AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (11) TMI 654
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....for grant of out of turn hearing on 23.05.2022. Ld. counsel for the assessee submitted that initially, the assessee has challenged the above order in Writ Petition bearing No. WPA23793 of 2010 before the Hon'ble Calcutta High Court. This Writ Petition has been disposed of by the Hon'ble High Court on 22nd March, 2022. The Hon'ble High Court has given a liberty to the assessee to file an appeal before the Tribunal within four weeks from the date of order, then the issue regarding period of limitation will not be raised by the Tribunal. The assessee has presented the appeal on 19th April, 2022, which is within four weeks from 22.03.2022. Therefore, the appeal is treated with in limitation in terms of Hon'ble Calcutta High Court's decision. The assessee has contended that though the Hon'ble High Court has disposed of the Writ Petition but kept the Interim Order alive upto ten weeks from the date of the order. Therefore, according to the assessee, this appeal be heard on priority basis before the expiry of ten weeks. It is pertinent to observe that the assessee has filed the present application after expiry of eight weeks from the order of the Hon'ble High Court. The appeals challen....
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....the above case were examined. It is seen the assessment for the AY 2005-06 was assessed u/s143(3) on 28.12.2007 on a total income of Rs.11,71,760/- with tax effect of Rs.21,166/- as under:- On examination of the assessment records, it was seen that the following expenditure were debited to the P&L A/c.:- (1) Commissioner paid to: (a) Panjabi & Pajama Card Sales Rs.45,01,527/- (b) Silk Saree Card Sales Rs.14,23,003/- (c) Cotton Saree Card Sales Rs.10,57,050/- Rs.70,90,580/- (2) Payment of labour charges to:- (a) Rahman Tailors Rs.4,10,272/- (b) Rima Tailor Rs.3,75,628/- Rs.7,85,900/- (3) Payment of Advertisement: Rs.2,81,700/- In the above cases, Column 27 of the audit report submitted in Form 3CD shows that no TDS has been made by the assessee. Therefore, all the above mentioned amounts were required to have been added to total income u/s 40(a)(ia) of the I.T. Act, 1961. As per section 40(a)(ia) of the I.T. Act if no tax was deducted from payment to contractors/sub-contractors u/s 194C, the expenditure was not deductible from the earnings of the AY 200506. Since in this case the assessee ....
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....tion " does not hold any water. The assessee's reading of Sec 40a(ia) is also thoroughly incorrect as Section 40a(ia) applies in cases not only where any amount remains payable but should actually be paid before the filing of return or the end of the relevant assessment year. Further the assessee's written submission in response to the show cause notice issued on 26-11-09 is silent on the points referred to in the show-cause notice and therefore it is clear that the assessee has no explanation to offer thereto. I have carefully considered the'submission of the assessee. The show cause notice has clearly spelt out the points which would conclusively show that the order passed by the AO is erroneous in so far as it is prejudicial to the interest of revenue. The submission of the assessee is general and the same no way disproves the points raised in the show cause notice, n view of this, I find no merit in the submission of the assessee. From the above, it is quite clear that the AO had passed a stereotyped order, and make enquiries which are called for in the circumstances of the case. The order is s in view of the decisions in Rampyari Devi V. CIT 1968) 67 ITR 84 (SC) and ....
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....on Ltd. (1998) 233 ITR 546,555 (Mad). Therefore, when the Commissioner prima-facie came to the conclusion that, the order passed by the Officer was not in accordance with law and the assessment records disclose that the Officer had not undertaken the enquiry which was expected of him before allowing the claim of the assessee for weighted deduction,' it is held that the Tribunal was not justified in holding that the Commissioner lacked the jurisdiction to exercise his power of revision. Thus, there is nothing in Section 263 to show that the Commissioner should in all cases record his final conclusion on the points in controversy before him. CIT V. Seshasayee Paper Boards Ltd. (2000) - 242 ITR 490, 497-98 (Mad). The Commissioner may consider an order of the Assessing Officer to be erroneous not only if it contains some apparent error of reasoning or of law or of fact on the face of it because it is a stereo-typed order which simply accepts what the assessee has stated in his return and fails to make enquiries which are called for in the circumstances of the case istration on the point, see Rampyari Devi Saraogi V. CIT(1968) 67 ITR 84 and Tara Devi Agarwal -vs- CIT (1973) 88....
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....r was held justifieo in setting aside the assessment made without making proper and detailed enquiry into the genuineness and creditworthiness of the persons who subscribed to the equity capital of the assessee Company. CIT V. M.N. Dastur & Co. (P) Ltd. (2000) ITR 10, 19 (Cal) Tribunal was held not justified in law in canceling the order of the Commissioner u/s. 263. The revisional power u/s. 263 is of wide amplitude and it is in the nature of supervisory jurisdiction. On fulfillment of the requisite conditions of section 263(1), the Commissioner can exercise the power of revision even in a case where the issue is debatable and it must always be borne in min'd that the provisional power under section 263 is not comparable with the power of rectification of mistake under section 154 of the Act [CIT v. M.M. Khambhatwala (1992) 198 ITR 144,146 (Guj). In fact, it is well settled that an incorrect assumption of the facts or application of law will satisfy the requirement ot the order being erroneous and prejudicial to the interests of revenue. In the same category would fall the orders passed without application of mind. The Commissoner may consider and order of the Assessing Offi....
