Case Law Details
Brief of the Case
ITAT Delhi held In the case of Lakshya Seth vs. ITO that CIT cannot remand the matter to the AO to decide whether findings recorded are erroneous. In the case where there is inadequate inquiry but not lack of inquiry, again the CIT must give and record his finding that the order/inquiry made is erroneous and this can happen if an inquiry is conducted by the CIT and thereafter he is able to establish and shows the error or mistake made by the AO, making the order unsustainable in law.
Facts of the Case
The AO selected the case for scrutiny through CASS with the reason that the AO should examine the source of cash deposited in the savings bank account as per AIR information. The AO completed the assessment by making an addition of Rs.6,11,230/- on surrendered amount made by the assessee vide order sheet dated 20.12.2013 as business income @8% of gross receipts of Rs.76,40,380 as prescribed u/s 44AF of the Act. Finally, the said addition was made being 8% of turnover made on account of trading of cloth during the relevant financial period. The AO completed the assessment u/s 143(3) at an income of Rs.7,52,860/- as against the returned income of Rs.1,40,180.
Subsequently the CIT issued notice u/s 263 on 9.9.2014. After considering the reply and explanation of the assessee, the CIT held that impugned assessment order is erroneous and prejudicial to the interest of revenue as not only assessment order has been passed in utmost haste and in a cryptic manner but the AO has also allowed benefit of section 44AD/AF erroneously without considering whether conditions thereto are fulfilled, and also not by applying provisions of section 69A. Finally, the CIT held that the order passed by the AO u/s 143(3) deserves to be cancelled and he directed the AO to make a fresh assessment after considering correct and legal and factual position in this regard.
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