Futuristic Sales Pvt. Ltd., New Delhi V. PrCIT (Central), Gurugram

ITA 1043/DEL/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2755 (ITAT-DELHI)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 11-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: Unexplained cash credit; Bogus Share capital; Gift; Search and seizure; Document seized; Share purchase agreement; Accommodation entries; Capital receipt; Documents seized; Revenue expenditure; Capital expenditure; Set aside
• Section: 143(3); 142(1); 153A; 133(6); 143(1); 131; 68; 148; 263; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI B BENCH, NEW DELHI BEFORE SHRI N.K. BILLAIYA , ACCOUNTANT MEMBER, AND S HRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 1043 /DEL/201 9 [A.Y 20 09 - 10 ] M/S FUTURISTIC SALES [P] LTD VS. THE PR. C.I.T FLAT NO. 97, SFS, FIRST FLOOR CENTRAL ASHOK VIHAR, PHASE IV GURGAON NEW DELHI PAN NO: AA ACF 6597 N [APPELLANT] [RESPONDENT] DATE OF HEARING : 0 6 . 06 .201 9 DATE OF PRONOUNCEMENT : 12 . 06 .201 9 ASSESSEE BY : SHRI GAUTAM JAIN , ADV SHRI LALIT MOHAN, CA REVENUE BY : MS. NIDHI SRIVASTAVA, CIT - DR ORDER PER N.K. BILLAIYA , ACCOUNTANT MEMBER: WITH THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE ORDER OF THE PCIT, CENTRAL, GURGAON DATED 24.01.2019 FRAMED U/S 263 OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT'] DATED 27.03.201 8 PERTAINING TO A.Y 20 09 - 10. 2 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD. PCIT WRONGLY ASSUMED JURISDICTION U/S 263 OF THE ACT. 3. THE REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LENGTH, THE CASE RECORDS CAREFULLY PERUSED AND WITH THE ASSISTANCE OF THE LD. COUNSEL, WE HAVE CONSIDERED THE DOCUMENTARY EVIDENCES BROUGHT ON RECORD I N THE FORM OF PAPER BOOK IN LIGHT OF RULE 18(6) OF ITAT RULES. JUDICIAL DECISIONS RELIED UPON WERE CAREFULLY PERUSED. 4. BEFORE PROCEEDING FURTHER, LET US UNDERSTAND THE SEQUENCE OF EVENTS. 5. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING INCOME OF RS. 22,51,600/ - . RETURN WAS PROCESSED U/S 143(1) OF THE ACT. PURSUANT TO SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT CONDUCTED AT THE PREMISES OF M/S GLOBE PANEL INDUSTRIES INDIA [P] LTD AND PURSUANT TO POST SEARCH ENQUIRIES, THE DDIT, INV, AMBALA SE NT AN INFORMATION TO THE ASSESSING OFFICER, CENTRAL CIRCLE, KARNAL. 6. AFTER RECEIVING THE INFORMATION, A NOTICE U/S 148 OF THE ACT WAS ISSUED. THE REASONS FOR REOPENING THE ASSESSMENT READ AS UNDER: 3 THE INFORMATION - IN THIS - CASE WAS PASSED OIR BY THE .D EPUTY DIRECTOR, OF INCOME - TAX (INVESTIGATION), AMBALA VIDE LETTER DATED 04.01.2016. BRIEF FACTS OF THE CASE ARE THAT A SEARCH & SEIZURE ACTION U/S 132 OF THE INCOME' TAX ACT, 1961 HAS BEEN CARRIED OUT ON 06.10.2015 AT TIRE RESIDENCE AND BUSINESS PREMISES OF M/S GLOBE PANEL INDUSTRIES INDIA PVT. LTD. GROUP OF CASES AT YAMUNANAGAR. DURING THE COURSE OF SEARCH, AND POST SEARCH PROCEEDINGS IT WAS OBSERVED THAT THE GROUP COMPANIES OF M/S GLOBE PANEL INDUSTRIES INDIA PVT. LTD., I.E. - THE ASSESSEE COMPANY HAS RECE IVED/RAISED HUGE SHARE CAPITAL AND SHARE PREMIUM, THE DETAIL OF WHICH IS AS UNDER: SR. NO. 1. NAME OF THE COMPANY DATE OF ALLOTMENT SHARE CAPITAL AND PREMIUM RAISED INVESTOR COMPANY WITH ADDRESS . M/S FUTURISTIC SALES PVT. LTD. 16.04.2009 2.48 CR. M/S SUNHIL LEASING & FINANCE PVT. LTD) 16.04.2009 40 LACS M/S SKGA IMPEX PVT. LTD. 16.04.2009 1.245 CR. M/S AVDHESH CONSTRUCTION & IMPEX LTD. 31.03.2012 3.00 CR. M/S AVDHESH CONSTRUCTION & IMPEX LTD DURING THE POST SEARCH ENQUIRES, IT WAS OBSERVED THAT THE ABOVE SHARE CAPITAL INVESTING COMPANIES WERE NOT FOUND EXISTENT AT THE ADDRESSES GIVEN IN THEIR PAN DATA BASES. FURTHER IT WAS FOUND THAT ULTIMATELY CASH WAS INTRODUCED AND TRANSFERRED THROUGH MULTIPLE ACCOUNTS IN THE ACCOUNT OF M/S FUTURISTIC SAL ES PVT. LTD. (PAN : AAACF6597N) AS SHARE CAPITAL AND SHARE PREMIUM. SO THE COMPANY 4 DINING THE ASSESSMENT YEAR 2009 - 10 HAS RECEIVED SHARE CAPITAL PREMIUM TO THE TUNE OF RS.432.50 LACS FROM THE BELOW MENTIONED ENTITIES: THE ASSESSEE VIDE LETTER DATED 06.11.2016 ADDRESSED TO THE DEPUTY DIRECTOR OF INCOME TAX (INV.), AMBALA HAS SURRENDERED THE AMOUNT ON ACCOUNT OF UNEXPLAINED CAS H CREDITS AS DETAILED IN PARA 2 ABOVE. KEEPING IN VIEW THE ABOVE FACTS, I HAVE, THEREFORE , RE ASONS TO BELIEVE THAT THE A SSESSEE COMPANY HAS ESCAPED INCOME TO LIRE TIME OF RS.432.50 LACS BY ROTATING ITS OWN FLUIDS THROUGH THE ABOVE BOGUS COMPANIES. THUS IT IS FIT CASE TO RE - OPEN THE PROCEEDINGS U/S 148 OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2009 - 10. (V.K. KATARIA) DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KARNAL. SR. NO. NAME OF SHAREHOLDER AMOUNT IN LACS 1 . M/S SUNHIL LEASING & FINANCE PVT. LTD. 248.00 2. M/S SKGA IMPEX PVT. LTD. 1/27, LALITA CHAMBER, LALITA PARK, LUXMI NAGAR, DELHI. 40.00 ,3. M/S AVDHESH CONSTRUCTION & IMPEX .LTD. 124.50 4, M/S ALCHEMIST CORPORATION LTD. 20.00 5. TOTAL 432.50 5 7. A PERUSAL OF THE AFORESTATED REASONS FOR REOPENING ASSESSMENT SHOW THAT DURING POST SEARCH ENQUIRIES, SHARE CAPITAL INVESTING COMPANIES WERE NOT FOUND IN EXISTENCE AT THE ADDRESSES GIVEN IN THEIR PAN DATA BASES. IN ITS REPLY DATED 31.08.2016, THE ASSESSEE MADE THE FOLLOWING SUBMISSI ONS INTER ALIA: IN THIS CONNECTION, IT IS MOST RESPECTFULLY SUBMITTED THAT THE ALLEGED COMPANIES IS VERY MUCH IN EXISTENCE AND THE DETAILS OF THEIR COMPLETE ADDRESSES OF THE ALLEGED COMPANIES IS GIVEN BELOW: - IT IS NOTEWORTHY THAT A SEARCH & SEIZURE ACTION U/S 132 OF THE INCOME TAX ACT, 1961 ( ;CT' FOR SHORT) HAS BEEN CARRIED OUT AT THE RESIDENCE AND BUSINESS PREMISES OF M/S SUNHIL L EASING AND FINANCE PVT. LTD. AND M/S AVDESH CONSTRUCTION AND IMPEX LTD - MLIE PHOTO - COPIES ASS ESSMENT ORDERS MADE U/S 153A R.W .S. 143(3) OF THE ACT SR. NO. NAME OF ALLEGED COMPANIES COMPLETE ADDRESSES OF ALLEGED COMPANIES 1. M/S SUNHIL LEASING & FINANCE PVT. LTD. 305, ELITE HOUSE, 36, COMMUNITY CENTRE, KAILASH COLONY EXTENSION (ZAMROODPUR), NEW DELHI - 48. 2. M/S SKGA IMPEX PVT. LTD. 1 /27, LALITA CHAMBER, LALITA PARK, LUXMI NAGAR, DELHI - 110092. 3. M/S AVDHESH CONSTRUCTION & IMPEX PVT. LTD. E - 94, GREATER KAILASH - 1, NEW DELHI - 48. I 6 FOR THE ASSESSMENT YEA R 2009 - 10 OF M/S SUNHIL LEASING AND FINANCE PVT. LTD. & M/S AVDESH CONSTRUCTION AND IMPEX LTD. B EING ENCLOSED HEREWITH FOR YOUR KIND CONSIDERATION AS PER ANNEXURE 'A'. 8. AFTER MAKING A THOROUGH ENQUIRY AND EXAMINING EACH ISSUE FOR REOPENING THE ASSESSMEN T QUA THE REPORT FROM THE INV WING, THE ASSESSING OFFICER FRAMED THE ASSESSMENT U/S 143(3) R.W.S 147 OF THE ACT VIDE ORDER DATED 31.03.2009 AND THE ASSESSMENT ORDER READS AS UNDER: THE INFORMATION IN THE EASE OF ASSESSEE WAS PASSED ON BY. THE - ' DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION), A M BALA VIDE LETTER DATED 04.(31.2016. THE FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE ACTION U/S 132 OF THE I.T. ACT. 1961 WAS CARRIED OUT ON 06.10.2015 AT THE RESIDENCE AND BUSINESS PREMISES' OF M/S GLOBE PANEL INDUSTRIES INDIA PVT. LTD. GROUP OF CASES AT YAMUNANAGAR. DURING THE CO U RSE O F SEARCH AND POST SEARCH PROCEEDINGS, IT WAS OBSERVE D THAT THE GROUP COMPANIES OF M S GLOBE PANE; INDUSTRIES' INDIA PVT. LTD. I.E. THE ASSESSEE COMPANY HAS RECEIVED/RAISED HUGE SHARE CAPITAL AND SHARE PREMIUM, THE DETAIL OF WHICH IS AS UNDER: - 7 DURING THE POST SEARCH ENQUIRIES, H WAS OBSERVED THAT THE ABOVE SHARE CAPITAL INVESTING COMPANIES WERE NOT FOUND EXISTENT AT THE ADDRESSES GIVEN IN THEIR PAN DATA BASIS. FURTHER, IT WAS FOUND THAT ULTIMATELY CASH WAS INTRODUCED AND TRANSFERRED THROUGH MULTIPLE ACCOUNTS IN THE ACCOUNT OF M/S FUTURSTIC SALES PVT. LTD. (PAN: AAACF6597N) AS SHARE CAPITAL AND SHARE PREMIUM. SO THE COMPANY DURING THE ASSESSMENT YEAR 2009 - 10 HAS RECEIVED SHARE CAPITA! PREMIUM TO THE TUNE OF RS. 432.50 LACS FROM THE BELOW MENTIONED ENTITIES: - 3. KEEPING IN 'VIEW THE ABOVE FACTS, THE THEN A.O. AFTER RECORDING THE REASONS AND OBTAINING THE APPROVAL FROM' THE WORTHY' SR. | NAME OF THE COMPANY DATE OF ALLOTMENT SH ARE CAPITAL AND PREMIUM RAISED INVESTOR COMPANY WITH ADDRESS 1. M/S FUTURISTIC SALES PVT. LTD. 16.04.2009 2.48 CR. M/S SUNHIL LEASING & FINANCE PVT. LTD. 16.04.2009 40 LACS M/S SKGA IMPEX PVT. LTD. 16.04.2009 1.245 CR. M/S AVDESH CONSTRUCTION & IMPEX LTD. 31.03.2012 3.00 CR. M/S AVDESH CONSTRUCTION & IMPEX LTD. SR. NO, NAME OF SHAREH OLDER AMOUNT IN LACS 1 M/S SUNHIL LEASING & FINANCE PVT. LTD. 248.00 2 ML/S SKGA IMPEX PVT. LTD. 40.00 3 . M/S AVDESH CONSTRUCTION & IMPEX LTD. 124.50 4 . M/S ALCHEMIST CORPORATION LTD. 20.00 5 . TOTAL 432.50 8 PR.CLT(CENTRAL),.GURGAON VIDE HIS LE TTER DATED 30.03.20 16 ISSUED NOTICE 'U/S 148 OF THE I.T . ACT. 1961 ON 30.03.2016 TH ROUGH REGISTE RED POST. SUBSEQUENTLY, NOTICE U/S 142(1) OF THE I NCOME T AX ACT, L WAS ISSUED ON 24.06.2016. IN RESPONSE TO NOTICES, SH. RAJIV GUPTA, ADVOCATE, COUNSEL ON BEHALF OF THE ASSESSEE ATTENDED AND FILED PHOTOCOPY OF 1TR FOR THE A.Y. 2009 - 10 DATED 26.09.2009 DECL ARING INCOME OF RS. 22.51,600/ - AND STATED THAT THE SAME MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOT ICE U/S 142( 1)/148 OF THE I.T. ACT, 1961. ON COUNSELS REQUEST, COPY OF REASONS RECORDED U/ S 148 PROVIDED TO HIM VIDE THIS OFFICE ORDER SHEET ENTRY D ATED 24.08.2016. THEREAFTER, STATUTORY NOTICE U/S 143(2) WAS ISSUED TO THE ASSESSEE ON 24.08.2016 FIXING THE CASE FOR HEARING ON 31.08.2016. DURING THE PROCEEDINGS,, THE ASSESSEE RAISED PRELIMINARY OBJECTIONS TO RE - OPENING OF ASSESSMENT U/S 148 OF THE INCO ME TAX ACT. 1961 VIDE HIS LETTER DATED 31.08.2016, WHICH HAS BEEN DISPOSED OFF VIDE THIS OFFICE LETTER NO. DCIT /OC /KAMAL /2016 - 17/494 DATED23.09.2016. DETAILED QUESTIONNAIRE WAS ISSUED TO THE ASSESSEE ON 23.09.2016 FIXING THE CASE FOR HEARING ON 04.10.2 016. IN RESPONSE, SH. RAJEEV GUPTA, ADVOCATE ATTENDED THE PROCEEDINGS ON BEHALF OF THE ASSESSEE AND FILED WRITTEN SUBMISSIONS WITH DOCUMENTARY EVIDENCES AS CALLED FOR FROM TIME TO TIME AS PER THIS OFFICE ORDER SHEET ENTRIES ON VARIOUS DATES. AFTER CONSID ERING THE REPLY AND DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE, THE INCOME AS RETURNED AT RS. 22,51,600/ - IS HEREBY ACCEPTED. 9 9. ASSUMING JURISDICTION U/S 263 OF THE ACT, THE PCIT PROPOSED INITIATION OF PROCEEDINGS VIDE NOTICE DATED 12.07.2018. REPRESE NTATIVE S OF BOTH THE SIDES READ THE CONTENTS OF THE NOTICE U/S 263 OF THE ACT AND IT WOULD BE IMPRACTICAL TO EXTRACT THE 15 PAGES NOTICE. IT WOULD SUFFICE TO EXTRACT THE RELEVANT PORTION OF THE NOTICE WHICH READS AS UNDER: 8. DURING THE ASSESSMENT PROCEEDINGS THE A.O. HAS ISSUED SHOW CAUSE NOTICES DATED 23.09.2016 AND 07.12.2016 TO THE ASSESSEE COMPANY. HOWEVER, IT IS S E EN THAT IN RESPONSE THE ASSESSING OFFICER HAS MERELY OBTAINED CERTAIN DOCUMENTS FROM THE ASSESSEE COMPANY WHI CH HAVE NEITHER BEEN ANALYSED NOR ENQUIRIES WERE CARRIED OUT IN THE LIGHT OF FINDINGS OF THE INVESTIGATION WING. THE A.O. HAS NOT VERIFIED THE NEW ADDRESSES OF THE SHELL COMPANIES SUPPLIED BY THE ASSESSEE EITHER THROUGH THE INSPECTOR OR BY ISSUING COMMISSI ON. IT IS ALSO SEEN THAT THE A.O. HAS RECORDED STATEMENTS OF CERTAIN PERSONS, WHO ALLEGEDLY CLAIMED TO BE ACCOUNTANTS OF THE SHELL COMPANIES AND PRODUCED AT THE BEHEST OF THE ASSESSEE COMPANY MECHANICALLY WITHOUT PROBING INTO THE AFFAIRS OF THE SHELL COMPA NIES IN LIGHT OF THE FINDINGS OF THE INVESTIGATION WING. FURTHER, ON PERUSAL OF THE ITRS AND FINANCIAL STATEMENTS OF THE J INVESTOR COMPANIES, THESE APPEARED TO BE MERELY PAPER/SHELL COMPANIES WHICH WERE SHOWING NEGLIGIBLE INCOME IN THEIR ITRS AND THERE WA S HARDLY ANY NOTICEABLE BUSINESS ACTIVITY. FROM THE ANALYSIS OF FUND FLOW IN THE STATEMENTS OF THE BANK ACCOUNT IT WAS OBSERVED THAT EITHER CASH WAS DEPOSITED OR HIGH VALUE CHEQUE OR RTGS WAS 10 CREDITED INTO BANK ACCOUNT AND THE FUNDS RECEIVED WERE IMMEDIATE LY TRANSFERRED TO OTHER ENTITIES, LEAVING NEGLIGIBLE BALANCE IN THE BANK ACCOUNTS WHICH CLEARLY POINTED OUT THAT THE ENTITIES WERE BEING USED FOR CIRCULATION OF FUNDS AND HAD NO CREDITWORTHINESS. ALSO, THE ABOVE SURRENDER WAS MADE THREE TIMES, TWICE IN THE STATEMENTS RECORDED U/S 132(4) AND ONCE THROUGH LETTER FILED IN THE OFFICE OF THE DDIT (INV.) WHICH WAS NEITHER RETRACTED NOR THERE WAS ANY ALLEGATION . OF THREAT/COERCION AT THE TIME OF SURRENDER. IT WAS SPECIFICALLY ADMITTED THAT THESE ACCOMMODATION ENT RIES WERE ARRANGED THROUGH THEIR CA, MR. MANOJ GUPTA. IT IS WORTH NOTING THAT THE SHARES HAVE BEEN BOUGHT BACK AND TRANSFERRED IN FAVOUR OF THE VARIOUS ASSESSEES OF GLOBE PANEL GROUP AT NOMINAL VALUE. SEVERAL INCRIMINATING DOCUMENTS RELATING TO THE SHARE A LLOTMENT AND THEIR BUY BACK WERE FOUND AT THE PREMISES OF GLOBE PANEL GROUP AND THE BOOKS OF ACCOUNT OF THE SHELL COMPANIES WERE ALSO FOUND IN THE HARD DISK OF THE COMPUTER AT THE PREMISES OF GLOBE PANEL GROUP. IN FACT, IT WAS ADMITTED BY SH. SAURABH AGRAW AL THAT THE OFFICE SITUATED AT FB - 20, SHIVAJI ENCLAVE, RAJA GARDEN, NEW DELHI BELONGS TO SH. MANOJ GUPTA, THEIR CA. THE SHARE CAPITAL/ PREMIUM WAS ARRANGED BY HIM INTO THEIR GROUP COMPANIES AND ALL THE DOCUMENTS, COMPUTATION ETC. WAS DONE BY HIM ONLY AND T HEY WERE NOT AWARE HOW IT WAS DONE BY HIM. SINCE IT WAS MANAGED BY HIM, THE DOCUMENTS WERE ALSO WITH HIM. THE AO HAS NEITHER EXAMINED SH. SAURABH AGRAWAL NOR THEIR CA, SH. MANOJ GUPTA IN THIS REGARD NOR HAS ANY PLAUSIBLE EXPLANATION BEEN GIVEN BY THE ASSES SEE. ALTHOUGH THE ASSESSEE MISERABLY FAILED TO DISCHARGE ITS ONUS AS REGARDS THE IDENTITY AND CREDITWORTHINESS OF THE SHAREHOLDERS, GENUINENESS OF THE TRANSACTIONS AND JUSTIFICATION OF 11 HIGH SHARE PREMIUM WHICH ARE ESSENTIAL INGREDIENTS FOR SATISFYING THE R EQUIREMENT OF SECTION 68 OF THE ACT, STILL THE RETURNED INCOME WAS ACCEPTED BY THE AO. FURTHER IT IS ALSO NOTED THAT DURING AY 2012 - 13, ADDITION AMOUNTING TO RS. 3.00 CRORE WAS MADE IN THE CASE OF THE ASSESSEE COMPANY ON ACCOUNT OF UNEXPLAINED SHARE CAPITA L & SHARE PREMIUM RECEIVED FROM M/S AVDESH CONSTRUCTION & IMPEX PVT. LTD. AS THE SAID COMPANY FAILED TO PROVE CREDITWORTHINESS OF THE INVESTOR AND GENUINENESS OF THE TRANSACTIONS WITH IT. 9. BASED ON THE ABOVE DISCUSSION, IT CAN BE INFERRED THAT WHILE PASSING THE ASSESSMENT ORDER DATED 30.12.2016, THE ASSESSING OFFICER HAS NEITHER APPRECIATED THE FACTS OF THE CASE WHICH IS BASED ON SEARCH AND POST SEARCH ENQUIRIES CONDUCTED BY THE INV WING OF THE DEPARTMENT NOR CONDUCTED ANY ENQUIRES IN TERMS OF THE FINDINGS OF THE INV WING. IT IS EVIDENT THAT IN THIS CASE THE ASSESSMENT ORDER HAS. BEEN PASSED WITHOUT MAKING PROPER ENQUIRIES OR VERIFICATION IN RESPECT OF SHARE CAPITAL/PREMIUM RECEIVED FROM THE FOUR SHELL COMPANI ES HENCE THE ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE IN VIEW OF T HE PROVISIONS OF SECTION 263 R/ W EXPLANATION 2 OF THE ACT. 10. IN VIEW OF THE ABOVE, YOU ARE HEREBY BEING GIVEN AN OPPORTUNITY AS TO WHY PROCEEDINGS U/S 263 OF THE INCOME TAX ACT, 1961 MAY NOT BE INITIATED IN YOUR CASE FOR THE A.Y. 2009 - 10. YOU MAY APPEAR OR FILE YOUR REPLY IN THE OFFICE OF THE UNDERSIGNED PERSONALLY/THROUGH AUTHORIZED REPRESENTATIVE ON OR BEFORE 23.07 .2018. 12 10. A PERUSAL OF THE NOTICE U/S 263 OF THE ACT SHOWS THAT THE PCIT HAS INITIATED PROCEEDINGS ON IDENTICAL GROUNDS ON WHICH THE ASSESSMENT WAS REOPENED BY ISSUE OF NOTICE U/S 148 OF THE ACT. THE PCIT HAS EMPHASISED ON THE FACT THAT THE ASSESSEE VID E ITS LETTER DATED 6.11.2016 ADDRESSED TO THE DDIT, INV. WING, AMBALA HAS SURRENDERED THE AMOUNT ON ACCOUNT OF UNEXPLAINED CASH CREDITS WHICH HAS BEEN TOTALLY IGNORED BY THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT ORDER U/S 143(3) R.W.S. 148 OF THE ACT. 11. THIS FACT HIGHLIGHTED BY THE PCIT IS NOT CORRECT SINCE IN ITS SUBMISSIONS DATED 19.12.2016, THE ASSESSEE HAS EXPLAINED WHY THE SURRENDERED AMOUNT WAS NOT OFFERED FOR TAXATION. THE RELEVANT PART OF THE SUBMISSIONS READ AS UNDER: BEFORE. CONCLUDING THE ASSESSEE ALSO SUBMITS THAT SHRI. SOURABH AGGARWAL IN HIS S TATEMENT RECORDED ON 8.10.2015 U/S 132(4) OF THE ACT HAD STATED AS UNDER: Q.8 DURING THE COURSE OF SEARCH U/S 132(4) OF THE INCOME TAX ACT, 1961 AT YOUR RESIDENTIAL PREMISES I.E. E - 49, INDUSTRIAL AREA, YAMUNA NAGAR ON 06 TH AND 7 TH OCTOBER, 2015, YOU ON BEHALF OF YOURSELF, YOUR FAMILY MEMBERS AND YOUR BUSINESS CONCERNS HAD SURRENDERED AN AMOUNT OF RS. 13 33.99 CRORES. PLEASE EXPLAIN THE DETAILED BREAKUP OF THE SURR ENDERED AMOUNT INCLUD ING... T HE PERSON/ENTITY, AND .FINANCIAL YEAR TO WHICH IT PERTAIN? ANS. I AM FILING A DE TAILED LETTER IN WHICH THE BREAKUP OF PERSONS AS WELL AS YEARS HAVE BEEN INCORPORATED. BROADLY, THE DETAILS OF THE SURRENDER ARE AS UNDER: - D BOOKS OF ACCOUNTS, CASH AND JEWELLERY SEIZED FROM OUR VARIOUS PREMISES. WE ONCE AGAIN SUBMIT THAT THE ENTIRE SURREN DER HAS BEEN MADE TO BUY PEACE OF MIND AND TO AVOID LITIGATION AND ALSO TO ESCAPE THE PENALTY AND P ROSECUTION PROVISIONS UNDER THE INCOME TAX - 1961. 0 SR NO. NAME OF ENTITY/ PERSONS A.Y. AMOUNT SURREND ERE D (RS. IN LACS) HEAD UNDER WHICH SURRENDERE D D 3 M/S FUTURISTIC SALES (P) LTD. 2009 - 10 432.50 UNEXPLAIN ED SHARE CAPITAL AND SHARES PREMIUM OUT OF THE ABOVE, THE TAX ON - LTCG RELATING TO AY 2015 - 16 HAS ALREADY BEEN PAID BEFORE THE SEARCH. IN ADDITION TO THE ABOVE SURRENDER, WE NOW AFTER ANALYZING THE PHOTOCOPIES OF SEIZED RECORDS, OFFER AN ADDITIONAL SURRENDER OF RS. ONE CRORE TO COVER THE ALL THE DISCREPANCIES IN SEIZED DOCUMENTS, COMPUTERS 14 8.1 AL SO IN LETTER DATED 6.11.2015 FILED BY ASSESSEE BEFORE DDIT; AMBALA, IT WAS STATED AS UNDER: A SEARCH WAS CONDUCTED ON OUR GROUP ON 6.10.2015/07 - 10 - 2015. DURING THE SEARCH AT THE TIME OF RECORDING OUR STATEMENT U/S 132(4), WE HAD OFFERED ON BEHALF OF GROUP TO DISCLOSE CERTAIN ADDITIONAL INCOME. WE NOW HEREBY GIVE ITS BREAKUP AND MODE AND MANNER OF EARNING THE SAME TO AVAIL THE BENEFIT OF NO PENALTY OR PROSECUTION UNDER INCOME TAX ACT. 1 ' UNEXPLAINED SHARE CAPITAL/SHARE PREMIUM WHILE RECORDING THE STATEMENT/WE HAD OFFERED TO DISCLOSE AN AMOUNT OF RS. 18.90 CRORES ON ACCOUNT OF ADDITION TO SHARE CAPITAL IN VARIOUS COMPANIES. SINCE WE WERE NOT READILY IN A POSITION TO PROVE THE GENUINENESS OF THESE SHARE CAPITAL ENTRIES IN OUR BOOKS SO WE HAD. AGREED TO SURRENDER THE SAME. THE MODE AND MANNER OF EARNING THIS INCOM E IS NOT APPLICABLE SINCE IT IS SURRENDER ON ACCOUNT OF UNEXPLAINED CASH CREDITS. THE BREAKUP OF THIS AMOUNT IS AS UN DER: 15 IT IS FURTHER - SUBMITTED - THAT - ANOTHER STATEMENT OF SHRI. - SOURABH - AGGARWAL IN HIS 'STATEMENT RECORDED ON 9.12.2015 U/S 131 OF THE ACT HAD STATED AS UNDER: . Q.14 I AM SHOWING YOU ANNEXURE A - L AND A - 3 OF PARTY A - 3, ; .IMPOUNDED FROM THE PREMISES OF M/S GLOBE PANEL INDUSTRIES INDIA (P) LTD. FB - 20, SHIVAJI ENCLAVE, - RAJOURI GARDEN, NEW DELHI. PLEASE IDENTIFY THE SAME AND EXPLAIN THE CONTENTS OF THE SAME? ANS. THE SAID DOCUMENTS CONTAINS THE SHARE CERTIF. AND SHARE TRANSFER FORM OF M/S FUTURISTIC SALES (P) LTD. WE HAVE ALREADY SURRENDERED AN AMOUNT OF RS. 18.9 CRC ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL/SHARE PREMIUM INCLUDING AN AMOUNT OF RS. 7.32 CRORES RECEIVED IN M/S FUTURISTIC SALES (P) LTD. 8. IT IS SUBMITTED THAT PERUSAL OF THE AFORESAID LETTER WOULD S H OW THA T SURRENDER WAS MADE ONLY ON ACCOUNT OF THE FACT THAT ASSESSEE WAS NOT READILY IN A POSITION TO PROVE THE GENUINENESS OF THESE SHARE CAPITAL ENTRIES IN OUR BOOKS. IT IS SUBMITTED THAT HOWEVER, SUCH A STATEMENT BY ITSELF IS NOT A CONCLUSIVE EVIDENCE TO SR. NAME OF SHAREHOLDER AMOUNT IN NO. LACS 1 SUNHIL LEASING & FINANCE (P) LTD. - 248 2 SKGA IMPEX (P) LTD. 40 3 AVDESH CONST..& IMPEX (P) LTD. 124.50 4 ALCHEMIST CORPORATION LTD. 20 TOTAL . 432,50 16 DETERMINE THE NATURE OF THE TRANSACTIONS AND THE TAXABILITY ARISING OUT OF SUCH TRANSACTIONS. IT . .IS SUBMITTED THAT IN INSTRUCTION NO. F NO. 286/2/2003 - IT (INV) DATED 10.03.2003), THE CBDT HAS DIRECTED THAT, 'INSTANCES HAVE CO ME TO THE NOTICE OF THE BOARD WHERE ASSESSEE HAVE CLAIMED THAT THEY HAVE BEEN FORCED TO CONFESS THE UNDISCLOSED INCOME DURING THE COURSE OF SEARCH & SEIZURE - AND SURVEY OPERATIONS. SUCH CONFESSIONS, IF NOT BASED UPON RELIABLE EVIDEN CE, ARE LATER RETRACTED BY THE CONCERNED ASSESSEES WHILE FILING RETURN OF INCOME. IN THESE CIRCUMSTANCES, ON CONFESSIONS DURING THE COURSE OF SEARCH & SEIZURE AND SURVEY OPERATIONS DO NOT SERVE ANY USEFUL PURPOSE. IT IS, THEREFORE ADVISED THAT THERE SHOULD BE FOCUS AND CONCENTRATIO N ON COLLECTION OF EVIDENCE OF INCOME WHICH LEADS TO INFORMATION ON WHAT HAS NOT BEEN DISCLOSED OR IS NOT LIKELY TO BE - DIS C LOSED - BEFORE IN CO ME TAX DEPARTMENTS. SIMILARLY, WHILE STATEMENT DURING THE COURSE OF SEARCH & S E IZ URE - AND - SURVEY OPERATIONS, NO ATTE MPT SHOULD BE MADE TO OBTAIN CONFESSION AS TO THE UNDISCLOSED INCOME. ANY ACTION ON THE CONTRARY SHALL BE VIEWED ADVERSELY. FURTHER IN RESPECT OF PENDING ASSESSMENT PROCEEDINGS ALSO, ASSESSING OFFICER SHOULD BE RELY UPON THE EVIDENCES/MATERIAL GATHERED DURING THE COURSE OF SEARCH/SURVEY OPERATIONS OR THEREAFTER WHILE FRAMING THE RELEVANT ASSESSMENT ORDERS/ [EMPHASIS - SUPPLIED] 17 8 .4 IN FACT, CBDT IN INSTRUCTION NO. F.NO. 286/98/2013 - IT (INV.II) DATED 18.12.2014 HAS STATED AS UNDER: INSTANCES/COMPLAINTS OF UNDUE INFLUENCE/COERCION HAVE COME TO NOTICE OF THE CBDT THAT SOME ASSESSEES WERE COERCED TO ADMIT UNDISCLOSED INCOME DURING SEARCH/SURVEYS CONDUCTED BY THE DEPARTMENT. IT IS ALSO SEEN THAT MANY SUCH ADMISSIONS ARE RETRACTED IN THE SUBSEQUENT PROCEEDINGS SINCE THE SAME ARE NOT BACKED BY CREDIBLE EVIDENCE. SUCH ACTION DEFEAT THE VERY PURPOSE OF SEARCH/SURVEY OPERATIONS AS THEY FAIL TO BRING THE UNDISCLOSED INCOME TO TAX IN A SUSTAINABLE MANNER LEAVE ALONE LEVY OF PENALTY OR LAUNCHING OF PROSECUTION. FURTHER , SUCH ACTIONS SH OW THE DEPARTMENT AS. A WHOLE AND OFFICERS CONCERNED IN POOR LIGHT. 