ESSEL MINING & INDUSTRIES LIMITED,MUMBAI vs. PRINCIPAL COMMISSIONER OF INCOME TAX-CENTRAL-1, MUMBAI

आदेश / O R D E R PER M.BALAGANESH (AM):

This appeal in ITA Nos.3202/Mum/2018 for A.Y.2009-10 is directed against the order passed by the ld. Principal Commissioner of Income Tax, (PCIT in short), Central-1, Mumbai for the A.Y.2009-10 against the search assessment order passed u/s.153C r.w.s. 143(3) of the Act dated 29/03/2016 by the Dy. Commissioner of Income Tax, Central Circle 1(4), Mumbai (hereinafter referred to as ‘ld.AO’).

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3.1. A limited search and seizure action was conducted by the Investigation Wing, New Delhi on the basis of information passed on by the CBI on 15/10/2013. The information received from the CBI on

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15/10/2013 over phone was that during a search action being carried out by CBI at the premises of Aditya Birla group atf 4th Floor, UCO Bank building, Parliament Street, New Delhi, the CBI team had found huge cash at the said premises of M/s. Aditya Birla Management Corporation Pvt. Ltd (ABMCPL in short). On the basis of this, a survey u/s.133A of the Act was conducted in the said premises in the case of ABMCPL on 15/10/2013 which was converted into search and seizure operation by issuance of search warrant u/s.132 of the Act in the name of ABMCPL and in the case of its group Executive President Shri Shubhendu Amitabh at his residential premises on 16/10/2013. The search and seizure action resulted into seizure of unaccounted cash of Rs.25,13,41,000/-; jewellery and billion worth of Rs.44,82,394/- besides incriminating documents from the office of the ABMCPL and from the residence of Shri Shubhendu Amitabh. Several books of accounts, documents etc., were found seized and inventorised as Annexure-1 to Annexure-23. Also various computer hard discs and laptops were seized which were inventorised as Annexure-24 to Annexure-40.

3.2. The Annexure A-8 seized from the premises of ABMCPL which was subjected to search u/s.132 of the Act was a petty cash book of M/s. Essel Mining & Industries Ltd i.e. the assessee before us. This petty cash book belonging to Essel Mining and Industries Ltd was found and seized from the said premises of ABMCPL and since the said entries suggest that the ownership of unaccounted cash lies in the hands of M/s. Essel Mining & Industries Ltd and therefore, it has direct bearing on the determination of its total income. Accordingly, the Assessing Officer of the searched person i.e. ABMCPL recorded due satisfaction that the said document Annexure A-8 being the petty cash book belongs to assessee herein before us and handed over the said seized documents to the Assessing

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Officer of the assessee before us. Later notice u/s.153C of the Act was issued on the assessee company on 26/11/2014 to file the returns for A.Yrs. 2008-09 to 2013-14. In response to this notice, the assessee filed a fresh return of income on 31/12/2014 declaring total income of Rs.1348,00,75,711/- which was same as the returned income filed in the revised return on 31/03/2011. The assessment was completed u/s.153C r.w.s. 143(3) of the Act by the ld. AO on 29/03/2016 for the A.Y.2009-10 by determining the total income at Rs.1513,83,22,160/- under normal provisions of the Act and book profits of Rs.1446,88,86,081/- u/s.115JB of the Act.

3.3. This assessment was sought to be revised by the ld. PCIT by invoking his revision jurisdiction u/s.263 of the Act by treating the order passed by the ld. AO as erroneous and prejudicial to the interest of the Revenue on the ground that assessee had received compensation for shortfall in guaranteed performance from Suzlon Energy Ltd amounting to Rs.22,22,18,000/- which was treated as capital receipt by the assessee in the return. According to the ld. PCIT, the said claim of capital receipt was allowed by the ld. AO without looking into the fact that the very same receipt was added by the Assessing Officer in A.Y.2008-09 i.e. in the immediately preceding assessment year. A show-cause notice dated 22/01/2018 was issued to this effect by the ld. PCIT. The ld. PCIT also invoked the provisions of Explanation 2 to Section 263 of the Act in the show-cause notice with regard to this issue. The assessee filed a reply in response to the show-cause notice before the ld. PCIT vide its letter dated 12/03/2018 filed on 13/03/2018 clearly objecting to the invocation of revision jurisdiction u/s.263 of the Act on the ground that -

