INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA No. 1007/Del/2019 (Assessment Year: 2014-15) Rekha Gupta, Vs. Pr. CIT-12, 110A, DDa Flats, SFS, New Delhi Gulabi Bagh, Delhi PAN: AANPG6989F (Appellant) (Respondent) Assessee by : Shri K. Sampath, Adv Shri V. Rajakumar, Adv Revenue by: Smt Sulekha Kumar, CIT DR Date of Hearing 11/07/2019 Date of pronouncement 25/09/2019 ORDER PER PRASHANT MAHARISHI, A. M. 1. This appeal is filed by assessee against order of ld Pr. CIT, New Delhi dated 05.2.2018 u/s 263 of Act for Assessment Year 2014-15. 2. assessee has raised following grounds of appeal:- 1. On facts and in circumstances of case and in law Pr. Commissioner of Income Tax erred in invoking revisionary powers u/s 263 of Income Tax Act, 1961. revision is ordered tentatively in conspicuous absence of either error or prejudice and merely on erroneous basis that necessary enquiries have not been made. order being ab initio illegal and void must be quashed. 3. Briefly stated facts of case shows that assessee is individual, who filed her return of income on 18.09.2014 declaring net taxable income of Rs. 584020/-. return of income was selected for scrutiny through CASS with reason low net profit or loss . Subsequently, assessment u/s 143(3) of Act passed on 27.12.2016 at returned income holding that assessee is engaged in trading in gold bars under name & Style of M/s. Swaran Traders as proprietary concern. Thus, return of income filed by assessee was accepted by ld AO. Page | 1 Rekha Gupta Vs Pr. CIT-12 ITA No. 1007/Del/2019 (Assessment Year: 2014-15) 4. Subsequently, ld Pr. CIT, on examination of record, found that ld AO accepted return of income without carrying out relevant investigation/enquiry with respect to unsecured loans received by assessee. He stated that for loan establishing identity, creditworthiness and genuineness of transaction is necessary. It was further stated that assessee has furnished party-wise sales and purchase details which is not in consonance with sales and purchase shown in profit and loss account. Thus, show cause notice u/s 263 was issued on 23.10.2018. In shows cause notice it was noted that assessee has made addition to capital amounting to Rs. 40 lakhs from four parties. Some of them were old parties, however, addition of Rs. 3925000/- was taken during year. Thus, ld CIT said that no enquiry was made by ld AO regarding verification of unsecured loan as well as with respect of sale and purchase itself. ld Pr. CIT held that case falls u/s explanation 2 to section 263 of Act. Consequently, it was also stated that unsecured loan taken during year of Rs. 3996000/- from Shri Jagjit Singh was not verified. 5. assessee was given opportunity by ld CIT and held that order passed by ld AO is erroneous and prejudicial to interest of revenue as ld AO has accepted claim without any enquiry with respect to unsecured loans. With respect to difference between party wise sales and purchase amount and its reflection in profit and loss account, shows that difference of Rs. 9183981/- in sales and Rs. 8719753/- in purchase. Thus, no enquiry was made by ld AO on this issue. Consequently, it was held that assessment order passed on 27.12.2016 is erroneous and prejudicial to interest of revenue. 6. Before us ld AR submitted that ld AO has made detailed enquiry with respect to unsecured loan from Mr. Jagjit Singh. He referred to page No. 8 of paper book which is letter dated 18.11.2016, wherein, copy of confirmation along with bank account was furnished. He submitted that primary onus cast upon assessee has been discharged. He further referred to page 22 income tax return, filed by lender for three years. He further referred to page 25 wherein, total source of funds Page | 2 Rekha Gupta Vs Pr. CIT-12 ITA No. 1007/Del/2019 (Assessment Year: 2014-15) was shown of Rs. 41,49,569/-. In view of this he submitted that assessee has completely discharged his onus to extent to above unsecured loan. With respect to sales and purchases details party wise details he referred to page Nos. 27 to 46 of paper book to show that on 26.11.2016 assessee submitted details of purchase and sales along with details of inventories as desired by ld AO. He further referred to purchase ledger of parties and sales ledger of parties from books and explained difference found by ld CIT stating that it is tax amount that does not credited to trading account but to respective account. He thus, submitted that complete enquiry was made by ld AO on this two counts. He further referred to notice u/s 142(1) dated 12.09.2016, wherein, annexure from Sl No. , where information on these two issues were asked explanations/ submissions were provided He therefore, submitted that there is proper enquiry made by ld AO. He further stated that ld CIT did not specify what is error in order of ld AO. He also referred to decision of Hon'ble Delhi High Court in ITO Vs. DG Housing Projects Ltd 343 ITR 329 to support his contentions. 