TMI Blog2015 (11) TMI 1131X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the assessee and the reply thereto which would indicate that though the order of assessment is silent on the issue, it must have been discussed during the assessment proceedings. No such material is available before us, even in the assessee’s reply to the show cause notice issued by the learned CIT in revisionary proceedings u/s 263. The Hon’ble Apex Court in the case of Malabar Industries Co. Vs CIT reported in [2000 (2) TMI 10 - SUPREME Court ] has observed that the acceptance of accounting entries as it is without causing enquiries by the Assessing Officer would render the order of assessment erroneous and prejudicial to the interest of revenue. In the light of the facts and circumstances of the case as discussed above, we are of the view that the learned CIT has rightly considered all these aspects before taking action u/s 263 of the Act. - Decided against assessee. - IT(TP)A No.1093/Bang/2013 - - - Dated:- 7-10-2015 - SHRI VIJAYPAL RAO, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER For The Appellant by : None For The Respondent by : Shri Anurag Sahay, CIT ORDER PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER : This appeal by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant prays that the order passed by the learned CIT, B lore III, B lore be quashed. On going through the grounds raised (Supra) we find that the grievance raised in the grounds is that the learned CIT has erred in taking cognizance u/s 263 of the Act and in setting aside the order of assessment for asst. year 2006-07 passed u/s 143(3) rws 144C of the Act vide order dated 18/10/2010. 3. The facts of the case, briefly, are as under:- 3.1 The assessee, a company in the business of software development services, filed its return of income for asst. year 2006- 07 on 29/11/2006, declaring loss of ₹ 9,79,37,638/-. The return was processed and the case was taken up for scrutiny. The assessment was concluded by order passed u/s 143(3) rws 144C of the Act dated 18/10/2010 wherein the income of the assessee was determined at ₹ 2,71,30,061/- as against declared loss of ₹ 9,79,37,638/-. The operative portion of the order of assessment read as under:- In response to notices issued, Sri Sachin Accounts Manager and Authorized Representative appear from time to time. The case was discussed and the relevant details have been brought on records. I. During the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordance with the provisions of sec. 144C of the Income-tax Act 1961 the assessee was asked to file it s acceptance to variation of income determined consequent to the adjustment in Arms length price and to file its objection before the Dispute Resolution Panel on the above issues and any other eligible issues in the said order within 30 days of the receipt of the same. Consequent to which the assessee filed its objections before the Dispute Resolution Panel. The said Dispute Resolution Panel after hearing the case has given direction u/s 144C(5) r.w.s 144C(8) dated 27.9.2010. The assessment in the case is concluded adopting the direction given by the Dispute Resolution Panel as under: Total loss as per return of income (-) ₹ 9,79,37,638 Assessed Loss as discussed in Para I of this order (-)Rs.6,51,91,941 Add: Difference on account of Arms length price suggested by the TPO and subsequently reworked out in accordance with the directions of the Dispute Resolution Panel in its direction dated 27.09.2010. Rs,9,41,68,778 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of Articles 5,7 etc. of the DTAA between India and the concerned counties, examination of the applicability of the provision of sec. 9(1)(vii) rws 195(i) and 40(a)(i) of the Act. In view of the above, the learned CIT at para 12 of the order held that the order of assessment for asst. year 2006-07 passed u/s 143(3) rws 144C of the Act dated 18/10/2010 was erroneous and prejudicial to the interest of revenue as per the provisions of sec. 263 of the Act and consequently cancelled the said order of assessment. The learned CIT then at para 13 of the impugned order directed the Assessing Officer to make a denovo order of assessment after examining and verifying the issue and considering the disallowance of the payments made by the assessee company for data link charges and issuance charges paid/payable to the parties outside India without making TDS thereon, after affording the assessee adequate opportunity of being heard in the matter. 4.1 We have heard the learned DR in the matter and perused and carefully considered the material on record. Before embarking upon an inquiry about the facts available on record and how to construe them, we deem it pertinent to take note of the funda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in that regard. 4.2 Apart from the above principles, we deem it appropriate to make reference to the decision of the Hon ble Delhi High Court in the case of CIT Vs. Sun Beam Auto reported in 227 CTR 113 wherein the Hon ble High Court has propounded a distinction between lack of inquiry and inadequate inquiry. If there is a lack of enquiry, then the assessment order can be branded as erroneous. The following observations of the Hon ble Delhi High Court are worth to note: 12. We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the CIT u/s 263 of the Income-tax Act. As note above, the submission of learned counsel for revenlue was that while passing the assessment order, the AO did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the AO had not applied his mind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 3,41,92,529/- on account of data link charges and insurance charges paid/payable to parties outside India, which it has claimed as not chargeable to tax in India based on the decision of Wipro Ltd., Vs. ITO (Supra) and, that therefore the provisions of sec. 40(a)(i) are not attracted in its case. From a perusal of the order of assessment, it is evident that the assessing officer has neither examined and nor verified this issue nor that he has applied his mind to the matter. Passing the order of assessment is the prerogative of the assessing officer and assessee has no control over the officer for passing the order of assessment in a specific manner. However, if the examination of the specific issue is not discernable from the order of assessment, then the higher forum can go through the show cause notice, if any, issued to the assessee and the reply thereto which would indicate that though the order of assessment is silent on the issue, it must have been discussed during the assessment proceedings. No such material is available before us, even in the assessee s reply to the show cause notice issued by the learned CIT in revisionary proceedings u/s 263. The Hon ble Apex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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