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(i) it is barred by limitation in terms of Section 263(2) of the Act as the error, if any, on account of not taxing the receipt of compensation for shortfall in guaranteed performance from Suzlon Energy Ltd was prevalent in the first scrutiny assessment order u/s.143(3) of the Act dated 30/12/2011 and that the same did not emanate or arose for the first time in the search assessment completed u/s.153C r.w.s. 143(3) of the Act on 29/03/2016. Accordingly, it was pointed out that the limitation for invoking proceedings u/s 263 of the Act should be reckoned from the date of completion of original assessment i.e. from 30/12/2011 and not from the search assessment framed on 29/03/2016. Reliance in this regard is placed on the decision of the Hon’ble Supreme Court in the case of CIT vs. Alagendran Finance Ltd reported in 293 ITR 1.

(ii) Since search took place in the case of Aditya Birla Group on 16/10/2013, consequently proceedings were initiated in the hands of the assessee u/s.153C of the Act on 26/11/2014. As on that date, the proceedings for A.Y.2009-10 in the case of the assessee herein had already been concluded and hence it becomes an unabated assessment. The seized documents passed on by the ld. AO of the searched person u/s.153A of the Act was only petty cash book marked as Annexure A-8 which belong to the assessee and the same was handed over to the ld. AO of the assessee, pursuant to which, the proceedings u/s. 153C of the Act were initiated on the assessee company on 26/11/2014. Admittedly, the said petty cash book marked as Annexure A-8 contained certain entries pertaining to A.Y.2011-12 only which is evident from the fact that a separate addition of Rs.1.35 Crores was made by the ld. AO for A.Y.2011-12 while framing the assessment. Hence, this petty cash book marked as Annexure A-8 was never used by the ld. AO while framing the search assessment u/s.153C

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r.w.s. 143(3) of the Act on 29/03/2016 for A.Y.2009-10. Hence, it could be safely concluded that there was no incriminating material available with the ld. AO while framing the said search assessment on 29/03/2016 for A.Y.2009-10. Hence, the ld. AO could not have looked into any other item or disturb the concluded assessment already framed for A.Y.2009-10 in the hands of the assessee. This action of the ld. AO is directly in consonance with the decision of the Hon’ble Jurisdictional High Court in the case of Continental Warehousing Corporation reported in 374 ITR 645. Hence, no error could be attributed in the order of the ld. AO in this regard warranting revision u/s.263 of the Act by the ld. PCIT. The assessee also placed reliance on yet another decision of the Hon’ble Jurisdictional High Court in the case of CIT vs. Sinhgad Technical Education Society reported in 378 ITR 84 which was approved by the Hon’ble Supreme Court reported in 397 ITR 344.

(iii) Order passed u/s.153C r.w.s. 143(3) of the Act dated 29/03/2016 is not prejudicial to the interest of the Revenue in view of the fact that the compensation received by the assessee company from Suzlon Energy Ltd was directly and undoubtedly connected with its business of generating power which qualified for 100% deduction u/s.80IA of the Act. In this regard, the assessee also pointed out that though in A.Y.2008-09, the assessee treated the said compensation as capital receipt in the return, the ld. AO while framing the assessment for A.Y. 2008-09 had treated it as Revenue receipt chargeable to tax. This matter was agitated by the assessee before the Tribunal and the Kolkata Tribunal had upheld the action of the ld. AO. On further appeal of the assessee to the Hon’ble Calcutta High Court, the Hon’ble High Court in IA No.GA/1/2017 (old No.GA/2471/2017) in ITAT/274/2017 dated 17/11/2021 had remanded the matter to the Tribunal for fresh consideration. The assessee pleaded

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that even after the said compensation receipt is construed as revenue receipt still the same would be eligible for deduction u/s.80IA of the Act for the assessee and thereby, becoming Revenue neutral. Hence, there cannot be any prejudice that could be caused to the interest of the Revenue in this regard warranting invocation of revision jurisdiction by the ld. PCIT u/s.263 of the Act.

