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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL,
Before: ARUN KHODPIA & ARUN KHODPIA & ARUN KHODPIA
IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/ S/SHRI CHANDRA MOHAN GARG, JUDICIAL JUDICIAL MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER ITA No. 46/CTK/2021 Assessment Year : 2016-17 Raj Kishore Prusty,At: Nuapatna, Raj Kishore Prusty,At: Nuapatna, Vs. Pr. CIT, Bhubaneswar Pr. CIT, Bhubaneswar-1 PO: Chandol, Dist: Kendrapara PO: Chandol, Dist: Kendrapara PAN/GIR No. No.ATDPP 8328 E (Appellant (Appellant) .. ( Respondent Respondent) Assessee by : Shri D.Parida, CA D.Parida, CA Revenue by : Shri Manoj Kumar Goutam, Manoj Kumar Goutam, CIT (DR) Date of Hearing : 8 /3/ 20 / 2022 Date of Pronouncement : 05/ /4/2022 O R D E R Per C.M.Garg g, JM This is an appeal filed by the assessee against the order of the This is an appeal filed by the assessee against the order of the This is an appeal filed by the assessee against the order of the Pr. CIT-1, Bhubaneswar 1, Bhubaneswar u/s.263 of the Act dated 26.3.2021 u/s.263 of the Act dated 26.3.2021 for the assessment year .2016-17. 17.
The assessee has raised the following grounds: The assessee has raised the following grounds:
“1. That, the order passed by the learned Pr. Commissioner of 1. That, the order passed by the learned Pr. Commissioner of 1. That, the order passed by the learned Pr. Commissioner of Income Tax, Bhubaneswar Income Tax, Bhubaneswar-1 u/s 263 of the I.T. Act, 1961 is 1 u/s 263 of the I.T. Act, 1961 is excessive, arbitrary and bad in law. excessive, arbitrary and bad in law. 2. That, the order of the Ld. Principal Commis 2. That, the order of the Ld. Principal Commissioner of Income Tax sioner of Income Tax- 1, Bhubaneswar passed u/s 263 of the Act setting aside the original 1, Bhubaneswar passed u/s 263 of the Act setting aside the original 1, Bhubaneswar passed u/s 263 of the Act setting aside the original assessment made u/s 143(3) to be redone is arbitrary in view of the assessment made u/s 143(3) to be redone is arbitrary in view of the assessment made u/s 143(3) to be redone is arbitrary in view of the fact that the original order was neither erroneous nor prejudicial to fact that the original order was neither erroneous nor prejudicial to fact that the original order was neither erroneous nor prejudicial to the interest of revenue. the interest of revenue.
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That, the observation of the Ld. Principal Commissioner of trading could not be established for want of bank statements in respect of payments to KARVEY COMTRADE LTD are based on incorrect assumption as all the relevant details have been verified by the Ld. Assessing officer at the time of assessment proceeding and direction issued for fresh assessment are nothing but change of opinion which is not permissible under the proceeding initiated u/s 263, therefore, the order passed under section 263 of the Act is illegal and void ab-initio. 4. That, on the facts and in the circumstances of the case and in law, the learned Ld. Principal Commissioner of Income Tax-1, Bhubaneswar erred in invoking jurisdiction under Section 263 and setting aside the assessment order u/s. 143(3) of the Act for reviewing and re-examining the facts, details, documents, evidences already examined by the learned AO, who had already made judgment based on the same and had passed the order of assessment under section 143(3) of the Act. It is well settled that revision cannot be undertaken for re-examining and directing fresh inquiry due to change of opinion.”
Facts of the case are that the assessee was engaged in trading in commodities like Aluminium, Soyabean and Copper through Karvy Comtrade Ltd. The assessee filed the return of income declaring total income at Rs.1,64,110/- on 17.10.2016. The Assessing Officer completed the assessment u/s.143(3) on 6.12.2018 accepting the returned income of the assessed.
