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2018 (12) TMI 810 - AT - Income TaxRevision u/s 263 - deduction u/s 80IA(4)(i)denied - whether the AO has examined the relevant facts during the assessment proceedings u/s 143(3)Held that - As decided in the case of CIT v. Sunbeam Auto Ltd. 2009 (9) TMI 633 - DELHI HIGH COURT if there is some inquiry by the AO in the original proceedings even if inadequate that cannot clothe the Commissioner with jurisdiction under Section 263 of the Act merely because he can form another opinion. It was emphasized here that the notice and questionnaire given to the assessee which were duly replied, were evidence of full and due inquiry about this expenditure We hold that the order of the AO cannot be held erroneous in so far prejudicial to the interest of the revenue merely on the ground that the AO has not verified/examine the facts properly during the assessment proceedings. It is noticed that the necessary verification was duly carried out by the AO during the assessment proceedings as discussed above. The assessee before us has filed a letter from the Govt. of Andhra Pradesh dated 06-06-2018 clarifying the agreement between Netafim ACS & India Ltd. as discussed above. It is a fact that this clarification by way of letter was not available at the time of original assessment proceedings u/s 143(3) of the Act. The clarification being additional document filed by the ld. Counsel for the assessee needs to be examined/verified by the AO in order to establish the veracity of the same. Therefore, we are restoring back the issue to the file of the AO for the limited purpose of carrying out the verification/ examination of the letter filed by the assessee written by the State Govt. of Andhra Pradesh and adjudicate the issue afresh in accordance to the provisions of law. - Decided in favour of assessee for statistical purposes.
Issues Involved:
1. Whether the Principal Commissioner of Income Tax (CIT) erred in holding the assessment order as erroneous and prejudicial to the interests of revenue under section 263 of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Erroneous and Prejudicial Assessment Order: The primary issue raised by the assessee was that the CIT erred in holding the assessment order framed under section 143(3) of the Income Tax Act as erroneous and prejudicial to the interests of revenue. The CIT observed that the assessee claimed a deduction under section 80-IA-4(i) of the Act, which he believed was not permissible because the agreement for the development of irrigation projects was not signed directly between the assessee and the State Government of Andhra Pradesh but rather with Netafim ACS and India Ltd., a foreign company. 2. Requirement of Agreement with Government: The CIT emphasized that for claiming a deduction under section 80-IA-4(i), there must be an agreement directly between the Indian company and either the Central Government, State Government, or any statutory body. In this case, the agreement was signed between Netafim ACS and India Ltd. and the Government of Andhra Pradesh, which did not fulfill the eligibility criteria for the deduction under section 80-IA-4(i). 3. Previous Disallowance: The CIT also noted that a similar deduction was disallowed in the preceding assessment year 2010-11. Despite this, the Assessing Officer (AO) allowed the deduction for the assessment year 2011-12 without proper verification and examination, making the assessment order erroneous and prejudicial to the interests of revenue. 4. Assessee's Defense: The assessee argued that the AO had duly verified the agreement and other relevant documents during the assessment proceedings. The assessee provided various documents, including invoices, performance certificates, and TDS certificates issued by the State Government of Andhra Pradesh, all in the name of the assessee company. The assessee also submitted a letter from the State Government of Andhra Pradesh clarifying that the agreement was indeed with the assessee company. 5. Tribunal's Observations: The Tribunal observed that the AO had made necessary inquiries and verified the relevant documents during the assessment proceedings. The Tribunal held that once the AO had applied his mind and conducted an inquiry, the order could not be deemed erroneous merely because the CIT had a different opinion. The Tribunal cited various judicial precedents, including the Supreme Court's judgment in Malabar Industrial Company Ltd. vs. CIT, which emphasized that an order could only be considered erroneous if there was a lack of inquiry, not merely inadequate inquiry. 6. Additional Evidence: The Tribunal noted that the letter from the State Government of Andhra Pradesh clarifying the agreement was not available during the original assessment proceedings. Therefore, the Tribunal directed the AO to verify this additional evidence and adjudicate the issue afresh. Conclusion: The Tribunal concluded that the assessment order could not be held erroneous and prejudicial to the interests of revenue merely on the ground of inadequate verification by the AO. However, the Tribunal restored the issue to the AO for the limited purpose of verifying the additional evidence provided by the assessee and to adjudicate the matter afresh in accordance with the law. Final Decision: The appeal filed by the assessee was allowed for statistical purposes, and the matter was remanded to the AO for further verification.
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