Shri Apurva Dinesh Patel, Vadodara V. The ACIT, Circle-2(1), Baroda

ITA 1903/AHD/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9152 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-02-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 26-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R I PATEL
• Keywords: Unexplained cash credit; Capital asset converted into stock in trade; Revision of order; Audit objection; Principle of natural justice; Question of law; Initiation of penalty proceedings; Speculation loss; Corroborative evidences; Assessment record
• Section: 143(3); 54F; 142(1); 131; 54; 263; 63; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI R.P. TOLANI, JM & SHRI MANISH BORAD, AM. ITA NO. 1381/AHD/2013 & ITA NO.1903/AHD/2015 ASST. YEAR: 2008-09 SMT. APURVA DINESH PATEL, D/49 PRATAPBAUG SOCIETY, MAJMAHUDA, VADODARA VS. COMMISSIONER OF INCOME TAX-1,/ACIT-2(1), BARODA. APPELLANT RESPONDENT PAN AJJPP 6843N APPELLANT BY SMT URVASHI SHODHAN, AR RESPONDENT BY SHRI R. I. PATEL, CIT DR DATE OF HEARING: 22/2/2017 DATE OF PRONOUNCEMENT: 28/02/2017 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THESE TWO APPEALS OF ASSESSEE FOR ASST. YEAR 2008- 09 ARE DIRECTED AGAINST TWO SEPARATE ORDERS (1) OF COMMI SSIONER OF INCOME TAX-1, BARODA, DATED 28.03.2013 U/S 263 OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) ARISING OUT OF ORDER U /S 143(3) OF THE ACT FRAMED ON 23.12.2010 BY ACIT, CIRCLE-2(1), BARODA A ND (2) OF COMMISSIONER OF INCOME TAX(A)-5, BARODA, DATED 9.3. 2015 ARISING OUT OF ORDER U/S 143(3) R.W.S. 263 OF THE ACT FRAME D ON 3.3.2014 PASSED BY ACIT, CIR.2(1), BARODA. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESSEE:- ITA NO. 1381 & 1903 ASST. YEAR 2008-09 2 GROUNDS RAISED IN ITA NO.1381/AHD/2013 ARE - 1. LD. CIT ERRED IN LAW AND ON FACTS IN HOLDING THE ASSESSMENT ORDER PASSED IN SCRUTINY PROCEEDINGS U/S 143 (3) OF THE A CT AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. LD. CIT FAI LED TO APPRECIATE THAT THE ORDER SOUGHT TO BE REVISED INVOKING PROVISIONS OF SECTION 263 OF THE ACT WAS PASSED AFTER DETAILED INQUIRY AND VERIF ICATION OF THE DOCUMENTARY EVIDENCES SUBMITTED BY THE APPELLANT. T HE ORDER OF CIT IS BAD IN LAW AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE THAT DESERVES TO BE QUASHED. IT BE SO HELD NOW. 2. LD. CIT ERRED IN LAW AND ON FACTS IN SETTING ASI DE SCRUTINY ASSESSMENT ORDER AND DIRECTING AO TO REFRAME THE ASSESSMENT BY MAKING COMPREHENSIVE INQUIRIES AND RECONCILIATION OF CASH DEPOSITED IN BANK FROM CASH ON HAND AND WITHDRAWALS FROM BANK WITHOUT CONSIDERING FACTUAL MATRIX ALREADY ON RECORD PLACED BY THE APPE LLANT IN ORIGINAL AS WELL REVISIONAL PROCEEDINGS. THIS ACTION OF ID. CIT IS HARSH, UNCALLED FOR AND COMPLETELY AGAINST THE PRINCIPLES OF NATURA L JUSTICE. GROUNDS IN ITA NO.1903/AHD/2015 ARE - 1. LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRM ING ACTION OF AO IN MAKING ADDITION OF CASH DEPOSIT OF RS. 39, 48, 493/ - U/S 68 OF THE ACT IGNORING SUBMISSION OF THE APPELLANT THAT CASH DEPO SITED IN BANK ACCOUNTS OF ORIENTAL BANK OF COMMERCE ARE FROM EARL IER WITHDRAWAL AND FROM CASH ON HAND. LD. CIT (A) OUGHT TO HAVE DE LETED ADDITION CONSIDERING EXPLANATION AND SUBMISSION REGARDING SO URCE OF DEPOSIT. IT BE SO HELD NOW. 2. LD. CIT (A) ERRED IN LAW AND ON FACTS IN O BSERVING THAT APPELLANT HAS REITERATED SUBMISSIONS FILED BEFORE AO AND (THEN) I D. CIT -1, BARODA AND NOT INTERESTED IN PURSUE HIS APPEAL IN RIGHT IN TEREST WITHOUT GIVING ANY INDEPENDENT FINDINGS. LD. CIT (A) OUGHT TO HAVE CONSIDERED SUBMISSION OF THE APPELLANT AND OUGHT TO HAVE GIVEN INDEPENDENT FINDINGS AND DELETE THE ADDITION. IT BE SO HELD NOW . 3. LEVY OF INTEREST U/S 234A, 234B, 234C & 234D OF THE ACT IS NOT JUSTIFIED. ITA NO. 1381 & 1903 ASST. YEAR 2008-09 3 4. INITIATION OF PENALTY PROCEEDINGS U/S 271 (L)(C) IS UNJUSTIFIED THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, ED IT, DELETE, MODIFY OR CHANGE ALL OR ANY OF THE GROUNDS OF APPEAL AT THE T IME OF OR BEFORE THE HEARING OF THE APPEAL. 2. OUT OF THESE TWO APPEALS ITA NO.1381/AHD/2013 IS CHALLENGING THE ORDER OF LD. COMMISSIONER OF INCOME TAX U/S 263 OF THE ACT AND ITA NO.1903/AHD/2015 IS ON MERITS AGAINST LD. COMMI SSIONER OF INCOME TAX(A)S ORDER CONFIRMING ADDITION U/S 68 OF THE ACT MADE U/S 143(3) R.W.S. 263 OF THE ACT.. 3. WE WILL FIRST TAKE ITA NO.1381/AHD/2013. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS AN INDIVIDUAL EARNING INCOME FROM HOUSE PROPERTY AND BUSINESS. SHE FILED RETURN OF INCOME FOR ASST. YEAR 2008-09 ON 16.02.2009 DECLARING TOTAL INCOME AT RS.7,81,690/-. CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE U/S 143 (3) OF THE ACT WAS ISSUED ON 19.08.2009 FOLLOWED BY NOTICE U/S 142 (1) OF THE ACT DATED 16.8.2010 DULY SERVED CALLING FOR VARIOUS DET AILS AND INFORMATION. IN RESPONSE THEREOF ASSESSEE AND HER C OUNSEL ATTENDED FROM TIME TO TIME AND SUBMITTED DETAILED REPLY. AFT ER DISCUSSION, RETURNED INCOME WAS ASSESSED AS TOTAL INCOME. PURSU ANT THERETO LD. COMMISSIONER OF INCOME TAX INVOKED HIS POWER U/S 26 3 OF THE ACT AND ON EXAMINING THE ASSESSMENT RECORDS OF ASSESSEE OBSERVED THAT SUBSTANTIAL AMOUNT OF CASH WAS