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TMI Blog2022 (4) TMI 1175X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment orders but in a case where the AO has made enquiry by issuing notice, taking on record compliance of notice and then took a plausible view, and the Pr. CIT is not agreeing with the view taken by the AO, then he has to conduct enquiry himself. He cannot direct the AO to redo the assessment. From the copy of confirmation of account available clearly reveals that the creditor Shri Mundra sent confirmation to the assessee showing opening balance as on 1.4.2015 at ₹ 14,50,000/- and same amount shown as on 31.3.2016, therefore, there was no new transaction during the relevant financial period with these creditors, copy of pass book of Brij Mohan Mundra with PNB Account No. 45852 clearly reveals that the assessee received loan during the financial year 2014-15, which was remained unpaid at the end of that financial year and brought forward to the present financial year 2015-16 and again carry forward to the next financial year. Therefore, copy of this statement clearly reveals that the amount received from this creditor has been credited to the account of the assessee and immediately refunded and, therefore, there was no cash transaction or cash deposit. Thus inquiries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due to change of opinion. 2. Facts of the case are that the assessee was engaged in trading in commodities like Aluminium, Soyabean and Copper through Karvy Comtrade Ltd. The assessee filed the return of income declaring total income at ₹ 1,64,110/- on 17.10.2016. The Assessing Officer completed the assessment u/s. 143(3) on 6.12.2018 accepting the returned income of the assessed. 3. Thereafter, the Pr. CIT, Bhubaneswar-1 by virtue of statutory powers vested in him u/s. 263(1) of the Act, called for the assessment records. On examination, he observed that the order dated 6..12.2018 of the AO is erroneous so far as prejudicial to the interest of the revenue. Accordingly, he proposed to revise the assessment order as per the provisions of section 263 of the Act and issued a show cause notice u/s. 263 of the Act on 17.2.2021 with the following observations: It is seen that and as stated above, during the year, the assessee has undertaken trading in commodities like Aluminium, Copper and Soyabean through Karvy Comtrade Ltd. having made purchases sales of ₹ 49,06,18,450/- ₹ 48,71,13,100/- respectively and incurring a net loss of ₹ 37,76,250/-. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has to explain the deposit of ₹ 20 lakh taken during the year from Mr. T K Parida for which no proof of identity, creditworthiness or genuineness has been furnished. The opening balance of ₹ 14.5 lakh shown to be a loan from Mr. Mundra also needs further examination as to source etc. The source of cash deposit of ₹ 2 lakh in the bank account on 7.5.2015 also needs examination. 8. It is well settled that an order involving lack of enquiry or a case of no enquiry on a vital issue which requires verification that should have been carried out by a prudent officer would constitute an order erroneous and prejudicial to the interest of revenue within the meaning of Sec 263(1) of the Act. In this context, reference may be had to Explanation -2 to Sec 263(1) that reads as under: [Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,- 1. the order is passed without making inquiries or verification which should have been made;....... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r setting aside the order of the Assessing Officer, simply directed the Assessing Officer to carry thorough and detailed enquiry. Moreover, the ITAT, Cuttack Bench, Cuttack, has upheld action u/s. 263 in the case of Cuttack Development Authority v. CIT, Cuttack in IT A No. 381/CTK/2014 on the same ground of failure to conduct further enquiries where circumstances demands so. The Revisional authority's power to treat a case of limited scrutiny as erroneous as is prejudicial to the interest of revenue where full scrutiny was the need of the case, has also been endorsed by ITAT Cuttack in a decision dated 5th October, 2020, the case of Shri Sushanta Kumar Chaudhury vs PCIT in ITA No. 226/CTK/2019. 6. Ld A.R. of the assessee submitted that during the assessment the assessee has complied to the notice u/s. 142(1) and furnished bank statements, commodity trading account with Karvy Comtrade and source of investment. He submitted that after verification and examination of those details, the Assessing Officer has passed order u/s. 143(3) of the Act. As regards to source of investment, ld. A.R. submitted that the assessee had availed friendly loan of ₹ 14,50,000/- fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder has relied on the decision of Hon'ble Kolkata High Court in the case of Denial Merchant Pvt. Ltd. Vs ITO, dated 10.4.2017 which is not binding precedent to apply in the case of the assessee as SLP dismissal is not a declaration of law within the meaning of Article 141 of the Constitution of India as held by Hon'ble Supreme Court in the case of Khoday Distilleries Ltd. vs Sri Mahadeswara Sahakara Sakkare Karkhane Ltd., in Civil Appeal No. 2432 of 2019 arising out of SLP (C) No. 490 of 2012 and ors. Ld A.R. submitted that it is not a case of no enquiry or inadequate enquiry but the AO has made detailed, proper and sufficient enquiry on the issue of incurring net loss of ₹ 37,76,250/- and the assessee has clearly shown the source of these loans taken from Brij Mohan Mundra of ₹ 14,50,000/- and Tushar Kanta Parida of ₹ 20,00,000/- and also shown capital of ₹ 6,13,479/- from proprietorship business, the source of loan is self-explanatory and the AO has rightly accepted and allowed the same, therefore, the assessment order cannot be alleged as erroneous and prejudicial to the interest of the revenue and same may kindly be set aside. 9. Ld A.R. drew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the genuineness of the loan amount was not verified by the AO before completing the assessment. Ld CIT DR submitted that the assessee is an employee with Gupta Cables Pvt. Ltd., and as per return of income, he has declared salary income of ₹ 1,64,114/-. Ld CIT DR further submitted that the bank statements were never filed before the AO and the genuineness of the loan was also not verified by the AO. Ld CIT DR further drawing our attention to page 6.2 of the impugned order submitted that the assessee had no money and made transactions of MCX derivatives total purchases of ₹ 49,06,18,450/- and sale was effected at ₹ 48,71,13,100/- incurring a loss of ₹ 37,76,251/-. Therefore, the Pr. CIT was right in alleging that the AO has not made enquiry in this regard. Ld CIT DR also drew our attention towards page 5 of APB to submit that the assessee is receiving very meager salary income and is a man of small means; therefore, Pr. CIT was right in doubting regarding the transaction undertaken during the relevant financial period. Ld CIT DR also pointed out that the documents, confirmation, ledger etc were not produced before the AO and no reconciliation statement was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the decision of ITAT Cuttack in the case of Surekha Builders Developers Pvt. Ltd., (supra) because in a situation when the AO has made enquiries in respect of the issues, agitated by the Pr. CIT and in the notice u/s. 263 of the Act, Pr. CIT alleges that there is inadequate and insufficient enquiry, then, he should have made further enquiries and he is not empowered to simply restore the issue to the AO for further enquiries and verification. He further submitted that in the present case, as per para 9 of the impugned revisionary order, it is clear that the Pr. CIT after holding the assessment order as erroneous and prejudicial to the interest of the revenue, set aside the same and directed the AO to redo the assessment keeping in mind inter alia, observations made by him in revisionary order and statements of the assessee during the assessment and revisional proceedings u/s. 263 of the Act and other documents furnished during the course of hearing of issue to be done afresh. Pr. CIT has not made any enquiries after alleging that it is a case of lack of enquiry or case of no enquiry. Ld A.R. referred to para 8 of the impugned order, and submitted that it is clearly that Pr. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e copy of the reply of the assessee to notice u/s. 263(1) of the Act, which is available at pages 3 to 20 of APB, it is clear that the assessee submitted copy of income tax return for assessment year 2016-17, bank statement for F.Y. 2015-16, substantiating the payment made to Karvy Comtrade Ltd., reconciliation statement with Karvy comtrade ltd., bank statement, ITRs and PAN of loan creditor Mr. Brij Mohan Mundra with opening balance of ₹ 14,50,000/- which also remains same at the year end, which reveals that there was no new transaction with creditors during the relevant financial period and opening balance was carry forward to next financial period. From the copies of notice dated 4.10.2018 and another notice dated 26.10.2018 u/s. 142(1) of the Act, clearly reveals that the AO has made enquiries and called upon bank statement including Fixed Deposits from the assessee and the assessee complied first notice by way of filing reply dated 18.10.2018. We also observe that since the assessee undertook high volume of trading in commodity future of MCX Platform, the source of finance stated in the audited account placed at PB 37 to 40 were also placed before the AO, in our consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial on record to show any discrepancy and deficiency therein. 17. From the careful reading of the impugned order of Pr. CIT u/s. 263 of the Act, we clearly observe that the Pr. CIT in para 6 of the order has noted that the ld. A.R. of the assessee filed reply on 11.3.2021. He also noted that the additional explanation of the assessee and on the next date of hearing on 15.3.2021, he also taken on record the reply of the assessee. In para 7.1, Pr. CIT noted that no proof of identity, creditworthiness or genuineness has been furnished from the loan taken from Tushar Kant Panda, whereas, as we have noted above, the assessee filed copy of PAN confirmation, bank statement etc establishing the creditworthiness and genuineness of the transaction. Therefore, the assessment order cannot be held as erroneous and prejudicial to the interest of the revenue. Ld CIT DR has placed vehement reliance on the decision of Hon'ble Supreme Court in the case of Denial Merchants Pvt. Ltd., vs ITO IN Special Leave (C) No. (s) 23976/2017 and other order dated 29.11.2017, wherein, the SLP of the assessee was dismissed up[holding the order of Hon'ble Kolkata High Court order dated 10.4.2017 in G.A. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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