TaxTMI 
TaxTMI 
2021 (9) TMI 1258
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....s case does not fall within the mischief of section 263. As such the order is bad in law and the same is liable to be cancelled. 4. That the order was passed hurriedly without applying the mind and without appreciating the facts of the case as the same was going to be barred by time. As such, the order passed is bad in law and is liable to be cancelled. 5. That the Pr CIT cannot assume jurisdiction u/s. 263 for making roving enquiry on the issues which are already enquired by the Assessing Officer, however, not expressly discussed in the assessment order passed. 6. That the Pr. CIT did not appreciate that the assessment order was passed after making through enquiries and after filing the necessary information as desired and required from time to time. It is pertinent to point out that this was a cases of tax audit. The case of the assessee was taken up several time and queries were raised and were duly complied. The Assessing Officer after considering all the facts and material and after making all the enquiries allowed deduction u/s. 80IB of the IT Act, 1961. As such the reopening by invoking the provisions of section 263 is not all justified and as such....
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....) of the Act and gross profit declared was raised by the assessing officer during the course of assessment, which was duly responded and the same was accepted as such, without drawing any adverse inference against the appellant. 7. Further, it is of utmost importance to note that the assessment proceedings in the case of the appellant, which was completed vide order dated 30.12.2016, passed under section 143(3) of the Act, was conducted and concluded under the supervision of the Pr.CIT-1, Amritsar as is evident from the observations made by the assessing officer in the assessment order as under: [Refer Page No.14 of the assessment order] "4. The case was discussed with the Worthy Principal Commissioner of Income Tax-1, Amritsar with reference to letter no. 5266 Dated 29.12.2016 of Addl. Commissioner of Income Tax, Range-3, Amritsar. After discussion, the returned income is accepted as directed by the Worthy Principal Commissioner of Income Tax-1, Amritsar." 8. It was the contention of the Ld.AR for the assessee that the same assessing officer had moved the proposal for initiation of the proceeding under section 263 of the income tax act, vide proposal dated 26 Octobe....
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....r above cited show cause Notice no 2614 dated 03.01.2018/2019 received by us on 16.01.2019. As per the said Notice, after going through our assessment records you have observed that our then assessing officer has failed to make necessary enquiries/verification and also failed to apply his mind on the following issues while framing our assessment I) That the record shows that the AO has accepted the claim of deduction U/s. 80IB of the Income Tax Act made by the company without verifying, as to whether all conditions of claiming deduction U/s. 80IB(11A) are satisfied or not and II) That for fall in gross profit rate during the year in comparison to the preceding year; the assessing officer has failed to make necessary verification and enquiries. 1. We have been afforded an opportunity to explain as to why the provisions of Section 263 of the Income Tax Act should not be invoked in this case. Our submissions on legal position of applicability of Section 263 and on facts are as under : I) At the outset, it is submitted that said show cause Notice is illegal, based on surmises and not substantiated in law. Section 263 of the Income Tax Act, empowers t....
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....ramed on 30.12.2016. During the course of these proceedings, in depth inquiries/information as required by the assessing officer from time to time were furnished. It was after almost 40 hearings, these proceedings were concluded. Also these assessment proceedings were subject to examination of two independent officers which initially continued till 21.03.2016 and subsequently because of change of new incumbent officer the assessment was finally framed on 30.12.2016. 3. As regards enquiries/verification of our claim for deduction U/s. 80IB (11A); we were asked on four occasions to justify our claim made with reference to the facts of our case and legal position. We submitted in our detailed replies dated 16.07.2015, 1/03/2016 and 04/08/2016. On 13.12.2016, again we were asked to show cause as to why 'Disallowance of deduction U/s. 80IB of Rs. 35125451/- be not made' and why net profit rate be not applied on substantial cash sales. Our said reply dated 13.12.2016 forms part of the assessment order dated 30.12.2016 in which same has been reproduced in verbatim. Copy of our submission dated 13.12.2016 on the above issues which is self explanatory, for your reference is enclose....
