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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
आदेश /O R D E R PER MAHAVIR SINGH, VP: This appeal by the assessee is arising out of the revision order passed by the Principal Commissioner of Income Tax, Coimbatore u/s.263 of the Income Tax Act, 1961 (hereinafter ‘the Act’)vide order C.No.120/PCIT-1/2020-21 dated 19.01.2021. The assessment was framed by the DCIT, Corporate Circle-1, Coimbatore for the
- 2 - ITA No.189/Chny/2021 assessment year 2014-15 u/s.147 r.w.s. 143(3) of the Act, vide order dated 24.12.2018.
At the outset, it is noticed that this appeal is delayed by 35 days. This appeal was filed before Tribunal only on 30.04.2021 and as per Form 36, the order of CIT(A) was received on 25.01.2021 The assessee has filed condonation petition stating that the delay was due to the spread of Covid-19 pandemic and nationwide lockdown imposed by the Government from 25.03.2020. The assessee has also stated that the Hon’ble Supreme Court in Miscellaneous Application No.665 of 2021 vide order dated 23.03.2020 has given directions that the delay are to be condoned during this period 15.03.2020 to 14.03.2021 and they have condoned the delay up to 28.02.2022 in Miscellaneous Application No.21 of 2022 vide order dated 10.01.2022. In term of the directions of Hon’ble Supreme Court, we condone the delay in filing of this appeal by assessee and admit the appeal for adjudication.
The only issue in this appeal of assessee is against the revision order passed by PCIT u/s.263 of the Act, assailing the revision order on the ground that the AO while framing reassessment order u/s.143(3) r.w.s. 147 of the Act, dated 24.12.2018, dropped the proceedings initiated u/s.148 of the Act and the issue in revision
- 3 - ITA No.189/Chny/2021 u/s.263 of the Act and issue before AO in reassessment proceedings u/s.147 of the Act was the same. For this, assessee has raised the following five grounds:- (1) The impugned order u/s 263 of the Principal Commissioner of Income Tax-1, Coimbatore, is in excess of his jurisdiction, in the facts and circumstances of the case and in law.
(2) The learned PCIT ought to have held that the order of the AO “under consideration", u/s 143(3) rws 147 of the Act, dated 24.12.2018, was not erroneous and prejudicial to the interest of the Revenue, in the facts and circumstances of the case and in law.
(3) The learned PCIT ought to have held that order u/s 143(3) rws 147 of the Act, under consideration dated 24.12.2018 of the A0, was in confirmity with law, in the light of the reason to believe recorded and disclosed by the AO, in his letter dated 09.08.2018, for issue of notice u/s 148 of the Act, was non- existent to take it outside the scope of Section 263 of the Act, in the facts and circumstances of the case and in law.
(4) The learned PCIT ought to have held that the proceedings u/s 148 of the Act, was rightly dropped by the AO, by his speaking order, as no income had escaped assessment, as per the reasons recorded and disclosed by the AO, us 147 of the Act, as the validity of the order is dependent only on the basis of the reasons for formation of belief of escapement of income, recorded before issue of the notice us148 of the Act, which cannot be improved or supplemented after the issue of notice wsl48 of the Act, in the facts and circumstances of the case and in law.
(5) The learned PCIT did not have jurisdiction us 263 of the I.T.Act, 1961, to revise ne Order w/s 143(3) passed on-02:12.2016, in terms of section 263(2) of the I.T.Act, 1961, in the facts and circumstances of the case and in law.
Brief facts are that the assessee company filed its income for the relevant assessment year 2014-15 on 23.09.2014 and assessment was completed under scrutiny assessment u/s.143(3) of
- 4 - ITA No.189/Chny/2021 the Act by the AO vide order dated 02.12.2016 by making addition on account of disallowance of income from sale of trees claimed as exempt amounting to Rs.29,99,360/-. Subsequently, the assessee’s case was reopened u/s.147 of the Act to examine the claim of deduction u/s.80IA of the Act, for considering the claim of deduction in the initial year and the period for which deduction can be claimed. The assessee was supplied the reasons recorded for issuance of notice u/s.148 r.w.s 147 of the Act vide letter dated 09.08.2018 by the AO, vide his letter the reasons supplied were as under:- “The reason for issue of notice under section 148 of the Income-tax Act, 1961 for both the assessment years is that as per information contained in form 10CCB the initial year from which deduction under section 80IA of the Income-tax Act, 1961 is claimed is A.Y. 2003-04. Therefore, the ten years period for which deduction can be claimed under section 80IA expires by A.Y. 2012-13. Thus, deduction under section 80IA has been incorrectly claimed in the A.Ys. 2013-14 and 2014-15 resulting in underassessment of income for these years atleast to the extent of the amount of deduction claimed under section 80IA.”
