2016 (4) TMI 961 - HC - Income Tax

Revision u/s 263 - period of limitation - Held that - We find that the order under section 263 of the Act was required to be passed within two years from the end of the financial year in which the order sought to be revised was passed. It has been categorically recorded by the Tribunal that the order under section 263 of the Act in the case of the assessee was passed on 20.3.2013 which was required to be passed upto 31.3.2013. Thus, the order was within the period of limitation. There was no requirement to dispatch the order within the period of limitation itself.

Summary

Issues Involved:

1. Limitation period for passing an order under Section 263 of the Income Tax Act.
2. Enquiries and investigations conducted by the Assessing Officer regarding the claim under Section 80IB of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Limitation Period for Passing an Order under Section 263 of the Income Tax Act:

The appellant-assessee contested the validity of the order passed under Section 263 of the Income Tax Act, arguing that it was barred by limitation. The key question was whether the order needed to be dispatched within the limitation period or merely passed. The Tribunal held that the order under Section 263 was passed on 20.3.2013, within the permissible period which ended on 31.3.2013. The dispatch of the order on 4.4.2013 and its receipt by the assessee on 6.4.2013 did not affect its validity. The Tribunal's findings were supported by the Supreme Court's decision in R.K. Upadhyaya vs. Shanabhai P. Patel, which clarified that the issuance of notice within the limitation period suffices, even if the service occurs later. Thus, the Tribunal's conclusion that the order was within the limitation period was upheld.

2. Enquiries and Investigations Conducted by the Assessing Officer Regarding the Claim under Section 80IB:

The appellant-assessee claimed a deduction under Section 80IB on surrendered income and job work, which was allowed by the Assessing Officer without proper enquiry or investigation. The Tribunal found that the Assessing Officer failed to investigate the claim thoroughly, particularly regarding the surrendered income of Rs. 6 crores, which was declared as business advances written off. The Tribunal noted that there was no evidence to show that the Assessing Officer issued any query letter or received any reply from the assessee concerning the deduction claim. The Tribunal relied on the decision in Malabar Industrial Co. Limited vs. Commissioner of Income Tax, which emphasized that an order could be revised if it was erroneous and prejudicial to the revenue. The Tribunal also referenced the case of National Legguard Works, which held that deductions under Section 80HHC could not be presumed for surrendered income without fulfilling specific conditions.

The Tribunal concluded that the Assessing Officer's failure to conduct a proper enquiry rendered the assessment order erroneous and prejudicial to the revenue. Consequently, the Commissioner of Income Tax was justified in invoking Section 263 to set aside the assessment order and direct a fresh assessment. The Tribunal's decision was further supported by the Full Bench of the Gauhati High Court in Commissioner of Income Tax vs. Shri Jawahar Bhattacharjee, which stated that jurisdiction under Section 263 could be exercised if the assessment order was passed on wrong assumptions, incorrect application of law, or without due application of mind.

Conclusion:

The High Court found no illegality or perversity in the Tribunal's findings, which were based on a thorough appreciation of evidence and relevant statutory provisions. As a result, the appeals were dismissed, and no substantial question of law was found to arise from the case.