Mr Subhas Kumar Dhanuka, Kolkata V. C.I.T W.B - XIX,kolkata, Kolkata

ITA 1123/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5014 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 07-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJAT SUBHRA BISWAS
• Keywords: Gift; Revision of order; Corroborative evidences; Assessment record
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A, KOLKATA (BEFORE SHRI P. M. JAGTAP, A.M. & SHRI N.V.VASUDEVA N, J.M.) ITA NO.1123/KOL/2013 : ASSESSMENT YEAR: 2008-09 MR. SUBHAS KUMAR DHANUKA PAN: ADYPD 8585D VS C.I.T., KOL-XIX KOLKATA (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUBASH AGARWAL, ADVOCATE RESPONDENT BY : SHRI RAJ AT SUBHRA BISWAS, CIT,DR DATE OF HEARING : 04.04.2016 DATE OF PRONOUNCEMENT :22.04.2016 ORDER SHRI P.M.JAGTAP, A.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. CIT-XIX, KOLKATA, DATED 06.03.2013 PASSED UNDER SECTION 263 OF THE INCOME TAX ACT FOR THE ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO IS CARRYING ON THE BUSINESS AS INSURANCE AGENT. THE RETURN OF I NCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HIM ON 15.07.2008 DECLARING TOTAL INCOME OF RS.8,15,179/-. IN THE ASSESSMENT COMPLETE D UNDER SECTION 143(3) VIDE AN ORDER DATED 27.12.2010, THE TOTAL IN COME OF THE ASSESSEE WAS DETERMINED BY THE AO AT RS.8,75,890/- AFTER MAK ING DISALLOWANCE ON ACCOUNT OF MOTOR CAR EXPENSES, TELEPHONE EXPENSE S AND BUSINESS PROMOTION EXPENSES AGGREGATING TO RS.60,708/-. THE RECORD OF THE SAID ASSESSMENT CAME TO BE EXAMINED BY THE LD. CIT AND O N SUCH 2 ITA NO.1123/KOL/2013 ASS ESSMENT YEAR 2008-09 EXAMINATION, HE FOUND THAT THE ASSESSMENT ORDER PAS SED BY THE AO UNDER SECTION 143(3) HAS SUFFERED FROM THE FOLLOWIN G ERRORS. A) THE ASSESSEE HAS DEBITED A SUM OF RS.3,99,778/ - TO THE P&L ACCOUNT UNDER THE HEAD COMPUTER STATIONERY EXPENSES. THIS CLAIM IS FOUND TO INCLUDE PURCHASE OF SPARE PARTS WORTH RS.2,03,000/-FROM M/S. HINDUSTHAN SALES CORPORATION AS ON 31- 3-2008. HOWEVER, THE SCHEDULE OF FIXED ASSETS FORMING PART OF THE BALANCE SHEET REV EALED NO ADDITION ON ACCOUNT OF COMPUTER PURCHASE. AFORESAID PURCHASE WAS ALSO NOT REFLECTED IN THE STOCK-IN-TRA DE. THE A.O. IS FOUND TO HAVE NEITHER MADE ANY ENQUIRY NOR CALLED FOR ANY EXPLANATION FROM THE ASSESSEE REGARDING SUC H HUGE PURCHASE OF SPARE-PARTS ON THE LAST DAY OF THE F.Y. FURTHER THE REASONABLENESS OF THE EXPENDITURE APPEARS TO HA VE NOT BEEN EXAMINED BY THE A.O. (B) THE ASSESSEE HAS CLAIMED A SUM OF RS.1,57,325/ - UNDER THE HEAD 'FORMS AND CIRCULARS EXPENSES'. THIS CLAIM IS FOUND TO INCLUDE PURCHASE TO THE TUNE OF RS.1,08,825/- IN THE MONTH OF MARCH,2008 ALONE. IT IS NOTICED THAT A.O. DID NO T MAKE ANY ENQUIRY ABOUT THE BUSINESS EXPEDIENCY OF THE CONSUMPTION OF SUCH A BULK QUANTITY OF FORMS AND CI RCULARS IN THE LAST MONTH