Thereafter, the Pr. CIT, Bhubaneswar-1 by virtue of statutory powers vested in him u/s.263(1) of the Act, called for the assessment records. On examination, he observed that the order dated 6..12.2018 of the AO is erroneous so far as prejudicial to the interest of the revenue. Accordingly, he proposed to revise the assessment order as per the provisions of section P a g e 2 | 20
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263 of the Act and issued a show cause notice u/s.263 of the Act on 17.2.2021 with the following observations:
“It is seen that and as stated above, during the year, the assessee has undertaken trading in commodities like Aluminium, Copper and Soyabean through Karvy Comtrade Ltd. having made purchases & sales of Rs. 49,06,18,450/- & Rs.48,71,13,100/- respectively and incurring a net loss of Rs.37,76,250/-. In the return of income, the assessee has mentioned Rs.34,50,250/- as loan from others, and Rs.6,13,479/- is shown as capital of proprietorship business. The AO has accepted the returned income of the assessee without calling for and verifying the bank statement. The payments made to KARVY Comtrade Ltd., towards the loss incurred was also not verified. Similarly the genuineness of loan amounts of Rs.34,50,000/- was also not verified.”
In response to notice u/s.263 of the Act, the A.R. of the assessee made written submission and further explained that the assessee is an employees with M/s. Gupta Cables Pvt Ltd.,; he indulges in commodity trading through M/s. Karvey Comtrade ltd., during the year, the assessee has incurred trading loss of Rs.37,76,250/- duly certified by M/s. Karvy Comtrade and as regards the source to pay off such loss of around Rs.37.76 lakhs, the assessee has shown unsecured loan of around Rs.20 lakhs from friends through banking channel; this loan is extended by one Mr T.K.Parida on 15.5.2015 through Ch. No.171628. The source of funding this loan was from Hariom Vanijya Pvt Ltd., i.e. a NBFC on 9.5.2015.
After considering the submissions of the assessee, the Pr. CIT hold that the assessment order is erroneous and prejudicial to the interest of the
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revenue and, accordingly, set aside the assessment and redo the same after hearing the assessee. The relevant observations of Pr. CIT are as under:
“7. I have carefully considered the submissions thus made. The ITR copies of Sri Mundra for AY 2015-16 and 2016-17 has also been filed, which shows gross receipts of Rs.4,50,172/- and investment/exp under Chap VIA of Rs. 1,05,126/- for AY 2015-16 , not quite sufficient to explain a loan of Rs. 14.50 lakh extended to the assessee. The account copy also shows that the purported advance/loan is interest free. As regards the assessee has shown only Rs. 1,16,114/- as Gross total income in his ITR for AY 2016-17. His monthly salary is seen to be around Rs. 12,530/- only, increased to Rs. 15,821/-. An amount from Mr T K Parida for Rs.20,00,000 is seen to have been credited to this account on 15/5/2015. The bank account (Axis Bank account No. 910010025330761 Customer No.] 835480247) also shows deposit by cash of Rs.2,00,000 on 7/5/2015 etc. 7.1 Thus, the assessee has to explain the deposit of Rs. 20 lakh taken during the year from Mr T K Parida for which no proof of identity, creditworthiness or genuineness has been furnished. The opening balance of Rs.14.5 lakh shown to be a loan from Mr Mundra also needs further examination as to source etc. The source of cash deposit of Rs.2 lakh in the bank account on 7.5.2015 also needs examination. 8. It is well settled that an order involving lack of enquiry or a case of no enquiry on a vital issue which requires verification that should have been carried out by a prudent officer would constitute an order erroneous and prejudicial to the interest of revenue within the meaning of Sec 263(1) of the Act. In this context, reference may be had to Explanation -2 to Sec 263(1) that reads as under: [Explanation 2.—For the purposes of this section, 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 interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,—
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the order is passed without making inquiries or verification which should have been made;........................... The position is a mere affirmation of what has been confirmed by the Apex court and several HCs earlier & few of such decisions beg mentioning. In Rampyari Devi Sarogi 67 ITR 84(SC) and Smt. Taradevi Agarwal 88 ITR 323(SC), it was held that lack of enquiry or due verification at the relevant time by the AO would satisfy the requirements of the provision of Sec 263. Where an Assessing Officer, who is supposed to protect the interest of revenue as a tax collector and does not perform his job in the right spirit and has passed the assessment order perfunctorily which shows lack of application of mind, failure to conduct enquiry with due diligence before passing the order would make the order erroneous. Reference in this context is invited to the decision of Delhi High Court in the case of Duggal & Co v. CIT (1996) 226 ITR 456(Del), wherein it has been held as under: "The ITO is not only an adjudicator, but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls further enquiry It is incumbent on the AO to further investigate the facts stated in the return, when circumstances would makes such an enquiry prudent. The word "erroneous" in section 263 includes the failure to make such enquiry." In Malabar Industrial Co Ltd. Vs. CIT 243 ITR 83(SC), the Hon'ble Apex Court observed: There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer; it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase prejudicial to the interests of the revenue is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. Recently, the Hon'ble Apex Court in the case of Denial Merchants Pvt Ltd. vs ITO in Special Leave (C) No.(s) 23976 /2017 and others order dated 29.11.2017 has upheld the judgement of Hon'ble Calcutta High Court passed on 10.4.2017 in G.A. No.599/2016,
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dismissing the special leave petition observing that the CIT after setting aside the order of the Assessing Officer, simply directed the Assessing Officer to carry thorough and detailed enquiry. Moreover, the ITAT, Cuttack Bench, Cuttack, has upheld action u/s 263 in the case of Cuttack Development Authority v. CIT, Cuttack in IT A No.381/CTK/2014 on the same ground of failure to conduct further enquiries where circumstances demands so. The Revisional authority's power to treat a case of limited scrutiny as erroneous as is prejudicial to the interest of revenue where full scrutiny was the need of the case, has also been endorsed by ITAT Cuttack in a decision dated 5th October, 2020 , the case of Shri Sushanta Kumar Chaudhury vs PCIT in ITA No.226/CTK/2019.”
Ld A.R. of the assessee submitted that during the assessment the assessee has complied to the notice u/s.142(1) and furnished bank statements, commodity trading account with Karvy Comtrade and source of investment. He submitted that after verification and examination of those details, the Assessing Officer has passed order u/s.143(3) of the Act. As regards to source of investment, ld A.R. submitted that the assessee had availed friendly loan of Rs.14,50,000/- from Brij Mohan Mundra in earlier years and Rs.20,00,000/- from Tushar Kanta Parida, who had availed the same money from Hariom Vanijya Pvt Ltd., an NBFC. Ld A.R. submitted that when after verification all these records, the Assessing Officer has passed the order, it cannot be said that the assessment has been passed without verification. Ld A.R. referred to various decisions in support of its case:
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“1. Nanda Kishore Agarwala vs. Pr. CIT in ITA No.212/CTK/2017 order dated 25.4.2018 2. ITO vs DG Housing Projects Ltd. 343 ITR 329 (Del) 3. DIT vs Jyoti Foundation, 357 ITR 388 (Del) 4. Pr. CIT vs Delhi Airport Metro Express Pvt Ltd., 398 ITR 8 (Del) 5. ITAT Indore in the case of M/s. Radhiswari Developers Pvt Ltd., vs Pr. CIT in ITGA No.493/Ind/2019 order dated 20.7.2021
Ld A.R further submitted that the Pr. CIT while revising the assessment order has taken non-sustainable and non-plausible view in observing that the AO has accepted the return of income of the assessee without examining and verifying the payment made to Karvy Comtrade Ltd., towards the loss incurred. Pr. CIT also stated that the genuineness of the loan amount of Rs.34,50,000/- was also not verified. Ld A.R. submitted that the account confirmation, bank statement & loan confirmation from Hariom Vanijya (NBFC) PAN with regard to loan received of Rs.20 lakhs during the year from Tushar Kanta Parida was also submitted before the authorities below, therefore, the observations of Pr. CIT that the assessment order has been passed was proper enquiry and investigation is not correct. Ld A.R. further submitted that even for the sake of arguments, it is presumed that but not admitted or accepted that the AO has not property verified the issues, then the Pr. CIT has to make enquiry himself and he cannot direct the AO to redo the enquiry.
