Shri Khodidas Premjibhai Bhagiya, RAJKOT-GUJARAT V. The Pr. CIT-3, RAJKOT-GUJARAT

ITA 177/RJT/2017

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3940 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 24-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Corroborative evidences; Assessment record; Revenue expenditure; Reassessment proceedings; Capital expenditure
• Section: 143(3); 142(1); 148; 263; 63

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT L LL LK KK KOZJH OZJH OZJH OZJH OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN] YS[KK LNL; ,OA ] YS[KK LNL; ,OA ] YS[KK LNL; ,OA ] YS[KK LNL; ,OA EK/KQFERK JKW; EK/KQFERK JKW; EK/KQFERK JKW; EK/KQFERK JKW;] U;KF;D LNL; DS LE{KA ] U;KF;D LNL; DS LE{KA ] U;KF;D LNL; DS LE{KA ] U;KF;D LNL; DS LE{KA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SMT MADHUMITA ROY, JUDICIAL MEMBER ITA NOS. 177, 178, 179 & 180/RJT/2017 ( / ASSESSMENT YEARS : 2009-10, 2010-11, 2012-13 & 20 13-14) SHRI KHODIDAS PREMJIBHAI BHAGIYA, SAHYOG SOCIETY, RAVAPAR ROAD, MORBI VS. ITO, WARD 2(3)(1), RAJKOT. ./ ./PAN/GIR NO. : ACBPB 3732 H / (APPELLANT) ( / RESPONDENT ) ASSESSEE BY : SHRI KALPESH DOSHI, A.R. REVENUE BY : SHRI JITENDRA KUMAR, CIT-D.R. / DATE OF HEARING : 29/08/2018 / DATE OF PRONOUNCEMENT: 03/10/2018 / O R D E R PER BENCH: THESE FOUR APPEALS BY THE ASSESSEE ARE DIRECTED AGA INST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME-TAX -3, RAJKOT , DATED 23.03.2017 FOR ASSESSMENT YEARS 2009-10, 2010-11, 2012-13 & 20 13-14. - 2 - THE ISSUE INVOLVE IN ALL THESE APPEALS RAISED BY TH E SAME ASSESSEE ARE COMMON. THEREFORE THESE HAVE BEEN CLUBBED TOGETHER FOR THE PURPOSE OF BREVITY, CONVENIENCE AND ADJUDICATION 2. WE TAKE UP ASSESSEES APPEAL IN ITA NO.177/RJT/2 017 FOR ASST. YEAR 2009-10 AS THE LEAD CASE. THE ASSESSEE HAS RAI SED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LEARNED PRINCIPAL CIT HAS WRONGLY HEL D THAT THE ORDER PASSED U/S.143(3) R.W.S. 147 IS ERRONEOUS AND PREJU DICIAL TO THE INTEREST OF THE REVENUE AND WRONGLY PASSED ORDER U/ S263 OF THE I.T. ACT. 2. THAT THE LEARNED PRINCIPAL CIT HAS WRONGLY AP PLIED THE EXPLANATION 2 TO SECTION 263(1) OF THE I.T. ACT FOR THE YEAR UNDER CONSIDERATION. 3. THAT THE REVISION U/S263 IS MADE ON INCORREC T FACTS AND ALSO ON THE BASIS INCORRECT LEGAL PROVISIONS AND THEREFORE THE ORDER U/S.263 IS BAD IN LAW. 4. THAT THE FINDINGS OF THE PRINCIPAL CIT(A) ARE NOT FINISHED AND ARE BAD-IN-LAW. THE APPELLANT CRAVES TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 3. THE ONLY ISSUE RAISED BY THE ASSESSEE IS THAT LD CIT ERRED IN HOLDING THE ORDER OF THE AO PASSED U/S 143(3) R.W.S. 147 OF THE ACT AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IN TH E PRESENT CASE IS AN INDIVIDUAL AND FILED ITS RETURN OF INCOME DATED 27- 05-2009 DECLARING TOTAL - 3 - GROSS INCOME OF RS. 5,65,324/- UNDER THE HEAD SALAR Y. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER RE-ASSESSMENT PROCEEDINGS A ND ACCORDINGLY A NOTICE U/S 148 OF THE ACT WAS SERVED UPON THE ASSES SEE. THE REASSESSMENT WAS COMPLETED U/S 143(3) R.W.S. 147 OF THE ACT DETE RMINING GROSS TOTAL AT RS. 6,25,615/- ONLY VIDE ORDER DATED 24-03-2015. 4.1 SUBSEQUENTLY, THE LD. CIT ON VERIFICATION OF TH E ASSESSMENT RECORDS OBSERVED THAT THE ORDER PASSED BY THE AO U/S 143(3) R.W.S. 147 OF THE ACT SUFFERS FROM CERTAIN DEFECTS AS DETAILED UNDER: I. THE ASSESSEE BEING A SALARIED EMPLOYEE HAS DEPOSITE D CASH AMOUNTING TO RS. 5,24,700/- AND RS. 99,500/- IN HIS BANK ACCOUNTS BEARING NO. 14003 & 1807 MAINTAINED WITH R AJKOT DISTRICT CO-OPERATIVE BANK. THE LD CIT ALSO OBSERVE D THAT THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS HAS FILE D CASH FLOW STATEMENT WITHOUT GIVING THE DETAILS OF CASH IN HAN D AS ON 01- 04-2008. THE ASSESSEE IN ITS CASH FLOW STATEMENT HA S ALSO SHOWN A SUM OF RS. 27,50,000/- AS RESERVED FOR INVE STMENT. II. THE ASSESSEE BEING A SALARIED CLASS EMPLOYEE HAS NO T SHOWN OPENING CASH IN HAND IN ITS CASH FLOW STATEMENT. AS PER THE LD. CIT THE CASH FLOW STATEMENT WAS NOT VERIFIED BY THE AO DURING THE PROCEEDINGS. III. THE ASSESSEE DURING THE YEAR HAS ACCEPTED MONEY FRO M HIS SON THROUGH BANKING CHANNEL BUT THE AO HAS NOT VERIFIED THE CREDITWORTHINESS OF THE SON OF THE ASSESSEE. IN VIEW OF ABOVE, THE LD CIT ISSUED A NOTICE U/S 26 3 OF THE ACT VIDE LETTER NO. CIT.R.-3/HQ-TECH/263/KPB/2016-17 DATED 9-3-2017 FOR SEEKING THE EXPLANATION OF THE FACTS DISCUSSED ABOVE. - 4 - 4.2 THE ASSESSEE IN COMPLIANCE TO IT SUBMITTED THAT THERE WAS NO CASH DEPOSIT IN THE BANK ACCOUNT BEARING NO.14003 FOR RS .5,24,700/-. AS SUCH THERE WAS CASH DEPOSIT ONLY FOR RS.300/- AS ON 25-0 2-2009. 4.3 THE AMOUNT OF CASH DEPOSIT FOR RS.99,500/- IN T HE BANK ACCOUNT BEARING NO.1807 WAS DULY EXPLAINED DURING THE ASSES SMENT PROCEEDINGS WHICH WAS ACCEPTED BY THE AO. 4.4 THERE IS AN ERROR IN THE NOTICE ISSUED U/S 263 OF THE ACT WHICH MENTIONS THE DEPOSITS OF CASH IN THE BANK ACCOUNT N O.1807 WITH RAJKOT COOPERATIVE BANK, WHEREAS SUCH BANK ACCOUNT IS MAIN TAINED WITH RAJKOT DISTRICT COOPERATIVE BANK. 4.5 THE REOPENING U/S 147 OF THE ACT WAS MADE ON AC COUNT OF THE DEPOSIT OF CASH IN THE BANK ACCOUNTS ON DIFFERENT D ATES. THUS, IT IS CLEAR THAT ALL THE FACTS REGARDING THE DEPOSIT OF CASH IN THE BANK ACCOUNTS HAVE BEEN DULY EXPLAINED AND VERIFIED BY THE AO DURING T HE ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT. THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT HAS FILED THE CASH F LOW STATEMENT JUSTIFYING ALL THE DEPOSITS MADE IN THE BANK ACCOUN TS AND NO DEFECT OF WHATSOEVER WAS POINTED OUT BY THE AO. 4.6 THERE WAS NO REQUIREMENT TO MENTION THE OPENING BALANCE AS ON 01-04-2008 IN THE CASH FLOW STATEMENT. IN FACT, THE RE WAS SUFFICIENT WITHDRAWALS FROM THE BANK ACCOUNT DURING THE YEAR W HICH ARE SUFFICIENT - 5 - ENOUGH TO JUSTIFY THE EXCESS CASH SHOWN AS RESERVED FOR INVESTMENT. AS SUCH THERE WERE CERTAIN FIXED DEPOSITS MATURED DURI NG THE YEAR. THUS, THE FIXED DEPOSITS WERE WITHDRAWN FROM THE BANK AND SHO WN AS RESERVE FOR INVESTMENT. 4.7 THE ASSESSEE HAS TAKEN MONEY THROUGH BANKING CH ANNEL FROM HIS SON NAMELY SUMIT K. BHAGIYA WHO IS MAINTAINING NRE ACCOUNT WITH HDFC BANK AND RESIDING IN USA. 4.8 ALL THE BANK STATEMENTS WERE FURNISHED TO THE A O DURING THE ASSESSMENT PROCEEDINGS. 