2023 (8) TMI 1434 - AT - Income Tax

Revision u/s 263 - eligibility for claim of deduction u/s 80P(2)(d) - HELD THAT - In so far as this issue with respect eligibility for deduction u/s 80P(2)(d) in our view, the order passed by the Assessing Officer is not erroneous and prejudicial to the interests of the revenue for the reason that firstly, the Assessing Officer had examined this issue during the course of assessment proceedings and secondly, various judicial precedents as highlighted above have also adjudicated on this issue in favour of the assessee including the jurisdictional Gujarat High Court and the jurisdictional Rajkot ITAT. Delay in deposit of PF - we observe that the Principal CIT has correctly observed that the Assessing Officer has not enquired into the evident delay in deposit of PF as is visible from the tax audit report. Though, the counsel for the assessee has submitted that this was owing to a mistake on part of the tax auditors, however, the Assessing Officer should have enquired into this apparent mistake which is coming from the tax audit report filed by the assessee, which clearly mentions that there has been a delay in deposit of PF on part of the assessee. Interest on income tax refunds - We observe that the AO has not enquired into this aspect at all. Though, the counsel for the assessee has submitted that the aforesaid amounts have been offered to tax by the assessee in its return of income, however, in our considered view, the AO should have enquired into this aspect during the course of assessment proceedings. Principal CIT has not erred in facts and in law in holding that the assessment order is erroneous and prejudicial to the interests of the Revenue with respect to the issue of late deposit of PF and enquiry into taxability of interest on tax refund. AO looking into the facts of the instant case, is directed to carry out the necessary enquiries and the assessee may also filed necessary documents in support of its aforesaid claim. Appeal of the assessee is partly allowed.

Summary

Issues involved:
The appeal against the order passed by the Ld. Principal Commissioner of Income Tax(Appeals) for Assessment Year 2017-18.

Grounds of Appeal:
The appellant challenged the reopening of assessment under Section 263, disallowance of claim under Section 80P(2)(d), late payment of PF dues, and non-disclosure of interest on income tax refund.

Reopening of Assessment:
The Principal CIT initiated proceedings under Section 263 based on interest income received from a cooperative bank, late PF deposit, and undisclosed interest on tax refund. The Assessing Officer had not taxed the interest income, leading to the order being set aside as erroneous and prejudicial to revenue. The appellant argued that the issue was duly examined during assessment, citing legal precedents supporting deduction under Section 80P(2).

Interest Income and PF Dues:
The appellant contended that interest from cooperative banks is eligible for deduction under Section 80P(2) based on legal precedents. The late PF deposit was attributed to a mistake in the Tax Audit Report, and the appellant provided proof of timely payment. The Assessing Officer's failure to investigate these issues was highlighted.

Interest on Tax Refund:
The appellant claimed that the interest on tax refunds was disclosed in the return of income and offered for taxation. However, the Assessing Officer did not inquire into this aspect. The Principal CIT's decision was upheld, directing further inquiries by the Assessing Officer.

Conclusion:
The ITAT upheld the appellant's arguments regarding eligibility for deduction under Section 80P(2)(d) based on legal precedents. However, the Assessing Officer was directed to investigate the late PF deposit and taxability of interest on tax refunds. The appeal was partly allowed, emphasizing the need for thorough examination of all relevant issues.