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....e as stated above. The Assessing Officer was expected to inquire these points and he has failed to make enquiry as expected. This would be a*ground for interference with the order passed by the essing Officer since such an order passed by the Officer is erroneous and prejudicial to crests of Revenue as is decided in the Court cases cited above. I have carefully considered the records and the submission of the assessee. I have also'heard the assessee, I consider the order passed by the AO u/s. 143(3) on 22/11/2007 for the revenue for the reasons stated above. Accordingly, the assessment is set-aside and AO is directed to make a fresh assessment as per law in accordance with the observation/directions given in this order and after making proper enquiries of the above points as called for in the circumstances of the case. Sd/- (S. MAMIDI) C.I.T.Kol-X, Kolkata" 7. While impugning the order of ld. Commissioner, ld. Counsel for the assessee contended that the assessee has collected copies of the submission filed before the ld. Assessing Officer through RTI and in response to the notice under section 142 of the Income Tax Act, the assessee has filed submission dated 28.1....
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....d the rival contentions and gone through the record carefully. Before we embark upon an enquiry on the facts and issues agitated before us to find out whether the action u/s 263 of the Act, deserves to be taken against the assessee or not, it is pertinent to take note of this section. It reads as under:- "263(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. [Explanation.- For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the In....
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....mination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a show cause notice pointing out the reasons for the formation of his belief that action u/s 263 is required on a particular order of the Assessing Officer. At this stage the opportunity to the assessee would be given. The learned Commissioner has to conduct an inquiry as he may deem fit. After hearing the assessee, he will pass the order. This is the 4th compartment of this section. The learned Commissioner may annul the order of the Assessing Officer. He may enhance the assessed income by modifying the order. He may set aside the order and direct the Assessing Officer to pass a fresh order. At this stage, before considering the multi-fold contentions of the ld. Representatives, we deem it pertinent to take note of the fundamental tests propounded in vario....
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....in his order he does not make an elaborate discussion in that regard. 11. Apart from the above principles, we deem it appropriate to make reference to the decision of the Hon'ble Delhi High Court in the case of CIT vs. Sun Beam Auto reported in 227 CTR 113 and Gee Vee Enterprises Ltd vs. Addl. Commissioner of Income Tax (99 ITR 375). In the case of Sun Beam Auto, the Hon'ble High Court has pointed out a distinction between lack of inquiry and inadequate inquiry. If there is a lack of enquiry, then the assessment order can be branded as erroneous. The following observations of the Hon'ble Delhi High Court are worth to note: "12. We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the Commissioner of Income-tax under section 263 of the Income-tax Act. As noted above, the submission of learned counsel for the revenue was that while passing the assessment order, the Assessing Officer did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the asse....
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.... It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would made such an inquiry prudent that the word 'erroneous' in section 263 includes the failure to make such an enquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct." 13. In the light of above, let us examine the facts of the present case. We have taken cognizance of the show-cause notice, we deem it appropriate to take note of the assessee's submission dated 28.11.2007 filed before the ld. Assessing Officer, which reads as under:- "Before The Addl. Commissioner of Income Tax, Range-28, Kolkata. 2, Gariahat Road (South) Kolkata-700 068. Re : In the matter of M/S. Kinnar Kinnaree, 98, Rash Behari Avenue, Kolkata-700029. Sub. : In the matter of scrutiny assessment proceeding u/s. 143(3) of the I.T. Act for the assessment year 2005-06. P.A.N. : AAFFK1754N Sir, That in early occasion of hearing you have raised certain queries/details which are assessed as under : 1. Query : Why TPS Not deducte....
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....ith fellow labourers and they received the payment by virtue of the muster roll as placed on record. That the payments were made to each and every individual labourer with the assistance of Labour Sardars whom the labourers of a particular area chose to act as their leader (sardar) for purposes of identification and safeguarding their interest. It was explained that it for the benefit of both the assessee and the labourers that the Labour Sardar act as a confirming party to the payments made to the individual labourers. That I am producing all the details of vouchers where name of all the labourers are there for test check. The amendment made in section 40(a)(ia) by the Finance Act No. 2 dated 10th September, 2004, the payments to contractor or sub-contractor for carrying out any work (including supply of labour for carrying out any work) will be deductible only if tax is deducted therefrom, at source under Chapter XVII-B and such tax has been paid during the previous year or in the subsequent year before expiry of the time prescribed under section 200 of the Act. The provision was made effective from 1 -42005 by the provision of section 11 of the Finance (No. 2) Act, 2004 wh....