TMI Blog2023 (9) TMI 1335X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted before the Assessing Officer. We note that Assessing Officer could not download the unit-wise balance sheets due to technical error, therefore ld. Counsel submitted that there is no mistake on the part of the assessee in submitting the unit-wise balance sheets. From the judgment of the Hon'ble Gujarat High Court in the case of PCT vs. M/s. Shreeji Prints Pvt. Ltd. [ 2020 (2) TMI 1021 - GUJARAT HIGH COURT] it is vivid that the revisional powers cannot be exercised for directing a fuller inquiry to merely find out if the earlier view taken is erroneous particularly when a view was already taken after inquiry. A mere observation that no proper details have been obtained, cannot be sufficient to come to a conclusion that the AO did not make proper and adequate inquiries which he ought to have made in the given facts and circumstances of this case. None of the reasons set out by the PCIT for invoking the jurisdiction u/s 263 of the Act are sustainable. The impugned order of the PCIT has to be quashed for the reason that order of the AO sought to be revised in the impugned order was neither erroneous nor prejudicial to the interest of the revenue for the reason of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. On verification of the records, it was observed by ld PCIT that the assessee has claimed deduction of Rs.3,10,98,776/-, u/s 80IA of the Act, in respect of income generated from six wind mills. As per the Rule 18BBB of the Income Tax Rules, the eligible entity is liable to file separate report for each of the undertaking or enterprise claiming deduction u/s 80I or 80IA or 80IB or 80IC, accompanied by the Profit and Loss account and Balance Sheet of the undertaking or enterprise, as if each undertaking or enterprise were a distinct entity. The ld PCIT quoted the provisions of Rule 18BBB of the Income Tax Rules, 1962, which are reproduced as under: 18BBB- Form of audit report for claiming deduction under section 80-I or section 80-IC 18BBB.(1) The report of the audit of the accounts of an assessee, which is required to be furnished under sub-section (7) of section 80-IA or subsection (7) of section 80-I, except in the cases of multiplex theatres as defined in sub-section (7A) of section 80IB or convention centers as defined in sub-section (7B) of section 80-IB [or areas as defined in subsection (11B) of section 80-IC], shall be in Form No.10CCB. (2) A separate report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Rules for claiming deduction u/s 80IA of the Act. Thus, the action of the Assessing Officer and the assessment order in question is erroneous in so far as it is prejudicial to the interests of the revenue within the meaning of section 263 of the Act, 1961. 6. In view of the above, it was observed by ld PCIT that while finalizing the assessment proceedings, the AO has allowed the deduction of Rs.3,10,98,776/- claimed u/s 80IA of the Act despite the fact that the assessee did not furnish all the supporting documents required as laid down in Rule 18BBB of the income Tax Rules for claiming deduction u/s 80IA of the Act This shows lack of verification and application of mind. Therefore, ld PCIT issued a show cause notice to the assessee bearing DIN No ITBA/COM/F/17/2022-23/1047640899(l) dated 25.11.2022 which was duly served upon the assessee. 7. In compliance with the above show cause notice, the assessee has furnished its reply on 02.12.2022 and has furnished the submission before ld PCIT. However, ld PCIT after carefully considered the facts of the case, assessment records and written reply/explanation/submission furnished by the assessee, observed that the assesses had fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel also submitted that before the Assessing Officer, the assessee has explained each and every windmill, the explanation given by the assessee for each and every windmill, is placed at page no.133 of paper book. The ld. Counsel also stated that for each and every windmill, the assessee submitted audit report unit-wise, profit and loss account unit-wise, combined balance sheet. The assessee also uploaded the unit-wise balance sheet of windmill but the Assessing Officer could not download from net, however assessee s side the assessee has submitted each and every document during the assessment proceedings. The ld. Counsel also submitted that during the revision proceedings under section 263 of the Act, the assessee submitted unit-wise balance sheet and unit-wise profit and loss account, unit-wise audit report before the ld. PCIT, however the ld. PCIT has not even conducted minimum enquiry from his side. Therefore, ld Counsel contended that order passed by the assessing officer is neither erroneous nor prejudicial to the interest of Revenue, hence order of ld PCIT may be quashed. 10. On the other hand, Ld. Departmental Representative (ld. DR) for the Revenue submitted that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20, furnished form 10CCB with respect to all the six wind mill units, unit-wise profit and loss account, Balance sheets and explanation for each unit. We note that Assessing Officer, vide its notice dated 16.01.2020 under section 142(1) of the Act, raised the query relating to deduction and exemption claim by the assessee which is placed at page no.22 of paper book. The relevant question raised by the Assessing Officer by way of notice under section 142(1) of the Act, is reproduced below: 5. Kindly give details of deduction and exemptions claimed and explain allowability thereof with respect to various provisions of the Income Tax Act. 15. In response to notice under section 142(1) of the Act, the assessee has submitted unit-wise reply and detailed explanation before the Assessing Officer which is placed at page no.126 to 128 of paper book and the assessee also submitted further reply before the Assessing Officer. We note that Assessing Officer has issued further notice under section 142(1) of the Act, which is placed at page no.129 of paper book, wherein the Assessing Officer asked the assessee to submit the details and documents of windmill unit-wise. In response to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial foundation for claiming allowance and the latter is the requirement of furnishing proof that foundation for claiming such deduction has been laid. While compliance with the former before the deduction is claimed is mandatory and so far as manner of submitting proof of such compliance of filing along with the return is concerned, is directory because such requirement falls in the realm of procedure for furnishing evidence in support of the claim and which can be furnished at the time while allowance or disallowance under section 80J is being considered by the concerned authority. Thus, the provision of section 80J(6A) to the extent it requires furnishing of the auditor's report in the prescribed form along with the return is directory in nature and not mandatory. As the provision of furnishing of the report in the prescribed form is held to be directory, the assessee can be permitted to produce such report at a later stage when the question for disallowance arises during the course of the proceedings in a given case, it will depend upon the facts and circumstances of each case and, therefore, the assessee may be permitted to produce such report, if it has not been pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice is required to be given to the assessee. Giving of this opportunity will include opportunity to erase procedural defect, if any, which is directory in nature. In the instant case, the claim made by the assessee though not admissible for want of the auditor's report on record, yet the same was allowed under a mistake by the Assessing Officer leaving no opportunity to the assessee to complete the requirements. The condition of non-fulfilment of the requirement under sub-section (6A) was made known to the assessee during the proceedings under section 263 although the assessee asked for an opportunity to produce the auditor's report to fulfil the requirements under section 80J(6A), the Commissioner ought to have afforded an opportunity to the assessee to furnish that proof and then examined the admissibility of the claim in the light of the proof furnished. 16. Our view is fortified by the judgment of the Hon'ble Gujarat High Court in the case of PCT vs. M/s. Shreeji Prints Pvt. Ltd., in R/Tax Appeal No.828 of 2019, dated 03.02.2020, wherein it was held as follows: 3.3 The Principal Commissioner of Income Tax [for short, 'the PCIT'] invoked Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of income of the parties, audited balanced sheet and profit and loss account of the parties and bank pass book and bank statement of the parties. During the course of assessee proceedings, form these facts it is clear that the assessee has not only proved the from these facts it is clear that the assessee has not only proved the identity of the lenders but also the genuineness of the transactions and credit worthiness of the lenders. Accordingly, the Ld. AO after verifying the details of unsecured loans being satisfied, accepted the submissions of the assessee which leads to infer that the Assessing Officer had made full enquiries of unsecured loans by raising the queries and calling for the all information in respect of the loan taken along with details evidences in support thereof and the same were also duly replied by the assessee and on receipt of all the details of evidences, the unsecured loans received by the assessee were accepted by the Assessing Officer and the assessment was finalised u/s. 143(3) of the Act on 15.03.2016. We also note that there was audit objection in the case of the assessee. The language of audit objection and show-cause notice under section 263 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended by the Learned Counsel that Clause (a) (b) of Explanation 2 of Section 263 are not applicable as the Assessing Officer has made enquiry and verification which should have been made. Further, in the show cause notice, the Explanation 2 of section 263 was not invoked by the PCIT and it was referred in the order u/s. 263 of the Act. Therefore, in the light of decision of the Coordinate Bench of Mumbai in the case of Narayan Tatu Rane 70 taxmann.com 227 (Mum. Trt.) [PB 1531561 wherein held that explanation cannot laid to have over ridden the law as interpreted / the various High Courts where the High Courts have held that before reaching the conclusion that the order of the Assessing Officer is erroneous prejudicial to the interest of Revenue. The CIT himself has to undertake some enquiry to establish that the assessment order is erroneous and prejudicial to the interest of Revenue. The ld. Counsel relied on the decision of M/s. Amira Pure Foods Pvt. Ltd., Vs. PCIT in ITA No.3205/Del/2017 and Ahmedabad Tribunal in the case of Torrent Pharmaceuticals Ltd. Vs. DCIT [2018] 97 TAXMANNCOM 671 (Ahmedabad Tribunal). it is clear from the enquiries made by the Assessing Officer and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner 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, prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. 53.3 Applicability: This amendment has taken effect from 1st day of June, 2015. 17 We thus find merit in the plea of the assessee that the Revisional Commissioner is expected show that the view taken by the AO is wholly unsustainable in law before embarking upon exercise of revisionary powers. The revisional powers cannot be exercised for directing a fuller inquiry to merely find out if the earlier view taken is erroneous particularly when a view was already taken after inquiry. If such course of action as interpreted by the Revisional Commissioner in the light of the Explanation 2 is permitted, Revisional Commissioner can possibly find fault wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, by invocation of Explanation in the order without confronting the assessee and giving an opportunity of being heard to the assessee is not appropriate and sustainable in law. 6. Thus, the Tribunal has considered in detail the aspect of revisional power to be exercised by the PCIT in the facts of the case and has given a finding of facts that the Assessing Officer has made inquiries in detail and after applying mind, accepted the genuineness of loans received by the respondent assessee from the aforesaid two companies and such view of the Assessing Officer is a plausible view, and therefore, the same cannot be said to be erroneous or prejudicial to the interest of the Revenue. 7. In view of such finding of facts arrived by the Tribunal, no questions of law much less of any substantial questions of law arise out of the impugned order passed by the Tribunal. The appeal, therefore, fails and is dismissed. No order as to costs. 17. From the above judgment of the Hon'ble Gujarat High Court in the case of PCT vs. M/s. Shreeji Prints Pvt. Ltd. (supra), it is vivid that the revisional powers cannot be exercised for directing a fuller inquiry to merely find ou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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