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TMI Blog2020 (10) TMI 617X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 514,453,415 on account of sundry creditors and also conduct proper enquiries and investigation to the above issue is in the case. The assessee is aggrieved and therefore has raised following grounds of appeal:- "1. On the facts and circumstances of the case, the order passed by the learned Principal Commissioner of Income Tax {PCIT} is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, the order passed by the Ld. PCIT setting aside the assessment order passed by the A.O. is untenable in the absence of order of the A.O. being erroneous as well as prejudicial to the interest of the Revenue. 3. On the facts and circumstances of the case, the Ld.PCIT has erred both on facts and in law in ignoring the fact that all the issues raised by him in notice under Section 263 were before the A.O. and as such, the jurisdiction on this issue under Section 263 cannot be assumed. 4. On the facts and circumstances of the case, the Ld.PCIT has erred both on facts and in law in ignoring the that the proceeding under Section 263 cannot be used to as a tool to simply extent the time limitation a proceeding, as laid down by the Income Tax Act, 1961. 5. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1,515,705/- on printing and stationery expenditure, Rs. 452,640/- on postage and stamps expenses and Rs. 660,475/- on vehicle running and maintenance expenditure. Accordingly the assessment was made at the total loss of Rs. 23,536,058/- against the returned income of the assessee of a loss of Rs. 476,19,855/-. 3. This assessment order along with the records were examined by The Commissioner Of Income Tax and observed that assessment was completed without proper examination/verification of relevant issues involved in this case and that the express provisions of the act were not applied properly. Therefore he was of the view that the Ao allowed the sundry creditors without proper examination and verification, a show cause notice was issued u/s 263 of the act on 28/1/2019 stating the reasons that:- "On perusal of the assessment record it is found that as per balance-sheet the assessee has shown an amount of Rs. 514,453,415/- as the sundry creditors. Out of total 70 entities in list of sundry creditors, only one entry of Rs. 4 65,86,911/- was verified and which was found bogus, therefore for verification was required of sundry creditors because assessee's business income was fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f transactions of amounting to Rs. 514,453,415/- on account of sundry creditors and also conduct proper enquiries and investigation to the above issue in this case. 6. Thus, the said assessment is set aside and the assessment proceedings are restored back to the file of the assessing officer on the aforesaid issues. The AO is directed to frame the assessment afresh as per the provisions of the income tax act as directed above, after affording the assessee reasonable opportunity of being heard and after making proper enquiries and verification." 6. Contesting the order passed u/s 263 of the income tax act, the learned authorised representative submitted that the show cause notice issued by the learned CIT is on incorrect facts as stated therein that out of the total creditors of Rs. 514,453,415/- one entry of Rs. 465,86,911 was verified and found to be bogus. He submitted that there is no such addition made by the learned assessing officer in the assessment order, there is no reference that such credit is found to be bogus. He submitted that during the course of assessment proceedings the assessee submitted details of the expenses which have been verified by the learned assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent fee was paid by the assessee. He further referred that the audited financial statements were submitted wherein as per note number 24 the details of previous financial year was also shown where that company was paid expenditure of Rs. 280,776,786. The above expenditure was containing toll collection expenses of Rs. 53,441,626/- and maintenance and repair charges of Rs. 227,135,160/-. Therefore he submitted that the complete details were furnished to the AO with respect to the above party. He submitted that the assessing officer was satisfied with that and did not make any addition on account of that particular creditor. With respect to the increase in the total expenditure it was submitted before AO that those decreased from RS. 2680409631/- to Rs. 221,56,14,462, therefore, there is no increase in expenses towards operation and maintenance of the toll. The learned authorised representative submitted that revisionary proceedings have been initiated on the assessee on basis of an audit objection and not on the basis of any enquiry establishing that the amount claimed to be bogus is actually bogus. He submitted that audit objection stated that out of total creditors of Rs. 514,453, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imit for passing an order u/s 143 (3) of the act. He even otherwise stated that in case of sundry creditors what is stated to be bogus by the learned principal Commissioner of income tax was not based on any material, the learned assessing officer has also not disallowed or made addition on account of that creditor. It is not the case of learned CIT that assessing officer was not having the complete details with respect to those creditors. In view of this, the revision proceedings initiated by the learned that CIT was on incorrect facts. In view of this he submitted that the 263 order is not sustainable in law. 7. The learned read CIT DR vehemently supported the order of the learned CIT. It was stated that assessee submitted the details of the creditors on 29th of December 2016 due to which AO did not have sufficient time for requisite enquiry/investigation of those transaction and whatever was claimed by the assessee, was allowed without verifying the genuineness of the transaction. Therefore the order passed by the learned assessing officer was erroneous and prejudicial to the interest of the revenue. Therefore it was submitted that there is no infirmity in the order of the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he creditors being source of those unpaid expenditure would have been held to be unsubstantiated. In those circumstances the order of the assessing officer would have become unsustainable in law. This for the reason that the expenditure incurred by the assessee were allowed and subsequently creditors resulting out of booking of those expenditure are added to the total income of the assessee. Therefore, the assessing officer took the first recourse available of disallowing the proportionate expenditure, which is according to us the one of the two options available with the assessing officer. By disallowing the expenditure to the extent of 20%, in fact he has held that the sundry creditors to the extent of that 20% i.e. Rs. 24,083,797/- are not related to the business and are unsubstantiated. The order of Ld CIT thus, did not show how the order passed by the ld AO is erroneous. 10. Further, the learned CIT held that the order is erroneous and prejudicial to the interest of the revenue for the reason that the assessee submitted the list of creditors on 29/12/2016 due to which the AO did not have sufficient time for requisite enquiry. According to us, if the assessee is found lacking ..... X X X X Extracts X X X X X X X X Extracts X X X X
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