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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: MS. SUCHITRA KAMBLE & SHRI B.M. BIYANI
आदेश / O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by revision-order passed by Ld. Pr. Commissioner of Income-Tax-1, Bhopal (in short “Ld. PCIT”) dated 19.03.2021 u/s 263 of the Income-tax Act, 1961 (in short “the Act”), which in turn arises out of assessment-order dated 29.12.2017 passed by Ld. ITO-3(1), Bhopal (in short “Ld. AO”) u/s 144 of the act for Assessment-Year 2015-16, the assessee has filed this appeal.
2. By means of various grounds raised in the appeal-memo, the assessee claims that the revision-order passed by Ld. PCIT is not justified and deserves to be quashed.
Nidhi Jain Assessment Year 2015-16 3. This appeal is required to be argued by Ld. CIT-DR from revenue side, but when the matter was called for hearing, none appeared on behalf of revenue. It is observed that the revenue has been seeking regular adjournments. Vide 1st letter dated 12.08.2022, adjournments have been sought for cases fixed on 16.08.2022 to 18.08.202 on medical-ground of Ld. CIT-DR. Thereafter, vide 2nd letter dated 18.08.2022 (accompanied by a certificate of Dr. Manish Nema), adjournments have been sought for cases fixed on 22.08.2022 to 23.08.2022 on medical-ground. Again vide 3rd letter dated 23.08.2022, adjournments have been sought for the cases fixed on 24.08.2022 to 25.08.2022 on medical-ground and in the same letter it is also mentioned that the charge had been given to a different CIT-DR, but interestingly it is also mentioned that the new CIT-DR is attending training at IIM, Ahmedabad and therefore unable to represent. It is also observed that in the 2nd letter dated 18.08.2022 and 3rd letter dated 23.08.2022, although request has been made to grant adjournments in “following cases” or “cases as per list” but no details of cases for which adjournments were required is actually furnished. The revenue has not taken care to make a suitable arrangement to represent its cases. Initially for a few days, the ITAT has allowed adjournment-requests but thereafter it was not possible to entertain such requests any more due to discomfort to the litigants and their counsels. Therefore, the adjournment-request of revenue is not accepted in this appeal. We proceed to dispose of appeal after hearing the Ld. AR and material available on record.
Briefly stated the facts are such that the assessee filed return of income declaring a total income of Rs. 4,27,600/- on 24.09.2015, which was selected under “limited scrutiny” through CASS to examine two issue, viz. (i) Sales-turnover mismatch, and (ii) Increase in capital. Ld. AO issued statutory notices u/s 143(2)/142(1) which were complied with by the assessee and the details and documents as required by Ld. AO were filed. Finally, Ld. AO completed assessment at a total income of Rs. 70,19,123/- after making certain additions. Subsequently, Ld. PCIT examined the records of assessment-proceeding and observed that the assessment-order Page 2 of 13
Nidhi Jain Assessment Year 2015-16 passed by Ld. AO is erroneous in so far as it is prejudicial to the interest of revenue for the reason that the Ld. AO did not examine “increase in closing stock”, a component of increase in capital, amounting to Rs. 31,40,298/-. Ld. PCIT, therefore, initiated action u/s 263 of the Act.
The assessee submitted reply to Ld. PCIT in detail on 19.03.2021 wherein all facts were narrated to prove that the Ld. AO had examined the “increase in closing stock” of Rs. 31,40,298/- and completed assessment after having been satisfied with the submission of assessee, therefore there was no error in the assessment-order. However, the Ld. PCIT was not satisfied with the submission of assessee and passed revision-order on 19.03.2021 holding the assessment-order as erroneous and prejudicial to revenue. Ld. PCIT further set aside the assessment-order and directed the Ld. AO to make a de novo assessment after examining the issue afresh. The observation and conclusion made by Ld. PCIT is extracted below:
“4.1 During the year under consideration, the assessee increased her capital and furnished justification for increase in capital. In regard to justification of increase in capital due to change in the closing stock, no explanation has been brought on record. The assessee has not furnish any valid reason to explain the discrepancy in opening and closing stocks as reported in the original ITR and as in the ITR in response to notice u/s 142(1) at the stage of assessment proceedings. The assessee did not furnish any stock register, purchase vouchers, transport receipts or any other supporting document to substantiate her claim. In absence of documentary evidences and satisfactory explanation the source of the increase in capital could not be considered as explained. The issue concerns here is that whether the assessing officer made all necessary enquiries which should have been made during the assessment. On perusal of case record, it is clear that the assessing officer has not enquired into the issue. It is incumbent upon the assessing officer to investigate the facts required to be examined and verified to complete the assessment as per law. If the Assessing Officer fails to conduct the said investigation, he commits an error and the word ‘erroneous’ includes failure to made the enquiry. In such cases, the order becomes erroneous because enquiry or verification has not been made. As per the amendment made to clause (a) to explanation 2 (inserted by Finance Act 2015 w.e.f. 1.6.2015) of section 263(1) of I.T. Act which is reproduced here below:
Nidhi Jain Assessment Year 2015-16 “For the purposes of this, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interest of revenue, if in the opinion of the Principal Commissioner or Commissioner. (a) The order is passed without making inquiries or verification which should have been made. (b) The order is passed allowing any relief without inquiries into the claim. (c) .. (d) … 5. For the above reasons I am satisfied that this is a fit case where action u/s 263 is justified and inescapable.”
Being aggrieved by revision-order passed by Ld. PCIT as aforesaid, the assessee has filed this appeal and now before us.
During hearing, Ld. AR made a very strong submission, from very beginning till end, to canvass that the observation of Ld. PCIT that the ld. AO has not examined the issue of “increase in closing stock”, is totally incorrect and far from truth. Ld. AR submitted that a bare perusal of the case-record available in the file of revenue, is sufficient enough to demonstrate that the Ld. AO has in fact examined the issue of “increase in closing stock” before finalizing assessment. In support of this, Ld. AR drew our attention to the following documents which are placed in Paper-Book:
(i) Firstly, Ld. AR carried us to the assessment-order passed by Ld. AO, where the Ld. AO has as observed as under:
“इस काया�लय �वारा जो ��नावल� जार� क� गई थी, िजसके जवाब करदाता के सी.ए. �वारा समय-समय पर �ल�खत म� दा�खल �कया गया, जो �क �रकाड� पर रखा गया है । सुनवाई के दौरान सी.ए �वारा कर �नधा�रण वष� 2015-16 क� दा�खल क� गई आयकर �ववरणी, आयकर संगणना �ववरण, ऑ�डट �रपोट� क� कॉपी एवं ��नावल� म� चाह� गई जानका�रय� के �ल�खत जवाब भी ��तुत �कए है, जो �क �रकाड� पर रखे गए है । उनसे �करण पर चचा� क� गई । िजस �बंदु पर �करण CASS के सले�शन से �ल�मटेड संवी�ा म� चुना गया है, उस संबंध म� �ल�खत
Nidhi Jain Assessment Year 2015-16 �प�ट�करण मांगा गया, जो �क �रकाड� पर रखा है । �करण के सभी �बंदुओ पर उनसे �व�तृत चचा� क� गई ।
करदाता �वारा कर �नधा�रण वष� 2015-16 क� दा�खल आयकर �ववरणी एवं ऑ�डट �रपोट� म� करदाता क� पूंजी �. 6,64,211/- क�, सुर��त ऋण �. 27,00,909/-, अं�तम �टॉक �. 30,59,700/- दशा�या है तथा ब�लेस शीट का ब�लेस �. 46,36,257/- का दशा�या है एवं कर �नधा�रण वष� 2015-16 क� दा�खल क� गई आयकर �ववरणी एवं ब�लेस शीट म� करदाता क� पूंजी �. 1,10,08,538/- क� एवं सुर��त ऋण �. 48,79,988/- एवं अं�तम �टॉक �. 1,02,64,705/- का दशा�या है तथा बैल�स शीट का बैल�स �. 1,65,70,619/- का दशा�या है । करदाता से सुनवाई के दौरान Sales Turnover Mismatch and Increase in capital के संबंध म� �ल�खत �प�ट�करण मांगा गया था, उनके �वारा जो �ल�खत �प�ट�करण सुनवाई के दौरान ��तुत �कया गया है, वह पूण�तः संतोषजनक नह�ं है इस संबंध म� इस काया�लय से �दनांक 18.12.2017 को धारा 143(2) /धारा 142(1) के तहत नो�टस एवं एक ��नावल� जार� कर �ल�खत �प�ट�करण मांगा गया था । �क आपके �वारा कर �नधा�रण वष� 2015-16 हेतु दा�खल मूल आयकर �ववरणी एवं ऑ�डट �रपोट� तथा 14.12.2017 को दा�खल संशो�धत आयकर �ववरणी एवं संशो�धत ऑ�डट �रपोट� म� उपरो�तानुसार अंतर पाया गया है । इससे �तीत होता है �क करदाता क� लेखा पु�तक� धारा 145(3) के तहत अमा�य कर द� जाये । इस संबंध म� आप अपना �ल�खत �प�ट�करण सुनवाई �दनांक को ��तुत कर� ।
