INTERNATIONAL SWITCHGEARS PRIVATE LTD.,CHANDIGARH vs. PR. CIT-1, CHANDIGARH

By way of this appeal, the assessee assails invocation of revisionary juri iction u/s 263 by Ld. Pr. Commissioner of Income Tax, Chandigarh-1 (Pr.CIT) for Assessment Year (AY) 2017-18 vide impugned order dated 30-03-2022 in the matter of an assessment framed by Ld. AO u/s.143(3) of the Act on 17-12-2019. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under. The assessee being resident corporate assessee is stated to be engaged in manufacturing of electric control panels, cable protection systems and accessories. 2. The assessee filed return of income declaring income of Rs.12.43 Crores which was picked up for scrutiny. The assessee started electricity production through solar plant and claimed deduction u/s 80-IA for the first time for two projects of solar plant. The Phase-1 of Solar Plant was commissioned in FY 2014-15 whereas the second phase was commissioned in FY 2015-16. The assessee claimed deduction of Rs.116.48 Lacs for these two units. The Ld. AO denied deduction of interest of Rs.7.53 Lacs and framed the assessment. 3. Subsequently, Ld. Pr. CIT, upon perusal of case records, observed that the assessee furnished two separate Forms 10CCB for two units which was allowed by Ld. AO overlooking the fact that the assessee was running one composite units. The Ld. AO allowed deduction of more than 50% of total sales. The profits declared in the two units was very high. The assessee did not provide any evidence to prove that it had actually started power generation. The Ld. AO did not call for any evidence in this regard. The details of plant and machinery used for power generation was neither requisitioned nor verified by Ld. AO. 4. Theassessee, in response to show-cause notices, furnished purchase deeds for the land which would show that it was continuous piece of land. One piece of land was purchased on 15-07-2014 whereas the other piece of land was purchased on 18-05-2015. The 3

The case records would show that pursuant to these directions, another assessment has been framed by Ld. AO on 10-03-2023 wherein Ld. AO denied deduction u/s 80-IA for Rs.52.03 Lacs and re- computed the income of the assessee. No addition has been made in this order for unsecured loans. Pertinently, the assessee has not complied with the hearing notices in the consequential proceedings and the assessment has been framed on best judgment basis. 6. The Ld. AR took us through the queries raised by Ld. AO during the course of regular assessment proceedings and assessee’s replies thereto to submit that due enquiries / verifications were made by Ld. AO and impugned revision of order was not justified. We find that first notice u/s 142(1) was issued on 22-05-2019 wherein no queries were raised on the issue of deduction u/s 80-IA. The second 142(1) notice was issued on 05-11-2019 wherein vide point no.11, a specific query was raised on the issue of deduction u/s 10CCB to the extent that the assessee was required to explain the reasons for not claiming deduction u/s 80-IA in earlier assessment years. The third notice u/s 142(1) was issued on 11-12-2019 wherein no further query was raised in respect to deduction u/s 80-IA. Upon perusal of all these notices u/s 142(1) as well as assessee’s replies thereto, it is quite discernible that the issues as flagged by revisionary authority in the impugned revisionary order were not, at all, verified by Ld. AO. No enquiries or verifications were made on the points and in the manner as observed by Ld. Pr. CIT.