TMI Blog2015 (11) TMI 859X X X X Extracts X X X X X X X X Extracts X X X X ..... self has reframed the assessment. In the facts and circumstances of the present case the CIT has not left any scope for the Assessing officer to redo the assessment or pass a fresh assessment order. It is also observed that Ld. CIT has directed the Assessing officer to give an opportunity of being heard to the assessee before passing the fresh assessment order. In our view, giving opportunity of being heard to the assessee by the Assessing officer is also meaningless, particularly when the Ld. CIT himself has reframed the assessment order. The directions given by the Ld. CIT in para 7 of the impugned order are also contrary to the settled position of law. When the Ld. CIT directs the Assessing officer to pass a fresh assessment order, the only proper course for the Commissioner was not to express any final opinion as regards to the controversial points. - Decided in favour of assessee. - ITA No. 573/Chd/2015 - - - Dated:- 3-11-2015 - SHRI H.L.KARWA, HON'BLE VICE PRESIDENT AND MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER For The Appellant : Sh. Ashwani Kumar For The Respondent : Sh. S.K.Mi t tal ORDER PER H.L.KARWA, VP This appeal filed by the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Trading Co. v CIT (2003) 131 Taxman 535 (P H) and the decision of ITAT, Kolkata Bench in Zamirun Bibi Vs. CIT in ITA No. 661/Kolkata/2011 dated 1.9.2011 for the proposition that merely because the order of the Assessing officer was cryptic would not be a sufficient reason to brand the assessment order as erroneous and prejudicial to the interest of Revenue. 4. The Ld. CIT observed that on some of the issues raised in the show cause notice u/s 263(1) of the Act, the Assessing officer had also raised queries and reply / explanation was filed by the assessee to those queries. He has also stated that the Assessing officer had noted that on 24.1.2013, the assessee had produced books of account, bills and vouchers which were verified and certain discrepancies were noted and certain disallowance were made on account of the same. However, in respect of some of the issues, the Ld. CIT was of the view that the Assessing officer has neither examined the issue nor applied his mind to the issue and has taken a decision contrary to law and, therefore, the assessment order was erroneous and also prejudicial to the interest of Revenue. The Ld. CIT set aside the assessment order with the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatively. As a matter of proof we are hereby producing before you the bills of the above said material of the suppliers for your reference. Copy of Mitti purchased account also enclosed for your reference. So,. Valuation of closing stock given by us is very much correct, The goods supplied to us from 16.03.2010 to 31.03.2010 minus closing stock of that goods included in work done figure of ₹ 22,00,000/-. 6. From the above reply it is clear that the goods have been supplied to the assessee on various dates and after 15 days the said party raised the bills against the assessee. It was also contended by the assessee that the bills of Diesel, Dust, Rori, Bricks Reta / Sand etc. debited in its account on 31.3.2010 did not mean that the goods were supplied to the assessee from 16.3.2010 to 31.3.2010. It appears that Ld. Commissioner has not properly appreciated the explanation of the assessee. Shri Ashwani Kumar, Ld. Counsel for the assessee vehemently argued that the points / query raised by the Ld. Commissioner have been duly looked into by the Assessing officer during the assessment proceedings. The Assessing officer was satisfied with the record produced before him and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing officer had not properly examined the issue. The order of the Assessing officer may be brief and cryptic but that by itself does not sufficient reason to brand the assessment order as erroneous and prejudicial to the interest of Revenue. It is well settled law that writing an order in details may be a legal requirement but the order not fulfilling this requirements cannot be said to be erroneous and prejudicial to the interest of Revenue. It is apparent from the records that the assessee submitted it reply and also furnished the requisite information or details to substantiate its claim during the assessment proceedings. The Assessing officer having considered all these issues on which the assessment order is revised u/s 263, the exercise of powers u/s 263 is bad in law. It is also true that if an enquiry is made by the Assessing officer and then objection of the CIT is that such inquiry is not adequate, the CIT would have no jurisdiction u/s 263 of the Act to revise the order of the Assessing officer. In our considered view the Assessing officer has made proper and desired enquires before passing the assessment order. Therefore, the view taken by the Ld. CIT cannot be held ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should have been disallowed. He further observed that the same was the position in respect to the bills bearing Nos. 1 2 dated 10.04.2009 for purchase of mixing plant. The Ld. CIT pointed out that machinery was purchased from Ahmadabad. However, no transportation charges had been debited and / or capitalized. In this regard, it was submitted that the assessee is doing the business of government contractor and required storage space for the storage of construction material, so assessee purchased the land measuring 2 acres 3 kanals and 20 marlas on Gurgaon to Badli Road, Village Budheda in the month of June 2009 for amounting to ₹ 66.71 lakhs. Later on, the assessee installed Mixing Batching Plant at the site. Accordingly, it was contended by the assessee that the above land was very much used for business purpose during the year under consideration. As regards the purchase of the machinery for ₹ 20 lakhs from M/s Bhawani Engineers, Ahmedabad it was contended that these plants have been purchased F.o.R at Gurgaon work site, so no transport charges etc. were paid by the assessee. It was also stated that plant runs on diesel and diesel expenses amounting to ₹ 56.83 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng officer has made the requisite enquiries before framing the assessment order for the year under consideration. In our considered opinion the Assessing officer was satisfied with the record produced before him and explanation given to him by the assessee with regard to the aforesaid points / queries. In the instant case, the Ld. Commissioner initiated the proceedings by pointing out what he saw as glaring illegalities in the assessment order which was subjected to revision proceedings, but what he concluded was that the such assessment order was passed without making proper inquires. The Commissioner finally revised the order for want of proper and desired inquires then shifted the stand, which is not permissible under the provisions of law. As we have already observed hereinabove that the order of the Assessing officer may brief and cryptic but that by itself is not a sufficient reason to brand the assessment order as erroneous and prejudicial to the interest of Revenue. Accordingly, we hold that the Commissioner was not justified in directing the Assessing officer to disallow interest u/s 36(1)(iii) in respect of land and mixing plant and depreciation in respect of mixing plant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been distributed amongst the partners as per the profit sharing ratio written in the aforesaid partnership deed. In our opinion, the conclusion drawn by the CIT on this issue is erroneous. Therefore, the CIT was not justified in stating that assessment order is erroneous in as much as prejudicial to the interest of this Revenue. Recently, the Hon ble Calcutta Hon ble High Court in the case of CIT Vs. S.R. Batliboi Associates in ITA No. 190 of 2009 vide its order dated 24.2.2015 held that Section 185 read with Section 184, although worded in emphatic terms, is not intended to be a mandatory provisions. The question before the Hon ble High Court was as under:- Whether the Income Tax Appellate Tribunal was justified in upholding the deletion of the disallowance amounting to a sum of ₹ 4,49,60,000/- on account of remuneration of the partners under section 185 of the Income Tax Act when the instrument of change in partnership was not filed along with the return? 11. In the above case, the Tribunal has made the following observations:- We observe that there was a change in partnership deed with effect from 1st August, 2004 and the assessee was required to file a cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ural in nature though the word shall is stated but the filing of the instrument of partnership deed is required by the A.O. as mentioned hereinabove to ascertain the genuineness of the existence of the partnership and to ascertain the share of each of the partner as to whether the remuneration being paid is in accordance with the deed of partnership deed and is also in accordance with the limit prescribed under section 40 (b) of the Act. The defect in not filing the copy of the change in instrument of partnership deed along with the return is a curable defect only through section 184(4) provides that the same should be furnished along with the return of income. 12. In the above case, the Tribunal observed that furnishing of certified copy of the revised instrument of partnership deed as per seciton184(4) of the Act is procedural in nature, though the word shall is stated but the filing of the instrument of partnership deed is required by the Assessing officer to ascertain the genuineness of the existence of the partnership and to ascertain the share of each of the partner as to whether the remuneration being paid is in accordance with the limit prescribed u/s 40(b) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The relevant portion of the said judgement reads as follows : It can well be said that section 22(3) is merely a proviso to section 22(1). Thus, a return submitted at any time before assessment is made is a valid return. In considering whether a return made is within time sub- section (1) of section 22 must be read along with sub-section (3) of that section. A return whether it is a return of income, profits or gains or of loss must be considered as having been made within the time prescribed if it is made within the time specified in section 22(3). In other words if section 22(3) is complied with section 22(1) must also be held to have been complied with. If compliance has been made with the latter provision the requirements of section 22(2A) would stand satisfied. Mrs. Das De has not disputed before us that the assessee could have filed his return along with the certified copy of the instrument of change within the period prescribed by sub- section 4 of section 139. In that case, the return would have been perfectly valid and there would have been no violation of sub-section 4 of section 184. But because the assessee filed the instrument of change before the day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... much as prejudicial to the interest of Revenue on this issue. 15. In view of the above discussion, we set aside the order of the CIT in toto and hold that the assessment order dated 28.01.2013 passed u/s 143(3) of the Act cannot be held erroneous in as such as prejudicial to the interest of the Revenue. 16. At his stage, we may also mention yet another aspect of the matter. The Ld. CIT has finally held as under:- 7. In light of the discussion above, the assessment order dated 28.01.2013 passed by the AO is, therefore; set aside to the AO on the aforesaid issues with the direction to the AO to pass a fresh assessment order after making an addition of ₹ 5,95,970/- on account of understatement of closing stock, disallowance of interest u/s 36(l)(iii) in respect of land and mixing plant and of depreciation in respect of mixing plant, and disallowance of deduction on account of interest, salary etc. paid to the partners. Opportunity of being heard shall be provided to the assessee before passing the fresh assessment order. 17. From the above, it is abundantly clear that CIT has exceeded its jurisdiction in virtually reassessing the case. It is true that the revisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing officer to pass a fresh assessment order then he was not required to express any final verdict as regards the controversial points. In this case, the Commissioner has directed the Assessing officer to make the specific additions / disallowances, as mentioned in the impugned order. Therefore, the directions given to the Assessing officer to frame a fresh assessment order is bad in law as this is clearly a case in which the Ld. CIT has exceeded his jurisdiction in reassessing the case. Even the direction given by the CIT to the Assessing officer to provide an opportunity of being heard to the assessee is also of no consequence. 18. It is relevant to observe here that while deciding the appeal on merits we have concluded that the assessment order passed by the Assessing officer cannot be held to be erroneous and prejudicial to the interest of Revenue, therefore, the order passed u/s 263 of the Act is not maintainable. At the same time, we have also concluded that the impugned order is not tenable on the ground that the Ld. Commissioner has exceeded his jurisdiction in virtually reassessing the case instead of remanding the matter to the Assessing officer for fresh assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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