TMI Blog2018 (6) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... , Tirupati, U/s. 263 of the Income Tax Act [Act], dated 30-03-2017. Assessee is contesting the jurisdiction of invoking revisionary proceeding as well as merits of the directions given by the CIT. 2. Briefly stated, assessee is engaged in manufacturing of white crystal sugar, alcohol and generation of power. The case was selected for scrutiny under CASS to Large Share application money received against un-allotted shares, large increase of unsecured loans and low net profit or loss shown from large gross receipts . When the assessment proceedings were pending, there were search and seizure operations U/s. 132 of the Act on 15-05-2012. Consequently, the pending proceedings got abated under second proviso to Section 153A of the Act. AO issued notices U/s. 153A and completed the assessment proceedings vide order dt. 27-03- 2015 after making necessary enquiries and disallowing an amount U/s. 14A r.w. Rule 8D. 3. Ld. CIT, Tirupati on examination of record was of the view that the order of AO was erroneous on the following issues: a) As seen from the Schedule Q, Notes to accounts, which contains the details of related party disclosures, assessee received Hire charges amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2534.46 lakhs in the amounts of unsecured loans and in the total of Balance sheet respectively. However, no reconciliation of the above figures is available on record. It is also seen that the issue of increase in unsecured loans is one of the reasons for CASS selection, but the details of loan creditors, confirmation from them etc. appear to have not been obtained. The same requires thorough examination. g) On perusal of balance sheet it is found that in addition to the share application money pending allotment as on 31.03.2011, an additional share application money of ₹ 75,29,73,245/- is received during the year and a total amount of ₹ 86,37,40,105/- is pending for allotment as at 31-03-2012. However, the details of the investors seem to have not been examined; Accordingly, exercising revisionary jurisdiction a notice u/s 263 was issued to assessee on the above issues. 4. Assessee in reply has given detailed explanation which was extracted in para 4 of the order of CIT, which is as under: (a) Short admission of ₹ 5.31 lakhs with regard to Hire Charges Hire charges received as shown in Profit and Loss account for the year ended 31.03.2012 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction of Tax under section 40(a)(ia) has been shown in Annexure- T of Form 3CD for the previous year and again enclose the same copy for your ready reference (Annex-III) Hence disallowance u/s 40(a)(ia) towards Rent and Professional fees has been duly added back to Income in the assessment year 2012-13 itself. Further, we have claimed as admissible expenses of professional fees of ₹ 3,32,537/- in the assessment year 2013-14 in memo of Total Income, since TDS has been paid in the financial year 2012-13. Copy of memo of total income for the Asst. Year 2013-14 is enclosed for your ready reference (Annex- IV) We have not claimed any deduction for a sum of ₹ 5,30,000/- after payment of TDS for the AY 2013-14 and claimed deduction only for a sum of ₹ 3,32,573/- after payment of TDS in the financial year 2012-13. Hence, again the question of disallowance u/s 40(a)(ia) of the Income Tax Act, 1961 will not arise. (d) Capital gain on sales of Shares of ₹ 3,99,00,000/- We have shown income from capital gain in the memo of total income for the sales of immovable property. Profit on sale of shares has been duly accounted in our books of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... current liabilities provision for a sum of ₹ 2534.46 Lakhs is as given below: Rs. In Lakhs Total of Balance Sheet - As per Balance Sheet 19270.95 Add: Current Liabilities Provisions as Per Balance Sheet 2534.46 Total of Balance Sheet as per Part-B to Form 3CD 21805.41 Further, we herewith enclose the copy of Annex-I Part B of Form 3CD and Balance Sheet as on 31.03.2012 for your ready reference (Annex-VII) The unsecured loan is only sum of ₹ 2548. 72 lakhs as shown in the balance sheet and the sum of ₹ 6777. 57 lakhs was shown as share application money pending for allotment has been grouped under the unsecured loan in the Form 3CD. However, the total figure of balance sheet and form 3CD is the same which can be apparently seen from the balance sheet Annex-I part B of 3CD. Further, we hereby enclose the details of loan creditors, copy of confirmation letter from the loan creditors along with Income Tax Return filed Copy for the assessment year 2012-13 of loan c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the AO is directed to examine the following issues with the books of account and other relevant information after giving an opportunity of being heard to the assessee: (i) short admission of hire receipts, (ii) delay in remittance of EPC, etc., (iii) non-deduction of tax at sources on rent professional payments, (iv) capital gain on sale of shares, (v) excess depreciation claim on vehicles office equipment, (vi) variation of figures of current liabilities provisions between the balance sheet and Form 3CD and (vii) retaining share application without allotting shares for the entire year The AO is also directed to obtain prior approval of the Joint Commissioner of Income Tax as a search u/s. 132 was conducted in this case . 6. It was the contention of Ld. Counsel that AO has examined all the issues, which were the subject matter of revision by the CIT and referred to the Paper Book placed on record to submit that all the issues have been examined as assessee s case was examined U/s. 153A, consequent to the search and seizure proceedings. It cannot be stated that AO has not enquired on the issues. 7. Coming to the merits of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y accounted under the head other income and capital loss has not been claimed, so there cannot be any prejudice to the Revenue on this issue. 9.4. With reference to excess claim of depreciation of hired vehicles, assessee has accounted for the lease charges. Therefore, the claim is allowable. 9.5. With reference to office equipment, the claim is correctly made. 9.6. With reference to reconciliation of balance sheet, assessee has explained on account of presentation / classification of figures under different heads in balance sheet differences have come and these were reconciled. Not a single word has been mentioned by the CIT, whether the reconciliation is correct or not. 9.7. With reference to share application money also which was received from one of the sister concerns, who is also covered by the search and shares were also allotted, Ld.CIT having taken up examination of few issues which in his opinion AO has overlooked. Ld. CIT should have undertaken the exercise of giving findings on the submissions made by assessee in the proceedings u/s. 263 of the Act. Without doing so, he has simply set aside the assessment for examination, which in our view does not require ..... X X X X Extracts X X X X X X X X Extracts X X X X
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