INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - Lack of enquiry on AO's part -

CIT held assessment order as erroneous and prejudicial to the interest of revenue on the ground of AO having made no enquiry as regards unsecured loans, sundry creditors/liabilities and sundry debtors and stock differences. Held: AO required assessee many times for producing the books of account but assessee failed to produce any details in respect of unsecured loans, sundry creditors/liabilities and sundry debtors on assets side appearing in balance sheet. In that regard AO accepted only audit report filed by assessee. From the records, it was not clear that there was any enquiry or any deliberation in this regard. AO should have done enquiry as regards genuineness of current liabilities and current assets as AO was not only an adjudicator, but also an investigator, accordingly, assessment order was erroneous and prejudicial to that extent and AO was to follow direction of Pr. CIT in that regard, however, as regards differences in stock balance, it was not clear that as to whether any enquiry had been done by Pr. CIT or not and it was also not clear as to whether there was a difference in quantitative details or only on value shown in the stock statement. In this regard, Pr. CIT was not justified for making direction to AO for re-examination of the valuation of stock recorded in the books of account of assessee reported to the bank.

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. : 2010-11

SUBSCRIBE FOR FULL CONTENT