TMI Blog2023 (11) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... the same is tantamount to violation of Rule 18BBB of the Act, such fact needs verification, which the AO has overlooked. Assessee s contention that proceedings u/s 263 cannot be used for substituting opinion of the AO by date the principal CIT, though a specific query regarding deduction u/s 80IA was asked by the Ld. AO, but the requirement of separate balance sheet of the power generation unit for admissibility of deduction u/s 80IA as prescribed in Rule 18BBB, wherein clause 2 of the said Rule specifies that A separate report is to be furnished by each undertaking or enterprise of the assessee claiming deduction u/s 80-I or 80-IA or 80-IB [or 80-IC] and shall be accompanied by the Profit and Loss Account and Balance Sheet of the undertaking or enterprise as if the undertaking or the enterprise were a distinct entity. Since, such a specific requirement of the Section for allowing the deduction was not touched by the Ld. AO, this makes the order of Ld. AO erroneous, which was without proper enquiries and examination of the records. Assessee also argued about the eligibility of the business for deduction u/s 80IA, have explained the process of business, power generation and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and allowed to the appellant since AY 2012-13 onwards and also same is allowed and accepted during earlier years scrutiny assessment s order u/s 143(3) of the Act to prove that there is no violation of provisions of section 801A(4)(iv) by the appellant. 6. The appellant reserves the right to add, amend or modify any of the ground/s of appeal. 2. While the matter is called for the hearing, the registry has indicated that the appeal of the assessee in the present case is barred by limitation by 206 days. The Ld. AR of the assessee has put forth the explanation to the cause for delay that, the erstwhile counsel of the assessee Shri Suraj Jhawar, who had appeared and represented the case of the assessee before lower authorities have opined that there is no requirement to file any appeal before the ITAT against the order passed u/s 263. An affidavit of the director of the company, Shri Vijay Anand Jhawar has been furnished stating the same reason. It is submitted that, the assessee later consulted with other senior counsel and as advised had appointed a new counsel for the matter on 3rd November 2022, thereafter, the appeal was filed against the order u/s 263 with impugned de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The case of the assessee was subsequently, selected for complete scrutiny through CASS u/s 143(3) and the assessment order was passed on 27.12.2019, accepting and assessing the total income of the assessee at the amount as declared by the assessee under its return of income. 5. Later on, Ld. PCIT has perused the case records of the assessee, having observed that certain issues which needs attention of the Ld. AO during the assessment proceedings were not properly been verified, inadequately enquired or not examined by the Ld. AO, thus are fit for invoking the revisionary proceedings as prescribed under explanation 2 of section 263 of IT Act. 6. Ld. PCIT has raised the following issues while exercising the powers conferred upon him u/s 263. On perusal of the case revealed that the following issues: (i) The assessee had only maintained the profit and loss account duly signed by Chartered Accountant in respect of power unit separately, but not maintained the balance sheet duly signed by the Chartered Accountant in respect of power unit separately, which is violation of Rule 18B (ii) Further, as per computation attached with Income Tax return for AY 2017-18, ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, the assessment order passed u/s 143(3) of the Act is erroneous in so far as it is prejudicial to the interest of the revenue in light of the section 263 of the IT Act, 1961. 7. In view of the aforesaid facts, a show cause notice u/s 263 for 20/12/2021, was issue to the assessee incorporating the above facts to furnish reply/explanations in support of its claim. 8. In response assessee had furnished a written submission on 29/12/2021. Nonetheless, considering the response of the assessee which was not found convincing by the Ld. PCIT, he observed that on the issues raised in the notice u/s 263, the Ld. AO was failed in conducting adequate enquiries, therefore considering the provisions of explanations 2 of section 263 which is effective from 01/06/2015, applicable on the year under consideration, so, the order of AO was deemed to be erroneous in absence of enquiries or verification. Certain case laws were relied upon by the PCIT and has concluded that I am of the considered opinion that assessment order is erroneous insofar as its prejudicial to the interest of revenue in view of section 263 of the I.T. Act, thus, for set aside the assessment order to the AO, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the above, since the additional ground of appeal raised goes to the root of the matter having a vital bearing on the tax liability of the appellant, it is prayed that the additional grounds of appeal raised may kindly be admitted exercising the plenary powers vested in your honors under Rule 11 of the Appellate Tribunal Rules, 1963 r.w.s. 254 of the Income Tax Act, 1961. 11. Apropos, the aforesaid additional ground raised by the Ld. AR, it was the submission that the provisions of sections 263 has been triggered only based on the borrowed satisfaction i.e. Audit objection and not based on independent application of mind by the Ld. PCIT, therefore, the order passed by Ld. PCIT on this ground alone is bad in law, void, invalid and liable to be quashed. A copy of the audit report dated 05-03- 2021, raising such objection is also enclosed with the additional ground. 12. Contradicting to the additional ground raised by the assessee, Ld. CIT-DR has submitted that even if the issue has been raised by the audit team of the department but the notice u/s 263 was issued by the Ld. PCIT after his own satisfaction and with due application of mind, it is further mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verification of the issue and, therefore, the same was erroneous so far as prejudicial to the interest of revenue, then the PCIT has to decide and to consider the matter to exercise the powers u/s 263, so as to remove the error in the order of AO by initiating the revisionary assessment proceedings. Under such scenario, it cannot be construed that, if an issue is surfaced by the audit team, the Ld. PCIT has no powers to touch the said issue by way of invoking the provisions of section 263, rather with effect from 01-06-2015 after introduction of explanation 2 in section 263, the Ld. PCIT s powers are further strengthen and widened to exercise the same, in the circumstances, wherein in the opinion of the PCIT, (a) the order passed by the AO was without making inquiries or verifications which should have been made; (b) allowing any relief without enquiry into claim, the order has not been made in accordance with any order; (c) direction or instruction by the board u/s 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turing of sponge iron and MS Ingot and generation of power through WHRB which is considered as an eligible business under the provisions of section 80 IA. 3. The Ld. PCIT has erred in concluding that the appellant has violated the provisions of Section 80AC of the act which is factually incorrect. The ROI was filed on 27.10.2017 and revised on 08.08.2018, however. the deduction for 80IA was already claimed in the original return itself. 4. The appellant also relies on various case laws in support of the above submission. With respect to Ground - 3 and 4 5. That, the Ld. PCIT has invoked the provisions of Section 263 of the Income tax act, 1961 to replace the opinion of the Ld. AO with that of the Ld. PCIT which is not tenable in law and therefore the order of the Ld. PCIT is liable to be quashed. The Ld. PCIT has erred by invoking the provisions of Section 263 of the Income Tax Act, 1961 on the premise of no enquiry. What may seem right to the Ld. AO may not seem right to the Ld. PCIT. The facts of the case are operating within the corners of law and therefore Section 263 cannot be invoked to replace the opinion of the Ld. AO with that of the Ld. PCIT. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to facts are subject to verification, therefore, Ld. PCIT has rightly set aside the order of Ld. AO, hence, the order of Ld. PCIT u/s 263, deserves to be upheld. 19. We have considered the rival contentions, perused the material available on records, legal pronouncements relied upon and the relevant provisions of the Act. In the present case, factually, on perusal of acknowledgement of the Income Tax return in ITR-6 for the AY 2017-18 filed by the assessee placed that page no. 37 of the assessee s PB(APB), it is apparent that the original return u/s 139(1) was filed on 27- 10-2017 and deduction under chapter VI-A was also claimed, however, assessee has revised its return on 08-08-2018 in ITR-6 with the same deduction under chapter VI-A, copy of the same is furnished act page no. 38 of the APB. This fact clearly establishes that the return of income filed by the assessee for the relevant AY was within the specified date for submission of return u/s 139(1) i.e., 7th November, 2017 (extended by CBDT from 31st October, 2017 to 7th November, 2017), assessee s response dated 29-12-2021 towards the notice issued u/s 263 on 20-12- 2021 also have such explanation before the Ld. PCIT a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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