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2017 (10) TMI 995 - AT - Income TaxRevision u/s 263 - AO not considered the aspects in the assessments framed u/s 153A - Held that - We find that there are no incriminating materials found during the course of search for the Asst Years 2008-09, 2010-11 and 2011-12 as the issues addressed by the ld CIT are only interpretation of law and not based on any materials found in the search. With regard to the Asst Year 2009-10, we find from the above explanation of the assessee, there was absolutely no material much less any incriminating material, so as to disturb the earlier concluded assessment for the Asst Year 2009-10. Hence the ld AO had rightly not considered these aspects in the assessments framed u/s 153A of the Act. The assessee had given proper explanations regarding these items before the ld CIT as reproduced above. We find that the assessee had also duly explained the complete contents of the seized documents relied upon by the ld CIT in his order. Thus those materials are not incriminating at all and are forming part of regular books of accounts of the assessee. These explanations have been completely ignored by the ld CIT while directing the ld AO to frame the assessment afresh. We hold that when an addition could not be made as per law in section 153A proceedings, then the said order cannot be construed as erroneous warranting revisionary jurisdiction u/s 263 of the Act by the ld CIT. We hold that even on merits, there is no case made out by the ld CIT for making any addition on the issues proposed in the show cause notice of ld CIT. In these facts and circumstances, we find that the order of the ld CIT u/s 263 of the Act for the Asst Years 2008-09 to 2011-12 deserve to be quashed. - Decided in favour of assessee. Allowance towards additional depreciation u/s 32(1)(iia) of the Act on plant and machinery - Held that - The assessee is engaged in the manufacturing activity and thereby eligible for deduction u/s 80IB of the Act. Once it is held so, the allowance towards additional depreciation u/s 32(1)(iia) of the Act on plant and machinery is automatic and this was specifically brought to the notice of the ld CIT by the assessee which has been conveniently ignored by the ld CIT while passing the revision order u/s 263 of the Act. In these facts and circumstances, we find that the order of the ld CIT u/s 263 of the Act deserves to be quashed. Accordingly, the grounds raised by the assessee are allowed.- Decided in favour of assessee.
Issues Involved:
1. Validity of the revisionary jurisdiction invoked under Section 263 of the Income Tax Act. 2. Presence of incriminating materials justifying the revision of assessments. 3. Eligibility to claim additional depreciation under Section 32(1)(iia) of the Act. 4. Understatement of sales and rate of depreciation on lorries. Issue-wise Analysis: 1. Validity of the revisionary jurisdiction invoked under Section 263 of the Income Tax Act: The primary issue in these appeals was whether the Principal Commissioner of Income Tax (CIT) validly invoked his revisionary jurisdiction under Section 263 of the Income Tax Act. The assessee argued that the CIT could not disturb concluded assessments under Section 143(3) unless incriminating materials were found during the search. The Tribunal concluded that the CIT's order to revise the assessments for the years 2008-09 to 2011-12 was not valid as there were no incriminating materials found during the search that could justify the revision. 2. Presence of incriminating materials justifying the revision of assessments: The Tribunal examined whether the CIT had any incriminating materials to justify the revision of assessments. For the assessment years 2008-09, 2010-11, and 2011-12, the Tribunal found that the CIT's issues were based on the interpretation of law and not on any materials found during the search. For the assessment year 2009-10, the Tribunal found that the explanations provided by the assessee regarding the alleged understatement of sales were satisfactory and that the documents cited by the CIT were part of regular books of accounts and not incriminating. 3. Eligibility to claim additional depreciation under Section 32(1)(iia) of the Act: The CIT sought to revise the assessment for the year 2013-14 on the grounds that the assessee's claim for additional depreciation on plant and machinery was erroneous. The Tribunal noted that it had previously held that the assessee was engaged in manufacturing and thus eligible for the deduction under Section 80IB. Consequently, the allowance of additional depreciation under Section 32(1)(iia) was automatic. The Tribunal found that the CIT ignored this fact and thus quashed the CIT's order. 4. Understatement of sales and rate of depreciation on lorries: For the assessment year 2009-10, the CIT alleged that there was an understatement of sales based on seized documents. The assessee provided a detailed reconciliation of sales figures, which the Tribunal found satisfactory. The Tribunal also noted that the CIT's issues regarding additional depreciation on plant and machinery and the rate of depreciation on lorries did not stem from any seized documents and thus could not be considered incriminating. Conclusion: The Tribunal quashed the CIT's orders under Section 263 for the assessment years 2008-09 to 2011-12 and 2013-14, holding that the CIT did not have valid grounds to invoke his revisionary jurisdiction as there were no incriminating materials found during the search. The Tribunal allowed the appeals of the assessee, confirming that the original assessments were not erroneous or prejudicial to the interest of the revenue.
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