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TMI Blog2015 (11) TMI 537X X X X Extracts X X X X X X X X Extracts X X X X ..... ls called for along with explanations in writing as well as all confirmations of the sundry creditors as well as lenders stating their name, address and PAN and also contra accounts along with the balance sheet and income tax returns of lenders. In case of TDS credit given to assessee AO has made inquiries from third parties. Further ld. CIT is under belief that sundry creditors and lenders remains unconfirmed which fact is not borne out from submission made by assessee and not controverted by revenue. Therefore order passed after such verification cannot be termed as erroneous. - Decided in favour of assessee. - ITA No. 2056/Del/2013 - - - Dated:- 8-10-2015 - Sh. G. C. Gupta, V. P. And Sh. Prashant Maharishi, AM For the Petitioner : Sh. K. Sampath , Advt., Sh. V.K. Goel, Adv For the Respondent : Sh. O. P. Modi, CIT, DR ORDER Per Prashant Maharishi, AM: 01. This appeal, by the assessee, is directed against the order dated 25/03/2013 u/s 263 of the Income-tax Act, 1961, passed by the Commissioner of Income Tax ,Meerut for A.Y. 2008-09. 02. Brief facts of the case is that Assessee Company is engaged in the business of repairs of transformers and also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... several grounds of appeal originally but subsequently raised an additional ground that the order passed by CIT u/s 263 of the act is arbitrary, erroneous and illegal and must be quashed. Ld.DR did not express any serious reservation against admission of this ground of appeal. As this ground appeal is mainly reiteration of many grounds of appeal raised in original appeal memo, in the interest of justice same is admitted. Further additional ground raised covers the main issue, only that ground is adjudicated. 06. Now we proceed to examine each of the issues raised in order u/s 263 and contention of rival parties. i. Lower Gross and net profit shown by assessee On this Ld. AR submitted that during the course of assessment proceedings u/s 143(3), AO issued notice dated 10th May, 2010 wherein AO raised query vide para no. 8 for gross profit and net profit rate for last 3 years and reasons for decrease therein. In response to that assessee submitted a comparative chart of the gross profit for last three years. According to that chart the assessee has disclosed from AY 2005-06 to AY 2008-09 gross profit earned, net profit thereon and the percentage thereof. The NP percentage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, 2010 of AO which was complied with by letter dated 20th May, 2010 vide para no. 7. As per chart it was also mentioned that most of the loans are old loans and carried over from earlier years. Hence, contention of Ld. CIT that these creditors remain unconfirmed is incorrect. Further when the transactions are supported by the balance sheet of the lender, their identity, creditworthiness and genuineness of the transactions is established. iv. Non-deduction of tax at sources on interest Ld. AR submitted that in para no. 9 of letter dated 10th May, 2010 the details of TDS were asked for and same were submitted by letter dated 20th May, 2010. Assessee submitted form no. 27A along with the provisional receipts issued for filing of TDS return along with the copy of the challan of tax deduction at source of ₹ 48,249/- on interest payment made on 28th May, 2008. Therefore, the issue of deduction tax at source on interest payment is examined by AO. v. Estimation of Turnover based on TDS deducted of assesseee In this regard AR of the appellant submitted that AOhas written a letter to almost all the parties who has deducted taxes at source on payments made to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on on those issues. In the case before us there were specific issues covered in notice and in response to that assessee has made detailed submission producing all the relevant details called for. Ld. CIT simply stated that AO had not made proper inquiry but from the order of Ld. CIT it is not mentioned that what inquiry other than already made by AO is required to be made. Facts relating to each of the above issues and our findings thereon is discussed hereunder :- (a) Net profit working of the assessee AO has raised a query during the course of assessment proceedings about the gross profit working as well as the net profit working of the assessee with respect to early arrears and reasons if there is a decrees in that. In response to that AO gave detailed chart for assessment year 2005-06 till assessment year 2008-09. Further all the orders concerning those years were also submitted wherein on identical facts the books results of the assessee was accepted either during the assessment proceedings or in appellant proceedings. For assessment orders for those years are passed u/s 143(3) of the act. The past history of the assessee also shows that in none of the years books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese new loans assessee has submitted confirmation of the parties stating their name, address permanent account number as well as the copy of ITR along with balance sheet. The AO on specific inquiry received these details and accepted that creditworthiness in view of copies of the balance sheet submitted by them. In view of this the finding of Ld. CIT that they remain totally unconfirmed is totally unfounded. Looking to the totality of the facts, we are of the view that the order of the assessing officer is not erroneous on this count. (c) TDS made on the interest Regarding tax deduction at source specific inquiry was made and assessee has submitted the TDS returns filed by the assessee along with the copies of the challans. Therefore, these details have already been verified on payment of interest of ₹ 4,69,432/-. The CIT does not speak about what further inquiry is to be made and what inquiry AO has failed to make. In absence of any such direction it cannot be said that AO has made even in proper inquiries on this count, therefore, the order of the AO cannot be found to be erroneous on this count. (d) Gross receipt based on TDS certificates In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t order, which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the Assessing Officer had not applied his mind on the issue. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between 'lack of inquiry' and 'inadequate inquiry'. If there was any inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has a different opinion in the matter. It is only in cases of 'lack of inquiry' that such a course of action would be open. In Gabriel India Ltd. [1993] 203 ITR 108 (Bom), law on this aspect was discussed in the following manner (page 113): ' . . . From ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds, 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 Incometax Officer. 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 Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be formed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion . . . There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed . . . We may now examine the facts of the present case in the light of the powers of the Commissioner set out above. The Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation in that reg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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