3.4. The ld. PCIT ignored all the aforesaid conditions of the assessee and treated the order by the ld. AO on 29/03/2016 u/s.153C r.w.s. 143(3) of the Act as erroneous and prejudicial to the interest of the Revenue on the ground that the same was passed without making any enquiries or verification or without application of mind which should have been made in terms of Clause(a) of Explanation 2 to Section 263 of the Act. Aggrieved, the assessee is in appeal before us.

3.5. The ld. DR before us filed a detailed written submission in respect of each and every ground raised by the assessee before us which are reproduced hereunder:-

i) The Return of Income u/s 139(1) of the Income Tax Act, 1961, was filed on 30.09.2009 declaring total income of Rs. 1345,80,61,460/- ii) ii)The Revised Return of Income was filed u/s 139(5) of the Income Tax Act, 1961, on 30.03.2011 declaring total income of Rs.1348,00,75,711/-. iii) Assessment was finalised u/s 143(3) of the Income Tax Act, 1961, on 30.12.2011 assessing income at Rs. 1374,99,31,150/-. iv) Statutory Notice u/s 148 of the Income Tax Act, 1961, was issued on 13.10.2014 and subsequently proceedings u/s 153C r.w.s. 153A of the Income Tax Act, 1961, were initiated. This resulted into abatement of the proceedings u/s 147 of the Income Tax Act, 1961, by issuing Notice u/s 148 of the Income Tax Act, 1961. v) Subsequently, assessment order u/s 153C read with 143(3) of the Income Tax Act, 1961, was finalised by the then Assessing Officer, DCIT, Central Circle 1(4), Mumbai, on 29.03.2016, assessing income at Rs. 1513,83,22,160/-. vi) The Principal CIT, Central-1, Mumbai, passed an Order u/s 263 of the Income Tax Act, 1961, on 22.03.2018, in respect of the assessment order u/s 153C read with 143(3) of the Income Tax Act, 1961. Vide this Order the

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Principal CIT, set aside the assessment order dated 29.03.2016, with the direction to pass fresh assessment order after giving reasonable opportunity of being heard to the Assessee. vii) The Assessee being aggrieved by the assessment order u/s 153C read with 143(3) of the Income Tax Act, 1961, dated 29.03.2016, filed Appeal u/s 246A of the Income Tax Act, 1961, before the CIT(A), Mumbai. The Ld.CIT(A)- 47, Mumbai, vide Order dated 26.12.2017 decided the Assessee's Appeal. The Order giving effect to the Order of CIT(A) was passed on 12.04.2018 revising the income to Rs.1396,87,41,577/-. viii) In consequence of Order u/s 263 of the Income Tax Act, 1961, a fresh Order u/s 153C r.w.s. 143(3) r.w.s 263 of the Income Tax Act, 1961, was passed on 27.11.2018, assessing the income at Rs. 1419,09,59,580/-. In this Order, an amount of Rs.22,22,18,000/- on account of Compensation for Short Fall in Guaranteed Performance, was added to the revised income determined Order giving effect to the Order of CIT(A) was passed on 12.04.2018. The Assessee being aggrieved by the Order of the Pr.CIT, Central-1, Mumbai, u/s 263 of the Income Tax Act, 1961, dated 22.03.2018, filed Appeal u/s 253(1)(c) of the Income Tax Act, 1961, before the Hon'ble Income Tax Appellate Tribunal, Mumbai Bench, vide ITA No.3202/M/18 In the Appeal filed, the Assessee has raised various Grounds of Appeal, the comments in respect of the same are offered hereunder. At the outset attention is invited to the judgement of Hon'ble High Court of Delhi in the case of CIT v/s Jansampark Advertising and Marketing (P) Limited, ((2015) 375 ITR 0373 (Delhi)), wherein the Hon'ble High Court vide paragraph no.42 has ruled as under 42. The AO here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT (Appeals), having noticed want of proper inquiry, could not have closed the chapter simply by allowing the appeal and deleting the additions made. It was also the obligation of the first appellate authority, as indeed of ITAT, to have ensured that effective inquiry was carried out, particularly in the face of the allegations of the Revenue that the account statements reveal a uniform pattern of cash deposits of equal amounts in the respective accounts preceding the transactions in question. This necessitated a detailed scrutiny of the material submitted by the assessee in response to the notice under Section 148 issued by the AO, as also the material submitted at the stage of appeals, if deemed proper by way of making or causing to be made a “further inquiry" in exercise of the power under Section 250(4). This approach not having been adopted, the impugned order of ITAT, and consequently that of CIT (Appeals), cannot be approved or upheld. In the light of aforementioned ruling of the Hon'ble High Court of Delhi, the Hon'ble Income Tax Appellate Tribunal, Mumbai, may be requested to reject the validity of filing of Revised Return of Income, because the provisions of Section 139(5) of the Income Tax Act, 1961, provides for revising a Return of Income under the circumstances when it is discovered that any omission or any wrong statement has been made in the Original Return of Income. A plain reading of the above, clearly indicates that for filing a revised Return of Income there should have been an omission or any wrong statement

