9911796707
TMI Blog2019 (12) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... der dispute, the assessee filed its return of income on 24th September 2010, declaring total income of Rs. 1,48,970. On the basis of information received from the DGIT (Inv.), Mumbai, and the Sales Tax Department, Government of Maharashtra that the assessee is a beneficiary of accommodation entries provided by some entities identified as hawala operators by the Sales Tax Department, the Assessing Officer re-opened the assessment under section 147 of the Act. In the course of assessment proceedings, the Assessing Officer called upon the assessee to prove the genuineness of purchases worth Rs. 2,55,018, claimed to have been made from Mayur Paper. As alleged by the Assessing Officer, in spite of the statutory notice issued under section 143(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of section 184(5) of the Act. Therefore, he issued a show cause notice to the assessee requiring it to explain as to why the assessment should not be revised under section 263 of the Act. After considering the submissions of the assessee in the context of facts and material on record, learned Principal Commission observed that when the Assessing Officer has completed the assessment under section 144 of the Act, he was required to disallow the interest and remuneration paid to partners as per section 184(5) of the Act. The Assessing Officer having failed to do so, learned Principal Commission held the assessment order to be erroneous in as much as prejudicial to the interests of Revenue. Accordingly, he set aside the assessment order w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 184(5) of the Act. Further, he submitted, the Assessing Officer has completed the assessment erroneously under section 144 r/w section 147 of the Act against which the assessee has preferred appeal before the first appellate authority. Thus, he submitted, exercise of power under section 263 of the Act for applying the provision of section 184(5) of the Act is invalid. In support of such contention, the learned Authorised Representative relied upon the following decisions:- i) Mubarak Trading Co. v/s CIT, [2008] 174 Taxman 339 (Kar.); ii) Mas Properties & Developers v/s ITO, [2014] 52 taxmann.com 22 (Bang.) (Trib.); iii) Vijay Vir Singh v/s ITO, [2014] 52 taxmann.com 462 (Agra); and iv) Bhagwat Prasad Sharma v/s JCIT, [2013] 38 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order passed by invoking the provisions of section 144 of the Act. The short issue before us is, whether the assessment order passed is erroneous and prejudicial to the interests of Revenue due to non-application of the provision contained under section 184(5) of the Act while allowing interest / remuneration paid to the partners. Before we proceed to deal with the issue, it is necessary to examine the relevant statutory provisions. A reading of section 144 of the Act makes it clear that the Assessing Officer can proceed to make best judgment assessment in the following situations:- i) If the assessee fails to file the return of income as per section 139(1), section 4 and section 5 of the Act; ii) If the assessee fails to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed deduction on account of interest / remuneration paid to partners. Even, the facts on record make it clear that the Assessing Officer has never examined the aspect of applicability of section 184(5) of the Act. Thus, there is a complete failure on the part of the Assessing Officer in making necessary enquiry with regard to the deduction claimed by the assessee qua the statutory provisions. At the cost of repetition, we must observe, in the present appeal we are not concerned with the validity of the assessment order passed under section 144 of the Act. We are only concerned with the validity of exercise of power under section 263 of the Act to make good the error and prejudice caused to the Revenue by virtue of the assessment order pass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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