2018 (1) TMI 1068 - AT - Income Tax

Revision u/s 263 - undisclosed sales - Held that - Order under Section 263 of the Act passed, was on the basis of some diary which was allegedly stated to be incriminating material by the Revenue and the said diary found in the possession of the third party was held not sufficient to draw an inference about the alleged undisclosed income by the Tribunal 2015 (5) TMI 849 - ITAT DELHI and all the advances were deleted by the Tribunal. - Decided in favour of assessee

Summary

Issues:
Appeal against order under section 263 of the Income-tax Act, 1961 for Assessment Year 2010-11.

Analysis:
The two appeals were filed by the assessee and the Revenue against the orders dated 10/1/2013 passed u/s 263 of the Income-tax Act, 1961 & order dated 30/11/2015 passed by CIT(A)-24 respectively for Assessment Year 2010-11. The grounds of appeal raised various contentions challenging the jurisdiction and legality of the orders. The appellant argued that the orders were beyond the scope of powers of the Commissioner of Income Tax, failed to satisfy statutory preconditions, and were based on factual and legal misconceptions. The appellant contended that the Assessing Officer's order was not erroneous or prejudicial to the interest of revenue, and that the Commissioner's findings were factually misconceived, misinterpreted provisions of law, and made adverse observations without granting opportunities. The appellant prayed for the quashing of the impugned order under section 263 of the Act.

In the case, search and seizure actions were carried out on the assessee and two commission agents, resulting in the seizure of a diary and a stock register. The Assessing Officer made various additions in the assessment order, including an addition of undisclosed GP based on the seized material. The CIT(A) upheld part of the Assessing Officer's findings but restricted the undisclosed GP percentage. Subsequently, the CIT(A) directed the Assessing Officer to consider the entire undisclosed sales as income of the assessee. The Assessing Officer, in compliance with the CIT(A) order, quantified the total undisclosed sales amount. The appellant challenged the CIT(A)'s order under section 263, arguing that the diary, considered incriminating by the Revenue, was insufficient to establish undisclosed income. The Tribunal found in favor of the appellant, setting aside the order under section 263. The delay in filing the appeal was condoned due to the circumstances faced by the assessee company. The Tribunal allowed the appeal of the assessee, stating that the order under section 263 was not based on sufficient evidence. The appeal of the Revenue was dismissed as the main issue had already been decided by the Tribunal.

In conclusion, the Tribunal allowed the appeal of the assessee and dismissed the appeal of the Revenue. The order under section 263 of the Income-tax Act, 1961 was set aside, as it was found to be lacking sufficient basis for establishing undisclosed income. The decision highlighted the importance of evidence and proper legal procedures in making determinations under the Act.