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TMI Blog2018 (12) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... dered opinion that the assessment order framed u/s 143(3) of the Act is neither erroneous nor prejudicial to the interest of the Revenue and the PCIT has erroneously assumed jurisdiction u/s 263 of the Act. We, accordingly, set aside the order framed u/s 263 of the Act and restore that of the Assessing Officer framed u/s 143(3) of the Act. - Decided in favour of assessee. - ITA No. 2756/DEL/2018 - - - Dated:- 29-11-2018 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER For The Assessee : Shri Ved Jain, Adv For The Revenue : Shri Raja Ram Sah, CIT- DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, With this appeal, the assessee has challenged the validity of the order framed u/s 263 of the Income-tax Act, 1961 [hereinafter referred to as 'the Act'] dated 27.03.2018 pertaining to A.Y 2013-14. 2. The sum and substance of the grievance of the assessee is that the ld. PCIT wrongly assumed jurisdiction u/s 263 of the Act. 3. The representatives of both the sides were heard at length, the case records carefully perused and with the assistance of the ld. Counsel, we have considered the documentary evidences bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Supreme Court, we will now see whether the assessment order framed u/s 143(3) of the Act is contrary to the facts of the case in hand. 9. Before proceeding further, let us examine the relevant part of the notice u/s 263 of the Act which reads as under: During the course of survey operation, the stock of gold and diamond jewellery was found in the business premises of the assessee firm. The valuer valued the entire jewellery in the presence of the partner. As per books, the value of gold and diamond jewellery was at ₹ 17,52,77,030/- whereas the same was valued by the approved valuer at ₹ 33,48,49,952/-. This resulted into excess/unaccounted stock of gold and diamond jewellery at ₹ 15,95,72,922/-. Against this, the firm has disclosed only ₹ 6 crore and for the remaining amount of ₹ 9,95,72,922/-, no proper enquiries were made nor the AO took pains to investigate the matter. It is worthwhile to mention that for the proper enquiry in this case, it was important to ask the assessee whether he maintains his stock register on LIFO (last in first out) or FIFO (first in first out) method. Otherwise/how can AO would have come to the conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s/A.Yr.2013-14/ PAN AABFM3409L Sub: Reply of Notice received u/s 142(1) of the I. Tax act dated 01/02/2016 Sir/Madam, As required by your good self I CA M.S. Kathuria the authorized representative Submit as follow: 1. The difference in the figure of stock is due to the following reason. The valuer has taken the value at the Market value and weighed the stock along with threads, stones, Mena and wax etc. He valued it at the prevalent Marketmate of gold on the date of the survey, but the stock shown in Books is at the cost or Market value whichever is less. The assessee is following the same method of valuation which is regularly employed since long. So the difference of ₹ 15.95 in the stock valuation is due to Market rate taken by the valuer and the cost of the stock taken by the assessee. 2. The stock surrendered is valued at the cost i.e. ₹ 2805/-per gm i.e the rate prevalent on the date of the survey. 21,390.380 Gms. X ₹ 2805/- per Gm.= 6,00,00,000/- Here, this is submitted that the surrendered value of stock of ₹ 6,00,00,000/- has been arrived by valuing stock at market rate . However the cost of this is ₹ 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amely on account of difference of value of Board adopted by the valuers. Please justify the difference in valuation and the basis of arriving at a figure of ₹ 6.00 crores as concealed income. 2. Please produce the bills of purchase of stock during A.Y. 2013-14 and party-wise purchase tabulation in the following format: Party from whom purchase was made Date of Purchase Description of items Quantity Purchase Rate of Purchase 4. Please produce the copy of challan of tax deposited with Sales Tax Department. 5. Please produce annexure 2A and 2B of form no.30 and 31 of DVAT return party-wise purchases and sales for A.Y. 2013-14. 14. Reply of the assessee is at page 75 and the same reads as under: The Asstt. Commissioner of Income Tax Circle 51(1) New Delhi Income Tax office Civic Centre , New Delhi Ref: Motiwala Sons/A.Yr.2013-14/PAN AABFM3409L Sub: submission of information required by your goodself. Sir/Madam, As required by your good self I CA M.S. Kathuria the authorized representative is SGbmittingJhe following informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TOTAL 228,630,438.01 DIAMOND STOCK AS ON 31/03/2013 RATE OPENING PURCHASE SALE CLOSING STK IN Cts IN Cts IN Cts STK IN Cts TOTAL 516.91 14690.97 1561.29 13646.59 GOLD STOCK AS ON 31/03/2013 PURIT OPENING PURCHAS SAtE CLOSING STOCK INGms IN Grm STOCK 22 CT -38518.240 12808.150 10550.142 40775.248 STOCK SURRENDER U/S 133 A 21390.380 TOTAL 62166.628 STONE STOCK AS ON 31/03/2013 RATE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the decision of the ITO cannot be held to be erroneous simply because in his order he did not make an elaborate discussion in this regard. 22. In the light of the aforementioned ratio, we have no hesitation to hold that the Assessing Officer during the course of assessment proceedings made detail and specific enquiries in relation to stock and after making detailed enquiries, accepted reconciliation in the variation in the value of stock. Therefore, it cannot be said that the Assessing Officer did not make any enquiry while framing the assessment order. The PCIT has grossly erred in observing that the Assessing Officer should have made a complete enquiry for the amount of excess stock at ₹ 9,95,72,922/- called for documentary evidence for purchase of gold and diamond and verified the genuineness. As mentioned elsewhere, the assessee had filed complete documentary evidences of purchase of gold and diamond and the Assessing Officer has verified the same. Even the alleged excess stock has been explained completely by filing a reconciliation statement. Therefore, it is incorrect to say that neither proper enquiries were made nor any investigation was made by the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d therein by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue‟ . It is not an arbitrary or unchartered power, it can be exercised only on fulfilment of the requirements laid down in sub-section (1). The consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation 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 quasi-judicial controversies as it must in other spheres of hu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held to be erroneous‟ simply because in his order he did not make an elaborate discussion in that regard. 16. Thus, in cases of wrong opinion or finding on merits, the CIT has to come to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the order under Section 263 is passed. In such cases, the order of the Assessing Officer will be erroneous because the order passed is not sustainable in law and the said finding must be recorded. CIT cannot remand the matter to the Assessing Officer to decide whether the findings recorded are erroneous. In cases where there is inadequate enquiry but not lack of enquiry, again the CIT must give and record a finding that the order/inquiry made is erroneous. This can happen if an enquiry and verification is conducted by the CIT 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 CIT can also show and establish that the facts on record or inferences drawn from facts on record per se justified and mandated further enquiry or investigation but ..... X X X X Extracts X X X X X X X X Extracts X X X X
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