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2021 (3) TMI 866
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....at "the ld. AO passed the assessment order with non-application of mind and without proper inquiry" which is wholly unjustified, bad in law and deserve to be quashed. 1.2. That the ld. Principal Commissioner of Income-tax failed to appreciate that the ld. Assessing Officer had passed the assessment order after appreciating all supporting documents and evidences which was just and proper therefore the assessment order passed by the ld. Assessing Officer is neither erroneous nor is prejudicial to the interest of the Revenue. 1.3. That the ld. Principal Commissioner of Income-tax grossly erred in ignoring the detailed submissions made by the assessee in response to notice u/s. 263 and in passing the impugned order on assumptions, presumptions, conjectures and surmises which is bad in law. 1.4. That the ld. Principal Commissioner of Income-tax grossly erred in holding that the ld. Assessing Officer has failed to consider applicability of section 115BBE read with section 69A of the Act on Rs. 1,77,95,859/- reflecting turnover surrendered before the Central Excise Authorities and in granting benefit of brought forward of losses/depreciation. 2. That on....
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....y well shown in computation of income placed before learned Assessing Officer by narration "income estimated on turnover surrendered in excise survey being GP of 3.11% on Rs. 1,77,95,858/- = 5,53,095/-. As far as assessee is concerned, it has disclosed and incorporated the undisclosed income in the income tax return filed by it. The ld. Assessing Officer has gone through the income-tax return and computation of income in detail and has cross-checked the same to his satisfaction. He was satisfied that the gross-profit rate on good sold without invoices is duly disclosed in the Income-tax Return of the assessee. During the course of hearing, the ld. Assessing Officer had also verified the books of accounts, etc. The ld. Assessing Officer passed the assessment order dated 06.12.2017 u/s 143(3) after complete verification and detailed scrutiny. The ld. Assessing Officer has made certain disallowances amounting to Rs. 1,30,840/- against which no appeal has been preferred by the assessee and the ld. Assessing Officer allowed carried forward unabsorbed depreciation of Rs. 1,92,40,180/-. 4. That thereafter the ld. PCIT issued a notice dated 29.11.2018 u/s. 263 of the Act wherein i....
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....loss were not to be given to the assessee appellant. In support, the reliance was placed on the Delhi Bench in the case of Sanjeev Singh v. PCIT (ITA No. 1781/Del/2016 dated 24.04.2019). 6. It was further submitted that on perusal of provisions of section 69A, it is crystal clear that the same can be invoked in case of any (1) money, (2) bullion, (3) jewellery or (4) other valuable article. However, in the instant case the Central Excise Department had neither found any (1) money, (2) bullion, (3) jewellery or (4) other valuable article, it only found kachi parchies having reference to undisclosed sales. No physical goods were found by the officials of the Central Excise department. Hence, the invocation of section 69A is not appropriate in the instant backdrop and facts. On the contrary the assessee has correctly offered the Gross Profit earned on out of books sale as its income. It is apparent that the ld PCIT has assumed the undisclosed sales as undisclosed stock found by the Central excise authorities whereas it is not so. Only loose slips of unaccounted sale of Rs. 1,77,95,856/- was found by the Central Excise Authorities and unaccounted stock of Rs. 1,77,95,856/- was not f....
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....elevant facts of the case as stated in para 2 of the order which reads as under:- "2. As per certain information received from the Commissioner of Central Excise Commissioner (Anti Evasion Branch), Jaipur, it is seen that during search of the factory premises of M/s Alokik Steel Pvt, Ltd on 16.01.2015, documents relating to clandestine removal of goods were recovered. Physical stock verification of the finished goods was also done in the premises of the company and shortage of 177.609 MT in finished goods i.e M.S. ingots was noticed. In his statement, Sh. Krishan Jindal, Director of the company, admitted that a quantity of 177.609 MT ingots valued at Rs. 53.10 lac were sold/cleared without payment of Central Excise Duty and without raising any Central Excise Invoice. Shri Jindal after calculating the Central Excise Duty on 177.609 MT 'MS Ingots' removed clandestinely, paid an amount of Rs. 6,56,375/- towards central excise duty. On examination of records including kanta slip and Kaccha record, covered from the residence during the search dated 16.01.2015, it has been observed that on earlier occasions, the assessee had also removed clandestinely their manu....
