TaxTMI 
TaxTMI 
2021 (12) TMI 1169
X X X X Extracts X X X X
X X X X Extracts X X X X
....g the jurisdiction of the Ld. PCIT to invoke the revisional jurisdiction u/s. 263 of the Act without validly holding that the A.O's action was erroneous as well as prejudicial to the Revenue. 3. Brief facts are that the assessee had filed return disclosing total income of Rs. 3,76,700/-. Later the assessee's case was selected by CASS for scrutiny inter alia. As far as this appeal is concerned, the relevant issue is "large increase in sundry creditors with respect to turnover as shown in the ITR". The A.O had issued notices u/s. 143(2) and 142(1) of the Act on 05.07.2017 and 15.05.2018, copy of the same is found placed at page 3 to 10 of the paper-book. From a perusal of the same, we note queries regarding the issue of sundry cred....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(1) of the Act has called for the books of account/documents relating to the relevant year and also had called for the list of names and details of sundry creditors for the F.Y under consideration, however the AO did not enquire in to the genuineness of the sundry creditors and held as under: "7. The submission of the assessee was meticulously examined by the undersigned. It was seen that the A.O vide notice u/s. 143(2) dated 05.07.2017 had given the assessee an opportunity to produce evidence/information in support of the return. However, I find that no evidence in support of the genuineness of the sundry creditors was furnished by the assessee. The A.O accepted the explanation of the assessee without examining or enquiring into t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....collected of sundry creditors, has accepted the version/explanation of the assessee that the sundry creditors to the tune of Rs. 1,86,05,800/- was existing in liability side of balance sheet because the assessee being a labour supplier contractor after having got this contract which fetched him Rs. 2,73,08,300/- and the cost of labour supply to him for this contract being Rs. 2,62,24,786/- which inter-alia includes (i) outstanding machinery rent of Rs. 9,55,800/- (ii) outstanding labour payment of Rs. 1,74,85,000/- and (iii) outstanding salary payment of Rs. 1,65,000/- and this amount (Rs. 1,86,05,800/-) would be disbursed/discharged when the assessee receives the payment due from the principal which is shown as sundry debtors to the tune o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h the sundry creditors. For such a proposition, the Ld. AR cited the ratio of the Hon'ble Delhi High Court in the case of CIT vs. Ritu Anurag Aggarwal in ITA No. 325 of 2008 dated 22.07.2009 wherein the A.O had held after the notices issued to the sundry creditors (in that case) under section 133(6) of the Act got returned "unserved" with the remark 'not known'. So the A.O in that case concluded that the assessee has failed to discharge its onus to prove the capacity of the creditors and genuineness of the transaction and made additions. This action of the A.O was reversed by the ITAT by observing that "This is a case, where the books are not out-rightly rejected, there is no adverse inference drawn regarding quantum of purchase....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en the A.O has accepted the gross receipt from labour supply contract and the cost/expense incurred by the assessee, then after making enquiry and after hearing the explanation, the A.O accepted the claim of the assessee regarding the sundry creditors, which action of A.O in the facts and circumstances of the case discussed supra is a plausible view which is in consonance with the view of the Hon'ble High Court. According to Ld. AR, it is not the case of the PCIT that the sundry creditors are bogus and if that is so, the Ld. PCIT should have directed the books of accounts of the assessee to be rejected. By not directing so, the Ld. PCIT has accepted the gross receipt of Rs. 2.73 crores and cost of Rs. 2.62 crores while doubting the sund....