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that has crept into the original return of income, which means that the mistakes as indicated above are in the nature of „inadvertent errors‟ or „inaccuracies‟. In the instant case no such mistakes by way of omission or wrong statement appears to have been committed in the original Return of Income. In the instant case as evident from Paragraph (I) at page no.3 of the submission made before the Pr.CIT, Central-1, Mumbai, vide letter dated 12.03.2018, during the course of proceedings u/s 263 of the Income Tax Act, 1961, the Revised Return of Income has been filed as per the advice received from the Counsel. Such advice by no stretch of reasoning and imagination can be termed as an omission or wrong statement, as mentioned in Section 139(5) of the Income Tax Act, 1961. As a matter of fact the change in opinion is the cause of filing the so-called Revised Return of Income. Therefore, the contents therein has no statutory sanctity. In the backdrop of the facts stated above and having regard to the provisions of Section 139(5) of the Income Tax Act, 1961, the alleged revised Return of Income has no locus standi, considering the statutory parameters prescribed in the relevant Section. The above view gathers support from the following judicial rulings, CIT v/s Andhra Cottons Mills Limited (219 ITR 404 (AP)) and Sunanda Ram Deka v/s CIT (210 ITR 988 (Gauhati)). In both these rulings, the Hon'ble High Courts have unequivocally and famously held that, “…. We find that under s. 139(5), a revised return could be filed if there is an omission or a wrong statement....” CIT v/s Andhra Cottons Mills Limited and "....For a valid revised return under s. 139(5) it is necessary that omission or wrong statement in the original return must be due to a bona fide inadvertence or mistake on the part of the assessee...." – Sunanda Ram Deka v/s CIT. This principle is sorely absent in the instant case. This being so, the tenability and validity of the Revised Return of Income filed u/s 139(5) of the Income Tax Act, 1961, has been struck at its foundation itself. Therefore, the Petitioners claim that the matter was disclosed before the Assessing Officer and formed his opinion stands demolished In this regard, it noteworthy that the opening paragraph of the Assessment Order u/s 143(3) of the Income Tax Act, 1961, dated 30.12.2011 does not mention about the Assessee having filed Revised Return of Income. Thus, the Assessee has not pin-pointed this fact to the Assessing Officer during the course of assessment proceedings. As a result, the Assessing Officer has not formed his opinion on the issue of amount of Rs 22,22,18,000/- on account of nature of Compensation for Short Fall in Guaranteed Performanceand treatment to the same. Since the Assessing Officer has not applied his mind to the issue, the point gets covered by the provisions of Section 263 of the Income Tax Act, 1961. Once this aspect is considered by the Hon'ble Income Tax Appellate Tribunal, the compensation received being not income derived from generation of electricity, it does not qualify for deduction u/s 80IA of the Income Tax Act, 1961, which will entail into considering the impugned amount as Revenue Receipt and denial of the benefit of deduction u/s 801A of the Income Tax Act, 1961, in respect of the impugned amount of Rs.22,22,18,000/-. This will serve the entire cause of invoking the provisions of Section 263 of the Income Tax Act, 1961. Having made submission about invalidity of Revised Return of Income, the Assessee's claim that the amount of Rs.22,22,18,000/- on account of

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Compensation for Short Fall in Guaranteed Performance is a capital receipt was not forming the part of assessment record. The Assessee being aggrieved by the Order u/s 263 of the Income Tax Act, 1961, dated 22.03.2018, filed Appeal before the Hon'ble Income Tax Appellate Tribunal, Mumbai. The submissions on the issues taken up by the Assessee before the Hon'ble Income Tax Appellate Tribunal, is made herein under. First Issue Vide Ground No.1 of Form No.36, the Assessee has raised the first issue before the Hon'ble Income Tax Appellate Tribunal that the conditions stipulated for invoking the extraordinary jurisdiction u/s 263 of the Income Tax Act, 1961, were not satisfied. At the outset, it needs to be mentioned that the Statute has vested the extra-ordinary jurisdiction u/s 263 of the Income Tax Act, 1961, to the Pr.Commissioner of Income Tax/Commissioner of Income Tax to safeguard the interest of Revenue. Accordingly, on examination of the assessment records of the Assessee Company for Assessment Year 2009-10, to be precise the assessment records relevant to the Assessment Order dated 29.03.2016 finalised u/s 153C r.w.s. 143(3) of the Income Tax Act, 1961, the Pr.Commissioner of Income Tax, Central-1, Mumbai, considered that the Assessment Order passed by the Assessing Officer is erroneous, in as much is, prejudicial to the interest of Revenue by virtue of allowing deduction the amount of Rs.22,22,18,000/- on account of Compensation for Short Fall in Guaranteed Performance. Accordingly, after giving an opportunity of being heard through Show Cause Notice dated 21.02.2018 an Order u/s 263 of the Income Tax Act, 1961, was passed on 22.03.2018. Vide this Order, the Pr. CIT, Central-1, Mumbai, set aside the assessment, on the issue of allowing deduction the amount of Rs.22,22,18,000/- on account of Compensation for Short Fall in Guaranteed Performance. In this regard, the Ground of Appeal raised by the Assessee is not correct for the obvious reason that it an indisputable fact that non-taxing of the amount of Rs.22,22,18,000/- on account of Compensation for Short Fall in Guaranteed Performance in the Assessment Order, has rendered the Assessment Order erroneous and prejudicial to the interests of Revenue. In this regard it also needs to be emphasised upon that, following the precedent of Hon'ble Income Tax Appellate Tribunal, Mumbai's decision for Assessment Year 2008-09 in the Assessee's own case, Compensation for Short Fall in Guaranteed Performance is Revenue Receipts in the Assessee's hands. Further, in this regard it also needs to be further emphasised that the income had not been generated from the business of generation of electricity, as a consequence the Assessee was not entitled for deduction u/s 801A of the Income Tax Act, 1961, in respect of this income. The foregoing facts establishes that the addition is not 'Revenue Neutral', which demolishes the Assessee's claim that the addition is 'Revenue Neutral' as it will be nullified by the deduction u/s 801A of the Income Tax Act, 1961, of an equivalent amount. Second Issue In the second issue raised vide Ground No.2, 2.1 and 2.2 of Form No.36, the Assessee claims that the provisions of section 263 of the Income Tax Act, 1961, has been invoked beyond the stipulated time prescribed u/s 263(2) of the Income Tax Act, 1961. In support of its contention the Assessee has relied upon