4.9 AS THE CASE WAS REOPENED U/S 147 OF THE ACT ON ACCOUNT OF DEPOSIT OF CASH IN THE BANK ACCOUNTS, THEREFORE, THE SOURCE OF CASH WAS DULY ENQUIRED BY THE AO DURING THE REASSESSMENT PROCEEDI NGS WHICH WAS SUFFICIENTLY EXPLAINED TO THE AO. HOWEVER, THE LD CIT DISREGARDED THE CONTENTION OF T HE ASSESSEE AND HELD THE ORDER OF THE AO AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE BY OBSERVING AS UNDER: 5.3 THE ARGUMENTS OF THE ASSESSEE HAVE BEEN DULY C ONSIDERED AND THE SAME CANNOT BE ACCEPTED. IT IS PERTINENT TO MENTION HERE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y.2011-12, T HE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF CASH DEPOSITS AND ADDITIO N OF RS.18,91,300/- WAS MADE BY TREATING THE SAME AS UNEXPLAINED. BUT D URING THE REASSESSMENT PROCEEDINGS FOR THE CURRENT YEAR, THE ASSESSEE HAS MADE AN ATTEMPT TO EXPLAIN THE SOURCE BY WAY OF A CASH-F LOW STATEMENT WHICH HAS BEEN EXHAUSTIVELY SCRUTINIZED BY THE AO EVEN TH OUGH THE SAME - 6 - SUFFERED FROM CERTAIN INHERENT DEFECTS AS DISCUSSED BELOW. IN ADDITION TO THE CASH DEPOSITS, THE ASSESSEE DID NOT DISCLOSE RE NTAL INCOME AS WELL AS INTEREST INCOME FROM FIXED DEPOSITS IN HIS ORIGINAL RETURN FILED. THE ASSESSEE HAS HOWEVER INCLUDED AND ADMITTED THESE IN COMES IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S.148 OF TH E I.T ACT, 1961. ON PERUSAL OF THE CASH FLOW STATEMENT SUBMITTED FOR A. Y. 2009-10, THE FOLLOWING DISCREPANCIES HAVE BEEN NOTICED: (I) IN A.Y. 2009-10, THE A.O. HAS ACCEPTED TH E CASH FLOW STATEMENT FURNISHED BY THE ASSESSEE WITHOUT PROPER VERIFICATION. THE ASSESSEE HAS SHOWN 'RESERVES FOR INVESTMENT & F IXED DEPOSIT AMOUNTING TO RS.27,50,000/-' WHICH IS NOTHING BUT A BALANCING FIGURE. THE ASSESSEE BEING A SALARIED EMPLOYEE, IT IS DIFFICULT TO BELIEVE AND ACCEPT THAT SUCH A HUGE AMOUNT WAS KEPT AS A RESERVE. THE AO HAS NOT VERIFIED THE SOURCE OF CHEQ UE DEPOSITS MADE BY THE ASSESSEE. ONLY A HAND-WRITTEN NOTING SA YING THE CHEQUES WERE GIVEN BY HIS SON I.E. SUMIT KUMAR K. B HAGIYA IS AVAILABLE ON RECORD. THIS NON-VERIFICATION ALSO RES ULTED IN APPARENT UNDER ASSESSMENT. THERE IS NO CONFIRMATION ALONG WITH SUPPORTING PROOF AVAILABLE ON RECORD FROM ASSESSEE' S SON SHRI SUMIT KUMAR K. BHAGIYA. NO EFFORT HAS BEEN MADE TO ASCERTAIN THE AO OF SHRI SUMIT BHAGIYA AND ALSO TO INTIMATE H IM ABOUT THE FUNDS HAVING BEEN TRANSFERRED TO THE ASSESSEE FROM HIS ACCOUNT. ALSO IN THE CURRENT YEAR I.E. A.Y. 2009-10, THE ASS ESSEE HAS SHOWN DONATION PAYMENT IN CASH OF RS.31,100/-. IT I S ALSO SEEN FROM THE CASH FLOW STATEMENT FURNISHED FOR A.Y. 200 9-10 THAT NO OPENING CASH BALANCE WAS SHOWN BY THE ASSESSEE. FUR THER, NO PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT HAVE B EEN INITIATED. THIS IS A CLEAR CASE PREJUDICIAL TO THE INTEREST OF THE REVENUE. 5.4 COMING TO THE LEGAL 5.5 THE ABOVE ARGUMENTS OF THE ASSESSEE HAVE ALSO BEEN DULY CONSIDERED. THE SAME CANNOT BE ACCEPTED ON THE FOLL OWING GROUNDS. THE ASSESSEE RELIED ON THE DECISION OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. V/S CIT (2000) 14 DTC 146(SC), (2000) 243 ITR 831 AND DECISION OF GUJARAT HIGH COU RT IN THE CASE OF CIT V/S ARVIND JEWELLERS 124 TAXMANN 615(GUJ.) (SUP RA). IT IS PERTINENT TO MENTION HERE THAT IN THE INSTANT CASE THE ASSESS MENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AS DISCUSSED IN PARA 7.3 ABOVE. THE POWER U NDER SECTION 263 - 7 - CAN BE EXERCISED WHERE THE ORDER OF THE ASSESSING O FFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. WHE N AN ORDER IS ERRONEOUS, THEN THE ORDER IS ALSO DEFICIENT AND IN ORDER TO REMEDY THE SITUATION, POWER UNDER SECTION 263 HAS BEEN GIVEN. THEREFORE, THE VIEW THAT THE POWER COULD NOT HAVE BEEN EXERCISED TO ALL OW THE ASSESSING OFFICER TO MAKE UP THE DEFICIENCY IS ALTOGETHER AN INCORRECT INTERPRETATION OF LAW. IT IS NOT THE LAW THAT THE A SSESSING OFFICER OCCUPYING THE POSITION OF AN INVESTIGATOR AND ADJUD ICATOR CAN DISCHARGE HIS FUNCTION BY PERFUNCTORY OR INADEQUATE INVESTIGA TION. SUCH A COURSE IS TO RESULT IN ERRONEOUS AND PREJUDICIAL ORDERS. W HERE THE RELEVANT ENQUIRY WASNOT UNDERTAKEN, AS IN THIS CASE, THE ORD ER IS ERRONEOUS AND PREJUDICIAL TOO AND THEREFORE, REVISABLE. INVESTIGA TION SHOULD ALWAYS BE FAITHFUL AND FRUITFUL. UNLESS ALL FRUITFUL AREAS OF ENQUIRY ARE PURSUED THE ENQUIRY CANNOT BE SAID TO HAVE BEEN FAITHFULLY COND UCTED. RELIANCE IS PLACED ON THE DECISION OF HON'BLE CALCUTTA HIGH COU RT IN THE CASE OF CIT, CENTRAL-1, KOLKATA V/S MAITHAN INTERNATIONAL ( 2015) 56 TAXMANN.COM 283(CALCUTTA). RELIANCE IS ALSO PLACED ON THE DECISION OF THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF C IT V/S AMITABH BACHCHAN DATED 16.05.2016 WHEREIN IT HAS BEEN HELD AS UNDER: 'HOWEVER, THE ABOVE IS NOT THE SITUATION IN THE PRE SENT CASE IN VIEW OF THE REASONS STATED BY THE LEARNED C.I.T. ON THE BASIS OF WHICH THE SAID AUTHORITY FELT THAT THE MATTER NEEDE D FURTHER INVESTIGATION, A VIEW WITH WHICH WE WHOLLY AGREE. M AKING A CLAIM WHICH WOULD PRIMA FACIE DISCLOSE THAT THE EXP ENSES IN RESPECT OF WHICH DEDUCTION HAS BEEN CLAIMED HAS BEE N INCURRED AND THEREAFTER ABANDONING/WITHDRAWING THE SAME GIVE S RISE TO THE NECESSITY OF FURTHER ENQUIRY IN THE INTEREST OF REVENUE. THE NOTICE ISSUED UNDER SECTION 69-C OF THE ACT COULD N OT HAVE BEEN SIMPLY DROPPED ON THE GROUND THAT THE CLAIM HAS BEE N WITHDRAWN. WE, THEREFORE, ARE OF THE OPINION THAT T HE LEARNED C.I.T. WAS PERFECTLY JUSTIFIED IN COMING TO HIS CON CLUSIONS INSOFAR AS THE ISSUE NO. (III) IS CONCERNED AND IN PASSING THE IMPUGNED ORDER ON THAT BASIS. THE LEARNED TRIBUNAL AS WELL A S THE HIGH COURT, THEREFORE, OUGHT NOT TO HAVE INTERFERED WITH THE SAID CONCLUSION.' 6. CONSIDERING THE TOTALITY OF THE FACTS AND THE CI RCUMSTANCES AS NARRATED ABOVE, THE ASSESSMENT FRAMED BY THE ASSESS ING OFFICER IS TREATED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTE RESTS OF THE REVENUE TO THAT EXTENT. HENCE, THE SAME IS SET-ASIDE WITH A DI RECTION TO THE AO TO EXAMINE AND REFRAME THE ASSESSMENT ORDER AS PER FOL LOWING DIRECTIONS: - 8 - 1. TO VERIFY SOURCE OF CASH DEPOSITS IN THE VARIOU S BANK ACCOUNTS 2. TO VERIFY SOURCE OF CHEQUES DEPOSITED IN THE BA NK ACCOUNTS. 3. TO VERIFY GENUINENESS OF THE CASH-FLOW STATEMEN T SUBMITTED DURING THE COURSE OF ASSESSMENT. 