2021 (12) TMI 516 - HC - Income Tax

Revision u/s 263 by CIT - additions on account of additional depreciation, suppression of sale and disallowance in case of depreciation - HELD THAT - While deciding the controversy and rendering a finding, the tribunal in paragraph-9 held that the assessee has given an explanation which is acceptable and there was nothing to disturb the concluded assessment for the assessment year 2009-10. In our considered view such conclusion appears to be without sufficient reason. We say so because when the assessee's case was that the CIT had ignored the explanation and submission therefore, if the tribunal was of the view that the CIT did not consider the explanation, it would have been well justified to accept the explanation, submission and record a finding. The other option open would have been to send the mater back to CIT for re- examination of the explanation and submission of the assessee. Either of the two options had not been chosen by the tribunal but merely concluded by stating that the explanation offered by the assessee is acceptable without assigning any reasons therefore. Thus our considered view would be an incorrect manner of rendering a conclusion which revolves entirely on facts and documents which were placed by the assessee before the CIT. Therefore, we are of the view that such finding of the tribunal requires to be set aside and the matter has to be remanded back to the Commissioner of Income Tax for fresh consideration on the said aspect. So far as the issue with regard to the claim for direction under Section 80IB is concerned, it is submitted by the Counsel on either side that such issue does not arise in the assessment year 2009-10. In the result the appeals in so far as the assessment years 2008-09, 2010-11, 2011-12 and 2013-14 are dismissed on the ground of low tax effect. Consequently, the substantial questions of law raised in this appeal in so far as the assessment years, as indicated above, are left open. So far as the order of the tribunal pertaining to the assessment year 2009-10 on two issues, namely, sales bill and depreciation on lorries is set aside and the matter is remanded to the CIT for fresh consideration after giving an opportunity of hearing to the respondent assessee. Since we have remanded the matter for fresh consideration by the CIT, we give liberty to the respondent assessee to raise all issues and more particularly the argument which has been placed before us that seized documents are not incriminating materials including the merits of the matter as well. Consequently, the order passed by the CIT for the assessment year 2009-10 is also set aside and the matter is remanded to the CIT for fresh consideration.

Summary

Issues:
1. Justification of quashing order under Section 263 of the Income Tax Act for assessment years 2008-09 to 2011-12 and 2013-14.
2. Treatment of seized material as non-incriminating for AY 2009-10.
3. Interpretation of term "Manufacture" in the context of Section 80IB.
4. Eligibility for deduction under Section 80IB for the process of manufacturing poultry feeds.
5. Disallowance of depreciation claim on lorries for AY 2009-10.
6. Deletion of addition made under Section 153A/143(3) in absence of incriminating documents.
7. Initiation of Section 153C without incriminating documents.

Analysis:
1. The appeal filed by the revenue under Section 260A of the Income Tax Act challenged the Tribunal's order quashing the order under Section 263 for various assessment years. The substantial questions of law raised included the justification for quashing the order, treatment of seized material as non-incriminating, and errors in interpreting the term "Manufacture" under Section 80IB. The High Court disposed of appeals for certain years due to low tax effect but remanded the matter back to the CIT for fresh consideration for AY 2009-10.

2. The CIT had relied on seized documents as incriminating for AY 2009-10, but the assessee argued that the documents were part of regular books of account and not incriminating. The Tribunal found the assessee's explanation acceptable and concluded that the assessment was correct. However, the High Court disagreed, stating that the Tribunal's conclusion lacked sufficient reasoning. The matter was remanded back to the CIT for fresh consideration.

3. The issue of eligibility for deduction under Section 80IB for the process of manufacturing poultry feeds was also raised. The Tribunal's decision was set aside, and the matter was remanded to the CIT for further consideration, allowing the assessee to raise all relevant issues and arguments.

4. The High Court addressed the disallowance of depreciation claim on lorries for AY 2009-10, setting aside the Tribunal's order and remanding the matter to the CIT for fresh consideration, giving the respondent assessee the opportunity to present their case fully.

5. Regarding the deletion of additions made under Section 153A/143(3) in the absence of incriminating documents and the initiation of Section 153C without such documents, the High Court remanded the matter back to the CIT for fresh consideration, emphasizing the importance of considering all relevant facts and submissions before reaching a conclusion.

6. The High Court's judgment highlighted the need for thorough consideration of all explanations and submissions by the assessee and the CIT before making decisions under the Income Tax Act, ensuring that all relevant evidence is properly examined to uphold the principles of justice and fairness in tax assessments.