TaxTMI 
TaxTMI 
2021 (9) TMI 619
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.....09.2012 declaring total income of Rs. 14,67,640/-. The assessee`s case was selected for scrutiny under CASS and the assessment under section 143(3) of the Act was framed on 26.02.2015, determining the total income of Rs. 15,65,860/-. 4.Later, the Learned Principal Commissioner of Income Tax, (In short "ld.PCIT"), has exercised his jurisdiction under section 263 of the Income tax Act, 1961.Therefore, a notice u/s 263 of the Act, dated 10.03.2017, was issued to the assessee, which is reproduced below: "To, Shri Rampratap S. Ghasoliya, 20-B, Aadarsh Nagar Society, Greed Road, Kaliawadi, Navsari-396445 Sub:- Notice u/s. 263 of the I.T. Act, 1961 in your case i.e. Shri Rampratap S. Ghasoliya, (PAN:- AAOPG5099F) for A.Y. 2012-13-reg. 2.In this case, the assessee filed his return of income on 12.09.2012 declaring total income of Rs. 14,67,640/-. The case was selected for scrutiny under CASS and the assessment u/s 143(3) was passed on 26.02.2015 determining the total income of Rs. 15,65,860/-. 3.The AO i.e. ITO, Ward-4, Navsari and the Range head i.e. Jt. CIT, Navsari Range, Navsari, vide....
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.... hearing in your case is being fixed on 17.03.2017 at 11.30 A.M. Please note that the required details should be submitted after numbering the documents enclosed and indexing the same in the forwarding/covering letter. 7.Please note that the required details should be submitted after numbering the documents enclosed and indexing the same in the forwarding/covering letter. You can attend the hearing either personally or through your duly authorized representative or can file written submissions on or before the stipulated date and time of hearing. [Satbir Singh] Pr. Commissioner of Income Tax, Valsad" 4. In response to the above show cause notice, the assessee has submitted its reply on 23.03.2017 before the ld PCIT( vide paper book page no.1). However, the learned PCIT did not consider assessee's reply and pass the order under section 263 of the Act. The ld PCIT observed that assessing officer has failed to make requisite inquiries about the valuation of property as per circle rate /stamp duty rate, in respect of the plot sold, that is, the applicability of the provisions of the section 50C, have not been examined by the assessing officer. The capital gains ari....
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....e findings of the ld PCIT and other materials brought on record. We note that ld PCIT, in his order under section 263 of the Act, has raised the following issues: (1).The AO has failed to make requisite inquiries about the valuation of property as per circle rate /stamp duty rate, in respect of the plot sold. The assessee is found to have declared sale consideration of Rs. 60,00,000/- as against the valuation of Rs. 1,69,26,000/- as per the stamp duty/circle rates. Therefore, the applicability of the provisions of the section 50C, which is prima facie attracted in this case, have not been examined by the assessing officer. (2). The assessee is found to have converted the said immovable property into stock-in-trade in F.Y. 2010-11 i.e. A.Y.2011-12. Therefore, the capital gains arising on conversion of the immovable property should have been brought to tax in the year of conversion as per the provision of section 45(2) of Income Tax Act, 1961. (3).The assessee is found to have shown contract amount of Rs. 60,00,000/- and has claimed expenses under various heads. Examination of records show that these are not contract receipts but sale consideration received....
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....and closing stock, which is evident from the order of the Assessing Officer, passed under section 143(3) of the Act, dated 26.02.2015, wherein the AO has examined the said issue as follows: "[2].In response to the said notice, Shri Daxesh Gandhi, Accountant, duly authorized, attended from time to time and furnished the details called for. The details furnished have been verified and placed on record. Books of accounts produced have been examined on test check basis. The case was discussed with him. [3]The assessee derives income from business of Contractor. [4]On going through the return of income filed for the year under consideration, it is noticed that the assessee has shown opening stock amounting to Rs. 56,80,077/- whereas it is seen from the return of income filed for the A.Y.2011-12, the assessee has shown closing stock of Rs. 56,60,713/-. Thus, difference comes of Rs. 19,364/-. On being asked the A.R. of the assessee, vide order sheet entry, dated 18.02.2015 regarding difference of Rs. 19,364/-, the A.R. of the assessee has submitted penalty order No.CH/NA/Sharatbhang/case no. 1/2005 dated 15.06.2010 passed by the Collector, Navsari. The aforesaid....
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....be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer's order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii)Assessing Officer's order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the AO has not investigated the issue before him; then the order passed by the Assessing Officer can be termed as erroneous order. Coming next to the second limb, which is required to be examined as to whether the actions of the AO can be termed as prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue. The Hon'ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. "prejudicial to the interest of the revenue'' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of Assessin....