TaxTMI 
TaxTMI 
2015 (12) TMI 1510
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....e petitioner company on 17.11.2011. Assessing Officer passed fresh scrutiny assessments under section 144 read with section 153-A of the Act for the relevant assessment years falling in the block period. During the course of such assessments, payments made by the petitioner Company to 176 entities showing them as sub-contractors along with various other income and expenditure entries of the petitioner company came up for discussion by the assessing officer. The assessing officer noted that the company had claimed that it had got certain construction works executed by sub-contractors during the period under consideration. However, upon scrutiny, it was found that these vendors were not available at the given addresses. The assessee was, therefore, called upon to produce the vendors before the assessing officer along with books of accounts, bills, vouchers, inspection reports etc. The assessee was also called upon to show cause why the transactions with the said vendors should not be treated as bogus. The assessing officer noted that these vendors were not presented before him and the revenue was, therefore, unable to verify the transactions between the assessee and the said vendors.....
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....es could not be established by you, it was clear that you had inflated the expenses to the extent of Rs. 1,05,36,55,448/- and hence, the entire amount was liable to be disallowed and added back to your total income for various years. However, rather than making this specific addition, the AO rejected your books of accounts by invoking the provisions of section 145(3) of the Act and estimated the G.P. for various years. 4. In view of above mentioned fact, the assessment orders passed by the AO for above mentioned years are erroneous and prejudicial to the interest of Revenue. You are, therefore, required to show cause as to why the above mentioned orders should not be cancelled u/s.263 and fresh assessments should not be made in your case. Your reply, in this regard, should reach me on or before 27.02.2015 positively. In case of non-compliance, the issue will be decided ex-parte on the basis of material on record. Sd/- SANDEEP KAPOOR Pr.Commissioner of Income-tax (Central), Ahmedabad" 5. The petitioner has challenged this notice on various grounds. Counsel for the petitioner vehemently contended that the Commissioner had no authority to take th....
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....aw or not. If the income in question has been taxed and legitimate revenue due in respect of that income has been realised, though as a result of erroneous order having been made in that respect, in our opinion, the Commissioner cannot exercise the powers for revising the order under section 263 of the Act merely on the basis that the order under consideration is erroneous. If the material in that regard is available on the record of the assessee concerned; the Commissioner cannot exercise his powers by ignoring that material which links the income concerned with the tax realisation made thereon. The two questions are interlinked and the authority exercising the powers under section 263 of the Act is under an obligation to consider the entire material about the existence of income and the tax which is realisable in accordance with law and further what tax has in fact been realised under the alleged assessment orders." (ii) In case of Commissioner of Income-tax v. Gabriel India Ltd. Reported in (1993) 71 Taxman 585, Division Bench of Bombay High Court observed that: "12. As observed in Dawjee Dadabhoy & Co. v. S.P.Jain (1957) 31 ITR 872 (Cal.) at page 881, "the wor....
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....r should have disallowed the entire expenditure of Rs. 105.36 crore which he failed to do. He, therefore, submitted that such addition should have been correctly made by the assessing officer so that the same can be sustained. Merely because the assessing officer has made certain additions by itself would not preclude the Commissioner from exercising the powers under section 263 of the Act, particularly when it is found that the assessing officer has not made additions on proper premises. Counsel for the revenue also submitted that in view of the statutory mechanism provided under the Act, the order of the Commissioner that may be passed on the basis of the impugned notice is appealable. This Court, therefore, in exercise of its extraordinary jurisdiction would not interfere at this stage. In this context, reliance was placed on the decision of the Supreme Court in case of Commissioner of Income-tax v. Chhabi Dass Agarwal reported in (2013) 357 ITR 357. 8. Facts are not seriously in dispute. Assessments made by the assessing officer for the entire block period contained an import element of expenditure of Rs. 105.36 crore for the payments made to 176 different vendors by the pet....
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....ssessment would be an erroneous assessment. 11. In the case of Income-Tax Officer vs. DG Housing Projects Ltd. reported in 343 ITR 329, Division Bench of Delhi High Court held that, a finding that the order is erroneous is a condition or requirement which must be satisfied for exercise of jurisdiction under section 263 of the Act. The matter cannot be remanded for a fresh decision to the the assessing officer to conduct further inquiries without a finding that the order is erroneous. 12. As noted, Division Bench of this Court in case of Smt.Minalben S. Parikh (supra) held and observed that, if income in question has been taxed and legitimate revenue due in respect of that income had been realized, though as a result of order having been made in that respect, the Commissioner cannot exercise powers for revising the order under section 263 of the Act merely on the basis that the order under consideration is erroneous. 13. In view of such legal position, we are afraid, the Commissioner could not have issued the impugned notice seeking to revise the order of assessment on the premise that the assessing officer did not apply the correct parameters and though taxed the same inco....