TMI Blog2008 (7) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court :- "A. Whether the Income-tax Appellate Tribunal was right in law and on facts in deleting the addition of Rs.2,37,61,817/- which was enhanced from Rs.30,66,860/- by the Commissioner of Income-tax under Section 263 of the Income-tax Act, 1961 on account of erroneous order passed by the Assessing Officer? B. Whether the Income-tax Appellate Tribunal was right in law and on facts in holding that the order passed by the Commissioner of Income-tax is beyond the jurisdiction under Section 263 of the Income-tax Act, 1961 and further holding that 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 appreciate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly to the second show-cause notice on 15.02.2006, 21.02.2006 and 22.02.2006. Ultimately, the learned Commissioner of Income-tax passed an order under Section 263 of the Act holding that order passed by the Assessing Officer was erroneous in so far as it was prejudicial to the interest of the revenue. The learned Commissioner of Income-tax has held that the payment made by the assessee to the sub-contractors cannot be considered as genuine and legitimate business expenditure and accordingly, after reducing the amount of Rs.4,84,935/- received by the assessee as commission 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 abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s submitted that substantial questions of law as proposed by the revenue have arisen from the order of the Tribunal and hence, this Court should allow the appeal in favour of the revenue and against the assessee, after formulating the substantial questions of law as framed by the revenue. 10. Mr. S. N. Soparkar, learned Senior advocate appearing for the assessee, on the other hand, has submitted that the Tribunal has considered the entire facts and circumstances of the case and after proper appreciation of evidence placed before the Tribunal, it has come to the right conclusion and this being finding of facts 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 payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has filed the affidavits of the sub-contractors but no contrary evidence was brought on record which may prove that these contractors have not carried out the work that was assigned to them. Even the returns of these contractors were duly accepted by the department. No action either under Section 147 or under Section 263 was carried out against each of the sub-contractors. It has also not been alleged by the Commissioner of Income-tax that the tax has not been deducted in respect of the payment made to sub-contractors. The Tribunal has also found that the allegations levied were general in nature stating 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interest of revenue unless view taken by the Income-tax Officer is inconsistent in law. Based on this decision, he has submitted that by no stretch of imagination, it can be said that the view taken by the Assessing Officer can be said to be a view not sustainable at law. He has, therefore, submitted that the order passed by the Tribunal does not call for any interference by this Court and no substantial 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-cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice under Section 263. Once compliance is made, he went on issuing notice after notice and certain adverse inferences were drawn by him from the details collected by him during the revisional proceedings. Those details were thoroughly checked and examined by the Tribunal and arrived at a factual finding that there was no illegality committed by the assessee in entrusting the work to sub-contractors nor there was any illegality in making all due payments to them. The Tribunal has also given specific finding to the effect that there was no evidence on record that these contractors were related to the assessee or were associates or 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 collect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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