TaxTMI 
TaxTMI 
2017 (1) TMI 809
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....oceedings and verified by the AO: i. alleged infusion of capital of Rs. 1 .43 Crores ii. purchase of Bentonite of Rs. 50.27 Lacs made from Patel Mines, a person specified u/s. 40(A)(2)(b) of the Act iii. Unsecured Loan of Rs. 9,00,000/- taken from Smt. Amrutaben Harji Jodhani iv. Applicability of section 50C of the Act on sale of plot v. Expenses claimed of Rs. 3,46,334/- The Id. CIT erred on facts as also in law in directing the AO to reframe the assessment without either establishing the specific errors or prejudicial finding from the assessment order under review. The order passed u/s 263 of the Act, without discussing and establishing two basic conditions as to erroneous and prejudicial to the interest of revenue is totally unjustified on facts as also in law and deserves to be quashed, may kindly be cancelled." 3. In this connection, the assessee has filed return of income on 29/10/2007 declaring total income of Rs. 4,48,090/-. The assessing officer had assessed the income u/s. 143(3) at Rs. 4,18,280/- adding Rs. 40,000/- on account of defective vouchers. Subsequently, the ld. CIT has initiated proceedings u/s. 263 of th....
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....ced before him passed order u/s 143(3) of the Act. Questionnaire issued and submissions made during the course of assessment proceedings are available with the case record. However, I wish to clarify and offer explanation on each of the point raised in the notice as under: A: Alleged introduction of new capital ofRs 1,24,98,639/- Your assessee submits that he is a proprietor of M/s Shri Hari Impex having its principal place of business at village Mankuva in Taluka Bhuj. He has maintained regular books of accounts of the said proprietary business. He has also maintained personal books of accounts in the name of "Harji Premji Patel". All *personal transactions are recorded in this books of accounts. He have kept cash book, ledgers, bank books etc. separately. The capital account in "Shri Hari Impex" is reflected. During the year, as per the business requirement, your assessee has transferred his capital from personal books of Harji Premji Patel to the books of Shri Hari Impex. In the balance sheet of both the books, amount transferred during the year have been duly reflected. Copy of capital account with contra account from the personal books of the assessee was pro....
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....ister concern. Your assessee furnishes here with the photo copies of sale bills issued by Patel Mines to your assessee giving details of grade & quality are reflected in the sales bills. Your assessee has purchased bentonite lumps twice in the F. Y. 2006-07. The first purchase was on 10-06-2006 by bill no. 1 of Rs. 32,83,200/-. The rate of the bentonite was Rs. 456/- per ton and the quality of the bentanite was grade A (export quality} while second purchase was on 31-12-2006 by bill no.4 of Rs. 17, 44,218/- at the rate of Rs. 109/- per ton and the quality of the bentonite was normal-grade. M/s. Patel Mines had also sold the bentonite to other parties at the rate of Rs. 328/- per ton and Rs.I60/- per ton. So, there is no question of variation in the rate of bentonite lumps affecting the profit ratio of Shri Hari Impex in F. Y. 2006-07. (Page 13 to 18) C: Verification of unsecured loan of Rs. 9,00,000/- from Amrutben H. Jodhani: During the year, your assessee accepted a loan of Rs. 9,00,000/- from his wife Amrutben Harjibhai Jodhani. As this was a new credit appearing in the books of the assesse, A.O. sought clarification for the same. It was submitted that....
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....3560/1 611 referred to in para 8 of the registered sale deed. It can thus be said that KPT has accepted and was satisfied about the amount of consideration as representing the fair market value of the subject land. Section 50C of the Income tax Act is applicable only in cases where there is a valuation by Stamp Duty Valuation Officer of the same property and that valuation is higher than the value declared in the sale deed. In absence of any such material available before the AO, he was justified in accepting the sale consideration as declared in the deed Your assessee submits that various lease holders have transferred their lease hold properties during the year and sale consideration receded has been at par with that of your assessee. KPT has given approval to such transfers as the sale consideration was as per the rate prevailing in the market. It is also submitted that value as determined by Stamp Duty Valuation Authority can not substitute the real consideration unless such valuation is corroborated by some other material on record that suggest that assessee has in fact received consideration higher than what has been shown in the document. It is sub....
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..... 3,46,334/- Thus, there is no under assessment which needs reopening under section 263 of the Act. (Page 39 to 44) We hope that above details and clarification will meet the satisfaction of your honour and action initiated under section 263 of the Act may please be dropped. However, if any further detail, information or clarification is considered essential, we may please be intimated accordingly giving us reasonable time to comply with the same. " The Ld. CIT stated that on further scrutiny of assessment record, it was noticed that authorized representative of the assessee appeared before the ADIT on 22.01.2008 who on the perusal of the vouchers noted the following discrepancies:- "(a) The vouchers were not numbered. (b) There was overwriting, either in name, amount or particulars, in almost all vouchers. (c) In the cases of payments made illiterate persons, there thumb impressions were not identified. (d) The vouchers are not completely filled up i.e. in some of the vouchers, only vehicle numbers were mentioned. (e) It can be construed from the paper quality of the vouchers, that it has been prepared at the will of t....
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....r. V. CIT:- When the assessing officer is expected to make an enquiry of a particular item of income and if he does not make on enquiry as expected that would be a ground for the commissioner of income tax to interfere under section 263 of the act. III ITR 312 (Guj) in the case of CIT vs. Mukur Corporation:- The words 'prejudicial' to the interest of revenue has not be defined in section 263 of the act but they must mean that the orders of assessment challenged are such as are not in accordance with law. 205 ITR 45 in the case of Tarjan Tea Co. Pvt. Ltd. ITO has not made proper enquiries may be a good ground for setting aside the order made by the assessing officer u/s. 263 of the act. 44 ITD 331in the case of K. Varma of Ahmedabad bench of the ITAT If the assessing officer has not made proper enquiries, the CIT can direct the assessing officer to hold further enquiries in the matter. 88 ITR 323 in the case of the Tara Devi Agarwal and 67 ITR 84 in the case of Rampyari Devi Saragi The commissioner may consider an order of the assessing officer erroneous not only if it contains some apparent error of reasoning or of law or fact on face of it but a....
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....me or in the name of family members. (V) On verification your capital, it is noticed that you have introduced substantial capital. In this connection, furnish complete details of such introduction of capital along with source/evidence thereof. (VI) Furnish complete details of house hold expenses, along with source thereof. (VI) Furnish copies of registered sale agreement in respect of plots/land sold during the year. (VII) Furnish copy of ledger A/c of transport: expense, shipping charge expenses, labor & process & shipping charge expenses and clearing & forwarding expenses. (IX) Furnish copies of ledger A/c of Sundry Creditors having out standing balance, exceeding Rs. 50000/- as on 31-03-07. Also furnish the reason as to how the liability has arised." We have further noticed that the assessee vide letter dated 01/05/2009 had furnished the required details along with supporting as required by the assessing officer. We have perused the comment of the ld. CIT stating that the failure by the assessing officer to make proper enquiries in view of the report of the ADIT (Inv.) resulted in passing an assessment order which was erroneous and....
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....of facts on the basis of which registration was granted to the assessee firm. The case of K.A. Ramaswamy Cheltiar relate to making assessment without making inquiries with regard to the value of the properties which subsequently found in search action that assesse had paid on money to the sellers. Mukur Corporation case pertain to the facts where the person who transferred the property to the assessee, subsequently found to be benamidar of the assessee on the basis of affidavit made by the benamidar owner of the property. The case of Tarjan Tea Co. Pvt. Ltd relates to the issue whether order of ITO passed on basis of direction issued by IAC do not merge with order of IAC giving direction. The case of Rampyari Devi Saraogi mentioned in the order u/s. 263 pertains to the issue where commissioner concluded that assessee had neither resided nor carried out any business from address declared in return. The case of Smt. Tara Devi Agrawal relates to the issue where an income has not been earned and is not assessable merely because assessee wants it be assessed in his or her hand in order to assist someone else who would have been assessed to a larger amount. The case of Amitabh Bachchan r....