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2016 (4) TMI 996 - AT - Income TaxRevision u.s 263 - Held that:- On two issues, one on the verification of the trade creditors and second on the issue of allowability of expenditure u/s 40a (ia) of the Act It is apparent that subsequent orders passed by the AO dated 28.02.2014 has accepted that all loan creditors are correct and there is a minor difference in case of only three trade creditors amounting to ₹ 36756 only which has arisen only on account of difference in accounts of those parties called for u/s 133(6) of the act by AO.. Therefore on these two counts subsequent orders speaks itself that there is no error in the original order made by the AO. Secondly during the original assessment proceedings on both these issues the AO has raised specific queries and they have been replied by the assessee therefore it may be a case of “inadequate enquiry” but it cannot be said to be a case of “lack of enquiry”. It may be possible that AO has not made an enquiry on these two aspects as expected by ld CIT. However even if that be the case, it does not give any power to ld. CIT to revise the assessment by invoking the provision of section 263 of the Act. On the issue of verification of gross profit and net profit disclosed by the assessee it is apparent that in the first two paragraph of assessment order itself it is mentioned by AO that he has made query on this issue. Further the gross profit chart and net profit chart produced by the assessee itself shows that the gross profit of the assessee in Assessment Year 2007-08 was 4.72%, whereas in Assessment Year 2008-09 it is 4.86%. Therefore the gross profit declared by the assessee is better than earlier year. It is also to be noted that earlier years assessment for Assessment Year 2007-08 was passed u/s 143(3) of the Act and later on the ld CIT attempted to revise by invoking provision of section 263 of the Act however later on the gross profit of the assessee was accepted. It is also noted that for Assessment Year 2009-10 the assessee has shows gross profit of 4.73% which is less than gross profit declared by the assessee for Assessment Year 2008-09 of 4.86%. Similarly gross profit for Assessment Year 2010-11 shown by the assessee is 4.16% which is less than gross profit disclosed by the assessee of 4.86% for Assessment Year 2008-09. It is interesting to note that for all Assessment Years 2007-08 to 2010-11 assessment orders have been passed u/s 143(3) of the Act after conducting enquiries on the adequacy of profitability of the assessee and it is interesting to note that assessment year 2008-09 as shown higher gross profit rate in all these four years even then Assessment Year 2008-09 is subjected to revision by ld CIT and addition of ₹ 15779481 has been made. This action of the ld CIT cannot be accepted in view of the past and subsequent years’ accepted assessment history of the assessee. CIT has gross erred in rejecting the books of accounts by applying provision of section 145 ( 3) of the act and making addition to the declared book result of the assessee. Therefore it is apparent that the original order u/s 143(3) of the act did not contain any error in accepting the book results declared by the assessee as the profitability disclosed by the assessee was in tune with past and subsequent assessment history of the assessee duly accepted by revenue after conducting scrutiny assessments. It was not a case of “no” inquiry but specific and pointed enquiries were made by the Assessing Officer. Therefore merely the statement of ld. CIT that order is erroneous does not give the powers to CIT to set aside the matter to the file of AO for fresh verification - Decided in favour of assessee
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