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TMI Blog2017 (1) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Pandey, D.R. Assessee by : Shri M.J. Ranpura, A.R. ORDER Per : Amarjit Singh, Accountant Member This assessee s appeal for A.Y. 2007-08, arises from order of the CIT-I, Rajkot dated 28-03-2012, in proceedings under section 263 of the Income Tax Act, 1961; in short the Act . 2. The assessee has raised following grounds of appeal:- 1.0 The grounds of appeal mentioned hereunder are without prejudice to one another. 2.0 The order u/s 263 of the Income-tax Act, 1961 passed by the learned Commissioner of Income Tax-l, Rajkot (hereinafter referred to as the CIT ) is without jurisdiction and bad in law as also on facts. 3.0 The learned CIT erred on facts as also in law in alleging that the Assessing Officer (AO) has not verified the followings though all the requisite details were furnished at the time of assessment proceedings and verified by the AO: i. alleged infusion of capital of ₹ 1 .43 Crores ii. purchase of Bentonite of ₹ 50.27 Lacs made from Patel Mines, a person specified u/s. 40(A)(2)(b) of the Act iii. Unsecured Loan of ₹ 9,00,000/- taken from Smt. Amrutaben Harji Jodhani iv. Applicability of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Your above assessee has been served with a notice issued under section 263 of the Act requiring him to show cause why action as provided under section 263 of the Act should not be initiated for assessment year 2007-08. Under his instructions, I wish to make following submission for your kind and sympathetic consideration. Your assessee objects the action proposed under section 263 of the Act for the fact that the impugned assessment order is neither erroneous nor prejudicial to the interest of the revenue. Your assessee submits here under reply on each of the issues raised in the notice which in your opinion warrants action under section 263 of the Act. It. is submitted that on each of the issues, detail reply were filed and deliberation took place during the course of assessment proceedings. AO has after examining the/acts and the material produced before him passed order u/s 143(3) of the Act. Questionnaire issued and submissions made during the course of assessment proceedings are available with the case record. However, I wish to clarify and offer explanation on each of the point raised in the notice as under: A: Alleged introduction of new capital ofRs 1,24,98,639/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e be seen from the copy of account furnished here with that assessee has made purchases of ₹ 50.27 lacs from the sister concern. We submit here with a comparative statement of purchases made by assessee to establish that no excessive payment has been made to the sister concern. Similarly, comparative statement with rate is also furnished for sales effected by sister concern during the year. Both the above statement will prove that purchases made from sister concern was as per the prevailing market rate of particular grade and quality. It is further submitted that sister concern Patel Mines is a partnership firm and assessed to tax as such. Said firm is also assessed to tax at maximum marginal rate of tax applicable to assessee firm. Under the circumstances, it is not a case of evading, tax by deriving any profit to the sister concern. Your assessee furnishes here with the photo copies of sale bills issued by Patel Mines to your assessee giving details of grade quality are reflected in the sales bills. Your assessee has purchased bentonite lumps twice in the F. Y. 2006-07. The first purchase was on 10-06-2006 by bill no. 1 of ₹ 32,83,200/-. The rate of the be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale consideration factually and legally both. It is submitted that land in question is owned by Karidla fort Trust who is administered by The Major Port Trust Act. The land owned by KPT was than transferred on 99 year lease to the Sindhu Resettlement Corporation for development of the same. SRC then transferred and sub leased the land to various lease holders. These sub lease holders were entitled to develop and transfer their lease right to any private party subject to prior approval of KPT. KPT. on receipt of application for transfer of land, scrutinizes the value at which the land is transferred and then it charges the Transfer Fee' on the basis of the consideration received. In the case of vow assessee also. KPT has given approval for transfer of land vide letter dated 30/05/2006 by letter number ES'SRI 3560/1 611 referred to in para 8 of the registered sale deed. It can thus be said that KPT has accepted and was satisfied about the amount of consideration as representing the fair market value of the subject land. Section 50C of the Income tax Act is applicable only in cases where there is a valuation by Stamp Duty Valuation Officer of the same prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 