2019 (6) TMI 95 - AT - Income Tax

Appeal Dismissed: Assessee's Arguments Rejected, Assessment Order Set Aside

The appellate tribunal dismissed the appeal of the assessee, upholding the decision of the Principal Commissioner to set aside the assessment order under ... Revision u/s 263 by CIT - PCIT was of the view that the product manufactured by the assessee was not eligible for deduction u/s 80IC - whether the product manufactured by the assessee i.e. Dissolved Acetylene Gas falls in negative list of Schedule XIII of the I.T. Act, hence, not eligible to claim deduction u/s 80IC of the Act. - HELD THAT:- The product manufactured by the assessee as per the activity and product classification given by Statistics & Databank Division, Ministry of Micro, Small & Medium Enterprises, Government of India bears code ‘24119’ and, hence, the same does not fall in the negative list. However, the assessee has not addressed any arguments about the remaining points on account of which also Ld. PCIT held that the order of the Assessing officer was erroneous and prejudicial to the interest of Revenue. The Ld. Counsel though orally submitted that the Ld. PCIT did not find any error in respect of point ‘d’ raised by him in the impugned order. May it be so, the Ld. Counsel for the assessee has not addressed any arguments regarding point ‘b’, point ‘c’ and point ‘e’ before us. We have been conveyed that even in the set aside proceedings, the assessee could not convince the Assessing officer apart from point ‘a’, regarding point ‘b’ and point ‘c’ also as mentioned in the impugned order of the PCIT. From the above discussion what emerges is that there were certain errors in the order of the Assessing officer passed u/s 143(3) of the Act and because of those errors, the income of the assessee has escaped assessment. Hence, the said order being erroneous was also prejudicial to the interest of Revenue. Though the assessee has arguable points regarding point ‘a’ raised in the impugned order of the PCIT, however, the facts establish on the file that the assessee could not rebut the findings of the Ld. PCIT in respect of points ‘b’ and ‘c’ which proves that the order of the Assessing officer was erroneous and prejudicial to the interest of Revenue as the Assessing officer had failed to make any proper required enquires to frame the assessment. In view of this, we do not find any reason to interfere in the order of the Ld. PCIT in setting aside the assessment order passed u/s 143(3) of the Act. - Decided against assessee. Issues:1. Invocation of provisions of section 263 of the Income-tax Act by the Principal Commissioner of Income Tax.2. Errors and discrepancies identified by the Principal Commissioner of Income Tax in the assessment order passed by the Assessing officer under section 143(3) of the Income-tax Act.3. Assessment order being erroneous and prejudicial to the interest of Revenue.4. Appeal by the assessee against the order of the Principal Commissioner of Income Tax.Analysis:Issue 1: Invocation of provisions of section 263The assessee appealed against the order of the Principal Commissioner of Income Tax invoking section 263 of the Income-tax Act. The Principal Commissioner set aside the assessment order passed by the Assessing officer under section 143(3) for de novo assessment due to identified errors and discrepancies.Issue 2: Errors and discrepancies in the assessment orderThe Principal Commissioner highlighted several errors in the assessment order, including incorrect allowance of deduction under section 80IC for specific activities, failure to verify certain income sources, and improper allocation of expenses between units. The Principal Commissioner found these errors to be prejudicial to the interest of Revenue.Issue 3: Erroneous and prejudicial assessment orderThe Principal Commissioner held that the assessment order was erroneous and prejudicial to Revenue due to the lack of proper inquiries by the Assessing officer and the failure of the assessee to satisfactorily explain the identified issues. The incorrect application of tax provisions further contributed to the decision to set aside the assessment order.Issue 4: Appeal by the assesseeThe assessee appealed the decision, focusing on the eligibility of the product manufactured for deduction under section 80IC. While the assessee argued that the product did not fall under the negative list, the appellate tribunal noted that the assessee did not address other discrepancies raised by the Principal Commissioner. As the assessee failed to rebut the findings on other points, the tribunal upheld the decision to set aside the assessment order.In conclusion, the appellate tribunal dismissed the appeal of the assessee, upholding the decision of the Principal Commissioner to set aside the assessment order under section 143(3) of the Income-tax Act. The assessee was granted the opportunity to present arguments on the issues raised by the Principal Commissioner.