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TMI Blog2014 (10) TMI 1039X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Sandur Sales Services Pvt. Ltd. [ 2012 (11) TMI 1305 - ITAT BANGALORE ] had held in favour of the assessee in similar facts and circumstances, relying on the decision of Hon ble Apex Court in Attar Singh Gurmukh Singh [ 1991 (8) TMI 5 - SUPREME COURT ] So, effectively, the ld. CIT was trying to substitute a lawful view taken by AO with that of his own. The Hon ble Apex Court in the case of Max India Ltd [ 2007 (11) TMI 12 - SUPREME COURT ] had clearly held that when two views are possible and ITO had taken one view with which Commissioner does not agree, it could not be treated as an erroneous order prejudicial to the interest of revenue, unless view taken by ITO was unsustainable in law. The Hon ble Bombay High Court in Gabriel India Ltd. [ 1993 (4) TMI 55 - BOMBAY HIGH COURT ] has clearly held that section 263 did not visualize substitution of judgment of Commissioner with that of ITO. We are, therefore, of the opinion that this was not a fit case where powers u/s. 263 could have been invoked. The original assessment order could be stated to be erroneous insofar as it was prejudicial to the interests of revenue. Order of the CIT u/s. 263 is quashed. - Decided in fav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ukh Singh v. ITO, 191 ITR 667 (SC). 5. However, the CIT was not impressed with the above reply given by the assessee. He held that Mumbai Bench of the Tribunal in the case of Star India Ltd. in ITA No.7476/MUM/07 320/MUM/10 had observed as under:- an Assessing Officer is part of revenue machinery, even though his job involves exercise of certain quasi-judicial powers, and decisions of the appellate forums, in general, do not prevent him from raising demands on those issues, unless these decisions are accepted by the revenue. No doubt, the Assessing Officer should follow the judicial decisions as long as he can do so without sacrificing the legitimate interests of the revenue, but we cannot visualize a situation in which his not raising demands on those issues will not affect the interests of revenue. In case the Assessing Officer does not raise the demands on the issues which have been decided in favour of the assessee by jurisdictional High Court, even though the income tax department is in appeal against the same, interests of the revenue will be clearly prejudiced and remain unprotected. The orders of the higher judicial authorities bind the Assessing Officer to the extent that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gurmukh Singh (supra), had come to the conclusion that section 40A(3) was not attracted to payments directly made by the assessee to bank account of suppliers. Even if there were judgments of other High Courts, that might have taken a different view; as per the ld. AR, it cannot be said that view taken by the AO was not a possible one. As per the ld. AR, this would not be a sufficient reason for invoking powers vested with the CIT u/s. 263. Reliance was placed on the decision of the Hon ble Apex Court in CIT v. Max India Ltd., 295 ITR 282 (SC) and that of the Hon ble Bombay High Court in CIT v. Gabriel India Ltd., 203 ITR 108 (Bom). 8. Per contra, ld. DR supported the order of the ld. CIT. According to him, view taken by the AO could not be considered as a legitimate one. As per the ld. DR, AO had not examined the reply given by assessee, nor had correctly assimilated the decisions relied on by the assessee. 9. We have perused the orders and heard rival submissions. There is no dispute that the issue regarding application of section 40A(3) of the Act was verified by the AO during the course of assessment proceedings. That, queries were raised in this regard and assessee had given r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the transaction from origin to the conclusion and ensures that the payee alone receives the payment and also as there is no case of any unaccounted money that could be said to have been employed to make the payments. Ours is a covered matter by the Hon ble Income Tax Appellate Tribunal which is based on the judgment of Supreme Court. Hon ble ITAT Bangalore Bench A in the case of The Dy. CIT Vs M/s Sandur Sales and Services Pvt. Ltd, ITA No.872(BNG)/2011 A.Y.2005-06 has allowed the appeal of the Assessee in similar circumstances. The extract of the Decision is enclosed to this letter for your kind reference. The decision is based on the reference of the Hon ble Supreme Court Case, the relevant extract of the Apex Court are referred in the above said Tribunal case, the extract of this is reproduced below :- The Hon ble Supreme Court in the case of Attar Singh Gurmukh Singh Vs ITO reported in 191 ITR 667 has held as under; The Hon ble Supreme Court noted that the intention to make payment by crossed cheque or crossed DD is to enable the assessing authority to ascertain that the payment is genuine and not out of the undisclosed source. It is also noted that sec.40A(3) is Intended t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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