2023 (4) TMI 893 - AT - Income Tax

Tribunal upholds assessee's appeal, denies Revenue's addition under Income Tax Act

Asstt. Commissioner of Income Tax, Circle-7 (2), New Delhi. Versus Shri Manish Sabharwal

The Tribunal dismissed the Revenue's appeal, upholding the deletion of the addition under section 80IC of the Income Tax Act for the Assessment Year ... Reopening of assessment u/s 147 - Addition u/s 80IC - assessee has not maintained separate accounts for the purpose of calculating the profits of the units for which deduction under section 80IC of the Act was claimed and the assessee had not furnished Form 10CCB at the time of original assessment - assessee’s case is that he has been allowed deduction under section 80IC in all the previous and subsequent years and the facts of the year under consideration are identical to all these years. The predecessor AO had allowed the impugned deduction only after verifying the facts from Form 10CCB - HELD THAT:- From the direction u/s 144A issued by the Ld. Addl. CIT Range-7 New Delhi, it is observed that he perused the assessment record and recorded the finding after seeing the material in the Schedule filed that heads are bifurcated in three units i.e. unit 1, 2 and 3 which shows that the assessee has maintained/furnished three separate accounts for the purpose of calculating the profits and deduction thereon. ACIT further noted that even during re-assessment proceedings the assessee submitted Form 10CCB alongwith letter dated 15.10.2018 and audited unit-wise final accounts. If that be so, the assessee’s case is fully covered in favour of the assessee by the decision of the Hon’ble Supreme Court in CIT vs. G.M. Knitting Industries (P) Ltd [2015 (11) TMI 397 - SC ORDER] as also by the decision of the Hon’ble Delhi High Court in CIT vs. Centimeters Electricals Pvt. Ltd. [2008 (12) TMI 4 - HIGH COURT DELHI] Decided against revenue. Issues:The appeal pertains to the deletion of an addition under section 80IC of the Income Tax Act, 1961 for the Assessment Year 2011-12.Summary:The case involved the reassessment of an individual's income tax return for the AY 2011-12. The original assessment allowed a deduction under section 80IC of the Act. However, the assessment was reopened due to alleged non-maintenance of separate accounts for units and failure to furnish Form 10CCB. The assessee submitted evidence of separate audited financial accounts and Form 10CCB during the original assessment proceedings. Despite this, the Assessing Officer disallowed the deduction, leading to an appeal.In the appeal, the CIT(A) considered various issues raised by the assessee, including the validity of the reassessment and compliance with directions issued under section 144A of the Act. The CIT(A) noted that the AO had allowed the deduction in the original assessment and found no reason to sustain the addition in the reassessment. The CIT(A) held that the directions under section 144A were binding on the AO, and since no material was presented to differ with those directions, the addition was deleted.The Revenue contested this decision before the Tribunal, arguing that the deletion of the addition under section 80IC was erroneous. The Tribunal heard arguments from both sides and examined the records. It observed that the assessee had provided evidence of maintaining separate accounts and submitting Form 10CCB. Referring to the directions under section 144A and relevant case law, the Tribunal found in favor of the assessee. It concluded that the assessee's case was similar to previous years where the deduction was allowed, and there was no evidence presented by the Revenue to dispute the assessee's contentions.Therefore, the Tribunal dismissed the appeal of the Revenue, upholding the deletion of the addition under section 80IC of the Act for the AY 2011-12.