2022 (4) TMI 1069

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....se are that the assessee is a private limited company deriving income from dealership of TATA motors and Fiat India Ltd., trading of motor car, utility vehicle, sales and service. The Assessing Officer completed the assessment u/s. 143(3) of the Act on 1/3/2013 determining the total income at Rs. 1,08,70,360/-. 4. Thereafter, the Pr. CIT, Cuttack called the assessment records by virtue of his power under section 263(1) of the Act. On perusal of records, he noticed that the assessee company had disclosed returned income of Rs. 8,78,800/- for the assessment year 2010-2011 after making adjustment of carry forward business loss & unabsorbed depreciation as per return of the assessment year 2009-10 amounting to Rs. 34,94,402/-. From the assessm....

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....edings indicates the purchase figure at Rs. 98,90,20,270/- but the AO has not examined the difference in purchase of Rs. 71,21,861/-. 7. In view of above, the CIT found that while framing the assessment u/s. 143(3) of the Act, the AO has not examined the aforesaid issues causing the assessment order erroneous and prejudicial to the interest of the revenue. Accordingly, show cause notice u/s. 263 of the Act was issued on 17.2.2014 by the CIT requiring the assessee to furnish clarification by 26.2.2014. In response to notice, the assessee filed written submissions with regard to the above issues pointed out by ld. CIT. After considering the submissions of the assessee, the CIT was of the view that the Assessing Officer has not made any enqui....

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....nd share premium money introduced by assessee in its books, AO is duty bound to investigate/enquire into the identity of the shareholder, the creditworthiness and genuineness of transaction. If AO is satisfied as to these, then he should state the same in the assessment order by recording his satisfaction. It is clear from, the assessment order that the AO has not recorded his satisfaction as to the explanation furnished by the assessee as to the introduction of share capital/share premium. As regards carry forward loss or unabsorbed depreciation, the contention of the A/R is not acceptable. The AO cannot wait indefinitely for the appeal proceedings before the CIT(A), ITAT and Hon'ble High Court. After receiving an appellate order, th....

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....s held that the Commissioner can regard the order of the AO as erroneous on the ground that, in the circumstances of the case, the AO should have made further enquiries before accepting the statement filed by the assessee. Further in the case of Jagadish Kumar Gulati Vs. CIT reported in 269 ITR 71 (All), it was held that where the Commissioner found that necessary enquiries were not made by the AO before finalizing the assessment, assumption of jurisdiction u/s. 263 by him to cancel the order of the AO was justified. Again in the case of CIT vs Puspa Devi reported in 164 ITR 639(Pat), it was held that where there was failure on the part of the AO to make proper enquiry, the commissioner was justified in cancelling the order of the AO. Sim....