Accepting Submissions Of Assessee Cannot Be Said As Faulty If Assessment Was Made By National E-Assessment Centre: Indore ITAT Quashes Sec 263 Order

The Bench of Vijay Pal Rao (Judicial Member) and B.M Biyani (Accountant Member) observed that “the action of AO in accepting the replies/ submissions of assessee cannot not lack bona fides and cannot be said to be faulty specially when the assessment of assessee has been made by National e-assessment Centre, Delhi”. (Para 10)

As per the brief facts of the case, the assessee filed return declaring Nil income which was selected under scrutiny-assessment for “verification of genuineness of expenses”. Ultimately, the AO completed assessment u/s 143(3) accepting the returned income declared by assessee. Subsequently, PCIT examined the record of assessment proceeding and viewed that the assessment-order passed by AO is erroneous in so far it is prejudicial to the interest of revenue which attracts revisionary-jurisdiction u/s 263. Accordingly, the PCIT issued show-cause notice and finally passed revision-order.

The Bench found that the AO has made a clear-cut finding in assessment-order that the issue of scrutiny namely “Verification of Genuineness of Expenses” has been examined and no addition is made and the returned income is accepted.

This finding by AO is fully supported from various documents which clearly show that the AO has issued multiple questionnaires u/s 142(1) and made repeat enquiries to examine the expenses claimed by assessee in general and payments made to M/s AD Enterprises in particular, added the Bench.

The Bench therefore noted that since the assessee has also filed complete replies to the questionnaires and there was no dispute or rebuttal by revenue, it is discernible that the AO has considered those replies/submissions and thereafter taken a plausible view.

The Bench also noted that the assessee has deducted substantial amount of TDS from payments made to M/s AD Enterprises, remitted the proceeds of TDS to income-tax department and also filed statutory returns of TDS giving each item of payment, TDS etc. against the payee M/s AD Enterprises.

“The TDS returns also contain PAN of Smt. Nilima proprietor of M/s AD Enterprises. The PAN so mentioned is verified and accepted as valid and correct by TDS Wing of Income-tax Department and that is why they have not created demand of higher amount of TDS u/s 206AA of the Act”, added the Bench.

Hence the ITAT concluded that the facts of the present case do not warrant application of section 263, and allowed the assessee's appeal.

Counsel for Appellant/ Assessee: Rajesh Mehta

Counsel for Respondent/ Revenue: Simran Bhullar

Case Title: AL A S Real Estate and Developers Private Ltd Verses Pr. CIT

Case Number: ITA No. 181/Ind/2023

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