AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (2) TMI 1589
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.... far as it was prejudicial to the interest of the revenue even though the assessment order was neither erroneous nor prejudicial to the interest of the revenue. 2. For that on the facts and in the circumstances of the case, the CIT was unjustified in law in revising the assessment order on the ground of lack of enquiry with regard to issue of allowability of prior period expense even though in the show cause notice the assessment order was not considered by the CIT to be erroneous on the ground of lack of enquiry. 3. For that on the facts and in the circumstances of the case, the CIT having held the assessment order to be erroneous on the ground that the AO wrongly allowed the deduction for prior period expense, he was wholly unjustified in ultimately setting aside the assessment on the ground entirely different than the ground on which the revision proceeding was initiated. 4. For that on the facts and in the circumstances of the case, the CIT was unjustified in law in holding the assessment order to be erroneous on the ground of lack of enquiry with regard to allowability of prior period expense even though the facts on record established that the liabi....
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....ited to arrive at net loss of Rs. 858,06,62073/- and the computation had been initiated with the same net loss to arrive at the total loss of Rs. 1035,72,53,747/- for the AY 2012-13. It was observed from the submission made by the assessee in course of assessment proceedings that prior period expenditure comprised contribution to pension and gratuity fund (past year) of Rs. 733,00,00,000/- past year consumer outstanding of Rs. 14,87,32,993/- and aforestation expenses of Rs. 61,93,11,759/-. The aforesaid prior period expenses aggregating to Rs. 809,80,44,752/- has been added back in course of computation of income for the AY 2012-13 and the same had also been accepted in assessment. This has resulted in allowance of debit of past years' to be extent of Rs. 39,34,86,241/- (849,15,30,993 - 809,80,44,752). Omission to add back the same resulted in over assessment of loss to the extent of Rs. 39,34,86,241/-. In view of the above facts & circumstances, I am of the opinion that the assessment order made u/s.143(3) dated 30/03/2015 for the AY 2012-13 is erroneous sin so far as it is prejudicial to the interest of Revenue. You are therefore given an opportunity to make your submiss....
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.... maintained at Kolkata head office. The amounts so paid appear in the HO's books under the category "Advance". On receipt of advance the supply orders are released and accordingly the subsidiaries of Coal India despatch the coal to different plant locations of DVC. At the relevant time the subsidiaries of CIL raise invoices on DVC's concerned power project. In the books of the respective projects the supply of coal is initially accounted. However before the bill for coal supply is approved and passed for payment the said bill goes through a detailed process of verification and for this purpose numerous checks and balances are putin place by the assessee. This process ensures that the quantity and quality of the coal supplied is thoroughly checked before the bills are approved for payments, Through these checks and balances it is ensured that the coal supply was of the grade prescribed in the Purchase Order. The verification process also involves physical inspection of the coal supplied so to ensure that not only the coal supplied is of desired quality but the quantity of the coal supplied is also as per invoice and Agreement. Coal is physically inspected to ensure that the ....
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....ed at between representative of Bharat Coking Coal Ltd (BCCL) and the assessee in respect of coal supplies made by BCCL to assessee's Mejia Thermal Power Plant (MTPP). The joint reconciliation was carried out in the month of December 2010 in meeting attended by the representatives of BCCL & DVC. A copy of the Joint reconciliation Statement signed and executed in December 2010 is enclosed for your ready reference and record. After the joint reconciliation was arrived at, the same was sent to the fuel section of MTPP for final approval and onward recommendation to the head office for passing requisite accounting entries in the assessee's books. Inadvertently however the senior account executives of the assessee posted at MTPP were deputed on election duty as the West Bengal Assembly Elections were held in early 2011. Since the concerned account executive of the assessee was on election duty; necessary recommendations for passing the entries in the books to give accountings effect to the settlement with BCCL could only be issued in the FY 2011-12. As soon the head office of the assessee at Kolkata received the recommendation from MTPP giving accounting effect to the settlement....
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....ims by each party which required resolution in joint consultation. It is material to submit that assessee as well as BCCL had continuous and ongoing trading transactions between them. Resolution of disputes arising from the trading transactions is therefore an on ongoing process and it is not a one time phenomenon. The disputes arising in the ordinary course of business need to be settled periodically. In respect of disputed sums, liability stand, crystallized only when the parties to the dispute jointly come together and resolve the disputes through dispute resolution mechanism mutually agreed by the parties. In case of dues arising from settlement reached by mutual consent liability of an assessee gets crystallized only when the parties arrive at mutually accepted terms and associate procedures are complied with. In the assessee's case the documents on record will show that such settlement was arrived at the meeting jointly conducted between BCCL & DVC representatives in December 2010 and thereafter the accounting effect to the settlement was given in the accounts for the year ended 31.03.2012. In the facts &circumstances set out in the foregoing, it shall be appreciated that....
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....ed to conduct inquiries ad no such relevant details were called by the Assessing Officer. The impugned assessment order has been passed allowing prior period expenses of Rs. 39,34,86,241/- without inquiring into the claim and without verification. 6. Hon'ble Delhi High Court in the case of GEE VEE Enterprise Vs. Addl. CIT reported in 99 ITR 375, 386 (Del). Has held that the CIT may consider the order of the Assessing Officer to be erroneous not only if it contain some apparent error of reasoning or of law of fact on the face of it, but also because the Assessing Officer has failed to make enquiries which are called for in the circumstance of the case and it is an order which simply accepted what the assessee has stated in his return of income on the said issue. It is not necessary for the CIT to make further enquiries before cancelling the assessment order. The Commissioner can regard the order erroneous on the ground that the Assessing Officer should have made further enquiries. 7. the Hon'ble Karnataka High Court in the case of Thalibai F. Jain Vs. ITO 101 ITR 1, 6 (Karn.)has held that where no enquiries made by the Assessing Officer on the relevant issu....
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....rder but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would make su9ch an inquiry prudent that the word "erroneous" in section 263 includes the failure to make such an enquiry. The order becomes erroneous because such an enquiry has not be made and not because there is anything wrong with the order if all the fact stated therein are assumed to be correct.' 10. Further to this, it is noticed that there is no appeal right available to the Revenue from the order of assessment passed by Assessing Officer and i.e. why revisionary powers have been given to the Commissioner and such power were held to be of wide amplitude by the Hon'ble Supreme Court in the case of CIT v..Shree Manjunatheswar Packing Products & Camphor Works [1998] 231 ITR 53/96 Taxman 1. Therefore, normally when Assessing Officer has not made any enquiry on a particular issue, then such order in view of the above detailed discussion has to be construed as erro....
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.... but the AO without verifying the same has allowed during assessment proceeding. The ld. DR vehemently relied on the order of ld. Pr.CIT and requested the Bench to decide the issue on merit. 7. We have considered the rival submissions and also perused the relevant material available. We have also given careful thought to the case laws and relevant statutory provisions referred to and relied upon by both the sides in support of their arguments. The assessment order passed by the AO u/s 143(3) of the Act was considered by the Ld. Pr. CIT to be erroneous and prejudicial to the interest of Revenue on the ground that the AO has allowed the prior period expenses which are otherwise not eligible for deduction. Accordingly a notice u/s 263 of the Act was issued by ld. Pr. CIT by pointing out the defects/ errors on merits in the order of the A.O. 7.1 In compliance thereto the assessee made a detailed reply and tried to justify that there was no error in the order of the AO. It was explained that the prior period expenses were crystallized during the year therefore the same was claimed in the year under consideration. However the ld. Pr. CIT in his order without pointing out any err....