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2018 (6) TMI 1312
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....sons: a) The learned CIT ought to have found that the assessing officer had examined the issue regarding disallowance of the contribution to provident fund made after the due date prescribed under the relevant PF Act/Rules but before the due date for filing the return of income and the learned AO allowed the claim in view of the decision of Hon Jurisdictional High Court of Kerala in the appellant's own case in the AY 2003-04 and AY 2004-05. (Copy of the submission before the AO vide letter dated 06.03.2015 and Copy of the order of Hon High court enclosed). There is neither absence nor inadequacy of verification by the assessing officer before allowing the deduction and the Ld AO has only rightly followed the principles as per the order of the Hon Jurisdictional High Court and hence his order is not erroneous in so far as it is prejudicial to the interests of the revenue. b) The learned CIT erred in re-opening the assessment on the ground that the AO has not verified the issue on account of the dormant scheme of spraying on coconut trees against the attack of eriophyid mite. The learned CIT ought to have found that learned AO has, while completing the assessmen....
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....as it is prejudicial to the interests of the Revenue. Further, it was submitted that on a similar issue the CIT invoked the provisions of sec.263 for the assessment year 2012-13. 5. We have heard the rival submissions and perused the record. Admittedly, the issue of disallowance of payment of employees' contribution to EPF and ESI after the specified date prescribed under the respective Act, was held in favour of the assessee in assessee's own case for the assessment years 2003-04 and 2004-05 by the judgment of the Jurisdictional High Court in ITA No. 280/2010 dated 13/08/2010 by observing as follows: "At the admission stage, standing counsel took notice and both sides were heard on the question of law raised. The only issue pertains to section 43B disallowance, which for another year in respect of the same assessee, stands decided by our judgment produced as Annexure-D. In that case, we remanded the matter to consider and allow such of the payments made before the date of filing of the return. We direct the Assessing Officer in this case also to verify the dates on which employees' contributions were paid to Provident Fund and if found paid before the date of filing of....
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....neous order prejudicial to the interest of the revenue, unless the view taken by the A.O. is unsustainable in law. The question of deductibility of belated payment of PF has been considered by the jurisdictional High Court in two cases; in one case, the jurisdictional High Court has taken a view that belated payment of PF within the date prescribed under the respective Acts cannot be allowed as deduction. In the earlier decision, the jurisdictional High Court in the case of Kerala State Warehousing Corporation Limited, after considering the Hon'ble Supreme Court decision in the case of CIT v. Vinay Cement (213 CTR 268), observed that the belated payment of contribution to PF before the due date of filing of return is sufficient compliance of provisions of section 43B and hence allowable as deduction. Though the subsequent decision of the jurisdictional High Court in the case of CIT v. Merchem Ltd. (supra) is in favour of the Revenue with regard to belated payment of employees' contribution to PF, the A.O. has taken a possible view on the basis of earlier decision of the jurisdictional High Court. Since the A.O. has taken one of the possible views, in our considered view, the view t....
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....accepting the valuation of work-in-progress report declared by the assessee. [Para 12] It is also noticed that the Tribunal has called for the records of assessment of the relevant assessment year and examined the various details, questionnaire called by the Assessing Officer along with notice under section 142(1) and additional details vide questionnaire (2) vis-à-vis the assessee's reply to the said questionnaire. [Para 14] The examination of the figures as reflected in the computation of development charges establishes that the development charges claimed by the assessee per sq. ft. is Rs. 251.11/- which is lower than Rs. 299.41/- accepted by the department for the assessment year 2007-08 while concluding the assessment under section 143(3). One mode of computation works out to Rs. 296.68/- per sq. ft. The development charges of Rs. 251.11/- per sq. ft. claimed by the assessee is just and reasonable and does not result in any loss to the revenue. Thus, the Commissioner invoking the provisions of section 263, is uncalled for as the order passed by the Assessing Officer is no way prejudicial to the interest of the revenue. The revenue has miserably fai....
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....dered the material placed before it, rightly set aside the order passed under section 263, as not sustainable. Accordingly, the assessee's appeal is allowed as the consequential order passed under section 143(3), read with section 263 does not survive for consideration as having become infructuous. No exception can be found with the well reasoned order passed by the Tribunal. [Para 21]" 11. The Hon'ble Bombay High Court in the case of CIT v. Gabriel India Ltd. (supra) has considered a similar issue in the light of provisions of section 263 of the Income-tax Act. The Hon'ble High Court after considering relevant provisions, held that the order passed by the A.O. could not be held to be erroneous simply because in his order he did not make an elaborate discussion in that regard. The relevant part of the order is extracted below:- "The power of suo motu revision under sub-section (1) is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of revision under this sub-section, viz., (i) the order is erroneous; and (ii) by vi....
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.... case that in the opinion of the Commissioner the order in question is prejudicial to the interests of the revenue. But that by itself will not be enough to vest the Commissioner with the power of suo motu revision because the first requirement, viz., that the order is erroneous, is absent. Similarly, if an order is erroneous but not prejudicial to the interests of the revenue, then also the power of suo motu revision cannot be exercised. Any and every erroneous order cannot be the subject-matter of revision because the second requirement also must be fulfilled. There must be some prima facie material on record to show that tax 'which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. Therefore, in order to exercise power under section 263(1) there must be material before the Commissioner to consider that the order passed by the ITO was erroneous insofar as it is prejudicial to the interests of the revenue and that it must be an order which is not in accordance with the law or which has been passed by the ITO without making any enquiry in und....
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....t. 13. In the result, the appeal filed by the assessee is allowed." 5.2 In view of the above decisions, we are of the opinion that the payment of employees' contributions to EPF and ESI after the due date prescribed under the respective Act but before the due date of filing of the return u/s. 139(1) of the Act is to be allowed. Hence, this ground of appeal of the assessee is allowed. 6. Coming to the issue of dormant scheme of spraying on coconut trees, after hearing both the parties, we find that there was no whisper about the issue in the assessment order. The Assessing Officer is duty bound to make enquiries while passing the assessment order u/s. 143 of the Act. Section 263 of the Income-tax Act seeks to remove the prejudice caused to the revenue by the erroneous order passed by the Assessing Officer. It empowers the Commissioner to initiate suo moto proceedings either where the Assessing Officer takes a 12 wrong decision without considering the materials available on record or he takes a decision without making an enquiry into the matters, where such inquiry was prima facie warranted. The Commissioner is well within his powers to regard an order as erroneous on ....
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.... principles of natural justice or without application of mind. (iii) The order passed by the Assessing Officer is a stereotype order which simply accepts what the assessee has stated in his return or where he fails to make the requisite enquiries or examine the genuineness of the claim which is called for in the circumstances of the case. 6.2 In the present case, the CIT was of the opinion that there is no proper enquiry by the Assessing Officer and he accepted the claims of the assessee without making any enquiry with regard to the claims of the assessee. The Assessing Officer has not gathered any information and evidence to suggest that the claims of the assessee were right. The Assessing Officer is required to cause enquiries with regard to the claims of the assessee. As such, the CIT is justified in remitting this issue to the file of the Assessing Officer for de novo consideration by invoking the provisions of sec. 263 of the Act. Accordingly, this ground of appeal of the assessee is dismissed. Hence, the appeal of the assessee in ITA No.255/Coch/2017 is partly allowed. 7. The only ground in the Revenue's appeal in ITA No. 309/Coch/2017 is with regard to deletio....