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TMI Blog2015 (8) TMI 866X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. The assessee has shown surrender of income as was made during the course of survey in the computation of income and after claiming set off of business loss and unabsorbed depreciation, shown taxable income at ₹ 63.42 lakhs. The nature of business of the assessee is manufacturing of sweet items on which the assessee explained that it was not possible to maintain the details of manufactured items or of the closing stock. The nature of business of the assessee clearly revealed that it may not be possible to give the exact detail of the manufacturing of the sweet items. The Assessing Officer has examined this aspect considering the history of the assessee and the learned Commissioner of Income-tax did not adversely committed upon the same in the impugned order that when the assessee is continuing with the same nature of business from the earlier year and similar data of manufactured items have not been prepared and have not been doubted by the Revenue-Department why such an item is considered in the proceedings under section 263 of the Act. The record further revealed that whatever objections have been raised by the learned Commissioner of Income-tax, have been met ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act, 1961 on the following grounds : 1. That the worthy Commissioner of Income-tax-III, Ludhiana has erred in cancelling the assessment as framed by the Assessing Officer under section 143(3) by treating the same as erroneous and prejudicial to the interests of the Revenue. 2. That the worthy Commissioner of Income-tax has failed to consider that on various occasions, the replies had been filed to him by way of written submissions and detailed discussion have taken place on various dates and has failed to consider the submissions made before him vide letters, dated May 10, 2013, May 27, 2013, July 14, 2013 and July 15, 2013. 3. That the Commissioner of Income-tax has failed to consider that the assessment as framed by the Assessing Officer was after due application of mind and after considering the detailed replies on various dates as filed before him during the course of assessment proceedings. 4. That the cancellation of earlier assessment by the Commissioner of Income-tax and directing the Assessing Officer to make a fresh assessment, confirms that the Commissioner of Income-tax is not of the confirmed view about the assessment being erroneous and prejudicial to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses and also wrongly allowed set off of unabsorbed losses against surrendered income and failed to make enquiry in this regard. The assessee did not place on record evidences with respect to surrender of office equipment or construction of building. 3. The Assessing Officer failed to make enquiry whether depreciation could be allowed in the absence of vouchers and that the assessee has shown gross profit of 10.85 per cent. even after including the surrendered amount. After excluding the surrendered amount, the assessee has shown loss. Therefore, the Assessing Officer should have rejected the books of account and has failed to make enquiry on the same. The show-cause notice was issued to the assessee under section 263 of the Income-tax Act which was attended to by his counsel. The learned Commissioner of Income-tax also directed as to why book results be not rejected. The assessee replied that the book results could not be rejected merely on impossibility of furnishing the information with regard to closing stock, as in the nature of the business of the assessee, it is impossible. The assessee filed written replies before the learned Commissioner of Income-tax explaining the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs. Learned counsel for the assessee referred to the audit report, profit and loss account and various statutory notices issued by the Assessing Officer at the assessment stage, copies of which are filed in the paper book in which the Assessing Officer called for the complete details of computation of income, audit report and details of the profit and loss account, details of manufacturing process, comparative chart of the gross profit, details of purchases and reconciliation of the raw material along with rates of the last three years. The assessee filed complete replies before the Assessing Officer. The Assessing Officer, thereafter called for further reply from the assessee regarding quantitative details of raw material consumed and production data and the assessee explained that in the nature of business of the assessee, where large quantities of sweet items have been manufactured and different items have been used, it was not possible to maintain consumption and production data. The summary of the stock held on March 31, 2010 was explained. The reason for fall of the gross profit rate was also explained because the price of the raw material have increased but the sale price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed by the assessee, it cannot be said that there was lack of enquiry so as to confer power on the Commissioner of Income-tax to invoke section 263. 8. Learned counsel for the assessee, therefore, submitted that the Assessing Officer has not failed to make enquiry in to the matter, therefore the order of revision is unjustified in law. 9. On the other hand, the learned Departmental representative relied upon the impugned order and submitted that surrender of income was made for deemed income and the Assessing Officer did not make proper enquiry into the matter. The Assessing Officer did not apply his mind and no details of the closing stock of manufactured items have been furnished. Therefore, the learned Commissioner of Income-tax was justified in cancelling the assessment order in the matter. The learned Departmental representative relied upon the following decisions : (i) Fakir Mohmed Haji Hasan v. CIT [2001] 247 ITR 290 (Guj) ; (ii) Tudor Knitting Works Pvt. Ltd. v. CIT [2014] 360 ITR 453 (P H); and (iii) Axia Engineering Works v. CIT [2007] 292 ITR 577 (P H). 10. We have considered the rival submissions and material available on record. The assessee has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o produced before the Assessing Officer. The Assessing Officer was satisfied with the explanation of the assessee. 11. The hon'ble Punjab and Haryana High Court in the case of CIT v. K. S. Bhatia [2004] 269 ITR 577 (P H) held that, mere fact that the profits were low compared to the earlier year was not a circumstance or material which could justify an estimate in the circumstances of the case. 12. The hon'ble Rajasthan High Court in the case of CIT v. Girdhari Lal [2002] 258 ITR 331 (Raj) held that (headnote) when the Assessing Officer after going through the material on record and after considering the explanation of the assessee, made some additions and rejected the books of account, it could not be said that he had not applied his mind. It is not always necessary that every assessee in the line of the business should have the same rate of profit. 13. The hon'ble Bombay High Court in the case of CIT v. Gabriel India Ltd. [1993] 203 ITR 108 (Bom) held as under (headnote) : Held, that the Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given a detailed explanation in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew taken by the Income-tax Officer is unsustainable in law. 16. The record further revealed that whatever objections have been raised by the learned Commissioner of Income-tax, have been met by the assessee by explaining the same before the Assessing Officer at assessment stage. The assessee explained the issue of set off of unabsorbed loss of ₹ 14,84,641 by referring to the reply filed before the Assessing Officer dated May 21, 2012 paper book 103 along with the details. The assessee also replied to the query raised by the Assessing Officer with regard to surrendered income, copies of the replies are filed on record. The assessee also explained that the Assessing Officer, after consideration of all the replies, has allowed the depreciation and the depreciation chart is filed at page 44 of the paper book. It is, therefore, clear that the assessee submitted complete details before the Assessing Officer at the assessment stage regarding all the issues which have been raised by the learned Commissioner of Income-tax in the impugned order under section 263 of the Act. It is, therefore, clear that the Assessing Officer was satisfied with all the items which have been raised i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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