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TMI Blog2016 (4) TMI 1429X X X X Extracts X X X X X X X X Extracts X X X X ..... monstrated any perversity in such conclusion on facts while invoking powers under S. 263 of the Act. Needless to say, once an enquiry on the issue has been carried out and a conclusion thereon has been arrived at by the Assessing Officer, the same cannot be interfered with under S. 263 merely because the Commissioner wants it to be carried out in particular way. Mere disagreement of the CIT with the order of the Assessing Officer would not in our view render such order erroneous . We find that it cannot be said that the Assessing Officer has acted perfunctorily while dropping the proceedings. Mere ipse dixit of the CIT is not the best foundation for invoking powers under S. 263 of the Act. We find considerable merit in the arguments canvassed on behalf of the Assessee for cancellation of the order of CIT. - Decided in favour of assessee. - ITA No.1087/PN/2013 - - - Dated:- 27-4-2016 - MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM Appellant by : Shri S. N. Puranik Respondent by : Shri S. K. Rastogi, CIT ORDER PER PRADIP KUMAR KEDIA, AM : The above captioned appeal filed by the assessee is against the order of Commissioner of Income Tax- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . According to him, these expenses ought to have been disallowed by the Assessing Officer under section 40(a)(ia) of the Act. However, the Assessing Officer failed to disallow the expenses in compliance of section 40(a)(ia) of the Act, while dropping the proceedings under section 147 of the Act. The CIT observed that since the Assessing Officer has assumed incorrect facts and also incorrectly applied the law while dropping the proceedings under section 147 of the Act, the order of the Assessing Officer dropping the proceedings initiated under section 147 was considered erroneous in so far as it is prejudicial to the interest of the Revenue. Accordingly, show-cause notice under section 263 of the Act was issued on 10.12.2012 giving the assessee an opportunity of being heard to explain as to why the order of the Assessing Officer referred above should not be revised. The relevant extract of the showcause notice is reproduced hereunder :- In respect of above mentioned Assessment Year, the Assessing Officer disallowed an amount of Rs. 13,81,403/- as per the provisions of section 40(a)(ia) of the IT Act, 1961 in respect of commission/ brokerage, garden expenses, transport charges an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Case was heard on 28/12/2010 and after detailed verification, Assessing Officer dropped the proceedings u/s. 147. In the order sheet Assessing Officer has noted Mrs M.N. Kulkarni CA attended alongwith CA S.N. Puarnik from Gadre Bhide Letter dated 27/12/2010, is filed giving detailed submission. It is seen that the disallowance u/s. 40a(ia) has been correctly made and there is no discrepancy in disallowance. We submitted a letter dated 31st January 2011, requesting copy of the order passed if any. We were told no order is passed - notings are made only on ordersheet, and we were allowed to copy the same. However, he levied penalty u/s. 271B by same order sheet entry In view of the above facts we submit as under: 1) Provisions of section 263 are not attracted to the facts and on legal grounds: a) There is no order passed by Assessing Officer, u/s. 143(3) r. w.s 147. Proceedings can be initiated only against order and not order sheet entry. For Example: If Assessing Officer takes hearing of scrutiny case u/s. 143(2) and writes in Order Sheet that case is heard. But he does not pass order and / or serve the Order u/s.143(3) with demand notice, can it b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich was mandatory in terms of Supreme Court decision in case of GKN Driveshafts (India) Ltd. 259 ITR 19. He has accepted the objections. On raising the objections; impliedly accepting the same, he has not passed the Order. We have requested Assessing Officer vide our letter dated 27.12.2010 for a) Xerox copy of the Order sheet recording reasons. b) Copy of Audit Objection letter and reply submitted by Assessing Officer to Audit Party. This will prove that Assessing Officer was NOT satisfied on reasons recorded, but was required so to do at the instance of Audit party / or higher authority. c) When assessee's submission u/s 154 was accepted, by not passing Order of rejection u/s 154(8) within six months, Assessing Officer has rightly, dropped proceeding and finalized the proceedings, therefore, could'nt have issued noticed U/s 148 Section 152(2) Without accepting- Even 154 Order is deemed to have passed accepting Assessee's submission: date of Deemed Order will be 30.09.2009. As such even revision u/s 263 for Order u/s 154 is time barred. Where rectification on the basis of audit objection was dropped, revision u/s 263 on the same audit objection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard to the payment of Rs.3,45,000/- made to Shri Avinash Navathe claimed as purchase instead of professional charge. 7. Aggrieved by the order of the CIT, the assessee is in appeal before us. 8. The Ld. Authorized Representative for the assessee at the outset referred to copy of the reasons for reopening the case under section 147 of the Act for the assessment year 2005-06 as recorded by the Assessing Officer annexed at page 149 of the Paper Book. For the sake of ready reference, the order reasons recorded under S. 148(20 of the Act are reproduced hereunder: Reasons for reopening the case for A.Y. 2005-06 While framing the assessment under S. 143(3), the AO disallowed an amount of Rs. 13,81,403 as per the provisions of S. 40(a)(ia) of the IT Act, in respect of commission/brokerage, garden expenses, transport charges and labour charges, However, the actual disallowance required to be made was Rs. 26,23,068/- which includes professional fees. The same was pointed out by internal Audit party. Hence, there has been understatement to the extent of Rs. 12,41,665/- as per provisions of S. 147 of IT Act. Issue notice u/s 148. 8.1 Ld. AR further referred to the order sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lleged. The different opinion of the CIT on the issue will not entitle him to invoke jurisdiction under S. 263 of the Act. It was thus submitted that the order of Commissioner under section 263 is bad in law and hence requires to be quashed. 9. The Ld. DR relied upon the order of the CIT appealed against. 10. We have carefully considered the rival submissions. The Appellant herein has impugned the revisional proceedings of the Commissioner of Income Tax under S. 263 as bad in law and without jurisdiction. In exercise of power conferred under S. 263, the CIT concerned in the instant case, has set aside the order of the Assessing Officer passed vide order sheet entry dated 28/12/2010 whereby proceedings initiated under S. 147 were dropped. The revisional action under S. 263 was taken against the impugned order u/s 147 on the premise that such order dropping the proceedings under S. 147 is erroneous in so far as it is prejudicial to the interest of revenue. 10.1 We notice that an order under S. 143(3) dated 31/12/2007 was passed in the instant case. Thereafter, a notice under S. 154 was issued by the Assessing Officer for carrying out certain rectification towards alleged def ..... X X X X Extracts X X X X X X X X Extracts X X X X
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