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TMI Blog2016 (9) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... t such payments were for purchase of cotton and the payments were made to the producers. This being an agricultural products such payments would be outside the purview of Section 40A(3) of the Act. The Commissioner, however, found that there were certain discrepancies in the records produced. We notice that the assessee had produced list of hundreds of farmers, producers to whom such payments were made and documents concerning their lands were also produced. Merely because there were some minor discrepancies in some of them would not be sufficient to conclude that the Assessing Officer did not make a proper inquiry. The revisional powers could not have been exercised for making better or further inquiry. - Decided against revenue - TAX APP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer accepted such explanation and limited the disallowance only to 20% of expenditure of ₹ 30,800/- where no such documents have provided. 3. The Commissioner was of the opinion that such order of the Assessing Officer was erroneous and prejudicial to the interest of the Revenue. He, therefore, after hearing the assessee, exercised revisional powers under Section 263 of the Act. He noticed certain discrepancies in the records pertaining to the farmers to whom such payments were made. The Commissioner, therefore, set aside the order of assessment and directed the Assessing Officer to verify the genuineness of the claim of purchases of URD Kapas by making necessary investigation and verification in respect of agricultural land holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he payments are made to the cultivator or grower of such produce. The AO was required to examine this aspect and to verify the claim of the assessee by making necessary enquiry in this regard. If the AO fails to make inquiry with regard to the claim of the assessee, then in our considered view, the order of the AO would be erroneous and prejudicial to the interests of the Revenue and the ld. CIT would be within its jurisdiction to revise such order u/s. 263 of the Act. In the present case, the AO has made enquiry from the assessee and in response thereto, the assessee submitted certain details. On the basis of such enquiry, the AO formed an opinion with regard to genuineness of the purchases. However, from the records it appears that the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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