RUHELA CONSTRUCTION COMPANY PRIVATE LIMITED, SITAPUR V. PRINCIPLE COMMISSIONER OF INCOME TAX, BAREILLY

ITA 108/LKW/2022

AI Insights

The case involves Ruhela Construction Company Private Limited, which appealed against the order of the Pr. CIT, Bareilly, setting aside the assessment order under section 263. The Pr. CIT had initiated proceedings citing that the assessment was erroneous and prejudicial to the Revenue, primarily focusing on the high ratio of refunds claimed by the assessee and the non-examination of certain financial details as per the Income Computation and Disclosure Standards (ICDS). The Tribunal examined whether the AO had adequately addressed these concerns during the original assessment and whether the assessee was given a fair opportunity to respond to the new grounds raised by the Pr. CIT.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127421 (ITAT-LUCKNOW)
• Duration Of Justice: 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-03-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 10-05-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset converted into stock in trade; Revision of order; Depreciation; Opportunity of being heard; Principle of natural justice; Application of stay; Initiation of penalty proceedings; Assessment record; TDS; Set aside; FORM 26AS
• Section: 263; 143(3); 142(1)

Judgement Text

आयकर अपील य अ धकरण, लखनऊ यायपीठ “ए” ,लखनऊ IN THE INCOME TAX APPELLATE TRIBUNAL, LUCKNOW BENCH “A”, LUCKNOW (THROUGH VIRTUAL HEARING) ी आकाश द प जैन, उपा य एवं ी व!म #संह यादव, लेखा सद'य BEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. VIKRAM SINGH YADAV, AM ITA NO. 108/LKW/ 2022 Assessment Year : 2017-18 Ruhela Construction Company Private Limited C/o Ravi Ratna Advocate, Lohar Bagh, Sitapur-261001 The Pr. CIT Bareilly PAN NO: AAECR5605F Appellant Respondent STAY APPLICATION NO. 02/LKW/2023 (In ITA NO. 108/LKW/ 2022) Assessment Year : 2017-18 Ruhela Construction Company Private Limited C/o Ravi Ratna Advocate, Lohar Bagh, Sitapur-261001 The Pr. CIT Bareilly PAN NO: AAECR5605F Appellant Respondent ! " Assessee by : Shri Rakesh Garg, Advocate # ! " Revenue by : Shri S.H. Usmani, CIT (DR) $ % ! & Date of Hearing : 21/03/2023 '()* ! & Date of Pronouncement : 19/04/2023 आदेश/Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the assessee against the order of the Ld. Pr. CIT, Bareilly passed under section 263 dt. 15/03/2022 wherein the assessee has taken the following grounds of appeal: “1. The initiation proceedings, u/s 263 was unwarranted as the Ld Principal Commissioner of Income Tax did not consider the replies of the assessee, filed 2 before the A.O. at the time of assessment as all details were filed and were duly considered into by Assessing Officer. The Assessment Order was neither erroneous nor prejudicial to the revenue. Hence, the entire proceedings u/s 263 being unnecessary may kindly be quashed. And the assessment order u/s 143(3) dated 24.12.2019 may kindly be sustained and restored. 2. The setting aside of assessment order is unjustified, against facts and circumstances of the case and unlawful. Therefore, the order by Ld. Principal Commissioner of Income Tax for denovo reassessment may kindly be quashed. And the assessment order u/s 143(3) dated 24.12.2019 may kindly be sustained and restored. 3. That the Ld. Principal Commissioner of Income Tax issued notices u/s 263 on certain grounds and the assessee filed proper details before Ld. Principal Commissioner of Income Tax. (Though these replies were already filed before the A.O by the assessee). The Ld. Principal Commissioner of Income Tax ignored it. Now, the Principal Commissioner of Income Tax took different grounds and without giving the opportunity to the assessee of being heard, passed order u/s 263. (Though even the grounds taken later by Principal Commissioner of Income Tax was duly considered by The A.O. while framing assessment.) Therefore the notice u/s 263 was on different grounds and the order u/s 263 is on different grounds. Hence, the order u/s 263 is bad in law, unjustified, against facts and circumstances of the case, and is against statutory as well as natural justice may kindly be quashed. And the assessment order u/s 143(3) dated 24.12.2019 may kindly be sustained and restored.” 2. Briefly the facts of the case are that the assessee filed its return of income declaring total income of Rs. 60,45,540/-. Subsequently, the assessment was completed under section 143(3) at an assessed income of Rs. 62,95,540/-. Thereafter, assessment records were called for and examined by the Ld. Pr. CIT and a show cause under section 263 was issued as to why the assessment order so passed by the AO should not be set aside as the same is erroneous in so far as prejudicial to the interest of the Revenue. 