TMI Blog2021 (2) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... iation of number of facts established by evidence, whether that was sound or not must be determined not by considering the weight to be attached to each single fact in isolation but by assessing the cumulative effect of all the facts in their setting as a whole. We have to appreciate the impugned order of the ld.Commissioner by looking into the facts and circumstances and not in a mechanical way that these very details were considered by the AO, therefore, the ld.CIT is precluded to look into this aspect while exercising power under section 263 of the Income Tax Act, 1961. As observed earlier, the ld.AO has not conducted an inquiry which was required after taking into consideration the discrepancies in the accounts, and therefore the ld.Commissioner has rightly taken cognizance under section 263 and set aside the assessment for conducting fresh inquiry and for passing of fresh assessment order. We do not find any merit in this appeal. Appeal of the assessee is dismissed. - I.T.A. No. 344/Ahd/2020 - - - Dated:- 28-1-2021 - Shri Rajpal Yadav, Vice President And Shri Pradip Kumar Kedia, Accountant Member Appellant by : Shri Dhinal Shah, A.R. Respondent by : Shri Mohd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and for this purpose, M/s. Prakash Chandra Jain Co. were appointed as auditor and special audit u/s. 142(2A) of the Act and audit report u/s.!43(2A) was finalized on 15/09/2016. However, books of accounts for A.Y. 2014-15 were already finalized at closing balance as per audit report in Form 3CB/3CD, dated 12/12/2013 for A.Y. 201314, therefore, opening values of the year under consideration, i.e.. A.Y. 2014-15 was entirely different from the values certified by the auditor under special audit u/s. 142(2A) of the Act for A.Y. 2013-14. For instance, in the audited balance sheet u/s.142(2A) of the Act the share capital as on 31/03/2013 was certified at ₹ 1,81,58,80,000/- and the same had been declared at ₹ 1,59,66,40,000/- in the balance sheet audited u/s. 44AB of the Act. Likewise, each ingredient of balance sheet differs. Even total of balance sheet (as on 31/03/2013) is ₹ 1,59,66,40,000/- as per the balance sheet, audited u/s. 44AB of the Act whereas the total of balance sheet is Rs, 1,81,58,80, OOO/- in the balance sheet audited u/s. 142(2A) of the Act. It can, therefore, be seen that books of account of the assessee do not reflect true and fair state of af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed vs. CIT (51 Taxmann.com 255) (Ahmedabad ITAT) 13. Zaveri Co. Pvt. Ltd. v. CIT (48 taxmann.com 153) (Ahmedabad ITAT) 14. M/s. Direct Media Distribution Ventures Pvt. Ltd. vs. PCIT (ITA No. 2211/Mum/2019forA.Y.2014-15) (Mumbai ITAT) 15. Antala Sanjaykumar Ravjibhai v. CIT (135 ITD 506) (Rajkot ITAT) 16. Indo Enterprise Limited vs. The PCIT (ITA No. 751 /PUN/201 9) (Pune ITAT) 4.3 On the strength of these judgments, he contended that proceedings under s.263 of the Act can be initiated by the learned CIT if the order of the AO is erroneous and prejudicial to the interest of the Revenue. According to him, if AO had made enquiry and took up a particular view based on the documents submitted and material available before him, then even if learned Commissioner holds different view, action under s.263 of the Act cannot be taken. In other words, if learned AO has taken a view permissible in law which does not match with the view of the CIT, then also proceedings under s.263 of the Act cannot be taken. After appraising us with the scope of Section 263 of the Act, he drew our attention to page no.15 of the paper book wherein a show cause notice issued by the AO has been pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22.12.2017 at 11:00 AM, failing which it would be construed that you have nothing to say in the matter and appropriate inference would be drawn accordingly. Further, please note that this office would not be to grant any adjournment keeping in view the date of limitation. 4.4 Learned counsel for the assessee pointed out that issues taken up in Section 263 proceedings, show cause notices are identical with that of one enquired by the AO by way of the above show cause notice. He further pointed out that special audit was undertaken in the case of the assessee for AYs. 2012-13 2013-14. There were differences between assets and liabilities in the balance sheet prepared by the special auditor vis- -vis balance sheet of assessee. The additions have been made on the basis of such differences in both the years. The special audit can only be ordered where the conditions referred to in Section 142(2A) of the Act are fulfilled. In other words, where there is complexity in the accounts and the tree income cannot be deduced, only then special audit can be ordered. But, in the present case, there were no complexity in the accounts pointed out by the AO. Though, learned AO initiated the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. He further submitted that assessee has never been maintaining its accounts according to the statutory requirements. Its accounts were always incomplete and provisional. Even in AY 2012-13 2013-14, it has filed provisional accounts. This fact is discernable from the details submitted by the learned counsel for the assessee in Annexure 1 also. The accounts were to be finalized as on 31st March, 2014. This was the date of balance sheet but there were two different values on the date of balance sheet i.e. 31st March, 2014. When learned CIT enquired about it, then explanation of the assessee was that both the auditors Mukund Rohit and Delloitte Haskins Sells had taken two different periods i.e. Mukund Rohit audited 12 months accounts, whereas, Delloitte Haskins Sells for 15 months. The learned CIT.DR pointed out that there should not be any difference on the balance sheet date i.e. 31st March, 2014. There can be certain differences in quantitative terms in some of the items but at the final day account should tally. In the case of the assessee, there are differences. The AO has just took cognizance of some of the items but thereafter left them there without conducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ector General or Commissioner authorized by the Board in this behalf under section 120; (b) record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation.- In computing the perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judge the action of CIT taken under section 263. (i) The CIT must record satisfaction that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Both the conditions must be fulfilled. (ii) Sec. 263 cannot be invoked to correct each and every type of mistake or error committed by the AO and it was only when an order is erroneous that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice the requirement of order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view with which the CIT does not agree. If cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under law (vi) If while making the assessment, the AO examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the CIT, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se are such as to provoke an inquiry It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would made such an inquiry prudent that the word erroneous in section 263 includes the failure to make such an enquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. 10. In the light of above, we have examined the record carefully. There is no dispute with regard to the proposition that if, on any issue AO has considered the details and formed an opinion, which is one of the possible views in law, then that view deserves not to be replaced by the higher authority i.e. learned Commissioner while exercising the powers under s.263 of the Act. A moot question before us is, whether the AO has taken one of the views possible in law ? No doubt he issued a show cause notice dated 20.12.2017 regarding the details considered by the ld.CIT in the proceedings under section 263 of the Act. But it is to be appreciated that this notice was issued by the AO on 20.12.2017, and he has passed th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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