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2016 (9) TMI 1153 - ITAT KOLKATA

2016 (9) TMI 1153 - ITAT KOLKATA - TMI - Revision u/s 263 - difference of TDS as per 26AS and TDS as declared in Return of Income (ROI) - reasons to believe - Held that:- 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 not .....

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e merits of the issues raised by the CIT in the show cause notice u/s 263 of the Act because in the impugned order the AO has only 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 uph .....

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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 28.03.2014 passed u/s.143(3) of the Act, determining the total income of the assessee as follows :- On the foregoing discussion the total income of the assessee is assessed as below :- Returned income : Rs.85, .....

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hich was not submitted. 2. In the A.Y. 2010-11 the profit was disclosed ₹ 48.23 Lakh against the turnover of ₹ 9.99 Crore. However, in the A.Y. 2011-12, the-net profit disclosed is only ₹ 49.82 Lakh against the turnover of ₹ 20.61 Crore. No submission or explanation regarding fall of net profit ratio compared to turnover was provided. 3. It was also seen than GP from sales of fabricated items is found to be around 26% of total sales of ₹ 8.92 Crore compared to last .....

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ceding year (iv) salary expenses of Rs, 146.62 lakh compared to ₹ 18.88 lakh (v) mess expenses of ₹ 22.54 lakh compared to ₹ 1.17 in the preceding year lakh last year etc. 4. Accordingly the CIT issued a show cause notice u/s 263 of the Act dated 10.04.2015 calling upon the Assessee to show cause as to why the order dated 28.3.2014 should not be revised u/s.263 of the Act. 5. The assessee vide its reply dated 14.01.2016 pointed out that the AO made the required enquiries before .....

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ies 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 poi .....

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n the assessment order dt. 28.03.2014 will remain in the fresh assessment order. Proper opportunity of being heard should be given to the assessee. 7. Aggrieved by the order of CIT the assessee has preferred the present appeal before the Tribunal. 8. The appeal before the Tribunal has been filed belatedly by 27 days. In an application for condonation of delay, the reason for the delay have been stated by the assessee as due to the absence of Shri.Anil Kumar Agarwala, director of the assessee, wh .....

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me was filed in the registry on 21.04.2016. The delay of 27 days in filing the appeal has been explained thus. Shri Anil Kumar Agarwala, Managing Director of the assessee has sworn to an affidavit mentioning all the above facts. The ld. DR opposed the prayer of the assessee for condonation of delay. According to him the reasons given by the assessee for condonation of delay cannot be regarded as reasonable and sufficient cause for the delay in filing the appeal. 9. After considering the rival su .....

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sonable 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 .....

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o 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 upon the assessee. 12. The record of proceedings before the AO from the date the case was selected for scrutiny assessment till the conclusion of the assessment which is in the form of order sheet entries of the AO, would show the nature of enquiry conducted by the AO before concluding the assessment proceedings. The order sheet en .....

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produced by the Assessee and test examined by the AO. In respect of purchase of goods and sundry creditors the Assessee was asked to furnish name and address of the concerns from who purchases were made. Notices u/s.133(6) of the Act were issued and served on the various parties to verify the genuineness of purchases as shown by the Assessee and the replies received were cross verified with Assessee s books of accounts, ledger and payments verified through bank statements. Thereafter the AO fou .....

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7.02.2014 Respected Sir, With reference to your requirements we are submitting the following information . against scrutiny assessment for the. asst, year 2011-12 (Accounting year 2010-11) the details of' which are as under : 1. We are enclosing herewith a Xerox copy of the balance sheet of RashinoVyapaar Pvt Ltd. Kolkata, who had taken made investments towards share application in our company by cheques. The investments have duly reflected in their balance sheet. The investment may please b .....

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hase 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 orde .....

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eceived from CIT. Sd/- JCIT® 28.3.14 Assessed u/s 143(3) of the I.T.Act, 1961. Issue copy of D/N and challan. Initiate penalty proceedings. 15. The learned counsel for the Assessee submitted before us that as per CBDT instructions dated 8.9.2010 which was the norm applicable for selection of cases for scrutiny when the case of the Assessee was picked up for scrutiny, the scope of scrutiny assessments is limited to only that aspect of information received through AIR. He pointed out that the .....

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AO contrary to the CBDT Instruction referred to above, the learned counsel for the Assessee relied on the decision of the Delhi ITAT in the case of Smt.Santosh Yadav Vs. CIT in ITA No.1810/Del/2012 order dated 18.1.2013 and the decision of the ITAT Amritsar in the case of Smt.Gurupreet Kaur Vs. ITO in ITA No.87/(Asr.)/2016 order dated 24.3.2016. In both the aforesaid decisions, the Tribunal has taken a view that the scope of scrutiny assessment cannot be enlarged contrary to the CBDT instructio .....

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y of such ases would be limited only to the aspects of information received through AIR. However, a case may taken up for wider 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 .....

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uiry 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 before concluding the assessment on the various aspect set out in the show cause notice of the CIT u/s 263 of the Act. There has been a failure on the part of AO to make necess .....

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the decision of certain judicial pronouncements namely : i) CIT vs :Leisure Wear Exports Ltd. 341 ITR 166 (Del) ii) CIT vs Budhilal Hiralal Rana 125 Taxman 455 (Guj.) 18. In these decisions it was held that there was no material brought on record to show that there was an error or omission or failure on the part of the AO. In our view, in the present case, as we have already observed, the material on record shows that the AO failed to make necessary enquiries on the issues set out in the show c .....

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