M/S. CCOMMERCIAL CARRIERS LTD,BALLYGUNGE, KOLKATA vs. PR. CIT, RANCHI, RANCHI
Facts
The assessee, a transport and infrastructure company, had its original assessment order under Section 143(3) revised by the PCIT under Section 263. The PCIT observed that the Assessing Officer (AO) failed to properly inquire into large sundry creditors (₹2.42 crores) and a discrepancy in investment in trucks/trailers (₹30.18 lakhs), deeming the assessment erroneous and prejudicial to the revenue.
Held
The tribunal found that the AO had conducted proper inquiries by issuing a notice under Section 142(1) and the assessee had provided detailed replies and confirmations. The AO's acceptance of the explanations without additions, even after PCIT's specific directions, indicated due application of mind. Citing a Supreme Court judgment, the tribunal held that the PCIT erred in invoking Section 263 as the original assessment was neither erroneous nor prejudicial to the interest of revenue, and thus set aside the revisionary order.
Key Issues
Whether the PCIT was justified in invoking revisionary jurisdiction under Section 263 on grounds of alleged lack of inquiry by the AO into sundry creditors and investment in assets, thereby rendering the original assessment erroneous and prejudicial to the revenue.
Sections Cited
Section 263, Section 143(3), Section 142(1), Section 37
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Income Tax Appellate Tribunal, BENCH-RANCHI
Before: Shri Sonjoy Sarma & Shri Ratnesh Nandan Sahay
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH-RANCHI VIRTUAL HEARING AT KOLKATA Before Shri Sonjoy Sarma, Judicial Member and Shri Ratnesh Nandan Sahay, Accountant Member I.T.A. No.28/Ran/2021 Assessment Year: 2016-17 M/s Commercial Carriers Ltd.....................…...........................……….……Appellant 1F & G, Swinhoe Castle, Swinhoe Street, Ballygunge, W.B – 700019. [PAN:AAACC6949F] vs. PCIT, Ranchi……………..…..…..….…..….........……........……...…..…..Respondent Appearances by: Shri C M Roy, AR, appeared on behalf of the appellant. Shri Rajib Jain, CIT- DR, appeared on behalf of the Respondent. Date of concluding the hearing : August 04, 2025 Date of pronouncing the order : August 07, 2025 ORDER Per Sonjoy Sarma, Judicial Member: The present appeal has been preferred by the assessee against an order dated 18.03.2021 of the Principal CIT, Ranchi [hereinafter referred to as ‘PCIT’] exercising revision jurisdiction u/s 263 of the Income Tax Act (hereinafter referred to as the ‘Act’) revising the original assessment order dated 26.12.2018 passed under Section 143(3) of the Act. 2. Brief facts of the case that the assessee is a company engaged in the transport and infrastructure business. During assessment proceedings, the Assessing Officer (AO) passed an order under section 143(3), determining the total income at ₹9,95,690, after making disallowances, including ₹3 lakhs on trip expenses and ₹6,95,692 under section 37 of the Act. However, on examination of the assessment records, the Ld. PCIT Ranchi, observed that Sundry creditors amounting to ₹2,42,35,736 were shown in the audited balance sheet, but no enquiry or verification was made during assessment proceeding and similarly issue relating to Investment in purchase of trucks and trailers amounting to ₹5,10,44,030 was recorded; however, the assessee had
I.T.A. No.28/Ran/2021 M/s Commercial Carriers Ltd produced bills and vouchers for only ₹5,40,62,030, indicating a discrepancy of ₹30,18,000, which was not explained. Based on the above, Ld. PCIT invoked powers under Section 263 of the act, set aside the assessment order, and directed a fresh assessment after proper verification.
Dissatisfied with the above order, assessee is in appeal before this tribunal. At the time of hearing, ld. AR stated that the issue relating to sundry creditors was duly examined during the original assessment proceeding and the Assessing Officer issued notice u/s 142(1) dated 15.01.2018, the relevant portion of the said notice is extracted hereunder:
3.1 In response to the said notice u/s 142(1) of the Act, the assessee submitted detailed replies with confirmation of accounts, books of
I.T.A. No.28/Ran/2021 M/s Commercial Carriers Ltd account, and supporting records, which were verified by the AO and passed an order under section 143(3) of the Act. The sundry creditors were part of audited books of accounts, and the trend of past years (FY 2014–15 and FY 2013–14) showed a similar pattern of high outstanding creditors due to the nature of the business (transportation). Similarly on the issue of investment in trucks and trailers, the assessee explained that the difference of ₹30.18 lakhs represented discounts received from the dealer. Bills and supporting documents were submitted, and no addition was made on this account in the reassessment order passed by AO under Ld. PCIT’s direction. Therefore, the assessee contended that there was due application of mind by the AO in the original assessment order and the revision under section 263 was unjustified. 4. On the other hand, Ld. DR. contended that the AO had issued notice under section 142(1), but there was no clear finding in the assessment order on whether the sundry creditors were properly verified or not. Therefore he stated that the Ld. PCIT was justified in exercising revisional jurisdiction to ensure proper examination and safeguard the interest of revenue. 5. We after hearing the rival submission of the party and perusal of material available on record, we find that the issue relating to sundry creditors of ₹2.42 crores was duly examined by the AO at the time of original assessment as from the notice under section 142(1) specifically required submission of details and confirmations and the assessee complied with the notice, filed confirmations, and the AO accepted the same without making any additions while framing the original assessment order u/143(3) of the Act. Therefore, it cannot be said that the AO failed to make any enquiry or that the assessment order was erroneous or prejudicial to the interest of revenue. Similarly, on the issue of purchase of trucks and trailers, no addition was made in the reassessment order under section 143(3) of the Act even after specific direction from Ld. PCIT, indicating that the AO was satisfied with the 3
I.T.A. No.28/Ran/2021 M/s Commercial Carriers Ltd assessee’s explanation regarding the discount. Moreover, there is no requirement under the Act that the AO must discuss every verified item in the body of the assessment order. It is sufficient if the enquiry was made and the AO was satisfied. As held by the Hon’ble Supreme Court in Malabar Industrial Co. Ltd. v. CIT [(2000) 243 ITR 83 (SC)], for invoking Section 263, both the conditions must be satisfied: 1. The order must be erroneous, and 2. It must be prejudicial to the interest of the Revenue. If either of the conditions is absent, the jurisdiction under Section 263 cannot be exercised. In the present case, both the issues raised by the PCIT—viz. sundry creditors and investment in trucks—had been examined by the AO. Even after the direction of the PCIT, the AO did not make any addition regarding the alleged discrepancy of ₹30.18 lakhs, which reinforces that the explanation provided by the assessee was acceptable and on record. Therefore, the assessment order cannot be held erroneous or prejudicial merely because the PCIT held a different view. We, After considering the all the facts involved in this appeal, we find that the Ld. PCIT erred in invoking Section 263 of the Act as the AO had already examined both issues during the original assessment proceedings. Accordingly the revisionary order dated 18.03.2021 passed by the Ld. PCIT under Section 263 of the act is set aside. 6. In the result, the appeal of the assessee is allowed. Kolkata, the 7th August, 2025.
Sd/- Sd/- [Ratnesh Nandan Sahay] [Sonjoy Sarma] Accountant Member Judicial Member
Dated: 07.08.2025. RS
I.T.A. No.28/Ran/2021 M/s Commercial Carriers Ltd Copy of the order forwarded to: 1. Appellant 2. Respondent 3. CIT(A)- 4. CIT- , 5. CIT(DR),
//True copy// By order Assistant Registrar, Kolkata Benches
