Shri Murtuja Husainbhai Hirani, Navsari V. The Income Tax Officer, Ward-3, Navsari

ITA 1194/AHD/2017

• Counselvise Citation: [2018] 111 COUNSELVISE.COM (IT) 1916 (ITAT-SURAT)
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 15-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRINIVAS T BIDARI
• Assessee Lawyers: SHRIRASESH SHAH
• Keywords: Bogus purchase; Gross profit estimation; Difference of opinion; Corroborative evidences; Assessment record; Prejudicial to interest; Set aside
• Section: 143(3); 142(1); 143(2); 13; 119; 22; 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL,SURAT BENCH,SURAT , , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . / ITA NO.1194/AHD/2017/SRT / ASSESSMENT YEAR: 2012-13 SHRIMURTUJAHUSSAINBHAIHIRANI, J. B. HOUSES, PATWA SHERI, MOTA BAZAR, NAVSARI 396 445. [PAN: ACIPH 3680D] VS. INCOME TAX OFFICER, WARD-3, NAVSARI. ( / APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRIRASESH SHAH, C.A /RESPONDENT BY : SHRINIVAS T BIDARI, CIT, D.R /DATE OF HEARING : 22-01-2018 /DATE OF PRONOUNCEMENT : 21-03-2018 / ORDER PERC.M.GARG, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE HAS BEEN FILED AGAINST THE ORDER OFPRL. COMMISSIONER OF INCOME TAX,VALSAD (FOR SHORT PCIT) DATED 26.03.2017 PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) FOR THE ASSESSMENT YEAR (A.Y) 2012-13. 2. IN THIS APPEAL ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL WHICH READ AS UNDER: - 2 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI 1. THE PRINCIPLE CIT, VALSAD ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE ASSESSMENT MADE BY ASSESSING OFFICER BY INVOKING PROVISIONS OF SECTION 263 WITHOUT APPRECIATING FACTS AS WELL AS LAW OF THE CASE PROPERLY. 2. THE PRINCIPLE CIT, VALSAD ERRED IN NOT TAKING INTO CONSIDERATION THE OVERALL FACTS, EVIDENCES AND CIRCUMSTANCES OF THE ASSESSEE SUBMITTED BEFORE PASSING THE REVISION ORDER U/S 263. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON THE RECORD OF THE TRIBUNAL, INTER ALIA , THE IMPUGNED ORDER OF LD. PCIT, THREE PAPER BOOKS FILED BY THE ASSESSEE SPREAD OVER 137 PAGES AND COPIES OF CASE LAW FILED BY THE ASSESSEE CONSISTING OF NINE JUDGMENTS. 4. THE LD. ASSESSEES REPRESENTATIVE (AR) DREW OUR ATTENTION TOWARDS COPY OF THE NOTICE ISSUED BY THE COMMISSIONER OF INCOME TAX, VALSAD DATED 17.03.2017 AND REPLY OF THE ASSESSEE, TO THE SAID NOTICE, DATED 25.03.2017 (ASSESSEES PAPER BOOK PAGES 1 TO 3). THE LD. AR SUBMITTED THAT, AT THE VERY INITIAL STAGE, WHEN THE LD. PCIT ISSUED NOTICE U/S. 263 OF THE ACT TO THE ASSESSEE SHOWING HIS INTENTION TO REVISE ASSESSMENT ORDER, THE AUTHORITY PROCEEDED WITH INCORRECT AND APPARENTLY WRONG FACTS AS IN PARA 3 OF THE SAID NOTICE THE LD. PCIT WRITES THAT THE ASSESSING OFFICER (AO) HAS FAILED TO MAKE REQUISITE ENQUIRIES ABOUT THE VERACITY OF THE CLAIM THAT ALMOST ENTIRE PURCHASES AND SALES HAVE BEEN MADE IN CASH. THE LD. AR SUBMITTED THAT IN THE REPLY TO THE SAID NOTICE VIDE DATED 3 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI 25.03.2017 IN PARA 3, THE ASSESSEE IS SPECIFICALLY DENIED HAVING MADE ENTIRE PURCHASES IN CASH AND CLEARLY STATED THAT WE HAVE MADE PAYMENT TO THE SUPPLIER OF MATERIAL THROUGH RTGS AND CASH PURCHASES DURING THE YEAR IS NIL. THE LD. AR VEHEMENTLY POINTED OUT THAT THE VERY BASIS FOR REVISING THE ASSESSMENT ORDER IS BASED ON THE INCORRECT FACT WHICH SHOWS NON APPLICATION OF MIND BY THE AUTHORITY. THEREFORE, ONLY ON THIS GROUND IMPUGNED ORDER AND NOTICE U/S. 263 OF THE ACT DESERVE TO BE QUASHED. FOR THIS CONTENTION THE LD. AR HAS PLACED RELIANCE ON THE DECISION OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF PCIT V/S. MERA BABA REALITY ASSOCIATES PVT. LTD. [2017] 99 CCH 0235 (DEL-HC). 5. THE LD. AR ELABORATING THE INQUIRY MADE BY THE AO DURING THE ASSESSMENT PROCEEDINGS SUBMITTED THAT THE AO ISSUED NOTICE U/S. 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WHEREIN QUESTION NO.19, THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF CASH DEPOSIT IN BANK ACCOUNT WITH DENA BANK, NAVSARI WITH SUPPORTING EVIDENCES AND TO FURNISH BANK STATEMENT OF ALL BANK ACCOUNTS OF THE ASSESSEE. THE LD. AR FURTHER POINTED OUT THAT THE ASSESSEE FILED HIS REPLY TO THE SAID NOTICE ON 12.08.2014 AND IN REPLY TO QUESTION NO.19 THE ASSESSEE SUBMITTED BANK STATEMENTS AND COPIES OF CURRENT AND SAVING ACCOUNTS BY EXPLAINING THAT IN BULLION 4 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI TRADING, THE PURCHASES ARE MADE BY PAYMENT THROUGH RTGS AND SALE OF THE SAME IS MADE IN QUANTITY OF 5 GRAMS TO 100 GRAMS BY CASH AND WHATEVER CASH IS RECEIVED THE SAME DEPOSITED IN THE BANK ACCOUNT FROM WHICH HE AGAIN PURCHASES GOODS THROUGH RTGS. IT WAS ALSO EXPLAINED BY THE ASSESSEE THAT THIS FACT CAN BE CORROBORATED AND CONFIRMED FROM THE BANK STATEMENT WHICH REFLECTS THAT WHENEVER CASH IS DEPOSITED, THE SAME IS USED FOR PAYMENT BY RTGS FOR PURCHASE OF GOODS. THE LD. DR FURTHER SUBMITTED THAT SUBSEQUENTLY IN REPLY TO THE NOTICE U/S. 143(3) OF THE ACT, THE ASSESSEE VIDE REPLY DATED 15.09.2014 SUBMITTED COPY OF CASH BOOK FROM 01.04.2011 TO 31.03.2012 (APB PAGES 146 TO 234) AND THUS, IT CANNOT BE ALLEGED THAT THE AO DID NOT MAKE ANY ENQUIRY REGARDING CASH SALES UNDERTAKEN BY THE ASSESSEE DURING THE RELEVANT PERIOD. THE LD. AR FURTHER POINTED OUT THAT THE ASSESSEE SUBMITTED COPY OF BANK PASS BOOK OF DENA BANK FROM 01.04.2011 TO 31.03.2012 (ASSESSEE PAPER BOOK PGS. 81 TO 96) PERTAINING TO A/C. NO. 004210024401 AND COPY OF BANK PASS BOOK AND STATEMENT OF BANK OF INDIA FOR THE SAME PERIOD PERTAINING TO A/C. NO.20088366146 AND ALSO CHART SHOWING AMOUNT OF CASH SALES DEPOSITED IN THE VARIOUS BANK ACCOUNTS. THE LD. AR SUBMITTED THAT THE LD. PCIT HAS,IN THE NOTICE U/S. 263 OF THE ACT,ONLY DISPUTED AND ALLEGED CASH DEPOSITS WITH SAID TWO SAVING 5 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI BANK ACCOUNTS WITH DENA BANK AND STATE BANK OF INDIA WHEREIN AMOUNT OF RS. 11,55,81,500/- AND RS. 3,09,11,000/- RESPECTIVELY WAS DEPOSITED IN CASH AND LD. PCIT HAS NOT DISPUTED REMAINING AMOUNT OF CASH DEPOSIT TO THE OTHER FOUR BANK ACCOUNTS WHICH WAS ALSO RECEIVED AND USED IN THE SAME MANNER AS WAS DEPOSITED TO THE TWO IMPUGNED BANK ACCOUNTS. 