TMI Blog2018 (2) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. 2. The appeal was earlier dismissed for want of prosecution vide order of the Tribunal dated 01.06.2016 however such order was recalled vide Tribunal order dated 09.09.2016 the appeal was listed for hearing on merits. 3. At the outset, the Ld. AR submitted that assessee is a partnership firm and during the year under consideration had received Excise Duty refund and interest Subsidy which were capital receipts as per the judgment of Hon'ble High Court of Jammu Kashmir in the case of M/s Balaji Alloys and others Vs. CIT and the said judgment of Hon'ble Jammu Kashmir High Court has been upheld by Hon'ble Supreme Court. The Assessing Officer during assessment proceedings in the course of assessment proceedings though discussed and disallowed the claim of Excise Duty refund and interest Subsidy but by mistake he did not add back these items in the computation of income. It was submitted that Assessing Officer had completed the assessment after scrutinizing the details required as is apparent from the Assessing Officer s order itself. The Ld. AR further submitted that a show cause notice u/s 263 of the Act was issued on 14.12.2015, proposing to add/disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the firm and in this respect our attention was invited to a copy of balance sheet placed at P.B. page 11 to 19. Our specific attention was invited to P.B. page 15 where under the head loans and advances, the amount of earnest money paid for purchase was appearing. The Ld. AR submitted that the assessee brought to the notice of CIT, in reply to show cause notice, that there was credit Balance of ₹ 2.03 crores in Partner s Capital as on 31.03.2011, and onus was on the revenue to prove that there was diversion of funds for non business purposes. The Ld. AR submitted that paying earnest money for booking plot was purely a business decision and revenue cannot sit in the chair of businessman to decide how to take decisions. It was submitted that the Punjab Haryana High Court in the case of CIT Vs. Max India Ltd. 388 ITR 0081, has held that where interest free funds are available, presumption will be that interest free funds were sufficient to meet investments and similar ratio has been held in a number of cases. In view of these facts and circumstances, it was submitted that on merits also the order passed by Assessing Officer was erroneous and the prejudicial but interest and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed funds. However, the Ld. CIT held that the department had not accepted the judgment of Hon'ble Jammu Kashmir in the case of Balaji Alloys and had filed before Hon'ble Supreme Court and therefore the same cannot be said to be applicable. As regards the proportionate disallowance of interest, the Ld. CIT held that assessee could not substantiate its claim that the assessee had sufficient funds. The Ld. CIT s findings that the decision of Jammu Kashmir High Court in the case of Balaji Alloys cannot be relied is not correct as the Assessing Officer was bound to follow the order of Hon'ble Jammu Kashmir High Court and as per the order of Hon'ble Jammu Kashmir High Court these two amounts representing Excise Duty refund and interest Subsidy were capital receipts and which were not liable to be taxed and therefore the order of the Assessing Officer to this extent was not erroneous and was not prejudicial to the interest of revenue. Regarding the disallowance of interest the assessee submitted before Ld. CIT in reply to show cause notice that assessee had sufficient interest bearing funds, therefore no disallowance was not warranted and also submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e satisfied for exercise of jurisdiction under section 263 of the Act. In such matters, to remand the matter/issue to the Assessing Officer would imply and mean the Commissioner of Income-tax has not examined and decided whether or not the order is erroneous but has directed the Assessing Officer to decide the aspect /question. This distinction must be kept in mind by the Commissioner of Income while exercising jurisdiction under section 263 of the Act and in the absence of the finding that the order is erroneous and prejudicial to the interests of the Revenue, exercise of jurisdiction under the said section is not s ustainable. In most cases of alleged inadequate investigation , it will be difficult to hold that the order of the Assessing Officer, who had conducted enquiries and had acted as an investigator, is erroneous, without the Commissioner of Income-tax conducting verification/inquiry. The order of the Assessing Officer may be or may not be wrong. The Commissioner Income-tax cannot direct reconsideration on this ground but only when I order is erroneous. An order of remit cannot be passed by the Commissioner of Income-tax to ask the Assessing Officer to decide whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by the Assessing Officer was erroneous. The finding recorded by the Commissioner of Income-tax is that order passed by the Assessing Officer may be erroneous . The Commissioner of Income-tax had doubts about the valuation and sale consideration received but the Commissioner of Income-tax should have examined the said aspect himself and given a finding that the order passed by the Assessing Officer was erroneous. He came to the conclusion and finding that the Assessing Officer had examined the said aspect and accepted the respondent's computation figures but he had reservations. The Commissioner of Income-tax in the order has recorded that the consideration receivable was examined by the Assessing Officer but was not properly examined and, therefore, the assessment order is erroneous . The said finding will be correct, if the Commissioner of Income-tax had examined and verified the said transaction himself and given a finding on the merits. As held above, a distinction must be drawn in the cases where the Assessing Officer does not conduct an enquiry; as lack of enquiry by itself renders the order being erroneous and 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
|
