TMI Blog2015 (1) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... have been substantial tax effect and thus the cause of revenue has suffered. Further, the order of the AO is in clear violation of the legal provisions as enumerated in the Income Tax Act, 1961. Thus, the very sanctity of the Act has been eroded and may serve as a very bad precedent”. Yet, finally he revised the order for want of “proper requisite and desired inquires” and thus shifted the goalpost. That’s not permissible under the scheme of the law, as a revision order can only be passed on the ground on which the assessee has been given reasonable opportunity of being heard, and as it is not open to Commissioner to set out one reason for revising the order but actually revise the order on some other ground. In our humble understanding, lack of proper inquiries, which an Assessing Officer ought to have conducted on the facts of the said case, is altogether a different reason from inadmissibility of a claim of deduction or an income which ought to have been brought to tax. In view of the above discussions, as also bearing in mind entirety of the case, we are of the considered view that the impugned revision order is contrary to the scheme of law, and should be quashed for this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 15,78,500 ( b ) Professional charges ₹ 36,000 ( c ) Legal fees ₹ 36,850 ( d ) Loading of material ₹ 62,82,650 Total ₹ 79,37,250 Therefore, these expenses are not admissible as provided in section 40(a)(ia) of the Income Tax Act, but the AO has allowed the same. iv. The assessee firm, as per balance sheet, has shown FDR and securities receivable worth ₹ 32,65,650 under the head Current Assets . The amount of FDR and security is to be bifurcated as to interest on FDR and security amount for closing balance/ work in progress may be verified but the same was not done by the AO. v. An amount of ₹ 2,65,650 has been recorded as unsecured loan from Shri N K Singhal in the balance sheet. Necessary verification regarding identity, creditworthiness of Shri N K Singhal and genuineness of transaction was not made by the AO. 4. Having so set out the infirmities in the assessment order dated 28th November, 2008, learned Commissioner proceeded to issue the show cause notice to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e erroneous in so far as it is prejudicial to the interest of the revenue to the extent of the amount of addition of ₹ 2,65,000 . Yet, when it came to operative part of the impugned order, learned Commissioner had a different tone altogether and he simply restored the assessment order to the file of the Assessing Officer for fresh adjudication after making proper enquiries as was evident from the following concluding paragraph: In view of the above, it is clear that the AO has passed the order without proper consideration of facts and without following the law laid down by the legislature and without making requisite and proper enquiries. As such the order passed by the AO is erroneous and prejudicial to the interest of the revenue and is set aside to be framed afresh after making proper enquiries. The AO is directed to make fresh assessment in accordance with the law. 6. What thus started with a disapproval of the stand taken by the Assessing Officer on merits, resulted in the assessment order being restored to the file of the Assessing Officer for fresh assessment in accordance with the law and after making proper inquiries . Be that as it may, the assessee is ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culation gain or loss . The extracts from show-cause notice, which have been reproduced in the impugned revision order at pp. 1 and 2, do not, however, even remotely support that stand. The stand taken in the show-cause notice is that, on merits, set off is not permissible in as much as show-cause notice states that as per the provisions of s. 73 of the IT Act, any loss computed in respect of speculation business carried on by the assessee shall not be set off except against profits and gains of another speculation business , and, therefore you (the assessee) are not allowed to adjust the speculation loss . The showcause notice, therefore, clearly refers to declining what the CIT perceives as a set off of speculation loss against business profits. That is a categorical disentitlement of set off. In the final conclusions in the impugned revision order, however, the CIT once again deviates from the stand so taken and concludes as follows: In view of the foregoing, the assessment order dt. 27th Dec., 2007 passed by the AO is considered to be erroneous and prejudicial to the interests of the Revenue. Since the AO has not taken the necessary details to verify whether the profits a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the assessee had given satisfactory replies. No action was taken under s. 263 in respect of these two issues. However, in the said order the CIT mentioned the hire charges as the ground for revising the assessment. This point had not been mentioned as a ground in the show-cause notice. The High Court held that in as much as the CIT had not chosen to show these two points as the errors in making the final order and the final order under s. 263 refers only to the inference of hire charges being exigible to tax which was not mentioned at all in the show-cause, obviously the assessee had no opportunity to meet that point. (Emphasis, italicsed in print, supplied) 10. The ratio of the decision, clear from the above observation, is that if a ground of revision is not mentioned in the show-cause notice issued under s. 263, that ground cannot be made the basis of the order passed under the section, for the simple reason that the assessee would have had no opportunity to meet the point. . 11. The other judgment which supports the case of the assessee is that of the Punjab Haryana High Court in CIT vs. Jagadhri Electric Supply Industrial Co. (1983) 140 ITR 490 (P H). T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers thereunder in accordance with law. If the grounds which were available to him at the time of the passing of the order do not find a mention in his order appealed against, then it will be deemed that he rejected those grounds for the purpose of any action under s. 263(1) of the Act. In this situation, the Tribunal, while hearing an appeal filed by the assessee, cannot substitute the grounds which the CIT himself did not think proper to form the basis of his order. We respectfully understand this judgment as holding, by necessary implication, that if the CIT has not mentioned the ground on which action is proposed to be taken under s. 263 in the show-cause notice, it is deemed that he was not satisfied that it was a fit ground for taking action under the section, with the result that the final order, if based on the ground which he had earlier considered not fit for taking action under the section, will have to be set aside as not based on any ground which may justify his belief that the order passed by the AO was erroneous insofar as it is prejudicial to the interests of the Revenue. . 10. We are in considered agreement with the views so expressed by the coordinat ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