2.1 In the show cause notice, it has been stated that one of the main issue highlighted for examination by the AO was to examine high ratio of refunds claimed and out of total TDS of Rs. 35.89 lakh, the assessee has claimed refund of Rs. 18.07 lakh which shows that the assessee has claimed more than 50% of TDS. 3 2.2 It has been further stated that since the assessee is a construction contractor and has executed construction contract awarded by the PWD and for the purpose of accounting of construction contracts, ICDS (Income Computation and Disclosure Standards) has been issued by the Government of India in terms of provisions of section 145(2) of the Act which provides for allocation of contract revenue and contract costs to the accounting periods in which the construction work is performed and the AO has failed to examine the case of the assessee in light of the aforesaid standard. 2.3 It has been further stated that since the case was flagged for high ratio of refund, the expenses claimed in the P&L Account needs to be examined and verified minutely and judiciously and the AO should have verified some of the claims of the assessee company through third party enquiry which was not undertaken. 2.4 Lastly it has been stated that since the AO has made the addition while passing the assessment order, he was required to initiate penalty proceedings under section 270A of the Act. 3. In response to the show cause, the assessee filed its submission wherein, it was submitted that the instructions / directives of ICDS don’t have any application in assessee’s case because the assessee has completed all the work under the various contracts during the year itself leaving no work in progress or closing stock. It was submitted that in the present case the Revenue has been recognized on the real value and no estimation was required as no work was pending. It was accordingly submitted that since there is no opening or closing stock and all the work under the various contracts have been executed and completed during the year, all the receipts under the contracts have been duly recognized as Revenue for the F.Y. 2016-17 and corresponding expenses which were attributable to the said contracts were also claimed. 4 3.1 It was further submitted that the assessee produced all the books of accounts i.e; Cash Book, Ledger, Vouchers, Registers etc. before the AO who after examining the same has disallowed a sum of Rs. 2.5 Lakh and there is a specific findings to this effect which has been recorded while passing the assessment order. 3.2 Regarding initiation of penalty proceedings, it was submitted that Section 270A does not direct the AO to impose penalty mandatorily as the section has used the term “may” and has not used the term “shall”. It was further submitted that Section 270A(6)(b) clearly states that no penalty should be levied where the addition / disallowance are made on estimate basis. 3.3 It was accordingly submitted that the assessment order so passed by the Assessing Officer was neither erroneous nor prejudicial to the interest of the Revenue. 4. The submissions so filed by the assessee were considered but not found acceptable to the Ld. Pr. CIT and he has recorded the following findings: “4. I have gone through the submissions of the assessee and perused the assessment record and following observations are made with regard to the assessment order u/s 143(3) passed by the AO being considered as erroneous. 1. The case was picked up for limited scrutiny through CASS under "limited scrutiny" category to examine high ratio of refunds. In order to do this, the AO was to examine the financial statements of the assessee company for the year under consideration and do further enquiries to ascertain whether profits declared were correct or had been understated. 2 During the assessment proceedings, the AO issued a questionnaire dated 24.10.2019 to the assessee in which following details were also asked for. These details were asked for and response of the assessee is discussed as hereunder: (a) With regard to the unsecured loan raised during the year, the assessee was asked to furnish copy of accounts from these persons alongwith documentary evidence to establish the identity and creditworthiness of these person(s) and genuineness of the transactions. The unsecured loan as on 31.03.2017 has been shown at Rs. 1,07,18,702/- as against Rs.20,70733/- as on 31.03.2016, showing an increase of Rs. 87,10,969/-. However in the details filed during the assessment proceedings, loan raised during the year has been shown at Rs. 25.06.903/- only. No documents have been filed in support of unsecured loan raised by the assessee during the year under 5 consideration. (b) Details of Trade payable as on 31.03.2017 in prescribed format alongwith confirmed copies of accounts from these parties regarding the amount of transaction and amount outstanding during the year was asked for by the AO. Trade payable shown under the head 'current liabilities' as on 31.03.2017 are at Rs. 