Shri Hemendra K. Parmar, RAJKOT-GUJARAT V. The Pr. CIT-2, RAJKOT-GUJARAT

ITA 103/RJT/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5276 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 10-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M N MOURYA
• Keywords: Business income; Revision of order; Salary income; Competent authority; Assessment record; Set aside
• Section: 143(3); 64; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SMT. MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NOS. 103, 104 & 105/RJT/2017 ( ASSESSMENT YEARS. : 2010-11, 2011-12 & 2012-13) SHRI HEMENDRA K. PARMAR SHAILESH SADAN, OPP. GALAXY HOTEL, RAJKOT - 360001 / VS. PR. COMMISSIONER OF INCOME TAX RAJKOT 2, RAJKOT ./ ./ PAN/GIR NO. : AOTPP7384R ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI VIMAL DESAI, A.R. / RESPONDENT BY : SHRI M. N. MOURYA, CIT. D.R. DATE OF HEARING 22/01/2020 !'# / DATE OF PRONOUNCEMENT 20/02/2020 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE PR. COMMISSIONER OF INCOME TAX, RAJKOT-2. THE RELEVANT PARTICULARS ARE TABULATED AS UNDER: ITA NOS. NAME OF ASSESSEE AY CIT(A)S ORDER DATED AOS PENALTY ORDER DATED AOS ORDER UNDER SECTION 103/RJT/17 SHRI HEMENDRA K. PARMAR 2010-11 06.02.17 27.03.15 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) 104/RJT/17 -DO- 2011-12 -DO- -DO- -DO- 105/RJT/17 -DO- 2012-13 -DO- -DO- -DO- ITA NO. 103, 104 & 105/RJT/2017 [SHRI HEMENDRA K. PARMAR VS. PR.CIT] AYS. 2010-11, 2011-12 & 2012- 13 - 2 - 2. THE GRIEVANCES RAISED BEING COMMON IN ALL THREE APPEALS WERE HEARD TOGETHER AND DISPOSED OF BY WAY OF THE COMMON ORDER . 3. WE SHALL TAKE UP APPEAL IN ITA NO.103/RJT/2017 C ONCERNING AY 2010-11 AS A LEAD CASE FOR ADJUDICATION. ITA NO. 103/RJT/2017 - AY- 2010-11 4. AS PER THE GROUNDS OF APPEAL, THE ASSESSEE HAS C HALLENGED THE REVISIONAL JURISDICTION USURPED BY THE PRINCIPAL CO MMISSIONER OF INCOME TAX, RAJKOT (PR.CIT) UNDER S.263 OF THE ACT. 5. IN THE INSTANT APPEAL, THE RELEVANT FACTS ARE NO TED AS FOLLOWS: 5.1 THE ASSESSEE, AN INDIVIDUAL, DERIVED INCOME FRO M SOURCES SUCH AS SALARY, BUSINESS INCOME AND INTEREST INCOME. THE ASSESSEE HOWEVER DID NOT FILE RETURN OF INCOME. THEREAFTER, BASED O N CERTAIN INFORMATION AVAILABLE WITH THE DEPARTMENT THAT THE ASSESSEE HAS MADE HUGE TRANSACTIONS IN STOCK MARKET AND COMMODITIES AND MADE CASH DEPOS ITS IN BANK, A NOTICE UNDER S.148 OF THE ACT WAS ISSUED TO THE ASSESSEE O N 02.12.2013. PURSUANT TO THE STATUTORY NOTICES THEREAFTER, THE ASSESSEE F ILED A RETURN OF INCOME FOR THE IMPUGNED AY 2010-11 DECLARING BUSINESS LOSS OF RS.6,68,451/- AND INCOME FROM OTHER SOURCES AND SALARY INCOME AGG REGATING TO RS.76,220/-. THE ASSESSMENT WAS CARRIED OUT UNDER S.143(3) R.W.S. 147 OF THE ACT WHEREBY THE INCOME WAS ASSESSED AT RS.76,22 0/- AS OFFERED. HOWEVER, THE CLAIM OF CARRY FORWARD LOSS OF RS.6,68 ,451/- WAS DISALLOWED. 5.2 SUBSEQUENT TO THE ASSESSMENT, ON VERIFICATION O F ASSESSMENT RECORDS, IT WAS FOUND BY THE REVISIONAL COMMISSIONER THAT WH ILE THE ASSESSEE HAS DEPOSITED HUGE CASH IN BANK ACCOUNT AGGREGATING TO RS.20,82,000/-, THE SAME WAS ACCEPTED AS EXPLAINED WITHOUT ANY DELIBERA TIONS AND WITHOUT MAKING ANY VERIFICATION OR ENQUIRY IN RELATION THER ETO. THE PR.CIT ALSO NOTED THAT THE ASSESSEE HAS FILED A COPY OF HIS ACC OUNT IN THE BOOKS OF THE SHARE BROKER M/S. LABDHI FINANCE CORPORATION WHERE AN AMOUNT OF ITA NO. 103, 104 & 105/RJT/2017 [SHRI HEMENDRA K. PARMAR VS. PR.CIT] AYS. 2010-11, 2011-12 & 2012- 13 - 3 - RS.26,86,510/- HAS BEEN SHOWN TO BE CREDITED FOR TH E CHEQUES RECEIVED BY BROKER FROM THE ASSESSEE. HOWEVER, THE BANK ACCOUN T OF THE ASSESSEE DOES NOT CORRESPONDINGLY REFLECT THE SIMILAR OUTGO PARAL LELY. IN THE LIGHT OF SUCH DISCREPANCIES AND LACK OF ENQUIRY ON SUCH ISSUES, T HE PR.CIT INVOKED THE JURISDICTION VESTED UNDER 263 OF THE ACT AND ISSUED A SHOW CAUSE NOTICE DATED 30.12.2015 SEEKING EXPLANATION ON THE AFORESA ID ISSUES. 5.3 THE SHOW CAUSE NOTICE IS REPRODUCED HEREUNDER F OR READY REFERENCE: 2. IN THE ABOVE MENTIONED CASE, AN ASSESSMENT OF 1 43(3) R.W.S 147 OF THE ACT WAS FINALIZED ON 27/03/2015 BY THE ITO, WAR D 2(2)(4), RAJKOT, ASSESSING TOTAL INCOME OF RS.76,220/-. 3. A PERUSAL OF THE RECORDS SHOWS THAT IN YOUR BANK A/C WITH CO.- PERATIVE BANK OF RAJKOT, THERE WERE CASH DEPOSITS T OTALING TO RS.20,87,000/-. IN ORDER TO EXPLAIN THE SOURCE OF C ASH DEPOSITED, YOU HAVE STATED THAT THERE WAS CASH ON HAND OF RS.15,46,000/ - ON 31/03/2009. BESIDES YOU RECEIVED CASH FROM SHARE TRANSACTIONS. AS PER INFORMATION AVAILABLE ON RECORDS, YOU HAD CARRIED OUT SHARE TRA NSACTIONS THROUGH M/S. LABDHI FINANCE CORPORATION. ON GOING THROUGH YOUR L EDGER ACCOUNT IN THE BOOKS OF ACCOUNTS OF M/S LABDHI FINANCE CORPORATION , NO SUCH CASH PAYMENTS BY THE SHARE BROKER IS NOTICED. FURTHER IT IS FOUND THAT RETURN OF INCOME WAS FILED FOR THE A.Y. 2009-10. EVEN THOUGH THE AO HAS ACCEPTED SOURCE OF THE CASH DEPOSITS AS GENUINE, THIS MAKES THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICE TO THE INTEREST OF THE REVE NUE. 4. FURTHER PERUSAL OF YOUR LEDGER ACCOUNT WITH M/S. LABDHI FINANCE CORPORATION SHOWS THAT YOU HAVE MADE PAYMENTS TO TH E SHARE BROKER ON VARIOUS DATES. ON GOING THROUGH THE LEDGER ACCOUNT VIS-A-VIS YOUR BANK A/C, IT IS SEEN THAT CERTAIN PAYMENTS AGGREGATING T O S.26,86,510/- MADE THROUGH CHEQUES ARE NOT APPEARING IN YOUR BANK ACCO UNT WITH CO. OPERATIVE BANK OF RAJKOT. HOWEVER, THE AO DID NOT I NVESTIGATE SOURCE OF THE AFORESAID PAYMENTS OF RS.26,86,510/- TO M/S. LA BDHI FINANCE CORPORATION. THUS THE ASSESSMENT ORDER PASSED BY TH E AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 5. THE ABOVE FACTS SHOW THAT THE ASSESSMENT ORDER P ASSED BY THE ASSESSING OFFICER IN RESPECT OF AY 2010-11 APPEARS TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFO RE, I INTEND TO INITIATE PROCEEDINGS U/S 263 OF THE I.T. ACT AND PASS A SUIT ABLE ORDER. BEFORE PASSING SUCH ORDER, YOU ARE HEREBY GIVEN AN OPPORTU NITY OF BEING HEARD IN THE MATTER. PLEASE STATE AS TO WHY THE ORDER PASSED BY THE ASSESSING OFFICER IN YOUR CASE SHOULD NOT BE REVISED AFTER MA KING NECESSARY INQUIRY. IN THIS CONNECTION YOU ARE REQUESTED TO SUBMIT THE WRITTEN SUBMISSION, IF ANY, AND ATTEND THIS OFFICE ON 28/01/2016 AT 12.15 P.M. A SOFT COPY OF THE WRITTEN SUBMISSION SHOULD ALSO BE PRODUCED. ITA NO. 103, 104 & 105/RJT/2017 [SHRI HEMENDRA K. PARMAR VS. PR.CIT] AYS. 2010-11, 2011-12 & 2012- 13 - 4 - 5.4 THE ASSESSEE FILED A WRITTEN SUBMISSION CONTEST ING THE SHOW CAUSE NOTICE WHICH IS REPRODUCED IN PARA 4 OF THE REVISIO NAL ORDER APPEALED AGAINST. THE PR.CIT HOWEVER DID NOT CONCUR WITH TH E JUSTIFICATIONS ADVANCED BY THE ASSESSEE TO DROP THE PROCEEDINGS IN ITIATED UNDER S.263 OF THE ACT. 5.5 AS REGARDS FIRST ISSUE, AS NOTED BY THE PR.CIT, THE SOURCE OF CASH DEPOSITS TO THE TUNE OF RS.20,87,000/- IN THE BANK ACCOUNT HAS NOT BEEN VERIFIED BY THE AO AT ALL. IN THE ABSENCE OF ANY T ANGIBLE SOURCE OF INCOME, THE CLAIM OF THE ASSESSEE TOWARDS OPENING BALANCE O F MORE THAN RS.15 LAKHS TO MEET THE DEPOSITS WAS NOT FOUND PLAUSIBLE AND OUGHT NOT TO HAVE BEEN READILY ACCEPTED. IT WAS ALLEGED THAT THE AO OUGHT TO HAVE MAKE REQUISITE ENQUIRY INTO THE SOURCE OF SUCH DEPOSITS MORE SO, HAVING REGARD TO MEAGER INCOME. IT WAS FURTHER NOTICED BY THE REVIS IONAL CIT THAT THE SHARE BROKERS DO NOT MAKE OR RECEIVE PAYMENT FROM ITS CLI ENTS IN CASH FOR SETTLEMENT OF SHARE TRANSACTIONS. THE EXPLANATION OF THE ASSESSEE TOWARDS SOURCE OF CASH THEREFORE OUGHT TO HAVE BEEN VERIFIE D. IT WAS THUS ALLEGED BY THE PR.CIT THAT LACK OF ENQUIRY AND NECESSARY VE RIFICATION INTO THE EXPLANATION OF THE ASSESSEE BEFORE ACCEPTING SUCH A SSERTIONS REGARDING SOURCE OF CASH DEPOSITS IN THE BANK ACCOUNT HAS RES ULTED IN DEFINITE PREJUDICE TO THE REVENUE ATTRACTING THE PROVISIONS OF SECTION 263 OF THE ACT. 5.5 AS REGARDS THE SECOND LIMB OF SHOW CAUSE NOTICE , THE PR.CIT FOUND THAT THE LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOK S OF ACCOUNTS OF BROKER (LABDHI FINANCE CORPORATION) SHOWS RECEIPT OF SEVER AL PAYMENTS FROM THE ASSESSEE THROUGH CHEQUE AGGREGATING TO RS.26,85,510 /-. THE BANK ACCOUNT OF THE ASSESSEE HOWEVER DOES NOT CORRESPONDINGLY RE FLECT THE PAYMENT TO THE BROKER. IT WAS ALLEGED THAT THE AO HAS FAILED TO VERIFY THE SOURCE OF VARIOUS PAYMENTS TO THE BROKER. 5.6 THE PR.CIT THUS CANCELLED THE RE-ASSESSMENT ORD ER AND DIRECTED THE AO TO MAKE A FRESH ASSESSMENT DE NOVO AFTER MAKING NECESSARY ENQUIRY REGARDING SOURCE OF CREDIT ENTRIES APPEARING IN THE LEDGER ACCOUNT OF THE ITA NO. 103, 104 & 105/RJT/2017 [SHRI HEMENDRA K. PARMAR VS. PR.CIT] AYS. 2010-11, 2011-12 & 2012- 13 - 5 - ASSESSEE MAINTAINED BY THE BROKER AS WELL AS THE SO URCE OF CASH DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. WHILE DOING S O, THE PR.CIT ALSO TOOK NOTE OF VARIOUS DECISIONS RELIED UPON BY THE ASSESS EE AND DISTINGUISHED THE SAME ESSENTIALLY ON THE PREMISE OF LACK OF APPRAISA L OF MATERIAL PLACED BEFORE THE AO AND NON-APPLICATION OF MIND THEREON. 