OMSAIRAM STEEL & ALLOYS PVT.LTD,JALNA vs. PR. COMMISSIONER OF INCOME-TAX-1, AURANGABAD

आदेश / ORDER

PER PARTHA SARATHI CHAUDHURY, JM :

This appeal preferred by the assessee emanates from the order of Pr. Commissioner of Income Tax-1, Aurangabad dated 08.12.2017 for the assessment year 2013-14 passed u/s.263 of the Income Tax Act, 1961 (hereinafter referred to as the ‘the Act’) as per following grounds of appeal:

“1. Legality of Corrigendum order passed u/s. 263 of the Act. The learned Principal CIT is erred in passing corrigendum order without passing an order u/s. 263 for the year under consideration.

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A corrigendum is akin to errata and the corrigendum order did not merely rectify any mistake in the earlier order, but simply eclipsed the same, and therefore, the same amounts to review by the Pr.CIT. The corrigendum order passed u/s. 263 is bad in law, which may kindly be treated void. 2. The Assessment order passed u/s.143(3) by the learned ACIT is not an erroneous order in any way. The action of learned Pr.CIT u/s.263 is wholly unreasonable and bad in law, which may kindly be quashed. 3. The appellant may kindly be allowed to add and amend the ground of appeal.”

under CASS to examine the reason for:

i) Difference in opening stock in current year with the closing stock of the previous year. ii) Large value of squared up loans during the year (Form 3CD) & iii) Unsecured loans-where no returns of income (Form 3CD) have been filed.

The Assessing Officer passed the order u/s.143 of the Act on 23.03.2016

assessing total income of Rs.37,21,862/- as against the returned income of

Rs.3,94,718/-.

of Income Tax was undertaken because of following issues:

i) That the assessment was completed without verification of identity and creditworthiness and genuineness of the persons from whom the assessee-company borrowed unsecured loans.

ii) It is the ground of Pr. Commissioner of Income Tax that although certain details have been called for by the Assessing Officer and the assessee filed certain details but nowhere in the file/record, it is seen that requisite enquiries have been conducted by the Assessing Officer which makes the assessment erroneous and prejudicial to the interest of the Revenue.

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iii) Apart from this issue, the section 263 of the Act was also invoked as to whether liability of disallowance u/s.43(B) of the Act for payment of MVAT after the expiry of due date of return of income iv) That as to whether the assessee has paid statutory dues for PF & ESIC in contravention of section 36(i)(va) r.w.s. 2(24)(x).

However, as pleaded in the grounds before us, only the order passed

u/s.263 of the Act is challenged, primarily, whether the identity,

creditworthiness and genuineness of the loans creditors were identified by the

Assessing Officer or not.

that this issue of loan creditors and their identity, creditworthiness and

genuineness of the transaction has been enquired by the Assessing Officer in

detail. That in page 2 to 3 of the paper book filed, there is detailed

questionnaire which was issued by the Assessing Officer and therein Sr.No.11

of questionnaire, the assessee company was asked for details of unsecured

loans/deposits/advances accepted and/or repaid, along with account

extracts, note on purpose, third party confirmation and documentary

evidences for identity and creditworthiness of loans creditors and

genuineness of transactions to which the assessee has provided detailed

answer which is included in page 7 of the paper book along with Annexure G.

That all details required by the Assessing Officer had been furnished by the

assessee. The Ld. AR further stated that there are total 101 loan creditors

and all of them have given their confirmations. The Bench put a question to

the Ld. AR to furnish copies of all confirmations. However, the fact that

confirmations of parties were received by the Assessing Officer, has not been

disputed by the Ld. DR. That after obtaining confirmations, the Assessing

Officer further issued notices u/s.133(6) of the Act and out of 101 loan

creditors, only 19 notices u/s.133(6) of the Act were returned un-served due

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to change of address and thereafter, the assessee had provided fresh address

for 4 parties out of those 19. The Ld. AR submitted that out of balance i.e. 19-

4=15, one party is not at all related and how his name appeared in the loan

creditors list is also not known to the assessee. Thus, number of parties

remains 14 in which the notice u/s.133(6) of the Act could not be served due

to change of address. The Ld. AR vehemently argued that it is agreed by the

Pr. CIT-1, that this issue was enquired by the Assessing Officer but it was not

done upto the intellectual satisfaction level of the Pr. Commissioner of Income

Tax-1 which is just difference of opinion and view and for which the order

passed u/s.263 of the Act is not maintainable.

4.1 The Ld. AR placed reliance on the decision of Hon'ble Bombay High

Court in the case of The Commissioner of Income Tax-8 Vs. M/s. Fine

Jewellary (India) Ltd., ITA No.296 of 2013 and the appeal filed by the Revenue

was dismissed by the Hon'ble High Court by upholding the findings of the

Tribunal which was passed after relying on the judgment of Hon'ble Supreme

Court of India in the case of CIT Vs. Max India Ltd. reported at 295 ITR 282

wherein it has been held that it is settled principle of law that if after

examining the details, the Assessing Officer has taken a view which is a

possible view then it cannot be treated that the order passed by the Assessing

Officer is erroneous and prejudicial to the interest of the Revenue.

u/s.263 of the Act by the Ld. Pr. Commissioner of Income Tax and also has

placed reliance on the decision of the Hon'ble Bombay High Court in the case

of Shoreline Hotel Private Limited Vs. Commissioner of Income Tax, reported

as (2018) 305 CTR 491 (Bom.).

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pronouncements placed before us. That this issue is predominantly the

matter relating to facts, where on the facts of verification of loan creditors, the

Assessing Officer had conducted sufficient enquiry. The fact on record clearly

establishes that detailed answer as asked by the Assessing Officer to the

assessee regarding loan creditors through questionnaire, was duly furnished

by the assessee. The Assessing Officer, thereafter, had issued notices

u/s.133(6) of the Act to all the parties. The Pr. Commissioner of Income Tax,

in his order has also agreed that enquiry was done by the Assessing Officer

but not requisite enquires conducted as according to him. The position of law

absolutely clear as held by the Hon'ble Apex Court in the case of CIT Vs. Max

India Ltd. (supra.) that when the Assessing Officer has taken a view which is

a possible view then it cannot be treated that the order passed by the

Assessing Officer is erroneous and prejudicial to the interest of the Revenue.

On the other hand, case laws relied on by the Ld. DR is substantially

different on facts from case of the assessee.

Commissioner of Income Tax u/s.263 of the Act is arbitrary and bad in law,

therefore, should be quashed. We order accordingly.

In the combined result, appeal of the assessee stands allowed. 8.

Order pronounced on 21st day of January, 2019.

Sd/- Sd/- D. KARUNAKARA RAO PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER

पुणे / Pune; �दनांक / Dated : 21st January, 2019. SB

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आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :

अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The Pr. CIT-1, Aurangabad. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” ब�च, 4. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 5.

// True Copy // आदेशानुसार / BY ORDER,

�नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.

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Date 1 Draft dictated on 09.01.2019 Sr.PS/PS 2 Draft placed before author 11.01.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order