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TMI Blog2018 (9) TMI 1323X X X X Extracts X X X X X X X X Extracts X X X X ..... to a survey operation. During the course of survey proceedings, several documents were seized and impounded. Statements of the representatives of the company were recorded. During assessment, notices were issued. Several details were called for from the assessee in such notices. Assessing Officer put the assessee to notice about not being satisfied with the declaration of profit by the assessee in which he referred to the impounded documents which included loose papers indicating cost of construction, cost of land, money received etc., in the hand writing of the representative of the company. Assessee strongly objected to the Assessing Officer invoking best judgment assessment principles. The Assessing Officer passed the order of assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipt was erroneous as against rate of 12.5% offered by the assessee. CIT (Appeals) passed a detailed order dated 9.3.2017 in which he confirmed the Assessing Officer's application of net profit at the rate of 15% of the turn over or total receipts as gathered from the impounded materials. He however gave certain consequential directions for recomputing such net profit. 3. After this order was passed by the Appellate Commissioner, the Commissioner of Incometax in exercise of his powers under Section 263 of the Incometax Act, 1961 ('the Act' for short) passed an order on 31.3.2017. In the notice that he had issued to the assessee for exercising revisional powers and the final order that he passed he had touched on two issues. His ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of assessment could be exercised only if the same is found to be erroneous and prejudicial to the interest of Revenue and further that a case of insufficient or defective inquiry cannot be equated with total lack of inquiries. The Tribunal recorded that unless the Commissioner holds and records the reasons how the assessment is erroneous, he cannot set aside the same merely on the ground that the Assessing Officer had not conducted proper inquiry. The Tribunal also noted that as the issue of determination of the assessee's undisclosed income had travelled to the Appellate Authority, action under Section 263 of the Act could not be taken by the Commissioner. 6. Counsel for the Revenue submitted that the Tribunal committed serious erro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner without recording any reasons asked the Assessing Officer to examine the claim of expenditure of statutory liabilities in the context of actual deposit of such amounts with the Government revenue. He submitted that essentially, the Commissioner has ordered a fishing inquiry. 8. Having heard learned counsel for the parties and having perused documents on record we find that the first issue on which the Commissioner of Incometax found fault with the Assessing Officer was not available for examination in the revision proceedings. We may recall, his objection to the order of assessment was that the assessee itself having offered net profit at 27.48%, the Assessing Officer could not have computed profit at the rate of 15% of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer had taken a holistic picture and arrived at the net profit percentage that the assessee could be reasonably expected to have earned out of the ventures. While doing, so he had also examined various aspects, including the payments such as for commission, for interest etc., and whether the assessee had deducted tax at source on such payments. Thus, the element of disallowing certain expenditure was in the mind of the Assessing Officer. It is true that with respect to statutory payments which may have bar of Section 43B of the Act on claiming without actual deposit with the Government revenue, there was no direct inquiry during the assessment or discussion in the order of assessment. However, the Commissioner merely refe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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