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TMI Blog2021 (12) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... was determined by the A.O. on the basis of certain incriminating materials found during the course of search. The seized material consisted of papers wherein receipts and payments have been noted down. Though the assessee stated in its statement that they represent cash drawn from bank and payments made therefrom, yet the A.O. took the view of cash receipts represented unaccounted sales of the assessee. Accordingly, he assessed gross profit on unaccounted sales @ 0.7% in all the 3 years under consideration and made the addition. 3. The Ld. Principal CIT (PCIT) examined the assessment record and took the view that the A.O. should have ascertained the profit by considering unaccounted purchases and unaccounted sales noted down in the seized materials. Accordingly, he took the view that the A.O. has made the addition without making any enquiry or verification regarding the source of unaccounted purchases. He also took the view that estimation of the gross profit at 0.7% without ascertaining profit from unaccounted purchases and unaccounted sales is erroneous and prejudicial to the interests of revenue. Accordingly, the AO initiated revision proceedings u/s 263 of the Act. 4. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of unaccounted purchases and unaccounted sales is not based on the seized materials. In any case, the AO has taken a plausible view on this matter and hence the assessment order cannot be considered to be erroneous and prejudicial to the interests of revenue. In support of this proposition, he placed his reliance on the decision rendered by Hon'ble Supreme Court in the case of Malabar Industrial Co Ltd vs. CIT (243 ITR 83)(SC). 6. The Ld A.R further submitted that Ld PCIT cannot substitute his views to the plausible view taken by the AO. In support of this contention, he placed his reliance on the decision rendered by Hon'ble Bombay High Court in the case of CIT vs. Gabriel India Ltd (203 ITR 108)(Bom). 7. On the contrary, the Ld D.R supported the orders passed by Ld PCIT. 8. We heard the parties and perused the record. The scope of revision proceedings initiated under section 263 of the Act was examined by Hon'ble Bombay High Court, in the case of Grasim Industries Ltd. V CIT (321 ITR 92) by taking into account the law laid down by the Hon'ble Supreme Court. The relevant observations are extracted below: "Section 263 of the Income-tax Act, 1961 empowers the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment of the Supreme Court in CIT v. Max India Ltd. [2007] 295 ITR 282." 9. The Hon'ble Bombay High Court has also explained the scope of revision proceedings in the case of CIT vs. Gabriel India Ltd (203 ITR 108) as under:- "9. From a reading 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 fulfilment 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 will be illegal and without jurisdiction. The Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with law. If an Income tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. We notice that the assessing officer has not commented upon the payments noted in the seized materials. The Ld A.R also submitted that the tax authorities have not considered the cash payments are towards purchases. He submitted that one of the entries would show that the cash payments represent deposit made into the Bank account. 12. Accordingly, we notice that it is nobody's case that the cash payment represents unaccounted purchases as presumed by Ld PCIT. In that case, the AO could not have computed gross profit on the basis of entries noted in the seized materials. Under these set of facts, one of the courses of action available with the AO is to estimate profit from the unaccounted sales. Since the assessee could not have sold materials without purchasing them, only profit element may be assessed. Thus, the AO has estimated the income and assessed the same in the hands of the assessee in all the three years. Thus, we notice that the AO has adopted one of the possible views in this matter. As held by Hon'ble Supreme Court in the case of Malabar Industrial Company (supra), if the AO has taken one of the possible views, then the same would not make the assessment order p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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