TaxTMI 
TaxTMI 
2021 (8) TMI 1165
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.... as well as the facts narrated in ITA No. 310/SRT/2018 for AY 2013-14, have been taken into consideration for deciding the above appeals en masse. The grievances raised by the assessee in ITA No. 310/SRT/2018, for AY 2013-14, are as follows: "1. In view of the facts and circumstances of the case, the Ld CIT erred in invoking the provisions of section 263 and thereby passing the order U/s 263 and hence Your Petitioner prays that the order passed by Ld. Prin CIT-2, Surat on 26th March, 2018 be declared illegal, ultra-wires and be quashed. 2. Such other relief(s) to which the appellant may be lawfully entitled to." 3. The facts of the case, which can be stated quite shortly are as follows: In this case, the assessee company filed its return of income for the assessment year 2013- 14 on 30.09.2013, declaring total income at Rs. 29,09,590/-. The assessee company is engaged in the business of manufacturing of dairy products. The total income of the assessee has been assessed vide order u/s 143(3) dated 18.03.2016 at Rs. 33,05,686/-. 4. Later, Learned Principal Commissioner of Income Tax -2, Surat ( ld.PCIT), has exercised his jurisdiction under section 263 of the ....
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....not be disallowed u/s 40(a)(ia). In this regard, we have to state that we have made payment to Rameshbhai - Labour Contractor. The issue was originally considered in assessment and accordingly the disallowance U/s 40 (a)(ia) was made and the assessee accepted the disallowance. In view of this no further fresh, disallowance is required to be made. 2. In, Para 2 of your notice, your good self has asked us as to why payment of Rs. 1,61,47,818/- (Rs. 1,82,18,581 - Rs. 20,70,763) made to various person from 01-04-2012 to 22-01-2013 should not be disallowed. In this regards, we provide herewith set of paper book containing 107 papers which contain the complete details of the payments referred to in the show cause notice and also the reason why the payment was made and why the same is not required to be disallowed as it is either the payment covered by the exceptions provided in rule 6DD or payment of Government Stamp Duties and Fees or purchase of agriculture or dairy produce or that the payment might not have been debited to profit and loss account because the same may not be revenue expenditure or may be forming part of the disclosure made for the period. ....
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....ther, regarding the issue of payment in cash in excess of Rs. 20,000/-, the assessing officer has taken the possible view, hence order passed by the assessing officer is neither erroneous nor prejudicial to the interest of revenue, therefore, order of the ld PCIT under section 263 of the Act may be quashed. 10. On the other hand, Shri S. T. Bidare -CIT- DR , relied on the order of the learned PCIT under section 263 of the Act, especially on para 4 of the order of the ld PCIT which is reproduced below: "4. I have considered the submission made by the A.R. of the assessee but the same is found not acceptable and tenable on the following grounds :- (a) Regarding the matter of payment to Rameshbhai, the AR of the assessee company has accepted that the Rameshbhai is a labour contractor and also stated this issue was originally considered in assessment and accordingly the disallowance u/s 40(a)(ia) was made and the assessee company accepted the disallowance. However, on perusal of assessment records it is found that the AO has made the disallowance U/s 40(a)(ia) of the Act of Rs. 44,661/- in the matter of non deduction of TDS on interest payment to a Non Banking Fina....
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....3), as detailed below : Sr No Name of payee Amount in Rs. 1 Surbhi Dairy Pvt Ltd 1877750 2 Asmita Agro Vet Agency 1032750 3 Bhagwatimata Milk and Milk Products 410000 4 Dudh Ganga Milk Products 63700 5 Gangotri Dairy Products Pvt Ltd 79464 6 Jagdish Traders 62837 7 Karmbhoomi Dairy Products 61875 8 Laxmi Ice Factory- Dairy 50000 Total 36,38,376 The ld PCIT observed that payments of Rs. 36,38,376/- were made by assessee to traders in cash in excess of Rs. 20,000/-, which is a violation of provisions of section 40A(3) of the Act. The ld PCIT was of the view that benefit of rule 6DD is available to milk producers and not to traders of milk, hence payment to traders in cash in excess of Rs. 20,000/- is required to be disallowed. That is, assessing officer did not disallow Rs. 36,38,376/-, therefore, ld PCIT held that order passed by the assessing officer is erroneous and prejudicial to the interest of revenue. We note that during the assessment stage, assessee has submitted all the documents and confirmations of all the parties. Each of the party is milk producer, each of them has the....
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....essment proceedings, on perusal of the details submitted by the assessee, it is noticed that the assessee has made cash payments of Rs. 93,56,628/- to various parties. Out of which, some amounts exceeding Rs. 20,000/- to a single party in a day. Therefore, the assessee was asked to explain vide show cause notice dated 14.03.2016, the relevant portion of the same are as under: "2. During the course of reassessment proceedings, on verification of the details submitted, you have made cash payments of Rs. 93,56,628/- to various parties exceeds Rs. 20,000/- in a day to a single party. Out of which, the payment made to purchase of Milk of Rs. 49,45,811/- is exempted under Rule-6DD of Income-tax Rules, 1962. The other cash payments exceeding Rs. 20,000/- in a day to a single party made by you during the F.Y.2009-10, the bifurcation of which are as under: Sr. No. Particulars Amount Rs. 1 Other Expenses 824672 2 Transportation 1026223 3 Salary 674981 4 Deposit return 1230000 4 Printed Poly film payment 390007 Total 4145883 2.1 The above payments made in cash during the year under consideration violated the provisi....
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....ing officer. Since, the assessing officer has not disallowed Rs. 1,61,47,818/- therefore, ld PCIT held that order passed by the assessing officer is erroneous and prejudicial to the interest of revenue. We note that during the assessment proceedings, assessee had submitted before assessing officer (AO), the cash payment register and explained each of the item of proposed addition as per show cause notice of assessing officer. The cash payment register, which is placed at paper book page nos. 22 to 27, wherein payment to the tune of Rs. 1,82,18,581/- has been explained to the assessing officer. The assessing officer, having gone through the cash payment register and explanation of each item, did not make the addition. Therefore, we note that assessing officer has examined this issue during the assessment stage and has taken a possible view and therefore, he did not make the addition. Hence, so far this issue is concerned, the order passed by the assessing officer, is neither erroneous nor prejudicial to the interest of the Revenue. 16. We note that in ITA No.310/SRT/2018, for assessment year 2013-14, ld PCIT has raised the following issue in his order under section 263 of the ....
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....rom taking the steps under the Act, and what gets finalized under KVSS of 1998 is the amount of tax payable on the declared sum under the Scheme. But, learned counsel for the revenue/appellant could not show us any material or ground on the basis of which it can be said that the order of the Assessing Officer, passed under the KVSS is erroneous in law, as such, merely on the ground that order can be prejudicial to the interest of revenue, power under section 263 of the Act could not have been exercised by the CIT. What is required under section 263 of the Act for cancelling an assessment under said section is that not only the CIT should have reason to believe that the order passed by the Assessing Officer is prejudicial to the interest of revenue but also erroneous in law. The same view has been expressed by the Apex Court in Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83. Since, as observed by the ITAT also, there appears to be no material on record to issue notice in the present case to cancel the assessment made by Assessing Officer, to exercise powers under section 263 of the Act, as such, the order passed by the ITAT, setting aside the order of CIT, under said section n....
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....sion cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous, that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase 'prejudicial to the interests of the revenue' is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the revenue. If due to an erroneous order of the Income-tax Officer, the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the revenue. The phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer, canno....