TaxTMI 
TaxTMI 
2022 (10) TMI 478
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....ls involved identical issues, they were heard together and are being disposed of by this common order for the sake of convenience. 2.0 The facts in brief are that the main issue in all the years under appeal (wherein action u/s 263 of the Income Act, 1961 [in short 'the Act'] has been initiated) is expenditure incurred on distribution of gifts / freebies to doctors and Medical Practitioners in the form of televisions, laptops, electronic goods, mobiles, sponsorship of tours and conferences and distribution of other similar items which have been charged as expenditure in the Profit and Loss Account under the head 'Business Promotion Expenditure'. In all the years under appeal, it is the opinion of the Ld. Principle Commissioner of Income Tax (PCIT) that such expenditure was not allowable in terms of Explanation to section 37(1) of the Act being expenditure for a purpose which was an offence or was prohibited under the law. 3.0 At the request of the Ld. AR, ITA No. 345/Chd/2022 pertaining to AY 2010-11 was taken as the lead case. The brief facts of the case in Assessment Year 2010-11 are that the assessee is a limited company and for the year under consideration, the return of ....
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....ing the order, the Ld.. PCIT has not heLd. that the assessment as framed by the Assessing Officer vide order dated 30.12.2019, is erroneous and prejudicial to the interest of revenue and having not satisfied the basic condition, for cancelling the valid assessment order of the Assessing Officer vide order dated 30.12.2019, the order as passed by the Ld.. PCIT (Central), Ludhiana is non-est. 3. Notwithstanding, the above said grounds of appeal, the Ld.. PCIT (Central), Ludhiana, having considered the replies filed by the assessee, on the issue of expenditure under the head 'business promotion', which did not include any gifts/freebis to the doctors and Medical Professionals, during the course of original assessment proceedings and during the course of assessment proceedings u/s 153A/143(3) and, therefore, setting aside the issue, again to the file of the AO, is wholly misconceived and not proper. 4. That the Ld. PCIT (Central), Ludhiana having noted the fact from the assessment file that no expenditure was incurred on account of any gifts/ freebis to the doctors/medical professional and the Assessing Officer, also having applied mind on the same issue, both....
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....he assessee company had no direct link or connection with the doctors / medical practitioners. It was submitted that regular books of accounts have been maintained by the assessee and the books of account are also regularly audited and the returns of income have also been filed on the basis of such audited books of account. It was submitted that the assessee company was from time to time assessed u/s 143(3) of the Act also but no major additions or disallowances had been made. He drew our attention to a Chart showing the status of original assessments from Assessment Years (AY) 2008-09 to 2018-19 to buttress that no major disallowances or additions have been made. This chart is being reproduced herein under for a ready reference: 4.1 The Ld. AR further submitted that there was a search and seizure operation at the business premises of the assessee on 23.03.2018 and the assessee surrendered a sum of Rs. 5,00,23,500/- in the hands of the company as well as one of the directors. It was submitted that this surrender was also duly disclosed in the return of income and tax at the rate of 78% u/s 115BBE of the Act was also paid by the company as well as the director. It was further sub....
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....ting necessary verification and inquiries into the nature of such expenditure thereby resulting in the assessment being rendered erroneous as well as prejudicial to the interest of the Revenue. 4.4 The Ld. AR submitted that the assessee had submitted identical/ common replies to the Ld. PCIT in response to the said show cause notices but such replies of the assessee did not find any favour with the Ld. PCIT and the Ld. PCIT had observed that such business promotion expenditure was not an allowable expenditure in terms of section37(1) of the Act and had referred once again to the Regulations issued by the Medical Council of India before setting aside the assessment orders on the ground that the AO had not conducted due and relevant inquiries in this regard. 4.5 The Ld. AR submitted that the show cause notices and the orders passed u/s 263 of the Act were almost on identical lines in all the years under consideration except for AY 2017-18, wherein, there was an additional issue relating to transfer pricing. The Ld. AR submitted that on the issue of allowbililty of business promotion expenditure and on the issue of whether or not the AO had made relevant and proper inquiries, hi....
