TMI Blog2022 (11) TMI 654X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment record including the Bank details and thereafter should have doubted about the finding of the AO. The amounts referred under three Heads do not require deduction of any TDS and in this situation, no disallowance u/s 40(a)(ia) is called for. Commissioner has failed to examine the issue analytically in right perspective and, therefore, it is not sustainable in the eyes of law. We allow the appeal of the assessee and quash the impugned order. Appeal of the assessee is allowed. - I.T.A. No. 176/KOL/2022 - - - Dated:- 30-8-2022 - Shri Rajpal Yadav, Vice-President (KZ) And Shri Manish Borad, Accountant Member Sri Soumitra Choudhury, Advocate, appeared on behalf of the assessee Md. Ghayas Uddin, CIT (DR), appeared on behalf of the Revenue ORDER Per Rajpal Yadav, Vice-President (KZ):- The present appeal is directed at the instance of the assessee against the order of ld. Commissioner of Income Tax-X, Kolkata dated 26.03.2010 passed for the assessment year 2005-06. 2. While fixing the appeal for out of turn hearing, we have recorded the following finding on the application filed by the assessee, which reads as under:- A Bench ITA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ountant Member Vice-President (KZ) 3. The grievance of the assessee is that the ld. CIT has erred in taking cognizance under section 263 of the Income Tax Act and thereby setting aside the assessment order dated 28.12.2007 passed under section 143(3) of the Income Tax Act for framing a fresh assessment order. 4. Brief facts of the case are that the assessee was engaged in the sale of Saree, Pyajama, Punjabi, Dhuti etc. It has filed its return of income on 28.10.2005 disclosing total income of Rs.11,38,730/-. According to the facts emerging out from the assessment order, a notice under section 143(2) was issued by Shri F.C. Mondal, ACIT, Circle-30, Kolkata. Subsequently the case was assigned to Additional Commissioner of Income Tax, Range-28, Kolkata, who again issued fresh notice under section 143(2) on 20.11.2007. After hearing the assessee, he passed the scrutiny assessment under section 143(3) on 28.12.2007. It is pertinent to observe that in the assessment order, dates of hearing have been mentioned starting from 08.06.2007. The total dates of hearing taking place before the ld. Assessing Officer are seven, as appearing in Column No. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or deduction from the AY 2005-06. Further out of the sundry creditors totaling Rs.3121 294.02, not a single cross verificaion has been made. Hence, there was a failure on the part of the Assessing Officer to carry out the necessary enquiries and as such the assessment order was erroneous and prejudicial to the interest of revenue. It is therefore, proposed to set aside the assessment so that the points discussed above may be examined by the AO to be decided on merit after giving a reasonable opportunity of being heard to the assessee. You are hereby given an aopportunity to show casue as to why the case may not be set aside. Kindly file your written submission in this regard. Your case is fixed for hearing on 06-01-2010 at 1:30 p.m. . 6. In response to the above show-cause notice, Shri A.K. Ghosh, Advocate appeared on behalf of the assessee. He submitted the reply of the assessee. At that relevant point of time, a dispute arose whether 40(a)(ia) is applicable on payments already made or amounts, which are payable. According to the assessee, this section is applicable on the amounts, which are payable and not on the amounts, which already paid. On this dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trial Co.Ltd. 243 ITR 83 (SC). The assessing Officer had accepted assessee s submission without examining the points discussed above.Thus , the AO failed to make necessary enquiry which was expected of him before concluding the assessment. The assessment is, thus, erroneous and prejudicial to the interest of revenue. Ref. CIT V. South India Shipping Corpn. Ltd. (1009) 233 ITR 546, Rampyari Devi Saraogi V. CIT (1968) 67 ITR 84 (SC) and Tara Devi Agarwal V. CIT (1973) 323 (SC). In this connection, the relevant judicial pronouncements need to be reviewed. It is beyond dispute that u/s. 263, the Commissioner does have the power to set aside the assessment order and send the matter for a fresh assessment if he is satisfied that further enquiry is necessary, and that the order of the AC is prejudicial to the interests of Revenue - Swarup Vegetable Products Industries Ltd. V:; LIT (1991) 187 ITR 412, 415-16 (All) In the facts of Umashankar Rice Mill v. CIT(1991) 187 ITR 638, 639 (Orissa), the Tribunal was held justified in upholding the prowsional order of the Commissioner who felt the there should be a further enquiry. The Commissioner is fully empowered to adopt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner can regard the order as erroneous on the ground that in the circumstances of the case the Assessing Officer should have made further enquiries before accepting the statements made by the assessee in his return. The reason is obvious. Unlike the Civil Court which is neutral to give decision on the basis of evidence produced before it, an assessing officer is not only an adjudicator but is also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further enquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke enquiry. The meaning to be given to the work erroneous in Section 263 emerges out of this context. The word erroneous in that section includes cases where there has been a failure to make the necessary enquiries (See Vee Enterprises V. Addl. CIT)1975) 99 ITR 375, 386 (Del). It is incumbent on the Officer to investigate the facts stated in the return, when circumstances would make such an enquiry prudent and the work erroneous in Section 263 includes the failure to make such an enquiry. The order becomes erroneous because such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a stereo-typed order which simple