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2014 (12) TMI 1174 - AT - Income TaxRevision u/s 263 - as per CIT(A) the amount has been split into two parts so as to avoid the attraction of provisions section 40A(3) - Held that - The copies of the ledger account of the Lorries demonstrate that the payment in question has been made in different points of time. The advance has been paid to the lorry at the first instance and thereafter when the delivery of the goods has been made the balance amount has been paid. This fact is reflected by way of passing of journal entries wherein the lorries have been credited with the balance payable on the day of payment of advance and it was on subsequent date that the balance has been paid after deducting TDS. This journal entry has not been properly understood by the ld CIT. This is clear from the show-cause notice where it states that the amount has been split into two parts so as to avoid the attraction of provisions section 40A(3). This is factually incorrect. After the assessee has demonstrated before the ld CIT that the manner in which the entries in the books have been passed he at page 5 acknowledged that the amounts were split into two parts and one was taken as advance and was given to lorry owners and the balance was paid subsequently by way of cash. This means the ld CIT admits after enquiry that the version of the assessee is correct. While so we don t find any justification in the ld CIT directing the AO to verify the details filed by the assessee and determined whether they are factually correct. When the enquiries conducted by the ld CIT have not thrown up any material to demonstrate that the order of the AO was erroneous and prejudicial to the interests of the revenue the ld CIT should have dropped the proceeding u/s.263.The Ld CIT also cannot without himself conducting enquiries and coming to a conclusion on the basis of material found as a result of enquiry give direction to the AO to conduct fresh verification. The assessee has satisfactorily explained the issues raised by the ld CIT and in such circumstances it cannot be said that the order of the AO is erroneous or prejudicial to the interest of the revenue. - Decided in favour of assessee. Deduction u/s.80C - Held that - Coming to deduction u/s.80C of the Act it is not the case of the ld CIT that the AO has not verified the claim of the assessee. In fact the assessee has submitted the details to the ld CIT and ld CIT on examination of such details has not recorded any adverse conclusion. A simple direction is given to AO to verify the claim of the assessee. Such a direction is erroneous for the reason that the ld CIT has not recorded that any prejudice is caused to the revenue.- Decided in favour of assessee. Insurance commission - tds u/s 194C or 194D - Held that - On the issue of alleged insurance commission earned by the assessee M/s. Bhaskar Prakashan Pvt. Ltd. has clearly explained that a mistake has occurred while mentioning the section 194D instead of 194C and the commission was never received by the assessee. Despite of such categorical confirmation the ld CIT directed the AO to verify this claim of the assessee without recording a finding that the order of the AO on this issue is either erroneous or prejudicial to the interests of the revenue. In our view when proper material has been furnished before the ld CIT and the ld CIT has examined the same he cannot without recording specific finding that the order is erroneous and prejudicial to the interests of the revenue on certain specific aspects invoked his power u/s.263 - Decided in favour of assessee.
Issues Involved:
1. Application of Section 40A(3) of the I.T. Act, 1961. 2. Deduction under Section 80C. 3. Discrepancies in TDS credit. 4. Genuineness of payments. 5. Direction for further verification by the Assessing Officer (AO). Issue-wise Detailed Analysis: 1. Application of Section 40A(3) of the I.T. Act, 1961: The Ld. CIT issued a notice proposing to revise the assessment order because the AO did not apply the provisions of Section 40A(3), despite the assessee making payments exceeding Rs. 20,000 by splitting them into two amounts. The Ld. CIT concluded that the payments were made to lorry owners and split into advance and subsequent cash payments, directing the AO to verify the genuineness and mode of these payments for disallowance under Section 40A(3). However, the Tribunal found that the AO had already conducted detailed verification and the Ld. CIT's direction for further verification was unjustified. The Tribunal held that the Ld. CIT cannot use revisionary powers to direct re-verification without demonstrating that the AO's order was erroneous and prejudicial to the revenue. 2. Deduction under Section 80C: The Ld. CIT directed the AO to examine the submission regarding the LIC premium paid and to determine the correct assessment year for the deduction. The Tribunal noted that the Ld. CIT did not record any adverse conclusion after examining the details provided by the assessee. The Tribunal held that the Ld. CIT's direction was erroneous because he did not establish that the AO's order was prejudicial to the revenue. 3. Discrepancies in TDS credit: The Ld. CIT directed the AO to verify whether the receipts from TDS certificates issued by M/s. Bhaskar Prakashan Pvt. Ltd. were properly accounted for by the assessee. The Tribunal found that the assessee had provided a confirmation letter explaining the discrepancy, and the Ld. CIT did not record any finding that the AO's order was erroneous or prejudicial to the revenue. Therefore, the Tribunal held that the Ld. CIT's direction for further verification was unjustified. 4. Genuineness of payments: The Ld. CIT raised concerns about the genuineness of payments to lorry owners, noting that only one broker appeared before the AO during enquiries. The Tribunal observed that the Ld. CIT acknowledged the payments were split into advance and subsequent cash payments, and the AO had conducted enquiries with lorry owners. The Tribunal held that the Ld. CIT cannot direct the AO to verify the genuineness of payments without himself conducting necessary enquiries and establishing that the AO's order was erroneous and prejudicial to the revenue. 5. Direction for further verification by the AO: The Tribunal emphasized that the Ld. CIT cannot remand the matter to the AO for further enquiry without conducting necessary enquiries himself and concluding that the AO's order is erroneous and prejudicial to the revenue. The Tribunal cited case laws to support the principle that the Ld. CIT must record specific findings and cannot direct the AO to conduct further enquiries without establishing the error and prejudice. Conclusion: The Tribunal quashed the order passed by the Ld. CIT under Section 263, holding that the Ld. CIT failed to demonstrate that the AO's order was erroneous and prejudicial to the revenue. The Tribunal emphasized that the AO had conducted detailed verification and enquiries, and the Ld. CIT's directions for further verification were unjustified. The appeal filed by the assessee was allowed.
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