TaxTMI 
TaxTMI 
2015 (4) TMI 825
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....ew that as the major part of the expenditure is not supported by proper bills and vouchers and thereby not verifiable, the genuineness and quantum of expenditure claimed and authenticity of books of account maintained by assessee are also suspect. In these circumstances, AO formed an opinion that in view of the deficiencies in the books of account, they cannot be relied upon thereby invoking provisions of section 145(3) of the Act, rejected the books of account and proceeded to estimate the income. AO noted, on the reported gross receipts of Rs. 1,07,33,505, the income declared by assessee works out to 8.32%, which according to AO was on the lower side. He, therefore, estimated the income from the transport contract at 10% of the gross contract receipts and thereafter allowed deduction towards remuneration and interest payment to partners and thereby determined the total income at Rs. 5,20,300. 3. The CIT invoking his powers u/s 263 of the Act called for the assessment records of assessee and after examining the same was of the view that assessment order passed is erroneous and prejudicial to the interests of the revenue for the following reasons: "1. It is observed from P&L A/c ....
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....ecting the submissions made by assessee, held that as AO has not examined the issues as mentioned in the show cause notice by making proper enquiry, assessment order passed is erroneous and prejudicial to the interests of revenue. Accordingly, the CIT set aside the order of assessment with the following directions: "6. For the purposes of invoking the jurisdiction u/s 263, it is settled law that the revisional authority should apply the tests as to whether such an order contains some apparent error of reasoning or of law or of the fact on the face of it and also whether it is an order wherein the AO simply accepted what the assessee has stated in its return &/or in the other particulars and failed to make examination/verification/enquiries which are called for on the facts & circumstances of the case which he as an investigator of that case was duty bound to do. In this case, it is clear from the above discussion, that the AO has not examined the above issues and the material on record which are called for on the facts and circumstances narrated above, and hence the impugned assessment order is erroneous and ....
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....evision order while completing the assessment u/s 143(3). In this context, learned DR specifically referred the observations in para 5.8 of CIT. Learned DR submitted as the assessment order does not reveal any enquiry by AO with regard to specific issues pointed by CIT, assessment order is erroneous and prejudicial to the interests of revenue thereby necessitating action u/s 263 of the Act. 6. We have considered the submissions of the parties and perused the orders of revenue authorities as well as other materials on record. We have also applied our mind to decisions relied upon by learned AR. As is evident from record, AO in course of assessment proceeding, after examining the books of account and other informations available before him was of the view that expenditure incurred are not fully verifiable, which also raised suspicion with regard to maintenance of books of account as well as its correctness. Therefore, being of the opinion that books of account are not verifiable, AO proceeded to reject the same and estimate the income of assessee @ 10% on the gross receipts. On a perusal of revision order, we find that CIT in specific terms has not disapproved the rejection of books....
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....ce to the interests of revenue. In the present case, on perusal of revision order, it appears that CIT himself is neither sure nor certain or has enough evidence before him to establish that the issues on which he has sought to revise assessment order would otherwise have resulted in assessment of income at the hands of assessee. That being the case, the provisions contained u/s 263 cannot be used as a tool to start roving and fishing enquiry. CIT must have strong material/evidence before him, which could indicate that non-consideration of those issues has not only made the assessment order erroneous, but, has also caused prejudice to the interests of revenue. Unless there are material to indicate to that effect, assessment order cannot be held to be erroneous and prejudicial to the interests of revenue empowering CIT to revise it u/s 263. In this context, a reference can be made to the judgment of the Hon'ble Delhi High Court in case of Director of Income-tax Vs. Jyothi Foundations, 357 ITR 388 wherein the Hon'ble Delhi High Court after analyzing several other decisions held that if the revising authority feels that AO has not conducted proper/adequate enquiry, then, he himself sh....