Lakshya Seth, Delhi V. ITO, New Delhi

ITA 218/DEL/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97486 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 21-12-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 12-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Revision of order; Opportunity of being heard; Assessment record; Right to appeal; Revenue expenditure; Capital expenditure
• Section: 44AD; 143(3); 69; 263

Judgement Text

ITA NO.218/DEL/2015 AY: 2011-12 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `D NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.218/DEL/2015 ASSESSMENT YEAR : 2011-12 LAKSHYA SETH, VS INCOME TAX OFFICER, 50-B, DDA FLATS, WARD-19(3), SATYAWATI COLONY, NEW DELHI. ASHOK VIHAR, PHASE-III, DELHI-110052 (PAN: CDAPS0119M) (APPELLANT) (RESPONDENT) APPELLANT B Y: SHRI SURESH K. GUPTA, CA RESPONDENT BY : SHRI GAJA NAND MEENA, CIT DR DATE OF HEARING: 18.08.2015 DATE OF PRONOUNCEMENT: 7.10.2015 O R D E R PER CHANDRAMOHAN GARG, J.M. THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAIN ST THE ORDER OF THE CIT, DELHI-VII DATED 13.11.2014 PASSED U/S 263 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) FOR AY 2011-12. 2. THE SOLE GROUND RAISED BY THE ASSESSEE IN THIS A PPEAL READS AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT HAS ERRED IN HOLDING THE ORDER OF ASSESSMENT DATED 20.12.2013 PASSED U/S 143 (3) AS ERRONEOUS AN D PREJUDICIAL TO THE INTEREST OF REVENUE AND HAVING S O HELD ITA NO.218/DEL/2015 AY: 2011-12 2 CANCELLING THE ASSESSMENT WITH THE DIRECTION TO THE AO TO MAKE A FRESH ASSESSMENT. 3. BRIEFLY STATED THE FACTS GIVING RISE TO THIS APP EAL ARE THAT THE AO SELECTED THE CASE FOR SCRUTINY THROUGH CASS WITH THE REASON THAT THE AO SHOULD EXAMINE THE SOURCE OF CASH DEPOSITED IN THE SAVINGS BANK AC COUNT AS PER AIR INFORMATION. THE AO COMPLETED THE ASSESSMENT BY MA KING AN ADDITION OF RS.6,11,230/- ON SURRENDERED AMOUNT MADE BY THE ASS ESSEE VIDE ORDER SHEET DATED 20.12.2013 AS BUSINESS INCOME @8% OF GROSS RE CEIPTS OF RS.76,40,380 AS PRESCRIBED U/S 44AF OF THE ACT. FINALLY, THE SAID ADDITION WAS MADE BEING 8% OF TURNOVER MADE ON ACCOUNT OF TRADING OF CLOTH DUR ING THE RELEVANT FINANCIAL PERIOD. THE AO COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT AT AN INCOME OF RS.7,52,860/- AS AGAINST THE RETURNED INCOME OF RS. 1,40,180. 4. SUBSEQUENTLY, THE CIT NOTICED THAT THE AO HAS PA SSED ORDER U/S 143(3) OF THE ACT ON 20.12.13 AND ON EXAMINATION OF RELEVANT ASSESSMENT RECORD, IT WAS NOTICED THAT THE ORDER PASSED BY THE AO IS PREJUDIC IAL TO THE INTEREST OF REVENUE AND ERRONEOUS, HENCE, THE CIT ISSUED NOTICE U/S 263 OF THE ACT ON 9.9.2014. AFTER CONSIDERING THE REPLY AND EXPLANATION OF THE ASSESSEE, THE CIT HELD THAT IMPUGNED ASSESSMENT ORDER IS ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF REVENUE AS NOT ONLY ASSESSMENT ORDER HAS BEEN PASSE D IN UTMOST HASTE AND IN A CRYPTIC MANNER BUT THE AO HAS ALSO ALLOWED BENEFIT OF SECTION 44AD/AF OF THE ACT ERRONEOUSLY WITHOUT CONSIDERING WHETHER CONDITI ONS THERETO ARE FULFILLED, AND ALSO NOT BY APPLYING PROVISIONS OF SECTION 69A OF THE ACT. THE CIT FURTHER ITA NO.218/DEL/2015 AY: 2011-12 3 HELD THAT THE ASSESSMENT ORDER PASSED BY THE AO RES ULTING INTO NON-APPLICATION OF CORRECT PROVISIONS OF LAW, THOUGH THE SAID ISSUE S WERE MOST CRUCIAL ISSUES FOR THE CURRENT ASSESSMENT SCRUTINY PROCESS. FINALLY, THE CIT HELD THAT THE ORDER PASSED BY THE AO U/S 143(3) OF THE ACT DESERVES TO BE CANCELLED AND HE DIRECTED THE AO TO MAKE A FRESH ASSESSMENT AFTER CONSIDERING CORRECT AND LEGAL AND FACTUAL POSITION IN THIS REGARD. NOW, THE AGGRIEVE D ASSESSEE IS BEFORE THIS TRIBUNAL IN THIS APPEAL WITH THE SOLE GROUND AS REP RODUCED HEREINABOVE, CHALLENGING THE VALID ASSUMPTION OF JURISDICTION BY THE CIT FOR PASSING IMPUGNED ORDER. 5. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. THE AO PICKED UP THE CASE FOR SCRUTINY MAINLY TO EXAMINE THE SOURCE OF CASH DEPOSITED IN T HE SAVING BANK ACCOUNT OF THE ASSESSEE AS PER ALLEGED AIR INFORMATION. LD. A R FURTHER CONTENDED THAT THE AO CONSIDERED EXPLANATION AND SUBMISSIONS OF THE AS SESSEE VIDE LETTER DATED 20.12.13 AND MADE AN ADDITION OF RS.6,11,230 BEING 8% OF RS.76,40,380 BEING ESTIMATED PROFIT EARNED BY THE ASSESSEE FROM TRADIN G OF CLOTH. LD. AR FURTHER POINTED OUT THAT IN THE NOTICE U/S 263 OF THE ACT, THE MAIN GRIEVANCE OF THE CIT IS THAT PROVISIONS OF SECTION 44AD/44AF OF THE ACT WERE NOT APPLICABLE IF THE GROSS TURNOVER EXCEEDS RS.60 LAKH. LD. AR FURTHER SUBMITTED THAT THE AO ONLY REFERRED TO PROVISIONS OF SECTION 44AF OF THE ACT W HICH PROVIDES ESTIMATION OF BUSINESS INCOME @5% OF GROSS RECEIPTS/TURNOVER WHER EAS THE AO TOOK 8% OF ITA NO.218/DEL/2015 AY: 2011-12 4 GROSS RECEIPTS/TURNOVER OF CLOTH BUSINESS OF THE AS SESSEE FOR DETERMINATION OF BUSINESS INCOME FROM TRADING OF CLOTH EARNED BY THE ASSESSEE DURING THE RELEVANT FINANCIAL PERIOD WHICH CANNOT BE SAID TO BE ERRONEO US OR PREJUDICIAL TO THE INTEREST OF REVENUE BECAUSE THE AO HAS ADOPTED A HI GHER PERCENTAGE FOR MAKING ESTIMATION OF BUSINESS INCOME OF THE ASSESSEE FROM CLOTH BUSINESS. 