TaxTMI 
TaxTMI 
2019 (11) TMI 1181
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....e realized that the assessee could have preferred an appeal before this Tribunal, thus, the delay happened and thereafter once the brief had been handed over to the Counsel he filed the appeal within 10 days. Due to the said reason delay of 194 days happened when assessee filed this appeal, which according to him is not intentional and pleads that delay be condoned. Since there is no quarrel in-respect of the facts which led to the delay we are of the opinion that the assessee should not be penalized for the ignorance of the AR as discussed. Therefore, we are inclined to condone the delay and for that we refer to the decision of Hon'ble Supreme Court reported in 167 ITR 471 (SC). Assessment Year 2009-10 3. The main grievance of the assessee is against the action of the Ld. Pr. CIT in exercising his revisional jurisdiction u/s 263 of the Act. Brief facts of the case are that the assessee is a trader of iron and steel items and is proprietor of M/s. Special Steel Stores. The assessee had filed return of income on 29.09.2009 declaring total income of Rs.2,01,14,730/- (thus reported GP of 11.96%). The AO during the original assessment u/s 143(3) of the Act had issued notices u/s 133(....
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....e Tax Act, 1961. 4. Considering the nature of information received from the Department of Sales Tax, Maharashtra, enquiries were required to be made by the A.O. to verify how goods shown to have been purchased from the alleged dealers were transported and delivered to the assessee, which was not done by the A.O. Absence of the proper examination/verification regarding the above has rendered the assessment erroneous and prejudicial to the interest of the revenue which deserves to be revised U/s 263 of the I.T. Act 1961." 6. Pursuant to the aforesaid SCN, the assessee filed written submissions on 08.03.2018 and 22.03.2018 which is placed at paper book at page 68-85 and 86-93 respectively. After reproducing the submissions of the assessee in his order, the Ld. Pr. CIT, being not satisfied with the replies of the assessee, was pleased to set aside the order of the AO and directed him to make necessary investigation in the light of the bills, invoices, delivery challans concerning transportation and delivery alone and pass a fresh assessment order re-computing the assessee's income taking into consideration the reasons leading to the action u/s 263 of the Act. 7. Aggrieved by the ....
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.... he found that the AO had in fact verified the purchases. Further, the Ld. Pr. CIT also noted that the office note of the AO suggested that the AO had infact verified the purchases however, the only fault which the Ld. Pr. CIT found from the reassessment order/action of the AO was that, "Nonetheless the root of the action u/s 263 lay in lack of enquiry in respect of the delivery and transportation charges incurred by the assessee on purchases." (emphasis given by us). 8. So, we note that the only fault which the Ld. Pr. CIT notes in the reassessment order is that the AO has not verified the transportation charges incurred by the assessee on the purchases (bogus purchases to the tune of Rs.4.43 crores). According to the Ld. Counsel the case of the assessee before the AO was that there were no transportation charges incurred by the assessee. For that the Ld. Counsel drew our attention to page 49 read with page 56 of the paper book which is the reply of assessee dated 30.11.2015 written to the AO during the reassessment proceedings wherein the assessee had given the list of suppliers from whom the Maharashtra Sales Tax wing has alleged that the assessee had purchased bogus purchases ....
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....008 774,384.00 Bank cheque-IDBI Free Delivery-By Truck 06.10.2008 779,750.00 Bank Cheque-IDBI Free Delivery-By Truck 20.10.2008 788,783.00 Bank cheque-IDBI Free Delivery-By Truck Total: 2,342,917.00 10. Thus we find that AO had made enquiry in respect of transportation of goods, so the action of AO cannot be termed a case of "lack of inquiry" . In order to understand the difference between "lack of inquiry" and "inadequate inquiry" and when it can be termed as erroneous, let us look at the judgment of the Hon'ble Calcutta High Court in the case of CIT Vs J.L. Morrison (I) Ltd (366 ITR 593), wherein on similar facts & circumstances, their Lordships explained the difference between the two as follows:- "14. The case of the CIT in his notice dated 26th November, 2009 under Section 263 of the Act reads as follows :-- "1. During the said A.Y., you have received a sum of Rs. 18.00 Crore from M/s. Beierdorf AG., Germany (BDF) as one-time settlement for termination of contracts of producing and selling of the products of the latter company in India as well as issuing a NOC for setting up a 100% subsidiary by them in India. The said receipt should have been....
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....e to time on the various days indicated above, appearing from the assessment records produced by Mr. Nizamuddin, leave no scope for any doubt as regards the fact that the Assessing Officer after satisfying himself passed the order dated 28th March, 2008. 79. Mr. Poddar also drew our attention to the impugned judgment of the learned Tribunal which reads as follows:-- "Therefore, on combined reading of the assessment order for the assessment year under consideration along with the order sheet entries, it can be said that the A.O. had carried out such enquiry as the circumstances warranted and permitted before accepting the claim of the assessee and passing assessment order accordingly. It was an entirely different matter that the Commissioner did not agree with the conclusion derived by the A.O. from the enquiries made. Failure to carry out an enquiry is one thing and in such cases the commissioner would be justified in saying that the mere failure to make any enquiry was erroneous and prejudicial to the interests of the Revenue. But it would not be open to him to hold that the assessment order was erroneous and prejudicial to the interests of the revenue merely because he is of ....
