TMI Blog2024 (4) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Pr.CIT Vs Shreeji Prints (Pvt.) Ltd. [ 2021 (9) TMI 108 - SUPREME COURT] held that when AO made enquiries in detail and accepted the genuineness of loan received by assessee, such view of AOwas a plausible view and cannot be considered to be erroneous or prejudicial to the interest of revenue. We also find force in the submission of assesse that language of Section 68 itself give discretion to the Assessing Officer about nature and source of explanation to the satisfaction of AO. We find that the AO on unsecured loan as well as on trade payables has taken a reasonable, plausible and legally sustainable view. Hon'ble Jurisdictional High Court in Aryan Arcade Ltd. [ 2018 (9) TMI 427 - GUJARAT HIGH COURT] held that merely because Commissioner held a different belief that would not permit him to take the order in revision, it if further held that when Assessing Officer made full enquiry, he made up his mind, the notice of revision is not valid. By following the aforesaid decisions of Superior Courts, the combination of this bench also took similar view in S.U. Enterprises [ 2022 (11) TMI 670 - ITAT SURAT] in our view, a mere observation of the PCIT that no proper details, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of assessment u/s. 143(3) of the I.T. Act is contrary to the fact of the case. 6. On the facts and in the circumstances of the case as well as law on the subject, the entire proceedings are bad-in-law and invalid as assessment order u/s. 143(3) of the Act for the same year were framed, wherein due inquiry was made. 7. On the facts and in the circumstances of the case as well as law on the subject, the learned Pr. Commissioner of Income Tax has grievously erred in setting aside the assessment order framed u/s. 143(3) of the I.T. Act without pointing out as to how the order is erroneous and prejudicial to interest of revenue. 8. It is therefore prayed that the above proposed proceedings may please be revoked as learned members of the tribunal may deem it proper. 9. Appellant craves liberty to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal. 2. Perusal of record shows that the impugned order was passed on 25/03/2022 and the present appeal is filed on 17/06/2023. The ld. AR of the assessee submits that there is a delay of 23 days in filing appeal before the Tribunal. Though, the order was passed on 25/03/2022. The appeal form was prepar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Account), the assessee has shown trade payable outstanding as on 31/03/2017 of Rs. 5.01 crores out of which sundry creditors of Rs. 4.21 crores and creditors for expenses of Rs. 80.53 lacs which was in respect of 234 parties. The Assessing Officer called the details regarding some parties by issuing notice on 16/04/2019 and vide reminder dated 24/06/2019. On issuing final show cause notice on 16/11/2019 wherein the assessee was asked to explain as to why the entire trade payable of Rs. 5.01 crores should not be added. The assessee in respect of such show cause notice, submitted list of parties from whom trade payable and details. The assessee furnished submission on ITBA Portal. The Assessing Officer further noted that neither the genuineness or creditworthiness of trade payable was examined nor any notice under Section 133(6) of the Act was issued by the Assessing Officer. The Assessing Officer accepted incomplete details. The assessment order is passed without proper verification or enquiry on the issue which should have been made during assessment which rendered assessment order erroneous in so far as prejudicial to the interest of revenue within meaning of Section 263 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of such observation, the ld. Pr.CIT by referring the explanation (2) of Section 263 of the Act held that the assessment order is passed without making enquiry or verification which should have been made. The ld. Pr.CIT set aside the assessment order and directed the Assessing Officer to pass fresh assessment order after taking into consideration the issues as may have been already considered together with the issue discussed by him. Aggrieved by the order of ld. Pr.CIT, the assessee has filed present appeal before this Tribunal. 6. We have heard the submissions of ld. AR of the assessee and the ld. CIT-DR for the revenue and have also perused the orders of the lower authorities carefully. The ld. AR of the assessee submits that the assessment order passed by the Assessing Officer on 11/12/2019 is neither erroneous nor prejudicial to the interest of revenue. The case of assessee was selected for scrutiny. The Assessing Officer conducted thorough investigation of fact by issuing various show cause notice and on satisfaction on various issues, accepted the explanation of assessee on the issue of share capital, unsecured loans as well as trade payables. The assessing officer made di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eiterated that he has filed confirmation of lenders as well as all the details of trade payables. To support his submissions, the ld. AR of the assessee has relied upon the following case laws: Pr. CIT Vs. Shreeji Prints (P.) Ltd [2021] 130 taxmann.com 294 (SC) Malabar Industries Co. Ltd. Vs. CIT [2000] 109 Taxman 66 (SC) Pr. CIT Vs. Shree Gayatri Associates [2019]106 Taxmann.com 31 (SC) CIT Vs. Nirav Modi [2017] 77 taxmann.com 78 (SC) (SC of India) CIT Vs. Nirma Chemicals Works (P.) Ltd. [2009] 182 Taxman 183 (Gujarat) CIT-III Vs. R.K. Construction Co. [2008] 175 Taxman 165 (Gujarat) Pr. CIT Vs. Harmony Yarns Pvt. Ltd. Tax Appeal No.282 of 2016 (HC of Gujarat) CIT Vs. Sunbeam Auto Ltd. (2009) 227 CTR 0133 (High Court of Delhi) CIT Vs. Vikas Polymers (2010) 236 CTR 0476 (High Court of Delhi) CIT Vs. Anil Kumar Sharma [2010] 194 taxman 504 (Delhi) (HC of Delhi) CIT, Central-III Vs. Nirav Modi [2016] 71 taxmann.com 272 (Bombay) CIT VS. Gabrial India Ltd. (1993) 114 CTR 0081 (HC MUMBAI) CIT VS. Fine Jewellery (India) Ltd. [2015] 55 taxmann.com 514 (Bom.) Munirabanu Imtiyaz Mahida Vs. Pr. CIT ITA No.73/SRT/2022 (ITAT, Surat) Ashraf Abdul Sattar Memon Vs. Pr. CIT ITA No.332/SRT/2023 (IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the suppliers. The ld. CIT-DR for the revenue submits that in the present case, audit objection was raised by internal audit party on both the issues. The internal auditor in their report clearly mentioned that no notice under Section 133(6) of the Act were issued by the Assessing Officer to cross verify the genuineness of transaction of unsecured loans. The ld. CIT-DR for the revenue submits that Explanation (2) to Section 263 of the Act was inserted by Finance Act, 2015 which is effective from 01/06/2015 wherein it was clarified that the order passed by the Assessing Officer shall be deemed to be erroneous and in so far as prejudicial to the interests of revenue, if in the opinion of revisional commissioner, the order is passed without making enquiries or verification, which should have been made. In the present case, the Assessing Officer failed to make requisite enquiry which was expected from the Assessing Officer. 9. In the rejoinder submission, the ld. AR of the assessee by refereeing the contents of audit objection and the contents of show cause notice under section 263, as recorded by the ld. Pr.CIT in his order would submit that the contents in the show cause notice was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT Vs Shreeji Prints (Pvt.) Ltd. held that when Assessing Officer made enquiries in detail and accepted the genuineness of loan received by assessee, such view of Assessing Officer was a plausible view and cannot be considered to be erroneous or prejudicial to the interest of revenue. We also find force in the submission of ld. AR of the assesse that language of Section 68 of the Act itself give discretion to the Assessing Officer about nature and source of explanation to the satisfaction of Assessing Officer. We find that the Assessing Officer on unsecured loan as well as on trade payables has taken a reasonable, plausible and legally sustainable view. We further find that the Hon'ble High Court in case of Pr.CIT Vs Shreeji Prints (Pvt.) Ltd.(supra),while referring the contents of decision of Tribunal, noted that language of audit objection and show cause notice under Section 263 of the Act is same, meaning thereby that show cause notice under Section 263 of the Act by the ld. Pr.CIT is without going through the assessment record and without exercising his own application of mind when the assessee has filed complete details of income tax return, balance sheet, P L account. 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der cannot be termed as erroneous unless it is not in accordance with law. If an assessing officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualize a case of substitution of the judgment of the Commissioner for that of the ITO, who passed the order, unless the decision is held to be erroneous. Cases may be visualized where the ITO while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the ITO. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the ITO has exercised the quasi-judicial power vested in hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the ITO could not be held to be 'erroneous' simply because in his order he did not make an elaborate discussion in that regard. Moreover, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous, he simply asked the ITO to re-examine the matter, which was not permissible. In CIT Vs Nirma Chemical Works (P) Ltd [(2009) 309 ITR 67], the Hon ble Gujarat High Court also held that when assessing officer after making due inquiries had adopted one of the view and granted partial relief, merely because Commissioner took a different view of the matter, it would not be sufficient to permit commissioner to exercise his powers under section 263. The Hon ble Court in para 22 of its order on the objection of the revenue that there is no discussion of the issue in the assessment order held that the contention on behalf of the revenue that the assessment order does not reflect any application of mind as to the eligibility or otherwise under section 80-I of the Act requires to be rejected. An assessment order cannot incorporate reasons for making /granting a claim of dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 263 had specifically mentioned that the entire matter was scrutinised and accepted while passing the assessment order. Our attention was also drawn to annexure 'D'. A submission made by the assessee to the Income-tax Officer, Surat, dated 18-10-1976, regarding the assessment year 1974-75 giving detailed chronological data of the constitution of the firm on November 11, 1968, induction of four more partners on 7-11-1972, the creation of goodwill in the books of account of the firm by debiting the goodwill account and crediting the old partners' capital accounts in their profit sharing ratio on that date, formation of a private limited company in the name of Rayon Silk Mills (P.) Ltd., and its induction into the firm as partner by the deed of partnership dated 27-10-1973, and the dissolution of the partnership firm on 23-2-1974, leaving the private limited company as a sole proprietor thereof and the valuation of the business at the book value as on that date. After giving the chronological sequence of events, the assessee also contended in his submission before the Income-tax Officer that there was no actual transfer of any asset inasmuch as when a partner is ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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