9911796707
TMI Blog2016 (12) TMI 1400X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment was completed u/s 143(3) of the Act on 19.12.2011, determining total income of Rs. 24,65,930/- inter-alia by making addition of Rs. 8,30,738/- towards disallowance of certain expenditure and excess depreciation claim made by the assessee. 3. The CIT, Rajahmundry issued a show cause notice on 4.9.2013 and asked to explain as to why the assessment order passed by the A.O. u/s 143(3) of the Act dated 19.12.2011 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, it was noticed that certain omissions and commissions were noticed, which rendered the assessment order erroneous in so far as it is prejudicial to the interest of the revenue. The CIT, in the said show cause notice observed that the assessing officer has failed to examine certain core issues, such as low net profit declared by the assessee, subcontract payments and its reasonableness, expenditure on plant and machinery, correctness of sundry creditors and withheld amount, disallowance u/s section 40A(3) of the Act, actual cost of the asset brought by the partners to the firm's books and verificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out by the CIT and contended that each and every issues pointed out in the show cause notice have been examined by the A.O. at the time of assessment. Therefore, the CIT was incorrect in assuming jurisdiction u/s 263 of the Act. 5. The CIT after considering the explanations furnished by the assessee, held that assessment order passed by the A.O. u/s 143(3) of the Act, dated 19.12.2011 is erroneous in so far as it is prejudicial to the interest of the revenue. The CIT further held that the A.O. failed to examine certain core issues such as sub contract payments made by the assessee, low net profit, sundry creditors and withheld amounts, assets brought into the books of the firm and its value as on the date of transfer, bank accounts and analysis of over draft accounts and its utilization to the business of the assessee. The CIT further held that the assessee is maintaining an over draft account at the Andhra Bank, Narsapur branch wherein the debit balance of Rs. 81,13,345/- is shown. It is shown that earlier the assessee has one more OD account with no.1567, which was transferred to account no.1589 and statement of that account is not brought on record. Similarly, the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the materials available on record and gone through the orders of the authorities below. The CIT assumed jurisdiction to revise the assessment order for the reason that the A.O. has not conducted proper enquiry of certain issues at the time of completion of assessment, thereby the assessment order passed by the A.O. is erroneous in so far as it is prejudicial to the interest of the revenue. The CIT questioned various issues in the show cause notice. According to the CIT, the A.O. failed to examine certain core issues such as low net profit admitted by the assessee, sub contract payments, sundry creditors and withheld amounts, loss incurred from hiring of plant and machinery, over draft account, current accounts maintained by the assessee and cash payment made by the assessee and consequent application of disallowance u/s 40A(3) of the Act. The CIT gave his own reasons for revising the assessment order. According to the CIT, the assessment order passed by the A.O. is brief and cryptic and the A.O. has discussed none of the issues pointed out in the show cause notice. It is the contention of the assessee that the A.O. has verified all the issues pointed out by the assessee at the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some apparent error of reasoning of law, or but also with its stereo typed order which simply accepts what assessee has stated in the return and failed to make any enquiries on the claim of the assessee. An order to be revised u/s 263 of the Act, would be erroneous and fall in the category of errors only when it has been passed based on an incorrect assessment of fact or an incorrect application of law or non-application of mind by the A.O. It is the duty of the A.O. to adequately protect the interest of both the parties i.e. the assessee as well as revenue. If he fails to discharge his duties or pass an arbitrary assessment order, which can be corrected either at the instance of the assessee, if the assessee is prejudiced or at the instance of the revenue, if the revenue is prejudiced. While making an assessment, the assessing officer has a fair role to play. He is an investigator as well as adjudicator of the issue. As an adjudicator of the issue, he has to discharge his duties judicially and justify the case for both the parties. Therefore, while passing the assessment order, the A.O. must record his findings on the relevant issue before allowing any claim of the assessee. If th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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