2023 (9) TMI 1335 - AT - Income Tax

Assessment order upheld by Tribunal, overturning Commissioner's decision under section 263.

The Tribunal held that the assessment order was not erroneous or prejudicial to the revenue's interest. The Principal Commissioner's order under section ... Revision u/s 263 - lack of verification and application of mind by AO - Aas per CIT AO has allowed the deduction claimed u/s 80IA of the Act despite the fact that the assessee did not furnish all the supporting documents required as laid down in Rule 18BBB of the income Tax Rules for claiming deduction - Whether the assessee has submitted unit-wise Balance Sheets or not? - HELD THAT:- In response to notice under section 142(1) of the Act, the assessee has submitted unit-wise reply and detailed explanation before the Assessing Officer and the assessee also submitted further reply before the Assessing Officer. We note that Assessing Officer has issued further notice under section 142(1) of the Act, wherein the Assessing Officer asked the assessee to submit the details and documents of windmill unit-wise. In response to notice issued by the Assessing Officer, the assessee submitted its detailed reply along with documents and evidences. Therefore, we note that detailed reply and explanation were submitted before the Assessing Officer. We note that Assessing Officer could not download the unit-wise balance sheets due to technical error, therefore ld. Counsel submitted that there is no mistake on the part of the assessee in submitting the unit-wise balance sheets. From the judgment of the Hon'ble Gujarat High Court in the case of PCT vs. M/s. Shreeji Prints Pvt. Ltd. [2020 (2) TMI 1021 - GUJARAT HIGH COURT] it is vivid that the revisional powers cannot be exercised for directing a fuller inquiry to merely find out if the earlier view taken is erroneous particularly when a view was already taken after inquiry. A mere observation that no proper details have been obtained, cannot be sufficient to come to a conclusion that the AO did not make proper and adequate inquiries which he ought to have made in the given facts and circumstances of this case. None of the reasons set out by the PCIT for invoking the jurisdiction u/s 263 of the Act are sustainable. The impugned order of the PCIT has to be quashed for the reason that order of the AO sought to be revised in the impugned order was neither erroneous nor prejudicial to the interest of the revenue for the reason of any lack of inquiry that the Assessing Officer ought to have made in the given facts and circumstances of the case. We accordingly quash the order u/s. 263 of the Act, and allow the appeal of the assessee. Issues Involved:1. Whether the assessment order passed under section 143(3) r.w.s. 143(3A) & 143(3B) was erroneous and prejudicial to the interest of the revenue.2. Whether the amount of Rs.3,10,98,776/- claimed as deduction under section 80IA was disallowable due to non-compliance with Rule 18BBB of the Income Tax Rules.Summary:Issue 1: Erroneous and Prejudicial Assessment OrderThe assessee, a Private Limited company, filed its return for AY 2018-19, declaring total income at Rs.15,69,53,860/-. The case was selected for scrutiny to verify issues related to Duty Drawback and deductions claimed under section 80IA. The assessment was completed at an assessed income of Rs.15,93,16,342/-.The Principal Commissioner of Income Tax (PCIT) exercised jurisdiction under section 263, observing that the assessee claimed a deduction of Rs.3,10,98,776/- under section 80IA for income from six windmills. The PCIT noted that separate balance sheets for each windmill, as required by Rule 18BBB, were not furnished, making the assessment order erroneous and prejudicial to the revenue.Issue 2: Disallowance of Deduction under Section 80IAThe PCIT issued a show cause notice, and the assessee responded, claiming that unit-wise profit and loss accounts, Form 10CCB, and combined balance sheets were submitted during the assessment. The assessee argued that unit-wise balance sheets were uploaded but not downloaded by the Assessing Officer due to technical issues.The Tribunal noted that the assessee had provided substantial compliance by submitting unit-wise profit and loss accounts, combined balance sheets, Form 10CCB, and tax audit reports. Citing the Gujarat High Court's judgment in Zenith Processing Mills vs. CIT, the Tribunal held that procedural requirements for furnishing documents can be fulfilled during assessment proceedings and are directory in nature.The Tribunal also referenced the Gujarat High Court's judgment in PCT vs. M/s. Shreeji Prints Pvt. Ltd., emphasizing that revisional powers under section 263 cannot be exercised for directing a fuller inquiry if the Assessing Officer had already made due inquiries and taken a plausible view.Conclusion:The Tribunal concluded that the assessment order was neither erroneous nor prejudicial to the interest of the revenue. The PCIT's order under section 263 was quashed, and the appeal of the assessee was allowed.Final Order:The appeal filed by the assessee is allowed, and the order is pronounced on 26/09/2023 in the open court.