TMI Blog2017 (11) TMI 1414X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 55 lakh from Prabodh B. Thakkar is concerned, it is noticed, the Assessing Officer in the notice issued under section 142(1) of the Act on 15th January 2014, has called upon the assessee to furnish the name and address and other details of the parties from whom advances were received along with the confirmations. In response to the notices issued by the Assessing Officer, the assessee vide letter dated 10th December 2014, has furnished the details of advances received from customers. A perusal of the party–wise details of unsecured loans / advances, received a copy of which is at Page–96 of the paper book reveals that the assessee has shown an aggregate amount of ₹ 1,30,49,675 towards advances to have been received from 80 customers. The revisional authority has not questioned the advances received from other 79 customers amounting to ₹ 75,49,675. He has picked up the advances received of ₹ 55 lakh from a single customer. Notably, as per the materials on record, it is evident that the Assessing Officer has not only made enquiry relating to the advances received from different parties but after analyzing the details furnished by the assessee has completed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned PCIT ), Mumbai, for the assessment year 2012 13. 2. Brief facts are, the assessee a company is engaged in manufacture and trading of jewellery. For the assessment year under dispute, the assessee filed its return of income on 29th September 2012, declaring total income of ₹ 3,04,68,563. The return of income filed by the assessee was selected for scrutiny and in the course of assessment proceedings, the Assessing Officer after calling for and examining the books of account and other information completed the assessment under section 143(3) vide order dated 9th March 2015, determining the total income at ₹ 3,05,52,122. While doing so, the Assessing Officer disallowed an amount of ₹ 83,559 under section 14A. The learned PCIT, in exercise of power under section 263 of the Act called for the assessment records of the assessee for the impugned assessment year and after verifying the same he found the following facts. 1. From the audit report in Form no.3CB, it appears that no TDS has been made on labour charges paid; 2. No details have been filed along with the audit report regarding the manufacture of jewellery of 18 carat and 20 carat and no detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) of the Act has allowed assessee s claim. Thus, on the aforesaid premises, the learned PCIT held the assessment order passed under section 143(3) of the Act to be erroneous and prejudicial to the interests of Revenue and set it aside with a direction to pass a fresh assessment order after examination of the issues pointed out by him. 5. Learned Authorised Representative submitted, in the course of assessment proceedings, the Assessing Officer has thoroughly enquired into all the issues on which the learned PCIT has initiated proceedings under section 263 of the Act. Therefore, the allegation of the learned PCIT that the Assessing Officer failed to look into the issues pointed out by him in the revisional order or he failed to make enquiry in respect of them is totally unfounded and contrary to the material on record. As far as the first issue relating to non furnishing of carat wise details of gold and diamond jewellery manufactured and sold is concerned, the learned Authorised Representative drawing our attention to the tax audit report filed in Form no.3CA, a copy of which is at Pate 67 of the paper book submitted, it clearly mentioned quantitative details of gold and diamon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party wise details of advances received along with other informations. Referring to the details submitted before the Assessing Officer, the learned Authorised Representative submitted, the amount in question was an advance received from customer. He submitted, insofar as the unsecured loans are concerned, the assessee has furnished confirmations from the creditors. However, in respect of advance from customers no confirmations were filed as it is not possible to file such confirmation. He submitted, during the year, assessee has received advances from 80 persons. Therefore, when the learned PCIT has no problem with the advances received from 79 parties, he should not have picked up a single advance received from one party as doubtful on mere presumption and surmises. He submitted, when the assessee has furnished all the details during the assessment proceedings and the Assessing Officer after necessary enquiry and application of mind has accepted the claim of the assessee, the revisional authority cannot consider the assessment order as erroneous and prejudicial to the interests of Revenue. As far as the issue relating to the reasonableness of payment made of ₹ 12.71 crore t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of section 263 of the Act, the revisional authority cannot exercise power conferred therein. In support of his contention, the learned Authorised Representative relied upon the following decisions: i) CIT v/s Gabrial India Ltd., 203 ITR 108; ii) CIT v/s Geera Development Pvt. Ltd., 387 ITR 691; iii) CIT v/s Fine Jewellery India Ltd., 372 ITR 303; and iv) Priyanka Regency Builders and Developers Pvt. Ltd. v/s CIT, ITA no.2944/Mum./2014, dated 8th February 2017. 7. Learned Departmental Representative justifying the exercise of power under section 263 of the Act by the learned PCIT submitted, the Assessing Officer during the assessment proceedings has not enquired into the issues on which the revisional authority has revised the assessment order. He submitted, due to lack of proper enquiry by the Assessing Officer the assessment order is not only erroneous but has also caused prejudice to the interests of Revenue. Therefore, the learned PCIT has correctly exercised his power under section 263 of the Act to set right the error committed by the Assessing Officer. As far as the first issue relating to non furnishing of carat wise details of manufacture an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment order by considering it as erroneous and prejudicial to the interests of Revenue in respect of issues no.2, 3 and 4. Therefore, we have to examine the validity of exercise of power under section 263 vis a vis the aforesaid issues on which he has revised the assessment order. Before that, we must observe, the learned PCIT is empowered to exercise his powers under section 263 of the Act on fulfillment of two conditions cumulatively. Firstly, the order sought to be revised must be erroneous and secondly, it must be prejudicial to the interests of Revenue. Keeping in view the aforesaid legal position, we have to examine the issue at hand. As stated earlier, in the impugned order the assessment order has been revised on three issues. First issue on which the learned PCIT has revised the assessment order under section 263 is on account of alleged non furnishing of carat wise details of gold and diamond jewellery. In this context, a perusal of the tax audit report for the relevant previous year filed along with the return of income, a copy of which is placed in the paper book reveals that in the said audit report all details of raw materials and finished products, such as, opening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record indicating not only the enquiry conducted by the Assessing Officer but the details furnished by the assessee. Therefore, we are unable to uphold the validity of exercise of power under section 263 of the Act with regard to this issue. 10. As far as the second issue relating to the genuineness of advance received of ₹ 55 lakh from Prabodh B. Thakkar is concerned, it is noticed, the Assessing Officer in the notice issued under section 142(1) of the Act on 15th January 2014, has called upon the assessee to furnish the name and address and other details of the parties from whom advances were received along with the confirmations. In response to the notices issued by the Assessing Officer, the assessee vide letter dated 10th December 2014, has furnished the details of advances received from customers. A perusal of the party wise details of unsecured loans / advances, received a copy of which is at Page 96 of the paper book reveals that the assessee has shown an aggregate amount of ₹ 1,30,49,675 towards advances to have been received from 80 customers. The revisional authority has not questioned the advances received from other 79 customers amounting to ₹ 75 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the interests of Revenue, only because, in his opinion the enquiry conducted by the Assessing Officer was not sufficient or not in the manner it should have been made. If the material on record demonstrate that the Assessing Officer has made necessary enquiry on a particular issue and has passed the assessment order after due application of mind on the materials brought on record, the assessment order cannot be held to be erroneous or prejudicial to the interests of Revenue due to lack of or inadequacy of enquiry. 11. As far as the third and final issue relating to reasonableness of payment to Anmol Jewellery qua section 40A(2)(b) is concerned, notably, in the tax audit report, the assessee has furnished all payments made to persons specified under section 40A(2)(b). It is also noted, in the questionnaire attached to the notice issued under section 142(1) dated 9th September 2014, the Assessing Officer has specifically called for details of payment made to persons covered under section 40A(2)(b) and also justify that the payments made were as per the fair market value. In response to the query raised by the Assessing Officer, the assessee vide letter dated 10th December 2014, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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