7. ld DR vehemently supported order of ld Pr CIT by submitting gist of various decisions. 8. We have carefully considered rival contentions and also perused orders of ld AO and Pr. CIT. According to provisions of section 263 of Act, after examination of records, ld CIT finds that order is erroneous and prejudicial to interest of revenue, then, he has power to revise such orders. Explanation 2 to that section has been inserted w.e.f 01.06.2015 of Finance Act 2015, wherein, in clause (a) it is provided that if order is passed without making enquiry or verification which should been made, order passed by ld AO shall be deemed to be erroneous insofar as it is prejudicial to interest of revenue. In present case assessee is engaged in trading in gold bars under name & Style of M/s. Swaran Traders as proprietary concern. case of assessee was selected under CASS for scrutiny with reason of Low net profit or loss shown from large gross receipt. Therefore, mandate given to ld AO was to examine low net profit. ld CIT holds that order is Page | 3 Rekha Gupta Vs Pr. CIT-12 ITA No. 1007/Del/2019 (Assessment Year: 2014-15) erroneous for reason that AO has not examined loan received by assessee from one Mr. Jagjit Singh and difference between purchase and sales shown in profit and loss account with purchase and sales shown in party wise details. On issue of unsecured loan, assessee has discharged its initial onus by furnishing income tax return, confirmation, source of funds available with lender etc. Therefore, it is correct that assessee has discharged its onus cast upon him. Thereafter if material gives any indication than ld AO should have made further enquiry. No such material has been shown by ld CIT from assessment records. Thus on this issue, it cannot be said that AO should have been made any further enquiry. Thus, n issue of verification of unsecured loan, we do not find that there is lack of due inquiry. 9. With respect to purchase and sales assessee has explained before ld CIT, that tax component which is debited or credited to parties account along with net sales value and only net sales is shown in profit and loss account. difference as pointed out by CIT in show cause notice cannot be said to be difference but correct accounting method. Naturally at time of sale assessee credits net off tax in profit and loss account and debit whole amount including tax in account of debtors. Similarly, purchases are made by debiting trading account by net off purchase and crediting whole amount including taxes to account of creditors. These details were already enquired by ld AO. ld Pr. CIT in his order has not mentioned what further enquiry AO might have made. Whenever explanation 2(a) is invoked, it is mandatory for CIT, to show what are enquiries on basis of information available on record should have been made by ld AO and also that those enquiries have not been made. In absence of such specific finding it cannot be said that order passed by AO is erroneous and prejudicial to interest of revenue. In order passed by ld Pr. CIT we do not have such categorical finding of lack of inquiry on both these issues. Further, it was also not mandate given to ld AO to enquire on this aspects as case was selected for limited verification of low profit. In view of this, we do Page | 4 Rekha Gupta Vs Pr. CIT-12 ITA No. 1007/Del/2019 (Assessment Year: 2014-15) not find that order passed by ld Pr CIT u/s 263 is sustainable. Accordingly, we quash it and allow appeal of assessee. Order pronounced in open court on 25/09/2019. -Sd/- -Sd/- (AMIT SHUKLA) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 25/09/2019 K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi Page | 5 Rekha Gupta v. Pr. CIT-12, New Delhi