TaxTMI 
TaxTMI 
2023 (10) TMI 23
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....(3) dated 02-07-2021 is prejudicial to the interest of the revenue. The assumption of jurisdiction u/s 263 being contrary8 to the provisions of law and facts on record, hence, the proceedings initiated u/s 263 of the Act and impugned order dated 21-10-2022 deserved to be quashed. 3. The ld. Pr. CIT (Central), Jaipur seriously erred in law as well as on the facts of the case in wrongly setting the assessment order dated 02-07-2021 despite there being complete application of mind by the AO on the subjected issues being the loans received and duly verified by the AO, it was nothing but a case of change of opinion, based on which, assumption of jurisdiction u/s 263 is not permissible. The impugned order dated 21-10-2022, therefore, lacks valid jurisdiction u/s 263 of the Act and hence, the same kindly be quashed.'' 2.1 Brief facts of the case are that the assessee e-filed her return of income on 31-10-2019 declaring total income amounting to Rs. 6,08,680/- for the assessment year under consideration. The return filed by the assessee was processed u/s 143(1) of the Act, 1961. A survey u/s 133A of the Act was carried out on the business premises of the assessee on 29-10-2018.....
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.... transaction. The complete details of the same were not furnished. b) Books not maintained by the assessee, this fact has not been discussed or inquired or satisfactorily examined in the assessment proceedings. c) The submission of a chart showing details of unsecured loans lacked satisfactory supporting documentary evidence, indicating a lack of documentary evidence. However, the ld. CIT, has not repeated the above allegations in the impugned order. d) Confirmations of loan filled by creditors u/s 133(6) were without any documentary evidence and do not inspire confidence. The list of 22 creditors with their confirmations lacked necessary details, and the particulars did not match with the details provided in Schedule "E", indicating incomplete or inaccurate creditor details. e) The appropriate inquiries / verifications of loans have not been made by the AO. This lack of inquiry and consequent non deriving of reasoned inference by the Assessing Officer has prima facie caused prejudice to the interests of the revenue." The assessee filed detailed submission in response dt. 24.08.2022 (PB 60-67). The ld. PCIT didn't agree with the submissions an....
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....ncorrect assumption of the fact or an incorrect application of law will satisfy the requirement of the order being erroneous. The phrase 'prejudicial to the interest of the revenue' has to be read in conjunction with an erroneous order passed by the AO. Every loss of Revenue as a consequence of the order of the AO cannot be treated as prejudicial to the interest of the Revenue. For example, if the AO has adopted one of the two or more courses permissible in law and it has resulted in loss of revenue, or where two views are possible and AO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue, unless the view taken by the AO is totally unsustainable in law. Kindly refer Malabar Industrial Co. Ltd. v/s CIT (2000) 243 ITR 83 (SC). 1.2 Also kindly refer CIT v/s Max India Ltd. (2007) 295 ITR 282 (SC) wherein it is held that: "The phrase "prejudicial to the interests of the Revenue" in S. 263 of the Income Tax Act, 1961, has to be read in conjunction with the expression "erroneous" order passed by the Assessing Officer. Every loss of revenue as a consequence of an orde....
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....ness premises considering year, please explain the source of investment. 12. If there are creditors or unsecured loans or any other liabilities pending/outstanding during he considering year, kindly furnish their details in the following format" vide notice dated 15.04.2021 u/s 142(1) of the IT Act (PB 33-34) w.r.t. the issue as under: "2. On perusal of details available on records, it is noticed that sundry creditor amount of Rs. 9,81,205/- and Unsecured Loan of Rs. 1,00,78,817/- were claimed in Balance Sheet of A.Y. 2019- 20. In this regard, various opportunities were given to you by issuing notice dated 24.02.2021 u/s 142(1) of the I T Act dated, 12.04.2021 but you have not furnished required details/information." The assessee in response to the above notices, filed detailed written submissions dated 19.04.2021 (PB 35-40), 09.06.2021, 29.06.2021 & 01.07.2021. He also filed complete documents w.r.t. queries raised along with affidavits, ITRs, Computation, bank account details etc in six new cases (and confirmations in old cases) which was required by the AO time to time through the A/R, and the same were duly verified and examined by the AO. The identit....
