TMI Blog2015 (12) TMI 707X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 1309 & 192/Ahd/2011 & 2013 - - - Dated:- 14-10-2015 - Rajpal Yadav, JM And Manish Borad, AM For the Appellant : Shri Rasesh Shah For the Respondent : Shri Jagdish Shah, CIT-DR ORDER Per Rajpal Yadav, Judicial Member The present two appeals are directed at the instance of the assessee. The ITA No.1309/Ahd/2011 is against the order of the ld.CIT dated 28.3.2011 passed u/s.263 for the Asstt.Year 2006-07, whereas ITA No.192/Ahd/2013 is against the order of the CIT(A) dated 16.10.2012 passed in the Asstt.Year 2006-07. This appeal emerges out from an assessment order passed under section 143(3) on 22.12.2011 in pursuance of the order under section 263 of the Income Tax Act passed by the CIT. First we take up the appeal No.1309/Ahd/2011. 3. Solitary grievance of the assessee is that the ld.CIT has erred in taking cognizance under section 263 of the Income Tax Act, and thereby revising the assessment order dated 26.12.2008 passed under section 143(3) of the Income Tax Act. 4. Brief facts of the case are that the assessee company is manufacturing textile machinery. It has filed its return of income on 31.10.2006 declaring an income of ₹ 19,35,980/-. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,21,13,715/- 5. Aggrieved with the order of the AO, the assessee went in appeal before the CIT(A). According to the ld.counsel for the assessee, the ld.First Appellate Authority has upheld the claim of the assessee for grant of exemption under section 80IB at ₹ 20,35,17,154/-. Appeal of the Revenue against the order of the CIT(A) was dismissed by the ITAT. Qua this fact, there was no dispute between the parties 6. After going through the record, the ld.Commissioner harboured a belief that in the claim made for the purpose of exemption under section 80IB, the assessee has included the following items on which 80IB is not admissible: i) F.D. (BOB) 16,03,107/- ii) Duty Drawback 36,76,140/- iii) FD Interest (Other bank) 7,10,215/- TOTAL 59,89,462/- 7. After hearing the assessee, the ld. Commissioner has held that the exemption under section 80IB will not admissible on the duty draw back income of ₹ 36,76,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... followed the decision of the jurisdictional High Court. Explaining the meaning of section 80IB, subsequent decision of the Hon'ble Supreme Court cannot brand the order of the AO erroneous which would cause prejudice to the interest of the Revenue. In support of his contentions, he relied upon the judgment of the Hon'ble Supreme Court in the case of CIT Vs. G.M. Mittal Stainless Steels P. Ltd., 263 ITR 255 (SC). 9. On the other hand, the ld.DR relied upon the order of the CIT. He placed reliance on the decision of the Hon'ble Gujarat High Court in the case of CIT Vs. Panna Knitting Industries as well as the order of the ITAT in the case of Intellinet Technologies India P. Ltd. Vs. ITO, 5 ITR (Trib.) 96 (Bang.). 10. We have duly considered the rival contentions and gone through the record carefully. Section 263 has a direct bearing on the controversy, therefore, it is pertinent to take note of this section. It reads as under:- 263(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. 11. On a bare perusal of the sub section-1 would reveal that powers of revision granted by section 263 to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a show cause notice pointing out the reasons for the formation of his belief that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not fee stratified with the conclusion. (viii) The CIT, before exercising his jurisdiction under s. 263 must have material on record to arrive at a satisfaction. (ix) If the AO has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the AO allows the claim on being satisfied with the explanation of the assessee, the decision of the AO cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard. 12. Apart from the above principles, we deem it appropriate to make reference to the decision of the Hon'ble Delhi High Court in the case of CIT vs. Sun Beam Auto reported in 227 CTR 113 referred by ld. Counsel for the assessee, and Gee Vee Enterprises Ltd vs. Addl. Commissioner of Income Tax (99 ITR 375). In the case of Sun Beam Auto, the Hon'ble High Court has pointed out a distinction between lack of inquiry and inadequate inquiry. If there is a lack of enquiry, then the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vious. The position and function of the Income-tax Officer is very diffident from that of a civil court. The statement made in a pleading proved by the minimum amount of evidence may be adopted by a civil court in the absence of any rebuttal. The civil court is neutral. It simply gives decision on the basis of the pleading and evidence which comes before it. The Income-tax Officer is not only on adjudicator but also an investigator. He cannot remain passive in the face of the return which is apparently in order but called for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would made such an inquiry prudent that the word erroneous' in section 263 includes the failure to make such an enquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. 14. In the light of the above, let us examine the facts of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced any new provision in the Act, meaning thereby, the law construed by the Hon'ble Supreme Court was the law when the AO has decided the issue. If the assessment is being looked with that angle, then certainly it is erroneous because it is passed against the provisions of the law. As far as contentions of the ld. Counsel of the assessee is concerned, that this issue travelled to the file of CIT(A), therefore, it merged with the order of the CIT(A). We find that in the deduction computed by the AO while granting to the assessee the amount of duty draw back was embedded in that amount. The assessee was not aggrieved with the computation to the extent of deduction was granted. His grievance was qua the difference between the deduction granted and claimed by the assessee, therefore, the issue travelled to the CIT(A) was the amount on which deduction was not granted. On the strength of the Hon'ble Gujarat High Court in the case of CIT Vs. Shastri Theatre P. Ltd. (supra), the ld. Counsel has raised contentions that once there is a link between the issue, the CIT(A) impliedly looked into this aspect also, we are of the view that when the CIT(A) has decided the appeal, the judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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