Itat/49/2023 Ia No: Ga/1/2023, Ga/2/2023 Principal Commissioner Of Income Tax 1, Kolkata v. M/S. Sppl Property Management Pvt. Ltd

OD–2 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITAT/49/2023IA NO: GA/1/2023, GA/2/2023PRINCIPAL COMMISSIONER OF INCOME TAX 1, KOLKATAVS.M/s. SPPL PROPERTY MANAGEMENT PVT. LTD. BEFORE : THE HON’BLE T.S. SIVAGNANAM ACTING CHIEF JUSTICE AndTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADate : 31[st] March, 2023 Appearance :Mr. Prithu Dudhoria, Adv.…for appellantMr. Pratyush Jhunjhunwala, Adv.Mr. Mrigank Kejriwal, Adv.…for respondent The Court : - We have heard Mr. Prithu Dudhoria, learned Standing Counsel forthe appellant and Mr. Pratyush Jhunjhunwala, learned Advocate appearing for therespondent/assessee. There is a delay of 64 days in filing the appeal. We have perused the affidavit filed in support of the petition and we findsufficient cause has been shown for not preferring the appeal within the period oflimitation. Accordingly, the application is allowed and the delay in filing the appeal iscondoned. This appeal is filed under Section 260A of the Income Tax Act, 1961 (the Act) isdirected against the order dated July 19, 2022 passed by the Income Tax AppellateTribunal, “B” Bench, Kolkata in ITA No. 520/Kol/2021 both relating to the AssessmentYear 2017-2018. The revenue has raised the following substantial questions of law forconsideration :- (a)WHETHER on the facts and in the circumstances of the case the LearnedIncome Tax Appellate Tribunal has erred in law in quashing the order passed by the Pr. CIT-1 under Section 263 of the Income Tax Act, 1961without considering the fact that the order passed by the Assessing Officeris erroneous and prejudicial to the interest of revenue ? (b) WHETHER on the facts and in the circumstances of the case the LearnedIncome Tax Appellate Tribunal has erred in law in disposing the appealwithout considering that air conditioner expenses its capital in nature andis not allowable as expenses ? (c) WHETHER on the facts and in the circumstances of the case the LearnedIncome Tax Appellate Tribunal has erred in law in disposing the casewithout considering that delay in payment of employees contribution toP.F. & other welfare funds under Section 36(1)(va) of the Income Tax Act,1961 is not an allowable expense if the contribution deposited beyond thedue date of next month in the light of the judgment of the Hon’bleSupreme Court in Civil Appeal No. 2833 of 2016 in the case of ChekmateServices P. Ltd. Vs.CIT ? The first issue to be considered in the instant case is whether the PrincipalCommissioner of Income Tax was justified in invoking his jurisdiction under Section263 of the Act. The assessment under Section 143(3) of the Act was completed by orderdated 19.11.2019. The PCIT initiated proceedings under Section 263 of the Act statingthat the provisions for doubtful debts amounting to Rs.1,05,24,671/- was notdisallowed at the time of assessment since provision for expenses is not allowable underSection 37(1) of the Act. Secondly the PF contribution received from the employees wasnot deposited to concerned account in due date and the amount should have beenadded to the total income of the assessee under Section 36(1)(va) of the Act. Further anamount was debited to the profit and loss account under the head “Air ConditionerExpenses” which being capital in nature is not allowable expenses and are required tobe added back to the total income of the assessee. Therefore, the PCIT was of the viewthat the assessment was erroneous in so far as it was prejudicial to the interest of revenue. The assessee submitted the reply to the show-cause notice on 23.9.2021. ThePCIT rejected the explanation offered and confirmed the proposal in the show-causenotice, set aside the order of assessment and directed the assessing officer to pass afresh assessment order after considering the issues mentioned in the order dated 8[th]November, 2021. revenue. The assessee submitted the reply to the show-cause notice on 23.9.2021. ThePCIT rejected the explanation offered and confirmed the proposal in the show-causenotice, set aside the order of assessment and directed the assessing officer to pass afresh assessment order after considering the issues mentioned in the order dated 8[th]November, 2021. Aggrieved by the same, the assessee preferred appeal before the Tribunal. Aspointed out earlier, the PCIT invoked his jurisdiction under Section 263 of the Act onthree issues namely, provisions for doubtful debts, employees’ contribution of providentfund and air-conditioner expenses. Before we go into the three heads, under which action was initiated underSection 263 of the Act, we have to first examine as to whether the assumption ofjurisdiction by the PCIT under Section 263 was just and proper. With regard to the firstand third issues, the assessing officer had issued notice under section 142(1) on 1[st] ofMay, 2019 and issued a questionnaire form and the assessee had submitted all therelevant details which have been noted by the Tribunal. Further, there is anotherquestion with regard to the details of expenses head-wise, where assessee had deductedtax at source. The Tribunal on going through the assessment records found that thequestionnaire on the issues raised by the assessing officer called for the details ofexpenses appearing in the audited P & L Account and various replies filed by theassessee and the Tribunal found that the assessing officer has specifically carried outan enquiry regarding provisions for doubtful debts and air-conditioner expenses and thespecific reply given by the assessee was also taken note of. With regard to the issuesregarding the provisions for doubtful debts, the Tribunal noted that the assessee duringthe regular course of business as claimed to have been shown sales, in the precedingyears of which, some sales turned bad and the same has been written off in the books ofaccounts as bad debts which the assessee is entitled for and, therefore, found the claimto be admissible. Similarly, for air-conditioner charges the assessee had filed completedetails along with tax deducted on the charges paid and the bills were also placed in the form of a paper book which the Tribunal perused and found the same to be acceptable.Thus, the Tribunal concluded that on both these issues, namely with regard to theprovisions for doubtful debts and air-conditioner expenses, the assessing officer hadconducted a detailed enquiry and thereafter completed the assessment. Secondly, it washeld that the PCIT had erred in invoking the revisional jurisdiction under Section 263 ofthe Act. The law on the subject is well settled, that if it is found, that the assessingofficer has in fact conducted an enquiry, merely because the PCIT is of a differentopinion, it would not justify action under Section 263 of the Act. The other issue withregard to the provident fund contribution, as mentioned, the assessment order was ofthe year 2017-18 and on the date, when the assessing officer completed theassessment, the law on the subject as laid down by the jurisdictional High Court,namely this Court is in the case of Commissioner of Income Tax Circle – 1, Kolkata Vs.Vijay Shree Ltd. [2014] 43 taxmann.com 396 (Calcutta). Thus the assessing officer hadfollowed the decision of this Court in the said case and had completed the assessment.Thus the assessing officer having followed the decision of the Jurisdictional High Courtwhich held the field, at the relevant point of time, the assessment cannot be held to beprejudicial to the interest of revenue. Thus, we are of the view that the learned Tribunal had rightly granted relief tothe respondent/assessee. In the result, the appeal fails and is dismissed. The substantial questions of laware answered against the revenue. (T.S. SIVAGNANAM)ACTING CHIEF JUSTICE) (HIRANMAY BHATTACHARYYA, J.)