The exercise of revisional powers under section 263 of the Income Tax Act, 1961 requires both that the order of assessment is erroneous and prejudicial to the interests of the revenue.

Akil Abdul Hamid Kureshi, J.

1. This petition is filed by the assessee challenging a notice dated 11.02.2015, as at Annexure-I to the petition, issued by the Commissioner of Income Tax initiating revisional proceedings under section 263 of the income-tax Act, 1961 ("the Act" for short) for assessment years 2008-09 to 2012-13. Brief facts are as under:

2. Petitioner is a Company registered under the Companies Act and is regularly assessed to tax. For the assessment years 2006-07 to 2012-13, petitioner had filed returns of income which were processed by the revenue authorities. Later on, however, search and seizure operations took place at the premises of the petitioner company on 17.11.2011. Assessing Officer passed fresh scrutiny assessments under section 144 read with section 153A of the Act for the relevant assessment years falling in the block period. During the course of such assessments, payments made by the petitioner Company to 176 entities showing them as sub-contractors along with various other income and expenditure entries of the petitioner company came up for discussion by the assessing officer. The assessing officer noted that the company had claimed that it had got certain construction works executed by sub-contractors during the period under consideration. However, upon scrutiny, it was found that these vendors were not available at the given addresses. The assessee was, therefore, called upon to produce the vendors before the assessing officer along with books of accounts, bills, vouchers, inspection reports etc. The assessee was also called upon to show cause why the transactions with the said vendors should not be treated as bogus. The assessing officer noted that these vendors were not presented before him and the revenue was, therefore, unable to verify the transactions between the assessee and the said vendors.

3. Despite resistance from the assessee, the assessing officer held that the expenses claimed by the assessee under profit & loss account to the tune of Rs. 105.36 crore (rounded off), which represented the payments made to such vendors for sub-contracts, were not verifiable. The assessee had claimed such expenditure in the profit & loss account. The assessing officer, therefore, was not satisfied with the correctness of the accounts of the assessee and rejected the books of accounts of the assessee in terms of section 145(3) of the Act. He thereafter proceeded to compare the gross profit ratio of various other agencies in the similar business and made additions on this score spread over all the assessment years, namely, assessment years 2008-09 to 2012-13.

4. These assessments are subject-matter of appeals at the hands of the assessee. Such appeals are pending before the Appellate Commissioner. The thrust of challenge of the assessee is the additions made by the assessing officer on the basis of the gross profit rate for all the years. At that stage, the Commissioner issued the impugned notice dated 11.2.2015. Since the contents of the notice are crucial, we may record the entire notice which reads as under:

"Date: 11.02.2015

To,

J.M.C. Projects (India) Ltd.

A-104, Shapath-IV, Opp.Karnavati Club,

S.G. Highway,

Ahmedabad.

Sub: Notice for proceedings u/s. 263 in your case for Assessment Years 2008-09 to 2012-13.

Please refer to above.

2. In your case, Search u/s. 132 of the Income-tax Act, 1961 was conducted on 17.11.2011. Thereafter, assessments were completed u/s. 143(3) read with section 153A of the Act by the Deputy Commissioner, Central Circle-1(1), Ahmedabad on 29.03.2014.

3. From the perusal of records, it is found that you have claimed that some sub-contracts were executed for you by various persons from the Assessment Years 2008-09 to 2012-13. Detailed inquiries were made in respect of various parties by the AO and it was found that the transactions claimed in the name of total 176 subcontractors were non-verifiable. The AO further observed in the assessment order that the total value of work c