AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 1104
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.... man who had earned his income from trading in ball-bearing, motor parts under the name of his proprietorship concern M/s. Shree Shakti Traders. The AO notes that during the assessment proceedings the assessee had produced relevant documents for verification with reference to the return of income filed along with the P&L Account, Balance Sheet, TAR, Bank statement, copy of 26AS and other details as per his requisition which were test checked by him. Thereafter, the AO notes that notices u/s. 133(6) of the Act were also issued to verify the transaction of the assessee. The AO also states that the case was discussed with the assessee and after hearing him he had discussed the issues relevant for determination of total income at pages 2 to 8 of his assessment order and then made an addition of Rs. 32,69,898/- and thus the total income of the assessee was assessed at Rs. 45,80,880/- vide assessment order dated 30.12.2016. This order was interfered by the impugned order of the Ld. Pr. CIT-12, Kolkata vide order dated 18.03.2019 by exercising his revisional power u/s. 263 of the Act. 4. The Ld. Pr. CIT has found fault with the framing of assessment. According to him, there is lack of ....
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....e taking into consideration the reasons leading to the action under section 263. The Assessing Officer is at liberty to set his own monetary ceiling for carrying out verification of the creditors. Reasonable opportunity of hearing shall be given to the assessee. Though the AO's power is unfettered, the fact must not be lost sight of that the discretion must be exercised legally and not absolutely."[emphasis given by us] 6. Thus, the Ld. Pr. CIT was pleased to set aside the assessment order passed by the AO dated 30.12.2016 and remanded it back to the AO to carry out verification of the creditors to the tune of Rs. 96,46,987/- (2 creditors) with the liberty to set his own (AO) monetary ceiling for carrying out verification of the creditors and also cautioning him that though the AO's power is unfettered, the discretion must be exercised legally and not absolutely. Aggrieved by the aforesaid action of the Ld. Pr. CIT the assessee is before us challenging the legal issue that the Ld. Pr. CIT could not have exercised his revisional powers u/s. 263 without satisfying the condition precedent that the assessment order is erroneous as well as prejudicial to the interest of t....
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....dentity and genuineness, inter-alia, of the creditors to the extent of Rs. 96,46,987/- and to pass a fresh assessment order recomputing the income. Thus, we note that the main reason given by the Ld. Pr. CIT to interfere with the assessment order dated 30.12.2016, while issuing SCN proposing to initiate revisional jurisdiction was started with the assumption of fact that the AO without making enquiries and verification in respect of sundry creditors to the tune of Rs. 2,11,05,222/- (as per the Balance Sheet) has framed the assessment order and however, while concluding the Ld. Pr. CIT found that the verification need to be restricted to only Rs. 96,46,987/- after hearing the assessee during the revisional proceedings. 10. Assailing the action of the Ld. Pr. CIT, the Ld. AR drew our attention to the notice issued by the AO u/s. 142(1) of the Act dated 12.11.2015 to the assessee during the assessment proceedings wherein he clearly asked the assessee to furnish the following details: "6. Kindly file complete party-wise details of all purchases and sales above Rs. 1,00,000/- mentioning complete postal addresses and PAN of the parties involved. 7. Kindly file comple....
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....verify the creditors to the tune of Rs. 96,46,987/- out of Rs. 2,11,05,222/- and thereafter he opines that no endeavor was made by the assessee to produce evidence in respect of sundry creditors before him and also the assessee failed to give any explanation regarding the two parties who failed to respond to the notices issued to them u/s. 133(6) of the Act by the AO during assessment proceedings. On this reason he has set aside the assessment order of the AO and directed him to verify the identity and genuineness of the sundry creditors to the extent of Rs. 96,46,987/- and to reframe the assessment against the assessee. 14. The Ld. AR drew our attention to a similar case which came up before the Delhi Tribunal in the case of Sandeep Kr. Aggarwal Vs. ITO in ITA No. 2321/Del/2014 for AY 2009-10 wherein a similar case the Tribunal after taking note of the Hon'ble Delhi High Court's decision in Pr. CIT Vs. Delhi Airport Metro Pvt. Ltd. in ITA No. 705/2017 dated 05.09.2017 wherein the Hon'ble Delhi High Court held that where the AO has made enquiries regarding the issue for which the revision has been made by the Ld. CIT, the assessment order cannot be termed as erroneous (since ....
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.... the 263 proceedings the assessee had brought to the notice of the Ld. Pr. CIT that assessee had complied with the notice issued u/s. 142(1) and produced all the documents before the AO for verification and the AO had verified the return of income filed along with the P&L Account, Balance Sheet, TAR, bank statement etc. and thereafter after going through the entire details in respect of the sundry creditors had examined and enquired the same by issuing 133(6) notice on test check basis has framed the assessment order without any adverse view in respect of the sundry creditors. In such a scenario, the AO's action cannot be termed as a case of non enquiry. So, when the Ld. Pr. CIT himself has made a finding of fact that out of sundry creditors of Rs. 2,11,05,222/- the AO has not verified the sundry creditors to the tune of Rs. 96,46,987/- means AO had verified about sundry creditors to the tune of Rs. 1,14,58,235/-. The scrutiny under CASS was undertaken after noticing huge sundry creditors, so AO called for the details which assessee furnished and AO has enquired on a test check basis the veracity of sundry creditor. So, if Ld. Pr. CIT was not satisfied with the enquiry conducted by....