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TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 1385
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....tunity given under section 263 of income tax act. 3. On the facts and in the circumstances of the case, the learned Pr. Commissioner of Income Tax-III, Jaipur was not justified in setting aside the order of the assessing officer." 2. Briefly stated, the facts of the case are that the assessment in this case was completed u/s 143(3) on 30.11.2016 assessing total income at Rs. 21,93,000/-. Subsequently, a show cause u/s 263 was issued by the Pr. CIT on 16.01.2019 and after taking into consideration the submissions of the assessee, the order passed by the Assessing Officer u/s 143(3) was set aside for the limited purposes of examining the allowability of the commission expenses claimed by the assessee company. Against the said findings of the ld. Pr. CIT, the assessee is now in appeal before us. 3. During the course of hearing, the ld. AR submitted that the assessment order passed by the Assessing Officer u/s 143(3) is neither erroneous nor prejudicial to the interest of the Revenue. Further, there is neither lack of inquiry or inadequate inquiry regarding the payment of commission paid by the Assessing Officer for selling its plots or shops and therefore, the condition....
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....g officer. It was submitted that the same could not be the intention of the legislature in inserting Explanation 2 to section 263 of the Act, since it would lead to unending litigations and there would not be any point of finality in the legal proceedings. In the present case, the Assessing officer collected necessary details, examined the same and then framed the assessment order u/s 143(3) of the Act. It was further submitted that even ld. Pr. CIT is also not confident enough in holding the assessment order as erroneous which is causing prejudice to the interest of the Revenue as she has given the findings that some aspects of the issue should be seen by the AO and that too only on test check basis. Further, reliance was placed on Hon'ble Supreme Court decision in case of Malabar Industrial Co. Ltd vs CIT 109 taxman 66 and various High Court decisions. It was accordingly submitted that the order of the ld Pr CIT should be set-aside. 4. Per contra, the ld. CIT DR submitted that the case of the assessee was selected for complete scrutiny under CASS and reason for such selection is large commission and low net profit. In the course of assessment proceedings, the Assessing officer....
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....Rs. 1,75,28,486/- against turnover of Rs. 5,45,09,089/- which constitutes 32.15% of the turnover as against the payment of commission of Rs. 50,53,305/- ( 16,92% of turnover) in A.Yr. 2013-14. iii. The payment of commission is spread across 70 parties and most from outside Jaipur. iv Rate of commission varies from Rs. 80/sq. yard to Rs. 400/sq. yard. The rate even within the same scheme for example, in IPV scheme varies from Rs. 100/sq. yard to 400/sq. yard therefore assessee's reasoning that depending upon the location/area etc. the rate of commission varies is not prima-facie acceptable. v. All these details linking the commission to the sale of plots was not before the AO and AO did not examine and verify the facts stated therein. vi. During the course of present proceedings no documentary evidence was produced to demonstrate that the transactions of sale of plots were negotiated through the broker concerned. Assessee only submitted that at the back of each registry the name of the broker and amount of commission is written. Copy of few deeds were submitted wherein on the backside of last page such details were mentioned in pencil. It is a....
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....ompany was selected for scrutiny for the purposes of verification of large commission expenditure claimed while filing its return of income. Therefore, it was incumbent on part of the Assessing officer to carry out the necessary examination and investigation which any officer with a reasonable intellect faced with a similar matter would have carried out. In the instant case, the Assessing officer issued notice u/s 142(1) dated 24.06.2016 and as part of the standard questionnaire attached thereto, at point no. 25 had asked the assessee to submit the details such as name and address of the person to whom the commission was paid, nature of work done, amount of commission paid, TDS and rate of TDS and the matter was fixed for hearing on 8.7.2016. Thereafter, on 11.11.2016, the assessee submitted the details of commission expenses and TDS thereon. The kind of details which were submitted and the line of enquiry by the Assessing officer can be appreciated by subsequent assessee's letter dated 25.11.2016 and the relevant extract thereof reads as under: "With reference to above said subject, in continuous to our last hearing and as desired by your honor we are pleased to submit as....
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....xpenditure. 7. Further, we find that it is only during the revisionary proceedings before the ld Pr CIT that the assessee has submitted further details as listed at page 44-61 of the paper book and which have been examined by the ld Pr CIT where she has highlighted glaring discrepancies in para 7 & 8 of her order as we have noted above. We therefore find that it is clearly a case of lack of enquiry and reference can be drawn to observations of the Coordinate Bench in case of Subhlakshmi Vanijya (P.) Ltd. vs Commissioner of Income-tax-I, Kolkata, reported in 60 taxmann.com 60 (Kolkata - Trib.) wherein it was held under: "It is imperative for the Assessing Officer to conduct enquiry to satisfy himself about the genuineness of transactions. Scope of the term 'enquiry' can be diverse in different circumstances. There cannot be straight jacket formula to positively conclude as to conducting or nonconducting of 'enquiry' by the Assessing Officer. It depends on the facts and circumstances of each case. Where the facts are just ordinary and prima facie there is nothing untoward the recorded transaction, in such circumstances, the obtaining of the documents and t....
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....n a mere collection of documents cannot be held as conducting an enquiry. In our considered view, it is a clear case of lack of enquiry on part of the Assessing officer and the order thus passed is clearly erroneous and prejudicial to the interest of the Revenue. 9. In light of above discussions, where the AO shuts his eyes and the ld PCIT discovers the glaring discrepancies leading to non-satisfaction of cardinal test of admissibility and allowability of commission expenditure during the course of his examination of records, we donot think there is any infirmity or illegality in ld Pr CIT exercising her revisionary jurisdiction u/s 263 of the Act. It is not a case where the Pr. CIT has set-aside the assessment order rather she has examined these transactions and has carried out broad analysis of the documentation so submitted by the assessee company and has come to a conclusion, that the AO has failed to carry out adequate enquiries which he should have conducted especially in light of glaring discrepancies in the documentation so submitted by the assessee company. Our view is fortified by the judgement of the Hon'ble Supreme Court in case of Daniel Merchants Private Limited an....