9911796707
Advanced Search 
TMI Blog2016 (4) TMI 1429X X X X Extracts X X X X X X X X Extracts X X X X ..... f mind, dropped the proceedings. Assessing Officer has not passed any order on "objections to proceedings" filed by assessee. Assessing Officer has accepted the objections that proceeding u/s 147 itself were bad in law. Such decision of dropping proceedings cannot be said to be erroneous or also not debatable. Appellant prays for cancellation of CIT's order u/s 263. 4) Appellant Prays for just and equitable relief. 5) Appellant Prays to add, alter, amend and /or withdraw the Ground/s as the occasion may demand during appellate proceedings." 3. The relevant facts concerning the issue, in brief, are that for the assessment year 2005-06 the assessment under section 143(3) of the Act was framed vide order dated 31.12.2007. The returned income of Rs.2,08,94,180/- was accepted. Subsequently, the assessment was re-opened under section 147 of the Act by issuing notice under section 148 dated 30.03.2010. However, proceedings were dropped vide order sheet entry dated 28.12.2010. While dropping the proceedings, the Assessing Officer discussed the assessee's reply dated 27.12.2010 and made the following order sheet entry :- "Letter dated 27/12/2010 is filed giving detailed submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er passed by the Assessing Officer is therefore considered to be erroneous in so far as it is prejudicial to the interests of the revenue. 5. In response to show-cause notice issued under section 263, the assessee filed submissions dated 21.12.2012 reproduced hereunder :- "Your honour has noted in Para 1 of the notice, that order u/ s. 143(3) for A. Y. 2005-06 is passed on 31/12/2007 assessing income at Rs. 2,08,94,180/- including disallowance made by Assessee of Rs. 13,81,403/- as per details furnished. Thereafter, notice u/s.154 was issued by Assessing Officer proposing rectification for additional disallowance u/s. 40(a)(ia) of Rs. 15,15,781/ - on the basis of audit objection. In response to the same, Assessee made detailed submission dated 02/03/2009 acknowledged on 03/03/2009. Thereafter, we were told that Assessing Officer has discussed and sent reply to Audit Objection and both have expressed satisfaction as to "no additions are called for ". However, to our surprise we received noticed u/s. 148 dated 30/03/2010 on 31/03/2010. In response to same, we submitted letter dted 30/04/2010 inter alia requesting copy of reasons recorded and stated that "original return file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 31/13/2007, if at all, is time barred. d) just because in Your Opinion, the decision of Assessing Officer of not disallowing Labour Payment & Professional Fee of Rs. 12,41,665/- was not effected even though was required to be made as per provisions of the Law. The alleged Order of Assessing Officer cannot be considered Prejudicial to Revenue. Much less it is erroneous in so far as 'Prejudicial to the Interest of revenue'. As reasons of non applicability of Section 40(a)(ia) are stated and accepted by Assessing Officer. We humbly and respectfully submit that same cannot be revised. 2) Without Prejudice to above submission, we further submit that a) It is not clear how this figure of 8,84,827/- and 3,56,838/- are worked out? b) Considering the merits of the case as submitted in reply to Notice u/s 154, Provisions of Section 40(a)(ia) are not applicable, as concluded by Assessing Officer after verification. 3) In fact, the proceedings u/s 147/148, itself were bad in law. For: a) Reasons recorded are nothing but change of opinion. As per Supreme Court decision, Assessing Officer does not get Jurisdiction u/s 148/147, in the case of change of opinion. CIT vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein it was held as under: " The CIT, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the CIT he would have estimated the income at a figure higher than the one determined by the ITO. That would not vest the CIT with power to re-examine the accounts and determine the income himself at a higher figure. It is because the ITO has exercised the quasi- judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the CIT does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the CIT the order in question is prejudicial to the interests of the Revenue. But that by itself will not be enough to vest the CIT with the power of suo-moto revision because the first requirement, viz. that the order is erroneous, is absent." In view of these facts, we submit that, Provisions of Section 263 are not applicable to the case both on legal ground of jurisdiction, facts of the case, and submission dated 03-03-2009 on merits. In view of the submission, proceedings initiated may please ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owance under section 40(a)(ia) of the Act. He therefore submitted that the very basis of reopening was alleged inaccuracy in disallowance under S. 40(a)(ia). The proceedings were dropped after verification exercise on the issue. Thus, the order of the Assessing Officer dropping proceedings under section 147 cannot be said to be erroneous in so far as it is prejudicial to the interest of the Revenue under these circumstances. 8.4 He thereafter submitted that prior to the action under section 147, a notice under section 154 was also served upon the assessee seeking disallowance under section 40(a)(ia) of the Act on account of labour charges of Rs.11,58,943/- and on account of professional charges of Rs.3,56,838/-. The notice was complied with vide letter dated 02.03.2009 appearing at page 31 of the Paper Book. It is not clear whether any formal order under section 154 has been passed or not in the absence of any service of such order on the assessee. He thereafter submitted that the proceedings under S. 147 were dropped under S. 152(2) of the Act. According to the Ld. AR, in view of the proviso to section 152(2), the Assessing Officer is not entitled to reopen the matter concluded b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This order passed vide order sheet entry was set aside by the CIT invoking jurisdiction under S. 263 of the Act. 10.2 In the background of the facts narrated above, we are totally at loss to perceive such action of the CIT. The Assessing Officer in exercise of quasi judicial powers and on consideration of reply of the assessee on the issue which is subject matter of agitation, has categorically recorded that the disallowances have been correctly made and no discrepancy subsists. Thus, the very issue for which S. 147 was invoked was addressed to the satisfaction of the Assessing Officer on facts. 10.3 We also inter alia notice a communication dated 02/09/2011 by the Assessing Officer to the CIT captioned 'final reply in respect of internal audit objection in the case of M/s Laxminarayan Associates A.Y 2005-06' wherein it was explained to the CIT that the disallowance under S. 40(a)(ia) could not be invoked owing to its inapplicability citing objective facts. The CIT has not demonstrated any perversity in such conclusion on facts while invoking powers under S. 263 of the Act. Needless to say, once an enquiry on the issue has been carried out and a conclusion thereon has been arri ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
