TaxTMI 
TaxTMI 
2019 (1) TMI 1457
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....er to frame afresh assessment as follows:- " I have perused the documents available in the assessment records and the details furnished by the A/R of the assessee. The AR had explained and produced the copies of the expenses that were incurred by an employee of the assessee which amounted to Rs. 23,323/- on behalf of the assessee for business. However, the AO needs to examine this and also the ledger copy of various bank loan to arrive at a proper conclusion from evidences I, therefore, set aside the assessment with the direction to examine the genuineness of the evidences filed by the AR of the assessee and accordingly complete the am. He may also examine any concomitant that arises in the process and take necessary action." 3. The Assessing Officer framed consequential assessment again assessing assessee's taxable income as Rs.22,43,333/- This time the PCIT issued his sec. 263 revision show-cause notice dated 10.08.2017 terming the latte consequential assessment also to be erroneous causing prejudice to interest of the Revenue as under:- "3. On perusal of the assessment record, it is observed from the P&L account that the assessee had claimed various expenses which seems to....
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....d not ask for any details or made any enquiry and evidences w.r.t. contravention of sec.40A(3). Importantly, the then PCIT while setting aside the original assessment order had also directed that he (AO) may also examine any concomitant that arises in the process and take necessary action. (emphasis supplied). Thus, the PCIT had directed the AO to dispose the assessment afresh by examining all issues relevant to ensuring the taxing of the correct total income of the assessee. In other words, the net profit declared by the assessee automatically became subjected to scrutiny for which the associated expenditures having a bearing required to be verified. Net profit declared was Rs. 20,17,193/- i.e. only 1.6% of the total gross receipt and expenses claimed under various heads were to the tune of Rs.l,13,09,047/-, as under.- Advertisement expenses 2,34,606/- Business promotion expenses 2,08,034/- Car hire charges 5,48,759/- Car maintenance 25,34,740/- Employer cont. to ESI 17,26,089/- Messing Exp. 14,35,550/- Rent 2,48,000/- Salary & bonus 16,13,172/- Site expenses 11,12,750/- Theft & damages 5,67,000/- Tea & Tiffin 2,03,532/- Telephone charges. ....
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.... wide import and is not confined to only loss of taxes. If the A.O. has accepted the claim of the assessee without any enquiries then such assessment order passed by the A.O. was held to be erroneous. 9. In this regard, it is mentioned that mere non-enquiry would also render a particular order passed by lower authority as erroneous and prejudicial to the interests of Revenue. This position has been clearly confirmed by Hon'ble Supreme Court in the case of Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84 & Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC). The reasoning for this proposition has been explained by Hon'ble Delhi High Court in the case of Gee Vee Enterprise v. AddI.CIT[1975] 99 ITR 375.386 in the following paras:- "It is not necessary for the Commissioner to make further inquiries before cancelling the assessment order of the Income-tax Officer. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the case the Income-tax Officer should have made further inquiries before accepting the statements made by the assessee in his return. The reason is obvious. The position and function of the Income-tax Officer is very diff....
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....interest of Revenue as Assessing Officer has failed to make any enquiry to that effect. 11. It may be further noticed, that in order to provide clarity on the issue of "Erroneous in so far as it is prejudicial to the interest of the revenue", a new Explanation has been inserted w.e.f 01.06.2015 to clarify 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 Commissioner or Commissioner. (a) The order is passed without making inquiries or verification which, should have been made; (b) The order is passed allowing any relief without inquiring into the claim (c) The order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) The order has not been passed in accordance with any decision, prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. 12. Thus, having regard to the facts and circumstances of the case and in the light of the aforesaid decisions of Hon'ble Supreme Court and Hon'ble High Co....
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....tenance, car insurance, the business promotion, site expenses employee's contribution to PF and pension etc., His case is that the same had not been examined during original assessment framed on 16.04.2012 which stood revised as per former CIT's order dated 16.09.2014 (supra). The PCIT clearly sought to exercises his revision jurisdiction on different issues which had nowhere been raised in first round revision order. 6. Case file suggests that the first round regular assessment had been framed on 16.04.2012 in financial year ending on 31.03.2013 Sec. 263(2) of the Act prescribes limitation in such a case to be "after expiry of two years from the end of the financial year in which the order sought to be revised was passed." The Revenue failed to dispute that the said clause states with a negative covenant. The limitation period of two years as per this statutory provision comes to be 31.03.2015 as outer limit i.e. much earlier than earlier to the PCIT's second show cause notices on 10.08.2017. The same is held to be hit by statutory period of limitation therefore. 7. Learned CIT-DR vehemently contends at this stage that CIT's former revision directions (supra) had made it clear t....