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2018 (11) TMI 1322 - AT - Income TaxRevision u/s 263 - deduction u/s 80IA allowability - raising of queries - Held that - AO did raise queries which were complied by the assessee. It is a settled position of law that powers u/s 263 can be exercised by the Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and prejudicial to the interest of the Revenue. By erroneous is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. Our view is fortified by the decision of Hon ble High Court of Bombay in the case of CIT vs. Nirav Modi, 2016 (6) TMI 1004 - BOMBAY HIGH COURT - Decided in favour of assessee.
Issues Involved:
1. Invocation of Section 263 of the Income-tax Act, 1961. 2. Claim of deduction under Section 80IA of the Income-tax Act, 1961. 3. Examination of the assessment order's validity and the Principal Commissioner's directive to reassess. Issue-wise Detailed Analysis: 1. Invocation of Section 263 of the Income-tax Act, 1961: The assessee challenged the invocation of Section 263 by the Principal Commissioner of Income-tax (PCIT), arguing that the PCIT erred in invoking this section by holding that the assessee failed to provide substantive documentary evidence during the assessment proceedings to justify the deduction under Section 80IA. The Tribunal noted that the PCIT issued a notice dated 07.03.2016 for revisionary proceedings under Section 263, alleging that the assessment order dated 14.03.2014 was erroneous and prejudicial to the interest of the Revenue due to the assessee's failure to submit supporting documents. 2. Claim of Deduction under Section 80IA of the Income-tax Act, 1961: The assessee's primary objective was the upgradation, modernization, financing, operation, maintenance, and management of a Cargo Terminal, for which it claimed a deduction under Section 80IA. The Tribunal reviewed the detailed submissions and documentary evidence provided by the assessee in response to multiple notices issued by the Assessing Officer (AO). The assessee submitted comprehensive details, including a note on business activities, the Concession Agreement, and Form No. 10CCB, which were thoroughly examined by the AO. 3. Examination of the Assessment Order's Validity and the Principal Commissioner's Directive to Reassess: The Tribunal scrutinized the AO's actions, noting that the AO issued three notices and received detailed responses from the assessee, indicating that the AO conducted a thorough inquiry. The Revenue's contention that the assessment order was cryptic and lacked clear findings was addressed by referencing judicial precedents. The Tribunal cited several judgments, including those from the Hon'ble Supreme Court and various High Courts, emphasizing that an order cannot be deemed erroneous merely because it lacks detailed reasoning if the AO conducted due inquiry and applied their mind to the facts. The Tribunal concluded that the AO's order was neither erroneous nor prejudicial to the interest of the Revenue, as the AO had conducted adequate inquiries and the assessee had provided sufficient documentary evidence to support its claim under Section 80IA. The Tribunal also noted that the powers under Section 263 could only be exercised if the assessment order was both erroneous and prejudicial to the Revenue, which was not the case here. Conclusion: The Tribunal set aside the PCIT's order and restored the AO's assessment order dated 14.03.2014, framing it under Section 143(3) of the Act. The appeal of the assessee was allowed, and the Tribunal emphasized that the AO had made ample inquiries before framing the order, thus meeting the requirements of law. The Tribunal also clarified that Explanation 2 to Section 263 applies only when no inquiry is made by the AO, which was not the situation in this case. Result: The appeal of the assessee in ITA No. 3182/DEL/2016 was allowed, and the order was pronounced in the open court on 23.10.2018.
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