Case Law Details
State Bank of India Vs PCIT-2 (ITAT Mumbai)
ITAT note that the AO during the assessment proceedings had requested the assessee to furnish explanation in respect of such items of expenses and receipt appearing in the trading accounts and profit and loss accounts (either by way of excess or reduction) in comparison to last year. And AO also has asked for comparative details in the form of a chart as given above (supra). And in reply, it can be seen that the assessee in-turn had asked the AO to refer Schedule-14 ‘other income’ and Schedule-16 ‘operating expenses’ for comparative analysis of the Annual Report. And it is noted that assessee even did not bother to give the details as asked for in the form of chart. Moreover, as rightly observed by the Ld. PCIT, the details called for by the AO were only general details pertaining to increase/decrease in income/expenditure during the year when compared to previous year. No specific queries were raised by AO regarding this claim of expenditure regarding CBS fees or even other expenses; and the assessee was not sked to prove any expenses it had booked or claimed in the profit & Loss account. And the reply of the assessee to the general query of AO to refer to schedule cannot be termed to be enquiry on the issue flagged by Ld PCIT. Merely production of financial notes an audit or reference to it when queried cannot be accepted as enquiry carried out by AO, who was bound by law to act both in the capacity of Investigator & Adjudicator; and failure to do any one duty [either that of Investigator or Adjudicator] can attract the supervisory jurisdiction of Ld PCIT u/s 263 of the Act and in this case, the AO has failed to discharge his duty as an investigator regarding CBS fees/expenditure to the tune of Rs.14.60 cr.
Moreover, as noted supra, the AO did not raise specific query regarding expenses claimed in respect of CBS to the tune of Rs.14,60,92,479/-; and even during the revisional proceedings in year 2022 before Ld PCIT, the assessee failed to produce the invoice raised by M/s. FIS for the services rendered by it till the year end (31.03.2017) i.e, even after four to five years the assessee was unable to support the expenditure claimed on account of CBS fees/expenditure.
Therefore, the action of the Ld. PCIT cannot be faulted firstly for non-specific inquiry by the AO as well as the failure on the part of assessee to even produce the invoice relating to the expenditure before the Ld. PCIT. Therefore, we relying on the decision of the Hon’ble Bombay High Court in the case of Jeevan Investment & Finance (P.) Ltd. Vs. CIT (2017) 88 com 552 (Bom) (2017) 291 CTR 241 (Bom), find that the AO failed to examine the claim of expense and erred in allowing such an expenses/CBS Fees. In the absence of examination of the claim made by the assessee the finding of Ld. PCIT that the order of the AO is erroneous and prejudicial to the interest of the revenue qua the expenditure claimed as CBS Fees is upheld. Therefore, we hold that exercise of the revisional jurisdiction u/s 263 of the Act by the Ld. PCIT is proper and valid. And therefore, we dismiss the appeal of the assessee.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
Please become a Premium member. If you are already a Premium member, login here to access the full content.
