R.S. Ispat Ltd., Kolkata V. DCIT, Central Circle - XXIV, Kolkata, Kolkata

ITA 113/KOL/2011

• Counselvise Citation: 11323514 RSA 2011
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2011
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 02-08-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 17-01-2011
• Court: TRIBUNAL
• Department Lawyers: M BHATTACHARYA; S SINHA
• Assessee Lawyers: D S DAMLE
• Keywords: Unexplained cash credit; Opportunity of being heard; Deemed to accrue or arise in india; Accommodation entries; Assessment record; Block assessment
• Section: 143(3); 153A; 133(6); 68; 263; 63

Judgement Text

1 , A , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- A , KO LKATA [ . . . . . .. . , ,, , . .. . ! ! ! !. .. . , , , , '# ] BEFORE SHRI B.R.MITTAL, JUDICIAL MEMBER & SRI C.D. RAO, ACCOUNTANT MEMBER $ $ $ $ / ITA NO. 113 (KOL) OF 2011 %& '( / ASSESSMENT YEAR 2001-02 M/S. R. S. ISPAT LTD., KOLKATA.. (PAN-AABCR1890D) DY.COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-XXIV, KOLKATA. (+, / APPELLANT ) - % - - VERSUS - (/0+,/ RESPONDENT ) +, 1 2 '/ FOR THE APPELLANT: / SRI D.S. DAMLE /0+, 1 2 ' / FOR THE RESPONDENT: / S/SRI S.SINHA & M.BHATTACHARYA '3 / ORDER ( . . . . . .. . ), (B.R.MITTAL), JUDICIAL MEMBER : THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT YEAR 2001-02 AGAINST ORDER OF LD. C.I.T., CENTRAL-III, KOLKATA DATED 23/11/2010 P ASSED U/S. 263 OF I.T. ACT, 1961 STATING THAT A.O. HAS WRONGLY MADE ADDITION OF RS.3 2 LAKHS U/S. 68 OF THE ACT IN THE ASSESSMENT YEAR 2002-03 IN PLACE OF ASSESSMENT YEAR 2001-02 AS THE CREDITS WERE APPEARING IN THE BOOKS OF THE ASSESSEE IN THE FINAN CIAL YEAR 2000-01 AND, ACCORDINGLY, THE ASSESSMENT ORDER PASSED U/S. 153A/143(3) DATED 31/12/2008 FOR ASSESSMENT YEAR 2001-02 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE AND HENCE DIRECTED THE A.O. TO REFRAME THE ASSESSMENT ORDER F OR ASSESSMENT YEAR 2001-02 AFTER CONSIDERING THE GENUINENESS OF CREDIT OF RS.32 LAKH S RECEIVED ON ACCOUNT OF SHARE APPLICATION MONEY.. 2. THE FACTS OF THE CASE IN BRIEF ARE THAT A SEARC H & SEIZURE OPERATION WAS CONDUCTED ON AGARWAL GROUP OF CASES ON 08/12/2006 AND THE ASS ESSEE IS ONE OF THE COMPANIES BELONGING TO THIS GROUP. CONSEQUENTLY, A NOTICE U/S . 153A OF THE ACT WAS ISSUED TO THE ASSESSEE ON 10/10/2007 AND IN RESPONSE, THE ASSESSE E FILED ITS RETURN FOR ASSESSMENT YEAR 2001-02 DECLARING TOTAL INCOME OF RS.5,87,600/-. AS SESSMENT ORDER U/S. 153A/143(3) WAS PASSED ON 31/12/2008 ON THE INCOME DECLARED BY THE ASSESSEE. 2 3. ON EXAMINATION OF RECORDS, THE LD. C.I.T. OBSER VED THAT ASSESSMENT ORDER U/S. 153A/143(3) OF THE ACT IN THE CASE OF THE ASSESSEE WAS SIMULTANEOUSLY PASSED FOR ASSESSMENT YEAR 2002-03, WHEREIN AN AMOUNT OF RS.32 LAKHS WAS ADDED U/S. 68 OF THE ACT IN RESPECT OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE, THE GENUINENESS OF WHICH, ACCORDING TO LD. C.I.T., WAS NOT ESTABLISHED . HE, THEREFORE, PRIMA FACIE FORMED AN OPINION THAT THE IMPUGNED ASSESSMENT ORDER PASSED B Y THE A.O. IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE AND IS SUED A SHOW CAUSE NOTICE U/S. 263 OF THE ACT DATED 01/11/2010 FOR THE REASONS AS UNDER :- 3. AN ORDER U/S. 153A/143(3) WAS PASSED SIMULTA NEOUSLY FOR A.YR. 2002-03 ON 31.12.2008 WHEREIN AN AMOUNT OF RS.32,00,000/- WAS ADDED U/S. 68 IN RESPECT OF SHARE APPLICATION MONEY RECEIVED WHOSE GENUINENESS WAS NO T ESTABLISHED. ON SCRUTINY OF ASSESSMENT RECORDS IT IS SEEN THAT THE SAID ADDITIO N MADE BY THE A.O. WAS BASED ON THE STATEMENT RECORDED U/S 132(4) GIVEN BY SHRI ARUN KU MAR KHEMKA WHO HAD ARRANGED THE ACCOMMODATION ENTRIES THROUGH VARIOUS CONDUIT C OMPANIES CONTROLLED BY HIM. FURTHER, THE COMPANIES WHICH HAS APPLIED FOR THE SH ARES OF THE ASSESSEE COMPANY HAD SUBMITTED LETTERS DATED 20.12.2006 GIVING ELABORATE DESCRIPTION OF THE CHEQUES WHICH WERE ISSUED TOWARDS SHARE APPLICATION BY RECEIVING CASH AND ISSUING CHEQUES IN LIEU THEREOF, THEREBY ADMITTING THE TRANSACTIONS INVOLVE D ARE BOGUS. THE DETAILS OF THE CHEQUES ISSUED BY THREE OF THE COMPANIES WERE AS UN DER : SL.NO. SHARES APPLIED BY DETAILS OF CHEQUE AMOUNT(RS.) 1 SWISS PARK VANIJYA PVT. LTD. CHEQUE NO. 879473 DT. 22-03-2001 7,00,000/- 2 SUMMIT PACKAGING PVT. LTD. CHEQUE NO. 469302 DT. 27-03-2001 10,00,000/- 3 GLOBE STOCKS & SECURITIES LTD. CHEQUE NO. 006787 DT. 23-03-2001 CHEQUE NO. 006775 DT. 20-03-2001 15,00,000/- TOTAL 32,00,000/- 4. IT IS APPARENT FROM THE ABOVE CHART THAT THESE SHARE APPLICATIONS WERE RECEIVED BY THE ASSESSEE COMPANY DURING THE F.Y. 2000-01 AND HE NCE, THE ADDITION OF RS.32,00,000/- MADE U/S 68 IN THE A.Y. 2002-03 SHOU LD HAVE BEEN MADE IN THE A.Y. 2001-02. IN VIEW OF THESE FACTS, IT IS EVIDENT THA T THE ASSESSMENT FOR THE A.Y. 2001-02 WAS COMPLETED WITHOUT DUE APPLICATION OF MIND WHICH RENDERS IT ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. THER EFORE, THE PROCEEDINGS U/S 263 OF THE INCOME-TAX ACT, 1961 ARE HEREBY INITIATED. 4. IN RESPONSE TO THE SAID NOTICE U/S. 263 OF THE A CT, ASSESSEES REPRESENTATIVE APPEARED AND MADE A WRITTEN SUBMISSION. AFTER CONS IDERING THE SAME AND CASE RECORDS FOR ASSESSMENT YEARS 2001-02 AND 2002-03, THE LD. C .I.T. DIRECTED THE A.O. TO REFRAME THE ASSESSMENT ORDER FOR A.Y. 2001-02 AFTER CONSIDE RING THE GENUINENESS OF THE CREDIT OF 3 RS. 32 LAKHS ON ACCOUNT OF SHARE APPLICATION MONEY APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BY OBSERVING AS UNDER :- 3. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE ASSESSEE. THE CASE RECORDS FOR A.Y. 2001-02 AND 2002-03 WERE ALSO CONSULTED. THE A SSESSMENT FOR A.Y. 2001-02 WAS COMPLETED U/S. 153A/143(3) ON 31.12.2008 AT TOT AL INCOME OF RS.5,87,600/- WHICH WAS AS PER RETURN. THIS ORDER IS FOUND TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ON THE BASIS OF MATERIALS AVAIL ABLE ON THE RECORD FOR A.Y. 2002-03. THIS CASE BELONGS TO AGARWAL GROUP OF CASES WHERE A SEARCH OPERATION U/S.132 WAS CONDUCTED ON 08.12.2006. IN THE COURSE OF STATEMENT RECORD U/S.132(4) OF THE ACT ON 09.12.2006, ONE SRI ARUN KUMAR KHEMKA HAD ADMITTED THAT CHEQUES WERE ISSUED BY HIS GROUP OF COMPANIES IN LIEU OF CASH RECEIVED FRO M THE ASSESSEE COMPANY AND OTHER GROUP COMPANIES. THE A.O. CONDUCTED IN DEPTH INQUIR IES IN THIS REGARD IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR AYRS. 2002-03 AND 200 3-04 AND FOUND THAT ELEVEN COMPANIES HAD APPLIED FOR SHARES OF THE ASSESSEE CO MPANY FOR A TOTAL AMOUNT OF RS. 1,27,00,000/-. THIS AMOUNT OF RS.1,27,00,000/- WAS CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY, THE GENUINENESS AND CREDIT WORTHINESS OF WHICH WAS EXAMINED TO THE A.O. THE DETAILS OF THESE CREDIT EN TRIES IS AVAILABLE IN THE ASSESSMENT ORDER FOR A.Y. 2002-03 WHICH IS RE-PRODUCED HEREUND ER : SL.NO. SHARES APPLIED BY DETAILS OF CHEQUE AMOUNT(RS.) 01. SPS COMMODEAL PVT. LTD. CHEQUE NO. 263207 DT. 22-11-2002 5,00,000/- 02. WEX FORD TIE-UP PVT. LTD. CHEQUE NO. 237199 DT. 27-11-2002 5,00,000/- 03. SWISS PARK VANIJYA PVT. LTD. CHEQUE NO. 879473 DT. 22-3-01 7,00,000/- 04. SUMMIT PACKAGING PVT. LTD. CHEQUE NO. 469302 DT. 27-3-01 10,00,000/- 05. LOKESH COMMERCIAL PVT. LTD. CHEQUE NO. 916182 DTD. 15-11-02 CHEQUE NO. 916185 DT. 19-11-02 CHEQUE NO. 916197 DT. 02-12-02 15,00,000/- 06. GLOBE STOCKS & SECURITIES LTD. GLOBE STOCKS & SECURITIES LTD. CHEQUE NO. 006787 DT. 23-3-01 CHEQUE NO. 006775 DT. 20-03-01 15,00,000/- 07. BOSKI TRADECOMM PVT. LTD. CHEQUE NO. 236389 DT. 27-11-02 CHEQUE NO. 236390 DT. 29-11-02 CHEQUE NO. 236391 DT. 29-11-02 14,00,000/- 08. KUSHAL FISCAL SERVICES PVT. LTD. CHEQUE NO. 890 771 DTD. 21-11-02 CHEQUE NO. 890776 16,00,000/- 4 DT. 28-11-02 CHEQUE NO. 890777 DT. 29-11-02 09. KNITWORTH LEASE FINANCE LTD. CHEQUE NO. 102960 DT. 15-11-02 CHEQUE NO. 102962 DT. 20-11-02 10,00,000/- 10. VEEA FISCAL SERVICES PVT. LTD. CHEQUE NO. 23349 7 DT. 18-11-02 5,00,000/- 11. SUNDEEP SALT & BROMINE INDUSTRIES LTD. CHEQUE NO. 234170 DTD. 21-11-02 CHEQUE NO. 234172 DT. 22-11-02 CHEQUE NO. 234174 DT. 25-11-02 CHEQUE NO. 241853 DT. 03-12-02 CHEQUE NO. 241855 DT. 04-12-02 25,00,000/- TOTAL 1,27,00,000 4. THE A.O. EXAMINED THIS MATTER IN THE COURSE O F ASSESSMENT PROCEEDINGS FOR A.Y. 2002-03 AND 2003-04 AND CONCLUDED THAT THE GENUINEN ESS OF THESEENTRIES WERE NOT ESTABLISHED. THE FINDINGS GIVEN BY THE A.O. IN THE ASSESSMENT ORDER FOR A.Y. 2002-03 IS REPRODUCED BELOW :- IN VIEW OF THE ABOVE DISCUSSIONS, THE GENUI NENESS OF THE AFORE-MENTIONED SHARE APPLICATION TRANSACTIONS IS NOT ESTABLISHED. AS A RESULT, THE CREDITS OF RS. 32,00,000/- AND RS.95,00,000/- APPEARING IN THE BOO KS, OF THE ASSESSEE COMPANY IN THE FORM OF SHARE APPLICATION DURING THE ACCOUNT ING YEARS 2001-02 AND 2002-03 RESPECTIVELY ARE DEEMED TO BE THE INCOMES OF THE AS SESSEE FOR THE AYS 2002-03 AND 2003-04 RESPECTIVELY AS PER PROVISIONS OF SECTI ON 68 OF THE ACT. PENALTY PROCEEDINGS U/S 271(1)(C) ARE INITIATED WITH RESPEC T TO THE AMOUNT OF RS.32,00,000/- AS DISCUSSED ABOVE. 