TaxTMI 
TaxTMI 
2025 (3) TMI 2021
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....ssessing Officer sought to be revised is erroneous and (ii) it is prejudicial, to the interests of the revenue. 3. Ld Pr. CIT erred in law as well as on facts in contending that Id. assessing officer did not conduct any inquiry, which is factually incorrect. 4. Ld. Pr. CIT erred in law as well as on facts in contending that Id. assessing officer computed total income u/s. 44AD of the Act. 5. Ld. Pr. CIT erred in law as well as on facts in contending that assessing officer ought to have applied provision of section 68 of the Act. 6. Ld. Pr. CIT erred in law, as well as, on facts in contending that gross deposit in bank account and not income element embedded therein has to be taxed. 7. Ld. Pr. CIT erred in law as well as on facts in not considering the fact that Id. assessing officer estimated profit on the gross deposits made in the bank account, which is in accordance with the ratio laid down by jurisdictional high court. 8. Ld. Pr. CIT erred in law as well as on facts in not appreciating the facts that Id. assessing officer did conduct inquiry of the transactions and came to a plausible view, which is supported by the decision....
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....e assessment had not examined the facts of the case and the issue under consideration, therefore, this has rendered the order erroneous as well as prejudicial to the interest of the revenue. 4. In view of the above, a show cause notice dated 13-01-2022, was issued, by ld. PCIT, proposing to subject the assessment order of the assessing officer to revision u/s 263 of the Income tax Act fixing the date of submission on 21-012022, however no compliance was made by the assessee. Therefore, one more notice was issued on 03-02-2022, fixing the date of submission on 10-02-2022. In compliance to the above notice issued by ld PCIT, the assessee has filed written submission, vide letter dated 04/02/2022 which is reproduced by ld PCIT, (vide page Nos. 2 to 4), in his revision order. The assessee has submitted that the assessing officer has applied the estimated profit @ 0.75% on the total sales after deducting the total income declared by the assessee in the return of income. Further, the assessing officer initiated the penalty proceedings u/s. 271B of I. T. Act for non- audit of the accounts u/s. 44AB of I. T. Act. Further the additions made by the assessing officer of treating the entire....
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....to third parties without any confirmations / supporting evidences. In view of the above discussion it is apparent that such cases where the assessment has been completed without conducting any inquiries/ verification or incorrect application of law tantamount to erroneous orders as also order prejudicial to the interest of Revenue. For such proposition of law reliance was made by ld. PCIT on following cases: 1. Rampyari Devi Sarogi Vs. CIT (SC) 67 ITR 84 2. Malabar Industrial Co. Ltd. Vs. CIT(SC) 243 ITR 83 3. Swarup Vegetable Products Industries Ltd. Vs. CIT (ALL) 187 ITR 412 4. Gee Vee Enterprises Vs. Addl.CIT & Ors (Del.) 99 ITR 375 5. Rajalakshmi Mills Ltd. Vs. ITO (ITAT, SB-Chennai) 121 ITD 343, 313 ITR(AT) 182 6. SRM Systems & Software Pvt. Ltd. Vs. ACIT 2010-TIOL-646-HC- MAD-IT. 7. Shakti Credits Ltd Vs. CIT 2015 Tax Pub (DT) 3058 (Luck.'A1 Trib) 8. Shoreline Hotel Pvt. Ltd. Vs. CIT 2015 Tax Pub (DT) 2982 (Mum. "E" Trib.) 9. Kapil Ratan Associates Vs CIT 2015 Tax Pub (DT) 2931 (Mum.'A1 Trib) 69 SOT 188 (Mum.) 10. Swadeshi Vilas Private Ltd Vs. ACIT ITA No. 599/Hyd/2013 dt: 25-09....
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....on without considering material available on record or he takes a decision without making inquiry into a matter, where such enquiry was prima facie warranted CIT is empowered to initiate proceedings u/s. 263 of I T Act. (iv) The Hon'ble ITAT, Cochin in the case of Baby Memorial Hospital Ltd vs. ACIT (2019) 111.taxmann.com 189 has held that even in a case of limited scrutiny assessment, Commissioner can exercise jurisdiction u/s. 263 of I T Act. (v) The Hon'ble ITAT, Hyderabad in the case of Smt S Umadevi vs. CIT (2015) 62.taxmann.com 64 has held that where assessing officer had passed cryptic, non speaking order, CIT was justified in invoking jurisdiction u/s. 263 of I T Act. (vi) The Hon'ble M P High Court in the case of Nagal Garment Industries Pvt Ltd(2020) 113.taxmann.com 4 has held that where assessing officer had issued detailed questionnaire, in reply to which submissions have been made but assessing officer did not applied his mind nor did he conduct any enquiry while accepting claim of assessee although he recorded in note sheet that reply filed by the assessee was not satisfactory and did not explain the facts, the assessment order w....
