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TMI Blog2016 (2) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... s a lack of enquiry by the AO. In the previous year’s also, the department has been accepting books of accounts of the assessee, therefore, without pointing out any defect in the books of accounts just because there are certain inflated nature of purchases on account of cash payment cannot be the basis for rejection of books of accounts u/s 145 of the Act and moreover GP rate was more than the previous year. So, we do find merit in the appeal of the assessee and accordingly, the impugned order passed by the ld. CIT is set aside and the assessment order framed by the AO is restored. - Decided in favour of assessee - ITA No.2837/Del./2013 - - - Dated:- 11-1-2016 - SHRI A.T. VARKEY, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Assessee : Shri K. Sampath, Advocate For The Revenue : Ms. Nandita Kanchan, CIT DR ORDER PER A.T. VARKEY, JUDICIAL MEMBER : This appeal, at the instance of the assessee, is directed against the order of the Commissioner of Income-tax, Meerut dated 15.03.2013 for the assessment year 2008-09. 2. The assessee has taken the following grounds of appeal :- 1. That the Worthy Commissioner of Income Tax has err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he month of April, 2007 to March, 2008 but had deposited the employees' share of PF of ₹ 9397/- for the month of February, 2008 on 24.03.2008 which was late i.e. deposited after the due date as specified in the concerned Act. Therefore, in view of the provisions of section 36(l)(va) read with section 2(24)(x) of the Act, the AO disallowed the said amount of ₹ 9,397/- on account of PF deposited late after due date and added to the total income of the assessee. Accordingly, the assessment was completed u/s 143(3) on the total income at Nil. 4. The CIT, Meerut, after examining the records, found that the assessment was done without proper enquiry and accordingly, notice u/s 263 of the Act was issued on the following points :- (i) In the preceding year and subsequent year, addition on account of bogus liabilities under the head of Sundry Creditors was made as follows:- AY 2007-08 ₹ 2,65,50,214/- AY 2009-10 Rs.1,90,65,636/- (ii) However, no exercise has been done by the A.O. to establish the genuineness of liability on account of sundry creditors amounting to ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt and not in the P L A/c. Such amount of refund was claimed not to be included in the income of the assessee because, apart from the above fact, a large part of that amount was claimed by a third party by filing a suit and also a writ petition and the same were pending. The officer accepted the claim of the assessee and did not include any part of the amount so refunded in the income of the assessee. In exercise of its power under section 263, the Commissioner set aside the assessment order as the same was erroneous and prejudicial to the interests of the revenue because the claim of the assessee was accepted without proper enquiries. The action of the Commissioner was upheld by the High Court. In the facts of Umashankar Rice Mill vs. CIT (1991) 187 ITR 638-39 (Ori), the Tribunal was held justified in upholding the revisional order of the Commissioner which was passed by the Commissioner who felt that there should be a further enquiry. Reliance is further placed on the following: i. Jagdish Kumar Gulati vs. CIT, 269 ITR 71 (All.) in which it is held that while framing the assessment under section 143(3), it is expected from the AO that he will make a detailed inquiry to find o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke inquiry. The meaning to be given to the word erroneous in section 263 of the Act emerges out of this context. The word erroneous in that section includes cases where there has been a failure to make the necessary inquiries [Gee Vee Enterprises vs. Addl.CIT, (1975) 99 ITR 375, 386 (Del.)]. 5.5. It is incumbent on the officer to investigate the facts stated in the return, when circumstances would make such an enquiry prudent and the word 'erroneous' in section 263 includes the failure to make such an inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. Duggal Co. vs. CIT, (1996) 220 ITR 456,459 (Del.) CIT vs. Pushpa Devi, (1987) 164 ITR 639 (Pat); CIT vs. Smt. Rambha Devi, (1987) 164 ITR 658 (Pat); CIT vs. Belal Nisa, (1988) 171 ITR 643 (Pat); CIT vs. Smt. Kaushalya Devi, (1988) 171 ITR 686 (Pat); CIT vs. Bibi Khodaija Khatoon, (1988) 171 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances relating to the issue as well as the contentions taken by the ld. counsel, as briefly stated above, I hold that following major creditors were required to be examined by the AO properly before accepting the creditors as such. Shri Abdul Karim Khan, S/o Abdul Haiee Rs.14,21,915/- Shri Abdul Wahid, S/o Shri Abdullah Rs.11,33,030/- Shri Abrar Khan, S/o Ishaque Ali Rs.16,84,855/- Shri Mohd. Rafeeque S/o Ibraheem Rs.10,86,970/- TOTAL Rs.53,26,770/- The AO is directed to examine the same now properly for which this issue is partly set aside for proper verification. 