TaxTMI 
TaxTMI 
2017 (11) TMI 797
X X X X Extracts X X X X
X X X X Extracts X X X X
....e appeared on behalf of Revenue. 2. The assessee has raised the following grounds of appeal:- "1. That the order u/s. 263, passed in pursuance to audit objection is unsustainable in eyes of law. 2. That the Ld CIT has failed to appreciate that AO had applied his mid to the details of purchase while passing the assessment order. 3. That the Ld CIT has erred in coming to the conclusion that there is undervaluation in closing stock when he has misinterpreted the method of ascertainment of cost as apparent from the ground. 4. That appellant deserves right to raise additional ground during hearing." 3. Solitary issue raised by assessee in this appeal is that Ld. CIT erred in holding the order of Assessing Officer passed u/s 143(3) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ulars Weight (in kg) shown in Form 3CD Value shown in the P&L account Rate (Rs/kg) 1 2 3 4 5 1 Opening stock 1,00,223.940 1,39,14,705 138.84 2 Purchase 5,47,640.570 16,32,03,915 298.01 3 Sale (export + local) of tea 5,49,088.100 16,43,91,181 299.39 4 Closing stock 98,776.410 2,27,18,574 230.00 On the basis of above Ld. Pr.CIT observed that the closing stock has been valued at Rs.230 per kg for its quantity lying at the yearend i.e. 98776.410 kg. Thus, the total value of closing stock was shown at Rs.2,27,18,574 (98776.510 x 230/-) whereas the purchase during the year was shown at Rs.298.10 per kg. The Ld. Pr CIT further observed that in case assessee is following FIFO method then the closing stock has been un....
X X X X Extracts X X X X
X X X X Extracts X X X X
....adjusted against the VAT liability incurred by the assessee on the sale of tea. Therefore there is no difference arising in the amount of purchase shown by the assessee in its profit and loss account vis-a-vis details of purchase submitted during the year. However, Ld. Pr CIT disregarded the contention of assessee by observing as under:- 1) With regard to purchase there is no material available on record suggesting that the difference is arising on account of input and out-put VAT liability. 2) With regard to valuation of closing stock there is no material available on record to specify qualitative and quantitative stock-in-statement for the determination of closing stock valuation. In view of the above Ld. Pr. CIT held that the orde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e with the relevant provisions of law." Aggrieved by this, the assessee has come up in appeal before us. 6. Ld. AR for the assessee before us submitted that the proceedings u/s. 263 of the Act was initiated on the basis of audit objection and there was no application of mind of Ld. Pr CIT in ariving at the conclusion that the order of AO is erroneous in so far as prejudicial to the interest of Revenue. Ld. AR in support of assessee's claim relied on the judgment of Hon'ble jurisdictional High Court in the case of Jeewanlal limited vs. ACIT (1929) reported in 108 ITR 407 (Cal) wherein the Hon'ble court has held:- "Further, in instant case, the Commissioner purported to exercise the power at the suggestion of the audit department....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd also by the Assessing Officer about any matter concerning erroneous order having been passed. 6.1 The ld. DR also submitted that as a matter of fact, any objection raised by audit wing of Income Tax Department, first of all, the Assessing Officer response to the audit query. If the audit query found maintainable then the matter is referred to the Ld. CIT u/s 263 of the Act for considerable action. Thereafter Ld. CIT calls for records and examined the facts by applying his mind. Once he considers that the order passed by the AO is erroneous in so far as prejudicial to the interest of Revenue only then he invokes the provision of u/s 263 of the Act. Thus, any action taken by Ld. CIT u/s. 263 of the Act merely on audit objection and withou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gh Court in the case of Sohana woollen Mills (supra) has given a categorical finding that no rigid rule could be laid down about the situation when the jurisdiction can be exercised. Whether satisfaction of the Commissioner for exercising jurisdiction is called for or not, has to be decided having regard to a given fact & situation. Similarly, we find that the principles laid down by Hon'ble High Court of Calcutta in the case of Jeewanlal Limited (Supra) are not applicable to the instant case as the ld. CIT has exercised his jurisdiction after applying his mind and not merely on the basis of audit objection. However, at this juncture we find important to reproduce the provision of sec 263 of the Act which reads as under : "Revision o....