TMI Blog2020 (3) TMI 1253X X X X Extracts X X X X X X X X Extracts X X X X ..... cline to accept the contention of assessee was not allowed due opportunity of hearing to explain his case before ld. Pr. CIT. Ante dated order - Merely because the AO received the copy of the order on 1.5.2019 and the assessee received the copy of order through its AR on 6.5.2019, it cannot be safely presumed that the order has been passed ante dated and same was not passed on 29.3.2019 i.e. on the date of mentioning in the impugned order. We are unable to see any evidence except service of notice in the second week of May, 2019, which could show and satisfy us that Pr. CIT has passed ante dated order. Therefore, we decline to accept this contention of ld A.R. that the order has been passed ante dated and thus, both the contentions and grounds agitated by the assessee are hereby dismissed. Sufficiency and adequacy of enquiry on the issues of Limited Scrutiny - AO issued notice u/s.143(2) and u/s.142(1) of the Act which were replied by the assessee - AO makes some inquiry on the issues picked up by him by way of issuing notices and taking on record replies, explanation and relevant documents submitted by the assessee in compliance to the said notice. Unable to find any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dated:- 17-3-2020 - Shri Chandra Mohan Garg, Judicial Member And Laxmi Prasad Sahu, Accountant Member Assessee by : Shri M.R.Sahu, AR Revenue by : Shri M.K.Gautam, CIT DR ORDER C.M.Garg,JM This is an appeal filed by the assessee against the order u/s.263 of the Act of the Pr. CIT(A), Sambalpur dated 29.3.2019 for the assessment year 2014-15. 2. The assessee has raised the following grounds: Ground No.l- Initiation of revision proceedings under section 263 of the Act: a. On the facts and circumstances of the case and in law, the learned Pr. CIT( Ld. Pr.CIT) has erred in holding that the order by the Assessing Officer (AO), Rourkela is erroneous as well as prejudicial to the interests of revenue. b. The Ld. Pr.CIT has erred in not appreciating the fact that the AO has passed the assessment order dated 30/12/2016 under section 143(3) of the Act after application of mind and after scrutinizing the submissions field by the Appellant as asked by the AO on the basis of the CBDT Instructions for limited scrutiny and accordingly, the order passed by the AO is not erroneous and prejudicial to the interest of revenue. c. The Ld. Pr.CIT with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case and in law, when the AO after conducting necessary enquiries , which the circumstances demanded , had accepted the documents, then it was not open to the Pr.CIT to treat the assessment order erroneous and prejudicial to the interest of revenue within meaning of section 263 of the Act. There fore the Pr.CIT order under section 263 setting aside the assessment be cancelled and AO's order under section 143(3) dated 30.12.2016 be restored. 5. Maintainability /Validity of Revisionary Proceedings towards disallowance of adjustment on account of unabsorbed depreciation of ₹ 1,34,85,465/- on the basis of tax audit report of the auditor: Without prejudice to ground no.1,2 . 3 - a. That on facts and circumstances of the case and in law, when the AO after conducting necessary enquiries and scrutinizing the tax audit report up loaded by tax auditor in the system accepted adjustment of unabsorbed depreciation, then it was not open to the Pr.CIT to treat the assessment order erroneous and prejudicial to the interest of revenue within meaning of section 263 of the Act. Therefore the Pr.CIT order under section 263 setting aside the assessment be cancelled and AO&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss account, same was disclosed at ₹ 15,69,31,397/-. Thus, the assessee had understated the gross receipts from contract by ₹ 1,22,51,569/-, which should have been added to the total income of the assessee. Ld Pr. CIT observed that the Assessing officer has not verified the said issue during scrutiny proceeding rendering the assessment order erroneous and prejudicial to the interest of the revenue. 5. Further, on perusal of record, Ld Pr. CIT observed that the assessee had shown ₹ 8,45,95,617/- as gross value of service provided under the head 00440262 (transport of goods by road) and a sum of ₹ 15,69,31,397/- as gross value of service provided under the head 00440402 (service provided in relation to mining of minerals, oil or gas) as is revealed from service tax return. However, the assessee had not accounted for the receipt of ₹ 8,45,95,617/- in its income. Moreover, this amount of ₹ 8,45,95,617/- had been grouped in note 19 under the head cost of materials consumed . Thus, the income credited to P L account was understated to the tune of ₹ 16,91,91,234/- and the same was not taken as income, which, according to Ld. PR. CIT, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of limited scrutiny into comprehensive scrutiny by AO has passed impugned revisional order on the basis of irrelevant consideration and thus, he has grossly erred in holding that the impugned assessment order is erroneous and prejudicial to the interest of the revenue. Ld A.R. pointed out that as per copy of the notice and annexure available at pages 42 and 43 of assessee s paper book, it is apparent that the assessee s case for assessment year 2014-15 is limited scrutiny only on turnover reported in service tax return compared to income tax return of the assessee and mismatch in the amount paid to the related person u/s.40A(2)(b) of the Act reported in audit report and ITR. Further, drawing our attention towards APB Pages 46 to 48 and page 49, ld counsel submitted that the Assessing Officer issued notice u/s.142(1) of the Act alongwith questionnaire dated 10.8.2016, on the said two issues for which the case was selected for limited scrutiny and the assessee filed its reply dated 14.10.2016, copy of the notice alongwith questionnaire is available at pages 49 to 104 of APB. Ld A.R. also drew our attention towards annexure to the said reply and submitted that a letter dated 20.12.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny with the approval of the Pr. CIT to convert from limited scrutiny to complete scrutiny, otherwise, the AO cannot be expected to examine and verify other issues and all those other issues, Pr. CIT was not correct in holding the assessment as erroneous and prejudicial to the interest of the revenue. Ld A.R. further drew our attention towards order of ITAT Mumbai D Bench in the case of M/s. R. H Property Developer Pvt Ltd vs Pr. CIT in ITA No.1906/Mum/2019 for the A.Y. 2014-15 order dated 30.7.2019 and submitted that as per para 8 of this order, the AO is required to confine himself the issues for which the case was selected for limited scrutiny and the assessment order cannot be held to be erroneous and prejudicial to the interest of the revenue by picking up other issues, for which the case was not selected for limited scrutiny. 15. Apropos Ground No.2 of appeal, ld A.R. of the assessee submitted that the Pr. CIT has not followed the principles of natural justice while passing revisionary order u/s.263 of the Act. Ld counsel submitted that the notice u/s.263 of the Act was issued on 12.3.2019 fixing the date of hearing on 19.3.2019 and subsequently second show cause notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to Ground Nos.1 to 3 of appeal, ld A.R. submitted that the assessee is a service provider and incurred expenditure towards transportation charges and in views of the documents including written reply filed by the assessee dated 14.10.2016 and dated 22.12.2016 to the notice dated 10.8.20₹ 16 issued u/s.142(1) of the Act, Pr. CIT has not brought on record any cogent and conclusive material or reason which could prove that the course followed by the AO was unsustainable in law and hence, revisionary order deserves to be quashed. 18. Ld A.,R. submitted that it was the duty of the assessee to deposit the service tax as on receipt of service and service tax liability of the assessee has been shown in the P L account and the AO has made enquiry on this point, which is also apparent from Note sheet of the AO dated 16.12.2016 available at page 108 of APB. Ld counsel submitted that the return of service tax at pages 52 to 66 of APB for financial year 2014-14 relevant to A.Y 2014-15 available at page 160 of APB for financial year 2011-12 relevant to assessment year 2012-13 and, therefore, it cannot be presumed that the AO has not made any enquiry on this issue. 19. Further, pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crutiny . Therefore, it is a case of inadequate and insufficient inquiry by the AO. Ld CIT DR vehemently pointed out that there is no deliberation by the AO in the assessment order on these issues. Merely because the assessee has replied to the notice u/s 142(1) of the Act and reply of the assessee alongwith all material was taken on record for consideration, it cannot be held that the AO has examined the issues by issuing notice by considering explanation and documents of the assessee on the issue. It is the duty of the AO, as an adjudicator, that the issues should be taken to a logical end and conclusion and without such exercise, the assessment order has to be held as erroneous and prejudicial to the interest of the revenue being passed without sufficient and inadequate enquiry on the issues for which case was selected for limited scrutiny. Ld CIT DR also submitted that in addition to regular notice, the assessee was also serviced notice on mail by Pr. CIT and he got sufficient time to reply the same personally or electronically, therefore, it cannot be alleged that revisional order has been passed in violation of natural justice. Without providing sufficient time and opportunit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing by the revisional authority. Therefore, we decline to accept the contention of ld A.R. that the assessee was not allowed due opportunity of hearing to explain his case before ld. Pr. CIT. 27. So far as allegation of ante dated order is concerned, it is very strange that such kind of allegation is being levelled against a Senior Revenue Officer without any cogent, relevant and self speaking evidence to show that the order was not actually passed on 29.3.2019 and the same was passed on some later date (ante dated). Merely because the AO received the copy of the order on 1.5.2019 and the assessee received the copy of order through its AR on 6.5.2019, it cannot be safely presumed that the order has been passed ante dated and same was not passed on 29.3.2019 i.e. on the date of mentioning in the impugned order. We are unable to see any evidence except service of notice in the second week of May, 2019, which could show and satisfy us that Pr. CIT has passed ante dated order. Therefore, we decline to accept this contention of ld A.R. that the order has been passed ante dated and thus, both the contentions and grounds agitated by the assessee are hereby dismissed. 28 .So far a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate this issue in the assessment order and in our humble opinion,until and unless inquiry started by the AO is terminated to a logical and plausible end, such kind of enquiry has to be held as inadequate and insufficient inquiry on the issues, which makes the assessment order as erroneous and prejudicial to the interest of the revenue. 31. From the material placed before us, we also observe that from the service tax return of the assessee, the assessee had shown Rs. ₹ 8,45,95,617/- as gross value of service provided under the head 00440262 (transport of goods by road) and a sum of ₹ 15,69,31,397/- as gross value of service provided under the head 00440402 (service provided in relation to mining of minerals, oil or gas) as is revealed from service tax return. However, the assessee had not accounted for the receipt of ₹ 8,45,95,617/- in its income. Moreover, this amount of ₹ 8,45,95,617/- had been grouped in note 19 under the head cost of materials consumed . Thus, the income credited to P L account was understated to the tune of ₹ 16,91,91,234/- which were not enquired by the AO. 32. We also observe that the issue of brought forward unabsorbed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g and evidence which comes before it. The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is duty to ascertain the truth of the facts stated in the return which the circumstances of the case are such as to provoke an inquiry. It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word erroneous in section 263 includes the failure to make such an enquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. 34. The Hon ble Delhi High Court also in the case of Duggal Co. vs. CIT [220 ITR 456], held as under: The ITO is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls further enquiry. It is incumbent on the AO to further investigate the facts stated in the return when circumstances would make such an enquir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer without probing into the matter further had allowed the claim of the assessee for weighted deduction and if the Commissioner on the basis of materials formed an opinion that the grant of allowance made by the officer was erroneous and not warranted by law, the jurisdiction of the Commissioner under section 263 of the Act was not ousted. The Commissioner may not have recorded his final conclusion, but the question for exercising the power of revision by the Commissioner is whether the order of the Assessing Officer can be regarded as erroneous and prejudicial to the interests of the Revenue. It may be erroneous in law or in fact. It may be erroneous in the sense that the Income-tax Officer had passed the order without properly conducting the inquiry in completion of the assessment and the order may also be erroneous when the expenditure allowed was against the provisions of law. 38. From the reading of all the above decisions of Hon ble High Courts, it is evident that their Lordships have taken the unanimous view that the Income-tax Officer is not only an adjudicator but also an investigator. It is his duty to ascertain the truth of the facts stated in the return. When the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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