5. IT IS EVIDENT FROM THE ABOVE FINDING THAT THE A. O. HAD TREATED THE CREDIT OF RS.32,00,000/- AND RS.95,00,000/- APPEARING IN THE BOOKS OF THE ASSESSEE COMPANY IN THE FORM OF SHARE APPLICATION DURING THE ACCOUNTING YEARS 2001-02 AND 2002-03 AS DEEMED INCOME U/S 68 OF THE ACT FOR THE RESPECTIVE ASSESSMENT YEARS I.E. AYS 2002-03 AND 2003-04. IT IS ALSO APPARENT FROM THE DETAILS O F SHARE APPLICATION MONEY CREDITED TO THE BOOKS OF ACCOUNTS OF THE ASSESSEE THAT THE C REDIT OF RS.32,00,000/- (AS DETAILED IN PARA-L OF THIS ORDER) WAS. NOT MADE DURING THE Y EAR 2001-02 BUT IN THE ACCOUNTING YEAR 2000-01. HENCE, THIS AMOUNT WAS LIABLE TO BE T REATED AS DEEMED INCOME U/S 68 OF THE ACT FOR THE A.Y.2001-02 AND NOT FOR THE A.Y.200 2-03. IN THE COURSE OF PRESENT PROCEEDING THE ASSESSEE HAS SUBMITTED THAT THE ASSE SSING OFFICER CHOSE TO MAKE THE ADDITION IN THE YEAR OF ALLOTMENT BECAUSE IN HIS OP INION THE ADDITION COULD BE MADE IN THE YEAR IN WHICH THE OFFER OF THE SHARE APPLICANTS WAS FINALLY ACCEPTED AND THE ALLOTMENT WAS MADE. IT WAS SUBMITTED THAT THE A.O. HAD APPLIED HIS MIND TO THE FACT ON RECORDS AND TAKEN A CONSCIOUS DECISION TO MAKE T HE ADDITION IN THE A.Y. 2002-03 BEING THE YEAR OF ALLOTMENT OF SHARES BECAUSE IN LA W TILL THE ALLOTMENT WAS MADE, THE 5 SHARE APPLICANTS WERE FREE TO WITHDRAW THE SHARE AP PLICATION. IT WAS FURTHER SUBMITTED THAT THIS DECISION WAS TAKEN BY THE A.O. AFTER OBTA INING ADMINISTRATIVE APPROVAL OF THE ADDL. COMMISSIONER OF INCOME TAX AND ALSO DISCUSSIN G THE MATTER OF THE COMMISSIONER OF INCOME TAX. IT WAS ALSO CONTENDED T HAT THE A.O. HAD EXAMINED THE MATTER IN DETAIL IN THE COURSE OF ASSESSMENT PROCEE DINGS FOR A.Y. 2002-03 AND NO ADDITION WAS CALLED FOR AT ALL IN RESPECT OF SHARE APPLICATION MONEY. 6. THE SUBMISSION OF THE ASSESSEE IS NOT FOUND TO B E CORRECT. THE A.O. IN THE ASSESSMENT ORDER FOR A.Y. 2002-03 HAS NOWHERE MENTI ONED THAT HE WAS MAKING ADDITION OF RS.32,00,000/- IN THE A.Y. 2002-03 AS B ECAUSE ALLOTMENT OF SHARES WAS MADE IN THAT YEAR. RATHER, THE A.O. HAS CATEGORICAL LY RECORDED IN THE ASSESSMENT ORDER FOR A.Y. 2002-03 THAT THE CREDITS OF RS.32, 00,000/- AND RS. 95,00,000/- APPEARING IN THE BOOKS OF THE ASSESSEE COMPANY IN THE FORM OF SH ARE APPLICATION DURING THE ACCOUNTING YEARS 2001-02 AND 2002-03 RESPECTIVELY A RE DEEMED TO BE THE INCOMES, OF THE ASSESSEE FOR THE AYS 2002-03 AND 2003-04 RESPEC TIVELY AS PER PROVISIONS OF SECTION 68 OF THE ACT . THE PROVISION OF SECTION 68 OF THE ACT STIPULATE S THAT ANY UNEXPLAINED CREDIT APPEARING IN THE BOOKS OF ACCOUN TS SHALL BE TREATED AS DEEMED INCOME FOR THE YEAR IN WHICH THE CREDIT ENTRIES WER E MADE. ACCORDINGLY, THE CREDIT OF RS.32,00,000/- WHICH WAS HELD AS UNEXPLAINED, WAS L IABLE TO BE TREATED AS DEEMED INCOME FOR THE YEAR IN WHICH THE CREDITS WERE APPEA RING IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THERE IS NO DISPUTE TO THE FACT THAT, THE CREDIT OF RS.32,00,000/- WAS APPEARING IN THE BOOKS OF THE ASSESSEE IN THE F.Y.2 000-01. THE A.O. HAD WRONGLY MENTIONED THE YEAR OF CREDIT AS 2001-02 IN PLACE OF 2000-01 AND ACCORDINGLY, WRONGLY ADDED THE UNEXPLAINED CREDITS ON ACCOUNT OF SHARE A PPLICATION OF RS.32,00,000/- U/S.68 OF THE ACT IN THE ASSESSMENT YEAR 2002-03. IN FACT, THE ASSESSEE HAD FILED AN APPEAL AGAINST THE ASSESSMENT ORDER FOR THE A.Y. 2002-03 W HICH HAS BEEN DECIDED BY THE CIT(A) VIDE ORDER APPEAL NO.263/CC-XXIV/CIT(A)/CENT RAJ-III/08-09 DATED 28.06.10. IN THE COURSE OF THE SAID APPEAL PROCEEDING THE ASS ESSEE HAD CONTENDED BEFORE THE CIT(A) THAT THE SUM OF RS.32,00,000/- WAS NOT CREDI TED IN THE BOOKS OF THE ASSESSEE DURING THE FINANCIAL YEAR 2001-02, HENCE, NO ADDITI ON WAS CALLED FOR IN THE A.Y. 2002- 03. THE CIT(A) HAS DELETED THE ADDITIONOFRS.32,00,0 00/-IN THE A.Y. 2002-03 RELYING UPON THE SUBMISSION OF THE ASSESSEE. THE CTT(A) HAS ALSO GIVEN A FINDING THAT THE AMOUNT OF RS.32,00,000/- WAS DEPOSITED IN THE APPEL LANTS BANK ACCOUNT IN THE MONTH OF MARCH 2001. ACCORDINGLY, THE A.O. SHOULD HAVE MA DE THE ADDITION U/S 68 OF THE ACT IN THE A,Y. 2001-02. THE ARGUMENT OF THE ASSESS EE TAKEN NOW THAT THE A.O. HAD APPLIED HIS MIND AND TAKEN A CONSCIOUS DECISION TO MAKE THE ADDITION IN THE A.Y. 2002-03 BEING THE YEAR OF ALLOTMENT OF SHARE, IS JU ST TO SUIT ITS CONVENIENCE AS NO SUCH ARGUMENT WAS TAKEN BY IT BEFORE THE CIT(A) IN THE C OURSE OF APPEAL PROCEEDING FOR THE A.Y.2002-03. THE ARGUMENT THAT THE DECISION WAS TAK EN BY THE A.O. AFTER OBTAINING ADMINISTRATIVE APPROVAL OF THE ADDL. COMMISSIONER O F INCOME TAX AND ALSO DISCUSSING THE MATTER OF THE COMMISSIONER OF INCOME TAX HAS NO RELEVANCE. EVEN IF THE ORDER U/S 153A WAS PASSED AFTER OBTAINING APPRO VAL OF THE ADDL. CIT, IT DOES NOT MAKE IT LESS ERRONEOUS. THE CONTENTION THAT THE ORD ER WAS PASSED AFTER DISCUSSION WITH THE CIT IS NOT FOUND TO BE CORRECT AND IT IS ALSO N OT BORNE OUT FROM THE RECORD. IN FACT THE LAW DOES NOT STIPULATE THAT THE ORDER HAS TO BE PASSED AFTER OBTAINING APPROVAL OR DISCUSSING THE MATTER WITH THE COMMISSIONER OF INCO ME TAX AND THE SUBMISSION OF THE ASSESSEE IN THIS RESPECT IS FOUND TO BE WITHOUT ANY BASIS AND UNCALLED FOR. 7. IN VIEW OF THE ABOVE FACTS AND DISCUSSIONS, IT IS AMPLY CLEAR THAT THE ASSESSMENT OF THE ASSESSEE FOR ASSESSMENT YEAR 2001-02 HAS BEEN C OMPLETED WITHOUT DUE APPLICATION 6 OF MIND RELATING TO ISSUE AS MENTIONED ABOVE. THE A .O. HAS WRONGLY MADE ADDITION OF RS.32,00,000/- U/S 68 OF THE ACT IN THE A.Y.2002-03 IN PLACE OF A..Y. 200 1-02 AS THE CREDITS WERE APPEARING IN THE BOOKS OF THE ASSESSEE IN THE F.Y. 2000-OI. THEREFORE, I HOLD THAT THE ASSESSMENT ORDER U/S 153A/143(3) DATE D 31/12/2008 FOR THE A.Y. 2001-02 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY, AS THE CONDITIONS FOR EXERCISE OF REVISIONARY POWERS UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 ARE SATISFIED IN THE INSTANT CASE, THE AS SESSMENT ORDER IS SET ASIDE AND. THE ASSESSING OFFICER IS HEREBY DIRECTED TO REFRAME THE ASSESSMENT ORDER FOR A.Y.200 1-02 AFTER CONSIDERING THE GENUINENESS OF THE CREDIT OF RS.32,00,000/ ON ACCOUNT OF SHARE APPLICATION MONEY APPEARING IN THE BOOKS OF ACCOUNT S OF THE ASSESSEE AS DISCUSSED ABOVE, AND AFTER ALLOWING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. HENCE THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL . 5. DURING THE COURSE OF HEARING, THE LD. A/R SUBMI TTED THAT THERE WAS A SEARCH ON 08/12/2006 AND SIMULTANEOUSLY A SEARCH WAS ALSO CON DUCTED IN THE CASE OF SRI ARUN KR. KHEMKA. DURING THE COURSE OF HIS STATEMENT RECORDE D U/S. 132(4) OF THE ACT, SRI KHEMKA STATED THAT HE GAVE ACCOMMODATION ENTRIES TO THE ASSESSEE, WHICH IS A COMPANY OF AGARWAL GROUP, AND CHARGED COMMISSION. THE LD. A /R SUBMITTED THAT THE ASSESSEE WAS NOT AWARE OF THE SAID STATEMENT OF SRI KHEMKA A ND THE A.O. SHOWED THE SAID STATEMENT DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. HE SUBMITTED THAT WHEN THE ASSESSEES REPRESENTATIVE CONTACTED SRI KHEMKA, HE STATED THAT HIS STATEMENT WAS RECORDED UNDER COERCION AND THREAT AND, ACCORDINGLY , HE RETRACTED HIS STATEMENT. THE LD. A/R SUBMITTED THAT THE A.O. INITIATED BLOCK ASSESSM ENT PROCEEDINGS FOR THE BLOCK PERIOD FOR ASSESSMENT YEAR 2001-02 TO ASSESSMENT YEAR 2007 -08 SIMULTANEOUSLY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FURN ISHED ALL THE REQUISITE DETAILS OF SHARE APPLICATION MONEY RECEIVED BY IT. HE SUBMITT ED THAT THE A.O. EXAMINED THE DETAILS AND THEREAFTER MADE THE ADDITION OF RS.32 L AKHS IN ASSESSMENT YEAR 2002-03 AND OF RS.95 LAKHS IN ASSESSMENT YEAR 2003-04 MERELY RE LYING ON THE STATEMENT OF SRI KHEMKA AND IGNORING ALL THE REQUISITE DETAILS AND D OCUMENTARY EVIDENCE FILED BY THE ASSESSEE CONFIRMING THAT THE ASSESSEE RECEIVED THE SHARE APPLICATION MONEY BY ACCOUNT PAYEE CHEQUES AND FURNISHED THE DETAILS OF THE SHAR E APPLICANTS ALONG WITH THEIR ADDRESSES, BALANCE SHEETS, ACKNOWLEDGEMENTS OF INCO ME-TAX RETURNS AND BANK STATEMENTS. HE, THEREFORE, SUBMITTED THAT THE ASSE SSEE PROVED NOT ONLY THE IDENTITY OF THE SHARE APPLICANTS BUT ALSO THE CREDITWORTHINESS OF T HE SHARE APPLICANTS AS WELL AS GENUINENESS OF THE TRANSACTIONS. HE SUBMITTED THAT THE A.O. MADE THE AGGREGATE ADDITION 7 OF RS.1,27,00,000/-, WHICH COMPRISED OF ADDITIONS O F RS.32 LAKHS IN ASSESSMENT YEAR 2002-03 AND RS.95 LAKHS IN ASSESSMENT YEAR 2003-04. HE SUBMITTED THAT IN RESPECT OF THE ADDITION MADE FOR ASSESSMENT YEAR 2003-04, THE LD. C.I.T.(A) DELETED THE SAID ADDITION HOLDING THAT THE SHARE APPLICATION MONEY R ECEIVED BY THE ASSESSEE WAS GENUINE. THE LD. A/R SUBMITTED THAT ONCE THE ASSESSEE HAD FU RNISHED THE DETAILS AND THE A.O. APPLIED HIS MIND, LD. C.I.T. CANNOT EXERCISE HIS JU RISDICTION U/S. 263 OF THE ACT AS THE ASSESSMENT ORDER COULD NOT BE SAID TO BE ERRONEOUS. HE SUBMITTED THAT ALL THE DETAILS OF SHARE APPLICATION MONEY AGGREGATING TO RS.1.27 CROR ES WERE BEFORE THE A.O. WHEN HE COMPLETED THE ASSESSMENTS FOR THE ASSESSMENT YEARS 2001-02 TO 2007-08 ON THE SAME DAY AFTER APPLYING HIS MIND. THEREFORE, IT COULD NO T BE SAID THAT THE A.O. DID NOT EXAMINE THE DETAILS OF SHARE APPLICANTS WHO SUBSCRI BED THE AGGREGATE AMOUNT OF RS.32 LAKHS. THE LD. A/R REFERRED THE ASSESSMENT ORDER F OR ASSESSMENT YEAR 2002-03 AND SUBMITTED THAT THE A.O. IN THE SAID ASSESSMENT ORDE R AT PAGE-4 CATEGORICALLY STATED THAT PURSUANT TO NOTICE ISSUED U/S. 133(6) TO THE SHARE APPLICANT COMPANIES CALLING FOR INFORMATION REGARDING DETAILS OF SHARE APPLICATIONS MADE WITH RESPECT TO THE SHARES OF THE ASSESSEE-COMPANY DURING THE FINANCIAL YEARS 200 1-02 TO 2006-07 ALONG WITH COPIES OF RELEVANT BANK STATEMENTS, THE SAID SHARE APPLICA NTS FURNISHED THE DETAILS AND THE SAME WERE EXAMINED BY THE A.O. THE LD. A/R REITERATED T HAT ONCE THE DETAILS WERE FURNISHED AND EXAMINED BY THE A.O., THE LD. C.I.T. CANNOT INV OKE JURISDICTION U/S. 263 OF THE ACT. HE SUBMITTED THAT MERELY BECAUSE THE ASSESSEE DID N OT MAKE THE SAID ADDITION OF RS. 32 LAKHS IN ASSESSMENT YEAR 2001-02 BUT MADE THE ADDIT ION IN ASSESSMENT YEAR 2002-03 AFTER CONSIDERING THE DETAILS FILED BEFORE HIM, IT COULD NOT BE SAID THAT THE A.O. DID NOT HAVE THE DETAILS AND DID NOT APPLY HIS MIND. HENCE , IT IS NOT A CASE THAT THE A.O. DID NOT EXAMINE THE RECORD AND/OR THE A.O. FAILED TO MAKE E NQUIRIES BEFORE COMPLETING THE IMPUGNED ASSESSMENT. THE LD. A/R FURTHER SUBMITTED THAT MERELY BECAUSE AN ADDITION WAS MADE BY THE A.O. IN THE NEXT ASSESSMENT YEAR, V IZ. ASSESSMENT YEAR 2002-03, INSTEAD OF CONSIDERING THE RECEIPT OF SHARE APPLICA TION MONEY IN THE ASSESSMENT YEAR 2001-02, IT COULD NOT BE SAID THAT THE ASSESSMENT O RDER IS ERRONEOUS. HE SUBMITTED THAT THE LD. C.I.T. AS PER SUB-SEC. (2) OF SEC. 263 OF T HE ACT IS REQUIRED TO EXAMINE THE AVAILABLE RECORD BEFORE INVOKING SEC. 263 OF THE AC T AND IF THE RECORD IS AVAILABLE AND THE SAME HAS BEEN DULY CONSIDERED BY THE A.O., THE LD. C.I.T. CANNOT SAY THAT THE A.O. 8 DID NOT MAKE ANY ENQUIRY. HE SUBMITTED THAT LD. C. I.T. BY INVOKING HIS JURISDICTION U/S. 263 OF THE ACT IS GIVING ANOTHER OPPORTUNITY TO THE A.O., WHICH IS NOT PERMISSIBLE. TO SUBSTANTIATE HIS ABOVE SUBMISSION, THE LD. A/R ALSO PLACED RELIANCE ON A DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF RANKA JEWE LLERS VS. ADDL. CIT [328 ITR 148 (BOM)] AND SUBMITTED THAT ONCE THE ISSUE WAS CO NSIDERED BY THE A.O., THE REMEDY OF THE REVENUE COULD NOT LIE IN INVOKING OF THE JUR ISDICTION U/S. 263 OF THE ACT. HE, THEREFORE, SUBMITTED THAT THE ORDER OF THE LD. C.I. T. SHOULD BE QUASHED AS IT IS OUTSIDE THE PURVIEW OF SEC. 263 OF THE ACT. 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESE NTATIVE SUPPORTED THE ORDER OF LD. C.I.T. HE SUBMITTED THAT THE ASSESSEE RECEIVED THE SUM OF RS.32 LAKHS IN MARCH, 2001 AND HENCE THE A.O. WHILE COMPLETING THE ASSESSMENT WRONGLY ADDED THIS AMOUNT IN NEXT ASSESSMENT YEAR, VIZ. ASSESSMENT YEAR 2002-03. THE REFORE, THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IS ERRONEOUS AN D PREJUDICIAL TO THE INTEREST OF REVENUE. THE LD. DEPARTMENTAL REPRESENTATIVE FURTH ER SUBMITTED THAT THE LD. C.I.T. HAS NOT DIRECTED THE A.O. TO MAKE THE ADDITION, BUT HAS ONLY DIRECTED TO CONSIDER THE SAME AFTER GIVING OPPORTUNITY TO THE ASSESSEE. HE FURTH ER SUBMITTED THAT EVEN IF THE ASSESSEE HAS FURNISHED ALL THE MATERIALS BEFORE THE A.O. AND IT IS FOUND THAT SOME MISTAKE ON FACTS HAS BEEN COMMITTED BY THE A.O., THE ASSESSMENT ORDE R IS ERRONEOUS AND THE LD. C.I.T. COULD INVOKE HIS JURISDICTION U/S. 263 OF THE ACT. HE SUBMITTED THAT WHETHER THE ADDITION IS SUSTAINABLE OR NOT COULD BE CONSIDERED FINALLY I N THE REGULAR PROCEEDING, BUT THE ACTION OF LD. C.I.T. U/S. 263 COULD NOT BE DISPUTED ON THE FACTS OF THE CASE OF THE ASSESSEE. HE SUBMITTED THAT THE ORDER OF LD. C.I.T. BE CONFIRMED AND THE APPEAL OF THE ASSESSEE BE DISMISSED. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE REASON AS POINTED OUT B Y THE LD. C.I.T. TO JUSTIFY HIS INVOKING JURISDICTION U/S. 263 OF THE ACT WAS THAT ALTHOUGH THE A.O. HAD CONSIDERED THE CREDITS OF RS.32 LAKHS APPEARING IN THE BOOKS OF THE ASSESSEE- COMPANY IN THE FORM OF SHARE APPLICATION AND MADE ADDITIONS U/S.68 OF THE ACT IN THE ASSESSMENT FRAMED U/S. 153A/ 143(3) OF THE ACT FOR ASSESSMENT YEAR 2002-03, BUT THE CREDIT AND/OR ADDITION THEREOF WAS NOT CONSIDERED AND NOT ADDED IN THE ASSESSMENT YEAR UNDER CONSIDERATION, I.E. A.Y.2001-02 IN SPITE OF THE FACT THAT THE SAID CRED IT OF RS.32 LAKHS WAS APPEARING IN THE 9 BOOKS OF THE ASSESSEE IN F.Y. 2000-01 RELEVANT TO A .Y. 2001-02. FOR THIS SOLE REASON, THE LD. C.I.T. TREATED THE IMPUGNED ASSESSMENT ORDE R TO BE ERRONEOUS SO AS TO PREJUDICIAL TO THE INTEREST OF REVENUE AND DIRECTED THE A.O. TO REFRAME THE ASSESSMENT FOR A.Y. 2001-02 AFTER CONSIDERING THE GENUINENESS OF THE SA ID CREDIT. 7.1. A BARE READING OF SECTION 263 OF THE ACT MAKES IT CLEAR THAT THE PRE-REQUISITE FOR THE EXERCISE OF JURISDICTION BY THE LD. COMMISSIONE R SUO MOTU UNDER IT, IS THAT HE HAS TO BE SATISFIED OF TWIN CONDITIONS, VIZ., (I) THE ORDE R OF THE A.O. SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERE ST OF THE REVENUE. IF ONE OF THEM IS ABSENT, I.E. IF THE ORDER OF THE A.O. IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE RE VENUE, RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE A.O. IT IS ONLY W HEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. IN THE INSTANT CASE, IT IS AN ADMITTED POSITION THAT THE A.O. INITIATED BLOCK ASSESSMENT PROCEEDINGS FOR THE BLOC K PERIOD FOR ASSESSMENT YEARS 2001- 02 TO 2007-08 SIMULTANEOUSLY AND THE ASSESSMENTS WE RE FRAMED FOR THE SAID ASSESSMENT YEARS ON THE SAME DAY. FROM THE ASSESSMENT ORDER FO R ASSESSMENT YEAR 2002-03, WE OBSERVE THAT DURING THE COURSE OF ASSESSMENT PROCEE DINGS, THE ASSESSEE WAS DIRECTED BY THE A.O. TO FURNISH DETAILS REGARDING SHARE APPLICA TION MONEY RECEIVED FOR THE FINANCIAL YEARS 2000-01 TO 2006-07 ALONG WITH COPIES OF RELEV ANT BANK STATEMENTS AND THE ASSESSEE FURNISHED THE SAME. THEREAFTER THE A.O. I SSUED NOTICES U/S. 133(6) OF THE ACT TO THE SHARE APPLICANTS. THE A.O. HAS STATED IN THE A SSESSMENT ORDER THAT IN RESPONSE TO NOTICES U/S. 