Rekha Gupta, Delhi V. Pr.CIT- 12 , New Delhi

ITA 1007/DEL/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9005 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 08-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SULEKHA KUMAR
• Keywords: Source of fund; Assessment record
• Section: 143(3); 142(1); 201; 263

Judgement Text

PAGE | 1 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, 110A, DDA FLATS, SFS, GULABI BAGH, DELHI PAN: AANPG6989F VS. PR. CIT - 1 2, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. SAMP ATH , ADV SHRI V. RAJAKUMAR, ADV REVENUE BY: SMT SULEKHA KUMAR, CIT DR DATE OF HEARING 11/07 / 201 9 DATE OF PRONOUNCEMENT 2 5 / 09 / 2019 O R D E R PER PRASHANT MAHARISHI , A. M. 1 . THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD PR. CIT, NEW DELHI DATED 05.2.2018 U/S 263 OF THE ACT FOR ASSESSMENT YEAR 2014 - 15. 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE PR. COMMISSIONER OF INCOME TAX ERRED IN INVOKING THE REVISIONARY POWERS U/S 263 OF THE INCOME TAX ACT, 1961. THE REVISION IS ORDERED TENTATIVELY IN THE CONSPICUOUS ABSENCE OF EITHER AN ERROR OR PREJUDICE AND MERELY ON THE ERRONEOUS BASIS THAT NECESSARY ENQUIRIES HAVE NOT BEEN MADE. THE ORDER BEING AB INITIO ILLEGAL AND VOID MUST BE QUASHED. 3 . BRIEF LY STATED THE FACTS OF THE CASE SHOWS THAT ASSESSEE IS A N INDIVIDUAL , WHO FILED HER RETURN OF INCO ME ON 18.09.2014 DECLARING NET TAXABLE INCOME OF RS. 584020/ - . THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY THROUGH CASS WITH RE ASON LOW NET PROFIT OR LOSS . SUBSEQUENTLY, THE ASSESSMENT U/S 143(3) OF THE ACT PASSED ON 27.12.2016 AT RETURNED INCOME HOLDING THAT THE ASSESSEE IS ENGAGED IN TRAD ING IN GOLD BARS UNDER THE NAME & STYLE OF M/S. SWARAN TRADERS AS A PROPRIETARY CONCERN. THUS, THE RETURN OF INCOME FILED BY THE ASSESSEE WAS ACCEPTED BY THE LD AO. REKHA GUPTA VS PR. CIT - 12 ITA NO. 1007/DEL/2019 (ASSESSMENT YEAR: 2014 - 15) PAGE | 2 4 . SUBSEQUENTLY , THE LD PR. CIT , ON EXAMINATION O F RECORD , FOUND THAT THE LD AO ACCEPTED THE RETURN OF INCOME WITHOUT CARRYING OUT RELEVANT INVESTIGATION /ENQUIRY WITH RESPECT TO UNSECURED LOANS RECEIVED BY THE ASSESSEE. HE STATED THAT FOR LOAN ESTABLISHING IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TH E TRANSACTION IS NECESSARY. IT WAS FURTHER STATED THAT THE ASSESSEE HAS FURNISHED PARTY - WISE SALES AND PURCHASE DETAILS WHICH IS NOT IN CONSONANCE WITH THE SALES AND PURCHASE SHOW N IN PROFIT AND LOSS ACCOUNT. THUS, SHOW CAUSE NOTICE U/S 263 WAS ISSUED ON 2 3.10.2018 . IN THE SHOWS CAUSE NOTICE IT WAS NOTED THAT THE ASSESSEE HAS MADE AN ADDITION TO THE CAPITAL AMOUNTING TO RS. 40 LAKHS FROM FOUR PARTIES. SOME OF THEM WERE OLD PARTIES , HOWEVER, AN ADDITION OF RS. 3925000/ - WAS TAKEN DURING THE YEAR . THUS, THE L D CIT SAID THAT NO ENQUIRY WAS MADE BY THE LD AO REGARDING VERIFICATION OF UNSECURED LOAN AS WELL AS WITH RESPECT OF SALE AND PURCHASE ITSELF. THE LD PR. CIT HELD THAT CASE FALL S U/S EXPLANATION 2 TO SECTION 263 OF THE ACT. CONSEQUENTLY, IT WAS ALSO STATED THAT UNSECURED LOAN TAKEN DURING THE YEAR OF RS. 3996000/ - FROM A SHRI JAGJIT SINGH WAS NOT VERIFIED. 