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....(11A), in view of same also no prudent assessee would understate its income which can be prejudicial to the interest of revenue. 8. At the end it is submitted that in totality of the facts, circumstances and legal position as explained above and also with reference to all detailed explanations and information furnished by us to the then assessing officer during our assessment proceedings, the assessment order dated 30.12.2016 framed by the assessing officer is correct. There isn't any doubt about the fact that the assessment has not been made without proper and detailed enquiries/verification and proper application of mind by then assessing officer. Therefore provisions of Section 263 of Income Tax Act cannot be invoked." 13. However Pr.CIT was not convinced with the reply filled by the assessee, and therefore exercised revisionary power under section 263 and order set-aside the assessment order dated 30.12.2016 passed under section 143(3), on the ground that the order was prejudicial to the interests of the Revenue on account of lack of enquiry conducted in the course of the assessment proceedings in respect of the issue of: (a) claim of deduction under section 80IB(11....
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....6.06.2015 [Copy enclosed at pages 8 to 10 of paperbook] The assessing officer vide the said notice, inter-alia required the appellant to justify the claim of deduction made under Chapter-VI-A of the Act and also directed to file details of gross profit declared in the past assessment year(s). The relevant extracts of the notice is re-produced hereunder: "1. A note on business activity/activities................................................ 3. Also submit ROI for A.Y. (Current year and preceding year) alongwith computation of income and notes thereto. .................... 9. Please give details and justify the deduction claimed under chap VI-A of Income Tax Act, alongwith appropriate documents and evidence. 11. Please furnish the details in the following format: Financial Year Gross Profit Net Profit Turn Over Ratio (Gp& NP) 2009-10 2010-11 2011-12 2012-13 20. Certified true copies of trading, P/L, Balance Sheet alongwith schedules thereto, Tax Audit Report for A.Y. 2013-14, 2012-13 and 2011-12." Reply....
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....80IB(11A) of the Act in light of the fact of mutual transactions with sister concerns. Reply dated 01.03.2016 [Copy enclosed at pages 30 to 32 of paperbook] In response to the aforesaid query, the appellant filed elaborate reply justifying its claim of deduction under section 80IB(11A) of the Act. Further, alongwith the aforesaid reply, the appellant also submitted complete details of all items dealt (i.e., purchase/sold)by the appellant and nature of all activities relating to processing, preservation and packaging of said items. Notice dated 19.07.2016 [Copy enclosed at page 33 of paperbook] The assessing officer directed the appellant to furnish details of deduction claimed under section 80IB with relevant report of the auditor and explaining satisfaction of conditions along with documentary evidences. Reply dated 04.08.2016 [Copy enclosed at pages 34 to 36 of paperbook] In response to the aforesaid query, the appellant once again elaborately reiterated and justified its claim of deduction under section 80IB(11A) of the Act before the assessing officer. Reply dated 12.09.2016 [Copy enclosed at pages 214 to 217 of pap....
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....ing Co. and in the ratio of 70:15:15 respectively. The sharing of the same depends upon the usage of power on estimate basis by these concerns. There is 'Roasting Unit' of the company situated in the said premises. [Annexure No.1469 to 1475] Notice dated 05.12.2016 [Copy enclosed at pages 38 to 40 of paperbook] The assessing officer once again issued detailed show cause notice inquiring about the claim of deduction under section 80IB(11A) of the Act. In the aforesaid show cause notice, the assessing officer required the appellant to explain why the deduction claimed under section 80IB(11A) of the Act should not be disallowed. Reply dated 13.12.2016 [Copy enclosed at pages 41 to 54 of paperbook] In response to the show cause notice, the appellant filed detailed reply with respect to the claim of deduction under section 80IB(11A) of the Act. 30.12.2016 The assessing officer passed assessment order, duly accepting the claim of deduction under section 80-IB(11A) of the Act. It is further relevant to point out that even during the course of assessment, the copies of opinion were duly filed before the AO during the course of assessm....
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....at and commenced its business of processing, preservation and packaging of fruits and its derivatives etc. In the said undertaking, the appellant had created significant infrastructure for processing, preservation and packaging of fruits, mainly Badam, GiriBadam, Abjosh, Kaju, Kishmish, Pista etc. In the previous year relevant to assessment year 2013-14, in its return of income, the appellant claimed deduction amounting to Rs. 3,51,25,451 under section 80-IB(11A) of the Act in respect of its profits derived exclusively from the business of processing, preservation and packaging of fruits, mainly Badam, GiriBadam. Since the process of preservation, cracking and packaging of fruits mainly GiriBadamis part and parcel of the integrated business of the appellant, deduction under section 80IB(11A) of the Act was claimed by the appellant on fulfillment of all conditions specified therein. The main allegation made by the Pr.CIT in setting aside the issue of deduction claimed by the appellant under section 80IB(11A) of the Act is that the assessing officer has failed to examine the following points (a) whether dry fruits are to be treated as 'fruits' for ....
