M/S L.B.WINES PRIVATE LIMITTED,LUDHIANA vs. PR.CIT-1, LUDHIANA

The Ld. AR advanced arguments and made out a case of one of the possible views. The Ld. CIT-DR also advanced arguments and submitted that Ld. AO failed to make requisite enquiries on the issues as flagged in revisionary order. Having heard vehement arguments of both the sides and upon perusal of case records, our adjudication would be as under. The assessee being resident corporate assessee is stated to be engaged in wholesale business of liquor. Proceedings before lower authorities 3.1 From the facts, it emerges that the assessee’s return of income was scrutinized u/s 143(3) and Ld. AO made addition of unvouched expenses for Rs.2.25 Lacs. During the course of assessment proceedings, notices were issued u/s 142(1) on various occasions along with detailed questionnaire / queries wherein the assessee was directed to file the requisite details. The same were duly responded to by the assessee and after due consideration thereof, the assessment was framed by Ld. AO substantially accepting the returned income of the assessee. 3.2 Subsequently, Ld.Pr. CIT, upon perusal of case records, alleged that the assessee did not reflect certain receipts of Rs.125 Lacs from two entities though TDS credit was claimed against the same. The Ld. Pr. CIT also disputed that as per TCS claim, the assessee made purchase of Rs.11.33 Crores whereas the assessee reflected purchases of Rs.5.73 Crores only which was not reconciled by the assessee and Ld. AO failed to apply his mind on this use. The Ld. Pr. CIT also alleged that TCS claim was not properly verified / examined. Lastly, the assessee did not deduct TDS u/s 194I on rental payments of Rs.2.70 Lacs. Since the assessee failed to file any satisfactory response, Ld. Pr. CIT, invoking Explanation-2(a) to Sec.263, set aside the assessment order for reconsideration / verification of these issues as flagged in the revisionary order. Aggrieved, the assessee is in further appeal before us. Our findings and Adjudication 4. From the facts, it emerges that the assessee’s return of income for this year was scrutinized u/s 143(3) and an assessment was framed on 22-12-2017. During the course of assessment proceedings, notices u/s 142(1) with detailed questionnaire was issued on various occasions which were duly been responded to by the assessee and the requisite details were furnished to Ld. AO. In its reply dated 15-12-2017, the assessee furnished details of purchases and sales in the format as required by Ld. AO. The party-wise sales were furnished by the assessee. The assessee also furnished party-wise purchases along with the amount of TCS. The purchase figures of Rs.5.73 Crores as reflected in the financial statements were duly reconciled since the assessee received substantial rebates and discounts. The copies of purchase invoices were also placed before Ld. AO. These details are also placed before us in the paper-book. The TCS amount was arrived at Rs.13.30 Lacs. Similarly, in its reply dated 18-12- 2017, the assessee furnished part-wise rent paid by it during the year. The copies of purchase invoices were also placed before Ld. AO. Upon perusal of all these replies and documents, it could be said that whatever information was called for by Ld. AO, the samewas duly been supplied by the assessee. The Ld. AO considered the replies of the assessee and after having satisfied with aforesaid explanation as furnished by the assessee, Ld. AO, barring small disallowance u/s 14A, chose to accept the returned income of the assessee. It could thus be seen that Ld. AO had raised a specific query on issues as flagged in the revisionary order and accepted the claim of the assessee with due application of mind. Therefore, it is a case of acceptance of one of the plausible views which was more on facts and the said view could not be said to be opposed to any law or statutory provisions. The Ld. AO, in our opinion, had taken one of the plausible views in the matter and therefore, Ld. Pr. CIT could not be said to be justified in substituting the view of Ld. AO with that of his own view. Simply because some further verification was required or simply because the verification was not done in a particular manner, the same could not justify revision of the order unless it was shown that the view of Ld. AO was erroneous or opposed to any law.

The Hon’ble Supreme Court in Malabar Industrial Co. Ltd. vs. CIT (supra) has held that the phrase 'prejudicial to the interests of the revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest of the revenue. For example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue, unless the view taken by the Income-tax Officer is unsustainable in law. The said principal has been reiterated by Hon’ble Court in its subsequent judgment titled as CIT V/s Max India Ltd. (295 ITR 282). Similar principal has been followed in Grasim Industries Ltd. V/s CIT (321 ITR 92). The ratio ofall these decisions is that where two views are possible and AO has preferred one view against another view, order could not be said to be erroneous or prejudicial to the interest of the revenue.

Therefore, on the given facts, the impugned revision of assessment order could not be sustained in law. We order so. The assessment as framed by Ld. AO stand restored back.

The appeal stands allowed in terms of our above order. Order pronounced on 21-04-2025. (RAJPAL YADAV) (MANOJ KUMAR AGGARWAL) VICE PRESIDENT लेखासद" /ACCOUNTANT MEMBER Dated: 21-04-2025. 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