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TMI Blog2015 (6) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... der consideration was filed by him on 30.09.2009 declaring total income of Rs. 1,98,650. In the assessment originally completed under section 143(3) vide order dated 20.05.2011 the total income of the assessee was determined by the A.O. at Rs. 2,86,770 after making addition of Rs. 98,620 on account of low gross profit and Rs. 40,500 on account of estimated interest income on the transactions reflected in the bank account of the assessee for the period from 01.07.2008 to 31.03.2009. The record of the said assessment was subsequently examined by the Ld. CIT and on such examination, he found that proper and sufficient enquiries were not made by the A.O. on the following issues : 1. "The sale proceeds of M/s. Sri Srirama Wines credited to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections for revision or cancellation of assessment order dated 31.05.2011 for the assessment year 2009-10. The revision is proposed as per the provisions of sec 263 of the Income Tax Act, 1961. The assessee submits his objections before the judicious authority as follows : Any order passed by the assessing officer which is erroneous insofar as it is prejudicial to the interests of the revenue, can be reviewed by the Commissioner as per the provisions of section 263. Hence, for any order to be revised, two conditions should be satisfied. i) The order should be erroneous and ii) Prejudicial to the interests of the revenue. In fact in the present assessee's case there is no erroneous assessment as all the books of accounts and bills an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late to agricultural operations. The Assessing Officer having not satisfied with my explanations that the circulation relates to agricultural operations, the AO has estimated interest on circulation of funds and added the interest so estimated to the income returned. The reasons on which revision is proposed cannot be considered as deficiencies, as all the aspects have been duly examined and considered during the course of assessment proceedings. It is clear from the above that the Assessing Officer has not simply accepted what the assessee has stated. Hence, the order cannot be considered as erroneous. The Hon'ble High Court of Madras in the case of Venkata Krishna Rice Co. Vs. Commissioner of Income Tax (1987) 163 ITR 129 (Mad) held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 69, as the case may be, of the Act (iii) When the assessee did not produce an audit report and in the absence of any verification of the stock as on 31.03.2009, he adopted the 'cost of goods sold' as the base for estimation. (iv) The A.O. has not conducted any enquiry or collected any material either from the assessee nor from any other person in the same locality or in the same trade to ascertain the likely % GP that was prevailing in that area but adopted the GP @ 21%, that when the APBCL grants GP between 20 to 27% based on the products. (v) The A.O. accepted assessee's explanation for the credits appearing in the bank accounts between 01.07.2008 to 31.03.2009, i.e., for the period in which the assessee was not in business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 263. In this regard, the Ld. Counsel for the assessee has clarified that assessee is proprietor of M/s. Sri Srirama Wines and since he was earlier working with another concern namely Sony Wines, the care-of address of that concern was given while opening the bank account. This being the factual position, no enquiry on this aspect of the matter was required to be done by the A.O. and it cannot be said that the order of the A.O. passed under section 143(3) was erroneous as alleged by the Ld. CIT on the basis of point No.1 raised in the notice issued under section 263. 4. As regards point No.2 raised by the Ld. CIT in notice issued under section 263 that the A.O. having failed to call for the tax audit report under section 44AB which was re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2009, it was submitted that the said circulation represent the usage of funds in connection with the agricultural activities pertain to the assessee's wife. However, the assessee could not furnish any relevant details in support of his claim. In the circumstances, it is concluded to estimate the interest receipts @ 12% on the available cash of Rs. 4,50,000/- (approx) for the period 01.07.2008 to 31.03.2009 which worked out to Rs. 40,500/-. Accordingly, the amount of Rs. 40,500/- is added to the income returned by the assessee." 6. As is evident from the above portion of the assessment order, the issue relating to the transactions reflected in the bank account of the assessee from 01.07.2008 to 31.03.2009 was examined by the A.O. and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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