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2016 (4) TMI 961 - PUNJAB AND HARYANA HIGH COURT

2016 (4) TMI 961 - PUNJAB AND HARYANA HIGH COURT - [2016] 388 ITR 440 - Revision u/s 263 - period of limitation - Held that:- We find that the order under section 263 of the Act was required to be passed within two years from the end of the financial year in which the order sought to be revised was passed. It has been categorically recorded by the Tribunal that the order under section 263 of the Act in the case of the assessee was passed on 20.3.2013 which was required to be passed upto 31.3.201 .....

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ppeals are identical. However, the facts are being extracted from ITA No.475 of 2015. 2. ITA No.475 of 2015 has been preferred by the appellant-assessee under Section 260A of the Income Tax Act, 1961 (in short, the Act ) against the order dated 3.8.2015, Annexure A.3 passed by the Income Tax Appellate Tribunal, Division Bench, Chandigarh (in short, the Tribunal ) in ITA No.679/CHD/2013, for the assessment year 2009-10, claiming following substantial questions of law:- A. Whether the requirement .....

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r on the facts and circumstances of the case and in law, the Tribunal was right in law in holding that order under section 263 was passed on 20.3.2013 though the same was dispatched on 4.4.2013 i.e. after the limitation which expired on 31.3.2013? D. Whether on the facts and circumstances of the case, the ITAT was justified in law in upholding the action of the CIT under section 263 on the basis that the AO has allowed claim of assessee under section 80IB without making any enquiry or investigat .....

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in the circumstances of the case, the Income Tax Appellate Tribunal was justified in law in upholding the action of the CIT under section 263 in holding that the claim of the appellant under section 80IB of the Income Tax Act was wrongly allowed by blindly relying upon the judgment of this Hon'ble Court in the case of National Legguard Works vs. CIT and another, 288 ITR 18 (P&H) which is distinguishable on facts itself and rather favours the present appellant's case? F. Whether, unde .....

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No.475 of 2015 may be noticed. The appellantassessee is a private limited company engaged in the business of manufacturing of rolling mill machinery and its parts based at Mandi Gobindgarh. Survey was conducted under section 133A of the Act in the appellant's case on 24.7.2008. The appellant company surrendered a sum of ₹ 06 crores on account of right off of business sundry creditors, outstanding since long due to some dispute with the said parties. The same were written back as incom .....

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were checked. Addition of ₹ 80,529/- was made under section 80IB of the Act on account of DEPB receipts of ₹ 2,68,430/- after scrutiny. The assessment was completed by the Assessing Officer under section 143 (3) of the Act on 29.10.2010, Annexure A.1. On 14.11.2012, notice was issued by the Commissioner of Income Tax, Ludhiana (CIT) under section 263 of the Act wherein it was observed that the assessee had been allowed deduction under section 80IB of the Act on various items. The ap .....

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ing was recovered to show that the appellant was engaged in any other business or activity except manufacturing. Therefore, the income as surrendered on account of writing back off of business sundry creditors having utilized for normal business activities of the appellant was from manufacturing business only and also the job work activities carried on by the appellant company were entitled for the impugned deduction under section 80IB of the Act. Reliance was placed on judgment of this Court in .....

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al order was barred by limitation and the appellant was entitled to deduction under section 80IB of the Act on the surrendered income as well as on job work. The appeal was dismissed vide order dated 3.8.2015, Annexure A.3. According to the appellant, the order under section 263 of the Act was time barred having not been served on it within two years from the end of the financial year in which the impugned order was passed which expired on 31.3.2013 while the impugned order was issued on 4.4.201 .....

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97) 227 ITR 38 (Kerala); and secondly (ii) whether any enquiries were made at the time of assessment and therefore, there was no scope for exercising revisional jurisdiction under Section 263 of the Act. Relying upon judgment of the Apex Court in Malabar Industrial Co. Limited vs. Commissioner of Income Tax, (2000) 243 ITR 83, initiation of proceedings under section 263 of the Act were assailed. 6. On perusal of the findings recorded by the Tribunal and after hearing learned counsel for the appe .....

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d of limitation itself. The relevant findings recorded by the Tribunal read thus:- 8. The learned counsel for the assessee submitted that assessment order was passed on 29.10.2010 and the order under section 263 has been passed on 20.3.2013. However, the impugned order was dispatched on 4.4.2013 and received by assessee on 6.4.2013. He has therefore submitted that revision order is barred by limitation. He has however admitted that the last date of passing of the revision order was 31.3.2013. 9. .....

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f the financial year in which the order sought to be revised was passed. In this case, the assessment order was passed on 29.10.2010 which was sought to be revised. Therefore, after end of the financial year, the order could have been passed upto 31.3.2013 which is also admitted by the learned counsel for the assessee. In the case of assessee, the order under section 263 of the Act has been passed on 20.3.2013, therefore, same is passed by the learned Commissioner of Income Tax within the period .....

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in the period so prescribed. The order shall have to be passed within the period of limitation which is so in the case of the assessee. This ground of appeal of the assessee is accordingly rejected. 7. The Apex Court in R.K.Upadhyaya vs. Shanabhai P.Patel, (1987) 166 ITR 163 had held that where the Income Tax Officer issued a notice of reassessment under section 147(b) of the Act by registered post on March 31, 1970 and the notice was received by the assessee on April 3, 1970, the same was not b .....

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orded by the Tribunal that the Assessing Officer had passed the assessment order without making any enquiry and investigation and allowed claim under section 80IB of the Act. Thus, the order was held to be erroneous and prejudicial to the interest of the revenue. The CIT was held to be justified in setting aside the assessment order and directing the Assessing Officer to pass the assessment order afresh by giving opportunity of hearing to the assessee. The conclusion of the Tribunal is quoted be .....

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The learned counsel for the assessee ultimately submitted that the directions may be issued to the learned Commissioner of Income Tax to consider the plea of the assessee on merit. On the other hand, learned DR submitted that Assessing Officer has not made any enquiry on both the issues and no income is derived form any business or industrial undertaking on which surrender was made as well as job income was shown. Therefore, when Assessing Officer failed to make enquiry on both the aspects, lear .....

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position of decision of the jurisdictional High Court are binding on all the subordinate authorities. 13. We have considered rival submissions. It is not in dispute that during the course of survey conducted in the premises of assessee on 24.7.2008, certain incriminating documents were found relating to loan and advances. The assessee surrendered a sum of ₹ 6 crore to cover up these discrepancies. The accounts of the assessee revealed that assessee had declared income of ₹ 6 crore as .....

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interesting to note that despite it is a case of survey under section 133A conducted against the assessee and finding incriminating material against the assessee during the course of survey, the Assessing Officer has even failed to mention this fact in the assessment order that it is a case of survey and during the course of survey, incriminating material was found against the assessee. The Assessing Officer has not discussed anything in the assessment order if he has conducted any enquiry or in .....

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regard to claim of deduction under section 80IB on surrendered income of ₹ 6 crore or on job charges. The learned counsel for the assessee has also shown inability to produce any reply filed before Assessing Officer of making claim of deduction under section 80IB on the surrendered income as well as on job charges by fulfilling conditions of Section 80IB. It would therefore reveal that Assessing Officer did not make any enquiry or investigation at assessment stage so as to qualify deductio .....

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had any nexus with the industrial undertaking of the assessee. The assessee during the course of survey as well as assessment proceedings has not filed any documentary evidence to establish that income of ₹ 6 crore has been earned through manufacturing activities eligible for deduction under section 80IB of the Act. Thus, the Assessing Officer has failed to make any enquiry or investigation on claim of assessee of deduction under section 80IB at the assessment stage on the above surrendere .....

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ed, 205 ITR 45 and decision of Madras High Court in the case of K.A.Ramaswami Chettiar 220 ITR 657. The learned Commissioner of Income Tax also relied upon several decisions in the impugned order in support of his findings that failure to make enqiry by the Assessing Officer at assessment stage would render the assessment order to be erroneous and prejudicial to the interest of revenue. The decision of the Hon'ble Punjab and Haryana High Court in the case of National Legguard Workers (supra) .....

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laim of assessee under section 80IB of the Act without making any enquiry and investigation. Therefore, the order was correctly treated as erroneous and prejudicial to the interest of revenue. The learned CIT was, therefore, justified in setting aside the assessment order and directing the Assessing Officer to pass the assessment order afresh de novo by giving opportunity of being heard to the assessee. In this view of the matter, no further directions are required to the learned Commissioner of .....

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