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....gifts/freebis to the doctors as per the assessment records of the assessee and, thus, the cancellation of the assessment, already framed vide order dated 30.12.2019, after due application of mind by the Ld.. Assessing Officer is wholly improper 6. That the Ld.. PCIT (Central), Ludhiana has wrongly refer to the 'Medical Counsel Regulation Act, 2002' and also to the CBDT Circular No. 5 of 2012 dated 01.08.2012 and the judgment of the 'Apex Court' in the case of 'Apex Laboratories Pvt. Ltd.' in para 5.8 of the order, regarding the provision by law of the gifts/freebis to the medical practitioner, since it is an acceded fact and borne out from the assessment records of the assessee, that no such gifts/freebis had been given to the medical practitioners and hence, reliance by the Ld.. PCIT (Central), Ludhiana on said circulars and of the Apex Court judgment is improper. 7. Notwithstanding with the above said grounds of appeal, the Ld.. PCIT (Central), Ludhiana has wrongly assumed the jurisdiction u/s 263 on the basis of the audit objection, which was not accepted by the department and no valid jurisdiction could have been assumed by the Ld.. PCI....
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....has erred in holding that there was 'lack of enquiry' on the issue of gifts/freebis, as it has been categorically stated that there was no such gifts/freebis to the doctors as per the assessment records of the assessee and, thus, the cancellation of the assessment, already framed vide order dated 30.12.2019, after due application of mind by the Ld.. Assessing Officer is wholly improper. 6. That the Ld. PCIT (Central), Ludhiana has wrongly referred to the 'Medical Counsel Regulation Act, 2002' and also to the CBDT Circular No. 5 of 2012 dated 01.08.2012 and the judgment of the 'Apex Court' in the case of 'Apex Laboratories Pvt. Ltd.' in para 5.8 of the order, regarding the provision by law of the gifts/freebis to the medical practitioner, since it is an accepted fact and borne out from the assessment records of the assessee, that no such gifts/freebis had been given to the medical practitioners and hence, reliance by the Ld.. PCIT (Central), Ludhiana on said circulars and of the Apex Court judgment is improper. 7. Notwithstanding with the above said grounds of appeal, the Ld.. PCIT (Central), Ludhiana has wrongly assumed the jurisdic....
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....f mind by the AO, is against the facts & circumstances of the case and the settled law on the subject. 5. That the Ld.. PCIT (Central), Ludhiana has erred in holding that there was 'lack of enquiry' on the issue of gifts/freebis, as it has been categorically stated that there was no such gifts/freebis to the doctors as per the assessment records of the assessee and, thus, the cancellation of the assessment, already framed vide order dated 30.12.2019, after due application of mind by the Ld.. Assessing Officer is wholly improper. 6. That the Ld. PCIT (Central), Ludhiana has wrongly referred to the 'Medical Counsel Regulation Act, 2002' and also to the CBDT Circular No. 5 of 2012 dated 01.08.2012 and the judgment of the 'Apex Court' in the case of 'Apex Laboratories Pvt. Ltd.' in para 5.8 of the order, regarding the provision by law of the gifts/freebis to the medical practitioner, since it is an accepted fact and borne out from the assessment records of the assessee, that no such gifts/freebis had been given to the medical practitioners and hence, reliance by the Ld.. PCIT (Central), Ludhiana on said circulars and of the Apex Court j....
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....ring the course of original assessment u/s 143(3) and the assessment u/s 153A/143(3), the setting-aside of the assessment as framed, after due application of mind by the AO, is against the facts & circumstances of the case and the settled law on the subject. 5. That the Ld.. PCIT (Central), Ludhiana has erred in holding that there was 'lack of enquiry' on the issue of gifts/freebis, as it has been categorically stated that there was no such gifts/freebis to the doctors as per the assessment records of the assessee and, thus, the cancellation of the assessment, already framed vide order dated 30.12.2019, after due application of mind by the Ld.. Assessing Officer is wholly improper. 6. That the Ld.. PCIT (Central), Ludhiana has wrongly referred to the 'Medical Counsel Regulation Act, 2002' and also to the CBDT Circular No. 5 of 2012 dated 01.08.2012 and the judgment of the 'Apex Court' in the case of 'Apex Laboratories Pvt. Ltd.' in para 5.8 of the order, regarding the provision by law of the gifts/freebis to the medical practitioner, since it is an accepted fact and borne out from the assessment records of the assessee, that no such....
