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2015 (6) TMI 33 - ITAT HYDERABAD

2015 (6) TMI 33 - ITAT HYDERABAD - TMI - Revision u/s 263 - Bank a/c was maintained towards Sony Wines, whereas the assessee was claimed to be the proprietor of M/s Sri Rama Wines - Held that:- As 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 b .....

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O. having failed to call for the tax audit report under section 44AB which was required to be filed by the assessee, his order suffered from an error, as find merit in the contention of the Ld. Counsel for the assessee that the action of the A.O. in not calling for the tax audit report under section 44AB cannot be regarded as an error in the order of the A.O. which is prejudicial to the interests of the Revenue.

Bank account reflected business activities for only 3 months and the bala .....

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bank account of the assessee from 01.07.2008 to 31.03.2009 was examined by the A.O. and on such examination, the addition of ₹ 40,500 was also made by the A.O. to the total income of the assessee being estimated interest income. A possible view on this issue thus was taken by the A.O. after due examination and application of mind and even if the same was not acceptable to the Ld. CIT, he cannot exercise the powers conferred upon him under section 263 to substitute his own view for the pos .....

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the business of running wine shop under the name and style of his proprietary concern M/s. Sri Srirama Wines. The return of income for the year under consideration was filed by him on 30.09.2009 declaring total income of ₹ 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 ₹ 2,86,770 after making addition of ₹ 98,620 on account of low gross profit and ₹ 40,500 on .....

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per ITS details, a Bank a/c was maintained towards Sony Wines, whereas the assessee was claimed to be the proprietor of M/s Sri Rama Wines. The A.O. did not call for the relevant details in this respect and not examined them. 2. As per P & L a/c, the turnover is of ₹ 44.00 lakhs for which the accounts are to be audited u/s 44AB of the I.T. Act. Neither the assessee furnished the audit report nor the A.O. called for the it and examined. 3. The Bank account reflected business activities .....

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requiring the assessee to explain as to why the said order of the A.O. should not be revised being erroneous as well as prejudicial to the interest of Revenue. 2.2. In reply to the show cause notice issued by the Ld. CIT under section 263, the following submission was made by the assessee in writing : It is to submit that Hon'ble Commissioner of Income Tax, Vijayawada vide the above said letter has called objections for revision or cancellation of assessment order dated 31.05.2011 for the as .....

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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 and vouchers are verified by the assessing officer and assessment was completed. The deficiencies pointed out for taking up revision are as follows: 1. It has been stated that bank account is maintained for Sony Wines, while Mr. G. Venkateswarlu is proprietor of Sri Rama Wines. 2. The tax audit report u/s 44AB is not furnished. 3. The ent .....

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by him for his proprietary concern business of Sri Rama Wines also. This aspect has come to discussion during the course of assessment proceedings before the Assessing Officer. I have submitted photo copy of acknowledgment of return of income and statement of total income to the Assessing Officer to clarify this aspect. The assessing officer having satisfied in this aspect proceeded with the proceedings. The Assessee has submitted tax audit report during the course of assessment proceedings and .....

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s, 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 "when CIT clearly conceded that order of assessment was in accordance with law, same could .....

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cts and as per the provisions of law. And the assessee prays to drop the proceedings initiated. Considering the above submissions, the assessee requests the authority Commissioner of Income Tax to drop the revision proceedings initiated u/s 263. In addition to the above submissions, further submissions were made on behalf of the assessee from time to time during the course of proceedings under section 263 before the Ld. CIT as required by the later. 2.3. Ld. CIT did not find the submissions made .....

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n 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 expl .....

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e same to be erroneous and prejudicial to the interests of the Revenue vide his order passed under section 263 with a direction to the A.O. to re-do the assessment de novo on the matters pointed out by him in accordance with law by following the established procedure. Aggrieved by the order passed by the Ld. CIT under section 263, assessee has preferred this appeal before the Tribunal. 3. I have heard the arguments of both the sides and also perused the relevant material on record. As rightly co .....

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ssue that requires my consideration is whether the order of the A.O. actually suffered from such errors calling for revision by the Ld. CIT under section 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 .....

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n of the Ld. Counsel for the assessee that the action of the A.O. in not calling for the tax audit report under section 44AB cannot be regarded as an error in the order of the A.O. which is prejudicial to the interests of the Revenue. 5. As regards the third point raised by the Ld. CIT in the notice issued under section 263 regarding nonexamination of the transactions reflected in the bank account of the assessee for the period from 01.07.2008 to 31.03.2009, it is observed that this aspect was d .....

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ansactions which had been reflected in the books of account. On examination of the statements and other information submitted during the assessment proceedings it is noticed that the assessee offered income from business which was run from 01-4- 2008 to 30-6-2008 during the relevant previous year. In response to the query in respect of the circulation of credits for the period 01.07.2008 to 31.03.2009, it was submitted that the said circulation represent the usage of funds in connection with the .....

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