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TMI Blog2024 (9) TMI 782X X X X Extracts X X X X X X X X Extracts X X X X ..... appened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case . The issue of sub-contract expenses admittedly was duly deliberated upon by the AO in Section 147 proceedings after the questionnaire dated 18.03.2023 - CIT wrong in saying that AO has not done proper enquiry. As discussed it is clearly discernible that AO has done properly each and every inquiry pertaining to sub-contract etc. The issue of refund was consequential to reassessment order dated 23.03.2023 and there is no specific order by the AO, hence, CIT cannot invoke jurisdiction u/s. 263 of the Act; Hence, we hold that the order passed by AO u/s. 147 dated 23.03.2023 is not erroneous in so far as it is prejudicial to the interest of the revenue. Since assessee has not challenged order u/s. 154 of the Act dated 8th August, 2023, hence not entitled to agitate in this proceedings. Tribunal order in the cases of Trinity Charitable Trust [ 2014 (9) TMI 924 - ITAT COCHIN ] and Cargo Service Centre India (P) Ltd. [ 2021 (12) TMI 398 - ITAT MUMBAI ] are dehors the facts of the present case hence not applicable. Case law c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sts of the revenue, without appreciating the material on record and submissions made by the Appellant. 2.3. The Ld. CIT erred in passing the Impugned Order, on the allegation that the Ld. AO had not examined/made inadequate inquiries with respect to provision for subcontracting expenses during the assessment proceedings, without appreciating that the Ld. AO had duly conducted enquiries and verification on subcontracting expenses and had also issued a notice under section 133(6) of the Act on Keller Ground Engineering India Private Limited ("Keller India"). 2.4. The Id. CIT erred in passing the Impugned Order, on the allegation that the Ld. AO had not examined the refund claim of the Appellant along with interest, without appreciating that the Ld. AO had duly conducted enquiries and verification on interest claimed along with refund during the proceedings under section 154 of the Act. 3- Disallowance of provision for subcontracting expenses 3.1 The Ld. CIT has, in the facts and circumstances of the case and in law, erred by disregarding the fact that the Appellant had created a provision for warranty based on unbilled revenue recorded by Keller India in percentage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income under the Act, the time limit for furnishing the return of income for the subject AY had expired (i.e., last date to furnish belated return for the impugned AY was March 31, 2019). Given the same, the Appellant had filed an application dated January 18, 2021, before the Hon'ble Board under section 119 of the Act for condonation of delay. During the pendency of disposal of the condonation application by the Hon'ble Board, the Appellant was served a notice under section 148 of the Act on March 31, 2022. In response to the notice Appellant filed a return of income on April 28, 2022. Thereafter, the Ld. AO proceeded with the reassessment proceedings. On conclusion of re-assessment proceedings, a reassessment order was passed by the Ld. AO under section 143(3) read with section 147 on March 23, 2023, accepting the returned income under section 148 of the Act. Further, the refund as returned in the return filed under section 148 of the Act ("148 return"), along with applicable interest was determined as due in the said assessment order. Thereafter, the Ld. AO has proposed to rectify the above order vide notice dated July 26, 2023. The rectification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 147 of the Act Issue of sub-contracting expense was examined and AO passed a clean order under section 147 of the Act after taking consideration response filed under section 133(6) by Keller India III. Rectification proceedings under section 154 of the Act 12 26-Jul-23 Notice for rectification proceedings under section 154 read with section 147 of the Act Claim of refund was examined 13 02-Aug-23 Response to notice for rectification under section 154 14 08-Aug-23 Rectification order under section 154 of the Act AO vide order under section 154 denied interest under section 244A of the Act IV. Revisionary proceedings under section 263 of the Act 15 18-Aug-23 SCN under section 263 of the Act SCN was issued on two issues provision for sub-contracting expense and refund claim 16 31-Aug-23 Response to SCN under section 263 of the Act 17 21-Sep-23 Order under section 263 of the Act holding Asst order u/s. 147 dated 23.03.2023 as erroneous in so far as it is prejudicial to the interest of Revenue 5. The ld. Authorised Representative referred the order of assessment passed u/s. 147 of the Act dated 23.03.2023 and relevant portion is reproduced as under:- ''3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, filed before CBDT in response to letter issued by CBDT dated July 05, 2023 123 2.1. Letter issued by CBDT dated July 05, 2023 126 II. Documents relied upon in connection with reassessment proceedings 3 Notice under section 148 of the Act dated March 31, 2022, issued by the Ld. AO 132 4 ROI filed on April 28, 2022, in response to notice under section 148 of the Act 133 5 Submission dated June 20, 2022, filed with the Ld. AO in response to the notice under section 142(1) of the Act dated June 09, 2022 206 5.1. Notice under section 142(1) of the Act dated June 09, 2022, issued by the Id. AO 208 6 Submission dated October 07, 2022, in response to notice under section 143(2) read with 147 of the Act 210 6.1. Notice under section 143(2) read with 147 of the dated October 03, 2022 issued by Ld. AO 213 7 Submission dated October 18, 2022, filed with the Ld. AO in response to the notice dated October 07, 2022 217 7.1. Notice under section 142(1) of the Act dated October 07, 2022, issued by the Ld. AO 221 7.2. Statement of computation of income of the Appellant for AY 2018-19 225 7.3. Financial statements of the Appellant for FY 2017-18 230 8 Submission date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aming reproducing again herein and may be read as part and parcel of this order as arguments of the assessee. 