6. THE AO INQUIRED THE ISSUE OF CASH DEPOSIT IN DETAIL DURING THE ORIGINAL ASSESSMENT PROCEEDINGS AND SUBSEQUENTLY, THE INCOME TAX OFFICER (INVESTIGATION), UNIT NAVSARI ALSO ISSUED SUMMONS U/S. 131(1A) OF THE ACT ON 05.10.2016. THE ASSESSEE FILED HIS REPLY TO THE SAID SUMMON VIDE DATED 13.10.2016 (APB PAGES 119 & 120) BY STATING THAT EVERY DETAILS FOR THE RELEVANT YEAR HAVE BEEN DEEPLY SCRUTINIZED DURING THESE ASSESSMENTS AND THEREAFTER ASSESSMENTS WERE FINALIZED. IT WAS ALSO CONTENDED BY THE LD. AR THAT EARLIER SUMMONS DATED 13.12.2013 FROM DDIT (INV.), VALSAD WAS RECEIVED ASKING FOR THE SAME INFORMATION AND ALL THE DETAILS ASKED BY THE INVESTIGATION WING WERE SUBMITTED BEFORE THE INVESTIGATION WING ON 07.01.2014 AT VALSAD. THE LD. AR ALSO DREW OUR ATTENTION TOWARDS COPY OF NOTICES OF INVESTIGATION WING DATED 05.10.2016 (PLACED AT PAGE 121 OF APB) WHEREIN, THE ASSESSEE HAS BEEN ASKED TO EXPLAIN EACH CREDIT ENTRY OF THE SAVING BANK 6 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI NO.004210024401 HELD WITH DENA BANK, NAVSARI DURING F.Y 2010- 11 & 2011-12 PERTAINING TO A.Y 2011-12 & 2012-13. THE LD. AR SUBMITTED THAT THE INVESTIGATION WING HAS DROPPED BOTH THE INQUIRY CONSIDERING THE REPLY OF THE ASSESSEE WHICH AGAIN SUPPORTS THE CONCLUSION DRAWN BY THE AO. 7. THE LD. AR SUBMITTED THAT IN THE ASSESSMENT ORDER PARA 4, THE AO INQUIRED AND ADJUDICATED THE ISSUE OF CASH SALES BY THE ASSESSEE AND ACCEPTED THE EXPLANATION OF THE ASSESSEE IN THIS REGARD. THE LD. AR FURTHER SUBMITTED THAT HOWEVER, THE AO, BY OBSERVING THAT THE GROSS PROFIT HAS NOT INCREASED IN COMMENSURATE AND CASH SALE BILLS OF THE ASSESSEE DO NOT MENTION COMPLETE DETAILS OF PURCHASERS, THE AO MADE LUMP SUM ADDITION OF RS. 2,00,000/- TO THE TOTAL INCOME OF THE ASSESSEE WHICH HAS BEEN DELETED BY THE LD. CIT(A) VIDE ORDER DATED 21.08.2016 AND NOW, AS ON THE DATE,THERE IS NO ADDITION ON THIS ISSUE. THE LD. AR SUBMITTED THAT THE OPINION OF THE A.O OR MAKING LUMP SUM ADDITION ON THE BASIS OF ALLEGED CASH SALES AND LOW PROFIT RATE HAS BEEN SET ASIDE BY THE LD. CIT(A) WHICH SHOWS THAT THE ISSUE IS DEBATABLE ONE AND WHEN THE AO & LD. CIT(A) DURING THE ORIGINAL QUANTUM ASSESSMENT AND APPELLATE PROCEEDINGS HAS TAKEN A VIEW THEN THE LD. PCIT 7 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI CANNOT PUT HIS OWN VIEW TO REPLACE THE PLAUSIBLE VIEW ALREADY TAKEN BY THE AO. 8. THE LD. AR FURTHER SUBMITTED THAT FOR REVISING ASSESSMENT ORDER U/S. 263 OF THE ACT BOTH THE CONDITIONS ARE REQUIRED TO BE FULFILLED SIMULTANEOUSLY VIZ. THE ORDER SHOULD BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. IN THE PRESENT CASE, THE LD. PCIT HAS MISERABLY FAILED TO ESTABLISH THIS FACT THAT THE ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. TO SUPPORT THIS CONTENTION THE LD. AR HAS PLACED RELIANCE ON THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. GABRIEL INDIA LTD. REPORTED AT 203 ITR 108 (BOM). 9. THE LD. AR FURTHER SUBMITTED THAT IT IS NOT A CASE OF NON- INQUIRY OR INADEQUATE INQUIRY, WHEREIN LD. PCIT ASSUME VALID JURISDICTION TO ISSUE NOTICE TO REVISE ASSESSMENT ORDER U/S. 263 OF THE ACT. THE LD. AR SUBMITTED THAT IF, FOR THE SAKE OF ARGUMENT,THIS IS PRESUMED THAT IT IS A CASE OF INSUFFICIENT INQUIRY THEN ALSO THE LD. PCIT IS BOUND TO MAKE INQUIRY HIMSELF. IN THE PRESENT CASE, THE LD. PCIT, AFTER HOLDING THE ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, WITHOUT MAKING ANY FURTHER INQUIRY HIMSELF, HAS DIRECTED THE AO TO MAKE A FRESH INQUIRY ON THE ISSUE WHICH IS NOT A JUSTIFIED AND CORRECT APPROACH. THE LD. AR PLACING RELIANCE ON 8 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SUNBEAM AUTO LTD. [2010] 189 TAXMANN.COM 436 (DELHI-HC) SUBMITTED THAT IF THERE IS EVEN INADEQUATE ENQUIRY THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE CIT TO PASS ORDER U/S. 263 OF THE ACT MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER. 10. THE LD. AR SUBMITTED THAT THE AO IS NOT REQUIRED TO GIVEDETAILED REASON IN RESPECT OF EACH AND EVERY ITEM IN THE ASSESSMENT ORDER AND WHEN THE AO HAD CALLED FOR EXPLANATION REGARDING THIS VERY ITEM AND THE ASSESSEE HAD FURNISHED HIS PLAUSIBLE EXPLANATION THEN IT CANNOT BE SAID IT IS A CASE OF LACK OF ENQUIRY OR INADEQUATE ENQUIRY. THE LD. AR ALSO SUBMITTED THAT IN THIS JUDGMENT THEIR LORDSHIP ALSO HELD THAT THE VIEW TAKEN BY THE AO ONE OF THE POSSIBLE VIEWS THEN THE ASSESSMENT ORDER PASSED BY THE AO COULD NOT BE HELD TO BE PREJUDICIAL TO THE INTEREST OF REVENUE. 11. THE LD. AR ALSO PLACED RELIANCE ON THE DECISION OF ITAT, DELHI D BENCH DATED 07.10.2015 IN THE CASE OF LAKSHYA SETH V. ITO PASSED IN ITA NO.218/DEL/2015 FOR A.Y 2011-12 (WHICH WAS RENDERED BY ONE OF US C.M. GARG, J.M) AND SUBMITTED THAT THE CONCLUSION DRAWN BY THE TRIBUNAL IN THIS ORDER IS SQUARELY COVERS THE CASE IN FAVOUR OF THE ASSESSEE THEREFORE, IMPUGNED NOTICE AND 9 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI ORDER U/S. 263 OF THE ACT MAY KINDLY BE QUASHED. THE LD. AR SUBMITTED THAT IN THE CASE OF LAKSHYA SETH V. ITO (SUPRA) ISSUE OF CASH SALES WAS PICKED UP BY THE CIT FOR REVISION THE ASSESSMENT ORDER U/S. 263 OF THE ACT AND IN THIS CASE ASSESSEE DID NOT DISCLOSE CASH SALES WHEREAS IN THE PRESENT CASE THE CASH SALES HAS BEEN DISCLOSED BY THE ASSESSEE AND NO FACT IN THIS REGARD HAS BEEN HIDDEN BY THE ASSESSEE. 12. THE LD. AR FURTHER, PRESSING INTO SERVICES THE RATIO OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF CIT V. SHASHI THEATRE (P) LTD . REPORTED AS 248 ITR 126 (GUJ), SUBMITTED THAT WHEN THE LD. CIT(A) HAS ALLOWED THE ASSESSEES CLAIM DURING QUANTUM APPEAL PROCEEDINGS THEN THE ALLOWABILITY OF CLAIM ON ALL ITEMS WERE OPEN FOR CONSIDERATION AND DECISION BEFORE THE LD. CIT(A) THEN IN VIEW OF CLAUSE(C) OF EXPLANATION TO S. 263(1) OF THE ACT THE CIT WAS NOT CORRECT IN WITHDRAWING THE RELIEF GRANTED BY THE LD. FIRST APPELLATE AUTHORITY ON THE SAME ALLEGATION AND ISSUE. THE LD. AR ALSO SUBMITTED THAT THE AO, DURING IN THE ORIGINAL ASSESSMENT PROCEEDINGS, MADE LUMP SUM ADDITION OF RS. 2,00,000/- BY TAKING COGNIZANCE OF CASH SALES AND LOW PROFIT RATE SHOWN BY THE ASSESSEE WHICH WAS NOT FOUND SUSTAINABLE BY THE LD. CIT(A) AND THE FIRST APPELLATE AUTHORITY DELETED THE SAME, WHICH 10 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI AGAIN SUPPORTS THE CASE OF THE ASSESSEE. THE LD. AR ALSO SUBMITTED THAT THE CLAUSE (C) TO EXPLANATION 1 TO SUB SECTION (1) OF S. 263 OF THE ACT IS NOT APPLICABLE TO THE PRESENT CASE AS THE SAME ISSUE ON CASH SALES AND CONSEQUENT ISSUE OF LOW PROFIT RATE HAS BEEN DECIDED BY THE LD. CIT(A) IN FAVOUR OF THE ASSESSEE DELETING THE LUMP SUM ADDITION. THEREFORE, THE IMPUGNED NOTICE AND ORDER U/S. 263 OF THE ACT MAY KINDLY BE QUASHED BEING BAD IN LAW AND PASSED WITHOUT HAVING VALID JURISDICTION. 