ITO, WARD-2, KARAIKUDI V. AR NAGAPPAN, ATHANGUDI

MA 97/CHNY/2023

AI Insights

The case involves a Miscellaneous Application filed by the Revenue against the order of the Income Tax Appellate Tribunal (ITAT) in ITA No.87/Chny/2022, which was dated 11.01.2023. The original dispute pertained to the assessment year 2015-16, where the Principal Commissioner of Income Tax (PCIT) had set aside the assessment order and directed the Assessing Officer (AO) to reframe the assessment after necessary enquiries. The ITAT had quashed the PCIT's order under section 263, stating that the AO had made necessary enquiries and accepted the assessee's explanations, thus there was no ground for the PCIT to set aside the assessment. The Revenue's Miscellaneous Application argued that the ITAT had overlooked certain points discussed in the PCIT's order, specifically point 5 regarding the classification of an IPOH account under secured loan as against capital. However, the Tribunal found that the Revenue's application did not disclose any mistake apparent on record but rather sought a review of the ITAT's decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130043 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 26 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 13-07-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-07-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 17-05-2023
• Other Referred Cases: Malabar Industries Co. Ltd vs CIT (2000) 243 ITR 83 SC
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Proportionate interest; Set aside

Judgement Text

Miscellaneous Application No.97/Chny/2023 (in ITA No.87/Chny/2022) िनधा रण वष /Assessment Year: 2015-16 The Income Tax Officer, Ward-2, Karaikudi, (Present Jurisdiction) The ACIT, Non-Corporate Circle, Madurai. v. Mr.AR Nagappan, No.2/47-B, Melur Road, Uthangudi, Madurai-625 107. [PAN: AACHN 8265 J] (अपीलाथ /Appellant) ( यथ /Respondent) Department by : Mr. AR.V.Sreenivasan, Addl.CIT Assessee by : Mr. G.Aniesh, Adv. For Mr.T.Vasudevan, Adv. सुनवाई क तारीख/Date of Hearing : 14.07.2023 घोषणा क तारीख /Date of Pronouncement : 14.07.2023 आदेश / O R D E R PER MANJUNATHA. G, ACCOUNTANT MEMBER: The Revenue has filed present Miscellaneous Application u/s.254(2) of the Income Tax Act, 1961, against the order of the Tribunal in ITA No.87/Chny/2022 dated 11.01.2023, and relevant assessment year 2015- 16. 2. The Revenue has narrated the facts of its case and mistakes stated to be apparent on record from the order of the Tribunal dated 11.01.2023, आयकर अपीलीय अिधकरण, ‘बी’ यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI ी महावीर िसंह, माननीय उपा एवं ी मंजूनाथा.जी, माननीय लेखा सद के सम BEFORE SHRI MAHAVIR SINGH, HON’BLE VICE PRESIDENT AND SHRI MANJUNATHA.G, HON’BLE ACCOUNTANT MEMBER MA No.97/Chny/2023 (in ITA No.87/Chny/2022) :: 2 :: and relevant contents of Miscellaneous Application filed by the Revenue for the AY 2015-16 in ITA No.87/Chny/2022, are reproduced as under: 1. The above appeal had been disposed of by the Hon'ble Tribunal by its order in ITA No. 87/Chny/2022 dated 11.01.2023 for the Assessment Year 2015-16. The respondent, regarding the assessment year 2015-16, beg to present this petition for rectification of a mistake u/s.254(2) of the Income-tax Act, 1961, which is apparent from record, in the said order. 2. The appellant had come on appeal before the Hon'ble Tribunal raising issues in the grounds of appeal against the order of PCIT u/s.263 of the Act in C.No.401/15/PCIT/MDU- l/2019-20 for the assessment year 2015-16 passed on 12.09.2020. 