MRS. NAHID BEGUM,CUTTACK vs. PRINCIPAL CIT, CUTTACK

आयकर अपीऱीय अधिकरण, कटक न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAVAN KUMAR GADALE, JM आयकर अपीऱ सं./ITA No.321/CTK/2016 (नििाारण वषा / Assessment Year :2011-2012) Mrs. Nahid Begum, Vs. Pr.CIT, Cuttack Charge, At-Mani Sahoo Chowk, Cuttack Buxi Bazar, Cuttack-753001 स्थायी लेखा सं./जीआइआर सं./ PAN/GIR No. : ACLPB 1495 M (अपीऱाथी /Appellant) (प्रत्यथी / Respondent) .. निर्ााररती की ओर से /Assessee by : Shri C.R. Dash, AR राजस्व की ओर से /Revenue by : Shri Piyush Kolhe, CITDR सुनवाई की तारीख / Date of Hearing : 27/12/2017 घोषणा की तारीख/Date of Pronouncement 28/12/2017 आदेश / O R D E R Per Shri Pavan Kumar Gadale, JM: The assessee has filed an appeal against the order of CIT, Cuttack, dated 10.3.2016, passed u/s.263 of the Act for the assessment year 2010-2011. 2. The assessee has raised the following grounds :- 1. For that, the Ld. AO has rejected the book result by invoking section 145 of the Act in the absence of proper books of accounts of the appellant while framing the assessment. Thereafter estimated the net profit after taking past records and comparable case of the appellant by taking the N P & GP ratio into consideration and passed the assessment order u/s.143 (3) of the Act. Thereafter the subsequent impugned order u/s. 263 of the Act has been passed by the Ld. Pr. CIT, Cuttack Charge, to revise the said assessment order with the thought of proper examination of the trade creditors in order to make further addition, is mere change of opinion, non exercise of judicial mind by the Ld. Pr. CIT, Cuttack Charge. The statutory revision power vested u/s. 263(1) of the Act has been incorrectly exercised by the Ld. Pr. CIT; therefore the order u/s.263 is impermissible under law. 2. For the Ld. Pr. CIT has wrongly acknowledged the assessment order passed u/s.143(3), as erroneous and prejudicial to the interest of revenue, thereafter set aside the same for re-adjudication with certain directions to the Ld. AO to make further examination afresh

2 ITA No.321/CTK/2016 and reframe the assessment order in order to make further addition is impermissible under law as settled. Thus the revision order u/s. 263 is liable to be quashed. 3. For that the invocation of statutory revision power vested u/s. 263(1) of the Act by the Ld. Pr. CIT is not proper for the reasons that the assessment order passed u/s. 143(3) of the Act after rejection of book result by the Ld. AO, is neither erroneous nor prejudicial to the interest of revenue, therefore the order u/s.263 is lack of jurisdiction hence impermissible under Law as settled. 4. For th6t the appellant craves leave to urge any other grounds of appeal and to file written submission along with the relevant documents in the shape of paper book, if so arises at the time of hearing of this appeal. 3. Brief facts of the case are that the assessee derives income from wholesale of medicine drugs and medical equipments etc. in the name and style of M/s A.N.Enterprises. The return of income for the A.Y.2011- 2012 was filed on 31.3.2011 declaring total income of Rs.11,43,391/- and the AO completed the assessment u/s.143(3) of the Act determining total income of Rs.12,81,110/-. 4. The Pr.CIT on examination of records, found that the assessment order passed u/s.143(3) of the Act is erroneous and prejudicial to the interest of revenue as total lack of enquiry by the AO with respect to substantiate trade creditors in the assessment proceedings. Therefore, the Pr.CIT set aside the assessment order and restored back to the file of AO for adjudication on the issue of sundry creditors afresh and reframe the assessment after proper enquiry and investigation of the sundry creditors. 5. Ld. AR submitted that the order passed by the Pr.CIT u/s.263 of the I.T.Act. is mere change of opinion and non exercise of judicial mind. Ld. AR also submitted that invocation of statutory revision power vested u/s.

3 ITA No.321/CTK/2016 263(1) of the Act by the Ld. Pr. CIT is not proper for the reasons that the assessment order passed u/s. 143(3) of the Act is after rejection of books of accounts by the Ld. AO, which is neither erroneous nor prejudicial to the interest of revenue, therefore the order u/s.263 is lack of jurisdiction hence impermissible under Law and the same should be quashed and filed written submissions. 5. Contra, ld. DR relied on the orders of Pr.CIT and submitted that the assessee has failed to furnish any details/documents in support of the sundry trade creditors to substantiate the genuineness, identity and creditworthiness and the Pr. CIT has passed the revision order u/s.263 of the Act Hence, the appeal of the assessee be dismissed and placed reliance on the decision of Hon’ble Supreme Court in the case of Rajmandir Estates (P) Ltd. (2017) 77 taxmann.com 285 (SC). 7. We have heard rival submissions and perused the material on record. Prima facie, we find that the Pr. CIT restored back the assessment order u/s.143(3) of the Act to the file of AO with a direction to adjudicate on the issue of sundry creditors afresh and reframe the assessment after proper enquiry and investigation of the sundry creditors. The AO in the assessment order observed that the assessee has failed to produce the bills and vouchers, cash book and stock register for verification and in absence of these documents the AO rejected the books of accounts u/s.145 of the Act and overlooked enquiry of sundry creditors, in our opinion, the ld. Pr. CIT was justified in treating the assessment order as erroneous and prejudicial to the interest of revenue and we

4 ITA No.321/CTK/2016 support our view with the recent decision of Hon’ble Supreme Court in the case of Deniel Merchants P. Ltd. & Anr Vs. Income Tax Officer & Anr. Special Leave to Appeal (C) No.(s).23976/2017 along with other connected appeals, dated 29.11.2017 wherein the Hon’ble Supreme Court has held as under :- “In all these cases, we find that the Commissioner of Income Tax had passed an order under Section 263 of the Income Tax Act, 1961 with the observations that the Assessing Officer did not make any proper inquiry while making the assessment and accepting the explanation of the assessee(s) insofar as receipt of share application money is concerned. On that basis the Commissioner of Income Tax had, after setting aside the order of the Assessing Officer, simply directed the Assessing Officer to carry thorough and detailed inquiry. It is this order which is upheld by the High Court. We see no reason to interfere with the order of the High Court.” Considering the observations of the Hon’ble Supreme Court and applying the ratio of decision to the facts and circumstances of the present case, we are of the substantive opinion that the Pr.CIT is justified in invoking his powers conferred u/s.263 of the Act. Accordingly, we are not inclined to interfere with the revision order of the Pr. CIT and the same is upheld and the appeal of the assessee is dismissed. 8. In the result, appeal of assessee is dismissed. Order pronounced in the open court on this 28/12/2017. Sd/- Sd/- (N. S. SAINI) (PAVAN KUMAR GADALE) ऱेखा सदस्य / ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनांक Dated 28/12/2017 प्र.कु.मि/PKM, Senior Private Secretary आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant- प्रत्यथी / The Respondent- 2. आयकर आयुक्त(अपील) / The CIT(A), 3. आयकर आयुक्त / CIT 4. निभागीय प्रनतनिनर्, आयकर अपीलीय अनर्करण, कटक / DR, ITAT, Cuttack 5.

5 ITA No.321/CTK/2016 गार्ड फाईऱ / Guard file. 6. सत्यापपत प्रतत //True Copy// आदेशािुसार/ BY ORDER, (Senior Private Secretary) आयकर अपीऱीय अधिकरण, कटक / ITAT, Cuttack