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ruling of the Hon'ble Supreme Court of India in the case of CIT v/s Alagendran Finance Limited [(2007) 293 ITR 0001] which is cited in the submission made before the Principal Commissioner of Income Tax, Central 1, Mumbai during the course proceedings u/s 263 of the Income Tax Act, 1961. The copy of which forms part of the Paper Book filed before Income Tax Appellate Tribunal. In this regard, on perusal of the aforementioned relied upon ruling of the Supreme Court it is observed that, the assessment was framed by the Assessing Officer in that case u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961, and in the backdrop of this fact, the Hon'ble Apex Court ruled that an issue which was not subject matter of reassessment, limitation under s. 263(2) would run from the date of original assessment and revisional proceedings initiated in respect of such issue beyond the period of two years from the date of original assessment were barred by limitation. At the outset, it needs to be pin-pointed that in the instant case the assessment proceedings u/s 153C r.ws. 143(3) of the Income Tax Act, 1961, while the assessment proceedings in the case before the Hon'ble Apex Court were finalised 143(3) r.w.s. 147 of the Income Tax Act, 1961. It is well known fact that the provisions of Section 147 to Section 153 of the Income Tax Act, 1961, deal with the income that has escaped assessment, while the provisions of Section 153A to 153C of the Income Tax Act, 1961, deals with the assessment in the case of search or requisition proceedings. Thus both the assessment proceedings are not identical. This fact gets corroborated by the provisions of Section 153C(1) of the Income Tax Act, 1961. The relevant part of the Section is reproduced hereunder - Section 153C(1) -Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,…… A careful reading of the above statutory provision clearly shows that the Sections starts with the non-obstante clause 'Notwithstanding and includes sections relevant to the income that has escaped assessments. This statutory provision clearly vindicates the fact that the proceedings u/s Section 143(3) r.w.s. 147 and proceedings u/s 153C r.w.s. 143(3) of the Income Tax Act, 1961, are not identical provisions but later supersedes the former. Therefore, the Supreme Court decision relied upon by the Assessee has no application to the facts of the case, which negates the Assessee's claim. As a result, the time limit for invoking and finalising the assessment proceedings u/s 263 of the Income Tax Act, 1961, is to be reckoned from 29.03.2016 i.e. the date of finalising the assessment u/s 153C r.ws: 143(3) of the income Tax Act, 1961. Third Issue Vide Ground No.3 and 3.1 of Form No. 36, the Assessee has raised the third issue before the Hon'ble Income Tax Appellate Tribunal that there was to justification in invoking the provisions of Section 263 of the income Tax Act, 1961, as the assessment made by the Assessing Officer was neither erroneous nor prejudicial to the interest of Revenue. As discussed in the comments regarding the Second Issue, the assessment proceedings finalised u/s 153C rw.s. 143(3) of the Income Tax Act, 1961, dated 29.03.2016, are independent proceedings and there should not be conjoint reading of assessment proceedings finalised u/s 143(3) of the Income Tax Act, 1961, on 30.12.2011. Further, as discussed in the opening paragraph of this submission, the so-called revised Return of Income was not a valid Return of

