M/S. VINEX ENTERPRISES (P) LTD.,MEERUT vs. ACIT, MEERUT

This is an appeal by the assessee against the order dated 25.03.2013 of ld. CIT, Meerut.

Following grounds have been raised in this appeal: “1. That notice U/s 263 issued by CIT, Meerut was vague and is based upon incorrect facts and law and no reasonable and proper opportunity being heard was allowed. Hence, entire proceeding is against the principle of natural justice.

Facts of the case in brief are that the assessee e-filed its return of income on 30.09.2008 declaring a loss of Rs.9,44,077/- which was processed u/s 143(1) of the Act on Nil income. Later on, the case was selected for scrutiny and the AO framed the assessment u/s 143(3) of the Act by making an addition of Rs.2,38,568/- on account of disallowance of expenses under the head freight & cartage, electricity & generator, wages & incentive, packing material etc. Thereafter, the ld. CIT, Meerut invoked the provisions of section 263 of the Act by observing that the assessment order appears to have been passed without proper investigation and inquiry and thus found to be erroneous and prejudicial to the interest of the revenue.

The ld. CIT observed in the impugned order as under: “As regards admissibility of expenses on foreign tour, repairs and maintenance account of vehicle even the details have now been given during 263 proceedings. Similarly the assessee has enclosed fresh P&L A/c giving the provisions of MAT as per section 115JB of the Income tax Act now during 263 proceedings. It is reiterated that giving information in 263 proceedings. It is very well settled that without furnishing some information during 263 proceedings does not absolve the AO of his duty to call for such details and examine them properly.”

The ld. CIT directed the AO to examine the issue properly on each aspect and pass the fresh order.

Now the assessee is in appeal. The ld. Counsel for the assessee submitted that a reasonable and proper opportunity of being heard was not provided by the ld. CIT. It was further submitted that the ld. CIT(A) had not given any specific direction to the AO by pointing out that how and in what manner the assessment order dated 24.12.2010 u/s 143(3) of the Act passed by him was erroneous and prejudicial to the interest of the revenue.

In his rival submissions the ld. DR supported the impugned order of the ld. CIT.

We have considered the submissions of both the parties and perused the material available on the record. In the present case, it is 4 Vinex Enterprises (P) Ltd. noticed that the ld. CIT in the body of the impugned order categorically stated that the assessment order passed by the Assistant Commissioner, Circle-2, Meerut appears to have been passed without proper investigation and inquiry from that observation. From the said observation of the ld. CIT, it is clear that he was not sure how and in what manner the assessment order passed was without investigation and inquiry done by the AO, the word “it appears” used by him shows that he was not sure. Moreover, the ld. CIT stated that Sh. Rajiv Jain, CA attended on behalf of the assessee with whom the issues were discussed. However, nowhere it is stated that what were the submission of the assessee and why those were not accepted. Furthermore, the ld. CIT admitted that the assessee had furnished the details relating to admissibility of expenses on foreign tour, repairs & maintenance, account of vehicles but no findings have been given on the said details, neither any remand report was sought, it is also not directed which inquiry was to be made by the AO. He simply directed the AO to examine the issue again and to pass a fresh order. In our opinion, the order passed by the ld. CIT is a non-speaking order. We, therefore, deem it appropriate to set aside the impugned order to the file of the ld. CIT for deciding the issue afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.