6. LD. COUNSEL FURTHER POINTED OUT THAT THE ASSESSE E HAD DECLARED THE DETAILS OF ALL SEVEN BANK ACCOUNTS SHOWING TOTAL CASH DEPOS IT OF RS.70,77,034/- DURING ORIGINAL ASSESSMENT PROCEEDINGS AS AGAINST THE DETA ILS ASKED BY THE AO FOR ONLY BANK ACCOUNT WITH HDFC BANK WHERE THE CASH OF RS.30 ,59,310 WAS REPORTED IN THE AIR AS AVAILABLE WITH THE INCOME TAX DEPARTMENT . LD. AR STRONGLY CONTENDED THAT THE ASSESSEE WAS FAIR ENOUGH IN SUBM ITTING ALL DETAILS OF CASH DEPOSITS TO HIS BANK ACCOUNT AND THE ASSESSEE NOT O NLY SUBMITTED DETAILS OF CASH DEPOSIT WITH HDFC BANK BUT ALSO SUBMITTED DETAILS O F OTHER BANK ACCOUNTS OF THE ASSESSEE AND THESE FACTS WERE PROPERLY EXPLAINE D BEFORE THE AO AND AFTER EXAMINING THE SAME, THE AO RECORDED HIS SATISFACTIO N IN THIS REGARD. LD. AR FURTHER SUBMITTED THAT THERE WAS NO MALA FIDE DURIN G ASSESSMENT PROCEEDINGS AS THE AO ADOPTED THE COURSE IN THE BEST INTEREST OF T HE REVENUE AND TOOK 8% OF GROSS RECEIPTS OF TRADING BUSINESS OF CLOTH FOR EST IMATION OF BUSINESS INCOME OF THE ASSESSEE. THE AR HAS FURTHER DRAWN OUR ATTENTI ON TOWARDS CONTENTS OF THE NOTICE ISSUED TO THE ASSESSEE U/S 263 OF THE ACT AN D REPLY OF THE ASSESSEE TO THE SAID NOTICE AND SUBMITTED THAT WHILE THE AO IS ADOP TING HIGHER PERCENTAGE OF ITA NO.218/DEL/2015 AY: 2011-12 5 PROFIT FOR ESTIMATION OF BUSINESS INCOME OF THE ASS ESSEE, THEN THE ORDER CANNOT BE HELD AS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF REVENUE BECAUSE FOR INVOKING PROVISIONS OF SECTION 263 OF THE ACT, TWI N CONDITIONS ARE REQUIRED TO BE FULFILLED, VIZ. THE ASSESSMENT ORDER SHOULD BE E RRONEOUS AND SECONDLY, THE ASSESSMENT ORDER SHOULD BE PREJUDICIAL TO THE INTER EST OF REVENUE AND IN THE PRESENT CASE, THE ASSESSMENT ORDER CANNOT BE HELD A S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. LD. COUNSEL FINALLY SU BMITTED THAT AS PER DICTA LAID DOWN BY HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE C ASE OF ITO VS D.G. HOUSING PROJECTS LTD. DATED 1.3.2012 IN ITA 17 9/2011, WHEN THE AO HAD ADOPTED ONE OF THE COURSES PERMISSIBLE AND AVA ILABLE TO HIM AND THIS HAS RESULTED IN LOSS TO REVENUE; OR TWO VIEWS ARE POSSI BLE AND THE AO HAS TAKEN ONE VIEW WITH WHICH THE CIT MAY AGREE; THE SAID ORDERS CANNOT BE TREATED AS ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF REVE NUE UNLESS VIEW TAKEN BY THE AO IS UNSUSTAINABLE IN LAW. LD. AR FURTHER SUBMITT ED THAT THE CIT HAS NOT GIVEN ANY FINDING TO ESTABLISH THAT THE VIEW TAKEN BY THE AO IS UNSUSTAINABLE IN LAW AND THEREFORE ORDER IS ERRONEOUS AND PREJUDICIA L TO THE INTEREST OF REVENUE BECAUSE THE CIT MUST SHOW THAT PREJUDICE IS CAUSED TO THE INTEREST OF REVENUE. THE AR VEHEMENTLY CONTENDED THAT WHILE THE AO HAS T AKEN HIGHER PERCENTAGE OF 8% INSTEAD OF 5% AS PROVIDED U/S 44AF OF THE ACT , THEN THE VIEW TAKEN BY THE AO CANNOT BE HELD AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. ITA NO.218/DEL/2015 AY: 2011-12 6 7. REPLYING TO THE ABOVE, LD. DR SUPPORTING THE ACT ION OF THE CIT SUBMITTED THAT THE CASE WAS SELECTED FOR SCRUTINY WITH THE MA IN OBJECTIVE THAT THE AO SHOULD EXAMINE THE SOURCE OF CASH DEPOSITED IN THE SB ACCOUNT OF THE ASSESSEE AND THE AO, INSTEAD OF EXAMINING THE SOURCE OF SAID CASH DEPOSIT, PROCEEDED TO INVOKE PROVISIONS OF SECTION 44AF OF THE ACT WHICH WAS NOT APPLICABLE TO THE ASSESSEES CASE AS THE TURNOVER OF THE ASSESSEE WAS MUCH HIGHER THAN THE PRESCRIBED LIMIT OF RS. 60 LAKH, HENCE ORDER PASSED BY THE AO WAS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF R EVENUE WHICH CANNOT BE HELD AS SUSTAINABLE AND IN ACCORDANCE WITH THE PROVISIONS O F THE ACT. JUSTIFYING THE ACTION OF THE CIT, LD. DR FURTHER POINTED OUT THAT THE AO IS NOT ALLOWED TO MAKE ESTIMATION OF PROFIT U/S 44AB OF THE ACT WHERE THE TOTAL TURNOVER/GROSS RECEIPTS ARE HIGHER THAN RS. 60 LAKH DURING THE RELEVANT FIN ANCIAL YEAR, THEREFORE, THE APPROACH OF THE AO WAS NOT SUSTAINABLE AND IN ACCOR DANCE WITH THE PROVISIONS OF THE ACT AND HENCE, THE CIT RIGHTLY CLOTHED HIMSE LF FOR INVOKING PROVISIONS OF SECTION 263 OF THE ACT AND FOR PASSING IMPUGNED ORD ER DIRECTING THE AO TO MAKE FRESH ASSESSMENT AFTER CONSIDERING THE CORRECT LEGA L AND FACTUAL POSITION OF THE CASE. 8. IN THE REJOINDER, LD. AR SUBMITTED THAT EVEN IF IT IS PRESUMED THAT THE PROVISIONS OF SECTION 44AF/44AD OF THE ACT ARE NOT APPLICABLE TO THE ASSESSEES CASE, THEN ALSO IF THE AO IS ADOPTING HIGHER PERCEN TAGE OF 8% FOR MAKING ESTIMATION OF BUSINESS INCOME, THEN THE VIEW IS OBV IOUSLY FAVOURABLE TO THE ITA NO.218/DEL/2015 AY: 2011-12 7 REVENUE WHICH CANNOT BE HELD AS ERRONEOUS OR PREJUD ICIAL TO THE INTEREST OF REVENUE BECAUSE AS PER RATIO OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS CIT (2000) 2 43 ITR 83 (SC) , THE PHRASE PREJUDICIAL TO THE INTEREST OF REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY OFFICER. LD. AR CONTE NDED THAT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE AO CANN OT BE TREATED AS PREJUDICIAL TO THE INTEREST OF REVENUE AND IN THE PRESENT CASE, THE AO HAS TAKEN A VIEW BY ADOPTING 8% INSTEAD OF 5% FOR MAKING ESTIMATION OF BUSINESS INCOME OF THE ASSESSEE WHICH WAS NOT PREJUDICIAL TO THE INTEREST OF REVENUE AND HENCE NOTICE U/S 263 OF THE ACT AND IMPUGNED ORDER MAY KINDLY BE QUASHED. 9. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS OF BOTH THE SIDES, AT THE OUTSET, WE FIND IT APPROPRIATE TO CONSIDER THE RATI O LAID DOWN BY JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF ITO VS D.G. HOUS ING PROJECTS LTD. (SUPRA) WHEREIN THEIR LORDSHIPS AFTER CONSIDERING THE RATIO OF ALL PREVIOUS RELEVANT JUDGEMENTS/ORDERS HAVE HELD THAT IN THE CASE OF WRO NG OPINION OR FINDING ON MERIT, THE CIT HAS TO COME TO THE CONCLUSION AND HI MSELF DECIDE THAT THE ORDER IS ERRONEOUS, BY CONDUCTING NECESSARY INQUIRY, IF REQU IRED AND NECESSARY BEFORE THE ORDER U/S 263 OF THE ACT IS PASSED. THEIR LORDSHIP S ALSO HELD THAT IN SUCH CASES, ORDER OF THE AO WILL BE ERRONEOUS BECAUSE THE ORDER PASSED IS NOT SUSTAINABLE IN LAW AND SAID FINDING MUST BE RECORDED. THE HONBLE HIGH COURT MADE IT CLEAR THAT THE CIT CANNOT REMAND THE MATTER TO THE AO TO DECIDE WHETHER THE FINDINGS ITA NO.218/DEL/2015 AY: 2011-12 8 RECORDED ARE ERRONEOUS AND IN THE CASES WHERE THERE IS INADEQUATE INQUIRY BUT NOT LACK OF INQUIRY, AGAIN THE CIT MUST RECORD A FI NDING THAT THE ORDER/INQUIRY MADE IS ERRONEOUS. IN THIS JUDGMENT, SPEAKING FOR JURISDICTIONAL HIGH COURT, THEIR LORDSHIPS ALSO HELD THAT IF AN INQUIRY AND VE RIFICATION IS CONDUCTED BY THE CIT AND HE IS ABLE TO ESTABLISH AND SHOW THE ERROR OR MISTAKE MADE BY THE AO, MAKING THE ORDER UNSUSTAINABLE IN LAW, THE RELEVANT OPERATIVE PART OF THIS JUDGEMENT IS BEING REPRODUCED FOR THE SAKE OF CLARI TY IN OUR FINDINGS:- 9. SECTION 263 OF THE ACT, READS AS UNDER:- '263. REVISION OF ORDERS PREJUDICIAL TO REVENUE.--( 1) THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOU S IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, H E MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTE R MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSA RY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSES SMENT, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASS ESSMENT. EXPLANATION.--FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT, FOR THE PURPOSES OF THIS SUB-SECTION,-- (A) AN ORDER PASSED ON OR BEFORE OR AFTER THE 1ST D AY OF JUNE, 1988 BY THE ASSESSING OFFICER SHALL INCLUDE-- (I) AN ORDER OF ASSESSMENT MADE BY THE ASSISTANT CO MMISSIONER OR DEPUTY COMMISSIONER OR THE INCOME TAX OFFICER ON THE BASIS OF THE DIRECTIONS ISSUED BY THE JOINT COMMISSIONER UNDER SECTION 144-A ; (II) AN ORDER MADE BY THE JOINT COMMISSIONER IN EXE RCISE OF THE POWERS OR IN THE PERFORMANCE OF THE FUNCTIONS OF AN ASSESSING OFFICER CONFERRED ON, OR ASSIGNED TO, HIM UNDER THE ORDERS OR DIRECTIONS ISSUED BY THE BOARD OR BY THE CHIEF COMM ISSIONER OR DIRECTOR GENERAL OR COMMISSIONER AUTHORISED BY THE BOARD IN THIS BEHALF UNDER SECTION 120 ; ITA NO.218/DEL/2015 AY: 2011-12 9 (B) 'RECORD' SHALL INCLUDE AND SHALL BE DEEMED ALWA YS TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PROCEEDING UND ER THIS ACT AVAILABLE AT THE TIME OF EXAMINATION BY THE COMMISS IONER; (C) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT-MATTER O F ANY APPEAL FILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 19 88, THE POWERS OF THE COMMISSIONER UNDER THIS SUB- SECTION SHALL E XTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED TO SUCH MAT TERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL. (2) NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) AF TER THE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE REVISED WAS PASSED. (3) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTI ON (2), AN ORDER IN REVISION UNDER THIS SECTION MAY BE PASSED AT ANY TIME IN THE CASE OF AN ORDER WHICH HAS BEEN PASSED IN CONSE QUENCE OF, OR TO GIVE EFFECT TO, ANY FINDING OR DIRECTION CONTAIN ED IN AN ORDER OF THE APPELLATE TRIBUNAL, NATIONAL TAX TRIBUNAL, THE HIGH COURT OR THE SUPREME COURT. EXPLANATION.--IN COMPUTING THE P ERIOD OF LIMITATION FOR THE PURPOSES OF SUB-SECTION (2), THE TIME TAKEN IN GIVING AN OPPORTUNITY TO THE ASSESSEE TO BE REHEARD UNDER THE PROVISO TO SECTION 129 AND ANY PERIOD DURING WHICH ANY PROCEEDING UNDER THIS SECTION IS STAYED BY AN ORDER OR INJUNCTION OF ANY COURT SHALL BE EXCLUDED.' 10. REVENUE DOES NOT HAVE ANY RIGHT TO APPEAL TO TH E FIRST APPELLATE AUTHORITY AGAINST AN ORDER PASSED BY THE ASSESSING OFFICER. SECTION 263 HAS BEEN ENACTED TO EMPOWER THE CIT TO EXERCISE POWER OF REVISION AND REVISE ANY ORDER PAS SED BY THE ASSESSING OFFICER, IF TWO CUMULATIVE CONDITIONS ARE SATISFIED. FIRSTLY, THE ORDER SOUGHT TO BE REVISED SHOULD BE E RRONEOUS AND SECONDLY, IT SHOULD BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE EXPRESSION PREJUDICIAL TO THE INTEREST OF THE REVENUE IS OF WIDE IMPORT AND IS NOT CONFINED TO MERELY LOSS OF T AX. THE TERM ERRONEOUS MEANS A WRONG/INCORRECT DECISION DEVIATING FROM LAW. THIS EXPRESSION POSTULATES AN ERROR WHICH MAKE S AN ORDER UNSUSTAINABLE IN LAW. 11. THE ASSESSING OFFICER IS BOTH AN INVESTIGATOR A ND AN ADJUDICATOR. IF THE ASSESSING OFFICER AS AN ADJUDIC ATOR DECIDES A QUESTION OR ASPECT AND MAKES A WRONG ASSESSMENT WHI CH IS UNSUSTAINABLE IN LAW, IT CAN BE CORRECTED BY THE CO MMISSIONER IN EXERCISE OF REVISIONARY POWER. AS AN INVESTIGATOR, IT IS INCUMBENT ITA NO.218/DEL/2015 AY: 2011-12 10 UPON THE ASSESSING OFFICER TO INVESTIGATE THE FACTS REQUIRED TO BE EXAMINED AND VERIFIED TO COMPUTE THE TAXABLE INCOME . IF THE ASSESSING OFFICER FAILS TO CONDUCT THE SAID INVESTI GATION, HE COMMITS AN ERROR AND THE WORD ERRONEOUS INCLUDES FAILURE TO MAKE THE ENQUIRY. IN SUCH CASES, THE ORDER BECOMES ERRONEOUS BECAUSE ENQUIRY OR VERIFICATION HAS NOT BEEN MADE A ND NOT BECAUSE A WRONG ORDER HAS BEEN PASSED ON MERITS. 