TaxTMI 
TaxTMI 
2016 (6) TMI 1272
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....olation of the principle of natural justice. 2. On the facts and circumstances of the case, the learned Pr. CIT erred in assuming jurisdiction u/s. 263 of the I T Act, in respect of order passed by assessing officer with prior approval of the Additional Commissioner of Income Tax by treating the same erroneous and prejudicial to the interest of revenue. 3. On the facts and circumstances of the case, the learned Pr. CIT erred in coming to the conclusion that the Assessing Officer ought to have examined the applicability of provision of section 69 of the Act which he has failed to do and thereby treating the order as erroneous and prejudicial to the interest of revenue. 4. On the facts and circumstances of the case, the learned Pr. CIT erred in coming to the conclusion that Assessing Officer has failed to carry out necessary verification and inquiries before allowing deduction u/s. l0B and thereby treating the order as erroneous and prejudicial to the interest of revenue. 5. On the facts and circumstances of the case, the learned Pr. CIT erred in coming to the conclusion that assessing officer has failed to carry out necessary verification and inqu....
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....Rs. 1,51,12,09,970/-. 5. On verification of assessment records including seized material, CIT noticed that assessment order passed by the DCIT was found to be prima facie erroneous in so far as prejudicial to the interest of Revenue. Therefore, proceedings u/s.263 of the Act were initiated by issuance of notice dated 07.03.2016 requesting the assessee to show cause as to why assessment order passed by Assessing Officer on 31.03.2014 should not be set aside for de novo consideration as per provisions of Section 263 of the Act. The relevant portion of show cause notice is reproduced hereunder: "2. On verification of the assessment record, including the seized material, for A. Y. 2006-07 it is noticed that the assessment order passed by the DCIT CC-10, Mumbai (pre-restructuring), in the above case is found to be prima facie erroneous in so far as it is prejudicial to the interest of the revenue for the following reasons:- (i) The AO had given a finding in para 10.3 of the assessment order that the cash transactions found as per seized material vide Annexure1 to 14 [Party No. 17] of Sterling Biotech Limited, Sandesara, Vadodara and Annexure-1 to 21 [Party No. 11] o....
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....entary evidence were found and seized. A similar list of 16 entities was also found from the premises at 4th floor, Chavda Commercial Centre, Link road, Malad (W), Mumbai which is also part of core documents (Annexure 1- pages 80 to 81), In these companies Shri Chetan Sandesara has substantial interest. These companies form a part of the aforesaid 151 companies. The C.A. of the group, Shri H.S.Haathi stated that these are paper companies, used by the assessee. However, later on during the course of assessment proceedings, it was claimed that most of these companies are clients of Shri H.S.Haathi with which the assessee did not have any nexus. Despite such contradictory statements, the A.O. accepted the assessee's claim without any verification. (v) During the course of search, certain documents were found and seized, for instance material found and seized from the premises of SBL at BKC Office Mumbai (Annexure A. 9) indicating investment in off-shore entities at locations like Nigeria, USA and Dubai, etc. The AO has not caused any verification in respect of these transactions entered into with offshore entities by the assessee. (vi) During the course of the se....
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....passed by the A. O. on 31.03.2014 be not set aside for de novo consideration as per the provisions of section 263 of the Act. For this purpose your case is fixed for hearing on 17.03.2016 at 11.00 a.m. You may appear on the stipulated date and time either in person, or through your authorized representative. If you do not wish to avail the opportunity of being heard, you may send written submission which will be duly considered before passing the order u/s 263 of the Act." 6. In compliance to the show-cause notice, written submissions dated 21/03/2016 were filed on behalf of assessee, relevant part of the same is reproduced below: "From the above, it may be seen that the assessee has already been scrutinized and investigated by the Department at three stages. Now, the Department is envisaging to again verify the same documents and same information which have already been verified and examined at three stages. If the Department proposes to review the assessment already made earlier twice, there would never be finality in the assessment proceedings. This will be against the observation of the Hon'ble Bombay High Court in CIT vs. Gabriel India Ltd (1993) 203 ITR 108, w....
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....wo views are possible and the AO has taken one view in the assessment order with which the CIT does not agree, the order cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the AO is unsustainable in Law. In this connection, attention is invited to the decision of the Supreme Court in the case of Malabar Industrial Co. Ltd. (243 ITR 83) wherein the Apex Court has held that - 'A bare reading of this provision makes it clear that the pre-requisite to the exercise of jurisdiction by the Commissioner suo motto under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent - if the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue recourse cannot be had to S. 263(1) of the act. There can be no doubt that the provision cannot be invoked to correc....
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....ion 143(2) of the Act and after considering the materials and explanation, the Income- tax Officer has come to a definite conclusion. The Commissioner of Income-tax did not agree with the conclusion reached by the Income-tax Officer. Section 263 of the Act does not empower him to take action on these facts to arrive at the conclusion that the order passed by the Income-tax Officer is erroneous and prejudicial to the interests of the Revenue. Since the material was there on record and the said material was considered by the Income-tax Officer and a particular view was taken, the mere fact that a different view can be taken, should not be the basis for an action under Section 263 of the Act and it cannot be held to be justified. " The Calcutta Tribunal has also in the case of Usha Martin Industries Ltd. (86 ITD 261) held that unless it can be established that the view taken by the AO is a perverse, or impossible view, Commissioner cannot invoke the revisionary powers conferred upon him by the statute under Section 263. Further, it is submitted that the learned Pr.CIT has not given any finding as to how the issues raised by him have led to any loss in revenue. In the....
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....ghly considering the explanation of the assessee, the AO thought it fit not to invoke the said provision. Hence it is submitted that your contention that the Assessing Officer had not examined the applicability of Section 69 is not justified. The show cause reads as under: ii) Assessee's claim of deduction u/ s. 10 B of the Act on its export of Co-enzyme Q10 from Massar Plant was allowed by the AO without causing necessary enquiries . to ascertain the veracity of its claim that it is exporting the co-enzyme Q10 to UAE at an average price of Rs. 2,55,000/- per kg as compared to the rate of Rs. 15,000 per kg at which it exported the same to France and the domestic sale price of Rs. 1,226/-per kg. The AO failed to take cognizance of the important fact that the department of Customs and Central Excise, Ahmedabad had dearly stated that during the relevant period i.e. 01.04.2005 to 31.03.2013 only two consignments of Co-enzyme Q10, of 50 kg each, valued at Rs. 15,48,816/- were exported to France by the assessee and that no other export has taken place in respect of this product, either by the assessee or any other party. No evidence in the form of export bills or ex....
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....documents) a list of 151 entities with their seals and other documentary evidence were found and seized. A similar list of 16 entities was also found from the premises at 4th floor, Chavda Commercial Centre, Link road, Malad (W), Mumbai which is also part of core documents (Annexure l - pages 80 to 81). In these companies Shri. Chetan Sandesara has substantial interest. These companies form a part of the aforesaid 151 companies. The C.A. of the group, Shri H. S. Hathi stated that these are paper companies, used by the assessee. However, later on during the course of assessment proceedings, it was claimed that most of these companies are clients of Shri H.S. Haathi with which the assessee did not have any nexus. Despite such contradictory statements, the A.O. accepted the assessee's claim without any verification. In this connection, it is submitted that the list of 151 entities (which also includes 16 entities found from the premises at 4th floor, Chavda Commercial Centre, Link road, Malad (W), Murnbai) found during the search were the clients of H.S. Hathi. As in the statements recorded on 2810612011, Shri H. S. Hathi was not confronted with the said list and hence th....
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....tion, recovery percentage, etc at each stage. The assessee company had also submitted last page of RG-1 register of gelatine to substantiate the production of Gelatin for all the years. The Assessing Officer had thoroughly examined and verified these details / documents before coming to the conclusion that the waste was to the extent of 5% and not 30% as claimed by the assessee. Hence it cannot be said that the conclusion of the AO was merely based on presumption, though even the said conclusion of the AO is devoid of any merits. Moreover, no incriminating material has been found in this regard during the search. The show cause is absolutely silent as to how there is a loss of revenue in the instant case. The show cause reads as under: vii) During the course of search, it was found that 18 entities of the Sterling Group have subscribed to the Share Capital of SBL to the tune of Rs. 45 crores. It was admitted by Shri H S Hathi in his statement during search that this was a mere paper entry and the money actually belongs to the assessee. This issue has also not been properly examined by the A.O. In this connection, it is submitted that during the search a d....
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....ns made during the search and seizure operation. Therefore, CIT rejected the general argument of assessee, regarding the fact that no incriminating material has been referred in show cause notice, was also without any basis, as the particular Annexures of the seized material and the name of the premises from where documents have been seized, as well as the content of these documents have been clearly referred in the show cause notice. CIT observed that in this particular case revision proceedings have been initiated on the basis of different views taken by the Assessing Officer on specific instances. According to CIT, show cause notice also clearly indicates loss of revenue due to lack of proper enquiries by the Assessing Officer. 9. Moreover, Explanation-2 to sub-section (1) to Section 263 (inserted by the Finance Act w.e.f. 01.06.2015) was found relevant and the same is reproduced hereunder for the sake of clarity: "Explanation-2 - For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commis....
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....ts application, was clearly erroneous and prejudicial to the interest of revenue, as the source of cash utilized in such transactions was not substantiated. Therefore, the Assessing Officer ought to have examined the applicability of provisions of section 69 of the Act, which he had failed to do. In this regard, assessee's stand before CIT has been that it had given explanation for each and every page of the loose papers/documents/note books and the same had been examined by the Assessing Officer. In this regard, emphasis was drawn towards para 9.1 of the assessment order which reads as under:- "In the course of discussions with C.A. Shri H. S. Hathi representing the group and also with Shri Nitin Sandesara, the key person, they have taken a stand that these documents have nothing to do with them and that if an employee is indulging in any cash dealings on his own behalf, the company from whose premises such documents have been seized, cannot be held responsible." 13. Assessee in assessment proceedings has denied that these documents had any relation with the assessee's group and has totally disowned these documents on the ground that they were maintained by the emp....
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....n) at the Ooty factory and that of the President and CEO of the assessee, Shri Deepak Korpal, being in-charge of manufacturing and Operations at Vadodara factory manufacturing Gelatin. In their statements u/s 131 recorded in the course of survey at the factory premises they have submitted in detail the manufacturing process being carried out at these factories. 2. A perusal of details of manufacturing available on records reveals that the average loss being shown year after year is in the range of 30%. This is evident from enclosed annexure containing year wise details bone consumption, production of gelatin and DCP and consequent loss. You are herewith required to explain the basis of loss so appearing in the manufacturing process. 3. It is also brought to your knowledge that the evidences collected in the course of search have confirmed undisclosed sales of DCP being undertaken by the company. There are direct evidences to confirm that DCP is being sold to farmers in cash. In this connection statement of Shri H. S. Haathi, chartered Accountant of the group needs mention. Referring to Annexure A-1 page no.73 impounded from the premises at 4th Floor, Chawda Commer....
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....016, various loose papers and other Incriminating documents were found and impounded and inventorized as per Annexure A-1 to A- 23. In the course of assessment proceedings in the case of M/s PMT Machines Ltd. a detailed show cause was issued calling for the explanation and evidences in respect of documents impounded therefrom. In response to the same a reply is received from M/s PMT Machines Ltd. vide letter dated __________ wherein it has been stated that some of the documents impounded from premises of M/s PMT Machines Ltd, pertain to M/s Sterling Biotech Ltd. as all cash transactions of M/s Sterling Biotech Ltd. were kept at that premises. It is pertinent to mention that during course of survey action at this premises the statement of oath was also recorded from Shri Ashok C. Gandhi. Accounts Officer on 28- 06.2011 wherein he has stated that some of these documents pertain to M/s Sterling Biotech Ltd as he is handling cash transactions for and on behalf of M/s Sterling Biotech Ltd., In view of the above facts you are requested to furnish evidences to Show that the transactions noted in impounded Annexure A-1 to A-23 and claimed to be pertaining to M/s Sterling Biotech Ltd. are r....
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....s and import optimization of portfolio prospecting and development of local partners (importers) filed trials and laboratory tests technical training & corporate sales for gelatin and slaughter house as consultant. According to Assessing Officer, this site gives a complete detail of process evolved in manufacturing gelatin and resultant wastage that occurs in such process. The sum and substance is that all basis for reaching a certain conclusion by Assessing Officer has been elaborated by him. Further, in assessment order, no incriminating material in respect of wastage was found. Assessing Officer concluded 5% instead of assessee's claim 30%. To be more precise on the point of telescoping, observation of Assessing Officer is reproduced as under: "10.3 Both the set of documents evidencing cash transactions have been analyzed in great details and an exercise was undertaken, where assessee's representative was associated, of working out the cash impact on a day to day basis thereby giving the cash incidence on a year to year basis. This exercise was done keeping in mind that in making addition to income on account of undisclosed sales of DCP and other by-products, the so....
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....uted a fund from which the asset was acquired. Though, assessee did not contend before the ITO that source for the acquisition of gold was the addition made by ITO to the turnover, yet it was assessee's case before the ITO that the gold had been legitimately acquired. Assessee could not then have known that the ITO would make an addition to the income on the basis of an addition to the turnover. Even before the Tribunal, assessee had adopted this stand but the assessee had contended in alternative that the source of gold could be assumed to have come out of intangible additions on account of increased turnover. In this background, it was held that Tribunal was held justified in deleting the addition of the amount as income from undisclosed sources. This ratio helps the facts of assessee as discussed above. Thus, the ratio of Jawanmal Gemaji Gandhi (supra) supports the proposition of applicability of telescopy as requested by the assessee. 19. We also find that Hon'ble Supreme Court in case of CIT vs. Max India Ltd. (2007) 295 ITR 282(SC) held as under: "The phrase "prejudicial to the interests of the Revenue" in section 263 of the Income-tax Act, 1961, has to be read in....
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....Act. Thus, CIT is supposed to find the error in the order of Assessing Officer and he is not supposed to set aside the matter to Assessing Officer for finding of the same. This approach is not justified as held by Hon'ble Supreme Court in case of CIT vs. Max India Ltd. (supra). 21. We also find that Mumbai 'G' Bench in ITA No.2378/Mum/2015 for A.Y.2010-11 in case of Gaurav Mathrawala vs. CIT has held as under: "Ld. CIT has not disputed this contention of the assessee raised before him, but has simply set aside the assessment to the AO to examine it afresh. Such an exercise by the CIT cannot be appreciated, firstly, he should give specific finding as to why such a contention raised by the assessee is not correct or divorced from the facts and material records and secondly, how on the facts the order of the AO is actually erroneous and also prejudicial to the interest of the revenue. Simply mentioning the phrase in the order that the "assessment order is erroneous and so far as it is prejudicial to the interest of the revenue" is not sufficient. The Ld. CIT after examining the records and the contentions of the assessee before him, has to give a specific finding and then ....
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.... necessary enquiries or verification in order to show that the finding given by the assessing officer is erroneous, the Ld Pr. CIT should have shown that the view taken by the AO is unsustainable in law. In the instant case, the Ld Pr. CIT has failed to do so and has simply expressed the view that the assessing officer should have conducted enquiry in a particular manner as desired by him. Such a course of action of the Ld Pr. CIT is not in accordance with the mandate of the provisions of sec. 263 of the Act. The Ld Pr. CIT has taken support of the newly inserted Explanation 2(a) to sec. 263 of the Act. Even though there is a doubt as to whether the said explanation, which was inserted by Finance Act 2015 w.e.f. 1.4.2015, would be applicable to the year under consideration, yet we are of the view that the said Explanation cannot be said to have over ridden the law interpreted by Hon'ble Delhi High Court, referred above. If that be the case, then the Ld Pr. CIT can find fault with each and every assessment order, without conducting any enquiry or verification in order to establish that the assessment order is not sustainable in law and order for revision. He can also force the AO to....
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....ad called for the details and the same were filed by the assessee, merely because there was no discussion in the assessment order would not lead to assumption that Assessing Officer had not applied his mind. In the present case before us, many issues discussed by the Commissioner were not finally discussed in assessment order by the Assessing Officer. However, there were enough correspondence in the matter at the time of assessment proceedings which would clearly reveal that Assessing Officer had applied his mind and caused necessary enquiry. 24. Facts and decision thereon in Shri Narayan Tatu Rane help the case of assessee. CIT can reach to any conclusion only after making enquiries and verification before setting aside assessment order under provisions of Section 263 of the Act. The opinion taken by Commissioner cannot be taken as final one without scrutinizing the nature of enquiry or verification carried out by Assessing Officer vis-à-vis its reasonableness in its facts and circumstances. In view of the above, in our view, the question as to whether the amendment brought in by way of Explanation 2(a) shall have retrospective or prospective applications shall not be re....
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....observed that claim of deduction u/s. l0B of the Act on its export of Co- enzyme Q-10 from Masar Plant, allowed by the Assessing Officer without causing necessary enquiry to ascertain the veracity of assessee's claim. In this regard, assessee claimed export of Q-10 which was claimed manufactured in its Masar Plant. During course of search proceedings on 28.06.2011, it was admitted by one Shri Santosh Bhaktpratap, the Deputy General Manager present at the premises that the plant at Masar along with the land was acquired from Torrent group in the year 2006. It was further stated by him that the entire machinery acquired from Torrent were being used in production facility by assessee after getting them cleaned and refurnished. Regarding new machinery installed if any, it was submitted by him that as per Form No. ER 7 and Form No. 14 IO, very limited items of capital assets were purchased. However, during course of assessment proceedings, it was claimed by assessee that the machinery purchased from Torrent was not being used for production of Q-10 on which deduction u/s.10B of the Act was being claimed by assessee company. According to assessee, it has exported majority of Q-10 to ....
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....zoic Acid, Imatinib Mesylate etc. Apart from the above, assessee had started a separate plant for the purpose of manufacturing of Coenzyme Q-10 for which the production and sale started in the month of March 2008. This plant was set up with the help of brand new plant and machinery partly imported from various countries. This was registered as 100% EOU as it was totally new plant with new plant and machinery. Assessee only used part of land and building earlier acquired from TGBL. Further machinery purchased from TGBL are such that it could be used only for manufacturing of other pharma products but it cannot be used for manufacturing coenzyme Q10 product. Certificates obtained from Chartered Engineer were also submitted during assessment proceedings. Submission made of Form 14 IO and other details of EOU Unit are placed at page nos. 40 to 50. Form 14 IO is for imported capital goods for production of Co- Q10. Santosh Bhaktpratap stated that we are using old machineries but no where he has mentioned that old machineries are used for manufacturing Co-enzyme Q 10 as detailed on page nos. 17 to 32 of the paper book. In response to various claims made by Assessing Officer, assessee had....
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....t. In this regard, certificates obtained from Chartered Engineer were also submitted during assessment proceedings. A submission made of Form 14 IO and the details of EOU have been placed by assessee at page nos. 40 to 50, certified to be filed before Assessing officer at relevant point of time. Form 14 IO is for imported capital goods for production of Co-enzyme Q 10. Above discussion shows that said Santosh Bhaktpratap stated that we are using old machinery but no where he mentioned that old machinery was being used for manufacturing Co-enzyme Q 10. CIT misunderstood these factual aspect while invoking provisions of Section 263 of the Act. In fact, all these facts were given to Assessing Officer at assessment stage. Assessee had already submitted that various permissions obtained from Kandla Economic Zone of Ministry of Commerce & Industries. The copies of invoices of new machineries obtained and installed in EOU Unit of Masar Plant for manufacturing Co-enzyme Q 10 have been placed on page nos. 51 to 173, certified to be before Assessing Officer at relevant point of time. Assessing Officer has made relevant enquiries in this regard, same were replied on behalf of assessee. Even w....
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....: "3) We are enclosing here with Trading, P&L account of Dubai branch of Sterling Biotech Limited for the year ended from 31.03.2006 to 31.03.2011 as per your requirement." So, in this background, it was submitted that all details with regards to transactions in question were filed before the Assessing Officer at relevant point of time. Ld. Authorized Representative took us to the relevant details filed to the paper book as on page no.27 and also drew our attention to page no.35 letter dated 05.03.2014 addressed to concerned Assessing Officer regarding information called for in the case of Sterling Biotech Limited which reads as under: "2) Confirmations were called from the parties with whom transactions i.e. sales/purchases carried out at Dubai Branch. Some of the parties responded on our request and provided their confirmations which are enclosed to this letter." 27.2 Thus, we find that confirmations were called from parties with whom transactions of sale and purchase carried out. Thus, Assessing Officer called for information and same were responded at relevant point of time with regards to the transactions carried out at Dubai. For the example, our atten....
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....have been found is not based on appreciation of facts given above. So, he invoked provisions of Section 263 of the Act on this issue as well. 28.1 In this regard, ld. Authorized Representative drew our attention to page no.9 of paper book II, having statement of Shri Ramani Iyer, Director of assessee group companies and specific attention was also drawn to the answer to question no.7 inter alia said Ramani Iyer stated as under: "Q.7.You have stated that you have a flat at Suvidhi apartment (flat no.202). Please state how your are utilizing it? Ans. No one is staying in the above flat, but I have given that flat free of rent to Sterling Biotech Group for their use. But there is no lease or rental agreement to prove that. They are using that premises for keeping the records of their various companies. Though the company is using it, the keys are available with me in my house." It shows that Ramani Iyer has not stated in clear words that said office is being used by assessee group companies, which is evident from the answer of question no.8 which reads as under: "Q.8. Will you please tell what kind of records the Sterling group is keeping in your above....
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....appear which has been properly accounted and filed the income tax return regular basis. On verification from M/s. H. S. Haul & Co. we came to know that there are certain companies which are in nascent stage and some of the companies do not have any business activities and they have also informed us wherever the business activities are there in those companies they are regular in filing the tax returns. We have enclosed the detailed names of the companies along with their addresses and PAN for you records and reference (Annexure 6A-1). Annexure Details 6A-1 Statement showing the details of the 151 companies along with their PAN, Directors and Income Tax Jurisdiction details. Keeping above facts, we submit that there is no connection of Sterling Biotech Limited with that of at the 151 companies found at the flat of Mr. Ramani Iyer except with group companies as mentioned above. We hereby confirm that these companies are not operated by Sterling Biotech Limited for their benefit as all companies other then promoter companies are independent companies and are regular in filing their respective tax returns." 28.3 It shows that assessee in certai....
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....of the above mentioned 18 concern and also the bank statement after 6 months from credit of share capital to SBL." Further attention was drawn to page no.71 to 73 of the paper book II wherein it contains the reply of the assessee to the concerned Assistant Commissioner of Income Tax dated 24.12.2013, with regard to share application money of Rs. 45 crores by Sterling Biotech Limited and refunded back afterwards. "With regard to above and in addition to the details submitted as per the annexure to the notice u/s. 142(1) for the block period from A.Y. 2006-07 to A.Y. 2011-12, we are submitting here with the further explanation on the subject matter as discussed and questioned by you in the hearing. In this regard we submit that pursuant to the requirement of term lending banks for equity contribution, the Promoters have to bring in additional Capital towards company's margin and accordingly the company has invited Share Application Forms from our 18 Group Companies to the tune of 45 Cr. Copy of sanction letter received from term lending bank highlighting the condition for capital expansion is enclosed for your perusal (Annexure - 1 A-7). The above co....
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....2007 1 A-6 Copies of Balance sheet of M/s Sterling Biotech Ltd of March, 2003 showing share application money received by the company 1 A-7 Copy of sanction letter received from term lending bank highlighting the condition for capital expansion In view of the above submissions, it is pertinent that these 18 companies have acquired funds prior to March, 2003 and they have invested these amounts as a share application money in March, 2003 in M/s Sterling Biotech Ltd. As the period is of 10 years old we are not in a position to submit the documents related to 18 companies as mentioned above but we are submitting the board resolution passed at the meeting of directors of Sterling Biotech Limited for receiving Share application money along with balance sheet of Sterling Biotech Limited for the year ended 31.03.2003 reflecting Share Application Money received to the tune of Rs. 45 Crores. Further going ahead in March' 2007 the entire amount was refunded back to all 18 companies. The copies of balance sheet reflecting the transactions is been submitted and also the income tax returns of these applicant companies is also submitted for y....
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....urnish Infrastructure Ltd., which has also found place in the statement of Shri Chetan Sandesara recorded during search action on 29.06.2011. The same was true for page No. 2 & 3 of the above annexure which also indicates huge payments made by Sterling Port Ltd. Page Nos. 6 to 8 of the same annexure is indicative of fund transfer to the tune of 1.07 lakh US Dollars to their subsidiary business of oil exploration in Nigeria. Page No. 17 is indicative of Cycle Plan for routing fund for project in Nigeria. In addition to the above, there were other documents in the same annexure which contains identical information about overseas investment activities of the assessees company, and the group. Blank letter heads of many such offshore entities, like Arabian Projects Ltd, Hallmark Enterprises Ltd and Richmond Overseas Ltd were found and seized. According to CIT, Assessing Officer ought to have thoroughly examined all the documents and should have worked out the correct scale of overseas investments of the assessee company. Accordingly, he invoked Section 263 of the Act on this issue, Which has been opposed on behalf of assessee. On other hand, ld. Departmental Representative supported the....
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....lated documents and explanations were filed. Page no.6,7,8 are fund transfer details of foreign entities which have not financial impact in the books of Sterling Biotech Limited (Page 24-26 of part II). Page no.17 which is projection / estimation of project at Nigeria which also does not have any financial impact in the books of Sterling Biotech Limited (Page 27 of part II). The assessee had also given page-wise explanation before the Investigating Wing as well as the Assessing Officer (page nos. 28, 29 of PB No.2). Letter heads found are belongings of the visitors who left by mistake at the premises of assessee. In this background, ld. Authorized Representative submitted that the order of CIT be set aside on the issue. On the other hand, ld. Departmental Representative supported the order of CIT. 29.2 After going through rival submissions and material on record, we find that during course of search, in respect of investment in offshore entities like USA and Dubai were found. In this regard, the stand of assessee has been that he has not made such big investment in offshore entities and details of same were submitted during course of proceedings u/s.153A of the Act. The document....
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....ng the search. Since, the complete quantitative details were admittedly maintained regarding production of gelatin and DCP at both units that is Karkhadi and Ooty, which were further verifiable with reference to the various internal quality check reports and quantitative tally, any such suppression of sale either of gelatin and DCF, ought to have been ascertained from the facts the case. However, the Assessing Officer chose to resort to estimation of byproducts and wastes from the data of bone consumption sourced from assessee. According to CIT, Assessing Officer also erred in holding that since the sale of gelatin in mostly to MNCs, therefore, suppression was not feasible and that only in sale of DCP, there was a possibility of unaccounted sales. CIT discussed that even the party wise details of sales and purchases had not been brought on record before arriving at this finding. The method adopted by the Assessing Officer and the basis chosen is not supported by any case specific data. CIT observed that Assessing Officer's discussion about the internet information also does not mention about the accepted yield of gelatin, the main product. The exercise resorted to by the Assessing ....
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....IT was not justified in invoking provisions of Section 263 of the Act in this account as well. In this background, ld. Authorized Representative submitted that order of CIT be set aside and that of order of Assessing Officer be restored. On the other hand, ld. Departmental Representative supported the order of CIT. 30.2 After going through rival submissions and material on record, we find that assessee has claimed wastage of 30% which was reduced to 5% by Assessing Officer after taking into consideration all details in this regard. Though, assessee was not satisfied with the reduction of wastage, but, facts remain that enquiry was done by the Assessing Officer at relevant point of time in assessment proceedings. So, CIT cannot be said that order of Assessing Officer is erroneous so as to prejudice to the interest of Revenue in absence of any enquiry. Under the circumstances, the order of Assessing Officer on this issue cannot be said to be erroneous, so as to prejudicial to the interest of Revenue so as to invoke provisions of Section 263 of the Act, and same is set aside. 31. Next issue pertains to A.Y.2010-11, 2011-12 & 2012-13 with regards to block of assets. With regards ....