AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (10) TMI 839
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.... in initiating proceedings u/s 263. 2. (a)For that the Ld. Pr. CIT, Kolkata-I was not justified in holding that the amount of commodity profit of Rs.83,76,790/- and that the same was not added back by the A.O. while computing the total taxable income of the assessee, thereby resulting in an under assessment of income to be added back u/s 68. (b) For that the Ld. Pr. CIT, Kolkata - 1 failed to appreciate that while computing the total income of the assessee, the A.O. had not added back the aforesaid amount of Rs.83,76,790/- since the said income was already shown in the Profit and Loss Account and offered in the computation of total income." 3. Brief facts of the case are that assessee is engaged in the business of share broking and trading and F&O transactions. Assessee filed its original return of income on 24.09.2011 reporting total income as Nil. However, it claimed business loss of Rs.19,32,076/-. Case of the assessee was reopened under section 147 of the Act by issuing notice under section 148 of the Act on 26.03.2018. Assessee filed its return in response to notice under section 148 of the Act on 20.04.2018 reporting total income as nil and claimed busine....
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....ing. All the payments were received through the channel of bank. The assessee also submitted that the assessee has earned profit of Rs.83,76,790/- through commodity transaction and the same has been disclosed in the Profit & Loss account and offered for taxation and there is no such loss of Rs.1,18,42,315/- as stated by your good self. Moreover your good self has issued notice under section 133(6) of the IT Act, 1961 to both the broker Ratna Kamal Holdings Pvt Ltd as well stock exchange NMCE. Reply of both the party has been received by your good self which has been mentioned by your good self in this show cause notice." [emphasis supplied by us by underline and bold] 3.3 Ld. AO did not accept the submission made by the assessee and noted that all was shown as apparent by the assessee is not real and even if the documents produced suggest that the income was earned through genuine trade, it was actually a concocted arrangement to show that a trade has taken place. He observed that this clearly indicates the pre-arranged nature of said trading and that there was a meeting of minds between the trading entities while conducting the said trade through NMCE. He thus noted th....
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.... So the presumption made by your good self that there was failure on the part of the Assessing officer to assess the income correctly is not correct. Also treating the said assessment order erroneous insofar as it is prejudicial to the interests of the Revenue within ambit of section 260 of the Act is not correct." 6. Ld. PCIT arrived at his consideration after taking into account the facts of the case and submissions made by the assessee to hold that "though in the assessment order the AO has stated that an amount of Rs.83,76,790/- was treated as income under section 68 of the Act as unexplained cash credit, but while computing the total taxable income the same was not added resulting in under-assessment of income. Accordingly, it is held that the assessment order is erroneous insofar as it is prejudicial to the interest of revenue." Therefore, he set aside the said assessment order, directing the AO to frame the assessment afresh after considering the aforesaid observations. Aggrieved, assessee is in appeal before the Tribunal. 7. Before us, Shri Siddharth Agrawal, Advocate represented the assessee and Shri Sudipta Guha, CIT DR represented the Department. Ld. Counse....
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.... there should not be any prejudice to the assessee if the matter is examined by the ld. AO in terms of directions given by the ld. PCIT in the impugned order. 10. We have heard the rival contentions and perused the material on record. Admittedly, it is an undisputed fact that assessee has disclosed the income earned from commodity trading of Rs.83,76,790/- in its audited profit and loss account and had offered it for taxation. This verifiable fact was placed before the Ld. AO in the assessment proceedings who treated the said income as unexplained cash credit under section 68 of the Act and disallowed the related expenses towards brokerage of Rs.34,620/-. Since this income was already disclosed in the audited profit and loss account of the assessee and formed part of the business loss reported in the return, Ld. AO did not make a separate addition while computing the assessed income of the assessee except for reducing the business loss by making the addition towards disallowance of brokerage expenses claimed in the audited profit and loss account. Assessee had reiterated these facts before the Ld. PCIT in the revisionary proceedings also. Before us also, Ld. Counsel demonstrated....
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....th an erroneous order passed by the AO. Their Lordships held that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the Assessing Officer is unsustainable in law. 13. We find that the issue in the present case is purely on facts which are verifiable from the records of the assessee. Examination and verification of the audited financial statements i.e. Balance Sheet and Profit & Loss account of the assessee reveals the correct state of its affairs in respect of the issue raised in the impugned revisionary proceedings for which both, ld. PCIT and the ld. CIT, DR could not bring any material on record to controvert the verifiable factual position. 14. Accordingly, on the issue raised by the Ld. PCIT in the revisionary proceedings, no action u/s 263 of the Act ....