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Income, and therefore the issue of nature of Compensation for Short Fall in Guaranteed Performancereceived was never part of assessment proceedings finalised on 30.12.2011 and 29.03.2016, before the Assessing Officers. As a result, the Principal Commissioner of Income Tax, Central-1, was very much within the statutory powers vested in him to invoke the provisions of Section 263 of the Income Tax Act, 1961, as the assessment order passed u/s 153C r.w.s. 143(3) of the Income Tax Act, 1961, dated 29.03.2016, was erroneous and prejudicial to the interest of Revenue, as income of Rs.22,22,18,000/- on account of Compensation for Short Fall in Guaranteed Performancewas not subject to tax. Therefore, the objection raised by the Assessee on this premise is devoid of merits. Fourth Issue Vide Ground No.4 and 4.1 of Form No.36, the Assessee has claimed that the assessment order passed u/s 153C r.w.s. 143(3) of the Income Tax Act, 1961, dated 29.03.2016, was correct and not erroneous. In this regard, it needs to be mentioned that the Assessee's conclusion that the Assessment Order passed by the Assessing Officer is not erroneous, is not correct. In this context, it needs to be mentioned that it is a statutory obligation cast upon the Principal Commissioner of Income Tax, to examine any order, including assessment order passed by the Assessing Officer that is erroneous and prejudicial to the interest of revenue. Accordingly, on examination of the impugned assessment order passed u/s 153C r.w.s. 143(3) of the Income Tax Act, 1961, dated 29.03.2016, the Commissioner of Income Tax, Central-1, Mumbai, found that considering the ruling of the Hon'ble Income Tax Appellate Tribunal, in the Assessee's own case for A.Y. 2008-09, the impugned income on account of Compensation for Short Fall in Guaranteed Performance is Revenue receipt and not Capital receipt as claimed by the Assessee. Further, this being income not derived from the business of generation of electricity does not qualify for deduction u/s 80IA of the Income Tax Act, 1961, which negates the Assessee's claim that the variation, if any, is Revenue Neutral Further, it needs to be mentioned that the Department is in Appeal before the Hon'ble Supreme Court of India in the case of Bombay High Court judgement in the case Continental Warehousing Corporation, which justifies that the addition not made in the assessment order u/s 153C r.w.s 143(3) of the income Tax Act, 1961, on the basis of incriminating material, is not sustainable. Taking this aspect into consideration, the Ground of Appeal of the Assessee is not acceptable. Fifth Issue Vide Ground No.5 of Form No.36, the Assessee has alleged that the Principal Commissioner of Income Tax has not followed the ruling of the Bombay High Court in the case of Continental Warehousing and Apex Court Judgement in the case of CIT v/s Alagendran Finance Limited (2007) 293 ITR 0001).In this regard, submission is made that on this objection discussions have been made and dealt with in the preceding paragraphs.”

3.6. It is not in dispute that assessee had received compensation for shortfall in guaranteed performance from Suzlon Energy Ltd. This receipt

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was shown as revenue receipt by the assessee in the return of income. However, during the course of assessment proceedings, the assessee did file revised computation of income and revised return on 31/03/2011 claiming the same to be capital receipt. The ld. AO had taken due cognizance of the said revised return which is evident from the fact that the computation of total income had commenced only from the revised computation of income. Hence, the objection made by the ld. DR in his written submissions supra that assessee could not have revised its return in terms of Section 139(5) of the Act has got absolutely no relevance and we hold that the ld. DR is trying to improve the case of the Assessing officer before this Tribunal which is not permissible in law. It is pertinent to note that the said receipt of compensation for shortfall in guaranteed performance from Suzlon Energy Ltd was also subject matter of adjudication by the Co-ordinate Bench of Jaipur Tribunal in the case of Rajasthan State Mines & Minerals Ltd vs. Asst. Commissioner of Income Tax, Circle-6, Jaipur reported in 88 Taxmann.com 892 wherein the Jaipur Tribunal considered the very same receipt to be Revenue receipt and allowed deduction u/s. 80IA of the Act for that assessee. The relevant operative operation of the said order is reproduced hereunder:-

“35.3 We have heard the rival contentions, perused the material available on record. The Ld. CIT (A) disallowed the claim on the basis that the first degree in nexus with the operation of the undertaking is missing. The Ld. CIT (A) has followed the decision of his predecessor pertaining to the A.Y. 2010-11. Admittedly, this payment is related to the contract between the assessee and the supplier. The contract is related to the wind mill independent of operation of the wind mill the payment of liquidated damages would not arise. It is only on the operation of the wind mill and the output of the equipment so installed this liability of the payment of damages arises. In the absence of operation, the issue of payment of such damages would not arise. It is only when the wind mill becomes operational on short fall on the production such payment is made. Hon'ble Madhya Pradesh High Court in the case of Prakash Oils Ltd. (supra) held that the payment made as an liquidated damages for not honouring the contract for sale of oil and deoiled cake, such income is directly derived from industrial undertaking, hence eligible deduction u/s 80IA. In our view,

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the Ld. CIT (A) erred in holding that such income is not derive from the business of the undertaking. Therefore, we direct the Assessing Officer to allow deduction u/s 80IA on this receipt. This ground of the assessee's appeal is allowed.

