TaxTMI 
TaxTMI 
2018 (2) TMI 1142
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....nses was included in the cost of land purchased and the same was claimed as deduction while determining Short Term Capital Gains (STCG) during the year. In the notice u/s. 263 of the Act dated 12.09.2016 at para 2, the Ld. CIT has stated that the scrutiny carried out by the Assessing Officer was under CASS for the reasons of- (i) large interest expenses relatable to exempt investment u/s. 14A;and (ii) low capital gains with respect to sales consideration. Thus, the assessment was carried out by the Assessing Officer primarily to verify the issue of capital gain offered by the assessee. 4. Our attention was invited to the notice issued u/s.142(1) of the Act dated 09/09/2014. During the course of the assessment proceedings, wherein vide query no.10, the assessee was asked to file the details of STCG. These details were filed by the assessee vide letter dated 13.10.2014 which shows that the land development expenses claimed was to the tune of Rs. 1,43,23,210/- and the same were part of the total purchase cost of Rs. 3,54,34,469/-. The details of the purchase of Rs. 3,54,34,469/- was submitted vide letter dated 20.10.2014 alongwith copies of invoices raised by Smt. Sumitraben Chau....
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....ised for directing a fuller inquiry to find out if the view taken is erroneous, when a view has already been taken after inquiry. This power of revision can be exercised only where no inquiry as required under the law is done. It is not open to enquire in cases of inadequate inquiry. (b) The Hon'ble Court held that it is not in every case that every evidence produced by the assessee has to be tested by cross examination of the person giving the evidence. It is only in cases where the evidence produced gives rise to suspicion about its veracity that further scrutiny is called for. If there is nothing on record to indicate that the evidence produced is not reliable and the Assessing Officer was satisfied with the same, then it is not open to the Ld. CIT to exercise his powers of revision without the Ld. CIT recording how and why the order is erroneous due to non-examination of the donors. (c) With respect to examination of the source of source in respect of gift received by the assessee, the Hon'ble Court observed that the inquiry of source of source is not the requirement of law. Once the Assessing Officer is satisfied with the explanation offered on inquiry, it is not o....
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.... was made for development. 14. In the scrutiny order passed u/s. 143(3), the AO has made detailed enquiry with regard to the payment made to Smt. Sumitraben Chauhan for development of land which was attributable to Hard Murram supplied to the assessee, the AO has issued query letter dated 09/09/2014 to the assessee asking to file details of short term capital gain, which was duly filed by the assessee vide letter dated 03/11/2014 which showed that land development expenses included the expenses incurred on payment to Smt. Sumitraben Chauhan. Assessee has also filed confirmation letter from Smt. Sumitraben Chauhan wherein she confirmed supply of 'Hard Murram' to the assessee for Rs. 50.60 lakhs. We also found that assessee has made payment for the same on 05/07/2011. Even to verify the genuineness of transaction, AO has also issued notice u/s.133(6) of the Act to Smt. Sumitraben Chauhan calling for the detailed account of the assessee in its books of account for A.Y.2012-13 and also copy of profit and loss accounts, balance sheet, computation of income and acknowledgement of ITR for the A.Y.2012-13. In response to the said query Smt. Sumitraben Chauhan had filed her reply vide lett....
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....sment order without makings any enquiry or verification in order to establish that the assessment order is not sustainable in law. With these observations, the Hon'ble Tribunal held that the provisions of s. 263 of the Act invoked by the Assessing Officer are not in accordance with law. 19. We found that that in the case of Rajmandir Estates (P) Ltd. v. Pr. CIT [77 Taxmann.com 285 (SC)], as relied by CIT-DR, the Ld Pr. CIT had made certain enquiries which revealed that the investors making investments in the said assessee were not genuine. Based on such enquiries, it was held by Ld. PR. CIT that the share capital would be liable to tax u/s. 68 for which the Assessing Officer was directed to carry out further verification. On these facts, the revision u/s. 263 was upheld by the Hon'ble Supreme Court. The said decision was later followed in the case of Pragati Financial Management (P) Ltd. v. CIT [82 Taxmann.com 12 (Cal.)]. Similarly, in case of Anuj Jayendra Shah v. Pr. CIT [67 Taxmann.com 38 (Mum.)], the Hon'ble Mumbai Tribunal observed that the Assessing Officer had merely accepted the affidavit of donor and based on the same, the gifts were accepted as genuine in the....
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....her alleged that the interest expenditure is not towards income from business but capital expenditure since the borrowed funds have been utilized for purchase of land. The CIT has therefore observed that the Assessing Officer has not examined as to when the interest expenditure of Rs. 18,81,000/- is a capital expenditure, how it is allowable as business expenditure. It was therefore held that there was non-application of mind by the Assessing Officer to the above facts and the order has been passed without making enquiry or verification which should have been made. 25. We have considered rival contentions and carefully gone through the orders of the authorities below and found that the assessment was taken up by the Assessing Officer under CASS to verify the issue of large interest expenses relatable to exempt investments u/s. 14A. Thus, the issue of interest expenditure was one of the main objectives for taking up the case for scrutiny by the Assessing Officer. 26. As per the notice issued u/s.142(1) dated 09/09/2014, wherein, at serial no.9, query with respect to the details of interest paid of Rs. 18,81,000/- were called for. Vide letter dated 13.10.2014, the assessee had file....