TaxTMI 
TaxTMI 
2015 (11) TMI 272
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....of the Act is wrong and bad in law as much as the ld. CIT did not give reasonable opportunity to the assessee to represent the case and completed the proceedings by passing impugned order. 3. BECAUSE it is a settled legal position that if the ground on which order is passed by the CIT is not specified in the notice u/s 263, such an order cannot be sustained. The impugned order is passed mainly for; (i) Non -Maintenance of stock register (ii) Low net profit (iii) Rejection of books of account u/s 145(3) (iv) Failure to prove sundry creditors and unsecured loans etc. These grounds were not even mentioned in the Show Cause Notice dated 12.2.2013. The Show Cause Notice dated 12.02.2013 issued by the ld. CIT did not raise the issue of additions on account of entire Sundry Creditors and Unsecured Loans nor was the assessee confronted with this aspect of the matter. If the assessee had been confronted with this issue, it could have explained the position before the ld. CIT that all the sundry creditors and Unsecured Loans are fully explainable. The ld. CIT cannot travel beyond the show cause notice. 4. BECAUSE the impugned order contains contradictory and incorrect facts which clear....
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....opy of accounts of creditors as required by the ld. AO and also produced books of accounts along with purchase invoices and vouchers. The ld. AO duly accepted the creditors after examining the records. The ld. CIT did not conduct any enquiry, did not even examine the purchase bills, accounts of the creditors (with opening balances). Therefore, on facts and in law and on ground taken and basis adopted, the addition of Rs. 5,90,39,946/- is totally wrong, unjustified and illegal. The same deserves to be deleted in too. 8. That the assessee craves leave to add, amend, alter or withdraw any of the ground of appeal on or before the date of hearing." 2. Brief facts of the case are that the assessee is the proprietor of M/s Arihant Prakashan. The business of the assessee is publication of books for competitive examinations. The assessee has been filing Income Tax Return regularly for last many years. For the assessment year 2008-09, the assessee filed original return u/s 139(1) declaring total income at Rs. 31,47,931/-. The case of the assessee was marked for scrutiny and the assessment was completed by the ld. ACIT, Circle (1) Meerut(the A.O), at total income of Rs. 32,62,590/- u....
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.... paid freight to M/s Delhi M.P. Road Carrier to Rs. 55,971/- but TDS has not been deducted on the same amount. Therefore, the same shall be disallowed u/s 40(a)(ia). 6. The ld. CIT ultimately concluded the grounds of addition in the following manner: S.No. Point/ground as per Notice u/s 263 dated 12.02.2012 Treatment/Conclusion in order u/s 263 dated 25.03.2013 a From the perusal of balance sheet and its annexure, it appears that during the year the assessee has introduced new capital of Rs. 20,99,000/- but source of capital (has not been verified) by the AO Vide para 5 of the Impugned order the ld. CIT added entire sum of loan liability of Rs. 48.23 lacs (including opening balances of Rs. 37.02 lac) appearing in the personal set without affording any opportunity to the assessee whatsoever b The assessee has filed personal balance sheet for the year ending 31.03.2008 in which capital shown Rs. 1,03,64,190/-. The assessee has also filed balance sheet for the year ending on 31.03.2007 in which capital was Rs. 76,56,659/-. Thus, capital has been increased to Rs. 27,07,531/- the source has not been verified by the AO. Vide para 6 of the impugned order the ....
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....e of the appellant as under: Income assessed as per assessment u/s 143(3) Dated 10.12.2010 Rs. 3262590/- Add: i) Addition on account of unsecured loans in Set of personal balance sheet Rs. 4823008/- ii Addition on account of unsecured loans Rs. 3593265/- iii) Addition on account of sundry creditors Rs. 59039946/- Total Income Rs. 70718809/- Or Rs. 70718810/- 9. The Ld.AO however made addition in respect of the loan liability amounting to Rs. 48.23 lacs, unsecured loan amounting to Rs. 38.23 lacs and sundry creditors amounting to Rs. 5.9crs, as per the order passed by the Ld. CIT u/s.263 of the Act. 10. Aggrieved by the order of the ld. CIT passed u/s 263, vide order dated 12/02/2012 the assessee is in appeal before us. The limited issue required to be adjudicated in this appeal is whether or not the Ld.CIT was justified in exercising revision powers u/s.263 of the Act, on the facts and circumstances of this case. The assessment year involved 2008-09. 11. Subsequent to the finalization of the assessment u/s.143(3), the Ld.CIT sought to revise the subject assessment. In the assessme....
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....Rs. 64,65,601.07/- to Rs. 98,00584.05/-. The same is verifiable from the audited balance sheet. It is very much evident that the assessee has introduced capital amounting to Rs. 20,99,000/- during the year under consideration. The Ld.DR confirms from the assessment records that the assessee had filed all the details and confirmations of the unsecured loans raised by the assessee in the personal balance sheet. Further it has been proved from the books of accounts that the assessee issued cheques to the account of M/s. Arihant Prakashan. However the Ld.CIT in the order passed u/s.263 records at para 5 that the details of the accounts were not filed at the time of assessment. It is further noticed that the ld. CIT has excerpted wrong figures from the submissions made by the assessee. 18. It is observed by us that the Ld.CIT did not provided opportunity of being heard to the assessee, which is paramount and mandatory requirement of the Act, prior to invoking the provision of Sec. 145(3). The CIT rejected books of accounts by pointing out that the business results could not be ascertained or verified in the absence stock register and other relevant records to support the same. The de....
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....p shown Rs. 1,03,64,190/- The assessee also filed B/S for the year ending on 31.03.07 in which cap was 76,56,659/- ii) Personal set Balance Sheets on page 58-59 which were filed both during assessment proceedings and proceedings u/s 263 2. Para 5 page 6 of Order * Details of unsecured loan year 2007-08. * This table is wrong * Most of the observations relate to documentary support etc. for opening balance in accounts of lenders. * Correct table on page 58 * In each of the account starting from Akash Jain wrong facts have been observed by the ld. CIT. * There is no Vipin Kr. Jain The CIT is wrong in recording the facts relating to lenders. 3. Para 8 page 9 of the order; * In case of Parul Jain, the loan of Rs. 4,66,275/- has been shown whose total income below taxable limit showing tax payable as nil * Page 81 GTI of Parul is 2.63 lac. * Total Income 1.64 lac Tax Paid 3498 * Source of loan of Rs. 5 lac is clearly bank overdraft 4. Para 8 page 9 of order: In case of Payal Jain the total sum advanced to the assessee is 947660/-.... Facts are totally wrong. See para 83-86 : Loan of Rs. 4 lac received from Payal. Rs. 3 lac was tak....
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....at the time of assessment. 21. In the present case, the following legal precedents are relevant: (a) Malabar Industrial Co. Ltd. Vs. CIT [2000] 243 ITR 83 (SC). It was, inter alia, laid down in this case that the prerequisite for the exercise of jurisdiction by the CIT under section 263 is that the order of the ITO is erroneous in so far as it is prejudicial to the interests of Revenue. The CIT has to be satisfied of twin conditions, namely : (a) The order of the AO sought to be revised is erroneous, and (b) It is prejudicial to the interests of the Revenue. If one of them is absent - if the order of the ITO 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) of the Act. It was further held that the provisions of section 263 cannot be invoked to correct each and every type of mistake or error committed by the AO. (b) CIT Vs Max India Ltd [2007] 295 ITR 282 (SC) : 213 CTR 266 (SC) It was held in this case that where two views are possible and the ITO has taken one view with which the CIT does not agree, it cannot be tr....
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....te deduction under section 80HHC(3) of the Act. The Commissioner held that while allowing deduction under section 80HHC of the Act, the Assessing Officer had not followed the provision of section 80HHC(3) of the Act, the deduction allowed was higher than what was allowable and recalculated the deduction under section 80HHC of the Act. On appeal, the Tribunal set aside the order passed by the Commissioner holding that the view taken by the Assessing Officer was a possible view and therefore, it could not be concluded that the order of the Assessing Officer was erroneous and was prejudicial to the interest of the Revenue and that the condition precedent for invoking jurisdiction under section 263 of the Act did not exist. On further appeal to the High Court, dismissing the appeal, held that it could not be said that the Assessing Officer had not applied his mind while granting deduction under section 80HHC of the Act as regards the net profit earned by the assessee pertaining to its export business. The Tribunal was right in holding that the view taken by the Assessing Officer was a possible view and that the condition precedent for invoking jurisdiction under secti....
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.... In this case, the Hon. High Court relied upon the judgment of the Supreme Court, in the case of Malabar Industrial Co. Ltd. Vs. CIT [2000] 243 ITR 83 (SC). (h) Ramakant Singh Vs CIT [2011] 8 ITR (Trib) 403 (Patna) It was held in this case that the Questionnaire issued by the AO covered all the points raised by the CIT in his showcause notice and in the order passed under section 263, and on all these points reply along with necessary details and evidence was furnished by the assessee before the AO, during the course of the assessment proceedings and hence it had to be accepted that the AO had applied his mind on all these issues. It was further held that even if such enquiry was inadequate in the opinion of the CIT, this did not give power to the CIT to pass order under section 263, merely because he had a different opinion on the matter. It was, accordingly, held that order of the CIT under section 263 was not sustainable. (i) Jamnadas T. Mehta Vs. ITO [2002] 257 ITR (AT) 90 (Pune) (TM). It was held in this case that the ambit of interference under section 263 is not to set aside merely unfavorable orders and bring to tax some more m....
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....se 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 order should have been written more elaborately. This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order, unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimates himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a higher figure....