4. TO INITIATE PENALTY PROCEEDINGS U/S.271(1)(C) O F THE I.T. ACT, 1961 FOR CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME. 7. IN THE RESULT, THE PROCEEDINGS U/S.263 OF THE IT ACT FOR A.Y. 2009- 10 ARE DECIDED ACCORDINGLY WITH THE DIRECTIONS AS A BOVE GIVEN TO THE AO, TO RECOMPUTED THE TAXABLE INCOME OF THE ASSESSE E AS WELL AS THE TAX, INTEREST & SURCHARGE PAYABLE BY HIM. BEING AGGRIEVED BY THE ORDER OF LD. CIT(A) ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD AR BEFORE US FILED A PAPER BOOK WHICH IS RUNNING FROM PAGES 1-56 AND SUBMITTED THAT THE LD CIT(A) HAS HEL D THE ORDER OF THE AO ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE ON ACCOUNT OF NON-VERIFICATION OF THE CASH DEPOSIT BY THE ASSESSE E DURING THE YEAR. HOWEVER, THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE FACT OF CASH DEPOSIT WAS DULY VERIFIED BY THE AO DURING THE ASSE SSMENT PROCEEDINGS. THE LD. AR IN SUPPORT OF HIS CLAIM DREW OUR ATTENTI ON ON THE REASONS RECORDED BY THE AO FOR THE REOPENING OF THE CASE IN HIS ASSESSMENT ORDER WHICH ARE DETAILED AS UNDER: DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A. Y.2011-12, IT HAS BEEN DISCOVERED THAT THE ASSESSEE HAS EARNED INTERE ST OF SAVING BANK A/C HELD IN RAJKOT DISTRICT CO.OP. BANK, COOPERATIVE BA NK OF RAJKOT AT RAJKOT AND MORBI AS ALSO INTEREST ON FIXED DEPOSIT RECEIPTS HELD IN THIS BANK. IT IS ALSO SEEN THAT THE ASSESSEE HAS ALSO RE CEIVED LEAVE AND LICENSE RENT ON PROPERTY OWNED BY HIM AT AHMEDABAD WHICH HAS BEEN LET OUT. ALSO, IT IS SEEN THAT ASSESSEE HAS DEPOSIT ED CASH ON VARIOUS DATED TO THE TUNE OF RS.15,48,500/- IN RAJKOT DISTRICT CO .OP. BANK IN A/C - 9 - NO.14003 AND RS.1,28,003/- IN A/C NO.1807. THE ASSE SSEE HAS NOT BEEN ABLE TO EXPLAIN SIMILAR CASH DEPOSIT AND SAME HAS B EEN ASSESSED AS UNDISCLOSED INCOME IN A.Y.2011-12. THESE CASH DEPOS ITS ARE OVER AND ABOVE THE CREDITS IN THE BANK A/C ARISING OUT OF SA LARY AND THEREFORE CONSTITUTE INCOME FROM UNDISCLOSED SOURCE. 5.1 THE LD. AR FURTHER DREW OUR ATTENTION ON THE NO TICE ISSUED DURING THE REASSESSMENT PROCEEDINGS REQUIRING THE ASSESSEE TO FURNISH THE COPIES OF THE BANK STATEMENTS. THE COPY OF THE NOTICE IS P LACED ON PAGE 18 OF THE PAPER BOOK AND RELEVANT EXTRACT OF THE NOTICE READS AS UNDER: SUB: ASSESSMENT PROCEEDINGS FOR A.Y.2009-10. PLEASE REFER TO THE ABOVE. YOU ARE REQUIRED TO FURN ISH THE FOLLOWING DETAILS AND INFORMATION WITH SUPPORTING EVIDENCE ON OR BEFORE 05.12.2014. 1. PLEASE FURNISH YOUR ALL SOURCES OF YOUR INCOME AND STATEMENT OF INCOME OF THE YEAR UNDER CONSIDERATION. 2. THE COPY OF STATEMENTS OF ALL BANK ACCOUNTS/PASS BO OK MAINTAIN BY YOU, EITHER JOINTLY OR IN INDIVIDUAL CAPACITY. 3. COMPLETE DETAILS OF YOUR BANK INTEREST AND FIXED DE POSIT INTEREST AND OTHER INTEREST, IF ANY. 5.2 THE LD AR FOR THE ASSESSEE ALSO DREW OUR ATTENT ION ON THE REPLY GIVEN TO THE AO IN RESPONSE TO THE NOTICE ISSUED BY THE AO DURING THE REASSESSMENT PROCEEDINGS WHICH IS PLACED ON PAGES 1 9 TO 21 OF THE PAPER BOOK. 5.3 LD AR ALSO DREW OUR ATTENTION ON THE COPIES OF THE BANK STATEMENT FILED DURING THE COURSE OF REASSESSMENT PROCEEDINGS WHICH IS PLACED ON PAGES 22-31 OF THE PAPER BOOK. 5.4 THE LD AR FOR THE ASSESSEE ALSO DREW OUR ATTENT ION ON THE CASH FLOW STATEMENT PLACED ON PAGES 32 AND 33 OF THE PAPER BO OK. - 10 - 5.5 THE LD AR ALSO DREW OUR ATTENTION ON THE DETAIL S OF THE LOAN TAKEN BY THE ASSESSEE FROM HIS SON NAMELY SUMIT KUMAR K. BHAGIYA ALONG WITH COPY OF BANK STATEMENT WHICH ARE PLACED ON PAGES 34 TO 38 OF THE PAPER BOOK. 5.6 THE LD AR FOR THE ASSESSEE ALSO SUBMITTED THAT IN THE IDENTICAL FACTS AND CIRCUMSTANCES THE LD CIT(A) FOR THE ASSESSMENT YEAR 2011-12 HAS DELETED THE ADDITION MADE BY THE AO AMOUNTING TO RS . 