3.7. It is also relevant to note that the Jaipur Tribunal while rendering the decision had placed reliance on the decision of the Hon’ble Madhya Pradesh High Court in the case of CIT vs. Prakash Oils Ltd reported in 58 DTR 279; decision of the Hon’ble Supreme Court in the case of CIT vs. Meghalaya Steels Ltd reported in 383 ITR 217 and the decision of the Hon’ble Delhi High Court in the case of CIT vs. Advance Detergents Ltd reported in 339 ITR 81 (Del). Hence, it could be safely concluded that the said receipt of compensation, even if construed as Revenue in nature, would be eligible for consequential deduction u/s.80IA of the Act is it is directly linked with the power generation activity carried on by the assessee which is eligible for deduction u/s.80IA of the Act. Hence, it becomes Revenue neutral and consequently, there could be no prejudice that could be caused to the interest of the Revenue in this regard. Hence, the pre-requisite twin conditions of Section 263 cannot be cumulatively satisfied in the instant case and consequently invocation of revision jurisdiction u/s. 263 of the Act on the same is unsustainable in the eyes of law.

3.8. It is pertinent to know that A.Y.2009-10 is a completed assessment as on the date of assumption of jurisdiction u/s.153C of the Act in the hands of the assessee. Admittedly, only incriminating material which was handed over is a petty cash book marked as Annexure A-8 pertains only to A.Y.2011-12 and not relatable to A.Y.2009-10. Hence, the ld. AO was fully justified in not looking into this issue while framing the search assessment on 29/03/2016. Hence, no error could be attributed in his order. Hence, the pre-requisite twin conditions of Section 263 cannot be cumulatively satisfied in the instant case and consequently invocation of

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revision jurisdiction u/s.263 of the ACT on the same is unsustainable in the eyes of law.

3.9. Further, we also find that the issue on receipt of compensation for shortfall in guaranteed performance from Suzlon Energy Ltd was claimed as capital receipt by the assessee in revised return filed on 31/03/2011 itself. The ld. AO had framed the original assessment u/s. 143(3) of the Act on 30/12/2011 by considering the said revised return. If at all there is any error, the error could only be in the said assessment order dated 30/12/2011. Hence, the time limit for reckoning revision jurisdiction u/s.263 of the Act has to be from that date on 30/12/2011 in terms of Section 263(2) of the Act and not from the search assessment framed on 29/03/2016. Reliance in this regard is placed on the decision of the Hon’ble Supreme Court in the case of CIT vs. Alagendran Finance Ltd reported in 293 ITR 1 wherein it was held as under:-

“15. We, therefore, are clearly of the opinion that keeping in view the facts and circumstances of this case and, in particular, having regard to the fact that the Commissioner of Income-tax exercising its revisional jurisdiction reopened the order of assessment only in relation to lease equalization fund which being not the subject of the reassessment proceedings, the period of limitation provided for under sub-section (2) of section 263 of the Act would begin to run from the date of the order of assessment and not from the order of reassessment. The revisional jurisdiction having, thus, been invoked by the Commissioner of Income-tax beyond the period of limitation, it was wholly without jurisdiction rendering the entire proceeding a nullity.”

3.10. Hence, we hold that the revision order passed u/s.263 of the Act by the ld. PCIT for A.Y.2009-10 is barred by limitation and accordingly, quashed.

3.11. In view of the aforesaid observations, we hold that the revision order u/s. 263 of the Act passed by the ld. PCIT is unsustainable in the

16 ITA No.3202/Mum/2018 M/s. Essel Mining & Industries Ltd

eyes of law for more than one reason as detailed supra. Accordingly, we quash the same. Accordingly, the grounds raised by the assessee are allowed.

Order pronounced on 15/11/2022 by way of proper mentioning in the notice board.

Sd/- Sd/- (PAVAN KUMAR GADALE) (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 15/11/2022 KARUNA, sr.ps Copy of the Order forwarded to : The Appellant 1. The Respondent. 2. The CIT(A), Mumbai. 3. CIT 4. DR, ITAT, Mumbai 5. 6. Guard file. //True Copy//

BY ORDER,

(Sr. Private Secretary / Asstt. Registrar) ITAT, Mumbai