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Placing reliance of the decision of ITAT Cuttack in the case of Sangram Keshari Samantaray vs Pr. CIT in ITYA No.12/CTK/2010 order dated 28.10.2021, ld A.R. submitted that when the source of finance stated in the audited accounts produced before the AO, then it is not a case of inadequate enquiry and in such situation, the Pr. CIT has to verify himself to record the finding that the assessment order is erroneous when the assessee produced all the details before him. Ld A.R. submitted that the Pr. CIT in the impugned order has relied on the decision of Hon’ble Kolkata High Court in the case of Denial Merchant Pvt Ltd. Vs ITO, dated 10.4.2017 which is not binding precedent to apply in the case of the assessee as SLP dismissal is not a declaration of law within the meaning of Article 141 of the Constitution of India as held by Hon’ble Supreme Court in the case of Khoday Distilleries Ltd vs Sri Mahadeswara Sahakara Sakkare Karkhane Ltd., in Civil Appeal No.2432 of 2019 arising out of SLP (C) No.490 of 2012 and ors. Ld A.R. submitted that it is not a case of no enquiry or inadequate enquiry but the AO has made detailed, proper and sufficient enquiry on the issue of incurring net loss of Rs.37,76,250/- and the assessee has clearly shown the source of these loans taken from Brij Mohan Mundra of Rs.14,50,000/- and Tushar Kanta Parida of Rs.20,00, 000/- and also shown capital of Rs.6,13,479/- from proprietorship business, the source of loan is self-explanatory and the AO has rightly accepted and allowed the same,
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therefore, the assessment order cannot be alleged as erroneous and prejudicial to the interest of the revenue and same may kindly be set aside.
Ld A.R. drew our attention towards paper book filed by the assessee spread over 141 pages and especially drew our attention to page 21 and submitted that no fresh loan was taken from Brij Mohan Mundra during the financial Year 2015-16 as there was opening balance as on 1.4.2015 at Rs.14,50,000/-, which was remained unpaid during the financial year and closing balance as on 31.3.2016 i.e. at the end of the financial year was Rs.14,50,000/-. Therefore, the loan taken during the preceding financial year cannot be disputed or taxed in the hands of the assessee in subsequent assessment year i.e. 2016-17. Ld A.R. further drew our attention to page 30 of PB and submitted that the assessee took loan from Shri Tushar Kanta Panda of Rs.20 lakhs on 9.5,.2015 through RTGS leaving closing balance as on 31.3.2016 of Rs.20 lakhs without returning a single rupee to the creditor and this amount was also received through banking channels through RTGS. In continuation, ld A.R. further drew our attention towards copy of the account statement from 1.4.2015 to 31.3.2016 of Karvy Comtrade Ltd., and submitted that the assessee has made payment to Karvy Comtrade ltd., against loss incurred through banking channel out of amount received from Brij Mohan Mundra and Tushar Kanta Parida and the capital was introduced by the assessee himself at the time of commencing the business. Therefore, incurring of loss and payment of such loss out of
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amount received from creditors and capital account cannot be doubted in any manner and the AO was right in considering the explanation of the assessee based on proper and detailed documentary evidence, therefore, it is not a case of no enquiry or inadequate enquiry and thus, the assessment order cannot be alleged as erroneous and prejudicial to the interest of the revenue. In support of this contention, ld A.R. relied on the following decisions:
i) ITO vs DG Housing Projects Ltd., 343 ITR 329 (Delhi) ii) DIT vs Jyoti Foundation, 357 ITR 388 (Delhi) iii) Surekha Builders & Developers Pvt Ltd vs Pr. CIT in ITA No.207/CTK/2018 order dated 17.7.2020 (Cuttack TIAT)
Replying to above, ld CIT DR supported the order of the Pr. CIT. He submitted that the Assessing Officer has not verified the bank statements to ascertain the payments made to Karvy Comtrade ltd., towards the loss incurred by the assessee. He also submitted that the genuineness of the loan amount was not verified by the AO before completing the assessment. Ld CIT DR submitted that the assessee is an employee with Gupta Cables Pvt Ltd., and as per return of income, he has declared salary income of Rs.Rs.1,64,114/-. Ld CIT DR further submitted that the bank statements were never filed before the AO and the genuineness of the loan was also not verified by the AO. Ld CIT DR further drawing our attention to page 6.2 of the impugned order submitted that the assessee had no money and
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made transactions of MCX derivatives total purchases of Rs.49,06,18,450/- and sale was effected at Rs.48,71,13,100/- incurring a loss of Rs.37,76,251/-. Therefore, the Pr. CIT was right in alleging that the AO has not made enquiry in this regard. Ld CIT DR also drew our attention towards page 5 of APB to submit that the assessee is receiving very meager salary income and is a man of small means; therefore, Pr. CIT was right in doubting regarding the transaction undertaken during the relevant financial period. Ld CIT DR also pointed out that the documents, confirmation, ledger etc were not produced before the AO and no reconciliation statement was also filed before him by the assessee during the assessment proceedings. Ld CIT DR alleged that as per page 29A, the creditor Tushar Kanta Parida gave loan of Rs.20 lakhs to the assessee on 15.5.2015 by banking channel and same amount received by him on 9.5.2015 from Hariom Vanijya Pvt Ltd but the AO has not verified this transaction between Tushar Kanta Parida and Hariom Vanijya Pvt Ltd. Ld CIT DR drew our attention regarding questionnaire issued by the AO available at page 32 of APB, question -10 and submitted that the AO only asked of bank account including fixed deposits but not bank statement, which shows the inadequate enquiry by the AO. Ld CIT DR further drew our attention towards reply of the assessee available at pages 34,35, & 36 of PB and submitted that the assessee did not submit bank statements only gave bank account No., amount of receipt in reply to the query and the AO has
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accepted the same without detailed investigation, therefore, this is a clear case of no enquiry.
Ld CIT DR pointed out that case laws relied by ld A.R. of the assessee are not applicable to the facts of the present case as the facts of those cases are quite dissimilar and different from the facts of the present case, therefore, same cannot be applied blindly in favour of the assessee.
Placing rejoinder to the above, ld AR submitted that as per page 29A of APB, there is no cash deposit by the assessee and the loan of Rs.20 lakhs of Tushar Kanta Parida has been received by the assessee through banking channel and the creditor Sri Parida has received the amount from Hariom Vanijya (NBFC), which cannot be doubted or discarded in any manner by the revenue authorities. Ld AR vehemently pointed out that when the outstanding amount of loan remained unpaid during the year and the amount of Rs.14,50,000/- was brought forward from immediately preceding year to the present year i.e. 2016-17 pertains to loan from Brij Mohan Mundra, then no action can be taken against the assessee as the AO has taken the plausible view regarding the loan taken by the assessee. Therefore, the assessment order cannot be alleged as erroneous and prejudicial to the interest of the revenue. Ld A.R, submitted that the decisions of Hon’ble Delhi High Court in the case of DG Housing Project and Jyoti Foundation (supra) are applicable to the case of the assessee in addition to the decision of ITAT Cuttack in the case of Surekha Builders & P a g e 12 | 20
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Developers Pvt Ltd., (supra) because in a situation when the AO has made enquiries in respect of the issues, agitated by the Pr. CIT and in the notice u/s.263 of the Act, Pr. CIT alleges that there is inadequate and insufficient enquiry, then, he should have made further enquiries and he is not empowered to simply restore the issue to the AO for further enquiries and verification. He further submitted that in the present case, as per para 9 of the impugned revisionary order, it is clear that the Pr. CIT after holding the assessment order as erroneous and prejudicial to the interest of the revenue, set aside the same and directed the AO to redo the assessment keeping in mind inter alia, observations made by him in revisionary order and statements of the assessee during the assessment and revisional proceedings u/s.263 of the Act and other documents furnished during the course of hearing of issue to be done afresh. Pr. CIT has not made any enquiries after alleging that it is a case of lack of enquiry or case of no enquiry. Ld A.R. referred to para 8 of the impugned order, and submitted that it is clearly that Pr. CIT was not clear whether it is a case of lack of enquiry or no enquiry, therefore, the revisional order cannot be held as sustainable.
On careful consideration of rival submissions, inter alia, perusal of paper book filed by the assessee spread over 141 pages and all relevant materials placed on record, from the impugned order of Pr. CIT passed u/s.263 of the Act, we observe that for invoking revisionary powers u/s.263
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of the Act, pr. CIT observed that the AO has accepted the return of income of the assessee without calling for and verifying the bank statements. He also observed that the payments made to Karvy Comtrade ltd., towards loss incurred was also not verified and the genuineness of loan of Rs.34,50,000/- was also not verified. It was also submitted by ld A.R. that demat account and loss statement issued by karvy Comtrade Pvt Ltd., reconciliation statement with Karvy, bank account of the assessee showing transaction with Karvy, details of loan from Brij Mohan Mundra like account confirmation, his bank statement, ITRS etc were submitted to Pr. CIT, which are also enclosed at pages 3 to 20 of Assessee’s Paper Book (APB). It was also observed by Ld Pr. CIT that the loan account and source of advance have not been verified properly and with these observations, Pr. CIT alleged that the assessment order is erroneous and prejudicial to the interest of the revenue and directed the AO to verify and examine the veracity of loan amount and redo the assessment.
From APB, we observe that the AO has verified the loss on commodity, trading and source of investment in details after considering all the necessary details/documents and taken the view to accept the same which cannot be held as unverifiable and unsustainable view. From careful reading of assessment order, we observe that the AO has issued notice u/s.142(1) of the Act on 4.10.2018 and another notice dated 26.10.2018, in response to which, the assessee through e-proceedings submitted all the
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relevant details out of which the AO adjudicated three points viz (i) the assessee was doing trading in commodity futures at MCX Platform (ii) during the impugned assessment year, the assessee has transacted through karvy Commodities broking through his client code 800904 and (iii) the AO has considered total volume of transaction undertaken by the assessee during the relevant period. From the copy of the reply of the assessee to notice u/s.263(1) of the Act, which is available at pages 3 to 20 of APB, it is clear that the assessee submitted copy of income tax return for assessment year 2016-17, bank statement for F.Y. 2015-16, substantiating the payment made to Karvy Comtrade Ltd., reconciliation statement with Karvy comtrade ltd., bank statement, ITRs and PAN of loan creditor Mr Brij Mohan Mundra with opening balance of Rs.14,50,000/- which also remains same at the year end, which reveals that there was no new transaction with creditors during the relevant financial period and opening balance was carry forward to next financial period. From the copies of notice dated 4.10.2018 and another notice dated 26.10.2018 u/s.142(1) of the Act, clearly reveals that the AO has made enquiries and called upon bank statement including Fixed Deposits from the assessee and the assessee complied first notice by way of filing reply dated 18.10.2018. We also observe that since the assessee undertook high volume of trading in commodity future of MCX Platform, the source of finance stated in the audited account placed at PB 37 to 40 were also placed before the AO, in our considered view, it is not a
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case of inadequate enquiry. After observing above factual position of the present case. We are also of considered view that in a case of no enquiry, pr. CIT is empowered to direct the AO to make enquiries and pass reassessment orders but in a case where the AO has made enquiry by issuing notice, taking on record compliance of notice and then took a plausible view, and the Pr. CIT is not agreeing with the view taken by the AO, then he has to conduct enquiry himself. He cannot direct the AO to redo the assessment.
The documents submitted by the assessee before the AO in compliance to notices and same were also submitted before the Pr. CIT in response to notice u/s.263 of the Act alongwith reply dated 15.3.2021. These documents clearly reveal that the assessee has made payments of loss out of loan taken from two creditors, reconciliation statement as annexure-3 reveals that the assessee sustained loss of Rs.37,76,251/- during the relevant financial period. From the copy of confirmation of account available at page 21 of APB clearly reveals that the creditor Shri Mundra sent confirmation to the assessee showing opening balance as on 1.4.2015 at Rs.14,50,000/- and same amount shown as on 31.3.2016, therefore, there was no new transaction during the relevant financial period with these creditors, copy of pass book of Brij Mohan Mundra with PNB Account No.45852 clearly reveals that the assessee received loan of Rs.14,50,000/- during the financial year 2014-15, which was remained
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unpaid at the end of that financial year and brought forward to the present financial year 2015-16 and again carry forward to the next financial year. Therefore, copy of this statement clearly reveals that the amount received from this creditor has been credited to the account of the assessee and immediately refunded and, therefore, there was no cash transaction or cash deposit.
So far as second creditor Shri Tushar Kant Parida is concerned, the assessee has submitted at pages 28 to 30 of APB, PAN card, confirmation of account with Axis Bank account statement for the period 1.4.2015 to 31.3.2016, the assessee has received Rs.20 lakhs on 9.4.2015 from Hariom Vanijya and this amount was given to the assessee on 15.5.2015. Therefore, these documentary evidences could not be doubted and discarded at the threshold without bringing any material on record to show any discrepancy and deficiency therein.
From the careful reading of the impugned order of Pr. CIT u/s.263 of the Act, we clearly observe that the Pr. CIT in para 6 of the order has noted that the ld A.R. of the assessee filed reply on 11.3.2021. He also noted that the additional explanation of the assessee and on the next date of hearing on 15.3.2021, he also taken on record the reply of the assessee. In para 7.1, Pr. CIT noted that no proof of identity, creditworthiness or genuineness has been furnished from the loan taken from Tushar Kant Panda, whereas, as we have noted above, the assessee filed copy of PAN confirmation, bank P a g e 17 | 20
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statement etc establishing the creditworthiness and genuineness of the transaction. Therefore, the assessment order cannot be held as erroneous and prejudicial to the interest of the revenue. Ld CIT DR has placed vehement reliance on the decision of Hon’ble Supreme Court in the case of Denial Merchants Pvt Ltd, vs ITO IN Special Leave (C) No.(s) 23976/2017 and other order dated 29.11.2017, wherein, the SLP of the assessee was dismissed up[holding the order of Hon’ble Kolkata High Court order dated 10.4.2017 in G.A. No.599/2016. Ld CIT DR submitted that there is no fault as the Pr. CIT has simply directed the AO to carry out detailed enquiry on the matter relying on the various judgments of Co-ordinate Benches of the Tribunal.
On careful reading of the order of Hon’ble Kolkata High Court in the case Denial Merchants Pvt Ltd., (supra), we observe that the order of Hon’ble Kolkata High Court was upheld by Hon’ble Supreme Court, wherein, the assessee challenged the direction of the Ld CIT to carry out detailed enquiry but in the present case, the AO has made enquiry by way of issuing notices, which were compiled by the assessee by filing relevant documents establishing the loss from MCX trading, bank statement and relevant documents pertaining to both the creditors. In the present case, from the impugned order, we clearly note that Pr. CIT in para 9 has simply held that the assessment order is erroneous and prejudicial to the interest of the revenue, whereas without making any enquiry himself on the reply filed by
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the assessee in response to notice 263 of the Act directed the AO to redo the enquiry. Therefore, the facts of the present case are quite distinguishable and dissimilar from the case before the Hon’ble Kolkata High Court.
In the case of DG Housing Projects Ltd (supra), it was held that
where revisionary authority opined that further inquiry was required, such
inquiry should have been conducted by the revisionary authority himself to
record finding that assessment order passed was erroneous and prejudicial
to the interest of the revenue. Similar view has been taken in the case of
Jyoti Foundation (supra) and other decisions relied on by ld A.R. of the
assessee (supra).
In the present case, inquiries were certainly conducted by the
Assessing Officer. It is not a case of no inquiry. The order under Section
263 itself records that the Pr. CIT felt that the inquiries were not sufficient
and further inquiries or details should have been called. Therefore, we set
aside the order of the ld Pr. CIT and quash the same.
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ITA No. 46/CTK/2021 Assessment Year : 2016-17
In the result, appeal of the assessee is allowed.
Order pronounced on 05/4/2022.
Sd/- sd/- (Arun Khodpia) (Chandra Mohan Garg) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 05 /04/2022 B.K.Parida, SPS (OS) Copy of the Order forwarded to : 1. The Appellant : Raj Kishore Prusty,At: Nuapatna, PO: Chandol, Dist: Kendrapara
The CIT(A)-, Bhubaneswar 3. Pr.CIT-1, Bhubaneswar 4. DR, ITAT, Cuttack 5. Guard file. //True Copy//
By order
Sr.Pvt.secretary ITAT, Cuttack
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