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TMI Blog2018 (7) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... S details in respect of 10 persons to whom total freight paid to hire tanker owners totalling to ₹ 84.24 lakhs - Held that:- A perusal of the assessment order vis a vis the enquiry made during the assessment proceedings show that the AO did not make any enquiry on these issues and the CIT has rightly assumed jurisdiction u/s 263 of the Act and has rightly set aside these issues to the file of the AO for proper verification. Therefore, to the extent of these issues, we do not find any infirmity in the order framed u/s 263 of the Act and accordingly to this extent the order of the CIT is confirmed. Thus on the first issue, the CIT has wrongly assumed jurisdiction u/s 263 of the Act and to that extent the order of the CIT is set aside and that of the AO is restored. On the other two issues, the order of the CIT is upheld. - Decided partly in favour of assessee. - ITA No. 3579/DEL/2013 - - - Dated:- 5-7-2018 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SMT BEENA A. PILLAI, JUDICIAL MEMBER For The Assessee : Shri Sandeep Sapra, Adv For The Revenue : Shri Vijay Varma, CIT- DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, By this appeal the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d expenses towards Road expenses at ₹ 18,36,340/-. After examination it was found that these expenses are not fully vouched. Hence, the verification of the same cannot be done. Therefore, to cover-up the possible leakage of revenue ₹ 35,000/- from the above expenses is disallowed and added to the income of the assessee. (Addition ₹ 35,000/-) In view of the above facts the income of the assessee is re-computed as under:- Returned income ₹ 11,91,456/- Additions as discussed above- ( i) Disallowance of Repair maintenance and telephone expenses ₹ 31,069/- (ii) Disallowance of Road expenses Total income ₹ 35,000/- Total income Rs.12,57,525/- Assessment is completed on total income of ₹ 12,57,525/-. Charge interest u/s 234B 234C. Issue notice of demand and challan. (Laljee Prasad) Assistant Commissioner of Income-tax Circle-2, Meerut 5. After framing the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the proposed sum of ₹ 7.54,247/- from him, would be made under the specific provisions of section 154 of the Act. ( Laljee Prasad) Assistant Commissioner of Income-tax Circle-2, Meerut 6. The assessee filed a detailed reply on 11.11.2011 in response to the aforesaid notice. Reply of the assessee is exhibited at pages 33 and 34 of the paper book and the same reads as under: THAT the assesses is doing the transportation business and transporting the goods of various companies through his own Tankers as well as from hired tankers. THAT the companies generally release tenders in the name of the assesses and after Transporting the goods the assessee raises bills of transportation in the name of respective companies: THAT the bills of the total transportation value are raised by the assessee whether goods are either transported through own tankers or through hired tankers. THAT as per the practice adopted by the assessee, the goods transported by the assessee through own tankers are directly credited in the freight received account and against the goods transported through the hired tankers shown under handling charges @ 3% o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already filed with you the photocopy of all the TDS certificates on 10th July 2009. Any other information, if required, will be submitted. Hope you will find the above in order. Thanking. You Naresh Saiuja. . Counsel To The Assessee 7. Thought the notice issued u/s 154 of the Act is dated 17.10.2011, but till date no order has been framed by the officer as pointed out by the representatives of both the sides. 8. Be that as it may, the CIT Meerut assumed jurisdiction u/s 263 of the Act alleging that the assessment order passed by the ACIT, Circle 1, Meerut is erroneous and prejudicial to the interest of the Revenue since the AO has not verified the points properly. The points mentioned by the CT in his notice read as under: Notice under section 263 of the IncomeTax Act, 1961 for the A.Y. 2008- 09-Reg.- An assessment order for assessment year 2008-09 was passed under section 143(3) of the Income Tax Act on 27.10.2010 by the Asstt. Commissioner of Income Tax, Circle-2, Meerut. On examination of therecords, it is evident that the said assessment order was passed without proper enquiry in view of the following points:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an malhotra 1051311 4. Shri Mahendra Singh 83247 5. Shri O.P. mahendru 1125170 6. Shri Rajendra Kumar malhotra 1596248 7. M/s Rajendra Kumar Sons 397327 8. Shri Ranjit Singh 8 96784 9. Mrs. Rekha Khanna 2145926 10. Shri Shaeis Ahmad 219523 Total 8425100 During the year under consideration the assessed had paid Freight to I lit eel Tanker owners ₹ 84,25,100/- to the different Parties, but, TDS was not deducted