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TMI Blog2019 (12) TMI 1530X X X X Extracts X X X X X X X X Extracts X X X X ..... imed in the Profit & Loss Account. Therefore, Pr.CIT has grossly erred in setting-aside the order and directing the AO to make fresh assessment after making proper enquiries, which amounts to change of opinion and the assessment framed is neither erroneous and prejudicial to the interest of the Revenue. 2. Succinctly, facts as culled out from the orders of lower authorities are that the assessee is engaged in business of Real Estate, Liquor Contractor and Toll Plaza Contractor. The assessee has filed return of income on 19.09.2014 declaring total income of Rs. 18,37,730 which was selected under CASS for Limited scrutiny for examination of large expenses. The same was assessed at Rs. 18,63,230 vide order dated 21.11.2016 under section 143(3) of the Act. On examination of records, the Pr. CIT noticed that the assessee has debited in the Profit & Loss Account toll Plaza expenses of Rs. 1,48,97,057 which included expenses of Rs. 3,62,608 of computer expenses and Rs. 3,68,192 on weig bridge expenses. As these expenses were paid to particular entity which are in the nature of Works contract and liable to TDS under section 194C of the Act. However, the perusal of records suggest tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 535 (SC). The Ld. AR of the assessee has also relied in the case of CIT v. Amar Jewellers Ltd. v. DCIT [2002]259 ITR 502, CIT v. Sunbeam Auto Ltd. [2011] 332 ITR 167 (Delhi) [2010] 189 Taxman 436 (Delhi), CIT v. Vinod Kumar Gupta [2007] 165 Taxman 225 (P&H) and others which have been reproduced by the Pr.CIT in his order passed under section 263 of the Act. However, the Pr. CIT observed that the objection regarding difference of opinion between the AO and Pr.CIT, is concerned the position has been substantially altered with insertion of Explanation-2 to section 263 by the Finance Act, 2015 and the deeming provisions would not apply pertaining to pre amended period does not hold good. The assessee has objected that case was selected under Limited scrutiny under CASS, hence, this cannot be extended to other queries. However, Pr.CIT observed that this case was selected for verification and examination of large expenses claimed under the head of other expenses. The Pr. CIT observed that regarding computer expense and weigh bridge expenses the assessee has not filed satisfactory reply for non deduction of TDS. Regarding expenses of Rs. 5,91,030, the claim of business relation and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee vide para No. 2 of which reply is placed the assessee Paper Book Page No. 18 and also detail explanation was filed vide paragraph No. 2 of explanation which is placed at the assessee`s Paper Book Page No. 25. With regard to recovery suit expenses, the learned counsel for the assessee submitted that a copy of ledger account was filed which is placed at Paper Book Page No. 51 showing the expenses debited in the name of Shri Kamaldeep Singh Anand and Gupta Traders. Hence, it was contended that such expenses are reflected in the ledger account, which have been debited to capital account of the assessee. The copy of account is placed at Paper Book Page No. 53 of Kamaldeep Singh and of Gupta Traders at Paper Book Page No.54. The details of suit recovery are given at Paper Book Page No. 55 to 64. Thus, the assessment order passed after making enquiries and verification. The learned counsel for the assessee further referred Paper Book Page No. 65 of which copy of Ahatas account showing monthly income from Ahatas totaling to Rs. 4,73,200 for the year under consideration. The details of same were submitted along with books of accounts during the course of assessment proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has claimed various expenses but the AO has not examined the same properly. Therefore, Explanation-2 to section 263 of the Act is very much applicable, as the AO has not made required enquiry. Therefore, the order passed by the AO is erroneous and prejudicial to the interest of the Revenue. Hence, Pr.CIT has rightly assumed jurisdiction to set-aside the issue to the AO for fresh assessment as the AO to examine the issue under dispute. 6. We have heard the rival submissions of both the parties and perused the material available on record. We are of the view that section 263 of the Act enables supervisory jurisdiction to the Pr.CIT over the AO. The Pr.CIT is empowered to act u/s. 263 of the Act when he considers that AO's order is erroneous in so far as it is prejudicial to the interest of Revenue. It is a settled position of law that the aforesaid twin condition i.e. AO's order is erroneous and prejudicial to the interest of revenue is sine qua non for assumption of revisionary jurisdiction by Pr.CIT. As per the scheme of the Act, AO has a dual role to discharge while assessing the income of an assessee. He is both an investigator as well as an adjudicator. If the AO f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer cannot be treated as prejudicial to the interests of the Revenue. For example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of Revenue; or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income-tax Officer is unsustainable in law." 7. Following the aforesaid judgment, the Supreme Court in CIT v. Max India Ltd. [2007] 295 ITR 282 (SC) reiterated that the phrase "prejudicial to the interests of the Revenue" as used in section 263(1) of the Act must be read in conjunction with the expression "erroneous" and unless the view taken by the Assessing Officer is found to be unsustainable in law, the powers under section 263 of the Act cannot be invoked. 8. No doubt, clause (a) of the Explanation 2 to section 263 deems the order to be erroneous and prejudicial to the interest of the Revenue in case order is passed without making enquiries or verification which should have been made in the opinion of Pr.CIT. In our opinion, for the applicability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed that Assessing Officer had undertaken exercise of examining as to whether expenditure incurred by assessee in replacement of dyes and tools was to be treated as revenue expenditure or not and on being satisfied with assessee's explanation, he accepted same, it could be said to be a case of lack of inquiry - Held, no - Whether further, on facts and law, view taken by Assessing Officer was one of possible views and, therefore, assessment order passed by Assessing Officer could not be held to be prejudicial to interest of revenue - Held, yes - Whether, therefore, Tribunal was justified in setting aside order of Commissioner - Held, yes 10. The Pr. CIT has noticed that the assessee has debited in the Profit & Loss Account toll Plaza expenses included Rs. 3,62,608 of computer expenses and Rs. 3,68,192 on weigh bridge expenses which were works contract and liable to TDS under section 194C of the Act. The assessee debited Rs. 5,91,030 as court fees paid for civil suit to recover Rs. 2,09,00,000 and Rs. 17,53,638 against Kamaldeep Singh and M/s. Gupta Traders respectively how these are related to business activity not examined and no income from Ahatas has been shown, but di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 18 and also detail explanation was filed vide paragraph No. 2 of explanation is placed at the assessee`s Paper Book Page No. 25. With regard to recovery suit expenses, the learned counsel for the assessee submitted that a copy of ledger account was filed which is placed at Paper Book Page No. 51 showing the expenses debited in the name of Shri Kamaldeep Singh Anand and Gupta Traders. Hence, it was contended that such expenses are reflected in the ledger account, which have been debited to capital account of the assessee. The copy of account is placed at Paper Book Page No. 53 of Kamaldeep Singh and of Gupta Traders at Paper Book Page No.54. The details of suit recovery are given at Paper Book Page No. 55 to 64. Thus, the assessment order has been passed after making enquiries and verification. The learned counsel for the assessee further referred Paper Book Page No. 65 of which copy of Ahatas account showing monthly income from Ahatas totaling to Rs. 4,73,200 for the year under consideration. The details of same were submitted along with books of accounts during the course of assessment proceedings. Therefore, the assessment order passed after verification and enquiry is no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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