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TMI Blog2024 (8) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment proceedings. In our considered view, looking at the relevant provisions reproduced above, the assessee in order to claim deduction u/s 35AD of the Act is required under law to furnish requisite form, duly certified by Chartered Accountant in terms of Section 80-IA(7) of the Act. The issue is also not whether it is mandatory or merely procedural to file such requisite form as envisaged u/s 80-IA(7) of the Act but it is a fact that no specific query was made by the AO with respect to his specific issue in hand before us. The assessee has claimed substantial amount of deduction u/s 35AD of the Act and the AO did not enquire into the aspect of whether the assessee had furnished the requisite form as required for claim of such deduction u/s 35AD of the Act. Accordingly, on this issue we are of the considered view that the Ld. Assessing Officer erred in not conducting the requisite enquiry and we hold that Ld. CIT(A) has not erred in facts and in law in holding that the assessment order is erroneous, in so far as prejudicial to the interest of the Revenue so far as this issue is concerned. Decided against assessee. - Shri Siddhartha Nautiyal, Judicial Member And Shri Makarand V. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No: 10CCB and details mentioned therein are not applicable so far as the claim under Section 35AD is concerned but are relating to claim under Section 80IA and since otherwise , the profit Loss account as well as Balance sheet with all its assets were duly vouched, audited and report thereon was already furnished. Also no such reason was recorded by Pr CIT in his show cause notice. 4. The ld Principal CIT further erred both in law and on facts in not appreciating the order passed under Section 143(3) after detailed scrutiny and necessary inquiry, the same could not be held to be erroneous merely because in him opinion, further inquiry is required to be made. Considering the explanations and details given and in view of settled legal position, regarding the law with regard to onus about capital introduced by partners, the order passed by AO is not erroneous or prejudicial to interest of revenue. It be so held now. 5. The ld Principal CIT also erred in law and on facts that the deduction under Section 35AD was wrongly allowed considering the fact that in view of submission of audit report by tax auditors and the appellants submission of details and invoices etc, the conditions for cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm, in some cases copy of ITR and computation of total income had not been made available for verification, in almost all cases there was insufficient balance before the clearance of cheques and amounts either in cash or transfer from other banks/persons have been found to be credited. Accordingly, in view of the above observations, the Principal CIT was of the view that the AO did not make enquiries on the basis of details available on record regarding the source of capital contribution made by these Partners in the assessee firm. The Principal CIT was of the view that the assessing officer should have recorded statements of all the Partners under Section 131 of the Act. Accordingly, the PCIT was of the view that while framing the assessment order, the assessing officer did not make adequate enquiries and therefore, the assessment order for this reason was erroneous and prejudicial to the interests of Revenue. 4. The assessee is in appeal before us against the aforesaid order passed by PCIT. The primary arguments of the Counsel for the assessee before us was that the order passed by the assessing officer could not be held to be erroneous for the reason that in various cases, the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o prove genuineness of loan and creditworthiness of lender. The submission of assessee was that amount was on account of current capital account; and that title of relevant account as 'loan' was inadvertently used as per prevailing practice but in fact it was a current capital account of partner in books of firm. It was further submitted that since assessee had furnished confirmation, identity and other records to establish that in fact amount was given to firm by partner as a current capital, addition could not be made in hands of firm. The ITAT held that since current capital introduced by partner in firm was established, addition could not be made in hands of firm. 8. In the case of Nova Medicare 150 taxmann.com 363 (Telangana) , Assessee-firm had taken loans from two partners and one outsider. The Assessing Officer concluded that none of those persons had creditworthiness to advance loans and doubted genuineness of said loan transactions. Accordingly, he made additions under Section 68 on account of said loan amount received by assessee. The High Court held that in view of decision in case of CIT v. M. Venkateshwara Rao [2015] 57 taxmann.com 373/232 Taxman 123/370 ITR 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10CCB as prescribed under the I.T. Rules quoted above. Further, the A.O. did not call for such details and verify the filing of Form No.10CCB which was one of the conditions for allowing the deduction claimed under Section 35AD of the Act. Since this condition has not been fulfilled, the allowing of the deduction under Section 35AD of the Act is a mistake committed by the A.O. while making the assessment under Section 143(3) of the Act which was also prejudicial to the interest of Revenue. Therefore, the assessment order passed under Section 143(3) of the Act on 27.12.2019 was held to be erroneous and prejudicial to the interest of Revenue for the reason that the A.O. has committed an error in allowing the deduction of Rs. 7,75,12,899/-. 13. Before us, the Counsel for the assessee submitted that on going to the relevant Income Tax Rules, more specifically form 10CCB and Rule 18BBB, there is no reference to Section 35AD of the Act. Accordingly, it was submitted that when the Auditors in Form No. 3CD had certified the amount of deduction claimed by the assessee under Section 35AD of the Act, there was no error in the part of the assessing officer since for the purpose of claiming ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 35AD of the Act amounting to Rs. 7.75 crores and the Assessing Officer did not enquire into the aspect of whether the assessee had furnished the requisite form as required for claim of such deduction under Section 35AD of the Act. 17. Accordingly, on this issue we are of the considered view that the Ld. Assessing Officer erred in not conducting the requisite enquiry and we hold that Ld. CIT(A) has not erred in facts and in law in holding that the assessment order is erroneous, in so far as prejudicial to the interest of the Revenue so far as this issue is concerned. 18. In the result, this ground of appeal of the assessee is dismissed. Now we come to ITA No. 151/Ahd/2022 (Shreeji Cold Storage for A.Y. 2017-18) 19. The assessee has taken the following grounds of appeal: 1. The learned Principals CIT-1 Ahmedabad has erred both in law and in facts in revising and setting aside the Order passed by ld A.O. u/s 143(3) on the ground that the AO failed to examine the details of capital introduced by partners as it was onus to be discharged by the appellant firm to prove identity, creditworthiness and genuineness of transactions of capital so introduced in the books of partners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and rightly allowed as such. It be so held now. 6. There being no material or different facts to hold- that the order passed by ld AO after due application of mind taking a correct view the order u/s 143(3) could not be treated as prejudicial to interest of revenue even considering the aggregate depreciation allowable as per Act It be so held now and order passed u/s 263 setting aside the Order of AO be cancelled and order passed by ld AO be restored. 7. Without prejudice to the above, the order passed by ld Pr CIT is invalid, illegal and bad in law being with no firm conclusion. 8. The ld Principal CIT erred in law and on facts in placing reliance to Explanation-2 to section 263 since it is settled legal position as considered by various judicial pronouncements that it does not give unfettered powers to the Commissioner to assume jurisdiction under section 263 to revise every order of the Assessing Officer to re-examine the issues. It be so held now and order passed by ld Pr.CIT be cancelled. 9. The appellant craves leave to add, alter, modify or delete any of the grounds at the time of hearing. 20. We observe that the issue is involved in the case of M/s. Shreeji Cold Storage in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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