9911796707
TMI Blog2023 (9) TMI 1207X X X X Extracts X X X X X X X X Extracts X X X X ..... rcise of jurisdiction by the PCIT u/s 263 of the Act in respect of certain eight issues and thereby setting aside the assessment order of AO dated 29.12.2017 passed u/s 143(3) of the Act and to frame the assessment afresh after going into those issues. 4. The assessment in this case was framed u/s 143(3) vide order dated 29.12.2017 assessing total loss at Rs. 1,49,61,751/- under the normal provision of Act and under MAT Loss of Rs. 2,32,36,707/- was assessed. The Ld. PCIT, on perusal of assessment records, observed that the AO has not made any enquiry with respect to certain issues in the balance sheet and profit and loss account which has rendered the assessment order erroneous insofar as prejudicial to the interest of the revenue. Accordingly a show cause notice u/s 263 of the Act dated 16.01.2020 was issued electronically in respect of following issues as per details below: i) That the AO has neither verified the identity and the creditworthiness of the four (4) directors i.e. Shri Abhishek Kajaria, Shri Vikram H Metharamani, Smt. Malti P Bhambani and Shri Prem L Bhambani to advance huge loans aggregating of Rs. 3.17 crores to the assessee during the FY 2014- 15 nor the genui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the difference of expenses amounting to Rs. 39,06,289/- and consequential disallowance u/s 40(a)(ia) of the Act. 5. The assessee responded to the said show cause notice and the ld. PCIT, after taking into consideration the reply of the assesse, concluded that the assessment framed by the AO is erroneous and prejudicial to the interest of the revenue in terms of Section 263 of the Act and accordingly set aside the order by directing the AO to frame the assessment de novo with the direction to carry necessary enquiry and verification vide order dated 10.06.2020 passed u/s 263 of the Act. 5. The Ld. A.R submitted before the Bench that first issue in para (i) relates to non-verification of loans aggregating to Rs.3.17 crores taken from four directors namely Shri Abhishek Kajaria, Shri Vikram H Metharamani, Smt. Malti P Bhambani and Shri Prem L Bhambani during FY 2014-15. The Ld. A.R submitted that these loans were taken from directors of the assessee company during the year and the Ld. A.R submitted that in the earlier also the opening balance of loans form Directors was Rs. 4,81,81,000/-. It was also submitted that during the course of assessment proceedings, the counsel of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dice caused to the revenue as the income fully assessed to tax. The Ld. A.R submitted that in order to invoke jurisdiction u/s 263 that twin condition has to be satisfied i.e. order has to be erroneous and similarly it has to be prejudicial to the interest of the revenue. The Ld. A.R submitted that there is no mistake in the order of AO and therefore he relied on the decision of Hon'ble Supreme Court in the case of CIT vs. Malabar Industries Co. Ltd. in 243 ITR 83(SC). Similarly the same argument was forwarded by the Ld. A.R in respect of issue in para (v) i.e. profit of Rs. 50,78,728.92 from Commodity Trading in cotton through the share brokers M/s Kali Commodities Pvt. Ltd. which has been stated by the ld PCIT to be not verified by the AO by conducting adequate enquiry from Commodity Exchange. The Ld. A.R submitted that the same has been shown as income under the head other non-operating income as stated hereinabove. Therefore the exercise of jurisdiction u/s 263 is invalid and liable to be set aside on the same analogy. Qua the issue in para no. (vi) of Rs. 21,72,315/-, the ld AR stated that the same represented sale of scrap of fixed assets being redundant or unfit for use. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D.R on the other hand argued that by exercise of jurisdiction u/s 263 by PCIT no prejudice is going to be caused to the assessee as the assessee would be given sufficient opportunity in the set aside proceedings to respond to this issue and therefore the objection by the Ld. A.R are devoid of merit and may kindly be dismissed. 7. After hearing the rival contentions and perusing the material on record, we find that so far as the first issue in para no. (i) of the show cause notice (loan from directors of Rs. 3.17 crores), issue no. (iv) profit of Rs. 1,49,88,621.26 from Commodity Trading in Foreign Currency US$, issue no.(v) profit of Rs. 50,78,728.92 from Commodity Trading in cotton through the share broker M/s Kali Commodities Pvt. Ltd. and issue no. (vii) in respect of write off of fixed asset of Rs. 88,65,000/-, we observe that the PCIT has not exercised the jurisdiction in accordance with the provisions of Section 263 of the Act. We find that the loans from four directors of Rs. 3.17 crores were verified during the assessment proceedings by the AO by calling for information/details from the assessee. We note that the opening balance coming from the earlier years from these dir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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