2015 (6) TMI 926 - AT - Income Tax

Disallowance of the deduction claimed u/s.80-IB - non-furnishing the prescribed audit report in Form No. 10CCB - Held that - The impugned order is a non-speaking order in-as-much as it does not convey the reason/s informing the decision. It is only when a judicial order bears the reason/s leading to the decision, that it can be said to be valid and, further, enable its review, to which it is subject, i.e., upon either party taking it before a higher appellate forum, as has been. Even if the ld. CIT(A) were to merely follow his order/s for the earlier years, which are not on record, the relevant part/s thereof ought to have been reproduced by him, so as to convey the said reasons, which would then by incorporation form the reasons informing his order or decision, besides constituting a self-contained order, while in the present case it does not state, even broadly, the basis for the confirmation of the disallowance, i.e., for the earlier years. Again, it would also enable the reader to see if the facts and circumstances of the instant case are or are not, identical or similar, as the case may be, for the said decision to apply for the current year. Further still, it was also incumbent on the ld. CIT(A) to state as to why the decision/s by the tribunal, confirming the deduction u/s.80-IB for the earlier years in the assessee s own case, binding upon him, was not followed, as judicial discipline would dictate. His order, accordingly, does not satisfy the mandate of section 250(6), and is accordingly to be set aside for passing a fresh, speaking order in accordance with the law. - Decided in favour of assessee for statistical purpsoes.

Summary

Issues:
Appeal against CIT(A) order for A.Y. 2006-07 disallowing deduction claimed under section 80-IB.

Analysis:
The appeal was filed against the CIT(A) order partly allowing the assessee's appeal contesting the assessment for A.Y. 2006-07. The assessee, a marble processing company, filed its return of income declaring total income of Rs. 24,13,007, which was selected for scrutiny and assessed at Rs. 37,74,570. The appeal specifically contested the disallowance of deduction claimed under section 80-IB due to non-furnishing of the prescribed audit report in Form No. 10CCB. The CIT(A) confirmed the assessment, leading to the second appeal.

The primary reason for disallowance was the non-furnishing of the audit report as required by the provision. The CIT(A) confirmed the assessment without providing reasons, making the order non-speaking. The lack of reasons rendered the decision invalid, as the basis for disallowance was not conveyed. The CIT(A) failed to follow judicial discipline by not considering tribunal decisions confirming the deduction in earlier years. The order did not satisfy the legal mandate and needed to be set aside for a fresh, speaking order.

The Assessing Officer objected to the admission of the audit report, but the CIT(A) had called for a remand report without recording reasons for admission. The AO did not examine the audit report on merits, which was necessary despite objections to its belated filing. The CIT(A) should have verified the report to determine the correct tax liability. Additionally, the AO claimed the assessee was not entitled to deduction on certain incomes, but the CIT(A) did not address this issue, showing a lack of application of mind. The order was set aside for a fresh decision with proper procedure and opportunity for both parties.

In conclusion, the appeal was allowed for statistical purposes, and the order was pronounced in open court on 27.3.2015. The judgment highlighted procedural deficiencies, lack of reasoning, and the need for a fresh decision in accordance with the law.