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TMI Blog2015 (9) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... the order passed under Section 263 of the Act by the CIT - Decided in favour of assessee. - ITA No. 2495/Del/2013 - - - Dated:- 21-8-2015 - SHRI I.C. SUDHIR AND SHRI INTURI RAMA RAO, JJ. For The Appellant : S/sh. K. Sampath Raja Kumar, Advocates For The Respondent : Sh. Ravi Jain, CIT-DR ORDER PER INTURI RAMA RAO, A.M.: This is an appeal filed by the assessee company for the assessment year 2008-09 against the order dated 25.03.2013 passed by the learned CIT, Meerut, under Section 263 of the Income-tax Act, 1961, raising the following ground of appeal: i. That on the facts and in the circumstances of the case order of the Ld. CIT revising the assessment order dated 27.12.2010 passed u/s 143(3) of the Income-tax Act 1961 is devoid misconceived and is erroneous and must be quashed; ii. That the order of revision of the Ld. CIT based solely on a difference of opinion and seeking only a further enquiry for assessment and passed without indicating any error or prejudice in the assessment order dated 27.12.2010 is ab initio illegal and void and so must be quashed; iii. That further, without prejudice to the foregoing, the finding of the Ld. CIT tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of stock register, required details regarding materials consumed and finished goods could not be reported and thus business results remained totally unverifiable from incomplete books of accounts, despite which the A.O. has accepted negligible profits as above. 3. In response to the show cause notice, the appellant had filed detailed reply vide letter dated 5th March, 2013 wherein it was submitted that in respect of those items, the Assessing Officer had caused the necessary inquiries and drawn attention towards the questionnaire dated 29th July, 2010 issued by the Assessing Officer on those items. However, the CIT not appreciated the explanation and set aside the assessment vide his order dated 25th March, 2013, exercising the powers vested with him under the provisions of Section 263 of the Act on the ground that prior no proper inquiry was conducted. In support of this, he relied upon the following decisions: i. CIT Vs. V.N.M. A. Rathinasabapathy Nadar, (1995) 215 ITR 309, 315 (Mad.) ii. Swarup Vegetable Products Industries Ltd. Vs. CIT, (1991) 187 ITR 412, 415-416 (All.) iii. Umashankar Rice Mills Vs. CIT, (1991) 187 ITR 638-39 (Ori.) iv. Gee Vee Enterprises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sale of hand looms in which turnover of Rs. l6,39,30,613/- is shown. However, the N.P. is shown at merely ₹ 8,73,333/- which is negligible. As per tax audit report, the assessee has not maintained stock register for trading actual raw material as well as finished goods. Moreover, the audit report clearly reports that in absence of stock register, required details regarding materials consumed and finished goods could not be reported and thus business results remained totally unverifiable from incomplete books of accounts, despite which the A.O. has accepted negligible profits as above. 7. The appellant replied saying that all those items had been examined by the Assessing Officer, only after being satisfied with the explanation filed by the appellant during the course of assessment proceedings, the Assessing Officer passed the assessment order. This facts have not been disputed by the learned CIT-DR but only ground on which the assessment had been set aside by the CIT under Section 263 is that no proper inquiry has been made by the Assessing Officer on those items. The Commissioner of Income Tax agreed to the extent that the Assessing Officer made some inquiries but not p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasijudicial controversies as it must in other spheres of human activity. (See Parashuram Pottery Works Co. Ltd. Vs. ITO [1977] 106 ITR 1 (SC) at page 10) From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualize a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry made is erroneous. This can happen if an enquiry and verification is conducted by the Commissioner of Income-tax and he is able to establish and show the error or mistake made by the Assessing Officer, making the order unsustainable in law. In some cases possibly though rarely, the Commissioner of Income-tax can also show and establish that the facts on record or inference drawn from facts on record per se justified and mandated further enquiry or investigation but the Assessing Officer had erroneously not undertaken the same. However, the said finding must be clear, unambiguous and not debatable. The matter cannot be remitted for a fresh decision to the Assessing Officer to conduct further enquiries without a finding that the order is erroneous. Finding that the order is erroneous is a condition or requirement which must be satisfied for exercise of jurisdiction under Section 263 of the Act. In such matters, to remand the matter/issue to the Assessing Officer would imply and mean the Commissioner of Income-tax has not examined and decided whether or not the order is erroneous but has directed the Assessing Officer to decide the aspect/question. 9. The principle that can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved (page 386): These two decisions show that it is not necessary for the Commissioner to make further inquiries before cancelling the assessment order of the Income-tax Officer. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the order as erroneous on the ground that in the circumstances of the case the Income-tax Officer should have made further inquiries before accepting the statements made by the assessee in his return. The aforesaid observations have to be understood in the factual background and matrix involved in the said two cases before the Supreme Court. In the said cases, the Assessing Officer had not conducted any enquiry or examined evidence whatsoever. There was total absence of enquiry or verification. These cases have to be distinguished from other cases (i) where there is enquiry but the findings are incorrect/erroneous; and (ii) where there is failure to make proper or full verification or enquiry. 11. Thus, the decisions relied upon by the CIT on the issue of jurisdiction under Section 263 are not applicable to the facts of the case. Further we observe that the Assessing Officer as an investig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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