9. As regards the inflated nature of purchases on account of cash payment, it was argued by the ld. counsel that purchases in cash are due to the nature of purchased item i.e. meat where transactions are made in cash only. Moreover, the purchases are essential for effecting sales and, hence, the same cannot be discarded merely because those were made in cash. After considering the arguments of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s satisfaction for initiating proceedings U/S 263 is based on additions for AIY 2007-08 and 2009-10. Under the Income Tax Act, each year is a separate year and has to be assessed on the facts of the particular year in question. e doctrine of res-judicata is inapplicable to tax proceedings and hence whatever has happened in other assessment years, cannot prevent the AO from taking a different view in another independent assessment year. In the impugned year, the AO has duly called for the confirmation from the sundry creditors and which have been filed by the assessee and after having considered the same and verifying them from die books of accounts, she reached a considered conclusion and thereby accepted the .same, i.e she has adopted one possible view to the entire issue involved. It needs to be appreciated here that all the sundry creditors are actually trade creditors and have been accepted as such year after year by the department. Moreover, if they are believed t~ be untrue than it goes to show that even the sales declared would not have been achieved and after having considered this aspect of the matter, the AO accepted the same. In view of the above facts and submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and the matter has become final. Reliance in this regard is placed on Bagaria Vegetable Products Ltd Vs JCIT 303 ITR (AT) 278 (Pun e) Ahalya Trading Pvt Ltd Vs CIT 22 SOT 68( Mumbai) CIT Vs Munjal Castings 303 ITR 23 ( P H) CIT V s RK Construction Co. 313 ITR 65( Guj) Reliance for this proposition is placed on:- CIT V s Valliammal D. 230 ITR 695 Madras Dhruv N Shah Vs DCIT 273 ITR (AT) 59 Bombay Various courts have held that under the revisionary powers, it is not open for the CIT to prescribe the nature and level of enquiries, if the AO has already considered them and taken a possible view. Reliance in this regard is place on : CIT Vs Arvind Jewellers 259 ITR 502 (Gujrat) Paul Mathews And Sons Vs CIT 263 ITR 101 (Ker) CIT Vs Parmeshwar Bohra 267 ITR 698 (Raj) CIT Vs Mehrotra Brothers 270 ITR 157 (MP) Ashok Kumar Parasramka VS ACIT 65 ITD 1 ( Cal) The Division Bench of Punjab and Haryana High Court in Hari Iron Trading Co Vs CIT 263 ITR 437 observed that an assessee has no control over the way an assessment order is drafted. It was observed that generally, the issues which are accepted by the Assessing Officer do not find mention in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such power in accordance with law and arrives at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not feel satisfied with the conclusion. (viii) The CIT, before exercising his jurisdiction under Section 263 of the Act, must have material on record to arrive at a satisfaction. We find that the assessee had filed before the AO the copy of the audit report, audited balance sheet along with its annexures for the year ending 31.03.2008 relevant for the assessment year under consideration. The AO has examined the books of accounts on test checked basis and has observed that the assessee company is engaged in the business of processing and trading of buffalo meat. The details of the trading results for the last three years show that there is decrease in the turnover during the year but there is slight improvement in the GP and NP rate. So, from the said fact that the AO had test checked the books of accounts of the assessee and has gone through the audited reports and balance sheet, it cannot be said that the AO has not examined the GP result of the assessee. We also find that in earlier years, the books of account of the assessee were acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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