TaxTMI 
TaxTMI 
2010 (7) TMI 38
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....d is directed against the Income-tax Appellate Tribunal's order dated 12.09.2008 passed in ITA No.1675/Del/2006, which, in turn, arose from the order dated 07.03.2006 passed by the Commissioner of Income-tax under Section 263 of the Income-tax Act, 1961 (hereinafter referred to as „the said Act‟). 3. ITA No1382/2009 is in respect of the assessment year 2002-03 and is directed against the Tribunal's order dated 30.01.2009 in ITA No.715/Del/08. The appeal before the Tribunal was in respect of the order dated 22.03.2007 passed by the Commissioner of Income-tax under Section 263 of the said Act. The Tribunal‟s order dated 30.01.2009 in respect of the assessment year 2002-03 merely follows the Tribunal‟s earlier order dated 12.09.2008 in respect of the assessment year 2001-02. In both these decisions, the Tribunal has set aside the order passed by the Commissioner of Income-tax holding that the assessment orders passed by the Assessing Officer, in the facts and circumstances of the case, could not be the subject matter of an order under Section 263 inasmuch as the view taken by the Assessing Officer in respect of both the years was a possible view. 4. Since the....
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....sioner of Income-tax under Section 263 of the said Act, it was mentioned that there was no question of there being any two views since the Assessing Officer had not, at all, considered the embargo placed by Section 80IA(9) / 80IB(13). According to the Commissioner of Income-tax, it was not a case where two views of a situation were reflected, but a case where the Assessing Officer did not, at all, apply his mind to the applicability of Section 80IA(9)/80IB(13) of the said Act. 7. At this juncture, it ought to be pointed out that the Assessing Officer, in the assessment order dated 18.03.2004, had dealt with the claim of deduction under Section 80HHC as well as the claim of deduction under Section 80IB separately in great detail. The deduction under Section 80HHC claimed by the assessee was to the extent of Rs 3,41,60,544/-, whereas the deduction allowed by the Assessing Officer was only to the extent of Rs 2,70,48,517/-. Similarly, the assessee had claimed an amount of Rs 3,19,74,289/- as deduction under Section 80IB. However, the Assessing Officer had allowed an amount of Rs 3,04,15,236/- as deduction under Section 80IB. It is true that while allowing the aforesaid deduction unde....
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.... decided on 20.06.2005; 2) Decision of the Jaipur bench of the Tribunal in the case of Toshica Creation v. ITO: 96 TTJ 651 (ITA No.613/Jpr/2005, decided on 19.07.2005); 3) Decision of the Bangalore bench of the Tribunal in the case of Irfan Sheriff v. ACIT: (2006) 7 SOT 57 (ITA No.115 Bang, decided on 18.11.2005); 4) Decision of the Delhi bench SMC of the Tribunal in the case of ITO v. RV Diamond Jewellers Pvt. Ltd: (ITA 2252/D/05, decided on 30.11.2005); and 5) Decision of the Delhi bench of the Tribunal in the case of Bharat Heavy Electricals Ltd v. DCIT: 98 TTJ 565 (ITA No.6146/Del/1997, decided on 22.07.2005). 9. The tribunal also noted the decisions rendered after 17.03.2006, which were all (except one) in favour of the assessee. The decisions referred to by the Tribunal were:- 1) Decision of the Delhi bench of the Tribunal in the case of DCIT v. Eltek SGS (P) Ltd: (ITA Nos.3646 and 3669/Del/03, decided on 30.06.2006); 2) Decision of the Madras High Court in the case of SCM Creations v. ACIT: 218 CTR 126 (Mad) (ITA Nos.310 and 311 of 2008, decided on 06.03.2008); 3) Decision of the Chandigarh bench of the Tribunal in the case of DCIT v. Glaxo Smithkline Consumer Healthcare Lt....
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.... the revenue is in appeal before us in both these appeals. The learned counsel for the appellant / revenue submitted that the impugned decisions of the Tribunal were liable to be set aside in view of the fact that the Tribunal ignored a very important circumstance and that is that the Assessing Officer in making the assessment order made no reference to two possible views. The learned counsel submitted that, in fact, the Assessing Officer made no mention of the provisions of Section 80IB(13) read with Section 80IB(9) of the said Act and the assessment order was passed in complete ignorance of the said provisions. According to the learned counsel, the situation in these appeals was not one where the Assessing Officer, faced with two different but plausible views, adopted one of them, but, the position was that the Assessing Officer did not at all refer to two different views or even to the relevant provisions and was thus a case of clear non-application of mind. Such a situation was clearly correctible by the Commissioner of Income-tax in exercise of his powers under Section 263 of the said Act. In aid of the aforesaid submission, the learned counsel for the appellant placed relianc....
