ARABINDA ROY, Hooghly V. C.I.T Kolkata - XX, Hooghly

ITA 1367/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4624 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 20-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SACHCHIDANANDA SRIVASTVA
• Keywords: Rectification of order; Opportunity of being heard; Audit objection; Rule of consistency; Period of limitation; Difference of opinion; Assessment record; Prejudicial to interest; Change of opinion
• Section: 40A(3); 143(3); 142(1); 263; 154; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.1367/KOL/2013 ASSESSMENT YEARS:2008-09 ARABINDA ROY, C/O SOMNATH GHOSH, ADVOCATE, SEVEN BROTHERS LODGE, P.O. BUROSHIBTALA, P.S. CHINSURH, DIST. HOOGHLY, PIN-712 105 [ PAN NO.ADDPR 2035 C ] / V/S . COMMISSIONER OF INCOME TAX-XX, KOLKATA, 54, RAFI AHMED KIDWAI ROAD, KOLKATA-16 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI SOMNATH GHOSH, ADVOCATE /BY RESPONDENT SHRI SACHCHIDANANDA SRIVASTVA, CIT-DR /DATE OF HEARING 30-06-2016 /DATE OF PRONOUNCEMENT 24-08-2016 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL HAS BEEN FILED BY THE ASSESSEE RELATING TO ASSESSMENT YEAR (AY ) 2008-09 IS AGAINST THE ORDER PASSED BY COMMISSIONER OF INCOME TAX-XX, KOLKATA UNDER THE PROVISION OF SECTION 263 OF THE ACT OF TH E INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE NO. CIT -XX/KOL/REVISION U/S. 263/28/2012- 13 DATED 06/19.03.2013. ASSESSMENT WAS FRAMED BY IT O WARD-1(4), HOOGHLY U/S 143(3) VIDE HIS ORDER DATED 23.12.2010. THE GROUNDS RAISED BY THE ASSESSEE PER ITS APPEAL ARE AS UNDER:- ITA NO.1367/KOL/2013 A.Y 2008-09 ARABINDA ROY VS. CIT-XX, KOL PAGE 2 1. FOR THAT NONE OF THE CONDITIONS PRECEDENT FOR TH E ASSUMPTION OF JURISDICTION U/S. 263(1) OF THE INCOME TAX ACT, 196 1 EXISTED AND/OR HAVE BEEN COMPLIED WITH AND/OR FULFILLED ON THE PART OF THE L D. COMMISSIONER OF INCOME TAX, KOLKATA-XX, KOLKATA IN THE INSTANT CASE AND TH E SPECIOUS ORDER DATED 06- 03-2013 PASSED U/S. 263 OF THE INCOME TAX ACT, 1961 IN PURSUANCE TO THE IMPUGNED NOTICE DATED 08-08-2012 IS THEREFORE AB IN ITIO VOID, ULTRA VIRES AND EX-FACIE NULL IN LAW. 2. FOR THAT THE LD. COMMISSIONER OF INCOME TAX, KOL KATA-XX, KOLKATA ACTED UNLAWFULLY IN SETTING ASIDE THE ASSESSMENT OR DER DATED 23-12-2010 FRAMED U/S 143(3) OF THE INCOME TAX ACT, 1961 BY TH E LD. INCOME TAX OFFICER, WARD 1(4), HOOGHLY ON THE TENUOUS PREMISE OF INADE QUATE-ENQUIRY BUT, NOT ON ACCOUNT OF LACK OF ENQUIRY' IS FRAUGHT WITH THE TA INT OF ILLEGALITY AND THE IMPUGNED FINDING REACHED ON THAT BEHALF ON EXTRANEO US CONSIDERATIONS NOT GERMANE TO THE ISSUE IN DISPUTE IS ALTOGETHER BAD, UNJUST, IMPROPER AND UNFAIR IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND CONT RARY TO THE CANONS OF LAW. 3. FOR THAT THE LD. COMMISSIONER OF INCOME TAX, KOL KATA-XX, KOLKATA FELL IN ERROR IN DIRECTING THE LD. INCOME TAX OFFICER, W ARD L( 4), HOOGHLY TO PASS A DE- NOVO ASSESSMENT ORDER WITHOUT FACTUALLY APPRECI ATING THE CONTENTS OF THE REJOINDER OF THE APPELLANT UNDERLINED WITH EVIDENCE WHICH DO NOT WARRANT THE PURPORTED DECISION IN THE CONTEXT UNDER CONSIDERATI ON AND THE IMPUGNED FINDING ON THAT ACCOUNT IS WHOLLY ILLEGAL, ILLEGITI MATE, ILLOGICAL AND INFIRM IN LAW. 4. FOR THAT THE IMPUGNED ORDER PASSED BY THE LD. CO MMISSIONER OF INCOME TAX. KOLKATA-XX, KOLKATA DIRECTING THE LD. INCOME T AX OFFICER, WARD 1(4) HOOGHLY TO CONDUCT FURTHER ENQUIRIES ON THE ISSUES WHICH STOOD EXPLAINED BEFORE HIM AND THE SPECIOUS CONCLUSION REACHED IN T HIS RESPECT CULMINATING IN A MANDATE INSTRUCTION TO FRAME THE ASSESSMENT DE NOVO IN SPITE OF THE FACTS THAT CIRCUMSTANCES DID NOT WARRANT SUCH ACTION IS COMPLE TELY UNFOUNDED, UNJUSTIFIED AND UNTENABLE IN LAW. SHRI SOMNATH GHOSH, LD. AUTHORIZED REPRESENTATIVE A PPEARED ON BEHALF OF ASSESSEE AND SHRI SACHCHIDANANDA SRIVASTVA, LD. DEPARTMENTAL REPRESENTATIVE APPEARED ON BEHALF OF REVENUE. 2. SOLE INTER-CONNECTED ISSUE RAISED BY ASSESSEE IN ALL THE GROUNDS OF APPEAL IS THAT LD. CIT ERRED IN HOLDING THE ORDER OF ASSESSING OFF ICER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE UNDER SECTION 263 OF THE AC T. ITA NO.1367/KOL/2013 A.Y 2008-09 ARABINDA ROY VS. CIT-XX, KOL PAGE 3 3. FACTS IN BRIEF AS HAVE BEEN BROUGHT ON RECORD TH AT ASSESSEE, AN INDIVIDUAL, IS ENGAGED IN THE TRADING BUSINESS OF POTATO. THE ASSE SSEE FILED ITS INCOME TAX RETURN FOR THE YEAR UNDER CONSIDERATION ON 19.09.2008 SHOWING TOTAL INCOME OF 1,13,464/-. THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY ASSES SMENT AND ACCORDINGLY NOTICE U/S 143(2) R.W.S. 142(1) OF THE ACT ISSUED. THE ASSESSM ENT WAS FRAMED AT 2,18,330/- AFTER MAKING CERTAIN DISALLOWANCE / ADDITION TO THE TOTAL INCOME OF ASSESSEE. 