MIR ASGAR HUSSAIN , NAGPUR V. PRINCIPAL COMMISSIONER OF INCOME TAX-2, NAGPUR

ITA 22/NAG/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0157 (ITAT-NAGPUR)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 04-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEP HEDAOO
• Keywords: Revision of order; Period of limitation; Reasonable cause; Bad and doubtful debts; Valuation report; Revenue expenditure; Set aside
• Section: 145; 54; 263; 10; 154; 2; 143(3); 54F; 142(1); 80HHC; 115JB; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SANDEEP GOSAIN, JM & SHRI O.P. KANT, AM ITA No. 22/NAG/2021 Assessment Year: 2015-16 Mir Asgar Hussain, Alfirdaus, New Colony, Nagpur-440013. Vs. Pr. Commissioner of Income Tax-2, Nagpur. PAN No.: AAGPH 6528 A Appellant Respondent Assessee by: Shri Manoj Moryani (Adv) & Shri Bhavesh Moryani (Adv.) Revenue by : Shri Pradeep Hedaoo (CIT-DR) Date of Hearing: 27/10/2021 Date of Pronouncement: 17/01/2022 ORDER PER: SANDEEP GOSAIN, J.M. The present appeal has been filed by the assessee against order dated 03/03/2020 passed U/s. 263(1) of the Income Tax Act, 1961 (in short, the Act) by the ld. Pr. Commissioner of Income Tax-2, Nagpur (PCIT, in short) for the Asstt. Year 2015-2016. The grounds of appeal raised by the assessee are as under “1. The ex-parte order passed by the Principal Commissioner of Income Tax-2, Nagpur U/s. 263(1) are illegal, invalid and ban in law. 2. The Principal Commissioner of Income Tax-2, Nagpur erred in not allowing deduction claimed by the assessee U/s. 54F though the assessee is entitled for the same and which was duly reflected in the sale deed itself, therefore, ex-party order passed is unjustified, unwarranted and excessive. ITA 22/NAG/2021_ Mir Asgar Hussain Vs PCIT 2 3. The Principal Commissioner of Income Tax-2, Nagpur erred in not allowing relief U/s. 54 as well as index cost of acquisition, improvement and also purchase cost, which was allowed by the assessing officer and considered in the original assessment passed U/s. 143(3) of the Income Tax Act, therefore ex-party order passed is unjustified, unwarranted and excessive. 4. The Principal Commissioner of Income Tax-2, Nagpur has not granted reasonable opportunity to being heard before passing ex-party order, therefore, ex-party order passed is unjustified, unwarranted and excessive. 5. The Principal Commissioner of Income Tax-2, Nagpur erred in not considering the entire written submission of the assessee and passed the order U/s. 263(1) without going into merits of the case, therefore order passed is illegal, invalid and bad in law. 6. The Principal Commissioner of Income Tax-2, Nagpur erred in not considering the issue which was already discussed in the assessment order as well as entire detail explained before the assessing officer and said investment was duly reflected in the sale deed dated 06/06/2014 and same was also verified by the assessing officer due to topographical error in the assessment order of the assessing officer the exemption cannot be denied though the same were shown in the sale deed therefore order passed is illegal, invalid and bad in law. 7. The appellant seeks permission to add any other ground of appeal or amend or alter the aforesaid ground of appeal.” 2. There is delay of 210 days in filing the present appeal, for which the assessee has filed an application for condonation of delay. The contents of the condonation application reads as under: “In the case of the assessee assessment U/s. 143(3) was completed on 28/11/2017 determining net income at Rs. 7,07,915/- and addition was made at Rs. 5,11,807/-. The assessee due to buy peace and avoid litigation the assessee has accepted addition and paid tax accordingly. ITA 22/NAG/2021_ Mir Asgar Hussain Vs PCIT 3 In the case of the assessee order U/s. 263(1) has been passed on 03/03/2020 by the Principal Commissioner of Income Tax-2, Nagpur and set-aside the assessment order. The said order was served on 08/07/2020. However due to Covid-19 pandemic and lock down the assessee could not contact any counsel for the above matter. The assessee being senior citizen and ailing did not have the resource or help to contact for legal advice. The said aspect came to the knowledge of the assessee when the assessee has received show cause notice dated 21/02/2021. The assessee was required to file the appeal against the said order within 60 days from date of receipts of order. Due to above reason the appeal has not been filed. The assessee has realized his mistake that the appeal has not filed against the said order. The assessee approached to new counsel Adv. Manoj Moryani and counsel advised that the said mistake is a bonafied mistake on 01/04/2021 and there was neither any negligence on the part of the assessee nor was there any intention to delay the filing of appeal. All these aspect viewed as a whole constitute sufficient cause for condoning delay in filing the appeal against the order of the Principal Commissioner of Income Tax-2, Nagpur passed on 03/03/2020 ought to have been filed on or before 30/05/2020. However due to above reason the same is being filed today i.e. 05/04/2021 resolving in delay of 210 days, which deserves and be condoned. The delay be kindly condoned in the interest of justice as appeal be heard and decided on merits. On the above mentioned preposition assessee placed reliance on 1) Judgment of Hon'ble Supreme Court of India dated 08/03/2021 vide Suo Motu Writ Petition (Civil) No. 3 of 2020. 