AI Drafter 
TaxTMI 
TaxTMI 
2019 (2) TMI 1623
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....8, which was received by the assessee on 27.03.2018. It was contended that vide revision order PCIT set aside the assessment framed by AO under section 143(3) of the Act dated 04.09.2015. The statutory time limit of 60 days prescribed under the Act for filing of appeal before Tribunal expired on 25.05.2018 and therefore there was a delay of 179 days in this petition. It was contended that the assessee's regular tax consultant M/s Pradeep Kumar Singhi & Associates, who generally handles assessment and first appellate proceedings were unaware of the provisions of section 263 of the Act and Revision order passed. Accordingly, M/s Pradeep Kumar Singhi and Associates through M/s Aarthi Shah advised not to challenge the revision order rather pursue the matter before the AO. Affidavit of M/s Aarthi Shah partner of M/s Pradeep Kumar singhi and his Associates was also filed by assessee, wherein she stated the above said position and the relevant Para 6 to 8 of the affidavit reads as under: - "6. That our firm generally handles tax matters only upto assessment/ first appellate proceedings and therefore we were not much conversant about the provisions under the Act that the sai....
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....essment order which was passed by the AO after due inquiry/ investigation on impugned issue, could not per-se be treated as erroneous in nature; 1.2 Ld. PCIT failed in not granting any opportunity to the Appellant to crossexamination the third party based on whose alleged statement as gathered by the DGIT (Inv.) Ld. PCIT held that the assessment order was erroneous, and thereby violated the principles of natural justice. The appellant prays the order passed under section 263 of the Act to be struck down as null and void ab initio and bad in law. Without prejudice to ground No. 1 Ground No. 2 alleged bogus purchase amounting to Rs. 8,22,86,744/- On the facts and in the circumstances of the case and in law, Ld. PCIT erred in setting aside the order of the AO and directing him to examine the purchases to the tune of Rs. 8,22,86,744/- The appellant prays that it be held that the purchases made by the Appellant be held as genuine and no re-examination/ disallowance / adjustment is warranted." 6. Briefly stated facts are that the assessee filed its return of income for the relevant AY 2013-14 on 02.09.2013 and the same was pr....
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....above discussion, the assessment order is liable to be set aside and proceeded with as per the provisions of section263 of the Income Tax Act. You are accordingly given an opportunity to make your submissions personally or thorough authorized representative to the under signed on 13.06.2016 at 12.00 AM." 7. The assessee replied this show cause notice vide letter dated 13.06.2016, filing all the evidences to support the purchase as genuine. It was claimed by assessee before PCIT that assessee has filed all the details before the AO and supported his claim that the payments for the same has been made by account payee cheque and all these entries are reflected in the books of account of the assessee. The assessee filed all the evidences before PCIT. Even now, the assessee has filed these details before Tribunal by pages 75 to 100 of assessee's paper book. It was claimed by the assessee before PCIT that all these details were scrutinized during the original assessment proceedings framed by the AO under section 143(3) of the Act i.e. the details filed in response to notice issued under section 143(2) of the Act. But the PCIT without going into the details, the details which is ....
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....Cts & Value 9. The learned Counsel drew our attention to the reply of the assessee to the notice under section 142(1) of the Act dated 17.0.2015 and 21.08.2015, which are enclosed as Annexure 'G' and 'C' of the assessee's paper book at pages 68 to 73 and 21 to 67. The learned Counsel for the assessee drew our attention to letter dated 21.08.2015 replied by assessee to the notice under section 142(1) of the Act and complete partwise details of sales and purchase enclosed and relevant reply reads as under: - "3. Part wise details of Sales and Purchases Party wise details of sales and purchase along with quantity is enclosed vide "Annexure C" 10. Further, the learned Counsel for the assessee drew our attention to P-68 of the assessee's paper book, wherein the details of inventory were provided to the AO vide letter dated 17.08.2015 and the relevant Para 7 of the letter reads as under: - "7. Details of inventory Details of inventory indicating opening stock, purchase, sales and closing stock along with yield percentage along with soft copy is enclosed vide : "Annexure G". the assessee firm has drawn yield of 36% from the....
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.... rebutted any of the evidences, and has not arrived at any independent satisfaction that the order of the AO is erroneous and he has simply held that the order is erroneous based on the alleged information received from the Investigation. Department This is a clear case of "borrowed satisfaction" which was not the case before the Hon. Bombay High Court in Shoreline Hotel's case. It may be noted that in the course of proceedings under section 143(3) rws 253, the Assessee has produced affidavits from the said parties that they are independent from the Bhavarlal Jain Group. These affidavits are set out at pages 591 to 594 of Additional Evidence Paper Books filed on January 10,2019 Further, the parties have replied to the notice issued under section 133(6) in course of proceedings under section 143(3) read with section 263. Refer page No. 595 to 600 of Additional Evidence Paper Books filed on January 10, 2019. Erroneous nature of the Assessment In the case before the Bombay High Court, the Assessee could not produce the parties and hence agreed for a GP Addition. Since the Assessee has agreed for GP addition, the AO did not further apply his mind as to whether ....
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.... unsettling the settled issue/assessments. Therefore, the reasons to believe have to be necessarily recorded in terms of Section 148 of the Act, before re-opening notice, is issued. These reasons, must indicate the material (whatever reasons) which form the basis of re-opening Assessment and its reasons which would evidence the linkage/nexus to the conclusion that income chargeable to tax has escaped Assessment. This is a settled position as observed by the Supreme Court in S. Narayanappa v. CIT [1967] 63 ITR 219, that it is open to examine whether the reason to believe has rational connection with the formation of the belief. To the same effect, the Apex Court in ITO v. Lakhmani Merwal Das [1976] 103 ITR 437 had laid down that the reasons to believe must have rational connection with or relevant bearing on the formation of belief i.e. there must be a live link between material coming the notice of the Assessing Officer and the formation of belief regarding escapement of income. If the aforesaid requirement are not met, the Assessee is entitled to challenge the very act of re-opening of Assessment and assuming jurisdiction on the part of the Assessing Officer. 13. In this ....
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....h inquiry. All that PCIT has done in the impugned order is to refer to the Circular of the CBDT and conclude that "in the case of the Assessee company, the AO was duty bound to calculate and allow depreciation on the BOT in conformity of the CBDT Circular 9/2014 but the AO failed to do so. Therefore, the order of the AO is erroneous insofar as prejudicial to the interest of revenue". 11. In the considered view of the Court, this can hardly constitute the reasons required to be given by the PCIT to justify the exercise of jurisdiction under Section 263 of the Act. In the context of the present case if, as urged by the Revenue, the Assessee has wrongly claimed depreciation on assets like land and building, it was incumbent upon the PCIT to undertake an inquiry as regards which of the assets were purchased and installed by the Assessee out of its own funds during the AY in question and, which were those assets that were handed over to it by the DMRC. That basic exercise of determining to what extent the depreciation was claimed in excess has not been undertaken by the PCIT. 12. Mr. Asheesh Jain then volunteered that the PCIT had exercised the second optio....
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..... A detailed note on the expenditure on the Corporate Social Responsibility claim was given in paragraph 8 which runs into more than five pages. It is not disputed that the appellant - assessee is a Government of India undertaking and the Government has a control over the expenses of the undertaking. It is pertinent to note that during the previous assessment years, similar claims were made by the assessee - Company and the assessment orders allowing the claims have attained finality. We have minutely perused the assessment order. The claims for deductions were made by the assessee at least under 20 heads and queries were made in the notice under Section 142 (1) of the Act to the assessee in respect of nearly all of them. We, however, find from the assessment order that the Assessing Officer has dealt with nearly nine claims of deductions. These claims have been specifically mentioned in the assessment order and they have been discussed therein because the Assessing Officer appears to have disallowed those claims either partially or totally. In respect of the claim for the Corporate Social Responsibility and some other claims that were allowed by the Assessing Officer, the Assessin....
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....he claims were disallowable they have been discussed in that assessment order and there is no discussion or reference in respect of the claims that were allowed. In view of the law laid down in the judgments in the case of Fine Jewellery (India) Ltd. (supra) and Nirav Modi (supra) it would be necessary to hold that in the circumstances of the case, it cannot be said that merely because the Assessing Officer had not specifically mentioned about the claim in respect of the Corporate Social Responsibility, the Assessing Officer had passed the assessment order without making any enquiry in respect of the allowability of the claim of Corporate Social Responsibility. In our view, the provisions of Section 263 of the Act could not have been invoked by the Commissioner of Income Tax in the circumstances of this case. The Tribunal was not justified in holding that the query under Section 142 (1) of the Act was very general in nature and the reply of the assessee was also very general in nature. In our considered view, the query pertaining to Corporate Social Responsibility was exhaustively answered and the appellant - assessee had provided the data pertaining to the expenditure under each h....