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TMI Blog2013 (7) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... Initiating proceedings u/s 201(1A) – CIT directed the Assessing Officer to initiate proceedings u/s 201(1A) – Held that:- Assessee deducted tax but had defaulted in remitting the same into government account – Proceedings for assessment and proceedings for levy of interest u/s 201(1A) are distinct and separate proceedings – Assessment order passed u/s 143(3) cannot be held to be erroneous and prejudicial to the interest of revenue because of non initiation of proceedings u/s 201(1A) – CIT has no jurisdiction to direct the Assessing Officer to initiate proceedings u/s 201(1A) – Decided in favor of assessee. - ITA No.953/Hyd/2008, ITA No.1202/Hyd/2011 - - - Dated:- 28-6-2013 - Shri Chandra Poojari And Shri Saktijit Dey,JJ. For the Petitioner : Shri A. V. Raghu Ram For the Respondent : Smt. V. Madhuvani ORDER Per Saktijit Dey, J. M:- ITA No.953/Hyd/2008 filed by the assessee, is directed against the order dated 28-3-2008 of CIT passed u/s 263 of the Act while ITA No.1202/Hyd/2011 filed by the department is directed against the order dated 31-3-2011 of CIT (A)-VI, Hyderabad, both pertaining to the assessment year 2003-04. ITA No.953/Hyd/2008 assessee's appeal:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een examined by the Assessing Officer. vi) There is discrepancy between the addition made to plant and machinery which has not been examined by the Assessing Officer. vii) Interest accrued but not paid to the tune of Rs.1,28,885/- should have been disallowed u/s 43B of the Act. viii) The Assessing Officer should have initiated proceedings u/s 201(1) of the Act due to failure on the part of the assessee to deduct tax at source. 6. In reply to the show cause notice issued by the CIT, the assessee made his submissions objecting to the initiation of proceedings as well as on the merits of the issues, the CIT however passed an order u/s 263 of the Act on 28-3-2008 setting aside the order of assessment by holding it to be erroneous and prejudicial to the interest of revenue on the following grounds:- "1. The balance-sheet of the assessee as at 31-3-2003 was showing unsecured loan of Rs.10 lakhs. On query made, it was submitted by the assessee that the loan was from M/s K. Paramanda Reddy Co. When the CIT called for the assessment records of M/s K. Paramanda Reddy Co., and initiated proceedings in case of M/s K. Paramanda Reddy Co., u/s 263 of the Act, it was noticed M/s K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntative for the assessee submitted that assessee had furnished all the details with regard to the unsecured loan of Rs.10 lakh as well the sub-contract receipts. In this context he referred to replies submitted before the Assessing Officer. The learned authorised representative for the assessee submitted that the Assessing Officer having considered all the details and passed the assessment order after proper application of mind, the exercise of power u/s 263 is without any jurisdiction. The learned authorised representative for the assessee submitted that the CIT in course of proceedings u/s 263 of the Act can only consider the assessment record as on the dale of completion of the assessment. However, while considering the issue of unsecured loan, the CIT has exceeded his jurisdiction by examining the balance-sheet of M/s. Paramananda Reddy Company which is not part of the assessment records of the assessee. Therefore, the proceedings u/s 263 is vitiated. 8. The learned Departmental Representative, on the other hand, strongly supporting the order of the CIT submitted that the issues on which the assessment order was held to be erroneous and prejudicial to the interests of reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usion that the amount of Rs.32,28,292/- was after adjusting the loan amount of Rs.10 lakh advanced to the assessee. He therefore directed the Assessing Officer to bring to tax the sub-contract payment of Rs.32,28,292/- the unsecured loan of Rs.10 lakhs. It is the contention of the learned authorised representative for the assessee before us that the there is no non disclosure of fact with regard to sub contract payment receivable of Rs.32,28,292/- or the unsecured loan of Rs.10 lakhs is also not fictitious. Only because of different treatments given by the assessee and M/s. K. Paramanand Reddy Co., in their respective books of accounts the CIT has come to an erroneous conclusion that there is excess of assets over liabilities. He further submitted that had the CIT given a proper opportunity, the assessee could have reconciled the figures by producing books of accounts and other evidences. After considering the submissions of the parties, we are of the view that the CIT was not correct in straight away directing the Assessing Officer to add the amount of Rs.42,28,292/- without affording an opportunity to the assessee to reconcile the figures by producing books of accounts and supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l verify the fact and decide the same after affording a reasonable opportunity of being heard to the assessee. 15. In ground No.12, the assessee has challenged the direction of the CIT to consider the disallowance of an amount of Rs.1,22,885/- being interest accrued but not paid by applying the provisions of section 43B of the Act. 16. We have head the parties on this issue. It is the contention of the learned authorised representative for the assessee that section 43B has no application to the amount of Rs.1,22,885/-. After considering the submissions of the parties, we remit this issue to the file of the Assessing Officer who shall take a decision after affording a reasonable opportunity of being heard to the assessee. 17. In ground No.13, the assessee had challenged the direction of the CIT for initiating proceedings u/s 201(1A) of the Act. 18. After going through the order of the CIT, we find that the assessee deducted tax but had defaulted in remitting the same into government account. The CIT therefore directed the Assessing Officer to initiate proceedings u/s 201(1A) for levy of interest. 19. We have considered rival submissions of the parties and perused the mater ..... X X X X Extracts X X X X X X X X Extracts X X X X
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