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....for processing, preservation and packaging of fruits mainly BadamGiri. It is submitted that the appellant is engaged in processing, preservation and packaging of various dry fruits which primarily include Almonds. It is pertinent to note that after purchase of dry fruits, the appellant performs a variety of processes. In order to obtain a better understanding, the various processes undertaken by the appellant, on various dry fruits, are elaborately explained in Annexure-I. [Refer Page No.212 & 213 of the paper-book] It is further relevant to point out that the assessee company also received financial assistance/grant in aid for setting of processing of nuts, sesame nut seeds, soybean and grant in aid was received at Rs. 50 Lakh. A copy of the letter dated 12/03/2013 is placed at Page No.110 & 111 of the paper-book. On perusal of the activities undertaken by the appellant, it is thus clear that all the three processes, viz. processing, preservation & packaging are being carried out by the appellant, which are the essence for claiming deduction under section 80IB(11A) of the Act. 18. The Ld.AR for the assessee had also submitted that the case of....
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.... - CIT vs. Max India Limited: 268 ITR 128 (P&H) [affirmed in 295 ITR 282 (SC)] - CIT v Kwality Steel Suppliers Complex: 395 ITR 1 (SC) - CIT vs. Amitabh Bachchan: 384 ITR 200 (SC) - CIT v. Vikas Polymers: 341 ITR 537 (Del.) - CIT v. Sunbeam Auto Ltd.: 332 ITR 167 (Del) - Vimgi Investment (P) Limited: 290 ITR 505 (Del) - CIT v. Hindustan Lever Ltd: 343 ITR 161 (Bom.) - CIT vs. Development Credit Bank Ltd: 323 ITR 206 (Bom.) - CIT vs. Gabriel India Limited: 203 ITR 108 (Bom) - CIT v. Ganpat Ram Bishnoi: 296 ITR 292 (Raj) - Hari Iron Trading Co. vs. CIT: 263 ITR 437 (P&H) - CIT V. Arvind Jewellers: 259 ITR 502 (Guj.) 20. Ld AR had further referred the decision of the Punjab and Haryana High Court in the case of Hari Iron Trading Co. vs. Commissioner of Income-tax: 263 ITR 437, wherein it was held that even though the assessment order was silent with respect to the issues raised in the 263 order, that by itself did not vest the Commissioner with valid jurisdiction, considering that such issues were considered by the assessing officer and formed part of the assessment record. On pa....
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....f the Assessing Officer did not apply his mind and committed a lapse, there is no reason why the assessee should be made to suffer the consequences of that lapse." (emphasis supplied) 22. The decision of the Delhi High Court has been affirmed by the Supreme Court in the case reported as CIT vs. Kelvinator of India Ltd.: 320 ITR 561.To the same effect is the decision of the Delhi High Court in the case of CIT vs. Anil Kumar Sharma: 335 ITR 83,where it was held that though the assessment order did not patently indicate that the issue in question had been considered by the assessing officer, the record showed that the assessing officer had applied his mind and once such application of mind was discernible from the record, proceedings under Section 263 of the Act would fall into the arena of the Commissioner having a different opinion, which was impermissible in law. 23. Ld AR Further, referred to the decision of the Allahabad High Court in the case of CIT v. Goyal Private Family Specific Trust: 171 ITR 698, wherein the Court observed as under: "Thereafter, notices under section 263 were issued to the assessee by the Commissioner of Income-tax for "both the years calling....
