2017 (1) TMI 1767 - AT - Income Tax

Revision u/s 263 - withdrawn the claim of deduction u/s. 10A - Revision on on the strength of the statement recorded at the time of survey proceedings - HELD THAT - We find that the business activities of the assessee fit into the eligibility criteria for claiming the impugned deduction as per the above notification. We find that on the basis of certain discussion at the time of survey proceedings, the assessee formed a belief that she is technically wrong in claiming exemption u/s.10A of the Act which triggered for her request of withdrawal of the claim of deduction. In our understanding of the facts relating to the business activities of the assessee qua the statement recorded at the time of survey, the assessee under a mistaken belief has accepted to withdraw the claim of deduction which she was otherwise legally entitled. Commissioner should not have invoked the powers vested upon him u/s. 263 of the Act merely on the strength of the statement recorded at the time of survey proceedings. A conspectus reading of the statement recorded at the time of survey shows that there is no concession on fact. The concession is only in relation to the law and that too was under a wrong belief. Commissioner further erred in directing the A.O. to withdraw the claim of deduction in subsequent assessment years also i.e. A.Ys. 2008-09, 2009-10 2010-11. In our considered opinion, the ld. CIT ought to have verified independently the eligibility of the claim and the deduction permissible to the assessee. Considering the business activities of the assessee as explained during the course of the survey proceedings, in our understanding of the law, the assessee was very much eligible for the claim of deduction u/s. 10A - Decided in favour of assessee.

Summary

Issues:
Challenge to order under section 263 of the Income Tax Act regarding deduction u/s. 10A and withdrawal of deduction for assessment years 2008-09, 2009-10 & 2010-11. Condonation of appeal filing delay by 97 days.

Analysis:
1. The appeal challenged the correctness of the order under section 263 of the Income Tax Act, concerning the withdrawal of deduction u/s. 10A and for specific assessment years. The appeal was initially barred by a 97-day delay, but the appellant requested condonation citing genuine reasons and legal complexities.

2. The appellant's request for condonation faced objections from the respondent, arguing that the delay was not bona fide due to the appellant's voluntary acceptance of deduction withdrawal. However, the Tribunal emphasized the importance of deciding appeals on merits rather than technical grounds, citing relevant legal precedents.

3. The Tribunal analyzed the circumstances leading to the deduction withdrawal, including statements recorded during survey proceedings and the appellant's subsequent realization of mistaken assumptions regarding the law. The Tribunal considered the eligibility of the appellant's claim under section 10A, supported by relevant notifications and the nature of the appellant's business activities.

4. Referring to legal principles and High Court observations, the Tribunal concluded that the Commissioner erred in invoking powers under section 263 solely based on survey statements without independently verifying claim eligibility. The Tribunal found the appellant entitled to the deduction under section 10A and set aside the Commissioner's order, restoring that of the Assessing Officer.

5. Ultimately, the Tribunal allowed the appeal, emphasizing the importance of ensuring legitimate tax assessments and correcting errors to prevent undue financial burden on taxpayers. The decision was based on a comprehensive review of the facts, legal provisions, and precedents, highlighting the significance of fair and thorough assessment processes in tax matters.