Hitachi Home & Life Solution (India) Ltd., Ahmedabad V. The DCIT, Cir.- 4, Ahmedabad

ITA 1427/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9514 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-11-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 14-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHANKERLAL MEENA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Depreciation; Principle of natural justice; Retrospective amendment; Assessment record
• Section: 143(3); 115JB; 263; 63

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.1427/AHD/2013 ( / ASSESSMENT YEAR : 2007-08) HITACHI HOME & LIFE SOLUTION (INDIA) LTD. 9 TH FLOOR ABHIJEET NR.MITHAKHALI SIX ROAD AHMEDABAD / VS. THE DCIT CIRCLE-4 AHMEDABAD # ./ ./ PAN/GIR NO. : AABCA 2392 K ( #% / APPELLANT ) .. ( &#% / RESPONDENT ) #%' / APPELLANT BY : SHRI S.N. SOPARKAR, AR &#%(' / RESPONDENT BY : SHRI SHANKERLAL MEENA,CIT-DR )*(+ / DATE OF HEARING 16/11/2016 ,-./(+ / DATE OF PRONOUNCEMENT 12/01/2017 / O R D E R PER PRADIP KUMAR KEDIA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX-II, AHMEDABAD (CIT IN SH ORT) DATED 14/03/2013 PASSED FOR THE ASSESSMENT YEAR (AY) 2007 -08. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. IN LAW AND IN THE FACTS AND THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD.CIT HAS GROSSLY ERRED IN HOLDING THE DULY CO MPLETED ASSESSMENT AS ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF REVENUE ITA NO.1427/AHD /2013 HITACHI HOME & LIFE SOLUTION (INDIA) LTD. VS. DCIT ASST.YEAR 2007-08 - 2 - AND HAS CONSEQUENTLY ERRED IN INVOKING THE PROVISIO NS OF SECTION 263 OF THE ACT. 2. IN LAW AND IN THE FACTS AND THE CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD.CIT HAS GROSSLY ERRED IN HOLDING THAT THE PR OVISION MADE FOR LOSS ON ASSETS HELD FOR DISPOSAL SHOULD BE ADDED TO THE BOOK PROFIT U/S.115JB OF THE ACT. HE OUGHT TO HAVE APPRECIATED , INTER ALIA, THAT IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE APPE LLANTS CASE, THOUGH THE TERM USED AS PROVISION, IN FACT IT IS THE ACTUAL DIMINUTION IN THE VALUE OF THE ASSETS WHICH IS BEIN G RECOGNIZED IN FORM OF EXTENDED DEPRECIATION AND HENCE EVEN ON MER ITS, THERE IS ABSOLUTELY NO WARRANT/JUSTIFICATION FOR INITIATING THE PROCEEDINGS U/S.263 OF THE ACT. 3. WITHOUT PREJUDICE, IN LAW AND IN THE FACTS AND THE CIRCUMSTANCES OF THE APPELLANTS CASE, THE LD.CIT HAS GROSSLY ERRED IN INITIATING THE PROCEEDINGS U/S.263 OF THE ACT SO AS TO MAKE ADDITI ON TO NET PROFIT WHILE CALCULATING BOOK PROFIT U/S.115JB IN VIEW OF RETROSPECTIVE AMENDMENT BY FINANCE (NO.2) ACT, 2009 WITH REGARD T O PROVISION FOR DIMINUTION IN VALUE OF ASSET. HE OUGHT TO HAV E APPRECIATED, INTER ALIA, THAT ASSESSMENT HAS BEEN FINALIZED TAKI NG INTO ACCOUNT THE LAW PREVAILING ON THE FIRST DAY OF THE CONCERNED AS SESSMENT YEAR, AND ANY RETROSPECTIVE AMENDMENT UNDER SECTION 115JB WILL NOT RENDER THE ORIGINAL ASSESSMENT ERRONEOUS. 