INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - AO after haring applied his mind taken one of the possible views -

Assessee admitted receipt of Rs. 35,00,000 on sale of laterite and gravel earth and also Rs. 60,00,000 as gift from sister. Assessee had not revealed these receipts in return of income. AO added back an amount of Rs. 9,50,000 as undisclosed income, i.e., is 10% of these receipts computed as per section 44AD. CIT invoked section 263 on the ground that there were no expenses involved in the sale of laterite, gravel earth and gift, and entire amount of Rs. 35,00,000 which stood undisclosed in return of income assessed under section 69B and tax should be levied @30% under section 115BBE.Held: Since assessee's turnover was less than Rs. 1 crore during the relevant previous year, AO had taken a clue from section 44AD and applied 10% of total income as income of assessee from the said business and made addition of Rs. 9,50,000 to the returned income of assessee. AO after applying her mind had taken one possible view where two views were possible and CIT could not substitute his view on the issue considered by AO, therefore, invocation of section 263 for making roving enquiry was unjustified.

Relied:Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC), CIT v. Max India Ltd. (295 ITR 282), and CIT v. Gabriel India Ltd. (1993) 203 ITR 108 (Bom) : 1993 TaxPub(DT) 1357 (Bom-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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