9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (2) TMI 1138 - AT - Income TaxRevision u/s 263 - assessment order passed u/s 147 r.w.s. 144B challenged distinction between lack of inquiry and inadequate inquiry - claim of 100% deduction u/s 80IC - re-verify and re-examine the matters in reference being the question of the proportion of deduction (viz. 25% versus 100%) u/s 80IC for the reason that prior to the initiation of the revision proceedings enquiries/examinations in the manners in which these ought to have been carried out were not so carried out by the Assessing officer rendering such previous impugned order of assessment erroneous and prejudicial to the interest of Revenue. HELD THAT - No discussion or findings by the ld Pr.CIT in respect of the nature of enquiry or verification so carried out by the AO vis- -vis its reasonableness in the facts and circumstances of the case in the proceedings so completed u/s 147 r/w 144B of the Act. The Explanation 2(a) to Section 263 doesn t give such unfettered powers to the ld PCIT and it is the responsibility of the ld PCIT to show that the enquiry or verification conducted by the AO was not in accordance with the enquires or verification that would have been carried out by a prudent officer in the facts and circumstances of the present case. Merely the fact that the order so passed is cryptic doesn t give the jurisdiction to ld PCIT to exercise the jurisdiction u/s 263 as what needs to be seen is the assessment records at the time of examination by the ld PCIT and which speak about the issue of notices the submissions and documentation so submitted by the assessee which reflect due application of mind by the AO. The assessment order is reflection of conclusion of assessment proceedings and it is an accepted practice that only where an adverse view is taken against the assessee the basis of arriving at such a adverse view find mention in the assessment/reassessment order which in turn allows the assessee to challenge and avail remedial action as so advised. AO after calling for required information/documentation and after duly considering the explanations and documentation submitted before him reached a rightful conclusion that the assessee is eligible for claim of 100% deduction u/s 80IC of the Act for the impugned assessment year 2017-18. In our view such a view is clearly a plausible view which a reasonable and prudent officer could have taken and in absence of any further enquiry conducted by the ld PCIT and merely for the purposes of re-verification and re-examination of claim so allowed the view so taken and order so passed by the Assessing officer cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue and the exercise of revisional jurisdiction by the Ld. PCIT u/s 263 cannot be sustained in the eyes of law. Assessee appeal allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment revolve around the invocation of Section 263 of the Income Tax Act by the Principal Commissioner of Income Tax (PCIT) to revise an assessment order. The primary questions are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Invocation of Section 263 by the PCIT The legal framework for this issue is based on Section 263 of the Income Tax Act, which allows the PCIT to revise an assessment order if it is erroneous and prejudicial to the interests of the Revenue. The Tribunal examined whether the PCIT satisfied the twin conditions necessary for invoking this section. The Court noted that the PCIT's order was conditional, stating that the assessment order could only be considered erroneous and prejudicial if further verification by the Assessing Officer contradicted the assessee's submissions. The Tribunal emphasized that the PCIT must have a clear, objective, and justifiable satisfaction that the assessment order is erroneous and prejudicial at the time of passing the revisionary order, which was not the case here. Relevant precedents include the Supreme Court's decision in Malabar Industrial Co. Ltd., which requires both conditions to be met for Section 263 to be invoked. The Tribunal also referenced other judgments emphasizing that the PCIT must conduct an inquiry to establish that the assessment order is erroneous and prejudicial, which was not done in this case. Issue 2: Entitlement to 100% Deduction under Section 80IC The legal framework involves Section 80IC, which provides deductions for certain undertakings in special category states. The Tribunal examined whether the assessee was entitled to claim a 100% deduction based on substantial expansion, as supported by the Supreme Court's decision in PCIT v. Aarham Softronics. This decision allows for two initial assessment years within the block of ten years, one at the commencement of operations and another upon substantial expansion. The Court found that the assessee had undertaken substantial expansion within the prescribed period, making it eligible for the 100% deduction. The Tribunal noted that the Assessing Officer had duly considered the Supreme Court's decision and the relevant provisions, and found no adverse inference against the assessee's claim during the reassessment proceedings. Issue 3: Justification for Re-verification and Re-examination The Tribunal scrutinized the PCIT's directive for re-verification and re-examination of the assessee's claim under Section 80IC. It emphasized that the PCIT did not point out any specific errors or omissions in the Assessing Officer's inquiry or verification process. The Tribunal held that the PCIT's reliance on Explanation 2(a) to Section 263 was misplaced, as it does not grant unfettered powers to revise an order without demonstrating that the Assessing Officer's inquiries were inadequate or unreasonable. The Tribunal referenced judgments indicating that the PCIT must show that the inquiries or verification conducted by the Assessing Officer were not in accordance with what a prudent officer would have done, which was not established in this case. 3. SIGNIFICANT HOLDINGS The Tribunal held that the PCIT did not have a justifiable basis to invoke Section 263, as the twin conditions of the order being erroneous and prejudicial to the Revenue were not met. The assessment order was not erroneous, as the Assessing Officer had conducted a proper inquiry and applied the law correctly, considering the Supreme Court's decision in Aarham Softronics. The Tribunal emphasized that the PCIT's order was based on a conditional satisfaction, which is not permissible under Section 263. The Tribunal concluded that the order passed by the Assessing Officer was neither erroneous nor prejudicial to the Revenue's interests, and the PCIT's directive for re-verification was unwarranted. The Tribunal set aside the PCIT's order and upheld the Assessing Officer's assessment, allowing the assessee's appeal.
|