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....detailed order. So, the conclusion of the Commissioner that the orders of the Income-tax Officer are erroneous and prejudicial to the interest of the Revenue are based merely on suspicion and surmises in the absence of any enquiry having been made by him. In the income-tax assessments, all questions boil down to this, whether income has been properly determined and whether the correct rate of tax has been applied. The Commissioner does not say that the income was higher or that it was assessed on a wrong entity or at a low rate or that any exemption was wrongly allowed. In the absence of such a finding, the assessment orders cannot be said to be erroneous and prejudicial to the interest of the Revenue."(emphasis supplied) 24. it was submitted that the Ld. AR that as a necessary corollary, when on a particular issue the assessing officer did conduct extensive enquires during the course of assessment proceedings, such order cannot, , be regarded as erroneous so as to warrant exercise of revisionary jurisdiction under section 263 of the Act. It was reiterated that once, on the facts of the case, not only the relevant details/ documents are available on record and the issue....
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....upport from the decision of Madras High Court in the case of Festo Elgi (P) Ltd vs. CIT reported in (2002) 123 Taxman 537. Again this view finds support from the decision of Madras High Court in the case of R. Srinivasan vs. ACIT reported in (2013) 29 taxmann.com 279 (Madras). He relied upon the decision of ITAT, Amritsar Bench, Amritsar in the case of Ambey Construction Company, Bathinda in ITA No. 208/Asr/2017, order dated 07/05/2019 relating to Assessment Year 2012-13 and also in the case of Ambey Construtech (P) Ltd, Bathinda in ITA No. 209/Asr/2017 & 344/Asr/2019, order dated 24/08/2021 relating to Assessment Year 2012-13. 28. The Ld.AR had further submitted that similar notice u/s 263 was issued by Pr. CIT in connection with AY 2014-15 on 13/03/2020, a copy of which is placed at Page No.116 & 117 of the paperbook against the assessee . The principal Commissioner of income tax after considering the reply of the assessee vide order dated 26 March 2021 had dropped the proceedings u/s 263. A copy of the order is available on Page No.114 & 115 of the paper-book. He had drawn our attention to Para 4 to 6 of the order, which are being reproduced hereinbelow for ready reference: ....
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....edings under section 263 vide his letter dated 4 October 2017 sent on 26 October 2017. In the letter he had also to produce the draft assessment order as sought by the PCIT in a communication dated 5 January 2017. It was the contention of the Ld.AR that it is a classic case of non application of mind by the assessing officer, the same assessing officer is admitting that there was no application of mind at his end further it was submitted by the Ld DR that further enquiries were required to be made by the DR, but for the direction of the P CIT the same was not carried out by the assessing officer and the assessment was framed on his instructions. The Ld. DR rely upon the record of the assessing officer as well as of the P CIT. During the course of argument we had directed the Ld. DR to produce the assessment record with a view to find out whether any communication percent by the additional Commissioner on 29 December 2016 and what was the response of the assessing officer after receipt of the explanation letter from the P CIT dated 5 January 2017. 31. In the rebuttal the Ld.AR had submitted that the assessment was required to be completed by 31 December 2016, and there was no dra....
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....not. And further, we have to find out whether enquiries/ verification made by the assessing officer were sufficient or not. 35. The assessment record produced before us, clearly shows that the assessing officer and made various enquiries/ verification from the assessee, and the assessee gave the reply to the said enquiries/ verification during the assessment proceedings. We are tabulating the multiple questions/enquiry made by the assessing officer and the response given by the assessee to that during the assessment proceedings, the same is as under:- Details of notice/ reply Description/ particulars of notice/ enqiry by AO and reply thereto Notice dated 16.06.2015 [Copy enclosed at pages 8 to 10 of paperbook] The assessing officer vide the said notice, inter-alia required the appellant to justify the claim of deduction made under Chapter-VI-A of the Act and also directed to file details of gross profit declared in the past assessment year(s). The relevant extracts of the notice is re-produced hereunder: "1. A note on business activity/activities................................................ 3. Also submit ROI for A.Y. (Current year and preceding....
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.... Explanation regarding Gross Profit and Net Profit and reasons for fall in GP Rate/NP Rate along-with other relevant details. Reply dated 17.11.2015 [Copy enclosed at pages 23 to 28 of paperbook] Comparative analysis of all the expenses debited to Profit & Loss A/c Order Sheet dated 22.02.2016 [Copy enclosed at page 29 of paperbook] Vide the said order-sheet, the assessing officer required the appellant to furnish following details: (c) to give detailed analysis of the transactions of purchase and sale of various items from and to its associated enterprises; (d) to explain the claim of deduction under section 80IB(11A) of the Act in light of the fact of mutual transactions with sister concerns. Reply dated 01.03.2016 [Copy enclosed at pages 30 to 32 of paperbook] In response to the aforesaid query, the appellant filed elaborate reply justifying its claim of deduction under section 80IB(11A) of the Act. Further, alongwith the aforesaid reply, the appellant also submitted complete details of all items dealt (i.e., purchase/sold)by the appellant and nature of all activities relating to processing, preserv....
