TMI Blog2013 (4) TMI 844X X X X Extracts X X X X X X X X Extracts X X X X ..... - 12-4-2013 - BHAVNESH SAINI JUDICIAL MEMBER AND A.L. GEHLOT, ACCOUNTANT MEMBER. M.B. Gabhawala for the Appellant. Jagdish for the Respondent. ORDER Bhavnesh Saini, Judicial Member - This appeal by the assessee is directed against the order of ld. CIT, Varanasi dated 13.08.2012 u/s. 263 of the IT Act for the assessment year 2009-10. 2. The facts of the case are that the assessee filed return of income at ₹ 2,91,340/- and assessment u/s. 143(3) was completed by the Assessing Officer on total income of ₹ 3,24,250/- vide assessment order dated 24.12.2011. The Assessing Officer submitted the proposal u/s. 263 of the IT Act to the Commissioner being the assessment order erroneous and prejudicial to the interest of the Revenue. The ld.CIT on perusal of the assessment record found the assessment order to be erroneous and prejudicial to the interest of Revenue and issued show cause notice u/s. 263 dated 14.06.2012 seeking explanation of the assessee. The assessee appeared before the ld. CIT through his counsel and filed the required details and written submissions. The ld.CIT considering several issues found the order of the Assessing Officer to be erro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding quota of liquor and its monthly sales from District Excise Officer, Sant Ravidas Nagar were not called where the assessee claimed annual license fee of ₹ 17,47,200/- and in the profit and loss account this amount is not mentioned and no verification has been done by the Assessing Officer. (v). In the profit and loss account, the assessee has shown net profit of ₹ 3,47,350/-, which has been directly credited to the capital account of balance sheet. The verification of the return shows the assessee's claim of deduction of ₹ 56,314/- under Chapter VI-A (LIP) and this amount is not taken into assets or investment side. (vi). The Assessing Officer passed the order in hurried manner without examining the issues, which is prejudicial to the interest of Revenue and no proper enquiries or investigations have been made. 3. The ld. Counsel for the assessee challenged the impugned order on several grounds and initially at the time of hearing of the present appeal, the ld. Counsel for the assessee brought to our notice that there were certain inconsistencies and mistakes in the impugned order u/s. 263 of the IT Act and the assessee has preferred the rectific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been passed, has filed a detailed written submission supported by all the documents on record. The gist of his submissions on all the issues is as under : (i). He has submitted that the case was selected for scrutiny on the basis of AIR information regarding the cash deposit of ₹ 1,01,35,500/- and the AO at the assessment stage issued notice dated 01.09.2011, copy of which is filed at page 4 of the paper book, which is a detailed notice u/s. 142(1) in which at Sl. No. 9, the Assessing Officer called for the details of the same deposit. The assessee was also summoned u/s. 131 of the IT Act vide notice dated 01.09.2011 (PB -6) and the statement of assessee was recorded u/s. 131 of the IT Act (PB- 8), in which question No.5 was specifically asked regarding the source of deposit of ₹ 1,01,35,500/- and the assessee explained in statement that the figure of the deposit is not correct because the correct amount of deposit is approximately ₹ 60,00,000/-. The assessee filed detailed reply before the Assessing Officer on 18.11.2011 (P.B.-98), in which complete details of the deposits were explained and it was explained that on certain dates, there were certain withdraw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count. He has submitted that since the sales of the assessee were less than ₹ 40,00,000/- and as per provisions of section 44AF, profit margin has to be taken at 5% and in the case of assessee, he has declared the profit rate of 11.85%. Therefore, the case of the assessee would be covered by the overriding provisions of section 44AF. He has submitted that the Assessing Officer has given reasons for estimating the sales, which were reasonably estimated and made addition of ₹ 79,250/- on account of extra profit addition, which was challenged before the ld. CIT(A) and the ld. CIT(A), Varanasi vide order dated 03.05.2012 deleted the addition of ₹ 79,250/- and the impugned order u/s. 263 has been passed on 13.08.2012 after the same issue is decided by the ld. CIT(A). Therefore, the ld. CIT has no jurisdiction to revise the issue on which the ld. CIT(A) has already decided the appeal. This issue, therefore, cannot be considered in the proceedings u/s. 263 of the IT Act. The ld. CIT is also not justified in holding that the assessee has not opposed the extra profit addition in the matter. (iv). The ld. Counsel for the assessee submitted that the ld. CIT considered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer and the order of the Assessing Officer cannot be considered as erroneous in so far as prejudicial to the interest of Revenue. He has relied upon the order of ITAT, Rajkot Bench in the case of Antala Sanjay Kumar Ravjibhai v. CIT [2012] 135 TTD 506/[2011] 16 taxmann.com 238 in which the Assessing Officer after considering whole matter, decided the issue. Therefore, suo motu revisional jurisdiction by the CIT was not found to be justified. 4. On the other hand, the ld. DR relied upon the order of the ld. CIT and submitted that no proper enquiry has been done in the matter. Therefore, the ld. CIT was justified in revising the assessment order. 5. We have considered the rival submissions, impugned orders and considered the material available on record. 6. The Assessing Officer, in the assessment order specifically mentioned that the assessee's representative appeared from time to time, filed details replies and produced relevant material /documents before him, which have been test-checked. The Assessing Officer issued detailed questionnaire to the assessee way back from 01.09.2011 (PB-4) when notice u/s. 142(1) was issued to the assessee for completion of assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cide the application u/s. 154 to the Assessing Officer. Since the order u/s. 263 has been passed by the ld. Commissioner, therefore, rectification application u/s. 154 should not have been forwarded to the Assessing Officer for reconsideration. It would, therefore, show that the ld. Commissioner instead of rectifying the mistakes in the impugned order, has confirmed his stand and blatantly did not take into consideration the reply of the assessee in proper perspective and even on wrong figures revised the assessment order. Since the replies of the assessee have not been considered by the ld. CIT under 263 proceedings as well as proceedings u/s. 154 of the IT Act, on this sole reason itself, the impugned order is liable to be set aside. Hon'ble Gauhati High Court in the case of Smt. Lila Choudhury v. CIT [2007] 289 ITR 226/[2008] 167 Taxman 1 held that explanation of the assessee in response to notice u/s. 263 must be considered. The order of Revision without considering the explanation is not valid. Hon'ble Delhi High Court in the case of CIT v. Vikas Polymers [2012] 341 ITR 537/[2010] 194 Taxman 57 held that explanation of the assessee not considered by the Commissioner - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of turnover. With regard to compulsory audit u/s. 44AB, the ld. Counsel for the assessee rightly contended that under the provisions of section 44AB, the total sales/ turnover or gross receipts shall have to be considered and not the bank deposits. Therefore, on such an issue, the ld. Commissioner was not justified in holding that the accounts of the assessee are required to be audited u/s. 44AB of the IT Act. On the issue of license fee of ₹ 17,47,200/-, the assessee has explained that it was a figure of minimum guarantee for lifting of goods for whole year, which is supported by the certificate of Excise Officer (P.B.- 123), against which the assessee made total purchase of ₹ 24,73,525/-, which is also shown in the trading account. Therefore, minimum guarantee for lifting of goods should not have been adversely considered by the ld. Commissioner against the assessee and this figure would not come in the profit and loss account and balance sheet of the assessee. Further on this issue no notice u/s. 263 has been issued, therefore, the ld. Commissioner would not have any jurisdiction to pass any adverse order against the assessee on this issue. Similarly for deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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