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....ident from his Bank account statement. Copy of ITR, and Bank Account are enclosed hereweth (PB-12-13). Thus here also, there is a direct source of receipt of Rs. 3.00.000/- 3.5 Shri Nikit Jain- Rs. 40,000/- He had sufficient bank balances prior to transfer the amount of Rs. 40,000/-on dated 21/07/2018. Thus here also, there is a direct source of receipt of Rs. 40,000/- 3.6 Shri Shiv Kumar Chourasiya- Rs. 10,000/- He had sufficient bank balances prior to transfer the amount of Rs. 10,000/- dated 07/06/2018.Thus here also, there is a direct source of receipt of Rs. 10,000/- 2.2 Selection of the case under compulsory scrutiny being a survey case: Moreover, the very fact of selection of the case under compulsory scrutiny based documents and material found during survey, followed by the issuance of various notices u/s 142(1) along with questionnaire which were duly replied by the assessee time to time, as stated above. This has fully established that the AO was fully alive to the issue in hand from all angles, whether factual or legal aspect involved. 2.3 That very pertinently, all the creditors except six cases are coming since prec....
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....ne step ahead and asked the assessee to file confirmations etc. The Ld. CIT by expecting the AO to doubt the existence of the debtors this year, wanted the AO to revisit/review the correctness of the earlier assessments orders, whereas the AO was estopped. 2.4 Admittedly, there were other relevant and crucial facts available on the assessment record of the current year and the preceding year, in the light of which the subjected assessment was passed as stated below: That, all the amounts were received through bank transfers only. There are no cash receipts. (PB 36 Para 1) That, the date/year of receipt is duly mentioned in the affidavits. That, most of the creditors are regular IT assessee and their respective PAN are available in the affidavits (and in the chart PB 35-36) Neetu Khandelwal despite request, refused to provide PAN (PB 36 Para 1). That, the identity and capacity of creditor and genuineness of transaction were fully proved in six cases where amount was received during the year vide letter dt. 19.04.2021 (PB 35- 44, Pr. 2-4 ), wherein the source in all the six cases have been explained . That, the Sundry Creditors an....
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....udicial guideline, the AO was not obliged still to ask the assessee to provide source of source under the pretense of examination of the creditworthiness of the creditor and to make addition. There is nothing in record to show that such discretion was not properly exercised. 3.3 Discretion conferred- Judiciously exercised: The provisions of S.68 of the Act use the word 'may' which indicate that the AO is not always obliged to make addition in each and every case even though there are no sufficient grounds or may be against the human probabilities. Hence, discretion conferred upon the AO has to be exercised judiciously as held in CIT vs Smt. P.K. Noorjahan (1999) 237 ITR 0570 (SC): "As pointed out by the Tribunal, in the corresponding clause in the Bill which was introduced in Parliament, the word "shall" had been used but during the course of consideration of the Bill and on the recommendation of the Select Committee, the said word was substituted by the word "may". This clearly indicates that the intention of Parliament in enacting s. 69 was to confer a discretion on the ITO in the matter of treating the source of investment which has not been satisfactorily expl....
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...." and "inadequate inquiry". If there was any inquiry, even inadequate that would not by itself give occasion to the CIT to pass orders under section 263 of the Act, merely because he has a different opinion in the matter. It is only in cases of "lack of inquiry" that such a course of action would be open." In another case of Narain Singla v. PCIT [2015] 62 taxmann.com 255 (Chandigarh - Trib.) it was held that when AO was fully aware of matter, he had appraised evidences filed by assessee and then had formed a view to accept same, Commissioner was unjustified in invoking jurisdiction under section 263. Whether if there was an enquiry, even inadequate, that would not, by itself, give occasion to Commissioner to pass order under section 263, merely because he has a different opinion in matter; it is only in case of 'lack of inquiry' that such a cause of action can be open. However, the ld. CIT is completely silent on this aspect. 5. S.263 Explanation not invoked: Interestingly, the ld. CIT did not invoke Explanation to S.263 which is normally interpreted / taken support by the invoking of S.263 in absence of which, the ld. CIT could not have at all complained....
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....al already available together with the material provided during the assessment proceedings-Entire details of each shareholder i.e., balance sheet, income declared, transactions done with the assessee-company as also his creditworthiness/financial capacity was duly verified by the AO-CIT has not doubted the ownership of the respective shareholdings by the three shareholders-Thus, the level of the proof required in a normal case of cash credit under s. 68 could not have been applied though the AO did whatever he was supposed in the law to satisfy the requirement of s. 68- There was no evidence, information or anything else indicating that more enquiries were warranted-It was not the case of the CIT that there was a complete/total lack of inquiry-Law is well settled that the assessment order cannot be held to be erroneous simply on the allegation of inadequate enquiry-Reason for selection of the case for scrutiny does not speak of s. 56(2)(viib)-Therefore, the AO could not have made enquiries on this aspect-Even otherwise, the assessee also submitted a report of the expert under r. 11UA which fully justified charging premium @ Rs. 50 per share-Hence, the AO was justified in not applyi....
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.... of Assessing Officer being a plausible view could not be considered erroneous or prejudicial to interest of revenue" The Gujarat High Court affirmed the ITAT Order as under: 15 The Pr.CIT had observed that Explanation 2 of section 263 of the Act is clearly applicable and it is clear that the Assessing Officer has passed the assessment order after making enquiries for verification which ought to have been made in this case. However, we find that the Pr. CIT has not mentioned in the show-cause notice issued under section 263 that he is going to invoke the Explanation 2 to 263 hence, invocation of Explanation in the order without confronting the assessee is not appropriate and sustainable in law in support of this contention, the ld. Counsel has placed reliance on the following decision: CIT v. Amir Corporation 81 CCH 0069 (Guj.), CIT Mehrotra Brothem -270 ITR 0157 (MP,CIT v. Ganpet Ram Bishnoi - 296 ITR 0292 (Raj.), Cadila healthcare Ltd. v. Cl 7, Ahmedabadh-1 [ITA no. 1096/Ahd/2013 & 910/Ahd/2014], Sri Saí Contractors v. ITO [ITO no. 109Nizag/2002] and Pyare lal Jaiswal v. CIT, Vamnesi [(2014) 41 taxmann.com 27 & (AII Trib.)]. It was contended by t....
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....ssioner is expected show that the view taken by the AO is wholly unsustainable in law before embarking upon exercise of revisionary powers. The revisional powers cannot be exercised for directing a fuller inquiry to merely find out if the earlier view taken is erroneous particularly when a view was already taken after inquiry. If such course of action as interpreted by the Revisional Commissioner in the light of the Explanation 2 is permitted, Revisional Commissioner can possibly find fault with each and every assessment order without himself making any inquiry or verification and without establishing that assessment order is not sustainable in law. This would inevitably mean that every order of the lower authority would thus become susceptible to section 263 of the Act and, in turn, will cause serious unintended hardship to the tax payer concerned for no fault on his part. Apparently, this is not intended by the Explanation. Howsoever wide the scope of Explanation 2(a) may be, its limits are implicit in it. It is only in a very gross case of inadequacy in inquiry or where inquiry is per se mandated on the basis of record available before the AO and such inquiry was not conducted, ....
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....showing alleged cases of missing information or non-reconciliation of details (kindly refer the following chart), it is submitted as under: 1. Para 6.1 ld. CIT made a comparison between column no.31 (a) form 3CD (PB II 74- 87) speaks of any loan deposit taken in cash exceeding the limit u/s 269 SS which has been shown as nil because no such loan in cash was taken exceeding the limit. In Schedule E (unsecured loans from others) (PB II 74-87) has been shown , partly taken this year and partly carried forward preceding year but all were received through cheque. When both the issues are entirely different then how a comparison could be there. Obvisiouly the conclusion drawn is based on misreading of law and facts hence the resultant conclusion is also erroneous. 2. Para 6.2 and 6.3 Both the objections that the conformations are in the same font without detail of mode of payment, is a mere suspicion. The supporting documents in all six cases where amount received this year were filed (PB 4). So called alledged difference found by the CIT in the list shown in reply dt.12.3.2021(PB 6-7) viz a vis Schedule E (PB 4) is nothing but an attempt to examine the issue with the m....
