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TMI Blog2014 (7) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... rical poles whereas the assessee company is not manufacturing transformers - the assessee’s sales were mainly to the electricity board on the basis of tender and during the period, the tender was opened and material was supplied, there was a hike in the price of raw material - while passing the order u/s 263, the CIT cannot go beyond the reasons given in the notice issued u/s 263 - The only ground given in the notice under Section 263 was lack of enquiry into the low profit rate disclosed by the assessee - This reason is found to be factually incorrect - Adequate enquiry into the low profit rate was made by the AO as well as ACIT - the order passed by the CIT u/s 263 is not valid and is liable to set aside – Decided in favour of Assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit disclosed by the assessee was much low as compared to profit disclosed by another assessee and the Assessing Officer did not verify this aspect properly. The learned counsel referred to the assessment order and pointed out that identical query was raised by the Assessing Officer and then the assessee referred the matter under Section 144A to the Additional Commissioner who examined the assessee s submission, factual aspects in detail and thereafter accepted net profit disclosed by the assessee. He, however, directed for making certain disallowances out of expenses. The Assessing Officer passed the order in pursuance to the order of the CIT passed under Section 144A. He submitted that the allegation of the CIT that the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on tender basis. During the year under consideration, the assessee company has declared GP and NP rates @ 2.17% and 0.73% respectively on gross receipts of 31,86,89,277/-, which are remarkably lower than the corresponding rates of immediate preceding year. b) M/s Milestone Fab, a proprietary concern of Sh. Man Mohan Gupta which is also engaged in similar business but claiming deduction u/s 80(IC) has shown a net profit of 28.81% as compared to 0.73 shown by M/s Fabrico India (P) Ltd. AO has accepted the same without any enquiry or verification. 3. In view of para 2 above, the assessment order passed by the Asstt. Commissioner of Income-tax, Circle-1, Meerut is erroneous and prejudicial to the interest of revenue since the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. Commissioner of Income-tax, Range-1, Meerut, after considering the submissions of the assessee, examination of books of accounts and discussion with the AO, decided the issue of profitability in favour of the assessees vide his order dated 22.12.2010. 7. From the above, it is evident that the Assessing Officer did notice that the profit disclosed by the assessee was much lower than the profit disclosed by M/s Milestone Fab which is engaged in the similar business. He directed the assessee to explain the same. However, the assessee referred the matter under Section 144A to the Additional Commissioner of Income Tax. The order of Additional Commissioner of Income Tax, Meerut is placed at pages 109 to 111 from which it is evident that be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turing accounting records have been meticulously maintained and the same being subject to review by excise authorities, the possibility of any leakages is remote. Thus there is no case for any tinkering with the manufacturing account. 8. Thereafter, the Additional Commissioner of Income Tax also examined the various expenses claimed by the assessee in both the units and directed for certain disallowances there from. In view of the above, we find that the Assessing Officer examined the issue, thereafter, on reference by the assessee to the Additional Commissioner of Income Tax, he examined the issue and gave direction to the Assessing Officer. The Assessing Officer completed the assessment as per the direction of the Additional Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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