9911796707
TMI Blog2021 (9) TMI 988X X X X Extracts X X X X X X X X Extracts X X X X ..... gaged in the business of manufacturing of iron and steel rerolled products and generation of power. The assessee filed its original return of income on 28.09.2011 declaring total income at Rs. Nil after inter alia claiming deduction under s.80IA(4) of the Act. Meanwhile, the amalgamation petition of the assessee company with transferor company Shri Bajrang Mettalics & Power Ltd. was pending for approval of the Hon'ble Chhattisgarh High Court under s.391 to 394 of the Company Act, 1956, for which, the appointed date was declared as 01.04.2008, if so approved by the Hon'ble High Court. The Hon'ble High Court of Chhattisgarh by an order dated 14.11.2011 sanctioned the aforesaid claim of amalgamation as submitted by the assessee company. As per the order of the Hon'ble High Court, the transferor company 'Shri Bajrang Mettalics & Power Ltd.' stood merged with the assessee company from the appointed date i.e. 01.04.2008. Accordingly, in terms of the sanction, the transferor company ceased to exist w.e.f. 01.04.2008 and all the assets and liabilities of the transferor company stood merged with the assessee company. Consequent to the sanction of amalgamation with retrospective date i.e. 01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereunder for ready reference: "Subject: Notice for Hearing in respect of Revision proceedings u/s 263 of the THE INCOME TAX ACT, 1961 - Assessment Year 2011 - 12 . In this regard, a hearing in the matter is fixed on 08/ 03/ 2021 at 11: 00 AM. You are requested to attend in person or through an authorized representative to submit your representation, if any alongwith supporting documents/ information in support of the issues involved (as mentioned below). If you wish that the Revision proceeding be concluded on the basis of your written submissions/ representations filed in this office, on or before the said due date, then your personal attendance is not required. You also have the option to file your submission from the e- filing portal using the link: incometaxindiaefiling.gov.in Please refer to the above. On examination of your Income Tax records for the above assessment year, I find that the order passed u/ s 143(3) r. w. s 147 on 06. 12. 2018 section 80 IA(7)of the Income tax Act, 1961 is erroneous in so far as it is prejudicial to the interest of revenue in the following manner: - The order in the aforesaid case is erroneous so far as prejudicial to the interest of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record.) This aspect was remained to be examine by the AO during re- assessment proceeding. In view of section 80 IA(7) r. w. s. 44AB - the books of account audited by the Chartered Accountant alongwith 3CA report and report in form 10 CCB was required to be signed and verified on or before the due date specified u/ s 139(1) of IT act i.e. 30. 09. 2011. The assessee company had failed to comply the conditions specified for claiming the deduction and not eligible for claiming the deduction u/ s 80IA for Rs. 295887877/- and required to be added back to the assesse income which was not done. The omission resulted in under assessment of income to the extant involving short levy of tax of Rs. 88975169/-. Further, audit examination revealed that the assessee had got account audited by the Chartered Accountant for A. Y. 2011- 12 and 3CD report was signed by the accountant on 24.01.2012. During assessment the assessing officer neither initiated the penalty proceeding for levy of penalty u/ s 271B nor having reason with speaking order passed for non levy of penalty. The assessee failed to comply the provision of section 44AB and liable to pay penalty u/ s 271 B for Rs. 1,50,000/-. Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and enquiry was not done by the Assessing officer during the course of re- assessment proceedings, the order passed u/ s 143 (3) r. w. s. 147 of the I.T Act dated 06.12.2018 for A. Y 2011- 12 is prejudicial to the interest of revenue. 4. Hence, there is no application of mind on the part of the AO to correctly tax the income of the assessee in the return of income and therefore, the assessment order passed u/ s 144 of the Act is erroneous in so far as it is prejudicial to the interest of revenue. Therefore, in exercise of the powers conferred on me by section 263 of the I.T. Act, 1961, I propose to suitable revise the order u/ s 263, which may include setting aside the order as such. Accordingly, an opportunity is being extended to explain your case along with details, documents and necessary evidences. An absence of any submission or reply shall lead to the conclusion that you have no objection for the proposed action and the proceedings shall be finalized accordingly. Your submission / reply may kindly be sent through the e- mail on or before 17/ 02/ 2021. If you wish to appear personally or through your authorized representative, personal hearing may kindly be availe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the effective date of amalgamation i.e. from 1.04.2008 to 31.03.2011. The AO is further advised to verify the status of claim of deduction u/ s 80IA in preceding previous years. With respect to issue No. 2, the industrial policy for subsidy framed by the State of Chhattisgarh and the case laws relied upon by the assessee. It is the undisputed fact of the case that the assessee has received the subsidy of Rs. 4. 20 Crore by way of deferment of sales tax liability. Therefore, the AO is directed to apply of the provision of section 43(1) for computing the actual cost of assets treating subsidy received on capital assistance obtained by state government." 8. Aggrieved by the aforesaid action of the PCIT, the assessee is in appeal before the Tribunal agitating the supervisory jurisdiction usurped by the PCIT under s.263 of the Act. 9. The learned counsel for the assessee broadly reiterated its detailed submissions made before the PCIT and submitted that the PCIT has mis-directed himself in law and facts in resorting the revisional jurisdiction in case where the issue was examined firstly in the original assessment and thereafter in the re-assessment proceedings. We shall appropri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 80IA(4) of the Act in the case of the assessee. The revisional jurisdiction under s. 263 of the Act was invoked yet again on the same set of ground for which the case was reopened under s. 147 of the Act. Such action of the PCIT was held to be impermissible in law by the Hon'ble Madras High Court in the case of Indira Industries vs. PCIT 305 CTR 314 (Mad.). 11.2 In this backdrop, the PCIT has raised strange issues in revisional order, such as, revised Form 10CCB (after amalgamation) was signed and verified after the due date specified under s.139(1) of the Act i.e. 30. 09. 2011 and consequently the assessee has failed to comply with the conditions specified for deduction. The stand of the PCIT is bizarre. Admittedly, the amalgamation of the assessee company was sanctioned by the Hon'ble High Court on 14. 11.2011 with effect from 01. 04. 2008. It is thus natural that Form 10CCB showing computation of deduction eligible to assessee under s. 80IA(4) of the Act can be signed and verified only after 14.11.2011 after amalgamation of accounts and completion of other formalities. The assessee cannot be expected to do the impossible when the scheme of amalgamation itself has been sancti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a quasi judicial order under s. 263 of the Act cannot be countenanced. The revisional action on the first issue therefore is quashed. 11.3 Adverting to the second issue, a controversy has been raised by the PCIT on correctness of depreciation on gross value of assets without deduction of subsidy receipt on capital assets obtained from the Government. In defense, the case of the assessee is two fold; (i) the AO was not seized of the impugned issue in the second round of proceedings under s.147 of the Act. No obligation was thus cast on the AO under law to enter into roving enquiries on all aspects unconnected to the issue on which the reopening was made. Such issue could have been examined only in the regular assessment. Thus, such issue could not be raised indirectly by way of a direction in the garb of revisional proceedings; (ii) On merits, it was contended that the subsidy by way of deferment of sales tax liability was not given to the assessee to meet the cost of any specific asset but was given to create an environment for industrial development and growth of economically backward areas of Chhattisgarh State to create additional employment, to ensure participation of backward ..... X X X X Extracts X X X X X X X X Extracts X X X X
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