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TMI Blog2018 (11) TMI 1419X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Department : Varinder Mehta, Commissioner of Income-tax ORDER VIJAY PAL RAO (JUDICIAL MEMBER).- 1. This appeal by the assessee is directed against the revision order dated March 28, 2018 passed by the learned Principal Commissioner of Income-tax, Jaipur-II, Jaipur under section 263 of the Income-tax Act for the assessment year 2013-14. The assessee has raised the following grounds of appeal : "1. In the facts and in the circumstances of the case the learned Principal Commissioner of Income-tax, Jaipur-II, Jaipur has erred in passing the order under section 263 of the Income-tax Act, 1961 which is void ab initio deserves to be quashed. 2. In the facts and in the circumstances of the case the learned Principal Commissioner of Income-tax, Jaipur-II, Jaipur has erred in holding that the order passed by the learned Assessing Officer under section 143(3) of the Income-tax Act, 1961 dated January 29, 2016 was erroneous and prejudice to the interests of the Revenue. 3. In the facts and in the circumstances of the case the learned Principal Commissioner of Income-tax, Jaipur-II, Jaipur has erred in holding that the learned Assessing Officer has erred in granting ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en approved by the SEZ authorities as evident from the shipping bills and invoices of sales made by the assessee during the year under consideration. He has further submitted that the assessee produced all the records during the assessment proceedings and the Assessing Officer on examination of the relevant record was satisfied with the claim of the assessee. Therefore, when the entire sales are export made from the SEZ unit engaged in handmade jewellery and role of machinery is nil, then the revision order passed by the learned Principal Commissioner of Income-tax on the basis of suspicion about the setting up of SEZ unit by splitting up the existing business and further doubting the quantum of articles manufactured and sold by the assessee in a short span of time is not based on any tangible material or fact. The learned authorised representative has referred to the purchase bills and sales vouchers which were duly approved by the SEZ authorities and submitted that when all the transactions of purchase and sale at the SEZ unit were carried out after approval of the SEZ authorities, then there was no question of suspecting the purchases and sales made by the assessee from the SEZ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Principal Commissioner of Income-tax is based on the presumption of wrong facts that sale quantity is more than the purchases made by the assessee during the period. Another point raised by the learned Principal Commissioner of Income-tax is the short span of period during which the assessee has made the first sale of finished goods. The learned authorised representative has submitted that since the assessee is not using machinery in the manufacturing process but all the manufacturing is done by the artisans who have been paid wages. He has referred to the chart indicating the names of the artisans, the work for which he has been engaged and the wages paid to him. Thus when the assessee has got the jewellery manufactured through artisans and not through the machinery, therefore, only the workers had carried out the manufacturing job with their own tools. The assessee, however, purchased the machinery and tools such as polish machine and other tools required for the manufacturing activity. He has referred the list of articles and tools which were purchased by the assessee. Thus the learned authorised representative has submitted that the assessee produced the entire relevant record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of the provisions of section 10AA whether the assessee has fulfilled the conditions for eligibility of claim under section 10AA. Thus the order passed by the Assessing Officer without conducting the proper enquiry is erroneous so far as prejudicial to the interests of the Revenue. The assessee has not disputed that prior to the setting up of the SEZ unit, the assessee was having its business from the Janta Colony and, therefore, the possibility of using the facility at Janta Colony for the SEZ unit activity cannot be ruled out. The learned Principal Commissioner of Income-tax has clearly made out the case of more sale than the purchases made by the assessee during the year under consideration when this is the first year of manufacturing activity of the SEZ unit. All these facts were required to be verified by the Assessing Officer. However, when the Assessing Officer has not conducted any enquiry then the said order passed by the Assessing Officer suffers from error and liable to be set aside. He has relied upon the impugned order of the learned Principal Commissioner of Income-tax. 5. We have considered the rival submissions as well as the relevant material on record. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l annexure for the assessment year 2013- 14 is already submitted in our earlier reply dated September 15, 2014. 3. That the assessee is a partnership firm and engaged in the business of trading and manufacturing of silver and gold jewellery, bullions and precious and semi precious stones. 4. The business address of the assessee-firm is A-129, Janta Colony, Jaipur and H-115, SEZ-II, Sitapura, Jaipur. 5. The address of the godown is A-129, Janta Colony, Jaipur and H-115, SEZ-II, Sitapura, Jaipur. The assessee is also maintained books of account at the same address. Copy of LOA for SEZ is enclosed herewith. (pages 1 to 2) 6. Complete detail of partners in the prescribed format is enclosed herewith. Copy of the partner's capital account is also enclosed here with. (page 3 to 8) 7. That the assessee is maintained current account with ICICI Bank, C Scheme, Jaipur (001205000369) and ICICI Bank (001205030972). (Page No. 9) 8. N.A. 9. That the most of work of manufacturing process is done manually so the assessee is not maintained any register of assets. 10. The assessee is used mainly gold, silver, diamond, precious and semi-precious stone as raw material for gold and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing creditors are enclosed herewith- (pages 52 to 53) (i) Sheetal Manufacturing Co. Pvt. Ltd. (ii) Mohan Lal Mahendra Kumar Jewellers 6. That during the year under consideration the assessee has received interest of ₹ 71,85,125 from loans and advances arid cred ited the same in the profit and loss account. Complete details of loans and advances made along with loan amount and interest rate is enclosed herewith. (page 54) 7. Copy of extension letter of LOA is enclosed herewith. (page 55) 8. As per the provisions of the Wealth-tax Act 1957 a partnership firm is not liable for wealth-tax return. Kindly do the needful and oblige. Thanking you, Yours faithfully, Date: 21-7-2015 Place : Jaipur (S. L. Poddar) Counsel for the assessee It is manifest from the replies filed by the assessee that the assessee has clearly explained all the details of the partnership firm, nature of busi ness of trading and manufacturing and further the SEZ unit of the assessee at Sitapura, Jaipur. Thus the assessee has explained the facts that the original business of the partnership firm was being carried out from the premises A-129, Janta Colony, Jaipur and a new SEZ unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner of Income-tax was not satisfied with the reply of the assessee and noted that the purchase of gold made by the assessee on May 23, 2012 of 509.890 gms whereas the assessee made first export of mixed gold and silver jewellery on May 31, 2012 having gold net weight at 686.770 gms. The learned Principal Commissioner of Income-tax has further noted that the total gold purchased during the year was 809.89 grams whereas the sale of jewellery having gold of 1087.388 gms. Thus according to the learned Principal Commissioner of Income-tax, the sales shown from the SEZ unit appar ently exceeds the availability of gold at the SEZ unit. All these facts as understood by the learned Principal Commissioner of Income-tax led to the revision of the assessment order. We find that as per the details of purchase and sale bills, the learned Principal Commissioner of Income-tax has taken the gold weight of jewellery sold vide bill dated May 31, 2012 at 686.770 gms. However, the pure gold weight of the said jewellery was 402.399 gms as against the purchases of 509.89 gms vide bill dated May 23, 2012. These details are also shown in the sale invoices that the gold content is only 402.399 gms as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we find that the assessee has brought this fact during the assessment proceedings that the earlier business activity from Janta Colony office was discontinued and the stocks remained lying at Janta Colony office since 2006. The assessee has also shown that the stocks lying at the Janta Colony office was not disturbed either by the Assessing Officer or by the learned Principal Commissioner of Income-tax. These facts were avail able on the assessment record. We find that all the relevant details as well as documents were available on the assessment record and the learned Principal Commissioner of Income-tax has also not pointed out that any further record was required for examination of the claim of deduction under section 10AA of the Act. Rather, the assessment order was set aside on the ground that the Assessing Officer has passed the order without conducting a proper enquiry in respect of the claim made by the assessee which makes the order erroneous and prejudicial to the interests of the Revenue. The learned Principal Commissioner of Income-tax has not given a concluding finding that the claim of the assessee is not allowable but the matter was set aside to the record of the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer. Consequently, the learned Principal Commissioner of Income-tax while invoking the provisions of section 263, is required to give a finding that the order passed by the Assessing Officer on the merits is erroneous and prejudicial to the interests of the Revenue. The Assessing Officer has conducted an enquiry and took a view which is a possible view under the law then even if the view taken by the Assessing Officer is not acceptable to the learned Principal Commissioner of Income- tax, it would not render the assessment as erroneous and prejudicial to the interests of the Revenue so as to empower the Commissioner to invoke the provisions of section 263 of the Act. Undisputedly, when the case in hand is not in the category of lack of enquiry, then the learned Principal Commissioner of Income-tax cannot exercise his jurisdiction under section 263 for asking the Assessing Officer to re-do the assessment. This view is supported by the decision of the hon'ble Delhi High Court in the case of ITO v. DG Housing Projects Ltd. [2012] 343 ITR 329 (Delhi) wherein the hon'ble High Court has held in paragraph 18 as under (page 340) : "18. It is in this contex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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