TaxTMI 
TaxTMI 
2015 (1) TMI 1011
X X X X Extracts X X X X
X X X X Extracts X X X X
....isclosing a taxable income of Rs. 4,92,380. This income tax return was subjected to the scrutiny assessment proceedings, and, vide order dated 28th November, 2008 passed under section 143(3) of the Act, the Assessing Officer assessed the at Rs. 5,82,380. The matter, however, did not rest there. On 14th February 2011, learned Commissioner issued a show cause notice to the assessee which, inter ala, pointed out following issues with respect to the assessment so completed under section 143(3): i. The assessee in his balance sheet has shown an amount of Rs. 12,48,500 as work in progress whereas, in the profit and loss account, this figure has been taken at Rs. 8,85,000. Therefore, the difference of these two figures, i.e. Rs. 3,63,000, was not added back by the AO. ii. On perusal of the records, it is noticed that one of the partners Shri Manoj Gupta has purchased a car in his name whereas depreciation amounting to Rs. 99,000 relating to this car has been claimed as expenses of the firm. As the assessee firm is not the owner of the vehicle, depreciation claimed at Rs. 99,000 was not admissible, but was allowed by the AO. iii. As per the P&L account, the assessee has incurred t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce. So far point no. 1, with respect to work in progress, was concerned, learned Commissioner rejected the explanation of the assessee "in the absence of the corroborative evidence". On point no. 2, learned Commissioner dropped the proceedings. On point no. 3, i.e. with respect to disallowance on account of not deducting TDS, learned Commissioner held that "these expenses are not verifiable" and that "in the absence of complete details, it is held that the assessee was liable to deduct tax at source but failed to do so", and, therefore, these expenses are disallowable under section 40(a)(ia). On point no. 4, learned Commissioner held that in the absence of bifurcation of details of FDR and security, the interest income could not be brought to tax but proceeded to hold that an amount of Rs. 2,60,150, which was deducted by the railway authorities, was a penal payment in nature and, as such, did not constitute an admissible expenditure. Finally, in respect of point no. 5, learned Commissioner held that since onus in respect of identity and creditworthiness of Shri N K Singhal is not discharged and since genuineness is not proved, "the assessment order is considered to be erroneous in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the law. As to whether such a shift in the stand was permissible, the coordinate bench, speaking through one of us and following the esteemed views of Delhi F bench of this Tribunal in the case of Maxpak Investments Ltd Vs ACIT [(2207) 13 SOT 67 (Del)] articulated through legendary Hon'ble Vice President Easwar (as he then was; later Hon'ble Justice Easwar), held as follows: ....... A plain reading of the impugned revision order clearly shows that the conclusions drawn in the revision proceedings are different from the reasons for revision proceedings set out in the show-cause notice-extracts from which are set out in the revision order itself. It is important to note the shifting stand of the CIT so far as reasons for subjecting the assessment order to revision proceedings. At p. 1, in fifth sentence of the impugned revision order, learned CIT notes that that "on perusal of assessment record, it was noticed that assessment order was erroneous in as much as it was prejudicial to the interest of the Revenue as the details of purchase and sale of share transactions in futures were not verified as to whether the profit or loss from the futures trading amounts to speculation gain o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ".............In CIT vs. G.K. Kabra (1995) 125 CTR (AP) 55 : (1995) 211 ITR 336 (AP) the Andhra Pradesh High Court was dealing with an application seeking reference under s. 256(2), inter alia of the following question : 'Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the CIT lacks initial jurisdiction, particularly when the conclusion made by the CIT in the order under s. 263 was on the basis of the information furnished in response to the initial notice ?' While declining to refer the above question, the High Court held as under (pp. 339-340) : 'The necessary implication in the expression 'after giving opportunity of being heard' relates to the point on which the CIT considers the order to be erroneous and prejudicial to the interests of the Revenue. In other words, it is necessary for the Commissioner to point out the exact error in the order which he proposes to revise so that the assessee would have an adequate opportunity of meeting the error before the final order is made.' (Emphasis, italicsed in print, supplied) In the case before the High Court, the show-cause notice referred to two issues to which the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat any order passed by him was erroneous insofar as it was prejudicial to the interests of the Revenue. Before doing so, he is also required to give an opportunity of being heard to the assessee. If after hearing the assessee in pursuance of the notice issued by him under s. 263(1) of the Act, he is not satisfied, he may pass the necessary orders. Of course, the order thus passed will contain the grounds for holding the order of the ITO to be erroneous, as contemplated under s. 263(1) of the Act. . . . The Tribunal cannot uphold the order of the CIT on any other ground which, in its opinion, was available to the CIT as well. If the Tribunal is allowed to find out the ground available to the CIT to pass an order under s. 263(1) of the Act, then it will amount to a sharing of the exclusive jurisdiction vested in the CIT, which is not warranted under the Act. It is all the more so, because the Revenue has not been given any right of appeal under the Act against an order of the CIT under s. 263(1) of the Act. . . . Under s. 263 of the Act it is only the CIT who has been authorized to proceed in the matter and, therefore, it is his satisfaction according to which he may pass necessary ....