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....78) 111 ITR 312, Gujrat * CIT vs. Assam Tea House (2012) 25 taxmann.com 93 (Punjab & Haryana) * Nagal Garment Industries Pvt. Ltd. vs. CIT (2020) 113 taxmann.com 4 (Madhya Pradesh) * Pr. CIT, Ludhiana vs. Venus Woolen Mills, Ludhiana (2019) 105 taxmann.com 287 (Punjab & Haryana) 12. We have heard the rival contentions and perused the material available on record. Firstly, we refer to the contention raised by the ld. AR that the findings of the ld. Pr.CIT have been given beyond the show cause notice and thus, no opportunity was provided to the assessee which is against the principles of natural justice. It has been further contended that the provisions of section 69A of the Act read with section 115BBE of the Act have been wrongly invoked by the ld Pr CIT as only loose slips of unaccounted sales and not any unaccounted stock was found by the excise authorities and secondly, the amendment to sub-section (2) to section 115BBE relating to set off of loss is effective from A.Y 2017-18 and not applicable to the impugned assessment year. It was accordingly submitted that where the provisions of section 69A of the Act read with section 115BBE of the Act are no....
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.... While doing so it must also be borne in mind that the legislature had not vested in the Revenue any specific power to question an order of assessment by means of an appeal. 10. Reverting to the specific provisions of Section 263 of the Act what has to be seen is that a satisfaction that an order passed by the Authority under the Act is erroneous and prejudicial to the interest of the Revenue is the basic pre-condition for exercise of jurisdiction under Section 263 of the Act. Both are twin conditions that have to be conjointly present. Once such satisfaction is reached, jurisdiction to exercise the power would be available subject to observance of the principles of natural justice which is implicit in the requirement cast by the Section to give the assessee an opportunity of being heard. It is in the context of the above position that this Court has repeatedly held that unlike the power of reopening an assessment under Section 147 of the Act, the power of revision under Section 263 is not contingent on the giving of a notice to show cause. In fact, Section 263 has been understood not to require any specific show cause notice to be served on the assessee. Rather, what ....
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....uired what that notice should have contained? Our answer to that question has already been made clear. In our judgment no notice was required to be issued by the Commissioner before assuming jurisdiction to proceed under Section 33-B. Therefore the question what that notice should contain does not arise for consideration. It is not necessary nor proper for us in this case to consider as to the nature of the enquiry to be held under Section 33-B. Therefore, we refrain from spelling out what principles of natural justice should be observed in an enquiry under Section 33-B. This Court in Gita Devi Aggarwal v. CIT, West Bengal ruled that Section 33-B does not in express terms require a notice to be served on the assessee as in the case of Section 34. Section 33-B merely requires that an opportunity of being heard should be given to the assessee and the stringent requirement of service of notice under Section 34 cannot, therefore, be applied to a proceeding under Section 33-B." (Page 827-828). [Note: Section 33-B and Section 34 of the Income Tax Act, 1922 corresponds to Section 263 and Section 147 of the Income Tax Act, 1961] 11. It may be that in a given case....
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....gned order relates to undisclosed investment in stock which is sought to be brought to tax u/s 69A r/w section 115BBE of the Act. The question that arises for consideration is whether such findings are borne out of material availble on records thus rendering the order passed by the AO as erroneous and whether before arriving at such a finding, an opportunity of being heard was provided to the assessee during the course of revisionary proceedings. 16. In this regard, in order to appreciate the relevant material/information available on record, we refer to the show cause notice dated 29.11.2018 issued by the ld Pr. CIT and find that the show cause notice has been issued in the context of certain information received from Central Excise Department, Jaipur pursuant to search of the assessee's premises and on the basis of the information so received, it has been stated that the entire sales of 740.549 MT of MS Ingots is unaccounted sales/turnover and was required to be examined and added to the total income by the AO. Therefore, the relevant material on record which is discernable from the show-cause was in relation to unaccounted sales/turnover of 740.549 MT of MS Ingots amounting t....
