TaxTMI 
TaxTMI 
2017 (9) TMI 1941
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....ing the provisions of sec.263 is improper. It further be held that the case of the appellant is not covered by the provisions of sec.263 of the Act on facts of the case. It be held that order under section 263 passed by Commissioner of Income Tax is merely due to change of opinion in the manner of completion of assessment proceeding and be held unwarranted, unjustified, contrary to the provisions of law and facts prevailing in the case. It further be held that order finalized by the AO u/s. 143(3) read with section 147 is in accordance with the provisions of law and facts prevailing in the case. The order passed by the Commissioner of Income tax, u/s. 263 be held as not tenable in law and be cancelled. The appellant be granted just and proper relief in this respect. 2. The appellant prays that the appeal be allowed condoning the delay in filing the appeal. The appellant be granted just and proper relief in this respect. 4. All the appeals filed by the assessee were after delay of 83 days. The assessee has filed an affidavit explaining the reasons for delay in filing the present appeals late before the Tribunal. The assessee contends that the appeal is against the order of rev....
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....pted 15% net profit on disclosed as well as undisclosed sales and assessed accordingly. The Commissioner was of the view that where the assessee had not furnished the details of expenses with supporting evidence pertaining to undisclosed sales, the action of Assessing Officer in rejecting the books of account under section 145(3) of the Act and then adopting estimation of net profit was not in conformity with the evidence found during the Survey. She was of the view that profit estimated on the undisclosed sales was not justified in the absence of any cogent evidence thereon. She was of the view that the Assessing Officer should have allowed those expenses which were substantiated by the assessee with proper and cogent evidence, pertaining to those undisclosed sales. Accordingly, she considered the assessment order to be prima facie erroneous in so far as it was prejudicial to the interest of Revenue and show caused the assessee as to why the same should not be set aside under section 263 of the Act. The plea of the assessee before the Commissioner was that the facts noted by the Commissioner in the notice issued under section 263 of the Act had already been noted in the notic....
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....es which were substantiated by the assessee with proper and cogent evidence pertaining to those undisclosed sales, were to be allowed. She further held that the Assessing Officer should have added all those undisclosed sales strictly to the income of assessee disclosed in the return of income. She then held that the assessment order passed by the Assessing Officer was both erroneous and prejudicial to the interest of revenue and further observed that the issue needed fresh examination at the end of Assessing Officer and hence, the matter was set aside to the file of Assessing Officer to re-examine the issue as discussed in the order. Vide para 6, she further holds that the assessee be given an opportunity to adduce evidence for his claim that the income offered was proper and the claim of deduction / expenditure was allowable to him in view of the prevailing position of law. She placed reliance on the ratio laid down by the Hon'ble Supreme Court in Rampyari Devi Saroagi Vs. CIT (1969) 67 ITR 84 (SC), wherein the apex court held that since the assessee is getting an opportunity of being heard, no prejudice is caused to the assessee if the order is set aside. The Assessing O....
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....e business and the profits from FAO business. He further made reference to the observations of the Commissioner in the order passed under section 263 of the Act for assessment years 2005-06 to 2008-09. He then, pointed out that admittedly, the bank accounts were undisclosed bank accounts, therefore, there was no means to get total details of expenses. He further stated that the Assessing Officer in such position had estimated the income after rejecting the books of account. He stressed that where there was application of mind by the Assessing Officer to compute the income of assessee, there was no merit in the order of Commissioner. He further referred to the reply filed before the Commissioner and the reliance on various case laws with emphasis in the case of CIT Vs. Max India Ltd. (2008) 166 Taxman 188 (SC) and pointed out that the Commissioner has failed to consider the ratios laid down in the aforesaid decisions. For assessment year 2009-10, the learned Authorized Representative for the assessee pointed out that there were no undisclosed receipts but the assessee was shareholder of 50% of shares of company. He further stated that Rs. 93 lakhs was offered as income in respo....
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....e bank account and the copy of entire bank account was available with the Assessing Officer, which was considered by him, assessment order was passed. The Commissioner was on the other hand, only tells the Assessing Officer to make assessment de novo as the same is not correct. 12. We have heard the rival contentions and perused the record. The issue which arises in the bunch of appeals is against exercise of powers of provision by the Commissioner under section 263 of the Act. Under the said section, the Commissioner is empowered to exercise his jurisdiction where the assessment order passed by the Assessing Officer is erroneous and prejudicial to the interest of revenue. Both the conditions laid down in section 263 of the Act should be present for the Commissioner to exercise his revisionary powers. In the absence of either of limbs being not satisfied, the Commissioner is not empowered to exercise such revisionary powers. The Hon'ble Supreme Court in Malabar Industrial Co. Ltd. Vs. CIT (2000) 109 Taxman 66 (SC) had held the proposition that if the order of Income Tax Officer was erroneous but was not prejudicial to the revenue or if it was not erroneous but was prejudicia....
