Appeal details
Counselvise Citation
[2022] 104 COUNSELVISE.COM (IT) 9489 (ITAT-RAJKOT)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
6 month(s) 9 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
29-09-2022
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Assessment Year
2017-2018
Appeal Filed On
20-03-2022
Judgement Text
ITA No.60/RJT/2022 Assessment Year: 2017-18 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted through E-Court at Ahmedabad) BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA No.60/RJT/2022 Assessment Year: 2017-18 Maruti Construction Co. vs. Principal Commissioner of Income Maruti, Umiya Park-A, Tax, Rajkot-1. Jalaram-2, University Road, Rajkot – 360 007. [PAN – AADFM 6071 A] (Appellant) (Respondent) Assessee by : Shri D.M. Rindani, AR Revenue by : Shri Shramdeep Sinha, CIT DR Date of hearing : 05.09.2022 Date of pronouncement : 30.09.2022 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER : This appeal is filed by the Assessee against the order dated 03.03.2022 passed by the PCIT, Rajkot-1 for the Assessment Year 2017-18. 2. The Assessee has raised the following grounds of appeal: “1. The learned Principal Commissioner of Income Tax, Rajkot-1, Rajkot erred in assuming jurisdiction u/s 263 of the Act, particularly in the light of reasons stated by him in the show cause notice and in the order passed u/s.263 of the Act and hence the impugned order is bad in law. 2. The learned Principal Commissioner of Income Tax, Rajkot-1, Rajkot erred in setting aside the assessment order framed u/s 143(3) of the Act by holding that the AO has not conducted any inquiries/verification in respect of loans/creditors/unexplained expenditure during the year under consideration and that the AO has failed to apply provisions of Sec.69C r.w.s. 115BBE of the Act. 3. The learned Principal Commissioner of Income Tax, Rajkot-1, Rajkot failed to appreciate that the very impugned issues were duly examined by the assessing officer by way of specific inquiries/notices and replies thereto, while finalizing assessment proceedings u/s 143(3) of the Act. ITA No.60/RJT/2022 Assessment Year: 2017-18 Page 2 of 4 4. The learned Principal Commissioner of Income Tax, Rajkot-1, Rajkot failed to appreciate that the first appeal of the Appellant against addition made in the assessment order on impugned issues were pending before the Commissioner (Appeals) and therefore the order u/s.143(3) could not be revised u/s 263 of the Act.” 3. The assessee filed return of income on 30.10.2017 declaring total income at Rs.36,06,550/-. The assessment was completed under Section 143(3) of the Income Tax Act, 1961 on 28.12.2019 assessing the income at Rs.73,43,950/- thereby making addition of Rs.37,37,400/- in respect of unexplained expenses related to sub-contract. The PCIT observed that the addition of Rs.37,37,400/- was made on account of unexplained expenditure. However, the Assessing Officer failed to satisfy Section 69C of the Act being unexplained expenditure which may attract higher tax liability as per Section 115BBE of the Act. Therefore, show cause notice dated 11.02.2022 was issued for revision under Section 263 of the Act. The PCIT held that the order of the Assessing Officer sought to be revised as the same is erroneous and prejudicial to the interest of the Revenue and directed the Assessing Officer to make fresh assessment by invoking Section 263 of the Act. 4. Being aggrieved by the order under Section 263 of the Act passed by the PCIT, the assessee failed appal before us. 5. The Ld. AR submitted that the assessee preferred first appeal before the National Faceless Appeal Centre (NFAC), Delhi against the disallowance of Rs.29,30,229/- made by the Assessing Officer and since the issue is pending in appeal before the CIT(A), the same cannot be revised under Section 263 of the Act. The Ld. AR further submitted that during the assessment proceedings the assessee has given all the details and submissions related to the unexplained expenditure wherein the Assessing Officer made addition of Rs.37,37,400/-. In fact, during the course of proceedings under Section 143(3) of the Act, notices under Section 142(1) dated 20.09.2019 and 28.11.2019 specifically pertaining to the query related to details of unsecured loans of creditors were issued. The Assessing Officer asked the assessee to furnish confirmation of all parties from whom loans were taken and repaid during the year along with confirmation of the party with ITR, Bank statement etc. The Ld. AR further submitted that during the assessment proceedings the Assessing Officer took all possible view and made disallowance of Rs.37,37,400/- to the return of ITA No.60/RJT/2022 Assessment Year: 2017-18 Page 3 of 4 income. Thus, the Assessing Officer has made proper enquiries and applied his mind. The Ld. AR relied upon the decision of Hon’ble Gujarat High Court in the case of PCIT vs. M/s. Shreeji Prints Pvt. Ltd. (Tax Appeal No.828 of 2019) and CIT vs. RK Construction Co. (2008) 76 CCH 869. The Ld. AR further relied upon the decision of Hon’ble Delhi High Court in the case of CIT vs. Sunbeam Auto Limited (2009) 332 ITR 167. The Ld. AR further submitted that in respect of unsecured loans, the assessee has filed details pertaining to 7 depositors and the opening balance reveals that the same were received in earlier years. As regards 5 depositors the assessee furnished evidences in respect of identity, creditworthiness and genuineness. The Assessing Officer specifically asked as to the assessee’s explanation in consonance to Section 68 and the burden of proving the assessee’s case was duly discharged by the assessee during assessment proceedings. The Assessing Officer has made disallowance of Sub-contractor expenses in respect of the 5 Sub-contractors as the source of expenditure was not disbelieved by the Assessing Officer and is not on assessee’s part, therefore, question of disallowance under Section 69C related to undisclosed expenses does not arise. Ld. AR further submitted that the Assessing Officer has rightly not invoked Section 69C of the Act and thus question of applying tax rate as per Section 115BBE could not arise. Thus, the Ld. AR submitted that the PCIT has taken a different view which amounts to change of opinion and is not permissible under Section 263 of the Act. 6. The Ld. DR submitted that the PCIT has rightly exercised revisionary powers as the Assessing Officer has mentioned unexplained expenditure but has not quoted and not calculated the addition as per Section 69C of the Act and in consonance with Section 115BBE of the Act. Thus, the Ld. DR relied upon the order of the PCIT passed under Section 263 of the Act. 7. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the Assessing Officer has given a detailed finding in respect of unexplained expenses related to Sub-contract and the same has been taken into account after verifying the evidences produced during the assessment proceedings. The Assessing Officer has properly adjudicated the issue and made the addition. Invocation of Section 69C of the Act does not arise in the present case as the source of the expenditure was already explained by the assessee and, therefore, it does not amount to undisclosed expenditure under Section 69C of the Act, but the ITA No.60/RJT/2022 Assessment Year: 2017-18 Page 4 of 4 same was related to Sub-contract expenses for which the relevant details and the explanation was not accepted by the Assessing Officer. Therefore, invocation of Section 263 of the Act which is revisionary statute cannot be exercised by PCIT as the Assessing Officer has passed just and proper assessment order by taking interest of the Revenue and thus it does not amount to erroneous or prejudicial to the interest of Revenue. Thus, appeal of the assessee is allowed. 8. In the result, appeal filed by the assessee is allowed. Order pronounced in the open Court on this 30 th day of September, 2022. Sd/- Sd/- (WASEEM AHMED) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 30 th day of September, 2022 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Rajkot Bench, Rajkot
Mehul