TaxTMI 
TaxTMI 
2019 (11) TMI 1181
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.... to file the appeal and then only the assessee 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 ....
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....us purchase of Rs. 4,43,18,698/-] on estimated basis under Section 69C of the Income 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 ta....
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....tself at page 29 of his impugned order that he (Pr. CIT) has examined the records of the assessment and 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 suppli....
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....action Amount of transaction Mode of payment Mode of delivery & transportation Arihant Traders 05.10.2008 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 s....
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....Without application of mind, according to him, the aforesaid notice itself could not have been issued. The fact that all the requisite papers required by the Assessing Officer were duly furnished and the matter was discussed from time 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 m....
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..... He also drew our attention to the judgment in the case of S.S Gadgil v. Lal & Co. [1964] 53 ITR 231, wherein the Apex Court held as follows :- - "A proceeding for assessment is not a suit for adjudication of a civil dispute. That an income tax proceeding is in the nature 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 ....
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....r alleged discrepancy in stock was not being made. In the absence of any suggestion by the Commissioner as to how the inquiry was not proper, we are unable to uphold the action taken by him under section 263 of the Act." 86. Whether the assessment order dated 28th March, 2008 was passed without application of mind 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....
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....n the basis whereof the claims were made by the assessee. Therefore, that was a clear case to show that the assessment order was passed without considering the relevant pieces of evidence. 93. The judgment in the case of Anusayaban. A. Doshi (supra) does not apply because the High Court in that case was dealing with the need on the part of the learned Tribunal to give 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 l....
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....n between "lack of enquiry" and "inadequate enquiry". If there is an enquiry, even if inadequate, that would not by itself give occasion to the ld. PrCIT to interdict and interfere by exercising his revisional jurisdiction merely because he is of the opinion that some more enquiries should have been conducted in the matter. In a case where the ld. Pr CIT finds that the enquiry conducted by the AO is not in accordance with his subjective standards, 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 pa....
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.... 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 contrary to evidence on record. So we find that the ld. Pr. CIT's SCN para 4 where he alleges the AO's failure to enquire about the mode of transportation is per se erroneous and therefore, his final direction to AO to enquire to re-compute the expenditure incurred 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 am....
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....elied on the self- same reasoning and dismissed the appeal of the revenue. Likewise, the High Court by the impugned judgment dated 5th July, 2017, affirmed the judgments of the CIT and ITAT as concurrent factual findings, which have not been shown to be perverse and, therefore, dismissed the appeal stating that no substantial question of law arises from the impugned order of the ITAT. In these circumstances, the Review Petitions are dismissed ." 13. As discussed the AO has taken a 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 (....