2014 (2) TMI 136 - AT - Income Tax

Revision u/s 263 of the Act Held that - The assessee has un-cleared goods and cheque bouncing details and by this he has reconciled the entire figure - It is to be mentioned here that the AO during the course of original assessment proceedings issued notice u/s. 133(6) of the Act calling for information from Mirc Electronics Ltd. and Mirc Electronics Ltd. in turn submitted ledger copy of assessee s account whereby complete purchase, cheque return, goods return are clearly mentioned. Once factually this is the position, there is no issue of revision of the assessment framed by the AO u/s. 143(3) of the Act - the assessee has a full proof case on the issue and the other aspects of the revision order of CIT that the revenue wants to verify these transactions, once the information is called by AO u/s 133(6) of the Act there is no further purpose for verification - the AO has verified the transactions and came to right conclusion. Revision order regarding commission paid Held that - The position that the nomenclature used by the assessee in his statement filed before AO as commission whereas this is only discount on the purchases by various parties - the details were filed before the AO during the course of assessment proceedings originally and even before CIT during the course of revision proceedings - As the assessee has filed complete details before the AO during the course of assessment proceedings and CIT in his revision order has observed that the AO needs verification of the same is without any purpose - It is for the CIT to point out as to what error was committed by the AO in having reached the conclusion accepting the reconciliation statement filed by the assessee qua the bank account of the assessee and purchases made - the commission disclosed by the assessee in a statement filed before AO and explained the same as discount has also been accepted - The CIT having failed to point out any error, no error can be inferred from the order of the AO for the simple reason that they are bereft of details - the revision order passed by CIT u/s. 263 of the Act is without any basis and deserves to be quashed Decided in favour of Assessee.

Summary

Issues:
1. Revision order passed by CIT-XX, Kolkata u/s. 263 of the Income-tax Act, 1961.
2. Discrepancy in transactions with Mirc Electronics Ltd.
3. Non-deduction of TDS on commission payments.

Issue 1: Revision order passed by CIT-XX, Kolkata u/s. 263 of the Income-tax Act, 1961:

The appeal arose from the revision order of CIT-XX, Kolkata under section 263 of the Income-tax Act, 1961. The assessee contested the revision order on the grounds of arbitrariness, lack of evidence of erroneous assessment prejudicial to revenue, and absence of conditions precedent under section 263 of the Act. The original assessment for Assessment Year 2008-09 was completed by the ITO, Hooghly under section 143(3) of the Act. The CIT issued a show cause notice for revising the assessment, citing discrepancies in transactions with Mirc Electronics Ltd. and non-deduction of TDS on commission payments. The CIT passed the revision order based on these issues, leading to the appeal by the assessee.

Issue 2: Discrepancy in transactions with Mirc Electronics Ltd.:

The CIT raised concerns regarding a discrepancy of Rs.2,41,767 in transactions between Mirc Electronics Ltd. and the assessee, pointing to unexplained expenditure under section 69C of the Act. Additionally, the CIT noted the non-deduction of TDS on commission payments to certain entities. The assessee provided a reconciliation statement during the original assessment, clarifying the discrepancies in the transactions. The AO had verified the transactions by issuing a notice under section 133(6) of the Act to Mirc Electronics Ltd., who provided ledger details confirming the purchases, cheque returns, and goods returns. The tribunal found the assessee's reconciliation to be accurate, supported by ledger copies, and concluded that the AO had correctly assessed the situation. The tribunal deemed the revision order by the CIT as baseless and ordered its annulment.

Issue 3: Non-deduction of TDS on commission payments:

The CIT's revision order also questioned the non-deduction of TDS on commission payments made to specific entities. The assessee clarified that these were discounts provided to various parties, not commissions, and had submitted detailed information during the assessment and revision proceedings. The tribunal acknowledged the discrepancy in terminology but found that the details provided by the assessee were comprehensive and had been previously disclosed to the AO and CIT. Despite the AO's brief order, lacking in detail, the tribunal determined that the order was not erroneous or prejudicial to revenue. The tribunal emphasized that the CIT failed to identify any errors in the AO's decision-making process regarding the reconciliation statement and the nature of payments. Consequently, the tribunal ruled in favor of the assessee, deeming the CIT's revision order unfounded and quashing it.

In conclusion, the tribunal allowed the appeal of the assessee, finding no merit in the revision order passed by CIT-XX, Kolkata under section 263 of the Income-tax Act, 1961. The detailed analysis of the discrepancies in transactions with Mirc Electronics Ltd. and the non-deduction of TDS on commission payments revealed that the original assessment by the AO was accurate and did not warrant revision. The tribunal's decision on each issue highlighted the adequacy of the assessee's submissions and the lack of errors justifying the revision order.