TMI Blog2017 (9) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... had rendered the order of the AO not only erroneous but also prejudicial to the interest of Revenue, accordingly, CIT had correctly invoked the provisions of Section 263. Accordingly, the grounds of the appeal are dismissed. - ITA No.2520/Del/2017 - - - Dated:- 15-9-2017 - SH. I.C. SUDHIR, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER For The Appellant : S/sh. Rakesh Gupta Somil Agarwal, Advocates For The Respondent : Sh. S.S. Rana, CIT(DR) ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed against order dated 30/03/2017 passed by the Commissioner of Income Tax, Dehradun (in short the CIT ) under section 263 of the Income-tax Act, 1961 (in short the Act ) revising the assessment order for assessment year 2012-13. 1. That having regard to facts circumstances of the case, Ld. Pr. CIT has erred in law and on facts in assuming jurisdiction u/s 263 and has further erred in observing that the admissibility of deduction claimed u/s 80IC was not properly examined during the course of assessment proceedings and further erred in holding the assessment order dated 18-03-2015 is erroneous in so far as it is prejudicial to the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is protected by patent and differentiates the coronary drug eluting stents from ordinary stents. According to him, drug eluting stents system is a new and distinct object or article or thing with a different chemical composition from the raw materials and therefore the process involved in the case amounts to manufacturing and the assessee was eligible for deduction under section 80IC of the Act. 2.1 The Ld. CIT, however, was of the opinion that the process of drug coating does not result in transformation of the article or object into a new object or does not bring into existence a new and distinct object or article and thus the process of coating does not come within the purview of definition of manufacturing as defined in section 2(29BA) of the Act. 2.2 Further, the Ld. CIT observed that the assessee did not furnish audit report required for claiming deduction under section 80IC of the Act in prescribed form No. 10CCB during the course of assessment proceedings. The Ld. CIT also observed that in copy of form issued by the drug licensing and controlling authority to the assessee, which was submitted to the Assessing Officer, the list of drugs manufactured was not enclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of jurisdiction to the DC/ACIT, Dehradun, Uttrakhand. In the said application, the assessee submitted that principal business of the assessee being situated at Dehradun, jurisdiction over the case lies with DCIT/ACT, Dehradun. The Ld. counsel also referred to page 27 of the paper book, which is a letter by the ITO, Ward 25(3), New Delhi transferring the records to ACIT, Dehradun. The Ld. counsel also referred to page No. 29 of the paper book, which is a letter transferring the case by the DCIT/ACIT, Dehradun to the ITO ward 2(5), Dehradun i.e. who finally passed the assessment order under section 143 (3) of the Act on 18/03/2015. The contention of the Ld. counsel is that the Income Tax Officer, Ward 2(5), Dehradun, who was having jurisdiction over the case did not issue notice under section 143(2) of the Act within the limitation period and therefore the assessment passed by him was bad in law and non-est in the eye of law. He submitted that since the assessment order was void ab initio , it cannot be revised. 8. Learned counsel also relied on the decision of the Tribunal dated 27/05/2016 in the case of Micro Spacematrix Solutions Private Limited versus Income tax officer i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Act, 1961 on 30th September, 2012 bearing e-filing acknowledgement number as 507824651300912. The LLP has its registered office situated in New Delhi. However, all its operations, manufacturing activities, sales and purchase office is situated at 9, Pharma City, Selaqui, Dehradun, Uttarakhand. OUR SUBMISSION In view of the above, we respectfully submit before your goodself the fact that the principal place of business of the assessee is situated at that in the PAN database, the Deputy/Assistant Commissioner of Income Tax, New Delhi has been listed as the assessee firm s assessing officer. However, as mentioned above, the principal place of business within the meaning of section 124 of the Income Tax Act, is situated at Dehradun, Uttarakhand. Therefore, jurisdictional assessing office in the case of assessee is the Assistant Commissioner of Income Tax, Circle, Range 2, Dehradun. 11. Further in the same letter, the assessee itself requested for transfer of jurisdiction from New Delhi to Dehradun, which reads as under: Therefore, we hereby present this application under Section 124 of the Act, for transfer of jurisdiction from the Deputy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n website. On perusal of notice under section 143(2) dated 16/08/2013, which is available on page 21 of the assessee s paper book, we find that the notice was generated by the computer system on the basis of PAN database having Delhi address. Thus, at the time notice under section 143(2) of the Act was issued, the Assessing Officer at New Delhi was having jurisdiction over the case. Subsequently, on the request of the assessee and on submission that the principal place of business was at Dehradun, the Assessing Officer transferred the case to Dehradun. Further, we find that in accordance with section 129 of the Act, the succeeding Assessing Officer may continue the proceeding from the stage at which the proceeding was left by his predecessor. For ready reference, section 129 of the Act is reproduced as under: Change of incumbent of an office. 129. Whenever in respect of any proceeding under this Act an income- tax authority ceases to exercise jurisdiction and is succeeded by another who has and exercises jurisdiction, the income-tax authority so succeeding may continue the proceeding from the stage at which the proceeding was left by his predecessor : Provided th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 42(1) of the Act by the Assessing Officer requiring the assessee to furnish inter alia complete set of return, computation of income, annual report, tax audit report and note with respect to business and professional activities carried out by the assessee ( vi) PB 25-26: is a copy of assessee s letter dated nil filed to Assessing Officer submitting the copy of return alongwith computation of income and tax audit report ( vii) PB 31-33: is a copy of assessee s submission dated nil filed to the Assessing Officer submitting that assessee firm manufactures drug eluting stents ( viii) PB 38-65: is a copy of letter under section 133(6) of the Act issued to three buyer parties of the assessee and there replies ( ix) PB 65-138: are copy of other letters/ information filed before the Assessing Officer to support that assessee manufactured drug eluting stents. ( x) PB 139-141: is a copy of the assessment order accepting the claim of the assessee under section 80 IC of the Act after observing (para 7) that in view of details on verification of submissions made by the assessee and on the basis of the report of the Inspector of Income tax, it was found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer examining and considering issue but not mentioning in assessment order -Order not erroneous - INFOSYS TECHNOLOGIES LTD. V/S JOINT CIT(ASSESSMENT)- VOL.287-ITR-211 (B ANGLOREL (2006) 103 ITD 399 (Bang) 20. The Ld. counsel further without prejudice to the above arguments, submitted that jurisdiction under section 263 of the Act can be assumed only in case of absence of enquiry by the Assessing Officer and no order can be set-aside by the Ld. CIT on the ground that AO did not make enquiry as per the satisfaction of the Ld. CIT. In support of the contention that Ld. counsel relied on the decision dated 13/04/2017 of the Tribunal Delhi bench in the case of Gorav Bhatia in ITA No. 1730/2013. 21. On the contrary, learned CIT(DR) submitted that after insertion of Explanation -2 to section 263 of the Act by Finance Act, 2015 w.e.f. 01/06/2015, now the assessment order passed without making Inquiry or verification which should have been made or passed allowing any relief without enquiring into the claim, shall be deemed to be erroneous insofar as prejudicial to the interest of the Revenue and thus the cases relied upon by the counsel of the assessee are d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner, - ( a) the order is passed without making inquiries or verification which should have been made; ( b) the order is passed allowing any relief without inquiring into the claim; ( c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or ( d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.] ( 2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. ( 3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, Natio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80IC of the Act has been wrongly allowed. The Ld. CIT has observed that the assessee even did not file the audit report in prescribed form 10CCB, issued by the chartered accountant in support of the claim of deduction under section 80IC of the Act. Regarding this observation of the Ld. CIT that audit report in form No. 10CCB was not found placed on record, and thus the eligibility of assessee undertaking under section 80IC could not be ascertained, the Ld. counsel referred to paper book pages 2A-2E and submitted that audit report in form No. 10 CCB was filed along with the return of income and therefore observation of the Ld. CIT are without any basis. 29. In our opinion, the contention of the Ld. counsel that form No. 10CCB was filed alongwith return of income, is not correct. On perusal of page 1 (one) of the paper book, we find that the return of income has been digitally signed and filed electronically by the assessee. During the relevant period, in terms of clause 2 of Rule 12 of the Income Tax Rules, 1962, the taxpayers filing their income tax returns electronically were not required to enclose any papers/documents/reports with their Income Tax Return. In such circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any enquiry to examine whether the said activity falls under the manufacturing activity as defined under Income-tax Act. Thus in the facts and circumstances of the case, we are of the opinion that Assessing Officer has not carried out the enquiries for examining the manufacturing activity of the assessee and which he ought to have carried out in the circumstances of the case. 33. Thus, we hold that the assessment order is deemed to be erroneous in terms of Explanation-2 to section 263 of the Act. 34. The Ld. counsel further, without prejudice to the earlier arguments, submitted that alleged absence of form 10 CCB and the list of the drugs were never grounds for issuing show cause notice under section 263 and therefore the action of the Ld. CIT in making this is a ground for revision under section 263 is without jurisdiction and deserve to be ignored for this reason only. In support of the contention, the learned counsel relied on the decision in the case of CIT Vs. Contimeters Electricals private limited (2009) 317 ITR 249. 35. The Ld. CIT(DR), on the other hand, submitted that form No. 10CCB and copy of license are documents which could justify the claim of deduction un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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