TMI Blog2014 (12) TMI 1174X X X X Extracts X X X X X X X X Extracts X X X X ..... he at page 5 acknowledged that the amounts were split into two parts and one was taken as advance and was given to lorry owners and the balance was paid subsequently by way of cash. This means the ld CIT admits after enquiry that the version of the assessee is correct. While so, we don’t find any justification in the ld CIT directing the AO to verify the details filed by the assessee and determined whether they are factually correct. When the enquiries conducted by the ld CIT have not thrown up any material to demonstrate that the order of the AO was erroneous and prejudicial to the interests of the revenue, the ld CIT should have dropped the proceeding u/s.263.The Ld CIT also cannot without himself conducting enquiries and coming to a conclusion on the basis of material found as a result of enquiry, give direction to the AO to conduct fresh verification. The assessee has satisfactorily explained the issues raised by the ld CIT and in such circumstances, it cannot be said that the order of the AO is erroneous or prejudicial to the interest of the revenue. - Decided in favour of assessee. Deduction u/s.80C - Held that:- Coming to deduction u/s.80C of the Act, it is not the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of section 40A(3) of Act, though the assessee has made payment in excess of ₹ 20,000/- by bifurcating it into two amounts, one named as cash and other to the lorry account, both of which have been done on the same day. Further, deduction u/s.80C with reference to the LIC premium paid was also found fault with. Certain discrepancy was also noticed on the TDS credit. The assessee gave a detailed reply, copy of which is at pages 50 51 of paper book. Evidences were produced before the Ld. CIT. After considering the submissions of the assessee, the Ld. CIT concluded that the payments were made to various lorry owners and wherever the total payment exceeded ₹ 20,000/- per trip, the amounts were split into two parts, one was taken as advance given to the lorry owners and other one paid subsequently by way of cash. He records that the tax was deducted at source by the assessee. Thereafter, at page 7, he records as follows: As already mentioned, enquiries were conducted with lorry owners by the assessing officer during the course of these proceedings. Lorry owners did not appear before the assessing officer and only one person appeared i.e. Mohd. Kareem, Nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when transportation is completed, the balance amount in question is paid to lorry owners or drivers, as the case may be. He referred to the order of the Ld. CIT, wherein, at page 5, it is acknowledged by the CIT that the payments are split into two parts and made at two different points of time. On a query from the bench, he produced ledger account copies of all the lorries to demonstrate that the payments have been made at different points of time and that TDS has been collected. He vehemently contended that all the books of account, TDS collection, journal entries, vouchers etc. were examined by the AO during the course of scrutiny assessment and order has been passed u/s.143(3) after coming to a conclusion that there is no violation of section 40A(3) and, under such circumstances, the Ld. CIT cannot invoke his powers u/s.263 of the Act. He further submitted that the list of 21 cases was given as sample to the Ld. CIT and the entire modusoperandi was explained to him and the Ld. CIT did not find any error therein. He also pointed out that the confirmation letter in evidence of the fact recorded was filed before the Ld. CIT and copy of the same is at pages 65 69 of the paper boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Charya opposed the contention of the assessee and submitted that the CIT has merely directed the AO to examine the facts of the case and the assessee should not have any grievance for the same. He pointed out that there are number of discrepancies in the paper book filed by the assessee. For example, he referred to page 84 read with page 340 and submitted that voucher number for the same transaction is different. Similarly, he pointed out that many other vouchers, which were mentioned against the same lorry were at variance and argued that this shows that proper verification has not been done. He took us through journal entries and pointed out that there are certain amounts, wherein the payment has exceeded amount of ₹ 20,000/- in cash on the same day and argued that the AO has not conducted any enquiry nor has he applied his mind specifically with reference to the disallowance made u/s.40A(3). 13. He agreed that the genuineness was the issue that was not raised in the show cause notice but argued that the ld CIT has come to a conclusion that the genuineness should also be verified by the AO. On the remaining two issues, the ld DR submitted that this is a case where the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts the AO to verify the genuineness of payment, which issue was never in the show-cause notice. The revisionary powers cannot be used to direct the AO to make re-verification in this manner to determine that the order of the AO is erroneous and prejudicial to the interest of revenue. The AO has in this case applied his mind after detailed verification and after conducting all enquiries has to come to certain conclusion, which are possible views and the ld CIT cannot substitute his view with the possible view taken by the AO. The Ld CIT also cannot without himself conducting enquiries and coming to a conclusion on the basis of material found as a result of enquiry, give direction to the AO to conduct fresh verification. The assessee has satisfactorily explained the issues raised by the ld CIT and in such circumstances, it cannot be said that the order of the AO is erroneous or prejudicial to the interest of the revenue. 14.2 Coming to deduction u/s.80C of the Act, it is not the case of the ld CIT that the AO has not verified the claim of the assessee. In fact, the assessee has submitted the details to the ld CIT and ld CIT, on examination of such details, has not recorded any ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adequate enquiry but not lack of enquiry, again the CIT must give and record a finding that the order/inquiry made is erroneous. This can happen if an enquiry and verification is conducted by the CIT and he is able to establish and show the error or mistake made by the AO, making the order unsustainable in Law. In some cases possibly though rarely, the CIT can also show and establish that the facts on record or inferences drawn from facts on record per se justified and mandated further enquiry or investigation but the AO had erroneously not undertaken the same. However, the said finding must be clear, unambiguous and not debatable. The matter cannot be remitted for a fresh decision to the AO to conduct further enquiries without a finding that the order is erroneous. Finding that the order is erroneous is a condition or requirement which must be satisfied for exercise of jurisdiction u/s 263. In such matters, to remand the issue to the AO would imply , the CIT has not examined and decided whether or not the order is erroneous but has directed the AO to decide the aspect/question. An order of remit cannot be passed by the CIT to ask the AO to decide whether the order was erroneous. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this very item from the assessee and the assessee had furnished his explanation vide letter dt. 26th Sept., 2002, This fact is even taken note of by the CIT himself in para 3 of his order. This clearly shows that the AO had undertaken the exercise of examining as to whether the expenditure incurred by the assessee in the replacement of dyes and tools is to be treated as revenue expenditure or not. It appears that since the AO was satisfied with the aforesaid explanation, he accepted the same. The CIT in his impugned order even accepts this. Thus, even the CIT conceded the position that the AO made the inquiries, elicited replies and thereafter passed the assessment order. The grievance of the CIT was that the AO should have made further inquiries rather than accepting the explanation. Therefore, it cannot be said that it is a case of 'lack of inquiry.-CIT vs. Gabrial India Ltd. (1993) 114 CTR (Born) 81 : (1993) 203 ITR 108 (Born) relied on. Even the CIT in his order, passed under s. 263, is not clear as to whether the expenditure can be treated as capital expenditure or it is revenue in nature. No doubtf in certain cases, it may not be possible to come to a definite f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise of jurisdiction by the ld Commissioner of Income Tax under section 263 of the Act. It reads as follows: (a) The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent-if the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but it is prejudicial to the Revenue-recourse cannot be had to section 263(1) of the Act. (b) Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue : or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income-tax Officer is unsustainable in law. (c) To invoke the suo motu revisional powers to reopen a concluded assessment u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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