TaxTMI 
TaxTMI 
2010 (7) TMI 620
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.... the Act. 3. As per the Commissioner, the total income declared by the assessee, included set-off of carry forward losses of Rs. 31,62,376/-. During the year, a survey u/s 133A was carried out at the premises of the assessee on 04.03.2005 in pursuance to which the assessee had offered additional income of Rs. 70,00,000/- over and above the income disclosed in the regular books of account. The additional income was reflected in the financial statements as under : On account of Stocks = Rs. 7,50,000/- On account of Cash in hand = Rs. 50,00,000/- Discrepancies in expenditure &nb....
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....ng the survey was to be assessed as deemed income from other sources u/s 69, 69A/69B of the Act and that, the same was not eligible to be set-off against the carried forward business loss/depreciation in view of the judgment of the Hon'ble Gujrat High Court in the case of Fakir Mohmed Haji Hasan, 247 ITR 290(Guj). After hearing the assessee, Commissioner has directed the Assessing Officer to modify the assessment order dated 28.12.2007. ... 5. Before us, learned counsel for the assessee has vehemently argued that the Commissioner has erred in exercising his jurisdiction u/s 263 of the Act in the present case. The learned counsel contended that the Assessing Officer had duly applied his mind to each and every aspect of the income surrendered during the survey and therefore, it could not be said that there was any lack of proper application of mind by the Assessing Officer so as to require interference by the Commissioner u/s 263 of the Act. In this regard, reference has been made to a detailed questionnaire issued by the Assessing Officer dated 14.06.2007, copy of which has been placed in the Paper Book at pages 63-65. It is pointed out that the Assessing Officer even examined as....
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....Revenue within the meaning of Section 263 of the Act. According to the learned DR, the Assessing Officer erred in assessing the surrendered income under the head 'business income' without making any enquiry with regard to its nature and source and therefore, the assessment order has been found to be erroneous within the meaning of Section 263 of the Act. For the aforesaid reasons, the impugned order of the Commissioner was sought to be defended. 7. We have considered the rival submissions carefully. Pertinently, the short issue in this appeal revolves around the invoking of Section 263 of the Act by the Commissioner. The first and the foremost grievance of the assessee is that the Commissioner erred in invoking his revisionary powers contained in Section 263 of the Act, having regard to the facts and circumstances of the case. 8. The provisions contained in Section 263 of the Act empower the Commissioner to call for and examine the record of any proceedings under this Act and if he considers any order passed therein by the Assessing Officer as erroneous, in so far as it is prejudicial to the interests of the Revenue, he may pass such orders thereon as the circumstances of the....
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....ourt in the case of Fakir Mohmed Haji Hassan (supra). Therefore, as per the commissioner, the sum of Rs. 31,62,376/- representing carried forward business loss has been wrongly set-off against the aforesaid income, which constitutes an "error" within the meaning of section 263 of the Act. . 10. Before applying the proposition laid down by the Hon'ble Gujarat High Court, the Commissioner observed that the surrendered income is assessable under sections 69, 69A/69B of the Act and that the Assessing Officer erred in assessing the same as business income. As per the commissioner, there is no dispute that incomes surrendered on account of stocks- Rs. 7,50,000/- and on account of cash in hand- Rs. 50,00,000/- are assessable under sections 69, 69A/69B of the Act respectively, because sources of such have not been explained by the assessee. 11. In the facts of the present case, we find that there is no material to indicate that Assessing Officer applied his mind or made enquiries regarding the source of investment in stock and cash surrendered during the survey. The Assessing Officer noted in the questionnaire dated 14.06.2007 issued during the assessment proceedings that....
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....r this objective, in our view, the Commissioner should have set-aside the matter to the file of the Assessing Officer requiring the assessee to establish that the surrendered income reflected by the unexplained stocks, cash in hand and unexplained expenditure amounting to Rs. 70,00,000/- was assessable as business income. The action of the Commissioner to straight away modify the assessment was premature and unjustified. 13. We have also carefully perused the judgement of the Hon'ble Gujrat High Court, because the crux of the action taken by the Commissioner is based on the said judgment. In that case the facts were that the Customs authorities confiscated gold/currency from the assessee, and he was penalized for smuggling of currency/gold. Consequently, the value of gold and currency found on the assessee was assessed to tax in terms of Section 69A of the Act holding him as an owner and considering the same as unexplained. The assessee claimed deduction against such income with regard to the loss suffered on confiscation of gold, as according to the assessee, such confiscation was a trading loss in his hands hands. This claim was denied by the Hon'ble High Court. As per t....