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TMI Blog2022 (11) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... of income filed on 30.03.2018, which is evident from the fact that the AO has considered current year loss in Column-11 of computation sheet as per revised return filed by the assessee. Therefore, assumption of jurisdiction by the ld. PCIT on this issue is fails. Disallowance of 'prior period expenses' - Although, the assessee has claimed deduction for 'prior period expenses' in the P L A/c, but did not made any disallowance in statement of total income, even though, said expenses is inadmissible under the law. The AO has failed to consider the disallowance of 'prior period expenses' while completing the assessment order u/s. 143(3) of the Act. Although, the Ld. Counsel for the assessee submitted that the AO h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the AO has already enquired into the prior period expenses and accepted the claim after due enquiry. 4. The AO having seen the details placed before him during the assessment proceedings and having taken one possible view, the CIT can't impose his view over that of the AO. 5. In any event, the CIT went wrong in setting aside the entire order of assessment. 3. The brief facts of the case are that the assessee company filed its return of income for the AY 2017-18 on 03.11.2017 admitting a loss of Rs. 6,01,57,245/- and said return has been revised on 30.03.2018 admitting a loss of Rs. 4,26,16,029/-. The case was picked up for scrutiny and the assessment has been completed u/s. 143(3) of the Act, on 26.12.2019, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest of the Revenue, because, the AO has considered two issues questioned in the revision proceedings while completing the assessment order u/s. 143(3) of the Act. Therefore, assumption of jurisdiction u/s. 263 of the Act, is incorrect. The PCIT after considering relevant submissions of the assessee opined that assessment order passed by the AO is erroneous in so far as it is prejudicial to the interest of the Revenue on the issue of erroneous consideration loss declared in original return of income filed by the assessee, even though, the assessee has filed revised return and declared loss, which is less than the amount of loss declared in original return. Further, the assessee has claimed 'prior period expenses', however, not adde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as per revised return filed by the assessee and thus, it cannot be said that assessment order passed by the AO is erroneous. The assessment order passed by the AO is not prejudicial to the interest of the Revenue on both the issues, because, once the assessment order is not erroneous, then it cannot be said that there is prejudicial to the interest of the Revenue, even otherwise, the AO has correctly taken loss as per revised return and computed tax liability. As regards, 'prior period expenses', the assessee has filed all details and the AO after considering relevant submissions of the assessee has rightly allowed the claim of the assessee, and thus, assumption of jurisdiction by the ld. PCIT is incorrect. 6. The ld. CIT-DR ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be erroneous and (ii) further, it should be prejudicial to the interest of the Revenue. The various High Courts/Tribunals have taken a consistent view on this legal position and held that unless twin conditions embedded u/s. 263 of the Act, are satisfied, the ld. PCIT, cannot assume jurisdiction and set aside assessment order passed by the AO u/s. 143(3) of the Act, in exercise of his powers conferred u/s. 263 of the Act. In this legal back ground, if you examine the facts of the present case, we are of the considered view that the assessment order passed by the AO neither erroneous nor prejudicial to the interest of the Revenue in so far as the first issue of computation of total income by considering loss declared by the assessee. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itely erroneous and prejudicial to the interest of the Revenue and thus, we are of the considered view that the ld. PCIT has rightly assumed jurisdiction u/s. 263 of the Act, and set aside the assessment order passed by the AO on the second issue. To sum up, we are of the considered view that the assumption of jurisdictional by ld. PCIT on the issue of computation of loss is fails and further, assumption of jurisdiction on the issue of 'prior period expenses' is in accordance with law. Therefore, we modified the directions of the PCIT's order dated 17.03.2022 passed u/s. 263 of the Act, and direct the AO to re-frame the assessment as per the directions of the ld. PCIT only on the issue of disallowance of 'prior period expens ..... X X X X Extracts X X X X X X X X Extracts X X X X
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