AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (9) TMI 1703
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....ed the return of income for the A.Y.2015-16 on 27/11/2015 declaring a total income of Rs.79,76,910/-. The case was selected under complete scrutiny through CASS. The scrutiny assessment order u/s.143(3) in this case was passed on 18/12/2017 by the Asst. Commissioner of Income Tax, Circle1(1), Thrissur, accepting the total income declared by the assessee. 2.1 Relevant IT MR was called for by the Ld. Principal CIT and on perusal of the same, he observed from records that assessment order passed on 18/12/2017 by Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue for the following reason(s):- (i) The assessee company uses derivative financial instruments to manage risks associated with gold....
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..... A, per ruling of Apex Court in several cases, profits for income tax purposes are to be computed in accordance with ordinary principles of commercial accounting, unless, such principles stand superseded or modified by legislative enactments. Wherever necessary, the legislature made provisions in the Income Tax Act for such supersession - e.g. Sections 40, 43A, 43B, 145A, 145B etc. There is no provision in the Act to exclude the MTM gain recognised in the statement of profit and loss on accrual basis in accordance with accounting principles regularly followed by the company. The acceptance of companies incorrect claim resulted in short accounting of income under normal provisions. (iv) On scrutiny of the assessment records it was ....
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....ucted (i.e. not offered to tax) while computing the total income chargeable to tax under normal provisions. 3.1 Ld. Principal CIT stated that Section 5 of the Act provides that the total income of a person for any previous year shall include all incomes derived from whatever source, which is received or is deemed to be received or which accrues or arises or is deemed to accrue or arise during such previous year, unless specifically exempt from tax under the provisions of the Act. 3.2 Perusal of assessment records/order sheet entries by the Ld. Principal CIT revealed that the assessment order was passed without making enquiries or verification which should have been made regarding the claim of deduction made by the assessee and whether....
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....resh assessment after giving a reasonable opportunity of being heard to the assessee. 4. We have heard the rival submissions and perused the materials available on record. In this case, the PCIT exercised jurisdiction u/s 263 of the Act on the reason that AO has not carried out the requisite enquiry with regard to treatment of MTM gain for the purpose of taxation under normal provisions and also AO has not computed the deduction u/s 80G of the Act. However, at the time of proceedings before Ld. PCIT, the assessee has given up the claim of deduction u/s 80G of the Act. Hence, the Ld. PCIT set aside the issue to the file of AO for examining the issue relating to the MTM gain. Considering the facts of present case, at the time of passing th....
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....1 It shows that there was no enquiry on the present issue. In our opinion, Ld. PCIT can exercise jurisdiction u/s 263 of the Act if he is satisfied that order sought to be revised is:- 1) Erroneous 2) Prejudicial to the interest of revenue. 4.2 Section 263 of the Act empowers the Ld. PCIT/CIT to initiate suo motu proceedings either AO takes wrong decision without considering the material available on record or he takes decision without making any enquiries into matters, where such enquiry was prima facie warranted. The Ld. PCIT was of the opinion that there was no proper enquiry by the AO and the AO accepted the return of income without making further enquiry with regard to MTM transactions while passing the assessment ....