OF THE F.Y. IN OTHER WORDS, THE REASONABLENESS OF THE IMPUGNED EXPENDITURE WAS OMIT TED TO BE PROBED BY THE A.O. (C) THE ASSESSEE'S CLAIM OF EXPENDITURE UNDER THE H EAD 'PRINTING AND STATIONERY MATERIALS' STOOD AT RS.2,0 5,129/-. THIS CLAIM INCLUDED PURCHASES WORTH RS.1,04,129/- F ROM M/S 3 ITA NO.1123/KOL/2013 ASS ESSMENT YEAR 2008-09 HINDUSTHAN SALES CORPORATION ON 03-12-2007. IN THIS REGARD THE A.O. IS FOUND TO HAVE NOT ENQUIRED ABOUT THE NA TURE OF STATIONERY PURCHASE AND AS TO HOW THE MATERIALS STO OD CONSUMED BY THE ASSESSEE DURING THE RELEVANT F.Y. REASONABLENESS OF THE EXPENDITURE UNDER THIS HEAD A LSO APPEARS TO HAVE NOT BEEN VERIFIED BY THE A.O. AT AL L. (D) THE ASSESSEE IS FOUND TO HAVE CLAIMED AN EXPEN DITURE OF RS.5,78,269/- ON ACCOUNT OF 'BUSINESS PROMOTION' . COMPLETE DETAILS IN RELATION TO THIS CLAIM WERENOT OBTAINED BY THE AO. HOWEVER, THE ASSESSMENT RECORD REVEALS T HAT TWO PURCHASE BILLS OF JEWELLERIES [11 PIECES OF GOLD C HAINS WORTH RS.1,17,543/- AND TWO PIECES OF BRACELETS AND A CHA IN WORTH RS.60,432/-] IN THIS CONNECTION WERE AVAILABLE THER EIN. THESE JEWELLERIES APPEARED TO BE QUITE UNUSUAL FOR BUSINE SS PROMOTION ACTIVITY IN CONNECTION WITH THE ASSESSEE' S LINE OF BUSINESS I.E. THE LIC COMMISSION AGENCY. THE AO SEE MS TO HAVE FAILED TO EXAMINE THIS ASPECT. ON THE CONTRARY , THE A.O. ONLY DISALLOWED A SUM OF RS.20,000/- ON ESTIMATE BA SIS FOR WHICH NO RATIONALE WAS DISCERNABLE IT IS PERTINENT TO MENTION THAT FOR A COMMISSION AGENT OF LIC THE QUESTION OF INCURRING BUSINESS PROMOTION EXPENDITURE GENERALLY DOES NOT A RISE. (E) THE ASSESSEE'S TOTAL CLAIM OF EXPENDITURE UNDE R THE HEAD 'SALARY AND BONUS' STANDS AT R.4,28,000/-. DET AILS OF SUCH EXPENDITURE FURNISHED BY THE ASSESSEE DURING T HE ASSESSMENT PROCEEDING REVEALED THAT THE ASSESSEE RE QUIRED AN AVERAGE SALARY PAYMENT OF RS.31,000/- (APPROX.) PER MONTH, BUT IN THE MONTH OF MARCH THE ASSESSEE HAD CLAIMED SALARY 4 ITA NO.1123/KOL/2013 ASS ESSMENT YEAR 2008-09 EXPENDITURE OF RS.82,000/-. THE AO. IS FOUND TO HAV E NOT ENQUIRED ABOUT THE RATIONALE BEHIND SUCH ABRUPT INC REASE IN THE SALARY EXPENDITURE DURING THE LAST MONTH OF THE RELEVANT F.Y. HE DID NOT CALL FOR ANY EXPLANATION FROM THE A SSESSEE IN THIS REGARD. 3. THE LD. CIT THEREFORE, ISSUED A NOTICE UNDER SEC TION 263 REQUIRING THE ASSESSEE TO SHOWCAUSE AS TO WHY THE ORDER PASSE D BY THE AO UNDER SECTION 143(3) SHOULD NOT BE REVISED TREATING THE S AME AS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN REPLY, THE FOLLOWING EXPLANATION WAS OFFERED BY THE ASSESSEE IN WRITING BEFORE THE LD. CIT. THE LEARNED A.O. HAD PASSED A SCRUTINY ASSESSMENT O RDER U/S 143(3) OF I.T.ACT,1961. ALL THE DETAILS OF EXPENSES ALONG WIT H SUPPORTING EVIDENCES WERE SUBMITTED TO HIM DURING THE COURSE O F THE ASSESSMENT. HE HAS EXAMINED THE BOOKS OF