TMI Blog2020 (9) TMI 1126X X X X Extracts X X X X X X X X Extracts X X X X ..... r that as to whether any enquiry has been done by the ld.Pr.CIT or not and it is also not clear whether there was a difference in quantitative details or only on value shown in the stock statement. In this regard, the ld. Pr.CIT is not justified for making direction to the AO for reexamination of the valuation of stock recorded in the books of accounts of the assessee reported to the bank. We observe from the record of authorities below and order sheet the AO had asked to the assessee many times for producing the books of accounts but the assessee failed to produce at any stage before the authorities below. The ld.Pr. CIT has observed that in respect of unsecured loans sundry creditors/liabilities and sundry debtors on asset side appearing on the balance sheet as on 31.03.2010 - AO should have done enquiry for the genuineness of the current liabilities and current assets which has been observed by the ld.Pr.CIT. The AO is not only an adjudicator, he is also an investigator before coming to any conclusion with regard to the genuineness of the transactions done by the assessee, which is lack in this case. Order of the AO in respect of unsecured loans, sundry creditors/liabiliti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing total income of ₹ 1,92,052/-. The assessee is an individual derives income from sale of Zuari Furniture earning under name and style of M/s Parivartan. The assessee was completed u/s.143(3) of the Act on 19.12.2012 by the ITO Ward-2(1), Cuttack determining the total income at ₹ 9,96,780/-. Later on by virtue of power vested u/s.263(1) of the Act, the Pr.CIT called the assessment records and after verification of the records it was noticed by him that the AO has not done proper enquiry which ought to have been done during the course of assessment proceedings on the different issues. Further it has been observed by him that the assessee produced the audit report in the prescribed Form No.3CB and 3CD which were duly audited by a qualified CA in which he has mentioned that the assessee had maintained cash book ledger, purchase and sale register, stock book etc. but the during the course of assessment proceedings many opportunities were given to the assessee for production of books of accounts as well as the show cause notice was also issued to the assessee in this regard but he did not produce the books of accounts before the AO. The AO completed the assessment only on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t made by the AO during assessment proceedings, he was justified in invoking provisions of Section 263 in respect of the order passed by the AO. Similarly, in the case of Gee Vee Enterprises Vs. Addl. CIT report in 99 ITR 375(Del), the Hon'ble Court has held that the Commissioner can regard the order of the AO as erroneous on the ground that, in the * circumstances of the case, the AO should have made further enquiries before accepting the statement filed by the assessee. In the instant case, on the issue pointed out in show cause notice proper enquiries and verifications were not made by the AO. During the course of scrutiny proceedings, assessee expressed her inability to produce the books of account and documents as called for by the AO for which AO has imposed penalty u/s.271(l)(b). Because of such failure on the part of the AO, the order passed by him is considered to be erroneous as well as prejudicial to the interests of revenue. Asheld by various courts in the cases mentioned above, the Pr.Commissioner can regard an order as erroneous on the ground that in the circumstances of the case, the AO should have made further enquires before accepting the statements g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that - assesse had overvalued the stock for the purpose of obtaining a larger credit from the Bank Therefore, AO has not properly examined the valuation of stock during the course of scrutiny proceedings apparently not considered the difference of stock valuation as unaccounted sales of the assessee which was not recorded in the books of the assessee for the financial year:2009-10. In view of the above, the assessment order framed u/s. 143(3) of the I.T.Act,1961 on 19.12.2012 is hereby set aside to the Assessing Officer for fresh adjudication of facts and proper application of law in fresh assessment proceeding after giving proper opportunities to the assesses in the following lines: i. The Assessing Officer has to call for audited books of account relating to the financial year:2009-10 and to examine the genuineness of liabilities shown in the balance sheet as on 31.03.2010 such as unsecured loan of ₹ 3,24,069/ sundry creditors of ₹ 18,39,100/details of payable of ₹ 3,33,474 and also Sundry debtors of ₹ 2,32,495 shown under 'current Assets' of the balance sheet. ii. AO has to examine the valuation of stock recorded in the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2010). and the survey operation was conducted u/s.133A on 09.03.2010 which Is almost towards the fag end of the assessment year. Because it was a case of survey operation, therefore the AO has meticulously and carefully gone through the case and passed order u/s. 143(3) of the IT. Act, 1961 on 19.12.2012 in accordance with law. In the balance sheet as on 31.03.2010 assessee has shown Sundry Creditors of ₹ 18,39,100/- Sundry debtors ₹ 2,32,495/- unsecured loan of ₹ 3,24,069/- and details of current liabilities and provisions payable of ₹ 3,33,474 respectively. The above details were duly explained to the Assessing Officer by the assessee in course of assessment proceeding, which is the Commissioner in proceeding u/s. 263 does not agree. After all this was an assessment consequent upon survey operation u/s. 133(A). Therefore, the A.O. has taken special care while scrutinising the assessment. Further the assessee has disclosed stock value as per books of accounts duly audited at 27,62,047/-. For obtaining loan the assessee has given an inflated figure of stock to Punjab National Bank at ₹ 55,43,112/-. For the above reason the CIT iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss the assessee as in duty bound shall ever pray. Ld. AR further submitted that the books of accounts was got audited by the qualified chartered accountant, according to him the assessee has maintained cash book, ledger stock books etc. which were verified by him, thereafter, he has issued audited report in prescribed form No.3CB 3CD which has not been disregarded by the AO during the course of assessment proceedings. The AO has verified all the financial transactions and the assessee submitted required documents during the course of assessment proceedings. He also stated that the details of the creditors were produced before the AO. It was the duty of the AO to verify to the extent of his satisfaction. In respect of difference of stock noted by the Pr.CIT, he stated that closing stock has been accepted by the AO and he has added to the difference of stock found during the course of survey u/s.133A of the Act and he also stated that for available cash credit limit and smooth running of the business the stock statement was given to the Punjab National Bank was inflated in this regard, he relied on the following judgments :- i) Malbar Industrial Co. Ltd Vs. CIT (2000) 243 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He also submitted that the AO did not observe to the records which were gathered during the course of survey proceedings u/s.133 of the Act as well as the documents produced before him. The stock statements were submitted to the Punjab National Bank for availing cash credit loan. He should have worked out the stock amount shown in the stock statement and on the date of survey which is 9th March, 2010, because there was a huge difference between the stock statements submitted to the bank and stock shown by the assessee. In this regard, the case laws relied on by the ld. AR is not applicable in the present facts of the case. In the judgments relied on by the ld. AR, the assessee had submitted with quantitative details but there is a difference in only value of the stock amount. But in this case the case is different, therefore, in this regard, the case laws relied on by the ld. AR is not applicable. In respect of legal issue, the case laws relied on by the ld. AR are also not applicable because in the present case in hand the assessee did not produce any books of accounts so that the AO can verify the correct and completeness of the financial transactions on the basis of which the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pr.CIT on the basis of record he observed that the order of the AO was erroneous and prejudicial to the interest of revenue. Accordingly, he issued show cause notice on 15.01.2015. We observe that in respect of stock the AO had taken a plausible view and added the difference found during the course of survey proceedings u/s.133A of the Act to the total income of the assessee. As per the Assessing Officer the assessee had maintained stock register from which he had taken figures which is apparent from the assessment order. The ld. Pr.CIT has observed that there is stock statement on record which has been submitted by the assessee to the Punjab National Bank in inflated value, therefore, the difference shall be treated as unaccounted sales. In respect of other findings of the ld.Pr.CIT, the AO did not enquire in depth which ought to have been done for competing the assessment proceedings as per the provisions of I.T.Act. Even before the proceeding u/s.263/143(3) of the Act before the AO, the assessee did not produce books of accounts. The ld.Pr.CIT should have got confirmed from Punjab National Bank as to whether the stock statement has been submitted before the bank is correct or no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncelling the assessment and directing a fresh assessment. Explanation 1.-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner authorised by the Board in this behalf under section 120; (b) record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Principal Commissioner or Commissioner; (c) where any order referred to in this sub-section and passe ..... 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