TaxTMI 
TaxTMI 
2007 (11) TMI 326
X X X X Extracts X X X X
X X X X Extracts X X X X
.... his written reply dated 10-1-2007", is illegal and unsustainable. 4. The direction of CIT (Central) contained in the order under section 263, is to make a roving enquiry which indicates that there is no material for passing the order under section 263. 5. The appellant respectfully submits that there is no basis or material before the CIT (Central) to assume that the order Block Assessment under section 158 BC dated 18-3-2005 was erroneous and prejudicial to the revenue. In the absence of the basic requirements under section 263 for initiating action, the present order is without jurisdiction. The impugned order is erroneous, illegal and unsustainable." 3. From the grounds taken by the assessee, the sole issue which arises for our consideration is whether the ld. CIT is justified in setting aside the block assessment by invoking section 263 and directing the Assessing Officer to redo the assessment. 4. The briefly stated facts are as under: The assessee is engaged in the business engaged in the business of trading in Indian Made Foreign Liquor (IMFL). In addition to that, he also runs fast food centre, aqua fast food and also bakery business. There was a search action ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....------------------------- 1997-98 10,38,884.00 11,74,560.00 1,35,676.00 ----------------------------------------------------------- 1998-99 11,02,873.10 12,50,954.00 148,080.90 ----------------------------------------------------------- 1999-2000 10,62,399.90 11,33,334.00 70,934.10 ----------------------------------------------------------- 2000-01 11,15,642.50 11,92,349.00 76,706.50 ----------------------------------------------------------- 2001-02 12,98,343.45 12,78,982.50 (-)19,360.95 ----------------------------------------------------------- Total 65,29,998.15 71,12,809.00 5,82,811.00 ----------------------------------------------------------- Income estimated @ 33.1% on sale of 23,54,339 Rs. 71,12,809 (being the average gross profit margin over the above period on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessee resisted the action proposed by the CIT. The CIT rejected all the objections of the assessee and held that the block assessment order passed by the Assessing Officer under section 158BC dated 18-3-2005 determining the undisclosed income relating to suppression of soda sales at Rs. 17,71,528 on total sales turnover of Rs. 71,12,809 has erroneous and also prejudicial to the interests of the revenue. The CIT directed the Assessing Officer to recompute the undisclosed income in respect of soda sales. Now, the assessee has challenged the order of the CIT passed under section 263 of the Act before us. 7. We have heard the rival submissions of the parties. We have also carefully considered the facts of this case. We have also carefully considered the precedents relied on by the learned counsel. There was a search action against the assessee under section 132 of the Act. The assessee is engaged in hotel business and also IMFL. After the search action, the assessment of the assessee was completed under section 158BC read with section 143(3) of the Act vide assessment order dated 18-3-2005. After examining the assessment record of the assessee, the CIT was not happy in respect ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... evidence on record and the assessee should not have any grievance as the CIT has rightly exercised his powers under section 263 of the Act. 10. Section 263 of the Act reads as under:- "263. (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous insofar as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation.-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1-6-1988 by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the J....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue. For example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue, unless the view taken by the Income-tax Officer is unsustainable in law. It has been held by this court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the revenue. Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC)." 13. In the case of Gabrial India Ltd.- "... We, therefore, hold that in order to exercise power under sub-section (1) of section 263 of the Act there must be material before the Commissione....
X X X X Extracts X X X X
X X X X Extracts X X X X
....------------------------------------ 1997-98 10,38,884.00 11,74,560.00 ----------------------------------------------------------- 1998-99 11,02,873.10 12,50,954.00 ----------------------------------------------------------- 1999-2000 10,62,399.90 11,33,334.00 ----------------------------------------------------------- 2000-2001 11,15,642.50 11,92,349.00 ----------------------------------------------------------- 2001-2002 12,98,343.45 12,78,982.50 ----------------------------------------------------------- Total 65,29,998.15 &nbs....