2022 (2) TMI 687 - AT - Income Tax

Revision u/s 263 by CIT - no enquiry or lack of enquiry - HELD THAT - Although the ld. Pr. CIT reproduced the entire submissions made by the assessee in writing in his impugned order passed u/s 263 of the Act, he did not give any finding or observation thereon and without arriving at any conclusion to show that the order of the AO was erroneous on merit, he simply set aside the same on the ground that the Assessing Officer failed to consider the various aspects and did not apply his mind to the facts of the case, which action of the PCIT cannot be countenanced for the reasons discussed infra. Before us, assessee reiterated the submissions made before the PCIT to demonstrate on the basis of relevant facts and figures that there were no errors in the order of the AO accepting the claim of the assessee on the relevant three issues on merit and we find that even the ld. CIT D/R has not been able to rebut or controvert the same. He has simply contended by relying on the impugned order of the ld. Pr.CIT that no enquiry or verification was made by the Assessing Officer during the course of assessment proceedings on this issue and, therefore, it was a case of lack of enquiry. According to this Section if a fact is likely to have happened i) in common course of natural events ; ii) according to general human conduct; iii) according to public and private business; iv) due to the relation to the facts of the particular case. Accordingly, the Court can presume the existence of that fact i.e. in this case we take the aid of illustration (e) to section 114 of the Indian Evidence Act, which helps us presume judicial and official acts have been regularly performed . So we presume in the facts and circumstances, and after going through the relevant pages of the PB that AO has regularly performed his duties. Since from perusal of the papers filed before the AO itself (PB) we are convinced that there was no error as wrongly assumed by Ld. PCIT. Therefore the Ld. PCIT erred in assuming revisional jurisdiction to interfere with the action of AO - the impugned order passed by the ld. Pr. CIT u/s 263 of the Act is without jurisdiction and so liable to be quashed. - Decided in favour of assessee.

Summary

Issues Involved:
1. Computation of Book Profit under Section 115JB.
2. Addition of Donations for Deduction under Section 80G.
3. Weighted Deduction under Section 35(1) for Contributions to a Research Institute.

Detailed Analysis:

1. Computation of Book Profit under Section 115JB:
The Principal Commissioner of Income Tax (Pr. CIT) observed that the assessee company debited ?132.87 crores to the profit & loss account under 'current tax' but added back only ?78.99 crores while computing book profit under Section 115JB. The Pr. CIT argued that the Assessing Officer (AO) should have added back the entire ?132.87 crores, leading to an under-assessment of book profit by ?53.87 crores, affecting the MAT calculation.

The assessee contended that they correctly added back the net current tax of ?76.99 crores after considering the MAT credit entitlement of ?55.87 crores. They argued that this method was consistent with previous assessments and judicial precedents, including their own cases for earlier years and similar cases like JK Paper Ltd.

The Tribunal found that the assessee's method of computing book profit by adding back the net current tax was correct and consistent with legal precedents. The Pr. CIT's order was deemed erroneous as it did not consider the detailed submissions and judicial precedents provided by the assessee.

2. Addition of Donations for Deduction under Section 80G:
The Pr. CIT noted that the assessee claimed a deduction under Section 80G for donations amounting to ?6.88 crores but added back only ?5.25 crores in the computation of total income, leading to an under-assessment of ?1.63 crores.

The assessee clarified that they had added back the entire ?6.88 crores, which included ?5.25 crores as direct donations and ?1.63 crores as Corporate Social Responsibility (CSR) contributions eligible under Section 80G. They provided detailed computations and supporting documents to demonstrate that the entire amount was correctly added back.

The Tribunal agreed with the assessee, noting that the detailed computations and records showed that the entire donation amount was added back correctly. The Pr. CIT's order was found to be incorrect as it did not adequately consider the detailed explanations and supporting documents provided by the assessee.

3. Weighted Deduction under Section 35(1) for Contributions to a Research Institute:
The Pr. CIT questioned the assessee's claim of a weighted deduction under Section 35(1) for a ?2 crore contribution to Pushpawati Singhania Research Institute, arguing that the required approval in Form 3CF-II was not on record.

The assessee argued that the institute had obtained the necessary approval in 2007, which was valid unless withdrawn by the Central Government. They provided evidence that the institute had complied with the annual filing requirements under Rule 5D, including the submission of necessary statements and audit reports.

The Tribunal found that the institute had the required approval and complied with the necessary filing requirements. The Pr. CIT's order was deemed incorrect as it failed to consider the detailed submissions and evidence provided by the assessee.

Conclusion:
The Tribunal concluded that the Pr. CIT's order under Section 263 was without jurisdiction as it did not adequately consider the detailed submissions and evidence provided by the assessee. The Tribunal quashed the Pr. CIT's order and allowed the appeal of the assessee. The Tribunal emphasized that the Assessing Officer had regularly performed his duties, and there were no errors in the original assessment order on the three issues raised by the Pr. CIT.