TaxTMI 
TaxTMI 
2010 (7) TMI 641
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....P.C. Bafna, CA along with Shri J.P. Matolia, Manager of the assessee attended and filed details along with written submission and the case was adjourned to 20-11-2008. On 20-11-2008 both above mentioned persons attended the proceedings and furnished details. The case was adjourned to 17-12-2008. On 17-12-2008 both the above mentioned persons appeared before the Assessing Officer and filed details. Books of account produced and case was adjourned to 5-1-2009. On 5-1-2009 only Sh. P.C. Bafna, CA attended and filed details. Books of account produced and the case was discussed and assessed. Perusal of the above mentioned noting revealed that the Assessing Officer never issued any questionnaire and whatever details available on record have been suo moto filed by the assessee along with two letters dated 5-10-2009 and 17-12-2008. Filing of any details on 14-10-2008 and on 20-11-2008 is not born out from record as mentioned on order sheet." Thereafter proposal under section 263 of the Act was received from the Assessing Officer through Additional CIT Range-7, Jaipur vide letter No. 1380 dated 17-7-2009. According to the order under section 263, the record was examined and after examina....
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....n reasons given by ld. CIT in his order and para-wise reply against query raised by ld. CIT and considered by Assessing Officer. Attention of the bench was drawn on copy of detailed reply filed before ld. CIT which is placed on record. Reliance is placed on various case laws mentioned in the written note filed by assessee. In reply, the ld. D/R has filed written note which is also placed on record. 5. We have heard rival contentions and considered them carefully. The reasons on which basis the notice issued by ld. CIT are as under : (a) In the order sheet, there is no mention of any queries raised during assessment proceedings, nor any query letter is available on record. (b) The details suo moto made available by the assessee was not examined by the Assessing Officer and no investigation was made. (c) The assessment order was passed without discussing any of the issues raised in notice u/s 263 though these issues were replied by the assessee in revision proceedings. The explanation of the assessee indicating issue in brief raised in show cause notice issued by ld. CIT reply/comments in respect to each issue and reply/comments fil....
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....on 31-3-2007, this flat is appearing (PB 68). In assessment proceedings for AY 2006-07, this flat is also appearing in the list of immovable properties as on 31-3-2006. Thus this flat is not purchased during the year. Club expenditure is claimed as business expenditure which is required to be disallowed after ascertaining commercial expediency, withdrawal for household expenditure at Rs. 2,98,844 is inadequate. These aspects were not examined by the AO. AO has not examined the bank account in which foreign exchange are realized and whether the Audit Report in respect of realization of foreign currency is correct or not. Payment to Club is not claimed as expenditure but debited to personal capital account which is evident from the personal capital account filed with the return. The house-hold expenses for four members at Rs. 2,78,179 was reasonable considering the fact that electricity expenses, telephone expenses and insurance are separately debited in the capital account (PB 8). The personal capital account was filed before the AO from which these facts are verifiable (PB 75). The payment in foreign currency vis-a-vis, applicability of section 195 on ....
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....ers Pvt. Ltd. was made. M/s. Rajkrishna Developers Pvt. Ltd. has not commenced any business during the year. Assessee has only made investment of Rs. 50,000 in the shares of this company (PB 10) which is also coming from the last year. Hence question of any income does not arise. Investment in shares of this company is verifiable from the details of investment filed with the return for AY 2006-07 and 2007-08. The income in relation to hired premises at Oberoi, Mumbai which is used by Amrapali Jewels is not examined. This premises is given on rent to Amrapali Jewels Pvt. Ltd. since inception. The rent paid by assessee is recovered from Amrapali Jewels Pvt. Ltd. (PB 11). The position remains the same as in earlier years. Purchase made from certain local suppliers are not verifiable as, as per the investigation carried out by the department. This aspect is not examined by AO. All parties are Income-tax assessee, having sales tax registration, payment is by account payee cheque and all purchases are genuine (PB 11). Details of purchases submitted (PB 69). AO has not examined the dividend income received from mutual fund from the angle of dividend stripp....
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....T v. Trustees of Anupam Charitable Trust [1987] 167 ITR 129/31 Taxman 335 (Raj.), CIT v. Sakthi Charities [2000] 244 ITR 226/110 Taxman 451 (Mad.), CIT v. Goyal (P.) Family Specific Trust [1988] 171 ITR 698/[1987] 35 Taxman 522 (All.), Rayon Silk Mills v. CIT [1996] 221 ITR 155 Guj.) and CIT v. Taj Printers [1989] 178 ITR 384/[1990] 48 Taxman 331 (All.). 8. The ld. D/R on the other hand has explained the facts of the case through written submission and has submitted that from the order of ld. CIT and from the impugned assessment order, it is clear that Assessing Officer has not raised any query. The ld. D/R though fairly has submitted that certain replies were filed by assessee. However, it is seen that they have been filed by assessee suo moto. Suo moto replies filed by assessee have not been considered by Assessing Officer in right perspective as the assessment has been completed in routine manner. The assessment completed in a routine manner without examining the details is an erroneous assessment and prejudicial to the interest of revenue. Therefore, ld. CIT was justified in setting aside the order of Assessing Officer. Reliance is placed on the decision of Apex Court in cas....
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....Officer cannot be held to be erroneous or prejudicially to the interest of the revenue. (3) The CIT (A) in his show-cause notice has raised 17 queries. All these were replied by the assessee as reproduced on pages 5-10 of the order. After considering the said reply, the CIT has not made any discussion as to why the said details furnished by the assessee with necessary evidence are still required to be further examined by the Assessing Officer. Rather he accepted that issue raised in 263 notice has been replied by the assessee. The Supreme Court in the case of Shree Manjunathesware Packing Products & Comphor Works (supra), 63 has held that records shall include all records available at the time of examination by the CIT. After examining the records in making or causing to make an enquiry, if the CIT considers the order to be erroneous then only he can pass the order as the circumstances of the case justify. In present case after examining the details filed by the assessee, CIT has not given any finding that order of the Assessing Officer is erroneous. (4) Further attention of the Bench is invited on written submissions at pages 2-5 where it is explained....
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....amine the record of any proceedings under this Act, and if considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of revenue, he may after giving the assessee an opportunity of being heard and after making or cause to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying assessment, or cancelling the assessment and directing afresh assessment". 11. The provisions of section 263 itself provided that the CIT may examine the record. However, in the present case, the ld. CIT has not applied his mind but the matter was referred by the Assessing Officer through Additional Commissioner for initiating proceedings under section 263. 12. However, if it is held that ld. CIT has examined the record and then found that no proper enquiry has been made by the Assessing Officer, he may issue show-cause notice. In the present case the ld. CIT issued show-cause notice assigning various reasons. It is seen that the assessee has explained each and every query before ld. CIT and all the relevant evidences filed before Assessing Off....
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....titution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order, unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimates himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a higher figure than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. This is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the Commissioner the order in question is prejudi....
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.... section 143(3) after making enquires from the assessee who filed detailed replies along with supporting evidence. It is not necessary that Assessing Officer should write a lengthy order discussing all the details filed on behalf of the assessee, but the necessity is that Assessing Officer should have applied his mind. It is further seen that the assessments of the assessee are completed under section 143(3) since assessment year 2003-04. The facts in the earlier years are similar to the facts in the year under consideration. Therefore, it has to be presumed that Assessing Officer based on the past history has accepted the explanation of the assessee. In past deduction under section 10B was allowed to the assessee. Accordingly, the Assessing Officer allowed deduction under section 10B for the year under consideration also. It is also a matter of fact that ld. CIT has initiated proceedings under section 263 for immediately preceding year i.e., 2006-07. The assessee preferred appeal against that order also before the Tribunal. The appeal for that year along with appeal of this year was heard together. We have already disposed off the appeal of the assessee for assessment year 2006-07....
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....ord" is not justified in view of the object of the provision and the nature and scope of the power conferred upon the Commissioner. The revisional power conferred on the Commissioner under section 263 is of wide amplitude. It enables the Commissioner to call for and examine the record of any proceeding under the Act. It empowers the Commissioner to make or cause to be made such enquiry as he deems necessary in order to find out if any order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. After examining the record and after making or causing to be made an enquiry, if he considers the order to be erroneous, then he can pass the order thereon as the circumstances of the case justify. Obviously, as a result of the enquiry he may come into possession of new i material and he would be entitled to take that new material into account. If the material, which was not available to the Income-tax Officer when he made the assessment could thus be taken into consideration by the Commissioner after holding an enquiry, there is no reason why the material which had already come on record though subsequent to the making of the assessment,....
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....o the interests of the revenue except mentioning that Assessing Officer has not examined the details filed before him. However, the ld., CIT could not point out how these details are not acceptable or how they are not correct. 20. The Hon'ble Allahabad High Court in the case of Goyal (P.) Family Specific Trust (supra) has held that : "the orders of the Assessing Officer may be brief and cryptic, but that by itself is not sufficient reason to brand the assessment order as erroneous and prejudicial to the interest of revenue. It is for the Commissioner to point out as to what error was committed by the Assessing Officer in having reached the conclusion. The Commissioner having failed to point out any error, no error can be inferred from the orders of the Assessing Officer for the simple reason that they are bereft of details." 21. Similarly, the Hon'ble Gujarat High Court in the case of Rayon Silk Mills (supra) has observed as under :- "It is an essential condition of exercise of power under section 263 that the Commissioner must find that the error which is found in the order of the Assessing Officer is prejudicial to the interest of revenue. The conclusion of Commission....
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....incorrect application of law will satisfy the requirement of the order being erroneous. 27. In the present case nothing has been brought on record by ld. CIT that how the Assessing Officer has assumed incorrect facts or has applied the provisions of law incorrectly. Therefore, the observation of Hon'ble Apex Court in the present case does not apply. Rather the decision of Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. (supra) supports the case of the assessee. It has been held by the Hon'ble Apex Court that twin conditions should be satisfied, (1) that the order of the Assessing Officer sought to be revised is erroneous and (2) it is prejudicial to the interest of revenue. If one of them is absent i.e., if the order of ITO is erroneous but is not prejudicial to the interest of revenue or if it is not erroneous but it is prejudicial to the interest of revenue, recourse cannot be had to section 263(1) of the Act. In the present case it is not brought on record how the order of Assessing Officer is prejudicial. Technically, if we admit that no questionnaire was issued by the Assessing Officer, however, assessee had filed details and it may not have been considered....