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TMI Blog2016 (10) TMI 893X X X X Extracts X X X X X X X X Extracts X X X X ..... al CIT and explained the fact that the question raised by the Principal CIT is considered by the A.O. and also the provisions of section 194C of the Act are not applicable, as the impugned amount has been paid before the end of the relevant financial year. It is also an admitted fact that the A.O. has not examined the issue at the time of completion of assessment, however, there is no revenue loss is caused to the exchequer because the issue is covered by the decision of ITAT, special bench (SB), wherein the ITAT held that no disallowance can be made u/s 40(a)(ia) of the Act, on the amounts paid within the end of the financial year. Since, the assessee failed to appear before the CIT, we are of the opinion that the CIT cannot presume th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A(3) of the Act and further addition of ₹ 1,20,000/- towards loading and unloading charges. 3. The Principal CIT, Visakhapatnam issued a show cause notice dated 18.3.2016 and asked to explain why the assessment order passed by the A.O. u/s 143(3) of the I.T. Act, dated 31.12.2013 shall not be revised under the provisions of section 263 of the Act. The Principal CIT, proposed to revise the assessment order for the reason that on examination of assessment records, certain omissions and commissions were noticed which render the assessment order erroneous in so far as it is prejudicial to the interest of the revenue, in terms of section 263 of the Act. The Principal CIT, in the said show cause notice, observed that the A.O. has not ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the total hire charges debited to the P L account ought to have been disallowed u/s 40(a)(ia) of the Act, but the A.O. has failed to do so. It is evident from the record that no query at all was raised nor any clarification was sought on this issue during the assessment proceedings. The record does not also indicate that the A.O. had applied his mind to facts and materials on record through a process of enquiry and investigation and formed a view on the issue. Thus, the assessment order is passed without making any enquiries on the issue. In such circumstances, the assessment order under consideration is deemed to be erroneous and prejudicial to the interest of the revenue under explanation 2 to section 263 of the Act. With these ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue. The Ld. A.R. further submitted that the issue of disallowance of hire charges is covered by special bench decision of ITAT, Visakhapatnam in the case of Merilyn Shipping and Transports Vs. ACIT 136 ITD 23., as such there is no prejudice is caused to the revenue. Therefore, the CIT was not correct in coming to the conclusion that the assessment order passed by the A.O. is erroneous in so far as it is prejudicial to the interest of the revenue. The Ld. D.R. on the other hand, strongly supported the order of Principal CIT. 6. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The Principal CIT assumed jurisdiction to revise the assessment order for the reason t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue as such the assessment order passed by the A.O. is not erroneous. It is further submitted that the issue involved in the revision proceedings is covered by the special bench decision of ITAT, Visakhapatnam in the case of Merilyn Shipping Transports Vs. ACIT (supra), wherein the ITAT held that no disallowance u/s 40(a)(ia) of the Act, can be made when the expenditure incurred has been paid before the end of the relevant financial year. In the present case on hand, the assessee has paid expenditure before the end of the financial year, as such the question of applicability of TDS and consequent disallowance of amount u/s 40(a)(ia) of the Act does not arise. The Principal CIT, may hold the assessment order passed by the A.O. may be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT, special bench (SB), wherein the ITAT held that no disallowance can be made u/s 40(a)(ia) of the Act, on the amounts paid within the end of the financial year. Since, the assessee failed to appear before the CIT, we are of the opinion that the CIT cannot presume things which is in the minds of assessee, as such opined that CIT has rightly assumed his jurisdiction to revise the assessment order based on the information available on record and his order is upheld. However, we deem it appropriate to modify the directions given by the CIT to disallow impugned expenditure and set aside the assessment order passed by the A.O. u/s 143(3) and direct the A.O. to re-do the assessment afresh in the light of above discussion in accordance with law, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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