Shir Bajrang Power and Ispat Ltd., Raipur V. Dy. Commissioner of Income Tax, Circle-1(1), Raipur

ITA 32/RPR/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5601 (ITAT-RAIPUR)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 19-05-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SINGH
• Assessee Lawyers: AMIT MALOO JAIN
• Keywords: Capital asset; Revision of order; Depreciation; Scheme of amalgamation; Revised return; Set aside
• Section: 143(3); 80IA; 264; 139(1); 271B; 44AB; 43; 13; 148; 263; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI N. K. CHOUDHRY, JUDICIAL MEMBER ./ I.T.A. NO. 32/RPR/2021) ( ASSESSMENT YEAR : 2011-12) SHRI BAJRANG POWER AND ISPAT LIMITED VILLAGE BORJHARA, URLA GUMA ROAD, RAIPUR-493221, CHHATTISGARH / VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(1), RAIPUR ./ ./PAN/GIR NO. : AACCB2944D ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI AMIT MALOO JAIN, C.A. / RESPONDENT BY : SHRI R. K. SINGH, CIT.DR DATE OF HEARING 30/07/2021 !'# / DATE OF PRONOUNCEMENT 21/ 09/2021 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE PRINCIPAL COMMISS IONER OF INCOME TAX, RAIPUR-1 (PCIT IN SHORT), DATED 27.03.2021 P ASSED UNDER S.263 OF THE INCOME TAX ACT, 1961 (THE ACT) WHEREBY THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER (AO) DATED 06 .12.2018 UNDER S. 143(3) R.W.S. 147 OF THE ACT CONCERNING AY 2011- 12 WAS SOUGHT TO BE SET ASIDE FOR REFRAMING ASSESSMENT IN TERMS OF SUPERVISORY DIRECTIONS. ITA NO. 32/RPR/2021 (SHRI BAJRANG POWER AND ISPAT LTD.VS. DCIT) A.Y. 2011-12 - 2 - 2. AS PER THE GROUNDS OF APPEAL, THE ASSESSEE HAS SOUGHT TO CHALLENGE THE JURISDICTION ASSUMED BY THE PCIT UNDE R S.263 OF THE ACT AND AS A COROLLARY, SOUGHT TO IMPUGN THE REVISI ONAL ORDER PASSED BY THE PCIT UNDER S.263 OF THE ACT. 3. BRIEFLY STATED, THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF IRON AND STEEL REROLLE D PRODUCTS AND GENERATION OF POWER. THE ASSESSEE FILED ITS ORIGIN AL RETURN OF INCOME ON 28.09.2011 DECLARING TOTAL INCOME AT RS.N IL AFTER INTER ALIA CLAIMING DEDUCTION UNDER S.80IA(4) OF THE ACT. MEANWHILE, THE AMALGAMATION PETITION OF THE ASSESSEE COMPANY WITH TRANSFEROR COMPANY SHRI BAJRANG METTALICS & POWER LTD. WAS PEN DING FOR APPROVAL OF THE HONBLE CHHATTISGARH HIGH COURT UND ER S.391 TO 394 OF THE COMPANY ACT, 1956, FOR WHICH, THE APPOINTED DATE WAS DECLARED AS 01.04.2008, IF SO APPROVED BY THE HONB LE HIGH COURT. THE HONBLE HIGH COURT OF CHHATTISGARH BY AN ORDER DATED 14.11.2011 SANCTIONED THE AFORESAID CLAIM OF AMALGA MATION AS SUBMITTED BY THE ASSESSEE COMPANY. AS PER THE ORDE R OF THE HONBLE HIGH COURT, THE TRANSFEROR COMPANY SHRI BAJRANG ME TTALICS & POWER LTD. STOOD MERGED WITH THE ASSESSEE COMPANY FROM THE APPOINTED DATE I.E. 01.04.2008. ACCORDINGLY, IN TE RMS OF THE SANCTION, THE TRANSFEROR COMPANY CEASED TO EXIST W. E.F. 01.04.2008 AND ALL THE ASSETS AND LIABILITIES OF THE TRANSFERO R COMPANY STOOD MERGED WITH THE ASSESSEE COMPANY. CONSEQUENT TO TH E SANCTION OF AMALGAMATION WITH RETROSPECTIVE DATE I.E. 01.04.200 8 TILL 30.03.2011 I.E. UPTO IMMEDIATELY PRECEDING COMPLETED FINANCIAL YEAR I.E. A.Y. 2009-10, 2010-11 & 2011-12. RETURNS ALREADY FILED WERE REVISED AS PER THE REVISED FINANCIAL DATA POST AMALGAMATION. FOR THE PURPOSES OF REVISED RETURN, THE ASSESSEE COMPANY INTER ALIA PREPARED AMALGAMATED FINANCIAL STATEMENT FOR THE F.Y. 2010-1 1 RELEVANT TO A.Y. 2011-12 IN QUESTION AND COMPUTED ITS REVISED T AX LIABILITY AFTER ITA NO. 32/RPR/2021 (SHRI BAJRANG POWER AND ISPAT LTD.VS. DCIT) A.Y. 2011-12 - 3 - GIVING EFFECT TO THE SCHEME OF AMALGAMATION. CONSE QUENTLY, THE ASSESSEE COMPANY AFTER AMALGAMATION FILED A REVISED RETURN ON 07.01.2013 DECLARING TOTAL INCOME AT NIL AND CLAIME D REVISED DEDUCTION UNDER S.80IA(4) OF THE ACT IN PARITY WITH THE REVISED FINANCIAL ACCOUNTS. THE CASE OF THE ASSESSEE WAS S UBJECTED TO SCRUTINY ASSESSMENT UNDER S.143(1) OF THE ACT AFTER CONSIDERING THE AMALGAMATION SCHEME WITH REFERENCE TO REVISED RETUR N FILED BY THE ASSESSEE. THE ASSESSMENT WAS COMPLETED AFTER MAKIN G ADDITIONS OF RS.4.20 CRORE BY TREATING THE CAPITAL SUBSIDY AS RE VENUE SUBSIDY. HOWEVER, AFTER RAISING QUERIES AND VERIFICATION IN SEVERAL ROUNDS, THE AO ACCEPTED THE REVISED CLAIM OF DEDUCTION UNDE R S.80IA(4) OF THE ACT UNDER S.143(3) OF THE ACT. THEREAFTER, THE CASE OF THE ASSESSEE WAS ALSO REOPENED BY ISSUE OF NOTICE UNDER S.148 OF THE ACT DATED 19.09.2017 FOR VERIFICATION OF CLAIM OF DEDUC TION UNDER S.80IA(4) OF THE ACT. THE AO DID NOT FIND ANY ERRO R IN THE CLAIM OF THE ASSESSEE UNDER S.80IA(4) OF THE ACT EVEN UNDER REOPENED PROCEEDINGS. SIMILARLY, EXPLANATION OF THE ASSESSE E WITH RESPECT TO ELIGIBILITY OF DEDUCTION UNDER S.80IA OF THE ACT ON CHARACTER OF SUBSIDY WAS ALSO ACCEPTED IN THE LIGHT OF THE DECIS ION OF THE CO- ORDINATE BENCH OF TRIBUNAL DATED 09.08.2018 IN ASSE SSEES OWN CASE FOR A.Y. 2010-11. CONSEQUENTLY, THE REASONS INITIA LLY FORMED FOR REOPENING THE COMPLETED ASSESSMENT WERE NOT APPLIED ADVERSE TO THE ASSESSEE AND NO ADDITIONS WERE MADE IN THE RE-ASSES SMENT PROCEEDINGS ON BOTH THE COUNTS. 4. THEREAFTER, THE PCIT IN EXERCISE OF ITS REVISION ARY POWERS, ISSUED SHOW CAUSE NOTICE DATED 01.03.2021 UNDER S.2 63 OF THE ACT REQUIRING THE ASSESSEE TO SHOW CAUSE AS TO WHY THE IMPUGNED ASSESSMENT SO FRAMED UNDER S.143(3) R.W.S. 147 OF T HE ACT DATED 06.12.2018 SHOULD NOT BE MODIFIED/SET ASIDE ON THE GROUND THAT SUCH ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL T O THE INTEREST OF THE ITA NO. 32/RPR/2021 (SHRI BAJRANG POWER AND ISPAT LTD.VS. DCIT) A.Y. 2011-12 - 4 - REVENUE. THE SHOW CAUSE NOTICE ISSUED IN THIS REGAR D IS EXTRACTED HEREUNDER FOR READY REFERENCE: SUBJECT: NOTICE FOR HEARING IN RESPECT OF REVISION PROCEEDI NGS U/S 263 OF THE THE INCOME TAX ACT, 1961 ASSESSMENT YEAR 2011-12 . IN THIS REGARD, A HEARING IN THE MATTER IS FIXED ON 08/03/2021 AT 11:00 AM. YOU ARE REQUESTED TO ATTEND IN PERSON OR THROUGH A N AUTHORIZED REPRESENTATIVE TO SUBMIT YOUR REPRESENTATION, IF AN Y ALONGWITH SUPPORTING DOCUMENTS/INFORMATION IN SUPPORT OF THE ISSUES INVOLVED (AS MENTIONED BELOW). IF YOU WISH THAT THE REVISION PRO CEEDING BE CONCLUDED ON THE BASIS OF YOUR WRITTEN SUBMISSIONS/ REPRESENTATIONS FILED IN THIS OFFICE, ON OR BEFORE THE SAID DUE DAT E, THEN YOUR PERSONAL ATTENDANCE IS NOT REQUIRED. YOU ALSO HAVE THE OPTIO N TO FILE YOUR SUBMISSION FROM THE E-FILING PORTAL USING THE LINK: INCOMETAXINDIAEFILING.GOV.IN PLEASE REFER TO THE ABOVE. ON EXAMINATION OF YOUR INCOME TAX RECORDS FOR THE A BOVE ASSESSMENT YEAR, I FIND THAT THE ORDER PASSED U/S 1 43(3) R.W.S 147 ON 06.12.2018OF THE INCOME TAX ACT, 1961 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE IN THE FOLLO WING MANNER: - THE ORDER IN THE AFORESAID CASE IS ERRONEOUS SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE ON THE FOLLOWING GROUNDS : THE ASSESSEE IS A COMPANY AND WAS ENGAGED IN THE MANUFACTURING AND SALE OF STRUCTURAL PELLETS, SPONG E-IRON, BILLETS AND BLOOMS & FERRY ALLOYS. THE ASSESSEE COMPANY HAD FIL ED ITS RETURN OF INCOME FOR A.Y. 2011-12 ON 26.09.2011 DECLARING INC OME AT NIL. THE CASE WAS REOPENED AFTER ISSUING NOTICE U/S 148 AND REASSESSMENT WAS COMPLETED ON 06.12.2018 AS SUCH AND TAX LEVIED UNDE R MAT FOR RS. 61299035/- ON BOOK PROFIT OF RS. 307563963/-. THE R EGULAR ASSESSMENT WAS COMPLETED ON 14.03.2014 AT NIL AFTER ALLOWING D EDUCTION U/S 80IA FOR RS. 337916123/- INCLUDING DISALLOWANCE MADE FOR RS. 42028246/- ON ACCOUNT OF SUBSIDY FROM C.G. STATE GOVT. TREATED AS REVENUE RECEIPT. THE CASE WAS REOPENED AFTER ISSUING NOTICE U/S 148 ON 19.09.2017 AND ASSESSEE COMPANY FILED RETURN OF INCOME ON 16.11.20 17 DECLARING INCOME AT RS. NIL/- AFTER CLAIMING DEDUCTION U/S 80 IA FOR RS. 295887877/- AND REASSESSMENT WAS COMPLETED ON 06.12 .2018 AS SUCH AND TAX LEVIED UNDER MAT FOR RS. 61299035/- ON BOOK PROFIT OF RS. 307563963/-. INCORRECT ALLOWANCE OF DEDUCTION U/S 80IA OF IT ACT . AUDIT EXAMINATION REVEALED THAT THE RAP HAS POINTED OUT FOR INCORRECT ALLOWANCE OF DEDUCTION U/S 80IA DUE TO NON-MAINTENA NCE OF SEPARATE BOOKS OF ACCOUNTS AND DISALLOWANCE MADE ON ACCOUNT OF SUBSIDY RECEIVED FROM THE C.G. STATE GOVT. TREATED AS REVEN UE RECEIPT VIDE H.M. NO./CRA/DT/ REVIEW 80IA/2015-16/13 DATED 18.09.2015 . THE CASE WAS REOPENED TO EXAMINE THE ELIGIBILITY OF DEDUCTION CL AIMED AND ALLOWED ITA NO. 32/RPR/2021 (SHRI BAJRANG POWER AND ISPAT LTD.VS. DCIT) A.Y. 2011-12 - 5 - U/S 80IA DURING REGULAR ASSESSMENT. FURTHER, IT WAS OBSERVED THAT THE ASSESSEE COMPANY HAD FILED THE ORIGINAL RETURN OF I NCOME ON 26.09.2011. DURING RE- ASSESSMENT THE ASSESSEE COMP ANY HAD FURNISHED BOOKS OF ACCOUNT AUDITED BY THE CHARTERED ACCOUNTAN T ALONGWITH 3CA REPORT SIGNED AND VERIFIED BY THE CHARTERED ACCOUNT ANT ALONGWITH FORM 10CCB WHICH WAS SIGNED AND VERIFIED BY THE CHARTERE D ACCOUNTANT ON 24.01.2012 AFTER DATE OF FILING OF RETURN OF INCOME . THE CHARTERED ACCOUNTANT HAD CERTIFIED DEDUCTION U/S 80IA FOR RS. 352395627/- IN FORM 10CCB BUT NO SEPARATE/ REVISED BOOKS OF ACCOUN TS AND REPORT IN FORM 10 CCB WAS FURNISHED FOR CALCULATION OF PROFIT AND DEDUCTION U/S 80IA FOR RS. 295887877/- AS CLAIMED IN REVISED RETU RN OF INCOME AND ALLOWED DURING RE-ASSESSMENT (AS PER BOOKS OF ACCOU NT, COMPUTATION OF INCOME AND REPORT IN FORM 10CCB AVAILABLE ON RECORD .) THIS ASPECT WAS REMAINED TO BE EXAMINE BY THE AO DURING RE-ASSESSME NT PROCEEDING. IN VIEW OF SECTION80IA(7) R.W.S. 44AB - THE BOOKS OF ACCOUNT AUDITED BY THE CHARTERED ACCOUNTANT ALONGWITH 3CA R EPORT AND REPORT IN FORM 10CCB WAS REQUIRED TO BE SIGNED AND VERIFIE D ON OR BEFORE THE DUE DATE SPECIFIED U/S 139(1) OF IT ACT I.E. 30.09. 2011. THE ASSESSEE COMPANY HAD FAILED TO COMPLY THE CONDITIONS SPECIFI ED FOR CLAIMING THE DEDUCTION AND NOT ELIGIBLE FOR CLAIMING THE DEDUCTI ON U/S 80IA FOR RS. 295887877/- AND REQUIRED TO BE ADDED BACK TO THE AS SESSE INCOME WHICH WAS NOT DONE. THE OMISSION RESULTED IN UNDER ASSESS MENT OF INCOME TO THE EXTANT INVOLVING SHORT LEVY OF TAX OF RS. 88975 169/-. FURTHER, AUDIT EXAMINATION REVEALED THAT THE ASSESS EE HAD GOT ACCOUNT AUDITED BY THE CHARTERED ACCOUNTANT FOR A.Y. 2011-1 2 AND 3CD REPORT WAS SIGNED BY THE ACCOUNTANT ON 24.01.2012. DURING ASSESSMENT THE ASSESSING OFFICER NEITHER INITIATED THE PENALTY PRO CEEDING FOR LEVY OF PENALTY U/S 271B NOR HAVING REASON WITH SPEAKING OR DER PASSED FOR NON LEVY OF PENALTY. THE ASSESSEE FAILED TO COMPLY THE PROVISION OF SECTION 44AB AND LIABLE TO PAY PENALTY U/S 271B FOR RS. 1,5 0,000/-. INCORRECT ALLOWANCE OF DEPRECIATION ON SUBSIDIZED C APITAL ASSETS. AUDIT EXAMINATION REVEALED THAT RAP HAS POINTED OUT FOR INCORRECT ALLOWANCE OF DEDUCTION U/S 80IA FOR DISAL LOWANCE MADE ON ACCOUNT OF SUBSIDY RECEIVED FROM C.G. STATE GOVT. T REATED AS REVENUE RECEIPT VIDE H.M. NO./CRA/DT/REVIEW/80IA/ 2015- 16/ 13 DATED 18.09.2015. FURTHER, IT WAS OBSERVED THAT THE CHART ERED ACCOUNTANT HAD CERTIFIED THAT THE ASSESSEE COMPANY HAD RECEIVE D CAPITAL SUBSIDY OF RS. 43155400/- WHICH WAS ADJUSTED AGAINST SALE TAX LIABILITY (REFER 13(E) OF 3CD REPORT). DURING REGULAR ASSESSMENT THE ASSESSING OFFICER HAD TREATED AS REVENUE SUBSIDY AND ADDITION MADE FO R RS. 42028246/- BUT DEDUCTION U/S 80IA ALLOWED ON THE SAID SUBSIDY AMOUNT. DURING RE-ASSESSMENT THE ASSESSSEE COMPANY HAD SUBM ITTED THAT ON THE EXACTLY SAME SETS OF FACTS AN ADDITION OF RS . 3.41 CR. WAS MADE BY THE ASSESSING OFFICER IN AY 2010-11 BY TREATING THE CAPITAL SUBSIDY AS REVENUE SUBSIDY AND THE SAID ADDITION WAS SUBJEC T TO FIRST APPEAL BEFORE HONBLE CIT(A) WHO WAS KIND ENOUGH TO ALLOW THE APPEAL OF THE ASSSESSEE BY DELETING THE ADDITION OF RS. 3.41 CR. MADE BY THE AO BY HIS ORDER DATED 28.04.2016 THE SAID ORDER OF CIT(A) WAS ALSO CONFIRMED BY THE HONBLE ITAT, RAIPUR BENCH ON 09.08.2018 THER EBY DELETING THE ITA NO. 32/RPR/2021 (SHRI BAJRANG POWER AND ISPAT LTD.VS. DCIT) A.Y. 2011-12 - 6 - ADDITION MADE BY THE AO. THE ASSESSING OFFICER HAD ACCEPTED THE PLEA OF THE ASSESSEE AND NO ADDITION MADE ON THIS GROUND DURING RE- ASSESSMENT. SINCE, THE ASSESSEE HAD RECEIVED CAPITAL SUBSIDY FR OM C.G. STATE GOVT. FOR RS. 4,31,55,400/- WHICH WAS ADJUSTED AGAI NST SALE TAX LIABILITY( AS PER 13(E) OF 3CD REPORT CERTIFIED BY THE CHARTERED ACCOUNTANT) DURING THE PREVIOUS YEAR RELEVANT TO AY 2011.12. FURTHER, IT WAS OBSERVED FROM THE BALANCE SHEET THAT THE ASS ESSEE COMPANY HAD SHOWN AS CAPITAL SUBSIDY FOR RS. 7,97,84,262/- AS O N 31.03.2011 (REFER SCHEDULE- 2 RESERVE AND SURPLUS). THE ASSESSE HAD RECEIVED TOTAL CAPITAL SUBSIDY FOR RS. 4,31,55,400/- DURING THE PREVIOUS YEAR WHICH WAS CR EDITED TO THE BALANCE SHEET, THE DEPRECIATION WAS REQUIRED TO BE CALCULATED AFTER CONSIDERING CAPITAL SUBSIDY WHICH WAS NOT DONE. IN VIEW OF EXPLANATION 10 OF SECTION 43 THE ASSESSEE HAD CLAIMED AND ALLOW ED EXCESS DEPRECIATION FOR RS. 3,45,24,230/- (BEING 80% ON PLANT AND MACHINERY FOR RS. 4,31,55,400/-) WAS NOT IN ORDER AND REQUIRE D TO BE ADDED BACK IN THE ASSESSES INCOME WHICH WAS NOT DONE. SINCE THE ABOVE FACTS AND ENQUIRY WAS NOT DONE BY T HE ASSESSING OFFICER DURING THE COURSE OF RE-ASSESSMENT PROCEEDI NGS, THE ORDER PASSED U/S 143(3) R.W.S. 147 OF THE I.T ACT DATED 0 6.12.2018 FOR A.Y 2011-12 IS PREJUDICIAL TO THE INTEREST OF REVENUE. 4. HENCE, THERE IS NO APPLICATION OF MIND ON THE PA RT OF THE AO TO CORRECTLY TAX THE INCOME OF THE ASSESSEE IN T HE RETURN OF INCOME AND THEREFORE, THE ASSESSMENT ORDER PASSED U/S 144 OF THE ACT IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF REVENUE. THEREFORE, IN EXERCISE OF THE POWERS CONFERRED ON M E BY SECTION 263 OF THE I.T.ACT, 1961, I PROPOSE TO SUITABLE REV ISE THE ORDER U/S 263, WHICH MAY INCLUDE SETTING ASIDE THE ORDER AS SUCH. ACCORDINGLY, AN OPPORTUNITY IS BEING EXTENDED TO EXPLAIN YOUR CASE ALONG WITH DETAILS, DOCUMENTS AND NECESSARY EVIDENCES. AN ABSENCE OF AN Y SUBMISSION OR REPLY SHALL LEAD TO THE CONCLUSION THAT YOU HAVE NO OBJECTION FOR THE PROPOSED ACTION AND THE PROCEEDINGS SHALL BE FINALI ZED ACCORDINGLY. YOUR SUBMISSION / REPLY MAY KINDLY BE SENT THROUGH THE E-MAIL ON OR BEFORE 17/02/2021. IF YOU WISH TO APPEAR PERSONALLY OR THROUGH YOUR AU THORIZED REPRESENTATIVE, PERSONAL HEARING MAY KINDLY BE AVAI LED ON 08/03/2021 AT 11:00 AM IN THE OFFICE OF PCIT-1, CENTRAL REVENU E BUILDING, CIVIL LINES, RAIPUR. 5. ON A BROADER RECKONING, THE ALLEGATIONS MADE IN SHOW CAUSE NOTICE AGAINST THE ASSESSEE ARE TWO FOLDS; (I) INCO RRECT ALLOWANCE OF DEDUCTION UNDER S.80IA(4) OF THE ACT & (II) INCORRE CT ALLOWANCE OF DEPRECIATION ON SUBSIDIZED CAPITAL ASSET. ITA NO. 32/RPR/2021 (SHRI BAJRANG POWER AND ISPAT LTD.VS. DCIT) A.Y. 2011-12 - 7 - 5.1 WITH REFERENCE TO FIRST ALLEGATION, FOLLOWING R EASONS WERE QUOTED TO ASSAIL THE CORRECTNESS OF CLAIM OF DEDUCT ION UNDER S.80IA(4) OF THE ACT. (A) THE AUDIT PARTY HAS POINT ED OUT INCORRECT ALLOWANCE DUE TO NON-MAINTENANCE OF SEPARATE BOOKS OF ACCOUNTS; & (B) THE TAX AUDIT REPORT AND FORM 10CCB TO BE FILED FOR THE PURPOSES OF CLAIM OF DEDUCTION UNDER S.80IA OF THE ACT IS SI GNED BY THE CHARTERED ACCOUNTANT ON 24.11.2012 I.E. AFTER THE D ATE OF FILING OF RETURN OF INCOME; & (C) THE AO FAILED TO INITIATE T HE PENALTY PROCEEDINGS FOR LEVY OF PENALTY UNDER S.271B OF THE ACT FOR NON- COMPLIANCE OF SECTION 44AB OF THE ACT. 5.2 WITH REFERENCE TO SECOND ALLEGATION, THE SHOW C AUSE NOTICE POINTED OUT THAT DEPRECIATION WAS REQUIRED TO BE CA LCULATED AFTER CONSIDERING THE CAPITAL SUBSIDY OF RS.4.31 CRORE WH ICH HAS NOT BEEN DONE. 6. HENCE, THE PCIT CONCLUDED THAT THE ASSESSMENT OR DER PASSED UNDER S.143(3) R.W.S. 147 OF THE ACT IS ERRONEOUS I N SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AS CONTE MPLATED UNDER S.263 OF THE ACT. THE RESPONSE AND THE EXPLANATION OF THE ASSESSEE TOWARDS THE SHOW CAUSE NOTICE WAS RECORDED BY THE P CIT IN ITS REVISIONAL ORDER. ON CONSIDERATION THEREOF, THE PC IT PASSED AN ORDER UNDER S.263 OF THE ACT WHEREBY THE IMPUGNED R E-ASSESSMENT ORDER WAS SET ASIDE TO MAKE A FRESH ASSESSMENT AFTE R MAKING SUITABLE ENQUIRIES AS DIRECTED IN THE ORDER. 7. THE RELEVANT DIRECTIONS OF THE REVISIONAL ORDER IN RESPECT OF EACH ISSUE ARE REPRODUCED HEREUNDER: I HAVE GONE THROUGH THE ABOVE SUBMISSION AND ANNEX URES SUBMITTED BY THE ASSESSEE. THE CONTENTION OF THE AS SESSEE THAT THEY HAVE FILED THE REVISED RETURN ALONG WITH THE AMALGAMATED FINANCIAL STATEMENT AND REVISED FORM 10CCB (AFTER AMALGAMATION) IS IN V IEW OF THE ORDER OF AMALGAMATION PASSED BY HONBLE HIGH COURT OF CHH ATTISGARH NEEDS FURTHER VERIFICATION. HOWEVER, THE AO IS DIRECTED T O VERIFY THE ABOVE ITA NO. 32/RPR/2021 (SHRI BAJRANG POWER AND ISPAT LTD.VS. DCIT) A.Y. 2011-12 - 8 - FACTS MENTIONED BY THE ASSESSEE. ALSO, THE AO IS AL SO DIRECTED TO VERIFY WHETHER ASSESSEE HAS FILED AMALGAMATED FINANCIAL ST ATEMENT ALONG WITH REVISED RETURN FROM THE EFFECTIVE DATE OF AMAL GAMATION I.E. FROM 1.04.2008 TO 31.03.2011. THE AO IS FURTHER ADVISED TO VERIFY THE STATUS OF CLAIM OF DEDUCTION U/S 80IA IN PRECEDING PREVIOU S YEARS. WITH RESPECT TO ISSUE NO. 2, THE INDUSTRIAL POLICY FOR SUBSIDY FRAMED BY THE STATE OF CHHATTISGARH AND THE CASE LA WS RELIED UPON BY THE ASSESSEE. IT IS THE UNDISPUTED FACT OF THE CASE THAT THE ASSESSEE HAS RECEIVED THE SUBSIDY OF RS.4.20 CRORE BY WAY OF DEF ERMENT OF SALES TAX LIABILITY. THEREFORE, THE AO IS DIRECTED TO APPLY O F THE PROVISION OF SECTION 43(1) FOR COMPUTING THE ACTUAL COST OF ASSE TS TREATING SUBSIDY RECEIVED ON CAPITAL ASSISTANCE OBTAINED BY STATE GO VERNMENT. 8. AGGRIEVED BY THE AFORESAID ACTION OF THE PCIT, T HE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGITATING THE SUPERVI SORY JURISDICTION USURPED BY THE PCIT UNDER S.263 OF THE ACT. 9. THE LEARNED COUNSEL FOR THE ASSESSEE BROADLY REI TERATED ITS DETAILED SUBMISSIONS MADE BEFORE THE PCIT AND SUBMI TTED THAT THE PCIT HAS MIS-DIRECTED HIMSELF IN LAW AND FACTS IN R ESORTING THE REVISIONAL JURISDICTION IN CASE WHERE THE ISSUE WAS EXAMINED FIRSTLY IN THE ORIGINAL ASSESSMENT AND THEREAFTER IN THE RE -ASSESSMENT PROCEEDINGS. WE SHALL APPROPRIATELY REFER AND DEAL WITH THE VARIOUS FACETS OF THE ARGUMENTS IN SUCCEEDING PARAGRAPHS. 10. THE LEARNED DR FOR THE REVENUE, ON THE OTHER HA ND, RELIED UPON THE REVISIONAL ORDER PASSED BY THE PCIT. 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS AND PERUSED THE REVISIONAL ORDER PASSED BY THE CIT UNDE R S.263 OF THE ACT AS WELL AS OTHER MATERIALS REFERRED TO AND RELI ED UPON BY THE RESPECTIVE PARTIES AND CASE LAWS CITED. 11.1 FIRST ISSUE IN THE REVISIONAL ORDER CONCERNS E LIGIBILITY OF DEDUCTION UNDER S.80IA(4) OF THE ACT. FEW FACTS NE EDS TO BE REITERATED. ORIGINAL RETURN IN THE INSTANT CASE WA S FILED ON 28.09.2011. THE APPLICATION FOR AMALGAMATION WAS F ILED ON 11.11.2008. BY HIGH COURT DATED 14.11.2011, THE SC HEME OF ITA NO. 32/RPR/2021 (SHRI BAJRANG POWER AND ISPAT LTD.VS. DCIT) A.Y. 2011-12 - 9 - AMALGAMATION WAS SANCTIONED AND THE TRANSFEROR COMP ANY, NAMELY, SHRI BAJRANG METTALICS & POWER LTD. GOT MERGED WITH THE ASSESSEE COMPANY. THE SCHEME OF AMALGAMATION WAS SANCTIONED WITH EFFECT FROM 01.04.2008. CONSEQUENTLY, THE AMALGAMATED AUD ITED FINANCIAL STATEMENT WAS PREPARED. THE REVISED RETURN THEREAF TER FILED ON 07.01.2013. AMALGAMATED FORM 10CCB WAS SIGNED AND VERIFIED ON 24.01.2012 I.E. MUCH BEFORE FILING OF REVISED RETUR N FILED ON 07.01.2013. ON THE BASIS OF THE REVISED RETURN, TH E ASSESSMENT WAS CARRIED OUT UNDER S.143(3) OF THE ACT DATED 14.03.2 014. THEREAFTER, COMPLETED ASSESSMENT OF THE ASSESSEE WAS REOPENED T O VERIFY THE CLAIM OF THE DEDUCTION UNDER S.80IA(4) OF THE ACT IN THE LIGHT OF REASONS RECORDED IN THIS REGARD. THE ELIGIBLE DEDUCTION UN DER S.80IA OF THE ACT STOOD AT RS.35,23,95,627/- BUT WAS HOWEVER REST RICTED TO THE AVAILABLE PROFIT. ALL THE FACTS CONCERNING CLAIM O F DEDUCTION UNDER S.80IA(4) OF THE ACT WAS VERIFIED BY THE AO IN THE ORIGINAL RETURN BASED ON REVISED RETURN AS PER AMALGAMATED ACCOUNTS AND THEREAFTER IN THE RE-ASSESSMENT PROCEEDINGS YET AGAIN AS CLAIMED AND DEMONSTRATED BY THE ASSESSEE WITH REFERENCE TO NOTICES ISSUED AN D REPLIES FILED THEREON. IT IS NOTICED FROM THE REASONS RECORDED F OR REOPENING THE ASSESSMENT DATED 27.04.2018 THAT REOPENING WAS CARR IED OUT TO ASCERTAIN THE CLAIM OF DEDUCTION UNDER S.80IA(4) OF THE ACT ALONE. APPARENTLY, ALL THE FACTS WERE EXAMINED BY THE AO A ND THE CLAIM OF DEDUCTION UNDER S.80IA(4) OF THE ACT WAS ACCEPTED A ND ALLOWED FOR WHICH THE CASE WAS REOPENED. NOTICEABLY, ORIGINAL AS WELL AS RE- ASSESSMENT WERE CARRIED OUT ON THE VERY ISSUE OF EL IGIBILITY OF SECTION 80IA(4) OF THE ACT IN THE CASE OF THE ASSESSEE. TH E REVISIONAL JURISDICTION UNDER S.263 OF THE ACT WAS INVOKED YET AGAIN ON THE SAME SET OF GROUND FOR WHICH THE CASE WAS REOPENED UNDER S.147 OF THE ACT. SUCH ACTION OF THE PCIT WAS HELD TO BE IMPERMISSIBL E IN LAW BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF INDIRA INDUSTRIES VS. PCIT 305 CTR 314 (MAD.) . ITA NO. 32/RPR/2021 (SHRI BAJRANG POWER AND ISPAT LTD.VS. DCIT) A.Y. 2011-12 - 10 - 11.2 IN THIS BACKDROP, THE PCIT HAS RAISED STRANGE ISSUES IN REVISIONAL ORDER, SUCH AS, REVISED FORM 10CCB (AFTER AMALGAMAT ION) WAS SIGNED AND VERIFIED AFTER THE DUE DATE SPECIFIED UNDER S.1 39(1) OF THE ACT I.E. 30.09.2011 AND CONSEQUENTLY THE ASSESSEE HAS FAILED TO COMPLY WITH THE CONDITIONS SPECIFIED FOR DEDUCTION. THE STAND OF THE PCIT IS BIZARRE. ADMITTEDLY, THE AMALGAMATION OF THE ASSES SEE COMPANY WAS SANCTIONED BY THE HONBLE HIGH COURT ON 14.11.2011 WITH EFFECT FROM 01.04.2008. IT IS THUS NATURAL THAT FORM 10CCB SHO WING COMPUTATION OF DEDUCTION ELIGIBLE TO ASSESSEE UNDER S.80IA(4) O F THE ACT CAN BE SIGNED AND VERIFIED ONLY AFTER 14.11.2011 AFTER AMA LGAMATION OF ACCOUNTS AND COMPLETION OF OTHER FORMALITIES. THE ASSESSEE CANNOT BE EXPECTED TO DO THE IMPOSSIBLE WHEN THE SCHEME OF AM ALGAMATION ITSELF HAS BEEN SANCTIONED IN NOVEMBER 2011. THE ASSESSEE COULD NOT HAVE FILED THE FORM 10CCB ON AMALGAMATED ACCOUNT, VERIFI ED BY THE CHARTERED ACCOUNTANT PRIOR TO THAT DATE. IN OUR VI EW, NEITHER THE ASSESSEE NOR THE AO CAN BE FAULTED IN THIS REGARD. THE AO HAS RIGHTLY APPRECIATED THE PECULIAR CIRCUMSTANCES AND IGNORED THE PROCEDURAL LATCHES AND THE CLAIM OF THE DEDUCTION UNDER S.80IA (4) OF THE ACT WAS ALLOWED AFTER VERIFICATION IN TWO ROUNDS. THE ACTI ON OF THE AO BEING PLAUSIBLE, CANNOT BE REGARDED AS ERRONEOUS FOR TAKI NG INTO ACCOUNT FORM 10CCB SIGNED AFTER THE DATE OF AMALGAMATION IN THESE PECULIAR CIRCUMSTANCES. THE DIRECTION OF THE PCIT ON FURTH ER VERIFICATIONS ARE REQUIRED IN THE CONTEXT OF REVISED FORM 10CCB IS N OT INTELLIGIBLE AT ALL. THE PCIT HIMSELF COULD HAVE EASILY VERIFIED T HESE OBVIOUS FACTS AVAILABLE ON RECORD AND POINTED OUT TO REVENUE. TH E PCIT HAS APPARENTLY ACTED WITHOUT THE AUTHORITY OF LAW ASKIN G FOR SOME DIRECTIONLESS PROBE ON CATEGORICAL FACTS AND THAT T OO AFTER TWO ROUNDS OF ASSESSMENTS ON THE ISSUE. WE ALSO FAIL TO UNDER STAND THE PURPORT OF DIRECTIONS TO THE AO TO VERIFY WHETHER ASSESSEE HAS FILED AMALGAMATED FINANCIAL STATEMENT ALONGWITH REVISED RETURN FROM T HE EFFECTIVE DATE OF AMALGAMATION. THE FACTS PLACED ON RECORD VOUCHES F OR THE STAND OF THE ASSESSEE. SUCH NON-SPEAKING OMNIBUS DIRECTION POIN TS TO FISHING EXPEDITION AND WOULD EVOKE AN APPARENT UNEASE IN TH E MINDS OF THE TAX ITA NO. 32/RPR/2021 (SHRI BAJRANG POWER AND ISPAT LTD.VS. DCIT) A.Y. 2011-12 - 11 - PAYERS. THE PCIT ON VERIFICATION OF THE CASE RECOR DS COULD HAVE VERIFIED THESE FACTS VERY EASILY WITHOUT ANY EFFORT AND COULD HAVE COME TO SOME MEANINGFUL OBSERVATIONS. THE ACTION O F THE PCIT IS GROSSLY CONTRARY TO THE OBSERVATIONS MADE BY THE HO NBLE DELHI HIGH COURT IN THE CASE OF ITO VS. DG HOUSING PROJECTS LTD. (2012) 343 ITR 329 (DELHI) WHEREIN A CASE OF INADEQUATE ENQUIRY AND LACK OF E NQUIRY HAS BEEN CLEARLY DISTINGUISHED AND A BURDEN ALBEIT ON SOME LOWER PEDESTAL HAS BEEN PLACED UPON PCIT TO CONDUCT SOME MINIMAL ENQUIRY HIMSELF TO PREVENT MISUSE OF REVISIONAL JURISDICTIO N. IN THE INSTANT CASE, THE PCIT COULD HAVE GATHERED THE APPARENT FAC TS WITHOUT ANY EXERTION TO OUR MIND. INEXPLICABLY, THE PCIT HAS R ATHER ASKED THE AO TO REVISIT THE FACTS ALREADY PLACED ON RECORD AND F OR THE PURPOSE UNKNOWN TO US. THE FACTS AVAILABLE ON RECORD CLEARL Y POINTS OUT TO PROPER VERIFICATION ON ASPECTS OF DEDUCTION CLAIMED AND DO NOT WARRANT ANY INDULGENCE. SUCH ACT OF THE PCIT TO DISLODGE A QUASI JUDICIAL ORDER UNDER S.263 OF THE ACT CANNOT BE COUNTENANCED . THE REVISIONAL ACTION ON THE FIRST ISSUE THEREFORE IS QUASHED. 11.3 ADVERTING TO THE SECOND ISSUE, A CONTROVERSY H AS BEEN RAISED BY THE PCIT ON CORRECTNESS OF DEPRECIATION ON GROSS VA LUE OF ASSETS WITHOUT DEDUCTION OF SUBSIDY RECEIPT ON CAPITAL ASS ETS OBTAINED FROM THE GOVERNMENT. IN DEFENSE, THE CASE OF THE ASSESS EE IS TWO FOLD; (I) THE AO WAS NOT SEIZED OF THE IMPUGNED ISSUE IN THE SECOND ROUND OF PROCEEDINGS UNDER S.147 OF THE ACT. NO OBLIGATION WAS THUS CAST ON THE AO UNDER LAW TO ENTER INTO ROVING ENQUIRIES ON ALL ASPECTS UNCONNECTED TO THE ISSUE ON WHICH THE REOPENING WAS MADE. SUCH ISSUE COULD HAVE BEEN EXAMINED ONLY IN THE REGULAR ASSESSMENT. THUS, SUCH ISSUE COULD NOT BE RAISED INDIRECTLY BY WAY OF A DIRECTION IN THE GARB OF REVISIONAL PROCEEDINGS; (II) ON MERITS, IT WAS CONTENDED THAT THE SUBSIDY BY WAY OF DEFERMENT OF SALES TAX LIABIL ITY WAS NOT GIVEN TO THE ASSESSEE TO MEET THE COST OF ANY SPECIFIC ASSET BUT WAS GIVEN TO CREATE AN ENVIRONMENT FOR INDUSTRIAL DEVELOPMENT AN D GROWTH OF ECONOMICALLY BACKWARD AREAS OF CHHATTISGARH STATE T O CREATE ITA NO. 32/RPR/2021 (SHRI BAJRANG POWER AND ISPAT LTD.VS. DCIT) A.Y. 2011-12 - 12 - ADDITIONAL EMPLOYMENT, TO ENSURE PARTICIPATION OF B ACKWARD AND WEAKER SECTION OF PEOPLE ETC. THE HIGHLIGHTS OF TH E INDUSTRIAL POLICY AWARDING THE SUBSIDY WAS REFERRED TO AND RELIED UPO N. IT WAS THUS CONTENDED THAT WHEN UNDER THE SCHEME NO PAYMENT IS MADE DIRECTLY OR INDIRECTLY TO MEET ANY PORTION OF THE ACTUAL COST O F ACQUISITION OF CAPITAL ASSET AND WHERE THE RELEASE OF SUBSIDY ITSE LF IS DETERMINED ON THE BASIS OF SALES TAX PAYMENT MADE BY THE ASSESSEE WITHOUT ANY REFERENCE TO THE COST OF PROJECT, EXPLANATION 10 TO SECTION 43(1) HAS NO APPLICATION. THE RELIANCE WAS PLACED ON THE JUD GMENT IN THE CASE OF PCIT VS. M/S. WELSPUN STEEL LTD. (2019) 264 TAXMAN 0252 (BOMBAY) , WHEREIN IN THE SIMILAR FACTS, THE ISSUE WAS DECID ED IN FAVOUR OF THE ASSESSEE. IT WAS HELD THEREIN THAT T HE GOVERNMENT SUBSIDY WHICH IS INTENDED AS AN INCENTIVE TO ENCOUR AGE ENTREPRENEURS TO MOVE TO BACKWARD AREAS AND ESTABLISH INDUSTRIES, WOULD NOT BE RECKONED FOR THE PURPOSES OF EXPLANATION (10) TO SE CTION 43(1) OF THE ACT. IT WAS POINTED OUT THAT THE PCIT COULD HAVE E ASILY ASCERTAINED THE POSITION OF LAW HIMSELF. 11.4 WE FIND MERIT ON BOTH THE COUNTS. WHEN A POIN T IN ISSUE WAS NOT RAISED IN THE REASONS RECORDED FOR ALLEGED ESCAPEME NT OF INCOME, THE AO CANNOT BE COMPELLED IN LAW TO START A WITCH-HUNT TO EXAMINE ALL PERIPHERAL ISSUES. THIS WILL TANTAMOUNT TO ROVING ENQUIRY IN THE GARB OF REOPENING AND EXPAND ITS SCOPE WHICH IS NOT PERM ISSIBLE UNDER S.147 OF THE ACT. THE AO THUS WAS NOT ENTITLED TO REVISIT THE IMPUGNED ISSUE OF DEPRECIATION ON CAPITAL SUBSIDY. SECONDLY, THE ISSUE RAISED IN SECOND ROUND WAS IN RELATION TO SEC TION 80IA(4) OF THE ACT FOR WHICH NO ADDITIONS WERE MADE AND THEREFORE NO OTHER ADDITIONS/DISALLOWANCES WERE PERMISSIBLE IN LAW AS ECHOED BY SEVERAL JUDICIAL PRECEDENTS INCLUDING CIT V. JET AIRWAYS , [2011] 331 ITR 236 (BOM) ; RANBAXY LABORATORIES LIMITED VERSUS CIT, (2011) 336 ITR 136 (DELHI) . ITA NO. 32/RPR/2021 (SHRI BAJRANG POWER AND ISPAT LTD.VS. DCIT) A.Y. 2011-12 - 13 - 11.5 WE ALSO FIND THE CASE OF THE ASSESSEE ON MERIT S TO BE PRIMA FACIE PLAUSIBLE. ALL THE RELEVANT FACTS WERE PLACED BEFO RE THE PCIT, WHICH CLEARLY JUSTIFIES THE STAND OF THE ASSESSEE THAT SU BSIDY GRANTED NOT BEING ATTRIBUTABLE TO MEET ANY PORTION OF ACTUAL CO ST, SUCH SUBSIDY CANNOT BE REDUCED FROM THE COST OF ASSETS. THE CLA IM OF ASSESSEE IS PLAUSIBLE AND IS IN ACCORD WITH JUDICIAL PRECEDENTS . CONSEQUENTLY, NON-ADJUSTMENT IN THE DEPRECIATION CANNOT TERMED AS ERRONEOUS. WE THUS SEE TOTAL ABSENCE OF MERIT IN THE ASSUMPTION O F JURISDICTION UNDER S.263 OF THE ACT. 12. THE EVENT OF INITIATION OF PENALTY UNDER S.271B OF THE ACT, IF ANY, RELATES BACK TO ORIGINAL ASSESSMENT DATED 14.0 3.2014 WHEN THE RETURN WAS FILED POST AMALGAMATION. THUS, THE SHOW CAUSE NOTICE IS TIMEBARRED IN SO AS THE IMPUGNED DIRECTION IS CONCE RNED. 13. THE REVISIONAL ORDER THUS REQUIRES TO BE QUASHE D. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. SD/- SD/- (N. K. CHOUDHRY) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER RAIPUR TRUE COPY S. K. SINHA / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 / DR, ITAT, RAIPUR 5. 267 8 / GUARD FILE. BY ORDER 4 SR. PRIVATE SECRETARY ITAT 4 RAIPUR (ON TOUR) ORDER PRONOUNCED ON 21/09/2021 BY PLACING THE RESULT ON THE NOTICE BOARD AS PER RULE 34(5) OF THE INCOME TAX (APPELLAT E TRIBUNAL) RULE, 1963.