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2016 (5) TMI 48 - AT - Income TaxRevision u/s 263 - estimation of net profit - Held that:- Unless the A.O’s order is erroneous, no action can be taken by the CIT u/s 263 of the Act. This is because, the twin conditions i.e. the order is erroneous and the same is also prejudicial to the interest of the revenue are co-exists. In the present case on hand, on examination of the records, we find that the A.O. has conducted enquiry on the issue of estimation of net profit. The assessing officer after verification of books of accounts and other relevant details has adopted 4% net profit on net purchases, which cannot be termed as erroneous. The contention of the CIT was that the A.O. has not applied the jurisdictional High Court judgments and also ITAT judgement while estimating the net profit. Therefore, the order passed by the A.O. is without application of mind. We do not see any merits in the arguments of the CIT, for the reasons that there is a distinction between lack of enquiry and inadequate enquiry, if there is an inadequate enquiry that would not by itself give occasion to the CIT to assume jurisdiction u/s 263 of the Act, merely because he has a different opinion. Therefore, we are of the opinion that in the present case on hand, there is no reason for the commissioner to revise the assessment order, as the A.O. has verified the issue and estimated the net profit.. In this case, there cannot be any dispute that A.O. has not discussed the issue at the time of completion of the assessment. The net profit adopted by the A.O. is correct or not is a debatable question. The Ld. CIT has not pointed out any mistakes in such estimation to say that it is erroneous and prejudicial to the interest of the revenue. Therefore, we are of the opinion that the assessment order passed by the A.O., in respect of estimation of net profit is not erroneous, in so far as prejudicial to the interest of the revenue. On examination of the assessment order and CIT order, we find that the issue of unsecured loans and capital introduction by the assessee were not examined by the A.O. at the time of completion of assessment. Therefore, we are of the opinion that the assessment order passed by the A.O., in respect of unsecured loans and capital introduction is erroneous in so far as it is prejudicial to the interest of the revenue. Accordingly, we uphold the CIT order and set aside the assessment order passed by the A.O. u/s 143(3) of the Act, in respect of unsecured loans and capital account. Accordingly, the order passed by the CIT u/s 263 of the Act is modified, so as to reject the CIT order in respect of estimation of net profit and uphold the action of the CIT, in respect of unsecured loans and capital account is concerned. - Decided partly in favour of assessee
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