TMI Blog2022 (2) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... if the AO has taken one of the possible views, then the same would not make the assessment order prejudicial to the interests of revenue. PCIT has held the assessment orders to be erroneous for the reason that the AO should have estimated income from unaccounted sales at a higher figure. Thus it is case where Ld PCIT is having a different view on the manner of estimation of income from unaccounted sales. As held in the case of Gabriel India Ltd (supra), the view so entertained by Ld PCIT would not give him power u/s 263 of the Act to initiate revision proceedings, since the view of the AO cannot be termed as erroneous. The impugned assessment orders cannot be termed as erroneous and prejudicial to the interests of revenue. Accordingly, Ld PCIT was not justified in invoking revision proceedings in all the three years under consideration. Accordingly we set aside the revision orders passed by Ld PCIT in all the three years under consideration. - Decided in favour of assessee. - ITA No.140 to 142/Bang/2021 (Assessment year : 2013-14 – 2015-16) - - - Dated:- 7-12-2021 - SHRI B.R BASKARAN, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K Assessee by : Shri V Srinivasan, Advoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rification regarding the source of unaccounted purchases. He also took the view that estimation of the gross profit at the rates stated above, without ascertaining profit from unaccounted purchases and unaccounted sales is erroneous and prejudicial to the interests of revenue. Accordingly, the Ld PCIT initiated revision proceedings u/s 263 of the Act. 4. The assessee submitted before Ld. Principal CIT as under:- a) The gross profit on the unaccounted turnover was admitted u/s 132(4) and accepted by the ADIT (Inv). b) The gross profit on the unaccounted turnover was admitted before the Assessing Officer and accepted by him. c) The notings in the seized material does not include any payment towards unaccounted purchases. d) There is no investment in this line of trade as the sale proceeds of the sale of arecanut was used to make the payments towards unaccounted purchases. e) A copy of the seized material and the statement identifying the unaccounted sales and unaccounted purchases be furnished for filing additional submissions. Accordingly, the assessee contended that the impugned assessment orders cannot be considered to be erroneous and prejud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Hon ble Bombay High Court in the case of CIT vs. Gabriel India Ltd (203 ITR 108)(Bom). 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). 7. On the contrary, the Ld D.R submitted that the assessee has admitted in the statement taken from one of its partners that the money transactions noted down in the seized materials consisted of unaccounted transactions also. However, the AO has failed to examine the details of unaccounted purchases, investment made in purchasing those stock and further the AO also failed to compute gross profit from the seized materials considering both unaccounted purchases and unaccounted sales. Accordingly, the Ld DR 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Income-tax Officer is unsustainable in law. The principle which has been laid down in Malabar Industrial Co. Ltd. [2000] 243 ITR 83 (SC) has been followed and explained in a subsequent judgment 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to law, upon mistaken view of law; or upon erroneous application of legal principles . 12. From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in 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 woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on order passed u/s 263 of the Act. A perusal of the same would show that the AO also could not collate the details of unaccounted purchases from the seized materials, meaning thereby, the AO also could not compute gross profit as observed by Ld PCIT in the consequential order. The fact remains that the assessee has collated the details of unaccounted sales from the seized record and agreed to offer gross profit thereon, since the assessee could not have sold the materials without purchasing them. 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. 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 assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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