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2023 (11) TMI 755 - AT - Income TaxRevision u/s 263 - as per CIT Inadequate enquiry made on the issue of sundry creditors’ balance outstanding - HELD THAT:- CIT have noted, has held that since the assessee had not furnished bank statement of the sundry creditors, inquiry regarding their genuineness and credit worthiness was incomplete, casting prejudice to the Revenue. We are unable to agree with the ld.Pr.CIT in this count. It is not the case of the ld.Pr.CIT that no inquiry was conducted by the AO on the issue of sundry creditors’ balance outstanding. His case of the assessment order being erroneous on this count, rests on inadequacy of inquiry. It is not denied that the assessee has furnished complete details of sundry creditors giving their names, addresses, their PAN and the details of the transaction undertaken with them during the year. The assessee had also stated that it was not possible for him to procure the bank statement of these sundry creditors. CIT has not pointed out as to why more inquiry needed to be conducted regarding sundry creditors. There is no reason given by him as to why the sundry creditors reflected by the assessee needed to be doubted. There is no financial analysis done by the ld.Pr.CIT leading to create a doubt regarding existence of this quantum of sundry creditors. Except for stating that huge sundry creditors were outstanding as at the end of the year, there is no basis given for stating so. There is no comparison of the turnover of the assessee or of the purchases made by the assessee with the outstanding creditors; there is no finding by the ld.CIT(A) that considering low volume of operation conducted by the assessee, the extent of sundry creditors outstanding is too huge so as to cast a doubt on the existence of such outstanding sundry creditors as at the end of the year. No exercise worth its name has been carried out by the ld.Pr.CIT so as to justify the need for further inquiry to be done regarding the sundry creditors. Hon’ble Delhi High Court in the case of CIT vs Sunbeam Auto Ltd. [2009 (9) TMI 633 - DELHI HIGH COURT] while dealing with issue of adequacy of inquiry by AO for the purposes of section 263 has held that inadequate inquiry alone is not sufficient for holding assessment order erroneous unless it is found by the Ld.CIT /PCIT to have resulted in error causing prejudice to the Revenue. Thus where details were filed to the AO and the Commissioner was unable to point out defects conclusively in the material for arriving at a conclusion that particular income had escaped assessment on account of non application of mind by AO, order for revision of assessment order on account of the same u/s 263 of the Act was not sustainable in law. See Anil Kumar Sharma [2010 (2) TMI 75 - DELHI HIGH COURT] The order passed under section 263 of the Act is set aside. Decided in favour of assessee.
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