2024 (6) TMI 1023 - AT - Income Tax

Validity of Revision u/s 263 - Alleged non-consideration of assessee's submissions by PCIT - Ex-parte dismissal of appeal without providing a proper opportunity of being heard . - whether the PCIT, vide impugned order, did justice in pursuance of the Tribunal s order, 2022 (9) TMI 1596 - ITAT DELHI - HELD THAT - PCIT, who was required to do needful after rectifying the computational error pointed out in the above-mentioned Tribunal s order, has given sufficient opportunities of being heard to the appellant/assessee as detailed in impugned order but the same were not availed by the appellant/assessee. PCIT was not required to review the original order dated 28.03.2021 but to act as per the Tribunal s order (supra). Since the appellant/assessee did not bring any material on the record during the set-aside proceedings to contradict the finding of the PCIT and to demonstrate any computational error in the original order passed under section 263 of the Act, therefore, it is held that the PCIT, vide impugned order, has rightly declined to interfere/rectify/revise with any of the findings mentioned in the order dated 28.03.2021 passed under section 263 of the Act. Thus, we are of the considered opinion that the impugned order was not passed ex-parte as mentioned in one of the grounds of appeal. Accordingly, in view of the above, grounds of appeal, numbered 1 to 4 are dismissed herewith. Disallow that expenditure or work out income relatable to such expenditure, on accrual basis, which had not been claimed in the Profit Loss account - We are of the considered opinion that the PCIT should have held one of the Tables mentioned as authentic as there is no dispute on aggregate expenditure mentioned in these tables and claimed in the Profit Loss account. In case of dispute about the apportionment of expenses at micro levels (amongst projects), the same would have been sorted out with the help of original bills vouchers of expenditure. Therefore, in the interest of justice and considering all the afore-stated observations finding in the order 2022 (9) TMI 1596 - ITAT DELHI we are of the considered opinion that the appellant/assessee deserves reasonable opportunity of being heard to make shortcomings. In view thereof, without offering any comment on merit of the case we deem it fit to set aside the impugned order and remit the issue of the computational mistake/error referred back to the file of the PCIT to decide the case afresh.

Summary

Issues Involved:

1. Legality and validity of the order passed under section 263 of the Income Tax Act, 1961.
2. Procedural fairness and opportunity to be heard.
3. Assumption of jurisdiction by the Principal Commissioner of Income Tax (PCIT) under section 263.
4. Computation and apportionment of expenses among different projects.
5. Alleged computational mistakes in the assessment order.

Issue-Wise Detailed Analysis:

1. Legality and Validity of the Order under Section 263:

The appellant/assessee challenged the order passed under section 263 of the Income Tax Act, 1961 by the PCIT, claiming it was "bad in law" and against the "facts and circumstances of the case." The Tribunal noted that the original order dated 28.03.2021 passed under section 263 was remanded back by the ITAT for rectification of computational errors. Since the appellant/assessee did not provide any material to contradict the findings of the PCIT during the set-aside proceedings, the Tribunal upheld the PCIT's decision, confirming that the order was in accordance with the law.

2. Procedural Fairness and Opportunity to be Heard:

The appellant/assessee argued that the PCIT dismissed the appeal ex-parte without providing a proper opportunity to be heard. The Tribunal found that the PCIT had given "sufficient opportunities of being heard" to the appellant/assessee, as detailed in paragraphs 5 and 6 of the impugned order. Therefore, the Tribunal concluded that the impugned order was not passed ex-parte and dismissed the related grounds of appeal.

3. Assumption of Jurisdiction by PCIT under Section 263:

The appellant/assessee contested the PCIT's assumption of jurisdiction under section 263, arguing that the Assessing Officer (AO) had already conducted detailed inquiries and verifications. The Tribunal observed that the PCIT had validly assumed jurisdiction under section 263, as the original order was found legally valid by the Tribunal in its order dated 22.09.2022. Consequently, the Tribunal dismissed the grounds of appeal questioning the legality of the original order passed under section 263.

4. Computation and Apportionment of Expenses:

The appellant/assessee contended that the PCIT erred in directing an addition of Rs. 94,52,860 due to a clerical mistake and incorrect apportionment of expenses among different projects. The Tribunal noted that there was no dispute on the aggregate quantum of expenses under the heads "material cost" and "labour charges." However, the dispute was regarding the apportionment of these expenses among the projects Royal Home and Ellora Infratech. The Tribunal found merit in the appellant/assessee's argument that the PCIT's figures led to an aggregate expenditure exceeding the claimed expenses by Rs. 1,32,34,888. The Tribunal held that the PCIT should have resolved the dispute using original bills and vouchers of expenditure.

5. Alleged Computational Mistakes:

The appellant/assessee argued that the PCIT had made computational mistakes in the assessment order. The Tribunal agreed that the PCIT should have consistently used figures from one table to avoid anomalies. The Tribunal set aside the impugned order and remitted the issue of computational mistakes back to the PCIT for fresh consideration, ensuring reasonable opportunities of being heard to the appellant/assessee.

Conclusion:

The Tribunal dismissed the grounds of appeal related to the legality of the order under section 263 and procedural fairness. However, it found merit in the appellant/assessee's arguments regarding the computation and apportionment of expenses. The Tribunal set aside the impugned order and remitted the issue back to the PCIT for fresh consideration, ensuring the appellant/assessee is given reasonable opportunities to address the computational mistakes. The appeal was partly allowed.