2015 (11) TMI 267 - AT - Income Tax

Revision u/s 263 - issue of share application money - Held that - With regard to the issue of share application money, we find that the amount of ₹ 52,48,000/- taken by the CIT is a clear mistake and it represents the opening balance as on 01.04.2007 and, in fact, the addition during the year was of ₹ 2.53 lakhs. The assessee has filed the required details and the order of the learned CIT itself is erroneous on this issue. In these facts of the case, we hold that the learned CIT was not justified in invoking the provisions of Section 263 of the Act on the issue of trade creditors and share application money and the same is cancelled. Claim of expenses which was accepted without any evidence or verification - Held that - Complete details of the expenses over ₹ 1 lakh were asked by the Assessing Officer and the same were submitted by the assessee vide reply dated 25.10.2010 and copies of accounts of various heads of expenses were submitted and the supporting vouchers and bills, receipts etc. were also summoned and produced by the assessee on 25.10.2010 and on 28.10.2010. The accounts of the assessee were audited by the Chartered Accountant. We find that the order of learned CIT u/s 263 on this issue is based on mere suspicion and there is no material brought on record to suggest that the order of the Assessing Officer was erroneous or prejudicial to the interests of the Revenue. Accordingly, we hold that there was no justification for the learned CIT to pass order u/s 263 on this issue, which is cancelled accordingly. The grounds of appeal of the assessee are allowed. - Decided in favour of assessee.

Summary

Issues involved:
1. Jurisdiction of CIT under Section 263 of the Income-tax Act, 1961.
2. Trade creditors and share application money acceptance without proper enquiry.
3. Discrepancy in TDS certificate and form 26AS.
4. Acceptance of expenses without evidence or verification.

Detailed Analysis:
1. The appeal challenged the order of the Commissioner of Income-tax (CIT) under Section 263 of the Income-tax Act, 1961. The CIT exercised jurisdiction over three issues: trade creditors, TDS discrepancy, and expenses. The CIT issued a notice citing concerns regarding trade creditors, TDS, and expenses without proper verification.
2. Regarding trade creditors and share application money, the Assessing Officer had conducted inquiries, requested details, and received confirmations from the assessee. The CIT disputed the assessment order, alleging errors. However, the Tribunal found that the Assessing Officer's actions were appropriate, and the CIT's conclusions were unfounded. The share application money discrepancy was clarified, and the CIT's order was deemed erroneous.
3. The second issue concerning the TDS certificate and form 26AS discrepancy was not pressed by the assessee as the Assessing Officer had already accepted the assessee's version in a previous order under Section 143(3). Therefore, this issue did not require further consideration.
4. The third issue raised by the CIT pertained to expenses accepted without proper evidence. The assessee submitted detailed expenses exceeding Rs. 1 lakh, including supporting documents. The Assessing Officer had requested and received these details, which were audited by a Chartered Accountant. The Tribunal found the CIT's order based on suspicion without substantial evidence, leading to the cancellation of the CIT's decision under Section 263.

In conclusion, the Tribunal allowed the appeal, ruling in favor of the assessee and overturning the CIT's orders on all three issues. The Tribunal found that the Assessing Officer had conducted proper inquiries and verifications, and the CIT's intervention was deemed unwarranted and erroneous.