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2023 (10) TMI 87 - AT - Income TaxRevision u/s 263 - Non deduction of TDS u/s 195 on brokerage pad to non-resident brokers - as per CIT AO has not examined this issue and no evidence has been put forth by the assessee to prove that whether such entities have or do not have permanent establishment in India and whether the assessee failed to deduct tax at source u/s 195 of the Act on the alleged brokerage - HELD THAT:- As in the assessment records declaration by the parties of not having any permanent establishment in India having tax residency certificates of other countries were not available. This fact is admitted by assessee as in the paperbook index it is mentioned that the declaration by the parties of not having any permanent establishment in India along with their tax residency certificates have not been filed before the AO and have been filed only for the first time before ld. Pr. CIT. Therefore, when ld. Pr. CIT noticed that no such details were available in the assessment records, he was well within his jurisdiction to invoke the provisions of Section 263 of the Act and carried out the revisionary proceedings and therefore, carrying out such proceedings is well within the provisions of Section 263 of the Act and the relevant grounds of the assessee challenging such invocation of revisionary powers are hereby dismissed. Whether the AO is erroneous and prejudicial to the interests of the revenue? - Whenever an assessee makes any payment outside India, it has to furnish Form 15CB before the banking authorities and such Form 15CB are also uploaded in the income tax portal. So, when the case of the assessee was selected for scrutiny proceedings and in the assessment order ld. AO has observed that the reason includes (1) foreign remittance made to persons located in low tax jurisdiction countries and (2) value of foreign remittance sent by the assessee is higher than the gross total income. As per the audited financial statement against the gross receipts of Rs. 430.16 Crore the net profit before tax is Rs. 1.31 Crore whereas the brokerage paid to agents outside India is Rs. 5.62 Crore. So, based on both the issues as referred by the AO in the assessment order it was bare minimum expected from the AO to have called for the details of all the non-resident brokers to whom the brokerage has been paid and the basis of its calculation and why tax has not been deducted. AO has not called for any such details and therefore, the assessee did not file these details. The copy of the notice u/s 142(1) of the Act has also not been filed by the assessee. We thus, find that no such question was raised by the AO during the course of assessment proceedings about the alleged issue of deductibility of tax at source u/s 195 of the Act on the payment of brokerage - By not calling these details the assessment proceedings are erroneous and since the Revenue is involved which has not been examined by the AO, the assessment proceedings are prejudicial to the interests of the revenue also. Whether Pr. CIT ought to have raised independent enquiry on the issue? - No merit in this issue raised by the assessee because it is not a case of any incomplete enquiry for which ld. Pr. CIT ought to mention that what should have been done by the AO. It is a case where there is an apparent issue mentioned in the reason for selecting the case for scrutiny which should have been examined by the AO but nothing has been done on the part of the AO. CIT has called for the complete details from the assessee which have been filed by it before ld. Pr. CIT -Now, the further course of action cannot be taken up by ld. Pr. CIT to examine each and every party who has claimed to be non-resident and not liable to be taxed in India because it does not have any permanent establishment in India. This exercise ought to be carried out by the AO only. Thus CIT was justified in invoking the revisionary power u/s 263 of the Act and has rightly held the order of the AO dated 25.12.219 as erroneous and prejudicial to the interests of the revenue - Decided against assessee.
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