Delhi High Court (HC) presided by Justices Rajiv Shakdher and Tara Vitasta Ganju set aside the revision order of the Principal Commissioner of Income Tax (PCIT) and upheld the decision of the Income Tax Appellate Tribunal (ITAT).
The appeal before the HC was filed by the PCIT against the order passed by the ITAT.
According to the documents, R K Jain Infra Projects Pvt. Ltd., the respondent/assessee, filed its return on October 1, 2015, stating an income of Rs. 7,19,24,790. Under the Computer Assisted Scrutiny Selection, the Assessing Officer (AO) only performed a cursory examination (CASS). a statutory notification pursuant to Section 143(2) of the Income Tax Act of 1961.
The PCIT, however, took umbrage to the assessment order dated 12.10.2017 passed under Section 143(3) of the Act. Consequently, queries were raised in the matter regards to payment towards job work amounting to Rs.10.87 crores.
The PCIT observed that the AO failed to enquire into and verify Job work charges claimed by the assessee which was one of the main reasons viz, Large other expenses claimed in the Profit & Loss Account‟ on the basis of which the case of the assessee was selected. Also asked to issue a fresh assessment against the assessee.
Aggrieved by the decision of the PCIT, the assessee moved an appeal before the tribunal in which the tribunal set aside the revision order.
The bench stated that there is no reason to question the payments and we do not find any reason as to why such payments can be said to be completely false if they were made through cheques after tax was deducted in accordance with Section 194C of the Income Tax Act and is consistent with the percentage of payment made in the earlier years stands accepted.
Furthermore, the PCIT has not shown any evidence or carried out any investigations to show that such job work costs are fraudulent, unreal, or exaggerated expenses recorded in the profit and loss account.
The division bench of the Delhi High Court ruled that the PCIT’s justifications for overturning the assessment order could not be upheld and that the assessment order accepting the stated job work charges should stand.
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