- (1.) This is an appeal against the order of the Income Tax Appellate Tribunal dated 28.10.2014 allowing the respondent's assessee appeal against the order of the Commissioner of Income Tax-II, Ludhiana dated 31.03.2014 for the assessment year 2010-11. The Commissioner of Income Tax (CIT) in exercise of the powers under Section 263 of the Income Tax Act, 1961 (for short 'the Act') cancelled the assessment framed by the Assessing Officer and directed him to make a fresh assessment. The appellant has raised the following questions of law:- i) Whether in the facts and circumstances of the case, the order of Hon'ble ITAT is perverse in law in quashing the order under section 263 ignoring the decision of Hon'ble Punjab and Haryana High Court in case of CIT v. M/s Abhishek Industries Limited, ITA No. 312 of 2011 dated 20.12.2012 and CIT v. Assam Tea House, 2012 344 ITR 507 wherein in the similar circumstances, Hon'ble Court has upheld the invoking of revisional power by the CIT. ii) Whether in the facts and circumstances of the case, the order of Hon'ble ITAT is perverse in law in quashing the order under section 263 ignoring that assessment order is erroneous in so far is prejudicial to the interest of the revenue as the Assessing Officer has not followed the decision of Hon'ble High Court of Punjab and Haryana in the case of M/s Kim Pharma (P) Ltd. v. CIT Panchkula, ITA No. 106 of 2011 (O&M) dated 27.04.2011 that income surrendered during survey is to be taxed u/s 69-A and set off losses u/s 70 and 71 is not permissible against such income. iii) Whether in the facts and circumstances of the case, the order of Hon'ble ITAT is perverse in law in quashing the order under section 263 ignoring that assessment order is erroneous in so far is prejudicial to the interest of the revenue as the assessee had failed to maintain the quantity wise details and as such it was not possible to compare the input with output and therefore books of account were liable to be rejected in the light of decision of Hon'ble Punjab and Haryana in the case of Hargopal Singh proprietor, Gopal Sweets v. CIT, 2005 273 ITR 507 which the AO failed to do.
(2.) The arguments were limited to questions (i) and (ii). The third question does not raise a substantial question of law. The appeal is admitted only in respect of question No. (ii).
(3.) The C.I.T.(A) held that the Assessing officer had failed to make necessary enquiries including recording the statements of the persons concerned and had accepted the low G.P. rate taken by the respondent. It was also held that the net profit rates were very low even in the previous assessment years namely 2008-09 and 2009-10. In the assessment year 2010-11 the G.P. rate was only 10.85%. Further if the amount surrendered was excluded there would be a loss. It was further held that the Assessing officer had failed to ascertain whether the G.P. rate shown by the assessee was appropriate keeping in view the nature of the business. It was further observed that the Assessing Officer could have gathered the necessary data by recording the statements of the employees who actually manufactured the products, namely, sweets, by gathering data from other sources which would indicate how much raw material was required to manufacture a particular item of sweet and the corresponding sale price. After referring to the authorities, the C.I.T. merely expressed the opinion that the order framed by the Assessing Officer was erroneous in so far as it is prejudicial to the interest of the revenue and cancelled the assessment order and directed the Assessing Officer to make a fresh assessment.;