TMI Blog2012 (1) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... tal income at ₹ 2,11,630/-. The AO made disallowance of ₹ 3 lacs out of expenses, on agreed basis and framed assessment u/s 143(3) on 22.12.2008 at an income of ₹ 5,11,630/-. The findings of the AO as contained in para 2 of the said assessment order are reproduced hereunder, for the purpose of proper appreciation thereof. 2 During the assessment proceedings, it was noticed that the assessee had debited an amount of ₹ 1357400/- to the profit and loss account under the head subcontract payments. The assessee was requested to give details of these expenses and produce all the vouchers in support of his claim. He was also asked to explain whether TDS was deducted from these payments or not. The assessee through his ld. counsel furnished account of all these persons. It was further explained that these payments have actually on account of labour. As payment is made to head of the workers for further distribution among them. Expenditure was booked under the head subcontracts. Receipts / vouchers in this regards were produced but some payments could not be established with proper evidence. When the discrepancy was confronted to the ld. counsel, he on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. V. CIT (2000) 242 ITR 83 (SC) and stated that the case is squarely covered by this decision. 6. We have carefully considered the facts of the case, rival submissions, case laws relied upon by both the parties and other relevant material placed on record. We have also carefully perused the impugned assessment order passed by the AO. A bare perusal of the impugned assessment order clearly reveals that disallowance of ₹ 3.00 lakhs, out of expenses, has been made by the AO on agreed basis. The ld. 'DR' stated that the issue of receivable is revenue neutral. Therefore, its inclusion in the impugned order passed u/s 263 of the Act is of no consequence. Therefore, the issue falls beyond the pale of Section 263 of the Act. 6(1) The AO failed to make enquiry and apply his mind to the issue of 1/3rd investment made by the assessee, in the purchase of SCF 59, Phase 9, Mohali, as to the source of such investment and also cash deposit of ₹ 2,20,000/-. In such a fact-situation of the case, the applicability of provisions of section 263 of the Act is required to be considered by us. 6(a) In the factua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;ble Supreme Court, in the case of Malabar Industrial Co. Ltd V. CIT (2000) 243 ITR 83 (S.C) relied upon by the Ld. DR . The relevant and operational part of the decision is reproduced hereunder for the purpose of proper appreciation of the same: A bare reading of Sec 263 of the Income-tax Act, 1961 makes it clear that the prerequisite for the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Incometax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely (i) the order of the AO 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 is prejudicial to the Revenue - recourse cannot be had to section 263(1) of the Act. The provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the CIT u/s 263 of the Act, as such presumption is contrary to the factual matrix as obtaining in the case of present case. It is pertinent to state here that it is a matter of common course of natural events and human conduct that human beings do over look or commit mistakes, due to oversight or by the absence of due-diligence. Such conduct of human being would stand on higher footing, when the assessment order is patently silent and contains no discussions, to indicate that the issues involved in that case had been duly conceived, examined and decided by the AO. Such non-conduct of any enquiry is discernible from the facts and text of the assessment order, passed by the AO. In such a situation, it is not possible to draw any presumption, where no required details had been filed before the AO that he had examined, considered and adjudicated the issue of source of investment made in the SCF and deposit made, in the impugned bank account. In the face of such a fact situation, it is not legally or factually tenable to presume that the AO has considered the said issue, as the discernibility of consideration of such issues, is conspicuous by its absence. Therefore, such consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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