TaxTMI 
TaxTMI 
2024 (4) TMI 87
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....us in so far as it is prejudicial to the interests of the revenue to the extent of verification of purchases and examining of applicability of section 40A(3) against cash purchase" is based on fundamental misconception of facts and provisions of law and thus not in accordance with law and, therefore untenable. 2.1 That the finding that "purchases from M/s Gaja Nand Pardeep Kumar of Rs. 58,42,492/- should have been disallowed as/bogus purchases']and also the observation that "assessee has made cash purchases from open market as the sales have been confirmed; However AO has failed to acknowledge this fact and no disallowance were made as per provision of section 40A(3) of the Act" are factually incorrect, legally misconceived, contrary to evidence on record; and in any case is vague, based on surmiseful considerations; and therefore unsustainable. 2.2 That the learned Principal Commissioner of Income Tax has erred in holding that it is a case of "lack of enquiry" and, further failing to appreciate that alleged inadequate enquiry in the manner, suggested without any independent evidence and, without any further enquiries by him, cannot be a basis for assumption of jurisdicti....
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....l to form a reason to believe that income of the appellant has escaped assessment therefore the order of assessment u/s 147/143(3) of the Act was without jurisdiction and as such the impugned order is also without jurisdiction. 3. At the outset, it is noted that there is a delay in filing the present appeal by 19 days. In this regard, the assessee has filed an application seeking condonation of delay stating that the period of delay is covered by the decision of the Hon'ble Supreme Court wherein the period of Covid-19 Pandemic was directed to be excluded for the purpose of limitation. It was, accordingly, submitted that the delay in filing the present appeal may be condoned. 4. The ld. DR did not raise any specific objection. 5. In view of the submissions made by both the parties, the delay is hereby condoned and appeal of the assessee is admitted for adjudication. 6. Ground Nos. 3, 4 and 4.1 are not pressed. Accordingly, these grounds are rejected. 7. Ground No.1 is general and needs no adjudication. 8. Apropos Ground Nos. 2 to 2.7, the facts are that the ld. PCIT issued a Show Cause Notice dated 06.08.2019 to the assessee u/s 262 of the Income Tax Act as follows : 2.....
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....y the decision of "Spectra Shares and Scrips (P) Ltd.", 2013 (6)...........173 Andhra Pradesh High Court (sic-incomplete citation was given), in which, it was held that merely because of difference of opinion, the Pr. CIT cannot invoke his power u/s 263 once the AO had taken a conscious decision and had acted in accordance with law and had made assessment, the same could not be branded as erroneous by the Commissioner, as simply according to him, the AO should have made further enquiries. The assessee placed reliance on the decision of the Hon'ble Supreme Court in the case of "Quality Steel", 395 ITR 1 (S.C), wherein, it has been held that where two views are possible and the AO had taken one view and the CIT revised the said order on the ground that he did not agree with the view taken by the AO, the assessment order could not be treated as an erroneous order or prejudicial to the interests of the Revenue; that the reason is simple, i.e., that while exercising the revisionary jurisdiction, the CIT is not setting in appeal. The assessee also relied on "Malabar Industries Co. Ltd. Vs CIT", (2000) 243 ITR 83 (S.C), wherein it was held that jurisdiction u/s 263 of the Act cannot b....
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....t of verification of purchases and examination of the applicability of Section 40A(3) against cash purchases. The AO was directed to decide this issue afresh as per law. 9.3 The ld. Counsel for the assessee has contended that the ld. PCIT has erred in passing the impugned order since the AO had accepted the claim of the assessee only on examination of the facts on record and after making possible enquiries, due to which the assessment order could not be termed as either erroneous or prejudicial to the interests of the Revenue; that it was only because the ld. PCIT had an opinion different from that held by the AO, that the impugned order was passed illegally, without establishing as to how the view of the AO was an impossible view in any manner; that the ld. PCIT has failed to appreciate that under the provisions of Section 263 of the Act, an order of assessment cannot be set aside simply to make further enquiries and to thereafter pass a fresh order; that the ld. PCIT has failed to appreciate that surmises, conjectures and suspicion could not be a valid basis to invoke the provisions of Section 263 of the Act; that the ld. PCIT has erred in acting beyond the Show Cause Notice iss....
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....furnish copies of cash book, ledger account and bank statement for the Financial Year 2010-11, relevant to assessment year 2011- 12, copy of account with M/s Gaja Nand Pardeep Kumar, Proprietor Shri Pardeep Kumar for the said party and details of assets purchased/sold alongwith documentary evidences during the said party. The assessee filed reply (APB 51), stating that the assessee had made payment of Rs. 15,50,000/- on 01.11.2010, vide cheque No. 009050 of State Bank of Patiala towards purchase of cotton made on 23.10.2010 from M/s Gaja Nand Pardeep Kumar. Copies of account of M/s Gaja Nand Pardeep Kumar and bank statements were enclosed. On 30.03.2018, a notice (APB 57) u/s 148 of the Act was issued to the assessee. Then, notice u/s 142(1) was issued on 27.08.2018 (APB 64). On 31.10.2018, a summon (APB 65) was issued to Shri Pardeep Kumar, Proprietor M/s Gaja Nand Pardeep Kumar u/s 131 of the Act. On 26/31.10.2018, notice (APB 66-67) was issued to the Market Committee, Dabwali, u/s 133(6) of the Act. On 14.11.2018, a reply (APB 68) was filed by the Market Committee, Dabwali, before the AO, stating that as per their office record available, there was no firm registered as M/s Gaja....
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....arried out unaccounted purchase of Rs. 15,50,000/- from M/s Gaja Nand Pardeep Kumar, NGM-209, Dabwali, District - Sirsa. Vide this (sic) office letter dated 22.03.2018, the assessee was specifically required to explain the details of purchases made from the abovesaid party. In response thereto, the assessee has intimated that he made purchases from M/s Gaja Nand Pardeep Kumar, Proprietor Pardeep Kumar amounting to Rs. 58,42,590/-. As per information received from ITO (Investment), Gurugram, the DDIT (Investigation), Hissar afforded too many opportunities to Shri Pardeep Kumar to appear or file any written reply as regard to purchase made with the parties, but he has neither appeared nor filed any written reply. A letter was sent to him by Registered Post on his residential address i.e., ........2875, Gandhi Memorial Vidhalya, Abohar by specifically mentioning that the entries in the account will be treated as his income from other sources and action will be initiated against him as per provisions of Income Tax Act, but no reply furnished by him. As Shri Pardeep Kumar has not submitted any reply or clarified his credit entries in his bank account, it is clear that he is not doing an....
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....a Nand Pardeep Kumar is genuine and duly accounted for in the books of account.........." 9.10. In its reply (APB 69-78) dated 11.12.2018, the assessee submitted relevant portion at APB 69-70) that; 9.11 Details of purchases made by the assessee from M/s Gaja Nand Pardeep Kumar, with copies of purchase bills have been filed at APB 111-125. 9.12 Copies of transportation bilty of the transporter who had lifted the goods from M/s Gaja Nand Pardeep Kumar, have been filed at APB 111-125. Copies of sale bills have also been enclosed. Copy of ledger of M/s Gaja Nand Pardeep Kumar in the books of the assessee, for the period from 01.04.2010 to 31.03.2011, has been filed at APB 110. 9.13 Copies of relevant pages of bank statement of the assessee, pertaining to State Bank of Patiala has been filed at APB 127-128 and that concerning Punjab National Bank, has been filed at APB 129-132. These bank statements show payments made by the assessee to M/s Gaja Nand Pardeep Kumar against purchases made from M/s Gaja Nand Pardeep Kumar/ 9.14 The copy of C-Form issued by the assessee to M/s Gaja Nand Pardeep Kumar has been filed at APB 126. 9.15 Details of purchases made from M/s Gaja Nand Pardeep....
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....ever, the assessee have obtained bogus higher rate purchase bills from the abovesaid party. The main reason for using the methodology is to suppress gross/net profit from the business activity. Therefore, it is held that the assessee has made purchases of Rs. 58,42,590/- from the open market which he has stated to be purchased form (sic) M/s Gaja Nand Pardeep Kumar at much lower price than the price disclosed in the books of account. The assessee has shown purchased (sic) of 570.26 qtl. Cotton from M/s Gaja Nand Pardeep Kumar for Rs. 58,42,590/-. Out of total purchased, it notice (sic) that assessee has purchased 175.86 qtl. (89.46 + 86.41) cotton J-34 @ Rs. .10931.14 from M/s Gaja Nand Pardeep Kumar, Dabwali on 01.11.2010 and also purchased same type of cotton @ Rs. 9872.85 from M/s Neelkamal Industries, Jaitsar on the same day i.e., 01.11.2010. Therefore, it is clear that assessee has purchased cotton on higher rate of Rs. 1058.29 from M/s Gaja Nand Pardeep Kumar in comparison to the other party. 5. The matter was discussed with the counsel of the assessee on the above issues and after discussion and taking a reasonable view, difference on account of above discrepancy has been ....
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....been able to produce any confirmations from any of the parties. The assessee had claimed payment by Account Payee Cheques, qua which, on verification, it was found that the cheques were encashed by parties and not by the alleged sellers. Despite these facts, the Tribunal opined that even the parties from whom the purchases had been statedly made were bogus. The purchases themselves were not bogus. It was concluded that the entire quantity of opening stock, purchases and the quantity manufactured during the year had been sold by the assessee, and that therefore, the entire 102514 meters of cloth purchased were sold during the year. Thus, the Tribunal accepted the assessee's contention that the finished goods were, in fact, purchased by the assessee, though not from the parties shown in the accounts. The Tribunal held that it was not the entire amount of purchases, but the profit margin embedded therein, which would be subjected to tax. On appeal, the Hon'ble Gujrat High Court held that the Tribunal had committed no error; that whether the purchases themselves were bogus or whether the parties from whom such purchases were allegedly made were bogus, was essentially a question....
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.... the following cases : i) 351 ITR 150 (Guj) CIT vs. Sathyanarayan P. Rathi ii) ITA No. 2826/Mum/2013 dated 5.11.2014 Shri Ganpatraj A Sanghavi vs. ACIT iii) 221 Taxman 436 (Guj) CIT vs. Pradeep Shantilal Patel (section 44AF) iv) ITA No. 116/Ahd/2011 dated 30.5.2014 Narpat Singh vs. 1TO v) 355 ITR 290 (Guj) CIT vs. Bholanath Poly Fab (P) Ltd. vi) 152 ITD 874 (Ahd) Dineshbhai Dhansukhlal Mithaiwala vs. ITO vii) ITA No. 2446 & 2447/Mum/2015 DCIT v. Allied Blendes and Distillers (P) Ltd. viii) ITA NO. 5313/Mum/2013 Vishal P. Mehta v. DCIT 9.22 Further, in "Vaghasiya Exports", order dated 27.07.2021 passed by the Mumbai Bench of the Tribunal in ITA No.2288/Mum/2019, it was found that the only addition made was with regard to suspicious purchases made by the assessee from various entities of a tainted group. Specific queries had been raised by the AO requiring the assessee to substantiate the purchased under suspicion. The assessee furnished their requisite details and documentary evidences before the AO. Such evidence included stock record and quantitative details of opening stock, closing stock, purchase, sale etc. The assessee also demonstrated before the AO, ....
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....support of such stand, that the assessment order was passed. The assessment order expressed the AO's view which was a possible view, taken by the AO with due application of mind. The same has not been shown to be perverse, in any manner. Therefore, "Vaghasiya Exports (supra) is squarely applicable to the facts of the present case. 10.1 In "Rakesh Prabhu Das Doshi Vs PCIT", vide order dated 02.11.2018, passed by the Mumbai Tribunal in ITA No. 4056/Mum/2018, the Tribunal observed that it had been found from the record that while passing order u/s 143(3) read with Section 147 of the Income Tax Act, the AO had considered the factual position with regard to the assessee having made purchases from different persons, who had made additions of Rs. 6,26,847/-. It had been found that the completed assessment had been reopened on the ground of information received from the Investigation Wing of the Department that the assessee had made purchases from alleged bogus suppliers. The AO, after having made detailed enquiry and investigation, found that the corresponding sales had been duly accounted for by the assessee in its books. The AO found that accordingly, the entire purchases could not be ....
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....nd that not only the assessee shown the purchases made in the books of account, the assessee had also recorded the corresponding sales effected; that thus, the AO proceeded to make addition of the profit element embedded in the bogus purchases by estimating the same at 10%; that thus, the AO proceeded to make addition not only having conducting due enquiry to ascertain the genuineness of the purchases made by the assessee, but had also made addition on account of bogus purchases in accordance with the judicial proceedings; that the PCIT had held the assessment order to be erroneous and prejudicial to the interests of the Revenue, primarily for two reasons; firstly, due to non consideration of the decision of the Supreme Court in the case of "N.K.Proteins" (supra) and secondly due to lack of proper enquiry ; that the Tribunal did not agree with the view of the PCIT that it was a case of lack of proper enquiry to find out the genuineness of the purchases; that as regards the PCIT's allegation of non consideration of the decision in "N.K. Proteins" (supra), the said decision had been rendered by the Hon'ble Supreme Court on 16.01.2017, much after the date of the passing of the ass....
