M/s Kurbetti and Sons, Nipani V. Pr. CIT, Belgavi

ITA 215/PAN/2018

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 6151 (ITAT-PANAJI)
• Duration Of Justice: 4 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: WT(D)
• Assessment Year: 2013-2014
• Appeal Filed On: 23-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RANJAN KUMAR
• Keywords: Revision of order
• Section: 263; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCHE : PANAJI, GOA BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA.No.215/PAN/2018 Assessment Year 2013-2014 M/s. Kurbetti and Sons, Dalal Peth, Nipani, Tal: Chikodi, Dist. Belagavi. PAN AAJFG0292P [vs. The Pr. Commissioner of Income Tax, F.K. Commercial Complex, Dr. Ambedkar Road, Opp. Civil Hospital, Belagavi. PIN – 590 001. (Appellant) (Respondent) For Assessee : Sh Pramod Vaidhya, Advocate For Revenue : Sh Ranjan Kumar, CIT-DR Date of Hearing : 17.06.2022 Date of Pronouncement : 17.08.2022 ORDER PER CHANDRA MOHAN GARG, J.M. This appeal has been filed by the assessee against the Order of the Ld. Pr. Commissioner of Income Tax, Belagavi, dated 20.03.2018, for the A.Y. 2013-2014. 2 ITA.No.215/PAN./2018 M/s. Kurbetti and Sons, Dalal Peth, Nipani, Tal: Chikodi, Dist. Belagavi. 2. The grounds raised by the assessee read as follows : 1. “On the facts and circumstances of the case and in law the learned Pr. CIT erred in passing the order u/s 263 of Income Tax 1961 even though the original order u/s 143(3) by A.O was neither erroneous nor prejudicial to the interest of revenue. 2. The Pr. CIT failed to appreciate that – i. No prejudice is caused to revenue as the salary paid to karta of HUF is already taxed in their respective hands. ii. The allowability of deduction in the hands of the assessee of salary paid to karta of HUF is a possible view based on judicial precedents and other one more different view by Pr.CIT cannot be subject matter of revision u/s 263 of the Act. 3. The Pr. CIT erred in holding that no interest has been charged by the firm on debit capital balance. 4. Reasons assigned for holding original scrutiny assessment u/s 143(3) as erroneous and prejudicial to 3 ITA.No.215/PAN./2018 M/s. Kurbetti and Sons, Dalal Peth, Nipani, Tal: Chikodi, Dist. Belagavi. the interests of revenue are wrong, insufficient and contrary to law and facts of the case. 5. The appellant craves leave to add, alter, amend or modify any of the grounds of appeal.” 3. The Learned Counsel for the Assessee submitted that on the facts and circumstances of the case and the legal mandate of Section 263 of the I.T. Act, 1961 the Ld. PCIT has erred in passing the order under section 263 of Income Tax 1961 even though the original scrutiny assessment order 29.12.2015 passed by the A.O was neither erroneous nor prejudicial to the interest of revenue. Learned Counsel for the Assessee vehemently pointed that the Ld. PCIT has failed to appreciate that no prejudice has been caused to the Revenue as the salary paid to the Karta of HUF is already taxed in their respective hands and the allowability of deduction in the hands of the assessee HUF of salary paid to Karta of HUF is a possible view based on judicial precedents and other one more different view by PCIT cannot be the basis for revision under section 263 of the I.T. Act, 1961. Learned Counsel for the Assessee also 4 ITA.No.215/PAN./2018 M/s. Kurbetti and Sons, Dalal Peth, Nipani, Tal: Chikodi, Dist. Belagavi. submitted that the Ld. PCIT has erred in holding that no interest has been charged by the firm on debit capital balance of partners and thus, the reasons assigned for holding the original scrutiny assessment order as erroneous and prejudicial to the interests of Revenue are wrong, insufficient and contrary to the mandate of Section 263 of the I.T. Act, 1961. 4. Replying to the above, Ld. CIT-D.R. drew our attention towards scrutiny assessment order dated 29.12.2015 and revisional order of Ld. PCIT dated 20.03.2018 and submitted that the Ld. PCIT has pick-up only two issues to revised the impugned assessment order i.e., (i) salary paid to HUF partner and (ii) non-charging of interest on capital account having debit balance and thus, the issues have not been taken-up by the assessee in the scrutiny assessment proceedings and, therefore, the impugned assessment order has to be held as erroneous and prejudicial to the interests of Revenue and, therefore, the Ld. PCIT was right in taking action under section 263 of the I.T. Act, 1961 to revise the erroneous assessment order. 5 ITA.No.215/PAN./2018 M/s. Kurbetti and Sons, Dalal Peth, Nipani, Tal: Chikodi, Dist. Belagavi. 5. Placing rejoinder to the above, the Learned Counsel for the Assessee submitted that the A.O. raised all the issues while passing the scrutiny assessment order and, therefore, assessment order cannot be alleged as erroneous and prejudicial to the interests of Revenue, which was passed after considering the copy of the audit report, extract of bank pass book and all the relevant material placed before the A.O. 6. On careful consideration of the above rival submissions and careful perusal of the assessment order dated 29.12.2015, we are satisfied that the A.O. despite having all material facts before him along with audit report, copies of bank pass book and other books of account, did not raise any question and did not made any enquiry on both the issues i.e., (i) salary paid to HUF partner and (ii) non-charging of interest on capital account having debit balance, which were very relevant and necessary to pass a sustainable assessment order. Not making enquiries on both the issues, made the assessment order erroneous and prejudicial to the interests of Revenue. From last para-4 of 6 ITA.No.215/PAN./2018 M/s. Kurbetti and Sons, Dalal Peth, Nipani, Tal: Chikodi, Dist. Belagavi. revisional order of Ld. PCIT, we also find that the Ld. PCIT has directed the A.O. to verify the points in detail after allowing due opportunity of hearing to the assessee. Therefore, no prejudice would be caused against the assessee, if such an enquiry is made by the A.O. and assessee is allowed to furnish his explanation and stand before the A.O. Therefore, we are compelled to hold that the Ld. PCIT was right in holding that the A.O. has not made necessary enquiries on both the above issues and, therefore, the scrutiny assessment order dated 29.12.2015 was rightly held as erroneous and prejudicial to the interests of Revenue. Consequently, the grounds of assessee being devoid of merits, are dismissed. 7. In the result, appeal of the assessee is dismissed. Order pronounced on this 17 th day of August, 2022 under Rule 34(4) of IT (AT) Rules, 1963. Sd/- Sd/- (GIRISH AGRAWAL) (CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Delhi, Dated 17 th August, 2022 VBP/- 7 ITA.No.215/PAN./2018 M/s. Kurbetti and Sons, Dalal Peth, Nipani, Tal: Chikodi, Dist. Belagavi. Copy to 1. The appellant 2. The respondent 3. CIT(A) concerned 4. CIT concerned 5. D.R. ITAT Panaji Bench, Panaji Goa 6. Guard File. // BY Order // Assistant Registrar : ITAT Panaji Bench : Panaji. Delhi.