TMI Blog2021 (7) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... n of quantitative details of goods produced and sales declared in books of account. The Principal CIT, ignoring all evidences filed by the assessee has simply arrived at difference in sales purely by estimating sales figure without pointing out how sales declared in books of account is incorrect. Therefore, we are of the considered view that the Principal CIT has erred in revision of assessment order by making certain general observations based on suspicion and wrong working of sales and without specifying errors which are prejudicial to the interests of revenue, contrary to the settled principles of law that assessment order cannot be revised merely on suspicious and surmises grounds We are of the considered view that assessment order passed by the Assessing Officer is neither erroneous nor pre-judicial to the interests of revenue which can be subject matter of proceedings u/s.263 of the Income Tax Act, 1961. Hence, we quash revision order passed by the Pr.CIT and restore assessment order passed by the Assessing Officer u/s.143(3). - Decided in favour of assessee. - I.T.A.No.474/Chny/2020 - - - Dated:- 16-7-2021 - Shri V.Durga Rao, Judicial Member And Shri G.Manjunatha, Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e objections, if any, for revision of assessment order passed by the Assessing Officer u/s.143(3) dated 28.09.2017. The learned Principal CIT in said show cause notice has proposed to revise assessment order passed by the Assessing Officer on the ground that there is a variation with sale value as shown in profit loss account, when compared to quantity of finished goods produced and sold during the year, as per details furnished in Form No.3CD issued by Auditor as required u/s.44AB of the Act, as per which the assessee has shown lesser sale value to the extent of ₹ 8,72,09,103/-. The Assessing Officer while completing assessment has failed to verify issue of sales declared in books of account with reference to quantitative details supplied in Form 3CD to ascertain true and correct details of sales declared for the year, which rendered assessment order to be erroneous and prejudicial to the interests of revenue. 4. In response to show-cause notice, the assessee vide its letters dated 05.09.2019 18.09.2019 submitted that assessment order passed by the Assessing Officer is neither erroneous nor prejudicial to the interests of revenue, because issue of verification of sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer u/s.263 of the Act, without appreciating fact that the Principal CIT himself has not arrived at satisfaction that the Assessing Officer has passed erroneous order which caused prejudicial to the interests of revenue. It is well settled principles of law that in order to invoke jurisdiction revision u/s.263 of the Act, the Principal CIT has to satisfy himself about twin conditions embedded therein, as per which order passed by the Assessing Officer must be erroneous and further, it should be prejudicial to the interests of revenue. In this case, the Principal CIT has revised the assessment order on the ground of under-reporting of sales turnover in books of account and such under-reporting has been arrived at purely on suspicious ground by estimating sales turnover based on closing stock declared by the assessee in books of account and quantitative details supplied in Form 3CD, even though the assessee has clarified that sales reported in Form 3CD includes internal transfer of yarn to the tune of 745991 kgs to clothing division. 7. The learned DR, on the other hand, supporting order of the Principal CIT submitted that learned Principal CIT has brought out clear facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clared by the assessee and quantitative details of goods produced and sold in Form 3CD. The Principal CIT has arrived at total sales of ₹ 34.89 crores and as against this, he had compared sales turnover declared by the assessee at ₹ 26.17 crores and thus, pointed out difference of ₹ 8.72 crores. We have gone through reasons given by the Principal CIT and working of difference in sales turnover arrived at by him and after going through explanation furnished by the assessee, we ourselves do not subscribe to the reasons given by the Principal CIT to term assessment order as erroneous, insofar as it is prejudicial to the interests of revenue. It is a well settled principles of law that in order to term any order to be erroneous and prejudicial to the interests of revenue, the Principal CIT himself should satisfy about the assessment order passed by the Assessing Officer and specify how and why the assessment order is erroneous and prejudicial to the interests of revenue. In this case, on perusal of reasons given for revision of assessment order, we find that the Principal CIT has arrived at under-reporting of sales purely on suspicious grounds and further extrapola ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case on hand, we hold that the Pr. CIT should have conducted enquiries and should have verified the accounts and other documents and details himself and pointed out specifically as to where an error has occurred which is prejudicial to the interest of the Revenue and which in his opinion would result in the assessee being not assessed at the correct amount of income and only after such enquiries, examination and verification he can come to a conclusion that there is an error insofar as it is prejudicial to the interest of the Revenue. The Pr. CIT is not authorized to simply set aside an assessment order by making certain general observations based on suspicion and wrong working out of the WIP and without specifically pointing out errors which are prejudicial to the interest of the Revenue. Mere suspicion of likely escapement of income is not a ground for revision by invoking powers u/s 263 of the Act. Such an order is bad in law. 14.1. Thus, we uphold the contentions of the assessee and quash the order passed by Pr. CIT u/s 263 of the Act. 11. In this view of the matter and considering facts and circumstances of the case, we are of the considered view that assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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