2023 (1) TMI 670 - AT - Income Tax
Revision u/s 263 - PCIT found that AO has not disallowed an amount debited to the profit and loss account on account of loss on assets on disposal which is a capital expenditure AND AO has not called for any details of purchases and other expenses to verify the correctness of income declared by the assessee - HELD THAT:- On selection of the case for scrutiny, the learned assessing officer has made an addition under section 69A of the act with respect to cash deposit made by the assessee of specified banknotes with PMC bank Ltd AND examined the deduction claimed by the assessee under section 80 P - Except, above two items, the learned assessing officer did not inquire any other matter or issues in the assessment proceedings.
The notice under section 142 (1) of the act dated 9/10/2019 mainly inquiring the deposit of cash in the bank account in various forms, details of sundry debtors, creditors et cetera. We further notice dated 12/12/2019 was also with respect to cash deposits. In the end the assessment proceedings resulted into a show cause notice dated 20/12/2019 with respect to the two issues on which the addition has been made by the learned assessing officer. The appeal pending before the CIT – A is only with respect to the additions made by the learned assessing officer - none of the issue involved in the 263 proceedings are considered and decided by the learned CIT – A. Therefore, it is evident that the learned assessing officer did not inquire about the loss on assets disposal claimed by the assessee as well as any of the expenditure debited in the profit and loss account.
AO has not applied his mind to the claim of the assessee of capital loss or various expenditure. In the case of Mukand global finance limited, the issue was different whether assessee can claim set-off of short-term capital loss against business income or not. The issue before us is whether the assessee can be allowed the capital loss debited in the profit and loss account or not as revenue expenditure and that makes the assessment order unsustainable in law. Therefore, the decisions relied upon by the assessee are not applicable to the facts of present case.
There is no iota of evidence that the learned assessing officer has asked details of any of the expenditure debited in the profit and loss account. Thus, the assessment records examined by the learned principal Commissioner of income tax clearly showed that the learned assessing officer has not made any enquiry on these two items. Thus he is correct in forming an opinion that failure of the learned assessing officer to make any enquiry which he should have made with respect to the capital loss claimed as revenue expenditure as well as several expenditure debited to the profit and loss account makes the order of assessment erroneous and prejudicial to the interest of revenue - Decided against assessee.