Dharrit Yogen Shah, Pune V. Commissioner of Income-tax - III,

ITA 1659/PUN/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7379 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 04-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NILESH KHANDELWAL
• Keywords: Business income; Opportunity of being heard; Principle of natural justice; Deemed to accrue or arise in india; Difference of opinion; Corroborative evidences; Deemed dividend; Condonation of delay; Revised return; Change of opinion
• Section: 69C; 143(3); 142(1); 133A; 147; 148; 6; 263; 63; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO S . 165 8 TO 1662 /P U N/20 1 4 / ASSESSMENT YEAR S : 20 0 5 - 0 6 TO 2009 - 10 DHARRIT YOGEN SHAH, MZSK & ASSOCIATES, LEVEL 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE 411001 . / APPELLANT PAN: A DLPS5102M V S. THE COMMISSIONER OF INCOME TAX - III, PUNE . / RESPONDENT / APPELLANT BY : SHRI NILESH KHANDELWAL / RESPONDENT BY : SHRI RAJEEV KUMAR, CIT / DATE OF HEARING : 28 . 0 8 . 201 7 / DATE OF PRONOUNCEMENT: 29 .0 9 . 201 7 / ORDER PER SUSHMA CHOWLA, J M : THIS BUNCH OF FIVE APPEALS FILED BY THE SAME ASSESSEE ARE AGAINST SEPARATE ORDER S OF CIT - III, PUNE RELATING TO ASSESSMENT YEAR S 200 5 - 0 6 TO 2009 - 10 PASSED UNDER SECTION 263 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . T H IS BUNCH OF APPEALS RELATING TO SAME ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO S . 165 8 TO 166 2 /P U N/20 1 4 DHARRIT YOGEN SHAH 2 HOWEVER, REFERENCE IS BEING MADE TO TH E FACTS AND ISSUES IN ITA NO.1658/PUN/2014 RELATING TO ASSESSMENT YEAR 2005 - 06 TO ADJUDICATE THE ISSUE. 3. THE ASSESSEE IN ITA NO. 165 8 /PUN/201 4 HAS RAISED THE FOLLOWING GROUND S OF APPEAL: - 1. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PR OVISIONS & SCHEME OF THE ACT IT BE HELD THAT ORDER PASSED BY THE COMMISSIONER OF INCOME TAX, I NVOKING THE PROVISIONS OF SEC.263 IS IMPROPER. I T FURTHER BE HELD THAT THE CASE OF THE APPELLANT IS NOT COVERED BY THE PROVISIONS OF SEC.263 OF THE ACT ON FACTS O F THE CASE. IT BE HELD THAT ORDER UNDER SECTION 263 PASSED BY COMMISSIONER OF INCOME TAX IS MERELY DUE TO CHANGE OF OPINION IN THE MANNER OF COMPLETION OF ASSESSMENT PROCEEDING AND BE HELD UNWARRANTED, UNJUSTIFIED, CONTRARY TO THE PROVISIONS OF LAW AND FAC TS PREVAILING IN THE CASE. IT FURTHER BE HELD THAT ORDER FINALIZED BY THE AO U/S. 143(3) READ WITH SECTION 147 IS IN ACCORDANCE WITH THE PROVISIONS OF LAW AND FACTS PREVAILING IN THE CASE. THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX, U/S. 263 BE HEL D AS NOT TENABLE IN LAW AND BE CANCELLED. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. 2. THE APPELLANT PRAYS THAT THE APPEAL BE ALLOWED CONDONING THE DELAY IN FILING THE APPEAL. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. 4. ALL THE APPEALS FILED BY THE ASSESSEE WERE AFTER DELAY OF 83 DAYS. THE ASSESSEE HAS FILED AN AFFIDAVIT EXPLAINING THE REASONS FOR DELAY IN FILING THE PRESENT APPEALS LATE BEFORE THE TRIBUNAL. THE ASSESSEE CONTENDS THAT THE APPEAL IS AGAINST THE ORDER OF REVISION UNDER SECTION 263 OF THE ACT AND THERE WAS CONFUSION AS TO COURSE OF ACTION TAKEN BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AND HENCE, THE DELAY. THE ASSESSEE MADE A REQUEST FOR CONDONING THE DELAY. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAD APPEARED BEFORE COMMISSIONER IN THE PROCEEDINGS AND THERE IS NO MERIT. HOWEVER, WE FIND MERIT IN THE APPLICATION MOVED BY THE ASSESSEE FOR CONDONATION OF DELAY AND IN THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES, WE CONDONE THE DELAY OF 83 DAYS IN ITA NO S . 165 8 TO 166 2 /P U N/20 1 4 DHARRIT YOGEN SHAH 3 EACH OF THE APPEALS FILED BY THE ASSESSEE AND PROCEED TO DECIDE THE PRESENT APPEALS. 6. THE ISSUE WHICH IS RAISED IN THE PRESENT APPEALS IS AGA INST THE EXERCISE OF POWER BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT. THE ASSESSEE IS AGGRIEVED BY THE SAID ORDER PASSED BY THE COMMISSIONER, WHERE THE ASSESSING OFFICER HAD PASSED THE ORDER UNDER SECTION 143(3) R.W.S. 147 OF THE ACT IN ACCORDANCE WITH THE PROVISIONS OF LAW AND THE FACTS OF THE CASE AND HAS CHALLENGED THE SAID ORDER OF COMMISSIONER ON CHANGE OF OPINION. 7. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FILED THE RETURN OF INCOME ON 31.10.2005 DECLARING TOTAL INCOME OF RS.12, 16,016/ - . SURVEY UNDER SECTION 133A OF THE ACT WAS CARRIED OUT ON THE PREMISES OF ASSESSEE ON 10.03.2011. CERTAIN INFORMATION WAS RECEIVED AND CONSEQUENT THERETO, PROCEEDINGS WERE REOPENED UNDER SECTION 147 / 148 OF THE ACT. IN RESPONSE THERETO, THE ASS ESSEE FILED REVISED RETURN OF INCOME DISCLOSING TOTAL INCOME OF RS.19,87,360/ - . THE ASSESSING OFFICER COMPLETED ASSESSMENT UNDER SECTION 143(3) OF THE ACT ON ASSESSED INCOME OF RS.35,37,789/ - . THE COMMISSIONER ON VERIFICATION OF RECORD, WAS OF THE VIEW T HAT THE ASSESSEE HAD NOT DECLARED THREE BANK ACCOUNTS WITH KOTAK MAHINDRA BANK LTD., WHICH INFORMATION WAS RECEIVED AND INVESTIGATIONS WERE CARRIED OUT BY THE ASSESSING OFFICER. THE COMMISSIONER FURTHER OBSERVED THAT THE ENTRIES IN THE SAID BANK ACCOUNTS REFLECT VARIOUS CHEQUES BEING DEPOSITED, PART OF WHICH WERE IN THE NAME OF UNDISCLOSED SALES . IN THE YEAR UNDER CONSIDERATION, UNRECORDED SALES WERE TO THE EXTENT OF RS.38,48,170/ - , WHICH WERE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT. THE COMMISSIONE R FURTHER OBSERVED THAT THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT UNDER SECTION 145(3) OF THE ACT AND ADOPTED 15% NET PROFIT ON DISCLOSED ITA NO S . 165 8 TO 166 2 /P U N/20 1 4 DHARRIT YOGEN SHAH 4 AS WELL AS UNDISCLOSED SALES AND ASSESSED ACCORDINGLY. THE COMMISSIONER WAS OF THE VIEW THAT WHERE THE ASSE SSEE HAD NOT FURNISHED THE DETAILS OF EXPENSES WITH SUPPORTING EVIDENCE PERTAINING TO UNDISCLOSED SALES, THE ACTION OF ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNT UNDER SECTION 145(3) OF THE ACT AND THEN ADOPTING ESTIMATION OF NET PROFIT WAS NOT IN CONFORMITY WITH THE EVIDENCE FOUND DURING THE SURVEY. SH E WAS OF THE VIEW THAT PROFIT ESTIMATED ON THE UNDISCLOSED SALES WAS NOT JUSTIFIED IN THE ABSENCE OF ANY COGENT EVIDENCE THEREON. SH E WAS OF THE VIEW THAT THE ASSESSING OFFICER SHOULD HAVE ALLOWED THOSE EXPENSES WHICH WERE SUBSTANTIATED BY THE ASSESSEE WITH PROPER AND COGENT EVIDENCE, PERTAINING TO THOSE UNDISCLOSED SALES. ACCORDINGLY, S HE CONSIDERED THE ASSESSMENT ORDER TO BE PRIMA FACIE ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTEREST OF REVENUE AND SHOW CAUSED THE ASSESSEE AS TO WHY THE SAME SHOULD NOT BE SET ASIDE UNDER SECTION 263 OF THE ACT. THE PLEA OF THE ASSESSEE BEFORE THE COMMISSIONER WAS THAT THE FACTS NOTED BY THE COMMISSIONER IN THE NOTICE ISSUED UNDER SECTION 263 OF THE ACT HAD ALREADY BEEN NOTED IN THE NOTICE ISSUED TO THE ASSESSEE UNDER SECTION 142(1) OF THE ACT, DURING RE - ASSESSMENT PROCEEDINGS. THE ASSESSEE ALSO REFERRED TO THE DETAILED SUBMISSIONS IN THIS REGARD DATED 21.12.2011 ON THE ISSUE AS TO WHY NO PRESUMPTION SHO ULD BE MADE WITH RESPECT TO EXPENSES RELATED TO UNDISCLOSED SALES HAVING ALREADY BEEN BOOKED. HE FURTHER REFERRED TO THE ASSESSMENT ORDER AT PAGE 3.2 TO POINT OUT THAT THE SAID SUBMISSIONS HAD BEEN NOTED BY THE ASSESSING OFFICER AND AFTER VERIFICATION OF MATERIAL PRODUCED, THE ORDER WAS PASSED BY THE ASSESSING OFFICER AFTER DUE APPLICATION OF MIND. HE FURTHER POINTED OUT THAT THERE WAS NOTHING IN THE SHOW CAUSE NOTICE TO POINT OUT ANY LEGAL OR FACTUAL ERROR IN THE ASSESSMENT OF INCOME BY THE ASSESSING OFF ICER ESPECIALLY WHERE THE ASSESSMENT ORDER WAS PASSED AFTER VERIFICATION OF ALL THE FACTS AND MATERIAL PRODUCED BEFORE THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS. THE ASSESSEE PLACED ITA NO S . 165 8 TO 166 2 /P U N/20 1 4 DHARRIT YOGEN SHAH 5 RELIANCE ON VARIOUS JUDGMENTS OF DIFFERENT HIGH COURTS IN THIS REGARD. THE COMMISSIONER TOOK NOTE OF THE DEPOSIT OF SALE PROCEEDS IN KOTAK MAHINDRA BANK LTD. IN THE YEARS STARTING FROM ASSESSMENT YEAR 2005 - 06 TO 2008 - 09 AND ALSO NOTED THAT THE ASSESSEE HAD SUBMITTED VERY FEW BILLS OF EXPENSES AGAINST THE ABOVE RECEIP TS AND ALSO THE BILLS WERE NOT SUPPORTED BY ANY CORROBORATIVE EVIDENCE. THE COMMISSIONER FURTHER OBSERVED THAT THESE WERE NOT CONSIDERED TO BE SATISFACTORILY EXPLAINED IN THE ASSESSMENT PROCEEDINGS ALSO. SH E WAS OF THE VIEW THAT IN THE ABSENCE OF COMPLET E DETAILS OF EXPENDITURE CLAIMED TO BE INCURRED AGAINST THE ABOVE RECEIPTS, THE QUESTION OF ACCEPTING THEM WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, DOES NOT ARISE. HENCE, THE VIEW OF THE ASSESSING OFFICER IN THE PRESENT CASE BY ANY STRETCH OF I MAGINATION C OULD NOT BE SAID TO BE REASONABLE VIEW. SH E HELD THE VIEW TO BE COMPLETELY ERRONEOUS, WHEREIN THE ASSESSING OFFICER HAD REJECTED THE BOOKS OF ACCOUNT UNDER SECTION 145(3) OF THE ACT AND ADOPTED THE ES TIMATION OF PROFIT, WAS NOT IN CONFORMITY W ITH THE EVIDENCE FOUND DURING THE COURSE OF SEARCH AND SUBSEQUENT ENQUIRIES. SH E ALSO NOTED THAT THE ASSESSEE HAD NOT FURNISHED ALL THE DETAILS OF EXPENSES WITH SUPPORTING EVIDENCE PERTAINING TO THE UNDISCLOSED SALES. THEREFORE, PROFIT ESTIMATED ON THE U NDISCLOSED SALES IN THE BANK ACCOUNTS WAS NOT JUSTIFIED IN THE ABSENCE OF ANY COGENT EVIDENCE. SH E WAS OF THE VIEW THAT ONLY THOSE EXPENSES WHICH WERE SUBSTANTIATED BY THE ASSESSEE WITH PROPER AND COGENT EVIDENCE PERTAINING TO THOSE UNDISCLOSED SALES , WER E TO BE ALLOWED . SHE FURTHER HELD THAT THE ASSESSING OFFICER SHOULD HAVE ADDED ALL THOSE UNDISCLOSED SALES STRICTLY TO THE INCOME OF ASSESSEE DISCLOSED IN THE RETURN OF INCOME. SH E THEN HELD THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WAS B OTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND FURTHER OBSERVED THAT THE ISSUE NEEDED FRESH EXAMINATION AT THE END OF ASSESSING OFFICER AND HENCE, THE MA T TER WAS SET ASIDE TO THE FILE OF ASSESSING OFFICER TO RE - EXAMINE THE ISSUE AS DISCUSSED IN THE ITA NO S . 165 8 TO 166 2 /P U N/20 1 4 DHARRIT YOGEN SHAH 6 ORDER. VIDE PARA 6 , S HE FURTHER HOLDS THAT THE ASSESSEE BE GIVEN AN OPPORTUNITY TO ADDUCE EVIDENCE FOR H IS CLAIM THAT THE INCOME OFFERED WAS PROPER AND THE CLAIM OF DEDUCTION / EXPENDITURE WAS ALLOWABLE TO H IM IN VIEW OF THE PREVAILING POSITION OF LAW. SH E PLACED REL IANCE ON THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN RAMPYARI DEVI SAROAGI VS. CIT (1969) 67 ITR 84 (SC), WHEREIN THE APEX COURT HELD THAT SINCE THE ASSESSEE IS GETTING AN OPPORTUNITY OF BEING HEARD, NO PREJUDICE IS CAUSED TO T HE ASSESSEE IF THE ORDER IS SET ASIDE. THE ASSESSING OFFICER WAS THUS, DIRECTED TO RE - ASSESS THE CASE AND EXAMINE THE EVIDENCE IN PROPER PERSPECTIVE OF PROVISIONS OF THE ACT BEFORE COMING TO ANY CONCLUSION. 8. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF COMMISSIONER. 9. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT SURVEY UNDER SECTION 133 OF THE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF ASSESSEE ON 10.03.2011. DURING THE COURSE OF SURVEY, THREE BANK ACCOUNTS WITH KOTA K MAHINDRA BANK LTD. WERE FOUND TO BE UNDISCLOSED BANK ACCOUNTS. THEREAFTER, NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 23.03.2011 AND THE ASSESSEE FILED REVISED RETURN OF INCOME IN RESPONSE THERETO. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE POINTED OUT THAT THE ASSESSEE WAS ENGAGED IN MAKING FURNITURE FOR OFFICES AND 20% OF DEPOSITS WERE OFFERED IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. HE REFERRED TO NOTICE ISSUED UNDER SECTION 142(1) OF THE A CT DATED 13.09.2011, COPY OF WHICH IS PLACED AT PAGE 17 OF THE PAPER BOOK AND THE REPLY OF ASSESSEE FILED BEFORE THE ASSESSING OFFICER DATED 19.09.2011 WHICH IS PLACED AT PAGE 19 OF THE PAPER BOOK. HE FURTHER REFERRED TO THE DETAILS OF CASH WITHDRAWALS MA DE DURING THE YEAR, COPY OF WHICH IS PLACED AT PAGE 32 OF THE PAPER BOOK. HE POINTED OUT ITA NO S . 165 8 TO 166 2 /P U N/20 1 4 DHARRIT YOGEN SHAH 7 THAT THE DETAILS OF UNBOOKED BILLS ARE LISTED AT PAGE 36 OF THE PAPER BOOK AND COMPLETE DETAILS WERE FILED BY THE ASSESSEE IN THIS REGARD. HE FURTHER POINTED OUT THA T ANOTHER NOTICE DATED 21.12.2011 WAS ISSUED TO THE ASSESSEE, WHICH IS PLACED AT PAGE 39 OF THE PAPER BOOK AND THE ASSESSEE IMMEDIATELY FILED THE REPLY, COPY OF WHICH IS PLACED AT PAGE 41 ALONG WITH NOTE ON BUSINESS ACTIVITY AT PAGE 43 OF THE PAPER BOOK. HE ALSO FURNISHED PARTY - WISE DETAILS OF SALES WHICH ARE PLACED AT PAGE 45 OF THE PAPER BOOK AND THEREAFTER, THE ASSESSMENT ORDER WAS PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT. OUR ATTENTION WAS DRAWN TO THE OBSERVATIONS OF ASSESSING OFFICER IN PAR AS 3.1 AND 3.2 AND THEREAFTER, THE ASSESSING OFFICER ESTIMATED PROFIT ON DISCLOSED AS WELL AS UNDISCLOSED RECEIPTS @ 15%. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT UNDISCLOSED RECEIPTS ARE UPTO RS.6.09 CRORES FOR ASSESSMENT Y EARS 2005 - 06 TO 2008 - 09. HOWEVER, IN ASSESSMENT YEAR 2009 - 10, THERE WAS UNDISCLOSED INTEREST INCOME AND DEEMED INCOME IN ADDITION TO THE LOSSES FROM THE BUSINESS AND THE PROFITS FROM FAO BUSINESS. HE FURTHER MADE REFERENCE TO THE OBSERVATIONS OF THE COMM ISSIONER IN THE ORDER PASSED UNDER SECTION 263 OF THE ACT FOR ASSESSMENT YEARS 2005 - 06 TO 2008 - 09. HE THEN, POINTED OUT THAT ADMITTEDLY, THE BANK ACCOUNTS WERE UNDISCLOSED BANK ACCOUNTS, THEREFORE, THERE WAS NO MEANS TO GET TOTAL DETAILS OF EXPENSES. HE FURTHER STATED THAT THE ASSESSING OFFICER IN SUCH POSITION HAD ESTIMATED THE INCOME AFTER REJECTING THE BOOKS OF ACCOUNT. HE STRESSED THAT WHERE THERE WAS APPLICATION OF MIND BY THE ASSESSING OFFICER TO COMPUTE THE INCOME OF ASSESSEE, THERE WA S NO MERIT I N THE ORDER OF COMMISSIONER. HE FURTHER REFERRED TO THE REPLY FILED BEFORE THE COMMISSIONER AND THE RELIANCE ON VAR IOUS CASE LAWS WITH EMPHASIS IN THE CASE OF CIT VS. MAX INDIA LTD. (2008) 166 TAXMAN 188 (SC) AND POINTED OUT THAT THE COMMISSIONER HAS FAIL ED TO CONSIDER THE RATIOS LAID DOWN IN THE AFORESAID DECISIONS. FOR ASSESSMENT YEAR 2009 - 10, THE LEARNED AUTHORIZED ITA NO S . 165 8 TO 166 2 /P U N/20 1 4 DHARRIT YOGEN SHAH 8 REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THERE WERE NO UNDISCLOSED RECEIPTS BUT THE ASSESSEE WAS SHAREHOLDER OF 50% OF SHARES OF CO MPANY. HE FURTHER STATED THAT RS.93 LAKHS WAS OFFERED AS INCOME IN RESPONSE TO NOTICE ISSUED UNDER SECTION 147 OF THE ACT, WHEREIN THE SAID INCOME WAS ON ACCOUNT OF DEEMED DIVIDEND. HE FURTHER REFERRED TO THE WORKING OF THE INCOME FOR THE YEAR, WHEREIN T HE LOSSES FROM FAO BUSINESS WERE HUGE AND POINTED OUT THAT AFTER GIVING EFFECT TO THE ORDER PASSED UNDER SECTION 264 OF THE ACT AGAINST APPLICATION UNDER SECTION 154 OF THE ACT, WHICH IN TURN, WAS AGAINST THE ORDER PASSED UNDER SECTION 143(3) R.W.S. 263 OF THE ACT , THE INCOME DETERMINED IS NIL. HENCE, THE ORDER PASSED IN SUCH CASE CANNOT BE SAID TO BE PREJUDICIAL TO THE INTEREST OF REVENUE. 10. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, POINTED OUT THAT THE DEPOSITS IN BANK ACCOUNTS WERE HUGE TOTALING RS.6.09 CRORES , WHICH WERE NOT DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME. HE FURTHER POINTED OUT THAT THE ASSESSEE HAS FAILED TO GIVE ANY DETAILS OF EXPENSES AND IN SUCH CIRCUMSTANCES, THE COMMISSIONER INVOKED THE JURI SDICTION UNDER SECTION 263 OF THE ACT. HE FURTHER REFERRED TO THE ORDER OF COMMISSIONER IN THIS REGARD AND POINTED OUT THAT THE ASSESSING OFFICER WAS DIRECTED TO VERIFY THE ACCOUNTS OF ASSESSEE. HE FURTHER VEHEMENTLY STATED THAT REJECTION OF BOOKS WAS WI THOUT ANY ENQUIRIES OR SIMILARLY, THE ADOPTION OF NET PROFIT RATE COULD NOT BE APPLIED IN THE HANDS OF ASSESSEE. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF DELHI IN CIT VS. D .K. GARG IN ITA NO.115/2005, JUDGMENT DATED 04.08.2017 AND BY THE HON'BLE SUPREME COURT IN CIT VS. AMITABH BACHCHAN IN CIVIL APPEAL NO.5009 OF 2016 (ARISING OUT OF S.L.P (C) NO.11621 OF 2009) JUDGMENT DATED 11.05.2016. HE STRESSED THAT WHERE THERE WAS NO INVESTIGATION BY THE ASSESSING ITA NO S . 165 8 TO 166 2 /P U N/20 1 4 DHARRIT YOGEN SHAH 9 OFFICER AND HE ACCEPTED THE ASSESSEES CASE WITHOUT MAKING ANY ENQUIRIES, THEN IT IS CASE OF NO APPLICATION OF MIND AND SUCH AN ORDER OF ASSESSING OFFICER CANNOT BE UPHELD. 11. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT RELIANCE PLACED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE WAS MISPLACED. IN THOSE CASES, THERE WAS NO INVESTIGATION AND THE ASSESSING OFFICER FAILED TO MAKE ANY ENQUIRIES AND HENCE, RE - ASSESSMENT WAS NOT UP HELD. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT PREMISE ON WHICH THE PROCEEDINGS UNDER SECTION 147 OF THE ACT HAD BEEN INITIATED WAS THE BANK ACCOUNT AND THE COPY OF ENTIRE BANK ACCOUNT WAS AVAILABLE WITH THE ASSESSING OFFICE R, WHICH WAS CONSIDERED BY HIM, ASSESSMENT ORDER WAS PASSED. THE COMMISSIONER WAS ON THE OTHER HAND, ONLY T ELLS THE ASSESSING OFFICER TO MAKE ASSESSMENT DE NOVO AS THE SAME IS NOT CORRECT. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES IN THE BUNCH OF APPEALS IS AGAINST EXERCISE OF POWERS OF PROVISION BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT. UNDER THE SAID SECTION, THE COMMISSIONER IS EMPOWERED TO EXERCISE HIS JURISDICTION WHERE THE ASSESSMENT ORDER PASSE D BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. BOTH THE CONDITIONS LAID DOWN IN SECTION 263 OF THE ACT SHOULD BE PRESENT FOR THE COMMISSIONER TO EXERCISE HIS REVISIONARY POWERS. IN THE ABSENCE OF EITHER OF LIMBS BEING NOT SATISFIED, THE COMMISSIONER IS NOT EMPOWERED TO EXERCISE SUCH REVISIONARY POWERS. THE HON'BLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 109 TAXMAN 66 (SC) HAD HELD THE PROPOSITION THAT IF THE ORDER OF INCOME TAX OFFICER WAS ERRONEOU S BUT WAS NOT PREJUDICIAL TO THE REVENUE OR IF IT WAS NOT ERRONEOUS BUT WAS PREJUDICIAL TO THE REVENUE, THEN ITA NO S . 165 8 TO 166 2 /P U N/20 1 4 DHARRIT YOGEN SHAH 10 RECOURSE CANNOT BE MADE TO SECTION 263(1) OF THE ACT. IT WAS ALSO HELD BY THE HON'BLE SUPREME COURT THAT WHERE AN ENTRY IN THE STATEMENT OF ACCOUN T FILED BY THE ASSESSEE WAS ACCEPTED BY THE ASSESSING OFFICER, WHICH WAS WITHOUT ANY SUPPORTING MATERIAL AND WITHOUT MAKING ANY ENQUIRY, THEN EXERCISE OF JURISDICTION BY THE COMMISSIONER IS VALID. THE HON'BLE SUPREME COURT FURTHER HELD THAT THE SAID PROVI SION OF SECTION 263 OF THE ACT COULD NOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER AND INCORRECT ASSUMPTION OF FACTS AND INCORRECT APPLICATION OF LAW WOULD SATISFY THE REQUIREMENT OF ORDER BEING ERRONE OUS AND SIMILARLY, ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. THE HON'BLE SUPREME COURT FURTHER HELD THAT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF ORDER OF THE ASSESSING OFFICER COULD NOT BE TREATED A S PREJUDICIAL TO THE INTEREST OF REVENUE; FOR EXAMPLE, WHEN AN ITO ADOPTS ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE ITO HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGRE E, IT COULD NOT BEEN TREATED AS ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF REVENUE UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER WAS UNSUSTAINABLE IN LAW. 13. IT MAY BE NOTED THAT THE APEX COURT IN MALABAR INDUSTRIAL CO. LTD. VS. CIT (SUPRA) HAD ALSO REFERRED TO THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN RAMPYARI DEVI SARAOGI VS. CIT (SUPRA) I.E. THE DECISION RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. IN THE FACTS OF THE SAID CASE, IT WAS HELD BY THE APEX COURT T HAT WHERE SUM NOT EARNED BY A PERSON WA S ASSESSED AS INCOME IN HIS HANDS ON HIS SO OFFERING, ORDER PASSED BY THE ASSESSING OFFICER ACCEPTING THE SAME AS SUCH WILL BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. ITA NO S . 165 8 TO 166 2 /P U N/20 1 4 DHARRIT YOGEN SHAH 11 14. THE HONBLE BOMBAY HIGH COURT IN CIT VS. GABRIEL INDIA LTD. (1993) 71 TAXMAN 585 (BOM) WHILE EXPLAINING THE POWERS OF REVISION UNDER SECTION 263 OF THE ACT HELD THAT SUCH POWERS WERE IN THE NATURE OF SUPERVISORY JURISDICTION AND THE SAME COULD BE EXERCISED ONLY IF THE CIRCUMSTANCES SPE CIFIED THEREIN EXISTS. THE HONBLE HIGH COURT HELD THAT AN ORDER COULD NOT BE TERMED AS ERRONEOUS UNLESS IT WAS NOT IN ACCORDANCE WITH LAW. WHERE AN ITO ACTING IN ACCORDANCE WITH LAW MAKES CERTAIN ASSESSMENTS, THE SAME COULD NOT BE BRANDED AS ERRONEOUS B Y THE COMMISSIONER SIMPLY BECAUSE ACCORDING TO HIM THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THE HONBLE HIGH COURT HELD THIS SECTION DOES NOT VISUALIZE THE CASE OF SUBSTITUTION OF JUDGMENT OF THE COMMISSIONER FOR THAT OF THE ITO TO PASS THE OR DER, UNLESS THE DECISION IS HELD TO BE ERRONEOUS. THE HONBLE HIGH COURT FURTHER HELD THAT WHERE THE ASSESSING OFFICER EXAMINES THE ACCOUNTS , MAKES ENQUIRIES, ACCOUNTS, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME MISTAKES HIMSELF, THEN THE COMMISSIONER, ON PERUSAL OF RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERN WAS ON LOWER SIDE AND LEFT TO THE COMMISSIONER, HE WOULD HAVE ESTIMATED T HE INCOME AT A FIGURE HIGHER THAN THE ONE DETERMINED BY THE ASSESSING OFFICER. THE HONBLE HIGH COURT IN SUCH CIRCUMSTANCES HELD THAT BUT THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO RE - EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGH ER FIGURE. THE HONBLE HIGH COURT HELD IT IS BECAUSE THE ITO HAS EXERCISED THE QUASI - JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOE S NOT FEEL SATISFIED WITH THE CONCLUSION. IT MAY BE SAID IN SUCH A CASE THAT IN THE OPINION OF THE COMMISSIONER THE ORDER IN QUESTION IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. BUT THAT BY ITSELF WILL NOT BE ENOUGH TO VEST THE COMMISSIONER WITH THE ITA NO S . 165 8 TO 166 2 /P U N/20 1 4 DHARRIT YOGEN SHAH 12 POW ER OF SUO MOTU REVISION BECAUSE THE FIRST REQUIREMENT, NAMELY, THE ORDER IS ERRONEOUS, IS ABSENT. SIMILARLY IF AN ORDER IS ERRONEOUS BUT NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE, THEN ALSO THE POWER OF SUO MOTU REVISION CANNOT BE EXERCISED. ANY AND E VERY ERRONEOUS ORDER CANNOT BE SUBJECT - MATTER OF REVISION BECAUSE THE SECOND REQUIREMENT ALSO MUST BE FULFILLED. 1 5 . THE HON'BLE SUPREME COURT IN CIT VS. MAX INDIA LTD. (SUPRA) HAD HELD THAT WHERE THE ASSESSING OFFICER HAD ADOPTED ONE OF THE COURSES PERMI SSIBLE IN LAW AND IT HAD RESULTED ANY LOSS OF REVENUE; OR WHERE TWO VIEWS WERE POSSIBLE AND THE ITO HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREED, IT COULD NOT BE TREATED AS ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF REVENUE, UNLESS TH E VIEW TAKEN BY THE ITO WAS UNSUSTAINABLE IN LAW AND THE APEX COURT THUS, HELD THAT WHERE TWO VIEWS ARE POSSIBLE, THEN EVERY LOSS IN THE REVENUE WOULD NOT ENABLE THE COMMISSIONER TO EXERCISE HIS POWER OF REVISION UNDER SECTION 263 OF THE ACT. 1 6 . THE LE ARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT VS. AMITABH BACHCHAN (SUPRA). IN THE FACTS OF THE SAID CASE, THE ASSESSMENT IN QUESTION WAS SET ASIDE ON THE GROUND THAT REQUI SITE AND DUE ENQUIRIES WERE NOT MADE BY THE ASSESSING OFFICER PRIOR TO FINALIZATION OF THE ASSESSMENT. THE CASE OF THE REVENUE WAS THAT AT THE FAG END OF THE YEAR, THE ASSESSEE DID NOT PRODUCE DETAILS AND HENCE, THE ASSESSING OFFICER HAD TO COMPLETE ASSES SMENT IN HASTE AND HENCE, HE FORMULATED CERTAIN ASPECTS OF THE CASE. IN THIS REGARD, THE COMMISSIONER ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE ON ALL THREE ISSUES AND THEREAFTER, PASSED THE ORDER ON ISSUES OTHER THAN ISSUES RAISED. THE APEX COURT DID NOT ACCEPT THE PLEA THAT THE REVISIONARY ORDER HAVING GONE BEYOND THE SHOW CAUSE NOTICE WAS INVALID, IN VIEW OF THE REASONABLE OPPORTUNITY OF BEING HEARD ITA NO S . 165 8 TO 166 2 /P U N/20 1 4 DHARRIT YOGEN SHAH 13 GIVEN BY THE COMMISSIONER. THE SECOND ARGUMENT WAS ON THE MERITS OF ISSUE RAISED VIDE SHOW CAUSE NOTICE ISSUED BY THE COMMISSIONER. THE ASSESSEE HAD MADE A CLAIM OF ADDITIONAL EXPENSES IN THE RE - REVISED RETURN WHICH WAS LATER WITHDRAWN. THE ASSESSING OFFICER HAD ISSUED NOTICE UNDER SECTION 69C OF THE ACT BUT BECAUSE OF THE WITHDRAWAL OF CLAIM BY THE ASSESS EE, THE ASSESSING OFFICER THOUGHT THAT THE MATTER NEED NOT BE INVESTIGATED ANY FURTHER. THE VIEW TAKEN BY THE ASSESSING OFFICER WAS PROPOSED BY THE ASSESSEE TO BE A POSSIBLE VIEW AND WHERE TWO VIEWS WERE POSSIBLE ON ISSUE, EXERCISE OF REVISIONARY POWER UN DER SECTION 263 OF THE ACT WAS CHALLENGED BY THE ASSESSEE. THE HON'BLE SUPREME COURT IN CIT VS. AMITABH BACHCHAN (SUPRA) HAD UPHELD THE RATIO THAT WHERE THE VIEW TAKEN BY THE ASSESSING OFFICER WAS POSSIBLE VIEW, THE SAME OUGHT NOT TO BE INTERFERED WITH BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT MERELY ON THE GROUND THAT THERE WAS ANOTHER POSSIBLE VIEW OF THE MATTER. IT WAS FURTHER HELD BY THE APEX COURT PERMITTING EXERCISE OF REVISIONAL POWER IN A SITUATION WHERE TWO VIEWS ARE POSSIBLE WOULD REALLY AMOUNT TO CONFERRING SOME KIND OF AN APPELLATE POWER IN THE REVISIONAL AUTHORITY. THIS IS A COURSE OF ACTION THAT MUST BE DESISTED FROM. THE HONBLE HON'BLE SUPREME COURT FURTHER HELD THAT WHERE THE AUTHORITY (COMMISSIONER) FELT THAT THE MATTER NEEDED FU RTHER INVESTIGATION I.E. IN CASE WHERE THE ASSESSEE HAD MADE A CLAIM WHICH WOULD PRIMA FACIE DISCLOSES THAT THE EXPENSES IN RESPECT OF WHICH DEDUCTION HAD BEEN CLAIMED HAD BEEN INCURRED AND THEREAFTER ABANDONING / WITHDRAWING THE SAME GIVES RISE TO THE NEC ESSITY OF FURTHER ENQUIRY IN THE INTEREST OF REVENUE. THE APEX COURT THUS, UPHELD THE POWER OF COMMISSIONER IN HOLDING THAT THE ORDER OF ASSESSING OFFICER IN SIMPLY DROPPING THE SAID CLAIM ON THE ISSUE THAT THE CLAIM WAS WITHDRAWN, WAS THE CORRECT COURSE OF ACTION. THE EXERCISE OF REVISIONARY POWERS BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT WAS THUS, UPHELD. ITA NO S . 165 8 TO 166 2 /P U N/20 1 4 DHARRIT YOGEN SHAH 14 1 7 . NOW, COMING TO THE FACTS OF THE CASE, WHERE THE ASSESSEE HAD ORIGINALLY FILED THE RETURN OF INCOME AND HAD DECLARED TURNOVER IN THE RESPEC TIVE YEARS WHICH WAS ACCEPTED IN THE HANDS OF ASSESSEE. HOWEVER, PURSUANT TO SURVEY UNDER SECTION 133 A OF THE ACT ON THE BUSINESS PREMISES OF ASSESSEE ON 10.03.2011, IT TRANSPIRED THAT THREE BANK ACCOUNTS WITH KOTAK MAHINDRA BANK LTD. WERE NOT DISCLOSED B Y THE ASSESSEE. THE UNDISCLOSED TURNOVER IN THE SAID THREE BANK ACCOUNTS FOR ASSESSMENT YEARS 2005 - 06 TO 2008 - 09 TOTALED TO ABOUT RS.6.09 CRORES. THEREAFTER, THE ASSESSEE FILED REVISED RETURN OF INCOME IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 148 O F THE ACT DECLARING ADDITIONAL INCOME IN ITS HANDS, WHEREIN 20% OF THE DEPOSITS WERE OFFERED AS ADDITIONAL INCOME. THE CASE OF ASSESSEE WAS TAKEN UP FOR SCRUTINY, WHEREIN NOTICES UNDER SECTION 142(1) AND 143(2) OF THE ACT WERE ISSUED TO THE ASSESSEE, COPI ES OF WHICH ARE PLACED AT PAGES 13 AND 14 OF THE PAPER BOOK. THE ASSESSEE MADE SUBMISSIONS WHICH ARE PLACED AT PAGES 15 AND 16 OF THE PAPER BOOK. ANOTHER NOTICE UNDER SECTION 142(1) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 13.09.2011, WHEREIN SPECIFIC QU ERY RAISED BY THE ASSESSING OFFICER WAS IN RESPECT OF DEPOSIT OF RS.25,75,751/ - IN KOTAK MAHINDRA BANK ACCOUNT. THE ASSESSING OFFICER QUESTIONED THE ASSESSEE THAT THE SAID DEPOSIT WAS NOT SHOWN BY HIM AND HE WAS ASKED TO CLARIFY THE ISSUE. THE NEXT QUEST ION RAISED WAS IN RESPECT OF ADDITIONAL INCOME SHOWN AT RS.7,69,634/ - WHICH WAS ESTIMATED AT 20% OF SALES. THE ASSESSING OFFICER QUESTIONS THE ASSESSEE. HOWEVER, NO EXPLANATION HAS BEEN PROVIDED ON THE EXPENDITURE INCURRED. PLEASE PROVIDE THE RELEVANT E VIDENCES IN SUPPORT OF YOUR CLAIM AND OTHER QUERIES WERE ALSO RAISED IN THE SAID NOTICE. IN REPLY, THE ASSESSEE EXPLAINED THE ADDITIONAL INCOME OFFERED BY IT. IT WAS POINTED OUT THAT PROFIT @ 20% WAS OFFERED AS INCOME AS PER DISCUSSION WITH THE SURVEY PA RTY. IT WAS ALSO EXPLAINED THAT MAJOR LABOUR EXPENSES TO THE CARPENTERS AND OTHER LABOURERS WERE MADE IN CASH FROM TIME TO ITA NO S . 165 8 TO 166 2 /P U N/20 1 4 DHARRIT YOGEN SHAH 15 TIME , SOURCES OF WHICH COULD BE TRACED TO THE UNDISCLOSED BANK ACCOUNTS , IN ADDITION, LOT OF VENDORS TO WHOM THE PAYMENTS COULD NOT BE MADE AT THAT TIME WERE STILL OUTSTANDING. THE ASSESSEE WAS ENGAGED IN TURN KEY INTERIOR CONTRACTS AND IT WAS POINTED OUT THAT BY NO STRETCH OF IMAGINATION, THE REAL PROFITS COULD EXCEED 20%. THE ASSESSEE GAVE BIFURCATION OF UNDISCLOSED SALES IN THE RE SPECTIVE YEARS AND THE PROFIT WORKED OUT @ 20% ON THE SAME. THE DETAILS OF WHICH READ AS UNDER: - SUMMARY OF SALES DISCLOSED AND UNDISCLOSED IN RESPECT OF KOTE PATIL, KUMAR HOUSING AND OTHERS ASSESSMENT YEAR PARTICULARS AY 05 - 06 AY 06 - 07 AY 07 - 08 AY 08 - 09 AY 09 - 10 TOTAL TOTAL SALES 3,848,170 15,206,897 88,844,139 171,783,046 19,637,225 299,319,477 LESS: SALES DISCLOSED - 8,000,000 73,909,840 137,426,546 19,637,225 238,973,611 UNDISCLOSE D SALES 3,848,170 7,206,897 14,934,299 34,356,500 - 60,3 45,866 PROFIT @ 20% 769,634 1,441,379 2,986,860 6,071,300 - 11,269,173 NOTE IN AY 08 - 09, RS.79577784 WAS ADDED ON ACCOUNT OF ASSESSMENT. OUT OF THE SAME RS.1,00,00,000/ - WAS RECEIVED IN KOTAK BANK AS 8% HAS ALREADY BEEN PAID ON THE AMOUNT DURING ASSESSMENT, ADDITIONAL 12% ON RS.1,00,00,000/ - HAS BEEN CONSIDERED WHILE ARRIVING AT UNDISCLOSED PROFIT. 1 8 . THE ASSESSEE ALSO FURNISHED THE DETAILS OF CASH WITHDRAWAL FROM UNDISCLOSED BANK ACCOUNTS FOR PAYMENT TO LABOUR CONTRACTORS AND BANK CHARGES AGGREGATING RS.30,00,958/ - . THE ASSESSEE ALSO POINTED OUT THAT CERTAIN BILLS WERE UNBOOKED TOWARDS PAYMENT WERE STILL OUTSTANDING AND THE SAID DETAILS WERE ALSO GIVEN AS ANNEXURES TO THE LETTER DATED 22.09.2011. THE AGGREGATE AMOUNT OF UNBOO KED BILLS WAS RS.75,33,028/ - TOWARDS UNDISCLOSED TURNOVER. THE ASSESSEE FURTHER EXPLAINED THAT THERE OTHER PARTIES WHOSE DUES WE RE STILL TO BE PAID AND CONSIDERING THE SAME, THE PROFITS C OULD NOT BE OFFERED @ 20%. THE DETAILS OF CASH WITHDRAWALS ARE PLAC ED AT PAGES 33 TO 35 OF THE PAPER BOOK AND THE DETAILS OF UNBOOKED BILLS YEAR - WISE AT PLACED AT PAGE 36 OF THE PAPER BOOK. THEREAFTER, ANOTHER NOTICE WAS GIVEN TO THE ASSESSEE UNDER SECTION 142(1) OF THE ITA NO S . 165 8 TO 166 2 /P U N/20 1 4 DHARRIT YOGEN SHAH 16 ACT ALONG WITH QUESTIONNAIRE WHICH IS PLACED AT PAG ES 38 AND 39 OF THE PAPER BOOK. THE QUERY RAISED IN THE QUESTIONNAIRE WAS IN RELATION TO THE PROFIT ESTIMATED ON UNDISCLOSED SALES IN THE BANK ACCOUNT BEING NOT JUSTIFIED IN THE ABSENCE OF ANY COGENT EVIDENCE. THE ASSESSING OFFICER ALSO ASKED AS TO WHETH ER THE EXPENDITURE IN RESPECT OF UNDISCLOSED SALES WAS ALREADY BOOKED IN THE ORIGINAL RETURN OF INCOME . THE ASSESSING OFFICER THUS, PROPOSED THAT IN VIEW THEREOF, THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE COULD NOT BE RELIED UPON AND THE SAME HAD TO BE REJECTED UNDER SECTION 145(3) OF THE ACT IN ORDER TO FINALIZE THE ASSESSMENT. HE WAS GIVEN AN OPPORTUNITY TO ADDUCE EVIDENCE IN THIS REGARD. THE ASSESSEE IN REPLY EXPLAINED WHY NO PRESUMPTION SHOULD BE ADOPTED BECAUSE OF EXPENSES BEING ALREADY BOOKED ON UNDISCLOSED INCOME. IT WAS EXPLAINED THAT THE ASSESSEE HAD UNDERTAKEN CONTRACTS MAJORLY WITH KUMAR HOUSING DEVELOPMENT LTD. AND KOLTE PATIL DEVELOPERS LTD. WHICH WERE FOR A CONTINUOUS PERIOD UPTO ASSESSMENT YEAR 2007 - 08. THE ASSESSEE EXPLAINED THAT I T HAD INVESTED MAJOR FUNDS IN FUTURE ACTIONS WHICH WERE TURNED OUT TO BE LOSS MAKING DECISIONS AND HENCE, CASH CRUNCH AND THE PAYMENTS TO SUB - CONTRACTORS WERE NOT MADE. THE ASSESSEE ALSO EXPLAINED THE NATURE OF BUSINESS UNDERTAKEN BY IT AND FILED THE DETA ILS OF PARTY - WISE SALES WHICH ARE PLACED AT PAGES 43 TO 45 OF THE PAPER BOOK. THE ASSESSING OFFICER THEREAFTER, COMPLETED THE ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE ACT. THE ASSESSEE REFERRED TO QUERIES RAISED AND ALSO REFERRED TO THE SHOW CAU SE NOTICE ISSUED AS TO WHY THE DISCLOSURE OF PROFIT @ 20% SHOULD BE ACCEPTED. THE ASSESSING OFFICER NOTED IN THE ORIGINAL RETURN OF INCOME, THAT THE ASSESSEE HAD ONLY DECLARED GROSS PROFIT OF 4.8% AND SINCE THE ASSESSEE COULD NOT PROVE AND SUBSTANTIATE TH E CONTENTS WITH SUPPORTS AS AGAINST THE GROSS PROFIT ESTIMATED @ 20%, THE GROSS PROFIT DISCLOSED IN THE ORIGINAL RETURN OF INCOME WAS ONLY 4.8%. THE ASSESSING OFFICER REFERRED TO SECOND SHOW CAUSE NOTICE ISSUED AND PROPOSED WHY BOOK RESULTS SHOULD NOT BE ITA NO S . 165 8 TO 166 2 /P U N/20 1 4 DHARRIT YOGEN SHAH 17 REJECTED AND PROVISIONS OF SECTION 145(3) SHOULD NOT BE INVOKED. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS SHOWN GROSS PROFIT OF 4.8%, 11.8%, 7.5%, 7.69% AND 11.25% IN ASSESSMENT YEARS 2005 - 06 TO 2009 - 10, RESPECTIVELY. FURTHER, THE ASSESSEE HAD D ISCLOSED INCOME UNDER SECTION 41(1) OF THE ACT IN ASSESSMENT YEAR 2009 - 10 BY WRITING BACK CERTAIN LIABILITIES AND IF THE SAID INCOME WAS TAKEN INTO CONSIDERATION, THE PROFIT FOR THE SAID YEAR WOULD EXCEED 15%. THE ASSESSING OFFICER ON CONSIDERATION OF THE GROSS PROFIT RESULTS FOR VARIOUS YEARS AND THE FACT THAT THE RE WERE UNDISCLOSED RECEIPTS IN ASSESSMENT YEAR 2009 - 10, THE PROFITS ON DISCLOSED RECEIPTS AND ON UNDISCLOSED RECEIPTS TO BE TOGETHER WERE ESTIMATED AND THE RATE OF 15% WAS APPLIED ON DISCLOSED A ND UNDISCLOSED TURNOVER. THE DISCLOSED TURNOVER WAS RS.3.56 CRORES AND UNDISCLOSED TURNOVER WAS RS.38,48,170/ - . THE ASSESSING OFFICER APPLIED 15% ON THE TOTAL TURNOVER OF RS.3.97 CRORES AND WORKED OUT THE PROFITS OF BUSINESS ON RS. 59,57,701/ - . 1 9 . THE COMMISSIONER HAS EXERCISED HIS POWERS UNDER SECTION 263 OF THE ACT AGAINST THE AFORESAID ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT. THUS, YEAR - WISE DETAILS OF INCOME DECLARED AS PER ORIGINAL RETURN , THE ADDITIONAL INCOME OFFERED AND TOTAL I NCOME ASSESSED IN THE HANDS OF ASSESSEE WORKS OUT AS UNDER: - ASSES SMENT YEAR DISCLOSED TURNOVER (A) UNDISCLO SED TURNOVER (B) TOTAL TURNOVER (C=A+B) 15% OF TOTAL TURNOVER (D=C*15 %) UNDISCLOSE D INTEREST INCOME AND DEEMED DIVIDEND (E) UNDISCLOSED LOSSES (F) D ISCLOSED LOSSES TO BE SET OFF TOTAL TAXABLE INCOME (G=D+E - F) INCOME AS PER ORIGINAL RETURN (H) ADDITIONAL INCOME TO BE OFFERED ( I=G - H) INCOME ASSESSED UNDER SECTION 148 2005 - 06 358,69,837 38,48,170 397,18,007 59,57,701 2,589 - 59,60,290 1 2,16,060 47,44,230 65,37,790 2006 - 07 240,09,875 72,06,898 312,16,773 46,82,516 10,730 - 46,93,246 6,84,897 40,08,349 46,93,250 2007 - 08 711,09,832 155,80,919 866,90,751 130,03,613 7,107 - 130,10,720 83,10,550 47,00,170 130,10,720 2008 - 09 1054,36,94 1 343,56,500 1397,93,441 209,69,016 18,72,762 (93,44,038) 134,97,740 14,35,980 120,61,760 230,96,040 TOTAL 2364,26,485 609,92,487 2974,18,972 446,12,846 18,93,188 (93,44,038) - 371,61,996 116,47,487 255,14,509 480,80,640 2009 - 10 405,82,577 - 405,82,577 60,87,387 96,29,242 (68,48,095) (327,29,254) 7,42,840 7,42,840 (238,60,72 0) 7,42,840 2770,09,062 609,92,487 3380,01,549 507,00,232 115,22,430 (161,92,133) (327,29,254) 379,04,836 123,90,327 16,53,788 488,23,480 ITA NO S . 165 8 TO 166 2 /P U N/20 1 4 DHARRIT YOGEN SHAH 18 20 . IN THE PRESENT CASE, THE ASSESSING OFFICER NOTED THE FACTUM OF ASSESSEE NOT DECLARING HIS TOTAL TURNOVER IN THE BOOKS OF ACCOUNT. CONSEQUENT THERETO, HE WAS OF THE OPINION THAT THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE CANNOT BE RELIED UPON. THE ASSESSEE THOUGH FILED THE DETAILS OF EXPENSES AGAINST UNDISCLOSED TURNOVER, BUT THE SAME WERE NOT VERIFIABLE, ALTHOUGH THERE WERE DEBITS FROM THE BANK ACCOUNTS , IN WHICH UNDISCLOSED SALES WERE CREDITED. IN THE TOTALITY OF THE FACTS, HE WAS OF THE VIEW THAT IT WA S FIT CASE TO INVOKE PROVISIO NS OF SECTION 145(3) OF THE ACT AND CONSEQUENTLY, THE BOOKS OF ACCOUNT WERE REJECTED. HE FURTHER NOTED THAT THE GROSS PROFIT DECLARED BY THE ASSESSEE IN VARIOUS YEARS WAS VARIED FROM 4.8% TO 11.8% AND IN ASSESSMENT YEAR 2009 - 10, THE ASSESSEE HAD DISCLOSED INCOME UNDER SECTION 41(1) OF THE ACT AND IF THAT WAS TAKEN INTO CONSIDERATION, THE GP OF THAT YEAR WORKED OUT TO 15% . ACCORDINGLY, THE PROFIT OF DISCLOSED AND UNDISCLOSED RECEIPTS WAS ESTIMATED @ 15%. HERE, IT MAY BE POINTED OUT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAD MADE ENQUIRIES, RAISED QUESTIONS FOR WHICH NOTICES UNDER SECTION 142(1) OF THE ACT WERE ISSUED ON DIFFERENT DATES AND AFTER CONSIDERING THE REPLY OF ASSESSEE ON VARIOUS ASPECTS, THE SAID VIEW WAS TAKEN B Y THE ASSESSING OFFICER. ONCE THE ASSESSING OFFICER HAS TAKEN A VIEW ON THE BASIS OF ASSESSEE HAVING NOT CORRECTLY DISCLOSED ITS TURNOVER FROM THE BUSINESS, THEN THE SAME CANNOT BE SUBSTITUTED BY THE COMMISSIONER ON THE SURMISE THAT THE VIEW OF ASSESSING OFFICER IS NOT A REASONABLE VIEW, WHERE THE SAID VIEW WAS ADOPTED BY THE ASSESSING OFFICER AFTER GOING THROUGH THE FACTUAL AND LEGAL ASPECTS OF THE ISSUE BEFORE HIM. IN ANY CASE, THE COMMISSIONER HAS NOT FOUND ANY FAULT WITH THE REJECTION OF BOOKS OF ACCO UNT BUT HAS EXERCISED JURISDICTION ON THE PROFIT ESTIMATED ON UNDISCLOSED SALES IN THE BANK ACCOUNTS BEING NOT JUSTIFIED IN THE ABSENCE OF ANY COGENT EVIDENCE. IN ANY CASE, AS HAS BEEN STATED AND REFERRED TO BY US IN EARLIER PARAS BY THE APEX COURT , EVEN IF THERE IS SOME LOSS OF REVENUE ITA NO S . 165 8 TO 166 2 /P U N/20 1 4 DHARRIT YOGEN SHAH 19 BUT THE COMMISSIONER IS NOT EMPOWERED TO EXERCISE HIS JURISDICTION UNDER SECTION 263 OF THE ACT FOR SUBSTITUTING THE VIEW ADOPTED BY THE ASSESSING OFFICER BY A VIEW OF THE COMMISSIONER WHICH IS AT VARIANCE. 2 1 . ANOTHER A SPECT WHICH NEEDS TO BE TAKEN NOTE OF IS THAT WHILE SETTING ASIDE THE ISSUE, THE COMMISSIONER HAS NOT COME TO A FINDING BUT HAS ASKED THE ASSESSING OFFICER TO DO A FRESH EXAMINATION AND HENCE, THE MATTER WAS SET ASIDE TO THE FILE OF ASSESSING OFFICER WITH DIRECTION TO RE - EXAMINE THE ISSUE. WE FIND NO MERIT IN SUCH SETTING ASIDE OF THE ISSUE. HE HAS DIRECTED THE ASSESSING OFFICER TO RE - ASSESS THE CASE AND EXAMINE THE EVIDENCE IN PERSPECTIVE OF THE PROVISIONS OF THE ACT, WHEREAS WHICH AMOUNTS FURTHER ENQUIR IES AND SUBSTITUTION OF THE VIEW ADOPTED BY THE ASSESSING OFFICER AND THE SAME IS NOT MERITED. ACCORDINGLY, WE FIND NO MERIT IN THE DIRECTIONS OF COMMISSIONER AND HOLD THAT EXERCISE OF JURISDICTION UNDER SECTION 263 OF THE ACT IS UNWARRANTED AND THE SAME IS HELD TO BE INVALID IN LAW. ACCORDINGLY, THE SAME IS CANCELLED. 2 2 . THE FACTS AND ISSUES IN ITA NO.1658/PUN/201 4 ARE SIMILAR TO THE FACTS AND ISSUES IN ITA NO S .1659/PUN/201 4 TO 1661/PUN/2014 AND OUR DECISION IN ITA NO.165 8 /PUN/201 4 SHALL APPLY MUTATIS MUTANDIS TO ITA NOS.1659/PUN/2014 TO 1661/PUN/2014. 2 3 . IN RESPECT OF ASSESSMENT YEAR 2009 - 10, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT NO UNDISCLOSED TURNOVER WAS DETECTED FOR THE SAID YEAR AND THERE WAS ONLY UNDISCLOSED I NTEREST INCOME WHICH HAS TO BE ADJUSTED AGAINST UNDISCLOSED LOSSES FROM FAO BUSINESS AND DISCLOSED LOSSES ALSO AND AFTER GIVING EFFECT TO THE ORDER PASSED UNDER SECTION 264 AGAINST APPLICATION MOVED UNDER SECTION 154 OF THE ACT, THE ASSESSED INCOME UNDER ITA NO S . 165 8 TO 166 2 /P U N/20 1 4 DHARRIT YOGEN SHAH 20 S ECTION 143(3) R.W.S. 148 OF THE ACT WORKS OUT TO BE THE SAME AS THE RETURNED INCOME AS PER ORIGINAL RETURN OF INCOME AND IN THE ABSENCE OF THE ORDER BEING PREJUDICIAL TO THE INTEREST OF REVENUE, THERE IS NO MERIT IN EXERCISE OF JURISDICTION UNDER SECTION 2 63 OF THE ACT. ON PERUSAL OF RECORD, THE RELEVANT DETAILS AS REFERRED IN THE CHART REPRODUCED IN THE PARAS ABOVE, IS BEING REFERRED , THERE IS NO MERIT IN THE EXERCISE OF JURISDICTION BY THE COMMISSIONER UNDER SECTION 263 OF THE A CT SINCE THE ORDER PASSED BY THE ASSESSING OFFICER IS NOT PREJUDICIAL TO THE INTEREST OF REVENUE. 2 4 . IN THE RESULT, ALL THE APPEALS OF ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS 29 TH DAY OF SEPTEMBER , 201 7 . SD/ - SD/ - ( ANIL CHATURVEDI ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 29 TH SEPTEMBER , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3 . THE ADDL. CIT , RANGE - 5 , PUNE ; 4 . , , / DR A , ITAT, PUNE; 5 . / GUARD FILE. / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE