The Mattewal Labour and Construction Cooperative Society Ltd. V. CIT and another

ITA/44/2012

AI Insights

The case involves The Mattewal Labour and Construction Cooperative Society Ltd., which appealed against the orders of the Commissioner of Income Tax and the Income Tax Appellate Tribunal. The dispute centered on the assessment for the year 2006-2007, where the Assessing Officer disallowed certain expenses and later, the Commissioner found the assessment to be erroneous as it lacked proper scrutiny of the books of accounts. The Tribunal and the High Court upheld the Commissioner's decision, leading to the dismissal of the Society's appeal.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 795796 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 18-09-2013
• Assessment Year: misc
• Other Referred Cases: Malabar Industrial Company Limited Vs. Commissioner of Income Tax, Commissioner of Income Tax Vs. Gabrial India Limited, Commissioner of Income Tax Vs. G.K.Kabra, Raylon Silk Mills Vs. Commissioner of Income Tax, Commissioner of Income Tax Vs. Ashish Rajpal
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: DENESH GOYAL
• Assessee Lawyers: RADHIKA SURI
• Keywords: Assessment Year; Erroneous order; Income tax appeal; Prejudicial to revenue; Revision of Orders
• Section: 143(3); 142(1); 143(2); 263; 133; 260-A

Judgement Text

"ITA No. 44 of 2012 1 HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. *** ITA No. 44 of 2012 Date of decision: 18th September, 2013. The Mattewal Labour and Construction Cooperative Society Ltd. Vs. Petitioner CIT and another. Respondents. CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON. 1. Whether the Judgment be reported? 2. Whether the judgment be shown to the reporter. 3. Whether a copy of the judgment be given to the reporter. Present: Ms. Radhika Suri, Advocate, for the appellant. Shri Denesh Goyal, Advocate, for the respondents. DR. BHARAT BHUSHAN PARSOON, J This Income Tax Appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter to be referred to as “1961 Act”), is directed against order dated 16.12.2011 (Annexure A-14) passed by the Income Tax Appellate Tribunal, Amritsar in ITA No. 166/ASR/2010 for assessment year, 2006-2007. Factual Matrix 2. The appellant Society is engaged in construction work. It had filed return for the assessment year 2006-2007 on 15.11.2006. On receipt of statutory notice under Section 143(2) followed by another notice under Section 142(1) of the 1961 Act, details were furnished by it to the Assessing ITA No. 44 of 2012 2 Officer. Thereafter, the Assessing Officer on 3.9.2007 passed order under Section 143(3) of the 1961 Act, and noticing, that some of the expenses were unverifiable, a sum of Rs. 60,000/- as expenses was dis-allowed. 3. Sometime later, survey was conducted at the premises of the Society on 27.3.2008 and books of accounts found in the premises, were seized. During survey proceedings ON 13.8.2009 a show cause notice under Section 133 of the 1961 Act, was issued to the Assessee by the Income Tax Authorities. It was followed by yet another notice dated 29.9.2009. On the basis of order passed by the Assessing Officer under Section 143(3) for assessment year 2006-2007, wherein it was found that the books of accounts had not been maintained by the assessee in due course of business, proceedings under Section 263 of the 1961 Act, were initiated. 4. In the course of proceedings under Section 263 of the 1961 Act, except for ledger for the financial year 2005-2006 and some more documents, no other books of accounts were found, whereupon an order was passed by the Commissioner holding to the effect that order of 3.9.2007 of the Assessing Officer under Section 143(3) of the 1961 Act for the assessment year 2006-2007 was erroneous as was also prejudicial to the interest of the revenue. The finding was based on the ground that the Assessing Officer had not made requisite inquiry regarding proper maintenance of books of accounts while completing the assessment. 5. Cancelling the order passed by the Assessing Officer, directions were issued by the Commissioner for making fresh assessment after affording the assessee a reasonable opportunity of being heard. This order dated 12.3.2010 was unsuccessfully challenged by the assessee in appeal before the Income Tax (Appellate) Tribunal, Amritsar Bench, Amritsar which had pronounced the order on 16.12.2011. ITA No. 44 of 2012 3 Substantial Questions of Law . 6. Challenging the verdict (Annexure P-14) of the Tribunal in the present appeal the appellant Assessee has proposed the following questions of law:- “i) Whether in facts and circumstances of the case the Income Tax Appellate Tribunal had failed to consider that the proceedings initiated under Section 263 of the Income Tax Act were completely without jurisdiction as the order passed by the Assessing Officer under Section 143(3) on 3.9.2007 was neither erroneous nor prejudicial to the interest of the revenue, the same having been passed after perusal of books of account on 28.8.2007 as is evident from the order sheets of the assessment proceedings that were placed before the Tribunal, contrary to the ratio of the Apex Court on 243 ITR 83; ii) Whether in facts and circumstances of the case, the Income Tax Appellate Tribunal had failed to consider that the reasons given by the CIT for affirming action under Section 263 were at variance from the reasons given in the show cause notice dated 13.8.2009 and 29.9.2009; and iii) Whether in the facts and circumstances of the case, the order passed by Income Tax Appellate Tribunal is perverse being contrary to material on record?” Stand of the appellant/Assessee 7. It is claimed by the appellate that the impugned order is erroneous as also without jurisdiction as assessment for the year 2006-2007 finalized by the Assessing Officer had neither any element of prejudice to the interest of the revenue nor was erroneous in law or on facts. It is claimed that the appellant's books of accounts had duly been considered by the Assessing Officer. Castigating the approach of the Tribunal, it is asserted that neither material evidence in the form of letters and correspondence exchanged between the Assessee and the Assessing Officer was perused nor the attending circumstances were appreciated. 8. Referring to show cause notice dated 13.8.2009 followed by yet ITA No. 44 of 2012 4 another notice dated 29.9.2009 of the CIT under Section 263 of the 1961 Act, it is urged that the sole ground for assuming jurisdiction under Section 263 of the 1961 Act, by the authorities, was that the books of accounts had not been maintained in due course of business, though as a matter of fact the said books had been seized during the survey conducted on 27.3.2008 at the premises of the appellant-society. In short, it is claimed that there is variance of reasons given in the show cause notice (for initiation of proceedings under Section 263 of the 1961 Act) and those mentioned in the order affirming action under the said provision. It is thus urged that the Tribunal did not take into account the facts as also the concomitant circumstances, as a result of which the impugned order has not only been rendered illegal but has caused prejudice to the assessee. Buttressing her arguments, counsel for the appellant, citing 243 ITR 83 (SC)- Malabar Industrial Company Limited Vs. Commissioner of Income Tax has urged that for invocation of provisions of Section 263 of the 1961 Act, order of Assessing Officer in addition to being erroneous, is also to be prejudicial to the interest of the revenue and both the conditions must co-exist and there must be material before the Commissioner for prima facie satisfying himself that the two requisites are present. Support in this regard is also sought by her from 203 ITR 108 (Bom) Commissioner of Income Tax Vs. Gabrial India Limited. 9. Taking a clue from 211 ITR 336 (AP) – Commissioner of Income Tax Vs. G.K.Kabra and 221 ITR 155 (Guj)-Raylon Silk Mills Vs. Commissioner of Income Tax, it is contended that the assessee has to be afforded an opportunity of being heard by the CIT with regard to the error which is proposed to be revised under Section 263 of the 1961 Act. It is claimed that facts which have not been communicated to the assessee, cannot be made foundation of an order under Section 263 of the 1961 Act. ITA No. 44 of 2012 5 Reliance in this regard has been placed on 23 DTR 266 (Del)- Commissioner of Income Tax Vs. Ashish Rajpal. Claim of the Revenue. 11. Claim of the revenue, on the other hand, is that there is no disparity between the grounds taken in the show cause notice and the grounds taken in the impugned order of the CIT or of the Tribunal. It is then argued by the revenue that the order dated 3.9.2007 under Section 143(3) of the 1961 Act determining total income of the Assessee at Rs. 3,35,080/- was clearly erroneous and prejudicial to the interest of the revenue as the books of accounts had not been prepared in the regular course of business and were also not completed in discharge of functions of the Accountants of the Assessee. 12. We have heard learned counsel for the parties and with their assistance have gone through the paper book and have perused the material available on the record. Statutory Provision 13. To better appreciate the legal requirements for application of Section 263 of the 1961 Act, this provision is reproduced as below: “Revision of orders prejudicial to revenue. 263(1) the Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation.- For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed (on or before or after the ITA No. 44 of 2012 6 Ist day of June, 1988) by the Assessing Officer shall include- i) an order of assessment made by the Assistant Commissioner (or the Deputy Commissioner) or the Income tax Officer on the basis of the directions issued by the (Joint) Commissioner under Section 144A; ii) an order made by the (Joint) Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorized by the Board in this behalf under Section 120; b) “Record” shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; c) Where any order referred to in this sub- section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the Ist day of June 1988, the powers of the Commissioner under this sub-section shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1), after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding any thing contained in sub- section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, (National Tax Tribunal), the High Court or the Supreme Court. Explanation.- In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. 14. When the matter is closely examined on the canvass of factual ITA No. 44 of 2012 7 matrix punctuated by legal inputs, it is found that in fact there is no dichotomy between reasons and circumstances given in the show cause notice and those detailed in the order of the CIT. Facts of the case vis.a.vis legal requirements 15. It is clear that unnecessary hype has been created by the assessee while referring to order (Annexure A-10) of CIT as also order (Annexure A-14) of I.T.A.T. Claim of the assessee that assessment in the year 2006-2007 had been framed by the Assessing Officer after going through the entire gamut of facts as also books of account and other documents of the assessee, is mis-conceived. In order dated 3.9.2007 passed by the Assessing Officer under Section 143(3) of the 1961 Act, there is mention of examination of books of account, whereas no books of accounts in fact had been produced before the CIT, though ledger and cash book of the relevant year along with some loose documents of-course had been impounded at the time of survey proceedings under Section 133 of the 1961 Act. 16. This so called contradiction in fact is non-existent. The Assessee has referred to order 3.9.2007 of the Assessing Officer vide which he had finalized the original assessment. In this order, there is recital that the Assessing Officer had gone through the books of accounts, whereas in the order of C.I.T, there is a mention that there were no books of accounts. When the entire attending facts are gone through, it transpires that version of the Assessing Officer in its order that he had gone through the books of accounts of the Assessee, is factually incorrect and wrong and is not supported by any record. 17. It may be noticed that taking income at Rs.2,25,080/- the assessment was finalized on the following counts:- i) Various expenses had not been explained and thus a sum of ITA No. 44 of 2012 8 Rs.60,000/- was disallowed; and, ii) Basic exemption limit to the tune of Rs.50,000/- was not allowed. 18. The return was filed on 5.11.2006 by the assessee for the assessment year 2006-2007. Subsequently, on compulsory scrutiny in terms of CBDT instructions (as the refund claimed in this case exceeded Rs. Five Lacs), notice under Section 143(2) of the 1961 Act, was served upon the assessee. Yet, another statutory notice under Section 142(1) of the 1961 Act, had followed along with a questionnaire to be answered by the assessee. Concededly, the assessee-Society is engaged in labour and construction work. During the assessment year, the assessee had shown receipt of contract of Rs.12,39,69,308/-. Concomitantly, huge expenses had been debited to P & L account. At the same time, huge refund was sought. 19. The Assessing Officer had accepted the return apparently without proper verification of the expenses stating that the same were “unverifiable”. The Assessing Officer in the same tone had also come to the conclusion that such 'unverifiable' expenses were inadmissible but yet even without properly quantifying the same (which could have been possible only on examination of the books of account closely and minutely) only a paltry sum of Rs. 60,000/- was disallowed and that too without giving details and basis of the same. This was nothing but a tip of the iceberg. Similarly, basic exemption of Rs.50,000/-(which was permissible under statutory provisions of the 1961 Act) was disallowed. This was merely an eye wash. Had the books of accounts been made available to the Assessing Officer and had those been actually examined by him, such perfunctory assessment was not to follow. 20. When survey proceedings under Section 133 of the 1961 Act were in progress, certain books of account, documents and loose papers had ITA No. 44 of 2012 9 been taken into possession by the authorities on 27.3.2008 and were sequelly impounded as is disclosed in Annexure A-6. It is a matter of record that the officer who had framed the original assessment (Annexure A-5) had himself conducted the said survey proceedings and had found large scale missing links and gaping holes. 21. During survey proceedings certain account books and documents etc. (Annexure A-6) had been impounded. The authorities were alarmed and were thus on guard. The matter was probed in detail. 22. In the initial questioning during the course of proceedings under Section 133 of the 1961 Act, President of the assessee Society claimed that he along with Secretary of the Society was looking after the accounts. He also maintained that account matters were being looked after by their Accountant and CA and that the transactions were conducted through their banker i.e the Central Cooperative Bank located near their site which was their only Banker. This representative of the Assessee had been dilly-dallying but when was directly asked questions about books of account and vouchers of the Assessee, it gave no definite answer and in the end came up with a new plea that the books of account had been misplaced though they had lodged no complaint on that count anywhere. The relevant questions and answers in this regard extracted from the statement of the President of the Society are as under:- Q10 Please state as to where are the books of accounts, bill and voucher of the Society lying since April, 2000? Ans: I am not aware. Q11. Then who is aware. Please consult other two persons? Ans: I have consulted Shri Jatinder Singh and Shri Sukhbir Singh who are present here. I again state that I am not aware of the whereabouts of the books of accounts of the society since April, 2000. Q12 Are the books since April, 2009 lying at 143, Golden ITA No. 44 of 2012 10 Avenue, Amritsar or your earlier office at Pt. Deen Dayal Complex? Ans: No books of accounts are lying at any of the above places, so far as the books of accounts pertaining to April, 2000 are concerned. Q 13. Please state as to upto which period the books of accounts for the current period has been written? Ans: I have consulted the other two working partner namely Shri Sukhbir Singh and in Jatinder Singh and after consulting them, I confirm that none of us is aware about the date upto which the books have been written for financial year 2007-2008. 23. From the statement of Harinder Pal Singh Sethi, President of the Assessee-Society recorded during the course of these survey proceedings, it is abundantly clear that every effort was made by the assessee to dodge the authorities. Though the assessee was ready to produce copy of the 'audited accounts' but was not at all interested to produce the account books. Answer to question No. 14 given by President of the Assessee Society ( Annexure A-7) is reproduced hereunder:- Q.14 Please state as to whether any books of account have been lost in respect of financial year 2000-01 to financial year 2007-08. The detailed may also be given in respect of police complaint filed if any in this regard. Ans: I categorically state that the books of accounts have been misplaced for the period from April, 2000 onwards in respect of Mattewal Cooperative Society. Hence, the question of any complaint regarding loss of books of account does not arise. 24. Upon further questioning, this President of the Assessee Society conceded that the appellant was conducting its business only through one Bank Account with Central Cooperative Bank in the name of the Society. When questioning became grilling, this President of the Assessee Society undertook to produce all the books of accounts in the office of the Income Tax Officer but then never produced the same. 25. After going through the record, what-so-ever was available, the ITA No. 44 of 2012 11 questioning continued but nothing qua existence of proper books of accounts and their verification emerged except for the sweeping assertion made by him that proper income had been shown in the returns. Relevant question and answer on this aspect is as below:- Q.No. 30 In the light of various discrepancies shown to you, please explain if whether you want to offer any comments regarding understatement of your income from April, 2002 to financial year 2007-08. Ans: I have consulted other partners Shri Sukhbir Singh and Shri Jatinder Singh and after consulting them we are of the view that we should have shown proper income in the cooperative Society at least for the last three years since 2005-06 considering the turnover of the cooperative Society in the light of the accounts not maintained by us. We will consult our legal counsel Mr. Pankaj Khaneja CA and Shri J.B.S.Jambwal, Advocate in this regard and appropriate statement will be given to you regarding additional income in regard to be shown for the year ending 31st March, 2008. (Emphasis by underlining has been added to clarify the point of non-existence of proper account books as this admission comes from the Assessee itself). 26. Nonetheless, even while concluding his statement, representative of the Assessee made an absolute statement undertaking to produce books of accounts, as under:- “I further state that the complete books of accounts will be produced on 31st March, 2008 alongwith bills and vouchers for the period April, 2008 onwards”. 27. Despite this undertaking, no books of accounts were produced. It is worth noticing further that neither the books of accounts were produced nor any explanation was furnished with regard to the infirmities in the statement of accounts furnished earlier. Instead of producing books of accounts, the appellant assessee vide Annexure A-8, surrendered a sum of Rs. Two Crores. 28. What prompted the appellant to make such surrender emerges from paras 2 and 4 of Annexure A-8 dated 3.7.2008. These paras are being reproduced on the next page. ITA No. 44 of 2012 12 “ Para 2. That in order to avoid litigation and to have good relations with the department and to win peace, we have surrendered these amounts as stated above in connection with assessment years 2007-08 and 2008-09. Para 4. That it may be pointed out that in order to cover everything right from Asstt. Year 2001-02 also, we have surrendered Rs. 70,00,000/- in connection with assessment year 2007-08 and Rs.1,30,00,000/- in connection with assessment year, 2008-09”. 29. After chaining these facts, the CIT concluded that the Assessing Officer had not framed assessment diligently. Sequelly, comments of the Assessing Officer had been called for. On 14.1.2008 among many other things, it was found by the supervisory officer i.e CIT Amritsar to the following effect:- Assessee had spent a sum of Rs. 12 Crores on labour and material and the entire amount has been paid in cash. It was felt that provisions of Section 10-A (3) should have been applied. 30. Reaction of the Assessing Officer to these observations of the CIT was found in his communication of 3.3.2008 (Annexure A-10), wherefrom, it is clear that payments of more than Rs. 20,000/-at one point of time had also been made in cash even though it was not legally permissible. 31. Yet, another communication (Annexure A-10) was sent to the CIT (proper channel) by the Assessing Officer in this matter regarding assessment year 2006-07, wherein he had made it clear that he was not in favour of the CIT exercising powers of Revision in this case. Notwithstanding such tough stand emerging from the Assessing Officer, the CIT took a bold step and proceeded with the case for Revision under section 263 of the Act. Legal aspects 32. Questions which arise for answer are, as to whether an error of Assessing Officer, resulting in incorrect assessment on facts or incorrect ITA No. 44 of 2012 13 application of law will be sufficient to label an order of Assessing Officer to be erroneous? In other words, whether an order of the Assessing Officer would be termed as erroneous merely because facts or law applicable to those, have not been appreciated properly by the Assessing Officer? 33. To put it a little differently, if the Assessing Officer on facts of a case has recorded certain conclusion, whereas on the same set of facts another conclusion could also be rendered, but that second available course was not adopted by the Assessing Officer, will it call for invocation of provisions of Section 263 of the Act? The answer is, Not. 34. Power of Revision would not be exercised by the supervisory officer to enable substitution of his own opinion for that of the Assessing Officer. Merely because the Commissioner comes to a conclusion that the Assessing Officer had estimated the income of the assessee on the lower side, this conclusion ipso facto would not vest power to order revision of assessment. For correction of such type of errors of judgment or of interpretation of law, there are provisions of appeal one after the other, in the Act. 35. Moreover, merely because a CIT is not fully satisfied with the conclusion arrived at by the Assessing Officer, would not be a ground to label the assessment framed by the Assessing Officer, as erroneous. To term an order to be biasd or erroneous, there has to be clear error of law or of appreciation of facts resulting in a completely different result from the one which was arrived at by the Assessing Officer. The conclusion arrived at by the CIT should be objective and not dependent on whims and fancies of an individual. Error of law or of appreciation of facts, should be perceptible and discernible even though facts are to be re-evaluated and marshalled again. 36. Merely because CIT comes to a conclusion that case of revenue has suffered though partially, on facts and circumstances of the case, when ITA No. 44 of 2012 14 the assessment by the Assessing Officer had substantially been framed correctly, will not make out a ground for application of provisions of Section 263 of 1961 Act. Thus, if in the opinion of the Commissioner an order is prejudicial to the interest of the revenue, the said conclusion by itself will not be sufficient to invoke the power of Revision unless in addition, the Assessment order is found to be erroneous as well. Looking at the matter from another angle, if an order is erroneous but is not to the prejudice of the interest of the revenue then invocation of provisions of revision is not permitted. Vice-versa is also true. 37. In short, erroneous character of an order is by itself not sufficient for a supervisory officer to exercise power of Revision. In addition, there has to be some material to satisfy the Commissioner that the tax lawfully imposeable was not imposed or had been imposed on the lesser side than what was actually to be imposed. To put it simply, to invoke the provisions of Section 263 of the Act, the supervisory officer must have sufficient material to come to a conclusive finding that order of Assessing Officer is prejudicial to the interest of the revenue in addition to being erroneous in nature and character. 38. By no means, the Commissioner is empowered to exercise jurisdiction under Section 263 of the Act to serve interest of the revenue when there is no error in the order and the said order cannot be termed as erroneous. In jurisprudential tone, when power flowing from a statute is exercised then compliance with conditions for its application, is a must. No power can be allowed to be used in a capricious, arbitrary or whimsical manner. It must abide by the sanction of law under which it has to operate. In short, fresh determination under Section 263 of the 1961 Act under the orders of the Commissioner would be possible only if he comes to a conclusion that the earlier assessment framed by the Assessing Officer in ITA No. 44 of 2012 15 addition to being erroneous was also prejudicial to the interest of the revenue. 39. Legal position which finally emerges is capsuled hereunder:- 1. Powers of revision being supervisory in nature can be exercised even taking suo moto cognizance but is neither plenary in character nor all pervasive in amplitude; 2. This power is not exercisable in hierarchy of Appellate powers but it is supervisory in nature; nonetheless, has quasi judicial implications; 3. Though suo moto invocation of this power is permissible but even then assessee has a right to put up his version and his side of the story; 4. If proceedings under Section 263 of the 1961 Act are initiated by issuance of a show cause notice, grounds taken therein are to form part of the order to be passed on culmination of the proceedings. Reliance on grounds other than those communicated in the show cause notice would not form foundation of the order to be ultimately passed. 5. To term an order to be erroneous, there should be clear error of law or of appreciation of facts resulting in a different result than the one which was arrived at by the assessing officer; 6. Error of law or of appreciation of facts should be perceptible even though facts are to be marshalled again; 7. The opinion of the Commissioner that an order is prejudicial to the interest of the revenue, by itself will not be sufficient to invoke the powers of Revision; 8. In addition to being erroneous the order sought to be revised should also be prejudicial to the interest of the revenue; 9. If such an order is erroneous but is not to the prejudice of the interest of the revenue, invocation of provisions of Revision is not permissible; vice versa is also true; 10. The Commissioner is not empowered to exercise jurisdiction under section 263 of the Act merely to serve interest of the Revenue when there is no error in the order and said order cannot be termed as erroneous; ITA No. 44 of 2012 16 11. when power emerging from a statute is exercised then compliance with conditions for its application is also a must; and, 12. Power of revision cannot be allowed to be used in a capricious, arbitrary or whimsical manner and is to abide by the sanction of law for which it is to operate. Conclusion 40. Plea of the assessee is that when books of accounts had been impounded on 27.3.2008 (Annexure A-6) during survey proceedings under Section 133-A of the Act, the Assessee was handicapped to put up its case effectively and thus entire exercise by the revenue under Section 263 of the 1961 Act, was a farce. This plea has no merit. Consistent case of the appellant is that computer backup of all the books/accounts whatever the Assessee had, was available with them. In this backdrop, mere impounding of books of accounts vide Annexure A-6 and their retention with the authorities vide Annexure A-12 had caused no prejudice to the appellant in conduct of proceedings under Section 263 of the 1961 Act. 41. Plea of the appellant that contents of show cause notice under Section 263 of the 1961 Act and the findings arrived at by the Commissioner on conclusion of these proceedings are divergent again is mis-founded. In other words, contention that case of the authorities in the show cause notice (Annexure A-9) had no match and synchronization with the findings arrived at by the Commissioner is wrong. Case of the authorities in the show cause notice (Annexure A-9) commenting upon erroneous nature of earlier order of the Assessing Officer is that there was no verification of entries and of expenditure etc. in the books of accounts and further that the books had in fact not even been produced during the assessment or survey proceedings under Section 133 of the Act and rather the conclusion is that no books of accounts in the sense of books prepared in the regular course of business, had ever been produced. This aspect of non-production of the vouchers and ITA No. 44 of 2012 17 other related documents had well been gone into in earlier part of this judgment. Even in the order of the Commissioner, (Annexure A-13) the entire discussion interalia is concentrating on this aspect. 42. It is rather a clear case, where the Assessing Officer should have rejected the books of accounts under Section 145 of 1961 Act or could have made proper examination and scrutiny of the same, in whatsoever form those had been produced before him. It is evident by now that no books of accounts maintained in regular course of business and prepared in due discharge of their duties by their Accountant or their C.A, had in fact been produced much-less for examination, as recorded in order of the Assessing Officer. 43. Following further points are also noteworthy:- i) During survey proceedings ledger and cash books for the financial year 2005-06 relevant to the assessment order for the year 2006-07 had been impounded on 27.3.2008 but neither supporting bills nor vouchers were available and there was a woeful lack of sufficient material to check the entries therein; and, ii) The Assessing Officer instead of scrutinizing the books of accounts and taking pains to pin point the discrepancies, preferred to pass consenting order dis-allowing only Rs.60,000/-. 44. It is, thus, clear that notwithstanding recital about production and examination of the books of Accounts in the Assessment order, it is a clear case of non production of books of accounts before the Assessing Officer. Even the Assessment proceedings conducted by the Assessing Officer do not support his version of examination of books of accounts. Thus, there is complete failure to examine the books with the Bills and Vouchers etc. It is a case of non-production of books of accounts maintained during regular course of business. Such books of accounts had neither been presented nor had actually been examined, even though recital regarding examination of books of accounts is there in the Assessment Order. Even ITA No. 44 of 2012 18 during the revision proceedings before CIT or in the further proceedings before the ITAT or in this Court, the appellant assessee has not been able to negate the plea of the revenue that neither proper books of accounts had been produced before the Assessing Officer nor examination and scrutiny of whatsoever documents and papers were available, was done. 45. No hype can be created by the assessee claiming that the ledger and cash books for the assessment year 2006-07 interalia were found at the premises of the assessee in Survey Proceedings and thus the Assessee was genuine. Without corresponding bills or vouchers those books of accounts found during Survey were of no significance. Plea of the Assessee thus fails. 46. CIT, Amritsar had rightly come to a firm finding that the assessment framed by the Assessing Officer on 20.12.2007 as also later under Section 143(3) of 1961 Act, both were erroneous and prejudicial to the interest of the revenue as the Assessing Officer had not made requisite inquiry with regard to the aspect of maintenance of proper books of accounts while completing the assessment. There is no infirmity in the order of ITAT as well, as it had rightly rejected the appeal of the assessee. 47. Even during proceedings before this Court, the assessee has failed to show that there was any wrong exercise of powers under Section 263 of the 1961 Act, whereby setting aside the impugned order, directions have been given to the Assessing Officer to pass orders afresh in conformity with law. 48. Sequelly, answering all the substantial questions of law in favour of the Revenue and against the Assessee, it is mentioned that powers of Revision under Section 263 of the 1961 Act were exercised by the CIT within the domain and sweep legally ordained for play of these powers and there was no variance with grounds given in the show cause notice and the ITA No. 44 of 2012 19 grounds discussed in the reasoning given with regard to exercise of powers under Section 263 of the 1961 Act. Thus the order of the ITAT cannot be said to be perverse or illegal and the same is upheld. 49. Resultantly, the appeal is dismissed. (Dr. Bharat Bhushan Parsoon) Judge September 18th, 2013 Malik (Rajive Bhalla) Judge "