2022 (4) TMI 1465 - HC - Income Tax

Revision u/s 263 by CIT - whether the conditions stipulated for being entitled for deduction under Section 80IB(10) was fulfilled by the assessee? - HELD THAT - Tribunal noted that the assessee has given details as called for by the AO and the details contained in annexures in support of the advances received giving names of each of the party and these records were also placed before the Tribunal in the form of a paper book. Further, the Tribunal noted that the assessee had filed tax audit report u/s 44AB in Form no.3CA along with the particulars and also furnished Form no.3CD. Tribunal noted that in respect of deduction claimed u/s 80IB(10) the assessee has given the audit report in Form no.10CCB and also furnished the basis on which the deduction was claimed under Section 80IB. After noting these facts which were not in dispute, the Tribunal examined as to whether the PCIT has recorded any reasons as to how the assessment order dated 4th March, 2015 was erroneous so far as prejudicial to the interest of the revenue. Tribunal on facts found that no reasons have been recorded by the PCIT justifying his action invoking the power under Section 263 - Tribunal has proceeded to consider as to whether the conditions stipulated for being entitled for deduction under Section 80IB(10) was fulfilled by the assessee and on facts it was satisfied that the assessee had fulfilled the conditions and therefore, held that the assumption of jurisdiction under Section 263 of the Act was not sustainable in law. Thus, we find that there is no question of law, much less substantial questions of law, arising for consideration in this appeal.

Summary

Issues:
Delay condonation in filing the appeal, validity of order under Section 263 of the Income Tax Act, 1961, justification of power exercised by the Principal Commissioner of Income Tax, Kolkata-IV under Section 263, assessment under Section 143(3) dated 4th March, 2015, deduction claimed under Section 80 IB, conditions for deduction under Section 80IB(10), reasons for invoking power under Section 263, sustainability of jurisdiction under Section 263.

Delay Condonation in Filing the Appeal:
The appellant filed an application for condonation of delay of 172 days in filing the appeal, which was already condoned by an order dated 24th August, 2021. The application, despite the delay being condoned, was shown as pending. The court allowed the application, and the appeal was filed under ITAT/188/2018.

Validity of Order under Section 263 of the Income Tax Act, 1961:
The appeal by the revenue under Section 260A of the Income Tax Act, 1961 was directed against the order passed by the Income Tax Appellate Tribunal for the assessment year 2012-13. The revenue raised substantial questions of law challenging the Tribunal's decision to quash the order passed under Section 263 of the Act. The Tribunal examined whether the Principal Commissioner's exercise of power under Section 263 was justified.

Justification of Power Exercised by the Principal Commissioner of Income Tax, Kolkata-IV under Section 263:
The Principal Commissioner initiated proceedings under Section 263 as he found the assessment under Section 143(3) dated 4th March, 2015, to be erroneous and prejudicial to the revenue's interest. The Tribunal assessed whether the conditions for invoking Section 263 were met and found that the Principal Commissioner did not provide reasons justifying his action. The Tribunal concluded that the assumption of jurisdiction under Section 263 was not sustainable.

Assessment under Section 143(3) Dated 4th March, 2015 and Deduction Claimed under Section 80 IB:
The assessing officer completed the assessment under Section 143(3) after discussing the case with the assessee, a company engaged in real estate business claiming deduction under Section 80 IB. The Principal Chief Commissioner of Income Tax found the assessment to be erroneous and prejudicial to the revenue, leading to proceedings under Section 263.

Conditions for Deduction under Section 80IB(10) and Sustainability of Jurisdiction under Section 263:
The Tribunal noted that the assessee had fulfilled the conditions for deduction under Section 80IB(10) and provided all necessary details and reports as required. It further found that the Principal Commissioner did not provide reasons for deeming the assessment prejudicial to the revenue. Consequently, the Tribunal held that the assumption of jurisdiction under Section 263 was not sustainable in law, leading to the dismissal of the appeal.

Conclusion:
The appeal was dismissed as there were no substantial questions of law arising for consideration. The court found that the Principal Commissioner's exercise of power under Section 263 was not justified, and the conditions for deduction under Section 80IB(10) were fulfilled by the assessee. As a result, the sustainability of jurisdiction under Section 263 was questioned, leading to the dismissal of the appeal and the corresponding stay application.