TMI Blog2022 (5) TMI 1482X X X X Extracts X X X X X X X X Extracts X X X X ..... le of consistency which the AO has done in the present case. It is not a case of no enquiry but the AO has made proper, sufficient and adequate enquiry on the issue of allowability of claim of depreciation. CIT (E) was not right in passing the impugned revisionary order u/s.263 of the Act in violation of principles of natural justice alleging the assessment order as erroneous and prejudicial to the interest of the revenue and directing the AO to redo the assessment without making an enquiry himself. In the case of CIT vs Jyoti Foundation [ 2013 (7) TMI 483 - DELHI HIGH COURT ] ITO vs DG Housing Projects Ltd [ 012 (3) TMI 227 - DELHI HIGH COURT ] Pr. CIT vs Delhi Airport Metro Express Pvt Ltd. [ 2017 (9) TMI 529 - DELHI HIGH COURT ] we are inclined to hold that the impugned revisionary order of ld CIT is not sustainable being bad in law and passed in violation of principles of natural justice. Therefore, the impugned notice u/s.263, revisionary order and all consequential proceedings and orders thereto are hereby quashed. Appeal of the assessee is allowed. - ITA NO. 134/CTK/2021 - - - Dated:- 17-5-2022 - SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND ARUN KHODPIA, ACCOUNTA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account, the assessee had declared income of Rs.25,63,08,085/- and claimed administrative expenses of Rs.18,60,27,027/-, interest other financial expenses of Rs.1,37,10,317/-, depreciation of Rs.4,77,03,665/-, excess of income over expenditure has been declared at Rs.88,67,076/- . In Form 10B, the amount of income of the previous year applied to charitable or religious purposes in India has been declared at Rs.88,67,076/- In this regard, attention is invited to the judicial pronouncement in the case of ACIT vs Grama Vidiyal Trust, reported in 71 taxmann.com 88, the ITAT, Chennai D Bench held that where the cost of asset was allowed u/s.11 as application of income in the earlier assessment years, the assessee would not be entitled to depreciation. It is seen that the assessee had gross block of fixed assets of Rs.96,78,84,619/- as on 1.4.2015. Since this cost of asset has already been allowed u/s.11, the assessee cannot claim depreciation of Rs.4,77,03,665/- as application of trust income for charitable purposes. The amount of income accumulated/set apart, therefore, works out to Rs.5,65,70,741/-, which exceeds 15% of the income derived from property held under the trust. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv) ITAT Cuttack in the case of Sangram Keshari Samantaray vs Pr. CIT in ITA No.12/CTK/2020 order dated 28.10.2021 11. Ld A.R. vehemently pointed out that in the notice u/s.263(1) of the Act and in the impugned order u/s.263 of the Act, the CIT (E) incorrectly noted that the AO did not make any proper enquiry to ascertain the true facts and not his mind while passing the assessment order as during the scrutiny assessment proceedings, the Assessing Officer issued notice u/s.142(1) of the Act vide dated 6.9.2018 alongwith questionnaire wherein, in Q. No.10, it was specifically asked to the assessee please furnish the details of depreciation claimed and said show cause notice was replied by the asssessee through e- proceedings response acknowledgement No.24091810416508. Ld A.R. further pointed out that when the AO during the scrutiny assessment proceedings has raised 15 questions to the assessee including Q.No.10, asking the assessee to furnish details of depreciation claimed and after taking on record receipt of the assessee and satisfied himself that the assessee has not claimed amount of purchase of assets as an application of income in the income and expenditure account, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and examination by the CIT (E) himself, the scrutiny assessment order cannot be alleged as erroneous and prejudicial to the interest of the revenue. Ld A.R. lastly submitted that the order has been passed by the AO after considering all relevant materials and taking into consideration consistency situation pertaining to claim of depreciation by the assessee since in several preceding assessment years, the AO was right in allowing the claim of depreciation as application of income to the assessee, therefore, the assessment order cannot be held as erroneous and prejudicial to the interest of the revenue, therefore, revisionary order may kindly be quashed. 13. Replying to above, ld CIT DR supported the order of the ld CIT(E) and further submitted that since the cost of asset has already been allowed u/s.11, the assessee cannot claim depreciation as application of trust income for charitable purposes. This aspect has not been examined by the AO while passing the assessment order u/s.143(3), therefore, the Ld CIT(E) was justified in directing the AO to redo the assessment order. 14. Ld CIT DR submitted that the assessee has not submitted the copy of reply before the Bench and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed up and agitated by ld CIT (E) that the AO allowed depreciation claimed by the assessee as application of money without any verification and examination whereas the AO during the assessment proceedings, issued notice u/s.142(1) of the Act alongwith questionnaire, wherein in Q. No.10, assessee was asked to submit details of depreciation claim and this notice was replied by the assessee by e-proceedings and the assessee submitted that since the assessee is not claiming amount at the time of purchase of assets as application of income, therefore, the assessee has claimed depreciation as application of income. Ld A.R. submitted that from the audited annual accounts and financial statement for past five years including the present assessment year 2016-17 clearly reveals that the assessee has not claimed amount of utilization for purchase of assets in the year of purchase as application of income and only claimed depreciation thereon as application of income which is allowable. 17. We have heard the rival submissions and perused the record of the case. The sole point taken by the ld CIT(E) for exercising his power u/s.263 of the Act is that the Assessing Officer without examining th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g or causing to be made such inquiry as he deems necessary, pass an order enhancing or modifying the assessment or canceling the assessment of the ITO and directing a fresh assessment. Thus, the statute itself has made a provision for an effective opportunity of being heard to the assessee before the Commissioner passes an order under s. 263. In this case, the CIT (E) having passed an order without giving the assessee an opportunity of being heard, can be taken to have infringed the statutory provision and, therefore, the order passed by him suffers from procedural irregularity. In the face of s. 263 in which the principles of natural justice have been embedded as a statutory procedure to be followed by the Commissioner before passing an order in his revisional jurisdiction, the order of the Commissioner in the present case suffers from procedural violation or irregularity and not from violation of abstract principles of natural justice. If the principles of natural justice are not embedded in the statute and those principles are found to have been violated, then the order can be said to be one passed in violation of the principles of natural justice. 23. In the present case, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act, which was replied by the assessee by e-compliance, acknowledgement No. being XXXX1375 on 21.9.2018, wherein, details of depreciation claimed have been submitted by the assessee before the AO. This fact has not been controverted by ld CIT DR except by stating that the copy of details have not been submitted and there is no discussion in the assessment order. We are of the considered view that when the AO has issued notice alongwith details of questionnaire, which was replied by the assessee, as has been done in the present case by the assessee through e-compliance supported by relevant documentary evidence/financial statement, therefore, it cannot be alleged that the AO has not made any enquiry. In the present case, keeping in mind the entirety of the facts and circumstances of the case, we are of the considered view that the AO has made sufficient and adequate enquiry on the issue of allowability of claim of depreciation as application of income by way of issuing notice and after considering the reply of the assessee, took a plausible view, therefore, we decline to agree with the contention of ld CIT (E) that the AO did not make any enquiry on true facts and not appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, 357 ITR 388 (Del); (ii) ITO vs DG Housing Projects Ltd., 343 ITR 329 (Del) (iii) Pr. CIT vs Delhi Airport Metro Express Pvt Ltd., 38 ITR 8(Del). 29. Ld CIT DR relied on the decision of ITAT Chennai in the case of M/s. Medall health Care pvt Ltd. Vs Pr.CIT 85 taxmann.com 211 (Chennai). On perusal of the said decision, we find in that case, the AO has not discussed anything in the assessment order regarding the issue pointed out by ld Pr. CIT but in the present case, the AO on the particular point i.e. claim of depreciation, asked the question and after being satisfied with the reply of the assessee, has allowed the same. In this context, the ld A.R. has placed reliance on the order of ITAT Mumbai Bench in the case of Reliance Payment Solutions ltd vs Pr. CIT (2022) 136 taxmann.com 277 (Mumbai), wherein, it was held thus: Where the specific issue raised in the revision order was specifically looked into, detailed submissions were made and these submissions were duly accepted by the Assessing Officer, PCIT cannot invoke powers of revision u/s 263 merely because the Assessing Officer did not write specific reasons for accepting the explanation of the assessee cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mills [(1896) 2 Ch 279, 288)], in respect of the role of an auditor, would equally apply in respect of the role of the Assessing Officer as well. Their Lordships held that an auditor (read Assessing Officer in the present context) is not bound to be a detective, or, as was said, to approach his work with suspicion or with a foregone conclusion that there is something wrong. He is a watch-dog, but not a bloodhound. . In our considered view, the AO cannot remain passive on the facts which, in his judicial opinion, need to be probed further, but then an Assessing Officer, unless he has specific reasons to do so after a look at the details, is not required to prove to the last point everything coming to his notice in the course of the assessment proceedings. In our humble opinion, when the facts as emerging or revealed out of the scrutiny alongwith explanation and reply of the assessee 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. In the present case, the AO has issued notice u/s.142(1) of the Act alongwith questionnaire asking the assessee de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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