AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (5) TMI 687
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....ed / cancelled/ set aside and it may be held accordingly. 2. For that in view of the facts and in the circumstances, the order so passed by Ld. Pi. CIT u/s 263 of the Act is bad on both in the eyes of law and on facts and it may be held accordingly. 3. For that in view of the facts and in the circumstances, the Ld. Pr. CIT failed to conduct any enquiry of his own and as such the order u/s 263 so passed by the Ld. Pr. CIT is bad in law and it may be held accordingly. 4. For that in view of the facts and in the circumstances, the Ld. Pr. CIT was wholly unjustified in setting aside the order u/s 263 dt. 4.12.2019 without giving any finding as to the manner in which the order u/s 143(3) is "erroneous" and "prejudicial to the interest of revenue" and in view of the facts and in the circumstances the order of Ld. Pr. CIT is bad in law and is liable to be quashed / cancelled / set aside and it may be held accordingly. 5. For that in view of the facts and in the circumstances, the Ld. Pr. CIT was wholly unjustified in passing the order u/s 263 for the verification of the impugned subject matter and as such the order so passed by the Ld. Pr. CIT is not covered within the ambit of se....
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....re, expenses amounting to Rs.67,85,064/- (Rs.92,52,023 - Rs.24,66,959 being selling, general and admn., expenses excluding depreciation) was required to be treated as unexplained expenditure and added back to total income. Omission to do so resulted in under assessment of income for Rs.67,85,064/- and short levy of demand for Rs.20,96,584/- (30% of Rs.67,85,064/- EC @ 3%) excluding interest. 2. The AO has passed the impugned assessment order without any application of mind nor conducting any enquiries or verifications which should have been made in this case." 4. In reply to the same, the assessee made the submission that the allegation that there is an unexplained expenditure of Rs. 67,85,064/- is not correct and the said amount was received from the customers to whom credit sale was made and even if it is presumed that the said sum is an unexplained expenditure then since the assessee is entitled to reduction of sales of the equivalent amount which will thus, make no impact on the net income of the assessee. However, ld. Pr. CIT was not satisfied with these submissions and he held the order of ld. AO dated 04.12.2019 as erroneous and prejudicial to the interests of the Revenue....
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....refore for smooth running without any hazards in business proceedings the owner always maintain separate ledger for cash and credit sales. It helps the fuel business organisation to tabulate its monetary management easily. But here offered explanation and so called prevailing practice is drawing quite different picture as credit system in same nature of this type of business organisation, so the accounting method adopted and explained by the assessee is also in question and needs to be verified. In para (iii) of the submission dated 04.03.2022 the assessee stated as follows It will be appreciated that if at all such sum of Rs.67,85,064/- is treated as unexplained expenditure, then the assessee is entitled to reduction of sales of the equivalent amount i.e. Rs.67,85,064/- from it sales and on such exercise the net effect of the taxable income of the assessee is nil and hence the impugned order u/s. 143(3) cannot be treated as. From the above point of view it is also necessary to verify the cash book and other books of accounts to ascertain the entitlement of the reduction of sales equivalent to the amount of Rs.67,85,004/- from the total sales. The AO has passed the impugned asse....
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....s, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorized by the Board in this behalf under section 120; (b) record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extende....
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.... modifying the order. He may set aside the order and direct the Assessing Officer to pass a fresh order. At this stage, before considering the multi-fold contentions of the ld. Representatives, we deem it pertinent to take note of the fundamental tests propounded in various judgments relevant for judging the action of the CIT taken u/s 263. 7.2. Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC) has laid down following ratio with regard to provisions of section 263 of the Act: "There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer; it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an or....
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....lained expenditure and hence proposed to be added back to the total income of the assessee. Indeed, your goodselves has failed to appreciate the real nature of the differential amount since the said amount of Rs. 67,85,064/ was notional cash entry and were in. fact sales reversal which were reverted on the very day in which the receipt in such respect was shown In the cash book. It is also submitted that a number of vehicles which were regular at the petrol pump of the assessee were paying cash sales immediately after Idling of the petrol. Assessee had some fixed panics as credit customers and others as daily credit customer local. As per our prevailing practice, as and when daily credit customer local sales are made the amount is included in cash sales though some payments are-received in subsequent' dates. However, the said amounts arc transferred to the name of Truck owner with Truck Nos. simultaneously and when the payment received the amount again credited "Daily cash Sales Customer Account" Actual amount of received under collection of Sundry Debtors and daily credit customer local arc amount billed (both cash & credit) less amount not received under "Daily Credit Custome....
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....ter and the amount is shown outstanding in the name of truck owners with truck numbers. Subsequently, when the amount is received the same is credited to the daily cash sales customer accounts. Though the policy adopted by the assessee is not at par with the settled accounting policies since the cash is entered in the books without actually receiving the cash, however, going through the flow of the transactions we find that this is in the nature of sales reversal, in other words, the sales which is booked at the time of giving goods to the regular customers and though the amount is not received but still the cash sales are increased by that amount but subsequently, when the actual amount is received then again the regular sales is credited with that amount and the amount shown in the past as cash sales from such customers (not actually giving cash), the same is reversed. Therefore, it is merely a sales reversal entry and not a case of unexplained expenditure. Complete documentary evidences in support of these transactions have been filed and we are satisfied that it is not a case of unexplained expenditure. Even otherwise all these details of cash sales including the cash book have....