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.... of a judicial proceeding between contesting parties, is a matter which is not capable of even a plausible argument. The Income Tax authorities who have power to assess and recover tax are not acting as judges deciding a litigation between the citizen and the State: they are administrative authorities whose proceedings are regulated by statute, but whose function is to estimate the income of the taxpayer and to assess him to tax on the basis of that estimate. Tax legislation necessitates the setting up of machinery to ascertain the taxable income, and to assess tax on the income, but that does not impress the proceeding with the character of an action between the citizen and the State." 83. He also drew our attention to the judgment in the case of CIT v. Gabriel India Ltd. [1993] 203 ITR 108 /71 Taxman 585 (Bom.) 'The Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation in that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee.....
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.... is basically a question of fact. The learned Tribunal has held that the assessment order was not passed without application of mind. The records of the assessment including the order sheets go to show that appropriate enquiry was made and the assessee was heard from time to time. In deciding the question Court has to bear in mind the presumption in law laid down in Section 114 Clause - e of the Evidence Act:-- "that judicial and official acts have been regularly performed;" 87. Therefore, the Court has to start with the presumption that the assessment order dated 28th March 2008 was regularly passed. There is evidence to show that the assessing officer had required the assessee to answer 17 questions and to file documents in regard thereto. It is difficult to proceed on the basis that the 17 questions raised by him did not require application of mind. Without application of mind the questions raised by him in the annexure to notice under Section 142 (1) of the Act could not have been formulated. 88. The Assessing Officer was required to examine the return filed by the assessee in order to ascertain his income and to levy appropriate tax on that basis. When the Assessing Offi....
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....reasons in support of its order. 94. The judgment in the case of Hindusthan Tin Works Ltd. (supra) also does not apply because there the Delhi High Court was dealing with the duty of the learned Tribunal to disclose reasons in support of its appellate order. 95. The judgment in the case of S.N. Mukherjee (supra) is clearly distinguishable. The point for consideration in that case was whether it was incumbent for the Chief of Army Staff while confirming the findings and the sentence of the General Court Martial, and for the Central Govt. while rejecting the post confirmation petition of the appellant, to record reasons for the orders passed by them. 96. The function of an Assessing Officer is to estimate the income of the assessee and to recover tax on the basis of such estimate as laid down by the Apex Court in the case of S.S Gadgil (supra). Their Lordships opined that the income tax proceedings do not partake the character of a judicial proceeding between the State and the citizen. Therefore, the principles applicable to a proceeding before a judicial or a quasi-judicial authority where there are two contesting parties cannot be made applicable to the proceedings before a....
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....dards, then the ld. Pr CIT should himself conduct the investigation and thereafter record a clear finding in his order u/s. 263 that the view followed or acted upon by the AO in his order was unsustainable in law and therefore the order of the AO was erroneous. In addition, the ld. Pr CIT should also prima facie show that the erroneous order caused prejudice to the Revenue and thereby twin conditions prescribed by Section 263 are satisfied. If even one condition is not satisfied, then it is open for the ld. CIT to usurp the revisionary jurisdiction u/s 263 of the Act. 12. Thus, we note that from the discussions and finding of ours made in para 8 to 10 (supra), we are of the considered opinion that the conclusion drawn by the Ld. Pr. CIT at page 49 of his impugned order (in his own words) "the assessee failed to produce relevant material and offered explanations in pursuance of the notice issued u/s. 142(1) as well as section 143(2) which led to non-consideration of the relevant material" is clearly erroneous and perverse. Since we have already taken note of the fact that the assessee had filed replies vide letter dated 31.08.2015 (refer pages 44 to 48 paper book) and has replied t....
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....ncurred for transportation of goods from the alleged hawala dealers is fraught with infirmities, viz., when the assessee has not claimed any expenditure on account of transport of these goods, we wonder as to how it can be computed by the AO or there was any material in the hands of ld Pr CIT to state that assessee had booked any expenditure on account of transport of these goods. We note that the AO during reassessment proceedings after reopening on the basis of precise information of sales tax department of Maharastra has enquired into these facts and after taking note of the assessee's stand that mode of transport was free on road (FOR) or free of transportation charges and when the books of account of the assessee did not show any amount as outgoing/expenses for transport of these goods and there was no material to draw any contrary view with the department, the AO has accepted the stand of the assessee; and taking note that assessee has procured the goods by making payment through the banking channel and the sales of the goods having been accepted by the department, the AO has made the GP addition of the profit embedded in the alleged bogus transaction which is a plausible act....
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.... plausible view after enquiry in the first round as well as in the second round and had appreciated the facts that assessee had shown the purchases in his stock register and had given the details of the opening stock of goods, purchases, sales and closing stock of the goods (both quantity as well as the value) and when the department has already accepted the sales of the goods (which includes the sale of the alleged bogus goods) and has shown a GP of 11.96% in its return of income declaring total income of Rs. 2,01,14,730/- and during the second round the AO after reopening the assessment had paid the vendor through account payee cheque and since the sales have been accepted by the department (turnover) accepted, then AO's action of adding 2.25% over and above the result shown by the assessee i.e. 11.96% and making an addition of Rs. 9,97,170/- in the facts and circumstances of the case is a plausible view. In order to take the aforesaid action the AO has relied on the decisions of the Hon'ble Gujarat High Court in CIT Vs. President Industries (2002) 258 ITR 654 (Guj)(HC) and the decision of Hon"ble Madhya Pradesh High Court in the case of CIT Vs. Balchand Ajit Kumar (2003) 263 ITR....