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2017 (9) TMI 848
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....at having regard to facts & circumstances of the case, Ld. Pr. CIT has erred in law and on facts in assuming jurisdiction u/s 263 and further erred in setting aside the issue to the file of Ld. AO to make assessment afresh and that too without observing the principles of natural justice. 3. That in any case and in any view of the matter, action of Ld. Pr. CIT in assuming jurisdiction and passing the impugned order u/s 263 is bad in law and against the facts and circumstances of the case. 4. That the appellant craves the leave to add, amend, modify, delete any of the grounds of appeal before or at the time of hearing and all the above grounds are without prejudice to each other." 2. The facts in brief of the case are that the assessee set up a unit at plot No. 9, Pharma City Selaqui, Uttranchal and commenced business on 22/06/2011. The assessee was engaged in producing drug coated coronary stents and their sterilized packing. The year under consideration was first year of business of the assessee. The assessee filed return of income electronically on 30/09/2012 declaring nil income. In the return filed, the assessee claimed deduction under section 80IC of the Ac....
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....ew of the observations, the Ld. CIT formed the opinion that admissibility of deduction under section 80IC of the Act was not properly examined during the course of assessment proceeding and accordingly, he set aside the assessment with the direction to make fresh assessment. 2.4 Aggrieved, the assessee is in appeal before the Tribunal raising the grounds as reproduced above. 3. The only effective issue in the present appeal is against the action of the Ld. CIT in assuming jurisdiction under 263 of the Act and holding the assessment order as erroneous insofar as prejudicial to the interest of the Revenue on the ground that admissibility of deduction under 80IC of the Act was not properly examined. 4. Before us, the Ld. counsel of the assessee filed paper book containing pages 1 to 187 and assailed the order of the CIT. According to the Ld. counsel, the order of the CIT need to be quashed based on many reasons. 5. According to the ld. counsel, the first reason being the impugned itself assessment order suffers from lack of jurisdiction. He Submitted that the assessment order passed being bad in law and void ab-initio, cannot be held as erroneous and prejudicial to the int....
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.... and submitted that even jurisdiction cannot be conferred upon the Assessing Officer by consent of the assessee. 9. On the issue of issuing first notice under section 143(2) of the Act by the Assessing Officer having jurisdiction over the case within the stipulated period, the Ld. CIT(DR) referred to letter dated 02/09/2013 filed by the assessee in the office of the ACIT, circle 16(1), New Delhi and submitted that the assessee itself provided registered office of the 'assessee LLP' at New Delhi in PAN database and accordingly, the assessee was assigned under the jurisdiction of Deputy/Assistant Commissioner of Income- tax New Delhi and on selection of the case for scrutiny, that very Assessing Officer issued notice under section 143(2) of the Act on 16/08/2013 and served within the prescribed period. Further, he submitted that on the request of the assessee to transfer the case from New Delhi to Dehradun as its principal place of business was situated at Dehradun, the Assessing Officer transferred the case following due procedure of law to the Assessing Officer at Dehradun, who completed the assessment u/s 143(3) on 18/03/2015. According to the Ld. CIT(DR) notice under section 1....
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....me Tax, New Delhi to the Deputy/Assistant Commissioner of Income Tax, Circle, Dehradun, Uttarakhand. The PAN of the assessee may also be linked with the correct jurisdictional officer." 12. Further, in a subsequent letter filed before the DCIT, Circle 16(1), New Delhi, which is available on page 25 of the assessee's paper book, the assessee also informed that it had filed application before the ACIT, Dehradun for transfer of case from Delhi to Dehradun. 13. The Jurisdiction over a registered firm /LLP is assigned in terms of section 124 of the Act to the Assessing Officer on the basis of address of principal place of business, which is provided in the application filed at the time of PAN allotment. The section 124 (1) reads as under: "124. (1) Where by virtue of any direction or order issued under subsection (1) or sub-section (2) of section 120, the Assessing Officer has been vested with jurisdiction over any area, within the limits of such area, he shall have jurisdiction- (a) in respect of any person carrying on a business or profession, if the place at which he carries on his business or profession is situate within the area, or where his business or pro....
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....ed may demand that before the proceeding is so continued the previous proceeding or any part thereof be reopened or that before any order of assessment is passed against him, he be reheard." 16. In the cases of M/s Classic Flour and Food Processing (P) Ltd. (supra) and Krishan Kumar Saraf (supra), the assessments under revision are held as invalid, whereas in the present case the impugned assessment has been held as valid by us and, therefore, the ratio of the said decisions is not applicable in the instant case. In the case of Micro Spacematrix Solutions Private Limited (supra), the Income Tax Officer who issued notice was not having territorial jurisdiction over the case, whereas in the present case the Income Tax Officer, who issued the notice was having territorial jurisdiction over the case in terms of section 124 of the Act at the relevant period of time and, therefore, the ratio of the said decision is not applicable over the facts of the instant case 17. In our considered opinion, the Assessing Officer at Delhi assumed jurisdiction in accordance with law and there is no illegality in the assessment order as far as issue of notice under section 143(2) of the Act is con....
