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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL,
Before: ARUN KHODPIA & ARUN KHODPIA & ARUN KHODPIA
O R D E R Per Bench This is an appeal filed by the assessee aga This is an appeal filed by the assessee against the order of the ld inst the order of the ld Pr.CIT,Bhubaneswar Bhubaneswar-1,dated 2.3.2022 in in Appeal Appeal No. No. ITBA/REV/F/REV5/2021 ITBA/REV/F/REV5/2021-22/1040258850(1) for the assessment year for the assessment year 2017- 18.
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:
“1. Letter of CIT DR- To The DCIT, Circle -1(1), Cuttack. Sub-Information required in the case of M/s. B.K.Textiles (PAN- AAHFM 3186 G), Nandi Sahi, PO: Buxi Bazar, Cuttack in Appeal A.Y. 2017-18-Regarding. Please refer to the captioned subject. 2. In this case, your predecessor had completed the assessment order u/s.143(3) of the Act on 18.12.2019. Subsequently, this P a g e 3 | 7 assessment was revised by the Pr. CIT-1, Bhubaneswar u/s.263 of the Act on the ground that during the year under reference, the AO had issued notices u/s.133(6) to various sundry creditors and in response to same, replies were also received from eight creditors. There were difference in the ledger accounts furnished by these creditors vis-à-vis the entries in the books of account of M/s. B.k.Textiles. However, the AO had not sought any reconciliation from the assessee firm in respect of such discrepancies. On the othe hand, the AR of the assessee has argued before ITAT, Cuttack that during personal hearing on 5.12.2019, the AO had asked him to file confirmation statements in respect of these creditors which were uploaded on 10.12.2019 vide e-proceedings response acknowledgement No.10121912627736, 10121912628254 & 10121912612087. In support of same, copies of acknowledgements have also been filed which are enclosed with this letter. However, as per Pr. CIT-1, BBSR, these reconciliation statements were not available in the assessment records which prompted him to hold that neither the assessee had filed the reconciliation statements nor any enquiry was conducted by your predecessor AO making the assessment erroneous and prejudicial to the interest of the revenue.
4. The Hon’ble members of the ITAT, Cuttack have directed that in this connection the concerned AO should verify the ITBA and corresponding uploading details to see whether such details were actually uploaded on 10.12.201 by the AR of the assessee or not.
5. In case, these requisite details were not uploaded by the assessee, then it would be imperative to file an affidavit to that effect by you before the Hon’ble ITA, Cuttack. The above information/report should be submitted to this office before 6.2.2023 since the next hearing in this case is fixed on 10.2.2023. Hence, you should accord utmost priority to this matter. The assessment records for A.Y. 2017-18 should also be sent/furnished to this office. Sd/- CIT DR 2. Reply of the JCIT- To The CIT (Audit & ITAT), Bhubaneswar. Sir, Sub: Furnishing of information in the case of M/s. BK Textiles (PAN – AAHFM 3186 G) in appeal A.Y. 17-18-Reg.
P a g e 4 | 7
Reference; Your office letter No.AA/LA/BBS/2022-23/CIT(Audit & ITAT)/BBSR/2022-23/2180 dated 20.1.2023. Kindly refer the above. The ITBA was verified and found that the assessee uploaded reconciliation statement in respect of 08 in number creditors on 10.12.2019. The details are tabled below and enclosed herewith for reference: Sr.no Creditor Period i. Hanuman Textiles, Balotra 5.4.2017 to 28.6.17 ii Kailash Tex Barabanki 1.4.17 to 10.6.17 iii Kailash Tex Barabanki 1.4.17 to 10.6.17 Iv KAS Zainulabdin & Co. Kolkata 1.4.17 to 1.4.17 V Mayur Corporation, Jetpur 1.4.176 TO 16.5.17 Vi Shree Shakambhari Prints Pvt Ltd. 1.4.17 to 28.6.17 Ahmedabad Vii Shree Jagannath Textiles, Mumbai 3.4.17 to 26.6.17 Viii Shree Mahakali Textiles, Mumbai 1.4.17 to 23.5.17 Ix Balajee Textiles, Erode 1.4.17 to 26.6.17 X Balajee Textiles, Erode 1.4.17 to 26.6.17 Ledger account i.r.o Balajee Xi 1.4.17 to 31.3.18 Textiles, Cuttack
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
P a g e 6 | 7 u/s.263 of the Act to impose his opinion over that of the Assessing officer. As it is noticed that the order u/s.263 is only an attempt by the Pr. CIT to impose his opinion over that of the AO, we are of the opinion that this is not permissible. Consequently, we quash the order passed u/s.263 of the Act.
In the result, appeal of the assessee stands allowed.
Order dictated and pronounced in the open court on 21/02/2023.
Sd/- sd/- (Arun Khodpia) (George Mathan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 21/02/2023 B.K.Parida, SPS (OS) Copy of the Order forwarded to : 1. The Appellant : M/s. B.K.Textiles, At: Nandi Sahi, Buxi Bazar, Cuttack 2. The respondent: Pr. CIT, Bhubaneswar -1 3. The CIT(A)-, 4. DR, ITAT, Cuttack 5. Guard file. //True Copy//