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Facts
A search and seizure operation was conducted on the assessee's premises. For AY 2015-16, the assessee claimed a deduction of Rs. 2,15,44,476/- under Section 80IC in their 'Nil' income return. The Assessing Officer rejected this deduction, but the CIT(A) subsequently reversed the AO's order, allowing the deduction based on the availability of audit reports, financial statements, and past consistent assessments.
Held
The Tribunal upheld the CIT(A)'s decision, noting that no specific defects were found in the assessee's claim and that the deduction had been consistently allowed in previous assessment years, including re-assessments, without adverse findings. The Tribunal found no justification to reverse the CIT(A)'s order, which had rightly applied the doctrine of consistency principles.
Key Issues
Whether the deduction claimed by the assessee under Section 80IC for AY 2015-16 was allowable, considering prior consistent assessments and the absence of specific defects in the claim.
Sections Cited
Section 143(3), Section 132, Section 80IC, Section 148
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Income Tax Appellate Tribunal, DELHI BENCH “E” DELHI
Before: SHRI CHALLA NAGENDRA PRASAD & SHRI PRADIP KUMAR KEDIA
PER PRADIP KUMAR KEDIA-AM:
The captioned appeal has been filed by the Revenue against the order of the Commissioner of Income Tax (Appeals)-IV, Kanpur (‘CIT(A)’ in short) dated 30.08.2018 arising from the assessment order dated 31.12.2016 passed by the Assessing Officer (AO) under Section 143(3) of the Income Tax Act, 1961 (the Act) concerning AY 2015-16.
Briefly stated, a search and seizure operation under Section 132 of the Act was conducted on 11.11.2014 on the premises of the assessee. The assessee filed return of income declaring total income at ‘Nil’ for A.Y. 2015-16. In the course of the assessment proceedings, the AO observed that assessee has claimed deduction amounting to Rs.2,15,44,476/- under Section 80IC of the Act. In the absence of any evidence to corroborate such claim of deduction before the Assessing Officer, the deduction claimed under Section 80IC was rejected by the AO and the income was assessed to tax on enhanced amount.
Aggrieved, the assessee preferred appeal before the CIT(A). The
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CIT(A) after considering the submissions and the remand report of the AO dated 06.03.2018 and the rejoinder thereto by the assessee, found merit in the plea of the assessee towards correctness of deduction and thus reversed the action of the AO. The relevant operative paragraphs of the order of the CIT(A) is reproduced hereunder:
“6.3 The undersigned has carefully gone through the assessment order, written submission as well as verbal arguments of the Ld. A.R. It is seen that, Assessing Officer has disallowed the deduction u/s 80IC of the Act on the only ground that, no details of the deductions were furnished. The observation of the Assessing Officer cannot be accepted because of the following reasons; i) Appellant's claim of deduction u/s. 80IC of the Act was backed by the specified audit report and the audited financial statements, which were submitted by the appellant, during the course of the assessment proceedings. During these appeal proceedings, ld. A. R. of the appellant has filed the specified audit report u/s 80IC of the Act alongwith the audited financial statement to justify the claim of deduction u/s 80IC of the Act. (ii) Assessing Officer has not pointed out any specific defects in the financial statements and the specified audit report u/s 80IC of the Act, furnished by the appellant, during the course of the assessment proceedings. In fact, the Assessing Officer has himself admitted the fact that, the complete details, books of accounts and vouchers were furnished which, were test checked by him in the assessment proceedings. (iii) Assessment order does not reveal that, the Assessing Officer has specifically requisitioned the details of deduction u/s 80IC of the Act from the appellant, during the course of proceedings u/s 143(3) of the Act. Hence, the addition made by Assessing Officer is against the established law of jurisprudence of natural justice. iv) In the regular scrutiny assessment made u/s 143(3) of the Act for * A.Y. 2009-10, 2010-11, 2012-13, 2013-14 and A.Y. 2014-15 the claim of the deduction u/s 80IC of the Act was duly examined and allowed by the Assessing officer. The facts and circumstances of the deduction u/s. 80IC of the Act for the years under this appeal is no different from A.Y. 2009- 10, 2010-11, 2012-13, 2013-14 and A.Y. 2014-15. Thus, following the legal principle of consistency, the action of the A.O. is unjustified especially considering the fact that, nothing adverse was brought out on record to disallow the claim of deduction u/s. 80IC of the Act. 6.4 In view of the above detailed reasoning and discussions, the addition made by the Assessing Officer u/s. 80IC of the Act cannot be sustained. The same is therefore, deleted and grounds of appeal of the appellant are allowed.” 4. Aggrieved by the reversal of additions made by the AO, the
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Revenue preferred appeal before the Tribunal.
The ld. DR for the Revenue relied upon the assessment order.
The ld. counsel for the assessee, on the other hand, strongly defended the order of the CIT(A) and submitted that the assessee is a partnership firm engaged in the business of manufacturing of healthcare products and claimed deduction under Section 80IC for the first time in A.Y. 2006-07 and the A.Y. 2015-16 in question is the last year for eligibility of deduction. The ld. counsel submitted that in the A.Y. 2010- 11; 2012-13 and A.Y. 2013-14, the claim of deduction under Section 80IC was examined and allowed in the scrutiny assessment made under Section 143(3) of the Act. However, for the A.Y. 2015-16 in question, the AO disallowed claim of deduction by incorrectly alleging that details / explanations were not filed by the assessee. Such observations are contrary to paragraph 3 of the assessment order where the AO himself observed that all details and information called for have been furnished and books of account, bills and invoices were also verified. The CIT(A) has also called for remand report. The AO, in its remand report, has not given any adverse remarks as regards the aforesaid claim of deduction. The ld. counsel further pointed out that assessment for A.Y. 2014-15 was reopened under Section 148 on the specific issue of claim of deduction under Section 80IC. As a consequence of such reopening, re-assessment order passed where correctness of deduction so claimed was accepted and no additions were made. In this backdrop, the ld. counsel submitted where the AO has not pointed out any specific non-compliance of conditions and where the Revenue has accepted the claim in regular assessment proceedings as well as in the re-assessment proceedings for nine long years, the denial of deduction in the last year in the identical facts tantamount to witch hunting and a non-permissible act in law. The ld. counsel submitted that the CIT(A) has rightly applied the doctrine of consistency principles and accepted the plea of the assessee. The ld. counsel thus submitted that no interference with the order of the CIT(A) is called for.
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We have carefully considered the rival submissions and perused the material available on record.
The claim of deduction under Section 80IC for A.Y. 2015-16 is in question. As pointed out on behalf of the assessee, the claim of deduction was made available to the assessee since A.Y. 2006-07. The intervening years were subjected to scrutiny assessment as well as re-assessment. On the specific issue, no adverse finding has been given in any of these years.
The CIT(A) after making necessary enquiries and Remand Report has endorsed the plea of Assessee. No change in facts for A.Y. 2015-16 has been pointed out by the Revenue. We thus do not see any justification in the plea of the Revenue for reversal of the order of the CIT(A). Hence, we decline to interfere.
In the result, the appeal of the Revenue is dismissed. 11. Order pronounced in the open Court on 04/04/2024
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[CHALLA NAGENDRA PRASAD] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /04/2024 Prabhat