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TMI Blog2022 (6) TMI 932X X X X Extracts X X X X X X X X Extracts X X X X ..... t this stage. A perusal of the consequential order clearly shows that the additions which have been proposed by the Pr.CIT, more so the issues that have been raised by the Pr.CIT have not resulted into any of the addition in the assessment. Obviously, if the Pr.CIT had done cursory verification of the details that has been produced by the assessee in the course of proceedings u/s.263 of the Act, maybe, the Pr.CIT himself would have dropped the proceedings. However, having invoking the powers u/s.263 of the Act, no addition on the said issues has been made. The additions have been made on other issues; clearly shows that the issues raised in the proceedings u/s.263 of the Act are unsustainable and liable to be quashed. We are not going into merits of the additions made in the consequential order. Only on the ground that no specific addition has been made in respect of specific issues which have been raised in the proceedings u/s.263 of the Act, therefore, the order passed u/s.263 of the Act is hereby quashed. - Decided in favour of assessee. - ITA No.34/CTK/2021 - - - Dated:- 30-5-2022 - Shri George Mathan, Judicial Member And Shri Arun Khodpia, Accountant Member For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 20th April, 2021 resulting in a delay of 315 days. In the application for condonation of delay, it has been alleged that delay was due to lapses on the part of AR of the appellant. It is alleged that appeal was filed belatedly due to Covid-19 but it started in March, 2021 in India and prior to that month, there were few cases in India. The appellant should have furnished necessary evidence in this regard by filing an affidavit from his AR (whose whereabouts are not known). In the absence of same, the appeal should not be condoned. In the case of UOI vs. Tata Yodogawa Ltd. 1988 (38) Excise Law Times 739 (SC), the Hon'ble Supreme Court took the view that the Government being impersonal takes longer time in filing the Appeals/Petitions than the private bodies or the individuals. Even giving that latitude, there must be some way or attempt to explain the cause of such delay and as there was no whisper to explain what legal problems occurred in filing the special leave petition, the application for condonation of delay was dismissed by t he Supreme Court. In another case of Collector of Central Excise, Madras v. A .. M.D. Bilal Co. 1999 (108) Excise Law Times 331 (SC), th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of provisions of Section 260A of the Act that where no such provisions as condonation of delay in filing appeal under section 260A has been made, then no application under section 5 of the Limitation Act could be filed. It was also the submission that there is no provision in the Act for condonation of delay and consequently cannot be condoned on this ground also. 5. Having heard to the parties, we found that the assessee in its application has given the reason for delay. It is also well-known fact that if the technicality is pitted against substantial justice, the technicality must step back and substantial justice should prevail, though we do feel that the reasons given should have been more elaborate but considering the fact that the substantial problems were going on during Covid-19 period, we feel that the delay in filing of the appeal by the assessee is liable to be condoned and we do so. 6. Coming to the powers of the ITAT in respect of condonation of delay, a perusal of the provisions of Section 253(5) of the Act, there is a specific provision that the Tribunal can admit an appeal or permit the filing of a memorandum of cross-objections after the expir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any. But the, Assessing Officer had failed to examine the issue and make appropriate disallowance. (c) The AO had failed to examine issue of low net profit rate of 0.17% (Rs. 7,62,404/-) against total receipts of Rs.43,38,39,099/- disclosed by the assessee during the year and surprisingly he had not raised any query on this issue. (d) The assessee had debited a huge expenditure of Rs.2,26,06,601/- under the head 'Transporting and Discounting Charges paid' booked under broad head Administrative and Other expenses . No expenditure under this head had been booked in the preceding A.Y.2013-14. However, the AO had failed to examine the genuineness of the expenses claimed by the assessee. (e) The AO had failed to examine the contradiction between the Auditor's note that no depreciation is charged in shopping Mall (Shanti Towers) since it was not put to use during the year and the assessee's submission on 11.01.2016 before the AO that the company has already commenced operations of its Shopping Mall on 31.10.2013 and the capital expenditure on the said Mall has been transferred from capital work-in-progress to respective fixed assets. 9. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors for expenses others as on 31.03.2014. As per details, Rs.2,60,21,286/- was payable to Indian Overseas Bank, Kolkata in respect of cheques issued to the creditors. The balances with banks were shown at Rs.1,23,486/- as on 31.03.2014. These cheques had not been encashed and to that extent, the liability for expenses had not been rightly shown and bank balances were required to be modified. The A.O. had failed to examine this issue. (b) As per note-28 to the balance sheet, it was mentioned that statement from Bank of Baroda was not received during the year. Hence balances of parties were subject to confirmation and reconciliation. The A.O. had failed to examine this issue. (c) The appellant company had shown low profit of Rs.7,62,404/- on gross receipts of Rs.43.38 crores which worked out to 0.17%. The A.O. had failed to examine this issue. No query was raised on this issue. (d) The appellant company had claimed transport discounting charges of Rs.2.26 crores in the year under reference. In spite of fact that no such expenses were claimed in the earlier year, the A.O. failed to call for necessary details and make the necessary disallowances indicatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were valued at cost but the method of valuation was not submitted. The A.O. allowed the loss in the shares without conducting further inquiries. It was held by the Hon'ble Mumbai High Court in para-10 that it was a case of no enquiry. The observations of the Hon'ble High Court in para-10 are reproduced as under: 10. We have examined the rival submissions made before us. We find that during the course of assessment proceedings, the Assessing Officer had by a letter dated 12th January, 2000 for the subject Assessment Year sought various details along with documentary evidence, if any, to enable the Assessing Officer to complete the Assessment. One enquiry in the letter dated 12th January, 2000 mentioned at Serial No.8 thereof was the method of valuation in case of unquoted shares (i.e.listed shares) namely M/s. Mayo India Ltd. The Appellant responded to the above letter dated 12th January, 2000 by its letter dated 31st January, 2000. However, the letter dated 31st January, 2000 did not address the enquiry at Sr. No.8 in the letter dated 12th January, 2000 namely method of valuation of unlisted shares. The Appellant's response was only that the unquoted shares ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income showing agricultural income of Rs.15 lakhs. During the course of scrutiny proceedings, the assessee filed revised return of income wherein the claim of agricultural income was enhanced to Rs.2.81crores (which was 1872% higher). The A.O. did not apply his mind to this aspect. The Hon'ble Himachal Pradesh High Court held in para-119 120 held that any enquiry by the A.O. without application of mind is non-est. The view taken by the A.O. was not plausible in law. It was further held that the A.O. in the given facts, should have done complete and proper enquiry. The Hon'ble Delhi High Court in the case of Gee Vee Enterprises (99 ITR 375) held as under: The reason is that it is not the Income-tax Officer but a superior officer like the Commissioner who is exercising a revisional jurisdiction suo motu there under. The superior officer could be trusted with a larger power. The only requirement for the exercise of this power is that the Commissioner should consider that the order passed by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the revenue . What is the meaning of erroneous in this context ? I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant portion of the order of Hon'ble ITAT is reproduced below:- 28.1 Ld. Special counsel has rightly pointed out that the expression, 'inquiry1, 'lack of inquiry' and 'inadequate inquiry', have not been defined and, therefore, when the action of the AO would be suggestive of lack of inquiry or inadequate inquiry, will depend upon the facts obtaining in a particular case. What emerges as a broad principle from the various decisions is that where the AO has reached a rational conclusion, based on his inquiries and material on record, the Commissioner should not start the matter afresh in a way as to question the manner of his conducting inquiries. It is not the province of the Commissioner to enter into the merits of evidence; it has only to see whether the requirements of essential inquires and of law have been duly and properly complied with by AO or not. 28.2 It is well settled that before the Commissioner can invoke his powers u/s 263, he has to arrive at a conclusion that the assessment order is erroneous in so far as it was prejudicial to the interests of the revenue. Then only the powers u/s 263 can be invoked. Therefore, if AO accepts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the power could not have been exercised to allow the Assessing Officer to make up the deficiency is altogether an incorrect impression of the law. In para19, the Hon'ble Kolkata High Court held that It is not the law that the Assessing Officer occupying the position of an investigator and adjudicator can discharge his function by perfunctory or inadequate investigation. Such a course is bound to result in erroneous and prejudicial orders. Where the relevant enquiry was not undertaken, as in this case, the order is erroneous and prejudicial too and therefore revisable. Investigation should always be faithful and fruitful. Unless all fruitful areas of enquiry are pursued the enquiry cannot be said to have been faithfully conducted. Reliance is placed on the decision of Hon ble Delhi High Court in the case of CIT vs. Nagesh Knitwers P. Ltd others (345 ITR 135) wherein it was held that when the A.O. has allowed claim of the assessee in a slipshod manner without conducting any inquiry, then in the case of no inquiry, the assessment order is not only erroneous but also prejudicial to the interest of revenue. The order of assessment has to be a speaking order and when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such application of mind is not discernible from the assessment order. The Tribunal held that, the Commissioner in proceedings under section 263 also had all these details and material available before it, but had not been able to point out defects conclusively in the said material, for arriving at a conclusion that particular income had escaped assessment on account of non-application of mind by the Assessing Officer. In the present case, the A.O. had not raised any question as regards second, third and fourth issue. In respect of first and fifth issue, the A.O. failed to apply his mind. Similarly in the case of Braham Dev Gupta vs. PCIT (88 taxmann.com 831), the AO had carried out necessary inquiries in respect of loan creditors and value of perquisite u/s.28(iv) of the Act. It was held by the Hon'ble Delhi Tribunal in para-35 that at the most, this was a case of inadequate enquiry on the part of the AO and not a case of lack of enquiry by any stretch of imagination. In the case of CIT vs. Nirav Modi (71 taxmann.com 272), during the assessment proceedings, the Assessing Officer issued a query memos to the assessee, calling upon him to justify the genuineness of the gifts. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e phrase prejudicial to the interests of the Revenue is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income-tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the Revenue. 6. The ld. AR of the appellant company has argued that it was incumbent upon the Pr. CIT to conduct some inquiry before passing the revisional order u/s.263 of the Act. In this regard, kindly refer to show-cause notice u/s.263 issued by the Pr. CIT, Sambalpur wherein he had raised as many as 11 questions. A plain reading of section 263 of the Act reveals that the CIT can make inquiry on his own if he feels so and can also direct the A.O. to conduct inquiries. This very question was answered by the Hon'ble Delhi High Court in the case of Gee Vee enterprises (99 ITR 375) as under: The question would naturally arise whether the firm was formed merely fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... open. In Gabriel India Ltd. (203 ITR 108) (Bombay High Court) law on this aspect was discussed in the following manner (page 113): The decision of the Delhi High Court in the case of ITO vs. D. G. Housing Project Ltd. (343 ITR 329) is applicable where some enquiry has been made by the A.O. but not in a case, where no enquiry was made by him. It was held in para-16 as under: 16. Thus, in cases of wrong opinion or finding on merits, the CIT has to come to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the order under Section 263 is passed. In such cases, the order of the Assessing Officer will be erroneous because the order passed is not sustainable in law and the said finding must be recorded. CIT cannot remand the matter to the Assessing Officer to decide whether the findings recorded are erroneous. In cases where there is inadequate enquiry but not lack of enquiry, again the CIT must give and record a finding that the order/inquiry made is erroneous. This can happen if an enquiry and verification is conducted by the CIT and he is able to establish and show the error or mistake made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sustainable and should be upheld. 15. We have considered rival submissions. 16. A perusal of the order of the ld. Pr.CIT shows that the show cause notice issued u/s.263 of the Act has been issues only on 1st March, 2019. Admittedly, the assessee has responded to the show cause notice though on 26.03.2019. In the said reply, the assessee has stated that he would submit the details of the bills on 29.03.2019, which is evident from the extract as made by the Pr.CIT. What happened to that bills is not coming out of the order of the Pr.CIT. The reply filed by the assessee has also admittedly not been looked into nor considered by the ld. Pr.CIT. A perusal of para 12 of the order of the Pr.CIT, shows that he has practically in verbatim extracted the issues from the show cause notice and reproduced it in para 12. Then in para 13, he says that the AO has not examined and verified many of the relevant issues either factually or from the angle of relevant provisions of the Act before allowing such claims and due to paucity of time, it is not possible to probe further at this stage. After this a substantial number of decision have been raised in regard to the power of the Pr.CIT u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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