AI Drafter 
TaxTMI 
TaxTMI 
2016 (10) TMI 417
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....missioner of Income Tax, Kolkata-XX, Kolkata in the instant case and the specious order dated 06- 03-2013 passed u/s. 263 of the Income Tax Act, 1961 in pursuance to the impugned notice dated 08-08-2012 is therefore ab initio void, ultra vires and ex-facie null in law. 2. FOR THAT the Ld. Commissioner of Income Tax, Kolkata-XX, Kolkata acted unlawfully in setting aside the assessment order dated 23-12-2010 framed u/s 143(3) of the Income Tax Act, 1961 by the Ld. Income Tax Officer, Ward 1(4), Hooghly on the tenuous premise of 'inadequate-enquiry' but, not on account of lack of enquiry' is fraught with the taint of illegality and the impugned finding reached on that behalf on extraneous considerations not germane to the issue in dispute is altogether bad, unjust, improper and unfair in the facts and circumstances of the case and contrary to the canons of law. 3. FOR THAT the Ld. Commissioner of Income Tax, Kolkata-XX, Kolkata fell in error in directing the Ld. Income Tax Officer, Ward l( 4), Hooghly to pass a de- novo assessment order without factually appreciating the contents of the rejoinder of the appellant underlined with evidence which do not warrant the ....
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..... 40(a)(ia) of the Act. (b) There were three credit entries reflecting in the bank statement of assessee for total amount of Rs. 3.5 lakh received from three persons but these were not examined by AO at the time of assessment proceedings. (c) There were two cheques debited from the bank account of assessee for Rs. 1.50 lakh and Rs. 1.25 lakh in the name of M/s Kalosona Himghar Pvt. Ltd. and Shri Haradhan Samanta respectively. But these debit entries were not examined by AO while framing assessment. (d) It was observed that numerous cash cheque were issued to several persons including Shri U. Tiwary who has received in aggregate the sum of Rs. 21.80 lakh from assessee. The payment on a particular date was exceeding Rs. 20,000/-. Therefore, these payments were in contravention of the provision of Sec. 40A(3) of the Act and this issue was not at all examined by the AO while framing his assessment order. (e) The assessee has shown agricultural income of Rs. 5,000/- per annum for the year under consideration but he owns no agricultural land by way of ownership as per its balance-sheet. 5. In view of the above, Ld. CIT opined that the order of AO is....
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....agricultural land in question was not reflecting in the balance-sheet of assessee. However the agricultural income was also shown in the earlier year which was duly verified by predecessor of AO without any dispute. Therefore, it should be accepted as normal agricultural income of assessee. However, Ld. CIT in his order u/s. 263 of the Act disregarded the claim of assessee by observing as under:- i) The contention of the assessee that the loans of Rs. 2,50,000.00 were brought forward from the earlier years needs to be verified by the AO with reference to the assessment records of earlier years. Similarly the interest needs to be verified on such loans as the forms 15H/G are not available in assessment records. It has also to be checked whether the provisions of section 194A are applicable to the assessee in the instant case. ii) The genuineness and credit worthiness of the parties who have given a sum of Rs. 3.5 lacs in aggregate require to be verified. iii) The payment of Rs. 2,75,000.00 to two parties was not verified with the purchases which the assessee claimed to have made in the earlier year. iv) The verification with regard to the withd....
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.... The loan creditors had provided declaration u/s 197A(1) of the Act in Form 15G to the assessee for non deduction of TDS and hence the assessee did not deduct any TDS from the payments made to them. In course of the assessment proceedings, the Forms 15G obtained from these parties were duly submitted before the AO and accordingly, the same was allowed by him. It is settled that the assessee's claim was to be accepted that since he had the declarations of the payees in the prescribed form before him at the time when the interest was paid. he was not liable to deduct tax therefrom under section 194A and; if he was not liable to deduct tax u/s 40(a)(ia) was not attracted [VIPIN P. MEHTA -VS- I.T.O. (2011) 46 SOT 71 (MUM)]. However, the Ld CIT in exercising his powers u/s 263 of the Act in the instant case has remitted the issue back to the file of the AO without concluding that the assessee had any legal liability for deduction of tax at source from the payments made to them. 6.1 Further, in respect of three deposits aggregating to a sum of Rs. 3.50 lakhs in the savings bank account bearing no. 364010200000903 with Axis Bank. Arambagh, it was apprised that these are amounts rec....
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....of purchase of potato during the preceding assessment year. In fact, such payments were on account of discharge of creditors which was outstanding as on 31-03-2007 as evidenced by the balance-sheet for the assessment year 2007-08. The AO was impressed with such categorical evidence on record and accepted such payments. However, the Ld. CIT brushed aside the evidence and without finding any error on the part of the AO branded the assessment order as erroneous. 6.3 In so far as the cash cheque payments relating to Shri U. Tewari is concerned, the assessee had made payments mainly in cash on account of purchase of potatoes as well as daily expenses are concerned Shri U. Tiwary being one of the trusted employees of the assessee was deputed to draw cash from the bank. The cash/cheques were being issued in his name to draw cash from the bank and, therefore, in the bank records his name was recorded as recipient of the cheque value. The cash withdrawn by Shri U. Tiwary were deposited in the cash book of the assessee wherein the inflow and outflow of cash are duly recorded therein. In course of the assessment proceedings, the assessee had produced his cash book and ledger account. It wa....
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....llowed such exemption. However the Ld. CIT in exercising his powers u/s. 263 of the Act in the instant case has remitted the issue back to the file of the AO on the justification that inheritance of the agricultural land and carrying out of agricultural operations on the said land are clearly the subject-matters of verification by the AO through enquiry or with reference to appropriate legal documents." The claim of exemption of agricultural income of Rs. 5,000/- was passed muster year in and year out. The Ld CIT was seriously remiss in the stand taken by him in view of the rationale established in this respect from year to year. It can be verified from the records of the assessee that income under the head "Agricultural Income" was disclosed from year to year which was accepted by the Revenue. Thus, the claim of the assessee that income was correctly disclosed as agricultural income exempted u/s. 10 of the Act. In view of the Rule of Consistency does not brook any interference. In the impugned revision order passed by the Ld. CIT the conclusion reached by him is that the instant case needs further re-examination and re-verification. In course of the assessment proceedings, the ass....
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....part, the assessment order had merged in the order dropping the rectification proceedings-In such circumstances, the assessment order could not be revised without interfering with the rectification order-Therefore, impugned notice as well as the order passed by the CIT are set aside and quashed" 3) [DWARKA DASS & CO. - VS- I.T.O. (1983) 16 TTJ (CHD) 304]. "The assessee firm was granted registration by the ITO. Subsequently the Commr. issued a notice to the assessee to show cause why the order granting registration be not set aside under s. 263(1). The said notice was issued at the instance of the report of the audit party according to which the registration granted to the firm was illegal in view of Punjab & Haryana High Court's judgment in the case of Hardit Sing Pal Chand & Co. (1979) 8 CTR(P&H) 365 as the assessee was a firm dealing in liquor and the ITO had not made necessary enquiries before granting registration. The assessee challenged the validity of the order of Commr. setting aside the order of registration on the ground that he had relied upon the audit party's report for initiating revision proceedings whereas that report was not a part of the assessment rec....
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....bsolute that the power is to be exercised by the Commissioner of the Income Tax from the examination of the records of the proceedings under the Act. The Explanation appended to s. 263 of the Act defines 'records' as all records relating to an) proceedings under the Act available at the time of examination by the Ld. CIT. The audit objections under no circumstances can be called as constituting record empowering the Ld. CIT to exercise jurisdiction u/s. 263 of the Act. Where it is apparent that the Ld. CIT has initiated the revision proceedings only on the basis of audit objection sue exercise of power under section 263 is not tenable in law and accordingly, the order passed by the Ld. CIT u/s 263 is to be set aside JASWINDER SINGH -VS- C.I.T. (2012) 150 TTJ 33 (CHD)(UO) 33]. The Audit Party is neither authorized nor competent to act as judicial supervisors of the Ld. CIT in discharging his quasi-judicial function under the scheme of statute. The requirement of law for initiating proceeding u/s 263 of the Act is that there must be independent application of mind by the Commissioner which is conspicuously lacking in the instant case. The act taken u/s. 263 of the Act in the ....
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.... inter alia, in respect of the share transactions in respect of which the assessee incurred the loss of Rs. 47.88 lakhs. The AO before completing the assessment vide letter dt. 31st May, 1999, and letter dt. 11th Feb., 2000, called for the details of business receipts/sales, details of purchase, books of accounts, bills/vouchers, bank statement and the details to consider the share loss of Rs. 47,87,692. It is observed that the assessee gave the details of purchase and sale of shares to the AO. The AO before completing the assessment, conducted enquiries and thereafter, has passed a brief assessment order. If an order passed by the AO is brief or cryptic but it has been passed after conducting the proper enquiries into the facts stated in the return, such an order cannot be held erroneous inasmuch as prejudicial to the interest of the Revenue for that reason alone. Further, the CIT while setting aside the assessment has also not given any reason as to whether the loss claimed by the assessee on account of share transaction is bogus or not genuine. He has merely stated that the AO did not examine properly the genuineness of the share transaction which could have been verified by cal....
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....passing an erroneous order. An order of remit cannot be passed by the Ld. CIT to ask the AO to decide whether the order was erroneous. This is not permissible. A finding that the order is erroneous is a condition or requirement which must be satisfied for exercise of jurisdiction under section 263 [I.T.O. - VS- DG HOUSING PROJECTS LTD. (2012) 343 ITR 329 (DEL)]. The purported action of the Ld. CIT of remitting the issues raised in his show cause notice and without adjudicating the issues to the file of the AO to decide the same de novo cannot be sustained in the instant case. The Ld. CIT had not taken any steps for making any enquiry as regards the issues raised by the assessee in the rejoinder to the show cause notice and he was unable to establish any purported error so committed by the AO which makes his order unsustainable in law. The provision of s. 263 of the Act lays down that the jurisdiction of the Ld. CIT can only be exercised if there is a specific finding to the effect that the order passed by the Assessing Authority is erroneous in so far as it is prejudicial to the interest of revenue. In other words, the provision of s. 263 of the Act can only be invoked when the Com....