TaxTMI 
TaxTMI 
2012 (8) TMI 94
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....e effective ground raised in the appeal of the assessee. In this appeal, the assessee challenged the order u/s 263 passed by CIT. The brief facts of the case are that the assessee is a partnership firm dealing in clothes particularly suiting, shirting as well as dealing in ready made garments. For AY 2005-06, the assessee filed return of income on 25.10.2005 declaring total income of Rs.1,03,830 which was later on revised on 18.1.2006. Survey u/s. 133A was carried out on 11.2.2005 at the business premises and during the course of survey the inventory of stock was prepared and stock to the extent of Rs.9,24,368/- was found over and above the books of account. In the revised return of income the assessee declared stock of Rs.9,24,368/- and pa....
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....essee is in appeal before us. On the date of hearing none appeared from assessee side. The Ld. D.R. relied on the order of CIT. He further relied on the decision in the case of Rajalakshmi Mills Ltd Vs ITO (2009) 121 ITD (Chennai) (SB) and Pt. Lashkari Ram Vs CIT (2005) 272 ITR 309 (All). 6. We have heard the Ld. D.R. and perused the material on record. The issue before us in the present appeal before us is whether the CIT was justified in invoking the provisions of s. 263 on the issue of treatment of closing stock found at the time of survey. 7. We observe that the AO while passing the order u/s 143(3) and while dealing with the issue of Gross profit in 2nd para of 3.2 on page 5 has observed as under: "The Assessee's submission has been....
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....der: "The power of suo motu revision under sub-section (1) of section 263 of the Income-tax Act, 1961, is in the nature of supervisory jurisdiction and can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise the power of revision under this sub-section, viz., (i) the order should be erroneous; and (ii) by virtue of the order being erroneous prejudice must have been caused to the interests of the Revenue. An order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the....
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....s, is absent. Similarly if an order is erroneous but not prejudicial to the interests of the Revenue, then the power of suo motto revision cannot be exercised. Any and every erroneous order cannot be the subject-matter of revision because the second requirement must be fulfilled." 10. It is also well-settled that order passed by the Assessing Officer would be erroneous only if the Assessing Officer has not considered all materials or had not done proper examination or enquiry or verification or if the Assessing Officer had completely omitted the issue, in question, from consideration and made the assessment in an arbitrary manner. In the case of CIT VS Hero auto ltd (2012) 343 ITR 342 (Del), the H'ble Delhi High Court has held as under: (....
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....ring to the said decision in the case of ITO vs DG Housing Projects Ltd decided on March 1 2012 (2012) 343 ITR 329 (Del) we have recently observed and held as under (pages 338-340): Thus in cases of wrong opinion or finding on merits, the CIT has to come to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the order u/s 263 is passed. In such cases, the order of the AO will be erroneous because the order passed is not sustainable in law and the said finding must be recorded. The CIT cannot remand the matter to the AO to decide whether the findings recorded are erroneous. In cases where there is inadequate enquiry but not lack of inquiry, again the CIT must give....
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....estigator, is erroneous, without the CIT conducting verification /inquiry. The order of the AO may be or may not be wrong. The CIT cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the CIT to ask the AO to decide whether the order was erroneous. This is not permissible. An order is not erroneous unless the CIT holds and records reasons why it is erroneous. An order will not become erroneous because on remit, the AO may decide that the order is erroneous. Therefore, the CIT must after recording reasons hold that the order is erroneous. The jurisdictional precondition stipulated is that the CIT must come to the conclusion that the order is erroneous and is unsustainable i....