TaxTMI 
TaxTMI 
2020 (12) TMI 210
X X X X Extracts X X X X
X X X X Extracts X X X X
....te but on account of circumstances beyond assessee's control. We quote hon'ble apex court in Collector, Land Acquisition vs. Mst. Katji & Ors [1987] 167 ITR 0471 (SC) that all technical aspects must make way for the cause of substantial justice and condone the delay herein of 291 days. The case is now taken up for adjudication on merits. 3. We advert to the basic relevant facts. This assessee is a company engaged in road infrastructure development and maintenance business. It files its original return on 29.09.12 declaring total income of Rs. 85,69,37,910/-. The Assessing Officer thereafter completed the regular assessment in question dated 30.03.2015 inter alia disallowing/adding section 35D deduction claim & exemption on profit from joint venture(s) and section 14A disallowance involving Rs. 1,12,60,000/-, Rs. 40,38,000/- & Rs. 2,48,10,148/-; respectively. 4. Case file suggests that PCIT termed the foregoing regular assessment as an erroneous one causing prejudice to the interest of the Revenue as follows: 5. He thus issued section 263 show-cause notice dated 27.02.17. The assessee appears to have filed a detailed response dated 10.03.17 contesting the PCIT's....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tanding anything contained in sub-section (1) or sub-section (2), the deduction in computing the total income of an undertaking providing telecommunication services, specified in clause (i) of sub-section (4), shall be hundred per cent of the profits and gains of the eligible business for the first five assessment years commencing at any time during the periods as specified in sub-section (2) and thereafter, thirty per cent of such profits and gains for further five assessment year. (3) This section applies to an undertaking referred to in clause (i) or clause (iv) of sub-section (4) which fulfils all the following conditions, namely: (i) it is not formed by splitting up, or the reconstruction, of a business already in existence: Provided that this condition shall not apply in respect of an undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section; (iii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose:....
X X X X Extracts X X X X
X X X X Extracts X X X X
....structure facility; (c) it has started or starts operating and maintaining the infrastructure facility on or after the 1st day of April, 1995; Provided that where an infrastructure facility is transferred on or after the 1st day of April, 1999 by an enterprise which developed such infrastructure facility (hereafter referred to in this section as the transferor enterprise) to another enterprise (hereafter in this section referred to as the transferee enterprise) for the purpose of operating and maintaining the infrastructure facility on its behalf in accordance with the agreement with the Central Government, State Government local authority or statutory body, the provisions of this section shall apply to the transferee enterprise as if it were the enterprise to which this clause applies and the deduction from profits and gains would be available to such transferee enterprise for the unexpired period during which the transferor enterprise would have been entitled to the deduction, if the transfer had not taken place. For the purposes of this clause, "infrastructure facility" means- (a) a road including toll road, a bridge or a rail system; ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t for Improvement/Upgradation of Shivguni Rafigunj-Goh-Uphara-Devkund-Baldrabad Road(SH-68) Length 78.00 kms Awarded by Executive Engineer, SH Division, RCD Gaya: and 4. The Company is executing the project for Improvement/Strengthening of State Rood in district of Nainital and Udham Singh Nagar, awarded by the Project Director/chief Engineer, P.M.U, A.D. B, Transport), PWD, Dehradun (Uttarakhand). From the requirements of Section 80IA as discussed and the nature of business the assessee is engaged in, the following conclusions can be arrived at: a) The assessee is carrying on the business of developing, operating and maintaining the infrastructure facility b) it is owned by a company registered in India or by a consortium of such companies [or by an authority or a body or a corporation or any other body shall be so constituted generally under Central or State Act). c) It has entered into an Agreement with a State Government or a local authority or any other statutory body. d) It has started operating and maintaining the infrastructure facilities on or after 1st day of April, 1995. e) It is engaged in the business of ro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y by the AO, thereby making the order prejudicial to the interest of revenue. The various judicial pronouncements relied upon by the assessee are clearly distinguishable and hence not applicable to the facts of the instant case. It is well established that the Assessing Officer being a quasi-judicial authority can't take a view, either against or in favour of the assessee/revenue, without making proper inquiries and proper examination of the claim made by the assessee in the light of existing provisions of law. The Assessing Officer has been entrusted the role of an investigator, prosecutor as well as adjudicator under the Scheme of the Income Tax Act. If he commits an error while discharging the aforesaid roles and consequently passes an erroneous order causing prejudice to the revenue, the order so passed by him is liable to be corrected. In this Context, it may be mentioned here that in the case of Commissioner of Income tax, Central-1 Kolkata Vs Maithan International, it was held by Calcutta High Court [2015] 56 taxmann.com 283(Calcutta) that "it is not the law that the Assessing Officer occupying the position of an investigator and adjudicator can dischar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1961. This leaves the assessee aggrieved. 6. We have given our thoughtful consideration to rival pleadings. The assessee's paper-books containing its Form 10CCB for the impugned assessment year, agreements entered with the Government of Bihar and Uttarakhand for improvement/upgradation of roads and bridges of Shivganj-Rafiganj-Goh-Uphara-Devkund-Baidrabad Road and state road in the districts of Nanital and Udham Singh Nagar (paper book I running into 470 pages), copy of the acknowledgement, audited accounts, communication(s), original assessment order, copy of the show cause notice dt. 27.02.2017, copy of the Letter of the assessee dt. 10.03.2017 (paper book II running into 123 pages); respectively stand perused. 7. Since the instant lis contains the issue of correctness of PCIT's action exercising his revision jurisdiction vested u/s. 263 of the Act, we deem it appropriate to refer to various landmark decisions. Case law Malabar Industries Ltd. [2000] 243 ITR 83 (SC) holds that before such a recourse is taken by the CIT or the PCIT, as the case may be, assessment in question has to be both erroneous as well as prejudicial to interest of the Revenue; simultaneously....