2018 (6) TMI 503 - AT - Income Tax

Doctrine of Merger - Revision order passed by CIT u/s 263 - CIT(A) dismissed the appeal - reopening of assessment order - requirement of set off of losses on notional basis while computing deduction allowable under section 80IB in respect of MBF unit has neither been considered nor set aside by the CIT in revisionary proceedings under section 263 - Held that - A perusal of the order of CIT passed u/s 263 shows that the ld. CIT by invoking powers conferred on him u/s 263 has set-aside the reassessment order on the limited issue of examination of deduction u/s 80IA/80IB. The entire order has not been set-aside and there is no specific comment by the ld. CIT in his order regarding the validity of the reassessment proceedings initiated by the Assessing Officer u/s 147/148. CIT(A), in our opinion, should not have dismissed the appeal holding the same to be infructuous. He was duty bound and obliged to decide the issue of validity of the reassessment proceedings initiated by the Assessing Officer which was challenged before him. If the assessee succeeds on this legal ground before the ld. CIT(A) then the 263 order passed by the ld. CIT would fail. The arguments by ld. DR, in our opinion, are without any merit and has to be rejected. Since the CIT(A) in the instant case has not decided the validity of the reassessment proceedings challenged before him and had dismissed the appeal as infructuous because of the revisionary powers exercised by the ld. CIT u/s 263, therefore, we deem it proper to restore the issue to the file of the ld. CIT(A) with a direction to decide the legal ground raised before him challenging the validity of the reassessment proceedings. Matter is restored to the file of the ld. CIT(A) with a direction to adjudicate the validity of reassessment proceedings. - Decided in favour of assessee for statistical purposes.

2022 (4) TMI 1115 - AT

Issues Involved:

1. Validity of the reassessment proceedings under section 147/148 of the Income Tax Act.
2. Legality of the reassessment order dated 04.03.2013.
3. Requirement of set-off of losses while computing deduction under section 80IB.
4. Interest charged under section 234D and withdrawal of interest under section 244A.

Detailed Analysis:

1. Validity of the reassessment proceedings under section 147/148 of the Income Tax Act:

The reassessment was initiated on the grounds that the assessee did not disclose fully and truly all material facts necessary for its assessment, specifically regarding the deduction under Section 80IB. The assessee challenged the validity of the reassessment proceedings, arguing that the reasons recorded did not specify any allegation of failure on the part of the assessee to disclose material facts necessary for the completion of the assessment. The Tribunal found merit in the assessee’s argument and noted that the reassessment proceedings were initiated on a mere change of opinion, which is not permissible. The Tribunal directed the CIT(A) to adjudicate the legal ground raised by the assessee challenging the validity of the reassessment proceedings.

2. Legality of the reassessment order dated 04.03.2013:

The reassessment order dated 04.03.2013 was not set aside in toto by the CIT under section 263. The CIT had set aside the reassessment order only to the extent of examining the deduction under sections 80IA/80IB. The Tribunal held that the CIT(A) should not have dismissed the appeal as infructuous and was duty-bound to decide the issue of the validity of the reassessment proceedings. The Tribunal restored the issue to the file of the CIT(A) for adjudication of the legal ground challenging the validity of the reassessment proceedings.

3. Requirement of set-off of losses while computing deduction under section 80IB:

The assessee argued that the losses of the Mini Blast Furnace (MBF) Unit for the assessment years 2003-04 and 2004-05, which were already set off against the taxable income of those years, should not be notionally brought forward and set off against the profits of the current year for computing the deduction under section 80IB. The Tribunal noted that the CIT had set aside the reassessment order only to the extent of examining the deduction under sections 80IA/80IB and directed the CIT(A) to adjudicate this issue as well.

4. Interest charged under section 234D and withdrawal of interest under section 244A:

The assessee contended that the interest under section 234D and the withdrawal of interest under section 244A were untenable in law. The Tribunal did not decide on this issue and directed the CIT(A) to adjudicate the legal ground regarding the validity of the reassessment proceedings first. The Tribunal noted that the CIT(A) had not discussed the validity of the assumption of jurisdiction under sections 147/148 by the Assessing Officer and had simply dismissed the appeal as infructuous.

Conclusion:

The Tribunal restored the matter to the file of the CIT(A) with a direction to adjudicate the legal ground raised by the assessee challenging the validity of the reassessment proceedings. The Tribunal held that the CIT(A) was duty-bound to decide the issue of the validity of the reassessment proceedings and directed the CIT(A) to give due opportunity of being heard to the assessee and decide the issue as per law. The appeal filed by the assessee was allowed for statistical purposes.

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