The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently, in an appeal filed before it, on finding that the order passed by the A.O. did not satisfy the twin conditions of “erroneous and prejudicial to the interest, set aside the Pr. CIT’s order.
The aforesaid observation was made by the Mumbai ITAT, when an appeal was preferred before it by the assessee, as against the order of the Pr. Commissioner of Income Tax (Pr.CIT), Mumbai, passed under Section 263 of the Income Tax Act.
The grounds of the assessee’s appeal being that the PCIT-5, Mumbai, has erred in law and in facts, in holding that the order 9.12.2019. passed u/s 147/143(3,) dated 26.03.2022, was erroneous and prejudicial to the interest of revenue, and thereby setting it aside under Section 263 of the Act, the brief facts of the case were that the assessee company was engaged in the business activity of construction and had undertaken an Infrastructure project known as World Trade Park at Jaipur with various offices, show rooms shops and other commercial spaces for sales.
The assessee had filed the return of income for the A. Y 2017-18 on 10.03.2018, disclosing a total income of Rs.Nil and the return of income was processed under Section 143(1) of the Act. And subsequently, the case of the assessee was selected for scrutiny through CASS for complete scrutunity, which includes (i)Large investment in immovable property (ii) depreciation claimed (iii) deduction and deposit of TDS (iv) High Loans and Advances and income from House Property.
Further, notice under Section 143(2) and 142(1) of the Income Tax Act, along with questionnaire was issued through ITBA portal. And, in compliance to the notice, the assessee had also filed its submissions.
The AO on perusal of the financial statement and information found that the assessee had disclosed revenue from sale of building/shops/offices, other goods and rent on revenue sharing basis, aggregating to Rs. 48,79,77,459/- and profit for the period to be Rs. 2,96,144/-. He also found that the assessee had filed the return of income beyond the time limit specified under Section 139(1) of the Act, and therefore initiated penal provisions under Section 271B of the Act and denied the claim of loss of set off of carry forward from earlier year, thus assessing the total income of Rs. 90,16,363/- and passing the order under Section 143(3) of the Act, dated 29.12.2019.
Subsequently, the Pr. CIT on perusal of the records and information found that the order passed by the AO under section 143(3) of the Act, is erroneous and prejudicial to the interest of the revenue and therefore issued revision notice under Section 263 of the Income Tax Act.
In compliance to the notice, the assessee filed the submissions through ITBA. And the Pr.CIT, not being satisfied with the explanations and submissions, was of the opinion that the order passed by the AO is erroneous and prejudicial to the interest of the revenue, and accordingly issued directions to the AO.
Finally, the Pr.CIT passed an order u/s 263 of the Act, dated 26.03.2022. And, it is being aggrieved by the order of the Pr.CIT, that the assessee has filed the instant appeal before the Tribunal.
Hearing the opposing contentions of both sides as presented by Shri Rajiv Sahai the AR on behalf of the assessee, and Shri.Dr. Kishor Dhule., the CIT-DR on behalf of the Revenue, and thereby perusing the materials available on record, the Mumbai ITAT observed:
“We Considering the overall facts, circumstances, ratio of the judicial decision and the details submitted in the course of hearing are of the view that the if any query is raised in the assessment proceedings and it was responded by the assessee, mere fact that it is not dealt within by the A.O. in the order cannot implied that there is no application of mind and the A.O. has applied one of the possible views.”
“Hence, the action of the Pr.CIT cannot be acceptable as the order passed by the A.O. does not satisfy the twin conditions of erroneous and prejudicial to the interest of the revenue”, a panel comprising of Baskaran BR, the Accountant Member, along with Pavan Kumar Gadale, the Judicial Member added.
Thus, allowing the assessee’s appeal, the Mumbai ITAT held:
“Accordingly, we set aside the order of the Pr.CIT and allow the grounds of appeal in favour of the assessee. In the result, the appeal filed by the assessee is allowed.”
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