COMMISSIONER OF INCOME TAX Vs. HERO AUTO LTD

JUDGEMENT

(1.) Ld. counsel for the Revenue at the outset states that Annexure 1 to this appeal is the assessment order passed pursuant to the order under Section 263 of the Income Tax Act, 1961 ('Act', for short). He prays for and is granted permission to place on record the original assessment order dated 26.12.2006. This order was made subject matter of an order under Section 263 of the Act dated 24th March, 2009 by the Commissioner of Income Tax ('CIT', for short). By the impugned order dated 8th July, 2011, the Income Tax Appellate Tribunal ('Tribunal', for short) has allowed the appeal of the respondent-assessee and has quashed the order dated 24.3.2009, under Section 263 of the Act, passed by the CIT on two aspects:

(2.) On the question of warranty claim, it is noticeable that this issue was raised by the Assessing Officer during the course of original assessment proceedings and the assessee had written a letter dated 21.11.2006 giving complete details of the provision for warranty and had relied upon decision of Delhi High Court in the case of Commissioner of Income Tax v. Vinitec Corporation. Pvt. Ltd., 2005 278 ITR 337. The CIT in the order dated 24.3.2009 has not disputed the aforesaid factual position and has stated as under:

(3.) Thereafter, he has referred to the second claim of the respondent-assessee and has observed that there was lack of enquiry and this vitiated the assessment order. Reference was made to the decision of this Court in Gee Vee Enterprises Vs. Addl. CIT & Ors., 1975 99 ITR 375 There is no discussion in the order of the CIT as to how and in what manner the enquiry was lacking and what was the fault and default committed by the Assessing Officer. The Assessing Officer had examined the said aspect in the original assessment proceedings and accepted the stand of the assessee. There is no finding of CIT that the order passed by the Assessing Officer was erroneous and prejudicial to the interest of the Revenue. The question of "lack of enquiry" and "inadequate enquiry" has been explained by this Court in Commissioner of Income Tax v. Sunbeam Auto Ltd., 2011 332 ITR 167 and it has been observed as under:-