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TMI Blog2018 (9) TMI 1248X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal. - INCOME TAX APPEAL NO.332 OF 2016 - - - Dated:- 11-9-2018 - S.C. DHARMADHIKARI B.P. COLABAWALLA, JJ. Mr. Nitesh Joshi a/w Mr.Atul Karsandas Jasani for the Appellant. Mr. P.C. Chhotaray for the Respondent. P.C. : 1. By this Appeal, the assessee challenges the order passed by the Income Tax Appellate Tribunal Bench at Mumbai dated 19th June 2015 for the Assessment Year 2011-2012. 2. Mr.Nitesh Joshi appearing in support of this Appeal would submit that the questions proposed at pages 23 and 24 of the paperbook are substantial questions of law. 3. He would submit that they squarely arise from the order passed by the Tribunal and impugned in this Appeal. 4. It is stated that the appellant is a company engaged in the business of running of a Five Star Hotel called Hotel Marine Plaza . In order to run the hotel in an efficient manner and to attract guests, the appellant is required to maintain a high standard of operations and it, therefore, purchases numerous goods and articles from various suppliers from time to time. All payments are made by the appellant by account payee cheques and the purchases are supported by bills and delivery challans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umbai Vs. M/s Maharashtra Hybrid Seeds Co. Ltd. [ Income Tax Appeal No.47 of 2002 decided on 4th September 2018 ] 9. On the other hand, Mr. P.C. Chhotaray appearing for the respondent would submit that the order of the Commissioner speaks for itself. He was satisfied that the revisional power ought to be exercised so as to prevent a huge revenue loss. Secondly, he was satisfied that the order of the Assessing Officer was erroneous and prejudicial to the interest of the Revenue. This is not a case of substitution of the views of the Assessing Officer, but a clear case where the revisional power has been exercised to correct the assessment, which is ex-facie illegal and erroneous. 10. With the assistance of both counsel, we have perused the Appeal paperbook and the annexures thereto, including the order of the Assessing Officer and that of the Commissioner. 11. It is evident from the order passed by the Assessing Officer that prior to the same being passed and promulgated, the Assessing Officer issued a communication dated 20th February 2014 to the appellant/assessee. In that he relied upon the information received from the Sales Tax Department of the Government of Maharash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ically recorded that the assessee failed to furnish relevant information and also failed to disclose true and fair affairs of its business. Therefore, Mr.Rahim Maredia, Director of the assessee/appellant was summoned and his statement on oath was recorded in terms of section 131 of the Income Tax Act 1961. The matter pertained to non-genuine bills to the extent of ₹ 3,60,24,582/. This Director was also called upon to give an explanation. The explanation was that these are genuine purchases or business transactions, but the matter is very old and the assessee company would not be able to produce the parties before the Assessing Officer. Thus, neither complete details were produced nor the parties could remain present before the Assessing Officer. Shri Maredia requested that the company is desirous to buy peace of mind and avoid protracted litigation. The company agreed that gross profit on such transactions can be offered to tax. He requested that no penal action be taken. It is thereafter that the Assessing Officer followed and as a matter of consistent policy that though the books of account of the assessee are liable to be rejected but the gross profit of the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfied with this detailed explanation of the assessee. The Commissioner came to the conclusion that the assessee has not disputed that the parties from whom the purchases were claimed to have been made are those whose names appear on the website of the Sales Tax Department as accommodation entry providers. That is why the Assessing Officer called for separate details and they were provided to him. The Assessing Officer is also to investigate in the sense that he/she has to ascertain the truth by due inquiry. If there is failure to make such inquiry, then, his/her order is erroneous insofar as it is prejudicial to the interest of the Revenue. With regard thereto, reference is made to the notice issued by the Assessing Officer to the assessee seeking clarification and explanation. It is clear that if the Value Added Tax Authorities have declared certain parties or suppliers/dealers as 'hawala operators', then, that is a good ground to initiate the investigation. It is in these circumstances, the Commissioner did not agree with the Assessing Officer as also the assessee/appellant before us. There are reasons assigned, which to our mind appear to be cogent and satisfacto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee by a writing/letter and the explanation was that these expenses were incurred in connection of the merger of two existing plants for the manufacturing of shock absorbers. These plants were located side by side at its factory at Mulund. As the layout of the two plants was not conducive, the Management merged those two plants and relaidout the same according to the flow of operations conducive to more production. The exercise of merging the two plants necessarily called for relocation of the facilities as well as adapting the existing structure and other services necessary for the plant as a whole. That is how the expenditure was incurred. This was a business expenditure allowable as deduction in computation of the assessee's income. This explanation was accepted by the Income Tax Officer and the deduction as claimed by the assessee was allowed. 19. It is after completion of this assessment, the Commissioner sought to revise by exercising powers under Section 263 of the Income Tax Act 1961. The Commissioner faulted the assessment by concluding that it was on a presumption that it was a revenue expenditure whereas in his view, the expenditure was in the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s responsibility was provided by the assessee. The Assessing Officer allowed certain claims without making a specific reference to them in the Assessment Order and disallowed some after giving detailed reasons for the disallowance. The Commissioner invoked the powers under Section 263 of the Income Tax Act 1961 after holding that the Assessing Officer has passed the Assessment Order without making any inquiry regarding the allowability of the expenses claimed by the assessee under the head 'corporate social responsibility'. He termed the order as erroneous and prejudicial to the interest of the Revenue. He remanded the matter to the Assessing Officer to carry out fresh assessment in respect of this claim. 23. The Tribunal did not interfere with this order, but the Appeal of MOIL Ltd. was allowed by this Court by holding that wherever the claims were disallowable, they have been discussed in that Assessment Order. There was discussion or reference in respect of the claims that were allowed, but by that alone it cannot be said that the expenses were not incurred under this head or the claim was allowed without making any inquiry. The query pertaining to corporatec social r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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