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TMI Blog2021 (3) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... fication is compulsorily made out and the absence of the same surely makes the order erroneous so as to cause prejudice to the Revenue. But in the present case, sadly the Ld. Pr.CIT has failed to make out a case for further verification of the details and explanations filed by the assessee. Undisputedly the AO had examined the claim of capital gains and business losses returned by the assessee, during assessment proceedings. Even with regard to the issues flagged by the Ld. Pr.CIT, the AO had examined the same with the evidences, details and explanations filed by the assessee. There is no dispute with regard to the aforesaid. Even before the Ld. Pr.CIT the assessee had referred to the said evidences and explained the queries raised by the Ld. Pr.CIT. Without pointing out fallacy in the same so as to raise doubt regarding the veracity of the claim, thus calling for further verification, we cannot agree with the findings of the Ld. Pr.CIT that the issues required further verification and the absence of the same resulted in the assessment order so passed being erroneous. The order of the Ld. Pr.CIT, in the impugned case, falls grievously short of this requirement of pointing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the assessee's claim without making any verification with respect to the various expenses claimed against the capital gains and against its business income and since the same needed verification, the order passed by the Assessing Officer was, therefore, erroneous. Accordingly he set aside the order passed by the AO with the direction to make assessment afresh after considering the issues raised. 3. Aggrieved by the same, the assessee has come up in appeal before us. 4. Before us, the Ld. Counsel for the assessee firstly challenged the findings of the Ld. PCIT of lack of enquiry by the Assessing Officer, for holding the assessment order erroneous. Ld. Counsel for the assessee reiterated the contention made before the Ld. PCIT that due enquires were made during the assessment proceedings and that all the details and evidences were filed by the assessee to the satisfaction of the Assessing Officer. In this regard, our attention was drawn to the submissions dated 17.8.2017 filed before the Assessing Officer during the assessment proceedings, placed before us at paper book pages 38 to 40 alongwith all evidences filed which were placed at pages 41 to 266. 5. The Ld. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a , from whom the bill of repair expenses mentioned above was procured. The A.O. did not care to conduct any enquiry about the genuineness of the assessee's claim of the given expenses. The A.O. just didn't try to find out as to how Mayank Gupta had issued bill for Commission Expenses, as well as for repair of Building, and that too for a vacant land. The smudging of the name at the top of the bill seems intentional with the clear purpose to avoid detection of bogus claim. Further, the bill is also unsigned which escalates the suspicion regarding the given expenses. In spite of such glaring discrepancies, the A.O. had passively accepted the version of the assessee despite the fact that one of the reasons for selection of case for scrutiny was 'Verification of Capital iii) Similarly, no enquiries were conducted by the A.O. to ascertain the genuineness of the third bill, i.e. bill of commission of ₹ 8 lacs from Rajeev insulation Products. It was incumbent upon the A.O. to ascertain the identity of the party concerned, and the genuineness of the transaction. The services rendered by Rajeev Insulation Products so as to make it eligible for receipt of commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Legal charges have been debited in the P L account to the tune of ₹ 56,02,852/-. If is noted that the said expenses are disproportionately higher than the preceding year. If is noted that only general submissions were made in this regard by the assessee. The A.O. did not care to ask the assessee to co-relate the expenses to the exact legal and professional services procured case-wise, and to ascertain the genuineness of the same. e) As per P L account, there is a payment of ₹ 50,000/- for the purchase of some book . The said expenses have been booked under the Miscellaneous Expenses . The A.O. has not cared to go through the details of Misc. expenses and to ascertain whether the expenses claimed were genuine and incidental to the business of the assessee. f) Further, there are huge Travelling Expenses Staff , and foreign travelling expenses of directors claimed by the assessee. Given the fact that there was hardly any worthwhile business transacted by the assessee company, the business relevance and the genuineness of the given expenses has not been probed into by the A.O. g) Salary has been paid to one Heritage Security Intelligence Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n connection and in order to complete sale of property. It was claimed and allowable as expenditure. In the show cause notice, there appears some typing error in mentioning ₹ 8,00,000/- as ₹ 8,80,000/- and accordingly total wrongly mentioned as 28,60,000/- where as correct amount is ₹ 27,80,000/- 2. Repair and maintenance expenses amounting to ₹ 10,33,079/-.: In the show cause notice, there appears some typing error in mentioning ₹ 10,35,079/- instead of correct figure ₹ 10,33,079/-. Details of repair and maintenance expenses were submitted before Learned AO (refer Page no ..... to .....). Details re produced herein below:- Financial Grouping Tally Grouping Debit Repair Maintenance MISC REPAIRS (DEL) 7,500 Repair Maintenance REPAIRS TO OTHER BUILDING (SBD 