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TMI Blog2017 (12) TMI 806X X X X Extracts X X X X X X X X Extracts X X X X ..... al to the interest of the revenue, unless the view taken by the A.O. is unsustainable in law. We are of the view that the assessment order passed by the A.O. is neither erroneous nor prejudicial to the interests of the revenue. Therefore, we set aside the order passed by the CIT u/s 263 and restore the assessment order passed by the A.O. u/s 143(3) of the Act. - Decided in favour of assessee - ITA No. 34/Coch/2017 - - - Dated:- 14-12-2017 - Shri George George K, JM And Shri Manjunatha G, AM Appellant by : Sri. V.Sathyanarayanan, CA Respondent by : Sri. A.Dhanaraj, Sr.DR ORDER Per Manjunatha G, AM This appeal filed by the assessee is directed against the order of the Principal Commissioner of Income-tax-I, Cochin, passed u/s 263 of the Income-tax Act, 1961 for the assessment year 2012-2013. 2. The assessee has raised the following grounds of appeal:- 1. The Learned Commissioner of Income Tax (CIT) erred in reopening u/s 263 of the IT Act, the assessment completed vide proceedings of Sec.143(3) of the IT Act after due verification of relevant facts and law. There is no error which is prejudicial to the interest of revenue which requires revision u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicial to the interest of the revenue. Accordingly, a show cause notice was issued asking the assessee to explain as to why the assessment order passed by the A.O. shall not be revised in terms of section 263 of the Act. 4. In response to the show cause notice, the assessee submitted that the assessment order passed by the A.O. is neither erroneous nor prejudicial to the interest of the revenue, as the A.O. has considered the issue of belated payment of employees PF at the time of original assessment, which is evident from the fact that the A.O. issued show cause notice dated 13.01.2015 for which the assessee has filed required details by letter dated 16.02.2015. The A.O. after considering the explanation of the assessee has chosen to accept the explanation of the assessee with regard to PF. Therefore, there is no reason to term assessment order passed by the A.O. as erroneous insofar as it is prejudicial to the interest of the revenue. The CIT after considering the relevant submissions of the assessee and also analyzing the provisions of section 2(24)(x) r.w.s. 36(1)(va), observed that the delay of remittance of employees contribution beyond the due date prescribed under resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble Supreme Court decision in the case of ACIT v. Victory Aqua Farm Limited [(2015) 379 ITR 335 (SC)], the law laid down by the earlier decision of the Court cannot be overturned by the subsequent decision of the Court on an issue that is pari material, would not be binding if such later decision is not decided by a Larger Full Bench as against the decision of the Division Bench. The AR further submitted that the issue of allowability of deduction towards belated payment of PF and ESI under the respective Acts, but before due dates specified u/s 139(1) has been considered by the Hon ble Supreme Court in the case of CIT v. Rajasthan State Beverages Corporation Ltd. [(2017) 250 Taxmann 16 (SC)], wherein the Hon ble Apex Court has rejected the SLP against the order of the High Court of Rajasthan holding that the amount claimed on payment of PF and ESI have been deposited or not before the filing of return, should not be disallowed u/s 43B or u/s 36(1)(v) of the Income-tax Act, 1961. 7. The learned Departmental Representative, on the other hand, strongly supported the order of the CIT. 8. We have heard both the parties and perused the material available on record and gone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f belated payment of employees contribution to PF has been examined by the A.O. in assessment proceedings by issuing a specific questionnaire dated 13.01.2015 for which the assessee has filed a letter dated 16.02.2015 explaining the reason for delay in payment of PF. The assessee has also explained in the light of the decision of the Hon ble Kerala High Court in the case of Kerala State Warehousing Corporation Limited (supra) and argued that the employees contribution remitted after due date prescribed under respective Acts, but before the date of filing of return of income as per section 139(1) of the Incometax Act, 1961, cannot be disallowed in view of the amended provisions of section 43B of the I.T.Act. The A.O. after considering the explanation of the assessee has taken one of the possible views with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue, unless the view taken by the A.O. is unsustainable in law. The question of deductibility of belated payment of PF has been considered by the jurisdictional High Court in two cases; in one case, the jurisdictional High Court has taken a view that belated payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interest of revenue. 10. Coming to the case laws relied upon by the assessee, the assessee has relied upon the decision of the Hon ble Karnataka High Court in the case of CIT v. Saravana Developers [(2016) 68 taxmann.com 148 (Kar.)], wherein the Hon ble Court observed that where the Assessing Officer found to have applied his mind before accepting valuation declared by the assessee in work-in-progress report and the Commissioner failed to satisfy that valuation report accepted was erroneous, the order passed u/s 263 by the Commissioner setting aside the assessment was bad in law. The relevant portion of the order is extracted below:- The Commissioner has invoked the provisions of section 263 only for the reason that the Assessing Officer has not spelt out in his order regarding the verification of the work-in-progress report and the reasons for accepting the valuation of work-inprogress report declared by the assessee. [Para 12] It is also noticed that the Tribunal has called for the records of assessment of the relevant assessment year and examined the various details, questionnaire called by the Assessing Officer along with notice under section 142(1) and additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business of real estate, the net profit would be 8 per cent as accepted by the department. In the instant case, the profit declared by the assessee works out to more than 8 per cent that is normally adopted and accepted by the department. However, in the computation of work-in-progress made by the Appellate Commissioner, the profit margin works out to more than 31.8 per cent which is practicably not acceptable. Accordingly, on this count also, the order passed by the Commissioner computing the margin at more than 31 per cent which is not normally workable in the business of real estate could not be accepted. This view is also supported by the Division Bench judgment of this Court in Dr. L. Narendra Prasad's case (supra). [Para 20] The Tribunal having considered the material placed before it, rightly set aside the order passed under section 263, as not sustainable. Accordingly, the assessee's appeal is allowed as the consequential order passed under section 143(3), read with section 263 does not survive for consideration as having become infructuous. No exception can be found with the well reasoned order passed by the Tribunal. [Para 21] 11. The Hon ble Bomba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the ITO. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the ITO has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the Commissioner the order in question is prejudicial to the interests of the revenue. But that by itself will not be enough to vest the Commissioner with the power of suo motu revision because the first requirement, viz., that the order is erroneous, is absent. Similarly, if an order is erroneous but not prejudicial to the interests of the revenue, then also the power of suo motu revision cannot be exerci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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