TaxTMI 
TaxTMI 
2019 (1) TMI 1063
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....3, which is in violation of the principles of natural justice. 03. Because the order passed under section 263 being partially set aside, the assessment framed under section 143(3) and the appeal therefrom should have been confined only to the issues on which it was set aside, the CIT(A) has erred on facts and in law in holding otherwise. 04. Because the entire assessment framed pursuant to order passed under section 263/143(3) of the Act, 1961 is contrary to facts, bad in law and be quashed, 05. Because the CIT(A) has erred on facts and in law in upholding the addition of Rs. 1,699/- being interest paid for late deposit of IDS, the addition be deleted. 06. Because the CIT(A) has erred on facts and in law in upholding the addition of Rs. 26,24,573/- being disallowance made by the AO in respect of claim made under section 80IB of the Act, the disallowance made be deleted. 07. Because the CIT(A) has erred on facts and in law in upholding the addition of Rs. 36,310/- made under section 14A of the Act, which addition is contrary to facts, bad in law and be deleted. 3. The following notice (ABP:12-16) dated 24/10/2013 was issued to the asse....
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....any income from any source in India: [Provided that nothing contained in this clause shall apply in relation to any income by way of fees for technical services payable in pursuance of an agreement made before the 1st day of April 1976, and approved by the Central Government,] [Explanation 1. For the purposes of the foregoing proviso, an agreement made on or after the 1st day of April 1976, shall be deemed to have been made before the date if the agreement is made in accordance with proposals approved by the Central Government before that date.] Explanation [2] - For the purposes of this clause, " fee for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial technical or consultancy services (including the provision of services of technical or other personnel) but dose's not include consideration for any construction assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries. "] A subsequent amendment has also been introduced by Finance Act, 2010 with retrospective effect from 01.6.1976....
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....ithin the meaning of clause (23D) of section JO or a public financial institution within the meaning of that clause, deduction of tax shall be made only at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode:] {Provided further that no such deduction shall be made in respect of any dividends referred to in section 115-O] Explanation - For the purpose of this section, where any interest or other sum as aforesaid is credited to any account, whether called "Interest payable account" or "Suspense account" or by any other name, in the book of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provision of this section shall apply.] (2) Where the person responsible for paying any such sum chargeable under this act (other, than salary) to a non resident considers that the whole of such sum would not be income chargeable in the case of recipient, he may make an application to the [Assessing] Officer to determine, [by general or special order], the appropriate proportion of such sum so chargeable and upon Such determination ,tax sh....
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....(c) Ganga Jamuna Commtrade Pvt. Ltd. Rs.2,00,00,000 (d) Hooghly Consultancy Services Pvt. Ltd. Rs.3,42,00,000 (e) Mahmood Alam Rs.1,02,05,466 (f) Mahtab Alam Rs.1,91,62,036 (g)Maqsood Alam Rs.1,60,92,013 (h) Marhoob Alam Rs.1,12,21,969.34 (i)Mohd Alam Rs.1,19,01,000 3. The assessee made new investment on account of FD No.867202 and FOR Account amounting to Rs. 50,000/- and Rs. 1,45,00,632.50 respectively, no details are available on record. 4. The Assessee has paid an amount of Rs. 29,97,182.30 on account of Job work. Evidence of deducting of TDS is not available on the record. 5. On perusal of return , it was found that the assessee has shown "any other income" at Rs. 4,50,55,996/-, details are not available on record. 6. Assessee purchased following Raw Hide: - Raw Hide & Leather Purchase Rs. 25,87,62,509.40 - Raw Hide Leather Purchase Rs. 38,01,30,343.06 However, no verification of these purchases has been made and no enquiries have been made to ensure that these are included exclusively for the purpose of assessee's business. It is further seen that there .are loan....
