9911796707
TMI Blog2019 (12) TMI 1625X X X X Extracts X X X X X X X X Extracts X X X X ..... from the orders of lower authorities are that the assessee is engaged in business of trading in coal , chemical & Transport Services. The assessee has filed return of income on 07.10.2013 declaring total income of Rs.5,23,48,010 which was assessed at Rs.6,25,50,590 vide order dated 22.03.2016 under section 143(3) of the Act. On examination of records, the Pr. CIT noticed that the assessee has shown total liabilities at Rs. 36,28,76,986 as on 31.03.2012 in the balance sheet whereas figures shown in previous year balance sheet as on 31.03.2012 were at Rs. 36,13,98,888. Therefore, there is difference in opening balance of liabilities at Rs. 14,78,098 which should have been disallowed under section 41(1) of the Act. Further, perusal of balance sheet and Profit & Loss Account and 3CD Report, revealed that the assessee has claimed sale at Rs. 227,65,20,025 from which a sum of Rs. 55,67,517 reduced being TCS amount collected by seller from buyers and deposited in government account. The credit of TCS is given to buyers hence, seller cannot reduce the amount collected from buyers, hence, same should be disallowed. The Pr.CIT has issued a show-cause notice to the assessee . The assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see further, referred Paper Book Page No. 70 to 74 which is copy of balance sheet and notes on accounts, and submitted that the assessee has done regrouping and recasting of various schedules. The learned counsel for the assessee drawn our attention to Paper Book Page No. 63 which is forming part of audited notes on account and submitted that as per note No. 9, it mentioned that Previous year`s figures have been regrouped and /or rearranged whenever necessary. The learned counsel for the assessee also referred Paper Book Page No. 72 to 74 which is reconciliation of liabilities not acceptable. It was submitted that current liabilities were regrouped and figures reflected in Schedule 8,9,10 and 11 of balance sheet as on 31.03.2012 are regrouped and reflected in difference Schedule viz. 4,5,6 and 16 of balance sheet. The change taken place due to change of auditors for both assessment years. The details of same were submitted along with books of accounts during the course of assessment proceedings and also submitted details related to sundry creditors. Therefore, relevant comparable details are available on record and both the figures are comparable and there was no difference in curr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or denovo assessment as the AO failed to examine the liabilities and accounting of TCS method. 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 CIT over the AO. The 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 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 fails in discharging any of the two said duties i.e. as an investigator or that of an independent/impartial adjudicator, the CIT's supervisory jurisdiction is attracted because the order of the AO would be erroneous for lack of inquiry. Thus if he does not investigate, it would be erroneous for failure of AO to adjudicate as an independent/impartial adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial to the interests of the Revenue, unless the view taken by the Incometax 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 of clause (a) of Explanation, it us necessary that the Pr. CIT must mention in the order what inquiries or verification the Pr. CIT desires to have been carried out by the AO. The Pr. CIT in this case even though stated that the AO failed to examine during the course of assessment proceedings the claimed development expenses but did not pointed out what type of inquiry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 merely stated which schedule is regrouped is not mentioning but did not pointed out as to why order is erroneous when the all detailed of balance sheet and notes appended thereto were on record of the AO. that The order passed by the AO, in our opinion, shall be deemed to be erroneous in so far as it prejudicial to the interest of the Revenue, if the Pr. CIT would have specifically pointed out which of inquiries or verification should have been carried out by the AO in this regard and the AO failed to carry out those inquiries and verification as desired by the Pr. Commissioner of Income-tax. Since the Pr. CIT has not suggested the basis of inquiry or verification to be carried out by the AO, the order passed by the AO cannot be deemed to be erroneous in so as far as it is prejudicial to the interest of the Revenue. 11. In the case of CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is is merely change of presentation. Therefore, the assessment order passed after verification and enquiry is not erroneous and prejudicial to the interest of the Revenue. Merely just because the view taken by the AO was not found acceptable does not mean that the AO has failed to make requisite enquiries. If the answer is affirmative then second question arises whether the acceptance of the claim by the AO was a plausible view or on the facts of the finding on the facts that the said finding of the AO can be termed as sustainable in law. We find that vide questionnaire, the assessee regarding current liabilities and details of TCS were asked for. The assessee had furnished his reply, which is placed found placed in Paper Book Pages as referred above. The assessee has explained that the TCS is being accounted separately and no deduction of the same has been claimed in the Profit & Loss Account. Therefore, it the method of accounting, which does not mean that income has escaped assessment or order being erroneous, because if TCS are considered as part of sale then corresponding debit of TCS was to be claimed in the Profit & Loss Account. Hence, there is no revenue loss. In view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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