133(6), THE SHARE APPLICANTS FURNISHED THEIR REPLIES ALONG WITH THE DOCUMENTS REQUISITIONED. THE ASSESSEE IN THE PAPER BOOK AT PA GES 2 TO 51 HAS PLACED THE COPIES OF THE REPLIES RECEIVED BY THE A.O. IN RESPONSE TO NOT ICES U/S. 133(6) OF THE ACT. WE OBSERVE THAT EACH OF THE SHARE APPLICANTS FURNISHED COPIES OF BANK STATEMENT, AUDITED ACCOUNTS FOR THE YEAR ENDED 31/3/2001, EVIDENCE FOR FILING OF INCOME-TAX RETURN FOR ASSESSMENT YEAR 2001-02 AND THE EXPLANATION WITH RE GARD TO SOURCES OF FUND OUT OF WHICH SHARE APPLICATION MONEY WERE PAID. WE OBSERVE THAT AFTER APPRAISAL OF THESE DOCUMENTARY EVIDENCE AND AFTER HEARING THE ASSESSEE AND EXAMINING ITS BOOKS OF ACCOUNT THAT THE A.O. CAME TO THE CONCLUSION, WHICH IS PERTINENT TO QUOTE BELOW :- 10 IN VIEW OF THE ABOVE DISCUSSIONS, THE GENUINENESS O F THE AFORE-MENTIONED SHARE APPLICATION TRANSACTIONS IS NOT ESTABLISHED. AS A RESULT, THE CREDITS OF RS.32,00,000/- AND RS.95,00,000/- APPEARING IN THE BOOKS OF THE ASSESS EE COMPANY IN THE FORM OF SHARE APPLICATION DURING THE ACCOUNTING YEARS 2001-02 AND 2002-03 RESPECTIVELY ARE DEEMED TO BE THE INCOMES OF THE ASSESSEE FOR THE AYS 2002- 03 AND 2003-04 RESPECTIVELY AS PER PROVISIONS OF SECTION 68 OF THE ACT. THEREFORE, IT CAN BE SAID THAT THE A.O. HAD CARRIED OUT SUCH ENQUIRY AS THE CIRCUMSTANCES WARRANTED AND PERMITTED. IT WAS AN ENTIRELY DIFFERE NT MATTER THAT THE LD. C.I.T. DID NOT AGREE WITH THE CONCLUSION DERIVED BY THE A.O. FROM THE ENQUIRIES MADE WHILE TREATING THE CREDITS IN THE ASSESSMENT YEAR 2002-03 INSTEAD OF ASSESSMENT YEAR 2001-02. FAILURE TO CARRY OUT AN ENQUIRY IS ONE THING AND IN SUCH CA SES THE LD. C.I.T. WOULD BE JUSTIFIED IN SAYING THAT MERE FAILURE TO MAKE ANY ENQUIRY WAS ER RONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BUT IT WOULD NOT BE OPEN TO HIM TO HOLD THAT THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE MERELY BECAUSE HE IS OF THE OPINION THAT SOME MORE ENQUIRIES WERE REQUIR ED AND HE COULD NOT AGREE WITH THE CONCLUSION DERIVED BY THE A.O. FROM THE ENQUIRIES M ADE. IT WAS AFTER VERIFYING THE BOOKS OF ACCOUNT OF THE ASSESSEE AND VARIOUS OTHER MATERIALS GATHERED FROM THE ASSESSEE AND/OR SHARE APPLICANTS DURING ASSESSMENT PROCEEDIN G AND AFTER CONSIDERING THE EXPLANATION OFFERED BY THE ASSESSEE THAT THE A.O. H AD EXERCISED A JUDICIAL DISCRETION IN THE MATTER WHILE COMPLETING THE ASSESSMENT. FURTHER , IT IS PERTINENT TO MENTION HERE THAT THE LD. C.I.T. HIMSELF AT PARA-3 OF HIS ORDER HAS R ECORDED THE FOLLOWING FINDING/ OBSERVATION :- 3. . IN THE COURSE OF STATEMENT RECORD U/S.132(4 ) OF THE ACT ON 09.12.2006, ONE SRI ARUN KUMAR KHEMKA HAD ADMITTED THAT CHEQUES WERE IS SUED BY HIS GROUP OF COMPANIES IN LIEU OF CASH RECEIVED FROM THE ASSESSE E COMPANY AND OTHER GROUP COMPANIES. THE A.O. CONDUCTED IN DEPTH INQUIRIES IN THIS REGARD IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR AYRS. 2002-03 AND 2003-0 4 AND FOUND THAT ELEVEN COMPANIES HAD APPLIED FOR SHARES OF THE ASSESSEE CO MPANY FOR A TOTAL AMOUNT OF RS. 1,27,00,000/-. THIS AMOUNT OF RS.1,27,00,000/- WAS CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY, THE GENUINENESS AND CREDIT WORTHINESS OF WHICH WAS EXAMINED TO THE A.O. THE DETAILS OF THESE CREDIT ENTRIES IS AVAILABLE IN THE ASSESSMENT ORDER FOR A.Y. 2002-03 FROM THE ABOVE FINDING/OBSERVATION OF LD. C.I.T., I T IS ESTABLISHED THAT THE A.O. HAD MADE IN DEPTH ENQUIRIES IN RESPECT OF THE RECEIPT O F SHARE APPLICATION MONEY BY THE ASSESSEE AND THEN ONLY CAME TO THE CONCLUSION THAT TOTAL SUM OF RS.1.27 CRORES WAS 11 CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE-CO MPANY, WHICH COMPRISED OF RS.32 LAKHS FOR A.Y. 2002-03 AND RS.95 LAKHS FOR A.Y. 200 3-04. THEREFORE, THE ENTIRE CASH CREDIT WAS ADDED IN THE HANDS OF THE ASSESSEE, ALTH OUGH IN APPEAL, THE LD. C.I.T.(A) HAS DELETED SUCH ADDITION FOR THE AFORESAID TWO ASSESSM ENT YEARS. IN SUCH CIRCUMSTANCES, THE VIEW TAKEN BY THE A.O. CANNOT BE SAID TO BE PREJUDI CIAL TO THE REVENUE NOR CAN IT BE SAID TO BE ERRONEOUS. IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. C.I.T. [243 I.T.R. 83 (SC)], THE HONBLE APEX COURT HELD AS UNDER :- THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE REV ENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFF ICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER, C ANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN INCOME-TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS T AKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED A S AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAK EN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. IN THE CASE UNDER CONSIDERATION BEFORE US, IT CANNO T BE SAID THAT THE VIEW TAKEN BY THE A.O. IS NOT ONE OF THE POSSIBLE VIEWS, BECAUSE AFTE R EXAMINING THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND EVIDENCES IN RESPECT OF EACH OF TH E SHARE APPLICANTS, THE A.O. CONSCIOUSLY ADDED THE SUM OF RS.32 LAKHS IN THE ASS ESSMENT YEAR 2002-03, BEING THE YEAR OF ALLOTMENT OF SHARES. THE LD. C.I.T. MAY BE OF THE VIEW THAT THE ADDITION OF RS.32 LAKHS WOULD HAVE BEEN JUSTIFIED IN ASSESSMENT YEAR 2001-02. HOWEVER, THAT BY ITSELF WILL NOT MAKE THE ASSESSMENT TO BE ERRONEOUS AND PR EJUDICIAL TO THE INTERESTS OF THE REVENUE. FURTHER, IT HAS ALSO NOT BEEN POINTED OUT BEFORE US THAT THE RELEVANT TRANSACTIONS WERE NOT RECORDED IN THE BOOKS OF ACCO UNTS WHICH WERE PRODUCED BEFORE THE A.O. IT IS NOW SETTLED LAW THAT IF, WHILE MAKING T HE ASSESSMENT, THE A.O. EXAMINES THE ACCOUNTS AND OTHER DETAILS, MAKES ENQUIRIES, APPLIE S HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME , THE LD. C.I.T., WHILE EXERCISING HIS POWER U/S. 263 OF THE ACT IS NOT PERMITTED TO SUBST ITUTE HIS OPINION IN PLACE THAT OF THE A.O. IN VIEW OF ABOVE, WE RESPECTFULLY FOLLOWING T HE ABOVE DECISION OF THE HONBLE APEX COURT HOLD THAT THE LD. C.I.T. WAS NOT JUSTIFI ED IN SETTING ASIDE THE ASSESSMENT ORDER DATED 31-12-2008 FOR ASSESSMENT YEAR 2001-02. WE, THEREFORE, QUASH THE ORDER PASSED BY THE LD. C.I.T. U/S. 263 OF THE ACT AND RE STORE THE ASSESSMENT ORDER DATED 31- 12-2008 FOR ASSESSMENT YEAR UNDER APPEAL. 12 8. IN RESPECT OF THE SUBMISSION OF LD. DEPARTMENTA L REPRESENTATIVE THAT LD. C.I.T. HAS MERELY SET ASIDE THE ASSESSMENT WITHOUT GIVING SPECIFIC DIRECTION FOR MAKING ADDITION IN RESPECT OF SHARE APPLICATION MONEY RECE IVED AND HENCE NO PREJUDICE IS CAUSED TO THE ASSESSEE BECAUSE THE A.O. HAS MERELY DIRECTED TO MAKE ENQUIRIES AND TO MAKE ADDITION AS PER LAW, WE DO NOT FIND SUBSTANCE IN THE SAID SUBMISSION OF LD. DEPARTMENTAL REPRESENTATIVE. IT IS WELL SETTLED TH AT PROCEEDINGS U/S. 263 OF THE ACT CANNOT BE RESORTED TO BY LD. C.I.T. TO PERMIT AN AS SESSING OFFICER TO CONDUCT ENQUIRIES AFRESH WITH REGARD TO ASSESSMENT WHICH HAS BEEN COM PLETED AFTER CARRYING OUT DETAILED ENQUIRY. LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT SHARE APPLICATION MONEY WAS RECEIVED IN MARCH, 2001 RELEVANT TO ASSESSMENT YEAR 2001-02 AND, THEREFORE, APPROPRIATE YEAR OF ASSESSMENT FOR MAKING SUCH ADDITION IS ASSE SSMENT YEAR 2001-02 AND ON THIS GROUND HE JUSTIFIED THE ACTION OF THE LD. C.I.T. W E ARE, HOWEVER, OF THE CONSIDERED VIEW THAT LD. C.I.T. COULD NOT REVISE AN ORDER U/S. 263 OF THE ACT IF THE A.O. HAS PASSED THE ASSESSMENT AFTER CONSIDERING THE FACTS ON RECORD A ND HAS TAKEN A CONSCIOUS VIEW THAT THE SAID SHARE APPLICATION MONEY IS TO BE CONSIDERED IN ASSESSMENT YEAR 2002-03 AND NOT IN ASSESSMENT YEAR 2001-02 IRRESPECTIVE OF THE FACT TH AT THE A.O., ADMITTEDLY, COMPLETED THE ASSESSMENT ON THE SAME DAY FOR BOTH THE ASSESSM ENT YEARS 2001-02 AND 2002-03 AND, ACCORDINGLY, THE VIEW OF THE A.O. COULD NOT BE SAID TO BE PREJUDICIAL TO THE INTEREST OF REVENUE WHEN HE HAD TAKEN A CONSCIOUS DECISION TO M AKE THE ADDITION IN ASSESSMENT YEAR 2002-03 INSTEAD OF MAKING THE ADDITION IN ASSE SSMENT YEAR 2001-02. AT THE SAME TIME, IT IS IMPORTANT TO STATE THAT EVEN IN RESPECT OF THE BALANCE ADDITION OF RS.95 LAKHS MADE BY THE A.O. IN ASSESSMENT YEAR 2003-04, THE LD . C.I.T.(A) HAS DELETED THE SAME HOLDING THAT THE ADDITION MADE BY THE A.O. U/S. 68 OF THE ACT BY CONSIDERING THE SHARE APPLICATION MONEY RECEIVED AS NOT GENUINE IS NOT CO RRECT. IN VIEW OF ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE ORDER OF LD. C.I.T. U/ S.263 OF THE ACT IS LIABLE TO BE QUASHED. 9. BEFORE PARTING, WE MAY FURTHER TO ADD THAT THE ASSESSEE BEING AGGRIEVED WITH THE ASSESSMENTS FRAMED FOR ASSESSMENT YEARS 2002-03 AND THEREBY MAKING ADDITION U/S. 68 OF THE ACT OF RS.32 LAKHS PREFERRED APPEAL BEFORE T HE LD. C.I.T.(A) AND THE LD. C.I.T.(A) VIDE HIS ORDER DATED 28/6/2010 DELETED THE ADDITION AND ALLOWED THE APPEAL OF THE ASSESSEE. THIS FACT IS ALSO EVIDENT FROM THE ORDER OF LD. C.I.T. AT PAGE-5. IN THIS CASE, 13 NOTICE U/S. 263 OF THE ACT WAS ISSUED ON 01/11/2010 AND ORDER WAS PASSED BY THE LD. C.I.T. ON 23/11/2010, WHICH WERE SUBSEQUENT TO DATE S OF THE ORDER OF LD. C.I.T.(A). THEREFORE, ONCE THE ADDITION OF RS.32 LAKHS FOR ASS ESSMENT YEAR 2002-03 IS DECIDED BY THE LD. C.I.T.(A), THE SAME ADDITION CANNOT AGAIN B E ADJUDICATED UPON BY THE LD. C.I.T. FOR TREATING THE SAME ADDITION IN ASSESSMENT YEAR 2 001-02, BECAUSE THE REMEDY OF THE REVENUE CANNOT LIE IN THE INVOCATION OF THE JURISDI CTION U/S. 263 OF THE ACT. HONBLE DELHI HIGH COURT HAD AN OCCASION TO DEAL WITH SUCH IDENTICAL SITUATION IN THE CASE OF RANKA JEWELLERS VS. ADDL. C.I.T. (SUPRA), WHEREIN R ELYING ON THE DECISIONS IN THE CASES OF MALABAR INDUSTRIAL CO. LTD. VS. CIT (SUPRA) AND CIT VS. MAX INDIA LTD. [295 ITR 282 (SC)], THEIR LORDSHIPS HELD AS UNDER :- WHERE AN ORDER PASSED BY THE AO IS SUBJECT TO AN AP PEAL THAT HAS BEEN FILED, THE POWER OF THE CIT TO INVOKE HIS REVISIONAL JURISDICT ION UNDER S. 263 CAN ONLY EXTEND TO SUCH MATTERS WHICH HAVE NOT BEEN CONSIDERED AND DEC IDED IN THE APPEAL. THE WORDS WHICH HAVE BEEN USED IN EXPLN. (C) TO SUB-S. (1) OF S. 263 ARE CONSIDERED AND DECIDED. IN OTHER WORDS, IT IS NOT MERELY A CONSID ERATION THAT DISABLES, BUT THE MATTER HAS TO BE CONSIDERED AND DECIDED IN THE APPE AL. THE SUBMISSION OF COUNSEL APPEARING ON BEHALF OF THE REVENUE THAT THE CIT(A) HAS NOT DECIDED THE ISSUE, WHILE DEALING WITH THE QUESTION OF ENHANCEMENT, CANNOT BE ACCEPTED. THE SUBMISSION WHICH HAS BEEN URGED ON BEHALF OF THE REVENUE IS THAT THE CIT(A) WAS REQUESTED TO EXERCISE HIS POWER OF ENHANCEMENT IN PURSUANCE OF THE REQUES T MADE BY THE ADDI. CIT ON 20TH MAY, 2005 AND THAT THE REQUEST WHICH WAS MADE WAS T O CARRY OUT AN ESTIMATION OF THE INITIAL INVESTMENT FOR THE FIRST YEAR OF THE BL OCK PERIOD. NOW, THE POWER OF THE CIT(A) IS STRUCTURED BY THE PROVISIONS OF S. 251. S EC. 251 INTER ALIA PROVIDES THAT IN DISPOSING OF AN APPEAL THE CIT(A) SHALL HAVE THE PO WER IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT TO CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT. CONSEQUENTLY, WHEN A REQUEST FOR ENHANCEMENT WAS MA DE TO THE CIT(A), HE HAD THE JURISDICTION, IN TERMS OF S. 251, TO CONFIRM, REDUC E, ENHANCE OR ANNUL THE ASSESSMENT. A READING OF THE ORDER PASSED BY THE CIT(A), PARTIC ULARLY PARA 16.5 OF THE ORDER, WOULD LEAD TO THE CONCLUSION THAT THE CIT(A) HAD CO NSIDERED AND DECIDED THE ISSUE. ONCE THE ISSUE WAS CONSIDERED AND DECIDED BY THE CI T(A), THE REMEDY OF THE REVENUE CANNOT LIE IN THE INVOCATION OF THE JURISDICTION UN DER S. 263 . [EMPHASIS SUPPLIED] IN VIEW OF ABOVE FACTS AND DECISION OF HONBLE BOMB AY HIGH COURT (SUPRA), THE ASSUMPTION OF JURISDICTION BY THE LD. C.I.T. U/S. 2 63 OF THE ACT DOES NOT LIE AND HENCE HIS ORDER IS LIABLE TO BE QUASHED. 10. EVEN OTHERWISE ALSO AND WITHOUT PREJUDICE TO A BOVE, WE OBSERVE THAT ALL THE REQUISITE DETAILS, VIZ. PAN DETAILS, BANK STATEMENT S, COPIES OF INCOME-TAX RETURNS, BALANCE SHEETS OF THE SHARE APPLICANTS WERE AVAILAB LE WITH THE A.O. THEREFORE, THE 14 ASSESSEE HAS DISCHARGED ITS PRIMARY ONUS THAT LAID UPON IT IN RESPECT OF THE SHARE APPLICATION MONEY RECEIVED BY IT. THE HONBLE DELH I HIGH COURT HAS ALSO HELD IN THE CASE OF C.I.T. VS. VALUE CAPITAL SERVICES (P) LTD. [307 ITR 334 (DEL)] THAT THE ADDITIONAL BURDEN IS ON THE DEPARTMENT TO SHOW THAT EVEN IF TH E SHARE APPLICANTS DO NOT HAVE THE MEANS TO MAKE INVESTMENT, THE INVESTMENT MADE BY TH EM ACTUALLY EMANATED FROM THE COFFERS OF THE ASSESSEE SO AS TO ENABLE IT TO BE TR EATED AS THE UNDISCLOSED INCOME OF THE ASSESSEE. IT WAS HELD THAT IN THE ABSENCE OF SUCH F INDINGS, THE ADDITION CANNOT BE MADE IN THE INCOME OF THE ASSESSEE U/S. 68 OF THE ACT. THE REFORE, IN THE CASE BEFORE US, IT COULD NOT BE SAID THAT THE DEPARTMENT BROUGHT ANY MATERIA L ON RECORD TO DISPUTE THE GENUINENESS OF THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE AND HENCE AS PER THE JUDICIAL PRECEDENCE, THE SHARE APPLICATION MONE Y RECEIVED BY THE ASSESSEE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, COULD NOT BE C ONSIDERED AS INCOME OF THE ASSESSEE. IN VIEW OF THE ABOVE AND THE DETAILS AVAILABLE BEFO RE THE A.O., IT COULD NOT BE SAID THAT THE A.O. WHILE COMPLETING THE ASSESSMENT FOR ASSESS MENT YEAR 2001-02 HAD NOT CONSIDERED THE DETAILS AVAILABLE BEFORE HIM WHILE N OT MAKING THE ADDITION OF THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE AS UNDIS CLOSED INCOME OF THE ASSESSEE. 11. THEREFORE, CONSIDERING THE TOTALITY OF THE FACT S AND CIRCUMSTANCES OF THE CASE AND THE JUDICIAL PRONOUNCEMENTS REFERRED TO ABOVE, WE Q UASH THE IMPUGNED ORDER PASSED BY THE LD. C.I.T. U/S. 263 OF THE ACT, SETTING ASIDE T HE ASSESSMENT ORDER TO REFRAME THE SAME AFTER CONSIDERING THE GENUINENESS OF THE CREDIT OF RS.32 LAKHS ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE. THE GRO UNDS OF APPEAL TAKEN BY THE ASSESSEE ARE, THEREFORE, ALLOWED. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED. 4 '3 #5' 6 5% 7 48 THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON 05 TH SEPT. 2011 SD/- SD/- ( . .. . ! ! ! !. .. . ) '# ( . . . . . .. . ) (C.D.RAO) , ACCOUNTANT MEMBER (B.R.MITTAL) , JUDICIAL MEMBER ( (( (!# !# !# !#) )) ) DATE: 05 TH SEPT., 2011 15 $ $ $ $ / ITA NO. 113 (KOL) OF 2011 '3 1 /9 :'9';- COPY OF THE ORDER FORWARDED TO : 1. +, / THE APPELLANT : M/S. R.S. ISPAT LTD., B-401, CITY CENTRE, SALT L AKE, KOLKATA-700 064. 2 /0+, / THE RESPONDENT : D.C.I.T., CENTRAL CIRCLE-XXIV, KOL KATA. 3. 3%/ THE C.I.T., CENTRAL-III, KOLKATA. 4. ?7 /% / DR, ITAT, KOLKATA BENCHES, KOLKATA 5 . GUARD FILE . 09 // TRUE COPY, '3%5/ BY ORDER, (DKP) @ A / DY/ASSTT. REGISTRAR .