In response to the reopening u/s.148 of the Act, the AO framed reassessment u/s.147 r.w.s.143(3) of the Act vide order dated 24.12.2018 and the AO accepted the claim of assessee vide para 3 to 5 of assessment order as under:- 3. As per information obtained in Form 10CCB assessee was stated to be claiming deduction under section 80IA from A.Y. 2003-04, therefore, the ten years for claiming the deduction would expire in A.Y.2012-13. Thus, there was reasons to believe that assessee had wrongly claimed deduction u/s.80IA in the year under consideration and income to the tune of Rs. 1,10,17,629/- had escaped assessment. Hence notice dated 28.03.2018 u/s
- 5 - ITA No.189/Chny/2021 148 of the Income Tax Act, 1961 was issued through ITBA after obtaining the prior approval of the Additional Commissioner of Income tax, Corporate Range, Coimbatore.
4 In response to the notice assessee e-filed the return of income on 11.04.2018. Thereafter, notice u/s 143(2) dated 10.08.2018 was issued to the assessee through ITBA. In response, the assessee filed letter dated 06.09.2018 objecting to the re-opening of assessment and requesting for dropping the re-assessment proceedings. The objection raised by assessee was disposed off by rejecting the assesscc's plea vide this office order dated 15.11.2018, which was duly served on the assessee on 16.11.2018.
5 Subsequently vide letter dated 20.11.2018 assessee stated that deduction under section 80IA of the Act was claimed only from AY 2006-07. Assessee submitted copies of the assessment orders for AY 2004-05 and AY 2005-06 in support of its claim. This claim of the assessee has been verified from the records available in this office and the submission filed by assessee is found to be correct. In the Forn 10CCB filed for the year under consideration the initial Assessment Year has been wrongly mentioned as 2003-04.
Since the ten years for claiming the deduction under section 80IA has not lapsed in the year under consideration, assessee's claim of the deduction is being allowed.”
4.1 Subsequently, the PCIT on examination of assessment records noticed that the assessee had installed the windmills in the financial year 1998-99 and assessee started claiming deduction u/s.80IA of the Act w.e.f. assessment year 2006-07. He noted that the total period of 15 years for claiming deduction u/s.80IA of the Act expired in assessment year 2013-14 itself i.e., cumulative period and assessee is eligible for claim of deduction for 10 assessment years. Since, according to PCIT the total period of 15 years i.e., cumulative period for claiming deduction u/s.80IA of the Act expired in
- 6 - ITA No.189/Chny/2021 assessment year 2013-14, the assessee is not eligible for claim of deduction u/s.80IA of the Act for the relevant assessment year 2014-15. According to PCIT, the AO has not verified the claim of deduction and wrongly allowed the claim of deduction u/s.80IA of the Act for the relevant assessment year 2014-15 and thereby assessment order is found to be erroneous insofar as it is prejudicial to the interest of Revenue. Therefore, the PCIT issued show cause notice dated 23.12.2016 giving proposal for revision of assessment u/s.263 of the Act on the following :- “2.2 It is now noticed from the records that your company had installed the Wind Mills in the Financial Year 1998-99, therefore, the total period of 15 years to claim the deduction under section 80IA expired in A.Y. 2013- 14. In view of this fact you are not eligible claim the deduction under section 80IA in the A.Ý.2014-15 and this fact is not verified by AO during the course of assessment proceedings and there is underassessment of income to the tune of Rs. 1,10,17,629/-
Thereby, the AO has failed to verify the above mentioned issue(s) during the assessment proceedings for the AY 2014-15. The acceptance of your incorrect claim by the Assessing Officer needs to be corrected so as to remedy the error.
For the above mentioned reasons, the assessment order made u/s.147 r.w.s. 143 (3) for the A.Y.2014-15 is found to be erroneous and prejudicial to the interests of the revenue as the order has been passed without making enquiry or verification which ought to have been made. Hence necessitating invoking the provisions of the Section 263 of the I.T. Act, to remedy the loss of the Revenue. It is therefore, proposed to invoke the provisions of the Sec. 263 of the I.T. Act, 1961.”
4.2 The assessee replied before the PCIT that the provisions of the Act are very clear and the legislature, in its wisdom, has used
- 7 - ITA No.189/Chny/2021 deliberately the word “from” in section 80IA for excluding for the purpose of arriving at 10 consecutive years out of total 15 years, the year in which the assessee generates power and not using the word with the year, the assessee begins to generate power, as it is used in section 80I of the Act. But, PCIT was not convinced with the reply of the assessee and he noted the provisions of section 80IA(2) of the Act, which reads as under:- 80IA (2) The deduction specified in sub-section (1) may, at the option of the assessee, be claimed by him for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure facility or starts providing telecommunication service or develops an industrial park or develops a special economic zone referred to in clause (iii) of sub-section (4) or generates power or commences transmission or distribution of power 5[or undertakes substantial renovation and modernisation of the existing transmission or distribution lines:
4.3 The PCIT vide his order noted that the phraseology “from the year” mentioned in the section is an inclusive terminology and explains that the deduction can be claimed inclusive of the year in which the operation begins, and not exclusive as claimed by the assessee. He noted that in the instant case, the deduction can be claimed from financial year 1998-99 till financial year 2012-13 pertaining to assessment years from 1999-2000 to 2013-14 and accordingly, the total period of 15 years has to be computed from financial year 1998-99. Hence, according to PCIT, the assessment framed is erroneous so as to prejudicial to the interest of Revenue
- 8 - ITA No.189/Chny/2021 and hence, he set aside the assessment order and remanded the matter back to the file of the AO for fresh assessment after providing reasonable opportunity of being heard to the assessee. Aggrieved, assessee came in appeal before the Tribunal.
