Meril Life Sciences Private Limited Vs PCIT (ITAT Surat)
Assessee company filed its return for AY 2018-19 declaring income of Rs.39,24,06,630/-. Assessment order was passed u/s 143(3) r.w.s. 144B accepting the returned income. Subsequently, PCIT issued notice u/s 263 and assessee was asked in respect of (i) net foreign exchange gain not added to total income – Rs.2,63,509/-, (ii) depreciation on addition to intangible assets – Rs.96,87,432/- and (iii) disallowance u/s 14A – Rs.98,88,137/-. Assessee submitted replied which was duly considered by PCIT accepted the explanation of assessee on the issue of depreciation only. PCIT treated the assessment. He set aside the assessment order with a direction to the AO to frame fresh assessment order.
During the appellate proceedings before ITAT assessee raised additional ground challenging the validity of issuance of notice u/s 263 which was duly admitted by the ITAT by relying upon the decision of Hon’ble SC Jute Corporation of India Ltd. vs. CIT, 187 ITR 688 (SC) and further held that ITAT is empowered to permit assessee to raise an additional ground. Case of the assessee was selected for complete scrutiny. AO was not precluded from making any inquiry and verification, which is the case in limited scrutiny assessment. AO was duty bound to carry out proper inquiry, investigation and verification in respect of various issues in complete scrutiny. Explanation 2 was inserted below sub-section (1) of section 263 with effect from 01.06.2015 to declare as to what shall be deemed to be “erroneous in so far as it is prejudicial to the interest of revenue and case of assessee belong to AY 2018-19 which covered by the above explanation. PCIT rightly invoked the provision of section 263 after finding that lack of inquiry and verification and inadequate inquiry would certainly make the assessment order incomplete and not in consonance within the scope of “complete scrutiny”. Accordingly, the additional ground of the assessee is dismissed.
