TMI Blog2019 (11) TMI 1385X X X X Extracts X X X X X X X X Extracts X X X X ..... and no hard and fast rule can be laid down as to how he should conduct the enquiry in discharge of his statutory functions. Where the factual scenario of a case prima facie indicates abnormalities and cry for looking deep into it, then a mere collection of documents cannot be held as conducting an enquiry. In our considered view, it is a clear case of lack of enquiry on part of the Assessing officer and the order thus passed is clearly erroneous and prejudicial to the interest of the Revenue. Where the AO shuts his eyes and the PCIT discovers the glaring discrepancies leading to non-satisfaction of cardinal test of admissibility and allowability of commission expenditure during the course of his examination of records, we donot think there is any infirmity or illegality in ld Pr CIT exercising her revisionary jurisdiction u/s 263 - It is not a case where the Pr. CIT has set-aside the assessment order rather she has examined these transactions and has carried out broad analysis of the documentation so submitted by the assessee company and has come to a conclusion, that the AO has failed to carry out adequate enquiries which he should have conducted especially in light of glaring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is neither lack of inquiry or inadequate inquiry regarding the payment of commission paid by the Assessing Officer for selling its plots or shops and therefore, the conditions for invoking the provisions of section 263 of the Act are absent in the instant case. It was submitted that the ld. Pr. CIT has misapprehend the facts of the case that the appellant company has paid the commission in the year under consideration and no commission was paid in the previous financial year. It was submitted that in previous financial year, the company has paid a commission of ₹ 50,53,305/- and the same is apparent from the financial statement of the assessee company. It was further submitted that the ld. Pr. CIT, Jaipur has opined that proper inquiries and verification was not made by the Assessing Officer before passing the assessment order regarding the payment of the selling commission by appellant company to brokers/agents for selling its plots and shops. In this regard, our attention was drawn to the notice issued by the Assessing Officer u/s 142(1) of the Act dated 24.06.2016 wherein vide query No. 25, the appellant company was asked to file the details of payments of commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee was selected for complete scrutiny under CASS and reason for such selection is large commission and low net profit. In the course of assessment proceedings, the Assessing officer called for details of commission in the prescribed format as per which name and address, nature of work done, amount of commission paid, amount of TDS, and rate of TDS were asked. The assessee company in response thereto did not submit the details in the required format but submitted ledger account of commission paid for the period 01.04.2013 to 31.03.2014, a few confirmations of ledger account and later submitted details such as name of the parties, PAN, amount paid and TDS deducted. It is seen that even complete address of each recipient were not mentioned nor was there any mention of work done/plots sold/name address of the purchasers introduced by these brokers. There is no linkage to the work done or plots sold along with documentary evidence on record. The Assessing officer accepted the payment of commission merely on the basis of details of payment made and TDS deducted thereon. No doubt the assessee company submitted details in respect of payments made towards commission, TDS deducted there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... name of the broker and amount of commission is written. Copy of few deeds were submitted wherein on the backside of last page such details were mentioned in pencil. It is also noted that in these deeds there is no mention of broker concerned nor has he signed there as witness. vii. During the course of present proceedings assessee also submitted affidavit from 4 parties to whom commission was paid. These affidavits are of identical format acknowledging the receipt of commission for selling of plots but no details of such plots are given. It does not mention anything about the persons who were introduced by him and to whom the plots were sold. 8. In view of the above stated facts and in the circumstance, AO should have carried out further enquiries before accepting the claim of commission. Though the case was selected on the reasons of payments of large commission low net profit, AO neither collected requisite details nor conducted any inquiry to verify the claim of the assessee. AO accepted the claim merely on the basis of payment details and TDS deducted therefrom and completed the assessment simply by making ad-hoc disallowance of ₹ 60,000/- for want of proper bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extract thereof reads as under: With reference to above said subject, in continuous to our last hearing and as desired by your honor we are pleased to submit as follows: At the time of last hearing your honor has asked us give the person wise list of the persons to whom we have paid the commission. In this regard we are enclosing herewith a separate statement containing the name of the persons as well as amount paid to him. We are also mentioning the individual PAN of all the persons. Your honor has also asked to us to get the amount paid confirmed from these persons. In this regard please note that we have already filed the copies of confirmations letters from some of the persons. 6. Therefore, the details so submitted are name of the persons, their PAN number, amount of commission paid and TDS thereon and that too, as part of latter submission dated 25.11.2016 and some confirmation letters were filed earlier. Taking the said bare minimum information on face value, the assessment was completed by the Assessing officer and order under section 143(3) was passed on 30.11.2016 within five days of receipts of such information. There is no information which has been s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts are just ordinary and prima facie there is nothing untoward the recorded transaction, in such circumstances, the obtaining of the documents and the application of mind thereon, without a further outside enquiry, may mean that the Assessing Officer did conduct enquiry, leaving the question open as to whether it was a proper or an improper enquiry. But, where the factual scenario of a case prima facie indicates abnormalities and cry for looking deep into it, then a mere collection of documents cannot be held as conducting enquiry, leave aside, adequate or inadequate. In such later cases, only when the Assessing Officer, after collection of the initial documents, embarks upon further investigation, that it can be said that he initiated enquiry. Where the facts of a particular transaction cry hoarse about its non-genuineness and even a casual look at such facts, prima facie, divulges foul play, then the alarm bell must ring in the mind of the Assessing Officer for making further examination. Collection of papers on record in such circumstances cannot be construed as conducting a proper enquiry. If in such circumstances, the Assessing Officer simply gathers documents and keeps t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umentation so submitted by the assessee company. Our view is fortified by the judgement of the Hon ble Supreme Court in case of Daniel Merchants Private Limited and others (supra) where the Hon ble Supreme Court has dismissed the SLP holding as under: In all these cases, we find that the Commissioner of Income Tax had passed an order under section 263 of the Income tax Act, 1961 with the observations that the Assessing officer did not make any proper enquiry while making the assessment and accepting the explanation of the assessee(s) in so far as receipt of share application money is concerned. On that basis, the Commissioner of Income tax had, after setting aside the order of the Assessing officer, simply directed the Assessing officer to carry thorough and detailed enquiry. It is this order which is upheld by the High Court. We see no reason to interfere with the order of the High Court. 10. Before parting, we may add that we have also gone through other legal authorities on the subject as brought to our notice by the ld AR which have been rendered in the context of specific facts and circumstances of the individual cases, however, the same doesn t support the case of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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