TaxTMI 
TaxTMI 
2025 (3) TMI 2163
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.... scrutiny assessment and a notice under Section 143(2) was issued and served upon the assessee. A survey under Section 133A of the Income Tax Act was carried out at the business premises of the assessee on 01.11.2017. The assessee has surrendered an income of Rs. 25 lacs which was included in the return of income. The ld. AO issued notices under Section 142(1) on 20.01.2020, 18.02.2020 and 18.05.2020. Thereafter, he has passed the assessment order on 10.06.2020. The AO has accepted the returned income after satisfying himself with the replies of the assessee on the queries raised in its notices. 4. The ld. CIT perused the assessment record and formed an opinion that assessment order is erroneous as much as it has caused prejudice to the interests of Revenue. He issued a Show Cause Notice under Section 263 on 06.03.2024. The copy of the Show Cause Notice has been placed on page No. 19 to 24 of the Paper Book. A perusal of its Show Cause Notice would indicate that ld. CIT termed the assessment order as suffering from error on account of three issues, namely ; a) No enquiry on the alleged shortage of stock found during the course of survey. b) No enquiry on the al....
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....The assessment order has been passed without making the requisite enquiries from the assessee in this regard as were called for in the facts and circumstances of the case. The AO has failed to examine this aspect of the matter which makes the order erroneous and prejudicial to revenue. (c). It is evident from the assessment records that the AO has failed to examine the books of accounts/impounded material during assessment proceedings. Digital data was also impounded during survey which was on a hard disk in image format which was never opened and examined. As mentioned in the Survey Report, no stock register was maintained by the assessee. In the absence of Stock Register, the books of account could not be relied upon without carrying out third party verifications. The AO has failed to make any such enquiries or verification. Notices u/s 133(6) were issued by the Assessing Officer in 10 cases. However, as per assessment record, information was received in only 4 cases. The AO has completed the assessment without receipt of the replies to the notices issued u/s 133(6).Some of the notices were received back undelivered due to wrong address. In these cases, onus lay upon the....
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.... have taken lumpsum in an estimated manner. 7. The ld. Counsel for the assessee further contended that as far as shortage of cash as worked out by the ld. CIT is concerned, there was no shortage and the working has been given to the AO as well as to the CIT which is available on page 71 of the Paper Book. According to this working, no shortage in cash was available and this has been accepted by the AO. Similarly, assessee has explained each and every document to whom discrepancy has been alleged by the ld. CIT. 8. The ld. CIT DR on the other hand relied upon the order of the CIT. He emphasized that perusal of the order of the AO would reveal that he has not discussed any of the issue in the assessment order. 9. We have duly considered the rival contentions and gone through the record carefully. Before we embark upon an enquiry on the facts and issues agitated before us to find out whether the action u/s 263 of the Act deserves to be taken against the assessee or not, it is pertinent to take note of this Section. It reads as under:- "263(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order pass....
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....oses of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." 10. A bare perusal of the sub section-1 would reveal that powers of revision granted by Section 263 to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage ....
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.... suffice the requirement of order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view with which the CIT does not agree. If cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under law. (vi) If while making the assessment, the AO examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the CIT, while exercising his power under s 263 is not permitted to substitute his estimate of income in place of the income estimated by the AO. (vii) The AO exercises quasi-judicial power vested in him and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not fee stratified with the conclusion. (viii) The CIT, before exercising his jurisdiction unde....
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....ct and how error lies in the assessment order. Hon'ble Delhi High Court has considered this aspect in the case of ITO Vs D.G. Housing Projects Ltd. reported in 343 ITR 329. Hon'ble Delhi High Court has propounded that ld. Commissioner cannot left the issue to the AO to find out where he has committed an error. It is the Commissioner who has to conduct an enquiry and then propound how the assessment order is erroneous. We deem it appropriate to take note of the discussion made by the Hon'ble Delhi High Court on this issue which read as under : "Thus, in cases of wrong opinion or finding on merits, the Commissioner of Income-tax has to come to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the order under Section 263 is passed. In such cases, the order of the Assessing Officer will be erroneous because the order passed is not sustainable in law and the said finding must be recorded. The Commissioner of Income-tax cannot remand the matter to the Assessing Officer to decide whether the findings recorded are erroneous. In cases where there is inadequate enquiry but not lack of enquiry....