2023 (8) TMI 156 - AT - Income Tax

Revision u/s 263 by CIT - scrap sale undisclosed - Apart from Other income , only one item has been shown as Sales (net) - HELD THAT - There was collection of tax at source by the assessee, there was a corresponding receipt from sale of scrap at Rs. 88.06 lakh, which ought to have been included in the total sales of the assessee. There is no specific mention of this amount on the face of Profit and loss account. AO did not enquire into this aspect of the matter and simply passed a five-lined assessment order observing that the case was selected for Complete scrutiny assessment on the issue of Non furnishing of quantitative details . Thereafter, he records that On above issue, no addition is made and eventually notes that the assessment of income is done as per computation sheet and the sum payable is determined as per the demand notice . Neither, there is any discussion about the scrap sale in the assessment order nor any such issue was taken up by the AO during the course of scrutiny assessment proceedings. This shows that an important aspect of the matter about the inclusion of scrap sale in the total sales, remained to be examined by the AO, which is a clear-cut case of non-application of mind. This action of the AO, in our considered opinion, rendered the assessment order erroneous and prejudicial to the interest of the Revenue Pr.CIT was right in holding the assessment order to be erroneous and prejudicial to the interest of the Revenue justifying revision. Decided against assessee.

Summary

Issues:
The appeal challenges the order passed by the ld. Pr.CIT, Pune-4 u/s. 263 of the Income-tax Act, 1961 concerning the assessment year 2018-19.

Summary:

1. Sale of Scrap Issue:
The assessee, engaged in manufacturing, declared a Nil income which was accepted by the AO without considering certain crucial aspects. The ld. Pr.CIT noted the sale of scrap amounting to Rs. 88,06,894/- with TCS of Rs. 88,069/-, which was not examined by the AO. The Tribunal observed that the AO failed to include the sale of scrap in the total revenue, indicating a lack of application of mind. This non-consideration rendered the assessment order erroneous and prejudicial to the Revenue's interest under Explanation 2(a) to section 263. Consequently, the Tribunal upheld the ld. Pr.CIT's decision to revise the assessment order.

2. Overall Assessment Lacking Consideration:
Given the deficiency in addressing the sale of scrap in the revenue, the Tribunal concluded that there was no need to delve into other issues highlighted by the ld. Pr.CIT. The assessment order's failure on the crucial issue of scrap sale alone was sufficient to justify the revision under section 263 of the Act.

In conclusion, the appeal was dismissed, affirming the revisionary order's validity. The Tribunal emphasized that an assessment order must be accurate and not prejudicial to the Revenue's interest on any significant issue highlighted by the revisionary authority to warrant revision under section 263 of the Income-tax Act, 1961.