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TMI Blog2015 (12) TMI 1743X X X X Extracts X X X X X X X X Extracts X X X X ..... iscretion and judgment in assuming the revisional jurisdiction. - Decided in favour of assessee - ITA No. 1223/PN/2013 - - - Dated:- 21-12-2015 - SHRI VIKAS AWASTHY, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Assessee : Shri Ketan Ved For The Revenue : Shri S.K. Rastogi ORDER PER VIKAS AWASTHY, JM : The present appeal of the assessee is directed against the order of Commissioner of Income Tax-III, Pune dated 26-03-2013 passed u/s. 263 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) for the assessment year 2008-09. In appeal, the assessee has assailed the impugned order on account of invoking jurisdiction u/s. 263 by Commissioner of Income Tax, as well on merits. 2. The brief facts of the case are : The assessee is a company and is engaged in the business of trading, indenting agent and export of goods. The assessee filed its return of income for the assessment year 2008-09 on 26-09-2008 declaring income of ₹ 4,39,86,108/-. During the course of scrutiny assessment, the Assessing Officer made certain additions/disallowances and assessed the total income of the assessee at ₹ 4,84,82,800/- vide order dated 30-12-2010. The C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment and directing the Assessing Officer to make fresh assessment. 3.1 The ld. AR further submitted that the Commissioner of Income Tax has erred in holding that the Assessing Officer has not applied his mind and the matter requires re-examination without giving any finding on the merits. The ld. AR submitted that the Commissioner of Income Tax has not pointed out any error in the assessment order allegedly prejudicial to the interest of Revenue. In support of his submissions, the ld. AR placed reliance on the following decisions: i. Commissioner of Income-tax Vs. Gabriel India Ltd., 203 ITR 108 (Bom); and ii. Umraosingh Ostwal Vs. The Commissioner-Central, Pune, ITA No. 8857/Mum/2011 decided on 10-05-2013. 3.2 The ld. AR contended that the Commissioner of Income Tax has to independently apply his mind for invoking jurisdiction u/s. 263 of the Act. The ld. AR submitted that a perusal of show-cause notice would show that the notice has been issued on the proposal made by the Dy. Commissioner of Income Tax, Circle-6, Pune. The Commissioner of Income Tax has stated in the show-cause notice that, the Dy. Commissioner of Income Tax has pointed out the following deficiencie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee company has hardly any business is unfounded. The Assessing Officer during the scrutiny assessment proceedings raised query with regard to the payment of commission which was answered to by the assessee. Accordingly, no addition/disallowance was made by the Assessing Officer on this ground. The Commissioner of Income Tax has further raised doubt over the amount of incentive ₹ 42,00,500/- paid. During the course of assessment proceedings this issue was also raised by Assessing Officer and the assessee had given employee wise details of the commission paid. The ld. AR submitted that the details of the incentive paid are given at page 104 of the paper book. The ld. AR submitted that the Commissioner of Income Tax has also raised question over deductibility of compensation paid to the family of deceased employee. This issue was also examined by the Assessing Officer during the course of assessment proceedings. The Assessing Officer was satisfied with the explanation furnished by the assessee for payment of compensation ₹ 27,50,000/- and accordingly allowed the same. The ld. AR further submitted that Commissioner of Income Tax has also raised doubt over genui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r suffers from certain deficiencies because of which it is erroneous in so far as it is prejudicial to the interest of revenue. The Dy. Commissioner of Income Tax has pointed out the following deficiencies in the assessment order:- i. Your Company has received substantial income which is exempt from income-tax. An amount of ₹ 15,29,167/- was voluntarily disallowed u/s.14A of the Income-tax Act, 1961 out of expenses being related to earning of exempt income. The Addl. Commissioner of Income-tax, Range 6, Pune, who made the assessment, computed disallowance of ₹ 56,76,732/- u/s.14A read with rule 8D of the Income Tax Rules, 1962. It is observed that for the purpose of working of disallowance, average value of investment was taken at ₹ 6,72,66,798/-, 0.50% of which was considered for disallowance. The Balance-Sheet, however, shows the values of investment as on 1.04.2007 and 31.03.2008 respectively at ₹ 26,02,44,413/- and at ₹ 34,67,26,761/-. Average of these two amounts works out to ₹ 30,34,85,587/-, 0.50% of which would be ₹ 15,17,428/-. However, in the computation The AO has taken this amount at ₹ 3,36,334/-. This has resulted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry with regard to expenses on commission, incentive, compensation to the deceased employee, traveling and rent though such enquiry was warranted on the basis of the facts on record. She has accepted the claims of your company without application of mind. The assessment order is, therefore, erroneous in so far it is prejudicial to the interest of revenue and the provisions of section 263 of the Income-tax Act, 1961 are attracted. In view of these facts and circumstances, you are hereby requested to explain as to why not the provisions of section 263 of the Income-tax Act, 1961 be involved and the assessment order dated 30-12-2010 be cancelled. 3. You are hereby given an opportunity of being heard in person or through an Authorized Representative on 18.05.2011 at 11 a.m. in my office at the address given in this notice. In case you prefer to furnish a written explanation in this regard, please ensure that the same reaches this office on or before that date. Yours faithfully, Sd/- (Dr. Prayag Jha) Commissioner o Income Tax-Ill, Pune A perusal of the show cause notice shows that the Commissioner of Income Tax has invoked the provisions of section 263 on the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer in taking a particular view. In the case in hand, the Commissioner of Income Tax has failed to point out error in the assessment order. For invoking revisionary powers the Commissioner of Income Tax has to exercise his own discretion and judgment. Here the Commissioner of Income Tax has invoked the provisions of section 263 at the mere suggestion of the Dy. Commissioner of Income Tax, without exercising his own discretion and judgment. 9. The Mumbai Bench of the Tribunal in the case of Vinay Pratap Thacker Vs. Commissioner of Income Tax (supra) has set aside the order of Commissioner of Income Tax passed u/s. 263 on the ground that the Commissioner of Income Tax had not used his own discretion and judgment in assuming the revisional jurisdiction. The relevant extract of the order of the Tribunal is reproduced here-in-under: 22. We have heard the contentions of both the parties and have also perused the material placed before us, including the case laws cited by either side. On going through the submissions of the assessee, SCN and Audit Objection, we find that the issue had been dealt with by the AO in regular assessment proceedings and thereafter an audit obje ..... X X X X Extracts X X X X X X X X Extracts X X X X
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