M/s Sree Bishnu Rice Mill, Burdwan V. A.C.I.T.,Circle-2, Burdwan

ITA 1684/KOL/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9836 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 16-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Assessee Lawyers: S K TULSIYAN
• Keywords: Commercial expediency; Condonation of delay; Set aside
• Section: 40A(3); 37; 263

Judgement Text

1 ITA NO. 1684/KOL/2019 M/S. SREE BISHNU RICE MILL, AY 2014-15 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( )BEFORE . , /AND . # . $ , ) [BEFORE SHRI J. SUDHAKAR REDDY, AM & SHRI A. T. VAR KEY, JM] I.T.A. NO. 1684/KOL/2019 ASSESSMENT YEAR: 2014-15 M/S. SREE BISHNU RICE MILL (PAN: ABNFS4859B) V VS. ASSISTANT COMMISSIONER OF INCOME- TAX, CIRCLE-2, BURDWAN. APPELLANT RESPONDENT FOR THE APPELLANT SHRI S. K. TULSIYAN, ADVOCATE FOR THE RESPONDENT DR. P. K. SRIHARI, CIT, DR DATE OF HEARING 27.08.2019 DATE OF PRONOUNCEMENT 20.09.2019 ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINS T THE ORDER OF PR. CIT, BURDWAN PASSED U/S. 263 OF THE INCOME-TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) DATED 27.03.2019 FOR AY 2014-15. IT HAS BEEN BROUGHT TO OUR NOTICE THAT THE APPEAL I S TIME BARRED BY 50 DAYS. CONDONATION OF DELAY PETITION HAS BEEN FILED BY THE ASSESSEE. FROM A PERUSAL OF THE SAME, IT IS REVEALED THAT THE WORKING PARTNER OF THE ASSESSE E WAS BED RIDDEN AND, THEREFORE, COULD NOT INSTRUCT COUNSEL WHO HAD TO FILE THE APPEAL BEFORE THE TRIBUNAL. COPY OF THE MEDICAL CERTIFICATE HAS BEEN BROUGHT TO OUR NOTICE. SINCE THE WORKING PARTNER OF THE ASSESSEE FIRM WAS UNABLE TO INSTRUCT LD. AR, THE APPEAL COULD NOT FILE BEFORE US ON TIME. SINCE THE DELAY IS NOT INTENTIONAL, WE ARE INCLINED TO CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA D FILED RETURN OF INCOME ON 30.11.2014 DISCLOSING TAXABLE INCOME OF RS.17,64,000/-. THERE AFTER, THE CASE WAS TAKEN UP FOR SCRUTINY. THE AO NOTED THAT THE ASSESSEE IS ENGAGED IN THE BU SINESS OF RUNNING OF RICE MILL WHERE IT MANUFACTURES RICE FROM PADDY. FROM THE MANUFACTURI NG AND TRADING ACCOUNT, THE AO OBSERVED THAT ASSESSEE HAD CLAIMED GROSS TURNOVER O F RS.64,93,16,230/- AND HAD PURCHASED PADDY FOR RS.63,33,84,264/-. THE AO ASKED THE ASSE SSEE TO FURNISH THE NAMES AND COMPLETE ADDRESS OF THE PERSONS FROM WHOM IT HAD PURCHASED P ADDY DURING THE YEAR UNDER CONSIDERATION. ACCORDING TO AO, THE ASSESSEE FURNI SHED THE LIST OF PERSONS FROM WHOM IT PURCHASED PADDY. THE AO NOTED THAT THE ASSESSEE HA D FURNISHED THE LEDGER ACCOUNT OF THE 2 ITA NO. 1684/KOL/2019 M/S. SREE BISHNU RICE MILL, AY 2014-15 SAID PERSONS IN ITS BOOKS OF ACCOUNT. THE AO OBSER VED FROM THE DETAILS OF PURCHASE AND FROM A PERUSAL OF THE PERSONAL LEDGER ACCOUNT OF TH E RESPECTIVE PARTIES REVEALED THAT MOST OF THE PAYMENTS TOWARDS PURCHASE OF PADDY WERE MADE IN CASH ALL IN EXCESS OF RS. 20,000/- IN A SINGLE DAY . THE AO ALSO TOOK NOTE THAT IN THE CASES WHERE C ASH WAS NOT PAID DIRECTLY, THEN IT WAS PAID BY BEARER CHEQUES ISSUED FROM ITS BANK ACCOUNT FROM ORIENTAL BANK OF COMMERCE, BURDWAN. THE AO NOTED CERTAIN PAYMENTS A S BELOW: I) A. BISWAS WAS PAID RS.11,70,000/- BY BEARER CHEQ UES; II) ABU KALAM MONDAL WAS PAID RS.5,20,63,560/- EITH ER IN CASH OR BY BEARER CHEQUES; III) AJAY AGARWAL WAS PAID MORE THAN RS.90,00,000/- IN CASH AND IV) ARJUN SHAW WAS PAID RS.93,00,834/- IN CASH 3. AFTER REFLECTING THE AFORESAID INSTANCES IN HIS ASSESSMENT ORDER, THE AO NOTED THAT THERE ARE SEVERAL OTHER INSTANCES OF PAYMENT BY CAS H AND THEREAFTER AO EXPRESSED HIS OPINION THAT THERE CAN BE NO FARMERS IN INDIA WHO COULD HAVE GRO WN PADDY VALUED MORE THAN RS. 1 CR. ACCORDING TO AO, THE ASSESSEE HAD ADMITTED THAT T HE PERSONS TO WHOM THE PAYMENTS MADE WERE NOT FARMERS BUT WERE SUPPLIERS O F PADDY, WHO USED TO PURCHASE PADDY FROM LOCAL FARMERS AND SELL THE SAME TO THE ASSESSE E. THE AO NOTED THAT THE ASSESSEE ADMITTED THAT THE AGGREGATE PAYMENTS MADE TO SUCH P ERSONS DURING THE YEAR WAS TO THE TUNE OF RS.14,08,50,854/-. THEREAFTER, THE AO ISSUED NO TICE TO THE ASSESSEE VIDE LETTER DATED 27.12.2016 ASKING WHY THE AMOUNT PAID TO SUPPLIERS OF PADDY IN VIOLATION OF THE PROVISION OF SECTION 40A(3) OF THE ACT COULD NOT BE DISALLOWE D, PURSUANT TO THE SCN, THE ASSESSEE REPLIED ON 28.12.2016 [A PORTION OF WHICH WAS REPRO DUCED BY THE AO] WHICH IS AS UNDER: THEY COLLECT PADDY FROM DIFFERENT FARMERS AND SUP PLIED IN THEIR OWN NAME TO THE RICE MILLS. THEREFORE THEY ARE FOND OF TO COLLECT THEIR PAYMENT S THROUGH CASH AND CONVENIENT TO PAY THE FARMERS IN CASH. THE SUPPLIERS ARE NOT HABITUATED TO TAKE THROUGH BANK. 4. AFTER TAKING NOTE OF THE REPLY OF THE ASSESSEE, THE AO THEREAFTER CONCLUDED THAT THE ASSESSEE HAD PAID CASH TO THE SUPPLIERS FOR PURCHAS E OF PADDY ALL IN EXCESS OF RS.20,000/- IN A SINGLE DAY AND THEREAFTER HE OBSERVED THAT THE LE GISLATURE HAS ENACTED THE PROVISION OF SEC. 40A(3) OF THE ACT AND RULE 6DD OF THE INCOME TAX RU LES, 1962 (HEREINAFTER REFERRED TO AS THE RULES) FOR A SPECIFIC PURPOSE AND THE ASSESSE E COULD NOT HAVE PAID TO THE SUPPLIERS OF PADDY IN EXCESS OF RS. 20,000/- ON A SINGLE DAY, WA S PLEASED TO DISALLOW THE AMOUNT OF RS.14,08,50,854/- AND THEN THE AO BY ASSESSMENT ORD ER DATED 29.12.2016 COMPUTED THE NET TAXABLE INCOME AND TAX PAYABLE OF THE ASSESSEE, WHI CH WAS AS UNDER: 3 ITA NO. 1684/KOL/2019 M/S. SREE BISHNU RICE MILL, AY 2014-15 RETURNED INCOME --- RS. 17,64,000/- ADD: DISALLOWANCE U/S. 40A(3) AS DISCUSSED ABOVE - -- RS.14,08,50,854/- TAXABLE INCOME AS PER THIS ORDER --- RS.14,26,1 4,854/- ROUNDED OFF TO --- RS.14,26,14,850/- 5. AGAINST THE AFORESAID ACTION OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) . MEANWHILE, THE LD. PR.CIT, BURDWAN ISSUED SHOW CAUSE NOTICE U/S. 263 OF THE ACT DATED 18.02.2019 WHEREIN HE EXPRESSED HIS DESIRE TO EXERCISE HIS REVISIONARY JURISDICTION AGAINST THE AFORESAID ASSESSMENT ORDER OF AO DATED 29.12.2016 ON THE FOLLOWING GROUNDS (RELEVANT PORTION OF SHOW CAUSE NOTICE IS REPRODUCE D): ISSUE NO. 1: AT PARA 5 OF ASSESSMENT ORDER, THE AO HAD DISALLOWE D EXPENSES INCURRED TO THE EXTENT OF RS.14,08,50,854/- TOWARDS PURCHASE OF PADDY, WHICH WERE HELD BY HIM TO BE IN VIOLATION OF PROVISIONS OF SECTION 40A(3) OF INCOME TAX. THIS D ISALLOWANCE WAS MADE BY AO AFTER CONSIDERING SUBMISSIONS DATED 28.12.2016 WHEREIN IT WAS STATED BY 4 ITA NO. 1684/KOL/2019 M/S. SREE BISHNU RICE MILL, AY 2014-15 5 ITA NO. 1684/KOL/2019 M/S. SREE BISHNU RICE MILL, AY 2014-15 6 ITA NO. 1684/KOL/2019 M/S. SREE BISHNU RICE MILL, AY 2014-15 7 ITA NO. 1684/KOL/2019 M/S. SREE BISHNU RICE MILL, AY 2014-15 8 ITA NO. 1684/KOL/2019 M/S. SREE BISHNU RICE MILL, AY 2014-15 6. PURSUANT TO THE SHOW CAUSE NOTICE AS STATED ABOV E, THE ASSESSEE FILED ITS OBJECTION BEFORE THE PR. CIT WHICH IS FOUND PLACED AT PAGE 11 TO 21 OF THE PAPER BOOK. THEREAFTER, THE LD. PR. CIT HAS PASSED THE IMPUGNED ORDER U/S. 263 OF THE ACT DATED 27.03.2019 WHEREIN HE CANCELLED THE ASSESSMENT ORDER DATED 29.12.2016 AND SET ASIDE THE MATTER BACK TO THE FILE OF THE AO TO PASS A FRESH ASSESSMENT ORDER. AGGRIEVED BY THE ACTION OF LD. PR. CIT THE ASSESSEE IS BEFORE US BY ASSAILING THE INVOCATION OF REVISIO NARY JURISDICTION BY LD PR CIT UNDER SECTION 263 OF THE ACT IN THE FACTS AND CIRCUMSTANC ES OF THE CASE. 7. ASSAILING THE ACTION OF LD PR CIT, THE LD. AR SU BMITTED THAT THE ASSESSEE IS RUNNING A RICE MILL AND MANUFACTURES RICE FROM PADDY. FOR D OING THIS BUSINESS ACTIVITY, THE ASSESSEE HAD TO PROCURE PADDY IN LARGE QUINTALS FROM FARMERS DIRECTLY OR THROUGH ITS AGENTS/SUPPLIERS/KACCHA ARAHATIYAS. ACCORDING TO L D. AR, THE FARMERS INSIST ON CASH AS CONSIDERATION FOR THEIR PADDY AND DOES NOT SELL PAD DY, IF ASSESSEE OR AGENTS/SUPPLIERS/KACCHA ARAHATIYAS GIVES CHEQUES IN THEIR NAME. MOREOVER ACCORDING TO LD. AR, THE PADDY PURCHASED BY ASSESSEE BEING AN AGRICULTURAL PRODUCE , THE PURCHASES OF PADDY MADE BY THE ASSESSEE THOUGH IN CASH CANNOT BE DISALLOWED, SINCE ASSESSEES CASE FALL IN THE KEN OF RULE 9 ITA NO. 1684/KOL/2019 M/S. SREE BISHNU RICE MILL, AY 2014-15 6DD(E)(I) AND (K), THEREFORE, THE AO HAS ACCEPTED P ARTLY THE CONTENTION OF ASSESSEE TO THE TUNE OF RS.12,66,63,446/- AND RESTRICTED THE ADDITI ONS TO THE TUNE OF RS.14,08,50,854/-, THOUGH ACCORDING TO LD. AR, THE CASE OF ASSESSEE IS THAT THE ENTIRE CASH PAYMENT OF RS.26,75,14,300/- CANNOT BE DISALLOWED, SINCE THE R EPRESENTATIVES OF THE ASSESSEE [AGENTS/SUPPLIERS/KACCHA ARAHATIYAS] WHO WERE IN THE FIELD HAD COLLECTED THE PADDY ON BEHALF OF ASSESSEE AND HAS MADE PAYMENT IN CASH TO FARMERS AND SO THE ACTION OF AO TO RESTRICT EVEN THE DISALLOWANCE TO THE TUNE OF RS.14 ,08,50,854/- HAS BEEN CHALLENGED BEFORE THE LD. CIT(A). HE DREW OUR ATTENTION TO RULE 6DD WHICH IS REPRODUCED AS UNDER: 6DD. NO DISALLOWANCE UNDER SUB-SECTION (3) OF SECTI ON 40A SHALL BE MADE WHERE ANY PAYMENT IN A SUM EXCEEDING TWENTY THO USAND RUPEES IS MADE OTHERWISE THAN BY A CROSSED CHEQUE DRAWN ON A BANK OR BY A CROSSED BANK DRAFT IN THE CASES AND CIRCUMSTANCES SPECIFIED HERE UNDER, NAMELY: (E): WHERE THE PAYMENT IS MADE FOR THE PURCHASE OF - (I) AGRICULTURAL OR FOREST PRODUCE; OR (II) THE PRODUCE OF ANIMAL HUSBANDRY (INCLUDING LIV ESTOCK, MEAT, HIDES AND SKINS) ***** OR DAIRY OR POULTRY FARMING; OR (III) FISH OR FISH PRODUCTS; OR (IV) THE PRODUCTS OF HORTICULTURE OR APICULTURE, TO THE CULTIVATOR, GROWER OR PRODUCER OF SUCH ARTIC LES, PRODUCE OR PRODUCTS. RULE 6DD(K) OF THE INCOME TAX RULES, 1962, READS AS FOLLOWS: (K)- WHERE THE PAYMENT IS MADE BY ANY PERSON TO HIS AGENT WHO IS REQUIRED TO MAKE PAYMENT IN CASH FOR GOODS OR SERVICES ON BE HALF OF SUCH PERSON. 8. THE LD. AR SUBMITTED THAT PAYMENTS TO SUPPLIERS AMOUNTING TO RS.26,75,14,300/- IN EXCESS OF RS.20,000/- PER DAY FALLS UNDER EXCEPTION TO SECTION 40A(3) OF THE ACT BY VIRTUE OF COMBINED READING OF RULE 6DD(E) AND RULE 6DD(K) OF THE RULES AS DISCUSSED IN THE PRECEDING PARAS. EXPLAINING THE MODUS OPERANDI, THE LD. AR SUBMITTED THAT THESE SUPPLIERS WERE MEDIATORS BETWEEN ASSESSEE FIRM AND THE FARMER S AND WERE ACTING AS AGENTS/KACCHA ARAHITAYAS ON BEHALF OF THE ASSESSEE FIRM IN PROCUR ING THE PADDY DIRECTLY FROM THE FARMERS. THE ENTIRE SUM OF RS.26,75,14,300/- PAID IN CASH FO R PURCHASE OF PADDY WAS MADE OUT OF BUSINESS EXPEDIENCY SINCE THE FARMERS RESIDING IN F AR FLUNG VILLAGES/SMALL TOWNS DO NOT ACCEPT CHEQUE PAYMENTS AND INSISTS FOR CASH PAYMENT S BECAUSE THE FARMERS HAD TO PAY IMMEDIATELY FOR GROCERIES ETC TAKEN BY THEM ON CRED IT. MORE SO, IT WAS POINTED OUT BY THE LD. AR THAT THERE WERE NO PROPER BANKING FACILITIE S IN THOSE AREAS FAR FLUNG VILLAGES WHERE 10 ITA NO. 1684/KOL/2019 M/S. SREE BISHNU RICE MILL, AY 2014-15 THE PADDY IS HARVESTED. THEREFORE FOR SMOOTH FUNCTI ONING OF THE BUSINESS AND UNINTERRUPTED SUPPLY OF PADDY WHICH IS THE LIFELINE OF THE BUSINE SS OF THE ASSESSEE, THE ASSESSEE WAS FORCED TO MAKE PAYMENT IN CASH OR THE FARMERS REFUSED TO S ELL THE PADDY TO ASSESSEE/AGENT/KACCHA ARAHATIYAS, WHICH IS A COMMERCIAL EXPEDIENCY. MOREO VER, THE LD. AR POINTED OUT THAT THE ASSESSEE HAD ALSO MADE CHEQUE PAYMENTS TO THE AGENT S/SUPPLIERS WHICH SUGGEST THAT THE ASSESSEE HAD NO ISSUES TO MAKE PAYMENTS EVEN THROUG H NORMAL BANKING CHANNELS, IF THE FARMERS ACCEPTED THE PAYMENT THROUGH CHEQUE. HOWEVE R, IN CASES WHERE THE FARMERS REFUSED TO TAKE THE PAYMENT IN CHEQUES AND INSISTS ON CASH PAYMENTS, THE ASSESSEE WAS FORCED TO MAKE CASH PAYMENTS TO THEM ALTHOUGH/ALBEIT THROUGH ITS AGENTS. FURTHER, IT WAS POINTED OUT THAT THE IDENTITY OF THE SUPPLIERS, GENUINENESS OF THE PURCHASES MADE AND PAYMENTS MADE TO THE FARMERS AND/OR THE AGENTS WERE NOT IN DISPUTE. IN THE PRESENT CASE, DURING THE YEAR THE ASSESSEE HAD REPORTED, PURCHASES OF PADDY TO THE TU NE OF RS.63,21,69,752/-, SALES THEREAFTER OF RS.64,93,16,230/- AND HAS SHOWN PROFITS OF RS.L, 84,18,155/-. ACCORDING TO LD. AR, THE SALES MADE BY THE ASSESSEE FIRM HAVE NOT BEEN DOUBT ED BY LD. PR CIT WHICH MEANS THAT THE TRADING RESULTS OF THE ASSESSEE WAS ACCEPTED BY EVE N THE LD. PR. CIT. HOWEVER, ACCORDING TO LD. PR. CIT, THE ASSESSMENT ORDER WAS FOUND TO BE E RRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ON THE SOLE GROUND THAT PAYMENTS WER E MADE IN CASH EXCEEDED RS.20,000/- ON A SINGLE DAY, WHICH FINDING THE LD. AR ASSAILS O N THE GROUND THAT THIS ISSUE WAS PROPERLY TAKEN NOTE BY THE AO AND ENQUIRED INTO BY THE AO. HE ALSO REFERRED TO THE FOLLOWING CASE LAWS TO BUTTRESS THE CONTENTION THAT SINCE THE ASSE SSEES CASE OF PURCHASE OF PADDY FELL IN THE KEN OF RULE 6DD(E)(I) AND 6DD(K) NO DISALLOWANCE WA S WARRANTED AT ALL:- I) ATTAR SINGH GURMUKH SINGH VS. ITO (1991) 59 TAXMAN 11 (SC); II) CIT VS. CPL TANNERY (2009) 318 ITR 179 (CAL); III) GIRDHARILAL GOENKA VS. CIT (1989) 179 ITR 0122; IV) RAMNAGAR PACHAI & C. S SHOP, ITA NO. 148/KOL/2015; V) MALABAR INDUSTRIAL CO. LTD. VS. CIT 243 ITR 83; VI) CIT VS. GABRIEL INDIA LTD. (1993) 71 TAXMAN 585 (BO M.); VII)DAWJEE DADABHOY & CO. VS. S. P. JAIN (1957) 31 ITR 872 (CAL) 11 ITA NO. 1684/KOL/2019 M/S. SREE BISHNU RICE MILL, AY 2014-15 9. FURTHER EXPLAINING THE FACTS, THE LD. AR SUBMITT ED THAT THE ACTION OF THE AO IN ACCEPTING PART PAYMENT MADE BY CASH OF THE TOTAL AM OUNT OF RS.26,75,14,300/- I.E. TO THE TUNE OF RS.12,66,63,446/- NOT TO BE DISALLOWED (RS. 26,75,14,300/- - RS. 14,08,50,854/- = RS.12,66,63,446/-) CANNOT BE TERMED AS ERRONEOUS IN VIEW OF VARIOUS JUDICIAL PRECEDENTS CITED ABOVE. ACCORDING TO LD. COUNSEL, AS PER THE HONBLE SUPREME COURTS DECISION IN MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 243 ITR 83 (SC) THE TWIN CONDITIONS I.E. THE AOS ORDER SHOULD BE ERRONEOUS AS WELL AS PREJUDICI AL TO THE INTEREST OF THE REVENUE SHOULD BE SATISFIED, BEFORE THE PR CIT USURP THE REVISIONA RY JURISDICTION UNDER SECTION 263 OF THE ACT. ACCORDING TO LD. AR, EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF AO CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDING TO HIM, THE HONBLE SUPREME COURT HAS CLEARLY HELD THAT WHEN TH E AO HAS ADOPTED ONE OF THE COURSE PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS TO T HE REVENUE, IT CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF REVENUE; AND WHERE T WO VIEWS ARE POSSIBLE IN THE GIVEN FACTS OF THE CASE, AND THE AO HAS TAKEN ONE VIEW WITH WHICH LD. PR. CIT DOES NOT AGREE, CANNOT BE A GROUND TO INVOKE REVISIONARY JURISDICTION SINCE ACT ION OF AO CANNOT BE TREATED AS ERRONEOUS. FURTHER, THE LD. AR EXPLAINED THAT THE ISSUE OF CAS H PAYMENT FOR PURCHASE OF PADDY WAS TAKEN NOTE BY THE AO DURING ASSESSMENT PROCEEDINGS AND HE MADE ENQUIRIES ON THIS ISSUE AND AFTER GOING THROUGH THE ORAL AND DOCUMENTARY SU BMISSION MADE BY ASSESSEE/LD AR AND AFTER PERUSAL OF THE BOOKS OF ACCOUNT OF THE ASSESS EE, HAS TAKEN A VIEW AFTER APPLICATION OF MIND, WHICH IS DEFINITELY A PLAUSIBLE VIEW AND, THE REFORE, CANNOT BE INTERFERED WITH U/S. 263 OF THE ACT BY THE LD. PR. CIT AS HELD BY THE HONBL E SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD. (SUPRA), AND THEREFORE, THE ASSESSMENT ORD ER FRAMED BY AO CANNOT BE TREATED AS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE UNLESS THE VIEW TAKEN BY THE AO IS UNSUSTAINABLE IN LAW, WHICH IS NOT THE CASE OF L D PR CIT. THEREFORE, HE CONTENDED THAT THE LD. PR. CITS ACTION OF INTERFERING WITH THE OR DER OF AO EXERCISING REVISIONAL JURISDICTION IS WITHOUT HAVING JURISDICTION AND, THEREFORE, NULL IN THE EYES OF LAW. 10. PER CONTRA, THE LD. DR VEHEMENTLY OPPOSING THE ARGUMENT OF THE LD. AR CONTENDED THAT ON A PERUSAL OF THE ASSESSMENT ORDER IT IS CLE AR THAT INITIALLY AO WAS OF THE OPINION THAT THE ENTIRE PADDY PROCURED BY THE ASSESSEE WAS NOT D IRECTLY FROM THE FARMERS AND, THEREFORE, 12 ITA NO. 1684/KOL/2019 M/S. SREE BISHNU RICE MILL, AY 2014-15 NEED TO BE DISALLOWED U/S. 40A(3) OF THE ACT. HOWE VER, THE AO DILUTES/CHANGES HIS STAND WHEN HE CONCLUDES THE ASSESSMENT ORDER AND THAT TOO BY SIMPLY RELYING ON THE SUBMISSION OF THE ASSESSEE DATED 28.12.2016. ACCORDING TO LD. CI T, DR, THE AO IN THIS CASE DID NOT ENQUIRE AT ALL THE CASH PAYMENTS MADE BY THE ASSESS EE EVEN THOUGH THE ASSESSEE HAD FAILED TO IDENTIFY THE PAYMENTS AGAINST WHOM PURCHASES OF PAD DY WERE FOUND BY HIM TO HAVE BEEN COVERED BY ANY EXCEPTIONAL CIRCUMSTANCES PROVIDED I N RULE 6DD. THIS LACK OF ENQUIRY, ACCORDING TO LD. CIT, DR, HAS RESULTED IN THE ASSES SMENT ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND, THE REFORE, ACCORDING TO HIM, THE LD. PR. CIT HAS RIGHTLY INVOKED SECTION 263 OF THE ACT AND HAS CANCELLED THE ORDER WHICH NEED NOT BE DISTURBED. 11. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RUNNING OF RICE MILL WHERE IT MANUFACTURES RICE FROM PADDY. IT IS NOTED THAT IN THIS ASSESSMENT YEAR, THE ASSESSEE FIRM HAS CLAIMED GROSS TURNOVER OF RS.64,93,162,230/- AND HA D PURCHASED PADDY FOR RS.63,33,84,264/-. DURING THE ASSESSMENT PROCEEDIN GS, THE AO ASKED THE ASSESSEE TO FURNISH THE DETAILS LIKE NAME, COMPLETE ADDRESS OF THE PERSONS FROM WHOM ASSESSEE HAD PURCHASED PADDY. PURSUANT TO THE SAME, THE ASSESSE E FURNISHED THE DETAILS AND THE AO AFTER GOING THROUGH THE LIST OF PERSONS FROM WHOM IT PURC HASED THE PADDY AND THE LEDGER ACCOUNT OF THE SAID PERSONS REFLECTED IN ASSESSEES BOOKS O F ACCOUNT, THE AO NOTED THAT THE ASSESSEE HAD MADE PAYMENTS MOSTLY BY WAY OF CASH IN EXCESS O F RS. 20,000/- ON A SINGLE DAY. FURTHER, THE AO ALSO NOTED THAT CERTAIN PAYMENTS WE RE MADE BY BEARER CHEQUES FROM ITS BANK ACCOUNT HELD IN ORIENTAL BANK OF COMMERCE, BUR DWAN. THE AO NOTED THAT CERTAIN PERSONS THROUGH WHOM PAYMENTS WERE MADE WERE IN EXC ESS OF MORE THAN A CRORE. TAKING NOTE OF THIS FACT THE AO OBSERVED THAT THERE CANNOT BE ANY FARMER WHO HAS LAND WHICH CAN PRODUCE PADDY WORTH MORE THAN A CRORE OF RUPEES. TH EREFORE, HE ASKED THE ASSESSEE TO EXPLAIN THE MODUS OPERANDI OF PROCUREMENT OF PADDY. THE AO NOTES THAT ASSESSEE HAD ADMITTED THAT THESE PAYMENTS WERE MADE TO SUPPLIERS WHO HAD COLLECTED PADDY FROM THE FARMERS. THE AO THEREAFTER, NOTES THAT THE ASSESSE E HAD ADMITTED THAT IT HAD MADE AGGREGATE PAYMENT TO THE SUPPLIERS OF RICE TO THE TUNE OF RS. 14,08,50,854/- AND THEREAFTER HE MADE A 13 ITA NO. 1684/KOL/2019 M/S. SREE BISHNU RICE MILL, AY 2014-15 DISALLOWANCE OF RS.14,08,50,854/- WHICH ACTION OF T HE AO HAS BEEN INTERFERED BY THE LD. PR. CIT WHILE EXERCISING HIS REVISIONAL JURISDICTION U/ S. 263 OF THE ACT. THE LD. PR. CIT HAS FOUND TWO FAULTS ON WHICH HE HAS ISSUED SHOW CAUSE NOTICE (SCN) WHEREIN ISSUE NO. 1, THE LD. PR. CIT NOTED THAT THOUGH THE ASSESSEE HAD MADE PAYMENTS IN CASH EXCEEDING RS.20,000/- A DAY TO THE TUNE OF RS.26,75,15,300/- THE AO HAS RESTRICTED THE DISALLOWANCE ONLY TO THE TUNE OF RS.14,08,50,854/- WITHOUT ENQUI RING THE FACTS WHEN THE ASSESSEE FAILED TO IDENTIFY THE PAYMENTS AGAINST PURCHASES WHICH WERE FOUND BY THE AO TO HAVE BEEN COVERED BY ANY OF THE EXCEPTIONAL CIRCUMSTANCES PROVIDED IN RULE 6DD. THUS, ACCORDING TO LD. PR. CIT, LACK OF ENQUIRY BY THE AO ON THIS ISSUE HAS RE SULTED IN UNDER-ASSESSMENT OF RS.12,66,63,446/- (RS.26,75,14,300 RS.14,08,50,85 4/-). IN THIS RESPECT WE NOTE THAT THE ASSESSEE HAD BROUGHT TO THE NOTICE OF THE AO DURING THE ASSESSMENT PROCEEDING THAT ASSESSEE HAD MADE PURCHASES OF PADDY BY WAY OF CASH OF A QUA NTITY OF 125809 QUINTAL FOR VALUE OF RS.14,08,50,854/- FROM THE SUPPLIERS (AGENTS/KUTCHA ARAHITAYAS) WHICH HAS BEEN NOTED BY THE LD. PR. CIT AT PAGE 9 OF THE IMPUGNED ORDER. T HIS FACT HAS ALSO BEEN TAKEN NOTE BY THE AO IN PARA 3 OF HIS ASSESSMENT ORDER WHEREIN THE AO NOTES .. HE ALSO ADMITTED THAT AGGREGATE PAYMENTS MADE TO SUCH PERSONS DURING THE YEAR WAS RS.14,08,50,854/-. THUS, THE AO TAKING NOTE THAT THE ASSESSEE HAD PURCHASED PADDY FROM SUPPLIERS, HAS DISALLOWED THE SAID AMOUNT OF RS.14,08,50,854/-. THE AOS DISA LLOWANCE U/S. 40A(3) OF THE ACT, ACCORDING TO LD. AR, WAS THAT THE ASSESSEE HAS NOT MADE THE PURCHASE OF THE PADDY DIRECTLY FROM THE FARMERS OF THE SAID AMOUNT [WHICH ACTION H AS BEEN PROMPTLY CHALLENGED BY THE ASSESSEE BEFORE THE LD. CIT(A)]. WE NOTE THAT THE AO HAD ACCEPTED THE RETURNED INCOME OF RS.17,64,000/- AND HAS NOT DISTURBED THE GROSS TURN OVER OF RS.64,93,16,230/- AND THE PURCHASE OF PADDY FOR RS.63,33,84,264/-. THE LD. P R. CIT ALSO HAS NOT FOUND ANY FAULT WITH THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE IN THE REGULAR COURSE OF BUSINESS AND HAS ACCEPTED THE FIGURES SHOWN BY THE ASSESSEE IN ITS BOOKS IN RESPECT OF PURCHASE OF PADDY. THOUGH THE ASSESSEE HAD CLAIMED BEFORE THE AO THAT IT HAD PURCHASED PADDY THROUGH CHEQUE (BEARER) AS WELL AS CASH FROM FARMERS AS WELL AS SU PPLIERS/AGENTS/ARAHITAYAS, AND THAT SAID ACTION OF ASSESSEE IS NOT HIT BY SEC. 40A(3) OF THE ACT SINCE THE ACTION OF ASSESSEE FALLS IN THE KEN OF RULE 6DD(E)(I) READ ALONG WITH RULE 6DD(K) H AS NOT BEEN COMPLETELY ACCEPTED BY THE AO. WE NOTE THAT AO CALLED FOR EXPLANATION FROM AS SESSEE IN RESPECT OF CASH PAYMENT AND 14 ITA NO. 1684/KOL/2019 M/S. SREE BISHNU RICE MILL, AY 2014-15 AFTER GOING THROUGH THE EXPLANATIONS GIVEN BY ASSES SEE ON 16.12.2016 AND 28.12.2016, THE AO HAS RESTRICTED THE DISALLOWANCE TO THE TUNE OF R S.14,08,50,854/- WHICH PART OF PAYMENT IN CASH ACCORDING TO AO, DID NOT QUALIFY TO GET EXC EPTION UNDER RULE 6DD MEANING AFTER THE AO RAISED HIS INITIAL INTENTION TO DISALLOW THE ENT IRE CASH PAYMENT TO THE TUNE OF RS.26,75,14,300/- HOWEVER AFTER GOING THROUGH THE R EPLIES OF ASSESSEE DATED 16.12.2016 AND 28.12.2016 AND AFTER GOING THROUGH THE LEDGER ACCOU NT AND BOOKS OF ACCOUNT OF THE ASSESSEE HAS ACCEPTED PARTLY THE CLAIM OF THE ASSESSEE TO TH E TUNE OF RS.12,66,63,446/- AND DISALLOWED U/S. 40A(3) OF THE ACT RS.14,08,50,854/-. HOWEVER, ACCORDING TO LD. AR, THE ENTIRE PURCHASE OF PADDY TO THE TUNE OF RS.26,75,14,300/- FALLS IN THE KEN OF RULE 6DD(E)(I) READ ALONG WITH RULE 6DD(K) AND, THEREFORE, COULD NOT HA VE BEEN AT THE FIRST PLACE DISALLOWED BY AO U/S. 40A(3) OF THE ACT. IN ANY EVENT, ACCORDING TO LD. AR, THE AO HAS PARTLY ACCEPTED THE CLAIM OF THE ASSESSEE AND HAS TAKEN NOTE THAT O UT OF ITS PURCHASE IN CASH OF RS.26,75,14,300/- ONLY RS.14,08,50,854/- NEED TO BE DISALLOWED BECAUSE THE PAYMENTS HAVE BEEN MADE BY THE ASSESSEE TO THE SUPPLIER/AGENT/ARA HITAYAS AND NOT DIRECTLY TO THE FARMERS WHICH ACTION OF AO CLEARLY SHOWS DUE APPLICATION OF MIND AFTER EVALUATION OF FACTS AND CANNOT BE TERMED AS ERRONEOUS ON THE GROUND OF LACK OF ENQUIRY AND THE ACTION OF AO CANNOT BE TERMED AS A CASE OF NO INQUIRY. 12. WE NOTE THAT THE LD. PR. CIT HAS FOUND FAULT WI TH THE AOS ACTION IN NOT DISALLOWING THE DIFFERENCE OF PURCHASE OF PADDY IN CASH TO THE TUNE OF RS.12,66,63,446/-. WE NOTE THAT THE ASSESSEE HAD BROUGHT TO THE NOTICE OF THE AO DU RING HIS ENQUIRY THAT THE ASSESSEE HAD PURCHASED FROM SUPPLIERS WHO WERE DEPUTED AS ITS AG ENTS/ARAHITAYAS TO PROCURE THE PADDY FROM DIFFERENT VILLAGES FROM THE FARMERS. EXPLAININ G THE MODUS OPERANDI ADOPTED BY THE ASSESSEE FIRM TO PROCURE THE PADDY FOR ITS RICE MIL LS, THE LD. AR HAS SUBMITTED THAT ASSESSEE HAS ENTRUSTED PERSONS/INDIVIDUAL WHO ACT AS AGENTS/ ARAHATIYAS TO PROCURE PADDY FROM EARMARKED VILLAGES WHICH ARE SITUATED AT FAR FLUNG AREAS. THESE AGENTS/ARAHITAYAS GO TO THE EARMARKED VILLAGES AND FIRST EN-CASHES THE BEARER C HEQUES GIVEN TO THEM BY THE ASSESSEE FROM THE ORIENTAL BANK OF COMMERCE. THEREAFTER, T HESE AGENTS PURCHASES PADDY FROM FARMERS ON BEHALF OF ASSESSEE AND GIVES CASH TO FAR MERS. HOWEVER, IN CASES, WHERE THE VILLAGES ARE FAR AWAY FROM THE BANK, SAY MORE THAN 100 KMS., THE AGENTS HAD TO COLLECT CASH 15 ITA NO. 1684/KOL/2019 M/S. SREE BISHNU RICE MILL, AY 2014-15 FROM ASSESSEE FOR DISBURSEMENT OF MONEY TO THE FARM ERS TO PURCHASE PADDY. AND SINCE THE ASSESSEE RICE MILL NEEDS THOUSANDS OF QUINTALS OF P ADDY FOR PRODUCTION OF RICE, THIS MODE OF COLLECTION OF PADDY IS RESORTED TO BY THE ASSESSEE OR ELSE ITS BUSINESS HAS TO BE SHUT DOWN. THE ASSESSEES ACTION OF PROCUREMENT/COLLECTING PAD DY WHICH IS UNDISPUTEDLY AN AGRICULTURAL PRODUCE DIRECTLY AS WELL AS INDIRECTLY THROUGH ITS AGENTS FALLS IN THE KEN OF RULE 6DD(E)(I) AS WELL AS RULE 6DD(K). WE NOTE THAT EVEN THOUGH THE ASSESSEE EXPLAINED THE MODUS OPERANDI TO THE AO, HE ACCEPTED ONLY CERTAIN WRITTEN PART OF REPLIES AND HAS NOT BOTHERED TO APPRECIATE THE MODUS-OPERANDI EXPLAINED BY LD. AR OF THE ASSES SEE BEFORE HIM AND HAS DISALLOWED RS.14,08,50,854/- PAID BY THE ASSESSEE TO THE SUPPL IERS/AGENT/ARAHITAYAS. WE NOTE FROM A PERUSAL OF PAGE 95 OF THE PAPER BOOK, THE LEDGER OF SHRI A. BISWAS (ONE OF THE SUPPLIER/AGENT/ARAHITAYAS) THAT THE ASSESSEE HAD MA DE A PAYMENT OF CASH TO THE TUNE OF RS.11,70,000/- ON VARIOUS DATES. PAGE 96 OF PAPER BOOK REVEALS THE WEIGHMENT OF PADDY IN QUINTAL FROM FOUR DIFFERENT PARTIES I.E. DINABANDHU GHOSH, AZIZUL MALLICK, HARU SARKAR AND GOPAL GHOSH HAD SHOWN THAT TOTAL QUANTITY OF 430 QN TL IS SHOWN AND SEPARATE AMOUNT OF JALPANI OF RS.2332/- HAS BEEN REFLECTED WHICH MEANS MR. A. BISWAS (SUPPLIER) HAD COLLECTED FROM FOUR FARMERS 430 QNTL OF PADDY FOR A CASH PAY MENT OF RS.4,67,668/- AND HAS MADE PAYMENTS TO THEM. IT IS ALSO REVEALED THAT FOR HIS SERVICES RENDERED, THE ASSESSEE HAD MADE PAYMENT OF RS.2332/- (JALPANI). PAGE 97 TO 100 OF PAPER BOOK ARE WEIGHMENT CERTIFICATE ISSUED BY SHRI BISHNU WEIGH BRIDGE IN RESPECT OF PA DDY PROCURED BY SHRI A. BISWAS. WE NOTE THAT IN THE AFORESAID FACTS AND CIRCUMSTANCES THE AOS ACTION OF NOT DISALLOWING RS.12,66,63,446/- CANNOT BE TERMED AS ERRONEOUS SIN CE THE AO HAS MADE ENQUIRIES ON THIS ISSUE. TO BE PRECISE THE AO HAS MADE ENQUIRIES ON THE CASH PAYMENTS MADE BY THE ASSESSEE AND AFTER ELICITING THE EXPLANATION OF THE ASSESSEE AND AFTER GOING THROUGH THE RECORDS HAD PARTLY ACCEPTED THE ASSESSEES CONTENTION, THEREFOR E, THE AOS ACTION CANNOT BE TERMED AS ERRONEOUS FOR WANT OF ENQUIRY. MOREOVER, ON THIS IS SUE SINCE WE HAVE MADE A FINDING THAT THIS WAS NOT A CASE OF LACK OF ENQUIRY ON THE PART OF THE AO, THE LD. PR. CIT IF HE WANTED TO INTERFERE OUGHT TO HAVE HIMSELF ENQUIRED ON THE FAC TS OF THIS ISSUE AND SHOULD HAVE RECORDED A FACTUAL FINDING TO UPSET THE DECISION OF THE AO T O ALLOW RS.12,66,63,446/- AS ALLOWABLE EXPENDITURE AND THEREBY NOT HIT BY SEC. 40A(3) OF T HE ACT. SINCE IN THIS CASE, THE LD. PR. CIT HAS NOT BEEN ABLE TO UPSET THE FINDING OF THE A O WHO HAS MADE ENQUIRY, THE ACTION OF 16 ITA NO. 1684/KOL/2019 M/S. SREE BISHNU RICE MILL, AY 2014-15 THE AO CANNOT BE TERMED ON THIS ISSUE AS A CASE OF NO ENQUIRY. THUS THE ACTION OF THE AO ON THIS ISSUE CANNOT BE TERMED AS ERRONEOUS FOR LAC K OF ENQUIRY. THE AOS ACTION IS BASED ON A PLAUSIBLE VIEW IN THE LIGHT OF THE JUDICIAL PREC EDENTS CITED BEFORE US. THEREFORE, THE ACTION OF AO DOES NOT SATISFY THE TWIN CONDITIONS FOR INVO KING REVISIONAL JURISDICTION U/S. 263 OF THE ACT, IN THE LIGHT OF THE RATIO OF THE DECISION OF HONBLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD. (SUPRA). THE VIEW OF THE AO IN THE LIGHT OF THE FACTS DISCUSSED AT ANY RATE CANNOT BE TERMED AS UNSUSTAINABLE IN LAW AND, THE REFORE, ON THIS ISSUE THE AOS ACTION CANNOT BE FAULTED WITH FOR INVOCATION OF SEC. 263 JURISDICTION BY PR. CIT. 13. COMING TO THE ISSUE NO. 2 THE LD. PR. CIT FOUND THAT THE ASSESSEE HAD MADE EXCESS CLAIM UNDER THE HEAD PURCHASE OF PADDY TO THE TUNE OF RS.12,14,512/- (RS.63,33,84,264/- - RS.63,21,69,752/-). ACCORDING TO LD. AR, THE ASSES SEE HAD DEBITED A FEW EXPENSES INADVERTENTLY IN THE PURCHASE LEDGER A/C DUE TO WHI CH DIFFERENCE OF RS.12,14,512/- AROSE IN THE PURCHASE LEDGER. THE BREAKUP OF THE SAID SUM O F RS.12,14,512/- IS TABULATED AS UNDER: DATE ACCOUNT AMOUNT REMARKS 5/4/2013 K. D. ENTERPRISE 1,00,000 GUNNY BAG PURCHA SE, LEDGER ENCLOSED AT PAGE 227 26/04/2013 OTHER EXPENSES 19,750/- OTHER EXPENSES 20.05.2013 WBSEDCL 10,49,537/- ELECTRICITY BILL ENC LOSED AT PAGE 228-230 20.07.2013 OTHER EXPENSES 18,215/- OTHER EXPENSES 12.09.2013 OTHER EXPENSES 18,000/- OTHER EXPENSES 12/12/2013 OTHER EXPENSES 9,010/- OTHER EXPENSES TOTAL 12,14,512/- ACCORDING TO LD. AR, THE SAID DIFFERENCE WAS EXPLAI NED TO THE LEARNED AO DURING ASSESSMENT AND SINCE THE DIFFERENCE WAS RECONCILED, NO ADDITIO N WAS MADE BY HIM IN THIS REGARD. 14. WE NOTE THAT IN THE ORDER PASSED U/S 263 OF THE ACT, IT HAS BEEN ALLEGED THAT THE ISSUE OF DIFFERENCE IN PURCHASES WAS NOT CAREFULLY EXAMIN ED BY THE ASSESSING OFFICER BEFORE ALLOWING ASSESSEE'S CLAIM FOR PURCHASES IN THE PURC HASE LEDGER ACCOUNT AND THAT NO QUERY WAS RAISED BY THE AO IN THIS REGARD WHICH MAKES THE ORDER OF AO ERRONEOUS. IN THIS CONTEXT, THE LD. AR SUBMITTED THAT DURING ASSESSMENT, THE AO NOTED THE SAID DIFFERENCE AND ASKED THE LD. AR OF THE ASSESSEE TO EXPLAIN THE DISCREPAN CY. ACCORDINGLY, THE LD. AR OF THE ASSESSEE EXPLAINED AND RECONCILED THE DIFFERENCE OF RS.12, 14,512/- IN THE PURCHASES A/C. IT 17 ITA NO. 1684/KOL/2019 M/S. SREE BISHNU RICE MILL, AY 2014-15 WAS EXPLAINED BEFORE THE AO THAT INADVERTENTLY A FE W EXPENSES HAD BEEN DEBITED TO THE PURCHASES LEDGER A/C. WE NOTE THAT THESE EXPENSES A RE OTHERWISE ALLOWABLE U/S 37 OF THE ACT. IT WAS BROUGHT TO OUR NOTICE THAT THE AO EXAM INED THE AFORESAID FACTS WITH REFERENCE TO THE PURCHASES LEDGER AND FOUND NO INFIRMITY IN THE EXPLANATIONS MADE BY THE ASSESSEE AND AS SUCH, NO ADDITION WAS MADE IN THE ASSESSMENT ORD ER. 15. IT HAS TO BE KEPT IN MIND THAT WHERE THE ASSES SING OFFICER DURING THE SCRUTINY ASSESSMENT PROCEEDING RAISED A QUERY ORAL/WRITTEN, WHICH WAS ANSWERED BY THE ASSESSEE TO THE SATISFACTION OF THE AO AND THE SAME WAS NOT RE CORDED/REFLECTED IN THE ASSESSMENT ORDER BY THE AO, ITSELF CANNOT BE A BASIS FOR DRAWING AN ADVERSE CONCLUSION BY THE PRINCIPAL COMMISSIONER THAT NO ENQUIRY WITH RESPECT TO THE I SSUE WAS MADE BY THE AO TO ENABLE HIM TO ASSUME JURISDICTION UNDER SECTION 263 OF THE ACT . IF THE AO ALLOWS THE CLAIM, ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, ON AN ENQUIRY MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS AFORESTATED, THE DECISION OF AO CANNOT BE HELD TO BE ERRONEOUS, ON THE GROUND THAT THERE IS NO DISCUSSION IN THAT R EGARD IN THE ASSESSMENT ORDER. THE AO WHILE SCRUTINIZING THE BOOKS OF THE ASSESSEE WILL C OME ACROSS NUMEROUS FACTS WHICH HE MAY RAISE QUERY AND ONCE THE ASSESSEE OR THE AR EXPLAIN S TO THE SATISFACTION OF AO, IT IS UPTO THE AO TO MENTION ABOUT THE SAME IN THE ASSESSMENT ORDE R OR NOT. SIMPLY BECAUSE THE AO DID NOT DISCUSS THE QUERY WHICH HE RAISED DURING ASSESS MENT PROCEEDINGS AND DID NOT INCORPORATES THE ASSESSEES EXPLANATION OR HIS SATI SFACTION, DOES NOT GIVE SCOPE TO THE LD. PR. CIT TO INVOKE SEC. 263 JURISDICTION ON LACK OF ENQU IRY ON THE PART OF AO. WE NOTE THAT THE FAULT NO. 2 WAS SPELLED OUT BY THE LD. PR. CIT IN T HE SCN DATED 18.02.2019 (SUPRA) AND THE ASSESSEE HAD REPLIED IN DETAILS WHICH REPLY IS FOUN D PLACED AT PAGES 11 21 OF THE PAPER BOOK. TO THIS SPECIFIC FAULT NO. 2, THE ASSESSEES REPLY IS FOUND AT PAGE 18 OF THE PAPER BOOK WHEREIN ASSESSEE POINTED OUT AT PARA 22, THAT DIFFE RENCE IN PURCHASE OF PADDY FIGURE BETWEEN STATEMENT AND P&L ACCOUNT WAS DUE TO INADVERTENT ER ROR OF BOOKING OTHER ALLOWABLE EXPENSES INTO THE PURCHASES. WHEN THE ASSESSEE EXP LAINED THIS FACT TO THE AO, THE AO ACCEPTED THE SAME AND DID NOT DRAW ANY ADVERSE INF ERENCE AGAINST THE ASSESSEE, HOWEVER, THE AO DID NOT MENTION THE SAME WHILE FRAMING THE A SSESSMENT ORDER, WHICH CANNOT BE TREATED AS A CASE OF FAILURE TO ENQUIRE BY AO. BE THAT AS IT MAY BE, WHEN THE ASSESSEE 18 ITA NO. 1684/KOL/2019 M/S. SREE BISHNU RICE MILL, AY 2014-15 REPLIED TO THE SCN ISSUED BY THE LD. PR. CIT ABOUT LACK OF ENQUIRY BY AO ON THIS DISCREPANCY TO THE TUNE OF RS.12,14,512/- AND WHEN THE ASSESSEE ASSERTED THAT IT WAS QUERIED BY THE AO AND THE ASSESSEE HAD EXPLAINED TO THE AO AND RECONCILED THE INADVERTENT ERROR, THE LD. PR. CIT OUGHT TO HAVE CALLED THE AO TO ASCE RTAIN WHETHER THE ASSESSEES EXPLANATION IS CORRECT OR NOT I.E. THE FACT OF ENQUIRY BY AO AN D ASSESSEES EXPLANATION. IN ANY WAY THE ASSESSEE HAS EXPLAINED THE DIFFERENCE OF RS.12,14, 512/- TO LD. PR. CIT AND CONTENDED THAT CERTAIN ALLOWABLE EXPENSES HAS BEEN INADVERTENTLY BOOKED IN THE PURCHASE, THIS FACT AS SHOWN IN THE CHART (SUPRA) WAS BEFORE THE LD. PR. C IT, WHICH GOES ON TO SHOW THAT CERTAIN ALLOWABLE EXPENSES HAVE BEEN INADVERTENTLY BOOKED I NTO THE PURCHASES WHICH FACT HAS NOT BEEN FOUND TO BE WRONG OR ERRONEOUS, SO THE SECOND LIMB THAT THE PREJUDICIAL TO THE INTEREST OF REVENUE IS NOT SATISFIED. SO, THE TWIN CONDITIO NS ARE NOT SATISFIED FOR INVOKING SEC. 263 JURISDICTION. IN THIS REGARD WE MAY GAINFULLY REFER TO THE HONBLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ASHISH RAJPA L (2010) 320 ITR 0674 (DELHI), IT WAS HELD THAT, THE FACT THAT A QUERY WAS RAISED DURING THE COURSE OF SCRUTINY WHICH WAS SATISFACTORILY ANSWERED BY THE ASSESSEE BUT DID NOT GET REFLECTED IN THE ASSESSMENT ORDER, WOULD NOT BY ITSELF LEAD TO A CONCLUSION THAT THERE WAS NO ENQUI RY WITH RESPECT TO TRANSACTIONS CARRIED OUT BY THE ASSESSEE GIVING THE CIT JURISDICTION TO INVO KE S. 263, MORE SO WHEN THE TRIBUNAL HAD FOUND THAT THERE HAD BEEN AN ENQUIRY WHICH HAD NOT BEEN CONDUCTED WITH 'UNDUE HASTE'. THEREFORE, IN THE FACTS AND CIRCUMSTANCES DISCUSSED SUPRA, WE ARE OF THE CONSIDERATE OPINION THAT THE ASSESSMENT ORDER FRAMED BY THE AO IS NEITH ER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THEREFORE, THE LD. PR. CITS IMPUGNED ACTION OF INTERFERING WITH THE ORDER OF AO INVOKING THE REVISIONAL JURISDICTIO N UNDER SECTION 263 OF THE ACT IS WITHOUT JURISDICTION AND, THEREFORE, NULL IN THE EYES OF LA W AND SO IT IS QUASHED. 16. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 20TH SEPT EMBER, 2019 SD/- SD/- (J. SUDHAKAR REDDY) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20TH SEPTEMBER, 2019 JD.(SR.P.S.) 19 ITA NO. 1684/KOL/2019 M/S. SREE BISHNU RICE MILL, AY 2014-15 COPY OF THE ORDER FORWARDED TO: 1)APPELLANT M/S. SREE BISHNU RICE MILL, MANKAR, NEAR RAILWAY STATION., P.O. BUDBUD, BURDWAN-713 144, WEST BENGAL 2) RESPONDENT ACIT, CIRCLE-2, BURDWAN. 3) PR. CIT, BURDWAN. 4)DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL ) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR