2023 (4) TMI 94 - AT - Income Tax

Validity of order framed u/s 143(3) r.w.s 144B - dismissal of appeal owing to settlement under VsV Act - Deduction of duties paid under protest - HELD THAT - We find that the present appeal filed by the assessee is with respect to the order framed u/s 143(3) r.w.s 144B of the Act. Aggrieved by the aforesaid order of AO assessee had filed appeal before CIT(A). CIT(A) had dismissed the appeal of the assessee by holding that since the appeal has already been disposed of under VSV scheme therefore, it is not maintainable Before us, assessee has demonstrated the factual error in the findings of CIT(A). He has further pointed that the appeal that was disposed under VSV Scheme was with respect to appeal against the penalty order passed u/s 271DA and not the appeal against the order passed u/s 143(3) r.w.s 144B of the Act. In such a situation, since CIT(A) has not decided the issue on merits, we are of the view that the issue needs to be re-adjudicated by CIT(A). We accordingly restore the appeal back to the file of CIT(A) and direct him to decide the appeal in accordance with law. Appeal of the assessee is allowed for statistical purposes.

Issues involved:
The issues involved in the judgment are:
1. Incorrect dismissal of appeal owing to settlement under VsV Act
2. Validity of assessment order
3. Incentive received in the form of credits erroneously treated as revenue receipt
4. Seat replacement cost treated as capital expenditure
5. Others

Incorrect dismissal of appeal owing to settlement under VsV Act:
The appeal was filed against the order passed by the Commissioner of Income Tax (Appeals) relating to Assessment Year 2018-19. The appellant contended that the order dismissing the appeal due to settlement under the Direct Tax Vivad se Vishwas Act, 2020 was erroneous and against the principles of natural justice. The appellant argued that the settlement was for a different appeal and not the one in question. The Tribunal found merit in the appellant's arguments and remitted the matter back to the Commissioner of Income Tax (Appeals) for fresh adjudication.

Validity of assessment order:
The appellant challenged the assessment order dated 19.04.2021, contending that it was passed without following the mandatory procedure prescribed under section 144B of the Income Tax Act, making it illegal and bad in law. The appellant also argued that the assessment proceedings were completed without providing adequate opportunity of being heard, violating the principles of natural justice. The Tribunal agreed with the appellant's contentions and directed the Commissioner of Income Tax (Appeals) to re-adjudicate the issue in accordance with the law.

Incentive received in the form of credits erroneously treated as revenue receipt:
The assessing officer had added an amount of Rs.575,62,67,767 as revenue receipt, which the appellant claimed to be a capital receipt in the form of "supplier credits." The appellant argued that the credits were consideration for the selection of aircraft parts and should not be taxed under the provisions of the Act. The Tribunal noted that the assessing officer had not properly considered the nature of the transaction and directed a re-evaluation of the matter.

Seat replacement cost treated as capital expenditure:
The appellant contested the disallowance of Rs.30,15,04,859 made by the assessing officer for the replacement of seats of the aircraft, arguing that it should not be considered capital expenditure. The Tribunal found merit in the appellant's argument and directed a re-examination of the disallowance.

Others:
The appellant raised additional grounds related to the deduction of duties paid under protest and other issues. The Tribunal did not adjudicate on these grounds as the main issue was remitted back to the Commissioner of Income Tax (Appeals) for fresh adjudication. Ultimately, the appeal of the assessee was allowed for statistical purposes.

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