Worldview Education Services Private Limited Vs ITO (ITAT Hyderabad)
Section 263 Invoked Merely for Review – Revision Held Unsustainable
The Hon’ble ITAT, Hyderabad held that the order passed under Section 263 was invalid and unsustainable, as the Assessing Officer had already examined the issue in detail during scrutiny proceedings. The refunds of ₹1,06,63,541/- were found to relate to income recognised and offered to tax in an earlier year, and the subsequent refunds due to COVID-19 cancellations constituted sales returns / allowable business loss. The Tribunal observed that the Principal Commissioner sought to revisit a concluded issue and substitute his opinion, which is impermissible under law. It was reiterated that revision cannot be based on suspicion, inadequate discussion, or change of opinion when the AO has taken a possible and legally permissible view. As the twin conditions of the order being erroneous and prejudicial to the interests of the Revenue were not satisfied, the revisionary order was set aside and the appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal by the Assessee is directed against the Order dated 28.03.2025 of the learned Principal Commissioner of Income Tax, Hyderabad-2, Hyderabad, for the assessment year 2021-2022.
2. The assessee is a private limited company engaged in the business of providing education tour services to the students of educational institutions. The assessee company had tie-up with the educational institutions situated at across India as well as Abroad which are actively looking for a structural educational tours and itineraries completely catering to the students. For the year under consideration, the assessee filed it’s return of income on 15.03.2022 declaring Rs. NIL income/loss of Rs.2,83,24,337/-. The case was selected for scrutiny under CASS and scrutiny assessment was completed u/sec.143(3) r.w.s.144B of the Income Tax Act [in short “the Act”], 1961 on 13.12.2022 whereby the Assessing Officer made the addition of Rs.6,95,691/-. Thereafter, the Pr. CIT noted that the assessee has shown income from revenue operations of Rs.75,69,911/-, against which, the assessee has debited aggregate expenditure of Rs.3,64,75,276/-. This expenditure includes an amount of Rs.1,06,63,541/- being refunds and returns, which in the view of Pr. CIT is not an allowable expenditure as the said amount was not offered as income in this year. Accordingly, the Pr. CIT invoked provisions of sec.263 of the Act by issuing show cause notice dated 17.03.2025 whereby the assessee was asked to show cause as to why the claim of Rs.1,06,63,541/- should not be treated as an unallowable expenditure under the provisions of Sec.37 of the Act and consequently, the assessment order passed by the Faceless Assessment Officer [in short “FAO”] is erroneous and prejudicial to the interests of the revenue. The assessee has filed his reply/submissions dated 27.03.2025 along with the financial statements, computation of income, ITR for the assessment year 2021-2022 as well as the other records including the show cause notice issued by the Assessing Officer and reply filed by the assessee along with the evidences to show that this amount of Rs.1,06,63,541/-represents the payments received from the students in the preceding year and also offered to tax in the preceding year, but, due to the advent of Covid-2019 pandemic and restrictions on the movement, including the flights and other transport facilities of the tour programmes were cancelled and the payments were refunded to the students/ institutions. The Pr. CIT was not convinced with the reply and passed the impugned order whereby the assessment order dated 13.12.2022 was set-aside being erroneous in so far as prejudicial to the interests of the revenue with the direction that the Assessing Officer should examine the issue in detail, after giving an opportunity to the assessee.
