Sharmanji Yarns Private Limited Vs PCIT (ITAT Chandigarh)
Revision u/s 263 Invalid: AO Asked Questions, Assessee Answered, Matter Closed!- ITAT Chandigarh to PCIT- Depth of Enquiry is AO’s Domain, Not Yours!- Revision u/s 263 Invalid When AO Took a Plausible View After Proper Enquiry
Assessee’s return was subjected to complete scrutiny u/s 143(3) r.w.s. 144B. During assessment proceedings, AO issued multiple detailed notices u/s 142(1) calling for information on various issues including stock valuation, ICDS compliance, opening vs closing stock difference, expenses with TDS details, additions to fixed assets & other heads of expenditure. Assessee furnished comprehensive replies along with supporting documents. After examining all replies, AO accepted the returned income on all issues except disallowance of alleged bogus purchases of Rs. 88.07 Cr.
Subsequently, PCIT invoked section 263 alleging that AO failed to conduct in-depth enquiries on (i) difference of Rs. 42.15 Lakhs in FTS vs Commission, (ii) verification of stock register & ICDS adjustments, (iii) examination of additions to fixed assets, (iv) verification of expenses of Rs. 543.53 Lakhs. Show-cause notices were issued. Assessee demonstrated that all these issues were already raised during scrutiny & duly replied with evidence. However, PCIT held that AO did not properly verify the issues & directed the AO to redo assessment on all identified points.