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....as incurred on account of any gifts/freebis to the doctors/medical professional and the Assessing Officer, also having applied mind on the same issue, both during the course of original assessment u/s 143(3) and the assessment u/s 153A/143(3), the setting-aside of the assessment as framed, after due application of mind by the AO, is against the facts & circumstances of the case and the settled law on the subject. 5. That the Ld.. PCIT (Central), Ludhiana has erred in holding that there was 'lack of enquiry' on the issue of gifts/freebis, as it has been categorically stated that there was no such gifts/freebis to the doctors as per the assessment records of the assessee and, thus, the cancellation of the assessment, already framed vide order dated 30.12.2019, after due application of mind by the Ld.. Assessing Officer is wholly improper. 6. That the Ld.. PCIT (Central), Ludhiana has wrongly referred to the 'Medical Counsel Regulation Act, 2002' and also to the CBDT Circular No. 5 of 2012 dated 01.08.2012 and the judgment of the 'Apex Court' in the case of 'Apex Laboratories Pvt. Ltd.' in para 5.8 of the order, regarding the provision....
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....s wholly misconceived and not proper. 4. That the Ld.. PCIT (Central), Ludhiana having noted the fact from the assessment file that no expenditure was incurred on account of any gifts/freebis to the doctors/medical professional and the Assessing Officer, also having applied mind on the same issue, both during the course of original assessment u/s 143(3) and the assessment u/s 153A/143(3), the setting-aside of the assessment as framed, after due application of mind by the AO, is against the facts & circumstances of the case and the settled law on the subject. 5. That the Ld.. PCIT (Central), Ludhiana has erred in holding that there was 'lack of enquiry' on the issue of gifts/freebis, as it has been categorically stated that there was no such gifts/freebis to the doctors as per the assessment records of the assessee and, thus, the cancellation of the assessment, already framed vide order dated 30.12.2019, after due application of mind by the Ld.. Assessing Officer is wholly improper. 6. That the Ld.. PCIT (Central), Ludhiana has wrongly referred to the 'Medical Counsel Regulation Act, 2002' and also to the CBDT Circular No. 5 of 2012 dated 0....
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....sessment proceedings and during the course of assessment proceedings u/s 153A/143(3) and, therefore, setting aside the issue, again to the file of the AO, is wholly misconceived and not proper. 4. That the Ld.. PCIT (Central), Ludhiana having noted the fact from the assessment file that no expenditure was incurred on account of any gifts/freebis to the doctors/medical professional and the Assessing Officer, also having applied mind on the same issue, both during the course of original assessment u/s 143(3) and the assessment u/s 153A/143(3), the setting-aside of the assessment as framed, after due application of mind by the AO, is against the facts & circumstances of the case and the settled law on the subject. 5. That the Ld.. PCIT (Central), Ludhiana has erred in holding that there was 'lack of enquiry' on the issue of gifts/freebis, as it has been categorically stated that there was no such gifts/freebis to the doctors as per the assessment records of the assessee and, thus, the cancellation of the assessment, already framed vide order dated 30.12.2019, after due application of mind by the Ld.. Assessing Officer is wholly improper. 6. That the ....
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....der the head 'business promotion', which did not include any gifts/freebis to the doctors and Medical Professionals, during the course of original assessment proceedings and during the course of assessment proceedings u/s 153A/143(3) and, therefore, setting aside the issue, again to the file of the AO, is wholly misconceived and not proper. 4. That the Ld.. PCIT (Central), Ludhiana having noted the fact from the assessment file that no expenditure was incurred on account of any gifts/freebis to the doctors/medical professional and the Assessing Officer, also having applied mind on the same issue, both during the course of original assessment u/s 143(3) and the assessment u/s 153A/143(3), the setting-aside of the assessment as framed, after due application of mind by the AO, is against the facts & circumstances of the case and the settled law on the subject. 5. That the Ld.. PCIT (Central), Ludhiana has erred in holding that there was 'lack of enquiry' on the issue of gifts/freebis, as it has been categorically stated that there was no such gifts/freebis to the doctors as per the assessment records of the assessee and, thus, the cancellation of the ....
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....ng, the above said grounds of appeal, the Ld. PCIT (Central), Ludhiana, having considered the replies filed by the assessee, on the issue of expenditure under the head 'business promotion', which did not include any gifts/freebis to the doctors and Medical Professionals, during the course of original assessment proceedings and during the course of assessment proceedings u/s 153A/143(3) and, therefore, setting aside the issue, again to the file of the AO, is wholly misconceived and not proper. 4. That the Ld.. PCIT (Central), Ludhiana having noted the fact from the assessment file that no expenditure was incurred on account of any gifts/freebis to the doctors/medical professional and the Assessing Officer, also having applied mind on the same issue, both during the course of original assessment u/s 143(3) and the assessment u/s 153A/143(3), the setting-aside of the assessment as framed, after due application of mind by the AO, is against the facts & circumstances of the case and the settled law on the subject. 5. That the Ld.. PCIT (Central), Ludhiana has erred in holding that there was 'lack of enquiry' on the issue of gifts/freebis, as it has been....
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.... the Assessing Officer, with the direction to pass the assessment order, afresh in accordance with law, after granting sufficient opportunity to the assessee. 2. That the order as passed by the Ld. PCIT (Central), Ludhiana is void-ab-initio since, while passing the order, the Ld. PCIT has not held that the assessment as framed by the Assessing Officer vide order dated 30.12.2019, is erroneous and prejudicial to the interest of revenue and having not satisfied the basic condition, for cancelling the valid assessment order of the Assessing Officer vide order dated 30.12.2019, the order as passed by the Ld.. PCIT (Central), Ludhiana is non-est. 3. Notwithstanding, the above said grounds of appeal, the Ld.. PCIT (Central), Ludhiana, having considered the replies filed by the assessee, on the issue of expenditure under the head 'business promotion', which did not include any gifts/freebis to the doctors and Medical Professionals, during the course of original assessment proceedings and during the course of assessment proceedings u/s 153A/143(3) and, therefore, setting aside the issue, again to the file of the AO, is wholly misconceived and not proper. ....
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.... the guidelines issued by the Medical Council of India and that the guidelines/ regulations were only applicable in the case of medical practitioners and / or doctors. It was submitted by the Ld. AR that it was apparent from the assessment proceedings that the different AOs in the captioned assessment years under appeal (both in the original assessment proceedings u/s 143(3) of the Act and assessment proceedings u/s 153A) had duly inquired into the issue of freebies and gifts but since there was no link or connection to be found between such freebies/gifts and medical practitioners / doctors, the issue of making any disallowance u/s 37(1) of the Act did not arise. It was submitted that the fact of not having given any freebies or gifts to doctors / medical practitioners had been the subject matter of verification and inquiries by the various AOs and, therefore, there was due application of mind on the part of the AO. 6.1 Thereafter, the Ld. AR referred to the following copies of the replies submitted before the AO for the various AYs under consideration: 6.2.1 Assessment Year 2010-11: i) The Ld. AR referred to certified copy of the reply, dated 08.01.2013 as obtained....
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....ent Sh. Vikas Garg, Counsel of assessee, filed reply to the queries raised in last discussion. The Photocopy of bills were perused & returned back. The counsel was ordered to file the details of the following: (a) To produce the original bills of expenses: (i) Business promotion (ii) Travelling (iii) Advertisement (b) High amount of rate of interest paid to some parties on unsecured loans. (c)Interest capitalization on building under construction (d)Basis of surrender during survey (e)Basis of share capital for shares issued during the year, along with the bank account (f) Details of amount reduced from computation u/s 40A Next date of hearing 16/01/2013 16.01.2013: Present Mr. Vikas Garg, filed reply for the queries raised in last discussion. Asked to produce the original bills of business promotion expenses, advertisement, building construction for verification. Next date of hearing 18/01/2013. 18.01.2013: Present Mr. Vikas Garg, produced the bills of the expenses (as noted) which were text checked. Further query was raised with respect to certain bills. Next date of hearin....
