TaxTMI 
TaxTMI 
2023 (4) TMI 1111
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.... as well as various other such correspondences. The assessee does not seem to have responded to the same. This compelled the Assessing Officer to complete his section 144 best judgment assessment dated 20.12.2019 inter-alia, disallowing / adding assessee's expenses debited in P & L account to the extent of Rs.20 lacs, sundry creditors of Rs.30 lacs out of total sum claimed to the tune of Rs.9,05,88,090/-, cash deposits made during demonetization of Rs.46,04,000/-, other credits to bank accounts of Rs.27,70,201/- and unsecured loan of Rs.33,23,470/-; respectively. The assessee claims to have filed appeal against the same on 31.01.2020 which is stated to be pending till date. 3. Next comes the issue of initiation of PCIT section 263 revision proceedings. He issued his twin section 263 show cause notices dated 27.01.2022 and 21.02.2022 inter-alia, affording opportunities of hearing to the assessee before holding the Assessing Officer's section 154 assessment dated 20.12.2019 as an erroneous one causing prejudice to the interest of Revenue. The assessee claims before us that he had strongly contested the PCIT's said show cause notices which stand rejected in the impugned revision di....
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....dits (supra) in part than in entirety once it was a fit case wherein he had already held this taxpayer to have failed in proving identity, genuineness and creditworthiness by way of filing cogent evidence. We note from a perusal of para 10 at page 4 of the assessment order that the Assessing Officer added sundry creditors of Rs.30 lacs only despite concluding that the assessee had failed to justify the entire claim of Rs.9,05,88,090/-. The factual position is hardly different regarding the remaining issues as well. We deem it appropriate at this stage to quote section 263 Explanation (2) (a) and (b); inserted by the Finance Act, 2015 w.e.f. 01.06.2015 that such a failure on the Assessing Officer's part in framing his assessment without due enquiries and verification and allowing relief without enquiry into the claim are deemed to be of an instance of the same being an erroneous one causing prejudice to the interest of Revenue. Various landmark judicial precedents - Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC), CIT vs. Pavelli Projects Pvt. Ltd. (2023) 149 taxmann.com 115 (SC), Rampyari Devi Saraogi vs. CIT (1968) 67 ITR 84 (SC) and Gee Vee Enterprise vs. CIT (1975) 99....
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....d in the above terms. Order pronounced in the Open Court on 25th April, 2023. ============= Document 1 5.14 I decline to admit these evidences and arguments in the absence of any explanation or justification for not filing these evidences before Assessing Officer. Also since the issue raised in the show cause u/s 263 is not being responded to particularly by the assessee, on the justification or otherwise of best judgment of Assessing Officer on the issues taken up in the order present, I am passing this order u/s 263 ex-parte. But before proceeding to do that, I hasten to add that assessee in his response letter has filed appeal memo where also no specific ground has been taken against the ex-parte nature of the order of assessment. That tantamounts to assessee being satisfied with the non-compliances observed by A.O. in the order of assessment and further concurring and accepting the action of Assessing Officer of an ex-parte order. 5.15 In the above circumstances, the ex-parte order passed by Assessing Officer is perfectly valid and justified. Consequently, the additional evidences purported to be filed and made an integral part of ....
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....these transactions has not been discharged. g. Details of subsequent settlement have also not been given In these background facts the Assessing Officer has made an observation that not a shred of evidence on the veracity of the sundry creditors has been filed by the assessee. He goes on and I stress upon these observations of Assessing Officer..... "However, despite several times asked during the course of assessment proceedings, the assessee did not furnish any verifiable details of these sundry creditors. Also, the details of subsequent settlements of these liabilities were not provided. Also, the assessee could not provide even the most basic details such as names/addresses nor could it file any confirmations/verifiable details of such parties to establish their veracity. Onus in this case squarely lies with the assessee to establish the veracity of these sundry creditor parties which has not been discharged. Not a shred of evidence has been produced by the assessee to establish the transactions/ outstanding balances as discussed" 7.3 Having thus observed the Assessing Officer goes on to make an addition of ONY a fraction....
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....e capricious, prima facie erroneous and prejudicial to the interest of revenue. 7.6 The order is erroneous in particular for the following reasons: First, that in the present situation, when no verifiable details are filed by assessee in respect of the whole of addition to sundry creditors at Rs. 2.76 crores, the entire amount ought to have been added to income in ex-parte order particularly because there is no basis for treating the balance amount, the quantum not added to income out of above, as explained and consequently verifiable. This is a blatant error of judgment of the Assessing Officer emanating from non-application of mind and carelessness. In situations present, there is absolutely no basis for an ad-hoc addition to income when everything is prima facie crystallized.. Second, the Assessing Officer has proceeded on the hypothetical argument of "considering the facts of the case and the ratio of the current liabilities with the total expenses debited by the assessee in its P & L account during the year" and no facts relevant for the purpose and not even quantification of the hypothetical ratio nor its significance for the....
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....f revenue and is consequently set aside with the following directions. Directions: 1. The Assessing Officer shall pass a fresh assessment order which shall continue to be under Section 144 of the Act subject to the following further directions. 2. In passing the fresh assessment order the Assessing Officer shall not make any change or amendment to the additions/disallowance already made in the order as hereunder: a. Out of expenses b. Cash deposited during demonetization c. Cash Credits u/s 68 Rs. 20,00,000/- Rs. 46.04,000/- Rs. 33,23,470/- These additions shall be retained without any modifications and the Assessing Officer, in passing a fresh order shall have no jurisdiction either to change the language of the original assessment order or the quantum of addition in respect of these three items. 3. The addition made to income out of sundry creditors appearing in Balance Sheet at Rs. 30,00,000/- in the original order of assessment stands cancelled and the Assessing Officer shall replace this addition with the total quantum of Rs. 2,76,20,898/- as discussed in the body of this order. Also this addition....