2014 (2) TMI 1295 - AT - Income Tax

Revision u/s 263 - Entitlement for claim of deduction u/s 80P - no elaborate discussion in this regard made by AO - Held that - The circumstances explained by the assessee as well as the order-sheet entry recorded by the Assessing Officer on 19.09.2008 clearly reflects that claim of the assessee for deduction u/s 80P of the Act was very much before the Assessing Officer even before he picked-up the return of income of the assessee for a scrutiny assessment under section 143(3) of the Act. Therefore, the anomaly in the depiction of the claim of deduction under section 80P of the Act on account of a software glitch, as explained by the assessee, is not only plausible but appears to be borne out of record. Having regard to the aforesaid position emerging on a perusal of the assessment records maintained by the Department, we are unable to uphold the assertion of the Commissioner to the effect that the Assessing Officer entertained and allowed the deduction u/s 80P of the Act in the absence of any such claim in the return of income filed by the assessee. The second point made by the Commissioner that the Assessing Officer did not make any enquiries with regard to entitlement of assessee to the deduction u/s 80P of the Act is also, in our view, not justified having regard to the material on record. In this context, A.Y. 2007-08 we find that in the course of assessment proceedings, assessee gave details of the incomes earned as also the claim of deduction u/s 80P(2)(d) of the Act in its communication which is on record. Evidently, the claim of the assessee was allowed by the Assessing Officer after being satisfied with the explanation of the assessee, though the discussion in the assessment order is quite brief on the aspect. So however, the decision of the Assessing Officer cannot be held to be erroneous simply because in the assessment order he has not made an elaborate discussion in this regard in terms of the parity of reasoning laid down by the Hon ble Bombay High Court in the case of CIT vs. Gabriel India Ltd.(1993 (4) TMI 55 - BOMBAY High Court) - Decided in favour of assessee

Summary

Issues:
1. Validity of assessment order under section 263 of the Income Tax Act.
2. Claim of deduction under section 80P of the Act.
3. Commissioner's jurisdiction under section 263 of the Act.

Issue 1: Validity of assessment order under section 263 of the Income Tax Act:
The appeal was against an order passed by the Commissioner of Income Tax-IV, Pune under section 263 of the Income Tax Act, setting aside the assessment order passed by the Assessing Officer. The Commissioner held the assessment order as erroneous and prejudicial to the interests of the Revenue, directing a fresh assessment to examine the assessee's entitlement for deduction under section 80P of the Act. The Tribunal analyzed the circumstances required for the Commissioner to invoke section 263, emphasizing that both the error in the order and prejudice to Revenue must be present. The Tribunal found that the Commissioner's assertion of error in the assessment order was not factually tenable, as the claim for deduction under section 80P was before the Assessing Officer during the scrutiny assessment proceedings. Therefore, the Tribunal set aside the Commissioner's order and restored the original assessment order.

Issue 2: Claim of deduction under section 80P of the Act:
The appellant, a Co-operative Credit Society, had filed its return of income claiming deduction under section 80P of the Act. However, the Commissioner alleged that no such claim was made in the return, leading to the assessment order being deemed erroneous. The appellant argued that the claim was indeed made, supported by evidence such as the computation of total income and acknowledgment of filing. The Tribunal examined the assessment records and noted that the claim for deduction under section 80P was evident before the Assessing Officer, even before the scrutiny assessment. The Tribunal concluded that the Commissioner's assertion of the absence of the claim was not justified, as the claim was substantiated by the appellant during the assessment proceedings. Therefore, the Tribunal held that the original assessment order was not erroneous concerning the claim of deduction under section 80P.

Issue 3: Commissioner's jurisdiction under section 263 of the Act:
The Commissioner invoked section 263 based on the belief that the assessment order was prejudicial to the Revenue's interests due to errors in allowing the deduction under section 80P without proper verification. The Tribunal scrutinized the proceedings and found that the Assessing Officer had considered the appellant's claim for deduction under section 80P during the assessment, even though the discussion in the order was brief. The Tribunal highlighted that the Commissioner failed to demonstrate how the allowance of the deduction was erroneous in law. Consequently, the Tribunal concluded that the Commissioner's decision to set aside the assessment order was unfounded, and the original assessment order was upheld. As a result, the Tribunal allowed the appeal of the assessee, restoring the assessment order dated 18.12.2009.

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