Case Number: ITA 877/DEL/2021
Appellant: Shree Balaji Polymers, Haryana
Respondent: Pr. CIT, Rohtak
Assessment Year: 2016-17
Result: Appeal Allowed and PCIT’s Order Quashed
Case Filed on: 2021-07-19
Order Type: Final Tribunal Order
Date of Order: 2022-03-15
Pronounced on: 2022-03-15
Shree Balaji Polymers, a del-credere agent for M/s Reliance Industries Ltd. for polymer products, filed its return of income for the assessment year 2016-17. The assessment was completed by the Income Tax Officer, Ward 4, Karnal under section 143(3) of the Income Tax Act, 1961, resulting in various disallowances and an addition to the returned income.
The Principal Commissioner of Income Tax (PCIT), Rohtak, issued a notice under section 263 of the Income Tax Act, alleging that the assessment order was erroneous and prejudicial to the interest of the revenue. The primary issue raised by the PCIT was the alleged inadequate inquiry conducted by the Assessing Officer (AO) regarding unsecured loans, specifically a loan of Rs. 9,00,000 received from Vijay Kumar Jain HUF.
Shree Balaji Polymers, represented by Sh. Vipul Arora, argued that the AO had conducted a thorough inquiry during the assessment proceedings. The AO had issued multiple notices under section 142(1) with detailed questionnaires, and Shree Balaji Polymers had responded with all necessary documents, including affidavits, bank statements, and income tax returns of the lenders. The appellant contended that the PCIT’s invocation of section 263 was unwarranted as the AO’s order was neither erroneous nor prejudicial to the interest of the revenue.
The respondent, represented by Sh. Umesh Takyar, Senior Departmental Representative (DR), argued that the AO had not conducted adequate inquiry into the creditworthiness and genuineness of the unsecured loan from Vijay Kumar Jain HUF. The PCIT alleged that the AO accepted the loan without properly verifying the source of the cash deposits made by Vijay Kumar Jain HUF.
The Tribunal, comprising Dr. B. R. R. Kumar, Accountant Member, and Ms. Astha Chandra, Judicial Member, examined the submissions and the relevant facts of the case. The key observations are as follows:
The Tribunal concluded that the AO had conducted a detailed inquiry and that the view taken by the AO was a plausible one. The AO’s acceptance of the unsecured loan from Vijay Kumar Jain HUF was based on proper application of mind, and the order was not erroneous or prejudicial to the interest of the revenue.
The Tribunal quashed the PCIT’s order passed under section 263, thereby allowing the appeal filed by Shree Balaji Polymers.
In conclusion, ITA No. 877/DEL/2021 filed by Shree Balaji Polymers was allowed, and the order passed by the PCIT, Rohtak under section 263, was quashed. This case underscores the importance of thorough inquiry by the AO and the necessity of substantiating claims of errors and prejudice by higher authorities when invoking revisionary powers.
Order pronounced in the open court on 15.03.2022.
Sd/- (Astha Chandra)
JUDICIAL MEMBER
Sd/- (Dr. B. R. R. Kumar)
ACCOUNTANT MEMBER
Date: 15.03.2022
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR: ITAT
Assistant Registrar, ITAT, New Delhi
Shree Balaji Polymers vs Pr. CIT: Dispute Over Unsecured Loans and Assessment Order
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