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al section 80IA deduction claim in the said assessment years 2010-11 & 2011-12 as well as the impugned assessment year 2012-13 having the corresponding sums of Rs. 2,70,151/-, Rs. 47996520/- and Rs. 101,732,513/-; respectively. He also invited our attention to the corresponding project agreements pages 33 to 298 to this effect. Mr. Tulsiyan then took us the assessee's performance guarantee of Rs. 16,85,27,765/- in favour of the Executive Engineer, State Highway Division, Road Construction department as well as corresponding clauses in the said agreement making it clear that it was the assessee only having undertaken the risk involved in the said road projects. Almost identical are the corresponding agreement conditions in the Nanital and Udham Singh Nagar project (supra) having been executed at the assessee's behest in Uttarakhand state forming part of the records in pages 299 to 470 making it had borne the similar business risks therein. Mr. Tulsiyan then referred to assessee's equipment, workforce, royalties and demurrage clauses followed by indemnity stipulation that the assessee not only had to carry out the project but also to bear the future risks in these twin pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat it is the assessee only who has not only employed plant and machinery and to other assets along with the staff but also it had been bearing all the risks involved in the said infrastructure projects and therefore, it could not have been treated a mere works contractor. We have ourselves perused the corresponding twin infrastructure development agreements in pages 33 to 470 of PB-1 involving identical project stipulations to be performed at the assessee's behest which sufficiently reveal that there has not been any deviation vis-à-vis all other similar projects in the impugned assessment year. The Assessing Officer has also accepted assessee's section 80IA deduction in succeeding assessment years 2013-14 and 2014-15 as well and the corresponding preceding assessment years since assessment orders to this effect have been placed before us in pages 109 to 115 and 116 to 123 of PB-2. No disallowance has been made qua section 80IA deduction claim in any of these assessments which have attained finality. That being so, we conclude that the Assessing Officer had taken only the plausible view in accepting the assessee's section 80IA deduction claim in his assessment d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f assessment made by the Assistant Commissioner or Deputy Commissioner or the Income Tax Officer on the basis of the directions issued by the Joint Commissioner under Section 144-A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorised by the Board in this behalf under Section 120; (b) "record" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject-matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub- section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The position and function of the Income-tax Officer is very different from that of a civil court. The statements made in a pleading proved by the minimum amount of evidence may be accepted by a civil court in the absence of any rebuttal. The civil court is neutral. It simply gives decision on the basis of the pleading and evidence which comes before it. The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. The meaning to be given to the word "erroneous" in section 263 emerges out of this context. It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word "erroneous" in section 263 includes the failure to make such an inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssing Officer had not applied his mind on the issue. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between " lack of inquiry" and " inadequate inquiry". If there was any inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has a different opinion in the matter. It is only in cases of "lack of inquiry" that such a course of action would be open. In Gabriel India Ltd. [1993] 203 ITR 108 (Bom), law on this aspect was discussed in the following manner (page 113): "... From a rending of sub-section (1) of section 263, it is clear that the power of suo motu revision can be exercised by the Commissioner only if, on examination of the records of any proceedings under this Act, he consid....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be formed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion... There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed... We may now examine the facts of the present case in the light of the powers of the Commissioner set out above. The Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation in that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. Such decision of the Income-tax Officer ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation/inquiry. The order of the Assessing Officer may be or may not be wrong. CIT cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the CIT to ask the Assessing Officer to decide whether the order was erroneous. This is not permissible. An order is not erroneous, unless the CIT hold and records reasons why it is erroneous. An order will not become erroneous because on remit, the Assessing Officer may decide that the order is erroneous. Therefore CIT must after recording reasons hold that the order is erroneous. The jurisdictional precondition stipulated is that the CIT must come to the conclusion that the order is erroneous and is unsustainable in law. We may notice that the material which the CIT can rely includes not only the record as it stands at the time when the order in question was passed by the Assessing Officer but also the record as it stands at the time of examination by the CIT [see CIT vs. Shree Manjunathesware Packing Products, 231 ITR 53 (SC)]. Nothing bars/prohibits the CIT from collecting and relying upon new/additional material/evidence to show and state that the order of the Assessing Officer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed. [FAN AACCM0564C) 1 Floor, Divine Bliss. 2/3, Judges Court Road, Kolkata - 700 027. Sir. Sub: Shaw Coute Notice u/s 263.of the income Tax Act. 1961, for Y. 2012-13 The Assessment onder for the Assessment Year 2012-13 was passed us 14313) on 30.03.2015 assessing income at Rs. 81.50.96.000/ against returned income of Rs. 77.47.87850V- 2. Scrutiny of records reveal that you are engaged in road construction and you have claimed and availed deduction u/s BCLA for an amount of Rs 15.00.40.130/- for the year under consideration. it is aso observed that The Executive Engineer, STEVsion RCD Gaya (for improvement/upgradation of Shivgunj-Rofguni-Goh-upharo Deviund-Baldrabad Road(SH-68) Length 78.00 Km) and the Project Director/Chief Engineer P.MU A.D.B.(Transport). PWD Dehradun Umarakhandstor improvement/strengthening of State Road in ostict of Nainital and Udham Singh Nogar. Contract no. 51 employed you as contractor for execution of above mentioned works. 3. In this connection, it is relevant to mention that the explanation to subsection (4) of Section 801A envisages the following "Explanation for the removal of doubts, it is....