Maithan International v. Asstt. CIT

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The Tax Publishers2012 TaxPub(DT) 1014 (Kol-Trib) : (2012) 134 ITD 0393 INCOME TAX ACT, 1961 --Revision under section 263--Erroneous and prejudicial orderApplicability of section 92--While framing assessment, assessing officer accepted the export turnover of assessee. CIT initiated proceeding under section 263 on the ground that assessing officer had not verified the applicability of section 92 before allowing export turnover. Assessee submitted that it had not entered into any international transaction involving purchase or sale of any goods or any service/facilities with any of its associated enterprise within the meaning of section 92A and Tax Audit Report also makes no reference to any such transaction. Revenue submitted that assessee did not submit the list of its associated enterprises before assessing officer and it was for the first time it submitted before CIT Based on this incidence, CIT was presumed that due to non-filing of such list of associated enterprises, the assessment made by assessing officer on this issue was defective, causing prejudice to the revenue. Assessee argued that assessing officer was not required the list of associated enterprises because of the fact that on perusal of the Tax Audit Report he found no international transaction being undertaken by assessee with its associated concerns. According to assessee, CIT had also not been able to bring on record such international transaction with associated concerns. In that event, the notice under section 263 itself was erroneous on the face of it. Held: For determining the arm's length price there must be international transaction at least with two of the associated enterprises of assessee and only export sales could not invite the provisions of section 92. When assessee's case did not fall under the purview of section 92, assessing officer had no occasion to call for list of associated concerns and to refer the matter to TPO for determining the arms length price as per section 92. Therefore, assessment framed by assessing officer was neither erroneous nor prejudicial to the interest of revenue. Income Tax Act, 1961 Section 263 Income Tax Act, 1961 Section 92C INCOME TAX ACT, 1961 --Revision under section 263--Erroneous and prejudicial orderLack of proper enquiry--CIT initiated proceeding under section 263 on the ground that assessing officer did not make proper enquiries about the creditworthiness of the lenders before accepting the laons to assessee. He also found in the bank statement of the lenders that identical amounts of loan were deposited in the respective account of some of the lends before they gave loan to assessee. Assessee submitted that assessing officer conducted enquiries on the lender companies through his Inspector and collected return of income, balance sheet, P/L Account, bank statement confirmation letter, etc., from those lenders. Therefore, assessing officer had made sufficient enquiries and applied his mind before accepting the genuineness of loan transactions. It further, submitted that CIT had tried to replace his view with the view of assessing officer which was not permissible as per provisions of section 263. Held: Since assessing officer had enquired into the matter and applied his mind before dealing with the loan creditors and taking a possible view, therefore, assessment framed by assessing officer was neither erroneous nor prejudicial to the interest of revenue. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 1014 (Kol-Trib) : (2012) 134 ITD 0393

INCOME TAX ACT, 1961

--Revision under section 263--Erroneous and prejudicial orderApplicability of section 92--While framing assessment, assessing officer accepted the export turnover of assessee. CIT initiated proceeding under section 263 on the ground that assessing officer had not verified the applicability of section 92 before allowing export turnover. Assessee submitted that it had not entered into any international transaction involving purchase or sale of any goods or any service/facilities with any of its associated enterprise within the meaning of section 92A and Tax Audit Report also makes no reference to any such transaction. Revenue submitted that assessee did not submit the list of its associated enterprises before assessing officer and it was for the first time it submitted before CIT Based on this incidence, CIT was presumed that due to non-filing of such list of associated enterprises, the assessment made by assessing officer on this issue was defective, causing prejudice to the revenue. Assessee argued that assessing officer was not required the list of associated enterprises because of the fact that on perusal of the Tax Audit Report he found no international transaction being undertaken by assessee with its associated concerns. According to assessee, CIT had also not been able to bring on record such international transaction with associated concerns. In that event, the notice under section 263 itself was erroneous on the face of it. Held: For determining the arm's length price there must be international transaction at least with two of the associated enterprises of assessee and only export sales could not invite the provisions of section 92. When assessee's case did not fall under the purview of section 92, assessing officer had no occasion to call for list of associated concerns and to refer the matter to TPO for determining the arms length price as per section 92. Therefore, assessment framed by assessing officer was neither erroneous nor prejudicial to the interest of revenue.

Income Tax Act, 1961 Section 263

Income Tax Act, 1961 Section 92C

INCOME TAX ACT, 1961

--Revision under section 263--Erroneous and prejudicial orderLack of proper enquiry--CIT initiated proceeding under section 263 on the ground that assessing officer did not make proper enquiries about the creditworthiness of the lenders before accepting the laons to assessee. He also found in the bank statement of the lenders that identical amounts of loan were deposited in the respective account of some of the lends before they gave loan to assessee. Assessee submitted that assessing officer conducted enquiries on the lender companies through his Inspector and collected return of income, balance sheet, P/L Account, bank statement confirmation letter, etc., from those lenders. Therefore, assessing officer had made sufficient enquiries and applied his mind before accepting the genuineness of loan transactions. It further, submitted that CIT had tried to replace his view with the view of assessing officer which was not permissible as per provisions of section 263. Held: Since assessing officer had enquired into the matter and applied his mind before dealing with the loan creditors and taking a possible view, therefore, assessment framed by assessing officer was neither erroneous nor prejudicial to the interest of revenue.