67,930 Repair Maintenance Office Upkeep 22,504 Repair Maintenance Repair Mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturers and Chemical equipments made of Fibers Glass Reinforcement manufactures and ii. Import of Hard PVC foam. Balsa wood for Indian Railways, Aerospace Wind energy sector and ship buildings. b. Above items are specialized products and not easily available in Indian markets-even though some are available but are of inferior quality and not acceptable to the manufactures of equipment's in government sector I organized sector. Some of the import customers are Indian Railways Coach building factory RCF-Kapurthala, National Aerospace, NSTL Vishakhapatnam, Hindustan Aeronautics Ltd. Etc. and in corporate sector like Suzlon, Sterling group Enercon India, Paharpur Cooling Tower etc. c. These customers float Global tender enquiry for the specialized items required and we on behalf of our principal company in Switzerland I USA and China submit the price and technical bid. All work connected to the technical approval, price negotiation and fill the finalization of the order is looked after by our team of sales, marketing and technical person who have been trained in USA Factory of our foreign principals. d. After the order finalization, all work connected to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oodself. 7. Travelling expenses of staff and foreign travelling expenses directors: the assessee has incurred Travelling expenses amounting to ₹ 19,61,571/-. In comparison to ₹ 23,22,948/- in previous year. The assessee is line of business requires extensive travelling. The principal of assessee is a swiss based company. Assessee is working under trade name Composite Polymers Specialties Company, a Unit of Indian Sulphacid Industries Limited. The assessee travels frequently to attend workshops, launches of the products. The assessee has submitted complete details of travelling expenses alongwith bills and vouchers. Intact for foreign travelling copy of Invitation/email trails were also asked by learned AO and produced by the assessee. (Copies attached .......................) From the above it can be slated that assessee has incurred travel conveyances expenses and thus correctly allowed by learned AO. Under the above circumstances, your good self will appreciate that learned AO has carried out complete enquiry, including independent inquiry and after being satisfied with the details submitted before him from time to time has allowed the claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation as required in the facts of the case and thereafter allowed the claims of the assessee. The assessment order is stated to be not erroneous on this ground. It is further stated mat merely a different view from that of the Assessing Officer by itself could not have been a ground for exercising jurisdiction u/s. 263. If was also submitted that an order can be interfered with under the revisionary provisions not only when the order is held erroneous but it also has to be prejudicial to the interest of Revenue. Several case laws have been relied upon. In the present case, the Assessing Officer completed the assessment without any application of mind and without conducting any worthwhile enquiries as is evident from the reasons spent out in the show cause letter for initiating the revisionary proceedings u/s. 263 of the Act. The AO blindly accepted assessee's claims without any independent verification as will be evident from the ensuing discussions. There were no subsequent events that were not available to the AO at the time of making the assessment. It has been held by many courts that where there is lack of proper enquiry or application of mind the invoking of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In view of the above, it is clear that the AO has passed the order dated 06.12.2017 in an extremely careless, casual and perfunctory manner without caring to go though the details of the case and conducting any worthwhile enquiries on critical issues. The AO failed to exercise due diligence in respect of each and every issue involved in the assessee's case, and has passed a summary assessment order after simply obtaining a few documents from the assessee and placing them on record. The order passed by the A.O. is, therefore, held to be erroneous in so far as it is prejudicial to the interest of Revenue. The same is accordingly set-aside with the directions to the A.O. to make the assessment afresh after inter alia considering all the facts/issues discussed above. The A.O. is also directed to allow reasonable opportunity of being heard to the assessee before passing the assessment order in this case. 10. As is evident from a bare perusal of para 5-9 above the Ld. Pr.CIT has dealt with each issue flagged in her show cause notice, and admitted to the fact of details, evidences and explanations vis- -vis. the same being filed by the assessee, but has held that they need furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as it is prejudicial to the interests of the revenue, he, may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation.- For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- Explanation-1 .............................. ..................................................... ..................................................... Explanation-2 For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,- (a) The order is passed without making inquiries or verification which should have been made; 13. The order of the Ld. Pr.CIT, in the impugned case, falls grievously short of this requirement of pointing out the absence of enquiry which should ..... X X X X Extracts X X X X X X X X Extracts X X X X
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