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2022 (6) TMI 734 - AT - Income TaxRevision u/s 263 - case was selected for limited scrutiny - Whether the AO has considered the issue is question - HELD THAT:- As per notice dated 19.09.2017 issued u/s 143(2) of the Act, the case of the Appellant was selected for limited scrutiny for examination of following issues (i) whether sundry creditors are genuine, (b) whether contract receipts/fees have been correctly offered to tax and (iii) whether sales turnover/receipts has been correctly offered to tax. AO was required to carry out necessary verification and inquiries in relation to the above issues. Appellant has contended that during the assessment proceedings the Appellant had filed necessary documents/confirmation and details reconciliation statement. We have examined the assessment order, the paper-book of the Appellant and copy letter date 11.06.2018 filed by the Appellant along with the annexures. AO has merely asked for age-wise details, and balance confirmation in relation to the sundry creditors. It is correct that the Appellant had provided the aforesaid information/documents during the assessment proceedings, however, but the same are not sufficient to enable the AO to verify the genuineness of sundry creditors. Similarly, the statement of Reconciliation of 26AS filed by the Appellant is also not sufficient to show that the contract fee has been offered to tax correctly. Clearly, the Assessing Officer has not undertaken necessary inquires/verification during assessment proceedings. The Assessment Order is also silent on these issues and therefore, does not support the contentions of the Appellant. We are also not inclined to accept the contention advanced on behalf of the Appellant that provisions of Clause (a) of Explanation 2 to Section 263 of the Act support the case of the Appellant. The expression ‘without making inquiries or verification’ used in Clause (a) of Explanation 2 to Section 263 of the Act, has to be read in conjunction with the words that follow this expression ‘which should have been made’. In the case before us, the Assessing Officer has failed to carry out necessary inquiries and verification in relation to the issues identified for limited scrutiny which should have been made in the facts and circumstances of the present case. PCIT was legally justified in exercising powers of revision under Section 263 of the Act in the facts and circumstances of the present case.
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