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....llowance had been made under Section 40A(3) of the Act. According to the ld. PCIT, it was, thus, a clear case of lack of enquiry due to which the assessment order was erroneous and prejudicial to the interests of the Revenue. We find that as correctly contended, the ld. PCIT's finding that the assessee had made cash purchases from the open market does not have anything on record to support it. Such finding is based merely on surmises and conjectures. This being so, there was no occasion for the ld. PCIT to conclude that the AO had not made disallowances as per the provisions of Section 40A(3) of the Act. In this regard, in "Shri Ganapat Raj A Sanghavi Vs ACIT", vide order dated 05.11.2014, passed in ITA No. 2826/Mum/2013, the Mumbai Bench of the Tribunal held that the copies of bank account collected by the AO showed the assessee to have made the payments to the stated parties by way of account payee cheques, showing that the transactions had been routed through bank accounts; that also, it was not the case of the AO that the assessee had indulged in accounting of bogus purchases; that when the assessee submitted that he could not effected the sales when making corresponding purcha....
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....nsactions. The total purchases of Rs. 5,18,27,26,557/-, includes purchases of Rs. 58,42,590/- made by the assessee from M/s Gaja Nand Pardeep Kumar, Dabwali. Corresponding sales were made, as reflected in the books of account. The books of account maintained by the assessee were not doubted, much less rejected either by the taxing authorities in the assessment and re-assessment, nor were they called into question by the ld. PCIT in the revisional proceedings. The assessee produced the relevant bank statements depicting the payments made to M/s Gaja Nand Pardeep Kumar (APB 127- 132) against purchases made from M/s Gaja Nand Pardeep Kumar. The assessee had shown delivery of the goods and payment of consideration for such delivery, which are the two things required to establish the purchases made. In the absence of any evidence on record to the contrary, purchases amounting to Rs. 58,42,492/- could not be said to be bogus purchases calling for disallowance. In fact, neither the AO, nor the PCIT disputed either the delivery of goods, or the payment of the consideration for such delivery. Rather, remarkably, the sales and closing stock had been accepted in the assessment proceedings, bo....
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....m the record, it was evident that the AO h addition not doubted the sales affected by the assessee and, therefore, it was logical to conclude that when corresponding purchases have been made, the assessee could not have effected sales; that the AO had not brought any evidence on record to conclusively prove that the purchases were bogus; that mere reliance on the information obtained from the Sales Tax Department, or on the statements/affidavits of the twelve parties before the Sales Tax Department, or on the fact that these parties did not respond to notices issued u/s 133(6) of the Act, would not, by itself lead to the conclusion that the purchases were to be treated as bogus, making addition u/s 69C of the Act; that in case the AO doubted the genuineness of the purchases, it was incumbent upon him to cause further enquiries so as to ascertain the genuineness or otherwise all these transactions; that in the absence of further enquiries in respect of the purchases, the AO could not make addition u/s 69C of the Act by merely relying on the information obtained from the Sales Tax Department, the statements/affidavits of the third party without affording opportunity of cross-examinat....
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.... evidences produced by the assessee; and that where the sales are accepted as genuine, the purchases cannot be disallowed. 12.5 The decision of the Delhi Bench of the Tribunal in the case of "Paramount Residency (P) Ltd. Vs DCIT" rendered in ITA 49707/Del/2014 and that of the Calcutta Bench of the Tribunal in "Ghanshyam Das Agarwal Vs ACIT" passed in ITA No. 1459/Kol/2010, are to the same effect. 12.6 In the case of "Tejua Rohit Kumar Kapadia", the Hon'ble Gujrat High Court, in ITA No. 691 of 2017, dismissed the appeal of the Department as bearing no question of law, holding that the purchases made by the assessee were duly supported by bills and payments were made by account payee cheque and there was no evidence to show that the amount was recycled back to the assessee, particularly when it was found that the assessee, the trader, had also shown sales out of purchases made which also were accepted by the Department. The SLP filed by the Department was dismissed vide theory No. 12670/2018. 13. In the following decisions, it has been settled that where purchases are duly recorded in the books of account, payment has been made through account payee cheques and the sales/closi....
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....5427/Mum/2015 iv) ITO V Shri Sanjay V Dhruv, order dated 29.02.2016, in ITA No. 5089/Mum/2014 v) ITO Vs M/s Vaman International P Ltd. order dated 16.11.2016 in ITA No. 794/Mum/2015 vi) CIT Vs M/s Ashish International, order dated 22.02.2011, passed in ITA No. 4299/2009 (Mum) vii) J.R. Solvent Industries (P) Ltd. V ACIT 68 ITD 65 CHD, and viii) Rupesh Chiman Lal V ITO, order dated 30.01.2017 in ITA Nos. 6179-6182/Mum/2016 13.5 Then, it is well settled that the assessee cannot be expected to be after the person with whom he has entered in the business transactions and the assessee's onus is to establish the identity of the party and once the payment has been made through account payee cheque, that identity is well established. 13.6 The following decisions are eloquent on this issue : i) Addl.CIT, Bihal Vs Hanuman Agarwal 151 ITR 150 (Patna) ii) Mather & Platt (I) Ltd. V CIT 168 ITR 493 (Cal) iii) Addl. CIT V Bahri Bros P.Ltd. 154 ITR 244 iv) Order of the Mumbai Bench of the Tribunal in the case of Prabhat Gupta V ITO in ITA No. 271/Mum/2017 and in M/s Vision Advertising P Ltd. V CIT, order dated 12.08.2018, in ITA No. 890/Mum/2015 13.7 Then, it has rightly b....
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....nt, therefore, had wrongly been treated by the ld. PCIT as erroneous within the meaning of the provisions of Section 263 of the Act. 14.1 In CIT Vs DLF 350 ITR 555 (Del) it has been held that once the AO had accepted the claim of the assessee on examination of the facts on record and after making all possible enquiries, the assessment order could not be termed as erroneous and prejudicial to the interests of the Revenue; that where two views are possible and the AO has taken a view with which the PCIT does not agree, the assessment order cannot be held to be erroneous and prejudicial to the interests of the Revenue. Similarly, the decision in the case of Garg Brothers Pvt. Ltd. Vs DCIT, rendered vide order dated 18.04.2018 in ITA 2519/KOL/2017. 15. Further, no new facts have been shown to have emerged after the passing of the assessment order and no fact has been stated to have been skipped by the AO. Therefore, again, the assessment order cannot be said to be erroneous and prejudicial to the interests of the Revenue. In this regard, the following decisions are to the same effect: i) CIT Vs Max India Ltd. 295 ITR 282 (S.C.) ii) Malabar Industrial Co.Ltd. V CIT 243 ITR 83 ....
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....5 (Gau) B & A Plantation & Industries Ltd. vs. CIT ii) 296 ITR 238 (P&H) CIT vs. Sohana Woolen Mills iii) ITA No. 690/Chd/2010 A.Y. 2005-06 dated 9.3.2012 Sh. Jaswinder Singh vs. CIT v) ITA No. 367/Chd/2012 A.Y. 2007-08 dated 7.3.2013 Aarti International vs. CIT vi) 384 ITR 147 (Del) CIT vs. G&G Pharma India Ltd. vii) ITA No. 7785/2015 (Del) dated 13.10.2015 Pr. CIT vs. Rakam Money Matters (P) Ltd. 15.3 It is also settled, as in the case of CIT Vs Leisure Ware Exports Ltd. 341 ITR 166 (Del) that the provisions of Section 263 of the Act cannot be invoked to make deeper enquiry in presumption and assumption that something new may come out. 15.4 In "DCIT Vs Jyoti Foundation" 357 ITR 388 (Del), it has been held that orders passed without enquiry or investigation are treated as erroneous and prejudicial to the interests of the Revenue, but orders which are passed after enquiry/investigation on the question/issue are not per-se or normally treated as erroneous and prejudicial to the interests of the Revenue because the revisionary authority feels and opines that further enquiry/investigation was required or deeper or further scrutiny should be undertaken. These decision....
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....A No. 3205/Del/2017 M/s Amira Pure Foods (P) Ltd. v. PCIT ii) ITA No. 574/Del/2018 dated 19.06.2018 M/s Vidya Prakashan Mandir (P) Ltd. vs PrCIT iii) ITA no. 2539/Del/2018 dated 29.08.2018 Durgesh Autofin P Ltd. Vs Pr. CIT 15.7 Besides, it is also settled that when, as in the present case, the reasons recorded for re-opening the assessment were the same as for which jurisdiction u/s 263 had been invoked, such invocation of the provisions of Section 263 was not tenable. In the present case, evidently, the reasons recorded (APB 53) for re-opening the assessment u/s 147 of the Act and those (APB 93-94) for which the ld. PCIT sought to invoke his revisionary jurisdiction, are the same. In similar facts and circumstances, revision has been held to be not sustainable ; (i) CIT Vs Suresh Paul Bansal 2 taxmann.com 260 (Mad), following CIT Vs Vikram Aditya & Associates (P) Ltd. 287 ITR 268 (Mad) and CIT Vs Prudent Advisory Services (P) Ltd., order dated 28.02.2007, passed in IT Appeal No. 170 of 2007, against which last order, the SLP filed by the Department has been dismissed vide order dated 15.01.2000 in SLP (Civil) [CC No. 13518/2007]. (ii) Sri Bala Forgings (P) Ltd. Vs PCI....
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....llowing decisions hold that a revisional order cannot be passed unless there is total non-application of mind by the AO : i) 100 ITD 173 (Mum) Mrs. Khatiza S. Oomerbhoy vs. ITO ii) 100 ITD 441 (Kol) Al-Haz Amir Hasan Properties Pvt. Ltd. vs. Asst. CIT iii) 203 1TR 108 (Bom) CIT vs. Gabriel India Ltd. iv) 171 ITR 141 (MP) CIT vs. Ratlam Coal Ash Co. 16.5 It has also been held that where all particulars are furnished before the AO by the assessee and he has applied his mind thereto, revision of the assessment order is not valid. The following decisions are on the issue : i) 130 TTJ 669 (Del) Regency Park Property Management Services Pvt. Ltd. vs. CIT ii) 125 TT.I 428 (Del) Rajiv Agnihotri vs. CIT iii) 131 ITD 58 (Jai) Rajiv Arora vs. CIT v) 137 TTJ 67 (Pat) Ramakant Singh vs. CIT 16.6 Courts have also on to hold that proceedings u/s 263 of the Act have to be confined to the findings recorded by the AO, as follows : i) 140 ITR 490 (P&H) Jagadhri Electric and Supply Co. vs. CIT ii) 192 ITR 547 (Kar) CIT vs. L.F.D. Silva iii) 192 ITR 50 (Mad) CIT vs. Late T.S. Srinivasa Iyer iv) 60 ITD 295 (Del) Jagjit Industries Ltd vs. ACIT v) 61 ITD 307 (Ahd) S....
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....he genuineness of the creditors" is factually incorrect, legally misconceived, contrary to evidence on record; and in any case is vague, based on surmiseful considerations; and therefore unsustainable. 2.3 That also finding that "the AO has failed to check whether all the payments made to partners is accordance with partnership deed and Income Tax Act, 1961 and also the observation that AO has not even called for the copy of partnership deed and brought the same on record" is patently erroneous, unsupported by any evidences, cryptic and, untenable. 2.4 That the learned Principal Commissioner of Income Tax has erred in holding that it is a case of "'lack of enquiry" and, further failing to appreciate that alleged inadequate enquiry in the manner suggested without any independent evidence and, without any further enquiries by him cannot be a basis for assumption of jurisdiction u/s 263 of the Act. 2.5 That the learned Pr. Commissioner of Income Tax has failed to appreciate that once the learned Assessing Officer on examination of the facts on record and after making all possible enquiries had accepted claim of the appellant then such an order of assessment could not be r....
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....us in so far as prejudicial to the interests of the Revenue, with regard to the following three issues : i) Genuineness and credit worthiness of unsecured loans ii) Verification of sundry creditors, and iii) Payments to partners 25. We have heard the parties and have perused the material on record with regard to these issues. 25.1 Apropos the issue of genuineness and credit worthiness of the unsecured loans, the ld. PCIT has observed that perusal of the assessment record showed that the replies filed during the assessment proceedings were just placed on record and that the AO had failed to verify the genuineness and credit worthiness of the unsecured loans; that the AO had not called for any ledger document and confirmation of accounts of the parties from whom the assessee had taken unsecured loans; that the AO had also failed to make any independent enquiry to verify the genuineness of the loans; that the assessee had submitted supporting documents related to unsecured loans only in response to the notice u/s 263 of the Act; that therefore, the assessment order was erroneous and prejudicial to the interests of the Revenue; that the AO should have brought the same on record....
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....The assessee was required to furnish copies of accounts alongwith complete address with PAN, contact number, e- mail Id, etc. in respect of unsecured loans of Rs. 19,33,54,914/-, trade creditors of Rs. 19,42,87,255/-, sundry debtors of Rs. 66,39,17,817/-, as appearing in the balance sheet, with full narration against the entry where the outstanding balance was of Rs. 2 lacs and above. The assessee was also asked to furnish details of loans squared up during the year. 27.1 Vide reply (APB 46-47) dated 04.12.2018, the assessee stated that details of interest paid and interest charged during the year would be produced during the manual hearing and that the rate of interest charged and paid are given in the said details. It was stated that there were no loans/deposits accepted or repaid during the year otherwise than by account payee cheques or bank drafts. It was stated that copies of accounts alongwith complete address with PAN, contact number, e-mail Id in respect of unsecured loans of Rs. 19,33,54,914/-, trade creditors of Rs. 19,42,87,255/- and sundry debtors of Rs. 66,39,17,817/-, as appearing in the balance sheet, with full narration against the entry where the outstanding bala....
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....ts Pvt. Ltd. "22. We may also add that, admittedly, no credit entry has been made in the books of the assessee in the previous year relevant to the assessment year 2008- 2009. The outstanding balances reflected as payable to M/s Elephanta Oil & Vanaspati Ltd. are the opening balances which are being carried forward for several years. The issue as to the genuineness of a credit entry, thus does not arise in the current year and this issue could only be examined in the year when the liability was recorded as having arisen, that is. in the year 1984-1985. The department having accepted the balances outstanding over several years, it was not open for the CIT (Appeals) to confirm the addition of the amount of" 1,53,48,850/- on the ground that the assessee could not produce sufficient evidence to prove the genuineness of the transactions which were undertaken in the year 1984-85." iv) 301 ITR 404 (Raj) CIT vs. Prameshwar Bohra v) 349 ITR 260 (All) CIT vs. Raghuraji Agro Industries (P) Ltd. vi) 45 taxmann.com 441 (Guj) CIT vs. Jagatkumar Satishbhai Patel INCOME TAX APPELLATE TRIBUNAL i) ITA No.1925/Del/2013 Kamal Industry, HUF vs. DCIT ii) ITA No. 1946/D/2010 AY 2000-....
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.... International (P) Ltd.), (Mad) in SLP dismissed by Apex court in SLP (C) No. 1992/2019 dated 18.02.2019. ii) 257 Taxman 390(Del) dated 7.7.2018 Pr. CIT v. Hi-Tech Residency (P) Ltd. affirmed by Hon'ble Apex Court in 257 Taxman 335 (SC) iii) 105 taxman.com 158 (Del) PCIT vs. E-Smart Systems (P) Ltd. affirmed by Hon'ble Apex Court in 263 Taxman 373 (SC) dated 3.12.2018. iv) 361 ITR 155 (Del) CIT Vs Nipun Auto (P) Ltd. v) 62 ITR (T) 512 (Del) ACIT Vs Shyam Indus Power Solutions (P) Ltd. 28.6 It is seen that with regard to these ten lenders, the assessee has produced the following evidences: 28.7 The above evidence with regard to each of these lenders remains patent on record and uncontroverted. Further, to reiterate, with regard to these loans carried out from earlier years, the assessee has also paid interest thereon after deduction of TDS. Now, evidently, the department cannot be allowed to approbate and reprobate, as has wrongly been done in the present case. The following are some of the decisions on this issue : 1. Union of India Vs British India Corporation 268 ITR 481 (S.C) 2. 217 Taxmann 247 (Guj) CIT vs. Jayantkumar Motichand Doshi 3. 217 Taxma....
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....nd sales exceeding Rs. 2 lacs had been made and to also intimate the total purchases/sales made during the year from these parties. The assessee was asked to also furnish copies of account of purchase and sales for the amounts, duly confirmed by the parties. 29.3 Vide reply (APB 46-47) dated 04.12.2018, the assessee stated that the names, complete address and copies of persons from whom purchases and sales exceeding Rs. 2 lacs had been made during the year, would be produced during the manual hearing. 29.4 Vide notice (APB 48-49) dated 11.12.2018, issued u/s 142(1) of the Act, the assessee was asked to attend the Assessing Officer's office on 17.12.2018 alongwith the required information/documents, and also to produce the books of account. 29.5 In ordersheet entry (APB 59) dated 21.12.2018, the AO noted that the counsel of the assessee was present and had submitted the required documents/information and had also produced books of account, which had been test checked, and that the case had been discussed with the counsel of the assessee. 29.6 In the assessment order (APB 50-59) dated 21.12.2018, passed u/s 143(3) of the Act, the AO noted that the response of the assessee had bee....
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....ions of s. 68 of the Act could not be attracted in the present case. We fully agree with the view taken by the Tribunal on this issue, inasmuch as, on the basis of the findings recorded by it that these two amounts represented purchases made by the respondent-assessee on credit and the purchases and sales having been accepted by the Department, the question of addition of the aforesaid two amounts under s. 68 of the Act did not arise inasmuch as the provisions of s. 68 of the Act would not be attracted on the purchases made on credit. iii) 220 Taxman 17 (Guj) CIT v Nangalia Fabrics (P) Ltd. iv) 200 Taxman 170 (Del) CIT v Oswal Chemical & Fertilisers Ltd. v) 372 ITR 619 (Bom) CIT vs. Nikunj Eximp Enterprises (P) Ltd. vi) 256 ITR 134 (Bom) Ramanand Sagar vs. DCIT vii) 282 ITR 251 (Bom) Babulal C Borana vs. ITO viii) 163 ITR 249 (Guj) CIT vs. M. K. Brothers ix) 276 CTR 89 (Cal) CIT v Manish Enterprises x) 205 Taxman 22 (Raj)(MAG.) CIT vs. Precious Jewels Corporation xi) 124 TTJ 554 (Del) Elnad International (P) Ltd. v DCIT "'5.4 We have considered the facts of the case and rival submissions. From the submissions made before us, it is clear that the tr....
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.... into account by making a credit entry in the books of account in favour of the person to whom the money is payable. Thus, there is marked difference between a credit representing a liability payable by the assessee and a credit representing monies received from another person. It is because of this distinction, a liability for purchase which has been credited in the account of the supplier cannot be added under section 68 of the Act, more so when the purchase has been accepted as genuine and a deduction therefore has been allowed." xiii) 95 TTJ 71 (Del) Annamaria Travels & Tours (P) Ltd. vs. DCIT iv) 67 SOT 52 (Mum) DCIT v Rajeev G. Kalathil xiv) 167 ITD 621 (Mum) M/s. Fancy Wear vs ITO., 6.But, we will like to decide the issue on merits also. The AO or the FAA have not rejected the books of accounts of the assessee nor have doubted the purchases made by it. The recognised principles of accountancy and tax jurisprudence hold that no sales can take place without purchases. Thus, the case under appeal is not about non genuineness of purchases itself, but it is about non genuineness of suppliers. Whether provisions of section 69C of the Act can be applied in the matters w....
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....ring the assessment proceedings were just placed on record and the AO had failed to check whether all the payments made to the partners were in accordance with the Partnership Deed and the Income Tax Act, 1961; that the AO had not even called for the copy of the Partnership Deed and had not brought the same on record during the assessment proceedings; that in the absence of the Partnership Deed, all the payments made to the partners remained unverified; that the copy of the Partnership Deed had been submitted by the assessee only in response to the notice issued u/s 263; that therefore, the assessment order was erroneous and prejudicial to the interests of the Revenue and that the AO should bring the same on record and verify and check whether all the payments made to the partners are in accordance with the deed and the Income Tax Act, 1961. 29.12 The payments made to the partners have been tabulated as follows : Sr. No. Name of Partner Interest (in Rs.) Remuneration (in Rs.) i) Lalit Mohan Sharda 8.98.170 3,00,000 ii) Mahesh Sharda 19,69,555 6,00,000 iii) Pankaj Sharda 17,66,511 3,00,000 Total 46,34,236 12,00,000 29.13 Further, the status ....
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....rmit revision on the basis of merely suspicion, conjectures and surmises; that revisionary powers cannot be invoked to make deeper enquiry; that to arrive at a conclusion of the assessment order being erroneous and prejudicial to the interests of the Revenue, the same minimal enquiry has to be there; that the revisionary action is based on receipt of proposal from the AO; that Commissioner of Income Tax cannot simply ask the Assessing Officer to re- examine the matter, he can do so only after finding order of assessment is erroneous and prejudicial to interest of Revenue; that error should be one which depended on fact or law and not mere poss1blity or guess work; that proceedings u/s 263 have to be confined to findings recorded by learned Assessing Officer and not beyond. 31. All these above contentions stand dealt with by us while dealing with t he assessee's appeal in ITA 146/CHD/2021 for assessment year 2011-12 (supra). For the above discussion, finding merit in the grievance sought to be raised by the assessee, the same is accepted. The impugned order qua all the three issues raised, i.e., genuineness and credit worthiness of unsecured loans, verification of sundry credit....
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....s not even called for the copy of partnership deed and brought the same on record" is patently erroneous, unsupported by any evidences, cryptic and, untenable. 2.4 That the learned Principal Commissioner of Income Tax has erred in holding that it is a case of "lack of enquiry" and, further failing to appreciate that alleged inadequate enquiry in the manner suggested without any independent evidence and, without any further enquiries by him cannot be a basis for assumption of jurisdiction u/s 263 of the Act. 2.5 That the learned Pr. Commissioner of Income Tax has failed to appreciate that once the learned Assessing Officer on examination of the facts on record and after making all possible enquiries had accepted claim of the appellant then such an order of assessment could not be regarded as erroneous in as much as prejudicial to the interest of revenue merely because the learned Pr. Commissioner of Income Tax had a different opinion and that too, without having established in any manner that, view adopted by the learned Assessing Officer was an impossible view. 2.6 That the learned Pr. Commissioner of Income Tax has also failed to appreciate that, u/s 263 of the Act, an or....