Ao verified loan based on CASS parameter: CIT(A) cannot invoke jurisdiction u/s 263

Citystar Ganguly Projects Ltd. Vs PCIT (ITAT Kolkata)

The issue under consideration is whether CIT is correct in invoking revisional jurisdiction u/s 263 on the ground of alleged inadequate enquiry by AO into loan transactions of assessee?

ITAT states that the CIT invoked the revisionary jurisdiction on the broad allegation that the AO failed to make adequate enquiries with regard to the creditworthiness of the four loan creditors, from whom the assessee had received huge loan during the year, when the information gathered u/s 133(6) showed that they had reported ‘NIL’ or low income and claimed huge TDS refund or they had accepted huge unsecured loans. It is noted that the impugned loan is the subject matter of SCN issued u/s 263 of the Act, which the assessee received from two bodies corporate i.e. Anadya Technologies Pvt Ltd & Hotahoti Wood Products Ltd. Although in the SCN, the ld PCIT while proposing to usurp the revisional jurisdiction found fault with the Assessment order on the ground of non-enquiry by AO into the loan transaction by the assessee, which ITAT find that enquiry under Section 133(6) was in fact carried out by the AO from the said party and evidence in support of compliance made by the said party was also furnished before the ld. Pr. CIT. ITAT therefore note that since the evidence led by the assessee in this regard was found to be factually true, the ld. Pr. CIT did not pursue this ground any further while passing the impugned order. Therefore ITAT have no hesitation in observing that on this ground of non-enquiry, the order u/s 263 holding the assessment order to be erroneous and prejudicial to the interests of the Revenue per-se erroneous.

Further, ITAT states that AO had made specific enquiry into loan transactions of assessee based on the CASS parameter. In response to enquiries made under section 133(6), loan creditors had filed their documents/details to substantiate/prove their identity(ies), creditworthiness and genuineness of the loan transactions. AO having examined all the details had not drawn any adverse inference against any loan creditors and did not follow a view ‘unsustainable in law’ and assessment order was not the result of non-application of mind or any inadequate enquiry, accordingly, invocation of jurisdiction under section 263 was untenable.

FULL TEXT OF THE ITAT JUDGEMENT

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