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of <h1>AO's failure to investigate conflicting sales figures justifies revision under Section 263 Explanation 2</h1> <h3>Yogita Weaves Versus The Pr. Commissioner of Income Tax-1, Raipur</h3> Yogita Weaves Versus The Pr. Commissioner of Income Tax-1, Raipur - TMI Issues Involved:1. Validity of Order u/s 263.2. Erroneous and Prejudicial to Revenue.3. Action based on Audit Objection.4. Jurisdiction of Pr. CIT.5. Admissibility of Evidence and Enquiry.Issue-Wise Detailed Analysis:1. Validity of Order u/s 263:The appellant contested the validity of the order passed u/s 263 by the Pr. Commissioner of Income-Tax-1, Raipur, arguing it was without jurisdiction, illegal, and void ab initio. The appellant claimed that the Pr. CIT-1, Raipur erred in drawing inferences about the sales figures based on an erroneous table in the assessment order, disregarding the regular books of accounts and VAT returns filed by the assessee. The Tribunal, however, upheld the Pr. CIT's jurisdiction, noting that the A.O's observation of aggregate sales at Rs. 4,24,67,351/- was not disputed during the assessment proceedings nor rectified post-assessment, making the Pr. CIT's intervention valid.2. Erroneous and Prejudicial to Revenue:The appellant argued that the Pr. CIT erred in holding the assessment order as erroneous and prejudicial to the interests of the revenue. The Tribunal found that the A.O had indeed observed the sales figures at Rs. 4,24,67,351/- in the assessment order, which was not contested by the assessee at any stage. The Tribunal concluded that the Pr. CIT was within his rights to set aside the assessment order for re-adjudication, as the discrepancy in sales figures could potentially affect the revenue.3. Action based on Audit Objection:The appellant contended that the action u/s 263 was taken based on an audit objection, contrary to the decision in CIT vs. Sohana Woollen Mills. The Tribunal did not find merit in this argument, as the Pr. CIT's action was based on the assessment order's internal inconsistencies rather than solely on an audit objection.4. Jurisdiction of Pr. CIT:The appellant claimed that the Pr. CIT failed to conduct an independent enquiry before assuming jurisdiction u/s 263. The Tribunal noted that the Pr. CIT had referred to the conflicting sales figures in the assessment order and directed a re-adjudication, which was within his jurisdiction. The Tribunal emphasized that the Pr. CIT's action was justified under 'Explanation 2' to Section 263, which allows revision if the A.O's order was passed without necessary enquiries or verification.5. Admissibility of Evidence and Enquiry:The appellant argued that the Pr. CIT did not conduct an independent verification of the sales figures. The Tribunal observed that the Pr. CIT had rightly set aside the assessment order based on the A.O's recorded figures, which were not contested by the assessee during the assessment proceedings. The Tribunal upheld the Pr. CIT's direction for the A.O to re-examine the issue, as the discrepancy in sales figures warranted further enquiry.Conclusion:The Tribunal dismissed the appeal, upholding the Pr. CIT's order u/s 263, and concluded that the Pr. CIT had rightly assumed jurisdiction to revise the assessment order, directing the A.O to re-adjudicate the issue after providing a reasonable opportunity to the assessee. The Tribunal found no merit in the appellant's arguments and emphasized the necessity of proper verification and enquiry in the assessment proceedings.
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