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TMI Blog2016 (10) TMI 925X X X X Extracts X X X X X X X X Extracts X X X X ..... for the year has been completed u/s 143(3) of the Act and determined total income of Rs. 21,02,790/- by making adhoc disallowance of Rs. 4 lakhs towards expenditure like gravel purchase, labour charges and sand purchased for want of bills and vouchers. 3. The CIT, Rajahmundry issued a show cause notice dated 5.2.2015 and asked to explain why the assessment order passed by the assessing officer u/s 143(3) of the Act dated 9.1.2013 shall not be revised under the provisions of section 263 of the Act. The 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 the interest of the revenue in terms of section 263 of the Act. The CIT in the said show cause notice, observed that the A.O. has not verified the issues mentioned in the show cause notice at the time of completion of assessment. The CIT, further, observed that the A.O. has completed assessment without examining the issues such as correctness of contract work expenses claimed by the assessee, depreciation claimed on mobile phones, details of unsecured and secu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee, accepted the explanations and completed the assessment, therefore, the assessment order passed by the A.O. cannot be held as erroneous in so far as it is prejudicial to the interest of the revenue. 5. The CIT, after considering the explanations of the assessee held that the assessment order passed by the A.O., u/s 143(3) of the Act, dated 9.1.2013 is erroneous in so far as it is prejudicial to the interest of the revenue, as the assessing officer has failed to examine the issues pointed out in the show cause notice with reference to books of accounts and relevant details. The CIT, further, observed that the A.O. has completed assessment by making adhoc disallowance of expenditure of Rs. 4 lakhs without examining the specific points referred to in the show cause notice with regard to work contract expenses, depreciation of fixed assets, secured and unsecured loans, loans and advances, applicability of TDS provisions and low net profit declared by the assessee, which shows that the A.O. has never applied his mind before completion of the assessment which caused prejudice to the interest of revenue. Since, the A.O. did not verify the issue and did not examine the is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er assets, the assessee submitted that the assessee has purchased an air compressor for an amount of Rs. 6,40,000/-, however by oversight mentioned as cell phone in the schedule of depreciation. But, the fact is that the assessee has purchased an air compressor for which a copy of bill issued by the supplier has been furnished to the CIT, the CIT has brushed aside the evidences filed by the assessee and invoked the jurisdiction of section 263 of the Act which is not correct. 7. The A.R. referring to the consequential order passed by the A.O. u/s 143(3) r.w.s. 263 of the Act, submitted that the assessing officer has passed consequential order wherein he had accepted the explanations offered by the assessee with regard to the allegations made by the CIT in the proceedings u/s 263 of the Act, except to the extent of disallowance of a further sum of Rs. 10,27,780/- under the head "contract work expenses" by invoking the provisions of section 40A(3) of the Act by stating that the assessee has made cash payments beyond the specified limit provided under the Act. Except this, the A.O. has accepted the explanation with regard to the other issues pointed out by the CIT, therefore, the revi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd completed the assessment by making adhoc disallowances of Rs. 4 lakhs for want of proper bills and vouchers in respect of certain expenditure debited to the P&L account. The assessee further contended that the CIT assumed jurisdiction to revise the assessment order without pointing out any specific defects in the assessment order passed by the A.O. The CIT has not spelt out as to how the order passed by the A.O. is erroneous and prejudicial to the interest of the revenue. Without making any allegation as to the order of the A.O. to say that it is erroneous and also prejudicial to the interest of the revenue, the CIT simply assumed jurisdiction for further verification of the issues which have already been examined by the A.O., therefore, the revision order passed by the CIT is incorrect. 11. The CIT assumed jurisdiction to revise the assessment order on the ground that there is a lack of enquiry on the part of the A.O. in examining the issues referred to in the show cause notice. The CIT questioned the issues right from examination of expenditure debited to profit & loss account to low net profit declared by the assessee. The assessee has filed a paper book which contains the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest of the revenue are co-exist. 13. In the present case on hand, on perusal of the facts available on record, we find that the A.O. has conducted detailed enquiry and also examined all the issues pointed out by the CIT in his show cause notice. The assessee has explained each and every item with necessary evidences, therefore, we are of the view that the CIT was incorrect in assuming jurisdiction to revise the assessment order, once assessee explained that it had filed all the details before the A.O. on the issues on which CIT wants further verification. It is a general presumption of law that 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 categorically proves that the assessment order passed by the A.O. is erroneous. Though, the A.O. made further disallowance of Rs. 6,27,780/- in the consequential proceedings towards cash expenditure under the head "contract work expenses" which earns more revenue to the department which is only disallowed on estimation basis for want of further bills and vouchers. To this extent, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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