TaxTMI 
TaxTMI 
2021 (5) TMI 388
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....s of the case and applicable law, Ld. Pr. CIT-II, Indore erred in invoking the provision of section 263 and passing the order thereunder by holding that the assessing officer has passed the order without making required examination/investigation which has resulted the assessment order being erroneous is so far as it is also prejudicial to the interest of the revenue. 3. On the facts and the circumstances of the case and applicable law, Ld. CIT-II, Indore erred in invoking the provision of section 263 and passing the order thereunder by resorting the hypothetical calculation for charging of interest on loans and advances and setting aside the assessment to the file of AO to re-examine the issue. 4. On the facts and circumstances of the case and applicable law, ld. Pr. CIT-II, Indore erred in holding that the order passed by Ld. AO u/s 143(3) is erroneous and prejudicial to the interest of revenue within the meaning of section 263 which is contrary to the material on record and provisions of the act, unjust and bad in law, more particularly when it is not a case of lack of enquiry. On the facts and circumstances of the case and applicable law, Ld. Pr. CIT-I....
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....rgeable from loan and advances of Rs. 11,41,73,105/- works out at Rs. 1,08,84,443/-(24531692* 114173105/257326860) and amount of difference of less charged interest from associated concerns is Rs. 25,01,882/-)10884443-8382561). The AO has not examined this factor. Therefore, the assessment order passed by the AO is erroneous in so far as it is prejudicial to the interest of the revenue. You are, therefore, required to show cause why provision of section 263 be not invoked in your case for the reasons mentioned above." 4. In the above referred show cause notice it was alleged that the assessing officer has not examined the claim of interest expenditure properly as the assessee has claimed excess interest expenditure by not charging interest on the advance given to its associates/sister concern. The show cause notice was duly replied by the assessee submitting that the Ld. AO completed assessment by conducting appropriate enquiries and applied his mind. It was also submitted that during the course of assessment proceedings the AO examined numerous issues and relied on judgments laying down the ratio that for the very reason that no such observation of the issue raised in ....
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....uestionnaire issued u/s 142(1) on 31.08.2016. Specific questions were raised relating to interest earned and interest paid on the loan transactions. In response to which all the documentary evidences were placed on record before Ld. AO. Details of which are as under - Sr. No. Q. no. of the questionnaire issued u/s 142(1) Query raised in the respective q. no. Details submitted 1 10 Party wise and section wise details with nature of payment of TDS done in the specific format. [PB 142] a. Complete details of TDS deducted in the specified format. b. Copy of TDS returns. c. Challans for the payment of TDS. d. No default in either deducting the TDS or depositing the tax with Government. [PB 146] 2 15 Confirmations of all unsecured loans taken. Confirmations for the large squared up loans in the specified format. [PB 142] Confirmations along with copy of ledger accounts were submitted. [PB 83-116, 146] 3 16 Details of interest earned on the loans and advances made. If interest not charged or charged at a lower rate, give explanation for the same showing cause why proportionate and suitable disallowance be not made out of the interest paid. [PB ....
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....every year as advance for the purchase of seeds. BY the end of December/January month certain liquid funds become available to the assessee which is given as temporary loans to reduce the burden of interest. Assessee has charged interest on all the accounts which has reduced the burden of interest on the assessee. 12. Ld. AO allowed the claim on being satisfied with the explanation of assessee, on an enquiry made during the course of assessment proceedings. Thus, the decision of Ld. AO cannot be held to be erroneous. 13. Distinction is to be appreciated between lack of enquiry and inadequate enquiry. If there was any enquiry, even inadequate that would not by itself give occasion to Ld. Pr. CIT to pass orders u/s 263, merely because he has different opinion in the matter. It is only in cases of "lack of enquiry" that such a course of action would be open for the Ld. Pr. CIT. 14. In the instant case, necessary enquiries were conducted by Ld. AO during the assessment proceedings and all the documentary evidences relating to unsecured loan, loans and advances and interest thereon has been duly considered. Thus, it cannot be construed as case of "lack of enqu....
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....ao - [2013] 29 taxmann.com 18 6. Per contra, Ld. Departmental Representative(DR) took us through the finding of Ld. Pr. CIT and relied on the decisions referred in the impugned order which reads as follows: 4. I have carefully considered the facts of the case, the assessment order, the submission of the assessee and the report given by the AO. As per the information available on records, it is noted that the assessee has debited interest paid of Rs. 2,45,31,692/ - during the previous year relevant to the A.Y. 2014-15 in respect of secured/unsecured loans of Rs. 25,73,26,860/- against this the assessee has shown loan and advances to associated concerns at Rs. 11,41,73,105/- but charged interest of Rs. 83,82,561/- only which is disproportionate. The records show that the AO did not properly examine this issue. He did hot examine whether the loans were given without interest or what was quantum of interest charged and also what was the purpose of such loans. During the course of proceedings before the undersigned the assessee has given certain submissions in which the calculations for interest charged_ were given and it has been claimed by the assessee that the in....
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.... (Delhi) affirmed in (2008) 173 Taxman 458 (SC) 3. Jagdish Kumar Gulati (2004) 139 Taxman 369(All.) 4. Malabar Industries Co. Ltd. (2000) 109 Taxman 66 (SC) 5. Crompton Greaves Ltd. (2017) 82 Taxmann.com 246 (Mumbai -I.T.A.T. Bench C 6. CIT vs. Vallabhdasvithaldas -Gujarat High Court (2002) 253 ITR 0543) Therefore, in view of the above discussion, I am of the considered opinion that the order dated 26.10.2016 for A.Y.2014-15 is erroneous in so far as it is also prejudicial to the interest of revenue on account of passing of the order without making required enquiries/investigations. Accordingly, I am satisfied that provisions of section 263 of the Act are required to be invoked. Therefore, the assessment for A.Y.2014-15 framed on 26.10.2016 is hereby set-aside the file of AO to reexamine issues, indicated in the preceding discussion, u/ 263 and passing an order as per the law after making necessary verification, inquiries and investigations. It would be not out of place to mention that the AO shall re-examine only the issues which have been indicated for further investigation in the preceding discussion." 7. We have heard rival conten....
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....eduction under section 54F of the Act. Learned counsel for the Revenue however submitted that these inquiries were confined to the claim of deduction under section 54F of the Act in the context of fulfilling conditions contained therein and may possibly have no relevance to the question whether the sale of land gave rise to a long term capital gain. Looking to the tenor of queries by the Assessing Office and details . A.Y. 2009-10 supplied by the assessee, we are unable to accept such a condition. In that view of the matter, the observation of the Tribunal that the Assessing Officer having made inquiries and when two views are possible, revisional powers could not be exercised, called for no interference. Since with respect to computation and assertions of other aspects of deduction under section 54Fofthe Act, the Tribunal has remanded the proceedings, nothing stated in this order would affect either side in considerations of such claim. 7. No question of law arises. Tax Appeals are dismissed." 11. We find the Hon'ble Delhi High Court in the case of CIT Vs. Anil Kumar reported in 335 ITR 83 has held that where it was discernible from record that the A.O has applied ....
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....ssuming it to be so, in our opinion, this does not justify the conclusion arrived at by the CIT that the AO had shirked his responsibility of examining and investigating the case. More so, in view of the fact that the assessee explained that the capital investment made by the partners, which had been called into question by the CIT was duly reflected in the respective assessments of the partners who were I.T. assessees and the unsecured loan taken from M/s Stutee Chit & Finance (P) Ltd. was duly reflected in the assessment order of the said chit fund which was also an assessee." 64. Since in the instant case the A.O after considering the various submissions made by the assessee from time to time and has taken a possible view, therefore, merely because the DIT does not agree with the opinion of the A.O, he cannot invoke the provisions of section 263 to substitute his own opinion. It has further been held in several decisions that when the A.O has made enquiry to his satisfaction and it is not a case of no enquiry and the DIT/CIT wants that the case could have been investigated/ probed in a particular manner, he cannot assume jurisdiction u/s 263 of the Act. In view of the a....