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TMI Blog2018 (11) TMI 1549X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT may not agree with the conclusion of the AO but if the AO has applied his mind and adjudicated the issue in the light of legal provisions, the CIT cannot set aside the order of the AO simply by holding that the order of the AO is erroneous and prejudicial to the interest of the Revenue. It has been repeatedly held that for setting aside the order under section 263 of the Act, the CIT is required to establish that the assessment order is not only erroneous but also prejudicial to the interest of the Revenue. In the instant case, when the AO has examined the issue in detail after calling all requisite information from the assessee, the assessment framed cannot be called to be erroneous and prejudicial to the interest of the Revenue. We are therefore, of the view that the Revision Order passed by the CIT on this issue is without assuming the proper jurisdiction and we accordingly set aside his order on this issue. So far as the other issue regarding import made from Basma Jewellers is concerned, we find that this issue was not examined either by the AO or by the CIT(A). The assessee has raised the claim to have purchased the gold bar from Basma Jewellers and AO intended to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order under section 263 of the Act, as the order passed under section 143(3)r.w.s 153A of the Act , was pursuant to proper enqui ry on the facts and circumstances of the case. 4. The order of revision has been passed in violation of the principles of natura1 justice, as the order has been passed without giving adequate opportunity of being heard and thus the order is required to be set aside on the facts and circumstances of the case. 5. The order of revision passed by the learned PCIT is also in violation of Principles of natural justice as the details requested by the appellant have not been given to the appellant and thus reliance on certain material by the PCIT without putting the same to the appellant is also violation of the principles of the principles of natural justice and on this count also the order is required to be cancelled on the facts and circumstance of the case. 6. The learned PCIT has passed an unsustainable order which is based purely on assumptions and presumptions. The order is absolutely arbitrary and full of surmises, without considering the relevant material and assuming irrelevant material. Consequently the order passed is a perverse or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the material on record as there is no gross loss in the main uni t and consequent ly passed a perverse order on the facts and circumstance of the case. Without prejudice the contention of the learned PCIT is arithmetically incorrect and consequently the impugned order is liable to be set aside. b) The learned PCIT has erroneously arrived at the Gross losses by conveniently ignoring certain operational income and not considering all the material on record and thus the very subst ratum of the numbers adopted by her are total ly erroneous and consequently the order of the learned PCIT is liable to be set aside on the facts and circumstance of the case. c) The learned PCIT failed to appreciate that when the entire operational income is taken into consideration there is no gross loss in the Main Unit of the appellant and hence when there is no gross loss itself there would not arise a need verify the gross loss leading to a clear inference that the assumption of jurisdiction under section 263 is erroneous the facts and circumstance of the case. d) The gross loss numbers arrived at by the learned PCIT are contrary to the facts and material available on record. Hence it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. l) The learned PCIT failed to appreciate that the assessment has been completed after thoroughly examining all the details more than 5 years back vide order dated 30/12/2011 which was further examined in detail while passing the 143(3) order read with 153A and consequently on the same point there cannot be proceedings under section 263. m) Without prejudice the issue of gross loss does not arise out of any seized material and consequently is beyond the scope of assessment under section 153A read with 143(3) of the Act. n) The learned PCIT is not justified in indirectly attempting to reopen the assessment order under section 143(3) dated 30.12.2011 after a lapse of more than 5 years which is impermissible in law and barred by limitation on the facts and circumstances of the case. o) The learned PCIT is not justified in not appreciating that all the details of the Purchases, Sales and several other voluminous details were provided during the course of the original assessment proceedings and consequently there has been no failure on the part of the assessing officer to verify such details and hence the order under section 263 is without jurisdiction on the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have made purchases of gold bars. As per the claim of the assessee, it had imported gold bars from Basma Jewellers from assessment year 2007-08 to 2013-14 whereas as per the information received from Basma Jewellers, it was incorporated only in financial year 2010-11. Therefore, claim of the assessee needs verification. The AO forwarded this letter to the CIT (A) before whom the appeals were pending and CIT(A) has confronted this communication to the assessee and sought his comments. 3. Assessee submitted its detailed reply stating therein that the information submitted by it during assessment proceedings contained a typographical error where the names of the parties from whom import was done were wrongly typed inadvertently. He submitted various documents in support of this contention. The copy of the reply received from the assessee/appellant was forwarded to the AO vide letter dated 2.1.2016 calling for its comments. The AO reverted back to the CIT(A) vide its letter dated 10.01.2017 stating therein that since information was not available at the time of assessment, necessary enquiries to examine the genuineness of the assessee s import could not be carried out, renderi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of the assessee. Therefore, it cannot be said that the AO has not applied his mind to the facts of the case or the controversies raised before it. In support of this contention, the learned counsel for the assessee has invited our attention to the order of the AO wherein the AO has discussed the issue in detail before accepting the claim. 7. So far as purchase from Basma Jewellers is concerned, the learned counsel for the assessee has contended that assessee has made the purchases from AJR Mathey but unfortunately, on account of typographical error, the name of Basma Jewellers was mentioned. He has filed a reconciliation statement before the CIT (A), but CIT(A), instead of getting it verified by himself or through AO, disposed off the appeal without adjudicating the issue of import from Basma Jewellers on the basis of the proposal of the AO for setting aside the assessment orders on the ground that the assessment order is erroneous and prejudicial to the interest of the revenue. The learned counsel for the assessee further contended that provisions of section 263 can only be invoked when the CIT himself comes to the conclusion that the assessment order is erroneous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... casion with the AO to readjudicate the issues again in the proceedings under section 153A r.w.s. 143(3) of the Act. He however examined the claim of deductions under section 10B of the Act. When the AO was not under the obligation to readjudicate, the issue of profit and loss of different units as no incriminating material was found during the course of search, the order passed by him cannot be called to be erroneous and prejudicial to the interest of the Revenue. 9. The learned DR, on the other hand has placed reliance upon the order of the CIT. 10. Having carefully examined the orders of the lower authorities in the light of rival submissions, we find that the CIT has set aside the order having invoked the jurisdiction under section 263 of the Act mainly on two issues, one is with regard to correctness of gross losses claimed and the other is with regard to discrepancies in purchases made from Basma Jewellers. The original assessment relating to assessment years 2008-09 and 2009-10 were framed on 30.12.2010 and 30.12.2011 respectively. Similarly, the original assessment for assessment year 2010-11 was also framed. During the course of original assessment proceedings, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thoroughly examined by the AO in the original assessment proceedings, there was no need to readjudicate or to re-examine all these evidences in subsequent proceedings. Therefore, the AO has not discussed these issues in detail in subsequent proceedings framed consequent to the search. 11. We have also examined the contentions raised by the assessee that the AO was under no obligation to examine the issue of deduction or the losses suffered by the non eligible unit as no incriminating material was found during the course of search, as these issues were already adjudicated by the AO in the original assessment framed before the search. In this regard, it has been repeatedly held by the Tribunal and the Hon ble jurisdictional High Court particularly in the case of CIT Vs. Lancy Constructions (237 Taxman 728) and the judgment of the Delhi High Court in the case of CIT Vs. Kabul Chawla (234 Taxman 300) in which different judgments of different High Courts were examined and held that if no incriminating material is found during the course of search, the concluded assessment cannot be reopened. In the light of these facts, we are of the view that since the AO has examined the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicate the issue and disposed off the appeal. According to us, the right course would have been for the AO to make a necessary verification of the detailed evidences filed and thereafter to adjudicate the issue and submit the report to the CIT(A) and then CIT(A) should have adjudicated the issue by passing a detailed order. But unfortunately, the AO has not discharged his duties and recommended the matter for revision under section 263 to the CIT (Administration). In any case, though the action of the AO may not be proper but for this reason, the order of CIT passed under section 263 on this issue cannot be sustained as the issue was never examined either by the AO or the CIT(A). Therefore, we are of the view that this issue requires a proper adjudication by the AO. Accordingly, we find no infirmity in the order of the CIT in this regard. Accordingly, we confirm his order. Now the AO is required to adjudicate only one issue i.e., with regard to purchase of gold bars made from Basma Jewellers. Accordingly, these appeals of the assessee are disposed off. 13. In the result, appeals of the assessee are partly allowed. Order pronounced in the open court on the date ment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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