TaxTMI 
TaxTMI 
2022 (4) TMI 160
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....ised in the assessment proceedings on issue under consideration of claim of depreciation of Rs. 6,87,12,817/- and all relevant details in response thereof was filed; 3. failed to appreciate that the assessment order was neither erroneous nor prejudicial to the interest of the revenue and thus order u/s 263 is bad in law, illegal, ultra-vires, in excess of and/or in want of jurisdiction and otherwise void; Claim of depreciation on Computer including Computer software 4. failed to appreciate that the addition / classification of assets by the Appellant for Income-tax purpose is as per Section 32 of the Income-tax Act, 1961 read with Rule 5 (New Appendix -I) of the Income-tax Rules. 1962 and the addition / classification as per the Companies Act is not relevant 5. failed to appreciate the detailed break-up and description of additions to the block of assets along-with supporting invoices submitted by the Appellant 2. To adjudicate on this appeal, only a few material facts need to be taken of the assessee is engaged in the business of "operation of semi closed prepaid instrument by the RBI". The assessment was picked up for scrutiny assessment, and one of the reasons for sel....
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.... on the facts and circumstances of the case, have not been inquired into while completing the assessment. On the facts and circumstances of the case, it is clear that in respect of the aforesaid aspects, the order of the A.O. suffers from error within the meaning of Section 263 of the I.T Act 1961. This error has resulted in prejudice to the revenue within the meaning of Section 263 in as much as the claim of the assessee is allowed in excess and/or income of the assessee has been under assessed. Accordingly, in respect of the aforesaid aspects, enumerated in foregoing paragraphs as above, provision of Section 263 of the Income Tax Act, 1961 are clearly attracted to the facts of this case. 4. The assessee, in reply, submitted as follows:- 4. Assessee in its reply submitted that, "The Assessee vide its submission dated 27th June 2017 during the course of assessment proceedings submitted facts related to depreciation. Further, the supporting invoices for addition to Fixed Assets were also submitted by the Company. Hence AO has verified this aspect. For the purpose of the Income Tax Act, the Company has correctly capitalized hardware and software under "Computers including compute....
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....that its wrong claim can be allowed. If assessee's wrong claim is allowed then assessee company would continue giving same treatment when it starts making profit and defer the payment of taxes. Case was selected for scrutiny under CASS. One of the reason for selection of scrutiny was, Depreciation claimed at higher rate'. Hence, AO was duty bound to verify all aspect related to depreciation claimed by the assessee. AO vide its notice u/s 142(1) dated 10.03.2017 and 22.5.2017 has not raised any query regarding depreciation. Assessee submitted the details regarding depreciation vide its submission dated 27-6-2017. A has accepted assessee's submission without making any further verification in this regard. There is no order sheet entry suggesting that the AO made any inquiry at all regarding depreciation despite 'Higher Depreciation', being one of the reasons for selection for scrutiny assessment. AO has failed to verify whether the depreciation of Rs. 6,45,61,542 claimed by the assessee under the head computer was allowable expense as per Income Tax Act. AO passed the assessment order u/s 143(3) on 29.06.2017 without making any further inquiry. In absence of an....
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....rectness of a claim made in the income tax return, probe into the matter deeper in detail. He need not look at everything with suspicion and investigate each and every claim made in the income tax return; a reasonable prima facie scrutiny of all the claims will be in order, and then take a call, in the light of his expert knowledge and experience, which areas, if at all any, required to be critically examined by a thorough probe. While it is true that an Assessing Officer is not only an adjudicator but also an investigator and he cannot remain passive in the face of a return which is apparently in order but calls for further inquiry but, as observed by Hon'ble Delhi High Court in the case of Gee Vee Enterprises v. ACIT [(1195) 99 ITR 375 (Del)], "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. (Emphasis, by underlining, supplied by us). It is, therefore, obvious that when the circumstances are not such as to provoke an inquiry, he need not put every proposition to the test and probe everything stated in the income tax return. In a way, his role in the scrutiny assessment proceedings is....