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2013 (2) TMI 18 - AT - Income TaxJurisdiction u/s 263 assumed by CIT(A) - assessment finalized u/s 143(3) - payments made to related parties u/s 40A(2)(b) by the assessee has been allowed by AO without checking the reasonableness of expenditure and without investigation/verifying any evidence for actual rendering of services - Held that:- AO had completed assessment u/s 143(3) and vide questionnaire seeking detail of commission and syndication fee with nature of services rendered and assessee do replied to that query explaining Rs.57,36,986/- which was part of earlier year expenditure of Rs.95 lakhs. As from the reading of questionnaire it can be concluded that AO wanted to know about commission and syndication fees only which he might have noted from computation of income wherein the assessee had claimed deduction a sum of Rs.57,36,986/- being out of earlier year expenses. AO did not enquire about the guarantee fees paid to M/s Religare Holding Ltd. and M/s Oscar Investment Ltd. and neither the assessee explained it. The contention of Assessee that adequate enquiry was conducted by the AO during course of original assessment proceedings is not correct. Though break up of expenses of finance charges and syndication fees was available with the AO yet he did not raise any question regarding the reasonability and genuineness of expenses. The written submissions filed before AO on dated 20.12.2007 & 21.6.2008 & 29.8.2008 does not anywhere deal with the payments of guarantee fee amounting to Rs.33,06,000/- & Rs.77,14,000/- - Observations of CIT that assessment order was erroneous and prejudicial to the interest of revenue is correct & had rightly initiated proceedings u/s 263 but the action of the CIT in not considering the merits of objections raised by assessee and just remitting back to AO for re-adjudication was not appropriate. Thus remit the file back to the office of CIT for adjudication and recording his findings on the objections to show cause notice which were filed by assessee vide letter dated 11.1.2010.
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