INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - AO took a possible view -

During course of survey proceedings in case of assessee, it was found that GP as a percentage of sales turnover of the assessee's business was higher than the return filed over the years. Further, it was found that the daily statement and sale vouchers were found to be destroyed by burning. Further, the assessee offered an additional amount for assessment consequent to the survey proceedings, which was found to be insufficient and accordingly, the AO added certain amount to make good the shortfall. CIT observed that, having found that the GP ranged between 32% and 57%, the average was 42%, and on giving a margin of 5%, the GP should not have been worked at less than 37%. However, the same worked out to only 23.63%. Hence, the CIT by invoking jurisdiction under section 263 directed the AO to make a fresh assessment.Held: It is settled that as long as the view taken by AO is a possible view, the same ought not to be interfered with by CIT under section 263 merely on the ground that there is another possible view of the matter. Further, permitting exercise of revisional power in a situation where two views are possible, would really amount to conferring some kind of an appellate power in the revisional authority. In instant case, calculation of GP was made by AO, and the assessee agreed to the additions made, therefore, the changes suggested by the CIT invoking the revisional jurisdiction under section 263 would not be sustainable as the view taken by the AO was a possible view.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2006-07

INCOME TAX ACT, 1961

Section 271(1)(c)

SUBSCRIBE FOR FULL CONTENT