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TMI Blog2023 (11) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Act, 1961 [hereinafter referred to as "the Act"], for the Assessment Year 2016-17. 2. The grounds raised by the assessee read as under: "1. The order u/s 263 of the Act has been passed beyond the period of limitation prescribed u/s 263(2) of the Act and is thus illegal and bad in law. 2. The ld. PCIT has grossly erred in law and on facts in assuming jurisdiction u/ 263 of the Act on the erroneous ground that the impugned assessment order is erroneous in so far as it is prejudicial to the interest of the revenue. 3. Lt. PCIT grossly erred in not appreciating that in order to invoke s. 263, two conditions must be fulfilled viz. the impugned assessment order must be erroneous and that error must be prejudicial to the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." 3. A perusal of the order passed by the learned PCIT reveals that the error noted by him in the order passed by the Assessing Officer so as to assume revisionary jurisdiction, was non-examination of the issue of contractual payment made to a related party of the assessee without deduction of tax at source as applicable, which warranted disallowance of 30% of the expenses as per section 40(a)(ia) of the Act. The order reveals that the ld. PCIT noticed these alleged facts from the Tax Audit Report furnished by the assessee during assessment proceedings which, in the Schedule requiring disclosure of payment made to related persons as specified under Section 40A(2)(b) of the Act, revealed payment made by the assessee of a sum of Rs. 86,55, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. PCIT was that the Tax Audit Report had inadvertently mentioned "Granules Work" as the nature of payment made to M/s. Anand Synthetic when in reality the payment was made for 'purchase of Granules' and not any "work" relating to granules. The ld. PCIT, we find, did not accept this explanation of the assessee for want of substantiation. His finding in this regard at paragraph No. 4.1 of the order are as under:- "4.1 The reply filed by the assessee has been perused. Assessee has stated that it had paid 86,55,661/- to the partnership firm on account of purchase of Granules from it. However, the assessee has not furnished any bills or invoices which could substantiate that the said transaction pertained to purchase of Granules and not of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bills or invoices to evidence the fact that the payment of Rs. 86.55 lakhs was made for 'purchase of granules' and not for any 'granules work'. He further found that no qualitative or quantitative details of granules were furnished by the assessee and no evidence regarding payment of Sales Tax and VAT on the aforesaid purchase was furnished as stated by the assessee. Thus, briefly put, the ld. PCIT found that the assessee was unable to prove the genuineness of its explanation that no payment was made for granules work but the payment made related to only purchase of granules. 7. The facts on records, however, we find, are to the contrary, clearly demonstrating that the assessee had not incurred any such alleged "granule work" expenses, bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consumption expenses, schedule of which at P-4, shows only raw-material consumption and no job work expenses debited to it. 9. The Annual Accounts of the assessee therefore clearly reveal that the assessee has not incurred any expenses of the nature of job work charges. On the contrary, the schedule of sales, P-1, at paper-book page no. 23, reveals that the assessee has earned income from job work to the tune of Rs. 47,21,424/-. Even otherwise, we have noted that the total manufacturing expenses incurred by the assessee during the year, which ought to have included the job work expenses if any incurred by the assessee, was to the tune of Rs. 60,99,563/- while, as per the ld. PCIT, the Tax Audit Report revealed granules work payment paid by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt for the same with reference to TDS vide notice issued under Section 142(1) of the Act dated 05.09.2018 placed before us at paper-book page no.34; in response to which the assessee had furnished complete job work account which revealed clearly the fact of job work done by the assessee for Anand Synthetic. Copy of the ledger account was placed before us at paper-book page No.37-39. He also pointed out that the copy of the TDS deducted on job work done by the assessee was also placed before the Assessing Officer, which account was placed before us at paper-book page nos. 40-41. Our attention was also drawn to the fact that during scrutiny proceedings the Assessing Officer had asked for details of opening closing stock, purchase and sales i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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