TMI Blog2015 (9) TMI 1720X X X X Extracts X X X X X X X X Extracts X X X X ..... - also not in dispute that the proceeding under section 263 were initiated for applying the GP rate of 24.57%, on a turnover shown in the audited balance sheet filed to the bank as against the GP rate applied by the AO on a turnover shown in the audited balance sheet filed alongwith return of income. It is evident from the above that the error related to application of G.P. rate and had crept in the order passed u/s 143(3) on 26/12/2008.The order passed u/s 147 had nothing to do with this issue. Therefore the order u/s 143(3) would subsist and would not merge with the order u/s 147. The limitation for the passing of order under section 263 was to be taken into consideration from the date of passing of order u/s 143(3) i.e. 26/12/2008. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er making disallowance of interest amounting to ₹ 2,20,614/-u/s 36(1)(iii) of the Act. Thereafter proceedings under section 263 were initiated against the order passed u/s 147/143(3) on 29/07/2010, considering it as erroneous and prejudicial to the interest of the Revenue on the following grounds reproduced in the order of the CIT u/s 263 : A perusal of assessment record revealed that assessee had shown sales turnover of ₹ 4,12,83,916/- in its return of income on the basis of Audit Report, Balance Sheet / Profit Loss Account etc. prepared by Sh. Harish Kumar, Chartered Accountant on 05/08/2006, whereas sales/turnover of ₹ 8,21,20,978/- was shown by the assessee on the basis of accounts prepared by M/s Anil Raj As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income showing a turnover of ₹ 4,12,83,916/-. The AO had rejected the books of account of the assessee on this account under section 145(3) of the Income Tax Act and framed the assessment applying a GP rate 24.57% as against 9.27% shown by the assessee. However the AO applied this rate on the lower turnover of ₹ 4,12,83,916/- whereas the higher turnover of ₹ 8,21,20,978/- should have been taken. This has resulted in under assessment of income of the extent of ₹ 1,00,33,666/-. The order passed by the AO is clearly erroneous as it has been passed without application of mind. An order passed without taking into account the details on record is treated as order without application of mind. Further, the income has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even the return filed in response to notice under section 148 ws inclusive of the income assessed under section 143(3) and as such there was no occasion to resort to the provision of Section 263 which renders the order illegal, arbitrary and unjustified. 4. That the re-assessment order having been passed by the Assessing Officer after due application of mind, recording of reasons for re-opening and taking into consideration the various replies, material on record and books of account, the action resorted to by the Commissioner of Income Tax is unwarranted and uncalled for. 5. That the reasons mentioned in the notice issued by the Commissioner of Income Tax for initiation of proceedings under section 263 are based on suspicion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 008. The Ld. AR placed reliance on the order of the apex court in the case of CIT vs. Alagendran Finance Ltd.(2007)293 ITR 1(SC) in support of his contention. The Ld. AR further stated that the order passed u/s 143(3) could be revised u/s 263 upto 31/03/2011 as per the provision of section 263(2). But since the order u/s 263 in the impugned case was passed on 24/02/2015, it was clearly barred by limitation. 7. The Ld. DR on the other hand stated that the impugned proceedings u/s 263 had been initiated in relation to the order passed under section 147 and not in relation the order passed under section 143(3) and therefore was not barred by limitation. 8. We have heard the argument of both the parties and have gone through the docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome. The doctrine of merger did not apply in a case of this nature: the period of limitation commenced from the dates of the original assessments and not from the reassessments since the latter had not had anything to do with the Lease Equalisation Fund. This was not a case where the subject matter of reassessment and the subject matter of the assessment were the same. CIT v. Shri Arbuda Mills Ltd.[1998] 231 ITR 50 (SC) relied on. CWT v. A.K. Thanga Pillai [2001] 252 ITR 260 (Mad) approved. There may not be any doubt or dispute that once an order of assessment is reopened, the previous under-assessment will be held to be set aside and the whole proceedings would start afresh, but that would not mean that even when the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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