AI Drafter 
TaxTMI 
TaxTMI 
2016 (4) TMI 732
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.... by the assessee from 19 persons. The assessee had furnished confirmation like photo copy of the income tax returns for the relevant assessment year and photo copy of bank account statement of the creditors. AO deputed an inspector to verify the genuineness of the credits. In respect of the 18 creditors the details of the enquiry done by the Inspector is given below in the form of a chart. The entry in the last column is however is a circumstance which was draw by the CIT on the basis of material on record. 4. According to the CIT the report of the Inspector only proves the identity of the unsecured creditors. The capacity and genuineness of the transactions was not established. On this ground order of the AO, according to the CIT was erroneous and prejudicial to the interest of the revenue. 5. CIT also noticed that the assessee received huge advances from the customers. CIT found that the assessee made single sales to M/s. Gel Marketing Ltd. The assessee also gave huge advances to M/s. Gel Marketing Ltd., and other partiers from time to time. CIT was of the view that these transactions were unusual and the AO failed to make inquiries on the above transactions. 6. In respo....
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....oneous and prejudicial to the interest of revenue. The facts of the case warranted taking cognizance of the discrepancies noticed and detailed above. The A.O. didn't take even basic steps to verify this aspect. There is no reference to these even in the assessment order. The Hon'ble Supreme Court in the case of Rampyari Devi Saraogi-Vs-CIT{1968} 67 ITR 84{SC) and Smt. Tara Devi Aggarwal- VS-CIT{1973}8B ITR 323{SC) has held that in the absence of proper enquiries, the assessment order would become erroneous and prejudicial to the interest of the revenue. The Hon'ble Delhi High Court in the case of Gee Vee Enterprise -Vs-AddI.CIT{1975} 991TR 375 has held as under: "The reason is obvious. The position and function of the income tax Officer is very different from that of a Civil Court. The statements made in a pleading proved by the minimum amount of evidence may be accepted by a Civil Court in the absence of any rebuttal. The Civil Court is neutral. It simply gives decision on the basis of pleading and evidence which comes before it. The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of return which is ....
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....have different shades in different circumstances. There cannot be straight jacket formula to positively conclude as to conducting or non-conducting of enquiry by the AO. In some cases, collection of necessary material by the AO may lead to an inference that he conducted enquiry. In some other cases, mere placing the documents on record cannot be equalized with conducting an enquiry. Where the facts of a particular transaction cry hoarse about their ingenuity and even a casual look at such facts, prima facie, divulges foul play, a mere placing of papers on record cannot at all be considered as conducting an inadequate enquiry. Such latter cases fall within the category of no enquiry at all because of the inaction of the AO to read a writing on the wall. 11. At this juncture, we would like to deal with the judgment of the Hon'ble jurisdictional High Court in the case of CIT Vs. Maithen International 375 ITR 123 (Cal). The assessee in that case obtained loans aggregating to Rs. 1.60 crore from six private limited companies ranging between Rs. 7 lac to Rs. 1.10 crore. These companies have filed their returns with nominal income. The AO mentioned in the assessment order that the Insp....
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....order of the CIT u/s.263 of the Act, in so far as it concerns direction to the AO to investigate regarding the unsecured loans appearing in the balance sheet of the Assessee. 13. As far as receipt of advances from customers by the Assessee and the complaint of the CIT in the order u/s.263 of the Act that the AO ought to have made investigation into such unusual practice which was not prevalent in the concerned trade, we are of the view that even in respect of these advances received against future supplies, proper enquiries ought to have been made by the AO before completing the Assessment because there were several suspicious circumstances which warranted a probe by the AO. Admittedly no such probe has been made by the AO. The reasons given for upholding exercise of jurisdiction u/s.263 of the Act, in respect of unsecured loans received during the previous year would equally apply to these advances also. 14. For the reasons given above, we uphold the order u/s.263 of the Act and dismiss the appeal by the Assessee. 15. In the result appeal by the Assessee is dismissed. Order pronounced in the Court on 02.03.2016. ============= Document 1 S.No. Name of parties Ad....