TaxTMI 
TaxTMI 
2023 (6) TMI 661
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..... PCIT for assuming jurisdiction u/s 263 of the Act. 5. Having assumed jurisdiction, the ld. PCIT issued the following show cause notice: "The case of M/s. Sherawali Coal Carriers P. Ltd., was selected for scrutiny under Complete Scrutiny. The assessment order u/s 143(3) of I.T. Act in this case was passed by the ITO Ward- 23(2), New Delhi on 14.12.2017 at a loss of Rs. 31,44,086/- as against the returned loss of Rs. 34,17,165/-. The additions of Rs. 1,23,079/- on account late deposit of EPF and disallowance of loader running expenses amounting to Rs. 1,50,000/- were made in this case. 2. The perusal of the records/ledger accounts filed during the assessment proceedings shows that the assessee had made cash payments of Rs. 11,65,000/- as under:- S.NO Name of concerned party Date of transactions Amount 1. M/s. Dee Cee Coal carriers Pvt. Ltd. 3.10.2014 Rs. 5,00,000 2. M/s. Dee Cee Coal carriers Pvt. Ltd. 07.10.2014 Rs. 5,00,000 3. Air Compressor Machine 30.05.2014 Rs. 55,000 4. Motor Cycle (8574) 27.02.2014 Rs. 55,000 5. Motor Cycle (8993) 26.05.2014 Rs. 55,000 Total Rs. 11,65,000/- As per the provisions of section 40A(3) of the I.T.....
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....ecide the question. 9. Had the PCIT considered the Circular No. 34 dated 05.05.1970 issued by the CBDT, the ld. PCIT would not have taken the view which he has taken. The said Circular reads as under: "The Board had occasion to deal with several representations from various chambers of commerce, trade associations and businessmen regarding the scope of provisions of section 40A(3) and rule 6DD. Since many of the points raised therein are of an important nature, the clarifications given thereon are summarised below. 2. The provisions of section 40A(3) would apply in computing the income under the heads "Profits and gains of business or profession" and "Income from other sources" as per section 58(2). All payments in excess of Rs. 2,500 at one time whether for goods or services obtained for cash or credit, which are deductible in computing the income, have to be made by crossed cheque or bank draft. Thus, the price of goods purchased for resale or use in manufacturing process or payments for services will be covered by the provisions of section 40A(3). However, the section will not apply to repayment of loans or payment towards the purchase price of capital assets such as plant....
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....to be examined and verified to compute the taxable income. If the Assessing Officer fails to conduct the said investigation, he commits an error and the word „erroneous‟ includes failure to make the enquiry. In such cases, the order becomes erroneous because enquiry or verification has not been made and not because a wrong order has been passed on merits. Delhi High Court in Gee Vee Enterprises vs. Additional Commission of Income-Tax, Delhi-I & Ors, (1975) 99 ITR 375, has observed as under:- "The reason is obvious. The position and function of the Income-tax Officer is very different from that of a civil court. The statements made in a pleading proved by the minimum amount of evidence may be accepted by a civil court 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 an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls 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 t....
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....ection 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 assessment order, which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the Assessing Officer had not applied his mind on the issue. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between " lack of inquiry" and " inadequate inquiry". If there was any inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under sectio....
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....visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be formed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion . . . There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed ....