TMI Blog2015 (6) TMI 931X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the AO. The observations of the ld. CIT about the non-production of books of account are, therefore, not tenable. Further, we are unable to find any rationale of the ld. CIT in applying a net profit rate of 5% on total turnover for computing income of ₹ 65.84 lac from business operations. This is again an application of the ad hoc net profit rate, unsubstantiated with any cogent reason. As the AO did carry out investigation on all the relevant aspects of the matter, which is evident from the order sheet entry, and the reply of the assessee giving details on several occasions, the assessment order cannot be termed as erroneous. We, therefore, set aside the action of the ld. CIT in making an addition of ₹ 65.84 lac by applyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 21.03.2013 passed by the CIT u/s 263 of the Income-tax Act, 1961 (hereinafter also called the Act ) in relation to the assessment year 2008-09. 2. Briefly stated, the facts of the case are that the assessee is a proprietor of Ganpati Traders, engaged in the trading of sweets and namkeens, as a distributor of M/s Haldiram. Original assessment in this case was completed u/s 143(3) of the Act on 8.12.2010 on total income of ₹ 7,61,920, making an addition of ₹ 1 lac towards disallowance of Conveyance, freight, labour and travelling expenses over and above the declared income. The ld. CIT considered the following points for exercising the jurisdiction under section 263 of the Act : - (i) The assessee showed lesser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o clarify that the mandate of section 263 is attracted only when the assessment order is found to be erroneous and prejudicial to the interest of the Revenue. These twin conditions have to be cumulatively satisfied for obtaining a valid jurisdiction under this section. Merely because an assessment order is prejudicial to the interest of the revenue is not enough, unless it is shown that the same is erroneous too. An assessment order can be termed as erroneous in several circumstances. Non-investigation by the AO on the relevant issues, which are required to be properly looked into, makes an assessment order erroneous. However, non-examination of the trivial or insignificant issues cannot lead to making an assessment order erroneous. Making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be expected to discuss each and every, significant or insignificant aspect of assessment, in his order. The essence of the matter is that on the non-discussed relevant issues in the assessment order, so long as there is material to suggest that the AO conducted inquiry and the assessee did file reply on them, the assessment order cannot be held as erroneous, until it is shown that the circumstances required the AO to conduct further inquiry on such issues. 5. Coming to the facts of the instant case, we find the first objection of the ld. CIT about non-production of books of account, etc. before the AO and the resultant rejection of such books and the consequential computation of business income at ₹ 65.84 lac, as unsustainab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and later on he went on to reject such books of account. Further, we are unable to find any rationale of the ld. CIT in applying a net profit rate of 5% on total turnover for computing income of ₹ 65.84 lac from business operations. This is again an application of the ad hoc net profit rate, unsubstantiated with any cogent reason. 6. The ld. AR has drawn our attention towards elaborate detail of all the expenses, etc., which were called for and submitted before the AO, whose copies have been made available to us as well. It can be seen from the order sheet entry of the AO dated 4.8.2010 that the AO did ask for details of Discount on sales and Commission etc., along with all other expenses, which were duly filed. Simply because suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n exercising power u/s 263 of the Act. 8. As the AO did carry out investigation on all the relevant aspects of the matter, which is evident from the order sheet entry, and the reply of the assessee giving details on several occasions, the assessment order cannot be termed as erroneous. We, therefore, set aside the action of the ld. CIT in making an addition of ₹ 65.84 lac by applying an ad hoc net profit rate. 9. In so far as the objections at sr. nos. 2 and 3 about the nonverification of sundry creditors and advances from customers are concerned, we find from order sheet entry dated 4.8.2010 that the assessee was called upon to furnish details of sundry creditors along with their copies of accounts, etc., which the assessee com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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