TaxTMI 
TaxTMI 
2017 (8) TMI 174
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....e creditors amounting to Rs. 4,77,66,341/- shown outstanding at the end of the F.Y as against the total sales of Rs. 5,29,09,042/-. Similarly, in the capital account of assessee in the books of M/s Balaji Enterprises, an amount of Rs. 4,50,000/- has been shown in the debit and credit side of M/s Kundan Tent House [another proprietary concern of the assessee] while in the capital account of the assessee in the books of account of M/s Kundan Tent House, this amount did not figure. This shows that the books of accounts are not maintained properly. The ld. CIT, therefore, issued a show cause notice dated 20.12.2012 asking the assessee to explain as to why the order passed u/s 143(3) of the Act should not be revised u/s 263 of the Act. 3. The assessee, in response to the said notice, replied that it deals in sale and purchase of iron scrap and the goods were purchased on receipt of orders from the debtors. During the year under consideration, the assessee received bulk order for supply of iron scrap more than Rs. Two crores in comparison to turnover of last F.Y. from Himgiri Ispat Pvt. Ltd, Uttaranchal. It was further submitted that the assessee has maintained quantitative details for ....
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....Enterprises, Najibababd and M/s Aggarwal Brothers, Najibabad. Further, the assessee has shown cash payment below Rs. 20,000/- to the above parties totaling to Rs. 25,10,790/- and Rs. 6,57,250/- respectively and violation of provisions of section 40A(3) of the Act has not been verified by the A.O. In view of the above, the ld. CIT(A) held that the A.O has failed to examine/investigate every aspect of the case during the course of assessment proceedings. Therefore, the assessment order passed by the A.O dated 05.05.2011 for the impugned A.Y is prima facie erroneous and prejudicial to the interest of the Revenue. Therefore, cancelling the order passed by the A.O u/s 263 of the Act, he directed him to examine all the above issues thoroughly and pass the assessment de novo. 7. Aggrieved with such order of the ld. CIT, the assessee is in appeal before us with the following grounds: "1. That having regard to facts & circumstances of the case, Ld. CIT has erred in law and on facts in passing the impugned order u/s 263 which is barred by limitation, illegal, without jurisdiction and contrary to law and facts and deserves to be quashed. 2. That having regard to facts & circumstances of....
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....t, which is placed at pages 1A to 20 of the assessee's paper book, the ld. AR drew the attention of the Bench to clause 8A which gives the nature of the business carried on by the assessee and 9(b) which gives the details of accounts maintained. Referring to page 9 of the assessee's paper book, he drew the attention of the Bench to the g.p. ratio and n.p. ratio and stock turnover ratio. Referring to page 14 of the paper book, he drew the attention of the Bench to the balance sheet which gives current liability as per Schedule D at Rs. 4.81 crores. Referring to page 15 of the paper book, he drew the attention of the Bench to the profit and loss account which shows sales at Rs. 5.29 crores. Referring to page 17 of the assessee's paper book, he drew the attention of the bench to the details of current liabilities under which sundry creditors have been shown at Rs. 47,766,341.12. Referring to page 18 of the assessee's paper book, he drew the attention of the Bench to the list of sundry creditors and advances which shows details of Rs. 47,766,341.12. Referring to page 21 of the assessee's paper book, he drew the attention of the Bench to the notice issued by the A.O u/s 142(1) of the Ac....
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....ues and the order on revision referred to 9 issues, the principles of natural justice was violated. Accordingly, order of revision was held as not valid. He submitted that there was no such mention in the notice on the issue of section 40A(3) violation whereas in the order of the ld. CIT this issue has been raised as one of the grounds for invoking provisions of section 263 of the Act. Therefore, in the absence of any opportunity of being heard to the assessee, principles of natural justice has been violated for which the revision order passed by the ld. CIT has to be held as invalid. He also referred to various other decisions for the above proposition. 10. So far as the issue relating to no proper enquiry is concerned, he submitted that only absence of enquiry can empower jurisdiction to the CIT to invoke revisional power u/s 263 of the Act and in case of improper enquiry, the ld. CIT has no power to invoke jurisdiction u/s 263 of the Act. 11. Referring to the following decisions, he submitted that merely because there is lack of enquiry, order cannot be held as erroneous and prejudicial to the interest of the Revenue. Such revisionary power can be exercised by the ld. CIT only....
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....ng to the reply given by the assessee to the notice issued u/s 263 of the Act, he submitted that this is a general reply given by the assessee and after considering the relevant material on record and after giving due opportunity of being heard to the assessee, the ld. CIT came to the logical conclusion that the issue of sundry creditors was not properly examined by the A.O. He also referred to the provisions of section 114 of the Indian Evidence Act, 1872 and the Explanation 2 to section 263 as inserted by the Finance Act, 2015 w.e.f 1st June, 2015. Referring to the decision of the Mumbai Bench of the Tribunal in the case of M/s Crompton Greaves Ltd Vs. CIT reported in (2016)-TIOL-816-ITAT-MUM he submitted that the Tribunal has held that the Explanation 2 being clarificatory in nature, is applicable restrospectively. He accordingly submitted that the order of the ld. CIT be upheld and the appeal of the assessee should be dismissed. He also relied on the following decisions: (i) Malabar Industrial Co. Ltd Vs. CIT [2001] 243 ITR 83/109 Taxman 66 [SC] (ii) M.D. Overseas Ltd Vs. DGIT [2011] 333 ITR 407/198 Taxman 136/10 Taxmann.com 30[All] (iii) CIT Vs. Hastings Properties [2002....
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....creditors and there is discrepancy in the capital account of the assessee in the books of M/s Shree Balaji Enterprises, issued notice u/s 263 of the Act asking the assessee to explain as to why the order passed u/s 143(3) of the Act should not be held as erroneous and prejudicial to the interests of the Revenue. We find the assessee filed various details substantiating that it has filed the various details of sundry creditors and the A.O after examining the same, has accepted such sundry creditors as genuine. Similarly, the assessee also filed details of capital account of assessee in the books of M/s Shree Balaji Enterprises and M/s Kundan Tent House. The order of the ld. CIT is silent on this issue which otherwise implies that he has accepted the submission of the assessee. Therefore, we are not concerned with this issue regarding discrepancy in the capital account of the assessee in the books of M/s Shree Balaji Enterprises and M/s Kundan Tent House. 16. So far as the issue relating the sundry creditors is concerned, the ld. CIT observed that out of 22 creditors, the A.O has issued notice u/s 133(6) of the Act only in the case of six creditors. However, he has not examined the ....
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....diction u/s 263 of the Act in a case when there is absolutely no enquiry on any issue. However, when there is some enquiry and the ld. CIT does not agree with the extent of enquiry conducted by the A.O as sufficient, he cannot invoke jurisdiction u/s 263 of the Act. 20. The Hon'ble Delhi High Court in the case of CIT Vs. Hindustan Marketing and Advertising Co. reported at 341 ITR 180 has held as under [at page 196]: "From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accept....