TaxTMI 
TaxTMI 
2015 (4) TMI 221
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....nd bad in law in as much as the learned CIT did not give reasonable opportunity to the assessee to represent the case and completed the proceedings exparte. 3. On the facts and circumstances of the case and in law the learned Commissioner of Income Tax, Meerut has erred in invoking the provisions of section 145(3) and holding that the net profit be assessed at 5% of gross turnover at Rs. 24542252/-. 4. WITHOUT PREJUDICE to other grounds of appeal, on the facts and circumstances of the case and in law the learned Commissioner of Income Tax, Meerut has erred in invoking the provisions of section 145(3) and holding that all other additions and disallowances shall be over and above the net profit assessed at 5% of gross turnover at Rs. 24542252/- resulting in double addition/taxation." 3. Briefly stated the facts giving rise to this appeal are that the assessing officer completed the assessment u/s 143(3) of the Act by making certain additions on account of depreciation taken separately, personal use of convenience and telephone, interest two partners and remunerations two partners and finalise the assessment at Rs. 19,35,120/- as against return income of Rs. 18,65,096/-. Subsequent....
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....2.2014 passed in pursuance to the impugned order u/s 263 / 143(3) of the act and submitted that the Assessing Officer has not make any additions on any of four points as mentioned in para 2 of notice u/s 263 of the Act dated 15.02.2013. The Ld. AR further, pointed out that the Assessing Officer while passing re-assessment order u/s 263 read with section 143(3) of the act has made two additions viz. first, pertaining to addition made by CIT(A), Meerut in vide impugned order dated 18.3.2013 passed u/s 263 of the Act being 5% of total turnover and second addition on account of sundry creditors amounting to Rs. 41,12,950/- in regard to sundry creditors namely M/s Nagin Fabrics and M/s Ramesh Enterprises & and both these issues were not pointed out and disputed in the notice u/s 263 of the Act. 6. Placing reliance on the recent decision of ITAT, Delhi Bench A in the case of B.S.Sangwan Vs. ITO (2015) 53 taxmann. Com 402 (Delhi-Tribunal) to which one of us ( C.M.Garg, J.M) was co-author, submitted that a revisional order u/s 263 read with section 143(3) of the Act can only be passed on the ground on which assessee has been given reasonable opportunity of being heard and it is not open t....
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....s 263 of the act. At the same time, we note that the Assessing Officer has made addition of Rs. 2,45,48,043/- in pursuance to the direction to the CIT in the impugned order and another addition of Rs. 41,12,950/- on account of sundry creditors namely M/s Nagin Fabrics and M/s Ramesh Enterprises which were also not part of the notice u/s 263 of the Act. 10. Turning to the ratio of the decision of ITAT, Delhi 'A'Bench in the case of B.S.Sangwan (Supra) we note that on the similar facts and circumstances of the case considering the decision of coordinate bench of the Tribunal in the case of Synerg Enterpreneur Solutions Pvt. Ltd. Vs. DCIT(2011) 46 SOT 111 it has been held thus :- 9. A co-ordinate bench of this Tribunal, in the case of SynergyEntrepreneur Solutions Pvt Ltd Vs DCIT [(2011) 13 ITR Tribunal 377(Mum)], had an occasion to deal with a somewhat similar situation. That case a case in which in the show cause notice, learned Commissioner held that the loss brought forward could not be set off against profits of the current year, but when the Commissioner was to pass the final revision order, he simply held that the matter is required to be examined afresh in accordance with th....
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....amounts to speculation profits or loss, the assessment order is set aside with a direction to obtain complete details and conduct necessary enquiries and examine the same for the assessment year under consideration. The AO shall provide adequate opportunity to the assessee before passing the assessment order." 5. It is thus clear that there has been shift in the stand of the CIT on whether it was a fit case for revision on the ground that the assessee was not eligible for set off of losses on speculative transactions or whether it was a case for revision on the ground that the AO did not make necessary verifications about the transactions. The reason given in the show-cause notice is former, while the reason for which revision powers are finally exercised in the impugned order are latter. As to whether such an exercise of revisional powers, on the grounds other than the grounds of revision as set out in the show-cause notice, could be held to be sustainable in law, we find guidance from the decisions of a Co-ordinate Bench in the case of Maxpak Investment Ltd. vs. Asstt. CIT (2006) 104 TTJ (Del) 881 : (2007) 13 SOT 67 (Del) which, inter alia, observes as follows: ".............In....
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....xamine the facts of the instant case in the light of legal position set out by the coordinate bench of the Tribunal in the case B.S.Sangwan (Supra) and find that in the impugned revision proceedings u/s 263 of the Act the CIT pointed out 4 mistakes in the assessment order which was subjected to the revision proceedings and the CIT concluded that the said assessment order was passed without making proper, requisite and desired inquiries and held that the same is erroneous and prejudicial to the interest of the revenue. 12. In our humble understanding of statutory provision of Section 263 of the Act, lack of proper inquiries which the assessing officer ought to have conducted on the facts of the case altogether different reason from inadmissibility of the claim of deduction or an income which to have been brought to tax. We are of the considered view of that the impugned revision order is contrary to the scheme of law as stipulated u/s 263 of the Act because the CIT proceeded to issue notice by pointing out any four issues as reproduces hereinabove. At the same time we notice in the impugned order passed u/s 263 of the Act, the CIT(A) directed to the AO to make inquiry not only on f....
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....s could not be ascertained or verified in the absence of bills, vouchers and other relevant records and documents to support the same. The stock details as per para 28 of Form 3CD are also not verifiable as Raw Materials are given in weight while finished goods in nos. And even the size of finished goods is not given though stated that the same are of different sizes. Inventories of stocks have also not been furnished by the assessee. In order to perview the tax as reasonable and to bring the income in terms of sales the net profit earned by the assessee is held @ 5% of gross turn over comparing to the type of business as carrying out by the other assesses of same trade and declaring the NP on or above in the same reasonable ratio of 5% to the gross turn over after invoking section145(3) of the I.T.Act, 1961. The income on other issues arising out of this order shall be added separately in addition to the income calculated @ of 5% of gross turn over of the business as follows :- Total turn over = Rs. 49,08,45,042/- Net profit @ 5% = Rs. 2,45,42,252/- Add (other Income, Interest received_ = Rs. 5791/-" 15. In view of above conclusion of the CIT we are unable to see wheathe the C....