TMI Blog2007 (11) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... . The direction of CIT (Central) contained in the order under section 263, is to make a roving enquiry which indicates that there is no material for passing the order under section 263. 5. The appellant respectfully submits that there is no basis or material before the CIT (Central) to assume that the order Block Assessment under section 158 BC dated 18-3-2005 was erroneous and prejudicial to the revenue. In the absence of the basic requirements under section 263 for initiating action, the present order is without jurisdiction. The impugned order is erroneous, illegal and unsustainable." 3. From the grounds taken by the assessee, the sole issue which arises for our consideration is whether the ld. CIT is justified in setting aside the block assessment by invoking section 263 and directing the Assessing Officer to redo the assessment. 4. The briefly stated facts are as under: The assessee is engaged in the business engaged in the business of trading in Indian Made Foreign Liquor (IMFL). In addition to that, he also runs fast food centre, aqua fast food and also bakery business. There was a search action under section 132 of the Income-tax Act at the residential premises of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --------------------------- 2000-01 11,15,642.50 11,92,349.00 76,706.50 ----------------------------------------------------------- 2001-02 12,98,343.45 12,78,982.50 (-)19,360.95 ----------------------------------------------------------- Total 65,29,998.15 71,12,809.00 5,82,811.00 ----------------------------------------------------------- Income estimated @ 33.1% on sale of 23,54,339 Rs. 71,12,809 (being the average gross profit margin over the above period on liquor sales) ----------------------------------------------------------- Less: Accounted income 5,82,811 ----------------------------------------------------------- Undisclosed income 17,71,528 ----------------------------------------------------------- From the above computation it can be seen that on a total sales turnover of Rs. 71,12,809 the assessee has admitted an income of Rs. 23,54,340 (being 33.1 per cent of the total turnover on soda sales) taking into account the average gross profit on liquor sales for the concerned period. Since the assessee himself has accounted an income of Rs. 5,82,811, the balance amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also IMFL. After the search action, the assessment of the assessee was completed under section 158BC read with section 143(3) of the Act vide assessment order dated 18-3-2005. After examining the assessment record of the assessee, the CIT was not happy in respect of the undisclosed income accepted by the Assessing Officer, more particularly relating to the soda sales. During the course of search, it was found that the assessee was showing purchase of soda for his bar from outside agency but in fact, the soda was actually being manufactured "in house" by the assessee himself. The search party recorded the statement of one Shri P.K. Abdul Latheef who deposed that he was engaged for preparing soda for assessee's hotel and bar and he was employed on monthly salary. As per the statement of Shri Latheef, he was preparing on an average 1300 soda bottles. The required gas cylinder and other expenses for soda manufacturing were handled by the manager. In respect of the utilization of the cylinder Shri Latheef deposed that approximately 5000 bottles of 300 ml. can be manufactured from one cylinder. The assessee admitted the undisclosed income of Rs. 17,71,528 on account of suppression o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorised by the Board in this behalf under section 120; (b) "record" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject-matter of any appeal filed on or before or after 1-6-1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 84 (SC) and in Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC)." 13. In the case of Gabrial India Ltd.- "... We, therefore, hold that in order to exercise power under sub-section (1) of section 263 of the Act there must be material before the Commissioner to consider that the order passed by the Income-tax Officer was erroneous insofar as it is prejudicial to the interests of the revenue. We have already held what is erroneous. It must be an order which is not in accordance with the law or which has been passed by the Income-tax Officer without making any enquiry in undue haste. We have also held as to what is prejudicial to the interests of the revenue. An order can be said to be prejudicial to the interests of the revenue if it is not in accordance with the law in consequence whereof the lawful revenue due to the State has not been realised or cannot be realised. There must be material available on the record called for by the Commissioner to satisfy him prima facie that the aforesaid two requisites are present. If not, he has no authority to initiate proceedings for revision. Exercise of power of suo motu revision under such circumstances will amount to arbitrary e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ----------- Undisclosed income 5,82,811.00 ------------ Considering the fact that the GP shown by the assessee in the returns of income for the block period from sale of soda was less than 9 per cent and the assessee has now surrendered income from soda sales by estimating GP on sale of soda at the rate of 33.13 per cent the claim made by the assessee is found to be acceptable and undisclosed income of Rs. 17,71,528 as admitted by the assessee is brought to tax as undisclosed income from the sale of soda for the period from 1-4-1996 to 31-3-2002." 15. As far as the determination of income from sale of soda is concerned, the Assessing Officer has taken a possible view which in his opinion was a reasonable view considering the material available before him. Merely because the view taken by the Assessing Officer is not liked by the CIT, the order of the Assessing Officer cannot be treated as erroneous order and revenue loss is not the sole criteria for exercising the powers under section 263 of the Act. In our opinion, the CIT has exceeded his powers as order passed by the Assessing Officer is not erron ..... X X X X Extracts X X X X X X X X Extracts X X X X
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