2016 (6) TMI 785 - AT - Income Tax

Tribunal overturns CIT's decision under sec 263, upholds AO's assessment.

Lakshami Energy And Foods Ltd. Versus Commissioner of Income-Tax

The tribunal allowed the appeal of the assessee, holding that the jurisdiction assumed by the Commissioner of Income-tax (CIT) under section 263 was not ... Revision u/s 263 - deduction under section 80-IA allowed - Held that:- Assessing Officer was quite open to the issue of deduction under section 80-IA of the Act with regard to various eligibility conditions provided in the Act, which were queried by her in a number of notices issued to the assessee, which were duly replied by the assessee. After considering all these replies, the Assessing Officer had allowed only a portion of the deduction claimed by the assessee. Thus we see that all the issues are related to deduction under section 80-IB of the Act. All the issues have been investigated properly by the Assessing Officer. In view of this also, we do not find any error in the order of the Assessing Officer. Therefore, we hereby hold the jurisdiction assumed under section 263 to be illegal and quash the order of the Commissioner of Income-tax. - Decided in favour of assessee Issues Involved:1. Jurisdiction under section 263 of the Income-tax Act.2. Examination and application of evidences by the Assessing Officer.3. Consistency with previous assessment years and ITAT decisions.4. Merits of the deduction under section 80-IB(11A) of the Income-tax Act.Issue-wise Detailed Analysis:1. Jurisdiction under section 263 of the Income-tax Act:The primary issue is whether the Commissioner of Income-tax (CIT) had the jurisdiction to invoke section 263 of the Income-tax Act, 1961. The assessee contended that the CIT erred in assuming jurisdiction under section 263, arguing that the assessment order passed by the Assessing Officer (AO) was neither erroneous nor prejudicial to the interests of the Revenue. The tribunal noted that for section 263 to be invoked, the order must be both erroneous and prejudicial to the interests of the Revenue. The tribunal found that the CIT's assumption of jurisdiction was influenced by a letter from the Departmental representative, which was not appropriate. The tribunal concluded that the CIT did not apply his mind independently and thus, the jurisdiction assumed under section 263 was not as per law.2. Examination and application of evidences by the Assessing Officer:The CIT argued that the AO did not properly examine and appreciate the evidences on record, particularly concerning the deduction under section 80-IB(11A). The tribunal reviewed the AO's detailed 46-page order and found that the AO had thoroughly applied her mind to various issues concerning the deduction under section 80-IB. The AO had issued multiple questionnaires and received detailed replies from the assessee, indicating that the AO had conducted a proper inquiry and investigation. The tribunal concluded that the AO had adequately examined the evidences and there was no error in her order.3. Consistency with previous assessment years and ITAT decisions:The CIT contended that the AO's order was inconsistent with the decisions for previous assessment years 2008-09 and 2009-10, where the deduction under section 80-IB(11A) was disallowed. However, the tribunal noted that the ITAT had decided in favor of the assessee for those years, and the department's appeal was pending before the High Court. The tribunal emphasized that the AO's order for the assessment year 2010-11 was in line with the ITAT's decision, which was binding on the AO. The tribunal held that the CIT's insistence on following the earlier disallowed view was against judicial discipline and binding precedent.4. Merits of the deduction under section 80-IB(11A) of the Income-tax Act:The tribunal examined the merits of the deduction under section 80-IB(11A) and found that the AO had allowed the deduction after detailed scrutiny and application of mind. The CIT's objections were based on issues that had already been decided in favor of the assessee by the ITAT for previous years. The tribunal found that the CIT did not provide any new evidence or findings to suggest that the AO's conclusions were erroneous. The tribunal concluded that the AO's order was neither erroneous nor prejudicial to the interests of the Revenue, and thus, the CIT's order under section 263 was quashed.Conclusion:The tribunal allowed the appeal of the assessee, holding that the jurisdiction assumed by the CIT under section 263 was not as per law. The tribunal found that the AO had conducted a proper examination of evidences and the order was consistent with the ITAT's decisions for earlier years. The tribunal quashed the CIT's order and upheld the AO's assessment order for the assessment year 2010-11.