ITAT Orders Re-Adjudication as VAT Liability and EPF Amount Deposited on Time u/s 263 [Read Order]

The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT) recently ordered for re adjudication as vat liability and EPF amount deposited on time under Section 263 of the Income Tax Act 1961.

The assessee  M/s Kaur Cookies (P) Ltd  initially filed its income tax return on 6.11.2017, declaring a loss of Rs. 2,40,88,622/-. Later, a revised return was filed on 21.06.2018, declaring a revised loss of Rs. 2,40,84,958/-.

The tax authorities selected the case for scrutiny assessment, and after examination, completed the assessment at a loss of Rs. 2,40,67,255/-, making an addition of Rs. 17,703/- to the declared loss.

Subsequently, the Principal Commissioner of Income Tax (PCIT) reviewed the record and issued a notice under Section 263 of the Income Tax Act to the assessee, questioning the validity of the assessment order dated 10.12.2019. The PCIT stated that the assessment order was erroneous and prejudicial to the interest of revenue. In response, the assessee filed a reply challenging the (PCIT)’s position.

However, the PCIT did not find the assessee's reply acceptable and concluded that the assessment order dated 10.12.2019 was indeed erroneous and prejudicial to the interest of revenue. As a result, the PCIT directed the Assessing Officer to conduct a fresh assessment. Dissatisfied with this decision, the assessee has filed an appeal before the Tribunal.

The Counsel for the assessee argued that a certain amount was duly deposited before the due date of filing the income tax return, therefore no disallowance is warranted and the VAT liability was deposited before the due date of filing the return, so no disallowance is required under Section 43B of the Income Tax Act.

They also point out that the EPF amount of Rs. 83,847 was not paid before the relevant date and was already disallowed by the appellant themselves, as part of the total disallowance of Rs. 83,850. The appellant asserts that the Principal Commissioner did not verify the facts from the records and failed to consider these points accurately.

The bench, consisting of two members, Judicial Member Kul Bharat and Accountant Member Pradip Kumar Kedia, observed that the payment of VAT before the due date and the self-disallowance of EPF were not refuted by the Deputy Commissioner.  The Bench was concluded that it was not appropriate to exercise powers under Section 263 of the Income Tax Act. The Principal Commissioner did not verify the facts correctly before issuing the notice and initiating the proceedings. As both conditions for revising the assessment were not satisfied, the impugned order was set aside, and the original assessment order passed by the Assessing Officer was restored. Consequently, the grounds raised in the appeal were allowed.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates