The Pune Bench of Income Tax Appellate Tribunal (ITAT) held that failure of Assessing Officer (AO) in non-consideration of sale of scrap in the total revenue is erroneous and prejudicial to interest of revenue and thus the Tribunal allowed the Principal Commissioner of Income Tax (PCIT) to exercise revisionary power under Section 263 of Income Tax Act, 1961.
The assessee Sushil Industries has been engaged in the business of manufacturing of plastic injection moulded parts and MS press parts of refrigerators and washing machines, return was filed declaring total income at Nil. The assessment was completed also determining the total income at Nil. The PCIT, while exercising his revisionary powers, observed that the AO failed to consider the issues germane to the assessment.
The PCIT observed that Audit report Column No.34 (a) clearly mentioned that the assessee had earned profit from alcoholic liquor, forest produce, scrap etc. at Rs.88,06,894/- (Net), on which Tax Collected at Source (TCS) at 1% amounted to Rs.88,069/-.
He further noticed that the AO had not examined as to whether such sale of scrap amounting to Rs.88.06 lakh was offered for taxation, since no break-up of sale was examined or called for. The PCIT made an addition of such amount along with other issues not dealt by AO.
The Authorised Representative (AR) of assessee Kishor B. Phadke, contended that the amount of Rs.88.06 lakh was a part and parcel of the amount of `Sales’.
Ajay Kumar Kesari appeared as Departmental Representative (DR).
The Bench comprising of R.S. Syal, Vice President and S.S.Viswanethra Ravi, Judicial Member observed that the AO did not enquire into this aspect of the matter and simply passed a five-lined assessment order observing that the case was selected for complete scrutiny assessment on the issue of “Non furnishing of quantitative details”.
The Tribunal considered this action of the AO rendered the assessment order erroneous and prejudicial to the interest of the Revenue, thus PCIT was right in exercising revisionary power under Section 263 of Income Tax Act.
Thus the Bench further held that the non-consideration of sale of scrap in the total revenue, there is no need to examine other issues that have been taken note of the ld. PCIT in the revisionary order. Hence dismissed the appeal of the assessee .
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