TaxTMI 
TaxTMI 
2014 (11) TMI 522
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....ed here under as :- The assessee has shown Development Expenses of Rs. 7,16,62,142/- in the Profit and Loss account. These appear to be excessive therefore, Rs. 1,20,000/- out of this is disallowed and added to the income of the assessee. 3. The assessee has filed an appeal against this order of Assessing Officer and the CIT (A), Meerut has deleted this addition of Rs. 1,20,000/- vide its order dated 05.06.2013 by holding as under :- "3. In the assessment order, the AO has recorded that the development expenses of Rs. 7,16,62,142/- has been debited to the P&L account. These appear to be excessive therefore Rs. 1,20,000/- is disallowed and added to the total income. In the submissions filed during the appeal proceedings, it has been stated that the AO had not mentioned any error while examining the books of account and other details. The AO is also not specified why the expenses are treated as excessive. 4. The facts of the case have been considered. Not only is the addition without any basis, the AO has not even concluded that the expenses are excessive but merely stated that there "appear" to be excessive. Such addition made in a cavalier and casual manner cannot be su....
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.... case of Umashankar Rice Mill vs. CIT reported in 187 ITR 638 (Ori) wherein the revisional order of the Commissioner which was passed by the Commissioner who felt that there should be a further enquiry was held to be justified. Reliance was also placed on the decisions of Jagdish Kumar Gulati vs. CIT - 269 ITR 71 (All.), Gee Vee Enterprises vs. Addl.CIT - 99 ITR 375 (Del.) and Saraogi vs. CIT - 67 ITR 84 (SC) and Tara Devi Aggarwal vs. CIT - 88 ITR 323 (SC) and also on various decisions mentioned in Para 5.5 of the order of the CIT. The CIT has partly revised and partly set aside the order passed by the Assessing Officer u/s 143(3) of the Act. 5. Now, the assessee is in appeal before us by taking the following grounds of appeal :- "1. That on the facts and circumstances of the case the learned Commissioner of Income tax, Meerut erred in law by giving her findings without going through merits and facts of the case for the order of the ld. ACIT, Circle- 2, Meerut, passed u/s 143(3) as erroneous and prejudicial to the interest of revenue. 2. That on the facts and circumstances of the case the learned Commissioner of Income tax, Meerut erred in law by applying various case law....
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....odify any of the grounds of appeal for the sake of justice." 6. The assessee has also taken addition ground which has been allowed and heard together with the main ground which read as under:- "That the provisions of section 263 of the I. T. Act in terms had no application to the facts of Appellant's case because the Ld. Assessing Officer had passed the assessment order dated 18.11.2010 u/s 143(3) of the I. T. Act after proper application of his mind". 7. While pleading on behalf of the assessee ld. AR submitted that assessee has executed labour contracts with M/s. Era Infrastructure India Pvt. Ltd. for development of agricultural land at Meerut. The return was filed on 27.09.2008 and order u/s 143(3) was made on 18.11.2010 u/s 143(3) of the Act. The Assessing Officer made an addition of Rs. 1,20,000/- which has been deleted by the CIT (A). Ld. AR submitted that the Assessing Officer has reported that the representative of the assessee has attended the proceedings from time to time and furnished the replies to various queries raised. The books of accounts were produced and the same were examined on test basis. The case was discussed and after discussion and taking into....
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.... Ltd. - 203 ITR 108 (Bom.) (iv) Malaba Industrial Co. Ltd. vs. CIT - 243 ITR 83 (SC) (v) CIT vs. Development Credit Bank Ltd.- 323 ITR 206 (Bom) (vi) CIT vs. Design and Automation Engineers P. Ltd. - 323 ITR 632 (Bom.) (vii) CIT vs. Ashish Rajpal - 320 ITR 674 (Del.) (viii) CIT vs. Ratlam Coal Ash Co. - 171 ITR 141 (ix) J.P. Shrivastava vs. CIT - 111 ITR 326 (x) ITO vs. DG Housing Project Ltd. - 343 ITR 329 (Del.) (xi) CIT vs. International Travels House Ltd. - 344 ITR 554 (Del.) Ld. AR also draws our attention to the various relevant paras of the above judgments. It was also submitted that the case laws relied upon by the CIT has no relevance in assessee's case as those were decided on particular facts prevailing in those cases. 8. Ld. DR, on the other hand, relied on the order of the CIT and also submitted that the assessee has submitted the details regarding the contracts, however, the details regarding the cancelled contracts were not submitted. In view of this, the CIT was justified in invoking the provisions of section 263 of the Act. 9. Ld. AR also submitted that the case laws relied upon by the revenue were at variance to the facts of the asses....
