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TMI Blog2008 (1) TMI 926X X X X Extracts X X X X X X X X Extracts X X X X ..... d with regard to which assessee had no opportunity to explain/meet the case of the ld. CIT. 4. That the ld. CIT has failed to appreciate that the claim of the assessee having been allowed in the past, ought not to have been disturbed without new facts or material and thus the order of CIT is against the settled principles that the consistency should not be disturbed. 5. That the ld. CIT fell in error in not appreciating that twin conditions that an order is erroneous and prejudicial to the interest of revenue do not get satisfied and thus the order is not sustainable in law. 6. That there is not a whisper in the order of ld. CIT as to how the order is erroneous and prejudicial in the absence of which the order cannot be sustained and liable to be quashed. 2. The assessee is engaged in the activity of manufacturing of electric and electronic meteRs. For the year under consideration it was assessed vide assessment order dated 20.1.2006 passed u/s 143(3) of the Act. A copy of such order is placed at pages 1 to 11 of the paper book. Return of income was filed at a sum of ₹ 33,30,486/- on 28.11.2003 which was assessed at a sum of ₹ 69,55,260/- aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 14,27,351/- being 30% of the business income calculated at ₹ 47,57,837/- but the section mentioned is 80 (IB). 4. The assessee submitted reply to the above-mentioned show cause notice vide letter dated 23.3.07 a copy of which is placed at pages 13 to 16 of the paper book. In the said reply it was submitted that the audit report in form No. 10 CCB for claim of deduction was filed during the course of assessment proceedings on 25.7.2005 along with a letter. It was submitted that the said report was duly considered by the AO while framing the assessment and deduction was rightly allowed. It was further submitted that the requirement of submission of the report along with return was for the first time introduced w.e.f. 1.4.2003 by Finance Act, 2002 and for the earlier years in the case of companies there was no such requirement. Reference was made to the case law relating to section 80 J(6A) according to which, if the audit report is filed during the course of assessment proceedings then it will be the sufficient compliance for filing the audit report. It was submitted that such audit report was submitted to the AO well before completion of assessment and hence taking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for consideration is the stage when assessing authority start assessment proceedings and if the audit report is made available by that time it would be substantial compliance of sub-section (6A) and a contrary view is likely to frustrate the very object and purpose of the claim underlined by section 80 J(1). 2. CIT v. A.N. Arunachalam, 208 ITR 481(Mad) wherein he has been held regarding requirement of section 80 J(6A) the stress laid by the said section was only to have accounts audited and to make the audited report available to the AO for proper assessment. Therefore, audit report must be available before assessment is made and if the section is so construed as to make the filing of audit report along with return mandatory it would discriminate between company assessee and other assessees and thus the provisions of section 80 J(6A) were not mandatory. Assessee was held entitled to relief though report and certificate were not filed along with return but filed before assessment. 7. Regarding objections of ld. CIT for non-fulfilment of conditions laid down in section 80-I it was pleaded by the ld. AR that w.e.f. 1.4.2000 the eligibility of the assessee was u/s 80 (IB). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the judgment of this Court in the case of Reckitt and Colman of India Ltd. v. CCE. This Court held that it is beyond the competence of the Tribunal to make out in favour of the revenue a case which the revenue had never canvassed and which the appellants had never been required to meet. 19. The impugned order of the Tribunal which had gone beyond the show cause notice and the order of the respondent - collector is, therefore, liable to be set aside. 8. On the ground that there should be consistency in the approach of revenue as deduction has been granted in earlier years and subsequent years the same approach should be adopted, the ld. AR relied on the decision in the case of CIT v. Lagan Kala Upvan, 259 TTR 489(Del) in which it was held that in the absence of any change in the objects and activity of the assessee, the AO was not justified in taking a different view in the asstt. year in question when exemption was being allowed consistently. 9. Thus it was pleaded that the order passed by CIT u/s 263 does not confirm the requirements of law and, therefore, be quashed. 10. On the other hand, the ld. DR pleaded that the AO has mechanically granted deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revisional powers cannot be exercised. Thus non-furnishing of audit report along with return does not render the assessment erroneous. In the circumstances it has to be held that CIT was not right in exercising his jurisdiction u/s 263 on the facts of the case. 12. Now coming to the second ground on which CIT has held that assessee has not fulfilled conditions laid down in section 80(I)(7) as the industry of the assessee does not fall within the category of any of the industries specified in that section. Apparently such ground is not forming part of the show cause notice. In the grounds of appeal the assessee has raised specific grievance that CIT even did not call any explanation on this ground and, therefore, the assessee had no opportunity to meet with this ground. Such argument of the assessee is acceptable. It will be against the principles of natural justice that a person if not put to any explanation cannot be saddled with the liability. It was the case of the assessee that had CIT confronted this issue to the assessee, it would have been explained that the claim of the assessee is u/s 80 (IB) which is well supported by audit report submitted during the course of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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