TMI Blog2017 (1) TMI 1097X X X X Extracts X X X X X X X X Extracts X X X X ..... and restore that of the Assessing Officer passed u/s. 143(3) of the Act. - Decided in favour of assessee - ITA. No: 389/AHD/2014 - - - Dated:- 10-1-2017 - Shri N. K. Billaiya, Accountant Member And Shri Mahavir Prasad, Judicial Member Appellant by: Shri S. N. Soparkar Ukti Shah, AR Respondent by : Shri Sanjay Agarwal, CIT/ D.R. ORDER Per N. K. Billaiya, Accountant Member 1. With this appeal, the assessee has challenged the validity of the order of the Ld. CIT-III, Baroda dated 29.11.2013 made u/s. 263 of the Act. The appellant contends that the assessment order dated 23.11.2011 made u/s. 143(3) of the Act is neither erroneous nor prejudicial to the interest of the revenue. Therefore, the ld. Commissioner erred in invoking the powers vested upon him by the provisions of Section 263 of the Act. 2. Rival contentions have been heard at length and with the assistance of the ld. Senior Counsel, we have carefully perused the relevant documentary evidences brought on record in the form of a paper book in the light of Rule 18(6) of the Income Tax Appellate Tribunal Rules. The ld. Commissioner vide notice dated 21.08.2013 initiated proceedings u/s. 263 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of share premium on issue of these shares was therefore required to be enquired into during the course of scrutiny, which was not done. Considering various aspects as above, verification regarding fresh share capital / share premium should have been done during scrutiny assessment proceedings, which was not done. 3) On perusal of Schedule to accounts being Advance to suppliers, it is gathered that an amount of ₹ 55.31 lacs, stood outstanding as on 31/03/2009, against a related party viz: Kothi Traders. During assessment proceedings, no enquiry or verification regarding the nature of related party transaction was carried out. 4) Many expenses debited viz interest on service tax, interest on electricity bill etc ha not been verified from the angle of same being penal in nature, 5) There was gross loss incurred in manufacturing activity by the company which was explained to be on account of rise in cost of raw material in third quarter of the previous year. Such explanation required further verification on A.O.'s part of purchases and sales from parties concerned, which was not done. 2. You are hereby given an opportunity of being heard and to show cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a loss to the revenue, but the Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd. 243 ITR 83 has held that every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue . 8. (ii) The second issue relates to the increase in share capital by ₹ 60.5 lakhs while addition to share premium was ₹ 5.445 crores. The ld. Commissioner is of the view that considering various aspects, verification regarding fresh sharer capital/share premium should have been done during the scrutiny assessment proceedings which was not done. 9. We find that during the course of the scrutiny assessment proceedings vide a submission dated 04.11.2011 at Point No. 16, the assessee has explained as under:- 16. Addition in share capital : There was an addition to share capital of the company during the relevant previous year. Please refer annexure-XXXII page no.329 to 528 for the details of addition to share capital of the company. It includes complete details of share holders, there applications and other relevant details. The shares were issued on premium to the share holders. The premium amount has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistration Acknowledgment of Return Bank Statement 195-200 5 Redstrip Merchants Pvt. Ltd. AABCR 3447 E Board Resolution - PAN Card Copy Certificate of Incorporation - Certificate of Registration - Acknowledgment of Return - Bank Statement 201 -206 6 Carelink Vyapaar Pvt. Ltd. AABCC 0963 G Board Resolution PAN Card Copy Certificate of Incorporation Certificate of Registration Acknowledgment of Return Bank Statement 207-212 7 Khushi Vyapaar Pvt. Ltd. AADCK 0862 E Board Resolution PAN Card Copy Certificate of Incorporation Acknowledgment of Return Bank Statement 213-218 SrNo. Party PAN Evidences submitted P/B Page 8 Simpro Vanijya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Certificate of Registration Acknowledgment of Return Bank Statement 262-269 16 Radiant Merchandise Pvt. Ltd. AABCR 3792 C Board Resolution PAN Card Copy Certificate of Incorporation Certificate of Registration Acknowledgment of Return Bank Statement 270-275 17 Galore Suppliers Pvt. Ltd. AAACG 9662 P Board Resolution PAN Card Copy Certificate of Incorporation Certificate of Registration Acknowledgment of Return Bank Statement 276-281 18 MSV Fiscal Services Pvt. Ltd. AACCM 1628B Board Resolution PAN Card Copy Certificate of Incorporation Certificate of Registration Acknowledgment of Return Bank Statement 282-287 19 Shubh Suppliers Pvt. Ltd. AAECS8192C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment proceedings itself, the assessee has made the following submissions before the Assessing Officer:- (5) GP/NP Ratio : Gross profit and net profit ratio for last three years is as under:- Year Sale-Amt.Rs. G.P.Amt.Rs. % of GP 2006-07- 60,64,05,079/- 1,08,54,937/- 1.79 2007-08- 76,79,50,186/- 