Before us, the ld.counsel for the assessee stated that the issue is squarely covered by decision of Hon’ble Bombay High Court in the cases of CIT vs. Jet Airways (I) Ltd., (2011) 331 ITR 236 and Ranbaxy Laboratories Ltd., vs. CIT, (2011) 336 ITR 136, wherein it is held that the AO had jurisdiction to reassess income other than the income in respect of which proceedings u/s.147 of the Act were initiated but he was not justified in doing so, when the very reason for initiation of those proceedings ceased to survive. The ld.counsel argued that legislature could not be presumed to have intended to give blanket powers to the AO that on assuming jurisdiction u/s.147 of the Act regarding assessment or reassessment of escaped income, he would keep on making roving enquiry and thereby including different items of income not connected or related with the reasons to believe, on the basis of which he assumed jurisdiction. The ld.counsel stated that this was the exact principle laid down by Hon’ble Bombay High Court in the cases of Ranbaxy Laboratories Ltd., and Jet Airways (I) Ltd., supra. The ld.counsel stated that in
- 9 - ITA No.189/Chny/2021 the present case also the AO at the first instance dropped the reopening vide order dated 24.12.2018 on the same reasons i.e., the claim of deduction u/s.80IA of the Act, that the assessee can claim the deduction for 10 years and that 10 years would expire in assessment year 2012-13.
On the other hand, the ld. CIT-DR argued that the issue before the AO in reassessment proceedings was the claim of deduction u/s.80IA of the Act and the AO was very well aware that the assessee had installed windmills in financial year 1998-99 relevant to assessment year 1999-2000 and assessee started claiming deduction u/s.80IA of the Act w.e.f. assessment year 2006-07. These facts were available on the files but despite that fact, the AO failed to consider the provisions of section 80IA(2) of the Act, that the total period of 15 years for claiming deduction u/s.80IA of the Act, in the present case, expired in assessment year 2013-14 itself and for assessment year 2014-15 no deduction u/s.80IA of the Act can be claimed in view of limitation provided in that very section. As argued by ld.counsel for the assessee, the ld.CIT-DR stated that the issue before AO during reassessment proceedings was the same, what was examined by PCIT u/s.263 of the Act and directed the AO to reframe the assessment in term of revision order passed by PCIT
- 10 - ITA No.189/Chny/2021 u/s.263 of the Act denying the claim of deduction u/s.80IA of the Act. In reply, the ld.counsel could not state anything new.
After hearing rival contentions and going through the facts of the case, we noted that the issue before AO during reassessment proceedings and framing reassessment u/s.147 r.w.s. 143(3) of the Act vide order dated 24.12.2018 was the claim of deduction u/s.80IA of the Act. The AO noted this fact in his order that “as per information obtained in Form 10CCB assessee was stated to be claiming deduction under section 80IA from A.Y. 2003-04, therefore, the ten years for claiming the deduction would expire in A.Y.2012- 13. Thus, there was reasons to believe that assessee had wrongly claimed deduction u/s.80IA in the year under consideration and income to the tune of Rs. 1,10,17,629/- had escaped assessment”. The AO was also aware that the assessee had installed windmills in financial year 1998-99 relevant to assessment year 1999-2000 and the assessee cannot claim deduction beyond assessment year 2013- 14 itself because 15 years will expire as on assessment year 2013- 14. In the given facts and circumstances, we are of the view that as argued by ld.counsel for the assessee, the decision of Hon’ble Bombay High Court in the cases of Jet Airways (I) Ltd., and Ranbaxy Laboratories Ltd., supra will not come to his help. According to us,
- 11 - ITA No.189/Chny/2021 the reassessment framed by the AO, the issue was exactly identical what was before the PCIT during revision proceedings u/s.263 of the Act. Hence, we affirm the order of PCIT but the AO is free to examine the aspect of claim of deduction u/s.80IA of the Act after allowing reasonable opportunity of being heard to the assessee. Hence, we affirm the order of PCIT and dismiss this appeal of assessee.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the open court on 8th December, 2022 at Chennai.
Sd/- Sd/- (मनोज कुमार अ�वाल) (महावीर �सह ) (MANOJ KUMAR AGGARWAL) (MAHAVIR SINGH) लेखा सद�य/ACCOUNTANT MEMBER उपा�य� /VICE PRESIDENT चे�ई/Chennai, �दनांक/Dated, the 8th December, 2022 RSR आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु� ) अपील(/CIT(A) 4. आयकर आयु� /CIT 5. िवभागीय �ितिनिध/DR 6. गाड� फाईल/GF.