3,91.11.110/- as compared to Rs. 7,75,000/- only last year. No details in this regard including confirmation was filed by the assessee during assessment proceedings. (c) The AO asked assessee to file details of Trade receivable as on 31.03.2017 shown at Rs. 2,11,09,872/- in prescribed format alongwith confirmed copies of account from these parties regarding the amount of transaction and amount outstanding during the year. No details asked for in this regard including confirmation was filed during assessment proceedings by the assessee. (d) Name of the persons to whom advances have been given, interest if any charged on the same and also establish business relations with them was asked during assessment proceedings was also asked for by the A.O. No details in response to the same were filed during assessment proceedings by the assessee. (e) To furnish copies of Sales Tax /VAT/Service Tax Returns for the period under consideration but no such details filed during assessment proceedings. (a) Furnish details of all expenses but no such details filed during assessment proceedings. After perusal of assessment record and the issues discussed above, it is clear that the Assessing Officer has passed the assessment order on 24.12.2019 u/s 143(3) of the Act without verifying details asked for or conducting enquiries on various issues as discussed above, which were mentioned in the questionnaire issued but neither examined nor enquiry done by the AO in absence of any submissions filed by the assessee in this regard.” 4.1 In light of the aforesaid findings, the Ld. Pr. CIT set aside the assessment order to be framed denovo as per law after providing reasonable opportunity to the assessee. 5. Against the said findings and the order of the Ld. Pr. CIT, the assessee is in appeal before us. 6. During the course of hearing, the Ld. AR drawn our reference to the show cause notice issued by the Ld. Pr. CIT wherein broadly three issues have been raised by the Ld. Pr. CIT (which we have already taken note of and the same 6 are not been repeated for the sake of brevity) and it was submitted that on receipt of the said notice, the assessee submitted his explanation and the Ld. Pr. CIT was satisfied with the explanation as can be seen from the impugned order where he did not pass the revision order on these points. However, on receipt of the impugned order, it was submitted that the assessee noticed that the Ld. Pr. CIT has ordered the setting aside of the assessment order for framing the assessment denovo raising entirely different points which were never part of the initial show cause issued under section 263 of the Act. 6.1 It was further submitted that even during the course of the revision proceedings, the assessee was never provided an opportunity to put forward its submission on the issues on which the Ld. Pr. CIT has recorded his findings and has set-aside the assessment order. It was accordingly, submitted that the assessee was denied an opportunity of being heard before passing of the order under section 263 which is mandatorily required under section 263 of the Act and on this ground itself, the impugned order deserves to be set aside. 6.2 Without prejudice to the above, it was submitted that on the points on which the assessment order is set aside, the same were duly examined by the AO as the AO has raised necessary queries on these points vide notice under section 142(1) dt. 24/10/2019 and the assessee had filed detailed reply which were examined and after proper examination and verification thereof, the assessment order was passed by the AO. It was accordingly submitted that even on the points which have been raised for the first time by the Ld. Pr. CIT while passing the impugned order, the order so passed by the AO cannot be held as erroneous in so far as prejudicial to the interest of the Revenue. 7. Per contra, the Ld. CIT DR relied on the findings of the Ld. Pr. CIT which we are already taken note of in para 4 supra. 8. We have heard the rival contentions and purused the material available on record. The principal contention which has been raised by the ld AR seeking 7 setting aside of the impugned order is that the order has been passed by the ld PCIT on matters/issues which are different from the matters/issues which were part of the initial show-cause and thus, not part of the initial show-cause notice and secondly, even during the course of revisionary proceedings, the assessee was never confronted with these fresh matters/issues and it was accordingly contended that the impugned order has been passed without providing an opportunity of being heard to the assessee and thus, the same deserve to be set-aside being in violation of basic cannon of justice that the assessee be allowed an opportunity of being heard before any adverse view is taken in its case. There is no dispute on the legal proposition so canvassed by the ld AR that