Case Number: ITA 658/DEL/2021
Appellant: Nutan Growth Fund Pvt Ltd, New Delhi
Respondent: Pr.CIT, New Delhi
Assessment Year: 2015-16
Case Filed On: 2021-06-04
Order Type: Final Tribunal Order
Date of Order: 2023-02-28
Pronounced On: 2023-02-28
This article provides a detailed analysis of the case ITA No. 658/DEL/2021, where Nutan Growth Fund Pvt Ltd, New Delhi, filed an appeal against Pr.CIT, New Delhi, concerning the assessment year 2015-16. The appeal was allowed due to jurisdictional issues regarding the application of Section 263 of the Income Tax Act, 1961.
Nutan Growth Fund Pvt Ltd, a private limited company based in New Delhi, filed its return of income on 28.09.2015, declaring an income of Rs. 8,940/-. The assessment was completed under Section 143(3) by the ACIT, Central Circle 20, Delhi, on 28.08.2017, accepting the returned income.
The Principal Commissioner of Income Tax (Pr.CIT), Central-2, Delhi, invoked Section 263 of the Income Tax Act, 1961, to revise the assessment order. The Pr.CIT directed a de novo assessment, citing the non-examination of the applicability of Section 56(2)(viia) concerning investments in unlisted equity shares during the assessment year.
The appellant, represented by Shri Sahil Sharma, Adv., Shri Saurabh Nandi, Adv., and Shri Mahesh Kumar, CA, argued that the Pr.CIT erred in assuming jurisdiction under Section 263. They contended that the original assessment was carried out with due diligence and that the Assessee had provided all necessary details, including the fair market value (FMV) of investments. The appellant also emphasized that the Pr.CIT’s order was based on a change of opinion rather than any actual error in the assessment.
The respondent, represented by Ms. Sarita Kumari, CIT DR, supported the Pr.CIT’s order, arguing that the assessment was erroneous and prejudicial to the interests of the revenue due to the non-examination of Section 56(2)(viia) issues.
The tribunal, comprising Dr. B. R. R. Kumar, Accountant Member, and Shri Yogesh Kumar US, Judicial Member, reviewed the case. They found that the Pr.CIT had shifted its stance and issued multiple show-cause notices, which reflected a mere change of opinion rather than any substantial error in the assessment. The tribunal noted that the Assessee had provided all required details during the original assessment, and the Assessing Officer (AO) had conducted a due inquiry within the limited scrutiny parameters.
Income Tax Appellate Tribunal, Delhi Bench ‘E’, New Delhi
Before: Dr. B. R. R. Kumar, Accountant Member & Shri Yogesh Kumar US, Judicial Member
Order:
This appeal filed by the assessee for the assessment year 2015-16 is directed against the order of Pr.CIT(Central)-2, Delhi dated 31.03.2021. The grounds raised by the assessee are centered around the assumption of jurisdiction by the Pr.CIT under Section 263 of the Income Tax Act, 1961.
After hearing the arguments of both parties and perusing the material available on record, the tribunal found that the Pr.CIT had failed to establish that the original assessment was erroneous and prejudicial to the interests of the revenue. The tribunal emphasized that the AO had made detailed inquiries during the assessment process and had duly considered the FMV of the investments.
The tribunal relied on several judgments, including the Hon’ble Supreme Court’s decision in Malabar Industrial Co. Ltd. vs. CIT, which clarified that the assumption of jurisdiction under Section 263 requires the satisfaction of both conditions – the order being erroneous and prejudicial to the revenue. Since the AO had applied his mind and conducted due inquiries, the tribunal held that the Pr.CIT’s invocation of Section 263 was not justified.
The tribunal quashed the order passed by the Pr.CIT under Section 263 and allowed the appeal filed by Nutan Growth Fund Pvt Ltd.
Order Pronounced and Signed in Open Court on 28.02.2023.
Signed:
Dr. B. R. R. Kumar, Accountant Member
Shri Yogesh Kumar US, Judicial Member
Date: 28th February 2023
This case underscores the importance of proper jurisdictional application in tax assessments and the necessity for tax authorities to base their revisionary powers on substantial errors rather than mere changes of opinion.
Nutan Growth Fund Pvt Ltd vs. Pr.CIT New Delhi: Appeal Allowed on Jurisdiction Issues 2023
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