ACCOUNTS, BILLS, VOUCH ERS ETC. UNDER DIFFERENT HEADS OF EXPENSES AND PASSED THE ORDER AF TER MAKING ADDITIONS TO THE TOTAI INCOME. ADDITIONAL INCOME TAX RAISED F ROM SCRUTINY ASSESSMENT ORDER WAS DULY DEPOSITED BY THE ASSESSEE ON TIME. THE PHOTOCOPY OF THE SAID CHALLAN IS ENCLOSED HEREWITH FOR YOUR KIND REFERENCE. IN THIS CONNECTION I WOULD LIKE TO FURNISH AS UNDER :- IT IS HUMBLY SUBMITTED THAT NOTICE U/S 263 OF THE I NCOME TAX ACT, 1961 MAY BE ISSUED ONLY IF BOTH THE FOLLOWING CONDI TIONS ARE SATISFIED: THE ORDER PASSED BY THE AO IS ERRONEOUS AND THE ORDER IS PREJUDICIAL TO THE INTEREST OF THE REV ENUE. IN THE CASE OF MALABAR INDUSTRIAL COMPANY LTD. VS. CIT(2000) 159 CTR(SC) 1: (2000) 243 ITR 83(SC), THE HON'BLE A PEX COURT HAS OBSERVED THAT A BARE READING OF S. 263(1) MAKES IT CLEAR THAT THE PREREQUISITE CONDITIONS TO EXERCISE REVISIONARY JUR ISDICTION BY THE CIT, SUO MOTU, IS THAT THE ORDER OF THE AO IS ERR ONEOUS INSOFAR AS IT IS 5 ITA NO.1123/KOL/2013 ASS ESSMENT YEAR 2008-09 PREJUDICIAL TO THE INTEREST OF THE REVENUE. MEANING THEREBY, THE CIT HAS TO BE SATISFIED WITH/TWIN CONDITIONS, NAMELY, THE O RDER OF THE AO SOUGHT TO BE REVISED IS ERRONEOUS AND IS ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN CASE ONE OF THE ABOVE CONDITIONS IS ABS ENT, SAY, IF THE ORDER OF THE AO IS ERRONEOUS BUT IS NOT PREJUDICIAL TO TH E INTEREST OF THE REVENUE OR VICE VERSA, RECOURSE TO S. 263 OF THE AC T CANNOT BE TAKEN. THE WORDS 'PREJUDICIAL TO THE INTEREST OF THE REVEN UE', HAVE NOT BEEN DEFINED BUT LEGALLY IT IS WELL SETTLED THAT THEY ON LY MEAN THAT ORDER SHOULD NOT HAVE BEEN PASSED IN ACCORDANCE WITH THE PROVISIONS OF LAW, IN CONSEQUENCE THEREOF THE LAWFUL REVENUE, DUE TO T HE STATE, HAS NOT BEEN REALIZED OR CANNOT BE REALIZED LIKEWISE, THE E XPRESSION 'ERRONEOUS' HAS NOT BEEN DEFINED IN THE ACT. BUT IT 'S PLAIN MEANING IS THAT THE TERM 'ERRONEOUS' INVOLVES ERROR OR DEVIATI ON FROM LAW. THEREFORE, AN ASSESSMENT ORDER MADE BY COMPLYING TH E PROVISION OF LAW CANNOT BE BRANDED AS ERRONEOUS BY THE CIT SIMPL Y BECAUSE ACCORDING TO HIM THE SAME SHOULD HAVE BEEN PASSED O R FRAMED IN A DIFFERENT MANNER. IN THE PRESENT CASE OF THE ASSESSEE THE A.O HAS EXA MINED ALL THE REQUIRED DOCUMENTS FURNISHED BY THE ASSESSEE IN DET AIL DURING THE SCRUTINY PROCEEDING. THE AO HAS CONDUCTED DETAILED SCRUTINY PROCEEDING AND CALLED FOR ALL THE DOCUMENTS AND VOU CHERS RELATING TO THE EXPENSES INCURRED BY THE ASSESSEE. ADDITIONS HA VE ALSO BEEN MADE BY THE A.O UNDER SEVERAL HEADS OF EXPENSES. THUS TH E ORDER OF THE AO CANNOT BE SAID TO BE ERRONEOUS, AS ALL EXPENSES HAV E BEEN EXAMINED BY THE AO IN DETAIL INCLUDING THE EXPENSES AND PURPOSE MENTIONED BY YOUR GOODSELF IN THE NOTICE ISSUED. REFERENCE IS MADE TO THE JUDICIAL PRONOUNCEMENT BY THE ITAT, JODHPUR BENCH IN PAWAN KUMAR VS. ASSESSING OFFICER (2007) 106 TT J 494 WHERE IT WAS HELD THAT WHERE THE AO HAD FULLY V ERIFIED THE PURCHASE/SALE OF GOODS AND EXAMINED THE AUDIT REPOR T, IT COULD NOT BE SAID THAT THE AO HAS NOT APPLIED HIS MIND TO THE RE LEVANT MATERIAL ON THESE ASPECTS AND THEREFORE, THE ORDER OF THE AO CA NNOT BE SAID TO ERRONEOUS AND COULD NOT BE REVISED BY CIT UNDER SEC . 