3, The Respondent submits that the PCIT vide order u/s.263 dated 12.09.2020 in para no.5.1 stated that the assessee claimed interest payment of Rs.23,03,009/- and also the assessee had invested in share to the extent of Rs.25,00,669/- and earned dividend income of Rs.92,642/-. However, the AO failed to disallow proportionate interest u/s.37(1) of the Income-tax Act. Also, the PCIT in para no.5 stated that during the course of revision proceedings u/s.263 the assessee claimed that an amount of Rs.99,65,897/-as IPOH account which was classified under the head secured loan as against capital. However, the assessee failed to produce any documentary evidence to substantiate his claim. This was also not verified by the AO during scrutiny and hence the PCIT satisfied that the assessment order passed by the AO is erroneous in so far as it is prejudicial to the interest of the Revenue on the above issues. Accordingly, the PCIT set aside the assessment and directed the AO to reframe the assessment after making the necessary enquires and verifications in accordance with law especially in regard to points discussed in paras 5 and 5.1 of his order. 4. It is further submitted that The ITAT VB' BENCH, CHENNAI in ITA NO.87/Chny/2022 dated 11.01.2023 held that when the AO has caused necessary enquiries on the issue of interest expenditure and accepted the explanation furnished by the assessee, then there is no scope for the PCIT to set aside the assessment order on the very same issue. Further it relied on the decisions of Hon'ble Supreme Court in the case of Malabar Industries Co. Ltd vs CIT (2000) 243 ITR 83 SC, wherein it held that unless the PCIT satisfies himself that the assessment order passed by the AO is erroneous in so far as it is prejudicial to the interest of the revenue, then there is no scope for the PCIT to set aside the assessment. Accordingly, the ITAT quashed the order passed by the PCIT u/s.263. 5. In this regard, it is submitted that PCIT had directed the AO to reframe the assessment after making the necessary enquiries and verifications in accordance with law especially in regard to points discussed in paras 5 and 5.1 of his order. However, the ITAT has quashed the order u/s.263 after discussing only point 5.1, while remaining silent about point 5 i.e no finding has been rendered in regard to the latter. Under these circumstances, it is prayed that the ITAT 'B' Bench ought not to have quashed the order passed by the PCIT u/s.263 since the PCIT satisfied himself that the assessment order passed by the AO is erroneous in so far as it is prejudicial to the interest of the revenue on the issues stated in para 5 & 5.1 of the order. Further, it is submitted that since this is a mistake apparent on the record, the respondent by filing miscellaneous petition u/s.254(2) requests that the Hon'ble ITAT, may recall its order passed in ITA No.87/Chny/2022 dated 11.01.2023 and adjudicate the issues based on the merits of the case. 3. We have heard both the sides and considered relevant contents of Miscellaneous Application filed by the Revenue in light of findings of the MA No.97/Chny/2023 (in ITA No.87/Chny/2022) :: 3 :: Tribunal in their order dated 11.01.2023, and we find that the AO has failed to make out a case of prima facie mistake apparent on record from the order of the Tribunal dated 11.01.2023, which can be rectified u/s.254(2) of the Income Tax Act, 1961. But, what was sought through present appeal filed by the Revenue is to review the decision rendered by the Tribunal under the given facts and circumstances of the case. Therefore, we are of the considered view that there is no mistake in the order of the Tribunal dated 11.01.2023, and thus, Miscellaneous Application filed by the Revenue is dismissed. 4. In the result, the Miscellaneous Application filed by the Revenue is dismissed. Order pronounced on the 14 th day of July, 2023, in Chennai. Sd/- (महावीर िसंह) (MAHAVIR SINGH) उपा / VICE PRESIDENT Sd/- (मंजूनाथा.जी) (MANJUNATHA.G) लेखा सद य/ACCOUNTANT MEMBER चे ई/Chennai, दनांक/Dated: 14 th July, 2023. TLN आदेश क ितिलिप अ ेिषत/Copy to: 1. अपीलाथ /Appellant 3. आयकर आयु /CIT 5. गाड फाईल/GF 2. यथ /Respondent 4. िवभागीय ितिनिध/DR