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....sing Officer was a possible view, the Commissioner of Income-tax would have no jurisdiction to interfere with such a view by exercising his powers under Section 263 of the said Act. The decision of the Punjab & Haryana High Court in the case of Max India Ltd (supra) was carried to the Supreme Court and the view taken by the Punjab & Haryana High Court was confirmed in CIT V. Max India Ltd: ITR 295 ITR 282 (SC). The Supreme Court also clarified its earlier decision in the case of Malabar Industrial Company Ltd (supra), which has been strongly relied upon by the learned counsel for the revenue, that the phrase "prejudicial to the interest of the revenue" in Section 263 had to be read in conjunction with the expression "erroneous". The Supreme Court further clarified that every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest of the revenue. As an example, the Supreme Court noted that when an Income-tax Officer adopts one of the courses permissible in law and it results in loss of revenue, then it cannot be treated as an erroneous order prejudicial to the interest of revenue. Furthermore, where two views are possibl....
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....ing at a conclusion as to whether the AO had examined any issue or not. The assessee has no control over the way an assessment order is drafted. The assessee on its part had produced enough material on record to show that the matter had been discussed in detail by the AO. The least that the Tribunal could have done was to refer to the assessment record to verify the contentions of the assessee. Instead of doing that, the Tribunal has merely been swayed by the fact that the AO has not mentioned anything in the assessment order. During the course of assessment proceedings, the AO examines numerous issues. Generally, the issues which are accepted do not find mention in the assessment order and only such points are taken note of on which the assessee's explanations are rejected and additions / disallowances are made. (underlining added) The view taken by the Punjab & Haryana High Court in Hari Iron Trading Company (supra) was accepted by this court in Eicher Limited (supra) in the following words:- "15. In Hari Iron Trading Co. v. CIT: (2003) 263 ITR 437, a Division Bench of Punjab and Haryana High Court observed that an assessed has no control over the way an assessment order is draft....
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....In cases where the Assessing Officer adopts one of the courses permissible in law or where two views are possible and the Income-tax Officer has taken one view, the Commissioner of Income-tax cannot exercise his powers under Section 263 to differ with the view of the Assessing Officer even if there has been a loss of revenue. Of course, if the Assessing Officer takes a view which is patently unsustainable in law, the Commissioner of Income-tax can exercise his powers under Section 263 where a loss of revenue results as a consequence of the view adopted by the Assessing Officer. It is also clear that while passing an order under Section 263, the Commissioner of Income-tax has to examine not only the assessment order, but the entire record of the profits. Since the assessee has no control over the way an assessment order is drafted and since, generally, the issues which are accepted by the Assessing Officer do not find mention in the assessment order and only those points are taken note of on which the assessee‟s explanations are rejected and additions / disallowances are made, the mere absence of the discussion of the provisions of Section 80IB(13) read with Section 80IA(9) wo....
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....ror committed by the AO; it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind." (emphasis supplied) In the context of the factual matrix of the case before it, the Supreme Court, in Malbar Industrial Company Ltd (supra), concluded as under:- "In the instant case, the CIT noted that the ITO passed the order of nil assessment without application of mind. Indeed, the High Court recorded the finding that the ITO failed to apply his mind to the case in all perspective and the order passed by him was erroneous. It appears that the resolution passed by the board of the appellant-company was not placed before the AO. Thus, there was no material to support the claim of the appellant that the said amount represented compensation for loss of agricultural income. He accepted the entry in the statement of the account filed by the appellant in the absence of any supporting material and without making any inquiry. On these facts ....
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....essing Officer's order was held to be erroneous because the relevant enquiry was not made. Again, in Malabar Industrial Company Ltd (supra), the Assessing Officer's order was held to be erroneous because it had been made without application of mind and the Assessing Officer had merely accepted the entries in the statement of accounts filed by the assessee in the absence of any supporting material and without making any enquiry. Similarly, in Deepak Kumar Garg (supra), the Assessing Officer accepted the version of the assessee and for want of time did not conduct any proper enquiry. On these facts, it was found that the order passed by the Assessing Officer was erroneous and prejudicial to the interest of the revenue. 23. In the facts of the present case, we find that there is no material to indicate that the Assessing Officer had not applied his mind to the provisions of Section 80IB(13) read with Section 80IA(9). The presumption that the assessment orders passed under Section 143(3) passed by the Assessing Officer had been passed upon an application of mind, has not been rebutted by the revenue. No additional facts were necessary before the Assessing Officer for the purpose of co....