IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B”, PUNE BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील स.ं / ITA No.1432/PUN/2025 Assessment Year : 2020-21 Sharada Erectors Private Limited, Vs. PCIT, Pune-3

11/1, Sharada Centre, Karve Road, Pune 411 004 Maharashtra PAN : AACCS6028D Appellant Respondent Appellant by : Shri Kishor B. Phadke Respondent by : Shri Amit Bobde Date of hearing : 27.07.2025 Date of pronouncement : 22.09.2025 आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The captioned appeal at the instance of assessee pertaining to A.Y. 2020-21 is directed against the order dated 30.03.2025 of Ld.PCIT, Pune-2 passed u/s.263 of the Income-

tax Act, 1961 (hereinafter also called ‘the Act’).

2. Brief facts of the case are that the assessee is a Private Limited Company engaged in the business of Construction. The assessee has constructed certain premises which are leased out to different occupants and earned rental income. The assessee has installed 9 wind Turbine Generators and the Electricity generated from the said Wind Turbine Generators are sold to either the State Electricity Distribution undertaking or to Private parties. It has also entered into overseas transactions and earned Commission and Brokerage. It also earns interest from some of the property advances made. Loss of (-) Rs.1,62,67,340/- declared in the return for A.Y. 2020-21 e filed on 15.02.2021. After the case being processed u/s.143(1) of the Act return selected for scrutiny and valid statutory notices u/s.143(2) and 142(1) duly served upon the assessee. The information called for in the notice u/s.142(1) were submitted. Ld. Assessing Officer (AO) concluded the proceedings accepting the loss declared by the assessee observing that “conclusively looking to the submissions uploaded along with corroborative evidences, the additions proposed earlier via show cause e-notice have now explained with proper justification. Accordingly, in the light of factual matrix no adverse inference may be drawn and thus the returned income of the assessee is accepted.”

3. Thereafter, ld. PCIT called for the assessment records and after going through the same assumed jurisdiction u/s.263 of the Act and issued assessee a show cause notice dated 07.03.2025. Referring to various issues which in the view of ld. PCIT have not been examined by the ld. AO resulting into the assessment order framed on 26.09.2022 being erroneous so far as prejudicial to the interest of Revenue. The assessee replied to the show cause notice stating that all the details relating to the said issues have been examined by the ld. AO and even these details are appearing in the body of the assessment order itself and therefore firstly assumption of jurisdiction by the PCIT u/s.263 of the Act is bad in law and secondly on merits of the case also assessee deserves to succeed. However, ld. PCIT was not satisfied and he concluded the proceedings holding as under :

“7. 1 However, having examined the facts of the case, the contentions advanced by the assessee on the various issues involved are found to be not fully acceptable vis-à-vis the following issues:-

a) Disallowance of Rs.1,68,194/- as determined by the assessee u/s 14A r.w.r. 8D:-

In this regard, on perusal of the Annexure-17 of the assessee's submission, it is noted that the assessee itself has worked out the quantum of disallowance u/s. 14A. Now the assessee is claiming that there is no case for disallowance of any expenditure if there is no exempt income earned. The claim of the assessee is not correct as the assessee has earned exempt income of Rs. 1,78,60,222/- by way of share of profit from partnership firms. Since, the assessee has shown exempt income during the previous year, the provisions of Sec 14A r.w.r 8D is triggered. Further, the proviso to Sec. 14A inserted by the Finance Act, 2022 clearly provides that the provisions of sec. 14A shall apply and deemed to have always been applied even in