9911796707
TMI Blog2024 (3) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... e order passed u/s 263 of I.T. Act by Ld. Principal Commissioner CIT, Bikaner relating to payment of freight, transport receipt, closing stock (WIP), misc. expenses have already been examined in detail by AO at the time of assessment and direction for further examination in wrong and against the principal of natural justice. 3. The reply submitted at the time of notice issued u/s 263 of I.T. Act have not properly been examined and order was passed on the basis of presumption and surmises. 4. The appellant reserve its right to add, alter and amend any grounds of appeal as and when occasion may arise. 5. No reasonable opportunity has been provided to the assessee while passing the order u/s 263 of I.T. Act." 3. Brief fact of the case is that the return of income for the assessment year under consideration was filed by the assessee on 07.09.2013 declaring a total income of Rs. 96,56,200/-. Subsequently, the case was selected for scrutiny through CASS and a notice under section 143(2) was issued on 08.09.2014 and the assessment was completed under section 143(3) of the Income Tax Act, 1961 on 22.03.2016 at a total income of Rs. 1,01,08,423/-. 3.1 On culmination of the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture of Rs. 1,71,07,035/- However, neither the AO asked for such information nor the same was provided by the assessee in the course of assessment. In this situation, I fail to understand as to on what basis the assessee is claiming that the individual payment was within the limit of Rs. 30,000/- and aggregate payments were within the limit of Rs. 75,000/- and hence, the provisions of Sec. 40(a)(ai) of the IT Act, 1961 were not attracted to the facts of the present case. It has to be remembered that the applicability of specific provisions of law is always dependent on the facts of individual case and exceptions from rigors of provisions of Sec. 194C are not available without supporting evidence. Therefore, the submissions made on behalf of the assessee firm are not acceptable in the absence of requisite evidence. 3.3 Further, it may be relevant to mention here that the impugned assessment order was also subjected to scrutiny by the C & AG and therefore, the ld. PCIT stated that he has no hesitation in holding that the AO has not examined the issue in question properly and the allowance of payment of Rs. 1,71,07,035/- is without any basis. I also hold that the action of the AO w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that the ld. AO is tasked with the primary responsibility of examining the relevant facts with reference to evidence being placed before him. Therefore, if the AO does not perform this important function, then the revenue has to suffer. Therefore, in light of the observations made by the statutory auditors and in the absence of any evidence suggesting examination of the issue of closing stock/ W.I.P, the ld. PCIT holds that the issue in question was not properly examined by the AO and which has caused prejudice to the interest of revenue. 3.6 The issue of miscellaneous expenses debited to the profit-loss account is directly linked with other issues discussed herein before and the same does not call for any separate discussion. In light of the aforesaid, the PCIT notes that he has no hesitation in holding that the impugned order is erroneous and prejudicial to the interest of the revenue. At this stage, he consider it appreciate to refer to the significant observations made in various orders of the Hon'ble Courts regarding the responsibility of the AO while doing assessment:- * Gee Vee Enterprises vs Addl. CIT, Delhi 1 and others (99 ITR 375) * CIT vs Jawahar Bhattacharjee [3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PCIT, the relevant para from the reply of the assessee is reproduced for the sake of convenience here in below :- "8. Photocopy of TDS returns together with challans evidencing the payment thereof is being submitted herewith for your verification. The assessee has duly discharged its liability of deducting the tax in adherence to the rules and limits specified in the Act. 12. Ledger account of Direct & Transportation expense and Indirect & Administrative expenses claimed during the year under consideration is being attached herewith. Details of expenses like Office Rent, Telephone expenses, Travelling expenses, Office expenses, Printing & Stationery expenses, Tyre & tube expenses, Claim & Discount expenses. Mess expenses and Conveyance expenses are being attached herewith delineating the expenses incurred at respective branches also. The Expenses have been incurred and spent wholly and exclusively for the purpose of business prudence and commercial expediency. The assessee as discussed earlier has taken contract involving various geographical locations. In order to ensure smooth and hassle free execution of work the assessee has to setup bases at strategic locations. As such o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion made is to justify the audit objection raised even the ld PCIT stated that he has no hesitation in holding that the AO has not examined the issue in question properly but he failed point where the ld. AO has called for the details and based on the details called for he has taken a view based on the record produced before him which merely there is audit objection the order passed after examination of the issue cannot be taken again. To drive home to this contention we take support on a decision of apex court in the case of Parashuram Pottery Works Co. Ltd Vs ITO [ 1977] 106 ITR 1 "At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi judicial controversies as it must in other spheres of human activity". On the second issue we note that the ld. PCIT is trying to justify the claim of the assessee with the net profit rate and the expenses incurred by the assessee and merely based on the contention that the ld. PCIT is not in agreement with the view taken b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commissioner does not sit in appeal." 8. The bench also noted from the order of the PCIT that the reasons for taking the proceeding u/s. 263 is not an independent view of the ld. PCIT but it is borrowed from the audit memo issued by the C&AG. Thus, it is undisputed that the action u/s. 263 based on the audit objection and it has been held in various case law cited by the ld. AR of the assessee holding that proceedings u/s. 263 at the instance of Revenue Audit is impermissible. The ld. AR of the assessee has relied upon the decision in the case of M/s. Grasim Industries Ltd., in ITA no. 1964/Mum/2019 wherein the co-ordinate bench while dealing with the similar set of facts held that- "9. We hold that a possible view has been taken by the ld AO in the matter and merely because the ld PCIT is of a different view on the same issue, he cannot resort to invoke revision proceedings u/s 263 of the Act. This is only a case wherein the ld PCIT is trying to substitute his view in lieu of a possible view already taken by the ld AO on the impugned issue on the allowability of LTCL. Reliance in this regard is placed on the decisions of Hon'ble Jurisdictional High Court in the case of Gabrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borrowed satisfaction i.e Audit Objection and not based on independent application of mind by the ld PCIT. Infact the show cause notice issued by the ld PCIT u/s 263 of the Act also uses the same language used by the Revenue Audit Party in its Audit Objection. Hence revision proceedings could not be invoked by the ld PCIT based on borrowed satisfaction. 12. Since the revision order passed by the ld PCIT u/s 263 of the Act is hereby directed to be quashed, the other arguments advanced by the ld AR on the applicability of provisions of section 170(2) of the Act and on merits of the case need not be gone into and they are left open." Respectfully following that decision of the co-ordinate bench and since the ld. PCIT based on the borrowed information and has not established as to how the view taken by the ld. AO is not correct when the issue raised has already been form part of the proceeding before the ld. AO. Based on the discussion so recorded we are of the considered view that the proceeding initiated u/s. 263 is merely based on the audit objection, PCIT is not agreement with the ld. AO and the observation on the stock, in the audit report already filed by the assessee. Thus, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
