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TMI Blog2011 (5) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... t under section 143(3) after issue of questionnaire under section 142(1) and even though full details had been filed by the assessee and material was placed on record? 2. With the consent of the learned counsel for the parties, we have heard the matter finally at this stage. 3. The assessee company is engaged in export and local trading of various handloom products, including readymade garments. It filed its return of income on 1-11-2004 declaring an income of Rs. 5,26,51,170. The case of the assessee was processed under section 143(1) of the Income-tax Act (for short, "the Act"). Subsequently, the case was selected for scrutiny and a notice under section 143(2) of the Act was issued on 10-10-2005. The Assessing Officer passed the assessment order on 29-11-2006 under section 143(3) of the Act and determined the taxable income at Rs. 5,74,58,752. The Commissioner of Income-tax took cognizance of the matter under section 263 of the Act observing the assessment under section 143(3) of the Act to be erroneous and prejudicial to the interest of the revenue. Accordingly, a notice under section 263 of the Act was issued. Brief reasons assigned in the show cause notice read as under: "F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission paid, the rate of the commission would work out to be very substantial and not 5 per cent as mentioned in the agreement. It is clear therefore that even though some details about the commission were furnished during the assessment proceedings, the Assessing Officer did not examine if the rate and amount of commission was reasonable. There is nothing on record to show if the Assessing Officer has examined whether Gem Photographic India (P.) Ltd. which is private limited company is covered by the provisions of section 40A(2)(b) by enquiring if there are any common shareholder or whether the two concerns are associated in any manner as covered by the provisions of that section." 5. The assessee preferred an appeal against the order of the Commissioner which came to be disposed of by learned Income-tax Appellate Tribunal vide order dated 25-2-2010 which is impugned here before us. 6. With regard to the brokerage, the learned Tribunal noted that the assessee has preferred an appeal before CIT (A) and this could not have been taken up by the Commissioner while exercising his powers under section 263(1) of the Act as per clause (c) Explanation 1. To this extent, the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easons given by the Commissioner for de novo enquiry in this regard was that it was not clear from the record if the Assessing Officer verified the nature and allowability of the general charges. It is true that though the Assessing Officer has not given detailed reasons in this regard, but there is nothing on record to suggest that he did not make any enquiry or applied his mind with regard to the submissions made by the assessee vide its letter dated 14-9-2006. It is seen that details of general charges given by the assessee were submitted as Annexure-H to the Assessing Officer. At the most, it can be said to be a case of inadequate enquiry. In fact, required information was given by the assessee to the Assessing Officer who made the assessment under section 143(3). May be that the detailed reasons of the same were not given by Assessing Officer, but after considering submissions of assessee, he assessed the total income at Rs. 5,74,58,752, as against the declared income of Rs. 5,26,51,170. In this regard, reference can be made to the decision of this Court in CIT v. Sunbeam Auto Ltd. [2010] 189 Taxman 436 wherein it was held as under: "1. We have considered the rival submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. (See Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1 (SC) at page 10). ** ** ** From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualize a case of substitution of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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