6. AGGRIEVED BY THE ORDER OF THE PR.CIT PASSED UNDE R S.263 OF THE ACT DATED 06.02.2017 HOLDING THE ASSESSMENT ORDER PASSE D UNDER S.143(3) R.W.S. 147 OF THE ACT DATED 27.03.2015 TO BE ERRONEOUS AS WELL PREJUDICIAL TO THE INTEREST OF THE REVENUE ON BOTH SCORES AS NOTED ABO VE, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. 6.1 ADVERTING TO THE FIRST LIMB OF ALLEGATION, THE LEARNED AR FOR THE ASSESSEE AT THE OUTSET SUBMITTED BEFORE THE TRIBUNA L THAT THE INGREDIENTS OF SECTION 263 OF THE ACT IS NOT AVAILABLE AT ALL AND THEREFORE PR.CIT HAS WRONGLY INVOKED THE JURISDICTION UNDER S.263 OF THE ACT. THE LEARNED AR SUBMITTED THAT THE ASSESSMENT ORDER WHICH WAS THE S UBJECT MATTER OF REVISION BY THE PR.CIT IS NEITHER ERRONEOUS NOR PRE JUDICIAL TO THE INTEREST OF THE REVENUE. THE LEARNED AR ADVERTED OUR ATTENTION TO THE ASSESSMENT ORDER PASSED BY THE AO AND SUBMITTED THAT THE NOTICE UNDE R S.148 OF THE ACT WAS ISSUED TO THE ASSESSEE FOR FILING THE RETURN ON THE GROUND THAT THE ASSESSEE HAD MADE HUGE TRANSACTIONS IN SHARE MARKET AND COMM ODITIES AND MADE CASH DEPOSITS IN THE BANK. IN RESPONSE TO SUCH NOT ICE, A RETURN WAS FILED SHOWING LOSSES TO THE TUNE OF RS.6.68 LAKHS INCURRE D BY THE ASSESSEE. THE RETURN SO FILED WAS SUBJECTED TO SCRUTINY ASSESSMEN T. THE SOURCE OF CASH DEPOSITS OF RS.20,87,000/- WAS SPECIFICALLY RAISED BY THE AO AND IN RESPONSE THERETO, THE BOOKS OF ACCOUNTS WERE PRODUC ED BY THE ASSESSEE WHICH WERE SUITABLY VERIFIED AT THE END OF AO. IN THE CIRCUMSTANCES, LACK OF PROPER ENQUIRY ON THE ISSUE CANNOT BE ALLEGED. 6.2 AS REGARDS THE SECOND LIMB OF ALLEGATION TOWARD S SOURCE OF CREDIT ENTRIES APPEARING IN THE BOOKS OF THE BROKER AGAINS T THE NAME OF THE ASSESSEE AND NOT CORRESPONDINGLY SHOWN TO BE DEBITE D IN THE BANK ACCOUNT OF THE ASSESSEE, THE LEARNED AR SUBMITTED THAT THE PAYMENTS WERE MADE ITA NO. 103, 104 & 105/RJT/2017 [SHRI HEMENDRA K. PARMAR VS. PR.CIT] AYS. 2010-11, 2011-12 & 2012- 13 - 6 - THROUGH DEMAND DRAFT TO THE EXTENT OF RS.15.85 LA KHS AND REMAINING AMOUNT OF RS.11.01 LAKHS ARE EITHER RETURNED UNCLEA RED OR DULY REFLECTED IN THE BANK. THE DEMAND DRAFTS WERE PREPARED OUT OF C ASH KEPT WITH THE ASSESSEE. IT WAS THUS CONTENDED THAT THE PR.CIT HA S PROCEEDED ON MIS- CONCEPTION OF FACTS THAT THE PAYMENT HAS BEEN MADE BY THE ASSESSEE BUT NOT REFLECTED IN THE BOOKS OF THE ASSESSEE, WHICH IS NO T TRUE. THE ACTION OF THE AO THEREFORE CANNOT BE SAID TO BE ERRONEOUS IN ACCE PTING THE TRANSACTIONS REFLECTED BY THE ASSESSEE. THE LEARNED AR ALSO REF ERRED TO THE LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF THE BROKER AND SUBMITTED THAT THE ASSESSEE WAS DOING SHARE TRADING BUSINESS ON BEHALF OF THE MANY SMALL TIME INDIVIDUALS WHO USED TO PAY CASH TO THE ASSESSEE TO RECOUP FOR THE LOSSES INCURRED BY THE ASSESSEE FOR THE TRANSACTION CARRIE D OUT ON THEIR BEHALF ON THE PLATFORM OF THE EXCHANGE THROUGH LABDHI FINANCE CORPORATION. THE SOURCE OF CASH DEPOSITS IN THE BANK AS WELL AS THE SOURCE OF PAYMENT TO THE BROKER, THUS, WAS FULLY EXPLAINABLE FROM THE BOOKS OF ACCOUNTS, AS VERIFIED BY THE AO. IT WAS THUS CONTENDED THAT THE VIEW TAK EN BY THE AO ON THESE FACTS OUGHT NOT TO HAVE BEEN HELD ERRONEOUS BY THE PR.CIT. IT WAS FURTHER CONTENDED THAT WHERE THE ASSESSEE HAS ACCOUNTED FOR ALL THE TRANSACTIONS OF SHARES AND SECURITIES AND RECORDED ALL THE CASH REC EIVED FROM VARIOUS SOURCES AND DEDUCED TAXABLE INCOME BASED ON SUCH EN TRIES, THERE CANNOT BE SAID TO BE ANY REVENUE LEAKAGE. HENCE, NO PREJUDIC E HAS BEEN CAUSED TO THE REVENUE AND THEREFORE INVOCATION OF SECTION 263 OF THE ACT IS NOT PERMISSIBLE IN LAW. THE LEARNED AR FOR THE ASSESSE E ALSO REFERRED TO THE DECISION OF HONBLE SUPREME COURT IN MALABAR INDUSTRIAL COMPANY LTD. VS. CIT (2000) 243 ITR 83 (SC) ; CIT VS. AMIT CORPORATION (2012) 21 TAXMANN.COM 64 (GUJ) & CIT VS. ARVIND JEWELLERS (2002) 290 ITR 689 (GUJ) TO SUPPORT THE PROPOSITION THAT WHEN A PARTICULAR VIEW HAS BEEN TAKEN BY THE AO AFTER EXAMINATION OF FACTS, MERE POSSIBIL ITY OF A DIFFERENT VIEW ON THE GIVEN FACTS COULD NOT BE THE BASIS FOR AN AC TION UNDER S.263 OF THE ACT. THE LEARNED AR ACCORDINGLY URGED THAT THE REVI SIONAL ORDER OF THE PR.CIT UNDER S.263 OF THE ACT IS NOT SUSTAINABLE FO R THE REASONS CITED ABOVE AND ACCORDINGLY REQUIRES TO BE QUASHED. ITA NO. 103, 104 & 105/RJT/2017 [SHRI HEMENDRA K. PARMAR VS. PR.CIT] AYS. 2010-11, 2011-12 & 2012- 13 - 7 - 7. THE LEARNED DR, ON THE OTHER HAND, STRONGLY DEFE NDED THE ACTION OF THE PR.CIT AND SUBMITTED THAT PLEA RAISED ON BEHALF OF THE ASSESSEE IS WITHOUT ANY TRACTION AS NOTED IN THE REVISIONAL ORD ER. THE LEARNED DR POINTED OUT THAT ON THE FACE OF A VERY MEAGER OR NE GATIVE INCOME, A SUBSTANTIAL AMOUNT OF CASH CONVENIENTLY SHOWN TO BE AN OPENING BALANCE FOR THE YEAR UNDER CONSIDERATION WAS NATURALLY REQU IRED TO BE VERIFIED. THE SOURCE OF CASH GENERATED DURING THE YEAR ALLEGED TO HAVE BEEN RECEIVED FROM UNKNOWN CLIENTS IS UNWORTHY OF ANY RELIANCE AS NEITHER THE BROKER NOR THE ASSESSEE COULD HAVE ENTERED INTO SHARE TRANSACT IONS IN CASH. THE AO HAS TOTALLY FAILED TO OBTAIN THE DETAILS OF SO CALLED I NDIVIDUAL CLIENTS FROM WHOM THE CASH WAS CLAIMED TO BE RECEIVED AND IN TUR N, DEPOSITED IN THE BANK AND WITH THE BROKER VIA DEMAND DRAFT/CHEQUE. THE NARRATIVE OF THE ASSESSEE TOWARDS SOURCE OF CASH THUS CLEARLY REMAIN S UNVERIFIED EVEN AT THIS STAGE. THE LEARNED DR THUS SUBMITTED THAT THE WHOLE BASIS OF EXPLANATION IS HOLLOW AND ANYTHING BUT BONAFIDE. THE AO HAD SHUT HIS EYES ON THE GLARING INCONGRUITY IN THE SOURCE OF CASH DEPOSITED WITHOUT ANY MEANINGFUL ENQUIRY DESPITE REOPENING THE CASE. SUCH PERFUNCTORY ORDER OF THE AO IS A NULLITY IN LAW AND RIGHTLY SET ASIDE BY THE PR.CIT FOR APPR OPRIATE VERIFICATION ON THE SOURCE OF DEPOSITS AND TO DETECT THE TRUTH. TH E LEARNED DR ACCORDINGLY SUBMITTED THAT NO INTERFERENCE WITH THE ORDER OF PR .CIT IS CALLED FOR. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS ON THE MAINTAINABILITY OF REVISIONAL ACTION TOWARDS THE SO URCE OF DEPOSITS MADE WITH THE BANK AND SOURCE OF PAYMENTS MADE TO THE BR OKER. SECTION 263 OF THE ACT CONFERS POWER UPON THE PR.CIT/CIT TO CALL F OR AND EXAMINE THE RECORDS OF A PROCEEDING UNDER THE ACT AND REVISE AN Y ORDER, IF HE CONSIDERS THE SAME TO BE ERRONEOUS AND PREJUDICIAL TO THE INT ERESTS OF THE REVENUE. THE PR.CIT CAN HOWEVER TAKE RECOURSE TO REVISION UN DER SECTION 263 OF THE ACT ONLY WHERE THE ASSESSMENT ORDER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. THE TWIN CONDITIONS ARE R EQUIRED TO BE SATISFIED SIMULTANEOUSLY. THE PR.CIT IN THE PRESENT CASE HAS PURPORTED TO ACT IN EXERCISE OF POWER UNDER S.263 OF THE ACT AND THEREB Y HAS SOUGHT TO CANCEL THE ASSESSMENT ORDER OF THE AO PASSED UNDER S.143(3 ) OF THE ACT. THE PR.CIT ESSENTIALLY OBSERVED THAT THE AO IN A SUMMAR Y MANNER HAS WRONGLY ITA NO. 103, 104 & 105/RJT/2017 [SHRI HEMENDRA K. PARMAR VS. PR.CIT] AYS. 2010-11, 2011-12 & 2012- 13 - 8 - ACCEPTED THE SOURCE OF CASH DEPOSITS IN BANK AS WEL L AS SOURCE OF PAYMENTS MADE TO THE BROKER WITHOUT MAKING ANY MEANINGFUL EN QUIRY IN THIS REGARD AND IN THE ABSENCE OF PROPER ENQUIRY, THE ORDER OF THE AO IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 8.1 AS POINTED OUT ON BEHALF OF THE ASSESSEE, TWO P RE-REQUISITES MUST CO- EXIST BEFORE THE DESIGNATED AUTHORITY TO ENABLE HIM TO EXERCISE THE REVISIONAL JURISDICTION CONFERRED ON HIM NAMELY; TH E ORDER SHOULD BE (I) ERRONEOUS & (II) THE ERROR MUST BE SUCH THAT IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. HOWEVER, AN ERRONEOUS ORDER DOES N OT NECESSARILY MEAN AN ORDER WITH WHICH THE PR.CIT IS UNABLE TO AGREE. TH E AO WHILE PASSING AN ORDER OF ASSESSMENT, PERFORMS JUDICIAL FUNCTIONS. AN ORDER OF ASSESSMENT PASSED BY THE AO CANNOT BE INTERFERED ONLY BECAUSE AN ANOTHER VIEW IS ALSO POSSIBLE ON THE ISSUE AS HELD IN CIT VS. GREENWORLD CORPORATION (2009) 181 TAXMAN 111 (SC) . IF IN GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, TWO VIEWS ARE POSSIBLE AND ONE VIEW, AS LEGALLY PLAUSIB LE, HAS BEEN ADOPTED BY THE AO THEN EXISTENCE OF OTHER POSSIBLE VIEW ALONE WOULD NOT BE SUFFICIENT TO EXERCISE POWERS UNDER S.263 OF THE ACT BY THE PR .CIT / CIT CONCERNED. HENCE, THERE CAN BE NO DOUBT THAT THE PROVISION CAN NOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COM MITTED BY THE AO. IT IS ONLY WHEN AN ORDER IS ERRONEOUS AND CAUSING PREJUDI CE, THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACT S OR INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENTS OF THE ORDER B EING ERRONEOUS. 8.2 IN THE INSTANT CASE, THE ALLEGATION OF THE REVI SIONAL CIT ARE TWO FOLD; FIRSTLY, THE SOURCE OF CASH DEPOSIT TO THE TUNE OF RS.20.87 LAKHS DURING THE YEAR [AND SIMILAR DEPOSITS OF RS.36.45 LAKHS IN FY 2010-11 (AY 2011-12) AND RS.62.20 LAKHS IN FY 2011-12 (AY 2012-13)] HAS NOT BEEN EXAMINED AT ALL AND SECONDLY, DEPOSITS OF RS.26.85 LAKHS SHO WN TO HAVE BEEN RECEIVED BY THE CORRESPONDING BROKER WAS NOT PROBED BY THE AO. ON THE OTHER HAND, IT IS THE CASE OF THE ASSESSEE THAT THE CASH BOOK WAS PRODUCED BEFORE THE AO IN THE COURSE OF RE-ASSESSMENT PROCEE DINGS WHICH REFLECTS THE SOURCE OF CASH DEPOSITS AND THEREFORE THE EXTEN T OF INQUIRY COULD NOT BE DETERMINED BY THE PR.CIT WHEN THE AO WAS SATISFIED ON THE SOURCE OF THE ITA NO. 103, 104 & 105/RJT/2017 [SHRI HEMENDRA K. PARMAR VS. PR.CIT] AYS. 2010-11, 2011-12 & 2012- 13 - 9 - CASH DEPOSITS AS WELL AS DRAFTS ISSUED IN FAVOUR OF CORRESPONDING BROKER NAMELY M/S. LABDHI FINANCE CORPORATION. ON THE FAC TS NARRATED ABOVE, A PERTINENT QUESTION WOULD ARISE AS TO WHETHER THE PR .CIT WAS JUSTIFIED IN SETTING ASIDE THE ASSESSMENT ORDER WHERE SOURCE OF CASH DEPOSITS FROM UNIDENTIFIED PEOPLE HAVE BEEN ACCEPTED SUMMARILY WI THOUT ANY TANGIBLE INQUIRY IN THIS REGARD. A PERUSAL OF THE QUESTIONN AIRES ISSUED AND REPLIES MADE BY THE ASSESSEE THEREON CLEARLY SHOW THAT NO R ELEVANT OR MEANINGFUL INQUIRY WAS CONDUCTED IN RESPECT OF SOURCE OF CASH TO MEET THE LOSSES INCURRED ON TRANSACTIONS WITH M/S. LABDHI FINANCE C ORPORATION. A BARE LOOK AT THE ASSESSMENT ORDER GIVES AN INFALLIBLE IM PRESSION THAT THE ASSESSMENT ORDER WAS PASSED IN A ROUTINE AND PERFUN CTORY MANNER WITHOUT ANY DISCUSSION ON ANY ASPECT OF THE ASSESSMENT FOR WHICH THE CASE WAS REOPENED. THE PREPONDERANCE OF EVIDENCE AND EXPLAN ATIONS THEREON BY THE ASSESSEE CLEARLY INDICATES ITS UNREALISTIC NATURE W HICH WOULD WARRANT AN INQUIRY FROM THE SOURCE PERSONS. THE PR.CIT IN DIS CHARGE OF ITS SOLEMN DUTY UNDER S.263 OF THE ACT COULD NOT REMAIN OBLIVI OUS OF THESE FACTS. THERE IS AN APPARENT PLAUSIBILITY IN THE ACTION OF THE PR.CIT BY RESORTING TO POWERS UNDER S.263 OF THE ACT WHICH IS OF WIDE AMPL ITUDE. THE CIRCUMSTANCES CLEARLY EXISTED WHICH DEMANDED ENQUIR Y WHICH WAS NOT DONE BY THE AO WHILE DISCHARGING ITS STATUTORY FUNCTION. 8.3 IT IS COMMON KNOWLEDGE THAT THE STOCK MARKET RE GULATIONS DID NOT PERMIT A SHARE BROKER OR MARKET INTERMEDIARY TO ACC EPT THE CASH PAYMENTS AGAINST THE TRANSACTIONS CARRIED OUT ON THE PLATFOR M OF THE STOCK EXCHANGE. THE CLIENT IS EXPECTED TO DEAL WITH THE SHARE BROKE R ONLY THROUGH THE BANKING CHANNEL. THE CASE MADE OUT ON BEHALF OF TH E ASSESSEE THAT THE TRANSACTIONS WERE CARRIED OUT ON BEHALF OF THE UNKN OWN CLIENTS FROM WHOM THE CASH WAS RECEIVED REMAINS TOTALLY UNSUBSTANTIAT ED. NO TANGIBLE ENQUIRY HAS BEEN MADE BY THE AO INTO THE CIRCUMSTANCES WHIC H LED TO SO CALLED ARRANGEMENT WHEREBY THE CASH WAS GIVEN BY UNIDENTIF IED PEOPLE TO THE ASSESSEE FOR DOING TRANSACTIONS ON THEIR BEHALF WHE RE ARRANGEMENT ITSELF IS VIOLATIVE OF REGULATED PROCEDURE. THE SOURCE OF CA SH HAS REMAINED UNEXPLAINED BEFORE THE AO INDEED IN THE ABSENCE OF PROPER VERIFICATION IN THIS REGARD. SIMILARLY, NO CONCRETE EVIDENCE IS AV AILABLE FOR CONVERSION OF ITA NO. 103, 104 & 105/RJT/2017 [SHRI HEMENDRA K. PARMAR VS. PR.CIT] AYS. 2010-11, 2011-12 & 2012- 13 - 10 - CASH INTO DEMAND DRAFTS, WHICH HAS, IN TURN, BEEN P AID TO THE BROKER. THE ELEMENTARY DETAILS CALLED FOR BY THE AO COULD NOT P ERSUADE ANY REASONABLE PERSON TO FORM AN OPINION IN FAVOUR OF THE ASSESSEE AS REGARDS SOURCE OF CASH. NO TRAIL OF CASH DEPOSITS WAS PLACED ON RECO RD. MERE PASSING OF ENTRIES TOWARDS RECEIPT OF CASH FROM UNKNOWN PERSON S, IN THE CASH BOOK, IN THE STRANGE CIRCUMSTANCES BYPASSING THE STOCK MARKE T REGULATIONS, COULD NOT HAVE DISCHARGED THE AO OF ITS QUASI-JUDICIAL RESPONSIBILITIES. THE ASSESSMENT ORDER PASSED BY THE AO CLEARLY SUFFERS F ROM THE VICE OF LACK OF REQUISITE ENQUIRIES OR VERIFICATION EXPECTED FROM H IM WHICH HAS RENDERED THE ORDER PASSED BY THE AO TO BE ERRONEOUS IN SO FA R AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE AS RIGHTLY HELD BY THE REVISIONAL COMMISSIONER. ARMED WITH FAIRLY EXTENSIVE POWERS, THE PR.CIT, IN OUR VIEW, HAS TAKEN ACTION COMPATIBLE WITH CIRCUMSTANCE S. THEREFORE, THE CAUSE OF ACTION DID EXIST IN RELATION TO ALL THE TH REE ASSESSMENT YEARS IN QUESTION. HENCE, THE PR.CIT WAS FULLY JUSTIFIED IN INVOKING ITS POWER UNDER S.263 OF THE ACT TO SET ASIDE THE ASSESSMENT FRAMED WITHOUT ANY APPLICATION OF MIND FOR MAKING A FRESH ASSESSMENT DE NOVO AFTER MAKING NECESSARY ENQUIRY REGARDING SOURCE OF CREDIT ENTRIES FROM THE ASSESSEE AND TOWARDS CASH DEPOSITS MADE IN THE BANK ACCOUNT BY THE ASSES SEE. 8.4 THE JUDICIAL PRECEDENTS RELIED UPON ON BEHALF O F THE ASSESSEE ARE NOT FOUND TO BE OF ANY ASSISTANCE. THE DECISIONS REFER RED TOO ARE BROADLY BASED ON THE CIRCUMSTANCES WHERE EITHER RELEVANT MATERIAL WAS NOT FOUND OR WHERE IT WAS FOUND IS A MATTER OF FACT THAT THERE WAS NO FAILURE ON THE PART OF THE AO IS TO MAKE INQUIRIES. NEEDLESS TO SAY, THE SCOP E OF SECTION 263 OF THE ACT IS QUITE DIFFERENT. IN ORDER TO INVOKE SECTION 263 OF THE ACT, THE COMPETENT AUTHORITY IS REQUIRED TO FIND THAT ORDER SOUGHT TO BE REVISED IS ERRONEOUS AND CAUSED PREJUDICE TO THE REVENUE. A L ACK OF INQUIRY ON A PERTINENT POINT WHICH DEMONSTRATES POSSIBLE REVENUE LEAKAGE OF STAGGERING AMOUNT WOULD DEFINITELY TANTAMOUNT TO THE ORDER BEI NG BOTH ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. CONSEQUENT UPON THE ACTION OF PR.CIT, THE ASSESSMENT ORDER IS MERELY CA NCELLED AND SET ASIDE TO THE FILE OF THE AO FOR MAKING RELEVANT INQUIRIES AS SPECIFIED FOR WHICH OBJECTIVE MATERIAL IS AVAILABLE AT THE THRESHOLD. THE ASSESSEE HAS NOT ITA NO. 103, 104 & 105/RJT/2017 [SHRI HEMENDRA K. PARMAR VS. PR.CIT] AYS. 2010-11, 2011-12 & 2012- 13 - 11 - ESTOPPED IN ANY MANNER FROM DEALING WITH THE INQUIR Y AS SPECIFIED TO THE AO AND TO REBUT THE PERCEPTION THAT THE PRIMA FACIE BELIEF ON ERROR IN THE ORIGINAL ORDER IS NOT CORRECT. THE ASSESSEE IS NOT PREVENTED FROM SUPPORTING ITS CASE IN ANY MANNER BEFORE THE AO IN THE PROCEED INGS PURSUANT TO SECTION 263 OF THE ACT. WE THUS DO NOT SEE ANY JUS TIFIABLE REASON TO INTERFERE WITH THE REVISIONAL ACTION OF THE PR.CIT. 9. THE APPEAL OF THE ASSESSEE IN ITA NO. 103/RJT/20 17 IS THUS DISMISSED. OTHER CAPTIONED APPEALS ARE ALSO FOUND TO BE WITHOUT ANY MERIT FOR THE SIMILAR REASONINGS. 10. IN THE COMBINED RESULT, ALL THREE APPEALS OF TH E ASSESSEE ARE DISMISSED. SD/- SD/- (MADHUMITA ROY) (PRADIP KUMAR KE DIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 20/02/2020 TRUE COPY S. K. SINHA / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 / GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, RAJKOT THIS ORDER PRONOUNCED IN OPEN COURT ON 20/02/2020