TaxTMI 
TaxTMI 
2018 (6) TMI 1817
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....mill. Assessee filed its original return of income for A.Y. 2011-12 on 30.09.2011 declaring total taxable income of Rs.10,61,828/-. A survey action u/s 133A of the Act was carried out on 02.02.2012 in the case of the assessee. During the course of survey incriminating material indicating incurring of cash expenses were found. Statement of Shri R.P. Suman, the partner of the assessee firm was recorded wherein he admitted of firm incurring cash expenses of Rs.1.45 crore for settlement with the farmers for various disputed sites in respect of A.Y. 2011-12. He also admitted payments amounting to Rs.35,45,195/- which were not made by "account payee" cheques resulting into violation of Sec.40A(3) of the Act. Thus, assessee admitted total disclosu....
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....ring the course of survey proceedings and assessment proceedings, assessee could not explain as to how the unexplained expenditure would lead to addition to WIP. He was of the view that the declaration of Rs.1.45 crores which was in the nature of unexplained nature was erroneously claimed by the assessee in addition to WIP and allowed by AO. He was of the view that on the lines of the assessment order for A.Y. 2012-13, the amount of Rs.1.45 crore should have been treated as unexplained expenditure u/s 69C and needed to be reduced from closing WIP. ii. The second reason according to Ld. PCIT for the order of AO to be erroneous and prejudicial was that on perusal of the Balance-Sheet, it was noticed that interest free loans of Rs.1,14,77,43....
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....the parties, it was submitted that capital accounts were far in excess of the amounts advanced and that no interest is charged on the advances and no interest is paid on the capital balances. The submissions of the assessee were not found acceptable to Ld. PCIT. He held that the order passed by the AO to be erroneous and prejudicial to the interest of Revenue on those two issues. He accordingly, set aside the order of AO passed u/s 143(3) of the Act and directed the AO to frame fresh assessment. Aggrieved by the order of AO, assessee is now in appeal before us and has raised the following ground : "The Ld. PCIT has erred in law and in facts in assuming jurisdiction u/s 263 of the Income Tax Act, 1961." 4. Before us, the ld. A.R. submitte....
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....raming the assessment order necessary inquiries were not made and therefore the Ld.PCIT was fully justified in resorting to provisions of Sec.263 of the Act. 5. We have heard the rival submissions and perused the material on record. The issue in the present case is about the invoking of provisions of Section 263 by Ld PCIT. Sec. 263(1) of the Act, the powers under which Ld PCIT has assumed power for revision reads as under : "The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the ITO is erroneous in so far as it is prejudicial to the interests of the Revenue, he may, after giving the assessee an opportunity of being heard and after making or causing ....
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.... agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the ITO is unsustainable in law. 8. In the present case we find that in the assessment order AO has noted about the survey conducted on 02.02.2012, the statement of assessee was recorded on oath incurring of cash expenses. He has further noted that the details about the sources of business expenses and other expenses were called for by the assessee and the admission of additional income was also examined by him. He also noted that in the revised return, the additional income admitted was included by the assessee. We find that AO has examined the issue and after application of mind has passed the order. Here it would be re....