TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1055
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....he Revenue hence the order under section 263 may be quashed and set aside. 2. On facts and circumstances of the case and in law, the Ld. PCIT has erred in issuing a Notice and passing an order under section 263 of the Act when the reassessment was initiated for the specific issue of creditors, which was examined by the Ld. Assessing Officer (AO) and has passed a speaking order considering the law and facts hence, the order under section 263 of the Act may be quashed and set aside. 3. Without prejudice to the above the order of the Assessing Officer is a possible view considering the facts and law hence, revision order under section 263 of the Act is bad in law and may be quashed and set aside. Creditor(s) of Rs. 3,13,65,060/- 4. Without prejudice to the above, on facts and circumstances of the case and in law, the Ld. PCIT has erred in issuing a Notice and passing an order under section 263 of the Act whereas the Hon'ble Bombay High Court (division bench) dated July 30, 2018, which does not fall in the Assessment year (AY) 2018-19 hence the revision order under section 263 is bad in law and liable to be quashed and set aside. 5. Without ....
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....p petitions filed by the creditors. Being aggrieved, the creditors preferred appeal before Hon'ble ITAT Mumbai Division Bench (Appeal No.122 of 2018 and in Appeal No 129 of 2018). However, the Division Bench upheld the previous order passed by the Single Bench and dismissed the petition of the creditors vide order dated 30.07.2018. 3.1 He also noticed that the assessee had contended that the dispute was settled only in F.Y.2018-19 relevant to A.Y. 2019-20 and thus, the cessation of liability u/s 41(1)(a) of the Act could not be invoked for the F.Y.2017-18 relevant to A.Y.2018-19. Also, the trading liability of Rs. 3,13,65,060/- was set off with the amount not received from the debtors AGP of Rs. 2,99,93,196/- and the balance of Rs. 13,72,164/- was shown as income in A.Y. 2020-21.This contention of the assessee was accepted and hence, no addition was made by the Ld. Assessing Officer while passing the reassessment order. 3.2 However, the ld.PCIT further observed that since such trading liability was outstanding for more than 3 years in F.Y. 2017-18 i.e. AY 2018-19 itself, the same was required to be treated as ceased liability in A.Y. 2018-19 only. As the matter was sub-judice....
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....ceived by ACG were of an inferior quality, and therefore, they did not make any payment to the assessee. The assessee could not make any payment to the above two creditors. The amount stood as a liability in the books of the assessee. It is further submitted that the case of the assessee for AY 2014-15 was selected for scrutiny by the AO and an addition was made of Rs. 3,13,65,360/- under section 41(1) of the Act. The ld. CIT(A) passed an order dated December 03, 2018 deleting the addition on the ground that matter was sub-judice, hence liability had not ceased to exist and provision of section 41(1)(a) of the Act could not be invoked. The Hon'ble ITAT for AY 2014-15 allowed the appeal of the assessee. The ITAT observed that the winding-up petitions concluded only in AY 2018-19. However, it did not mention the appeal filed by the creditors to the division bench of the Hon'ble High Court for recovery, which was decided on July 30, 2018, although the details were submitted. 4.1 It is explained that the assessee filed its return of income for AY 2018-19 declaring an income of 63,14,210/-. It received a notice under section 148A(b) of the Act on March 09, 2022 wherein the informatio....
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....ection 263 of the Act. Hence, it is prayed that the assessee has offered the sum as income in the subsequent year and the order of the AO is not prejudicial to the interest of the revenue. 4.3 It is further argued that the AO had taken a possible view in the reassessment order. The reassessment was for the purpose of examining cessation of liability. He vide notice dated January 16, 2023, asked a specific question pertaining to cessation of liability. The assessee replied with supporting documents. Considering the submissions, the AO passed a detailed order referring to the submissions and concluding that the liability did not cease in AY 2018-19.Reliance is placed on the decision of the Hon'ble Jurisdictional Tribunal in the case of Sir Dorabji Tata Trust v. DCIT [2020] 122 taxmann.com 274 (Mum.)(Trib.) and CIT v. Development Credit Bank Ltd. (2010) 323 ITR 206 (Bom)(HC). 4.4 Without prejudice to the above, it is contended that the liability did not cease in AY 2018-19.The creditors preferred an appeal against the winding-up orders of the Bombay High Court which was decided on July 30, 2018; hence, there is cessation of liability in AY 2019-20.This is mentioned in the assess....
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....,643/- is concerned, we find that the ld.PCIT has observed that the issues needed to be examined by the AO. In this regard, the ld.AR has contended that financials for last three previous years were submitted during assessment proceedings and were duly examined by the AO. He has verified and examined all the details and applied his mind and no adverse view was taken. It was submitted that as per Sundry creditors outstanding for more than a year Rs 73,26,343/- comprised of Rs 65,88,667/-out of which Rs 33,00,000/- was paid and remaining amount of Rs 32,88,667/- was outstanding in the books of the assessee as well as in the books of the creditor B.J. International. The other sum of Rs 7,37,676/- pertained to Eskaybee International P.Ltd was written back and offered for income in AY 2019-20.Relevant ledger folios were also placed on record. Therefore, we find that the AO has taken one of the two possible course permissible under law and in such a situation, it cannot be inferred that the assessment order was erroneous or prejudicial to the interest of the Revenue. 5.1 We notice that the ld.PCIT had simply directed to invoke section 41(1) because the amounts were outstanding for thr....
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....rent view of the impugned issues. In this connection, reference is made to the decision of Hon'ble Bombay High Court in the case of CIT vs. Gabriel India Ltd (1993) 203 ITR 108 (Bom) where the hon'ble Bombay High Court held as under:- "An order cannot be termed as erroneous unless it is not in accordance with law. If an ITO acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by the Commissioner simply because according to him the order should have been written more elaborately. This section does not visualise a case of substitution of judgment of the Commissioner for that of the ITO, who passed the order, unless the decision is held to be erroneous. Cases may be visualised where ITO while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimates himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and, left to the Commissioner, he would have estimated the income at a higher figure th....
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....t open to enquire in cases of inadequate inquiry. [Para 6] In this case, during the assessment proceedings, the Assessing Officer issued a query memos to the assessee, calling upon him to justify the genuineness of the gifts. The assessee responded to the same by giving evidence of the communications received from his father and his sister i.e. the donors of the gifts along with the statement of their bank accounts. On perusal, the Assessing Officer was satisfied about the identities of the donors, the source from where these funds have come-and also the creditworthiness/ capacity of the donor. Once the Assessing Officer was satisfied with regard to the same, there was no further requirement on the part of the Assessing Officer to disclose his satisfaction in the assessment order passed thereon. Thus, this objection on the part of the revenue, cannot be accepted. It is next submitted that the donor had not been examined by the Assessing Officer. It is not in every case that every evidence produced has to be tested by cross examination of the person giving the evidence. It is only in cases where the evidence produced gives rise to suspicion about its veracity that further s....