DEPOSITED IN TH E BANK ACCOUNT DURING THE YEAR TOTALING TO RS.39,48,493.58 BUT NO EXPLANATION WAS PROVIDED FOR ITS SOURCE DURING THE ASSESSMENT PROCE EDINGS. LD. COMMISSIONER OF INCOME TAX ALSO OBSERVED THAT ASSES SEE HAS ITA NO. 1381 & 1903 ASST. YEAR 2008-09 4 CLAIMED INTEREST ON LOAN TAKEN FOR PURCHASE OF SHOP S AGAINST RENTAL INCOME EVEN WHEN THE SHOPS WERE NOT GIVEN ON RENT. ACCORDINGLY, LD. COMMISSIONER OF INCOME TAX ISSUED SHOWS CAUSE NOTIC E U/S 263(1) OF THE ACT WHICH IS REPRODUCED BELOW :- OFF ICE OF THE COMMISSIONER OF INCOME-TAX-I, AAYAKAR BHAVAN, 2 ND FLOOR, ANNEXE BUILDING, RACE COURSE, BARODA. NO. BRD/CIT-I/HQ/263/ADP/2012-13 DATED; 23.01.2013 TO, SMT. APURVA DINESH PATEL, D/49, PRATAPBAUG SOCIETY, MUNJMAHUDA, BARODA. SIR, SUB: PROCEEDINGS U/S 263 OF THE I.T. ACT, 1961- A .Y.2008-09- NOTICC U/S 263(1) OF THE ACT.- REGARDING- PAN: AJJPP6843N . . IT WAS FOUND THAT THE ASSESSMENT ORDER PASSED U/S 1 43(3) OF THE ACT DATED 23.12.2010. BY THE ASSESSING OFFICER, ASSISTANT COM MISSIONER OF INCOME TAX, CIRCLE-2(L), BARODA FOR A.Y. 2008-09 WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE ON ACCOUNT OF THE FOLLO WING: 'IT IS NOTICED THAT DURING THE YEAR SUBSTANTIAL AMO UNT OF CASH WAS DEPOSITED IN YOUR BANK ACCOUNT. FOR THE MONTH OF APRIL, 2007 ALONE TH IS AMOUNT WAS RS. 3,39,420/-. AS YOU HAVE NOT SHOWN ANY INCOME/LOAN IN CASH, THES E DEPOSITS WERE REQUIRED TO BE TREATED AS UNEXPLAINED CASH CREDIT AND TREATED AS Y OUR INCOME. ALSO DURING THE YEAR YOU HAVE CLAIMED EXPENDITURE ON PAYMENT OF INTEREST OF RS. 1,97,5747- TO ICICI BANK ON THE LOAN AMOUNT OF RS. 90,00,0007- FOR PURC HASE OF SHOP NO. 116 TO 119 AT SHREEM SHALINI MALL, VADODARA. AS EVIDENT FROM THE COMPUTATION OF INCOME, THESE SHOPS WERE NOT GIVEN ON RENT. HOWEVER, THE DEDUCTIO N OF INTEREST ON LOAN WAS DEBITED FROM THE RENT INCOME EARNED ON OTHER RENTED PROPERTIES. THIS RESULTED INTO UNDER ASSESSMENT OF INCOME. IN VIEW OF THE FOREGOING, YOU ARE HEREBY GIVEN AN O PPORTUNITY OF BEING HEARD AND TO SHOW CAUSE AS TO WHY THE AFORESAID ASSESSMENT MADE BY THE ASSESSING OFFICER FOR THE A.Y.2008-09, SHOULD NOT BE ENHANCED OR CANCELLE D WITH A DIRECTION TO MAKE FRESH ASSESSMENT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 263 OF THE ACT. FOR THIS PURPOSE, YOU MAY APPEAR BEFORE THE CIT-I IN PE RSON OR THROUGH YOUR AUTHORIZED ITA NO. 1381 & 1903 ASST. YEAR 2008-09 5 REPRESENTATIVE ON 30.01.2013 AT 12.30 P.M. IN CASE OF NON-COMPLIANCE, THE MATTER WILL BE DECIDED ON MERITS. YOURS FAITHFULLY, SD/- (N.M. RAWAL) ITO(TECH) FOR COMMISSIONER OF INCOME TAX -1, BARODA. ASSESSEE FILED SUBMISSIONS IN PURSUANCE TO NOTICE U /S 263(1) OF THE ACT ON 21.2.2013 MENTIONING THAT AS REGARDS CASH DE POSITS SOURCE WAS REGULAR CASH WITHDRAWAL FROM THE BANK AND AS RE GARDS RENTAL INCOME SHOPS WERE ACTUALLY GIVEN ON RENT. FURTHER A SSESSEE ALSO SUBMITTED THAT ALL DETAILS RELATING TO CASH DEPOSIT S INCLUDING COPY OF BANK STATEMENT AND CASH BOOK WERE PROVIDED TO THE A SSESSING OFFICER FOR DUE VERIFICATION DURING THE COURSE OF A SSESSMENT PROCEEDINGS. 4. ON GOING THROUGH THE SUBMISSIONS OF ASSESSEE LD. COMMISSIONER OF INCOME TAX(A) WAS CONVINCED WITH RE GARD TO THE LEGITIMATE CLAIM OF INTEREST PAID AGAINST THE RENTA L INCOME FROM THE SHOPS BUT NOT SO RELATING TO FURNISHING THE SOURCE OF CASH DEPOSITS IN THE BANK ACCOUNT AND WAS OF THE VIEW THAT ASSESSEE HAS NOT PROPERLY EXPLAINED AS TO WHY HE KEPT ON WITHDRAWING THE CAS H FROM THE BANK AND THEN DEPOSITING IT AGAIN THROUGHOUT THE YEAR. L D. COMMISSIONER OF INCOME TAX OBSERVED THAT THE ASSESSING OFFICER H AD FAILED TO EXAMINE THESE ASPECTS RELATING TO CASH DEPOSITS AND THE ORDER PASSED U/S 143(3) OF THE ACT WAS ERRONEOUS AND PREJ UDICIAL TO THE INTEREST OF REVENUE AND NEEDS TO BE SET ASIDE AND A CCORDINGLY ITA NO. 1381 & 1903 ASST. YEAR 2008-09 6 DIRECTED THE ASSESSING OFFICER TO REFRAME THE ASSES SMENT AFTER MAKING COMPREHENSIVE INQUIRIES AND RECONCILIATIONS. 5. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL CHALLENGING THE VALIDITY OF THE ORDER U/S 263 OF TH E ACT. LD. AUTHORISED REPRESENTATIVE REFERRING TO THE COPY OF BANK STATEM ENT AND CASH BOOK (FORMING PART OF THE PAPER BOOK) SUBMITTED THA T THE SOURCE OF CASH DEPOSIT WAS OUT OF CASH IN HAND IN THE BEGINNI NG OF THE YEAR AND REGULAR CASH WITHDRAWALS FROM THE BANK ACCOUNT HELD WITH ORIENTAL BANK OF COMMERCE (OBC). THE TOTAL CASH DEPOSIT DURI NG THE YEAR IN THE BANK ACCOUNT WITH OBC IS RS.39,48,493.58 AND TO TAL WITHDRAWAL IS RS.41,73,163/-. 6. LD. AUTHORISED REPRESENTATIVE ALSO REFERRED TO T HE LETTER DATED 9.12.2010 SUBMITTED BEFORE LD. ASSESSING OFFICER WH EREIN DETAILS OF DEPOSITS OF CASH WERE ATTACHED AND EXPLANATION FOR THE SOURCE OF CASH DEPOSIT WAS PROVIDED FOR. REFERENCE WAS ALSO M ADE TO LETTER DATED 7 TH JULY,2011 SUBMITTED TO THE DCIT, CIRCLE-2(1), BARO DA IN REFERENCE TO AUDIT OBJECTION IS PLACED AT PAGE 9 OF THE PAPER BOOK WITH REGARD TO EXPLANATION FOR TREATMENT OF CASH DE POSIT IN BANK ACCOUNT AND OTHER DETAILS. LD. AUTHORISED REPRESENT ATIVE ALSO REFERRED TO THE LETTER ISSUED BY ASSESSING OFFICER DATED 10 TH MARCH, 2010 ISSUED BY DCIT CIR-2(1) AND ANOTHER LETTER DAT ED 16.8.2010 ISSUED BY ACIT, CIR.2(1) FOR FINALIZING OF ASSESSME NT FOR ASST. YEAR 2008-09 CALLING FOR THE REMAINING INFORMATION INCLU DING FURNISHING OF BANK STATEMENT AND FURNISHING OF SOURCE OF CASH DEP OSITS WHICH WAS DULY REPLIED WITH ENCLOSURE EXPLAINING EACH ENTRY. LD. AUTHORISED ITA NO. 1381 & 1903 ASST. YEAR 2008-09 7 REPRESENTATIVE STRONGLY CONTENDED CHALLENGING THE V ALIDITY OF ORDER U/S 263 OF THE ACT AND SUBMITTED THAT POWER U/S 263 OF THE ACT HAS BEEN INVOKED ONLY WITH REGARD TO NON-SUBMISSION OF EXPLANATION OF SOURCE OF CASH DEPOSITS WHICH IS NOT CORRECT AND DE VOID OF FACTS BECAUSE LD. ASSESSING OFFICER HAS SPECIFICALLY CALL ED DETAILS FOR BANK STATEMENT, CASH BOOK AND SOURCE OF CASH DEPOSITS AN D ASSESSEE HAS DULY COMPLIED WITH IT BY FURNISHING NECESSARY EXPLA NATION WITH COPIES OF CASH BOOK, BANK STATEMENT AND RECONCILIATION OF CASH DEPOSITS AND CASH WITHDRAWALS. AS LD. ASSESSING OFFICER HAS MADE FULL APPLICATION OF MIND ON THE DETAILS SUBMITTED DURING THE ASSESSM ENT PROCEEDINGS, SUCH ORDER CANNOT BE HELD TO BE ERRONEOUS OR PREJUD ICIAL TO THE INTEREST OF REVENUE AND, THEREFORE, LD. COMMISSIONE R OF INCOME TAX ERRED IN INVOKING POWER U/S 263 OF THE ACT FOR SETT ING ASIDE THE ASSESSMENT U/S 143(3) OF THE ACT. LD. AUTHORISED RE PRESENTATIVE REFERRED AND RELIED ON THE FOLLOWING JUDGMENT/DECIS IONS :- 1. COMMISSIONER OF INCOME TAX VS. AMIT CORPN. (2012 ) 21 TAXMANN.COM.64 (GUJ) 2. TRIBUNALS DECISION IN THE CASE OF PATEL PRAHLAD BHAI HARJIVANBHAI IN ITA NO.2347/AHD/2012 3. TRIBUNAL DECISION IN THE CASE OF SHRI KUMARBHAI M. TAHELYANI IN ITA NO.2144/AHD/2012 4. TRIBUNALS DECISION IN THE CASE OF SHITAL PRIYAS HARAN SHAH VS. DCIT IN ITA NO.1454/AHD/2015 7. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE VEHEMENTLY ARGUED SUPPORTING THE ORDER U/S 263 OF T HE ACT AND SUBMITTED THAT ASSESSEE HAS NOT GIVEN PROPER EXPLAN ATION OF THE SOURCE OF CASH DEPOSITS AND LD. ASSESSING OFFICER F AILED TO OBSERVE ITA NO. 1381 & 1903 ASST. YEAR 2008-09 8 THE FACT THAT ASSESSEE WAS CONTINUOUSLY WITHDRAWING AND DEPOSITING CASH WITHOUT GIVING ANY REASON FOR DOING THE SAME A ND ALSO FAILED TO LINK THE IMPUGNED CASH DEPOSITS, TRANSACTIONS AS WE LL AS CASH WITHDRAWALS WITH THE BUSINESS ACTIVITY. LD. DEPARTM ENTAL REPRESENTATIVE REFERRED AND RELIED ON THE FOLLOWING JUDGMENTS/DECISION :- 1. RAJMANDIR ESTATES (P) LTD. VS. PR.CIT (2016) 70 TAX MANN.COM 124. (CALCUTT) 2. DO- T.A. 1-2/2014 (WITH C/DELAY IN FILING SLP) D ATED 9/1/2017(SC) 3. COMMISSIONER OF INCOME TAX VS. SARWANKUMAR SHARMA ( 2014) 49 TAXMANN.COM 101 (GUJARAT) 4. BHAGWANDAS D. VACHHANI VS. ACIT (2015) 56 TAXMANN.C OM 284 (GUJARAT) 5. ADANI AGRO (P) LTD. VS. DCIT (2013) 32 TAXMANN.COM. 356 (GUJARAT) 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED ON RECORD AND GONE THROUGH THE JUDGMENTS/DEC ISIONS RELIED ON BY THE LD. REPRESENTATIVES. SOLITARY GRIEVANCE OF T HE ASSESSEE IN THIS APPEAL IS CHALLENGING THE CORRECTNESS OF THE ORDER OF LD. COMMISSIONER OF INCOME TAX U/S 263 OF THE ACT. WE O BSERVE THAT ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED ON 2 3.12.2010 AFTER CALLING NECESSARY INFORMATION AND ACCEPTING THE RET URNED INCOME AS ASSESSED INCOME. THEREAFTER LD. COMMISSIONER OF INC OME TAX EXAMINED THE ASSESSMENT RECORD AND OBSERVED THAT AS SESSEE HAD DEPOSITED CASH INTO BANK ACCOUNT OFTENLY DURING THE YEAR WHICH TOTALED TO RS.39,48,493/- AND LD. ASSESSING OFFICER HAD FAILED TO EXAMINE THE ISSUE AS TO WHY ASSESSEE KEPT WITHDRAWI NG CASH FROM BANK AND THEN DEPOSITED IT AGAIN THROUGHOUT THE YEA R. LD. ITA NO. 1381 & 1903 ASST. YEAR 2008-09 9 COMMISSIONER OF INCOME TAX IN VIEW OF THIS FACT SET ASIDE THE ORDER OF ASSESSING OFFICER U/S 143(3) OF THE ACT AND ORDE RED FOR REFRAMING ASSESSMENT AFTER MAKING COMPREHENSIVE INQUIRIES AND RECONCILIATION. 9. THE ISSUE BEFORE US IS TO EXAMINE AS TO WHETHER THE ASSESSMENT ORDER U/S 143(3) OF THE ACT WAS FRAMED W ITHOUT VERIFICATION OF NECESSARY DETAILS AND PROPER APPLIC ATION OF MIND BY LD. ASSESSING OFFICER WITH REGARD TO THE CASH DEPOSIT I N THE BANK ACCOUNT. WE FIND THAT ON 10 TH MARCH, 2010 LD. DCIT ISSUED A LETTER CALLING FOR VARIOUS INFORMATION WHICH IS REPRODUCED BELOW :- OFFICE OF 1THE DEPUTY COMMISSIONER OF INCOME-TAX;,CIRCLE 2(T) ROOM NO. 209, 2 ND BOOR, AAYAKAR BHAVAN, RACE COURSE OWDTE, BARODA 390-007 NO.BRD/DCIT/CIR-2(1)/SCR.ASSTT/2009-10 DA TE: 10 TH MARCH,2010 TO SHRI APURVA DINESH PATEL, 13, RAJARAM SSOCIETY, MUNJMAHUDA, BARODA. SIR, SUB ; ASSESSMENT PROCEEDINGS FOR ASESSMERTT YEAR 200 8-09 REG. PLEASE REFER TO USE NOTICE A/S 145(2) DATED 19-8-09 ISSUED BY ITO, WD-2(3) BATODA. THE NOTICE HAS BEEN NOW TRANSFERRED TO THIS OFFICE, AS THE JURISDICTION OVER THE CASE RESTS WITH THE UNDERSIGNED, AND, ACCORDINGLY LETTER DATE D 16.02.2010 REQUESTING CERTAIN DETAILS WAS ISSUED TO YOU BY THIS OFFICE. IN ADDITI ON TO THE ABOVE YOU ARE REQUESTED TO FURNISH THE FOLLOWING :- 1. A BRIEF NOTE ON THE NATURE OF ACTIVITIES UNDERTA KEN IN THE PREVIOUS YEAR AND ALSO OF THE EARLIER YEAR IF THERE IS ANY CHANGE. 2. THE ADDRESSES OF ALL OFFICES/SHOPS, HOTELS/RESTA URANTS, AND OTHER ENTITIES OWNED AND RUN BY YOU AS WELL AS GIVEN ON RENT BASIS ALONG WITH DOCUMENT IN SUPPORT OF CLAIM. ITA NO. 1381 & 1903 ASST. YEAR 2008-09 10 3. PLEASE FURNISH THE DETAILS OF LITIGATION WITH TE NSILE STEEL LTD. BY FILING A COPY OF PLAINT AND YOUR REPLY THEREON IN THIS MATTER. 