TaxTMI 
TaxTMI 
2022 (11) TMI 654
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....sessment year 2005-06. The assessee has filed an application 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 ....
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....priate to take note of such reason, which reads as under:- "Assessment records in 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 p....
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.... factual submission with regard to the expenditures claimed to have incurred as discussed above. The assessee's contention that the entire observations are "simply misinterpretation " 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 pa....
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....conclusion on the question, if accepted w'ould take away the powers conferred report the Commissioner u/s. 263 to pass such order as the circumstances of the case would justify. CIT V. South India Shipping Corporation 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 th....
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.... The Supreme Court was of the opinion that the High Court has rightly held that the exercise of the jurisdiction by the Commissioner under section 263 was justified. In CIT V. Active Traders (P) Ltd. (1995) 214 ITR 583,586-87, (Cal Commissioner 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 t....
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....xtiles vs. CIT [157 ITR 112 (Mad)]. AO granted relief without proper verification and such order is an order prejudicial to the interest of revenue. From the records, it is abundantly clear that no worthwhile enquiry was made nor any meaningful investigation was carried out -egarding.the claim of the assessee 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. MAMID....
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....otally silent about all these enquiries. It is just one and half pages assessment order without exhibiting any inquiry made at the end of the ld. Assessing Officer. Therefore, the ld. Commissioner has rightly taken cognizance of the record and rightly directed the ld. Assessing Officer to pass fresh assessment order. 9. We have duly considered 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 ....
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....ments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination 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 ....
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.... (viii) The CIT, before exercising his jurisdiction under s. 263 must have material on record to arrive at a satisfaction. (ix) If the AO has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the AO allows the claim on being satisfied with the explanation of the assessee, the decision of the AO cannot be held to be erroneous simply because 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 an....
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....ourt in the absence of any rebuttal. The civil court is neutral. It simply gives decision on the basis of the pleading and evidence which comes before it. The Income-tax Officer is not only on adjudicator but also an investigator. He cannot remain passive in the face of the return which is apparently in order but called for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry... 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:- ....
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....abourers/karigars are made through Sardars and for this there was no contract between the Sardars and the assessee. It is only done for better administrative convenience and smooth functioning of the business as and when required to engage the karigars, therefore, the provision of section 194C/40(a)(ia) was not attracted in respect of the said payments. That provisions of section 194C(2) would not be applicable in its case as there was no contract between it and two Labour Sardars; that the Labour Sardars could not be termed as labour contractors for the purposes of section 194C as they worked along with 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 ....