TMI Blog2022 (12) TMI 1353X X X X Extracts X X X X X X X X Extracts X X X X ..... Interest paid to Bajaj Finance ltd.- Assessee has been unable to produce Form 10BA before the Assessing officer or before the ld Pr. CIT. The nondeduction of TDS on the amount paid to Bajaj Finance Ltd., is clearly a violation of law which should have come to the attention of the AO. Failure on the part of the AO on this issue admittedly makes the order erroneous and prejudicial to the interest of the Revenue on that count. Consequently, in respect of issue of non-deduction of TDS in respect of payment made to Bajaj Finance ltd., we are of the view that the order of the Pr. CIT is on right footing and does not call for any interference. Administrative expenses and general charges, interest paid to HPCL on delayed payment and in respect of solar machine as also the proposal in respect of non-examination of the low net profit and the loss account of leakage in respect of diesel and petrol - As it is noticed that in the course of survey, books of account have been impounded. Assessing Officer has made addition representing the cash withdrawal from the bank account and treating the same as unexplained money shows that even cash book was before the AO. AO has in his assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liance the assessee furnished all the relevant documents, materials and information alongwith the books of accounts which were verified and test checked by the learned AO during the course of scrutiny proceedings. The learned AO verified all the materials and passed the order on 29.12.2019. Revision u/s.263 was conducted by the PCIT , Bhubaneswar -1 stating that certain details were not verified as such the assessment order is erroneous and prejudicial the interest of revenue. A notice was issued on 10.08.2021. The assessee through his AR appeared on 25.11.2021 and discussed the case with the Pr.CIT explaining the each and every query. Thereafter the Pr. CIT passed the Order on 31.12.2021. 4. Ld CIT DR has filed written submission, as follows: This is the assessee's appeal against the revision order dated 31.12.2021 passed by the Pr. CIT-1, Bhubaneswar. The Pr.CIT has noticed serious errors in the assessment order passed by the A.O. He has reached an inference that said assessment order had been passed by the A.O. without correct application of law and without. The Pr. CIT has noticed that the A.O. should have invoked provisions of section 115BBE in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de of the Pr. CIT. ii.) Coming to the decision of Hon'ble Orissa High Court in the case of Orissa State Police Housing Welfare Corporation Limited (139 taxmann.com 207), it has been rendered on different facts. In the cited case, the profit element in Work-in-Progress (MP) was directed to be added especially when the profit from such WIP had already been included in the income of the assessee. It was noticed that the AO had in fact called for the details of the closing WIP which had been furnished by the Assessee and had examined it. If the CIT was of the view that the AO had not examined this issue at all, it could then lead to the conclusion that the order of assessment was erroneous. That was not, however, the case there. On the other hand, the CIT simply decided that even for verification of the correctness of the submission of the Assessee, the matter had to be remanded to the AO. Under these circumstances, the Hon'ble Jurisdictional High Court had taken a view that the order u/s.263 of the Act was not sustainable. The observations of the Hon'ble High Court in para-14 are reproduced as under: 14. Section 263 of the Act requires the CIT, after hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 375) held as under: The reason is that it is not the Income-tax Officer but a superior officer like the Commissioner who is exercising a revisional jurisdiction suo motu there under. The superior officer could be trusted with a larger power. The only requirement for the exercise of this power is that the Commissioner should consider that the order passed by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the revenue . What is the meaning of erroneous in this context ? It was argued for the assessees by Shri G. C. Sharma that the word erroneous means that the order must appear to be wrong on the face of it. In other words, he equated the error with error of law apparent on the face of record which is a well-known ground for the review of a quasi-judicial order by this court under article 226. We are unable to agree with this interpretation. The intention of the legislature was to give a wide power to the Commissioner. He may consider the order of the Income-tax Officer as erroneous not only because it contains some apparent error of reasoning or of law or of fact on the face of it but also because it is a stereo-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quirements of essential inquires and of law have been duly and properly complied with by AO or not. 28.2 It is well settled that before the Commissioner can invoke his powers u/s 263, he has to arrive at a conclusion that the assessment order is erroneous in so far as it was prejudicial to the interests of the revenue. Then only the powers u/s 263 can be invoked. Therefore, if AO accepts or rejects any claim of the assessee without due application of mind and if such failure causes prejudice to revenue, the Commissioner would be well within his powers u/s 263 to intervene in the matter. An inquiry which is just farce or mere pretence of inquiry, cannot be said to be an inquiry at all, much less an inquiry needed to reach the level of satisfaction of the AO on the given issue. The level of satisfaction would obviously mean that he has conducted the inquiry in a manner whereby he places on record the material enough to reach the satisfaction, which a rational person, being informed of the nuances of tax laws would reach after due appreciation of such material. If this component is missing, it will always be a case of lack of inquiry and not inadequate inquiry. In the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly on account of low tax effect in respect of the said addition, no appeal had been filed. It was the submission that it is not that the assessee has accepted the claim of unexplained money. In respect of interest paid to Bajaj Finance Ltd., it was the submission that the amount had been paid in lumpsum and it included principal and interest and Bajaj Finance Ltd was not cooperating in providing Form 10 BA to show that the amount has been disclosed by them in their return. In respect of other issues, it was submitted that when the book of account of the assessee itself had been impounded and examined by the AO but now the claim that the AO has not done any examination and restoring the issue to the file of the AO is in fact an injustice being done to the assessee. 6. In reply, ld CIT DR submitted that there is no mention by the AO that the cash book has been impounded. It was the submission that when the addition u/s.69A has been made, the law requires the application of the provisions of section 115BBE and failure on the part of the AO to apply the correct provision is a mistake, which is apparent an error which caused prejudice to the interest of the revenue. It was the furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so. 8. In regard to the issue of interest paid to Bajaj Finance ltd., the assessee has been unable to produce Form 10BA before the Assessing officer or before the ld Pr. CIT. The nondeduction of TDS on the amount paid to Bajaj Finance Ltd., is clearly a violation of law which should have come to the attention of the AO. Failure on the part of the AO on this issue admittedly makes the order erroneous and prejudicial to the interest of the Revenue on that count. Consequently, in respect of issue of non-deduction of TDS in respect of payment made to Bajaj Finance ltd., we are of the view that the order of the Pr. CIT is on right footing and does not call for any interference. 9. Coming to other issues, being the verification of the administrative expenses and general charges, interest paid to HPCL on delayed payment and in respect of solar machine as also the proposal in respect of non-examination of the low net profit and the loss account of leakage in respect of diesel and petrol, it is noticed that in the course of survey, books of account have been impounded. The fact that the Assessing Officer has made addition of Rs.80,000/- representing the cash withdrawal from the bank a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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