TMI Blog2008 (1) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... evident from the material on record and therefore, there was no question of the assessment order being erroneous or prejudicial to the interest of revenue. 3. That it is a baseless allegation that Assessing Officer failed to conduct enquiries to verify the correctness and completeness of the income declared. It was shown to the CIT during the proceedings u/s 263 that this objection was factually incorrect but he failed to appreciate the correct factual position in this behalf and did not bring any material on record to rebut the appellant's submission to the contrary. 4. That on the facts and circumstances of the case, the Assessing Officer having adopted one course permissible in law and having taken a particular view while acting in his competent jurisdiction, it was not open to CIT merely to disagree with his findings and actions, none of which can be said to be unsustainable on facts or in law. 5. That on the facts and circumstances of the case, the Ld CIT erred in passing an order u/s 263 on the basis of the report Inv. Wing, Gurgaon which are very vague in nature. 6. That on the facts and circumstances of the case, the Ld CIT was not justified in dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orically declared himself the beneficiary of all bank accounts and filed a statement indicating total credits in the ten bank accounts at ₹ 731.28 lakhs after discounting returned cheques and squared up entries. During the course of assessment proceedings, the assessee also filed a revised return on 18.3.2004 for the assessment year 1997-98, wherein income of ₹ 1,95,932/- which also included surrendered income at ₹ 73,000/-, in addition to the income originally declared on the accommodation entry so provided by him, he spelled out the basis of working of profit at 0.1 of gross turnover. He further stated that this, gross commission ranged from 0.25% to 0.5% of the accommodation consideration against which he had to part equal shares to the introducers in all most in all the cases. After accounting for all expenses, the net profit came barely to 0.1% which he has disclosed. Without undertaking any enquiry with respect to facts and figures as well as the affidavit supplied by the assessee, the Assessing Officer has simply accepted the revised income declared at ₹ 1,95,932/-. The CIT in his order u/s 263 stated that prima facie the order passed by the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation and what the Assessing Officer has done was just to increase the rate of commission, i.e. which amounts to change of opinion. As per Ld AR the order of CIT u/s 263 was not justified. He further relied on the positions of law lay down in case of Malabar Industrial Co. Ltd. 243 ITR 83 (SC), to the effect that conditions namely the order of the Assessing Officer sought to be revised is erroneous and second is prejudicial to the interest of revenue. Both these conditions are required to be satisfied. Reliance was also placed on the decision of Bongaigaon Refinery and Petrochemicals Ltd. v. Union of India and Others (2006) 287 ITR 120 wherein it was held that entertainment of a view different from the one adopted by the Assessing Officer, if plausible would not clothe the Commissioner with the power to interfere. The jurisdiction exercisable under section 263 of the Act being supervisory in nature, permitting suo motu review of any assessment already made, the statutorily enjoined sanctions circumscribing it have to be rigorously construed. 5. He also relied on the decision of Gujarat High Court in the case of CIT v. Arvind Jewellers (2003) 259 ITR 502, wherein it was held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red which included (other income surrendered at ₹ 73,000/- in addition to the income originally declared). Shri D.K. Singhal also stated the percentage of commission being earned by him and the net income offered. However, the Assessing Officer has accepted the submission of the assessee at the face value and no enquiry was made by him either in respect to the total amount of transactions routed through the assessee's bank account, respective beneficiaries, rate of commission being given to the assessee, the quantum of expenditure incurred by the assessee and he accepted the revised return as furnished by the assessee. In view of these facts the CIT invoked his jurisdiction u/s 263 of IT Act and set aside the order of AO. A bare reading of provisions of s. 263 makes it clear that the prerequisite to exercise of jurisdiction by the CIT suo moto under it, is that the order of the ITO is erroneous in so far as it is prejudicial to the interests of the Revenue. The CIT has to be satisfied of twin conditions, namely, (i) the order of the AO sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent -if the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will in any way help to the assessee in alleging the assumptions of jurisdiction by CIT u/s 263. 9. In the absence of any enquiry the CIT in its proceedings u/s 263 found that order of the Assessing Officer was erroneous which resulted into the loss of revenue. Accordingly, he held that the Assessing Officer has failed to examine and verify the facts furnished by the assessee and also not obtained details of beneficiaries by making necessary enquiries from the respective banks in order to cross check the nature of transactions as well as quantum of income earned from the alleged beneficiaries. Jurisdictional High Court in the case of Gee Vee Enterprises v. Addl. CIT 99 ITR 375 have held that ITO being not only an adjudicator but also an investigator, he cannot remain passive in the face of the return which is apparently in order but calls for further enquiry in the facts and circumstances of the case. The position and function of the ITO was very different as that of Civil Court. The statements made in a pleading proved by the minimum amount of evidence may be accepted by a civil Court in the absence of any rebuttal. The civil Court is neutral. It simply gives decision on the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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