TaxTMI 
TaxTMI 
2024 (11) TMI 1600
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....issue(s) on which the impugned order under section 263 of the Income Tax Act, 1961 has been set aside, therefore, the Pr. Commissioner of Income Tax-, Kanpur is not justified in exercising powers under section 263 of the Income Tax Act, 1961. 3. That the Order for the Assessment Year 2011-12 was passed under Section 153C of the Income Tax Act, 1961 after approval from the Joint Commissioner of the Income Tax under section 153D of the Income Tax Act, 1961, therefore in view of the Judgment of Hon'ble Allahabad High Court in the case of CIT vs. Dr. Ashok Kumar IT Appeal No. 192 of 2000 and Pr. Commissioner of Income Tax (Central), Kanpur has no jurisdiction to pass the order under section 263 of the Income Tax Act, 196] in the instant case. 4. That the reasons for initiating revision proceedings _ under section 263 of the Income Tax Act, 1961 given in show cause notice u/s 263(1) of the Income Tax Act, 1961, dated 24.10.2013, are ambiguous, non specific and different from the reasons for which the impugned assessment order has been set aside hence, the said revision nil order is insupportable in law and on facts and deserves to be quashed and assessment order restor....
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....& leather goods for export & local sales under the name and style of M/s Model Exims. 3) A return of income declaring total income at Rs.52,19,290/was e-filed under section 1391) of the Income Tax Act, 196] on 30.09.2011. An order of assessment in case of M/S Model Exims C/o Sultan Tanners, Jajmau, Kanpur was passed u/s 153C on 31.03.2013 by ACIT, Central Circle-II, Kanpur. 4) Subsequently, an order u/s 263 dated 30.03.2015 was passed by Pr. CIT, Central, Kanpur setting aside the aforesaid assessment order passed u/s 153C dated 31.03.2013. 5) Subsequent to the aforesaid order, an order passed under section 263/143(3) of the Income Tax Act, 1961 was passed by Asstt. Commissioner of Income Tax, Central Circle-Il, Kanpur dated 31.03.2016. 6) That the previous Counsel of the appellant Late C.A. R.R. Jain advised the appellant that if need arises validity of order under section 263 of the Income Tax Act, 1961 (impugned order) will be challenged in the appeal to be filed against assessment order pursuant to impugned order under section 263 of the Income Tax Act, 1961. 7) An appeal was filed by the assessee against the assessment order dated 30....
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....i.e., till 04.06.2016. Due to lack of knowledge of income tax laws, assessee relied on the advice of the previous counsel Late CA R.R. Jain. An appeal was filed by the assessee against the assessment order dated 30.03.2016 before CIT(A) on 29.04.2016 in which interalia the validity of Order passed u/s 263 was also challenged on the advise of previous counsel and no separate appeal against the order passed u/s 263 was filed before Hon'ble ITAT, Lucknow on the advise of previous counsel Late CA R.R. Jain. The previous counsel, Late CA R.R. Jain expired on 21.04.2021.On receiving the proper legal advice by the new counsel, CA Swaran Singh, an appeal before Hon'ble ITAT Lucknow against the order passed under section 263 of the Income Tax Act, 1961 is being filed by the assessee firm M/s Model Exims. There was a delay of 2564 days in filing the appeal before Hon'ble ITAT Lucknow against the order passed under section 263 of Income Tax Act, 1961. Another relevant fact is that there was an outbreak of Covid19 and as per the order of Hon'ble Supreme Court of India In RE: Cognizance for extension of limitation with miscellaneous application No. 29 of 2022 in miscellaneous ....
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....e Tax Officer-3(1), Kanpur ITA No. 360/Lkw/2019 enclosed at P.B. No. 21-25 b) Judgment of Hon'ble High Court of Jharkhand in the case of State of Jharkhand vs. Ashok Kumar Chokhan(AIR 2009 SC 1927) enclosed at P.B. No. 26-38 c) Judgment of Hon'ble High Court of Judicature at Bombay in the case of - Pattherao Narsu Patil & Anr. Vs. Sou. Gangu A. Lad & Ors. (2019(2)Bom.C.R.436) enclosed at P.B. No. 39-45 d) Judgment of Hon'ble Maharashtra Real State Appellate Tribunal in the case of Mysore Sainath Lavanya vs. M/s AkshayGruha in Appeal No. 0006000000021171 enclosed at P.B. No. 46-47 Further reliance is placed on the Judgment of Hon'ble Supreme Court of India in the case of Collector Land Acquisition, Anantnag & Anr. Vs Mst. Kataji & Ors. (P.B. No. 48-51) laid down the following guidelines in condonation of delay: 1. Ordinarily a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on mer....
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....is not a case for "negligence" of the assessee that it is not filed appeal or not pursuing alternate remedy available under the Act to challenge the order of the Ld. CIT u/s 263 of the Act, because no person will derive any undue benefit by not preferring appeal against any assessment order or other order passed under the Act. 6. Having said so, let us come back to legal precedents on the issue of condonation of delay. It is well settled principle of law by the decision of various courts including the Hon'ble Supreme Court in the case of Collector Land Acquisition Vs. Mst. Katiji & Ors reported in [1987] 167 ITR 471 (SC), where, the Hon'ble Supreme Court clearly laid down the law in condonation of delay and held that ordinarily a litigant does not stand to benefit by lodging an appeal late. Further, refusing to condone delay result in meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned the highest that can happen is cause would be decided on merits after hearing the parties. At the same time, the Hon'ble Supreme Court made it clear that every day of delay must be explained. In case, th....
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....and reasons: Applicability of section 195 of the IT Act, 1961 on Commission paid to foreign agents (sales commission) The assessee firm has paid a sum of Rs. 83,89,773/- to the overseas entities and debited in profit & loss account under head 'Sales promotion' without deduction of income tax at source u/s 195 of the IT Act. As per provisions of section 195 of the IT Act, 1961 read with section 9(1)(vii), it is mandatory to deduct tax at source. The applicable provision has been contained under section 9 and 195 of the IT Act, 1961 which define the term "income deemed to accrue or arise in India" and liability of the assessee to deduct income tax at source on "other sums", Section 9(1)(vii) of IT 1961 under: The following income deemed to accrue or arise in India: (vii). Income by way of fees for technical services payable by (a). the Government; or (b) a person who Is a resident, except where the fees are payable in respect of services utilized in a business or profession carried on by such person outside India or for the purpose of making or earning any income from any source outside India; or (c). a person who is a no....
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....is very preciously defined in Explanation(2) to include any Payment for rendering of any managerial or consultancy services rendered by the Non-Resident agent. In the case of the assessee since he was not able to sell his goods on his own to the foreign buyers, he had to avail the managerial acumen and the expertise of the non-resident in lieu of the consideration debited by the assessee in his book of accounts as Commission. It makes it clear that the payment by the assessee in connection with his business expediencies in India to a person outside Indian territory for availing his expertise Sale of his goods is nothing but a fee paid by the assessee to the non-resident against tee technical services rendered by him. Section 195 of the Income Tax Act, 1961 read as under: Other sums" 195. [(1) Any person responsible for paying to a non-resident, not being a company or to a foreign company, any interest[*] or any other sum chargeable under the provision of this Act (not being income chargeable under the head " Salaries" [*] shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a ....
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.... debited in Profit & Loss account as 'Sales promotion'. Therefore there was a clear cut liable for deduct tax at source and having failed in deducting the same amount was liable to be disallowed as per provisions of section 40(a)(i) of the IT Act, 1961. The AO while passing the order u/s 153C of the Act in this case has not examined the above facts, accordingly order on this point is erroneous as well as prejudicial to the interest of Revenue. Deduction u/s 801B of the IT Act, 1961. On examination of record, it is seen that the assessee has claimed a deduction of Rs.7,47,500/- u/s 80IB, it is further seen that the date of formation of firm is 01-04-1996, which is more than 10 years of claiming of said deduction. As per provisions of sub-sections (5) of section 80IB, the total period should not be exceeded ten consecutive assessment years. For sack of convenience the relevant portion of section is reproduced as under: (5). The amount of deduction in the case of an industrial undertaking located in such industrially backward districts as the Central Government may, having regard to the prescribed guidelines, by notification in the Official Gazette, specify ....
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....e, he set aside the assessment order dated 31/03/2013 and directed the AO to frame afresh order de nova. This impugned action of Ld. PCIT has been challenged before us by the assessee. 10. Assailing the action of the Ld. PCIT, the assessee submitted a detailed reply in respect of all the above allegation which are reproduced in brief as under:- "That the order u/s 153C has been passed after due examination of facts, by raising queries and diligently examining the same. There is no failure on the part of the AO not to examine the issues in details. The order passed under section 153C has been approved by the Joint Commissioner of Income Tax. Disallowance of Commissioner paid to the Foreign Agent: The assessee company has paid a sum of Rs. 83,89,773/- to the Overseas entities and debited in the Profit & Loss Account under the head 'Sales Promotion with TDS u/s 195 of the IT. Act. In his reply the assessee has stated the disallowance of the commission under section 9(1)(vii) as FTS is not applicable to the facts of the case as per reason given in the reply. In support of his claim he has relied upon the following case laws in his favour: - 1. CIT....
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.... The domestic sales which form major part of sales are fully verifiable. The AO vide notice u/s 142(1) dt. 24-01-13 directed the assessee to furnish the details of the Commission paid. The assessee vide reply dated 18-11-13 submitted as under: "Details of commission debited to profit & loss account is being filed. The commission has been paid to foreign agents against sale of exports. Copy of their accounts alongwith agreement is being filed. No tax has been deducted at the source." Further vide reply dated nil received in this office on 05-12-13 the assessee submitted as under: As regards claim u/s 80Ib and its examination as well as allow ability it is submitted that the AO has already denied the said deduction and as such there is no error in the order of the AO. This order passed by the AO u/s 143(3) has been passed after being duly approved by the JCIT, Central Circle. The JCIT Central must have given his approval to the order only after applying his mind, examining the issues involved with due diligence. Once an order has been passed with the prior approval of the Range JCIT, it ceases to be an order passed by the AO. The order of the AO ge....
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.... 12. Learned counsel for the assessee vehemently contended before us that the order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue. The Assessing Officer has duly examined all the issues. The assessee has given complete details in this regard during the course of hearing. Further, the Ld AR submitted that the Ld. PCIT has erroneously presumed that AO had not inquired into the issue. According to the Ld. AR, during the course of assessment proceedings, the assessee submitted the details with regard to Rs. 2 crore which is as under: - a. Model Tanners (India) Pvt. Ltd. Rs. 50,00,000/- b. Model Echoes (P) Ltd., Rs. 25,00,000/- c. Model Exims Rs. 25,00,000/- d. S.K. Enterprises Rs. 30,00,000/- e. AI Razeeq Traders Rs. 70,00,000/- Rs. 2,00,00,000/- 13. So according to assessee, the Ld. PCIT could not have invoked the revisional jurisdiction on this issue which has been inquired into by the AO. So the impugned action of Ld. PCIT is without jurisdiction. 14. In the course of appellate proceedings in ITAT, the assessee filed a paper book containing the follow....
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.... No.16 of 2024 2 Judgement of Hon'ble Bombay High Court in the case of Procter and Gamble Hygiene and Healthcare Limited vs. Commissioner of Income Tax - 8 Income Tax Appeal No. 1210 of 2017 3 Judgement of Hon'ble Supreme High Court in the case of Mool Chandra Vs Union of India and Another Civil Appeal Nos. 8435 - 8436 of 2024. 4 Decision of Hon'ble ITAT Chennai 'A' Bench in the case of M/s. Saravana Stocks - Investments (P) Ltd. vs. The DCIT / ACIT, Company Circle-4 in ITA Nos. 1852 & 2298/Chny/2018 & ITA No. 2803/Chny/2019 5 Judgement of Hon'ble Madras High Court in the case of United Christmas Celebration Committee Charitable Trust v. Income-tax officer, Nagercoil [2017] 83 taxmann.com 293 (Madras) 6 Judgement of Hon'ble Bombay High Court in the case of Vijay Vishin Meghani v. Deputy Commissioner of Income-tax, Circle-23(2), Mumbai [2017] 86 taxmann.com 98 (Bombay) 7 Decision of Hon'ble ITAT Lucknow 'B' Bench in the case of Mehtab Alam v. Astt. CIT Central. S. No. Particulars 1 Decision of Hon'ble ITAT Surat Bench in the case of Chirag P. Thummar vs. Principal Commissioner of....
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....to the second limb, the AO's erroneous order can be revised by the Ld. CIT only when it is shown that the said order is prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue. The Hon'ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. "prejudicial to the interest of the revenue'' has to be read in conjunction with an "erroneous" order passed by the Assessing Officer. The Hon'ble Supreme Court, held that for invoking powers conferred by Section 263 of the Act; the CIT should not only show that the AO's order is erroneous as a result of any of the situations enumerated above but CIT must also further show that as a result of an erroneous order, some loss is caused to the interest of the revenue. Their Lordship in the said judgment held that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. It was further observed that when the Assessing Officer adopts one of the course permissible in law and it has resulted in loss to the revenue, or where two views are poss....