12. DELHI HIGH COURT IN GEE VEE ENTERPRISES VS. ADDITIONAL COMMISSION OF INCOME-TAX, DELHI-I & ORS .,(1975) 99 ITR 375, HAS OBSERVED AS UNDER:- 'THE REASON IS OBVIOUS. THE POSITION AND FUNCTION O F THE INCOME- TAX OFFICER IS VERY DIFFERENT FROM THAT OF A CIVIL COURT. THE STATEMENTS MADE IN A PLEADING PROVED BY THE MINIMUM AMOUNT OF EVIDENCE MAY BE ACCEPTED BY A CIVIL COURT IN THE AB SENCE OF ANY REBUTTAL. THE CIVIL COURT IS NEUTRAL. IT SIMPLY GIV ES DECISION ON THE BASIS OF THE PLEADING AND EVIDENCE WHICH COMES BEFO RE IT. THE INCOME-TAX OFFICER IS NOT ONLY AN ADJUDICATOR BUT A LSO AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER INQUIRY. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN THE RETURN WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOK E AN INQUIRY. THE MEANING TO BE GIVEN TO THE WORD 'ERRONEOUS' IN SECTION 263 EMERGES OUT OF THIS CONTEXT. IT IS BECAUSE IT IS IN CUMBENT ON THE INCOME-TAX OFFICER TO FURTHER INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MAKE SUCH AN INQUIR Y PRUDENT THAT THE WORD 'ERRONEOUS' IN SECTION 263 INCLUDES THE FAILURE TO MAKE SUCH AN INQUIRY. THE ORDER BECOMES ERRONEOUS B ECAUSE SUCH AN INQUIRY HAS NOT BEEN MADE AND NOT BECAUSE T HERE IS ANYTHING WRONG WITH THE ORDER IF ALL THE FACTS STAT ED THEREIN ARE ASSUMED TO BE CORRECT.' 13. IN THE SAID JUDGMENT, DELHI HIGH COURT HAD REFE RRED TO EARLIER DECISIONS OF THE SUPREME COURT IN RAMPYARI DEVI SAROGI VS. CIT (1968) 67 ITR 84 ( SC) AND TARA DEVI AGGARWAL VS. CIT (1973) 88 ITR 323 (SC), WHEREIN IT HAS BEEN HELD TH AT WHERE ASSESSING OFFICER HAS ACCEPTED A PARTICULAR CONTENT ION/ISSUE WITHOUT ANY ENQUIRY OR EVIDENCE WHATSOEVER, THE ORD ER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. AFTER REFERENCE TO THESE TWO DECISIONS, THE DELHI HIGH CO URT OBSERVED:- ITA NO.218/DEL/2015 AY: 2011-12 11 'THESE TWO DECISIONS SHOW THAT IT IS NOT NECESSARY FOR THE COMMISSIONER TO MAKE FURTHER INQUIRIES BEFORE CANCE LLING THE ASSESSMENT ORDER OF THE INCOME-TAX OFFICER. THE COM MISSIONER CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THA T IN THE CIRCUMSTANCES OF THE CASE THE INCOME-TAX OFFICER SH OULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE STATEME NTS MADE BY THE ASSESSEE IN HIS RETURN.' 14. THE AFORESAID OBSERVATIONS HAVE TO BE UNDERSTOO D IN THE FACTUAL BACKGROUND AND MATRIX INVOLVED IN THE SAID TWO CASES BEFORE THE SUPREME COURT. IN THE SAID CASES, THE AS SESSING OFFICER HAD NOT CONDUCTED ANY ENQUIRY OR EXAMINED E VIDENCE WHATSOEVER. THERE WAS TOTAL ABSENCE OF ENQUIRY OR V ERIFICATION. THESE CASES HAVE TO BE DISTINGUISHED FROM OTHER CAS ES (I) WHERE THERE IS ENQUIRY BUT THE FINDINGS ARE INCORRECT/ERR ONEOUS; AND (II) WHERE THERE IS FAILURE TO MAKE PROPER OR FULL VERIF ICATION OR ENQUIRY. 15. IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SUNBEAM AUTO LTD . (2011) 332 ITR 167 (DEL), DELHI HIGH COURT WAS CONSIDERING THE ASPECT, WHEN THERE IS NO PROPER OR FULL VERIFICATION, AND IT WAS HELD AS UNDER:- 'WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE CO UNSEL ON THE OTHER SIDE AND HAVE GONE THROUGH THE RECORDS. THE F IRST ISSUE THAT ARISES FOR OUR CONSIDERATION IS ABOUT THE EXERCISE OF POWER BY THE COMMISSIONER OF INCOME-TAX UNDER SECTION 263 OF THE INCOME-TAX ACT. AS NOTED ABOVE, THE SUBMISSION OF LEARNED COUN SEL FOR THE REVENUE WAS THAT WHILE PASSING THE ASSESSMENT ORDER , THE ASSESSING OFFICER DID NOT CONSIDER THIS ASPECT SPEC IFICALLY WHETHER THE EXPENDITURE IN QUESTION WAS REVENUE OR CAPITAL EXPENDITURE. THIS ARGUMENT PREDICATES ON THE ASSESS MENT ORDER, WHICH APPARENTLY DOES NOT GIVE ANY REASONS WHILE AL LOWING THE ENTIRE EXPENDITURE AS REVENUE EXPENDITURE. HOWEVER, THAT BY ITSELF WOULD NOT BE INDICATIVE OF THE FACT THAT THE ASSESSING OFFICER HAD NOT APPLIED HIS MIND ON THE ISSUE. THERE ARE JU DGMENTS GALORE LAYING DOWN THE PRINCIPLE THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IS NOT REQUIRED TO GIVE DETAILED R EASON IN RESPECT OF EACH AND EVERY ITEM OF DEDUCTION, ETC. T HEREFORE, ONE HAS TO SEE FROM THE RECORD AS TO WHETHER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE EXPENDITURE IN QUESTION AS REVENUE EXPENDITURE. LEARNED COUNSEL FOR THE ASSESSEE IS RI GHT IN HIS SUBMISSION THAT ONE HAS TO KEEP IN MIND THE DISTINC TION BETWEEN ' ITA NO.218/DEL/2015 AY: 2011-12 12 LACK OF INQUIRY' AND ' INADEQUATE INQUIRY' . IF THE RE WAS ANY INQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF G IVE OCCASION TO THE COMMISSIONER TO PASS ORDERS UNDER SECTION 263 OF THE ACT, MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MA TTER. IT IS ONLY IN CASES OF 'LACK OF INQUIRY' THAT SUCH A COURSE OF ACTION WOULD BE OPEN. IN GABRIEL INDIA LTD. [1993] 203 ITR 108 ( BOM), LAW ON THIS ASPECT WAS DISCUSSED IN THE FOLLOWING MANNER ( PAGE 113): ' . . . FROM A RENDING OF SUB-SECTION (1) OF SECTION 263 , IT IS CLEAR THAT THE POWER OF SUO MOTU REVISION CAN BE EXERCISE D BY THE COMMISSIONER ONLY IF, ON EXAMINATION OF THE RECORDS OF ANY PROCEEDINGS UNDER THIS ACT, HE CONSIDERS THAT ANY O RDER PASSED THEREIN BY THE INCOME-TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE . IT IS NOT AN ARBITRARY OR UNCHARTERED POWER, IT CAN BE EXERCISED ONLY ON F ULFILMENT OF THE REQUIREMENTS LAID DOWN IN SUB-SECTION (1). THE CONSIDERATION OF THE COMMISSIONER AS TO WHETHER AN ORDER IS ERRON EOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE RE VENUE, MUST BE BASED ON MATERIALS ON THE RECORD OF THE PROCEEDINGS CALLED FOR BY HIM. IF THERE ARE NO MATERIALS ON RECORD ON THE BAS IS OF WHICH IT CAN BE SAID THAT THE COMMISSIONER ACTING IN A REASO NABLE MANNER COULD HAVE COME TO SUCH A CONCLUSION, THE VE RY INITIATION OF PROCEEDINGS BY HIM WILL BE ILLEGAL AND WITHOUT J URISDICTION. THE COMMISSIONER CANNOT INITIATE PROCEEDINGS WITH A VIEW TO STARTING FISHING AND ROVING ENQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED. SUCH ACTION WILL BE AGAINST THE WELL- ACCEPTED POLICY OF LAW THAT THERE MUST BE A POINT O F FINALITY IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MU ST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI-JUDICI AL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. ( SEE PARASHURAM POTTERY WORKS CO. LTD. V. ITO [1977] 106 ITR 1 (SC) AT PAGE 10) . . . FROM THE AFORESAID DEFINITIONS IT IS CLEAR TH AT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDAN CE WITH LAW. IF AN INCOME- TAX OFFICER ACTING IN ACCORDANCE WITH LA W MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS E RRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SEC TION DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME-TAX OFFICER, WH O PASSED THE ORDER UNLESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALISED WHERE THE INCOME-TAX OFFICER WHILE MAKIN G AN ASSESSMENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS ITA NO.218/DEL/2015 AY: 2011-12 13 MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY M AKING SOME ESTIMATE HIMSELF. THE COMMISSIONER, ON PERUSAL OF T HE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE COM MISSIONER HE WOULD HAVE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN THE ONE DETERMINED BY THE INCOME-TAX OFFICER. THAT WOULD NO T VEST THE COMMISSIONER WITH POWER TO RE-EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE. IT IS BECAUSE THE INCOME-TAX OFFICER HAS EXERCISED THE QUASI-JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONC LUSION AND SUCH A CONCLUSION CANNOT BE FORMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WI TH THE CONCLUSION . . . THERE MUST BE SOME PRIMA FACIE MAT ERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED . . . WE MAY NOW EXAMINE THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE POWERS OF THE COMM ISSIONER SET OUT ABOVE. THE INCOME-TAX OFFICER IN THIS CASE HAD MADE ENQUIRIES IN REGARD TO THE NATURE OF THE EXPENDITUR E INCURRED BY THE ASSESSEE. THE ASSESSEE HAD GIVEN DETAILED EXPLA NATION IN THAT REGARD BY A LETTER IN WRITING. ALL THESE ARE PART O F THE RECORD OF THE CASE. EVIDENTLY, THE CLAIM WAS ALLOWED BY THE I NCOME-TAX OFFICER ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. SUCH DECISION OF THE INCOME-TAX OFFICER CANNOT BE H ELD TO BE ERRONEOUS SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD.'' 16. THUS, IN CASES OF WRONG OPINION OR FINDING ON M ERITS, THE CIT HAS TO COME TO THE CONCLUSION AND HIMSELF DECIDE TH AT THE ORDER IS ERRONEOUS, BY CONDUCTING NECESSARY ENQUIRY, IF REQU IRED AND NECESSARY, BEFORE THE ORDER UNDER SECTION 263 IS PASSED. IN SUCH CASES, THE ORDER OF THE ASSESSING OFFICER WILL BE E RRONEOUS BECAUSE THE ORDER PASSED IS NOT SUSTAINABLE IN LAW AND THE SAID FINDING MUST BE RECORDED. CIT CANNOT REMAND THE MAT TER TO THE ASSESSING OFFICER TO DECIDE WHETHER THE FINDINGS RE CORDED ARE ERRONEOUS. IN CASES WHERE THERE IS INADEQUATE ENQUI RY BUT NOT LACK OF ENQUIRY, AGAIN THE CIT MUST GIVE AND RECORD A FINDING THAT THE ORDER/INQUIRY MADE IS ERRONEOUS. THIS CAN HAPPEN IF AN ENQUIRY AND VERIFICATION IS CONDUCTED BY THE CIT AN D HE IS ABLE TO ESTABLISH AND SHOW THE ERROR OR MISTAKE MADE BY THE ASSESSING OFFICER, MAKING THE ORDER UNSUSTAINABLE IN LAW. IN SOME CASES ITA NO.218/DEL/2015 AY: 2011-12 14 POSSIBLY THOUGH RARELY, THE CIT CAN ALSO SHOW AND E STABLISH THAT THE FACTS ON RECORD OR INFERENCES DRAWN FROM FACTS ON RECORD PER SE JUSTIFIED AND MANDATED FURTHER ENQUIRY OR INVEST IGATION BUT THE ASSESSING OFFICER HAD ERRONEOUSLY NOT UNDERTAKEN TH E SAME. HOWEVER, THE SAID FINDING MUST BE CLEAR, UNAMBIGUOU S AND NOT DEBATABLE. THE MATTER CANNOT BE REMITTED FOR A FRES H DECISION TO THE ASSESSING OFFICER TO CONDUCT FURTHER ENQUIRIES WITHOUT A FINDING THAT THE ORDER IS ERRONEOUS. FINDING THAT T HE ORDER IS ERRONEOUS IS A CONDITION OR REQUIREMENT WHICH MUST BE SATISFIED FOR EXERCISE OF JURISDICTION UNDER SECTION 263 OF THE ACT. IN SUCH MATTERS, TO REMAND THE MATTER/ISSUE TO THE ASSESSIN G OFFICER WOULD IMPLY AND MEAN THE CIT HAS NOT EXAMINED AND D ECIDED WHETHER OR NOT THE ORDER IS ERRONEOUS BUT HAS DIREC TED 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 ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, EXERCISE OF JURISDICTIO N UNDER THE SAID SECTION IS NOT SUSTAINABLE. IN MOST CASES OF ALLEGE D 'INADEQUATE INVESTIGATION', IT WILL BE DIFFICULT TO HOLD THAT T HE ORDER OF THE ASSESSING OFFICER, WHO HAD CONDUCTED ENQUIRIES