TaxTMI 
TaxTMI 
2010 (1) TMI 639
X X X X Extracts X X X X
X X X X Extracts X X X X
....here was no error in the order and it cannot be said to be erroneous and thereby quashing the order passed under section 263 of the Income-tax Act, 1961?" 3. The brief facts of the case are as follows : The assessee, a liquor contractor, filed its return on 31-10-1993 declaring income of Rs. 5910. In the trading account, gross sales of Rs. 2,74,29,952 were disclosed on which gross profit of Rs. 27,23,950 giving out gross profit rate of 9.9 per cent was shown. The Assessing Officer completed the assessment on 3-1-1994. However, during the security of the assessment order, the learned Commissioner held that the same was erroneous and prejudicial to the interest of the revenue. He held so on the ground that the Assessing Officer has not ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der section 263 of the Income-tax Act. 5. The Tribunal has recorded the following findings : "We have given our utmost consideration to the issue in dispute. As would be seen, the Assessing Officer examined and perused the books of account, which he found to have been maintained in regular course of business. He also accepted the trading results and found the gross profit reasonable. On the basis of the information already placed on record, as was explained and demonstrated before us by Shri Garg, debit side as well as credit side of the trading account were explainable and that being so, the accounts appear to have been rightly acceptable by the Assessing Officer along with the trading result. Even at the cost of repetition, it ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n Hiralal, copy found at pages 85 to 91 of the assessee's paper book. Reference may also be made to a decision of the Madhya Pradesh High Court in the case of Jayantilal Kirhorilal v. CIT [1985] 154 ITR 821, where it was held that in case result shown by a country liquor dealer was verifiable, net profit rate could not be resorted to. We will not pass on to the other points taken by the learned Commissioner. Certain expenses were disallowed by the Assessing Officer in respect of which an appeal was preferred by the assessee. These disallowances were deleted. Obviously nothing survived before the learned Commissioner, which could have been revised by him. A reference to the provisions of section 263(1)(c) do not help the Department as the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....th cash and the assessee having 39 shops, had not physical control over them all the time. Such deposits appeared at the beginning of the accounting period and, therefore, could not even be considered as cash credits in the hands of the assessee. In this connection, reliance was placed on the decision of the jurisdiction High Court in the case of CIT v. Jaiswal Motor Finance [1983] 141 ITR 706. It was also submitted that the Assessing Officer found and observed in the assessment order that it was customary in the liquor business that salesmen were required to deposit security money with the firm which was returned back to them after the confirmation was over. The assessment order also went to say that confirmation from the salesmen had been....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted that a huge sum of Rs. 10,22,500 was found deposited in the books of account of the assessee in the names of 84 employees, who were working as salesmen, and their deposits have been accepted merely on the basis of the certificates/confirmatory letters furnished by them before the assessing authority without making any further inquiry about the source of deposits. Therefore, the Commissioner of Income-tax has rightly initiated the proceedings under section 263 of the Income-tax Act and has held that the order was erroneous. 8. We have perused the assessment order. On perusal of the assessment order, it reveals that the firm had 48 shops, located in district Rai Bareilly, wherein salesmen were appointed to carry out the sales of the co....