- (1.) Heard Sri Ashok Kumar, learned counsel for the appellant and Sri Ashish Bansal, learned counsel for the respondent.
(2.) The assessee has derived his income from the business of manufacturing of Tobacco and Gutkha under the name and style of M/s Jagdambay Flavours at Kanpur and Bhopal. For the Assessment Year 2009-2010, the return filed by the assessee was processed under Section 143 (1) of the Income Tax Act, 1961, which was subsequently, selected for scrutiny. Accordingly, a notice dated 10.9.2010, under Section 143(2) of the Income Tax Act, was issued. Thereafter, a notice under Section 142(1) was issued along with questionnaire requiring the assessee to furnish the trading results of the last three years. The questionnaire also required the appellant to indicate the reasons as to why there was a huge downfall in gross profit as well as in gross profit rate percentage and why there was a huge increase in the total turnover as compared to the preceding year in both the units. The assessing Officer after considering the matter in detail and after examining the books of accounts found that the gross profit rate that arose could not be compared with the previous year because of the change in the charging of the excise duty which was compounded and was charged per machine at a fixed rate in this year irrespective of the fact whether production took place or not while excise duty in the preceding year was charged on the basis of sales. The assessing authority, while passing the assessment order found that considering the nature and trends of the assessee's business, no adverse inference could be drawn and the trading results could not be disturbed. It transpires that the Commissioner of Income Tax passed an order under Section 263 of the Act holding that the order of the assessing officer was pre-judicial to the interest of the revenue and accordingly remanded the matter to the Assessing Officer to pass a fresh assessment order.
(3.) The Commissioner of Income Tax, while noticing that the assessee's case was processed under scrutiny and the questionnaire was issued on the issue of gross profit rate and variation made therein was of the opinion that a proper inquiry should be made with regard to the charging of excise duty which could have impacted the drastic decrease in the rate of gross profit and net profit as compared to earlier assessment years. The assessee being aggrieved filed an appeal before the Tribunal, which was allowed and the order of the Commissioner of Income Tax, under Section 263 of the Act, was set aside. The department being aggrieved has filed the present appeal.;