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....ss of manufacturing of medical devices. 19. The Ld. counsel submitted that in view of the above mentioned pleadings and evidences examined and considered by the Assessing Officer, the claim of deduction under section 80IC of the Act was examined in detail and, therefore, the action of the Ld. CIT in assuming jurisdiction under 263 of the Act deserve to be quashed. In support, the Ld. counsel placed reliance on following judicial precedents: * Jamna Auto Industries Ltd. vs CIT, ITA 495/Chd/2015, Date of order 05-01-2016. (ITAT, Chandigarh) Para 12, page 12-13 * MAYA GUPTA VS. CIT in ITA NO. 5701/DEL/2014, Delhi ITAT Finally, respectfully following the ratio laid down by jurisdictional High Court of Delhi in the case of DG Housing (supra), we are of the view that the conclusion of the AO on all three alleged issues was supported by reasonable and the same cannot be held as unsustainable and not in accordance with law. In this situation, invoking of provision of section 263 of the Act by issuance of notice and passing impugned order, directing the AO to revisit the issue and to make further inquiry cannot be held as valid and in this situation, action of ....
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....cts of the instant case. The Ld. CIT(DR) submitted that the Assessing Officer ought to have carried out inquiries on the submissions made by the assessee claiming the activity of the assessee as manufacturing activity, but he accepted the claim of the assessee even without taking audit report of the chartered accountant in prescribed form No. 10CCB regarding claim of deduction under section 80IC of the Act. He further submitted that in the case of the assessee, notice under section 263 of the Act was issued on 30/01/2017 which is much after insertion of the Explanation -2 to section 263 of the Act, hence it was very much in operation during relevant period. He submitted that accordingly, not making enquiries by the Assessing Officer to examine the manufacturing activity has rendered the assessment order as erroneous so as to prejudicial to the interest of the revenue and therefore Ld. CIT was justified in setting aside the said order. 22. In the rejoinder, the Ld. counsel of the assessee submitted that Explanation -2 to section 263 inserted by the finance Act 2015, w.e.f. 01/06/2015 is a prospective amendment as held by the Hyderabad bench in the case of Shantikrupa Estate Priva....
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....Court." 26. It is evident from the plain reading of the above explanation that the cases where the Assessing Officer has not done the enquiries, which he ought to have done in the circumstances of the case, the assessment order is deemed to be erroneous and prejudicial to the interest of the revenue. This provision has been inserted by the finance Act 2015 w.e.f. 01/06/2015. Since in the instant case the proceedings under section 263 of the Act have been initiated on 30/01/2017 by the Commissioner of income tax (i.e. after the date from which the explanation has been made effective), the issue whether the operation of the explanation is retrospective, is not involved and, thus, the decisions in the case of Shantikrupa Estate Private Limited (supra) and Narayan Tatu Rane (supra) are not applicable over the facts of the instant case. Further, we are not agreed with the contention of the Ld. counsel that assessment year involved in the case is 2012-13 and, therefore, the Explanation -2 cannot be applied retrospectively. Before us, the proceeding under section 263 of the Act has been challenged and the Explanation -2 is in respect of the proceedings u/s 263 of the Act and not in res....
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....e electronically the audit report in form No. 10CCB alongwith the return of income. The assessee has filed copy of notices under section 142(1) of the Act issued by the Assessing Officer making various quarries from the assessee. These notices are available on page 21 and page 30 of the paper book. On perusal of these notices, we find that Assessing Officer has nowhere asked the assessee to furnish the audit report in form No. 10CCB. The assessee has also filed copy of submissions made to the Assessing Officer during assessment proceedings. The submissions are available on pages 22 to 23, 25 to 26, 31 to 37, 65 to 79, 80 to 106, 107 to 127 and 128 to 138 of the paper book. We find that most of these submissions claimed to have been filed are not dated and without any acknowledgement from the office of the Assessing Officer. On perusal of these submissions, we find that the assessee has nowhere claimed to have filed the audit report in form No. 10 CCB. Thus the claim of the Ld. counsel that the assessee filed form No. 10 CCB before the Assessing Officer, is without any documentary evidence and cannot be accepted. 30. Regarding the observation of the Ld. CIT that the assessee had ....
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....IT(DR) submitted that no new issue has been raised in the order under section 263 of the Act, other than non-eligibility of deduction under section 80IC of the Act and therefore the contention of the Ld. counsel that form No. 10CCB was not a ground for issuing show cause under section 263 of the Act is not a valid argument. 36. We have heard the rival submissions and perused the relevant material on record. In the case of Contimeters Electrical (Pvt.) Ltd. supra) the Hon'ble Delhi High Court held that revision on the issue not mentioned in the so-called notice is not permissible. The relevant finding of the Hon'ble High Court is reproduced as under: "The Tribunal considered the rival contentions and referred to the Supreme Court's decision in the case of Commissioner of Customs v. Toyo Engineering India Limited (2006) 7 SCC 592 wherein the Supreme Court noted that the department cannot travel beyond the show cause notice. The Tribunal was of the view that the ground that the assessee had not fulfilled the conditions laid down under Section 80-IA did not form part of the show cause notice. The Tribunal accepted the argument of the assessee that the Commissioner of Income....