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TMI Blog2024 (3) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... d the observation on the stock, in the audit report already filed by the assessee. Thus, there is clear absence of his satisfaction and there is no independent view of the ld. PCIT even on merits thus, the assessee which has been completed there cannot be the second inning to the revenue without justifying the twin condition to the order passed by the ld. AO. We note that on all the four issue the AO has called for the details, examined the issue and the plausible view on the matter is taken. Merely there is an audit objection, adverse remark of the auditor and the ld. PCIT is not in agreement with the view of the AO the order cannot be sustained as liable to quash as the twin condition provided u/s. 263 that the order should be erroneous and prejudicial to the interest of the revenue fails and therefore, we do not agree with the finding of the ld. PCIT wherein he could not point out any mistake / error in order which is prejudicial to the interest of the revenue. The AO while framing the assessment had taken a possible view, and revenue did not demonstrate the error remain on the part of the ld. AO. In fact, when the ld. AO has conducted the required enquiry and not violated any o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arise. 5. No reasonable opportunity has been provided to the assessee while passing the order u/s 263 of I.T. Act. 3. Brief fact of the case is that the return of income for the assessment year under consideration was filed by the assessee on 07.09.2013 declaring a total income of Rs. 96,56,200/-. Subsequently, the case was selected for scrutiny through CASS and a notice under section 143(2) was issued on 08.09.2014 and the assessment was completed under section 143(3) of the Income Tax Act, 1961 on 22.03.2016 at a total income of Rs. 1,01,08,423/-. 3.1 On culmination of the assessment proceedings on examination of assessment record for the year under consideration the ld. PCIT found that the order passed u/s 143(3) of the Act dated 22.03.2016 was erroneous and prejudicial to the interest of the revenue in as much as certain issues were not properly examined by the AO and the version of the assessee was accepted on face value. Accordingly, a show cause notice under section 263 of IT Act, 1961 was issued on 01.12.2017. 3.2 In response to the aforesaid show cause notice, detailed written reply has been filed on behalf of the assessee firm on 15.02.2018. the reply filed by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exceptions from rigors of provisions of Sec. 194C are not available without supporting evidence. Therefore, the submissions made on behalf of the assessee firm are not acceptable in the absence of requisite evidence. 3.3 Further, it may be relevant to mention here that the impugned assessment order was also subjected to scrutiny by the C AG and therefore, the ld. PCIT stated that he has no hesitation in holding that the AO has not examined the issue in question properly and the allowance of payment of Rs. 1,71,07,035/- is without any basis. I also hold that the action of the AO was erroneous in as much as prejudicial to the interest of the Revenue. 3.4 As regards the transportation receipts of Rs. 82569235/- from M/s ACC Ltd. Tikaria, the ld. PCIT find that the issue in question was not examined by the AO in as much as no question with regard to the transportation receipts and the expenses claimed against such receipts was raised in the course of assessment proceedings. The submission of the assessee that in order to carry out the transportation of goods on behalf of M/s ACC Ltd., the assessee firm has deployed its own bulker (trucks) and therefore the expenses were on lower side a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count is directly linked with other issues discussed herein before and the same does not call for any separate discussion. In light of the aforesaid, the PCIT notes that he has no hesitation in holding that the impugned order is erroneous and prejudicial to the interest of the revenue. At this stage, he consider it appreciate to refer to the significant observations made in various orders of the Hon ble Courts regarding the responsibility of the AO while doing assessment:- Gee Vee Enterprises vs Addl. CIT, Delhi 1 and others (99 ITR 375) CIT vs Jawahar Bhattacharjee [341 ITR 434 (Gau.)] Jagadish Kumar Gulati vs. CIT [269 ITR 71 (All.)] 3.7 It is well settled that if the Assessing Officer fails to make a proper enquiry this is erroneous and prejudicial to the interests of the Revenue vide K. A. Ramaswamy Chettiar v. CIT [1996] 220 ITR 657 (Mad); Addl. CIT v. Mukur Corporation [1978] 111 ITR 312 (Guj); Gee Vee Enterprises v. Addl. CIT [1975] 99 ITR 375 (Delhi); Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 (SC); CIT v. Active Traders (P.) Ltd. [1995] 214 ITR 583 (Cal); Swarup Vegetable Products Industries Ltd. (No. 1) v. CIT [1991] 187 ITR 412 (All); CIT v. Rampiyari Khemka [1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ionery expenses, Tyre tube expenses, Claim Discount expenses. Mess expenses and Conveyance expenses are being attached herewith delineating the expenses incurred at respective branches also. The Expenses have been incurred and spent wholly and exclusively for the purpose of business prudence and commercial expediency. The assessee as discussed earlier has taken contract involving various geographical locations. In order to ensure smooth and hassle free execution of work the assessee has to setup bases at strategic locations. As such offices are taken on the rent basis at such places. 15 Quantitative details of opening and closing stock is being furnished with a caption Statement of Transportation Quantity and Amount Receipt payment . The valuation has been done on the basis of payment made to the transporters for the execution of transportation contracts which constitutes cost in the hands of the assessee. The cost of the work executed but not billed partakes the character of work in progress. 18. Details of receipts such as Transportation receipts, Job Work receipts, Wagon Loading Receipts, Handling charges receipts and Hiring charges for Plant Machinery is being produced herewith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi judicial controversies as it must in other spheres of human activity . On the second issue we note that the ld. PCIT is trying to justify the claim of the assessee with the net profit rate and the expenses incurred by the assessee and merely based on the contention that the ld. PCIT is not in agreement with the view taken by the AO the assessment cannot be hold liable to be sustained u/s. 263 of the Act. As regards the opening and closing stock we note that the ld.AO has called for the details and has examined the issue. Merely in the audit report the auditor has stated that increase / decrease has not been certified by them the order which is passed after examination of the issue cannot be a base to again given the second inning to the ld. AO and review of the order passed after the examination of the issue is not permitted under the law. As regards the fourth issue there is no observation recorded by the ld. PCIT has simply stated that the issue does not require separate discussion. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts held that- 9. We hold that a possible view has been taken by the ld AO in the matter and merely because the ld PCIT is of a different view on the same issue, he cannot resort to invoke revision proceedings u/s 263 of the Act. This is only a case wherein the ld PCIT is trying to substitute his view in lieu of a possible view already taken by the ld AO on the impugned issue on the allowability of LTCL. Reliance in this regard is placed on the decisions of Hon ble Jurisdictional High Court in the case of Gabriel India Ltd reported in 203 ITR 108 (Bom) and in the case of Nirav Modi reported in 390 ITR 292 (Bom). It is also pertinent to note that the Special Leave Petition (SLP) preferred by the Revenue before the Hon ble Supreme Court against the judgement of Nirav Modi was dismissed in 77 taxmann.com 15 (SC). 10. We also find that the Explanation 2 to section 263 of the Act , which was heavily relied upon by the ld DR before us, would not apply to the facts of the instant case as full enquiry was already made by the ld AO in the original assessment proceedings itself. Infact the stand of the assessee was accepted by the ld AO in the assessment proceedings and also before the Revenu ..... 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