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...., cannot take the place of evidence or proof. (ii) The Hon'ble P&H High Court in the case of CIT vs. Faqir Chaman Lal - 262 ITR 295 has held that it is a well settled proposition that the presumption howsoever strong cannot substitute evidence. (iii) In the case of CIT vs. Emerald Commercial Ltd. & Anr. - 250 ITR 539, the Hon'ble Calcutta High Court following its own judgment reported in 244 ITR 422 has held that Tribunal was justified in holding that the findings of the Income-tax Officer and the Commissioner of Income-tax (Appeals) were based on presumption and not warranted by the facts of the case. We would also like to note that the observation of the CIT that the Assessing Officer during the course of assessment proceedings failed to inquire into the correctness of gross receipts, claim of expenses, the total contract work to be executed as per the work orders and the discrepancies therein, total receipts of the assessee as per Form 26AS vis-à-vis the receipts returned in the Profit & Loss account and did not raise a finger on the unverifiable nature of accounts maintained by the assessee was unjustified. We also hold that this observation is factually....
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....ly, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. This decision of the Income-tax Officer could not be held to be "erroneous" simply because in his order he did not make an elaborate discussion -in that regard. Moreover, in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous and that the expenditure was not revenue expenditure but an expenditure of capital nature. He simply asked the Income-tax Officer to reexamine the matter. That was not permissible. The Tribunal was justified in setting aside the order passed by the Commissioner of Income-tax under section 263." 4. 243 ITR 83, Malabar Industrial Co. Ltd. Vs. CIT, (Supreme Court) :- "A bare reading of section 263 of the Income-tax Act, 1961, makes it clear that the prerequisite for the exercise of jurisdiction by the Commissioner sue motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, name....
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....uced below: "Held, dismissing the appeal, that it could not be said that the Assessing Officer had not applied his mind while granting deduction under section 80HHC of the Act as regards the net profit earned by the assessee pertaining to its export business. The Tribunal was right in holding that the view taken by the Assessing Officer was a possible view and that the condition precedent for invoking jurisdiction under section 263 by the Commissioner did not exist. The Tribunal was justified in upsetting the order passed by the Commissioner under section 263 of the Act. " 7. 320 ITR 674, CIT vs. Ashish Rajpal (Delhi H.C.). At pages 687-688, the Hon'ble Delhi H.C. has held as under: "The fact that a query was raised during the course of scrutiny which was satisfactorily answered by the assessee but did not get reflected in the assessment order, would not by itself lead to a conclusion that there was no enquiry with respect of transactions carried out by the assessee. The fact that there was an enquiry can also be demonstrated with the help of the material available on record with the Assessing Officer. The material, to which a reference has been made in the impugned ju....
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....comes necessary for the Commissioner to examine the merits of the objection raised by the assessee. He cannot delegate that power to the Income-tax Officer by setting aside the assessment order and directing him to make a fresh assessment after taking into consideration the objection of the assessee." 10. 343 ITR 329, CIT vs. D.G. Housing Projects Ltd. (Delhi H.C.), in which it was held as under: "A distinction must be drawn in the cases where the Assessing Officer does not conduct an enquiry; as lack of enquiry by itself renders the order erroneous and prejudicial to the interests of Revenue and cases where the Assessing Officer conducts an enquiry but the finding recorded is erroneous and which is also prejudicial to the interests of Revenue. In the latter cases, the Commissioner has to examine the order or the decision taken by the Assessing Officer on the merits and then form an opinion on the merits that the order passed by the Assessing Officer is erroneous and prejudicial to the interests of the Revenue. In the second set of cases, the Commissioner cannot direct the Assessing Officer to conduct further enquiry to verify and find out whether the order passed is erroneou....