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2020 (3) TMI 1020 - AT - Income TaxRevision u/s 263 - referring the case back to the A.O. for fresh examination of estimating the NP at 1% on the turnover declared by the appellant - whether the actions of the AO can be termed as prejudicial to the interest of Revenue? - HELD THAT:- From perusal of the records of A.Y. 2011-12, wherein the book of accounts of the assessee company was rejected and the profit was computed @1% of total sales engaged in the same line of business, observed that during the relevant year also the assessee has failed to produce copy of bills of purchase and sale of goods to examine the actual purchases and sales. AO further held that no labour payment was made for loading and unloading of goods and no transportation cost was claimed by assessee for inward and outward movement of goods. Finally, the AO arrived at the conclusion that in absence of bills evidencing the purchase and sale of goods, the entire trading of goods could not be examined, which under such circumstances were to be treated as paper transactions, implying that there was neither any sale nor purchase. AO had rightly assessed the business income at Nil since no income can arise out of non existent sales and purchases. Therefore, order passed by the AO should not be erroneous. Another stand of the PCIT was that that sufficient/proper enquiries were not conducted by the Ld. AO during the assessee’s assessment u/s 143(3) for the relevant Assessment Year. We are of the view that the assessee cannot be held to be at fault and subjected to revision proceedings u/s 263(1) for ‘inadequate enquiry' being conducted by the Ld. AO.In other words, fresh enquiry cannot be conducted on completed assessments on the premise that the enquiries and investigations conducted during assessment were not proper/incomplete/inadequate. AO has considered the documents and submissions made by assessee and AO has also considered the assessment order for A.Y. 2011-12 passed in assessee`s case and taking into account all the facts and circumstances the AO has adopted one of the courses permissible in law and even if it has resulted in loss to the revenue, the said decision of the AO cannot be treated as erroneous and prejudicial to the interest of the revenue as held in Malabar Industries Ltd. vs. CIT [2000 (2) TMI 10 - SUPREME COURT] Since the order of the Assessing Officer cannot be held to be erroneous as well as prejudicial to the interest of the revenue, usurpation of jurisdiction exercising revisional jurisdiction by the Principal CIT is “null’’ in the eyes of law and, therefore, we are inclined to quash the very assumption of jurisdiction to invoke revisional jurisdiction u/s 263 by the Principal CIT. - Decided in favour of assessee.
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