4. WITHOUT PREJUDICE, IN LAW AND IN THE FACTS AND THE CIRCUMSTANCES OF THE APPELLANTS CASE, THE LD.CIT SHOULD HAVE OTHERW ISE ALLOWED THE DEPRECIATION ELIGIBLE ON THE QUANTUM OF ALLEGED PRO VISION SINCE THE APPELLANT HAS DEDUCTED THE LOSSES FROM THE BLOCK OF ASSET WHILST COMPUTING ELIGIBLE DEPRECIATION. 2. BRIEFLY STATED, THE ASSESSEE IS ENGAGED IN THE B USINESS OF MANUFACTURING AND TRADING OF AIR-CONDITIONERS AND A LSO TRADING OF WASHING MACHINES AND REFRIGERATORS. THE RETURN OF INCOME FOR THE AY 2007-08 WAS FILED ON 30/10/2007 DECLARING TOTAL IN COME OF RS.NIL, AFTER ADJUSTING BROUGHT FORWARD LOSSES. THE CASE W AS SELECTED FOR SCRUTINY ITA NO.1427/AHD /2013 HITACHI HOME & LIFE SOLUTION (INDIA) LTD. VS. DCIT ASST.YEAR 2007-08 - 3 - AND THEREAFTER FINAL ASSESSMENT ORDER WAS PASSED UN DER SECTION 143(3) R.W.S. 144-C OF THE INCOME TAX ACT, 1961 (HEREINAFT ER REFERRED TO AS 'THE ACT') ON 24/02/2011, WHEREBY THE INCOME UNDER HEAD BUSINESS AND PROFESSION WAS COMPUTED AT RS.2,65,81,620/- AND BO OK PROFIT UNDER SECTION 115JB WAS AT RS.25,85,56,391/-. SUBSEQUE NT TO THE ASSESSMENT, ON VERIFICATION OF RECORDS, IT WAS FOUND BY THE COM MISSIONER THAT THE ASSESSEE HAD PROVIDED FOR SEVERAL PROVISIONS OF RS.1,01,94,000/- IN P&L ACCOUNT WHICH INTER ALIA INCLUDES PROVISION OF RS.40,08,000 TOWARDS ON LOSS ON ASSETS FOR DISPOSAL WHICH WAS D ISALLOWED AND ADDED TO THE TOTAL INCOME BUT THE SAME WAS NOT ADDED TO T HE BOOK PROFIT COMPUTED UNDER SECTION 115JB OF THE ACT. IT WAS A LSO OBSERVED BY THE CIT THAT THIS AMOUNT WAS ALSO NOT ADDED TO THE BOOK PROFIT ASSESSED UNDER SECTION 143(3) R.W.S. 144-C APPEALED UNDER SECTION 250 OF THE ACT. THE CIT ACCORDINGLY NOTED THAT BOOK PROFIT FOR THE PURP OSES OF SECTION 115JB WAS UNDER-ASSESSED BY AN AMOUNT OF RS.40,07,558/-. ACCORDINGLY, A SHOW-CAUSE NOTICE (SCN) DATED 14/02/2012 WAS ISSUED TO THE ASSESSEE SEEKING EXPLANATION IN THIS REGARD. THE ASSESSEE F ILED WRITTEN SUBMISSION DATED 17/07/2012 AS REPRODUCED IN THE ORDER OF THE CIT APPEALED AGAINST. THE CIT, HOWEVER, DID NOT CONCUR WITH THE JUSTIFICA TIONS ADVANCED BY THE ASSESSEE. THE CIT NOTED THAT THE ISSUE REGARDING D ISALLOWANCE OR OTHERWISE OF PROVISION TOWARDS ASSET HELD FOR DISPO SAL HAS NOT BEEN EXAMINED AT ALL BY THE ASSESSING OFFICER (AO). ACC ORDINGLY, THE BOOK PROFIT ASSESSED BY THE AO SUFFERS FROM THE ERROR WH ICH IS PREJUDICIAL TO ITA NO.1427/AHD /2013 HITACHI HOME & LIFE SOLUTION (INDIA) LTD. VS. DCIT ASST.YEAR 2007-08 - 4 - THE INTERESTS OF THE REVENUE INASMUCH AS THE BOOK P ROFIT REMAINS UNDER ASSESSED TO THE EXTENT OF THE AFORESAID AMOUNT. CO NSEQUENTLY, THE CIT INVOKED THE REVISIONAL POWER UNDER SECTION 263 OF T HE ACT AND SET ASIDE THE ASSESSMENT ORDER IN RESPECT OF THE AFORESAID IS SUE FOR REFRAMING THE ASSESSMENT. THE RELEVANT PARA OF THE ORDER OF THE CIT IS REPRODUCED HEREUNDER: 4. THE FACTS OF THE CASE AND THE SUBMISSIONS OF A R HAVE