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2022 (6) TMI 932 - AT - Income TaxRevision u/s 263 by CIT - whether the issues raised by the Pr.CIT were in fact issues which could have given rise to an order u/s.263 ? - HELD THAT - A perusal of the order of the ld. Pr.CIT shows that the show cause notice issued u/s.263 of the Act has been issues only on 1st March, 2019. Admittedly, the assessee has responded to the show cause notice though on 26.03.2019. In the said reply, the assessee has stated that he would submit the details of the bills on 29.03.2019, which is evident from the extract as made by the Pr.CIT. What happened to that bills is not coming out of the order of the Pr.CIT. The reply filed by the assessee has also admittedly not been looked into nor considered by the ld. Pr.CIT. A perusal of para 12 of the order of the Pr.CIT, shows that he has practically in verbatim extracted the issues from the show cause notice Then he says that the AO has not examined and verified many of the relevant issues either factually or from the angle of relevant provisions of the Act before allowing such claims and due to paucity of time, it is not possible to probe further at this stage. A perusal of the consequential order clearly shows that the additions which have been proposed by the Pr.CIT, more so the issues that have been raised by the Pr.CIT have not resulted into any of the addition in the assessment. Obviously, if the Pr.CIT had done cursory verification of the details that has been produced by the assessee in the course of proceedings u/s.263 of the Act, maybe, the Pr.CIT himself would have dropped the proceedings. However, having invoking the powers u/s.263 of the Act, no addition on the said issues has been made. The additions have been made on other issues; clearly shows that the issues raised in the proceedings u/s.263 of the Act are unsustainable and liable to be quashed. We are not going into merits of the additions made in the consequential order. Only on the ground that no specific addition has been made in respect of specific issues which have been raised in the proceedings u/s.263 of the Act, therefore, the order passed u/s.263 of the Act is hereby quashed. - Decided in favour of assessee.
Issues Involved:
1. Condonation of Delay 2. Validity of the Order Passed u/s.263 of the Act Issue-wise Detailed Analysis: 1. Condonation of Delay: The appeal by the assessee was barred by 686 days. The assessee filed an application for condonation of delay, citing unavoidable circumstances due to the Covid-19 pandemic, including forced shutdowns, lockdowns, and travel restrictions, which hindered consultation and preparation of the appeal. The assessee referenced the Hon’ble Supreme Court’s decision in Suo Moto Writ (Civil) No.3 of 2020, which extended the period(s) of limitation due to the pandemic. The Tribunal found the reasons satisfactory, emphasizing that substantial justice should prevail over technicality. Consequently, the delay was condoned, and the appeal was admitted for hearing. 2. Validity of the Order Passed u/s.263 of the Act: The assessee challenged the order passed u/s.263 of the Act by the Pr.CIT, which set aside the original assessment order for the limited purpose of conducting further enquiry/verification on five specific issues: (a) Overstatement of liability and assets in the balance sheet due to cheques issued but not encashed. (b) Non-receipt of a statement from Bank of Baroda, leading to unconfirmed and unreconciled balances. (c) Low net profit rate of 0.17% on total receipts of Rs.43,38,39,099/-. (d) Huge expenditure of Rs.2,26,06,601/- under "Transporting and Discounting Charges" not booked in the preceding year. (e) Contradiction between the auditor’s note on non-depreciation of a shopping mall and the assessee’s claim of its operation commencement. The Tribunal found that the Pr.CIT had not conducted any verification but had passed the responsibility back to the AO. The Tribunal noted that the consequential order did not result in any specific addition on the issues raised by the Pr.CIT. The Tribunal highlighted that if the Pr.CIT had verified the details provided by the assessee during the proceedings, the proceedings u/s.263 might have been dropped. The Tribunal concluded that the issues raised in the proceedings u/s.263 were unsustainable and quashed the order passed u/s.263 of the Act. Conclusion: The Tribunal condoned the delay in filing the appeal due to the Covid-19 pandemic and found that the Pr.CIT’s order u/s.263 was unsustainable as no specific additions were made on the issues raised. The appeal of the assessee was allowed, and the order passed u/s.263 of the Act was quashed.
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