7,33,900/- ON ACCOUNT OF CASH DEPOSIT. THE COPY OF THE CIT(A) ORD ER FOR THE ASSESSMENT YEAR 2011-12 IS PLACED ON PAGES 39 TO 48 OF THE PAP ER BOOK. 6. ON THE OTHER HAND, THE LD DR SUBMITTED THAT THE ORDER OF THE AO IS CONSIDERED ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF REVENUE IF THE LD. CIT CONSIDERS THAT THE ORDER HAS BEEN PASSED WITHOU T MAKING ENQUIRES FOR VERIFICATION WHICH SHOULD HAVE BEEN MADE DURING THE ASSESSMENT PROCEEDINGS. 6.1 THE LD DR ALSO SUBMITTED THAT THE AO DURING THE ASSESSMENT PROCEEDINGS HAS NOT VERIFIED THE CREDITWORTHINESS O F THE SON OF THE ASSESSEE FROM WHOM THE ASSESSEE HAS TAKEN LOAN DURI NG THE YEAR. 6.2 IN VIEW OF ABOVE, THE LD DR CLAIMED THAT THE RE ASSESSMENT ORDER NEEDS TO BE SET ASIDE AND SHOULD BE EXAMINED IN PUR SUANCE TO THE DIRECTION OF LD CIT PASSED U/S 263 OF THE ACT. - 11 - 7. THE LD. AR IN HIS REJOINDER SUBMITTED THAT THE E XPLANATION TO SECTION 263 OF THE ACT IS NOT APPLICABLE. THE LD. C IT(A) U/S 263 OF THE ACT HAS NOT POINTED OUT ANY DEFECT IN THE ASSESSMEN T ORDER PASSED BY THE AO U/S 143(3) R.W.S. 147 OF THE ACT. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ORDER OF THE AO WAS SET ASIDE BY THE LD CIT U/S 263 OF THE ACT WITH THE DIRECTION TO FRAME THE ASSESSMENT AFRESH AFTER VERIFICATION OF SOURCE OF C ASH/CHEQUE DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. FROM THE PRECEDING DISCUSSION, WE NOTE THAT THE AO DURING THE ASSESSMENT PROCEEDINGS HAS VERIFIED ALL THE NECESSA RY DETAILS WITH REGARD TO THE DEPOSIT OF CASH/CHEQUE IN THE BANK ACCOUNT O F THE ASSESSEE. THEREFORE, IN OUR CONSIDERED VIEW, THE ORDER OF THE AO CANNOT BE HELD AS ERRONEOUS IN SO FAR PREJUDICIAL TO THE INTEREST OF REVENUE ON ACCOUNT OF NON-VERIFICATION OF THE CASH/CHEQUE DEPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE. IN THIS REGARD, WE DRAW OUR SUPPORT AND G UIDANCE FROM THE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF SUNBEAM AUTO LTD. REPORTED IN189 TAXMAN 436 WHEREIN IT WAS HELD AS UNDER: THE SUBMISSION OF THE REVENUE WAS THAT WHILE PASSI NG THE ASSESSMENT ORDER, THE ASSESSING OFFICER DID NOT CONSIDER THE A SPECT SPECIFICALLY WHETHER THE EXPENDITURE IN QUESTION WAS REVENUE OR CAPITAL EXPENDITURE. THAT ARGUMENT PREDICATED ON THE ASSESSMENT ORDER, W HICH APPARENTLY DID NOT GIVE ANY REASON WHILE ALLOWING THE ENTIRE E XPENDITURE AS REVENUE EXPENDITURE. HOWEVER, THAT, BY ITSELF, WOUL D NOT BE INDICATIVE OF THE FACT THAT THE ASSESSING OFFICER HAD NOT APPLIED HIS MIND TO THE ISSUE. THERE ARE JUDGMENTS GALORE LAYING DOWN THE PRINCIPL E THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IS NOT RE QUIRED TO GIVE - 12 - DETAILED REASONS IN RESPECT OF EACH AND EVERY ITEM OF DEDUCTION, ETC. THEREFORE, ONE HAS TO SEE FROM THE RECORD AS TO WHE THER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE EXPENDITURE IN QUESTION AS REVENUE EXPENDITURE. ONE HAS TO KEEP IN MIND THE DI STINCTION BETWEEN 'LACK OF INQUIRY' AND 'INADEQUATE INQUIRY'. IF THER E WAS ANY INQUIRY, EVEN INADEQUATE, THAT WOULD NOT, BY ITSELF, GIVE OCCASIO N TO THE COMMISSIONER TO PASS ORDERS UNDER SECTION 263 MERELY BECAUSE HE HAS DIFFERENT OPINION IN THE MATTER. IT IS ONLY IN CASES OF 'LACK OF INQUIRY' THAT SUCH A COURSE OF ACTION WOULD BE OPEN 8.1 WE ALSO FIND SUPPORT AND GUIDANCE FROM THE ORDE R OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. ARVIND JE WELLERS REPORTED IN 124 TAXMAN 615, WHEREIN IT WAS HELD AS UNDER: IT IS CLEAR THAT THE PROVISIONS OF SECTION 263 CAN NOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COM MITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRO NEOUS, THAT SECTION WILL BE ATTRACTED AND INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE INSTANT CASE, IT WAS THE FINDING OF FACT GIVEN BY THE TRIBUNAL THAT THE ASSESSEE HAD PRODUCED RELEVANT MA TERIAL AND OFFERED EXPLANATION IN PURSUANCE OF THE NOTICES ISSUED UNDE R SECTION 142(1) AS WELL AS SECTION 143(2) AND AFTER CONSIDERING THOSE MATERIALS AND EXPLANATION, THE ITO HAD COME TO A DEFINITE CONCLUS ION. THE COMMISSIONER DID NOT AGREE WITH THE CONCLUSION REAC HED BY THE ITO. SECTION 263 DID NOT EMPOWER HIM TO TAKE ACTION ON T HESE FACTS TO ARRIVE AT THE CONCLUSION THAT THE ORDER PASSED BY THE ITO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. SINCE T HE MATERIAL WAS THERE ON RECORD AND THE SAID MATERIAL WAS CONSIDERED BY T HE ITO AND A PARTICULAR VIEW WAS TAKEN, THE MERE FACT THAT DIFFE RENT VIEW COULD BE TAKEN, SHOULD NOT BE THE BASIS FOR AN ACTION UNDER SECTION 263 AND IT COULD NOT BE HELD TO BE JUSTIFIED. 8.2 WE ALSO NOTE THAT THE LD. DR HAS PLACED HIS REL IANCE ON EXPLANATION TO SECTION 263 OF THE ACT, WHICH READS AS UNDER: [EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, I T IS HEREBY DECLARED THAT AN ORDER PASSED BY THE ASSESSING OFFI CER SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO T HE INTERESTS OF THE - 13 - REVENUE, IF, IN THE OPINION OF THE PRINCIPAL COMMIS SIONER OR COMMISSIONER, (A) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VER IFICATION WHICH SHOULD HAVE BEEN MADE; (B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQUIRING INTO THE CLAIM; (C) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH ANY ORDER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 11 9 ; OR (D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WITH AN Y DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE, RENDERED BY THE JUR ISDICTIONAL HIGH COURT OR SUPREME COURT IN THE CASE OF THE ASSESSEE OR ANY OTHER PERSON.] 8.3 FIRST OF ALL, WE NOTE THAT THIS EXPLANATION IS APPLICABLE WITH THE EFFECT FROM 01-06-2015 AND THE YEAR BEFORE US PERTA INING TO THE ASSESSMENT YEAR 2009-10. THEREFORE, IN OUR CONSIDER ED VIEW, THE SAME CANNOT BE APPLIED TO THE INSTANT CASE. IN ADDITION TO THE ABOVE, WE ALSO NOTE THAT THE ORDER OF THE AO SHALL BE CONSIDERED A S ERRONEOUS IF HE FAILS TO MAKE ENQUIRY ON VERIFICATION WHICH SHOULD HAVE B EEN MADE BY THE AO. HOWEVER, ON PERUSAL OF THE ORDER OF LD. CIT WE FIND THAT THERE WAS NO MENTION OF ANY DEFECT IN THE ORDER PASSED BY THE AO. THEREFORE THE SAME CANNOT BE HELD AS ERRONEOUS WITHOUT POINTING O UT THE DEFECTS IN THE MANNER IN WHICH THE AO HAS CONDUCTED ENQUIRIES. IN THIS REGARD, WE PLACE OUR RELIANCE ON THE ORDER OF MUMBAI TRIBUNAL IN THE CASE OF ANIL L TAODARWAL, MUMBAI VS PR CIT 19, IN ITA NO.3498/MUM/ 2017 