TaxTMI 
TaxTMI 
2022 (11) TMI 812
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.... of Revenue. 2. That having regard to the facts and circumstances of the case, Ld. Pr. CIT, Agra-1 has erred in law and on facts in assuming jurisdiction under section 263 of the I.T. Act, 1961 without appreciating that the issue is a subject matter of appeal before CIT(A)-2, Agra now transferred to CIT(A) NFAC is not sustainable on various legal and factual grounds. 3. That having regard to the facts and circumstances of the case and in light of the finding of the Ld. Pr. CIT, Agra-1 that "failure to make proper enquiries/verification to arrive at the correct and complete facts and to apply the correct law..." read in light with the principle laid down in various decisions does not make the order erroneous and prejudicial to the interest of the revenue. The order passed by the Ld. Pr. CIT, Agra-1 is illegal and bad in law. 4. That having regard to the facts and circumstances of the case, the order of the Ld. Pr. CIT, Agra-1 under section 263 of the I.T. Act, 1961 setting aside the assessment framed with the directions to make fresh assessment after examining the issues. Non-issuance of specific directions for assessment to be framed clearly proves that i....
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....ding adjudication till date. 4. Subsequently the Ld. PCIT, Agra issued notice dated 8.3.2021 u/s. 263 of the Act stating that the difference in closing stock of Rs. 21,87,38,966/- was undisclosed and should be added to the income of the Assessee and during the assessment proceedings the difference in closing stock was not added U/s 68 of the Act but net profit of Rs. 19,90,13,469/- was assessed as income and therefore the assessment order dated 30.12.2017 passed U/s 143(3) r.w.s 147 of the Act appears to be erroneous as well as prejudicial to the interest of the revenue and the Assessee was asked to give explanation. 5. The Assessee filed its reply on 15.3.2021 before the Ld. PCIT objecting for treating difference in closing stock as addition U/s 68 of the Act stating as under: "It must be appreciated that the alleged net profit of Rs. 19,90,13,470 which has been worked out from the stock summary takes into account the impact of the figure of the so-called closing stock of Rs. 30,31,62,405. This is evident from the reasons recorded reproduced in page 2 of the assessment order. The perusal of the same will reveal that under the column "As per stock summary taken from ....
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....15-16 holding that the assessment order dated 30.12.2017 passed U/s 143(3) of the Act by the Assessing Officer is erroneous as well as prejudicial to the interest of the revenue and directed the Assessing Officer to pass a fresh order after examining the issue as discussed in her order and after affording reasonable opportunity of being heard to the Assessee. 9. Against these orders of the Ld. PCIT dated 31.3.2021 passed u/s. 263 of the Act for A.Y 2014-15 and 2015-16, the Assessee is in appeal before us. 10. The Ld. Counsel Shri Ranjan Chopra appearing for the assessee submits that the addition of net profit of Rs. 19,90,13,470/- made by the Assessing Officer while completing the assessment U/s 143(3) r.w.s 147 is based on stock summary taken from hard disk impounded during survey and the alleged net profit is the resultant of the so called (Sales + Closing Stock) minus (Opening Stock + Purchases + Direct expenses + Indirect expenses). It is submitted that the said alleged difference is merely an arithmetical calculation between the figures as per the ITR and the figures taken from stock summary sheet generated from the impounded hard disk and this difference does not show t....
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....assessee submits that the entire order of 14 pages of the Ld. PCIT contains the submissions/objections of the assessee running into 11 pages and the conclusion of the Ld. PCIT is in one small para on last page. The Ld. Counsel submits that the Ld. PCIT in her entire order nowhere demonstrated as to how the assessment order passed U/s 143(3) r.w.s 147 of the Act in not making addition U/s 68 resulted in erroneous and prejudicial to the interests of revenue except stating that the Assessing Officer should have been made addition U/s 68 instead of treating the net profit as assessed income of the Assessee on account of alleged difference in closing stock. 13. The Ld. Counsel submits that the Ld. PCIT was of the view that the Assessing Officer had made no enquiries and therefore the assessment order passed by him is erroneous and prejudicial to the interests of revenue. The Ld. Counsel in this regard referring to page 6 para 5 of the reassessment order (page 30 of the paper book) submits that the Assessing Officer has given finding that in the course of assessment proceedings vide order sheet entry dated 20.12.2017, the Assessee was required to furnish explanation and justification ....
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....ock summary sheet retrieved from hard-disk impounded during the survey operation. While the issue raised during the proceedings u/s. 263 is altogether different. Ld. DR submits that as per stock summary taken from the hard-disk closing stock was Rs. 30,31,62,406/-, however, the closing stock disclosed by the assessee in the ITR filed by the assessee was Rs. 8,44,23,439/-. The excess closing stock of Rs. 21,87,38,966/- was found undisclosed and, therefore, it was required to be added as an unexplained investment. Therefore, the Ld. DR submits that the contention of the assessee that the order passed by the AO is subject matter of appeal before the Ld. Commissioner(Appeals) and no proceedings u/s. 263 of the Act can be initiated is not acceptable. The Ld. DR submits that the PCIT has rightly assumed jurisdiction u/s. 263 on issues which are not at all subject matter of appeal much less considered and decided in appeal. Reliance was placed on the decision of the Allahabad High Court in the case of Mehra Brothers Partnership vs. CIT in WT No. 185/2015 dated 11.03.2015. The decision of the Hon'ble Delhi High Court in the case of BSES Rajdhani Power Ltd. vs. PCIT in ITA No. 387/2017 ....
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....see was required to explain the difference in closing stock and the assessee has furnished its replies with charts, reconciliation of the closing stock differences and on making enquiries and verifications the AO treated the alleged difference in stock, difference in net profit as assessed income of the assessee while completing the assessment and, therefore, it cannot be said that there is no enquiry/investigation made by the AO while passing the assessment order. 18. We have heard the rival submissions, perused the orders of the authorities below and the decisions relied on and the material placed before us. The first contention of the assessee in ground nos. 1 & 2 is that the assumption of jurisdiction by the Ld. PCIT u/s. 263 of the Act is bad in law for the reason that the subject matter of addition of net profit on account of difference in opening stock, purchases, sales, closing stock, GP and net profit are under appeal before the Ld. CIT(Appeals). 19. The assessee carrying on the business of manufacture and sale of glass products filed its return of income for AY 2014-15 on 04.11.2014 declaring income of Rs. 11,66,380/- and the assessment was completed u/s. 143(3) on ....
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....ded by CIT(A) on 05.06.2013. Thus, the order passed by the ITAT does not suffer from any irregularity and needs no interference." 22. We also observe that similar view has been taken by the Hon'ble Madras High Court in the case of Smt. Renuka Philip Vs. ITO (supra), wherein the Hon'ble High Court held as under: "22. The above explanation makes it clear that when the appeal is pending before the Commissioner, the exercise of jurisdiction under Section 263 of the Act is barred. The Commissioner in the order dated 14.03.2012 states that the appeal pertains to the claim made by the assessee under Section 54 of the Act and it has got nothing to do with the order passed by the Assessing Officer under Section 54F of the Act. The said finding rendered by the Commissioner is wholly unsustainable, since the assessee went on appeal against the re-assessment order dated 31.12.2009 stating that his claim for deduction u/s. 54 of the Act should be accepted. 23. Therefore, in the process of considering as to what relief the assessee is entitled to, the Assessing Officer held that the assessee is entitled to claim deduction under Section 54F of the Act and assigned cer....
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....pplies to the facts of the assessee's case. The decisions relied on by the Ld. DR are distinguishable on facts. Thus, respectfully following the decision of the Jurisdictional High Court since the larger issue of whether there is any difference in closing stock at all is the subject matter of appeal before the Ld. CIT(A) we hold that the Ld. PCIT is barred in assuming jurisdiction u/s. 263 of the Act. 24. We also further observe from the order of the Ld. PCIT the assessment order passed by the Assessing Officer was held to be erroneous and prejudicial to the interest of the Revenue stating that the AO has not made enquiries. The Ld. PCIT is also of the view that the difference in closing stock should have been added as income u/s. 68 of the Act. 25. In so far as the AO not making enquiries in the course of assessment proceedings are concerned as we have already noted above that it is the categorical finding of the AO in para 5 page 6 of assessment order that in the course of assessment proceedings the assessee was required to explain the difference in closing stock and the assessee has furnished charts, reconciliation statement, explanations etc., which was examined by th....