AND HAD ACTED AS AN INVESTIGATOR, IS ERRONEOUS, WITHOUT CIT CONDUCTI NG 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 ORDER IS ERRONEOUS. AN ORD ER OF REMIT CANNOT BE PASSED BY THE CIT TO ASK THE ASSESSING OF FICER 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 BECO ME ERRONEOUS BECAUSE 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 JURISDICTIONAL PRE CONDITION STIPULATED IS THAT THE CIT MUST COME TO THE CONCLUS ION THAT THE ORDER IS ERRONEOUS AND IS UNSUSTAINABLE IN LAW. WE MAY NOTICE THAT THE MATERIAL WHICH THE CIT CAN RELY INCLUDES N OT ONLY THE RECORD AS IT STANDS AT THE TIME WHEN THE ORDER IN Q UESTION WAS PASSED 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 STATE THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS. ITA NO.218/DEL/2015 AY: 2011-12 15 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 PREJUDIC IAL TO THE INTEREST OF REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EV ERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSI NG OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF REVENUE. THUS, WHEN THE ASSESSING OFFICER HAD ADOPTED ONE OF THE C OURSES PERMISSIBLE AND AVAILABLE TO HIM, AND THIS HAS RESU LTED IN LOSS TO REVENUE; OR TWO VIEWS WERE POSSIBLE AND THE ASSESSI NG OFFICER HAS TAKEN 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 AS SESSING OFFICER IS UNSUSTAINABLE IN LAW. IN SUCH MATTERS, THE CIT M UST GIVE A FINDING THAT THE VIEW TAKEN BY THE ASSESSING OFFICE R IS UNSUSTAINABLE IN LAW AND, THEREFORE, THE ORDER IS E RRONEOUS. HE MUST ALSO SHOW THAT PREJUDICE IS CAUSED TO THE INTE REST OF THE REVENUE. 10. WHEN WE ANALYSE THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, FROM THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT, WE NOTE THAT THE MAIN THRUST OF THE DEPARTMENT WAS THAT THE AO SHOULD EXA MINE AND VERIFY THE AMOUNTS OF CASH DEPOSITED TO THE BANK ACCOUNT OF THE ASSESS EE AND DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE NOT ONLY SUBMITTED DETAIL S OF ALLEGED AMOUNT OF RS.30,59,310 BUT SUBMITTED DETAILS OF RS.42,64,130 DEPOSITED IN HDFC BANK AND IN ADDITION TO THAT, THE ASSESSEE ALSO SUBMITTE D DETAILS OF TOTAL CASH DEPOSIT OF RS.70,77,034 OF ALL SEVEN BANK ACCOUNTS INCLUDING B ANK ACCOUNT IN HDFC BANK WHICH WAS POINTED OUT BY THE AIR INFORMATION. WE C ANNOT IGNORE THAT THE TOTAL FINANCIAL/TRADING TRANSACTION OF THE ASSESSEE WERE ADOPTED BY THE AO FOR MAKING ESTIMATION OF BUSINESS PROFIT AT 8% OF GROSS RECEIP TS/TURNOVER PUTTING ALL THE ACCOUNTS TOGETHER IRRESPECTIVE OF ANY REAL PROFIT E ARNED BY THE ASSESSEE. WHEN ITA NO.218/DEL/2015 AY: 2011-12 16 WE ANALYSE THE APPLICATION OF SECTION 44AF OF THE A CT BY THE AO IN THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT, THEN FROM THE SAID PROVISION, IT IS CLEAR THAT THIS IS A SPECIAL PROVISION OF COMPUTING PROFITS OF RETAIL BUSINESS AND SUB-SECTION (I) OF THIS PROVISION SHALL NOT APPLY I N RESPECT OF ASSESSEE WHOSE TOTAL TURNOVER EXCEEDS AN AMOUNT OF RS.40 LAKH DURING THE RELEVANT PREVIOUS YEAR. IN THE PRESENT CASE, THE ASSESSEE HAS NOT DISPUTED THI S FACT THAT HIS TOTAL TURNOVER WAS MORE THAN RS.40 LAKH DURING THE RELEVANT FINANC IAL PERIOD AND AT THE SAME TIME WHEN WE ANALYSE THE TOTALITY OF THE CONTENTS O F THE IMPUGNED ASSESSMENT ORDER, WE CAN SAFELY INFER THAT THE INTENTION OF TH E AO WAS TO ESTIMATE BUSINESS INCOME OF THE ASSESSEE AND HE ESTIMATED THE SAME BY TAKING 8% OF TOTAL GROSS RECEIPTS OF RS.76,40,380 VIDE ORDER SHEET ENTRY DA TED 20.12.13 AND THE AO MADE AN ADDITION OF RS.6,11,230 AS BUSINESS INCOME FROM TRADING OF CLOTH ON ACCOUNT OF PROFIT EARNED FROM THIS BUSINESS. HOWEVER, IT IS CLEAR THAT WHEN THE GROSS RECEIPTS OF THE ASSESSEE WERE MORE THAN RS.40 LAKH, THEN THE PROVISIONS OF SECTION 44AF(1) OF THE ACT ARE NOT APPLICABLE BUT T HE AO MADE ESTIMATE OF PROFIT EARNED BY THE ASSESSEE DURING THE RELEVANT FINANCIA L PERIOD FOR TRADING OF CLOTH BY ESTIMATING 8% OF TOTAL GROSS RECEIPTS, THEN THE RECOURSE ADOPTED BY THE ASSESSEE IS MORE THAN BENEFICIAL TO THE REVENUE AND WHICH CANNOT BE HELD AS PREJUDICIAL TO THE INTEREST OF REVENUE. 11. FROM THE OPERATIVE PART OF THE IMPUGNED ORDER P ASSED U/S 263 OF THE ACT, WE CLEARLY NOTE THAT THE CIT HAS DIRECTED THE AO TO MAKE A FRESH ASSESSMENT ITA NO.218/DEL/2015 AY: 2011-12 17 AFTER CONSIDERING THE CORRECT LEGAL AND FACTUAL POS ITION AND HE HAS NOT DRAWN ANY DEFINITE CONCLUSION THAT THE VIEW TAKEN BY THE AO I S NOT SUSTAINABLE AND IN ACCORDANCE WITH LAW AND THEREFORE, THE SAME IS ERRO NEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. AT THIS STAGE, AT THE COST OF REPETITION, WE FIND IT APPROPRIATE TO REPRODUCE RELEVANT OPERATIVE PART OF THE IMPUGNE D ORDER WHICH READS AS UNDER:- 4. IN THE INSTANT CASE, THE ASSESSEE DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDE R CONSIDERATION DEPOSITED CASH AMOUNTING TO RS.76,40, 3801- IN SIX DIFFERENT BANK, ACCOUNTS AND DEPOSIT BY CHEQUE WAS ONLY TO THE EXTENT OF RS.5,63,346/- AND AS PER THE SUBMISSION O F THE ASSESSEE'S AR, THE ASSESSEE HAD LOST HIS BOOKS OF A CCOUNT AND OTHER RECORDS AND LODGED FIR WITH P.S. NAIAINA, NEW DELHI, VIDE HIS SUBMISSION DATED 20.12.2013, BEFORE THE ASSESSI NG OFFICER. HOWEVER, IN THE FIR, THE ASSESSEE HAS ONLY MENTIONE D LOSS OF CASH