5 . THE ASSESSEE WAS GIVEN AN OPPORTUNITY BY LD CIT AND HELD THAT THE ORDER PASSED BY THE LD AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AS THE LD AO HAS ACCEPTED THE CLAIM WITHOUT ANY ENQUIRY WITH RESPECT TO THE UNSECURED LOANS. WITH RESPECT TO THE DIFFERENCE BETWEEN THE PARTY WISE SALES AND PURCHASE AMOUNT AND ITS REFLECTION IN PROFIT AND LOSS ACCOUNT , SHOWS THAT THE DIFFERENCE OF RS. 9183 981 / - IN SALES AND RS. 8719753/ - IN PURCHASE. THUS, NO ENQUIRY WAS MADE BY THE LD AO ON THIS ISSUE . CONSEQUENTLY, IT WAS HELD THAT THE ASSESSMENT ORDER PAS SED ON 27.12.2016 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 6 . BEFORE US THE LD AR SUBMITTED THAT THE LD AO HAS MADE A DETAILED ENQUIRY WITH RESPECT TO THE UNSECURED LOAN FROM MR. JAGJIT SINGH . HE REFERRED TO PAGE NO. 8 OF THE PAPER BOOK WHICH IS A LETTER DATED 18.11.2016, WHEREIN, COPY OF THE CONFIRMATION ALONG WITH BANK ACCOUNT WAS FURNISHED. HE SUBMITTED THAT PRIMARY ONUS CAS T UPON THE ASSESSEE HAS BEEN DISCHARGED. HE FURTHER REFERRED TO PAGE 22 THE INCOME TAX RETURN , FILED BY LENDER FOR THR EE YEARS. HE FURTHER REFERRED TO PAGE 25 WHEREIN, TOTAL SOURCE OF FUNDS REKHA GUPTA VS PR. CIT - 12 ITA NO. 1007/DEL/2019 (ASSESSMENT YEAR: 2014 - 15) PAGE | 3 WAS SHOWN OF RS. 41 , 49 , 569/ - . IN VIEW OF THIS HE SUBMITTED THAT THE ASSESSEE HAS COMPLETELY DISCHARGE D HIS ONUS TO THE EXTENT TO THE ABOVE UNSECURED LOAN. WITH RESPECT TO SALES AND PUR CHASES DETAILS PARTY WISE DETAILS HE REFERRED TO PAGE NOS. 27 TO 46 OF THE PAPER BOOK TO SHOW THAT ON 26.11.2016 THE ASSESSEE SUBMITTED THE DETAILS OF PURCHASE AND SALES ALONG WITH DETAILS OF INVENTORIES AS DESIRED BY THE LD AO. HE FURTHER REFERRED TO THE PURCHASE LEDGER OF THE PART IES AND SALES LEDGER OF THE PARTIES FROM THE BOOKS AND EXPLAINED DIFFERENCE FOUND BY THE LD CIT STATING THAT IT IS TAX AMOUNT THAT DOES NOT CREDITED TO THE TRADING ACCOUNT BUT TO THE RESPECT IVE ACCOUNT . HE THUS, SUBMITTED THAT TH E COMPLETE ENQUIRY WAS MADE BY THE LD AO ON THIS TWO COUNTS. HE FURTHER REFERRED TO NOTICE U/S 142(1) DATED 12.09.2016, WHEREIN, ANNEXURE A 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 THE LD AO. HE FURTHER STATED THAT THE LD CIT DID NOT SPECIFY WHAT IS THE ERROR IN THE ORDER OF THE LD AO. HE ALSO REFERRED TO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN ITO VS. DG HOUSING PROJECTS LTD 3 43 ITR 329 TO SUPPORT HIS CONTENTIONS . 7 . THE LD DR VEHEMENTLY SUPPORTED THE ORDER OF THE LD PR CIT BY SUBMITTING THE GIST OF VARIOUS DECISIONS. 8 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORDERS OF THE LD AO AND PR. CIT. ACCORDIN G TO THE PROVISIONS OF SECTION 263 OF THE ACT , AFTER EXAMINATION OF RECORDS , THE LD CIT FINDS THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE 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 AN ORDER IS PASSED WITH OUT MAKING ENQUIRY OR VERIFICATION WHICH SHOULD BEEN MADE , THE ORDER PASSED BY THE LD AO SHALL BE DEEMED TO BE ERRONEOUS IN SOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE PRESENT CASE THE ASSESSEE IS ENGAGED IN TRADING IN GOLD BARS UNDER THE NAME & STYLE OF M/S. SWARAN TRADERS AS A PROPRIETARY