TaxTMI 
TaxTMI 
TaxTMI 
2016 (3) TMI 1227
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....e, it was noticed that in the P&L account, the assessee had claimed an expense of Rs. 1,12,50,000/- on account of sales tax included in the selling and distribution expenses (Annexure-U to P&L account) (compound levy scheme IRQ Banaspati Unit) and the same was allowed by the Assessing Officer. As per notes on accounts, sales did not include sales-tax. In fact, this expense is not allowable and should have been disallowed. As such, order of the A.O. was erroneous and prejudicial to the interest of revenue to the extent of income of Rs. 1,12,50,000/-. Penalty proceedings u/s 271(l)(c) were also leviable which were not initiated by the A.O. while passing assessment order. 6. In view of the above facts, it is apparent that action in this case is required to be taken u/s 263 in view of the decision of the Tribunal in the case of Jai Commercial Co. Ltd Vs. Joint CIT (2000) 66 TTJ (del-Tribunal) 731, it was held that it is open for the Commissioner to call for and examine the record of any proceedings under the Act, in exercise of his administrative powers. If an order is found to be erroneous and prejudicial to the interest of the revenue, the Commissioner can assume jurisdiction unde....
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....dings, proceedings under section 154 of the Act and also in proceedings initiated under section 153A of the Act after the search conducted under section 132 on 10.06.2009. The submission of the assessee was that the Assessing Officer after applying his mind did not make any addition on this account. 5. On the merits of the case, it was submitted that the payments were made on account of sales tax under compound levy scheme in respect of its Vanaspati unit at Saharanpur and whatever sales tax was paid, according to the assessee is allowable expenditure. The Commissioner of Income Tax rejected the contentions of the assessee. He stated that the assessee has claimed in its profit and loss account an expense on account of sale tax of Rs. 1,12,50,000/- which was allowed by the Assessing Officer. As per the notes on accounts sales do not include sales tax and therefore sum of Rs. 1,12,15,000/- is not an allowable expense. The Commissioner of Income Tax also held that it is evident that the Assessing Officer has not properly examined the issue of allowability of sale tax of Rs. 1,12,50,000/-. The entire issue of payment of sale tax and its allowability is intricately connected with the i....
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....sued to the assessee after the passing of original assessment under section 143 (3). In this letter also, the assessee was asked to clarify regarding the allowability of sale tax paid. At page 13 the reply to the said letter filed by the assessee to the Assessing Officer was enclosed in which it was clarified that the sale tax amounting to Rs. 1,12,50,000/- under the compound levy scheme in respect of unit in Uttar Pradesh was raised during the assessment proceedings which was duly replied thereon however was again annexed with the said reply. At page 15 another reply filed by the assessee in response to notice under section 154 was filed, whereby again the issue of sale tax was clarified by the assessee to the Assessing Officer. At page 16 which was a letter filed before the Assessing Officer during the assessment proceedings under section 153A of the Act. In this letter also clarification with regard to the sale tax was given and a copy of the earlier letter with the copy of scheme was also enclosed therewith. All this was shown to us in order to emphasise the fact that the issue of sale tax was being considered by the Assessing Officer both at the time of original assessment und....
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....has rightly invoked the provisions of section 263 of the Act. 10. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. In order to invoke provisions of section 263 of the Act, the two conditions of the order being erroneous as well as prejudicial to the interest of the Revenue are to be satisfied simultaneously. An order can be said to be erroneous if the Assessing Officer has not made enquiry on a relevant issue. An enquiry made by the Assessing Officer, considered inadequate by the Commissioner of Income Tax, cannot make the order of the Assessing Officer erroneous. Yes, the order can be erroneous if the Assessing Officer fails to apply the law rightly on the facts of the case. In the present case, as can be seen from the Paper Book, it cannot be said that there is no enquiry. Certainly, enquiries have been conducted by the Assessing Officer with regard to the issues of sale tax. As far as adequacy of enquiry is considered, there is no law which provides the extent of enquiries to be made by the Assessing Officer. It is Assessing Officer's prerogative to make enquiry to the e....