2019 (9) TMI 1628 - AT - Income Tax

Revision u/s 263 by CIT - unexplained cash credit u/s 68 interest disallowance treating it to be bogus and unexplained expenditure u/s 69C - HELD THAT - It is noted that the issue involved in this case is no longer res integra in light of the decision of the Hon ble Calcutta High Court in the case of CIT Vs Atha Mines Limited 2018 (12) TMI 1931 - CALCUTTA HIGH COURT . In the decided case the Hon ble High Court upheld the decision of this Tribunal allowing the claim of the assessee for set off of business loss of the current year against the income assessee u/s 68 in the same year. In this regard we may also gainfully refer to the decision of this Tribunal in the case of DCIT vs M/s Atibir Hitech Pvt Ltd 2019 (3) TMI 1952 - ITAT KOLKATA As per the CBDT Circular No. 11/2019 we find that the order of AO on this issue cannot be termed as erroneous as well as prejudicial to the revenue. Therefore we find that the show cause issued by the ld. Pr. CIT and the consequent order passed u/s 263 is legally unsustainable for want of jurisdiction and accordingly the same is hereby cancelled. - Decided in favour of assessee.

Summary

Issues:
Appeal against action of Pr. CIT under Section 263 of the Income Tax Act, 1961.

Analysis:
1. The appellant challenged the invocation of revisional jurisdiction by the Pr. CIT under Section 263, citing different reasons in the show cause notice and final order. The appellant contended that the AO's order was erroneously held prejudicial due to wrong set-off adjustments against current year's business loss.

2. The Pr. CIT invoked Section 263 based on the AO's assessment, making additions and adjustments against the appellant's declared loss. The Pr. CIT referred to the Finance Act, 2016, effective from 01.04.2017, to deny set-off benefits. The appellant relied on judicial precedents and Circular No. 11/2019 to support their claim for set-off against income assessed under Section 68, 69 & 69C.

3. The Tribunal considered the legal issue of set-off of business loss against income assessed under Sections 68, 69 & 69C. Citing the decision of the Hon'ble Calcutta High Court and other Tribunal rulings, the Tribunal upheld the appellant's claim for set-off. The Tribunal also referenced Circular No. 11/2019, supporting the appellant's position.

4. The Tribunal found the Pr. CIT's order unsustainable and lacking jurisdiction, thus cancelling the show cause notice and order under Section 263. The Tribunal allowed the appellant's appeal, emphasizing the legality of claiming set-off of losses against income assessed under Sections 68, 69 & 69C.

5. The decision was pronounced on 6th September 2019, in favor of the appellant, highlighting the importance of legal interpretations, judicial precedents, and circulars in determining the validity of tax assessments and revisions.