TMI Blog2022 (3) TMI 1241X X X X Extracts X X X X X X X X Extracts X X X X ..... was filed to the Ld.PCIT and the bills of old assets transferred also submitted to him, pointing out that the said bills were not included in the list of new assets on which addl. depreciation and investment allowance had been claimed by the assessee. Similarly the assessee had filed all details of TDS deducted on legal, professional and advertisement expenses, correlating it with their ledger accounts in the books of the assessee and further supplementing the claim with TDS returns filed. Thus the assessee had demonstrated that the claim of the assessee to these expenses was in accordance with law, none being disallowable on account of non deduction of tax at source as apprehended by the Ld.PCIT. We have also noted that the assessee had been subjected to tax audit u/s 44AB of the Act, and the tax auditors had not reported any such incorrect /disallowable claims of the assessee. Nothing adverse has been pointed out by the Ld.PCIT with regards to the either of the above claims. The Ld.PCIT, we find, has not even cared to consider the contention of the assessee and simply held that these issues not having been examined by the AO ,has resulted in the assessment order being erro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preciation u/s 32(1)(iia) and investment allowance u/s. 32(AC) of the Act of machineries of value of ₹ 3,97,96,055/- which were not new but transferred from earlier plant of the assessee at Uttarakhand to present plant at Gokak Karnataka. The show cause notice to the assessee u/s. 263 of the Act dated 19.03.2021 reproduced at para 2 of the PCIT orders brings out the above as under: 2. A show cause notice was issued to the assessee on 19.03.2021 to file submissions in connection with the proceedings u/s. 263 of the I. T. Act. Relevant points of the show cause notice reads as under; Thereafter, on scrutiny of assessment records available with the Department, it is noticed that, you have claimed depreciation of ₹ 1,92,38,44,812/- including additional depreciations of ₹ 43,01,59,408/- And apart from the same also availed investment allowances u/s 32 AC for ₹ 28,05,30,843/-. It is also found that some of the machineries (total value at ₹ 3,97, 96,055), were transferred from the earlier Uttarakhand Plant of the Company to present plant at Gokak Karnataka . The website of the related company, Riddhi Siddhi Gluco Biols Ltd. gives informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned order u/s 263 of the Act .In this regard, he drew our attention to communication from the office of the PCIT -3, Ahmedabad dated 09.10.2019 regarding the transfer of PAN of the assessee mentioning the fact of the assessee s jurisdiction falling in Mumbai. The said communication was placed before us paper book page 1 the contents of which are as under: To Roquette India Pvt, Ltd, 21st Floor, Coeroi Commerz-lI Oberoi Sarden City Goregaon East, Mumbai-400Q63 PAN;- AAFCR2758S Subject: Transfer of PAN-Regarding. It is informed that the PAN: AAFCR2758G is currently lying with DCIT,Circle-3(l)(2), Ahrnedabad, As per our record address mentioned, the PAN should fall under the jurisdiction of MUM, Circle-13(3){2) Mumbai. It is therefore proposed to transfer your PAN and jurisdiction over your case to the said ACIT, Circie-13|3|(2)s Mumbai You are therefore requested to- submit yours view on the proposed transfer of your PAN by speed post/email before 20,10,2019. If your views are not received before the said date, it shall be presumed that you have no objection regarding the; transfer of PAN/jurisdiction as proposed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ector General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner from whose jurisdiction the case is to be transferred may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, pass the order; (b) where the Principal Directors General or Directors General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or Commissioners aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner as the Board may, by notification in the Official Gazette, authorise in this behalf. 6. Ld. Counsel for the assessee was unable to respond to the above queries of the bench. He stated that he was not aware of any response filed by the assessee to the communication nor was aware of the any order passed u/s. 127 of the Act transferring the jurisdiction of the assessee to Mumbai. Ld. Counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of Machineries of ₹ 3,97,96,055/- which were transferred from Uttarakhand Plant to Gokak Plant as mentioned by your good office. Therefore, no question arises with respect to claim of additional depreciation u/s 32(1) (iia) and Investment allowance u/s 32AC of the Act on the said machineries. For your ready reference copy of invoices of these machineries submitted during assessment are attached herewith as Annexure-4. 5. As no additional depreciation/ investment allowance have been claimed on said machineries of ₹ 3,97,96,055/- question of disallowance of additional depreciation @ 20 % u/s 32(l)(iia) and 15 % of Investment allowance u/s 32AC of the Income Tax Act, 1961 for ₹ 1,39,28,6197- does not arise. 9. Referring to the same he contended that the entire list of new machine on which additional depreciation and investment allowance had been claimed ,amounting in all to ₹ 2,47,88,19,354/- had been filed to the Ld.PCIT alongwith the copies of bills, in all four, of old machines transferred amounting to ₹ 3,97,96,055/-, clearing demonstrating that the said bills were not included in the list . He drew our attention to the tax audi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een subject to audit under Companies Act and Income Tax Act and no adverse remark has been made with regard to said expenses. 6. Accordingly, the said expenses have been properly and fully verified by the Id.AO. In view of above facts and circumstances the learned AO has passed the order u/s 143(3) of the Act after full and proper verification of all the relevant details related to items listed out in your good office letter and accordingly, we request your good office to kindly drop the proceedings u/s 263 of the Act. 11. With respect to the same also it was pointed out that ledger account of all the expenses was filed, detail showing TDS on each payment made was filed giving reasons where not deducted and the same was evidenced with copies of TDS returns. Our attention was drawn to all the details in the relevant annexures as mentioned in the letter, placed at paper book page no. 75 to 84, which included list of advertisement and legal professional and consultancy expenses mentioning the TDS deducted therein. 12. Ld. D.R. on the other hand supported the order of the Ld. PCIT stating that the assessee had not demonstrated his claim before the Ld. PCIT but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee having demonstrated his claim being in accordance with law and nothing adverse being pointed out by the Ld.PCIT in the explanation of the assessee, there arises no question of the assessment order being erroneous at all. No inquiry may have been conducted by the AO in the present case, but if the assessee demonstrates to the Ld.PCIT that his claim was in accordance with law,as in the present case and no infirmity is pointed out by him in the explanation of the assessee, how can the assessment order be erroneous. The fact of mere non inquiry in itself,in such circumstances, will not be sufficient to hold the assessment order erroneous so as to cause prejudice to the Revenue. Explanation 2 to section 263 of the Act, which the Ld.PCIT has relied upon, for the said purpose, mentions orders passed without making inquiries or verifications which should have been made,( italics provided by us) as resulting in erroneous orders. Clearly where orders are found to have been passed without making inquiries which were necessary, only those can be said to be erroneous. Not all and sundry non inquiries will tantamount to the orders being erroneous. The Ld.PCIT has to give a categorical f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gth of the conclusion that must be reached by the CIT before setting aside an assessment under s. 263 as the answer to the said question would really depend on the facts that may be confronting the CIT in any given case. The position can be best resolved by saying that in certain situations the opinion or conclusion recorded would be the final opinion; in other situations it may be less than final . What would be necessary for our purposes is to take note of the fact that there has to be an opinion that the assessment which has been set aside is, indeed, erroneous and prejudicial to the interests of the Revenue. Furthermore, the power under s. 263 being quasi-judicial such conclusion must be reached after hearing the assessee which is mandated by the statute itself and after recording the reasons for the conclusions reached, a requirement, imposition or which, would be consistent with the well-settled principles of exercise of quasi-judicial powers. 13. Turning to the facts of the present case what is noticeable from the impugned order dt. 1st Nov., 1996, is that the CIT has not recorded any opinion that the order of assessment of the petitioner for the asst. yr. 1992-93 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as considered Explanation 2 to section 263, in the case of Narayan Tatu Rane vs ITO (2016) 47 CCH 309, holding that it cannot be said to have overridden the law interpreted by courts that before holding any order to be erroneous, the PCIT should have conducted inquiries to show that the finding of the AO was erroneous. That the provision would apply only if an order has been passed without making inquiries which a prudent officer should have carried out .the relevant findings of the ITAT are as under: 19.The law interpreted by the High Courts makes it clear that the Ld Pr. CIT, before holding an order to be erroneous, should have conducted necessary enquiries or verification in order to show that the finding given by the assessing officer is erroneous, the Ld Pr. CIT should have shown that the view taken by the AO is unsustainable in law. In the instant case, the Ld Pr. CIT has failed to do so and has simply expressed the view that the assessing officer should have conducted enquiry in a particular manner as desired by him. Such a course of action of the Ld Pr. CIT is not in accordance with the mandate of the provisions of sec. 263 of the Act. The Ld Pr. CIT has taken suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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