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2016 (10) TMI 893 - ITAT VISAKHAPATNAM

2016 (10) TMI 893 - ITAT VISAKHAPATNAM - TMI - Revision u/s 263 - as per CIT(a) A.O. has completed the assessment without examining the issue of applicability of TDS provisions u/s 194C on hire charges paid by the assessee - Held that:- It is true that the issue involved in revision proceedings i.e. disallowance of hire charges u/s 40(a)(ia) of the Act is covered by the special bench decision of ITAT, Visakhapatnam in the case of Merilyn Shipping & Transports Vs. ACIT ( 2012 (4) TMI 290 - ITAT V .....

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mined the issue at the time of completion of assessment, however, there is no revenue loss is caused to the exchequer because the issue is covered by the decision of ITAT, special bench (SB), wherein the ITAT held that no disallowance can be made u/s 40(a)(ia) of the Act, on the amounts paid within the end of the financial year. Since, the assessee failed to appear before the CIT, we are of the opinion that the CIT cannot presume things which is in the minds of assessee, as such opined that CIT .....

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of assessee - I.T.A.No.301/Vizag/2016 - Dated:- 7-10-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Shri G.V.N. Hari, AR For The Respondent : Shri Aravindakshan, DR ORDER PER G. MANJUNATHA, Accountant Member: This appeal filed by the assessee is directed against the order of Principal CIT-1, Visakhapatnam dated 31.3.2016 and it pertains to the assessment year 2011-12. 2. The brief facts of the case are that the assessee is an individual en .....

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The Principal CIT, Visakhapatnam issued a show cause notice dated 18.3.2016 and asked to explain why the assessment order passed by the A.O. u/s 143(3) of the I.T. Act, dated 31.12.2013 shall not be revised under the provisions of section 263 of the Act. The Principal CIT, proposed to revise the assessment order for the reason that on examination of assessment records, certain omissions and commissions were noticed which render the assessment order erroneous in so far as it is prejudicial to th .....

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interest of the revenue. Therefore, issued a show cause notice and asked to explain why the assessment order passed u/s 143(3) of the Act dated 31.12.2013 shall not be revised under the provisions of section 263 of the Act. 4. Though adequate opportunity was granted to furnish the explanations on 28.3.2016, 30.3.2016 & 31.3.2016, no explanation has been furnished for non-deduction of tax at source on sub contract payment made by the assessee. Since, the assessee failed to comply with the sho .....

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ired u/s 194C of the Act. As the TDS was not made on such credits towards hire charges, the expenditure claimed to the extent of ₹ 12,05,000/- within the total hire charges debited to the P&L account ought to have been disallowed u/s 40(a)(ia) of the Act, but the A.O. has failed to do so. It is evident from the record that no query at all was raised nor any clarification was sought on this issue during the assessment proceedings. The record does not also indicate that the A.O. had appl .....

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d the A.O. to disallow the impugned hire charges of ₹ 12,05,000/- claimed by the assessee and added back to the total income assessed in the assessment order u/s 143(3) of the Act dated 31.12.2013. A copy of the order giving effect to this order shall be forwarded to this office for record. Aggrieved by the CIT order, the assessee is in appeal before us. 5. The Ld. A.R. for the assessee, submitted that the assessment order passed by the A.O. u/s 143(3) of the Act, dated 31.12.2013 is not e .....

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ue questioned by the Principal CIT. The A.R. further submitted that the A.O. has examined the issue, at the time of assessment by a specific questionnaire and the assessee has submitted all the details before the A.O., therefore, the CIT was not correct in coming to the conclusion that the assessment order passed by the A.O. is erroneous in so far as it is prejudicial to the interest of the revenue. The Ld. A.R. further submitted that the issue of disallowance of hire charges is covered by speci .....

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ecord and gone through the orders of the authorities below. The Principal CIT assumed jurisdiction to revise the assessment order for the reason that the A.O. has not conducted proper enquiry before completion of assessment, thereby the assessment order passed by the A.O. u/s 143(3) of the Act dated 31.12.2013 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 .....

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oc disallowances of expenditure different from the hire charges which render the assessment order erroneous in so far as it is prejudicial to the interest of the revenue. 7. It is the contention of the assessee that the A.O. has examined the issue of applicability of TDS on hire charges and after satisfied with the explanations furnished by the assessee, chosen to complete the assessment by making certain adhoc disallowances different from the issue of hire charges, therefore, the CIT was not co .....

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made when the expenditure incurred has been paid before the end of the relevant financial year. In the present case on hand, the assessee has paid expenditure before the end of the financial year, as such the question of applicability of TDS and consequent disallowance of amount u/s 40(a)(ia) of the Act does not arise. The Principal CIT, may hold the assessment order passed by the A.O. may be erroneous, but it cannot be prejudicial to the interest of the revenue, as there is no prejudice is caus .....

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