2,08,73,374/- 2.72 2008-09- 1,03,80,18,802/- -4,11,55,664/- -- As can be seen from the above figures the GP has drastically gone down in negative form. The main reason for the drastic fall was the overall international recession in steel industry. The prices of the steel were sharply declined from the third quarter of the relevant previous year. The stock of raw material was at very high rate and even the reduced prices of finished goods could not cover the cost of raw material. The average rate of raw material purchased in the month of Septem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his depreciation for the relevant previous year was more by ₹ 30,10,4317- in compare with earlier year. In this way the interest on term loan from SBI was also there which amounted to ₹ 38,17,831/- added to loss of the company. Please refer annexure- III page no. 21 to 75 for the copy of purchases account for the month of September-2008 along with the purchases invoices on random selection basis as pointed out by your good selves. Please refer annexure- IV page no. 75 to 154 for the copy of Ingot sale account for the month of October-2008 along with the Sales invoices on random selection basis as pointed out by your good selves. The purchases bills of September-2008 and Sales bills of October-2008 clearly show the reasons of huge loss incurred by the company. The drastic fall in the prices of Ingots put company in the position of huge losses. Please also refer annexure - V page no. 155 to 266 for the complete raw material purchases account for the relevant previous year. Hope above details would be sufficient for finalization of my assessment. Please do the needful. 17. Having discussed the factual matrix qua the assessment proceedings, let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions contained therein and may possibly have no relevance to the question whether the sale of land gave rise to a long term capital gain. Looking to the tenor of queries by the Assessing Office and details supplied by the assessee, we are unable to accept such a condition. In that view of the matter, the observation of the Tribunal that the Assessing Officer having made inquiries and when two views are possible, revisional powers could not be exercised, called for no interference. Since with respect to computation and assertions of other aspects of deduction under section 54Fofthe Act, the Tribunal has remanded the proceedings, nothing stated in this order would affect either side in considerations of such claim. 7. No question of law arises. Tax Appeals are dismissed. 20. The Hon ble Supreme Court in Malabar Industrial Co. Ltd., 243 ITR 83, has laid down the following ratio:- A bare reading of section 263 of the Income-tax Act, 1961, makes it clear that the prerequisite for the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder. In this case, during the assessment proceedings for both the Assessment Years, the Assessing Officer issued a query memo to the assessee, calling upon him to justify the genuineness of the gifts. The Respondent-Assessee responded to the same by giving evidence of the communications received from his father and his sister i.e. the donors of the gifts along with the statement of their Bank accounts. On perusal, the Assessing Officer was satisfied about the creditworthiness/capacity of the donors, the source from where these funds have come and also the creditworthiness/capacity of the donor. Once the Assessing Officer was satisfied with regard to the same, there was no further requirement on the part of the Assessing Officer to disclose his satisfaction in the Assessment Order passed thereon. Thus, this objection on the part of the Revenue cannot be accepted. 25. Considering the facts in totality, in the light of the judicial decisions discussed hereinabove, in our understanding of the law, the Assessment Order is neither erroneous nor prejudicial to the interest of the revenue. We, therefore, set aside the impugned order passed by the ld. Commissioner u/s. 263 and restore t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erroneous in so far as prejudicial to the interest of the revenue , is specifically stated to be effective from 1st June 2015. It is clearly a provision adverse to the interests of the assessee and is specifically stated to be prospective in effect. .. a judicial precedent ceases to be a binding precedent when it is passed per incurium i.e. in ignorance of a previous decision of its own or of a co-ordinate jurisdiction which covered the issue. The amendments made to Section 263 by the Finance Act 2015 will, therefore, hold good only in respect of the revision orders on or after 1st June 2015, whereas the impugned revision order was passed on 11th March 2014. As for the law in force at the relevant point of time, for the detailed reasons set out earlier, the cases of inadequate inquiry, even if that be so, will continue to be outside the ambit of scope of section 263. 28. There is no such prayer for the case in hand and such an attempt at this stage is not permissible. In any case, in the case of judgment of Hon ble Bombay High Court in case of Nirav Modi (supra) which was passed on 16.06.2016 i.e. post insertion of Explanations to Section 263 by Finance Act, 2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
