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2015 (4) TMI 439 - AT - Income TaxRevision u/s 263 - Bogus expenditure - earlier assessment order passed u/s 143(3) r/w Section 153A quashed - Expenses claimed by the assessee company and offered to tax by the recipient company become revenue neutral and, therefore, it cannot be said that the order of the AO was prejudicial to the interest of revenue as submitted by assessee - Held that:- It is well-settled principle that the Revenue authorities are duty bound to tax right person and right person alone. By "right person" is meant the person who is liable to be taxed, according to law, with respect to a particular income. The meaning of "wrong person" is obviously used as the opposite of the expression "right person". Ratio of decision ITO vs Ch. Atchaiah [1995 (12) TMI 1 - SUPREME Court] clarifies that merely because of a wrong person is taxed with respect to a particular income, the AO is not precluded from taxing the right person with respect to that income. Same is the case here when assessee company made a bogus claim of expenditure then the assessee cannot avail immunity from tax liability by stating that the impugned amount of expenditure claim has been taxed in the hands of respective payee companies. The present case is squarely covered in favour of the revenue by the decisions of Gee Vee Enterprises vs ACIT (1974 (10) TMI 29 - DELHI High Court) and CIT vs Nagesh Knitwears P. Ltd. (2012 (6) TMI 65 - DELHI HIGH COURT ) as in the present case, the AO did not raise any query or make any inquiry pertaining to the claim of expenses submitted by the assessee in its books and statements of accounts submitted along with return and this is a clear case of "lack of inquiry". We may also point out that if the AO fails to conduct the said investigation, he commits the error and the word "erroneous" includes failure to make inquiry. In such cases, the order becomes erroneous because necessary inquiry or verification has not been made and not because a wrong order has been passed on merits. We further hold that if from the detailed investigation conducted by the Investigation Wing of the department, it is revealed that the bogus expenses have been claimed by the assessee with the intention to reduce its tax liability, then the order is also prejudicial to the interest of revenue. The argument of the ld. Counsel of the assessee about revenue neutrality is not applicable to the facts and circumstances of the present case. Hence, we are of the view that the CIT(A) invoked provisions of section 263 of the Act in a judicious and proper manner and we are unable to see any ambiguity, perversity or any other valid reason to interfere with the same - Decided against assessee.
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