TaxTMI 
TaxTMI 
2020 (3) TMI 1253
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....t as asked by the AO on the basis of the CBDT Instructions for limited scrutiny and accordingly, the order passed by the AO is not erroneous and prejudicial to the interest of revenue. c. The Ld. Pr.CIT without ensuring the fact regarding conversion of limited scrutiny in to comprehensive scrutiny by AO, has based on irrelevant considerations, erred in concluding that assessment order is erroneous and prejudicial to the interest of revenue. d. The Ld. Pr.CIT erred in initiating proceedings under section 263 of the Act and hence the impugned order is bad in law and void ab initio. Ground No.2- Order dated 29.03.2019 under section 263 was passed without following rules of natural justice and without application of mind: a. On the facts and circumstances of the case and in law, the learned Pr. CIT( Ld. Pr.CIT) has passed the order under section 263 without following the rules of natural justice that is "audi alteram partem" by issuing show cause notice dated 12/03/2019 and hence the impugned order is bad in law and invalid. b. On the facts and circumstances of the case and in law, the learned Pr. CIT( Ld. Pr.CIT) has passed the order under ....
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....unabsorbed depreciation, then it was not open to the Pr.CIT to treat the assessment order erroneous and prejudicial to the interest of revenue within meaning of section 263 of the Act. Therefore the Pr.CIT order under section 263 setting aside the assessment be cancelled and AO's order under section 143(3) dated 30.12.2016 be restored. b. That on facts and circumstances of the case and in law, when the AO has not converted the limited scrutiny in to comprehensive scrutiny following procedures laid down by CBDT Instruction No.7/2014 dated 26/09/2014, disallowance of adjustment on account of unabsorbed depreciation is a serious procedure irregularity, then it was not open to the Pr.CIT to treat the assessment order erroneous and prejudicial to the interest of revenue within meaning of section 263 of the Act. There fore the Pr.CIT order under section 263 setting aside the assessment be cancelled and AO's order under section 143(3) dated 30.12.2016 be restored. 6.That the Pr.CIT has further grossly erred in relying on the judgments totally inapplicable to the facts of the case of the assessee-appellant and has further, placed reliance on the provisions not app....
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....er, this amount of Rs. 8,45,95,617/- had been grouped in "note 19"under the head "cost of materials consumed". Thus, the income credited to P&L account was understated to the tune of Rs. 16,91,91,234/- and the same was not taken as income, which, according to Ld. PR. CIT, the assessment order is erroneous and prejudicial to the interest of revenue. 6. Further, the Pr.CIT observed that the brought forward unabsorbed depreciation has been allowed to be set off, which was liable to be added back to the total income of the assessee. Further, the Pr. CIT observed that the MAT credit of Rs. 26,33,135/- was not admissible in assessment year 2014-15 and MAT credit of Rs.,19,40,110/- carried forward to next assessment year was also inadmissible. 7. Hence, ld Pr. CIT relying on the decision of Hon'ble Supreme Court in the case of Malbar Industrial Co. Ltd vs CIT, 243 ITR 83 (SC) and other decisions on the issue, observed that the Assessing Officer has completed the assessment without enquiry or verification, which rendered the assessment order erroneous and prejudicial to the interest of the revenue and directed the AO to reframe the assessment after conducting necessary enquiry/verifi....
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....as selected for limited scrutiny and the assessee filed its reply dated 14.10.2016, copy of the notice alongwith questionnaire is available at pages 49 to 104 of APB. Ld A.R. also drew our attention towards annexure to the said reply and submitted that a letter dated 20.12.2016 in compliance to CASS. Ld A.R. submitted that as per note sheet entry dated 16.12.2016, reply to which are available at annexure 2 to 3 at APB Pages 80 to 104 and hence, it is very much clear that the AO has gone into deep in making the assessment for which case was selected for scrutiny. Therefore, he finally concluded that the impugned assessment order cannot be alleged as erroneous and prejudicial to the interest of the revenue. 12. Ld A.R further drew our attention towards page 109 containing note sheet dated 22.12.2016 and submitted that the AO asked the AR of the assessee to furnish details and explanation in respect of to reasons of CASS selection, which were verified and examined by the AO and all relevant papers were taken on record and same were also forwarded to JCIT for kind perusal and approval of refund, which was received on 29.12.2016 vide letter No.1688 dated 29.12.2016, which was placed ....
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....he Pr. CIT has not followed the principles of natural justice while passing revisionary order u/s.263 of the Act. Ld counsel submitted that the notice u/s.263 of the Act was issued on 12.3.2019 fixing the date of hearing on 19.3.2019 and subsequently second show cause notice dated 27.3.2019 fixing the date of hearing after one day i.e. on 29.3.2019 and thereafter the impugned order has been passed on the same date i.e. 29.3.2019 without affording due opportunity to the assessee. Ld A.R. further submitted that the assessee has been placed at Sundargarh and the hearing was conducted by Pr. CIT at Aayakar Bhavan, Cuttack about 300 kms away. Therefore, it was not practically possible and convenient to the assessee to properly contest the proceedings by way of filing relevant documents and reply within a period of six days to the first notice and then one day only to the second notice. Therefore, it is a clear case of violation of principles of natural justice. Ld counsel submitted that between the period from 12.3.2019 to 19.3.2019, there were to holidays i.e. on 16.3.2019 and 17.3.2019 and the assessee could only get four working days to reply the show cause notice issued by Pr. CIT a....
