TMI Blog2016 (9) TMI 1153X X X X Extracts X X X X X X X X Extracts X X X X ..... y been directed to examine the issues on merits after affording the assessee opportunity of being heard. In the given circumstances we are of the view that the assessee is at liberty to put forth of its claims on the merits of the issues before the AO in the assessment proceedings to be completed pursuant to the impugned order of CIT. For the reasons given above we uphold the order of CIT u/s 263 of the Act and dismiss the appeal of the assessee. - Decided against assessee - I.T.A No. 754/Kol/2016 - - - Dated:- 12-8-2016 - Shri P.M.Jagtap, AM and Sri N.V.Vasudevan, JM For The Appellant : Shri Subash Agarwal, Advocate For The Respondent : Shri Niraj Kumar, CIT ORDER Per N.V.Vasudevan, JM This is an appeal by the Assessee against the order dated 18.01.2016 of Pr.CITSiliguri passed u/s 263 of the Income Tax Act, 1961 (Act) relating to AY 2010-11. 2. The Assessee is a company. It is engaged in the business of steel fabrication, construction, carrying on contract and engineering works. For A.Y.2011-12 the assessee filed return of income on 01.11.2011 declaring total income of ₹ 85,89,700/-. The assessment was completed by the AO by an order dated 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. The assessee vide its reply dated 14.01.2016 pointed out that the AO made the required enquiries before concluding the assessment and it cannot be said that the order of the AO is erroneous and prejudicial to the interest of the revenue for the failure on the part of AO to make proper enquiries on the issues set out in the show cause notice. 6. The CIT however concluded that the AO did not apply his mind to the issues set out in the show cause notice and did not conduct proper enquiry on those issues before concluding the assessment. In this regard the CIT also concluded that the order sheet entries of the AO before concluding the assessment did not show application of mind on the part of the AO. Thereafter the CIT after referring to certain judicial pronouncements, concluded as follows :- The Assessing Officer has miserably failed to conduct proper enquiry necessary for making assessment. There is a clear non application of mind on the part of Assessing Officer in making the assessment. The assessee could not rebutt the ratio of judgment on which the reply was asked and also on the points mentioned in the notice u/s 263. In view of the above facts and the ratio of ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven by the assessee as reasonable and sufficient cause for the delay in filing the appeal. We therefore condone the delay in filing the appeal. 10. As far as the merits of the various issues raised by the CIT in the show cause notice u/s 263 is concerned, we are of the view that it is not necessary to go into the merits of the said issues. Ultimately the CIT has invoked the jurisdiction u/s 263 of the Act on the ground that the AO failed to make necessary and proper enquiries which he ought to have made before concluding the assessment. Therefore it is enough for the purpose of the present appeal to examine the question as to whether the AO before concluding the assessment made enquiries which ought to have made in the given facts and circumstances of the case. 11. In this regard the first aspect which we notice is the fact that the case of the assessee was taken for scrutiny assessment for the following reasons :- 2. The case was selected for scrutiny through CASS as per AIR information the A.O. was required to examine the reason for difference of TDS as per 26AS and TDS as declared in ROI. Subsequently notices u/s 143(2) u/s 142(1) of IT Act 61 was issued and served ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Supreme Court in Lovely export's case. PAN of Rashino Vyapaar Pvt Ltd. is AADCR1939F 1. For HCC {pare) ledger difference, we are enclosing herewith reconciled .statement for your ready reference. 2. For HCC Road, Assam ledger difference, we are enclosing herewith reconciled statement for your ready reference . 3. We are enclosing herewith Xerox copy of Invoice, Bill of Entry, Insurance copy Way bill copy of Motor Graders purchase from L T Limited as advised by you. 4. For the balance difference with Kotak Mahindra Finance, we are enclosing the payment schedule which was provided to us from their end, We also like to inform you that the. balance they had .send to you is totally wrong. It is pertinent to mention here that all the payments were made through prepaid bank cheques which had duly been encashed in our account. 14. Thereafter the assessment was concluded by the AO and the following were the order sheet entries of the AO which throw light on the nature of enquiry conducted by the AO :- 14.3.14 Reply received from Hindusthan Construction Corporation Ltd., Mumbai received clarifying that total TDS in the case of PBN Construction during F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er scrutiny with the approval of the administrative Commissioner, where it is felt that apart from the AIR information there is a potential escapement of income more than ₹ 10 lacs. . 17. It can be seen from the above instructions of the CBDT that the AO is also duty bound to examine that apart from the AIR information, if there is potential escapement income more than ₹ 10 lacs. On the facts and circumstances of the present case, we are of the view that the AO ought to have made proper and adequate enquiries with regard to all the aspects set out in the show cause notice u/s.263 of the Act. The enquiry with regard to the receipt of share capital by the Assessee during the previous year was inadequate and in the light of the decision of the ITAT Kolkata Bench in the case of Subhlakshmi Vanijya (P) Ltd., (2015) 124 DTR (Kol)(Trib.) 249, the enquiry cannot be said to be adequate and proper. In our view there has been failure on the part of the AO to make proper and adequate enquiries on the issues set out by the assessee in the show cause notice u/s 263 of the Act. The circumstances pointed out by CIT in the show cause notice clearly warrant an enquiry by the AO befor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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