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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
आदेश /O R D E R
PER MAHAVIR SINGH, VP:
This appeal by the assessee is arising out of the Revision order passed by the Principal Commissioner of Income Tax, Madurai-1, in Order No.ITBA/REV/F/REV5/2020-21/1031436763(1) dated 12.03.2021. The assessment was framed by the Income Tax Officer, Non-Corporate Ward-3(1), Madurai for the assessment year
2 2015-16 u/s.143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’), vide order dated 11.05.2017.
At the outset, it is noticed that this appeal is barred by limitation by 382 days. The facts are that the order of PCIT dated 12.03.2021 was received by assessee as per Form No.36 on 17.03.2021. The assessee is supposed to file appeal on or before 16.05.2021 but actually appeal is filed on 02.06.2022. The assessee filed condonation petition along with affidavit stating the reason that the Hon’ble Supreme Court vide order in SMW(C) No.3 of 2020 dated 23.03.2020 extended the limitation for filing the appeals and subsequently in M.A. No.665 of 2021 had restored the order dated 23.03.2020, in continuation of order dated 23.09.2021. The relevant portions of the order dated 10.01.2022 are extracted herewith for your perusal. I. The order dated 23.03.2020 is restored and in continuation of the subsequent orders dated 08.03.2021, 27.04.2021 and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasijudicial proceedings.
II. Consequently, the balance period of limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022.
III. In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance
3 period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply.
The assessee contended that further the Hon’ble Supreme Court has extended the limitation order up to 30.05.2022 and the delay in filing of any appeal action or anything would be done up to 30.05.2022 whereas in this case, the assessee filed appeal only on 02.06.2022 thereby practically there is a delay of 2 days only. When this was confronted to ld.CIT-DR, he could not controvert the above fact situation. Going by the reasons stated, we condone the delay and admit the appeal.
The only issue in this appeal is against the revision order passed by the PCIT u/s.263 of the Act setting aside the assessment framed u/s.143(3) of the Act dated 11.05.2017 by the AO on the issue of non-verification of sundry creditors. For this assessee has raised various grounds i.e., Ground Nos.1.1 to 4.2, which we have considered, and are argumentative, exhaustive and factual, hence need not be reproduced.
Brief facts are that the assessee firm is carrying on wholesale business in iron and steel. The assessee filed its return of income
4 for the relevant assessment year 2015-16 on 15.08.2015 and the same was processed by the Income-tax Department u/s.143(1) of the Act. The assessee’s case was selected for scrutiny assessment under CASS and accordingly notice u/s.143(2) of the Act was issued. In this assessment order, the AO has examined the issue of low gross profit and accordingly tinkered with the profit rate and also made addition of Rs.2,22,605/- by increasing the GP rate at total turnover by 0.15% and accordingly, assessment was completed.
Subsequently, the PCIT on examination of assessment records noted that the assessee has disclosed sundry creditors to the tune of Rs.2,28,92,649/- which the AO failed to verify the genuineness of the same before framing of assessment. The second issue raised by the PCIT is as regards to non-reconcillation of closing stock for the year ended 31.03.2014 at Rs.1,09,36,046/- and opening stock as on 01.04.2015 of Rs.1,87,68,982/. The PCIT accordingly issued show-cause notice dated 10.02.2021 and assessee replied before the PCIT filing reconciliation of closing stock and also the sundry creditor as on 31.03.2015 at Rs.2,28,92,649/-. The assessee filed the names & details and stated that the entire family deposits are confirmed and filed copy of accounts as well as confirmation letters.
5 As regards to the trade creditors, he filed copy of accounts and contra with PAN of these trade creditors. The assessee has also stated that there are salary advance, trade advance and TDS account which are also filed before PCIT. The PCIT accepted the claim of closing stock but as regards to sundry creditors noted that the assessee failed to file the details like name, PAN number, confirmation letter, address of creditors and copies of their return of income and failed to verify the creditworthiness of the assessee claimed. Hence, the PCIT set aside the issue of sundry creditors to the file of the AO for reframing assessment after verification by observing in para 7 as under:- “7. In view of the above, I am satisfied that the order dated 11.05.2017 passed by the Assessing Officer u/s 143(3) of the Income Tax Act is erroneous in so far it is prejudicial to the interest of the revenue. Accordingly, in exercise of powers conferred u/s 263 of the Act, I set aside the aforesaid order with the direction to the Assessing Officer to frame the assessment after making necessary enquiries and verification in accordance with law with regard to the issue of sundry creditors discussed in para(5.1) above. The Assessing Officer shall allow reasonable opportunity of being heard to the assessee before passing the order.”
Now before us, the ld.counsel for the assessee Shri I.Dinesh only pointed out to reply filed by assessee before the AO dated 06.05.2017 wherein the details of creditors as on 01.03.2014 and as on 31.03.2015 i.e., amounting to Rs.1,80,29,368/- and Rs.2,28,88,288/- respectively were filed. When a query was raised
6 by the Bench that whether the AO had issued any notice and whether this particular reply was filed by the assessee, what is the evidence. The ld.counsel for the assessee could not answer the same and moreover stated that he is not aware whether questionnaire was issued by the AO during the assessment proceedings on the issue of sundry creditors. When the Bench pointed out that in the assessment order nothing is discussed about the sundry creditors and even now the assessee has not filed the details of sundry creditors like name, address, PAN number, source of deposit, etc., to prove the genuineness, creditworthiness and identity of the parties.
On the other hand, the ld.CIT-DR supported the order of PCIT passed u/s.263 of the Act revising the assessment.
We have heard rival contentions and gone through the facts and circumstances of the case. We noted that the AO has not made any enquiry regarding the cash credits as pointed out by the PCIT in his order. Admittedly, there are cash credits to the tune of Rs.2,28,92,649/- as on 31.03.2015 and assessee has filed names only. The assessee has not filed address, assessment details, PAN number or the source of deposit. Hence, we find no infirmity in the 7 revision order passed by PCIT with direction to AO to verify these sundry creditors according to law. Therefore, we affirm the revision order passed by the PCIT and dismissed the appeal of assessee.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the open court on 12th July, 2023 at Chennai.