2021 (10) TMI 951 - AT - Income Tax

Revision u/s 263 by PCIT - claim of deduction u/s 80P - HELD THAT - AO had indeed made requisite enquiries on the subject mentioned issue of claim of deduction u/s 80P - Infact the return itself was selected for limited scrutiny only for examining the said deduction. AO had indeed carried our requisite enquiries on the same and had duly applied his mind on the eligibility of assessee for claiming deduction u/s 80P of the Act by taking due cognizance of the fact that the assessee is a registered co-operative housing society deriving interest income from deposits kept with co-operative banks. The assessee had indeed placed the copies of scrutiny assessment orders for the immediately preceding two assessment years before the ld AO, wherein under identical facts and circumstances AO had accepted the fact that interest received from a co-operative bank would be eligible for deduction u /s 80P - AO could not have taken any other view in the matter while framing the assessment as he is bound to apply the rule of consistency. When the rule of consistency has been applied by the ld AO, his order cannot be termed as erroneous without bringing any fresh facts on record. PCIT had not brought any evidence on record to prove that the facts prevailing in Asst Yea₹ 2013-14 and 2014-15 were different from that of facts prevailing in the year under consideration. Hence in our considered opinion, the conclusion of the ld PCIT that no enquiries were indeed carried out by the ld AO cannot be accepted and hence the revision order passed by him u/s 263. - Decided in favour of assessee.

Summary

Issues:
Validity of assumption of revision jurisdiction u/s 263 of the Act by ld PCIT.

Analysis:
The only issue to be decided was whether the ld PCIT validly assumed revision jurisdiction u/s 263 of the Act. The assessee, a co-operative housing society, claimed deduction u/s 80P of the Act for interest income from Co-operative Banks in the return of income for A.Y. 2015-16. The ld AO conducted limited scrutiny and completed the assessment u/s 143(3) of the Act, allowing the deduction. The ld PCIT sought to revise the assessment, alleging inadequate inquiries by the ld AO. The ld PCIT contended that the ld AO failed to determine the true nature of income, the business activity of the assessee, and the applicability of amended section 80P(4) of the Act.

Upon examination, it was found that the ld AO had conducted necessary inquiries on the issue of deduction u/s 80P. The ld AO considered the scrutiny assessment orders of the preceding years and applied the rule of consistency, leading to a nil income determination after allowing the deduction. The ld PCIT's claim of inadequate inquiries was dismissed as no fresh facts were presented to contradict the previous assessment decisions. Judicial precedents were cited to support the decision, emphasizing that the ld AO had appropriately considered the deduction claim u/s 80P(2)(d). The invocation of section 80P(4) was deemed incorrect as cooperative societies, not being cooperative banks, were entitled to the deduction.

In light of the above observations and legal precedents, the revision order by the ld PCIT u/s 263 of the Act was quashed, and the appeal of the assessee was allowed. The order was pronounced on 12/10/2021.