R.S. THAMILSELVUN , TIRUCHIRAPALLI V. ACIT, CIRCLE-1, TRICHY

ITA 312/CHNY/2023

AI Insights

The case revolves around an appeal by Shri R.S. Thamilselvun against a revision order by the PCIT, Madurai-1, which set aside an assessment completed under section 143(3) of the Income Tax Act, 1961. The original assessment was a limited scrutiny focusing on income from house property for the assessment year 2018-19. The PCIT later noted non-deduction of TDS on interest payments to NBFCs and revised the assessment, directing the AO to verify the applicability of section 40(a)(ia) of the Act. The ITAT, referencing a decision by the Madras High Court, held that the limited scrutiny did not warrant such a revision, leading to the allowance of the assessee's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132724 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-06-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 12-03-2023
• Other Referred Cases: CIT vs. Smt. Padmavathi, [2020] 120 taxmann.com 187 (Madras)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Opportunity of being heard; Fair market value; TDS; Set aside
• Section: 263; 143(3); 40(a)(ia)

Judgement Text

अपीलीय अिधकरण, ‘बी’ ᭠यायपीठ,चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ᮰ीमहावीर ᳲसह, उपा᭟यᭃ एवं ᮰ी मनोज कुमार अᮕवाल, लेखा सद᭭य के समᭃ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 312/CHNY/2023 िनधाᭅरण वषᭅ /Assessment Year: 2018-19 Shri R.S. Thamilselvun, 58, Palayam Bazaar, Woraiyur, Tiruchirapalli – 620 003. PAN: ABQPT 9634A v. The ACIT, Circle-1, Trichy (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : None ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri T. Vasanthan, CIT सुनवाई कᳱ तारीख/Date of Hearing : 27.06.2023 घोषणा कᳱ तारीख/Date of Pronouncement : 27.06.2023 आदेश /O R D E R PER MAHAVIR SINGH, VICE PRESIDENT: This appeal filed by the assessee is directed against the Revision order passed by the Principal Commissioner of Income Tax, Madurai-1 in Revision No.PCIT, Madurai-1/Revision-263/ 100000436537/2022 dated 21.02.2023. The assessment was framed by the Addl./Joint/Deputy/Asst. Commissioner of Income Tax/Income Tax Officer, National e-Assessment Centre, Delhi for the 2 I.T.A. No.312/CHNY/2023 assessment year 2018-19 u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 11.01.2021. 2. The only issue in this appeal of assessee is as regards to the revision order passed by the PCIT u/s.263 of the Act, setting aside the assessment completed u/s.143(3) of the Act in limited scrutiny assessment. For this, assessee has raised various argumentative grounds and also cited many case laws, which we need not to reproduce. 3. At the time of hearing, none is present from assessee’s side and we have heard ld.CIT-DR and gone through facts and circumstances of the case. Brief facts are that the original assessment was completed u/s.143(3) r.w.s. 143(3A) & 143(3B) of the Act vide order dated 11.01.2021. From the assessment order, it is clear that the case was selected for limited scrutiny i.e., for examining income from house property. The relevant noting done in the assessment order reads as under:- “1. The case was selected for Limited Scrutiny assessment under the E- assessment Scheme, 2019 on the following issues:- S.No. Issues 1. Income from House Property 2. On above issue(s), no addition is made.” 3 I.T.A. No.312/CHNY/2023 The PCIT, on verification of records noted that the assessee has incurred expenditure of interest paid to NBFCs amounting to Rs.41,83,817/- without deduction of TDS. Hence, he revised the assessment framed by AO and directed the AO to verify the applicability of provisions of section 40(a)(ia) of the Act for non- deduction of TDS on interest payment to NBFCs. The PCIT finally directed the AO in para 7 as under:- 7. In view of the above, I am satisfied that the order dated 11/01/2021 passed by the Assessing Officer u/s 143(3) of Act for the A.Y.2018-19 is erroneous in so far it is prejudicial to the interest of the revenue. Therefore, in exercise of powers conferred u/s 263 of the Act, I set aside the aforesaid order for the limited purpose of verification of applicability of section 40(a) (ia) of the Act as discussed in para (5.3) & (5.4) above. The assessing officer shall pass fresh order after making necessary enquiries and verification with regard to the claim of the assessee as discussed above in accordance with law after allowing reasonable opportunity of being heard to the assessee. 4. We noted that first of all the assessee’ case is clear-cut a limited scrutiny assessment i.e., to examine the income from house property only and this issue is now squarely covered by the decision of Hon’ble Madras High Court in the case of CIT vs. Smt. Padmavathi, [2020] 120 taxmann.com 187 (Madras), wherein it is held as under:- 17. The assessing officer in his limited scrutiny, has verified the source of funds, noted the sale consideration paid, the expenses incurred for stamp duty and other charges. Furthermore, the assessee in their reply dated 11.01.2019 to the show cause notice dated 26.10.2018 issued by the PCIT has specifically stated that the assessment was getting time barred, 4 I.T.A. No.312/CHNY/2023 assessing officer took upon himself the role of a valuation officer under Section 50(C)(2) and found that the guideline value was not actual fair market value of the property and the actual consideration paid was the fair market value and therefore, he did not choose to make any addition under Section 50(C) of the Act. 18. The PCIT, has not dealt with this specific objection, but, would fault the assessing officer for not invoking Section 56(2)(vii)(b)(ii) merely on the ground that the market value was higher. As point out earlier, the guideline value is only an indicator and that will always not represent the fair market value of the property and therefore, the invocation of the power under Section 263 of the Act by the PCIT is not sustainable in law. On this short premise, the revision order will go. Accordingly, we quash the revision order passed by PCIT and allow the appeal of assessee. 5. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 27 th June, 2023 at Chennai. Sd/- Sd/- (मनोज कुमार अᮕवाल) (MANOJ KUMAR AGGARWAL) लेखा सद᭭य/ACCOUNTANT MEMBER (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 27 th June, 2023 RSR आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ /CIT 4. िवभागीय ᮧितिनिध/DR 5. गाडᭅ फाईल/GF.