BEEN CAREFULLY CONSIDERED. IT IS A SETTLED LEGAL POSITION THAT AN Y ORDER PASSED BY THE AO WITHOUT PROPER INQUIRY AND INVESTIGATION IS ERRONEO US AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE FOLLOWING JUDICIAL PRONOU NCEMENTS ENDORSE THE ABOVE CONTENTION: THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS . SESHASAYEE PAPER 7 BOARDS LTD. (2000) 242 ITR 490 (MADRAS) HAS HELD THAT FAILURE OF THE A.O TO MAKE AN INQUIRY BEFORE GRANTING DEDUCTION WO ULD RENDER THE ASSESSMENT ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF REVENUE. THE HONBLE MADRAS HIGH COURT, IN THE CASE OF CIT V S. SOUTH INDIA SHIPPING CORPORATION LTD., (1998) 233 ITR 546 (MAD) HAS HELD THAT THE ORDER OF THE A.O MAY BE ERRONEOUS IN LAW OR IN FACT . IT MAY BE ERRONEOUS IN THE SENSE THAT THE A.O HAD PASSED THE ORDER WITH OUT PROPERLY CONDUCTING THE INQUIRY IN COMPLETION OF THE ASSESSM ENT AND THE ORDER MAY ALSO BE ERRONEOUS WHEN THE EXPENDITURE ALLOWED WAS AGAINST THE PROVISIONS OF LAW. IN THE CASE OF ADOR TECHNOPACK LTD. VS. DR. ZAKIR H USSEIN, DY.CIT (2004) 271 ITR 50 (BOM), THE HONBLE BOMBAY HIGH COURT HAS HELD THAT THE COMMISSIONER CAN REOPEN THE ASSESSMENT U/S.263 OF T HE ACT IF HE FINDS THAT THE ASSESSMENT ORDER IS PREJUDICIAL TO THE INT EREST OF REVENUE EVEN IF THE ASSESSMENT HAS BEEN REOPENED U/S.147 OF THE ACT BY THE A.O. IT IS FURTHER HELD BY THE HONBLE COURT THAT THE PROCEEDI NGS U/S.147 ARE DISTINCT AND SEPARATE FROM THE PROCEEDINGS U/S.263 OF THE ACT. RELIANCE IN THIS CONNECTION IS ALSO PLACED ON THE J UDGMENT OF THE HONBLE GAUHATI HIGH COURT IN THE CASE OF TARAJAN TEA CO. P VT.LTD. VS. CIT (1994) 205 ITR 45, 61 (GAUH) WHEREIN IT WAS HELD TH AT A DECISION TAKEN WITHOUT CONSIDERING THE RELEVANT ASPECT OF A PARTIC ULAR POINT WOULD ITA NO.1427/AHD /2013 HITACHI HOME & LIFE SOLUTION (INDIA) LTD. VS. DCIT ASST.YEAR 2007-08 - 5 - CERTAINLY BE ERRONEOUS AND SUCH A DECISION IN FAVOU R OF THE ASSESSEE WITHOUT SUCH CONSIDERATION WOULD BE PREJUDICIAL TO THE INTEREST OF REVENUE SO AS TO EMPOWER THE COMMISSIONER TO EXERCISE HIS R EVISIONAL POWERS U/S.263 OF THE ACT. SIMPLY BECAUSE THE FACTS HAVE BEEN DISCLOSED BY THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS, I T DOES NOT GIVE HIM THE IMMUNITY FROM THE REVISIONAL JURISDICTION WHICH THE COMMISSIONER CAN EXERCISE U/S.263 OF THE ACT. IN THE CASE OF MANNULAL MATADEN VS. CIT REPORTED AT (2005) 277 ITR 346 (ALL.), THE HONBLE ALLAHABAD HIGH COURT HAD HELD T HAT THE ORDER OF REVISION WAS VALID AS THE A.O. HAD NOT MADE NECESSA RY ENQUIRIRIES BEFORE ALLOWING DEDUCTION OF INTEREST. THE ITAT, MUMBAI IN THE CASE OF ARVEE INTERNATIONAL V. ADDL.CIT (101 ITD 495) DECIDED AS UNDER: THE CIT MAY CONSIDER AN ORDER OF THE AO TO BE ERR ONEOUS NOT ONLY WHEN IT CONTAINS SOME APPARENT ERROR OF REASONING OR OF LAW OR OF FACT ON THE FACT OF IT BUT ALSO WHEN IT IS A STEREOTYPED ORDER WHICH SIMPL Y ACCEPTS WHAT THE ASSESSEE HAS