Rajasthan High Court - Jaipur
Smt. Renu Gupta vs Commissioner Of Income Tax on 7 May, 2007
Equivalent citations: (2007)211CTR(RAJ)147, [2008]301ITR45(RAJ)
Bench: P.B. Majmudar, Dinesh Maheshwari
JUDGMENT
1. Heard the learned Counsel for the parties.
2. By filing this appeal, the appellant assessee has challenged the order dt. 24th March, 2005 passed by the CIT, Bikaner by which the CIT, while exercising the revisional jurisdiction under Section 263 of the IT Act has found that the order passed by the AO is against the interest of the Revenue The CIT, accordingly, set aside the order and remanded the matter back for fresh enquiry by giving opportunity to the appellant assessee to lead evidence in connection with the facts in issue The order of the CIT was taken further by way of appeal before the Tribunal The Tribunal also found that the CIT has exercised the revisional jurisdiction in proper manner and accordingly the said order was confirmed by the Tribunal, Jodhpur The orders passed by the CIT and the Tribunal are impugned in this appeal While admitting this appeal, this Court has formulated the following question:
Whether in the facts and circumstances of the case, the CIT having issued show-cause notice under Section 263, giving the details of certain items in respect of which enquiry was not conducted by the AO, but on receipt of reply from the respondents and finding enquiry in those matters were conducted without holding that the conclusions arrived at by the AO on the basis of enquiry conducted by the AO is erroneous, was the CIT justified in exercise of jurisdiction under Section 263 by merely opining that proper enquiry has not been conducted?
3. The learned advocate Mr. Ojha appearing for the appellant submitted that there was no justification on the part of the CIT to exercise the revisional jurisdiction as no reasons are given by the CIT in his order as to why it is necessary to exercise such jurisdiction nor the CIT has held that the conclusions arrived at by the AO are erroneous He submitted that there is nothing on record to show that the order passed by the AO is against the interest of Revenue He, therefore, submitted that the CIT could not have exercised the revisional jurisdiction against the just decision of the AO Learned Counsel submitted that the CIT as well as the Tribunal both have erred and the matter was not required to be sent back for further scrutiny.
4. We have gone through the record In our view, the Tribunal while disposing of the appeal of the appellant has considered all the relevant aspects of the matter It is required to be noted that the cogent reasons have been given by the CIT in his order as to why the order of the AO is required to be interfered with While exercising the revisional jurisdiction, the CIT has found that the matter was required to be sent back for further scrutiny The CIT also found that the assessee was required to furnish the details of expenses debited to income and expenditure account under the various heads In paras 5 and 5 1 of the order, the CIT has observed as under:
5. The assessee has shown the net profit of Rs. 2,46,226 against the commission receipt of Rs. 6,79,787 The expenses against the commission receipts were claimed to the tune of Rs. 4,33,561 In regard to the expenses claimed against the receipts of commission the assessee was required to furnish the details of expenses debited to income and expenditure account under the various heads as per para 6 of the AO's letter dt. 31st Dec, 2002 placed at file page No 37 Similarly the details and evidence of the commission paid to various persons along with their age, schooling, experience in the service rendered, mode of payment, relationship etc was required as per para 7 of letter dt. 31st Dec , 2002 placed at file page Nos 36 and 37 In compliance of the requisition the assessee filed his reply vide letter dt. 21st Feb , 2003 placed at file page Nos 210, 211 and 212 The reply so filed is found incomplete because of the fact that the evidence/details such as age, schooling, experience, mode of payment are neither given by the assessee nor the investigation/inquiry was carried out by the AO to ascertain the genuineness of the claim.
The assessment was completed by making the trading addition of Rs. 10,000 besides the disallowance of 20 per cent of the vehicle expenses and depreciation for personal use It is surprising to note that at one place the AO suggested deep investigation while selecting the case for scrutiny whereas on the other hand the submissions of the assessee is accepted without obtaining the details as required as per the letter dt. 31st Dec , 2002 without considering further inquiry/investigation which shows that the assessment has been completed in routine manner without applying his mind.
5.1 During the course of proceedings under Section 263 of the IT Act, 1961 the learned Counsel for the assessee has contended vide letter dt. 24th March, 2005 that the AO has thoroughly examined, investigated and verified the issue and thereafter an addition of Rs. 10,000 was made It is further stated that the expenses claimed were duly verified by the AO during the course of assessment proceedings and the order passed on such basis is not erroneous and prejudicial to the Revenue.
As mentioned above in para 5 that the AO has accepted the submission of the assessee without obtaining the details required and without making inquiry as suggested by him while selecting the case for scrutiny Examination of record reveals that the photocopies of self-made vouchers in respect of payment of salary, commission etc has been filed but neither the assessee has given the detailed particulars like their age, experience, educational qualification, nature of service rendered etc as especially required vide letter dt. 31st Dec , 2002 nor the investigation was carried out on this score by the AO On going through the record, it is observed that the assessment proceedings were effectively commenced on 21st Feb , 2003 and concluded on 21st March, 2003 The order sheet shows that after 21st Feb , 2003 neither any inquiry on any point was taken up nor any requisition was made from the assessee, it proves that the assessment proceedings were virtually concluded on the date when it was commenced i.e. 21st Feb , 2003, therefore, the assessment is completed in hasty manner without applying his mind and without conducting inquiry and as such the order passed by the AO is improper which is held erroneous inasmuch as prejudicial to the interest of the Revenue Further it is not out of place to mention here that mere filing of copy of account without supporting evidence do not prove that the expenditure has been incurred for the purpose of business and in this respect a reference is invited on the decision of the Hon'ble Haryana High Court in the case of CIT v. Export House (infra)
5. The CIT also found that the assessee was required to give details of the properties with source of investment and details of renovation with source of investment, but such details were not furnished on the ground that the assessee was not in possession of the same It has also been found that the AO has accepted the submission of the assessee though he showed his inability to furnish the details as required The CIT in view of the decision of the Hon'ble Tribunal Mumbai Bench in the case of Schenectady Beck India Ltd v. Dy CIT (2005) 92 TTJ (Mumbai) (TM) 872 : (2005) 272 ITR 103 (Mumbai) (TM) (AT) found that when the law prescribes conditions for allowability of a claim and the claim was not tested on the touchstone of such conditions, it amounts to error This error could be said to be prejudicial to the interest of the Revenue.
6. The CIT also took into consideration the judgment of apex Court in the case of Tarn Devi Agarwal v. CIT 1973 CTR (SC) 107 : (1973) 88 ITR 323 (SC) wherein it has been held that CIT may consider an order of the AO to be erroneous not only if there is some apparent error of reasoning or of law or of fact on the face of it but also when it is a stereotyped order which simply accepts what the assessee has stated in his return and fails to make inquiries which are called for in the circumstances of the case It is not necessary for the CIT to make further inquiries before cancelling the assessment order of the AO.
7. Considering the aforesaid aspects, in our view, the impugned order of the CIT, which is confirmed by the Tribunal, is not required to be interfered with by this Court.
8. We may clarify that it will be open to the assessee to lead evidence before the AO in view of the remand order passed by the CIT and on merits of the issue, we have not given any finding as it is for the AO to give final decision in view of the orders in question Accordingly, the present income-tax appeal stands dismissed No order as to costs.