Lahu Ashruba Jadhav, Pune V. Pr. Commissioner of Income-tax -3, Pune

ITA 802/PUN/2019

AI Insights

The case involves an appeal by Lahu Ashruba Jadhav against the order of the Principal Commissioner of Income Tax-3, Pune, which was issued under section 263 of the Income Tax Act, 1961. The PCIT had set aside the original assessment order made by the Assessing Officer, which had allowed certain business losses to be set off against income. The PCIT's revision was based on the grounds that the Assessing Officer had not properly examined certain items, including the failure to deduct TDS on interest paid on loans and the treatment of unexplained unsecured loans. The appellant contended that the PCIT had not provided a reasonable opportunity to represent the matter, and thus the revision order was illegal and invalid. The Tribunal found that the PCIT had not adequately provided an opportunity for the appellant to respond to the show-cause notice, leading to the setting aside of the PCIT's order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137171 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 10-01-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 21-05-2019
• Other Referred Cases: Malabar Industrial Co. Ltd. vs. CIT, CIT vs. Max India Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Opportunity of being heard; Assessment record; TDS
• Section: 68; 263; 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S. S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं. / ITA No.802/PUN/2019 िनधाᭅरण वषᭅ / Assessment Year : 2014-15 Lahu Ashruba Jadhav, 403, Market Yard, Off. Janta Sahakari Bank, Gultekdi, Pune- 411037. PAN : ACAPJ8461G Vs. Pr. CIT- 3, Pune. Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM: This is an appeal filed by the assessee directed against the order of ld. Pr. Commissioner of Income Tax- 3, Pune [‘the PCIT’] dated 19.03.2019 for the assessment year 2014-15. 2. Briefly, the facts of the case are that the appellant is an individual engaged in the business of dealing in trading of pulse, poultry & cattle feeds and transport activities. The Return of Income for the assessment year 2014-15 was filed on 25.11.2015 declaring loss of Rs.86,74,692/-. Against the said return of income, the assessment was completed by the Dy. Commissioner of Income Assessee by : Shri S. N. Puranik Revenue by : Shri Keyur Patel Date of hearing : 11.01.2023 Date of pronouncement : 31.01.2023 ITA No.802/PUN/2019 2 Tax, Circle-5, Pune (‘the Assessing Officer’) vide order dated 15.12.2016 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at a total income of Rs.1,07,95,450/- after making addition on account of disallowance of interest on TDS of Rs.27,220/-, addition on account of unexplained unsecured loans of Rs.83,00,000/-, addition on account of unexplained interest on unsecured loans of Rs.5,59,417/-, disallowance u/s 14A of Rs.30,383/- and disallowance of interest expenses Rs.18,78,430/-. 3. Subsequently, on examination of the assessment records, the ld. PCIT had come to the conclusion that the Assessing Officer had wrongly allowed the set-off of earlier business losses against the income assessed u/s 68 and income tax liability wrongly calculated at 30%. The assessee had failed to deduct TDS on interest paid on loans borrowed from NBFC of Rs.2,04,10,684/-, therefore, the same interest is liable to tax. The capital balance of the assessee on account of diversion of the borrowed funds requiring the disallowance u/s 36(1)(iii) of the Act. According to the ld. PCIT, failure of the Assessing Officer to examine the above those items, rendered the assessment order erroneous and prejudicial to the interests of the Revenue and, accordingly, issued a show-cause notice u/s 263 of the Act on 24.01.2019. In response to the show- cause notice, the appellant did not respond. The ld. PCIT also made ITA No.802/PUN/2019 3 clear that on failure of the same, no further notice shall be issued and matter shall be decided without giving further opportunities. However, the appellant could not cause response to the above show- cause notice, as the appellant was not aware of the proceedings. Then, the ld. PCIT had proceeded with setting aside the assessment order and directed the Assessing Officer to pass a de novo assessment order after giving opportunity of being heard to the appellant. 4. Being aggrieved, the appellant is in appeal before us in the present appeal. 5. It is contended before us that no reasonable opportunity was given to the appellant to represent the matter before the ld. PCIT. He further submitted that on the issues which are sought to be revised by the ld. PCIT, no addition is warranted. Thus, it is submitted that the order of revision passed by the ld. PCIT u/s 263 is illegal and invalid, cannot be sustained in the eyes of law. 6. On the other hand, ld. CIT-DR supporting the order of the ld. PCIT submits that no interference is required. 7. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the validity of assumption of jurisdiction u/s 263 by the ld. PCIT. The Parliament had conferred the power of revision on the Commissioner of Income ITA No.802/PUN/2019 4 Tax u/s 263 of the Act in case the assessment order passed is erroneous and prejudicial to the interests of revenue. In order to invoke the power of revision, the above two conditions are required to be satisfied cumulatively. References in this regard can be made to the decision of the Hon’ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT, 243 ITR 83 (SC) and in the case of CIT vs. Max India Ltd., 295 ITR 282 (SC). The error in the assessment order should be one that it is not debatable or plausible view. In a case where the Assessing Officer examined the claim took one of the plausible views, the assessment order cannot be termed as an “erroneous”. 8. We find the ld. PCIT was issued only one show-cause notice on 24.01.2019 requiring the appellant to appear before him on 11.02.2019. The ld. PCIT had not brought on record the evidence of service of the show-cause notice and it is not clear that as to when the show-cause notice was served upon the appellant. Nor the ld. PCIT had given another opportunity to the appellant. Thus, we are of the considered opinion that the ld. PCIT had not given adequate opportunity of hearing to represent the matter before him. Therefore, in our considered opinion, the order passed by the ld. PCIT u/s 263 is incorrect and unreasonable in the eyes of law. Therefore, we set-aside the order of the ld. PCIT and restore back to ITA No.802/PUN/2019 5 the file of the ld. PCIT with a direction to pass a de novo order u/s 236 after giving reasonable opportunity of being heard to the appellant. 9. In the result, the appeal filed by the assessee stands partly allowed. Order pronounced on this 31 st day of January, 2023. Sd/- Sd/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 31 st January, 2023. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The Pr. CIT-3, Pune. 4. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “A” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 5. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.