VIDE ORDER DATED 02-01-2018, WHEREIN IT WAS HELD AS UNDER: WE ARE NOT OBLIVIOUS OF THE FACT THAT THE LEGISLAT URE, VIDE THE FINANCE ACT , 2015, BY MAKING AVAILABLE EXPLANATION 2 TO SEC. 2 63 ON THE STATUTE W.E.F 01.06.2015, HAD THEREIN PROVIDED CERTAIN CIRC UMSTANCES, UNDER WHICH THE ORDER PASSED BY THE A.O, IF, IT IS IN THE OPINION OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER SO, SHALL BE DEEMED TO BE - 14 - ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF THE REVENUE. HOWEVER, EXERCISE OF SUCH DEEMED POWERS CONFERRED O N THE REVISIONAL AUTHORITY AS PER EXPLANATION 2 HAVE TO CONSTRUED BY STRICTLY CONFINING AND SUBJECT TO SATISFACTION OF THE CONDITIONS CONTE MPLATED THEREIN. WE ARE OF THE CONSIDERED VIEW THAT TO THE EXTENT MAKIN G OF INQUIRIES AND VERIFICATION WHICH IN THE OPINION OF THE CIT THE A. O SHOULD HAVE MADE, AS CONTEMPLATED IN CLAUSE (A) OF EXPLANATION 2, TH OUGH GIVES AN EDGE TO THE OPINION OF THE CIT AS REGARDS THE INQUIRIES AND VERIFICATIONS WHICH THE A.O SHOULD HAVE MADE, BUT THEN, SUCH INQU IRIES AND VERIFICATIONS ARE NOT ONLY REQUIRED TO BE RELEVANT FOR ADJUDICATION OF THE ISSUE, BUT ALSO SHOULD POINT OUT AS TO HOW THE VIEW ARRIVED AT BY THE A.O BY NOT TAKING RECOURSE TO SUCH INQUIRIES AND VERIFI CATION, CAN BE FAULTED WITH AND HELD TO BE WRONG. 8.4 IN VIEW OF ABOVE AND AFTER HAVING REGARD TO THE ENTIRE FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE LD. CIT HAS NOT P OINTED OUT ANY DEFECT IN THE ORDER OF AO EXCEPT NON-VERIFICATION OF THE DEPO SIT OF CASH/CHEQUE IN THE BANK ACCOUNT OF THE ASSESSEE. WE ALSO FIND THAT THE ORDER WAS PASSED BY THE AO AFTER DUE VERIFICATION DURING THE ASSESSM ENT PROCEEDINGS. THEREFORE IN OUR CONSIDERED VIEW THE ORDER PASSED B Y THE LD CIT U/S 263 OF THE ACT IS NOT SUSTAINABLE. HENCE, WE QUASH THE ORDER OF LD. CIT AND RESTORE THE ORDER OF AO. HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 9. COMING TO THE OTHER APPEALS FILED BY THE ASSESSEE: AT THE OUTSET OF THE HEARING THE LD AR BEFORE SUBMI TTED THAT THE ISSUE INVOLVED IN THESE APPEALS ARE IDENTICAL TO DI SPUTES RAISED IN ITA NO.177/RJT/2017. ACCORDINGLY, BOTH LD AR AND DR BEF ORE US AGREED THAT WHATEVER, VIEW WILL BE TAKEN IN ITA NO.177/RJT/2017 WOULD BE APPLICABLE TO THE OTHER APPEALS OF THE ASSESSEE IN FULL STRENGTH. AS WE - 15 - HAVE ALLOWED THE ASSESSEES APPEAL IN ITA NO.177/R/ 2017, WE ARE INCLINED TO ALLOW THE OTHER APPEALS OF THE ASSESSEE ALSO. HENCE, ALL THE GROUNDS OF THE APPEALS OF THE ASSESSEE ARE ALLOWED. 10. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED . THIS ORDER PRONOUNCED IN OPEN COURT ON 03/10/2018 SD/- SD/- E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 03/10/2018 PRITI YADAV, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! ' # $' / CONCERNED CIT 4. # $' () / THE CIT(A)-3, RAJKOT. 5. '() * +'+, , , ./ ! / DR, ITAT, AHMEDABAD. 6. * 01 2 3 / GUARD FILE. / BY ORDER, '' +' //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !', $% / ITAT, AHMEDABAD 1. DATE OF DICTATION 05/09/2018 (DICTATION-PAD 8 PAG ES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 28/09/2018 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 01/10/2018 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER