TMI Blog2019 (12) TMI 1191X X X X Extracts X X X X X X X X Extracts X X X X ..... h price. The method used for determining the arm s length price which also goes to show that there is nothing on the record to suggest that assessee had made any excessive payments to the related parties which has caused loss to the Revenue. Payment of bank guarantee commission and renewal fees - HELD THAT:- With regard to payment of bank guarantee commission and renewal fees is concern, in this regard, we have seen from the record that specific query was raised by the AO and the assessee had submitted ledger account vide letter dated 25.11.2016 and also duly replied to the query vide letter dated 26.12.2016. All those facts goes to show that the AO has applied his mind and after considering the same and has passed the assessment order u/s.143(2) of the Act and hence it cannot be said that this is a case of no enquiry. It is well settled that both the conditions vis- -vis before of AO should be erroneous and assessment was prejudicial to the interest of Revenue and both those conditions should be cumulatively specified by the ld.Pr.CIT. In the present case the matter belongs to A.Y. 2014-15 and the Explanation 2 was inserted in the Act u/s.263 by Finance Act 2015 w.e.f 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y please be quashed or modified as your honour deem it proper. 3. Brief facts of the case are that the assessee is engaged in the business as a government contractor for construction works during the year and consideration. The assessee company filed its Return of Income on 17.11.2014 for the A.Y. 2014-15 by declaring total income of ₹ 7,45,67,950/-. The Scrutiny assessment was finalized u/s.143(3) on 28.12.2016 by determining the total income at ₹ 7,46,90,940/- by way of making addition of ₹ 1,22,994/- on account of disallowance of various expenses. 4. Subsequently, ld.Pr.CIT on scrutiny record had observed that there were various payments made by the assessee company to the persons covered u/s.40A(2)(b) of the Act in the form of director remuneration, rent expenses and purchase payments. However, no proper verification has been made by the AO in respect of these payments. 5. Ground No.1: The Authorised Representative (AR) reiterated the same arguments as raised before the ld.Pr.CIT. It was submitted that ld.PCIT has erred in passing the order u/s.263 of the Act by invoking Explanation-2 although, the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kantilal Bhalala 9600000 9600000 9600000 Pradipbhai Gajera 4800000 4800000 4800000 Beenaben Bhalala 3600000 3600000 3600000 6. It was further submitted that the ld.Pr.CIT had stated that the AO has failed to invoke the provisions of Section 40(A)(2) of the Act, however it is wrong to state the same as the assessee had filed all the documents and books of accounts and there was nothing on record to suggest that assessee had made any excessive payment to related. It was further submitted that in fact in this case, the provision of domestic transfer pricing were applicable for the year under consideration. In this regard, The assessee had also duly furnished the report from expert in Form 3CEB as required by law wherein all the details of payment made to related party were mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons viz order of the assessing officer should be erroneous and assessment order should be prejudicial to the interest of Revenue should be cumulatively satisfied by the ld.Pr.CIT. The reliance is placed on the decision of Hon'ble Gujarat High Court in case of CIT v/s. Minaiben S. Parikh - 215 ITR 0081 (Guj.) and the decision of Honourable Bombay High Court in case of CIT v/s. Gabriel India Ltd. - 203 ITR 108 (Bom.) and decision of Honourable Supreme Court in the case of Malabar Industrial Co. Ltd. V/s. CIT 243 ITR 83. Even if it is assumed that two views are possible and assessing officer has adopted one of the views in favour of the assessee, the assessment order cannot be revised u/s. 263 as held by Honourable Supreme Court In case of Malabar industrial Co. v/s. CIT - 243 ITR 0083 (SC). The decision of the Supreme court was followed in the case of CIT vs. Max India Ltd. - 295 ITR 0282 (SC) and by the Gujarat High Court in the case of CIT vs. Arvind Jewellers - 259 ITR 0502. It was submitted that in view of the above submission it is clear that the order passed by Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue and requested to drop proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso drawn our attention to page no. 55 which contains the details regarding turnover, Gross Profit of the previous years and the preceding previous years and at page no.40 of the paper book, Form 3CEB is contained in page no.34 to 42 of the paper book, more particularly at page no.40 the particulars in respect of transactions in the nature of any expenditure u/s.40A(2)(b) of the Act have specifically been mentioned. All those documents were examined by the auditors which are part and parcel and tax audit report along with audited financial statements. The AO had cited details in respect of these transaction in his notice issued u/s.142(1) of the Income Tax Act which is at page 29 to 30 of the paper book. The assessee had furnished a letter dated 30.05.2016 thereby explaining the details and also placing on record all the documents in the form of Annexures it is Annex at page no 27 to 28 of the paper book. The AO had again issued notice u/s.142(1) of the Income Tax Act dated 03.11.2016 which is at page 24 to 26 and in this respect the reply was also filed by the assessee before the AO which is at page no.20 to 23 and had filed all the replies along with documents and participated in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is unsustainable in law. In the case of CIT Vs. Amit Corporation 81 CCH 0069 (Guj HC) wherein it has been held that the Commissioner was of opinion that AO did not carry out proper inquiries during assessment proceedings. Commissioner set aside order of AO and placed matter back before AO to frame assessment de novo after making proper inquiry and verifying books of account of assessee-Tribunal allowed assessee s appeal- Held, when, during course of framing of assessment, AO had access to all records of assessee and after pursuing such record AO framed assessment, such assessment could not have been re-opened in exercise of revision power u/s 263 for making further inquiries-In facts of case, Tribunal rightly interfered with such order-Appeal dismissed. In the case of CIT Vs. Arvind Jewellers 259 ITR 0502 (Guj HC) wherein it has been held that Enquiry by ITO-Finding of fact given by the tribunal that the assessee had produced relevant material and offered explanation in pursuance of the notices issued under s. 142(1) as well as s. 143(2)- ITO has come to a definite conclusion after considering those material and explanation-Mere fact that a different view could be taken cannot be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent as their life span is more than a year-With the replacement of such tools and dyes, no new asset com into existence, nor there is benefit of enduring nature-It does not enhance the 1 of the existing machine or increase its production capacity-Therefore, the view taken by the AO was one of the possible views and the assessment order passed the AO could not be held to be prejudicial to the Revenue . 16. The above judgment of Hon'ble Delhi High Court in the case of Sunbeam Auto Ltd. clearly made distinction between lack of enquiry and inadequate enquiry . It was held that if there is an enquiry even inadequate, that would not by itself give vocation to the CIT to pass order u/s.263 of the Act, merely because he has a different opinion in the matter. Further, in the case of Narayan Tatu Rane Vs. ITO [2016] 70 taxmann.com 227 (Mum Trib) AND Shanti Krupa Estate Pvt. Ltd., Vs. ACIT in ITA No.1252/Ahd/2015, Ahmedabad Tribunal has held as under : 7. Shri Anil Kumar, learned C.I.T. (D.R.) at this stage relies upon section 263 Explanation 2 inserted in the Act by the Finance Act 2015 w.e.f. 01.06.2015 envisaging exercise of revision jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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