Diya Hygiene Flours Private Limited vs. The PCIT (Central)

Parties Involved

Facts Summary

The assessee filed its return of income for Assessment Year 2019-20 on 25.10.2019 declaring total income at Rs.15,08,820/-. The case was selected for scrutiny and the Assessment Order was passed under Section 143(3) of the Income Tax Act, 1961 on 28.09.2021 thereby making addition and disallowance and determining the total assessed income of the assessee at Rs.56,08,500/-. The following additions and disallowances were made: Disallowance u/s.36(1)(va) of the I.T. Act Rs. 88,654/- Addition u/s.69B r.w.s. 15BBE of the I.T. Act Rs.12,14,596/- Addition u/s.69C r.w.s. 15BBE of the I.T. Act Rs.18,83,195/- Cessation of Liability Rs. 9,13,230/-. The PCIT observed that during the course of assessment proceedings under Section 143(3) of the Act, the assessee failed to give any satisfactory explanation regarding discrepancies in stock of Rs.1214,596/-. Hence, an addition was made under Section 69B of the Act. The assessee has made unaccounted purchase amounting to Rs.18,83,195/- and hence addition to that extent was made under Section 69C of the Act. Addition of Rs.9,13,230/- was made on account of cessation of liability and addition of Rs.88,654/- was made on account of disallowance under Section 36(1)(va) of the Act. The PCIT observed that the Assessing Officer was required to initiate penalty proceedings under Section 271AAC of the Act but has not initiated penalty proceedings under Section 271AAC of the Act. Further, the PCIT observed that the Assessing Officer made addition on acco…

Legal Issues

• 1. The Order passed U/s.263 on 28/03/2024 for A.Y. 2019-20 by PCIT(Central) Surat is wholly illegal, unlawful and against the principle of natural justice.
• 2. The Ld. PCIT has grievously erred in law and or on facts in holding that the order of assessment dt. 28-09-2021 was erroneous and prejudicial to the Revenue in as much as it failed to carry out inquiry in respect of initiate and levy penalty u/s.271AAC in respect of additions u/s.69B and 69C r.w.s. 115BBE of the I.T. Act and U/s. 270A in respect of additions on account of cessation of liability and addition u/s.36(1)(va) of the IT. Act.
• 3. That in the facts and circumstances of the case as well as in law, the Ld. PCIT ought not to have held that the order of assessment dt. 28-09-2021 was erroneous and prejudicial to the Revenue in as much as it failed to carry out inquiry.
• 4. The Ld. PCIT has erred in law and on facts in setting aside the entire assessment and directing AO to make fresh assessment.

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

Precedents Relied Upon

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