TaxTMI 
TaxTMI 
2015 (4) TMI 865
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....aid books of account maintained by the assessee was not verifiable. He therefore, rejected the books of account of the assessee and estimated the income of the assessee from the business of transport contracts by applying a net profit rate of 10% to the gross receipts of Rs. 56,75,546 subject to the deductions towards remuneration to partners and interest on partners' capital. Accordingly, the total income of the assessee was determined by the Assessing Officer at Rs. 3,14,340 in the assessment completed under S.143(3) vide order dated 31.5.2011. 3. The record of the assessment subsequently came to be examined by the learned Commissioner of Income-tax and on such examination, he found that huge amounts were paid by the assessee to various persons other than its partners from the bank account maintained with Andhra Bank, Manuguru, which attracted the provisions of S.40A(3) of the Act. He also found that huge withdrawals were made by the partners of the assessee firm from the said account. According to him, the Assessing Officer however, had not call for and examine the relevant details in respect of these transactions reflected in the bank account of the assessee with Andhra Bank....
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.... it is left that the drawings are inadequate, it is earnestly prayed that taking note of the assessee income, the element of telescoping for the notional difference, if any, may kindly be considered. Huge payments exists in the case of Sri Pichai. K.Srinivas Rao,. Vidvasagar, Sudhakar, Naveen etG .. ' It is pointed out by the Ld. CIT during the course of hearing held on 23rd that there existed huge payments made by the assessee firm to the above persons and directed to explain the nature of the payments. It is submitted that all of them happened to be lorry owners and they individually got one or two vehicles. The payments referred to by the Ld.CIT represent freight charges paid and it is submitted that as a measure of convenience, the assessee used to identify the freights payable to the lorry owners on each occasion and he records the details of payments in the bill book. To analyze the freights payable to each owner are recorded in the above book. But, however, the cheques are given to a particular owner who approached him covering the amounts payable to him and also tu the other owners who as an association with him, for disbursement among themselves. In this pattern ....
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....is appeal before the Tribunal. 6. I have heard the arguments of both the sides and also perused the relevant material on record. As submitted by the learned counsel for the assessee, similar issue had arisen before the Division Bench of this Tribunal in the case of Shanti Transport V/s. ITO (ITA No.995/Hyd.2014 for assessment year 2009-10), wherein the order of the Assessing Officer passed under S.143(3) rejecting the books of account of the assessee and estimating the income by applying higher rate net profit rate was set aside by the Commissioner of Income-tax by exercising the powers conferred under S.263 for the alleged failure on the part of the Assessing Officer to make proper and sufficient enquiries on certain issues. The Tribunal, vide its order dated 10.10.2014, however, quashed the order passed by the learned Commissioner under S.263 and restored the assessment order passed by the Assessing Officer under S.143(3). The relevant observations recorded by the Tribunal in this context, as contained in paragraph 6 are reproduced hereunder- "6. We have considered the submissions of the parties and perused the orders of revenue authorities as well as other materials on rec....
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....t according to his own wisdom. In the facts of a given case, after considering the materials available before him, when the AO has come to a conclusion that books of account of assessee are not verifiable, hence, profit has to be estimated after rejecting the books of account. It is not understood how such view of AO can be held to be erroneous. It is well settled that CIT can exercise power u/s 263 of the Act on satisfaction of two conditions cumulatively, which are, the order passed must be erroneous and it must be prejudicial to the interests of revenue. Therefore, before revising the order u/s 263, CIT must establish that assessment order passed is not only erroneous, but, has also caused prejudice to the interests of revenue. In the present case, on perusal of revision order, it appears that CIT himself M/s Shanti Transport, Kotha gude m 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....