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TMI Blog2022 (6) TMI 932X X X X Extracts X X X X X X X X Extracts X X X X ..... led with the entrusted authorised legal consultant resulting in the delay which may kindly be condoned as we neither acted deliberately nor in defiance of law or was guilty of conduct, contumacious or dishonest, or acted in conscious disregard of our obligation. Ld. AR of the assessee has also relied on the decision of the Hon'ble Supreme Court in Suo Moto Writ (Civil) No.3 of 2020, wherein the Hon'ble Apex Court has held that in continuation of the order dated 8th March 2021, the period(s) of limitation, as prescribed under any general or special laws in respect of all judicial or quasi judicial proceedings, whether condonable or not, shall stand extended till further orders. Ld. AR also drew our attention to Section 253 (5) of the Act and submitted that the Tribunal can condone the delay if it is satisfied with sufficient cause for delay. In view of the above, ld. AR submitted that the delay in filing the present appeal may kindly be condoned and appeal may kindly be admitted for hearing. 3. Per Contra, ld. CIT-DR vehemently opposed to condone the delay in filing the present appeal. In this regard, ld. CIT-DR has filed his written submission wherein in para 1, he has stated as u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey are taking it to be for granted that the UOI is entitled to claim condonation of delay de hors its averments in the application. For these reasons, the Hon'ble Supreme Court found no merits in the applications and declined to condone the delay and dismissed both the applications. 4. Apart from the above, ld. CIT-DR also submitted that the assessee in his letter for condonation of delay has mentioned that the delay was on account of failure on the part of authorised representative. It was the submission that the affidavit of the authorised representative has not been brought out. Ld. CIT-DR was then informed that the assessee has filed an additional letter dated 05.10.2021 wherein it has been mentioned that there is a delay of 686 days and the delay was neither international nor deliberate but to due unfortunate and unavoidable circumstances beyond the control as the forced shutdown & lockdown along with travel restrictions in continuance of havoc of Covid-19 pandemic. It was the submission that a reasonable cause has not been explained and, therefore, the delay is not liable to be condoned. He relied upon the decision of Hon'ble Tata Yodogawa Ltd. 1988 (38) Excise Law Time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee had filed his reply to the said show cause notice vide a written submission on 26.03.2019. It was also the submission that the ld. Pr.CIT had issued show cause notice in respect of multiple issues, which read as under :- (a) As per the statement of "Creditors for Expenses & Others" furnished by the assessee, RS.2,60,21 ,286/- was payable to Indian Overseas Bank, Kolkata account, in respect of cheques issued. Further balance with banks as at 31.03.2014 was on Rs.1,23,486/-. When bank account balance was reduced by issue of cheques, the amount payable to Indian Overseas Bank, Kolkata was required to be reduced to the same extent. Though cheques were issued from Indian Overseas Bank, Kolkata account against amounts payable to sundry creditors, the amount was still shown as payable to Indian Overseas Bank, Kolkata account This implies that the liability in Balance Sheet was overstated to the extent of RS.2,60,21 ,286/- and consequently, the assets in the Balance Sheet were also overstated to the same -extent. But the AO had failed to examine this issue. (b) According to Note-28 to Balance Sheet and P&L account on "Additional Notes on Account', the Auditor had state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year no addition had been made. 11. In respect of issue of the low net profit, it was the submission that no addition had been made in respect of debit of a huge expenditure of Rs.2,26,06,601/- under the head "transporting and discounting charges paid". Though the AO had been directed to examine the genuineness of the expenses claimed by the assessee, however, the AO estimated the income from transportation business @5% of the total transportation receipt on account of failure for verification of all the vouchers and bills. 12. In respect of the last issue representing the depreciation in respect of the shopping mall, no addition had been made. It was, thus, submission that though all the issues had been brought to the attention of the ld. Pr.CIT, the Pr.CIT had not done any verification but had passed on the issue of verification back to the AO. It was the submission that the order of the Pr.CIT is liable to quashed. 13. In reply, ld. CIT-DR vehemently supported the order of Pr.CIT on merits and filed his written submission wherein he has stated in para 2 onwards as under :- 2. The Pr. CIT has held in the revision order dated 29.03.2019 U/s.263 of the Act that there were fiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant company had shown purchases of Rs.7,50,87,734/- in FY 2013-14. Further as per ledger account, payment of Rs.1,64,88,875/- and Rs.95,32,411/- had been made vide cheques dated 28.03.2014 and 31.03.2014 through Overseas Bank, Kolkata. On the other hand, State Bank of India, SME Branch, Rourkela informed the A.O. that payments of Rs.2,60,21,286/- had been made to a concern "Maa Trading Company" and not to Veeline Media Ltd. Hence claim of liability of Rs.2,60,21,286/- made by the appellant company was found to be bogus (paras 4.1 to 4.6 of assessment order dated 30.12.2019 u/s.143(3) r.w.s. 263 of the Act. It was also found that Veeline Media Ltd. was engaged in the business of records, audio & video tapes and computer tapes and it could not have sold iron & steel to the appellant company. thus by booking bogus purchases of Rs.4,90,66,446/-, the appellant company had reduced its GP and NP. These aspects had been overlooked by the A.O. while completing the original assessment on 05.04.2016. On the first and fifth issues, reliance is placed on the judgement of Hon'ble Mumbai High Court in the case of Jeevan Investment & Finance Ltd. (88 taxmann.com 552). In this case, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs under Section 263 of the Act on the basis that the necessary information was not furnished by the Appellant in support of its claim nor the Assessing Officer enquired into the same. Thus, this is a case of non-enquiry and not inadequate enquiry. Therefore, the order of the Assessing Officer is certainly erroneous. There is no dispute that the order of the Assessing Officer is prejudicial to the Revenue". In the case of Renu Gupta vs. CIT (301 ITR 45), the submissions of the assessee were placed on record by the A.O. without causing any inquiry. The Hon'ble Rajasthan high Court held that the assessment order was passed by the A.O. in a routine manner without applying his mind. In the case of CIT vs. Deepak Kumar Garg (299 ITR 435), it was held by the Hon'ble Madhya Pradesh High Court in para-4 that issuing a questionnaire and placing submissions on record by the A.O. is a case of no enquiry. If the AR of the assessee still emphasizes that the A.O. had made an enquiry for the sake of an argument, then it is only a semblance of enquiry and that too in a very slipshod manner and the A.O. has agreed to the version of the assessee without proper enquiry. In the case of V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are such as to provoke an inquiry. The meaning to be given to the word " erroneous " in section 263 emerges out of this context. It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word "erroneous" in section 263 includes the failure to make such an inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct". 3. The ld. AR of the appellant has failed to demonstrate as to what kind of inquiries were conducted by the A.O. on these five issues. In the case of NIIT vs. Commissioner of Income-tax (Central-II) (60 taxmann.com 313), the Hon'ble Delhi ITAT analyzed plethora of judgments on the issue and through order dated 27.03.2015, gave a ratio that the AO is required to conduct the inquiry in a manner whereby he places on record the material enough to reach the satisfaction, which a rational person, being informed of the nuances of tax laws would reach after due appreciation of such material. If this component is missing, it wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enders, mere examination of their bank statements or letter of confirmation was not enough and therefore, impugned revisional order passed by Commissioner setting aside assessment was upheld. In para-12, it was held by the Hon'ble Kolkata High Court that In the instant case, the Commissioner had reasons to hold that creditworthiness of the alleged lenders was not enquired into. Mere examination of the bank pass book, profit and loss account and balance sheet of the creditors is not enough. When the requisite enquiry was not made, the order is bound to be erroneous and prejudicial to the interest of the revenue. The Tribunal proceeded on the theory that it was not a case of no enquiry; that no doubt is true, but that is not enough. If the relevant enquiry was not made, it may in appropriate cases amount to no enquiry and may also be a case of non-application of mind. In para-16, it was held by the Hon'ble Kolkata High court that The power under section 263 can be exercised where the order of the Assessing Officer is erroneous and prejudicial to the interest of the revenue. When an order is erroneous, then the order is also deficient and in order to remedy the situation, powe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terfered with only because another view is possible. In para-35, the Hon'ble Supreme Court held that order of assessment passed by the A.O. on the dictates of the higher authorities (CIT, Simla) being wholly without jurisdiction, was a nullity which is not the case here. Similarly in the case of CIT vs. Vodafone Essar South Ltd. (28 taxmann.com 273), the Hon'ble Delhi High Court held that CIT couldn't follow section 263 route to treat an expense as capital (expenses incurred for obtaining loan such as license fee, loan charges, stamp duty etc.), if AO chose to allow same as revenue expenses after due analysis which is not the case here. In the case of CIT vs. Anil Kumar Sharma (194 Taxman 504), the Hon'ble Delhi High Court held in para-5 that the A.O. had asked the assessee to submit the Purchase Deed in respect of the purchase of land at village Tughlakabad and that the assessee in response thereto had supplied requisite details and submitted a copy of the High Court's decision in relation to the award of compensation etc. The Tribunal, therefore, came to the conclusion that the complete details were filed before the Assessing Officer and that he applied his mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 666 to 669/Kol/2018 dated 28.11.2018, the A.O. had issued letters u/s.133(6) to the sellers at given addresses. All the suppliers had confirmed having made sales to said company. The quantitative details were also verified by the A.O. He doubted the mode of receipt/delivery of the alleged purchases. In these circumstances, he disallowed only 3% of such purchases. This issue was covered in the favour of assessee company by the judgement of Hon'ble Gujarat High Court in the case of Tejua Rohitkumar Kapadia (supra). There was no proof of any cash being received from suppliers. Further on the issue of disallowance of 3% of purchases, appeal was pending before the CIT(A)-3, Kolkata. In these facts, it was held that the Pr. CIT had no jurisdiction to revise the order u/s.263 of the Act. This is not the case here. 5. The decision of Hon'ble Supreme Court in the case of Malabar Industries Ltd. vs. CIT (243 ITR 83) is in the favour of the Deptt. It was held therein that an incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d matrix involved in the said two cases before the Supreme Court. In the said cases, the Assessing Officer had not conducted any enquiry or examined evidence whatsoever. There was total absence of enquiry or verification. These cases have to be distinguished from other cases (i) where there is enquiry but the findings are incorrect/erroneous; and (ii) where there is failure to make proper or full verification or enquiry". The Hon'ble Delhi High Court in the case of CIT vs. Sunbeam Auto Ltd. (332 ITR 167) while considering the aspect, when there is no proper or full verification, held as under:- "Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between "lack of inquiry" and "inadequate inquiry". If there was any inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has a different opinion in the matter. It is only in cases of "lack of inquiry" that such a course of action would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voke the provisions of Section 263 of the Act, insofar as there was no verification/non-examination by the AO when completing the original assessment order u/s.143(3) of the Act. It was further submitted that even when the show cause notice was issued to the assessee, the assessee replied during the last minute being on 26.03.2019 thereby precluding the ld. CIT(A) from doing any further verification. It was also submitted that in fact the issue of creditors for expenses & others, representing Rs.2,60,21,286/- when examined brought out the addition of Rs.4,90,66,446/-. It was further submitted that the addition itself leads to increase in the net profit rates. It was also submitted that the estimation of income from transportation business @5% of the total transportation receipt done by the AO showed that there was doubt on the genuineness of the expenses claimed by the assessee in respect of transporting and discounting charges. It was the submission that the AO having not done the enquiry that he was supposed to do, the ld. Pr.CIT was right in directing proper enquiry to be done. Accordingly, ld. CIT-DR submitted that the order passed u/s.263 of the Act by the Pr.CIT is sustainabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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