TaxTMI 
TaxTMI 
TaxTMI 
2017 (11) TMI 1414
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.... order dated 9th March 2015, determining the total income at Rs. 3,05,52,122. While doing so, the Assessing Officer disallowed an amount of Rs. 83,559 under section 14A. The learned PCIT, in exercise of power under section 263 of the Act called for the assessment records of the assessee for the impugned assessment year and after verifying the same he found the following facts. 1. From the audit report in Form no.3CB, it appears that no TDS has been made on labour charges paid; 2. No details have been filed along with the audit report regarding the manufacture of jewellery of 18 carat and 20 carat and no details are available in respect of sale of jewellery of various denominator such as 18 carat and 20 carat gold and diamond jewellery; 3. Loan standing in the name of Shri Prabodh B. Thakkar, amounting to Rs. 55 lakh was not supported by any confirmation letter; 4. The assessee made payment of Rs. 12.71 crore of Anmol Jewellery which attracts the provisions of section 40A(2)(b) of the Act; and 5. No enquiry relating to payment of Rs. 16 crore to old trade creditors has been made. 3. The learned PCIT observed, the Assessing Officer while completing the assessment has neith....
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....f the learned PCIT that the Assessing Officer failed to look into the issues pointed out by him in the revisional order or he failed to make enquiry in respect of them is totally unfounded and contrary to the material on record. As far as the first issue relating to non-furnishing of carat-wise details of gold and diamond jewellery manufactured and sold is concerned, the learned Authorised Representative drawing our attention to the tax audit report filed in Form no.3CA, a copy of which is at Pate-67 of the paper book submitted, it clearly mentioned quantitative details of gold and diamond jewellery manufactured and sold. He submitted, besides the fact that all informations relating to manufacture and sale of gold and diamond jewellery were furnished in the tax audit report, the Assessing Officer in the course of assessment proceeding has issued notice under section 142(1) of the Act on 24th January 2015, wherein, he specifically enquired into the manufacture and sale of gold and diamond jewellery by calling for month-wise details of opening and closing inventory both in terms of value and quantity. He submitted, in response to the query raised in the notice issued under section 14....
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.... no problem with the advances received from 79 parties, he should not have picked up a single advance received from one party as doubtful on mere presumption and surmises. He submitted, when the assessee has furnished all the details during the assessment proceedings and the Assessing Officer after necessary enquiry and application of mind has accepted the claim of the assessee, the revisional authority cannot consider the assessment order as erroneous and prejudicial to the interests of Revenue. As far as the issue relating to the reasonableness of payment made of Rs. 12.71 crore to Shri Anmol Jewellers, qua section 40A(2)(b) of the Act is concerned, the learned Authorised Representative submitted, in respect of this issue also, the Assessing Officer has enquired into during the assessment proceedings. In this context, he drew our attention to the notice dated 15th January 2014 issued under section 142(1) of the Act. He submitted, in the said notice, the Assessing Officer has specifically called upon the assessee to furnish the details of payments made to persons covered under section 40A(2)(b) of the Act and justify the reasonableness of expenses vis-a-vis the fair market value o....
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.... the Assessing Officer during the assessment proceedings has not enquired into the issues on which the revisional authority has revised the assessment order. He submitted, due to lack of proper enquiry by the Assessing Officer the assessment order is not only erroneous but has also caused prejudice to the interests of Revenue. Therefore, the learned PCIT has correctly exercised his power under section 263 of the Act to set right the error committed by the Assessing Officer. As far as the first issue relating to non-furnishing of carat-wise details of manufacture and sale of gold and diamond jewellery is concerned, the Learned Departmental Representative relied upon the observations of the revisional authority, though, he agreed that assessee has furnished quantitative details before Assessing Officer. With regard to the second issue of unsecured loan received from of Shri Prabodh B. Thakkar, the Learned Departmental Representative submitted, the Assessing Officer, though, has raised the issue in the notice issued under section 142(1), however, he failed to conduct proper enquiry. He submitted, though, in the notice issued under section 142(1) the Assessing Officer apart from callin....
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....sue at hand. As stated earlier, in the impugned order the assessment order has been revised on three issues. First issue on which the learned PCIT has revised the assessment order under section 263 is on account of alleged non-furnishing of carat-wise details of gold and diamond jewellery. In this context, a perusal of the tax audit report for the relevant previous year filed along with the return of income, a copy of which is placed in the paper book reveals that in the said audit report all details of raw materials and finished products, such as, opening stock, purchases, consumption, sales and closing stock of 14 carat, 18 carat, 22 carat and 24 carat gold, diamond, platinum, silver, jewellery were given in exhibit attached to the tax audit report. Further, the Assessing Officer in the notice issued under section 142(1) dated 24th January 2015, has called for the month-wise details of opening and closing stock of each item of jewellery and in response thereto, the assessee has furnished month-wise quantitative details of opening and closing stock of each item of jewellery carat-wise. In fact, the learned PCIT in the revision order, though, has accepted the fact that the Assessin....
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....tions. In response to the notices issued by the Assessing Officer, the assessee vide letter dated 10th December 2014, has furnished the details of advances received from customers. A perusal of the party-wise details of unsecured loans / advances, received a copy of which is at Page-96 of the paper book reveals that the assessee has shown an aggregate amount of Rs. 1,30,49,675 towards advances to have been received from 80 customers. The revisional authority has not questioned the advances received from other 79 customers amounting to Rs. 75,49,675. He has picked up the advances received of Rs. 55 lakh from a single customer. Notably, as per the materials on record, it is evident that the Assessing Officer has not only made enquiry relating to the advances received from different parties but after analyzing the details furnished by the assessee has completed the assessment. Learned PCIT has made an allegation that the Assessing Officer without calling for some other details has accepted the claim of the assessee. Irrespective of the fact whether it is an advance or unsecured loan, we are unable to understand what further details the Assessing Officer should have asked from the asse....
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....in the tax audit report, the assessee has furnished all payments made to persons specified under section 40A(2)(b). It is also noted, in the questionnaire attached to the notice issued under section 142(1) dated 9th September 2014, the Assessing Officer has specifically called for details of payment made to persons covered under section 40A(2)(b) and also justify that the payments made were as per the fair market value. In response to the query raised by the Assessing Officer, the assessee vide letter dated 10th December 2014, has furnished the details of payment made to the persons specified under section 40A(2)(b) during the year. Thus, from the aforesaid facts, it is clear that in the course of assessment proceedings, the Assessing Officer has enquired into the issue of payment made to persons specified under section 40A(2)(b) and after applying his mind to materials brought on record has completed the assessment. Learned PCIT has held the assessment order to be erroneous and prejudicial to the interests of Revenue, since, according to him the Assessing Officer has not examined the reasonableness of such payment looking at the fair market value of the goods and services received....