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TMI Blog2023 (9) TMI 1447X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Ld PCIT erred on facts and in law in setting aside the order of the Assessing Officer without justifiable reasons." 2. Facts of the case which can be stated shortly are as follows: The assessee before us is a limited company and filed its return of income for the assessment year 2018-19 on 16.10.2018, declaring total income at Rs.13,64,72,520/-. The case was selected for complete scrutiny and the assessment order was passed u/s 143(3) on 11.02.2021 by accepting the returned income of the assessee-company. 3. Later on, Learned Principal Commissioner of Income Tax-Valsad (in short "ld. PCIT"], has exercised his jurisdiction under section 263 of the Income Tax Act, 1961. On perusal of records, it was noted by ld PCIT that in Note 13 of the Annual Report of the company for financial year 2017-18, the assessee-company has shown addition to the fixed asset in the following manner: (amount in Rs) Tangible asset 38,24,29,117 Intangible asset 8,00,000 Capital work-in-progress 5,03,55,149 4. While in the return of income and in ITR the details are given as under: (amount in Rs) Tangible + intangible asset 35,87,54,241 Capital work-in-progress 5,03,55,149 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case the assessee has purchased fixed asset amounting to Rs.30.84 Crores and claimed the depreciation as well as additional depreciation during the year under consideration, none of these aspects have been verified defying the CBDT circular as well as duty cast upon the Assessing Officer...." Now sir in reference to above we would like to state and submit our response as under: 1) We had received a notice u/s 143(2) intimating that our case has been selected for scrutiny of return filed for A.Y 2018-19 vide notice dtd.22/09/2019. There was no mention on the notice that the scrutiny proceedings are complete scrutiny on the notice. We would like to submit copy of notice u/s 143(2) issued in our case for A.Y. 2016-17 as "Annexure A", wherein it has been clearly mentioned that the case is selected for complete scrutiny. Since no such information is mentioned in notice issued for A.Y. 2018-19 and issues are reported for selection of scrutiny, it is evident that the scrutiny selected was for limited reasoning. 2) As per the guidelines of CBDT the reasons for which scrutiny has been selected in the case of "Limited Scrutiny" are to be informed to assessee and accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation amounting to Rs.12,04,28,394/- which is as per the provisions of Income Tax Act, 19961 and also as reported by the Tax Auditor in Form 3CA3CD filed for the year under consideration. Copy of Computation of income and Form 3CA-3CD are attached as Annexure D and Annexure E respectively. Kindly consider the above factual and legal position of the case and drop the contemplated revision u/s 263 of the Income Tax Act, 1961 of the assessment completed for A.Y 2018-19." 7. However, ld PCIT rejected the contention of the assessee and observed that assessee`s case was selected for complete scrutiny and the same was clarified by the Instruction of the CBDT. The ld PCIT also observed that different figures have been given by the assessee for addition to the assets in depreciation chart and therefore this issue ought to have been verified / examined by the assessing officer, however assessing officer failed to do so. Therefore, ld PCIT held that assessment order u/s 143(3) of the Income Tax Act 1961 in the case of M/s Maheshwari Logistics Ltd, for assessment year (A.Y.) 2018-19, passed on 11.02.2021 by the Assessing Officer is erroneous in so far it is prejudicial to the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs by way of tax audit report. The depreciation schedule was also submitted by the assessee bay way of audited books of accounts as per companies Act. The assessee has not claimed the depreciation in tax audit report (for income tax purposes) as the new assets so purchased were not put to use. However, for Companies Act purpose, the assessee has shown depreciation in the audited books of accounts. The Principle Commissioner of Income Tax has caught the difference between the depreciation schedule prepared as per Income Tax Act and the depreciation schedule prepared by the assessee, as per companies Act, and stated in his revision order that the assessing officer has not examined the depreciation properly. The ld Counsel submitted that tax audit report was there before the assessing officer and the audit report as per companies Act and the balance sheet and profit and loss account, as per the companies Act were also there before the assessing officer. Therefore while doing the limited scrutiny the assessing officer could have examined the issue raised by ld PCIT. There is no default on the part of the assessee to submit the depreciation schedule as per companies Act and as per Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plete failure on the part of the Assessing Officer to verify the claim of depreciation. Thus, ld DR further pointed out that Assessing Officer has not raised the question relating to depreciation therefore it is a complete nonapplication of mind on the part of Assessing Officer, hence the assessment order so passed by the assessing officer is erroneous as well as prejudicial to the interest of revenue. Therefore, the order passed by the Ld. PCIT may be upheld. 13. We have heard both sides and perused the materials available on record. We note that assessee's case was selected for "limited scrutiny", which is evident from page 103 of paper book, wherein notice u/s 143(2) of the Act is placed. The said notice is reproduced below for ready reference: After going through the above notice u/s 143(2) of the Act, it is clearly evident that assessee's case was selected for limited scrutiny only for two issues viz: (i) refund claim and (ii) ICDS compliance and adjustment. Therefore, we note that assessee's case was selected for 'limited scrutiny' and the said 'limited scrutiny' was not converted by the assessing officer in the 'unlimited scrutiny' by taking the permission from the higher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has shown depreciation in the audited books of accounts, this difference between the depreciation schedule prepared as per Income Tax Act and the depreciation schedule prepared by the assessee, as per companies Act, has been raised by ld PCIT. We note that there is no default on the part of the assessee to submit the depreciation schedule as per companies Act and as per Income Tax Act before the assessing officer. Therefore, on merit also the assessing officer has examined the issue which was raised by the ld. Principal Commissioner of Income Tax. The ld PCIT also stated in his order that depreciation issue has not been examined by the assessing officer as per CBDT instruction, in this regard ld Counsel stated that CBDT Instruction No.9/2007 dated 11.09.2007 pertains to the issue of the allowability of depreciation and brought forward losses/unabsorbed losses, however in assessee`s case there is no any such issue pertaining to brought forward losses and unabsorbed depreciation exist. Hence there is no need to examine by assessing officer the issues such as brought forward losses and unabsorbed depreciation, as these issues are not existed in the balance sheet and financial stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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