2018 (9) TMI 782 - AT - Income Tax

Revision u/s 263 - Contention of ld. AR is that the AO has made an enquiry and the Pr.CIT again called for the necessity of enquiry in respect of sundry creditors and also the order passed by the Pr. CIT does not satisfy twin conditions i.e. erroneous or prejudicial to the interest of Revenue - Held that - Pr.CIT found the confirmations submitted in the assessment proceedings before the AO of sundry creditors are not satisfactory and the AO has not examined and enquired regarding sundry creditors to the extent of 17, 38, 511/- and has not recorded his findings in the assessment order. AO has followed the directions of Pr. CIT on the disputed issue of verification of sundry creditors and the ld. AR of the assessee has participated in the assessment proceedings and filed the details and also information was called for u/s.133(6) of the Act in respect of sundry creditors and finally the AO has passed the order u/s.143(3) r.w.s 263. Therefore we are of the opinion that the assessee has participated in the assessment proceedings and as envisaged by the ld. AR the assessee has filed an appeal against the order of AO passed u/s.143(3)/263 of the Act. Pr.CIT has dealt on the disputed issue and considered the judicial decision and passed a reasoned order. - Decided against the assessee.

Summary

Issues:
1. Condonation of delay in filing the appeal.
2. Validity of the order passed by Pr.CIT u/s.263 of the Act.
3. Assessment proceedings conducted by the AO.
4. Jurisdiction of Pr.CIT to revise the assessment order.
5. Compliance with the directions of Pr.CIT in the assessment proceedings.
6. Applicability of judicial decisions in the case.
7. Upholding or dismissing the appeal filed by the assessee.

Condonation of Delay:
The appeal filed by the assessee against the order of the Pr.CIT, Cuttack, was delayed by 125 days. The AR of the assessee submitted an application for condonation of delay, which was accepted as the LD. DR did not object. The delay was condoned, and the appeal was heard on merits.

Validity of Pr.CIT's Order:
The Pr.CIT found the AO's order to be erroneous and prejudicial to the revenue's interest. After considering submissions and findings, the Pr.CIT set aside the assessment order for fresh adjudication. The assessee appealed against this decision, arguing that the order was contrary to law and facts. The Pr.CIT's order was upheld as it was reasoned and considered judicial decisions.

Assessment Proceedings:
The AO conducted assessment proceedings under section 143(3) of the Act, making various disallowances. The Pr.CIT found discrepancies in the assessment order and directed a fresh adjudication. The AO's failure to adequately verify sundry creditors led to the revision of the assessment order.

Jurisdiction of Pr.CIT:
The Pr.CIT's jurisdiction to revise the assessment order was questioned by the assessee. However, the Pr.CIT's decision was supported by judicial precedents and the requirement for proper inquiry by the AO. The AO was directed to reframe the assessment after proper verification.

Compliance with Pr.CIT's Directions:
The AO followed the Pr.CIT's directions regarding the verification of sundry creditors. The AR of the assessee participated in the proceedings, providing necessary details. The AO's subsequent order restricted the addition of sundry creditors based on the evidence submitted.

Applicability of Judicial Decisions:
The AR cited judicial decisions to support the assessee's position. However, the Pr.CIT's decision was based on relevant legal principles and the requirement for thorough inquiry by the AO. The Pr.CIT's order was upheld considering the facts and judicial decisions.

Upholding or Dismissing the Appeal:
After considering the facts, circumstances, and judicial decisions, the Tribunal upheld the Pr.CIT's order. The appeal filed by the assessee was dismissed, and the Pr.CIT's decision was deemed reasoned and valid.

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