9911796707
TMI Blog2015 (9) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... i Kumar Gupta Vs. CIT [2004 (2) TMI 270 - ITAT AGRA ] The fact that the AO issued the questionnaire on several issues and the assessee had responded to the same by filing the information and on consideration of replies from the assessee, the AO held that an amount of ₹ 23,137/- u/s. 40(a)(ia) and an amount of ₹ 1,42,650/- u/s. 40A(3) of the Act held to be disallowable, goes to prove that the AO had applied his mind while passing the assessment order and therefore, we hold that the Ld.CIT is not correct in exercising the jurisdiction in the present case under the provisions of Section 263 - Decided in favour of assessee. - ITA No. 1307/Hyd/2014 - - - Dated:- 27-5-2015 - Saktijit Dey, JM And Inturi Rama Rao, AM, JJ. For the Appellant : Shri T Chaitanya Kumar, AR For the Respondent : Smt K Kamakshi, CIT-DR ORDER Per Inturi Rama Rao, AM. This is an appeal filed by the assessee-appellant against the order of the Ld. Commissioner of Income Tax, Vijayawada, dated 26-03-2014 for the AY. 2009-10 passed exercising powers u/s. 263 of the Income Tax Act, 1961 [Act] raising the following grounds of appeal: 1. The order of Commissioner of Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sharing ratio of the partners and details of the withdrawals made by the partners; vi) verify the cash withdrawals of ₹ 18,80,000/- from the bank account of CC A/c of SBH. 3. In response to the show cause notice, the assessee vide letter dt. 11-12-2012 submitted as under: Sub: - Revision U/s 263 of the I.T. Act.. 1961, - Scrutinv Assessment order Passed U/s 143(3) of I.T. Act, 1961, Dated 31/05/2001- A.Y.2009-2010 Reply to Show cause notice - Reg. Ref: - Your letter dated 29/10/2012. With reference to the above we submit the following Para wise remarks. 1. GROSS PROFIT VARIANCE:- The Gross Profit for the A.Y 2008 .. 2009 was 6.1 % on o turnover of ₹ 1,99,11,667/- at ₹ 12,41,485/- while the Gross Profit reported for the AY 2007- 2010 works at 5.87% on a turnover of 2,53,61,201/- which works out to 14,91,076/-, Thus there is a difference of 0.23% which works out to ₹ 58,377/- Against the above observations we submit that the Assessing officer has completed the assessment u/s 143(3) accepting the book of accounts. Hence he was not done anything erroneous and prejudicial to the interest of revenue. The goods being consumer i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay expenses of the business in cash and some payments were made by barer cheques up to permissible limits U/s 40A(3). The assessee does not have any other activity, the incomes of which are exempt. The assessee has not diverted any amounts to any other activity. The amounts of each withdrawals being very small, this aspect need not be doubted. As such we request you to drop the proceedings U/s. 263. Thanking you, Yours truly 4. After considering the replies filed by the assessee-firm, the CIT in exercising his powers u/s. 263 of the Act, passed the impugned order vide para 4.4 to 7.2 as under: 4.4. The above submissions are considered carefully. The assessee has not admitted any closing stock of OST Toor Dal for the fy 2007-08. However, it has admitted opening stock OST Toor Dal at ₹ 3,16,882/- in the fy 2008-09. The assessee has stated that it has shown OST Toor Dal closlnq stock at ₹ 2,16,857/- on 31/03/2007. It was also shown in Trading a/c and balance sheet for the ay 2008-09. The assessee further states as there were no purchases or no losses, the closing stock was valued at enhanced price at ₹ 3,16,882/- on 31/03/2008 and shown the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the unsecured loans, the assessee has furnished confirmation letter before the AD from Mr./Ms. Hemanth Sarada, Bindu Sarada, Nikitha Sarada. However, the confirmation letters do not contain the dates on which the said loan was given, cheque no. etc. The AD failed to examine these details and also the applicability of Sec.269SS of the Act. 6.3. It is further stated that all the creditors are students studying 1st year Intermediate, 2nd year Degree and 3rd year Degree. The sources in the hands of the creditors were not verified at the time of assessment. The assessee has replied that the depositors are Son and Daughters of the assessee and these amounts represent gifts received from relatives on different occasions. As a parent he had safe custody of this amount and brought into business during the year. As such, the provisions of Sec.269SS do not apply. The explanation given by the assessee is vague. The AD failed to examine and apply the provisions of Sec.68 and 26955 in accordance with law. 7. The final issue in this case is extracted as under; As per the cc a/c copy of the assessee maintained with SBH, it is noticed that huge amounts were withdrawn by way of cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set aside u/s. 263. 7. We heard the rival parties and perused the material on record. On perusal of page No. 9 to 16 of the Paper Book, we find that the issues raised by the Ld.CIT in his show cause notice were examined by the AO. However, the AO had not made any mention in the assessment order. After examining those details, he felt that no further enquiry was required and took a view that these are all allowable expenditure. Even before the CIT, appellant had produced cogent material rebutting the contentions of the CIT. The CIT without assigning any reasons as to why the explanation tendered by the appellant is not acceptable had simply set aside the order for denovo assessment, on the issues raised in the show cause notice. The sum and substance of the order of the CIT is that the AO failed to conduct enquiry on issues raised. But from the material on record, it is clear that the AO made enquiries on the very same issues during the course of assessment proceedings and merely because, the returned income is lower, the assessment order cannot be termed as erroneous. It is only after the examination of detailed information filed during the course of assessment proceedings that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f inquiry that such a course of action would be open. In Gabrial India Ltd. (supra), law on this aspect was discussed in the following manner : ........From a reading of sub-s. (1) of section, it is clear that the power of suo motu revision can be exercised by the CIT only if, on examination of the records of any proceedings under this Act, he considers that any order passed therein by the ITO is 'erroneous insofar as it is prejudicial to the interests of the Revenue'. It is not an arbitrary or unchartered power. It can be exercised only on fulfilment of the requirements laid down in sub-s. (1). The consideration of the CIT as to whether an order is erroneous insofar as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the CIT 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 CIT cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessment order would not lead to a conclusion that no mind has been applied to it . iv. Delhi High Court in the case of CIT Vs. Anil Kumar Sharma [335 ITR 83] (Delhi) held that Once such application of mind is discernible from the record, the proceedings u/s. 263 would fall into the area of the Commissioner having a different opinion . v. In the case of CIT Vs. Max India Ltd., [295 ITR 282 (SC)] it was held that It is a settled principle of law that even after examining the details, the AO took a view, which is a possible view, then it cannot be treated that the order passed by the AO is erroneous and prejudicial to the interest of Revenue . 8. Respectfully following the ratio laid down in the cases mentioned supra, in the present case, it cannot be held that the AO had not applied his mind on the issue nor had made no enquiry. The fact that the AO issued the questionnaire on several issues and the assessee had responded to the same by filing the information and on consideration of replies from the assessee, the AO held that an amount of ₹ 23,137/- u/s. 40(a)(ia) and an amount of ₹ 1,42,650/- u/s. 40A(3) of the Act held to be disallowable, goes t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
