TMI Blog2016 (3) TMI 1425X X X X Extracts X X X X X X X X Extracts X X X X ..... of the goods purchased by the assessee and had also enhanced income in the hands of assessee. Merely because elaborate discussion has not been made by the Assessing Officer on this aspect does not make the order passed by the Assessing Officer as being accepting transactions at face value. AO had made enquiries in the case and had discussed the aspect of transportation of goods in the assessment order elaborately, but had not discussed the information and details filed by the assessee with regard to purchases, does not make the order passed by the Assessing Officer to be a prima facie case of assumption of incorrect computation of income or under assessment of income. We find support from the ratio laid down by the Hon ble Bombay High Court in CIT Vs. Gabriel India Ltd.[ 1993 (4) TMI 55 - BOMBAY HIGH COURT] The order passed by the AO cannot be said to be erroneous or passed on assumption of incorrect computation of income on the ground that the Assessing Officer had failed to carry out the exercise of verification of transactions with the said four parties involving purchases.assessee himself has filed the confirmations from the said parties, which are available on record. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Commissioner on subsequent verification of record and information available with the office, noticed that during the previous year relevant to assessment year under consideration, the assessee firm was beneficiary of hawala transactions totaling ₹ 37,79,207/-. The Commissioner further noted that the Assessing Officer had failed to verify the transactions and had accepted the books of account and the financial results at face value. The veracity of income which was disclosed by the assessee firm in its Profit Loss Account, which as per the Commissioner, was prima facie understated, remained to be verified during the course of assessment proceedings. Since this lead to assumption of incorrect computation of income and / or under assessment of income, the order passed by the Assessing Officer, as per the Commissioner appeared to be erroneous and prejudicial to the interest of revenue. A show cause notice under section 263 of the Act was issued to the assessee. The contention of the assessee before the Commissioner was that the assessment was completed by the Assessing Officer after extensive enquiries and verification of records submitted. It was further pointed out by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at pages 33 to 54 of the Paper Book. Further, the learned Authorized Representative for the assessee referred to the reverse of page 35 of Paper Book and pointed out that the purchases from the parties, who were part of show cause notice issued under section 263 of the Act are enlisted. Thereafter, the learned Authorized Representative fo r the assessee pointed out that confirmation was received from the said parties which are placed at page 55 of Paper Book in respect of Sampark Steels, pages 87 and 88 of Paper Book i.e. Prayan Trading Co., page 120 of Paper Book i.e. Vitarag Trading Co. and page 132 i.e Siddhivinayak Steel. The total purchases from the said parties were ₹ 37,79,207/-. It was the case of learned Authorized Representative for the assessee before us that all these details were available with the Assessing Officer and the purchases were examined in detail by the Assessing Officer, hence, where enquiries were made by the Assessing Officer, there is no question of action under section 263 of the Act. Reliance in this regard was placed on the ratios laid down by the Hon ble Bombay High Court in CIT Vs. Gabriel India Ltd. (1993) 203 ITR 108 (Bom) and CIT Vs. Desi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n CIT v. Gabriel India Ltd. [1993] 203 ITR 108 and the High Court of Gujarat in CIT v. Smt. Minalben S. Parikh [1995] 215 ITR 81 treated loss of tax as prejudicial to the interests of the Revenue. Mr. Abraham relied on the judgment of the Division Bench of the High Court of Madras in Venkatakrishna Rice Company v. CIT [1987] 163 ITR 129 interpreting prejudicial to the interests of the Revenue. The High Court held (page 138) : In this context, it must be regarded as involving a conception of acts or orders which are subversive of the administration of revenue. There must be some grievous error in the order passed by the Income-tax Officer, which might set a bad trend or pattern for similar assessments, which on a broad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue administration. In our view, this interpretation is too narrow to merit acceptance. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income-tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neous 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. 11. The Hon ble Bombay High Court in CIT Vs. Gabriel India Ltd. (1993) 203 ITR 108 (Bom) had held as under:- ... From a rending of sub-section (1) of section 263, it is clear that the power of suo motu revision can be exercised by the Commissioner only if, on examination of the records of any proceedings under this Act, he considers that any order passed therein by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue . It is not an arbitrary or unchartered power, it can be exercised only on fulfillment of the requirements laid down in sub-section (1). The consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed . . 13. It has been held by the Hon ble Bombay High Court in CIT Vs. Gabriel India Ltd. (supra) that exercise of jurisdiction under section 263 of the Act cannot be invoked for making short enquiries or to go into the process of assessment again and again merely on the basis that more enquiries ought to have been conducted to find something. In cases where, two views are possible and the Assessing Officer had taken one view, with which the Commissioner may not agree, the said order cannot be termed as erroneous as held by the Hon ble Supreme Court in Malabar Industrial Co. Ltd. Vs. CIT (supra). Further, the Hon ble Supreme Court had observed that the phrase prejudicial to interest of Revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. However, loss of revenue as a consequence to order of the Assessing Officer cannot be treated as prejudicial to the interest of revenue. The Hon ble Apex Court (supra) further held that where the Assessing Officer had adopted one of the courses permissible and available to him, which in turn, had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd / or under assessment of income to that extent. As pointed out by the learned Authorized Representative for the assessee and as noted by us, the Assessing Officer had made enquiries in the case and had discussed the aspect of transportation of goods in the assessment order elaborately, but had not discussed the information and details filed by the assessee with regard to purchases, does not make the order passed by the Assessing Officer to be a prima facie case of assumption of incorrect computation of income or under assessment of income. We find support from the ratio laid down by the Hon ble Bombay High Court in CIT Vs. Gabriel India Ltd. (supra). The order passed by the Assessing Officer cannot be said to be erroneous or passed on assumption of incorrect computation of income on the ground that the Assessing Officer had failed to carry out the exercise of verification of transactions with the said four parties involving purchases of ₹ 37,79,207/-. In the first instance, the assessee himself has filed the confirmations from the said parties, which are available on record. Further, evidence of transportation of the goods also have been filed which have been taken note by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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