9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (5) TMI 934 - AT - Income TaxRevision u/s 263 - Disallowance u/s 14A and 36(1)(iii) - Held that - The issues of sections 14A and 36(1)(iii) of the Act were open before the Assessing Officer, who after due verification preferred to make certain disallowances under these sections. Once the disallowances under respective sections have been made, we can safely presume that the provisions of these sections in whole were there before the Assessing Officer i.e. he was seized of all the issues involved in these respective provisions. The learned CIT (Appeals) have the powers of wide amplitude, co-terminus powers with that of the Assessing Officer as well as the power of enhancement. Since these issues were before him also, we cannot say that one of the aspects related to both these issues were not open before him. What has been referred in the Explanation-1 to section 263(1) of the Act is the term matter . The issues relating to sections 14A and 36(1)(iii) of the Act in its entirety consists of matters . However, there may be many aspects of a matter . We cannot say that the issues of sections 14A and 36(1)(iii) of the Act were not the matters before the CIT (Appeals). Though we can say that one of the aspects related to these matters were not there before the Assessing Officer or the CIT (Appeals). In this view, we do not hesitate to hold that the disallowances under sections 14A and 36(1)(iii) of the Act were the matters before the CIT (Appeals). Therefore, the same does not come under the jurisdiction of the Commissioner of Income Tax in provisions of section 263 of the Act. - Decided in favour of assessee
Issues Involved:
1. Jurisdiction of the Commissioner of Income Tax under Section 263 of the Income Tax Act. 2. Disallowance under Section 14A of the Act. 3. Disallowance under Section 36(1)(iii) of the Act. 4. Doctrine of merger of the assessment order with the appellate order. Issue-wise Detailed Analysis: 1. Jurisdiction of the Commissioner of Income Tax under Section 263 of the Income Tax Act: The appeal is directed against the order of the Commissioner of Income Tax (CIT) under Section 263 of the Income Tax Act, 1961, which found the original assessment order erroneous and prejudicial to the interest of the Revenue. The CIT issued a notice under Section 263, questioning the investments made not for business purposes and advances given for capital assets not put to use. The assessee contended that the CIT did not have jurisdiction under Section 263 because the issues raised were already dealt with by the CIT (Appeals), and the assessment order had merged with the appellate order. The tribunal held that the CIT had correctly assumed jurisdiction under Section 263 at the time of issuing the notice. However, once the appellate order was passed, the CIT lost jurisdiction to revise the same issues under Section 263. 2. Disallowance under Section 14A of the Act: The CIT argued that the assessee’s investment in a partnership firm, which earned tax-free income, should have led to a disallowance under Section 14A of the Act. The Assessing Officer (AO) had failed to examine this aspect. The assessee countered that substantial owned funds were available, and no borrowed funds were used for the investment, thus no disallowance under Section 14A was warranted. The tribunal noted that the issue of disallowance under Section 14A was already considered by the AO and the CIT (Appeals), and thus, the CIT could not invoke Section 263 on this ground. 3. Disallowance under Section 36(1)(iii) of the Act: The CIT noted that an advance given for booking an office, which was not put to use during the relevant assessment year, should have led to a disallowance under Section 36(1)(iii) of the Act. The assessee argued that the advance was made from loans secured against FDRs, and any disallowance would be notional. The tribunal observed that the issue of disallowance under Section 36(1)(iii) was also considered by the AO and the CIT (Appeals), and thus, the CIT could not invoke Section 263 on this ground either. 4. Doctrine of Merger of the Assessment Order with the Appellate Order: The tribunal discussed the doctrine of merger, which implies that once an assessment order is appealed, the appellate order supersedes the original assessment order. The tribunal held that the matters related to Sections 14A and 36(1)(iii) were already dealt with by the CIT (Appeals), and thus, the CIT could not revise these matters under Section 263. The tribunal referred to various judicial precedents, including the decision of the Hon'ble Supreme Court in CIT Vs. Amrit Lal Bhogi Lal and the Calcutta High Court in Oil India Ltd. Vs. CIT, to support its conclusion that the CIT did not have the jurisdiction to revise the assessment order on matters already considered in appeal. Conclusion: The tribunal quashed the order of the CIT made under Section 263 of the Act, holding it illegal as it pertained to matters already dealt with by the CIT (Appeals). The appeal of the assessee was allowed, and the order pronounced in the open court on April 25, 2016.
|