63 of the Act. Your assessee wishes to clarify that no such income has escaped assessment. It is submitted that expenditure amounting to ₹ 3, 46, 3 3 4/- was debited to the profit and loss account of the assessee. This expenditure pertains to bank interest and charges on secured loans. Though this expenditure is legally permissible, assessee has not claimed the deduction of same. We submit here with the general profit and loss account of your assessee and statement of income attached with the return of income. Your honor can verify that your assessee has calculated all income separately and correctly computed his taxable income. No deduction of the expenses as alleged was claimed in the computation of income. Had the assessee claimed such expenses, his income would have, further reduced by the sum of ₹ 3,46,334/- Thus, there is no under assessment which needs reopening under section 263 of the Act. (Page 39 to 44) We hope that above details and clarification will meet the satisfaction of your honour and action initiated under section 263 of the Act may please be dropped. However, if any further detail, information or clarification is considered essential, we may pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT further stated that the assessing officer had finalized the assessment in the case of the assessee in a routine manner by making a lump-sum disallowance of ₹ 40,000/- without conducting necessary inquiries into the matter. The ld. CIT also stated that the reply of the assessee has been considered carefully and further added that the following judicial judgments have also been taken into consideration. 991 ITR (Del) in the case of Gee Vee Enterprises vs. Addl. CIT:- The commissioner can regard the order as erroneous on the ground that in the circumstances of the case, the assessing officer should have made further inquiries before accepting the statement made by the assessee in his return. 220 ITR 657 in the case of K.A. Ramswamy Chettiar and Anr. V. CIT:- When the assessing officer is expected to make an enquiry of a particular item of income and if he does not make on enquiry as expected that would be a ground for the commissioner of income tax to interfere under section 263 of the act. III ITR 312 (Guj) in the case of CIT vs. Mukur Corporation:- The words prejudicial to the interest of revenue has not be defined in section 263 of the act but they must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessing officer had passed an order u/s. 143(3) without due and proper enquiries as stated supra in this order. In this connection, we noticed that assessing officer vide letter dated 23/04/2009 during the course of assessment proceedings had asked the assessee to furnish the following details:- (I) Brief note on business activities carried out by you,, during the previous year. (II) G.P/N.P ratio with reference to turnover, for three preceding year, including year under consideration. (III) In respect of un secured loan raised during the year, furnish copy of ledger A/c, confirmation, PAN and copy of acknowledgement of return filed for A.Y 06-07. (IV) Furnish details of Bank A/cs, held either in your name or in the name of family members. (V) On verification your capital, it is noticed that you have introduced substantial capital. In this connection, furnish complete details of such introduction of capital along with source/evidence thereof. (VI) Furnish complete details of house hold expenses, along with source thereof. (VI) Furnish copies of registered sale agreement in respect of plots/land sold during the year. (VII) Furnish copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment of the Hon ble court of Gujarat in the Tax Appeal NO. 2583 of 2010 in the case of CIT vs. Amit Corporation in which it was held that when during the course of framing of assessment, assessing officer had access to all records of assessee and after perusing such record assessing officer framed assessment, such assessment could not have been re-opened in exercise of revisional power u/s. 263 for making further inquiries which was relied by the ld. counsel. We have also perused the judicial pronouncements relied upon by the ld. CIT in the order passed u/s. 263 of the act. We find that case of Gee Vee Enterprises 99 ITR 375 relate to making first assessment by the assessing officer without ascertaining the truth of facts on the basis of which registration was granted to the assessee firm. The case of K.A. Ramaswamy Cheltiar relate to making assessment without making inquiries with regard to the value of the properties which subsequently found in search action that assesse had paid on money to the sellers. Mukur Corporation case pertain to the facts where the person who transferred the property to the assessee, subsequently found to be benamidar of the assessee on the basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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