263. IT IS FURTHER SUBMITTED THAT THE ORDER OF THE AO IS NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE AS A NUMBER OF EXPEN SES HAVE BEEN DISALLOWED BY THE AO IN SPITE OF DOCUMENTARY EVIDEN CE BEING PRESENT. AD HOC ADDITIONS HAVE BEEN MADE BY THE AO AND TAX O N THE SAME HAS BEEN BORNE BY THE ASSESSEE. THEREFORE, THERE SHOULD NOT BE ANY REASON FOR THE ORDER TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. 6 ITA NO.1123/KOL/2013 ASS ESSMENT YEAR 2008-09 WITHOUT PREJUDICE TO THE ABOVE, IT IS FURTHER SUBMI TTED THAT THE ASSESSEE IS A LIC COMMISSION AGENT AND EARNS LIC CO MMISSION AGAINST SALE OF NEW LIC POLICIES UNDER DIFFERENT POLICY PLA NS. UNDER THE CURRENT SCENARIO, IT IS VERY DIFFICULT TO SELL LIC POLICIES . RETURNS AGAINST INVESTMENT MADE IN LIC POLICY ARE MUCH LOWER THAN A NY OTHER INVESTMENT PLAN. HENCE, NO ONE BECOMES INTERESTED I N TAKING ANY NEW LIC POLICY. THUS EITHER A PUSH SALE IS REQUIRED OR ANY INCENTIVES/GIFTS ETC. NEED TO BE GIVEN AGAINST SALE OF NEW LIC POLIC IES. IN SUCH A COMPETITIVE MARKET, THE ASSESSEE HAS SHOWN A NET PR OFIT OF 20% OF THE TOTAL COMMISSION RECEIPTS. IT IS VERY DIFFICULT TO EARN THIS INCOME AFTER DEBITING VARIOUS EXPENDITURES INCURRED REGULARLY. FURTHER, THE ASSESSEE HAD INCURRED VARIOUS EXPENDIT URES UNDER DIFFERENT HEADS OF EXPENSES TO CARRY ON THE SAID LI C COMMISSION BUSINESS. HE HAS TO MAINTAIN AN OFFICE WITH OPTIMUM STAFF TO CARRY ON THE DAY TO DAY REGULAR BUSINESS. AS ASKED BY YOU, T HE VARIOUS EXPENDITURES INCURRED BY THE ASSESSEE DURING THE F. Y. 2007-08 ARE DISCUSSED AS UNDER: 1. COMPUTER STATIONERY EXPENSES : - THE ASSESSEE HAS INSTALLED COMPUTER MACHINES FOR MAINTAINING THE DETAILS OF PO LICIES UNDER MAGIC LIC APPROVED SOFTWARE. HENCE THE ASSESSEE HAS TO PU RCHASE COMPUTER STATIONERIES INCLUDING COMPUTER COS AND VARIOUS OTH ER DAY-TO-DAY COMPUTER CONSUMABLE ITEMS. ALL SUCH EXPENSES ARE RE VENUE IN NATURE, HENCE CLAIMED AS EXPENSES INTO THE PROFIT AND LOSS ACCOUNT. ALL THE PURCHASES ARE MADE BY PAYING VAT @ 4% BY ACCOUNT PA YEE CHEQUES ONLY. 2. PAMPHLETS AND CIRCULAR EXPENSES : VARIOUS LIC POLICY PLANS ARE ANNOUNCED FROM TIME TO TIME AND THE FEATURES AND DE TAILS OF SUCH PLANS ARE CIRCULATED THROUGH PAMPHLETS AND CIRCULARS AMON G POTENTIAL AND EXISTING POLICY HOLDERS TO INFORM THEM ABOUT THE NE W POLICIES AND PLANS. HUGE EXPENSES ARE INCURRED IN DISTRIBUTION AND CIRC ULATION OF PAMPHLETS AND CIRCULARS TO COMMUNICATE ABOUT THE NE W POLICIES TO VARIOUS CUSTOMERS. ALL PAYMENTS UNDER THIS HEAD ARE BEING MADE BY CASH/CHEQUES AGAINST BILLS AND VOUCHERS. THESE PAYM ENTS ARE MADE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THIS LIC BUSINESS. 