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2023 (11) TMI 296 - AT - Income TaxRevision u/s 263 - Belated filing of return for claiming deduction u/s 80-IA - deduction claimed u/s 80-IA as alleged violation of provisions of section 80AC wherein it is mandated that the return of income was supposed to be filed on or before the due date specified u/s 139(1), whereas as observed by the PCIT, assessee has filed the return after the date specified u/s 139(1) - HELD THAT - The return of income filed by the assessee for the relevant AY was within the specified date for submission of return u/s 139(1) i.e., 7th November, 2017 (extended by CBDT from 31st October, 2017 to 7th November, 2017), assessee s response dated 29-12-2021 towards the notice issued u/s 263 on 20-12- 2021 also have such explanation before the Ld. PCIT and, therefore, violation of section 80AC as observed by the Ld. PCIT is incomprehensible. Observation of the Ld. PCIT that separate balance sheets for the power unit was not furnished by the assessee, the same is tantamount to violation of Rule 18BBB of the Act, such fact needs verification, which the AO has overlooked. Assessee s contention that proceedings u/s 263 cannot be used for substituting opinion of the AO by date the principal CIT, though a specific query regarding deduction u/s 80IA was asked by the Ld. AO, but the requirement of separate balance sheet of the power generation unit for admissibility of deduction u/s 80IA as prescribed in Rule 18BBB, wherein clause 2 of the said Rule specifies that A separate report is to be furnished by each undertaking or enterprise of the assessee claiming deduction u/s 80-I or 80-IA or 80-IB or 80-IC and shall be accompanied by the Profit and Loss Account and Balance Sheet of the undertaking or enterprise as if the undertaking or the enterprise were a distinct entity. Since, such a specific requirement of the Section for allowing the deduction was not touched by the Ld. AO, this makes the order of Ld. AO erroneous, which was without proper enquiries and examination of the records. Assessee also argued about the eligibility of the business for deduction u/s 80IA, have explained the process of business, power generation and related aspects, however, we are not dealing with such contentions as the same is also subject of verification for which the Ld. PCIT has rightly set aside the order to the files of Ld. AO, without reaching to any logical conclusion, providing the assessee proper opportunity of being heard and to be represented in the set aside proceedings. PCIT has rightly assumed the jurisdiction u/s 263 of IT Act, in terms of explanation 2 of section 263, consequently, the order passed u/s 263 is held as sustained. Decided against assessee.
Issues Involved:
1. Jurisdiction under Section 263. 2. Audit objection and independent application of mind. 3. Procedural compliance under Section 80IA and Rule 18BBB. 4. Consistency in allowing deductions across assessment years. 5. Adequacy of AO's inquiry and verification. Summary of Judgment: Jurisdiction under Section 263: The assessee contested that the assessment order passed by the AO was neither erroneous nor prejudicial to the interest of Revenue. The PCIT invoked Section 263, arguing that the AO did not conduct adequate inquiries or verification, making the order erroneous and prejudicial to the interest of Revenue. Audit Objection and Independent Application of Mind: The assessee raised an additional ground, arguing that the PCIT's jurisdiction under Section 263 was based solely on an audit objection without independent application of mind. The Tribunal found no merit in this argument, stating that the PCIT had perused the case records independently and decided to invoke Section 263 based on his own satisfaction, in line with the provisions of the law and CBDT instructions. Procedural Compliance under Section 80IA and Rule 18BBB: The PCIT noted that the assessee did not maintain a separate balance sheet for the power unit, violating Rule 18BBB. The Tribunal agreed that this procedural lapse needed verification and justified the PCIT's invocation of Section 263 for further examination. Consistency in Allowing Deductions Across Assessment Years: The assessee argued that deductions under Section 80IA were allowed in previous years, suggesting a principle of consistency. However, the Tribunal held that compliance for each assessment year must be verified independently, and past allowances do not automatically validate current claims. Adequacy of AO's Inquiry and Verification: The Tribunal found that the AO did not adequately verify the specific requirements for allowing deductions under Section 80IA, particularly the necessity of a separate balance sheet for the power generation unit. This lack of inquiry made the AO's order erroneous and justified the PCIT's revisionary action under Section 263. Conclusion: The Tribunal dismissed the appeal, upholding the PCIT's order under Section 263. The Tribunal found that the PCIT had rightly assumed jurisdiction and that the AO's order was indeed erroneous and prejudicial to the interest of Revenue due to inadequate inquiry and verification. The appeal filed by the assessee was thus dismissed.
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