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.... the services rendered. The assessee has deposited cash and cheques in his bank account to the tune of Rs. 38,01,13,684/-. During the course of assessment proceedings, the assessing officer issued notice to the assessee and the assessee was asked to explain high cash deposit transactions. In response, the assessee submitted that the said amount belonged to his customers. However, the assessee failed to give details of such customers, therefore, ld. PCIT has exercised his jurisdiction under section 263 of the Act. The assessing officer took plausible and reasonable view and calculated the total income of the assessee @ 0.75% of total deposit of Rs. 38,01,13,684/-. The assessing officer has computed the total income of the assessee, u/s 44AD of the Act, which is reasonable considering the nature of the business of the assessee. The Ld. Counsel submitted that during assessment proceeding, the assessee has provided documents and details which are also mentioned in the paper book of the assessee, submitted before the Bench. Therefore, the ld. Counsel contended that order passed by the assessing officer is neither erroneous nor prejudicial to the interest of the revenue. Therefore, order....
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.... basis, the assessing officer, accepted the turnover of the assessee is not known. During the assessment proceedings, the assessee submitted before the assessing officer that he is getting Rs. 200/- as commission on transaction of Rs. 1,00,000/-, however, the assessing officer did not consider the same and stated that as per his agreement, the total income is determined at the rate of 0.75% of turnover. The assessee has not provided any copy of such agreement neither to the assessing officer nor to the ld. PCIT. In such a scenario, the view taken by the assessing officer cannot be said, as a plausible view, and such plausible view is not sustainable in the eye of law, also. Besides, the assessing officer initiated penalty proceedings against the assessee under section 271B of the Act for non-auditing of books of accounts, it means, the assessee is owner of the turnover of Rs. 38,01,13,684/-, however, the assessing officer took plausible view to tax, turnover of the assessee at the rate of 0.75%, which is contrary to the penalty levied by the assessing officer. Hence, the view taken by the assessing officer is not a plausible view and therefore order passed by the assessing officer ....
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....ore, the assessee cannot claim that he has submitted the required details and documents during the assessment proceedings to frame the assessment order under section 143(3) of the Act. Therefore, on this score only, the assessment order passed by the assessing officer is erroneous as well as prejudicial to the interest of the revenue. We note that in order to conduct scrutiny assessment under section 143(3) of the Act, the assessing officer issued notices under section 142(1) of the Act to the assessee, calling various details and documents to examine the claim of the assessee. The provisions of section 142(1) speaks of inquiry before assessment and gives immense power to the assessing officer for conducting enquiry. Therefore, the assessing officer u/s 142(1)(ii) & (iii) can ask the assessee almost any information which he things necessary for passing assessment. However, the assessee failed to furnish the details, documents and information before the assessing officer. Therefore, in this scenario, the assessing officer could not complete the assessment under section 143(3) of the Act and could not take plausible view. Hence, order passed by the assessing officer, by taking plausi....
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....sustainable in law. 18. From the above facts, it is clear that the assessing officer, speaks in a double way, that is, like a double speaking person (who cannot reach on final conclusion), therefore, in this situation, the assessing officer cannot take plausible view, which can be sustainable in the eye of law. This is proved from para number 4(E ) of the assessment order, which is reproduced below: "4(E). Assessee was, vide question no.9, requested to show -cause as to why the total credit of Rs. 38,01,13,684/- should not be treated as his trading receipt and the income should not be determined in absence of names of the persons who have deposited the cash/cheque. Assessee, in reply, contended, that he is getting Rs. 200/- as commission on transaction of Rs. 100,000/-, however, he agreed for determining the net profit of 0.75% on total turnover. As per his agreement, the total income is determined at Rs. 28,50,853/- (0.75% of 38,01,13,684/-)." From the above findings of the assessing officer, it is clear that assessing officer issued show -cause notice to the assessee, as to why the total credit of Rs. 38,01,13,684/- should not be treated as his trading receipt and ....
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....e enquiries which he ought to have made in the given circumstances of a case is well settled. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the case the Income-tax Officer should have made further inquiries before accepting the statements made by the assessee in his return. The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word "erroneous" in section 263 includes the failure to make such an enquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. We derive support for the proposition as stated above from the decision of the Hon'ble Delhi High Court in the case....
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....d that this phrase i.e. "prejudicial to the interest of the revenue'' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered 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 PCIT 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". 21. We find that in assessee`s case under consideration, the order passed by the assessing officer is erroneous and prejudicial to the interest of the revenue, as the view taken by the Assessing Officer is unsustainable in law, as stated by us in above para of this order. The Assessing Officer passed the order on incorrect assumption of fact, incorrect application of law and the order passed by the Assessing Officer is without application of mind and more....