STATED IN IT S RETURN AND FAILS TO MAKE ENQUIRI ES OR EXAMINE THE GENUINENESS OF THE CLAIM WHICH ARE CALLED FOR IN TH E CIRCUMSTANCES OF THE CASE. NO EVIDENCE HAS BEEN PLACED THAT THE CLAIM MADE BY THE ASSESSEE WAS OBJECTIVELY EXAMINED OR CONSIDERED BY THE AO EITHER ON RECORD OR IN THE ASSESSMENT ORDER. IT WAS BECAUSE OF SUCH NON CONSI DERATION OF ISSUES ON PART OF THE AO THAT THE BENEFIT CLAIMED BY THE ASSESSEE STOOD AUTOMATICALLY ALLOWED WITHOUT ANY SCRUTINY. THE ASSESSMENT ORDER WAS CLE ARLY ERRONEOUS AS IT WAS PASSED WITHOUT PROPER EXAMINATION OR ENQUIRY OR VER IFICATION OR OBJECTIVE CONSIDERATION OF THE CLAIM MADE BY THE ASSESSEE. MERE ALLEGATION THAT THE AO HAD TAKEN A VIEW IN THE MATTER WOULD NOT PUT THE MATTER BEYOND THE PURVIEW OF SECTION 263, UNLESS TH E VIEW TAKEN BY THE AO WAS A JUDICIAL VIEW CONSCIOUSLY BASED UPON PROPER E NQUIRIES AND APPRECIATION OF ALL RELEVANT FACTUAL AND LEGAL ASPE CTS OF THE CASE. THE ORDERS PASSED ON AN INCORRECT ASSUMPTION OF FAC TS OR INCORRECT APPLICATION OF LAW OR WITHOUT APPLYING PRINCIPLE OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND OR WITHOUT MAKING REQUISITE ENQ UIRIES WOULD SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF REVENUE WITHIN THE MEANING OF SECTION 263. ITA NO.1427/AHD /2013 HITACHI HOME & LIFE SOLUTION (INDIA) LTD. VS. DCIT ASST.YEAR 2007-08 - 6 - THE DELHI COURT IN THE CASE OF UGEE VEE ENTERPRISE S V ADDL.CIT (99 ITR 375) HAD HELD THAT THE POSITION AND FUNCTION OF THE ITO IS VERY DIFFERENT FROM THT OF A CIVIL COURT. THE STATEMENT S MADE IN A PLEADING PROVED BY THE MINIMUM AMOUNT OF EVIDENCE MAY BE ACC EPTED BY A CIVIL COURT IN THE ABSENCE OF ANY REBUTTAL. THE CIVIL CO URT IS NEUTRAL. IT SIMPLY GIVES THE DECISION ON THE BASIS OF PLEADING AND EVI DENCE WHICH COMES BEFORE IT. THE ITO IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACT OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER ENQUIRY. IT IS HIS DUTY TO A SCERTAIN THE TRUTH OF THE FACTS STATED IN THE RETURN WHEN THE CIRCUMSTANCES O F THE CASE ARE SUCH AS TO PROVABLE AN INQUIRY. THE MEANING GIVEN TO THE WORD ERRONEOUS IN SECTION 263 EMERGES OUT OF THIS CONTEXT. IT IS BE CAUSE IT IS INCUMBENT ON THE ITO TO FURTHER INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MAKE SUCH AN INQUIRY PRUDENT TH AT THE WORD ERRONEOUS IN SECTI8ON 263 INCLUDES THE FAILURE TO MAKE SUCH AN INQUIRY. THE ORDER BECOMES ERRONEOUS SUCH AN INQUIRY HAS NOT BEEN MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WITH THE ORDERS IF ALL THE FACTS STATED THEREIN ARE ASSUMED TO BE CORRECT.. 5. THE VARIOUS SUBMISSIONS MADE BY THE ASSESSEE ON THE ABOVE-MENTIONED ISSUES HAVE BEEN CAREFULLY CONSIDERED AND ARE NOT FOUND AC CEPTABLE. THE DETAILS AVAILABLE ON THE ASSESSMENT RECORD SHOW THAT THE AO DID NOT AT ALL EXAMINE THE ISSUES. 6. IN VIEW OF THE DETAILED DISCUSSIONS GIVEN HEREIN A BOVE AND THE LEGAL VIEWS OF VARIOUS HIGH COURTS, THE ORDER PASSED BY THE ASSESS ING OFFICER WITHOUT MAKING PROPER ENQUIRIES IS HELD TO BE ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF REVENUE. THEREFORE, THE ORDER PASSED BY THE A.O. U /S.143(3) OF THE ACT DATED 18.02.2011 IS HEREBY SET ASIDE AND THE A.O. IS DIRE CTED TO REFRAME THE ASSESSMENT AS PER THE DIRECTIONS GIVEN HEREIN ABOVE AND ALSO AFTER GRANTING SUFFICIENT OPPORTUNITIES OF HEARING TO THE ASSESSEE . 3. AGGRIEVED BY THE ORDER OF THE CIT PASSED UNDER S ECTION 263 OF THE ACT DATED 14/03/2013, THE ASSESSEE PREFERRED AN APP EAL BEFORE THE TRIBUNAL. ITA NO.1427/AHD /2013 HITACHI HOME & LIFE SOLUTION (INDIA) LTD. VS. DCIT ASST.YEAR 2007-08 - 7 - 4. THE LD.AR FOR THE ASSESSEE MR.S.N. SOPARKAR, AT THE OUTSET, SUBMITTED THAT THE INGREDIENTS OF SECTION 263 OF THE ACT IS N OT FULFILLED AT ALL AND THEREFORE THE CIT HAS WRONGFULLY ASSUMED THE JURISD ICTION UNDER SECTION 263 OF THE ACT. THE LD.AR SUBMITTED THAT THE ASSES SMENT ORDER WHICH IS SUBJECT MATTER OF REVISION BY THE COMMISSIONER IS N EITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE L D.AR ADVERTED OUR ATTENTION TO THE FIXED ASSETS SCHEDULE TABULATED AT PAGE NO.130 OF THE PAPER-BOOK FILED BY THE ASSESSEE FORMING PART OF TH E FINANCIAL STATEMENTS AND SUBMITTED THAT THE IMPUGNED AMOUNT OF RS.40,08, 000/- IS REFLECTED IN THE FIXED ASSET SCHEDULE AS PROVISION FOR THE YEA R UNDER COLUMN DEPRECIATION. HE THEREAFTER SUBMITTED THAT THE A SSETS LYING WITH THE ASSESSEE-COMPANY WHICH WERE INTENDED TO BE SOLD ARE TO BE VALUED AT THEIR REALIZABLE VALUE AND SO WHILE PREPARING THE B OOKS OF ACCOUNTS, THE SELLING VALUE IS ESTIMATED BY DISCOUNTING THE FUTUR E CASH FLOWS TO THEIR PRESENT VALUE AND DIFFERENCE OF SUCH DISCOUNTED VAL UE AND BOOK VALUE IS BOOKED AS IMPAIRMENT LOSS. IT WAS CONTENDED THAT P ROVISIONS OF SECTION 115JB OF THE ACT REQUIRES THAT THE P&L ACCOUNT SHOU LD BE PREPARED IN ACCORDANCE WITH THE PROVISIONS OF PART-II AND III O F SCHEDULE-VI OF THE COMPANIES ACT, 1956 AND THEREBY FOLLOW ALL THE APP LICABLE ACCOUNTING STANDARDS AS WELL. THEREFORE, THE ASSESSEE-COMPANY IN COMPLIANCE WITH THE ACCOUNTING STANDARD-28 AS ISSUED BY THE INSTITU TE OF CHARTERED ACCOUNTANT OF INDIA RECOGNIZED THE IMPAIRMENT LOSS ON THE ASSET. THE ITA NO.1427/AHD /2013 HITACHI HOME & LIFE SOLUTION (INDIA) LTD. VS. DCIT ASST.YEAR 2007-08 - 8 - LD.AR SUBMITTED THAT THE AFORESAID AMOUNT IS ACTUAL DIMINUTION IN THE VALUE OF ASSETS WHICH IS BEING RECOGNIZED AND NOT M ERE PROVISION OF POSSIBLE LOSSES. THE LD.AR THEREAFTER SUBMITTED TH AT PARA-3 OF CLAUSE 2.3 OF SCHEDUE-21 TO NOTES TO ACCOUNTS MAKES REFE RENCE TO IMPAIRMENT POLICY ADOPTED BY THE ASSESSEE-COMPANY AND THE AFOR ESAID AMOUNT HAS BEEN ADJUSTED TO THE VALUE OF THE FIXED ASSETS IN T ERMS OF AFORESAID POLICY. IT WAS SUBMITTED THAT A READING OF FINANCIAL STATEM ENT MAKES IT DISCERNIBLE IN THE FINANCIAL STATEMENTS OF THE ACCO UNTS AND THUS NO FURTHER INFORMATION WAS REQUIRED BY MAKING ANY ENQUIRIES WI TH RESPECT TO THE SAID AMOUNT. IT WAS NEXT SUBMITTED THAT IT IS NOT A CASE OF LACK OF ENQUIRY AT ALL. HE POINTED OUT THAT AS PER NOTICE OF THE A O DATED 09/11/2010 ENQUIRIES IN RESPECT OF VARIOUS PROVISIONS MADE AS LISTED AT PAGE NO.9 OF THE PAPER-BOOK WERE MADE. THEREFORE, IT CAN BE PRE SUMED THAT THE AO WAS AWARE OF THE PROVISION FOR LOSS OF ASSETS HELD FOR DISPOSAL AND THE ASSESSMENT ORDER WAS PASSED AFTER DUE APPLICATION O F MIND. IT WAS PLEADED THAT THE SCOPE OF INTERFERENCE UNDER SECTIO N 263 OF THE ACT IS NOT TO SET ASIDE MERELY UNFAVOURABLE ORDERS AND BRING T O TAX SOME MORE MONEY TO THE EXCHEQUER. AN ALTERNATIVE CONTENTION WAS ALSO RAISED TO SAY THAT EVEN IF THE PROVISION FOR LOSS OF ASSET HELD F OR DISPOSAL IS CONSIDERED IN THE NATURE OF PROVISION AND NOT ACTUAL LOSS OF THE ASSETS FOR A MOMENT, THEN TOO ITS DISALLOWANCE BY WAY OF REVIS ION OF THE ORIGINAL ASSESSMENT IS NOT VALID. IN THIS REGARD, IT WAS SUBMITTED THAT FINANCE (NO.2), ACT 2009 HAD INTER ALIA INCORPORATED CLAUSE (I) IN SECTION 115JB ITA NO.1427/AHD /2013 HITACHI HOME & LIFE SOLUTION (INDIA) LTD. VS. DCIT ASST.YEAR 2007-08 - 9 - WHICH STATES THAT FOR THE COMPUTATION OF BOOK PROFI T, THE PROFIT AS PER PROFIT & LOSS ACCOUNT SHOULD BE INCREASED BY THE PR OVISION FOR DIMINUTION IN THE VALUE OF ASSETS AND WAS MADE EFFE CTIVE RETROSPECTIVE FROM 01/04/2001. HOWEVER, AS PER LAW PREVAILING AT THE TIME OF FILING OF THE RETURN, FOR COMPUTATION OF BOOK PROFIT UNDER TH E PROVISION OF SECTION 115JB, NO DISALLOWANCE WAS REQUIRED TO BE MADE FOR THE PROVISION IN DIMINUTION IN THE VALUE OF ASSETS. THE ASSESSMENT ORDER WAS FRAMED TAKING INTO CONSIDERATION THE LAW PREVAILING AT THE TIME OF FILING OF RETURN OF INCOME AND SUCH LAW WHICH STOOD AMENDED BY THE R ETROSPECTIVE AMENDMENT CANNOT MAKE THE ORDER ERRONEOUS PER SE . HE SUBMITTED IN CONCLUSION THAT THE ACTION OF THE CIT IS TOTALLY UN WARRANTED IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND PREVAILING LA W IN THIS REGARD AND ACCORDINGLY REQUIRES TO BE QUASHED. 5. THE LD.DR MR.SHAKERLAL MEENA, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT AND SUBMITTED THAT THE ASSESSEE HA S DECLARED THE IMPUGNED AMOUNT OF RS.40,08,000/- AS PROVISION I N ITS BOOKS IN ITS OWN WISDOM. NO ENQUIRY ABOUT THE NATURE OF PROVIS ION WAS MADE AT ALL IN THE COURSE OF ASSESSMENT PROCEEDINGS AS CAN BE S EEN FROM THE ENQUIRY LETTER REFERRED TO BY THE LD.AR. THEREFORE, JUSTI FYING THE CORRECTNESS OF CLAIM BEFORE THE CIT ON MERITS IS NOT OF ANY AVAIL IN THE ABSENCE OF ANY ENQUIRY IN THIS REGARD. HE THEREFORE SUBMITTED TH AT THE ACTION OF THE CIT IS IN ACCORDANCE WITH LAW AND CANNOT BE INTERFERE W ITH. ITA NO.1427/AHD /2013 HITACHI HOME & LIFE SOLUTION (INDIA) LTD. VS. DCIT ASST.YEAR 2007-08 - 10 - 6. WE HAVE CAREFULLY CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE CIT AND MATERIAL RELIED UPON IN THE C OURSE OF HEARING. 7. THE ASSESSEE IN THE PRESENT CASE HAS AGITATED TH E ACTION OF THE CIT IN INVOKING REVISIONAL POWER VESTED UNDER SECTION 2 63 OF THE ACT TOWARDS ALLEGED UNDER STATEMENT OF BOOK PROFIT UNDER SECTIO N 115JB OF THE ACT. IT IS THE CASE OF THE ASSESSEE THAT THE PROVISION FOR LOSS OF ASSETS HELD FOR DISPOSAL AMOUNTING TO RS.40,08,000/- REPRESENTS ACT UAL LOSS TOWARDS IMPAIRMENT AND IS NOT IN THE NATURE OF PROVISION. IT IS FURTHER CASE OF THE ASSESSEE THAT THE POWER UNDER SECTION 263 OF THE AC T CANNOT BE INVOKED FOR THE REASONS NARRATED IN ITS ARGUMENTS BEFORE T HE CIT. IN THIS REGARD, AT THE OUTSET, WE REFER TO THE FINANCIAL STATEMENT FOR THE ACCOUNTING YEAR MARCH-2007 AND FIXED ASSETS SCHEDULE ANNEXED THERET O. AS PER THE FIXED ASSETS SCHEDULE PREPARED BY THE ASSESSEE, THE ASSESSEE ITSELF HAS REFLECTED THE AFORESAID AMOUNT OF RS.40,08,000/- TO WARDS LOSS OF ASSETS UNDER THE HEAD PROVISION. NO EXPLANATION ABOUT T HE NATURE OF PROVISION IS DISCERNIBLE FROM FINANCIAL STATEMENTS. WE HAVE TAKEN NOTE OF THE IMPAIRMENT POLICY REFLECTED IN THE SCHEDULE OF FINA NCIAL STATEMENTS. IT MERELY NARRATES THE POLICY ADOPTED BY THE ASSESSEE. WHILE IT SPELLS OUT THAT THE IMPAIRMENT POLICY IS TO BE FOLLOWED YEAR A FTER YEAR, IT NOWHERE GIVE REFERENCE TO THE AFORESAID AMOUNT OF PROVISION IN DISPUTE. THE NATURE OF PROVISION AND EXPLANATION OF THE ASSESSEE ON MERITS IS ALSO NOT ITA NO.1427/AHD /2013 HITACHI HOME & LIFE SOLUTION (INDIA) LTD. VS. DCIT ASST.YEAR 2007-08 - 11 - DISCERNIBLE FROM THE FINANCIAL STATEMENTS. NO EXPL ANATION ON THE ASSERTION THAT THE IMPUGNED AMOUNT IS IN THE NATURE OF ACTUAL WRITE OFF CONTRARY TO RELEVATION OF IT BEING PROVISION IN FI NANCIAL STATEMENT IS AVAILABLE ON THE RECORD BEFORE CIT WHILE EXERCISING POWER UNDER SECTION 263 OF THE ACT. WE SIMULTANEOUSLY NOTE THAT AO WH ILE MAKING ENQUIRY ABOUT HOST OF PROVISIONS MADE BY THE ASSESSEE HAS O MITTED TO MAKE ANY REFERENCE TO IMPUGNED PROVISION OF RS.40,08,000/- A PPEARING IN THE FINANCIAL STATEMENT. THUS, ON THE CONSPECTUS OF AF ORESAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE AO HAS FAILED TO MAKE A NY ENQUIRY ON THE AFORESAID PROVISION IN THE COURSE OF THE ASSESSMENT AND HAS MERELY ACCEPTED THE PROVISION MADE PERFUNCTORILY AND WITHO UT ANY APPLICATION OF MIND. THIS IS NOT TO SAY THAT THE CLAIM OF THE ASS ESSEE IS INCORRECT OR OTHERWISE. THE PERTINENT QUESTION HERE IS WHETHER WHEN THERE IS TOTAL ABSENCE OF ENQUIRY ON AN ADJUSTMENT DECLARED IN THE NATURE OF PROVISION WHICH HAS A BEARING ON THE ULTIMATE BOOK PROFIT, I S IT OPEN TO THE CIT TO INVOKE JURISDICTION UNDER SECTION 263 OF THE ACT OR NOT. THE ANSWER TO THIS QUESTION IS CLEARLY IN AFFIRMATIVE. THE ASSE SSEE HAS CLAIMED THE AFORESAID ADJUSTMENT UNDER THE HEAD PROVISION WHI CH WHEN UNDERSTOOD ON ORDINARY AND NATURAL SENSE WILL GIVE RISE TO PRE SUMPTION OF IT BEING A PROVISION. IT WAS FOR THE ASSESSEE TO REBUT THE PR ESUMPTION BY PROPER EXPLANATION WHICH HAS NOT BEEN DONE. NO ENQUIRY ON IT BEING DIFFERENT FROM MERE PROVISION HAS BEEN CONDUCTED BY THE AO. IN THE CIRCUMSTANCES, THE ORDER PASSED BY THE AO IN DISCHA RGE OF ITS QUASI- ITA NO.1427/AHD /2013 HITACHI HOME & LIFE SOLUTION (INDIA) LTD. VS. DCIT ASST.YEAR 2007-08 - 12 - JUDICIAL FUNCTIONS IS CLEARLY ERRONEOUS AND PREJUDI CIAL TO THE INTEREST OF THE REVENUE AS NOTED. CERTAIN EXPLANATION HAS BEEN GIV EN BY THE ASSESSEE ON MERITS TO JUSTIFY THAT IT IS ACTUAL DIMINUTION AND NOT MERE PROVISION. HOWEVER, THAT WILL BECOME RELEVANT ONLY AT THE STAG E OF MAKING ASSESSMENT THEREIN AFTER REQUISITE ENQUIRY IN THIS REGARD. THUS AT THE THRESHOLD, FOR INVOKING THE JURISDICTION, THE CONCL USION OF THE CIT OF THE ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTERE STS OF THE REVENUE CANNOT BE FAULTED IN THE LIGHT OF SUCH EXPLANATION ON MERITS AT LATER POINT OF TIME, THE CORRECTNESS OF WHICH HAS NOT BEEN TEST ED . 8. WE ALSO TAKE NOTE OF THE SECOND LIMB OF ARGUMEN TS ON BEHALF OF THE ASSESSEE THAT THE AMENDMENT TO SECTION 115JB AS PER CLAUSE(I) THERETO HAS BEEN MADE WITH RETROSPECTIVE EFFECT AFTER FILING OF THE RETURN OF INCOME AND THEREFORE THE ASSESSMENT PASSED BASED ON THE RE TURN OF INCOME AS PER THE LAW AS STOOD AT THE TIME OF FILING OF THE RETUR N COULD NOT HAVE BEEN DISTURBED BY THE AO. WE DO NOT FIND ANY MERIT IN THIS LINE OF ARGUMENT EITHER. THE RECORD FOR THE PURPOSE OF SECTION 263 OF THE ACT AS PER EXPLANATION-1 THEREOF WOULD MEAN ALL RECORDS RELATI NG TO ASSESSMENT PROCEEDINGS AVAILABLE AT THE TIME OF EXAMINATION BY THE COMMISSIONER. THEREFORE, ANY DEVELOPMENT IN LAW WHICH HAS TAKEN P LACE EVEN AFTER THE ASSESSMENT ALSO CAN BE TAKEN COGNIZANCE OF BY THE C IT IN EXERCISE OF POWER UNDER SECTION 263 OF THE ACT. UNLIKE PENALTY PROCEEDINGS, THE ASSESSMENT IS REQUIRED TO BE FRAMED IN ACCORDANCE W ITH LAW AFTER TAKING ITA NO.1427/AHD /2013 HITACHI HOME & LIFE SOLUTION (INDIA) LTD. VS. DCIT ASST.YEAR 2007-08 - 13 - THE COGNIZANCE OF RETROSPECTIVE AMENDMENT IN LAW, I F ANY. THUS, THE ASSESSMENT ORDER PASSED IN CONFLICT WITH THE RETROS PECTIVE AMENDMENT IN LAW, IN OUR VIEW, WOULD BE ERRONEOUS IN SO FAR AS P REJUDICIAL TO THE INTERESTS OF THE REVENUE AND WOULD THUS BE AMENABLE TO REVISION UNDER SECTION 263 OF THE ACT. 9. IN THE RESULT, WE DO NOT FIND ANY FORCE IN THE A PPEAL OF THE ASSESSEE. RESULTANTLY, APPEAL OF THE ASSESSEE STANDS DISMISSE D. THIS ORDER PRONOUNCED IN OPEN COURT ON 12 /01/2017 SD/- SD/- () ( ) (RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 12/ 01 /2017 3..),.)../ T.C. NAIR, SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &#% / THE RESPONDENT. 3. 456+ 7+ / CONCERNED CIT-II, AHMEDABAD 4. 7+ ( ) / THE CIT(A)-CONCERNED 5. 89:+)56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<* / GUARD FILE. / BY ORDER, &8++ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD