TMI Blog2022 (4) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer did not write specific reasons for accepting the explanation of the assessee cannot be reason enough to invoke powers under section 263, and non-mentioning of these reasons do not render the assessment order erroneous and prejudicial to the interest of the revenue. - Appeal of assessee allowed. - ITA No. 1010/Mum/2021 (Assessment Year: 2015-16) - - - Dated:- 21-3-2022 - Pramod Kumar, (Vice President) And Kuldip Singh, Judicial Member Nimesh Vora for the Appellant Sandeep Raj for the Respondent ORDER Per Pramod Kumar, VP: 1. By way of the present appeal the appeal, the assessee has challenged correctness of the order dated 24th March 2021 passed by the learned Principal Commissioner under section 263 r.w.s. 143(3) of the Income Tax Act, 1961, on the following grounds:- Order u/s.263 of the Act is bad in law, illegal, ultra-vires 1. erred in passing the order under section 263 of the Income-tax Act, 1961 (the Act), by holding that the Assessment Order passed by the Deputy Commissioner of Income Tax -8(1)(1), Mumbai (hereinafter referred to as AO) u/s.143(3) of the Act dated 29.06.2017 is erroneous and prejudicial to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings by the learned Principal Commissioner initiated the revision proceedings under section 263. The justification for this initiation of revision proceeding has been set out by the learned Principal Commissioner as follows:- 2. On perusal of the assessment records it was seen that, note 7 of the Financial Statement for the year ended 31 March 2015 (relevant to AY 2015-16) reveals that, the company was making expenditure under Capital Work in Progress and Intangible Asset under development, and had capitalized during the year software expenses of ₹ 6.45 crore under the head Intangible Assets. Further under the Plant and Machinery head, total block of ₹ 5.47 crore was reflected. However, while claiming depreciation under Income Tax Act, both of these assets were shown as computers with aggregate value of ₹ 11,47,71,456 and depreciation @ 60% amounting to ₹ 6,87,12,817 has been claimed by the assessee and allowed in assessment. The rates of depreciation can be different as per Companies Act and as per Income Tax Act, however the value of addition or classification of block of asset must not change. From the breakup of the project development expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove, even if it is falsely assumed that the depreciation claimed by the Company is in excess of what is allowed under the provisions of the Act, there is no loss of revenue to the exchequer as change in the rate of depreciation only results into a timing difference and would not have any impact as the Company is into losses.' Assessee has placed its reliance on following judicial pronouncements: CIT v. Gabriel India Ltd. (1993] 203 ITR 108 (Bom) CIT vs. Vikas Polymers (2012] 341 ITR 537 (Del) Mumbai Tribunal in the case of Netscribes (India) Pvt. Ltd. vITO (2014-TIOL-933- ITAT-MUM) Hindustan Construction Co. Ltd. v. DCIT (2013| 140 ITD 642 (Mum.) 5. None of these submissions however impressed the learned PCIT who rejected these submissions and observed as follows:- 5. The contention of the assessee, that the Order passed by the AO is not erroneous in so far as being prejudicial to the interest of the revenue, is not found to be acceptable. Assesse stated that there is no loss of revenue to the exchequer as change in the rate of depreciation only results into a timing difference and since company is in losses it will have no imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted by the assessee were duly submitted by the assessee . Everything thus hinges on whether assessee s submission being accepted can be faulted with, whether the assessee ought to have produced the appropriate evidence and whether non-recording of the reasons for accepting explanation will render the order erroneous and prejudicial to the interest of the revenue. 8. In the case of JRD Tata Trust vs DCIT [(2012) 122 taxman.com 275 (Mum)], a coordinate bench of this Tribunal, speaking through one of us (i.e. the Vice President) and in the context of exercised of powers under section 263, observed as follows:- 21. That brings us to our next question, and that is what a prudent, judicious, and responsible Assessing Officer is to do in the course of his assessment proceedings. Is he to doubt or test every proposition put forward by the assessee and investigate all the claims made in the income tax return as deep as he can? The answer has to be emphatically in negative because, if he is to do so, the line of demarcation between scrutiny and investigation will get blurred, and, on a more practical note, it will be practically impossible to complete all the assessments allott ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts as emerging out of the scrutiny are apparently in order, and no further inquiry is warranted in his bonafide opinion, he need not conduct further inquiries just because it is lawful to make further inquiries in the matter. A degree of reasonable faith in the assessee and not doubting everything coming to the Assessing Officer's notice in the assessment proceedings cannot be said to be lacking bonafide, and as long as the path adopted by the Assessing Officer is taken bonafide and he has adopted a course permissible in law, he cannot be faulted- which is a sine qua non for invoking the powers under section 263. In the case strial Co Ltd v. CIT [(2000) 243 ITR 83 (SC)], Hon'ble Supreme Court has held that Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken ..... X X X X Extracts X X X X X X X X Extracts X X X X
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