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....ges 52 to 66 of APB for financial year 2014-14 relevant to A.Y 2014-15 available at page 160 of APB for financial year 2011-12 relevant to assessment year 2012-13 and, therefore, it cannot be presumed that the AO has not made any enquiry on this issue. 19. Further, placing reliance on the order of ITAT Chandigarh bench in the case of Jaswinder Singh vs CIT, 56 SOT 85 (Chandigarh), ld counsel submitted that the revisionary proceedings initiated on the basis of audit objection is not maintainable in law. Further, ld A,R placed reliance on the proposition laid down by Hon'ble Delhi High Court in the case of CIT vs Anil Kumar Sharma(2010) 194 Taxman 504 (Delhi) wherein, it was held that where it was discernible from record that AO had applied his mind to issue in question, the Commissioner could not invoke section 263 merely because he had different opinion. 20. Placing reliance on the decision of Hon'ble A.P. High Court in the case of Spectra Shares & Scrips Pvt Ltd vs CIT, (2013) 36 taxmann.com 348 (AP), ld A.R. submitted that the Assessing Officer in the assessment order is not required to give detailed reasons and once it is clear that there was application of mind by an enqu....
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....e was also serviced notice on mail by Pr. CIT and he got sufficient time to reply the same personally or electronically, therefore, it cannot be alleged that revisional order has been passed in violation of natural justice. Without providing sufficient time and opportunity to the assessee On the allegation of ante dated order, Ld CIT DR strenuously contended that such allegation against the Sr. Revenue Officer cannot be made in absence of any selfspeaking material or documents and this kind of practice should not be adopted by the honest taxpayer. 24. Lastly, ld CIT DR submitted that Pr. CIT has picked up four issues for revising the assessment order, which has also been mentioned in show cause notice issued under section 263 of the Act, therefore, it cannot be alleged that the order is passed in violation of principles of natural justice. However, Ld CIT DR, in all fairness, submitted that in pursuance to the impugned revisional order u/s.263 of the Act, the AO has passed the reassessment order after allowing due opportunity to the assessee. Therefore, no prejudice has been caused to the assessee in this regard. Ld CIT DR submitted that keeping in view the entire facts, the rev....
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....uld show and satisfy us that Pr. CIT has passed ante dated order. Therefore, we decline to accept this contention of ld A.R. that the order has been passed ante dated and thus, both the contentions and grounds agitated by the assessee are hereby dismissed. 28 .So far as sufficiency and adequacy of enquiry on the issues of ' Limited Scrutiny' are concerned, we observe that the AO issued notice u/s.143(2) and u/s.142(1) of the Act which were replied by the assessee and copies of these notices and replies have been placed on record at APB pages 42 to 113, which shows that the AO makes some inquiry on the issues picked up by him by way of issuing notices and taking on record replies, explanation and relevant documents submitted by the assessee in compliance to the said notice. However, we are unable to find any deliberation in the assessment order regarding these issues which could show and satisfy us that the AO not only made sufficient and adequate enquiries on the issues for which the case was selected for limited scrutiny but also made deliberation by application of mind and thereafter adjudicated the issues by way of inserting deliberation in the assessment order. 29. Ld A.R....
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....er the head "cost of materials consumed". Thus, the income credited to P&L account was understated to the tune of Rs. 16,91,91,234/- which were not enquired by the AO. 32. We also observe that the issue of brought forward unabsorbed depreciation of Rs. 1,34,85,465/- and MAT credit of Rs. 26,33,135/- was not under Limited Scrutiny, hence, the AO has not enquired into the matter while passing the assessment order. Although both the issues were not under limited scrutiny but from the spirit and mandate of section 263 of the Act, which provides revisional powers to Pr. CIT/CIT in the cases where the assessment order or any other proceedings under this Act, passed by the AO is erroneous and prejudicial to the interests of the revenue. This section is itself a mini code wherein proceedings for revision has also been provided and as per this provision, the first and foremost requirement for invoking the revisional proceedings is that the ld. Pr. CIT/CIT shall call and examine the assessment records of any proceedings under this Act, which include scrutiny assessment records and if after applying his mind to such record or proceedings, he consider that any order passed by the AO is erro....
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....n investigator. He cannot remain passive in the face of a return which is apparently in order but calls further enquiry. It is incumbent on the AO to further investigate the facts stated in the return when circumstances would make such an enquiry prudent. The work ' erroneous' in section 263 includes the failure to make such enquiry." 35. In the case of Tarajan Tea Co. Pvt. Ltd. vs. CIT [205 ITR 45], the Hon'ble Gauhati High Court held as under :- "that it was not quite certain whether the tress sold in the previous year relevant to the assessment year were trees standing at the time of acquisition or trees which grew on roots and trunk existing on the date of acquisition or on roots and trunks of trees existing at the time of acquisition and cut subsequently. This was a matter which had to be investigated by the Income-tax Officer after calling upon the assessee to furnish relevant data. The Inspecting Assistant Commissioner had no such data before him in order to enable him to conclude that there was no cost of acquisition. It was also to be considered whether the spontaneous growth required any care or attention by way of protection from animals and the like an....