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Income Tax Appellate Tribunal, DELHI BENCH: ‘A’ NEW DELHI
Before: SHRI G.D. AGRAWAL, HON’BLE & SHRI K.N. CHARRY
This is an appeal challenging the order dated 30.03.2016 passed by the Principal Commissioner of Income Tax-Rohtak u/s 263 of the Income Tax Act requiring the AO to examine afresh the expenses debited to all the four units of the assessee at Rohtak, Manesar, Aurangabad and Uttranchal and also the expenses pertaining to the sales and job work.
Brief facts of the case are that the assessee is a limited company having four units at Rohtak, Manesar, Aurangabad and Uttranchal respectively. For the A.Y. 2011-12 a total income of Rs. 1,40,21,660/- claiming a deduction of 74,04,479/- u/s 80IC of the Act was returned on 30.09.2011 and during the assessment the AO disallowed a sum of Rs. 68,84,141/- out of 74,04,479/-, and allowed deduction u/s 80IC at Rs. 5,23,338/-. By order dated 07.03.2014 u/s 143(3) of the Act the AO added a sum of Rs. 68,84,141/-. However, by order dated 30.03.2016 the Pr.
Commissioner of Income Tax recorded a finding that very less profit was shown for the units located at Rohtak, Manesar and Aurangabad which are not eligible for deductions u/s 80IC, whereas huge net profit was disclosed for the unit at Uttranchal where the firm enjoys the deduction u/s 80IC at 100%, as such the order passed by the AO u/s 143(3) of the Act was erroneous in so far as it is prejudicial to the interest of the Revenue, and on this premise required the AO to examine afresh the expenses debited to all the four units and also expenses pertaining to sales and job work.
Challenging this action of the Ld. Pr. CIT –Rohtak the assessee is in appeal before us contending that the Ld. Pr. CIT erred in invoking Section 263 of the Act in as much as the aspect of deduction u/s 80IC is already subject matter of an appeal u/s 246A of the Act and also that there is no reason for the Ld. Pr. CIT to hold that the order of assessment is erroneous and prejudice to the interest of Revenue.
It is the argument of the Ld. AR that the AO has considered the facts in depth with reference to the books of accounts maintained by the assessee in respect of the four units and disallowed a sum of Rs. 68,84,141/- out of Rs. 74,04,479/- which was claimed by the assessee, and this fact itself established that the AO had examined the issue in depth as such the Ld. Pr. CIT is not justified in invoking the jurisdiction u/s 263 of the Act.
Further argument of the Ld. AR is that the certified copy of the office noting giving rise to the proceedings u/s 263 of the Act clearly show that no record was called for, for examination of the issue by the Ld. Pr. CIT and for want of application of mind the proceedings are bad.
Per contra, it is the argument of the Ld. DR that though the AO disallowed a sum of Rs. 68,84,141/- that fact alone per se does not established that such aspects as are referred by the Ld. Pr. CIT in her order were also considered by the AO. As a matter of fact the record does not reveal that the AO adverted to this aspect of the assessee booking huge expenses in respect of the units which are not qualified for deduction u/s 80IC and disclosing huge profits in respect of the units which are eligible for the benefits u/s 80IC. For these reasons he submitted that the appeal is devoid of merits and prayed to dismiss the same.
We have carefully gone through the record and it is a matter of record that by way of order dated 07.03.2014 u/s 143(3) of the Act the AO vide paragraph nos. 3, 3.1 and 3.2 considered the aspect of income from job work and sales, and out of an amount of Rs. 74,04,479/- claimed by the assessee u/s 80IC he disallowed a sum of Rs. 68,84,141/- while allowing only a sum of Rs. 5,20,338/- u/s 80IC. We are inclined to agree with the Ld. Counsel that by no stretch of imagination can it be said that there is no requisite enquiry by the AO. At best it is the case of inadequate enquiry.
Further the certified copy of the office noting filed by the Ld. AR reads as follows:
“M/s Dynamic Transmission Pvt.Ltd.,151, IDC, Hissar Road, Rohtak AY 2011-12 In this case, proposal u/s 263 of the I.T. Act, 1961 was received from DCIT, Circle, Rohtak noticing certain discrepancies noticed while completing assessment u/s 143(3) of the Income Tax Act, 1961 vide order dated 07.03.2014. PUC is show cause notice fixing the case for hearing on 15.03.2016.”
It clearly shows that immediately on receipt of the proposal u/s 263 of the Act from DCIT Circle-Rohtak noticing certain discrepancies in the completion of assessment u/s 143(3) of the Act, show cause notice fixing the date of hearing on 15.03.2016 was ordered. This clearly shows that on receipt of proposal no exercise of calling from record and examining the issue in detail to reach the satisfaction that there is escapement of income in the assessment framed by the AO as such the order of the AO is erroneous in so far as it is prejudicial to the interest of the Revenue. This clearly indicates want of due exercise for reaching a satisfaction as such the initiation of proceedings u/s 263 of the Act does not appear to be on any sound basis.
Viewing from any angle, we are of the considered opinion that the impugned order u/s 263 of the Act cannot be sustained. With this view of the matter, we quash the same.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 21.04.2017