TMI Blog2022 (5) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... Audit Report and ITR by verifying the submissions and supporting evidences furnished by the assessee and has found nothing adverse in them. Thus, the aforesaid observations of the Assessing Officer in the assessment order and the Office Note coupled with submissions made by the assessee and supporting evidences furnished, which forms part of the record, would clearly reveal that the Assessing Officer has not only made proper enquiry on the issues for which the case was selected for limited scrutiny but being satisfied with the genuineness of the expenses which was established through the supporting evidences, accepted the returned income. Reading of the impugned order of learned PCIT would reveal that he has considered the assessment order to be erroneous and prejudicial to the interest of Revenue only for the reason that the Assessing Officer has not made proper enquiry on the issues, on which, the case was selected for limited scrutiny - facts on record are contrary to the allegation made by learned PCIT. Further, while holding the assessment order to be erroneous and prejudicial to the interest of Revenue, learned PCIT has directed the AO to conduct detailed enquiries on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PER SAKTIJIT DEY, JM: Captioned appeal has been filed by the assessee calling into question the validity of order dated 20.03.2021 passed by learned Principal Commissioner of Income Tax (PCIT), Rohtak, under section 263 of the Income-tax 1961 (for short the Act ) for the assessment year 2015-16. 2. The grounds raised by the assessee are as under: 1. That having regard to facts and circumstances of the case, Ld. Pr. CIT has erred in law and on facts in assuming jurisdiction u/s 263 of Income Tax Act, 1961 and has erred in holding the assessment order dated 22.12.2017 as erroneous as well as prejudicial to the interest of revenue within the meaning of section 263 read with explanation -2 there under and that too by recording incorrect facts and findings and in violation of principles of natural justice. 2. That having regard to facts and circumstances of the case, Ld. Pr. CIT has erred in law and on facts in cancelling the order passed by the assessing officer u/s 143(3) dated 22.12.2017 with direction to pass an order afresh and that too by recording incorrect fact and findings and without observing the principles of natural justice and more parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... low net profit rate and mismatch in sales turnover reported in Audit Report and ITR. He observed, the net profit rate shown by the assessee in the impugned assessment year is much less than the net profit rate shown in assessment year 2014-15 at 1.18%. He observed, to verify the low net profit shown by the assessee, the Assessing Officer should have examined the genuineness of expenses shown under the head manufacturing expenses and establishment expenses after obtaining documentary evidences from the assessee. However, the Assessing Officer failed to do so. Thus, he held that the Assessing Officer having failed to examine the genuineness of expenses, the assessment order is erroneous and prejudicial to the interest of Revenue. Having held so, he observed, the Assessing Officer should conduct detailed enquiries on the issue of genuineness of expenses by examining documentary evidences. Further, he observed, the Assessing Officer must also examine the cash expenses. Thus, ultimately, he set aside the assessment order with a direction to the Assessing Officer to pass a fresh assessment order keeping in view the observations made in the revision order. 5. Learned counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be said that the assessment order is erroneous and prejudicial to the interest of Revenue, only because, he has accepted the income returned by the assessee. In support of his contention, learned counsel relied upon the following decision: 1. ITO Vs. DG Housing Projects Ltd. (2012) 343 ITR 329 (Delhi HC) 7. Learned Departmental Representative submitted, no enquiry worth its name was conducted by the Assessing Officer on the issues on which assessee s case was selected for limited scrutiny. Drawing our attention to the assessment order, he submitted, the observations of the Assessing Officer on the limited scrutiny issues are unreasoned and without application of mind. He submitted, when the net profit rate shown by the assessee has drastically reduced, the Assessing Officer should have made thorough enquiry to find out the reason behind such low net profit rate and whether such fall in net profit rate is not due to huge commission expenses. Thus, he submitted, due to lack of proper enquiry the Revisionary Authority can revise the assessment order under section 263 of the Act in terms with Explanation 2(a) to section 263 of the Act. Thus, he submitted, failure on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the genuineness of the expenses which was established through the supporting evidences, accepted the returned income. 9. Reading of the impugned order of learned PCIT would reveal that he has considered the assessment order to be erroneous and prejudicial to the interest of Revenue only for the reason that the Assessing Officer has not made proper enquiry on the issues, on which, the case was selected for limited scrutiny. However, the facts on record are contrary to the allegation made by learned PCIT. Further, while holding the assessment order to be erroneous and prejudicial to the interest of Revenue, learned PCIT has directed the Assessing Officer to conduct detailed enquiries on the limited scrutiny issues by examining documentary evidences in respect of huge expenses shown by the assessee. When in course of assessment proceeding, the Assessing Officer has called for the documentary evidences relating to the commission expenses and the assessee has furnished them, it is not understood what more documentary evidences learned PCIT wanted the assessee to furnish. It is very much evident, learned PCIT has not mentioned the nature of evidences to be furnished by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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