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TMI Blog2018 (1) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee for withholding tax on the aforesaid payment, neither of the aforesaid verifications as were sought by the Principal CIT did survive any more. We are of the considered view that the Principal CIT in the backdrop of the aforesaid facts as emerges from the record, and was also pleaded by the assessee before him, had however not shown as to how the view taken by the A.O was found to be erroneous Now when the A.O after making necessary inquiries and verifications which should have been made by him in the course of the assessment proceedings and the queries raised vide notice under Sec. 133(6), had arrived at a plausible view, which we are afraid the Principal CIT had not been able to show as to how the same was erroneous, nor as to what all inquiries and verification leading to a contrary view should have been made by him, therefore, are unable to persuade ourselves to be in agreement with the Principal CIT that the order passed by the A.O under Sec. 143(3) was erroneous in so far it was prejudicial to the interest of the revenue, therein rendering it liable to be revised under Sec. 263 of the Act. We may further observe that we are in agreement with the contention of the ld. A.R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplained and accepted by the Assessing Officer. 3. That the learned Principal Commissioner of Income-tax has not properly considered, appreciated and understood replies dated 24.02.2017, 03.03.2017 and 14.03.2017 and has passed the impugned order ignoring the claims and contentions, which is bad. 4. The order dated 21/03/2017 passed by the Principal Commissioner Of Income Tax - 19, under section 263 of the Income Tax Act 1961 is void, illegal, without jurisdiction and needs to be quashed. The Appellant craves to leave, to add, amend and/or alter all or any of the above grounds of appeal. 2. Briefly stated, the facts of the case are that the assessee had efiled his return of income for AY 2012-13 on 19.12.2012, declaring total income of ₹ 8,90,147/-. The return of income filed by the assessee was processed as such under Sec. 143(1) of the 'Act'. The case of the assessee was thereafter taken up for scrutiny assessment under Sec. 143(2) and the returned income of the assessee was accepted by the A.O vide his order passed under Sec. 143(3) of the 'Act', dated 29.01.2015. 3. The Principal CIT in exercise of his powers vested under Sec. 263 of the Act, called for the recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after making necessary verifications had allowed the claim of the assessee as regards the local and foreign commission, therefore, the assessment order passed by him was not amenable for revision under Sec. 263. The assessee further in the course of the revision proceedings placed on record the list of the commission agents, along with the copies of the letter and terms of payments regulating the payment of foreign commission. However, the Principal CIT after deliberating on the reply observed that the assessee had neither submitted an order under Sec.195 of the Act, nor a certificate by a Chartered accountant in Form No. 15CA specifying that the deduction of tax at source on the foreign commission paid was not required to be made. Thus, in the backdrop of his aforesaid observations the Principal CIT concluded that as the A.O while framing the assessment under Sec. 143(3), had failed to make necessary verifications in respect of deductibility of tax at source on foreign commission while framing the assessment under Sec. 143(3), therefore, the order passed by him without making the enquiries and verifications which should have been made, rendered the order passed by him amenable for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the observations of the Principal CIT that the assessee had not submitted either an order under Sec. 195 of the Act, nor the prescribed certificate in Form No. 15CA of the Chartered Accountant, specifying that the deduction at source on such commission paid was not required to be made, submitted that as the foreign commission was paid by the assessee to a non-resident for his services rendered abroad, therefore, there was no obligation on the assessee for deducting tax at source in respect of the said payment. The ld. A.R submitted that it was brought to the notice of the A.O that as the amount paid to Shri Pratap Singh was in respect of the supervision charges and was to be considered as a part of the salary, therefore, the provisions for deduction of tax at source on the said payment as per Sec. 194H of the 'Act' were not attracted. The ld. A.R submitted that the A.O had during the course of the assessment proceedings raised queries on the issues under consideration and had only after thoroughly deliberating on the reply of the assessee in respect of the said issues, viz. (i) payment of commission to foreign agents; and (ii) payment of supervision charges to Shri Pratap Singh, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oreign commission; and (b). local commission, therefore, the Principal CIT could not have revised the order passed by the A.O, for the reason that observations in respect of the said issues were not found recorded in the body of the assessment order. The ld. A.R in support of his aforesaid contention relied on the judgments of the Hon'ble High Court of Bombay in the case of CIT Vs. Fine Jewellery (India) ltd. (2015) 372 ITR 303 (Bom) and Commissioner of Income-tax Vs. Gabrial India Ltd.