TMI Blog2016 (3) TMI 1227X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Ashwani Kumar For The Respondent : Shri Manoj Mishra, CIT DR ORDER PER RANO JAIN, A.M. : This appeal filed by the assessee is directed against the order of learned Commissioner of Income Tax (Central), Ludhiana dated 14.03.2014, passed under section 263 of the Income Tax Act, 1961 (in short the Act ). 2. Briefly, the facts of the case are that a search under section 132 of the Act was conducted on 10.06.2009. The assessee filed its return in pursuance to notice under section 153A of the Act declaring income of ₹ 4,81,513/ on 26.06.2010. The assessment under section 153A of the Act was completed vide order dated 29.12.2011 at an income of ₹ 9, 63, 880/ . 3. The Commissioner of Income Tax issued a show cause notice dated 2.1.2014 under section 263 of the Act to the assessee, the relevant extract of which reads as under. 5. While reviewing the case, it was noticed that in the P L account, the assessee had claimed an expense of ₹ 1,12,50,000/- on account of sales tax included in the selling and distribution expenses (Annexure-U to P L account) (compound levy scheme IRQ Banaspati Unit) and the same was allowed by the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, if any, to the proposed action in writing. In case of your failure to attend on the aforesaid date or to submit written reply by that date, it will be presumed that you have no objection to the proposed action and matter shall be decided on merits. 4. The assessee replied to the Commissioner of Income Tax. The first contention of the assessee was that since the order of the Assessing Officer was not passed on incorrect assumption of facts or law or without application of mind the same cannot be a matter for revision under section 263 of the Act. Further it was also submitted that sales tax payable of ₹ 1,12,50,000/ was made on account of compound levy scheme and is allowable under section 43B of the Act. It was also stated that sales tax is not charged separately. The assessee also submitted before the Commissioner of Income Tax that this issue has been examined in the course of original assessment proceedings, proceedings under section 154 of the Act and also in proceedings initiated under section 153A of the Act after the search conducted under section 132 on 10.06.2009. The submission of the assessee was that the Assessing Officer after applying his mind did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roper enquiries and the aspect of allowability of sales tax paid has not been properly examined. 7. Before us, the Ld. counsel of the assessee started his arguments by drawing our attention to various pages of the paper book filed by the assessee. Our attention was invited to paper book page No. 9, whereby a letter dated 7.10.2008 was placed on record whereby at point No. 20 assessee has submitted a copy of the sale tax policy of Uttar Pradesh government regarding levy of sale tax under compound levy scheme in respect of one of its units. A copy of the sale tax policy was annexed with the said letter. It was clarified that this letter was given to the Assessing Officer during the original assessment proceedings under section 143 (3) of the Act. At paper book page 11 a notice from the Assessing Officer dated 28.07.2008 was annexed where some clarification regarding income escapement was also enclosed with the said letter. This letter was issued to the assessee after the passing of original assessment under section 143 (3). In this letter also, the assessee was asked to clarify regarding the allowability of sale tax paid. At page 13 the reply to the said letter filed by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and holds the order to be erroneous he has to give a categorical finding with regard to the error in the order of the assessing officer. In the garb of provisions under section 263 of the Act he cannot ask the assessing officer to again make assessment denovo. In this view it was prayed that the order passed by the Commissioner of Income Tax under section 263 be held not as per law. Reliance was placed on the order of the I.T.A.T., Chandigarh Bench in the case of Damini Resorts Builders (P) Ltd. Vs. CIT, ITA No.404/Chd/2012, dated 31.10.2014 and SEL Mfg. Co. Ltd. Vs. Addl. CIT, ITA No.409 410/Chd/2014, dated 18.11.2015. 9. The Ld. DR relied on the order of the Commissioner of Income Tax and further submitted that it is a fact on record that the sale tax is not allowable to the assessee, therefore there is an error in the order of the Assessing Officer which is also prejudicial to the interest of revenue therefore the Commissioner of Income Tax has rightly invoked the provisions of section 263 of the Act. 10. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. In ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer may not make the proposed addition or disallowance. There will emerge a very weird situation in such a case. Therefore, if the learned Commissioner of Income Tax holds that there is any error in the order of the Assessing Officer, he should give a categorical finding in this regard and for this purpose, he himself has to make enquiries and investigations, whatever he deems fit in the circumstances. Our view gets strengthened by the judgment of the Hon'ble Delhi High Court in the case of ITO Vs. D.G. Housing Projects Ltd. (2012) 343 ITR 329 (Del), whereby the Hon'ble High Court held as under : 16. Thus, in cases of wrong opinion or finding on merits, the CIT has to come to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the order under section 263 is passed. In such cases, the order of the Assessing Officer will be erroneous because the order passed is not sustainable in law and the said finding must be recorded. CIT cannot remand the matter to the Assessing Officer to decide whether the findings recorded are erroneous. In cases where there is inadequate enquiry but not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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