TaxTMI 
TaxTMI 
2021 (10) TMI 349
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.... must be prejudicial to the interest of the Revenue. It was submitted that even if one condition is missing, the learned CIT does not get power to exercise its power U/s. 263 of the Act. It was submitted that in the case of H.H. Maharaja Raja Pawar Dewas vs. CIT [1982] 138 ITR 518 (MP), it was held that CIT cannot exercise the revisional jurisdiction U/s. 263 of the Act if the order is erroneous but is not prejudicial to the interest of the Revenue. Similarly if the order is not erroneous but is prejudicial to the interest of the Revenue, the same can also be not subject of action U/s. 263 of the Act as held by Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT [2000] 243 ITR 83 (SC). Inviting our attention to the copy of show cause notice placed at pages 1 to 3 of the paper book, Learned counsel for the assessee submitted that on all these issues, the Assessing Officer had raised its enquiries and all were replied to by the assessee during the original assessment proceedings. Inviting our attention to the first objection of learned CIT regarding details of expenses debited in the profit & loss account, it was submitted that complete details all expenses i....
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....arned CIT also, the assessee had filed complete reply to the show cause notice issued by him and the final finding of learned CIT(A) is that the assessee had not maintained stock register as well as sale invoices and that the assessee had filed copy of acknowledgement of ITR as well as confirmation of members in respect of capital contribution of Rs. 2,13,64,000/- but Assessing Officer has failed to verify these documents through independent enquiries. It was submitted that the objection of learned CIT is that assessment record shows that during the assessment proceedings the Assessing Officer has not correctly verified the expenses claimed under various heads, as discussed above whereas the fact remains that the assessee had filed complete information during the assessment proceedings itself and as regards his objection regarding non availability of ledger account of expenses, our attention was invited to the fact that books of account include ledgers as well and moreover, it was argued that books of account were rejected by the Assessing Officer by applying provisions of section 145(3) and Assessing Officer had estimated the income of the assessee by applying gross profit rate. I....
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....as under: "I have carefully considered the submission made by the assessee as well as perused the case records. If is noticed that no ledger accounts of the expenses as mentioned in the AO report is available in the case records. It is also noticed that assessee is not maintaining stock register as well as sales invoice. The assessee has filed copies of acknowledgement of ITR's as well as confirmations of members in respect of capital contribution of Rs. 2,13,64,000/- made by members but AO has failed to verify these documents through independent enquiry. The Assessment records show that during the assessment proceedings A.O. has not correctly verified the expenses claimed under the various heads as discussed above so as to bring correct facts on record to examine the allowability of these expenses which renders the order passed by the A.O. is erroneous and prejudicial to the interest of revenue." The order has been passed without application of mind. The Hon'ble jurisdictional High Court in the case of C/7" v. Bhagwan Das [2005] 272 ITR 367 (Ail.)(HC), held that non-application of mind by the Assessing Officer was prejudicial to the interest of the revenue. ....
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....15. Please furnish the copies of accounts of all expenses claimed in the trading and P&L account and prove the reasonableness of these expenses stating nature of each type of expense. 17. Please give details of all employees to whom salary has been paid. State duties of each employee. 22. Please explain renewal fee, assessment fee and processing fee and its necessity for the business." 6. In respect of query relating to Query No. 5, the assessee submitted as under: "4 & 5. That as required to explain the source of deposit in name of members of A.O.P. In this regard it is submitted that assessee has already furnished copy of Capital Accounts of all the members of A.O.P. along with theirs confirmations as well as theirs ITR's. The assessee-has already furnished the copy of income Tax-acknowledgments of members incorporating theirs complete postal addresses and PAN, On perusal of the capital account, your good self may appreciate that there is fresh addition in most of accounts of the members. It may be appreciate that it is normal practice of the members to withdraw entire amounts standing in the name of members at the end of each financial years and....
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....is compulsion on the assessee to make entire sales before the closing of year as it is not possible for assessee to sale the product after expiry of license period. In other words, it is compulsion on the assessee to NIL its stock at the end of year. Liquor is purchased from distilleries after paying license fees which is subject to deduction TCS. The assessee has claimed TCS in which amount of purchases made by members are given. Your honour may verify purchase; from TCS Certificates regarding purchases made by members from the distilleries in which amount of TCS and amount of purchases made by members of AOP is given and therefore purchases of the assessee is completely verifiable. Your good self may appreciate - that this practice is being consistently followed by assessee and accordingly assessee make humble request that assessee may please very kindly be exempted from furnishing this-information which is, not possible for assessee because of the reason narrated above." 9. With respect to Query No. 15, the assessee submitted as under: "Point No-15 That as required by your honour to furnish the copies of accounts of all the expenses claimed in the profit and....
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....he assessee during the course of assessment proceedings indicate that Assessing Officer did carryout the necessary investigation and assessee filed the relevant replies which in our opinion are plausible explanations and therefore Assessing Officer rightly passed the assessment order accepting the explanations of the assessee. 13. The Assessing Officer took a plausible view and therefore the order passed by the Assessing Officer is not erroneous and therefore the condition for initiating the action u/s. 263 does not arise as on all the issues on which the ld. CIT took u/s. 263 were examined during the assessment proceedings. The Jurisdictional High Court of Allahabad in CIT vs. Krishna Capbox (P.) Ltd. [2015] 372 ITR 310 (All) has held where the Assessing Officer made certain queries which were replied to by assessee and after inquiry, being satisfied in respect to any queries replied by the assessee, Assessing Officer accepted declared income and passed the assessment order, Commissioner cannot issue notice u/s. 263 on the ground that Assessing Officer had not made enquiry on certain accepted version of assessee without making any enquiry or verification. In DIT vs. Jyoti Found....