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2018 (6) TMI 1045 - AT - Income TaxRevision u/s 263 - erroneous and prejudicial order to the interest of the revenue - Held that - as per CIT(A) there was difference in sale/purchase price of Gold - assessee admitted that there is clerical mistake in the details filed regarding sale and purchase of the gold during the month of March which was overlooked by the AO - thus AO failed to make any enquiry regarding the purchase and sale including quantitative details of the gold bars, therefore, it is a case of no enquiry by the Assessing Officer for which the Pr. CIT has rightly invoked the provisions u/s 263. Provisions u/s 263 of the Act becomes redundant, if it is not invoked in such type of cases like the present one where the assessee pleads before the Pr. CIT that there were certain inadvertent clerical error of purchase and sale including quantitative details This itself shows that there is absolute non-application of mind and no enquiry conducted by the Assessing Officer at all - hence the Assessment order has become both erroneous as well as prejudicial to the interest of revenue for which Pr. CIT was justified in invoking the provision of Section 263 - Decided against the assessee.
Issues Involved:
1. Whether the Principal Commissioner of Income Tax (Pr. CIT) erred in holding the assessment under Section 143(3) of the Income Tax Act, 1961 as erroneous and prejudicial to the interest of the revenue under Section 263. 2. Whether the Pr. CIT erred in rejecting the explanation provided by the assessee and directing the Assessing Officer (AO) to make an addition of ?1,47,29,502/-. Issue-wise Detailed Analysis: 1. Erroneous and Prejudicial Assessment: The Pr. CIT found that the AO completed the assessment without proper and necessary enquiry. The scrutiny of assessment records revealed discrepancies in the purchase and sale of gold bars by the assessee. Specifically, the assessee purchased 1643 kg of gold for ?3,77,46,98,443/- and sold 1641 kg for ?3,43,89,91,867/-. The average purchase price was ?22,97,442/- per kg, and the average selling price was ?20,95,668/- per kg, resulting in a difference of ?2,01,774/- per kg. The Pr. CIT observed significant discrepancies in the values of sale and purchase prices in specific months, indicating suppressed sales amounting to ?1,47,29,502/-. Consequently, the Pr. CIT issued a show-cause notice under Section 263, and after considering the assessee's submissions, held the assessment order as erroneous and prejudicial to the revenue's interest. The AO was directed to re-frame the assessment accordingly. 2. Rejection of Assessee's Explanation and Directed Addition: The assessee argued that the figures mentioned in the Pr. CIT's notice were incorrect due to clerical mistakes. The correct figures were 1641 kg purchased for ?3,82,71,63,207/- and 1639 kg sold for ?3,82,33,90,969/-. The assessee explained that the discrepancies were due to inadvertent clerical errors and that the sales included pieces of gold bars, not just whole bars. The assessee provided detailed monthly stock positions and argued that there was no suppression of sales. However, the Pr. CIT found the explanations unsubstantiated and held that the AO failed to conduct proper enquiries or verification. The Pr. CIT directed the AO to make an addition of ?1,47,29,502/-. Conclusion: The Tribunal upheld the Pr. CIT's order, agreeing that the AO failed to make necessary enquiries and that the assessment order was erroneous and prejudicial to the revenue's interest. The Tribunal noted that the assessee admitted clerical mistakes and that the AO overlooked these during the assessment proceedings. The Tribunal found the Pr. CIT's invocation of Section 263 justified, as the AO did not properly assess the income, leading to a prejudicial impact on the revenue. The Tribunal dismissed the assessee's appeal, affirming the Pr. CIT's order and the directed addition of ?1,47,29,502/-. Order: The appeal of the assessee is dismissed. The order under Section 263 of the Income Tax Act, 1961, passed by the Principal Commissioner of Income Tax, is upheld as just and proper.
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