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TMI Blog2012 (10) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... n on windmills and we are satisfied that the A.O. had made necessary inquiries and the assessee had provided an explanation in that regard. Thus, it can be said the A.O. on being satisfied did not make any addition and dis-allowance. Therefore, we are of the view that the stand taken by the A.O. was not an unsustainable in law so as to render the order as prejudicial to the interest of Revenue. Therefore the order of the A.O. cannot be considered either to be erroneous or prejudicial to the interest of the Revenue. Order of CIT quashed - Decided in favor of assessee - I.T.A. No. 3297/AHD/2011 - - - Dated:- 13-7-2012 - Mukul Kr . Shrawat And Anil Chaturvedi , JJ. Appellant by : S. N. Soparkar, Sr. Adv. Respondent by : B. K. S. Pandya, CIT (DR) ORDER Per: Shri Anil Chaturvedi, Accountant Member This appeal is filed by the assessee against the order of Ld. CIT-III, Ahmedabad dated 24-11-2011 for the assessment year 2007-08 passed under section 263 of the I.T. Act, 1961. 2. The only ground raised by the assessee reads as under:- That the Commissioner of Income tax, has erred in law and facts by passing order und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to substantiate its stand that whichever method, i.e. either inclusive or exclusive method, is followed there is no impact to the profits. It was further submitted that the A.O. had verified the tax audit report including the annexure showing the work of profits under inclusive and exclusive method and on being satisfied, made no addition on that account. The assessee also relied on a few decisions in its support. With respect to the 2nd issue of non inclusion of refund of excise duty in the computation of income, it was submitted that the assessee follows exclusive method of accounting for sales and material cost. Accordingly, the sales are accounted net of excise duty and material purchased is shown net of duty paid. Credit is availed of the amount paid towards excise duty on purchase of raw material and the same is utilized for payment of duty on sales. Balance of unutilized excise duty /CENVAT is shown under other current assets in the balance sheet. Accordingly, Excise duty/CENVAT has no impact on the Profit and Loss of the Company. It was further submitted that the aforesaid method of accounting has been consistently followed by the assessee and has been accepted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application of mind and without examining all relevant issues/facts which subsequently came to notice for which proceedings u/s. 263 of the I.T. Act was initiated. The A.O. simply accepted the assessee s claims without making any enquiry or raising any issue or even calling for any explanation on the issues discusses in this order. The assessee s case therefore is squarely covered by the ratio of the case of Malabar Industrial Co. Ltd. (supra) and does not favour the assessee as claimed by the A.R. It is simply a case of incorrect assumption of facts as in the case of Malabar Industrial Co. Ltd. (supra). Consequently, it is an order which is totally erroneous and hence, prejudicial to the interest of the Revenue, and the provisions of section 263 are clearly applicable to the facts of the assessee s case. 13. In the case of our assessee, a clear finding has been given throughout this order, as to how the assessment order passed by the A.O. u/s. 143(3) dated 27-11-2009 was erroneous. It has been brought out in considerable detail how the A.O. failed to apply his mind to all aspects of the case. He passed a stereotyped order accepting the claim of the assessee, without making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT vs. Parry Engineering Electronics Pvt. Ltd. (ITA No.3317/Ahd/2011) 9. The Ld. A.R. further submitted that for the purpose of invoking the provisions of section 263 two conditions are required to be satisfied namely, the order is prejudicial to the interest of Revenue and the order is erroneous. Both the conditions have to be simultaneously fulfilled. If only one condition is fulfilled, then also provisions of section 263 cannot be invoked. In the case of the assessee, though the assessment order does not state very clearly the issues examined by him, but that cannot be the reason for considering the order as being prejudicial and erroneous. In view of these facts, it was submitted that the order of CIT be quashed. 10. On the other hand the Ld. D.R. contended that the CIT was right in invoking the provisions of section 263 as the A.O. had not made any inquiry. According to the Ld. D.R. the A.O. had not examined the issues pointed out by CIT in the show cause notice. The A.O. had neither sought any details nor called for any explanation. The order was passed by the A.O. without due diligence and application of mind and therefore the order of the A.O. is erroneous and prejud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sory jurisdiction and can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise the power of revision under this sub-section viz. (i) the order should be erroneous; and (ii) by virtue of the order being erroneous prejudice must have been caused to the interests of the Revenue. An order cannot be termed as erroneous unless it is not in accordance with law. If an Income tax Officer acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by the Commissioner simply because,. According to him, the order should have been written more elaborately. This section does not visualize a case of substitution of the judgment of the Commissioner for that of the Income tax Officer, who passed the order, unless the decision is held to be erroneous. Cases may be visualized where the Income tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimates himself. The Commissioner, on perusal of the records, may be of the opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re A.O. whereby it was contended that the assessee has been consistently following exclusive method of accounting for sales, purchase and closing stock. It also demonstrated through the annexure of tax audit report certified by Chartered Accountant that whichever method of accounting is adopted (inclusive or exclusive method) by the assessee, there is no impact on the profit of the year. Similarly assessee also submitted before A.O. CIT the method of accounting employed consistently followed by it for accounting of Excise duty and CENVAT and by following either of the method there is no impact on profit and loss account. The assessee also submitted that the depreciation has been allowed to the assessee before examining the relevant details. The A.O. in the instant case had examined the issue of stock valuation and depreciation on windmills. The charge of the CIT that the A.O. overlooked the provisions of 145A and 32(2)(iia) also does not appear to be justified for the reason that the A.O. had examined the same. In view of the fact that the assessee had made written submission with respect to it which was addressed to the A.O. The order of assessment dated 27-11-2009, no doubt doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ills, the Co-ordinate Bench has held as under :- 4. . The depreciation is allowable on renewable energy device which also includes windmill. The depreciation at the rate of 80% is allowable on the entire device which is capable of generating electricity using wind energy 16. In the case of Nirmalaben Chopra (supra) the assessee had declared capital gains on sale of shares. The A.O. had not made enquiries in respect of computation of capital gains whether short term or long term. The Hon ble ITAT held that for computing capital gains, the necessary enquiries to be carried out by the A.O. are when the capital asset is sold and what are the sale proceeds, when the capital asset is purchased and what is the cost of acquisition, what is the further expenditure in connection with the acquisition of the asset or in connection with the sale, what is the long term capital gain or short term capital gains. In that case, since the A.O. had not made the required inquiries, the order of A.O. was held to be erroneous and prejudicial to the interest of the revenue. Thus in this case the facts are distinguishable and therefore not applicable to the facts of the case before us. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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