TaxTMI 
TaxTMI 
2022 (2) TMI 373
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....relative documents, After that has pointed out the discrepancies therein, taking into consideration all these has passed the order U/s. 143(3) by making the adhoc addition for Rs. 5,00,000/- which shows that the AO, after application of his mind has passed the order U/s. 143(3) which is not erroneous within the meaning of sec 263 of Income Tax Act order passed U/s. 263 is bad in law liable to be set aside. 3. That prior to passing of the order U/s. 143(3), the AO has issued the notice U/s. 142(1) and 143(2) of Income Tax Act, details, explanations required were duly furnished along with books of account with other details, duly examine, taking into consideration all the details produced and Filed, order U/s. 143(3) making the adhoc addition for Rs. 5,00,000/- has been passed which proved the AO, after application of his mine, examination of documents and records as asked and duly filed has passed the order U/s. 143(3) which can not be said to be erroneous as per definition of erroneous, explanation 2 of sec. 263, The order passed by PCIT is bad in law liable to be cancelled. 4. That while passing the order U/s. 263 of Income Tax Act The PCIT has not pointed out th....
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....he gross profit percentage of the assessee is matching with the previous assessment years and for that purposes he had submitted that out of the total turnover, the deductible amounts are required to be reduced gross profit is calibrated, the same is in the line of the gross profit of the assessee for the previous years. 4. The Ld. A.R. had submitted that for the purposes of invoking the jurisdiction under section 263 the twin conditions are required to be fulfilled by the lower authorities namely that the order passed by the assessing officer was erroneous and it should be prejudicial to the interest of the revenue. It was submitted that in the absence of one of the conditions, the jurisdiction under section 263 cannot be invoked by the lower authorities. 5. Per contra DR for the revenue had vehemently relied upon the order passed by the lower authority. Ld. D.R. for the revenue had drawn our attention to paragraph 8 of the order passed by the lower authority, it was mentioned in the order as under: "The earlier replies submitted by the assessee have been carefully considered vis-a-vis the material available on record. lt is seen that the case was selected under scr....
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....ents cited at bar during hearing by both the parties. 9. Before we deal with the legal submissions made before us, we should record the date and event in the present case which will show whether the order passed by the lower authorities was within the period of limitation or not. 8.5.2017 The assessment order was passed by the Assessing Officer i.e. Assistant Commissioner of Income Tax, Circle-2(2)(1), Firozabad u/s. 143(3). 04.05.2018 First notice under section 263 was issued by the PCIT 7.9.2018 , Another notice dated 07.09.2018 was issued to the assessee fixing the date of hearing on 24.09.2018. 31.10.2019 Another notice dated 31.10.2019 was issued by the then PCIT-2, Agra on account of change of officer and the case was fixed for hearing on 12.11.2019 17.3.2020 Thereafter, another notice dated 17.03.2020 was issued to the assessee fixing the date of hearing on 19.03.2020 4.3.2021 Due to change of jurisdiction, a notice dated 04.03.2021 was issued to the assessee by the officer of the revenue affording final opportunity of being heard and the case was fixed for 12.03.2021. 21.3.....
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.... In considered opinion once the verifications were made by the assessing officer, then the contention of the Ld. DR of the revenue, cannot be accepted that no verification were made by the during the assessment proceedings. In our considered opinion once the assessing officer came to the conclusion that the addresses of the creditors are unverifiable then the assessing officer was required to estimate the income of the assessee based on past history or other cogent basis. 14. In the present case on the facts of the unverifiable addresses, the assessing officer had made the ad hoc addition of Rs. 5 lakhs to the income of the assessee. 15. The Ld. PCIT, in the order in para 3 had mentioned as under" "3. Adhoc addition of Rs. 5,00,000/- was made in the assessment order to cover possible leakage of revenue on account of 'purchases from unregistered vendors and cash expenses. The ad-hoc addition brings net profit percent to 6.52% of the gross sales but keeping in view the last year net profit percentage of 7% on gross receipts, addition should have made so as to bring the net profit margin to 7% and thus bringing the current year profit in line with the past history."....