Girija Shankar Maji , Bankura V. ITO, Ward - 3(2) , Bankura

ITA 1046/KOL/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5662 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 06-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Keywords: Unexplained investment; Opportunity of being heard; Source of fund; Revenue expenditure; Capital expenditure; Set aside
• Section: 271(1)(c); 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA C BENCH, KOLKATA (BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER) I.T.A. NO. 1046/KOL/2019 ASSESSMENT YEAR: 2014-15 GIRIJA SHANKAR MAJI..................APPELLANT C/O. BADAL CHANDRA MAJI AT-BHAKRABANDH KESHIARA BANKURA -722 133 [PAN : ALGPM 4971 M] VS. INCOME TAX OFFICER, WARD -3(2), BANKURA.........RESPONDENT APPEARANCES BY: SHRI SUNIL SURANA, FCA, APPEARED ON BEHALF OF THE ASSESSEE. DR.P. K. SRIHARI, JCIT, SR. D/R APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : JULY 11 TH , 2019 DATE OF PRONOUNCING THE ORDER : JULY 31 ST , 2019 ORDER PER J. SUDHAKAR REDDY, AM :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX - DURGAPUR, (HEREINAFTER THE LD. PR. CIT), DT. 06/03/2019, PASSED U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT), RELATING TO ASSESSMENT YEAR 2014-15. 2. THE ASSESSEE IS AN INDIVIDUAL AND IS IN THE BUSINESS OF TRADING IN GROCERY GOODS AND HARDWARE. HE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2014-15 ON 08/05/2015 DECLARING TOTAL INCOME OF RS.2,27,644/-. THE ASSESSING OFFICER COMPLETED ASSESSMENT BY DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.8,38,010/- VIDE HIS ORDER PASSED U/S 143(3) OF THE ACT ON 29/12/2016. IN THIS ORDER, HE MADE AN ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT OF RS.5,02,612/- BEING INVESTMENT MADE BY THE ASSESSEE IN IMMOVABLE PROPERTY AS A CO-PURCHASER. THE LD. PR. CIT ISSUED A NOTICE U/S 263 OF THE ACT ON 15/11/2018, PROPOSING REVISION OF THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT ON 29/12/2016, ON THE GROUND THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. LATER, ON 16/01/2019, A REVISED NOTICE U/S 263 OF THE ACT, WAS ISSUED. THE ASSESSEE REPLIED ON 31/01/2019. THE LD. PR. CIT PASSED 2 I.T.A. NO. 1046/KOL/2019 ASSESSMENT YEAR: 2014-15 GIRIJA SHANKAR MAJI HIS ORDER U/S 263 OF THE ACT ON 06/03/2019, REVISING THE ASSESSMENT ORDER AND DIRECTING THE ASSESSING OFFICER TO PASS A FRESH ASSESSMENT ORDER, AFTER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. THE DIRECTIONS ARE AT PARA 8 PAGE 4 OF THE ORDER, WHICH IS EXTRACTED FOR READY REFERENCE:- 8. THE HON'BLE KOLKATA HIGH COURT IN THE CASE OF M/S. RAJ MANDIR ESTATE PVT. LTD. (2016) 70 TAXMANN.COM 124 (CAL) HAS HELD THAT THE INADEQUATE ENQUIRY IS A VALID GROUND FOR REVISION OF ASSESSMENT U/S.263. FURTHER, THE ITAT, KOLKATA IN THE CASE OF SUBHALAKSHMI VANIJYA PVT. LTD. VS. CIT (2015) IN ITA NO.LL04/KOL/2015 BY ORDER DATED 30-07-2015 HAS HELD THAT THE FACT THAT ENQUIRY WAS CONDUCTED IN THE CASE IS SUFFICIENT TO ITSELF FOR INVOKING OF PROVISIONS OF SECTION 263. FURTHER HON'BLE SUPREME COURT- IN THE CASE OF DENIEL MERCHANTS P LTD. VS. ITO & ANR DATED 29.11.2017, THE ASSESSMENT ORDER PASSED U/S.143(3) DATED 29.12.201-6 IS ORDERED TO BE MODIFIED AND SET-ASIDE TO THE EXTENT ABOVE. THE ASSESSING OFFICER IS TO PASS A SPEAKING ORDER AFTER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE AND AFTER CARRYING OUT THE FOLLOWING: A) VERIFY THE REMAINING SOURCE OF INVESTMENT OF RS.20,60,750/- AND TAX ACCORDINGLY. B) WHILE VERIFYING THE ABOVE DETAILS, AMONG OTHER DETAILS, THE A.O. SHOULD EXAMINE APPLICABILITY OF SEC. 40A(3), 40A(3A), 269SS AND 269T ETC. OF THE I. T. ACT, 1961. THE ADDITIONS MADE IN THE ORDER DATED 29.12.2016 WILL REMAIN INTACT AND THE REVISED ASSESSMENTS STANDS TO BE MODIFIED AFTER NECESSARY VERIFICATION. 3. AGGRIEVED THE ASSESSEE IS BEFORE US ON THE FOLLOWING GROUNDS:- 1. FOR THAT THE LD. PR. CIT ERRED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE I T ACT 1961 WHEN THE ASSESSING OFFICER HAVING EXAMINED THE CLAIM OF THE ASSESSEE GAVE SPECIFIC FINDINGS TAKING INTO ACCOUNT THE ACCOUNTS FILED BY THE ASSESSEE AND THE LD. PR CIT HAS NOT POINTED OUT ANY NON-APPLICATION OF MIND OR ERROR ON THE ISSUE INVOLVED. 2. FOR THAT THE LD PR. CIT ERRED IN INVOKING THE PROVISIONS OF SECTION 263 WITHOUT HIMSELF EXAMINING THE ISSUE INVOLVED WHEN ALL THE FACTS WERE BEFORE HIM AND ON THAT FACTS THE AO TOOK A POSSIBLE VIEW WHICH VIEW CANNOT BE TAKEN AS IMPOSSIBLE VIEW. 3. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. PR. CIT ERRED IN APPLYING THE PROVISIONS OF SECTION 263 WHEN ON THE FACTS AND WHILE ESTIMATING THE AVAILABILITY OF FUNDS TWO OPINIONS WERE ALWAYS POSSIBLE. 4. FOR THAT THE LD. PR. CIT ERRED IN DIRECTING THE APPLICABILITY OF SECTION 40A(3), 40A(3A), 269A AND 269T WHEN ON THE FACTS THE SAID SECTIONS WERE NOT APPLICABLE AND IN ANY CASE NO OPPORTUNITY OF BEING HEARD WAS GRANTED ON THE SAID ISSUE SINCE THE SAME WAS NOT THE PART OF THE SHOW CAUSE NOTICE. 3 I.T.A. NO. 1046/KOL/2019 ASSESSMENT YEAR: 2014-15 GIRIJA SHANKAR MAJI 4. THE LD. COUNSEL FOR THE ASSESSEE, SHRI SUNIL SURANA, SUBMITTED THAT THE LD. PR. CIT IN HIS NOTICE U/S 263 OF THE ACT HAD STATED THAT THE ASSESSING OFFICER HAS NOT CONDUCTED ADEQUATE ENQUIRY INTO THE ISSUE OF SOURCE OF INVESTMENT OF RS.25,63,362/- MADE BY THE ASSESSEE AS A CO-PURCHASER OF IMMOVABLE PROPERTY. HE POINTED OUT TO THE RELY GIVEN TO THE LD. PR. CIT ON 31/01/2019 AND SUBMITTED THAT THE ASSESSING OFFICER HAD IN FACT SOUGHT EXPLANATION ABOUT THE SOURCE OF INVESTMENT AND AFTER EXAMINING AND VERIFYING THE REPLIES AND EVIDENCES FILED BY THE ASSESSEE HAD TAKEN A PLAUSIBLE VIEW, WHEREIN HE ACCEPTED ONLY 40% OF THE SUNDRY CREDITORS AS A SOURCE AND HAD PARTLY REJECTED THE EXPLANATION GIVEN BY THE ASSESSEE AND HAD MADE AN ADDITION OF RS.5,02,612/-. HE FILED A PAPER BOOK RUNNING INTO 9 PAGES AND SUBMITTED THAT CLOSING CASH BALANCE AS ON 31/03/2013 WAS RS.8,89,642/- AS COMPARED TO RS.2,322/- ONLY AS ON 31/03/2014 WHICH POINTS OUT TO THE FACT THAT THE ASSESSEE HAS MADE INVESTMENT FROM OUT OF THE OPENING CASH IN HAND. SIMILARLY, HE SUBMITTED THAT SUNDRY DEBTORS AS ON 31/03/2013 WAS RS.7,38,840/- AS COMPARED TO NIL AS ON 31/03/2014 POINTING OUT TO THE FACT THAT SUNDRY DEBTORS WERE REALIZED AND UTILIZED FOR THE PURPOSE OF INVESTMENT. HE FURTHER ARGUED THAT SUNDRY CREDITORS AS ON 31/03/2013 HAD INCREASED FROM RS.5,19,780/- TO RS.8,74,870/- AND THIS INFLOW OF FUND WAS ALSO USED FOR THE PURPOSE OF INVESTMENT. HE FOUND FAULT WITH THE CONCLUSION DRAWN BY THE LD. PR. CIT AT PARA 4.01 OF HIS ORDER AND EMPHASIZED THAT THE INCREASE IN SUNDRY CREDITORS IS DEFINITELY A SOURCE OF INVESTMENT. THUS, ON FACTS HE SUBMITS THAT THE INVESTMENT WAS ADEQUATELY EXPLAINED AND THE ASSESSING OFFICER WAS RIGHT IN ACCEPTING THE SAME. 4.1. ON LAW, HE SUBMITTED THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR LIMITED SCRUTINY ON THE GROUND OF LARGE INVESTMENT IN PROPERTY UNDER CASS AND THAT THE POWERS OF THE ASSESSING OFFICER WAS LIMITED TO EXAMINING THIS ISSUE ONLY. THUS, HE SUBMITS THAT THE LD. PR. CITS POWER TO REVISE THE ASSESSMENT ORDER ALSO IS RESTRICTED TO THE ISSUES THAT ARISE FOR SCRUTINY IN CASS. HE SUBMITTED THAT THE LD. PR. CIT HAS TRAVELLED BEYOND HIS JURISDICTION IN DIRECTING THE ASSESSING OFFICER TO EXAMINE OTHER ISSUES WHICH ARE NOT SUBJECT MATTER OF LIMITED SCRUTINY. FOR THIS PROPOSITION, HE RELIED ON THE DECISION OF THE KOLKATA BENCH OF THE ITAT IN THE CASE OF SANJEEV KR. KHEMKA VS. PR. COMMISSIONER OF 4 I.T.A. NO. 1046/KOL/2019 ASSESSMENT YEAR: 2014-15 GIRIJA SHANKAR MAJI INCOME TAX IN ITA NO. 1361/KOL/2016, ORDER DT. 02/06/2017 . HE FURTHER SUBMITTED THAT INADEQUATE ENQUIRY CANNOT BE GROUND FOR INVOLVING JURISDICTION U/S 263 OF THE ACT. FOR THIS PROPOSITION HE RELIED ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SUNBEAM AUTO LTD. (2011) 332 ITR 167 (DELHI). HE FURTHER RELIED ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. JYOTI FOUNDATION 357 ITR 0388 (DEL), FOR THE PROPOSITION THAT THE CIT CANNOT EXERCISE HIS REVISIONARY POWER U/S 263 OF THE ACT, ON THE GROUND THAT FURTHER ENQUIRY/INVESTIGATION WAS REQUIRED OR THAT DEEPER OR FURTHER SCRUTINY SHOULD BE UNDERTAKEN WITHOUT HIMSELF CONDUCTING THE ENQUIRY AND COMING TO SUCH A CONCLUSION. HE FURTHER RELIED ON THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. J.L. MORRISON (INDIA) LTD. [2014] 366 ITR 593 (CALCUTTA) , FOR THE PROPOSITION THAT WHEN THE ASSESSING OFFICER HAS APPLIED HIS MIND AND HAS TAKEN A PLAUSIBLE VIEW, THE CIT IS BARRED FROM EXERCISING HIS JURISDICTION U/S 263 OF THE ACT. THUS, HE SUBMITS THAT THE ORDER PASSED U/S 263 OF THE ACT IS BAD IN LAW. 5. THE LD. D/R, DR. P.K. SRIHARI, ON THE OTHER HAND, OPPOSED THE CONTENTION OF THE ASSESSEE AND SUBMITTED THAT THE SOURCE OF THE PAYMENT OF THE ADDITIONAL STAMP DUTY OF RS.10,59,215/- WAS NOT VERIFIED BY THE ASSESSING OFFICER. HE POINTED OUT THAT BANKERS CHEQUES HAVE BEEN TAKEN FOR AMOUNTS OF RS.49,000/- EACH, AS NO PAN NO. WAS REQUIRED TO BE GIVEN AND SUBMITTED THAT THIS RAISES DOUBTS ABOUT THE GENUINENESS OF THE TRANSACTION. ON THE ISSUE OF POWERS OF THE LD. PR. CIT, HE SUBMITTED THAT THERE IS NO RESTRICTION U/S 263 OF THE ACT AND THAT THE LD. PR. CIT CAN TRAVEL BEYOND THE REQUIREMENTS OF LIMITED SCRUTINY. HE POINTED OUT THAT THE LD. PR. CIT HAS SIMPLY SET ASIDE THE MATTER TO THE ASSESSING OFFICER FOR FRESH ENQUIRY AND ADJUDICATION AFTER GIVING ADEQUATE OPPORTUNITY AND THAT THERE IS NO PREJUDICE CAUSED TO THE ASSESEE AND THAT HE CAN APPEAR BEFORE THE ASSESSING OFFICER AND EXPLAIN HIS CASE. 5.1. IN REPLY, THE LD. COUNSEL FOR THE ASSESSEE, POINTED OUT THAT THE SOURCE OF PAYMENT OF 1/3 RD OF THE ADDITIONAL STAMP DUTY OF RS.10,59,215/-, WAS IN FACT CONSIDERED AND VERIFIED BY THE ASSESSING OFFICER AND THE INVESTMENT MADE ALONG WITH THIS STAMP DUTY AMOUNT, TOTALLED TO RS. 25,63,362/-. HE REFERRED TO PARA 3 OF THE ASSESSMENT ORDER AND SUBMITTED THAT ADEQUATE ENQUIRY HAS BEEN MADE BY THE ASSESSING OFFICER. 5 I.T.A. NO. 1046/KOL/2019 ASSESSMENT YEAR: 2014-15 GIRIJA SHANKAR MAJI 6. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS:- 7. THE ASSESSING OFFICER AT PARA 3 OF HIS ORDER, HELD AS FOLLOWS:- 3. THE ASSESSEE ALONG WITH 3 (THREE) CO-PURCHASERS, HAS MADE INVESTMENT IN IMMOVABLE PROPERTY OF RS.1,02,53,451/- (COST OF RS.90,000/- + STAMP DUTY OF RS.10,59,215/- + FEES OF RS.1,94,236/-) ON 06.11.2013, OUT OF WHICH ASSESSEES SHARE OF INVESTMENT WAS RS.25,63,362/-. THE A.R. OF THE ASSESSEE WAS ASKED TO EXPLAIN ABOUT THE SOURCE OF INVESTMENT. HE OFFERED AN EXPLANATION ABOUT SOURCE OF INVESTMENT. HIS EXPLANATION ABOUT THE SOURCE OF FUND IS CONSIDERED TO THE EXTENT OF RS.20,60,750 AS UNDER:- CASH IN HAND AS ON 31.03.2012 RS.8,89,642/- + SUNDRY DEBTORS AS ON 31.03.2013 RS.7,8,840/- + (RS.1,52,320/- BEING OF INCOME FOR THE A.Y. 2014-15 MINUS RS.70,000/- BEING OF DRAWINGS) + RS.3,49,948/- BEING 40% OF SUNDRY CREDITORS. BUT, EXPLANATION FOR REMAINING SOURCE OF FUND OF RS.5,02,612, IS FOUND NOT SATISFACTORY. ACCORDINGLY, A SUM OF RS.5,02,612/- WAS ADDED AS UNEXPLAINED INVESTMENT. PENALTY PROCEEDINGS U/S 271(1)(C) IN THIS REGARD FOR CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME IS INITIATED SEPARATELY. 8. A PERUSAL OF THE SAME DEMONSTRATES THAT THE ASSESSING OFFICER HAD SOUGHT AN EXPLANATION FROM THE ASSESSEE AS TO THE SOURCE OF INVESTMENT OF RS.25,63,362/-, WHICH INCLUDED THE ASSESSEES SHARE OF ADDITIONAL STAMP DUTY OF RS.10,59,215/-. THUS, IT IS WRONG ON THE PART OF THE REVENUE TO ARGUE THAT THE ASSESSING OFFICER HAS NOT EXAMINED THIS ISSUE OF SOURCE OF PAYMENT OF STAMP DUTY. THE ASSESSING OFFICER HAS ACCEPTED THE SUBMISSIONS OF THE ASSESSEE THAT THE SOURCE