(1993) 203 ITR 108 (Bom). It was thus submitted by the ld. A.R that the Principal CIT had exceeded his jurisdiction and revised the assessment order passed by the A.O under Sec. 143(3) of the Act. Per contra, the ld. Departmental representative (for short 'D.R') submitted that a perusal of the records of the assessee revealed that the assessee had paid the foreign commission to its buyers. The ld. D.R to drive home his aforesaid contention, took us through Page 24 and Page 45 of the 'APB'. It was thus submitted by the ld. D.R that as the A.O had failed to make the necessary verifications in respect of the payment of the foreign commission, therefore, the Principal CIT had rightly observed that the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies after the culmination of the assessment proceedings and prior to initiation of the revision proceedings by the Principal CIT under Sec. 263, were raised by the A.O vide his notice issued to the assessee under Sec. 133(6), dated 06.10.2016 in respect of the aforesaid issues, viz. (i) foreign commission; and (ii) local commission. We find that as observed by us hereinabove, the assessee had duly clarified that as the foreign commission of ₹ 9,84,862/- was paid to non-residents for the services rendered abroad, therefore, as per Sec. 9 of the Act, in the absence of any income having deemed to accrue or arise in India, there was no obligation on the part of the assessee to withhold any tax in respect of the said payment. We further find that the assessee had also clarified the reason for non-deduction of tax at source on the local commission aggregating to ₹ 44,446/-. The assessee in response to the notice issued to him by the A.O under Sec. 133(6), had in his reply dated 09.01.2017, divulged complete details as regards the reasons and the procedure for payment of the foreign commission, along with the details of the foreign commission agents. We further find that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner or Commissioner so, shall be deemed to be erroneous in so far as it is prejudicial to the interest of the revenue. However, exercise of such deemed powers conferred on the revisional authority as per Explanation 2 have to construed by strictly confining and subject to satisfaction of the conditions contemplated therein. We are of the considered view that to the extent making of inquiries and verification which in the opinion of the CIT the A.O should have made, as contemplated in Clause (a) of Explanation 2, though gives an edge to the opinion of the CIT as regards the inquiries and verifications which the A.O should have made, but then, such inquiries and verifications are not only required to be relevant for adjudication of the issue, but also should point out as to how the view arrived at by the A.O by not taking recourse to such inquiries and verification, can be faulted with and held to be wrong. We thus are of the considered view that now when the assessee had in the course of proceedings before the A.O proved that the foreign commission was paid to the foreign commission agents for services rendered abroad, which thus did not cast any obligation on the assessee to wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not salary, on which the assessee had defaulted to deduct tax at source, without pointing out as to on what basis he had so concluded, and as to what all inquiries or verification the A.O should have made, thus, cannot be accepted. We are of the view that now when a plausible view had been arrived at by the A.O accepting the claim of the assessee that the amount paid to Shri Pratap Singh towards supervision charges was by way of salary, therefore, the order passed by the A.O could not have been faulted with by holding that the same was erroneous in so far as it was prejudicial to the interest of the revenue. We thus are of the view that the assumption of jurisdiction by the Principal CIT to revise the assessment order passed by the A.O, even in respect of the issue of payment of commission to Sh. Pratap singh cannot be sustained and is liable to be vacated. We thus in the backdrop of our aforesaid observations are of the considered view that now when the A.O after making necessary inquiries and verifications which should have been made by him in the course of the assessment proceedings and the queries raised vide notice under Sec. 133(6), had arrived at a plausible view, which we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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