Sh. Bhagwan Dass, Sirsa V. Pr.CIT, Rohtak

ITA 156/CHANDI/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2027 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 09-06-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 145; 263; 10; 201; 43; 13; 22; 20

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़ I N T H E I N C O M E T A X A P P E L L A T E T R I B U N A L D I V I S I O N B E N C H , “ A ” , C H A N D I G A R H B E F OR E SH R I N . K . SA I N I , V I C E P R E SI D E N T & S H R I S U D H A N S HU SR I V A S T A V A , J U D I C I A L M E M B E R आयकर अपील सं./ ITA No. 155/C H D / 2 0 2 1 नधा रण वष / Assessment Year : 2 0 1 6 - 1 7 M/s B.D. Ispat (P) Ltd, 15-B, Around Additional Mandi, Sirsa-125055 Haryana बनाम The PCIT, Rohtak थायी लेखा सं./PAN NO: AADCB8461A अपीलाथ /Appellant यथ /Respondent आयकर अपील सं./ ITA No. 156/C H D / 2 0 2 1 नधा रण वष / Assessment Year : 2 0 1 6 - 1 7 Bhagwan Dass, SCF 35,CC-2-2 nd OPP Baba Bihari Netralya Janta Bhawan Road, Sirsa-125055 Haryana बनाम The PCIT, Rohtak थायी लेखा सं./PAN NO: AFXPD7385K अपीलाथ /Appellant यथ /Respondent Hearing though video Conferencing नधा रती क ओर से/Assessee by : Sh. Gautam Jain , Advocate. Sh. Lalit Mohan, CA राज व क ओर से/ Revenue by : Sh. Vivek Nangia, CIT DR स ु नवाई क तार$ख/Date of Hearing : 21.02.2022 उदघोषणा क तार$ख/Date of Pronouncement : 18. 05.2022 आदेश/Order P er S u d h an sh u S ri va s ta va , J u d i c i a l M e mb e r : Bo t h t he s e ap p e a l s pre fe rre d b y t h e c a pt i o n e d as s es s ee s re l a t e t o t he a c ti on t ak en u / s 26 3 o f t h e In c o m e T ax A c t, 19 61 ( h e r e in a f te r c a l l e d 't he A c t ' ) by c ha l l e ng in g t h e as s u m pt i on o f j uri s di c t i on b y t h e Ld . ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 2 P ri nc i p al C o m mi s s i one r o f I nc o m e T a x , Roh t a k (P CI T) i n h o l d i n g t h a t t he as s e s s me n t or d er s p as s e d b y t h e A s s es s in g o ff i ce rs w er e e r r o ne ous s o fa r as pr ej ud i c ia l t o t h e i nt er e s t o f Re v en u e i n t e r ms o f p r ov i s i o ns o f s e ct i on 2 63 o f t he A c t i n cl u d i n g E x pl a na ti on 2 i ns er te d by F in an ce A c t , 20 15. B y t h e i mp ug ne d o r de rs , t he Ld. P CI T h as s e t as i d e t h e a s s es s men t or d e r s i n t h e o r i g i na l as s e s s me nt p ro c e ed i n g s . S i nc e bo t h t he a p p e a l s i n vo lv ed i de nt i ca l i s s ue s and be l o n g ed t o t he s a m e g r o up , t he y w e r e he ar d t o g et h e r a n d a r e b e i n g di s po s e d o f th ro ug h th is c o mm o n or d e r for th e s a ke o f c o n ve ni en c e . 2. 0 T he bri e f f ac ts in t he ca s e o f M / s B. D . Is p at (P ) L td ( i n I TA N o. 15 5/ C h d/ 2 0 2 1) a r e th a t a s u rv e y ac ti o n u/ s 1 3 3A o f t he A c t w as ca rr i e d ou t a t t h e bus i ne s s pre mi s e s o f t h e a s s es s e e on 1 0.09. 2 0 15. D uri n g t h e c ou r se o f s u r ve y, so me e xc es s c a s h, un ac c o un t e d l o ans a nd a d va nc e s t o va r i o us pa r t i es , un ex p l a i ne d in ves t m e nt i n fur ni tu re a nd f ix t u r e a nd un e xp la i n e d e x pe n di t ur e w e r e f ou nd . Th e d e ta i ls o f t h e di s c r e p a nc i es no t i c ed b y th e s ur v ey te a m w er e a s un de r : - i ) E xc e s s ca s h fo un d Rs . 8, 00, 0 00 / - i i) U na cc ou n t e d l oa ns an d Rs . 2, 00, 0 00 / - a dv a n c es va r i o u s p ar t i e s i ii ) U ne x pl a in e d i nv e s t me nt in Rs . 4, 30, 00 0/ - fu r ni t u re an d fi xt ur e i v) U ne x pl a in e d e xp e n di t ur e Rs . 7 , 70, 00 0/ - v) T ot al R s. 4 0, 00, 00 0/ - ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 3 2. 1 T he a s s e ss e e o ff e r e d a d di t i o na l i nc o me o f Rs . 40, 0 0, 00 0/ - t o t a x ov e r a n d a b o v e t h e nor ma l b us i n es s i nc o me t o c o v er u p fo r t he a bo v e no t e d d i s c re p a n c i e s . 2. 2 T he r e t u r n o f i n c o me w a s fi l e d on 1 7 . 10. 20 1 6 d ec l a ri ng a l o s s o f Rs . 5, 61, 01 0/ -. Th e a ss e s s e e w as as k ed t o j us t i fy t he h u ge l os s c l a i m ed by i t d u ri ng th e po s t s urv e y pe ri od o f t he f in a n c i al y e a r. T he a s s es s e e w as pr ov i d e d a m pl e op p o rt uni t i e s to j us t i f y t h e l o ss c l ai me d by pr o vi di ng d o c u me n t ar y ev id e nc e s b ut no b oo ks o f a c cou nt , s a l es b i l l s , pu r c h as e bi l l s e t c. w er e pr o d uc ed . The A s s e s s i ng off i c e r a l s o is s u e d s u m mon s u /s 1 33 (6 ) o f t he A c t t o t h e s un dr y c re di tors r e q ui ri ng t h e m t o s ub m i t c on f ir me d co p i es o f t ha t le dg e r a c c o u n t s w i th t h e a s s es s e e bu t ne i th er w e re a n y re s pons e s re c e i v e d n or w e re t h e noti c es re c ei ve d ba c k . S i nc e n o r e p l y fr o m t h e a ss e s s e e w as fo r t h co mi ng, th e A s s es s i ng o f fi ce r t oo k r el ev a n t da t a fr o m t he a s s es s e e ’ s I nc o me Ta x Re tu rns an d A u d i t Re por ts fo r as s e s sme nt y ea rs 2 01 4- 15 , 20 15 - 1 6 an d 20 17 -18 a n d w ork ed ou t t he a v e r a g e g ro s s pr o fi t at 0. 6 43 % a nd a pp l y i n g t he s a m e t o t he t o t a l t ur n o ve r o f Rs . 3 9, 45, 7 9, 7 45 / - , t he A s s e ssi ng O f fi ce r c o mpu te d th e gr os s pr o fi t at R s. 22, 48, 9 6 3/ -. T he re a f te r, f ro m the Re v e n u e e xp e n di t u re c l a i m e d i n t h e p r o fi t a n d l os s ac c o u nt a m ou nt i ng t o R s . 38 , 5 4, 7 89 /- , t h e A s s e s s i ng O f fi c e r m a de a di s al l ow an c e o f Rs . 43 , 0 00 / - c la i me d on a cc ou n t o f d e pr ec i at i o n on fu rn i t ur e an d fi x t ur e o n th e w ri t t e n do w n va l u e o f Rs . 4, 30 , 0 00/ -, ( w h i c h t h e ass e s s ee ha d s ur re nd e r e d a t t h e t i me o f s ur vey ). F r o m th e r e m aini n g ex p en di tu re o f ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 4 Rs . 38, 1 1, 7 89 / -, i n th e a bs e n c e o f a n y bi l ls a n d vo uc h er s , a no t h e r 20 % o f th e e xp e n di t ur e w a s fu r t h er di s a l l ow ed w h i c h w o rk ed o u t t o R s. 7, 62 , 35 8/ -. A ft er i n c l u di ng t he mi s c e l l a ne ous i nc o me o f R s . 12, 9 0, 972 / -, c o mm i s si on i nc o m e o f R s . 2, 3 6, 884 / - a nd i nt er es t i nc o me o f Rs . 4 , 000/ -, t he n e t p r o fi t o f t he a s s es s e e w as w o rk e d o ut a t Rs. 7 , 3 1, 388 /- . T h e a s s es s men t w as co m p l et e d a t a n in co me o f Rs . 4 7, 31 ,3 8 8/ - a f t e r ma ki ng a n a d d i t i on o f Rs . 4 0, 00, 00 0 / - w hi c h h ad b e e n s u rr ende re d by t h e a s s es s e e du ri n g t h e ti me o f s u r ve y. 2. 3 S ubs e q u en t l y, t h e L d. P C I T i s s ued a s ho w c au se no t i c e u/ s 26 3 o f t he A c t p r op os in g t o in vo ke t h e r e v i s i ona ry j ur is dic t i o n i n t h e as s e s s ee ’s c as e . F o r a re a d y re fe r e nc e t he c o nt e nt s o f th e s how c a u se no t i ce ar e be i ng r e p r o duc e d h e re i n u nd e r: - “ Re t ur n d e c l ar in g l os s of R s 5, 6 1, 0 10 / - f or t he A Y 20 16 - 17 w as fi l e d b y y ou on 1 7. 10. 2 0 1 6. Su b s eq u en tl y y our c as e wa s s e l ec t e d f or c om pu l s or y s cr u ti n y af t er s e r vi n g y o u a no t i c e u /s 143 ( 2 ) o f t h e I nc om e T ax A c t (he r e in af t er r e fe r r ed as A ct ) on 04. 09 . 20 17 b y D C I T ci r c le S i r s a an d l at er on yo ur c as e wa s t r ans f e r re d t o I to w ar d - 3, Si r sa wh o v id e hi s or de r d at ed 2 8. 1 2. 2 01 8 c om pl et e d t h e as s e s sm ent i n y o ur ca s e at a n i nc om e o f R s . 4 7, 31, 38 8 / -. 2. T he as s e ss m e nt r ec or d f or t he per i o d u n de r c ons i de r a t i o n w as c al l e d up o n a nd e x am in e d . a) O n s uc h e x am i na t i o n, it h as be e n n ot i c e d t ha t le t t e r s we r e i s s ue d b y t h e AO to t he c r ed it or s an d t h e s am e we r e ne i t h e r r e pl i e d t o n o r r e tu r n ed b a ck , t he r e f ore i t i s c ry s t a l c le a r th a t t he c re d i t or s r e m ai ne d un v e r if i e d . b) D ur i ng t he a s se s sm en t pr o c e e di n gs th e A O ha d no t i c ed t ha t t he m od e o f t r ans p or t at i on of g oo ds a t ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 5 t he t im e of s al e wa s fa ke e v e n t h e n t h e l os s o n s ale of g o o ds h as be e n ad m i t te d b y t he A . O . T h e l os s so c la im e d w as r e q ui r e d t o be di sa ll o w e d b e f or e c om p ut i ng t he i nc om e. Fu r t h er no v er i f ic at i on o f de b t or s am oun ti ng t o Rs . 19. 1 2 cr or e was do n e b y A . O . an d th us th ey r em ai ne d un v e r if i e d . c ) P er us a l o f t h e as s e s sm en t o r de r sh ows t h at t h e t r ans po r t a t i o n r e c ei p t s w er e f ak e , th er e f or e , t he pu r ch a s es r e m ai n e d un v er i f i e d f or t he y ear u nd e r c ons i de r a t i o n. T h e AO ha s n o t t ak e n a ny a c t i on i n t hi s re ga r d. F ai lu re on th e p ar t o f t he A O t o e x am in e th e a bo ve i s s ue s by c on d u c t i n g a ny e nq ui ri e s r e nde r s t he as s e s s m en t or d e r e r r one o us i n s o f a r as i t is pr e j ud i c i al t o t he i n te r es t o f r e ve n ue . 5. I n v i e w of t he a bov e , th e a ss e s s m en t c om pl e te d by t h e A O i s , pr i m a f ac i e e r r one o u s i n s o fa r a s i t i s - pre j u d i c i a l t o th e i nt er e s t o f r e ve n ue . T he s am e is , t h er e f or e , r e q ui r e d t o b e s ui t a b l y am e nde d / m o di f i e d u / s 263 o f t h e I nc om e T ax A c t , 19 61 . Y ou ar e , t he r e f or e , r e q ui r e d t o s h ow c a us e as t o w hy an ap p r opr i at e or d e r u /s 26 3 (1 ) o f t he A ct s ho ul d no t be p a s s ed . I n t h i s c on ne c t i on , y o u m a y se n d y our wr i t t e n r e pl y s up p or t i n g d oc u m ent ar y e v id e n c e s o n t he e m ai l- i d (r oh t a k . ci t (g) jn co m e t a x. g ov. i n ) or t hr ou gh e - pr o ce ed in gs b y 2 3. 03 . 20 21 . In c as e o f no r ep ly per ab o ve , i t s ha l l b e as s um e d t ha t y o u . do n ot w i s h t o s a y a ny th in g i n t h e m a tt e r and t he m at t e r wo u ld be d ec i d e d as per m at er i a l o n re c or d wi t h o ut an y fu r t h er not i ce / i n ti m a t i o n t o y o u. ” 2. 4 T he a s s es s e e i n r e p li e d t o t he ab ov e s ai d s h ow c au s e not i c e by fi l in g a r es p o ns e a s w el l as va ri ous d o cu me n t a r y e vi de nc e s bu t t he s a m e w as not a c c e p t e d b y t he L d . P CIT an d t he L d. P CIT p ro c ee de d to h ol d t ha t th e o ri gi na l a s s e s sme n t fr a m e d in t h e c a s e w as e r r on e ou s s o fa r as ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 6 pr e j u di c ia l t o t h e i nt e r es t o f R ev e n u e an d d i r ec t e d t he A s s e ss i ng o f fi c e r t o fr a m e t he a fr es h a s s e s s me n t a fr es h . 2. 5 A ga in s t t h i s or de r o f th e L d . P CI T, th e as s e s s ee ha s no w a pp r o ac he d t hi s T ri bu n al an d ha s c ha l l e ng e d t h e o rde r pa s s ed u/ s 26 3 o f t he A c t b y ra i si ng f ol l ow in g gr ou nds o f a pp ea l :- IT A N o . 1 55/ Ch d / 2 0 21: 1. T hat or d er d a t e d 3 0 . 3. 202 1 u/ s 2 63 o f t he Ac t b y l ea T i ed Pr i nc i pa l C o m m i s s io ne r of I n c o m e T a x, R oh t a k ha s be e n m ade wi t ho ut s a t i s f y i n g th e s ta t ut or y pr e c o nd i t io ns co n t ai n ed in t h e A ct an d is t he r e fo re wi t ho ut j ur i s di c t i o n a n d th us , de s er v es t o b e qu as he d as s uc h: 2. T hat t he c on c l us i o n o f le ar ne d P r in ci p al Co m m i s s io n e r of Inc om e T ax t ha t " th e AQ ha s pas s e d t he or d er dat e d 2 9 . 12. 20 1 8 in a v er y c as ua l m an ne r wi t ho ut du e d i l i g en c e an d w i t h o ut co n du c t i n g an y wo rt hw hi l e e nq ui r i e s . T h er e f or e, i t i s ve r y c l ear th at as s e s sm ent p ro ce e d in gs c om p l e t e d u / s 143 ( 3 ) o f t h e A ct ar e e r r one ou s s o f ar as pr e j u di c i al t o th e in t er es t of t he r ev e n u e i n t e r m s of p r ov is i ons o f s e ct i on 263 of t he Ac t i n c l u d i n g E xp la na t i on 2 i ns er t e d b y t he F in an c e A c t, 2 0 1 5 w . e . f . 01. 0 6. 2 0 1 5" i s ba s e d o n f un d am e nt al m is c o n ce pt io n o f f a c t s a nd p ro vi s i ons of l a w a n d t h us n o t in a cc or d a nc e wi t h l a w a nd, t he r e f or e u nt e n a bl e . 2. 1 T hat t h e fi nd in g o f le ar n e d Pr i n c i p a l Co m m i s s ion e r of In c o m e T ax t h at or de r of t h e le ar ne d A ss e s s i ng O ff ic e r i s e r r one ous an d p r e ju d i c i a l t o t h e in te r e s t of r e ve nu e on t h e f ol lo wi n g b as i s i s f a c t u a l l y i nc or r e c t , l e gal l y m i sc on c e i ve d, c on t r ar y t o e v id en c e o n r e c or d ; a n d in an y c as e i s v ag ue, ba s ed on s u r m i s e fu l c o ns i d e r at i ons ; an d th er e f or e u ns us t ai na bl e : ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 7 a) T hat s i n c e d u ri n g t he as s e s s m e nt pr oc e ed i n g s t he A O h ad i s s ue d l e tt e r s t o c r e di to rs a n d t he y we re e it he r r e tu rn ed b ac k u ns e r ve d or w er e no t r e pl i e d to wh i c h l e d to t h e c on c l u s io n b y t h e AO hi m s el f th at as s ess e e ha d b og us c r e di t or s a n d t he r e f or e ad di t i on on th is ac c ou nt w a s r e qu ir e d t o b e m ad e ho w e v e r n o s uc h a dd i t i o n was m ade by t h e A O ; b) T hat d u r in g t h e a s s es sm e nt pr oc ee di n gs i t s el f it wa s e s ta b l is h e d t ha t t he as s e ss e e h as s h o wn f ake m ode o f tr a n s por t at i o n of g o ods , th e r e fo r e th e l os s cl ai m e d b y t h e as s e s s ee o n s a l e was bo gus on e an d w as r equ i r e d t o b e d is a ll o w e d a nd t he A O was r eq ui r e d t o d is a ll o w t h e l os s e s on b o g us s al e ho we v er n o s u c h di s al lo wa nc e m a de by t he A O on th is ac c o un t ; c ) T hat s i nc e t h e a s s ess e e had s ho w n de b t or s am ou nt i n g t o R s . 1 9 . 12 cr o r e h ow ev er no i n q u ir y wa s m ade to v er i f y t h e s am e p ar t i c u l ar l y wh e n t he g l ar i ng ev i d e n ce s o f f ak e t r an s por t m o de we r e a v ai l a bl e w it h t he A. O ; d) T hat t h e A O c on du c te d n o e n qu ir y r eg a r di ng t ha t t he as s es s e e h ad s h ow n f a k e tr a n s por t a t i on r e ce i pt t he re f or e t he pu r ch a s es r em ai ne d un v e r if i e d ; e ) T hat t he AO s ho u l d e nq u ir e i nt o th e am ou nt i nv es t e d by t h e as s e s s ee i n c o n st r uc t i o n of bu i l d i n g a nd i f i t i s r e qu ir e d t o d o s o , r e f er t he m at t er to v al u at i o n o f f i ce r f or v a lu a ti on o f pr o per t y ; a nd f ) T hat i n v es t m e n t a n d s o ur c e s s ho ul d b e i nq u ir e d i nt o by ex am i ni n g d oc um e nt ar y e v i de nc e s 2. 2 T hat t h e l e ar n e d Pr . Co m m i s s io ne r o f I n co m e T ax has f a i le d t o app re c ia te t h a t o nc e t he l e ar n e d A s se s s i ng O f fi c er on e x a m in a t i o n o f t he f a ct s o n r e co rd a nd af t er m ak i n g a l l p os s i bl e e n qu i r i e s h a d m ade ad di ti o n s by r ej e c t i ng t h e b o o k s of ac co unt s u/ s 14 5 of th e A c t a nd e s t im at i n g t he pr o f i ts a n d fu r t her ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 8 al s o m ad e d is a ll o wa nc e o f e x p en s e s a nd t h e r ef or e c om p ut e d t h e n e t pr o f i t wh i c h es t i m a t i o n a n d c om p ut a t i on h a ve ne i th er b ee n r e j e c t ed n or r ai s e d, i n s uc h c i r cum s t a nc e s th e o r de r o f r e v i si o n i s pe rs e m i sc on c e i ve d, m i s pl ac ed an d u n te n a b le , m or e pa r ti c u la r l y w he n i nc om e s ur r e nde r e d i n t h e c our s e o f s ur v ey o n a c c ou nt o f e x c e s s c as h, u nex p l a i n e d i nv es t m en t an d uns e c ur e d l o a ns ha v e b ee n s e par a t e ly br o u ght t o t a x t h en s uc h an or d e r of a s s ess m e nt c oul d no t b e r eg ar de d a s e r r one ous i n as m u c h as pr e j u di ci al to t h e in t e r e s t o f r ev e n ue m e r el y b ec ause t he le ar n ed Pr . Co m m i s s io ne r of I n c om e T ax h ad a di f fe r e nt o p i n i o n an d t h at to o, wi t h out ha v i ng e s ta b l is h e d i n a ny m ann er t ha t , v i e w ado pt ed by t he l ea r n ed As s e s si ng O f f i c e r w as an i m p os s ib le or un s us ta in ab l e v i e w. 2. 3 T hat th e le ar ne d Pr i nc i p al Co m m i s s io ne r of In c o m e T ax ha s e r r e d in h ol d in g t h a t i t i s a c as e of " l ac k of e n qui r y " a n d, f ur t h er f ai l i n g t o ap p r ec i a te t ha t a l l eg ed i n a de q ua te e n qu i r y i n t he m a nn e r s ug ges t e d wi t ho ut an y i nd e p e n de nt e vi d e n c e a nd, wi t ho ut an y f ur t h e r enq ui r i e s by hi m c an not b e a b as i s f or as s um pt i o n of j ur i sd ic t i o n u / s 263 o f t h e A c t. 2. 4 T hat t h e l e ar n e d Pr . Co m m i s s io ne r o f I n co m e T ax has f a i le d t o app re c ia te t h a t o nc e t he l e ar n e d A s se s s i ng O f fi c er on e x a m in a t i o n o f t he f a ct s o n r e co rd a nd af t er m ak i n g a l l p os s i bl e e n qu i r i e s h a d ac c ep t e d c l ai m o f t h e a pp e l la n t th e n s uc h an or de r o f as s e s sm ent c ou l d n ot b e r eg ar de d as e r ro ne o us i n as m uc h as pr e j ud i ci a l t o t he i nt e r es t of r ev e nu e m er ely be c aus e t h e l e a r ne d Pr . C o m m i s s io ne r of I nc om e T a x ha d a d if f er e nt o p i ni o n a nd t ha t t o o , wi t h o ut ha v i ng e s ta b l is h e d i n a ny m ann er t ha t , v i e w ado pt ed by t he l ea r n ed As s e s s in g O f f i c e r was an i m p os s i bl e v i e w. 2. 5 T hat t h e l e ar n e d Pr . Co m m i s s io ne r o f I n co m e T ax h as a ls o fa i l ed to a pp re c i a te t ha t , u/ s 2 63 o f t he A ct , an or d er of as s e s sm e nt ca nn ot be s et -a s id e t o s i m p ly t o m a k e f ur t he r e nq u ir i e s an d th er e af te r p ass f r es h o r d er o f as s e s sm e nt an d as s uc h , i m p ug ne d or de r i s con tr a r y t o l aw a nd he n c e , uns us t ai n ab l e . ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 9 2. 6 T hat th e le ar ne d Pr i nc i p al Co m m i s s io ne r of In c o m e T ax h a s f ai l ed t o a p pr e c i a t e t h at s ur m i se s, c on j e c t ur e an d s us p ic i o n co u l d n o t b e a bas i s m uc h l es s a v al i d b as i s to i nv ok e s e c ti on 2 6 3 of t h e A ct. 2. 7 T hat w h i l e p as s i ng t he or de r u/ s 26 3 of th e A ct t he l ea r n e d P r i nc i pa l Com m i s s io n o f In c om e T ax c an no t t r a ve l b e y on d t h e s ho w c a us e no t i c e a nd t he r e f or e fi nd i n g s an d o b s er v a t io n an d a ls o t he m at er i a l re l ie d up o n no t r e f e r r ed i n t h e s h o w c au se no t i c e b ut m a d e p a r t o f t h e or de r c o u l d ne i t he r i n l a w an d n or o n f ac t be m ad e a ba si s t o a s s um e j ur i s di cti on u/ s 26 3 o f t he A c t ; an d t h us or d er o n t hi s gr ou nd al on e de s e rv e t o b e qu as h e d as s uc h. 2. 8 T hat v ar i ous o t he r ad ve r s e f i nd i n g s re c or d e d i n t he no ti c e u/ s 26 3 o f t he A c t a nd, a ls o i n im pu gn e d or d er ar e f ac tu a ll y i n co r r ec t , v ag u e, l e ga l l y m i sc on c e i ve d and u nt e n a bl e. 3. T hat th e le ar ne d Pr i nc i p al Co m m i s s io ne r of In c o m e T ax ia s fr am e d t he im pu gn e d or d er w i t ho ut gr a nt i n g s uf fi c i e nt op p or t u ni ty t o t h e a ppe l l an t a nd t he r e f or e t he o r d e r m ade is i l l e g al , i n v al i d a n d, v it i a t e d o r de r P r aye r : I t i s th er e f or e pr ay e d t h a t, i m p u gn e d or d er da t e d 3 0 . 3. 20 21 u n de r s e ct i on 2 6 3 o f t he A c t b e h e ld t o b e wi th ou t j ur i s di c t i on an d, th er e f or e be q u as h ed an d app e a l of t h e a p pe l l an t be al lo we d . 3. 0 In r es p e c t o f th e s e co nd c a pt i o ne d a s s e s s e e, S hri B ha g w a n D as s (i n I T A N o . 156 / Ch d/ 20 21 ), t h e br i e f fa c t s o f t h e ca s e a re t h a t t hi s a s s es s e e w a s a ls o co v e r ed i n t he s u rv ey op e ra ti on u/ s 13 3 A o f t he A c t w hi ch w a s ca rr i e d ou t a t hi s b u s in es s pr ee mi e s o n 10. 09. 20 15 a nd du r i n g t he c ou r s e o f su ch s ur v e y , s o me e x c es s ca s h, u na c c ou nt e d l o a ns a nd a dv a n c es t o va r i ous pa rt i es , un e x pl a in ed i nv es tme n t i n fu rn it ur e a nd ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 10 fi x t u r e a n d u ne x p l a i n e d e x pe ndi t u re w e re fou nd. Th e d e t a i ls a n d di s c r e p an ci e s n o t e d b y th e s ur ve y t e a m w er e a s under : - i ) e xc es s c as h fo un d Rs . 8, 00 , 0 00/ - i i) un a c c o u nt ed l o ans a nd Rs . 21, 5 0, 000 / - a dv a n c es i ii ) un e xp la i n e d i n ve st m e nt i n Rs . 1, 50 , 0 00/ - fu r ni t u re an d fi xt ur e i v) U ne x pl a in e d e xp e n di t ur e Rs . 4, 00 , 0 00/ - T ot al Rs . 35, 00 , 0 00 / - 3. 1 S i nc e t h e a s s e ss e e cou ld n o t ex p l a i n t h es e d i scr e pa nc i es , a nd i n o rde r t o c o v er u p t h e s e di s cr ep an c i es , th e as s e ss ee off er e d a d di ti on al i nc o me o f Rs . 35, 0 0 , 0 00 / - o v er an d a b o ve t h e n or m a l b u s in es s i nc o me fo r as s e s s me n t ye a r 2 016- 17. 3. 2 T he re t u r n o f i n c o me w a s f il e d o n 15. 10 . 2 01 6 d e cl a r i ng i nc o me o f Rs . 3, 09, 32 0 / -, h ow e v e r, t he A s s e s s i ng of fi c e r n ot ic e d t h at du r i n g t h e F . Y . 201 5- 16 , t i ll d a t e o f s u rve y, th e as s e s see h ad e a r ne d pr o fi t , w he re a s , he ha d i n cu r r e d l o s s es po st s ur ve y. T h e a s s e s s ee w as a s ke d t o j us t i fy t h e r ea s o n fo r lo s se s w hi c h c o ul d n o t b e e xp l a in ed b y t he a s s es s e e . T he A s s e ss in g o ff i c e r al s o no t e d s o me di s c r e pa nc ie s i n t h e t ra ns po r t a t i o n bi l ls s u b mi t t e d b y t h e as s e s s ee a nd h e o b s er ve d t ha t t h e bi l ls pr o du ce d pe rt ai n e d t o t r a ns p or ta t io n by t ra c to r , a th r e e w he e l e r a n d M ar ut i 8 00 c a r (d e t ai l s o f w h i c h a r e av a i l ab l e a t pag e s 7 a n d 8 o f t he a s s es s men t o rd e r ). T he A s s e s s in g o ffi c er , t h e re fo r e, pro c e e d e d t o c on c l u d e t h a t s al e s of t h e as s e s s ee w e re n o t g en ui ne . Th e A s s e s s in g ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 11 o f fi c e r a ls o i s s ue d not i c e u /s 13 3( 6) o f t h e A ct c al l i n g i n f or m a t i on fro m t he s u nd ry c re di t o r s a s ki ng t he m t o p r ovi de co n fi r med c o py o f a c c o un t s , ho w e ve r, n e i t h e r w er e no t i ce s r e ce i v e d b ac k u nd el i ve r e d n o r w as a n y i n fo r ma t i o n r e c e i v e d fr o m th e p e rs o ns t o w h o m su c h no ti c es w e re i s s ue d. T he re a ft e r, i n th e a bs e n c e o f re l ev an t i n for ma ti on , t he A s s e ss i ng o f fi c e r pr oc e e d e d to c a l c ul at e t he g r o s s pro fi t @ 0. 55 5 % b y t a ki ng gr os s p r o fi t p e rc e n ta g e s o f a s s es s m en t y e ar s 20 15 -1 6 a nd 20 16 -1 7 a nd w ork e d ou t t he gr o s s pr o fi t fo r t h e y e a r a t Rs . 13 ,80, 82 6 /- b y ap pl y i n g t he s a m e a t tu rn o v er o f R s . 2 4, 87, 97 , 52 9/ -. T he A s se s s i ng o f fi c e r a l s o di s a l l ow e d a n a mo u nt o f R s . 15 , 0 00 / - be in g de p r e c i at i o n on f u rn i t u re w hi ch ha d be e n s ur re n de re d by t he as s e s s ee a t th e ti me o f s urv ey . Th e A s s es s i ng o f fi ce r a l s o p ro c e e d e d t o d i s a ll ow a l u mp s u m a mou nt o f Rs . 20 % ou t o f t h e t ot a l ex p e n se s cl a i m e d w h ic h w o rk e d ou t to Rs . 1, 82 , 93 5/ -. T he r ea ft e r, fa ct or in g t h e c o mm i s s io n in co m e a nd t he i nt er es t i n c o m e, t h e n et p ro f i t w a s co mpu te d at Rs. 8 , 10, 17 3 /- a n d th e a s s es s men t w as co mp l e t e d a t Rs . 46, 18 , 1 7 0/ - a f te r ad di ng t he i nc o me s ur re nd e r e d du ri ng t he c o u rs e s o f s u r v e y a mo u nt in g t o R s . 3 5, 00, 00 0/ - a nd i nc o me fro m h o us e p r op e r t y o f Rs . 3 , 0 8, 000 / - . 3. 3 S ubs e q u en t l y, no t i ce w as i s s ue d u / s 2 6 3 o f t he A ct pr o pos i ng to in vo k e re vi s i on a ry j u r is di c ti on . T he con t e n ts o f t h e s how c au s e n o t i c e a re b e i ng r e p r od u c e d he re in un de r for r e a dy r e fe re nc e : - “ Re t ur n de c l ar i n g a n in c om e of R s 3 , 09, 32 0 /- fo r t he A Y 20 1 6- 1 7 w as f i l e d by y o u on 15 . 1 0. 20 1 6. Su bs eq u e n tl y y o ur ca se was s e l ec t e d f or c om p ul s or y s c r ut in y a ft e r s e r vi ng y o u a n o t i c e u /s 1 43 ( 2) of the ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 12 In c o m e T ax A ct ( he re i n af t er r e f er r e d a s A c t ) o n 04 . 0 9. 2 01 7 b y D CI T c ir c l e S i r s a an d l at e r o n yo u r cas e wa s t r a ns f e r re d t o It o w ar d- 3 , S ir s a w ho v i de hi s or d e r da t e d 2 8. 12. 2 01 8 co m p l e t ed t he as s e s s m e nt i n yo ur c as e a t a n in c om e o f R s . 46, 18 , 1 70 / -. 2. T he as s e ss m en t r e c or d f or t he pe r i od u nd e r c ons i de r a t i o n w as c al l e d up o n a nd e x am in e d . 1. O n s uc h e x a m i n a t i on, i t h as be en n ot i ce d t h a t l et t er s we r e i s s ue d b y t h e A O t o t h e c r ed i t or s a n d t he sa m e w e r e n e i th er r e p l i e d t o no r r e tu r ne d ba c k , t he re f or e , it i s c l ea r t h at t h e cr e di t or s r e m a in e d u n v er i fi e d. 2. D ur i ng t he a s se s sm en t pr oc ee di ng s th e AO h a d no t i c ed th a t t he m od e o f t r a ns p or t at i on of g oo ds at t h e t i m e of s a le we re f ak e e v e n th en t he lo s s o n s al e o f g oo ds ha s be e n a dm i t t e d b y t he A. O . T he l os s s o c l a im e d w a s re qu ir e d t o be di s a l l ow e d be f or e co m p ut i n g th e in c om e . F u r th er n o v er i f ic at i on of d e b to r s a m oun t i ng t o Rs . 25. 3 1 c r or e wa s d on e b y A . O . and t h u s t h e y r e m ai n e d un v e r if i e d . 3. P er us a l of t he as s e s s m e nt o r de r s h o w s t h at t h e t r ans po r t a t i o n r e ce i pt s we r e f ak e , t h e re f or e , t he pu r ch a s es r em ai n e d un v er i f i e d f or t h e y e ar u nd e r c ons i de r a t i o n. F ai l ur e o n th e p a r t of t he A O t o d o s o r e nd e r s t he a s s es s m e nt or d e r er r on eo u s i n s o f ar as i t i s pr e ju di c i al t o t h e i nt e r e s t o f r e ve n ue. 4. A t th e t i m e o f s ur ve y , i t h as b e e n n o ti c e d t ha t s ub st an ti al am o u n t hav e be e n in ve s t e d o ut o f un di sc l os e d s ou rc e s in co ns t r u ct i o n o f b ui ld in g by y o u. H ow ev er , dur i ng t h e c o ur s e o f as s es s m e nt pr o ce ed in gs , th e A s s ess i ng O f f ic e r f a i l e d t o t a k e c og ni z a n c e o f t h e s am e a nd di d not f ur t he r i nv es t i ga t e th e c os t o f c o ns t r u ct i o n i n a l e as e d bu i l d i n g. ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 13 F ai lu re o n t h e p a r t of t he AO t o e x am i n e t he ab o v e i s s ue s by co n d uc t in g a ny e nq ui r i es r e nd er s t h e as s e s sm ent or de r e r ro ne ous i n s o f ar as i t i s pr e j u di ci al t o t h e i nt er e s t o f r e v en u e. 3. In v i ew o f t he a bo v e, t he a s s es s m e nt c om pl e te d by t he AO i s , p r im a f ac i e e r r on e o u s i n s o fa r a s it i s pr e j u di ci al t o th e i nt er e s t o f r ev e n ue . T he s am e i s, t he r e f or e , r e qu i r e d to b e s ui t ab l y a m e nd e d / m o d i fie d u/ s 2 6 3 o f t h e I nc om e T a x A ct , 19 61. Y ou ar e , t he r e f or e , r eq ui r e d t o s ho w c a us e as to why a n ap pr opr i a t e o r de r u /s 2 6 3( 1 ) o f t h e A c t s h o u l d n ot be pa s se d. I n t h is c o n n ec t i o n, y o u m a y se nd yo u r wr i t te n r e pl y s up por t in g d oc um e nt ar y e v i d e n c e s o n t he e m a i l- i d (r o ht ak . c i t @ i h e g. m ei a x . go y . i n) or t hr o ug h e - pr o ce ed in gs by 2 3 . 03. 20 2 1. In c as e of n o r e pl y pe r ab ove , i t s h al l b e as s u m e d t h a t y o u d o n ot w is h t o s a y an y t h i n g i n t h e m at t e r a nd t h e m at te r wo ul d b e d ec ide d as p er m at e r ia l o n r e co rd w i th ou t a n y f ur t he r no t i ce / i nt im at i o n t o y o u. ” 3. 4 T he a s se s s e e re p l i e d to t h e s ho w c a us e n o t i c e bu t th e r e p l y o f t he a s s es s e e w a s fou nd u ns a t i s fa c to r y by t he L d. P CIT . H e p roc e e de d t o s e t a s id e t he a s s e s sme nt b y h ol d i n g i t a s be i n g e r r on eou s so fa r as be i n g pr e j u di c ia l t o t h e i nt e r es t o f R e ve n u e a nd di re c t e d th e A s s e s s i ng o ff ic e r t o fr a m e t he as s e s s me nt a fr es h . 3. 5 A ggr i e v e d by t h is or d er o f th e Ld . P CI T , t he a ss e s se e h as now a pp r o ac he d t h i s T ri bu n al c h a l l en g i n g t h e i mp u g ne d ac t i o n u/ s 263 o f t he A ct by r ai s i n g fo ll ow i n g gr o un d s o f a ppe al : - IT A N o . 1 56/ Ch d / 2 0 21: 1. T hat or d er d a t e d 3 0 . 3. 202 1 u/ s 2 63 o f t he Ac t b y l ea T i ed Pr i nc i pa l C o m m i s s io ne r of I n c o m e T a x, R oh t a k ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 14 ha s be e n m ade wi t ho ut s a t i s f y i n g th e s ta t ut or y pr e c o nd i t io ns co n t ai n ed in t h e A ct an d is t he r e fo re wi t ho ut j ur i s di c t i o n a n d th us , de s er v es t o b e qu as he d as s uc h: 2. T hat t he c on c l us i o n o f le ar ne d P r in ci p al Co m m i s s io n e r of Inc om e T ax t ha t " th e AQ ha s pas s e d t he or d er dat e d 2 9 . 12. 20 1 8 in a v er y c as ua l m an ne r wi t ho ut du e d i l i g en c e an d w i t h o ut co n du c t i n g an y wo rt hw hi l e e nq ui r i e s . T h er e f or e, i t i s ve r y c l ear th at as s e s sm ent p ro ce e d in gs c om p l e t e d u / s 143 ( 3 ) o f t h e A ct ar e e r r one ou s s o f ar as pr e j u di c i al t o th e in t er es t of t he r ev e n u e i n t e r m s of p r ov is i ons o f s e ct i on 263 of t he Ac t i n c l u d i n g E xp la na t i on 2 i ns er t e d b y t he F in an c e A c t, 2 0 1 5 w . e . f . 01. 0 6. 2 0 1 5" i s ba s e d o n f un d am e nt al m is c o n ce pt io n o f f a c t s a nd p ro vi s i ons of l a w a n d t h us n o t in a cc or d a nc e wi t h l a w a nd, t he r e f or e u nt e n a bl e . 2. 1 T hat t h e f i n d i n g o f l ea rn ed P r in c i p al Com m is s i on e r of I nc om e T ax t ha t or d er of t he l e ar n e d As s e s s i ng O f fi c er i s e r r one ou s a nd p r ej ud ic i a l t o th e in t e r est of r ev en ue o n t h e fo ll ow i n g ba s is i s f a c t u al l y i nc or r ec t , l e ga ll y m is c on c e i v e d, c on t r ar y t o e vi de nc e on r e c or d ; an d i n a n y c as e is v ag ue , bas e d on s ur m i se f ul c ons i d e r at io ns ; a n d t he r e fo re un s us ta in ab l e : a) T hat si nc e d ur i n g t he as s e s sm e nt p ro c e e d i n gs t he A O ha d i s s ue d le t t e r s to c r e d i t o r s a nd t he y we r e ei t he r r et ur n e d b ac k u n s e r v ed or we r e n ot r ep li e d t o w hi c h l ed t o t he c on c l u s io n b y t h e A O hi m s e l f t ha t as s e s s ee ha d b o gu s c r e d i t or s and t he r e f or e a dd i t i o n on t hi s a c c o un t wa s r e qui r e d to b e m a de ho we v e r no s u ch a dd i t io n w as m ade by t h e AO ; b) T hat d ur i ng t he a ss e s sm en t pr o c e e d i n gs it s e l f i t w a s e s t ab l i sh e d t ha t t he as s e s s e e has s ho wn f ak e m o de o f t r ans p or ta ti on o f go o ds , t he r e f or e t he lo s s cl a i m ed b y th e a s s es s e e o n s al e wa s bo g us o n e and was r eq ui r e d t o b e di s al l o we d an d t he A O wa s r e qu ir e d t o ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 15 di s al l o w t he l os s e s on bo g us s a l e ho w e v er n o s uc h d i s al l o wa n c e m a de b y t he AO on t hi s ac c ou nt ; c ) T hat s i nc e t h e as s e s s ee had s h ow n de bt or s am ou nt i n g t o Rs . 2 5. 3 1 c r or e h ow ev er no i nq u ir y wa s m a de t o v e r i f y t h e s a m e pa r ti c u la r l y w h en t he g l ar i ng e v i d en c e s of f ak e t ra ns p or t m od e we r e a v a i l ab l e wi t h t he A . O ; d) T hat t h e AO c o n du c t e d n o e nq ui r y r e ga r di n g t ha t t h e as s e s s e e h ad s ho w n f ak e t r ans po r t a t i o n r e ce i pt t he r e f or e t h e p u r c ha se s r e m a in e d u n ve r i fi e d; e ) T hat t h e A O s ho u l d e nq ui re in to t he am ou nt i nv es t e d by t h e a s s es s e e i n c o ns t r uc t i o n o f bu i l d i n g a n d if i t i s r eq ui re d t o d o s o, r e fe r t he m a t t er to v al u at i on of fi c er fo r v al u at i o n of pr op er t y ; and f ) T hat i n v es t m e n t a n d s ou rc e s s ho ul d b e i nq u ir e d i n t o b y e x am i n i n g d o c u m en ta ry e vi de nc es 2. 2 T hat t he l ea r n ed Pr . C om m i s s i one r of In c o m e T a x h as f a i l e d to a p pr e c i a t e t ha t on c e th e l ea r n ed A s s es s i ng O f fi c er on e x am i nat i o n of t he f ac ts o n r e co rd a n d a f t e r m a k i n g al l p os s i b le e nq ui r i es ha d m a de a dd i t io ns by r e j e c t i ng t h e bo o ks of a c co u n t s u/ s 14 5 of t h e A ct a nd e s t i m at i n g t he pr o fi t s an d f ur t he r al s o m a de di s al l ow an c e of e xp ens e s an d t h er e f or e c om pu te d t h e ne t pr o f i t wh i c h es t i m a ti on a n d c o m p u t a t i o n h av e ne i th e r be e n r e j ec te d nor r ai s ed, in s u c h c i r c um s ta nc e s t he or d er o f r e vi s i o n i s pe rs e m i s co n ce i v e d, m is p l a c e d an d u n t e n ab le , m or e p a r ti c ul a r ly wh en i n co m e s ur r e nde r e d i n t h e co ur s e o f s ur v e y on a cc o un t of e xc e ss ca s h, un e x p l ai n e d i nv e s t m e n t a n d u ns ec ur e d l oa n s ha ve b e e n s e par at e l y br ou gh t t o t ax t he n s uc h an or d e r o f as s es sm e nt c oul d n ot b e r e gar d e d as e r r one o us i n as m u c h as p r ej ud i c ia l t o th e i n t e r es t ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 16 of r ev en ue m e r e l y be c aus e t h e l e ar ne d Pr . Co m m i s s io n e r o f In c om e T a x h a d a di f f e r e nt op i n i on an d t ha t t o o, wi t ho ut ha v i n g e s t abl i s he d i n an y m an n er t ha t , vi e w ad o p te d by t he l e ar ne d A s se s s i ng O ff i ce r was an i m p os s i bl e or un s us ta in ab l e v i e w. 2. 3 T hat t h e l ear n ed Pr i nc ip al C om m is si on e r of In c om e T ax h as e r r ed i n ho l d i n g t h at it is a c ase of " l ac k o f e n q u ir y " a n d, f ur t he r f ai l i n g t o ap pr ec i at e t h a t al l ege d in ad e q ua t e e nq ui r y i n t h e m ann er s ugg es t e d wi t ho ut a n y i nd e p e nde nt ev i d e n ce an d, w it ho u t a n y f u r t her e n qu i r i es b y hi m c an n ot be a ba si s f or a s s um pt io n o f j ur i s d i c t i on u/ s 2 6 3 of the A ct . 2. 4 T hat t he l ea r n ed Pr . C om m i s s i one r of In c o m e T a x h as f a i l e d to a p pr e c i a t e t ha t on c e th e l ea r n ed A s s es s i ng O f fi c er on e x am i nat i o n of t he f ac ts o n r e co rd a n d a f t e r m a k i n g al l p os s i b le e nq ui r i es h ad a c c e p te d c l ai m o f t h e a p pe ll an t t he n s uc h a n or d er o f a s s ess m e nt c o ul d n o t be r e g ar de d as e r r one ou s in as m uc h as p r ej u di c ia l t o t he i nt er e s t of r ev en ue m e r el y be c a us e t h e l ea r n ed Pr . Co m m i s s io n e r o f In c om e T a x h a d a di f f e r e nt op i n i on an d t ha t t o o, wi t ho ut ha v i n g e s t abl i s he d i n an y m an n er t ha t , vi e w ad op te d by t he l e ar ne d A s se s s i ng O f fi c er wa s a n im po s s ib l e vi e w. 2. 5 T hat t he l ea r n ed Pr . C om m i s s i one r of In c o m e T ax h as al s o fa il e d to a ppr e c i at e t h a t, u/ s 26 3 o f t h e A ct , a n o r de r of as s es s m ent c an n o t b e s e t- as i de t o s i m pl y to m ak e fu r t h er e nq ui r ie s a nd t he r e af t er p as s f r es h or de r o f as s e s sm e nt an d as s uc h, im pu gn e d o r d e r i s c on t r ar y t o l a w a nd he nc e, un s us ta in ab l e. 2. 6 T hat t h e l ear n ed Pr i nc ip al C om m is si on e r of I nc om e T a x ha s f a i l ed t o ap pr e ci at e t ha t s ur m i s es, c onj ec t ur e a n d s us p i c i o n c o u ld n o t be a ba s is m u c h le s s a v al i d b as i s t o i nv o k e s e c t io n 2 6 3 of t h e A c t . ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 17 2. 7 T hat w hi l e pas s i n g t he o r d er u / s 26 3 o f t he A ct t h e l e ar n e d P r i nc i pa l Com m is s i on o f I nc o m e T ax c an no t tr a ve l b e y o nd t he s h ow c au s e n o t ic e a n d t he r e f or e f i n d i n gs an d o bs e r va ti o n an d a l s o t he m at er i a l r el i ed u p o n no t r e f er r e d i n t h e s ho w c au s e no t i c e b u t m a d e p a r t o f t he or de r c ou l d ne i th er i n l a w a n d no r o n f ac t be m a de a ba s i s t o a ss u m e j ur i s di ct i o n u/ s 2 6 3 o f t h e A ct ; an d th us or de r on t hi s gr ou n d a l o ne d es e r v e t o be q uas h e d a s s u ch . 2. 8 T hat va r i o us ot h er a d v e r s e f i n di n gs r e co rd e d i n t he n ot i ce u / s 26 3 of t h e A ct a n d, al s o i n i m pu g n e d o rd er ar e f ac tu al l y i n c o r r e ct , v ag u e, l eg al ly m is c o nc e iv e d and u n t e n a b le . 3. T hat th e le ar ne d Pr i nc i p al Co m m i s s io ne r of In c o m e T a x i as f r a m e d t he i m p ug n e d or de r w i t ho ut gr a nt i n g s uf f i c i en t op p or tu ni ty t o t h e ap p el l a nt a nd t he r e f or e th e or d e r m ade i s i l l e ga l, i n v a l i d a nd, v it i a t e d o r de r P r aye r : It is t h e r ef or e pr ay ed t h a t, i m p u gne d or der da t e d 3 0 . 3. 20 2 1 u nd er s e c t i o n 26 3 o f th e A c t be he l d t o be wi th ou t ju r is d ic t io n an d , t he r e fo r e be qu as he d a nd a pp e a l o f t he a pp e l l an t be a ll o we d. 4. 0 A t t he ou t s e t, t h e Ld . A R s u b mi t te d th at a s p er t h e not i c e s re c ei ve d f ro m t he Re gi s tr y o f t he T ri bu n al , b ot h the a pp e a ls w er e t i me ba r r e d b y 12 d a ys . It w as s ub m i t t e d by t h e L d. A R th a t t he r e w a s no de l ay i n f i l i n g o f t he s e a p p e al s i n v i e w of t h e j u dg e me n t o f t h e H on ' b l e A pe x C ou r t i n s uo m o t u Wri t P e t i t i o n ( Ci v i l ) N o. 3 of 2 02 0 , w he re i n, th e pe r i o d o f l i mi t at i o n h ad be e n e x t e n de d b y t ak i n g j ud i ci a l n ot i c e o f t h e fa c t t ha t t h e s te e p r is e i n C ov id -1 9 vi r us c as e s w as n o t l i m it e d t o D el hi a lo ne b u t ha d e n g ul fe d t h e en ti r e na ti o n a nd, t h e r ef or e , k e e pi ng i n m i n d t hi s ex t ra or di na r y s i tu at i o n, th e l i mi ta t io n p e r i o d ha d s t o o d e xt e n de d. ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 18 4. 1 P e r c o nt ra , t he L d. CI T D R a g r e e d w i t h t h e co n te n t i on o f t h e L d. A R i n th is r e ga r d . 4. 2 A cc or di ng l y, w e a r e o f t he vi ew t ha t t he re i s no a c t u a l de l a y i n fi l in g t h e a pp e a ls a nd w e a d m it t he a p p ea l s f or he ar i n g. 5. 0 T he L d. A R s ub m i tt e d t h a t t he f ac t s o f t h e s e t wo c a s e s w e re i de nt ic al t o t he f ac t s o f t he s i x ot he r a s s es s e es viz S h. Ra j e e v G o y al , M /s P ar de ep I sp at ( P ) Lt d, P r iy a G o ya l , M s P ri ya nk a, S h . P ar s hot a m G oya l a nd S h. T a r s e m G oy a l w hos e a pp e a ls be fo r e t h e I T A T w e re de c id e d i n fa v o ur o f t h e as s e s s ee s , w her e i n, o r de rs pa s s ed u/ s 263 o f t he A ct w e re s e t as i d e i n I TA N os . 1 49 / C hd /2 0 2 1, 1 50/ Ch d / 20 21, 15 1/ C h d/ 2 0 2 1, 1 52/ C hd / 2 0 2 1, 15 4 / C h d/ 2 02 1 a n d 1 57/ C hd/ 20 2 1 re s pe ct i ve ly vi de c o mm o n or d e r da t e d 19. 0 1 . 2 0 22 . It w a s s ub mi t te d t ha t t h es e t w o as s e s s ee s a l s o b e l o ng t o t h e s a m e gro u p o f ca s es a n d t h e s ur ve y as w e ll a s t h e a s s e ss m e nt o r de rs t he s how c au s e no t i c es i s s ue d u/ s 26 3 a n d t h e o r d e rs pa s s ed u /s 26 3 o f t he A ct we r e on i de n t i c al fa ct s a nd on i d e n t i c a l r e a s oni ng a nd, t he r e fo re , or de r s pa s s e d b y t he I TA T i n t he a b ove me nt io n ed s i x c a s e w oul d a pp ly mu t a t is mut a n di s i n t h es e c as e s as w e ll . 5. 1 It w as fu rt h er su b mi t t e d t h a t on ce t h e l e a r ne d P r. C IT has no t d is p u t e d t he a c t i o n o f t h e A s s e s s in g O ffi c er v is -a -v i s t he re je ct i o n o f bo ok s o f a c c o un t s , th e r ev e n u e c ou l d n ot r e l y on t h e re je c t e d bo o ks o f a cc ou n t for ma k i n g t he a ddi t i o ns on a c c o un t o f t ra de c r e d it or s . It w as s ub m i tt e d t ha t s in c e t he i nc o me o f t h e as s e s s ee h as b ee n e s t i m at e d a nd ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 19 gr os s p ro fi t r a t e h as be e n ap pl i e d, n o s e p a ra t e a d di t i o n w as c al l e d f or e it he r o f t he a m o unt s i nc u rr e d on t he p ur c ha s e or su ndr y c r ed i t ors a ri s i n g fro m t hos e pur ch a s e s b y r e l y i n g o n t he b oo ks o f a cc ou n ts t h a t ha v e b e e n r e j ec t e d u/ s 14 5 o f t he A c t . Re l ia nc e w a s pl a c e d on fo ll ow i ng j ud i c ia l p ro n o un c e m e nt s: i ) 30 2 IT R 2 46 ( P & H ) CIT v. A gga rw a l E ng g. Co . i i) 29 6 IT R 3 24 ( P & H ) CIT v. S an to sh J ai n i ii ) 22 3 Ta x m a n 2 4 (P &H ) CI T v. D ul l a Ra m L ab ur C o ntr ac t or i v) IT A N o . 418 / C h d / 2 0 15 a nd 4 4 6/ Ch d /2 0 15 d a t e d 12.8 2 01 5 CI T v. H in d A gro I nd us t ri e s 5. 2 It w a s s u b mi t te d b y t h e L d. A R t ha t t he b oo k s o f a cc ou nt s ha v i n g be e n r e j e c t e d by th e A s s es s i ng O ff ic e r an d pro f it ha v in g be e n c o mp ut e d on t h e ba s i s o f e s t i m a t i o n, a s s u ch t h e sa me b o o ks o f a cc ou n ts c o ul d n ot b e r e l ie d u po n f o r ma k i n g a n y fur th er a d di t i o n t o i nc o me in r e s pe c t o f p u r c h as e s , s u ndr y c r e d i t ors . It w a s s ub m it t ed t ha t on c e t he A O ha s ma d e t h e ad di ti on s o f on ac c o u nt o f i nc o m e s ur re nd e r e d at t he ti m e o f s ur v e y, t h e n t he al l e g ed s u p pre s s e d pr o fi ts a nd i nv e s t me nt s ha v e a l r e a dy be en fa c t o re d i n s u c h s u r r e nd e r a n d t h a t t he a ll e ge d un ex p la i ne d c re di to rs o r i n ve s t me n t s hav e t o be t e l es c op ed i nt o t h e o t he r r es ul t i ng o nl y i n o n e a d d i t i on . 5. 3 It w a s a l s o s u b mi t t e d t ha t w he re t w o v ie w s a r e p o s s ib l e a nd t he A O h as ta k e n a vi e w w it h w h i ch t he L d. P r. CIT do e s no t a g re e, th e s a id o r d er c a n n ot be t r e a t e d as an e rro n e o us o r d e r p r e ju d ic i a l t o t h e i nt er es t s o f t he re v e n ue u nl es s t he vi ew t ak en b y th e A O is ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 20 un s us ta i n a b l e i n la w . Re l i a nc e w a s pl a c e d on fo l l o wi n g j ud i ci a l pr o no u n c e m e nt s : i ) 35 0 IT R 5 55 ( D e l ) CI T v. D LF Lt d. i i) 30 3 IT R 2 3 (P & H ) CI T v. M un ja l C as t i ng 5. 4 It w a s fu rt he r su b mi t t e d t h a t a n or d e r u / s 26 3 o f t he A c t ba s e d on hi gh l y v a gu e a nd c r y pt ic ob s er va t i ons d oe s not s a ti s fy t h e s t at u t o r y p re -c on d i t i o ns c o n ta i n ed in s ec t i o n 26 3 of t he A ct . Re l i a n c e w as p la c e d on th e fo ll ow i n g j u di c ia l p r on ou nc e me nt s: i ) 11 2 ta x m a n n. c o m 3 21 ( D el ) E T T Lt d. v. CIT i i) 12 0 ta x m a n n. c o m 1 87 (M ad ) CI T v. P a d m av a t h i i ii ) 27 5 Ta x m a n 3 9 4 ( M a d) CI T v. V ij a y K u ma r K oga n i i v) 11 7 ta x m a n n. c o m 9 86 ( G au ) A b du l H am i d v . I TO 5. 5 T he L d. A R a l s o s u b mi t te d t h a t t h e A O ha d p as se d t h e a s s es s men t o rd e r a f te r ma ki ng al l p o s s ib l e e nq u i r ies a nd t hat it w a s n o t a ca s e o f “ l a c k o f e nq u i r y ” o r “ l a c k o f i nv e s t ig at io n” w h er ei n t h e L d . Co m mi s s i on e r w as e mp ow e r e d to e x e rc is e hi s r e v i s i o na l p o w e rs b y c al l i n g f or an d e x a mi ni n g th e r e c or ds o f a n y pr o c e ed in gs un de r t h e A c t a nd th er e a ft e r p a s s i ng o r de rs th er e on . It w a s a lso s u b m it t e d t ha t a pe r u sa l o f th e i m pu g ne d o r de rs r ea d w it h t he s ho w -c a us e n ot ic e s w oul d s ho w t ha t t he L d. P r. CIT h a s p ro c ee d e d on a fu n d a me n ta l f ac t ua l m is c o nc e p ti on . I t w as s u b mi t t e d t h a t t h e A s s e s s i ng O ff i c e r ha d is s u ed re l ev an t qu e s ti on n a i re s / no t i ce s w h er e i n i t w a s a ppa re nt t ha t t h e i s s ue s, a s ra i s ed by t he L d. P r . CIT , ha ve be e n du ly co ns id e r ed by t h e A O . I t ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 21 w as s ubm i t t e d t h a t, ad mi t t e dl y, a nd as al s o no t d isp u te d by L d. P r. CI T i n th e s h ow c a us e n ot i c e s a n d t he o r d e rs o f r e vi s i on u/ s 26 3 o f t h e A c t, t ha t t h e A O h a d, o n p r op er a nal ys i s o f fa c t s a n d mat e r ia l on r e c o rd , c o me t o a c e r t a i n c on c l us i on a nd h a d r ej e c t ed t he boo ks o f a c c o un t u /s 14 5(3 ) o f t h e A ct a n d co m p ut e d t h e i n co me o f t h e a ss e s s e es by a pp l y i n g t he G ro s s P ro fi t ra t io a nd h a d, t h u s , c ons i de re d the fa c t s o f b ot h t he c as e in a pr o p er p er s p e c t i v e a nd h a d t ake n a p la us ibl e vi e w w hi l e pa s s i ng t h e a s s es s m e n t ord er s. Re l i a n ce w a s p l a ce d o n t he fo ll ow i n g j ud i c ia l p ro n o un c e m e nt s: i ) 34 1 IT R 5 37 ( D e l ) CI T v. V ik as P ol y me rs i i) 33 2 IT R 1 6 (D e l ) C IT v . S u nbe a m A u t o Lt d. i ii ) 34 3 IT R 3 29 ( D e l ) IT O v . D . G . H o us i n g P roj e ct s Lt d. 5. 6 It w as s u b m it t e d t h a t s e c ti on 2 6 3 d oe s n o t pe rm i t re vi s i o n o f a n or de r on t he b a s i s of s us p ic i o n, c onj e c t u re s a n d su rm is e s . Re l ia nc e w as p la c e d on th e fo ll ow i n g j u di c ia l p r on ou nc e me nt s: i ) 29 6 IR 23 8 (P &H ) C I T v . S oh an a Wo o l en M i l l s i i) IT A N o . 6 9 0 / C hd / 20 1 0 A . Y . 200 5 - 0 6 d a t ed 9 . 3 . 20 12 S h. J a s w i nd er S i n g h v. CI T i ii ) IT A N O . 3 67/ Ch d / 2 0 12 A Y 2 0 07 - 0 8 da t ed 7. 3. 20 13 A a rt i In t e r n a t i o na l v. CI T 5. 7 It w a s s ub m i t t ed b y t he L d. A R t h a t s ec t i on 263 o f th e A c t c an no t b e i n vo k e d t o ma ke a de e p er e n q ui r y. R el i an ce w a s pl a c e d on th e j ud g m e n t i n t he ca s e o f C I T v. L ei s u re We a r E x p ort s L t d. r ep o rt ed i n 34 1 I TR 1 6 6. I t w a s al s o s u b m i t t e d t ha t f or ho l d i ng t ha t t h e a s s es s m en t or d e r p as s e d b y t h e A O i s no t o nl y pr e ju d i c i a l t o th e i n t e r e s t o f r ev en u e ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 22 bu t i s al s o e rr o neo u s , th e a ct i on o f t he Ld . P r . CIT ha s t o be p re c e d e d b y s o me mi n i ma l en q ui r y. I t w a s s ub mi t te d t ha t me re i ss ua n ce o f s ho w c au s e n ot i c e s a n d, th e re a ft er , me c ha ni c a l p a s s in g of t h e o rd e rs doe s no t qu a l i fy a s “ mi ni ma l en q u i ry ” u / s 26 3 o f t h e A c t. I t w a s s ub mi tt e d t ha t t he b ur den i s o n t h e l e a r ne d P r i n c i p a l C o m m is s i on er o f I nc o me Ta x t o e s ta b l i s h t h at t h e re i s an ‘e rr o r’ i n t h e o r de r o f as s e s s me nt an d t ha t i n a bs e n ce o f a n ‘ er r or ’, in voc at i o n o f s ec t i o n 2 63 o f t he A ct w as n o t i n a cc or d a n ce w i t h l a w . Re l ia nc e w a s pl a ce d o n th e j u dg m e nt o f H on ’b l e D el hi H i gh C ou rt i n t h e c as e o f P C IT vs . D el hi A i r po rt M e t ro E x pr es s (P ) L t d. re p or t e d i n 398 I T R 8 . 5. 8 It w as fur th er s ub m i t t e d b y t he L d. A R t h at E xp l an a t io n 2 t o s e ct i on 2 6 3 o f th e A c t doe s no t a u t h o ri s e or g iv e un fe t te re d p o w e rs t o t he L d. Co mm is s i one r t o r ev is e ea c h a nd e ve ry o r d e r a nd, i s not a s ub st i t ut e t o t h e p r e c o nd i t i o n u/ s 2 6 3( 1 ) o f t he A ct . R e l i a nc e w a s p la c e d on t h e fo l l ow i n g j u dg m e n ts : i ) 70 t a x ma n n . c o m 22 7 ( M u m ) N a ra y an T a tu R an e v. ITO i i) IT A N o . 3 391/ D e l/ 20 1 8 A run K u m ar G a rg H U F v. P CIT 5. 9 It w as , t h e re fo r e, pr a y e d t ha t t he i m pu gne d ord er ma d e u /s 26 3 o f t h e A c t be q uas h e d . 6. 0 P e r co nt ra , t h e L d . C IT D R ve he me nt l y s up p o rt ed th e fi n d i n gs o f t he L d. P C IT a n d he h i gh l i gh t e d t h a t the as s e ss e e ha d a do pt e d a c o mp l e t e l y n on - co op e r a t i v e at t i t u d e du r i ng th e co urs e o f ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 23 a s s es s men t p ro c e e d in gs . It w a s s u bmi t te d t h at th e r e w as a c o mp l e t e l ac k o f a p pl i c a t io n o f mi n d o n b eh a l f o f t he A s s e s si ng o f fi ce r a n d t h a t he ha d no t in qui re d i n t o t h e fa k e r ec e ip ts p e rt a i ning t o t r a ns p o r t at i o n a nd h a d a ls o n o t u n de r t a k e n a n y i n qu i r y i n re sp ec t o f c r e d i t or s o r de b t o rs e v e n w h e n t he y had n ot r e s po nd e d t o t he no ti ce s i ss u e u/ s 13 3(6 ) o f t he A c t . I t w as poi nt e d o ut by t h e L d. DR th a t th e A s s e s s i ng o f fi c e r ha d a l s o n ot e n q u i re d i nt o th e a s p ec t o f i nv es t me nt s m a d e i n t h e c as e o f S hr i B ha g w a n D a s s v is - a- v is le a s e d p ro pe r t y. H e p ra ye d fo r up hol di ng t he i m p u gn e d o r de r. 7. 0 We ha v e h e a r d th e ri va l s ub mi s s io n s a nd h a v e a ls o ca r e ful l y c ons i de re d t h e r ec ord . W e h a v e a l s o g o ne t h r o ug h t he c o ns ol i d at e d or d e r p as s e d b y a c o -o r d in at e B e n c h o f I T A T C h an di ga r h in t h e c as e o f a s s es s e es vi z S h . Ra j e e v G oy a l , M / s P a rd ee p Is p at ( P ) L t d , P r i ya G oya l , M s P r i y a nk a, S h. P a rs ho t a m G oya l a nd S h. T a rs e m G oy al i n IT A N os . 149/ C h d / 20 21 , 15 0 / C hd/ 20 2 1, 15 1/ Ch d/ 20 2 1, 1 52 / C hd /2 02 1, 15 4/ C h d/ 2 0 2 1 a n d 15 7 / Ch d/ 2 0 21 re s p e c t i v e l y w he re in t he c o -o r di na te Be nc h h a s he l d t h e pr o c e e d in gs i ni t i a t e d u / s 26 3 o f t h e A c t as b a d i n l aw . We a gre e w i th t h e c o nt e nt io n o f t h e Ld . A R t h at t he t w o c a p t i on e d a pp e a l s a re i de nt i c a l to t h e a bo ve me nt i on e d s i x a pp e a ls in as muc h a s a ll t h e as s e s s ee s bel o n g t o t he s a me g r ou p a nd t he a s s es s me nt s w e re c o mp l e t ed u /s 14 3( 3) o f t h e A c t p os t s u rv e y pr oce e di n gs u/ s 13 3A o f t h e A ct . T he a s s e ss me n t or de r s pa s s e d w e r e a l s o o n i de nt ic a l l in e s w i t h t he A s s es s i ng O f fi c e r re j ec t in g t he b oo k s of a cc ou n t a nd e s ti m at ed t he pr o fi t b y a p p l y i n g th e G ro s s P r ofi t r at i o. The S how Ca us e N ot i ce s ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 24 i s s ue d b y t he L d. P CIT w e r e a ls o i d en t i ca l an d s o we re th e o r de rs pa s s ed u / s 263 o f t he A c t . Th e r e fo re , o n i de n ti c a l s e t o f fa c ts , w e a re i nc li ne d to f o l l o w t he f in di ngs o f t h e c o -o rd i n a t e B e n ch o f t h e IT A T Ch a n d ig ar h i n th e ca s e o f S h. Ra je e v G oy al , M / s P a rde e p I s p at (P ) Lt d, P ri ya G oya l , M s P ri ya n k a , S h. P ar s hot a m G o y a l a nd Sh . Ta rs e m G o y al (s u pr a ) w he r e i n v i d e or d e r da te d 19 . 0 1 . 202 2 i t w as he l d a s u nde r : - “ 8. 0 We ha v e co ns id er e d t he r iv a l s u b m i s s i ons a nd ha v e a ls o p er us e d t he m at e r i al o n r e co r d . Fr o m t he r e c or ds pr o d uc e d be f or e us , it is ve r y m uc h e v i de n t t ha t t he A s se s s i ng O ff i c e r h ad m a d e de t a i le d i n q ui r ie s re ga rd i n g th e as s e s s ee ’s cl ai m o f pur c h a s es , s a le s , su n dr y d e bt ors , s undr y c r ed i t or s and t r ad i ng r e s ul t s de c l ar e d by t h e a s se ss e e i n t he r e tu r n o f i n c om e . H o wev e r , s i nc e o n de t a i l e d e nq uir y , t he A O r e je c t e d t h e t r a di ng r es u l t s , h e e s t i m at e d t he bu s i n e s s pr o fi t o f t h e a s se s s e e by a pp l y i n g th e n e t p ro fi t ra te de c la re d i n s u bs e q ue n t y e ar s . T he L d. P r . CIT h as ne i t he r di s pu t e d t h e r e j ec t io n o f bo ok s o f a c co u nt s by t he A O by i nv ok i n g s e c t i o n 1 45 of t he A c t a n d n or h a s di s p u ted t he ap pl i c a t i o n of ne t pr of i t r a t e d e c la re d i n su bs e qu ent ye ar s . H e has , h owe ve r , he l d t hat b as e d o n th e en q u i r ie s mad e, ad di t i o n o u g ht t o ha v e b ee n m ad e o n a c co u n t o f c r e di t or s an d d is a l l ow an ce o f pur c has e s c l ai m e d by t h e as s e s see . H e ha s a l s o di r e c t e d t h e AO t o c on d uc t d et ai l ed i n q ui rie s r e gar di ng t h e p ur c h as e s a nd s al e s m a d e b y t he as s e ss ee by c on du ct i n g t hi r d pa r ty v er i f ic at i o ns , e xa m i n a t i o n of t he c r ed i t or s , e t c. a n d af t er in qu i r ie s n e c es s a ry a dd i tio n s t o be m ade as p er l a w. T h e or d e r o f t he L d . P r . C IT o n th is c o unt i s , t hus , c r yp ti c , va g ue a n d c o nt r a di c to r y. N o e f fo r t has be e n m ad e t o s pe l l o ut as to i n w h a t m ann er th er e wa s l ack of e n q ui r y by t h e A O i n th e or de r o f a s s ess m e nt v i s-a -v i s t he t r adi ng r es u l t s de c la r e d by t he as s es s e e . T he As s e ss in g O f fi c er ha d m ad e ad e qu at e i n q u i ri e s as i s ev i de nt fr o m th e or d er of as s e s s m e nt as w e l l as fr o m th e r ep li e s f urni s he d (w hi c h h av e b e e n pl a c e d i n t h e P a p e r Bo o k f i l ed b y t he as s e s s ee bef or e u s ). T hus , i n v i ew of t he do c um e n ta ry e vi de nc es , as c al l ed f or a nd e x am i ne d b y t h e As s e s si ng ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 25 O f fi c er , it is v er y m uc h e vi de nt t h a t t he A s s es s i ng O ff i ce r ha d d u l y ap p l i e d hi s m i nd t o t h e is s u e of t r a d i n g re s u l t s a nd i t w a s o n l y t h e r ea f t e r t h a t he ha d e s t im at e d i n c o m e o f t he as s e s s ee . A s fa r as t he is s ue of i n v e s t m en t in c ons tr u ct i o n of ho us e i s co n ce r n e d, t he sa m e is a pp ar en t l y m i s con ce i v e d, as i t i s n ot ar i si n g f r om as s e s s m e nt r ec or ds . As far a dd i t i o n on ac co u n t of f i x e d as s e t s is c on c e r ne d, t h e s am e sta nds s e par at e l y ad de d a s p ar t of t he i n c o m e de c la r e d duri ng t he c our s e of s ur v ey b y t he as s e s s ee . T he r ef or e , we c an s a f e ly c on c l u d e t h at pr o pe r i n q ui r i e s h ad be e n m a d e by t he A s se s s i ng O f f i c e r wh i le ac c e pt i n g t h e c l a im o f t he as s e s s ee an d, t he r ef or e , t he co nt en t i on o f t h e L d . Pr. CIT tha t n o i nq u ir y wa s m ad e by t he A ss e s s i ng O f f i c e r v is - a- v is tr a di n g r e s ul ts or add it i o n i n f i x e d a s se t s i s f a ct u a l l y i nc or r e ct . It i s no t t he ca s e w h e r e no i nq u ir y ha s be e n m a de by t he A s se s s i ng O f f ic er . M er e l y be c a us e th e L d. P r. CIT fe lt t hat f ur t h e r i n qu i r y s h o ul d ha v e be en m a d e , i t d oes n ot m a ke t he or d er o f t he A s s es si ng O f f ic e r er r o ne o us a n d pr e j udi c i a l t o t he i nt e r es t of th e re ve nu e . 8. 1 We al s o no t e t ha t t he L d. Pr . CIT has m er e ly rem i tt e d t he m a t t er ba c k t o t he As s e s s in g O f f i c er wi t ho ut m aki ng any i nq u ir y h im s e lf . I t i s ap p ar e n t t h at n o i nd ep e n d e n t i n q ui r ie s ha v e b ee n m a de b y t he L d. Pr . CI T al t h ou g h i t was i nc um be nt up on h i m t o m ak e s uc h i n q ui r y s o as to r eac h t he i m pu gn e d c o n c lu s i on t ha t t h e o r de r o f t h e A s s es s i ng O ff i c er wa s e r r one o u s a nd pr e ju di ci al t o t h e i nt er e s t o f t he r ev en ue . 8. 2 Mor e ov e r, on f ac t s, r e je c ti on of t r a di ng r e su lt s an d a pp l i ca t i on of net pr o f i t r at e by t h e As s e s s in g O f f i c e r i s a pos s i b l e v i e w an d, no t a n u ns us t ai na bl e v i e w a nd, t he r e f or e , e v en o th e r wi s e , i nv oc at io n o f s e c t i o n 2 63 is no t i n ac c or da n c e wi t h l aw . I n t h e c a s e of CI T vs . D L F L t d. r e por t e d i n 35 0 I T R 55 5, t he H o n ’ bl e D e l hi H i g h C our t, ap pl y i n g t h e m and a te o f t he H on ’ b l e A p ex C o ur t i n th e ca s e of M a l a bar I nd us tr i al C o. L t d. v s . C I T ( re po r te d in 24 3 I T R 83 ) an d C IT vs . M ax I nd ia L t d. (r e p or t e d i n 29 5 I T R 2 82 ) ha s h e l d t h a t i t i s n ot a m e r e pr e ju di ci al to r e ve nu e a c t o r a m er e e r r one ous v i e w t h a t c an b e r e vi s e d bu t t he r e mu st be an e l e m e n t o f un - su s ta in ab i l i t y wh ic h cl ot h e s t h e Co m m i s s io n e r wi t h th e j ur i s d i c ti on u / s 263 of t he Ac t . A l s o ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 26 i n t h e c as e o f IT O v s . D . G . H ous i ng P r o je c t L t d r e por t e d i n 34 3 IT R 32 9, i t wa s he l d by t he H o n ’ bl e D e l hi H ig h C o ur t t ha t in c as e of i n a de q ua te e nq ui ry i t is i ncu m be n t f or t he Co m m i s s io n e r t o c on d uc t e nq u ir y an d n ot m e r e ly r em it t h e m at t er t o t he A ss e s s i ng O f f ic er wi t ho ut c o nd uc t in g a ny v er i f ic at i on / e n q ui r y. In t h e c a s e of PC IT vs . D el hi A i r por t Me t ro Ex pr e ss ( P) L t d. r e por t e d i n 3 98 IT R 8 (D el ) i t has be e n he ld a s u nd e r : “ 9. It i s s e e n, i n t he o r de r d at e d Mar c h 3 0 , 20 1 6, t h e P r in c i p al C om m is s i on e r of I n c om e - t a x has pr oc e ed e d by s e t t i n g ou t t h e c ont e n t s of t h e s ho w-c aus e n o t i ce an d t he co nt en ts o f th e r e p l y gi ve n b y t h e a ss e s s e e. I t ap pea r s t h at n o i n qui r y, as s uc h , w a s un d er t ak e n b y t he Pr i nc i p a l C om m i s s i one r o f I nc om e -t ax t o c om e t o t he co nc l us i on t h a t th e o r ig in a l as s es s m e nt or de r was e r r one o us and pr e j u di ci al t o t he i nt e r es t s o f t he R ev en ue . 10 . F or th e p u r pos e s o f e xe r c is i ng j u r i s di ct i o n un der s e ct i on 2 63 of th e A ct , t he c on cl us i on t h at th e or de r o f t he A s s es s i ng O f fi c er i s e r r one ou s a n d pr e j ud ic i al t o t he in t e r es t s of t h e Re v e n ue ha s t o b e p r ec ed ed b y s om e m i ni m a l i n q ui r y. I n f ac t, i f t h e P r i nc i p a l Co m m i s s io n e r of I nc om e - t a x i s of t h e vi e w t ha t t h e A s se s s i ng O f f i c er di d n ot u nd e r t ak e an y in qu i r y, i t be c om es i nc um be nt o n t h e P r in ci pa l Co m m i s s io n e r o f In c o m e - t a x t o co nd uc t s u c h i nq ui r y . A l l t ha t t he P r in c i p al C om m i s s i one r o f Inc om e - t a x has d on e i n t he i m pu gn e d or d e r i s t o r e f e r t o t he c i r cu l ar o f t he Ce nt r al B oa rd o f D i r ec t T a x e s a n d co n c l ud e t h at " i n t he c as e of t he a s s ess e e- c o m p a n y , th e A s s es s i ng O f fi c er wa s du t y -bo un d t o ca l c ul at e a n d a l l o w de pr e ci at i o n o n t h e B O T i n c o n f or m i t y o f t he Ce n tr al B o ar d o f D i r e ct T a x es C ir c u l ar N o. 9 of 2 01 4 b u t t he A s se s s i ng O f f i ce r f ai l e d to do s o. T he r e fo re , t he ord er of t h e A s s es s i ng O ff i ce r i s e r r on e ou s in s o f ar as pr e j u di ci al t o t h e i nt er e s t s o f t h e Re v e nu e" . 11 . In t h e co n s id er e d vi e w o f t he c ou r t, t h i s c a n ha r dl y c ons t it ut e t h e r e as o ns r e qu i r e d to b e gi v e n b y t he Pr i nc ip al Com m is s i one r o f I n c o m e -t a x to ju s t i f y t he e xe r c i s e of ju r i s di c ti on u n d er s ec t i o n 2 6 3 o f th e A ct . In th e c o n te xt o f t he pr e s e n t ca s e i f , as ur g ed b y t he R ev e n u e , t h e as s es s e e ha s w r on gl y c l ai m e d de pr e ci at i o n o n as s e t s l i ke la n d a nd bu i l d i n g, i t was ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 27 i nc um be nt u p o n t he Pr i n c i p a l C o m m i s s io n e r o f I nc om e t ax t o u n de r t a k e a n i n q ui r y as r e g ar d s wh i c h o f t h e as s e t s we r e p ur ch as e d an d i ns t al l e d b y t h e a s s es s e e ou t o f i t s own f u nd s dur i ng t he as s e s sm e nt y e ar i n qu es t i o n a nd, wh i ch w e r e t h os e as s et s th at we r e ha nde do v er t o i t b y th e D MR C. T ha t b as i c e x er c i s e of de t er m i ni ng t o w h at ex t e nt t he d e pr ec i a t i o n was c la im e d i n ex c es s has n ot be e n u n de r ta ke n b y t he P r in c i p al C om m i s si on er of I n c om e -t ax . 12 . Mr . A s he es h J ai n t he n v ol un t e er e d t ha t t he P r in c i p al C o m m i s s i on e r of I n co m e -t a x h a d e x er c i se d t he se c on d o pt i o n a va il ab l e t o h i m un der s e ct i o n 26 3(1 ) o f t he A ct b y s e nd in g t he e n t i r e m at t e r b a ck t o t he A ss e s s i ng O f f i c e r f or a f r es h a s s e ss m e nt . T ha t op t i o n, i n t h e c on s i de r ed vi e w of t h e co u r t, c a n b e e xe r c i s e d o nl y af t er th e Pr i nc i p al C om m i s s i on e r o f In c o m e - t a x u nd er t ak es a n i n q ui r y h im s e lf i n t h e m ann er i n di c at ed h er e i n be f or e. T ha t i s m i s s in g i n the pr e s en t c as e . 13 . T he r ef or e , t he c o u r t i s o f t he vi e w t ha t t he In c o m e t a x A p p e ll at e T r i bu n a l w a s n ot i n e r ro r i n s e tt i ng a s id e t he i m p u gn e d o r de r o f th e P r i nc ip a l Co m m i s s io n e r o f I nc om e - t ax un d er s e ct i o n 2 6 3 o f t h e A ct . No s ubs t an ti al que s t io n of l aw a r i s e s . ” 8. 3 In t he c as e of M /s Ar u n K u m ar G ar g H U F v. Pr. CI T i n I T A NO . 339 1/ D e l / 2 0 18 f or A s s es sm e nt y e ar 2 014 - 1 5 da t e d 8. 1. 20 19 i t ha s be e n he l d by t he D el hi Be nc h of t h e IT A T as unde r : “ 5. 4 In t h e p r es e n t c as e , i t i s a ppa r e nt t h at t he L d . P r . CI T , un m i nd fu l of t he in qu i r i es c o n duc t e d b y t he A s se s s i ng O f f i c er d ur i ng t h e c ou r s e o f as s e s s m en t pr o ce ed in gs an d t h e s u bm is s i o ns m ad e by t he a s s es s ee i n r es po ns e t o n ot ic e u /s 2 63 of th e Ac t , h a s m er e ly ob s er v e d t h at th e a s s e ss m e nt or d e r w a s p as s ed w i t h ou t m ak in g pr op e r i n q ui r ie s an d i t i s a m at t er of r ec ord t ha t t he L d. Pr . CI T has h im s e lf no t u nd e r ta ke n a n y i nq u ir y t o r e a c h a c o nc lu s io n t h at t h e o r der is e r r one o us a n d pr e j u di c i a l t o t h e i nt er e s t of t he r e ve n ue . 5. 5 We m a y fu r t h er a d d t ha t t he r e i s a d if f er e nc e be t we e n l ac k o f i n qui r y an d i n ad e q ua te i nq u ir y a n d i t i s fo r th e A s s es s i ng O f f ic er t o d ec i de t he e xt e n t of i nq u ir y to b e m a d e a nd i t i s h i s s at is f ac t i o n wh i c h is r e qui r e d u n de r t h e l a w. T he H on’ b l e D el hi H i gh C ou rt ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 28 i n t he c as e o f C om m i s s i on e r o f Inc om e T ax v s . Su nbe am Au to L t d r e po r te d i n ( 2 01 0 ) r ep or t e d in 33 2 IT R 16 7(D e lh i) ha s he l d t ha t i f t h e r e was a ny i n q uir y , e ve n i n a de qu a t e , t h a t wo u l d b y i ts e lf n ot gi v e o cc as i o n t o t he C om m is s i on e r t o pas s o r der u / s 26 3 of t h e A ct m er e l y b e c a us e t he C om m is s i one r ha d a d i f fe r e n t op i n i on in t he m a t te r . It i s a se t t le d l a w t ha t t he L d . P r . C IT c an no t p as s t he o r d e r u/ s 26 3 on t h e gr o un d t ha t t ho r o u gh i n qu ir y s h o ul d h av e b e en m a de b y th e A s se s s i ng O f fi c er . 5. 6 A lt ho u g h, t h e r e h a s be en an am en dm en t in t h e pr o vi s i o ns of s e c ti o n 2 6 3 o f t h e A c t b y w h i ch E xp l a n a t i o n 2 h as be e n i ns e r t e d w. e . f. 1. 6. 20 15 b ut t he s am e d oe s no t gi v e u nf e tt e r ed po we rs t o t h e Co m m i s s io n e r t o as s um e ju r is d ic t i o n u nde r s e c t io n 26 3 t o re v is e ev er y o r de r of t h e As s e s s in g O f f ic er t o re - e xa m i ne t h e i s su es al r e a dy e x am i n e d d u r in g t he c o urs e of a s se s s m en t pr o c ee d i n gs . T h e Mum bai I T A T B e n c h ha s de al t w i t h E x p la n at i o n 2 a s i ns e r te d b y F i n a nc e A ct , 2 0 15 i n t h e c as e o f Nar a y a n T a t u Ra ne v s . I T O r e por t e d i n ( 20 1 6 ) 70 t a xm an . c om 2 27 t o h ol d t h a t the s ai d E xp l a n at io n c an not be s a i d t o ha v e ov e r r i dd e n t he l ia bi li t y as i n t e rp r et e d by H o n ’ bl e D e l h i H i gh Co urt, ac c or di ng t o wh i c h t h e C om m i s s i one r has t o c on du c t t he i nq u ir y a n d v e r if i ca ti on t o e s t ab l i s h a n d s h o w t h a t t he as s e s sm e nt or d er wa s u ns u s ta i n a bl e i n l aw . T he IT A T M u m ba i B e nc h h as f ur t h e r h e l d t hat t h e i nt ent io n of t he l e g i s la tu r e co u ld no t ha v e be e n t o en ab l e t he CI T t o f i n d f a ul t w i t h ea ch a n d e v er y a s s ess m e nt o rder wi t ho ut co nd uc t in g any i n q ui r y or ve r i fi c at io n in or der t o es t a b li s h t hat th e as s e s s m e nt or de r is n o t s us t ai n ab le i n l a w , s i nc e s u ch a n i n t er pr e t at io n wil l l ea d t o u ne nd i ng l i ti g a t i o n a nd t he r e wo u l d no t b e a ny po i n t o f f i n al i t y i n t he l e ga l pr o c e e d in g s . T he IT AT Mum b a i B en c h of t h e T r i b un a l w e n t o n t o ho ld t ha t the op i n i on o f t h e C o m m i s s io ne r r e f er r e d to i n s ec t io n 2 63 of t he A ct h as t o b e un d er s t oo d as le ga l an d ju di cio us op i n i on a nd n o t a rb it r ar y op i n i o n. 5. 7 We a l so n ot e t h at i t h a s b ee n h e l d b y t h e IT A T Mum b a i Be n c h i n t h e c as e of M/ s In dus B e s t H os pi t a l i t y & R e al t or s P vt . L t d. in IT A N o . 31 25/ M um / 2 01 7 v i de or d er d at e d 19. 01. 2 01 8 t ha t E xp l a n a t i o n 2 to S e ct i o n 2 63 o f t he A ct i nt r o d u ce d by F in an c e Ac t , 20 15 is r et r os p ec ti v e i n n at ur e. Si nc e t h e y ea r u n d er c o ns i d e ra ti o n i s A Y 2 0 14 - 15, w e ar e af r ai d ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 29 t ha t E x p l a n at i on 2 t o s e ct i on 2 63 wi ll n o t c om e to t h e ai d o f t h e de pa r tm e nt i n th i s ca se . S im i l ar v i ew h as be e n t a k e n by t h e va ri o u s C oor d i n at e Be nc hes o f t he IT A T in t he f o ll o w i n g ca se s : (a ) A V I nd u s tr i e s v . A CIT [ IT A No. 34 6 9 / Mum / 2 0 10] da t e d 0 6 . 1 1. 2 01 5 (b ) Me t a c a ps E n g i ne er i ng a n d M a he n dr a Co n s tr u ct i o ns C o. ( JV ) v . C IT [ IT A No . 28 95/ M um / 2 01 4] dat e d 1 1. 0 9. 20 17 (c ) R el i a nc e M on e y I n f r a s tr uc t ur e L t d. v . P C IT [ ITA No . 32 5 9/ Mum / 2 01 7] d at ed 06. 1 0. 2 0 1 7. (d ) Sh ant ik r u p a E s t a te P v t. L td . [ IT A No . 12 52/ Ah d/ 2 0 15] d at ed 0 9. 09. 2 0 1 6 (e ) A m i r a P ur e F o ods P v t. L t d. v . P CIT [ IT A N o. 45 1/ D e l /2 01 7] da te d 29 . 1 1. 2 01 7. 5. 8 A cc or di ng l y , r e s pe c t f u l l y f ol lo wi n g t he r at i o o f t he va ri ou s ju dgm e n ts a s r ef e r re d t o i n t he pr e ce ding pa r a gr ap h s , we h a v e n o h es i t a t i o n i n ho l di n g t h at th e L d. P r . C IT ha d w r on gl y i n v o k e d t he re v is i on ar y po wer s u/ s 26 3 of t he A ct a nd we h av e no o pt i o n b u t t o qu as h t he s a m e . It is s o or d er e d ac c or d i ng l y . ” 8. 4 A cc or di ng l y , r e sp e c t f u l l y f ol l o w i n g t he r at io of t he v ar i o us j u d gm e n t s as r e f er r e d t o i n t h e p r e c e d in g pa r a gr ap h s , we hav e n o h es i t a t i o n i n h ol d i n g th at the L d. P r . CI T h as wr on g l y i n vo ke d t h e r e v is i o na r y p o w e rs u /s 26 3 o f t he A c t v i s -a - v is t h e t r ad i n g r e s ul ts de cl ar e d b y as s es s e e an d we ha v e n o op t i on bu t t o ho l d t he s am e as be i n g ba d in la w. ” 7. T he ab ov e fi nd i n g s re p ro du c e d a b ov e s qu ar el y c ove r t h e c a s es o f bo t h t he a s s es s e e s i n th e p re s e nt a pp e a ls an d, t he re fo r e, o n i d e n t i c al s e t o f fa c t s a n d re s pe c t fu l l y f ol l ow i ng th e o rde rs o f the c o - or d i n a t e B e n c h a s re pr o du c e d a bo v e i n t h e gro up c a s es , w e ho ld t h e p r o ce e di ngs i ni ti a t e d u/ s 26 3 o f t he A c t a s ba d i n la w and qua sh t he s a me . ITA No. 155 & 156-Chd-2021 - M/s B.D Ispat (P) Ltd. & Sh. Bhagwan Dass, Sirsa 30 8. 0 In th e fi n a l r es u lt , t h e a p pe al s o f b o t h t h e a ss es s e e s a re al l ow e d. O r der pr o n ou n c e d on 18 . 0 5. 2 02 2. Sd/- Sd/- (N. K. SAINI) (SUDHANSHU SRIVASTAVA) V i c e P r e s i de n t J u di c ia l M e m be r Dated : 18.05.2022 “आर.के.” आदेशक त+ल,पअ-े,षत/ Copy of the order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent 3. आयकरआय ु .त/ CIT 4. आयकरआय ु .त (अपील)/ The CIT(A) 5. ,वभागीय त न1ध, आयकरअपील$यआ1धकरण, च3डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड फाईल/ Guard File आदेशान ु सार/ By order, सहायकपंजीकार/ Assistant Registrar