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....ll should not be disallowed. (3) Justify abnormal increase in selling expenses like advertisement, business promotion, rebate & discount. Submit confirmation. Hearing is fixed for dt. 29.01.2014 at 11 pm." 6.3.2 The Ld. AR then referred to the assessment order for AY 2011-12, placed at paper book pages 75 to 78 and submitted that after due examination by the Assessing Officer on the issue of 'Business Promotion Expenses', no adverse view had been drawn by the Assessing Officer. 6.4.0 Assessment Year 2012-13: The Ld. Counsel AR referred to reply dated 09.03.2015 as submitted during original assessment proceedings wherein the ledger copy of the 'Business Promotion Expenses' along with the vouchers had been enclosed, giving all such details as placed at pages 80 to 96 of the Paper Book-1 along with copies of the bills at pages 97 to 105 and the order sheet entries as placed at pages 106 to 111 and it was submitted that after examining these details and documents, the AO did not take any adverse view vis-à-vis the business promotion expenses. 6.5.0 Assessment year 2014-15: The Ld. AR submitted that the original assessment for this year wa....
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.... type of gift or cash or otherwise to any such professional. 6. Further clarified that the company had policy of Business Promotion to give some free gifts to the dealers as quantity discount which is purely for the purpose of sales increment. The total such material purchased and delivered had duly been accounted for in the books of accounts. The prescribed rate list of the assessee is attached herewith as a proof of sales promotion. " 6.7 Our attention was further drawn by the Ld. AR to the order sheet entries at pages 168 to pages 180 of the 'Paper Book', wherein at page 171 of the order sheet entries, dated 01.11.2019, there is a query raised with regard to the business promotion expenses, which is being reproduced as under:- "Kindly give details of the services received from the commission agents together with the agreements enter with them, the basis of the commission paid and the percentage of the commission paid viz. a viz. sales. Also submit the certified copies of the ledger accounts of all the commission agents above Rs.10) lac. (i) Kindly give reason for increase in the following other expenses in F.Y. 2014-15 w.r.t. F.Y. 2013-14: ....
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....neously by the issuance of notices u/s 153A firstly for six assessment years and, later on, for the preceding four assessment years and all the search assessments were taken up together and that the date of issuance of notices u/s 153A/142(1) in six assessment years was the same and for the preceding four assessment years also is the same. It was further submitted that only one Assessing Officer was seized of the search assessments for all the years under consideration and he had proceeded to frame the assessments simultaneously on one single day i.e. on 30.12.2019 and had also verified this 'Business Promotion expenses' in detail and this fact coupled with the earlier detailed enquiries/investigation/examinations made by the different Assessing Officers in original assessment proceedings left no doubt that the AO had applied his mind to the issue of business promotion expenses in detail. Our attention was also drawn to the Annotated Report' of the Assessing Officer submitted to the Pr. Commissioner of Income Tax (Central) and further our attention was also drawn to the following chart depicting the sequence of search assessments u/s 153A/143(3): - CHART SHOWING SEQU....
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....the case. Reliance was placed on the following judgments by the Ld. Counsel as under:- i). CIT (Central)-III vs Kabul Chawla [2015] 61 taxmann.com 412 ii). Principal CIT-9 vs Ram Avtar Verma [2017] 88 taxmann com 666 iii). PCIT-1 v. Devangi [2-017] 88 taxmann.com 610 iv). PCIT, Central IT New Delhi v Meeta Gutgutia [2018] 96 taxmann.com 468 v). PCIT-V vs Vikas Gutgutia [2017] 88 taxmann.com 605 vi). Judgement of Chandigarh Bench of the ITAT in the case of Shri Tarun Jain & Others in ITA No. 625 & 626/Chd2019 vide order, dated 27.01.2020 6.11 The Ld. AR further submitted detailed arguments on the basis of various contentions of the Ld. PCIT from Para 5.4.1 to Para 5.13, which are summarized as under:- a). Since no incriminating material had been found with respect to "Freebies / Gifts to Doctors/Medical Practitioners, no adverse view can be taken in respect of 'Business Promotion' expenses as claimed in the return of income as per the binding judgment in the case of 'Kabul Chawla's (supra) case and various other judgments of different Hon'ble High Courts and of the Co-ordinate Benches, particularly the....
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....tracted in assessee's case and, therefore, for this reason the guidelines issued by the Medical Council of India were also not applicable in the case of the assessee. It was also submitted that Medical Practitioners or Doctors, usually, as a matter of general practice, do not prescribe any generic medicines, whereas the assessee, undisputedly, was manufacturing generic medicines and, therefore, for this reason also it could not be said that the Ld. PCIT had rightly set aside the assessment order. 6.14 Thus, in nutshell, the main thrust of argument was that the assessee had submitted plethora of documents and other evidences before the AO as well as the Ld. PCIT to prove that the impugned business promotion expenses wetre not incurred for providing any freebies or gifts to doctors or medical practitioners and that further there was due application of mind and detailed inquiries by the AO and as such in view of such detailed inquires and such due application of mind, the revisionary proceedings were bad in law and were liable to be quashed. The Ld. AR placed reliance on numerous judicial precedents for the proposition that where there has been due application of mind by the AO, th....
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....ncriminating material found during the course of search. The Ld. CIT DR emphasized that in terms of provisions of section 153A both disclosed as well as undisclosed income has to be brought to tax and, therefore, to say that additions can be based only incriminating material found during the course of search is not the correct interpretation of law. 7.2 Drawing our attention to the contents of the show cause notice, the Ld. CIT DR submitted that the Ld. PCIT had duly taken note of the fact that the AO, during the course of assessment proceedings, had not examined the issue of Business Promotion Expenses and there was not even any kind of analysis carried out by the AO to examine the nature of Business Promotion Expenses. It was submitted by the Ld. CIT DR that a perusal of the assessment records would show that the AO has not carried out any kind of inquiry into the nature of expenditure pertaining to business promotion, whereas, the AO was required to properly evaluate the various evidences filed by the assessee. The Ld. CIT DR emphasized that the AO had failed to verify whether the freebies / gifts distributed by the assessee company were given to Medical Practitioners or to o....
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.... was the subject matter of detailed enquiries/examinations/verifications by the different Assessing Officers during the course of original assessment proceedings and the same is evidenced by various replies/documentary evidences and text/brochures of the various 'Promotional/ Incentive Schemes', as launched from time to time for the benefit of the Stockists/ Distributors, to whom various items were given as 'Freebies/Gifts' and for which, copies of the sample bills, etc also have been furnished. Thus, in view of these documentary evidences and replies, the contention of the assessee in this regard appears to be correct. 9.2 We also note that it is also borne out from the records that seven assessments originally have been framed u/s 143(3) of the Act and it is also a fact that the question as to whether or not the promotional/incentive schemes of the company were meant only for Stockists/Distributors and the nature and details of expenses under the head 'Business Promotion' expenses had elaborately been explained in the original assessment proceedings. It is also seen that in AY 2010-11, there is a specific reply dated 08.01.2013 relating to the query about the nature of 'Busine....
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.... showing the sequence of events for the search assessments vis-à-vis issue of notices u/s 153A, 143(2), 142(1) and the same are identical in all the assessment years and the same Assessing Officer has framed the assessments for all the eleven years on a single day i.e. on 30.12.2019, on a similar pattern. 9.5 We have also taken note of the fact that in respect of search assessments, the same Assessing Officer had duly applied his mind to the issue of 'Business Promotion' expenses as is evident from the queries and replies furnished during the course of search assessments and we find that the assessee vide reply dated 13.12.2019, which was furnished during the course of assessment proceedings for AY 2015-16, had categorically stated that the assessee company is not giving any gift in kind of cash or otherwise to any Doctors/Medical Practitioners and for that, the relevant paragraph of such reply, dated 13.12.2019 is being reproduced herein under:- "5. The assessee deals in marketing and trading of Generic pharmaceutical, Healthcare and cosmetic products all over India and appointed numbers of C & F agent for distribution and sale of goods. Since the company deals ....
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....ges 196 to 197 of the paper book and emanating from the same Assessing Officer in which it has categorically been communicated by the Assessing Officer concerned to the Ld. PCIT that the assessee had not provided any benefit to the Doctors. The same is evident from the following paragraphs:- "It is submitted that the above issue was dealt during the course of search assessment proceedings which were completed on 30.12.2019. During the course of assessment proceedings u/s 153A r.w.s 143(3) of the IT. Act, 1961, the assessee was asked during the course of assessment proceedings to give detail note on business model, nature of business. details of commission paid, business promotion expenses, scheme, rebate and discount expense which were examined and compared with the previous year and the turnover of the assessee (copy of the order sheet dated 01.11.2019), it was found that the assessee used to provide various gift items to the distributors/C&F distribution agents linked with their volume of order and sales made by the distributor copy of sample scheme and gifts pamphlet) and not the doctors The assessee company deals in marketing and trading of generic pharmaceuti....
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.... only one single assessment was required to be made to assess the undisclosed income in different assessment years and, whereas, under the provisions of section 153A, the Assessing Officer is required to exercise normal assessment procedure i.e. to assessee or reassess the total income, where both disclosed and undisclosed income is brought to tax. The facts with regard to 158BC assessments is not applicable in this case, but even u/s 153A as per decided case laws, only 'undisclosed income' is sought to be assessed based on incriminating material found during search and if particular income/facts has been disclosed in the regular return, the same cannot be disturbed until or unless, some incriminating material is found. Reliance is being placed on the decision of Delhi High Court in the case of 'Kabul Chawla' and Others and numerous judgments of 'Chandigarh Bench' of the ITAT and of different coordinate Benches of ITAT. Para 5.4.3 Again, the Ld. PCIT here has mentioned that in the procedure for assessment u/s 153A, once the assessment is reopened, the Assessing Officer can take note of disclosed income in the earlier return and take into consideration everything, even if i....
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....ourt in the case of 'Confederation of Indian Pharmaceutical Industries' reported in 353 ITR 388, in which it has been held as under:- "This court is not oblivious to the increasing complaint that 'medical practitioners' do not prescribe 'generic medicines' but prescribe' branded medicines', only in lieu of the gifts and other freebies given to them by some particular Pharmaceutical Industries." We are manufacturing only generic medicines and, as such, the facts are totally different in our case and copy of judgment is placed in Judgment Set-II. Page 17 The PCIT has quoted a particular paragraph from the judgment of 'Apex Court', where the regulations of Medical Council (Professional Conducts) has been discussed. The facts are not applicable to our case, since we are giving incentives to only Distributors/Stockiest and have no link or connection with the Medical Practitioners / Doctors. Para 5.9.1 The PCIT has again mentioned that u/s 153A, the Assessing Officer can touch upon any issue and his jurisdiction is not restricted to issue arising from incriminating material. This observation of the Ld. PCIT is incorrect as stated above and even, further, it is ....
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.... this rebuttal, which is based on records, cannot be negated. Therefore, we have no hesitation in holding that the nature of the expenses under the head 'Business Promotion' in all the years under consideration have thoroughly been examined/verified by the Assessing Officer, who framed the search assessments simultaneously and, as such, we are of the considered view that the concerned AO had duly applied his mind on this issue and the records of the various assessment proceedings, both in the original and in search assessment, bear testimony to the fact that, no 'Freebies/Gifts' have been given to the Medical Practitioners/Doctors and that such gifts were only given to the Stockists/Distributors of the company as is evident from the various promotional schemes launched by the assessee company in different years. 9.11 It would be relevant here to refer to the judgment of the Hon'ble Delhi High Court in the case of 'CIT vs. Sunbeam Auto reported in 332 ITR 167', wherein the Hon'ble Court has held that the distinction between the 'lack of enquiry' and 'inadequate enquiry' has to be considered and it has been held that if there was an enquiry, howsoever inadequate that would not giv....
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....e Income-tax Act, 1961 - Cash credit (Gift) - Assessment years 2007-08 and 2008-09 - Assessee received certain amount as gifts from his father and sister who were non-residents in India - Assessing Officer after making detailed enquiries, took a view that assessee had duly proved identity, source and creditworthiness of donors - Commissioner, however, passed a revisional order under section 263 directing Assessing Officer to enquire into capacity of donors and to decide about genuineness of gifts afresh - It was noted that Commissioner in his order of revision, did not indicate any doubt in respect of genuineness of evidence produced by assessee - Moreover, satisfaction of Assessing Officer on basis of documents produced was not shown to be erroneous - High Court by impugned order held that it was a case where a view had been taken by Assessing Officer after making proper enquiry and, thus, Tribunal was justified in setting aside impugned revisional order - Whether Special Leave Petition filed against impugned order was to be dismissed - Held, yes [Para 2] [In favour of assessee]" 9.15 Thus, the crux is that once there is an application of mind and enquiry has been made by the A....