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TMI Blog2016 (11) TMI 1310X X X X Extracts X X X X X X X X Extracts X X X X ..... the order passed by the Assessing Officer is erroneous and prejudicial to the interests of the Revenue. We hold that the order passed by the Commissioner is bad in law and therefore, we quash and set aside the order passed by the Commissioner and allow the appeal filed by the assessee company. - ITA. No. 723/Hyd/2015 - - - Dated:- 21-10-2016 - Shri D. Manmohan, Vice President And Shri B. Ramakotaiah, Accountant Member For Assessee : Mr. P. Muralimohan Rao For Revenue : Mr. P. Chandrasekhar ORDER Per D. Manmohan, V. P. This appeal by the assessee-company is directed against the order passed by the Commissioner of Income Tax under section 263 of the I.T. Act, 1961 and it pertains to the A.Y. 2010-2011. 2. Facts necessary for the disposal of the appeal are stated in brief. As per 3CB report of the company the assessee is engaged in the business of manufacture and trading of MS Bars, MS Angles and MS Channels. For the year under consideration, it declared NIL income which was processed accordingly on 27.10.2011. Thereafter, the case was taken-up for scrutiny and a notice was issued under section 143(2) of the Act. A questionnaire was also issued to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessment was thus completed on 31.03.2013. 4. By virtue of the powers vested in the Commissioner under section 263 of the Act, the assessment records of the assessee-company were called for and on perusal of the same, the learned Principal Commissioner was of the opinion that the order passed by the Assessing Officer is erroneous as well as prejudicial to the interests of the Revenue. The errors pointed-out in the notice were reproduced for immediate reference : (i) No enquiries were conducted into the alleged trading activity, which would be in the nature of round tripping because the entities with whom the activities are conducted are of the same group companies; (ii) The investment of $ 32,49,877/- by M/s. Starline Holdings Inc, 60 Market Square, PO Box No.374, Belize City, Belize @ ₹ 250/- per share (at a premium of ₹ 250 per share) was not investigated by the Assessing Officer and the documents were accepted at face value. 4.1. In response to the said notice, the Representative who appeared on behalf of the assessee-company submitted that the order passed by the Assessing Officer is neither erroneous nor prejudicial to the interests of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the Assessing Officer is one of the possible views on the matter and therefore, not amenable to the jurisdiction of the revisional authority. 5.1. The Ld. Pr. CIT agreed in principle that when there are two views possible and if Assessing Officer takes one of the courses permissible in law, the CIT cannot exercise his power under section 263 of the Act merely because he has a different view on the matter. At the same time, he was of the opinion that the view taken by the Assessing Officer is unsustainable in law and therefore, he is entitled to invoke jurisdiction under section 263 of the Act. In his opinion, the Assessing Officer has to ascertain all the facts by making further investigation and failure to make such an enquiry would make the assessment order erroneous. Proceeding further, the Pr. CIT observed that the Assessing Officer failed to cause enquiries regarding the alleged trading activity pertaining to the entities with whom the activities are conducted. Further, investments by Sterling Inc., Belize City was not investigated by the Assessing Officer and documents were accepted at face value. He therefore, concluded that the matter requires re-examination by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon the decision of the A.P. High Court in the case of Spectra Shares 36 taxmann.com 348 wherein the Court observed that the Assessing Officer, in the assessment order, is not required to give detailed reasons while accepting the plea of the assessee and what is required to be verified is, whether there was application of mind by an enquiry; once there is a proper enquiry it cannot be called as erroneous merely because the Commissioner entertains a different opinion on the matter. Learned Counsel for the assessee thus strongly submitted that the order passed by the CIT is bad in law inasmuch as there was no material on record to suggest that the order passed by the Assessing Officer is erroneous and prejudicial to the interests of the Revenue. 6. On the other hand, the Ld. D.R. placed reliance upon the following decisions to support the stand taken by the Commissioner that the order passed by the Assessing Officer can be said to be erroneous and prejudicial to the interests of the Revenue. 1. CIT vs. Alloy Steels (2013) 36 taxman.com 514 (Karnataka) (HC) (In the absence of vouchers in respect of payments if the Assessing Officer accepts labour payments without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uiry but not lack of enquiry, the Commissioner must give a finding that the enquiry is insufficient and in order to come to such a conclusion the Commissioner has to make proper verification of facts and should establish, based on the facts on record, that further enquiry is mandatory. Learned Counsel for the assessee strongly relied upon the aforecited decision to submit that even in the case of Glade Steels the Ld. Commissioner merely acted upon conjectures and surmises without making any specific enquiry as to why a further investigation is required/absolutely mandatory and how the trading activity is in the nature of round-tripping activity. The revisional authority jumped to the conclusion merely because the activity was within the same group of companies and such surmises should not be the basis for concluding that the order passed by the Assessing Officer is erroneous and prejudicial to the interests of the Revenue. He also relied upon the decision of the Hon ble Mumbai High Court in the case of CIT vs. Credit Bank 196 taxman 329 wherein the Court observed that Assessing Officer having made enquiries and arrived at a conclusion that assessee was entitled to depreciation on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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