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TMI Blog2022 (10) TMI 1207X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case as well as law on the subject, the learned Pr. Commissioner of Income Tax has erred in observing that order passed by Assessing Officer u/s 143(3) of the Act is erroneous on the ground that purchase and commission expenses claimed by assessee is not genuine. 3. It is therefore prayed that order passed by Pr. Commissioner of Income Tax u/s 263 of the I.T. Act setting aside the order of assessing officer and directing assessing officer to make fresh investigations on issue of deduction of purchases and commission expense may please be quashed. 4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal." 2. Brief facts of the case are that the assessee is engaged in the business of manufacturing and trading of elastic tapes. The assessee files its return of income for the Assessment Year (AY) 2014-15 on 30/09/2014 declaring income of Rs.68,79,440/-. The case was selected for scrutiny and assessment was completed under Section 143(3) of the Income Tax Act, 1961 (in short, the Act) on 27/10/2016 making certain additions on account of disallowance of EPF contribution and ad hoc disallowance of 20% of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m M/s Abhisar Buildwell Pvt. Ltd., the assessee contended that the assessee made purchase of Rs. 59,47,294/-. To support the purchases, the assessee filed ledger account, invoices, bank statement, payments were made through account payee cheques. During the course of assessment, the latest available address as per the assessee record, was furnished and as per master data of ministry of corporate affairs and the address of assessee is available. With regard to commission paid to Shri Umesh Balubhai Rana of Rs. 3,01,739/-, the assessee furnished confirmation along with return of income and Form 26AS. For non-filing of reply in response to notice under Section 133(6), the assessee submitted that the assessee has already furnished complete details, commission payments are genuine and paid in the course of business. For the commission paid to Shri S.K. Ojha of Rs. 4,35,402/-, the assessee filed confirmation, statement along with acknowledgement of return, copy of bank statement of party showing details of payment. For non-compliance of notice under Section 133(6), the assessee contended that during the assessment, the Assessing Officer asked for confirmation, the assessee furnished comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther submits that the assessee furnished tax invoices of M/s Indorama Industries Ltd. having their complete details including PAN and the proof of payment through banking channel. For M/s Abhisar Buildwell Pvt. Ltd., the ld. AR submits that he has furnished the details of tax invoices, ledger account having their complete address, phone number and the payments were made through banking channel. Similarly, for genuineness of commission payment, the ld. AR of assessee submits that he has furnished Form 26AS of Shri Umesh Balubhai Rana along with income tax return and computation of income with profit and loss account and the details of commission payment. Similarly, for Shri S.K. Ojha, the assessee furnished copy of income tax return, computation of income, profit and loss account and bank statement. On the basis of aforesaid submission, the ld. AR of the assessee submits that mere the third parties from whom the assessee has made purchases or paid commission has not made compliance, though, the Assessing Officer was examined such issues during assessment, specified the assessment order cannot be treated as erroneous or prejudicial to the interests of revenue. To support his submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its reply dated 08.07.2016, furnished complete details about the purchases as well as commission payment. We find that the reply of assessee in response to show cause notices of purchases and commission payment is duly acknowledged by Assessing Officer. As recorded above, the Assessing Officer has not made any reference about such enquiries or reply received by him on both the issues. 9. As recorded above, the ld. Pr.CIT in his show cause notice under Section 263 of the Act identified two issues by taking view that notice under Section 133(6) was issued for confirmation of the parties and that no confirmation, bank account and income tax return from all parties were furnished. We find that in reply to show cause notice, the assessee filed details reply, inter alia contending therein that the purchases from the parties are genuine. The assessee furnished bank statement, tax invoices and leger account of the parties. Similarly, for the commission expenses, the assessee furnished the details of both the parties. We find that out of four parties, three parties are located at distant places. The ld Pr CIT has not disputed the existence of the parties, nor the payment against the purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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' is not an expression of art and is not defined in the Act. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the revenue. If due to an erroneous order of the Income-tax Officer, the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the revenue. 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 Income-tax Officer adopted one of the courses permissible 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 prejudi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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