9911796707
TMI Blog2024 (9) TMI 1113X X X X Extracts X X X X X X X X Extracts X X X X ..... Issues of transactions with NSEL commodities and provision for bad and doubtful debts have been considered by the AO during original assessment proceedings and subsequently in reassessment proceedings, where is error in reassessment order dated 24.03.2022 so as to make the same prejudicial to the interest of revenue, CIT-DR could not controvert the above fact situation except supporting the revision order passed by the PCIT. Complete details were examined by the AO in the reassessment proceedings and framed assessment u/s. 147 r.w.s.144B of the Act after examining these details. Even these were answered by the assessee in reply to questionnaire issued along with notice u/s. 142(1) while completing reassessment. Hence, it is a full verification case and AO has verified complete facts and after verification completed the reassessment. Hence, we find no reason to hold that the reassessment order is erroneous insofar as prejudicial to the interest of revenue on this very jurisdictional issue. Hence, we quash the revision order passed by PCIT and allow this appeal of assessee. - Shri Mahavir Singh, Vice President And Shri S.R. Raghunatha, Accountant Member For the Appellant : Shri D. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.07.2013, the transactions of the assessee in NSEL platform are more than Rs. 1.31 crores. He noted that the amount receivable is reported to be Rs. 33.93 lakhs from NSEL commodities. After examining the information, profit loss account, balance sheet and other details and verification of details submitted by assessee viz-aviz the issue flagged and data available, reassessment was concluded and reassessment order was passed u/s. 147 r.w.s. 144B of the Act. 4. Subsequently, the PCIT on examination and perusal of assessment records of the assessee for the relevant assessment year 2014-15, issued show-cause notice u/s. 263 of the Act for setting aside the assessment by revising the assessment vide dated 28.07.2023 on the following two issues:- 2. The records related to the assessment were prused. IT is seen from the records that, no action has been taken to assess Rs. 33,93,000/- being receivable from NSEL Commodities. The suppressed income/undisclosed incomes is to be taxed at applicable rate. 3. Further the provision for Bad debts amount of Rs. 15,91,000/- has been debited as expenditure in Profit and loss account. In this connection, the expenditure is a mere provision only. Hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t assessment of income requiring revision. Therefore, the order of the Assessing Officer dated 24/03/2022 is deemed to be erroneous in so far prejudicial to the interests of revenue in terms clause (a) of Explanation (2) to section 263 of the Income-tax Act, 1961. 22. Hence, the order of the Assessing Officer passed u/s 147 r.w.s. 144 of the Income-tax Act, 1961 dated 24/03/2022 vide DIN: ITBAAST/S/143(3)/2021-22/1041497458(1) is set aside and restored back to the file of the Assessing Officer for the limited purpose of verification of Transactions of NSEL Commodities and provisions of bad debts claim and for necessary order in accordance with law after providing due opportunity of hearing to the assessee. The assessee shall produce all the necessary evidences in relation to the aforesaid transactions before the Assessing Officer and the Assessing Officer shall cause necessary enquiries as per law. Aggrieved, assessee is in appeal before the Tribunal. 5. We have heard rival contentions and gone through facts and circumstances of the case. Before us ld.counsel for the assessee, first of all drew our attention to the paper-book filed by it and page 1 wherein, a letter to the AO filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out by you. 5.1 The ld.counsel for the assessee then took us through the reassessment order passed u/s. 147 r.w.s.144B of the Act dated 24.03.2022 and stated that the assessee has explained the transactions and the AO in his reassessment order at para 2 had noted the same as under:- As per the information available with the department, due to the fact that there were suspicious source of funds of many of the investors, transactions carried out without physical possession of underlying commodities etc., trading in NSEL (National Spot Exchange Ltd) was suspended on 31.07.2013. Assessee, Shri Ashok Kumar Jain is one of the persons who had transacted in NSEL platform. IT is seen from the Trading and Profit and Loss account for the year ended 31.03.2014, the assessee has shown sales from NSEL commodities at Rs. 68,21,000/- and NSEL commodities purchases at Rs. 67,42,700/-. Thus, during the short period of four months from 1.4.2013 to 31.07.2013, the transactions of the assessee in NSEL platform in sale and purchases is more than Rs. 1.31 crores. The amount receivable is reported to be Rs. 33,93,000/- from NSEL commodities. and vide para 5, he framed assessment as under:- 5. Assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court has clearly pointed out once a query has been raised by the AO during the assessment proceedings and the assessee has responded to that query, it would necessarily follow that the AO has accepted the assessee s submission, so as to not deal with that issue in the assessment order. The Hon ble High Court of Bombay considering another decision of the same High Court in the case of GKN Sinter Metals Ltd., vs. ACIT reported in 371 ITR 225 has categorically pointed out that an assessment order passed u/s. 143(3) of the Act does not reflect any consideration of the issue, it must follow that no opinion was formd by the AO in the regular assessment proceedings. This submission was negatived by the Hon ble Bombay High Court and the relevant paras 10 11 reads as under:- 10. It is undisputed position before us, that query was raised on the very issue of reopening during regular Assessment proceedings. The parties have responded to it and the Assessment Order dated 30 January 2018 makes no reference to the above issue at all. However, once a query has been raised by the Assessing Officer during the assessment proceedings and the assessee has responded to that query, it would neces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the same on 25 th January, 2005 explaining the manner of distribution of common expenses for delaying the process of claiming deduction under Section 80IA/IB of the Act. All this would indicate that Assessing Officer had formed an opinion while passing the order dated 9 th March, 2005. This Court in Aroni Commercials Ltd. v/s. Assistant Commissioner of Income Tax 367 ITR 405 had occasion to consider somewhat similar submission made by the Revenue and negatived the same by holding that when a query has been raised with regard to a particular issue during the regular assessment proceedings, it must follow that the Assessing Officer had applied his mind and taken a view in the matter as is reflected in the Assessment Order. Besides, the manner in which an Assessing Officer would draft/frame his order is not within the control of an assessee. Moreover, if every contention raised by the assessee which even if accepted is to be reflected in the assessment order, then as observed by the Gujarat High Court in CIT v/s. Nirma Chemicals Ltd. 305 ITR 607, the order would result into an epic tome. Besides, it would be impossible for the Assessing Officer to complete all the assessments which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ays down a two- pronged test to exercise the revisional authority i.e., firstly, the 17:06:54 assessment order must be erroneous and secondly, it must be prejudicial to the interests of the Revenue. Further, Explanation 2 to Section 263 of the Act delineates certain conditions and circumstances when the order passed by the AO can be said to be erroneous and prejudicial to the Revenue. 20. Clause (a) of Explanation 2 to Section 263 of the Act further stipulates that if an order is passed without making an enquiry or verification which should have been made, the same would bestow a revisional power upon the Commissioner. However, the said Clause or any other condition laid down in Explanation 2 does not warrant recording of the said enquiry or verification in its entirety in the assessment order. 6.1 Even the Hon ble High Court of Bombay in the case of PCIT vs. Shivshahi Punarvasan Prakalp Ltd., in ITA No.397 of 2018, order dated 05.08.2022 has considered the issue of no enquiry case or inadequeate enquiry even after the insertion of Explanation 2 in para 32 as under:- 32. In this appeal, we are concerned with the assessment year 2006-07. Prior to the insertion of Explanation 2, it w ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
