AI Drafter 
TaxTMI 
TaxTMI 
2021 (11) TMI 132
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....issioner of Income-tax may please be quashed/set aside. 4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal." 3. The relevant material facts, as culled out from the material on record, are as follows. Assessee filed its return of income electronically on 29.09.2012 declaring total income of Rs. 1,28,39,070/-. The assessee's case was selected for scrutiny under CASS for the reason that assessee has claimed in the Profit and Loss account 'large other expenses'. The assessment under section 143(3) of the Act was framed on 14.11.2014 determining total income to the tune of Rs. 1,29,79,070/-. 4. Later, Assessing Officer i.e. ACIT, Navsari Circle, Navsari and the Range head i.e. Jt. CIT, Navsari Range, Navsari vide their letters dated 13.01.2017 have proposed that the assessment order in assessee`s case is erroneous as well prejudicial to the interest of revenue and therefore, the same should be revised under section 263 of the Income Tax Act, 1961. Therefore, a notice under section 263 of the Act, dated 17.01.2017 was issued to the assessee. For the sake of reference the said notice under section 263 ....
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....the same party to whom the payments by cheque are being made unless there is one off emergency situation with justifiable reasons. (i) For example, in the case of Maruti Infrastructure there are cash payments amounting to Rs. 3,15,237/- and most of these payments are shown to have been made in the month of January to March, 2012 on the dates in near vicinity of each other. The total payments to these parties amount to Rs. 1.42 crores and the other payments have been made in cheque which shows that the party is having a bank account and as no problem whatsoever in accepting the payment by cheques. (ii) Similarly, in the case of Raj Supplier, the total cash payment of Rs. 1,71,200/- have been made despite the fact that the other payment amounting to Rs. more than 30 lacs have been made by cheque. (iii) Further, in case of Shantilal C. Patel, the total cash payments of Rs. 809500/-have been made out of the total payments of Rs. 39.40 lacs, the other payments are made by cheque. (iv) In the case of Vijaybhai C. Patel, the total cash payments of Rs. 7,01,579/- have been made out of total payments of Rs. 44.33 lacs, the other payments are made by chequ....
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....observations in para-4, the order of the AO is erroneous as well as prejudicial to the interest of revenue due to almost complete absence of any inquiry on the above mentioned issues despite the fact that the case was selected for scrutiny for verification of 'large other expenses claimed in profit and loss account' necessitating the revision of the order of the AO by invoking the provisions of section 253 of I T. Act. 6. You are, therefore, required to show-cause as to why the said assessment order be not revised by invoking the provisions of 253 of I.T. Act, 1961. The hearing in your case is being fixed on 03.02.2017 at 11.00 A.M. Please note that the required details should be submitted after numbering the documents enclosed and indexing the same in the forward/covering letter. 7. You can attend the hearing either personally or through your duly authorized representative or can file written submissions on or before the stipulated date and time of hearing. [Satbir Singh] Pr. Commissioner of Income Tax, Valsad" 5. In response to the above show-cause notice, the assessee submitted its reply before the ld PCIT. 6. The Ld. PC....
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....is order u/s 263 of the Act. In response to queries raised by the Assessing Officer u/s 142(1) of the Act, the assessee has submitted his reply along with evidences. The Assessing Officer after going through the reply of assessee has passed order u/s 143(3) of the Act, dated 23.12.2014. Therefore, order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of revenue. He further contends that in order to invoke the provision of section 263 of the Act, twin condition needs to be satisfied, first the order sought to be revised should be erroneous and secondly it should be prejudicial to the interest of revenue. Such occasion arises when the Assessing Officer while passing assessment order u/s 143(3) did not have called for such information / documents from the assessee to frame the assessment and did not consider the same before completing the assessment. Once Assessing Officer conducts inquiry as deemed fit to complete the assessment u/s 143(3) of the Act and takes a possible view on such inquiry and consideration of facts and explanation of the assessee, in that case, the provision of Section 263 of the Act does attract. Therefore, ld Counsel prays th....
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....e time of the hearing. The assessing officer therefore passed the assessment order after making full inquiry as he should have made. After making inquiry, the assessing officer made the lump sum addition of Rs. 1,40,000/- out of labour and carting expenses as per para no. 5 of the assessment order on the ground that certain vouchers are defective. Even before making the addition of Rs. 1,40,000/-, assessing officer issued the show cause notice and in response, the assessee explained that the expenses were genuine and were incurred for the purpose of business. 12. From the above facts, it is clear that assessing officer passed the assessment order after making due inquiry. That is, assessing officer framed assessment order, after verification of the details furnished by the assessee in the course of assessment proceedings and also verification of the books of accounts and vouchers produced before him. We note that ld PCIT issued show cause notice u/s 263 on 17.01.2017. In the said show cause notice itself it was mentioned that case of the assessee was selected under scrutiny under CASS on account of large "other expenses" claimed in the Profit and Loss account amounting to Rs. 8.....
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....63, the assessee, vide letter dated 09.02.2017, explained the payments made to four parties and expenses in regard to Uday Earth Movers and Sawariya Earth Movers. In respect of the alleged four parties, it was submitted that only small amount of cash was paid to these parties, which were within the limits laid down us/ 40A(3) of the Act. The assessee has explained the reasons for the payments made in cash. The assessee also explained the outstanding amount of Uday Earth Movers and Sawariya Earth Movers. In respect of M/s Poonam Paints, it was submitted that there was no increase in loan, however, assessee filed the confirmation, and ITR in support of this. About the increase in case of partner's capital, it is submitted that there has been fresh capital of Rs. 12.25 lacs and other induction of the capital was due to the partner's emoluments. The Assessee also justified that payments were not made in contravention of section 40A(2)(b) of the Act. In the course of the hearing, the PCIT made the detailed inquiry in regard to the other issues also which were not there in the show cause notice and assessee filed the detailed submission at the time of hearing on 27.02.2017. The ld. PCIT ....
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.... accounts along with the vouchers of the supporting documents. The observation of ld PCIT was wrong that assessee debited the expenses under the head 'other expenses'. We note that assessee debited the expenses under the specific head in the audited trading and profit and loss account. Since there are no specific heads in the return of income prescribed by the Government of India therefore certain expenses were clubbed under the head "other expenses" while filing the return of income under section 139(1) of the Act. The ld PCIT raised the issue in respect of said "other expenses" (which were there in the assessee`s tax audit report under various heads), without having verified with the assessee`s tax audit report and therefore reached on a wrong conclusion, which is not acceptable in the eye of law. 15. We note that it is a well settled legal position that in order to exercise the jurisdiction under section 263 of the Act, both conditions viz: order of the assessing officer should be erroneous and assessment order should be prejudicial to the interest of revenue, should be cumulatively satisfied by the ld. PCIT. The reliance is placed on the decision of Hon'ble Gujarat High Cour....
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.... order is also prejudicial to the interest of revenue-twin conditions of assessment order being erroneous and it also being prejudicial to the interest of revenue, keeps initial burden on Commissioner, who invokes such jurisdiction. Premises for invoking the revisional jurisdiction on the ground that the Assessing Authority made insufficient inquiry or improper enquiry and fail to verify closing stock in record of the assessee, before passing assessment order, falls flat by a bare perusal of assessment order itself. Thus, Tribunal was justified in holding that Commissioner was in error invoking revisional jurisdiction u/s 263. Mere alleged insufficiency of inquiry in of opinion of Commissioner by Assessing Authority, would not permit him to in walk revisional jurisdiction u/s 263. Therefore, essential twin condition for invoking revisional jurisdiction, were not satisfied." 17. Hon`ble Delhi High Court in the case of PCIT v. Delhi Airport Metro Express Pvt. Ltd. [ITA No. 705/2017] has categorically held that for the purpose of exercising jurisdiction u/s 263 and reaching a conclusion that the order is erroneous and prejudicial to the interest of revenue, the ld. PCIT has to unde....