accepts what the assessee has stated in his return and fails to make enquiries which are called for in the circumstances of the case. It is well known that simply because the facts have been disclosed by the assessee, in the course of assessment proceedings, it does not give the immunity from revisional jurisdiction which the Commissioner can exercise under section 263 and as such even in a case where the facts have been disclosed by the assessee to the assessing authority and the correct provisions of law have not been examined by the assessing authority, the power under section 263 can be invoked. If any authorities are dt all needed to be cited in support of the aforesaid trite principles, then one can advert with advantage to the decisions in Rampyari Devi Saraogi vs. CIT (1968) 67 1TR 84 SC) : Tara Devi Aggarwal vs. CIT (1973) 88 ITR 323 (SC) : Malabar Industrial Co. Ltd. vs. CIT(1992) 198 ITR 611 (ker) : CIT vs. Emery Stone Mfg. Co. (1995) 213 ITR 843 (Raj) : B.S. Bajaj Sons vs. CIT (1996) 222 ITR 418 (P H) : Patel Cotton Co. Ltd. vs. ACIT (1998) 64 ITD 273 (Mum) : BLu Mai Pyare Lai vs. ACIT(2001) 79 IT'D 169 (Chd): Morinda Coo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough these pages. According to the ld. Counsel for the assessee, no TDS was required to be deducted at its end. The ld. Commissioner in his show-cause notice has divided the expenditure under three Heads. Under the 1st Head, an amount of Rs.70,90,580/- has been referred by the ld. Commissioner of Income Tax on which TDS was to be deducted. He submitted that actually it is not a commission rather it is a sale on Credit Card. He explained the position shown to the ld. Assessing Officer not only with the help of this letter but supporting evidence from the Bank Statement. On page no. 12 of the paper book, he placed on record the details of Credit Card bill. How these amounts have been received? How sales have been made and what are the Bank charges? Thus according to him, no TDS was required for making such sales. Similarly he pointed out that under the 2nd Head, ld. Commissioner made reference for labour charges of Tailors. There is no relationship of a contractor as well as contractee. The Tailors were given payments on job work basis and a single job work bill was not more than Rs.20,000/-. He filed the break-up of all these payments and the details of bills from pages no. 15 onwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorized by the Board in this behalf under section 120; (b) record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this subsection shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT taken u/s 263. The ITAT in the case of Mrs. Khatiza S. Oomerbhoy Vs. ITO, Mumbai, 101 TTJ 1095, analyzed in detail various authoritative pronouncements including the decision of Hon ble Supreme Court in the case of Malabar Industries 243 ITR 83 and has propounded the following broader principle to judge the action of CIT taken under section 263. (i) The CIT must record satisfaction that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Both the conditions must be fulfilled. (ii) Sec. 263 cannot be invoked to correct each and every type of mistake or error committed by the AO and it was only when an order is erroneous that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice the requirement of order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view with which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the Assessing Officer had not applied his mind on the issue. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between lack of inquiry and inadequate inquiry . If there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of lack of inquiry , that such a course of action would be open . 12. In the case of Gee Vee Enterprise vs. Commissioner of Income Tax reported in 99 ITR page 375, the Hon ble court has expounded the approach of ld. Assessing Officer while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Not deducted on commission paid against card sales of Rs.70,90,580/- REPLY : That we have not paid any commission against credit card sale and it is not applicable and there is no question to deduct TDS on credit card sale. ITEM L/F AMOUNT(Rs.) Panjabi Pajama Credit card sale 102 46,10,527.00 Silk Saree Credit Card Sale 121 14,23,003.00 Cotton Saree Credit Card Sale 112 10.57.050.00 Total Credit card sale 70,90,580.00 Total bank Credit Card Received 70.23.726.86 The said amount relates to sales proceeding through credit card to different customers and the above amount relate to sale, therefore, no TDS is liable to be deducted against such credit card sales. In the audited balance sheet there is no expenses has been shown as commission paid as no TDS was deducted. Our total credit card sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 dated 10th September, 2004, the payments to contractor or sub-contractor for carrying out any work (including supply of labour for carrying out any work) will be deductible only if tax is deducted therefrom, at source under Chapter XVII-B and such tax has been paid during the previous year or in the subsequent year before expiry of the time prescribed under section 200 of the Act. The provision was made effective from 1 -42005 by the provision of section 11 of the Finance (No. 2) Act, 2004 which is relevant to assessment year 2006- 07. But in the instant case, the assessment year under dispute is 2005-06 and the relevant previous year is 1-4- 2004 to 31-3-2005 and during this year, the provision of section 40(a)(ia) of the Act was non-existent and the same was not applicable in the instant case. Therefore,your goodself is requested Rs.7,85,900/- should not be added and allow the same. We are enclosing Bills. Voucher, Ledger account for your kind perusal. 3. Query : Why TPS Not deducted on payment of advertisement charges amounting to Rs.281,700/- REPLY : That in profit loss account, an amount of Rs.2,81,700/- only was debited towards advertisement charge ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