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.... 11, it cannot be said that there was any error in the order of the ITO relating to the assessment year 1971-72. This error was not relevant to the assessment year 1975-76. Hence, the impugned Order deserves to be quashed.'' 2.4 On the other hand, the ld. CIT-DR relied upon the order of the ld. PCIT and submitted that ld. PCIT was justified in invoking section 263 of the Act for which the ld. CIT-DR filed the written submission as under:- "The copy of audited Balance sheet, Trading P & L account and Schedule of unsecured loans from others of Rs. 1,00,78,816/- for AY 2019-20 has names mentioned as Amit Chamuniya, Anand Goyal Sister, Dinesh Gothwal, Jagdamba Tractors etc. at page Nos 13 and 14 of the written submission dated 01.08.2023 the assessee has claimed them to be nick names. If there are nick names then how did the auditor verify them? So, in the light of the absence of due verification in finalising audit report, the facts are at variance in themselves and accepted by the Ld. A/R and also clearly as highlighted by the Ld. PCIT in his order u/s 263. 02. In Para 9.3 of the written submission dated 01.08.2023, the Ld. A/R has stated- "9.3 ....
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....he loan given and thus did not inspire confidence and at S.No. 5 clearly stated that the fact of not having maintained books of accounts by the assessee as also owned up in the statement recorded on oath, has not been discussed in the assessment order or in the order sheet. In support of genuineness of these loan transactions, supporting evidences/documents such as bank statements, PANS, ITRS, confirmation of accounts and individual accounts of all lenders were not provided. Now this is coupled with fact mentioned at examples quoted by the Ld. PCIT at Page No. 9 at S.No. 1 to 3. 05. And this issues is further coupled with the fact of different reporting done by the auditor in form no. 3CD and in the schedule E(Schedule for unsecured loans from others) of the audit report. 06. Furthermore, as highlighted by the Ld. PCIT in the order u/s 263 that the names of the persons who have given loans also do not match as highlighted in Point No. 2 at Page 9 of order u/s 263 and the same is also substantiated from the Ld. A/RS reply dated 01.08.2023 wherein he has stated that the names mentioned in the audit report are nicknames or popularly known names, or grouped t....
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....uisite details were available before the AO as admitted by the ld. CIT and CIT DR in Annexure E of the Audit report. Thus, in any case, it can't be said that there was a contradiction of showing nil on one hand and showing details of the Unsecured Loans, on the other. The AO therefore correctly considered these facts as they were before him and did not entertain any sort of confusion which now appears to have been created just to justify the invoking of S. 263 of the Act. In any case, issue to be decided is the correctness of the assumption of the jurisdiction u/s 263 based on the facts available on record and not on what the auditor did or could/should have done. (Which is not commented even otherwise by the CIT in his order). 1.2 Further, in Para 31(a) of the Tax Audit Report, the Tax Auditor was not supposed to report the old loans carry forward this year which is a misleading objection raised by the ld. DR. In any case, the substantive fact that except six parties all the remaining parties were carried forward from preceding year. Pertinently the AO had the access to the assessment record of the current as well as the preceding year of the assessee and various....
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....ed. Out of the remaining also, two are old cases i.e. Anand Goyal Sister & Jagdamba Tractors. Thus, the material reconciliation was already available. Moreover, in the scrutiny cases like the one where verification of creditors involved it is a usual practice of verifying the confirmation/affidavit with the list of the creditors by the AO manually however there is no practice that he notes down each and every communication exchanged by the parties on record which is humanly not possible. 2. No Legal Requirement to pass a very detailed or thesis type order/ Supporting Case Laws : Where admittedly, the AO has made a detailed inquiry by issuing notices and replies have also been filed thereto However, feeling satisfied the AO chose not to make any addition but at the same time he has not made any reference to the Assessment Order. This fact by itself cannot be made a ground for invoking S. 263 as held in various cases. Kindly refer: 2.1 In the case of CIT Mumbai Vs Reliance Communication Ltd. [2016] 76 taxmann.com 226 (SC) it was held that: "Section 68, read with section 263, of the Income-tax Act, 1961 - Cash credits (FCCBs) - Assessee raised funds by way o....
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....t (P.) Ltd. Vs PCIT, Kolkata [2021] 127 taxmann.com 682 (Kol - Trib.) it was held that: "Section 68, read with section 263, of the Income-tax Act, 1961 - Cash credit (Bogus sales) - Assessment year 2015-16 - Assessee company filed its return of income for relevant year - Case was selected for limited scrutiny on ground of mismatch in sales turnover and suspicious sale transaction in shares - Assessment was completed under section 143(3) - Thereafter, Commissioner issued a show cause notice to assessee under section 263 proposing to revise assessment order passed under section 143(3) - Assessee stated that Assessing Officer had already verified issue of shares at time of assessment proceedings before finalizing assessment order, therefore, proceedings under section 263 could not be invoked - It was found that Assessing Officer during course of assessment proceedings had issued notice under section 142(1), along with a questionnaire and directed assessee to furnish documents and evidences of sale transactions of shares and assessee had given point wise reply and transactions were supported by documentary evidences notes, bills, bank transactions and transactions were done on....
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....ler Flour Mills (P.) Ltd. Vs CIT [2019] 110 taxmann.com 170 (Allahabad) it was held that: "Section 69A, read with section 263, of the Income-tax Act, 1961 - Unexplained money (Loan) - Assessment year 2007-08 - For relevant year, assessee filed its return declaring certain taxable income - Assessee's case was selected for scrutiny and a notice was issued under section 143(2) to which assessee replied along with documentary evidence - Assessing Officer being satisfied, passed assessment order under section 143(3) - Commissioner subsequently passed a revisional order directing Assessing Officer to examine matter relating to unsecured loans obtained by assessee - Tribunal confirmed said revisional order - It was noted that in course of assessment, Assessing Officer had raised various queries from assessee in respect of unsecured loan which were duly replied by assessee along with documentary evidence in regard to each of query - Whether in aforesaid circumstances, unless Commissioner exercising power under section 263 brought on record any evidence showing that order of Assessing Officer was erroneous, as same was passed without application of mind or Assessing Officer had....
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....onal order under section 263 directing Assessing Officer to enquire into capacity of donors and to decide about genuineness of gifts afresh - Tribunal set aside revisional order - It was noted that Commissioner in his order of revision, did not indicate any doubt in respect of genuineness of evidence produced by assessee - Moreover, satisfaction of Assessing Officer on basis of documents produced was not shown to be erroneous - Whether on facts, it was a case where a view had been taken by Assessing Officer after making proper enquiry and, thus, Tribunal was justified in setting aside impugned revisional order - Held, yes [Paras 9 and 12] [In favour of assessee]" 2.8 In the case CIT vs Kamal Galani [2019] 110 taxmann.com 213 (SC) it was held that: "Section 69A, read with section 263, of the Income-tax Act, 1961 - Unexplained money (Revision) - Block period 1-4-1996 to 25-7-2002 - Assessee was subjected to block assessment proceedings - During such proceedings, Assessing Officer found that there was introduction of amount in capital account of assessee - Further, assessee had received loan from his brother - With respect to introduction of capital, assessee had poi....
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....tion of law will suffice the requirement of order being erroneous. (iv) If the order is passed without application of mind such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under law. (vi) If while making the assessment, the AO examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income, the CIT of IT, while exercising his power under s. 263 of the Act is not permitted to substitute his estimate of income in place of the income estimated by the AO. (vii) The AO exercises quasi-judicial power vested in him and if he exercises such power in accordance with law and arrives at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not feel satisfied with the conclusion. (viii) The CIT, befo....
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....been discussed or inquired or satisfactorily examined in the assessment proceedings. c) The submission of a chart showing details of unsecured loans lacked satisfactory supporting documentary evidence, indicating a lack of documentary evidence. d) Confirmations of loan filled by creditors u/s 133(6) were without any documentary evidence and do not inspire confidence. The list of 22 creditors with their confirmations lacked necessary details, and the particulars did not match with the details provided in Schedule "E", indicating incomplete or inaccurate creditor details. The appropriate inquiries / verifications of loans have not been made by the AO. This lack of inquiry and consequent non-deriving of reasoned inference by the Assessing Officer has prima facie caused prejudice to the interests of the revenue. (However, the ld PCIT, has not repeated all the above allegations while passing impugned order.) It is well settled that the prerequisites to exercise of jurisdiction by the ld PCIT under s. 263 of the Act is that to establish order of the AO is to be erroneous insofar as it is prejudicial to the interest of the Revenue, the PCIT has to satisfy of twin cond....
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....61 dated 24.09.2020 issued to the assessee. ****** 4. "During the assessment proceeding considering the facts of the cases and details/ explanation filed by the assessee and it's A/R on time to time." The main ground on which impugned order u/s 263 was passed by the ld. PCIT was that the AO did not verify/examine the loan creditors as there is a lack of supporting evidences and no appropriate inquiry was made. However, after a careful perusal of the material placed on record it is noticed that such observations are not legally & factually correct. The AO raised directly relevant and very specific queries on the issue in hand from time to time by issuing various notices issued u/s 142, which were dully replied by the Assessee from time to time along with supporting evidences, as discussed hereinafter. 2.7 Firstly, notice u/s 142(1) dated 24.02.2021 copy at (PB 4A-4E) was issue as under: In connection with the assessment for the assessment year 2019-20 you are required to: **** During the course of survey operation conducted at your business premises on 29.10.2018 certain incriminating documents/loose papers & other valuables were found and impounded by the Department.....
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....opportunities were given to you by issuing notice dated 24.02.2021 u/s 142(1) of the I T Act dated, 12.04.2021 but you have not furnished required details/information." This was duly replied in a great detail vide letter dated 19.04.2022 (Copy at PB 35-40) as under: A. "Cash Creditors of Rs. 1,00,78,817/- The assessee had taken unsecured loans of Rs. 1,00,78,817/-. The entire amount was not taken afresh during the year but, their already existed opening balances in the account of respective creditors of Rs.73,82,817/- and it is only Rs.27,46,000/-, which is taken afresh during the year. For better appreciation refer the following chart. A. "Cash Creditors of Rs. 1,00,78,817/- The assessee had taken unsecured loans of Rs. 1,00,78,817/-. The entire amount was not taken afresh during the year but, their already existed opening balances in the account of respective creditors of Rs.73,82,817/- and it is only Rs.27,46,000/-, which is taken afresh during the year. For better appreciation refer the following chart. Chart showing unsecured loans in the earlier years and the Current year S. No. Name of Parties PAN No. Opening ....
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....es. Thus, the identities of creditors as also the genuineness of the transactions are stand established. 2. Out of 24 creditors, the unsecured loans were taken from 6 creditors only during the year and remaining all the balances of loans continued as opening balances from earlier years. Confirmation in almost all the 24 cases has already been filed along with letter dated 13.03.2021 (except in case of one Shri Ashok Jain whose confirmation is also enclosed herewith now with this reply PB-1). Hence a partial compliance had already been made to the statutory notices. 3. As regards the creditworthiness/source from which the 6 creditors had advanced the amount to the assessee has been explained creditor wise as under. 3.1 Shri Ajay Vijayvergiya- Rs. 4,00,000/-. He advanced Rs. 4,00,000/- to the assessee i.e. Rs. 3,00,000/- on dated 06.09.2018 and Rs. 1,00,000/- on dated 11/09/2018. He was in receipt of personal loan of Rs. 3,91,028/- on dated 04/09/2018, as evident from his Bank account statement. Copy of IT and Bank Account are enclosed herewith (PB2-4). Thus, there is a direct source of receipt of Rs. 4,00,000/. 3.2 Shri Dinesh Ku....
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....t enquiries from all the creditors. We have already supplied their PAN No. and complete addresses. The department may ascertain all the relevant information with reference to the respective PAN No's. Sill however, if some more clarifications are required we shall have to submit the same (Sufficient opportunity is provided) ******** B. Sundry Creditors of Rs. 9,81,205/- Firstly, these are the outstanding balances from 48 parties were the trade creditors, out or which 47 parties the balance totaled to Rs, 6,98,105/, in whose cases the individual balances were less than Rs. 1,00,000/- only. It is only one party Shri Sachin Chourasiya whose credit balance of Rs. 2,83,100/- for which confirmation is attached with the reply al PB-14. In the cases of sundry creditors where the credit balance is below Rs. 1 Lakh only, the AO himself did not require the confirmations of vide his notice dated12.04.2021. Relevant para of the Notice is reproduced: "You are requested to furnish the confirmation of sundry creditors, unsecured loans above Rs. 1 lakh in prescribed performa with enclose IT and Bank Statements and should reach in this office on or bef....
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....heet of the preceding year A.Y. 2018-19 (copy placed at PB 69 to 72) showing the figure of the Current liabilities - Sundry Creditors (Net Amt.) at Rs. 69,92,663 /- and from the ledger a/c at PB-73. After adjusting the figure of Sundry Misc. Debtors of Rs. 3,40,154.47/- the outstanding debtors of the preceding year was carry forward this year and the reconciled with Rs. 73,32,817/-. The ld. PCIT has nowhere alleged nor referred to any material controverting the fact that the 19 cash creditors were old and their closing credit balances were carried forward this year. Needless to say that in the context of S. 68, it is only the amount received during the year, has to be examined and therefore, the AO was not supposed to have looked into the past assessment records. The cash credits of Rs. 73.32 lacs relating to 19 creditors, was already established by completing the assessment of the preceding year, the department dully accepted their identity, creditworthiness of the Sundry Creditors and their genuineness. Finding fault by the ld. PCIT in the Assessment Order for this year in the context of S. 68 would imply that the ld. PCIT expected the AO to make inquiries even in the preceding y....
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.... that would amount to calling upon him to establish the source of source. Hence addition cannot be sustained." And in Aravalli Trading Co. v/s ITO (2008) 8 DTR 199 (Raj) (DPB 12-16) held that: "Once the existence of the creditors is proved and such persons own the credits which are found in the books of the appellant, the appellant's onus stand discharged and the latter is not further required to prove the sources from which the creditors could have acquired the money deposited with him and, therefore the addition u/s 68 cannot be sustained in the absence of anything to establish that the sources of the creditors deposits flew from the appellant itself." Thus, in view of the above binding judicial guideline, the AO was not obliged to ask the Assessee to provide source of source under the pretense of proper examination of the creditworthiness of the creditor and absence of further evidence showing the source of source was not an error. In the present case, the material show that the AO has made all possible enquires acting u/s 68 with reference to all the creditors. There is nothing in record to show that discretion conferred u/s 68 was not properly exercised. T....
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....s also shown as Amit Chamunia in letter dated 19.04.2021 and thus reconciled with the entry in the Schedule E. The ld. PCIT did not appreciate that that it was a case of physical assessment through personal hearing after discussion between the AO and the assessee. We agree the Ld.AR that during personal hearings lot of discussions are made, but it is not possible to note down each and every word communicated. 2.14 Another ground raised is that the binding Standard Operating Procedure (SOP) dated 10.07.2021, issued by CBDT was not followed. We have carefully gone through the relevant extract copied in the order under challenge and a full copy thereof is available at page PB 88. However, we are not in agreement with the Ld.PCIT. Firstly, such guidelines are not in the nature of binding instructions issued u/s 119 of the Act. But even otherwise on merits, we find that the AO has fulfilled all the requirements made in the guidelines. On the contrary, the SOP speaks of only to examine the credits of a sum found during the year but not the old one. In that view of the matter, not only in six cases but also evidently, the AO made all the inquiries required under law exhaustively and to....