TMI Blog2023 (10) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... iction to invoke the provisions of Section 263 of the Act and carried out the revisionary proceedings and therefore, carrying out such proceedings is well within the provisions of Section 263 of the Act and the relevant grounds of the assessee challenging such invocation of revisionary powers are hereby dismissed. Whether the AO is erroneous and prejudicial to the interests of the revenue? - Whenever an assessee makes any payment outside India, it has to furnish Form 15CB before the banking authorities and such Form 15CB are also uploaded in the income tax portal. So, when the case of the assessee was selected for scrutiny proceedings and in the assessment order ld. AO has observed that the reason includes (1) foreign remittance made to persons located in low tax jurisdiction countries and (2) value of foreign remittance sent by the assessee is higher than the gross total income. As per the audited financial statement against the gross receipts of Rs. 430.16 Crore the net profit before tax is Rs. 1.31 Crore whereas the brokerage paid to agents outside India is Rs. 5.62 Crore. So, based on both the issues as referred by the AO in the assessment order it was bare minimum exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of the assessment order framed u/s 143(3) of the Act dated 25.12.2019. 2. The assessee is in appeal before this Tribunal raising the following grounds: 1. The notice issued u/s 263 by the Ld. Pr. Commissioner of Income-Tax, PCIT - 2, Kolkata (hereinafter referred to as PR.CIT ) and the order passed u/s 263 are illegal, bad in law and without jurisdiction 2. That having regard to the facts and circumstances of the case the Ld. Pr. C1T has erred in law and on facts in assuming jurisdiction in passing the order u/s 263, more so when the assessment order passed u/s 143(3) is neither erroneous nor prejudicial to the interest of revenue. 3. That having regard to the facts and circumstances of the case, the Ld. Pr. C1T has erred in setting aside the assessment order passed u/s 143(3) of the Act by the ACIT, Circle 5(1) Kolkata on the ground that no detailed investigations have been carried out by the ACIT. 4. That the Ld. Pr. CIT has tailed to consider that the assessment as framed by the ACIT, Circle 5(1) Kolkata was after due application of mind and after considering the detailed replied on various dates as filed before him during the course of assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'AO') has not examined this issue and no evidence has been put forth by the assessee to prove that whether such entities have or do not have permanent establishment in India and whether the assessee failed to deduct tax at source u/s 195 of the Act on the alleged brokerage at Rs. 5,62,07,050/-. 4. During the course of revisionary proceedings, the assessee stated that ld. ACIT has duly considered the fact about payment of brokerage to non-resident and non-applicability of provisions of Section 195 of the Act and that Section 40(a)(ia) of the Act cannot be attracted in respect of payment of brokerage to non-resident brokers. However, ld. Pr. CIT was not satisfied and he was of the view that the assessment dated 25.09.2019 is erroneous and prejudicial to the interests of the revenue and accordingly directed the AO to frame assessment afresh. 5. Aggrieved, the assessee is now in appeal before this Tribunal. Ld. Counsel for the assessee referring to the paperbook containing 154 pages submitted that in the past also assessment u/s 143(3) of the Act for AY 2010-11 AY 2012-13 have been completed u/s 143(3) of the Act and no such disallowance of brokerage paid to non-residen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorized by the Board in this behalf under section 120; (b) record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to take note of the fundamental tests propounded in various judgments relevant for judging the action of the CIT taken u/s 263. 8.2. Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC) has laid down following ratio with regard to provisions of section 263 of the Act: There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer; it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase 'prejudicial to the interests of the revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hand, payment has gone out of the country in foreign currency and secondly, no tax was withheld before making such payment. Whenever an assessee makes any payment outside India, it has to furnish Form 15CB before the banking authorities and such Form 15CB are also uploaded in the income tax portal. So, when the case of the assessee was selected for scrutiny proceedings and in the assessment order ld. AO has observed that the reason includes (1) foreign remittance made to persons located in low tax jurisdiction countries and (2) value of foreign remittance sent by the assessee is higher than the gross total income. As per the audited financial statement against the gross receipts of Rs. 430.16 Crore the net profit before tax is Rs. 1.31 Crore whereas the brokerage paid to agents outside India is Rs. 5.62 Crore. So, based on both the issues as referred by the AO in the assessment order it was bare minimum expected from the AO to have called for the details of all the non-resident brokers to whom the brokerage has been paid and the basis of its calculation and why tax has not been deducted. The AO has not called for any such details and therefore, the assessee did not file these det ..... X X X X Extracts X X X X X X X X Extracts X X X X
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