TaxTMI 
TaxTMI 
2020 (5) TMI 408
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....me from other sources" after claiming deduction on account of payment of interest of Rs. 12,00,000/-. The ld. PCIT during the revisionary proceedings u/s 263 held that the Assessing Officer has not looked into/enquired the claim of expenses u/s 57 during the assessment proceedings. The ld. PCIT held that for allowing the deduction u/s 57, nexus between the income earned and the expenditure incurred to earn this income is a mandatory requirement and this requirement has not been established during the assessment proceedings. Disregarding the explanation offered by the assessee vide letter dated 10.11.2015, the ld. PCIT has set aside the order of the Assessing Officer holding that the AO allowed the deduction without any enquiry and examination of this issue. 4. The ld. AR argued on the strength of the submissions made before the authorities below and referred to the details of earning of interest and payment on account of interest. 5. The ld. DR argued, drawing the attention to the Explanation II of the Section 263 of IT Act introduced by the Finance Act, 2015 w.e.f. 01.06.2015. She also relied on the judgments in the case of Deniel Merchants Pvt. Ltd. Vs ITO (SC) and also rel....
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....Calcutta)/[2016] 240 Taxman 306 (Calcutta/[2016] 386 ITR 162 (Calcutta)/[2016] 287 CTR 512] here Hon'ble Calcutta High Court held that where assessee with a small amount of authorised share capital, raised a huge sum on account of premium and chose not to go in for increase of authorised share capital merely to avoid payment of statutory fees and Assessing Officer passed assessment order without carrying out requisite enquiry into increase of share capital including premium received by assessee, Commissioner was justified in treating assessment order as erroneous and prejudicial to interest of revenue 4. Rajmandir Estates (P.) Ltd. Vs PCIT [2017] 77 taxmann.com 285 (SC)/[2017] 245 Taxman 127 (SC) Hon'ble Supreme Court has dismissed SLP against High Court's ruling that where assessee with a small amount of authorised share capital, raised huge sum on account of premium, exercise of revisionary powers by Commissioner opining that this could be a case of money laundering was justified. 5. Shree Maniunathesware Packing Products & Camphor Works Vs CIT [1998] 96 Taxman 1 (SC)/[1998] 231 ITR 53 (SC)/[1997] 143 CTR 406 (SC) Hon'ble Supreme C....
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....fficer where there are two views possible and the Ld. assessing officer has taken one of the possible views. Further, where the Ld. assessing officer has made some enquiry and has reached at a conclusion. Therefore, on debatable issues and where there is absence of Lack of Inquiry" the powers of the CIT cannot be exercised under section 263 of the act. There exists a difference between "Lack of Inquiry" and inadequate Inquiry". In the present case on all the four issues raised by the Ld. CIT, in the paper book submitted by the assessee or in the arguments raised by the Ld. authorized representative we did not find that Ld. AO has made any enquiry on all ITA No. 2860/Del/2010 A Y 2005-06 PTC Impex (India) Pvt. Ltd vs. Commissioner Of Income tax the 4 issues. Therefore, according to us there is no Inquiry made by the Ld. assessing officer on the issues raised by CIT in proceedings under section 263 of the act. The arguments of Ld. Authorized representative on the issue with respect to cash deposited in the bank account, loan repaid, bank interest on fixed deposit receipt and absence of narration in the bank statements were more on the aspect that no such addition can be made....
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....IT is upheld and appeal of the assessee is dismissed.'' 8. Order of Hon'ble HIGH COURT OF KARNATAKA in the case of CIT vs. Infosys Technologies Ltd. 341 ITR 293 dated 04.01.2012 "Section 263 is a section which enables the Commissioner to have a look at the orders or proceedings of the lower authorities and to effect a correction, if so needed, particularly if the order or proceeding is erroneous and prejudicial to the interest of the revenue. This provision occurs in a taxing statute, the object of which is to raise revenue for the State, and section 263 is an enabling provision conferring jurisdiction on the Commissioner to revise the order of the authorities below in certain circumstances particularly when it is erroneous and prejudicial. One can at once realize that the provision is intended to plug leakage to the revenue by an erroneous order passed by the lower authorities, whether by mistake or in ignorance or even by design. It makes little difference as to for what reasons the order is passed by the lower authority, so long as it becomes erroneous and prejudicial to the interest of the revenue. Ultimately, the object is to ensure that leakage of the revenu....
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....TO should have made further inquiries before accepting the statements made by the assessee in his return and it was observed that reason is obvious. The position and functions of the ITO are very different from that of civil court. 11. Order of Hon'ble Delhi Bench in the case of Perfetti Van Melle India Pvt. Ltd., ITA No. 3046/Del/2016 for A.Y. 2009-10 order dated 11.01.2019. "11. We have heard both the parties and perused all the records. It is pertinent to note that the assessee is engaged in manufacturing of a variety of confectionary productions which includes Big Babool, Alpenlibe, Centre Fresh, Center Fruit, Center Shok, Chater Pater, Chlor-mint, Choco-tella, Cofitos, Happydent White, Protex Happydent, Marbels, Mentos etc. From these products it can be seen that all products are not that of pharma, chlor- mint, ayurved based products. There are confectionary products as well. The Pr. CIT after perusal of the quarterly statement furnished by the assessee company with the Commissioner, Central Excise, Meerut for F.Y. 2008-09, noticed that the assessee company had also manufactured other products such as 'chewing gum', 'toffee' and 'bubble gum' in addition to m....
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....ssessee in proper manner. Thus, proper opportunity was given by the Pr. CIT to the assessee during the proceeding's u/s 263 of the Act. The present case is covered by the decision of the Hon'ble Apex Court in case of Deniel Merchants Private Limited & Anr. Vs. Income Tax Officer (Appeal No. 2396/2017 order dated 29.11.2017). The Hon'ble Supreme Court held as under: "In all these cases, we find that the Commissioner of Income Tax had passed 9 ITA No. 3046/Del/2016 an order under Section 263 of the Income Tax Act, 1961 with the observations that the Assessing Officer did not make any proper inquiry while making the assessment and accepting the explanation of the assessee(s) insofar as receipt of share application money is concerned. On that basis the Commissioner of Income Tax had, after setting aside the order of the Assessing Officer, simply directed the Assessing Officer to carry thorough and detailed inquiry. It is this order which is upheld by the High Court. We see no reason to interfere with the order of the High Court. The Special Leave Petitions are dismissed." Thus, in the present case the Assessing Officer has not properly adjudicated the issue of claim u/s 80IC b....
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....mind regarding the allowability of the exemption of the Long Term Capital Gain. This is not the case of inadequate enquiry but is a clear case of lack of enquiry which makes it different from the case of Nirav Modi (supra). Obtaining of the information about the transaction cannot be taken as akin to enquiring about the information. This is a clear case of no enquiry for which the Ld. PCIT has rightly invoked the provisions of Section 263. We also find that the Ld. PCIT has clearly brought about the error in the assessment order and has also directed the Assessing Officer to take remedial action to take action as per the law after providing due opportunity to the assessee. Thus, it can be said that the Ld. PCIT has not exceeded his jurisdiction nor directed the Assessing Officer to pass the assessment order in any particular way thus not interfering in the judicial function of the Assessing Officer. 17. Ongoing through the facts, it can be observed that the Assessing Officer has not conducted any enquiry and this is a clear case of lack of enquiry not a case inadequate enquiry. Further non application of mind by the Assessing Officer can be easily gauzed from the fact that....
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....o enquiry has been conducted in this case. (g) Merely because the stock price moved sharply, the assessee is not to be 16 blamed for bogus transactions where he has purchased and sold the stocks through registered brokers and confirmed by valid contract notes as per law. The order u/s 263 has not been based on the stock price but it was based on the information and extensive investigation and the conclusion drawn thereof by the revenue extensive investigation by the department. (h) The transactions cannot be brushed aside on suspicion and surmises where the transactions of the shares are genuine The Ld. Principal CIT has invoked the provisions of section 263 based on the valid tangible information which has been extensively investigated by the department as the Assessing Officer has failed to discharge his statutory duties in accordance with the Income Tax Act which led to the order being erroneous and prejudicial to the interest of the revenue. 18. Hence keeping in view the entire facts of the case, the judgment of the Apex Court in the case of Malabar Industrial Co. Ltd. 243 ITR 83 wherein the action under section 263 is upheld when the Assessing Office....
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....he assessee has received interest from BHL Forex & Finlease Ltd. of Rs. 44,02,030/- and the assessee paid interest of Rs. 12,00,000/- to Multiplex Fincap Ltd. The complete details of the loans given and received have been enquired by the Assessing Officer. The amount of the loan given to BHL Forex & Finlease Ltd. was Rs. 2,41,00,000/- during the year and the opening balance stands at Rs. 1,14,87,686/-. During the year the payment of Rs. 8,77,891/- was made leaving a closing balance of Rs. 3,91,11,825/-. The total interest received was Rs. 44,02,030/-. Thus, we find that this loan has been an ongoing financial transaction with the assessee for a minimum period of three years. The confirmation has also been obtained the Assessing Officer along with details of the cheques issued on account of interest payment. The details of TDS have also been filed before the AO. The assessee has also received salary & bonus from BHL Forex & Finlease Ltd. which has been duly offered to tax. Regarding the payment of interest, the details of opening balance, closing balance of the loans received have also been filed and examined by the Assessing Officer. The opening balance with Multiplex Fincap Ltd. w....