4. HOWEVER, LD. CIT U/S 263 OF THE ACT WHILE SCRUTI NIZING THE ASSESSMENT RECORDS OF ASSESSEE, FOUND THAT ORDER PASSED BY AO SUFFERS FROM SEVERAL DEFICIENCIES AND INFIRMITIES AS DETAILED UNDER:- (A) THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION H AS SHOWN UNSECURED LOAN FOR AN AMOUNT OF 2.50 LAKH FROM THE FOUR PERSONS. IN NONE-OF THE CAS E, PAN OF THE LOAN CREDITORS WAS AVAILABLE. THE LD. CIT FOUND THAT THE GENUINENESS OF THE LOAN, IDENTITY OF THE LOAN CREDITORS WITH THEIR CRE DITWORTHINESS WAS NOT ESTABLISHED IN THE ASSESSMENT PROCEEDINGS. ACCORDIN GLY, THE INTEREST DEBITED ON SUCH LOAN FOR AN AMOUNT OF 60,000/- IS LIABLE TO BE DISALLOWED. LD. CIT FURTHE R OBSERVED THAT EVEN IT IS PRESUMED THAT THE LOAN CRE DITORS ARE GENUINE THEN ALSO THE INTEREST EXPENSE IS NOT ALLOWED FOR DEDUCTION B Y VIRTUE OF THE PROVISION OF SEC. 40(A)(IA) OF THE ACT. (B) THERE WERE THREE CREDIT ENTRIES REFLECTING IN T HE BANK STATEMENT OF ASSESSEE FOR TOTAL AMOUNT OF 3.5 LAKH RECEIVED FROM THREE PERSONS BUT THESE WER E NOT EXAMINED BY AO AT THE TIME OF ASSESSMENT PROCEEDING S. (C) THERE WERE TWO CHEQUES DEBITED FROM THE BANK AC COUNT OF ASSESSEE FOR 1.50 LAKH AND RS.1.25 LAKH IN THE NAME OF M/S KALOS ONA HIMGHAR PVT. LTD. AND SHRI HARADHAN SAMANTA RESPECTIVELY. BUT THESE DEBIT ENTRIES WERE NOT EXAMINED BY AO WHILE FRAMING ASSESSMENT. (D) IT WAS OBSERVED THAT NUMEROUS CASH CHEQUE WERE ISSUED TO SEVERAL PERSONS INCLUDING SHRI U. TIWARY WHO HAS RECEIVED IN AGGREG ATE THE SUM OF 21.80 LAKH FROM ASSESSEE. THE PAYMENT ON A PARTICULAR DATE WAS EXCEEDING 20,000/-. THEREFORE, THESE PAYMENTS WERE IN CONTRAVENTION OF THE PROVISION OF SEC. ITA NO.1367/KOL/2013 A.Y 2008-09 ARABINDA ROY VS. CIT-XX, KOL PAGE 4 40A(3) OF THE ACT AND THIS ISSUE WAS NOT AT ALL EXA MINED BY THE AO WHILE FRAMING HIS ASSESSMENT ORDER. (E) THE ASSESSEE HAS SHOWN AGRICULTURAL INCOME OF 5,000/- PER ANNUM FOR THE YEAR UNDER CONSIDERATION BUT HE OWNS NO AGRICULTURA L LAND BY WAY OF OWNERSHIP AS PER ITS BALANCE-SHEET. 5. IN VIEW OF THE ABOVE, LD. CIT OPINED THAT THE OR DER OF AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE DUE TO NON-V ERIFICATION / EXAMINATION BY AO. ACCORDINGLY, LD. CIT U/S 263 OF THE ACT ISSUED SHOW CAUSE NOTICE UPON ASSESSEE. IN COMPLIANCE TO THE NOTICE, ASSESSEE SUBMITTED AS UND ER:- (I) THE INTEREST WAS DEBITED FOR AN AMOUNT OF 60,000/- FOR THE YEAR UNDER CONSIDERATION ON THE UNSECURED LOAN FROM FOUR PARTI ES WHICH WERE CARRIED FORWARD FROM EARLIER YEARS AND NO FRESH LOA N WAS TAKEN DURING THE YEAR UNDER CONSIDERATION. THE DISPUTE OF THE GE NUINENESS/ IDENTITY AND CREDITWORTHINESS OF THE FOUR LOAN CREDITORS WER E DULY EXAMINED BY AO IN AY 2005-06. THERE WAS NO ADVERSE REMARKED IN THE AUDIT REPORT GIVEN BY QUALIFIED CHARTERED ACCOUNTANT U/S 44AB OF THE ACT WITH REGARD TO THE LOAN CREDITORS. IT WAS SUBMITTED THAT LOAN CREDITORS HAD FURNISHED DECLARATION IN FORM 15H / 15G FOR NON DED UCTION OF TDS ON THE PAYMENT OF INTEREST. THEREFORE, ASSESSEE WAS NO T LIABLE TO DEDUCT TDS ON THE PAYMENT OF INTEREST OF RS.15,000 EACH PA ID/ PAYABLE TO THE FOUR LOAN CREDITORS. THE ASSESSEE ALSO SUBMITTED TH AT THE PROVISIONS OF SECTION 194A IS NOT APPLICABLE TO IT. (II) IT WAS SUBMITTED THAT THE RECEIPT OF 3.5 LAKH FROM THREE PARTIES IS REFLECTING THE SALE OF POTATO. ASSESSEE WAS NOT UND ER ANY OBLIGATION TO CHECK THE CREDITWORTHINESS OF THE PURCHASERS OF POT ATO. THE SALE-PRICE WAS RECEIVED THROUGH ACCOUNT PAYEE CHEQUES AS A RES ULT OF SALE. NONE OF THE PARTY, IN THE INSTANT CASE, IS A FICTITIOUS THE REFORE PROPOSE ADDITION U/S. 263 OF THE ACT IS NOT WARRANTED. (III) THE PAYMENT OF RS. 1,50,000.00 AND RS. 1,25,0 00.00 WAS MADE TO TWO PARTIES WHICH ARE THE CREDITORS OF ASSESSEE AND THE IR BALANCES WERE ITA NO.1367/KOL/2013 A.Y 2008-09 ARABINDA ROY VS. CIT-XX, KOL PAGE 5 CARRIED FORWARD FROM THE EARLIER YEAR. THE PAYMENT WAS MADE IN THE CURRENT YEAR FOR THE PURCHASES MADE IN THE PRECEDIN G YEAR. (IV) WITH REGARD TO CASH CHEQUE ISSUED BY ASSESSEE, IT WAS SUBMITTED THAT SHRI U TIWARI IS THE REGULAR EMPLOYEE AND HE WAS AU THORIZED TO WITHDRAW MONEY FROM BANK. ACCORDINGLY AFTER WITHDRA WAL OF MONEY, PAYMENTS WERE RELEASED TO THE SUNDRY CREDITORS AND IN NONE OF THE CASE, THE PAYMENT WAS EXCEEDING OF 20,000/- IN A DAY. THEREFORE, THE PROVISION OF SEC. 40A(3) R.W.R. 6DD OF THE IT RULES HAVE NO APPLICATION IN THE INSTANT CASE OF ASSESSEE. (V) THE ASSESSEE WITH REGARD TO AGRICULTURAL INCOME OF RS.5,000/- SUBMITTED THAT AGRICULTURAL LAND WAS INHERITED. SO THE AGRICU LTURAL LAND IN QUESTION WAS NOT REFLECTING IN THE BALANCE-SHEET OF ASSESSEE . HOWEVER THE AGRICULTURAL INCOME WAS ALSO SHOWN IN THE EARLIER Y EAR WHICH WAS DULY VERIFIED BY PREDECESSOR OF AO WITHOUT ANY DISPUTE. THEREFORE, IT SHOULD BE ACCEPTED AS NORMAL AGRICULTURAL INCOME OF ASSESS EE. HOWEVER, LD. CIT IN HIS ORDER U/S. 263 OF THE ACT D ISREGARDED THE CLAIM OF ASSESSEE BY OBSERVING AS UNDER:- I) THE CONTENTION OF THE ASSESSEE THAT THE LOANS OF RS . 