Sun and Sun Inframetric Pvt. Ltd., Raipur V. Assistant Commissioner of Income Tax, Central Circle-1, Raipur

ITA 21/RPR/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3157 (ITAT-RAIPUR)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 09-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K M I R A
• Assessee Lawyers: PRAFULLA PENDSE
• Keywords: Unexplained cash credit; Sale consideration of property below Jantri Value; Principle of natural justice; Deemed to accrue or arise in india; Fair market value; Competent authority; Set aside
• Section: 68; 263; 69C; 43CA; 40A(3); 143(3); 201; 48; 13; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI N. K. CHOUDHRY, JUDICIAL MEMBER ./ I.T.A. NO.21/RPR/2021 ( / ASSESSMENT YEAR : 2015-16) SUN AND SUN INFRA METRIC PVT LTD 11/146, CHIKNI MANDIR, MALVIYA ROAD, RAIPUR, CHHATTISGARH / VS. ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, RAIPUR ./ ./ PAN/GIR NO. : AACCN 1338 F ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI PRAFULLA PENDSE, CA / RESPONDENT BY : SHRI P.K. MISHRA, CIT-DR / DATE OF HEARING 30.07.2021 / DATE OF PRONOUNCEMENT 22.10.2021 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE REVISIONAL ORDER OF THE PRINCI PAL COMMISSIONER OF INCOME TAX (PCIT IN SHORT), RAIPUR-1 COMMUNICATED TO THE ASSESSEE ON 27.03.2021 PASSED UNDER SECTION 263 OF THE INCOM E TAX ACT, 1961 (THE ACT IN SHORT) WHEREBY THE ASSESSMENT ORDER P ASSED BY THE ASSESSING OFFICER (AO IN SHORT) DATED 21.08.2017 UNDER SECTION 143(3) OF THE ACT CONCERNING ASSESSMENT YEAR (AY IN SHORT) 2015- 16 WAS SOUGHT TO BE SET ASIDE FOR REFRAMING THE ASS ESSMENT IN TERMS OF SUPERVISORY JURISDICTION. 2. AS PER ITS GROUNDS OF APPEAL, THE ASSESSEE HAS C HALLENGED THE REVISIONAL ACTION OF THE PCIT WHEREBY THE ASSESSING OFFICER WAS DIRECTED TO PASS THE ASSESSMENT ORDER DE NOVO AFTER MAKING ENQUIRIES ITA NO. 21/RPR/2021 SUN & SUN INFRAMETRIC PVT LTD VS. ACIT AY : 2015-2016 - 2 - ON THE POINTS SET OUT IN THE NOTICE WHICH HAS ALREA DY EXAMINED AND CONSIDERED DURING THE ORIGINAL ASSESSMENT PROCEEDIN GS CONCERNING AY 2015-16. THE ASSESSEE HAS CHALLENGED THE ASSUMPTIO N OF JURISDICTION BY THE PCIT UNDER SECTION 263 OF THE ACT ON THE GRO UND THAT THE ASSESSMENT ORDER UNDER REVISION IS NEITHER ERRONEOU S NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. 3. BRIEFLY STATED, THE ASSESSMENT IN THE INSTANT CA SE WAS FRAMED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 21 .08.2017 BY THE ASSESSING OFFICER WHEREBY THE TOTAL INCOME OF THE A SSESSEE WAS ASSESSED AT A LOSS OF RS.(-)34,90,150/-. THEREAFTER , IN EXERCISE OF JURISDICTION UNDER S. 263 OF THE ACT, THE CASE RECO RD OF THE ASSESSMENT SO MADE WAS CALLED BY THE REVISIONAL COMMISSIONER. ON ITS APPRAISAL, THE PCIT OBSERVED THAT THE IMPUGNED ASSESSMENT ORDE R IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. A SHOW- CAUSE NOTICE DATED 08.03.2021 (SIGNED ON 09.03.2021 ) WAS ISSUED TO THE ASSESSEE IN THIS REGARD SEEKING COMPLIANCE THRO UGH E-MAIL INEXPLICABLY ON OR BEFORE 17.02.2021, I.E. PRIOR TO THE ISSUANCE OF NOTICE ITSELF. THE PERSONAL HEARING WAS HOWEVER SI MULTANEOUSLY ALLOWED TO BE AVAILED AT 11.03.2021 AT 11.00AM, I.E . WITHIN LESS THAN 48 HOURS FROM THE DATE AND TIME OF SIGNING THE SHOW -CAUSE NOTICE. 4. AS PER THE SHOW-CAUSE NOTICE, THE REVISIONAL COM MISSIONER MADE WIDE RANGING ALLEGATIONS TO ASSAIL THE ASSESSM ENT ORDER. THE REVISIONAL COMMISSIONER ALLEGED THAT THE ASSESSING OFFICER HAS FAILED TO CARRY OUT NECESSARY VERIFICATIONS IN RESPECT OF FOLLOWING POINTS:- (I) DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE MADE REPAYMENT OF RS.6,11,26,848/- TO M/S. GANGOTRI TRAC ON P. LTD. (GTPL IN SHORT). IT WAS ACCORDINGLY OBSERVED THA T INTEREST PAYMENT OF RS.47,36,052/- AND REPAYMENT OF RS.6,11, 26,848/- ITA NO. 21/RPR/2021 SUN & SUN INFRAMETRIC PVT LTD VS. ACIT AY : 2015-2016 - 3 - SHOULD HAVE BEEN DISALLOWED IN TERMS OF SECTION 69C OF THE ACT; (II) ADVANCE AGAINST SALE OF LAND OF RS.16 CRORES WAS RE CEIVED, BUT NO SALE DEED WAS FURNISHED BY THE ASSESSEE; THE ADV ANCE RECEIVED HAS NOT BEEN EXAMINED UNDER S. 68 OF THE A CT (III) THE ASSESSEE ISSUED 550400 EQUITY SHARES @ 170 PER SHARES (160 PREMIUM AND 10 FACE VALUE) ON THE BASIS OF FAI R MARKET VALUE DETERMINED AS PER BALANCE-SHEET AS ON 31.03.2 013; HOWEVER, SINCE THE SHARES WERE ISSUED IN THE FY 201 4-15, THE FAIR MARKET VALUE (FMV IN SHORT) OF THE SHARES SH OULD HAVE BEEN WORKED OUT ON THE BASIS OF FINANCIAL STATEMENT OF IMMEDIATELY PRECEEDING FY 2013-14 INSTEAD OF FY 201 2-13 ADOPTED, IN TERMS OF SECTION 56(2)(VIIB) OF THE ACT . THE FMV AS ON 31.03.2014 WORKS OUT TO RS.153 PER SHARES ONL Y AS AGAINST THE ISSUE PRICE OF RS.170 PER SHARES. CONSE QUENTLY, A DIFFERENCE OF RS.17 PER SHARE SHOULD HAVE BEEN TREA TED AS DEEMED INCOME IN VIEW OF SECTION 56(2)(VIIB) OF THE ACT. (IV) THE REVENUE AUDIT PARTY OF THE DEPTT. HAS POINTED O UT THAT THE ASSESSEE PAID RS.25 LAKHS IN CASH TO ONE MR. GOPICH AND KHEMANI AS ADVANCE FOR PURCHASE OF LAND AND SINCE T HE ASSESSEE IS A BUILDER, SUCH PAYMENT ATTRACTS SECTIO N 40A(3) OF THE ACT AND HENCE SUCH PAYMENTS ARE LIABLE TO BE DI SALLOWED. BESIDES, NO DOCUMENTARY EVIDENCE WAS AVAILABLE REGA RDING REGISTRATION OF SAID LAND. (V) THE REVENUE AUDIT PARTY HAS POINTED OUT THAT NON-VE RIFICATION OF SALE DEED FOR POSSIBLE LOSS OF REVENUE AS SPECIF IED IN SECTION 43CA OF THE ACT. ITA NO. 21/RPR/2021 SUN & SUN INFRAMETRIC PVT LTD VS. ACIT AY : 2015-2016 - 4 - IN THE LIGHT OF POINTS RAISED, AS NOTED ABOVE, THE REVISIONAL COMMISSIONER ALLEGED LACK OF APPLICATION OF MIND BY THE ASSESSING OFFICER AND ABSENCE OF PROPER ENQUIRY IN THIS REGAR D. THE REVISIONAL PROCEEDINGS WERE THUS SET IN MOTION AND THE REVISIO NAL ORDER WAS PASSED UNDER SECTION 263 OF THE ACT WHEREBY THE ASS ESSMENT ORDER PASSED BY ASSESSING OFFICER WAS SET ASIDE FOR FRESH ADJUDICATION OF ISSUES DISCUSSED IN THE REVISIONAL ORDER. 5. IT IS NOTICED THAT WHILE THE SHOW-CAUSE NOTICE W AS ISSUED ON THE POINTS NOTED IN THE PRECEDING PARAGRAPHS, THE FINAL DIRECTIONS IN THE REVISIONAL ORDER WAS PASSED TAKING A SLIGHTLY DIFFE RENT STANCE. THE FINAL DIRECTIONS GIVEN TO THE ASSESSING OFFICER ON THE ISSUES RECORDED BY THE PCIT IN ITS REVISIONAL ORDER IS REPRODUCED H EREUNDER FOR READY REFERENCE:- 1 1 HAVE GONE THROUGH THE CASE RECORD AND SUBMISSI ON OF THE ASSESSEE FURNISHED DURING ASSESSMENT PROCEEDINGS. F ROM THE FACTS NARRATED ABOVE, IT IS CLEAR THAT THE ASSESSIN G OFFICER HAS NOT CONDUCTED ANY INQUIRY REGARDING GENUINENESS OF THE CONTENTION MADE BY THE ASSESSEE. THEREFORE, I AM SA TISFIED THAT THE ASSESSMENT ORDER IS ERRONEOUS IN SO FAR AS IT I S PREJUDICIAL TO THE INTEREST OF REVENUE IN VIEW OF EXPLANATION 2 OF SECTION 263 OF THE INCOME TAX ACT. THE A.O. IS DIRECTED TO MAKE ADEQUATE ENQUIRIES. 1. IDENTITY, GENUINENESS AND CREDITWORTHINESS OF M/ S GANGOTRI TRACON P. LTD IN RESPECT OF RECEIPT OF SUM OF RS. 1 6,00,00,000/- IN THE LIGHT OF PROVISIONS OF SECTION 68 OF THE I.T . ACT, 1961. 2. TO VERIFY THE GENUINENESS OF BOTH STAMP PAPER WI TH COMPETENT AUTHORITY WHO ISSUED THOSE STAMP PAPERS. 3. TO INVOKE THE DOCTRINE OF SUBSTANCE OVER FORM IN RESPECT OF TRANSACTION WITH M/S GANGOTRI TRACON P. LTD AFTER D UE VERIFICATION. 4. TO VERIFY THE REPAYMENT AND INTEREST PAYMENT OF SUM OF RS.6,11,26,848/- & RS.47,36,052 RESPECTIVELY. ITA NO. 21/RPR/2021 SUN & SUN INFRAMETRIC PVT LTD VS. ACIT AY : 2015-2016 - 5 - 5. TO VERIFY THE APPLICABILITY OF SECTION 56(2)(VII B) IN RESPECT OF SHARES ISSUED. 6. TO VERIFY THE APPLICABILITY OF SECTION 43CA IN R ESPECT OF SALE DEED EXECUTED BELOW STAMP DUTY VALUE. 7. TO VERIFY THE APPLICABILITY OF SECTION 40A(3) IN RESPECT OF PAYMENT FOR PURCHASE OF LAND. 6. AGGRIEVED BY THE IMPUGNED REVISIONAL ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. 7. WHILE THE REVENUE HAS SUPPORTED THE REVISIONAL A CTION IN THE ABSENCE OF ADEQUATE ENQUIRIES ON THE POINTS RECORDE D BY THE PCIT, THE LEARNED COUNSEL FOR THE ASSESSEE MADE EXTENSIVE SUB MISSIONS AND ASSAILED THE REVISIONAL ACTION OF THE PCIT ASSERTIV ELY. THE LD. COUNSEL SUBMITTED THAT THE REVISIONAL ORDER PASSED BY THE PCIT SUFFERS FROM THE VICE OF ARBITRARINESS AND LACK OF APPLICATION OF MIND ON THE ORAL AND WRITTEN SUBMISSIONS PUTFORTH & EVID ENCES ADDUCED IN ITS REBUTTAL. IT WAS ALLEGED THAT DIRECTIONS WERE G IVEN SUMMARILY. IT WAS FURTHER CONTENDED THAT THE ORDER OF THE PCIT AL SO SUFFERS FROM LACK OF PROPER OPPORTUNITY DESERVED IN THIS REGARD AS CAN BE SEEN FROM THE DATE OF ISSUE AND TIME MADE AVAILABLE TO ASSESS EE FOR COMPLIANCE THEREON. ON A BROADER RECKONING, THE LEARNED COUNSE L CLAIMED THAT THE REVISIONAL DIRECTIONS ARE BAD IN LAW IN THE ABSENCE OF ANY PERCEPTIBLE ERROR SHOWN IN THE ASSESSMENT ORDER SOUGHT TO BE RE VISED, WHICH MAY CAUSE PREJUDICE TO THE INTEREST OF THE REVENUE. WE SHALL DEAL WITH THE ISSUE BASED SUBMISSIONS ADVANCED BEFORE US AT THE A PPROPRIATE PLACE HEREINAFTER. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE REVISIONAL ORDER AS WELL AS THE ASSESSMENT ORDE R FOR AY 2015-16 IN QUESTION. WE HAVE ALSO TAKEN NOTE OF THE EVIDENCES , DOCUMENTS ETC. ITA NO. 21/RPR/2021 SUN & SUN INFRAMETRIC PVT LTD VS. ACIT AY : 2015-2016 - 6 - REFERRED TO AND RELIED UPON IN THE COURSE OF PROCEE DINGS BEFORE US IN TERMS OF RULE 18(6) OF THE INCOME-TAX (APPELLATE TR IBUNAL) RULES, 1963. 9. POINT NO. 1-4 OF THE DIRECTIONS OF THE PCIT TO T HE AO [AS EXTRACTED IN PARA 4 ABOVE] CONCERNS TRANSACTIONS RE LATING TO GTPL. THE PCIT ALLEGES ABSENCE OF ENQUIRY INTO THE NATURE AND SOURCE OF LOAN FROM GTPL RS. 16 CR. HAVING REGARD TO S. 68 O F THE ACT; THE ABSENCE OF VERIFICATION OF AGREEMENT FOR RECEIPT OF AFORESAID SUM BY WAY OF ADVANCE TOWARDS SALE OF LAND, NON VERIFICATI ON OF REPAYMENT OF LOANS RS. 6.11 CRS AND INTEREST RS. 47.36 LAKHS THE REON FROM THE PERSPECTIVE OF S. 69C OF THE ACT. THE DIRECTIONS HO WEVER APPEAR TO BE VAGUE AND INNOCUOUS. 9.1 IN DEFENSE, THE ASSESSEE CONTENDS THAT THE COPI ES OF FINANCIAL STATEMENT OF THE LENDER, INCOME-TAX RETURNS AND LED GER ACCOUNT OF THE LENDER COMPANY FOR AYS 2014-15, 2015-16 AND 2016-17 WERE FILED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS IN PURSUANCE OF ENQUIRY MADE IN THIS REGARD. IT IS SIMULTANEOUSLY C ONTENDED THAT THE AMOUNT OF RS.16 CRORES ALLEGED BY THE PCIT WAS NOT RECEIVED DURING THE YEAR AT ALL, BUT WAS RECEIVED IN THE PRECEDING ASSESSMENT YEAR 2014-15. A FRESH ADVANCE RECEIVED DURING THE YEAR S TANDS AT RS.2.12 CRORES ONLY. FOR THIS ASSERTIONS, A REFERENCE WAS MADE TO THE LEDGER ACCOUNT OF THE LENDER COMPANY (PAGE NO.115 OF THE P APER-BOOK) TO DEMONSTRATE THAT AMOUNT OF RS.16 CRORES REFERRED TO BY PCIT WAS RECEIVED THOUGH BANKING CHANNEL IN FY 2013-14 RELEV ANT TO AY 2014- 15. SIMILARLY, THE LEDGER ACCOUNT (PAGE NO.117 OF T HE PAPER-BOOK) WAS REFERRED TO DEMONSTRATE THAT ONLY A SUM OF RS.2.12 CRORES WAS RECEIVED DURING THE YEAR. IT IS THUS CONTENDED THAT THE PCIT CLEARLY MISDIRECTED HIMSELF IN LAW IN GIVING WRONGFUL DIREC TIONS OF ENQUIRY ON THE TOUCHSTONE OF SECTION 68 FOR SUCH AMOUNT REC EIVED IN A ITA NO. 21/RPR/2021 SUN & SUN INFRAMETRIC PVT LTD VS. ACIT AY : 2015-2016 - 7 - DIFFERENT FINANCIAL YEAR. IT WAS ASSERTED THAT THE SCOPE OF S. 68 IS RESTRICTED TO CREDITS RECEIVED DURING THE YEAR AND DOES NOT EXTEND TO TRANSACTIONS OF CREDITS RECEIVED IN SOME OTHER ASSE SSMENT YEAR. THE ASSESSEE THUS CONTENDS THAT THE DIRECTIONS OF THE P CIT TO MAKE ENQUIRY IN THIS REGARD IS WITHOUT ANY LEGAL BASIS. THE AO C OMMITTED NO ERROR IN NOT INVOKING S. 68 FOR PAST CREDITS AND THE DIRE CTIONS OF PCIT ARE PRIMA FACIE BAD IN LAW. THE ASSESSEE THUS URGED FOR SETTING AS IDE SUCH DIRECTIONS. 9.2 THE ASSESSEE NEXT SUBMITS THAT NOTHING ADVERSE HAS BEEN OBSERVED BY THE PCIT REGARDING THE AMOUNT OF RS.2.1 2 CRORES RECEIVED DURING THE YEAR UNDER CONSIDERATION. THERE IS EFFEC TIVELY NO FINDING BY THE PCIT INSOFAR AS ADVANCE RECEIVED OF THIS SUM AGAINST THE SALE OF LAND IS CONCERNED. THE ASSESSEE FURTHER CONTENDS THAT THE ASSESSMENT OF AY 2014-15 IN THE CASE OF ASSESSEE WA S FRAMED UNDER SECTION 143(3) OF THE ACT (PAGE NO.112 TO 114 OF TH E PAPER-BOOK) AND THE CREDITS WERE FOUND TO BE IN ORDER IN THAT YEAR. IT WAS ALSO POINTED OUT THAT THE LENDER COMPANY IS A PRIVATELY HELD GRO UP COMPANY UNDER THE SAME MANAGEMENT FOR PAST SO MANY YEARS AND CONS ISTENTLY ASSESSED TO TAX FOR SO MANY YEARS AND HAS KNOWN SOU RCES AVAILABLE IN PUBLIC DOMAIN AS WELL AS ON THE RECORDS OF THE DEPA RTMENT. IT WAS CONTENDED THAT FINANCIAL SOUNDNESS OF THE LENDER CA N BE GAUGED FROM THE AMOUNT OF TAXES PAID YEAR AFTER YEAR. FOR INSTA NCE, THE INCOME OF THE LENDER COMPANY WAS ASSESSED AT RS.7.04 CRORES I N AY 2014-15 AND RS.8.58 CRORES IN AY 2015-16. BESIDES, THE LENDER C OMPANY IS A NON- BANKING FINANCE COMPANY (NBFC) REGISTERED WITH RESE RVE BANK OF INDIA AS A NON-SYSTEMATIC NON-DEPOSIT TAKING NBFC FOR THE PAST SO MANY YEARS. THESE BACKGROUND FACTS WOULD DEMONST RATE THAT THE LENDER CO. IS NOT A PAPER CO. OR A SHELL CO. AS ALL EGED AND HAS A SUBSTANTIAL NET-WORTH AND AN ENTITY OF SOUND FINANC IAL STANDING. ITA NO. 21/RPR/2021 SUN & SUN INFRAMETRIC PVT LTD VS. ACIT AY : 2015-2016 - 8 - 9.3 WITHOUT PREJUDICE TO THE NON APPLICABILITY OF S . 68 AT THE THRESHOLD AS CONTENDED, IT IS FURTHER CASE OF THE A SSESSEE IN THE ALTERNATIVE THAT THE REVISIONARY POWERS HAVE BEEN E XERCISED BY PCIT ONLY ON THE BASIS OF THE LENDER COMPANY BEING CLASS IFIED BY THE SEBI AS A SHELL COMPANY COUPLED WITH SOME ADVERSARIAL ST ATEMENT OF ONE SHRI AMIT KUMAR KEDIA. IT IS VOCIFEROUSLY CONTENDE D THAT BOTH THESE FACTS WHICH ARE THE FOUNDATION FOR ENTERTAINMENT OF ADVERSE BELIEFS WERE NOT MADE AVAILABLE ON THE RECORD AT THE TIME O F ASSESSMENT, BUT APPEARS TO HAVE COME ON RECORD AFTERWARDS. THE PCIT PURPORTEDLY IN POSSESSION OF SUCH SO CALLED INFORMATION, HAS NEITH ER PROVIDED THE INFORMATION RECEIVED FROM SEBI NOR THE STATEMENT OF SHRI AMIT KUMAR KEDIA. THE ASSESSEE WAS DENIED THE VALUABLE R IGHTS OF ASCERTAINING THE OBJECTIVITY AND CORRECTNESS OF THE SO CALLED INFORMATION. THE VALUABLE RIGHT OF CROSS-EXAMINATIO N OF SUCH A THIRD PARTY WAS THUS NATURALLY DENIED DESPITE REQUESTS. I T WAS THUS CONTENDED THAT IN THE ABSENCE OF THE ASSESSEE BEING PRIVY TO SUCH ADVERSE MATERIAL, THE ACTION AGAINST THE ASSESSEE C ANNOT BE INVOKED UNDER ANY CIRCUMSTANCES. AS FURTHER SUBMITTED, THE LENDER IS A CLOSELY HELD CO. AND NOT LISTED AND IT IS A MATTER OF EXAMI NATION TO UNDERSTAND AS TO HOW THE SEBI IS IMPLICATED SUCH CLOSELY HELD CO. BEHIND ITS BACK AND WITHOUT ANY