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2018 (3) TMI 310 - TELANGANA AND ANDHRA PRADESH HIGH COURTRevision u/s 263 - order of the AO does not explain as to how the figure of ₹ 40 lakhs has been arrived at as undisclosed turn over and on what basis, income was estimated at 10% thereof - the order does not even explain the basis for allowing ₹ 36 lakhs as expenditure out of the unaccounted sales of ₹ 40 lakhs thereby taxing the balance of ₹ 4 lakhs only - Held that:- As held by the Supreme Court in Malabar Industrial Co. Ltd. (2000 (2) TMI 10 - SUPREME Court) an order would be termed as erroneous, if the same is based on an incorrect assumption of facts or an incorrect application of law. Commissioner considered any material available on record, which would have improbablised the claim of the assessee that out of the turnover of ₹ 40 lakhs, he has incurred an expenditure of ₹ 36 lakhs, it would have been permissible for him to interfere with the assessment order, for, in such a case, acceptance of the claim of the assessee by the AO could have been termed as based on an incorrect assumption of facts contrary to the record. The Commissioner has not pointed out any such material. In the absence of such material, in our opinion, the Commissioner wanted a further enquiry into the correctness or otherwise of the claim of expenditure, which, totally, falls outside the scope of his jurisdiction under Section 263 of the Act. It is the order of the Commissioner, which is based on an incorrect assumption that the expenditure might have been exaggerated or bloated up without there being anything on record. The Commissioner has also not rendered a finding that assumption of income at 10% of the undisclosed turn over is contrary to any statutory provisions or settled legal principle. Therefore, it cannot be said that the order of the AO suffers from the defect of an incorrect assumption of fact or an incorrect application of law warranting interference - Decided in favour of assessee
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