M/S. OM PRAKASH BADAYA (HUF), JAIPUR V. PR.CIT, ALWAR

ITA 217/JPR/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3195 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 02-03-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A.S. NEHRA ACIT
• Keywords: Unexplained cash credit; Revision of order; Search and seizure; Share purchase agreement; Earning of tax free income; Tangible material; Difference of opinion; Accommodation entries; Penny stocks; Change of opinion; Set aside; Capital Gains; Bogus
• Section: 68; 263; 144; 69C; 143(3); 142(1); 80HHC; 133A; 201; 2(A); 13; 119; 22; 20

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO.217/JP/2020 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2015-16 SHRI OM PRAKASH BADAYA, HUF, 42, AGRASEN NAGAR, JAIPUR CUKE VS. PR. CIT ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABHO0013L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY:SHRI MANISH AGRAWAL (AR) JKTLO DH VKSJ LS@ REVENUE BY : SHRI A.S. NEHRA (ACIT-DR) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 19/11/2020 MN?KKS'K.KK DH RKJH[K@ DATE OF PRONOUNCEMENT :19/11/2020 VKNS'K@ ORDER PER: KUL BHARAT, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED PR. COMMISSIONER OF INCOME TAX (LD. PR. CIT, ALWAR, DATED 23/01/2020 PERTAINING TO THE ASSESSMENT YEAR 2015-16. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - ITANO.217/JP/2020 OM PRAKASH BADAYA 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, LD. PR. CIT ERRED IN PASSING ORDER U/S 263 OF THE INCOME TAX ACT, 1961(THE ACT), WHEN THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR HAD ALREADY BEEN CONCLUDED BY LD. AO U/S 143(3) OF THE ACT, AFTER SE EKING EXPLANATIONS AND MAKING ALL THE ENQUIRIES RELEVANT TO THE ISSUE ON WHICH THE PROCEEDINGS U/S 143(3) ARE INITI ATED AND WERE NECESSARY FOR COMPLETION OF ASSESSMENT. APPELLANT PRAYS ORDER SO PASSED U/S 263 MAY PLEASE BE HELD AS BAD IN LAW. 1.1 THAT, THE LD. PR. CIT HAS FAILED TO ESTABLISH A S TO HOW THE SAID ORDER WAS ERRONEOUS IN SO FAR AS BEING PREJUDICIAL TO THE INTERESTS OF REVENUE, PARTICULAR LY WHEN THE LD. AO HAD MADE COMPLETE INQUIRIES, THUS THE OR DER PASSED DESERVES TO BE STRUCK DOWN. 1.2 THAT, LD. PR. CIT HAS ERRED IN PASSING THE ORDE R U/S 263 SETTING ASIDE THE ASSESSMENT ONLY ON THE BASIS OF CHANGE OF OPINION WHEREAS THE ASSESSMENT ORDER HAS BEEN PASSED BY LD. AO AFTER COMPLETE EXPLANATION AN D REQUIRED ENQUIRIES AND THEREBY ORDER U/S 263 DESERV ES TO BE QUASHED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. PR. CIT ERRED IN DIRECTING THE AO T O EXAMINE THE ISSUE OF EQUITY SHARE TRANSACTION AFTER USING THE INFORMATION /MATERIAL PASSED ON BY INVESTIGATIO N DIRECTORATE BY IGNORING THE FACT THAT ALL SUCH MATERIAL/INFORMATION HAS ALREADY BEEN CONSIDERED AN D ENQUIRIES BASED ON SUCH MATERIAL / INFORMATION HAS ALREADY BEEN CARRIED OUT BY LD. AO THUS SUCH DIRECT IONS OF LD. PR. CIT ARE DEVOID OF MERITS AND NOT IN CONSONA NCE WITH FACTS ON RECORD AND THEREBY CONSEQUENT ORDER PASSED U/S 263 DESERVES TO BE QUASHED. ITANO.217/JP/2020 OM PRAKASH BADAYA 3 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND I N LAW, LD. PR. C1T HAS GROSSLY ERRED IN IGNORING THE FACT THAT THE ID. AO HAS PASSED THE ASSESSMENT ORDER ACCEPTIN G THE LONG TERM CAPITAL GAINS DECLARED BY THE ASSESSE E AS GENUINE ONLY AFTER RELYING UPON THE BINDING DECISIO N OF THE JURISDICTIONAL HIGH COURT ON IDENTICAL FACTS AN D THUS THE ORDER SO PASSED IS NEITHER ERRONEOUS NOR PREJUD ICIAL TO THE INTEREST OF THE REVENUE AND THEREFORE, THE CONS EQUENT ORDER PASSED U/S 263 DESERVES TO BE QUASHED. 4. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, DELE TE, AMEND OR ABANDON ANY OF THE GROUNDS OF APPEAL EITHE R BEFORE OR AT THE TIME OF HEARING OF APPEAL. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT 1961(HEREINAFTER REFERRED AS THE ACT) WAS FRAMED VIDE ORDER DATED 29.11.2017 WHILE FRAMING THE ASSESSMENT , ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD EN TERED INTO SHARE TRANSACTIONS AND HAD CLAIMED EXEMPTION U /S 10(38) OF THE ACT ON ACCOUNT OF LONG TERM CAPITAL G AIN. THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE SE EKING EXPLANATION REGARDING SUCH TRANSACTIONS. IN RESPONS E THERETO, THE ASSESSEE HAD FILED A REPLY, THEREAFTER THE ASSESSING OFFICER PASSED ORDER U/S 143(3) OF THE AC T ACCEPTING THE RETURN FILED BY THE ASSESSEE. LD. PR. CIT FOUND THAT THE ASSESSMENT ORDER WAS ERRONEOUS ITANO.217/JP/2020 OM PRAKASH BADAYA 4 PREJUDICIAL TO THE INTEREST OF REVENUE. HENCE, THE ORDER WAS SET ASIDE AND ASSESSING OFFICER WAS ASKED TO PROPERLY EXAMINE THE ISSUES AND TO VERIFY THE GENUINENESS OF THE SHARE TRANSACTIONS. 3. AGGRIEVED AGAINST THIS THE ASSESSEE IS IN PRESEN T APPEAL. 4. LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED T HAT THE ACTION OF THE LD. PR. CIT IS CONTRARY TO THE SE TTLED PRINCIPLES OF LAW AND HE FURTHER SUBMITTED THAT THE EXERCISE OF THE JURISDICTION U/S 263 IS NOT PROPER. THE ASSESSMENT ORDER HAS BEEN REVISED ARBITRARILY. FURT HER, HE RELIED UPON VARIOUS CASE LAWS I.E. JUDGMENT OF HON BLE SUPREME COURT RENDERED IN THE CASE OF CIT VS. MALABAR INDUSTRIAL CO. LTD. (2000) 243 ITR 83 (SC) . FURTHER, THE DECISIONS OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ITO VS. SHRI NARAYAN TATU RANE IN ITANO.2690 & 2691/MUM/2016 AND IN THE CASE OF PR. CIT VS. SANJEEN KR. KHEMKA IN ITANO.1361/KOL/2016 AND THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF ITO VS. DG HOUSING PROJECTS LTD. IN ITA NO.179/2011 DATED 1 ST MARCH 2012. LD. COUNSEL FOR THE ASSESSEE FURTHER REITERATED THE SUBMISSION AS MADE IN THE WRITTEN SUBMISSION. THE SUBMISSION OF THE ASSESSEE ARE REPRODUCED AS UNDER: ITANO.217/JP/2020 OM PRAKASH BADAYA 5 BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A HUF AND FOR THE YEAR UNDER APPEAL HAS FILED ITS RETURN OF INCOM E DECLARING TOTAL INCOME AT RS. 4,90,900/- AND CLAIME D EXEMPT INCOME OF RS. 11,52,000/- TOWARDS THE LONG T ERM CAPITAL GAINS FROM THE SALE OF SHARES. THEREAFTER T HE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS WHICH WAS SPECIFICALLY FOR VERIFYING THE GENUINENESS OF THE S HARE TRANSACTIONS. VARIOUS QUERY LETTERS / SHOW CAUSE NO TICE WERE ISSUED BY THE LD. AO FROM TIME TO TIME AND AFT ER DUE SCRUTINY, ENQUIRIES AND VERIFICATIONS INTO THE MATT ER, THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT VIDE DATED 29.11.2017 WHEREIN THE RETURNED INCOME WAS ACCEPTED. THEREAFTER, THE LD. CIT (ADMN.) INVOKED THE PROVISI ONS OF SECTION 263 OF THE INCOME TAX ACT, 1961 BY ALLEGING THAT THE LD. AO HAS NOT MADE PROPER ENQUIRIES AND VERIFICATI ON INTO THE MATTER AND ISSUED SHOW CAUSE NOTICE U/S 263 TO THE ASSESSEE REQUIRING HIM TO SHOW CAUSE WITH REGARD TO THE PROPOSED ACTION U/S 263 ( APB 10-11). IN RESPONSE TO SHOW CAUSE NOTICE REPLIES WERE SUBMITTED ALONGWITH NECES SARY EVIDENCES (APB 4-9) AND IT WAS VEHEMENTLY EMPHASIZED THAT ALL THE ASPECTS OF THE CASE WERE THOROUGHLY EX AMINED BY THE LD. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS FURTHER SUBMITTED BEFORE LD. CI T(ADMN.) THAT SPECIFIC SHOW CAUSE NOTICE WAS ISSUED WITH RES PECT TO THE VERIFICATION OF LONG TERMS CAPITAL GAINS FROM T HE SALE OF SHARES AND WAS DULY REPLIED BY THE ASSESSEE. LD. AO AFTER DULY CONSIDERING THE FACTS & CIRCUMSTANCES OF THE C ASE AND THE RECORDS AS WELL AS THE DETAILS SUBMITTED BY ASS ESSEE AND ALSO AFTER CONSIDERING THE JUDICIAL PRONOUNCEME NTS INCLUDING THE PRONOUNCEMENTS OF THE JURISDICTIONAL HIGH COURT, PASSED THE ASSESSMENT ORDER. ON MERITS ALSO, IT WAS SUBMITTED THAT THE ISSUES WHICH HAVE BEEN ALLEGED B Y THE LD. CIT AS NOT INQUIRED INTO WERE NOT TENABLE AND W ERE EXAMINED BY THE LD. AO AFTER ISSUE OF SHOW CAUSE NO TICE AND DECIDED AFTER DUE APPLICATION OF MIND. ITANO.217/JP/2020 OM PRAKASH BADAYA 6 HOWEVER, THE LD. CIT(ADMN.), COMPLETELY BRUSHED ASI DE THE SUBMISSION OF ASSESSEE AND ARBITRARILY PROCEEDED TO PASS THE IMPUGNED ORDER U/S 263 THEREBY DIRECTING THE ASSESSING OFFICER TO CONSIDER THE MATTER AFRESH IN LIGHT OF THE DIRECTIONS GIVEN BY HIM IN THE IMPUGNED REVISIO N ORDER, WHICH IS NOTHING BUT THE CHANGE OF OPINION ON THE A LREADY DECIDED ISSUE. AGGRIEVED BY THE AFORESAID REVISION ORDER OF LD. CI T (ADMN.), THE ASSESSEE HAS PREFERRED THE PRESENT APP EAL BEFORE THIS HONBLE TRIBUNAL. IN SUPPORT OF AND ELA BORATION TO THE GROUNDS OF APPEAL ALREADY TAKEN, GROUND-WISE SUBMISSION IS MADE AS UNDER: GROUNDS OF APPEAL NOS. 1 TO 3: UNDER ALL THESE GROUNDS OF APPEAL, THE ASSESSEE HAS CHALLENGED THE ACTION OF LD. CIT(ADMN.) IN PASSING THE IMPUGNED REVISION ORDER U/S 263 OF THE ACT ARBITRAR ILY AND WITHOUT IN ANY MANNER ESTABLISHING AS TO HOW THE ASSESSMENT ORDER PASSED BY LD. AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE MORE PARTICU LARLY WHEN THE LD. AO HAS CONDUCTED THE ENQUIRY IN THE MANNER SPECIFIED TO VERIFY THE LONG TERM CAPITAL GAINS FRO M THE SALE OF SHARES. AS STATED ABOVE, IN THE YEAR UNDER APPEAL ASSESSEE HAS CLAIMED EXEMPT INCOME TO THE TUNE OF RS. 11,52,000/ - FROM THE SALE OF SHARES OF M/S JACKSON INVESTMENT LTD. T HE LD. CIT(ADM.) IN HIS ORDER ALLEGED THAT THE CAPITAL GAI NS DECLARED IS NOT GENUINE AS M/S JACKSON INVESTMENT L TD. IS DETECTED TO BE PENNY STOCK LISTED COMPANY, AND THER EFORE THE CASE WAS TO BE HANDLED BY THE AO IN ACCORDANCE WITH THE EFS INSTRUCTIONS ISSUED BY THE SYSTEM DIRECTORA TE OF THE DEPARTMENT. IN THIS REGARD KIND ATTENTION OF THE HONBLE BENCH IS INVITED TO THE FACT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON 22.11.2017 (APB 16-18) A DETAILED SHOW CAUSE NOTICE RUNNING INTO 3 PAGES WAS ISSUED BY LD. AO WHEREIN IT WAS ALLEGED THAT THE TRANSACTION OF PURC HASES AND SALE OF SHARES OF M/S JACKSON INVESTMENT LTD. E NTERED ITANO.217/JP/2020 OM PRAKASH BADAYA 7 INTO BY THE ASSESSEE IS ACCOMMODATED BOGUS ENTRY CA RRIED OUT TO OBTAIN BOGUS LONG TERM CAPITAL GAINS. IT IS ALSO RELEVANT TO STATE HERE THAT THE SAID SHOW CAUSE NOT ICE IS ISSUED IN ACCORDANCE WITH THE INSTRUCTIONS ISSUED B Y THE SYSTEM DIRECTORATE OF THE INCOME TAX DEPARTMENT. FR OM THE PERUSAL OF THE SAME, IT CAN BE SEEN THAT IN THE SAI D NOTICE LD. AO SPECIFICALLY REFERRED CERTAIN ENQUIRIES CARR IED OUT BY THE DIRECTOR OF INCOME TAX (INVESTIGATION) KOLKATTA AND FURTHER SHOW CAUSED THE ASSESSEE AS TO WHY NOT THE CAPITAL GAINS DECLARED BY IT IS HELD AS UNEXPLAINED CREDIT AND THE SAME BE NOT ADDED U/S 68 OF THE ACT. LD. AO FURTHER PROPOSED TO MAKE THE ADDITION TOWARDS THE COMMISSIO N PAID FOR OBTAINING SUCH GAIN. HOWEVER, AFTER CONSID ERING THE EVIDENCES FILED BY THE ASSESSEE AND ALSO AFTER CONS IDERING THE JUDICIAL PRONOUNCEMENTS WHICH INCLUDES THE DECI SION OF HONBLE JURISDICTIONAL HIGH COURT, LD. AO WAS OF TH E OPINION THAT THE CAPITAL GAINS DECLARED BY THE ASSE SSEE IS GENUINE WHICH IS PURELY BASED ON HIS WISDOM AND JUDGEMENT. HOWEVER, BY COMPLETELY IGNORING THE ABOVE FACTUAL P OSITION, THE LD. CIT (ADM.) WITHOUT ANY BASIS ALLEGED THAT T HE LD. AO HAD NOT MADE PROPER INQUIRY DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AND THEREFORE, HE ARBITRARI LY HELD THE ORDER OF LD. AO AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE VIDE THE IMPUGNED REVISION ORDE R PASSED U/S 263 OF THE INCOME TAX ACT, 1961. IN THIS REGARD, IT IS SUBMITTED THAT THE MAIN ISSUE POINTED OUT BY THE LD. CIT IN THE IMPUGNED REVISION ORDER P ERTAINS TO THE VERIFICATION OF GENUINENESS OF LONG TERM CAP ITAL GAINS FROM THE SALE OF SHARES. THE LD. CIT HAS FRAMED AN OPINION THAT THE ISSUE OF CAPITAL GAINS WAS ENQUIRED INTO B Y THE LD. ASSESSING OFFICER PROPERLY. IN THIS CONNECTION, IT IS SUBMITTED THAT COMPLETE EVIDENCES PERTAINING TO THE PURCHASES OF SHARES, SHARE TRANSFER CONFIRMATION BY THE COMPANY, PHYSICAL DELIVERY OF SHARES, CREDIT OF SHA RES IN DEMAT ACCOUNT, SALE OF SHARES AND FINALLY DEBIT OF SHARES FROM DEMAT ACCOUNT ETC. WERE FILED DURING THE COURS E OF ASSESSMENT PROCEEDINGS. IT IS FURTHER SUBMITTED THA T ITANO.217/JP/2020 OM PRAKASH BADAYA 8 PURCHASE OF SHARES WERE MADE IN OCTOBER, 2011 AND SHARES WERE WITH ASSESSEE FOR LONG MORE THAN 3 YEAR S AS WELL AS THESE WERE DEMATERIALIZED IN BETWEEN. DEMAT ACCOUNTS ARE HELD BY INDEPENDENT THIRD PARTY OF REP UTE, WHICH CANNOT BE DOUBTED. MOREOVER IT IS NOT A CASE WHERE SHARES WERE DEMATERIALIZED THAT BEFORE THEIR SALE G IVING DOUBT TO THE ENTIRE TRANSACTIONS OF SALE. IN THE IN STANT CASE SHARES WERE IN DEMAT ACCOUNT SINCE 18 TH FEBRUARY, 2013 AND SOLD AFTER NEARLY ABOUT 2 YEARS IN JANUARY, 201 5 FROM DEMAT DATE (AND ABOUT 3 YEAR FROM PURCHASE DATE). FURTHER THE ISSUE HAS BEEN SETTLED BY THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF POOJA AGARWAL (APB 26- 33) WHICH IS BINDING IN NATURE AND WAS SUBMITTED BEFORE THE LD., AO. THE LD. AO AFTER CONSIDERING ALL THE D ETAILS, FACTS, EVIDENCES AND LEGAL POSITION PREVAILING AT T HE TIME OF PASSING OF ORDER HAS FOUND THE GAIN TO BE NOT NON-G ENUINE. IT IS PERTINENT TO SUBMIT BEFORE YOUR HONOUR THAT L D. CIT(ADMN.) ALSO COULD NOT REBUT ANY EVIDENCES FILED BY ASSESSEE BEFORE LD. AO AND ALSO COULD NOT REBUT THE EXPLANATIONS AND SUBMISSIONS MADE BEFORE HIM IN PROCEEDINGS U/S 263. LD. CIT(A) HAD MERELY OBSERVED THAT LD. AO HAD NOT MADE SUFFICIENT ENQUIRIES AND HE SHO ULD HAVE MADE MORE ENQUIRIES. THE EXTENT OF IN-DEPTHNES S OF ENQUIRIES DIFFERS FROM PERSONS PERCEPTION AND CANN OT BE MADE AS A BASE TO TREAT THE ORDER PASSED BY LD. AO AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. IN VIEW OF THE ABOVE FACTUAL BACKGROUND OF THE CASE , IT IS HUMBLY SUBMITTED THAT ESSENTIAL ELEMENTS NECESSITAT ED FOR INVOKING SECTION 263 ARE NOT FULFILLED. THE BASIC I NGREDIENTS TO BE FULFILLED BEFORE INVOKING SECTION 263 HAVE BE EN EXPLAINED BY THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT REPORTED IN 243 ITR 83 (SC) (CASE LAW PAPER BOOK APB 1-6) IN THE FOLLOWING WORDS: A BARE READING OF SECTION 263 OF THE INCOME TAX AC T, 1961, MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF JURISDICTION BY THE COMMISSIONER SUO MO TU UNDER IT, IS THAT THE ORDER OF THE INCOME TAX OFFIC ER IS ITANO.217/JP/2020 OM PRAKASH BADAYA 9 ERRONEOUS IS SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED O F TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERE STS 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 ERRONEOU S BUT IS PREJUDICIAL TO THE REVENUE RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. IT IS THUS SUBMITTED THAT THE ORDER OF LD. AO IS NE ITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENU E. AT THIS JUNCTURE, KIND ATTENTION OF HONBLE BENCH I S INVITED TO EXPLANATION 2 INSERTED IN SECTION 263 BY FINANCE ACT, 2015, W.E.F. 01.06.2015, WHICH HAS WIDENED THE POWE RS OF CIT TO REVISE THE ALREADY COMPLETED ASSESSMENT AND HAS BEEN TAKEN SHELTER BY THE LD.CIT (ADMN.) IN THE PRE SENT CASE ALSO, WHICH READS AS UNDER: EXPLANATION 2 .FOR THE PURPOSES OF THIS SECTION, IT IS HEREBY DECLARED THAT AN ORDER PASSED BY THE ASSESSI NG OFFICER SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR A S IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, IF, IN THE OPINION OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER, (A) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE; (B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQUIRING INTO THE CLAIM; (C) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH ANY ORDER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119 ; OR (D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WIT H ANY DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE, REND ERED BY THE JURISDICTIONAL HIGH COURT OR SUPREME COURT IN T HE CASE OF THE ASSESSEE OR ANY OTHER PERSON. ] ITANO.217/JP/2020 OM PRAKASH BADAYA 10 A PERUSAL OF ABOVE CLARIFIES THAT ORDER PASSED BY A SSESSING OFFICER SHALL BE DEEMED TO BE ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF THE REVENUE IF AO HAS PASSED SUCH O RDER WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE; IT IS WORTHWHILE TO NOTE HERE THAT THE PHRASE WHIC H SHOULD HAVE BEEN MADE HERE IN NO WAY MEANS THAT ENQUIRIES SHOULD HAVE BEEN MADE IN MANNER AS DESIRED BY CIT, RATHER IT MEANS THAT BEFORE HOLDING AN ORDER TO BE ERRONEOUS, CIT SHOULD HAVE CONDUCTED NECESSARY ENQU IRIES OR VERIFICATION WHICH BRINGS ON RECORD CERTAIN MATE RIAL IN ORDER TO SHOW THAT THE FINDING GIVEN BY THE ASSESSI NG