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....official acts have been regularly performed;" 87. Therefore, the Court has to start with the presumption that the assessment order dated 28th March 2008 was regularly passed. There is evidence to show that the assessing officer had required the assessee to answer 17 questions and to file documents in regard thereto. It is difficult to proceed on the basis that the 17 questions raised by him did not require application of mind. Without application of mind the questions raised by him in the annexure to notice under Section 142 (1) of the Act could not have been formulated. 88. The Assessing Officer was required to examine the return filed by the assessee in order to ascertain his income and to levy appropriate tax on that basis. When the Assessing Officer was satisfied that the return, filed by the assessee, was in accordance with law, he was under no obligation to justify as to why was he satisfied. On the top of that the Assessing Officer by his order dated 28th March, 2008 did not adversely affect any right of the assessee nor was any civil right of the assessee prejudiced. He was as such under no obligation in law to give reasons. 89. The fact, that all....
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.... that case was whether it was incumbent for the Chief of Army Staff while confirming the findings and the sentence of the General Court Martial, and for the Central Govt. while rejecting the post confirmation petition of the appellant, to record reasons for the orders passed by them. 96. The function of an Assessing Officer is to estimate the income of the assessee and to recover tax on the basis of such estimate as laid down by the Apex Court in the case of S.S Gadgil (supra). Their Lordships opined that the income tax proceedings do not partake the character of a judicial proceeding between the State and the citizen. Therefore, the principles applicable to a proceeding before a judicial or a quasi-judicial authority where there are two contesting parties cannot be made applicable to the proceedings before an Assessing Officer. 97. Mr. Nizamuddin contended the judgments cited by Mr. Poddar indicate that the Assessing Officer is not required to write an elaborate judgment. He contended that the assessing officer may not have any such obligation but it cannot be said, according to him, that the Assessing Officer is under no obligation to record anything in his asse....
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.... 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 section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of "lack of inquiry", that such a course of action would be open. In Gabriel India Ltd.'s case (supra), law on this aspect was discussed in the following manner : " ...... From a reading of sub-section (1) of section, it is clear that the power of suo motu revision can be exercised by the Commissioner only if, on examination of the records of any proceedings under this Act, he considers that any order passed therein by the Income-tax Officer is 'erroneous insofar as it is prejudicial to the interests of the revenue'. It is not an arbitrary or unchartered power. It can be exercised only on fulfilmen....
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....dicial power vested in him in accordance with law and arrived at conclusion and such a conclusion cannot be termed 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. ****** We may now examine the facts of the present case in the light of the powers of the Commissioner set out above. The Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation on that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. Such decision of the Income-tax Officer cannot be held to be "erroneous" simply because in his order he did not make an elaborate discussion in that regard ........ " (pp. 113-117) 13. When we examine the matte....
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....nal jurisdiction. Since we find in the present case that the AO had carried out inquiry on the issue which the Ld. PCIT holds erroneous for lack of inquiry, the Ld PCIT ought not to have interdicted the assessment order. Therefore, we hold the impugned action of the Ld. PCIT to be without jurisdiction. Accordingly, the impugned order u/s 263 of the Act is set aside; and the assessment order dated 31/03/2013 is restored. 19. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 05/11/2024. ============= Document 1 From the perusal of the cash book, it is found that there is fabrication in cash book. Ilence, a show cause notice dated 11.03.2016 was issued to the assessee which is re-produced as under :- Cash Transaction Model Exims- Unit-Il Date Description Debit Credit 01.04.2010 Opening Balance 8,00,079/- 07.04.2010 Cash received 7 Partners (1 lacs cach) 7,00,000/- 07.04.2010 Salary & wages 13.03.198/- 20.04.2010 Cash received 3 Partners (1 lacs each) 3,00,000/- 05.05.2010 Bank 15,00,00/- 07.05.2010 Salary & wages 11,03,502/- 07.06.2010 Bank 10,00,000/- 22.06.2010 Bank 7.50,000/- 07 & 11.06.2010....
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....2010 & 29.09.2010 and provision of salary payable was made on 31.08.2010. 5. That on 24.09.2010 available cash balances in both the units namely Unit I & Unit IOI the cash balances of Rs. 4 laes and Rs. 21 Lacs were paid to one of partner Mr. Mehtab Alam and entries were made reflecting in audited cash books of the answering assessec. copies of which has already been annexed along with reply dated 01.12.2015 and thus on your records. In view of above explanation & facts it is crystal clear that there was plenty of cash balance available in audited books of accounts of the answering assessee. which was handed over to one of the partner Mr. Mehtab Alam to purchase raw hides as explainest here in above at Para 5 and querries raised vide show cause notice under teletence is saturned. We have discharged our responsibility as alleged and no addition is required. In view of the above explanations needful may be please done at your end as per provision of law u's 263 of IT Act, 1961. From analysis of the submission of the assessce. Following facts of reached out :- 1. "The assessce submission that audited cash book available with the assessee reflects the different figures and ....