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TMI Blog2022 (10) TMI 1031X X X X Extracts X X X X X X X X Extracts X X X X ..... construed as an order passed by a subordinate authority in view of the fact that the Settlement Commission order has been passed by the Officers in the rank of the Chief Commissioner. Hence, we have no hesitation to hold that revision jurisdiction invoked u/s.263 by the ld. CIT seeking to make adjustment in respect of (a) claim of deduction in respect of loss by way of liquidated damages on account of delay in execution of contracts (b) adjustment u/s.145A of the Act in respect of MODVAT as void ab initio as the same was already the subject matter of consideration by the ld. AO while passing an order giving effect to Settlement Commission proceedings. Hence, due enquiries had been carried out by the ld. AO on these two items. In respect of aforesaid two items, revision jurisdiction invoked by the ld. CIT u/s.263 of the Act is unsustainable in the eyes of law. The various arguments made by the ld. AR on the merits and other legal submissions in respect of the aforesaid two issues, need not be gone into and they are left open as adjudication of the same would only be academic in nature. Impact of Section 145A of the Act of MODVAT - AO in the instant case had passed an orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in ITA No.4352/Mum/2010 to 4354/Mum/2010 for A.Y.2001-02 to 2003-04 preferred by the order against the revision order of the ld. Principal Commissioner of Income Tax-8, Mumbai u/s.263 of the Act dated 30/03/2021 24/03/2010 respectively for the A.Y.2001-02 to 2003-04. 1.1. Identical issues are involved in both these appeals and hence, they are taken up together and disposed of by this common order for the sake of convenience. 1.2. With the consent of all the parties, the appeal of the assessee for A.Y.2001-02 is taken as the lead case and the decision rendered thereon would apply with equal force for A.Yrs. 2002-03 and 2003-04 also except with variance in figures in view of identical facts. 2. Though the assessee has raised several grounds of appeal before us, the effective issue to be decided in these appeals is as to whether the ld. Administrative CIT (Ld. CIT) was justified in invoking revisionary jurisdiction u/s.263 of the Act in the facts and circumstances of the instant case by treating the order of the ld. AO as erroneous in as much as it is prejudicial to the interest of the Revenue. 3. We have heard the rival submissions and perused the materials available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a list of 35 items which required further consideration. They did not adjudicate any of the aforesaid 35 items but directed the Assessing Officer to consider the said issues and disposed of the application only with respect to the additional disclosure as made by the assessee in the settlement application. 7 22.02.2008 The assessee filed detailed submissions before the A.O. in response to notice dated 19.02.2008 issued under section 143(2) of the Act while giving effect to the order dated 07.01.2008 passed by the Settlement Commission. In the said letter the assessee has also made its submissions as to why no addition/ disallowance should be made in respect of the 35 issues as raised by the Revenue before the Settlement Commission. 8 25.02.2008 The A.O. passed an order under section 143(3) read with section 245D(4) of the Act determining the assessee's total income for assessment year 2001-02 at Rs. 118,04,09,077. Out of the 35 issues as identified before the Settlement Commission, additions/ disallowances were made in respect of certain items by rejecting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Settlement Commission which was not permissible in law. Detailed submissions have also been made in respect of each of the issues as raised in the show cause notice dated 06.11.2008 issued by the CIT under section 263 of the Act explaining as to why no addition / disallowance should be made in respect thereof. 12 24.03.2010 The CIT passed the impugned order under section 263 of the Act inter-alia revising the assessment order 25.02.2008 passed by the A.O. with respect to the adjustment to be made under section 145A of the Act, modification of the method to recognize revenue, quantitative details in respect of raw materials and finished goods and deduction in respect of provision for loss by way of liquidated damages and warranty obligation. The present appeal has been filed against this order. 13 31.12.2010 The A.O. passed an order giving effect to the impugned Order dated 24.03.2010 passed by the CIT under section 263 of the Act inter-alia determining the assessee's total income for the assessment year 2001-02 at Rs. 105,86,64,353. The additions as made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion s order. We find that pursuant to the directions of the Hon ble Settlement Commission, the ld. AO had indeed examined the 35 issues listed in the said order while framing the assessment giving effect to Settlement Commission s order. In fact in the said order, the ld. AO after due examination had accepted to the stand of the assessee for certain items and wherever he is not in agreement with the contentions of the assessee, the ld. AO had resorted to make suitable disallowances / additions. Hence, this goes to prove that the ld. AO had indeed made thorough examination and enquiries with regard to 35 items listed in the Settlement Commission s order. This also would be in due consonance with the directions of the Settlement Commission. Hence, it could be safely concluded that the order giving effect to Settlement Commission s order was passed by the ld. AO u/s.143(3) r.w.s. 245D(4) of the Act on 25/02/2008 as per the directions of the Hon ble Settlement Commission. When an assessment order has been framed by the ld. AO pursuant to the directions of the Hon ble Settlement Commission by giving effect to the said order, the said assessment order loses its independent status of ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3.3. In view of the aforesaid decision, the various arguments made by the ld. AR on the merits and other legal submissions in respect of the aforesaid two issues, need not be gone into and they are left open as adjudication of the same would only be academic in nature. 3.4. Moreover, with regard to impact of Section 145A of the Act of MODVAT, we find that the Settlement Commission had directed the ld. AO to look into the same only for A.Y.2004-05. Hence, for the A.Y.2001-02, the ld. AO could not have looked into that aspect as he is merely passing an order giving effect to the directions of the Hon ble Settlement Commission. Hence, an order passed by the ld. AO as per the directions of the Hon ble Settlement Commission cannot be construed as erroneous and prejudicial to the interest of the Revenue warranting revision jurisdiction u/s.263 of the Act by the ld. CIT. Hence, the revision jurisdiction u/s.263 of the Act by the ld. CIT fails on this count also in respect of adjustment sought to be made u/s.145A of the Act on MODVAT and its impact on business profits for the A.Y.2001-02. At the cost of repetition, we would like to state that the ld. AO in the instant case had pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en made on scientific basis by the assessee. Hence, we find that the ld. CIT had only resorted to invoke his revision jurisdiction u/s. 263 of the Act by directing the ld. AO to make fishing and roving enquiries in respect of claim of deduction for provision for warranty. In our considered opinion, revision jurisdiction u/s.263 of the Act cannot be invoked by the ld. CIT for directing to make fishing and roving enquiries by the ld. AO. Moreover, the ld. CIT had not stated as to how the claim for provision of warranty made by the assessee is incorrect or erroneous, as admittedly reply was given before the ld. CIT by the assessee in response to show-cause notice. Hence, it is incumbent on the part of the ld. CIT to atleast make preliminary enquiry on the submissions made by the assessee before concluding that the order passed by the ld. AO is erroneous in respect of this issue. Hence, we hold that the revision jurisdiction u/s.263 of the Act invoked by the ld. CIT fails in respect of this issue also. 3.6. In view of the aforesaid observations, revision order passed by the ld. CIT u/s.263 of the Act is hereby quashed. Accordingly, the grounds raised by the assessee challenging vali ..... X X X X Extracts X X X X X X X X Extracts X X X X
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