GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (5) TMI 48 - ITAT VISAKHAPATNAM

2016 (5) TMI 48 - ITAT VISAKHAPATNAM - TMI - Revision u/s 263 - estimation of net profit - Held that:- Unless the A.Os order is erroneous, no action can be taken by the CIT u/s 263 of the Act. This is because, the twin conditions i.e. the order is erroneous and the same is also prejudicial to the interest of the revenue are co-exists. In the present case on hand, on examination of the records, we find that the A.O. has conducted enquiry on the issue of estimation of net profit. The assessing of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uiry and inadequate enquiry, if there is an inadequate enquiry that would not by itself give occasion to the CIT to assume jurisdiction u/s 263 of the Act, merely because he has a different opinion.

Therefore, we are of the opinion that in the present case on hand, there is no reason for the commissioner to revise the assessment order, as the A.O. has verified the issue and estimated the net profit.. In this case, there cannot be any dispute that A.O. has not discussed the issue at th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and CIT order, we find that the issue of unsecured loans and capital introduction by the assessee were not examined by the A.O. at the time of completion of assessment. Therefore, we are of the opinion that the assessment order passed by the A.O., in respect of unsecured loans and capital introduction is erroneous in so far as it is prejudicial to the interest of the revenue. Accordingly, we uphold the CIT order and set aside the assessment order passed by the A.O. u/s 143(3) of the Act, in res .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

.V.N. Hari, AR For The Respondent : Shri M. Bhupal Reddy, DR ORDER PER G. MANJUNATHA, Accountant Member: These appeals filed by the assessee s are directed against the separate, but identical orders of CIT, Rajahmundry u/s 263 of the Income Tax Act, 1961 (hereinafter called as the Act ) and it pertains to the assessment year 2007-08. Since, the facts are identical and issues are common, they are clubbed, heard together and disposed off, by way of this common order for the sake of convenience. 2. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r relevant details. The A.O. after duly considering the books of accounts and other details, completed assessment u/s 143(3) of the Act on 4.8.2009 and estimated the income at 4% on net purchases. 3. The CIT, Rajahmundry issued a show-cause notice u/s 263 of the Act dated 1.8.2011 and proposed to revise the assessment order. The CIT, proposed to revise the assessment order for the reason that on examination of assessment record, it was noticed that the A.O. has not examined certain issues, which .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t profit at 1% on such estimated sales or declared sales whichever is more clear of all deductions and allowances. The A.O. without considering the decision of the jurisdictional ITAT, has estimated the net profit of 4% on net purchase which is contrary to the decision of jurisdictional ITAT. Therefore, the assessment order passed by the A.O. is erroneous, in so far as it is prejudicial to the interest of the revenue. The CIT further observed that the assessee has shown unsecured loans and intro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sed the source for payment of license fees and also sources for deposits kept in bank for obtaining the bank guarantee. With these observations, the CIT was of the opinion that the A.O. has completed the assessment contrary to the decisions rendered by the jurisdictional High Court and ITAT, which render the assessment order erroneous, in so far as it is prejudicial to the interest of the revenue in terms of section 263 of the Act. Therefore, issued a show cause notice and asked to explain why t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r is rendered by the ITAT, under different set of facts which cannot be compared. The assessee further stated that he is in the business of dealing in IMFL, whereas the case laws relied upon by you are dealing with sale of arrack. There is a difference between business activity and also profit margins in two businesses, which cannot be compared. The assessee further submitted that the A.O. at the time of assessment has taken note of all the facts and decided to adopt a net profit of 4% on net pu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ails filed by the assessee the A.O. has chosen to estimate the net profit. Therefore, the assessment order passed u/s 143(3) of the Act is not erroneous, in so far as it is prejudicial to the interest of the revenue. 5. However, the CIT after considering the explanations offered by the assessee, held that the A.O. did not verify the above issues at the time of completing the assessment u/s 143(3) of the Act. Therefore, the assessments order dated 4.8.2009 needs to be revised, as it is erroneous, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r of all deductions and allowances. If the net profit estimated is less than the profit declared by the assessee, then the profit so declared should be accepted. The A.O. is directed to go through the order of the Hon ble A.P. High Court thoroughly and complete the assessment afresh within the stipulated time and compute the net profit in accordance with the order of the Hon ble A.P. High Court. The CIT further directed the A.O. to examine the unsecured loan accepted by the assessee. The assessi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of net profit and chose to estimate the net profit of 4% on net purchase considering the explanations offered by the assessee. The A.R. further submitted that the judgments relied upon by the CIT for initiating the revision proceedings are in respect of trading in arrack, the facts and context of which are different from assessee s business of trading in IMFL and hence, cannot be applied to this line of business. The A.R. further submitted that the assessee is dealing in IMFL wherein the MRP of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

raised by the CIT, the A.R. submitted that he has not pressed the other issues raised by the CIT, such as unsecured loans and introduction of fresh capital, therefore requested to modify the order to the extent of estimation of net profit. On the other hand, the Ld. D.R. submitted that the issue of net profit estimated by the A.O. is not a subject matter of revision, as the A.O. has already considered the issue of estimation of net profit at the time of assessment. However, the other two issues .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed proper enquiry while completing the assessment u/s 143(3) of the Act. Therefore, the assessment orders dated 4.8.2009 is erroneous, in so far as it is prejudicial to the interest of the revenue. The CIT assumed jurisdiction for the reason that the A.O. has not considered the ITAT and jurisdictional High Court judgements, while estimating the net profit from the business. The CIT was of the opinion that ITAT and Hon ble A.P. High Court has held that sales should be estimated at 8 times of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

essment proceedings, which is evident from the assessment order. The A.O. at the time of completion of assessment after considering the books of accounts and other explanations furnished by the assessee rejected the books of accounts and estimated the net profit of 4% on net purchases. Therefore, we are of the opinion that the CIT was not correct in observing that the A.O. did not conduct proper enquiry of the issues before completion of the assessment. 8. The CIT assumed the jurisdiction to rev .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. has verified the details and chose to adopt the net profit, then the CIT cannot assume the jurisdiction to revise the assessment order for the same reasons by stepping into the shoes of the assessing officer. The A.O. at the time of assessment has called for books of accounts and after verification of books of accounts rejected the same and resorted to estimation of net profit. While estimating the net profit, the A.O. has taken note of the relevant factors and estimated the net profit of 4% o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

debatable issue and always two views are possible. The A.O. has taken one of the possible view, therefore, it cannot be held that the order passed by the A.O. is erroneous and also it is prejudicial to the interest of the revenue. The assessment order passed by the A.O. is also not prejudicial to the interest of the revenue, as there is no loss of revenue because of the action of the A.O, as the A.O. has chosen to adopt 4% net profit, which is almost in line of the business activity of the asses .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

orted to estimation of net profit, which cannot be termed as erroneous and prejudicial to the interest of the revenue. Therefore, we are of the opinion that there is no reason of whatsoever for the CIT to revise the assessment order for estimation of higher profit. 9. The CIT u/s 263 of the Act has power to revise the assessment order. But, to invoke the provisions of section 263 of the Act, the twin conditions must be satisfied. (1) The order of the A.O. is erroneous and (2) further it must be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sts. In the present case on hand, on examination of the records, we find that the A.O. has conducted enquiry on the issue of estimation of net profit. The assessing officer after verification of books of accounts and other relevant details has adopted 4% net profit on net purchases, which cannot be termed as erroneous. The contention of the CIT was that the A.O. has not applied the jurisdictional High Court judgments and also ITAT judgement while estimating the net profit. Therefore, the order p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

der, as the A.O. has verified the issue and estimated the net profit. In this case, there cannot be any dispute that A.O. has not discussed the issue at the time of completion of the assessment. The net profit adopted by the A.O. is correct or not is a debatable question. The Ld. CIT has not pointed out any mistakes in such estimation to say that it is erroneous and prejudicial to the interest of the revenue. The question whether the decision of ITAT in the case of M. Veerabhadra Rao and Others .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by the A.O., in respect of estimation of net profit is not erroneous, in so far as prejudicial to the interest of the revenue. 10. During the course of hearing, both the counsels submitted that the other issues raised by the CIT with regard to the verification of unsecured loans and capital account of the assessee, the A.O. has not verified the issues at the time of completion of assessment. Therefore, the assessment order passed by the A.O. in respect of these two issues is erroneous, in so far .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version