the assessee deserve an opportunity of being heard before the ld PCIT passes an order setting aside the assessment order holding the same to be erroneous in so far as prejudicial to the interest of Revenue. More so, where the principle of natural justice has been ingrained in the statue itself while providing such powers to the ld PCIT where he intends to unsettle a settled position emerging out of tax filings of the assessee as examined by the Assessing officer. It is equally a settled position that the powers of the ld PCIT are not limited to the matters contained in the initial show-cause notice, and therefore, during the course of revisionary proceedings, where he come across other matters, he is equally empowered to enquire about the same and pass appropriate orders and all that is required is that before recording any findings where are adversial in nature and which result in unsettling the position which has been accepted in the past, the assessee be put to notice and be allowed a reasonable opportunity to put forward its defence. 9. Now, coming back to the facts of the case, it is a matter of record that the assessee has been issued a show-cause notice dated 18.11.2021 and thereafter, there is no further show-cause or any other notice which has been issued by the ld PCIT during the course of revisionary proceedings seeking the assessee’s submissions. Therefore, what is relevant to examine is whether the 8 issues/matters which were part of the initial show-cause notice and the issues/matters wherein the findings have been recorded by the ld PCIT while passing the impugned order are same or in any manner connected or are different issues/matters and independent of each other. 10. In the show-cause notice, it has been stated that the case of the assessee was selected for limited scrutiny for examination of high ratio of refunds during the year wherein the assessee has claimed more than 50% of TDS as refund. In the said context, it has been elaborated further by the ld PCIT that since the assessee is a construction contractor and has executed construction contract awarded by the PWD and for the purpose of accounting of construction contracts, ICDS Standard has been issued by the Government of India in terms of provisions of section 145(2) of the Act which provides for allocation of contract revenue and contract costs to the accounting periods in which the construction work is performed and the AO has failed to examine the case of the assessee in light of the aforesaid standard. It has been further stated by the ld PCIT that since the case was flagged for high ratio of refund, the expenses claimed in the P&L Account needs to be examined and verified minutely and judiciously and the AO should have verified some of the claims of the assessee company through third party enquiry which was not undertaken. Lastly it has been stated that since the AO has made the addition while passing the assessment order, he was required to initiate penalty proceedings under section 270A of the Act. 11. Now, if we look at the findings of the ld PCIT, in para 4(1), he says that in order to examine high ratio of refunds, the AO was to examine the financial statements of the assessee company and to conduct further enquiries as to whether profits declared were correct or had been understated. We find that the said finding is in context of the same issue of high ratio of refund which is part of the initial show-cause notice and thus, the assessee has been provided an 9 opportunity in this context and the same cannot be held as any new matter/issue in respect of which the assessee has not been an opportunity of being heard. 12. In para 4(2)(a), the ld PCIT talks about increase in unsecured loans raised by the assessee during the year under consideration and the fact that though the AO has raised a query in this regard, however, no documents have been filed by the assessee in support of unsecured loans raised during the year. Similarly, in para 4(2)(d), the ld PCIT talks about advances given by the assessee and no details on record to explain whether interest has been charged or business expediency of advancing such loans. Depending upon the financial implication of raising of unsecured loans during the year under consideration and whether any interest has been paid/charged by the assessee company in its profit/loss account which will have an effect on the profits declared by the assessee and similarly, depending upon whether the assessee has advanced funds on which interest has been charged or not, it cannot be stated with certainty that the said issue is totally unconnected with issue of examination of high ratio of refund as the same is likely to carry some financial implications which in turn will effect the profitability of the assessee and consequent refund of taxes as so claimed by the assessee. 