DPD INDUSTRIES LTD, FEROZEPUR CITY V. PR. COMMISSIONER OF INCOME TAX, BHATINDA

ITA 301/ASR/2017

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 7526 (ITAT-AMRITSAR)
• Duration Of Justice: 5 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 22-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Revision of order; Depreciation; Principle of natural justice
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 301/Asr/2017 Assessment Year: 2012-13 DPD Industries Ltd., Ferozepur [PAN: AADCD 3945P] Vs. Pr. Commissioner of Income Tax, Bathinda Range, Bathinda (Appellant) (Respondent) Appellant by : Sh. P. N. Arora, Adv. Respondent by: Sh. Sunil Gautam, CIT DR Date of Hearing: 12.05.2022 Date of Pronouncement: 14.07.2022 ORDER Per Anikesh Banerjee, JM: The instant appeal was filed by the assessee against the order passed by the Ld. Pr. Commissioner of Income Tax, Civil Station, Bathinda [in brevity the PCIT], bearing Appeal No. Pr.CIT/BTI/Tech./263/2016-17/3824 dated 30.03.2017 u/s 263 of the Income Tax Act, 1961 [in brevity the Act], in respect of Assessment Year 2012-13. The impugned order is originated against the order of Asstt. Commissioner of Income Tax, Circle-III, Ferozepur (in brevity the ACIT) passed u/s 143(3) of the Act dated 25.03.2015. ITA No. 301/Asr/2017 DPD Industries Ltd. v. DCIT 2 2. The assessee has raised the following grounds of appeal: “1. That the learned Principal commissioner of Income, Bhatinda Range, Bhatinda was not right in applying the provisions of the section 263 of the Income Tax Act, 1961 on the same issue on which the Assessing officer, Range -3, Ferozepur has recorded his findings in Para 2 of the Assessment orders passed for the Asstt. Year 2012-2013 on dated 25.3.2017 without appreciating the facts of the case. It is therefore requested that the orders passed u/s 263 of the I.T. may kindly be quashed. 2. That the assessee has also submitted photo copies of the vouchers along with written submission on dated 29.3.2017 in reply to the show cause notice issued under section 263 of the I.T. Act, 1961 to make the Principal Commissioner of Income Tax, Bhatinda Range, Bhatinda satisfied that none the payment was made in cash exceeding Rs.20,000/- to single person even then they applied the provisions of 263 and set aside the assessment which was wrong and it is therefore requested that orders passed under 263 may kindly be quashed. 3. That the orders of assessment passed by the Assessing officer, Range-3, Ferozepur has been amalgamated in the orders of the CIT(A), on account of the appellate orders passed on 29.3.2017 on account of the expenditure as discussed in the para 2 of the assessment orders dated 25.3.2015 by the Assessing officer- Range-3, Ferozepur in which Assessing Officer has made the addition to the tune of Rs.4,00,000/- after having glance over the vouchers that the some vouchers are handmade vouchers and which are not verifiable as per version of the assessing officer being one sided version. 4. That there is no loss of revenue if the computation is made by reducing the depreciation as per companies and not as the Income Tax Act, 1961 and whereas the tax in computation is to be paid before allowing the depreciation allowable under the Income Tax Act, 1961. It is, therefore, requested that the orders passed by the Principal Commissioner totally illegal and based on hypothetical assumption and not based on facts and reality under section 263 may kindly be quashed. 5. That the assessee craves to grant any other relief which this court may deemed fit in the interest of Natural justice.” ITA No. 301/Asr/2017 DPD Industries Ltd. v. DCIT 3 3. Brief fact of the case is that the assessment was completed u/s 143(3) of the Act, the assessee verified the following expenses as electricity repair expenses, generator maintenance, salary, crate repair, legal fees paid, freight expenses, machinery repair & spares, paddy freight, sheller labour and Power & fuel. After the verification for restrict the leakage of revenue addition was made Rs.4,00,000/- with the total income of the assessee. Also Rs. 1,60,00,000/- was added back against share application money. The Ld. Pr.CIT issued notice u/s 263 and setting aside the order of the Ld. AO on the ground that all the expenses are paid by cash which follows u/s 40A (3) of the Act and additional depreciation claimed by the assessee which was not verified accordingly excess depreciation Rs.42,20,000/- was required to be disallowed. Further unsecured loan of Rs.63,00,025/- from M/s DPD & Sons was subject to the verification by the Ld. AO. The Ld. Pr. CIT had taken reasons that the loan was not verified by the Ld. AO in relation to the genuinity of the transaction. Accordingly, the order of the AO is erroneous and prejudicial to the interest of the Revenue, so the order of the Ld. AO was setting aside for further verification. Aggrieved, the assessee filed an appeal before us. 4. During hearing the Ld. counsel of the assessee vehemently argued that took our attention in the paper book filed on 29.10.2018 pertaining page no. 10 to 176 in page nos. 23 and 24, the notice u/s 263(1) is annexed. The requisition of the Ld. Pr. CIT related to payment of expenses was already covered in the assessment order. ITA No. 301/Asr/2017 DPD Industries Ltd. v. DCIT 4 The calculation of WDV of machinery was already filed during the assessment proceedings. The company is maintaining two types of depreciation as per the Income Tax Act, 1961 and as per the Companies Act, 1961. The calculation of depreciation of lacunae chart is annexed in page