M/s. Jabibur Rahaman , Murshidabad V. Principal CIT - 14, Kolkata , Kolkata

ITA 1171/KOL/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1769 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 29-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHEY SHYAM
• Assessee Lawyers: S K TULSIYAN
• Keywords: Business income; Business expenditure; Principle of natural justice; Peak credit; Assessment record; Reason to believe; Reassessment proceedings
• Section: 143(3); 142(1); 143(2); 13; 147; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI A.T.VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.1171/KOL/2018 ( / ASSESSMENT YEAR:2008-09) M/S JABIBUR RAHAMAN VILL & P.O.- MAJHYAMPUR BAGANPARA, PS- BELDANGA, MURSHIDABAD-742133. VS. PR. CIT-14, KOLKATA ./ ./PAN/GIR NO.: AAHFJ 0297 P (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI S. K. TULSIYAN, ADVOCATE RESPONDENT BY :SHRI RADHEY SHYAM, CIT / DATE OF HEARING : 16/10/2019 /DATE OF PRONOUNCEMENT : 11 /12/2019 / O R D E R PER DR. A. L. SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAI NING TO ASSESSMENT YEAR 2008-09, IS DIRECTED AGAINST THE ORDER PASSED BY TH E PR. COMMISSIONER OF INCOME TAX-14, KOLKATA, UNDER SECTION 263 OF THE INCOME TA X ACT, 1961 (IN SHORT THE ACT) DATED 09/03/2018. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS: 1) THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. PRINCIPAL CIT, KOLKATA-14 ERRED IN LAW IN ASSUMING JURISDICTION U/ S 263 OF THE ACT IN ORDER TO IMPOSE HIS OWN VIEWS ON THE A.O. WHEN THE A.O. HAD TAKEN A POSSIBLE VIEW. 2) THAT, THE LD. PR. CIT FURTHER ERRED IN ASSUMING JUR ISDICTION U/S. 263 OF THE ACT ON THE ALLEGED GROUND OF ABSENCE OF THOROUGH AND PR OPER INQUIRY BY THE A.O. AND THUS HOLDING THE ASSESSMENT ORDER PASSED U/S. 1 47/143(3) OF THE ACT TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E SIMPLY BY DIFFERING WITH M/S JABIBUR RAHAMAN ITA NO.1171/KOL/2018 ASSESSMENT YEAR:2008-09 PAGE | 2 THE PLAUSIBLE VIEW TAKEN BY THE A.O., SPECIFICALLY ACCEPTING THE AUDITED BOOKS OF ACCOUNT AFTER APPROPRIATE INQUIRY. 3) THAT, THE LD. PR. CIT WRONGLY ASSUMED JURISDICTION U/S.263 OF THE ACT INASMUCH AS EXPLANATION TO SEC.263 INSERTED BY FINA NCE ACT, 2015 W.E.F. 01.06.2015 PROVIDES THAT THE ORDER PASSED WITHOUT M AKING ENQUIRIES/VERIFICATION WOULD BE A GROUND FOR THE PR . CIT TO INVOKE JURISDICTION U/S.263 SUBSEQUENT TO 01.06.2015 AND NOT RELATING T O A.Y. 2008-09 UNDER CONSIDERATION. 4) THAT, THE LD. PR. C.I.T. FURTHER ERRED IN OBSERVING THAT THE A.O. DID NOT MAKE ENQUIRIES ON LOW G.P. DECLARED BY THE APPELLANT AT 0.96% IN COMPARISON TO 4.68% ON SAME LINE OF BUSINESS IN INDIVIDUAL ASSESS MENT ALTHOUGH THE A.O. ACCEPTED THE SAME AFTER THOROUGH SCRUTINY OF AUDITE D BOOKS OF ACCOUNT. 5) THAT, THERE WAS NOTHING FOR THE LD. PR. CIT TO ASSU ME THAT THE G.P. DECLARED BY THE APPELLANT WAS LOW WHEN HE HIMSELF COULD NOT BRING ON RECORD ANY SPECIFIC DISCREPANCY IN PURCHASE, SALES, STOCK AND EXPENSES SHOWN IN THE AUDITED ACCOUNTS VIS-A-VIS G.P. EARNED AND HENCE TH E IMPUGNED ORDER PASSED U/S.263 OF THE ACT IS ERRONEOUS, WITHOUT ANY VALID REASON AND LIABLE TO BE QUASHED. 6) THAT, THE LD. PR. C.I.T. FURTHER ERRED IN HAVING AS SUMED THAT THE A.O. SHOULD HAVE ESTIMATED THE G.P. AT 4.68% IN SPITE OF THE FA CT THAT THE OPENING STOCK, PURCHASES, SALES AND CLOSING STOCK ARE INDEPENDENT VARIABLES AND THE GP IS THE RESULTANT BALANCING FIGURE OR DEPENDENT VARIABL E AND HAVING ONCE ACCEPTED THE BOOKS, THE AO WAS PRECLUDED FROM MAKIN G ANY ESTIMATE OF INCOME/G.P. 7) THAT, THE LD. PR. CIT WRONGLY INTERPRETED THAT AS P ER ORDER OF HON. TRIBUNAL, THE PEAK CREDIT OF RS. 10,60,742/- HAS NOT BEEN CON SIDERED IN THE REASSESSMENT ORDER IN SPITE OF THE FACT THAT ADDITION OF THE SAI D PEAK CREDIT WAS MADE IN THE INDIVIDUAL HANDS FOR NOT DISCLOSING THE AXIS BANK A /C WHICH STOOD DISCLOSED IN ROI AND ACCOUNTS OF THE APPELLANT-FIRM. 8) THAT, AS THE ORDER OF LD. PR. C.I.T. ON THE ABOVE I SSUES SUFFERS FROM JURISDICTION, ILLEGALITY AND IS DEVOID OF ANY MERIT , THE SAME SHOULD BE QUASHED AND YOUR APPELLANT BE GIVEN SUCH RELIEF(S) AS PRAYE D FOR 9) THAT, THE APPELLANT CRAVES LEAVE TO AMEND, ALTER, M ODIFY, SUBSTITUTE, ADD TO, ABRIDGE AND/ OR RESCIND ANY OR ALL OF THE ABOVE GRO UNDS. 3. BRIEF FACTS QUA THE ISSUE ARE THAT IN THE ASSESS EE`S CASE UNDER CONSIDERATION THE ASSESSMENT U/S 147/143(3) OF THE I.T. ACT, 1961 WAS MADE ON 27/01/2016 ASSESSING THE LOSS AT RS. 4,900/-. LATER ON, A PROPOSAL U/S. 263 OF THE INCOME TAX ACT, 1961 WAS RECEIVED BY THE PRINCIPAL COMMISSIONER OF INCOM E TAX, SUGGESTING REVISION OF THE ASSESSMENT ORDER DATED 27/01/2016, AS THE SA ME WAS FELT TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTOF THE R EVENUE. ACCORDINGLY, THE ASSESSMENT RECORDS WERE EXAMINED BY LD PCIT. ON EXAMINATION OF THE ASSESSMENT RECORDS, IT WAS FOUND THAT IN THE COURSE OF THE ASSESSMENT PROC EEDINGS IN THE CASE OF JABIBUR RAHAMAN, INDIVIDUAL, THE TOTAL SALES AS PER THE TRA DING ACCOUNT WAS SHOWN AT RS.53,67,500/- FROM HUMAN HAIR BUSINESS AND THE GRO SS PROFIT WAS DISCLOSED @ M/S JABIBUR RAHAMAN ITA NO.1171/KOL/2018 ASSESSMENT YEAR:2008-09 PAGE | 3 4.68%. A BANK ACCOUNT IN THE NAME OF THE SAID ASSES SEE WAS FOUND AND THE ASSESSING OFFICER ADDED THE DEPOSITS IN THE BANK AC COUNT TO THE SALES DISCLOSED BY THE ASSESSEE AND TREATED THE TRANSACTION OF RS.1,35 ,22,943/- (RS.53,67,500 + RS.81,55,443) AS THE SALES OF JABIBUR RAHAMAN, INDI VIDUAL ON WHICH GROSS PROFIT RATE OF RS.4.68% AS DISCLOSED BY THE ASSESSEE HIMSE LF WAS APPLIED FOR ARRIVING AT THE PROFITS OF THE ASSESSEE. THE ITAT-KOLKATA IN I TA NO.119/KOL/2012, FOR A.Y. 