TaxTMI 
TaxTMI 
TaxTMI 
2022 (12) TMI 1266
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....erred to as the Act)for the Assessment year 2016-17. 2. Though the Registry has pointed out that the appeal in ITA No. 201/Kol/2021 for AY AY 2016-17 is barred by limitation , however, in view of the decision of the Hon'ble Supreme Court in Miscellaneous Application No. 665 of 2021 in SMW(C ) No. 3 of 2020, the period of filing appeal during the COVID-19 pandemic is to be excluded for the purpose of counting the limitation period. In view of this, the appeal is treated as filed within the limitation period. 3. First we shall take up in IT(SS)A Nos. 19 to 21/Kol/2019 for AY 2009-10 to 2011-12 as the issue involved in all the appeals is common and therefore these appeals are decided and disposed off together. For the sake of convenience we shall first take ITA No. 19/Kol/2019 A.Y.2009-10. 4. The issue raised in ground nos. 1 and 2 is a legal issue and is against the invalid jurisdiction exercised by the Ld. PCIT u/s 263 of the Act thereby setting aside the assessment framed u/s 143(3) read with 153A of the Act in which the AO has not made any addition because there was no incriminating evidences found during the course of search. 5. Facts in brief are that a search action was con....
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....xercised by the Ld. PCIT u/s 263 of the Act is invalid and nullity as there was no incriminating material found and seized during the year with respect to the claim of deduction u/s 35(2AB) of the Act and excess claim of brought forward depreciation. In defense of his argument, the Ld. A.R relied on the series of decisions namely CIT vs. Kabul Chawla reported in [2016] 380 ITR 573 (Del-HC), CIT vs. Commissioner of Income-tax-II, Thanev.Continental Warehousing Corporation (Nhava Sheva) Ltd. reported in [2015] 374 ITR 645 (Bom- HC). The ld AR therefore prayed that the revisionary order passed u/s 263 of the Act may kindly be quashed. 7.The ld DR, on the other hand, relied heavily on the order of ld. PCIT and submitted that the assessee is not be prejudiced by the revisionary proceedings as the assesse would be allowed fair hearing by the AO in the set aside proceedings. When a query was put to the ld. DR on the incriminating materials found during search, he relied on the order of ld. PCIT. 8. We have heard the rival parties and perused the material on record including the assessment order and revisionary order passed u/s 263 of the Act. Undisputedly the instant year is an unabated....
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.... 10. Now we shall adjudicate in IT(SS)A Nos. 22 to 25/Kol/2019 for AY 2012-13 to 2015-16. 11. In all the appeals the assessee has challenged the revisionary jurisdiction exercised by ld. PCIT u/s 263 of the Act on the ground that the revisionary powers were invoked without valid jurisdiction and therefore the order passed u/s 263 of the Act is nullity and bad in law. 12. Facts qua these appeals are same as discussed hereinabove in para 5 of the said order and are not being repeated. The Ld. PCIT upon perusal of the assessment record came to the conclusion that the assessment framed u/s 143(3) / 153A of the Act dated 31.12.2016 is erroneous and prejudicial to the interest of the revenue for the reason that the provisions for gratuity Rs. 12,67,38,890/- were allowed in excess beside allowing the claim of deduction u/s 35(2AB) of the Act without doing any verification which rendered the assessment so framed as erroneous and prejudicial to the interest of the revenue. The issue of 35(2AB) is common in all the years whereas the provision for gratuity was only involved as stated in AY 2012-13. Finally the ld. PCIT revised the assessment by directing the AO be pass afresh order after ma....
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....pendent satisfaction and in fact it is a case of borrowed satisfaction as the revisionary jurisdiction was exercised on the basis of audit objection. The Ld. A.R therefore prayed that the revisionary jurisdiction exercised by the Ld. PCIT is invalid and therefore the order passed u/s 263 is bad and may kindly be quashed. 14. The Ld. D.R on the other hand relied on the order of Ld. PCIT and submitted that ld. PCIT has only directed the AO to frame the assessment afresh after affording a reasonable opportunity of hearing to the assessee and therefore no prejudice has been caused to the assessee by the said set aside/revising of assessment and therefore the appeal of the assessee may kindly be dismissed on this issue. The Ld. D.R. also filed written submissions which are extracted as under: "In this connection, I am reiterating my oral arguments that Section 263 applies to any order passed by the AO during any proceeding under this Act. It is submitted that approval granted by the Addl. CIT to the AO u/s 153D is not a separate order passed under the Act. Section 153D reads as under: "No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of....
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....efore exercising jurisdiction u/s 263 of the Act. We have perused the provisions of the Act vis-à-vis the judicial pronouncements as relied by the assessee hereinabove and find that the issue of assessee is squarely covered by the decision of Co-ordinate Bench of Kolkata Tribunal in the case of Nilkantha Dealcom Pvt. Ltd. (supra) wherein it has held as under: 7. We first take up the legal argument that, order u/s 153A/143(3) of the Act, cannot be revised without cancelling the order of statutory approval given by the JCIT u/s 153D of the Act. On this same issue, the Hyderabad Bench of the ITAT in the case of Shri Ch. Krishna Murthy vs. Asstt. Commissioner of Income Tax Hyderabad reported in 2013 (3) TMI 359 - ITAT Hyderabad, has held as follows:- "23. At this stage, one has to remember, the settled position of law is, for invoking jurisdiction u/s 263 of the Act, two conditions have to be satisfied cumulatively. Firstly, order must be erroneous and secondly it must be prejudicial to the interests of revenue. In absence Ch. Krishna Murt hy of any one of the two conditions, the power conferred u/s 263 cannot be exercised. On a perusal of the assessment order as a whole....
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.... approval well in time. The submission of the draft order must be docketed in the order-sheet and a copy of the draft order and covering letter filed in the relevant miscellaneous records folder. Due opportunity of being heard should be given to the assessee by the supervisory officer giving approval to the proposed block assessment, at least one month before the time barring date. Finally once such approval is granted, it must be in writing and filed in the relevant folder indicated above after making a due entry in the ordersheet. The assessment order can be passed only after the receipt of such approval. The fact that such approval has been obtained should also be mentioned in the body of the assessment order itself." Thus, from the aforesaid facts it becomes clear, the Assessing Officer while exercising power u/s 153A has to pass the assessment order as per the approval granted by addl. CIT u/s 153D. In these circumstances, Assessing Officer having examined the issue and applied his mind to the facts and having passed the order in terms with the directions of the Range Head as per the statutory provisions contained u/s 153D, the assessment order cannot be held to be erroneou....
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.... accumulated profits, which is one of the conditions for invoking section 2(22)(e), it was incumbent upon him to examine that aspect before directing for addition of Rs. 4,27,36,648 u/s 2(22)(e). ITAT Lucknow Bench in case of Mehtab Alam Vs. ACIT, ITA No. 288 to 294/LKW/14 dated 18/11/2014 while setting aside the order passed u/s 263 of the Act, amongst other decisions also took note of a decision of the Hon'ble Allabahad High Court in case of CIT Vs. Dr. Ashok Kumar wherein it was held that when Assessing Officer Ch. Krishna Murthy was fully alive about the facts of the case and the order passed by him was approved by Addl. CIT, then, ld. CIT cannot be justified in interfering in the approval given by Addl. CIT for framing assessment order and there will be no case for setting aside the assessment order. Therefore, considered in the aforesaid perspective when it is a fact on record that both the addl. CIT while granting approval u/s 153D as well as Assessing Officer in course of assessment proceeding have examined the issue of deemed dividend u/s 2(22)(e) of the Act at the hands of assessee in relation to the advance shown in his name in the books of M/s VCPL and the view take....
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....evised without revising the directions of the Addl. CIT under section 153D of the I.T. Act. The Ld. Counsel for the assessee, has relied upon the decisions of this Tribunal in the case of Ch. Krishna Murthy vs. ACIT, C.C. 3, Hyderabad in ITA No. 766/Hyd/2012 dated 13.02.2015 and also the decision of Lucknow Bench of ITAT in the case of MehtabAlam 288/Luck/2014 dated 18.11.2014 in support of this contention. He has also placed reliance upon the decision of Hon'ble Allahabad High Court in the case of CIT vs. Dr. Ashok Kumar in I.T. Appeal No. 192 of 2000 wherein it has been held that the assessment order approved by the Addl. CIT under section 153D, cannot be subjected to revision under section 263 of the I.T. Act. In view of the above decision also, we hold that the revision order under section 263 of the I.T. Act is not sustainable. Accordingly, we allow the grounds of the assessee". 27. Hon'ble Tribunal in case of Dhariwal Industries Ltd v. CIT in ITA Nos. 1108-1113/Pn/2014 dated 23.12.2016 wherein, the Hon'ble Tribunal held as under: 9. Referring to the decision of the Hyderabad Bench of the Tribunal in the case of M/s. Trinity Infra Ventures Ltd. Vs. DCIT vide ....
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....r to decide the issues afresh." 9. The Pune Bench of the Tribunal in the case of Dhariwal Industries Limited vs. CIT, Central, Pune 2017 (1) TMI 260 - ITAT Pune, held as under:- "13. It is the submission of the Ld. Counsel for the assessee that since the order has been passed by the Assessing Officer after obtaining approval of the Addl. CIT u/s. 153D of the I.T. Act, therefore, the Ld. CIT has no power to exercise his jurisdiction u/s. 263 of the I.T. Act, 1961. It is also his submission that even on merit the Tribunal has decided both the issues in favour of the assessee.14. We find merit in the above submission of the Ld. Counsel for the assessee. We find the Lucknow Bench of the Tribunal in the case of Mehtab Alam v. ACIT vide ITA Nos. 288 to 294/Lkw/2014 order dated 18-11-2014 while deciding an identical issue has observed as under: "31. Besides other judgments were also referred by the assessee in this regard and we have also carefully examined the same and we find that similar views were expressed by various judicial authorities. 32. We have also examined the judgment of the Hon'ble jurisdictional High Court in the case of CIT v. Dr. Ashok Kumar (supra) on an issue ....
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....on 263 of the I.T. Act is not sustainable. Accordingly, we allow the grounds of the assessee." 15. Since in the instant case also the Assessing Officer has passed the order after obtaining necessary approval from Addl. CIT u/s. 153D of the I.T. Act, therefore, respectfully following the above-mentioned decisions of the Coordinate Benches of the Tribunal we are of the considered opinion that the CIT has no power to revise the order u/s. 263 of the I.T. Act in the instant case since the same has been passed with the approval of the Addl. CIT u/s. 153D of the I.T. Act." 10. Respectfully following the propositions of law laid down in all these judgments and applying the same to the facts of the case, we have no other alternative but to hold that the revision order passed u/s 263 of the Act by the ld. Pr. CIT is bad in law for the reason that the order of statutory approval passed u/s 153D of the Act, based on which the order u/s 153A r.w.s. 143(3) of the Act, dt. 30/03/2016, was passed, was not revised and is a valid and legal order. We, therefore respectfully following the decision of Co-ordinate Bench, hold that the revisionary jurisdiction has been invalidly exercised and th....
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....elied on the decision of Coordinate Benches in the case of Texmaco Rail & Engineering Ltd. vs. PCIT in [2017] 86 taxmann.com 50 (Kolkata-Trib). The Ld. A.R. finally prayed that the order passed by the AO allowing the said claim of the assessee on the basis of approval granted by the Department of Scientific Industrial Research, Govt. of India has correctly been allowed and thus the order is neither erroneous nor prejudicial to the interest of the revenue and accordingly, the order of Ld. PCIT may kindly be quashed. 21. The Ld. D.R on the other hand relied heavily on the order of Ld. PCIT. 22. After hearing the rival submissions and perusing the material on record, we observe that the assessee has claimed weighted deduction in respect of expenditure on scientific research u/s 35(2AB) of the Act. We note that the approval was granted to the assessee by the Department of Scientific Industrial Research, Govt. of India. Therefore we find force in the arguments of the assessee that once the research facility is approved the AO has no business to question the deduction. If the AO has any reservation on the claim of weighted deduction claimed by the assessee it can be referred to the Dep....