The order of the Bench was delivered by
Rano Jain (Accountant Member)- The appeal filed by the assessee is directed against the order of the learned Commissioner of Income-tax (Central), Gurgaon, dated March 11, 2015, for the assessment years 2010-11, passed under section 263 of the Income-tax Act, 1961 (in short "the Act").
2. The facts of the case are that the assessment for the assessment year 2010-11 was completed under section 143(3) of the Income-tax Act, 1961, as on March 31, 2013. Later on, on examination of record, the Commissioner of Income-tax formed the opinion that the Assessing Officer did not appreciate evidences on record, failed to examine and arrive at the correct logical and the legal conclusion and in this process allowed a deduction under section 80-IB of the Act, which was not under the facts allowable to the assessee. In this view, a notice under section 263 of the Act was issued to the assessee dated December 29, 2013. The main contention of the Commissioner of Income-tax was that the claim of deduction under section80-IB(11A) of the Act was partly allowed by the Assessing Officer by holding that besides the business of rice milling, the assessee was also engaged in the integrated business of handling, storage and transportation of food grains. He also mentioned that in the previous year, such claim was rejected by the Assessing Officer and the Commissioner of Income-tax (Appeals) confirmed the stand of the Department. Further, in this order itself, the Commissioner of Income-tax mentioned that even though subsequently on February 26, 2014, the Income-tax Appellate Tribunal decided the matter in favour of the assessee in ITA Nos. 250 and 251/Chd/ 2013 for the assessment years 2008-09 and 2009-10 but since the order of the Income-tax Appellate Tribunal is under challenge, the conclusion of the Assessing Officer of allowing the deduction under section 80-IB(11A) of the Act in the assessment year 2010-11 was not in conformity with the provisions of law, self-contradictory and highly erroneous. For this, the Commissioner of Income-tax noted down his various objections, which are reproduced by him in his order at pages 1 to 3. He was of the view that the Assessing Officer did not consider the factual position and did not make inquiry or investigation on the said issue.
3. The assessee in reply to the notice under section 263 of the Act pointed out that the Income-tax Appellate Tribunal, Chandigarh Bench, vide order dated February 26, 2014, for the assessment years 2008-09 and 2009-10 had allowed the deduction by passing a self-speaking order in favour of the assessee. In this order, all the issues raised by the Commissioner of Income-tax were held in favour of the assessee. In spite of all these, the assessee gave point to point rebuttal of the issues raised in the notice under section 263 of the Act. This point to point rebuttal is reproduced by the Commissioner of Income-tax in his order in paragraph 3.2 at pages 2 to 7.
After considering the submission of the assessee the Commissioner of Income-tax set aside the order of the Assessing Officer for the assessment year 2010-11 with a direction to follow the consistent view point as has been taken in the assessment years 2007-08 and 2008-09, even though the same has been set aside by the Income-tax Appellate Tribunal, since the matter is before the honourable High Court for adjudication.
4. Aggrieved by this, the assessee has come up in appeal, raising the following grounds of appeal :
"1. That the learned Commissioner of Income-tax (Central), Gurgaon, has erred in assuming the jurisdiction under section 263 and, thereby holding that the assessment order as passed by the Assessing Officer for the assessment year 2010-11 is erroneous and prejudicial to the interests of the Revenue.
2. That the learned Commissioner of Income-tax (Central), Gurgaon, has failed to appreciate the fact that the assessment had been framed by the Assessing Officer after due application of mind and after considering all the facts and, thus, there was no error in the order passed under section 143(3) of the Act.
3. That the learned Commissioner of Income-tax (Central), Gurgaon, has also grossly erred in holding that the orders for the earlier two years, are erroneous and setting aside the assessment for the assessment year 2010-11 to the file of the Assessing Officer for making the assessment de novo as per the direction contained in the order as passed under section 263 of the Act.
4. That the learned Commissioner of Income-tax (Central), Gurgaon, has ignored the fact that for the earlier years, the matter has been adjudicated and decided by the honourable Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh, for the assessment years 2008-09 and 2009-10, vide order dated February 26, 2014, and those directions were binding upon the Commissioner of Income-tax (Central), Gurgaon and, as such, the assessment as set aside is against the facts and circumstances of the case.
5. That the findings of the Commissioner of Income-tax (Central), Gurgaon, as contained in the order under section 263 are totally incorrect, as being adjudicated too and the submissions as made before him have not been considered properly.
6. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed of."
5. The learned counsel for the assessee before making elaborate submissions on the merits of the case, stated that the Commissioner of Income- tax has not applied his mind while assuming the jurisdiction under section 263 of the Act but was influenced by the letter from the Commissioner of Income-tax, the Income-tax Appellate Tribunal, Departmental representative and which information was procured by the assessee under the RTI and a copy of the same was placed on record. It was stated that the letter of the Commissioner of Income-tax-Departmental representative clearly demonstrates that whatever points were dictated by him, the same were copied word by word by the Commissioner of Income-tax while issuing the notice under section 263 of the Act. The apprehension of the learned Commissioner of Income-tax-Departmental representative, in the said letter was that the order of the Assessing Officer in the assessment year 2010-11 was going to adversely affect the Departmental appeal for the assessment years 2008-09 and 2009-10. It was also stated that even the Commissioner of Income-tax while passing the order under section 263 of the Act has relied on the same reasons as given in the said letter by the Commissioner of Income-tax-Departmental representative, and there is not even a change of comma or full stop.
6. On the merits of the case, it was argued that the order of the Assessing Officer passed under section 143(3) of the Act runs into 46 pages, which was delivered by her after detailed application of mind. The Assessing Officer has applied her mind to various issues concerning deduction under section 80-IB of the Act, which were later on raised by the Commissioner of Income-tax in his notice under section 263 of the Act. Our attention was invited to pages 1 and 2 of the paper book filed by the assessee, whereby deductions under section 80-IB(11A) and section 80-IA of the Act were claimed. At paper book pages 3 and 4, a revised return filed as on March 28, 2012, was annexed. The returns were accompanied by the audited balance-sheets which are placed at the paper book pages 5 to 30 along with the report in Form 10CCB at pages 31 to 37. On the first questionnaire issued by the Assessing Officer placed at the paper book page 38, the queries regarding deductions are at question No. 12. In reply to the said questionnaire, the assessee filed a letter dated February 26, 2013, which is placed at page 43 onwards and the relevant replies are at item No. 72. This letter was annexed with various annexures. Annexures 9, 10, 11 and 13 were with respect to deduction under section 80-IA with regard to sanction of the mega project, certificate regarding the machinery, documents showing storage and documents showing transportation respectively. In another reply at page 47 of the paper book, the facts relating to deduction under section 80-IB(11A) of the Act were explained in detail to the Assessing Officer. It was submitted that even the issue of integrated business of handling, storage and transportation and power generation was duly replied by the assessee, the relevant pages of the paper book are 103 to 109. In another letter dated March 7, 2013, the replies regarding the mega project were given to the Assessing Officer. In view of all this, it was emphasised that the Assessing Officer was quite open to the issue of deduction under section 80-IA of the Act with regard to various eligibility conditions provided in the Act, which were queried by her in a number of notices issued to the assessee, which were duly replied by the assessee. After considering all these replies, the Assessing Officer had allowed only a portion of the deduction claimed by the assessee.
7. Another contention of the learned counsel for the assessee that the Commissioner of Income-tax in his order, himself affirmed the facts that all these issues were before the Income-tax Appellate Tribunal in the assessment years 2008-09 and 2009-10. Therefore, even on the merits, the assessment cannot be termed to be erroneous and prejudicial to the interests of the Revenue. Just because the Department is in appeal before the High Court, the order of the Assessing Officer which is in consonance with the findings given by the Income-tax Appellate Tribunal on various issues cannot be said to be erroneous.
8. The learned Departmental representative on the issue of initiation of provisions under section 263 of the Act on the basis of a letter written by the Commissioner of Income-tax-Departmental representative, stated that this document is an internal document for the purpose of administration and nothing beyond that and, therefore, no cognizance of the same should be taken qua the said document. This document can never be construed as record for the purpose of the provisions of section 263 of the Act. On the merits of the case, the learned Departmental representative relied on the order of the Commissioner of Income-tax and further stated that even if the allowability of the claim under section 80-IB(11A) of the Act is covered in favour of the assessee, vide the order of the Tribunal in the assessee's own case for the assessment years 2008-09 and 2009-10, since the Department is in appeal before the Punjab and Haryana High Court, this fact itself proves that there are divergent views on the said issue. Therefore, the presumption of jurisdiction under section 263 of the Act by the Commissioner of Income-tax is as per law. He placed reliance on the order of the honourable Supreme Court in the case of CIT v. Ansal Housing and Construction Ltd. [2014] 51 taxmann.com 376 (SC). Further, reliance was placed on the judgment of the Punjab and Haryana High Court in the case of CIT v. Rajesh Mahajan [2012] 346 ITR 514 (P&H) ; [2011] 16 taxmann.com 85, copy of the order of the Income-tax Appellate Tribunal, Chandigarh Bench, in the case of Vodafone South Ltd. v. CIT (TDS) [2015] 61 taxmann.com 108 (Chandigarh-Trib) and Bassera Realtors P. Ltd. v. CIT [2015] 55 taxmann.com 327 (Chandigarh-Trib) were also filed before us.
9. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. The undisputed fact which is also coming out of the order of the Commissioner of Income-tax passed under section 263 of the Act is that the issues which have been raised by the Commissioner of Income-tax in proceedings under section 263 of the Act were all present in the assessment years 2008-09 and 2009-10 also in the assessee's case at the time of hearing before the Assessing Officer. However, at the time of passing of order under section 263 of the Act, the issues were decided by the Income- tax Appellate Tribunal in ITA Nos. 250 and 251/Chd/2013 for the assessment years 2008-09 and 2009-10. The Commissioner of Income-tax himself admits that the issues have been decided in favour of the assessee by the Income-tax Appellate Tribunal. However, it is also a fact on record that the Department is in appeal against the said order of the Income-tax Appellate Tribunal before the honourable High Court. Nowhere in his order, the Commissioner of Income-tax has given any finding that any of the conclusions drawn by the Assessing Officer in the relevant assessment year is not in consonance with the findings given by the Income-tax Appellate Tribunal in the assessment years 2008-09 and 2009-10. Time and again, the Commissioner of Income-tax in his order under section 263 of the Act has stated that since these points were held against the assessee by the Assessing Officer and also the Commissioner of Income-tax (Appeals) in the assessment years 2008-09 and 2009-10, the order in the relevant assessment year is erroneous since the Assessing Officer has not maintained consistency in her view point.
10. For invoking the jurisdiction under section 263 of the Act, twin conditions of the order being erroneous as well as prejudicial to the interests of the Revenue are to be satisfied simultaneously. We are unable to understand that once the particular issues have been decided in favour of the assessee by the Income-tax Appellate Tribunal, even if in the earlier assessment years, how the Commissioner of Income-tax can infer that the same view having been taken by the Assessing Officer in subsequent assessment year, is erroneous. This is totally against the principles of judicial discipline and binding precedent. It is the spirit of law that the view taken by a higher authority is binding on all the lower authorities. The view taken by the Income-tax Appellate Tribunal is binding on the Assessing Officer as well as the Commissioner of Income-tax (Appeals) and even on the Commissioner of Income-tax, assuming jurisdiction under section 263 of the Act. Even if at the time of passing the order, the Assessing Officer did not have the benefit of the order of the Income-tax Appellate Tribunal in the earlier years, the Commissioner of Income-tax, while assuming the jurisdiction under section 263 had the benefit of the same. Therefore, the order was binding on the Commissioner of Income-tax.
11. Since the issues have been settled by the Income-tax Appellate Tribunal and the same view has been taken by the Assessing Officer, now in the garb of proceedings under section 263 of the Act, the Commissioner of Income-tax cannot tinker with her act stating that the same does not commensurate with the findings given by the Assessing Officer and the Commissioner of Income-tax (Appeals) in the earlier years. In this order of the Commissioner of Income-tax, we do not find even an iota of evidence and observe that the Commissioner of Income-tax has not been able to bring on record any of the inferences drawn by the Assessing Officer, which is not as per the view of the Income-tax Appellate Tribunal given in the earlier assessment years. In view of this, we do not find any error in the order of the Assessing Officer, not to talk about the prejudice to the interests of the Revenue. Therefore, in our view, the jurisdiction assumed by the Commissioner of Income-tax under section 263 of the Act is not as per law.
12. Even otherwise, all the nine issues raised by the Commissioner of Income-tax, which he has recorded in his order at pages 1 to 3, have been replied by the assessee, which is reproduced by him in his order at paragraph 3.2, from the perusal of which we see that all the issues are related to deduction under section 80-IB of the Act. All the issues have been investigated properly by the Assessing Officer. In view of this also, we do not find any error in the order of the Assessing Officer. Therefore, we hereby hold the jurisdiction assumed under section 263 to be illegal and quash the order of the Commissioner of Income-tax.
13. In the result, the appeal of the assessee is allowed.
The order pronounced in the open court on this 18th day of April, 2016.