All HC: Municipal Corp. to Ensure Availability of Clean Drinking Water to Residents of Lucknow  ||  Bom. HC: Bail Granted to Accused Who Wasn’t Produced Before Court on Seventy Previous Dates  ||  Delhi HC Seeks Explan. from Legal Services Committee on Failure to Assist Litigant Despite Requests  ||  Hemant Soren, Former CM of Jharkhand Moves SC After HC Dismissed Challenge to His Arrest by ED  ||  CESTAT: No Provision in Cenvat Credit Rules to Allow Cash Refund of Cess in Cenvat Credit Balance  ||  Delhi High Court: Parents to Bear Cost of Air Conditioning Services in Schools  ||  Ker. HC: Declining a Rape Victim to Terminate Pregnancy Violates Right to Live With Dignity  ||  SC: Can’t Apply Section 498A IPC Mechanically in All Cases of Ill-Treatment by Husband  ||  SC: To Summon Person u/s 319 CrPC as Additional Accused, Stronger Evidence is Needed  ||  SC: Trial Judges Should Take Participatory Role in Trial & Not Act as Mere Tape Recorders    

Sarvottam Caps Pvt. Ltd., Kolkata vs. Principal Commissioner of Income Tax - (Income Tax Appellate Tribunal) (11 Mar 2024)

Phrase "Prejudicial to the interest of the Revenue" is of wide import and is not confined to loss of taxes only

MANU/IK/0105/2024

Direct Taxation

In facts of present case, the assessment was completed under Section 143(3) of the Income Tax Act, 1961 (IT Act). The assessee debited the provision for bad and doubtful debts amounting to Rs. 1,86,29,997 and the disallowance amounting to Rs. 77,08,984 under Section 14A of the Act. During computation of the book profit under Section 115JB of the Act both the amounts are not added with the book profit. Accordingly, during calculation of the MAT credit under Section 115JA of the Act, Assessing Officer had allowed more credit to the assessee which was amounted to Rs. 83,84,295. The Principal Commissioner of Income Tax by invoking sec 263 called the assessment order erroneous for wrong calculation of Section 115JB of the Act and prejudicial to the interest of revenue. The learned Pr. CIT by invoking Section 263 of the Act, issued the notice. The order under Section 263 of IT Act was passed by setting aside the assessment order. Being aggrieved the assessee filed appeal.

The assessee has failed to completely disclose its true and correct income by non-furnishing of details as required under provisions of I.T. Act. The A.O. has passed the assessment order without making enquiries or verification which should have been made in the instant case. Clause (a) of Explanation - 2 to Section 263(1) is attracted in this case. Accordingly, it is held that the assessment order is erroneous insofar as it is prejudicial to the interest of the revenue.

Delhi High Court in the case of GEE VEE Enterprise vs. Addl. CIT has held that, the CIT may consider the order of the Assessing Officer to be erroneous not only if it contain some apparent error of reasoning or of law or of fact on the face of it but also because the Assessing Officer has failed to make enquiries which are called for in the circumstances of the case and it is an order which simply accepted what the assessee has stated in his return of income on the said issue. It is not necessary for the CIT to make further enquiries before cancelling the assessment order. The Commissioner can regard the order erroneous on the ground that the Assessing Officer should have made further enquiries.

Apex Court in the case of Malabar Industrial Co. Ltd. vs. CIT held that, the phrase "Prejudicial to the interest of the Revenue" is of wide import and is not confined to only loss of taxes. If the AO has accepted the claim of the assessee and with a wrong calculation of Section 1115JB of the Act there is a genuine loss of revenue which was prejudicial to the interest of the Revenue. Further, during calculation of MAT credit, the learned AO had made wrong and vitiated the entire proceeding. The impugned order of Principal Commissioner of Income Tax is upheld. Appeal dismissed.

Tags : ASSESSMENT   MAT CREDIT   CALCULATION  

Share :        

Disclaimer | Copyright 2024 - All Rights Reserved