TaxTMI 
TaxTMI 
2024 (8) TMI 739
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....e are that the assessee is engaged in the trading of scrap and processing stainless steel cuttings. The assessee filed its return of income electronically on 29.09.2015, declaring total income of Rs. 7,65,050/-. 5. Return was selected for scrutiny assessment through CASS. Reasons for scrutiny selection were: (i) low net profit or loss shown from large gross receipts; (ii) large squared up loans during the year, and (iii) custom duty payment mismatch. 6. Statutory notices were issued and served upon the assessee and assessment was framed u/s 143(3) of the Act vide order dated 0806.2017. 7. Vide notice dated 18.01.2017, the Assessing Officer sought clarification on the following points: 8. It can be seen from the above that a very specific query was raised in relation to large squared up loans during the year. 9. The assessee filed detailed reply alongwith documentary evidences which are exhibited at pages 12 to 191 of the Paper Book. Exhibit Nos. 51 to 53 need special mention here as the same are confirmation of accounts of M/s Vardhman Financial Services Pvt Ltd for Rs. 1 crore, bank statement with HDFC belonging to M/s Vardhman Financial S....
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.... if it is not erroneous but is prejudicial to the Revenue recourse cannot be had to section 263(1) of the Act. 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 7 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 ". 16. The Hon'ble Bombay High Court in the case of Gabriel India Ltd 203 ITR 108 has held as under: "The power of suo motu revision under subsection (1) is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of revision under this sub-section, viz., (i) the order is erroneous; (ii) by virtue of the order being erroneous prejudice has been caused to the interests of the Revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. We find that the expressions "erroneous", "erroneous assessment" and "erroneous judgment" have been defined in Black's Law Dicti....
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.... an order is erroneous but not prejudicial to the interests of the Revenue, then also the power of suo motu revision cannot be exercised. Any and every erroneous order cannot be the subject-matter of revision because the second requirement also must be fulfilled. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. We, therefore, hold that in order to exercise power under sub-section (1) of section 263 of the Act there must be material before the Commissioner to consider that the order passed by the Income-tax Officer was erroneous in so far as it is prejudicial to the interests of the Revenue. We have already held what is erroneous. It must be an order which is not in accordance with the law or which has been passed by the Income-tax Officer without making any enquiry in undue haste. We have also held as to what is prejudicial to the interests of the Revenue. An order can be said to be prejudicial to the interests of the Revenue if it is not in accordance with the law in cons....
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....prejudicial to the interest of the Revenue. Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. Our view is fortified by the 12 decision of Hon'ble High Court of Bombay in the case of CIT vs. Nirav Modi, [2016] 71 Taxmann.com 272 (Bombay)". 18. The Hon'ble High Court of Gujarat in the case of CIT vs. Nirma Chemical Works Ltd. 309 ITR 67 has observed as under: "if assessment order were to incorporate the reasons for upholding the claim made by an assessee, the result would be an epitome and not an assessment order. In this case, during the assessment proceedings for both the Assessment Years, the Assessing . A.Y. 2009-10 Officer issued a query memo to the assessee, calling upon him to justify the genuineness of the gifts. The Respondent Assessee responded to the same by giving evidence of the comm....
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....n the assessment order which could make it erroneous and prejudicial to the interest of the revenue. Therefore, we set aside the order of the PCIT and restore that of the Assessing Officer dated 8.06.2017. 21. In the result, the appeal of the assessee in ITA No. 1272/DEL/2021 is allowed. The order is pronounced in the open court on 31.01.2024. ============= Document 1 r Registered/Speed GOVERNMENT OF INDIA Ave MINISTRY OF FINANCE INCOME TAX DEPARTMENT Income Tax Officer, Ward-3, Hisar Aayakar Bhawan, Sector-14, Hisar-12509! (Haryana) Telephone No. 01662-278977, Fax No. 01652-278975. No. ITO/W-3/HSR/2016-17/13609 To M/s National Udyog #78, Industrial Development Colony. Hisar D/Sir, Dated: 16.01 2017 18 Sub: Assessment Proceedings u/s 143(3) Information Required u/s 142(1) o the Income Tax Act, 1961 for the Assessment year 2015-16 - Regarding To enable me to complete the assessment in your case for the above noted assessmen year, you are requested to furnish the following information/documents/explanations with documentary evidence to the following points, wherever necessary:- 2 3. Confirm the Jurisdi....
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....BFC0979K 3. Dayanand Aggarwal, Hisar 200000.00 200000.00 No 4. Rohit Jindal, 90, UE-Ilnd, Hisar 7052000.00 4852000.00 No PAN: AGFPJ3951N 5. Haryana Tin 3300000.00 2100000.00 No Plot No-13, IDC, Hisar PAN:AABFH698IN 6. S.S. Saxena & Sons H.U.F., Hisar 168848.00 168848.00 No 7. Shanti Devi, Sec-9-11, Hisar 300000.00 300000.00 No PAN: Notes: 1. Accounts consisting of loans/deposits as well as sales/purchases are not considered for reporting here. 2. Particulars of only those accounts in which loan or deposit has exceeded Rs. 20000/- or more during the year are considered for reporting here. 3. It is not possible for us to verify whether the payments have been made otherwise than through account payee cheques/drafts as the necessary evidence is not in the possession of the assessee. However, no such payments have been made otherwise than by cheque/drafts. 4. Particulars of Bank Loan are not considered for reporting here Document 3 à¤à¤¾à¤°à¤¤ सरकार / Govt. of India आयकर विà¤à¤¾à¤— / In....
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....ing out any business except providing the entry on commission basis. Therefore, all the above facts indicate that you have just introduced the unaccounted money into the business in the form of unsecured loan. But the AO has failed to conduct the necessary detailed investigation and cross-verification to unearth the real picture. 3. In view of the above facts, failure on the part of the Assessing Officer to examine the issues discussed hereinabove have prima facie rendered the assessment order erroneous in so far as it is prejudicial to the interest of revenue. The same is, therefore, required to be suitably amended/modified u/s 263 of the I.T.Act 1961. You are, therefore, required to show cause as to why an appropriate order u/s 263(1) of the Act should not be passed. In this connection, hearing in your case has been fixed in the office of undersigned at Hisar on 05.10.2018 at 11:45 AM. You may send your written reply so as to reach this office before the stipulated date. In case you wish to avail of the opportunity of being heard in person, you may do so by attending the office of the undersigned personally or through duly authorized r....