2008-09, ORDER DATED 13.02.2014 IN ASSESSEE`S INDIV IDUAL CASE (JABIBUR RAHAMAN), HELD THAT ACTION IN RESPECT OF SALES OF RS. 8L,55,4 43/- SHOULD BE TAKEN IN THE HANDS OF THE FIRM, M/S. JABIBUR RAHAMAN, I.E., THE ASSESS EE IN THE PRESENT CASE.ON PERUSAL OF THE ASSESSMENT RECORDS OF THE ASSESSEE, IT WAS N OTICED BY LD PCIT THAT WHILE IN THE CASE OF JABIBUR RAHAMAN, INDIVIDUAL, WHO WAS RU NNING IDENTICAL BUSINESS ( BUSINESS OF HUMAN HAIR), THE GROSS PROFIT(G.P) RATE WAS DISCLOSED BY HIM WAS AT 4.68%, WHEREAS IN THE CASE OF THE ASSESSEE PARTNERS HIP FIRM-M/S. JABIBUR RAHAMAN, THE G.P. RATE DECLARED WAS ONLY 0.96 % ON SALES. THE AMOUNT OF TURNOVER IN THE CASE OF THE ASSESSEE WAS EARLIER AD DED TO THE TURNOVER OF JABIBUR RAHAMAN. SINCE G.P. @ 4.68% WAS DECLARED BY THE SAI D JABIBUR RAHAMAN HIMSELF AND WAS ALSO APPLIED BY THE ASSESSING OFFICER IN TH EASSESSMENT ORDER, WHILE ASSESSING THE CASE OF M/S. JABIBUR RAHAMAN, I.E. TH E ASSESSEE IN THE PRESENT CASE, THEREFORE, IT WAS INCUMBENT ON THE PART OF THE A.O. TO HAVE ENQUIRED INTO THE REASONS AS TO WHY SUCH ABYSMALLY LOW G.P. RATE OF 0 .96% WAS DECLARED BY THE ASSESSEE PARTNERSHIP FIRM. PRIMA FACIE, G.P. OF AT LEAST 4.68% SHOULD HAVE BEEN APPLIED FOR ARRIVING AT THE NET PROFIT FROM THE ASS ESSEE`S PARTNERSHIP BUSINESS. HOWEVER, THE A.O FAILED TO DO SO. THEREFORE, LD PCI T WAS OF THE VIEW THAT A.O. HADPASSED THE ORDER WITHOUT MAKING ENQUIRIES OR VER IFICATIONS WITH REGARD TO THE CORRECTNESS OF THE PURCHASES AND SALES AS CLAIMED B Y THE ASSESSEE, WHICH SHOULD HAVE BEEN MADE IN THE CASE OF M/S. JABIBUR RAHAMAN- PARTNERSHIP FIRM. THIS HAD RENDERED THE ORDER ERRONEOUS IN SO FAR AS IT IS PRE JUDICIAL TO THE INTEREST OF REVENUE. 4. THE LD PCIT ALSO NOTICED THAT THAT AN ADDITION O F RS.18,02,087/- WAS MADE IN THE CASE OF JABIBUR RAHAMAN ON ACCOUNT OF PEAK CRED IT IN RESPECT OF THE DEPOSITS AND WITHDRAWALS OF RS. 1,02,92,960/- IN THE BANK AC COUNT MAINTAINED BY HIM WITH AXIS BANK. THE LD. CIT(A) RESTRICTED THE ADDITION T O RS. 10,60,742/-. ON APPEAL BY THE ASSESSE, THE ITAT-KOLKATA IN ASSESSEE`S CAS E (SUPRA) HELD THAT THEY HAD M/S JABIBUR RAHAMAN ITA NO.1171/KOL/2018 ASSESSMENT YEAR:2008-09 PAGE | 4 ALREADY ADJUDICATED THE ISSUE HOLDING THAT THIS BAN K ACCOUNT BELONGED TO THE PARTNERSHIP FIRM, I.E., M/S JABIBUR RAHAMAN AND NOT THE INDIVIDUAL JABIBUR RAHAMAN. THE ITAT IN ASSESSEE`S CASE (SUPRA), DIREC TED THE AO TO TAKE ACTION IN THE HANDS OF THE PARTNERSHIP FIRM-M/SJABIBUR RAHAMA N, IF ANY, AND THAT ALSO AS PER LAW. ON EXAMINATION OF THE ASSESSMENT RECORDS OF TH E FIRM BY LD PCIT, HOWEVER, REVEALED THAT THIS ISSUE HAD NOT AT ALL BEEN ENQUIR ED INTO OR EXAMINED BY THE A.O. AND THE ORDER HAD BEEN PASSED WITHOUT MAKING VERIFI CATION WHICH SHOULD HAVE BEEN MADE AND THE A.O. ALSO FAILED TO MAKE THE ADDI TION ON THIS ACCOUNT EVEN OF THE AMOUNT WHICH WAS CONFIRMED BY THE LD. CIT(A) IN THE CASE OF JABIBUR RAHAMAN. SINCE, ON THE BASIS OF THE ABOVE FACTS IT WAS CLEAR THAT THE ORDER PASSED BY THE AO WAS ERRONEOUS IN SO FAR AS IT IS PREJUDIC IAL TO THE INTEREST OF THE REVENUE, IT HAD BEEN PASSED WITHOUT MAKING ENQUIRES OR VERIF ICATION WHICH SHOULD HAVE BEEN MADE, THEREFORE, A SHOW CAUSE NOTICE WAS ISSU ED TO THE ASSESSEE TO EXPLAIN AS TO WHY THE ASSESSMENT IN ITS CASE SHOULD NOT BE REV ISED UNDER SECTION 263 OF THE I.T ACT, 1961. 5. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESS EE HAS SUBMITTED WRITTEN SUBMISSIONS BEFORE THE LD PCIT, WHICH IS REPRODUCED BELOW: 1.THE ASSESSEE IN HIS INDIVIDUAL CAPACITY HAS BEEN RUNNING BUSINESS OF PROCURING AND SELLING HUMAN HAIR. THEREAFTER VIDE PARTNERSHIP DEED DATED 30.03.2007, A PARTNERSHIP FIRM CAME INTO EXISTENCE W.E.F. 23.03.2 007 FOR THE SAME KIND OF BUSINESS WITH THE PARTNERS, NAMELY, .SRI JABIBU RRA HAMAN AND SRI AJMAIL SK HAVING RATIO OF PROFIT & LOSS, 'INCLUDING LOSS OF C APITAL, OF 60% AND 40% RESPECTIVELY. IN HIS INDIVIDUAL ROI FOR A. Y. 2008- 09, SRI JABIBUR RAHAMAN DISCLOSED SALES TO THE TUNE OF RS. 53,67,500/- AND G.P. @ 4.68% OF RS.2,51,490/-. THE LD. A.O. OBSERVING THAT THE ASSESSEE HAD NOT DI SCLOSED SALES OF RS.81,55,443/- FOUND IN THE BANK ACCOUNT MAINTAINED WITH AXIS BANK AND HAD ONLY DISCLOSED THE SALES AS PER BANK ACCOUNT WITH S.B.I., TOOK THE TOT AL SALES AT THE FIGURE OF RS. 1,35,22,943/- AND COMPUTED THE PROFIT @4.68% AT RS. 6,32,874/-, RESULTING IN ADDITION TO THE INCOME OF RS.3,81,383/-. ON THE BAS IS OF THE SAID AXIS BANK ACCOUNT, THE A.O. ALSO ADDED PEAK CREDITS IN APRIL, 2007 OF RS.18,02,087/- TO ARRIVE AT THE TOTAL INCOME OF RS.27,48,380/- VIDE O RDER U/S 143(3) DATED 23.12.2010. ON APPEAL, THE LD. C.I.T.(A) UPHELD THE ADDITION OF RS.3,81,383/-, BUT RESTRICTED THE ADDITION ON ACCOUNT OF PEAK CREDITS TO RS.10,60,742/-. ON FURTHER APPEAL BY THE ASSESSEE, THE HONBLE TRIBUNAL CONSID ERING THE SUBMISSION MADE BY THE ASSESSEE WITH RELEVANT DOCUMENTS DELETED THE AD DITION OF RS.3,81,383/- BY HOLDING THAT THE SALES OF RS.81,55,443/- FOUND RECO RDED IN THE C.C. ACCOUNT WITH AXIS BANK ACCOUNT SHOULD NOT BE CONSIDERED IN THE I NDIVIDUAL HANDS OF THE APPELLANT AND IF LAW PERMITS, THE SAME SHOULD BE CO NSIDERED IN THE HANDS OF THE PARTNERSHIP FIRM. SIMILAR WAS THE DIRECTION OF THE HONBLE TRIBUNAL IN RESPECT OF ADDITION OF PEAK CREDIT OFRS. 10,60,742/-. M/S JABIBUR RAHAMAN ITA NO.1171/KOL/2018 ASSESSMENT YEAR:2008-09 PAGE | 5 2.THEREAFTER, IN VIEW OF THE SAID OBSERVATION/FINDI NG OF THE HONBLE TRIBUNAL, THE A.O. INITIATED REASSESSMENT PROCEEDING IN THE CASE OF THE PARTNERSHIP FIRM M/S. JABIBUR RAHAMAN AND ISSUED NOTICE U/S.148 OF THE AC T ON THE FOLLOWING REASONS RECORDED: ON EXAMINING THE RECORDS, IT IS SEEN THAT THE FIRM M/S. JABIBUR RAHAMAN HAVING PAN- AAHFJ0297P FILED RETURN OF INCOME THROUGH ONLI NE ON 31.03.2010 DISCLOSING TOTAL LOSS OF RS.4,900/-. THOUGH, THE TOTAL SALES FOR THE F.Y. 2007-08 HAS BEEN SHOWN FOR RS.81,55,443/- WHICH HAS CONFORM ITY WITH THE BANK TRANSACTION IN QUESTION IN THE INDIVIDUAL JABIBUR R AHAMAN CASE, THERE IS EVERY POSSIBILITY OF ESCAPEMENT OF INCOME. BOOKS OF ACCOUNT AND OTHER RELEVANT PAPERS SHOULD BE THOROUGHLY VERIFIED IN ORDER TO IDENTIFY SUCH ESCAPEMENT. AS SUCH, I HAVE REASON TO BELIEVE THAT IT IS A FIT CASE TO ISS UE NOTICE U/S.148 FOR THE INTEREST OF REVENUE. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE-FIRM F ILED RETURN ON 12.12.2014 SHOWING THE INCOME DECLARED IN THE ORIGINAL ROI FIL ED ON 31.03.2010. NOTICES U/S. 143(2) AND 142(1) OF THE ACT WERE ALSO SERVED ON TH E ASSESSEE IN RESPONSE TO WHICH THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED BEFORE THE A.O. AND FILED ALL THE REQUISITE DETAILS AS CALLED FOR AND D ULY ACKNOWLEDGED IN THE IMPUGNED ASSESSMENT ORDER. AFTER HEARING THE A.R. OF THE ASS ESSEE ON SEVERAL DATES AND VERIFYING THE DOCUMENTS REQUISITIONED AND AVAILABLE ON RECORDS, THE LD. A.O. FOUND THAT THE BANK ACCOUNT WITH AXIS BANK WAS DULY REFLECTED IN THE HANDS OF THE PARTNERSHIP-FIRM. HE FURTHER OBSERVED THAT THE TRAN SACTION OF RS.81,55,443/-, WHICH WAS CONSIDERED IN THE HANDS OF INDIVIDUAL (JA BIBUR RAHAMAN) WAS REFLECTED IN THE AUDITED ACCOUNTS OF THE FIRM AND WAS ALSO PA RT OF ROI. FINDING NO INGENUINE AND ANY SUSPICIOUS TRANSACTION IN IT, THE LD. A.O. ACCEPTED THE G.P. SHOWN IN THE CASE OF THE FIRM AT 0.96% AND NET LOSS OF RS.4,900/-. 3.THE PRESENT SUBMISSION IS BEING MADE BY THE ASSES SEE IN RESPONSE TO THE SHOW CAUSE NOTICE DATED 17.01.2018 ISSUED BY YOUR GOODSE LF U/S 263 OF THE ACT, ALLEGING THAT THE ASSESSMENT ORDER PASSED IN THE CASE OF THE ASSESSEE-FIRM U/S 147/143(3) DATED 27.01.2016 BY THE LD. AO FOR A.Y. 2008-09 WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS THE REVENUE. AS PER PROVISIONS OF SEC. 263 OF THE ACT, THE LD. COMMISSIONER HAS TO BE /SATISFIED OF THE FOLLOWING TWIN CONDITIONS IN ORDER TO EXERCISE HIS POWERS OF REVISION: (I).THE ORDER OF THE ASSESSING OFFICER SOUGHT TO B E REVISED, IS ERRONEOUS ;AND (II).THE ORDER OF THE ASSESSING OFFICER SOUGHT TO B E REVISED, IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THEREFORE, RECOURSE TO SEC. 263 OF THE ACT CANNOT B E TAKEN IF EITHER OF THE ABOVE TWO CONDITIONS ARE NOT SATISFIED, I.E. IF THE IMPUGNED ASSESSMENT ORDER IS ERRONEOUS BUT NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE; OR IF T HE IMPUGNED ASSESSMENT ORDER IS PREJUDICIAL TO THE INTEREST OF THE REVENUE BUT NOT ERRONEOUS. HAVING STATED THE ABOVE, THE ASSESSEE WOULD LIKE TO SUBMIT THAT VIDE FINANCE ACT, 2015 EXPLANATION 2 WAS INSERTED TO SEC. 263 OF THE ACT W.E.F. 01-06-2 015, WHICH READS AS FOLLOWS: EXPLANATION 2.- FOR THE PURPOSES OF THIS SECTION, I T IS HEREBY DECLARED THAT AN ORDER PASSED BY THE AO SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, IF, IN THE OPINION OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER, A) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VER IFICATION WHICH SHOULD HAVE BEEN MADE; B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQ UIRING INTO THE CLAIM; C) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH ANY ORDER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119; D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WITH AN Y DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE, RENDERED BY THE JURISD ICTIONAL HIGH COURT OR M/S JABIBUR RAHAMAN ITA NO.1171/KOL/2018 ASSESSMENT YEAR:2008-09 PAGE | 6 SUPREME COURT IN THE CASE OF THE ASSESSEE OR ANY OT HER PERSON. FROM A BARE READING OF THE ABOVE IT STANDS CLEAR TH AT IF AN ASSESSMENT ORDER IS PASSED IN NON-COMPLIANCE TO ANY OF THE AFOREMENTION ED CLAUSES OF EXPLANATION 2 TO SEC.263(L) OF THE ACT, THE ASSESSMENT ORDER SO P ASSED BY THE LD. AO SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICI AL TO THE INTERESTS OF THE REVENUE. IN LIGHT OF THE ABOVE, THE ASSESSEE WOULD LIKE TO S UBMIT THAT YOUR GOODSELF HAS ISSUED THE IMPUGNED SHOW CAUSE NOTICE DATED 17/01/2 018 IN THIS CASE, SEEKING TO INVOKE THE POWERS OF REVISION U/S 263(1) OF THE ACT ON THE FOLLOWING ALLEGED GROUNDS: A) THAT, IN THE CASE OF JABIBURRAHAMAN (INDIVIDUAL), G .P. WAS SHOWN AND ACCEPTED AT 4.68%, BUT IN THE CASE OF THE ASSESSEE- FIRM G.P. RATE DECLARED WAS ONLY 0.96%. PRIMA FACIE, G.P. OF AT LEAST 4.68% SHOULD HAVE BEEN APPLIED FOR ARRIVING AT THE NET PROFIT OF THE PARTN ERSHIP-FIRM. THAT NOT BEING DONE, THE A.O. PASSED THE REASSESSMENT ORDER U/S.147/143(3) WITHOUT MAKING ENQUIRIES OR VERIFICATION WITH REGAR D TO THE CORRECTNESS OF THE PURCHASES AND SALES, AS CLAIMED BY THE FIRM. B) THAT, IN REGARD TO ADDITION OF PEAK CREDIT OF RS. 1 0,60,742/- IN THE BANK ACCOUNT WITH AXIS BANK SUSTAINED BY THE CIT(A), THE HONBLE TRIBUNAL DIRECTED THE A.O. TO TAKE ACTION IN THE CASE OF THE FIRM, IF ANY, AS PER LAW. THIS ISSUE HAS NOT AT ALL BEEN ENQUIRED INTO/ EXAMI NED BY THE A.O. HENCE THE ORDER PASSED BY THE A.O. WAS ERRONEOUS IN SO FA R AS IT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 5. HAVING SUBMITTED THE ABOVE AND WITHOUT PREJUDICE TO THE SAME, THE ASSESSEE WOULD LIKE TO SUBMIT THE FOLLOWING: 5.1. AT THE OUTSET IT IS SUBMITTED THAT THE IMPUGNE D ASSESSMENT PROCEEDING WAS A REASSESSMENT PROCEEDING U/S 147/143(3) OF THE ACT. YOUR GOODSELF HAS ASSUMED THAT THE REASSESSMENT ORDER IN THE CASE OF THE PART NERSHIP FIRM, PASSED ON THE OBSERVATION/FINDING OF HONBLE TRIBUNAL IN THE CASE OF SRI JABIBUR RAHAMAN (INDIVIDUAL), ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF THE REVENUE ON THE ALLEGED GROUND THAT G.P. SHOWN AT 4.68% ON SALES MA DE IN INDIVIDUAL CAPACITY SHOULD HAVE BEEN CONSIDERED FOR G.P. IN THE CASE OF THE FIRM ALSO. AS PER AUDITED TRADING AND PROFIT & LOSS A/C. FOR THE YEAR ENDED O N 31.03.2008, SALES WERE TO THE TUNE OF RS.81,55,443/- AS AGAINST PURCHASE OF R S.78,68,555/- AND CONSIDERING CLOSING STOCK AND OTHER CHARGES, G.P. STOOD AT RS. 78,410/-. THEREAFTER ADJUSTING BUSINESS EXPENDITURE UNDER VARIOUS HEADS, NET LOSS STOOD AT RS.4,897/-. AS STATED ABOVE THERE IS NO DISPUTE TO THE FACT THAT THE ASSE SSEE PARTNERSHIP FIRM CAME INTO EXISTENCE W.E.F. 23.03.2007 VIDE PARTNERSHIP DEED D ATED 30.03.2007. THEREFORE, THE FIRM STARTED FUNCTIONING FROM F.Y. 2007-08 RELE VANT TO IMPUGNED A,Y. 2008- 09. THEREFORE, COMPARISON OF RATE OF G.P. OF THE IN DIVIDUAL BUSINESS OF SRI JABIBUR RAHMAN WITH THAT OF THE PARTNERSHIP FIRM IS PREMATU RE, INASMUCH AS INDIVIDUAL BUSINESS HAS BEEN CARRYING ON SINCE LONG PAST AND G OODWILL/REPUTATION IN THE MARKET IS SETTLED. FURTHERMORE, THERE WAS NO DISPUT E ABOUT RECORDING THE PURCHASES, SALES AND OTHER INCIDENTAL EXPENSES IN T HE BOOKS OF ACCOUNT ANDRELEVANT BANK ACCOUNT. ITS ACCOUNTS ARE DULY AUD ITED U/S.44AB OF THE ACT. INRESPONSE TO NOTICES U/S. 143(2) AND 142(1) OF THE ACT AND ON VERBAL QUERIES DURING THE ASSESSMENT PROCEEDING, ALL THE REQUIRED DETAILS/EVIDENCES WERE FILED AND THE A.R. OF THE ASSESSEE ALSO EXPLAINED THE REA SON, AS STATED ABOVE, FOR LOW YIELD OF G.P., WHICH HAS BEEN DULY ACKNOWLEDGED IN THE ASSESSMENT ORDER STATING THAT SHRI S.N. ROY, A/R OF THE ASSESSEE FIRM APPEA RED FROM TIME TO TIME WITH BOOKS OF A/CS AND OTHER RELEVANT DOCUMENTS AND EXPL AINED THE RETURN OF INCOME. THE BOOKS OF A/CS HAVE DULY BEEN TEST CHECKED AND V ERIFIED FROM TIME TO TIME. M/S JABIBUR RAHAMAN ITA NO.1171/KOL/2018 ASSESSMENT YEAR:2008-09 PAGE | 7 THEREFORE, AFTER CONDUCTING ENQUIRIES AND INVESTIGA TIONS, AS WARRANTED FOR THE IMPUGNED ASSESSMENT PROCEEDING AND DEEMED FIT AND A FTER BEING SATISFIED WITH THE REPLIES OF THE QUERIES VIS-A-VIS LOW G.P. AND VERIF YING THE AUDITED BOOKS OF ACCOUNT, BANK STATEMENT AND OTHER RELEVANT DETAILS, THE LD. A.O. ASSESSED THE LOSS OF THE ASSESSEE-FIRM AT RS.4,900/- VIDE THE IMPUGNE D ORDER U/S. 147/143(3) OF THE ACT DATED 27.01.2016. 5.2 THE SECOND POINT IN THE IMPUGNED NOTICE U/S.263 WAS TO THE DIRECTION THAT ADDITION OF PEAK CREDIT OF RS.10,60,742/- ON THE BA SIS OF THE BANK ACCOUNT HAS NOT BEEN CONSIDERED IN THE IMPUGNED REASSESSMENT ORDER. AS STATED ABOVE, THE SAID PEAK CREDIT WAS ASSUMED ON THE BASIS OF DEPOSITS IN APRIL,2007 IN AXIS BANK MAINTAINED BY THE ASSESSEE-FIRM. IT IS PERTINENT TO NOTE THAT THE SAID PEAK CREDIT WAS ORIGINALLY ADDED IN THE INDIVIDUAL ASSESSMENT O F SRI JABIBUR RAHAMAN FOR THE IMPUGNED ASSESSMENT YEAR SOLELY ON THE GROUND THAT THE BANK ACCOUNT WITH AXIS BANK HAD NOT BEEN DISCLOSED IN HIS ROI. THE HONBLE TRIBUNAL ON THE BASIS OF THE FINDING THAT THE SAME WAS NOT RELATED TO THE INDIVI DUAL BUT BELONGED TO THE PARTNERSHIP FIRM, IN WHICH THE SAID INDIVIDUAL IS A PARTNER, DELETED THE ADDITION AND THE SAME WAS DIRECTED TO BE CONSIDERED IN THE C ASE OF THE ASSESSMENT OF THE PARTNERSHIP FIRM. FROM THE ABOVE FACTS IT IS THUS E VIDENT THAT THE ADDITION OF PEAK CREDIT IN THE GUISE OF UNDISCLOSED INCOME WAS MADE FOR NOT DISCLOSING THE AXIS BANK ACCOUNT IN THE ROI, BUT WHEN THE SAID BANK ACC OUNT ADMITTEDLY STOOD DECLARED IN THE ROI OF THE PARTNERSHIP FIRM FOR THE IMPUGNED ASSESSMENT YEAR AND ACCOUNTED FOR IN THE AUDITED BOOKS OF ACCOUNT, THE ADDITION ON THE BASIS OF EARLIER STAND OF UNDISCLOSED INCOME DOES NOT SURVIVE ON FAC TS AND IN LAW. MOREOVER, THE LD. A.O. DURING REASSESSMENT PROCEEDING HAS THOROUG HLY VERIFIED THE DEPOSITS AND WITHDRAWALS FOUND IN THE STATEMENT OF AXIS BANK FOR THE RELEVANT PERIOD AND FOUND ALL THE TRANSACTIONS IN THE BANK RECORDED IN THE BO OKS AND THUS RIGHTLY DID NOT MAKE ANY ADDITION. 6. HOWEVER, THE LD. PCIT REJECTED THE CONTENTION OF THE ASSESSEE AND HELD THAT THE ASSESSMENT ORDER U/S. 147/143(3) DATED 27/01/2016 F OR THE ASSESSMENT YEAR 2008- 09 IS CONSIDERED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD PCIT, THEREFORE DIRECTED THE AO TO EXAMINE AND VERIFY THE ISSUE RELATING TO THE LOW G.P DISCLOSED BY THE ASSESSEE A ND TO EXAMINE THE ISSUE RELATING TO THE ADDITION ON ACCOUNT OF PEAK CREDIT IN RESPE CT OF THE DEPOSIT MADE IN THE AXIS BANK ACCOUNT OF THE ASSESSEE. 7. AGGRIEVED BY THE ORDER OF LD PCIT UNDER SECTION 263 OF THE ACT, THE ASSESSEE IS IN APPEAL BEFORE US. 8. SHRI S.K. TULSIYAN, THE LD. COUNSEL FOR THE ASSE SSEE, BEGINS BY POINTING OUT THAT THE VERY BASIS FOR ISSUANCE OF NOTICE U/S 263 IS NO T IN ACCORDANCE WITH LAW.THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 143(2 ) OF THE ACT AND NOTICE UNDER M/S JABIBUR RAHAMAN ITA NO.1171/KOL/2018 ASSESSMENT YEAR:2008-09 PAGE | 8 SECTION 142(1) OF THE ACT AND ASKED THE ASSESSEE TO SUBMIT DETAILS AND DOCUMENTS. THE ASSESSEE, IN RESPONSE TO NOTICE U/S 142(1) OF T HE ACT, HAS SUBMITTED ENTIRE DETAILS, EVIDENCES AND DOCUMENTS BEFORE THE ASSESSI NG OFFICER. THE LD. COUNSEL ALSO STATED BEFORE THE BENCH THAT THE REQUIRED DOCU MENTS AND EVIDENCES AS MENTIONED IN THE REASONS RECORDED U/S 147 OF THE AC T WERE ALSO SUBMITTED BEFORE THE ASSESSING OFFICER. THEREAFTER, LD. COUNSEL TOOK US THROUGH THE RELEVANT PARA OF THE REASSESSMENT ORDER PASSED BY THE AO UNDER SECTI ON 147/143(3) OF THE ACT, WHICH IS REPRODUCED BELOW, ( TO THE EXTENT RELEVANT FOR OUR DISCUSSION): THE ASSESSEE FIRM IN ITS LETTER DATED 12.12.2014, STATED THAT THE RETURN FILED VIDE ACK NO. 121237450310310 DATED 31.03.2010, MAY BE TREATE D AS RETURN OF INCOME IN COMPLIANCE TO NOTICE U/S 148 OF THE IT ACT, 1961. A CCORDINGLY, A NOTICE U/S 143(2) OF THE IT ACT, 1961 WAS DULY SERVED ON THE ASSESSEE FI RM. SUBSEQUENTLY, A NOTICE U/S 142(1)OF THEIT ACT, 1961 DATED 26.06.2015 WAS DULY SERVED ON THE ASSESSEE FIRM ON 13.07.2015. SHRI S.N. ROY, A/R OF THE ASSESSEE FIRM APPEARED FR OM TIME TO TIME WITH BOOKS OF A/C AND OTHER RELEVANT DOCUMENTS AND EXPLAINED THE RETU RN OF INCOME. THE BOOKS OF A/CS HAVE DULY BEEN TEST CHECKED AND VERIFIED FROM TIME TO TIME. ON PERUSAL OF THE BOOKS OF A/CS, BALANCE SHEET AS W ELL AS BANK STATEMENT OF A/C NO. 163010100102292, AXIS BANK, BERHAMPORE BRANCH IS RE FLECTED IN THE HAND OF THE FIRM. IT WAS ALSO NOTICED THAT THE TRANSACTION OF RS. 81, 55,443/- WHICH WAS CONSIDERED IN THE HAND OF JABIBUR RAHAMAN, INDIVIDUAL IS REFLECTED IN THE A/CS OF THE FIRM M/S JABIBUR RAHAMAN. THE CASE WAS DISCUSSED WITH THE A/R OF THE ASSESSEE IN DETAILS AND HEARD TO HIM. ON THE BASIS OF THE ABOVE DISCUSSION AND HEARINGS A SSESSED AT A LOSS OF RS. 4,900/- ALLOWING NO OPPORTUNITY TO CARRY FORWARD AND SET OF F OF LOSS AS THE RETURN OF INCOME FILED AFTER DUE DATE. HAVING GONE THROUGH THE FINDINGS OF THE ASSESSING O FFICER, AS NOTED ABOVE, THE LD. COUNSEL SUBMITTED BEFORE US THAT DURING THE REASSES SMENT PROCEEDINGS, THE ASSESSEE FIRM APPEARED FROM TIME TO TIME WITH BOOKS OF ACCOUNTS AND OTHER RELEVANT DOCUMENTS AND EXPLAINED THE RETURN OF INCO ME. THE BOOKS OF ACCOUNTS HAVE DULY BEEN EXAMINED AND VERIFIED BY AO DURING T HE ASSESSMENT PROCEEDINGS. THE LD. COUNSEL SUBMITTED THAT THE BANK STATEMENT O F(A/C NO. 163010100102292), AXIS BANK, BERHAMPORE BRANCH IS GETTING REFLECTED I N THE BOOKS OF ACCOUNTS OF ASSESSEE`S PARTNERSHIP FIRM. THE LD. COUNSEL ALSO S UBMITTED THAT THE TRANSACTION OF RS.81,55,443/- WHICH WAS CONSIDERED IN THE HAND OF JABIBUR RAHAMAN INDIVIDUAL M/S JABIBUR RAHAMAN ITA NO.1171/KOL/2018 ASSESSMENT YEAR:2008-09 PAGE | 9 IS REFLECTED IN THE ACCOUNTS OF THE FIRM M/S JABIBU R RAHAMAN. THEREFORE, THE ASSESSEE HAS SUBMITTED EVERY KIND OF DETAILS ASKED BY THE ASSESSING OFFICER IN RESPECT OF ASSESSEE FIRM AND THE ASSESSING OFFICER HAVING EXAMINED EACH AND EVERY ASPECT PASSED THE REASSESSMENT ORDER U/S 147 / 143(3) OF THE ACT. THEREFORE, THE ORDER PASSED BY THE ASSESSING OFFICER IS NEITHE R ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. 9. ON THE OTHER HAND, LD. DR FOR THE REVENUE HAS PR IMARILY REITERATED THE STAND TAKEN BY THE LD. PCIT WHICH WE HAVE ALREADY NOTED I N OUR EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 10. WE HEARD BOTH THE PARTIES AND CAREFULLY GONE TH ROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLU DING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIAL AVAILABLE ON RECORD. FIRS T OF ALL, WE HAVE TO SEE WHETHER THE REQUISITE JURISDICTION NECESSARY TO ASSUME REVI SIONAL JURISDICTION IS THERE EXISTING BEFORE THE LD. PCIT TO EXERCISE HIS POWER. FOR THAT, WE HAVE TO EXAMINE AS TO WHETHER IN THE FIRST PLACE THE ORDER OF THE A SSESSING OFFICER FOUND FAULT BY THE PRINCIPAL CIT IS ERRONEOUS AS WELL AS PREJUDICIAL T O THE INTEREST OF THE REVENUE. FOR THAT, LET US TAKE THE GUIDANCE OF JUDICIAL PRECEDEN T LAID DOWN BY THE HONBLE APEX COURT IN MALABAR INDUSTRIES LTD. VS. CIT [2000] 243 ITR 83(SC) WHEREIN THEIR LORDSHIP HAVE HELD THAT TWIN CONDITIONS NEEDS TO BE SATISFIED BEFORE EXERCISING REVISIONAL JURISDICTION U/S 263 OF THE ACT BY THE C IT. THE TWIN CONDITIONS ARE THAT THE ORDER OF THE ASSESSING OFFICER MUST BE ERRONEOU S AND SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE FOLLOWING CIRCU MSTANCES, THE ORDER OF THE AO CAN BE HELD TO BE ERRONEOUS ORDER, THAT IS (I) IF T HE ASSESSING OFFICERS ORDER WAS PASSED ON INCORRECT ASSUMPTION OF FACT; OR (II) INC ORRECT APPLICATION OF LAW; OR (III)ASSESSING OFFICERS ORDER IS IN VIOLATION OF T HE PRINCIPLE OF NATURAL JUSTICE; OR (IV) IF THE ORDER IS PASSED BY THE ASSESSING OFFICE R WITHOUT APPLICATION OF MIND; (V) IF THE AO HAS NOT INVESTIGATED THE ISSUE BEFORE HIM ; THEN THE ORDER PASSED BY THE ASSESSING OFFICER CAN BE TERMED AS ERRONEOUS ORDER. COMING NEXT TO THE SECOND LIMB, WHICH IS REQUIRED TO BE EXAMINED AS TO WHETHE R THE ACTIONS OF THE AO CAN BE TERMED AS PREJUDICIAL TO THE INTEREST OF REVENUE. W HEN THIS ASPECT IS EXAMINED ONE M/S JABIBUR RAHAMAN ITA NO.1171/KOL/2018 ASSESSMENT YEAR:2008-09 PAGE | 10 HAS TO UNDERSTAND WHAT IS PREJUDICIAL TO THE INTERE ST OF THE REVENUE. THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIES (SU PRA) HELD THAT THIS PHRASE I.E. PREJUDICIAL TO THE INTEREST OF THE REVENUE HAS T O BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. TH EIR LORDSHIP HELD THAT IT HAS TO BE REMEMBERED THAT EVERY LOSS OF REVENUE AS A CONSE QUENCE OF AN ORDER OF ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. WHEN THE ASSESSING OFFICER ADOPTED ONE OF THE COURS ES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS TO THE REVENUE, OR WHERE TWO V IEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF THE REVENUE UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAI NABLE IN LAW. 11.TAKING NOTE OF THE AFORESAID DICTUM OF LAW LAID DOWN BY THE HONBLE APEX COURT, LET US EXAMINE WHETHER ORDER PASSED BY THE A SSESSING OFFICER UNDER SECTION 147/143(3),OF THE ACT, DATED 27/01/2016 IS ERRONEO US AND PREJUDICIAL TO THE INTEREST OF REVENUE. MR. JABIBUR RAHAMAN RUNS TWO I DENTICAL BUSINESSES, FIRST IN THE NAME AND STYLE OF JABIBUR RAHAMAN-INDIVIDUAL AN D SECOND IN THE NAME AND STYLE OF M/S JABIBUR RAHAMAN-PARTNERSHIP FIRM. THE LD PCIT EXERCISED HIS JURISDICTION UNDER SECTION 263 OF THE ACT IN THE CA SE OF M/S JABIBUR RAHAMAN- PARTNERSHIP FIRM. THE ASSESSEE FIRM (M/S JABIBUR RA HAMAN-PARTNERSHIP FIRM), SUBMITTED BEFORE US FOLLOWING DOCUMENTS, EVIDENCE S AND DETAILS WHICH IS ENUMERATED BELOW AS FOLLOWS: (1)THE COPY OF PARTNERSHIP DEED DATED 30.03.2007 (V IDE PB-1 TO 6). (2)THE COPY OF INCOME TAX RETURN OF FIRM FOR A.Y. 2 008-09 (VIDE PB-7). (3)THE COPY OF AUDITED ACCOUNTS ALONG WITH TAX AUDI T REPORT, BALANCE SHEET, PROFIT AND LOSS ACCOUNT OF THE PARTNERSHIP FIRM FOR THE F. Y. 2007-08 RELEVANT TO A.Y. 2008-09 (VIDE PB-8 TO 23). (4)THE COPY OF NOTICES U/S 148, U/S 142(1) AND U/S 143(2) OF THE ACT ISSUED BY THE ASSESSING OFFICER DURING THE REASSESSMENT PROCEEDIN GS. (VIDE PB 24 TO 27). (5) COPY OF ORDER PASSED BY THE ASSESSING OFFICER I N CASE OF ASSESSEE FIRM( M/S JABIBUR RAHAMAN) U/S 147 / 143(3) FOR A.Y. 2008-09 (VIDE PB- 28 TO 29). (6) THE COPY OF BANK STATEMENT OF AXIS BANK A/C NO. 163010100102292 (VIDE PB 34 TO 38). M/S JABIBUR RAHAMAN ITA NO.1171/KOL/2018 ASSESSMENT YEAR:2008-09 PAGE | 11 DURING THE REASSESSMENT PROCEEDINGS, THESE DOCUMENT S, EVIDENCES AND DETAILS WERE SUBMITTED BY THE ASSESSEE FIRM BEFORE THE AO. THE A O EXAMINED THESE DOCUMENTS, AND EVIDENCES AND AFTER DOING DETAILED SCRUTINY, TH E AO FRAMED THE ASSESSMENT UNDER SECTION 147/143(3) OF THE ACT DATED 27.01.201 6. IT IS AN ADMITTED FACT THAT IN THIS CASE THE ASSESS EE(PARTNERSHIP FIRM) HAS COME INTO BEING IN THE PRECEDING PREVIOUS YEAR ON 30.03.2007 AND BALANCE SHEET AS ON 31.03.2008 SHOWS THAT THE CAPITAL IS BROUGHT FORWAR D FROM EARLIER ASSESSMENT YEARS OF RS. 50,000/- EACH BY EACH PARTNER (VIDE PB 22 BA LANCE SHEET OF FIRM). WE NOTE THAT THE ASSESSING OFFICER AFTER EXAMINATION OF BOO KS OF ACCOUNTS OF ASSESSEE FIRM (AUDITED ACCOUNTS ) HAS NOT DRAWN ANY ADVERSE INFER ENCE IN RESPECT OF TURNOVER OF PARTNERSHIP FIRM AS ON 31.03.2008, WHICH IS TO THE TUNE OF RS. 81,55,443/-, VIDE PROFIT AND LOSS ACCOUNT AS ON 31.03.2008 (PB-23). T HE ASSESSEE PARTNERSHIP FIRM HAS SHOWN GROSS PROFIT @ 0.96%, WHEREAS THE INDIVID UAL PROPRIETORSHIP BUSINESS IN THE NAME OF MR.JABIBURRAHAMAN HAS SHOWN GROSS PROFI T @ 4.68%. THEREFORE, THE LD. D.R. FOR THE REVENUE STATES BEFORE US THAT SINC E THE ASSESSEE PARTNERSHIP FIRM IS ALSO INTO THE SAME KIND OF BUSINESS AS THAT OF INDI VIDUAL, THEN THE GROSS PROFIT SHOWN BY THE INDIVIDUAL @ 4.68%, AT LEAST, SHOULD H AVE BEEN THE INCOME OF THE ASSESSEE`S PARTNERSHIP FIRM. THE LD DR POINTED OUT THAT SINCE AO HAS ACCEPTED THE GROSS PROFIT RATE @ 0.96% (INSTEAD OF 4.68%) IN CASE OF ASSESSEE, PARTNERSHIP FIRM THEREFORE, ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND HENCE THE LD PCIT HAS RIGHTLY EXERCI SED HIS JURISDICTION UNDER SECTION 263 OF THE ACT. HOWEVER, THE PLEA OF THE LD. D.R. CANNOT BE ACCEPTE D FOR THE SIMPLE REASON THAT THE GROSS PROFIT RATE @0.96% AND THE LOSS REFLECTED IN ASSESSEE FIRM ARE OUTCOME OF THE AUDITED BOOKS OF ACCOUNTS AND THE ASSESSING OFFICER HAVE GIVEN THE CLEAR FINDINGS THAT HE HAS EXAMINED EACH AND EVERY DETAIL OF THE A SSESSEE DURING THE REASSESSMENT PROCEEDINGS. THE FINDINGS OF THE ASSESSING OFFICER, ( TO THE EXTENT RELEVANT FOR OUR DISCUSSION) IS GIVEN BELOW: THE ASSESSEE FIRM IN ITS LETTER DATED 12.12.2014, STATED THAT THE RETURN FILED VIDE ACK NO. 121237450310310 DATED 31.03.2010, MAY BE TREATE D AS RETURN OF INCOME IN COMPLIANCE TO NOTICE U/S 148 OF THE IT ACT, 1961. A CCORDINGLY, A NOTICE U/S 143(2) OF M/S JABIBUR RAHAMAN ITA NO.1171/KOL/2018 ASSESSMENT YEAR:2008-09 PAGE | 12 THE IT ACT, 1961 WAS DULY SERVED ON THE ASSESSEE FI RM. SUBSEQUENTLY, A NOTICE U/S 142(1)OF THEIT ACT, 1961 DATED 26.06.2015 WAS DULY SERVED ON THE ASSESSEE FIRM ON 13.07.2015. SHRI S.N. ROY, A/R OF THE ASSESSEE FIRM APPEARED FR OM TIME TO TIME WITH BOOKS OF A/C AND OTHER RELEVANT DOCUMENTS AND EXPLAINED THE RETU RN OF INCOME. THE BOOKS OF A/CS HAVE DULY BEEN TEST CHECKED AND VERIFIED FROM TIME TO TIME. ON PERUSAL OF THE BOOKS OF A/CS, BALANCE SHEET AS W ELL AS BANK STATEMENT OF A/C NO. 163010100102292, AXIS BANK, BERHAMPORE BRANCH IS RE FLECTED IN THE HAND OF THE FIRM. IT WAS ALSO NOTICED THAT THE TRANSACTION OF RS. 81, 55,443/- WHICH WAS CONSIDERED IN THE HAND OF JABIBUR RAHAMAN, INDIVIDUAL IS REFLECTED IN THE A/CS OF THE FIRM M/S JABIBUR RAHAMAN. THE CASE WAS DISCUSSED WITH THE A/R OF THE ASSESSEE IN DETAILS AND HEARD TO HIM. ON THE BASIS OF THE ABOVE DISCUSSION AND HEARI NGS ASSESSED AT A LOSS OF RS. 4,900/- ALLOWING NO OPPORTUNITY TO CARRY FORWARD AND SET OF F OF LOSS AS THE RETURN OF INCOME FILED AFTER DUE DATE. WE NOTE THAT THE ASSESSEE FIRM IS SHOWING LOSS WHIC H HAS BEEN ACCEPTED BY THE ASSESSING OFFICER IS A PLAUSIBLE VIEW AND THE ASSES SING OFFICERS ACTION CANNOT BE HELD TO BE ERRONEOUS. THE LD PCIT HAS NOT GIVEN A S PECIFIC FINDING THAT WHY THE LOSS SHOWN BY THE ASSESSEE FIRM IS NOT ACCEPTABLE. SO, WHEN THE ASSESSING OFFICER HAS MADE ENQUIRY AND HAS ACCEPTED THE LOSS SHOWN BY THE ASSESSEE FIRM, THEN THE LD. PCIT U/S 263 CAN INTERFERE ONLY IF HE IS ABLE T O GIVE A FINDING AFTER HE HAS HIMSELF ENQUIRED AND RECORDED A FINDING THAT ASSESS ING OFFICERS VIEW IS UNSUSTAINABLE IN LAW, WHICH IS NOT THE CASE HERE, T HEREFORE, WE NOTE THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS NOT ERRONEOUS. 10.WE NOTE THAT LD PCIT EXERCISED HIS JUDICATION UN DER SECTION 263 OF THE ACT MAINLY ON THE ALLEGED GROUND THAT G.P. SHOWN AT 4.6 8% ON SALES MADE IN INDIVIDUAL CAPACITY SHOULD HAVE BEEN CONSIDERED FOR G.P. IN THE CASE OF THE PARTNERSHIP FIRM (ASSESSEE UNDER CONSIDERATION). WE NOTE THAT AS PER AUDITED TRADING AND PROFIT & LOSS ACCOUNT FOR THE YEAR ENDE D ON 31.03.2008, SALES WERE TO THE TUNE OF RS.81,55,443/- AS AGAINST PURCHASE OF R S.78,68,555/- AND CONSIDERING CLOSING STOCK AND OTHER CHARGES, G.P. STOOD AT RS. 78,410/-. THEREAFTER ADJUSTING BUSINESS EXPENDITURE UNDER VARIOUS HEADS, NET LOSS STOOD AT RS.4,897/-. AS STATED ABOVE THERE IS NO DISPUTE TO THE FACT THAT THE ASSE SSEE PARTNERSHIP FIRM CAME INTO EXISTENCE W.E.F. 23.03.2007 VIDE PARTNERSHIP DEED D ATED 30.03.2007. THEREFORE, THE FIRM STARTED FUNCTIONING FROM F.Y. 2007-08 RELE VANT TO IMPUGNED A.Y. 2008- 09. THEREFORE, COMPARISON OF RATE OF G.P. OF THE IN DIVIDUAL BUSINESS OF SRI JABIBUR M/S JABIBUR RAHAMAN ITA NO.1171/KOL/2018 ASSESSMENT YEAR:2008-09 PAGE | 13 RAHMAN WITH THAT OF THE PARTNERSHIP FIRM IS PREMATU RE, INASMUCH AS INDIVIDUAL BUSINESS HAS BEEN CARRYING ON SINCE LONG PAST AND G OODWILL/REPUTATION IN THE MARKET IS SETTLED. FURTHERMORE, THERE WAS NO DISPUT E ABOUT RECORDING THE PURCHASES, SALES AND OTHER INCIDENTAL EXPENSES IN THE BOOKS OF ACCOUNT AND RELEVANT BANK ACCOUNT. BOOKS OF ACCOUNTS OF PARTNERSHIP FIRM (AS SESSEE) ARE DULY AUDITED U/S.44AB OF THE ACT. IN RESPONSE TO NOTICES U/S. 14 3(2) AND 142(1) OF THE ACT AND ON VERBAL QUERIES DURING THE ASSESSMENT PROCEEDING, ALL THE REQUIRED DETAILS/EVIDENCES WERE FILED AND THE ASSESSEE ALSO EXPLAINED THE REASON, AS STATED ABOVE, FOR LOW YIELD OF G.P., WHICH HAS BEEN DULY A CKNOWLEDGED IN THE ASSESSMENT ORDER STATING THAT SHRI S.N. ROY, A/R OF THE ASSESSEE FIRM APPEARED F ROM TIME TO TIME WITH BOOKS OF A/CS AND OTHER RELEVANT DOCUMENT S AND EXPLAINED THE RETURN OF INCOME. THE BOOKS OF A/CS HAVE DULY BEEN TEST CHECK ED AND VERIFIED FROM TIME TO TIME. THEREFORE, AFTER CONDUCTING ENQUIRIES AND INVESTIG ATIONS, AS WARRANTED FOR THE IMPUGNED ASSESSMENT PROCEEDING AND DEEMED FIT A ND AFTER BEING SATISFIED WITH THE REPLIES OF THE QUERIES VIS-A-VIS LOW G.P. AND V ERIFYING THE AUDITED BOOKS OF ACCOUNT, BANK STATEMENT AND OTHER RELEVANT DETAILS, THE LD. A.O. ASSESSED THE LOSS OF THE ASSESSEE-FIRM AT RS.4,900/- VIDE THE IMPUGNE D ORDER U/S. 147/143(3) OF THE ACT DATED 27.01.2016.HENCE, AFTER THOROUGH EXAMINAT IONS OF THE DETAILS AND DOCUMENTS AND EXPLANATIONS SUBMITTED BY THE LD. A.R . OF THE ASSESSEE AS PER REQUISITIONS SOUGHT BY THE A.O. U/S 142(1) AND AS D EEMED FIT FOR COMPUTING THE TRUE TAXABLE INCOME, THE ASSESSMENT WAS COMPLETED U /S. 147/143(3) OF THE ACT ON 27.01.2016. THEREFORE, WE ARE OF THE VIEW THAT AO H AS EXAMINED ALL THE NECESSARY EVIDENCES, AND DOCUMENTS AND REACHED ON A LOGICAL C ONCLUSION. THEREFORE, IT IS NOT A CASE OF INADEQUATE SCRUTINY, FOR THAT WE RELY ON THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SUNBEAM AUTO LTD. (2011) 332 ITR 167 (DEL), WHEREIN IT WAS HELD THAT: 'IF THERE WAS ANY INQUIRY, EVEN INADEQUATE THAT WOU LD NOT BY ITSELF GIVE OCCASION TO THE COMMISSIONER TO PASS ORDERS UNDER S ECTION 263 OF THE INCOME-TAX ACT, 1961, MERELY BECAUSE HE HAS A DIFFE RENT OPINION IN THE MATTER. IT IS ONLY IN CASES OF LACK OF INQUIRY THAT SUCH A COURSE OF ACTION WOULD BE OPEN.' 11. WE NOTE THAT THE OBJECTIVE OF SCRUTINY ASSESSME NT U/S 143(3)AND/OR REASSESSMENT U/S 147 OF THE ACT IS TO CONFIRM THAT THE TAXPAYER HAS NOT UNDERSTATED M/S JABIBUR RAHAMAN ITA NO.1171/KOL/2018 ASSESSMENT YEAR:2008-09 PAGE | 14 THE INCOME OR HAS NOT COMPUTED EXCESSIVE LOSS OR HA S NOT UNDERPAID THE TAX IN ANY MANNER. TO CONFIRM THE ABOVE, THE A.O. CARRIED OUT A DETAILED SCRUTINY OF THE RETURN OF INCOME, AS DEEMED FIT, AND SATISFIED HIMS ELF REGARDING VARIOUS CLAIMS, DEDUCTIONS ETC. MADE BY THE ASSESSEE IN THE RETURN OF INCOME. THEREFORE, THE EXERCISE WAS AIMED AT ASCERTAINING WHETHER THE INCO ME IN THE RETURN WAS CORRECTLY SHOWN AND WHETHER THE CLAIMS FOR DEDUCTIONS ETC. WE RE FACTUALLY AND LEGALLY CORRECT. AS A MATTER OF FACT, TO REITERATE, THE LD. A.O. AFTER HAVING CALLED FOR SEVERAL DETAILS, INFORMATION AND EVIDENCES AS DEEMED FIT FO R THE IMPUGNED ASSESSMENT AND AFTER HEARING THE ASSESSEE ON SEVERAL DATES WAS SAT ISFIED ABOUT THE CORRECTNESS OR OTHERWISE OF THE RETURN OF INCOME FILED BY THE ASSE SSEE. THEREFORE, THE EXERCISE AIMED AT ASCERTAINING THE CORRECT INCOME OF THE ASS ESSEE HAS BEEN FULFILLED BY THE LD. A.O. BY EXERCISING HIS QUASI-JUDICIAL FUNCTIONS VIS--VIS PASSING THE IMPUGNED ASSESSMENT ORDER U/S 147 / 143(3) OF THE ACT. THAT BEING SO, CERTAINLY IT IS NOT A CASE WHEREIN ADEQUATE ENQUIRIES WITH RESPECT TO VAR IOUS CLAIMS AND VERIFICATION OF THE AUDITED BOOKS OF ACCOUNT AT THE ASSESSMENT STAG E WERE NOT CARRIED OUT BY AO. SECTION 142(1) SPEAKS OF ENQUIRY BEFORE ASSESSMENT AND GIVES IMMENSE POWER TO THE A.O. FOR CONDUCTING ENQUIRY. THEREFORE, THE A.O . U/S 142(L)(II) & (III) CAN ASK THE ASSESSEE ALMOST ANY INFORMATION WHICH HE THINKS NECESSARY FOR PASSING ASSESSMENT AND INFORMATION CAN BE ASKED IN A PROFOR MA AND QUESTIONNAIRE. FURTHER, AS PER SEC. 142(1) & (2) OF THE ACT, IT IS WITHIN T HE PROVINCE OF THE LD. A.O. TO DECIDE WHICH POINTS HE WANTS TO TAKE UP FOR ENQUIRY AND TO WHAT EXTENT AND, AS SUCH, THE LD. PCIT CANNOT INTERFERE WITH THE SAME A ND EVEN, IF LD. PCIT DOES NOT AGREE WITH THE RESULTS OF ENQUIRIES, THE RESULTANT ORDER CANNOT BE SUBJECTED TO REVISION PROCEEDING. IT IS ALSO A SETTLED POSITION THAT WHAT IS AN OPINION FORMED AS A RESULT OF THESE ENQUIRIES AND VERIFICATION OF THE M ATERIALS IS SOMETHING WHICH IS IN EXCLUSIVE DOMAIN OF THE ASSESSING OFFICER, AND EVEN IF LD. COMMISSIONER DOES NOT AGREE WITH THE RESULTS OF SUCH ENQUIRIES, THE RESUL TANT ORDER CANNOT BE SUBJECTED TO REVISION PROCEEDINGS. FOR THIS WE RELY ON THE JUDGM ENT OF THE COORDINATE BENCH OFI.T.A.T., KOLKATA IN THE CASE OF SMT. JUTHIKA KAR VS. ITO, I.T.A. NO.1128/KOL/ 2009, DATED 16.5.2012WHEREIN IT HAS BEEN HELD AS UN DER :- 8 ............ . THE FINE POINT, HOWEVER, ONE MUST BEAR IN MIND IS T HE DISTINCTION BETWEEN ADEQUATE ENQUIRIES NOT HAVING BEEN CONDUCTED AND TH E RESULT OF SUCH ENQUIRIES NOT HAVING BEEN DEALT WITH BY WAY OF A SPEAKING ORDER O R NOT HAVING RESULTED IN THE CONCLUSION THAT COULD BE, IN THE WISDOM OF A PERSON OTHER THAN THE ASSESSING OFFICER, M/S JABIBUR RAHAMAN ITA NO.1171/KOL/2018 ASSESSMENT YEAR:2008-09 PAGE | 15 MORE APPROPRIATE. HERE IS A CASE IN WHICH SUFFICIEN T ENQUIRIES WERE CONDUCTED. AS LEARNED BROTHER HAS RIGHTLY NOTED, THE ASSESSING OF FICER CALLED FOR SPECIFIC DETAILS, CONFIRMATIONS AND EVEN COPIES OF BILLS. IT COULD NO T, THEREFORE, BE SAID THAT SUFFICIENT ENQUIRIES WERE NOT CONDUCTED. HOWEVER, WHAT IS OPIN ION FORMED AS A RESULT OF THESE ENQUIRIES IS SOMETHING WHICH IS IN EXCLUSIVE DOMAIN OF THE ASSESSING OFFICER, AND EVEN IF COMMISSIONER HAS SUCH RESULTS OFENQUIRIES, THE R ESULTANT ORDER CANNOT BE SUBJECTED TO REVISION PROCEEDINGS. THE CONCLUSIONS ARRIVED AT AS A RESULT OF ENQUIRIES CANNOT BE TINKERED WITH IN THE REVISION PROCEEDINGS. THE CONC LUSIONS BEING DRAWN UP AS A RESULT OF ENQUIRY IS A HIGHLY SUBJECTIVE EXERCISE AND AS T O WHAT IS APPROPRIATE CONCLUSION IS SOMETHING ON WHICH PERCEPTIONS VARY FROM PERSON TO PERSONS. THESE VARIATIONS IN THE PERCEPTIONS OF THE ASSESSING OFFICER VIS-A-VIS THAT OF THE COMMISSIONER, CANNOT RENDER AN ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 9. VIEWED IN THIS PERSPECTIVE, AND HAVING NOTED THA T THE COMMISSIONER HAS SUBJECTED THE ASSESSMENT ORDER MAINLY ON THE GROUND THAT THE ASSESSING OFFICER DID NOT REACH THE RIGHT CONCLUSIONS AS A RESULT OF HIS ENQUIRY, THE I MPUGNED REVISION ORDER IS INDEED UNSUSTAINABLE IN LAW. IT IS NOT A CASE IN WHICH ADE QUATE ENQUIRIES HAS NOT BEEN CARRIED OUT. 12. ON THE SAME FACTS WE ALSO RELY ON THE JUDGMENT OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF CHROMA BUSINESS LTD. V S. DCIT (2004) 82 TTJ 540 (CAL). FURTHER OUR VIEW IS FORTIFIED BY THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. VIKAS POLYMERS (2012) 341 ITR 5 37 (DEL). RELEVANT PART OF THE OBSERVATION IN THIS REGARD READS AS UNDER: 'THIS IS FOR THE REASON THAT IF A QUERY IS RAISED D URING THE COURSE OF SCRUTINY BY THE ASSESSING OFFICER WHICH WAS ANSWERED TO THE SATISFA CTION OF THE ASSESSING OFFICER BUT NEITHER THE QUERY NOR THE ANSWER WAS REFLECTED IN THE ASSESSMENT ORDER THAT WOULD NOT BY ITSELF LEAD TO THE CONCLUSION THAT THE ORDER OF THE ASSESSING OFFICER CALLED FOR INTERFERENCE AND REVISION.' WE ARE OF THE VIEW THAT IT IS A SETTLED POSITION IN LAW THAT PROVISIONS OF SECTION 263 OF THE ACT DO NOT PERMIT SUBSTITUTING ONE OPINION B Y ANOTHER OPINION. THEREFORE, THE ORDER OF THE LD. PCIT CANNOT BE SUSTAINED ON TH E PRINCIPLE OF 'ERRONEOUS' NATURE OF THE ORDER OF THE A.O., AS IT IS NOT ERRONEOUS. F URTHER, IN THE INSTANT CASE, TO REITERATE, THERE WAS NO ALLEGATION BY THE LD. ASSES SING OFFICER THAT THE EVIDENCES PRODUCED WERE FICTITIOUS OR INVENTED, THUS ACCEPTED THE AUTHENTICITY OF THE SAME. SUCH AN ORDER CANNOT BE CALLED ERRONEOUS AND PREJUD ICIAL TO THE INTERESTS OF REVENUE. HENCE, WE ARE OF THE VIEW THAT REVISIONAR Y JURISDICTION EXERCISED BY THE LD. PCIT U/S. 263 OF THE ACT WAS NOT IN TUNE WITH T HE FACTS AND EVIDENCES ON RECORD DULY EXPLAINED TO THE A.O. AND VERIFIED BY H IM IN DETAIL, THAT BEING SO THE ORDER PASSED U/S. 263 OF THE ACT ON SUCH ERRONEOUS STAND IS LIABLE TO BE QUASHED. M/S JABIBUR RAHAMAN ITA NO.1171/KOL/2018 ASSESSMENT YEAR:2008-09 PAGE | 16 WE ACCORDINGLY QUASH THE ORDER U/S 263 OF THE ACT A ND ALLOW THE APPEAL OF THE ASSESSEE. 13. THE SECOND POINT IN THE IMPUGNED NOTICE U/S.263 WAS TO THE DIRECTION THAT ADDITION OF PEAK CREDIT OF RS.10,60,742/- ON THE BA SIS OF THE BANK ACCOUNT HAS NOT BEEN CONSIDERED IN THE IMPUGNED REASSESSMENT ORDER. AS STATED ABOVE, THE SAID PEAK CREDIT WAS ASSUMED ON THE BASIS OF DEPOSITS IN APRIL,2007 IN AXIS BANK MAINTAINED BY THE ASSESSEE-FIRM. IT IS PERTINENT TO NOTE THAT THE SAID PEAK CREDIT WAS ORIGINALLY ADDED IN THE INDIVIDUAL ASSESSMENT OF SR I JABIBUR RAHAMAN FOR THE IMPUGNED ASSESSMENT YEAR SOLELY ON THE GROUND THAT THE BANK ACCOUNT WITH AXIS BANK HAD NOT BEEN DISCLOSED IN HIS ROI. THE HONBLE TRIBUNAL ON THE BASIS OF THE FINDING THAT THE SAME WAS NOT RELATED TO THE INDIVI DUAL BUT BELONGED TO THE PARTNERSHIP FIRM, IN WHICH THE SAID INDIVIDUAL IS A PARTNER, DELETED THE ADDITION AND THE SAME WAS DIRECTED TO BE CONSIDERED IN THE CASE OF THE ASSESSMENT OF THE PARTNERSHIP FIRM. FROM THE ABOVE FACTS IT IS THUS E VIDENT THAT THE ADDITION OF PEAK CREDIT IN THE GUISE OF UNDISCLOSED INCOME WAS MADE FOR NOT DISCLOSING THE AXIS BANK ACCOUNT IN THE ROI, BUT WHEN THE SAID BANK ACC OUNT ADMITTEDLY STOOD DECLARED IN THE ROI OF THE PARTNERSHIP FIRM FOR THE IMPUGNED ASSESSMENT YEAR AND ACCOUNTED FOR IN THE AUDITED BOOKS OF ACCOUNT, THE ADDITION ON THE BASIS OF EARLIER STAND OF UNDISCLOSED INCOME DOES NOT SURVIVE ON FAC TS AND IN LAW. SINCE, IN PARA NO.12 OF OUR ORDER, WE HAVE QUASHED THE ORDER OF LD PCIT, AND THE SECOND POINT IN THE IMPUGNED NOTICE U/S.263 IS CONSEQUENTIAL IN NAT URE, THEREFORE DOES NOT REQUIRE ADJUDICATION. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE COURT ON 11.12.2019 SD/- ( A.T.VARKEY ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 11/12/2019 ( SB, SR.PS ) M/S JABIBUR RAHAMAN ITA NO.1171/KOL/2018 ASSESSMENT YEAR:2008-09 PAGE | 17 COPY OF THE ORDER FORWARDED TO: 1. M/S JABIBUR RAHAMAN 2. PR. CIT-14, KOLKATA 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES