2016 (7) TMI 313

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....ng the objections raised by the appellant. 2. The learned Commissioner of Income Tax ought to have appreciated that the twin conditions required for invoking the provisions of Section 263 of the Income Tax Act was absent in the appellant's case. 3. The learned Commissioner of Income Tax ought to have met the objections of the appellant and thereafter concluded that, there was error in the order passed by Assessing Officer, causing prejudice to the department. Having not done so, order u/s. 263 is bad in law. 4. The learned Commissioner of Income Tax erred in not entering into a finding as to how interest bearing funds were diverted to sister concerns. Mere mention that there is diversion is bad in law. 5. The learned Commissioner of....

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.... assessment and pass afresh assessment order. The relevant findings of the Ld. CIT are reproduced hereinbelow: "5. I have carefully considered the submission of the Learned AR. The assessee is paying heavy interest to financial institutions for acquiring capital assets and for working capital requirement and at the same time lending to related parties interest-free. As such, proportionate interest is leviable and the same has not been looked into by the Assessing Officer while making assessment inadvertently. 6. In the light of the above, by invoking the provisions of section 263 of the Income Tax Act, 1961, the assessment order dated 06/03/2013 is set aside as it is prejudicial to the interest of revenue and I direct the Assessing Offi....

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.... - Total 4,98,78,531.20 74,87,709.00     Schedule-4 Unsecured Loan:   F.Y. 2009-10 Rs. Ps F.Y. 2008-09 Rs. Ps. Tata Capital Car Loan (7000058961-X6) 53,63,211.60 - Gokulam Chits - 3,44,167.00 ICICI Car Loan - X5 - 60,28,000.00 Platino Cars India Pvt. Ltd., Kochi - 79,89,608.00 Shamina Ashique 19,88,169.40 24,76,912.00 Reliance Capital - Car Loan - 65,34,538.00 Total 73,51,381.00 2,33,73,225.00   Correspondingly details of finance charges are given in Schedule-15, which reads as below: Schedule-15 Finance Charges:     F.Y. 2009-10 Rs. Ps F.Y. 2008-09 Rs. Ps. Bank Charges 4,52,739.93 3,94,208.00 Chitty Loss 6,33,833.00 - Interest - Spare pa....

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....ans/advances have been given for the specific purpose, therefore, the view taken by the Ld. CIT(A) is not a correct view and there cannot be any occasion to come to the conclusion that the order of the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Ld. CIT(A) himself in para 5 of his order reproduced hereinabove has mentioned that the assessee was paying heavy interest to the financial institutions for acquiring capital assetsand for working capital requirements. No finding has been given as to how theorder of the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Ld. CIT(A) in para 6 has referred to the assessment order which is prejudicial ....