Income Tax Appellate Tribunal - Cochin
M/S. Delphi Connection System India P. ... vs The Acit, Cochin on 8 November, 2016
ITA No. 256/C/2016
IN THE INCOME TAX APPELLATE TRIBUNAL
COCHIN BENCH
KOCHI
BEFORE S/SHRI B P JAIN, AM & GEORGE GEORGE K, JM
ITA No 256/Coch/2016
(Asst Year 2010-11)
M/s Delphi Connection Systems India P Ltd Vs The Asst Commr of Income Tax
(Formerly FCI Technology Services Ltd) Corporate Circle 1(1)
XXIX/2809 Thykoodam
Kochi 19
( Appellant) (Respondent)
PAN No. AAACF5044Q
Assessee By Sh Satyanarayanan
Revenue By Sh Shantom Bose CIT-
DR
Date of Hearing 7th Nov 2016
Date of pronouncement 8th Nov 2016
ORDER
PER GEORGE GEORGE K,JM:
This appeal, at the instance of the revenue, is directed against the CIT"s order dated 23.3.2016 passed u/s 263 of the I T Act. The relevant assessment year is 2010-11.
2 The ground raised, read as follows:
1 The learned CIT went wrong in reopening the assessment completed u/s.143 (3) r w.s.l44C of the IT Act on 17-4-2014. There is no error prejudicial to the interest of revenue requiring reopening u/s.263 of the IT Act.
2. The order of the learned CIT is not valid for the reason that the learned CIT has not mentioned how the assessment has error which is prejudicial to the interest of revenue.
3. The learned CIT has only stated that the contention of the assessee needs verification. The learned CIT ought to have verified and convinced that there is an error which is prejudicial to the interest of revenue.
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4. For these and other grounds to be further adduced at the time of hearing the order of the learned CIT requires to be modified to the extent appealed against."
3 Briefly stated the facts of the assessee are as follows:
The assessee is a company engaged in the business of computer aided design and engineering services. For the assessment year 2010-11, return of income was filed on 15.10.2010, declaring the total income of Rs. 71,76,698/-. The assessment u/s 143(3) r.w.s 144C of the Act was completed vide order dated 17.4.2014 fixing a total income of Rs. 88,83,634/-.
3.1 Subsequently, the CIT issued notice dated 24.2.2016 u/s 263 of the Act. The assessee raised objections to the noticed issued u/s 263 of the Act, which are reproduced in para 2 of the impugned order of the CIT. The CIT, however, rejected the contentions raised by the assessee and set aside the assessment order dated 17.4.2014 passed u/s 143(3) r.w.s 144C of the Act. The relevant findings of the CIT, read as follows:
"3. I have considered the submission of the assessee. The contentions of the assessee need verification from records which is to be provided by the assessee. This fact has to be examined by the Assessing Officer in detail. All these things which is supposed to be examined by the Assessing Officer at the time of passing the Assessment order was not done by him. Hence the order is erroneous.
4. I, therefore, set aside the order u/s 143(3) r.w.s. 144 of the IT Act dated 17-4-2014 on the above said limited issues. The Assessing Officer is directed to examine the facts of the case and pass an order as per the provisions of the Income- tax Act 1961, after giving ample opportunity to the assessee."
4 Aggrieved by the order of the CIT, the assessee has preferred this present appeal. The ld counsel for the assessee submitted that the CIT, in the impugned order, 2 ITA No. 256/C/2016 has only mentioned that 'the assessment order is erroneous'. It was submitted that the CIT has not mentioned that the order is prejudicial to the interest of the revenue. Therefore, it was contented that the twin conditions, for invoking the revisionary jurisdiction u/s 263 of the Act, have not been satisfied in the instant case and the revisionary order is to be quashed. In support of the above contention, the ld counsel relied on the order of the Amritsar Bench of the Tribunal in the case of Nitco Logistics P Ltd vs Principal Commissioner of Income Tax in ITA No.236/Asr/2015 (order dated 31.5.2016).
5 The ld DR, on the other hand, argued that the assessment order has not been dealt with any of the issues and has only incorporated the transfer pricing adjustment made u/s 92CA(3) of the Act. It was stated that the assessment order is cryptic and has not been considered the issues that were raised in the notice dated 24.2.2016 issued u/s 263of the Act. The ld DR relied on the judgment of the Hon'ble Delhi High Court in the case of CIT vs Toyota Motor Corporation reported in 306 ITR 49(Del). 6 We have heard the rival submissions and perused the material on record. The CIT, having examined the assessment records, for the assessment year 2010-11 had held that the order passed u/s 143(3) r.w.s 144C of the Act, is erroneous and prejudicial to the interest of the revenue and issued notice u/s 263 of the I T Act (notice dated 24.2.2016). The CIT had listed out following reasons for issuance of notice u/s 263 of the Act:
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"i) From the computation of income filed, it is seen that there is an error in the total taken by the assessee of Rs. 18,50,000/-
ii) Deduction u/s 10A has not been calculated properly as it is seen that in the 56F report there is a remark as under:-
"Turnover of the undertaking includes income due for the month of March 2010 of Rs. 56,43,468/- which was provided as on 31.3.2010 but subsequently reversed in April 2010."
