Vinayak Mhatre v. Pr. CIT - Taxpublishers.in

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The Tax Publishers2021 TaxPub(DT) 4180 (Mum-Trib)

INCOME TAX ACT, 1961

Section 263

After estimation of business income of assessee, making of a separate disallowance of expenses debited in profit and loss account that was already rejected by AO would undeniably lead to distorted assessment of the assessee's income. AO had taken one of the possible views by making no disallowance under section 40(a)(ia) and, therefore, assessment order could not be treated as erroneous order prejudicial to the interest of revenue.

Revision under section 263 - Erroneous and prejudicial order - No disallowance made by AO under section 40(a)(ia) - AO having estimated assessee's income after rejecting book results

AO rejected assessee's books of account and estimated business income. Pr. CIT treated order passed by AO as erroneous and prejudicial to the interest of revenue on the ground that AO while framing assessment had failed to disallow under section 40(a)(ia) certain expenses which were debited in profit & loss account, despite the fact that assessee failed to deduct tax at source as regards the same. Held: After estimation of business income of assessee, making of a separate disallowance of expenses debited in profit and loss account that was already rejected by AO would undeniably lead to distorted assessment of the assessee's income. AO had taken one of the possible views and, therefore, assessment order could not be treated as erroneous order prejudicial to the interest of revenue.

Relied:CIT v. Max India Ltd. (2007) 295 ITR 282 (SC) : 2007 TaxPub(DT) 1548 (SC), CIT v. Banwarilal Bansidhar (1998) 229 ITR 229 (All-HC) : 1998 TaxPub(DT) 570 (All-HC), CIT v. Smt. Santosh Jain (2008) 296 ITR 324 (P&H) : 2007 TaxPub(DT) 0632 (P&H-HC) and Dharrit Yogen Shah v. CIT-II, Pune, ITA No. 1658/Pune/2014, ITA No. 1658/Pune/2014. Distinguished:Kalekhan Mohmmad Hanif v. CIT (1963) 50 ITR 1 (SC) : 1963 TaxPub(DT) 420 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2008-09 to 2011-12

IN THE ITAT, MUMBAI BENCH