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Issues Involved:
1. Non-filing of the audit report along with the return under section 80-IB. 2. Non-examination of the stock register by the Assessing Officer. 3. Non-transfer of share premium to the "Securities Payment Premium Account" as per section 78 of the Companies Act. 4. Direction by the CIT to the Assessing Officer to examine other issues during reassessment. Issue-wise Detailed Analysis: 1. Non-filing of the Audit Report Along with the Return Under Section 80-IB: The primary issue was whether the assessee's claim for exemption under section 80-IB was valid despite the audit report not being filed along with the return. The assessee argued that the audit report, although filed a day after the return, was within the prescribed time under section 139(1) and should be considered part of the return. The Tribunal noted that the assessment records and the proposal for scrutiny did not mention the absence of the audit report, indicating it was likely available to the Assessing Officer. The Tribunal concluded that the audit report was indeed filed on 28-11-2003 and that the Assessing Officer had examined it before allowing the claim, thus complying with section 80-IA(7). The Tribunal held that the non-attachment of the audit report with the return did not render the assessment order erroneous or prejudicial to the interests of revenue. 2. Non-examination of the Stock Register by the Assessing Officer: The CIT found the assessment order erroneous due to the non-production of the stock register before the auditors and the Assessing Officer. However, the Tribunal found that the stock register was produced during the assessment proceedings, as evidenced by the order sheet entries and the detailed queries made by the Assessing Officer regarding the stock. The Tribunal concluded that the stock register was examined, and the non-production before the auditors did not affect the assessment's validity. Hence, the assessment order was not erroneous or prejudicial to the interests of revenue on this ground. 3. Non-transfer of Share Premium to the "Securities Payment Premium Account" as per Section 78 of the Companies Act: The CIT held the assessment order erroneous due to the failure to transfer the share premium to the "Securities Payment Premium Account." The assessee argued that this non-compliance did not impact the computation of taxable income under the Income-tax Act. The Tribunal agreed, stating that the classification of share premium under the Companies Act did not affect the income computation under the Income-tax Act. Therefore, the assessment order could not be revised on this ground. 4. Direction by the CIT to the Assessing Officer to Examine Other Issues During Reassessment: The CIT's order directed the Assessing Officer to examine other issues during reassessment, which was beyond the scope of the notice under section 263. The Tribunal held that the CIT could not widen the scope of reassessment beyond the issues specified in the notice. This transgression rendered the CIT's order invalid. Conclusion: The Tribunal quashed the CIT's order under section 263, holding that the assessment order dated 28-3-2005 was not erroneous or prejudicial to the interests of revenue on any of the grounds specified. The Tribunal emphasized that the CIT's directions exceeded the scope of the notice under section 263, rendering the order invalid. The appeal was allowed in favor of the assessee.
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