TaxTMI 
TaxTMI 
2016 (5) TMI 213
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.... passed an assessment order running into half-page. The order read as under: "In this case, the assessee has filed his original return of income for A.Y. 2010-11 on 02/05/2011 declaring income of Rs. 1,58,010/- u/s 44AF of the Act. Thereafter, the Assessee has revised his return of income and e-filed on 29/03/2012 declaring income of Rs. 5,82,800/-. The return original return was processed U/s. 143(1) of IT Act. The return was selected for scrutiny under CASS and notice U/s. 143(2) of the Act issued on 01/08/2012, which was served upon the assessee. Thereafter, due to change in-incumbent, notice u/s. 142(1) of the Act was issued on 05/10/2012 along with questionnaire and served upon the assessee. In response to the notices issued 143(2) & 142(1) of the Act, Shri Laxman Kalwani & authorized representative of the assessee attended from time to time and furnished the details as called for the same is verified on test check basis. The assessee has income from retail sale of agriculture products. He has shown income from Salary of Rs. 75,000/- and other sources Rs. 35,650/- and total income of business of Rs. 5,82,800/-after calming deduction under chapter VI-A of Rs. 23,654/-. The....
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....was passed after scrutinizing the accounts and ld.Commissioner ought to have not taken any action under section 263 of the Income Tax Act. 6. The ld.DR, on the other hand, relied upon the order of the ld.Commissioner. 7. At this stage, before considering the multi-fold contentions of the ld. Representatives, we deem it pertinent to take note of the fundamental tests propounded in various judgments relevant for judging the action of the CIT taken u/s 263. The ITAT in the case of Mrs. Khatiza S. Oomerbhoy Vs. ITO, Mumbai, 101 TTJ 1095, analyzed in detail various authoritative pronouncements including the decision of Hon'ble Supreme Court in the case of Malabar Industries 243 ITR 83 and has propounded the following broader principle to judge the action of CIT taken under section 263. (i) The CIT must record satisfaction that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Both the conditions must be fulfilled. (ii) Sec. 263 cannot be invoked to correct each and every type of mistake or error committed by the AO and it was only when an order is erroneous that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect....
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....is about the exercise of power by the Commissioner of Income-tax under section 263 of the Income-tax Act. As noted above, the submission of learned counsel for the revenue was that while passing the assessment order, the Assessing Officer did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the Assessing Officer had not applied his mind on the issue. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between "lack of inquiry" and "inadequate inquiry". If there was any inquiry, even inadequate, that would not b....
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....nsel for the assessee, in the first show cause notice, ld.Commissioner has observed that the assessee has not filed tax audit report along with return, and therefore, the AO ought to have initiated penalty proceedings under section 271B of the Income Tax Act. According to the assessee, in the relevant assessment year, no audit report was required to be attached with the income-tax return. The assessee has got audit report well within the statutory time. It has disclosed the details in the return, and duly submitted the audit report in the assessment proceedings. In our opinion, this cannot be a ground to take action under section 263, because, the assessee has complied with his obligation to get its accounts audited well within time. He was not supposed to file the audit report. 11. The next issue raised by the ld.Commissioner is that on perusal of cash book and other details, it revealed that there was an account called "loan given account". The assessee has received cash and the AO has not enquired to this account nor initiated proceedings under section 271D for violation of section 269SS of the Act. We find that on these aspects, neither the AO has made any inquiry nor in the a....