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05-09-2019, Kosamattom Finance, Section 263, 255(5), Tribunal Cochin

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4 months 2 weeks ago #10712 by amit
Section - 263, 255(5), 12A(a)
Order Date - 05-09-2019
Favouring - Revenue
Court - Tribunal Cochin
Appellant - Kosamattom Finance Private Limited
Respondent - ACIT
Justice - Chandra Poojari, AM & George George K, JM
Citation - 919Taxpundit42
Appeal No. - ITA No.600/Coch/2017
Asstt. Year - 2012-2013


PER : Chandra Poojari, AM

This appeal by the assessee is directed against the order of the Commissioner of Income-tax dated 30.11.2016, passed u/s 263 of the I.T.Act. The relevant assessment year is 2012- 2013.

2. The assessee has raised following grounds:-

“1. The order of the Commissioner of Income Tax (Central), Cochin, u/s 263 of the I.T. Act, 1961 dated 30.11.2016 for the asst. year 2012-13, is opposed to law, facts and circumstances of the case.

2. The Commissioner of Income Tax (Central), went wrong in proceeding on the assumption that the asst. order passed by the Assistant Commissioner of Income Tax, Central Circle, Kottayam u/s.143(3) for 2012-13 dated 28.2.2015 is erroneous in so far as it is prejudicial to the interest of Revenue coming within the purview of section 263 of the Act. The above assumption is unsustainable in law and on the facts of the appellant's case.

3. It is respectfully submitted that the notice dated 27.10.2016, by which the Commissioner proposed to invoke section 263 of the Act and the revised asst. Order contained mere allegations/opinion and did not contain any cogent and reliable material or evidence to come to a conclusion that the order passed by the assessing officer is erroneous and prejudicial to the interest of Revenue. A true copy aforesaid notice dated 27.10.2016 is produced herewith and marked as Annexure-A.

4. In this connection, the appellant respectfully submits, without prejudice, that the allegations contained in the notice Annexure-A are properly explained through the reply dated 22.11.2016 by pointing out that based on the facts of the case and the principles of law governing the issue both in regard to the merits of the case, as regards the alleged error orprejudice and in regard to the settled principles of law and that :-

i) "the expenditure and cost incurred for issue of debentures is a statutorily admissible claim in the year of issue in which such expenditure is incurred without resorting to amortization of such expenditure.

ii) the interest accrued on the debentures were claimed and allowed proportionately for each year during the period of the debentures from 2012-13 to 2016-17

iii) the payment of interest has suffered deduction of tax at source which are remitted in Government Account fulfilling the legal requirements; and

iv) all transactions pertaining to receipts from debenture holders and repayment thereof as also interest thereon are fully by way of bank transactions.

5. In this connection, a true copy of the detailed reply submitted by the appellant to the Commissioner vide letter dated 22.11.2016 is produced herewith and marked as Annexure-B. It is humbly prayed that the grounds urged therein may be treated as part of these grounds.

6. Without prejudice, it is respectfully submitted that a perusal of the order u/s.263 impugned herein would show that there is failure on the part of the respondent to consider the objections contained in Annexure-B fairly and judiciously but the issues were decided summarily, thus violating the principles of natural justice.

7. Without prejudice, it is submitted that the Commissioner of Income Tax is also unjustified in pre-deciding the issue so as to interfere with the adjudicating powers of the assessing officer in making assessment u/s.143(3). There is thus excessive exercise of jurisdiction by the adjudicating Authority, which would invalidate the impugned order. For these and other grounds that may be urged at the time of hearing, it is humbly prayed that the Hon'ble Income Tax Appellate Tribunal, Cochin Bench, Cochin, may kindly be pleased to set aside the order passed u/s 263 dated 30.11.2016 and restore the assessment already made u/s 143(3). allow the appeal and render justice.”

3. At the outset, we noticed that there was a delay of 288 days in filing this appeal. The learned AR drew out attention to the condonation petition filed before us explaining the delay, which reads as under:-

“2. The above appeal is filed against the order u/s 263 of the Income Tax Act, 1961 passed by the Assistant Commissioner of Income tax Central Circle, Kottayam, vide order dated 30.11.2016, for the Assessment Year 2012-13. By order u/s 263, the Assessment Order passed u/s 143(3) by the Assistant Commissioner of Income Tax, Central Circle, Kottayam, dated 28.02 2015 for 2012-13 was set aside by directing the Assessing Officer to make fresh assessment. The order u/s 263 was passed on 30.11.2016 and was communicated to the petitioner on or about 3.12.2016. The time for fi ing the appeal being 60 days from the date of service of he order, the due date for filing the appeal was 1 2/2017. The appeal now filed against the order u/s 263 is, therefore, delayed by 288 days.

3. The petitioner respectfully submits that upon receipt of the order u/s 263, the same was handed over to the Chartered Accountant, MIs Cheeran Varghese & Company, Thrissur within a reasonable time thereafter. The order u/s 263 concluded in paragraph-10 by recording the finding that "The order of the Assessing Officer is set aside on the issue mentioned in the earlier part of the said order 'for the limited purpose on verification and examination of the above relevant facts. 'A decision on the eligibility for deduction, would be arrived at by the Assessing Officer after granting the assessee an opportunity of being heard".

The appellant bonafide believed that the above finding was confined to verification of books of account already accepted by the Assessing Officer when the Assessment Order passed

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