Assessment Order not to be held erroneous simply on allegation of Inadequate Enquiry,  without establishing a total lack of Enquiry: ITAT quashes Revision Order [Read Order]

The Income Tax Appellate Tribunal (ITAT ) Jaipu bench held that assessment order could not be held to be  erroneous simply an allegation of inadequate enquiry,unless there is an established case of total lack of enquiry. Therefore, the bench quashed the revision order.

Assessee, Gayatri Devi filed her return of income by declaring total income amounting to Rs.6,08,680/- for the assessment year under consideration. The return filed by the assessee was processed under Section 143(1) of the Income Tax  Act, 1961.

When a survey was carried out on the business premises of the assessee,  Subsequently, the case of the assessee was manually selected for compulsory Scrutiny. 

In the assessment order passed by the AO it was observed that Under the name and business alias M/s. Jagdish Petroleum, the assessee operates an Indian Oil Corporation Ltd. dealership. For the period under review, the assessee reported net profit of Rs. 9,1275/- at 1.39% N.P. ratio on total revenue of Rs. 6,63,99,428/-.

Further assessee filed the relevant details/ documents online electronically through e-filing account on dates of hearing as per order sheet which were perused and examined by the AO.

PCIT, on examination of the details/records said that,  the order passed by the AO is erroneous insofar as it is prejudicial to the interest of Revenue.

PCIT had held that AO did not verify/examine the  following issues: –

1. Assesee did not furnish the complete details of Liability of Rs. 9,81,205/- has been shown under head Sundry Creditors
2. Assesee did not maintain books of account which  have not been discussed or inquired or satisfactorily examined in the assessment proceedings. 
3. The submission of a chart showing details of unsecured loans lacked satisfactory supporting documentary evidence, indicating a lack of documentary evidence.
4. Creditor confirmations of loans made pursuant to Section 133(6) lacked any supporting documentation and lacked credibility.

Aggrieved by the order of the PCIT, the assessee carried the matter before the tribunal.

On behalf of the assessee, Mahendra Gargieya, counsel argued that identity, genuineness and creditworthiness of such subjected creditors already stood established but even was accepted by the department in the assessment of preceding year.

Veshnawi Joshi, Counsel for Revenue argued that details of creditors provided by the assessee are either incomplete or inaccurate or without satisfactory supporting documents.

Further submitted that assessee has furnished details of creditors which are different from Schedule E of audit report and are not matching with her own previous submissions furnished before the assessing officer.

It was observed by the tribunal that necessary enquiries and examination as reasonably expected, have been carried out by the AO in discharge of his quasi-judicial function.

Thus  he has taken a prudent, judicious and reasonable view in accepting the explanation of the assessee in support of the cash deposits after considering the entire material available on record and the order so passed under Section  143(3) of the Income Tax Act could not be held as erroneous insofar as prejudicial to the interest of Revenue.

After reviewing  the facts submitted and circumstances, the two member bench of Rathod Kamlesh Jayantbhai (Accountant Member) and Dr. S. Seethalakshmi, (Judicial Member) quashed the revision order passed under Section 263 of the Income Tax Act, 1961.

To Read the full text of the Order CLICK HERE

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