TaxTMI 
TaxTMI 
2017 (2) TMI 501
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....of machinery, which is after due consideration accepted by the Ld. A.O.. This addition is against law and facts of the case. 3. That the Ld. CIT has given direction to the A.O. to inquire following: (i) Correctness of the claim towards Financial Charges. (ii) Correctness of the Unsecured Loan and Sundry Creditors. (iii)Fright debited Rs. 6,93,000/- to examine the provision of TDS and disallow U/s 40A(ia). These issues are already considered by the A.O. and after going through the books of account, bills and vouchers, the A.O. was satisfied and not made any addition in the total income of the assessee. The view taken by the A.O. one of the best, while he framing assessment U/s 143(3) of I.T. Act, to set aside these issues for further inquiry is nothing but duplicacy of work, which not permitted U/s 263 of I.T. Act 4. That penalty proceeding initiated by the CIT is arbitrary, unjust and routine & mechanical manner, which is against the law. 5. That the assessee has right to add, delete or modify any grounds during the appeal proceeding." 2. The facts in brief of the case are that the assessee, a private limited company, was engaged in t....
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.... Sundry Creditors of Rs. 7,16,533/-; (h) applicability of section 40(a)(ia) on freight expenses of Rs. 6,93,425/-. 4. In response to the notice, the assessee submitted that all the details in respect of above issues were duly submitted before the Assessing Officer and considered by him and he formed an opinion on the basis of the material on record and hence power given under section 263 of the Act cannot be resorted to as the order of the Assessing Officer was neither prejudicial to the interest of Revenue nor erroneous. 5. However, the learned Commissioner of Income Tax held that the order passed by the Assessing Officer was erroneous and prejudicial to the interest of Revenue. On the issue of loss from sale of machinery, the addition of Rs. 49,46,196/- was quantified and on other issues, directions for making enquiries were given as under: a. the Assessing Officer did not enquire into the loss of the magnitude, which is even higher than the entire turnover; b. the AO is directed to look into and verify the relevant accounts properly before ascertaining and determining the actual profit/loss, after examining books of accounts which were not produced during the cour....
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.... the Assessing Officer. The Auditor has also not made any adverse reporting in tax audit in respect of the sale of machinery. The learned Authorized Representative further submitted that the Assessing Officer had made enough inquiry on the issue of acquisition of asset, loss on sale of machinery as well as depreciation claimed and, therefore, it was not of the case of lack of enquiry warranting invoking of jurisdiction by the learned Commissioner of Income Tax under Section 263 of the Act. 4. In ground No. 3, the assessee has raised the issue that enquiries were made by the Assessing Officer in respect of the issues of correctness of the claim towards financial charges, correctness of unsecured loan and sundry creditors and provisions of TDS and disallowance under section 40(a)(ia) of the Act in respect of the freight expenses of Rs. 6.93 lacs. 5. Before us, the learned Authorized Representative of the assessee referred to pages no. 14 and 15 of the assessee's paper book, which is a copy of notice under section 142(1) of the Act calling for information in respect of the assessment year and submitted that the Assessing Officer called for confirmation of sundry creditors & unse....
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....rs etc, he relied on the judgment of the Jurisdictional High Court of Allahabad in the case of Meerut Roller Flour Mills Ltd Vs. Commissioner of Income-tax (2013) reported in 35 taxmann.com 183 (Allahabad). In support of the contention that it was not necessary for the Commissioner of Income Tax to come to a firm conclusion that the order of the Assessing Officer was erroneous, insofar as, it is prejudicial to the interest of Revenue and the Commissioner of Income Tax can remand the matter to the Assessing Officer to make fresh assessment after giving an opportunity of hearing to the assessee, he relied on the judgement of the Hon'ble Gujarat High Court in the case of Additional Commissioner of Income Tax Vs. Mukur Corporation reported in 111 ITR 312 (Guj). 4.3 We have heard the rival submissions of the parties and perused the relevant material on record including the paper book containing 32 pages filed by the assessee. The mandate of section 263 of the Act is attracted only when the assessment order is found to be erroneous insofar as to be prejudicial to the interest of the Revenue. These twin conditions have to be cumulatively satisfied for obtaining a valid jurisdiction und....
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....the paper book. It is evident that this notice was issued on 13/05/2010. According to the notice, the hearing was fixed on 20/05/2010 and the assessee was asked to furnish various details listed at serial Nos. 1 to 10, inter alia, business activity, audit report, bank accounts, Director/Shareholders, confirmation of sundry creditors, proof of payment under section 43B, confirmation of unsecured loans and details in table format, gross profit/net profit rate, liability of TDS etc. A further reminder/notice under section 142(1) of the Act was issued on 23/06/2010 calling for the reply in respect of the information as called for vide notice under section 142(1) of the Act dated 13/05/2010. In response to the said queries raised by the Assessing Officer, the reply submitted by the assessee is placed on pages 11 to 12 of the paper book. Before us, the assessee has also submitted a copy of reply dated 15/11/2010 claimed as submitted to the Assessing Officer on his verbal queries. This reply contains computation of loss on sale of machinery. One more reply of the assessee, which is signed by the counsel of the assessee on 25/11/2010, is available on page 9 of the paper book, which contain....
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....ies, the assessee replied vide letter dated 21/10/10, which is available on pages 11 of the assesses paper book, as under: "Answer No. 4: The details of sundry creditors are enclosed. We are trying to get their confirmation. Answer No. 6: The confirmation of Unsecured Loan of following with PAN are enclosed:- 1. Sanjay Bharadwaj 70,00,000.00 2. Yash Pal Singh 10,00,000.00 (Copy of his Kisan Bahi having agriculture land 4.290 hectare at village Rajpura is also enclosed.). 4. Kamal Singh 50,00,00.00 (Copy of his Kisan Bahi of agriculture land 1.292 hectare at Villate Rajpura is enclosed.) 5. Brajpal Singh 80,00,00.00 (Copy of his Kishan Bahi of agriculture land 2.2560 hectare at Village Rajpura is enclosed.) Answer No. 9: That TDS was not deductible on any of the expenses. 4.7 In reply dated 15/11/2010, which is placed on page 18 of the assessee's paper book, reply in respect of creditors was as under: Answer No. 2: Copy of a/c of following creditors in our books of a/c: (a) M/s. ABN Enterprises Hissar (b) M/s. Apin Textiles. 4.8 Thus, it is evident from the submission of the assessee that....
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.... 4.10 The Hon'ble Gujarat High Court in the case of Mukur Corporation (supra) has upheld the action of the Commissioner of Income Tax in order under section 263 of the Act, remanding the matter to the Assessing Officer for fresh examination. The relevant finding of the Hon'ble High Court is reproduced as under: "15. The third step is as regards an inquiry as the CIT "deems necessary". It is with regard to this step that Shri Patel vehemently contended that the CIT had committed an error in not allowing the assessee to cross-examine Dr. Vyas, whose affidavit dt. 10th March, 1971, was very material. Now, after reading the relevant portion of sub-s. (1) of s. 263, we do not find any justification for the view that in every case the CIT is expected to make an inquiry before passing the final order. The concluding portion of this sub-s. (1) of s. 263 shows that the CIT can pass various orders such as enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment. If the CIT in this case had enhanced or modified the assessment, then looking to the facts of the present case, Shri Patel would have been justified in contending that, before passing the....
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....ion of the principles of natural justice on the question of opportunity being given to the assessee. That opportunity was reasonably given, by stating the basic grounds on which the CIT thought that the ITO's order was erroneous and giving a reasonable opportunity to the assessee even to produce evidence along with facts of that case, the High Court further observed that all that the CIT did was to cancel the assessment and ask the ITO to make a fresh assessment according law after making proper enquiries and investigations with regard to the jurisdiction, carrying on the business, possession of initial capital and the sources of moneys invested in the name of the assessee and, therefore, the assessee would again get full opportunity to produce evidence, if any, in support of her case. 16. In view of this, we find that considering the facts of this case, the CIT was not bound to make any inquiry before passing the final order and that in substance no prejudice is caused to the assessee by failure of the CIT to give it any opportunity to cross-examine Dr. Vyas. 17. Next question is whether at the time of passing the final order, the CIT was bound to record final conclusion....