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Bridge & Building Construction Company Pvt. Ltd. Versus CIT (Central-1) , Kolkata

2016 (5) TMI 1027 - ITAT KOLKATA

Revision u/s 263 - assessee providing accommodation entries - Held that:- The first reason was that the AO could not verify the genuineness of the assessee in accordance with the query raised from the office of income tax- Delhi. The query was raised that the assessee might be engaged in providing accommodation entries to M/s Skyline engineering contracts India private Limited. So it was required by Delhi income tax office to verify genuineness of assessee’s business by making field enquiries bu .....

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essee has claimed sales promotion expenses and repair & maintenance expenses without proper enquiry and examination of the records - Held that:- It is settled law that the commissioner of income tax can exercise his jurisdiction u/s 263 of the Act only in cases where no enquiry is made by the Assessing Officer. In the instant case, it is admitted by the Income Tax Department that the Assessing Officer had made some enquiries though according to them it was not a proper enquiry. In view of the ab .....

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there was any transaction of sale of the property. In our view the CIT held the order of AO erroneous and prejudicial to the interest of revenue without making necessary enquiry. Accordingly we are inclined to reverse the order of the CIT passed under section 263 of the Act. - Decided in favour of assessee - ITA No. 241/Kol /2015 - Dated:- 19-4-2016 - Shri Mahavir Singh, Judicial Member And Shri Waseem Ahmed, Accountant Member For the Appellant : Shri Manish Tiwari, AR For the Respondent : Shri .....

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w:- 1. That on the facts and in the circumstances of the case, Ld. CIT (Central)-1, Kolkata has erred in initiating proceeding U/s. 263 of Income Tax Act. 2. That on the facts and in the circumstances of the case, Ld. CIT (Central)-1, Kolkata has erred in holding that assessment order U/s 143(3) of Income Tax Act, 1961 dated 28.03.2014 is erroneous & prejudicial to the interest of revenue. 3. That on the facts and in the circumstances of the case, Ld. CIT (Central)-1, Kolkata has erred in se .....

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issuing notices U/s 133(6) and only after getting proper response to such notices the AO framed assessment U/s 143(3). 6. That on the facts and in the circumstances of the case, Ld. CIT (Central)-1, Kolkata has erred in passing order U/s 263 mechanically without proper application of mind. 2. Issue raised in all the grounds of appeal by assessee is that Ld. CIT u/s 263 of the Act erred in holding the assessment order passed by Assessing Officer as erroneous and prejudicial to the interest of Re .....

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g field enquiries. However, Ld. CIT found that no such inquiry has been conducted. Besides the above in the instant case, assessee was paid a sum of ₹ 16,86,87,593/- for undertaking earth work for development of agricultural land by M/s Skyline Engineering Contracts (India) Pvt. Ltd. Accordingly, Ld. CIT opined that order passed by AO is erroneous and prejudicial to the interest of revenue, hence, Ld. CIT issued notice u/s 263 of the Act on the following points:- a) That AO failed to make .....

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in the name of its office building. Ld. CIT found that AO has not examined as to why assessee had invested such a huge amount of Rs. 30 lakh on rented building whereas rent charge showed in its profit and loss account, is merely of Rs. 7,200/- per annum, d) That there was information gathered from source of AIR that assessee has sold the property amounting to Rs. 3 crores but same fact has not been verified by AO from the office of sub registrar, Jaitaran, Rajasthan. Accordingly, Ld. CIT opined .....

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sessment. The expenses incurred on purchase of materials were duly cross verified by service of notice issued u/s 133(6) of the Act by AO. Therefore, assessment was completed after detailed inquiry and examination of all relevant materials. 2) The reason expressed in the show cause notice that the assessee might have indulged in giving accommodation entries cannot be a valid ground for initiation of proceedings under section 263 because of suspicion and surmises. 3) Regarding sale of property as .....

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any supporting material and without making any enquiry, the commissioner under section 263 of the Act can exercise jurisdiction. ii) The claim of assessee is that the books of account of assessee were produced before AO at the time of assessment is not correct. As per the examination of assessment records, the assessee has produced its books of account on 28.03.2014 and AO passed assessment order on the same date. Therefore, it is clear and beyond doubt that AO has not examined or carried out n .....

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sales promotion expense shown by assessee has not been verified by AO. v) That AO has relied on the affidavit submitted by assessee regarding the sale of property for an amount of Rs. 3 crore. However, AO should have taken the registered documents of the sold property in question from sub-registrar of Rajasthan. So it is very much apparent that the AO failed to collect the required information and necessary inquiry has not been done by the AO. In this connection, Ld. CIT u/s. 263 of the Act rel .....

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Representative appearing on behalf of assessee and Shri Sachidananda Srivastava, Ld. Departmental Representative appearing on behalf of Revenue. The ld. AR submitted before us that the assessment was framed by the AO after due verification and detailed enquiry and relied on the order of AO. On the contrary the ld. DR strongly relied on the order of the ld. CIT. 4. We have heard rival contentions and perused the materials available on records. From the aforesaid discussion we find that the ld. C .....

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x return. 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 [ Principal Commissioner or] 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 interes .....

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he record of any proceeding under the Act; 2) If he considers that the order passed by the AO is (i) Erroneous; and (ii) Is prejudicial to the interest of Revenue; 3) He has to give an opportunity of hearing in this respect to the assessee; and 4) He has to make or cause to make such enquiry as he deems necessary; 5) He may pass such order thereon as the circumstances of the case justify including, (i) An order enhancing or, (ii) Modifying the assessment or (iii) Cancelling the assessment and di .....

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he query raised from the office of income tax- Delhi. The query was raised that the assessee might be engaged in providing accommodation entries to M/s Skyline engineering contracts India private Limited. So it was required by Delhi income tax office to verify genuineness of assessee s business by making field enquiries but it was not made by the AO. In our view this cannot be the reason to make an opinion that the order passed by the AO is erroneous and prejudicial to the interests of the reven .....

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m the order of the AO we find that the assessee has produced books of accounts and other details which were test checked by the AO and thereafter the assessment order was framed. The CIT also alleged that the books of accounts were produced on the day i.e. 28th March 2014 and same day the order of assessment was passed. We again disagree with the view of CIT that the AO had short time for the verification of the books. In this connection we opined that it was the duty of the AO to carry out the .....

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mmissioner of Income Tax vs. M/s Ashok Handloom Factory Pvt. Ltd. in ITA No. 19 of 2016 dated 01.02.2016 wherein the Hon ble High Court has held that it is settled law that the commissioner of income tax can exercise his jurisdiction u/s 263 of the Act only in cases where no enquiry is made by the Assessing Officer. In the instant case, it is admitted by the Income Tax Department that the Assessing Officer had made some enquiries though according to them it was not a proper enquiry. In view of t .....

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as supposed to make such enquiries as he deems necessary before arriving to the conclusion that the order passed by the AO is erroneous and prejudicial to the interest of revenue. The CIT has failed to make or cause to make such enquiry as he deems necessary. The term deems necessary is open ended. There could be cases that the Commissioner can take a stand that there was no necessity to make such enquiry. If that is the case it should be specifically recorded that the facts emanating from the r .....

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neous and prejudicial to the interest of revenue without making necessary enquiry. Accordingly we are inclined to reverse the order of the CIT passed under section 263 of the Act. We are also findings support from one of the decision of Hon ble Bombay High Court in the case of Commissioner Of Income-Tax vs Gabriel India Ltd. (1993) 203 ITR 108 (Bom) wherein it was held that We may now examine the facts of the present case in the light of the powers of the Commissioner set out above. The Income-t .....

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