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TMI Blog2014 (1) TMI 1176X X X X Extracts X X X X X X X X Extracts X X X X ..... .263 of the Act; he should not to travel beyond the reasons recorded in the show cause notice. While issuing the show cause notice CIT had informed the assessee that deduction u/s.10B of the Act ought to have been allowed in respect of profits of the EOU I and EOU II undertakings after setting off of the losses incurred by the EOU III undertaking - While passing the final order CIT has held that section 10B dealt with exemption, that setting off of losses was not allowable if a claim pertained to an exemption-section - If the CIT was of the opinion that provisions of section 10B,being exemption section, did not allow setting off of losses she should have mentioned the same it in the show cause notice issued by her - It would have given the assessee an opportunity to deal with question raised by the CIT – CIT had travelled beyond the reasons mentioned in the show cause notice - Decided in favour of assessee. - ITA No.4084/Mum/2011 - - - Dated:- 13-11-2013 - B R Mittal And Rajendra, JJ. For the Appellant : Shri Nitesh Joshi For the Respondent : Shri S J Singh ORDER:- PER : Rajendra Challenging the order dated. 21.03.2011 of the CIT-8, Mumbai,passed u/s.263 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s tabulated below:- Particulars Non-EOU EOU-I EOU-II EOU-II SEZ-I Total (Rs) Total income (as computed by the assessee 8,02,43,782 5,34,30,787 6,79,45,079 (2,76,63,648) 72,29,007 18,11,27,072 (-)PF/ESIC 1,13,66,943 5,84,148 45,11,406 9,08,789 --- 1,73,71,286 Total income 6,88,76,839 5,28,46,639 6,34,33,673 (2,85,72,437) 72,29,007 16,37,55,786 (-)Ded.10B/10A Nil 5,28,46,639 6,33,75,738 --- 72,29,007 12,24,51,384 Business income 6,88,76,839 Nil 57,935 (2,85,72,437) Nil 4,03,62,337 (iii) The A.O. while completing the assessment has allowed deduction u/s. 10B in respect of profit derived by two EOUs. Without first setting off the losses incurred in the third EOU amounting to Rs. 2,85,72,437/- which is not as per law as mentioned in para (i) above. Accordingly, a show cause notice dated 28.02.2011 was issued to the assessee to show why the assessment made by the A.O. which is erro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T in her notice dated 28.02.2011,issued u/s.263 of the Act, had referred to section 10B(6)(ii) and had mentioned that loss suffered by an EOU undertaking has to be set off only against profits of an EOU undertaking, that the CIT further mentioned that deduction u/s.10B of the Act in respect of EOU I and EOU II ought to have been allowed on profits arrived at after setting off the loss incurred in the EOU III undertaking, that vide her order dated 21.03.2011 CIT had denied the claim made by the assessee for set off of loss relating to the EOU III undertaking on the ground that section 10B was in nature of an exemption provision, that the income of an eligible undertaking was not included in the total income the loss could not also be allowed to be set off, that the grounds for initiation of revision proceedings as mentioned in the show cause notice dated 28.02.2011 and reasons given by the CIT in her order dated 21.03.2011 were different. It was further argued that when the decision taken by the CIT in the order passed u/s.263 goes beyond the reasons mentioned in the show cause notice same has to be quashed. AR relied upon the order delivered by the Hon'ble Bombay High Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 263 of the Act shows that the Commissioner may, if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, pass such orders thereon after giving the assessee an opportunity of being heard. The necessary implication in the expression "after giving opportunity of being heard" relates to the point at which the Commissioner considers the order to be erroneous and prejudicial to the interests of the Revenue. In other words, it is necessary for the Commissioner to point out the exact error in the order which he proposes to revise so that the assessee would have an adequate opportunity of meeting that error before the final order is made. Affording any further opportunity after setting aside the order of the Income-tax Officer would not amount to an opportunity of meeting the alleged error in the assessment proposed to be revised. 4.1.a. In the case of Ashish Raj pal (320 ITR 674) Hon'ble Delhi High Court has held that it is the requirement of section 263 that the assessee must have an opportunity of being heard in respect of those errors which the Commissioner proposes to revise. Court fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7) has held as under : "There must be nexus between the reasons given in the show-cause notice and the order of the Commissioner under section 263. The reason given in the show-cause notice to the assessee was that duty drawback received by the assessee could not be considered as profit derived from export in view of the Supreme Court judgment and, therefore, the said amount did not qualify for deduction under section 80HHC. However, the order under section 263 held the assessment order as erroneous on different grounds ...This clearly showed that there was no nexus between the reasons given in the show-cause notice and the reasons given in the order for holding the order of the AO erroneous qua deduction under section 80HHC. The order of revision was not valid with reference to section 80HHC." From the above it is clear that for invoking provisions of section 263 of the Act,contents of the show cause notice and the final order should not be different or rather they should be same. Reasons behind the said principle are not difficult to understand. Assessee comes to know about the proposed revision, for the first time, when he receives a notice from the CIT. Accordingly, he f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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