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2015 (4) TMI 221

Validity of revision u/s 263 - CIT rejected the books of accounts - Assessee has taken new unsecured loan and AO has obtained confirmation only Bank A/c of lender has not been obtained to examine the creditworthiness - Assessee has paid designing charges and it is not enquired as to whether TDS was made on these payments - A.O. has not taken any details nor made any enquiry on a/c of fire loss claimed - Duty draw back is set off totally & negligible profit is shown

Held that:- Unable .....

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heme of the Act but also violative to the principles of natural justice and hence, conclusion of CIT is not sustainable cannot be held as valid in this regard. See B.S.Sangwan (2015 (1) TMI 1011 - ITAT DELHI) - Decided in favour of assessee. - ITA No. 3376/DEL/2013 - Dated:- 30-3-2015 - Shri R. S. Syal And Shri C. M. Garg,JJ. For the Petitioner : Sh. Sunil Jain, CA For the Respondent : Sh. R.I.S., DR ORDER Per C. M. Garg, Judicial Member : This appeal has been preferred by the assessee against t .....

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ase and in law the learned Commissioner of Income Tax, Meerut has erred in invoking the provisions of section 145(3) and holding that the net profit be assessed at 5% of gross turnover at ₹ 24542252/-. 4. WITHOUT PREJUDICE to other grounds of appeal, on the facts and circumstances of the case and in law the learned Commissioner of Income Tax, Meerut has erred in invoking the provisions of section 145(3) and holding that all other additions and disallowances shall be over and above the net .....

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to whether TDS was made on these payments. iii) From the purchases, the assessee has reduced amount of ₹ 62,58,623/- on a/c of fire loss. A.O. has not taken any details in this regard nor made any enquiry. iv) Duty draw back ₹ 6 crores is set off totally & negligible profit is shown which is accepted as such without any enquiry. 4. The CIT(A), Meerut passed impugned order by holding that the assessment order Dated 5.10.2010 is erroneous as well as prejudicial to the interest of .....

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roneous and prejudicial to the interest of Revenue. The Ld. AR, further, contended that the impugned order is not only wrong but also bad in law as the CIT did not give reasonable opportunity to the assessee to represent the case and the CIT, Meerut completed proceedings ex-partly violating principles and natural justice and assuming invalid jurisdiction for passing impugned order. The Ld. AR filed copy of the assessment order dated 17.2.2014 passed in pursuance to the impugned order u/s 263 / 1 .....

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tion 143(3) of the Act can only be passed on the ground on which assessee has been given reasonable opportunity of being heard and it is not open to the commissionor to set out one reason for revising the order but actually revising order on the some other ground. To support these contentions, the Ld. AR has also placed reliance on the decision of ITAT, Delhi C Bench in the case of Genesis Colors (P.) Ltd. Vs. CIT (2014) 42 taxmann.com 552 (Delh) and submitted that where show cause notice issued .....

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CIT(A), Meerut. From part 6 of the impugned order. We note that the CIT also issued reminder dated 28.2.2013 and passed ex parte order on 28.03.2013. From operative part of para 7 of the impugned order, we note that in para 7 the CIT has directed the AO to examine entire amount of sundry creditors of ₹ 10, 81,49,561/- including an unsecured loan from M/s Kabir Oldtax; from para 10 of the impugned order we also note that the CIT(A) has directed the AO to bring the income in terms sales the .....

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of B.S.Sangwan (Supra) we note that on the similar facts and circumstances of the case considering the decision of coordinate bench of the Tribunal in the case of Synerg Enterpreneur Solutions Pvt. Ltd. Vs. DCIT(2011) 46 SOT 111 it has been held thus :- 9. A co-ordinate bench of this Tribunal, in the case of SynergyEntrepreneur Solutions Pvt Ltd Vs DCIT [(2011) 13 ITR Tribunal 377(Mum)], had an occasion to deal with a somewhat similar situation. That case a case in which in the show cause notic .....

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or subjecting the assessment order to revision proceedings. At p. 1, in fifth sentence of the impugned revision order, learned CIT notes that that "on perusal of assessment record, it was noticed that assessment order was erroneous in as much as it was prejudicial to the interest of the Revenue as the details of purchase and sale of share transactions in futures were not verified as to whether the profit or loss from the futures trading amounts to speculation gain or loss". The extract .....

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, 2007passed by the AO is considered to be erroneous and prejudicial to theinterests of the Revenue. Since the AO has not taken the necessary details to verify whether the profits and loss from futures trading amounts to speculation profits or loss, the assessment order is set aside with a direction to obtain complete details and conduct necessary enquiries and examine the same for the assessment year under consideration. The AO shall provide adequate opportunity to the assessee before passing t .....

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6 (AP) the Andhra Pradesh High Court was dealing with an application seeking reference under s. 256(2), inter alia of the following question : Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the CIT lacks initial jurisdiction, particularly when the conclusion made by the CIT in the order under s. 263 was on the basis of the information furnished in response to the initial notice ? While declining to refer the above question, the High Court hel .....

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order and the final order under s. 263 refers only to the inference of hire charges being exigible to tax which was not mentioned at all in the show-cause, obviously the assessee had no opportunity to meet that point." (Emphasis, italicsed in print, supplied)10. The ratio of the decision, clear from the above observation, is that if a ground of revision is not mentioned in the show-cause notice issued under s. 263, that ground cannot be made the basis of the order passed under the section, .....

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essing officer ought to have conducted on the facts of the case altogether different reason from inadmissibility of the claim of deduction or an income which to have been brought to tax. We are of the considered view of that the impugned revision order is contrary to the scheme of law as stipulated u/s 263 of the Act because the CIT proceeded to issue notice by pointing out any four issues as reproduces hereinabove. At the same time we notice in the impugned order passed u/s 263 of the Act, the .....

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due opportunity of hearing for the assessee and directed the AO to estimate net profit @ 5% of the total turnover without comparing results of the assessee for earlier and succeeding assessment years and also without considering any other suitable and proper comparable similar to the assessees business to above contentions of the assessee. The Ld. DR replied that the AO did not verify books of accounts of the assessee when it was considered by the CIT then it was found not property maintained, .....

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e of bills, vouchers and other relevant records and documents to support the same. The stock details as per para 28 of Form 3CD are also not verifiable as Raw Materials are given in weight while finished goods in nos. And even the size of finished goods is not given though stated that the same are of different sizes. Inventories of stocks have also not been furnished by the assessee. In order to perview the tax as reasonable and to bring the income in terms of sales the net profit earned by the .....

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me. The CIT also noted that the stock details are not verifiable as raw material are given in weight while finished goods in nos. and size of finished goods is also not given. The deficiencies as noted by the CIT cannot held inclusive until and unless the assessee is provided due opportunity of being heard to explain his stand which has not been granted by the CIT. Hence, on the basis of foregoing discussions we are inclined to hold true the CIT rejected books of accounts of the assessee in a un .....

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u/s 263 of the Act, by passing final order u/s 263 of the Act. We may further point out that the AO did not make any addition on any one out of four issues, which were raised and pointed out int he notice u/s 263 of the Act, in the order framed u/s 263 r.w.section 143(3) of the Act in pursuant to the impugned order. Hence, impugned order u/s 263 of the Act is not valid and sustainable and therefore, we quash the same and all subsequent proceedings and order passed in pursuant thereto. Accordingl .....

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