KPA Apparels Private Limited Vs ITO (ITAT Delhi)
In this case, the assessee challenged the revisionary order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act for Assessment Year 2020-21. The original assessment had been completed under Section 143(3), wherein the Assessing Officer (AO) accepted the loss declared by the assessee after examining the information and documents furnished during scrutiny proceedings.
The revision proceedings were initiated based on a revenue audit objection alleging violation of Sections 269SS and 269T of the Act. It was alleged that the assessee had accepted loans and repaid loans in a manner attracting penalty provisions under Sections 271D and 271E respectively. During the revision proceedings, the assessee explained that the amount received from M/s New Delhi Exports House had been received through banking channels and therefore there was no violation of Section 269SS. Regarding Section 269T, the assessee submitted that there was no repayment of loan. Instead, pursuant to a tripartite agreement, the outstanding loan balance was transferred through journal entries from the account of M/s New Delhi Exports House to the account of one of its partners, Smt. Kusum Uppal.
The PCIT accepted the explanation relating to Section 269SS but proceeded to hold that the assessee had violated provisions of the Companies Act and also observed that expenses amounting to ₹6.14 crore had been allowed without proper enquiry. On this basis, the PCIT concluded that the assessment order was erroneous and prejudicial to the interests of the Revenue and set it aside under Section 263.
