Parisharam Builders Krunal Complex Vs PCIT (ITAT Rajkot)
Summary: The assessee, a partnership firm engaged in civil construction mainly for government bodies, filed its return for AY 2015-16 on 31.10.2015 declaring total income of Rs. 82,64,950/-. The case was selected for Limited Scrutiny under CASS and the assessment was completed under section 143(3) of the Income-tax Act, 1961 on 23.11.2017 accepting the returned income.
The Principal Commissioner of Income-tax subsequently invoked section 263. The record showed that the Assessing Officer had called for details of outstanding sundry creditors above Rs.1 lakh, including complete addresses, PAN and details of purchases giving rise to the creditors. The PCIT considered the assessee’s response deficient because, according to him, details of purchases were not furnished and PAN, return acknowledgements and complete addresses were absent in a majority of confirmations. He also noted instances of cash payments in instalments below Rs.20,000/-. The PCIT therefore considered the assessment order erroneous and prejudicial to the interests of Revenue and directed the AO to make in-depth independent inquiries into identity, creditworthiness and genuineness.
The assessee contended that complete creditor details, confirmations, ledgers and other documents had been furnished and that the AO had specifically examined the sundry creditors during assessment. It was submitted that many creditors represented opening balances, that transactions were through banking channels and that the proposed revision amounted to a change of opinion. The assessee relied, inter alia, on the principles governing revision under section 263, together with judicial precedents including Torrent Pharmaceuticals Ltd., Smt. Renuka Phillip, Parshuram Pottery Works, Malabar Industrial Co. Ltd., CIT v. Arvind Jewellers, CIT v. Max India Ltd., CIT v. Jagson International Ltd., CIT v. SakSoft Ltd. and CIT v. R.K. Construction Co. The TaxGuru discussion of revision under section 263 is available here: Revision by Commissioner – Section 263 -Income Tax Act 1961
