Case Law Details
Kyal Agencies Private Limited Vs PCIT (ITAT Cuttack)
Admittedly, in the present case, in respect of the issue of sundry creditors, the powers invoked by the ld. Pr.CIT u/s.263 of the Act is in effect only for the purpose of rectification of the arithmetical mistake being the totalling difference between the total as arrived at by the AO in the original assessment order and the total as determined by the ld. Pr.CIT in his revisionary order. The total as arrived at by the Pr.CIT in his order is also erroneous insofar as it is short by Rs.27000/-. In any case, in regard to the issue of genuineness, creditworthiness and identity of the sundry creditors, the same has already been filed before the ld. CIT(A) and on the basis of the remand proceedings, the ld. CIT(A) has deleted the substantial portion of the addition resulting into sustenance of addition of Rs.11,375/- only. This being so, we are of the view that the order of the ld. Pr.CIT passed u/s.263 of the Act on the issue of sundry creditors in respect of correction of the arithmetical mistake no more survives, insofar as the primary addition has itself been deleted.
Coming to the issue of non-reconciliation of the discount on the sales, a perusal of the order of the Pr.CIT clearly shows that he has not identified which is the sales relating to which the discount needs to be reconciled. Further, admittedly, the details of the purchase and sales and discount thereon have already been called for by the AO and the details were also submitted by the assessee and they were examined and no addition on that account has been made by the AO. But after having examined the details the same have been accepted. Per Contra, the ld. Pr.CIT has come up with a proposal of revision wherein he talks of the figure of Rs.80,000/-. However, he does not identify the sales or the party with whom the transaction has been done which calls for the reconciliation. This being so, we are of the view that the order of the Pr.CIT-1, Bhubaneswar is unsustainable on the facts of the case and consequently the same stands quashed.
FULL TEXT OF THE ORDER OF ITAT CUTTACK
This is an appeal filed by the assessee against the order of the ld. Pr.CIT-1, Bhubaneswar, dated 15.03.2021 in Revision No. PCIT, Bhubaneswar-1/Revision-263/100000168355/2021 for the assessment year 2017-2018 in respect of the order passed u/s.263 of the Act.
2. At the outset, we found that the present appeal filed by the assessee is barred by 30 days. In this regard, the assessee in column no.11 of Form No.36 has submitted that the M.D. of the assessee company was suffering from Covid 19, therefore, he could not pursue the matter in the stipulated time, resulting into 30 days delay in filing the present appeal. Thus, the ld. AR of the assessee prayed that the delay in filing the appeal may kindly be condoned. Ld. CIT-DR also agreed to the contention of the ld. AR and he did not have any objection to condone the delay occurred in filing the instant appeal. Accordingly, we condone the delay of 30 days in filing the present appeal and the appeal is heard finally.
3. It was submitted by the ld. AR that the assessee company was dealing in the business of medicine and the return filed by the assessee came to be originally completed u/s.143(3) of the Act on 30.12.1990. In the assessment, the sundry creditors of the assessee totalling to Rs.2,52,50,807/- was disallowed consisting of 13 sundry creditors. It was the submission that the AO totalled the sundry creditors in the original assessment order to Rs.2,52,50,807/-. It was the submission of ld. AR that as there was an error in the totalling, the ld. Pr.CIT had invoked his powers u/s.263 of the Act and in respect of the same sundry creditors, the total was arrived at Rs.3,11,15,098/-. The AO has made a total of the sundry creditors at Rs.2,52,50,807/- instead of Rs.3,11,15,098/- making a difference of Rs.58,64,291/-, which has been directed to be added by the ld. Pr.CIT. It was also the submission of the ld. AR that this totalling done by the ld. Pr.CIT is also erroneous and the actual figure is Rs.3,11,42,098/- representing a difference of Rs.27,000/-. It was further submission that the same sundry creditors which were originally disallowed in the order passed u/s.143(3) of the Act was the subject matter of the appeal before the ld. CIT(A), who had, vide his order passed in Appeal No.CIT(A), Bhubaneswar-1/14626/2019-20, Dated 05/05/2022 for the assessment year 2017-2018, being the impugned year under consideration, copy of which is placed in the paper book at pages 7 to 27, deleted the addition made by the AO. It was also the submission of ld. AR that all the details in respect of sundry creditors were produced before the AO in a remand proceedings and the AO himself has examined everything including the calling for details of the sundry creditors u/s.133(6) of the Act. After verifying all the details, the ld. CIT(A) confirmed the addition of Rs.11,375/- representing negligible difference. It was the submission that this addition has already been sustained in view of the order of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, therefore, no further purpose would be served by confirming the order u/s.263 of the Act by the ld. Pr.CIT, Bhubaneswar insofar as the same creditors have already been examined and deleted by the ld. CIT(A).
4. It was further the submission that the ld. Pr.CIT in his order u/s.263 of the Act has raised an issue of a difference of Rs.80,000/- in respect of sale discount. It was the submission that the ld. Pr.CIT has not brought out as to which sale discount or the discount to which sale this reconciliation is being called for. It was the submission by the ld. AR that from where the ld. Pr.CIT got this figure of Rs.80,000/- difference is not coming out of the order of the ld. Pr.CIT. It was also the submission that the order of the Pr.CIT passed u/s.263 of the Act is liable to be cancelled. Further, the ld. AR submitted that the issue of purchase discount and sale discount with all the details had been produced before the AO in the course of original assessment in electronic form and he produced the copy of the e-proceedings response acknowledgement as evidence.
5. In reply, ld. CIT-DR vehemently supported the order of the ld. Pr.CIT. It was submitted that the order of the ld. Pr.CIT is liable to be confirmed, at least to the extent of Rs.11,375/- as confirmed by the ld. CIT(A).
6. We have considered the rival submissions.
7. Admittedly, in the present case, in respect of the issue of sundry creditors, the powers invoked by the ld. Pr.CIT u/s.263 of the Act is in effect only for the purpose of rectification of the arithmetical mistake being the totalling difference between the total as arrived at by the AO in the original assessment order and the total as determined by the ld. Pr.CIT in his revisionary order. The total as arrived at by the Pr.CIT in his order is also erroneous insofar as it is short by Rs.27000/-. In any case, in regard to the issue of genuineness, creditworthiness and identity of the sundry creditors, the same has already been filed before the ld. CIT(A) and on the basis of the remand proceedings, the ld. CIT(A) has deleted the substantial portion of the addition resulting into sustenance of addition of Rs.11,375/- only. This being so, we are of the view that the order of the ld. Pr.CIT passed u/s.263 of the Act on the issue of sundry creditors in respect of correction of the arithmetical mistake no more survives, insofar as the primary addition has itself been deleted.
8. Coming to the issue of non-reconciliation of the discount on the sales, a perusal of the order of the Pr.CIT clearly shows that he has not identified which is the sales relating to which the discount needs to be reconciled. Further, admittedly, the details of the purchase and sales and discount thereon have already been called for by the AO and the details were also submitted by the assessee and they were examined and no addition on that account has been made by the AO. But after having examined the details the same have been accepted. Per Contra, the ld. Pr.CIT has come up with a proposal of revision wherein he talks of the figure of Rs.80,000/-. However, he does not identify the sales or the party with whom the transaction has been done which calls for the reconciliation. This being so, we are of the view that the order of the Pr.CIT-1, Bhubaneswar is unsustainable on the facts of the case and consequently the same stands quashed.
9. In the result, appeal of the assessee is allowed.
Order dictated and pronounced in the open court on 17/05/2022.
