Revision u/s 263 on Ground of Failure to Collect TCS Invalid during Pendency of First Appeal: ITAT [Read Order]

Allowing the appeal of the assessee, the Rajkot Bench of the Income Tax Appellate Tribunal (ITAT) has recently held that the revision by the Principal Commissioner of Income Tax (PCIT) when the first appeal is pending before the the Commissioner of Income Tax (Appeals) [CIT(A)].

The Tribunal comprising Waseem Ahmed, Accountant Member and Siddhartha Nautiyal, Judicial Member has conclusively held that no revision shall lie in a matter during pendency of first appeal and that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to interests of Revenue.

In this specific matter, the PCIT added, on the ground that the payment of TCS by the assessee to the supplier is not verifiable at all, “the entire purchase amounting to Rs. 2,53,99,953/- should not  have been treated as expenditure in the nature of unverifiable purchases and the total amount of Rs. 2,53,99,953/- should have been added to the income of the assessee as unexplained expenditure under section 69C of the Act, instead of 30% of the same i.e., Rs. 76,86,510/- under Section 40(A)(ia) of the Income Tax Act, 1961.”

However, the assessee, aggrieved by the additions, approached the ITAT in order to seek deletion of the said additions.

The Tribunal Bench observed that “TCS has not been collected on certain purchases does not automatically imply that the said purchase is non-genuine/bogus” on the submission of sufficient evidence by the appellant counsel to prove the genuineness of transactions so conducted with the seller. It was also observed that the issue whether the purchase is bogus or not is also the subject matter of the pending appeal before CIT(A).

The settled rule that the provision beneficial to the assessee is to be taken and that if two views are possible and one view has been adopted by Assessing Officer, then that view alone would not be sufficient to exercise powers under Section 263 of the Income Tax Act by the Commissioner were upheld in this order providing relief to assessee.

To Read the full text of the Order CLICK HERE

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