2) AIR 1981 SC – 1400 R A F I Q A N D A N O T H E R - V S . - M U N S H I L A L 8 5 OTHERS ITA 22/NAG/2021_ Mir Asgar Hussain Vs PCIT 4 3) (1998) 7 SUPREME COURT CASES 123 N. BALKRISHNAN -VS.- M. KRISHNAMURTHY 4) 167 ITR 471(SUPREME COURT) COLLECTOR LAND ACQUISITION Vs. Smt. Katiji & OTHERS 5) 172 ITR 331 (M.P. HIGH COURT) MAHAVEER PRASAD JAIN -VS.- COMMISSIONER OF INCOME TAX 6) 133 ITR 339 (NEW DELHI) AUTAR KRISHNADAS -VS.- COMMISSIONER OF INCOME TAX P r a y e d : I t i s , t h e r e f o r e , h u m b l y p r a y e d t h a t d e l a y i n f i l i n g o f a p p e a l b y 2 1 0 d a y s may kindly be condoned. 3. On the other hand, the ld CIT- DR opposed the prayer but could not rebut the facts submitted by the assessee before us for seeking condonation of delay. 4. We have heard the rival contentions and pursued the material available on record. There is no dispute and is an admitted fact that there has been a delay in filing the present appeal by 210 days. There is also no dispute that under section 253(5) of the Income Tax Act, 1961 (in short, the Act) the Tribunal may admit an appeal filed beyond the period of limitation where it is satisfied that there exists a sufficient cause on the part of the assessee for not presenting the appeal within the prescribed time. The explanation of the assessee therefore becomes relevant to determine whether the same reflects sufficient and reasonable cause on his part in not ITA 22/NAG/2021_ Mir Asgar Hussain Vs PCIT 5 presenting the present appeal within the prescribed time. In the instant case, it has been stated by the assessee that due to Covid-19 pandemic and lock down the assessee could not contact any counsel for the matter. The assessee being senior citizen and ailing did not have the resource or help to contact for legal advice and due to which, the appeal could not be filed on time before the Tribunal. 5. In case of Collector, Land Acquisition, Anantnag & Anr. Vs Mst. Katiji and others (1987) 2 SCC 107, the Hon'ble Supreme Court has held that the expression ‘Sufficient Cause’ employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner to sub-serves the ends of justice that being the life-purpose of the existence of the institution of Courts. It was further held by the Hon’ble Supreme Court that such liberal approach is adopted on one of the principles that refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. Another principle laid down by the Hon’ble Supreme Court is that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non- ITA 22/NAG/2021_ Mir Asgar Hussain Vs PCIT 6 deliberate delay. It was also held by the Hon’ble Supreme Court that there is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of male fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. In the instant case, applying the same principles, we find that there is no culpable negligence or malafide on the part of the assessee in delayed filing of the present appeal and it does not stand to benefit by resorting to such delay more so considering the fact that it has applied for settlement of present dispute and payment of appropriate taxes. Therefore, in the factual matrix of the present case, we find that there exists sufficient and reasonable cause for condoning the delay in filing the present appeal and as held by the Hon’ble Supreme Court, where substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserved to be preferred. 6. In light of aforesaid discussions, in exercise of powers under section 253(5) of the Act, we hereby condone the delay in filing the present appeal as we are satisfied that there was sufficient cause for not presenting the appeal within the prescribed time and the appeal is hereby admitted for adjudication on merits. ITA 22/NAG/2021_ Mir Asgar Hussain Vs PCIT 7 7. The brief facts of the case are that the assessee has filed his return of income on 22/02/2016 declaring total income of Rs. 1,96,110/-. The case of the assessee was selected for limited scrutiny and finally the assessment was completed U/s 143(3) of the Act vide order dated 28/11/2017 enhancing the returned income at Rs. 7,07,915/-. Later on, the ld. Pr.CIT invoked provisions of Section 263 of the Act on the ground that on verification of records by the ld. Pr.CIT, the assessee had claimed estimated cost of acquisition without recording purchase of plot by his ancestors nor any valuation report of any authorized valuer was filed. It was also observed by the ld. Pr.CIT that the assessee had claimed cost of improvement of Rs. 52,000/- which