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TMI Blog2021 (7) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... light of the above legal position discussed on the facts of the present case, we are of the considered opinion that the ld.PCIT was justified in exercising the jurisdiction u/s 263 of the I.T. Act and we do not find any merit in the grounds of the appeal filed by the assessee. - ITA No.1406/PUN/2017 - - - Dated:- 15-7-2021 - Shri Inturi Rama Rao, AM And Shri Partha Sarathi Chaudhury, JM For the Assessee : Shri Vardhaman Jain. For the Revenue : Shri Deepak Garg, CIT. ORDER PER INTURI RAMA RAO, AM: This is an appeal filed by the assessee directed against the order of learned Principal Commissioner of Income Tax 1, Pune (hereinafter referred as ld.PCIT ) dated 30.03.2017 passed u/s 263 of the Income Tax Act (hereinafter referred as the Act ) for the assessment year 2012-13. 2. The brief facts of the case are as under : The appellant is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of manufacturing and sale of anti-virus software namely Net Protector . The return of income for the assessment year 2012-13 was filed on 30.09.2012 declaring a total income of ₹ 19,14,48,969/- after claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... volved in the CD writing services and packing activities, the actual development of anti-virus software was developed in Pune Unit and therefore significant portion of the profits in relation to the sales from Parwanoo Unit of ₹ 13.47 crores is attributable to Pune Unit and therefore since the Pune unit was not eligible for deduction, the profits were diverted to Parwanoo Unit and the Assessing Officer had allowed the claim without examining and causing necessary enquiries into the claim made by the assessee. Therefore, the ld.PCIT set aside the assessment order dated 31.03.2015 passed u/s 143(3) of the Act with a direction to the Assessing Officer to examine the claim for deduction u/s 80IC in respect of sales of ₹ 13.47 crores made to vendors directly from Parwanoo Unit vide order dated 31.03.2017 passed u/s 263 of the Act. 5. Being aggrieved by the order of ld.PCIT, the appellant is before us in the present appeal. 6. Firstly, it was contested before us that ld.PCIT ought not have exercised the revisional jurisdiction in the facts of the case as the Assessing Officer had considered the issue and took a plausible view as the Assessing Officer himself had disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the present case. The ld. CIT D.R. also placed reliance on the decision of Hon ble jurisdiction High Court in the case of CIT Vs. Ballarpur Industries Ltd. reported in (2017) 85 taxamnn.com (Bom) and the order of Co-ordinate Bench of the Tribunal in the case of the Jalgaon People s Co-op Bank Ltd., Vs. PCIT (ITA No.698/PUN/2019 dt.22.02.2021). On the issue of merger of assessment order of ld.CIT(Appeals), he submitted that the ld.CIT(Appeals) had not considered the issue of eligibility of profits on the sales made to vendors directly from Parwanoo Unit neither considered and decided by the ld.CIT(Appeals) as it does not form part of the appeal before ld.CIT(Appeals). Therefore, in the light of the clear provisions of clause (c) of Explanation 1 to sub-section (1) of Section 263 of the Act, it cannot be said that the doctrine of merger have no application to issue which is the subject matter of revision. 8. We have heard the rival contentions and perused the material on record. The only issue that arises for our consideration in the present appeal relates to whether the ld.PCIT was justified in the facts of the present case in exercising the revisional authority vested with hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ausible view is a question of fact. The onus lies upon the assessee to prove this fact by leading the necessary evidence on record. In the present case, the Ld.A.R. neither pointed out any material on record suggesting that the issue which is the subject matter of revision was examined by the Assessing Officer during the course of assessment proceedings nor could he reply to the pointed query on this aspect from the Bench. The only submission of the Ld.A.R. is that the claim was examined by the Assessing Officer during the course of assessment proceedings is on the premise that out of the total claim of ₹ 21,09,60,407/- u/s 80IC, the Assessing Officer had disallowed a sum of ₹ 10,90,23,322/-. In our considered opinion, the submission of the ld.A.R. is far-fetched and cannot be accepted for the reason that the Assessing Officer had examined only one component of the total claim and had failed to examine the other component of the claim for whatsoever reasons nor can it be inferred that the Assessing Officer had examined total claim u/s 80IC of the Act, in the absence of any material on record justifying such inference. As held by the Hon ble jurisdictional High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent on the AO to investigate the facts stated in the return when the circumstance would make such an inquiry prudent and when the word 'erroneous' in Section 263 includes failure to make an inquiry, the order becomes erroneous when such an inquiry had been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. Duggal and Co. vs. Commissioner of Income Tax 220 ITR 456 (Delhi); CIT vs. Pushpa Devi 164 ITR 639 (Pat.) and CIT vs. Pushpa Devi 173 ITR 445 (Pat.). Further, the Hon ble Bombay High Court in the case of CIT, Nagpur Vs. Ballarpur Industries Ltd., reported in (2017) 85 taxmann.com 10 (Bom) held as follows : 13. The above issue which comes for our consideration is, did the Assessing Officer consider and examine the claim of the respondent before allowing a claim for deduction under Section 80 HHC of the Act. The respondent-assessee seeks to draw inference from the statement of case that there was an inquiry made before allowing the claim of deduction under Section 80 HHC of the Act at ₹ 92.81 lakhs. This inference is not justified. Mere using the word allowed does not mean examinatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the absence of examination is no view but only a chance result. Therefore, even the decision of the Andhra Pradesh High Court in Gogineni Tobacco Ltd. (supra) will also have no application. 15. It appears from the decision of the Apex Court in Max India Ltd. (supra) that the Assessing Officer had taken one of the two views of the word profit as occurring in Section 80 BBC of the Act. Therefore, it was in that context that the Apex Court held that Section 263 of the Act would not be attracted particularly when view of the Assessing Officer was found to be a view taken by various authorities under the Act. In passing we may point out that as recorded in the statement of case, the Tribunal held the exercise of powers under Section 263 of the Act by the Commissioner of Income Tax to be bad in law as the view of the Assessing Officer was in line with the decision of the Tribunal in Mysore Exports Ltd. (supra). It is relevant to note t.hat on the date when the Commissioner of Income Tax exercised his powers under Section 263 of the Act on 3l.03.1995, the decision of the Tribunal in Mysore Exports Ltd. (supra) was not available before him as it was rendered on 19.05.1995. 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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