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2015 (8) TMI 1273 - ITAT CHANDIGARH

2015 (8) TMI 1273 - ITAT CHANDIGARH - TMI - Revision u/s 263 - deduction under section 80IB - Held that:- Assessing Officer did not make any enquiry or investigation at assessment stage so as to qualify deduction under section 80IB of the Act to the assessee on surrendered income as well as on job charges. The accounts of the assessee revealed that assessee declared income of ₹ 6 crores as business advances written off, therefore, it could not be said to have any nexus with the Industrial .....

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r 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 surrendered income as well as on job charges

It is well settled law that failure by the Assessing Officer to make enquiry at assessment stage would render his order to be erroneous and prejudicial to the interest of revenue and jurisdiction under section 263 of the Act have been .....

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ssment order and directing the Assessing Officer to pass the assessment order afresh denovo by giving opportunity of being heard to the assessee. In this view of the matter, no further directions are required to the Ld. Commissioner of Income Tax in the matter as is argued by ld. counsel for the assessee. The appeal of the assessee has thus no merit. The same is accordingly, dismissed. - Decided against assessee - ITA No. 679/CHD/2013, ITA No. 680/CHD/2013 - Dated:- 3-8-2015 - SHRI BHAVNESH SAIN .....

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ered the material available on record. The ld. counsel for the assessee submitted that the issues are same in both the appeals and has mainly argued in ITA 679/2013 and stated that order in this case may be followed in ITA 680/2013. 3. Briefly the facts of the case are that in this case assessment was made under section 143(3) of the Act vide order dated 29.10.2010 at an income of ₹ 7,02,83,440/- against the returned income of ₹ 7,02,02,910/-. The Ld. Commissioner of Income Tax, on p .....

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not entitled to claim of deduction under section 80IB of the Income Tax Act. The decision of the Hon'ble Punjab & Haryana High Court in the case of Friends Casting Pvt. Ltd. 50 DTR 61 was relied upon. It was also noted that survey under section 133A was conducted at the business premises of the assessee and during the course of survey, certain incriminating documents relating to loans and advances were found. The assessee, accordingly surrendered a sum of ₹ 6 Crores to cover up th .....

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well settled proposition that incomes eligible for claim of deduction under section 80IB are only such profits and gains of business as could be said to have been derived from such eligible Industrial Undertaking. Reference was made of the judgement of the Hon'ble Supreme Court in the case of Sterling Foods 237 ITR 579 as also Vallore Electric Corporation 227 ITR 557 in which it has been held that direct nexus between the income earned and income qualified for deduction should be establishe .....

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that assessee should prove that such income was derived from Industrial Undertaking, therefore, was of the view that surrendered income would not qualify for deduction under section 80IB of the Act on the following grounds : i) Surrendered income is treated as undisclosed income from other sources. ii) The assessee has failed to establish that the source of unaccounted income invested in advances which were written off had any nexus in the Industrial Undertaking of the assessee. iii) Neither du .....

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to be prima facie erroneous in so far as prejudicial to the interest of revenue. The explanation of the assessee was called for. The assessee filed the submissions before Ld. Commissioner of Income Tax. 6. The Ld. Commissioner of Income Tax, considering the material on record and submissions of the assessee, noted that assessee is not entitled for deduction under section 80IB of the Act on surrendering undisclosed income. The Assessing Officer has not made any enquiry in this regard and has not .....

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mmissioner of Income Tax, considering the material on record found that Assessing Officer has not made proper enquiry and has not verified the correctness and genuineness of the claim of the assessee and no facts have been analyzed. Therefore, the order passed by the Assessing Officer was without proper verification of the details and the seized material and no investigations have been done. It was also noted that it is not a case where Assessing Officer has adopted one possible view. The Assess .....

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s been allowed deduction under section 80IB on the surrendered income of ₹ 6 crores. The perusal of the accounts revealed that assessee has declared income of ₹ 6 crores as business advances written off. The Ld. Commissioner of Income Tax found that the additional income of ₹ 6 crore has been credited as business advances forfeited on which deduction under section 80IB of the Act is not permissible because deduction under section 80IB is eligible on the income of Industrial Und .....

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e could be no presumption that the surrendered income on account of unexplained stocks represented export income. The Ld. Commissioner of Income Tax, therefore, found that deduction under section 80IB is not available to the assessee on undisclosed income from other sources and assessee failed to establish that source of unaccounted income invested in advances which were written off, had any nexus with the Industrial Undertaking of the assessee. During the course of survey or assessment proceedi .....

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regard to deduction under section 80IB on job work also noted that claim is allowed by the Assessing Officer without verifying the fact and without making any enquiry. The Ld. Commissioner of Income Tax also found that provision of Section 41(1) of the Act is also not applicable in the case of the assessee. The Ld. Commissioner of Income Tax, therefore, set aside the assessment order and directed the Assessing Officer to make the assessment afresh denovo after properly examining the issue and c .....

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pugned order was dispatched on 04.04.2013 and received by assessee on 06.04.2013. 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 31.03.2013. 9. The ld. DR contended that the only requirement of the law was to pass the revision order within two years which is passed by the Ld. Commissioner of Income Tax in this case. There is no requirement to dispatch the order within that period itself. .....

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which is also admitted by ld. counsel for the assessee. In the case of assessee, the order under section 263 of the Act has been passed on 20.03.2013, therefore, same is passed by the Ld. Commissioner of Income Tax within the period of limitation. There is no requirement under the law to dispatch the order within period of limitation itself. The Hon'ble Supreme Court in the case of R.K. Upadhyaya Vs Shanabhai P. Patel 166 ITR 163 held that "Issue of notice under section 147 within the p .....

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is eligible for deduction under section 80IB on surrendered income as well as on job work and Assessing Officer after making proper enquiry granted relief to the assessee at assessment stage. The ld. counsel for the assessee has, however, not been able to place on record any query letter issued by the Assessing Officer with regard to deduction under section 80IB or any reply filed before Assessing Officer in this regard. The ld. counsel for the assessee ultimately submitted that the directions m .....

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us and prejudicial to the interest of revenue. 12. The ld. DR also submitted that Ld. Commissioner of Income Tax is bound by the judgement of Hon'ble Punjab & Haryana High Court in the case of National Legguard Works 288 ITR 18 directly applicable in this issue. The ld. DR relied upon decision of the Hon'ble Punjab & Haryana High Court in the case of Arun Luthra 252 ITR 76 on the proposition of decision of the jurisdictional High Court are binding on all the subordinate authoriti .....

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al Legguard Works (supra) held that the deduction under section 80HHC of the Act is available on showing fulfillment of the conditions prescribed and that there could be no presumption that surrendered income on account of unexplained stocks represented export income. The assessee, however, claimed deduction under section 80IB on income of ₹ 6 crore so surrendered during the course of survey. It is interesting to note that despite it is a case of survey under section 133A conducted against .....

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The Assessing Officer has also failed to make any enquiry or investigation with regard to claim of deduction under section 80IB made by assessee on surrendered income and income on job charges at the assessment stage. The ld. counsel for the assessee has shown his inability to produce any query letter issued by the Assessing Officer at assessment stage for investigating or conducting any enquiry with regard to claim of deduction under section 80IB on surrendered income of ₹ 6 crore or on j .....

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The accounts of the assessee revealed that assessee declared income of ₹ 6 crores as business advances written off, therefore, it could not be said to have any nexus with the Industrial Undertaking of the assessee. The surrendered income was, therefore, undisclosed income from other sources and assessee failed to establish that source of unaccounted income invested in advances which were written off had any nexus with the Industrial Undertaking of the assessee. The assessee, during the cou .....

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Officer to make enquiry at assessment stage would render his order to be erroneous and prejudicial to the interest of revenue and jurisdiction under section 263 of the Act have been properly exercised by the Ld. Commissioner of Income Tax. We rely upon decision of the Delhi High Court in the case of Gee Vee Enterprises 99 ITR 375, decision of Gauhati High Court in the case of Tarzen Tea Company Pvt. Ltd. 205 ITR 45 and decision of Madras High Court in the case of K.A. Ramaswani Chettiar 220 ITR .....

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ourt itself would support the findings of the Ld. Commissioner of Income Tax that the order passed by the Assessing Officer was erroneous and prejudicial to the interest of revenue. 14. Considering the totality of the facts and circumstances, it is clear that Assessing Officer has passed the assessment order without conducting enquiry and investigation on the above issues and has allowed claim of assessee under section 80IB of the Act without making any enquiry and investigation. Therefore, the .....

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The same is accordingly, dismissed. 15. In the result, appeal of the assessee is dismissed. ITA 680/CHD/2013 (M/s Mithila Malleables P.Ltd.) 16. In this appeal also, the facts are same as have been considered in ITA 679/CHD/2013. The assessee in the ground of appeal also challenged the revisional order to be time barred and deduction claimed under section 80IB of the Act on surrendered income as well as on job charges. The assessee also raised other grounds with regard to deduction claimed unde .....

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