The A.Y.2010-11 being the last year of 10A, the profit far A.Y.2010-11 is in excess.
iii) Additional depreciation of Rs.41, 43,719/ - in respect of plant and machinery put to use in A.Y.2009-10 has been allowed as deduction which is not in order.
iv) An excess sum of Rs.3,06,082/- regarding assets taken an lease has been deducted from the profit,
v) The details regarding depreciation are not an record. As such the depreciation was not properly verified by the Assessing Officer.
vi) The applicability of provisions of Section 145A regarding excise duty has not been verified by the Assessing Officer.
vii. The expenses related to increase in capital whether treated as capital or revenue has not been verified by the Assessing Officer. viii. No. disallowance u/s 14A has been made by the Assessing Officer.
ix) Gratuity and superannuation paid during the year relate to A.Y.2009- 10. As such these are expenses of A.Y.2009-10 which are allowed in A.Y.2010-11. This is not in order.
x) The expenses under the head Miscellaneous Expenses and rates and taxes have not been verified with regard to payment of tax xi. Reconciliation of "Other income" has not been done properly. xii. Brought forward losses have not been verified by the Assessing Officer." 4 ITA No. 256/C/2016 6.1 On perusal of the assessment order completed on 17.4.2014 u/s 143(3) r.w.s 144C of the Act, we notice that several issues, raised by the CIT in the notice dated 24.2.2016 u/s 263 of the Act, have not been considered in the assessment order. 6.2 The Hon'ble Delhi High Court in the case of Toyota Motor Corporation (supra) had held that the order of the Assessing Officer must be self contained giving relevant facts and reasons for coming to a conclusion on those facts and law. The relevant findings of the Hon'ble Delhi High Court in the case of Toyota Motors Corporation (supra) read as follows:
"............It is also necessary for the parties to know the reasons that have weighed with the adjudicating authority in coming to a conclusion. The order passed by the Assessing Officer should be a self-contained order giving the relevant facts and reasons for coming to the conclusion based on those facts and law.
We find that the order passed by the Assessing Officer is cryptic, to say the least, and it cannot be sustained. The Tribunal cannot substitute its own reasoning to justify the order passed by the Assessing Officer when the Assessing Officer himself did not give any reason in the order passed by him......"
6.3 On further appeal, the Hon'ble Supreme Court while dismissing the appeal of the assessee ( 306 ITR 52) held that "it was not necessary to interfere at this stage. When the matter would be taken by the Assessing Officer on remand it was his duty to take into account all the relevant facts, including the materials, if any, placed by the assessee, and pass a reasoned order".
5 ITA No. 256/C/2016 6.4 The ld AR had relied on the Amritsar Bench of the Tribunal in the case of Nitco Logistics P Ltd (supra). According to us, the above order of the Tribunal will not help the case of the assessee. In that case, the Assessing Officer had passed a considered order and the CIT by invoking the powers u/s 263 of the Act, was in fact substituted his view that of the AO. The Amritsar Bench of the Tribunal had in substance decided the issue in favour of the assessee, after considering the factual situation of that case. In the instant case, as mentioned earlier, on perusal of the assessment order many of the issues that are raised in the notice dated 24.2.2016 issued u/s 263 of the Act, was never considered in the assessment order and in light of the judgment of the Hon'ble Delhi High Court in the case of Toyota Motors Corporation (supra), which has been affirmed by the Hon'ble Supreme Court in 306 ITR 52, we hold that the CIT is justified in invoking his revisionary powers u/s 263 of the Act and, we uphold the same. It is ordered accordingly.
7 In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open Court on this 8th day of Nov 2016.
Sd/- Sd/-
(B P JAIN) (GEORGE GEORGE K )
Accountant Member Judicial Member
Cochin: Dated 8th Nov 2016
Raj*
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ITA No. 256/C/2016
Copy to:
1. Appellant -
2. Respondent -
3. CIT(A)
4. CIT,
5. DR
6. Guard File
By order
Assistant Registrar
ITAT, COCHIN
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