TMI Blog2016 (2) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... be added or peak purchases has to be added or the entire sales has to be added as income. Therefore, the view taken by the AO was one of the possible views and the assessment order passed by the AO could not be held to be prejudicial to the Revenue. Even the CIT conceded the position that the AO made the inquiries, elicited replies on Gross Profit and thereafter passed the assessment order. The grievance of the CIT was that the AO should have made further inquiries as to whether any addition has to be made on account of unrecorded purchases or whether the entire suppressed sales had to be regarded as income of the Assessee rather than accepting the explanation. Therefore, it cannot be said that it is a case of 'lack of inquiry'. The decision of the Hon’ble Bombay High Court in the case of Ganbriel India Ltd. (supra) clearly supports the stand taken by the Assessee in this regard. Thus we are of the view that the jurisdiction u/s.263 of the Act was not properly exercised by the CIT as the condition precedent for invoking the same viz., that the order of the AO is erroneous and prejudicial to the interest of the revenue is not shown to be present in the present case. We therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment. He held that the Assessee neither produced documentary evidence to substantiate his contention regarding existence of such practice nor did he maintain any other hand book or record of such transactions nor was such hand book or record found in the course of survey. The AO therefore concluded that the Assessee had in fact done transaction of sale of auto parts and such transactions were not recorded in the books of accounts maintained by the Assessee. 6. The next question before the AO was how to compute income from such transactions of sale which are not recorded in the books of accounts of the Assessee. The AO found that the Gross profit declared by the Assessee on sales recorded in the books of accounts was 7.53%. However in the statement recorded at the time of Survey the Assessee had in answer to question no.2 stated that the Gross Profit in his business would vary between 15.5% and 53%. The AO therefore applied 17% Gross profit on unrecorded sales of ₹ 2,26,293/- and made an addition of ₹ 38,470/- to the total income of the Assessee. The AO passed the order u/s.143(3) r.w.s.148 of the Act on 30-12-2010. 7. The CIT in exercise of his powers u/s.263 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as income and not the entire undisclosed sale. 9. The CIT however did not deal with any of the aforesaid submissions but nevertheless concluded that the Gross Profit adopted by the AO for making addition on account of income from unrecorded sales was proper. He went on further to add that the element of unaccounted purchase ought to have been added by the AO and the order of the AO without going into this aspect has resulted in underassessment of income. The CIT further held that if purchases and sales recorded in the books of accounts are correlated than gross profit rate can be applied and income from unrecorded sales estimated. Since the AO has not verified the above aspect the order of the AO is erroneous and prejudicial to the interest of the revenue. The CIT accordingly passed order u/s.263 of the Act setting aside the assessment order dated 30.12.2010 with a direction to pass a fresh assessment order after examining the evidence and documents in respect of various issues raised after giving opportunity to the Assessee and in accordance with law. 10. Aggrieved by the order of the CIT, the Assessee is in appeal before the Tribunal. 11. At the time of hearing it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. It is clear from the above observations of the AO and the observations in para-3 of the order of assessment that he had taken due cognizance of all debit items in the profit and loss account, the tax audit report, the impounded documents, statement recorded during Survey and during assessment proceedings, books and accounts and other documents, bills, vouchers etc. 15. The CIT has exercised jurisdiction u/s.263 of the Act on the ground that the AO failed to make proper enquiry which he ought to have made before completing the assessment. There is a distinction between lack of enquiry and inadequate enquiry . If there is an enquiry, even inadequate, that would not by itself give occasion to the CIT to pass order under s. 263, merely because he has a different opinion in the matter. Such a course of action is open only in cases of lack of enquiry . Although apparently the assessment does not give any reasons why purchased were not being added as income, that by itself would not be indicative of the fact that the AO has not applied his mind to the issue. AO is not required to give detailed reason in respect of each and every item of deduction in the assessment order. AO h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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