on such payments. But, the assessee had debited total Freight Expenses before taken into account in Total Freight Received In P L Account and on which TDS was also . not deducted by the assessee. The assessee vas liable to deduct TDS on payment of Freight ₹ 84, 25,100/- u/s 40 (a)(ia) of Income Tax Act, 1961. Hence, the payment of Freight ₹ 84, 25,100/- on which TDS was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding that in Form No. 26AS freight receipts were at ₹ 1.11 crores and TDS was ₹ 2.15 lakhs whereas the assessee had declared ₹ 94.70 lakhs for freight receipts in his profit and loss account and, therefore, freight receipts shown by the assessee in his profit and loss account and as found in Form No. 26AS is not matching and wanted to add the difference by rectifying the mistake u/s 154 of the Act. However, as mentioned elsewhere till date no action has been taken by the AO, but it cannot be said that the AO never made any verification on this count. 14. It is true that the assessment order is silent on this issue. The Hon'ble Bombay High Court in the case of Gabriel India Ltd 203 ITR 108 has held as under: The power of suo motu revision under subsection (1) is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of revision under this sub-section, viz., (i) the order is erroneous; (ii) by virtue of the order being erroneous prejudice has been caused to the interests of the Revenue. It has, therefore, to be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . But that by itself will not be enough to vest the Commissioner with the power of suo motu revision because the first requirement, viz., that the order is erroneous, is absent. Similarly, if an order is erroneous but not prejudicial to the interests of the Revenue, then also the power of suo motu revision cannot be exercised. Any and every erroneous order cannot be the subject-matter of revision because the second requirement also must be fulfilled. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. We, therefore, hold that in order to exercise power under sub-section (1) of section 263 of the Act there must be material before the Commissioner to consider that the order passed by the Income-tax Officer was erroneous in so far as it is prejudicial to the interests of the Revenue. We have already held what is erroneous. It must be an order which is not in accordance with the law or which has been passed by the Income-tax Officer without making any enquiry in undue haste. We h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court was seized with the following substantial question of law:- Whether the Tribunal is right in law and on facts in upholding the order passed by the CIT under section 263 of the Act on merits and still storing the issue of allowability of deduction under section 54 of the Act to the file of Assessing Officer even though the working of allowability of deduction under section 54F is available in the order under section 263 which is not disputed by the assessee before ITAT. 10. And the Hon'ble High Court, after considering the facts, held as under:- 6. It can thus be seen that though final order of assessment was silent on this aspect, the Assessing Officer had carried out inquiries about the nature of sale of land and about the validity of the assessee's claim of deduction under section 54F of the Act. Learned counsel for the Revenue however submitted that these inquiries were confined to the claim of deduction under section 54F of the Act in the context of fulfilling conditions contained therein and may possibly have no relevance to the question whether the sale of land gave rise to a long term capital gain. Looking to the tenor of queries by the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prejudicial to the interest of the Revenue which could have prompted the CIT to assume jurisdiction u/s 263 of the Act. Therefore, to this extent, the order of the CIT is bad in law and on facts of the case in hand. 19. Second issue relates to insurance claim receivable shown at ₹ 4,52,360/-. 20. The CIT is of the opinion that insurance claim was not received in A.Y 2007-08 and since the assessee is following the mercantile system of account, he was liable to credit insurance claim receivable in profit and loss account on accrual basis 21. Third issue relates to non verification of TDS details in respect of 10 persons to whom total freight paid to hire tanker owners totalling to ₹ 84.24 lakhs. 22. A perusal of the assessment order vis a vis the enquiry made during the assessment proceedings show that the AO did not make any enquiry on these issues and the CIT has rightly assumed jurisdiction u/s 263 of the Act and has rightly set aside these issues to the file of the AO for proper verification. Therefore, to the extent of these issues, we do not find any infirmity in the order framed u/s 263 of the Act and accordingly to this extent the order of the CIT is c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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