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TMI Blog2020 (10) TMI 617X X X X Extracts X X X X X X X X Extracts X X X X ..... ture incurred wholly and exclusively for the purposes of the business there is no question to further examine the genuineness and creditworthiness of such creditors when such creditors emerge from these expenditure only. The creditors were not the loans received by the assessee but are part of unpaid expenditure. Thus the reason given for resuming jurisdiction u/s 263 of the act to verify the genuineness and creditworthiness of the sundry creditors is also not correct. There is no provision in the act that unpaid expenditure is also to be tested on the parameter of creditworthiness. Therefore even in the assessment order the ld AO did not commit any error of law. - Decided in favour of assessee. - ITA No. 4712/Del/2019 - - - Dated:- 13-10-2020 - Shri H.S. Sidhu, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : Shri G.S. Grewal, CA For the Revenue : Ms. Nidhi Srivastava, CIT DR ORDER PER PRASHANT MAHARISHI, A. M. 1. M/s Delhi Gurgaon super connectivity Ltd (the assessee/the appellant) has filed this appeal against the order passed by The Commissioner Of Income Tax, Central II, New Delhi dated 29th of March 2019 u/s 263 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee has signed an agreement with the National Highway authority of India on 18th of April 2002 for conversion of Delhi Gurgaon Section of National Highway 8 into an access controlled 8/6 lane highway from kilometre 14.32 to km 42. The assessee filed its return of income on 29th of December 2016 declaring income of Rs. Nil. The case of the assessee was selected for scrutiny by issue of various notices u/s 143 (2) and 142 (1) of the act. The assessee initially did not submit requisities details, however, subsequently the details were submitted. The learned assessing officer on examination of the profit and loss account noted that on perusal of details submitted, during the year revenue from operation has declined compared to the last year from ₹ 192.2 crores to ₹ 1 49.1 crore. From the profit and loss account there is an increase of various expenses as compared to last year Under the heads of project running expenses, electricity and fuel expenses, administration and office expenses, printing and stationery expenses, postage and stamps , vehicle running and maintenance expenses were noted. The AO further held that the expenditure claimed by the assessee does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned AO and were found satisfactory as no further enquiry was raised by the learned AO. Therefore the order passed by the learned AO is neither erroneous nor not prejudicial to the interest of revenue and hence order u/s 263 of the act should not be passed. 5. Thereafter the learned CIT rejected the explanation of the assessee and passed an order u/s 263 of The Income Tax Act holding as Under:- 4. I have perused the assessment records and submissions made by the assessee in this case. The core issue in this revision proceedings u/s 263 of the income tax act, 1961 is that assessment on the issues raised in the show cause notice was made without proper examination/verification or all the relevant rules have not been properly applied. In this case, it is found that the assessee has shown an amount of ₹ 514,453,415/ as sundry creditors in his balance-sheet. During the assessment proceedings the assessee submitted the list of creditors on 29.12.2016 to which the AO did not have sufficient time for requisite enquiry/investigation of these transactions and whatever was claimed by the assessee, was allowed without verifying the genuineness of transactions. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the creditors have been verified and ad hoc percentages applied to disallow the same. He therefore submitted that the assessee has also submitted the complete list of the sundry creditors which is available at page number one of the paper book wherein the assessee as per letter dated 29 December 2016 at serial number six has submitted the details of the sundry creditors above ₹ 1 lakh as per annexure [3] of the submission. He further referred to that letter and stating that name and address of the all bank account maintained were submitted, he further referred that assessee submitted that assessee is not a manufacturing concerned and there is no comparative chart of percentage of yield for the last two years since project was Under implementation stage. He therefore submitted that as the project was under implementation stage there was a list of some the creditors. He referred to the list of sundry creditors placed at page number two of the paper book wherein there are 70 creditors available amounting to ₹ 51,44,53,415/ . He therefore submitted that it is wrong finding by the CIT that assessee did not submit the details of creditors. With respect to confirmation and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prejudicial to the interest of the revenue and further the learned CIT has set aside the matter to the file of the assessing officer without giving a finding as to what error has crept into in the assessment order and what prejudice is caused to the revenue. For this proposition also, he relied on several judicial precedents. He even otherwise stated that the learned AO did verify the creditors and the expenditure associated with such creditors and make a disallowance out of that therefore it is not the fact that AO is not aware about the same. He further stated that creditors are result of debiting expenditure in the books of accounts which remain unpaid, which have been fully examined by the assessing officer. Therefore after examination he has made disallowance only on the basis of increase in expenditure which is also not the fact. He also submitted that when after an enquiry the learned assessing officer on perusal of the details of expenditure has made disallowance out of those expenditure, such expenditure has gone to result into the creditors existence, failure of the learned CIT to show that what error assessing officer has committed, the order passed by him u/s 263 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the balance-sheet the assessee has shown a sundry creditors of ₹ 514,453,415 comprising of total 70 entities and only one entity of s. 465,86,911/ was verified and which was found to be bogus and therefore for verification was required of sundry creditors. On careful reading of the assessment order we do not find that the learned assessing officer could find that one entity comprising of ₹ 4 65,86,911 was bogus. No evidence were also led by CIT in her order to show that. Ld CIT DR also could not show us basis of holding so by the CIT. Thus, There is no material on record which shows that any such creditor is found bogus. Therefore, it is a wrong fact or a fact which is not borne out from the evidence was recorded by the learned CIT for invoking jurisdiction u/s 263 of the act. 9. In fact, as per the assessment order the learned assessing officer has not made any addition on account of any bogus creditor found during the course of assessment proceedings. In fact the learned assessing officer on verification of the details of the expenditure and on the basis of its statistical analysis found that assessee has incurred higher expenditure during the year therefore he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther enquiry and decide the issue afresh is not permissible according to the law. If this is held to be permissible then it would amount to extension of further time limit provided u/s 153 of the income tax act to complete the assessment. Thereby any assessment order passed by the learned assessing officer could further be tinkered with the provisions of Section 263 of the income tax act by the CIT and then a further time is granted to the assessing officer to make further inquiries. That is not the mandate of the law. The mandate of the law is to rectify an order if it is found to be erroneous and prejudicial to the interest of the revenue u/s 263 of the act. But here an alternative bypass route is devised by revenue to give further time to the assessing officer to complete the assessment order by making further enquiry. In the original assessment proceedings, AO was not precluded to make addition of the whole of the creditors or disallow the whole of the expenditure , if the details were not forthcoming from the assessee. But when the details are filed by assessee, because of the Lake of time available with the assessing officer, provisions of Section 263 cannot be invoked. For ..... X X X X Extracts X X X X X X X X Extracts X X X X
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