TMI Blog2022 (10) TMI 985X X X X Extracts X X X X X X X X Extracts X X X X ..... nuine and whether for brokerage expenses services were rendered or not. PCIT did not find single instances despite having all the information available with him, which is even remotely suggesting and supporting the reasons for which order under Section 263 of the Act was passed. If the order has been passed without making enquiries or verification which are reasonable and prudent officer should have carried out, in that case no doubt the order passed by the learned Assessing Officer becomes erroneous. However, the learned PCIT should have shown that what are the further enquiries or verification should have been made by AO which he has failed to do. The revisionary authority should be in a position to show that failure to make the enquiry in a particular fashion, which should have been made by the man of reasonable prudence, and learned Assessing Officer has failed to do so. This could have been shown by also looking at the past assessment history of the assessee. In fact the assessee has shown that in earlier assessment year passed under scrutiny assessment did not result into any addition. There is nothing in the revisionary order to show that the claim of deduction of expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enge the validity and findings of the order of the PCIT. 04. The fact shows that assessee is an individual engaged in the business of trading in iron and steel in a proprietary concern of M/s Siddhi Enterprises. Assessee filed his return of income on 1st November, 2017 at ₹1,34,36,914/-. The return was picked up for scrutiny and assessment order under Section 143(3) of the Act was passed on 10thDecember 2019 at the same figure. 05. The learned PCIT, on examination of the record issued notice under Section 263 of the Act on 4thMarch2022because the learned Assessing Officer has not verified the Sundry Creditors of ₹9.35 crores, other expenses of ₹79,53 lacs, brokerage paid of ₹1.36 crores and unsecured loan of ₹7.45 crores. The learned PCIT is of the view that as the learned Assessing Officer has not verified these aspects while passing the assessment order same as erroneous and prejudicial to the interest of the Revenue under Section 263 of the Act. 06. The Assessee made written submission on 9th March, 2022. The claim of the assessee is that the learned Assessing Officer has examined all the details, applied his mind, did not make any adjustme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 010. The learned Authorized Representative referred to the paper book of 386 pages. He first referred to page no. 323 of the Paper Book which is a show cause notice dated 4.3.2022 under Section 263 of the Act and referred to page no. 325 to page no. 346 which is also reply of the assessee before the PCIT. Coming to the assessment proceedings, he referred to the return of income and the annual accounts of the assessee and thereafter referred to notice under Section 142(1) of the Act issued on 3rd June, 2019 by the learned Assessing Officer. He referred to paragraph no.4 wherein the details of loans and interest taken in a tabular form was asked for. As per Para no.6, the details of sundry creditors and debtors were asked for along with paragraph no. 13 where Party wise details of purchase and sales along with complete postal address of the party above ₹10 lacs was asked for. He further referred to paragraph no.14 where the details of major heads of expenditure along with the TDS thereon were called for. He referred to page no. 41 where letter dated 13thNovember 2019 was submitted before the learned Assessing Officer. On page no. 60 there was part compliance and therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cally referred to page no. 381, wherein the report of the learned Assessing Officer dated 16thMarch 2022 is placed in the paper book. He specifically stated that no confirmation letters and bank statement are found in the scrutiny folder and in the ITBA system of the relevant parties to whom interest has been paid and therefore, the learned PCIT is correct in holding that the order passed by the learned Assessing Officer is erroneous and prejudicial to the interest of the Revenue. 012. We have carefully considered the rival contentions and perused the orders of the lower authorities. The assessment order in the present case was passed on the basis of inquiries mentioned in notice under Section 142(1) of the Act issued by the learned Assessing Officer on 3rd June, 2019 wherein the return filed by the assessee on 1st November, 2017 was picked up for scrutiny. The return was accompanied by the audited accounts and tax audit reports. By this notice, the learned Assessing Officer vide Para no.4 asked for the details of loan taken and received and interest expenses paid and credited in a particular format along with loan confirmation in respect of new loan, old loans and squared up lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee complied with giving the list of such Sundry Debtors and Sundry Creditors along with their names and address as well as the bank statement of the Assessee wherever the payments are made and receipts are shown. Similarly, with respect to all the expenditure, the details are submitted before the learned Assessing Officer. 013. The details submitted and examined by the learned Assessing Officer resulted into acceptance of the return income by the learned Assessing Officer for making an assessment. The learned CIT (A) in Para No.4.4 to 4.7 has found fault with the same for following reasons: - 4.4 As far as unsecured loan of Rs. 7.45 crores and interest of Rs. 1.46 crore claimed to have been paid on such loans is concerned, it is undisputed fact that the assessee had not furnished even confirmatory letters of the parties to whom interest of Rs. 1.46 crore was claimed to have been paid. The Assessing Officer has accepted the claim of the assessee without examining the correctness and genuineness of the claim of the assessee. The Assessing Officer before allowing the deduction for interest paid of Rs. 1.46 crore, should have examined the genuineness of the payment and also whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, which should have been made as per law. Only reason for holding the order of the learned Assessing Officer erroneous is that interest was not examined if same were utilized for the purpose of the business, the expenses were correct or genuine and whether for brokerage expenses services were rendered or not. The learned PCIT did not find single instances despite having all the information available with him, which is even remotely suggesting and supporting the reasons for which order under Section 263 of the Act was passed. 015. It is true that if the order has been passed without making enquiries or verification which are reasonable and prudent officer should have carried out, in that case no doubt the order passed by the learned Assessing Officer becomes erroneous. However, the learned PCIT should have shown that what are the further enquiries or verification should have been made by the learned Assessing Officer which he has failed to do. The revisionary authority should be in a position to show that failure to make the enquiry in a particular fashion, which should have been made by the man of reasonable prudence, and learned Assessing Officer has failed to do so. This cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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