TMI Blog2023 (11) TMI 755X X X X Extracts X X X X X X X X Extracts X X X X ..... to be conducted regarding sundry creditors. There is no reason given by him as to why the sundry creditors reflected by the assessee needed to be doubted. There is no financial analysis done by the ld.Pr.CIT leading to create a doubt regarding existence of this quantum of sundry creditors. Except for stating that huge sundry creditors were outstanding as at the end of the year, there is no basis given for stating so. There is no comparison of the turnover of the assessee or of the purchases made by the assessee with the outstanding creditors; there is no finding by the ld.CIT(A) that considering low volume of operation conducted by the assessee, the extent of sundry creditors outstanding is too huge so as to cast a doubt on the existence of such outstanding sundry creditors as at the end of the year. No exercise worth its name has been carried out by the ld.Pr.CIT so as to justify the need for further inquiry to be done regarding the sundry creditors. Hon ble Delhi High Court in the case of CIT vs Sunbeam Auto Ltd. [ 2009 (9) TMI 633 - DELHI HIGH COURT] while dealing with issue of adequacy of inquiry by AO for the purposes of section 263 has held that inadequate inquiry alone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Principal Commissioner of Income Tax, Central Ahmedabad has wrongly mentioned the facts in body of order and set aside the Speaking order passed by Assessing Officer is treated as erroneous and prejudicial to interest of the revenue within the meaning of section 263 of the I T Act, it is totally wrong, unwarranted, unjustified and bad in law. Your applicant reserves the right in addition or alteration in the grounds of appeal at the time of hearing. 3. During the course of oral arguments raised before us, the ld.counsel for the assessee challenged the order passed by the Ld.Pr.CIT under section 263 of the Act on two counts, viz. i) That it was passed without giving fair opportunity of hearing to the assessee, and ii) That even on merits, there was no error in the order of the AO to validate any revision in the same. 4. On the aspect of denial of fair opportunity of hearing, the contention of the ld.counsel for the assessee was that only two notices were issued to the assessee in the proceedings conducted by the ld.Pr.CIT under section 263 of the Act, and both notices pertained to the period when COVID-19 pandemic was at its peak; making it virtually impossibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that having regard to the statutory limit within which appropriate authority has to Act and his failure to act in conformity with the principles of natural justice, the matter cannot be remanded for reconsideration and has to be set aside. Section 263 of the Act also places a limitation for passing orders under the section in sub clause (2) to section 263 of the Act, being within two years from the en d of the financial year in which the order sought to be revised is passed. In the present case the order u/s 263 of the Act being passed without giving opportunity of hearing to the assessee , the same is not sustainable and needs to be set aside. 8. Again in the case of CIT vs Amitabh Bachchan in Civil Appeal No. 5009 5010 of 2016 dt 11th May 2016, while dealing with the provisions of section 263 of the Act the Hon ble Court held that section 263 of the Act contemplates due opportunity of hearing being afforded to the assessee, absence of which would make the order passed fragile. Relevant findings of the Hon ble Supreme court are as under: What is contemplated by Section 263, is an opportunity of hearing to be afforded to the assessee. Failure to give such an opportunity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance sheet as at the end of the impugned year i.e. as on 31.3.2015 in a specific format. Our attention was drawn to relevant notice placed before us at PB Page No.10. Thereafter, he pointed out that the assessee submitted response to the same vide his letter dated 27.6.2017 giving complete details of all the sundry creditors including their names, addresses, PAN and complete details of transaction undertaken with them reflecting opening balance and debit and credit transactions in their accounts during the years, as also their closing transaction. Our attention was drawn to the relevant documents in this regard placed before us at Page No.13-16 of the PB. He contended that the assessee had also stated that bank account of these parties could not be submitted because the creditors did not provide the copies of their bank statement. The response so filed by the assessee to the AO was pointed out to us placed at PB No.21. The ld.counsel for the assessee contended that during the assessment proceedings, it had been explained to the AO, the assessee is a government contractor and all books of accounts and vouchers had been furnished during the assessment proceedings, who had gone th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is too huge so as to cast a doubt on the existence of such outstanding sundry creditors as at the end of the year. No exercise worth its name has been carried out by the ld.Pr.CIT so as to justify the need for further inquiry to be done regarding the sundry creditors. 14. The Hon ble Delhi High Court in the case of CIT vs Sunbeam Auto Ltd. (Delhi), [2010] 189 Taxman 436 (Delhi) while dealing with issue of adequacy of inquiry by AO for the purposes of section 263 of the Act has held that inadequate inquiry alone is not sufficient for holding assessment order erroneous unless it is found by the Ld.CIT /PCIT to have resulted in error causing prejudice to the Revenue. Relevant para 12 of the order reads as under: 12. We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the Commissioner of Income-tax under section 263 of the Income-tax Act. As noted above, the submission of learned counsel for the revenue was that while passing the assessment order, the Assessing Officer did not consider this aspect specifically whether the expenditure in q ..... X X X X Extracts X X X X X X X X Extracts X X X X
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