IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH `G' : NEW DELHI)
BEFORE SHRI O.P.KANT, ACCOUNTANT MEMBER
AND
SHRI KULDIP SINGH, JUDICIAL MEMBER
ITA No.4739/Del./2018
(ASSESSMENT YEAR : 2014-15)
Supreme Build Cap P. Ltd. Vs. Pr. CIT,
8-A, Commissioner Lane, Civil Lanes, Central-1
New Delhi Room No. 336,
ARA Centre, E-2
Jhandewalan
New Delhi
(PAN :AABCS3168B)
Appellant Respondent
ASSESSEE BY : Sh. Rohit Tiwan, Adv.
REVENUE BY : Shri S.S.Rana, CIT-DR
Date of Hearing : 10.10.2018
Date of Order : 25.10.2018
ORDER
PER KULDIP SINGH, JUDICIAL MEMBER :
Present appeal has been filed with the delay of 8 days.
Assessee moved the application for condonation of delay on the
on the grounds inter alia that the impugned order passed by Ld.
Pr. CIT was received by Ashok Paswan who was not aware of the
legal proceedings and ; that due to inadvertence, he has kept the
order with himself leading to the delay of 8 days filing the
appeal. The Ld. CIT-DR opposed the application for condonation
2 ITA No.4739/Del./2018
of delay. However, we are of the considered view that since the
application of condonation of delay is supported within affidavit
of the Director of the assessee company and reasons disclosed
appears to be sustainable, 8 days delay in filing the present
appeal stands condoned.
2. Appellant, Supreme Build Cap P. Ltd. (hereinafter referred
to as `the assessee'), by filing the present appeal sought to set
aside the impugned order dated 30.03.2018 passed by the Pr.
CIT, New Delhi, qua the assessment year 14-15 on the grounds
inter alia that :-
"1. That the order of Principal Commissioner of
Income Tax, Central 1, New Delhi ("Ld. Pr. CIT")
under section 263 of the Income Tax Act ("Act")
is against the law and without jurisdiction.
2. That the Ld. Pr. CIT grossly erred in law and
on facts in setting aside the assessment framed
u/s 143(3) of the Act by the Learned Assistant
Commissioner of Income Tax, New Delhi ("Ld.
AO").
3. The Ld. Pr. CIT ought to have considered
while framing the order under section 263 that
the assessment had been framed by the Ld. AO
after considering details and the law applicable in
the circumstances of the case and therefore, the
order of assessment was framed after proper
enquiry and therefore, such order could not be
considered as "erroneous" within the meaning of
section 263 of the Act.
4. That the Ld. Pr. CIT has grossly erred in law
and on facts in treating the assessment order as
`erroneous' and `prejudicial to the interests of the
revenue' when the Ld. AO has completed the
assessment u/s 143(3) after detailed verification
3 ITA No.4739/Del./2018
of the documents furnished by the assessee in the
assessment proceedings.
5. That the Ld. Pr. CIT has grossly erred in law
and on facts in not allowing sufficient
opportunity of being heard to the appellant
during the course of proceedings under section
263 of the Act.
6. That the Ld. Pr. CIT has grossly erred in law
and on the facts in not appreciating that the
expenditure of Rs. 1,89,08,562/- under the head
"Legal & Profssional Charges" were incurred
wholly and exclusively for the purpose of business
and applicable taxes were deducted at source on
such payments and were duly deposited.
That the above grounds of appeal are without
prejudice to each other."
3. Briefly stated that facts necessary for adjudication of the
controversy at hand are : assessment in this case was completed
u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as
`the Act') on at income of Rs. 1,14,80,270/-. Ld. Commissioner
of Income Tax (CIT) by invoking provisions contained u/s 263
of the Act perused the record and noticed that the assessee
company has claimed an expenditure of Rs. 1,89,08,562/- under
the head "Legal and Professional charges" during the year under
assessment in profit and loss account. Ld. CIT after adjourning
the proceedings for 3 dates, rejected the adjournment application
on 3rd date and proceeded to conclude that the assessment order
passed by the Assessing Officer is erroneous and pre-judicial to
the interest of revenue in so far as the expenses claim of Rs.
4 ITA No.4739/Del./2018
1,89,08, 562/- of the assessee is concerned and allowed the
same without due care and verification by the AO and directed
the AO to make fresh assessment after examining the claim of the
assessee in respect of such expenses.
4. Feeling aggrieved the assessee has challenged the impugned
order passed by ld. CIT before the Tribunal by way of filing the
present appeal.
5. We have heard the ld. Authorized Representatives of the
parties to the appeal, gone through the documents relied upon and
orders passed by the revenue authorities below in the light of the
facts and circumstances of the case.
6. The Ld. AR for the assessee challenged the impugned order
on two grounds ; one that sufficient opportunity of being heard
has not been given by the Ld. CIT before the passing the
impugned order; two that the adequate inquiry has been
conducted by AO whom the entire record as to claiming the
expenditure of Rs. 1,89,08,562/- were supplied during the
assessment proceedings.
7. On the other hand Ld. DR in order to repel the argument
addressed by Ld. AR contended that the order has been passed
without making any inquiries or verifications and relied upon
5 ITA No.4739/Del./2018
explanation 2, to Section 263 of the Act inserted by Finance Act,
2015 with effect from 01.06.2015. The Ld. DR further relied
upon decision rendered by the Hon'ble Supreme Court and
Hon'ble High Courts cited as Deniel Merchants Pvt. Ltd. vs.
ITO (Appeal No. 2396/2017) dated 29.11.2017), Malabar
Industrial Co. Ltd. vs. CIT [2000] 109 Taxman 66 (SC) /
[2000] 243 ITR 83 (SC)/[2000] 159 CTR 1(SC), Rajmandir
Estates (P.) Ltd. vs. PCIT [2016] 386 ITR 162
8. So far as the question of providing the adequate opportunity
of being heard by Ld. CIT to the assessee is concerned
undisputedly first notice was issued to the assessee to appear on
14.03.2018, on which date none-appeared. Then Ld. CIT
received an adjournment application for 21.03.2018. Again on
21.03.2018 assessee failed to file any reply and documentary
evidence and his request for further adjournment was rejected
and Ld. CIT(A) and proceeded to pass the order ex parte. Facts
show that sufficient opportunities were given to the assessee but
he has not preferred to defend the case by filing reply supported
with documentary evidence. So this contention raised by the
assessee is not sustainable.
9. Now the second question to be decided is "as to whether
6 ITA No.4739/Del./2018
the assessing officer has made adequate inquiry or verification
which was required to be made as per amended provisions
contained in Explanation 2 Section 263 of the Act".
10. For ready perusal provision contained u/s 263 Explanation
2 effective from 01.06.2015 are extracted as under :-
"Explanation 2-For the purposes of this section, it is
hereby declared that an order passed by the Assessing
Officer shall be deemed to be erroneous in so far as it is
prejudicial to the interests of the revenue, if , in the opinion
of the Principal Commissioner or Commissioner,-
(a)the order is passed without making inquiries or
verification which should have been made;
(b)the order is passed allowing any relief without inquiring
into the claim;
(c) the order has not been made in accordance with any
order, direction or instruction issued by the Board under
section 119; or
(d) the order has not been passed in accordance with any
decision which is prejudicial to the assessee, rendered by the
jurisdictional High Court or Supreme Court in the case of
the assessee or any other person."
11. Now coming to the facts of this case, the Ld. AR for the
assessee drew our attention towards page 54 to 58 of paper book ,
which is the reply filed by the assessee to the queries raised by
the AO. At item no. 20 at page 57 of paper book AO has made
specific query that :
"20. Details of all expenses exceeding Rs. 80,000/- debited in
accounts and copies of ledger accounts with necessary
evidences for the year ending 31.03.2014 is enclosed."
7 ITA No.4739/Del./2018
12. No doubt, the Assessing Officer has raised specific query
that all expenses exceeding Rs. 80,000/- debited in the accounts
and copies of ledger accounts with necessary evidences are to be
produced. But the Ld. AR for the assessee has failed to point out
if he has produced bills vouchers and nature of the legal and
professional charges paid to the legal professionals before AO.
We are of the considered view that enquiries as to the expenses
claim of legal and professional charges cannot be allowed merely
on the basis of ledger unless supported with documentary
evidence. So, we are of the considered view that Explanation 2 to
Section 263 is attracted in this case and the Assessing Officer has
passed order without making enquiries or verification which
should have been made during the assessment proceedings.
13. Even otherwise, the Ld. CIT(A) has passed a legal and
valid order directing the Assessing Officer to make fresh
assessment so far as expenses claim of Rs. 1,89,08,562/- is
concerned , by affording reasonable opportunity of being heard to
the assessee and in these circumstances no prejudice is being
cuased to assessee who can produce the necessary evidence in
support of its claim before the AO before whom assessment is
pending as per impugned order passed by Ld. CIT. So Finding
8 ITA No.4739/Del./2018
no illegality or perversity appeal filed by the assessee is hereby
dismissed.
Order pronounced in open court on this 25th October, 2018.
Sd/- Sd/-
(O.P.KANT) (KULDIP SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated 25/10/ 2018
BR
Copy forwarded to:
1.Appellant
2.Respondent
3.CIT
4.CIT(A)-XXVI, New Delhi.
5.CIT(ITAT), New Delhi.
AR, ITAT
NEW DELHI.
Date of dictation 10 .10.2018
Date on which the typed draft is placed before 10.10.2018
the dictating Member
Date on which the typed draft is placed before 12.10.2018
the Other Member
Date on which the approved draft comes to the 25.10.2018
Sr. PS/PS
Date on which the fair order is placed before 25 .10.2018
the Dictating Member for pronouncement
Date on which the fair order comes back to the .10.2018
Sr. PS/PS
Date on which the final order is uploaded on .10.2018
the website of ITAT
Date on which the file goes to the Bench Clerk .10.2018
Date on which the file goes to the Head Clerk
The date on which the file goes to the Assistant
Registrar for signature on the order
Date of dispatch of the Order
9 ITA No.4739/Del./2018
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