Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2011 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2011 (3) TMI 1039 - ITAT, DELHIRevision u/s 263 - AO had allowed certain expenses without examining the genuineness of expenses in view of the fact that a complaint made by a close family friend of the Director was received by the AO on 19/11/2008 indicating misappropriation and siphoning of the funds of the company - Held that:- AO had treated 90 per cent of repairs and maintenance expenditure of capital in nature. The AO issued questionnaire specifically asking the assessee to furnish the addresses of the parties to whom the payment exceeding Rs.50,000/- which being submitted AO had noted that the assessee had not furnished complete details of contractors decided it against the assessee but on appeal CIT (Appeals) deleted the addition relying on the expenditure incurred by the assessee in earlier years. Thus it is apparent that the CIT (A) has also gone into genuineness of the expenses & identified the expenditure of Rs.29,49,360/- capital in nature and the balance expenditure of Rs.55,11,54,867/- was held to be Revenue in nature. Thus the order of the AO has merged in the order of the CIT (A). As regards disallowance of foreign travel/tour expenses CIT (A) has gone through the details. The assessing officer had considered the foreign travel expenses liable to FBT and the assessee had paid the tax thereon. If the expenditure was in nature of personal expenses of the Directors, there was no reason to charge FBT on such expenditure. CIT (A) has gone through the VISA and Pass-ports of the Directors on test-check basis and has found that the expenditure was incurred for the purpose of business. Therefore, the order of the AO has merged in the order of the CIT (A). As regards issue that the Directors have siphoned off money of Rs.50 crores in assessment year 2002-03 to 2008-09 by illegal withdrawals of money by way of addition to the fixed assets, the assessment cannot be held to be erroneous merely on hear-say or failure to make inquiries into the allegations contained in complaint that too for the purposes of making the roving enquiries. The expenditure incurred by the assessee on fixed assets has been found to be genuine by the AO, which has been also upheld by the ld. CIT (Appeals). Therefore, the AO had considered the issue in relation to the renovation and maintenance expenses and foreign travelling expenses. Merely because a complaint has been filed, the assessment cannot be treated as erroneous and prejudicial to interests of revenue on the grounds that the assessing officer had passed such order without making proper enquiries. Thus as CIT(A) had adjudicated upon on all the issues therefore, the assessment order has merged in the order of CIT(A). Hence, CIT was debarred to assume jurisdiction u/s 263 of the Act - appeal filed by the assessee is allowed.
|