6. The ld. AR relied upon the following cases and contended that the impugned order of ld. CIT is liable to be set aside. The referred cases are reproduced in chart as under:- A. Revision under Section 263 of the Act:- Sl.No Name of the case Forum Citation Page No. 1 Max India Ltd. Supreme Court 295 ITR 282 3 2 Max India Ltd. HC-P&H 268 ITR 128 5 3 Malabar Industries Co. Ltd. Supreme Court 243 ITR 83 7 4 Virtusa Consulting Services (P.) Ltd. HC-Madras 442 ITR 385 12 5 Sunbeam Auto Ltd. HC-Delhi 332 ITR 167 22 6 Spectra Shares & Scrips (P.) Ltd. HC-Andhra Pradesh 354 ITR 35 33 7 Saravana Developers HC-Karnataka 387 ITR 239 57 8 Chemsworth (P.) Ltd. HC-Karnataka 119 taxmann.com 358 65 9 Hari Iron Trading Co HC-Punjab & Haryana 263 ITR 437 69 10 Shriram Properties Limited ITAT-Chennai 2023 (4) TMI 375 76 11 Cavinkare (P.) Ltd. ITAT-Chennai 149 taxmann.com 296 97 12 Rajkumar Impex Pvt. Ltd. ITAT-Chennai 2023 (6) TMI 812 108 13 FCA Engineering India Pvt. Ltd. ITAT-Chennai ITA No. 684/CHNY/2023 117 B. Refu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case, it is apposite to refer to the power of the revisional authority of the CIT envisaged as per Section 263 of the Act. For the sake of clarity, the relevant extract of Section 263 of the Act is reproduced as under: ''263. Revision of orders prejudicial to revenue (1) The [Principal Chief Commissioner or Chief Commissioner or Principal Commissioner] or Commissioner] may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] is erroneous in so far as it is prejudicial to the interest of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify,' [including,' (i) an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment; or (ii) an order modifying the order under Section 92- CA; or (iii) an order cancelling the order under Section 92-CA and directing a fresh order under the said section.] *** [Explanation 2. 'For the purposes of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs under Section 263 of the Act includes the cases where either an adequate enquiry has not been made and the same has not been recorded in the order of assessment or the said authority is circumscribed to only consider the cases where no enquiry has been conducted at all. 22. Reliance can be placed on the decision of this Court in the case of CIT v. Sunbeam Auto Ltd. [2009 SCC OnLine Del 4237], wherein, it was held that if the AO has not provided detailed reasons with respect to each and every item of deduction etc. in the assessment order, that by itself would not reflect a non-application of mind by the AO. It was further held that merely inadequacy of enquiry would not confer the power of revision under Section 263 of the Act on the Commissioner. The relevant paragraph of the said decision reads as under:- We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the Commissioner of Income-tax under section 263 of the Income-tax Act. As noted above, the submission of learned counsel for the Revenue was that while passing the assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quot;lack of inquiry" and, even if the inquiry was termed inadequate, following the decision in Sunbeam Auto Ltd. (2011) 332 ITR 167 (Delhi) (page 180) : "that would not by itself give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has a different opinion in the matter." No substantial question of law arises for our consideration. 24. In Ashish Rajpal as well, this Court was of the view that the fact that a query was raised during the course of scrutiny which was satisfactorily answered by the assessee but did not get reflected in the assessment order, would not by itself lead to a conclusion that there was no enquiry with respect to transactions carried out by the assessee. 25. Further, the decision of the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd., enunciates the meaning and intent of the phrase 'prejudicial to the interests of the Revenue', in the following words:- '8.The phrase 'prejudicial to the interests of the Revenue' is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The High Court of Calc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 84(SC)] and in ''Tara Devi Aggarwalv.CIT[(1973) 3 SCC 482:1973 SCC (Tax) 318:(1973) 88 ITR 323].) [Emphasis supplied] 26. Recently, the Hon'ble Supreme Court in the case of CIT v. Paville Projects (P) Ltd. [2023 SCC OnLine SC 371], while relying upon Malabar Industrial Co. Ltd., has discussed the sanctity of two-fold conditions for the purpose of invoking jurisdiction under Section 263 of the Act. The relevant paragraph of the said decision reads as under:- Learned counsel appearing on behalf of the assessee has heavily relied upon the decision of this Court in the case of Malabar Industrial Co. Ltd.(supra). It is true that in the said decision and on interpretation of Section 263of the Income Tax Act, it is observed and held that in order to exercise the jurisdiction under Section 263(1)of the Income tax Act, the Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. It is further observed that if one of them is absent, recourse cannot be had to Section 263(1) of the Act. ***'. 27. Considering the aforesaid judicial pronouncements, it ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the original assessment order passed by the AO, particularly because both the aforesaid issues were duly examined at the stage of the original assessment proceedings, hence, the impugned order is beyond jurisdiction, bad in law and void-ab-initio''. 29. It is discernible from the aforenoted findings of the ITAT that both the claims were duly examined during the original assessment proceedings itself and neither there was any error nor the same was prejudicial to the interests of the Revenue. Thus, the findings of fact arrived at by the ITAT do not warrant any interference of this Court. 30. So far as the reliance placed by the CIT on Umashankar Rice Mill is concerned, the same is misplaced, particularly in light of the insertion of Explanation 2 to Section 263 of the Act, brought in place by the Finance Act, 2015. The said amendment markedly specifies various conditions to exercise the authority vested in the Commissioner under Section 263 of the Act, leaving no ambiguity in the interpretation of the said provision. 31. In view of the aforesaid, the appeal preferred by the Revenue is dismissed alongwith the pending application(s), if any''. 9. Hence in the light of above ..... X X X X Extracts X X X X X X X X Extracts X X X X
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