Manjulata Sahoo, Keonjhar V. Principal CIT, Cuttack, Cuttack

ITA 163/CTK/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4770 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 30-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: B R PANDA
• Keywords: Unexplained cash credit; Gift; Principle of natural justice; Source of fund; Assessment record; Set aside
• Section: 143(3); 201; 251; 13; 68; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM . / ITA NO. 163 /CTK/20 1 9 ( / A SSESSMENT Y EAR : 20 1 4 - 201 5 ) SMT. MANJULATA SAHOO, C/O: B.S. MAHAL, NEW MARKET, KEONJHAR - 758001 VS. PR.CIT, CUTTACK PAN NO. : BEIPS 1809 G ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI B.R.PANDA , ADVOCATE /REVENUE BY : SHRI SUBHENDU DUTTA, DR / DATE OF HEARING : 1 4 / 09 /20 20 / DATE OF PRONOUNCEMENT : 14 / 10 /20 20 / O R D E R PER L.P.SAHU, AM : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 29.03.2019 , PASSED BY THE PR.CIT , CUTTACK FOR THE AS SESSMENT YEAR 20 1 4 - 20 1 5 , ON THE FOLLOWING GROUNDS OF APPEAL : - I. FOR THAT THE ORDER OF THE FORUM BELOW IS HIGHLY ILLEGAL, ABSOLUTELY WRONG AND ARBITRARY AND NOWHERE IT FOUND THAT TO COMPLETE THE ORDER OF ASSESSMENT THE BASIC AND REQUIRED PROCEDURE W AS NOT FOLLOWED, HENCE THE ORDER PASSED WAS NOT ERRONEOUS. THEREFORE, THE ORDER OF REVISION PASSED IS TO BE QUASHED. II. FOR THAT THE ORDER OF ASSESSMENT UNLESS FOUND TO BE ERRONEOUS EVEN IF PREJUDICIAL TO THE INTEREST OF REVENUE, THEN SUCH AN ORDE R PASSED CANNOT BE REVISED U/S.263 OF THE IT ACT. CONSIDERING THE FACTS OF THE CASE AS WELL AS THE LAW THIS ORDER MADE U/S.263 OF THE IT ACT NEEDS TO BE VACATED AND QUASHED. III. FOR THAT THE SUBMISSION OF THE APPELLANT REGARDING AVAILABILITY OF CASH FR OM THE OWN NEAR AND DEAR IF ANY WAS NOT ATTRIBUTABLE TO THE BUSINESS, BECAUSE OF HAVING THEN CANNOT BE ADDED U/S.68 OF THE IT ACT AND THE AMOUNT IN EXCEPTIONAL CIRCUMSTANCES LYING WITH THE APPELLANT WAS NOT INVESTED WITH THE BUSINESS OF THE ITA NO. 163 /CTK/201 9 2 APPELLANT BEING THE HOUSE PROPERTY INCOME ONLY. FURTHER OPPORTUNITY SHOULD HAVE BEEN GRANTED TO ALLOW OPPORTUNITY TO THE APPELLANT WITHOUT PASSING AN ERRATIC ORDER TO HAVE ADDITION WITH INCOME TO QUALIFY SPECIAL RATE OF TAX AND THE ORDER OF REVISION HAS TO BE QUASHED. I V. FOR THAT THE ID. ASSESSING OFFICER HAVING EXAMINED EACH AND EVERY TRANSACTIONS OF DEPOSITS OR DRAWLS NOW NEEDS THE ORDER OF ASSESSMENT HAS TO BE SUSTAINED BEING NOT ERRONEOUS. V. FOR THAT BEFORE PROCEEDING TO PASS THE ORDER WITH A DIRECTION TO THE ID. ASSESSING OFFICER TO MODIFY THE ORDER OF ASSESSMENT WHICH SHOULD NOT HAVE BEEN MADE UNLESS THE ID. PRINCIPAL CIT GIVEN ADEQUATE OPPORTUNITY TO EXPLAIN THE AVAILABILITY OF CASH WITH THE APPELLANT HAS NOT UTILISED IN ANY UNDERTAKINGS. THE ORDER AS SU CH PASSED IS REQUIRED TO BE QUASHED AND DELETED. VI. FOR THAT THE AMOUNT FOUND AVAILABLE IF NOT UTILISED OR CONNECTED WITH THE BUSINESS OR TRADING THE ADDITION U/S.68 OF THE IT ACT CANNOT BE MADE BY INVOKING SECTION 263 OF THE I.T. ACT AFTER REVISING A ND RECALLING THE ORDER OF THE ID. ASSESSING OFFICER. OTHER GROUNDS WILL BE URGED AT THE TIME OF HEARING. 2. IN AL L THE ABOVE GROUNDS, THE ASSESSE E HAS RAISED THE SOLE ISSUE CHALLENGING THE REVISIONARY POWERS PROVIDED U/S.263 OF THE A C T BY THE PR.CIT 3 . B RIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME FROM HOUSE PROPERTY AND OTHER SOURCES. THE ASSESSEE FILED HER RE TURN OF INCOME FOR A.Y.2014 - 2015 ON 31.07.2014 DISCLOSING TOTAL INCOME AT RS.4,47,500/ - . THE CASE OF THE ASSES SEE WAS SELECTED FOR SCRUTINY THROUGH CASS AND STATUTORY NOTICES WERE ALSO ISSUED TO THE ASSESSEE. THEREAFTER THE AO COMPLETED THE ASSESSMENT U/S. 143(3) OF THE ACT DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.4,69,600/ - . 4 . SUBSEQUENTLY, THE PR.CIT I NVOKING POWERS U/S.263(1) OF THE ACT, CALLED FOR THE ASSESSMENT RECORDS AND AFTER EXAMINATION OF THE SAME , HE ITA NO. 163 /CTK/201 9 3 ISSUED SHOW CAUSE NOTICE DATED 0 7.03 .2019 TO THE ASSESSEE STATING THAT THE ASSESSING OFFICER HA D TO ENQUIRE THE IDENTITY OF THE ALLEGED CREDITORS WITH DOCUMENTARY PROOF , THEIR CREDITWORTHINESS AND GENUIN EN ESS OF TRANSACTIONS IN RESPECT OF CASH DEPO S IT RECORDED IN THE CASH BOOK OF THE ASSESS EEE WHICH OUGHT TO HAVE ENQUIRED BY THE AO DURING THE COURSE OF ASSESSMENT BUT HE HAS FAILED TO DO SO AND HAS PASSED THE ASSESSMENT ORDER . IN RESPONSE TO THIS SHOW CAUSE NOTICE ISSUED BY THE LD. P R. CIT THE AUTHORISED REPETITIVE APPEARED ON 20.03.2019 AND SUBMITTED W RITTEN SUBMISSIONS AS WELL AS ORAL SUBMISSION. B UT THE PR.CIT WAS NOT SATISFIED WITH THE EXPLANA TION OF THE ASSESSEE AND HELD THAT THE ORDER PASSED BY THE AO IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY, THE PR.CIT DIRECTED T HE AO TO MODIFY THE ASSESSMENT ORDER BY MAKING A DDITION OF RS.62,10,386/ - UNDER THE HEAD INCOME FROM OTHER SOURCES IN THE LIGHT OF THE PROVISIONS OF SECTION 68 OF THE ACT TOWARDS UNEXPLAINED CASH CREDITS APPEARING IN THE CASH BOOK OF THE ASSESSEE. FURTHER THE PR.CIT HAS ALSO DIRECTED TO TAX THE ABOVE AM OUNT AT THE SPECIAL RATE OF 30% U/S.115BBE OF TH E ACT WITHOUT ALLOWING ANY EXPENDITURE OR ALLOWANCE ON THE SAME. 5 . AGAINST THE ABOVE ORDER OF PR.CIT, THE ASSESSEE IS IN APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL. 6 . LD. AR BEFORE US REITERATED THE SU BMISSIONS AS WERE MADE BEFORE THE LOWER AUTHORIT IES AND SUBMITTED THAT AVAILABILITY OF CASH FROM THE ITA NO. 163 /CTK/201 9 4 OWN NEAR AND DEAR IF ANY WAS NOT ATTRIBUTABLE TO THE BUSINESS, WHICH CANNOT BE ADDED U/S.68 OF THE IT ACT A ND THE AMOUNT IN EXCEPTIONAL CIRCUMSTANCES LYING WITH THE ASSESSEE WAS NOT INVESTED WITH THE BUS INESS OF THE ASSESSEE BEING THE HOUSE PROPERTY INCOME ONLY. FURTHER THE LD. AR SUBMITTED THAT THE AO HAS EXAMINED EACH AND EVERY TRANSACTIONS OF DEPOSITS OR DRA WLS NOW NEEDS THE ORDER OF ASSESSMENT HAS TO BE SUSTAINED BEING NOT ERRONEOUS. IT WAS ALSO CONTE NDED BY LD. AR THAT BEFORE PROCEEDING TO PASS THE ORDER WITH A DIRECTION TO THE ID. ASSESSING OFFICER TO MODIFY THE ORDER OF ASSESSMENT WHICH SHOULD NOT HAVE BE EN MADE UNLESS THE ID. PRINCIPAL CIT GIVEN ADEQU ATE OPPORTUNITY TO EXPLAIN THE AVAILABILITY OF C ASH WHICH THE ASSESSEE HAS NOT UTILISED IN ANY UNDERTAKINGS. THE ORDER AS SUCH PASSED IS REQUIRED TO BE QUASHED AND DELETED. FURTHER THE LD. AR SUBMITTED THAT T HE AMOUNT FOUND AVAILABLE IF NOT UTILISED OR CON NECTED WITH THE BUSINESS OR TRADING THE ADDITION U/S.68 OF THE IT ACT CANNOT BE MADE BY INVOKING SECTION 263 OF THE I.T. ACT AFTER REVISING AND RECALLING THE ORDER OF THE ID. ASSESSING OFFICER. ACCORDINGLY, L D. AR SUBMITTED THAT THE APPEAL OF THE ASSESSEE DESERVES TO BE ALLOWED. 7 . ON THE OTHER HAND, LD . DR RELIED ON THE ORDER OF PR.CIT AND SUBMITTED THAT THE AO HAS NOT VERIFIED THE NATURE AND SOURCE OF THE CASH CREDITS ON THE TOUCH STONE OF SECTION 68 OF THE ACT AND IF AFTER VERIFICATION, ANY UNEXPLAINED C ASH CREDIT WAS FOUND, THE SAME SHOULD ITA NO. 163 /CTK/201 9 5 HAVE BEEN ADDED BY THE AO TO THE TOTAL INCOME OF THE ASSESSEE, HOWEVER, THE AO HAS MADE NO ATTEMPT TO VERIFY THE IDENTITY OF THE ALLEGED CREDITORS WITH DOCUMENTARY PROOF, THEIR CREDITWORTHINESS AND THE GENUINENESS OF T HE TRANSACTIONS EVEN THOUGH IT WAS A DUTY C A ST O N HIM. FURTHER, THE LD. DR SUBMITTED THAT THE ASSESSEE HAS FAILED TO FURNISH ANY COGENT EXPLANATION REGARDING THE SOURCES OF SUCH CASH CREDITS IN HER CASH BOOK. EVEN THE ASSESSEE COULD NOT EXPLAIN AS TO WHY N ONE OF THOSE ALLEGED CREDITORS HAVE BEEN ACTUALL Y REFUNDED THE AMOUNT. THEREFORE, THE LD. DR SUBMITTED THAT THE PR.CIT HAS RIGHTLY MODIFIED THE ASSESSMENT ORDER AND THE ORDER OF THE PR.CIT DESERVES TO BE UPHE LD. TO SUPPORT HIS VIEW, LD. DR RELIED ON THE FO LLOWING CASE LAWS: - I) CIT VS. DEEPAK KUMAR GARG , [2008] 299 ITR 435 (MP); II) CIT VS. NALWA INVESTMENTS LTD. [2011] 11 TAXMANN.COM 98 (DELHI); III) SMT. RENU GUPTA VS. CIT [2008] 301 ITR 45 (RAJASTHAN) 8 . AFTER HEARING BOTH THE SIDES AND PERUSING THE E NTIRE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE ASSESSMENT WAS COMPLETED BY THE AO MAKING ADDITION OF THE DIFFERENCE OF THE AMOUNT EARNED AS INTEREST INCOME AND THE AMOUNT SHOWN IN THE RETURN OF INCOME A S INCOME FROM OTHER SOURCES. THE PR.CIT INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT FOUND THAT THE AO FAILED TO ADJUDICATE THE ISSUE OF CASH CREDIT OF RS.62,10,386/ - IN ACCORDANCE WITH PROVISIONS OF LAW AND THE FACTS OF THE CASE, WHILE FRAMING THE AS SESSMENT ORDER. AS A RESULT OF THIS, THE ORDER ITA NO. 163 /CTK/201 9 6 PASSED BY THE A O SUFFERS F ROM DUAL INFIRMITIES OF BEING ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. EVEN THE ASSESSEE HAS NOT EXPLAINED THE NATURE AND SOURCE OF CASH CREDIT OF RS.62,10,386/ - BEFORE THE PR.CIT . ACCORDIN GLY, THE PR.CIT DIRECTED THE AO TO MODIFY THE AS SESSMENT ORDER AFTER OB SERVING AS UNDER : - 10. I HAVE DULY CONSIDERED THE PROVISIONS OF LAW, THE FACTS OF THE CASE, THE SUBMISSIONS OF THE ASSESSEE AND PERUSED THE ASSESSMENT RECORDS. 11. THE FIRS T CONTENTION OF THE ASSESSEE IS THA T CASH DEPOSI TS OF RS.46,80,000/ - MAD E IN TWO BANK ACCOUNTS HELD BY THE ASSESSEE IN ODISHA GRAMYA BANK AND SBI IS OUT OF THE CASH CREDITS OF RS.62,10,386/ - APPEARING IN HER CASH BOOK FILED DURING ASSESSMENT PROCEEDINGS. HE NCE, NO SEPARATE ADDITION SHOULD BE MADE ON ACCO UNT OF CASH DEPOSITS IN BANK AND ADDITION, IF ANY, SHOULD BE RESTRICTED ONLY TO CASH CREDITS APPEARING IN HER CASH BOOK. ON VERIFICATION, IT HAS BEEN FOUND THAT CASH DEPOSITS OF RS.46,80,000/ - APPEARING IN BA NK ACCOUNTS HAVE ACTUALLY PASSED THROUGH THE CAS H BOOK IN WHICH CASH CR EDITS OF RS.62,10,386/ - HAVE BEEN RECORDED. THEREFORE, THE FIRST CONTENTION OF THE ASSESSEE IS ACCEPTED ON MERITS. THEREFORE, NO SEPARATE ADDITION ON ACCOUNT OF BANK DEPOSITS IS NECESSA RY. 12. NOW COMING TO THE CASH CREDITS APP EARING IN HER CASH BOOK , THE ASSESSEE'S EXPLANATION IS THAT NEAR AND DEAR PERSONS FROM THE LOCALITY USED TO COME AND DEPOSIT THEIR AMOUNTS WITH HER FOR SAFE KEEP TO BE TAKEN BACK SHORTLY AFTERWARDS. IT WAS CL AIMED THAT SHE USED TO DEPOSIT THOSE AMOUNTS IN HER BANK ACCOUNTS . THIS IS AN EXPLANATION HARD TO BELIEVE AND IS AGAINST HUMAN PROBABILITY. NORMALLY, NOBODY GOES TO ANOTHER PERSON TO KEEP HIS/HER MONEY IN SOMEBODY ELSE'S BANK AOCOUNT. ASSUMING BUT NOT AOOE PTING HER CLAIM TO BE TRUE, THERE ,S NO INSTANCE IN THE CASH BOOK MAINT AINED BY THE ASSESSEE, WHERE MONEY HAS ACTUALLY BEEN RETURNED TO ANY OF THOSE ALLEGED NEAR & DEAR ONES. HENCE, THIS IS A COOKED UP EXPLANATION WITHOUT ANY MERIT IN THE SAME. 13 . HAVING NO PLAUSIBLE EXPLANATION, THE ASSESSEE APPEARS TO HAVE HIT UPON SUCH A N UNBELIEVABLE STORY TO GET OVER THE PROVISIONS OF SECTION 68 OF THE IX ACT. THE SAID SECTION PROVIDES THAT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE, AND THE ASSESSE E OFFERS NO EXPLANATION ABOUT THE NATURE AND SOU RCE THEREOF OR THE EXPL ANATION OFFERED BY HIM IS FOUND TO BE NOT SATISFACTORY, THEN THE SUM SO CREDITED MAY BE CHARGED TO INCOME - TAX AS THE INCOME OF THE ASSESSEE. THIS IS THE MANDATE OF SECTION 68, WHICH IS REPRODUCED HEREUNDER: 'SECTION 68: WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, ITA NO. 163 /CTK/201 9 7 SATISFACTORY, THE SUM SO CREDITED MA Y BE CHARGED TO INCOME - TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR: 14 THE HON'BLE SUPREME COURT, IN THE CASE OF CIT V P. MOHANKALA & OTHERS (2007) 291 ITR 278 (SC), HAD AN OCCASION TO DEAL WITH THE APPLICABILITY O F SECTION 68 IN A CASE WHERE THE ASSESSEE HAD CLAIMED TO HAVE RECEIVED HUGE FOREIGN GIFTS THROUGH BANKING CHANNELS. EVEN THOUGH ALLEGED GIFTS WERE RECEIVED THROUGH BANKING CHANNELS FROM SINGAPORE, AFTER APP RAISING THE EXPLANATION OFFERED BY THE ASSESSEE AND CONDUCTING SOME INV ESTIGATION, THE AO DISBELIEVED THE STORY OF RECEIPT OF GIFTS AND ADDED THE AMOUNTS U/S 68 OF THE ACT. IN THAT CASE, UPHOLDING THE ACTION OF THE AO, THE HON'BLE SUPREME COURT HAS HELD AS UNDER 'A BARE READING OF SECTION 68 SUGGESTS THAT THERE HAS TO BE C REDIT OF AMOUNTS IN THE BOOKS MAINTAINED BY ASSESSEES; THAT SUCH CREDIT HAS TO BE OF A SUM DURING THE PREVIOUS YEAR; AND THAT THE ASSESSEES OFFER NO EXPLANATION ABOUT THE NATURE AND SOU RCE OF SUCH CREDIT FOUND IN THE BOOKS OR THE EXP LANATION OFFERED BY THE ASSESSEES IN THE OPINION OF THE ASSESSING OFFICER IS NOT SATISFACTORY. IT IS ONLY THEN THE SUM SO CREDITED MAY BE CHARGED TO INCOME - TAX AS THE INCOME OF THE ASSESSEES OF THAT PREVIOUS YEAR. THE EXPRESSION 'THE ASSESSEES OFFER NO EXP LANATION' MEANS WHERE T HE ASSESSEES OFFER NO PROPER, REASONABLE AND ACCEPTABLE EXPLANATION AS REGARDS THE SUMS FOUND CREDITED IN THE BOOKS MAINTAINED BY THE ASSESSEES.' 15. IN THE CASE IN HAND, IT IS AN UNDISPUTED FACT THAT THERE HAS BEEN CASH CREDITS OF RS.62,10,386/ - IN A SSESSEE'S CASH BOOK PRODUCED DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS FAILED TO FURNISH ANY COGENT EXPLANATION REGARDING THE SOURCE(S) OF SUCH CASH CREDITS IN HER CASH BOOK. RATHER SHE HAS TAKEN THE SPECIOUS & MISLEADING P LEA THAT SHE HAD USED H ER BANK ACCOUNT/CASH BOOK TO ENTERTAIN HER NEAR & DEAR ONES, WHO HAD NO BANK ACCOUNTS, TO DEPOSIT THEIR MONEY IN HER BANK ACCOUNT TO BE RETURNED SHORTLY AFTERWARDS. BUT SHE HAS NO EXPLA NATION AS TO WHY NONE OF THOSE ALLEGED CREDITORS HAVE BEEN ACTUALLY REF UNDED THE AMOUNT. SIMILARLY, SHE HAS NO EXPLANATION AS TO WHY ONLY RS.46,80,000/ - WAS DEPOSITED IN HER BANK ACCOUNT WHEN HER SO CALLED NEAR AND DEAR ONES HAD ALLEGEDLY GIVEN HER RS.62,1 0,386/ - FOR DEPOSITING IN BANK. THERE ARE MANY S UCH LOOSE - ENDS IN THE S TORY CONCOCTED BY THE ASSESSEE. 16. THEREFORE, SUCH EXPLANATION OF THE ASSESSEE FAILS THE TEST OF HUMAN PROBABILITIES AND IS NOT AN ACCEPTABLE EXPLANATION WITHIN THE MEANING OF SEC TION 68 OF THE ACT. THE HON'BLE SUPREME COURT IN THE CASES OF KALE KHAN MOHAMMAD HANIF VS. CIT (1963) 50 ITR 1 (SC) AND ROSHAN DI HATTI V. CIT (1977) 107 ITR 938 (SC) HAVE HELD THAT WHERE THE NATURE AND SOURCE OF A CREDIT, WHETHER IT BE OF MONEY OR OTHERWI SE, CANNOT BE SATISFACTORILY EXPLAINED BY THE AS SESSEE, IT IS OPEN TO T HE REVENUE TO HOLD THAT IT IS THE UNDISCLOSED INCOME OF THE ASSESSEE, LIABLE TO TAX. THE RATIO OF THE ABOVE DECISIONS SQUARELY APPLY TO THIS CASE. 17. NOW LET ME DEAL WITH THE CASE LAW S RELIED UPON BY THE A.R., QUESTIONING THE VALID ITY OF ACTION INITIATED U/S 263 OF THE ACT. AFTER ITA NO. 163 /CTK/201 9 8 GOING THROUGH THESE DECISIONS, I FIND THAT THE CASE LAWS CITED ARE OUT OF CONTEXT AND DISTINGUISHABLE, TAKING INTO FACTS AND CIRCUMSTANCES OF THE PRESENT CASE IN HAND. THE DETAILS ARE GIVEN BELOW: (I) THE ASSESSEE HAS CITED THE CASE OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF JAI KUMAR KANKARIA V. CIT (2001) 251 ITR 707 (CAL). THIS CASE IS CLEARLY DISTINGUISHABLE AS IN THAT CASE, THE CIT HAD WITHDRAWN THE AP PROVAL GRANTED U/S 35CCA OF THE ACT, FOR WHICH N O MECHANISM HAD BEEN PR OVIDED UNDER THE ACT. THEREFORE, THE HIGH COURT HAD SET ASIDE THE ORDER. BUT IN THIS CASE, THE PROCEEDINGS HAVE BEEN VALIDLY INITIATED AGAINST AN ERRONEOUS AND PREJUDICIAL ASSESSMENT OR DER DUE TO FAILURE OF THE AO TO CONDUCT NECESSAR Y INQUIRY INTO THE SOUR CE OF HUGE UNEXPLAINED CASH CREDITS. FURTHER, THE RATIO OF THE ABOVE DECISION, AS CITED ABOVE BY THE ASSESSEE, IS NOT APPLICABLE TO THE PRESENT 263 PROCEEDINGS SINCE THAT DECISION WAS RENDERED FOR A.Y. 1985 - 86. THE HIGH COURT HAD HE LD THAT NO NEW MATERIAL CAN BE TAKEN INTO CONSIDERATION AFTER THE ASSESSMENT WAS OVER, FOR THE PURPOSE OF REVISION U/S 263. HOWEVER, SUBSEQUENTLY W.E.F. 1.6.1988, THE ACT HAS BEEN AMENDED AND MEANING OF THE W ORD 'RECORD' FOR THE PURPOSE OF REVISION, HAS BE EN WIDENED TO INCLUDE E VEN THE NEW RECORD WHICH COMES INTO THE POSSESSION OF THE DEPARTMENT SUBSEQUENTLY. IN ANY CASE, NO NEW MATERIAL HAS BEEN UTILIZED TO INITIATE ACTION U/S 263 IN THIS CASE. (II) THE SECO ND CASE LAW CITED BY THE ASSESSEE I.E. JEEWANLAL (1929) LTD. V. ADDL.CI T 108 ITR 407 (CAL) IS TOTALLY OUT OF CONTEXT AS IN THAT CASE THE CIT HAD PROPOSED TO REVISE AN ORDER OF THE ITO, WHICH HAD ALREADY MERGED WITH THE ORDER OF THE APPELLATE ASSISTANT COMM ISSIONER(AAC). HOWEVER, THERE IS NO SUCH APPELLA TE ORDER IN THIS CASE A GAINST THE AO'S ORDER. THEREFORE, THE RATIO OF ABOVE CASE LAW WOULD NOT HELP THE ASSESSEE. (III) SIMILARLY, THE A/R HAS WRONGLY PLACED RELIANCE ON THE DECISION OF MALABAR INDUSTRIAL CO . LTD. V. CIT 243 ITR 83 (SC)(2000). IN FACT THA T DECISION IS PARTLY IN FAVOUR OF REVENUE ALSO. IN THAT ORDER, IT HAS BEEN HELD THAT AN ORDER WOULD BE HELD ERRONEOUS IN THE FOLLOWING CIRCUMSTANCES: 'AN INCORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICATIO N OF LAW WILL SATISFY THE REQUIREMENT OF THE ORD ER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND'. (EMPHASIS MINE). SINCE IN THE INSTANT CASE, THE AO HAD FAILED T O APPLY HIS MIND TO THE ISSUE OF CASH CREDIT OF RS.62,10,386/ - FROM THE ANGLE OF APPLICABILITY OF SECTION 68 OF THE ACT, IT CLEARLY IS AN ERRONEOUS ORDER AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. V. CIT (2000) 243 ITR 83 (SC). ITA NO. 163 /CTK/201 9 9 18. AFTER HAVING DEALT WITH THE CASE L AWS CITED BY THE A.R., I FIND THAT IN THE INSTANT CASE, THE TWIN CONDITIONS FOR INITIATING ACTION U/S 263 ARE VERY MUCH PRESENT. THE AO'S ORDER IS ERRONEOUS AS HE HAD NOT CONSIDERED THE SOURCE(S) OF INTRODUCT ION OF CASH BY THE ASSESSEE IN HER CASH BOOK DUR ING THE YEAR UNDER CONS IDERATION AMOUNTING TO RS.62,10,386 AND SUCH NON - CONSIDERATION ON THE PART OF THE AO IS PREJUDICIAL TO THE INTEREST OF REVENUE AS LAWFUL TAX DUE TO THE EXCHEQUER HAS BEEN LOST. THE ASSE SSEE HAD DISCLOSED INCOME OF ONLY RS.7,37,901 [R S.7,20,00 (HOUSE PROPER TY) + RS.17,901 (INTEREST)] AS HER TAXABLE SOURCES OF INCOME, BUT SHE WAS FOUND TO HAVE INTRODUCED CASH AMOUNTING TO RS.62,10,386/ - IN HER CASH BOOK DURING THE FINANCIAL YEAR FROM SOURC ES WHICH HAVE NOT BEEN FOUND TO BE SATISFACTORIL Y EXPLAINED. BUT, THE A O HAD NOT EXAMINED THE ISSUE, NOR CONDUCTED ANY ENQUIRY/VERIFICATION IN THIS REGARD. THIS HAS NO DOUBT MADE THE ASSESSMENT ORDER PASSED ON 25.11.2016 ERRONEOUS IN SO FAR AS IT IS PREJUD ICIAL TO THE INTEREST OF REVENUE . 19. IN T HIS CONTEXT, REFERENCE CAN ALSO BE MADE TO THE DECISIONS OF HON'BLE SUPREME COURT IN THE CASES OF RAMAPYARI DEVI SARAOGI (1968) 67 ITR 84 (SC) AND SMT. TARADEVI AGARWAL VS CIT (1973) 88 ITR 323 (SC), WHEREIN THE HON'BLE APEX COURT HAS HELD THAT LACK OF ENQ UIRY OR VERIFICATION AT THE RELEVANT TIME BY THE AO WOULD CONSTITUTE 'PREJUDICE TO THE INTEREST OF REVENUE' AND WOULD MAKE SUCH ORDER 'ERRONEOUS'. SIMILARLY, THE HON'BLE HIGH COURT OF ORISSA IN THE CASE OF UM ASHANKAR RICE MILL V. CIT (1991) 187 ITR 638 (OR I.) HAS OBSERVED THAT W HERE THE COMMISSIONER FELT THAT PROPER ENQUIRY WAS NOT MADE BY THE AO DURING THE ASSESSMENT PROCEEDING, HE WAS JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 263 IN RESPECT OF THE ORDE R PASSED BY THE AO. 20. REFERENCE IN THIS CONTEXT IS ALSO INVITED TO THE DECISION OF DELHI HIGH COURT IN THE CASE OF DUGGAL & CO V. CIT(1996) 226 ITR456(DEL), WHEREIN IT HAS BEEN HELD AS UNDER: 'THE ITO IS NOT ONLY AN ADJUDICATOR, BUT ALSO AN INVEST IGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPAR ENTLY IN ORDER BUT CALLS FURTHER ENQUIRY. IT IS INCUMBENT ON THE AO TO FURTHER INVESTIGATE THE FACTS STATED IN THE RETURN, WHEN CIRCUMSTANCES WOULD MAKE SUCH AN ENQUIRY PRUDENT. THE WOR D 'ERRONEOUS' IN SECTION 263 INCLUDES THE FAILUR E TO MAKE SUCH ENQUIRY. ' 21. SIMILARLY, IN RAJALAKSHMI MILLS LTD. VS. ITO (2009) 313 ITR (AT) 182 (CHENNAI)(SB), THE SPECIAL BENCH OF THE TRIBUNAL HAS HELD THAT THE COMMISSIONER CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCE S OF THE CASE, THE AO S HOULD HAVE MADE FURTHER ENQUIRIES BEFORE ACCEPTING THE STATEMENTS MADE BY THE ASSESSEE IN HIS RETURN. IT IS INCUMBENT ON THE AO TO INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUM STANCES WOULD MAKE SUCH AN ENQUIRY PRUDENT. SIMI LAR VIEW HAS BEEN EXPRE SSED IN CALCUTTA HIGH COURT'S DECISION IN THE CASE OF RAJMANDIR ESTATES (P) LTD. VS. PR.CIT (2016) 386 ITR 162 (CAL).LN ANOTHER DECISION CIT VS. MAITHAN INTERNATIONAL (2015) 375 ITR 123 (CAL),THE HIGH COURT HELD AS UNDER: ITA NO. 163 /CTK/201 9 10 'IT IS NOT THE LAW THAT THE ASSES SING OFFICER OCCUPYING THE POSITION OF AN INVESTIGATOR AND ADJUDICATOR CAN DISCHARGE HIS FUNCTION BY PERFUNCTORY OR INADEQUATE INVESTIGATION. SUCH A COURSE IS BOUND TO RESULT IN ERRONEO US AND PREJUDICIAL ORDERS. WHERE THE RELEVANT EN QUIRY WAS NOT UNDERTAKE N, AS IN THIS CASE, THE ORDER IS ERRONEOUS AND PREJUDICIAL TOO AND THEREFORE REVISABLE. INVESTIGATION SHOULD ALWAYS BE FAITHFUL AND FRUITFUL. UNLESS ALL FRUITFUL AREAS OF ENQUIRY ARE PU RSUED THE ENQUIRY CANNOT BE SAID TO HAVE BEEN FA ITHFULLY CONDUCTED. IN A DIFFERENT CONTEXT THE APEX COURT OBSERVED 'CONTRA VERITATEMLEXNUNQUAMALIQUIDPERMITTIT: IMPLIES A DUTY ON THE COURT TO ACCEPT AND ACCORD ITS APPROVAL ONLY TO A REPORT WHICH IS THE RESU LT OF FAITHFUL AND FRUITFUL INVESTIGATION'(SEE M ANU SHARMA V. STATE [20 10] 6 SCC 1 PARA 200 AT P 80)' 22. IT IS WORTHWHILE TO MENTION THAT HON'BLE APEX COURT HAS AFFIRMED THE DECISION OF CALCUTTA HIGH COURT IN THE CASE OF RAJMANDIR ESTATES (P) LTD. V S. PR.CIT (2016) 386 ITR 162 (CAL) ON MERIT IN R AJMANDIR ESTATES PVT. L TD. (2017) 245 TAXMAN 127 (SC). IT HAS BEEN HELD THEREIN THAT WHERE THE ASSESSMENT ORDER WAS MADE WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE, THE PR. COMMISSIO NER IS JUSTIFIED IN INVOKING THE REVISIONAL JURI SDICTION U/S 263. 23. THE HON'BLE ITAT, CUTTACK BENCH, CUTTACK, WHILE UPHOLDING ACTION U/S 263 IN THE CASE OF CUTTACK DEVELOPMENT AUTHORITY V. CIT, CUTTACK IN ITA NO. 361/CTK/2014 ON THE SAME GROUND OF F AILURE TO CONDUCT FURTHER ENQUIRIES WHERE CIRCUM STANCES DEMANDS SO, HAS HELD AS UNDER. 'WE RELY ON VARIOUS JUDICIAL PRONOUNCEMENTS, WHEREIN, IT WAS HELD THAT THE COMMISSIONER CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE THE INCOME TAX OFFICER SHOULD HAVE MADE FUR THER INQUIRIES BEFORE A CCEPTING THE STATEMENTS MADE BY THE ASSESSEE IN HIS RETURN. IT WAS ALSO HELD THAT THE INCOME TAX OFFICER IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVESTIGATOR. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN THE RETURN OF INCOME. WHEN THE CIRCUM STANCES OF THE CASE ARE SUCH SO AS TO PROVOKE AN ENQUIRY, IT IS HIS DUTY TO MAKE PROPER ENQUIRY. FAILURE TO MAKE ENQUIRY IN SUCH CIRCUMSTANCES WOULD MAKE THE ASSESSMENT ORDER ERRONEOUS. THE HON'BLE APEX COURT IN THE CASE OF SMT TARA DEVI AGGARWAL VS. CIT, 88 ITR 323 (SC), HAS HELD THAT THE CIT MAY CONSIDER AN ORDER OF THE AO TO BE ERRONEOUS NOT ONLY IT CONTAINS SOME APPARENT ERROR OF REASONING OR OF LAW OR OF FACT ON THE FACE OF IT BUT A LSO BECAUSE IT IS A STEREO TYPED ORDER WHICH SIM PLY ACCEPTS WHAT THE AS SESSEE HAS STATED IN HIS RETURN AND FAILS TO MAKE ENQUIRIES WHICH ARE CALLED FOR IN THE CIRCUMSTANCES OF THE CASE. RECENTLY, THE HON'BLE APEX COURT IN THE CASE OF DENIAL MERCHANTS PVT L TD VS ITO IN SPECIAL LEAVE (C) NO.(S) 23976/2017 AND OTHERS ORDER DATED 29.11.2017 HAS UPHELD THE JUDGEMENT OF HON'BLE CALCUTTA HIGH COURT PASSED ON 10.04.2017 IN G.A. NO.599/2016, DISMISSING THE SPECIAL LEAVE PETITION OBSERVING THAT THE CIT AFTER SETTING ASIDE THE ORDER OF THE ASSESSING OFFICER, SIMPLY DIRECTED THE ASSESSING OFFICER TO CARRY THOROUGH AND DETAILED ENQUIRY.' 24. IN THE LIGHT OF THE ABOVE DISCUSSION, IT IS HELD THAT THE AO HAD FAILED TO ADJUDICATE THE ISSUE OF CASH CREDIT OF RS.62,10,386 / - IN ACCORDANCE ITA NO. 163 /CTK/201 9 11 WITH PROVISIONS OF LAW AND THE FACTS OF THE CASE, WHIL E FRAMING THE ASSESSMENT ORDER. AS A RESULT HIS ORDER SUFFERED FROM DUAL INFIRMITIES OF BEING ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. 25. IT IS ALSO A MATTER OF RECORD THAT THE ASSESSEE HAS NOT BEEN ABLE TO SATISFACTORILY EXPLAIN THE NATURE AND SOURCE OF CASH CREDIT OF RS.62,10,386/ - BEFORE ME. AS MENTIONED EARLIER, THE ASSESSEE HAD DISCLOSED RENTAL INCOME FROM HOUSE PROPERTY AT RS.7,20,000/ - IN HER RETURN OF IN COME. BUT NO PLEA HAS BEEN MADE BEFORE THE UNDER SIGNED THAT THE ABOVE A MOUNT WAS RECEIVED IN CASH AND THE SAME HAS BEEN CREDITED TO THE CASH BOOK. A COPY OF THE CASH BOOK FILED BY THE ASSESSEE DURING ASSESSMENT PROCEEDING IS ENCLOSED AS ANNEXURE - I TO THIS ORDER WHEREIN NO SUCH CREDIT IS FOUND. THEREFORE , NO CREDIT FOR HOUSE R ENT INCOME OF RS.7,20,000/ - IS BEING GRANTED AGAINST THE UNEXPLAINED CASH CREDITS OF RS.62,10,386/ - , ASSESSABLE UNDER SECTION 68 OF THE ACT. 26. ACCORDINGLY, I DIRECT THE AO TO MO DIFY HIS ASSESSMENT ORDER DATED 25.11.2016 BY MA KING FURTHER ADDITION O F RS.62,10,386/ - UNDER THE HEAD 'INCOME FROM OTHER SOURCES' IN THE LIGHT OF PROVISIONS OF SECTION 68 OF THE ACT TOWARDS UNEXPLAINED CASH CREDITS APPEARING IN CASH BOOK OF THE ASSESSEE. THE AO IS ALSO DIRECTED TO TAX THE ABOVE AMOUNT AT THE SPECIAL RATE OF 30% U/S 115BBE WITHOUT ALLOWING ANY EXPENDITURE OR ALLOWANCE ON THE SAME. 9. FROM THE ABOVE OBSERVATIONS OF THE PR.CIT, WE ARE OF THE OPINION THAT THE PR.CIT HAS RIGHTLY DIRECTED THE AO TO MA K E FURTHER ADDITION RS.62,10,386/ - HOLDING THAT THE AO WAS UNAB LE TO ADJUDICATE THE ISSUE OF C ASH CREDIT OF THE AMOUNT IN QUESTION IN THE ASSESSMENT ORDER. HE HAS NOT APPLIED HIS MIND PROPERLY IN SPITE OF THE MATERIALS AVAILABL E BEFORE HIM I.E. CASH BOOK, BANK STATEMENTS IN REGARD TO CASH RECEIPT AND DEPOSIT OF THE CA SH INTO THE BANK ACCOUNT OF THE ASSESSEE. I N THE ASSESSMENT ORD ER THERE IS NO ANY DELIBERATION IN THIS R EGARD ON THE BASIS OF WHICH THE LD. PCIT HAS ASSUMED TH AT THE ORDER PASSED BY THE AO IS ERRONEOUS AND PRE JUDICIAL TO THE INTEREST OF REVENUE. THE ASSESS ING OFFICER IS NOT ONLY AN ADJUDICATOR BUT HE IS ALSO AN INVESTI GATOR OF INCOME DECLARED IN THE RETURN OF INCOME . THE AO SHOULD ITA NO. 163 /CTK/201 9 12 HAVE DONE REQUISITE ENQUIRY ON THE BASIS OF MATERIALS AVAILABLE BEFORE HIM . IN THIS IMPUGNED CASE THERE IS NO ANY WHISPER THAT A NY PLAUSIBLE VIEW WAS FORMED BY THE ASSESSING OFFICER IN THIS REGARD . THE SUBMISSION OF THE LD. AR OF THE ASSESSEE THAT HE HAS NOT BEEN GIVEN PROPER OPPORTUNITY BEFORE THE PR. CIT IS ALSO NOT ACCEPTABLE BECAUSE THE PR. C IT HAD ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AND FIXED THE CASE FOR HEARING ON 20.03.2019 I N RES PONSE TO WHICH THE AR OF THE HAD ALSO APPEARED . THE LD. AR OF THE ASSESSEE COULD NOT PLACE ANY COGENT MATERIAL FACT BEFORE US AS TO WHETHER THE ASSESSEE HAS SOUGHT TIME AND THE PR.CIT HAS NOT PROVIDED ANY FURTHER OPPORTUNITY TO THE ASSESSEE BEFORE PASSING THE R EVISONARY ORDER . IN VIEW OF THIS, THE ORDER PASSED BY THE AO IS ALSO ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. CONSIDERING THE ABOVE OBSERVATIONS OF THE PR.CIT AND FACTUAL AS PECTS, WE ARE OF THE VIEW THAT THE LD. PR.CIT HAS RIGHTLY EXERCISED HIS POWERS AND WE D O NOT FIND ANY REASON TO INTERFERE WITH THE SAM E. THE CASE LAWS RELIED ON BY THE LD. AR OF THE ASS ESSEE ARE NOT APPLICABLE IN THE PRESENT CASE IN H AND. ACCORDINGLY, WE D ISMISS THE APPEAL OF THE ASSESSEE. 10 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 14 / 10 / 20 20 . SD/ - ( C.M.GARG ) SD/ - (L.P.SAHU) / JUDICIAL MEMB ER / ACCOUNTANT MEMBER CUTTACK ; DATED 14 / 10 /20 20 PRAKASH KUMAR MISHRA, SR.P.S. ITA NO. 163 /CTK/201 9 13 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , /ITAT, CUTTACK 1. / THE APPELLANT - SMT. MANJULATA SAHOO, C/O: B.S.MAHAL, NEW MA RKET, KEONJHAR - 758001 2. / THE RESPONDENT - PR.CIT, CUTTACK 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE . //TRUE COPY/ /