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TMI Blog2014 (12) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue - If any one of them is absent CIT cannot exercise jurisdiction u/s 263(1) - every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interest of the Revenue – the amount of freight was included in the bills for supplies received from suppliers - assessee has only reimbursed the freight payment made by the suppliers of the goods - AO has decided that no disallowance u/s 40(a)(ia) of the Act is called for - reimbursement of expenses cannot be said to be payment of freight which may call for deduction of TDS u/s 40(a)(ia) - the view adopted by the AO cannot be said to be unsustainable in law – thus, the exercise of jurisdiction by the CIT u/s 263 is not sustainable - AO has done proper e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,60,850/-) without deduction of tax at source u/s 194C. The assessee was under mandatory obligation to deduct tax at source also as per CBDT Circular No.715 dated 08-08-1995 on such transactions. Since the assessee had not deducted tax at source while making freight charges of ₹ 96,15,109/- the same was not allowable u/s 40(a)(ia) of the I.T.Act the assessment made u/s 143(3) dated 11-11-2011 for A.Y.2009-10 appeared to be erroneous as well as prejudicial to the interest of revenue and proceedings u/s 263 of the I.T.Act was initiated by issuing a show cause to the assessee to explain as to why the assessment made u/s 143(3) for A.Y.2009-10 should not be revised u/s 163 of the I.T.Act as the same is apparently erroneous and prejudicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was no agreement or contract between the assessee and the transporters who were paid by the suppliers directly. The said payment was, therefore, only reimbursement of the expenses incurred by the suppliers on behalf of the assessee on which there was no requirement to deduct tax at source. The AO has applied his mind and has taken a possible view. The assessment, therefore, cannot be said to be either erroneous or prejudicial to the interest of Revenue." The A/R also opined that the Circular No.715 of CBDT dated 08-08-1995 "the purchase transactions do not fall under the ambit of Section 194C, there is no question of deduction of tax at source on the bills raised by the suppliers." Alternatively as per A/R the Circulars issued by the CBDT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of assessment apparently failed to examine these issues. 3.3. In the above circumstances the ld. CIT observed that power u/s 263 of the Act can be exercised even in cases where the issue is debatable. The ld. CIT referred to the decision of the Hon'ble Apex Court in the case of Rampyari Devi Saraogi vs CIT 67 ITR 84 (SC) and several other case laws. The ld. CIT concluded as under : "It is also a trite law that the disclosure of facts by the assessee in the return of income or/and in the course of assessment proceedings cannot give immunity from revisional jurisdiction of the CIT u/s 263. The details that were needed to be filed before the AO appears to be filed only before this office and the A.O. failed to examine and apply his mind t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he paper book wherein the assessee has submitted detail explanation to the AO vide letter dated 31.10.2011 giving the explanation regarding non deduction of tax on freight. The ld. Counsel further referred to the assessment order in para 3 where in AO specifically discussed the disallowance u/s 40(a)(ia) of the Act. In this view of the matter the ld. Counsel submitted that AO has duly considered the issue and applied his mind. Hence he submitted that the ld. CIT cannot exercise jurisdiction u/s 263 of the Act. He also placed before us the copy of the decision of the Hon'ble Gujarat High Court in the case of CIT vs Gujarat Narmada Valley Fertilisers Co.Ltd and the decision of the Hon'ble Apex Court in which SLP filed by the department was re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Apex Court further expounded that every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interest of the Revenue. For example when an ITO has adopted one of the courses permissible in law and it has resulted in loss of revenue or where two views are possible and the ITO has taken one view with which the CIT does not agree it cannot be treated as an erroneous order prejudicial to the interest of the Revenue unless the view taken by the AO is unsustainable in law. 4.3. Now we examine the present case on the anvil of foresaid case law. In the present case we find that ässessee has explained before the AO that the freight payment has not been made by the assessee himself. The amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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