M/S R. PIYARELALL IMPORT & EXPORT,KOLKATA vs. CIT, KOLKATA-1, KOLKATA

This is an appeal filed by the assessee against the order of Ld. CIT-1, Kolkata dated 31.03.2014 for AY 2009-10 passed u/s. 263 of the Income-tax Act, 1961 (hereinafter the “Act”).

The assessee has challenged the exercise of revisional jurisdiction u/s. 263 of the Act by the Ld. CIT-1, Kolkata. According to the assessee, the AO in the original assessment has made enquires and ld CIT ought not to have interfered in the assessment order on the plea of AO not conducting enquires on certain transactions. According to the assessee, the AO appreciated the fact that a company called M/s. R. Piyarelall Foods Pvt. Ltd. (in short “RPFPL”) was amalgamated with the assessee company, pursuant to the scheme of amalgamation approved by the shareholders and sanctioned by the Hon’ble High Court at Calcutta vide order dated 21.05.2007 which stood transferred and vested in the assessee company as a going concern w.e.f. 01.04.2008. Accordingly, the merged company (RPFPL) stood merged with the assessee company, consequently, all expenses and income, assets and liabilities got transferred to the assessee company item wise. According to the Ld. Counsel for the assessee, the fact of amalgamation was clearly stated in the notes on account no. 11 2 R. Piyarelall Import & Export Ltd., AYs- 2009-10 of the Audited Accounts of the assessee company. According to the Ld. Counsel for the assessee, the CIT before invoking his revisional jurisdiction show caused to the assessee company about the details of 19 item wise facts, which included points in particular relating to payments made by assessee to M/s. RPFPL on which TDS was not deducted by the assessee. The following issues related to the applicability of TDS on payment were show caused by Ld. CIT which are given below: a) In respect of loading and unloading charges of Rs.94.90 lacs; b) Lorry freight charges of Rs.15.38 lacs; c) Railway Freight charges of Rs.3.78 cr.; d) Legal consultancy charge of Rs.14,24,748/-; e) Brokerge expenses of Rs.1.35 cr; f) Godown rent of Rs.2.459 cr.

The Ld. Counsel for the assessee drew our attention to para 2 of the original assessment order, wherein the AO has recorded that notices u/s. 142(1) were issued on 22.07.2011 and 05.09.2011 along with elaborate questionnaire. Thereafter, the AO recorded in his order that further clarifications were also called for during the course of assessment proceedings vide various order sheet noting. Thereafter, he drew our attention to para 3 of the AO’s order wherein the AO has mentioned the following:

We have heard rival submissions and gone through the facts and circumstances of the case. We note that though generally the AO has made certain general observations as stated above about enquiries conducted during assessment proceedings, however, we do not find anywhere from the records as to whether the AO in the original assessment proceedings enquired into the 19 item wise facts show-caused by the Ld. CIT in order to invoke the 3 R. Piyarelall Import & Export Ltd., AYs- 2009-10 revisionary jurisdiction. To our specific query to the Ld. AR to point out to us, as to whether the 19 issues raised by the Ld. CIT in his show cause notice to the assessee company has been enquired into by the AO by issuing 142(1) notices/order sheets, the ld. Counsel for the assessee was unable to bring to our notice any specific queries of the AO which was raised about these items during the assessment proceedings. In the light of the aforesaid facts, we are unable to agree with the ld. Counsel for the assessee that because of the general observations made by the AO in para 2 and 3 of his order that the AO has made enquiries in respect of the 19 issues raised by the ld. CIT. It has to be kept in mind that the AO has a dual role while assessing an assessee. He has to be an investigator as well as an adjudicator. In this case, we find that the AO has not exercised his role of investigator in respect to the items show-caused by ld CIT, which makes the order erroneous as held by the Hon’ble Supreme court and High Courts in plethora of decisions. Since the AO has not specifically made queries in respect to the issues that has been raised by the Ld. CIT, we cannot infer that the AO has made proper enquiries before passing the assessment order. In the light of the aforesaid discussion, we are unable to find any fault in the order of the Ld. CIT in exercising his revisional jurisdiction for lack of enquiry from the part of AO. Therefore, we uphold the order of the Ld. CIT and dismiss the appeal of the assessee.

In the result, appeal of the assessee is dismissed. Order is pronounced in the open court on 05.01.2018 Sd/- Sd/- (J. Sudhakar Reddy) (Aby. T. Varkey) Accountant Member Judicial Member Dated : 5th January, 2018 Jd.(Sr.P.S.) Copy of the order forwarded to: 1. Appellant – R. Piyarelall Import & Export Ltd., 12, Govt. Place (East), Kolkata-69. Respondent – CIT, Kolkata-1, Kolkata. 2 3. The CIT(A) Kolkata.