TaxTMI 
TaxTMI 
2022 (10) TMI 818
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....ome tax Act, 1961 (-Act") in the manner passed by him. The order so passed is bad in law and liable to be quashed. 2. Grounds relating to exercising jurisdiction under section 263 of the Act 2.1 The learned PCIT has erred in passing order under section 263 of the Act based on grounds which are different from the grounds in the show cause notice. 2.2 The learned PCIT has erred in not providing any opportunity of being heard in relation to points on which the assessment order is considered to be erroneous or prejudicial to the interest of Revenue. 2.3 The learned PCIT has erred in concluding that the assessment order passed by the AO is erroneous in so far as it is prejudicial to the interest of the revenue within the meaning of clause (a) of Explanation 2 to section 263. 2.4 The learned POT has erred in stating that the AO did not examine the allowability of claim under section 80JJAA. 2.5 The learned PCIT has erred in not appreciating that the deduction under 80JJAA was examined in detail by the learned AO during the assessment proceedings and thereafter the assessment order was passed. 2.6 Without prejudice, the learned POT observes that the learned AO should make a....
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....ejudice, the learned PCIT has erred in not appreciating that the jurisdiction under section 263 of the Act cannot be invoked where two views are possible and the AO has accepted one of the possible views while passim!, the assessment order. 2.16 Based on facts and circumstances of the case and law applicable, the revision order passed by the learned PCIT is bad in law and liable to be deleted. 3. Prayer:- 3.1. The Assessee prays that directions be given to grant all such relief arising from the grounds of appeal mentioned supra and all consequential relief thereto. 3.2. The grounds of appeal raised by the Assessee herein are without prejudice to each other. The Assessee craves leave to add to and or to alter, amend, rescind, modify the grounds herein above or produce further documents before or at the time of hearing of this Appeal. The Assessee prays accordingly." 3. The assessee filed return of income (revised) for AY 2017-18 on 31-10-2018 declaring total taxable income of Rs.11,63,81,273/- after claiming a deduction u/s.80JJAA of Rs.3,30,26,436. For AY 2018-19 the return was filed on 31.10.2018 declaring NIL income after claiming deduction u/s. 80JJAA of Rs.3,40,84,211....
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....y. The examination of accounts and findings of survey proceedings show that points raised in the showcause notice are factually correct. Hence, it is held that the Assessment Order passed by the Assessing Officer is erroneous so far as it is pre judicial to the interest of the Revenue as der the provisions of Clause (a) of Explanation (2) to the Section 263 of the Income Tax Act, 1961. 7. In view of the above, I, the Principal CIT (Central), Bengaluru, by virtue of powers conferred on me u/ s 263 of the Act, am satisfied that the assessment order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of revenue within the meaning of the clause (a) of Explanation 2 to the section 263 of the Income Tax Act, 1961, as the AO did not examine the allowability of claim of assessee company u/s 8OJJAA of I T Act as discussed above. Therefore the assessment order passed u/s 143(3) of I T Act dated 29.08.2019 is hereby set-aside to the file of the Assessing Officer for passing a fresh assessment Order after making verification and enquiry with regard to claim of deduction u/s 80JJAA. of I T Act." 6. Aggrieved, the assessee is in appeal before the Tribun....
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....eduction under section 80JJAA was claimed. 8. The ld. AR further submitted that on examination and verification of the details filed by the Assessee, the assessment under section 143(3) was concluded by accepting the returned income vide assessment order u/s. 143(3) dated 29.08.2019. It was further submitted that the PCIT has not found anything erroneous in the order of the AO in relation to deduction u/s. 80JJA of the Act and the PCIT has not examined the merits of the case to conclude that there is an error in the deduction claimed. Therefore the PCIT is not right in holding that the order of AO is erroneous and prejudicial to the interests of the revenue to set aside the assessment order u/s. 263 of the Act. 9. The ld. DR submitted that Explanation 2 to section 263 is correctly invoked by the PCIT since as per clause (a) to Explanation to section 263, the order passed without making enquiries or verification which should have been made is erroneous insofar as it is prejudicial to the interests of the revenue. In the given case, one of the reasons the case was selected for scrutiny is the verification of deduction u/s. Chapter VIA and there is nothing coming out of the order of....
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....provided in the newly inserted Explanation means the verification/ enquiry which ought to have been done. In the given case the assessee's case was selected for scrutiny and one of the reasons was examination of deduction from total income under Chapter VIA. The AO issued various notices calling for details including the details pertaining to section 80JJA deduction. However, in the assessment order as extracted below for AY 2017-18 the AO has not brought out anything explicitly and not recorded any finding with regard to the deduction claimed u/s.80JJAA and also there is nothing mentioned in the order that he has verified the eligibility and the correctness of the claim of deduction u/s. 80JJA. "2. Subsequently, notice u/s 142(1) of the Act dated 19-02- 2019 calling for relevant details in connection with the reasons for selection of the case for scrutiny was issued and served on the assessee. The assessee furnished details in support of the return of the return of income filed in response to the notices issued through the CPC E-filing portal. The details furnished by the assessee were examined. 3. The assessee-company is engaged in business of providing Manpower contract serv....
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....e to a situation where the commissioner may consider the order as erroneous and prejudicial and the commissioner having remanded the matter to the assessing authority, we are of the clear opinion that it cannot be characterized as a situation beyond the realm of Section 263 of the Act, as the order being erroneous and prejudicial is a clear possibility particularly the assessing authority not disclosing the basis. 22. To test this proposition, if an order which is explicit is passed by the assessing authority and indicating that the assessee is entitled to a particular extent of relief, but if it is with reference to relevant articles of the double taxation avoidance agreements and if it is not either a proper computation or not fully in consonance with the same and if it has resulted in a situation of granting a greater relief than the assessee is otherwise entitled to under these agreements and if the commissioner can revise such an order without any hassle in the exercise of revisional jurisdiction under section 263 of the Act and can correct the order which is erroneous and prejudice to the interest of the revenue, just because the assessing authority does not spell out the r....
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....o limit or curtail the scope and operation of the provision even when there is no need for it. 26. We are also not in a position to accept the submission that, the materials had been placed before the assessing authority and therefore there should be a conclusion that the authority has applied his mind to the same and there was no question of the commissioner interfering by taking a different view etc. 27. Assessing authority performs a quasi-judicial function and the reasons for his conclusions and findings should be forthcoming in the assessment order. Though it is urged on behalf of the assessee by its learned counsel that reasons should be spelt out only in a situation where the assessing authority passes an order against the assessee or adverse to the interest of the assessee and no need for the assessing authority to spell out reasons when the order is accepting the claim of the assessee and the learned counsel submit that, this is the legal position on authority, we are afraid that to accept a submission of this nature would be to give a free hand to the assessing authority, just to pass orders without reasoning and to spell out reasons only in a situation where the find....