TaxTMI 
TaxTMI 
2024 (8) TMI 284
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....ipals CIT-1 Ahmedabad has erred both in law and in facts in revising and setting aside the Order passed by ld A.O. under Section 143(3) on the ground that the AO failed to examine the details of capital introduced by partners as it was onus to be discharged by the appellant firm to prove identity, creditworthiness and genuineness of transactions of capital so introduced in the books of partnership firm. On the facts and circumstances of the case and considering the details and evidences furnished, order passed by AO being neither erroneous nor prejudicial to interest of revenue, PR.CIT erred in revising the said Order. It be so held now and order under Section 263 be set aside. 2. The learned Principal CIT further grievously erred in law and on facts in revising and setting aside the order of assessment on the ground that the AO did not call for details and verify the filing of Form No: 10CCB and that conditions of Section 35AD were not fulfilled and that deduction under Section 35AD in any case would be Rs. 43,01,639/- as against Rs. 7,75,12,899/- as claimed. The Order under Section 143(3) being passed after application of mind to the issue and considering submissions, ev....
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....n facts in placing reliance to Explanation-2 to Section 263 since it is settled legal position as considered by various judicial pronouncements that it does not give unfettered powers to the Commissioner to assume jurisdiction under Section 263 to revise every order of the Assessing Officer to re-examine the issues. It be so held now and order passed by ld Pr.CIT be cancelled. 9. The appellant craves leave to add, alter, modify or delete any of the grounds at the time of hearing." 3. The brief facts of the case are that the assessee is a partnership firm which came into existence with effect from 4th May 2016 with 10 partners and the partners of the firm introduced capital of Rs. 2,26,27,740/- during the year under consideration. The Principal CIT observed that on going through the assessment records, the assessing officer failed to enquire about the source of capital by these partners. Accordingly, the Principal CIT initiated proceedings under Section 263 of the Act asking the assessee firm to furnish details regarding capital introduced by the respective partners and also the details like name, returns of income, mode of introduction of capital by these partners, thei....
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....n that case, the addition could have only been made in the hands of the individual partners who had invested capital in the assessee firm and not in the hands of the assessee firm. Therefore, it was submitted that the order passed by the assessing officer cannot be held to be erroneous insofar as prejudicial to the interests of the Revenue. 5. In response, this issue, DR placed reliance on the observations made by the principal CIT in the 263 order. 6. We have heard the rival contentions and perused the material on record. In the case of Vaishnodevi Refoils & Solvex 96 taxmann.com 469 (SC), the facts were that for relevant year, Assessing Officer made addition to income of assessee-firm under Section 68 on account of capital introduction by one partner of firm. He was of view that creditworthiness of partner who introduced capital had not been proved. The High Court in impugned order noted that amount received by assessee-firm had been duly reflected in books of account maintained by concerned partner and that assessee had furnished details with regard to source of capital introduced in firm and concerned partner had also confirmed such contribution and concluded that assesse....
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....ve been made in the hands of the individual partners who had contributed capital in the assessee firm, and not in the hands of the assessee firm. Accordingly, the assessment order, in so far as the issue of capital contribution is held not to be erroneous as prejudicial to the interest of Revenue. 10. Therefore, this ground of appeal raised by the assessee is allowed. 11. The next ground of appeal relates to order passed by the Principal CIT in relation to claim of deduction under Section 35AD(1) of the Act. During the course of 263 proceedings, the Principal CIT observed that the assessee firm has claimed deduction under Section 35AD of the Act of Rs. 7,75,12,899/- as per statement of total income available. During the course of assessment proceedings, the assessee firm had submitted that it has carried out specified businesses as defined under Section 35AD(1) of the Act and it has set up and operated warehousing facility for storage of agricultural produce. The assessee had submitted that the business of the assessee was specifically covered under Section 35AD(1)(ii) of the Act. On examination of the case records, the Principal CIT observed that the provisions of Section 35....
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....ts held for the purposes of the specified business." Section 80-IA(7) "(7) The deduction under sub-section (1) from profits and gains derived from an undertaking shall not be admissible unless the accounts of the undertaking for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant, as defined in the Explanation below sub-section (2) of section 288, before the specified date referred to in section 44AB and the assessee furnishes by that date the report of such audit in the prescribed form duly signed and verified by such accountant." 16. Accordingly, on going through the relevant provisions, it is evident that filing of requisite form for claiming deduction under Section 35AD in terms of 80-IA(7) of the Act is required under the Act. In the present case, admittedly, no separate form was filed by the assessee under the Income Tax Rules. On going through the case records it is observed that no specific query regarding claim of deduction under Section 35AD of the Act was raised by the Assessing Officer, during the course of assessment proceedings. Further, in our considered view, looking at the rele....
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....Rs. 44,88,323/- as against Rs. 7,18,96,466/- as claimed. The Order u/s 143(3) being passed after application of mind to the issue and considering submissions, evidences and details furnished by appellant, the order is neither erroneous nor prejudicial to interest of revenue. It be so held now and order passed u/s 263 be set aside. 3. The ld Principal CIT also erred both in law and on facts in holding that as audit report in Form No: 10CCB was not furnished electronically, the condition for deduction u/s 35AD was not fulfilled, as it is advised that Form No: 10CCB and details mentioned therein are not applicable so far as the claim u/s 35AD is concerned but are relating to claim u/s 80IA and since otherwise , the profit & Loss account as well as Balance sheet with all its assets were duly vouched, audited and report thereon was already furnished . Also no such reason was recorded by Pr CIT in his show cause notice. 4. The ld Principal CIT further erred both in law and on facts in not appreciating the order passed u/s 143(3) after detailed scrutiny and necessary inquiry, the same could not be held to be erroneous merely because in him opinion, further inquiry is req....