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2023 (9) TMI 206 - ITAT RAJKOTRevision u/s 263 - Failure of AO levy tax u/s 115BE for the additions made u/s 68 - addition made by AO in the assessment order of unexplained sundry creditors and bogus salary and wages expenses ought to have been made u/s. 68 and section 69C of the Act respectively and subjected to tax at the rate prescribed u/s. 115BBE - HELD THAT:- The contention of the assessee that pending appeal before the Ld. CIT(A) revisionary powers u/s 263 of the Act cannot be exercised, is dismissed. Addition u/s. 68/69C - AO having made the addition u/s 68 of the Act, the assessee’s plea that it could not have been made under the said section cannot be entertained in revisionary proceedings. The scope of proceedings u/s 263 of the Act is limited to revision of orders which found erroneous causing prejudice to the Revenue. Any finding prejudicial to the assessee cannot be dealt with by the Revenue authorities in revisionary proceedings u/s 263 of the Act. The assessee has remedy by way of right to appeal against orders prejudicial to it and the same can be dealt with in appeal only. PCIT in revisionary proceedings u/s 263 of the Act cannot adjudicate/deal with issues decided by AO to the prejudice of the assessee. AO having made addition u/s 68 of the Act, taxing it at the rate prescribed u/s 155BBE of the Act was a natural corollary. Admittedly the law itself prescribes a special rate of tax for additions made u/s 68, 69, 69A/B/C of the Act u/s 115BBE of the Act. Even the Ld. Counsel for the assessee does not dispute this position of law. The AO, therefore having not taxed the addition made on account of unexplained creditors u/s 68 of the Act, as per the rate prescribed u/s 115BBE of the Act, is clearly an error causing prejudice to the Revenue. The contention of the ld. counsel for the assessee that the computation of tax is not part of the assessment order is incorrect. The sheet of computation of tax has been held in the case of KalyanKumar Ray [1991 (8) TMI 291 - SUPREME COURT] as being part of the assessment order in terms of section 143(3) of the Act. Any error in the same, we hold, would undoubtedly constitute an error in the assessment order. We confirm the order of the Ld. PCIT holding the non-invocation of section 115BBE of the Act on the addition made on account of unexplained sundry creditors u/s. 68 of the Act as an error in the order of the Assessing Officer causing prejudice to the Revenue. Disallowance of bogus expenses - As with regards to disallowance of expenses, the invocation of section 69C by the Ld. PCIT, we hold is not correct and the provisions of section 115BBE of the Act could not have been applied to this disallowance made. We therefore hold that the ld. PCIT has erred in holding that the assessment order was erroneous on account of the disallowance of expenses not being made u/s. 69C of the Act and 115BBE of the Act not invoked as a consequence. We uphold the order of the ld. PCIT finding the assessment order erroneous causing prejudice to the Revenue only with respect to the aspect of non-invocation of section 115BBE on the addition made on account of unexplained sundry creditors u/s. 68 of the Act. With respect to the other aspect of bogus expenses disallowed, we hold there is no error in the order of the AO. Appeal of the assessee is partly allowed.
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