9911796707
TMI Blog2017 (12) TMI 1816X X X X Extracts X X X X X X X X Extracts X X X X ..... "1. The original scrutiny asst. order not being erroneous nor was it prejudicial to the interest of the Revenue, the CIT erred in exercising his jurisdiction under Section 263 of the Act. 2. Without prejudice, the CIT ought to have appreciated that the assessing officer had adopted the same view year after year, after calling for various details during the course of the assessment proceedings and after being satisfied, had passed an order under Section 143(3) and therefore exercise of revisional powers under Section 263 to substitute his view, year after years, was impermissible & un sustainable in the eye of law. 3. None of the twin conditions for invoking revisional powers under Section 263 being absent, the impugned order passed und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued a show cause notice dated 12.05.2015 under section 263 of the Act proposing to revised assessment order, as the Assessing Officer had failed to assess the amount of Rs. 2,59,09,307/- being 15% of proceeds of E-auction of Iron Ore of Rs. 17,27,28,707/-. This amount was deducted by the Central Empowered Committee (CEC) towards the special purpose vehicle. The Principal Commissioner was of the opinion that this amount is an application of income and therefore cannot be allowed as a deduction. Subsequently, a revised show cause notice dated 16.03.2016 was issued wherein the learned Principal CIT held that apart from 15% of the E-auction sale proceeds, a further sum of Rs. 6,05,00,000/- paid by the appellant-firm as a penalty towards compens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a deduction as the breach of the provision of law is not a necessary incident of the business. The learned Principal CIT also placed reliance upon the decision of the jurisdictional High Court in the case of CIT Vs. Mamatha Enterprises (266 ITR 352) and Millenium Developers Pvt. Ltd., Vs. DCIT (322 ITR 401) wherein the Hon'ble jurisdictional High Court held that the compounding fees paid for the violation of the rules of construction of buildings, is penal in nature and is not deductable. Thus the Principal CIT had come to the conclusion that the order of assessment is erroneous and prejudicial to the interests of the Revenue as the AO passed the assessment order without making any enquiries or verification which should have been made an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing and dumping on the illegal site of Rs. 6,05,00,000/-. For better appreciation of the claims made by the appellant in the assessment proceedings, it is necessary to refer to the factual background of this this transaction. The appellant is classified as 'B' category mining owner. The Hon'ble Supreme Court of India in the SLP No. 7366 to 7361/2010 dated 29.07.2011 had banned the activity of mining of Iron Ore in the districts of Bellary, Tumkur and Chitradurga of Karnataka districts. In compliance with the orders of the Hon'ble Supreme Court of India, the mining activity had been suspended by the appellant since the month of January 2012. It may be further stated that the Iron Ore held in the stock was not permitted to be sold by the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct Zone" (CPEMIZ) around mining leases in Bellary, Chitradurga and Tumkur. The SPV would be under the Chairmanship of the Chief Secretary, Government of Karnataka and would have senior officers of the concerned departments of the State Government as Members. The SPV would function in a transparent manner and the accounts of the SPV would be subject to an annual audit by the CAG. A detailed scheme containing the details of the works to be undertaken, process of selection of implementing agencies, accounting procedure and other details of CEPMIZ may be directed to be prepared and submitted to this Hon'ble Court by the State of Karnataka, in consultation with the CEC within four weeks. The amounts received/retained by the Monitoring Commit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing mercantile system of accounting as there was no accrual of right to receive payment, having regard to the ratio laid down by the Hon'ble Apex Court laid down in the cases of CIT vs. Shoorji Vallabhdas & Co. (46 ITR 144), CIT vs. Birla Gwalior (P) Ltd. (89 ITR 266) Poona Electric Supply Co. Ltd. vs. CIT (57 ITR 521), R.B. Jodha Mal Kuthiala vs. CIT (82 ITR 570) and State Bank of Travancore vs. CIT (158 ITR 102). Thus, it is clear that the sale proceeds had accrued to the appellant only by virtue of the order of the Director of Department of Mines and Geology vide proceedings No.DMG/MONCOM/E-Auction/2012- 13 dated 03.01.2013. The taxability or otherwise of it can be considered only during the period ending on 31.03.2013, whereas the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
