Smt. Sadiq Sheikh., Goa V. Dy. Commissioner of Income Tax, Central Circle., Panaji

ITA 172/PAN/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8434 (ITAT-PANAJI)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-08-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 21-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BANJUL BARTHAKUR LD
• Assessee Lawyers: P Y VAIDYA; SAMIR C ANVEKAR
• Keywords: Capital asset; Gift; Recovery proceedings; Depreciation; Opportunity of being heard; Additional depreciation; Period of limitation; Capital receipt; Reason to believe; Capital expenditure
• Section: 143(3); 142(1); 153A; 263; 63; 132; 10; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NOS. 170 & 17 2 /PNJ/2014 : (ASST. YEAR : 2006 - 07 & 2010 - 11) SHRI SADIQ SHEIKH 201A, 2 ND FLOOR, DEMPO TRADE CENTRE, PATTO, PANAJI, GOA PAN : AMFPS2073J (APPELLANT) VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, PANAJI, GOA (RESPONDENT) ITA NOS. 17 1 & 173/PNJ/2014 : (ASST. YEAR : 2006 - 07 & 2010 - 11) SMT. SADIA SHEIKH 201A, 2 ND FLOOR, DEMPO TRADE CENTRE, PATTO, PANAJI, GOA PAN : AKQPS9076A (APPELLANT) VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, PANAJI, GOA (RESPONDENT) ASSESSEE BY : P.Y. VAIDYA, ADV. & SAMIR C. ANVEKAR, CA REVENUE BY : BANJUL BARTHAKUR, LD. DR DATE OF HEARING : 07/08/2014 DATE OF PRONOUNCEMENT : 22 /08/2014 O R D E R PER P.K. BANSAL 1. ALL THE FOUR APPEALS FILED BY THE ASSESSEE AGAINST THE RESPECTIVE ORDERS OF CIT PASSED U/S 263 OF THE INCOME TAX ACT RELATE TO THE SAME ISSUE AND HAVE COMMON GR OUNDS OF APPEAL EXCEPT GROUND NO. 5 IN A.Y 2010 - 11 IN ITA NOS. 172 & 173/PNJ/2014. THE ASSESSEES ARE HUSBAND AND WIFE AND THEIR INCOME HAS TO BE DIVIDED EQUALLY AS PER THE PROVISIONS OF SEC. 5A OF THE INCOME TAX ACT. 2. AT THE OUTSET, THE LD. AR STATED THAT ALL THE FOUR APPEALS CAN BE DISPOSED OFF ON THE BASIS OF THE FACTS FOR THE A.Y 2006 - 07 AS IN BOTH THE YEARS, THE CIT 2 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) INVOKED JURISDICTION U/S 263 PRACTICALLY ON THE SAME BASIS. THEREFORE, HE PREFERRED TO ARGUE THE APPEALS ON THE BASIS OF THE FACTS FO R A.Y 2006 - 07 AND CONTENDED THAT WHATEVER VIEW THIS TRIBUNAL MAY TAKE IN A.Y 2006 - 07, THE SAME MAY BE FOLLOWED IN A.Y 2010 - 11. WE, THEREFORE, DISPOSE OFF ALL THE FOUR APPEALS ON THE BASIS OF THE FACTS RELATING TO A.Y 2006 - 07. 3. THE ASSESSEES IN ITA NOS. 170 & 171/PNJ/2014 FOR A.Y 2006 - 07 HAVE TAKEN THE FOLLOWING COMMON GROUNDS OF APPEAL : 1. ON THE FACTS AND CIRCUMSTANCES AND IN LAW THE LEARNED C.I.T ERRED IN PASSING ORDER U/S 263 HOLDING THAT THE ORDER PASSED A.O IS ERRONEOUS AND PREJUDICIAL TO THE IN TEREST OF REVENUE. 2. THE LEARNED C.I.T ERRED IN NOT APPRECIATING THAT THE A.O HAD AFTER DETAILED ANALYSIS IN A SCRUTINY ASSESSMENT U/S 153A R.W.S 143(3) FORMED A VIEW THAT THERE WAS NO TRANSFER IN RELEVANT A.Y 2006 - 07. 3. THE LEARNED CIT FAILED TO APPRECIATE THAT A SIMILAR VIEW IN ASSESSEES OWN CASE ON SIMILAR FACTS FOR A.Y 2003 - 04 WAS CONFIRMED BY THE HON'BLE HIGH COURT. 4. THE LEARNED C.I.T ERRED IN NOT APPRECIATING THAT THERE WAS A TRANSFER U/S 2(47) OF THE I.T. ACT R.W.S. 53A OF TRANSFER OF PR OPERTY ACT 1882 IN A.Y 2012 - 13 AND THE SAME WAS RIGHTLY DISCLOSED AND OFFERED BY THE ASSESSEE. 5. THE LEARNED C.I.T ERRED IN NOT APPRECIATING THAT THERE WAS A VIEW FORMED BY A.O AFTER DETAILED ANALYSIS AND SCRUTINY AND MERELY BECAUSE CIT IS OF A DIFFERENT VIEW IT WILL NOT RESULT IN TO ASSESSMENT BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 6. THE REASONS ASSIGNED FOR HOLDING THAT ORDER ORIGINALLY PASSED BY A.O U/S 153A R.W.S. 143(3) IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ARE WRONG, INSUFFICIENT AND CONTRARY TO LAW AND FACTS OF THE CASE. 7. THE APPELLANT CRAVES TO STAY THE RE - ASSESSMENT PROCEEDINGS UNDER THE PROVISIONS OF SEC 263 FOR SETTING ASIDE THE ORIGINAL ASSESSMENT ORDER PASSED BY THE DCIT, CENTRAL CIRCLE, PANAJI, GO A VIDE SEC 153A W.R.S 143(3) DATED 29.12.2011 AND RECOVERY PROCEEDINGS FOR THE RELEVANT ASSESSMENT YEAR TILL THIS APPEAL IS HEARD AND DISPOSED BY THE HON ITAT, APPELLATE AUTHORITIES. 3 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) SIMILARLY, IN ITA NOS. 172 & 173/PNJ/2014 DURING A.Y 2010 - 11 BOTH THE A SSESSEES HAVE TAKEN THE FOLLOWING COMMON GROUNDS OF APPEAL : 1. ON THE FACTS AND CIRCUMSTANCES AND IN LAW THE LEARNED C.I.T ERRED IN PASSING ORDER U/S 263 HOLDING THAT THE ORDER PASSED A.O IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 2. THE LEARNED C.I.T ERRED IN NOT APPRECIATING THAT THE A.O HAD AFTER DETAILED ANALYSIS IN A SCRUTINY ASSESSMENT U/S 153A R.W.S 143(3) FORMED A VIEW THAT THERE WAS NO TRANSFER IN RELEVANT A.Y 2010 - 11. 3. THE LEARNED CIT FAILED TO APPRECIATE THAT A SIMILAR VIEW I N ASSESSEES OWN CASE ON SIMILAR FACTS FOR A.Y 2003 - 04 WAS CONFIRMED BY THE HON'BLE HIGH COURT. 4. THE LEARNED C.I.T ERRED IN NOT APPRECIATING THAT THERE WAS NO TRANSFER U/S 2(47) OF THE I.T. ACT R.W.S. 53A OF TRANSFER OF PROPERTY ACT 1882 IN A.Y 2010 - 11 AND THE SAME WAS RIGHTLY CONSIDERED BY THE ASSESSEE. 5. THE LEARNED C.I.T ERRED IN NOT APPRECIATING THAT EVEN IF PART OF THE AMOUNT WAS RECEIVED THERE WAS NO TRANSFER AND POSSESSION WAS NOT HANDED OVER DURING THE RELEVANT YEAR. 6. THE LEARNED C.I.T ERRED IN NOT APPRECIATING THAT THERE WAS A VIEW FORMED BY A.O AFTER DETAILED ANALYSIS AND SCRUTINY AND MERELY BECAUSE CIT IS OF A DIFFERENT VIEW IT WILL NOT RESULT IN TO ASSESSMENT BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 7. THE REASONS ASSI GNED FOR HOLDING THAT ORDER ORIGINALLY PASSED BY A.O U/S 153A R.W.S. 143(3) IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ARE WRONG, INSUFFICIENT AND CONTRARY TO LAW AND FACTS OF THE CASE. 8. THE APPELLANT CRAVES TO STAY THE RE - ASSESSMENT PROCEEDINGS UNDER THE PROVISIONS OF SEC 263 FOR SETTING ASIDE THE ORIGINAL ASSESSMENT ORDER PASSED BY THE DCIT, CENTRAL CIRCLE, PANAJI, GOA VIDE SEC 153A W.R.S 143(3) DATED 29.12.2011 AND RECOVERY PROCEEDINGS FOR THE RELEVANT ASSESSMENT YEAR TILL THIS APPE AL IS HEARD AND DISPOSED BY THE HON ITAT, APPELLATE AUTHORITIES. 4. THE ONLY ISSUE INVOLVED IN THE GROUNDS TAKEN BY THE ASSESSEES RELATE TO THE VALIDITY OF THE ORDER PASSED U/S 263. THE BRIEF FACTS OF THE CASE FOR A.Y 2006 - 07 ARE THAT A SEARCH AND SEIZU RE ACTION U/S 132 OF THE INCOME TAX ACT WAS 4 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) CONDUCTED IN THE CASE OF THE ASSESSEE ON 25.2.2010. THE SEARCH ASSESSMENTS WERE COMPLETED U/S 153A R.W.S. 143(3) FOR A.Y 2006 - 07 ON 29.12.2011 AND THE INCOME WAS DIVIDED BETWEEN BOTH THE ASSESSEES AS PER THE PRO VISIONS OF SEC. 5A OF THE INCOME TAX ACT. DURING THE COURSE OF SEARCH, EVIDENCE RELATING TO DEVELOPMENT OF LAND AT OXDEL, DONA PAULA BY THE ASSESSEE WAS FOUND AND SEIZED VIDE PG. 25 - 30 OF THE SEIZED MATERIAL A/EB/21 DT.25.2.2010. THE ASSESSEE ENTERED INTO MEMORANDUM OF UNDERSTANDING DT. 31.3.2006 ALONGWITH HIS WIFE AND MR. ARMANDO GONSALVES WITH M/S. EMGEE HOUSING PVT. LTD. FOR SALE OF THE PROPERTY AT SURVEY NO. 234/2 ADMEASURING 18,500 SQ. MTRS. FOR A CONSIDERATION OF RS. 6 CRORES. FURTHER, THE PROPERTY AT SURVEY NO. 225/1 AND 4 AND 227/1 ADMEASURING 28,341 SQ. MTRS. BELONGING TO SAJJAD SHEIKH AND MRS.ZAIBUM SHEIKH WERE ALSO AGREED TO BE SOLD TO M/S. EMGEE HOUSING PVT. LTD. AT OXDELL AT DONA PAULA FOR A CONSIDERATION OF RS. 6 CRORES. BOTH THE PROPERTIES WERE ADJACENT TO EACH OTHER. THE TOTAL CONSIDERATION FOR BOTH THE PROPERTIES IS RS. 12 CRORES. ON 25.3.2010 THE STATEMENT OF THE ASSESSEE WAS RECORDED WHEREIN RELEVANT QUESTION NO. 57 READS AS UNDER : Q.NO. 57: I AM SHOWING YOU PAGE 25 TO 30 OF SEIZED MATERIAL A/EB/21 DATED 25.02.2010 WHICH IS THE MOU DATED 31.03.2006 BETWEEN MR.SADIQ SHEIKH, MRS.SADIA SHEIKH, MR. ARMANDO GOBSALVES AND M/S. EMGEE HOUSING PVT. LTD. FOR SALE PROPERTY AT SY. NO. 234/2 MEASURING 18,500 SQ. MTRS., AT OXDELL AT DONA PAULA FO R A CONSIDERATION OF RS.6,00,00,000/ - . PLEASE EXPLAIN IN DETAIL THIS TRANSACTION ? ANS: THIS TRANSACTION IS STILL NOT COMPLETE. WE HAVE SO FAR RECEIVED RS.5.16 CRORES. OUT OF WHICH RS. 4.5 CRORES HAS PAID TO THE MAPUSA URBAN CO - OP. BANK. THE BALANCE AMOUNT IS STILL TO BE RECEIVED SINCE THERE IS LITIGATION ON THE PROPERTY. THE CIT WAS OF THE VIEW THAT IN THE ASSESSMENT COMPLETED U/S 153A R.W.S. 143(3) THE AO HAS NOT CONSIDERED THE SAID ISSUE RELATING TO THE TRANSFER OF THE AFORESAID PROPERTY DURING T HE IMPUGNED ASSESSMENT YEAR SO THAT THE GAIN ARISING THERE FROM COULD HAVE BEEN ASSESSED DURING THE IMPUGNED ASSESSMENT YEAR. 5 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) THE ASSESSEE HAS NOT DECLARED THE INCOME IN RESPECT OF THIS TRANSACTION IN A.Y 2006 - 07 EVEN THOUGH ASSESSEE HAS RECEIVED CONSIDE RATION OF RS. 3 CRORES DURING THE IMPUGNED ASSESSMENT YEAR. CIT, THEREFORE, ISSUED A SHOW CAUSE NOTICE DT.5.3.2014 FOR INVOKING THE JURISDICTION U/S 263. IN REPLY THERETO, THE ASSESSEE CONTENDED THAT THE MEMORANDUM OF UNDERSTANDING WAS MERELY AN OFFER TO SELL. IT HAS ONLY EVIDENTIARY VALUE FOR THE PAYMENT OF RS. 2.5 CRORES. THE MEMORANDUM OF UNDERSTANDING WAS TOTALLY CONDITIONAL AS THERE WAS LITIGATION EXISTING AS ON THAT DATE WHICH THE ASSESSEE PROMISED TO CLEAR BEFORE 31.5.2006, AS EVIDENT FROM PG. 8 OF THE SAME, AND ON THAT DATE THE BUYER HAS TO MAKE PAYMENT OF RS. 1.5 CRORE AND AN AGREEMENT OF SALE HAS TO BE EXECUTED. THERE WERE HUTMENTS ALSO WHICH WERE TO BE REMOVED BY THE OWNERS AT THEIR OWN COST SO THAT THE MARKETABLE TITLE OF THE SAID PROPERTY C OULD BE MADE. THE DEVELOPER WAS ENTITLED TO SETTLE ALL THE CLAIMS OF THE SAID PROPERTY AS IT MAY DEEM FIT AND SHALL BE ENTITLED TO DEDUCT/ADJUST THE COST OF SUCH SETTLEMENT FROM THE SAID CONSIDERATION OF RS. 6 CRORES. THE REGISTERED AGREEMENT OF SALE AND DEVELOPMENT WAS EFFECTIVELY DRAWN ON 6.5.2011 TO TAKE INTO CONSIDERATION ALL THESE OBLIGATIONS. CLAUSE 32 OF THIS AGREEMENT RESCINDS EARLIER MOU DT. 31.3.2006. SUBSEQUENTLY, POWER OF ATTORNEY WAS ALSO EXECUTED IN FAVOUR OF THE DEVELOPER ON 28.8.2012. TH EREFORE, THE TAX INCIDENCE ON THIS TRANSACTION WILL ARISE ONLY IN 2013 - 14. THUS, IT WAS CONTENDED THAT THERE WAS NO ERROR IN THE ORDER OF AO FOR A.Y 2006 - 07 AND THE PROCEEDINGS INITIATED U/S 263 BE DROPPED. RELIANCE WAS PLACED IN THIS REGARD ON THE FOLLO WING DECISIONS : I) CIT VS. SMT. MINALBEN S. PAREKH, 215 ITR 81 (GUJ.) II) CIT VS. ARAVIND JEWELLERS, 259 ITR 502 (GUJ.) CIT AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE TOOK THE VIEW THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AS WELL AS PR EJUDICIAL TO THE INTEREST OF REVENUE AND ULTIMATELY SET ASIDE THE ORDER FOR A.Y 2006 - 07 AND DIRECTED THE AO TO CONSIDER THIS TRANSACTION IN ACCORDANCE WITH THE PROVISIONS OF 6 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) INCOME TAX ACT AFTER GIVING SUFFICIENT OPPORTUNITY TO THE ASSESSEE BY MENTIONING A S UNDER: THEREFORE, IN THE INSTANT CASE, THE INCOME WOULD BE TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS ARE ENTERED INTO EVEN IF THE TRANSFER OF THE IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UNDER THE GENERAL LAW. FURTHER, IN THE PRESENT CASE, THERE IS AN AGREEMENT IN WRITING AND IT PERTAINS TO THE IMMOVABLE PROPERTY. THE TRANSFEREE AGREED AND WILLING TO PERFORM HIS PART OF CONTRACT. THUS ALL THE CONDITIONS FOR A VALID CONTRACT ARE SATISFIED IN THE INSTANT CASE. THE CONTENTS OF THE MOU ARE T O BE READ AS A WHOLE, RATHER THAN BY EACH INDIVIDUAL CLAUSE OF THE SAME. IF THE EXERCISE IS DONE, IT IS VERY CLEAR THAT THE TRANSACTION AMOUNTS TO TRANSFER WITHIN THE MEANING OF SEC. 2(47) OF THE ACT. THUS THERE WAS A TRANSFER AS PER THE CONTENTS OF THE MOUDT. 31.3.2006 REGARDING THE SAID PROPERTY TRANSACTION AND INCOME ARISING THEREON IS LIABLE TO BE TAXED. THEREFORE I AM OF THE CONSIDERED OPINION THAT THE AO FAILED ON HIS PART IN ENQUIRING INTO THE ABOVE SAID TRANSACTION FOR THE PURPOSE OF ASSESSMENT I N THIS REGARD FOR THE AY 2006 - 07. THUS THE ORDER DATED 29.12.2011 PASSED U/S. 153A RWS 143(3) OF THE ACT WAS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, THE SAID ORDER IS SET ASIDE AND THE AO IS HEREBY DIRECTED TO C ONSIDER THESE TRANSACTIONS IN ACCORDANCE WITH THE PROVISIONS OF THE INCOME TAX ACT AFTER GIVING SUFFICIENT OPPORTUNITY TO THE ASSESSEE. 5. THE LD. AR BEFORE US VEHEMENTLY CONTENDED THAT IN RESPECT OF THE MEMORANDUM OF UNDERSTANDING ENTERED INTO BY THE AS SESSEE WITH M/S. EMGEE HOUSING PVT. LTD., PROPER INQUIRY WAS CONDUCTED BY THE AO. THE MOU WAS ON RECORD AND WAS IN POSSESSION OF THE AO. THE AO EVEN ASKED FOR THE NATURE OF THE TRANSACTION FROM THE ASSESSEE AND THE ASSESSEE HAD ENCLOSED COPY OF THE MOU. OUR ATTENTION WAS DRAWN TOWARDS PG. 128 OF THE SECOND PAPER BOOK. ATTENTION WAS ALSO DRAWN TO THE MOU AND IT WAS VEHEMENTLY CONTENDED THAT WHATEVER QUERY WAS RAISED BY THE AO, THE ASSESSEE HAS DULY COMPLIED WITH THE SAME. THUS, IT WAS CONTENDED THAT THE RE WAS NO ERROR IN THE ORDER OF THE AO. IF THE AO HAS TAKEN ONE OF THE POSSIBLE VIEWS, THE ORDER CANNOT BE REGARDED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. RELIANCE WAS PLACED IN THIS REGARD ON THE FOLLOWING CASES : I) CIT VS. GABRIEL INDIA LTD., 203 ITR 108 (BOM) II) CIT VS. HONDA SIEL POWER PRODUCTS LTD., 333 ITR 547 (DEL) 7 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) III) CIT VS. ANAND FOOD PRODUCTS, 39 TAXMANN.COM 187 (AP) IV) CIT VS. AMIT CORPORATION, 21 TAXMANN.COM 64 (GUJ) V) CIT VS. ANIL KUMAR SHARMA, 335 ITR 83 (DEL) VI) CIT VS. MESHA NADIST CO - OP MILK PRODUCERS UNION LTD., 263 ITR 645 (GUJ) VII) PYARELALJAISWAL VS. CIT, 41 TAXMANN.COM 278 (ALL) VIII) INDU FINE LANDS (P) LTD. VS. CIT, 45 TAXMANN.COM 307 (HYD) IX) ANANDPODDAR VS. ACIT, 33 TAXMANN.COM 367 (GAUH) X) CIT VS. VODAFONE ESSAR SOUTH LTD. 212 TAX MANN 184 (DEL.) 6. THE LD. DR ON THE OTHER HAND DREW OUR ATTENTION TOWARDS PG. 6 OF THE SECOND PAPER BOOK WHICH CONTAINS QUESTIONNAIRE MADE BY THE AO, ESPECIALLY QUERY NO. 37 BY WHICH THE AO ASKED THE ASSESSEE TO FURNISH DETAILED NOTE ON THE TRANSACTION WITH M/S. EMGEE HOUSING PVT. LTD., DEVELOPMENT OF LAND AT OXDELL, DONA PAULA, WHETHER THE TRANSACTION HAS BEEN COMPLETED. THE AO ALSO ASKED DETAILED WORKING OF THE INCOME GENERATED THEREFROM. BY REFERRING TO THE REPLY OF THE ASSESSEE, IT WAS CONTENDED TH AT THE ASSESSEE SIMPLY SUBMITTED THE MOU DT. 26.11.2009 BUT DID NOT SUBMIT ANY NOTE ETC. ON THE TRANSACTION WHICH THE ASSESSEE HAD WITH THE SAID PARTY. 7. WHEN THE BENCH COUNTERED LD AR WITH THIS FACT, THE LD. AR AGREED THAT EXCEPT FOR THE MEMORANDUM OF UNDERSTANDING, NO NOTE ON THE TRANSACTION WHICH THE ASSESSEE HAD WITH RESPECT TO THIS TRANSACTION HAS BEEN FILED BY THE ASSESSEE BEFORE THE AO AS PER THE RECORD AVAILABLE WITH HIM. EVEN THERE IS NO SUCH EVIDENCE ON RECORD BUT THE LD. AR VEHEMENTLY CONTEND ED THAT EVEN OTHERWISE ON MERIT, THIS TRANSACTION CANNOT BE MADE TAXABLE DURING THE IMPUGNED ASSESSMENT YEAR AS THERE WAS NO TRANSFER U/S 2(47) OF THE INCOME TAX ACT DURING THE IMPUGNED ASSESSMENT YEAR, THEREFORE, THERE CANNOT BE ANY ERROR IN THE ORDER PAS SED BY THE ASSESSING OFFICER. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD ALONG WITH THE CASE LAWS AS RELIED ON AND THE ORDER OF THE CIT 8 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) PASSED U/S. 263 OF THE ACT. WE NOTED THAT IN THIS CASE THE CIT INVOKED JU RISDICTION U/S 263 IN RESPECT OF ORDER PASSED BY THE AO U/S 153A READ WITH SECTION 143(3) DT. 29.12.2011. THE MAIN ALLEGATIONS LEVIED BY CIT FOR INVOKING JURISDICTION U/S 263 ARE AS UNDER : DURING THE COURSE OF THE SEARCH, EVIDENCE RELATING TO DEVELOPME NT OF LAND AT ODXEL, DONA PAULA BY THE ASSESSEE WAS FOUND AND SEIZED VIDE PAGE 25 TO 30 OF SEIZED MATERIAL A/EB/21 DATED 25.02.2010. THE ASSESSES ENTERED INTO MOU ON 31.03.2006 ALONGWITH HIS WIFE AND MR. ARMANDO GOBSALVES WITH M/S. EMGEE HOUSING PVT. LTD. FOR SALE OF PROPERTY AT SY.NO.234/2 MEASURING 18,500 SQ.MTRS, FOR A CONSIDERATION OF RS.6,00,00,000/ - . FURTHER, THE PROPERTY AT S.NO.225/1 AND 4 AND 227/1 MEASURING 28,341 SQ.MTRS BELONGING TO MR. SAJJAD SHEIKH & MRS.ZAIBUM SHEIKH WERE ALSO AGREED TO BE SO LD TO M/S. EMGEE HOUSING PVT. LTD. AT OXDELL AT DONA - PAULA FOR A CONSIDERATION OF RS.6,00,00,000/ - . BOTH PROPERTIES WERE ADJACENT TO EACH OTHER. THE TOTAL CONSIDERATION FOR BOTH THE PROPERTIES TOGETHER IS RS.12 CRORES I.E. RS. 6 CRORES EACH I.E. RS. 6 CROR ES FOR 18,500 SQ.MTRS AND ANOTHER RS.6 CRORES FOR 28,341 SQ.MTRS. THE STATEMENT DATED 25.3.2010 OF THE ASSESSEE, MR. SADIQ SHEIKH IN THIS REGARD IS AS UNDER: Q.NO.57: I AM SHOWING YOU PAGE 25 TO 30 OF SEIZED MATERIAL A/EB/21 DATED 25.02.2010 WHICH IS THE MOU DATED 31.03.2006 BETWEEN MR. SADIQ SHEIKH, MRS. SADIA SHEIKH, MR.ARMANDO GOBSALVES AND M/S. EMGEE HOUSING PVT. LTD. FOR SALE PROPERTY AT SY.NO.234/2 MEASURING 18,500 SQ.MTRS, AT OXDELL AT DONA PAULA FOR A CONSIDERATION OF RS. 6,00,00,000/ - . PLEASE EXP LAIN IN DETAIL THIS TRANSACTION? ANS: THIS TRANSACTION IS STILL NOT COMPLETE. WE HAVE SO FAR RECEIVED RS.5.16 CRORES. OUT OF WHICH RS.4.5 CRORES HAS PAID TO THE MAPUSA URBAN CO - OP BANK. THE BALANCE AMOUNT IS STILL TO BE RECEIVED SINCE THERE IS LITIGATION ON THE PROPERTY. IN THE ASSESSMENT COMPLETED UNDER SECTION 153A R.W.S. 143(3) OF THE INCOME TAX ACT FOR THE AY 2006 - 07, WITHOUT CONSIDERING THE ABOVE ISSUE. AS PER THE AGREEMENT FOR DEVELOPMENT AND SALE WITH M/S. EMGEE HOUSING PVT. LTD, THE ASSESSEE REC EIVED A SUM OF RS.2.5 CRORES VIDE CHEQUE NO.677503 DATED 31.03.2006 DRAWN ON INDIAN BANK, WADALA BRANCH, A SUM OF 49 LAKHS PAID VIDE VARIOUS MODES AND RS. 1 LAKH WITHIN ONE MONTH. THE ASSESSEE HAD NOT DECLARED INCOME IN RESPECT OF THIS TRANSACTION FOR THE ASST. YEAR 2006 - 07. SECTION 2(47) OF THE IT ACT, DEFINES THE TERM TRANSFER IN CLAUSE (V), AS PER WHICH IT INCLUDES ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY 9 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTR ACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882. THEREFORE, THE INCOME ARISING FROM THE ABOVE TRANSACTIONS HAS TO BE ASSESSED IN THE YEAR IN WHICH THE ASSESSEE HAS ENTERED INTO AN AGREEMENT I.E. AY2006 - 07. THEREFORE, IT WAS CONSIDERED THAT THE ACTION OF THE ASSESSING OFFICER IN NOT CONSIDERING THE AMOUNTS RECEIVED BY THE ASSESSE OUT OF THE SAID AGREEMENT MENTIONED ABOVE WHILE PASSING THE ASSESSMENT ORDER UNDER SECTION 153A R.W.S.143(3) DTD.29.12.2011 OF THE INCOME TAX AC T, 1961 WAS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND ACCORDINGLY THE PROVISIONS OF SECTION 263 OF THE INCOME TAX ACT WERE PROPOSED TO BE INVOKED. BEFORE DECIDING THE ISSUE WHETHER THE ORDER PASSED U/S 263 IS VALID OR N OT, IT IS ESSENTIAL TO REFER TO THE RELEVANT PROVISIONS OF SEC. 263. SECTION 263 LAYS DOWN AS UNDER: - 263. (1) THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE MA Y, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT , OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. EXPLANATION. - FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT, FOR THE PURPOSES OF THIS SUB - SECTION, - (A) AN ORDER PASSED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988 BY THE ASSESS ING OFFICER SHALL INCLUDE - (I) AN ORDER OF ASSESSMENT MADE BY THE ASSISTANT COMMISSIONER OR DEPUTY DIRECTOR OR THE INCOME - TAX OFFICER ON THE BASIS OF THE DIRECTIONS ISSUED BY THE JOINT COMMISSIONER UNDER SECTION 144A; (II) AN ORDER MADE BY THE JOINT COMMISSIONER IN EXERCISE OF THE POWER OR IN THE PERFORMANCE OF THE FUNCTIONS OF AN ASSESSING OFFICER CONFERRED ON, OR ASSIGNED TO, HIM UNDER THE ORDERS OR DIRECTIONS ISSUED BY THE BOARD OR BY THE CHIEF COMMISSIONER OR DIRECTOR GENERAL OR COMMISSIONER AUTHO RISED BY THE BOARD IN THIS BEHALF UNDER SECTION 120; 10 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) (B) 'RECORD' SHALL INCLUDE AND SHALL BE DEEMED ALWAYS TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PROCEEDING UNDER THIS ACT AVAILABLE AT THE TIME OF EXAMINATION BY THE COMMISSIONER; (C) WHERE ANY ORDER REFERRED TO IN THIS SUB - SECTION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER OF ANY APPEAL FILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988, THE POWERS OF THE COMMISSIONER UNDER THIS SUB - SECTION SHALL EXTEND AND SHALL BE DEEMED ALWA YS TO HAVE EXTENDED TO SUCH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL. (2) NO ORDER SHALL BE MADE UNDER SUB - SECTION (1) AFTER THE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE REVISED WAS PASSED. (3) NOTWITHSTANDING ANYTHING CONTAINED IN SUB - SECTION (2), AN ORDER IN REVISION UNDER THIS SECTION MAY BE PASSED AT ANY TIME IN THE CASE OF AN ORDER WHICH HAS BEEN PASSED IN CONSEQUENCE OF OR TO GIVE EFFECT TO, ANY FINDING OR DIRECTION CONTAINED IN AN OR DER OF THE APPELLATE TRIBUNAL, THE HIGH COURT OR THE SUPREME COURT. EXPLANATION. - IN COMPUTING THE PERIOD OF LIMITATION FOR THE PURPOSES OF SUB - SECTION (2), THE TIME TAKEN IN GIVING AN OPPORTUNITY TO THE ASSESSEE TO BE REHEARD UNDER THE PROVISO TO SECTION 1 29 AND ANY PERIOD DURING WHICH ANY PROCEEDING UNDER THIS SECTION IS STAYED BY AN ORDER OR INJUNCTION OF ANY COURT SHALL BE EXCLUDED. 