CONCERN . THE CASE OF THE ASSESSEE WAS SELECTED UNDER CASS FOR SC RUTINY WITH A REASON OF LOW NET PROFIT OR LOSS SHOWN FROM LARGE GROSS RECEIPT . THEREFORE, THE MANDATE GIVEN TO THE LD AO WAS TO EXAMINE THE LOW NET PROFIT. THE LD CIT HOLDS THAT ORDER IS REKHA GUPTA VS PR. CIT - 12 ITA NO. 1007/DEL/2019 (ASSESSMENT YEAR: 2014 - 15) PAGE | 4 ERRONEOUS FOR THE REASON THAT AO HAS NOT EXAMINED THE LOAN RECEI VED BY THE ASSESSEE FROM ONE MR. JAGJIT SINGH AND THE DIFFERENCE BETWEEN THE PURCHASE AND SALES SHOWN IN THE PROFIT AND LOSS ACCOUNT WITH THE PURCHASE AND SALES SHOW N IN PARTY WISE DETAILS. ON THE ISSUE OF UNSECURED LOAN , THE ASSESSEE HAS DISCHARGE D ITS INITIAL ONUS BY FURNISHING INCOME TAX RETURN, CONFIRMATION, SOURCE OF FUNDS AVAILABLE WITH THE LENDER ETC. THEREFORE, IT IS CORRECT THAT THE ASSESSEE HAS DISCHARGE D ITS ONUS CAST UPON HIM. THEREAFTER IF MATERIAL GIVES AN Y INDICATION THAN THE LD AO SHOULD H AVE MADE FURTHER ENQUIRY . NO SUCH MATERIAL HAS BEEN SHOWN BY THE LD CIT FROM THE ASSESSMENT RECORDS. THUS ON THIS ISSUE , IT CANNOT BE SAID THAT AO SHOULD HAVE BEEN MADE ANY FURTHER ENQUIRY. THUS, N THE ISSUE OF VERIFICATION OF UNSECURED LOAN, WE DO NOT FIN D THAT THERE IS LACK OF DUE INQUIRY. 9 . WITH RESPECT TO PURCHASE AND SALES ASSESSEE HAS EXPLAINED BEFORE THE LD CIT , THAT TAX COMPONENT WHICH IS DEBITED OR CREDITED TO THE PARTIES ACCOUNT ALONG WITH NET SALES VALUE AND ONLY NET SALES IS SHOWN IN THE PROFIT A ND LOSS ACCOUNT. THE DIFFEREN CE AS POINTED OUT BY THE CIT IN SHOW CAUSE NOTICE CANNOT BE SAID TO BE DIFFEREN CE BUT THE CORRECT ACCOUNTING METHOD. NATURALLY AT THE TIME OF SALE THE ASSESSEE CREDITS NET OFF TAX IN PROFIT AND LOSS ACCOUNT AND DEBIT THE WHOLE AMOUNT INCLUDING TAX IN THE ACCOUNT OF THE DEBTORS . SIMILAR LY, PURCHASE S ARE MADE BY DEBITING THE TRADING ACCOUNT BY NET OFF PURCHASE AND CREDIT ING WHOLE AMOUNT INCLUDING TAXES TO THE ACCOUNT OF THE CREDITORS. THESE DETAILS WERE ALREADY ENQUIRED BY THE LD AO . THE LD PR. CIT IN HIS ORDER HAS NOT MENTIONED WHAT FURTHER ENQUIRY AO MIGHT HAVE MADE. WHENEVER AN EXPLANATION 2(A) IS INVOKED , IT IS MANDATORY FOR THE CIT , TO SHOW WHAT ARE THE ENQUIR IES ON THE BASIS OF INFORMATION AVAILABLE ON RECORD SHOULD HAVE BEEN MADE BY THE LD AO AND ALSO THAT THOSE ENQUIRIES HAVE NOT BEEN MADE. IN ABSENCE OF SUCH A SPECIFIC FINDING IT CANNOT BE SAID THAT THE ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF REVENUE. IN THE ORDER PASSED BY THE LD PR. CIT WE DO NOT HAVE SUCH CATEGORICAL FINDING OF LACK OF INQUIRY ON BOTH THESE ISSUES. FURTHER , IT WAS ALSO NOT THE MANDATE GIVEN TO THE LD AO TO ENQUIRE ON THIS ASPECTS AS THE CASE WAS SELECTED FOR LI MITED VERIFICATION OF LOW PROFIT . IN VIEW OF THIS , WE DO REKHA GUPTA VS PR. CIT - 12 ITA NO. 1007/DEL/2019 (ASSESSMENT YEAR: 2014 - 15) PAGE | 5 NOT FIND THAT THE ORDER PASSED BY THE LD PR CIT U/S 263 IS SUSTAINABLE. ACCORDINGLY, WE QUASH IT AND ALLOW APPEAL OF THE ASSESSEE. ORDER PRONOUNCED IN THE OPEN COURT ON 2 5 / 09 / 2019 . - SD/ - - SD/ - ( AMIT SHUKLA ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 5 / 09 / 2019 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI