TMI Blog2022 (7) TMI 1082X X X X Extracts X X X X X X X X Extracts X X X X ..... length price. As in the present case, there are no transactions with the associated enterprises, and therefore on this ground of reference to TPO, valid jurisdiction u/s 263 cannot be invoked. Verification of the sundry creditors - In the order u/s 263, nothing adverse has been pointed out in relation to any of the creditors or any irregularities in the account. Simply on the basis of suspicion the order cannot be said to be erroneous when proper enquiry was duly made. It the view taken by the AO after verification is a plausible and permissible view, the CIT cannot exercise the powers under s. 263. Even from the impunged order it is seen that various past assessments had been also made under scrutiny and some of the creditors which are regular creditors, nothing adverse had been stated in relation to these creditors. Even from Glory Exports confirmation from the said party was submitted during the assessment. In the present issue the AO has made proper enquiry on this issue and it is not denied that notices u/s 133(6) had been issued to certain creditors, the nature of assessment order does not bring the case of the revenue within the purview of s.263 and cannot be sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 01.03.2021 under section 263 of the Act to set aside the order of the Assistant Commissioner of Income Tax, Cricle-2, Ajmer (herein after referred to as the Assessing officer) by holding that the order of the Assessing Officer dated 20.12.2018 is both erroneous and prejudicial to the interest of Revenue, and giving directions to the Assessing Officer to reframe the assessment order on the issues mentioned in the order dated 01.03.2021. The appellants contend that the Pr.CIT has not appreciated the facts of the case in its entirety; the impunged order under section 263 is bad in law in as much as the assessment order of the Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue. The appellant further contends that on the facts and in the circumstances of the case and in law, the Pr. CIT ought not to have reached the aforesaid conclusion in as much as the Assessing Officer, after being satisfied on the basis of documentary evidences filed, framed the order dated 20.12.2018 making an adhoc disallowance of office expenses Rs. 50,000. The appellant further, contend that the observation of the Pr. CIT that As directed in preceding par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y examined. The reasons for cass were as under : a. Gross total income is less than the value of foreign remittance sent (Form 15CA and total income in Part BTI of ITR). b. High ratio of refund to TDS. c. Large outward remittances to a non resident not being a company or to a foreign company (Form 15CA). d. Large amount of Sundry Creditors (Part 1 of BS of ITR). 6. The objection of the PCIT is that the sundry creditors are very high as compared to the amount of purchases made and the sales being made by the appellant. The PCIT observed that the total turnover was Rs. 83.63 crores against which purchases were 69.88 crores and opening stock was Rs. 13.65 crores which raised doubts about the sundry creditors which was Rs. 218.30 crores. The PCIT observed that in the submissions made by the appellant before him, it was contended that during assessment details of all sundry creditors along with their names and addresses and confirmation was submitted, which was examined by AO. As per the assessee in the list of sundry creditors there were some business advances also which were grouped under sundry creditors, but were unsecured loans and inadvertently grouped i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the same has nothing to do with the remittances sent. It was contended that all imports of precious metals and diamonds are verifiable with invoices payment of duty and remittances being sent to the suppliers. It was pointed out that the details of all the foreign remittances made submitted to the AO during assessment and were also annexed in the paper book. As regards high ratio of TDS and refund being claimed, the appellant submitted that the TDS on various payments are statutorily required to be deducted by the payer as per requirement of the Act, and is not based upon the income of the appellant. In relation to the outward remittances to non resident and foreign companies, it was mainly for purchase of diamonds imported from foreign countries mainly Belgium, Russia, Dubai, Hongkong, Israil etc. For the Imports of goods assessee had to made the payments which caused outward remittance. All the purchases/imports made by the assessee company are duly certified by the custom department thereafter only the payments are made. It was submitted that the assessee was not liable to furnish Form 15CA to the bank as per press release of CBDT and rule 37BB, he had however also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns with the sundry Creditors were regular and liability of them were alive as on the balance sheet date. It is submitted that all the reasons mentioned in the CASS were thoroughly examined by the Ld. AO and only after satisfying with the details and explanation assessment order was made. Therefore saying that the CASS reasons were not examined by the AO is factually wrong and on such ground of creditors and for cass reasons, the order passed by AO cannot be said to be erroneous or prejudicial to the interest of the revenue. 12. The next objection of the PCIT is that the commission expenses claimed had not been examined. It is stated that the commission expenses had been claimed at Rs. 26,91,041/- which has not been enquired into. No rent has been claimed for Mumbai and Surat or Beawar office, however certain expenses had been claimed at Surat and Mumbai. In relation to the payment of commission expenses the contention of the appellant is that the details of the same was furnished to the AO, which is also there in the paper book submitted by the department at pages 38 to 88 containing all supporting vouchers and bills. Further copy of their voucher receipts together with their re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not pressed, and therefore the order of the ld. AO had merged with the order of CIT(A), and therefore the PCIT will not have any jurisdiction over such issue. Further it is pointed out that the PCIT himself has dropped this issue in his order u/s 263 and has observed that the disallowance be not disturbed. 16. The appellant had also relied upon certain judicial decisions to support his contention that the assessment was made after due enquiry and in the order the PCIT has not pointed out any error in the decision taken by the AO and the said order cannot be said to be erroneous or prejudicial to the interest of revenue to invoke section 263 and requested to quash the order. 17. During the course of hearing, the ld. DR strongly relied on the orders of the authorities below. 18. We have heard both the parties and perused the materials available on record. As regards the first issue raised by the PCIT with regard to reference to TPO, we find from the order u/s 263 of the PCIT at page 6 in para 4 of his order in which he has observed as under : 4. In response the assessee has filed submissions dated 11.2.2021 though e filing portal in respect of the issues as discussed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f case was not on TP risk parameters, and there were transactions with associated enterprises, and still the reference was not made to TPO, the proceedings u/s 263 were found to be not justified. In the present case, there are no transactions with the associated enterprises, and therefore on this ground of reference to TPO, valid jurisdiction u/s 263 cannot be invoked. 20. The issue relating to the verification of the sundry creditors, it is seen that the AO during the course of assessment proceedings had raised query and the appellant had submitted the details and confirmation of the creditors. The AO during the course of assessment proceedings had also issued notices u/s 133(6) to some of the creditors on random basis, and was satisfied by the same and no adverse inference was drawn. It cannot be said that proper enquiry was not made in relation to the same. The complete address of the creditors and their PAN details were also submitted during the assessment proceedings. In the order u/s 263, nothing adverse has been pointed out in relation to any of the creditors or any irregularities in the account. Simply on the basis of suspicion the order cannot be said to be erroneous wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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