TaxTMI 
TaxTMI 
TaxTMI 
2015 (12) TMI 696
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.... which certain payments were shown to have been made in favour of the assessee herein. On perusal of the same, the A.O. observed that though the properties were being transferred by various persons, the sale consideration is received by the assessee herein and hence, it has a very intricate relationship with the transactions as reflected in the registered sale deeds. He therefore, issued a notice under section 153C of the I.T. Act. During the course of assessment proceedings, various details were called for from the assessee. The assessee produced the required details. However, the A.O. was not satisfied with the same and holding that no clarity was emerging from the transactions, issued a show cause notice dated 01.12.2011 for the special audit under section 142(2A). Assessee filed its objections on 12.12.2011. However, the said objections were set aside and the assessee was directed to get its accounts audited under section 142(2A) of the I.T. Act with M/s. Ratnam Daveji, Chartered Accountants. The Special Auditor submitted his report, but the A.O. observed that none of the issues referred to the Special Auditor have been commented upon by him in his report. Therefore, he brushed....
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.... rejected as not pressed. The other grounds of appeal on which the assessee is seeking adjudication are as under. For the sake of convenience, the grounds of appeal raised in A.Y. 2006-07 are reproduced hereunder: "Grounds of Appeal 1. "The Ld.Pr.CIT (Central), has erred in passing the order u/s.263 on the ground that the assessment order passed u/s.143(3) rws 153C by the DCIT, Circle-2(1), Hyderabad for the A.Y 2006-07 is erroneous in so far as it is prejudicial to the interests of revenue. 2. ... ... ... ... 3. ... ... ... ... 4. The Ld.Pr.CIT (Central), erred in passing the order u/s.263 by forming mere change of opinion and without considering the fact that the original assessment had been completed u/s 143(3) rws 153C of the IT Act, 1961 after careful verification of all the information furnished. 5. The Ld.Pr.CIT (Central), ought to have appreciated the submissions of the assessee in the following judgment of Honorable Supreme Court of India in the case of Malabar Industrial Co. Ltd. vs. Commissioner of Income Tax (2000)-243-ITR -0083 - (SC). 6. The Ld.Pr.CIT (Central), ought to have appreciated that as the accounts of the assessee were referred for specia....
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....IT (Central) ought to have appreciated the fact hat an order passed with prior approval of JCIT under section 153D cannot be subject to revisionary proceedings u/s. 263 of the Act." 3.1. In support of its contention that the very same issue has been considered by the A.O. under section 143(3) read with section 153A of the I.T. Act, 1961, the Ld. Counsel for the assessee, has drawn our attention to the questionnaire issued by the A.O. at the time of the assessment which are placed at pages 1 to 14 of the paper book. He submitted that the very same issues were also referred for special audit under section 142(2A) of the I.T. Act and that the assessee has filed its objections by filing its detailed reasons. The Ld. Counsel for the assessee, has drawn our attention to pages 15 to 19 of the paper book, in support of its contention that the Special Auditor has also issued a questionnaire on the very same issues. The Ld. Counsel for the assessee, has placed reliance upon pages 20 to 33 of the paper book to submit that during the assessment proceedings also, the A.O. has considered the issues and has rejected the Special Audit Report of the Auditor which shows application of mind by the ....
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....onsideration as per the registered sale deeds is declared by the assessee company and therefore, the same is assessed in its hands as it is voluntarily declared by the assessee company and protective assessment in the hands of the respective assignees has already been made. It was, after considering these aspects, that the A.O. estimated the income of the assessee. This itself clearly demonstrates that the A.O. has applied his mind to the facts of the case before him before estimating the income of the assessee. As regards the issue as to whether, the assessment order passed by the A.O. after due application of mind, can be revised under section 263 of the I.T. Act, we find that the Hon'ble A.P. High Court in the case of Spectra Shares & Scrips P. Ltd., vs. CIT-III, Hyd. (2013) 36 taxmann.com 348 (A.P.) has considered the judicial precedents on the issue in detail and has culled out the following principles as to the exercise of jurisdiction of the CIT under section 263 of the Act. "(a) The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenu....
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....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 under Sec.263 merely because he has a different opinion in the matter; that it is only in cases of lack of inquiry that such a course of action would be open; that an assessment order made by the Income Tax Officer cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately; there must be some prima facie material on record to show that the tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation, a lesser tax than what was just, has been imposed. (g) The power of the Commissioner under Sec.263 (1) is not limited only to the material which was available before the Assessing Offi....
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....0 is also taken into account. In the instant case, undoubtedly, there was a big difference between profit earned with own capital and profit earned with borrowed capital and such a difference could have been taken into account by the Assessing Officer, while making an estimate. If the Commissioner had set aside the estimate on the ground that the vital fact that the business was carried on with own capital and not with borrowed capital had been ignored by the Assessing Officer, there might not have been any difficulty in upholding that order. But, when he proposed to add back an exact item in the profit and loss account, he was relying on the rejected books which he could not do. There was also a further difficulty, if section 40 was to be taken into account even after making an estimate. When there are certain other deductions which are to be disallowed such as wealth-tax payment in section 40, it cannot be said that after making an estimate, the wealth-tax charged in the profit and loss account should again be added back to the profit. Therefore, no separate addition representing the interest and remuneration paid to partners could be made to the income already estimated an....