TaxTMI 
TaxTMI 
2021 (9) TMI 1258
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.... 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 the order by the Pr. CIT is liable to be cancelled. 7. That the Ld. C.I.T. has grossly....
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.... 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 October 2017, despite the fact he was transferred from the charge of assessing Officer and new officer had taken of the charge on 5 Oc....
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....s 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 the Commissioner with the power of revising any order of the assessing officer, where the order is erroneous and error has resulted in prejudice to interest of revenue. The Commissioner ....
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.... 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 enclosed herewith 4. We explained in detail the provisions of said Section, nature of our business in detail which proved beyond any doubt to the assessing officer that the said deduction of income as has been claimed by us meets the conditions o....
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....o 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(11A) of the Act; and (b) gross profit rate declared by the appellant. 14. Feeling aggrieved by the order passed by the principal CIT the assessee is in appeal before us on the ground mentioned hereinabove. 15. At the outset the Ld. AR for the assessee had submitted that during ....
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....t 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 dated 16.07.2015 [Copy enclosed at pages 11 to 14 of paperbook] In response to notice dated 16.06.2015, the appellant vide reply dated 16.07.2015, submitted before the assessing officer that the appellant is eligible for claiming deduction under section 80-IB(11A) of the Act and has fulfilled all the requisite conditions. The relevant extracts of the reply ar....
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....e/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 paperbook] (i) The details of cash deposits in bank duly tallies with respective bank statements. (ii) The date-wise cash and credit sales for the year ended 31/03/2013 are being enclosed herewith vide Annexure 1422 & 1423. (iii) The monthly cash and credit sales for the year ended 31/03/2013 are being enclosed herewith vide Annexure 1424 & 1425. Reply dated 03.10.2016 [Copy enclosed at pages 218 & 219 of paperbook] (i) We have also furnished....
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....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 assessment proceedings, the details of which are as under:- (i) The copy of opinion given by Shri T.N. Pandey, Ex-Chairman CBDT dated 28/02/2013 on the applicability of section 80IB in the case of the assessee was duly filed before the AO during the course of assessment proceedings. [Refer Page No.227 to 233 of the paper-book] (ii) The copy of opinion of T.U. & Company dated 13/02/2013 on the applicability of section 80IB in the case of the assessee was duly filed before the AO during the course of assessment proceedings....
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....f 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 the purpose of section 80IB(11A) of the Act; and (b) whether the appellant is engaged in the business of 'processing, preservation and packaging. In this regard, it is respectfully submitted, that section 80IB(11A) of the Act provides deduction in respect of profits derived from undertakings engaged in the business of processing, preservation and packaging of fruits or vegetables or meat and meat products or poultry or marine or dairy products. The provisions of section 80IB(11A) of the Act read as under: "(11A) The amount of deduction in a case of an undertaking deriving profit from the business of process....
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....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 the assessee is covered by the decision of the Hon'ble Supreme Court. He relied upon decision of the Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT : 243 ITR 83, wherein the apex Court, dealing with the preconditions for jurisdiction under Section 263 of the Act, held as under: "A bare reading of this provision makes it clear that the prerequisite to the exercise of jurisdiction by the Commissioner suomotu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revis....
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....aryana 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 page 444 of the judgment, the High Court observed as under: "Thus, it is not only the assessment order but the entire record which has to be examined before arriving at a conclusion as to whether the Assessing Officer 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 Assessing Officer. 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 Assessing Officer has not mentioned anything in the assessment order. During the course of assessment proceedings, the Ass....
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....r 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 upon the assessee to show cause as to why assessment orders be not cancelled, as being erroneous and prejudicial to the interests of the Revenue. Not being satisfied with the explanation of the assessee, the Commissioner set aside the assessment orders for both the years directing the Income-tax Officer to make the assessments de novo. The Commissioner was of the view that the orders for both the years were erroneous and prejudicial to the interests of the Revenue, inasmuch as they were passed by the Income-tax Officer " ......in haste/hurry without proper and adequate enquiry ...... ... The Commissioner also observed that the orders do riot show " How and in what manner and with what capital the trust conducted its business relating to handloom daris and it is not at all clear from the papers filed." He also adde....
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....ing 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 issues were specifically raised and considered by the assessing officer, in such circumstances, it is not open to the CIT to exercise revisionary jurisdiction, unless the assessing officer is found to have failed to make inquiries/ verification, which should have been made as per law but were not made. The CIT cannot, merely on difference of opinion with regard to the manner of the inquiries/ investigation, exercise revisionary jurisdiction 25. it was submitted by the Ld.AR that the assessment order passed by the assessing officer or the assessment year 2013 - 14 was neither erroneous nor prejudicial to the interest of revenue and therefore the exercise of jurisdiction by the PCIT was without jurisdiction . 26. It was also the contention of the Ld.AR that the assessing officer had passed the order after taking approval from the principal Co....
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....ncipal 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: "04. On the principle of res judicata, it needs to be brought on to record that for AY 2013-14, the PCIT had set aside the assessment on the issue of 80IB(11A). However, on a perusal of case records, this decision is rooted in the assessment order, where, after over 30 order sheet notings, the Assessing Officer, in his wisdom, noted that "the returned is accepted as directed by the Worthy Pr. Commissioner of Income Tax-1, Amritsar." The genesis of the 263 proceedings for AY 2013-14 lay in this comment. This is not the case for AY 2014-15 and is dealt with as such. 05. The submission of the AR have been carefully perused vis-à-vis the assessment records. The AO has in fact done a detailed enquiry and due verification of the information called. The order sheet notings on the file of the AO on 1.11.2017 and 22.11.2017 and the compliance of the A....
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....e 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 draft order available in the record of the assessing officer further there was no order sheet after 16 December 2016 and therefore if any enquiry was required to be made by the assessing officer, step should have been taken by the assessing officer after 16 December 2016. However no steps were taken as sufficient enquiries were already made by the assessing officer satisfying himself about the eligibility of the assessee under section 80 IB as well as in respect of GP rate of the assessee. 32. The assessment record was made available to us, however we were not able to locate either the letter dated 29th of December 2016 written by additional Commissioner to the assessing officer , the reply of the assessing officer to the explanation dated 5 January 2017 and the draft assessment order prior to passing of the assessment order on 30 December 2016. 33. We have considered the rival c....
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....ile 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 dated 16.07.2015 [Copy enclosed at pages 11 to 14 of paperbook] In response to notice dated 16.06.2015, the appellant vide reply dated 16.07.2015, submitted before the assessing officer that the appellant is eligible for claiming deduction under section 80-IB(11A) of the Act and ha....
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....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 paperbook] (i) The details of cash deposits in bank duly tallies with respective bank statements. (ii) The date-wise cash and credit sales for the year ended 31/03/2013 are being enclosed herewith vide Annexure 1422 & 1423. (iii) The monthly cash and credit sales for the year ended 31/03/2013 are being enclosed herewith vide Annexure 1424 & 1425. Reply dated 03.10.20....
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....he 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. 36. Similarly AO asked various questions/ show cause notice/ verification in respect of alleged fall in GP. The table of questions raised and reply given by the assessee to the assessing officer are given hereinbelow. 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 decla....
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....only with small set up of Plant and Machinery. Its own 'Factory Building' was under construction. The company's Factory Building and its main Plant & Machinery was put to use & became operational during the year 31.03.2013. The company's own 'Cold Storage' was still under construction as at 31.3.13. 3. The comparison chart of all items dealt in by company during this year as well as last year showing the itemized value of sale, gross profit in value, gross profit rate along with the similar information for last year is enclosed herewith vide Annexure No.770 to 775. It is thus submitted that we are dealing in highly volatile items and gross profit rate(s) depend upon the market conditions prevailing at that time. 4. Our all sales and purchases are completely vouched. Complete stock tally has been maintained. It is therefore requested that no adverse inference can be drawn. Reply dated 12.09.16 [Copy enclosed at pages 214 & 215 of paperbook] The necessary details with regard to cash sales and credit sales and other details were filed along-with annexures. Reply dated 03.10.16 [Copy enclosed at pages 218 & 219 of paperbook] The GP rate on aggregate sales and ....
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....a nutshell, the deduction is allowable only if all the conditions are satisfied otherwise, it cannot be allowed" 38. In other words, the objection of the Ld. PCIT can be summarised as under * AO 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 * 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 has 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 consideration was the "initial assessment Year" of the assessment company claiming the deduction Us 80IB(11A) of the I.T. Act 39. In first notice dated 16 June 2015, the assessing officer had asked the assessee to " 9. Please give details and justify the deduction claimed under chap VI-A of Income Tax Act, alongwith appropriate documents and evidence.". The assessee had filed the reply to the notice on 16 July 2015 and had categorically submi....
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....ar Number] : ..................... 3. Status : ..................... 4. Ownership status of the undertaking/enterprise : (a) Fully owned by assessee Yes No (b) Partly owned by assessee Yes No If yes, please specify the percentage of ownership : ..................... 5. Address : ..................... 6. Name of the enterprise or undertaking eligible for deduction under section 80-IA, 80-IB or 80-IC : ..................... 7. Section and sub-section of the Income-tax Act, 1961, under which deduction is being claimed : ..................... 8. Date of commencement of operation/activity by the undertaking or enterprise : .................... 9. Initial assessment year from when deduction is being claimed : 10. Address (with District and State) of the enterprise/ undertaking claiming deduction : .................... 11. Excise/service tax registration number and office where registered : ..................... 12. Sales tax registration number and office where registered .......... : 13. Local/State authorities from whom approval is ta....
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....f the profits derived from such business, in a manner that total period of deduction does not exceed 10 consecutive years, subject to the fulfillment of the conditions as laid in the section. We have also fulfilled all other conditions as laid out in section in 80-IB and for this purpose the company has obtained a separate `Audit Report' dated 29.11.2013 in Form No.10CCB (Rule18BBB) which also stands already furnished by the Company vide earlier letter dated 26.05.2015 to your ld. Predecessor. Notwithstanding, the special provision for payment of tax by certain companies U/s. 115JB are also applicable to the company, which provides that where the income tax payable on total income computed under this Act is less than 18.5% of Book Profit, such Book Profit shall deemed to be the total income of the assessee. In view of the same we have paid tax @18.5% + surcharge & education cess on the book profits of the company amounting Rs. 8156794 for the year ended 31.03.2013. Audit Report under section 115JB in Form No.29B of the Income Tax Act,1961 dated 28.09.2013 for computing the book profits of the company stand already furnished by the Company vide earlier letter dated 26.05.2015 to y....
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....ry material were available in the "Record" of the assessing officer. 52. The principal CIT, in another limb of decision, in paragraph 6.2 of the order mentioned that the AO failed to verify the reasons for the fall in gross profit rate of the assessee. In this regard, we have gone through the record of the assessing officer produced before us. We, ourselves had verified that the notices/questions/verifications were sought from the assessee, as tabulated by us hereinabove in para 36 (supra) in respect to eligibility under section 80IB. 53. In view of above we are of the considered opinion sufficient, necessary enquiries were made by the assessing officer during the assessment proceedings, therefore the action on the part of the principle CIT cannot be countenanced and the invocation of jurisdiction under section 263 , was devoid of any merit and is liable to be set aside and annulled . 54. There is yet another critical aspect of the matter whereby the Principle CIT relied upon explanation 2 to section 263 of the Income Tax Act. In our opinion, the explanation to section 263 is prospective and cannot be applied to the assessment year prior to the introduction of the explanation in....
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....ng the provisions of section 263 of the Act and the decision of Hon'ble Apex Court in the case of M/s. Tuticorin Alkali Chemicals and Fertilizers Ltd.(supra) reached a conclusion that inasmuch as there was no specific inquiry by the Assessing Officer, the assessment order was erroneous in so far as it is prejudicial to the interest of Revenue. He does not conduct any independent enquiry to reach the conclusion that the assessment order was erroneous in so far as it is prejudicial to the interest of Revenue. If we accept the submission of the ld. DR that since all the material was available on record, there was no need for the PCIT to conduct any further inquiry, it also inures to the benefit of the assessee because all these things are available on record and the assessee specifically submitted that the difference in the ITR and 26AS occurred because of the adjustment of the interest received against the project expenditure. Admittedly, this is the only project conducted by the assessee and there is no other project. In such an event, it is not the passive submission to be recorded to the AO, but also actively pleading before him that the interest received was adjusted against ....
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....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 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.'s case (supra), law on this aspect was discussed in the following manner: ". . . From a reading of sub-section (1) of section, it is clear that the power of suo motu revision can be exercised by the Commissioner only if, on examina-tion of the records of any proceedings under this Act, he considers that any order passed therein by the Income-tax Officer is 'erroneous insofar as it is prejudicial to the....
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....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 Incometax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at conclusion and such a conclusion cannot be termed 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 on 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 canno....
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....given by the assessee and immediately thereafter the assessing officer has completed the assessment he had completed the assessment from the direction of Principle Commissioner of Income Tax-1, Amritsar. After completing the assessment, the principal CIT had issued a notice calling upon the explanation from the assessing officer vide letter dated 5 January 2017. The letter of the PCT provided as under:- Sub: Explanation in the case of M/s.KBBNutts Private Limited.Ltd., Amritsar - Assessment order passed on 30.12.2016 u/s 143(3) of the Income-tax Act,1961-Regarding - Please refer to the above. 2. In this case only one issue seems to have been raised during the course of assessment proceedings and that issue, according to you, is whether the assessee is entitled to deduction u/s 80IB of the Income-tax Act, 1961. 1. Please refer to your observations given in para 2 of the assessment order where you have observed as under:- "During the year under consideration, the assessee company is engaged in the business of processing, preservation and pasckaging of nuts and dry fruits items.' Refer to your query as raised in para 3(iii) wherein you have observed that the assessee h....
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....er receipt of the letter dated 5 January 2017; however, the said reply was also not traceable in the file, produced before us. 57 During the argument, the Ld. DR had brought to our notice the proposal for initiation of proceedings under section 263 issued by the same assessing officer, the letter was dated fourth of October 2017, however, it was dispatched on 26 October 2017. Asa matter of record, Sh Charan Dass, Than AO, was transferred on 5 October 2017 to another Ward and the charged was given to Sh Prit Pal Singh ACIT. With this fact came to the notice of the Additional Commissioner of income tax, he had written one letter dated 10th of November 2017 to the following effect. "Sub:- Proposal u/s 263 [PAN:- AADCK3310K] M/s KBB Nuts Pvt. Ltd. for the Asst. Year. 2013-14 -Regarding. * . * . * _ * . * . * _ * Refer to the above. The proposal u/s 263 in the aforesaid case has been sent vide letter no. 4584 dated 26.10.2017. It has to be noted that you have taken over the charge of Circle-3 Amritsar on 5/10/2017, whereas the proposal bears the signature of your predecessor who was not DCIT Circle-3, Amritsar on 26/10/2017, i.e. the date of sending of proposal. In this regard....
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.... The Conduct of the assessing officer speaks volumes of breach of settled procedure, which is evident from the delay in providing the draft assessment order to PCIT despite notice dated 5.1.2017. Technically the draft assessment order should have been ready before 30 December 2016, so it should be so that it should be ready for discussion with the said authorities however in the present case despite specifically asking for the draft assessment order vide communication dated 5 January 2017, the draft assessment order was not provided to the Senior authorities. 62 We have noted down the above-said sequence of fact, intending to show the above perversity in the working of the Department at the level of the assessing officer and thereafter. 63 In our opinion, the law is fairly settled. The assessing officer cannot be given the right to review his own order in the garb of sending proposal under section 263 of the income tax act. Under the Income Tax Act, the two options are available with the assessing officer, either to initiate proceedings under section 148 of the income tax act or to correct the mistake by invoking the power under section 154 of the income tax act to rectify the mi....