LOTUS ENERGY INDIA LTD,MUMBAI vs. DCIT RG 8(2), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SRI MAHAVIR SINGH, JM AND SRI N.K. PRADHAN, AM (A.Y:2006-07) Lotus Energy (India) Ltd. Dy. Commissioner of Income Tax Range-8(2), Aayakar Bhavan, 2 nd 409, Laxmi Plaza, Laxmi Industrial Estate, Andheri (W), Vs. Floor, Mumbai-400007 Mumbai-400053 PAN No.AABCL0119K Appellant .. Respondent Assessee by .. Shri Jigar Mehta, AR Revenue by .. Shri. Maurya Pratap, DR Date of hearing .. 20-12-2016 Date of pronouncement .. 20-12-2016 O R D E R PER MAHAVIR SINGH, JM:

This appeal by the assessee is arising out of the order of CIT(A)-17, Mumbai, in appeal No. CIT(A)-17/IT-195/11-12, Mumbai dated 21-01-2014. The Assessment was framed by DCIT-8(2), Mumbai for the A.Y. 2006-07 vide order dated 30-08-2011 u/s 143(3) r. w. s. 263 of the Income Tax Act, 1961 (hereinafter ‘the Act’).

“We have considered the rival contentions and also perused the material available on record including the case laws relied upon. We have observed that the assessment was framed u/s 143(3) of the Act by the A.O. on 23rd December, 2008 and during the course of assessment proceedings, the A.O. has made necessary enquiries with respect to the matters covered by the order of the CIT u/s 263 of the Act. Tax-audit reports were also submitted by the assessee before the AO and it cannot be said that the A.O. has not gone

AO is bound to go through the same before framing assessment. All the details were duly submitted before the A.O. by the assessee as set out in preceding para’s and the AO has taken a decision based on his judgment which is a plausible view and in our considered view, finding of the AO were not perverse as rather the same were plausible view after considering material on record. The A.O. has arrived at the decision after examination and enquiry hence it cannot be said that the assessment order passed by the AO was erroneous so far it is prejudicial to the interest of the Revenue to be covered under the mandate of Section 263 of the Act for revising the concluded assessment. In our considered view, the assessment order of the A.O. is neither erroneous nor prejudicial to the interest of the Revenue. The ld. CIT has invoked the provisions of section 263 of the Act based upon the audit objection raised by the internal audit party team. The A.O. has categorically replied vide letter no. ACIT/Circle-8(3)/Audit Objection / 2009-10 dated 19-08-2009 to the objections raised by the internal audit party objections and dismissed audit objections by replying on each and every issue on merit which clearly reflects that the AO has gone through every issue on merits and applied his mind before passing assessment orders and the decisions was taken by the AO on merits before passing assessment order. With respect to non-deduction of TDS on usance interest, the AO while replying to audit objection has sought permission to invoke provisions of Section 154 of the Act to rectify the mistake apparent from record. The assessee in proceedings before learned CIT u/s 263 of the Act and also before us duly demonstrated that all the facts were before the AO and the AO has taken a conscious decision on merits which is a plausible decision which does not warrant interference u/s 263 of the Act to revise concluded assessment. We have also considered all the replies given by the assessee on merits before AO and CIT as well before us which are set out in preceding para’s and are not repeated for the sake of brevity , and we find that the assessee has convincingly replied on all issues on merits and the view taken by the AO before passing assessment order was a plausible view on merit taken after due enquiries and cannot be categorized as erroneous so far as prejudicial to the interest of the Revenue and the same does not warrant interference u/s 263 of the Act to revise concluded assessment, as the assessment order cannot be said to be erroneous so far as it is prejudicial to the interest of revenue. With respect to the usance interest, the proceedings u/s 154 of the Act was contemplated by the AO vide reply to audit objection on 19-08-2009, while ld. CIT issued show cause notice only on 11.03.2011 u/s 263 of the Act. Thus, the record of proposal to take action by the AO u/s 154 of the Act was before the CIT before issuing notice u/s 263 of the Act and hence the order of the AO cannot be termed as erroneous so far as prejudicial to the interest of Revenue as the word ‘records’ used in Section 263 of the Act shall also contemplate including the record pertaining to proceedings u/s 154 of the Act arising subsequently out of the assessment order passed by the AO u/s 143(3) of the Act , and such record was before ld CIT before he issued notice u/s 263 of the Act on 11.03.2011. Thus, in our considered view, the assessment order dated 23.12.2008 passed by the A.O. u/s 143(3) of the Act is neither erroneous nor it is prejudicial to the interest of Revenue, and the ld. CIT has not correctly invoked the provisions of section 263 of the Act, hence, the order of the CIT in our considered view is not sustainable in law and is hereby ordered to be quashed. We order accordingly.”