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TMI Blog2015 (8) TMI 1296X X X X Extracts X X X X X X X X Extracts X X X X ..... on commission/incentive on prepaid cards. No reply seems to have been given. Assuming for arguments sake, that it is not necessary to mention everything in the order but nothing has been field before us to show that relevant question on this issue was asked by the Assessing Officer and replied were also given. Therefore, it is a clear case of non-enquiry in respect of this issue. The Ld. CIT-DR has correctly submitted that Assessing Officer has merely set up a preamble on this issue in the first para but has not made any enquiry in this respect. In this regard we may mention that mere non enquiry would also render a particular order passed by lower authority as erroneous and prejudicial to the interest of Revenue. No doubt that Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. (2000 (2) TMI 10 - SUPREME Court ) has held that if Assessing Officer has taken a particular view which is legally possible then such order cannot be held to be erroneous and prejudicial to the interest of Revenue. However, as we have seen above, this is a case of non-enquiry and, therefore, it cannot be said that Assessing Officer has taken a particular view.. In view of the above discussi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t' basis and the Appellant had duly deducted tax u/s 194H of the Act on the commission paid to the pre-paid distributors. 4. Brief facts of the case are that a proposal was put up by ACIT (TDS) Chandigarh before the Commissioner for revising the order u/s 263. On the basis of proposal, Ld. Commissioner issued a show cause notice to the assessee pointing out that issue regarding TDS on commission paid in view of section 194H was not considered by ACIT (TDS). The assessee was provided with an opportunity of being heard. In response, the assessee filed a detailed reply which has been reproduced by Ld. Commissioner at pages 2 to 8 of his order. In this reply it has been submitted that for exercising power u/s 263 it has to be established that order passed by the authority is erroneous as well as prejudicial to the interest of Revenue and has led to loss to the Revenue. Since these ingredients are not there, therefore, no revisionary order u/s 263 can be passed. Ld. Commissioner examined these submissions and did not find force in the same for which he has given the following reasons: 1. That on examining an scrutiny of the assessment record, I find that the assessing office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on discount/commission paid to the vendors against pre paid sim card/recharge voucher during these years. 5. Before us Ld. Counsel for the assessee referred to page 1 of the paper book, which is copy of the notice issued by the Income Tax Officer (HQ). He pointed out that in this notice it has been mentioned that proposal has been put by ACIT (TDS) u/s 263 because issue of TDS on prepaid sim card u/s 194H was omitted to be verified. He submitted this is totally wrong and in this regard he referred to the order passed u/s 201 and referred to first para of the order and pointed out that it has been clearly mentioned that from the details furnished by the assessee-deductor company that the person responsible of the assessee company has not deducted the tax at source from the payment made towards commission/incentive of pre paid cards as required u/s 194H. From this observation, it becomes clear that issue was duly examined by the ACIT (TDS). He further submitted that under section 263 the Commissioner was required to indicate in the notice that order passed by the lower authorities was erroneous and prejudicial to the Revenue but no such mention has been made in the notice. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce between 'verify' and 'omitted'. 9. On the other hand Ld. DR submitted that there is no need to issue any notice before assuming jurisdiction u/s 263 of the Act. He contended that Assessing Officer has simply set up a preamble in the order u/s 201 regarding non-deduction of tax u/s 194H but no query was raised in this regard and no replies were file. Therefore, it is a clear case of non-application of mind by the Assessing Officer. Once this defect was noticed, the Assessing Officer put up a proposal for revision u/s 263 of the Act which was examined by the Commissioner and then he directed to issue a notice. In this regard he filed copies of the noting sheets from the folder of the Commissioner which shows that proposal was approved on 26.4.2012. As far as the date of notice is concerned, it is a normal practice with the lower staff to prepare all the papers including notice before putting up before the senior officer and notice was prepared on 23.4.2012 but the same was dispatched later on after approval of the Commissioner was obtained. 10. He contended that there is no force in the submissions that Assessing Officer has taken one of the possible views. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Officer. The jurisdiction of the Commissioner to proceed under section 33B is not dependent on the fulfilment of any condition precedent. He is not required to give any notice before commencing the inquiry. All that he is required to do, before reaching his decision and not before commencing the inquiry, is to give the assessee an opportunity of being heard and make or cause to make such inquiry as he deems necessary. These requirements have nothing to do with the jurisdiction of the Commissioner. They pertain to the region of natural justice. Breach of the principles of natural justice may affect the legality of the order made but that does not affect the jurisdiction of the Commissioner. The above decision makes it absolutely clear that there was no requirement of giving any notice and, therefore, there is no merit in the contention pointing to various defects in the notice. No doubt this decision was rendered u/s 33B of the old Act i.e. Income Tax Act, 1922. Section 33B of this old Act reads as under:- The Commissioner may call for and examine the record by any proceeding under this Act and if he considers that any order passed therein by the Income-tax Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Denning. M R, held that for the purpose of just determining whether there is a prima facie, case or not and for arriving at a sort of preliminary decision, principles of natural justice are not applicable. There is a great difference between a Tribunal which has to decide the rights and wrongs of the parties and one which has to just determine simply whether there is or there is not a prima facie case. Applying the above principles to the procedure under section 263, the Commissioner would be justified in initially issuing a notice to the assessee on a prima facie or tentative impression he may not formed on the materials he had collected; but certainly principal of natural justice would be violated if, before forming his final conclusion and before his passing the final order, under section 263, he does not place all the materials he has gathered before the assessee and give him a full chance of rebutting or explaining. In CIT v. Electro House, the Supreme Court held that section 263 (unlike section 148 corresponding to section 34 of 1922 Act) does not require any notice to be issued by the Commissioner before he assumes jurisdiction to the Commissioner to proceed under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing material to the notice of the CIT of initiation of revision proceedings. The only rider given by the High Court was that Commissioner must apply his mind to the material placed before him. Similar view has been taken by Hon'ble Allahabad High Court in the case of Jagdish Kumar Gulati v. CIT [2004] 269 ITR 71. We have verified the record and it is clear that when the proposal was put up before the Ld. Commissioner, the same was approved by the Ld. Commissioner on 26.4.2012. No doubt the notice is dated 23.4.2012 but we are satisfied with the reasoning given by Ld. DR that notices are also prepared simultaneously with the proposal. Further verification of the record shows that notice was dispatched only on 27.4.2012 by speed post i.e. after obtaining the approval of the Ld. Commissioner. In any case the assessee cannot object to this technicality because proper opportunity of being heard was provided to the assessee which has been duly availed and detailed reply was submitted before the Ld. Commissioner after various hearings on 28.3.2013. The assessee has filed detailed submissions which have been reproduced by the Ld. Commissioner at pages 2 to 8 of his order. Therefore, cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrutiny of the assessment record, I find that the assessing officer has omitted to have dealt with the issue of discount/commission paid on prepaid/recharge vouchers liable for TDS u/s 194H of the I.T. Act. This fact has been admitted by the Assessing Officer himself who passed order u/s 201(1)/201(1A) for all these years. Therefore, the orders passed by the AO are erroneous. Since, the AO has not deemed the assessee an assessee in default for not having deducted TDS on the payments made as discount/commission to the vendors against prepaid sim cards/recharge vouchers, despite the fact that on the postpaid sim cards the assessee has been deducting tax at source 194H and also having not charged the mandatory interest u/s 201(1A) for not deducting tax at source on the deductible amount paid by way of discount/commission to the vendors. Hence, the orders passed for all these years by the AO are prejudicial to the interest of revenue. I am, therefore, satisfied that the provisions of section 263 of I.T. Act, 1961 are attracted for all these years. 17. In our opinion it would be a case of splitting of hair if we try to distinguish between the expression 'verified' used in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easoning for this proposition has been explained by Hon'ble Delhi High Court in the case of Gee Vee Enterprises v. Addl. CIT [1975] 99 ITR 375 in the following para:- It is not necessary for the Commissioner to make further inquiries before cancelling the assessment order of the Income-tax Officer. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the case the Income-tax Officer should have made further inquiries before accepting the statements made by the assessee in his return. The reason is obvious. The position and function of the Income-tax Officer is very different from that of a civil court. The statements made in a pleading proved by the minimum amount of evidence may be adopted by a civil court in the absence of any rebuttal. The civil court is neutral. It simply gives decision on the basis of the pleading and evidence which comes before it. The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s case (supra). Therefore, this decision was no more in existence rather the decision rendered by Hon'ble Delhi High Court was against the assessee. The second decision rendered by Hyderabad Bench of the Tribunal was decided on February, 26, 2009 and in that decision the Hyderabad Bench has mainly relied on the decision of Delhi Bench which already stands reversed. Further, there was another decision by the Hon'ble Kerela High Court in one of the group company of assessee in case of Vodafone Essar Cellular Ltd. (supra) wherein it was clearly held as under:- Held, dismissing the appeal, that the SIM card was what linked the mobile subscriber to the assessee's network. Therefore, supply of SIM card was only for the purpose of rendering continued services by the assessee to the subscriber of the mobile phone. The position was the same so far as recharge coupons or e topups were concerned which was only air time charges collected from the subscribers in advance. There was no sale of any goods involved as claimed by the assessee and the entire charges collected by the assessee at the time of delivery of SIM cards or recharge coupons were only for rendering services to u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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