4. COPY OF PROFIT AND LOSS ACCOUNT/INCOME AND EXPEN DITURE ACCOUNT AND PERSONAL BALANCE SHEET. 5. FURNISH COPY OF DETAILED CAPITAL ACCOUNT. 6. DETAILS OF INVESTMENTS MADE IN SHRIM DUPLEX/BUNG LOW NO.4 & 5 NR. VISHWAMITRI TOWNSHIP, MUJMAHUDA, BARODA BY YOU OR BY ANY FAMILY MEMBER. PLEASE FURNISH COPY OF SALE DEED AS WELL AS THE SOURCE OF INVESTME NTS WITH SUPPORTING DOCUMENTS. 7. PLEASE FURNISH THE COPY OF RC BOOK OF SKODA CA R AND MERCEDES BENZ WITH DETAILS OF PURCHASE AND SOURCE OF INVESTMENTS THEREOF WITH SUPPORTING DOCUMENTS. 8. ALSO FURNISH THE COMPLETE DETAILS OF SHOPS FLOOR SPACE OCCUPIED BY YOU OR BY YOUR FAMILY MEMBER IN SHRIM SHALIN MALI, R.C. DUTT ROAD, BARODA WITH COPY OF DOCUMENTS AND THE SUPPORTING DOCUMENTS FOR SOURCE O F INVESTMENTS. 9. ALSO FURNISH THE DETAILS OF INVESTMENTS MADE BY YOU OR BY FAMILY MEMBERS IN OTHER ASSETS INCLUDING LAND, PROPERTY AND INVESTMEN T IN SHARES AND MUTUAL FUND, FD ETC. 10. DETAILED ADDRESSES AND PAN OF ALL THE PARTIES W ITH WHICH TRANSACTIONS (PURCHASE, SALES AND EXPENDITURE! EXCEEDING RS. 1,00,000/- HAV E BEEN MADE DURING THE PERIOD UNDER CONSIDERATION. 11. THE SOURCES M RESPECT OF CAPITAL INTRODUCED DUR ING THE YEAR WITH SUPPORTING EVIDENCE. 12. NAME OF ALL THE BANKERS WITH COMPLETE ADDRESSES AND NATURE OF ACCOUNT IN YOUR NAME AS WELL AS IN THE NAME OF FAMILY MEMBER. 13. PLEASE FURNISH THE DETAILS OF VARIOUS TYPES OF BANK LOANS OBTAINED WITH NATURE OF SECURITY PLEDGED AND HYPOTHECATION OF STOCK OFFERED . 14. SUPPORTING DOCUMENTS IN RESPECT OF CLAIM UNDER CHAPTER VI-A. 15. ORIGINAL TAX DEDUCTED AT SOURCE CERTIFICATES IN RESPECT OF TAX DEDUCTED AT SOURCE CLAIM. 16. PLEASE FURNISH MONTHWISE BREAK UP OF HOUSEHOLD EXPENSES ALONG WITH COPY OF LEDGER ACCOUNT SHOWING THEIR WITHDRAWALS. THIS LETTER MAY BE TREATED AS NOTICE U/S 142(1) OF THE 'INCOME TAX ACT, 1961. ITA NO. 1381 & 1903 ASST. YEAR 2008-09 11 YOU ARE REQUESTED TO ATTEND THE OFFICE OF THE UNDER STIGNED EITHER PERSONALLY OR THROUGH AUTHORISED REPRESENTATIVE ALONG WITH THE POINTWISE DETAILS/CLARIFICATION/EVIDENCE AS CALLED FOR ABOVE ON 22.03.2010 AT 10.30 AM. YOURS FAITHFULLY SD/- DCIT, CIR-2(1), BARODA. 10. WE FURTHER NOTICE THAT ON 16.8.2010 REMAINING F OLLOWING INFORMATION WERE CALLED FOR FINALIZING THE ASSESSME NT THROUGH LETTER :- (1) PLEASE FURNISH COPY OF RENT 3GREEM.NT WITH RE SPECT TO THE HOUSE PROPERTYINCOME. (2) PLEASE FURNISH DETAILS OF INCOME FROM BUS INESS AND. PROFESSION. (3) PROOF OF DEDUCTION U/S.VIA. (4) PLEASE FURNISH THE CERTIFICATE OF INTERES T. (5) PLEASE FURNISH THE DETAILS OF ALL MOVABLE & I MMOVABLE PROPERTY OF PURCHASE WITH SOURCE FOR THE SAME. (6) PLEASE FURNISH THE BANK STATEMENT FOR THE A .Y .2008-09 AND 2009-10. (7) PLEASE FURNISH SOURCE OF CASH DEPOSIT PER E NCLOSURE EXPLAINING EACH ENTRY. (8) THE RENT INCOME AS PER ENCLOSURE HAS NOT BEE N, SHOWN BY YOU PLEASE EXPLAIN RHE SAME. 11. IN RESPONSE TO THE LETTER ISSUED BY THE ASSESSI NG OFFICER THE ASSESSEE FILED REPLY ON 9.2.2010 PLACED AT PAGE 3 O F THE PAPER BOOK EXPLAINING THE SOURCE OF CASH DEPOSIT OF RS.39,48,4 93/- ALONG WITH COPY OF CASH BOOK SHOWING CONTRA ENTRIES FOR FOR BA NK ACCOUNT, COPY OF BANK ACCOUNT WITH ORIENTAL BANK OF COMMERCE SHOW ING CASH DEPOSITS ENTRIES IN ORDER TO SUPPORT THE FACT THAT SOURCE OF CASH DEPOSIT WAS OUT OF CASH WITHDRAWAL FROM BANK ACCOU NT. PURSUANT THERETO ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT WITHOUT CALLING FOR ANY ADDITION IN THE ASSESSMENT ORDER. THEREAFTE R ON ACCOUNT OF AUDIT OBJECTION ASSESSEE WAS AGAIN ASKED TO SUBMIT DETAILS OF CASH ITA NO. 1381 & 1903 ASST. YEAR 2008-09 12 DEPOSITS AND WITHDRAWALS WHICH WERE DULY COMPLIED B Y FILING LETTER DATED 7 TH JULY, 2010. 12. FROM THE SERIES OF EVENTS WHICH HAPPENED DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT IS WELL EVIDENT THAT INFO RMATION ABOUT CASH DEPOSITS WAS DULY ASKED BY THE ASSESSING OFFICER AN D ASSESSEE HAS ALSO SUBMITTED NECESSARY DETAILS WITH SUPPORTING EV IDENCE FOR PERUSAL AND APPARENTLY LD. ASSESSING OFFICER HAS MA DE PROPER APPLICATION OF MIND BY THOROUGHLY EXAMINING THE DET AILS BEFORE FINALIZING OF THE ASSESSMENT ORDER. 12.1 WE ALSO OBSERVE THAT LD. DEPARTMENTAL REPRESEN TATIVE BUTTRESSED HIS ARGUMENT WITH THE SUPPORT OF JUDICIA L PRONOUNCEMENTS. HOWEVER, THE FACTS AND ISSUES DEALT THEREIN ARE DIF FERENT FROM THE FACTS TO BE ADJUDICATED IN THE APPEAL BEFORE US. LD . DEPARTMENTAL REPRESENTATIVE RELIED ON THE JUDGMENT OF HON. CALCU TTA HIGH COURT IN THE CASE OF RAJMANDIR ESTATES PVT. LTD. (SUPRA) WHE REIN THE ISSUE IS UNDOUBTEDLY ABOUT SECTION 263 OF THE ACT BUT THE QU ANTUM IS OF AROUND 32 CRORES WHICH RELATES TO PREMIUM CHARGED O N AUTHORIZED SHARE CAPITAL OF RS.1.36 CRORES AND HON. COURT HELD IN FAVOUR OF REVENUE BEING JUSTIFIED FINDING THE ORDER U/S 263 O F THE ACT TO BE JUSTIFIED BUT THESE FACTS WILL NOT BE A FIT CASE RE LATING TO ASSESSEES CASE BECAUSE IN THIS CASE THE ISSUE RELATES TO DEPO SITS OF CASH IN THE BANK ACCOUNT WHICH HAVE CORRESPONDING SOURCE OF WIT HDRAWALS FROM BANK ACCOUNT AND ALL DETAILS WERE THERE FOR EXAMINA TION BY THE ASSESSING OFFICER. ITA NO. 1381 & 1903 ASST. YEAR 2008-09 13 12.2 WE FURTHER OBSERVE THAT REVENUE HAS RELIED ON THE JUDGMENT OF HON. GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SARWANKUMAR SHARMA (SUPRA) AND IN THE CASE OF B HAGWANDAS D. VACHHANI VS. ACIT (SUPRA) BUT THESE TWO CASES ALSO CANNOT FAVOUR THE REVENUE BECAUSE THEY ARE ON ISSUES ON MERITS AN D NOT IN RELATION TO THE ORDER U/S 263 OF THE ACT. SIMILARLY HON. GUJARAT HIGH COURT IN THE CASE OF ADANI AGRO (P) LTD. HELD THAT NO SUBSTANTIAL QUESTION OF LAW ARISES OUT OF THE ORDER OF THE TRIB UNAL, DISMISSING THE APPEAL OF ASSESSEE THAT ORDER OF COMMISSIONER OF IN COME TAX U/S 263 WAS NOT ERRONEOUS. WE FIND THAT THE FACTS IN TH IS CASE OF ASSESSEE RELATED TO CLAIMING SET OFF OF GAIN FROM S ALE OF SHARES AGAINST UNABSORBED SPECULATION LOSS WHICH WAS ALLOW ED BY THE ASSESSING OFFICER . EVEN THESE FACTS ARE DIFFERENT TO THOSE IN THE CASE OF ASSESSEE. 13. ON THE OTHER HAND, LD. AUTHORISED REPRESENTATIV E HAS ALSO RELIED ON CERTAIN JUDGMENT/DECISIONS. WE NOTICE THA T HON. JURISDICTIONAL HIGH COURT IN THE CASE OF COMMISSION ER OF INCOME TAX VS. AMIT CORPORATION (SUPRA) WERE OF THE OPINION TH AT THE TRIBUNAL COMMITTED NO ERROR IN SETTING ASIDE THE ORDER U/S 2 63 OF THE ACT IN THE CASE WHEN DURING THE COURSE OF FRAMING ASSESSMENT, ASSESSING OFFICER HAD EXCESS TO ALL RECORDS OF ASSESSEE AND A FTER PROPER PERUSAL OF SUCH RECORD HE HAS FRAMED THE ASSESSMENT . HON.COURT DECIDED THE SAME AGAINST THE REVENUE BY OBSERVING A S FOLLOWS :- 4. TRIBUNAL WAS OF THE OPINION THAT WHILE FRAMING T HE ORIGINAL ASSESSMENT, THE ASSESSING OFFICER HAD CARRIED OUT FULL INQUIRIES AN D THEREAFTER FRAMED THE ASSESSMENT. TRIBUNAL, THEREFORE, WAS OF THE OPINION THAT THE OR DER OF THE ASSESSING OFFICER COULD ITA NO. 1381 & 1903 ASST. YEAR 2008-09 14 NOT HAVE BEEN CATEGORIZED AS ERRONEOUS ON THE GROUN DS STATED BY THE COMMISSIONER OF INCOME-TAX. TRIBUNAL HELD AND OBSERVED AS UNDER :- '6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND HAVE ALSO PERUSED THE MATERIAL ON RECORD AS ALSO THE PAPER BOOK FILED BEFORE US. WE FIND FROM THE ASSESSMENT ORDER ITSELF THAT AS STATED IN PARA (4) THEREOF THE A.O. HAS CLEARLY STATED THAT DURING THE YEAR THERE WERE SALES OF FLA TS OF RS. 5,20,000/= ON WHICH A CERTAIN PROFIT WAS DECLARED. WE FIND FROM THE ORD ER THAT THE ASSESSEE IS A CIVIL CONTRACTOR AND WHAT IS SOLD AS FLAT IS FIXED ASSETS OF THE FIRM. FROM THE SUBMISSIONS TO THE I.T.O. AND TO THE CIT IT IS NOTE D THAT NO BUSINESS ACTIVITY WAS MADE DURING THE YEAR. WE ALSO FIND THAT THE ITO HAS CLEARLY STATED IN PARA (5) THAT SUBJECT TO ABOVE REMARKS -AND BASED UPON T HE INFORMATION PRODUCED BEFORE THE UNDERSIGNED, THE TOTAL INCOME OF THE ASS ESSEE IS COMPUTED AS UNDER. IT IS FURTHER NOTED THAT SEVERAL REPLIES WERE FILED BOTH DURING ASSESSMENT PROCEEDINGS AND DURING THE INQUIRY BY THE A.O. DURI NG REVISION PROCEEDINGS. FROM THE REPLIES ON ISSUES REFERRED TO IN THE SHOW CAUSE NOTICE, IT IS SEEN THAT IN RESPECT OF THE MAJOR ITEM BEING CASH CREDITS, TH E REQUIRED DETAILS IN SUPPORT THEREOF WERE FURNISHED AND THE A.O. IS STATED TO HA VE EVEN ISSUED SUMMONS U/S. 131 TO THE CONCERNED PARTIES FOR VERIFICATION. IN RESPECT OF CURRENT LIABILITIES BY WAY OF SUNDRY CREDITORS ALSO, FROM T HE ACCOUNTS FILED IT IS SEEN THAT THEY ARE REPAYMENTS OF OPENING BALANCES AND NO T FRESH CREDITS. EVEN OTHERWISE, CONSIDERING THE FACTS ON RECORD, WE ARE NOT IN AGREEMENT WITH THE C.I.T. THAT NO INQUIRIES WERE CONDUCTED BY THE A.O. THE DECISIONS OF JURISDICTIONAL HIGH COURT CITED BEFORE US SUPPORT T HE GROUND OF APPEAL. HENCE, CONSIDERING THE SAME ALONG SIDE THE MATERIAL ON RECORD AND THE LANGUAGE OF THE ASSESSMENT ORDER, THE ASSESSMENT OR DER CANNOT BE SAID TO BE ERRONEOUS ON GROUNDS STATED BY THE C.I.T. IN VIEW O F ABOVE, WE HOLD THAT ONLY FOR THE PURPOSE OF MAKING RE-ENQUIRIES, MORE SO WHE N INQUIRY REPORT WAS ALSO OBTAINED BY THE CIT, THE ASSESSMENT CANNOT BE SET A SIDE IN THE SCHEME OF SECTION 263 OF THE ACT.' 5. WE ARE OF THE OPINION THAT THE TRIBUNAL COMMITTE D NO ERROR. WHEN, DURING THE COURSE OF FRAMING OF THE ASSESSMENT, THE ASSESSING OFFICER HAD ACCESS TO ALL THE RECORDS OF THE ASSESSEE, AFTER PURSUING SUCH RECORD THE ASSESSING OFFICER FRAMED THE ASSESSMENT, SUCH ASSESSMENT COULD NOT HAVE BEEN REO PENED IN EXERCISE OF REVISION POWER UNDER SECTION 263 OF THE ACT FOR MAKING FURTH ER INQUIRIES. IN THE FACTS OF THE CASE, IN OUR OPINION, TRIBUNAL RIGHTLY INTERFERED W ITH SUCH ORDER. NO QUESTION OF LAW ARISES. TAX APPEAL IS, THEREFORE, DISMISSED. 14. WE FURTHER OBSERVE THAT IN THE CASE OF SHITAL P RIYASHARAN SHAH VS. DCIT (SUPRA) CO-ORDINATE BENCH, AHMEDABAD HAS S ET ASIDE THE ORDER PASSED BY LD. COMMISSIONER OF INCOME TAX BY E LABORATELY ITA NO. 1381 & 1903 ASST. YEAR 2008-09 15 ADJUDICATING FACTS FOLLOWING THE JUDICIAL PRONOUNCE MENT HAS LUCIDLY HELD AS FOLLOWS :- 7. THE FIRST THING WHICH HAS TO BE CONSIDERED IS WH ETHER THE PRINCIPAL CIT HAS RIGHTLY ASSUMED THE POWER UNDER SECTION 263 OF THE ACT. THE HON'BLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD ., 243 ITR 83, HAS LAID DOWN THE FOLLOWING RATIO:- 'A BARE READING OF SECTION 263 OF THE INCOME-TAX AC T, 1961, MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF JURISDICT ION BY THE COMMISSIONER SUO MOTU UNDER IT, IS THAT THE ORDER OF THE INCOME- TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS , NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRON EOUS ; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT--IF THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIA L TO THE REVENUE-- RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT . THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAK E OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS' 8. NOW, LET US SEE IN THE LIGHT OF THE ABOVE RATIO WHETHER THE ASSESSMENT HAS BEEN MADE ON AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW. THE FIRST OBSERVATIO N OF THE PRINCIPAL CIT IS THAT THE ASSESSEE HAD INVESTED VERY MEAGER AMOUNT O F RS.2,16,600/- AS COMPARED TO INVESTMENT IN THE SHARES OF RADHE DEVEL OPERS INDIA LTD AMOUNTING TO RS.3.78 CRORES. THE PRINCIPAL CIT FUR THER OBSERVED THAT SHEETAL BIO AGROTECH LTD OPENED A BANK ACCOUNT IN B HUJ MERCANTILE CO-OP BANK, AHMEDABAD AND DEPOSITED CASH IN THE SAID BANK ACCOUNT AND ON THE SAME DAY FUNDS WERE TRANSFERRED TO SHRI SHITAL P. S HAH AND FURTHER TRANSFERRED TO RADHE DEVELOPERS INDIA LTD. THE PRI NCIPAL CIT WAS OF THE FIRM BELIEF THAT THE CREDIT AND SOURCE OF THE AMOUN T TRANSFERRED SHOULD HAVE BEEN VERIFIED BY THE ASSESSING OFFICER AND HAV ING FAILED TO DO SO, THE ORDER PASSED BY THE ASSESSING OFFICER BECOMES ERRON EOUS AND PREJUDICIAL ITA NO. 1381 & 1903 ASST. YEAR 2008-09 16 TO THE INTEREST OF THE REVENUE. THE PRINCIPAL CIT CONCLUDED BY HOLDING AS UNDER:- THE ASSESSMENT ORDER DATED 26/03/2013 IS THEREFORE CANCELLED AND THE ASSESSING OFFICER IS DIRECTED TO AGAIN COMPLETE THE ASSESSMENT AFTER MAKING APPROPRIATE ENQUIRY REGARDING THE SOURCE OF UNSECUR ED LOAN OF RS.3.4 CRORES, AS MENTIONED ABOVE. THE ASSESSING OFFICER I S DIRECTED TO VERIFY COMPLETE TRAIL OF FUNDS AND MAKE SUITABLE ADDITION IN THE CASE OF THE BENEFICIARIES OF THE TRANSACTION. REGARDING PROFIT MADE ON TRANSACTION IN SHARES, THE ASSESSING OFFICER IS DIRECTED TO EXAMIN E THE CLAIM OF THE ASSESSEE REGARDING THE SAME BEING CAPITAL GAIN OR BUSINESS I NCOME. WHILE DOING SO, THE PRINCIPLE OF NATURAL JUSTICE SHOULD BE FOLLOWED BY HIM. 9. A PERUSAL OF THESE FACTUAL MATRIX SHOWS THAT IN THE YEAR 2006 THE ASSESSEE WAS HOLDING 11,000 SHARES OF RADHE DEVELOP ERS INDIA LTD. THE SHARES WERE OF RS.10/- EACH. ON 24.10.2007, THE AS SESSEE APPLIED FOR 21 LACS CONVERTIBLE WARRANTS AT RS.18/- EACH AND ON 04 .01.2008, THE ASSESSEE WAS ALLOTTED THE WARRANTS. ON 21.08.2009, THE WARR ANTS WERE CONVERTED INTO SHARES OF RS.10/- EACH AGAINST ONE WARRANT AND ACCORDINGLY, THE ASSESSEE GOT 2.10 CRORES SHARES AT RS.1/- EACH. BET WEEN 02.02.2010 AND 31.03.2010, THE ASSESSEE SOLD 1.02 CRORES SHARES AT PROFIT. 10. THE AFOREMENTIONED TRANSACTIONS WERE QUESTIONED BY THE ADIT. NECESSARY REPLIES WERE FILED BEFORE THE ADIT AND AL L THE RELEVANT DETAILS WITH DOCUMENTS WERE SUBMITTED. THE ASSESSEE ALSO S UBMITTED DETAILS OF QUERIES RAISED BY THE ADIT AT THE TIME OF HEARING. ON 12.02.2013, THE DCIT, CIRCLE (11), AHMEDABAD ISSUED A SHOW-CAUSE NO TICE WHICH READS AS UNDER:- ON PERUSAL OF THE DETAILS SUBMITTED BY YOU AND THE INFORMATION AVAILABLE ON RECORD, IT IS SEEN THAT YOU HAVE INVESTED RS. 3. 87 CRORES IN M/S RADHEY DEVELOPERS ( INDIA ) LTD BY ACQUIRING 2,10,000 SHAR ES. IN THIS REGARDS, YOU HAVE SUBMITTED THAT THE SOURCES OF THESE INVEST MENTS WERE LOANS RECEIVED FROM M/S SHITAL BIO AGRITECH LTD, WHOSE AC COUNT PAY CHEQUES DRAWN ON BHUJ MERCANTILE COOPERATIVE BANK ON 29-06- 2009. THE INVESTMENT WAS MADE ON 30-06-2009 AND FURTHER YOU H AVE SUBMITTED THAT THE LOAN OF RS. 3.40 LACS WAS REPAID BY YOU AFTER S ELLING THESE SHARES BEFORE 30-03-2010. ON FURTHER PERUSAL IT IS NOTED THAT YOU HAVE MADE INVESTMENT OF RS. 38.07 LACS THAT IS 10 PER CENT OF TOTAL INVE STMENT RS. 3.87 CRORES OUT OF WHICH FUNDS AVAILABLE IN YOUR BUSINESS FIRM M/S DIVYA INVESTMENT. IT IS SEEN THAT YOU HAVE FURNISHED THE DETAILS AS TO HOW THE SURPLUS FUNDS OF RS. ITA NO. 1381 & 1903 ASST. YEAR 2008-09 17 38.7 LACS WERE RAISED BY YOUR FIRM M/S DIVYA INVEST MENT AND AS REGARDS THE LOAN OF RS. 3.4 CRORES OBTAINED FROM M/S SHITAL BIO AGRITECH LTD, NO EVIDENCES WHATSOEVER HAVE BEEN FURNISHED TO PROVE T HAT IT HAS CREDIT WORTHINESS TO ADVANCE LOAN TO YOU. IN VIEW OF THI S, YOU ARE HEREBY SHOW CAUSED AS TO WHY THE LOAN OF RS. 3.4 CRORES AND RS. 38.7 LACS BE NOT TREATED AS UNEXPLAINED CASH CREDITS APPEARING IN YOUR BOOKS WITHIN THE MEANING OF SECTION 68 OF THE ACT. LOOKING TO THE NATURE OF TRANSACTIONS CARRIED OUT B Y YOU AND THE STATEMENT GIVEN BY YOU BEFORE ADIT(INV.), AHMEDABAD THAT YOU HAVE MADE THESE TRANSACTIONS WITH A MOTIVE TO EARN PROFIT, IN DICATING THE NATURE OF THE TRANSACTIONS AS BUSINESS TRANSACTIONS. YOU ARE, THE REFORE, REQUIRED TO SHOW- CAUSE AS TO WHY STCG SHOWN BY YOU ON THESE TRANSACT IONS BE NOT TREATED AS INCOME FROM BUSINESS AND PROFESSION CARRIED OUT BY YOU. YOU REPLY SHOULD REACH THE UNDER-SIGNED WITHIN 03 D AYS TIME FROM THE RECEIPT OF THIS LETTER FAILURE TO WHICH IT WILL PRESUMED THAT YOU HAVE NOTHING TO SUBMIT IN THIS REGARD AND THE ASSESSMENT SHALL BE FINALIZED ON THE MERITS OF THE DETAILS AVAILABLE ON RECORD. 11. ON 21.03.2013, THE ASSESSEE FILED ALL THE DETAI LS SOUGHT BY THE DCIT, CIRCLE-11, AHMEDABAD. AT THIS STAGE, IT WOULD BE P ERTINENT TO REFER TO THE SUBMISSIONS OF THE DR WHO STATED THAT THOUGH THE FI RST NOTICE WAS ISSUED BY THE DCIT, CIRCLE-11, AHMEDABAD, BUT THEREAFTER T HE RECORDS WERE TRANSMITTED TO DCIT, CENTRAL CIRCLE-1(3). THEREFOR E, THE PRESENT ASSESSING OFFICER HAD NO OPPORTUNITY TO EXAMINE THE DETAILS/D OCUMENTS. THIS CONTENTION OF THE LD. DR DOES NOT HOLD ANY WATER, B ECAUSE ON 23.03.2013 THE ASSESSEE HAD FILED AFFIDAVIT EXPLAINING THE NAT URE, SOURCE, IDENTITY AND GENUINENESS OF THE ENTIRE TRANSACTIONS OF ALLOTMENT OF SHARE WARRANT AND CONVERSION OF THE SAME TO SHARES AND SUBSEQUENTLY S ELLING THEM AT PROFIT. THIS AFFIDAVIT ALONGWITH THE NECESSARY DETAILS WERE FILED WITH THE PRESENT ASSESSING OFFICER. 12. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CI T VS. GABRIEL INDIA LTD., REPORTED IN (1993) 203 ITR 108 (BOM), HAS HEL D THAT THE DECISION OF THE INCOME-TAX OFFICER CANNOT BE HELD TO BE ERRONE OUS SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION I N THAT REGARD...........'. THIS IS FURTHER FORTIFIED BY THE OBSERVATION OF THE ASSESSING OFFICER IN HIS ORDER WHICH READS AS UNDER:- IN RESPONSE TO THE NOTICES, SHRI GAUTAM N. SHAH, CA ATTENDED WITH THE ASSESSEE SHRI SHITAL P. SHAH AND FILED THE DETAILS CALLED FOR. THE DETAILS ITA NO. 1381 & 1903 ASST. YEAR 2008-09 18 SUBMITTED BY THE ASSESSEE HAVE BEEN VERIFIED AND KE PT ON RECORD. THE ASSESSEE IS AN INDIVIDUAL AND DERIVING INCOME FROM BUSINESS, HOUSE PROPERTY, CAPITAL GAINS AND INCOME FROM OTHER SOURC ES AND THE RETURNED INCOME WAS ACCEPTED AS SUCH. 13 THE ASSESSING OFFICER HAS TAKEN A VIEW WHICH MAY BE DIFFERENT FROM THE VIEW OF THE LD. PRINCIPAL CIT AND ASSUMING THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IS A LOSS TO THE REVENUE, BUT THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. (SUPRA) HAS HELD THAT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSE SSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVE NUE. 14. IT IS A SETTLED POSITION OF LAW THAT POWERS U/S 263 OF THE ACT CAN BE EXERCISED BY THE COMMISSIONER ON SATISFACTION OF TW IN CONDITIONS, I.E., THE ASSESSMENT ORDER SHOULD BE ERRONEOUS AND PREJUDICIA L TO THE INTEREST OF THE REVENUE. BY ERRONEOUS IS MEANT CONTRARY TO LAW. THUS, THIS POWER CANNOT BE EXERCISED UNLESS THE COMMISSIONER IS ABLE TO ESTABLISH THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PRE JUDICIAL TO THE INTEREST OF THE REVENUE. THUS, WHERE THERE ARE TWO POSSIBLE VIEWS AND THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIE WS, NO ACTION TO EXERCISE POWERS OF REVISION CAN ARISE, NOR CAN REVISIONAL PO WER BE EXERCISED FOR DIRECTING A FULLER ENQUIRY TO FIND OUT IF THE VIEW TAKEN IS ERRONEOUS, WHEN A VIEW HAS ALREADY BEEN TAKEN AFTER ENQUIRY. THIS PO WER OF REVISION CAN BE EXERCISED ONLY WHERE NO ENQUIRY, AS REQUIRED UNDER THE LAW, IS DONE. IT IS NOT OPEN TO ENQUIRE IN CASE OF INADEQUATE INQUIRY. OUR VIEW IS FORTIFIED BY THE DECISION OF HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. NIRAV MODI, [2016] 71 TAXMANN.COM 272 (BOMBAY). THIS VIE W IS FURTHER SUPPORTED BY THE DECISION OF THE HONBLE JURISDICTI ONAL HIGH COURT IN THE CASE OF SHRI PRAKASH BHAGCHAND KHATRI IN TAX APPEAL NO. 177 WITH TAX APPEAL NO.178 OF 2016, WHEREIN THE HONBLE JURISDIC TIONAL HIGH COURT WAS SEIZED WITH THE FOLLOWING SUBSTANTIAL QUESTION OF L AW:- WHETHER THE TRIBUNAL IS RIGHT IN LAW AND ON FACTS IN UPHOLDING THE ORDER PASSED BY THE CIT UNDER SECTION 263 OF THE ACT ON M ERITS AND STILL STORING THE ISSUE OF ALLOWABILITY OF DEDUCTION UNDER SECTIO N 54 OF THE ACT TO THE FILE OF ASSESSING OFFICER EVEN THOUGH THE WORKING OF ALL OWABILITY OF DEDUCTION UNDER SECTION 54F IS AVAILABLE IN THE ORDER UNDER S ECTION 263 WHICH IS NOT DISPUTED BY THE ASSESSEE BEFORE ITAT. ITA NO. 1381 & 1903 ASST. YEAR 2008-09 19 AND THE HONBLE HIGH COURT, AFTER CONSIDERING THE F ACTS, HELD AS UNDER:- 6. IT CAN THUS BE SEEN THAT THOUGH FINAL ORDER OF ASSESSMENT WAS SILENT ON THIS ASPECT, THE ASSESSING OFFICER HAD CARRIED OUT INQUIRIES ABOUT THE NATURE OF SALE OF LAND AND ABOUT THE VALIDITY OF THE ASSES SEE'S CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT. LEARNED COUNSEL FOR T HE REVENUE HOWEVER SUBMITTED THAT THESE INQUIRIES WERE CONFINED TO THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT IN THE CONTEXT OF FULF ILLING CONDITIONS CONTAINED THEREIN AND MAY POSSIBLY HAVE NO RELEVANC E TO THE QUESTION WHETHER THE SALE OF LAND GAVE RISE TO A LONG TERM C APITAL GAIN. LOOKING TO THE TENOR OF QUERIES BY THE ASSESSING OFFICE AND DETAIL S SUPPLIED BY THE ASSESSEE, WE ARE UNABLE TO ACCEPT SUCH A CONDITION. IN THAT VIEW OF THE MATTER, THE OBSERVATION OF THE TRIBUNAL THAT THE AS SESSING OFFICER HAVING MADE INQUIRIES AND WHEN TWO VIEWS ARE POSSIBLE, REV ISIONAL POWERS COULD NOT BE EXERCISED, CALLED FOR NO INTERFERENCE. SINCE WITH RESPECT TO COMPUTATION AND ASSERTIONS OF OTHER ASPECTS OF DEDU CTION UNDER SECTION 54F OF THE ACT, THE TRIBUNAL HAS REMANDED THE PROCE EDINGS, NOTHING STATED IN THIS ORDER WOULD AFFECT EITHER SIDE IN CONSIDERA TIONS OF SUCH CLAIM. 7. NO QUESTION OF LAW ARISES. TAX APPEALS ARE DISM ISSED. 15. AS MENTIONED ELSEWHERE, THE ELABORATE ENQUIRES WERE MADE NOT ONLY BEFORE THE ASSESSMENT PROCEEDINGS STARTED BUT ALSO DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND THE ASSESSEE HAS FUL LY COMPLIED WITH ALL QUERIES RAISED BY THE REVENUE AUTHORITIES. THE CON TENTION THAT THE PRESENT ASSESSING OFFICER DID NOT MAKE FULL ENQUIRY IS NOT ACCEPTABLE, BECAUSE WHEN THE ASSESSMENT RECORDS WERE TRANSMITTE D FROM ONE DCIT TO ANOTHER DCIT, THE OTHER DCIT WAS WELL AWARE OF THE QUERIES RAISED DURING THE COURSE OF PROCEEDINGS. THE OFFICER WAS ALSO AW ARE OF ALL THE REPLIES FILED BY THE ASSESSEE, SUPPORTED BY RELEVANT DOCUME NTARY EVIDENCES. 16. CONSIDERING THE FACTS IN TOTALITY IN THE LIGHT OF THE JUDICIAL DECISIONS DISCUSSED HEREINABOVE, IN OUR UNDERSTANDING OF LAW, THE ASSESSMENT ORDER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERES T OF THE REVENUE. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER PASSED BY T HE PRINCIPAL CIT U/S 263 AND RESTORE THAT OF THE ASSESSING OFFICER PASSE D U/S 143(3) OF THE ACT. ITA NO. 1381 & 1903 ASST. YEAR 2008-09 20 15. RESPECTFULLY FOLLOWING THE JUDGMENT OF HON. JUR ISDICTIONAL HIGH COURT IN THE CASE OF AMIT CORPORATION (SUPRA) AND T HE DECISION OF CO- ORDINATE BENCH IN THE CASE OF SHITAL PRIYASHARAN SH AH (SUPRA) AS DISCUSSED ABOVE, WE OBSERVE THAT FACTS DEALT IN THE SE CASES ARE QUITE SIMILAR TO THE FACTS TO BE ADJUDICATED BY US IN THIS APPEAL. SO MUCH SO THAT IN THE CASE OF ASSESSEE ALSO DURING TH E COURSE OF ASSESSMENT PROCEEDINGS SPECIFIC DETAILS WERE CALLED FOR BY THE ASSESSING OFFICER ABOUT THE BANK STATEMENT AND SOUR CE OF CASH DEPOSITS IN THE BANK WHICH HAS BEEN DULY REPLIED BY THE ASSESSEE WITH THE TOTAL FIGURE OF CASH WITHDRAWAL AND CASH D EPOSITS TO JUSTIFY THAT THE SOURCES OF CASH DEPOSITS WERE OUT OF THE C ASH WITHDRAWAL MADE PRIOR TO IT. EVEN COPIES OF CASH BOOK AND BANK STATEMENTS WERE AVAILABLE ON RECORD FOR PERUSAL. HERE WE ALSO LIKE TO MENTION ABOUT THE FINDING OF LD. COMMISSIONER OF INCOME TAX U/S 2 63 IN PARA 3.1 WHEREIN HE HAS MENTIONED THAT THE ASSESSEE HAS EXPLAINED THAT THE DEPOSITS MADE IN THE BANKS ARE OUT OF THE CASH WITH DRAWALS DURING THE YEAR. HOWEVER, THE ASSESSEE HAS NOT EXPLAINED A S TO WHY HE HAS KEPT WITHDRAWING THE CASH FROM THE BANK AND THEN DE POSITING IT AGAIN THROUGHOUT DURING THE YEAR. THE ASSESSING OFFICER H AD FAILED TO EXAMINE THESE DEPOSITS DURING THE COURSE OF ASSESSM ENT PROCEEDINGS. THE WITHDRAWALS OF CASH AND DEPOSITING OF THE SAME IS TO BE EXAMINED WITH REFERENCE TO VARIOUS EXPENDITUR E AND INVESTMENTS OF THE ASSESSEE DURING THE YEAR. THE ABOVE PHRASE CONNOTES THAT LD. COMMISSIONER OF INCOME TAX HAS AC CEPTED THAT ASSESSEE HAD EXPLAINED ABOUT THE SOURCE OF DEPOSITS BUT ASSESSING OFFICER HAD FAILED TO EXAMINE THESE ASPECTS WHICH S EEMS TO US VERY CONTRADICTORY. ONCE WHEN LD. COMMISSIONER OF INCOME TAX HAS ITA NO. 1381 & 1903 ASST. YEAR 2008-09 21 ACCEPTED THAT PROPER EXPLANATION HAS BEEN GIVEN BY THE ASSESSEE TO THE ASSESSING OFFICER THEN HE CANNOT TAKE THE BASIS OF INADEQUATE INQUIRY AND CAN DIRECT THE ASSESSING OFFICER TO PER FORM. AS OBSERVED ABOVE, IN THE JUDGMENT AND DECISION RELIED ON BY TH E ASSESSEE THAT WHEN THE ASSESSING OFFICER HAS CONDUCTED PROPER ENQ UIRY AND HAS EXAMINED THE RELEVANT RECORDS BEFORE TAKING THE FIN AL DECISION OR FRAMING THE ASSESSMENT ORDER THEN IN SUCH CIRCUMSTA NCES LD. COMMISSIONER OF INCOME TAX CANNOT INVOKE THE POWER U/S 263 OF THE ACT FOR DIRECTING TO FRAME ASSESSMENT AFRESH. 16. WE ARE, THEREFORE, OF THE VIEW THAT IN TOTALITY OF FACTS AND IN VIEW OF JUDICIAL PRONOUNCEMENTS AS DISCUSSED ABOVE AND R ESPECTFULLY FOLLOWING THE JUDGMENT OF HON. SUPREME COURT IN THE CASE OF MALABAR INDUSTRIES LTD. (SUPRA) AND IN OUR UNDERSTANDING OF THE LAW, THE ASSESSMENT ORDER U/S 143(3) DATED 23.12.2010 IS NEI THER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE AND ACCO RDINGLY WE SET ASIDE THE IMPUGNED ORDER PASSED BY LD. COMMISSIONER OF INCOME TAX U/S 263 OF THE ACT AND RESTORE THE ASSESSMENT O RDER PASSED U/S 143(3) OF THE ACT. ACCORDINGLY, THIS APPEAL OF THE ASSESSEE IS ALLOWED. 17. APPEAL IN ITA NO.1903/AHD/2015 IS AGAINST THE O RDER OF LD. COMMISSIONER OF INCOME TAX(A) ARISING OUT OF ORDER OF ASSESSING OFFICER U/S 143(3) R.W.S. 263 OF THE ACT RELATING T O ASST. YEAR 2008-09. AS WE HAVE ALREADY ALLOWED ASSESSEES APPEAL IN ITA NO.1381/AHD/2013 AND SET ASIDE THE ORDER U/S 263 OF THE ACT AND ITA NO. 1381 & 1903 ASST. YEAR 2008-09 22 REINSTATED THE ORDER U/S 143(3) OF THE ACT IT WILL BE ACADEMIC TO DEAL WITH THIS APPEAL. THUS WE DISMISS THE SAME. 18. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2017 SD/- SD/- (R.P. TOLANI) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 28/02/2017 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 1381 & 1903 ASST. YEAR 2008-09 23 1. DATE OF DICTATION: 27/02/2017 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 27/02/2017 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 28/2/17 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: