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TMI Blog2014 (8) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... l jurisdiction but at the same time it is equally important that mistake cannot be perpetuated - the order passed by the I.T.O would obviously be prejudicial to the Revenue and would give jurisdiction to the Commissioner u/s 263 as held in CIT Vs Pushpa Devi [1986 (6) TMI 20 - PATNA High Court] - the unsecured loan also remained to be examined by the AO – Decided against Assessee. - ITA No. 3336/Del/2013 - - - Dated:- 14-8-2014 - Sh. S. V. Mehrotra, AM And Sh. Joginder Singh, JM,JJ. For the Petitioner : Sh. Kapil Goel, Adv. For the Respondent : Ms. Sulekha Verma, DR ORDER Per Joginder Singh, JM: The assessee is aggrieved by the impugned order dated 21.3.2013 of the ld. Commissioner invoking revisional jurisdiction u/s 263 of the Income Tax Act, 1961. 2. During hearing of this appeal we have heard Shri Kapil Goel, ld. Counsel for the assessee and Ms. Sulekha Verma, ld. DR. The crux of argument advanced on behalf of the assessee is that a well reasoned order was passed by the Assessing Officer that too after due examination of record and other facts, therefore, invoking of revisional jurisdiction by the ld. Commissioner is not justified. Our attentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red. However, again on 5.3.2013 the books of account were not produced. Apart from non production of books of account, the assessee was asked time and again to explain its low profits but apat1 from the explanation given and discussed above, no other explanation or any document or material in support of any contention in this regard was furnished. So far as the correctness of business results are concerned, the accounts of the assessee are shown as tax audited and the copy of tax audit report placed in the assessment records. A perusal of the same showed that the books of account as maintained by the assessee are incomplete from which the actual profits earned by the assessee cannot be deduced, ascertained or verified. Some of the discrepancies noticed which rendered the books of a/cs liable for rejection are as follows:- i) As per the tax auditor's report in form 3CD the books of account maintained are only cash book and ledger which means that all the incomes and expenses are unvouched and the assessee has not maintained any registers, records and documents including stock register, stock inventories etc. from which GP and the other accounts could be verified. ii) Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entally, it is mentioned that the tax audit report relevant for the period ending 31.3.2010 relevant for A. Y. 2010-11 has also been perused from the relevant assessment records which gave the similar picture i.e. para 28(a) of tax audit report dated 28.8.2010 stated that the said report is at Annexure-2 whereas out all the annexures, Annexure-2 was missing. vi) On the basis of above, it is absolutely clear and evident that the books of account of the assessee are maintained in such a manner from which true profits of the assessee are not ascertainable. The provisions of section 145(3) of the Income-tax Act, 1961, therefore, are clearly applicable to the case of the assessee where the books of account are not correct and complete. The same are, therefore, rejected under section 145(3) of the Income-tax Act and the profits of the assessee are ascertained and determined on the basis of facts and material available on record. The various case laws in this case support rejection of books under section 145(3) of the I.T. Act, 1961. It is true that absence of the stock register or cash memos in a given situation may not per se lead to an inference that the accounts are false or in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee declared gross profit rate of 19.68% on the sales of ₹ 2,84,40,958 against the sale of ₹ 2,77,00,870/-, showing gross profit rate of 17.37% in the immediate preceding year. The ld. Assessing Officer made addition of ₹ 1,50,000/- simply to cover up leakage while framing assessment u/s 143(3) of the Act. 4.1 The ld. Commissioner before invoking revisional jurisdiction u/s 263 of the Act has to satisfy himself about two prerequisites. Firstly the order passed by the I.T.O must be erroneous and secondly the error must be such that it is prejudicial to the interest of Revenue. If the order is erroneous but not prejudicial to the interest of Revenue, the Commissioner cannot exercise the revisional jurisdiction u/s 263(1) of the Act. An erroneous order does not mean a wrong order. It is necessary for the ld. Commissioner to point out the exact error in the order which he proposes to revise so that the assessee would have an adequate opportunity of meeting out those error before the final order is made. Certainly omission to make inquiry is an error. The assessment order was examined by the ld. Commissioner and found the assessment order erroneous as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the book results may not be rejected, however, in spite of repeated asking by ld. CIT the books of accounts were not produced as is evident from para 8 of the impugned order. It is further noted that the assessee did not adduce any explanation regarding low profit rate. In view of these facts the books of the assessee were held to be not complete and thus, the actual profit could not be ascertained. The reason for rejection of books of accounts has been mentioned at para 8 onwards of the impugned order. We are satisfied with the observation made in para 8(vi) of the impugned order that the books of accounts are maintained by the assessee in such a manner from which the due profit would not be ascertained. We are aware that the principle of consistency must be followed before invoking revisional jurisdiction but at the same time it is equally important that mistake cannot be perpetuated, more specifically under the facts and the circumstances available on record. If the procedure adopted by I.T.O brings lesser Revenue then some other procedure the order passed by the I.T.O would obviously be prejudicial to the Revenue and would give jurisdiction to the ld. Commissioner u/s 263 as w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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