2,50,000.00 WERE BROUGHT FORWARD FROM THE EARLIER YEARS NEEDS TO BE VERIFIED BY THE AO WITH REFERENCE TO THE ASSESSMENT RECORDS OF EARLIER YEAR S. SIMILARLY THE INTEREST NEEDS TO BE VERIFIED ON SUCH LOANS AS THE FORMS 15H /G ARE NOT AVAILABLE IN ASSESSMENT RECORDS. IT HAS ALSO TO BE CHECKED WHETH ER THE PROVISIONS OF SECTION 194A ARE APPLICABLE TO THE ASSESSEE IN THE INSTANT CASE. II) THE GENUINENESS AND CREDIT WORTHINESS OF THE PARTIE S WHO HAVE GIVEN A SUM OF RS. 3.5 LACS IN AGGREGATE REQUIRE TO BE VERIFIED . III) THE PAYMENT OF RS. 2,75,000.00 TO TWO PARTIES WAS N OT VERIFIED WITH THE PURCHASES WHICH THE ASSESSEE CLAIMED TO HAVE MADE I N THE EARLIER YEAR. IV) THE VERIFICATION WITH REGARD TO THE WITHDRAWAL OF S UM OF RS. 21.80 LACS FROM THE BANK AND CASH PAYMENT EXCEEDING THE LIMIT BY VIOLATING THE PROVISIONS OF SECTION 40A(3) OF THE ACT NEED TO BE VERIFIED. ITA NO.1367/KOL/2013 A.Y 2008-09 ARABINDA ROY VS. CIT-XX, KOL PAGE 6 V) THE INHERITED PROPERTY AND ITS AGRICULTURAL USE NEE D TO BE ASCERTAINED BY THE AO WITH REFERENCE TO THE DOCUMENTS AND EARLIER YEAR RECORDS. ACCORDINGLY THE LD. CIT(A) DISREGARDED THE SUBMISSI ON OF THE ASSESSEE BY HOLDING AS UNDER : IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED OPINI ON THAT OWING TO THE OMISSION ON THE PART OF THE AO TO CONDUCT NECESSARY ENQUIRIES IN RELATION TO THE ISSUES MENTIONED IN THE RECEDING PARAGRAPHS THE ASS ESSMENT ORDER HAS UNDOUBTEDLY BEEN RENDERED ERRONEOUS AS WELL AS PREJ UDICIAL TO THE INTERESTS OF THE REVENUE. IT IS ALSO PERTINENT TO MENTION THAT T HE DOCUMENTARY EVIDENCES FURNISHED BY THE LD. AR BEFORE THE UNDERSIGNED IN T HE COURSE OF HEARING ARE NOT COMPLETE IN NATURE AND THEREFORE THE SAME ONLY TEND TO VAGUELY SUPPORT THE AR/S CONTENTIONS. NO CONCRETE INFERENCE CAN BE DRAW N THEREFROM. I AM, THEREFORE, LEFT WITH NO OTHER ALTERNATIVE BUT TO SE T ASIDE THE ASSESSMENT ORDER DATED 23.12.2010 U/S. 263 OF THE IT ACT WITH THE DI RECTION TO THE AO TO FRAME THE ASSESSMENT DE NOVO IN THE LIGHT OF THE OBSERVAT IONS MADE IN THE FOREGOING PARAGRAPHS AND AFTER CONDUCTING THE REQUISITE ENQUI RIES TO THAT EFFECT IT IS NEEDLESS TO SAY THAT WHILE DOING SO, THE AO SHALL A FFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. BEING AGGRIEVED BY THIS ORDER OF LD. CIT ASSESSEE C AME IN APPEAL BEFORE US. 6. BEFORE US LD. AR FILED A PAPER BOOK COMPRISING P AGES FROM 1 TO 123 AND SUBMITTED THAT THE LD. CIT HAS ISSUED THE NOTICE U/ S 263 OF THE ACT ON THE BASIS OF AUDIT OBJECTION AND WITHOUT APPLYING HIS OWN MIND. THE LD . AR DREW OUR ATTENTION ON PAGES 18 TO 21 OF THE PAPER WHERE THE COPY OF THE AUDIT O BJECTION WAS PLACED. IT IS NOT IN DISPUTE THAT THE ID. COMMISSIONER INITIATED THE PRO CEEDINGS U/S. 263(1) OF THE ACT ON AS MANY AS SIX ISSUES WHICH WERE NOT VERIFIED IN THE C OURSE OF ASSESSMENT PROCEEDINGS BY THE AO WHICH HAD RENDERED THE ASSESSMENT ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTEREST OF REVENUE. IN SO FAR AS THE APPLICATI ON OF S. 40(A)(IA) READ WITH S. 194A OF THE ACT IS CONCERNED. THE APPELLANT INCURRED EXPENS ES OF RS. 60.000/- ON ' INTEREST PAID ' ON UNSECURED LOAN FROM TATINI GHOSH, NEMAI GHOSH, MANJU BHUNIYA AND TAPAN KUMAR RAY SINCE DECEASED. THE LOAN CREDITORS HAD PR OVIDED DECLARATION U/S 197A(1) OF THE ACT IN FORM 15G TO THE ASSESSEE FOR NON DEDU CTION OF TDS AND HENCE THE ASSESSEE DID NOT DEDUCT ANY TDS FROM THE PAYMENTS M ADE TO THEM. IN COURSE OF THE ASSESSMENT PROCEEDINGS, THE FORMS 15G OBTAINED FROM THESE PARTIES WERE DULY SUBMITTED BEFORE THE AO AND ACCORDINGLY, THE SAME W AS ALLOWED BY HIM. IT IS SETTLED ITA NO.1367/KOL/2013 A.Y 2008-09 ARABINDA ROY VS. CIT-XX, KOL PAGE 7 THAT THE ASSESSEE'S CLAIM WAS TO BE ACCEPTED THAT S INCE HE HAD THE DECLARATIONS OF THE PAYEES IN THE PRESCRIBED FORM BEFORE HIM AT THE TIM E WHEN THE INTEREST WAS PAID. HE WAS NOT LIABLE TO DEDUCT TAX THEREFROM UNDER SECTIO N 194A AND; IF HE WAS NOT LIABLE TO DEDUCT TAX U/S 40(A)(IA) WAS NOT ATTRACTED [VIPIN P . MEHTA -VS- I.T.O. (2011) 46 SOT 71 (MUM)]. HOWEVER, THE LD CIT IN EXERCISING HI S POWERS U/S 263 OF THE ACT IN THE INSTANT CASE HAS REMITTED THE ISSUE BACK TO THE FILE OF THE AO WITHOUT CONCLUDING THAT THE ASSESSEE HAD ANY LEGAL LIABILITY FOR DEDUC TION OF TAX AT SOURCE FROM THE PAYMENTS MADE TO THEM. 6.1 FURTHER, IN RESPECT OF THREE DEPOSITS AGGREGATI NG TO A SUM OF RS. 3.50 LAKHS IN THE SAVINGS BANK ACCOUNT BEARING NO. 36401020000090 3 WITH AXIS BANK. ARAMBAGH, IT WAS APPRISED THAT THESE ARE AMOUNTS RECEIVED ON ACCOUNT OF SALE PROCEEDS AND THE AO WAS CONVINCED BY SUCH ELUCIDATION. HOWEVER, THE LD. CIT IN EXERCISING HIS POWERS U/S. 263 OF THE ACT IN THE INSTANT CASE HAS REMITTED THE ISSUE BACK TO THE FILE OF THE AO ON THE JUSTIFICATION THAT SUCH DEPOSITS IN T HE ACCOUNTS WERE NOT EXPLAINED QUA CREDITWORTHINESS OF THE PARTIES WHICH RENDERS THE A SSESSMENT ORDER ERRONEOUS. THE AO WAS SATISFIED WITH THE GENUINITY OF THE PAYMENTS RE CEIVED BY THE ASSESSEE AND NO ADVERSE PROOF WAS LED BY THE LD. CIT TO PROVE THE C ONTRARY. HOWEVER, THE SPECIOUS CONCLUSION DRAWN IN THIS RESPECT IS BEREFT OF LEGAL SANCTITY BY CONCEIVING THAT THE DEPOSITS IN THE NAMES OF DEBOL ANGAMI ON 28-06-2007 OF RS, 1 LAKH DURLOV SHARMA ON 02-07- 2007 OF RS. 1 LAKH AND SHRI BALAJI COMM. ON 28-12-2007 OF RS.1.50 LAKH AMOUNTED TO UNDISCLOSED INCOME. DURING THE COURSE O F ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD PROVIDED THE DETAILS OF SUNDRY DEBTORS WHICH INCORPORATES THE IMPUGNED PAYMENTS RECEIVED ON THIS BEHALF WHICH ARE ON ACCOU NT OF SALE PRICE OF POTATO FROM THE PURCHASERS. SINCE THE AMOUNT OF RS. 3.50 LAKH IS DU LY CONSIDERED IN THE RECEIPTS ON WHICH THE INCOME WAS COMPUTED AS DISCLOSED IN THE P ERCEPTS OF THE BOOKS PRODUCED DURING THE ASSESSMENT PROCEEDINGS. THE SPECIOUS FIN DINGS OF THE LD. CIT IN THIS RESPECT WILL NOT STAND THE TEST OF JUDICIAL SCRUTIN Y. 6.2 THE ISSUE RELATING TO THE PAYMENT OF RS. 2.75 L AKH IS THAT IT WAS FOUND THAT THE ASSESSEE HAD ISSUED TWO CHEQUES TO TWO PARTIES AGGR EGATING TO THE AFORESAID AMOUNT ITA NO.1367/KOL/2013 A.Y 2008-09 ARABINDA ROY VS. CIT-XX, KOL PAGE 8 DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER DISPUTE WHO WERE NOT INCLUDED IN SUCH DETAILS OF PURCHASE PARTIES FURNIS HED BY HIM. IN COURSE OF ASSESSMENT PROCEEDINGS, IT WAS APPRISED TO THE AO THAT SUCH PA YMENTS WERE MADE ON ACCOUNT OF DISCHARGE OF LIABILITY FOR THE PRECEDING AY 2007-08 . HOWEVER, SUCH ENUMERATION DID NOT IMPRESS THE LD. CIT WHO WITHOUT CONSIDERING THE M IN THE PROPER PERSPECTIVE REMITTED THE ISSUE BACK TO THE FILE OF THE AO ON TH E FINDING ' IT IS NOT ASCERTAINABLE WHETHER THESE PAYMENTS WERE REALLY EXAMINED BY THE AD WITH REFERENCE TO THE PURCHASE DETAILS OF THIS ACCOUNTING YEAR OR EARLIER YEARS . THERE IS NO DOUBT OR DISPUTE THAT THE ISSUANCE OF CHEQUE BEING NO. 4235 TO KALOSONA HIMGHAR UDYOG ON 03-07-2007 IN THE SUM OF RS.1.50 LAKH AND NO. 4239 TO HARADHAN SAMANTA ON 07-07- 2007 AMOUNTING TO RS. 1.25 LAKH WERE PAYMENTS OUTST ANDING ON ACCOUNT OF PURCHASE OF POTATO DURING THE PRECEDING ASSESSMENT YEAR. IN FACT, SUCH PAYMENTS WERE ON ACCOUNT OF DISCHARGE OF CREDITORS WHICH WAS OUTSTAN DING AS ON 31-03-2007 AS EVIDENCED BY THE BALANCE-SHEET FOR THE ASSESSMENT Y EAR 2007-08. THE AO WAS IMPRESSED WITH SUCH CATEGORICAL EVIDENCE ON RECORD AND ACCEPTED SUCH PAYMENTS. HOWEVER, THE LD. CIT BRUSHED ASIDE THE EVIDENCE AND WITHOUT FINDING ANY ERROR ON THE PART OF THE AO BRANDED THE ASSESSMENT ORDER AS ERRO NEOUS. 6.3 IN SO FAR AS THE CASH CHEQUE PAYMENTS RELATING TO SHRI U. TEWARI IS CONCERNED, THE ASSESSEE HAD MADE PAYMENTS MAINLY IN CASH ON AC COUNT OF PURCHASE OF POTATOES AS WELL AS DAILY EXPENSES ARE CONCERNED SHRI U. TIWARY BEING ONE OF THE TRUSTED EMPLOYEES OF THE ASSESSEE WAS DEPUTED TO DRAW CASH FROM THE BANK. THE CASH/CHEQUES WERE BEING ISSUED IN HIS NAME TO DRAW CASH FROM THE BANK AND, THEREFORE, IN THE BANK RECORDS HIS NAME WAS RECORDED AS RECIPIENT OF THE C HEQUE VALUE. THE CASH WITHDRAWN BY SHRI U. TIWARY WERE DEPOSITED IN THE CASH BOOK O F THE ASSESSEE WHEREIN THE INFLOW AND OUTFLOW OF CASH ARE DULY RECORDED THEREIN. IN C OURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD PRODUCED HIS CASH BOO K AND LEDGER ACCOUNT. IT WAS PROVED THAT SHRI U. TIWARY WAS NOT PAID SUCH AMOUNT S ON ANY ACCOUNT. IN OTHER WORDS, THOSE WERE NOT EXPENDITURES INCURRED BY THE ASSESSE E. HOWEVER, THE LD. CIT IN EXERCISE OF HIS POWERS U/S. 263 OF THE ACT CONCEIVE D THAT SUCH AMOUNT OF RS. 21.80 LAKH WAS PAID TO ONE SHRI U. TIWARY DURING THE ASSE SSMENT YEAR UNDER DISPUTE THROUGH ITA NO.1367/KOL/2013 A.Y 2008-09 ARABINDA ROY VS. CIT-XX, KOL PAGE 9 CASH CHEQUES WERE HIT BY THE PROVISIONS OF S. 40A(3 ) OF THE ACT. IT WAS APPRISED THAT UNLESS AND UNTIL IT IS ESTABLISHED THAT THE ASSESSE E HAD INCURRED EXPENDITURE IN CASH EXCEEDING RS. 20,000/- IN EACH TRANSACTION OUT OF S UCH WITHDRAWALS PROVISIONS OF S. 40A(3) OF THE ACT ARE NOT ATTRACTED. IT IS AN ADMIT TED FACT THAT THE NAME OF SHRI U. TIWARY IS RECORDED IN THE SALARY REGISTER OF THE AS SESSEE WHICH WAS ADDUCED IN COURSE OF THE ASSESSMENT PROCEEDINGS. THE ENTIRE AMOUNT WA S MERELY WITHDRAWALS FROM THE BANK ACCOUNT THROUGH HIS TRUSTED EMPLOYEE WHICH DID NOT REPRESENT ANY EXPENDITURE AND AS SUCH, THE PROVISIONS OF S. 40A(3) OF THE ACT IS NOT APPLICABLE. IT IS UNDISPUTED FACT THAT THE WITHDRAWALS MADE WERE DEPOSITED IN TH E CASH BOOK WERE PROVED BEFORE THE AO IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THE PROVISION OF S. 40A(3) OF THE ACT REFERS TO THE EXPENSES UNDERTAKEN IN CASH IN EX CESS OF RS. 20,000/- AND NOT TO WITHDRAWALS IN EXCESS OF RS. 20,000/- FROM BANKS. W HEN PROVISIONS OF S. 40A(3) WERE APPLIED ON CASH WITHDRAWAL FROM BANK IT WAS HELD TH AT SUCH SECTION IS INTENDED ONLY FOR PAYMENTS MADE IN CASH ABOVE RS. 20,000/- AND TH E ADDITION RESORTED TO ON THAT GROUND WAS STRUCK DOWN [SUSHANFA SARKAR - VS- I.T.O . (I.T.A. NO. 95/KOL/09 DATED 27- 03-2009)1. IN OTHER WORDS, THE CONCEPTION THAT CASH WITHDRAWAL IN EXCESS OF RS. 20,000/- FROM BANK HAS NO CONNOTATION FOR IN VITING THE MISCHIEF OF S. 40A(3) OF THE ACT IS WRONGLY CONCEIVED BY THE LD. CIT SINCE T HE BASIS TO INVOKE THE PROVISION OF S. 40A(3) OF THE ACT IS ALTOGETHER NON-EXISTENT IN THE INSTANT CASE. HOWEVER, THE LD. CIT IN EXERCISING HIS POWERS U/S. 263 OF THE ACT IN THE INSTANT CASE REMITTED THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO VERIFY THE CONTENTION OF THE ASSESSEE. 