OF FUNDS IS OPENING CASH IN HAND AS ON 31/03/2013, REALISATIONS FROM SUNDRY DEBTORS AND PART OF THE INCOME EARNED FOR THE ASSESSMENT YEAR 2014-15. HE ACCEPTED THE CLAIM OF THE ASSESSEE ONLY TO THE EXTENT OF RS.20,60,750/-. THE CLAIM OF THE ASSESSEE THAT THE INCREASED SUNDRY CREDITORS WAS A SOURCE, WAS PARTLY ACCEPTED BY THE ASSESSING OFFICER. OUT OF THE TOTAL INVESTMENT OF RS.25,63,362/-, THE ASSESSING OFFICER MADE AN ADDITION OF RS.5,02,612/- AS UNEXPLAINED INVESTMENT. TO OUR MIND THIS IS A PLAUSIBLE VIEW TAKEN AFTER DUE ENQUIRY AND APPLICATION OF MIND. IN ADEQUATE ENQUIRY CANNOT BE A GROUND FOR EXERCISING JURISDICTION U/S 263 OF THE ACT, AS HELD BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SUNBEAM AUTO LTD. 6 I.T.A. NO. 1046/KOL/2019 ASSESSMENT YEAR: 2014-15 GIRIJA SHANKAR MAJI (SUPRA). IN THE CASE ON HAND, THERE WAS APPLICATION OF MIND BY THE ASSESSING OFFICER AND ON FACTS, HE HAS TAKEN A PLAUSIBLE VIEW AND UNDER THE CIRCUMSTANCES, WE HAVE NO HESITATION IN HOLDING THAT THE LD. PR. CIT, HAS ERRED IN INVOKING HIS POWERS U/S 263 OF THE ACT ON THIS ISSUE. THIS IS BAD IN LAW. ON THE ISSUE OF THE LD. PR. CIT EXPANDING THE SCOPE OF ENQUIRY, WE ARE OF THE OPINION THT THE SCOPE OF ENQUIRY CANNOT BE EXPANDED BEYOND THE POINTS PERMITTED TO BE EXAMINED BY THE ASSESSING OFFICER IN LIMITED SCRUTINY FOR CASES SELECTED UNDER CASS. THERE IS NO ERROR ON THE PART OF THE ASSESSING OFFICER IN NOT ENQUIRING OR VERIFYING THOSE ISSUES WHICH ARE NOT PART OF THE ISSUES COVERED UNDER LIMITED SCRUTINY. IN FACT SUCH AN EXERCISE IS NOT PERMITTED. WHEN THE ASSESSING OFFICER IS PROHIBITED FOR EXAMINING CERTAIN ISSUES, THE LD. PR. CIT CANNOT TAKE UP THESE ISSUES FOR REVISING BY SING HIS POWERS U/S 263 OF THE ACT AS HELD IN THE CASE OF SANJEEV KUMAR KHEMKA (SUPRA). EVEN OTHERWISE, THE LD PR. CIT HAS TO CONDUCT AN ENQUIRY HIMSELF AND DEMONSTRATE AS TO WHAT IS THE ERROR THAT CAUSED PREJUDICE TO THE CASE OF REVENUE. MATTERS CANNOT BE SET ASIDE FOR FRESH ADJUDICATION WITHOUT POINTING OUT THE ERROR. WE NOW EXAMINE THE CASE-LAW ON THIS ISSUE. 9. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SUNBEAM AUTO LTD. (SUPRA) HAS HELD AS FOLLOWS:- 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 COMMISSIONER OF INCOME-TAX UNDER SECTION 263 OF THE INCOME-TAX ACT. AS NOTED ABOVE, THE SUBMISSION OF LEARNED COUNSEL FOR THE REVENUE WAS THAT WHILE PASSING THE ASSESSMENT ORDER, THE ASSESSING OFFICER 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 REASONS WHILE ALLOWING THE ENTIRE EXPENDITURE AS REVENUE EXPENDITURE. HOWEVER, THAT BY ITSELF WOULD NOT BE INDICATIVE OF THE FACT THAT THE ASSESSING OFFICER HAD NOT APPLIED HIS MIND ON THE ISSUE. THERE ARE JUDGMENTS GALORE LAYING DOWN THE PRINCIPLE THAT THE ASSESSING OFFICER IN THE ASSESSMENT 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 EXPENDITURE 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 COMMISSIONER TO PASS ORDERS UNDER SECTION 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 7 I.T.A. NO. 1046/KOL/2019 ASSESSMENT YEAR: 2014-15 GIRIJA SHANKAR MAJI WOULD BE OPEN. IN GABRIEL INDIA LTD.'S CASE (SUPRA), LAW ON THIS ASPECT WAS DISCUSSED IN THE FOLLOWING MANNER : '. . . FROM A READING OF SUB-SECTION (1) OF SECTION, IT IS CLEAR THAT THE POWER OF SUO MOTU REVISION CAN BE EXERCISED BY THE COMMISSIONER ONLY IF, ON EXAMINA-TION OF THE RECORDS OF ANY PROCEEDINGS UNDER THIS ACT, HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE INCOME-TAX OFFICER IS 'ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE'. IT IS NOT AN ARBITRARY OR UNCHARTERED POWER. IT CAN BE EXERCISED ONLY ON FULFILMENT OF THE REQUIREMENTS LAID DOWN IN SUB-SECTION (1). THE CONSIDERATION OF THE COMMISSIONER AS TO WHETHER AN ORDER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE MUST BE BASED ON MATERIALS ON THE RECORD OF THE PROCEEDINGS CALLED FOR BY HIM. IF THERE ARE NO MATERIALS ON RECORD ON THE BASIS OF WHICH IT CAN BE SAID THAT THE COMMISSIONER ACTING IN A REASONABLE MANNER COULD HAVE COME TO SUCH A CONCLUSION, THE VERY INITIATION OF PROCEEDINGS BY HIM WILL BE ILLEGAL AND WITHOUT JURISDICTION. THE COMMISSIONER CANNOT INITIATE PROCEEDINGS WITH A VIEW TO STARTING FISHING AND ROVING ENQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED. SUCH ACTION WILL BE AGAINST THE WELL-ACCEPTED POLICY OF LAW THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI-JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. [SEE : PARASHURAM POTTERY WORKS CO. LTD. V. ITO [1977] 106 ITR 1 (SC) AT PAGE 10]. ****** 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 MAKES 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 COMMISSIONER 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 LOWER 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 HIGHER FIGURE. IT IS BECAUSE THE INCOME-TAX OFFICER 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 SATISFIED WITH THE CONCLUSION. . . . 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 THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED. 8 I.T.A. NO. 1046/KOL/2019 ASSESSMENT YEAR: 2014-15 GIRIJA SHANKAR MAJI ****** WE MAY NOW EXAMINE THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE POWERS OF THE COMMISSIONER SET OUT ABOVE. 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 ON 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 EXPLANATION 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. 9.1. THE HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. JYOTI FOUNDATION (SUPRA) , IT HAS BEEN HELD AS FOLLOWS:- THE ORDER UNDER SECTION 263 ITSELF RECORDS THAT THE DIRECTOR FELT THAT THE INQUIRIES WERE NOT SUFFICIENT AND FURTHER INQUIRIES OR DETAILS SHOULD HAVE BEEN CALLED. HOWEVER, IN SUCH CASES, AS OBSERVED IN THE CASE OF ITO V. D.G. HOUSING PROJECTS LTD. [2012] 343 ITR 329/20 TAXMANN.COM 587/[2013] 212 TAXMAN 132 (MAG.) , THE INQUIRY SHOULD HAVE BEEN CONDUCTED BY THE COMMISSIONER OR DIRECTOR HIMSELF TO RECORD THE FINDING THAT THE ASSESSMENT ORDER WAS ERRONEOUS. HE SHOULD NOT HAVE SET ASIDE THE ORDER AND DIRECTED THE ASSESSING OFFICER TO CONDUCT THE SAID INQUIRY. 9.2. THE HONBLE DELHI HIGH COURT IN THE CASE OF ITO VS. D.G. HOUSING PROJECTS LTD. [2012] 343 ITR 329 (DELHI) HELD AS FOLLOWS:- IN THE INSTANT CASE, THE FINDINGS RECORDED BY THE TRIBUNAL ARE CORRECT AS THE COMMISSIONER HAS NOT GONE INTO AND HAS NOT GIVEN ANY REASON FOR OBSERVING THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS. THE FINDING RECORDED BY THE COMMISSIONER IS THAT 'ORDER PASSED BY ASSESSING OFFICER MAY BE ERRONEOUS'. THE COMMISSIONER HAD DOUBTS ABOUT THE VALUATION AND SALE CONSIDERATION RECEIVED BUT THE COMMISSIONER SHOULD HAVE EXAMINED THE SAID ASPECT HIMSELF AND GIVEN A FINDING THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS. HE CAME TO THE CONCLUSION AND FINDING THAT THE ASSESSING OFFICER HAD EXAMINED THE SAID ASPECT AND ACCEPTED THE ASSESSEE COMPUTATION FIGURES BUT HE HAD RESERVATIONS. THE COMMISSIONER IN THE ORDER HAS RECORDED THAT THE CONSIDERATION RECEIVABLE WAS EXAMINED BY THE ASSESSING OFFICER BUT WAS NOT PROPERLY EXAMINED AND, THEREFORE, THE ASSESSMENT ORDER IS 'ERRONEOUS'. THE SAID FINDING WILL BE CORRECT, IF THE COMMISSIONER HAD EXAMINED AND VERIFIED THE SAID TRANSACTION HIMSELF AND GIVEN A FINDING ON MERITS. AS HELD ABOVE, A DISTINCTION MUST BE DRAWN IN THE CASES WHERE THE ASSESSING OFFICER DOES NOT CONDUCT AN ENQUIRY; AS LACK OF ENQUIRY BY ITSELF RENDERS THE ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND CASES WHERE THE ASSESSING OFFICER CONDUCTS ENQUIRY BUT FINDING RECORDED IS ERRONEOUS AND WHICH IS ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. IN LATTER CASES, THE COMMISSIONER HAS TO EXAMINE THE ORDER OF THE ASSESSING OFFICER ON MERITS OR THE DECISION TAKEN BY THE ASSESSING OFFICER ON MERITS AND THEN HOLD AND FORM AN OPINION ON MERITS THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE SECOND SET OF CASES, THE COMMISSIONER CANNOT DIRECT THE ASSESSING OFFICER TO CONDUCT FURTHER ENQUIRY TO VERIFY AND FIND OUT WHETHER THE ORDER PASSED IS ERRONEOUS OR NOT. [PARA 19] 9 I.T.A. NO. 1046/KOL/2019 ASSESSMENT YEAR: 2014-15 GIRIJA SHANKAR MAJI 10. APPLYING THE PROPOSITIONS OF LAW LAID DOWN IN THE ABOVE CASE-LAW TO THE FACTS OF THE CASE ON HAND, WE CANCEL THE ORDER PASSED U/S 263 OF THE ACT BY THE LD. PR. CIT AND ALLOW THIS APPEAL OF THE ASSESSEE. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. KOLKATA, THE 31 ST DAY OF JULY, 2019. SD/- SD/- [ S.S. VISWANETHRA RAVI ] [ J. SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31.07.2019 {SC SPS} COPY OF THE ORDER FORWARDED TO: 1. GIRIJA SHANKAR MAJI C/O. BADAL CHANDRA MAJI AT-BHAKRABANDH KESHIARA BANKURA -722 133 2. INCOME TAX OFFICER, WARD -3(2), BANKURA 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES