M/S TRANSTRON ELECTRICALS PVT. LTD.,MEERUT vs. CIT, MEERUT

The effective ground of appeal of the assessee is ground No.1, which reads as under:-

“That the learned Commissioner of Income-tax erred in law and on the facts invoking the provisions of Section 263 of the Income-tax Act, 1961 and passing the Order dated 25.03.2013. The Order passed and various directions given are bad in law, arbitrary, erroneous, illegal and unwarranted in view of the facts and circumstances of the case and the material on record. The order, therefore, deserves to be quashed.”

Learned counsel for the assessee submitted that this is an appeal against the order of learned CIT passed u/s 263 of the Income- tax Act, 1961. He submitted that the learned CIT has exercised his jurisdiction u/s 263 of the Act with regard to three issues recorded in paragraph 6 of the impugned order, which is reproduced hereunder:-

With regard to the first issue of trade creditors of `1.37 crores and share application money of `52.48 lakhs, the learned counsel for the assessee submitted that the Assessing Officer had made due enquiries with regard to trade creditors and, therefore, merely because learned CIT has a different view, the assessment order could not be said to be erroneous and prejudicial to the interests of the Revenue. He referred to the copy of the notice issued by the Assessing Officer u/s 142(1) of the Act dated 10.05.2010 wherein in question No.5, the Assessing Officer had asked for confirmation of sundry creditors along with their permanent account numbers and complete address and copy of return of income, genuineness of the transaction and creditworthiness. He submitted that complete details were filed along with the confirmation from the trade creditors and they were existing income tax assessees and copy thereof has been filed at pages 64 to 3 ITA-2765/Del/2013 93 of the compilation filed by the assessee. He submitted that there was some mistake regarding the account of M/s Jyotika Electric Corporation, Meerut and the same was reconciled and a reconciliation statement was filed along with copy of account and copy thereof has been filed in the compilation before the Tribunal. With regard to the share application money of `52.48 lakhs, he submitted that the amount had been taken wrongly by the learned CIT as it pertained to the earlier years and was opening balance as on 01.04.2007 and the addition during the year was only `2.53 lakhs for which necessary evidence was filed. He referred to the relevant details filed in the compilation in this behalf.

Learned DR has opposed the submissions of the learned counsel for the assessee on this issue. He submitted that not only enquiry but proper enquiry should have been made by the Assessing Officer, which was not done in this case. The Assessing Officer has failed to do any enquiry with regard to the source and merely taking papers on record is not sufficient. He relied on the decision of Hon'ble Delhi High Court in Gee Vee Enterprises Vs. Additional CIT, Delhi I, and Others – [1975] 99 ITR 375 and of Hon'ble Supreme Court in Roshan Di Hatti Vs. CIT, Delhi – [1977] 107 ITR 938 in support of the case of the Revenue. He relied on the order of learned CIT.

We have considered the rival submissions and have perused the order of the Assessing Officer and learned CIT(A). Regarding the first issue of trade creditors and share application money, we find that the Assessing Officer has served on the assessee a notice u/s 142(1) of the Act dated 10.05.2010 wherein vide enquiry No.5, he has asked for the relevant details with regard to sundry creditors. The assessee has complied with the said notice and has given complete details along with copy of account, complete address and a confirmation of account

The second issue is with regard to the difference in the receipt shown by the assessee in TDS certificate and as per form 26AS. The learned counsel for the assessee has not pressed this issue as the Assessing Officer himself in order passed u/s 143(3) giving effect to the order of the CIT u/s 263 had accepted the version of the assessee and had not made any addition on this account. Accordingly, this issue does not require any adjudication.

The third issue raised by the learned CIT u/s 263 was the claim of expenses which was accepted without any evidence or verification.

Learned counsel for the assessee submitted that the total expenses apart from purchases and depreciation was of about `50 lakhs for which complete details were filed by the assessee. He

We have considered the rival submissions and have perused the order of the Assessing Officer and learned CIT. We find that complete details of the expenses over `1 lakh were asked by the Assessing Officer and the same were submitted by the assessee vide reply dated 25.10.2010 and copies of accounts of various heads of expenses were submitted and the supporting vouchers and bills, receipts etc. were also summoned and produced by the assessee on 25.10.2010 and on 28.10.2010. The accounts of the assessee were audited by the Chartered Accountant. We find that the order of learned CIT u/s 263 on this issue is based on mere suspicion and there is no material brought on record to suggest that the order of the Assessing Officer was erroneous or prejudicial to the interests of the Revenue. Accordingly, we hold that there was no justification for the learned CIT to pass order u/s 263 on this issue, which is cancelled accordingly. The grounds of appeal of the assessee are allowed.

In the result, the appeal of the assessee is allowed. Decision pronounced in the open Court on 5th October, 2015.