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2015 (4) TMI 587 - AT - Income TaxRevision u/s 263 - disallowance under section 40A(2)(b) and section 40A(3) - Held that:- A perusal of the correspondence relied upon by the Ld. Counsel reveals that the AO has not applied his mind on this aspect of the matter. A perusal of letter dated 13.10.11 placed on the paper book at Sl. No.G reveals that the AO had sought details of retiring partners Shri Ramnivas Ramratan Gupta and Shri Nikhil Ramnivas Gupta along with return of income, capital account and balance sheet of last three years. However, the said details had not been submitted by the assessee while replying to the said letter vide letter dated 18.10.11, copy of which has been placed at Sl. No. I of the paper book. Moreover, as observed above, we find that the issue relating to the applicability of section 40A has not been examined by the AO. There was sufficient material available on the file which was enough for the Ld. CIT to form the opinion that the AO had not applied his mind on this aspect of the matter. Hence, we do not find any infirmity in the order of the Ld. CIT while invoking provisions of section 263 on the issue of the application of provisions of section 40A(1) and (2). So far as the contention of the assessee regarding the application of provisions of section 40A(3) is concerned, we find that the said issue has also not been examined by the AO. The Ld. CIT has not made any addition but has only set aside the order of the AO on the above said two issues for examination afresh after giving opportunity of hearing to the assessee. Hence, the assessee will be at liberty to present its case before the AO.- Decided against assessee.
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