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2018 (1) TMI 594 - AT - Income TaxRevision u/s 263 - Held that - It is observed that the assessee brought to the notice of the CIT that in respect of group concern M/s Sujana Metal Products, similar depreciation claim was allowed by the AO when the CIT set aside the issue to him for examination, but, in the given case, the CIT ignored the submissions of the assessee. In the present case, the learned Assessing Officer after duly considering the explanation and information filed in response to the notice issued u/s. 143(2) of the Act, on being satisfied with such explanation chose not to make any further enquiry. Endless enquiry is not possible and it is for the learned Assessing Officer to decide when to end the enquiry. The learned CIT cannot transgress the jurisdiction under Section 263 of I.T. Act, 1961 by mentioning that no proper enquiry was made. Thus we quash the order passed by the CIT u/s 263 of the Act, considering the fact that CIT has not brought on record the findings to substantiate that the order passed by AO is erroneous and also it is prejudicial to the interests of revenue. Mere set-aside without proper findings by him will be illegal and without proper jurisdiction. Therefore, we restore the order of AO passed u/s 143(3) of the Act - Decided in favour of assessee.
Issues Involved:
1. Delay in filing the appeal. 2. Claim of depreciation on plant and machinery at a higher rate. 3. Treatment of unavailed CENVAT credit. Issue-Wise Detailed Analysis: 1. Delay in Filing the Appeal: The assessee filed the appeal with a delay of 225 days. The delay was attributed to the 263 order being misplaced by office staff, only discovered when the AO issued a notice to the assessee. The Tribunal condoned the delay, accepting the reason as a reasonable cause for not filing the appeal within the stipulated time. 2. Claim of Depreciation on Plant and Machinery at a Higher Rate: The CIT exercised powers under section 263 of the Income-tax Act, 1961, to revise the assessment order passed by the AO. The CIT noted discrepancies regarding the assessee's claim of 80% depreciation on plant and machinery. The assessee argued that the machinery used in the iron and steel manufacturing process, specifically rolling mill rolls, qualified for 80% depreciation as per item 8(vii) of the depreciation table. The CIT, however, observed that the AO did not verify whether MS chilled bars and rolling mill rolls were the same and entitled to 80% depreciation. Additionally, the CIT pointed out that air and water pollution control equipment purchased by the assessee should have been eligible for 100% depreciation, not 80%, and directed the AO to verify these claims. The Tribunal found that the CIT's order lacked specific findings to substantiate that the AO's order was erroneous and prejudicial to the interests of revenue. The Tribunal referenced a similar case involving the assessee's group concern, where the AO had allowed the depreciation claim after examination. The Tribunal concluded that the CIT's direction for further verification amounted to a change in opinion and was not justified. Thus, the Tribunal quashed the CIT's order and restored the AO's original assessment order. 3. Treatment of Unavailed CENVAT Credit: The CIT noted that the assessee had an unavailed CENVAT credit amounting to ?4,97,61,782, which should have been added back to the total income. The assessee contended that it followed the guidance note issued by the Institute of Chartered Accountants of India (ICAI), treating the unutilized CENVAT credit as a current asset. The CIT directed the AO to verify whether purchases were net of excise and whether unutilized CENVAT credit had been debited before allowing the same. The Tribunal observed that the CIT had not provided concrete findings to show that the AO's treatment of CENVAT credit was erroneous or prejudicial to the interests of revenue. Citing precedents, the Tribunal emphasized that an order cannot be termed erroneous unless it is not in accordance with the law. The Tribunal concluded that the CIT's order lacked a basis for setting aside the AO's assessment and thus quashed the CIT's order, restoring the AO's original assessment. Conclusion: The Tribunal allowed the assessee's appeal, quashing the CIT's order under section 263 and restoring the AO's original assessment order. The Tribunal found that the CIT had not substantiated the claim that the AO's order was erroneous and prejudicial to the interests of revenue, and that the CIT's directions amounted to a change in opinion rather than correcting an error.
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