3. PRINTING AND STATIONERY EXPENSES :- PRINTING AND STATIONERY EXPENSES ARE INCURRED FOR THE PURPOSE OF PRINTING O F VARIOUS PAMPHLETS, BROCHURES, ENVELOPES, VISITING CARDS, LETTER HEADS ETC. HUGE PAPERS AND STATIONERIES ARE REGULARLY REQUIRED TO RUN THE DAY, TO DAY OPERATION. PRINTING PAPERS ARE REGULARLY REQUIRED FOR VARIOUS PROPOSALS AND CORRESPONDENCES TO VARIOUS CUSTOMERS. GREETING CARD S ON VARIOUS 7 ITA NO.1123/KOL/2013 ASS ESSMENT YEAR 2008-09 OCCASIONS SUCH AS DIWALI, NEW YEARS EVE AND BIRTHDA Y OF CLIENTS ETC. ARE TO BE GIVEN TO ALL POLICY HOLDERS TO MAINTAIN A REGULAR RELATIONSHIP WITH THEM. SOMETIMES FREE COS ARE TO BE DISTRIBUTED TO HIGHLIGHT THE DETAILS OF THE NEW LIE POLICY PLANS ETC. HUGE PAYME NTS ARE INCURRED FOR PHOTOCOPY OF ALL DOCUMENTS OF NEW POLICY PROPOSAL B EFORE SUBMITTING TO LIC OFFICE EVERY MONTH. 4. BUSINESS PROMOTION EXPENSES :- IN LIC AGENCY BUSINESS, VARIOUS MEETINGS AND SEMINARS ARE ORGANIZED FROM TIME TO TI ME BY THE ASSESSEE IN WHICH CURRENT EXISTING POLICYHOLDERS AND POTENTI AL CUSTOMERS ARE INVITED TO INFORM ABOUT NEW POLICIES AND PLANS. VAR IOUS EXPENSES TOWARDS VENUE BOOKING CHARGES, FOOD ARRANGEMENTS ET C. ARE INCURRED TO ORGANIZE SUCH MEETINGS. DISTRIBUTIONS OF SWEETS ARE MADE ON DIWALI AND OTHER FESTIVE OCCASIONS. CALENDARS, PERSONAL DI ARIES AND OTHER FREE GIFTS ARE DISTRIBUTED ON NEW YEARS TO VARIOUS POLIC YHOLDERS TO MAINTAIN A CORDIAL RELATIONSHIP WITH THEM. FLOWER BOUQUETS A LONG WITH GREETINGS AND GIFTS ARE SENT TO ESTEEMED AND VALUED POLICYHOL DERS ON SPECIAL OCCASIONS SUCH AS BIRTHDAYS, ANNIVERSARIES, ETC. GO LD CHAINS AND PENDANTS ARE GIFTED TO SOME OF THE KEY POLICYHOLDER S TO PROMOTE NEW POLICIES AND PLANS TO THEM. IT IS A KIND OF INCENTI VE WHICH IS GIVEN AGAINST NEW LIC POLICIES. IT IS VERY DIFFICULT TO S ELL NEW LIC POLICIES WITHOUT ANY INCENTIVE SCHEMES TO THE NEW POLICYHOLD ERS. IT IS VERY MUCH NECESSARY FOR EVERY AGENT TO OFFER ALL THESE GIFTS TO INCREASE THEIR BUSINESS. 5. SALARY AND BONUS :- SALARY AND BONUS PAYMENTS ARE MADE TO VARIOUS REGULAR STAFFS IN THE OFFICE. LIC OFFICE HA S PROVIDED A SERVER MACHINE IN THE ASSESSEE'S OFFICE TO COLLECT THE PRE MIUM OF THE POLICYHOLDERS EITHER BY CASH OR CHEQUE AND ISSUE IN DEPENDENT RECEIPTS ON BEHALF OF LIC OFFICE TO THE POLICYHOLDERS. PERMA NENT STAFFS ARE REQUIRED TO RUN A PREMIUM COLLECTION CENTRE AT THE ASSESSEE'S OFFICE. A SET OF SEPARATE STAFFS ARE EMPLOYED TO COLLECT THE POLICY PREMIUM CHEQUES FROM THE POLICY-HOLDERS' ADDRESS AS BY GOIN G FROM HOME TO HOME. SOME STAFFS ARE RECRUITED FOR MARKETING THE B USINESS, EXPLAINING ABOUT VARIOUS LIC POLICIES AND PLANS TO POTENTIAL A ND EXISTING CUSTOMERS AND BRINGING IN NEW BUSINESS. SOME STAFFS ARE REQUIRED FOR PREPARING FORMS AND OTHER DOCUMENTS OF NEW POLICIES . POLICIES CANNOT BE APPROVED AT THE DIVISIONAL OR CENTRAL OFFICES UN TIL PROPER DOCUMENTS ARE SUBMITTED TO THEM. SANCTION OF LOANS AGAINST TH E RUNNING POLICIES. DEATH CLAIM SANCTIONS, SURRENDER VALUE OF POLICIES ETC. ARE REGULAR ACTIVITIES TO BE PROVIDED TO EXISTING POLICYHOLDERS . ALL THESE ACTIVITIES CAN ONLY BE PERFORMED WITH THE HELP OF REGULAR EDUC ATED STAFFS ONLY. HENCE PROPER HUMAN RESOURCES ARE REQUIRED TO CARRY ON DAY TO DAY REGULAR WORK FOR FACILITATING THE ASSESSEE TO RENDE R DIFFERENT CATEGORIES 8 ITA NO.1123/KOL/2013 ASS ESSMENT YEAR 2008-09 OF SERVICES TO THE POLICYHOLDERS. HOWEVER, NOW-A-DA YS, SMART AND EDUCATED STAFFS HAVING GOOD WORKING KNOWLEDGE OF CO MPUTERS ARE ONLY AVAILABLE AGAINST HEFTY SALARY PAYMENTS. THUS, FROM THE ABOVE EXPLANATION IT CAN BE CLEARLY OBSERVED THAT THE SAID EXPENSES HAVE BEEN INCURRED FOR THE PURPOS E OF THE BUSINESS OF THE ASSESSEE. ALMOST ALL PAYMENTS HAVE BEEN MADE TH ROUGH ACCOUNT PAYEE CHEQUES TO GENUINE PARTIES. SUPPORTING DOCUME NTS AND INVOICES WERE AVAILABLE FOR VERIFICATION IN CASE OF ALL PAYM ENTS. NECESSARY DETAILS OF ALL THE HEADS OF EXPENSES WERE SUBMITTED FOR VERIFICATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THUS UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE HAS SHOWN A MODERATE INCOME OF 20 % OF TOTAL RECEIP T DURING THE A.Y. 2008-09. HE HAS PAID AN INCOME TAX AMOUNT OF RS.2,0 0,000/-(APPROX.). THERE IS NO LOSS TO REVENUE. HENCE THE ASSESSMENT O RDER PASSED FOR A.Y. 2008-09 IS NOT ERRONEOUS AND PREJUDICIAL TO THE INT EREST OF THE REVENUE. I, THEREFORE, REQUEST YOUR HONOUR TO DROP THE PROCE EDINGS U/S 263 OF INCOME TAX ACT, 1961 . 4. THE ABOVE EXPLANATION OFFERED BY THE ASSESSEE WA S NOT FOUND ACCEPTABLE BY THE LD. CIT FOR THE FOLLOWING REASONS GIVEN IN HIS IMPUGNED ORDER: THOUGH THE LD. A.R. HAS TRIED ASSIDUOUSLY TO ESTABL ISH THE GENUINENESS OF THE EXPENDITURE CLAIMED BY THE ASSESSEE IN HIS P &L ACCOUNT UNDER VARIOUS HEADS, IT IS AMPLY EVIDENT THAT THE AO DID NOT CALL FOR THE REQUISITE DETAILS AND THE RELATED DOCUMENTARY EVIDE NCES TO ASCERTAIN THE VERACITY AND THE REASONABLENESS OF THE ASSESSEE'S D IFFERENT CLAIMS. REGARDING THE COMPUTERS STATIONERY EXPENDITURE IT I S CLEARLY NOTICED THAT A PART THEREOF CONSTITUTES A CAPITAL EXPENDITU RE, BUT THE ENTIRE CLAIM HAS BEEN SHOWN BY THE ASSESSEE AS REVENUE EXPENDITU RE. IN RESPECT OF THE BUSINESS PROMOTION EXPENSES IT IS NOTICED THAT A SIGNIFICANT PART THEREOF CONSTITUTES PERSONAL EXPENDITURE IN THE FOR M OF JEWELLERY PURCHASE ETC. IN RELATION TO THE OTHER HEADS OF EXP ENSES IT IS SEEN THAT THE CLAIMS INCREASED ABRUPTLY IN THE LAST MONTH OF THE F.Y. THE RATIONALE BEHIND SUCH INCREASE IS APPARENTLY NOT COMPREHENSIB LE. IN RESPECT OF THE FORMS AND CIRCULARS EXPENSES AND PRINTING AND S TATIONERY EXPENDITURE IT IS CLEARLY DISCERNED THAT THE A.O. F AILED TO ENQUIRE ABOUT THE DISPROPORTIONATE INCREASE IN THE CONSUMPTION OF THESE MATERIALS BY THE ASSESSEE IN A SINGLE MONTH OF THE F.Y. THIS ABN ORMAL INCREASE IN THE EXPENSES IN A PARTICULAR MONTH APPEARS TO HAVE NOT SURPRISED THE A.O. WHO WAS SUPPOSED TO BE MENTALLY ALERT ENOUGH TO SUS PECT THIS KIND OF CLAIMS MADE BY THE ASSESSEE. THE A.O. SHOULD HAVE G OT APPREHENSIVE 9 ITA NO.1123/KOL/2013 ASS ESSMENT YEAR 2008-09 ABOUT THE GENUINENESS AND THE REASONABLENESS OF THE CONSPICUOUSLY INFLATED EXPENDITURE CLAIM. OMISSION/FAILURE ON THE PART OF THE AO. TO CONDUCT THE NECESSARY ENQUIRIES TO UNEARTH/UNRAVEL THE INGENUINE TYPE OF CLAIM IN THE P & L ACCOUNT HAS UNDOUBTEDLY RENDE RED THE ASSESSMENT ORDER ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTER ESTS OF THE REVENUE. ALL THESE ASPECTS OMITTED TO HAVE BEEN EXAMINED BY THE A.O. DURING THE ASSESSMENT PROCEEDING NEED TO BE REVISITED FOR INDE PTH ENQUIRY. FOR THE REASONS GIVEN ABOVE, THE LD. CIT SET ASIDE THE ASSESSMENT ORDER PASSED BY THE AO UNDER SECTION 143(3) BY EXERCISING POWERS CONFER RED UPON HIM UNDER SECTION 263 OF THE ACT WITH A DIRECTION TO THE A.O. TO REFR AME THE SAME AFRESH, AFTER TAKING INTO CONSIDERATION THE OBSERVATIONS AND FINDINGS RE CORDED BY HIM. AGGRIEVED BY THE ORDER OF THE LD. CIT PASSED UNDER SECTION 263, THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SO-CALLED ERRORS IN THE ORDER OF THE AO HAVE BEEN POINTED OUT BY THE LD. CI T IN HIS IMPUGNED ORDER PASSED UNDER SECTION 263 ON THE BASIS OF DETAILS AND DOCUM ENTS FURNISHED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HE CON TENDED THAT THE FACT THAT THESE DOCUMENTS AND DETAILS WERE AVAILABLE ON RECORD BEFO RE THE AO ITSELF SHOWS THAT THE ERRORS POINTED OUT BY THE LD. CIT WERE DULY EXAMINE D BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON SUCH EXAMINATION, THE ASSESSMENT WAS COMPLETED BY HIM UNDER SECTION 143(3). HE CONTENDED THAT ADEQUAT E ENQUIRIES THUS WERE MADE BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON ALL THE RELEVANT ISSUES AND EVEN IF THE LD. CIT WAS OF THE VIEW THAT THE ENQUIR IES MADE BY THE AO WERE NOT ADEQUATE, THAT CANNOT BE A GROUND FOR REVISING THE ASSESSMENT BY EXERCISING POWERS CONFERRED UPON HIM UNDER SECTION 263. HE RELIED ON THE DECISIONS OF THE HONBLE DELHI HIGH COURT IN THE CASE OF DIT-VS- JYOTI FOUND ATION 357 ITR 388 (DEL.) AND IN THE CASE OF CIT-VS- SUNBEAM AUTO LTD. 332 ITR 167 ( DEL.) AS WELL AS THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE O F M/S. FAIRLAND DEVELOPMENT (P) LTD. VS- CIT IN ITA NO.786/KOL/2012 DATED 20.01.20 16 TO CONTEND THAT THE 10 ITA NO.1123/KOL/2013 ASS ESSMENT YEAR 2008-09 ASSESSMENT CANNOT BE HELD TO BE ERRONEOUS AND PREJU DICIAL TO THE INTEREST OF THE REVENUE ON THE BASIS OF INADEQUATE ENQUIRY. 6. THE LD. DR, ON THE OTHER HAND, INVITED OUR ATTEN TION TO THE ASSESSMENT ORDER PASSED BY THE AO UNDER SECTION 143(3) DATED 27.12.2 010 TO POINT OUT THAT THERE WAS NO DISCUSSION WHATSOEVER MADE BY THE AO ON THE ISSU ES RAISED BY THE LD. CIT IN THE NOTICE ISSUED UNDER SECTION 263. HE CONTENDED THAT THE ABSENCE OF SUCH DISCUSSION AS WELL AS ANY OTHER EVIDENCE BROUGHT ON RECORD BY THE ASSESSEE TO SHOW THAT THE ENQUIRIES AS WARRANTED IN THE FACTS AND CIRCUMSTANC ES OF THE CASE WERE MADE BY THE AO CLEARLY SHOWS THAT IT WAS A CASE OF LACK OF ENQU IRY BY THE AO WHICH FULLY JUSTIFIED THE REVISION BY THE LD. CIT UNDER SECTION 263 OF THE ASSESSMENT MADE BY THE AO. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE RELEVANT MATERIAL ON RECORD. AS RIGHTLY POINTED OUT BY THE LD. DR, A PERUSAL OF ORDER PASSED BY THE AO UNDER SECTION 143(3) CLEARLY SHOWS THAT THERE IS NO DISCUSSION WHATSOEVER ON THE VARIOUS ISSUES POINTED OUT BY THE LD. CIT IN THE NO TICE ISSUED UNDER SECTION 263. THE LD. COUNSEL FOR THE ASSESSEE ALSO HAS NOT BEEN ABLE TO BRING ANYTHING ON RECORD TO SHOW THAT THE ENQUIRIES AS WARRANTED IN THE FACTS A ND CIRCUMSTANCES OF THE CASE WERE ACTUALLY MADE BY THE AO DURING THE COURSE OF ASSESS MENT PROCEEDINGS. THE MERE FACT THAT THE ERRORS ON THE PART OF THE AO IN NOT C ONDUCTING ENQUIRIES IN RESPECT OF RELEVANT ISSUES WHILE COMPLETING THE ASSESSMENT WER E POINTED OUT BY THE LD. CIT ON THE BASIS OF DETAILS AND DOCUMENTS AVAILABLE ON REC ORD BY ITSELF CANNOT PROVE THAT SUCH ENQUIRIES WERE ACTUALLY CONDUCTED BY THE AO DU RING THE COURSE OF ASSESSMENT PROCEEDINGS. THERE IS NOTHING BROUGHT ON RECORD TO SHOW THAT SUCH ENQUIRIES WERE INDEED CONDUCTED BY THE AO. WE THEREFORE, FIND OURS ELVES IN AGREEMENT WITH THE LD. DR THAT IT WAS A CASE OF LACK OF ENQUIRY ON THE PAR T OF THE AO WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3) AND SUCH LACK OF EN QUIRY MADE THE ASSESSMENT ORDER PASSED BY THE AO UNDER SECTION 143(3) ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE GIVING JURISDICTION TO THE LD. CIT UNDER SECTION 263 TO SET 11 ITA NO.1123/KOL/2013 ASS ESSMENT YEAR 2008-09 ASIDE THE SAME WITH A DIRECTION TO THE AO TO MAKE T HE ASSESSMENT AFRESH. WE THEREFORE, UPHOLD THE IMPUGNED ORDER OF THE LD. CIT PASSED UNDER SECTION 263 AND DISMISS THIS APPEAL FILED BY THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND APRIL, 2016. SD/- SD/- (N.V.VASUDEVAN) ( P.M.JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22/04/2016 TALUKDAR/SR.PS COPY OF ORDER FORWARDED TO: 1 MR. SUBHAS KUMAR DHANUKA, 1, BRITISH INDIAN STREET, 3 RD FLOOR, ROOM NO.304A, KOLKATA 700 069 2 C.I.T., KOL.-XIX, KOLKATA 3 THE CIT(A), 4 5 CIT, 5. D.R. TRUE COPY, BY ORDER, ASSTT. REGISTRAR , ITAT, KOLKATA