2021 (10) TMI 350 - AT - Income Tax

Revision u/s 263 by CIT - allowance of deduction u/s 80IA - HELD THAT - AO had carried out specific enquiries with regard to deduction claimed u/s 80IA(4) of the Act and it was only after he was satisfied with the propriety of the claim, the continuing deductions claimed by the assessee left undisturbed. Significantly, AY 2015-16 in question is not the first year for claim of deduction u/s 80IA(4) - assessee has claimed deduction in respect of different sites from various initial assessment years noted earlier and no change in circumstances was noted by the PCIT which is warranted in a settled point. The acceptance of continuity of claim u/s.80IA(4) cannot be seen with any concern without showing deviation in facts. Private railway sidings have been treated as eligible infrastructure facility for the purposes of Section 80IA(4) of the Act by the co-ordinate benches. Lastly, the purport of enquiry directed by the PCIT is totally unintelligible. PCIT himself has not carried out any examination or verification of facts and has simply directed the AO to may verify Form 10CC and initial years assessment orders of each business based on the contract entered with Railways . PCIT has merely set aside to indulge in verification of the same facts yet again without citing as to how the AO has committed any error except alleging no proper enquiry. The assessment order can be interdicted u/s 263 of the Act only where both the conditions are met i.e. order is erroneous as well as prejudicial to the interests of the Revenue. No error has been shown by the PCIT except absence of proper enquiry. Issue of deduction has been found to be continuing since last many assessment years and necessary documentations for claim / deduction has been placed on record and examined by the AO. No inconsistency in the action of the AO has been shown which can render his action to be erroneous and prejudicial to the interest of the Revenue. As no two persons possibly think alike, variance in their analysis, understanding and application of law in same or similar factual matrix by itself would not empower a superior authority to displace the view of the lower authority. This apart, in the absence of any reason showing error in the assessment order, there was no warrant for a PCIT to interfere with the order under s.143(3) of the Act. The action of the PCIT under s.263 of the Act is thus found to be without jurisdiction and consequential order thus passed is set aside. Claim of deduction u/s 80G - As it is an admitted position that the clinching evidence in the form of receipt from the donor was available before the PCIT. The PCIT has simply observed that the AO may consider deduction after proper verification . The nature of verification is not specified. Such mundane and directionless observations in the revisional proceedings are neither here nor there, in the absence of any elaboration of the grounds for not entertaining the deduction. This ground for revisions is thus set aside. - Appeal of assessee allowed.

Summary

Issues Involved:
1. Jurisdiction assumed by the PCIT under Section 263 of the Income Tax Act, 1961.
2. Improper allowance of deduction under Section 80IA of the Act.
3. Improper enquiries in respect of the claim of deduction under Section 80G of the Act.

Issue-wise Detailed Analysis:

1. Jurisdiction Assumed by the PCIT under Section 263 of the Income Tax Act, 1961:
The assessee challenged the jurisdiction assumed by the PCIT under Section 263 of the Act, arguing that the revision order was unjustified, bad in law, without jurisdiction, and void ab initio. The PCIT concluded that the AO failed to carry out necessary enquiries and investigations related to the issues concerning the material already on record. The Tribunal found that the AO conducted specific enquiries regarding the deduction claimed under Section 80IA(4) of the Act and allowed the claim after being satisfied with the propriety of the claim. The Tribunal noted that the PCIT did not point out any particular error in the AO's action and did not carry out any examination or verification of facts himself. Consequently, the Tribunal held that the PCIT's action under Section 263 of the Act was without jurisdiction and set aside the consequential order.

2. Improper Allowance of Deduction under Section 80IA of the Act:
The assessee, engaged in developing, operating, and maintaining infrastructure facilities (Railway Sidings/Logistic Parks), claimed deductions under Section 80IA(4) of the Act. The AO allowed these deductions after conducting necessary and diligent enquiries, including examining Form No. 10CCB, separate books of accounts, and past assessment history. The PCIT, exercising revisionary powers, issued a show cause notice and subsequently set aside the assessment order, directing the AO to verify Form 10CCB and initial years' assessment orders. The Tribunal found that the AO had conducted specific enquiries and allowed the deductions after proper examination. It noted that the PCIT did not show any deviation in facts or inconsistency in the AO's action. The Tribunal held that the PCIT's action was based on the absence of proper enquiry rather than any error, and thus, the assessment order could not be interdicted under Section 263 of the Act. The Tribunal set aside the PCIT's order, stating that the action was without jurisdiction.

3. Improper Enquiries in Respect of the Claim of Deduction under Section 80G of the Act:
The PCIT held that the AO did not conduct proper enquiries regarding the claim of deduction under Section 80G of the Act, despite examining donation receipts during the revisionary proceedings. The Tribunal noted that the evidence of payment of donation to the Prime Minister's National Relief Fund was available before the PCIT. The PCIT's direction to the AO to consider the deduction after proper verification was found to be mundane and directionless, without specifying the nature of verification required. The Tribunal set aside this ground for revision, holding that the PCIT's observations were neither here nor there in the absence of any elaboration of the grounds for not entertaining the deduction.

Conclusion:
The Tribunal allowed the appeal of the assessee, setting aside the PCIT's order under Section 263 of the Income Tax Act, 1961. The Tribunal found that the AO had conducted necessary enquiries and allowed the deductions under Sections 80IA and 80G of the Act after proper examination. The PCIT's action was found to be without jurisdiction, as it was based on the absence of proper enquiry rather than any specific error. The Tribunal emphasized that the appreciation of material placed before the AO is exclusively within his domain and cannot be interdicted by a superior authority under Section 263 of the Act.