HC : Upholds Sec. 263-order ; Condemns AO’s 'slipshod' acceptance of books despite huge surrender in survey

Punjab & Haryana HC reverses ITAT order, upholds CIT’s revisionary order u/s. 263 resulting in enhancement of assessee’s income for AY 2008-09; Takes note of CIT’s observations that AO had failed to reject books of accounts despite assessee’s own admission that there were discrepancies in the books, as well as a huge surrender of additional income of Rs. 2.15 cr. had been made during the survey; Further, taking note of the drastic fall in the GP rate as well as the net profit rate as compared to earlier years, CIT had remarked that ,“This further indicates that the assessee has adopted a method to offset the amount surrendered,” and that AO had simply accepted assessee’s explanations without independent application of mind; In light of above, HC upholds CIT’s order u/s. 263 and forthwith directs Registry to forward this ruling copy to CBDT to issue necessary instructions to all AOs in cases of survey / search and seizure operations especially where surrender or concealment has been detected, to ensure proper scrutiny of such cases; States that CBDT directive should require AO “to discuss reasons for rejecting or accepting the books of account of the assessee and not to merely record in slipshod or cursory manner that ‘the books of account produced and test checked’ as done by the AO in the present case.”:HC