13. In para 4(2)(b), the ld PCIT talks about substantial increase in trade payable during the year as compared to last year and absence of any confirmation from these trade payable accounts on record. Similarly, in para 4(2)(c), the ld PCIT talks about trade receivables during the year and absence of any details and confirmation from these trade receivables on record. In para 4(2)(e), the ld PCIT talks about sales tax/Vat/service tax returns for the period under consideration and absence of such returns on record and in para 4(2)(f), he talks about details of expenses not being on record. To our mind, these are matters which are clearly in context of examining the revenues, cost/expenses and related 10 payables/receivables which will effect the profitability of the assessee and consequent refund of taxes as so claimed by the assessee. 14. In our overall analysis, we find that the assessee was put to notice as part of the initial show-cause notice that its case was selected for limited scrutiny to examine huge ratio of tax refund and thus, the AO was required to examine both the revenues whether duly accounted for as per ICDS standard and secondly, the examination of corresponding contract costs and other expenses in the profit/loss account and the AO has failed to examine the same and thereafter, taking into consideration the submissions of the assessee, the ld PCIT has recorded his specific findings highlighting specific areas where though questionnaire was issued by the AO but in absence of details/submissions filed by the assessee, the same were neither examined nor verified by the AO. We are therefore unable to accede to the contention so raised by the ld AR in terms of divergent issues on which findings have been recorded by the ld PCIT vis-à-vis the issue raised in the show-cause notice without providing an opportunity to the assessee. 15. Now, coming to other contention advanced by the ld AR that even on the issued raised by the ld PCIT, the matter has been duly examined by the AO and thus, the order so passed by him cannot be held as erroneous in so far as prejudicial to the interest of the Revenue. In this regard, we refer to the specific findings as recorded by the Ld. PCIT in para 4 of the impugned order and the assessee’s point wise reply in its written submissions which read as under: As per PCIT's order As per assessee's submission 1. The case was picked up for limited scrutiny through CASS under "limited scrutiny" category to examine high ratio of refunds. In order to do this , the AO was to examine the financial statements of the assessee company for the year under consideration and do further enquiries to ascertain whether profits declared were correct or had been understated. All financial statements were filed. Details of the contract receipts, copy of the contract orders, trade payables, trade receivables and all such details as were mentioned and required as per the questionnaire dated 24.10.2019 were filed. " The questionnaire appears on page 30- 34 11 of the paper-book. The assessee submitted 03 replies i n all which are appearing on pages 42, 165 and 352 of the (PB). These replies are supported by the various details as filed before AO and are on papers 42-374 of the (PB). • Thus the reply was filed before the AO. 2. During the assessment proceedings, the AO issued a questionnaire dated 24.10.2019 to the assessee in which following details were also asked for. These details were asked for and response of the assessee is discussed as hereunder: The questionnaire as issued is on pages 30-34 of the (PB). • Complete reply was filed before the AO. a. With regard to the unsecured loan raised during the year, the assessee was asked to furnish copy of accounts from these persons alongwith documentary evidence to establish the identity and creditworthiness of theses person(s) and genuineness of the transactions. The unsecured loan as on 31.03.2017 has been shown at Rs. 1,07,18,702/- as against Rs.2070733/- as on 31.06.2016, showing an increase of Rs. 87,10,969/- "However in the details filed during the assessment proceedings loan raised during the year has been shown at Rs. 25,06,903/- only. No documents have been filed in support of unsecured loan raised by the assessee during the year under consideration." • This issue/ query has not been raised by PCIT in notice issued u/s 263 of the Act. • However, the query raised by the AO is at serial no. 5 of the questionnaire. • It is submitted the reply of the assessee as filed before the AO is at page no.43 (PB), at serial no. 5. Confirmations appear on pages 162,163,164 all these loans are from the directors, family members or sister concern of the directors. • Thus the reply was filed before the AO. b. Details of Tr ade payable as on 31.03.2017 in prescribed format alongwith confirmed copies of accounts from these parties regarding the amount of transactions and amount outstanding during the year was asked