2. I AM FURTHER DIRECTED TO INVITE YOUR ATTENTION TO THE INSTRUCTIONS/GUIDELINES ISSUED BY CBDT FROM TIME TO TIME, AS REFERRED ABOVE, THROUGH WHICH THE BOARD HAS EMPHASIZED UPON THE NEED TO FOCUS ON GATHERING EVIDENCES DURING SEARCH/SURVEY AND TO STRICTLY AVOID OBTAINING ADMISSION OF UNDISCLOSED INCOME UNDER COERCION/UNDUE INFLUENCE 3. IN VIEW OF THE ABOVE, WHILE REITERATING THE AFORESAID GUIDELINES OF THE BOARD, I AM DIRECTED TO CONVEY THAT ANY INSTANCE OF UNDUE INFLUENCE/COERCION IN THE RECORD ING - OF THE STATEMENT DURING SE AR C H/SUR VEY/OTHER PROCEEDINGS UNDER THE I.T. ACT, 1961 AND/OR RECORDING A DISCLOSURE OF UNDISCLOSED INCOME UNDER UNDUE PRESSURE/COERCION SHALL BE VIEWED BY THE BOARD OF ADVERSELY. 18 8.4.1 IT IS SUBMITTED, THAT INSTRUCTIONS OF CBDT ARE BINDING AS HAS BEEN HELD IN TH E FOLLOWING JUDICIAL PRONOUNCEMENTS: I ) 56 ITR 198 (SC) NAVNIT LAI C. JAVERI VS. K. K. SEN II ) 82 ITR 913 (SC) ELLERMAN LINCES LTD. VS. C1T III ) 237 ITR 889 (SC) CIT VS. UCO BANK LTD. IV ) 247 ITR 128 (SC)TAPER PRODUCTS LTD. VS. COMMISSIONER OF CENTRAL EXCISE V ) 131 ITR 597 (SC) K. P. VARGHESE VS. ITO VI ) 183 ITR 1 (SC) KESHAVJI RAVJI AND CO. VS. CIT VII ) 252 ITR 1 (SC) CIT VS. ANJUM M. H. GHASWALA 8 . 5 IT WOULD BE EVIDENT FROM THE AFORESAID INSTRUCTION THAT SURRENDER BY ITSELF CANNOT BE MADE A BASIS TO MAKE ADDITION MORE PARTICULARLY WHEN IN THE INSTANT CASE, THE REASON FOR SURRENDER HAS ALSO BEEN STATED I.E. INABILITY AT THE TIME OF SEARCH TO FURNISH DOCUMENTS VIS - A - VIS CREDITWORTHINESS AND G ENUINENESS OF THE TRANSACTIONS WHICH REASONS APPARENTLY IS BASED ON FACTUAL AND LEGAL MISCONCE PTION. 8 . 6 8.6 IT.IS FURTHER SUBMITTED THAT COMPLETE EVIDENCE AS AVAILABLE WITH THE ASSESSEE IN SUPPORT OF SHARE CAPITAL RECEIVED HAS BEEN PLACED ON RECORD AS WOULD BE EVIDENT FROM PARA 2 OF THIS SUBMISSION. IT IS SUBMITTED THAT THE SAID EVIDENCE DISCHARGE THE BURDEN ON THE A SSESSEE COMPANY WHICH INCLUDES THE BURDEN IN RESPECT OF CREDITWORTHINESS OF SHAREHOLDERS AND GENUINENESS OF THE TRANSACTIONS. IT IS SUBMITTED THAT CREDITWORTHINESS OF THE SHAREHOLDERS IS ESTABLISHED FROM THE FINANCIAL STATEMENTS OF THE SHAREHOLDERS WHICH S HOW THAT THEY HAD SUFFICIENT FUNDS TO INVEST - 19 IN THE ASSESSEE COMPANY. LT IS FURTHER . SUBMITTED THAT GENUINENESS OF THE TRANSACTIONS IS ESTABLISHED FROM THE STATUTORY DOCUMENTS IN THE SHAPE OF FORM II FILED WITH ROC AND THE ANNUAL RETURN FURNISHED BY THE A SSESSEE WHICH WILL ALSO DEMONSTRATES THAT THE SAID INVESTORS CONTINUE TO REMAIN SHAREHOLDERS OF THE ASSESSEE. IT IS SUBMITTED THAT IN LIGHT OF THE ABOVE FACTUAL POSITION, IT WOULD BE ERRONEOUS TO CONCLUDE THAT THE GENUINENESS OR CREDITWORTHINESS OF THE SHA REHOLDERS IS NOT ESTABLISHED. IT IS THUS SUBMITTED THAT THE ASSESSEE HAS LED COMPLETE EVIDENCE UNDER SECTION 68 OF THE ACT AND THEREFORE, NO ADVERSE INFERENCE MAY KINDLY BE DRAWN, PARTICULARLY WHEN NO INCRIMINATING MATERIAL HAS BEEN DETECTED AS A RESULT OF SEARCH TO SHOW THAT SHARE CAPITAL RECEIVED BY THE ASSESSEE COMPANY REPRESENTS UNACCOUNTED - OR UNDISCLOSED INCOME OF THE ASSESSEE. IT IS ALSO A MATTER OF RECORD THAT NO ENQUIRIES OR ANY OTHER INDEPENDENT INVESTIGATION HAS BEEN CONDUCTED EVEN PRIOR TO SEARC H TO ASSUME AND ALLEGE THAT THE SAID SHARE CAPITAL REPRESENTS UNEXPLAINED CASH CREDIT UNDER SECTIOIT68 OF THE ACT. IN OTHER WORDS, THERE IS NO CORROBORATIVE EVIDENCE FOUND, GATHERED OR SEIZED TO SUPPORT SUCH AN ADVERSE INFERENCE AGAINST THE ASSESSEE COMPA NY WHEREBY THE CAPITAL RECEIPT IS BEING BROUGHT TO TAX AS REVENUE RECEIPT OF THE ASSESSEE COMPANY, MERELY ON THE BASIS OF A SURRENDER MADE UNDER A MISCONCEPTION OF FACTS AND LAW. 12. IT IS THE SAY OF THE LD. DR THAT THOUGH THE ASSESSING OFFICER HAS OBTAINED THE DOCUMENTS BUT HAS NOT ANALYSED THE SAME AS NO VERIFICATION WAS DONE WHICH HA S MADE THE ASSESSMENT ORDER ERRONEOUS 20 AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD. DR FURTHER STATED T HAT ENQUIRIES HAVE NOT BEEN CARRIED OUT IN THE LIGHT OF FINDINGS OF INV WING NOR THE ASSESSING OFFICER HAS VERIFIED THE NEW ADDRESSE S OF THE COMPANIES SUPPLIED BY THE ASSESSEE. 13. IN OUR CONSIDERED OPINION, SU CH ALLEGATIONS ARE FACTUALLY IN CORRECT IN THE LIGHT OF THE OFFICE NOTE WHICH READS AS UNDER: A SEARCH & SEIZURE ACTION U/S 132 OF THE INCOME TAX ACT, 1961 HAS BEEN CARRIED OUT ON 06.10.2015 AT THE RESIDENCE AND BUSINESS PREMISES OF M/S GLOBE PANEL INDUSTRIES INDIA PVT. LTD. GROUP OF CASE AT YAMUN ANAGAR. DURING THE COURSE OF SEARCH AND POST SEARCH PROCEEDINGS., IT WAS OBSERVED THAT - THE GROUP COMPANIES OF M/S GLOBE PANEL INDUSTRIES INDIA PVT. LTD. I.E. ASSESSEE COMPANY HAS RECEIVED/RAISED SHARED CAPITAL/SHARE PREMIUM TO THE TUNE OF RS.432.50 LACS FR OM THE. FOLLOWING INVESTOR COMPANIES: DURING THE POST SEARCH .ENQUIRIE S, IT WAS OBSERVED THAT THE ABO VE SHARE CAPITAL INVESTING COMPANIES NOT FOUND EXISTENCE AT THE ADDRESSES GIVEN IN THEIR PAN DATA - BASES., .FURTHER IT .WAS FOUND THAT ULTIMATELY CASH - WAS INTRODUCED AND TRANSFERRED THROUGH S N O L O , NAME OF SHAREHOLDERS AMOUNT INVESTED IN LACS 1 . M/S AVDESH CONSTRUCTION & IMPEX LTD., 248.00 2 M/S SKGA IMPEX (P) LTD., 1/27, LALITA CHAMBER, LAIITA PARK, LUXMI NAGAR, NEW DELHI 40.00 3 . M/S SUNHIL LEASING & FINANCING (P) LTD. 124.50 4 . M/S ALCHEMIST CORPORATION LTD., 20.00 TOTAL 432. - 50 7 21 MULTIPLE ACCOUNTS JN THE - ACCOUNT OF M/S - 5 UNMSTICE SALES PVT. LTD . AS SHARE CAPITAL AND SHARE PREMIUM. IN VIEW OF ABOVE, ASSESSEE WAS REQUESTED I FILE CERTAIN INFORMATION VIDE THIS OFFICE QUESTIONNAIRE DATED 23.09.2016. IN RESPONSE TO ASSESSEE HAS LED WRITTEN SUBMISSIONS ON DATED 08.1 1.2016 PROVIDED THEREIN COMPLETE DE TAIL OF INVESTOR COMPANIES TIKE ADDRESSES OF THE INVESTOR COMPANIES, THEIR BANK NAME, AO NAME WHERE THE SAID COMPANIES FLED THE IR INCOME TAX RETURNS. COPY OF ACKNOWLEDGMENT OF RETURN - OF INCOME, C ONFIRMED COPY OF - ACCOUNT, COPY OF SHARE CERTIFICATE & COPY OF AUDITED FINANCIAL STATEMENT FOR THE F.Y. 2008 - 09. COPY OF ORDER U/S 143(3) V.S. 153A IN THE CASE OF M/S AVDESH CONSTRUCTION & IMPEX (P) LTD. & M/S SUNHEAL LEASING AND FI NANCING (P) LTD. ALSO FURNISHED. THEREAFTER INFORMATION WERE ALSO CALLED FOR FROM THE INVESTOR COMPANIES U/S. 133(6) OF THE INCOME !961 ON THE ADDRESSES GIVEN BY THE ASSESSEE IN HIS REPLY DATED 08.1 1.2016. THE REPLY FROM ALL THE INVES TOR COMPANIES HAVE BEEN RECEIVED BY THIS OFFICE THROUGH POST . THE REPLY FILED BY THE INVESTOR COMPA NIES WE RE FOUND IN ORDER AND PLACED ON RECORD. FURTHER TO PROVE THE CREDITWORTHINESS OF THESE INVESTOR COMPANIES AND GENUINENESS OF TRANSACTION 'TOPER SUPPORTING DOCUMENTARY EVIDENCE, THE ASSESSEE COMPANYS C OUNSEL WAS ASKED TO PRODUCE THE CONTRO LLING PERSON OF THESE COMPANIES WITH BOOKS OF ACCOUNTS FOR VERIFICATION VIDE THIS OFFICE LETTER DATED 2.2016. IN RESPONSE, SH. RAJEEV GUPTA. AR ATTENDED AND PRODUCED THE PERSONS OF FOLLOWING COMP ANIES FOR STATEMENT : 22 M/S AVDESH CONSTRUCTION & IMPEX LTD. M /S SK.GA IMPEX (P) LTD. M/S SUNHIL LEASING & FINANCING (P) LTD. M - S ALCHEMIST CORPORATION LTD. STATEMENT OF ABOVE PERSONS WERE RECORDED AND CONFRONTED WITH THE A.R. OF THE ASSESSEE. HE WAS FURTHER ASKED TO JUSTIFY THE CREDITWORTHINESS OF THE ABOVE SAID COMPANIES VIDE THIS OFFICE ORDER SHEET ENTRY DATED 12/13.12.206. IN RESPONSE, ASSESSEE HAS FILED THE DETAILED REPLY IN THIS REGARD. THE SAME HAS DULY BEEN EXAMINED AND FOUND IN ORDER. KEEPING IN - VIEW THE 'ABOVE FACTS, AS THE ASSESSEE HAS PROVED THE IDENTI TY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS MADE BY THE INVESTOR COMPANIES. HENCE, NO ADVERSE INFERENCE IS DRAWN IN THIS REGARD. 14. A PERUSAL OF THE OFFICE NOTE CLEARLY DEMOLISHES THE ALLEGATIONS OF THE PCIT AND THE LD. DR. IN ITS NOTICE U/S 263 OF THE ACT, THE PCIT HIMSELF HAS ACKNOWLEDGED THE FACT THAT INFORMATION RECEIVED FROM THE DDIT, INV WING, AMBALA WAS BASIS FOR REOPENING OF T HE ASSESSMENT AND THE ASSESSING OFFICER, AFTER RECORDING REASONS FOR ISSUE OF NOTICE U/S 148 OF THE ACT. IT WOULD NOT BE OUT OF PLACE TO MENTION HERE THAT THE NOTICE ISSUED U/S 148 OF THE ACT WAS WITH THE PRIOR APPROVAL FROM THE PCIT, CENTRAL, GURGAON. 23 15. BEFORE US, THE LD. DR HAD PLACED STRONG RELIANCE ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF DANIEL MERCHANTS PVT LTD VS. ITO APPEAL NO. 2396/2017 ORDER DATED 29.11.2017. IN OUR CONSIDERED OPINION, THE FACTS OF THAT CASE ARE TOTALLY DI FFERENT FROM THE FACTS OF THE CASE IN HAND IN AS MUCH AS IN THAT CASE, THE ASSESSING OFFICER DID NOT MAKE ANY PROPER ENQUIRY WHILE MAKING ASSESSMENT AND ACCEPTING THE EXPLANATION OF THE ASSESSEE IN SO FAR AS RECEIPT OF SHARE APPLICATION MONEY IS CONCERNED, WHEREAS IN THE CASE IN HAND, AFTER RECEIVING INFORMATION FROM THE INV WING, ASSESSMENT WAS REOPENED AND PROPER ENQUIRIES WERE MADE WHICH IS ALSO EVIDENT FROM THE OFFICE NOTE EXHIBITED ELSEWHERE. 16. ANOTHER DECISION RELIED UPON BY THE LD. DR IS THE CASE OF SURYA FINANCIALS SERVICES LTD ITA NO. 2158/DEL/2017 WHERE THE ASSESSING OFFICER FAILED TO CARRY OUT ADEQUATE ENQUIRY ABOUT THE ALLEGED ACCOMMODATION ENTRIES AND THE CO - ORDINATE BENCH UPHELD THE ORDER OF THE PCIT FRAMED U/S 263 OF THE ACT. 24 17. AS MENTIO NED ELSEWHERE, IN THE CASE IN HAND, THE ASSESSING OFFICER HAD NOT ONLY MADE SUFFICIENT ENQUIRIES, BUT AFTER SATISFYING HIMSELF, ASSESSMENT WAS FRAMED U/S 143(3) R.W.S 147 OF THE ACT. 18. THE LD. DR ALSO REFERRED TO THE DECISION OF THE HON'BLE DELHI HIGH C OURT IN THE CASE OF ASHOK LOGANI 347 ITR 22 WHEREIN THE HON'BLE DELHI HIGH COURT HELD THAT WHERE THE ASSESSING OFFICER HAS LEFT MANY LOOSE ENDS, THAT TOO IN A CASE WHERE HUGE CASH WAS FOUND DURING SEARCH, MOST OF WHICH WAS SURRENDERED BY GIVING STATEMENT A T THE TIME OF SEARCH, IT WAS NECESSARY FOR THE ASSESSING OFFICER TO PROPERLY ADJUDICATE UPON THAT ISSUE [SURRENDER] AND ASSESSMENT ORDER SHOULD HAVE AT LEAST REFLECTED THAT HE WAS SATISFIED WITH THE EXPLANATION DISCLOSING SOURCE OF CASH FOUND. IN THE PRES ENT CASE, THE FACTS ARE DIFFERENT. 19. THE HON'BLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD., 243 ITR 83, HAS LAID DOWN THE FOLLOWING RA TIO: 'A BARE READING OF SECTION 263 OF THE INCOME - TAX ACT, 1961, MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF JURISDICTION BY THE COMMISSIONER SUO MOTU UNDER IT, IS THAT THE ORDER OF THE INCOME - TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE 25 INTERESTS OF THE REVEN UE. THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT -- IF THE ORDER OF THE INCOME - TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE -- RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. THE PROVISION CANNOT BE IN VOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQU IREMENT OF THE ORDER BEING ERRONEOUS '. 20. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GABRIEL INDIA LTD 203 ITR 108 HAS HELD AS UNDER: THE POWER OF SUO MOTU REVISION UNDER SUBSECTION (1) IS IN THE NATURE OF SUPERVISORY JURISDICTION AND THE SAME CAN BE EXERCISED ONLY IF THE CIRCUMSTANCES SPECIFIED THEREIN EXIST. TWO CIRCUMSTANCES MUST EXIST TO ENABLE THE COMMISSIONER TO EXERCISE POWER OF REVISION UNDER THIS SUB - SECTION, VIZ., (I) THE ORDER IS ERRONEOUS; (II) BY VIRTUE OF THE ORDER BEING ERRONEOUS PREJUD ICE HAS BEEN CAUSED TO THE INTERESTS OF THE REVENUE. IT HAS, THEREFORE, TO BE CONSIDERED FIRSTLY AS TO WHEN AN ORDER CAN BE SAID TO BE ERRONEOUS. WE FIND THAT THE EXPRESSIONS 'ERRONEOUS', 'ERRONEOUS ASSESSMENT' AND 'ERRONEOUS JUDGMENT' HAVE BEEN DEFINED IN 26 BLACK'S LAW DICTIONARY. ACCORDING TO THE DEFINITION, 'ERRONEOUS' MEANS 'INVOLVING ERROR; DEVIATING FROM THE LAW'. 'ERRONEOUS ASSESSMENT' REFERS TO AN ASSESSMENT THAT DEVIATES FROM THE LAW AND IS, THEREFORE, INVALID, AND IS A DEFECT THAT IS JURISDICTIONAL IN ITS NATURE, AND DOES NOT REFER TO THE JUDGMENT OF THE ASSESSING OFFICER IN FIXING THE AMOUNT OF VALUATION OF THE PROPERTY. SIMILARLY, 'ERRONEOUS JUDGMENT' MEANS 'ONE RENDERED ACCORDING TO COURSE AND PRACTICE OF COURT, BUT CONTRARY TO LAW, UPON MISTAKEN VIEW OF LAW; OR UPON ERRONEOUS APPLICATION OF LEGAL PRINCIPLES'. 12. FROM THE AFORESAID DEFINITIONS IT IS CLEAR THAT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN INCOME - TAX OFFICER ACTING IN ACCORDANCE WITH LAW MAKE S A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY THIS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSI ONER FOR THAT OF THE INCOME - TAX OFFICER, WHO PASSED THE ORDER UNLESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALISED WHERE THE INCOME - TAX OFFICER WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATE HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWE R SIDE AND LEFT TO THE COMMISSIONER HE WOULD HAVE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN THE ONE DETERMINED BY THE INCOME - TAX OFFICER. THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO RE - EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HI GHER FIGURE. IT IS BECAUSE THE INCOME - TAX OFFICER 27 HAS EXERCISED THE QUASI - JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SAT ISFIED WITH THE CONCLUSION. IT MAY BE SAID IN SUCH A CASE THAT IN THE OPINION OF THE COMMISSIONER THE ORDER IN QUESTION IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BUT THAT BY ITSELF WILL NOT BE ENOUGH TO VEST THE COMMISSIONER WITH THE POWER OF SUO MOT U REVISION BECAUSE THE FIRST REQUIREMENT, VIZ., THAT THE ORDER IS ERRONEOUS, IS ABSENT. SIMILARLY, IF AN ORDER IS ERRONEOUS BUT NOT PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THEN ALSO THE POWER OF SUO MOTU REVISION CANNOT BE EXERCISED. ANY AND EVERY ERR ONEOUS ORDER CANNOT BE THE SUBJECT - MATTER OF REVISION BECAUSE THE SECOND REQUIREMENT ALSO MUST BE FULFILLED. THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF T HE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED. WE, THEREFORE, HOLD THAT IN ORDER TO EXERCISE POWER UNDER SUB - SECTION (1) OF SECTION 263 OF THE ACT THERE MUST BE MATERIAL BEFORE THE COMMISSIONER TO CONSIDER THAT THE ORDER PASSED BY THE INCOME - TAX OFFICER WAS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. WE HAVE ALREADY HELD WHAT IS ERRONEOUS. IT MUST BE AN ORDER WHICH IS NOT IN ACCORDANCE WITH THE LAW OR WHICH HAS BEEN PASSED BY THE INCOME - TAX OFFICER WITHOUT MAKING ANY ENQUIRY IN UNDUE HASTE. WE HAVE ALSO HELD AS TO WHAT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. AN ORDER CAN BE SAID TO BE PREJUDICIAL TO TH E INTERESTS OF THE REVENUE IF IT IS NOT IN ACCORDANCE WITH THE LAW IN CONSEQUENCE WHEREOF THE LAWFUL REVENUE DUE TO THE STATE HAS NOT BEEN REALISED OR CANNOT BE REALISED. THERE MUST BE MATERIAL AVAILABLE ON THE RECORD CALLED FOR BY THE COMMISSIONER TO SATI SFY HIM PRIMA FACIE THAT THE AFORESAID 28 TWO REQUISITES ARE PRESENT. IF NOT, HE HAS NO AUTHORITY TO INITIATE PROCEEDINGS FOR REVISION. EXERCISE OF POWER OF SUO MOTU REVISION UNDER SUCH CIRCUMSTANCES WILL AMOUNT TO ARBITRARY EXERCISE OF POWER. IT IS WELL - SET TLED THAT WHEN EXERCISE OF STATUTORY POWER IS DEPENDENT UPON THE EXISTENCE OF CERTAIN OBJECTIVE FACTS, THE AUTHORITY BEFORE EXERCISING SUCH POWER MUST HAVE MATERIALS ON RECORD TO SATISFY IT IN THAT REGARD. IF THE ACTION OF THE AUTHORITY IS CHALLENGED BEFOR E THE COURT IT WOULD BE OPEN TO THE COURTS TO EXAMINE WHETHER THE RELEVANT OBJECTIVE FACTORS WERE AVAILABLE FROM THE RECORDS CALLED FOR AND EXAMINED BY SUCH AUTHORITY. THE INCOME - TAX OFFICER IN THIS CASE HAD MADE ENQUIRIES IN REGARD TO THE NATURE OF THE EXPENDITURE INCURRED BY THE ASSESSEE. THE ASSESSEE HAD GIVEN DETAILED EXPLANATION IN THAT REGARD BY A LETTER IN WRITING. ALL THESE ARE PART OF THE RECORD OF THE CASE. EVIDENTLY, THE CLAIM WAS ALLOWED BY THE INCOME - TAX OFFICER ON BEING SATISFIED WITH THE EX PLANATION OF THE ASSESSEE. SUCH DECISION OF THE INCOME - TAX OFFICER CANNOT BE HELD TO BE 'ERRONEOUS' SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. MOREOVER, IN THE INSTANT CASE, THE COMMISSIONER HIMSELF, EVEN AFTER INIT IATING PROCEEDINGS FOR REVISION AND HEARING THE ASSESSEE, COULD NOT SAY THAT THE ALLOWANCE OF THE CLAIM OF THE ASSESSEE WAS ERRONEOUS AND THAT THE EXPENDITURE WAS NOT REVENUE EXPENDITURE BUT AN EXPENDITURE OF CAPITAL NATURE. HE SIMPLY ASKED THE INCOME - TAX OFFICER TO RE - EXAMINE THE MATTER . THAT, IN OUR OPINION, IS NOT PERMISSIBLE. HENCE THE PROVISIONS OF SECTION 263 OF THE ACT WERE NOT APPLICABLE TO THE INSTANT CASE AND, THEREFORE, THE COMMISSIONER WAS NOT JUSTIFIED IN SETTING ASIDE THE ASSESSMENT ORDER. 29 2 1. IT IS A SETTLED POSITION OF LAW THAT POWERS U/S 263 OF THE ACT CAN BE EXERCISED BY THE COMMISSIONER ON SATISFACTION OF TWIN CONDITIONS, I.E., THE ASSESSMENT ORDER SHOULD BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. BY 'ERRONEOUS' IS MEAN T CONTRARY TO LAW. THUS, THIS POWER CANNOT BE EXERCISED UNLESS THE COMMISSIONER IS ABLE TO ESTABLISH THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THUS, WHERE THERE ARE TWO POSSIBLE VIEWS AND THE ASSES SING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEWS, NO ACTION TO EXERCISE POWERS OF REVISION CAN ARISE, NOR CAN REVISIONAL POWER BE EXERCISED FOR DIRECTING A FULLER ENQUIRY TO FIND OUT IF THE VIEW TAKEN IS ERRONEOUS. THIS POWER OF REVISION CAN BE EXERCISED O NLY WHERE NO ENQUIRY, AS REQUIRED UNDER THE LAW, IS DONE. IT IS NOT OPEN TO ENQUIRE IN CASE OF INADEQUATE INQUIRY. OUR VIEW IS FORTIFIED BY THE DECISION OF HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. NIRAV MODI, [2016] 71 T AXMANN.COM 272 (BOMBAY)'. 22. THE HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. NIRMA CHEMICAL WORKS LTD . 309 ITR 67 HAS OBSERVED AS UNDER: IF ASSESSMENT ORDER WERE TO INCORPORATE THE REASONS FOR UPHOLDING THE CLAIM MADE BY AN ASSESSEE, THE RESULT WOULD BE AN EPITOME AND NOT AN ASSESSMENT ORDER. IN THIS CASE, DURING 30 THE ASSESSMENT PROCEEDINGS FOR BOTH THE ASSESSMENT YEARS, THE ASSESSING . A.Y. 2 009 - 10 OFFICER ISSUED A QUERY MEMO TO THE ASSESSEE, CALLING UPON HIM TO JUSTIFY THE GENUINENESS OF THE GIFTS. THE RESPONDENT - ASSESSEE RESPONDED TO THE SAME BY GIVING EVIDENCE OF THE COMMUNICATIONS RECEIVED FROM HIS FATHER AND HIS SISTER I.E. THE DONORS OF THE GIFTS ALONG WITH THE STATEMENT OF THEIR BANK ACCOUNTS. ON PERUSAL, THE ASSESSING OFFICER WAS SATISFIED ABOUT THE CREDITWORTHINESS/CAPACITY OF THE DONORS, THE SOURCE FROM WHERE THESE FUNDS HAVE COME AND ALSO THE CREDITWORTHINESS/CAPACITY OF THE DONOR. O NCE THE ASSESSING OFFICER WAS SATISFIED WITH REGARD TO THE SAME, THERE WAS NO FURTHER REQUIREMENT ON THE PART OF THE ASSESSING OFFICER TO DISCLOSE HIS SATISFACTION IN THE ASSESSMENT ORDER PASSED THEREON. THUS, THIS OBJECTION ON THE PART OF THE REVENUE CANN OT BE ACCEPTED . 23. WE FIND THAT THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS SUNBEAM AUTO REPORTED IN 332 ITR 167 HAS HELD AS HELD AS UNDER: 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE COUNSEL ON THE OTHER SIDE AND HAVE GONE THROUGH THE RECORDS. THE FIRST ISSUE THAT ARISES FOR OUR CONSIDERATION IS ABOUT THE EXERCISE OF POWER BY THE CIT UNDER S. 263 OF THE IT ACT. AS NOTED ABOVE, THE SUBMIS SION OF LEARNED COUNSEL FOR THE REVENUE WAS THAT WHILE PASSING THE ASSESSMENT ORDER, THE AO DID NOT CONSIDER THIS ASPECT SPECIFICALLY WHETHER THE EXPENDITURE IN QUESTION WAS REVENUE OR CAPITAL EXPENDITURE. THIS ARGUMENT PREDICATES ON THE ASSESSMENT ORDER, WHICH APPARENTLY DOES NOT GIVE ANY 31 REASONS WHILE ALLOWING THE ENTIRE EXPENDITURE AS REVENUE EXPENDITURE. HOWEVER, THAT BY ITSELF WOULD NOT BE INDICATIVE OF THE FACT THAT THE AO HAD NOT APPLIED HIS MIND ON THE ISSUE. THERE ARE JUDGMENTS GALORE LAYING DOWN T HE PRINCIPLE THAT THE AO IN THE ASSESSING ORDER IS NOT REQUIRED TO GIVE DETAILED REASON IN RESPECT OF EACH AND EVERY ITEM OF DEDUCTION, ETC. THEREFORE, ONE HAS TO SEE FROM THE RECORD AS TO WHETHER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE EXPENDITU RE IN QUESTION AS REVENUE EXPENDITURE. LEARNED COUNSEL FOR THE ASSESSEE IS RIGHT IN HIS SUBMISSION THAT ONE HAS TO KEEP IN MIND THE DISTINCTION BETWEEN 'LACK OF INQUIRY' AND 'INADEQUATE INQUIRY'. IF THERE WAS ANY INQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE CIT TO PASS ORDERS UNDER S. 263 OF THE ACT, MERELY BECAUSE HE HAS DIFFERENT OPINION IN THE MATTER. IT IS ONLY IN CASES OF 'LACK OF INQUIRY' THAT SUCH A COURSE OF ACTION WOULD BE OPEN . 24. CONSIDERING THE FACTS OF THE CASE IN T OTALITY FROM ALL POSSIBLE ANGLES, WE FAILED TO PERSUADE OURSELVES TO ACCEPT THE CONTENTION OF THE LD. DR WHO HAD STRONGLY SUPPORTED THE FINDINGS OF THE PCIT. WE ARE OF THE CONSIDERED VIEW THAT THE ORDER FRAMED U/S 263 OF THE ACT DESERVES TO BE SET ASIDE A ND THAT OF THE ASSESSING OFFICER DESERVES TO BE RESTORED. WE ORDER ACCORDINGLY. 32 25 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO. 1043 /DEL/201 9 IS ALLOWED. THE ORDER IS PRON OUNCED IN THE OPEN COURT ON 12 . 06 .201 9 . SD/ - SD/ - [ SUDHANSHU SRIVASTAVA, ] [ N.K. BILLAIYA ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12 TH JUNE , 201 9 VL/ COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) ASST. REGISTRAR 5 . DR ITAT, NEW DELHI 33 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER