2024 (1) TMI 60 - AT - Income Tax

Revision u/s 263 - assessment order was for limited scrutiny assessment and the PCIT now want to enlarge the scope of limited scrutiny by setting aside assessment order - deduction from income from other sources u/s 57 - maintenance charges collected by the assessee are assessed as income from other sources whether the expenses claimed by the assessee are allowable u/s 57? - HELD THAT -Assessee drew our attention to all the replies filed by the assessee before the Assessing Officer. Further, assessee drew our attention to notice issued u/s. 142(1) wherein the Assessing Officer had required the assessee to explain only the large deduction claimed u/s. 57 of the Act. Even the assessee has replied complete queries regarding the claim of deduction u/s. 57 of the Act and specifically it is a simplicater case of limited scrutiny assessment. As urged by the ld. Counsel that this issue is now squarely covered by the decision of Hon ble Madras High Court in the case of CIT vs. Smt. Padmavathi, 2020 (10) TMI 425 - MADRAS HIGH COURT .On this short premise, the revision order will go. Accordingly, we quash the revision order passed by PCIT and allow the appeal of assessee.

Summary

Issues Involved:
The judgment involves the issue of revision order passed by the Principal Commissioner of Income Tax (PCIT) under section 263 of the Income Tax Act, 1961, challenging a limited scrutiny assessment order for the assessment year 2018-19.

Revision Order by PCIT:
The PCIT sought to enlarge the scope of limited scrutiny assessment by setting aside the assessment order due to concerns regarding the treatment of maintenance charges collected from tenants and the claimed expenses by the assessee under the head "income from other sources."

Assessee's Explanation:
The assessee maintained that the maintenance charges were collected separately from tenants for services related to maintenance of the property, distinct from lease rentals. The assessee argued that the maintenance charges were correctly treated as income from other sources, supported by detailed explanations and documentation provided during the assessment process.

PCIT's Findings:
The PCIT found the assessment order erroneous and prejudicial to the revenue's interest as the Assessing Officer failed to adequately examine the nature of services provided and the claimed expenses. Consequently, the PCIT directed the Assessing Officer to redo the assessment.

Legal Proceedings:
During the legal proceedings, the counsel for the assessee highlighted the detailed responses provided to the Assessing Officer during the limited scrutiny assessment, emphasizing that the issue was specifically related to deductions from income from other sources, as per the assessment order.

Judicial Precedent:
The counsel for the assessee invoked a decision by the Hon'ble Madras High Court in a similar case, emphasizing the importance of thorough scrutiny in limited assessment cases. The court's ruling supported the assessee's position, leading to the quashing of the revision order and allowing the appeal.

Conclusion:
Ultimately, the appeal filed by the assessee was allowed, and the revision order passed by the PCIT was quashed. The judgment was pronounced on December 29, 2023, in Chennai.