Alliance Integrated Metaliks Ltd. vs. Pr. CIT (Central)-3

Parties Involved

Facts Summary

The assessee, Alliance Integrated Metaliks Ltd., filed an appeal against the order of the Principal Commissioner of Income Tax, Central-3, New Delhi, dated 30.03.2019, passed under section 263 of the Income Tax Act, 1961, relating to the assessment year 2014-15. The assessee had filed an e-return declaring a loss of Rs. 34,05,16,817/- on 29.11.2014. The case was selected for scrutiny under CASS, and notices were issued under sections 143(2) and 142(1) of the Act. The assessee's contention was accepted, and the income was assessed at the returned loss amount. However, the Principal Commissioner of Income Tax observed that the assessee had invested Rs. 4,04,23,38,400/- in equity shares and earned dividend income of Rs. 1,13,04,224/-. The AO did not raise the issue of disallowance of expenses under section 14A of the Act. A show cause notice was issued, and the assessee objected to the proceedings under section 263 of the Act. The Principal Commissioner of Income Tax's order was held erroneous and prejudicial to the interest of revenue, and the assessment order was cancelled to the extent of disallowance of expenses related to exempt income. The assessee appealed against this order.…

Legal Issues

• 1. Whether the order passed by the Principal Commissioner of Income Tax is bad both in the eye of law and on facts?
• 2. Whether the Principal Commissioner of Income Tax erred in invoking the provisions of section 263 of the Income-tax Act without satisfying the preconditions necessary for passing a revisionary order?

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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