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Income Tax Appellate Tribunal, ‘C’ BENCH, BENGALURU
Bharat Electronics Ltd. Nagavara, Outer Ring Road, Bengaluru. … Appellant PAN:AAACB 5985 C Vs. Commissioner of Income-tax, Large Tax Payers Units, Bengaluru. … Respondent Appellant by : Jinitha, Advocate Respondent by : Shri Pradeep Kumar, CIT(DR) Date of hearing: 26/02/2019 Date of pronouncement: 01/03/2019 O R D E R
Per PAVAN KUMAR GADALE, JM :
The assessee has filed the appeal against the order of the Principal Commissioner of Income-tax [CIT], passed u/s 263 of the Income-tax Act,1961 ['the Act' for short] dated 19/03/2015.
2. At the time of hearing, the Learned AR has not pressed ground Nos.3 and 4. Accordingly, they are dismissed as not pressed. The only effective grounds are ground Nos.1, 2, 5, 6 and 7 which read as under:
Page 2 of 8 1. “On the facts and in the circumstances of the case, the learned Principal Commissioner of Income Tax(hereafter, "the Pr. CIT") had no occasion to initiate proceedings under section 263 of the Income Tax Act, 1961 (hereafter, "the Act") as the assessment order sought to be revised is neither erroneous nor prejudicial to the interests of the revenue.
The impugned order of the learned Principal Commissioner of Income Tax is bad in law as there is no specific finding in the order that the order of assessment is erroneous insofar as it is prejudicial to the interests of revenue in respect of any of the issues raised.
The learned Pr. CIT acted without jurisdiction in passing an order in respect of the claim for tax deducted at source as the same issue had already been considered and decided by the learned Commissioner of Income Tax (Appeals).
6. In respect of the claim for depreciation on energy saving devices, the order of the learned Pr. CIT deserves to be quashed as it seeks to substitute the view of the Pr. CIT in place of the view of the Assessing Officer.
7. For these and other grounds that may be adduced at the time of hearing, the order of the learned Pr. CIT may be quashed and the appeal allowed. The appellant craves leave to add to, or, amend/ alter/ withdraw any of the above grounds of appeal. All the grounds of appeal are without prejudice to each other.
Brief facts of the case are that the assessee is engaged in manufacture and sale of professional grade electronic equipment and components and power generation through Windmill and filed the Return of income on 29/10/2010 with total income of Rs.9,98,15,29,830/-. The return of income was processed u/s 143(1) of the Act on 28/07/2011. Subsequently, the case was selected for scrutiny and notice u/s 143(2) and 142(1) were issued. In compliance, the Learned AR appeared from time to time and submitted details. The Page 3 of 8 Assessing Officer (AO), on perusal of the financial statements and discussions with the Learned AR and the material available on record, found that certain claims were not admissible. Therefore, made disallowances u/ss. 35(2AB) and 14A of the Act and assessed the total income of Rs.13,99,46,94,400/- and passed the order u/s 143(3) of the Act dated 18/03/2013. Subsequently, the CIT, on perusal of the assessment records, is of the opinion that the AO has passed the assessment order which is erroneous and prejudicial to the interests of revenue and issued revision notice u/s 263 dated 15/12/2014 with reasons being excess claim of depreciation on plant and machinery under Rule 5(2), grants from the Government and income and TDS credit as per 26AS was not claimed in the return of income and excess depreciation at 80% on energy saving devices referred at pages 2 and 3 of the order.
The Learned AR argued and submitted details on various dates. Finally, the CIT, was not satisfied with the explanations and therefore took a view that mere submission of information before the AO cannot be a reason for considering the assessee’s submissions and the AO has not applied mind on issue. No enquiry was conducted by the AO on the disputed issue and accordingly, set aside the order of assessment u/s 143(3) of the Act as erroneous and prejudicial to the interests of revenue and directed the AO to redo and provide sufficient opportunity
Page 4 of 8 to the assessee to furnish details on the disputed matters and conduct proper enquiry and passed the Revision order on 19/3/2015. Aggrieved by the order, the assessee has filed the appeal before the Tribunal.
5. Before us, the Learned AR submitted that the CIT has erred in in considering the order passed u/s 143(3) of the Act as erroneous and prejudicial to the interests of revenue. The assessee has co-operated in the assessment proceedings and complied with the directions of the AO and the notices issued u/s 143(2) and 142(1) of the Act. Further, the Learned AR submitted that the consequential order u/s 143(3) r.w.s. 263 of the Act dated 31/8/2015 was passed by the AO as per the directions of the Principal CIT and the Learned AR has not pressed these grounds of appeal No.3 and 4and the contention of the Learned AR is that the AO has not granted credit of TDS credit and excess depreciation on energy saving devices prayed that the order of the CIT be set aside. Contra, the learned DR supported the order of the CIT.
