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TMI Blog2015 (11) TMI 859X X X X Extracts X X X X X X X X Extracts X X X X ..... emanding the matter to the Assessing officer is of no consequence, particularly when the CIT himself has reframed the assessment. In the facts and circumstances of the present case the CIT has not left any scope for the Assessing officer to redo the assessment or pass a fresh assessment order. It is also observed that Ld. CIT has directed the Assessing officer to give an opportunity of being heard to the assessee before passing the fresh assessment order. In our view, giving opportunity of being heard to the assessee by the Assessing officer is also meaningless, particularly when the Ld. CIT himself has reframed the assessment order. The directions given by the Ld. CIT in para 7 of the impugned order are also contrary to the settled position of law. When the Ld. CIT directs the Assessing officer to pass a fresh assessment order, the only proper course for the Commissioner was not to express any final opinion as regards to the controversial points. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... Iron and Trading Co. v CIT (2003) 131 Taxman 535 (P&H) and the decision of ITAT, Kolkata Bench in Zamirun Bibi Vs. CIT in ITA No. 661/Kolkata/2011 dated 1.9.2011 for the proposition that merely because the order of the Assessing officer was cryptic would not be a sufficient reason to brand the assessment order as erroneous and prejudicial to the interest of Revenue. 4. The Ld. CIT observed that on some of the issues raised in the show cause notice u/s 263(1) of the Act, the Assessing officer had also raised queries and reply / explanation was filed by the assessee to those queries. He has also stated that the Assessing officer had noted that on 24.1.2013, the assessee had produced books of account, bills and vouchers which were verified and certain discrepancies were noted and certain disallowance were made on account of the same. However, in respect of some of the issues, the Ld. CIT was of the view that the Assessing officer has neither examined the issue nor applied his mind to the issue and has taken a decision contrary to law and, therefore, the assessment order was erroneous and also prejudicial to the interest of Revenue. The Ld. CIT set aside the assessment order with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As a matter of proof we are hereby producing before you the bills of the above said material of the suppliers for your reference. Copy of Mitti purchased account also enclosed for your reference. So,. Valuation of closing stock given by us is very much correct, The goods supplied to us from 16.03.2010 to 31.03.2010 minus closing stock of that goods included in work done figure of ₹ 22,00,000/-." 6. From the above reply it is clear that the goods have been supplied to the assessee on various dates and after 15 days the said party raised the bills against the assessee. It was also contended by the assessee that the bills of Diesel, Dust, Rori, Bricks & Reta / Sand etc. debited in its account on 31.3.2010 did not mean that the goods were supplied to the assessee from 16.3.2010 to 31.3.2010. It appears that Ld. Commissioner has not properly appreciated the explanation of the assessee. Shri Ashwani Kumar, Ld. Counsel for the assessee vehemently argued that the points / query raised by the Ld. Commissioner have been duly looked into by the Assessing officer during the assessment proceedings. The Assessing officer was satisfied with the record produced before him and explanation g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling this requirements cannot be said to be erroneous and prejudicial to the interest of Revenue. It is apparent from the records that the assessee submitted it reply and also furnished the requisite information or details to substantiate its claim during the assessment proceedings. The Assessing officer having considered all these issues on which the assessment order is revised u/s 263, the exercise of powers u/s 263 is bad in law. It is also true that if an enquiry is made by the Assessing officer and then objection of the CIT is that such inquiry is not adequate, the CIT would have no jurisdiction u/s 263 of the Act to revise the order of the Assessing officer. In our considered view the Assessing officer has made proper and desired enquires before passing the assessment order. Therefore, the view taken by the Ld. CIT cannot be held justifiable. While taking such a view we are forfeited by the decision of Hon'ble Bombay High Court in the case of CIT Vs. Gabrial India Ltd (1992) 203 ITR 108 (Bombay) wherein it has been held that ITO had made enquires in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation in that regard by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee is doing the business of government contractor and required storage space for the storage of construction material, so assessee purchased the land measuring 2 acres 3 kanals and 20 marlas on Gurgaon to Badli Road, Village Budheda in the month of June 2009 for amounting to ₹ 66.71 lakhs. Later on, the assessee installed Mixing Batching Plant at the site. Accordingly, it was contended by the assessee that the above land was very much used for business purpose during the year under consideration. As regards the purchase of the machinery for ₹ 20 lakhs from M/s Bhawani Engineers, Ahmedabad it was contended that these plants have been purchased F.o.R at Gurgaon work site, so no transport charges etc. were paid by the assessee. It was also stated that plant runs on diesel and diesel expenses amounting to ₹ 56.83 lakhs were incurred during the year under consideration. The Ld. Commissioner observed that the details of the purchase of land must have been submitted during the course of assessment proceedings, however, no query was either raised by the Assessing officer nor put forth by the assessee to show that the land was used for the purpose of assessee's bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the proceedings by pointing out what he saw as glaring illegalities in the assessment order which was subjected to revision proceedings, but what he concluded was that the such assessment order was passed without making proper inquires. The Commissioner finally revised the order for want of proper and desired inquires then shifted the stand, which is not permissible under the provisions of law. As we have already observed hereinabove that the order of the Assessing officer may brief and cryptic but that by itself is not a sufficient reason to brand the assessment order as erroneous and prejudicial to the interest of Revenue. Accordingly, we hold that the Commissioner was not justified in directing the Assessing officer to disallow interest u/s 36(1)(iii) in respect of land and mixing plant and depreciation in respect of mixing plant. In view of the detailed findings given in respect of point No.1, ground No.2 (a), the assessment order cannot be held erroneous and prejudicial to the interest of Revenue in respect of issues mentioned in ground No. 2(b) and (c) of the appeal. 10. In the impugned order, the Ld. Commissioner has also directed the Assessing officer to disallow deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cutta Hon'ble High Court in the case of CIT Vs. S.R. Batliboi & Associates in ITA No. 190 of 2009 vide its order dated 24.2.2015 held that Section 185 read with Section 184, although worded in emphatic terms, is not intended to be a mandatory provisions. The question before the Hon'ble High Court was as under:- "Whether the Income Tax Appellate Tribunal was justified in upholding the deletion of the disallowance amounting to a sum of ₹ 4,49,60,000/- on account of remuneration of the partners under section 185 of the Income Tax Act when the instrument of change in partnership was not filed along with the return? 11. In the above case, the Tribunal has made the following observations:- "We observe that there was a change in partnership deed with effect from 1st August, 2004 and the assessee was required to file a certified copy of the partnership deed along with the return as per section 184 (4) of the Act. Section 185 of the Act provides that if a firm does not comply with the provisions of Section 184 for any assessment year, firm shall be so assessed that no deduction by way of any payment of interest, salary, bonus, commission or remuneration, by whatever name called mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o in accordance with the limit prescribed under section 40 (b) of the Act. The defect in not filing the copy of the change in instrument of partnership deed along with the return is a curable defect only through section 184(4) provides that the same should be furnished along with the return of income." 12. In the above case, the Tribunal observed that furnishing of certified copy of the revised instrument of partnership deed as per seciton184(4) of the Act is procedural in nature, though the word 'shall' is stated but the filing of the instrument of partnership deed is required by the Assessing officer to ascertain the genuineness of the existence of the partnership and to ascertain the share of each of the partner as to whether the remuneration being paid is in accordance with the limit prescribed u/s 40(b) of the Act. In this case the Tribunal observed that the filing of the revised/changed instrument of partnership deed along with the return is directory in nature and it can be filed at any time before completion of the assessment by the A.O. The Tribunal further observed that we do not agree with the contention of the Revenue that after amendment by the Finance Act 2003, non f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is a return of income, profits or gains or of loss must be considered as having been made within the time prescribed if it is made within the time specified in section 22(3). In other words if section 22(3) is complied with section 22(1) must also be held to have been complied with. If compliance has been made with the latter provision the requirements of section 22(2A) would stand satisfied." Mrs. Das De has not disputed before us that the assessee could have filed his return along with the certified copy of the instrument of change within the period prescribed by sub- section 4 of section 139. In that case, the return would have been perfectly valid and there would have been no violation of sub-section 4 of section 184. But because the assessee filed the instrument of change before the day on which the assessee could have filed under sub-section 4 of section 139, the return is to be treated as invalid, is a submission which we are in a position to accept. The records reveal that a prayer was made before the assessing officer on behalf of the assessee to treat the return as a defective return because the instrument of change in the partnership deed was not annexed to the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held as under:- "7. In light of the discussion above, the assessment order dated 28.01.2013 passed by the AO is, therefore; set aside to the AO on the aforesaid issues with the direction to the AO to pass a fresh assessment order after making an addition of ₹ 5,95,970/- on account of understatement of closing stock, disallowance of interest u/s 36(l)(iii) in respect of land and mixing plant and of depreciation in respect of mixing plant, and disallowance of deduction on account of interest, salary etc. paid to the partners. Opportunity of being heard shall be provided to the assessee before passing the fresh assessment order." 17. From the above, it is abundantly clear that CIT has exceeded its jurisdiction in virtually reassessing the case. It is true that the revisional authority itself has wide power to examine the case whether the decision has been erroneous and prejudicial to the interest of Revenue and in exercise of these power modifications are permissible, and furthermore that if the Commissioner comes to this conclusion that the assessment is required to be redone, that such direction can still be issued to the Assessing officer . However, it is trite law that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se in which the Ld. CIT has exceeded his jurisdiction in reassessing the case. Even the direction given by the CIT to the Assessing officer to provide an opportunity of being heard to the assessee is also of no consequence. 18. It is relevant to observe here that while deciding the appeal on merits we have concluded that the assessment order passed by the Assessing officer cannot be held to be erroneous and prejudicial to the interest of Revenue, therefore, the order passed u/s 263 of the Act is not maintainable. At the same time, we have also concluded that the impugned order is not tenable on the ground that the Ld. Commissioner has exceeded his jurisdiction in virtually reassessing the case instead of remanding the matter to the Assessing officer for fresh assessment order without recording his final conclusion on the points of issues involved. We also agree with this submission of the Ld. Counsel of the assessee that when a fresh assessment is done, there could always be grounds on which one of the parties is aggrieved and the law prescribes a corrective remedy by way of appeal, revision etc. If the CIT who is a highly placed authority of the Revenue, is to exercise the powers ..... 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