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2022 (5) TMI 834 - AT - Income TaxRevision u/s 263 - assessee’s case was selected for limited scrutiny for verifying large commission expenses and low net profit and mismatch in sales turnover - as per DR no enquiry worth its name was conducted by the Assessing Officer on the issues on which assessee’s case was selected for limited scrutiny - HELD THAT:- As in the body of the assessment order the Assessing Officer has not discussed in detail the nature of enquiry conducted by him and the evidences produced by the assessee, however, he nevertheless has mentioned that in response to statutory notices issued from time to time and various order sheet entries, the counsel of the assessee has attended and furnished written replies along with supporting documentary evidences. In fact, in the Office Note appended to the assessment order, a copy of which was obtained by the assessee under Right to Information Act, 2005, the Assessing Officer has clearly and categorically mentioned that he has examined both the issues of large commission expenses and low net profit and mismatch in sales turnover reported in Audit Report and ITR by verifying the submissions and supporting evidences furnished by the assessee and has found nothing adverse in them. Thus, the aforesaid observations of the Assessing Officer in the assessment order and the Office Note coupled with submissions made by the assessee and supporting evidences furnished, which forms part of the record, would clearly reveal that the Assessing Officer has not only made proper enquiry on the issues for which the case was selected for limited scrutiny but being satisfied with the genuineness of the expenses which was established through the supporting evidences, accepted the returned income. Reading of the impugned order of learned PCIT would reveal that he has considered the assessment order to be erroneous and prejudicial to the interest of Revenue only for the reason that the Assessing Officer has not made proper enquiry on the issues, on which, the case was selected for limited scrutiny - facts on record are contrary to the allegation made by learned PCIT. Further, while holding the assessment order to be erroneous and prejudicial to the interest of Revenue, learned PCIT has directed the AO to conduct detailed enquiries on the limited scrutiny issues by examining documentary evidences in respect of huge expenses shown by the assessee. When in course of assessment proceeding, the Assessing Officer has called for the documentary evidences relating to the commission expenses and the assessee has furnished them, it is not understood what more documentary evidences learned PCIT wanted the assessee to furnish. It is very much evident, learned PCIT has not mentioned the nature of evidences to be furnished by the assessee. Therefore, the direction to the Assessing Officer appears to be in vacuum and without any substance. When all the evidences relating to commission/brokerage paid by assessee both to domestic as well as overseas agents are available on record, what more evidences are required to be furnished by the assessee is beyond comprehension. When the facts on record reveal that the Assessing Officer has made proper enquiry on the issues, on which limited scrutiny was directed, by merely referring to Explanation 2(a) to section 263 of the Act, the assessment order cannot be held to be erroneous and prejudicial to the interest of Revenue by making a general observation that proper enquiry, which the Assessing Officer ought to have made was not made. When the Assessing Officer has conducted proper enquiry and the assessee has furnished all documentary evidences and has offered proper explanation for the low net profit shown, merely because, the assessment order is cryptic one without discussing in detail the nature of enquiry conducted and the evidences furnished by the assessee, it cannot be said that the order is erroneous and prejudicial to the interest of Revenue. Certainly, the assessee is expected to have any control over the mode and manner in which the Assessing Officer drafts the assessment order. We are of the view that the Assessing Officer having passed the assessment order after proper enquiry and application of mind, the assessment order cannot be held to be erroneous and prejudicial to the interest of Revenue, so as to, empower learned PCIT to revise it under section 263 of the Act. Appeal of assessee allowed.
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