TaxTMI 
TaxTMI 
2015 (1) TMI 691
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....ial to the interest of revenue. 4. The appellant craves leave to add, alter, amend any ground of appeal. 3. The CIT-Gandhinagar, Ahmedabad issued a notice to the assessee vide No.GNR/263/SKB/2010-11 dated 13.10.2010 u/s 263 of the Act, which is reproduced hereunder:- "No. GNR/263/SKB/2010-11 Date: 13.10.2010 To, Shri Satyanarayan K. BharadwaJ, AT: Khabdosan, Tal: Visnagar, Mehsana Dist. Sub: Re-opening of assessment proceedings u/s. 263 of the IT Act for A.Y. 2008-09 - regarding - The assessment order u/s. 143(3) was made on 19/04/2010 determining total income at Rs. 1,15,990/- as against Rs. 90,990/- declared by the assessee. 2. On going through the return of income, it has been found that report under the contract work has been disclosed at Rs. 99,84,332/- whereas the net profit declared is Rs. 90,992/- which is around 1% of the gross receipt. 3. The A.O. during the course of assessment proceedings did not call for the details of the following: (i) Raw Material exps. Rs. 10,47,040/- (ii) Diesel & Fuel exps. Rs. 14,38,751/- (iii) Labour exps. Rs. 17,48,095/- (iv) Spare Parts Exps Rs. 1,19,533/- (v) Site Exps Rs. 1,79,250/- (vi)....
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.... Rs. 75000 (xxii) Babulal Sharma 31-3-2008 Rs. 50000 Why aforesaid payments were made is not ascertainable and copies of ledger accounts of all these parties were not available on record. 7. On going through the copies of Bank Accounts in the books of accounts, the following receipts have been noticed. (i) Saraswati Construction Rs. 200000 on 16-4-2007 (ii) Saraswati Builder Rs. 40000 on 24-05-2007 (iii) Babulal Sharma Rs. 100000 on 6-2-2008 (iv) Saraswati Construction Rs. 215000 on 26-2-2008 (v) Babulal Sharma Rs. 100000 on 19-3-2007 (vi) Narendrakumar Rs. 50000 on 26-3-2008 Whether these are cash credits/loans are not ascertainable as no confirmations from the parties are available on record. If it is contract receipt, why the same were remain undisclosed is not known. 8. In the all items ledger account, there are following debit and credit. Dena Bank Thara (7875) (1) Chamunda Trading Co. Payment Rs. 200000 on 3-7-2007 (2) Nandram Rs. 61960 on 11-7-2007 (3) Ramkumar Sharma Rs. 10000 on 11-7-2007 (4) -do- Rs. 20000 on 22-9-2007 (5) -do- Rs. 10000 on 25-10-2007 (6) -do- Rs. 10000 on 29-10-2007 (7) -do- Rs. 20000 on 30-1....
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.... As Per Notice u/s 142 (1) of Act dated 22/02/2010 (Refer Para 3) Assessee has submitted on dated 17/03/2010 Copy of Ledger A/c with Contra Confirmation of Saraswati Construction, and Saraswati Builders which has been examined and verified by Assessing Officer and found Correct as per books of accounts and records. For your ready reference, we again submit aforesaid details for your kind verification. (Refer Page No: 28 to 31) 4. Reply to Para 5 : As Per Notice u/s 142(1) of Act dated 22/02/2010 (Refer Para 1 & 8) Assessee has submitted on dated 17/03/2010 Copy of TDS Certificate and Bank Statements for verification of TDS Certificate Entry withy Bank Statement which has been examined and verified by Assessing Officer and found Correct as per books of accounts and records. For your ready reference, We again Submit afore said details for your kind verification. (Refer Page No: 32 to 49) 5. Reply to Para 6 : As Per Notice u/s 142 (1) of Act dated 22/02/2010 (Refer Para 8) Assessee has submitted on dated 17/03/2010 Copy of bank Statements and books of Accounts wherein payment made to item no i to xxii as Stated in your notice dated 13/10/2010, with statement of Led....
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.... the order of the ASSESSING OFFICER is erroneous but is not prejudicial to the revenue, or if it is not erroneous but is prejudicial to the revenue-recourse cannot be had to section 263(1)" What the Honourable Supreme Court lays down is that the order under consideration has to be erroneous and that error must be prejudicial to the interest of the revenue. The words "prejudicial to the interest of the revenue" have not been defined but legally it is well settled that they mean that the orders under consideration are such as are not in accordance with law, in consequence whereof the lawful revenue due to the state has not been realized or cannot be realized. (2) In the case of Malabar Industrial Co. Ltd. Vs. CIT (supra) The Honourable Supreme Court had an opportunity to deal with the issue as to what is an error. The Honourable Supreme Court thus observed "there can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the assessing officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order....
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....commissioner is required to give an opportunity of a personal hearing to the assessee. The first two stages were purely administrative while this stage acquires the character of quasi judicial proceedings. Under section 263, this commissioner act as a quasi judicial authority and therefore the principle of natural justice has to be strictly adhered to. Further the order passed under this section must be reasoned orders otherwise the same would be vitiated. (B) DURING THE COURSE OF ASSESSMENT PROCEEDING WE HAD SUBMITTED DETAILS DATED 17/03/2010 BEFORE ASSESSING OFFICERS WHICH ARE CONSIDERED AS PART OF OUR REPLY In view of the aforesaid observation, the order u/s 143(3) dated 19-04-2010 is NOT treated as erroneous and prejudicial to the interest of revenue. With Thanks Yours Faith fully Sd/- Satyanarayan K Bhardwaj Proprietor" 5. The CIT-Gandhinagar, Ahmedabad has held as under:- "ORDER UNDER SECTION 263 OF THE I.T. ACT, 1961 The assessment in this case was completed U/s.143 (3) on 19/04/2010 on a total income of Rs. 1,15,990/- as against the revised returned income of Rs. 90,990/-. While completing the assessment, the Assessing Officer has disallowed part of Tel....
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....0 not to treat erroneous and prejudicial to the interest of revenue. 3. As stated above, the examination of the case records of the assessee showed that the ledger accounts of Sadbhav Engg. Ltd. Contract receipt received was Rs. 1,07,33,184/- includes mobilization advance credited on 15/02/2008 of Rs. 675406/-, same was in the nature of advances hence this amount not treated as revenue therefore, reduced from the total (Shown in account) receipt of Rs. 1,07,33,184/-. In view of this there is a difference as per P&L account and as per ledger account comes to Rs. 73,476/-(Rs 10733184 - Rs. 675406). 4. As per the details available on record, the Assessing Officer did not called for the details. In respect of Tractor rent and machinery rent, on verification of the ledger accounts of the parties to whom the payments were made it is seen that the most of the person has given confirmation without PAN, address and identity therefore, it is not possible to confirm whether it pertain to Tractor rent or machinery rent and if prima facie applicable u/s 40a (ia) of the Act or not. 5. The above facts clearly show that proper verification In respect of Tractor rent and machinery rent and....