Court Restores Assessment Order, Bars Revisiting Claim Without Changing Initial Year's Accepted Relief.

The HC allowed the assessee's appeal, overturning the Tribunal and PCIT's orders. The court restored the assessment order, ruling in favor of the assessee. It emphasized that the AO could not revisit the claim for substantial expansion in subsequent years without altering the initial year's relief, as the initial claim was accepted and undisputed.

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Issues Involved:
1. Deduction under Section 80IC for subsequent assessment years.
2. Order under Section 263 of the Act by the Commissioner.
3. Tribunal's justification in upholding the Commissioner's orders.
4. Scope of notice under Section 263 of the Act.

Summary:

1. Deduction under Section 80IC for subsequent assessment years:
The assessee claimed a 100% deduction under Section 80IC for its Unit IV for the 7th year of such claim and 2nd year from the date of substantial expansion. The initial claim for the Assessment Year 2012-13 was accepted by the department, and this acceptance was not disputed. The Principal Commissioner of Income Tax (PCIT) issued a notice under Section 263 of the Act, alleging that the assessee had not filed Form 10CCB during the assessment proceedings, and thus, only 30% deduction was permissible. However, the PCIT's order was challenged on the grounds that the initial claim for the substantial expansion was accepted and should not be revisited in subsequent years.

2. Order under Section 263 of the Act by the Commissioner:
The PCIT held that the Assessing Officer (AO) had not made proper inquiries to verify the genuineness of the assessee's claim regarding substantial expansion, rendering the assessment order erroneous and prejudicial to the interest of revenue. The assessee argued that they had submitted all necessary documents during the initial year and subsequent years, and the AO had accepted the substantial expansion claim after thorough verification.

3. Tribunal's justification in upholding the Commissioner's orders:
The Tribunal dismissed the assessee's appeal, stating that Form 10CCB was not filed during the assessment proceedings, and the assessee failed to provide supporting evidence to substantiate the AO's examination of the facts. The Tribunal did not consider the detailed inquiries made by the AO during the initial year of substantial expansion and the subsequent acceptance of the claim in following years.

4. Scope of notice under Section 263 of the Act:
The Tribunal did not address the crucial fact that the assessment year under consideration was the 2nd year of substantial expansion, and the initial year's claim had been accepted. The Tribunal failed to note that without disturbing the relief granted in the initial year, the AO could not revisit the claim in subsequent years. This principle was supported by various precedents, including Sourashtra Cement and Chemical Industries Limited vs. Commissioner of Income Tax, Gujarat-V, Commissioner of Income Tax vs. Paul Brothers, and Commissioner of Income Tax vs. Delhi Press Patra Prakashan Limited.

Conclusion:
The High Court allowed the appeal filed by the assessee, setting aside the orders passed by the Tribunal and the PCIT. The assessment order was restored, and the substantial questions of law were answered in favor of the assessee. The court emphasized that the AO could not revisit the claim for substantial expansion in subsequent years without disturbing the relief granted in the initial year.

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