for by the AO. “Trade payable shown under the head' current liabilities' as on 31.03.2017 are at Rs.3,91,11,110/- as compared to Rs.7,75,000/- only last year. No details in this regard including confirmation was filed by the assessee during assessment proceedings." • This issue/ query has not been raised by PCIT in Notice issued u/s 263 of the Act. • However, the query raised by the AO at serial no. 06. • It is submitted the reply of the assessee filed before the AO is on page no. 165(PB), at serial no. 06 of the questionnaire. • Thus the reply was filed before the AO. 12 c. The AO asked assessee to file details of Trade receivable as on 31.03.2017 shown at Rs.2,11,09,872/- in prescribed format alongwith confirmed copies of accounts from these regarding the amount of transaction and amount outstanding during the year. "No details asked for in this regard including confirmation was filed during assessment proceedings by the assessee." • This issue/ query has not been raised by PCIT in notice issued u/s 263 of the Act. • However, the query raised by the AO at serial no. 08 of the questionnaire. • It is submitted the reply of the assessee filed before the AO is on page no. 165(PB), at serial no. 08. • Thus the reply was filed before the AO. d. Name of persons to whom advances have been given, interest if any charged on the same and also establish business relations with them was asked during assessment proceedings was also asked for by the AO. "No details in response to the same were filed during assessment proceedings by the assessee." • This issue/ query has not been raised by PCIT in notice issued u/s 263 of the Act. • However, the query raised by the AO at serial no. 07 of the questionnaire. • It is submitted the reply of the assessee filed before the AO is on page no. 165(PB), at serial no. 07. • Thus the reply was filed before the AO. e. To furnish copies of Sales Tax/VAT/service Tax Returns for the period under consideration but no such details filed during assessment proceedings. • This issue/ query has not been raised by PCIT in notice issued u/s 263 of the Act. • However, the query raised by the AO at serial no. 16 of t h e questionnaire. • It is submitted the reply of the assessee filed before the AO is on page no. 166 of the (PB), at serial no. 16. • Thus the reply was filed before the AO. a. Furnish details of all expenses but no such details filed during assessment proceedings. • This item should be ( f ] and has been inadvertently typed as (a) in the order passed u/s 263. • However, the query raised by the AO at serial no. 17,18,19,20 of the questionnaire. • This query/issue has not been raised in the notice issued u/s 263. • The assessee submitted his reply to 13 the AO and is at page no. 166(PB), below item no. 16 and reads as under: That the details of point no.17,18,19 and 20 are being voluminous and number of vouchers are being in thousand, are being produced physically before your honour for your kind perusal. • Thus the reply was filed before the AO. 16. On perusal of aforesaid submissions and paperbook placed on record, we find that as per the audited financial statement of the assessee company, it has reported contract revenues of Rs 15,09,61,584/- which as per reply submitted before the AO matches with the revenues as reported in Form 26AS and the whole of the TDS so deducted on the contract revenues has been claimed by the assessee in its return of income. The details of account receivables have also been filed during the course of assessment proceedings. Therefore, as far as contract revenues are concerned, the matter has been duly examined by the AO and even as per the ld PCIT, there is no adverse finding which has been recorded as far as reporting of contract revenues and any mismatch of such revenues in Form 26AS and corresponding account receivables are concerned. 17. As far as contract costs and other expenses are concerned, as per audited financial statements, the assessee has claimed cost of material amounting to Rs 13,26,00,458/- , finance cost amounting to Rs 9,84,739/-, employee benefit cost amounting to Rs 19,52,855/-, depreciation and amortization amounting to Rs 15,67,496/- and other expenses amounting to Rs 90,90,087/-. During the course of assessment proceedings, the AO vide questionnaire dated 24/10/2019 has asked the details of all sites where contractual work has been done by the assessee during the year or in progress, details of material purchased alongwith documentary evidences, site wise labour charges along with documentary evidences and details of other expenses alongwith supporting documentary 14 evidences. In response, the assessee vide its submission dated 22/12/2019 has submitted before the AO that “the details so sought are voluminious in nature and number of vouchers are in thousand and the same are being produced physically before your honour for kind perusal.” Similarly, it has been submitted that “the details of trade payable being voluminous are being produced manually before your honour for your kind perusal. Most of the payments have been received in February and March and therefore, there is balance payable to the supplier/creditors.” The AO subsequently passes the assessment order on 24/12/2019 recording his findings as under: In response to the aforesaid notices, the assessee has furnished the requisite details through e-proceedings. The information/documents furnished were verified and the books of account produced were examined on test check basis. During the year Assessee has debited Rs. 90,90,087/- under the Other Expenses in his P&L account. In order to examine the genuineness and allow-ability of these expenses, the assessee was asked to provide ledger account of various expenses debited in P&L A/c along with bills & vouchers raised or submitted by the vendors or employees in support of its claim. The assessee has furnished hand-made bills & vouchers of the above business expenses during assessment proceedings, also the genuineness and allow-ability of these expenses could not be established beyond doubt on the basis of information provided. Therefore, in order to protect the interest of the revenue and in order to stop any possible leakage, Rs. 2,50,000/- out of the above claimed expenses will be disallowed and added back to the returned income of the assessee company during the year. 18. We therefore find that it is not a case where the matter relating to expenses has not been enquired into by the AO or the details as called for were not submitted by the assessee and not examined by the AO. The AO issued a detailed questionnaire and in response, the assessee submitted its reply and supporting documentation as called for and taking the same into consideration, the AO has passed the assessment order holding that the assessee did furnish hand-made bills and vouchers but at the same time, he is not convinced with the genuineness and allowability of these expenses and he had gone ahead and disallowed certain expenses as so claimed by the assessee. The same 15 shows that the AO did examine the matter and applied his mind to the submissions made by the assessee and after analyzing the documentation so produced, he accepted the claim of the expenses subject to certain disallowances. Therefore, the findings of the ld PCIT that no details of expenses have been filed during the course of assessment proceedings is not borne out of record and is in face of specific findings recorded by the AO disallowing certain expenses. 19. As far as unsecured loans raised during the year, the assessee in its submissions before the AO has submitted that it has taken unsecured loan from related persons/entities namely Piyush Ruhela, Ruhela Constructions Company and Satish Ruheja and in support, the copy of ledger account detailing the transactions during the year and necessary confirmation have also been filed during the course of assessment proceedings. It is noted that the assessee has regular dealings with these related persons/entities and necessary confirmation is on record and therefore, the findings of the ld PCIT that no documents have been filed by the assessee is not borne out of records. Further, regarding, the advances given by the assessee during the year, the assessee during the assessment proceedings has submitted that no advances were given during the year and therefore, the findings of the ld PCIT is again not borne out of records. 20. In view of the aforesaid discussions, we agree with the alternate contention of the ld AR that the matter has been duly examined by the AO as he has raised necessary queries on these points vide notice under section 142(1) dt. 24/10/2019 and the assessee had filed detailed reply which were examined and after proper examination and verification thereof, the assessment order was passed by the AO. Therefore, we are not in agreement with the findings of the ld PCIT that the details so called for by the AO were not filed and verified by the AO and therefore, the order so passed by the AO cannot be held as erroneous in so far as prejudicial to the interest of the Revenue. 16 21. In view of the above, where we have set-aside the order passed by the ld PCIT, the stay petition seeking stay on the set-aside proceedings consequential to order passed u/s 263 has become infructious. 22. In the result, the appeal of the assessee is allowed and the stay petition is dismissed. Order pronounced in the open Court on 19/04/2023 . Sd/- Sd/- आकाश द प जैन व!म #संह यादव (AAKASH DEEP JAIN) (VIKRAM SINGH YADAV) उपा य / VICE PRESIDENT लेखा सद'य/ ACCOUNTANT MEMBER AG Date: 19/04/2023 ( + ! , - . - Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. $ / CIT 4. $ / 0 1 The CIT(A) 5. - 2 ग 4 5 & 4 5 6 DR, ITAT, LUCKNOW 6. ग 7 8 % Guard File ( + $ By order, 9 # Assistant Registrar