TaxTMI 
TaxTMI 
2023 (11) TMI 296
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....ue u/s 263 cannot be assumed by him. 3. On the facts and circumstances of the case, the learned Pr. CIT has erred both on facts and in law in ignoring the fact that the proceeding under Section 263 cannot be used for substituting opinion of the A.O. by that of the Pr. CIT. 4. On the facts and circumstances of the case, the order passed by Pr. CIT under section 263 of the Income Tax Act is unsustainable as power to revise can be invoked in the case of no/lack of enquiry, not in the case of inadequate enquiry. 5. On the facts and circumstances of the case, Pr. CIT has erred both on facts and in law in setting aside the issue of section 801A(4)(iv) to the file of the AO without proper appreciating the explanation of assessee given during the assessment proceedings brought on record and also on the facts that deduction u/s 801A(4)(iv) is being claimed and allowed to the appellant since AY 2012-13 onwards and also same is allowed and accepted during earlier years scrutiny assessment's order u/s 143(3) of the Act to prove that there is no violation of provisions of section 801A(4)(iv) by the appellant. 6. The appellant reserves the right to add, amend or modify any of the gro....
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....is a Pvt. Ltd. Company, engaged in the business of manufacturing of sponge iron and MS Ingot and trading of related raw materials. As submitted by the assessee before the Ld. PCIT, in the process of manufacturing of sponge iron, waste flue gas gets generated. The kinetic and potential energy of waste flue gas so generated, is diverted to Waste Heat Recovery based boiler. Which leads to generation of power. This power generated is used to manufacturing process of sponge iron and MS Ingot. As per assessee, 100% profit from the power division of the company consisting of Waste Heat recovery-based boiler, turbine etc. is eligible for deduction u/s 80IA (1) being eligible business u/s 80IA(4)(iv). 4. Return of income for the year under consideration i.e. AY 2017-18 was filed by the assessee on 08-08-2018 declaring a total income of Rs. 1,31,17,380/-. The case of the assessee was subsequently, selected for complete scrutiny through "CASS" u/s 143(3) and the assessment order was passed on 27.12.2019, accepting and assessing the total income of the assessee at the amount as declared by the assessee under its return of income. 5. Later on, Ld. PCIT has perused the case records of the asse....
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....uch assessment year on or before the due date specified under sub-section (1) of section 139. Therefore, deduction claimed by assessee amounting to Rs.8,68,43,623/- is irregular & should be added back to total income of assessee. Considering the facts narrated in the foregoing paras which have emanated from the case record, it is seen and observed that the order passed u/s 143(3) of the Income tax Act, 1961 vide order dated 27.12.2019 is erroneous and prejudicial to the interest of revenue. Since the issue discussed supra have not been properly verified by the AO while passing the assessment order by conducting proper enquiries and examination of accounts, therefore, the assessment order passed u/s 143(3) of the Act is erroneous in so far as it is prejudicial to the interest of the revenue in light of the section 263 of the IT Act, 1961. 7. In view of the aforesaid facts, a show cause notice u/s 263 for 20/12/2021, was issue to the assessee incorporating the above facts to furnish reply/explanations in support of its claim. 8. In response assessee had furnished a written submission on 29/12/2021. Nonetheless, considering the response of the assessee which was not found ....
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....d. Additional Grounds of Appeal: 1. That, on the facts and circumstances of the case, the order passed by the Ld. Pr. CIT assuming jurisdiction under section 263 of the Act, is bad in law, having been initiated at the instance of audit objection only. Merely, an audit objection cannot be a basis of revision of assessment orders by the Ld. Pr. CIT without any independent enquiry and application of mind. Revision proceedings u/s 263 of the Act has been triggered only based on borrowed satisfaction i.e., Audit Objection and not based on independent application of mind by the Ld. Pr. CIT. Therefore, the Order passed by the Ld. Pr. CIT on this ground alone is bad in law, void, invalid and liable to be quashed. 2. In view of the above, since the additional ground of appeal raised goes to the root of the matter having a vital bearing on the tax liability of the appellant, it is prayed that the additional grounds of appeal raised may kindly be admitted exercising the plenary powers vested in your honors under Rule 11 of the Appellate Tribunal Rules, 1963 r.w.s. 254 of the Income Tax Act, 1961. 11. Apropos, the aforesaid additional ground ....
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....ed independent application of mind and all the short comings noted in the notice u/s 263 were picked up from the audit objection, therefore, such an action of the Ld. PCIT in assuming jurisdiction conferred upon him within the provisions of section 263 was bad in law, which in turn makes the order passed u/s 263 void, is not acceptable, since the PCIT has perused the case records of the assessee for the relevant AY, may be after the issue has been raised under the audit objection but still it was the duty of Ld. PCIT to check whether such issue has been examined by the AO or not, adequate enquiries as required in terms of the provisions of the law were conducted or not, and in case it is found that the order passed by the Ld. AO was without proper verification of the issue and, therefore, the same was erroneous so far as prejudicial to the interest of revenue, then the PCIT has to decide and to consider the matter to exercise the powers u/s 263, so as to remove the error in the order of AO by initiating the revisionary assessment proceedings. Under such scenario, it cannot be construed that, if an issue is surfaced by the audit team, the Ld. PCIT has no powers to touch the said iss....
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.... in invoking the provisions of section 263: If the Act without properly appreciating the facts of the case. The Ld. PCIT concluded that the appellant has not maintained proper books of accounts which is incorrect. The books of accounts are maintained as per Companies Act, 2013 and are duly audited by a Chartered Accountant. The balance sheet of the eligible business is incorporated in the Audited Financial Statements in Note - 30 under Segment reporting. The non-furnishing of balance sheet in form 10 CCB is a procedural mistake. 2. The Ld. PCIT has concluded that the deduction under section 80IA. cannot be allowed to be set off against noneligible business. which is incorrect. The appellant is 15 engaged in manufacturing of sponge iron and MS Ingot and generation of power through WHRB which is considered as an eligible business under the provisions of section 80 IA. 3. The Ld. PCIT has erred in concluding that the appellant has violated the provisions of Section 80AC of the act which is factually incorrect. The ROI was filed on 27.10.2017 and revised on 08.08.2018, however. the deduction for 80IA was already claimed in the original return itself. 4. The appellant also reli....
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....n of Ld. AR, Ld. Sr. DR submitted that since the assessee has filed its return of income on 08-08-2018 i.e., after the date as specified under subsection (1) of Section 139, therefore, there was a violation of the IT Act. Certain other irregularities or incomplete compliances as mandated by the law were also found, therefore, the deduction claimed u/s 80-IA(4)(iv) by the assessee was wrongly allowed by the AO, without any whisper of the proper enquires or any view expressed on the same, as such the order of Ld. AO was proved to be erroneous in so far as prejudicial to the interest of revenue, accordingly the proceedings u/s 263 were rightly invoked. Certain clarifications pertaining to facts are subject to verification, therefore, Ld. PCIT has rightly set aside the order of Ld. AO, hence, the order of Ld. PCIT u/s 263, deserves to be upheld. 19. We have considered the rival contentions, perused the material available on records, legal pronouncements relied upon and the relevant provisions of the Act. In the present case, factually, on perusal of acknowledgement of the Income Tax return in ITR-6 for the AY 2017-18 filed by the assessee placed that page no. 37 of the assessee's PB(A....