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TMI Blog2019 (9) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout giving any notice for the same. 4. (i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the order passed under Section 147 read with Section 148 of the-Act, despite the fact that the same was bad in the eyes of law, as the conditions and procedures prescribed under the statute have not been satisfied and complied with. (ii) On the facts and circumstances of the case, the learned CIT(A) has erred in confirming the order passed by AO as the reassessment proceedings initiated by the learned AO are bad in the eyes of law, as the reasons recorded for the issue of notice under Section 148 are bad in the eye of law and are contrary to the facts. 5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law, in confirming the order of the AO despite the fact that the order has been passed without disposing of the objection against reopening raised by the assessee. 6. (i)On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law, in disallowing an amount being 12.32% of the total expenses incurred by the assessee (ii) That the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Ld. AR submitted that the assessee filed its return of income declaring income of Rs. 41,60,505/- on 20.09.2011. Subsequently, notice u/s 148 of the Act was issued to the assessee for A.Y. 2011-12 and in response to the same the assessee submitted that its return of income declaring income of Rs. 41,60,505/- filed on 20.09.2011 may be treated as return filed u/s 148. Thereafter, on request of the assessee, copy of the reasons recorded was supplied to the assessee vide order sheet entry dated 03.03.2014. The assessee has filed its objections on 09.04.2014 regarding reopening of the case and the same were disposed of without passing the speaking order. A survey action u/s 133A of the Act was carried out on 19.10.2010 at the business premises of assessee i.e. M/s Indo Office Solutions Pvt. Ltd. This survey was conducted consequent upon the search conducted at the business premises of M/s ESAJV D-Art Indo India Consortium and its associates on 19.10.2010 at New Delhi. The assessee company is one of the service provider to M/s ESAJV D-Art and M/s ESAJV D-Art has claimed an expenditure of Rs. 2,28,32,100/- incurred for procuring following services from the assessee: Sr. No. Natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erits have confirmed and even enhanced the additions made by the Assessing Officer by holding that the disallowance should be made at 12.32% of the entire expenditure and not only the administrative expense and selling overheads as made by the Assessing Officer. The CIT(A) further held that the above calculation will lead to disallowance of a higher amount, but such calculation does not amount to enhancement of income for which separate notice u/s 251(2) had to be given. The Ld. AR submitted that it is a settled proposition of law that the CIT(A) cannot make enhancement to the income of the assessee without issuing show cause notice u/s 251(2) of the Act. Further, the CIT(A) cannot make enhancement on the issue which does not arise out of the order of assessment. The Ld. AR relied upon the decision of the Tribunal in case of Ramesh Kumar Pabbi vs. ACIT (ITA No. 5594/Del/2014). The Ld. AR also relied upon the decisions of the Hon'ble Delhi High Court in case of CIT vs. Sardari Lal and Co. 251 ITR 864 as well as the decision of the Tribunal in case of Bikram Singh vs. DCIT (2016) 48 ITR 689. Thus, in light of the above, the Ld. AR submitted that the enhancement made by the CIT (A) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29.05.2019) Mum. Tri. Further, the Ld. AR submitted that the Assessing Officer while recording the reasons for reopening of the assessment has went ahead in haste and has recorded the reasons without application of mind. The same can be observed from the plain reading of the following paragraphs: "M/s Indo Office Solutions Pvt. Ltd. has also claimed to have provided supervision services to the assessee. However, it failed to provide any supporting documents in respect of same." "As per the contract for supply of furniture, 10% of the contract amount had to be paid as advance whereas the remaining 90% had to be paid after completion of the project. While the claimed furniture was supplied on 10.09.2010 and 11.09.2010, a single invoice for the entire contract value was raised on 01.09.2010 i.e. even before the contract had been executed." "In respect of the warehousing charges, it was found that the amount charged by M/s Indo Office Solutions Pvt. Ltd. from the assessee company was ten times the amount that it is presently charging from its tenants fro the same premises." Firstly, from the perusal of the reasons recorded by the Assessing Officer it appears that the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company. During the assessment proceedings, assessee has also submitted the comparative chart of business receipts and net profit the crux of the comparative chart is as under:- FY Turnover (Rs. Lacs) NP% 2009-10 2194.55 0.71% 2010-11 1852.99 2.18% 2011-12 1179.62 1.13% The Ld. AR submitted that in the year under consideration the NP rate is highest in three years. Since NP is 2.18%, making addition at 12.32% of the expenses is not tenable in law. The Ld. AR further submitted that there is no allegation by the Assessing Officer that the assessee had not made payments for such expenditure. All the expenses are fully vouched and were verifiable. The assessee has been maintaining regular books of accounts duly audited under Section 44AB of the Act which have not been doubted or rejected by the Assessing Officer. The additions are merely on the suspicions and lacks evidence. The same are bad in law in the light of the judgment of the Hon'ble Supreme Court in the case of Umacharan Shaw & Bros vs. CIT 37 ITR 271 (SC) wherein it is settled law that suspicion however strong it is cannot take place of the evidence. Further the Ld. AR relied upon the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r language used by the Supreme Court as well as this Court, the Assessing Officer did not comply with the requirement of law." 7. This Court has, therefore, no hesitation in setting aside reassessment order dated 29th December, 2018 for the Assessment Year AY 2011-12. Consequently, a direction is issued to the AO to once again take up for consideration, the Petitioner's objections to the reopening of the assessment for the aforementioned AY and dispose of those objections by a reasoned order not later than four weeks from today. The said order shall be communicated to the Petitioner not later one week thereafter. 8. Thereafter, the AO will proceed in accordance with law as far as the reassessment proceedings are concerned. 9. It will be open to the Petitioner to seek appropriate remedies if his objections to the reopening of the assessment are rejected by the AO." In the present case as well, the Assessing Officer has not disposed off the objections of the assessee filed at the initiation of assessment proceedings. Thus, in light of the decision of the Hon'ble Delhi High Court in case of Surendra Kumar Jain (supra) we are also of the opinion that the objections filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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