B K TEXTILES,CUTTACK vs. PCIT-1, BHUBANESWAR

Shri Keshav Dubey, ld AR appeared for the assessee and Shri Shri Keshav Dubey, ld AR appeared for the assessee and Shri Shri Keshav Dubey, ld AR appeared for the assessee and Shri M.K.Gautam, ld CIT DR appeared for the revenue. M.K.Gautam, ld CIT DR appeared for the revenue.

It was submitted by ld AR that the assessee, a partnership firm, had It was submitted by ld AR that the assessee, a partnership firm, had It was submitted by ld AR that the assessee, a partnership firm, had filed its return of income and assessme filed its return of income and assessment came to be completed u/s.143(3) nt came to be completed u/s.143(3) on 18.12.2019 accepting the returned income. It was the submission that on 18.12.2019 accepting the returned income. It was the submission that on 18.12.2019 accepting the returned income. It was the submission that P a g e 1 | 7 the said order u/s.143(3) came to be revised by the Pr. CIT, Bhubaneswar-1 through an order u/s.263, wherein, the Pr. CIT has raised the issue of short disclosure of sundry creditors and non-examination of the unsecured loans and consequently non-initiation of penalty u/s.271D. It was the submission that the Pr. CIT has also in para 6.1.1 raised the issue of non-examination of large cash deposits. It was the submission that in respect of issue of short disclosure of sundry creditors, the Assessing Officer had issued notice u/s.142(1) of the Act, which is shown at pages 2 & 3 of PB. It was the submission that the assessee had responded to the Assessing Officer’s notice and had given details of sundry creditors and had also filed the reconciliation, which was placed at pages 15 to 33 of PB. It was the submission that the Pr. CIT has taken the view that the assessee has not provided the reconciliation of sundry creditors. It was the submission that the reconciliation had been produced and the same had been filed online and all the examinations had been done by the Assessing Officer. It was the further submission that in respect of non-examination of the unsecured loans, Pr. CIT was of the opinion that in the audit report and Form 3CD at clause 31(a), the auditors had mentioned that there were loans taken during the year and same was in cash. It was the submission that this is a mistake on the part of the auditors and the Assessing Officer had examined the issue in depth and evidences had been produced before the AO, which is placed at pages 36 to 54 of PB. It was the submission that the unsecured

P a g e 2 | 7 loans were not fresh loans during the year and these were carried forward balance from the earlier years. It was the submission that all the evidences were produced before the AO. In regard to issue of the non-examination of large cash deposits, the Assessing Officer had examined this issue also and the evidence for the same had been produced before the AO, which is placed at pages 55 to 57 of PB. It was the submission that as all these issues had been examined in-depth by the AO, the assessment order could not be said to be erroneous and prejudicial to the interest of the Revenue.

In reply, ld CIT DR submitted that in respect of sundry creditors, he had issued a letter to the DCIT as to whether the reconciliation statement had been filed before him. The JCIT has responded to the letter vide his letter dated 1.2.2023, wherein, it has been confirmed that the ITBA was verified and it was found that the assessee has uploaded the reconciliation statement in respect of 8 creditors on 10.12.2019, which was in the course of assessment proceedings. The copy of the letter issued by ld CIT DR and the reply of the JCIT is as follows:

In regard to unsecured loan, it was the submission that the auditors had mentioned in the audit report that the assessee has taken loans during the year. It was the submission that this could have led the Pr. CIT to draw the conclusion that the Assessing Officer has not examined the issue. In P a g e 5 | 7 regard to the issue of large cash deposit , ld CIT DR supported the order of the Pr. CIT.

We have considered the rival submissions. Coming to the issue of short disclosure of sundry creditors, admittedly, it is noticed that the Assessing Officer, has in the course of assessment proceedings, called for the reconciliation and the reconciliation has also been filed by the assessee and the JCIT has also confirmed the same in response to the letter issued by ld CIT DR.

Coming to the issue of unsecured loans, a perusal of paper book as also notice u/s.142(1) of the Act show that the Assessing Officer has examined this issue and the details of the unsecured loans have also been produced before the AO.

Coming to the issue of non-examination of the cash deposit, a perusal of the PB and notice u/s.142(1) clearly show that the details of the large cash deposits have been examined by the AO and evidences have also been produced before the AO in the course of assessment. Thus, in respect of three issues, evidences have been produced before the AO and the AO has examined the issue in-depth also. Hence, it cannot be said that the Assessing Officer has not done proper examination. The Assessing Officer having examined all the three issues and having been reached the conclusion and formed an opinion, the Pr. CIT cannot use his powers

In the result, appeal of the assessee stands allowed.