TMI Blog2016 (3) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. AR. In view of we reverse the order of the ld. CIT(A) under section 263 of the Act. - Decided in favour of assessee - ITA No.2290/Kol/2014 - - - Dated:- 10-2-2016 - Shri Waseem Ahmed, Accountant Member and Shri S.S.Viswanethra Ravi, Judicial Member For The Appellant Shri R.R.Modi, FCA For The Respondent : Shri S.Srivastava, CIT-DR ORDER PER Waseem Ahmed, Accountant Member:- This appeal by the assessee is against the order passed by Commissioner of Income Tax, Kolkata-IV dated 03.11.2014 u/s 263 of the Income Tax Act, 1961 (hereinafter referred to as the Act ). Assessment was framed by ITO Ward-12(4), Kolkata u/s 143(3) of the Act vide his order dated 21.03.2014 for assessment year 2011-12. Assessee has raised the following grounds:- 1. For that the order of the Ld. Commissioner of Income Tax (CIT) is arbitrary, illegal and bad in Law. 2. That the assumption of jurisdiction under section 263 by Ld. CIT is erroneous and bad at Law. 3. That the passing of order by Assessing Officer is neither erroneous nor prejudicial to Revenue. 4. For that the Ld. CIT erred in writing the nature of expense as Personal Recruitment Cost in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot been considered on its book profit of ₹ 23,41,956/-. 4) No justification was enquired for making the payment of ₹ 124.12 lacs to the key management personnel in the light of the provisions of section 40A(2)(b) of the Act. Accordingly, Ld. CIT issued notice u/s 263 of the Act for clarification on the above subject-matter. The reply of the assessee stand as under : 1) Personnel Recruitment Cost ₹ 22,87,960/-. It is submitted that the nature of expense is not personal as mentioned in the Notice. It is Personnel meaning employee recruitment expenses. The expenses were primarily paid to two consultants ABC Consultants P. Ltd. a renowned Pan India manpower recruitment / placement consultant ₹ 16.67 lacs and Info Edge India P Ltd. (naukri.com) a popular employment website ₹ 6 lacs. 2) Inter Company Loan to M/s Thiess mines ₹ 42,79,700/-. It is most humbly submitted that the said amount is not inter-company loan but is a security deposit lying with the landlord- M/s RDB Two Thousand Plus Ltd., Kolkata, for having the occupation of office premises since 24th June 2007. 3) Calculation for MAT IT i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO after detailed and proper enquiry and after consideration of various documents and records filed by the assesseecompany from time to time in response to the requirements of the AO. During the course of assessment proceedings, AO verified and responses to notice issued u/s. 133(6) and after being satisfied about genuineness of transactions, passed the order without making any addition except as discussed in the assessment order. Hence there is no justification in further issuing notice u/s. 263 of the Act in respect of the said order which was passed u/s. 143(3) and in which AO has considered all the aspects of the facts of the present case. 3. However, the Ld. CIT has disregarded the claim of assessee by observing as under : After going through the facts of the case, written submission of the assessee and as per discussion I am of the view that the assessment required reconsideration therefore, the assessment order passed by the AO is set aside DENEVO, directing AO to make a fresh assessment after providing adequate opportunity of being heard to the assessee. Being aggrieved by this order of Ld. CIT assessee preferred an appeal before us. Shri R.R. Modi, Ld. Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar as it is prejudicial to the interest of revenue. It is because that the AO has not made required enquiry at the time of framing assessment proceedings u/s. 143(3) of the Act. Therefore, the ld. CIT held the order erroneous in so far prejudicial to the interest of Revenue. Now to arrive at the correct conclusion of the case, we deem it necessary to reproduce the relevant provisions of section 263 of the Act. (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the [Assessing] Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he, my, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment . 6.1 The sum and substance of the above reproduced section 263(1) can be summarized in the following points:-: 1) The commissioner may call for an examine the record of any proceeding under the Act; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand, the AO has made an addition by disallowing the commission expenses after making the necessary enquiry. The instant case is duly covered with the decision of Hon ble Allahabad High Court M/s Ashok Handloom Factory Pvt. Ltd. (supra) as discussed above, therefore relying on the same, we reverse the order of Ld. CIT for u/s 263 of the Act. We are also putting our reliance in the decision of Hon ble Delhi High Court in the case of CIT v. Sunbeam Auto Ltd. 332 ITR 167 and CIT v. Anil Kumar Sharma 335 ITR 83 (Del) held that the fact as to whether the AO has applied his mind or not need not necessarily be determined from what has been stated in the assessment order alone, it has to be examined as to whether any inquiry was at all conducted by the AO. There exists a difference between lack of inquiry and inadequate inquiry. If there were any inquiry, even inadequate that would not give an occasion to exercise jurisdiction u/s 263 of the said Act. Accordingly, order passed by Ld. CIT u/s 263 of the Act is reversed hence, ground No. 1 to 6 raised by assessee is allowed. 6.3 Now regarding the issue of remuneration paid to the employees for an amount of ₹ 124.12 lakhs, Ld. CIT fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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