2018 (3) TMI 1937 - AT - Income Tax

Revision u/s 263 by CIT - Wrongful allowance of deduction u/s 80IB - assessee has neither produced certificate from competent authority nor has submitted the audit report in form 10CCB - HELD THAT - Insofar as the non submission of the audit report is concerned, as in the case of Medicaps Ltd. 2010 (1) TMI 261 - MADHYA PRADESH HIGH COURT has upheld the findings of the Tribunal which held that the audit report is procedural and directory in nature and the same can be filed at the appellate stage. It is a fact that the audit report was made available to the ld. CIT during the proceedings u/s. 263 of the Act. In the case of Kewal Kiran Clothing Pvt. Ltd. 2015 (4) TMI 1323 - ITAT MUMBAI had the occasion to consider an identical issue wherein the claim of deduction u/s. 80IB of the Act was for the tenth year and held that since the assessee has filed the audit report before the ld. CIT, no adverse inference should be drawn in proceedings u/s. 263 of the Act. Claim of deduction u/s. 80IB of the Act is for the tenth year which means that the A.O. had allowed the claim of deduction in previous nine years. Therefore, we have no hesitation to hold that the assumption of jurisdiction u/s. 263 of the Act is bad in law. Allegation that the assessee is not registered as an SSI Unit is concerned, we find that u/s. 80IB (14) clause G, there is no such requirement. Therefore, it cannot be said that the assessment order is erroneous and prejudicial to the interest of the revenue to this extent also. Interest on I.T. refund - we find that the assessee has furnished the copy of interest account before the ld. CIT showing that the assessee has already credited the interest amount to interest account. Therefore, there is no question of any under assessment. We set aside the order of the ld. CIT and restore that of the A.O. framed u/s. 143(3) - Decided in favour of assessee.

Summary

Issues: Validity of order u/s. 263 of the Act

Analysis:
1. The appellant challenged the validity of the order of the ld.CIT, Raipur dated 18.03.2014 framed u/s. 263 of the Act, arguing that the assessment order dated 23.12.2011 under section 143(3) of the Act was neither erroneous nor prejudicial to the interest of the revenue.
2. The Tribunal carefully considered the submissions and reviewed the documentary evidences in light of Rule 18(6) of the ITAT Rules.
3. The ld. CIT issued a notice dated 22.01.2014 under section 263, pointing out alleged errors in the assessment order, including the disallowance of deduction u/s 80IB and the failure to offer interest income for taxation.
4. The Tribunal noted that the audit report, although not initially submitted, was made available during the proceedings u/s. 263. Citing precedents, it held that the audit report could be filed at the appellate stage.
5. The Tribunal referred to a case where a similar issue of deduction u/s 80IB was considered, and since the audit report was submitted before the ld. CIT, adverse inference was not drawn.
6. Notably, the deduction u/s 80IB was claimed for the tenth year, indicating previous approval by the Assessing Officer for nine years, leading the Tribunal to conclude that the assumption of jurisdiction u/s. 263 was legally flawed.
7. Regarding the allegation of the appellant not being registered as an SSI Unit, the Tribunal found no such requirement under section 80IB(14) clause G, thereby rejecting the claim of error in the assessment order.
8. The Tribunal also addressed the issue of interest on IT refund, noting that the appellant had credited the interest amount to the interest account, eliminating the possibility of under assessment.
9. After considering all aspects of the case, the Tribunal set aside the ld. CIT's order and reinstated the assessment order framed u/s. 143(3) of the Act, ultimately allowing the appeal filed by the Assessee.