BOOK AND LEDGERS WITHOUT SPECIFYING ANY PARTIC ULAR FINANCIAL YEAR, THOUGH HE HAS CLAIMED LOSS OF MISCE LLANEOUS DOCUMENTS OF VOUCHERS & OTHER RECORDS FOR THE LAST FIVE YEARS. THE ASSESSING OFFICER, DURING THE COURSE OF REGULAR ASSESSMENT UNDER REFERENCE, CONDUCTED NO ENQUIRY ABOUT THE GEN UINENESS OF THE BUSINESS OF THE ASSESSEE AS THE ASSESSEE COULD NOT PRODUCE ANY SINGLE DOCUMENT PERTAINING TO HIS SO CALLED BUS INESS ACTIVITIES. IT IS NOT A NORMAL FEATURE THAT A BUSIN ESS HAVING A TURNOVER OF RS.76,40,380/- WAS BEING RUN FROM THE R ESIDENCE OF THE ASSESSEE AND IT WAS CLOSED SOON AFTER THE DETEC TION OF CASH DEPOSITS IN THE UNDISCLOSED BANK ACCOUNTS OF THE AS SESSEE. FURTHER, THE ASSESSEE DID NOT SHOW ANY INCOME FROM BUSINESS OR PROFESSION IN HIS RETURN OF INCOME. HENCE, THERE W AS ABSOLUTELY NO BASIS TO ASSESS THE INCOME AT THE RATE OF 8% OF THE GROSS TURNOVER U/S 44AD /AF OF THE ACT, MORE SO WHEN THE PROVISIONS OF SECTION 44AD OF THE ACT IS NOT APPLICABLE IN THE CA SE OF ASSESSEE IN TERMS OF NATURE OF BUSINESS & TURNOVER. ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNT UNDER THE PRETEXT THAT THESE WERE LOST BUT NO FURTHER ENQUIRY WAS CONDUCTED BY THE AS SESSING OFFICER FROM THE POLICE AUTHORITIES REGARDING THE O UTCOME OF THE FIR LODGED. THE ASSESSING OFFICER DID NOT EVEN SEEK A ITA NO.218/DEL/2015 AY: 2011-12 18 CLARIFICATION FROM THE ASSESSEE AS TO WHY AUDIT U/S 44AB OF THE ACT WAS NOT CONDUCTED AND ALSO IF THE ASSESSEE HAS TAKEN ANY BACKUP OF THE SO CALLED LOSS OF BOOKS OF ACCOUNTS A ND OTHER DOCUMENTS. THE RETURN OF INCOME FILED BY THE ASSESS EE FOR THE RELEVANT ASSESSMENT YEAR REFLECTS RECEIPT OF A SUM OF RS.1,80,000/- FROM M/S SHINE BATH, HIS EMPLOYER, T OWARDS SALARY. ALL THESE FACTS CLEARLY INDICATE THAT THE M ONEY DEPOSITED IN THE VARIOUS BANK ACCOUNTS OF THE ASSESSEE WAS NO T IN THE NATURE OF SALE PROCEEDS/BUSINESS RECEIPTS, SINCE TH E ASSESSEE IS NOT EVEN AWARE OF THE NATURE AND TYPE OF BUSINESS C ARRIED ON BY HIM AND COULD NOT PRODUCE SALES TAX/V AT DETAILS IN THIS REGARD. IN SUCH A SITUATION THE ENTIRE CASH DEPOSITS IN DIF FERENT BANK ACCOUNTS OF THE ASSESSEE SHOULD BE TREATED AS UNEXP LAINED MONEY OF THE ASSESSEE U/S 69A OF THE I.T. ACT. 5. IN CIT VS RAJA INDUSTRIES (2012) 340 ITR 344 (P& H), IT HAS BEEN HELD THAT WHERE ENQUIRY IS WARRANTED BUT N OT MADE, IT WOULD CERTAINLY CONSTITUTE PREJUDICE TO REVENUE, SO THAT JURISDICTION FOR THE COMMISSIONER IS AVAILABLE FOR REMANDING THE MATTER FOR SUCH ENQUIRY. 6. IN JYOTI ELECTRIC MOTORS LTD. VS CIT (1999) 237 ITR 280 (GUJ), IT WAS HELD THAT EVEN WHERE FACTS ARE DISCLO SED BY THE ASSESSEE, THE ORDER OF ASSESSMENT CAN BE THE ORDER OF ASSESSMENT CAN BE REVISED IF THE CORRECT PROVISIONS OF LAW ARE NOT EXAMINED. IN THE INSTANT CASE EVEN THE FACTS ARE NOT DISCLOSE D BY THE ASSESSEE IN HIS RETURN OF INCOME AS REGARDS MAINTENANCE OF B ANK ACCOUNTS AND DEPOSIT OF CASH IN THE SAID BANK ACCOUNTS. 7. IT HAS BEEN HELD IN CIT V. ACTIVE TRADERS (P) LT D (1995) 214 ITR 583 (CAL) THAT THE CIT CAN ALSO REGARD AN A SSESSMENT ORDER TO BE ERRONEOUS WHEN ON THE CIRCUMSTANCES OF THE CASE, HE FINDS THAT IT HAS BEEN MADE IN UNDUE HASTE AND WITH OUT PROPER ENQUIRY. IT IS INCUMBENT ON THE ASSESSING OFFICER T O INVESTIGATE THE FACTS STATED IN A RETURN PARTICULARLY WHEN THE CIRC UMSTANCES SUGGEST THAT THE ENQUIRY WOULD HAVE BEEN NECESSARY OR PRUDENT. HENCE, THE WORD ERRONEOUS WOULD ALSO INCLUDE A FAIL URE TO MAKE SUCH AN ENQUIRY. 8. CONSIDERING THE FACTS OF THE CASE AND THE TOTALI TY OF CIRCUMSTANCES, THE ASSESSMENT MADE BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT, DATED 20.12.2013 IS TREATED AS E RRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS NOT ONLY THE ASSESSMENT ITA NO.218/DEL/2015 AY: 2011-12 19 ORDER HAS BEEN PASSED IN UTMOST HASTE AND IN A CRYP TIC MANNER BUT THE AO HAS ALSO ALLOWED THE BENEFIT OF SECTION 44AD /AF OF THE ACT, ERRONEOUSLY, WITHOUT CONSIDERING WHETHER CONDITIONS THEREFOR ARE FULFILLED, AND ALSO BY NOT APPLYING 'THE PROVISIONS OF SECTION 69A, RESULTING IN NON APPLICATION OF CORRECT PROVISIONS OF LAW, THOUGH THE SAID ISSUES WERE THE MOST CRUCIAL ISSUE FOR THE CONCERNED SCRUTINY ASSESSMENT PROCEEDINGS. THEREFORE, THE ORD ER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT IS HERE BY CANCELLED AND THE ASSESSING OFFICER IS HEREBY DIRECTED TO MAKE A FRESH ASSESSMENT AFTER CONSIDERING THE CORRECT LEGAL AND FACTUAL POSITION IN THIS REGARD, AS SUGGESTED IN THIS ORDER. 12. IN VIEW OF ABOVE AND IN THE LIGHT OF RATIO OF T HE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF I TO VS DG HOUSING PROJECTS LTD. (SUPRA), WE CLEARLY NOTE THAT THE CIT OBSERVED THAT THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNTS UNDER THE PRETEXT THAT TH ESE WERE LOST BUT NO FURTHER INQUIRY WAS CONDUCTED BY THE AO REGARDING THE OUTCO ME OF THE FIR LODGED. THE CIT HAS MERELY ALLEGED THE WAY OF CONDUCTION OF ASS ESSMENT PROCEEDINGS IN PARA 4 AND IN PARA 5, HE HAS NOTED THAT WHERE INQUIRY I S WARRANTED BUT NOT MADE, IT WOULD CERTAINLY CONSTITUTE PREJUDICE TO REVENUE, S O THAT JURISDICTION FOR THE COMMISSIONER IS AVAILABLE FOR REMANDING THE MATTER FOR SUCH ENQUIRY. IN PARA 6 AND 7, THE CIT HAS FURTHER NOTED THE RATIO OF THE J UDGMENT OF GUJARAT HIGH COURT IN THE CASE OF