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TMI Blog2017 (8) TMI 1188X X X X Extracts X X X X X X X X Extracts X X X X ..... cessary enquiries on the issues on which he wants further verification. No doubt, the assessment order passed by the AO is brief and cryptic which does not show any light on the verification of two issues, but the facts remain that the AO has cast necessary enquiries and the assessee has furnished necessary details which fact is not disputed by the CIT. The CIT’s only point is that enquiries conducted by the AO are inadequate. No doubt, in the opinion of the CIT, the AO ought to have conducted further enquiries. But that itself is not a ground for revision of assessment order u/s 263 because once the issues on which the CIT wants further verification was already examined by the AO, then there is no scope for the CIT to conduct further enquiries by holding that the enquiries conducted by the AO are inadequate. - Decided in favour of assessee. - I.T.A No.2271/Mum/2014 - - - Dated:- 11-8-2017 - Shri D.T. Garasia (JUDICIAL MEMBER) And Shri G Manjunatha (ACCOUNTANT MEMBER) For The Appellant : Shri Prakash Pandit For The Respondent : Shri Shantanu Saikia ORDER Per G Manjunatha, AM : This appeal filed by the assessee is directed against the order of Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the revenue. 4. In response to show cause notice, the assessee submitted that assessment order passed by the AO u/s 143(3) of the Act, dated 29-12-2011 is neither erroneous nor prejudicial to the interest of the revenue as the AO has caused necessary enquiries with regard to the loans and advances given to three parties and also called for names and addresses of the sundry creditors from whom purchases were effected. The assessee has also filed necessary details of loans and advances and explained to the AO that the advances give to other parties as observed by the CIT are normal business advances which did not carry any interest. Similarly, in respect of purchases and sundry creditors, the assessee has furnished books of account and other relevant documents including stock statements to justify purchases made from the above parties. The AO, after satisfying with the explanations of the assessee has chosen to complete the assessment which is evident from the fact that the AO has called for various details on number of occasions for which the assessee has filed details vide letters dated 16-06-2011, 01-12-2011, 05-12- 2011 and 09-12-2011. Therefore, assessment order passed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the assessment order passed by the AO u/s 143(3) dated 29-12-2011 is neither erroneous nor prejudicial to the interest of the revenue as the AO has examined the issues pointed out by the CIT in the revision proceedings. The Ld. AR further submitted that the CIT was not correct in directing the AO to conduct further enquiries with regard to the issues which were already examined by the AO by issuing specific questionnaire for which the assessee has filed necessary details. The Ld. AR referring to the paper book filed, submitted that the AO has issued various notices on number of occasions for which the assessee has filed his submissions vide letters dated 16-06-2011, 01-12-2011, 05-12-2011 and 09- 12-2011 which is evident from the fact that the AO himself has recorded the dates of hearing in the assessment order. The Ld. AR further submitted that once the issues on which the CIT wants further verification was already done by the AO in the assessment proceedings, then the CIT cannot assume jurisdiction u/s 263 under the guise of lack of enquiry or inadequate enquiry. Once it is proved that the AO has called for necessary details on the issues on which the CIT wants further v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be upheld. 8. We have heard both the parties, perused the materials available on record and gone through the orders of authorities below. The CIT assumed jurisdiction to revise the assessment order for the reason that the AO has not conducted required enquiries in relation to loans and advances and sundry creditors which caused prejudice to the interest of the revenue. According to the CIT, the assessee has borrowed unsecured loan and also advanced loans to third parties without charging any interest. The CIT further observed that on verification of purchase made by the assessee it is very clear that the assessee has effected purchases from certain parties, who are listed as suspicious hawala dealers. It was further observed that sundry creditors shown against purchases are abnormally more than the industrial average which aspect has not been examined by the AO. The CIT further observed that though the AO has called for certain details, while completing the assessment, he failed to conduct necessary enquiries in the light of the facts of the present case which is evident from the fact that the assessment order passed by the AO is brief and cryptic which does not show any li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has filed all the details explaining the loan given to others as per which the loans given in the normal course of business without any condition as to charging interest. Insofar as the purchases and sundry creditors, the assessee has filed a list of sundry creditors having outstanding balance of more than ₹ 1 lakh with names and addresses and also PAN. The assessee also filed confirmation letters from the sundry creditors. The AO, after satisfying with the details filed by the assessee has accepted the explanation with regard to those two issues. Therefore, we are of the view that the CIT was incorrect in observing that the AO has not conducted necessary enquiries on the issues on which he wants further verification. 11. The CIT has power to revise assessment order u/s 263 of the Act, but to invoke the provisions of section 263, twin conditions embedded in the section must be satisfied, i.e. (i) the order of the AO is erroneous; (ii) it must be prejudicial to the interest of the revenue. Unless both the conditions are satisfied, the CIT cannot assume jurisdiction u/s 263 of the Act. It is not necessary that every order which is erroneous, may be prejudicial to the interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere made during the assessment proceedings with regard to the details of expenditure claimed under the head miscellaneous expenses aggregating to ₹ 2.94 crores. The assessee had responded to the queries and on consideration of its response, the Assessing Officer held that only an amount of ₹ 17.98 lakhs incurred on account of repairs and maintenance out of ₹ 2.94 crores was capital expenditure. This itself would be an indication of application of mind by the Assessing Officer while passing the order. The fact that the assessment order did not contain any discussion with regard to the balance amount of expenditure of ₹ 1.76 crores, i.e., ₹ 2.94 crores less ₹ 17.98 lakhs claimed as revenue expenditure would not by itself indicate non-application of mind to this issue by the Assessing Officer in view of the specific queries made during the assessment proceedings and the assessee's response to it. Moreover, from the nature of expenditure as explained by the assessee to the Assessing Officer during the assessment proceedings the view that the expenses were in the realm of revenue expenditure, was a possible view. Therefore, there was no fault in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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