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....sclosed investment in stock which has been found during the course of search. Further, we find that during the course of revisionary proceedings, no further show-cause or query has been raised by the ld Pr CIT or for that matter, any discussions/deliberations with the assessee as to the applicability of provisions of section 69A and section 115BBE of the Act and therefore, the directions at Para 7 & 8 of the impugned order are clearly without providing an opportunity of being heard to the assessee and where such findings are recorded by the ld Pr CIT, it renders such findings legally unsustainable due to violation of principal of natural justice. 18. In light of aforesaid discussions, we are of the considered view that the findings and directions of the ld Pr CIT contained at Para 7 & 8 of her order are not borne out of material available on record and secondly, the such findings have been recorded without providing any opportunity of being heard to the assessee, therefore, such findings are hereby set-aside and to that extent, the order of the Pr CIT stands modified. 19. Now coming back to the other findings of ld Pr CIT, at Para 6 of the impugned order, she has stated that ....
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....95,859/- which can be brought to tax and to this extent, we accept the contention so advanced by the ld AR. In this regard, we draw support from the decision of the Hon'ble Gujarat High Court in case of DCIT vs Panna Corporation (supra) wherein it was held as under: "9. Having heard the learned counsel for the parties and having perused the orders under consideration, what emerges is that the findings arrived at by the Assessing Officer that the respondent - partnership firm received on money of Rs. 62 lakhs during the block period for sale of the flats, is not seriously in dispute. The Tribunal confirmed such findings arrived at by the Assessing Officer. However, the Tribunal did not permit the revenue to collect the tax on the entire receipt believing the it was only the income embedded in such receipt which can be subjected to tax. 10. As pointed out by the counsel for the respondent, this Court in the case of Commissioner of Income Tax v. President Industries, reported in (2002) 258 ITR 654 had taken a similar view. In the said case, during the course of survey conducted on the premises of the assessee, from the excise records found, an inference was ....
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....y the gross profit on the said amount can be brought to tax does not call for any interference. 12. Counsel also relied on the decision in the case of Commissioner of Income Tax v. Samir Synthetics Mill, reported in (2010) 326 ITR 410, wherein the High Court confirmed the view of the Tribunal accepting only the profit of unaccounted sale for the purpose of collecting tax. 13. Our attention was also drawn to the decision of the M. P. High Court in the case of Man Mohan Sadani v. Commissioner of Income Tax, reported in (2008) 304 ITR 52, wherein referring to and relying upon the decision of this Court in the case of Commissioner of Income Tax v. President Industries (supra) and other decisions of other High Courts, the M. P. High Court had also taken a similar view. It was observed that entire sale proceeds of the assessee should not be added in his income and that the Tribunal has erred in doing so. 14. We may recall that the Tribunal, in the impugned judgement, relied on its previous judgement in case of Kishor Mohanlal Telwala. The said judgement of the Tribunal was apparently carried in appeal by the revenue. The High Court by a speaking order dated 24.....
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.... the statement made without considering the surrounding circumstances and evidence to uphold the addition. In the circumstances, the CIT(A) held that in the facts of the case, that only 4% being the profit earned on sales of Rs. 35 lakhs can be added to net profit of the applicant. Therefore, only Rs. 1.40 lakhs was the profit on unaccounted sales which could be added. Thus, the balance addition of Rs. 33.63 lakhs was deleted. 6. On further Appeal, the Tribunal by the impugned order held that the entire sales which are unaccounted/cannot be undisclosed income of the assessee, particularly as the purchase had been accounted for. It was held that only net profit which would arise on such unaccounted sales can rightly be taken as the amount which could be added to the Respondent-Assessee's income for the purpose of tax. 7. The grievance of the Revenue is that Section 69C of the Act is to be invoked and entire amount of undisclosed sales has to be brought to tax. We are unable to appreciate how Section 69C of the Act which speaks of unexplained expenditure is all at relevant for this appeal. We are not concerned with any unexplained expenditure in this ca....