8.1 FROM THE PERUSAL OF THE AFORESAID SECTION, IT IS APPARENT THAT THERE ARE FOUR MAIN FEATURES OF THE POWER OF REVISION TO BE EXERCISED U/S 263 BY THE COMMISSIONER OF INCOME - TAX. FIRSTLY, THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORDS OF ANY PROCEEDINGS UNDER THE ACT AND FOR THIS PURPOSE HE NEED NOT TO SHOW ANY REASON OR RECORD ANY REASON TO BELIEVE. IT IS A PART OF HIS ADMINISTRATIVE POWER TO CALL FOR THE RECORD AND EXAMINE THEM RELATING TO ANY ASSESSEE. SECONDLY, HE MAY CONSIDER ANY ORDER PASSED BY THE ASSESSING OFFICER AS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THIS IS EXERCISED BY CALL ING FOR AND EXAMINING THE RECORD AVAILABLE AT THIS STAGE. THERE IS NO QUESTION OF THE ASSESSEE TO APPEAR AND MAKE SUBMISSION AT THIS STAGE. THIRDLY, IF AFTER CALLING FOR AND EXAMINING THE RECORDS THE COMMISSIONER CONSIDERS THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE IS BOUND TO GIVE AN OPPORTUNITY TO 11 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) THE ASSESSEE OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH ENQUIRY AS HE MAY DEEM FIT, PASS SUCH ORDER THEREON AS THE CIRCUM STANCES OF THE CASE MAY JUSTIFY INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELLING ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. THIS EMPOWERS THE CIT TO CAUSE OR MAKE SUCH ENQUIRIES AS HE DEEMS NECESSARY. FOURTHLY, THE CIT U/S 263 CAN ENHANCE OR MODIFY THE ASSESSMENT AS A RESULT OF ENQUIRY CONDUCTED AND HEARING OF THE ASSESSEE. 8.2 FOR INVOKING THE PROVISIONS OF SECTION 263, WE DO AGREE WITH THE LD. A.R BOTH THE CONDITIONS THAT THE ORDER PASSED BY THE A.O. IS ERRONEOUS AND ALSO THAT IT IS PREJUDICIAL TO THE INTEREST OF REVENUE MUST BE SATISFIED. IF ONE OF THEM IS ABSENT, THE PROVISIONS OF SECTION 263 CANNOT BE INVOKED. THE TERM ERRONEOUS HAS NOT BEEN DEFINED UNDER THE INCOME - TAX ACT BUT IT IS WELL SETTLED THAT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE A.O. CANNOT BE SAID TO BE AN ERROR. AN ORDER CAN BE SAID TO BE ERRONEOUS IF THERE IS INCORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW IN THE ORDER BY THE A.O. IF THE A.O. AFTER MAKING THE ENQUIRIES AND EXAMI NING THE RECORDS TAKEN ONE OF THE POSSIBLE VIEW, IT CANNOT BE SAID THAT THE ORDER PASSED BY THE A.O. WAS ERRONEOUS. THIS VIEW HAS BEEN TAKEN BY HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. 243 ITR 83(SC). 8.3 THE ALLEGATIONS IN RESPE CT OF WHICH JURISDICTION U/S 263 IS EXERCISED RELATE TO THE INCOME ARISING ON TRANSACTION WHICH THE ASSESSEE ENTERED INTO ALONGWITH HIS WIFE AND MR. ARMANDO GONSALVES WITH M/S. EMGEE HOUSING PVT. LTD. FOR SALE OF THE PROPERTY AT SURVEY NO. 234/2 ADMEASURIN G 18,500 SQ. MTRS. FOR A CONSIDERATION OF RS. 6 CRORES ON THE BASIS OF MOU DT. 31.3.2006. FURTHER, THE PROPERTY AT SURVEY NO. 225/1 AND 4 AND 227/1 ADMEASURING 28,341 SQ. MTRS. BELONGING TO SAJJAD SHEIKH AND MRS.ZAIBUM SHEIKH WERE ALSO AGREED TO BE SOLD TO M/S. EMGEE HOUSING PVT. LTD. AT OXDELL AT DONA PAULA FOR A CONSIDERATION OF 12 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) RS. 6 CRORES. BOTH THE PROPERTIES WERE ADJACENT TO EACH OTHER. THE TOTAL CONSIDERATION FOR BOTH THE PROPERTIES IS RS. 12 CRORES. ACCORDING TO CIT, THERE HAD BEEN TRANSFER U/S 2( 47) DURING THE YEAR. THIS HAS NOT BEEN EXAMINED BY THE ASSESSING OFFICER. FIRST, WE WOULD DEAL WITH THIS ISSUE. THE RECORD AND THE EVIDENCE PRODUCED BEFORE US DURING THE COURSE OF HEARING REFLECT APPARENTLY THAT THE A.O. IN THIS CASE DURING THE IMPUGNED A.Y. HAS EVEN THOUGH ISSUED QUESTIONNAIRE TO THE ASSESSEE BY WAY OF FOLLOWING QUERY BEING QUERY NO.37 WHICH READ AS UNDER: - 37. PLEASE FURNISH A DETAILED NOTE ON THE TRANSACTIONS WITH M/S. EMGEE HOUSING PVT. LTD DEVELOPMENT OF LAND AT OXDELL DONA PAU LA WHETHER THE TRANSACTION HAS BEEN COMPLETED IF SO, PLEASE FURNISH DETAILED WORKING ON THE INCOME GENERATED. THE ASSESSEE DID NOT SUBMIT ANY REPLY ON THE QUERY AS DESIRED BY THE A.O AND NO FURTHER QUERY ETC. WAS RAISED BY THE ASSESSING OFFICER WHETH ER THE TRANSACTION ENTERED INTO BY THE ASSESSEE CAN BE REGARDED TO BE THE TRANSFER TAKEN PLACE DURING THE YEAR AS PER THE PROVISION OF SECTION 2(47) OF THE INCOME TAX ACT. RATHER BY NOT SUBMITTING THE REPLY, THE ASSESSE DEBARRED THE AO TO MAKE AN INQUIRY O N THE TAXABILITY OF THE TRANSACTION. IT IS A CLEAR CASE OF LACK OF INQUIRY AND COMPLETING THE ASSESSMENT WITHOUT GETTING THE COMPLETE INFORMATION AS HAS BEEN ASKED FOR. 8.4 NOW THE QUESTION ARISE WHETHER LACK OF ENQUIRY BY THE ASSESSING OFFICER WILL TANTAMOUNT TO BE THE ONE WHICH IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. WE NOTED THAT A SIMILAR ISSUE HAS ARISEN BEFORE US IN THE ASSESSMENT YEAR 2006 - 07 IN I.T.A. NO.139/PNJ/11 IN THE CASE OF V.M. SALGOACAR IN WHICH ALSO THE A.O HAS N OT CARRIED OUT ANY ENQUIRY AND THIS TRIBUNAL, VIDE ORDER DATED 25/08/2011 HAS HELD AS UNDER: 12. WE HAVE HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECORD AND CASE LAWS BROUGHT TO OUR NOTICE. THE APPELLANT DOES NOT DISPUTE THAT HE ALSO IS ENGAGED IN TH E 13 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) BUSINESS OF TRADING OF IRON ORE. THE APPELLANT IN HIS RETURN OF INCOME MADE CLAIM OF ADDITIONAL DEPRECIATION AMOUNTING TO RS.4,42,46,711/ - AND DECLARED INCOME OF RS FROM THE BUSINESS OF IRON ORE MINING, PROCESSING AND EXPORTING AS REPRODUCED AT PAGE 1 OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SIMPLY ACCEPTED THE AFORESAID CLAIM OF ADDITIONAL DEPRECIATION AS WAS STATED IN THE RETURN OF INCOME AND HAS FAILED TO MAKE ANY ENQUIRY AS TO WHETHER THE CONDITIONS CONTAINED U/S 32(1)(IIA) FOR ALLOW ING THE ADDITIONAL DEPRECIATION HAVE ACTUALLY BEEN SATISFIED. EVEN THE APPELLANTS RETURN DID NOT CONTAIN SUCH DETAILS FROM WHICH A CONCLUSION IN ACCORDANCE WITH LAW COULD BE DRAWN. THE IMPLICATION OF THE JUDGMENT BY APEX COURT IN THE CASE OF CIT VS. SE SA GOA LTD. 271 ITR 332 (SC) HAS NOT BEEN ANALYZED TO FIND OUT AS TO WHETHER THE NEW MACHINERY ON WHICH ADDITIONAL DEPRECIATION HAS BEEN CLAIMED IS ACQUIRED OR INSTALLED IN THE ASSESSEES BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING OR THA T IT WAS A MACHINERY INSTALLED IN THE TRADING BUSINESS OR OTHERWISE IN A BUSINESS WHICH DOES NOT AMOUNT TO MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING AS CLARIFIED IN THE SUPREME COURT JUDGMENT IN SESA GOA LTD., SUPRA. NO FINDINGS OF FACT ARE SHOWN TO HAVE BEEN RECORDED BY THE ASSESSING OFFICER ON THESE ASPECTS. THE NATURE OF BUSINESS MENTIONED AT PAGE NO. 1 OF THE ASSESSMENT ORDER SIMPLY STATES THE EX - FACIE POSITION AS IS NARRATED BY THE ASSESSEE IN THE RETURN OF INCOME FILED BY HIM. THE SAME DOES NOT CONSTITUTE ANY FINDING OF FACT REACHED AFTER MAKING ANY ENQUIRY BY THE ASSESSING OFFICER. IT THUS IS APPARENT THAT THE ASSESSING OFFICER ACCEPTED THE CLAIM ON ITS FACE WITHOUT PERFORMING HIS FUNCTIONS AS ARE REQUIRED OF HIM AS A QUASI JUDICIAL AUTHOR ITY. THE ASSESSMENT ORDER THUS MADE WAS ERRONEOUS AND UNDER THE CIRCUMSTANCES OF THE CASE, IT WAS NOT NECESSARY FOR THE LEARNED CIT TO MAKE FURTHER ENQUIRIES BEFORE SETTING ASIDE THE ORDER AND FIND OUT HIMSELF ALL SUCH RELEVANT FACTS IN A MANNER AS ARE RE QUIRED TO BE DONE BY THE ASSESSING AUTHORITY. THE ASPECT OF DEDUCTION OF INTEREST PAID ON INCOME TAX WAS NEITHER ENQUIRED NOR SHOWN TO HAVE BEEN VERIFIED BY THE ASSESSING OFFICER AND THUS THE ORDER OF ASSESSMENT IS ERRONEOUS ON THAT COUNT AS WELL. 13. ADMITTEDLY THE ASSESSING OFFICER BEING A QUASI - JUDICIAL AUTHORITY HAD THREE FUNCTIONS (I) TO COLLECT THE MATERIALS AND INFORMATION (II) TO PROCESS THE MATERIALS AND INFORMATION; AND (III) TO ADJUDICATE ON THE CONSIDERATION OF SUCH MATERIALS AND INFORMATIO N. IN A CASE LIKE THIS, WHERE THE ASSESSING OFFICER HAS FAILED TO PERFORM HIS DUTIES IN NUMBER (I) AND (II) ABOVE AND PROCEEDS TO ADJUDICATE, SUCH ORDERS ARE TAKEN TO HAVE BEEN PASSED IN A SLIP - SHOD MANNER AND CANNOT BE TAKEN TO BE ORDERS PASSED IN ACCORD ANCE WITH LAW. DEFINITELY SUCH ACTIONS OF THE GOVT. FUNCTIONARIES GOES TO EFFECT THE REPUTATION OF REVENUE DEPARTMENT ADVERSELY AND CAUSE PREJUDICE TO THEIR INTERESTS, BESIDES CAUSING LOSS OF REVENUE BY HIS SUCH DECISION. 14. THE APPELLANTS PLEA THAT SI MILAR ISSUE WAS ALSO A SUBJECT MATTER OF ASSESSMENT IN ASSESSMENT YEAR 2008 - 09, NOT AN YEAR IN APPEAL BEFORE US IS OF NO CONSEQUENCE IN CASE OF EXERCISE OF JURISDICTION U/S 263 FOR THE DIFFERENT YEAR. UNDER THE PECULIAR FACTS, THE CASE LAWS REFERRED INCLU DING THOSE ON POSSIBILITY OF TWO VIEWS ON THE ISSUES BEFORE US CANNOT IMPRESS US TO SAY THAT THE EXERCISE OF JURISDICTION U/S 263 OF THE ACT IS 14 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) INITIATED AS THE OPINION ON THE BASIS OF SUCH CASE LAWS NEEDS TO BE TESTED IN THE CIRCUMSTANCE WHEN ASSESSING OF FICER HIMSELF HAS MADE ENQUIRIES AND TAKEN A POSSIBLE DECISION IN ACCORDANCE WITH LAW. 15. IN THE PRESENT CASE, THE LEARNED CIT IS FOUND SATISFIED THAT THE ASSESSMENT ORDER PASSED IS BOTH ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF REVENUE AND TH US THE TWIN CONDITIONS OF SECTION 263 OF THE ACT AS ARE ALSO ENUNCIATED BY APEX COURT IN MALABAR INDUSTRIAL CO. LTD. VS. CIT [2000] 243 ITR 83 (SC) STAND DULY SATISFIED. THE LEARNED CIT ALSO DIRECTED THE ASSESSING OFFICER TO CALL FOR INFORMATION ON BOTH T HE ISSUES AND EXAMINE IT AND TAKE DECISION AFRESH ON MERITS AFTER PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS WOULD CAUSE NO PREJUDICE TO THE ASSESSEE. HAVING REGARD TO THE JUDGMENT RENDERED BY HON'BLE DELHI HIGH COURT IN THE CASE OF GEE V EE ENTERPRISES VS. ADDL. CIT [1975] 99 ITR 375 (DEL), HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF SMT. RENU GUPTA VS. CIT [2008] 301 ITR 45 (RAJ.) AND HON'BLE MADHYA PRADESH HIGH COURT IN CIT VS. DEEPAK KUMAR GARG [2008] 299 ITR 435 (MP) AND THE FINDINGS R EACHED AS AFORESAID, WE FIND NO INFIRMITY IN THE DECISION TAKEN BY LEARNED CIT. THE GROUNDS RAISED IN APPEAL, THEREFORE, STAND REJECTED AND APPEAL IS DISMISSED. 8.5 IN THAT CASE, WE NOTED THAT LEARNED A. R. HAS TAKEN ALL THESE ARGUMENTS AND HAS ALSO REL IED ON THE DECISION OF I.T.A.T. DELHI IN THE CASE OF SAW PIPES LTD., 3 SOT 237 FOR THE PURPOSE OF THE LACK OF ENQUIRY. THE LEARNED A. R., BEFORE US, TRIED TO DISTINGUISH THE FACTS OF THE CASE AND VEHEMENTLY RELIED IN RESPECT OF THIS ISSUE WHICH IS THE ONE ON THE BASIS OF WHICH THE PROCEEDINGS U/S 263 WERE INITIATED. 8.6 WE HAVE GONE THROUGH THE PROVISIONS OF SECTION 2(47). THIS SECTION DEFINES THE TERM TRANSFER FOR THE PURPOSE OF CHARGING THE CAPITAL GAIN. SECTION 45 MANDATES THAT THE CAPITAL GAIN IS CH ARGEABLE TO TAX IN THE YEAR IN WHICH THE CAPITAL ASSET IS TRANSFERRED. THE ASSESSING OFFICER IN OUR OPINION WAS BOUND TO INQUIRE INTO THE TRANSACTION WHICH THE ASSESSEE HAS ENTERED INTO WITH M/S EMGEE HOUSING PVT LTD ON THE BASIS OF PAGE 25 TO 30 OF THE SE IZED MATERIAL A/EB/21 DATED 25.2.10.THE AO, IN THIS CASE, WE NOTED, EXCEPT ASKING FOR THE NOTE ON THE TRANSACTION WITH DETAILS, ASSESSEE ENTERED INTO WITH M/S EMGEE HOUSING P LTD DID NOT EXAMINE WHETHER THE PROVISION OF SECTION 2(47) ARE APPLICABLE ON THES E TRANSACTION OR NOT DURING THE YEAR. NOT ONLY THIS, THIS AN DISPUTED FACT THAT THE 15 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) ASSESSEE DID NOT FILE ANY NOTE OR DETAILS ON THE TRANSACTIONS ENTERED INTO BY THE ASSESSEE WITH M/S EMGEE HOUSING P LTD, EVEN THOUGH THE SAID INFORMATION WAS DULY ASKED FO R BY THE ASSESSING OFFICER, YET THE ASSESSING OFFICER PASSED THE ASSESSMENT IGNORING WHETHER ANY INCOME ARISES DURING THE YEAR. IT IS NOT A CASE WHERE THE AO HAS ALLOWED THE DEDUCTION BY TAKING ONE OF THE POSSIBLE VIEWS. IT IS ALSO NOT A CASE OF INADEQUAT E INQUIRY BUT A CASE WHERE NO INQUIRY HAS BEEN CONDUCTED BY THE AO ON THE APPLICABILITY OF SECTION 2(47) OF THE INCOME TAX ACT FOR THE GAIN ARISING ON THE TRANSACTION WHICH THE ASSESSEE HAD WITH M/S EMGEE HOUSING P LTD. 8.7 WE HAVE GONE THROUGH THE DECI SION OF CIT VS. VODAFONE ESSAR SOUTH LTD. 212 TAXMANN 184 (DEL.) ON WHICH THE LD . AR VEHEMENTLY RELIED. WE NOTED THAT THIS DECISION WILL NOT ASSIST THE ASSESSEE. IN THIS DECISION THE HONBLE HIGH COURT RELIED ON THE EARLIER DECISION OF THE HIGH COURT IN THE CASE OF CIT VS. SUNBEAM AUTO LTD., 332 ITR 167 IN WHICH IT WAS HELD THAT IF THERE IS SOME INQUIRY BY THE AO IN THE ORIGINAL PROCEEDINGS, EVEN IF INADEQUATE, THAT CANNOT CLOTHE THE COMMISSIONER WITH JURISDICTION U/S 263 MERELY BECAUSE HE CAN FORM ANOTH ER OPINION. IN THIS CASE ON THE BASIS OF THIS DECISION, HONBLE HIGH COURT TOOK THE VIEW THAT IF THERE WAS ANY INQUIRY, EVEN INADEQUATE, THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE COMMISSIONER TO PASS ORDERS U/S 263 OF THE ACT MERELY BECAUSE HE HAS A D IFFERENT OPINION IN THE MATTER. IT IS ONLY IN CASES OF LACK OF INQUIRY. IN THIS DECISION UNDER PARA 11 HONBLE HIGH COURT CLEARLY LAID DOWN THAT THAT WAS NOT A CASE OF NO INQUIRY. IN THE CASE OF THE ASSESSEE WE NOTED THE AO HAS NOT MADE ANY INQUIRY WH ETHER THE PROVISION OF SECTION 2(47) ARE APPLICABLE ON THESE TRANSACTION DURING THE YEAR OR NOT. 8.8 IN THE CASE OF CIT VS. HONDA SIEL POWER PRODUCTS LTD., 333 ITR 547 (DEL) WE NOTED THAT THE HON'BLE HIGH COURT HAS HELD THAT WHERE THE AO ADOPTS ONE OF TH E COURSE PERMISSIBLE IN LAW OR WHERE TWO VIEWS ARE POSSIBLE AND AO HAS TAKEN 16 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) ONE OF THE POSSIBLE VIEWS, CIT CANNOT EXERCISE HIS POWERS U/S 263 TO DIFFER WITH THE VIEW OF THE AO. IF REGULAR ASSESSMENT HAS BEEN MADE U/S 143(3), A PRESUMPTION CAN BE RAISED T HAT THE ORDER HAS BEEN PASSED UPON APPLICATION OF MIND AND THOUGH THIS PRESUMPTION IS REBUTTABLE, YET THERE MUST BE SOME MATERIAL TO INDICATE THAT THE AO HAS NOT APPLIED HIS MIND TO INVOKE THE PROVISIONS OF SEC. 263. THIS DECISION, IN OUR OPINION, WILL AL SO NOT HELP THE ASSESSEE THE REASON BEING THAT IN THE CASE OF THE ASSESSEE, THE AO HAD SPECIFICALLY ASKED A NOTE FROM THE ASSESSEE IN RESPECT OF THE TRANSACTIONS WHICH THE ASSESSEE HAD WITH M/S. EMGEE HOUSING PVT. LTD. BUT THE ASSESSEE DID NOT SUBMIT THE SA ID NOTE. THEREFORE, IT CANNOT BE SAID THAT THE AO HAS APPLIED HIS MIND WHILE PASSING THE ORDER U/S 143(3). THE CASE OF THE ASSESSEE, AS WE HAVE ALREADY HELD, IS A CASE WHERE IN RESPECT OF TRANSACTIONS WITH M/S. EMGEE HOUSING PVT. LTD., THE AO HAS NOT EXA MINED THE ISSUE. 8.9 WE HAVE ALSO GONE THROUGH THE DECISION OF HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT VS. ANAND FOOD PRODUCTS, 39 TAXMANN.COM 187. IN THIS CASE WE NOTED THAT THE AO EXAMINED THE BILLS, BOOKS OF ACCOUNTS, INVOICES, PAYMENTS ETC. AND EVEN MADE INQUIRIES ON THE ISSUE UNDER CONSIDERATION AND THE ASSESSEE HAD GIVEN A DETAILED EXPLANATION BY LETTER FURNISHING THE DATA. UNDER THESE FACTS, IT WAS HELD THAT THE ORDER CANNOT BE SAID TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE BE CAUSE THE AO DID NOT MAKE A DETAILED DISCUSSION. IN THE CASE OF THE ASSESSEE, WE NOTED THAT EVEN THOUGH THE AO HAS RAISED THE QUERY, THE ASSESSEE DID NOT REPLY AND EVEN NO SUCH EVIDENCE OR MATERIAL WAS BROUGHT TO OUR KNOWLEDGE BY THE LD. AR THOUGH THE BEN CH SPECIFICALLY ASKED THE LD. AR WHETHER ANY EXPLANATION WAS SUBMITTED IN RESPECT OF THE TRANSACTION BEFORE THE AO. THE AO, THEREFORE, IN THE ABSENCE OF THE ENQUIRY AND FILING OF DETAILS PASSED THE ORDER. THEREFORE, T HIS DECISION WILL ALSO NOT HELP THE A SSESSEE. 17 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) 8.10 WE HAVE ALSO GONE THROUGH THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. AMIT CORPORATION, 21 TAXMANN.COM 64 . THIS CASE, WE NOTED, WILL NOT HELP THE ASSESSEE. IN THIS CASE ALSO THE BOOKS OF ACCOUNTS, BILLS, VOUCHERS , CASH BOOK ETC. WERE PRODUCED BY THE ASSESSEE BEFORE THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS AND ON THAT BASIS THE AO HAD FRAMED THE ASSESSMENT. UNDER THESE FACTS, THE HON'BLE HIGH COURT TOOK THE VIEW THAT THE ASSESSMENT COULD NOT BE RE - OPENED IN EX ERCISE OF POWERS U/S 263 FOR MAKING FURTHER INQUIRIES. AS WE HAVE ALREADY STATED, IN THE CASE BEFORE US THE ASSESSEE DID NOT PROVIDE THE INFORMATION AS DESIRED BY THE AO WHILE FRAMING THE ASSESSMENT. THUS, THIS DECISION WILL ALSO NOT HELP THE ASSESSEE. 8.11 IN THE CASE OF CIT VS. ANIL KUMAR SHARMA, 335 ITR 83 (DEL), WE NOTED THAT THE HON'BLE HIGH COURT TOOK THE VIEW THAT THE PROVISIONS OF SEC. 263 CANNOT BE EXERCISED MERELY BECAUSE THE CIT HAD A DIFFERENT OPINION IN THE MATTER. IN THIS CASE, THE TRIBUNA L HAD ARRIVED AT A CONCLUSIVE FINDING THAT THOUGH THE ASSESSMENT ORDER DID NOT PATENTLY INDICATE THAT THE ISSUE IN QUESTION HAD NOT BEEN CONSIDERED BY THE AO, YET THE RECORDS SHOWED THAT THE AO HAD APPLIED HIS MIND. IN THE CASE OF THE ASSESSEE, AS WE HAVE ALREADY HELD, THE RECORDS DO NOT SHOW THAT THE AO HAD APPLIED HIS MIND. IN THE ABSENCE OF INFORMATION AS DESIRED BY HIM, THE AO PASSED THE ORDER. 8.12 WE HAVE GONE THROUGH THE DECISION IN THE CASE OF CIT VS. MEHSANADIST CO - OP MILK PRODUCERS UNION LTD. , 263 ITR 645 (GUJ). IN THIS CASE, THE HON'BLE HIGH COURT HAS HELD THAT WHERE TWO VIEWS ARE POSSIBLE AND THE AO HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF THE REVENUE SO AS TO EXERCISE THE POWERS U/S 263. IN OUR OPINION, THIS IS A SETTLED LAW AS PER THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. V. COMMISSIONER OF INCOME - TAX, 243 ITR 83. WE DO NOT DENY THIS PROPOSITION OF 18 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) THE LAW BUT IN THE CASE OF THE ASSESSEE THE AO HAS WITHOUT MAKING ANY INQUIRY ABOUT THE TRANSACTION WHICH ASSESSEE HAD WITH M/S. EMGEE HOUSING PVT. LTD. PASSED THE ORDER. THEREFORE, THE CASE OF THE ASSESSEE, IN OUR OPINION, RELATES TO LACK OF INQUIRY. 8.13 WE HAV E ALSO GONE THROUGH THE DECISION IN PYARELALJAISWAL VS. CIT, 41 TAXMANN.COM 278 (ALL). IN THIS CASE, WE NOTED THAT THE ALLAHABAD TRIBUNAL HAS CLEARLY HELD THAT WHERE IN A PROCEEDING U/S 143(3) THE ASSESSEE ON BEING ASKED BY THE AO FILES SEVERAL REPLIES AS WELL AS DETAILS AND EVIDENCES AND THE AO CONSIDERING THE SAME TOOK ONE OF THE VIEWS POSSIBLE IN THE MATTER, THE ORDER OF THE AO CANNOT BE SAID TO BE ERRONEOUS INSOFAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THIS CASE WILL ALSO NOT HELP THE ASSESSE E BECAUSE IN THE CASE BEFORE US, THE ASSESSEE DID NOT FILE THE REPLY TO THE QUERY RAISED BY THE AO. 8.14 COMING TO THE DECISION IN THE CASE OF INDU FINE LANDS (P) LTD. VS. CIT, 45 TAXMANN.COM 307 (HYD) WE NOTED THAT IN THIS CASE THE ASSESSEE COMPANY HAS ADVANCED A SUM OF RS. 20 CRORES TO ANOTHER COMPANY FOR BUYING A PIECE OF LAND AND ENTERED INTO DEVELOPMENT AGREEMENT WITH ITS GROUP COMPANY. THE DEAL COULD NOT MATERIALIZE AND THE GROUP COMPANY PAID THE SUM OF RS. 20 CRORES TO THE ASSESSEE AS COMPENSATIO N. THE AO HELD THAT THE AMOUNT PAID TO THE COMPANY WAS A CAPITAL EXPENDITURE AND THE SUM RECEIVED BY IT WAS CAPITAL RECEIPT IN THE HANDS OF THE ASSESSEE. CIT INVOKED JURISDICTION U/S 263 AND DIRECTED THE AO ON THESE FACTS TO MAKE A FURTHER INQUIRY. ON T HESE FACTS, THE HYDERABAD BENCH OF THIS TRIBUNAL TOOK THE VIEW THAT THE ASSUMPTION OF JURISDICTION U/S 263 BY CIT ITSELF WAS NOT PROPER SINCE THE VIEW TAKEN BY THE AO WAS ONE OF THE POSSIBLE VIEWS AND THERE WAS NO MATERIAL BEFORE THE COMMISSIONER TO VARY W ITH THE OPINION OF THE AO. THIS IS A CASE WHERE THE AO HAS TAKEN A VIEW ON THE BASIS OF THE FACTS BEFORE HIM BUT IN THE CASE BEFORE US, 19 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) THE ASSESSEE DID NOT COMPLY WITH THE INQUIRY MADE BY THE AO. THUS, THIS DECISION WILL NOT ASSIST THE ASSESSEE. 8.15 WE HAVE ALSO GONE THROUGH THE DECISION IN THE CASE OF ANAND PODDAR VS. ACIT, 33 TAXMANN.COM 367 (GAUH). THIS IS A CASE WHERE THE AO MADE INQUIRY BUT INQUIRY MADE BY THE AO WAS INADEQUATE IN THE OPINION OF THE CIT AND THEREFORE CIT INVOKED JURISDICTION U/S 2 63. WHEN THE MATTER TRAVELLED TO THE TRIBUNAL, THE TRIBUNAL TOOK THE VIEW THAT IF AO HAS MADE THE INQUIRY AND IN THE OPINION OF THE CIT THERE WAS INADEQUACY OF INQUIRY, THAT WILL NOT GIVE RIGHT TO INVOKE PROVISIONS OF SEC. 263. IN THE CASE OF THE ASSESSE E, WE NOTED THAT THE ASSESSEE DID NOT GIVE THE INFORMATION IN RESPECT OF PARTICULAR TRANSACTION AS DESIRED BY THE AO BY MAKING A SPECIFIC QUERY WHICH DEBARRED THE AO FROM EXAMINING THAT PARTICULAR ISSUE. THE CASE OF THE ASSESSEE IS NOT WHERE IT CAN BE SAI D THAT THERE WAS INADEQUACY OF INQUIRY. THUS, THIS DECISION WILL ALSO NOT HELP THE ASSESSEE. 8.16 IN THE CASE OF INFOSYS TECHNOLOGIES LTD. VS. JCIT (BANG), 103 ITD 399 WE NOTED THAT THE AO EXAMINED AND CONSIDERED THE RELEVANT FACT AND ONLY AFTER CONSIDERI NG THOSE FACTS ALLOWED THE DEDUCTION TO THE ASSESSEE AND THEREFORE THE TRIBUNAL TOOK THE VIEW THAT IF THE AO HAS TAKEN ONE OF THE POSSIBLE VIEWS, REVISION CANNOT BE RESORTED TO. 8.17 IN THE CASE OF HARYANA COACH BODY BUILDERS VS. ITO, 10 SOT 736 WE NOTED THAT THE AO ALLOWED THE CLAIM OF THE ASSESSEE AFTER INQUIRING INTO ALL THE ITEMS CALLED FOR THE INQUIRY AND THEREFORE THE HONBLE TRIBUNAL TOOK THE VIEW THAT THE AOS BRIEF ORDER INQUIRING INTO ALL THE ITEMS CALLED FOR INQUIRY COULD NOT BE SET ASIDE BY TH E CIT ON THE GROUND THAT THE ORDER SHOULD HAVE BEEN MORE ELABORATE OR FURTHER INQUIRIES SHOULD HAVE BEEN MADE. 8.18 IN THE CASE OF NABHA INVESTMENTS PVT. LTD. VS. UNION OF INDIA &ORS. 246 ITR 41 (DEL) WE NOTED THAT QUESTION DOES NOT RELATE TO THE LACK O F INQUIRY. THEREFORE, THIS DECISION WILL NOT ASSIST THE ASSESSEE. 20 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) 8.19 IN THE CASE OF INDIAN HOTELS LTD. VS. DCIT, ITA NO. 3234/B/92 WE NOTED THE COURT QUASHED THE 263 PROCEEDINGS AS IN THAT CASE INQUIRY HAD BEEN MADE BY THE AO WITH REGARD TO THE QUESTI ON INVOLVED RELYING ON THE DECISION OF MUMBAI HIGH COURT IN THE CASE OF GABRIEL INDIA, 203 ITR 108. 8.20 IN THE CASE OF CIT VS. GABRIEL INDIA, 203 ITR 108 (MUM) THE AO HAD MADE THE INQUIRIES IN REGARD TO THE NATURE OF THE EXPENDITURE INCURRED BY THE ASS ESSEE AND ASSESSEE HAD GIVEN DETAILED EXPENDITURE. THE ORDER PASSED BY THE AO WAS HELD NOT TO BE ERRONEOUS SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. THUS, IN OUR VIEW THE CASE LAW RELIED ON BY THE LD. AR FOR LACK OF INQUIRY/INADEQUATE INQUIRY WILL NOT ASSIST THE ASSESSEE. 8.21 THE DECISION OF THE COORDINATE BENCH IN THE CASE OF THE V.N. SALGAONCAR IS BINDING ON US AND WE CANNOT TAKE A DIFFERENT VIEW AS SUGGESTED BY LEARNED AR. HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT [2000] 243 ITR 83, AT PAGE 88 HAS CATEGORICALLY HELD AS UNDER: IN THE INSTANT CASE, THE COMMISSIONER NOTED THAT THE INCOME TAX OFFICER PASSED THE ORDER OF NIL ASSESSMENT WITHOUT APPLICATION OF MIND. INDEED, THE HIG H COURT RECORDED THE FINDING THAT THE INCOME TAX OFFICER FAILED TO APPLY HIS MIND TO THE CASE IN ALL PERSPECTIVE AND THE ORDER PASSED BY HIM WAS ERRONEOUS. IT APPEARS THAT THE RESOLUTION PASSED BY THE BOARD OF THE APPELLANT COMPANY WAS NOT PLACED BEFORE T HE ASSESSING OFFICER. THUS, THERE WAS NO MATERIAL TO SUPPORT THE CLAIM OF THE APPELLANT THAT THE SAID AMOUNT REPRESENTED COMPENSATION FOR LOSS OF AGRICULTURAL INCOME. HE ACCEPTED THE ENTRY IN THE STATEMENT OF THE ACCOUNT FILED BY THE APPELLANT IN THE ABS ENCE OF ANY SUPPORTING MATERIAL AND WITHOUT MAKING ANY INQUIRY . ON THESE FACTS THE CONCLUSION THAT THE ORDER OF THE INCOME TAX OFFICER WAS ERRONEOUS IS IRRESISTIBLE. WE, ARE, THEREFORE OF THE OPINION THAT THE HIGH COURT HAS RIGHTLY HELD THAT THE EXERCISE OF THE JURISDICTION BY THE COMMISSIONER U/S 263(1) WAS JUSTIFIED. THIS ITSELF PROVES NON APPLICATION OF MIND ON THE PART OF THE ASSESSING OFFICER AND COMPLETING THE ASSESSMENT WITHOUT MAKING AN ENQUIRY WILL TANTAMOUNT THAT THE ORDER IS ERRONEOUS AND PREJ UDICIAL TO THE INTEREST OF THE REVENUE. HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. (SUPRA) WHILE HOLDING SO HAS RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RAMPYARI DEVI SARAOGI VS. COMMISSIONER OF INCOME - TAX 67 ITR 84( SC). IN THIS CASE THE INCOME TAX OFFICER ACCEPTED THE RETURN OF THE ASSESSEE IN RESPECT OF THE INITIAL 21 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) CAPITAL, GIFT RECEIVED AND SALE OF JEWELLERY, THE INCOME FROM BUSINESS ETC. WITHOUT ANY ENQUIRY OR EVIDENCE WHATSOEVER. FOR THAT REASON THE CIT HELD TH E ORDER TO BE ERRONEOUS. IN REVISION, HE CANCELLED THE ORDER AND ORDERED THE INCOME TAX OFFICER TO MAKE FRESH ASSESSMENT. IN HIS ORDER THE COMMISSIONER HAD USED CERTAIN NEW GROUNDS WHICH HAD NOT BEEN DISCLOSED TO THE ASSESSEE IN THE NOTICE GIVEN TO HIM T O SHOW CAUSE WHY THE ORDER OF THE INCOME TAX OFFICER SHOULD NOT BE REVISED. BUT, APART FROM THIS NEW GROUND, THE HON'BLE SUPREME COURT OBSERVED AT PAGE 385 AS UNDER: 'THERE WAS AMPLE MATERIAL TO SHOW THAT THE INCOME TAX OFFICER MADE THE ASSESSMENTS IN UND UE HURRY...THE ASSESSEE MADE A DECLARATION GIVING THE FACTS REGARDING INITIAL CAPITAL, THE ORNAMENTS AND PRESENTS RECEIVED AT THE TIME OF MARRIAGE, OTHER GIFTS RECEIVED FROM HER FATHER IN LAW, ETC., WHICH SHOULD HAVE PUT ANY INCOME TAX OFFICER ON HIS GUARD . BUT THE INCOME TAX OFFICER WITHOUT MAKING ANY INQUIRIES TO SATISFY HIMSELF PASSED THE ASSESSMENT ORDER... A SHORT STEREO TYPED ASSESSMENT ORDER WAS MADE FOR EACH ASSESSMENT YEAR... NO EVIDENCE WHATSOEVER WAS PRODUCED IN RESPECT OF THE MONEY LENDING BUSIN ESS DONE...NO NAMES WERE GIVEN AS TO THE PARTIES TO WHOM THE LOANS WERE ADVANCED ......' 8.22 THUS, THE LAW AS MAY BE STATED AFTER GOING THROUGH BOTH THE DECISIONS OF SUPREME COURT IS VERY CLEAR THAT IF THE ASSESSMENT HAS BEEN MADE WITHOUT MAKING THE PROPE R ENQUIRY AND APPLICATION OF MIND, THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. UNLIKE THE CIVIL COURT WHICH IS NEUTRAL TO GIVE A DECISION ON THE BASIS OF EVIDENCE PRODUCED BEFORE IT, AN ASSESSING OFFICER IS NOT ONLY AN ADJUDICATOR B UT IS ALSO AN INVESTIGATOR. THE ASSESSING OFFICER CANNOT REMAIN PASSIVE ON THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER ENQUIRY. IT IS THE DUTY OF THE ASSESSING OFFICER TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN THE RETURN W HEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE ENQUIRY. IF THERE IS FAILURE TO MAKE SUCH ENQUIRY, IN OUR OPINION, THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE REVENUE HAS NOT TO PROVE THAT ITS ORDER IS ERRONEOUS AND CI T CAN REVISE IT U/S 263. EVEN THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF SWARUP VEGETABLE PRODUCTS INDUSTRIES LTD. (NO. 1) VS. CIT [1991] 187 ITR 412 HAS ALSO TAKEN THE SIMILAR VIEW BY OBSERVING AS UNDER: 22 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) IT IS BEYOND DISPUTE THAT, UNDER SECTION 2 63 OF THE I.T. ACT, THE COMMISSIONER HAS POWER TO SET ASIDE THE ASSESSMENT ORDER AND SEND THE MATTER FOR FRESH ASSESSMENT IF HE IS SATISFIED THAT FURTHER ENQUIRY IS NECESSARY AND THAT THE ORDER OF INCOME TAX OFFICER IS PREJUDICIAL TO THE INTEREST OF THE RE VENUE. HON'BLE DELHI HIGH COURT ALSO IN THE CASE OF GEE VEE ENTERPRISES VS. ADDL. CIT [1975] 99 ITR 375 (DEL) HAS ALSO TAKEN THE SIMILAR VIEW THAT LACK OF PROPER ENQUIRY TANTAMOUNT THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 8.23 SIMILAR ISSUE HAS ARISEN BEFORE THE SPECIAL BENCH OF I.T.A.T. CHENNAI B BENCH IN THE CASE OF RAJALAKSMI MILLS LTD. VS. INCOME TAX OFFICER [2009] 121 ITD 343 (CHENNAI) (SB). THE FACTS OF THIS CASE WERE THAT THE ASSESSEE ENCLOSED THE BALANCE SHEET A LONG WITH THE RETURN AND IN THE BALANCE SHEET THE ASSESSEE MADE A PROVISION FOR GRATUITY AMOUNTING TO RS.7,85,600/ - . THE ASSESSEE CLAIMED IT AS DEDUCTION IN THE RETURN OF INCOME. THE ASSESSING OFFICER ALLOWED THE SAME WITHOUT MAKING ANY DISCUSSION IN THE ORDER OF ASSESSMENT. THE CIT BY INVOKING THE PROVISION OF SECTION 263 TOOK THE VIEW THAT THE ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE SPECIAL BENCH OF I.T.A.T. UNDER THESE FACTS HAS HELD AS UNDER: IT IS NOT NECESSARY FOR THE COMMISSIONER TO MAKE FURTHER ENQUIRIES BEFORE CANCELLING THE ASSESSMENT ORDER OF THE ASSESSING OFFICER. THE COMMISSIONER CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE THE ASSESSING OFFICER SHOULD HAVE MADE FURTHER I NQUIRIES BEFORE ACCEPTING THE STATEMENTS MADE BY THE ASSESSEE IN THE RETURN. THE REASON IS OBVIOUS. UNLIKE THE CIVIL COURT WHICH IS NEUTRAL TO GIVE A DECISION ON THE BASIS OF EVIDENCE PRODUCED BEFORE IT, AN ASSESSING OFFICER IS NOT ONLY AN ADJUDICATOR B UT IS ALSO AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER ENQUIRY. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN THE RETURN WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE AN INQUIRY. THE MEANING TO BE GIVEN TO THE WORD 'ERRONEOUS IN SECTION 263 EMERGES OUT OF THIS CONTEXT. THE WORD 'ERRONEOUS' IN THAT SECTION INCLUDES CASES WHERE THERE HAS BEEN FAILURE TO MAKE THE NECESSARY INQUIRIES. IT IS INCUMBENT ON THE AS SESSING OFFICER TO INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES MAKE SUCH AN INQUIRY PRUDENT AND THE WORD 'ERRONEOUS' IN SECTION 263 INCLUDES THE FAILURE TO MAKE SUCH AN ENQUIRY. THE ORDER BECOMES ERRONEOUS BECAUSE SUCH AN ENQUIRY HAS NOT BEEN MADE AND NOT BECAUSE THERE 23 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) IS ANYTHING WRONG WITH THE ORDER IF ALL THE FACTS STATED THEREIN ARE ASSUMED TO BE CORRECT. IN THE INSTANT CASE, THE ASSESSING OFFICER FAILED TO MAKE ANY ENQUIRY IN REGARD TO THE ALLOWABILITY OF THE PROVISION FOR GRATUITY. AS SUCH, THE ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THEREFORE, THE CONDITIONS PRECEDENT FOR ASSUMING JURISDICTION UNDER SECTION 263 DID EXIST IN THE FACTS OF THE INSTANT CASE. 8.24 WE HAVE ALSO GONE THROUGH THE DECISION OF I. T.A.T. E BENCH NEW DELHI IN I.T.A. NO.1438/DEL/09 IN THE CASE OF N.T.P.C. LIMITED VS. DY. CIT. ON THE CASE OF LACK OF ENQUIRY IN THIS JUDGMENT WHILE DEALING THE ISSUE OF LACK OF ENQUIRY, THE TRIBUNAL, UNDER PARA 14 HAS HELD AS UNDER: 14. IN THE LIGHT O F ABOVE PROPOSITIONS LET US EXAMINE THE FACTS OF THE PRESENT CASE. ON PAGE NO. 5 OF THE PAPER BOOK, VOLUME - I, THE ASSESSEE HAS PLACED ON RECORD COPY OF THE QUESTIONNAIRE DATED 29/06/2006 ISSUED BY THE ASSESSING OFFICER. IN THIS QUESTIONNAIRE, ASSESSING OF FICER HAS CALLED FOR INFORMATION FROM THE ASSESSEE UNDER SEC. 142(1) ON FIFTEEN COUNTS. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THIS QUESTIONNAIRE CAREFULLY. PERUSAL OF THIS QUESTIONNAIRE REVEALS THAT ASSESSING OFFICER HAS NO T A SINGLE QUESTION ON BOTH THE ISSUES. THEREFORE, IT SUGGESTS THAT HE HAS NOT CONDUCTED ANY INQUIRY ON THESE TWO ISSUES. THE CONTENTIONS OF THE ASSESSEE IS THAT IT HAS DISCLOSED ALL MATERIAL FACTS FULLY AND TRULY DURING THE ASSESSMENT PROCEEDINGS AND ASSE SSMENT HAS BEEN FRAMED UNDER SEC.143(3) OF THE ACT, THEREFORE, IT BE PRESUMED THAT ASSESSING OFFICER MUST HAVE GONE THROUGH ALL THESE DETAILS. HOWEVER, HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIES, HON'BLE DELHI HIGH COURT IN THE CASE OF GEE VE E ENTERPRISES AS WELL AS IN THE CASE OF ASHOK LOGANI AND DLF POWER EQUIPMENTS, IT HAS BEEN HELD THAT IF THE ASSESSING OFFICER FAILED TO GO INTO THE ISSUES IN PROPER PERSPECTIVE AND HIS APPROACH IS PERFENTORY THEN THE ORDER WOULD BE TERMED AS ERRONEOUS WHIC H WOULD ULTIMATELY CAUSED A PREJUDICE TO THE ASSESSEE ON ESCAPEMENT OF INCOME FROM TAX. THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF ASHOK LOGANI AS WELL AS IN THE CASE OF DLF POWER ARE THE LATEST DECISIONS ON THIS ISSUE. SIMILARLY, LEARNED DR HAS BROUGHT TO OUR NOTICE THE DECISION OF HON'BLE DELHI HIGH COURT DATED 15.2.2002 IN THE CASE OF CIT VS. REGENCY PARK PROPERTY MANAGEMENT SERVICESPVT. LTD. REPORTED IN [2012] TIOL PAGE 75 WHERE IT HAS BEEN HELD THAT IF ASSESSING OFFICER HAD NOT DEALT WITH THE DETAILS AND EXAMINED THE ISSUES THEN THERE WAS AN ERROR ON THE PART OF THE ASSESSING OFFICER UPON WHICH ACTION U/S 263 CAN BE JUSTIFIED. THUS, CONSIDERING ALL THESE ASPECTS, WE ARE OF THE VIEW THAT LEARNED COMMISSIONER HAS RIGHTLY TAKEN COGNIZANC E U/S 263 OF THE ACT BECAUSE ASSESSING OFFICER HAS NOT CONDUCTED ANY INQUIRY ON THESE TWO ISSUED. 8.25 THIS CLEARLY PROVES THAT THE TRIBUNAL HAS ALSO TAKEN THE VIEW THAT LACK OF ENQUIRY WILL TANTAMOUNT TO BE THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. OUR AFORESAID VIEW IS DULY SUPPORTED BY THE DECISION OF FULL BENCH OF GUWAHATI HIGH COURT IN THE CASE OF CIT VS JAWAHAR 24 ITA NOS. 170 TO 173/PNJ/2014 (ASST. YEARS : 2006 - 07 & 2010 - 11) BHATTACHARJEE, 341 ITR 434(GAU.)(F.B) IN WHICH HONBLE HIGH COURT TOOK THE VIEW NOT HOLDING SUCH INQUIRY AS A NORMAL AND NOT APPLYING THE MIND TO THE RELEVANT MATERIAL IN MAKING AN ASSESSMENT WOULD BE AN ERRONEOUS ASSESSMENT WARRANTING EXERCISE OF REVISIONAL JURISDICTION . THE CIT HAS ALREADY RESTORED THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER AND THE ASSES SING OFFICER, AFTER GIVING PROPER OPPORTUNITY TO THE ASSESSEE HAS TO RE - DECIDE THE ISSUE WHETHER ANY CAPITAL GAIN ARISE DURING THE YEAR. WE THEREFORE, CANNOT ENTERTAIN THE GROUND RELATING TO THE MERIT OF THE ISSUE AS CIT(A) HAS NOT DECIDED THE ISSUE ON ME RIT. 8.26 WE, THEREFORE, DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER OF CIT INVOKING THE JURISDICTION U/S 263 OF THE INCOME TAX ACT IN ALL THE CASES. 9. IN THE RESULT, ALL THE APPEALS FILED BY THE RESPECTIVE ASSESSEES STAND DISMISSED. 10. ORDER PR ONOUNCED IN THE OPEN COURT ON 22 /08/2014. SD/ - (D.T.GARASIA) JUDICIAL MEMBER SD/ - (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI DATED : 22 /08/2014 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT(A) CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER