TMI Blog2022 (11) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... n 263 of the Act - Also see SMT. RENUKA PHILIP [ 2018 (12) TMI 129 - MADRAS HIGH COURT] Thus since the larger issue of whether there is any difference in closing stock at all is the subject matter of appeal before the Ld. CIT(A) we hold that the Ld. PCIT is barred in assuming jurisdiction u/s. 263 of the Act. Also from the order of the Ld. PCIT the assessment order passed by the Assessing Officer was held to be erroneous and prejudicial to the interest of the Revenue stating that the AO has not made enquiries. The Ld. PCIT is also of the view that the difference in closing stock should have been added as income u/s. 68 of the Act. In the course of assessment proceedings the assessee was required to explain the difference in closing stock and the assessee has furnished charts, reconciliation statement, explanations etc., which was examined by the AO and decision was taken to treat the difference in opening stock, purchases, sales, closing stock, GP/net profit as income of the assessee. Therefore, the observations of the Ld. PCIT that the AO has not carried out any enquiries are not borne out from record. We also observe that the Ld. PCIT having observed that the AO has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to the interest of the revenue. The order passed by the Ld. Pr. CIT, Agra-1 is illegal and bad in law. 4. That having regard to the facts and circumstances of the case, the order of the Ld. Pr. CIT, Agra-1 under section 263 of the I.T. Act, 1961 setting aside the assessment framed with the directions to make fresh assessment after examining the issues. Non-issuance of specific directions for assessment to be framed clearly proves that it is a case of only change of opinion and the assessment framed is neither erroneous nor prejudicial to the interest of the Revenue. 5. That having regard to the facts and circumstances of the case, Ld. Pr. CIT, Agra-1 has erred in law and on facts in passing the order under section 263 of the I.T. Act, 1961, setting aside the assessment order to the file of Ld. Assessing Officer with the direction to pass fresh order after examining the issue is arbitrary, unjust, based on assumptions and presumptions and that no error existed nor prejudice was caused to Revenue, therefore, the order passed is bad in law and against the facts and circumstances of the case and deserves to be quashed. 6. That the appellant craves the leave to add, ame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 68 of the Act stating as under: It must be appreciated that the alleged net profit of Rs. 19,90,13,470 which has been worked out from the stock summary takes into account the impact of the figure of the so-called closing stock of Rs. 30,31,62,405. This is evident from the reasons recorded reproduced in page 2 of the assessment order. The perusal of the same will reveal that under the column As per stock summary taken from hard disks impounded during survey reproduced in Para 1 above the alleged net profit is the resultant of the so called (Sales + Closing Stock) minus (Opening Stock + Purchases + Direct expenses + Indirect expenses). The last column in the said table i.e. difference is merely an arithmetical calculation between the figures as per the ITR and the figures taken from stock summary sheet generated from the impounded hard disk. This difference does not show that there was excess stock and even during the course of survey no material in relation to the value of the closing stock for the impugned year was found to show that this alleged difference was actual. Hence on a mere hypothesis this working has been made and the so-called net profit which takes into impa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded during survey and the alleged net profit is the resultant of the so called (Sales + Closing Stock) minus (Opening Stock + Purchases + Direct expenses + Indirect expenses). It is submitted that the said alleged difference is merely an arithmetical calculation between the figures as per the ITR and the figures taken from stock summary sheet generated from the impounded hard disk and this difference does not show that there was excess stock and even during the course of survey no material in relation to the value of the closing stock for the impugned year was found to show that this alleged difference was actual. Therefore it is submitted that on a mere hypothesis the working has been made and the so-called net profit which takes into impact the closing stock of Rs. 30,31,62,405/- has been already taken as income of the assessee for the impugned years. The Ld. Counsel submits that since entire addition of net profit on alleged difference in closing stock is the subject matter of appeal before the Ld. CIT(A), the assumption of jurisdiction by the Ld. PCIT is bad in law. Reliance was placed on the decision of the Jurisdictional High Court in the case of CIT Vs. Vam Resorts Hotels ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed by him is erroneous and prejudicial to the interests of revenue. The Ld. Counsel in this regard referring to page 6 para 5 of the reassessment order (page 30 of the paper book) submits that the Assessing Officer has given finding that in the course of assessment proceedings vide order sheet entry dated 20.12.2017, the Assessee was required to furnish explanation and justification regarding the difference in stock as per stock summary and as per ITR and Audit Report and the Assessee by written reply dated 29.12.2017 furnished along with charts showing reconciliation of the data between the stock summary impounded during the course of survey and the Audited Balance sheets of the assessee. The Ld. Counsel therefore submits that since the Assessing Officer made all enquiries and examined the evidences, submissions and replies filed, the allegation of the Ld. PCIT that the Assessing Officer has not made enquires is baseless and contrary to record. 14. The Ld. Counsel for the assessee submits that the Ld. PCIT has failed to point out which enquires the Assessing Officer failed to make during the course of assessment proceedings. The Ld. Counsel for the Assessee submits th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umed jurisdiction u/s. 263 on issues which are not at all subject matter of appeal much less considered and decided in appeal. Reliance was placed on the decision of the Allahabad High Court in the case of Mehra Brothers Partnership vs. CIT in WT No. 185/2015 dated 11.03.2015. The decision of the Hon'ble Delhi High Court in the case of BSES Rajdhani Power Ltd. vs. PCIT in ITA No. 387/2017 dated 08.11.2017. The Ld. DR placing reliance on this decision submits that the Hon'ble Delhi High Court held that non consideration of larger claim of depreciation and the consideration of only a part of it by the Assessing Officer who did not go into the issue with respect to the whole amount was an error that could be corrected u/s. 263 of the Act. 16. The Ld. DR regarding order of AO being erroneous and prejudicial to the interest of Revenue submits that in the instant case no enquiry into excess stock and unaccounted purchases has been made by the AO. Ld. DR submits that it is the duty of the AO to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an enquiry. Reliance was placed on the decision of the Delhi High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of addition of net profit on account of difference in opening stock, purchases, sales, closing stock, GP and net profit are under appeal before the Ld. CIT(Appeals). 19. The assessee carrying on the business of manufacture and sale of glass products filed its return of income for AY 2014-15 on 04.11.2014 declaring income of Rs. 11,66,380/- and the assessment was completed u/s. 143(3) on 11.07.2016 determining the income at Rs. 13,79,320/-. A survey operation u/s. 133A of the Act was conducted at the business premise of the assessee on 3rd August, 2016 and in the course of survey whereas documents/loose papers and hard-disk were impounded. On the basis of the information contained in the hard-disk the assessment was reopened by issue of notice u/s. 148 of the Act. The reassessment was completed u/s. 143(3) of the Act read with Section 147 of the Act determining the income of the assessee by making an addition of Rs. 19,90,13,470/-. The said Rs. 19,90,13,469/- represents the difference in opening stock, purchases, sales, closing stock and the net profit as shown by the assessee in its return of income and as per the stock summary taken from hard-disk impounded during the survey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able, since the assessee went on appeal against the re-assessment order dated 31.12.2009 stating that his claim for deduction u/s. 54 of the Act should be accepted. 23. Therefore, in the process of considering as to what relief the assessee is entitled to, the Assessing Officer held that the assessee is entitled to claim deduction under Section 54F of the Act and assigned certain reasons for that. Therefore, the larger issue was pending before the Commissioner of Appeals, and in such circumstances, the Commissioner could not exercise power under section 263 of the Act on account of the statutory bar. Therefore, on this ground also, the assumption of jurisdiction under Section 263 of the Act was wholly erroneous. 24. As noticed above, the Assessing Officer while completing the reassessment proceedings has assigned certain reasons for coming to a conclusion that the assessee is entitled for deduction under Section 54F and not under Section 54 of the Act. This reason assigned by the Assessing Officer has been found by us to show due application of mind. As observed, we cannot expect an Assessing Officer to write a judgment. In such circumstances, the view taken by the Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment proceedings are concerned as we have already noted above that it is the categorical finding of the AO in para 5 page 6 of assessment order that in the course of assessment proceedings the assessee was required to explain the difference in closing stock and the assessee has furnished charts, reconciliation statement, explanations etc., which was examined by the AO and decision was taken to treat the difference in opening stock, purchases, sales, closing stock, GP/net profit as income of the assessee. Therefore, the observations of the Ld. PCIT that the AO has not carried out any enquiries are not borne out from record. We also observe that the Ld. PCIT having observed that the AO has not made an enquiry the Ld. PCIT failed to point out any deficiency in enquiries and also not made any minimal enquiry by himself to prove that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue. 26. The Hon'ble Delhi High Court in the case of DIT Vs. Jyoti Foundation held that where revisionary authority opined that further enquiry was required such enquiry should have been conducted by revisionary authority himself to record a findin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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