6.4 APROPOS THE EXEMPTION CLAIMED BY THE ASSESSEE I N THE SUM OF RS.5,000/- IN HIS RETURN ON ACCOUNT OF AGRICULTURAL INCOME. SINCE THE AGRICULTURAL LAND IS AN INHERITED ASSET AND DO NOT FIND A PLACE IN THE BUSINESS BALAN CE SHEET OF THE ASSESSEE AND FOLLOWING THE RULE OF CONSISTENCY, THE AO HAD ALLOW ED SUCH EXEMPTION. HOWEVER THE LD. CIT IN EXERCISING HIS POWERS U/S. 263 OF THE AC T IN THE INSTANT CASE HAS REMITTED THE ISSUE BACK TO THE FILE OF THE AO ON THE JUSTIFI CATION THAT INHERITANCE OF THE AGRICULTURAL LAND AND CARRYING OUT OF AGRICULTURAL OPERATIONS ON THE SAID LAND ARE CLEARLY THE SUBJECT-MATTERS OF VERIFICATION BY THE AO THROUGH ENQUIRY OR WITH REFERENCE TO APPROPRIATE LEGAL DOCUMENTS. ' THE CLAIM OF EXEMPTION OF AGRICULTURAL INCOME OF ITA NO.1367/KOL/2013 A.Y 2008-09 ARABINDA ROY VS. CIT-XX, KOL PAGE 10 RS. 5,000/- WAS PASSED MUSTER YEAR IN AND YEAR OUT. THE LD CIT WAS SERIOUSLY REMISS IN THE STAND TAKEN BY HIM IN VIEW OF THE RATIONALE ESTABLISHED IN THIS RESPECT FROM YEAR TO YEAR. IT CAN BE VERIFIED FROM THE RECORDS OF THE ASSESSEE THAT INCOME UNDER THE HEAD ' AGRICULTURAL INCOME ' WAS DISCLOSED FROM YEAR TO YEAR WHICH WAS ACCEPTE D BY THE REVENUE. THUS, THE CLAIM OF THE ASSESSEE THAT INCOM E WAS CORRECTLY DISCLOSED AS AGRICULTURAL INCOME EXEMPTED U/S. 10 OF THE ACT. IN VIEW OF THE RULE OF CONSISTENCY DOES NOT BROOK ANY INTERFERENCE. IN THE IMPUGNED RE VISION ORDER PASSED BY THE LD. CIT THE CONCLUSION REACHED BY HIM IS THAT THE INSTANT C ASE NEEDS FURTHER RE-EXAMINATION AND RE-VERIFICATION. IN COURSE OF THE ASSESSMENT PR OCEEDINGS, THE ASSESSEE HAD PRODUCED THE BOOKS OF ACCOUNTS AND OTHER RELEVANT E VIDENCE. ON THE OTHER HAND THE LD. CIT VEHEMENTLY SUPPORTED THE ORDER OF THE CIT. 7. WE HAVE HEARD RIVAL PARTIES AND PERUSED THE MATE RIALS AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION, WE FIND THAT IT IS B EYOND DOUBT THAT THE PROCEEDINGS CONCEIVED U/S. 263(1) OF THE ACT HAS BEEN INITIATED ON THE BASIS OF THE INTERNAL AUDIT OBJECTION DATED 09-12-2011. THE ISSUES RAISED IN TH E NOTICE DATED 08-08-2012 UNDER SECTION 263 OF THE ACT BY THE LD. CIT ARE SIMPLY CO PIED FROM THE AUDIT OBJECTION WHICH IS NOT JUSTIFIABLE IN LAW. IT IS TRUE THAT FO R ASSUMPTION OF JURISDICTION U/S 263 OF THE ACT, THE LD. CIT SHOULD SATISFY HIMSELF WITH RE GARD TO THE ORDER PASSED BY THE ASSESSING AUTHORITY IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IN THIS CONNECTION WE RELY IN THE FOLLOWING JUDGMENTS. 1) [JEEWANLAL (1929) LTD. -VS- ADDL.C.I.T. (1977) 108 ITR 407 (CAL)] WHERE IT WAS HELD : CIT ISSUING NOTICE UNDER S. 263 AT THE SUGGESTION OF AUDIT WITHOUT EXERCISING HIS OWN DISCRETION AND JUDGMENT, SUCH NOTICE IS INVALID. 2) [B AND A PLANTATIONAND INDUSTRIES LID AND ANOTHER - VS- C.LT. (2007) 290 ITR 395 (GAU)]. REVISIONERRONEOUS AND PREJUDICIAL ORDERABSENCE O F FINDING/REASONS BY CITAN ORDER CANNOT BE TERMED ERRONEOUS UNLESS IT CAN BE SHOWN T O BE AN ORDER WHICH IS NOT IN ACCORDANCE WITH LAWEVERY ERROR OF AN ASSESSING AUTHORITY IS N OT OPEN TO EXERCISE OF POWERS UNDER S. 263ERROR COMMITTED BY THE PRIMARY AUTHORITY MUST B E AN ERROR OF JURISDICTIONASSESSING AUTHORITY ALLOWED DEDUCTION OF BONUS TO THE ASSESSE ERECTIFICATION PROCEEDING INITIATED UNDER S. 154 AT THE INITIATIVE OF THE AUDIT PARTY W AS DROPPED AS THE ASSESSING AUTHORITY WAS ITA NO.1367/KOL/2013 A.Y 2008-09 ARABINDA ROY VS. CIT-XX, KOL PAGE 11 SATISFIED THAT THERE WAS NO MISTAKE APPARENT FROM T HE RECORD IN ALLOWING THE CLAIM OF SAID DEDUCTIONINITIATION OF SUO MOTU REVISIONAL PROCEED INGS IN THE SAME MATTER AMOUNTED TO ENTRENCHING UPON THE POWERS OF THE ASSESSING AUTHOR ITY WHICH HAVE BEEN SPECIFICALLY RESERVED FOR ITIT WAS NOT OPEN TO THE CIT TO CONSIDER THE O RDER OF THE AO AS ERRONEOUS MERELY BECAUSE IN HIS VIEW CERTAIN AMOUNT OF BONUS SHOULD HAVE BEE N DISALLOWEDFURTHER, CIT COULD NOT INITIATE REVISIONAL PROCEEDINGS ON THE BASIS OF AUD IT OBJECTIONTHERE IS NOTHING TO SHOW THAT THE CIT HAS APPLIED HIS INDEPENDENT MIND TO COME TO THE CONCLUSION THAT THE ASSESSMENT NEEDS TO BE REVISEDTHAT APART, THE ASSESSMENT ORDER HAD MERGED IN THE ORDER DROPPING THE RECTIFICATION PROCEEDINGSIN SUCH CIRCUMSTANCES, TH E ASSESSMENT ORDER COULD NOT BE REVISED WITHOUT INTERFERING WITH THE RECTIFICATION ORDERTH EREFORE, IMPUGNED NOTICE AS WELL AS THE ORDER PASSED BY THE CIT ARE SET ASIDE AND QUASHED 3) [DWARKA DASS & CO. - VS- I.T.O. (1983) 16 TTJ (CHD) 304]. THE ASSESSEE FIRM WAS GRANTED REGISTRATION BY THE I TO. SUBSEQUENTLY THE COMMR. ISSUED A NOTICE TO THE ASSESSEE TO SHOW CAUSE WHY THE ORDER GRANTING REGISTRATION BE NOT SET ASIDE UNDER S. 263(1). THE SAID NOTICE WAS ISSUED AT THE INSTAN CE OF THE REPORT OF THE AUDIT PARTY ACCORDING TO WHICH THE REGISTRATION GRANTED TO THE FIRM WAS I LLEGAL IN VIEW OF PUNJAB & HARYANA HIGH COURTS JUDGMENT IN THE CASE OF HARDIT SING PAL CHA ND & CO. (1979) 8 CTR(P&H) 365 AS THE ASSESSEE WAS A FIRM DEALING IN LIQUOR AND THE ITO H AD NOT MADE NECESSARY ENQUIRIES BEFORE GRANTING REGISTRATION. THE ASSESSEE CHALLENGED THE VALIDITY OF THE ORDER OF COMMR. SETTING ASIDE THE ORDER OF REGISTRATION ON THE GROUND THAT HE HAD RELIED UPON THE AUDIT PARTYS REPORT FOR INITIATING REVISION PROCEEDINGS WHEREAS THAT RE PORT WAS NOT A PART OF THE ASSESSMENT RECORD, AND COULD NOT BE TAKEN INTO CONSIDERATION F OR ASSUMING JURISDICTION UNDER S. 263(1).THE ASSUMPTION OF JURISDICTION BY THE COMMIS SIONER WAS ILLEGAL AS THE ORDER OF REGISTRATION PASSED BY THE ITO COULD NOT BE CONSIDE RED ERRONEOUS ON THE BASIS OF THE REPORT OF THE AUDIT PARTY. THE ORDER PASSED BY THE COMMISSION ER IS SET ASIDE. IN OTHER WORDS, THE APPLICATION OF MIND BY THE LD. COMMISSIONER IS A SINE QUA NON FOR INITIATING PROCEEDINGS U/S. 263(1) OF THE ACT AND T HE ABSENCE THEREOF, WILL RENDER THE PROCEEDINGS AB INITIO VOID AND EX-FACIE NULL IN LAW. THERE IS NO DOUBT OR DISPUTE THAT THE INITIATION OF THE INSTANT PROCEEDINGS WAS MADE ON AN ADVICE OF THE AUDIT PARTY AND NOT ON THE INDEPENDENT APPLICATION OF MIND. IN OTHE R WORDS, IT IS THE SOLE PREROGATIVE OF THE LD. CIT WHICH ALONE WILL BE A GROUND FOR ACT ION U/S. 263 OF THE ACT AND ANY DEPARTURE THEREFROM NEGATES THE JURISDICTION VESTED IN HIM UNDER THE LAW. WHERE IT IS CLEAR THAT THE LD. CIT INITIATED THE REVISIONAL PRO CEEDINGS INFLUENCED BY THE OBJECTION RAISED BY THE INTERNAL AUDIT PARTY AND HAS NOT APPL IED HIS INDEPENDENT MIND, WHILE PASSING THE IMPUGNED ORDER, SUCH ORDER IS LIABLE TO BE SET ASIDE AND QUASHED IT IS ALSO SETTLED THAT THE ASSUMPTION OF JURISDICTION BY THE COMMISSIONER WAS ILLEGAL AS THE ORDER OF REGISTRATION PASSED BY THE ITO COULD NOT B E CONSIDERED ERRONEOUS ON THE BASIS OF THE REPORT OF THE AUDIT PARTY WHERE IN THE IMPU GNED REVISION ORDER LD. CIT DOES MENTION ABOUT A FEW POINTS, OSTENSIBLY BORROWED FRO M REVENUE AUDIT OBJECTIONS, ON THE BASIS OF WHICH REVISION PROCEEDINGS WERE INITIATED, BUT IT WAS NOT EVEN THE LD. CIT'S CASE THAT HE HAD ANY OPINION OF HIS OWN BEYOND THIS BORROWED OPINION TO EVEN ITA NO.1367/KOL/2013 A.Y 2008-09 ARABINDA ROY VS. CIT-XX, KOL PAGE 12 CONSIDER THE ASSESSMENT ORDER AS ERRONEOUS AND PREJ UDICIAL TO THE INTEREST OF THE REVENUE. CLEARLY, THEREFORE, THE CONDITIONS PRECEDE NT FOR INITIATING REVISION PROCEEDING U/S 263 OF THE ACT WERE NOT SATISFIED. THERE IS NO DOUBT OR DISPUTE THAT THE LD, CIT HAD INITIATED THE PROCEEDINGS U/S. 263 ON THE BASIS OF THE AUDIT OBJECTIONS IN THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE. THE IMPUGNED S HOW-CAUSE NOTICE WAS ISSUED IN THE PRESENT CASE WAS ONLY BORROWED FROM THE OPINION OF THE AUDIT PARTY AND THE IMPUGNED ORDER PASSED BY HIM U/S. 263 OF THE ACT DI RECTING THE LD. ASSESSING OFFICER TO RE DO THE ASSESSMENT ORDER IS NOT TENABLE IN LAW . THE PROVISIONS OF S. 263 OF THE ACT ARE CLEAR AND ABSOLUTE THAT THE POWER IS TO BE EXER CISED BY THE COMMISSIONER OF THE INCOME TAX FROM THE EXAMINATION OF THE RECORDS OF T HE PROCEEDINGS UNDER THE ACT. THE EXPLANATION APPENDED TO S. 263 OF THE ACT DEFIN ES 'RECORDS' AS ALL RECORDS RELATING TO AN) PROCEEDINGS UNDER THE ACT AVAILABLE AT THE T IME OF EXAMINATION BY THE LD. CIT. THE AUDIT OBJECTIONS UNDER NO CIRCUMSTANCES CAN BE CALLED AS CONSTITUTING RECORD EMPOWERING THE LD. CIT TO EXERCISE JURISDICTION U/S . 263 OF THE ACT. WHERE IT IS APPARENT THAT THE LD. CIT HAS INITIATED THE REVISIO N PROCEEDINGS ONLY ON THE BASIS OF AUDIT OBJECTION SUE EXERCISE OF POWER UNDER SECTION 263 IS NOT TENABLE IN LAW AND ACCORDINGLY, THE ORDER PASSED BY THE LD. CIT U/S 26 3 IS TO BE SET ASIDE JASWINDER SINGH -VS- C.I.T. (2012) 150 TTJ 33 (CHD)(UO) 33]. THE AUDIT PARTY IS NEITHER AUTHORIZED NOR COMPETENT TO ACT AS JUDICIAL SUPERVI SORS OF THE LD. CIT IN DISCHARGING HIS QUASI-JUDICIAL FUNCTION UNDER THE SCHEME OF STA TUTE. THE REQUIREMENT OF LAW FOR INITIATING PROCEEDING U/S 263 OF THE ACT IS THAT TH ERE MUST BE INDEPENDENT APPLICATION OF MIND BY THE COMMISSIONER WHICH IS CONSPICUOUSLY LACKING IN THE INSTANT CASE. THE ACT TAKEN U/S. 263 OF THE ACT IN THE INSTANT CASE I S SOLELY BORROWED OPINION FROM THE REPORT OF THE AUDIT PARTY AND HENCE UNTENABLE IN LA W. THEREFORE, IN THE INSTANT CASE, NEITHER THE ASSESSMENT ORDER FRAMED BY THE AO WAS P ROVED TO BE ERRONEOUS NOR IT WAS PROVED THAT THERE WAS ANY PREJUDICE CAUSED TO THE R EVENUE AND THERE BEING NO MATERIAL ON RECORD TO JUSTIFY HIS ACTION FOR ASSUMING JURISD ICTION FOR ISSUANCE OF NOTICE U/S. 263 OF THE ACT THE ACTION OF THE LD. CIT IN ISSUING THE IMPUGNED NOTICE IS INCONSISTENT WITH THE SETTLED POSITION IN LAW. ITA NO.1367/KOL/2013 A.Y 2008-09 ARABINDA ROY VS. CIT-XX, KOL PAGE 13 7.1 WE ALSO FIND THAT ASSESSEE HAS PRODUCED THE BOO KS OF ACCOUNTS AND OTHER RELEVANT DETAILS DURING ASSESSMENT PROCEEDINGS BEFO RE THE AO. THEREFORE IT CANNOT BE SAID THAT THERE WAS NO APPLICATION OF MIND OF THE A O IN THE MATTER. THE ONLY BASIS FOR INVOKING THE PROVISIONS OF S. 263 OF THE ACT WAS IM PROPER EXAMINATION IN AN APPROPRIATE PERSPECTIVE, I.E. LACK OF ENQUIRY BY TH E ASSESSING OFFICER. THERE IS A DISTINCTION BETWEEN ' LACK OF ENQUIRY ' AND ' INADEQUATE ENQUIRY' . IF THERE IS AN ENQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF CONFER AUT HORITY ON THE LD. CIT TO ASSUME JURISDICTION U/S. 263 OF THE ACT MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER. IN THIS CONNECTION WE RELY IN THE FOLLOWING JUDGMEN TS. 1. [PLASTIC CONCERN -VS- A.C.I.T. (1998) 61 TTJ (CAL) 87]. REVISIONVALIDITYCHANGE OF OPINIONCONFIDENTIAL NO TE, OF AO REVEALS THAT REVISIONAL AUTHORITY HAD LOOKED INTO THE FACTS OF THE CASE AND MATERIAL ON RECORD IN COMING TO CONCLUSION THAT NO ADDITION COULD BE MADE AT THE STAGE OF ASSESSMENT AND GAVE H IS CONSENT TO AO TO PROCEED WITH ASSESSMENT LATER, INITIATED PROCEEDINGS UNDER S. 263NOT JUSTI FIEDBY THIS ACTION, HE ONLY INTENDED TO GIVE AO FURTHER TIME OF TWO YEARS TO COMPLETE THE ASSESSMEN T AT LEISUREJURISDICTION OF CIT CANNOT BE EXTENDED TO MAKE FURTHER ENQUIRIES WHICH COULD NOT BE MADE F OR WANT OF TIMETHIS EXTENSION OF PERIOD OF LIMITATION IS NOT WITHIN POWERS VESTED WITH REVISIO NAL AUTHORITYFURTHER, SINCE CIT WAS CONVINCED THAT NO FURTHER ENQUIRY WAS POSSIBLE CANNOT NOW CHANGE H IS OPINION AND HOLD THAT ORDER OF AO IS ERRONEOUS 2. [CHROMA BUSINESS LTD. -VS- D.C.I.T. (2004) 82 TTJ ( CAL) 540] THE ASSESSMENT ORDER PASSED BY THE AO UNDER S. 143( 3) IS A BRIEF ASSESSMENT ORDER AND THE AO HAS NOT DISCUSSED IN THE SAID ORDER THE DETAILS OF THE DISCUSSIONS AND DETAILS OF EXAMINATIONS MADE BY HIM , INTER ALIA, IN RESPECT OF THE SHARE TRANSACTIONS IN RESPECT OF WHICH THE ASSESSEE INCURRED THE LOSS OF RS. 47.88 LAKHS. THE AO BEFORE COMPLETING THE ASSESSMEN T VIDE LETTER DT. 31ST MAY, 1999, AND LETTER DT. 11 TH FEB., 2000, CALLED FOR THE DETAILS OF BUSINESS RECE IPTS/SALES, DETAILS OF PURCHASE, BOOKS OF ACCOUNTS, BILLS/VOUCHERS, BANK STATEMENT AND THE DETAILS TO C ONSIDER THE SHARE LOSS OF RS. 47,87,692. IT IS OBSE RVED THAT THE ASSESSEE GAVE THE DETAILS OF PURCHASE AND SALE OF SHARES TO THE AO. THE AO BEFORE COMPLETING THE ASSESSMENT, CONDUCTED ENQUIRIES AND THEREAFTER, HAS PASSED A BRIEF ASSESSMENT ORDER. IF AN ORDER PASSED BY THE AO IS BRIEF OR CRYPTIC BUT IT HAS BEE N PASSED AFTER CONDUCTING THE PROPER ENQUIRIES INTO THE FACTS STATED IN THE RETURN, SUCH AN ORDER CANNO T BE HELD ERRONEOUS INASMUCH AS PREJUDICIAL TO THE INTEREST OF THE REVENUE FOR THAT REASON ALONE. FURT HER, THE CIT WHILE SETTING ASIDE THE ASSESSMENT HAS ALSO NOT GIVEN ANY REASON AS TO WHETHER THE LOSS CL AIMED BY THE ASSESSEE ON ACCOUNT OF SHARE TRANSACTION IS BOGUS OR NOT GENUINE. HE HAS MERELY STATED THAT THE AO DID NOT EXAMINE PROPERLY THE GENUINENESS OF THE SHARE TRANSACTION WHICH COULD HA VE BEEN VERIFIED BY CALLING FOR CONTRACT NOTES FROM THE BROKERS, THE CHALLAN RECORDING DELIVERY OF SHAR ES, OBTAINING DETAILS OF DATES AND MODE OF PAYMENTS , EXAMINING THE BOOKS OF BROKERS AND MAKING ENQUIRIES FROM THE STOCK EXCHANGE. IN THIS REGARD, THERE IS SUBSTANCE IN THE SUBMISSION OF THE AUTHORISED REPRE SENTATIVE OF THE ASSESSEE THAT EVEN IF THE BROKERS DO NOT RESPOND TO THE SUMMONS ISSUED BY THE AO, THE TR ANSACTIONS STILL WILL HAVE TO BE TREATED AS GENUINE . THUS, THE ORDER OF THE CIT IN THE CIRCUMSTANCES, IS NOT JUSTIFIABLE AND HAS TO BE CANCELLED.CIT VS. GABRIEL INDIA LTD. (1993) 114 CTR (BOM) 81 : (1993) 203 ITR 108 (BOM) , MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 159 CTR (SC) 1 : (2000) 243 ITR 83 (SC), CI T VS. SMT. D. VALLIAMMAL (1997) 140 CTR (MAD) 433 : (1998) 230 ITR 695 (MAD) AND ANDHRA VAL LEY POWER SUPPLY CO. LTD. VS. DY. CIT (1995) 53 TTJ (BOM) 647 : (1995) 55 ITD 24 (BOM) RELIED ON ; CIT VS. KOHINOOR TOBACCO PRODUCTS (P) LTD. (1998) 148 CTR (MP) 536 : (1998) 234 ITR 557 (MP) D ISTINGUISHED. AO, BEFORE MAKING THE ASSESSMENT, HAVING CALLED FOR DETAILS AND HAVING DI SCUSSED THE MATTER WITH THE REPRESENTATIVE OF THE ASSESSEE, SUCH AN ORDER CANNOT BE CALLED ERRONEOUS AND PREJUDICIAL TO INTERESTS OF REVENUE ONLY BECAUSE THE AO MADE A BRIEF ASSESSMENT ORDER WITHOU T DISCUSSING SUCH DETAILS THEREIN. ITA NO.1367/KOL/2013 A.Y 2008-09 ARABINDA ROY VS. CIT-XX, KOL PAGE 14 THEREFORE ONE HAS TO SEE FROM THE RECORD AS TO WHET HER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE EXPENDITURE IN QUESTION AS REVE NUE EXPENDITURE. ONE HAS TO KEEP IN MIND THE DISTINCTION BETWEEN ' LACK OF INQUIRY ' AND ' INADEQUATE INQUIRY '. IF THERE WAS ANY INQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSE LF GIVE OCCASION TO THE LD. CIT TO PASS ORDERS UNDER SECTION 263 MERELY BECAUSE HE HAS DIFFERENT OPINION IN THE MATTER. IT IS ONLY IN CASES OF ' LACK OF INQUIRY ' THAT SUCH A COURSE OF ACTION WOULD BE OPEN [C.I.T . - VS- SUNBEAM AUTO LID. [(2009) 322 ITR 167 (DEL)]. I N THE INSTANT CASE, THE AO HAD MADE NECESSARY ENQUIRIES IN THE COURSE OF TH E ASSESSMENT PROCEEDINGS ON THE ISSUES RAISED IN THE SHOW CAUSE NOTICE BEFORE HIM A ND REACHED A CONCLUSION NOT BEING DETRIMENTAL TO THE ASSESSEE. IT IS SETTLED THAT THE LD. CIT CANNOT REMAND THE MATTER TO THE AO TO DECIDE WHETHER THE FINDINGS RECORDED ARE ERRONEOUS. IN CASES WHERE THERE IS INADEQUATE ENQUIRY BUT NOT LACK OF ENQUIRY. THE LD. CIT MUST RECORD A CLEAR FINDING THAT THE INADEQUATE INQUIRY HAS RESULTED IN PASSING AN ERRONEOUS ORDER. AN ORDER OF REMIT CANNOT BE PASSED BY THE LD. CIT TO ASK THE AO TO DECIDE WHETHER THE ORDER WAS ERRONEOUS. THIS IS NOT PERMISSIBLE. A FINDING THAT THE ORDER IS ERRONEOUS IS A CONDITION OR REQUIREMENT WHICH MUST BE SATISFIED FOR EXERCISE OF JURISDICTION UNDER SECTION 263 [I.T.O. - VS- DG HOUSING PROJECTS LTD. (2012) 343 I TR 329 (DEL)]. THE PURPORTED ACTION OF THE LD. CIT OF REMITTING THE IS SUES RAISED IN HIS SHOW CAUSE NOTICE AND WITHOUT ADJUDICATING THE ISSUES TO THE FILE OF THE AO TO DECIDE THE SAME DE NOVO CANNOT BE SUSTAINED IN THE INSTANT CASE. THE LD. CI T HAD NOT TAKEN ANY STEPS FOR MAKING ANY ENQUIRY AS REGARDS THE ISSUES RAISED BY THE ASSESSEE IN THE REJOINDER TO THE SHOW CAUSE NOTICE AND HE WAS UNABLE TO ESTABLISH AN Y PURPORTED ERROR SO COMMITTED BY THE AO WHICH MAKES HIS ORDER UNSUSTAINABLE IN LAW. THE PROVISION OF S. 263 OF THE ACT LAYS DOWN THAT THE JURISDICTION OF THE LD. CIT CAN ONLY BE EXERCISED IF THERE IS A SPECIFIC FINDING TO THE EFFECT THAT THE ORDER PASSE D BY THE ASSESSING AUTHORITY IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF REVENUE. IN OTHER WORDS, THE PROVISION OF S. 263 OF THE ACT CAN ONLY BE INVOKED WHEN THE COMMISSIONER OF INCOME TAX IS SATISFIED ABOUT THE EXISTENCE OF THE TWO PRE CONDITIONS: (1) THE ACTION OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS ; (2) IT IS ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. IF ANY OF THESE PRE-CONDITIONS ARE ABSENT. THE LD. CIT CANNOT SEEK RECOURSE TO THIS PROVISION. IT IS SETTLED THAT THE LD. CIT CAN INVOKE S. 263 IF THE ORDER ITA NO.1367/KOL/2013 A.Y 2008-09 ARABINDA ROY VS. CIT-XX, KOL PAGE 15 OF AO IS ERRONEOUS AND IT IS ALSO PREJUDICIAL TO IN TERESTS OF THE REVENUE; BOTH CONDITIONS MUST CO-EXIST [MALABAR INDUSTRIAL CO. L TD. - VS- C.I.T. (2000) 243 ITR 83 (SC)]. IN THE INSTANT CASE, THE LD. CIT HAS NOT ESTABLISHED ANYWHERE IN THE IMPUGNED ORDER THAT THE ASSESSMENT ORDER OF THE AO IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE NON-COMPLIANCE WITH THE STATUTORY PRESCRIPTION AS EVIDENT FROM THE IMPUGNED ORDER IS A SERIOUS INFIRM ITY VITIATING THE VALIDITY OF THE PROCEEDINGS. IN A SITUATION WHERE THE ASSESSING AUT HORITY AS AN ADJUDICATOR DECIDES AN ISSUE AND RENDERS A WRONG DECISION WHICH IS UNSUSTA INABLE IN LAW. IT CAN BE CORRECTED BY THE COMMISSIONER IN EXERCISE OF REVISIONARY POWE R. IN SUCH CASES, THE LD. CIT HAS TO COME TO THE CONCLUSION AND HIMSELF DECIDE THAT T HE ORDER IS ERRONEOUS BY CONDUCTING APPROPRIATE ENQUIRY IF REQUIRED AND NECESSARY BEFOR E THE ORDER U/S. 263 OF THE ACT IS PASSED. IN SUCH CASES, THE ORDER OF THE ASSESSING A UTHORITY WILL BE ERRONEOUS BECAUSE THE ORDER PASSED IS NOT SUSTAINABLE IN LAW AND THE SAID FINDING MUST BE RECORDED. THE JURISDICTIONAL PRECONDITION STIPULATED IS THAT THE LD. CIT MUST COME TO THE CONCLUSION THAT THE ORDER IS ERRONEOUS AND IS UNSUSTAINABLE IN LAW. THE FINDING OF AN ' ERROR ' IS THE CONDITION PRECEDENT FOR PROCEEDINGS U/S. 263 OF THE ACT WHICH IS PALPABLY MISSING IN HIS ORDER AND ACCORDINGLY, THE SPECIOUS CONCLUSION OF THE LD. CIT WITHOUT LAYING DOWN ANY BASIS THEREFORE IS TOTALLY CONTRARY TO LAW . THEREFORE, THE CONDITIONS PRECEDENT FOR INVOKING THE PROVISIONS OF S, 263 OF THE ACT NOT HAVING BEEN SATISFIED, THE ACTION OF THE LD. CIT OF ASSUMING JURISDICTION THERE UNDER IS IN CONTRAVENTION OF THE SETTLED POSITION IN THIS REGARD. IN VIEW OF ABO VE, WE HOLD THAT THE ORDER PASSED BY THE LD. CIT IS NOT SUSTAINABLE IN THE LAW AND ACCOR DINGLY WE REVERSE THE SAME. HENCE THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 24/08/2016 SD/- SD/- (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP ! - 24/08/2016 / KOLKATA ITA NO.1367/KOL/2013 A.Y 2008-09 ARABINDA ROY VS. CIT-XX, KOL PAGE 16 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ARABINDA ROY, C/O SOMNATH GHOSH, ADVOCAT E, SEVEN BROTHERS L ODGE, P.O. BUROSHIBTALA, P.S. CHINSURAH, DIST. HOOGHLY, P IN 712 105 2. /RESPONDENT-CIT, KOLKATA-XX, 54/1, RAFI AHMED KIDWA I ROAD, KOL-16 3. '# % / CONCERNED CIT 4. % - / CIT (A) 5. &'( ))'# , '# / DR, ITAT, KOLKATA 6. (*+ / GUARD FILE. BY ORDER/ , /TRUE COPY/ / '#,