Directing the AO to decide the issue afresh i.e., for making rowing enquiry is not permissible u/s.263
M/S AADHAR RICE MILLS PVT. LTD., C/O SRI VINAY KUMAR JALAN, M/S O.P. JALAN AND ASSOCIATES CONSULTANTS LLP VERSUS ITO, WARD-1 (1) , RANCHI
ITA No.294/RAN/2018, ITA No.201/RAN/2019
Revision u/s 263 – Pr. CIT has proceeded to revise the scrutiny assessment order and directing the AO to decide the issue afresh i.e. for making rowing enquiry which is not permissible u/s.263 – Tri
Disallowance of deduction u/s 80IB(11A) – as alleged assessee is not engaged in the business of integrated bulk handling storage & transportation of food grains and in fact the assessee is engaged in dehusking of paddy into rice and such this is not qualified for deduction u/s.80IB(11A) – HELD THAT:- Hon’ble Madras High Court in the case of M/s Muthuramalingam Modern Rice Mill [2019 (3) TMI 1104 – MADRAS HIGH COURT] answered the question in negative i.e against the Revenue and in favour of the assessee by holding that there is no reason to hold that the activity of dehusking of paddy into rice will not amount to “manufacture or production” and there is no justification to give a narrower meaning to these terms, therefore, the assessee is entitled for claim of deduction u/s.80IB(11A) of the Act.
AO was not correct in disallowing the benefit of Section 80IB(11A) to the assessee and, thus, the CIT(A) was not also correct and justified in confirming the disallowance made by the AO. Sole ground of assessee is allowed and the AO is directed to allow the deduction as claimed by the assessee u/s.80IB(11A)
Revision u/s 263 – HELD THAT:- We failed to understand on which basis the CIT held that the assessment order dated 27.12.2016 is erroneous or prejudicial to the interest of revenue without calling and perusing the relevant assessment records an merely on the basis of proposal for revision sent to him by the ITO, Ward-1, Ranchi. From the assessment order dated 27.12.2016 AO has examined the claim of the assessee u/s.80IB and thereafter held that the assessee is entitled for claim of deduction u/s.80IB(11A) hence, it is not a case of no enquiry.
CIT is empowered to revise the assessment order where such assessment order is erroneous or prejudicial to the interest of revenue after calling and examining the relevant assessment records and holding that either there is no enquiry or there is insufficient or inadequate enquiry by the AO on a particular issue but no such exercise has been undertaken by the ld. Pr. CIT while passing the impugned order u/s.263 of the Act either – no hesitation to hold that Pr. CIT has proceeded to revise the scrutiny assessment order and directing the AO to decide the issue afresh i.e. for making rowing enquiry which is not permissible u/s.263 of the Act. – Decided in favour of assessee