TaxTMI 
TaxTMI 
TaxTMI 
2019 (2) TMI 292
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....ts and in the circumstances of the case, Hon'ble ITAT Chandigarh is justified in quashing the revisionary order under Section 263 made by the CIT-3, Ludhiana without appreciating the fact that all the comparison of figures made by the assessee is very much based on the figure taken from books of account duly admitted defective by the assessee himself during survey operation?" 2. A few facts necessary for adjudication of the instant appeal as narrated therein may be noticed. The assessee is engaged in the business of manufacturing/trading of yarn and fiber waste etc. A survey under Section 133A of the Act was conducted at the business premises of the assessee on 28.2.2008 and during the survey, a sum of Rs. 2,15,00,000/- was surrendered as an additional income. The assessee filed its return of income for the assessment year 2008-09 on 27.9.2008 declaring an income of Rs. 1,35,36,300/-. The case was selected for scrutiny and notice was issued to the assessee. The assessment was completed under Section 143(3) of the Act by the Assessing Officer vide order dated 8.12.2010 (Annexure-I) by making an addition of Rs. 15,752/- under Section 40(a)(ia) of the Act. Subsequently, the Commissi....
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....s ; (b) and it should be prejudicial to the interests of the revenue. In other words, two circumstances must exist to enable the Commissioner to exercise power of revision under Section 263, viz., (a) the order is erroneous; (b) by virtue of the order being erroneous, prejudice has been caused to the interests of the revenue. Wherever one of them is absent - if the order of the assessing officer is erroneous but is not prejudicial to the interests of the revenue or if it is not erroneous but is prejudicial to the interests of the revenue - assumption of revisional jurisdiction under Section 263 of the Act would not be proper. 6. The object of the enactment of the aforesaid provision is to correct an order which is prejudicial to the interests of the revenue. The purpose behind incorporating this provision in the statute is to ensure that interests of the revenue is safeguarded by an erroneous order passed by the Assessing Officer as the Department has no right to file an appeal against the order of the Assessing Officer. It is not the power as a substitute for the power of the Assessing Officer to make assessment whereas the revisional power under Section 263 of the Act is certa....
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....0/- during survey under Section 133A of the Act carried out on 28.2.2008 where huge amount of Rs. 1,31,00,000/- was surrendered on account of undisclosed investment in construction of building in 424 IA-Area, Ludhiana and Rs. 70,00,000/- on account of unexplained investment in stock. From the narration of facts noticed hereinabove, it is clear that the assessee has attempted to off set the surrender made by him by claiming loss figure in the business otherwise the taxable income could not have been Rs. 1,35,52,050/- against a surrender of Rs. 2,15,00,000/- made by it. The Tribunal has also made certain observations in that behalf but proceeded to cancel the revisional order passed by CIT under Section 263 of the Act. The relevant observations read thus:- "26. Before parting, we would like to observe that Assessing Officer may have called for certain details which have been filed but no discussion at all has been made in the assessment order and in our opinion the Assessing Officer in general should be more cautious and vigilant and discuss the various aspects of the case at least briefly in the body of the assessment order. xxxxxx" 10. The CIT vide order passed under Section 26....
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....t the order of the Assessing Officer was erroneous and prejudicial to the internets of the revenue, the CIT is empowered to pass an order as the circumstances of the case may warrant. He may pass an order enhancing the assessment or he may modify the assessment. He is also empowered to cancel the assessment and direct a fresh assessment. The CIT is fully competent to adopt any one of the three causes indicated by the said provision. 14. The CIT while coming to the conclusion that declared income is to be enhanced by Rs. 1,83,80,208/- had dealt with the matter in detail before so concluding. It would be expedient to reproduce the findings of the CIT which are quoted below:- "5. I have carefully considered the submission of the assessee. The Assessee was specifically asked as to why the books of account be not rejected as the books of account are not reliable in view of the surrender made by the assessee on various heads. The Assessee did not give any specific reply and simply stated that the AO did not point out any specific defects in the books of account. What greater proof is required than the own admission of the assessee that there are discrepancies in the books of account a....
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....ding of Venus Woollen Mills at 424, Industrial Area-A, Ludhiana during the financial year 2007-08 over and above the amount disclosed in the regular books of account. This amount has been spent out of the undisclosed income of the firm which I am offering for tax subject to no penalty under Section 271(1)(c). Q.4. Do you wish to offer any additional income on anything other than the above? Ans. I wish to declare a sum of Rs. 10 lacs over the above discrepancies to cover any possible mistake/omission/discrepancy in the books of account for the financial year 2007-08. Thus, in total a sum of Rs. 2,15,00,000/- (Rs.Two crores and fifteen lacs) is offered for tax over and above the normal income as per account for the financial year 2007-08. 8. The above statement itself shows that the assessee's books of account cannot be relied upon in view of the details of discrepancies found during the course of survey and the assessee has also admitted such discrepancies. If excess stock/excess cash is found, it is inconceivable that such books of account are reliable. The assessee is unnecessarily putting an emphasis that the AO has verified all the records. Infact, the AO failed to appl....