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TMI Blog2016 (10) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... is order dated 28.12.2011 for assessment year 2009-10. The grounds raised by the assessee per its appeal are as under:- "1) That the learned Commissioner of Income Tax, Kolkata - I, Kolkata erred in arbitrarily initiating the impugned proceedings under section 263 of the Income Tax Act, 1961, in the instant case of the Appellant Company herein, in respect of the assessment year 2009-10, through the Notices dated 9th January, 2014 and 3rd March, 2014. 2) That, on the facts and in the circumstances of the case, the Ld. Commissioner of Income-tax erred in alleging that the assessment order dated 28th December, 2011 passed under section 143(3) was erroneous in so far as it was prejudicial to the interest of the Revenue, and on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 24.48 lacs and commissioning installation and service charges Rs. 1.36 crore. (v) Commission received and Commission Paid. 5) That the learned Commissioner of Income Tax erred in arbitrarily alleging and/or holding that the Assessing Officer failed to properly scrutinize and enquire into above aspects and on the basis of such allegation he further erred in setting aside the whole of the assessment order with directions to pass fresh order after examining the case de-novo. 6) That, without prejudice to the above, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax erred in setting aside the order dated 28th December, 2011 passed by the Assessing Officer under section 143(3) of the Act by assumi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s comprising of house property income, business and professional income and income from other sources. Thereafter case was selected for scrutiny and notice u/s. 143(2) r.w.s.142(1) of the Act was issued to the assessee. The assessment was framed at Rs. 5,61,26,967/- after making certain additions / disallowances. Thereafter Ld. CIT u/s. 263 of the Act opined that order passed by Assessing Officer is erroneous in so far prejudicial to the interest of revenue on account of following:- 1. As per the column no. 21(B)(b) of Tax Audit Report (For short TAR) the liability for leave salary amounting to Rs. 21,90,943/- was incurred during the year but the same was not paid. But the AO has allowed the same as deduction except an amount of Rs. 1,69, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the advance given to M/s Nagel Special Machines Pvt. Ltd. for Rs. 6.20 lacs. Similarly there is a sundry debtors amount of Rs. 64.19 lacs in the debtors list of the assessee in the name of M/s Dango & Dienthal (India) Pvt. Ltd. Besides the above there were also advances shown by the assessee to others of Rs. 7.62 crores. The ld. CIT under section 263 of the Act that the above stated facts have not been verified by the AO at the time of assessment. 7. The amount of sales, service charges for installation and the expenses for travelling, exhibition etc. were not verified by the AO. The ld. CIT u/s 263 of the Act after giving the opportunity to the assessee held that order passed by the AO is erroneous and prejudicial to the interest of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of their remuneration and hence have been shown under the heads "Director remuneration" and in case of GM under the head "Salary, wages bonus and gratuity" in Schedule 15 of the Accounts. If may be mentioned that since such commission paid is part of their salary and comes within the definition of salary u/s. 17(1)(iv) of the Act and TEs as applicable on alary as per Section 192 of the Act has been deducted and paid. As per Sec. 192 in case of salary TES has to be deducted at the time of payment and the same has been done. Ld. AR further submitted that Sec. 40(a)(ia) of the Act is not applicable in case of TDS on salary and hence there is no violation in the order of AO as erroneous and prejudicial to the interest of Revenue. On the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to provoke an inquiry. The meaning to be given to the word "erroneous'' in s. 263 emerges out of this context. It is because it is incumbent on the ITO to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word "erroneous'' in s. 263 includes the failure to make such an inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. The company and the partnership in this case were formed in the same year with many members common in both. The fact that the company purchased the land but handed over construction work to the partnership ..... X X X X Extracts X X X X X X X X Extracts X X X X
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