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.... accordance with law makes certain assessments, the same could not be branded as erroneous by the Commissioner simply because according to him the order should have been written more elaborately. The Hon'ble High Court held this section does not visualize the case of substitution of judgment of the Commissioner for that of the ITO to pass the order, unless the decision is held to be erroneous. The Hon'ble High Court further held that where the Assessing Officer examines the accounts, makes enquiries, accounts, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some mistakes himself, then the Commissioner, on perusal of records, may be of the opinion that the estimate made by the officer concern was on lower side and left to the Commissioner, he would have estimated the income at a figure higher than the one determined by the Assessing Officer. The Hon'ble High Court in such circumstances held that but that would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. The Hon'ble High Court held It is because the ITO has exercised the quasi-ju....
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....issioner. The second argument was on the merits of issue raised vide show cause notice issued by the Commissioner. The assessee had made a claim of additional expenses in the re-revised return which was later withdrawn. The Assessing Officer had issued notice under section 69C of the Act but because of the withdrawal of claim by the assessee, the Assessing Officer thought that the matter need not be investigated any further. The view taken by the Assessing Officer was proposed by the assessee to be a possible view and where two views were possible on issue, exercise of revisionary power under section 263 of the Act was challenged by the assessee. The Hon'ble Supreme Court in CIT Vs. Amitabh Bachchan (supra) had upheld the ratio that where the view taken by the Assessing Officer was possible view, the same ought not to be interfered with by the Commissioner under section 263 of the Act merely on the ground that there was another possible view of the matter. It was further held by the apex court Permitting exercise of revisional power in a situation where two views are possible would really amount to conferring some kind of an appellate power in the revisional authority. This is ....
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....ovided on the expenditure incurred. Please provide the relevant evidences in support of your claim and other queries were also raised in the said notice. In reply, the assessee explained the additional income offered by it. It was pointed out that profit @ 20% was offered as income as per discussion with the Survey party. It was also explained that major labour expenses to the carpenters and other labourers were made in cash from time to time, sources of which could be traced to the undisclosed bank accounts, in addition, lot of vendors to whom the payments could not be made at that time were still outstanding. The assessee was engaged in turn key interior contracts and it was pointed out that by no stretch of imagination, the real profits could exceed 20%. The assessee gave bifurcation of undisclosed sales in the respective years and the profit worked out @ 20% on the same. The details of which read as under:- Summary of sales disclosed and undisclosed in respect of Kote Patil, Kumar Housing and others Assessment year Particulars AY 05-06 AY 06-07 AY 07-08 AY 08-09 AY 09-10 Total ....
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....ty to adduce evidence in this regard. The assessee in reply explained why no presumption should be adopted because of expenses being already booked on undisclosed income. It was explained that the assessee had undertaken contracts majorly with Kumar Housing Development Ltd. and Kolte Patil Developers Ltd. which were for a continuous period upto assessment year 2007-08. The assessee explained that it had invested major funds in future actions which were turned out to be loss making decisions and hence, cash crunch and the payments to sub-contractors were not made. The assessee also explained the nature of business undertaken by it and filed the details of party-wise sales which are placed at pages 43 to 45 of the Paper Book. The Assessing Officer thereafter, completed the assessment under section 143(3) r.w.s. 147 of the Act. The assessee referred to queries raised and also referred to the show cause notice issued as to why the disclosure of profit @ 20% should be accepted. The Assessing Officer noted in the original return of income, that the assessee had only declared gross profit of 4.8% and since the assessee could not prove and substantiate the contents with supports as against....
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....08-09 1054,36,941 343,56,500 1397,93,441 209,69,016 18,72,762 (93,44,038) 134,97,740 14,35,980 120,61,760 230,96,040 Total 2364,26,485 609,92,487 2974,18,972 446,12,846 18,93,188 (93,44,038) - 371,61,996 116,47,487 255,14,509 480,80,640 2009-10 405,82,577 - 405,82,577 60,87,387 96,29,242 (68,48,095) (327,29,254) 7,42,840 7,42,840 (238,60,72 0) 7,42,840 2770,09,062 609,92,487 3380,01,549 507,00,232 115,22,430 (161,92,133) (327,29,254) 379,04,836 123,90,327 16,53,788 488,23,480 20. In the present case, the Assessing Officer noted the factum of assessee not declaring his total turnover in the books of account. Consequent thereto, he was of the opinion that the books of account maintained by the assessee cannot be relied upon. The assessee though filed the details of expenses against undisclosed turnover, but the same were not verifiable, although there were debits from the bank accounts, in which undisclosed sales were credited. In the totality of the facts, he was of the view that it was fit case to invoke provisions of section ....