AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (4) TMI 285
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....ober 2017. Further notice under section 142(1) was issued on 15th June 2017 calling for the details. The Learned Counsel for the Assessee appeared before Assessing Officer. The Assessing Officer discussed the matter with him. The Assessing Officer noted that as per the submissions of the assessee, the business of the assessee during relevant assessment year period was "Trading in meat and meat products". The Assessing Officer as per discussion with the Counsel for Assessee, accepted the return of income and passed the assessment order under section 143(3) dated 6th December 2017. 3.1. The Learned Pr. CIT noted that proposal was received under section 263 of the Income Tax Act from the Assessing Officer for review of the assessment. The Pr. CIT, on examination of the assessment order and assessment record found that the assessment order under section 143(3) passed by the Assessing Officer dated 6th December 2017, is erroneous in so far as it is prejudicial to the interests of revenue. He has issued show cause notice to the assessee as to why the assessment order may not be set aside. The assessee filed reply to the show cause notice. The Learned Pr. CIT, after considering the asses....
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....were necessary to examine the issue of "low net profit or loss" were not called, investigation was not made and mind was not applied by AO. No view was formed by AO on this issue. Failure on the part of the Assessing Officer to conduct necessary and required enquiries made the assessment order erroneous and prejudicial to the interest of revenue and Commissioner rightly exercised his revisionary power as held in case of CIT vs. Harsh I. Punjabi (2012) 345 ITR 451 (Del.). There was a clear case of substantial f all in net profit and it called for addition on that count and not making such addition has resulted in substantial loss of revenue. The fall in GP rate from 24.40% to 2.21% meant a f all in GP rate of 22.19% which comes to Rs. 44.38 Cr. on a turnover of Rs. 200 Cr. The fall in NP rate from 6.33% to 0.07% meant a fall in NP rate of 6.26% which comes to Rs. 12.52Cr. on a turnover of Rs. 200 Cr. Even if a due discount is given in such GP and NP rate owing to difference in turnover of 2 yrs, yet lot of explanation is required by assessee to avoid such addition which may range from Rs. 12.52 Cr. to Rs. 44.38 Cr. If due to an erroneous order of the AO the revenue is losing tax law....
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....). Learned Counsel for the Assessee referred to the Office Note of the Assessing Officer (PB-2, Page-1) in which the Assessing Officer has mentioned that assessment is framed strictly as per limited scrutiny. He has referred to PB 2, Page-6, 12, 75, which are replies filed before Assessing Officer and submitted that since Assessing Officer in the limited scrutiny assessment has completed assessment, after examining the details, therefore, Pr. CIT should not hold the assessment order to be erroneous in so far as prejudicial to the interests of revenue. 5. On the other hand, Learned Departmental Representative relied upon the impugned order of the Pr. CIT and submitted that the Assessing Officer did not make any inquiry on the items, on which, assessment was to be completed in limited scrutiny. The assessee did not produce books of account and no details were produced as required for scrutiny assessment. The Departmental Representative filed copy of the Order sheet of the Assessing Officer to show that Assessing Officer did not issue any specific notice on items to be examined and no books of account have been called/produced for verification of the Assessing Officer. She has submit....
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....made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. [Explanation-1] For the removal of doubts, it is hereby declared that, for the purposes of this subsection, (a) an order passed [on or before or after the 1st day of June, 1988] by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner [or Deputy Commissioner] or the Income- tax Officer on the basis of the directions issued by the [Joint] Commissioner under section 144A; (ii) an order made by the [Joint] Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the [Principal Chief Commissioner or] Chief Commissioner or [Principal Director General or] Director General or [Principal Commissioner or] Commissioner authorised by the Board in this behalf under section 120; (b)" record" [shall include and shall be deemed always to have included] all records relating to any proce....
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.... the interests of revenue. The Pr. CIT may call for and examine the record of any proceedings under this Act and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry as deemed necessary pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment or cancelling the assessment and directing fresh assessment. Explanation-2 to Section 263 of the Income-Tax Act, 1961 has been inserted in the Statute by Finance Act, 2015 with effect from 1st June, 2015, which is applicable to the assessment year under appeal, which provides that for the purpose of this Section, the order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Pr. CIT, the order is passed without making inquiries or verification, which should have been made. Thus, the Pr. CIT has to be satisfied of two conditions namely (i) the order of the Assessing Officer so....
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....d no further details were called for. The Learned Pr. CIT also noted that during the scrutiny proceedings, the Assessing Officer did not notice that both opening and closing stock were shown at NIL, which is impossible in manufacturing processing unit. The Learned Counsel for the Assessee referred to replies filed by the assessee at the assessment stage, copies of which, are filed at PB-2 at Pages 6, 12, 75, which do not show any reply filed by assessee with regard to fall in gross profit/net profit or details submitted on expenses as is noted in the impugned order. Learned Counsel for the Assessee, during the course of hearing of the appeal, could not demonstrate if assessee produced any books of account or details required on this issue before Assessing Officer. The findings of fact recorded by the Learned Pr. CIT have not been rebutted by the Learned Counsel for the Assessee through any evidence or material on record. The Order Sheet of the Assessing Officer clearly supports the finding of Pr. CIT that Assessing Officer did not enquire into any of the matter in issue at assessment stage. It would, therefore, clearly show that Assessing Officer passed the assessment order, withou....
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....e interests of the Revenue and how an authority exercising powers under section 263 had to proceed in the matter. Ultimately, following the decision of the Supreme Court the Tribunal confirmed the opinion of the Commissioner that there was no application of mind while considering the assessment under section 143(3), and that therefore, it was not only erroneous but also prejudicial to the interests of the Revenue. Opining that the procedure adopted definitely would have implication on the tax computation which ultimately caused prejudice to the Revenue, the Tribunal confirmed the orders of the Commissioner. Therefore, the fresh consideration of the matter by the assessing authority in the light of the observations of the Commissioner was required." 6.4. The decisions relied upon by the Learned Departmental Representative also supports the finding of fact of the Pr. CIT that Assessing Officer has completed the assessment without making any enquiry or verification of facts, which was required at the assessment stage. We, therefore, do not find any infirmity in the order of the Pr. CIT in invoking the jurisdiction under section 263 of the Income Tax Act, 1961. 6.5. The Learned Cou....