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TMI Blog2011 (7) TMI 638X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee. - IT APPEAL NO. 855 OF 2010 - - - Dated:- 11-7-2011 - ADARSH KUMAr GOEL, ACTG., AJAY KUMAR MITTAL, JJ. Denesh Goyal for the Appellant. ORDER Ajay Kumar Mittal, J. This appeal under Section 260A of the Income-Tax Act, 1961 (for short "the Act") has been filed by the revenue against the order dated 6.8.2009, passed by the Income Tax Appellate Tribunal Chandigarh Bench (B), Chandigarh (in short "the Tribunal") in ITA No. 757/CHANDI/2008, relating to the assessment year 2004-05. 2. The following substantial questions of law have been claimed for determination of this Court: "(i) Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in law in setting aside the order under Section 263 passed by the CIT by holding that Commissioner has not furnished any opinion on any of the issues raised in his order under Section 263? (ii) Whether on the facts and circumstances of the case, the ITAT was right in law in setting aside the order under Section 263 of the CIT though the order was erroneous and prejudicial to the interest of revenue on account of improper and inadequate scrutiny by the A.O.?" 3. The facts, in brief, necessary fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.10.2004 which was processed u/s 143(1) on 24.6.2005. Since survey u/s 133A was conducted in this case on 22.1.2004, the case was taken for compulsory scrutiny in view of existing guidelines and statutory notice u/s 143(2) has been issued on 9.12.2004 and served upon assessee. Further information u/s 142 (1) was called by issue of notice dated 9.12.2004. In response, the assessee attended the proceedings with Sh. Bhupinder Sharma, Advocate, from time to time and furnished the requisite information/documents. Books of account along with supporting vouchers have been produced and examined. After discussion, assessment is made as under:- The assessee is carrying the business of Steel Rolling Mills. During the course of survey u/s 133A, the assessee declared additional income of Rs.12 lacs which is well reflected in Profit Loss account. Further after discussion and examination of books of account and bills/vouchers of expenses, a disallowance of Rs. 20,000/- is made out of telephone expenses and other unvouched expenses being of personal or unverifiable nature. In view of above discussion, income is computed as under: Returned income Rs. 8,53,480/- Addition of Rs. 20,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee in pre-survey and post-survey period. As per the details on record the assessee had shown G.P. rate at 2.33% in the pre-survey period but 3.25% in the post-survey period. This aspect needed verification and it was incumbent upon the Assessing Officer to verify the correctness of GP rate shown. It was necessary to verify the reasons-whether it was actual or manipulated trading results. It was necessary to examine the low G.P. rate shown in the pre- survey period. The Assessing Officer failed to examine and verify this issue. (D) The Assessing Officer also did not verify the correctness of the closing stock of raw material which was shown at Rs. 1,69,217/- for 17.160 units. (Rs. 9861/- per unit), whereas the average purchase price of the purchase of 2662.590 units for Rs. 3,24,50,559/- came to Rs. 12,187/- per unit. The assessing officer has not examined the issue and why the value of closing stock of raw material was shown at a lower figure. (E) The Assessing Officer has allowed the deduction on account of theft of Rs. 3.00 lakh merely on the basis of a letter of the police which only stated that the accused were let off and discharged by the court from the crimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner had not rendered a definite and clear opinion as to why the order of the Assessing Officer was erroneous and prejudicial to the interests of the Revenue. As noted earlier, 'erroneous' in the context of section 263 is to be understood as to mean something which is unsustainable in law or is devoid of factual support. On none of the issues, is there any finding by the Commissioner as to how the order of assessment deviates from the law or is otherwise invalid. The Commissioner has merely set aside the assessment and directed a fresh assessment and has directed the Assessing Officer to consider the issues raised by the assessee. Quite clearly, on all the issues, elaborate submissions were made by the assessee and in the context of the same, there is no finding of the Commissioner as to how the assessment order was contrary to law or that it was based upon a mistaken view of law or of fact. For instance, with regard to the deduction of Rs. 3,00,000/- on account of theft, the Commissioner has concluded that the said deduction was allowed by the Assessing Officer without verification. In the 'show cause notice' issued u/s 263 dated 21.11.2007, the Commissioner observed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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