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Income Tax Appellate Tribunal, F Bench, Mumbai
Before: Shri Jason P. Boaz & Shri Sandeep Gosain
This appeal by the Revenue is directed against the order of the CIT(A)- 14, Mumbai dated 24.12.2014 passed in respect of the order of assessment for A.Y. 2009-10 passed under section 143(3) r.w.s 263 of the Income Tax Act, 1961 (in short 'the Act') vide order dated 30.01.2014.
The facts of the case, briefly, are as under: - 2.1 The assessee company filed its return of income for A.Y. 2009-10 on 26.09.2009 declaring income of `3,34,29,990/- under normal provisions of the Act and ‘Book Profits’ under section 115JB of the Act were declared at `15,78,87,606/-. The assessment was completed under section 143(3) of the Act vide order dated 03.12.2012 wherein the total income of the assessee was determined at `3,11,01,575/- and ‘Book Profits’ under section 115JB of the Act at `15,78,87,606/- in view of various additions/ disallowances.
M/s. Ultramarine & Pigments Ltd. 2.2 Subsequently, the CIT-7, Mumbai invoking revisionary jurisdiction under section 263 of the Act, passed an order thereunder dated 15.02.2013, holding that having regard to the material on record, he was of the view that the order of assessment dated 03.12.2013 for A.Y. 2009-10 is erroneous and prejudicial to the interests of Revenue as the Assessing Officer (AO) had allowed the assessee’s claim for depreciation, which included claim of additional depreciation of `1,65,04,000/- and deduction under section 10A of the Act without any enquiry. Accordingly, the learned CIT set aside the order of assessment dated 03.12.2013 and directed the AO to examine the issues which are the subject matter of notice under section 263 of the Act and to conduct enquiries required on facts and circumstances of the case in accordance with law. 2.3 In pursuance thereof, the AO passed an order of assessment under section 143(3) r.w.s 263 of the Act vide order dated 31.01.2014 wherein the assessee’s income was determined at `5,91,97,150/- under normal provisions of the Act in view of the following disallowances/additions: - (i) Additional depreciation disallowed `1,65,04,000/- (ii) Deduction under section 10A disallowed `1,15,91,571/- 2.4 Aggrieved by the order of assessment passed under section 143(3) r.w.s. 263 of the Act vide order date 31.01.2014 for A.Y. 2009-10, the assessee preferred an appeal before the CIT(A)-13, Mumbai. The learned CIT(A) disposed off the appeal vide order dated 24.12.2014 granting the assessee partial relief by allowing its claims in respect of both additional depreciation and deduction under section 10A of the Act. 3.1 Revene, being aggrieved by the order of the CIT(A)-14, Mumbai dated 24.12.2014, has preferred this appeal raising the following grounds: - “(i) The Learned CIT(A) has erred on facts and law, in allowing additional depreciation on Wind Turbine Generators u/s. 32(i)(iia) of the Act of Rs.1,65,04,000/- without properly appreciating the factual and legal matrix as clearly brought out by the Assessing Officer. (ii) The Learned CIT(A) has erred on facts and in law in deleting the disallowance u/s. 10A amounting to Rs.1,15,91,571/- M/s. Ultramarine & Pigments Ltd. without properly appreciating the factual and legal matrix as clearly brought out by the Assessing Officer.
2. The Ld. CIT(A)’s order is contrary to law and on facts and deserves to be set aside and A.O’s order may be restored.
The appellant craves leave to amend or alter any ground or add a new ground that may be necessary.” 3.2 At the outset of the hearing, the learned A.R. of the assessee submitted that the order of the CIT passed under section 263 of the Act dated 15.02.2013 has been quashed and held to be non-maintainable by the decision of the Coordinate Bench of the Tribunal in order in dated 10.08.2016, a copy of which has been placed on record. It is prayed that in view of the aforesaid order of the Coordinate Bench the present appeal of Revenue based on the order of the assessment passed under section 143(3) r.w.s. 263 of the Act dated 31.01.2014 is not maintainable and is to be dismissed. 3.3.1 We have heard both the learned A.R. of the assessee and the learned D.R. for Revenue and perused and carefully considered the material on record; including the judicial pronouncements cited. We find that a Coordinate Bench of the Tribunal in its order in ITA No. 2844/Mum/2013 dated 10.08.2016 has quashed the order of the CIT under section 263 dated 15.02.2013 holding as under: - 7. We have considered the rival submissions and perused the record. At the very outset we have anyalised the show-cause noticed issued by learned CIT and subsequently order passed by learned CIT which reads as under :- “In view of the above, it is clear that the AO’s order allowing for such depreciation without enquiry has resulted in error within the meaning of Section 263 of the I.T. Act,1961; this error has differently caused prejudice to the revenue because of allowance of excess depreciation to the extent of Rs.1,65,04,000/-. Accordingly, it is held that order of the AO in this regard is erroneous insofar as it is prejudicial to the interest of revenue within the meaning of section 263 of I.T. Act,1961.
In respect of other items viz. profit of Rs.1,15,91,571/-, the AO has allowed deduction u/s 10A without conducting any enquiry. The assessee’s reply in this regard as contained in the written reply dated 12.2.2013 is carefully considered. However, it is a fact that the AO has not conducted any enquiry in respect of these items before allowing deduction u/s 10A. In view of this, after having M/s. Ultramarine & Pigments Ltd. considered the material on record and assessee’s submissions, I am of the considered view that these items have been considered for exemption u/s 10A by the A.O. without conducting the enquiries which are prima-facie warranted on the facts and circumstances of this case. It is trite law that lack of enquiry results in error within the meaning of Sec.263 of the I.T. Act,1961. It is a fact that considering profit of Rs.1,15,91,571/- for computation of income u/s.10A without enquiries has resulted in error within the meaning of section 263 of the I.T. Act,1961. This has also caused prejudice to the revenue inasmuchas it has resulted in granting exemption without enquiries warranted on facts and circumstances of the case. Accordingly, the order the AO in respect of profit of Rs.1,15,91,571/- is also set aside to the file of the AO.
The AO is directed to examine issues which are subject matter of notice u/s.263 and conduct enquiries required on facts and circumstances of the case. Thereafter, the AO is directed to take the decision as per law. In nutshell, the order passed by the AO is set aside to the file of the AO for considering the issues which are subject matter of notice u/s.263 afresh and take decision as per law.” From the perusal of both show-cause notice as well as findings recorded by learned CIT while passing the order u/s. 263, we have noticed that the grounds taken by learned CIT while issuing show- cause notice is with regard to the disallowance but in the final order passed u/s. 263, the learned CIT has categorically mentioned that the Assessing Officer has not carried out any inquiry therefore direction was given to carry out necessary inquiry in this regard. We first of all referred to the judgment passed by the ITAT, Mumbai Bench in the case of Star India Ltd. (supra), wherein it has been categorically held that when the show-cause notice is issued on the ground that the computation is incorrect but the revision is exercised on the ground that the matter was not examined on the merits. The reason which can be inferred from the revision order u/s 263 is different from the reason set out in the show cause notice and therefore in that case it was held that if a ground of revision is not mentioned in the show-cause notice, then it cannot be made the basis of the order for the reason that assessee would have had no opportunity to meet the point. Hon’ble ITAT Delhi Bench in the case of B.S. Sangwan vs. ITO (supra) has also categorically held that the commissioner started by pointing out, that he saw as, glaring illegalities in the assessment order, which was subjected to revision proceedings, but what he concluded was that the said assessment order was passed without making ‘proper requisite and desired inquiries’. Therefore, the Hon’ble ITAT has held in the above cited case that a revision order can only be passed on the ground on which the assessee has been given a reasonable opportunity of being heard, and it is not open to the Commissioner to set out one reason ground for revising the order but actually revise the order on some other ground.
M/s. Ultramarine & Pigments Ltd.
8. Considering the other judgments relied upon by learned AR, we find that the grounds mentioned by learned CIT in show-cause notice are different and the order passed by learned CIT u/s. 263 is based on another ground and therefore the assessee could not get opportunity to explain the point recorded at the time of passing the final order. Therefore, respectfully following the judgments which are based on the facts which are similar to the facts of the present case, we hold that the order passed by learned CIT u/s. 263 is bad in law and not sustainable in law. Therefore the same is quashed.” 3.3.2 In view of the fact that the Coordinate Bench of the Tribunal has quashed the order under section 263 of the Act dated 15.02.2013 passed by the CIT-7, Mumbai for A.Y. 2009-10, the consequent order of assessment passed under section 143(3) r.w.s. 263 of the Act dated 31.01.2014 in pursuance thereof is rendered non-est. Consequently, the present appeal by Revenue, against the impugned order of the CIT(A) in respect of the order of assessment under section 143(3) r.w.s. 263 of the Act dated 31.01.2014, is not maintainable and is accordingly dismissed. Therefore, the grounds raised
by Revenue (supra) are not required to be adjudicated.