TaxTMI 
TaxTMI 
2008 (1) TMI 496
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....ts. 3. The appellant craves leave to add, alter, omit or substitute any of the above ground at the time of hearing of the appeal." 3. Subsequently, the assessee submitted an application dt. 14th March, 2007 requesting for permission to admit an additional ground as under : "In the facts and circumstances of the case and in law, and in the absence of the conditions precedent for invoking the revisional jurisdiction under s. 263 of the IT Act 1961, the impugned order passed by the learned CIT being patently illegal, arbitrary and without jurisdiction the same may please be vacated." 4. After hearing both the parties, the additional ground was admitted for adjudication. 5. The assessee was engaged in construction business. A survey was conducted under s. 133A of the Act on 21st Jan., 1999. In his statement recorded under s. 131 of the Act during the survey, one of the partners of the assessee firm declared and offered for tax Rs. 41 lacs, representing excess stock detected during the survey. The return for asst. yr. 1999- 2000 was filed on 31st Dec, 1999 showing total income only at Rs. 17,86,750. In the assessment order passed under s. 143(3) on 25th Feb., 2002, the to....
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....p; 30,10,000 Less : Salary to partners as claimed 3,60,000 --------- Total income 26,50,000 --------- 6. The CIT-II, Pune initiated proceeding under s. 263 of the Act, by issue of a show cause notice dt. 3rd April, 2003, and for the reasons mentioned in para 3 of his order, as under : "(i) T....
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....he Act provides for an estimation of 8 per cent as net profit if the books of account are not maintained. The assessee has not produced the relevant books of account before the AO at the time of assessment proceedings. The Hon'ble Supreme Court in the case of CIT v. British Paints India Ltd. [1991] 91 CTR (SC) 108 : [1991] 188 ITR 44 (SC) has held that 'if assessee's method of accounting does not disclose true picture of his profits and gains, then it is the duty of the AO to adopt any such computation as he deems appropriate for the proper determination of true income of the assessee.' The assessee through one of his partners, in sworn statement had declared additional income of Rs. 41 lacs during action under s. 133A(1), over and above, the regular profit and also has substantiated the same as per the note filed along with the return of income. However, the correct income has not been reflected in the return of income, as discussed above. If assessee has voluntarily declared additional income during survey, the Allahabad High Court in the case of Dr. S.C. Gupta v. CIT [2001] 170 CTR (All) 421 : [2001] 248 ITR 782 (All) has held, 'that such a statement could form the basis of asse....
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....r could not be termed as erroneous unless it was not in accordance with law, that if the AO acting in accordance with law made certain assessment, the same could not be branded as erroneous by the CIT simply because, according to him, the order should have been written more elaborately, that s. 263 did not visualize a case of substitution of the judgment of the CIT for that of the AO, who passed the order, unless the decision was held to be erroneous, that cases may be visualized where the AO while making an assessment examined the accounts, made enquiries, applied his mind to the facts and circumstances of the case and determined the income either by accepting the accounts or by making some estimates himself, the CIT, on perusal of the records, may be of the opinion that the estimate made by the AO concerned was on the lower side and left to the CIT he would have estimated the income at a higher figure than the one determined by the AO, that would not vest the CIT with power to re-examine the accounts and determine the income himself at a higher figure, that this was because the AO had exercised the quasi- judicial power vested in him in accordance with law and had arrived at a co....
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....r of the AO cannot be treated as prejudicial to the interests of the Revenue, for example, when an AO adopted one of the courses permissible in law and it had resulted in loss of revenue; or where two views were possible and the AO had taken one view with which the CIT did not agree, it could not be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the ITO was unsustainable in law. 15. In the case of CWT v. N.T. Rama Rao, the Court held that after the amendment of s. 2(e)(2)(ii) of the WT Act, 1956 and insertion of the proviso under cl. (vi) of s. 5(1) w.e.f. 1st April, 1975, the exemption in respect of annuities would be available only to the extent explained in the proviso to s. 5(1)(vi) of the Act irrespective of the date on which the policies were taken or annuity contracts were entered into, that the decision of the CIT that the proviso to s. 5(1)(vi) of the Act would come into play and at the best the assessee would be entitled to only one-tenth of the total value of the policies but not to the full extent of the policies for the reason that the annuity policies were for less than ten years was absolutely correct, that the ....