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2024 (7) TMI 706 - AT - Income TaxRevision u/s 263 - unexplained cash credit u/s. 68 - HELD THAT - Claim of the Ld. AR that though the observation of the A.O that the aggregate sales of the assessee firm worked out at Rs. 4,24,67,351/- (as per chart ) was a factually incorrect observation, but the same would by no means lead to any prejudice to the revenue, we are unable to concur with the same. As nothing is either discernible from the record nor placed before us by the AR which would reveal that the aforesaid observation of the A.O that the aggregate sales of the assessee firm for the year under consideration had been assailed or sought to be rectified by the assessee firm therefore, we are of the view that no infirmity emerges from the order of the Pr. CIT who had in the backdrop of the aforesaid serious infirmity in the order of the A.O, set-aside the same with a direction to him to readjudicate the issue after affording a reasonable opportunity of being heard to the assessee firm. We are of the view that in case the observation of the AO as canvassed by the AR is found to be factually incorrect, then the proper recourse would be available to the assessee only in the course of the set-aside proceedings by seeking weeding out of the said incorrect observation and substitution of the same by the correct figure. As regards the contention of the Ld. AR that the Pr. CIT had failed to carry out any independent verification on the aforesaid aspect, we are unable to persuade ourselves to subscribe to the same. We, say so, for the reason that the Pr. CIT had categorically referred to the aforesaid conflicting figures of sales as are clearly discernible from the assessment order and, in the backdrop of the same, had set-aside the order of the A.O with a direction to readjudicate the same. Also, we are unable to concur with the claim of the Ld. AR that the aforesaid variance in the figures of sales would have no bearing on the assessment order. In case, the aggregate sales of the assessee firm as observed by the A.O are found to be Rs. 4,24,67,351/- (as per chart ), then, the same would clearly render the order passed by the A.O as erroneous and prejudicial to the interest of the revenue u/s. 263 of the Act. A.O while framing the assessment had lost sight of the aggregate figure of sales of Rs. 4,24,67,351/- (supra) as is clearly discernible from the chart forming part of the assessment order, therefore, the Pr. CIT had rightly assumed jurisdiction as per the Explanation 2 to Section 263 of the Act, as per which, he remains well within his power to revise the order passed by the A.O if in his opinion, the order was passed by the A.O without making enquiries or verification which should have been made. In our view, the A.O based on the figure of aggregate sales of Rs. 4,24,67,351/- (supra) ought to have carried out necessary enquiries and verification as regards the aggregate sales that were disclosed by the assessee firm as against that gathered by him on the basis of its cash book for the year under consideration. CIT had rightly assumed jurisdiction as per Explanation 2 to Section 263 of the Act, therefore, uphold his order. Appeal of assessee dismissed.
Issues Involved:
1. Validity of Order u/s 263. 2. Erroneous and Prejudicial to Revenue. 3. Action based on Audit Objection. 4. Jurisdiction of Pr. CIT. 5. Admissibility of Evidence and Enquiry. Issue-Wise Detailed Analysis: 1. Validity of Order u/s 263: The appellant contested the validity of the order passed u/s 263 by the Pr. Commissioner of Income-Tax-1, Raipur, arguing it was without jurisdiction, illegal, and void ab initio. The appellant claimed that the Pr. CIT-1, Raipur erred in drawing inferences about the sales figures based on an erroneous table in the assessment order, disregarding the regular books of accounts and VAT returns filed by the assessee. The Tribunal, however, upheld the Pr. CIT's jurisdiction, noting that the A.O's observation of aggregate sales at Rs. 4,24,67,351/- was not disputed during the assessment proceedings nor rectified post-assessment, making the Pr. CIT's intervention valid. 2. Erroneous and Prejudicial to Revenue: The appellant argued that the Pr. CIT erred in holding the assessment order as erroneous and prejudicial to the interests of the revenue. The Tribunal found that the A.O had indeed observed the sales figures at Rs. 4,24,67,351/- in the assessment order, which was not contested by the assessee at any stage. The Tribunal concluded that the Pr. CIT was within his rights to set aside the assessment order for re-adjudication, as the discrepancy in sales figures could potentially affect the revenue. 3. Action based on Audit Objection: The appellant contended that the action u/s 263 was taken based on an audit objection, contrary to the decision in CIT vs. Sohana Woollen Mills. The Tribunal did not find merit in this argument, as the Pr. CIT's action was based on the assessment order's internal inconsistencies rather than solely on an audit objection. 4. Jurisdiction of Pr. CIT: The appellant claimed that the Pr. CIT failed to conduct an independent enquiry before assuming jurisdiction u/s 263. The Tribunal noted that the Pr. CIT had referred to the conflicting sales figures in the assessment order and directed a re-adjudication, which was within his jurisdiction. The Tribunal emphasized that the Pr. CIT's action was justified under "Explanation 2" to Section 263, which allows revision if the A.O's order was passed without necessary enquiries or verification. 5. Admissibility of Evidence and Enquiry: The appellant argued that the Pr. CIT did not conduct an independent verification of the sales figures. The Tribunal observed that the Pr. CIT had rightly set aside the assessment order based on the A.O's recorded figures, which were not contested by the assessee during the assessment proceedings. The Tribunal upheld the Pr. CIT's direction for the A.O to re-examine the issue, as the discrepancy in sales figures warranted further enquiry. Conclusion: The Tribunal dismissed the appeal, upholding the Pr. CIT's order u/s 263, and concluded that the Pr. CIT had rightly assumed jurisdiction to revise the assessment order, directing the A.O to re-adjudicate the issue after providing a reasonable opportunity to the assessee. The Tribunal found no merit in the appellant's arguments and emphasized the necessity of proper verification and enquiry in the assessment proceedings.
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