9911796707
TMI Blog2023 (6) TMI 1424X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee is against the revision order of Ld. Pr. CIT, Kolkata-4 vide No. 10577-59 dated 29.01.2019 under section 263 of the Income-tax Act, 1961 (hereinafter referred to as the Act ), against the assessment order of Ld. DCIT, Circle-10(1), Kolkata u/s. 143(3) of the Act dated 30.12.2016 for AY 2014-15. 2. Grounds raised by the assessee are reproduced as under: 1.That the learned Pro Commissioner of Income Tax has erred in law and in fact by passing an order under section 263(1) for excess deduction amounting to Rs. 1,36,28,981/- under section 80IC without considering the fact substantial expansion was made in the AY 2012-13 and it is not related in the relevant assessment year. 2. That the learned Pr. Commissioner of Income Tax has erred in law and in fact by passing an order under section 263(1) without considering the fact substantial expansion was established in the initial year of 2012-13 and the same is carried forward in the relevant assessment year. 3. That the learned Pr. Commissioner of Income Tax has erred in law by passing an order under section 263(1) where he had mentioned in the assessment order that AO has overlooked the issue in the assessment year 2012-13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturing of Finishing Agents, Dye Carriers of a kind used in Textile paper, Leather or Like Industries etc. (iv) Trading Division- Trading of leather, Dyes Chemicals in Unit IV and (v) Manufacturing Trading of Leather in Leather Division. Assessee filed its return of income on 06.10.2014, reporting total income of Rs. 59,79,520/- after claiming deduction of Rs. 1,95,30,972/- under Chapter VI-A which included deduction u/s. 80IC of Rs. 1,94,69,973/-. Assessment was completed u/s. 143(3) of the Act vide order dated 30.12.2016, wherein after making certain disallowances, total income was assessed at Rs. 5,31,38,970/-. Subsequently, Ld. Pr. CIT called for assessment records and on the basis of verification of the material, issued a show cause notice dated 31.12.2018, invoking the revisionary proceedings u/s. 263 of the Act. Observations made by Ld. Pr. CIT in the show cause notice are reproduced as under: It is noticed that the assessee has claimed deduction u/s 80IC amounting to Rs. 1,94,69,973/-. Subsequently , it is observed that the assessee had claimed deduction u/s 80IC upon the profit of unit IV Which has located at Plot No .210(102,104), Mouja judikalam behind plot No.69B(I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erroneous. There is prima acre material issue available on records which called for specific enquiry for examining both eligibility as well as quantum of deduction u/s. 80IC. It is also relevant to point out that even in reply to show cause notice u/s. 263, the assessee has not been able to controvert the error pointed out in the said show cause notice regarding excess deduction allowed by the AO as mentioned in para 2 above, making the order erroneous. Considering the aforesaid facts it is a case which comes within the domain of lack of enquiry validly warranting revision u/s. 263 of the Act, 1961. Thus order passed u/s. 143(3) of the Income Tax Act,1961 is erroneous so far as prejudicial to the interest of revenue. As regards to the explanation of the assessee that the company has undergone substantial expansion in the Assessment Year 2012-13 and the relevant details in respect of the expansion of the business was provided during the course of scrutiny proceedings, it may be logically concluded that the Assessing officer has overlooked the issue and bas allowed the deduction u/s. 80lC as claimed by the assessee. This is the case, where the AO has failed to verify the aforementio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the statistical information tabulated above, reference is made in respect of AY 2013-14. It is the second year of substantial expansion (being the seventh year over all) for which also revisionary proceedings were invoked u/s. 263 and assessee came up in appeal before the Tribunal in ITA No. 636 /Kol/2018. Order of this appeal has been pronounced on 15.12.2022 by dismissing the appeal of the assessee. While dismissing the appeal, Coordinate Bench stated about its inability to find any such documents on record which could show that issue regarding deduction of claim u/s. 80IC before the Ld. AO was examined. Accordingly, the Coordinate Bench found no infirmity in the order passed u/s. 263 of the Act, setting aside the assessment order dated 28.03.2016, directing the AO to frame the assessment afresh after considering the observation made by the Ld. Counsel. 5.3. In this respect, Ld. Counsel made another submission dated 09.02.2023, pointing out differences between the two assessment years viz., AY 2013-14 and 2014-15 in respect of revisionary proceedings invoked in both the years. Ld. Counsel thus, asserted that order passed by Coordinate Bench for AY 2013-14 (supra) cannot be appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of substantial expansion. We agree with the submission by Ld. Counsel that the very basis of initiation of proceeding u/s. 263 are mechanical in nature without application of mind by the Ld. Pr. CIT. 7.2. It is also observed that the concluding para of the order passed u/s. 263 for both the AYs 2013-14 and 2014 -15 are identical, containing the reference to explanation (2)(c) below section 263(1) of the Act on the ground of lack of enquiry. Ld counsel has taken a ground in this respect wherein explanation 2(c) refers to the order has not been made in accordance with any order, direction or instruction issued by the Board u/s. 119. Ld. Counsel has categorically submitted that there is no such order or direction or instruction in respect of the claim of the assessee in view of which Ld. Pr. CIT has made a reference to set aside the assessment order and invoke the revisionary proceeding. In the course of hearing before us, we have considered this contention and found it to be more in the nature of a typographical mistake where in the intent of the Ld. Pr. CIT is to make a reference to clause (a) to Explanation (2) which deals with the order is passed without making enquiries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... H.P. dated 29.03.2013 regarding subsidy. Copy of letter received from Department of Industries, Baddi, District Solan, H.P dated 21.01.2015 regarding subsidy. Product wise sale of Unit- IV for F. Y. 2011-12 List of major Raw material and Final Product of Unit-IV. 8. Aspect of application of mind by the CIT has been succinctly dealt by the Hon ble Delhi High Court in the judgment of DG Housing Finance Co. Ltd. [2012] 20 taxmann.com 587 (Del) which is discussed hereunder. 8.1. While adverting on the issue, Hon ble High Court held that the CIT has to come to the conclusion and himself decide that order is erroneous, by conducting necessary enquiry, if required and necessary before the order u/s 263 of the Act is passed. In such cases, the order of the AO will be erroneous because the order passed is not sustainable in law and the said finding must be recorded by CIT who cannot remand the matter to the assessing officer to decide whether the findings recorded are erroneous. 8.2. In cases where there is inadequate enquiry but not lack of enquiry, again the CIT must give and record a finding that the order/enquiry made is erroneous. This can happen if an enquiry and verification is cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how and state that the order of the AO is erroneous. 8.6. In the present case before us, we note that Ld. Pr. CIT has raised two issues in the show cause notice and thereafter concluded on the same to set aside the assessment with the direction to do it afresh. We find that the issues in the present case considered by the Ld. CIT for exercising revisionary proceedings u/s. 263 of the Act are purely on facts which are verifiable from the records of the assessee. 9. We are of the considered view that Ld. Pr. CIT has to come to the conclusion and himself decide that order is erroneous by conducting necessary enquiry, if required, before passing the order u/s. 263 of the Act. It is an important fact that Ld. Pr. CIT is able to establish and show the error or mistake making the assessment order indisputably in law. Accordingly, we find it proper to remit the matter back to the file of Ld. Pr. CIT to consider the material placed on record for proper application of mind and conduct the enquiry or cause to be conducted any enquiry, if required, to draw conclusion as to order being erroneous insofar as prejudicial to the interest of revenue. Needless to say that assessee be given reasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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