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TMI Blog2017 (9) TMI 1941X X X X Extracts X X X X X X X X Extracts X X X X ..... iction u/s 263 of the Act for substituting the view adopted by the Assessing Officer by a view of the Commissioner which is at variance. While setting aside the issue, the Commissioner has not come to a finding but has asked the AO to do a fresh examination and hence, the matter was set aside to the file of AO with direction to re-examine the issue. We find no merit in such setting aside of the issue. He has directed the AO to re-assess the case and examine the evidence in perspective of the provisions of the Act, whereas which amounts further enquiries and substitution of the view adopted by the AO and the same is not merited. Accordingly, we find no merit in the directions of Commissioner and hold that exercise of jurisdiction u/s 263 of the Act is unwarranted and the same is held to be invalid in law. Accordingly, the same is cancelled. Appeals of assessee are allowed. - ITA Nos.1658 to 1662/PUN/2014 - - - Dated:- 29-9-2017 - MS. SUSHMA CHOWLA AND SHRI ANIL CHATURVEDI, JJ. Appellant by : Shri Nilesh Khandelwal Respondent by : Shri Rajeev Kumar, CIT ORDER SUSHMA CHOWLA, J. This bunch of five appeals filed by the same assessee are against separate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or condonation of delay and in the entirety of the facts and circumstances, we condone the delay of 83 days in each of the appeals filed by the assessee and proceed to decide the present appeals. 6. The issue which is raised in the present appeals is against the exercise of power by the Commissioner under section 263 of the Act. The assessee is aggrieved by the said order passed by the Commissioner, where the Assessing Officer had passed the order under section 143(3) r.w.s. 147 of the Act in accordance with the provisions of law and the facts of the case and has challenged the said order of Commissioner on change of opinion. 7. Briefly, in the facts of the case, the assessee had filed the return of income on 31.10.2005 declaring total income of ₹ 12,16,016/-. Survey under section 133A of the Act was carried out on the premises of assessee on 10.03.2011. Certain information was received and consequent thereto, proceedings were reopened under section 147 / 148 of the Act. In response thereto, the assessee filed revised return of income disclosing total income of ₹ 19,87,360/-. The Assessing Officer completed assessment under section 143(3) of the Act on assessed incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced, the order was passed by the Assessing Officer after due application of mind. He further pointed out that there was nothing in the show cause notice to point out any legal or factual error in the assessment of income by the Assessing Officer especially where the assessment order was passed after verification of all the facts and material produced before the Assessing Officer during assessment proceedings. The assessee placed reliance on various judgments of different High Courts in this regard. The Commissioner took note of the deposit of sale proceeds in Kotak Mahindra Bank Ltd. in the years starting from assessment year 2005-06 to 2008-09 and also noted that the assessee had submitted very few bills of expenses against the above receipts and also the bills were not supported by any corroborative evidence. The Commissioner further observed that these were not considered to be satisfactorily explained in the assessment proceedings also. She was of the view that in the absence of complete details of expenditure claimed to be incurred against the above receipts, the question of accepting them wholly and exclusively for the purpose of business, does not arise. Hence, the view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisclosed bank accounts. Thereafter, notice under section 148 of the Act was issued on 23.03.2011 and the assessee filed revised return of income in response thereto. The learned Authorized Representative for the assessee pointed out that the assessee was engaged in making furniture for offices and 20% of deposits were offered in the return of income filed in response to notice under section 148 of the Act. He referred to notice issued under section 142(1) of the Act dated 13.09.2011, copy of which is placed at page 17 of the Paper Book and the reply of assessee filed before the Assessing Officer dated 19.09.2011 which is placed at page 19 of the Paper Book. He further referred to the details of cash withdrawals made during the year, copy of which is placed at page 32 of the Paper Book. He pointed out that the details of unbooked bills are listed at page 36 of the Paper Book and complete details were filed by the assessee in this regard. He further pointed out that another notice dated 21.12.2011 was issued to the assessee, which is placed at page 39 of the Paper Book and the assessee immediately filed the reply, copy of which is placed at page 41 along with note on business activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in such case cannot be said to be prejudicial to the interest of revenue. 10. The learned Departmental Representative for the Revenue on the other hand, pointed out that the deposits in bank accounts were huge totaling ₹ 6.09 crores, which were not disclosed by the assessee in the return of income. He further pointed out that the assessee has failed to give any details of expenses and in such circumstances, the Commissioner invoked the jurisdiction under section 263 of the Act. He further referred to the order of Commissioner in this regard and pointed out that the Assessing Officer was directed to verify the accounts of assessee. He further vehemently stated that rejection of books was without any enquiries or similarly, the adoption of net profit rate could not be applied in the hands of assessee. The learned Departmental Representative for the Revenue placed reliance on the ratio laid down by the Hon ble High Court of Delhi in CIT Vs. D.K. Garg in ITA No.115/2005, judgment dated 04.08.2017 and by the Hon'ble Supreme Court in CIT Vs. Amitabh Bachchan in Civil Appeal No.5009 of 2016 (arising out of S.L.P (C) No.11621 of 2009) judgment dated 11.05.2016. He stressed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d every type of mistake or error committed by the Assessing Officer and incorrect assumption of facts and incorrect application of law would satisfy the requirement of order being erroneous and similarly, orders passed without applying the principles of natural justice or without application of mind. The Hon'ble Supreme Court further held that every loss of revenue as a consequence of order of the Assessing Officer could not be treated as prejudicial to the interest of revenue; for example, when an ITO adopts one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it could not been treated as erroneous order prejudicial to the interest of revenue unless the view taken by the Assessing Officer was unsustainable in law. 13. It may be noted that the apex court in Malabar Industrial Co. Ltd. Vs. CIT (supra) had also referred to the ratio laid down by the Hon'ble Supreme Court in Rampyari Devi Saraogi Vs. CIT (supra) i.e. the decision relied upon by the learned Departmental Representative for the Revenue. In the facts of the said case, it was held b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, is absent. Similarly if an order is erroneous but not prejudicial to the interest of the Revenue, then also the power of suo motu revision cannot be exercised. Any and every erroneous order cannot be subject-matter of revision because the second requirement also must be fulfilled. 15. The Hon'ble Supreme Court in CIT Vs. Max India Ltd. (supra) had held that where the Assessing Officer had adopted one of the courses permissible in law and it had resulted any loss of revenue; or where two views were possible and the ITO has taken one view with which the Commissioner does not agreed, it could not be treated as erroneous order prejudicial to the interest of revenue, unless the view taken by the ITO was unsustainable in law and the apex court thus, held that where two views are possible, then every loss in the revenue would not enable the Commissioner to exercise his power of revision under section 263 of the Act. 16. The learned Departmental Representative for the Revenue has placed reliance on the ratio laid down by the Hon'ble Supreme Court in CIT Vs. Amitabh Bachchan (supra). In the facts of the said case, the assessment in question was set aside on the ground that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Commissioner in holding that the order of Assessing Officer in simply dropping the said claim on the issue that the claim was withdrawn, was the correct course of action. The exercise of revisionary powers by the Commissioner under section 263 of the Act was thus, upheld. 17. Now, coming to the facts of the case, where the assessee had originally filed the return of income and had declared turnover in the respective years which was accepted in the hands of assessee. However, pursuant to Survey under section 133A of the Act on the business premises of assessee on 10.03.2011, it transpired that three bank accounts with Kotak Mahindra Bank Ltd. were not disclosed by the assessee. The undisclosed turnover in the said three bank accounts for assessment years 2005-06 to 2008-09 totaled to about ₹ 6.09 crores. Thereafter, the assessee filed revised return of income in response to the notice issued under section 148 of the Act declaring additional income in its hands, wherein 20% of the deposits were offered as additional income. The case of assessee was taken up for scrutiny, wherein notices under section 142(1) and 143(2) of the Act were issued to the assessee, copies of which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 137,426,546 19,637,225 238,973,611 Undisclose d Sales 3,848,170 7,206,897 14,934,299 34,356,500 - 60,345,866 Profit @ 20% 769,634 1,441,379 2,986,860 6,071,300 - 11,269,173 Note In AY 08 In AY 08-09, ₹ 79577784 was added on account of Assessment. Out of the same ₹ 1,00,00,000/- was received in Kotak Bank As 8% has already been paid on the amount during assessment, additional 12% on ₹ 1,00,00,000/- has been considered while arriving at undisclosed profit. 18. The assessee also furnished the details of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to why the disclosure of profit @ 20% should be accepted. The Assessing Officer noted in the original return of income, that the assessee had only declared gross profit of 4.8% and since the assessee could not prove and substantiate the contents with supports as against the gross profit estimated @ 20%, the gross profit disclosed in the original return of income was only 4.8%. The Assessing Officer referred to second show cause notice issued and proposed why book results should not be rejected and provisions of section 145(3) should not be invoked. The Assessing Officer noted that the assessee has shown gross profit of 4.8%, 11.8%, 7.5%, 7.69% and 11.25% in assessment years 2005-06 to 2009-10, respectively. Further, the assessee had disclosed income under section 41(1) of the Act in assessment year 2009-10 by writing back certain liabilities and if the said income was taken into consideration, the profit for the said year would exceed 15%. The Assessing Officer on consideration of the gross profit results for various years and the fact that there were undisclosed receipts in assessment year 2009-10, the profits on disclosed receipts and on undisclosed receipts to be together wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 2364,26,485 609,92,487 2974,18,972 446,12,846 18,93,188 (93,44,038) - 371,61,996 116,47,487 255,14,509 480,80,640 2009-10 405,82,577 - 405,82,577 60,87,387 96,29,242 (68,48,095) (327,29,254) 7,42,840 7,42,840 (238,60,72 0) 7,42,840 2770,09,062 609,92,487 3380,01,549 507,00,232 115,22,430 (161,92,133) (327,29,254) 379,04,836 123,90,327 16,53,788 488,23,480 20. In the present case, the Assessing Officer noted the factum of assessee not declaring his total turnover in the books of account. Consequent thereto, he was of the opinion that the books of account maintained by the assessee cannot be relied upon. The assessee though fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He has directed the Assessing Officer to re-assess the case and examine the evidence in perspective of the provisions of the Act, whereas which amounts further enquiries and substitution of the view adopted by the Assessing Officer and the same is not merited. Accordingly, we find no merit in the directions of Commissioner and hold that exercise of jurisdiction under section 263 of the Act is unwarranted and the same is held to be invalid in law. Accordingly, the same is cancelled. 22. The facts and issues in ITA No.1658/PUN/2014 are similar to the facts and issues in ITA Nos.1659/PUN/2014 to 1661/PUN/2014 and our decision in ITA No.1658/PUN/2014 shall apply mutatis mutandis to ITA Nos.1659/PUN/2014 to 1661/PUN/2014. 23. In respect of assessment year 2009-10, the learned Authorized Representative for the assessee pointed out that no undisclosed turnover was detected for the said year and there was only undisclosed interest income which has to be adjusted against undisclosed losses from FAO business and disclosed losses also and after giving effect to the order passed under section 264 against application moved under section 154 of the Act, the assessed income under section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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