TaxTMI 
TaxTMI 
TaxTMI 
2017 (10) TMI 416
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....ial to the interest of revenue. The CIT observed that order passed by the AO u/s.143(3) was prima facie erroneous and prejudicial to the interest of revenue on account of followings :- i) The AO has not verified the trading results of the assessee; ii) The AO did not verify the account of M/s Simplex Polymers, New Delhi, in view of the unusual transactions; iii) Remuneration to partners have been allowed without calling for partnership deed ; iv) Provisions of Section 2(22)(e) have not been verified by the AO in the context of the beneficial share holding ; v) The payment to M/s Hari Om Udyog and M/s Elparts Electronics without any purchase or sale and interest bearing loans used in unreasonably high debt funding; vi) Sundry debtors of the assessee have not been verified by the AO. Because of these irregularities in the assessment order, the CIT issued a show cause notice u/s.263(1) to the assessee confronting him on all the above issues. During the proceedings u/s.263 the assessee has objected that in the case of assessee under consideration the CIT does not have power u/s.263 to examine the records and books of accounts of the assessee without issuing the show cause ....
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....firmed by the AO in the assessment order as well. It is, therefore, submitted that the view of non maintenance of stock register is not correct. About the average value per Kg of opening stock, purchase, sales and closing stock, the assessee submitted that the method of valuation of stock is at cost or net realizable value whichever is lower as is evident from the Tax Audit Report. Itemwise complete details of movement of stock with quantity and value including opening balance, inward, outward and closing balance had been explained. The closing stock is correctly enclosed. The closing stock is correctly valued, and when particular details are available and are maintained there is no logic to take average value of the items dealt with. Further purchases and sales are fully vouched and verifiable and the bills and vouchers were examined with reference to the books of accounts by the AO in the course of assessment proceedings. The books of accounts have been accepted by the AO after due application of mind. Not only that the purchase and sales were also examined by issue of notice u/s 133(6). Therefore, assessee submitted that there is no error in the order of the Assessing Officer on....
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....itted by the assessee. The assessee also quoted the judgment of Hon'ble Rajasthan High Court in the case of CIT-vs- Hotel Hilltop reported in 313 ITR 116 and as held by the Special Bench of this Tribunal in the case of AClT -vs- Bhaumik Colour (P) Ltd. 118 lTD 1 (Mum.) wherein it was held that the deemed dividend under section 2(22)(e) can only be assessed in the hands of a person being a shareholder in the lender company and since the assessee was not a shareholder in the company from whom loan was taken, taxability under section 2(22)(e) could not be attracted. Hence, there is neither any error nor any prejudice caused to the Revenue on this count. 3.5. The Fifth issue raised by the CIT was that the assessee had received and made payments to M/s. Hariom Udyog and M/s. Elparts Electronics and there were neither any loan transactions or nor any trading transactions with the said parties. The Party M/s Hariom Udyog was a sundry debtor whose opening balance was Rs. 10,51,708/- and there was no other sale made to it during the year. The copy of the ledger account of M/s Hari Om Udyog was submitted by the assessee before the CIT. There were only two amounts of Rs. 5 Laks and 3 Lak....
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....claim made by the assessee in the light of the applicable law. This way, the CIT exercised his jurisdiction u/s.263 of the Act, and set aside the order of the AO and he directed the AO to pass a fresh assessment order and recomputed the assessee's income after making further enquiries on the observations discussed above. 5. Aggrieved by the order of the CIT, the assessee is in appeal before us and has taken the following grounds of appeals: 1 For that the order of the ld Commissioner of income tax is arbitary, perverse, and bad in law since that initial the show cause notice of assumption of jurisdiction under section 263 was issued by the ITO ( technical) for and on behalf of the CIT. 2.For that the ld Commissioners of income tax erred in ignoring the details and evidences on record while initiating the proceedings under section 263, thereafter copies of the same were also filed before him and further ignoring the fact that the AO examined the all issues pointed by the ld CIT as not examined by the AO which according to him made the order erroneous and prejudicial to the interest of revenue when all these details were duly examined by the assessing officer in accordance with....
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.... in his own manner but in accordance with Law. 8. For that on the facts and circumstances of the case the order passed under section 263 on various issues is not in accordance with law. 9. For that the order of the Ld CIT be cancelled and the appellant be given relief prayed for. 6. Ld. Counsel for the assessee has submitted that during the assessment proceedings u/s.143(3), the AO has issued notice u/s.142(1) calling accounts, documents and details (paper book page 52). The AO required eight details and entire details required by the AO had been submitted by the assessee vide letter dated 22.11.2010 ( paper book page no.53). The Ld. Counsel submitted that whatever the details, the AO asked, the same have been submitted before the AO. Even detail documents and books of accounts were also available on the record of the AO. Merely because he did not bring these records and evidence in the assessment order, does mean that he has not applied his mind. The CIT alleges that separate trading account should be filed instead of combined trading account. Assessee has always filed a combined trading account since last several years and assessments of which have been completed u/s 143(....
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....ion between lack of enquiry and inadequate enquiry. 7. On the other hand, ld. DR for the Revenue has reiterated the stand taken by the CIT u/s.263 which we have already noted in our earlier para and is not being repeated for the sake of brevity. 8. Having heard the rival submissions, perused the material available on records, we are of the view that the issue under consideration is not a case of lack of enquiry. Simply because the order is not a speaking order does not mean that the AO has not applied his mind. The Hon'ble Kolkata High Court in the case of J.L.Morrison (India) Ltd. reported in 366 ITR 593, wherein it has been held that if the assessee has submitted the entire details and documents as required by the AO and because the AO does not bring each and every document in the assessment order, does not mean that there is a lack of enquiry. The assessee had submitted the details asked by the AO during the assessment proceedings. The AO issued notice u/s.142(1), calling details from the assessee, like details of purchases, details of sales, evidence of secured loan, loan confirmations from loan creditors, details of interest paid with evidence, details of custom duty paid, b....