SHRI PARAMJEET SINGH, Jaipur V. CIT, Kota

ITA 206/JPR/2012

• Counselvise Citation: 20623114 RSA 2012
• Duration Of Justice: 1 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 05-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUBHASH CHANDRA
• Keywords: Gift; Prejudicial to interest
• Section: 143(3); 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI B.R. JAIN AND SHRI KUL BHARAT) I.T.A. NO. 206/JP/2012 ASSTT. YEAR 2007-08 PAN NO. ADFCJ2098H SHRI PARAMJEET SINGH, VS. THE COMMISSIONER OF INCOME TAX PROP. M/S PARAMJEET ASSOCIATES, KOTA. STATION ROAD, KOTA. (APPELLANT) (RESPONDENT) APPELLANT BY : WRITTEN SUBMISSION DEPARTMENT BY : SHRI SUBHASH CHANDRA DATE OF HEARING : 28.08.2013 DATE OF PRONOUNCEMENT : 30.08.2013 O R D E R PER B.R. JAIN, A.M. THIS APPEAL BY ASSESSEE AGAINST THE ORDER DATED 10 /02/2012 OF LD. COMMISSIONER OF INCOME TAX, KOTA RAISES THE FOLLOWI NG GROUNDS. 1. THAT THE INVOKING OF PROVISIONS OF SECTION 263 O F THE I.T. ACT, 1961 IN CASE OF THE APPELLANT BY THE LD. CIT WAS WITHOUT JU RISDICTION, WRONG AND BAD IN LAW. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT IS WRONG, UNJUST AND HAS ERRED IN LAW IN HOLDING THAT THE ASSESSMENT COMPLETED BY THE ASSESSING OFFICER ON 24/12/2009 U/ S 143(3) OF THE I.T. ACT, 1961 IN CASE OF THE APPELLANT WAS ERRONEO US ON FACTS AND IN LAW AND PREJUDICIAL TO THE INTEREST OF REVENUE ON F OLLOWING COUNTS:- A. SALES HAVE BEEN BIFURCATED IN TWO PARTS WITHOUT ANY BASIS AND APPLICABILITY OF TDS PROVISIONS ON SUCH RECEIPTS HA VE NOT BEEN EXAMINED BY THE A.O. B. STOCK INVENTORY WAS NOT CALLED BY THE A.O. C. PURPOSE FOR WHICH ADVANCE OF RS. 75,00,000/- WAS MADE AND REASONS FOR NOT CHARGING INTEREST THEREON WAS NOT E XAMINED. D. UNSECURED LOANS AND SUNDRY CREDITORS WERE NOT PR OPERTY EXAMINED, AND 2 E. DOCUMENTS PERTAINING TO PURCHASE OF PROPERTY THR OUGH SMT. MEENA JAIN WERE NOT PROPERLY EXAMINED. 3. THE APPELLANT CRAVES THE PERMISSION TO ADD OR TO AMEND TO ANY OF GROUND OF APPEAL OR TO WITHDRAW ANY OF THEM. 2. NONE ATTENDS ON BEHALF OF THE ASSESSEE WHEN THE CASE WAS CALLED FOR HEARING. THE ASSESSEE HAS MADE AN APPLICATION DATED 19/8/201 3 STATING THEREIN THAT THE APPEAL MAY BE DECIDED ON THE BASIS OF WRITTEN SUBMISSIONS ALREADY FILED ON 23/4/2013. ACCORDINGLY, IT WAS DECIDED TO HEAR LD. DEPARTMENTA L REPRESENTATIVE EX PARTE QUA THE ASSESSEE WITH REFERENCE TO THE WRITTEN SUBMISSI ONS ON RECORD. 3. THE LD. COMMISSIONER OF INCOME TAX, KOTA CALLED FOR THE RECORD AND AFTER EXAMINATION WAS OF THE PRIMA FACIE OPINION THAT THE ASSESSMENT ORDER DATED 24/12/2009 PASSED BY THE I.T.O. WARD 2(1), KOTA IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE AND ISSUED A SHOW CAUSE NOTICE DATED 31/1/2012 REQUIRING THE ASSESSEE TO SHOW AS TO WHY THE ASSESS MENT MADE BY THE A.O. BE NOT SET ASIDE TO BE MADE AFRESH ON THE DIRECTION THAT MAY B E CONSIDERED NECESSARY. THE SHOW CAUSE NOTICE WAS GIVEN ON THE FOLLOWING POINTS :- I) AS PER TRADING AND P&L ACCOUNT, SALES OF RS. 83, 81,952/- HAS BEEN SHOWN. AS PER ASSESSMENT ORDER, THE A.O. HAS BIFURC ATED THIS AMOUNT IN TWO PARTS- RS. 5,00,000/- SALES ON A/C OF PLOTS AND RS. 78,81,952/- BEING JOB WORK (REPAIR WORK. NO DOCUMENTARY EVIDENC E IS AVAILABLE ON THE RECORD WHICH MAY PROVE THE RECEIPT SHOWN BY THE ASSESSEE. WHEN THE ENTIRE FLATS HAVE BEEN SOLD, THE PURCHASER IS N OT BOUND TO GET THE JOB WORK/REPAIR WORK DONE FROM THE BUILDER. EVEN TH E NAMES AND ADDRESSES OF THE PERSONS FROM WHOM THE RECEIPTS OF RS. 83,81,952/- HAVE BEEN SHOWN BY THE ASSESSEE DURING THE YEAR. AP PLICABILITY OF TDS PROVISIONS HAS ALSO NOT BEEN EXAMINED BY THE AO . II) OPENING STOCK OF RS. 1,09,18,126/- AND CLOSING STOCK OF RS. 1,76,73,526/- HAVE BEEN SHOWN BUT NO STOCK INVENTOR Y HAS BEEN CALLED 3 FOR BY THE A.O.. SINCE, THE ASSESSEE IS A BUILDER, TO KEEP CLOSE MONITORING ON THE BUSINESS ACTIVITIES OF THE ASSESS EE, A COPY OF MAP OF EACH PROJECT EXECUTED BY THE ASSESSEE MUST HAVE BEE N CALLED FOR TO ASCERTAIN THE STOCK IN TRADE AVAILABLE WITH THE ASS ESSEE OUT OF THE TOTAL FLATS CONSTRUCTED BY THE ASSESSEE ON THE VARIOUS PR OJECTS. III) AS PER MONTH WISE DETAILS OF INTEREST PAYMENT, IT IS SEEN THAT A SUM OF RS. 4,91,476/- HAS BEEN PAID BY THE ASSESSEE. AS PE R DETAILS OF BALANCE SHEET- SUMMARY OF SUNDRY ADVANCES, A SUM OF RS. 82, 09,500/- HAS BEEN ADVANCED TO VARIOUS PARTIES WHICH INCLUDES A S UM OF RS. 75,00,000/- ADVANCED TO CREDIBLE BUILD HOME (P.) LT D. ON THE ENTIRE ADVANCED AMOUNT, NO INTEREST HAS BEEN CHARGED BY TH E ASSESSEE. THE REASONS OF NOT CHARGING THE INTEREST AND PURPOSE FO R WHICH ADVANCE WAS MADE HAVE NOT BEEN EXAMINED BY THE A.O. IV) THE A.O. HAS NOT PROPERLY EXAMINED UNSECURED LO ANS FOR RS. 59,93,858/-, SUNDRY CREDITORS FOR RS. 1,16,61,519/- AND CREDITORS FOR RS. 23,05,000/-. IN SOME OF THE CASES, THE COPIES O F ACCOUNTS HAVE BEEN FURNISHED BY THE ASSESSEE WHICH ARE NOT DULY C ONFIRMED BY THE CREDITORS AND ADDRESSES AS WELL AS PAN ARE ALSO NOT MENTIONED ON SUCH COPIES OF ACCOUNT. THEREFORE, THE PURPOSE FOR SELEC TING THE CASE UNDER SCRUTINY IS TOTALLY DEFEATED. V) AS PER SALE DEED DATED 16/10/2006, SMT. MEENA JA IN SOLD THE PROPERTY FOR RS. 1,10,00,000/- TO SHRI PARAMJEET SINGH IN TH E CAPACITY OF MUKTYAR AAM OF 8 PERSONS AS MENTIONED IN THE SALE DEED. TOTAL AREA OF THE PLOT IS 172 X 200 SQ.FEET. AS ADMITTED BY SM T. MEENA JAIN IN THE SALE DEED AT PAGE NO. 5, OUT OF TOTAL AREA OF PLOT 172 X 200= 34,400 SQ.FEET, 172 X 60= 10,320 SQ.FEET OF THE SAID PLOT WAS GIFTED BY SHRINGI BROS (SELLERS) THROUGH REGISTERED DEED TO GOVT. SCHOOL NAMED SHAHEED AJAY AHUJA GOVT. MIDDLE SCHOOL. THIS GIFT DEED WAS REGISTERED IN THE OFFICE OF SUB-REGISTRAR, KOTA AT S.NO. 2862 PAGE NO. 85 DATED 18.09.2006. THUS, IT IS CLEAR THAT AS ON 1 6.10.2006 I.E. DATE OF REGISTERED SALE, THERE WAS NO DISPUTE W.R.T. THE AR EA OF PLOT. ONLY THE REMAINING AREA OF LAND AFTER THE GIFTED PLOT 172 X 140= 24,080 SQ. FEET WAS SOLD BY SMT. MEENA JAIN TO SHRI PARAMJEET SINGH AS ALSO MENTIONED IN THE LAST PARA OF THE REGISTRATION DOCU MENT AT PAGE NO. 5. FURTHER, THE SELLER (SMT. MEENA JAIN) HAS ADMITTED IN THE REGISTRATION DEED THAT SHE HAS RECEIVED FULL AND FINAL PAYMENT OF THE PLOT 172 X 4 140 SQ. FEET. THERE IS NOT EVEN A WHISPER IN THE D EED THAT THERE WAS ANY DISPUTE REGARDING THE GIFTED PROPERTY. RATHER, THE SELLER HAS ADMITTED IN THE DEED VIDE LAST PARA OF PAGE 7 THAT THERE WAS NO DISPUTE OF ANY KIND REGARDING THE PROPERTY SOLD BY HER. EVE N THE STAMP DUTY WAS PAID ON THE COST OF 24090 SQ. FEET PLOT. SO FAR AS THE OWNERSHIP OF THE SAID PLOT IS CONCERNED, SMT. MEENA JAIN HAS ADM ITTED IN THE AFFIDAVIT DATED 23/12/2009 THAT ACTUALLY THE SAID P LOT OF SIZE 172 X 140 WAS PURCHASED BY HER AND THE COST OF THE PLOT WAS A LSO PAID BY HER WITH AN INTENTION OF FURTHER SALE AND TO EARN PROFI T BUT SINCE THE PLOT WAS NOT GOT REGISTERED BY HER, SHE HAD TAKEN THE PO WER OF ATTORNEY FROM THE MAIN OWNERS OF THE PLOT AND THEREFORE, THE REGISTRY WAS DIRECTLY MADE BY HER AS ATTORNEY HOLDER TO SHRI PAR AMJEET SINGH JUST TO SAVE STAMP DUTY PAYABLE BY HER WHEN SHE HAS PURCHAS ED THE SAID PLOT. IT IS EVIDENT THAT SHE DID NOT GET REGISTERED THE P URCHASE DEED FROM THE SUB-REGISTRAR JUST TO SAVE STAMP DUTY AND TO HIDE T HE INVESTMENT MADE BY HER IN PURCHASE OF THE SAID PLOT. THUS, SHE HAS OBTAINED POWER OF ATTORNEY FROM THE OWNERS OF THE SAID PLOT. IN THE P URCHASE DEED, THE DATE AND NUMBERS OF POWER OR ATTORNEY REGISTERED BY THE NOTARY ARE NOT MENTIONED WHICH IS VERY ESSENTIAL TO ASCERTAIN THE AMOUNT/COST OF PURCHASE OF PLOT PAID BY SMT. MEENA JAIN TO THE ACT UAL OWNERS OF THE PLOT. THE DOCUMENTS AVAILABLE ON RECORD PROVE THAT THE ASSESSEE APPEARS TO BE HIDING THE FACTS FOR THE CONSTRUCTION OF FLATS ON NEW PLOT PURCHASED. THE A.O. HAS GROSSLY FAILED TO EXAMINE T HE CASE PROPERLY IN VIEW OF THE FACTS POINTED OUT AS ABOVE. 4. IN RESPONSE TO THE AFORESAID SHOW CAUSE NOTICE, THE ASSESSEE FURNISHED DETAILED REPLY WHICH STOOD CONSIDERED AND THEREAFTE R FOLLOWING FINDINGS HAVE BEEN RECORDED BY THE LD. CIT AND HELD THE ORDER TO BE ER RONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. 4.1 THE AOS OBSERVATIONS IN THE ASSESSMENT ORDER R EGARDING SALES, PURCHASES, OPENING STOCK, CLOSING STOCK AND REGARDI NG THE IMPROPER MAINTENANCE OF ACCOUNT BOOKS ARE VERY PERTINENT. AC CORDING TO THEM THE SUPPORTING BILLS AND VOUCHERS HAVE NOT BEEN KEP T PROPERLY AND THEY ALSO DO NOT MATCH WITH THE ENTRIES MADE IN THE BOOK S OF ACCOUNTS. IT WAS SO MUCH SO THAT EVEN THE ASSESSEE HAD AGREED FO R REJECTION OF THE BOOKS OF ACCOUNTS U/S 145(3) OF THE I.T. ACT. IN SP ITE OF THIS FACT THE 5 AO HAS SIMPLY RELIED ON THE FINDINGS OF THE AO IN A .Y. 2006-07. THE AMOUNTS OF PLOTS SOLD (RS. 5,00,000/-) AND OF JOB WORK RECEIPTS (RS. 78,81,952/-) WERE ALSO PROVIDED BY THE ASSESSEE TO THE AO WHEN HE WAS DOING THE ASSESSMENT FOR A.Y. 2006-07. IN THE P REVIOUS A.Y. THE AO AFTER APPLICATION OF AS-07 DETERMINED RATES OF 6 % ON SALE OF PLOTS AND 8% ON JOB WORK RECEIPTS FOR ASCERTAINING INCOME OF THE ASSESSEE. THIS YEAR THE SALE OF PLOTS IS OF RS. 5,00,000/- AN D JOB WORK RECEIPTS ARE OF RS. 78,81,952/- AND THE SAME RATES OF PROFIT HAS BEEN APPLIED BY AO TO ASSESS HIS INCOME. THIS CONCLUSION OF THE AO IS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS THE C LAIMS MADE IN REGARD TO BOTH THESE RECEIPTS AND PROFIT EARNED ON THEM HA VE NOT AT ALL BEEN CROSS VERIFIED AND HAVE BEEN BELIEVED WITHOUT TAKIN G THE RELEVANT EVIDENCES ON RECORD. THIS IS PARTICULARLY SO WHEN T HE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE WERE TOTALLY UN RELIABLE AS PER THE ASSESSEE AND AO HIMSELF. THE ARGUMENTS OF THE ASSES SEE IN THIS REGARD ARE JUST ESCAPIST AND THEY RELY ONLY ON STATEMENTS MADE BY AO IN THE ORDER ONLY INSTEAD OF PUTTING EVIDENCE FROM THEIR S IDE, OF THE VERIFICATION MADE BY AO. THEY ADMIT THAT WHEN ALL T HE FLATS HAVE BEEN SOLD THERE SHOULD NOT HAVE BEEN ANY JOB WORK DONE. EVEN THE APPLICABILITY OF TDS PROVISIONS ON THE RECEIPTS IN THE HANDS OF THE PAYER HAVE NOT BEEN EXAMINED BY AO, AS THE ASSESSEE HAS NOT ASKED FOR ANY CREDIT OF TAXES ON ACCOUNT OF TDS. THE ENTI RE TAX HAS BEEN PAID BY THE ASSESSEE ON ACCOUNT OF SELF ASSESSMENT TAX. THIS NATURALLY MEANS THAT THE PAYER HAS NOT DEDUCTED ANY TAX. THE IDENTITY OF THE PAYER MUST HAVE BEEN ASCERTAINED AND THE AO CONCERN ED MUST HAVE BEEN ASKED TO TAKE ACTION AGAINST HIM. THE ITO (TDS ) SHOULD ALSO HAVE BEEN INTIMATED. THUS THE ASSESSMENT ORDER IS E RRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF REVENUE ON THIS SCO RE AND REQUIRES REVISION. 4.2 THE OPENING STOCK SHOWN RS. 1,09,18,126/- AND T HE CLOSING STOCK SHOWN I.E. RS. 1,76,73,526/- HAVE NOT AT ALL BEEN V ERIFIED AND NO INVENTORY OF THEM HAVE BEEN PUT ON RECORD. NEITHER THE MAPS OF EXECUTED/NON EXECUTED WORKS ARE AVAILABLE ON RECORD TO TESTIFY OPENING STOCK AND CLOSING STOCK. THE REPLY OF THE A SSESSEE ON THIS ISSUE IS NOT AT ALL SATISFACTORY. NO DETAILS ARE AV AILABLE ON THE RECORD EXCEPT AFFIDAVIT OF THE ASSESSEE. THE LETTER DATED 27/11/2009 OF THE ASSESSEE IS MENTIONING ONLY FIGURES REGARDING PLOT PURCHASED IN 2005- 06/2006-07 AT RS. 39,17,000/- AND RS. 1,17,40,960/- AND WORK IN 6 PROGRESS AT RS. 20,15,566/- WHICH ARE CONTRADICTORY TO WHAT HAS BEEN DISCLOSED DURING THE YEAR AND HAVE NOT AT ALL BEEN RECONCILED BY THE AO ANY FURTHER. HENCE THE ORDER OF AO IS BOTH ERRON EOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ON THIS SCOR E AS WELL. 4.3 REGARDING INTEREST PAYMENT OF RS. 4,91,476/- TH E FACT IS THAT A SUM OF RS. 82,09,500/- HAS BEEN ADVANCED TO VARIOUS PARTIE S BY THE ASSESSEE INCLUDING AN ADVANCE OF RS. 75,00,000/- TO CREDIBLE BUILT HOME PVT. LTD. ON WHICH NO INTEREST HAS BEEN CHARGED. THE PUR POSE OF GIVING THE ADVANCE AND THE REASON WHY THE INTEREST HAS NOT BEE N CHARGED ON IT HAS NOT BEEN VERIFIED BY AO HENCE IT IS NOT KNOWN AS TO WHETHER IT WAS FOR BUSINESS PURPOSE OR NOT. THE REPLY GIVEN BY THE ASS ESSEE NOW GIVES THE FIGURES OF UNSECURED LOANS (RS. 59,93,858/-) AND HI S OWN CAPITAL OF (RS. 18,69,097/-) AND IS STATING THAT CREDITORS ARE NOT BEARING ANY INTEREST. BUT THE TOTAL POSITION HAS NOT AT ALL BEE N EXAMINED AS TO WHETHER THERE IS ANY DIVERSION OF BORROWED CAPITAL TO THE INTEREST FREE ADVANCES GIVEN TO OTHERS AND WHETHER THESE ADVANCES GIVEN WERE COMMERCIALLY PRUDENT OR NOT. HENCE, THE ORDER IS ER RONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE ON THIS SCOR E AS WELL. 4.4 ON THE POINTS OF NON EXAMINATION OF UNSECURED L OANS OF RS. 59,93,858/- SUNDRY CREDITORS OF RS. 1,16,61,579/- A ND OTHER CREDITORS OF RS. 23,05,000/- THE ASSESSEE HAS GIVEN THE REPLY THAT REVISION CANNOT BE MADE FOR ONLY NON EXAMINATION, BUT AS ILLUCI DAT ED BELOW IT IS NOT TRUE (SEE LEGAL DISCUSSION ON THIS POINT AT THE END OF THE ORDER). HENCE ORDER IS PREJUDICIAL TO THE INTEREST OF REVENUE AND ALSO ERRONEOUS ON THIS ISSUE AS WELL AND REQUIRES REVISION. THE ONUS OF PROVING THE IDENTITY AND CREDITWORTHINESS OF THE UNSECURED LOAN S, SUNDRY CREDITORS AND OTHER CREDITORS HAS NOT BEEN DISCHARGED PROPERL Y BY THE ASSESSEE AND THE GENUINENESS OF THE TRANSACTION HAS ALSO NOT BEEN ESTABLISHED. 4.5 THOUGH THE AO HAS PUT AN OFFICE NOTE IN REGARD TO THE PLOT SOLD BY THE ASSESSEE AS POWER OF ATTORNEY HOLDER OF SOMEONE TO HIS WIFE MEENA JAIN, BUT HE HAS FAILED TO EXAMINE TAXABILITY OF TH E ASSESSEE ON SALE OF THIS PLOT FOR AN AMOUNT OF RS. 1,10,00,000/-. AS PE R THE REGISTERED SALE DEED, THE ENTIRE AMOUNT OF RS. 1,10,00,000/- HAS BE EN PAID BEFORE THE DOCUMENT WAS MADE BY SMT. MEENA JAIN AND THE TRANSA CTION WAS COMPLETED. HENCE, IT CANNOT BE BELIEVED THAT ONLY R S. 10,00,000/- WERE PAID TO HIM BY SMT. MEENA JAIN. THE CAPITAL GA INS SHOULD HAVE 7 BEEN ACCORDINGLY TAXED IN THE HANDS OF THE ASSESSEE ON THIS TRANSACTION OR IN THE HANDS OF PERSONS WHO MADE HIM THE POWER O F ATTORNEY HOLDER. THIS ISSUE HAS NOT ALL BEEN EXAMINED THOUGH THE OFF ICE NOTE MENTIONS REFERENCE TO BE MADE IN CASE OF SMT. MEENA JAIN FOR EXAMINATION OF SOURCES OF PAYMENT MADE BY HER. HENCE THE ORDER IS CERTAINLY PREJUDICIAL TO THE INTERESTS OF REVENUE AS WELL AS ERRONEOUS ON THIS SCORE AND REQUIRES REVISION. 4.6 IN THE CASE OF RAMPYARI DEVI SARAOGI V CIT, 67 ITR 84 (S.C>) THE HONBLE APEX COURT HAS HELD THAT THE COMMISSIONER M AY CONSIDER AN ORDER OF THE ASSESSING OFFICER TO BE ERRONEOUS NOT ONLY IF IT CONTAINS SOME APPARENT ERROR OF THE REASONING OR OF LAW OR O F FACT ON THE FACT OF IT, BUT ALSO BECAUSE IT IS A STEREO TYPED ORDER WHI CH SIMPLY ACCEPTS WHAT THE ASSESSEE HAS STATED IN HIS RETURN AND FAIL S TO MAKE ENQUIRIES WHICH ARE CALLED FOR IN THE CIRCUMSTANCES OF THE CA SE. IT IS NOT NECESSARY FOR THE COMMISSIONER OF INCOME TAX TO MAK E FURTHER ENQUIRIES BEFORE CANCELLING THE ASSESSMENT ORDERS O F THE ASSESSING OFFICER. THE COMMISSIONER CAN REGARD THE ORDER AS E RRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE, THE A SSESSING OFFICER SHOULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE STATEMENTS MADE BY THE ASSESSEE IN HIS RETURN. THE REASON IS O BVIOUS. UNLIKE THE CIVIL COURT WHICH IS NEUTRAL TO GIVE A DECISION ON THE BASIS OF EVIDENCE PRODUCED BEFORE IT, AN ASSESSING OFFICER IS NOT ONL Y AN ADJUDICATOR BUT IS ALSO INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN T HE FACE OF THE 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 R ETURN WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE IN QUIRY. THE MEANING TO BE GIVEN TO THE WORD ERRONEOUS IN SECTION 263 EMERGES OUT OF THIS CONTEXT. THE WORD ERRONEOUS IN THAT SECTION INCLU DES CASES WHERE THERE HAS BEEN FAILURE TO MAKE THE NECESSARY INQUIR IES. IT IS INCUMBENT ON THE ASSESSING OFFICER TO INVESTIGATE THE FACTS S TATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MAKE SUCH AN ENQUIRY PRUDE NT AND THE WORD ERRONEOUS IN SECTION 263 INCLUDES THE FAILUR E TO MAKE SUCH AN ENQUIRY. THE ORDER BECOMES ERRONEOUS BECAUSE SUCH A N ENQUIRY HAS NOT BEEN MADE AND NOT BECAUSE THERE IS ANYTHING WRO NG WITH THE ORDER IF ALL THE FACTS STATED THEREIN ARE ASSUMED TO BE C ORRECT. THIS VIEW ALSO FINDS SUPPORT FROM THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF SMT. TARADEVI AGARWAL V/S CIT (1973) 88 ITR 323 (SC) AND MALABAR INDUSTRIAL COMPANY LTD. VS. CIT (2000) 243 ITR 323 (SC). 8 4.7. HE, THEREFORE, SET ASIDE THE ASSESSMENT FOR MA KING IT AFRESH AFTER FOLLOWING DIRECTIONS CONTAINED IN THE SAID FINDINGS . 5. THE ASSESSEE COUNSEL BY WRITTEN SUBMISSIONS DAT ED 23/4/2013 HAS MADE THE FOLLOWING SUBMISSIONS:- (1) THE GROUND NO. (1) OF APPEAL RELATES TO OBJECTI NG THE ACTION OF CIT IN INVOKING PROVISIONS OF SECTION 263 OF I.T. ACT IN C ASE OF ASSESSEE AS WITHOUT JURISDICTION WRONG AND BAD IN LAW. IT IS SETTLED LAW THAT THE ASSESSMENT ORDER WOULD B E ERRONEOUS IF THE A.O. HAS NOT CONSIDERED ALL MATERIALS OR HAD NO T DONE A PROPER EXAMINATION OR ENQUIRY OR VERIFICATION. AN INCORREC T ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW OR NON-APPLIC ATION OF MIND WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOU S. THE PHRASE PREJUDICIAL TO INTEREST OF REVENUE SHOULD BE UNDE RSTOOD IN ITS ORDINARY MEANING, IT IS OF WIDE IMPORT AND IS NOT CONFINED T O LOSS OF TAX. THE PHRASE PREJUDICIAL TO INTEREST OF REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY A.O. THUS FOR IN VOKING JURISDICTION U/S 263 BY CIT AN ORDER HAS NOT ONLY T O BE ERRONEOUS BUT SHOULD ALSO BE PREJUDICIAL TO INTEREST OF REVENUE. IN CASE OF APPELLANT THE LD. CIT INVOKED JURISDICTION WITHOUT SPECIFICAL LY DEMONSTRATING THAT THE ORDER OF ASSESSING OFFICER IS ERRONEOUS. IT IS ALSO THE PRINCIPLE OF LAW, NOW WELL ACCEPTED, THAT AN ORDER PASSED BY THE ASSESSING OFFICER CANNOT BE SET ASIDE FOR MAKING ROVING INQUIRY WITHOUT POINTING OUT ANY ERROR IN HIS ORDER . THE COMMISSIONER HAS TO SPECIFICALLY DEMONSTRATE THAT THE ORDER OF T HE ASSESSING OFFICER IS ERRONEOUS. THE POWER OF REVISION IS NOT MEANT TO BE EXERCISED FOR THE PURPOSE OF DIRECTING THE ASSESSING OFFICER TO H OLD ANOTHER INVESTIGATION WITHOUT DESCRIBING AS TO HOW THE ORDE R OF THE ASSESSING OFFICER IS ERRONEOUS. FROM THIS, IT ALSO FOLLOWS TH AT WHERE THE ASSESSMENT ORDER HAS BEEN PASSED BY THE ASSESSING O FFICER AFTER TAKING INTO ACCOUNT THE ASSESSEES SUBMISSIONS AND DOCUMEN TS FURNISHED BY HIM AND NO MATERIAL WHATSOEVER HAS BEEN BROUGHT ON RECORD BY THE COMMISSIONER WHICH SHOWS THAT THERE WAS ANY DISCREP ANCY OR FALSITY IN EVIDENCES FURNISHED BY THE ASSESSEE, THE ORDER O F THE ASSESSING OFFICER CANNOT BE SET ASIDE FOR MAKING DEEP INQUIRY ONLY ON THE PRESUMPTION AND ASSUMPTION THAT SOMETHING NEW MAY C OME OUT. FOR MAKING A VALID ORDER UNDER SECTION 263, IT IS ESSEN TIAL THAT THE COMMISSIONER HAS TO RECORD AN EXPRESS FINDING TO TH E EFFECT THAT ORDER 9 PASSED BY THE ASSESSING OFFICER IS ERRONEOUS WHICH HAS CAUSED LOSS TO THE REVENUE. FURTHER MORE, WHERE ACTING IN ACCORDAN CE WITH LAW THE ASSESSING OFFICER FRAMES CERTAIN ASSESSMENT ORDER, SAME CANNOT BE BRANDED AS ERRONEOUS SIMPLY BECAUSE ACCORDING TO TH E COMMISSIONER, THE ORDER SHOULD BE WRITTEN MORE ELABORATELY. THE A BOVE LEGAL VIEW IS SUPPORTED FROM THE RECENT JUDGMENT IN CASE OF CIT V S. LEISURE WEAR EXPORTS LTD. (2012) 341 ITR 180. IN VIEW OF THE ABOVE POSITION OF LAW THE LD. CIT, K OTA IS WRONG IN ASSUMING JURISDICTION U/S 263 AND THE ORDER PASS ED BY HIM IS WRONG AND BAD IN LAW WHICH DESERVES TO BE CANCELLED. (2) THE GROUND NO. (2) IS SUPPORTIVE TO GROUND NO. (1) CHALLENGING THE ACTION OF LD. CIT IN HOLDING THAT THE ASSESSMENT CO MPLETED BY THE ASSESSING OFFICER ON 24/12/2009 U/S 143(3) OF THE I .T. ACT, 1961 IN CASE OF THE APPELLANT WAS ERRONEOUS ON FACTS AND IN LAW AND PREJUDICIAL TO THE INTEREST OF REVENUE ON POINTS GIVEN IN THE G ROUND REFERRED ABOVE. IN THIS CONNECTION, IT IS SUBMITTED THAT WHEN IT IS EVIDENT FROM ASSESSMENT ORDER (PAGE 4-7 HEREWITH) THAT THE INCOM E TAX OFFICER HAD MADE REASONABLY DETAILED ENQUIRIES, COLLECTED RELEV ANT MATERIAL AND DISCUSSED VARIOUS FACTS OF THE CASE WITH THE ASSESS EE AND DETERMINED FACTS OF THE CASE AND INCOME ON DETAILED EXAMINATIO N AND EVIDENCE ON RECORD AND PAST HISTORY AND THEREFORE, THE ORDER OF THE COMMISSIONER TO DIRECT FRESH ASSESSMENT BY GOING DEEPER INTO THE MATTER WOULD NOT FORM A VALID OR LEGAL BASIS TO EXERCISE JURISDICTIO N UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 (CIT VS HINDUSTAN MARKETIN G AND ADVERTISING CO. LTD. (2012) 341 ITR 180). THE EMPHA SIS LAID BY THE CIT WAS THAT IN RESPECT TO POINTS RAISED BY HIM NO QUERIES OR ENQUIRIES WERE MADE BY A.O. AND OBSERVED THAT THERE WAS NO AP PLICATION OF MIND ON THE PART OF A.O. AND THE A.O. HAD NOT STATE D HAVING EXAMINED THOSE FACTS OR HAD NOT RECORDED THE REASONS TO JUST IFY THAT WHEY HE DID NOT CONSIDER THESE FACTS WHICH TOO IS NOT CORRECT A S MAY BE FOUND FROM PERUSAL OF ASSESSMENT ORDER. THERE IS NO WHISPER IN THE ORDER OF CIT THAT THE ORDER WAS ERRONEOUS ON ANY SPECIFIC POINT OR HOW THAT ORDER WAS PREJUDICIAL TO THE INTEREST OF REVENUE WHICH WA S NECESSARY TO JUSTIFY EXERCISE OF POWER U/S 263 BY HIM. THE LD. A O REJECTED BOOKS OF ACCOUNTS AND ESTIMATED INCOME BY INVOKING PROVIS IONS OF SECTION 145(3) WHILE CIT IS CONSIDERING AGAIN SAME BOOKS OF ACCOUNT FOR PASSING ORDER U/S 263, WHICH IS WRONG IN LAW. THE L D. CIT IS ONLY ACTING ON DOUBTS AND SURMISES AND ORDERING AGAIN DE TAILED ENQUIRY 10 FROM A.O. FORESEEING SOME THING MORE MAY COME OUT W HICH IS NOT PERMITTED IN LAW UNDER POWERS VESTED IN CIT U/S 263 . IT IS THUS SUBMITTED THAT ORDER OF CIT IS WRONG AND BAD IN LAW WHICH DESERVES TO BE CANCELLED. 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE SUPPORTED THE FINDINGS AND CONCLUSIONS REACHED BY THE LD. CIT AS THE ASSESSMENT FRAMED LACKS ENQUIRY AND IS A CLASSIC EXAMPLE OF NON-APPLICATION OF MIND TO THE FACTS BY THE ASSESSING OFFICER. THIS FACT ALONE HAS MADE THE ASS ESSMENT ORDER ERRONEOUS, WHICH HAS CAUSED PREJUDICE TO THE INTERESTS OF REVENUE. T HE LD. CIT HAS ACTED WITHIN THE SCOPE OF HIS JURISDICTION AS PROVIDED U/S 263 OF TH E ACT. THE ASSESSEES SUBMISSION BEING DEVOID OF ANY MERIT, THE GROUNDS RAISED IN AP PEAL ARE REQUIRED TO BE REJECTED. 7. AFTER HEARING LD. D.R. WITH REFERENCE TO WRITTEN SUBMISSIONS AND MATERIAL ON RECORD, WE FIND THAT THE LD. CIT HAS EXERCISED VALI D JURISDICTION AND ACTED WITHIN THE SCOPE OF HIS POWERS AS ARE CONTAINED UNDER SECTION 263 OF THE ACT. THE DECISION HAS BEEN TAKEN BY HIM AFTER CALLING THE ASSESSMENT RECO RD AND EXAMINATION THEREOF AND THEREAFTER PROVIDING PROPER OPPORTUNITY OF BEING HE ARD TO THE ASSESSEE ON EACH AND EVERY ISSUE BY WAY OF ISSUING A SHOW CAUSE NOTICE I N RESPECT OF ITEMS THAT WERE FOUND PRIMA FACIE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. THEREAFTER THE LD. CIT AFTER CONSIDERING THE WRITTEN SUBMISSIO NS AND MATERIAL ON RECORD, HAS FOUND THAT THE ASSESSMENT HAS BEEN FRAMED WITHOUT E MBARKING NECESSARY ENQUIRY INTO THE FACTS OF THIS CASE. AN ESTIMATION OF INCOM E MADE BY THE AO IS NOT ON RELEVANT CONSIDERATIONS NOR THE SAME IS BONAFIDE AS NO CROSS VERIFICATION HAS BEEN DONE NOR ANY RELEVANT EVIDENCE HAS BEEN BROUGHT ON RECORD. EVEN THE OPENING AND CLOSING STOCK OF INVENTORY WAS NEITHER VERIFIED NOR PUT ON RECORD BY HIM. THE 11 MAKING ADVANCE OF RS. 75,00,000/- WITHOUT CHARGING INTEREST HAS NOT BEEN EXAMINED BY THE AO. THERE IS NO ENQUIRY AS TO WHETHER THE SA ME WAS MADE OUT OF OWN CAPITAL OR FROM SURPLUS FUNDS. NO EFFORT HAS BEEN MADE BY T HE AO TO FIND OUT THE NEXUS OF BORROWED CAPITAL ON WHICH INTEREST HAS BEEN PAID WI TH THE ADVANCES GIVEN INTEREST FREE. IN THIS VIEW OF THE MATTER, THE LD. CIT VIDE PARA 4.1, 4.2 AND 4.3 OF THE IMPUGNED ORDER HAS RECORDED A FINDING THAT THE ASSE SSMENT ORDER SO PASSED BY THE AO IS ERRONEOUS AND IS PREJUDICIAL TO THE INTEREST OF REVENUE AND THUS THE TWIN CONDITIONS AS ENVISAGED BY SECTION 263 OF THE ACT S TAND SATISFIED. 8. THE LD. CIT VIDE PARA 4.4 HAS ALSO RECORDED A FI NDING THAT THE AO HAD NOT EXAMINED UNSECURED LOANS OF RS. 59,93,858, SUNDRY C REDITORS OF RS. 1,16,61,579 AND OTHER CREDITORS OF RS. 23,05,000/-. THE NON-EXAMIN ATION OF CREDITORS HAS MADE THE ORDER ERRONEOUS THEREBY CAUSING PREJUDICE TO THE IN TERESTS OF REVENUE. MERELY BY PUTTING AN OFFICE NOTE WITH RESPECT TO PLOTS SOLD BY THE ASSESSEE AS POWER OF ATTORNEY HOLDER WITHOUT EXAMINING THE CHARACTER OF TRANSACTI ON ALSO MADE THE ORDER ERRONEOUS THEREBY CAUSING PREJUDICE TO THE INTERESTS OF REVEN UE. THE LD. CIT HAS RECORDED A FINDING IN PARA 4.4 AS WELL AS IN PARA 4.5 ALSO THA T THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THUS THE TW IN CONDITIONS AS ENVISAGED IN SECTION 263 OF THE ACT STAND DULY SATISFIED. THE LD . CIT HAS PLACED RELIANCE ON THE JUDGMENT BY THE HONBLE APEX COURT IN THE CASE OF M ALABAR INDUSTRIAL COMPANY LTD. VS. CIT (2000) 243 ITR 323 (SC), WHICH IS WELL FOUNDED IN THIS CASE. THE LD. CIT IS FOUND TO HAVE DIRECTED THE AO TO DECIDE THE ISSUES AFRESH. THIS CAUSES NO PREJUDICE TO THE ASSESSEE. SUCH A VIEW IS FOUND FOR TIFIED BY THE JUDGMENT OF HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF DEEPAK KUM AR GARG (2008) 299 ITR 435 12 (MP). BEFORE WE PART, IT IS CLARIFIED THAT THE LD. AO IN THE REMIT PROCEEDINGS SHALL DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW WITHOUT BEING INFLUENCED BY THE DIRECTIONS GIVEN ON THE POINTS MENTIONED IN THE ORD ER. IN THIS VIEW OF THE MATTER, WE FIND NO MERIT IN THE GROUNDS RAISED IN APPEAL BY TH E ASSESSEE. THE SAME STAND REJECTED AND APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.08.2013. SD/- SD/- (KUL BHARAT) (B.R. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED: 30.08.2013 * RANJAN COPY FORWARDED TO:- 1. SHRI PARAMJEET SINGH, KOTA. 2. THE COMMISSIONER OF INCOME TAX, KOTA. 3. THE CIT (A) 4. THE CIT 5. THE D.R. GUARD FILE (ITA NO. 206/JP/2012) BY ORDER AR, ITAT, JAIPUR