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TMI Blog2008 (7) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... t the order is also not correct on merits? C. Whether the Income-tax Appellate Tribunal was right in law and on facts in holding that the word 'record' used in Section 263 (1) of the Act would not mean the record as it stands at the time of examination by the Commissioner, but it means the record as it stands at the time the order in question was passed by the Income-tax Officer? D. Whether the Income-tax Appellate Tribunal was right in not taking note of the decision rendered by the Apex Court in the case of CIT v Shree Manjunathesware Packing Products and Camphor Works [1998] 231 ITR 53 (SC) as also not properly appreciated the decision of the Apex Court rendered in the case of Malabar Industrial Company Limited v. CIT, [2000] 243 ITR 83? 2. The brief facts giving rise to the present Tax appeal are that the Commissioner of Income-tax (for short 'CIT') issued show-cause notice to the assessee under Section 263 of the Income-tax Act, 1961 dated 26.06.2005, in respect of the order passed by the Assessing Officer under Section 143 (3) for Assessment Year 2001-02 dated 30.12.2003 stating therein that in the trading account, the assessee had reduced gross receipts of Rs.30.08 Crores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion from 17 sub-contractors, out of the payment made by the assessee amounting to Rs.2,42,46,752/-, the net amount of Rs.2,37,61,817/- was disallowed and consequently, the total income determined in the assessment order dated 30.12.2003 was enhanced by an amount of Rs.2,37,61,817/-. 3. Being aggrieved by the said order of the learned Commissioner of Income-tax, the assessee took up the matter before the Income Tax Appellate Tribunal and the Tribunal, for the reasons stated in its order dated 17.11.2006, allowed the appeal of the assessee on both grounds, namely, on legality as well as on merits. 4. In the above background of the matter, the present appeal is filed before this Court. 5. Mr. K. M. Parikh, learned Standing Counsel appearing for the revenue has submitted that the Tribunal has wrongly arrived at the conclusion that the order passed by the learned Commissioner of Income-tax was beyond the jurisdiction under Section 263 of the Act. The Tribunal has also wrongly arrived at the conclusion that the order of the learned Commissioner of Income-tax was not correct on merits. He has further submitted that the Tribunal has given its finding contrary to the judgment of the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts given by the Tribunal, no question of law, much less any substantial questions of law arises out of the order of the Tribunal. He has further submitted that the order passed by the Commissioner of Income-tax under Section 263 of the Act is absolutely illegal and it was rightly cancelled by the Tribunal. There was no error in the order of the Assessing Officer. He has further submitted that the basis of revising the assessment order by the Commissioner of Income-tax is law gross profit and that the Assessing Officer did not inquire about the genuineness of the sublet payment, labour charges, etc. As a matter of fact, the assessee has supplied all details with regard to gross profit, labour charges, sub-contractor payment as well as the copy of accounts to the Assessing Officer during the course of assessment proceedings. He has further submitted that the assessee has also supplied the relevant details consisting of copy of accounts, copy of income-tax return, nature of the work done by each of the contractor etc. Each and every query raised by the Assessing Officer was duly satisfied. Despite this fact, the Commissioner has made further inquiry after issuance of notice under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that there was difference in the signatures in the returns as well as the statements recorded under Section 131 of the Act but ignoring the fact that how these are relevant for the assessee. The assessee has neither signed the return nor has given the statement. The other allegations are to this effect that the sub-contractors got the cheque received discounted from the Shroffs. The assessee was not concerned about the financial evidence of these parties. So far as the computation of income in accordance with the provisions of Section 44AD is concerned, the Tribunal did not find any illegality because the return has been filed by these sub-contractors in accordance with the provisions of law which was in existence during the year. For the work carried out by these contractors, the affidavits were duly filed. There was also no evidence on record that these contractors were related to the assessee or were associates or sister-concern of the assessee. The Tribunal has, therefore, came to the factual finding that the revenue has not brought any evidence on record showing that seventeen sub-contractors were not genuine. He has, therefore, submitted that the order of the Tribunal canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tial question of law arises out of its order. 15. We have heard learned Standing Counsel appearing for the revenue as well as learned Senior counsel appearing for the assessee. We have perused the orders passed by the Assessing Officer, under Section 143 (3) of the Act and also the order passed by the Commissioner of Income-tax under Section 263 of the Act. We have also gone through the order passed by the Tribunal. We have also perused the records produced before the Commissioner as well as the Tribunal and detailed chart giving particulars of sub-contractors examined by the Assessing Officer as per the directions of Commissioner of Income-tax in revision proceedings and also summary of details relating to various sub-contractors. From the details of sub-contractors examined by the Assessing Officer as per the directions of Commissioner of Income-tax in revision proceedings, inter alia, include the name of these sub-contractors, their permanent account numbers, their permanent addresses, amount given to them, name of work entrusted to them, nature of such work and statements recorded by the Assessing Officer etc. These details reveal that during the course of examination under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sister concern of the assessee. The Tribunal has also given finding that the revenue has not discharged the onus that the payment to sub-contractors were not genuine. Thus the Tribunal has come to the conclusion that no disallowances can be made merely on the basis of suspicion, howsoever strong may it be, and the suspicion cannot take the place of actuality. 16. As far as law is concerned, the Assessing Officer has taken a particular view on the basis of evidence produced before him. On the basis of the said material and materials which were collected by the Commissioner of Income-tax in revisional proceedings, the Commissioner has taken a different view. However, in the revisional proceedings under Section 263, it is not open for the Commissioner to take such a different view in view of the decisions of the Hon'ble Supreme Court in the case of Malabar Industrial Company Limited v. CIT [2000] 243 ITR 83. There is nothing on record to suggest that the view taken by the Assessing Officer is unsustainable at law. This Court has also taken the same view in case of CIT v. Arvind Jewellers [2003] 259 ITR 502 whereby the order passed by the Commissioner under Section 263 of the Act was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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