2016 (7) TMI 968

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....Incometax Act passed by the Commissioner of Incometax on the ground that the said order u/s 263 is a change of opinion?" 2. As can be seen from the question, the issue arises in the background of power exercised by the Commissioner of revision under section 263 of the Act. For the assessment year 2006-2007, the respondent assessee who is engaged in the business of transportation was subjected to survey proceedings during which he had admitted an expenditure of Rs. 77.01 lacs out of undisclosed source. In the return filed by the assessee for the assessment year 2006-2007, the Assessing Officer though took note of such income, allowed set off against the business expenditure which order was taken in revision by the Commissioner. He was of ....

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....amount which should be taxed. By now it is well settled that even in case of unaccounted receipts of a businessman, it is only the profit element embedded in the business which can be taxed and not the entire amount. In other words, if the assessee can point out that even on unaccounted receipts, expenditure was also incurred for the purpose of business, it would be only the reasonable profit on such receipts which should be taxed. 4. In view of this, we do not see any error in the view of the Tribunal particularly considering the fact that the commissioner was exercising limited power of revision under section 263 of the Act. Decision in case of Fakir Mohmmed Haji Hasan(supra) came to be considered and explained in a later decision in c....

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....any income under any head not specified in section 14 of the Act. In the circumstances, there is no question of trying to read any conflict in the two judgments of this Court as submitted by the learned Counsel for the Revenue." In any case, we are convinced that the Tribunal was correct in holding that even if two views are possible, powers under section 263 of the Act could not and ought not to have been exercised. The Apex Court in the case of Malabar Industrial Co. Ltd. observed as under: "The phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of Assessing Officer cannot be treat....