We heard rival submissions and perused the material on record. Prima facie, Revision proceedings u/s 263 of the Act by the Principal CIT because there is no proper enquiry by the AO on the disputed issues raised in the revision notice and the Page 5 of 8 order passed by the AO is erroneous and prejudicial to the interests of revenue. The Learned AR’s contentions that the AO, as per the directions of the Principal CIT, has passed the order on 31/8/2015 and AO found the claim is in order in respect of acceleration of depreciation as per rule 5(2) and Government grants. Therefore, the learned AR restricted her arguments to other two grounds being grant of TDS credit on book adjustment and excess depreciation on items treated as energy saving devices. As per the books of account, the AO found the surplus income is Rs.204.37 crores and the assessee filed letter dated 12/11/2014 from the Principal Controller of Defence Accounts which confirmed the remittance of TDS through book adjustment. We found the order of the Principal CIT is directing the AO to grant TDS credit on verification of the books of accounts. The learned AR also supported her stand by accepting the directions of CIT and relief from the AO. Accordingly, we are not inclined to interfere with the direction of the CIT and dismiss the ground of appeal.
On the second ground of appeal being claim of excess depreciation on assets treating them as energy saving devices the contention of the Learned AR that the assessee has rightly claimed depreciation on assets and the information was filed in the course of hearing proceedings and referred to the notice u/s 142(1) dated 16/5/2012 calling for information. Whereas
Page 6 of 8 the assessee has furnished information by letter dated 10/7/2012 as enclosure 5 with details of energy saving device added during the assessment year 2009-10 and also another letter justifying the claim of depreciation on 18/12/2012, the ld.CIT found that no inquiry was conducted by the AO.
We find that the Assessing Officer has followed the directions of Pr. CIT on the disputed issue of verification of claim and the ld. AR of the assessee has participated in the assessment proceedings and filed the details and and finally the AO has passed the order u/s.143(3) r.w.s 263 of the Act. Therefore, we are of the opinion that the assessee has participated in the assessment proceedings and as envisaged by the ld. AR the assessee has filed an appeal against the order of AO passed u/s.143(3)/263 of the Act.
We find that the Hon’ble Delhi High Court in the case of Kailash Prasad Jain Vs. CIT, [2011] 202 Taxman 244 (Calcutta) has observed in para 18 of the order which reads as under :- “18. Dr. Pal's client approached the Tribunal challenging the order passed under section 263 and even did not pray for any interim relief for stay of operation of the said order and allowed the order of assessment to be passed. Ultimately an appeal was also preferred. The legal proposition explained by Dr. Pal would be appropriate when it would be found that the authority concerned lack inherent jurisdiction in the subject- matter. In this case it cannot be held CIT had no jurisdiction. The question is whether assumption of jurisdiction is done by the said authority on being satisfied with the twin conditions mentioned therein. This question could and can be examined in many ways. When assessee did not take any step for stay of Page 7 of 8 the order of the Assessing Officer pursuant to the impugned order of the CIT under section 263 and after having participated in the hearing of the assessment proceedings and consequently preferring appeal, we think it would not be proper for this Court at this stage to decide issue raised before us.”
Similarly, the Hon’ble Supreme Court in the case of DENIEL MERCHANTS P. LTD. & ANR. Vs. ITO, SLP(C) No(s). 23976/2017, dated 29.11.2017, wherein the Hon’ble Apex Court has held as under :-
“Delay condoned. In all these cases, we find that the Commissioner of Income Tax had passed an order under Section 263 of the Income Tax Act, 1961 with the observations that the Assessing Officer did not make any proper inquiry while making the assessment and accepting the explanation of the assessee(s) insofar as receipt of share application money is concerned. On that basis the Commissioner of Income Tax had, after setting aside the order of the Assessing Officer, simply directed the Assessing Officer to carry thorough and detailed inquiry. It is this order which is upheld by the High Court. We see no reason to interfere with the order of the High Court. The Special Leave Petitions are dismissed. Pending application(s), if any, stands disposed of accordingly.”
We, considering the facts and circumstances of the case and judicial decision, found that the Pr.CIT has dealt on the disputed issue and considered the judicial decision and set aside the order u/s 143(3) and passed a reasoned order. Accordingly, we are not inclined to interfere with the order of the Pr.CIT and the same is upheld and the grounds of appeal are dismissed.
Page 8 of 8 12. In the result, the appeal of the assessee is dismissed.
Order pronounced in the open court on 1st March, 2019.