RAMAN KANT ,LUDHIANA vs. PR.COMMISSIONER OF INCOME TAX-1, LUDHIANA

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHANDIGARH PHYSICAL HEARING BEFORE HON’BLE SHRI LALIET KUMAR, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपीलसं./ ITA No.989/CHANDI/2026 (िनधा�रणवष� / Assessment Year: 2022-23) Shri Raman Kant Pr. CIT – 1 Prop. Laxmi Timber Traders Ludhiana बनाम/ Vs. Radha Swami Road Near Dhuri Railway Line Ludhiana, Punjab – 141002 �ायीलेखासं./जीआइआरसं./PAN/GIR No. BGUPK-2406-B (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Sh. Pushkal Soni (CA) &Sh. Gulshan Wadhwa – Ld. ARs ��थ�कीओरसे/Respondent by : Sh. Rajat Kumar Kureel (CIT) - Ld. DR सुनवाईकीतारीख/Date of Hearing : 30-06-2026 घोषणाकीतारीख /Date of Pronouncement 06-07-2026 : आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. By way of this appeal, the assessee assails invocation of revisionary jurisdiction u/s 263 by Ld. Pr. Commissioner of Income Tax, Ludhiana-1 (Pr. CIT) for the Assessment Year (AY) 2022-23 vide impugned order dated 25-02-2026 proposing revision of an assessment as framed by Ld. Assessing Officer [AO] u/s.143(3) r.w.s.

144B of the Act on 27-02-2024 accepting returned income of the assessee. 2. The Ld. AR advanced arguments supporting the assessment order and made out a case of one of the possible views as taken by Ld. AO during the course of regular assessment proceedings. The Ld. AR contended that sufficient explanations and documents were already furnished by the assessee during the course of regular assessment proceedings itself. The Ld. CIT-DR, on the other hand, advanced arguments supporting the impugned revisionary order. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under. 3. From the case records, it emerges that the assessee filed return of income on 07.09.2022 at Rs.9.95 Lacs which was selected for scrutiny on the ground of low income from TCS receipts – timber not obtained from forest lease. The assessee was confronted with the fact that assessee disclosed low income from receipts on which TCS had been deducted. There was a possibility that the assessee reflected low income in order to reduce the profit / taxable income. The assessee was engaged in sale of timber, plywood, plyboard, mica etc. In response to notice u/s 142(1), the assessee furnished detailed reply which is extracted in the assessment order. Along with its reply, the assessee furnished its financial statements, bank statements, comparative chart of purchases, sales and GP / NP ratios for three years along with various other details in support of its return of income. The assessee also furnished details of timber purchase and sales

along with copy of quarterly GST returns in GSTR-3B alongwith major purchase and sales bills. In reply dated 09.10.2023, the assessee furnished details of timber purchase and sales and stated that it did not purchase any timber from forest lease. The details of TCS on purchase / sales werealso furnished along with this reply. The Ld. AO made specific observation in the assessment order that the assessee did not purchase any timber from forest lease. The turnover shown in ITR and GST returns was found to be in order. The bills were test checked and finally no adverse inference was drawn against the assessee. 4. Subsequently, Ld. Pr. CIT, upon perusal of case records, held an opinion that the order was erroneous and prejudicial to the interest of the revenue in terms of Sec.263. As per Form 26AS, purchases on which TCS were collected were Rs.197.71 Lacs. The assessee reflected non-TCS purchases also and the aggregate purchases were Rs.245.75 Lacs whereas the assessee disclosed purchases of Rs.201.46 Lacs leaving a gap of Rs.44.28 Lacs. No enquiry or verification or reconciliation was carried out for this discrepancy and accordingly, the assessee was show- caused. The assessee furnished a reply on 26.11.2025 and reconciled the alleged discrepancy as raised by Ld. Pr. CIT. The purchases as per Form 26AS were stated to be inclusive of capital assets and GST components which led to the said discrepancy. The assessee thus opposed any interference in the assessment order. However, the said reconciliation was alleged to be mere after-thought for which no evidence was available on record. The said difference was not investigated by Ld. AO. Finally, Ld. AO was

directed to conduct detailed investigation of purchases vis-à-vis Form 26AS and examine the applicability of Sec.69C and 115BBE of the act to the said difference. The Ld. AO was directed to frame fresh assessment order. Aggrieved by aforesaid revision, the assessee is in further appeal before us. 5. From the enumerated facts, it clearly emerges that the assessee’s case was scrutinized to examine TCS receipts. During the course of assessment proceedings, notices were issued by Ld. AO u/s 142(1) which were duly been responded to by the assessee along with requisite details which include assessee’s financial statements, bank statements, comparative chart of purchases, sales and GP / NP ratios for three years along with various other details. The assessee also furnished details of timber purchases and sales along with copy of quarterly GST returns in GSTR-3B along with major purchase and sales bills. In subsequent reply dated 09.10.2023, the assessee furnished details of timber purchase and sales and stated that it did not purchase any timber from forest lease. The details of TCS on purchase / sales were also furnished along with this reply. The Ld. AO made specific observation in the assessment order that the assessee did not purchase any timber from forest lease. The turnover shown in ITR and GST returns was found to be in order. The bills were test checked and finally no adverse inference was drawn against the assessee. On these facts, it could be well said the issue as identified for scrutiny was well examined by Ld. AO during the course of assessment proceedings itself. The allegation of Ld. Pr. CIT is that there was difference in

purchases for Rs.44.28 Lacs. However, the said difference was duly reconciled by the assessee in reply to show-cause notice also. However, no error has been pointed out in the said reconciliation. The whole basis of revision is the allegation that no enquiry or verification or reconciliation was carried out by Ld. AO. This allegation runs contrary to facts as noted by Ld. AO in the assessment order. The perusal of assessee’s replies to Ld. AO and the documents furnished along with these replies would amply demonstrate that adequate enquiries were duly been made by Ld. AO and no error could be found in the same. This being so, the twin conditions of Sec.263 are not fulfilled and impugned revision of the order could not be sustained in law. 6. The Hon’ble Delhi High Court in the case of ITO vs. DG Housing Projects Ltd. (343 ITR 329) held that AO is both an investigator and an adjudicator. A distinction has to be drawn between a case where the AO has not conducted any enquiry or examined any evidence whatsoever (“lack of inquiry”) from one (i) where there is enquiry but the findings are erroneous; and (ii) where there is failure to make proper or full verification or enquiry (“inadequate inquiry”). The fact that the assessment order does not give any reasons for allowing the claim is not by itself indicative of the fact that the AO has not applied his mind on the issue. All the circumstances have to be seen. A case of lack of enquiry would by itself render the order being erroneous and prejudicial to the interest of the revenue. In a case where there is inquiry by the AO, even if inadequate, the CIT would not be entitled to revise u/s 263 on the ground that he has a different opinion in the

matter. The ratio of this decision squarely applies to the facts of present case before us and duly supports the case of the assessee. 7. The Hon’ble High Court of Punjab & Haryana in the case of CIT vs. M/s Jain Uday Fabrics Pvt. Ltd. (ITA 221-2011 (O&M) dated 16.07.2024) concurred that every loss of revenue as a consequence of the order of AO could not be treated as prejudicial to the interest of the revenue. If two views are possible to reach a conclusion and an assessment, merely because the revisionary authority does not agree with the view adopted by Ld. AO, could not a ground to hold that order as erroneous. The error has to be found from the provisions of law and order could be set aside only when the view taken by AO is unsustainable in law. In the facts of the present case, we are of the considered opinion that the view taken by Ld. AO was one of the possible views and the same is not shown to be perverse. 8. Similar is the decision of jurisdictional High Court in the case of Pr. CIT vs. The Ropar Distt. Coop. Milk Producers Union Ltd. (ITA 102-2024 (O&M) dated 18-09-2024). The Hon’ble Court, at para-5, held that merely on account of change of opinion, the order of AO could not be interfered with u/s 263. To find that the order was erroneous, revisionary authority has to give a finding that no enquiry was conducted by AO and there was non-application of mind. In the present case, as noted in preceding paragraphs adequate enquiry has duly been conducted by AO during assessment proceedings and therefore, the impugned revision could not be held to be justified,

-Sd- -Sd- (LALIET KUMAR) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AS Dated: 07-07-2026 आदेश की �ितिलिप अ�ेिषत /Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

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ITAT CHANDIGARH