Brief of the case:
ITAT Chandigarh held in M/s. Ved Parkash Contractors Vs CIT that if the AO had passed brief and cryptic assessment order but had checked and verified all the related documents submitted by the assesse in reply to the questionnaire of the AO, which contains all the questions raised by CIT, which was found correct and genuine in the eyes of AO so it could not be said that the order passed by the AO was erroneous and prejudicial to the interest of revenue simply because in his order he did not make any elaborate discussion in that regard.
ITAT also held that the submission of partnership deed was not mandatory at the time of filing of return and could be filed at any time before the completion of assessment.
Facts of the case:
On an examination of the assessment record of the assessee for the assessment year under consideration, the CIT observed that the assessment order dated 20.01.2013 passed in this case u/s 143(3) of the Act was erroneous and in as much as it was prejudicial to the interest of Revenue. The Ld. Commissioner issued a notice to the assessee u/s 263 of the Act listing eight issues in respect to which it was found that the assessment order was erroneous and prejudicial to the interest of Revenue. In response to the aforesaid notice, the assessee contended that all the queries raised in the show cause notice had been looked into by the Assessing officer while framing the assessment order and the Assessing officer was fully satisfied with the record produced before him and the content ion put for the before him by the assessee with regard to the points raised by the Ld.Commissioner. The next contention of the assessee was that it was the prerogative of the Assessing officer to make entries in the noting sheet of the record he verified and it was also his preoperative to write the wording of the assessment order as per his choice, but this did not mean that the Assessing officer did not verify the points raised in the show cause notice merely because the order of the Assessing officer was crypt ic would not be a sufficient reason to brand the assessment order as erroneous and prejudicial to the interest of Revenue.
Contention of the assessee:
Assessee was of the view that as AO was fully satisfied with the records produced before him. Moreover it had submitted full details of the closing stock shown in the balance sheet on which AO agreed and also the assesse had submitted the details of the land which the assesse purchased was used for the business purpose during the year. It was the also AO’s preoperative to write the wording of the assessment order as per his choice, but this did not mean that the Assessing officer did not verify the points raised in the show cause notice merely because the order of the Assessing officer was cryptic would not be a sufficient reason to brand the assessment order as erroneous and prejudicial to the interest of Revenue.
Further it was well settled law that writing an order in details may be a legal requirement but the order not fulfilling this requirements could not be said to be erroneous and prejudicial to the interest of Revenue. It was apparent from the records that the assessee submitted it reply and also furnished the requisite information or details to substantiate its claim during the assessment proceedings. The Assessing officer had considered all these issues on which the assessment order was revised u/s 263, the exercise of powers u/s 263 was bad in law.
In case of submission of revised partnership deed assesse was of the view that the partnership deed could be submitted at any time before the completion of assessment.
Contention of the revenue:
Revenue was of the view that the in some of the cases AO had neither examined the issue nor applied his mind while doing the assessment and took view contrary to the law. Therefore the order was erroneous and prejudicial to the interest of revenue. Therefore the closing stock of the assesse was understated by Rs 5,95,970/- which was not checked by the AO So, CIT made an addition of Rs 5,95,970/- and also disallowed the interest paid on the loan taken to purchase the land because it was of the view that it was for the personal purpose because AO had never mentioned about the same in his assessment order.
CIT also made addition of the interest and salary given to the partners because of the view that the assesse had not submitted the revised partnership deed while filing of return.
Held by ITAT:
ITAT held that as the assesse had furnished all the details related with closing stock which CIT was considering understated. As AO had verified all the details of closing stock and considered the same to be correct so CIT could not consider the same to be erroneous and prejudicial to the interest of revenue simply because that the order of AO was brief and cryptic and had not made any elaborate discussion in that regard.
It was also true that if an enquiry was made by the Assessing officer and then objection of the CIT was that such inquiry was not adequate, the CIT would have no jurisdiction u/s 263 of the Act to revise the order of the Assessing officer.
Secondly as the assesse had presented the partnership deed before the AO before the completion of assessment which was accepted by AO so, CIT was wrong in disallowing the salary and interest paid to the partners.
Appeal of the assesse was allowed.