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TMI Blog2016 (10) TMI 925X X X X Extracts X X X X X X X X Extracts X X X X ..... , the CIT can assume jurisdiction once the assessment order passed by the A.O. is erroneous and also it is prejudicial to the interest of the revenue. In the present case on hand, though the order passed by the A.O. is prejudicial to the interest of the revenue but it is not erroneous, therefore, the CIT cannot assume jurisdiction to revise the assessment order passed by the A.O. u/s 143(3) of the Act. The assessment order passed by the A.O. u/s 143(3) of the Act dated 9.1.2013 is not erroneous in so far as it is prejudicial to the interest of the revenue. Therefore, we quash the order passed by the CIT u/s 263 of the Act and restore the order passed by the A.O. u/s 143(3) of the Act. - Decided in favour of assessee - I.T.A.No.140/Vizag/2015 - - - Dated:- 7-10-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Shri C. Subrahmanyam, AR For The Respondent : Shri M.B. Reddy, DR ORDER PER G. MANJUNATHA, Accountant Member: This appeal filed by the assessee is directed against order of the CIT, Rajahmundry u/s 263 of the Income Tax Act, 1961 (hereinafter called as 'the Act') for the assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 9.1.2013 is not erroneous in so far as it is prejudicial to the interest of the revenue, as the A.O. has examined all the issues pointed out in the show cause notice at the time of completion of assessment. The assessee further submitted that it has furnished books of accounts and other relevant information before the A.O., the A.O. has issued show cause notices on various occasions and specifically asked details about the expenditure debited in the profit loss account, such as work contract expenses, details of depreciation claimed on fixed assets, secured and unsecured loans, sub contract details and loans and advances given to various parties. The assessee further submitted that as regards sub contract work expenses and other expenses debited in the Profit loss account, the A.O. after verified with the books of accounts has chosen to disallow an adhoc disallowance of ₹ 4 lakhs in the absence of proper bills and vouchers. As regards depreciation on fixed assets, the A.O., at the time of assessment has called for specific details of bills and vouchers of additions made to fixed assets and having satisfied with the details filed by the assessee has accepted the claim. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neous in so far as it is prejudicial to the interest of the revenue, as the A.O. has examined all the issues pointed out by the CIT, right from verification of expenditure to loans and advances, secured and unsecured loans and applicability of the provisions of TDS on various expenditure. The A.O. has called for specific details about all the issues, at the time of completion of assessment by a questionnaire and the assessee has replied point by point to the issues raised by the A.O. The A.O. after satisfied with the explanations offered by the assessee, chosen to make adhoc disallowance of ₹ 4 lakhs to cover up the deficiencies in the form of proper bills and vouchers, except that has accepted the return of income filed by the assessee. The A.R. further submitted that the CIT has failed to point out any specific defects in the assessment order to invoke the jurisdiction u/s 263 of the Act. Without pointing out any specific defects, as to the assessment order passed by the A.O. is erroneous in so far as it is prejudicial to the interest of the revenue, simply directed the A.O. for further verification of the issues which have been already examined by the A.O. at the time of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t order which is erroneous and prejudicial to the interest of the revenue, therefore, the CIT order should be upheld. 9. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The CIT assumed jurisdiction to revise the assessment order for the reason that the A.O. has not conducted proper enquiry before completion of assessment, thereby the assessment order passed by the A.O. is erroneous in so far as it is prejudicial to the interest of the revenue. The CIT revised the assessment order for the reason that the A.O. has completed the assessment without examining the issues pointed out in his show cause notice which caused prejudice to the interest of the revenue. The CIT has observed various issues in the revision proceedings. According to the CIT, the A.O. has failed to examine the expenditure debited to P L account. The CIT, further, observed that the A.O. has not called for any details with regard to the acquisition of fixed assets and claim of depreciation, secured and unsecured loans, loans and advances, applicability of TDS provisions and low net profit declared by the assessee. The A.O. not only faile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment by making adhoc disallowance of ₹ 4 lakhs towards certain expenditure for want of proper bills and vouchers. We further observed that the A.O. has passed consequential order u/s 143(3) r.w.s. 263 of the Act, wherein he had accepted the explanation offered by the assessee with regard to all the issues pointed out by the CIT in the revision proceedings, except further disallowance of ₹ 6,27,780/- in respect of certain cash expenditure incurred under the head work contract expenses for which the assessee s A.R. has agreed. Except this, the A.O. has accepted all the issues pointed out by the CIT, therefore, we are of the view that the CIT is incorrect in holding that the A.O. has not conducted proper enquiry of the issues before completion of assessment. In our considered view, the issues pointed out by the CIT have been thoroughly examined by the A.O., therefore, there is no reason for the CIT to revise the assessment order. 12. The CIT has power to revise the assessment order u/s 263 of the Act, but to invoke the provisions of section 263 of the Act, the twin conditions must be satisfied i.e. (i) the order of the A.O. is erroneous (ii) further it must be pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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