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2015 (6) TMI 931 - ITAT DELHI

2015 (6) TMI 931 - ITAT DELHI - TMI - Revision u/s 263 - The assessee showed lesser profit from the trading activity, which was not properly looked into by the Assessing Officer - Held that:- The order sheet entry of 9.11.2010 divulges that the assessee’s counsel appeared and produced books of account, which were test checked by the AO. Again, on 16.11.2010, the assessee’s C.A. appeared and produced books of account, which were again test checked and the assessment proceedings were completed on .....

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om 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 applying an ad hoc net profit rate .....

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circumstances suggested. Simply saying that it was for the assessee to prove the genuineness and credit worthiness of the creditors, without any thing to the contrary in the extant facts of the case, is not enough to exercise jurisdiction u/s 263.- Decided in favour of assessee.

Non verification of TDS claim and even TDS certificates were not on record - Held that:- The assessee did furnish the necessary details before the AO, which are available on pages 296 onwards of the paper boo .....

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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 .....

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ect, the ld. CIT noticed that the assessee had shown turnover of ₹ 13.98 crore but a meager net profit of ₹ 6,36,538/- was declared. In his opinion, the AO did not examine Discount on sales amounting to ₹ 19.76 lac, Commission of ₹ 22.27 lac, and Incentive of ₹ 8.56 lac. He further observed that no vouchers, bills or supporting documents, etc., were produced before the AO. In his view, the AO was not justified in making an ad hoc addition of ₹ 1 lac out of som .....

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rtificates, which were not on record. The assessee is aggrieved against the impugned order. 4. We have heard the rival submissions and perused the relevant material on record. We want to 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 prejudi .....

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, also makes an assessment order erroneous. A line of distinction should be drawn between patently erroneous view and accepting one of the possible views. Only the former makes an assessment order erroneous and not the later. In other words, if there is a debatable issue and the AO has taken one of the possible and legally sustainable views, then that aspect goes outside the realm of revision. Another situation of an erroneous order may be when investigation was made by the AO, but the circumsta .....

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ng to prompt further investigation, then the assessment order cannot be characterized as erroneous simply because there is no discussion in the assessment order on such aspects. If a view is taken that non-discussion of an issue in the assessment order on which the AO is satisfied, means the absence of application of mind by the AO, then probably all the assessment orders would become erroneous. It is so for the reason that the AO cannot be expected to discuss each and every, significant or insi .....

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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 unsustainable. We have perused a copy of the order sheet entry of the AO, which is available on pages 368 to 370 of the paper book. It is manifest that the first notice was issued by the AO to the assessee on 26.8.2009. On 4.8.2010, the assessee appeared and was called upon to furnish various details listed at sr. nos. a) to o) .....

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l appeared and produced books of account, which were test checked by the AO. Again, on 16.11.2010, the assessee s C.A. appeared and produced books of account, which were again test checked and the assessment proceedings were completed on 8.12.2010. A bare perusal of the order sheet entry of the AO amply demonstrates that the assessee was called upon to produce books of account, which were duly produced on at least two occasions and the same were also checked by the AO. The observations of the ld .....

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th 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 such expenses account for a higher amount, cannot in itself be a reason to .....

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rial available before him, made an ad hoc addition of ₹ 1 lac to cover up possible leakage of revenue on account of self-made vouchers. This decision was taken on a holistic consideration of the material before him. It is not a case of no or improper inquiry conducted by the AO. The view point of the ld. CIT that the disallowance of ₹ 1 lac made by the AO out of expenses is paltry, cannot be a ground to hold the assessment order erroneous. It cannot be characterized as a patent mista .....

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ation 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 o .....

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