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Issues Involved:
1. Jurisdiction of CIT(A) to hear the appeal against the order under section 143(3)/263. 2. Deletion of addition of Rs. 2,00,000 on account of interest disallowed. 3. Relief of Rs. 4,00,000 allowed by CIT(A) out of disallowance of transportation charges and tank lorry operational expenses of Rs. 5,00,000. Issue-wise Detailed Analysis: 1. Jurisdiction of CIT(A) to hear the appeal against the order under section 143(3)/263: The revenue contended that the CIT(A) erred in admitting the appeal against the order under section 143(3)/263, arguing that the order was subject to appeal before the ITAT as per section 253(1)(c) and not before the CIT(A) under section 246A. However, the Tribunal concluded that if the assessee is aggrieved by any portion of the fresh assessment order passed under section 143(3)/263, it is appealable before the CIT(A) in terms of section 246A. Thus, there was no error in the CIT(A)'s decision to hear the appeal, and the ground taken by the revenue was rejected. 2. Deletion of addition of Rs. 2,00,000 on account of interest disallowed: The revenue argued that since the CIT set aside the whole assessment, the Assessing Officer (AO) was justified in disallowing Rs. 2,00,000 out of interest and bank charges of Rs. 2,11,058, claiming that such interest was paid in a personal capacity and not for business purposes. The CIT(A) deleted the disallowance, stating that under section 263, there was no direction to the AO to make such an enquiry. The Tribunal upheld the CIT(A)'s decision, noting that the CIT's order under section 263 directed the AO to make a fresh assessment after conducting proper enquiry and investigation, but did not specifically direct the AO to disallow the interest. The Tribunal emphasized that the CIT cannot set aside the order or part of the order which is neither erroneous nor prejudicial to the interest of the revenue. Since the disallowance of interest was not part of the original assessment, the AO exceeded his jurisdiction, and thus, the CIT(A)'s deletion of the disallowance was upheld. 3. Relief of Rs. 4,00,000 allowed by CIT(A) out of disallowance of transportation charges and tank lorry operational expenses of Rs. 5,00,000: The revenue contended that the CIT(A) erred in reducing the disallowance to Rs. 1,00,000 out of the Rs. 5,00,000 disallowed by the AO on account of unverifiable transportation charges and tank lorry operational expenses. The Tribunal noted that the original assessment included a similar disallowance of Rs. 5,00,000, which was not disputed by the assessee either in appeal or in revision. Since this disallowance was not part of the CIT's order under section 263, it had attained finality. Therefore, the CIT(A) erred in adjudicating this issue and allowing relief to the assessee. The Tribunal restored the addition of Rs. 5,00,000 made by the AO, allowing the revenue's ground. Conclusion: The appeal was partly allowed, with the Tribunal rejecting the revenue's contention on the jurisdiction of CIT(A) and the deletion of interest disallowance, but restoring the disallowance of transportation charges and tank lorry operational expenses.
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