2019 (2) TMI 1429 - AT - Income Tax

Tribunal restores assessment order in section 263 appeal, finds no error or prejudice

The Tribunal set aside the Principal Commissioner of Income-tax's order invoking section 263, restoring the assessment order dated 05.12.2014. It found ... Revision u/s 263 - scope of Explanation 2 to section 263 - deemed erroneous order - assessee failed to place on record, during the assessment proceedings, any such documentary evidence of substantive nature, to justify the deduction u/s 80IA - HELD THAT:- As decided in SUNBEAM AUTO LTD. [2009 (9) TMI 633 - DELHI HIGH COURT] where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry as following SHRI NIRAV MODI [2016 (6) TMI 1004 - BOMBAY HIGH COURT] PCIT issued a similar notice u/s 263 of the Act as he found that the assessment order framed u/s 143(3) of the Act dated 14.03.2014 was erroneous, in as much as it was prejudicial to the interest of the revenue for at 2011-12. Tribunal considered the issue [2018 (11) TMI 1322 - ITAT DELHI] and set aside the order of the PCIT and restored that of the AO. The facts of assessment year 2011-12 are same as the facts of the year under consideration except the claim of deduction under Chapter VI is different in value. Since the Tribunal has quashed the order framed u/s 263 of the Act, we are of the considered opinion that the claim of deduction in the initial assessment year i.e. 2011-12 was justified and, therefore, the same cannot be disturbed in the subsequent assessment year when the facts are identical and law has not changed. Before parting, the ld. DR has also heavily relied upon Explanation 2 to section 263 of the Act. In our considered opinion, the said Explanation is applicable only when there is no enquiry made by the Assessing Officer whereas in the case in hand, as demonstrated elsewhere, the Assessing Officer had made ample enquiries before framing the order u/s 143(3) of the Act. - Decided in favour of assessee. Issues Involved:1. Invocation of section 263 of the Income-tax Act, 1961 by the Principal Commissioner of Income-tax (PCIT).2. Examination of the deduction claimed under section 80IA of the Income-tax Act, 1961.3. Determination of whether the assessment order was erroneous and prejudicial to the interest of the Revenue.Issue-wise Detailed Analysis:1. Invocation of Section 263 of the Income-tax Act, 1961 by the PCIT:The assessee challenged the correctness of the order dated 31.03.2017 by the Principal Commissioner of Income-tax (PCIT), New Delhi, invoking section 263 of the Income-tax Act, 1961. The PCIT held that the assessment order dated 05.12.2014 was erroneous and prejudicial to the interest of the Revenue. The PCIT's primary contention was that the Assessing Officer (AO) failed to properly examine the facts and admissibility of the deduction claimed under section 80IA during the assessment proceedings.2. Examination of the Deduction Claimed Under Section 80IA:The assessee electronically filed the return on 30.11.2012, claiming a deduction under section 80IA. The case was selected for scrutiny, and the assessment order was framed under section 143(3) on 05.12.2014. The PCIT issued a show cause notice for proceedings under section 263, stating that the AO failed to discuss the nature of the business activities and allowed the deduction without proper examination. The assessee submitted detailed replies to the notices issued by the AO, providing comprehensive information about the business, including the Concessionaire Agreement with Delhi International Airport Private Limited (DIAL) and the responsibilities undertaken by the company.3. Determination of Whether the Assessment Order was Erroneous and Prejudicial to the Interest of the Revenue:The Tribunal examined whether the assessment order was erroneous and prejudicial to the interest of the Revenue. It referenced several judicial decisions, including the Hon'ble Supreme Court's decision in Malabar Industrial Co. Ltd. and the Hon'ble Bombay High Court's decision in Gabriel India Ltd., which emphasized that an order is erroneous if it is not in accordance with law or passed without proper inquiry. The Tribunal noted that the AO issued multiple notices and received detailed replies from the assessee, indicating that the AO made adequate inquiries before framing the assessment order. The Tribunal concluded that the AO's order was not erroneous as it was based on proper inquiries and compliance by the assessee.The Tribunal also referenced the Hon'ble High Court of Gujarat's decision in CIT vs. Nirma Chemical Works Ltd., which stated that an assessment order does not need to incorporate detailed reasons for upholding a claim if the AO is satisfied with the explanations provided. The Tribunal found that the AO's satisfaction with the assessee's claim under section 80IA was evident from the records.Conclusion:The Tribunal set aside the order of the PCIT, restoring the assessment order dated 05.12.2014 framed under section 143(3). It held that the AO made sufficient inquiries and that the assessment order was neither erroneous nor prejudicial to the interest of the Revenue. The Tribunal emphasized that the powers under section 263 can only be exercised when the assessment order is both erroneous and prejudicial to the Revenue, which was not the case here. The appeal of the assessee was allowed.