OPPORTUNITY. THE CURRENT STATUS OF THE ALLEGATION OF SEBI IS ALSO UNKNOWN. THE WHOLE AFFAIR IS KEPT A DE EP SECRET WHILE TRYING TO DISPLACE A COMPLETED ASSESSMENT. THE AO I N ABSENCE OF ANY ADVERSE INFORMATION ON RECORD AT THE RELEVANT TIME COULD NOT FORESEE AND IMAGINE ANY ENQUIRY ON THIS ASPECT. THE ACTION OF AO COULD BE POSSIBLY BRANDED AS ERRONEOUS, ONLY IF THE AO WAS A LSO PRIVY TO SUCH PURPORTED INFORMATION ADVERSE TO THE ASSESSEE AT TH E RELEVANT TIME OF ASSESSMENT BUT HAS FAILED TO MAKE ENQUIRIES NECESSI TATED IN LAW. THIS IS NOT THE CASE. THE BONAFIDE ACTION OF AO, NOT BEI NG PRIVY TO SUCH SO CALLED INFORMATION, THUS CAN NOT BE SAID TO BE FALL ING WITHIN THE AMBIT ITA NO. 21/RPR/2021 SUN & SUN INFRAMETRIC PVT LTD VS. ACIT AY : 2015-2016 - 9 - OF CLAUSE (A) TO EXPLANATION 2 OF S. 263 OF THE ACT AND CONDEMNED AS ERRONEOUS. THE PCIT, AT A SUBSEQUENTLY STAGE, IF SO PROPOSES TO RELY ON SUCH INFORMATION, HE HIMSELF HAS TO NECESSARILY MAKE REQUISITE ENQUIRIES AFTER GIVING SOME REASONABLE OPPORTUNITY TO ENABLE THE ASSESSEE TO ASSIST THE PCIT IN COMING TO A LAWFUL C ONCLUSION. THE DIRECTIONS OF THE PCIT BASED ON SOME UN-CONFRONTED AND UNTESTED INNOCUOUS INFORMATION THUS DO NOT CARRY ANY LEGAL B ASE. 9.4 THE OTHER DIRECTIONS FOR VERIFICATION OF GENUIN ENESS OF STAMP PAPER FOR RECEIPT OF ADVANCE AGAINST SALE OF LAND, IT WAS ARGUED, PRIMA FACIE TANTAMOUNT TO AN ARDUOUS TASK FOISTED ON AO AND DO ES NOT PASS THE TEST OF REASONABLENESS IN ENQUIRY EXPECTED FOR THE PURPOSES OF DIRECTIONS UNDER S. 263 OF THE ACT. BE IT AS IT MAY , IT WAS CONTENDED THAT IN THE ABSENCE OF TAXABILITY OF SUCH SUM PERMI SSIBLE UNDER S. 68 OF THE ACT IN THE YEAR UNDER QUESTION, THE ENQUIRY SO DIRECTED ON THIS POINT IS DEVOID OF LEGAL BACKING AND IS A MEANINGLE SS EXERCISE. NO ERROR COULD THUS BE ENVISAGED IN THE ORDER OF AO ON THIS SCORE. 9.5 IT WAS FURTHER ASSERTED THAT NOTWITHSTANDING TO TAL IMPERMISSIBLY IN LAW TO ASSESS THE RECEIPT/CREDIT IN THE YEAR OTH ER THAN YEAR OF RECEIPT UNDER S. 68, THE IMPUGNED DIRECTIONS FOR S UBSTANCE OVER FORM IN THE GARB OF ALLEGED LACK OF ENQUIRY ( ABSENCE A REASONABLE ENQUIRY) IS TOTALLY INCREDULOUS AND IN GROSS BREACH OF MANDA TE ASSIGNED TO THE REVISIONAL AUTHORITY. IT WAS CONTENDED THAT THE PCI T HAS FAILED TO SHOW AS TO HOW THE AO COMMITTED ERROR AT THE TIME O F ASSESSMENT IN NOT APPLYING SUBSTANCE OVER FORM THEORY HAVING RE GARD TO MATERIAL AVAILABLE ON RECORD. SUCH QUESTIONS, BEING OF EXTRA -ORDINARY NATURE AND INHERENTLY SUBJECTIVE, ARE OUTSIDE THE SCOPE OF REVISIONAL PROCEEDINGS AND MAY, AT BEST, ARISE ONLY AT THE TIM E OF ASSESSMENT. ITA NO. 21/RPR/2021 SUN & SUN INFRAMETRIC PVT LTD VS. ACIT AY : 2015-2016 - 10 - 9.6 IT WAS NEXT SUBMITTED THAT, THE DIRECTION NO. 4 ALTHOUGH VAGUE LIKE OTHER FORMER DIRECTIONS, THE REPAYMENT OF LOAN S AND INTEREST IS SOUGHT TO BE VERIFIED UNDER S. 69C OF THE ACT. IN T HIS REGARD IT WAS CONTENDED THAT IT IS DIFFICULT TO VISUALIZE AS TO W HO THE REPAYMENT OF EXISTING LOANS WHICH IS NORMAL INCIDENCE HAS CAUSED PREJUDICE TO THE REVENUE. IT WAS FURTHER CONTENDED THAT WHERE THE RE PAYMENT OF LOANS AND INTEREST EXP THEREON ARE ALREADY RECORDED IN TH E BOOKS, S. 69C IS NON-STARTER AND CAN NOT BE INVOKED. 9.7 IT WAS SUBMITTED THAT ALL THE 4 VAGUE AND NON-D ESCRIPT DIRECTIONS OF THE PCIT IN RELATION TO TRANSACTION WITH GTPL SU FFERS OF VICE OF LACK OF APPLICATION OF MIND AND WHOLLY WRONG APPREC IATION OF FACTS AND LAW. THE DIRECTIONS GIVEN TO AO TO REFRAME THE ASSESSMENT THESE COUNTS ARE INHERENTLY AND PATENTLY OPPOSED TO MANDA TE OF PROVISIONS OF S. 263 OF THE ACT. 10. AS EVIDENT, THE FACTS NARRATED ON BEHALF OF THE ASSESSEE SPEAK FOR ITSELF AND DOES NOT REQUIRE ANY SERIOUS ELABORA TION. IT IS TRITE THAT SECTION 68 CANNOT BE INVOKED IN RELATION TO CREDITS UNCONNECTED TO THE ASSESSMENT YEAR IN QUESTION. THE FACTS ON RECORDS P LACED BEFORE THE PCIT AS WELL AS BEFORE US CLEARLY SHOW THAT THE ALL EGED SUM OF RS.16 CRORES FROM GTPL WAS NOT RECEIVED IN ASSESSMENT YEA R IN QUESTION BUT WAS RECEIVED IN THE EARLIER ASSESSMENT YEAR AND WAS DULY ASSESSED. THE AMOUNT REPRESENTS OPENING BALANCE OF CARRIED FO RWARD CREDIT OF AN EARLIER YEAR. HENCE, THE DIRECTION FOR VERIFICATION OF TRANSACTIONS, OUTSIDE THE PURVIEW OF SECTION 68 OF THE ACT, TRAVE LS BEYOND THE SCOPE OF POWERS CONFERRED UNDER S. 263 AND COULD NOT HAVE BEEN GIVEN BY THE PCIT IN THE GARB OF REVISION. THE CONSEQUENTIAL DIRECTIONS TOWARDS GENUINENESS OF STAMP PAPER OF RECEIPT OF ADVANCE FR OM GTPL AND APPLICABILITY OF DOCTRINE OF SUBSTANCE OVER FORM ET C. BEING RELATABLE TO ITA NO. 21/RPR/2021 SUN & SUN INFRAMETRIC PVT LTD VS. ACIT AY : 2015-2016 - 11 - RECEIPT OF LOANS IN OTHER ASSESSMENT YEAR ARE APPAR ENTLY FAR-FETCHED AND HAVE NO RELEVANCE FOR ASSESSMENT OF INCOME OF T HIS YEAR. THE ORDER OF THE ASSESSING OFFICER ON THIS SCORE IS NEI THER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. SIMILARLY, WE ALSO FAIL TO UNDERSTAND AS TO HOW THE REPAYMENT OF LOANS AND PAY MENT OF INTEREST EXPENDITURE DURING THE YEAR BEING A RECORDED TRANSA CTION IN THE BOOKS, FALLS WITHIN THE PURVIEW OF SECTION 69C OF THE ACT AS ALLEGED IN THE SHOW CAUSE NOTICE. ALL THE 4 DIRECTIONS IN RELATION TO LOAN TRANSACTIONS WITH GTPL THUS ARE DEVOID OF ANY LEGAL BASIS AND AR E OUTSIDE THE AUTHORITY OF PCIT. 11. IN THE ABSENCE OF ANY MERITS FOUND, THE DIRECT ION OF THE PCIT TO THE ASSESSING OFFICER FOR SOME ADEQUATE VERIFICATIO N ON SUCH POINTS ARE ILLUSORY AND CANNOT BE COUNTENANCED IN LAW AT T HE THRESHOLD. 12. NOTWITHSTANDING, WE ALSO TAKE NOTICE OF THE PLE A OF THE ASSESSEE THAT THE SO CALLED INCRIMINATING INFORMATION FROM S EBI AND STATEMENT OF SHRI AMIT KUMAR KEDIA COMING TO THE NOTICE OF PC IT POST ASSESSMENT, WAS NOT MADE AVAILABLE TO THE ASSESSEE DESPITE REQUESTS AND ENABLING IT TO PLACE ITS DEFENSE. IN THE CONVER SE, IT IS DEMONSTRATED ON BEHALF OF THE ASSESSEE THAT GTPL IS A NBFC REGISTERED WITH RBI AND IS A COMPANY OF A SOUND FIN ANCIAL STANDING AND A REGULAR TAX PAYER OF VERY HIGH AMOUNTS YEAR A FTER YEAR. ALSO, AS NOTED, THE ASSESSING OFFICER COULD HAVE MADE ENQUIR IES ONLY IN RELATION TO TRANSACTIONS ENTERED DURING THE YEAR AN D ON THE BASIS OF ADVERSE MATERIAL RECEIVED FROM OUTSIDE SOURCES AS A VAILABLE BEFORE HIM. THE AO THUS HAD NO PERCEPTIBLE OCCASION TO EXA MINE THE ENTRIES RELATING TO OTHER YEAR HAVING NO BEARING ON THE ASS ESSMENT OF THIS YEAR. IT THUS CANNOT BE SAID THAT THE ASSESSING OFF ICER LACKED IN PRAGMATISM AND REASONABLENESS OF A PRUDENT PERSON I NSTRUCTED IN LAW ITA NO. 21/RPR/2021 SUN & SUN INFRAMETRIC PVT LTD VS. ACIT AY : 2015-2016 - 12 - IN CONDUCTING ENQUIRY ON FACTS WHICH HE WAS NEITHER PRIVY TO NOR HAD ANY IMPACT ON THE ASSESSMENT OF THE YEAR IN QUESTIO N. 13. AT THIS JUNCTURE, A PERTINENT LEGAL QUESTION AL SO HAS CROPPED UP ON INTERPRETATION OF MANDATE AVAILABLE UNDER S. 263 READ WITH EXPLANATION 1 & EXPLANATION 2 APPENDED THERETO. THE INTERPLAY AND INTER-CONNECT BETWEEN THESE EXPLANATION NEEDS SOME DELIBERATION. 13.1 TO BEGIN WITH, EXPLANATION 2 DEEMS THE ORDER PASSED BY THE AO TO BE ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INT EREST OF REVENUE IN CERTAIN SITUATIONS NOTED THEREIN. WE ARE PRESENTLY CONCERNED WITH CLAUSE (A) THERETO. CLAUSE (A) TO EXPLANATION (2) C ONFERS POWERS ON THE REVISIONAL AUTHORITY UNDER SECTION 263 WHERE THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATIONS WHICH SHO ULD HAVE BEEN MADE . APPARENTLY, IN THE ABSENCE SO CALLED INCRIMINATIN G MATERIAL (AS ALLEGEDLY GATHERED FROM THIRD PARTIES IN THE INSTAN T CASE) AT THE TIME OF ASSESSMENT, THERE IS NO OCCASION FOR THE AO TO EMBA RK UPON INQUIRIES WHICH SHOULD HAVE BEEN MADE, AS EXPECTED IN TERMS OF CLAUSE (A) EXPLANATION 2. THE AO COULD NOT BE EXPECTED TO FATH OM SOME ROVING ENQUIRY IN THE ABSENCE OF SPECIFIC INPUTS WHICH PUR PORTEDLY CAME TO THE POSSESSION OF THE PCIT SUBSEQUENT TO THE ASSESS MENT. THIS IS NOTWITHSTANDING THE FACT THAT THE IMPUGNED RECEIPT OF RS. 16 CR., (SOUGHT TO BE TREATED AS UNEXPLAINED CREDIT) IN ITS ELF IS UNCONNECTED TO THE ASSESSMENT OF THIS YEAR. HENCE, THE ALLEGED LAC K OF ENQUIRY ON THIS ISSUE IN THE IMPUGNED ASSESSMENT YEAR IN QUESTION C ANNOT LEGITIMATELY BE DEEMED AS ERRONEOUS ON THE BASIS OF FACTS COMI NG TO LIGHT SUBSEQUENTLY AND THAT TOO, IN RELATION TO TRANSACTI ONS OCCURRED AND RELATABLE TO SOME OTHER YEAR ON THE TOUCHSTONE OF F ICTION ENACTED IN CLAUSE (A) TO EXPLANATION 2 TO SECTION 263. ITA NO. 21/RPR/2021 SUN & SUN INFRAMETRIC PVT LTD VS. ACIT AY : 2015-2016 - 13 - 13.2 NOTWITHSTANDING, IT WOULD BE PERTINENT TO SIMU LTANEOUSLY TAKE A LOOK AT THE ISSUE WITH REFERENCE TO CLAUSE (B) TO EXPLANATION 1 THERETO. CLAUSE (B) EXPLAINS THE TERM RECORD FOR THE PURPO SES OF S. 263 OF THE ACT. APPARENTLY, IT SEEKS TO SOMEWHAT EXPAND THE SC OPE OF SECTION 263 AND SEEKS TO HOLD THE ORDER UNDER REVIEW TO BE ERRONEOUS EVEN ON THE BASIS OF INCRIMINATING INFORMATION IN RELATION TO THE PROCEEDING COMING TO THE NOTICE OF THE REVISIONAL AUTHORITY SU BSEQUENT TO THE ORDER SOUGHT TO BE REVISED IS PASSED. HENCE, WHILE THE ORDER OF THE AO MAY NOT PER SE FALL WITHIN THE SWEEP OF CLAUSE (A) TO EXPLANATION 2, SUCH ORDER MAY STILL POSSIBLY BE REGARDED AS TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE HAVING REGAR D TO MEANING OF RECORD ENLARGED IN EXPLANATION 1 TO SECTION 263. IN TERMS OF CLAUSE (B) TO EXPLANATION 1, THE PCIT HEREIN IS THUS ENTIT LED TO REFER TO ALL RECORDS RELATING TO THE ASSESSMENT PROCEEDINGS ALTH OUGH SUCH RECORDS / INFORMATION DID NOT EMANATE FROM THE ASSESSMENT PRO CEEDINGS AS SUCH AND CAN ALSO POSSIBLY HOLD SUCH ORDER UNDER REVIEW TO BE ERRONEOUS IN APPROPRIATE CASE, BASED ON SUBSEQUENT EVIDENCES GAT HERED, WITHOUT ATTRIBUTING ANY FAULT TO THE AO. HENCE, ORDER UNDER REVIEW MAY BE HELD TO BE ERRONEOUS IN EITHER OF THE MUTUALLY EXCL USIVE SITUATIONS NAMELY (I) WHERE AO FAILS TO MAKE REQUISITE ENQUIRY IN TERMS OF EXPLANATION 2 OR (II) WHERE REVISIONAL AUTHORITY DI SCOVERS FRESH INCRIMINATING MATERIAL AFTER THE SUBJECT ORDER IS P ASSED EVEN WITHOUT ATTRIBUTING DELINQUENCY ON THE PART OF AO OWING EXP ANDED MEANING ASSIGNED TO THE EXPRESSION RECORD IN EXPLANATION 1. 13.3 IN OUR OPINION, A SUBTLE BUT REAL DISTINCTION BETWEEN THE MANNER OF EXERCISE OF REVISIONAL POWERS ARISE HERE. WHEREA S, THE TEMPLATE OF EXPLANATION-2 ITSELF HAVE BEEN READ DOWN AND SWEEPI NG REMIT TO THE AO FOR FRESH ENQUIRIES IN AN UNBRIDLED EXERCISE HAV E BEEN DISCOURAGED BY THE COURTS, WITHOUT REVISIONAL AUTHORITY HIMSELF UNDERTAKING SOME ITA NO. 21/RPR/2021 SUN & SUN INFRAMETRIC PVT LTD VS. ACIT AY : 2015-2016 - 14 - BASIC AND MINIMAL ENQUIRIES; THE SECOND SITUATION, IN OUR VIEW, CALLS FOR EVEN GREATER DEGREE OF CIRCUMSPECTION. IN THE I NSTANCE CASE, WHERE THE FAILURE TO MAKE DEEPER ENQUIRIES ARE NOT ATTRIB UTABLE TO AO PER SE HAVING REGARD TO THE FACT THAT SO CALLED ADVERSE MA TERIAL HAS COME TO THE LIGHT ONLY AFTER THE COMPLETION OF THE ASSESSME NT ORDER, IT IS OSTENSIBLE THAT THE SACROSANCT PRINCIPLES OF NATURA L JUSTICE IN RELATION TO SUCH NEW ADVERSE MATERIAL HAS NOT BEEN OBSERVED AT THE STAGE OF FRAMING THE ASSESSMENT ORDER. THUS AN OBVIOUS INCID ENTAL QUESTION WOULD ARISE TOWARDS SAFEGUARDS AVAILABLE TO THE ASS ESSEE AND ONUS PLACED ON THE REVISIONAL AUTHORITY SEEKING TO DISTU RB THE ORDER PASSED IN SUCH AN EXTRA-ORDINARY SITUATION. PRIMA FACIE, I T APPEARS TO US THAT THE REVISIONAL AUTHORITY WOULD, IN SUCH A SITUATION , BE REQUIRED TO DON AND SUBSUME THE QUASI JUDICIAL ROLE PLAYED BY THE A O AS ENVISAGED IN LAW. IN THE EVENT OF FRESH MATERIAL COMING TO LIGHT , THE REVISIONAL AUTHORITY CAN NOT BYPASS THE PRINCIPLES OF NATURAL JUSTICE AND CASUALLY PRE-EMPT SUCH ORDER TO BE ERRONEOUS. A CANCELLATION OF AN ORDER ALREADY PASSED AND COMING TO THE FORE, BASED ON FRE SH MATERIAL, WITHOUT PERFORMING QUASI-JUDICIAL TASK OF CONFRONTI NG THE MATERIAL TO ASSESSEE AND WEIGH ITS DEFENSE THEREON, WOULD BE CL EARLY OPPOSED TO DOCTRINE OF LEGITIMATE EXPECTATIONS AND WOULD HAVE TO BE CONSTRUED AS A MERE IPSE DIXIT AND A PERFUNCTORY EXERCISE OF REVISIONAL POWERS. I N OUR MIND, THE IMPERATIVES OF ENSHRINED PRINCIPLES O F FAIR PLAY ARE REQUIRED TO BE OBDURATELY OBSERVED IN SUCH SITUATIO N AND WITH GREATER CIRCUMSPECTION. THE ONUS OF A RELATIVELY HIGHER PED ESTAL WOULD SQUARELY & PROFOUNDLY REST UPON THE PCIT TO COMPREH ENSIVELY DEMONSTRATE BY A SPEAKING ORDER THAT THE ORDER IS I NDEED ERRONEOUS AND CAUSING PREJUDICE. IT WOULD BE THUS INCUMBENT U PON THE PCIT TO EXERCISE DUE CIRCUMSPECTION & RESTRAINT EXPECTED OF A QUASI JUDICIAL OFFICER BEFORE ATTEMPTING TO DISLODGE THE ORDER OF A FUNCTIONARY RANKED LOWER IN HIERARCHY. A SUMMARY SET ASIDE AS A SWEEPI NG MEASURE AND ITA NO. 21/RPR/2021 SUN & SUN INFRAMETRIC PVT LTD VS. ACIT AY : 2015-2016 - 15 - RESTORATION OF ISSUE TO AO ON ACCOUNT OF PURPORTED LACK OR INADEQUACY IN ENQUIRY ON THE POINT WOULD BE THUS NOT BE IN ACC ORD WITH SCHEMATIC INTERPRETATION OF THE PROVISION. 13.4 OSTENSIBLY, BEFORE REMITTING THE MATTER TO AO, THE REVISIONAL AUTHORITY WOULD BE REQUIRED TO NECESSARILY TAKE UPO N HIMSELF AND SET A PRELIMINARY ENQUIRY IN MOTION TO GIVE CREDENCE TO H IS SATISFACTION OF ORDER PASSED BEING ERRONEOUS. THE REVISIONAL AUTHOR ITY WOULD BE LEGITIMATELY EXPECTED TO MAKE NECESSARY ENQUIRIES A S HE MAY CONSIDER EXPEDIENT, CONFRONT THE MATERIAL SOUGHT TO BE RELIE D UPON; FOLLOWED BY A SPEAKING ORDER. 13.5 PERTINENT TO NOTE THAT THE HONBLE GAUHATI HIG H COURT IN THE CASE OF SMT. LILA CHOUDHURY VS. CIT & ORS, (2007) 289 ITR 226 (GAUHATI) HAS BEFITTINGLY ECHOED THAT DEFENSE CANVASSED BY T HE ASSESSEE IN RESPONSE TO NOTICE UNDER SECTION 263 OF THE ACT MUST BE CONSIDERED AND EXAMINED TO SHUN SYMBOLIC EXERCISE O F POWERS IN A NONCHALANT AND ROUTINE MANNER. THE REASONS ARE NOT FAR TO SEEK. THE ISSUES RAISED IN THE SHOW-CAUSE NOTICE ARE UNDERSTO OD TO BE REBUTTABLE AND THUS THE ORDER OF THE REVISION WIT HOUT CONSIDERING THE COUNTER-EXPLANATION OF THE ASSESSEE COULD NOT BE VA LIDATED. CONCEIVABLY, THE BURDEN ON REVISIONAL AUTHORITY WIT H REFERENCE TO SOME FRESH INFORMATION SURFACING AFTER PASSING OF A N ORDER IS RELATIVELY FAR GREATER. 14. IN THE BACKGROUND OF NUANCED UNDERSTANDING OF L AW CODIFIED IN S. 263, WE OBSERVE THAT THE ASSESSEE HAS VOCIFEROUS LY PLEADED BEFORE PCIT IN THE FIRST INSTANCE THAT THE SO CALLED LIST OF SHELL CO. BY SEBI IMPLICATING LENDER ( A PRIVATELY HELD GROUP CO.), S TATEMENT OF SOME ITA NO. 21/RPR/2021 SUN & SUN INFRAMETRIC PVT LTD VS. ACIT AY : 2015-2016 - 16 - THIRD PARTY WITNESS ALLEGING SUCH A PRIVATELY MANAG ED COMPANY TO BE A SHELL COMPANY AND ALL OTHER MATERIAL COMING TO THE NOTICE OF DEPTT., WHICH IS BASIS FOR ALLEGATION OF ORDER BEING ERRONE OUS, MUST BE CONFRONTED AND MADE AVAILABLE TO ASSESSEE. SUCH MAT ERIAL WERE ADMITTEDLY NEVER CONFRONTED TO THE ASSESSEE DESPITE SPECIFIC REQUEST. 14.1 PERTINENT HERE TO OBSERVE THAT WHILE IT IS FAI RLY SETTLED THAT SUBSTANTIVE POWER ENSHRINED IN THE ACT CANNOT BE OR DINARILY HELD HOSTAGE TO PROCEDURAL REQUIREMENTS, NONETHELESS, IT BEARS TO RECALL THAT PROCEDURE DELINEATED IN SECTION 263 IS A SUBSTANTIV E PROVISION AND THE PROVISION EXPLICITLY REQUIRES THE REVISIONAL AUTHOR ITY TO MEET THE MANDATE OF PRINCIPLES OF NATURAL JUSTICE., AN ABIDI NG CHARACTERISTIC OF ANY ADMINISTRATIVE OR QUASI-JUDICIAL FUNCTION IN AN Y CASE. THE STATUTORY PROTOCOLS ARE REQUIRED TO BE SCRUPULOUSLY MET, MORE SO, WHEN REVISION IMPINGES UPON SOME SORT OF CIVIL RIGH TS ACCRUED TO THE ASSESSEE AND SEEKS TO UNSETTLE A SETTLED ASSESSMENT . IT MUST BE ACKNOWLEDGED THAT SUCH EXERCISE OF POWERS OF REVISI ON OF A CONCLUDED ASSESSMENT AND FOR NO FAULT OF ASSESSEE, HUGELY DRA INS THE ASSESSEE WHO HAS TO UNDERGO A RESTART OF CONCLUDED PROCEEDIN G. KEEPING THIS IN VIEW, THE REVISIONAL AUTHORITY BEING A VERY SENIOR OFFICER IN THE HIERARCHY IS EXPECTED TO EXERCISE POWERS CONFERRED UNDER SECTION 263 WITH DILIGENCE, DEXTERITY AND REASONABLENESS TO ACH IEVE AND ADVANCE THE OBJECT AND PURPOSES OF THE ENACTMENT. 14.2 THE REVISIONAL ORDER SO PASSED, IN THE INSTANT CASE, ALLEGING EXISTENCE OF SOME ADVERSE MATERIAL WITHOUT ENABLING THE ASSESSEE TO RESPOND THERETO AND WITHOUT GIVING ANY EFFECTIVE OP PORTUNITY DESPITE EXPRESS DEMAND IS THUS PALPABLY FRAGILE AND REQUIRE S TO BE TREATED AS ILLEGAL. IN THE ABSENCE OF ADHERENCE TO SALUTARY PR INCIPLES, THE PURPORTED NEW MATERIAL IS RENDERED EXTRANEOUS AND H ENCE REQUIRED TO ITA NO. 21/RPR/2021 SUN & SUN INFRAMETRIC PVT LTD VS. ACIT AY : 2015-2016 - 17 - BE IGNORED AS NON EST AND CONSEQUENTLY, THE REVISIONAL ACTION IS REQUIRED TO BE TESTED DOHORS SUCH ALLEGED MATERIAL. THE WHOLE CASE OF THE PCIT BUILT ON SUCH UNINTELLIGIBLE AND NON-DESCR IPT PREMISE IS THUS A DAMP SQUIB . ON THIS SCORE TOO, THE REVISIONAL ACTION FAILS. 15. LOOKING FROM ANY ANGLE, THE DIRECTIONS TOWARDS VERIFICATION OF LOAN TRANSACTIONS ARE UNSUSTAINABLE IN LAW AND DESE RVE TO BE QUASHED. THE DIRECTIONS NO. 1-4 ARE THUS SET ASIDE. 16. POINT NO.5 OF THE DIRECTIONS CONCERN APPLICABIL ITY OF SECTION 56(2)(VIIB) IN RESPECT OF SHARES ISSUED. IT IS THE CASE OF THE ASSESSEE THAT :- (A) THE CASE WAS PROPERLY EXAMINED BY THE AO VIDE QUERY NO.2 OF THE NOTICE DATED 21.03.2017 (PAGE NO.99 OF THE PAPE R-BOOK) WHEREBY THE AO SOUGHT TO MAKE INQUIRY TOWARDS JUSTI FICATION FOR PREMIUM ON ISSUE OF SHARES. A REPLY THERETO WAS FIL ED BY THE ASSESSEE (PAGE NO.104 & 105 OF THE PAPER-BOOK) IMPL IEDLY TO THE SATISFACTION OF THE AO; (B) THE ASSESSEE DETERMINED FAIR MARKET VALUE (FMV) OF EQUITY SHARES ON THE BASIS OF THE BOOK VALUE METHOD AS P ER BALANCE- SHEET DRAWN UP AS ON THE DATE IMMEDIATELY PRECEDING THE VALUATION DATE WHICH HAS BEEN APPROVED AND ADOPTED IN THE ANNUAL GENERAL MEETING OF THE SHAREHOLDERS, AND SIN CE THE BALANCE-SHEET OF 31.03.2014 WAS NOT APPROVED AND AD OPTED BY THE SHAREHOLDERS AT THE TIME OF ISSUE OF SHARES IN JULY 2014, THE AUDITED BALANCE-SHEET OF 31.03.2013 AS LAST AVAILAB LE AT THE TIME OF ISSUE OF SHARES WERE CONSIDERED AS REQUIRED; ITA NO. 21/RPR/2021 SUN & SUN INFRAMETRIC PVT LTD VS. ACIT AY : 2015-2016 - 18 - (C) THE CERTIFICATE OF THE CHARTERED ACCOUNTANT VOUCHES THE FMV ADOPTED BY THE ASSESSEE WHICH STANDS AT RS. 169.62 PER SHARE ON THE BASIS OF LAST AUDITED BALANCE-SHEET AS ON 31.03 .2013. 17. IN THE LIGHT OF FACTS POINTED OUT ON BEHALF OF THE ASSESSEE, WE ARE UNABLE TO SEE ANY ERROR IN THE ACTION OF THE AO TOW ARDS HIS ENDORSEMENT ON ISSUE OF SHARES AT PREMIUM. THE PREM IUM CHARGED IS DEMONSTRATED TO BE STRICTLY AS PER THE IMMEDIATELY LAST AVAILABLE AUDITED AND APPROVED BALANCE-SHEET AT THE TIME OF I SSUE OF SHARES. THE ACTION OF THE ASSESSEE IS THUS ON A SOUND BASIS . WE FIND PRIMA FACIE MERIT IN THE PLEA ADVANCED FOR JUSTIFICATION OF TH E REQUIREMENT OF SECTION 56(2)(VIIB) OF THE ACT. NO ABNORMALITY IS D ISCERNABLE IN THE ADMISSION OF CLAIM OF THE ASSESSEE BY THE AO. ON FA CTS, THE BALANCE- SHEET FOR THE FY 2013-14 WAS STATED TO BE SIGNED ON 29.08.2014, I.E. AFTER THE ISSUE OF SHARES ON 30.07.2014 AND, THEREF ORE, THE STANCE OF THE ASSESSEE TO ADOPT THE FIGURES AS PER LAST AUDIT ED ACCOUNTS OF FY 2012-13 IS PLAUSIBLE. THE ASSESSING OFFICER HAS WE IGHED THESE FACTS AND HAS COME TO A REASONABLE CONCLUSION. 17.1 OTHERWISE ALSO, VALUATION DYNAMICS IS CONTINGE NT UPON OF PLETHORA OF FACTORS SUCH AS MARKET INTEREST, FEASIB ILITY, PERCEPTION ETC. AND CANNOT BE DETERMINED WITH A MATHEMATICAL PRECIS ION. IT IS OFTEN SAID THAT VALUATION IS AN ART RATHER THAN A SCIENCE . A MEAGER DIFFERENCE IN PREMIUM QUA A BOOK NET-WORTH AS PER PAST BALANCE-SHEET WOULD N OT, IN OUR VIEW, NECESSARILY INVITE THE DEEMING FICTION IN THE LARGER CONTEXT OF ITS STATED OBJECTS. SUCH COURSE IS CERTA INLY NOT DECIPHERABLE UNDER THE SHELTER OF REVISIONAL PROCEEDINGS WHERE T HE ORDER HAS BEEN PASSED IN EXERCISE OF QUASI JUDICIAL POWERS AND CAR RIES LEGAL EFFECT. SUCH A TINY DIFFERENCE IN VALUATION DETERMINED BY A HIGHLY SUBJECTIVE EXERCISE CAN NOT BE SAID TO BE EITHER ERRONEOUS OR EVEN PREJUDICIAL TO ITA NO. 21/RPR/2021 SUN & SUN INFRAMETRIC PVT LTD VS. ACIT AY : 2015-2016 - 19 - THE INTEREST OF REVENUE IN IT TRUE PURPORT. IT IS N OT PERMISSIBLE TO PCIT TO SUBSTITUTE A VIEW TAKEN BY THE AO WHICH HAS A PL AUSIBLE BASIS. 17.2 THE DIRECTIONS, AS PER POINT NO.5, TOWARDS APP LICABILITY OF SECTION 56(2)(VIIB) BY THE REVISIONAL COMMISSIONER IS THUS SET ASIDE. 18. AS PER POINT NO.6 OF THE DIRECTION, THE PCIT HA S DIRECTED THE AO TO VERIFY THE APPLICABILITY OF SECTION 43CA IN RESP ECT OF SALE DEED EXECUTED BELOW STAMP DUTY VALUE. THE ASSESSEE CONT ENDS IN THIS REGARD THAT THE POINT IN ISSUE WAS ADDRESSED TO THE ASSESSING OFFICER IN RESPONSE TO QUERY RAISED BY THE REVENUE AUDIT PA RTY OF THE DEPTT. IT WAS POINTED OUT THAT THERE IS NO DIFFERENCE BETWEEN THE ACTUAL CONSIDERATION AND STAMP DUTY VALUE. A CHART WAS PLA CED BEFORE THE PCIT ALSO SHOWING ACTUAL SALE CONSIDERATION AND CIR CLED RATE/STAMP DUTY VALUE (PAGE NO.126 OF THE PAPER-BOOK). THE AS SESSEE THUS CONTENDS THAT IT WAS CONCLUSIVELY DEMONSTRATED BEFO RE THE PCIT THAT THERE EXISTS NO INFRINGEMENT OF SECTION 43CA. THE P CIT HAS NOT APPLIED HIS MIND TO THE DEMONSTRABLE FACTS BUT HAS MERELY DIRECTED THE ASSESSEE TO RE-VERIFY THE POINT IN QUESTION. 18.1 THE ACTION OF PCIT DOES NOT APPEAR TENABLE. TH E PCIT MUST HAVE WEIGHED THE SUBMISSIONS OF THE ASSESSEE TO REM OVE ANY DOUBT ENTERTAINED BY HIM AS PER SHOW CAUSE. THE POINTS AT THE STAGE OF SHOW CAUSE ARE EPHEMERAL AND REBUTTABLE. THE PCIT HAS N OT GIVEN ANY FINDING ON THE SUBMISSIONS MADE. WE HAVE NO HESITAT ION TO SET ASIDE SUCH ACTION. SECTION 263 IS NOT MEANT TO CONDUCT RO VING INQUIRY HOWSOEVER WIDE THE AMPLITUDE OF THE POWERS MAY BE. WHEN A GLARING AND DEMONSTRABLE FACT HAS BEEN PLACED BEFORE THE PC IT TO ADDRESS HIS CONCERN, THE MINIMUM THAT IS EXPECTED OF HIM IS TO LOOK AT THE ITA NO. 21/RPR/2021 SUN & SUN INFRAMETRIC PVT LTD VS. ACIT AY : 2015-2016 - 20 - RELEVANT FACTS. HE CANNOT DIRECT THE ASSESSING OFFI CER TO MAKE FURTHER INQUIRY/ADEQUATE INQUIRY WITHOUT HIMSELF LOOKING IN TO THE FACTS AND CARRYING OUT SOME MINIMUM INQUIRY TO DEMONSTRATE TH E ERROR. THE MUNDANE AND PERFUNCTORY REMITTANCE OF THE ISSUE TO THE FILE OF THE ASSESSING OFFICER CANNOT BE APPROVED. 18.2 THE ACTION OF PCIT IS THUS SET ASIDE AND THAT OF AO IS RESTORED. 19. AS PER POINT NO.7 OF THE DIRECTION, THE APPLICA BILITY OF SECTION 40A(3) IN RESPECT OF PAYMENT FOR PURCHASE OF LAND H AS BEEN REMITTED BY THE PCIT FOR FRESH VERIFICATION. WE STRAIGHT AW AY FIND SUBSTANTIAL MERIT IN THE PLEA OF THE ASSESSEE THAT SECTION 40A( 3) HAS NO APPLICATION IN THE FACTS OF THE CASE WHERE THE PAYM ENT WAS MADE MERELY BY WAY OF ADVANCE AND CONSEQUENTLY NOT CLAIM ED AS EXPENDITURE/DEDUCTION. THE PCIT HAS NOT CONTROVERT ED THE CLAIM OF THE ASSESSEE THAT NO EXPENDITURE HAS BEEN CLAIMED U NDER THE PROVISIONS OF LAW TOWARDS ADVANCES MADE. APPARENTL Y, THE PROVISIONS OF SECTION 40A(3) DOES NOT APPLY TO SUCH TRANSACTIO NS OF MERE ADVANCE WITHOUT BEING CLAIMED AS EXPENDITURE. THE G ENUINENESS OF STAMP-PAPER FOR EXECUTION OF DOCUMENTS FOR ADVANCE PAYMENT IS NOT RELEVANT WHERE NO PREJUDICE IS CAUSED TO THE REVENU E HAVING REGARD TO THE FACT THAT NO EXPENDITURE HAS BEEN CLAIMED AT AL L. THE PROPOSED DIRECTIONS ARE GROSSLY OPPOSED TO THE SCHEME OF THE REVISIONARY POWERS. WE THUS SEE NO MERIT, WHATSOEVER, IN THIS D IRECTION EITHER. 20. THE WHOLE SET OF DIRECTIONS GIVEN BY THE REVISI ONAL ORDER THUS ARE THUS MARRED IN LAW AND TRAVELED BEYOND THE MAND ATE. IN THE BACKDROP OF REASONS NOTED ABOVE ON VARIOUS POINTS, THE REVISIONAL ITA NO. 21/RPR/2021 SUN & SUN INFRAMETRIC PVT LTD VS. ACIT AY : 2015-2016 - 21 - ORDER PASSED BY THE PCIT IS FOUND TO BE UNDER MISCO NCEPTION OF FACTS AND LAW AND HENCE QUASHED AND SET ASIDE. 21. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. PRONOUNCED ON 22.10.2021 AS PER RULE 34(4) OF TH E INCOME TAX APPELLATE TRIBUNAL RULES, 1963. SD/- SD/- SD/- SD/- (N. K. CHOUDHRY) (PRADIP K UMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMB ER BT TRUE COPY / COPY OF ORDER FORWARDED TO:- !' #$ / REVENUE 2' / ASSESSEE &' '(')* + / CONCERNED CIT 4' +- / CIT (A) .' /01 22)*3 )*3 / DR, ITAT, RAIPUR 4' 156 78 / GUARD FILE. BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR