TaxTMI 
TaxTMI 
TaxTMI 
2014 (3) TMI 1113
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....ame to a conclusion that the order passed u/s 143(3) on 22.03.2012 is erroneous and prejudicial to the interest of Revenue, for the reasons given in his order. He concluded that - (a) the Assessing Officer has erred in estimating the net profit from construction business of the assessee at 8% and thereafter allowing depreciation thereon to the extent of Rs. 57,69,346 and whereas the Hyderabad Bench of the Tribunal has been consistently approving estimation of profit at the rate of 12.5% of the net receipt on the total turnover. (b) the Assessing Officer has erred in treating the interest income earned by the assessee from banks as business income and that the said interest income has to be assessed under the head `income from other sources'. 2.1 He, therefore, concluded as follows:- "Under these circumstances the order passed by the assessing officer is considered to be erroneous in so far as it is prejudicial to the interest of revenue for the purpose of section 263 of the I.T.Act, 1961. Hence, I set aside the assessment order made by the AO u/s 143(3) for redoing the assessment denovo with a direction to the AO to estimate the income at 12.5% as held by the ITAT `B' ....
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....me from business' and argued that this being a possible view approved by the High Court, the CIT could not have revised the order of the Assessing Officer u/s 143(3). He relied on the decisions of the Hon'ble Supreme Court in the case of CIT v. Gabrial India Ltd.[(1993) 203 ITR 108 (SC)] and Malabar Industrial Co. Ltd. v. CIT [(2000) 243 ITR 83 (SC)]. 5. The learned Departmental Representative, Sri K.V.N.Charya, CIT, on the other hand, opposed the contentions of the assessee and submitted that large real estate company, with crores of rupees turnover, was showing very low percentage of income. He submitted that the Assessing Officer without application of mind, has simply accepted the percentage of 8% and there from he allowed depreciation, which is contrary to the facts of the case. He submitted that the CIT has pointed out a number of errors in the order of the Assessing Officer which is not disputed by the assessee and hence the Assessment order is not only erroneous but prejudicial to the interest of the Revenue. On the issue of assessing interest income, he submitted that interest earned from surplus funds is assessable only under the head `income from other sources' and as t....
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....erusal of record, we find that the assessing officer has deliberated the issue in detail in his order. Before coming to the conclusion of estimating the profit at 2% of the gross receipt he made a detailed enquiry and analysis of the facts available before him. In these circumstances, it cannot be said that assessing officer has not applied his mind to the issue in dispute. 6. It is settled position of law that the CIT cannot sit over judgment of the assessing officer if he has adjudicated the issue in detail by passing a speaking order. It was a question of estimate of the net profit after rejecting the books of accounts and the CIT cannot trust upon his view upon the A.O. Moreover, in earlier years a disallowance of particular percentage was made to the expenditure claimed by the assessee which was later on reduced by the CIT(A). 7. Keeping in view of the totality of the case, we are of the considered opinion that assessing officer has adjudicated the issue in dispute in his order in detail by proper application of mind and as such his order cannot be held to be erroneous and prejudicial to the interest of the revenue. We therefore do not find any agreement with the findings ....
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....e as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law." The principle which has been laid down in Malabar Industrial Co. Ltd. [2000] 243 MR 83 (SC) has been followed and explained in a subsequent judgment of the Supreme Court in CIT v. Max India Ltd. [2007] 295 ITR 282." 7. There may not be any dispute that the revision proceeding shall not lie on the issues on which the Assessing Officer has taken a plausible view after examining and applying his mind on it. In the instant case, we notice that the assessee herein filed its return of income on estimated basis on the plea that it did not maintain books of account. This fact was brought to the notice of the assessing officer by way of note attached to the return of....