M/s. Divya Reality, Ahmedabad V. Pr. CIT-6, Ahmedabad

ITA 1153/AHD/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 7976 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-09-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 07-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Business expenditure; Income from undisclosed sources; Search and seizure; Opportunity of being heard; Principle of natural justice; Set aside
• Section: 143(3); 201; 13; 69; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 1153/AHD/2018 (ASSESSMENT YEAR: 2013-14) M/S. DIVYA REALITY NR. RAMKRISHNA MISSION HALL NR. L.G. HOSPITAL CORNER, MANINGAR, AHMEDABAD V/S INCOME TAX OFFICER, WARD- 7 (2), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAGFD 6939F APPELLANT BY : SHRI S. N. DIVETIA, AR RESPONDENT BY : SHRI ALOK SINGH, CIT/ D.R. ( )/ ORDER DATE OF HEARING : 10 -12-201 9 DATE OF PRONOUNCEMENT : 19 -12-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. PR. CIT(A)-6, AHMEDABAD DATED 27.03.2018 PERTAINING TO A.Y. 2013-14 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO . 115 3/AHD/2018 . A.Y. 2013-1 4 2 1.1 THE ORDER PASSED U/S.263 ON 27.03.2018 FOR A.Y.2013-14 BY PR.CIT-6, ABAD SETTING ASIDE THE ORDER OF REGULAR ASSESSMENT PASSE D U/S.143(3) ON 31.08.2015 BY AO WITH A DIRECTION TO PASS FRESH ORDER HAVING REGA RD TO THE POINTS STATED IN THE IMPUGNED ORDER IS WHOLLY ILLEGAL, UNLAWFUL AND AGAI NST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD. PR. CIT HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENC E PRODUCED BEFORE AO. THE LD. PR. CIT OUGHT TO HAVE ALLOWED SUFFICIENT TIME B EFORE PASSING THE IMPUGNED ORDER AND THUS THERE WAS VIOLATION OF THE PRINCIPLE S OF NATURAL JUSTICE. 2.1 THE LD. PR. CIT HAS GRIEVOUSLY ERRED IN LA W AND ON FACTS IN HOLDING THAT THE ORDER OF REGULAR ASSESSMENT PASSED U/S.143(3) ON 31 .08.2015 BY AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E AND THEREFORE THE POWERS EXERCISED U/S.263 WERE JUSTIFIED. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. PR. CIT OUGHT NOT TO HAVE HELD THAT THE ORDER OF REGULA R ASSESSMENT PASSED U/S.143(3) ON 31.08.2015 BY AO WAS ERRONEOUS AND PR EJUDICIAL TO THE INTEREST OF REVENUE AND THEREFORE THE POWERS EXERCISED U/S.263 WERE JUSTIFIED. 3.1 THE LD. PR. CIT HAS GRIEVOUSLY ERRED IN LA W AND ON FACTS IN HOLDING THAT IN VIEW OF THE DISCREPANCY OF GROSS RECEIPTS BETWEEN B OOKS AND BANK ACCOUNTS, THE LOANS AND ADVANCES, THE BUSINESS EXPENSES CLAIMED E TC. IT REQUIRED INQUIRY ON PART OF AO TO EXAMINE ITS GENUINENESS. IT IS, THEREFORE, PRAYED THAT THE ORDER OF REVISION PASSED U/S.263 BY PR. CIT WAS ILLEGAL AND THE SAME MAY BE SET ASIDE. 