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2016 (10) TMI 428 - ITAT KOLKATA

2016 (10) TMI 428 - ITAT KOLKATA - TM - Revision u/s 263 - non-deduction of TDS on salary and commission paid to directors and managers - insufficient enquiry - Held that:- The impugned order passed by AO has been considered erroneous and prejudicial to the interest of revenue on the ground that proper verification was not carried out by AO at the time of framing original assessment. In the case of insufficient enquiry, the courts have decided the issue in favour of revenue, therefore, we deem i .....

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rder of Commissioner of Income Tax, Kolkata-I u/s 263 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide M.No. CIT,Kol-I,Kol/263/2013-14/10847-49 dated 28.03.2013. Assessment was framed by JCIT(OSD). CIT-1, Kolkata u/s 143(3) of the Act vide his order dated 28.12.2011 for assessment year 2009-10. The grounds raised by the assessee per its appeal are as under:- 1) That the learned Commissioner of Income Tax, Kolkata - I, Kolkata erred in arbitrarily initiating the impugned pro .....

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asis of such misconceived allegation he further erred in assuming jurisdiction under section 263 of the Act, and passing the impugned order dated 26th March, 2014 under the said Section, which is wholly perverse and invalid in limine. 3) That without prejudice to the above, the learned Commissioner of Income Tax failed to appreciate that the conditions precedent for initiation of the impugned proceedings under section 263 of the said Act, were neither present nor satisfied, in the instant case o .....

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Tax deducted at source of ₹ 74,47,992/- claimed by the Appellant Assessee Company. (ii) Income earned from investments made in companies under the same management namely M/s Nagel Special Machines Pvt. Ltd. and Dango & Dienenthal (India) Pvt. Ltd., (iii) Advances of RS.7.62 crore appearing in the Balance Sheet (iv) Expenses claimed under various heads debited in Profit & Loss account and Sales of ₹ 4.33 crore, Sales (Computer & accessories) of ₹ 35-!6 crore and sal .....

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de-novo. 6) That, without prejudice to the above, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax erred in setting aside the order dated 28th December, 2011 passed by the Assessing Officer under section 143(3) of the Act by assuming jurisdiction under section 263 of the Act relying on several decisions of Courts which are either not applicable or distinguishable to the facts and law relating to this case and thereupon further erred in directing the Assessin .....

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ds, and/or to amend or withdraw any of the foregoing grounds before, or at the time of hearing of this appeal. Smt. Nilima Joshi, Ld. Authorized Representative appeared on behalf of assessee and Shri Sachchidananda Srivastava, Ld. Departmental Representative appeared on behalf of Revenue. 2. Grounds No. 1 to 7 are inter-related and therefore being taken up together for the passing of consolidated order for sake of convenience. The common issue raised in all the grounds of appeal is that the ld. .....

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framed at ₹ 5,61,26,967/- after making certain additions / disallowances. Thereafter Ld. CIT u/s. 263 of the Act opined that order passed by Assessing Officer is erroneous in so far prejudicial to the interest of revenue on account of following:- 1. As per the column no. 21(B)(b) of Tax Audit Report (For short TAR) the liability for leave salary amounting to ₹ 21,90,943/- was incurred during the year but the same was not paid. But the AO has allowed the same as deduction except an a .....

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ited in the profit and loss account. In the absence of the details of the commission of ₹ 1.36 crores, the ld. CIT observed that the AO did not verify whether commission paid to the general managers was debited in the profit & loss account or it was adjusted with the amount of commission of ₹ 1.36 crores. 3. The TDS on the payment of commission expenses has also not been verified by the AO at the time of assessment. 4. The commission paid to the directors has also not been verifi .....

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(India) Pvt. Ltd. respectively. At the same time the assessee has shown the advance given to M/s Nagel Special Machines Pvt. Ltd. for ₹ 6.20 lacs. Similarly there is a sundry debtors amount of ₹ 64.19 lacs in the debtors list of the assessee in the name of M/s Dango & Dienthal (India) Pvt. Ltd. Besides the above there were also advances shown by the assessee to others of ₹ 7.62 crores. The ld. CIT under section 263 of the Act that the above stated facts have not been verifi .....

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us. 4. Before us Ld. AR submitted paper book which is running pages from 1 to 76 and stated that all the details in relation to assessment was furnished at the time of original assessment. Ld AR submitted that as reported in the clause 21(B)(b) of TAR, liability of leave salary amount to ₹ 21,90,943/- which has to be added back. Amount added back as per the assessment order was ₹ 11,69,505/-. This is due to the fact that ₹ 10,21,438/- being provision for leave in respect of ea .....

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cy commission is received and commission received from this business was ₹ 19,10,40,625/- and payment of commission was ₹ 1,36,59,529/- on which TDS on commission has been deducted and paid commission of ₹ 83,32,880/- paid to the two general managers are not included in this and commission of the MD whole time Director and the two GM are part of their remuneration and hence have been shown under the heads Director remuneration and in case of GM under the head Salary, wages bonu .....

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re is no violation in the order of AO as erroneous and prejudicial to the interest of Revenue. On the other hand, Ld. DR vehemently relied on the impugned order of Ld. CIT. 5. We have heard the rival contentions of both the parties and perused the materials available on record. From the foregoing discussion, we find that the impugned order passed by AO has been considered erroneous and prejudicial to the interest of revenue on the ground that proper verification was not carried out by AO at the .....

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f the ITO is very different from that of a civil Court. The statements made in a pleading proved by the minimum amount of evidence may be accepted by a civil Court in the absence of any rebuttal. The civil Court is neutral. It simply gives decision on the basis of the pleading and evidence which comes before it. The ITO is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty t .....

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because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. The company and the partnership in this case were formed in the same year with many members common in both. The fact that the company purchased the land but handed over construction work to the partnership even though the object of the company was to make such construction should naturally provoke a query as to why this was done. The partners .....

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