2022 (4) TMI 538 - AT - Income Tax

Revision u/s 263 by CIT - Low profit before interest and tax (PBIT) shown AND Low net profit or loss shown from large gross receipt - HELD THAT - A perusal of the relevant paras of the impugned order reveals that the ld. PCIT has not pointed out any error, discrepancy or otherwise any incriminating material justifying his exercise of revision jurisdiction u/s 263 relating to the aforesaid two issues. The only issue raised by the ld. PCIT in para 6 of the impugned order is relating to non-deduction of TDS by the assessee on carriage inward loading and unloading expenses, however, while setting aside the assessment order, PCIT has not directed to the AO to examine the aforesaid issue of non-deduction of TDS. He has directed the AO to examine the aforesaid two issues relating to low profit before interest and tax shown and low net profit or loss shown from large gross receipts. PCIT himself has not given any finding relating to the aforesaid issues. PCIT must have some basis to form the opinion that the order of the Assessing Officer was erroneous and prejudicial to the interest of the Revenue and that basis should have been pointed out in the impugned order by the ld. PCIT. The assessment records were available to the ld. PCIT but he failed to point out any defect or discrepancy in the accounts of the assessee. In view of this, we do not find any justification on the part of the ld. PCIT in passing the impugned order u/s 263 of the Act and the same is therefore, quashed. - Appeal of assessee allowed.

Summary

Issues:
Appeal against PCIT order invoking jurisdiction u/s 263 of the Income Tax Act - Low profit before interest and tax shown - Low net profit or loss shown from large gross receipt.

Analysis:
The appeal was filed against the Principal Commissioner of Income Tax-5, Kolkata's order invoking jurisdiction under section 263 of the Income Tax Act. The PCIT set aside the assessment order dated 06.12.2017, directing the Assessing Officer to examine two issues: low profit before interest and tax shown, and low net profit or loss shown from large gross receipts. Despite notice, no one appeared on behalf of the assessee during the appeal proceedings. The Judicial Member noted that the PCIT's order lacked clarity regarding the errors pointed out in the assessment order related to the specified issues. The PCIT did not provide any incriminating material justifying the exercise of revision jurisdiction under section 263. While the PCIT raised a non-deduction of TDS issue, the direction to the Assessing Officer was to examine the two issues of low profit before interest and tax and low net profit or loss from large gross receipts. The PCIT did not provide any findings on these issues, and the Judicial Member found the PCIT's order to be vague and lacking a basis for deeming the AO's order erroneous. Consequently, the Judicial Member quashed the PCIT's order under section 263.

In conclusion, the appeal of the assessee was allowed, and the order passed by the PCIT under section 263 was quashed. The decision was made on 28th March 2022 by the Appellate Tribunal ITAT Kolkata, with Shri Sanjay Garg as the Judicial Member.