TaxTMI 
TaxTMI 
2014 (3) TMI 502
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..../s 263 of the Act called for the assessment records of the assessee for the impugned assessment year and after examining the records noted that the assessee has entered into agreement with Adlabs Ltd. On 24-1-2007 to conduct he existing theatre against monthly conducting charges of Rs.4 lakh. After going through the terms and conditions of the said agreement and also examining the P & L A/c of the assessee for the period ended 31-3-2008, the CIT noticed that the assessee had received an amount of Rs.42,93,334/- towards conducting charges from Adlabs Limited from 9-4-2007 to 31-3-2008 and has debited expenditure to the tune of Rs.18,11,377/- under the head electrical charges, gratuity, theatre insurance, salaries, ESI etc., theatre maintenance, depreciation on car, air cooling maintenance, car petrol, interest on car loan and car repairs etc. On going through the details of expenditure claimed, the CIT felt that the Assessing Officer should have disallowed these expenditures as some of the expenses were by Adlabs Limited and expenses relating to car was for personal use. On the basis of the aforesaid facts, the CIT was of the view that the assessment order passed was erroneous and p....
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.... the assessment proceedings vide letter dated 1-11-2010 had submitted that the firm purchased the movie "Okkadunnadu" for Rs.6,30,000/- and the screening commenced from 3-3-2007 and continued till 8-4-2007 for a duration of 37 days. It was stated by the assessee that the collections for the period 3-3-2007 to 31-3-2007 are at Rs.4,67,859/- and the collections received for the period 1-4-2007 to 8-4-2007 are Rs.73,158/-. The assessee while crediting an amount of Rs.78158/- to the profit & loss a/c has debited with an amount of Rs.6,30,000/-. The CIT noted that the assessee while crediting the aforesaid collections to the profit & loss a/c has not apportioned Rs.6,30,000/- and claimed the entire amount of expenditure during the previous year relevant to the assessment year under dispute. The CIT observed that the Assessing Officer without properly considering this aspect has allowed the entire expenditure instead of allowing apportioned expenditure. 5. Further, the CIT on going through the conducting agreement with Adlabs Films Limited noted that as per the agreement the lease is valid for a period of 15 years. The agreement also provides for a lock in period of 10 years during whic....
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.... leasing out of theatre under the head 'business', without examining the lease agreement, the CIT considered the assessment order passed to be erroneous and prejudicial to the interest of revenue. The CIT further observed that the Assessing Officer has passed the order in a casual and mechanical manner without proper enquiry and hence the assessment order so passed is erroneous and prejudicial to the interest of revenue which is amenable to proceedings u/s 263 of the Act. In support of such view, the CIT relied upon a number of decisions as mentioned by him in para-13 of his order. On the aforesaid conclusion, the CIT set aside the assessment order passed u/s 143(3) of the Act and directed the Assessing Officer to redo the assessment de novo by examining in detail on the issues as were discussed by him. Being aggrieved of the order passed u/s 263, the assessee has filed this appeal before us raising as many as 12 grounds. Some of the grounds raised by the assessee are argumentative in nature. 7. Primary contention of the learned AR before us is, exercise of jurisdiction u/s 263 of the Act by the CIT is without any basis as the Assessing Officer has passed the assessment or....
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....specifically pointed out what are those expenses while issuing the show cause notice. The learned AR submitted that no reimbursement of expenditure was received from the Adlabs Limited. The learned AR finally contended that the assessment order in the given facts and circumstances cannot be considered as erroneous and prejudicial to the interests of revenue so as to invoke the provisions contained u/s 263 of the Act. 8. The learned DR however strongly supporting the order of the CIT submitted that the assessment order was passed without application of mind and without conducting any enquiry. Though the agreement with Adlabs Limited was available before the Assessing Officer but he has not at all applied his mind to the agreement and simply accepted the lease rentals as income under the head 'business'. The Assessing Officer has also not verified the various expenditures claimed and other issues as pointed out by the CIT. Therefore, the assessment order is erroneous to the extent it is prejudicial to the interest of revenue. It was further contended by the learned DR that the CIT has merely directed the Assessing Officer to redo the assessment de novo after examining all as....
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....s submitted before us also do not establish any enquiry to have been conducted by the Assessing Officer on the issue pointed out by the CIT. It is very much evident from the assessment order that the Assessing Officer has completed the assessment in a mechanical and casual manner without proper application of mind or even a semblance enquiry. The assessee could not demonstrate before us or submit any material, except a letter dated 1/11/2010, at page 107 of the paper book which could show that enquiry in any manner was conducted by the Assessing Officer to find out the true intent of agreement with Adlabs Limited or verifying the allowability of the expenditure claimed by the assessee since the property was handed over to Adlabs Limited on lease during the financial year under dispute. When on a receipt of Rs.42 lakhs, the assessee is disclosing a profit of Rs.77,000/-, which works out to roughly 2%, the Assessing Officer should have been little more circumspect in finding out not only the true nature of transaction but also the genuineness of the expenditure claimed. Neither the assessment order, nor any other material on record show even a hint of enquiry by the Assessing Officer....