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Income Tax Appellate Tribunal, DELHI BENCH “F”: NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M. 1. This appeal is filed by the assessee against the order of the ld Pr. CIT, New Delhi dated 05.2.2018 u/s 263 of the Act for Assessment Year 2014-15. 2. The assessee has raised the following grounds of appeal:- “1. On the facts and in the circumstances of the case and in law the Pr. Commissioner of Income Tax erred in invoking the revisionary powers u/s 263 of the Income Tax Act, 1961. The revision is ordered tentatively in the conspicuous absence of either an error or prejudice and merely on the erroneous basis that necessary enquiries have not been made. The order being ab initio illegal and void must be quashed.”
3. Briefly stated the facts of the case shows that assessee is an individual, who filed her return of income on 18.09.2014 declaring net taxable income of Rs. 584020/-. The return of income was selected for scrutiny through CASS with reason „low net profit or loss‟. Subsequently, the assessment u/s 143(3) of the Act passed on 27.12.2016 at returned income holding that the assessee is engaged in trading in gold bars under the name & Style of M/s. Swaran Traders as a proprietary concern. Thus, the return of income filed by the assessee was accepted by the ld AO.
Rekha Gupta Vs Pr. CIT- (Assessment Year: 2014-15) 4. Subsequently, the ld Pr. CIT, on examination of record, found that the ld AO accepted the return of income without carrying out relevant investigation/enquiry with respect to unsecured loans received by the assessee. He stated that for loan establishing identity, creditworthiness and genuineness of the transaction is necessary. It was further stated that the assessee has furnished party-wise sales and purchase details which is not in consonance with the sales and purchase shown in profit and loss account. Thus, show cause notice u/s 263 was issued on 23.10.2018. In the shows cause notice it was noted that the assessee has made an addition to the capital amounting to Rs. 40 lakhs from four parties. Some of them were old parties, however, an addition of Rs. 3925000/- was taken during the year. Thus, the ld CIT said that no enquiry was made by the ld AO regarding verification of unsecured loan as well as with respect of sale and purchase itself. The ld Pr. CIT held that case falls u/s explanation 2 to section 263 of the Act. Consequently, it was also stated that unsecured loan taken during the year of Rs. 3996000/- from a Shri Jagjit Singh was not verified.
The assessee was given an opportunity by ld CIT and held that the order passed by the ld AO is erroneous and prejudicial to the interest of the revenue as the ld AO has accepted the claim without any enquiry with respect to the unsecured loans. With respect to the difference between the party wise sales and purchase amount and its reflection in profit and loss account, shows that the difference of Rs. 9183981/- in sales and Rs. 8719753/- in purchase. Thus, no enquiry was made by the ld AO on this issue. Consequently, it was held that the assessment order passed on 27.12.2016 is erroneous and prejudicial to the interest of revenue.
Before us the ld AR submitted that the ld AO has made a detailed enquiry with respect to the unsecured loan from Mr. Jagjit Singh. He referred to page No. 8 of the paper book which is a letter dated 18.11.2016, wherein, copy of the confirmation along with bank account was furnished. He submitted that primary onus cast upon the assessee has been discharged. He further referred to page 22 the income tax return, filed by lender for three years. He further referred to page 25 wherein, total source of funds Page | 2 Rekha Gupta Vs Pr. CIT- (Assessment Year: 2014-15) was shown of Rs. 41,49,569/-. In view of this he submitted that the assessee has completely discharged his onus to the extent to the above unsecured loan. With respect to sales and purchases details party wise details he referred to page Nos. 27 to 46 of the paper book to show that on 26.11.2016 the assessee submitted the details of purchase and sales along with details of inventories as desired by the ld AO. He further referred to the purchase ledger of the parties and sales ledger of the parties from the books and explained difference found by the ld CIT stating that it is tax amount that does not credited to the trading account but to the respective account. He thus, submitted that the complete enquiry was made by the ld AO on this two counts. He further referred to notice u/s 142(1) dated 12.09.2016, wherein, annexure A from Sl No. , where information on these two issues were asked explanations/ submissions were provided He therefore, submitted that there is proper enquiry made by the ld AO. He further stated that the ld CIT did not specify what is the error in the order of the ld AO. He also referred to the decision of the Hon'ble Delhi High Court in ITO Vs. DG Housing Projects Ltd 343 ITR 329 to support his contentions.
The ld DR vehemently supported the order of the ld Pr CIT by submitting the gist of various decisions.
We have carefully considered the rival contentions and also perused the orders of the ld AO and Pr. CIT. According to the provisions of section 263 of the Act, after examination of records, the ld CIT finds that the order is erroneous and prejudicial to the interest of the revenue, then, he has power to revise such orders. Explanation 2 to that section has been inserted w.e.f 01.06.2015 of Finance Act 2015, wherein, in clause (a) it is provided that if an order is passed without making enquiry or verification which should been made, the order passed by the ld AO shall be deemed to be erroneous insofar as it is prejudicial to the interest of the revenue. In the present case the assessee is engaged in trading in gold bars under the name & Style of „M/s. Swaran Traders‟ as a proprietary concern. The case of the assessee was selected under CASS for scrutiny with a reason of “Low net profit or loss shown from large gross receipt. Therefore, the mandate given to the ld AO was to examine the low net profit. The ld CIT holds that order is Page | 3