2021 (3) TMI 836 - HC - Income Tax

Revision u/s 263 - Exemption claimed u/s 80 IB(11- C) - whether the observation made in the order passed by the Tribunal that proper verification and enquiry was made by the Assessing Officer before granting such exemption was correct? - HELD THAT - As found that the Assessment Officer did make necessary enquiry by issuing questionnaire to the assessee for the assessment year 2012-13 seeking proof of deduction along with the details of deduction as well as exemption claimed by the Assessee. Similar notice under Section 142(1) of the said Act was also replied to by the assessee and it is in that backdrop that the Assessment Officer was pleased to allow the deduction under Section 80 IB (11-C) - Members of the Tribunal thus found that the reason for invoking jurisdiction by the Principal Commissioner of Income Tax u/s 263 of the said Act had no foundation. If certain assessment order was made by the Income Tax Officer the same could not be branded as erroneous by the Principal Commissioner of Income Tax merely because another view was possible. The order of the Income Tax Officer was required to be shown to have been made without any enquiry and not accordance with law. These aspects were missing in the said assessment order. We find that this observation of the Tribunal is correct considering the nature of verification and enquiry made by the Assessment Officer. In the earlier assessment year 2011-12 similar deduction was claimed by the assessee under Section 80 IB (11-C) of the said Act and it was granted by the Assessing Officer. In the decisions relied upon by the learned counsel for the respondent this position has been considered and it was observed that similar deduction having been allowed in the earlier year could not have been denied in the subsequent assessment years. Thus after perusing the material placed on record including the questionnaire, summons under Section 131 of the said Act and notice under Section 142(1) of the said Act, we are satisfied that the Tribunal did not commit any error in holding that such enquiry was made by the Assessing Officer and hence there was no reason for the Principal Commissioner of Income Tax to invoke jurisdiction under Section 263. - Decided in favour of assessee.

Summary

Issues:
Assessment of deduction under Section 80 IB (11-C) of the Income Tax Act, 1961 for the assessment year 2012-13.

Analysis:
For the assessment year 2012-13, the Assessing Officer initially allowed the deduction claimed by the assessee under Section 80 IB (11-C) of the Income Tax Act. However, the Principal Commissioner of Income Tax invoked jurisdiction under Section 263 (1) of the Act, setting aside the deduction and directing the Assessing Officer to re-examine the claim's admissibility. The Income Tax Appellate Tribunal later overturned the Principal Commissioner's decision, stating that the Assessing Officer had properly verified and permitted the deduction. The assessee, a medical facilities provider, had shown various sources of income, including referral income and income from a nursing college, and claimed exemption under Section 80 IB(11-C).

The Assessing Officer conducted a thorough scrutiny, requested documents, issued a detailed questionnaire, and summoned the assessee under Section 131 of the Act before allowing the deduction. However, the Principal Commissioner found the verification inadequate and set aside the assessment order, deeming it prejudicial to revenue interests. The Tribunal disagreed, noting that the Assessing Officer had indeed conducted a proper enquiry and the necessary details were on record. The Tribunal emphasized that the Principal Commissioner's intervention under Section 263 was unwarranted.

The appellant argued that the Principal Commissioner was justified in invoking Section 263 due to inadequate verification, but the respondent contended that the Assessing Officer had conducted a proper enquiry, including issuing relevant notices and considering past assessments. The Court examined the documents, including the questionnaire and summons, and found that the Assessing Officer's actions were sufficient. The Court agreed with the Tribunal that the Principal Commissioner had no grounds to intervene under Section 263.

Considering the past assessment year and the consistency in granting similar deductions, the Court concluded that the appeals did not raise any substantial legal questions. As a result, the appeals were dismissed, with each party bearing its own costs.