2023 (7) TMI 1437 - AT - Income Tax

Revision u/s 263 - Assessment of income u/s 44AE - case was originally selected for limited scrutiny - HELD THAT - Income disclosed by the assessee by duly accounting for the receipts from the aforesaid vehicles in his regular books of accounts, as against determining the income from plying of the same on a presumptive basis u/s. 44AE can by no means be held to be prejudicial to the interest of the revenue. We, thus, in terms of our aforesaid deliberations are of the considered view that as the assessee had duly accounted for his income from the business of running a stone crusher as per his regular books of accounts, which is found to be higher than the deemed income worked out as per the presumptive mechanism set out in Sec. 44AD of the Act, therefore, the order passed by the A.O allowing the assessee s claim for depreciation cannot be held as erroneous. We are also of the view that accounting of the aforesaid income by the assessee as per his regular books of accounts as against that determined on a presumptive basis u/s. 44AE of the Act is also in no way prejudicial to the interest of the revenue. We, thus, in terms of our aforesaid deliberations, are unable to concur with the order passed by the Pr. CIT u/s. 263, wherein he had set-aside the order passed by the A.O u/s. 143(3) holding the same as erroneous in so far it was prejudicial to the interest of the revenue. Accordingly, we herein setaside the order passed by the Pr. CIT u/s. 263 and restore the order of the A.O u/s. 143(3) - Appeal of the assessee is allowed.

Summary

Issues:
1. Delay in filing the appeal
2. Jurisdiction of the Commissioner under Section 263 of the Income Tax Act
3. Assessment of income under Section 44AE of the Act
4. Prejudice to the interest of revenue

Analysis:

1. Delay in filing the appeal:
The appeal involved a delay of 424 days, with the assessee providing reasons for the delay. The Authorized Representative (AR) explained that a significant portion of the delay was due to a Supreme Court order and subsequent modifications. The remaining delay was attributed to the lapse of the previous counsel. The AR argued that the delay was due to genuine reasons and should be condoned, a stance not opposed by the Departmental Representative (DR). The Tribunal, after considering the reasons, condoned the delay of 45 days as it was found to be for bona fide reasons.

2. Jurisdiction of the Commissioner under Section 263:
The controversy centered on the Commissioner's order under Section 263, setting aside the assessment order by the Assessing Officer (AO) for fresh inquiry. The Commissioner's contention was that the AO failed to determine the income of the assessee under Section 44AE of the Act. However, the Tribunal observed that the case was selected for limited scrutiny, and the AO's jurisdiction was confined to specific issues for which the case was picked up. Referring to relevant instructions, the Tribunal held that the Commissioner could not exceed the scope of issues for limited scrutiny. Citing precedents, the Tribunal concluded that the Commissioner had overstepped his jurisdiction under Section 263.

3. Assessment of income under Section 44AE of the Act:
The Commissioner's order questioned the AO's failure to determine the income of the assessee under Section 44AE, considering the ownership of two vehicles. The Tribunal analyzed the income disclosure by the assessee from the business of running a stone crusher, finding the claim for depreciation to be justified. It was noted that the vehicles were used in the business, and the income was accounted for in the regular books of accounts. The Tribunal concluded that the AO's decision to allow the depreciation claim was correct, and the income disclosure was not prejudicial to the revenue.

4. Prejudice to the interest of revenue:
Based on the assessment of the income and adherence to accounting norms, the Tribunal disagreed with the Commissioner's view that the AO's order was erroneous and prejudicial to revenue. Consequently, the Tribunal set aside the Commissioner's order under Section 263 and restored the AO's order under Section 143(3) of the Act. The appeal of the assessee was allowed based on the Tribunal's deliberations.

In conclusion, the Tribunal's detailed analysis of the issues surrounding the delay in filing the appeal, the jurisdiction of the Commissioner under Section 263, the assessment of income under Section 44AE of the Act, and the prejudice to the interest of revenue led to the decision to allow the assessee's appeal and restore the Assessing Officer's order.