Revision u/s 263 - non-verification of raw material - HELD THAT:- the observations of learned CIT that certain vouchers were still unverifiable appears to be based on mere assumption and mere assumption is not sufficient to hold that assessment order is erroneous. Therefore, we hold that in the present case there is no incorrect assumption of facts and there is no incorrect application of law so as to make the assessment order passed by the AO as erroneous. so far as it relates to the issue regarding invocation of power u/s 263 with regard to non-verification of raw material purchases to the tune of ₹ 1,94,66,944, we hold that the power has wrongly been exercised by CIT u/s 263.
In regard to donation - HELD THAT:- it is observed that the said mistake was rectified by the AO much prior even to the show-cause notice issued by learned CIT. The said mistake was rectified by the AO vide order passed u/s 154 dt. 22nd May, 2008 whereas the show-cause notice issued by the CIT is dt. 2nd March, 2010. Thus, the said ground cannot be said to be subject-matter of s. 263 as the said issue was not existing on the date when CIT has initiated the proceedings u/s 263.
regard to claim of depreciation - HELD THAT:- it is observed that the AO had raised specific query with regard to user of the asset on which the assessee had claimed depreciation and the replies were also given by the assessee to the AO. The AO being satisfied with the reply has accepted the claim of the assessee regarding depreciation. Learned CIT in his order has nowhere specified that which part of the machinery was not utilized by the assessee for whole of the year and to pinpoint that how the claim of the assessee regarding depreciation was wrongly decided by the AO. In the absence of any such material, the ratio applied by us in respect of the issue regarding raw material purchase will be fully applicable to this issue also and applying the same reasons we hold that learned CIT was wrong in invoking the s. 263 on the issue of depreciation.
Therefore, we are of the opinion that learned CIT has wrongly invoked s. 263 to the case of the assessee. Therefore, the impugned order passed u/s 263 is set aside and the assessment order, which is neither erroneous nor prejudicial to the interest of Revenue, is restored.
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