TMI Blog2016 (9) TMI 998X X X X Extracts X X X X X X X X Extracts X X X X ..... hat, the A.O. has considered all the details before completion of assessment and the CIT cannot presume that the enquiries conducted by the A.O. is insufficient and also the A.O. has not applied his mind, unless CIT proves that the assessment order passed by the A.O. is erroneous. Therefore, we are of the view that the assessment order passed by the A.O. u/s 143(3) of the Act dated 29.11.2011 is not erroneous in so far as it is prejudicial to the interest of the revenue. - Decided in favour of assessee - I.T.A.No.242/Vizag/2014 - - - Dated:- 12-8-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Shri V. Ravi Sarma, AR For The Respondent : Shri T.S.N. Murthy,DR ORDER PER G. MANJUNATHA, Accountant Member: This appeal filed by the assessee is directed against order of the CIT, Rajahmundry u/s 263 of the Income Tax Act, 1961 (hereinafter called as 'the Act') for the assessment year 2009-10. 2. The brief facts of the case are that the assessee is a Limited Company engaged in the business of manufacture of automobile spare parts, filed return of income for the assessment year 2009-10 on 29.9.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice issued by the assessing officer on various occasions. The A.O. has issued various show cause notices on 5 occasions and specifically asked details about the excise returns filed by the assessee, ledger account copies of building maintenance and interest and finance charges, pre-paid expenses and others. The assessee further submitted that the A.O. has sought every details in respect of advances paid against purchase of raw materials, bank reconciliation statements, payment made to specified persons u/s 40A(2)(b) of the Act, details of sales commission, repayment of loans, purchase of raw materials and analysis of consumption of raw materials and also observations made by the tax auditors in annexure in form no.3CD to tax audit reports. The assessee has filed its reply dated 2.9.2011, 24.10.2011, 25.10.2011, 14.11.2011 24.11.2011 along with details sought by the A.O. The assessee has furnished details of bank reconciliation statement and also explained difference between bank balance shown in the books of accounts to the balances appeared in the bank accounts as on the date. The assessee also furnished details of raw materials purchased, analysis of consumption of raw material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation with regard to payment of sales commission with necessary evidences. It was further observed that as pointed out by the tax auditors in the tax audit report annexure to form no.3CD, there were some differences as per books of accounts of the assessee and as per the confirmation furnished by some of the creditors however, the A.O. has failed to examine the amount shown in the books of accounts with reference to confirmation letter furnished by the assessee. The CIT, further, observed that the A.O. not only examined the issues pointed out in the show cause notice, but failed to apply his mind before completion of assessment. Therefore, the assessment order passed by the A.O., is erroneous in so far as it is prejudicial to the interest of the revenue. With these observations, set aside the order passed by the A.O. u/s 143(3) of the Act dated 29.11.2011 and directed the A.O. to pass consequential order in the lines discussed herein above within the time allowed after giving an opportunity of being heard to the assessee. Aggrieved with the CIT order, the assessee is in appeal before us. 6. The Ld. A.R. for the assessee submitted that the assessment order passed by the A.O. u/s1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pletion of assessment, thereby the assessment order passed by the A.O. u/s 143(3) of the Act, dated 29.11.2011 is erroneous in so far as it is prejudicial to the interest of the revenue. The CIT, revised the assessment order for the reason that the A.O. has completed the assessment without examining the various issues which caused prejudice to the interest of the revenue. The CIT, further, was of the opinion that the A.O. has completed the assessment by making few adhoc disallowances without examining the core issues, such as bank reconciliation statement, excise duty payment details with reference to excise returns filed by the assessee before the authorities, various expenditure debited to the profit loss account, advances paid against purchase of raw materials, analysis of consumption of raw materials and other issues pointed out by the tax auditors in their report in annexure to form no.3CD. The CIT, further, was of the opinion that the assessee has made payments to specified persons u/s 40A(2) of the Act, however, the A.O. failed to examine the reasonableness of the payment made to specified persons with reference to provisions of section 40A(2)(b) of the Act. The A.O. not o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT. 9. The CIT, assumed jurisdictions to revise the assessment order on the ground that there is lack of enquiry on the part of the A.O. in examining the issues referred to in the show cause notice. The CIT questions the issues right from verification of bank reconciliation statement to examination of advances against purchase of raw materials. The assessee has filed a paper book which contains the details furnished to the A.O. at the time of assessment. On perusal of the paper book filed by the assessee, we find that the assessee has listed out the issues pointed out by the CIT in the show cause notice in a tabular form. On further verification of the details filed by the assessee, we noticed that the assessee has submitted all the details with regard to each and every issues raised by the CIT in the show cause notice and explained before the A.O. The A.O. after satisfied with the explanations furnished by the assessee completed the assessment by making certain adhoc disallowances. Therefore, we are of the view that once the issues which were subject matter of revision u/s 263 of the Act, have been examined by the A.O. at the time of assessment, the CIT has no jurisdiction t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of coordinate bench of Visakhapatnam Tribunal, in the case of Nu Tech Engineers Vs. CIT in ITA No.570/Vizag/2013 dated 10.6.2016. The coordinate bench of this Tribunal, under similar circumstances held that once the A.O. examined the issues on which the CIT wants further verification, the CIT cannot assume jurisdiction on the same issues which was already examined by the A.O. at the time of assessment by stating that the A.O. has conducted inadequate enquiry or there is a lack of enquiry. The relevant portion of the order is reproduced hereunder: CIT(A) assumed jurisdiction to revise the assessment order on the sole ground that there is a lack of enquiry on the part of the A.O. in examining the issues referred to in his show cause notice. The question of low net profit declared by the assessee and also TDS on rent and hire charges have been considered by the A.O. at the time of completion of assessment. The assesses filed a paper book which contains the details furnished before the A.O. at the time of assessment. On perusal of the paper book filed by the assessee, ITAT find that the A.O. has issued a detailed questionnaire in respect of net profit and also TDS in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f action would be open. The AD had called for explanation 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 AD 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 AD 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 AD made the inquiries, elicited replies and thereafter passed the assessment order. The grievance of the CIT was that the AD should have made further inquiries rather than accepting the explanation. Therefore, it cannot be said that it is a case of lack of inquiry'.-GT vs. Gabrial India Ltd. (1993) 114 (Bom) 81 (1993) 203 ITR 108 (Bom) 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 doubt, in certain cases ..... X X X X Extracts X X X X X X X X Extracts X X X X
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