COMMISSIONER OF INCOME TAX Vs. SUNBEAM AUTO LTD

JUDGEMENT

(1.) THIS appeal was admitted on the following question of law :

(2.) IN order to appreciate as to under what circumstances, the question of law has arisen for our consideration, it would be necessary to take stock of the facts as they appear on the records of the case.

(3.) THE Commissioner of Income Tax-III, New Delhi examined this file and felt that the assessment order was perfunctory and erroneous and it was prejudicial to the interest of the Revenue. According to the CIT no detailed investigation had been carried out by the Assessing Officer while making the assessment. Solitary objection of the Commissioner related to the expenditure on tools and dyes aggregating to Rs. 10,56,69,367/-, which was claimed as revenue expenditure and was allowed as such. According to the Commissioner, he noticed that otherwise substantial expenditure during the year and details of the expenditure filed before the Assessing Officer also showed that the cost of some of the dyes exceeded Crores of rupees. The CIT accordingly issued notice on 03.11.2004 to the assessee to show-cause why appropriate order under Section 263 be not passed by him with a view to correct the lapse committed by the AO.