| The Tax Publishers2020 TaxPub(DT) 3141 (Mum-Trib) INCOME TAX ACT, 1961
Section 263
Where view was taken by AO on inquiry even if such view, in the opinion of Pr.CIT was not correct. AO could not be expected to raise more queries if he was satisfied about admissibility of claim on the basis of materials and details supplied and, therefore, order was not erroneous or prejudicial to the revenue.
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Revision under section 263 - Erroneous and prejudicial order - Pr. CIT not satisfied with enquiry made by AO -
Pr.CIT held assessment order as erroneous and prejudicial to the interest of revenue on the ground that the AO, while making assessment under section 143(3), failed to examine certain issues regarding job work charges debited to profit and loss account and shown payable to M/s Jay Precision Products (India) Ltd.; liability on account of labour charges and on account of electricity and fuel charges of pharma division towards M/s Jay Precision Products (India) Ltd., when same after its demerger had already been taken over by the assessee-company with effective from 1-1-2014. Held: Order was passed Bombay High Court for demerger on 14-11-2014 and appointed date was fixed as 1-1-2014. From examination of documents filed by assessee before AO during assessment proceedings, it was clear that during the year job-work charges payable to Pharma Division of Jay Precision Products (India) (P) Ltd. were Rs. 10,68,26,606 and it included Rs. 6,93,11,793 for the period 1-4-2013 to 31-12-2013 and Rs. 3,75,14,813 for the period 1-1-2014 to 31-3-2014, (ii) upon merger of Pharma Division of Jay Precision Products (India) (P) Ltd. sales shown by them of Rs. 3,75,14,813 to assesse were, therefore, adjusted and cancelled against expenses of same account debited to the P&L account and accordingly net amount was claimed at Rs. 6,93,11,793 and said net amount was reported in tax audit report and in Form 3CEB, (iii) labour processing charges and electricity and fuel charges as mentioned in impugned order were related to and incurred by the pharma division of Jay Precision Products (India) (P) Ltd. for the period 1-1-2014 to 31-3-2014, (iv) expenses referred in impugned order were incurred by Pharma Divsiion of Jay Precision Products (India) (P) Ltd. so acquired by assessee pursuant to order of High Court, (v) sale of pharma division of Jay Precision Products (India) (P) ltd. for the period 1-1-2014 to 31-3-2014 were also transferred to assessee-company due to effective demerger (vi) amount reported in tax audit report (Form 3CD) and From 3CEB were gross amount of said purchases including duties, taxes and freight. All the above details were filed by assessee before AO during assessment proceedings. Satisfaction of AO on the basis of documents was not shown to be erroneous in the absence of making a further inquiry. It was a case where view was taken by AO on inquiry. Even if this view, in the opinion of Pr.CIT was not correct. AO could not be expected to raise more queries if he was satisfied about admissibility of claim on the basis of materials and details supplied and, therefore, order was not erroneous or prejudicial to the revenue.
Relied:CIT v. Nirav Modi (2017) 77 taxmann.com 78 (SC) : 2017 TaxPub(DT) 0127 (SC), MOIL Ltd. Earlier Known as Manganese Ore India Ltd. v. CIT (2017) 396 ITR 244 (Bom.) : 2017 TaxPub(DT) 1548 (Bom-HC)
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2014-15
IN THE ITAT, MUMBAI BENCH
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