TaxTMI 
TaxTMI 
TaxTMI 
2015 (11) TMI 533
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....r and also produced books of accounts, bills and vouchers etc. The Assessing Officer, after examining the books of accounts and other information, completed the assessment u/s 143(3) after making additions of Rs. 66,825/- being difference in partner's capital account and also round some disallowance of Rs. 1,00,000/- towards unverifiable expenditures. 3. The CIT, Rajahmundry has issued a show-cause notice u/s 263 of the Act dated 19.09.2011 proposing to revise the assessment order passed by the assessing officer u/s 143(3) dated 30.10.2009. The CIT, proposed to revise the assessment order, for the following reasons. (a) The A.O. has passed the assessment order without conducting proper enquiry with regard to allowability of expenditure under the head wages and centering charges, as these expenditures are supported by self-made vouchers as indicated by the assessing officer in his order and endorsed by the tax auditors in annexure to Form. No.3CB. (b) The additions to capital accounts of the partners are not examined with regard to their source of income. (c) The A.O., has not verified the correctness of profit declared by the assessee, as there was difference in capital account....
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....ring the course of assessment, the assessee has furnished all the details sought by the A.O. and after carefully examined the details filed, the A.O. passed the assessment order which is evident from the assessment order. The A.R. submitted that, the CIT is not correct in stating that the A.O. did not verified the bills and vouchers, and without conducting proper enquiry the assessment is completed. The A.R. further submitted that as for as self-made vouchers is concerned, the A.O. has called for books of accounts and vouchers which were verified by the A.O. as indicated in his assessment order. The A.R. further submitted that the assessee executes works contracts which is more labour oriented job hence, the assessee incurred huge labour charges. He further, argued that though some of the expenditure are supported by self-made vouchers, these fact was brought to the notice of A.O. and the A.O., after verified the vouchers, came to the conclusion that the round some disallowance of Rs. 1,00,000/- would suffice to meet the ends of justice. Therefore, it is not a case of lack of enquiry or non-application of mind by the A.O. 5. The Authorised representative, further submitted that as....
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....ar stipulation in the partnership deed that the contract works are treated as property of the firm. The very fact that the entire contract receipts have been offered in the hands of firm which was verified by the A.O., and allowed the claim of credit of TDS standing in the name of the partners to the firm account, which is clearly shows that the A.O. has considered the issue before passing the assessment order. 7. The AR further, submitted that the assessing officer has examined the relevant aspects in the course of assessment proceedings. An element of judgment and discretion are involved in this matter and the assessing officer being quasi-judicial authority shall have the authority to exercise the right discretion on the basis of available information come to his knowledge during the course of assessment, most of which may not find place in the assessment order. Therefore, the assessment order passed by the A.O. is not erroneous and also not prejudicial to the interest of the revenue to be upheld and the CIT order should be quashed. He relied on the decision of Hon'ble Delhi high court in the case of Director of Income tax vs. Jyoti Foundation, (2013) 357 ITR 388 (Del). 8. On ....
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....ted the assessment, which is again a case of non- application of mind. According to the CIT, the A.O., allowed the remuneration to partner's without considering the services rendered by them. The CIT was of the opinion that the profit declared by the assessee is very low, thereby, the A.O., should have rejected the books of accounts and estimated the net profit. The CIT has given elaborate discussion on the issues in his order and justified the revision of assessment order under section 263. While doing so, he has relied upon various case laws as indicated in his order. 10. To invoke the provisions of section 263 of the Act, the twin conditions must be satisfied i.e. the order of the assessing officer is erroneous and further it must be prejudicial to the interest of the revenue. Unless both conditions are satisfied, the CIT cannot assume jurisdiction to pass order u/s 263 of the Act. It is not necessary that every order which is prejudicial to the interest of revenue is also erroneous. Unless the A.O's order is not erroneous, no action can be taken by the CIT u/s 263 of the Act, this is because the twin conditions i.e. (1) the order is erroneous and (2) the same is also prejudici....
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....f the possible view available for him, which the CIT shall not term it as lack of enquiry or non application of mind. Thus, it cannot be said that it is a case of lack of enquiry or non application of mind. 11. Now, it is relevant to consider the case laws relied on by the parties. The assessee relied on the Hon'ble Delhi High Court decision in the case of Director of Income Tax Vs. Jyoti Foundation, (2013) 357 ITR 388 (Delhi), wherein, the Hon'ble court observed as under. "It was held that revisionary power u/s 263 is conferred on the Commissioner/Director of Income Tax when an order passed by the lower authority is erroneous and prejudicial to the interest of the Revenue. But Orders which are passed without inquiry/investigation are treated as erroneous and prejudicial to the interest of the Revenue, but orders which are passed after inquiry/investigation on the quest ion/ issue are not per se or normal ly t reated as er roneous and prejudicial to the interest of the Revenue because the rev is ionary author i ty feels and opines that fur ther inquiry/investigation was required or deeper or further scrutiny should be undertaken. In the case of Income Tax Officer vs. DG Housing P....
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....felt that the inquiries were not suff icient and further inquiries or details should have been called. However, in such cases, as observed in the case of DG Housing Projects Limited, the inquiry should have been conducted by the Commissioner or Director himself to record the finding that the assessment order was erroneous. He should not have set aside the order and di rected the AO to conduct the said inqui ry. Revenue's appeal dismissed." 12. The assessee relied on co-ordinate bench decision in the case of Smt. Susheela Devi Bothra Jain vs. ITO, ward -1, Rajahmundry, ITA. No. 279/Viz/2014, wherein the Hon'ble Tribunal after considering the Delhi High Court decision in the case of Director of Income tax vs. Jyoti Foundation (Supra), CIT, Sunbeam Auto Ltd (2011) 332 ITR 167 (Del) and Hon'ble Andhra Pradesh High Court decision in the case of Spectra Shares and Scrips Pvt Ltd vs. CIT, (2013) 354 ITR 35(AP), quashed the order passed by CIT. 13. A similar issue came before the co-ordinate bench in the case of Agri Gold Constructions Pvt Ltd vs. The Commissioner of Income-Tax, Vijayawada, ITA. No. 452/Viz/2012, wherein the Hon'ble Tribunal held that the CIT cannot seek to substitu....
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....ssioner not to exercise his suo motu revisional powers unless supported by adequate reasons for doing so; that if a query is raised during the course of the scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer were reflected in the assessment order, this would not by itself lead to the conclusion that the order of the Assessing Officer called for interference and revision. (e) The Commissioner cannot initiate proceedings with a view to start fishing and roving inquiries in matters or orders which are already concluded , that the Department cannot be permitted to begin fresh litigation because of new views they entertain on facts or new versions which they present as to what should be the inference or proper inference either of the facts disclosed or the weight of the circumstance; that if this is permitted, litigation would have no end except when legal ingenuity is exhausted. (f) Whether there was application of mind before allowing the expenditure in question has to be seen; that if there was an inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders ....
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.... ought not to have taken into consideration the explanation submitted by the assessee before the Commissioner for coming to the conclusion that the errors pointed out by the Commissioner have no effect on the revenue. Ultimately, it is for the Assessing Officer, at the time of de novo enquiry, to consider whether, the explanation offered by the assessee to the points raised by the Commissioner is proper or not. When once the Commissioner has got power to point out the errors which had the effect on the revenue, the Tribunal cannot sit as an appellate authority on the order of the Commissioner passed under section 263 of the Act. If the power exists in the Commissioner and is exercised by him after satisfying himself on the facts of the case, it is not for the Tribunal to re-appreciate the said satisfaction of the Commissioner. It is only when the Commissioner does not exercise the power properly by satisfying the twin test contemplated under section 263, the order of the Commissioner can be held to be perverse. A prima facie perusal of the order of the Commissioner showed that he was satisfied that there were errors which had effect on the interests of the revenue and it needed....