करदाता के �वारा सुनवाई के दौरान �ल�खत �प�ट�करण ��तुत �कया गया है, िजसम� उ�लेख �कया गया है �क आयकर �ववरणी के आंकड़े, Clarical Mistake के कारण, Provisional Audit Report के आंकड़� मूल आयकर �ववरणी म� ��तुत हो गये थे चूं�क म�ने सह� तरह से �यान नह�ं दे पाया था इस�लए इन आंकड़� को न माना जाये एवं �दनांक 11.09.2015 क� ऑ�डट �रपोट� एवं ब�ल�स शीट जो बाद म� ��तुत क� गई है, के सह� आंकड़े मा�य �कया जाये ।
करदाता ने अपने �ल�खत �प�ट�करण म� कहा है �क कर �नधा�रण वष� 2014-15 क� ब�ल�स शीट का अं�तम बैल�स �.30,59,700/- है इस अं�तम बैल�स को पुरानी आयकर �ववरणी कर �नधा�रण वष� 2015-16 क� म� �ारं�भक �टॉक �. 30,59,700/- दशा�ना जाना चा�हए था जो �क �ारं�भक �टॉक �. 93,61,512/- दशा�या गया है । इस �कार �. 63,01,812/- का �टॉक अ�धक के �थान पर अं�तम �टॉक �. 1,02,64,705/- दशा�या गया है एवं मजदूर� एवं बारदाना खच� �. 42,03,767/- के �थान पर �. 78,49,290/- को �ल�खत �प�ट�करण देकर �वीकृत करने हेतु अनुरोध �कया गया है । इस संबंध म� सुनवाई के दौरान करदाता एवं सी.ए.से �प�ट�करण मांगा गया था परंतु उनके �वारा कोई संतोजनक जबाव ��तुत नह�ं �कया गया है । �ल�खत जबाव Page 5 of 13
Nidhi Jain Assessment Year 2015-16 अनुसार चूं�क ये आंकड़े Provisional Audit Report के आधार पर ��तुत हो गये थे तथा Clerical Mistake के कारण गलत भर �दये गये थे अतः Provisional Audit Report के आंकडे न माना जाकर �दनांक 11.09.2015 को ह�ता��रत सह� ऑ�डट �रपोट� के आंकड़� मानने हेतु अनुरोध �कया है । करदाता �वारा कर �नधा�रण वष� 2014-15 एवं 2015-16 क� आयकर �ववरणी म� �न�नानुसार आंकड़� दशा�ये गये है : �मांक �ववरण क.�न.व. 2014-15 क� क.�न.व. 2015-16 क� �रमाक� �ववरणी अनुसार �ववरणी अनुसार 1. 4,40,67,000/- 6,72,58,506/- कुल �ब�� �. 18,82,599/- 2. सकल लाभ �. 35,30,894/- (4.27 ��तशत) (5.24 ��तशत) 5,48,916/- 3. शु� लाभ �. 7,33,723/- (1.24 ��तशत) (1.09 ��तशत) 12,30,900/- 4. मजदूर� एवं 42,03,767/- इसे 78,49,290/- बारदाना खच� (11.67 ��तशत) (2.79 ��तशत) (6.25 ��तशत) मानने हेतु अनुरोध �कया गया है।
करदाता के �वारा सुनवाई के दौरान ��तुत �कया गया �ल�खत जबाव �वीकार करने यो�य नह�ं है अतः इन ि�थ�तय� म� करदाता क� कर �नधा�रण वष� 2015-16 क� लेखा पु�तक� क� स�यता एवं पूण�ता सह� �तीत नह�ं होती है, जो गलत, �ु�टपूण�, अ�व�वसनीय या अपूण� �तीत होती है । अतः करदाता क� लेखा क� शु�ता या स�पूण�ता के बारे म� संतु�ट नह�ं हूँ, करदाता �वारा के���य सरकार �वारा अ�धसू�चत Accounting Standards का पालन उ�चत �प से नह�ं �कया जा रहा है । इससे �प�ट है �क करदाता �वारा लेखा क� प��त या अ�धसू�चत लेखा मानक� का �नय�मत �प से पालन नह�ं �कया जा रहा है इन ि�थ�तय� म� लेखा पु�तक� के प�रणाम को अमा�य �कया जाता है । अतः धारा 144 के तहत एकतरफा सव��तम �या�यक कर �नधा�रण आदेश (Best Judgement Assessment) पा�रत करते हुए करदाता के �करण म� धारा 145(3) के तहत लेखा पु�तक� को अमा�य �कया जाता है एवं करदाता के �करण� म� मूल ऑ�डट �रपोट� एवं आयकर �ववरणी म� दशा�यी गई मजदूर� एवं बारदाना खच� �. 42,03,767/- के �थान पर जो मजदूर� एवं बारदाना खच� �. 78,49,290/- �वीकृत करने हेतु अनुरोध �कया है ।
Nidhi Jain Assessment Year 2015-16 सुनवाई के दौरान करदाता एवं सी.ए.से मजदूर� एवं बारदाना खच� के �बल वाऊचर, लेखा पु�तक� इ�या�द ��तुत करने हेतु कहा गया था पर�तु उनके �वारा मजदूर� एवं बारदाना खच� के �बल वाऊचर एवं लेखा पु�तक� इ�या�द नह�ं ��तुत क� गई है । अतः मजदूर� एवं बारदाना खच� म� �. 78,49,290/-(-) �. 42,03,767/- = �. 36,45,523/- क� गई बढ़ो�तर� को करदाता क� आय म� जोडी जाती है एवं करदाता के �व�� धारा 271(1)(सी) क� शाि�त क� काय�वाह� शु� क� जाती है ।
करदाता के �वारा कर �नधा�रण वष� 2014-15 क� आयकर �ववरणी म� �ो. क� पूंजी �. 6,64211/- क� दशा�यी है एवं कर �नधा�रण वष� 2015-16 के दौरान �ो. क� पूंजी �. 1,10,08,538/- क� दशा�यी है इस �कार करदाता के �वारा इस कर �नधा�रण वष� के दौरान �. 1,03,44,327/- क� पूंजी म� अ�धक बढ़ो�तर� क� गई है, के संबंध म� आव�यक द�तावेजी सा�य मांगे गये थे, पर�तु करदाता के �वारा आव�यक द�तावेजी सा�य ��तुत नह�ं �कये गये है उनके �वारा �ल�खत जबाव म� बताया गया है �क करदाता क� ब�क म� एक सी.सी. एकाउंट �ल�मट �. 42,58,029/- क� थी िजसे Clarical Mistake के कारण सुर��त ऋण म� न दशा�कर पूंजी बढ़ो�तर� म� दशा�या गया है एवं �. 29,46,000/- क� �पछले वष� खर�द� गई अचल स�पि�त क� पूंजी म� बढ़ो�तर� क� गई है, जो �क कर �नधा�रण वष� 2014-15 क� �ववरणी म� नह�ं �दखाई गई थी शेष रा�श �. 31,40,298/- को कर �नधा�रण वष� 2015-16 के अं�तम �टॉक म� वृ�� क� गई थी िजसके कारण �ववरणी के आंकड़े गलत भर �दये गये थे । िजसे �ल�खत जबाव ��तुत कर न मानने हेतु अनुरोध �कया है ।
करदाता के �वारा कर �नधा�रण वष� 2014-15 के दौरान नवीन म�डी �ांगण कर�द, तहसील हुजूर, िजला भोपाल म� एक भूख�ड �मांक 8, �. 22,29,600/- एवं �टे�प एवं अ�य खच� हेतु �. 1,61,700/- तथा �. 5,54,700/- का दुकान हेतु खच� इस �कार कुल �. 29,46,000/- क� अचल स�पि�त खर�द� क� पूंजी म� बढ़ो�तर� करना दशा�या गया है इस पूंजी म� क� गई बढ़ो�तर� के ��ोत का �प�ट�करण मांगा गया था पर�तु उनके �वारा बताया गया है �क यह ब�क क� सी.सी. �ल�मट से �पया समय-समय पर देकर खर�द� गई थी । पर�तु अपने कथन के समथ�न म� उनके �वारा ब�क खाते क� कॉपी एवं अ�य कोई द�तावेजी सा�य ��तुत नह�ं �कया गया है । अतः �. 29,46,000/- क� अघो�षत ��ोत से �कया गया �नवेश मानते हुए करदाता क� आय म� जोड़ा जाता है एवं करदाता क� �व�� धारा 271(1)(सी) क� शाि�त क� काय�वाह� शु� क� जाती है ।“
(ii) The, the Ld. AR drew our attention to the query-letter dated 18.12.2017 issued by Ld. AO u/s 142(1), a copy of which is placed at page Page 7 of 13
Nidhi Jain Assessment Year 2015-16 No. 38 of the Paper-Book, relevant extracts thereof are being reproduced below:
“उसके प�चात समय-समय पर धारा 142(1)/143(2) के तहत नो�टस एवं ��नावल� पंजीकृत डाक से जार� कर तामील क� गई थी । िजसके अनुपालन म� �ी मयंक जैन, सी.ए. एवं करदाता के प�त �ी सतीश जैन उपि�थत हुए एवं उनके �नवेदन पर अगल� सुनवाई �त�थ 15.09.2017 �नयत क� गई थी, उनके �वारा कुछ जानका�रय� ��तुत क� है, जो �क �रकाड� पर रखी गई है ।
उनके �वारा कर �नधा�रण वष� 2015-16 क� �दनांक 14.12.2017 को दा�खल संशो�धत आयकर �ववरणी क� छाया��त, आयकर संगणना प�क एवं संशो�धत ऑ�डट �रपोट� क� कॉपी ��तुत क� है, जो �क �रकाड� पर रखी गई है । मूल आयकर �ववरणी �दनांक 24.09.2015 के साथ दा�खल ऑ�डट �रपोट� एवं �दनांक 14.12.2017 को दा�खल संशो�धत आयकर �ववरणी के साथ संल�न ऑ�डट �रपोट� म� �न�न अंतर पाया गया है :- �मांक �ववरण बढो�तर�/कमी कर �नधा�रण वष� कर �नधा�रण 2015-16 म� वष� 2015-16 म� दा�खल मूल दा�खल �ववरणी के संशो�धत अनुसार �ववरणी के अनुसार 1 93,61,512/- 30,59,700/- (-) 63,01,812/- �ारं�भक �टॉक 2 1,02,64,705/- 76,08,416/- (-) 26,56,289/- अं�तम �टॉक 3 42,03,767/- 78,49,290/- (+)36,45,523/- मजदूर� खच� 4 9,95,284/- 9,98,091/- (+) 2,807/- वेतन खच� 5 2,55,078/- 2,52,270/- (-) 2,808/- घसारा खच� 6 8,30,251/- 6,64,211/- (-) 1,66,040/- �ारं�भक पूंजी 7 97,02,124/- 29,46,000/- (-) 67,56,124/- पूंजी म� बढो�तर� 8 2,57,560/- 2,50,000/- (-) 7,560/- आहरण 9 48,79,988/- 91,38,017/- (+) 42,58,029/- सुर��त ऋण 10 1,65,70,619/- 1,39,14,044/- (-) 26,56,575/- स�पि�त एवं दा�य�व म� अंतर
उपरो�त �मांक 1 से लेकर 10 तक जो भी बढ़ो�तर�/कमी संशो�धत आयकर �ववरणी म� क� गई है। उसके �ल�खत �प�ट�करण �मांक से �हसाब से ��तुत कर� । Page 8 of 13
Nidhi Jain Assessment Year 2015-16
चूं�क आपके �वारा कर �नधा�रण वष� 2015-16 हेतु दा�खल मूल आयकर �ववरणी एवं ऑ�डट �रपोट� तथा �दनांक 14.12.2017 को दा�खल संशो�धत आयकर �ववरणी एवं संशो�धत ऑ�डट �रपोट� म� उपरो�तानुसार अंतर पाया गया है इससे �तीत होता है �क करदाता क� लेखा पु�तक� क� स�यता एवं पूण�ता सह� �तीत नह�ं होती है अतः �य� न करदाता क� लेखा पु�तक� धारा 145(3) के तहत अमा�य कर द� जाये । इस संबंध म� आप अपना �ल�खत �प�ट�करण सुनवाई �दनांक को ��तुत कर� ।
अतः इस प� के मा�यम से आपको पुनः एक अं�तम अवसर �दान �कया जा रहा है �क आप धारा 143(2)/142(1) के नो�टस के अनुपालन म� कर �नधा�रण वष� 2015-16 क� आयकर �ववरणी जमा कर उसक� पूर� आयकर �ववरणी क� छाया ��त एवं आयकर संगणना प�क, सम�त लेखा पु�तक�, खर�द �ब�� �बल, सम�त खच� के वाऊचर, देनदार� एवं लेनदार� के �ववरण, पूंजी खाता, सभी ब�क खात� के �ववरण इस काया�लय म� �दनांक 20.12.2017 तक मेरे सम� आव�यक �प से ��तुत कर�, ता�क �करण म� अं�तम आदेश जार� �कया जा सक� । इसके बाद सुनवाई �त�थ नह�ं बढ़ाई जाएगी । Sales Turnover Mismatch कुल �व�य के द�तावेजी सा�य ��तुत कर�, एवं कुल (1) �व�य म� �म�मेच �कस �कार एवं �कस कारण से है इसका भी �ल�खत �प�ट�करण ��तुत कर�।
Increase in Capital आपके �वारा इस वष� के दौरान पूंजी म� जो बढो�तर� क� गई है (2) इस बढ़ो�तर� के द�तावेजी सा�य ��तुत कर� ।“
(iii) Thereafter, Ld. AR carried us to the reply filed by assessee on 19.12.2017 in response to the aforesaid query-letter dated 18.12.2017 and drew our attention to Point No. 1, 2 and 6 submitted by assessee therein:
1. In the A.Y. 2015-16, the audit report for the year was submitted mistakenly on the provisional data basis. Because of very overloaded and end of time limit of audit report in the September month and party was also not providing the data on time, this mistake was happen. And accidently we were unable to cross check it, due to this we forget to mention “Provisional word on the top of the documents.
2. Just because of the above error the provisional figures of opening and closing stock for the respective year i.e. F.Y. 2014-15 it changes. Page 9 of 13
Nidhi Jain Assessment Year 2015-16
Particulars Original Revised Difference submitted submitted Opening stock (Rs.) 9361512 3059700 6301812 Closing Stock (Rs.) 10264705 7608416 2656289
But in actual our opening stock is Rs.3059700/- And closing stock is 7608416/- in actual. 6. In the respective year there was a decrease in the capital, following reasons are responsible:
Particulars Original Revised Audit Difference Audit report report Change in opening 9702124 2946000 6756124 capital The reasons are: a. There is one limit a/c in the bank for Rs.4258029/- was included in the capital account by the staff ignorance. b. The rest difference amount of Rs.2498095 was occurred due to change in profit (due to change in the closing stock as mention in the point 1). c. Party has a shop in the karond mandi which was shown for the first time in the balance sheet of Rs. 2229600/- and stamp duty of Rs. 161700 was paid on it. The rest Rs. 554700/- was incurred on the land development charges. Else there is no other change in the capital during the year.
7. As there is a decrease of Rs.7560/- in the drawing for the respective year, we accepted the same.
As we have mentioned in point 6 regarding the secured loan was included in the capital account instead of secured loan account by the staff ignorance of Rs.4258029/-. Therefore the secured loan amount in the previous audit report was submitted undervalued. But we have actual limit a/c in the bank.”
8. Placing a strong reliance upon above documents and analyzing contents thereof at length, Ld. AR vehemently argued that the Ld. AO has Nidhi Jain Assessment Year 2015-16 raised quarries with regard increase in capital / increase in stock and the assessee has also given detailed explanation with regard to these items. Ld. AR, therefore, argued that there is no lack of inquiry by the Ld. AO qua increase in closing-stock. For the sake of clarity, completeness and further arguments, Ld. AR also pointed out that in the present case, the assessee had filed original-return on the basis of “provisional balance-sheet” due to mistake, but when this mistake came to her notice during assessment- proceeding, the assessee immediately submitted audited Balance-Sheet dated 11.09.2015 and requested Ld. AO to consider the same, which Ld. AO accepted. Further, the assessee also placed before Ld. AO a reconciliation of all figures including increase in capital / increase in closing-stock item by item, which is very much evident from the letter dated 18.12.2017 filed in response to query-letter u/s 142(1) issued by Ld. AO, which stands reproduced in the foregoing paragraph. Ld. AR submitted that it is after consideration of assessee’s submission on various items including increase in closing-stock that the Ld. AO made addition of Rs. 36,45,523/- out of Wages & Bardana Expenditure and Rs. 29,46,000/- on account of investment in a plot, but no addition on account of increase in closing- stock. Thus, Ld. AR submitted that the issue of increase in closing stock stands fully enquired into and examined by Ld. AO. Therefore, the revision- order passed by Ld. PCIT on the basis that the Ld. AO had not examined “increase in closing-stock” does not have merit.
Ld. AR dutifully supported the revision-order passed by Ld. PCIT but, however, could not controvert the submission made by Ld. AR.
We have considered submissions of both sides and perused the documents pointed out by Ld. AR. Suffice it to say that the Ld. AR has successfully demonstrated, with reference to the contents of documents narrated in the foregoing paragraphs, that the Ld. AO has made detailed enquiries with respect to the increase in capital including increase in closing-stock. We further observe from the reply-letter dated 19.03.2021 filed by assessee to Ld. PCIT in response to notice u/s 263 (copy placed in Page 11 of 13
Nidhi Jain Assessment Year 2015-16 Paper-Book) that the assessee has explained all of the above submissions made before us, to Ld. PCIT as well to prove that there was no lack of enquiry by Ld. AO. However, in the revision-order, the Ld. PCIT has not discussed the submissions made by assessee and simply cut-short by mentioning “A written submission was filed on 19.03.2021 which was placed on record”.
In view of above and for the reasons stated above, we are of the firm view that the Ld. AO has made sufficient enquiry and the assessee has also filed explanation with respect to the issue escalated by Ld. PCIT in notice u/s 263. Therefore, the assessment-order passed by Ld. AO cannot be said to be erroneous and prejudicial to the interest of revenue. Being so, we are inclined to hold that the revision-order passed by Ld. PCIT does not meet the requirement of section 263 and deserves to be quashed. We order accordingly.
In the result, the appeal of Assessee is allowed.
Order pronounced as per Rule 34 of I.T.A.T. Rules, 1963 on 19/09/2022.