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.... contending that the order passed under section 263 of the Act clearly set aside the original assessment order for the same to be framed afresh de novo. 7. Heard. The Assessing Officer, in the assessment order dated 30/3/2016, passed in pursuance of the revisional order dated 30/3/2015, made the following additions/disallowances:- (i) Disallowance under section 80-IB of the Act : Rs.26,24,573/- (ii) Disallowance of job charges : Rs.1,66,700/- (iii) Addition on account of TDS : Rs.1,699/- (iv) Addition under section 14A of the Act : Rs.36,310/- 8. A perusal of the show cause notice dated 24/10/2013 issued under section 263 of the Act, as reproduced hereinabove, shows that there is nothing contained therein with regard to the above additions or disallowances, but for the issue of disallowance of job charges, the addition on which, incidentally, has been deleted by the ld. CIT(A). To reiterate, the assessee had been asked to show cause with regard to the following items:- (i) Applicability of the provisions of section 195 of the Act on commission paid to foreign agents. (ii) Enquiries required to be made in respect of assets ....
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.... from various concerns, but no enquiry were made to verily the purchases and the submissions of the assessee were accepted without verification. In fact, it is very clearly seen that in para 6, 7 and 8 that there is only a reference to inventory of closing stock being filed and that the sales are verifiable. But actually they have not been verified. Thereafter the A.O. has, without any clear verification disallowed a partial amount of Rs. 1,25,000/-only. In view of the above facts, perusal of proceedings of the assessment as recorded on the note sheet and the documents available indicate that though some information was furnished by the assessee during the course of proceedings, the Assessing Officer did not make adequate enquiries nor carried out any investigation to verify the purchases specially in the backdrop of a search and seizure operation carried out by the I.T. Department. In the operation cash was found which was not explained and was said to be for purchase of raw hides from Kolkatta. The case was centralized with the A.O. CC-1 by the CIT-1, Kanpur in order to carry out coordinated investigation with the other cases of the group namely Shri Mehtab Alam....
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.... It is also seen that the order u/s 153C of the A.O, has been passed after obtaining approval from the Joint Commissioner of Income Tax, Central Range, Kanpur in terms of provisions of section 153D of the IT Act. Since the order is erroneous as well as prejudicial to the interest of revenue, the approval has been granted by the Joint Commissioner of Income Tax, Central Range, Kanpur without application of mind, the same is also set aside to be granted afresh as provided u/s 153D of the Income Tax Act. 1961." 10. Specifically, in the last paragraph at page 2 of the order passed under section 263 of the Act, it has been observed that "......it is thus seen that the order for assessment year 2010-11 is erroneous as the items of income indicated above have not been included in the total income as well as enquiries which should have been made by the Assessing Officer, have not been made. The order, due to this reason, has resulted in determination of incorrect total income at a lower figure and, therefore, prejudicial to the interest of the Revenue" (Emphasis supplied). 11. Thus, the notice issued as well as the order passed under section 263 of the Act referred to the 'items....
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....of the Act, cannot be made subject matter of assessment in pursuance to an order passed under section 263 of the Act. It cannot be disputed, as has also not been done, that the items of additions/disallowances now made by the Assessing Officer, i.e., disallowance of Rs. 26,24,573/- under section 80-IB of the Act; interest of Rs. 1,699/- on TDS and addition of Rs. 36,310/- under section 14A of the Act, were not the subject matter of either the notice issued, or the order passed under section 263 of the Act. 17. In "CIT vs. D.N. Dosani", 280 ITR 275 (Guj.), it has been held that where the assessee was called upon by the ld. Pr. CIT to tender an explanation qua two items mentioned in the show cause notice, the ld. Pr. CIT could not have treated any further item or part of the assessment order as being erroneous and prejudicial to the interests of the Revenue without giving the assessee an opportunity of being heard; and that, therefore, what the Commissioner himself could not have done, could not be permitted to be done by the Assessing Officer while giving effect to the order under section 263 of the Act. It was held that the Tribunal was right in holding that in the fresh assessm....