2015 (7) TMI 1365

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....erroneous and prejudicial to the interest of the revenue, without appreciating that the assessment order was passed after proper enquiry and due application of mind on the issue, therefore the revision order u/ s. 263 may be quashed 2. The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal." Assessee-company, engaged in the business of running a hotel, filed its return of income on 27. 09.2011, declaring income of Rs. 97, 47, 540/-. The Assessing Officer(AO)completed the assessment u/s.143(3)of the Act on 28.03.2014 determining the income of the assessee at Rs. 1, 11, 91, 100/-. 2.Effective ground of appeal is about revoking the provisions of section 263 of the Act by the CIT. As per the ....

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....hearing is fixed on 19.09.2014. at 3PM....." In response to the 263 notice , the assessee vide its reply dated 19.12.2014 stated that for carrying out the repairs and maintenance of to the hotel property it would purchase various items, that such purchase was crucial for running the business, that during the assessment proceedings the AO had informed the assessee that as per the information received from the Sales tax department certain parties had not paid VAT to the state government, that doubt was expressed about certain purchases made by the assessee by the AO, that the AO had issued a detailed show cause notice to the assessee on 28.02. 2014 in that regard, that the AO had asked to it as to why entire alleged non genuine purchase sh....

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....ry order passed by him would be prejudicial to the interest of Revenue, that in the case of assessee purchase related to consumables, that the AO ought to have conducted necessary enquiry regarding the existence of suppliers etc, that the assessee had not produced the suppliers before the AO, that the assessee had agreed to addition of gross profit on such purchases.Citing the case of Indian Woolen Carpet Factory(125Taxman763), he held that the order passed by the AO was erroneous and prejudicial to the interest of revenue. Setting aside the order, the directed the AO to pass a fresh order after hearing the assessee. 3.Before us, the Authorised Representative(AR)argued that during the original assessment proceedings all the purchases wer....

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....fferent manner then it cannot held that the order of the AO was erroneous or prejudicial to the interest of Revenue.Here, we would like to reproduce relevant portion of the decision of Jyoti Foundation(357 ITR 388)of Hon'ble Delhi High Court which deals with the scope of the revisionary powers of the CIT and same reads as under: "Revisionary power u/s. 263 of the Act is conferred by the Act on the CIT /Director of Income-tax when an order passed by the lower authority is erroneous and prejudicial to the interests of the Revenue. Orders which are passed without inquiry or investigation are treated as erroneous and prejudicial to the interests of the Revenue, but orders which are passed after inquiry/investigation on the question/iss....