no. 77 to 103 with the financial statement of the assessee. Not further argued, the Ld. counsel mentioned that all the documents are submitted before the Ld. AO as per its requisition in the notice u/s 142(1). The questionnaire of the Ld. AO is annexed in APB page no. 8, the notice dated 11.08.2014. The assessee almost covers of this issue during the assessment proceedings. The Assessing Officer verified the documents. The Ld. counsel further mentioned that after the notice of u/s 263(1) of the Act, the assessee filed a written submission to clarify all the details the low is containing in APB page nos. 5 to 7. Further, draw our kind attention that a notice was issued u/s 142 for verification of all the details by the Ld. AO, the copy of the submissions with annexure are also annexed in APB from page 111 to 163. The Ld. counsel further relied on the coordinate Bench in the case of Sh. Jaswinder Singh v. ITO, Bathinda in ITA No. 115/Asr/2016 order dated 21.02.2022. The observation of the coordinate Bench is as follows: “In our considered view, as the AO after necessary deliberations had taken a possible and a plausible view, therefore, the Pr. CIT was clearly divested from exercising his revisional jurisdiction u/s 263 of the Act. Our aforesaid view, that where an AO after making proper and detailed inquiry had on the basis of a possible view accepted the ITA No. 301/Asr/2017 DPD Industries Ltd. v. DCIT 5 assessee’s claim, then, the CIT in the garb of his revisional jurisdiction u/s 263 of the Act cannot direct the AO to carry out a fuller enquiry, is supported by the judgment of the Hon’ble High Court of Bombay in the case of CIT, Central-III v. Nirav Modi [2017] 390 ITR 292 (Bombay). In the aforesaid case, the AO after making a proper and detailed inquiry had formed a view that the amount received by the assessee as a gift from his relative was a genuine transaction. However, the CIT set-aside the order passed by the AO, with a direction to inquire into the capacity of the donors and therein decide about the genuineness of the gift transaction afresh. On appeal, it was, inter alia, observed by the Hon’ble High Court, that where there are two possible views and the AO had taken one of the possible views, then no occasion to exercise powers of revision can arise. It was observed by the Hon’ble High Court that the CIT could not have exercised his revisional jurisdiction for directing a fuller inquiry to find out if the view taken was erroneous, specifically when the view was arrived at by the AO after an inquiry. We find that the aforesaid judgment of the Hon’ble High Court had thereafter being upheld by the Hon’ble Supreme Court in the case of CIT v. Nirav Modi [2017] 77 taxmann.com, 244 Taxman 194 (SC) and the SLP filed by the Revenue was dismissed.” The Ld. counsel further argued that related to unsecured loan from DDP & Sons, the Ld. Pr. CIT did not take the point in his requisition issued u/s 263(1) of the Act so the setting aside the issue is not relevant in the question of violation of the reasonable opportunity for the assessee. 5. The Ld. CIT DR vehemently argued and relied on the order of the Pr. CIT. 6. We heard the rival submissions and relied on the documents available in the record. The assessment proceeding is continued by verification of expenses as required by the ld AO. The ‘a’ provided details during proceeding. Only in point of additional depreciation the issue is covered during filing of return with financial statement & ld AO had taken care during computation to total income. Where specific issue related to assessee-company's claim of higher rate of depreciation ITA No. 301/Asr/2017 DPD Industries Ltd. v. DCIT 6 was raised by AO in scrutiny assessment and assessment order was passed after detailed submissions made by assessee were duly accepted. Mere non-mentioning of specific reasons for accepting explanation of assessee by AO in assessment order could not be reason to invoke revisionary powers under section263. We respectfully relied on the order of ITAT, Mumbai Bench in the case of Reliance Payment Solutions Ltd. v. Principal Commissioner of Income-tax-8, [2022] 136 taxmann.com 277 (Mumbai - Trib.). “9. Clearly, therefore, as long as the action of the Assessing Officer cannot be said to be lacking bonafides, his action in accepting an explanation of the assessee cannot be faulted merely because it could have been lawful to make mere detailed inquiries or because he did not write specific reasons of accepting the explanation. As for learned PCIT's observations regarding accepting the explanation "without appropriate evidence", there is nothing to question the bonfides of the Assessing Officer or to elaborate as to what should have been 'appropriate' evidence. The fact remains that 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. Merely because the Assessing Officer did not write specific reasons for accepting the explanation of the assessee cannot be reason enough to invoke powers under section263, and non-mentioning of these reasons do not render the assessment order "erroneous and prejudicial to the interest of the revenue". Considering the above discussion, the ld. PCIT had invoked the section 263 which is beyond the jurisdiction. ITA No. 301/Asr/2017 DPD Industries Ltd. v. DCIT 7 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 14.07.2022 Sd/- Sd/- (Dr. M. L. Meena) (Anikesh Banerjee) Accountant Member Judicial Member *GP/Sr. PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(A), (4) The CIT concerned (5) The Sr. DR, I.T.A.T (6) The Guard File True Copy By Order