2022 (4) TMI 31 - AT - Income Tax

Revision u/s 263 - deduction u/s 80IB(10) - HELD THAT - AO raised the query and Assessee submitted the copy of certificate of completion of housing projects as well as the audit report for claiming deduction under section 80IB in form No.10 CCB - the assessee gave complete details of the stock, sales of flats vide letter dated 19th December, 2017 - details of closing stock showing flat no was also submitted - we find that the assessee has submitted whatever details were asked for by the AO and thereafter allowed the claim of the assessee. As also shown to him that these appeals for AY 2015-16 and the assessee is claiming deduction under section 80IB(10) of the Act since 2008-09. There has been no dispute with respect to the satisfaction of condition relevant to that section. Therefore, this issue was also examined by the learned AO during the assessment proceedings. The issue remains that the PCIT while passing the order has stated that assessee did not comply with date of hearing on 20th February, 2020 and therefore, order was passed without considering the explanation of the assessee. We find that assessee has sent email on 19th March, 2020 explaining the reasons that on account of provision of Section 263 cannot be exercised for the impugned assessment year. However, this explanation was not considered by the learned PCIT though order u/s 263 was passed on 24/3/2020. It is apparent that assessee did not attend the hearing on 20/2/2020 but before the order was passed assessee submitted its reply. Therefore in the interest of justice , we direct the assessee to produce the copy of the mail before the ld PCIT and raise all the contention once again on the issue of allowability of claim u/s 80 IB (10) of the Act. When this proposition was expressed at the time of hearing , both the parties agreed to it - we set aside the matter back to the file of the learned PCIT to examine the submission of the assessee sent through email dated 19th March, 2020 and then to decide the issue whether the order of the learned Assessing Officer is erroneous and prejudicial to the interest of the Revenue or not, only on the aspect of claim of deduction under section 80IB(10) of the Act. PCIT on consideration of the explanation submitted by the assessee, if he feels that still the jurisdiction lies with him and the order passed by the learned Assessing Officer is still erroneous so far as prejudicial to the interest of the Revenue, grant opportunity for hearing to the assessee and then decide the issue on its merit. In view of this, Ground no 1 2 of the appeal are partly allowed.

Summary

Issues:
1. Jurisdiction under section 263 of the Income-tax Act, 1961.
2. Compliance with principles of natural justice during the pandemic of COVID-19.

Analysis:

Issue 1: Jurisdiction under section 263 of the Income-tax Act, 1961

The appeal was filed against an order passed under section 263 of the Income-tax Act, 1961, by the Principal Commissioner of Income-tax-3, Thane. The appellant challenged the jurisdiction of the Principal Commissioner to invoke section 263, arguing that the Assessing Officer had already examined the issues within the limited scrutiny scope. The Principal Commissioner identified discrepancies in the assessment related to work in progress and deduction claimed under section 80IB of the Act. The appellant contended that the Assessing Officer had made due inquiries and the order was not erroneous. The Tribunal held that the Assessing Officer could only inquire into issues within the limited scrutiny scope unless the case was converted to complete scrutiny with necessary approval. As the work in progress issue was beyond the limited scrutiny scope, the Principal Commissioner lacked jurisdiction to invoke section 263 on that matter. Regarding the deduction claimed, the Tribunal found that the Assessing Officer had already examined and allowed the claim after receiving necessary details from the appellant. Therefore, the Principal Commissioner's order under section 263 was deemed invalid on these grounds.

Issue 2: Compliance with principles of natural justice during the pandemic of COVID-19

The appellant raised concerns about the violation of natural justice principles during the COVID-19 pandemic, arguing that the Principal Commissioner passed the order hastily without giving sufficient opportunity for a hearing. The appellant had submitted detailed replies and explanations, including an email, which were allegedly not considered before the order was issued. The Tribunal acknowledged the appellant's submission and directed the appellant to produce the email before the Principal Commissioner for reevaluation. Both parties agreed to this proposition, and the matter was remanded back to the Principal Commissioner for a fresh examination. The Tribunal emphasized the importance of considering all submissions and providing a fair hearing, especially during challenging times like the pandemic. Ultimately, the appeal was partly allowed for statistical purposes, emphasizing the need for procedural fairness and adherence to natural justice principles even in extraordinary circumstances.

This detailed analysis highlights the key legal issues, arguments presented, and the Tribunal's findings in the judgment delivered by the Appellate Tribunal ITAT Mumbai.