Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

M/s. Mahawar Iron Stores (P) Ltd. Versus DCIT, Central Circle-1, Faridabad

2016 (4) TMI 557 - ITAT DELHI

Revision u/s 263 - Held that:- For Brokerage expenses the case was selected for scrutiny to verify the admissible of the said expenses, but no enquiry appeared to have been made as to the purpose and basic of payment of brokerage, its connection with the business and whether the payment commensurate to the benefit derived by the Company. However, a complete list of the agents alongwith addresses was available on records, but no attempt apparently was made to verify even one of these persons. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n the P&L A/c are yet to be reconciled. It was seen that the reconciliation statement shows addition of credit note to Purchases in order to reconcile the figure of total purchases. Similarly, sales have been reconciled by adding a figure under the nomenclature “Sale High Seas” (not part of VAT return) and no reason whatsoever for such addition has been given nor any evidence was produced.

Reconciliation of bank balance as on 31.3.2010 as per the Bank Statement the book of account as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dispute to the file of the AO to examine the same afresh

Various loans amounting to ₹ 9 crores is concerned, we find that the same was also not enquired into and verified by the AO during the assessment proceedings. On this issue, the assessee has furnished copies of bank account of the lenders as well as their assessment details, but the same was not verified entry wise from the books of account as well as bank account of the assessee. CIT has rightly set aside the issue in di .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Ltd., on 3.6.2009 in respect of goods described as “round”, another seller M/s Narayan & Company has sold the same to another person @Rs.32,330/- per MT on the same date. This reveals that purchases from related parties have been shown by the assessee at inflated price. Therefore, in our considered opinion, Ld. CIT has rightly set aside the issue in dispute to the file of the AO to examine the same afresh - Decided against assessee - I.T.A. No. 2639/DEL/2015 - Dated:- 11-4-2016 - Shri N. K. Sain .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Ld Commissioner of Income-Tax, (Central), Gurgaon is against law and facts on the file in as much as he was not justified to set aside the order dated 31-12-2012 passed u/s 143(3) of the Income-tax Act, 1961 by the Deputy Commissioner of Income-Tax, Central Circle-I, Faridabad on the ground that the same is allegedly erroneous and prejudicial to the interests of the Revenue in as much as the twin conditions as laid out in Section 263 of the Income-tax Act, 1961 were not fulfilled. 2. That t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aimed in the Profit & Loss Account; b) reconcile the figures of sale and purchase for fresh consideration de novo covering all factual aspects as there is difference in sales and purchase as per the purchase/sales register vis-a-vis the VAT returns and the purchases and sales disclosed in the profit and loss account c) reconcile bank account with the bank balances in various accounts of the Appellant Company for fresh consideration as reconciliation of bank balance figure as on 31.03.2010 as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

erested parties in respect of Loan amounting to ₹ 9 crore raised by the Appellant Company from various parties. g) examine afresh whether the transaction with related parties are hit by the provisions contained in Section 40A(2)(b) of the Income-tax Act, 1961 and to take appropriate decision as per the provisions of the aforesaid section. h) to hold that proper inquiries were not made by the Ld. Assessing Officer at the time of framing the original assessment. 2. The briefly stated facts a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nd documents with regard to the income shown and expenses claimed have been placed on record. Books of accounts and vouchers have also been produced by the Assessee and examined on test check basis by AO. The AO accepted the income declared by the assessee and completed on total income of ₹ 22,59,020/- vide order dated 31.12.2012 passed u/s. 143(3) of the I.T. Act, 1961. 3. Ld. CIT while examining the assessment order, found that Assessing Officer has not examined the following issues or i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Dyna Power and ₹ 2.46 crores from M/s National Housing Development Finance Corporation (ii) Unsecured Loans squared up during the year. (e) Applicability of the provisions of Section 40A(2)(b) of the Act in respect of purchases made from MIs Star Wire (I) Ltd, a related enterprise, and payment of salary of ₹ 40,000/- per month to Shri Surendra Kumar Gupta. 4. In compliance of the Notice dated 07.3.2014 assessee filed its reply dated 14.11.2014 and stated that no exercise of the revis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of all the relevant facts and examination of the evidence filed and as such the order passed by him u/s. 143(3) of the Act cannot be considered to be erroneous whereby one of the mandatory tenets for the provisions of Section 263 to come into play are not satisfied. 5. After examination of the Reply of the Assessee and documentary evidences, Ld. CIT passed the impugned order u/s. 263 of the I.T. Act dated 18.03.2015 by observing that the assessment order passed by the AO is held to be erroneous .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he documentary evidences filed by him in the shape of Paper Book containing pages 1 to 267 having the copy of the notice u/s. 263; copy of written submission dated 14.11.2014 filed before the CIT, (Central) Gurgaon; Complete details of the parties to whom brokerage has been paid by the Assessee Company alongwith confirmations from some parties; statement reconciling the differences of purchases and sales as per books and VAT return; statement reconciling difference between Bank balance figures s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o notices; copy of reply dated 23.10.2012 filed before the DCIT, Faridabd during the course of assessment proceedings u/s. 143(3) of the I.T. Act, 1961. 7.1 Ld. Authorised Representative of the assessee has reiterated the similar contentions before us which he made before the Ld. CIT. He submitted that AO has completed the assessment after examining all the evidences filed by the assessee making detailed enquiry thereof, despite that Ld. CIT has wrongly applied Section 263. In the Written Submis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