13. REPLYING TO THE ABOVE, THE LD. CIT-DR SUPPORTING THE IMPUGNED ORDER, SUBMITTED THAT IT IS A CASE OF NO ENQUIRYAND INADEQUATE ENQUIRY ON THE ISSUE OF CASH PURCHASE AND SALES AND THE AO HAS NOT INQUIRED THE ISSUE IN A PROPER PROSPECTIVE WHICH MAKES THE ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF DENIEL MERCHANTS P. LTD. VS. ITO DATED 10.04.2017 IN SLP(C) NO.23976/2017 AND OTHER RELATED PETITIONS, THE LD. CIT-DR SUBMITTED THAT WHEN THE AO DID NOT MAKE ANY PROPER INQUIRY WHILE MAKING THE ASSESSMENT AND ACCEPTED THE EXPLANATION OF THE ASSESSEE THEN ONLY ON THAT BASIS THE LD. PCIT HAD, AFTER SETTING ASIDE THE ASSESSMENT ORDER, SIMPLY DIRECTED THE AO TO CARRY THROUGH AND DETAILED INQUIRY. THE LD. CIT-DR STRENUOUSLY POINTED OUT THAT IN THIS SITUATION, THE LD. PCIT HASASSUMED VALID JURISDICTION TO 11 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI REVISE THE ASSESSMENT ORDER U/S. 263 OF THE ACT WHICH IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE LD. CIT-DR ALSO DREW OUT ATTENTION TOWARDS RELEVANT JUDGMENT OF HON'BLE HIGH COURT OF CALCUTTA DATED 13.05.2016 PARAS 27-30 AND SUBMITTED THAT WHEN IT IS CLEAR THAT THE AO HAD REQUISITE NECESSARY DETAILS BY WAY OF ISSUING NOTICES U/S. 142(1) OF THE ACT BUT THE THEREAFTER DID NOT APPLY HIS MIND THERETO, THEN THE ASSESSMENT ORDER HAS TO BE HELD AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 14. PLACING REJOINDER TO THE ABOVE SUBMISSIONS OF THE REVENUE, THE LD. AR AGAIN DREW OUR ATTENTION TOWARDS GOLD AND SILVER TRADING ACCOUNTS OF THE ASSESSEE FOR THE YEAR ENDED ON 31.03.2012 AND SUBMITTED THAT ENTIRE PURCHASES OF BULLION OF RS. 62,85,04,716/- HAS BEEN MADE BY THE ASSESSEE THROUGH RTGS AND THERE IS NO CASH PURCHASES BY THE ASSESSEE DURING THE RELEVANT FINANCIAL PERIOD. THE LD. AR AGAIN POINTED OUT THAT OUT OF TOTAL CASH SALES OF RS. 53,60,29,787/- THE LD. PCIT HAS ONLY DISPUTED DEPOSITS IN TWO BANK ACCOUNTS OF ASSESSEE VIZ. DEPOSIT OF CASH TO THE STATE BANK OF INDIA A/C. NO.20088366146 AND DENA BANK A/C. NO. 004210024401 WITHOUT ANY BASIS LEAVING ASIDE THE OTHER FOUR BANK ACCOUNTS WHEREIN CASH DEPOSIT WAS ALSO MADE. THE LD. AR POINTED OUT THAT AS PER EXPLANATION SUBMITTED BY THE ASSESSEE TO THE AO DURING THE 12 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI COURSE OF ASSESSMENT PROCEEDINGS THROUGH VIDE REPLY DATED 12.08.2014 (PLACED AT PGS. 111 TO 114 AND ENGLISH TRANSLATION THEREOF ON PGS. 115 TO 117) ANSWERING TO QUESTION NO.19 IT WAS SUBMITTED THAT THE ASSESSEE IS IN BULLION TRADING WHERE ENTIRE PURCHASES HAVE BEEN MADE THROUGH BANKING CHANNELS BY MAKING PAYMENT THROUGH RTGS AND THE SALE OF GOODS HAS BEEN MADE IN THE QUANTITY OF 05 GRAMS TO 100 GRAMS IN CASH. WHENEVER CASH IS RECEIVED AGAINST SALES, THE SAME IS DEPOSITED TO THE BANK ACCOUNT FROM WHICH THE ASSESSEE AGAIN PURCHASES GOODS BY MAKING PAYMENT THROUGH RTGS I.E., THROUGH BANKING CHANNELS. THE LD. AR SUBMITTED THAT IT IS NOT A CASE OF BOGUS PURCHASES OR SALES BUT FROM THE BANK STATEMENTS IT IS APPARENT THAT WHENEVER CASH HAS BEEN RECEIVED FROM SALE OF GOODS THE SAME IS DEPOSITED TO THE BANK ACCOUNT, AND THEREAFTER THE SAME IS IMMEDIATELY USED FOR MAKING PAYMENT THROUGH RTGS TOWARDS PURCHASE OF GOODS. 15. THE LD. AR FURTHER SUBMITTED THAT THE CIT HAS DISPUTED ONLY CASH DEPOSITS OF TWO BANK ACCOUNTS AND THE ASSESSEE, IN REPLY VIDE DATED 25.03.2017 TO THE NOTICE U/S. 263 OF THE ACT, SUBMITTED THAT BEFORE LD. PCIT CLEARLY EXPLAINED THAT ALL PAYMENTS TO THE CREDITORS/SUPPLIERS OF GOODS HAS BEEN MADE THROUGH BANKING AND AS THE ASSESSEE IS A LOW PROFIT BUSINESS MAN AND THE BANK USED 13 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI TO CHARGE RS. 100/- PER ONE LAKH TOWARDS HANDLING OF CASH IN THE CURRENT ACCOUNT. THE LD. AR FURTHER SUBMITTED THAT ONLY TO SAVE RS. 100/- PER ONE LAKHTHE ASSESSEE USED TO DEPOSIT THE CASH RECEIVED FROM SALES TO SAVING ACCOUNT AND THEREAFTER THE SAME AMOUNT WAS TRANSFERRED TO THE CURRENT ACCOUNT FOR MAKING PAYMENTS TOWARDS PURCHASE OF GOODS. THE LD. AR SUBMITTED THAT THIS PRACTICE WAS ADOPTED BY THE ASSESSEE SINCE SEVERAL PRECEDING YEARS JUST TO SAVE COST OF CASH DEPOSIT TO THE CURRENT ACCOUNT AND THERE IS NO MALAFIDE OR BAD INTENTION OF THE ASSESSEE THEREIN. 16. THE LD. AR SUBMITTED THAT IN VIEW OF DECISION OF HON'BLE JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF CIT V. SHASHI THEATRE (P.) LTD. REPORTED AT 248 ITR 126, THE CIT(A) HAVING ALLOWED THE ASSESSEES CLAIM FOR INVESTMENT ALLOWANCE ON SOME OF THE INSTALLATIONS IN CINEMA THEATRE ON THE GROUND THAT AO HAD ALLOWED RELIEF ON OTHER INSTALLATIONS, ALLOWABILITY OF CLAIM OF ALL THE ITEMS WAS OPEN FOR CONSIDERATION AND DECISION BEFORE THE LD. CIT(A) AND THE ORDER OF THE AO COULD NOT BE REVISED U/S. 263 OF THE ACT SO AS TO WITHDRAW THE RELIEF GRANTED BY THE AO. THE LD. AR VEHEMENTLY POINTED OUT THAT IN VIEW OF CLAUSE(C) OF EXPLANATION TO SUB SECTION (1) OF S. 263 OF THE ACT THE ORDER OF THE AO COULD NOT BE REVISED U/S. 263 OF THE ACT AND THE LD. PCIT WAS NOT CORRECT IN 14 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI WITHDRAWING THE RELIEF GRANTED TO THE ASSESSEE. THE LD. AR LASTLY SUBMITTED THAT IMPUGNED NOTICE AND ORDER PASSED U/S. 263 OF THE ACT MAY KINDLY BE QUASHED BEING BAD IN LAW ON ACCOUNT OF ABOVE DEFICIENCIES, INFIRMITIES AND PERVERSITIES. 17 ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSIONS, FIRST OF ALL, WE FIND IT NECESSARY AND APPROPRIATE TO REPRODUCE NOTICE U/S. 263 OF THE ACT DATED 17.03.2017 PLACED AT PG. 03 OF THE ASSESSEE PAPER BOOK. THE SAID NOTICE READS AS FOLLOWS: TO, SHRIMURTUJAHUSAINBHAIHIRANI, PROP. R.K. BULLION, J.B.HOUSE, PATWA SHERI, MOTA BAZAR, NAVSARI. SUB:- PROCEEDINGS U/S. 263 OF THE I.T. ACT, 1961 IN YOUR CASE FOR A.Y 2012-13 (PAN:- ACIPH 3680D)-REG. PLEASE REFER TO ABOVE. 2.IN THIS CASE, THE ASSESSEE HAD FILED ITS RETURN INCOME ON 14.09.2012 DECLARING TOTAL LOSS OF RS. 9,52,250/-. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND THE ASSESSMENT U/S. 143(3) OF THE I.T. ACT, 1961 WAS PASSED ON 16.01.2015 DETERMINING TOTAL INCOME OF RS. 11,52,250/- 3.AFTER GOING THROUGH THE ASSESSMENT RECORD OF THE AO, IT IS SEEN THAT THE AO HAS NOT EXAMINED/CARRIED OUT REQUISITE VERIFICATIONS IN RESPECT OF THE AMOUNT OF RS. 14,59,90,800/- DEPOSITED IN CASH IN THE ASSESSEES BANK ACCOUNT NO. 004210024401 MAINTAINED WITH DENA BANK, NAVSARI BRANCH, NAVSARI AND A/C. NO.20088366146 MAINTAINED WITH SBI, LISBRARY ROAD, NAVSARI BRANCH. ON EXAMINATION OF RECORDS SHOWS THAT THE AO HAS ONLY OBTAINED COPIES OF CERTAIN LEDGER ACCOUNTS IN WHICH THE CASH SALES AND PURCHASES HAVE BEEN REFLECTED WITHOUT ANY ADDRESSES. 3. THE AO HAS FAILED TO MAKE REQUISITE INQUIRIES ABOUT THE VERACITY OF THE CLAIM THAT ALMOST ENTIRE PURCHASES AND SALES HAVE BEEN MADE IN CASH. THE FACT THAT ALMOST THE TRADING ACTIVITY OF BULLION INVOLVING HUGE AMOUNTS HAVE BEEN CONDUCTED IN CASH MINIMUM THING TO BE DONE IN 15 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI SUCH A SITUATION WAS THAT THE AO SHOULD HAVE VERIFIED THE VERACITY OF CLAIM OF THE ASSESSEE HAVING PURCHASED AND SOLD ALMOST THE ENTIRE STOCK IN CASH. THIS IS AN UNUSUAL CLAIM PARTICULARLY WHEN IT IS NOT BACKED BY ANY JUSTIFIABLE REASON. THE FAILURE OF THE AO TO EXAMINE THE ENTIRE ISSUE PARTICULARLY WITH REFERENCE TO THE TRANSACTIONS OF PURCHASE AND SALES OF BULLION VIS-A-VIS THE CASH DEPOSITS MADE IN THE SAID BANK ACCOUNT OF THE ASSESSEE MAKES THE ORDER ERRONEOUS AS WELL AS PREJUDICIAL INTEREST OF REVENUE. 4.YOU ARE, THEREFORE, REQUIRED TO SHOW-CAUSE AS TO WHY THE SAID ASSESSMENT ORDER BE NOT REVISED BY INVOKING THE PROVISIONS OF 263 OF I.T. ACT, 1961. THE HEARING IN YOUR CASE IS BEING FIXED ON 23.03.2017 AT 1.00 P.M. PLEASE NOTE THAT THE REQUIRED DETAILS SHOULD BE SUBMITTED AFTER NUMBERING THE DOCUMENTS ENCLOSED AND INDEXING THE SAME IN THE FORWARDING/COVERING LETTER. 5. PLEASE NOTE THAT THE REQUIRED DETAILS SHOULD BE SUBMITTED AFTER NUMBERING THE DOCUMENTS ENCLOSED AND INDEXING THE SAME IN THE FORWARDING/COVERING LETTER. YOU CAN ATTEND THE HEARING EITHER PERSONALLY OR THROUGH YOUR DULY AUTHORIZED REPRESENTATIVE OR CAN FILE WRITTEN SUBMISSIONS ON OR BEFORE THE STIPULATED DATE AND TIME OF HEARING. [SATBIR SINGH] PR. COMMISSIONER OF INCOME TAX, VALSAD 18. IN VIEW OF ABOVE RIVAL SUBMISSION MADE BEFORE US AND FACTS AND CIRCUMSTANCES OF THE CASE FIRSTLY, WE MAY POINT THAT UNDISPUTEDLY, THE AO IN THE IMPUGNED ASSESSMENT ORDER DATED 16.01.2015, IN PARA 4 HAS CONSIDERED THE ISSUE OF CASH SALES MADE BY THE ASSESSEE AND IN THE SAME PARA THE AO AFTER DETAILED DELIBERATIONS ON THE ISSUE AND ALSO CONSIDERING THE GROSS PROFIT RATE, WHICH WAS NOT INCREASED IN COMMENSURATE WITH THE EARLIER YEAR, HAS MADE LUMP SUM ADDITION OF RS. 2,00,000/- TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF GROSS PROFIT. IT IS ALSO NOT IN DISPUTE THAT IN THE APPEAL FILED BY THE ASSESSEE BEFORE LD. CIT(A), THE FIRST APPELLATE AUTHORITY VIDE ORDER DATED 16 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI 28.01.2016 (ASSESSEES PAPER BOOKS PGS. 21 TO 24) DELETED THE ADDITION WITH THE FOLLOWING OBSERVATIONS AND CONCLUSION: DECISION: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AS CONTAINED IN THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER AS WELL AS THE WRITTEN SUBMISSION MADE BY AR OF THE APPELLANT DURING THE APPELLATE PROCEEDINGS. IN THIS APPEAL THE ONLY ISSUE INVOLVED IS THE ADDITION OF RS.2,00,000/- MADE BY THE ASSESSING OFFICER FOR THE REASON THAT THE SALE BILLS OF THE APPELLANT DOES NOT BEAR BECAUSE THE SALES ARE EFFECTED IN CASH TO A LARGE EXTENT. DURING THE APPELLATE PROCEEDINGS THE AR OF THE APPELLANT SUBMITTED THAT SALES ARE MADE IN CASH AND DUE TO THIS REASON ONLY NAME OF THE CUSTOMER IS MENTIONED. AS NO CREDIT SALE IS MADE HENCE, THERE EMERGES NO NECESSITY TO KEEP COMPLETE ADDRESS OF THE CUSTOMER. THIS PRACTICE HAS BEEN FOLLOWED SINCE LONG AND NO SUCH ADHOC ADDITION HAS BEEN MADE IN THE PAST IN THE APPELLANT'S OWN CASE. I HAVE GIVEN MY CAREFUL THOUGHTS TO THE RIVAL SUBMISSIONS. THE ADDITION MADE BY THE ASSESSING OFFICER, MERELY ON THE REASON THAT THE SALE MEMOS DOES NOT CONTAIN THE ADDRESS OF THE CUSTOMER WHICH LEADS TO THE PRESUMPTION THAT THE SALES MIGHT HAVE BEEN UNDER STATED. IN MY CONSIDERED VIEW THERE IS NO PROVISION UNDER INCOME TAX ACT WHICH REQUIRES THE APPELLANT TO GIVE COMPLETE NAME AND ADDRESS ON THE SALE MADE IN THE SALE MEMO. NO DEFECT IN THE BOOKS OF ACCOUNTS HAS BEEN POINTED OUT. NO SUCH ADDITION HAS BEEN MADE IN THE PAST AS PER CLAIM OF THE APPELLANT. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE AD HOC ADDITION OF RS.2,00,000/- MADE BY THE ASSESSING OFFICER MINDLESSLY WITHOUT ANY REASON IS DELETED AND THE GROUNDS APPEAL OF THE APPELLANT ON THIS ISSUE ARE ALLOWED. 19. IN VIEW ABOVE NOTED CONCLUSION OF LD. CIT(A) AND ALLEGATIONS OF THE AO MADE IN PARA 4 OF THE ASSESSMENT ORDER, IT IS APPARENT THAT THE AO MADE LUMP SUM ADDITION ON RS. 2,00,000/- ON THE ALLEGATION OF CASH SALES AND LOW GP RATE WHICH HAS BEEN DELETED BY THE LD. CIT(A) IN THE FIRST APPEAL AFTER CONSIDERING IN ENTIRE THE FACTS AND CIRCUMSTANCES OF THE ISSUE. IN THE BACK DROP OF ABOVE NOTEDFACTUAL SITUATION, WE ARE IN 17 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI AGREEMENT WITH THE LEGAL CONTENTION OF THE LD. AR THAT THE ISSUE OF CASH SALES WAS OPEN FOR CONSIDERATION AND DECISION BEFORE FIRST APPELLATE AUTHORITY I.E., LD. CIT(A), THEN IN VIEW OF CLAUSE (C) OF EXPLANATION TO SUB SECTION (1) OF S. 263 OF THE ACT THE ORDER OF THE AO COULD NOT BE REVISED U/S. 263 OF THE ACT AND THE LD. PCIT WAS NOT CORRECT IN AGITATING THE ISSUE AGAIN FOR REVISING THE ASSESSMENT ORDER U/S. 263 OF THE ACT. OUR ABOVE NOTED VIEW AND CONCLUSION ALSO GETS STRONG SUPPORT FROM THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SASHI THEATRE (P) LTD. (SUPRA). 20. FURTHER, WE OBSERVE THAT THE ASSESSEE IN REPLY TO NOTICE U/S. 263 OF THE ACT DATED 17.03.2017 VIDE DATED 25.03.2017, IN PARA 3 CLEARLY STATED THAT WE HAVE MADE PAYMENT TO THE SUPPLIER OF MATERIAL THROUGH RTGS MOSTLY OUT CASH PURCHASE DURING THE YEAR IS NIL. AS WE HAVE ALREADY NOTED ABOVE THAT ENTIRE PURCHASES HAVE BEEN MADE BY THE ASSESSEE BY MAKING PAYMENT THROUGH RTGS AND CASH PURCHASES ARE NIL. FURTHERMORE, THE ASSESSEE IN THE REPLY DATED 12.08.2014 TO THE NOTICE AND QUESTIONNAIRE ISSUED BY THE AO DATED 22.07.2012, ANSWERING TO QUESTION NO.19 STATED AS FOLLOWS: ALL BANK STATEMENTS OF CURRENT AND SAVINGS ACCOUNT ARE ENCLOSED AT PAGE NO. 122 TO 317. IN MY BULLION TRADING, THE PURCHASES ARE MADE BY PAYMENT THROUGH RTGS. WHENEVER WE GET GOODS, THE SALE OF THE SAME IS MADE IN THE QUANTITY OF 5 GRAMS TO 100 GRAMS BY CASH AND WHATEVER CASH RECEIVED IS DEPOSITED IN BANK ACCOUNT FROM WHICH WEAGAIN PURCHASE GOODS. THIS FACT CAN BE SEEN FROM THE BANK STATEMENT. 18 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI WHENEVER CASH IS DEPOSITED, THE SAME IS USED FOR PAYMENT BY RTGS FOR PURCHASE OF GOODS. 21. THIS REPLY MUST BE PART OF ASSESSMENT RECORD WHICH WAS CALLED AND PERUSED BY THE LD. PCIT AT THE TIME OF ISSUING NOTICE U/S. 263 OF THE ACT. IN THIS SITUATION, WE SAFELY PRESUME THAT DESPITE SPECIFIC REPLY OF THE ASSESSEE THAT ENTIRE PURCHASES HAS BEEN MADE THROUGH BANK CHANNEL I.E., RTGS, THE LD. PCITINPARA3 OF THE NOTICE U/S. 263 OF THE ACT AND IN PARA 3 & 4 OF THE IMPUGNED ORDER ALLEGES THAT THE AO HAS FAILED TO MAKE REQUISITE INQUIRIES ABOUT THE VERACITY OF THE CLAIM THAT ALMOST ENTIRE PURCHASES AND SALES HAVE BEEN MADE IN CASH, WHICH CLEARLY SHOWS NON APPLICATION OF MIND BY THE LD. PCIT AT THE TIME OF ISSUING NOTICE U/S. 263 OF THE ACT AND ALSO WHILE PASSING THE IMPUGNED ORDER.WITH THESE OBSERVATIONS WE HOLD THAT AS PER RATIO OF THE JUDGMENT OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF MERA BABA REALITY PVT. LTD. (SUPRA) ORDER OF LD. PCIT BECOMES BAD IN LAW. 22. NOW, WE SHALL EXAMINE THE ISSUE OF INADEQUATE OR INSUFFICIENT INQUIRY BY THE AO. IN THE NOTICE U/S. 263 OF THE ACT, THE LD. PCIT IN PARAS3 & 4 ALLEGES THAT AFTER GOING THROUGH THE ASSESSMENT RECORD IT IS SEEN THAT THE AO HAS NOT EXAMINED/CARRIED OUT REQUISITE VERIFICATIONS IN RESPECT OF THE AMOUNT OF RS. 14,59,90,800/- DEPOSITED IN CASH IN THE ASSESSEES BANK ACCOUNT NO. 004210024401 MAINTAINED WITH DENA BANK, NAVSARI BRANCH AND A/C. NO.20088366146 MAINTAINED WITH SBI, 19 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI LIBRARY ROAD, NAVSARI BRANCH. THE LD. PCIT FURTHER OBSERVED THAT ON EXAMINATION OF RECORDS SHOWS THAT THE AO HAS ONLY OBTAINED COPIES OF CERTAIN LEDGER ACCOUNTS IN WHICH THE CASH SALES AND PURCHASES HAVE BEEN REFLECTED WITHOUT ANY ADDRESSES. THEREAFTER THE LD. PCIT IN PARA 4, ALLEGES THAT THE AO HAS FAILED TO MAKE REQUISITE INQUIRIES ABOUT THE VERACITY OF CLAIM THAT ALMOST ENTIRE PURCHASES AND SALES HAVE MADE IN CASH. THE LD. PCIT FURTHER ALLEGES THAT THE AO SHOULD HAVE VERIFIED THE VERACITY OF CLAIM OF THE ASSESSEE HAVING PURCHASED AND SOLD ALMOST ENTIRE STOCK IN CASH WHICH IS AN UNUSUAL CLAIM PARTICULARLY WHEN IT IS NOT BACKED BY OR SUPPORTED BY ANY JUSTIFIED REASON. THEREAFTER THE LD. PCIT ALLEGES THAT THE FAILURE OF THE AO TO EXAMINE ENTIRE ISSUE PARTICULARLY WITH REFERENCE TO TRANSACTIONS OF CASH PURCHASE AND SALES OF BULLION VIS- A-VIS THE CASH DEPOSITS MADE IN THE SAID BANK ACCOUNTS OF THE ASSESSEE MAKES THE ORDER ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 23. IN THE LIGHT OF ABOVE ALLEGATIONS, WHEN WE PROCEED TO EXAMINE THE SUFFICIENCY AND ADEQUACY OF THE INQUIRY CONDUCTED BY THE AO THEN WE FIND THAT THE AO ISSUED NOTICE U/S. 142(1) OF THE ACT ALONG WITH DETAILED QUESTIONNAIRE ON 22.07.2014 AND REPLY TO THE SAME WAS SUBMITTED BY THE ASSESSEE ON 12.08.2014. THEREAFTER, THE AO ISSUED NOTICE U/S. 143(2) OF THE ACT WHICH WAS REPLIED BY ASSESSEE ON 15.09.2014 ALONG 20 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI WITH COPY OF THE CASH BOOK FROM 01.04.2011 TO 31.03.2012 WHICH IS ALSO AVAILABLE AT PGS. 146-234 OF THE ASSESSEES PAPER BOOK. 24. IN THE QUESTIONNAIRE ISSUED TO THE ASSESSEE ALONG WITH NOTICE U/S. 142(1) OF THE ACT, IN QUESTION NO.19, THE AO SPECIFICALLY ASKED THE ASSESSEE TO EXPLAIN OF CASH DEPOSIT IN THE BANK ACCOUNT WITH DENA BANK, NAVSARI ALONG WITH SUPPORTING EVIDENCES AND THE AO ALSO ASKED THE ASSESSEE TO FURNISHCOPIES OF BANK STATEMENTS OF ALL BANK ACCOUNTS OF THE ASSESSEE. WHICH SHOWS THAT THE AO WAS CAUTIOUS ABOUT THE FACT THAT THE ASSESSEE HAS DEPOSITED CASH TO HIS BANK ACCOUNTS AND THEREFORE, THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF SUCH CASH DEPOSIT. WHEN WE LOGICALLYANALYZE THE REPLY TO QUESTION NO.19 OF THE ASSESSEE AS HAS BEEN REPRODUCED IN PARA 20 OF THIS ORDER (SUPRA) THEN WE FIND THAT THE ASSESSEE CLEARLY STATED THAT THE PURCHASES ARE MADE BY PAYMENT THROUGH RTGS AND ON RECEIPT OF GOODS THE SALE IS MADE IN THE QUANTITY OF 05 TO 100 GRAMS IN CASH AND WHENEVER CASH IS RECEIVED THE SAME IS DEPOSITED TO THE BANK ACCOUNT FROM WHICH HE AGAIN PURCHASES THE GOODS BY MAKING PAYMENT THROUGH BANK. THE ASSESSEE ALSO SUBMITTED COPIES OF STATEMENTS OF ALL BANK ACCOUNTS WHICH CLEARLY SHOWS THAT WHENEVER CASH IS DEPOSITED THE SAME IS AGAIN USED FOR MAKING PAYMENT THROUGH RTGS TOWARDS PURCHASE OF GOODS/BULLION. 21 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI 25. FURTHER, WHILE REPLYING TO THE NOTICE U/S. 143(2) OF THE ACT, THE ASSESSEE VIDE REPLY DATED 15.09.2014 SUBMITTED THE COPY OF CASH BOOK OF THE ASSESSEE FOR THE RELEVANT FINANCIAL PERIOD I.E., FROM 01.04.2011 TO 31.03.2012 SUPPORTING THE FACTUM OF CASH RECEIVED FROM SALE, WHICH WAS DEPOSITED TO THE BANK ACCOUNTS OF THE ASSESSEE FOR THE PURPOSE OF MAKING PAYMENT THROUGH BANK TOWARDS PURCHASES. AT THIS STAGE, WE ALSO FIND IT APPROPRIATE TO CONSIDER REPLY OF THE ASSESSEE FILED TO THE DIRECTOR (INVESTIGATION) VIDE DATED 15.02.2017, WHEREIN THE ASSESSEE CLEARLY STATED THE CAUSE OF CASH DEPOSIT TO THE BANK ACCOUNTS, WHICH READS AS FOLLOWS: THE CASH DEPOSITED IN MY SAVINGS ACCOUNT WAS ONLY TO SAVE THE CASH HANDLING CHARGES LEVIED BY THE BANK. THE DATE ON WHICH CASH WAS DEPOSITED IN MY SAVINGS BANK ACCOUNT, ON THAT VERY DATE, I HAVE TRANSFERRED THE SAME THROUGH ACCOUNT PAYEE CHEQUE TO THE CURRENT ACCOUNT OF MY PROPRIETARY CONCERN R.K. BULLION AND ON THAT DATE, MY PROPRIETARY CONCERN, FOR THE PURPOSE OF PURCHASES, HAD MADE PAYMENT THROUGH RTGS FROM THE CURRENT ACCOUNT TO THE PURCHASE PARTY. YOUR GOODSELF CAN VERIFY THE SAME FROM THE SAVINGS PASSBOOK AND DURING SCRUTINY ASSESSMENT THE SAME WAS ALSO SHOWN TO THE ITO WHO HAD ALSO ACCEPTED IT. 26. WE ARE CAUTIOUS ABOUT THE LEGAL POSITION THAT THE INQUIRY MADE BY THE INVESTIGATION DEPT. IS NOT RELEVANT WHILE ADJUDICATING THE ISSUE OF SUFFICIENCY OR ADEQUACY OF INQUIRY BY THE AO DURING ORIGINAL ASSESSMENT PROCEEDINGS BUT FROM ABOVE NOTED REPLY IT IS CLEAR AND APPARENT THAT THE ASSESSEE HAS TAKEN A CONSISTENT STAND BEFORE THE AUTHORITIES BELOW AS WELL AS BEFORE THE INVESTIGATION DEPT. EXPLAINING THE CAUSE AND THE 22 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI SOURCE OF CASH DEPOSIT TO HIS BANK ACCOUNTS, INCLUDING TWO BANK ACCOUNTS WHICH WERE PICKED UP BY THE LD. PCIT FOR ISSUING NOTICE AND REVISING ASSESSMENT ORDER U/S. 263 OF THE ACT. 27. FURTHER FROM PERUSAL OF THE ASSESSMENT ORDER PASSED U/S. 143(3) OF THE ACT FOR IMMEDIATELY PRECEDING A.Y 2010-11, WE ARE INCLINED TO ACCEPT CONTENTION OF THE ASSESSEE THAT THERE IS NO ADDITION ON ACCOUNT OF CASH DEPOSITS OR CASH SALES TO THE INCOME OF THE ASSESSEE DESPITE THE FACT THAT THE MODUS OPERANDI OF BUSINESS OF THE ASSESSEE I.E., PURCHASE THROUGH BANKING CHANNEL AND MAXIMUM SALES IN CASH WAS CONSISTENT SINCE SEVERAL IMMEDIATELY PRECEDING YEARS AND THIS FACT HAS NOT BEEN CONTROVERTED BY THE LD. CIT-DR. THE ASSESSEE ALSO FILED AUDIT REPORT ALONG WITH AUDITED FINANCIAL STATEMENTS FOR A.Y 2011-12 AND 2012-13 BEFORE THE A.O DURING RELEVANT ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT, WHICH SUPPORTS THE CONTENTION OF THE APPELLANT THAT THE A.O AFTER CONSIDERING ENTIRE FACTS AND CIRCUMSTANCES ADJUDICATED THE ISSUE BY MAKING DETAILED INQUIRY WHICH WAS NOT ONLY ADEQUATE BUT SUFFICIENT WHICH DOES NOT PROVIDE VALID JURISDICTION TO THE LD. PCIT TO REVISE ASSESSMENT ORDER U/S. 263 OF THE ACT AND THUS, IN VIEW OF FOREGOING DISCUSSION WE ACCEPT THE SAME. 28. THE LD. AR DURING THE ARGUMENTS, REITERATING WRITTEN SUBMISSIONS PLACED AT PGS. 138-145 OF THE ASSESSEE PAPER BOOK SUBMITTED THAT IT IS 23 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI WELL SETTLED THAT BOTH THE CONDITIONS VIZ. ORDER OF THE ASSESSING OFFICER SHOULD BE ERRONEOUS AND SHOULD BE PREJUDICIAL TO THE INTEREST OF REVENUE SHOULD BE CUMULATIVELY SATISFIED BY THE LD. PCIT. SINCE FROM THE ABOVE DISCUSSION IT IS CLEAR THAT ASSESSING OFFICER HAS PASSED THE ORDER AFTER DETAILED, ADEQUATE AND SUFFICIENT INQUIRY AND SO THE ASSESSMENT ORDER CANNOT BE TAGGED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ON THE ALLEGATION OF INADEQUATE OR INSUFFICIENT ENQUIRY. THE ALLEGATION LD. PCIT IN PARA 15 OF THE ACT THE IMPUGNED ORDER THAT THE ASSESSMENT ORDER HAS BEEN PASSED BY THE AO WITHOUT ANY INQUIRY IN RESPECT OF ISSUES MENTIONED THEREIN HAS NO LEGS TO STAND HENCE, THE SAME IS HELD TO BE INCORRECT AND UNSUSTAINABLE. FURTHER, FACTS OF THE PRESENT CASE AS NOTED ABOVE, REVEALS THAT THE CASH DEPOSITED IN THE SAVINGS BANK ACCOUNT ARE THE PROCEED RECEIVED BY THE ASSESSEEAGAINST CASH SALE AND IT WAS SHOWN IN THE PROFIT AND LOSS ACCOUNT SO IT COME TO TAXING NET. THERE IS NO FINDING BY THE LD. PCIT THAT ASSESSEE HAS SHOWN LESS PRICE THAN THE PRICE ACTUALLY CHARGED BY HIM FROM THE CUSTOMERS WHILE MAKING CASH SALES OR THE CASH SALES PRICE SHOWN BY THE ASSESSEE IS LESSER THAN THE FAIR MARKET PRICE ON THE DATE OF SALE. SO THE ORDER CANNOT BE HOLD AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AS THE CASH DEPOSITED IN THE BANK ACCOUNTS IS THE PROCEED OF THE CASH SALES WHICH WAS THE PART OF THE INCOME/SALES SHOWN IN THE PROFIT AND LOSS ACCOUNT AND THIS FACT ALSO GETS SUPPORT FROM THE AUDITED 24 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI FINANCIAL ACCOUNTS AND STATEMENTS OF THE ASSSESSEE ALONG WITH VAT AUDIT REPORT FOR THE RELEVANT PERIOD. 29. BEFORE WE FINALLY DECIDE THE ISSUE OF SUFFICIENCY OR ADEQUACY OF INQUIRY CONDUCTED BY THE AO, WE ALSO FIND IT APPROPRIATE TO CONSIDER THE RATIO OF THE JUDGMENT OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF DENIEL MERCHANTS P. LTD. (SUPRA) AND OTHER RELATED APPEALS, WHICH HAS BEEN UPHELD BY THE HONBLE SUPREME COURT BY WAY OF DISMISSING SPECIAL LEAVE PETITIONS (SLP) OF RESPECTIVE ASSESSEES BY ORDER DATED 10.04.2017, THE FINAL VERDICT OF HON'BLE APEX COURT READS AS FOLLOWS: IN ALL THESE CASES, WE FIND THAT THE COMMISSIONER OF INCOME TAX HAD PASSED ORDER UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 WITH THE OBSERVATIONS THAT THE ASSESSING OFFICER DID NOT MAKE ANY PROPER INQUIRY WHILE MAKING THE ASSESSMENT AND ACCEPTING THE EXPLANATION OF THE ASSESSEE(S) INSOFAR AS RECEIPT OF SHARE APPLICATION MONEY IS CONCERNED. ON THAT BASIS THE COMMISSIONER OF COME TAX HAD, AFTER SETTING ASIDE THE ORDER OF THE ASSESSING OFFICER, SIMPLY DIRECTED THE ASSESSING OFFICER TO CARRY THOROUGH AND DETAILED INQUIRY. IT IS THIS ORDER WHICH IS UPHELD BY THE HIGH COURT. WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE HIGH COURT. 30. THE LD. DR DRAWING OUR ATTENTION TO PARAS 27 TO 30 OF THE ACT THE JUDGMENT OF HON'BLE CALCUTTA HIGH COURT AND SUBMITTED THAT WHEN THE AO ISSUED NOTICE ON A PARTICULAR ISSUE AND AFTER TAKING ON RECORD REPLY AND SUPPORTING EVIDENCE, WHICH WAS BEFORE THE AO AND WHICH SHOULD HAVE PROVOKED HIM TO MAKE FURTHER INVESTIGATION OR INQUIRY AND THE AO DID NOT ATTACH OR PROVIDE ANY IMPORTANCE TO THAT ASPECT OF THE MATTER AND WITHOUT MAKING ANY FURTHER ENQUIRY, THE AO HAD PROCEEDED 25 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI TO ALLOW THE CLAIM OF THE ASSESSEE THEN ORDER HAS TO BE HELD AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. FROM RESPECTFUL AND VIGILANT PERUSAL OF THE ORDER OF HONBLE SUPREME COURT (SUPRA) AND HONBLE HIGH COURT OF CALCUTTA (SUPRA) WE OBSERVE THAT THIS IS A CASE OF ACCOMMODATION ENTRY THROUGH APPLICATION MONEY WHEREIN THE AO, AFTER TAKING OR RECORD REPLY OF ASSESSE AND DESPITE AVAILABILITY OF EVIDENCE WHICH WAS SUFFICIENT TO PROVOKE HIM TO MAKE FURTHER INVESTIGATION, WITHOUT MAKING ANY FURTHER INVESTIGATION, VERIFICATION OR EXAMINATION ALLOWED THE CLAIM OF THE ASSESSE REGARDING SHARE CAPITAL. IN THIS SITUATION, IT WAS HELD BY HON'BLE HIGH COURT OF CALCUTTA THAT ON ACCOUNT OF INSUFFICIENT INQUIRY ORDER OF THE AO HAS TO BE HELD AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THIS CONCLUSION OF HONBLE HIGH COURT HAS BEEN UPHELD BY HONBLE APEX COURT WITH THE OBSERVATIONS AS REPRODUCED HEREIN ABOVE IN THE PRECEDING PARA. 31. FIRST OF ALL, WE MAY POINT OUT THAT PRESENT CASE IS NOT A CASE OF ACCOMMODATION ENTRY THROUGH SHARE APPLICATION MONEY OR SHARE CAPITAL BUT IN THE PRESENT CASE ISSUE OF CASH PURCHASES, CASH SALES AND CASH DEPOSITS TO BANK ACCOUNTS OF THE ASSESSE WAS PICKED UP BY THE LD. PCIT FOR THE PURPOSE OF ISSUING NOTICE U/S. 263 OF THE ACT BY ALLEGING IN PARA 15 OF THE IMPUGNED ORDER PASSED U/S. 263 OF THE ACT, THAT THE 26 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI ASSESSMENT ORDER DATED 16.01.2015 U/S. 143(3) OF THE ACT HAS BEEN PASSED BY THE AO WITHOUT MAKING ANY INQUIRY WHATSOEVER IN RESPECT OF ISSUE AS MENTIONED HEREIN ABOVE I.E., IN THE IMPUGNED ORDER. AS WE HAVE FOUND ABOVE THAT IN THE PRESENT CASE THE AO HAS MADE DETAILED INQUIRY ON THE ISSUE OF CASH SALES AND CASH DEPOSITS TO THE BANK ACCOUNTS OF THE ASSESSEE BY WAY OF ISSUING NOTICE U/S. 142(1) & 143(3) OF THE ASSESSEE THEREAFTER, HE FRAMED ASSESSMENT ORDER U/S. 143(3) OF THE ACT. HENCE, PRESENT CASE IS NOT A CASE OFNO INQUIRY OR INSUFFICIENT OR INADEQUATE ENQUIRY. THEREFORE, WE RESPECTFULLY NOTE THAT THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE QUITE DISSIMILAR AND DISTINGUISHED FROM THE FACTS IN THE CASE OF DENIEL MERCHANTS P. LTD. (SUPRA), THUS, BENEFIT OF THE RATIO OF SAID JUDGMENT OF HON'BLE APEX COURT IS NOT AVAILABLE FOR THE REVENUE. 32. THE LD. AR HAS PLACED VEHEMENT RELIANCE ON THE DECISIONS OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MINALBEN S. PARIKH 215 ITR 0081 (GUJ.), DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GABRIEL INDIA LTD. 203 ITR 108 (BOM.) AND DECISION OFHONBLE HIGH COURT OF DELHI IN THE CASE OF ITO VS. D.G.HOUSING PROJECTS LTD. DATED 01.03.2012 IN ITA NO.179/2011 AND SUBMITTED THAT WHEN THE AO HAD ADOPTED ONE OF THE PERMISSIBLE VIEW, OUT OF TWO POSSIBLE VIEWS, AVAILABLE TO HIM AND EVEN IF THIS HAS RESULTED IN LOSS TO 27 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI REVENUE AND THE AO HAS TAKEN ONE VIEW WITH WHICH THE LD. PCIT MAY NOT AGREE THEN ALSO THE SAID ORDERS CANNOT BE TREATED AS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE UNLESS VIEW TAKEN BY THE A.O IS UNSUSTAINABLE IN LAW. 33. IT WAS ALSO A CONTENTION OF THE LD. AR THAT THE ASSESSMENT ORDER CANNOT BE HELD AS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE BECAUSE AS PER RATIO OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT [2000] 243 ITR 83 (SC) , THE PHRASE PREJUDICIAL TO THE INTEREST OF REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSMENT OFFICER. THE LD. AR CONTENDED THAT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE A.O CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF REVENUE. 34. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSIONS, FIRSTLY, WE MAY POINT OUT THAT THE A.O AFTER MAKING DETAILED ENQUIRY BY ISSUING NOTICES U/S. 142(1) & 143(2) OF THE ACT AND CONSIDERING THE REPLY AND SUPPORTING DOCUMENTS AND EVIDENCE IS SUBMITTED BY THE ASSESSEE, IN PARA 4 OF ASSESSMENT ORDER, HAS ADJUDICATED THE ISSUE OF CASH SALES AND LOW GROSS PROFIT RATE WITH FOLLOWING OBSERVATIONS AND FINDINGS: 4. DURING PREVIOUS YEAR TO RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN GROSS PROFIT OF RS. 20,39,279 @ 0.32%. ON PERUSAL OF SALES ACCOUNT VIS--VIS CASH BOOK IT WAS REVEALED 28 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI THAT MOST OF SALES WERE SHOWN IN CASH. IT WAS FURTHER SEEN THAT THE SALE BILLS DO NOT CONTAIN COMPLETE ADDRESS OF PURCHASERS. FOR WANT OF COMPLETE DETAILS OF SALES, THE PROFIT SHOWN FROM CASH SALES WAS NOT VERIFIABLE. ON COMPARISON IT IS FOUND THAT THERE IS INCREASE IN TURNOVER OF THE ASSESSEE. TURNOVER HAS GONE UP FROM RS. 19,56,38,231/- TO RS. 63,22,78,579/-, HOWEVER, GROSS PROFIT HAS NOT INCREASED IN COMMENSURATE. ON BEING POINTED OUT THE ASSESSEE CLAIMED THAT HE HAS PRODUCED ALL BILLS FOR PURCHASE AND SALE. IT MAY BE MENTIONED THAT SALE BILL OF THE ASSESSEE DO NOT MENTION COMPLETE DETAILS OF PURCHASERS HENCE THERE IS SCOPE OF UNDER REPORTING OF SALES. LOOKING TO FACTS OF THE CASE AND NATURE BUSINESS A LUMP SUM ADDITION OF RS. 2,00,000/- IS MADE TO TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF GROSS PROFIT. 35. BEFORE WE FURTHER PROCEED TO ANALYZE THE ERRONEOUSNESS OR INCORRECTNESS IN THE ASSESSMENT ORDER, WE MAY POINT OUT THAT IN THE FIRST APPEAL ABOVE ADDITION OF RS. 2,00,000/- HAS BEEN DELETED BY THE LD. CIT(A) BY PASSING ORDER ON 28.01.2016 PLACED AT ASSESSEES PAPER BOOK PGS. 21-24. IN THE PRESENT CASE,ON THE BASIS OF FOREGOING DISCUSSION WE ARE SATISFIED THAT THE AO MADE SUFFICIENT INQUIRY ON THE VARIOUS ISSUE RELATED TO THE CASH SALES AND DEPOSIT OF CASH TO THE BANK ACCOUNTS OF THE ASSESSEE. IN THE LIGHT OF THESE FACTS THE AO ALSO CONSIDERED LOW GROSS PROFIT RATE OF THE ASSESSEE IN COMPARISON TO THE PRECEDING ASSESSMENT YEAR AND THEREAFTER, HE MADE LUMP SUM OF RS. 2,00,000/- WHICH WAS SUBSEQUENTLY DELETED BY THE FIRST APPELLATE AUTHORITY. WE MAY ALSO POINT OUT THAT AS PER VAT AUDIT REPORT FOR A.Y 2012-13 PLACED AT ASSESSEES PAPER BOOK PG. 72-80 WHICH HAS BEEN ACCEPTED BY THE CONCERNED A.O, AMOUNT OF SALES AND PURCHASES IS QUITE SIMILAR AND IDENTICAL AS HAS BEEN SHOWN BY THE ASSESSEE BEFORE 29 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI THE AO DURING ASSESSMENT PROCEEDINGS WHICH AGAIN SUPPORTS THE CORRECTNESS OF THE FINANCIAL ACCOUNTS OF THE ASSESSE. 36. IN THIS BACK DROP OF FACTS AND CIRCUMSTANCES, WE HAVE NO HESITATION TO HOLD THAT THE AO HAD TAKEN A PLAUSIBLE VIEW OUT OF TWO POSSIBLE VIEWS WHICH IS SUSTAINABLE AND CORRECT. ONLY BECAUSE THE LD. PCIT IS NOT AGREED WITH THE VIEW TAKEN BY THE AO AND WANTS TO REPLACE THE SAME BY IMPOSING SECOND VIEW OF HIS CHOICE, THIS SITUATION DOES NOT EXTEND VALID JURISDICTION IN THE HANDS OF LD. PCIT TO REVISE ASSESSMENT ORDER U/S. 263 OF THE ACT. OUR CONCLUSION IN THIS REGARD ALSO GETS STRONG SUPPORTS FROM THE RATIO OF THE DECISION HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF MINALBEN S. PARIKH (SUPRA), AND DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF D.G. HOUSING (SUPRA). 37. IN THE PRESENT CASE FROM THE IMPUGNED ORDER OF LD. PCIT, WE OBSERVE THAT IN PARAS 6, 7 & 8 THE ALLEGATIONS REGARDING INSUFFICIENT INQUIRY AND VERIFICATION HAD BEEN MADE. THEREAFTER, IN PARAS 11 TO 14, THE LD. PCIT HAS NOTED AND CONSIDERED THE MANDATE OF S. 263 OF THE ACT AND THEREAFTER IN PARA 15 DIRECTLY JUMPED TO A CONCLUSION THAT THE ASSESSMENT ORDER DATED 16.01.2015 HAS BEEN PASSED WITHOUT MAKING ANY INQUIRY IN RESPECT OF ISSUES AS MENTIONED ABOVE I.E., ISSUE OF CASH PURCHASES & SALES AND CASH DEPOSITS TO THE BANK ACCOUNT OF THE ASSSESSEE. AFTER THIS EXERCISE, IN SECOND PART OF PARA 15, THE LD. PCIT 30 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE AO TO MAKE FRESH ASSESSMENT AFTER GIVING PROPER OPPORTUNITY OF HEARING TO THE ASSSESSEE. IN THE CASE OF SUNBEAM AUTO LTD . (SUPRA) THE HONBLE HIGH COURT OF DELHI LAID A PREPOSITION THAT WHERE THE ASSESSING OFFICER MADE THE ADEQUATE INQUIRY BEFORE PASSING ORDER U/S. 143(3) OF THE ACT. IF THERE WAS ANY INQUIRY, EVEN INADEQUATE, THAT BY ITSELF WOULD GIVE NO OCCASION TO THE LD. CIT TO PASS ORDERS U/S. 263 OF THE ACT, MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER. IN THE CASE OF INADEQUATE INQUIRY THE LD. CIT MUST HIMSELF CONDUCT REQUISITE ENQUIRY BEFORE PASSING THE ORDER U/S. 263 OF THE ACT AND THE MATTER CANNOT BE REMITTED TO THE ASSESSING OFFICER TO CONDUCT SUCH FURTHER ENQUIRIES. 38. IN THE PRESENT CASE, AS WE HAVE NOTICE ABOVE, THE LD. PCIT AFTER CONSIDERING THE INCORRECT FACTS THAT IT IS A CASE OF TOTAL CASH PURCHASE AND SALES,WHEREAS ALL PURCHASES WAS MADE BY THE ASSESSEE THROUGH BANKING CHANNELS BY MAKING PAYMENT THROUGH RTGS, THEN OBSERVATION OF THE LD. PCIT THAT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE CANNOT BE HELD AS SUSTAINABLE SPECIALLY WHEN THE VIEW TAKEN BY THE AO ON THE ISSUE IS ONE POSSIBLE VIEW OUT OF TWOPOSSIBLE VIEWS. EVEN ON CAREFUL CONSIDERATION OF ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE ON MERITS, WE HAVE NO HESITATION TO HOLD THAT IT IS NOT A CASE OF DIFFERENCE OF OPINION OR TWO POSSIBLE VIEWS AS THE ASSESSEE HAS 31 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI ESTABLISHED THE IMPUGNED CASH DEPOSIT TO THE BANK ACCOUNTS WAS MADE OUT OF PROCEED RECEIVED FROM CASH SALES OF THE GOODS, WHICH WAS PURCHASED THROUGH BANKING CHANNELS BY MAKING PAYMENT THROUGH RTGS, AND THERE IS NO ALLEGATION OF THE LD. PCIT THAT THERE WAS UNDER VALUATION OF CHARGING OF LESS PRICE OF THE GOODS SOLD BY THE ASSESSEE IN CASH. THERE IS NO OTHER ALLEGATION BY THE LD. PCIT THAT THE ASSESSEE WAS HAVING ANOTHER SOURCE OF COLLECTING CASH AND DEPOSITING THE SAME TO HIS BANK ACCOUNT WHICH WAS EITHER HIDDEN BY THE ASSESSEE OR WAS NOT INVESTIGATED AND ADJUDICATED BY THE AO. IN THESE SITUATIONS, THEORY OF TWO POSSIBLE VIEWS COULD BE TAKEN PER CONTRA, IN THE PRESENT CASE THIS IS GLARING FACT THAT THERE IS ONLY ONE SOURCE OF CASH COLLECTION WITH THE ASSESSEE I.E., SALE OF GOODS IN CASH AND THE SAME WAS DEPOSITED TO THE BANK ACCOUNTS AND THE SAME WAS FURTHER USED FOR PURCHASE OF GOODS/BULLION BY MAKING PAYMENT THROUGH BANKING CHANNELS I.E., RTGS WHICH IS CLEARLY SUPPORTED BY THE BANK ACCOUNTS OF THE ASSESSEE AS WELL AS COPY OF THE CASH BOOK PLACED BEFORE THE AO AS WELL BEFORE THE LD. PCIT. 39. IT IS ALSO RELEVANT TO MENTION THAT IN THE PRESENT CASE, THE LD. PCIT HAS ALLEGED THAT THE INQUIRY MADE BY THE AO IS INSUFFICIENT AND THEREFORE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND WITHOUT MAKING ANY ENQUIRIES IN THIS REGARD THE LD. PCIT 32 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI ON THE SAID ALLEGATION SET ASIDE THE ASSESSMENT ORDER DIRECTING THE AO TO REFRAME ASSESSMENT IN RESPECT OF ISSUES MENTIONED THEREIN THE IMPUGNED ORDER VIZ. ISSUE OF CASH PURCHASES, CASH SALES AND CASH DEPOSITS TO THE VARIOUS BANK ACCOUNTS. THIS APPROACH OF THE LD. PCIT IS NOT CORRECT AND JUSTIFIED IN VIEW OF THE VARIOUS DECISIONS INCLUDING DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF SUNBEAM AUTO LTD. (SUPRA). 40. IN THE PRESENT CASE, THE AO HAS TAKEN A REASONABLE AND PLAUSIBLE VIEW ON THE ISSUE OF CASH SALES AND CASH DEPOSITS TO THE BANK ACCOUNT OF THE ASSESSEE FAVOURING THE ASSESSEE WHICH IS INCONSONANCE WITH THE PROVISIONS OF THE ACT AND HAS BEEN DRAWN AFTER DETAILED ENQUIRY ON THE ISSUE AND AFTER CONSIDERING ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE.THEN THE ASSESSMENT ORDER CANNOT BE HELD AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN VIEW OF ABOVE NOTED CONCLUSION, THE ASSESSMENT ORDER CANNOT BE REVISED U/S. 263 OF THE ACT AND LD. PCIT WAS NOT CORRECT AND JUSTIFIED THE REVISING THE SAME WITHOUT CONDUCTING ANY INQUIRY HIMSELF. THIS CONCLUSION GETS STRONG SUPPORT FROM THE VARIOUS JUDICIAL PRONOUNCEMENTS, AS HAS BEEN RELIED BY THE LD. AR, INCLUDING JUDGMENTS OF HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. V. CIT 243 ITR 83 (SC), WHICH WAS FOLLOWED BY IT IN THE SUBSEQUENT DECISION IN THE CASE OF CIT VS. GABRIEL INDIA LTD. 33 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI (SUPRA) AND WAS ALSO FOLLOWED BY HONBLE JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF CIT V. ARVINDJEWELLERS 259 ITR 502 (GUJ.) 41. ON THE BASIS OF FOREGOING DISCUSSION, WE ARE INCLINED TO HOLD THAT THE LD. PCIT DID NOT ASSUME VALID JURISDICTION TO REVISE THE IMPUGNED ASSESSMENT ORDER (DATED 16.01.2015 PASSED U/S. 143(3) OF THE ACT) U/S. 263 OF THE ACT AND IMPUGNED ORDER, DIRECTING THE AO TO REFRAME THE ASSESSMENT, IS NOT VALID AND SUSTAINABLE BEING PASSED WITHOUT HAVING VALID JURISDICTION AND AGAINST THE MANDATE OF S. 263 OF THE ACT AND BAD IN LAW. CONSEQUENTLY, IMPUGNED NOTICE DATED 17.03.2017 &ORDER DATED 26.03.2017 U/S. 263 OF THE ACT AND ALL CONSEQUENTIAL PROCEEDINGS OR ORDER(S), IF ANY, IN PURSUANT THERETO ARE QUASHED. 42. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 21 ST MARCH, 2018. / SURAT ; DATED :21 ST MARCH, 2018 EDN / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A)-3, SURAT; 4. PR. CIT-III, SURAT; 5. , , / DR, ITAT, SURAT; 6. / GUARD FILE. / BY ORDER, // TRUE COPY // / ASSISTANT REGISTRAR SD/- SD/- ( ) ( O.P.MEENA ) / ACCOUNTANT MEMBER ( ) (C.M.GARG) / JUDICIAL MEMBER 34 ITA NO.1194/AHD/2017/SRT (A.Y: 2012-13) SHRIMURTUJAHUSAINBHAIHIRANI , / ITAT, SURAT