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M/s Shri Shakti Credits Limited, Kanpur Versus C.I.T. -II, Kanpur

2015 (7) TMI 938 - ITAT LUCKNOW

Revision u/s 263 by CIT(A) - regarding service tax issue - Held that:- This is by now settled position of law that if there is lack of enquiry by the Assessing Officer or if there is lack of application of mind by the Assessing Officer, the assessment order is erroneous and prejudicial to the interest of Revenue and in those situations, the learned CIT can exercise his powers u/s 263 of the Act.

A very general query was raised by the Assessing Officer in his questionnaire dated 16/12/ .....

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e on pages 28 to 31 of the paper book also. There is no reply regarding service tax aspect and therefore, in our considered opinion, there is complete lack of enquiry on service tax aspect by the Assessing Officer.

Commission payment aspect - Held that:- Assessing Officer has very much raised a query regarding services rendered by commission agents with documentary evidence. But in the reply of the assessee, he has furnished copy of agreement and copy of commission bills along with th .....

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ssee. - ITA No.345/LKW/2013 - Dated:- 24-7-2015 - Shri Sunil kumar Yadav and Shri A.K. Garodia, JJ. For the Petitioner : Shri P. K. Kapoor, C.A. For the Respondent : Shri Vivek Mishra, C.I.T., D. R. ORDER PER A. K. GARODIA, A.M. This is assessee s appeal directed against the order passed by learned CIT-II, Kanpur dated 30/12/2010 for the assessment year 2008- 2009 passed by him u/s 263 of the Act. 2. The grounds raised by the assessee are as under: 1. BECAUSE the "CIT" has erred in law .....

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which show cause notice under section 263(1) dated 14.03.2013 had been issued and accordingly the same deserves to be quashed. 3. BECAUSE the assessment order dated 30.12.2010 was "no order" in the eyes of law and accordingly the same could not have been subjected to revision under section 263 of the Act. 4. BECAUSE the direction for fresh assessment as per Para 7 of the order dated 28.03.2013 as has been impugned in the present appeal, is wholly unenforceable in law as the earlier ass .....

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tax; could not have held that the deduction of ₹ 1,73,30,720/- claimed by the appellant and allowed in the assessment order dated 30.12.2010 was prejudicial to the interest of Revenue and accordingly no revision under section 263 was permissible on this issue. 6. BECAUSE the "CIT" has erred in holding that payment of handling charges as made to - (a) M/s Muren Impex (P) Ltd. 1,23,21,518 (b) M/s E-commodities 2,00,00,000 are ''clouded with doubts as no business requiremen .....

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nation dated 22.03.2013 (submitted during the course of revisionary proceedings. 8. BECAUSE merely on account of 'doubt' lurking in the mind of "CIT, the admissibility of such payment could not have been disputed and the assessment order dated 30.12.2010 could not have been termed as erroneous and prejudicial to the interest of Revenue on this count. 9. BECAUSE even if the services rendered by the payees/ as listed by the appellant in Para 6 of its explanation dated 22nd March, 2013 .....

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lated to the Directors of the appellant company; the view taken by the Assessing Officer in favour of admissibility of the payments, could not have been substituted by the view of "CIT" and accordingly revision of the assessment order dated 30.12.2010 on this ground too was not maintainable. 11. BECAUSE the payment of ₹ 75,00,000/- as made to M/s K.J. Associates had been allowed in the assessment by taking a probable view by the Assessing Officer and the "CIT" was not j .....

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of ₹ 1,73,20,720/- in the profit & loss account on account of service tax paid and the reason for the objection is that as per CIT, the assessee has shown receipt of handling charges of ₹ 12,37,47,784/- which has been credited after excluding the element of service tax and therefore, as per learned CIT, service tax cannot be debited to profit & loss account. He also submitted that the second objection of learned CIT is that the assessee has debited a sum of ₹ 4,09,21,5 .....

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ssessee to file copy of account of service tax paid amounting to ₹ 1,73,20,720/- and to file copy of challans so that payment may be verified. He also submitted that query was made regarding payment of commission by the assessee of ₹ 3,89,89,250/- and ₹ 19,32,266/- totaling ₹ 409.22 lac. He also pointed out that the reply submitted by the assessee before CIT on 22/03/2013 is available on pages 5 to 21 of the paper book. He also submitted that the reply submitted by the as .....

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(v) CIT vs. Sunbeam Auto Ltd. [2011] 332 ITR 167 (Del) (vi) CIT vs. Ratlam Coal Ash Company [1988] 171 ITR 141 (MP) 5. As against this, Learned D.R. of the Revenue supported the order of learned CIT. 6. We have considered the rival submissions. We find that this is by now settled position of law that if there is lack of enquiry by the Assessing Officer or if there is lack of application of mind by the Assessing Officer, the assessment order is erroneous and prejudicial to the interest of Revenue .....

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able expenditure or not because the receipt were accounted for by the assessee after reducing service tax there from as has been stated by learned CIT in his notice and Learned A.R. of the assessee could not point out any defect in the reply available on pages 28 to 31 of the paper book also. There is no reply regarding service tax aspect and therefore, in our considered opinion, there is complete lack of enquiry on service tax aspect by the Assessing Officer. 6.1 Regarding the commission paymen .....

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ered by the commission agents. Hence, in our considered opinion, there is lack of application of mind by the Assessing Officer even after making query and therefore, in the facts of the present case, the exercise of the revisionary power by learned CIT u/s 263 appears to be proper. 7. Now we examine the applicability of various judgments cited by Learned A.R. of the assessee. 7.1 The first judgment cited by Learned A.R. of the assessee is the judgment of Hon'ble Allahabad High Court rendered .....

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arties against the handling charges after excluding the element of service tax and assessee also debited the amount of service tax in the profit & loss account and there is no query by the Assessing Officer on this aspect. We have also seen that in the query letter issued by the Assessing Officer, there is no query on this aspect and therefore, there is lack of enquiry. Regarding the second aspect regarding the services rendered against payment of commission, a clear finding is given by lear .....

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mind. Therefore, this judgment of Hon'ble Allahabad High Court is not applicable in the present case. 7.2 The second judgment cited by Learned A.R. of the assessee is the judgment of Hon'ble Gujarat High Court rendered in the case of Arvind Jewellers (supra). This judgment is also not applicable in the present case because in that case, it was found that the Assessing Officer made the assessment after considering the relevant material and the explanation offered by the assessee in pursu .....

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hat case, all the additions made by learned CIT in order passed by him u/s 263 were deleted by the Tribunal and thereafter, it was held by Tribunal that since all the addition were deleted on merit, the order passed by CIT u/s 263 is set aside and quashed. Hence, there is no finding in this Tribunal order regarding validity of order passed by CIT u/s 263 without considering the issue on merit and in the present case, the issue on merit is admittedly not properly examined by the Assessing Officer .....

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Ploymers (supra). In this case, it was held that CIT must give reasons and assessee must be given opportunity to be heard. There is no quarrel on these two aspects but in the present case, this is not the objection of Learned A.R. of the assessee that no reason has been given by CIT in his order or that no opportunity was given to the assessee by the CIT. The next basis of decision in this case is that there is no material to show that the order of Assessing Officer is prejudicial to the intere .....

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vice by commission agent and therefore, allowing deduction for commission payment is also prejudicial to the interest of Revenue. Because of these facts, this judgment is also not rendering any help to the assessee. 7.5 The next judgment cited by Learned A.R. of the assessee is the judgment of Hon'ble Delhi High Court rendered in the case of Sunbeam Auto Ltd. (supra). In this case, it was held by Hon'ble High Court that the opinion of the Assessing Officer in treating the expenditure as .....

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