2013 (7) TMI 84 - AT - Income Tax

Reframing of assessment - assessment in pursuance of direction by CIT in revision u/s 263 - Earlier ITAT had set aside the order and remanded the matter back to AO - Held that - in so far as the first two issues relating to disallowance under S.40(a)(ia) and interest not offered to tax are concerned, the entire additions made by the Assessing Officer in pursuance of the specific direction of the Commissioner of Income-tax have no legs to stand, and as such they have become redundant. The disallowance made u/s. 40(a)(ia) by the Assessing Officer in the consequential assessment order is also beyond the scope of the directions given by the CIT(A) under S.263, as he has only directed the Assessing Officer to levy interest under S.201(1A) for non-deduction of tax at source on interest payment of Rs.9,71,452. Consequently the relief granted by the CIT(A) cannot be found fault with. - Decided against the assessee.

Summary

Issues Involved:
Appeal by Revenue against CIT(A) order for assessment year 2006-07.

Detailed Analysis:

1. Revenue's Appeal:
The Revenue's appeal challenged the CIT(A)'s decision to allow relief to the assessee based on information filed by the assessee without giving an opportunity to verify the additional evidence. The appeal also contested the CIT(A)'s jurisdiction to override the directions of CIT IV under Section 263 of the IT Act. Additionally, the appeal raised concerns about non-compliance with show cause notices leading to additions made under Section 144 of the IT Act.

2. Background and Assessment:
The assessee, engaged in power generation and distribution, filed a return for the assessment year 2006-07 with NIL income. The Assessing Officer initially accepted the returned income but later, the Commissioner of Income-tax IV deemed the assessment erroneous under Section 263 and directed re-assessment. The directions included additions for interest not offered to tax, excess claim of expenditure, and levying interest for non-deduction of tax on certain payments.

3. Assessing Officer's Additions:
In compliance with the Commissioner's directions, the Assessing Officer made additions totaling Rs. 1,99,04,730, including disallowance under Section 40(a)(ia), interest not offered to tax, and excess claim of expenditure.

4. CIT(A) Decision and Appeal Outcome:
The CIT(A) partially upheld the additions but deleted some, leading to the Revenue's appeal. However, the ITAT Hyderabad, in a previous order, had already accepted the assessee's contentions on certain issues related to interest payments and modified the Commissioner's directions for excess expenditure. Consequently, the ITAT dismissed the Revenue's appeal, finding no fault with the CIT(A)'s relief granted to the assessee.

5. Conclusion:
The ITAT Hyderabad dismissed the Revenue's appeal and the assessee's cross-objection as the latter was not pressed during the hearing. The entire matter was concluded on 27.6.2013, with both the Revenue's appeal and the assessee's cross-objection being dismissed.