(a) With regard to brokerage expenses, it was submitted that the Assessee Company is basically engaged in trading of steel wherein payment of brokerage is not only required but also essential not only to generate sales by identifying customers and their requirements but also sometimes to facilitate in the collection of dues and guarantee the recovery of the outstanding. Brokerage is an integral part of the Assessee Company's business activities and has been allowed as an expenditure in the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

reconciling the same. (d)(i) With regard to the loans of ₹ 54 lacs raised from Dyna Power and ₹ 2.46 crores from M/s National Housing Development Finance Corporation, the requisite documentary evidence with regard to confirmations, bank statements and Income Tax Returns along with extract of the relevant bank statements in which the cheques received from the said parties have been deposited were filed. . It may be clarified in this regard that all the transactions in the said accoun .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

A(2)(b) of the Act in respect of purchases made from MIs Star Wire (I) Ltd, a related enterprise, and payment of salary of ₹ 40,000/- per month to Shri Surendra Kumar Gupta, it was submitted as under:- Under sub-section (2) of Section 40A, expenditure incurred in a business for which payment has been or is to be made to the taxpayer's relatives or associate concerns is liable to be disallowed in computing the profits of the business or profession to the extent the expenditure is consid .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

profits of the business or profession. In view of the above, Ld. AR submitted that no exercise of the revisionary powers u/s. 263 of the Act is called for in the facts and circumstances of the case, hence, the order of the Ld. CIT may be quashed and the order of the AO may be restored. 8. On the contrary, Ld. DR relied upon the order passed by the Ld. CIT dated 18.3.2015 because the assessment order passed by the AO was held to be erroneous as well as prejudicial to the interest of revenue by th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the impugned order. 9. We have heard the rival contentions and considered the Paper Book alongwith case laws cited by the assessee and orders of the authorities below. We find that the AO has not even made any attempt to make any enquiry before accepting the claim of the assessee and accepted the claim in a hurry manner without applying mind. From the records, it reveals that the AO has not even appropriately appreciated the evidence on record either failed to examine or if examined, did not .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

but no enquiry appeared to have been made as to the purpose and basic of payment of brokerage, its connection with the business and whether the payment commensurate to the benefit derived by the Company. However, a complete list of the agents alongwith addresses was available on records, but no attempt apparently was made to verify even one of these persons. Therefore, in our considered opinion, Ld. CIT has rightly set aside the issue of allowability of brokerage expenses to the file of the AO f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

egisters in order to reconcile the figure of sales and purchases as disclosed in the P&L A/c are yet to be reconciled. It was seen that the reconciliation statement shows addition of credit note to Purchases in order to reconcile the figure of total purchases. Similarly, sales have been reconciled by adding a figure under the nomenclature Sale High Seas (not part of VAT return) and no reason whatsoever for such addition has been given nor any evidence was produced. Therefore, in our consider .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

reconciliation statement various cheques issued by the assessee but not presented in bank as well as cheques received but not encashed by the assessee, these entries requires verification from the bank account of the assessee in various banks, however, AO has not made any attempt to verify/examine the same. Therefore, in our considered opinion, Ld. CIT has rightly set aside the issue in dispute to the file of the AO for fresh consideration, which does not need any interference on our part, henc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

opinion, Ld. CIT has rightly set aside the issue in dispute to the file of the AO with the direction to verify the dates, cheque number and amount from the bank account of the lender and tally it with the entries in the books of account as well as bank account of the assessee, besides examining the identity, creditworthiness and genuineness of the transactions including tax implication thereof, which does not need any interference on our part, hence, we uphold the order of the Ld. CIT on this i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t of goods described as round , another seller M/s Narayan & Company has sold the same to another person @Rs.32,330/- per MT on the same date. This reveals that purchases from related parties have been shown by the assessee at inflated price. Therefore, in our considered opinion, Ld. CIT has rightly set aside the issue in dispute to the file of the AO to examine the same afresh whether the transaction with related parties are hit by the provisions contained in section 40A(2)(b) of the I.T. A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version