OFFICER IS ERRONEOUS. IN THIS REGARD RELIANCE IS PLACED ON THE FOLLOWING DECISIONS: (1) SHRI NARAYAN TATU RANE VS ITO ITA NO.2690 & 2691/MUM/16 (CASE LAW PAPER BOOK PAGES 7-27) DATED 06.05.2016 20. FURTHER CLAUSE (A) OF EXPLANATION STATES THAT AN ORDER SHALL BE DEEMED TO BE ERRONEOUS, IF IT HAS BEEN PAS SED WITHOUT MAKING ENQUIRIES OR VERIFICATION, WHICH SHO ULD HAVE BEEN MADE. IN OUR CONSIDERED VIEW, THIS PROVISION S HALL APPLY, IF THE ORDER HAS BEEN PASSED WITHOUT MAKING ENQUIRIES OR VERIFICATION WHICH A REASONABLE AND PR UDENT OFFICER SHALL HAVE CARRIED OUT IN SUCH CASES, WHICH MEANS THAT THE OPINION FORMED BY LD PR. CIT CANNOT BE TAK EN AS FINAL ONE, WITHOUT SCRUTINISING THE NATURE OF ENQUI RY OR VERIFICATION CARRIED OUT BY THE AO VIS--VIS ITS REASONABLENESS IN THE FACTS AND CIRCUMSTANCES OF TH E CASE. HENCE, IN OUR CONSIDERED VIEW, WHAT IS RELEVANT FOR CLAUSE (A) OF EXPLANATION 2 TO SEC. 263 IS WHETHER THE AO HAS PASSED THE ORDER AFTER CARRYING OUT ENQUIRIES OR VE RIFICATION, WHICH A REASONABLE AND PRUDENT OFFICER WOULD HAVE C ARRIED OUT OR NOT. IT DOES NOT AUTHORISE OR GIVE UNFETTERE D POWERS TO THE LD PR. CIT TO REVISE EACH AND EVERY ORDER, IF I N HIS OPINION, THE SAME HAS BEEN PASSED WITHOUT MAKING ENQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MA DE. IN OUR VIEW, IT IS THE RESPONSIBILITY OF THE LD PR. CI T TO SHOW ITANO.217/JP/2020 OM PRAKASH BADAYA 11 THAT THE ENQUIRIES OR VERIFICATION CONDUCTED BY THE AO WAS NOT IN ACCORDANCE WITH THE ENQUIRES OR VERIFICATION THAT WOULD HAVE BEEN CARRIED OUT BY A PRUDENT OFFICER. H ENCE, IN OUR VIEW, THE QUESTION AS TO WHETHER THE AMENDMENT BROUGHT IN BY WAY OF EXPLANATION 2(A) SHALL HAVE RETROSPECTIVE OR PROSPECTIVE APPLICATION SHALL NOT BE RELEVANT. (2) SANJEEV KR. KHEMKA VS PR. CIT (KOLKATTA ITAT) (CASE LAW PAPER BOOK PAGES 28-39) 5.1 IN VIEW OF THE ABOVE WE FIND THAT LD. CIT HAS PASSED IMPUGNED ORDER U/S. 263 OF THE ACT BY HOLDING THE O RDER OF AO AS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INT EREST OF REVENUE ON ACCOUNT OF INADEQUATE ENQUIRY MADE BY AO WHILE PASSING ORDER U/S. 143(3) OF THE ACT. HOWEVER , WE FIND THAT PROPER AND SUFFICIENT ENQUIRIES WERE COND UCTED BY THE AO AT THE TIME OF ASSESSMENT AS EVIDENT FROM TH E ORDER OF AO. THEREFORE IT CANNOT BE CONCLUDED THAT NO PRO PER ENQUIRY HAS BEEN CONDUCTED BY THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS. THE AO HAS TAKEN CONSCIOUS VIEW AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF TH E CASE AND GIVING PROPER OPPORTUNITY TO THE ASSESSEE. THUS , THE VIEW EXPRESSED BY AO IN THE FORM IN HIS ASSESSMENT ORDER CANNOT BE REPLACED WITH THE VIEW OF LD. CIT U/S 263 OF THE ACT. IN HOLDING SO, WE FIND SUPPORT AND GUIDANCE FR OM THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT VS. M/S. J.L. MORRISON (INDIA) LTD.(ITA NO 168 OF 2011) IN GA NO 1541 OF 2012 DATED 15.05.2014, WHEREIN IT WAS HELD AS UNDER:- BY SECTIONS 3 AND 4, THE INDIAN INCOME-TAX ACT, 19 22, IMPOSES A GENERAL LIABILITY TO TAX UPON ALL INCOME. BUT THE ACT DOES NOT PROVIDE THAT WHATEVER IS RECEIVED BY A PERSON MUST BE REGARDED AS INCOME LIABLE TO TAX. IN ALL CA SES IN WHICH A RECEIPT IS SOUGHT TO BE TAXED AS INCOME, TH E BURDEN LIES UPON THE DEPARTMENT TO PROVE THAT IT IS WITHIN THE TAXING PROVISION. ITANO.217/JP/2020 OM PRAKASH BADAYA 12 WE ALSO RELY ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. MAX INDIA LIMITED REPORTED I N 295 ITR 282 WHEREIN IT WAS HELD AS UNDER : WHEN THE CIT PASSED THE IMPUGNED ORDER UNDER S. 26 3, TWO VIEWS WERE INHERENTLY POSSIBLE ON THE WORD 'PRO FITS' OCCURRING IN THE PROVISO TO S. 80HHC(3) AND THEREFO RE, SUBSEQUENT AMENDMENT OF S. 80HHC MADE IN THE YEAR 2005, THOUGH RETROSPECTIVE, DID NOT RENDER THE ORDE R OF THE AO ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, AND CIT COULD NOT EXERCISE POWERS UNDER S. 263. IN VIEW OF THE ABOVE PROPOSITION, AND RESPECTFULLY FOLLOWING PRINCIPLE LAID DOWN BY THE HON'BLE COURTS AND KEEPI NG IN VIEW ALL THESE DISCUSSION, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE DEEM IT FIT AND PROPER TO UPHOLD TH E GRIEVANCE OF THE ASSESSEE AND QUASH THE IMPUGNED RE VISION ORDER AS DEVOID OF JURISDICTION. THE ASSESSEE GETS THE RELIEF, ACCORDINGLY. IN VIEW OF ABOVE, IT IS SUBMITTED THAT : 1. THE ORDER OF LD. AO IS NOT ERRONEOUS: IT HAS ALREADY BEEN ESTABLISHED ABOVE THAT ASSESSEE HAS PURCHASED THE SHARES AFTER MAKING PAYMENT THROUGH BANKING CHANNELS AND AFTER SOLD THEM AFTER A PERIOD OF MORE THAN THREE YEARS THROUGH ONLINE MODE IN THE RECOGNIZED STOCK EXCHANGE. NEVERTHELESS, THE LD. AO HAD MADE INQUIRY ON THIS ASPECT AND COMPLETE DETAILS AS ASKED FOR BY THE LD. AO WERE SUBMITTED BY ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND, AS SUBMITTED ABOVE, THE LD. AO PASSED THE ASSESSMENT ORDER AFTER TAKING INTO CONSIDERATION ALL THOSE DETAILS AND EVI DENCES. IT IS THEREFORE, SUBMITTED THAT THE LD. AO HAS TAKEN A LEGAL AND CORRECT VIEW OF THE ENTIRE MATERIAL AVAILABLE B EFORE HIM AND AFTER DUE APPLICATION OF MIND ON LAW AND ON FAC TS HAD REACHED TO A REASONABLE SATISFACTION OF CONCLUDING THE ASSESSMENT, WITHOUT TAKING ANY ADVERSE VIEW ON THES E ITANO.217/JP/2020 OM PRAKASH BADAYA 13 ISSUES, THUS THE ORDER OF LD. AO IS NOT ERRONEOUS O N ANY COUNT NOR PREJUDICIAL TO THE INTEREST OF REVENUE. INDEED, IN THE INSTANT CASE THE LD. AO HAS PASSED T HIS ORDER AFTER CONSIDERING ENTIRE MATERIAL AVAILABLE O N RECORD, CALLED FOR AND SUBMITTED BY ASSESSEE DURING THE COU RSE OF ASSESSMENT PROCEEDINGS. IT IS NOT THE CASE THAT THE LD. AO HAD PASSED THE ORDER WITHOUT CONDUCTING NECESSARY A ND PROPER INQUIRIES INTO THE ISSUE FOR WHICH THE CASE WAS TAKEN UP FOR SCRUTINY. AS A MATTER OF FACT, THE LD. AO HA D RAISED SPECIFIC QUERIES WITH REGARD TO THE GENUINENESS OF THE LONG TERM CAPITAL GAINS AND HE FURTHER SHOW CAUSED THE ASSESSEE AS TO WHY THE SAME BE NOT TREATED AS UNEXPLAINED INCOME OF THE ASSESSEE IN VIEW OF THE F ACT THAT THERE WERE SURVEY AND ENQUIRIES WERE CONDUCTED IN T HIS RESPECT BY THE INVESTIGATION WING OF THE DEPARTMENT AT KOLKATTA AND FURTHER THE COMPANY M/S JACKSON INVEST MENT LTD. WAS A PENNY STOCK COMPANY. AFTER CONSIDERING T HE ENTIRE MATERIAL AVAILABLE ON RECORD IN THE SHAPE OF THE SUBMISSIONS AND JUDICIAL PRONOUNCEMENTS, THE LD. AO HAS PASSED A REASONED ORDER. THUS, THE ORDER OF LD. AO CANNOT AT ALL BE HELD AS ERRONEOUS AND THUS THE ACTION OF LD. CIT(ADM.) IN PASSING THE IMPUGNED ORDER CONCLUDING THAT THE SAID ORDER IS ERRONEOUS AND PREJUDICIAL TO THE REVENUE IS BAD IN LAW. IT IS FURTHER SUBMITTED THAT, THE HONBLE BOMBAY HI GH COURT IN THE CASE OF CIT VS. GABRIAL INDIA LTD ., REPORTED IN 203 ITR 108 , HAS HELD THAT, CIT CANNOT REVISE ORDER MERELY BECAUSE HE DISAGREES WITH THE CONCLUSION ARRIVED AT BY THE ITO. FURTHER, IN THE CASE OF CIT VS. SUNBEAM AUTO LTD. , REPORTED IN 227 CTR 133 , THE HONBLE DELHI HIGH COURT DREW A DISTINCTION BETWEEN LACK OF INQUIRY AND INADEQUATE ENQUIRY AND HELD THAT, IN THE CASE OF INADEQUATE ENQUIRY, PROVISIONS UNDER SECTION 263 CA NNOT BE INVOKED. IT MAY HOWEVER, BE NOTED THAT THE INSTANC E CASE IS NEITHER THE CASE OF INADEQUATE ENQUIRY NOR LACK OF ENQUIRY DURING ASSESSMENT PROCEEDINGS AS IT CAN BE SEEN ITANO.217/JP/2020 OM PRAKASH BADAYA 14 THAT DUE, NECESSARY AND MOST PERTINENT ENQUIRIES TO ALL THE ISSUES EMERGING FROM THE RETURN FILED BY THE ASSESS EE WERE CONDUCTED BY THE LD. AO. THEREFORE, IN VIEW OF SUCH LEGAL POSITION, NO ACTION U/S 263 COULD HAVE BEEN TAKEN. IT IS A WELL ESTABLISHED LAW BY NOW THAT SECTION 26 3 DOES NOT CONTEMPLATE MERE SUBSTITUTION OF THE OPINION OF AO WITH THAT OF CIT. IT HAS FURTHER BEEN HELD BY THE COURTS THAT WHERE TWO VIEWS ARE POSSIBLE IN THE MATTER AND THE AO HAS CHOSEN ANY ONE OF THEM, THEN REVISION CANNOT BE MAD E MERELY BECAUSE THE CIT IS OF THE OPINION THAT THE O THER VIEW SHOULD HAVE BEEN TAKEN BY THE AO. 2. THE ORDER OF LD. AO IS NOT PREJUDICIAL TO THE INTEREST OF REVENUE: IN LIGHT OF THE FACTS OF THE PRESENT CASE, IT IS SU BMITTED THAT THE LD. CIT (ADM.) HAS FAILED TO APPRECIATE THE FAC TS THAT THE SHARES PURCHASED BY THE ASSESSEE WERE THROUGH PAYEE S ACCOUNT CHEQUE AND AFTER GETTING TRANSFER, THE SAME WERE LYING IN THE DMAT ACCOUNT OF THE ASSESSEE FOR ABOUT 2 YEARS WHEN THE SAME WERE SOLD THROUGH A MEMBER BROK ER IN RECOGNIZED STOCK EXCHANGE. FURTHER THE ASSESSEE HAS SUBMITTED ALL THESE DETAILS BEFORE THE LD. AO IN RE PLY TO THE SHOW CAUSE LETTER (APB 12-15) AND LD. AO COULD NOT FOUND OUT ANY DEFICIENCY IN THE SAME. RATHER THE LD. CIT( ADM.) IN HIS ORDER ASKED THE AO TO MAKE ENQUIRIES IN SPECIFI C MANNER BY IGNORING THE FACT THAT ALL SUCH ENQUIRIES WERE CONDUCTED BY THE LD. AO WHILE ISSUING THE SHOW CAU SE LETTER. THEREFORE, THE ACTION OF THE LD. AO WAS NOT AT ALL PREJUDICIAL TO THE INTEREST OF REVENUE. IT HAS BEEN HELD IN THE CASE OF CIT V. MAX INDIA LTD. REPORTED IN 295 ITR 282 (SC) THAT EVERY LOSS OF REVENUE CANNOT BE SAID TO BE PREJUDICIAL TO THE INTERESTS O F REVENUE, HOWEVER IN THIS CASE INTERESTINGLY, THERE HAS BEEN NO LOSS AT ALL TO THE REVENUE, ACCORDINGLY, IT CANNOT BE SAID THAT THE ACTION OF LD. AO WAS PREJUDICIAL TO THE INTEREST OF REVENUE. THIS SUBMISSION OF ASSESSEE IS FORTIFIED FROM THE ITANO.217/JP/2020 OM PRAKASH BADAYA 15 OBSERVATIONS OF HONBLE SUPREME COURT IN THE CASE O F CIT VS. MAX INDIA (SUPRA) WHEREIN IT WAS HELD AS UNDER: THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE REV ENUE IN SECTION 263 OF THE INCOME-TAX ACT, 1961, HAS TO BE READ IN CONJUNCTION WITH THE EXPRESSION ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS O F REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSI NG OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE. FOR EXAMPLE, WHEN THE ASSESSING OFFICER ADOPTS ONE OF TWO COURSES PERMISSIBLE IN LA W AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TW O VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TA KEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE , IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDIC IAL TO THE REVENUE, UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. THUS, IT IS SUBMITTED WITHOUT ADMITTING THAT THE DE FECT (IF ANY) DOES NOT IN ANYWAY LEAD TO SUPPLY THE FOUNDATI ON FOR REVISING AN OTHERWISE VALID ORDER WHICH CAN NEITHER BE SAID ERRONEOUS NOR PREJUDICIAL TO INVOKE SECTION 263 OF THE INCOME TAX ACT, 1961, WHICH SECTION CANNOT BE PERMI TTED TO BE BROUGHT INTO PLAY UNLESS BOTH THE CONDITIONS I.E . THE ORDER HAS TO BE PREJUDICIAL AS WELL AS ERRONEOUS BO TH, MEANING THEREBY THAT THE TWIN CONDITIONS ARE TO BE CUMULATIVELY SATISFIED BEFORE PROCEEDING TO REVISE AN ASSESSMENT ORDER. IN LIGHT OF THE FACTS / CIRCUMSTANCES OF THE CASE, SUBMISSIONS MADE ABOVE, AND THE CASE LAWS RELIED UP ON, IT IS VERY HUMBLY PRAYED THAT THE IMPUGNED REVISION OR DER OF LD. CIT(ADMN.) MAY PLEASE BE QUASHED AND HELD BAD I N LAW, THEREBY RESTORING THE ASSESSMENT ORDER OF LD. AO. FURTHER, RELIANCE IS PLACED ON THE FOLLOWING CASE L AWS: 1. CIT VS. M/S CHAMBAL FERTILIZERS & CHEMICALS LTD. (RAJ HC) (2014) 51 TW (III) 157 ITANO.217/JP/2020 OM PRAKASH BADAYA 16 THEREFORE, IT IS CLEAR THE CIT DOES NOT HAVE UNFETT ERED AND UN-CHECKED DISCRETION / POWER TO REVERSE THE ORDER. HE CAN DO SO WITHIN THE BOUNDS OF THE LAW AND HAS TO SATIS FY THE NEED OF FAIRNESS IN ACTION AND FAIR PLAY WITH DUE R ESPECT TO THE PRINCIPLE OF AUDI ALTEREM PARTEM AS ENVISAGED I N THE CONSTITUTION. THE LAW IS WELL SETTLED THAT THE CIT CANNOT INVOKE THE POWERS TO CORRECT EACH AND EVERY MISTAKE OR ERROR COMMITTED BY THE AO. EVERY LOSS TO THE REVENU E, CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND IF THE ASSESSING OFFICER HAS ADOPTED ON E OF THE COURSE PERMISSIBLE UNDER THE LAW OR WHERE TWO V IEWS ARE POSSIBLE AND THE AO HAS TAKEN ONE VIEW WHICH TH E CIT DOES NOT AGREE WITH, IT CANNOT BE TREATED AS AN ORD ER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. THE AO EXERCISES QUASI JUDICIAL POWER VESTED IN HIM AND IF HE EXERCISES SUCH POWERS IN ACCORDANCE WITH LAW, ARRIV ES AT A JUST CONCLUSION SUCH CONCLUSION CANNOT BE TERMED AS ERRONEOUS ONLY BECAUSE THE CIT DOES NOT FEEL SATISF IED WITH THE CONCLUSION. 2. CIT VS. M/S DEEPAK REAL ESTATE DEVELOPERS P. LTD. (RAJ HC) (2014) 51 TW (IV) 186 IT IS NO LONGER RES-INTEGRA THAT THE REVISIONAL JUR ISDICTION AVAILABLE TO A COMMISSIONER U/S 263 OF THE ACT, IS ESSENTIALLY CIRCUMSCRIBED BY THE DETERMINANT THAT T HE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS SO MUCH SO TH AT IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THIS ST ATUTORY ENJOINMENT CARVES OUT AN EXTREMELY CONSTRICTED AMBI T OF SUCH DISCRETIONARY JURISDICTION. THE WORD CONSIDER S APPLIED IN THE STATUTORY PROVISION INVOLVED, SIGNIF IES A GENUINE SATISFACTION OF THAT AUTHORITY THAT THE ORD ER OF THE ASSESSING OFFICER IS ERRONEOUS AND THAT THE INTERES T OF REVENUE IS PREJUDICING THEREBY. ANY EXERCISE OF THE REVISIONAL JURISDICTION, BEREFT OF SUCH SATISFACTIO N AND / OR FINDING THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND THAT IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THAT TOO, BASED ON TANGIBLE MATERIALS ON RECORD, IS IMPERMISSIBLE RENDERING THE RESULTANT ORDER VOID. ITANO.217/JP/2020 OM PRAKASH BADAYA 17 3. CIT VS. GREEN WORLD CORPORATION 314 ITR 81 (SC) THE INCOME-TAX OFFICER, WHILE PASSING AN ORDER OF ASSESSMENT PERFORMS A JUDICIAL FUNCTION. A REVISION APPLICATION LIES BEFORE THE COMMISSIONER. IT IS TRI TE THAT THE JURISDICTION EXERCISED BY THE REVISIONAL AUTHORITY PERTAINS TO HIS APPELLATE JURISDICTION. THE JURISDICTION UNDER SECTION 263 CAN BE EXERCISED ONLY WHEN BOTH THE FOLLOWING CONDI TIONS ARE SATISFIED (I) THE ORDER OF THE ASSESSING OFFICE R SHOULD BE ERRONEOUS, AND (II) IT SHOULD BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THESE CONDITIONS ARE CONJUNCTIVE. AN O RDER OF ASSESSMENT PASSED BY THE ASSESSING OFFICER SHOULD N OT BE INTERFERED WITH ONLY BECAUSE ANOTHER VIEW IS POSSIB LE. 4. M/S EMGEE CABLES & COMMUNICATION LTD. VS. CIT (2014) 51 TW (IV) 197 SECTION 263 POWER OF REVISION BY COMMISSIONER A O COMPLETED ASSESSMENT AT NIL ASSESSEE INVOLVED IN MANUFACTURE / TRADING OF CABLE/COPPER/WIRE DECLAR ED INCOME FROM INTEREST & COMMISSION AS BUSINESS INCOM E ACCEPTED BY AO CIT INVOKED SEC 263 AND SET-ASIDE THE ORDER OF AO DIRECTING HIM TO CONSIDER THE SAID INCO ME AS INCOME FROM OTHER SOURCES AND NOT FROM BUSINESS W HETHER CIT JUSTIFIED IN INVOKING SEC 263? HELD : NO CIT ONLY WANTED AO TO MAKE RE-VERIFICATION CANNOT BE SAID THAT THAT ORDER OF AO WAS WITHOUT MAKING PROPER ENQUIRY AO HAVING TAKEN ONE OF THE POSSIBLE VIEW CANNOT BE S AID THAT ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF REVENUE. CIT VS. GANPAT RAM BISHNOI, 296 ITR 292 (RAJ.) REVISION: S. 263 OF INCOME TAX ACT, 1961: A.Y. 1993 -94: POWERS OF COMMISSIONER: NO POWER TO MAKE SHORT ENQU IRIES OR TO GO INTO PROCESS OF ASSESSMENT AGAIN AND AGAIN : FINDING THAT AO MADE ASSESSMENT AFTER RELEVANT ENQU IRIES: JURISDICTION ASSUMED BY COMMISSIONER UNSUSTAINABLE. ITANO.217/JP/2020 OM PRAKASH BADAYA 18 IT IS THUS SUBMITTED THAT FOR THE SAKE OF CLARIFICA TION AND AT THE COST OF REPETITION IT IS SUBMITTED THAT TWIN CO NDITIONS AS LAID DOWN U/S 263 I.E. ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE HAVE TO BE CUMULATIVELY SAT ISFIED AND IN THE ABSENCE OF ONE OF THE CONDITIONS, NOT BE ING ATTRACTED THE OTHER WOULD BECOME NONEST FOR THE PUR POSES OF REVISION. THEREFORE, IN VIEW OF THE ABOVE IT IS PRAYED THAT T HE IMPUGNED ORDER OF LD. CIT(ADMN.) BE QUASHED AND HEL D BAD IN LAW. 5. PER CONTRA, LEARNED. DEPARTMENTAL REPRESENTATIVE (DR) VEHEMENTLY OPPOSED THESE SUBMISSIONS AND SUPPORTED THE IMPUGNED ORDER. LD. CIT-DR HAS TAKEN THROUGH IMPUGN ED ORDER AND ALSO THE ASSESSMENT ORDER. THE ARGUMENT O F THE LD. CIT-DR IS THAT THE EX-FACIE THERE IS A LACK OF ENQUIRY BY THE ASSESSING OFFICER AS HE FAILED TO MAKE PROPE R INVESTIGATION IN RESPECT OF THE MATERIAL GATHERED B Y THE INVESTIGATION WING. HE FURTHER CONTENDED THAT AFTER AMENDMENT IN THE LAW WHEN THE EXPLANATION (2) SECTI ON 263 HAS BEEN INSERTED AND THE LD. PR. CIT IS EMPOWE RED TO REVISE THE ORDERS WHERE HE FINDS THAT THERE IS A LACK OR INADEQUATE ENQUIRY. HE FURTHER RELIED UPON THE DECI SIONS AS RELIED BY THE LD. PR. CIT IN THE IMPUGNED ORDER. 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORDS. THE ONLY ISSUE IS WI TH ITANO.217/JP/2020 OM PRAKASH BADAYA 19 REGARD TO EXERCISE OF JURISDICTION U/S 263 FOR REVI SING THE ASSESSMENT ORDER. THE BASIS OF PASSING OF IMPUGNED ORDER IS THE NOTICE ISSUED U/S 263 WHERE THE REASONINGS A RE GIVEN AS UNDER: (A) YOUR CASE WAS SELECTED ON THE SPECIFIC REASON THAT YOU HAD SHOWN SUSPICIOUS SALE TRANSACTION IN SHARES AND EXEMPT LONG TERM CAPITAL GAINS SHOWN IN RETURN (PENNY STOCK TAB IN ITS), (B) YOU HAD SOLD SHARES OF SCRIP OF M/S JACKSON INVESTMENT LTD, WHICH IS A PENNY STOCK COMPANY AS PER SPECIFIC INVESTIGATION MADE BY THE DEPARTMENT. SUMMARY OF THE INVESTIGATION IS AS UNDER:- OF LATE, SEARCHES HAVE BEEN CONDUCTED BY THE INVESTIGATION WING O THE DEPARTMENT AT VARIOUS PLACES THROUGHOUT THE COUNTRY. DURING TH SEARCHES & AS PER THE INFORMATION MADE PUBLIC BY THE SEBI, IT DISCOVERED THAT VARIOUS SYNDICATES HAVE ARRANGED ACCOMMODATION ENTRY OF BOGUS LTCG, BOGUS STCG, BOGUS LONG/SHORT TERM CAPITAL LOSS THROUGH TRADING OF SHARES OF PENNY STOCKS. THE MODUS OPERANDI FOUND IS TH.T THE INVESTORS/BENEFICIARIES HOLD THESE SHARES FOR ONE YEAR OR SO ANT' THEN. SALE IT TO ONE OF THE SHELL PRIVATE LIMITED COMPANIES OF THE OPERATOR. THESE FACTS WERE CONFIRMED BY THE STAKE HOLDERS VIZ. OPERATOR/SYNDICATE MEMBERS/BROKERS WHICH WERE PROVIDING ACCOMMODATION ENTRIES IN STATEMENTS RECOR DED DURING ACTION U/S 133A OF THE INCOME-TAX ACT. IT HA S BEEN MANIFESTLY ACCEPTED BY THEM THAT SUCH PENNY ST OCK COMPANIES ARE THE CONDUIT FOR CONVERTING UNTAXED MO NEY BROUGHT ON RECORD BY PAYING NO TAXES IN THE GARB OF EXEMPTED INCOME. IT IS FURTHER DETECTED THAT M/S JACKSON INVESTMENT LTD, IS A PENNY STOCK LISTED COMPANY. IT HAS VERY SMALL CAPITAL BASE BUT ITS MAR K ITANO.217/JP/2020 OM PRAKASH BADAYA 20 CAPITALIZATION IS MULTIFOLD TO ITS CAPITAL BASE. FU RTHER, INFORMATION IN RESPECT OF TRADING IN PENNY STOCK I. E. M/S. JACKSON INVESTMENT LIMITED IS ALSO AVAILABLE A T ITS DATA / AIR. (C)THE AO INADVERTENTLY NOT CONSIDERED THE INVESTIGATION MADE BY THE DEPARTMENT IN RESPECT OF M/S JACKSON INVESTMENT LTD, AND ALLOWED THE CLAIM O F THE ASSESSEE AND HE COULD NOT MAKE PROPER ENQUIRIES A' ASSESSMENT WAS BECOMING TIME BARRED. (D)THE AO ALLOWED EXEMPT LONG TERM CAPITAL GAINS U/ S 10(38) OF THE INCOME TAX ACT, 1961 OF RS. 11, 52, 0 00/- WITHOUT MAKING PROPER ENQUIRIES AND NOT CONSIDERING INVESTIGATION MADE BY THE DEPARTMENT. AS THE AO HAS NOT MADE PROPER ENQUIRIES AND NOT CONSIDERED THE REPORT OF INVESTIGATION MADE BY THE DEPARTMENT IN RESPECT OF TRADING IN PENNY STOCK I. E. M/S JACKSON INVESTMENT LTD , AND ALLOWED EXEMPT LONG TERM CAPITAL GAINS U/S 10(38) OF THE INCOME - TAX ACT, 1961, OF RS. 11, 52, 000/-. THEREFORE, THE ORD ER PASSED BY THE AO ON 29. 11. 2017 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 7. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSING OFFICER HAD ISSUED SHOW CAUSE NOTICE DATE D 22.11.2017. THE RELEVANT CONTENTS OF THE NOTICE ARE AS UNDER: FROM THE PERUSAL OF DETAILS FILED DURING THE COURSE OF SCRUTINY PROCEEDINGS AND ON EXAMINATION OF MATERIAL AVAILABLE ON RECORD, IT IS SEEN THAT THAT YOU HAVE CLAIMED EXEMPT INCOME UNDER SEC. 10(38) BEING LONG TERM CAPITAL GAIN OF RS. 11,52,000/- ON SALE OF SHARES OF M/S JACKSON INVESTMENTS LIMITED. DURING THE YEAR UNDER CONSIDERATION. IN THIS REGARD, YOU ITANO.217/JP/2020 OM PRAKASH BADAYA 21 ARE REQUIRED TO FURNISH FOLLOWING DETAILS WITH RESP ECT TO YOUR INVESTMENT IN THE SHARE M/S JACKSON INVESTMENTS LIMITED...:- I. AMOUNT OF INVESTMENTS MADE BY YOU IN THE SHARE; II. SOURCE OF INVESTMENT; III. MODE OF PAYMENTS MADE TO SHARE BROKER WITH EVIDENCE; IV. CONTRACT NOTE FOR PURCHASE OF SHARES/INVESTMENT MADE AND SALE OF INVESTMENT/ SHARES; V. BANK STATEMENT REFLECTING PAYMENT AND RECEIPT OF SALE OF INVESTMENTS; YI. DEMAT STATEMENT TO PROVE INWARD & DELIVERY OF SHAH ES ; VII. LEDGER COPY OF SHARE BROKER A/C ; VIII. PLEASE JUSTIFY THE REASON TO BUY SHARES OF M/S JACKSON INVESTMENTS LIMITED. IX NAME AND ADDRESS OF THE PERSON WHO HAS RECOMMENDED THE PURCHASE OF THESE SHARES. X. ANALYSIS OF FINANCIAL PERFORMANCE BEFORE PURCHASE OF SHARE, IF ANY MADE BY YOU. XI. COPY OF SHARE PURCHASE AGREEMENT, IF ANY. XII. REASON FOR SELLING THE SHARES. BUSINESS OF THE INVESTOR/ COMPANY INVESTING THE SHARES? XIII. HOW DID YOU PLACE THE PURCHASE ORDERS WITH BROKER? TO WHOM DID YOU SPEAK/ INSTRUCT FOR PLACING THE ORD ERS? XIV. HOW WAS THE PAYMENT MADE/RECEIVED TO/FROM BROKER? XV. DATE OF PURCHASES OF SHARES AND DATE OF ACTUAL DEPOSIT IN DEMAT ACCOUNT. IN CASE OF DELAY I N DEMATERIALIZATION OF SHARES, PLEASE JUSTIFY THE SAM E. 2. PLEASE STATE WHETHER YOU ARE A REGULAR INVESTOR IN SHARES AND IF YES, PLEASE FURNISH DETAILS OF ITANO.217/JP/2020 OM PRAKASH BADAYA 22 INVESTMENTS/TRADING DONE BY YOU IN SHARES FOR 3 YEA RS AND REGULARITY OF INVESTING IN SHARES. 3_ AS PER INFORMATION RECEIVED FROM THE DIRECTOR OF INCOME TAX (INVESTIGATION), KOLKATA, A SURVEY U/S 1 33A HAD BEEN CARRIED OUT ON VARIOUS SHARE BROKERS. DURI NG THE SURVEY, VARIOUS ENQUIRIES HAVE BEEN CONDUCTED B Y THE DIRECTORATE O INVESTIGATION, KOLKATA, ON A PROJ ECT BASIS, WHICH HAS RESULTED INTO TH UNEARTHING OF A H UGE SYNDICATE OF ENTRY OPERATORS, SHARE BROKERS AND MON E LAUNDERERS, INVOLVED IN PROVIDING BOGUS ACCOMMODATION OF LONG TERM CAPIT GAIN, SHORT TERM CAPITAL LOSS. 4. IT HAS COME TO LIGHT THAT LARGE SCALE MANIPULATION HAS BEEN DONE IN MARK PRICE OF SHARES OF CERTAIN COMPANIES LISTED ON THE BOMBAY STOCK EXCHANGE CERTAIN PERSONS WORKING AS A SYNDICATE IN ORDER TO PROVIDE ENTRIES OF TAX EX- PT BOGUS LONG TERM CAPIT AL GAINS TO LARGE NUMBER OF PERSONS IN LIEU OF UNACCOUNTED CASH. THE BASIC OBJECTIVE OF THIS RACKE T IS TO CONVERT BLACK MONEY INTO WHITE WITHOUT PAYMENT O F INCOME TAX. THE UNACCOUNTED CASH OF SUCH PERSONS [BENEFICIARIES] IS UTILIZED TO PURCHASE SHARES OF S UCH COMPANIES AT A VERY HIGH ARTIFICIALLY INFLATED MARK ET PRICE. 5. THIS PRACTICE IS GENERALLY CALLED, ACCOMMODATION ENTRY SCAM, AS THE ACTIVITIES OF SUCH PERSONS ARE CARRIED OUT WITH PRIME OBJECTIVE OF ACCOMMODATING UNACCOUNTED CASH OF BENEFICIARIES INTO THEIR REGULA R BOOKS OF ACCOUNTS WITHOUT PAYING ANY TAX ON THE SAM E. 6. DURING THE SURVEY, THE STATEMENT OF DIRECTORS/EN TRY OPERATORS HAD BEEN RECORDED AND THEY ADMITTED THAT THE VARIOUS COMPANIES ARE BEING RUN ON PAPER ONLY A ND THEY DO NOT EXIST IN REALITY. SOME OF THEM WERE FOR MED ITANO.217/JP/2020 OM PRAKASH BADAYA 23 TO PROVIDE ACCOMMODATION ENTRIES ONLY IN THE FORM O F SHARE CAPITAL. 7. THE STATEMENT OF VARIOUS KEY PERSONS OF SHARE BROKERS WERE RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS CONDUCTED BY THE INVESTIGATION WING, KOLKATTA AND THEY ADMITTED THAT VARIOUS COMPANIES A RE BEING RUN ON PAPER ONLY AND THEY DO NOT EXIST IN REALITY. 8. AS PER REPORT OF INVESTIGATION WING, KOLKATTA, T HE COMPANY KIS JACKSON INVESTMENTS LIMITED. IS ALSO ON E OF THE PENNY STOCK COMPANIES. YOU HAVE ALSO SOLD OU T SHARES OF ABOVE COMPANY AND CLAIMED EXEMPTION U/S 10(38) FOR RS.11,52,000/-. 9. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, THE TRANSACTIONS ENTERED INTO BY YOU FOR PURCHASE AND SALE OF SHARES OF MIS JACKSON INVESTMENTS LIMITED... ARE FOUND TO BE BOGUS AS THE SAID COMPAN Y ACCOMMODATED BOGUS ENTRIES AND IS USED CHEQUES FOR BOGUS LONG-TERM CAPITAL GAINS. IT IS THEREFORE PROPOSED TO TREAT THE SAID AMOUNT OF RS. 11,52,000/ - , AS UNEXPLAINED CREDIT AS FOUND IN THE BOOKS OF ACCOUNT UNDER SEC. 68 TC THE RETURNED INCOME. YOU ARE REQUESTED TO SHOW CAUSE AS TO WHY THE ABOVE AMOUNT TOWARDS LONG-TERM CAPITAL GAIN SHOULD NOT BE ADDED U/S 68 TO THE INCOME RETURNED. 10. AS PER ABOVE REPORT, DURING THE SURVEY PROCEEDINGS, THE VARIOUS KEY PERSONS OF SHARE BROKERS WERE ADMITTED THAT THEY HAD TAKEN COMMISSION OR BROKERAGE @ 0.5 TO 8% ON THE PENNY STOCK TRANSACTIONS MADE BY SHARE HOLDERS. IN THIS REGARD, YOU ARE HEREBY ALSO REQUESTED TO SHOW CAUSE AS TO WHY THE COMMISSION OR BROKERAGE PAID BY YOU ON ABOVE TRANSACTIONS SHOULD NOT BE ADDED U/S 69C TO THE INCOME RETURNED. ITANO.217/JP/2020 OM PRAKASH BADAYA 24 11. YOU ARE HEREBY REQUESTED TO FURNISH YOUR EXPLANATION AS REGARDS THE ABOVE ALONGWITH SUPPORTING DOCUMENTARY EVIDENCES AND OTHER MATERIAL EVIDENCE WHICH YOU MAY RELY UPON ALONGWITH BOOKS OF ACCOUNTS TO THE OFFICE OF THE UNDERSIGNED ON THE DATE FIXED FOR HEARING ON 27.11.2017 AT 11:00 A.M. THE ABOVE INFORMATION HAS BEEN CALLED FOR IN TERMS OF PROVISIONS OF SECTION 142(1) OF THE I.T. ACT, 1961. NOTICE UNDER SEC. 142 (1) OF THE I.T. ACT, 1961 IS ENCLOSED HEREWITH. 12. IN ADDITION TO THE ABOVE INFORMATION YOU ARE ALSO REQUIRED TO FURNISH THE FOLLOWING INFORMATION/DETAI LS:- PLEASE NOTE THAT NO FURTHER ADJOURNMENT SHALL BE GIVEN AS THIS IS A TIME BARRING CASE. NON-COMPLIANC E, PART COMPLIANCE OR INCOMPLETE COMPLIANCE MAY ENTAIL PENAL ACTION, AND/OR ADVERSE INFERENCE IN RESPECT O F THE SAID ISSUE AND/OR TAKING RECOURSE TO REJECTION OF BOOK RESULTS AND ASSESSMENT U/S 144 OF THE INCOME TAX ACT, 1961 WITHOUT ANY FURTHER REFERENCE TO YOU IN THIS REGARD 8. IN RESPONSE THERETO, THE ASSESSEE STATED AS UNDE R: 1. (I). THAT THE ASSESEE HAS INVESTED RS. 40000/- F OR PURCHASES OF SHARES AS PER ENCLOSED COPY OF CONTRAC T NOT FOR SALE & LATTER OF TRANSFER OF SHARE DATED 20/10/ 2011. (II) THAT THE ASSESSEE HAS INVESTED RS. 40000/- OUT OF HIS INCOME FROMCOMMISSION/BROKERAGE EARN ON THE SALE OF AGRICULTURE GOODS. (III) THAT THE ASSESSEE PAID RS.40000/- THROUGH M/S PLEASANT DEALCOM PVT LTD AS PER ENCLOSED SALE BILL. (IV) THAT REQUISITE COPY OF CONTRACT NOTE FOR SALE & PURCHASES ENCLOSED. ITANO.217/JP/2020 OM PRAKASH BADAYA 25 (V) THAT REQUISITE COPY OF BANK STATEMENT REFLECTING RECEIPT OF SALE OF INVESTMENTS ENCLOSED. (VI) THAT REQUISITE COPY OF DEMAT A/C STATEMENT TO PROVE INWARD & DELIVERY OF SHARES ENCLOSED HEREWITH . (VII) THAT WE HEARD FROM OUR FRIEND & OTHER INVESTOR THAT THE INVESTMENT IN SHARES OF M/S JACKSON INVESTMENT LIMITED WILL BE A GOLD INVESTMENT FROM THE POINT OF LONG TERMS INVESTMENT, HENCE WE ALSO LIKE TO INVESTED IN THESE SHARES. (VIII) THAT THE ASSESSEE HAS FORGET THE NAME & ADDR ESS OF THE PERSON WHO HAS RECOMMENDED THE PURCHASES THESE SHARE. (IX) THAT ASSESSEE HAVING PRIMARY SCHOOL KNOWLEDGE, HENCE HE WAS UNABLE TO MADE ANALYSIS OF FINANCIAL PERFORMANCE BEFORE PURCHASES OF SHARES. (X) THAT COPY OF SHARES ALLOTMENT AND TRANSFER LATTER ENCLOSED. (XI) THAT BEING EARNING OF GOOD PROFIT AS PER ASSESSEE'S EXPECTATION THE ASSESSEE SOLD OUT HIS SHARES. (XII) THAT THE ASSESSEE PLACE THE PURCHASES ORDERS WITH BROKER/ AUTHORIZED PERSON ON PHONE. (XIII) THAT THE ASSESSEE PAID RS. 40000/- & RECEIVED RS.1187082.08/-. (XIV) THAT THE DATE OF PURCHASES OF SHARES 13/10/2011 & THE DATE OF DEMAT 18/02/2013. 2. THAT THE ASSESSEE IS NOT A REGULAR INVESTOR. 3. THAT ASSESSEE'S TRANSACTION IN SHARES IS GENUINE AND THE ASSESSEE IN NOT LIABLE FOR THE ALLEGATION O F THE THIRD PARTY WHICH ARE FAKE & FALSE STATEMENT BASED ON MERE PRESUMPTION, SUSPICION OR SURMISE AND SUPPOSIT ION. 4. THAT THE ASSESSEE HAS NOT MADE ANY MANIPULATION OF CONVERTING BLACK MONEY INTO WHITE, AS THE ASSESS EE'S TRANSACTION IS GENUINE. THE ALLEGATION AS STATED IN YOUR ITANO.217/JP/2020 OM PRAKASH BADAYA 26 NOTICE IS TOTALLY FAKE AND FALSE BASED ON MERE PRESUMPTION, SUSPICION OR SURMISE AND SUPPOSITION. 5. THAT AN STATED ABOVE THE ASSESSEE'S TRANSACTION IS GENUINE AND THE ALLEGATION IN THE NOTICE IS DENIED BEING FAKE & FALSE & BASED ON MERE PRESUMPTION, SUSPICION OR SURMISE AND SUPPOSITION. 6. THAT THE ADMISSION OF DIRECTORS/ENTRY OPERATORS AS STATED BY YOU IN THE NOTICE IF ANY IS FAKE & FALSE BASED ON MERE PRESUMPTION, SUSPICION OR SURMISE AND SUPPOSITION. 7. THAT THE STATEMENT OF VARIOUS KEY PERSON OF SHAR E AS STATED BY YOU IN THE NOTICE IF ANY IS FAKE & FAL SE BASED ON MERE PRESUMPTION, SUSPICION OR SURMISE AND SUPPOSITION. 8. THAT AS ALLEGED BY YOU M/S JACKSON INVESTMENT LT D. IS ALSO ONE OF THE PENNY STOCK COMPANIES WHICH IS F AKE & FALSE ON MERE PRESUMPTION, SUSPICION OR SURMISE AND SUPPOSITION, AS TO THE BEST OF ASSESSEE'S KNOWLEDGE THE JACKSON INVESTMENT LTD. IS A GENUINE COMPANY TO WHO M ASSESSEE RECEIVED PAYMENT THROUGH BANK AS PER ENCLOSED BANK STATEMENT AND THE DELIVERY OF THE SHA RES HAS BEEN TAKEN & GIVEN THROUGH DEMAT ACCOUNT, CONTR ACT NOTES FOR SALE & PURCHASES OF SHARES ENCLOSED, SHAR E TRANSFER LATTER FROM M/ S JACKSON INVESTMENT LTD. DATED 20/11/2011 ENCLOSED. 9. THAT LONG TERM CAPITAL IS GENUINE FOR THE REASON S (A) PAYMENT FOR THE SALE OF SHARES RECEIVED RS. 1187082 .08 THROUGH NEFT IN THE ASSESSEE'S BANK AS PER COPY OF THE BANK STATEMENT ENCLOSED. (B) DELIVERY OF THE SHARES TAKEN & GIVEN THROUGH DEMAT A/C AS PER ENCLOSED COP Y OF THE SAME. (C) CONTRACT NOTES FOR SALE & PURCHASE S OF THE BROKER WHO ARE MEMBERS OF RECOGNIZE STOCK EXCHANGE AS PER COPY OF THE SAME ENCLOSED. THE ASSESSEE'S LONG TERM CAPITAL GAIN IS GENUINE. THE FOLLOWING CASES OF OUR JURISDICTIONAL HIGH COURT AS WELL AS HIGH COURT OF THE OTHER STATE AND TRIBUNAL SUPPO RT THE ITANO.217/JP/2020 OM PRAKASH BADAYA 27 CASE OF THE ASSESSEE IN WHICH IT IS HELD THAT SUCH THAT WHERE ASEESSEE PROVED GENUINENESS OF SHARE TRANSACTIONS BY CONTRACT NOTES FOR SALE AND PURCHAS ES, BANK STATEMENT, DEMAT ACCOUNT SHOWING TRANSFER IN A ND OUT OF SHARES CAN NOT BE TREATED UNEXPLAINED CASH C REDIT U/ S 68 OF THE I.T. ACT 1961:- (I).HIGH COURT OF RAJASTHAN AT JAIPUR IN CASE OF CI T VS. SMT. POOJA AGARWAL (D.13, INCOME TAX APPEAL NO 385/2011, DECIDED ON 11/ 09/ 2017) (II) HIGH COURT OF RAJASTHAN AT JODHPUR IN CASE OF CIT VS. SMT SUMITRA DEVI IN ITA 54/2012 (III) HIGH COURT OF GUJRAT IN CASE OF CIT VS. MAHESHCHANDRA G. VAKIL {2013) 40 TAXMANN.COM 326 (GUJRAT) (IV) HIGH COURT OF ALLAHABAD IN CASE OF CIT VS. UDI T NARAIN AGARWAL IN ITA 560 OF 2009 (V) TRIBUNAL AT KOLKATA IN CASE OF SCIT VS SUNITA K HEMA IN ITA NOS 714 TO 718/ KOL/ 2011 (VI) HIGH COURT OF BOMBAY IN CASE OF COMMISSIONER O F INCOME TAX-13 VS MR. SHYAM R. PAWAR 10. THAT THE ASSESSEE IS NOT MADE ANY COMMISSION OR BROKERAGE & 0.50% TO 8% ON THE ALLEGED PENNY STOCK AS THE ASSESSEE NOT MADE ANY INVESTMENT IN PENNY STOCK , HOWEVER THE ASSESSEE HAS PAID COMMISSION/BROKERAGE, SERVICE TAX, STT, AND TRXN. CHARGES ETC FOR SALE OF THESE SHARES TO M/S SHRI PARASRAM HOLDING PVT. LTD. AS PE R ENCLOSED NET OBLIGATION DATED 01/01/2015, HENCE THE COMMISSION OR BROKERAGE PAID ON ABOVE TRANSACTIONS SHOULD NOT BE ADDED U/S 69C OF THE I.T. ACT 1961. IT IS, THEREFORE, REQUESTED TO YOU TO DROP THE PROC EEDINGS I/S 68 & 69C OF THE I.T. ACT 1961. ITANO.217/JP/2020 OM PRAKASH BADAYA 28 9. LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF ITO VS. DG HOUSING PROJECTS LTD.(SUPRA) WHEREIN THE HONBLE COURT AFTER EXAMINING ENTIRE LAW ON THE ISSUE HELD AS UND ER: 16. THUS, IN CASES OF WRONG OPINION OR FINDING ON MERITS, THE CIT HAS TO COME TO THE CONCLUSION AND HIMSELF D ECIDE THAT THE ORDER IS ERRONEOUS, BY CONDUCTING NECESSAR Y ENQUIRY, IF REQUIRED AND NECESSARY, BEFORE THE ORDE R UNDER SECTION 263 IS PASSED. IN SUCH CASES, THE ORDER OF THE ASSESSING OFFICER WILL BE ERRONEOUS BECAUSE THE ORDER PASSED IS NOT SUSTAINABLE IN LAW AND THE SAID FINDI NG MUST BE RECORDED. CIT CANNOT REMAND THE MATTER TO T HE ASSESSING OFFICER TO DECIDE WHETHER THE FINDINGS RE CORDED ARE ERRONEOUS. IN CASES WHERE THERE IS INADEQUATE E NQUIRY BUT NOT LACK OF ENQUIRY, AGAIN THE CIT MUST GIVE AN D RECORD A FINDING THAT THE ORDER/INQUIRY MADE IS ERRONEOUS. THIS CAN HAPPEN IF AN ENQUIRY AND VERIFICATION IS CONDUC TED BY THE CIT AND HE IS ABLE TO ESTABLISH AND SHOW THE ER ROR OR MISTAKE MADE BY THE ASSESSING OFFICER, MAKING THE O RDER UNSUSTAINABLE IN LAW. IN SOME CASES POSSIBLY THOUGH RARELY, THE CIT CAN ALSO SHOW AND ESTABLISH THAT TH E FACTS ON RECORD OR INFERENCES DRAWN FROM FACTS ON RECORD PER SE JUSTIFIED AND MANDATED FURTHER ENQUIRY OR INVESTIGA TION BUT THE ASSESSING OFFICER HAD ERRONEOUSLY NOT UNDER TAKEN THE SAME. HOWEVER, THE SAID FINDING MUST BE CLEAR, UNAMBIGUOUS AND NOT DEBATABLE. THE MATTER CANNOT BE REMITTED FOR A FRESH DECISION TO THE ASSESSING OFFI CER TO CONDUCT FURTHER ENQUIRIES WITHOUT A FINDING THAT TH E ORDER IS ERRONEOUS. FINDING THAT THE ORDER IS ERRONEOUS I S A CONDITION OR REQUIREMENT WHICH MUST BE SATISFIED FO R EXERCISE OF JURISDICTION UNDER SECTION 263 OF THE ACT. IN SUCH MATTERS, TO REMAND THE MATTER/ISSUE TO THE ASS ESSING OFFICER WOULD IMPLY AND MEAN THE CIT HAS NOT EXAMIN ED AND DECIDED WHETHER OR NOT THE ORDER IS ERRONEOUS B UT HAS ITANO.217/JP/2020 OM PRAKASH BADAYA 29 DIRECTED THE ASSESSING OFFICER TO DECIDE THE ASPECT/QUESTION. 17. THIS DISTINCTION MUST BE KEPT IN MIND BY THE CI T WHILE EXERCISING JURISDICTION UNDER SECTION 263 OF THE ACT AND IN THE ABSENCE OF THE FINDING THAT THE ORDER IS ERRONE OUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, EXERCISE OF JURISDICTION UNDER THE SAID SECTION IS NOT SUSTAINA BLE. IN MOST CASES OF ALLEGED 'INADEQUATE INVESTIGATION', I T WILL BE DIFFICULT TO HOLD THAT THE ORDER OF THE ASSESSING O FFICER, WHO HAD CONDUCTED ENQUIRIES AND HAD ACTED AS AN INVESTIGATOR, IS ERRONEOUS, WITHOUT CIT CONDUCTING VERIFICATION/INQUIRY. THE ORDER OF THE ASSESSING OF FICER MAY BE OR MAY NOT BE WRONG. CIT CANNOT DIRECT RECONSIDERATION ON THIS GROUND BUT ONLY WHEN THE OR DER IS ERRONEOUS. AN ORDER OF REMIT CANNOT BE PASSED BY TH E CIT TO ASK THE ASSESSING OFFICER TO DECIDE WHETHER THE ORDER WAS ERRONEOUS. THIS IS NOT PERMISSIBLE. AN ORDER IS NOT ERRONEOUS, UNLESS THE CIT HOLD AND RECORDS REASONS WHY IT IS ERRONEOUS. AN ORDER WILL NOT BECOME ERRONEOUS BE CAUSE ON REMIT, THE ASSESSING OFFICER MAY DECIDE THAT THE ORDER IS ERRONEOUS. THEREFORE CIT MUST AFTER RECORDING RE ASONS HOLD THAT THE ORDER IS ERRONEOUS. THE JURISDICTIONA L PRECONDITION STIPULATED IS THAT THE CIT MUST COME T O THE CONCLUSION THAT THE ORDER IS ERRONEOUS AND IS UNSUSTAINABLE IN LAW. WE MAY NOTICE THAT THE MATERI AL WHICH THE CIT CAN RELY INCLUDES NOT ONLY THE RECORD AS IT STANDS AT THE TIME WHEN THE ORDER IN QUESTION WAS P ASSED BY THE ASSESSING OFFICER BUT ALSO THE RECORD AS IT STANDS AT THE TIME OF EXAMINATION BY THE CIT [SEE CIT VS. SHREE MANJUNATHESWARE PACKING PRODUCTS , 231 ITR 53 (SC)]. NOTHING BARS/PROHIBITS THE CIT FROM COLLECTING AND RELYING UPON NEW/ADDITIONAL MATERIAL/EVIDENCE TO SHOW AND S TATE THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOU S. 18. IT IS IN THIS CONTEXT THAT THE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD. VS. COMMISSIONER OF INCOME TAX , (2000) 243 ITR 83 (SC), HAD OBSERVED THAT THE PHRASE PREJ UDICIAL ITANO.217/JP/2020 OM PRAKASH BADAYA 30 TO THE INTEREST OF REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFF ICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF REVENUE. THUS, WHEN THE ASSESSING OFFIC ER HAD ADOPTED ONE OF THE COURSES PERMISSIBLE AND AVAILABL E TO HIM, AND THIS HAS RESULTED IN LOSS TO REVENUE; OR T WO VIEWS WERE POSSIBLE AND THE ASSESSING OFFICER HAS T AKEN ONE VIEW WITH WHICH THE CIT MAY NOT AGREE; THE SAID ORDERS CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJ UDICIAL TO THE INTEREST OF REVENUE UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. IN SUCH MATTERS, THE CIT MUST GIVE A FINDING THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW AN D, THEREFORE, THE ORDER IS ERRONEOUS. HE MUST ALSO SHO W THAT PREJUDICE IS CAUSED TO THE INTEREST OF THE REVENUE. 19. IN THE PRESENT CASE, THE FINDINGS RECORDED BY T HE TRIBUNAL ARE CORRECT AS THE CIT HAS NOT GONE INTO A ND HAS NOT GIVEN ANY REASON FOR OBSERVING THAT THE ORDER P ASSED BY THE ASSESSING OFFICER WAS ERRONEOUS. THE FINDING RECORDED BY THE CIT IS THAT 'ORDER PASSED BY THE AS SESSING OFFICER MAY BE ERRONEOUS'. THE CIT HAD DOUBTS ABOUT THE VALUATION AND SALE CONSIDERATION RECEIVED BUT THE C IT SHOULD HAVE EXAMINED THE SAID ASPECT HIMSELF AND GI VEN A FINDING THAT THE ORDER PASSED BY THE ASSESSING OFFI CER WAS ERRONEOUS. HE CAME TO THE CONCLUSION AND FINDIN G THAT THE ASSESSING OFFICER HAD EXAMINED THE SAID ASPECT AND ACCEPTED THE RESPONDENT S COMPUTATION FIGURES BUT HE HAD RESERVATIONS. THE CIT IN THE ORDER HAS RECORDED THA T THE CONSIDERATION RECEIVABLE WAS EXAMINED BY THE ASSESS ING OFFICER BUT WAS NOT PROPERLY EXAMINED AND THEREFORE THE ASSESSMENT ORDER IS 'ERRONEOUS'. THE SAID FINDING W ILL BE CORRECT, IF THE CIT HAD EXAMINED AND VERIFIED THE S AID TRANSACTION HIMSELF AND GIVEN A FINDING ON MERITS. AS HELD ABOVE, A DISTINCTION MUST BE DRAWN IN THE CASES WHE RE THE ASSESSING OFFICER DOES NOT CONDUCT AN ENQUIRY; AS L ACK OF ENQUIRY BY ITSELF RENDERS THE ORDER BEING ERRONEOUS AND ITANO.217/JP/2020 OM PRAKASH BADAYA 31 PREJUDICIAL TO THE INTEREST OF THE REVENUE AND CASE S WHERE THE ASSESSING OFFICER CONDUCTS ENQUIRY BUT FINDING RECORDED IS ERRONEOUS AND WHICH IS ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN LATTER CASES, THE CIT H AS TO EXAMINE THE ORDER OF THE ASSESSING OFFICER ON MERIT S OR THE DECISION TAKEN BY THE ASSESSING OFFICER ON MERITS A ND THEN HOLD AND FORM AN OPINION ON MERITS THAT THE ORDER P ASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF THE REVENUE. IN THE SECOND SET OF C ASES, CIT CANNOT DIRECT THE ASSESSING OFFICER TO CONDUCT FURT HER ENQUIRY TO VERIFY AND FIND OUT WHETHER THE ORDER PA SSED IS ERRONEOUS OR NOT. 10. FURTHER RELIANCE IS PLACED ON THE DECISION OF T HE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/ S. ARUN KUMAR GARG, HUF, VS. PR. CIT IN ITA NO. 3391/DEL/2018 WHEREIN THE TRIBUNAL HAS CONSIDERED T HE AMENDED LAW AND HELD AS UNDER: 5.6 ALTHOUGH, THERE HAS BEEN AN AMENDMENT IN THE PROVISIONS OF SECTION 263 OF THE ACT BY WHICH EXPLANATION 2 HAS BEEN INSERTED W.E.F. 1.6.2015 BUT THE SAME DO ES NOT GIVE UNFETTERED POWERS TO THE COMMISSIONER TO ASSUM E JURISDICTION UNDER SECTION 263 TO REVISE EVERY ORDER OF THE ASSESSING OFFICER TO RE-EXAMINE THE ISSUES ALREADY EXAMINED DURING THE COURSE OF ASSESSMENT PROCEEDING S. THE MUMBAI ITAT BENCH HAS DEALT WITH EXPLANATION 2 AS INSERTED BY FINANCE ACT , 2015 IN THE CASE OF NARAYAN TATU RANE VS. ITO REPORTED IN (2016) 70 TAXMAN.COM 227 T O HOLD THAT THE SAID EXPLANATION CANNOT BE SAID TO HA VE OVERRIDDEN THE LIABILITY AS INTERPRETED BY HON'BLE DELHI HIGH COURT, ACCORDING TO WHICH THE COMMISSIONER HAS TO CONDUCT THE INQUIRY AND VERIFICATION TO ESTABLISH A ND SHOW THAT THE ITA NO. 3391/DEL/2018 ASSESSMENT YEAR 2014 - 15 ASSESSMENT ORDER WAS UNSUSTAINABLE IN LAW. THE I TAT ITANO.217/JP/2020 OM PRAKASH BADAYA 32 MUMBAI BENCH HAS FURTHER HELD THAT THE INTENTION OF THE LEGISLATURE COULD NOT HAVE BEEN TO ENABLE THE CIT T O FIND FAULT WITH EACH AND EVERY ASSESSMENT ORDER WITHOUT CONDUCTING ANY INQUIRY OR VERIFICATION IN ORDER TO ESTABLISH THAT THE ASSESSMENT ORDER IS NOT SUSTAINABLE IN LAW , SINCE SUCH AN INTERPRETATION WILL LEAD TO UNENDING LITIGA TION AND THERE WOULD NOT BE ANY POINT OF FINALITY IN THE LEG AL PROCEEDINGS. THE ITAT MUMBAI BENCH OF THE TRIBUNAL WENT ON TO HOLD THAT THE OPINION OF THE COMMISSIONER REF ERRED TO IN SECTION 263 OF THE ACT HAS TO BE UNDERSTOOD AS LEGAL AND JUDICIOUS OPINION AND NOT ARBITRARY OPINION. 5.7 WE ALSO NOTE THAT IT HAS BEEN HELD BY THE ITAT MUMBAI BENCH IN THE CASE OF M/S INDUS BEST HOSPITALITY & REALTORS PVT. LTD. IN ITA NO. 3125/MUM/2017 VIDE OR DER DATED 19.01.2018 THAT EXPLANATION 2 TO SECTION 263 OF THE ACT INTRODUCED BY FINANCE ACT , 2015 IS RETROSPECTIVE IN NATURE. SINCE THE YEAR UNDER CONSIDERATION IS AY 20 14-15, WE ARE AFRAID THAT EXPLANATION 2 TO SECTION 263 WILL NOT COME TO THE AID OF THE DEPARTMENT IN THIS CASE. SIM ILAR VIEW HAS BEEN TAKEN BY THE VARIOUS COORDINATE BENCH ES OF THE ITAT IN THE FOLLOWING CASES:- ITA NO. 3391/DEL/ 2018 ASSESSMENT YEAR 2014-15 (A) AV INDUSTRIES V. ACIT [ITA NO. 3469/MU M/2010] DATED 06.11.2015 (B) METACAPS ENGINEERING AND MAHENDRA CONSTRUCTIONS CO. (JV) V. CIT [ITA NO . 2895/MUM/2014] DATED 11.09.2017 (C) RELIANCE MONEY INFRASTRUCTURE LTD. V. PCIT [ITA NO. 3259/MUM/2017] DATED 06.10.2017. (D) SHANTIKRUPA ESTATE PVT. LTD. [ITA NO. 1252/AHD/ 2015] DATED 09.09.2016 ITANO.217/JP/2020 OM PRAKASH BADAYA 33 (E) AMIRA PURE FOODS PVT. LTD. V. PCIT [ITA NO. 451/DEL/2017] DATED 29.11.2017. 5.8 ACCORDINGLY, RESPECTFULLY FOLLOWING THE RATIO O F THE VARIOUS JUDGMENTS AS REFERRED TO IN THE PRECEDING PARAGRAPHS, WE HAVE NO HESITATION IN HOLDING THAT T HE LD. PR.CIT HAD WRONGLY INVOKED THE REVISIONARY POWERS U /S 263 OF THE ACT AND WE HAVE NO OPTION BUT TO QUASH T HE SAME. IT IS SO ORDERED ACCORDINGLY. 6.0 IN THE RESU LT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. 11. LD. AR HAS ALSO TAKEN US THROUGH THE DECISION O F THE MUMBAI BENCH OF THIS TRIBUNAL RENDERED IN THE CASE OF ITO VS. SHRI NARAYAN TATU RANE(SUPRA) WHEREIN THE TRIBUNAL IN PARAS 19 TO 21 HAS DECIDED THE ISSUE AS UNDER: 19. THE LAW INTERPRETED BY THE HIGH COURT MAKES IT CLEAR THAT THE LD PR. CIT, BEFORE HOLDING AN ORDER TO BE ERRONEOUS, SHOULD HAVE CONDUCTED NECESSARY ENQUIRIE S OR VERIFICATION IN ORDER TO SHOW THAT THE FINDING GIVE N BY THE ASSESSING OFFICER IS ERRONEOUS, THE LD PR. CIT SHOU LD HAVE SHOWN THAT THE VIEW TAKEN BY THE AO IS UNSUSTAINABL E IN LAW. IN THE INSTANT CASE, THE LD PR. CIT HAS FAILED TO DO SO AND HAS SIMPLY EXPRESSED THE VIEW THAT THE ASSESSIN G OFFICER SHOULD HAVE CONDUCTED ENQUIRY IN A PARTICUL AR MANNER AS DESIRED BY HIM. SUCH A COURSE OF ACTION O F THE LD PR. CIT IS NOT IN ACCORDANCE WITH THE MANDATE OF THE PROVISIONS OF SEC. 263 OF THE ACT. THE LD PR. CIT H AS TAKEN SUPPORT OF THE NEWLY INSERTED EXPLANATION 2(A) TO S EC. 263 OF THE ACT. EVEN THOUGH THERE IS A DOUBT AS TO WHET HER THE SAID EXPLANATION, WHICH WAS INSERTED BY FINANCE ACT 2015 W.E.F. 1.4.2015, WOULD BE APPLICABLE TO THE YEAR UN DER CONSIDERATION, YET WE ARE OF THE VIEW THAT THE SAID EXPLANATION CANNOT BE SAID TO HAVE OVER RIDDEN THE LAW ITANO.217/JP/2020 OM PRAKASH BADAYA 34 INTERPRETED BY HONBLE DELHI HIGH COURT, REFERRED A BOVE. IF THAT BE THE CASE, THEN THE LD PR. CIT CAN FIND FAUL T WITH EACH AND EVERY ASSESSMENT ORDER, WITHOUT CONDUCTING ANY ENQUIRY OR VERIFICATION IN ORDER TO ESTABLISH THAT THE ASSESSMENT ORDER IS NOT SUSTAINABLE IN LAW AND ORDE R FOR REVISION. HE CAN ALSO FORCE THE AO TO CONDUCT THE E NQUIRIES IN THE MANNER PREFERRED BY LD PR. CIT, THUS PREJUDI CING THE INDEPENDENT APPLICATION OF MIND OF THE AO. DEFINITE LY, THAT COULD NOT BE THE INTENTION OF THE LEGISLATURE IN IN SERTING EXPLANATION 2 TO SEC. 263 OF THE ACT, SINCE IT WOUL D LEAD TO UNENDING LITIGATIONS AND THERE WOULD NOT BE ANY POI NT OF FINALITY IN THE LEGAL PROCEEDINGS. THE HONBLE SUPR EME COURT HAS HELD IN THE CASE PARASHURAM POTTERY WORKS CO. LTD VS. ITO (1977)(106 ITR 1) THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS AND THE STALE ISS UES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND TH E LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDIC IAL AND QUASI-JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SP HERES OF HUMAN ACTIVITY. 20. FURTHER CLAUSE (A) OF EXPLANATION STATES THAT A N ORDER SHALL BE DEEMED TO BE ERRONEOUS, IF IT HAS BEEN PAS SED WITHOUT MAKING ENQUIRIES OR VERIFICATION, WHICH SHO ULD HAVE BEEN MADE. IN OUR CONSIDERED VIEW, THIS PROVIS ION SHALL APPLY, IF THE ORDER HAS BEEN PASSED WITHOUT M AKING ENQUIRIES OR VERIFICATION WHICH A REASONABLE AND PR UDENT OFFICER SHALL HAVE CARRIED OUT IN SUCH CASES, WHICH MEANS THAT THE OPINION FORMED BY LD PR. CIT CANNOT BE TAK EN AS FINAL ONE, WITHOUT SCRUTINIZING THE NATURE OF ENQUI RY OR VERIFICATION CARRIED OUT BY THE AO VIS--VIS ITS REASONABLENESS IN THE FACTS AND CIRCUMSTANCES OF TH E CASE. HENCE, IN OUR CONSIDERED VIEW, WHAT IS RELEVA NT FOR CLAUSE (A) OF EXPLANATION 2 TO SEC. 263 IS WHETHER THE AO HAS PASSED THE ORDER AFTER CARRYING OUR ENQUIRIES O R VERIFICATION, WHICH A REASONABLE AND PRUDENT OFFICE R WOULD HAVE CARRIED OUT OR NOT. IT DOES NOT AUTHORISE OR G IVE UNFETTERED POWERS TO THE LD PR. CIT TO REVISE EACH AND EVERY ORDER, IF IN HIS OPINION, THE SAME HAS BEEN P ASSED ITANO.217/JP/2020 OM PRAKASH BADAYA 35 WITHOUT MAKING ENQUIRIES OR VERIFICATION WHICH SHOU LD HAVE BEEN MADE. IN OUR VIEW, IT IS THE RESPONSIBILI TY OF THE LD PR. CIT TO SHOW THAT THE ENQUIRIES OR VERIFICATI ON CONDUCTED BY THE AO WAS NOT IN ACCORDANCE WITH THE ENQURIES OR VERIFICATION THAT WOULD HAVE BEEN CARRI ED OUT BY A PRUDENT OFFICER. HENCE, IN OUR VIEW, THE QUEST ION AS TO WHETHER THE AMENDMENT BROUGHT IN BY WAY OF EXPLANAT ION 2(A) SHALL HAVE RETROSPECTIVE OR PROSPECTIVE APPLIC ATION SHALL NOT BE RELEVANT. 21. IN THE INSTANT CASE, AS NOTICED EARLIER, THE A O HAS ACCEPTED THE EXPLANATIONS OF THE ASSESSEE, SINCE TH ERE IS NO FOOL PROOF EVIDENCE TO LINK THE ASSESSEE WITH TH E DOCUMENT AND M/S RNS INFRASTRUCTURE LTD, FROM WHOSE HANDS IT WAS SEIZED, ALSO DID NOT IMPLICATE THE ASS ESSEE. THUS, THE ASSESSEE HAS BEEN EXPECTED TO PROVE A NEG ATIVE FACT, WHICH IS HUMANELY NOT POSSIBLE. NO OTHER CORROBORATIVE MATERIAL WAS AVAILABLE WITH THE DEPAR TMENT TO SHOW THAT THE EXPLANATIONS GIVEN BY THE ASSESSEE WERE WRONG OR INCORRECT. UNDER THESE SET OF FACTS, THE A O APPEARS TO HAVE BEEN SATISFIED WITH THE EXPLANATION S GIVEN BY THE ASSESSEE AND DID NOT MAKE ANY ADDITION . WE HAVE NOTICED THAT THE HONBLE SUPREME COURT HAS HEL D IN THE CASE OF CENTRAL BUREAU OF INVESTIGATION VS. V.C . SHUKLA AND OTHERS (SUPRA) THAT THE ENTRIES IN THE B OOKS OF ACCOUNT BY THEMSELVES ARE NOT SUFFICIENT TO CHARGE ANY PERSON WITH LIABILITY. HENCE, IN OUR VIEW, IT CANNO T BE HELD THAT THE ASSESSING OFFICER DID NOT CARRY OUT ENQUIR Y OR VERIFICATION WHICH SHOULD HAVE BEEN DONE, SINCE THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE INCRIMINATING DOCUMENT WAS NOT CONSIDERED TO BE STRONG BY THE AO TO IMPLICATE THE ASSESSEE. THUS, WE ARE OF THE VIEW TH AT THE ASSESSING OFFICER HAS TAKEN A PLAUSIBLE VIEW IN THE FACTS AND CIRCUMSTANCES OF THE CASE. EVEN THOUGH THE LD P R. CIT HAS DRAWN CERTAIN ADVERSE INFERENCES FROM THE DOCUM ENT, YET IT CAN SEEN THAT THEY ARE DEBATABLE IN NATURE. FURTHER, AS NOTICED EARLIER, THE LD PR. CIT HAS NOT BROUGHT ANY MATERIAL ON RECORD BY MAKING ENQUIRIES OR VERIFICAT IONS TO ITANO.217/JP/2020 OM PRAKASH BADAYA 36 SUBSTANTIATE HIS INFERENCES. HE HAS ALSO NOT SHOWN THAT THE VIEW TAKEN BY HIM IS NOT SUSTAINABLE IN LAW. TH US, WE ARE OF THE VIEW THAT THE LD PR. CIT HAS PASSED THE IMPUGNED REVISION ORDERS ONLY TO CARRY OUT FISHING AND ROVING ENQUIRIES WITH THE OBJECTIVE OF SUBSTITUTING HIS VIEWS WITH THAT OF THE AO. HENCE WE ARE OF THE VIEW THAT THE LD PR. CIT WAS NOT JUSTIFIED WAS NOT CORRECT IN LAW IN HOLDING THAT THE IMPUGNED ASSESSMENT ORDERS WERE ERRONEOUS. 12. WE FIND THAT LD. PR. CIT HAS RELIED UPON THE VA RIOUS CASE LAWS I.E. PUJA GUPTA VS. PR. CIT IN ITANO.4057/DEL/2018 AND ALSO HEAVILY RELIED UPON TH E AMENDMENT MADE IN THE LAW. WE FIND THAT THE COORDIN ATE BENCH OF THIS TRIBUNAL IN THE CASE OF ITO VS. SHRI NARAYAN TATU RANE(SUPRA), M/S. ARUN KUMAR GARG, HUF, VS. PR . CIT(SUPRA) HAVE RULED THAT THE PR. CIT CAN NOT PASS THE ORDER U/S 263 OF THE ACT ON THE GROUND THAT THOROUG H ENQUIRY SHOULD HAVE BEEN MADE BY THE ASSESSING OFFI CER. IN THE PRESENT CASE THE ASSESSING OFFICER HAD GIVEN A SPECIFIC NOTICE REGARDING THE DISPUTED TRANSACTIONS AND THE ASSESSEEE ALSO GAVE SPECIFIC REPLY TO THE SHOW CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER. THEREFORE, IT IS NOT A CASE WHERE THE ASSESSING OFFICER HAS NOT MADE ANY E NQUIRY REGARDING IMPUGNED TRANSACTIONS BUT THE LD. PR. CIT INVOKED THE PROVISIONS OF SECTION 263 OF THE ACT ON THE GROUND THAT THE ENQUIRY WAS NOT MADE IN THE MANNER, IT ITANO.217/JP/2020 OM PRAKASH BADAYA 37 OUGHT TO HAVE BEEN DONE. IN THE LIGHT OF THE RATIO LAID DOWN IN THE JUDGMENT OF THE HONBLE DELHI HIGH COUR T IN THE CASE ITO VS. DG HOUSING PROJECTS LTD.(SUPRA) AN D OTHER DECISIONS OF THE COORDINATE BENCHES OF THIS T RIBUNAL I.E. ITO VS. SHRI NARAYAN TATU RANE(SUPRA), M/S. AR UN KUMAR GARG, HUF, VS. PR. CIT(SUPRA). IN OUR CONSIDE RED VIEW LD. PR. CIT HIMSELF OUGHT TO HAVE MADE SOME EN QUIRY REGARDING THE IMPUGNED TRANSACTIONS BEFORE SETTING ASIDE TO THE FILE OF THE ASSESSING OFFICER. HENCE, THE AC TION OF THE LD. PR. CIT IS CONTRARY TO THE RATIO LAID DOWN BY T HE BINDING PRECEDENCE. WE, THEREFORE, HOLD ACCORDINGLY , IMPUGNED ORDER IS QUASHED. GROUNDS RAISED IN THIS A PPEAL ARE ALLOWED. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.11.2020. SD/- SD/- (VIKRAM SINGH YADAV) ( KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED:- NOVEMBER, 2020 *PATEL ITANO.217/JP/2020 OM PRAKASH BADAYA 38 VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- 2. IZR;FKHZ@ THE RESPONDENT- 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR