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2022 (4) TMI 1175 - AT - Income TaxRevision u/s 263 - no proof of identity, creditworthiness or genuineness has been furnished from the loan taken - CIT observed that the AO has accepted the return of income of the assessee without calling for and verifying the bank statements and the payments made to Karvy Comtrade ltd., towards loss incurred was also not verified and the genuineness of loan was also not verified - HELD THAT - From the copies of notice u/s. 142(1) of the Act, clearly reveals that the AO has made enquiries and called upon bank statement including Fixed Deposits from the assessee and the assessee complied first notice by way of filing reply dated 18.10.2018. We also observe that since the assessee undertook high volume of trading in commodity future of MCX Platform, the source of finance stated in the audited account placed were also placed before the AO, in our considered view, it is not a case of inadequate enquiry. After observing above factual position of the present case. We are also of considered view that in a case of no enquiry, pr. CIT is empowered to direct the AO to make enquiries and pass reassessment orders but in a case where the AO has made enquiry by issuing notice, taking on record compliance of notice and then took a plausible view, and the Pr. CIT is not agreeing with the view taken by the AO, then he has to conduct enquiry himself. He cannot direct the AO to redo the assessment. From the copy of confirmation of account available clearly reveals that the creditor Shri Mundra sent confirmation to the assessee showing opening balance as on 1.4.2015 at ₹ 14,50,000/- and same amount shown as on 31.3.2016, therefore, there was no new transaction during the relevant financial period with these creditors, copy of pass book of Brij Mohan Mundra with PNB Account No. 45852 clearly reveals that the assessee received loan during the financial year 2014-15, which was remained unpaid at the end of that financial year and brought forward to the present financial year 2015-16 and again carry forward to the next financial year. Therefore, copy of this statement clearly reveals that the amount received from this creditor has been credited to the account of the assessee and immediately refunded and, therefore, there was no cash transaction or cash deposit. Thus inquiries were certainly conducted by the Assessing Officer. It is not a case of no inquiry. The order under Section 263 itself records that the Pr. CIT felt that the inquiries were not sufficient and further inquiries or details should have been called. Therefore, we set aside the order of the ld. Pr. CIT and quash the same. - Appeal of assessee allowed.
Issues Involved:
1. Legality of the order passed by the Principal Commissioner of Income Tax (Pr. CIT) under Section 263 of the Income Tax Act, 1961. 2. Whether the original assessment order under Section 143(3) was erroneous and prejudicial to the interest of the revenue. 3. Adequacy of the Assessing Officer's (AO) verification and inquiry during the original assessment proceedings. 4. Jurisdiction of the Pr. CIT to direct the AO to redo the assessment. Issue-wise Detailed Analysis: 1. Legality of the Order Passed by Pr. CIT Under Section 263: The assessee contended that the order passed by the Pr. CIT under Section 263 was "excessive, arbitrary, and bad in law." The Pr. CIT invoked Section 263, asserting that the AO's order was erroneous and prejudicial to the interest of the revenue due to lack of proper verification of bank statements, payments to Karvy Comtrade Ltd., and the genuineness of loans amounting to ?34,50,000. The assessee argued that the Pr. CIT's directive to redo the assessment was based on a change of opinion, which is not permissible under Section 263. 2. Whether the Original Assessment Order Under Section 143(3) Was Erroneous and Prejudicial to the Interest of the Revenue: The Pr. CIT observed that the AO accepted the assessee's return without verifying the bank statements or the genuineness of the loans. The Pr. CIT cited several judicial precedents, including Rampyari Devi Sarogi (67 ITR 84 SC) and Malabar Industrial Co Ltd. (243 ITR 83 SC), to support the position that lack of inquiry or verification by the AO constitutes an erroneous order prejudicial to the revenue. The Pr. CIT emphasized that the AO's failure to conduct due diligence and necessary verification rendered the assessment order erroneous. 3. Adequacy of the AO's Verification and Inquiry During the Original Assessment Proceedings: The assessee argued that all relevant details, including bank statements, commodity trading accounts, and sources of investment, were furnished during the original assessment proceedings. The AO had verified these details and passed the assessment order under Section 143(3). The assessee provided documentary evidence, such as account confirmations, bank statements, and loan confirmations, to demonstrate that the AO had conducted a detailed and proper inquiry. The assessee cited various judicial decisions to support the contention that the AO's inquiry was adequate and the Pr. CIT's directive was unwarranted. 4. Jurisdiction of the Pr. CIT to Direct the AO to Redo the Assessment: The assessee contended that the Pr. CIT should have conducted the inquiry himself if he believed the AO's inquiry was inadequate. The Pr. CIT cannot merely direct the AO to redo the assessment without making further inquiries. The assessee cited the ITAT Cuttack decision in Sangram Keshari Samantaray vs. Pr. CIT and other relevant cases to argue that the Pr. CIT's directive was not sustainable. The Tribunal observed that the AO had made inquiries and taken a plausible view based on the documentary evidence provided by the assessee. The Tribunal noted that the Pr. CIT did not conduct any further inquiry himself but simply directed the AO to redo the assessment. Conclusion: The Tribunal concluded that the AO had conducted adequate inquiries and verification during the original assessment proceedings. The Pr. CIT's directive to redo the assessment was based on a change of opinion and not on any substantial lack of inquiry. The Tribunal set aside the order of the Pr. CIT and quashed the same, allowing the appeal of the assessee. The Tribunal emphasized that in cases where the AO has made inquiries and taken a plausible view, the Pr. CIT must conduct further inquiries himself rather than merely directing the AO to redo the assessment.
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