2. FACTS OF THE CASE ARE THAT THE ASSESSEE WAS ASKED T O SHOW CAUSE AS TO WHY PROCEEDINGS U/S.263 OF THE ACT SHOULD NOT BE INITIA TED IN THIS CASE. THE RELEVANT PORTIONS OF THE SHOW CAUSE NOTICE ARE REPRODUCED AS UNDER :- '...A) ON VERIFICATION OF RECORDS IT IS SEEN THAT, D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SUBMITTED COPIES OF B ANK ACCOUNT STATEMENTS OF TWO CURRENT BANK ACCOUNTS. THE TOTAL DEPOSITS/RECEI PTS IN BOTH THE BANKS IS APPROXIMATELY 2,55,56,832/-, THE BIFURCATION OF THE DEPOSITS IN BOTH THE BANK ACCOUNTS IS GIVEN BELOW:- THE MAHILA VIKAS CO.OP. BANK LTD. RS. 24,86,25 2/- STATE BANK OF INDIA RS.2.30,70.580/- ITA NO . 115 3/AHD/2018 . A.Y. 2013-1 4 3 TOTAL DEPOSITS RS.2,55,56,832/- WHEREAS, THE TOTAL RECEIPTS/TURNOVER AS PER YOUR RE TURN OF INCOME IS RS.96,93,700/-. THE AO HAS FAILED TO QUESTION ABOUT THIS DISCREPANCY OF RS.L,58,63,132/- 'I.E. DIFFERENCE AS PER THE TOTAL TURNOVER SHOWN BY YOU AND AS PER THE TOTAL DEPOSITS/RECEIPTS REFLECTED IN BOTH THE B ANK ACCOUNTS. IF THE AMOUNT OF RS. 1,58,63,132/- WAS ADDED BACK TO THE TOTAL TURNO VER/INCOME OF THE ASSESSEE, THE TURNOVER OF THE FIRM EXCEEDS RS.1 CRORE, THEN T HE ASSESSEE WAS BOUND TO GET HIS BOOKS OF ACCOUNTS AUDITED U/S.44AB AS WELL-AS I TS INCOME TO THE EXTENT 1,58,63,132/- ESCAPED ASSESSMENT.... 3. IN RESPONSE TO SHOW CAUSE NOTICE, THE HAS FURNISH ED COPY OF BANK STATEMENTS OF THE THE MANILA VIKAS CO.OP. BANK LTD AND STATE B ANK OF INDIA, FURTHER IT HAS STATED THAT THE VARIATION IN AMOUNT OF DEPOSITI ON WITH BANK ACCOUNTS AND TURNOVER BEING VARIOUS NATURE OF RECEIPT / DEPOSIT SHOULD BE .CONSIDERED, RECEIPT AGAINST REGISTERED SALE DEED AND OTHER RELA TED REVENUE INCOME SHOULD BE CONSIDERED AS TOTAL TURNOVER. MERE FILING OF COPY O F BANK STATEMENT IS NOT ENOUGH FOR VERIFICATION OF NATURE OF TRANSACTIONS A ND ITS OUTCOME. THUS THIS ISSUE REMAINS UNEXPLAINED. 4. DURING THE COURSE OF REVISION PROCEEDINGS, I.E. ON 13.03.2018, THE ASSESSEE WAS REQUESTED TO FURNISH BALANCE SHEET, PROFIT & LOSS A /C WITH ALL ANNEXURES FOR F.Y. 2011-12, 2012-13 AND F.Y. 2013-14. THE ASSESSE E WAS ALSO REQUESTED TO SHOW THAT LOANS AND ADVANCES ARE EXPLAINED AND ALSO THE CAPITAL ACCOUNT RECEIPTS ARE FROM SOURCES HAVING PROPER IDENTITY, G ENUINENESS AND CREDITWORTHINESS. SIMILARLY, THE ASSESSEE WAS REQU ESTED TO EXPLAIN WHY ADVANCES RECEIVED FROM CUSTOMERS AND SHOW N IN SALES SUBSEQUENTLY SHOULD NOT BE CONSIDERED AS SALES FOR THE YEA? SINC E MORE THAN 90% (ALMOST) OF SALES PRICE HAVE BEEN RECEIVED BUT AGREEMENT WAS NO T DONE. THE NEXT HEARING WAS FIXED FOR 16.03.2018. ITA NO . 115 3/AHD/2018 . A.Y. 2013-1 4 4 5. ON 16.03.2018, THE ASSESSEE FILED SUBMISSION AND FU RNISHED COPY OF BALANCE SHEET, PROFIT & LOSS A/C. HOWEVER, OTHER DETAILS AS REQUESTED VIDE PARA 6 ABOVE .HAVE NOT BEEN FILED BY THE ASSESSEE. ANY ADJ OURNMENT WAS ISO NOT SOUGHT. HENCE, IT IS HELD THAT THE ASSESSEE HAS NOT HING TO EXPLAIN IN RESPECT OF THE VARIOUS ISSUES RAISED. 6. THE FACTS OF THE CASE AND THE SUBMISSIONS MADE, IN THIS CASE, HAVE BEEN CAREFULLY CONSIDERED. THERE IS NO DISPUTE ON FACTS. ADMITTEDLY, THE ASSESSEE HAS DEPOSITED RS.2.56 CRORES IN HIS BANK ACCOUNT DURING THE YEAR AND THE SALES SHOWN AS PER ACCOUNTS ARE RS.96.90 LACS. THE DIFFER ENCE IN DEPOSITS IN BANK ACCOUNT AND THE SALE IS EXPLAINED TO BE THE RECEIPT S OTHER THAN THE SALE PROCEEDS. 7. THE ASSESSEE IS IN THE BUSINESS OF CONSTRUCTION AND SALES OF REAL ESTATES. VIDE LETTER DATED 13-03-2018, IT IS EXPLAINED THAT DURIN G THE YEAR, SALE OF STOCK IN TRADE HAS BEEN ACCOUNTED AS PER THE RULE ON THE BAS IS OF REGISTERED SALE DEED AND OTHER REVENUE RECEIPTS. HOWEVER, CAPITAL ACCOUN T RECEIPTS SUCH AS, FROM PARTNERS, RECOVERY AGAINST LOAN AND ADVANCES, BOOKI NG MONEY FROM BUYERS, ETC. HAVE NOT BEEN CONSIDERED AS TURNOVER. ALL THESE WAS PROPERLY CONSIDERED AND EXAMINED BY THE AO BEFORE COMPLETING THE ASSESSMENT . 8. THE ASSESSEE HAS ALSO GIVEN DETAILS OF CAPITAL ACCO UNT RECEIPTS CREDITED IN THE BANK ACCOUNT IN MAHILA VIKAS CO.OP. BANK LTD. TOTAL ING RS.24.86 LACS. THE ASSESSEE HAS ALSO GIVEN THE DETAILS OF SUCH CAPITAL ACCOUNT RECEIPTS DEPOSITED IN STATE BANK OF INDIA - TOTAL RECEIPTS IS RS.2.31 CRO RES. FROM THE DETAILS OF SUCH RECEIPTS, SALE ACCOUNT RECEIPTS ARE FOR RS.65 LACS AND THE BALANCE ARE CAPITAL ACCOUNT RECEIPTS MAINLY LOANS AND ADVANCES. THUS, T HE ASSESSEE HAS GIVEN DETAILS ITA NO . 115 3/AHD/2018 . A.Y. 2013-1 4 5 OF TOTAL CREDITS IN THE BANK ACCOUNT OF RS.2.56 CRO RES WHICH INCLIDES SALES RECEIPTS OF ONLY RS.65 LACS AND THE BALANCE ARE STA TED TO BE ON CAPITAL ACCOUNT AND MAINLY BEING LOAN AND ADVANCES. 9. TOTAL LOANS AND ADVANCES AS PER THE BALANCE SHEET A S ON 31-03-2018 CONSISTS MAINLY SUNDRY CREDITORS OF RS.8.23 CRORES. NO OTHER LOAN AND ADVANCES IS SEEN IN THE BALANCE SHEET. SUNDRY CREDITORS AS PER THE D ETAILS FURNISHED ARE FROM VARIOUS PERSONS BUT SINCE THE MONEY HAS BEEN RECEIV ED AND CREDITED IN THE BANK ACCOUNT, IT CANNOT BE CONSIDERED AS SUNDRY CREDITOR S BECAUSE NONE OF SUCH CREDITS AS SUBMITTED ARE NOT ON ACCOUNT OF GOODS OR MATERIAL PURCHASED OR THE EXPENSES INCURRED FOR SUPPLIES RECEIVED. THIS IS TH E MONEY RECEIVED AND DEPOSITED IN THE BANK. HENCE, THE ASSESSEE HAS USED A MISLEADING NOMENCLATURE IN RESPECT OF LOAN AND ADVANCES IN THE BALANCE SHEE T. 10. IT MAY BE MENTIONED THAT THE PURCHASES DEBITED IN T HE PURCHASE AND EXPENSES DEBITED IN P. & L, ACCOUNT IS ONLY ABOUT RS.115 LAC S AGAINST THE SALE RECEIPTS OF RS.96 LACS AND CLOSING STOCK OF RS.38.7 LACS. FURTH ER, THE ASSESSEE HAS FAILED TO JUSTIFY THE LOAN AND ADVANCES BY FURNISHING REQUISI TE INFORMATION AS REQUISITIONED VIDE ORDER SHEET NOTTINGS DATED 13-03 -2018 TO SUPPORT THE CREDITS BY GIVING PROPER EVIDENCE REGARDING IDENTITY OF THE SOURCES, GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE CREDITORS. 11. THE AO HAS ALSO, DURING THE ASSESSMENT, NOT CONDUCT ED ANY INQUIRY WHATSOEVER IN RESPECT OF SUCH CREDITS AND GENUINENESS THEREOF AND IN VIEW OF THE FACT THAT THE SUNDRY CREDITORS SHOWN IN THE BALANCE SHEET ARE NOT THE CREDITORS AS THE NOMENCLATURE IMPLIES RATHER THEY ARE LOAN CREDITORS . THEREFORE, THE ASSESSMENT HAS BEEN COMPLETED WITHOUT CONDUCTING NECESSARY INQ UIRIES IN RESPECT OF ITA NO . 115 3/AHD/2018 . A.Y. 2013-1 4 6 IDENTITY OF THE CREDITORS, GENUINENESS OF THE TRANS ACTIONS AND THE CREDITWORTHINESS OF THE CREDITORS AND WITHOUT VERIF YING THE TOTAL CREDITS IN BANKS AND THE DISPROPORTIONATE BANK CREDITS TO SALE S. MOREOVER, THE AO HAS ALSO NOT CONDUCTED ANY INQUIRY IN RESPECT OF THE EX PENSES DEBITED IN PROFIT AND LOSS ACCOUNT AND WHETHER THE EXPENSES SO DEBITED IS MATCHING WITH THE INCOME CREDITED AND THE VALUATION OF THE CLOSING STOCK. TH E AO HAS ALSO NOT CONDUCTED ANY INQUIRY IN RESPECT OF ADVANCES AGAINST PROPERTY AND VERIFIED WHETHER ADVANCES RECEIVED ARE SUBSTANTIAL TO TREAT IT AS SA LES EVEN DURING THE PENDENCY OF REGISTRATION OF AGREEMENT. THE AO HAS ALSO NOT C ONSIDERED THE APPLICABILITY OF SECTION 53A OF TRANSFER OF PROPERTY ACT AS ENSHR INED IN SECTION 2(47) OF THE IT. ACT. THE AO HAS ALSO NOT CONSIDERED THAT WHETHE R THE RECEIPTS SHOWN AS LOANS AND ADVANCES ARE ACTUALLY ASSESSABLE AS SALE PROCEEDS OF PROPERTY SINCE MORE THAN 90% OF SALE PRICE HAS BEEN RECEIVED BY TH E ASSESSEE IN SEVERAL CASES BUT AGREEMENT IS NOT EXECUTED. IN ANY CASE, IT WAS IMPERATIVE ON THE PART OF THE AO TO EXAMINE THE CREDITS IN BANKS AND THEIR GENUIN ENESS INCLUDING TAXABILITY OF THE RECEIPTS U/S.68 OR AS THE CASE MAY BE U/S.28 OF THE I.T. ACT, 1961. 12. IN THE REPLY ON RECORD, THE ASSESSEE HAS FURNISHED CERTAIN SUBMISSIONS AND EVIDENCES WHICH WERE NEITHER BEFORE THE A.O. DURING THE ASSESSMENT NOR THE A.O. EXAMINED THEM NOR HE HAS CONDUCTED ANY ENQUIRY IN RESPECT OF THE ISSUES RAISED IN THE NOTICE U/S.263 ISSUED AND FURTHER QUE RIES RAISED DURING THE REVISION PROCEEDINGS. HENCE, THE ASSESSMENT WAS COMPLETED IN A SUMMARY MANNER WITHOUT CONDUCTING NECESSARY AND PROPER ENQUIRIES A S NECESSARY ON FACTS OF THE CASE. 13. IN VIEW OF THE ABOVE DISCUSSIONS, ASSESSMENT ORDER PASSED BY THE A.O. WAS MADE WITHOUT MAKING PROPER ENQUIRY AS NECESSARY ON FACTS OF THE CASE. HENCE, ITA NO . 115 3/AHD/2018 . A.Y. 2013-1 4 7 IT IS HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE I NTEREST OF REVENUE. THE A.O. IS DIRECTED TO MAKE NECESSARY ENQUIRIES/INVESTIGATIONS AND EXAMINE THE ISSUES AFRESH AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND COMPLETE THE ASSESSMENT AFRESH, AS PER INCOME TAX A CT, 1961. THE ORDER OF THE ASSESSING OFFICER U/S. 143(3) DATED 31/08/2015 IS H EREBY SET ASIDE TO THE FILE OF A.O. AND TO BE FRAMED DENOVO. 14. NOW ASSESSEE HAS COME BEFORE US AGAINST THE ORDER O F LD. PR. CIT U/S. 263. 15. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER. IN THIS CASE, ON VERIFICATION OF RECORDS, IT IS SEEN THAT, DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SUBMITTED COPIES OF B ANK ACCOUNT STATEMENTS OF TWO CURRENT BACK ACCOUNTS. THE TOTAL DEPOSITS/RECEI PTS IN BOTH THE BANKS IS APPROXIMATELY 2,55,56,832/-. 16. WHERE AS THE TOTAL RECEIPTS/TURNOVER AS PER RETURN OF INCOME IS RS. 96,93,700/-. AS WE CAN SEE, FROM THE IMPUGNED ORDER THAT ASSESSI NG OFFICER HAS FAILED TO QUESTION ABOUT THIS DISCREPANCY OF RS. 1,58,63,132/ - I.E. DIFFERENCE AS PER TOTAL TURNOVER SHOWN BY THE ASSESSEE AND AS PER TOTAL DEP OSITS/RECEIPTS REFLECTED IN BANK ACCOUNTS. 17. BEFORE US, LD. A.R. COULD NOT EXPLAIN ANY PLAUSIBLE EXPLANATION ABOVE THIS HUGE DIFFERENCE OF DEPOSITS/ RECEIPTS. 18. IN THE CASE OF CIT VS. R.S. ASSOIARTES [2014] 51 TA XMANN.COM 201 (ALLAHABAD) WHEREIN IN SIMILAR CIRCUMSTANCES ORDER OF LD. CIT(A ) U/S. 263 WAS SUSTAINED BY THE HONBLE ALLAHABAD HIGH COURT: ITA NO . 115 3/AHD/2018 . A.Y. 2013-1 4 8 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A FIRM OF CIVIL CONTRACTORS CONSISTING OF FIVE PARTNERS. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, IT HAS CONSTRUCTED 32 FLATS. ON 23.2.2000, A SURVEY WA S CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE. A TRIAL BALANCE SHEET OF THE ASSESSEE WAS FOUND INDICATING THE CASH IN HAND OF RS. 14.98 LAKHS. BUT DURING THE SURVEY, NO ACTUAL CASH WAS FOUND. IT WAS ALLEGED THAT THE CASH WAS TA KEN BY THE PARTNERS, WHO HAVE SPENDED THE SAME. THE A.O. HAS ACCEPTED THE EX PLANATION OF THE ASSESSEE. HOWEVER, THE CIT HAS PASSED AN ORDER UNDER SECTION 263 OF THE INCOME TAX ACT, STATING THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. SO, HE SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE A.O. TO MAKE A FRESH ASSESSMENT ORDER. BEING AGGRIEVED, THE ASSE SSEE HAS FILED AN APPEAL BEFORE THE TRIBUNAL, WHO HAS SET ASIDE THE ORDER PA SSED BY THE CIT UNDER SECTION 263 OF THE INCOME TAX ACT. NOT BEING SATISFIED, THE DEPARTMENT HAS KNOCKED THE DOORS OF THIS COURT. 4. WITH THIS BACKGROUND HEARD SHRI DHANANJAY AWASTH I, THE LEARNED COUNSEL FOR THE APPELLANT-DEPARTMENT, WHO HAS JUSTIFIED THE ORD ER PASSED BY THE CIT UNDER SECTION 263 OF THE INCOME TAX ACT. HE SUBMITS THAT NO DETAILS OF 'WORK IN PROGRESS' WERE MAINTAINED. NO INVENTORY OF CLOSING S TOCK IN THE FORM OF SEMI FINISHED BUILDINGS, FINISHED BUILDINGS, RAW MATERIA LS ETC. WERE FOUND ON RECORD. THE BOOKS OF ACCOUNTS WERE INCOMPLETE AND THE ENTRI ES OF VOUCHERS REGARDING VARIOUS EXPENSES INCURRED WERE NOT MADE IN THE BOOK S OF ACCOUNTS. NO CASH WAS FOUND OF RS. 14.98 LAKHS, WHICH WAS SHOWN IN THE BO OKS OF ACCOUNTS. 5. HE FURTHER SUBMITS THAT DURING THE ASSESSMENT YE AR UNDER CONSIDERATION, THE ASSESSEE HAS SOLD 30 FLATS WHEREAS THE COST OF 32 F LATS HAS BEEN DEDUCTED WHILE WORKING OUT THE CLOSING STOCK OF RS. 1,29,04,1077-. ONE SHRI SURESH KUMAR ROCHLANI, MADE A VAGUE STATEMENT WITHOUT KNOWING TH E FACTS, SO CIT HAS RIGHTLY PASSED AN ORDER UNDER SECTION 263 OF THE INCOME TAX ACT. 6. ON THE OTHER HAND, SHRI S.D. SINGH, LEARNED SENI OR COUNSEL ASSISTED BY SRI KRISHNA DEV VYAS, LEARNED COUNSEL FOR THE ASSESSEE- RESPONDENT HAS JUSTIFIED THE IMPUGNED ORDER PASSED BY THE TRIBUNAL. HE SUBMITS T HAT THE ASSESSMENT ORDER WAS NEITHER PREJUDICIAL TO THE INTEREST OF THE REVE NUE NOR IT WAS ERRONEOUS AS MENTIONED BY CIT IN HIS ORDER, PASSED UNDER SECTION 263 OF THE INCOME TAX ACT. FOR THE PURPOSE, HE RELIED ON THE RATIO LAID DOWN I N THE FOLLOWING CASES : (I) MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83/109 TAXMAN 66 (SC); (II) CITV. MAX INDIA LTD. [2007] 295 ITR 282/[200 81 166 TAXMAN 188 (SC): AND (III) CIT V. BAGRIEL INDIA LTD. [19931 203 ITR 10 8/71 TAXMAN 585 (BOM.). 7. LASTLY, HE MADE A REQUEST TO DISMISS THE APPEAL FILED BY THE DEPARTMENT. ITA NO . 115 3/AHD/2018 . A.Y. 2013-1 4 9 8. WE HAVE HEARD BOTH THE PARTIES AT LENGTH AND GON E THROUGH THE MATERIAL AVAILABLE ON RECORD, FROM WHICH IT APPEARS THAT THE ASSESSEE HAS SHOWN AVAILABILITY OF CASH OF RS. 14.98 LAKHS, BUT THE SA ME WAS NEVER FOUND. THE EXPLANATION GIVEN BY THE ASSESSEE THAT CASH WAS TAK EN BY THE PARTNERS, WHO HAVE SPENDED, IS NOT ACCEPTABLE. THE MONEY BELONGS TO TH E FIRM AND IT WAS NOT THE MONEY OF THE PARTNERS. THE ACCOUNTS -WERE NOT COMPL ETED AT THE TIME OF SURVEY. VOUCHERS REGARDING THE VARIOUS EXPENSES WERE NOT AV AILABLE, SO THE BOOKS OF ACCOUNTS WERE LIKELY TO BE REJECTED. BUT THE A.O. H AS NOT DONE. FURTHER OUT OF SALE OF 30 FLATS AGAINST THE CONSIDERATION OF RS. 1,26,0 5,0007-, THE ASSESSEE HAS SHOWN THE NET PROFIT OF RS. 71,89,057-, WHICH IS MEAGER O NE AND DOES NOT APPEAR TO BE REASONABLE BY LOOKING THE COMMERCIAL REALITY. MOST OF THE EXPENSES WERE INCURRED IN CASH. IT MAY BE MENTIONED THAT THE INCO ME HAS TO BE COMPUTED BY APPLYING A SUITABLE NET PROFIT RATE AS PER RATIO LA ID DOWN IN THE CASE OF SARAYA ENGG. WORKS (P.) LTD. V. CIT [1987] 168 ITR 455/31 TAXMAN 165 (ALL.) 9. REGARDING THE LOAN TRANSACTIONS, THE IDENTITY, C APACITY OF THE DEPOSITS AND GENUINENESS OF THE TRANSACTIONS WERE NOT EXAMINED B Y THE A.O. THE A.O. HAS NOT OBTAINED THE COMPLETE NAME AND ADDRESS OF THE PARTI ES, THEIR SOURCE OF INCOME AND ALSO THE DETAILS OF TRANSACTIONS. NO CONFIRMATI ON LETTER WAS OBTAINED. 10. IN THE CIRCUMSTANCES MENTIONED ABOVE, WE ARE OF THE VIEW THAT THE MATTER NEEDS DEEP INVESTIGATION. THE CIT HAD RIGHTLY PASSE D AN ORDER UNDER SECTION 263 OF THE INCOME TAX ACT, WHERE HE HAD DIRECTED THE A. O. TO MAKE A FRESH ASSESSMENT ORDER. CONSIDERING THE PECULIAR FACTS AN D CIRCUMSTANCES OF THE CASE, THE SAME APPEARS TO BE REASONABLE. THE TRIBUNAL HAS SET ASIDE THE ORDER NEARLY BY DISCUSSING THE CASE LAWS, BUT WITHOUT EXAMINING THE FACTS OF THE CASE. IT MAY BE MENTIONED THAT THE ASSESSEE WILL GET FRESH OPPOR TUNITY BEFORE THE A.O. AT THE TIME OF FRAMING THE DE NOVO ASSESSMENT. 11. IN THE LIGHT OF THE ABOVE DISCUSSION, WE SET AS IDE THE IMPUGNED ORDER PASSED BY THE TRIBUNAL AND RESTORE THE ORDER DATED 25.03.2 003 PASSED BY THE CIT UNDER SECTION 263 OF THE INCOME TAX ACT. BEING AN OLD MAT TER, IT IS EXPECTED THAT THE A.O. WILL MAKE A FRESH ASSESSMENT WITHIN A PERIOD O F SIX MONTHS. 12. THE ANSWER TO THE SUBSTANTIAL QUESTIONS OF LAW IS IN FAVOUR OF THE DEPARTMENT AND AGAINST THE ASSESSEE. 13. IN THE RESULT, THE APPEAL FILED BY THE DEPARTME NT IS ALLOWED. 19. IN SIMILAR FACTS AND CIRCUMSTANCES AND HONBLE HIGH COURT OF CALCUTTA IN THE MATTER OF SUSHIL MODI VS. CIT, CENTRAL-II [2015] 59 TAXMANN.COM 63 (CALCUTTA) HAS DECIDED MATTER IN FAVOUR OF REVENUE: ITA NO . 115 3/AHD/2018 . A.Y. 2013-1 4 10 SECTION 69 OF THE INCOME-TAX ACT, 1961 - UNEXPLAIN ED INVESTMENT (DEPOSITS) - BLOCK PERIOD 1-4-1986 TO 20-9-1996 - D URING SEARCH AND SEIZURE OPERATION, ASSESSEE'S SAVING BANK ACCOUNT SHOWED CE RTAIN SUM DEPOSITED IN SAID BANK ACCOUNT - ASSESSEE CONTENDED THAT SAID DEPOSITS WERE MADE OUT OF CASH BALANCE AVAILABLE - IN ABSENCE OF ANY P ROOF WITH REGARD TO SUCH AVAILABILITY OF FUNDS, ASSESSING OFFICER TREATED SA ID DEPOSITS AS INCOME FROM UNDISCLOSED SOURCES - ASSESSEE FURTHER CONTEND ED THAT SAID DEPOSITS HAD BEEN REFLECTED IN FINAL ACCOUNTS OF ASSESSMENT YEAR 1987-88 BUT HE DID NOT PRODUCE HIS FINAL ACCOUNTS OF SAID ASSESSMENT Y EAR - WHETHER, ON FACTS, ASSESSING OFFICER WAS JUSTIFIED IN INVOKING PROVISI ONS OF SECTION 69 - HELD, YES [PARAS 13 & 17] [IN FAVOUR OF REVENUE] 20. IN OUR CONSIDERED OPINION, WE DO NOT FIND ANY AMBIG UITY IN THE ORDER PASSED BY THE LD. PR. CIT AS HE HAS DIRECTED THE A.O. TO MAKE NECESSARY ENQUIRY /INVESTIGATION EXAMINE THE ISSUES AFRESH AS ASSESSI NG OFFICER HAS BEEN FAILED TO CONDUCT PROPER ENQUIRY. THEREFORE, APPEAL OF THE L D. PR. CIT IS UPHELD AND SAME DOES NOT REQUIRE ANY KIND OF INTERFERENCE AT O UR END. 21. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON 19 - 12- 2019 SD/- SD/- (PRADIP KUMAR KEDIA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 19/12/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD