N.V. Vasudevan, Judicial Member - This is an appeal by the assessee against the order dated 16.12.2010 passed u/s. 263 of the Act by the Commissioner of Income-tax ["CIT"], Mangalore relating to assessment year 2006-07.

2. The assessee is a partnership firm. For the A.Y. 2006-07, assessee filed a return of income declaring total income of Rs.5,88,340. An order of assessment u/s. 143(3) of the Act was passed in which the Assessing Officer made two additions to the total income viz., a sum of Rs.1 lakh voluntarily offered by the assessee for taxation and another sum of Rs.2,66,036 by making disallowance for non-deduction of tax at source on a payment of Rs.2,66,036 towards payment to contractors falling u/s. 194C of the Act.

3. The ld. CIT, in exercise of his powers u/s. 263 of the Act, was of the view that the aforesaid order of the AO was erroneous and prejudicial to the interests of the revenue, inasmuch as the AO has not made disallowance of a sum of Rs.29,95,170 which comprised of 170 payments towards professional fees and contract charges on which tax had not been deducted at source. The CIT noticed that the dates of payment or credit to payees are spread throughout the prev