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....ne Expenses of Rs. 341033/- reimbursed to Bajaj Overseas Impex. In this connection , we are to state that these electricity expenses pertains Delhi Office and to the business premises of 'Bakewell Industries', to whom the company is paying rent of Rs. 60000/- p.m. (Rs. 720000/- for the year). That in the said premises, Bajaj Overseas Impex and Fairways Trading Company also are one of the tenants. These bills are received in the name of Bakewell Industries and are initially paid by either of these Associate Concerns. However at the end of the year, these total electricity expenses are being shared amongst all the associate concerns/tenants namely Bajaj Overseas Impex, Fairways Trading Co. and in the ratio of 70:15:15 respectively. The sharing of the same depends upon the usage of power on estimate basis by these concerns. There is 'Roasting Unit' of the company situated in the said premises. [Annexure No.1469 to 1475] Notice dated 05.12.2016 [Copy enclosed at pages 38 to 40 of paperbook] The assessing officer once again issued detailed show cause notice inquiring about the claim of deduction under section 80IB(11A) of the Act. In the aforesaid show cause notice....
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....& 17.09.2015. We furnish here under Gross Profit/Net Profit chart in the format as suggested in the questionnaire for the years Financial year Gross Profit (Rs.) Net Profit (Rs.) Turnover Ratio (GP & NP in %) 2009-10 N.A. 2010-11 Nil Nil N/A 2011-12 6690248 3276064 10.61%/5.2% 2012-13 67437348 30473818 4.79%/2.16% As regards the comparison of Gross Profit/Net Profit rate this year as compared to preceding year, it is submitted that the same is incomparable on account of following factors:- 1. That the company's turnover last year is Rs. 630.03 Lacs as compared to Rs. 14081.39 Lacs this year. Thus, there is an increase in turnover of the company by more than 22 times. Further, all the items in which the company dealt in are in the nature of agriculture produce and is not engaged in manufacture of any industrial products. The prices of these items always remain erratic and depend upon climate, total production and demand thereof including export/import of these items from season to season. The prices vary depending upon international market also. 2. That upto last year i.e. upto 31.03.12....
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....of comparables and of assessee has been examined and placed on record. In view of the functional and economic analysis of assessee and of comparables, no adverse inference is drawn in respect of domestic transaction undertaken by the assessee during the FY 2012-13. Thus it is clear that this order was passed by JCIT after considering all the relevant documents and making all the enquiries. 37. The principal CIT in paragraph 6.1 of his order mentioned as under "(6.1) Asper the assessment records the Assessing Officer has failed to make necessary enquiries/verification and he has failed to apply his mind that as to whether all the conditions of sub-section (11A) of section 80 IB of the Income Tax Act,1961 are satisfied or not in the case of assessee company. He has allowed the claim of the assessee company without application of mind. The Assessing Officer has failed to examine as to whether "dry fruits" are to be treated as "fruits" for the purpose of section 80IB (11A).He also failed verify as to whether the assessee company is engaged in the business of 'processing, preservation and packaging----".The AO has also failed to examine as to whether the year under con....
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.... sub-section (11B) of section 80-IB], shall be in Form No. 10CCB. (2) A separate report is to be furnished by each undertaking or enterprise of the assessee claiming deduction under section 80-I or 80-IA or 80-IB 1[or 80-IC] and shall be accompanied by the Profit and Loss Account and Balance Sheet of the undertaking or enterprise as if the undertaking or the enterprise were a distinct entity. (3) In the case of an enterprise carrying on the business of developing or operating and maintaining or developing, operating and maintaining an infrastructure facility, the form shall be accompanied by a copy of the agreement of the enterprise with the Central Government or the State Government or the local authority for carrying on the business of developing or operating and maintaining or developing, operating and maintaining the infrastructure facility. (4) In any other case, the form shall be accompanied by a copy of the agreement, approval or permission, as the case may be, to carry on the activity signed or issued by the Central Government or the State Government or the local authority for carrying on the eligible business. 42. Form 10CCB provides as under ....
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....ct. 45. On 1 March 2016 of along with the relevant details and information. In the reply it was also submitted by the assessee, explaining the nature of all activities relating to processing, preservation and packaging of the various dry fruit items. 46. The assessing officer had not stopped here, he had further issued the notice on 19 July 2016, and in the said notice, the assessing officer made a specific enquiry/documents from the assessee pertaining to " 2. Details of deduction claimed under section 80IB with relevant report of the auditor and explaining satisfaction of conditions along with documentary evidences". 47. The assessee filed the detailed reply on 4thAugust 2016, explaining elaborately how the assessee satisfies the conditions, as required under section 80 IB. In the reply, it was mentioned as under:- It is stated that the Company has during the year also claimed deduction of income U/s.80-IB(11A) of the Income Tax Act,1961. That the Company has established an undertaking and is deriving profit exclusively from the business of processing, preservation and packaging of fruits viz. Badam, GiriBadam, Abjosh, Kaju, Kishmish, Pista etc. Section....
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....essee company is found to be cracking of Badam and not the processing packaging in preserving the fruit and vegetables, and the work of processing, preserving, if any would be the essence of trading business of(trading of dry fruit of the assessee)." 49. The assessee vide reply dated 13.12. 2016 had explained its position and submitted that the assessee is entitled to deduction under section 80 IB of the Act. page 41 to 54 of PB).The assessing officer was also provided the copy of the opinion given by Shri T. N. Pandey Ex-Chairman CBDT dated 28/2/2013 section 80 IB in the assessee's case to the assessing officer during the assessment proceedings. Beside that the opinion of T. U. &COMPANY Dated 13.2.2013 on the applicability of section 80 IB was also provided to the assessing officer. 50. From the reading of the contention of various notices / note sheet enquiries, it is abundantly clear that the assessing officer while framing the assessment had made an extensive, elaborate and necessary enquiry with a view to find out whether the assessee fulfils the conditions mentioned in section 80IB or not. The reading of the notice and the reply and subsequent notices and replies cl....
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....orm 26AS and ITR was due to the interest received from the banks that was duly accounted and considered in the financial statements of the company and was adjusted against the project expenditure. The very fact that pursuant to the scrutiny when the Ld. Assessing Officer proposed charging the interest amount received to tax, the very same explanation was offered by the assessee and was accepted by the Assessing Officer. We are, therefore, of the considered opinion that it is not a case of no enquiry and as a matter of fact, it was specifically brought to the notice of the Ld. Assessing Officer that the interest earned was adjusted against the project expenditure. 13. Further, it is an admitted fact that in this case, the business of the assessee was commenced in this case, unlike the facts in the case of M/s. Tuticorin Alkali Chemicals and Fertilizers Ltd.(supra). The Mumbai Bench of Tribunal while noticing the decision of jurisdictional High Court in the case of CIT vs. Sunbeam Auto Ltd, 332 ITR 167 and the case of Nagesh knitwear Pvt. Ltd., 355 ITR 135 observed that the Explanation-2 to section 263 inserted by Finance Act, 2015 w.e.f. 01.04.2015 would not impact the asse....
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....n reasons in the assessment order is not indicative, always, of whether or not he has applied his mind. Therefore, scrutiny of the record, is necessary and while scrutinising the record the Court has to keep in mind the difference between lack of enquiry and perceived inadequacy in enquiry. Inadequacy in conduct of enquiry cannot be the reason based on which powers under Section 263 of the Act can be invoked to interdict an assessment order. The observations made in this behalf, by the Division Bench of this Court, in Commissioner of Income-tax vs. Sunbeam Auto Ltd., [2010] 189 Taxman 436 (Delhi)/[2011] 332 ITR 167 (Delhi) being apposite, are extracted hereafter. "12. We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the Commissioner of Income-tax under section 263 of the Signature Not Verified Digitally Signed By:VIPIN KUMAR RAI Signing Date:06.07.2021 10:30:10 Income-tax Act. As noted above, the submission of learned counsel for the revenue was that while passing the assessment order, the Assessing Officer did not consider this as....
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....ll be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. [See : Parashuram Pottery Works Co. Ltd. v. ITO[1977] 106 ITR 1 (SC) at page 10]. ****** From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income Signature Not ....
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....r Section 263 of the Act, if two conditions are met, i.e., that the order is erroneous and is prejudicial to the interests of the revenue. [See Malabar Industrial Co. Ltd. vs. Commissioner of Income-tax, [2000] 109 Taxman 66 (SC)/[2000] 243 ITR 83 (SC) and CIT vs. Max India Ltd., (2007) 295 ITR 282 (SC)] Signature Not Verified Digitally Signed By:VIPIN KUMAR RAI Signing Date:06.07.2021 10:30:10 11.1. Therefore, the error should be one that is not debatable or a plausible view. Section 263 of the Act invests a power of revision in a superior officer and therefore, by the very nature of the power, does not allow for supplanting or substituting the view of the AO. The appreciation of material placed before the AO is, exclusively within his domain which cannot be interdicted by a superior officer while exercising powers under Section 263 of the Act only on the ground that if he had appraised the said material, he would have come to a different conclusion. [See Parashuram Pottery Works Co. Ltd. v. ITO, [1977] 106 ITR 1 (SC)]" Respectfully following the decision of Delhi High Court in the matter of Brahma Centre Development Private Limited, ITA No.116 of 2021 be quash order pass....
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....e with your Addl.CIT or not. You are required to send your explanation on following points: (a) Why your observations in para 4 of the assessment order "that returned income is accepted as per directions of the Worthy Principal Commissioner of Income-tax-1, Amritsar" is made which is not based on facts. If you have prepared any draft assessment order other than the assessment order passed by you, it may be known when it was brought to my knowledge? (b) Please explain why the observations have been made in the body of assessment order. Why it was not kept in office note? (c) This order was also required to be discussed with the Addl.CIT, Range-3,f Amritsar also. Please state whether this case was discussed with him. If it was not discussed with the additional CIT then how you are claiming that the case was discussed with the undersigned 5. Your explanation should raise this office within seven days from the date of receipt of this letter. If no explanation is received on the receipt of this letter it will be presumed that you have nothing to say in the matter stated above. 55 We have also called upon the revenue to produce the letter written by....
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....ssessee. Secondly, assessing officer / PCIT, were bothon two different occasions had taken two contrary views. At the time of framing of assessment, it was the case of the AO, the assessment was framed under the direction of the PCIT, to which the assessing officer is not agreeable, despite framing the assessment on 30 December 2016. However, at the time of sending the proposal, the assessing officer had changed his stand and send the proposal for issuing the notice under section 263 and had given the reasons in the proposal dated 26 October 2017. 60 In the proposal dated 26 October 2017, the earlier assessing officer, in the proposal act mentioned that " the assessment order was passed under section 143 (3) dated 30 December 2016 of as per one direction of the Commissioner of income tax-1 Amritsar. The Commissioner of income tax-1Amritsar vide letter no 5832 dated 17.1.2017 asked for explanation as to why order has been passed as above mentioned as per his direction when he did not issue any directions and neither case discussed in detail by furnishing draft assessment order and asked draft order, which was furnished as under" 61 Interestingly the draft ass....
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....sessment order or in other words he cannot act upon the recommendation of the same assessing Officer whose the assessment order was under revision. On this ground also the order passed by the principal CIT is required to be quashed. We fruitfully rely on the decision in the case of Ambey Construction in ITA no ITA No.208(Asr)/ 2017 decided on 5.5.2019 wherein in identical facts, the tribunal had quashed the 263 order passed by the PCIT. 64 As mentioned hereinabove, the assessing officer at the first instance was holding the view that no addition can be made based on either non-fulfilment of the Commissioner under section 80IB and thereafter he had turned around and proposed that additions are required to be made on account of non-fulfilment of the conditions of section 80 IB and non-verification of the GP ratio of the assessee. Similarly, If we believe the assessing officer, that the order section was given by the Commissioner income tax framing the assessment and making the additions again the assessee at the time of passing the assessment order, the Commissioner was holding a view and was also simultaneously discussing the matter with the assessing officer, however quite contr....