was not allowable expenditure as the said amount was penal charges imposed by the Nagpur Improvement Trust for the unauthorized construction done by the assessee on the plot in question. Apart from the above, the assessee claimed deduction U/s 54F of the Act of Rs. 61,00,000/- on account of purchase of a residential flat. According to the ld. Pr.CIT, the A.O. had neither called for the sale deed/agreement to sell in respect to the asset purchased by the assessee, therefore, the ld. Pr.CIT concluded that the facts were not examined by the A.O. during the scrutiny proceedings and therefore, held that the order passed by the A.O. is erroneous and prejudicial to the interests of the revenue. ITA 22/NAG/2021_ Mir Asgar Hussain Vs PCIT 8 8. All the grounds raised by the assessee in this appeal are interrelated and interconnected and mainly relates to challenging the order of the ld. Pr.CIT in initiating the proceedings U/s 263 of the Act. 9. Having considered the rival contentions and carefully perused the material placed on record, we found that the assessee was decided ex parte before the ld. Pr.CIT, however, documents were placed on record by the assessee before the ld. Pr.CIT which contains notice U/s 143(2) issued for limited scrutiny by the ITO, Ward 5(1), Nagpur on 21/09/2016, notice U/s 142(1) issued for furnishing of details on 22/05/2017, assessee’s reply, copy of acknowledgement of return, computation of income and copy of sale deed on 10/08/2017, notice U/s 142(1) issued by the ITO, Ward 3(1), Nagpur on 17/08/2017 due to change of incumbent for furnishing of details, show cause notice issued on 15/09/2017 regarding assessment proceedings U/s 143(3) by the ITO Ward 3(1), Nagpur, reminder to show cause notice dated 20/11/2017 regarding assessment by ITO, Ward 3(1), Nagpur with regard to proceedings U/s 143(3) and the reply filed by the assessee on 27/11/2017. We have also perused the copy of the sale deed dated 06/06/2014 and as per the said sale deed and also the reply filed by the assessee before the A.O. during the course of assessment proceedings, specific stand has been taken by the assessee that the assessee had entered into an agreement of sale of plot in the F.Y. 2013-14 for Rs. ITA 22/NAG/2021_ Mir Asgar Hussain Vs PCIT 9 61,00,000/- lacs. Though, the sale deed was executed in F.Y. 2014-15 with market value of the plot at Rs. 70,61,000/-, therefore, while calculating the capital gains, the assessee has taken the stamp value and the actual amount settled for the sale of the plot at Rs. 61,58,000/-. As far as acquisition of the plot in question is concerned, it was categorically stated by the assessee that the said plot was an ancestral property of the assessee and he got the same from his father. The said fact has also been mentioned in the records, which have already been placed on record by the assessee and the assessee has taken cost of acquisition on estimated basis at Rs. 31,660/- being valuation as on 01/4/1981. The assessee had also placed on record copy of ITR filed alongwith computation of income before the ld. Pr.CIT. After perusal of the sale deed dated 06/06/2014, we noticed that the sale consideration got by the assessee is only by way of book adjustment towards the cost of apartment No. 102 in the proposed scheme on the above said plot to be constructed by the vendee i.e. M/s Green City Builders (purchaser) and in this way, the assessee had sold the plot in question vide sale deed dated 06/06/2014 to M/s Green City Builders for Rs. 61.00 lacs. However, instead of getting the said amount in cash, the assessee had agreed to get one flat No. 102 in the proposed scheme on the above said plot to be constructed by the said M/s Green City Builders i.e. the purchaser. The said recitals in the sale deed proposed that the assessee ITA 22/NAG/2021_ Mir Asgar Hussain Vs PCIT 10 had got the sale consideration only by way of book adjustment towards cost of apartment No. 102 and the entire amount of the sale consideration was invested by the assessee in purchase of apartment No. 102 in lieu of sale of the property in question and in this way, the entire amount was invested and no amount was received by the assessee. All those facts were placed on record by the assessee before the A.O. and thus in this way, the A.O. had passed the order of assessment after considering the facts placed on record by the assessee. In view of the above all the details were duly furnished by the assessee during the course of assessment proceedings alongwith the supporting documents and same aspect were also examined by the A.O. in the assessment order and the A.O. has also calculated computation of capital gain in the assessment order itself and the entire consideration were directly invested for purchase of residential apartment, which is evident from the sale deed, therefore there is no question of any irregularity in order passed U/s. 143(3) of the Act. In this regard, we draw strength from the decision in the case of Commissioner of Income Tax – Vs.- Max India Ltd. (2007) 295 ITR 0282 (SC) wherein the Hon’ble Apex Court has held as under: “Section 263, read with section 80HHC, of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interests of revenue - Assessment year 1992-93 - Assessee claimed deduction under section 80HHC, which was allowed by Assessing Officer - However, Commissioner was of view that order passed by Assessing Officer was prejudicial to interest of revenue as while working out deduction under section ITA 22/NAG/2021_ Mir Asgar Hussain Vs PCIT 11 80HHC Assessing Officer had ignored negative profit and, accordingly, set aside order of Assessing Officer by passing order dated 5-3-1997 - Revenue's case was that 2005 amendment in section 80HHC which is clarificatory and retrospective in nature itself indicates that view taken by Assessing Officer at relevant time was unsustainable in law - Whether since two views existed on word 'profits' in proviso to section 80HHC(3), on day when Commissioner passed his order and moreover mechanics of section have become so complicated over years that two views were inherently possible, subsequent amendment in 2005 even though retrospective would not attract provision of section 263, particularly when one had to take into account position of law as it stood on date when Commissioner passed order in purported exercise of his powers under section 263 - Held, yes” We also draw strength from the decision of Hon’ble Bombay High court in the case of Commissioner of Income Tax –Vs.- Garbrial India Ltd. (1993) 203 ITR 0108 (Bom. HC) wherein the Hon’ble Bombay High Court has held as under: “13. We, therefore, hold that in order to exercise power under sub-section (1) of section 263 there must be material before the Commissioner to consider that the order passed by the ITO was erroneous insofar as it is prejudicial to the interests of the revenue. We have already held what is erroneous. It must be an order which is not in accordance with the law or which has been passed by the ITO without making any enquiry in undue haste. We have also held as to what is prejudicial to the interests of the revenue. An order can be said to be prejudicial to the interests of the revenue if it is not in accordance with the law in consequence whereof the lawful revenue due to the State has not been realised or cannot be realised. There must be material available on the record called for by the Commissioner to satisfy him prima facie that the aforesaid two requisites are present. If not, he has no authority to initiate proceedings for revision. Exercise of power of suo motu revision under such circumstances will amount to arbitrary exercise of power. It is well-settled that when exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exercising such power must have materials on record to satisfy it in that regard. If the action of the authority is challenged before the Court, it would be open to the Courts to examine whether the relevant objective factors were available from the records called for and examined by such authority. Our aforesaid conclusion gets full support from a decision of ITA 22/NAG/2021_ Mir Asgar Hussain Vs PCIT 12 Sabyasachi Mukharji, J. (as his Lordship then was) in Russell Properties (P.) Ltd. v. A. Chowdhury, Addl. CIT [1977] 109 ITR 229 (Cal.). In our opinion, any other view in the matter will amount to giving unbridled and arbitrary power to the revising authority to initiate proceedings for revision in every case and start re-examination and fresh enquiries in matters which have already been concluded under the law. As already stated, it is a quasi-judicial power hedged in with limitation and has to be exercised subject to the same and within its scope and ambit. So far as calling for the records and examining the same is concerned, undoubtedly, it is an administrative act, but on examination 'to consider' or in other words, to form an opinion that the particular order is erroneous insofar as it is prejudicial to the interests of the revenue, is a quasi- judicial act because on this consideration or opinion the whole machinery of re- examination and reconsideration of an order of assessment, which has already been concluded and controversy which has been set at rest, is set again in motion. It is an important decision and the same cannot be based on the whims or caprice of the revising authority. There must be materials available from the records called for by the Commissioner. 14. We may now examine the facts of the present case in the light of the powers of the Commissioner set out above. The ITO in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation in that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was allowed by the ITO on being satisfied with the explanation of the assessee. Such decision of the ITO cannot be held to be 'erroneous' simply because in his order he did not make an elaborate discussion in that regard. Moreover, in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous and that the expenditure was not revenue expenditure but an expenditure of capital nature. He simply asked the ITO to re-examine the matter that, in our opinion, is not permissible. Further inquiry and/or fresh determination can be directed by the Commissioner only after coming to the conclusion that the earlier finding of the ITO was erroneous and prejudicial to the interests of the revenue. Without doing so, he does not get the power to set aside the assessment. In the instant case, the Commissioner did so and it is for that reason that the Tribunal did not approve his action and set aside his order. We do not find any infirmity in the above conclusion of the Tribunal. 15. In the light of the foregoing discussion, we answer the question referred to us in the affirmative, that is, in favour of the assessee and against the revenue.” ITA 22/NAG/2021_ Mir Asgar Hussain Vs PCIT 13 We also draw strength from the decision of the Hon’ble Delhi High Court in the case of Commissioner of Income Tax –Vs.- Vimgi Investment (P) Ltd. (2007) 290 ITR 0505 (Del. HC) wherein the Hon’ble High Court has held as under: “Section 94, read with section 263, of the Income-tax Act, 1961 - Avoidance of tax by certain transactions in securities - Assessment year 2001-02 - Assessee purchased certain units of mutual funds - After receiving dividend, assessee sold those units within two or three days at a loss - In its return for relevant assessment year, assessee adjusted loss incurred in sale of units against its business profits - Assessing Officer accepted bona fides of transaction in question and allowed said adjustment - However, Commissioner invoking section 263 set aside assessment order on ground that transaction entered into by assessee was not bona fide - On basis of amendment made to section 94 with reference to assessment year 2002-03, revenue contended that Commissioner had validly exercised his powers under section 263 - Whether since disallowance of loss under section 94 in respect of transaction in question was effective only from assessment year 2002-03, same could not be invoked in assessment year in question - Held, yes - Whether since view taken by Assessing Officer with reference to assessment year in question, was only possible view, there was no occasion for Commissioner to exercise his powers under section 263 to revise order passed by Assessing Officer - Held, yes.” We further draw strength from the decision of the Hon’ble Delhi High Court in the case of Commissioner of Income Tax –Vs.- DLF Power Ltd. (2010) 329 ITR 0289 (Del. HC) wherein the Hon’ble Court has held as under: “Section 263, read with sections 80-IA and 115JB, of the Income-tax Act, 1961 - Revision - Of order prejudicial to interest of revenue - Assessment year 2002-03 - For relevant assessment year, assessee-company filed its return declaring loss of Rs. 4.70 crores - Assessment order under section 143(3) was passed and income was assessed at Rs. 11.3 crores - Commissioner set aside assessment order in exercise of power under section 263 mainly on two grounds, firstly, excess ITA 22/NAG/2021_ Mir Asgar Hussain Vs PCIT 14 deduction had been allowed to assessee under section 80-IA and, secondly, provision for doubtful debts at Rs. 818.03 lakhs, debited in profit and loss account was not added back for calculating book profit under section 115JB - However, few days before this order of Commissioner, Assessing Officer had passed order under section 154 wherein purported mistake in regard to deduction under section 80-IA, had been corrected - On appeal, as regards first ground, Tribunal held that original assessment order was no longer in existence as it got merged with order under section 154 passed by Assessing Officer and, in such a situation, Commissioner could not exercise his jurisdiction under section 263 - As regards second ground, Tribunal relied upon judgment of this Court in case of CIT v. EL Dupont India Ltd. [2008] 169 Taxman 184 holding that provision made for doubtful debts while computing book profits under section 115JA is not required to be added back as per clause (c) of Explanation to section 115JA - Accordingly, Tribunal set aside revisional order - Whether as regards first ground, prima facie, approach of Tribunal seemed to be correct - Held, yes - Whether, even otherwise, it was not necessary to enter into this question inasmuch as, even as per revisional order passed by Commissioner under section 263, benefit under section 80-IA should have been restricted to lower amount, which had already been done by Assessing Officer by passing rectification order under section 154 - Held, yes - Whether as regards second ground, in view of fact that Explanation to section 115JB is identically worded as Explanation to section 115JA, Tribunal rightly relied upon decision in EL Dupont India Ltd.'s case (supra) and set aside impugned revisional order passed by Commissioner - Held, yes.” We also find support from the decision of the Coordinate Bench of Hyderabad Tribunal in the case of Chenai Finance Co. Ltd –Vs- Assistant Commissioner of Income Tax (2002) 81 ITD 0007 (ITAT Hyd.) wherein the Coordinate Bench has held as under: “The admitted position was that before 1-4-1997, the assessee had a clear choice in the matter of selecting the method of accounting. The assessee could select cash basis or mercantile basis or even a hybrid system. The choice in the matter of following hybrid system was taken away after 1-4-1997 and the present position is that the assessee has to follow either the cash or the mercantile system of accounting. In the matter of the choice with the assessee under section 145, it is settled that the choice of the method of accounting lies with the assessee. It is ITA 22/NAG/2021_ Mir Asgar Hussain Vs PCIT 15 also the legal position that if an assessee’s method of accounts has been accepted regularly for a number of years as basis for his assessment, the Assessing Officer will not be justified if he, for any particular year, refuses to accept such method as the basis of assessment for that year. Further, rejection of a particular method of accounting, if it is not unreasonable, cannot be justified on the ground that a better method could be visualised. When the established position is that the choice in the matter of method of accounting lies with the assessee, it remains to be seen whether the provisions of section 209(3) mandating mercantile system of accounting for corporate assessees overrides the provisions of section 145. There is no warrant for coming to such a conclusion. There is no quarrel with the proposition, that provisions of the Income-tax Act have to be interpreted and implemented in consonance with the provisions of general law, which includes the Companies Act. But the question, however, is whether a provision of general law can override a specific provision of the Income-tax Act, like section 145 in the present case. The matter would be different, if there was no specific provision under the Income-tax Act. In that situation, one could go by the general enactment. But, when there is a specific provision under the Income-tax Act, the said provision could not be fettered by any provision under the general enactment, like, in the present case, the Companies Act. Even after the amendment of section 145 by the Finance Act, 1995, with effect from 1-4-1997, the assessee is left with the choice of following either mercantile system of accounting or cash system of accounting. If the Legislature intended to allow the choice only to non-corporate assessees, nothing would have been easier to make a mention to that effect in section 145, by excluding companies from the ambit of section 145. There is no reason for circumscribing the freedom of the assessee to choose any method of accounting, which is clearly granted by the provisions of section 145. It cannot be assumed that the provisions of section 209(3) of the Companies Act override the provisions of section 145 of the Income-tax Act. The plea of the revenue that the provisions of the Income-tax Act should be read harmoniously with those of Company Law seemed attractive but there was no reason, for superseding the provisions of section 145 in the name of harmonious interpretation. These provisions, under two different enactment are parallel provisions and they do not intersect each other. At any rate, the issue whether the provisions of section 209(3) of the Companies Act, override the provisions of section 145 of the Income-tax Act, and make it mandatory to complete the assessment of the income on accrual basis, is a ITA 22/NAG/2021_ Mir Asgar Hussain Vs PCIT 16 debatable one, on which two views are possible. That being so, since two views are possible in the matter, the provisions of section 263 were not attracted. For the above reasons, the impugned order of the Commissioner passed under section 263, was set aside.” Considering the totality of the facts and circumstances, we are of the considered view that the assessee has fully explained his entire case and we agree with the ld. AR’s submission and entire details were duly examined by the A.O. which were evident from the assessment order U/s. 143(3) of the Act and no ambiguity has been found by us. The case laws relied upon by the ld. AR also find support of the contentions made by him. Therefore, the order passed by the ld. Pr. CIT U/s. 263(1) of the Act is hereby quashed and the assessment framed by the A.O. U/s. 143(3) of the Act is upheld. 10. In the result, this appeal of the assessee stands allowed. Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board. Sd/- Sd/- (O.P. KANT) (SANDEEP GOSAIN) Accountant Member Judicial Member Nagpur Dated:- 17/01/2022 *Ranjan Copy of the order forwarded to: 1. The Appellant- Shri Mir Asgar Hussain, Nagpur. 2. The Respondent- The PCIT-2, Nagpur. 3. CIT 4. The CIT(A) ITA 22/NAG/2021_ Mir Asgar Hussain Vs PCIT 17 5. DR, ITAT, Nagpur 6. Guard File (ITA No. 22/Nag/2021) By order, Asst. Registrar