JYOTI ELECTRIC MOTORS LTD. VS CIT (1999) 237 ITR 280 (GUJ), AND RATIO OF THE JUDGMENT OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS ACTIVE TRADERS (P) LTD. (1995) 3214 ITR 5 83 (CAL) AND NOTED THAT IN THE INSTANT CASE, FACTS ARE NOT DISCLOSED BY TH E ASSESSEE IN HIS RETURN OF INCOME AS REGARDS MAINTENANCE OF BANK ACCOUNTS AND DEPOSIT OF CASH IN THE SAID BANK ACCOUNTS. THE CIT ALSO HELD THAT THE AO PASSE D ORDER IN UTMOST HASTE ITA NO.218/DEL/2015 AY: 2011-12 20 AND WITHOUT PROPER INQUIRY AND IT WAS INCUMBENT UPO N THE AO TO INVESTIGATE THE FACT STATED IN THE RETURN PARTICULARLY WHEN THE CIR CUMSTANCES SUGGEST THAT INQUIRY WOULD HAVE BEEN NECESSARY AND PRUDENT. IN PARA 8, THE CIT WITHOUT DRAWING ANY CONCLUSION ABOUT THE OUTCOME OF THE IMPUGNED ASSESS MENT ORDER HAS HELD THAT THE ASSESSMENT MADE BY THE AO U/S 143(3) OF THE ACT DATED 20.12.13 IS TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REV ENUE AS NOT ONLY ASSESSMENT ORDER HAS BEEN PASSED IN A CRYPTIC MANNER BUT THE A O HAS ALSO THE BENEFIT OF SECTION 44AD/44AF OF THE ACT ERRONEOUSLY WITHOUT CO NSIDERING WHETHER THE CONDITIONS ARE FULFILLED OR NOT. THE CIT ALSO HELD THAT THE ASSESSMENT ORDER HAS BEEN PASSED BY NOT APPLYING THE PROVISIONS OF SECTI ON 69 OF THE ACT RESULTING IN NON-APPLICATION OF CORRECT PROVISIONS OF LAW THOUGH THE SAID ISSUES WERE MOST CRUCIAL ISSUES FOR THE CONCERNED SCRUTINY ASSESSMEN T PROCEEDINGS. FINALLY, THE CIT, WITHOUT DRAWING ANY CONCLUSION ABOUT THE CORRE CTNESS AND SUSTAINABILITY OF THE IMPUGNED ASSESSMENT ORDER, DIRECTED THE AO TO C ANCEL THE IMPUGNED ASSESSMENT ORDER AND DIRECTED THE AO TO MAKE A FRES H ASSESSMENT AFTER CONSIDERING CORRECT LEGAL AND FACTUAL POSITION. AS WE HAVE ALREADY ANALYSED THE VIEW TAKEN BY THE AO THAT THE AO FIRSTLY INQUIRED A BOUT THE CASH DEPOSITED TO THE BANK ACCOUNT OF THE ASSESSEE AND IN HIS REPLY, THE ASSESSEE SUBMITTED DETAILS OF CASH DEPOSITS TO ALL THE SEVEN BANK ACCOUNTS OF THE ASSESSEE SHOWING TOTAL CASH DEPOSITS OF RS.70,77,034 DURING RELEVANT FINAN CIAL PERIOD AS AGAINST THE DETAILS ASKED BY THE AO FOR ONLY BANK ACCOUNT WITH HDFC BANK ABOUT THE CASH DEPOSIT OF RS. 30,59,310 WHICH WAS REPORTED IN AIR INFORMATION SENT TO THE AO ITA NO.218/DEL/2015 AY: 2011-12 21 FOR PICKING UP THE CASE FOR SCRUTINY. AS WE HAVE ALREADY OBSERVED THAT THE AO ESTIMATED THE BUSINESS INCOME OF THE ASSESSEE @8% O F RS.76,40,380 BEING GROSS RECEIPTS REFERRING TO PROVISIONS OF SECTION 44AF OF THE ACT, AT THE SAME TIME, WE MAY POINT OUT THAT WHEN THE ASSESSEE COULD NOT FILE HIS BOOKS OF ACCOUNTS AND OTHER RECORD AND HE LODGED AN FIR WITH POLICE STATI ON, NARAINA, NEW DELHI, THEN THE AO HAD NO ALTERNATIVE BUT TO ESTIMATE THE PROFI T ON THE BASIS OF INFORMATION AVAILABLE BEFORE HIM DURING THE ASSESSMENT PROCEEDI NGS AND THE AO ESTIMATED THE BUSINESS INCOME OF THE ASSESSEE @8% OF GROSS RE CEIPTS MERELY REFERRING TO SECTION 44AF OF THE ACT WHICH PROVIDES APPLICATION OF 5% IN THE CASES WHERE TURNOVER IS NOT MORE THAN RS. 40 LAKH FROM RETAIL B USINESS. 13. ON THE BASIS OF FOREGOING DISCUSSION, WE REACH TO A CONCLUSION THAT THE AO FOLLOWED A PROPER PROCEDURE FOR FRAMING ASSESSME NT AND FOR ESTIMATING BUSINESS INCOME OF THE ASSESSEE WHICH CANNOT BE HEL D AS SUSTAINABLE OR AGAINST THE PROVISIONS OF THE ACT. AT THIS JUNCTURE, IT WO ULD BE APPROPRIATE TO RESPECTFULLY REFER TO THE DICTA LAID DOWN BY HONBL E JURISDICTIONAL HIGH COURT IN THE CASE OF ITO VS DG HOUSING PROJECTS LTD. (SUPRA) WHEREIN THEIR LORDSHIPS HELD THAT IN THE CASE OF WRONG OPINION OR FINDING O N MERITS, CIT HAS TO COME TO THE CONCLUSION AND HIMSELF DECIDE THAT THE ORDER IS ERRONEOUS BY CONDUCTING NECESSARY INQUIRY BEFORE THE ORDER U/S 263 IS PASSE D. IN SUCH A CASE, THE ORDER OF THE AO WILL BE ERRONEOUS BECAUSE THE ORDER PASSED I S NOT SUSTAINABLE IN LAW AND SAID FINDING MUST BE RECORDED. IN THIS JUDGEMENT, IT WAS ALSO HELD THAT THE ITA NO.218/DEL/2015 AY: 2011-12 22 CIT CANNOT REMAND THE MATTER TO THE AO TO DECIDE WH ETHER FINDINGS RECORDED ARE ERRONEOUS. IN THE CASE WHERE THERE IS INADEQUA TE INQUIRY BUT NOT LACK OF INQUIRY, AGAIN THE CIT MUST GIVE AND RECORD HIS FIN DING THAT THE ORDER/INQUIRY MADE IS ERRONEOUS AND THIS CAN HAPPEN IF AN INQUIRY IS CONDUCTED BY THE CIT AND THEREAFTER HE IS ABLE TO ESTABLISH AND SHOWS THE ER ROR OR MISTAKE MADE BY THE AO, MAKING THE ORDER UNSUSTAINABLE IN LAW. IT WAS FURT HER HELD THAT THE MATTER CANNOT BE REMITTED FOR A FRESH DECISION TO THE AO TO CONDU CT FURTHER INQUIRY WITHOUT A FINDING THAT THE ORDER IS ERRONEOUS IS A CONDITION OR REQUIREMENT WHICH MUST BE SATISFIED FOR VALID EXERCISE OF JURISDICTION U/S 26 3 OF THE ACT. LASTLY, THEIR LORDSHIPS, SPEAKING FOR THE JURISDICTIONAL HIGH COU RT, MADE IT CLEAR THAT IN SUCH MATTERS, TO REMAND THE MATTER/ISSUE TO THE AO WOULD IMPLY AND MEAN THAT THE CIT HAS NOT EXAMINED AND DECIDED WHETHER OR NOT THE ORDER IS ERRONEOUS BUT HAS DIRECTED THE AO TO DECIDE THE ASPECT/QUESTION. 14. IN PARA 17 OF THIS ORDER, THEIR LORDSHIPS ENLIG HTENED US BY EXPLAINING THAT THIS DISTINCTION MUST BE KEPT IN MIND BY CIT WHILE EXERCISING JURISDICTION U/S 263 OF THE ACT AND IN ABSENCE OF THE FINDING THAT T HE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, THE EXERCIS E OF JURISDICTION UNDER THE SAID SECTION IS NOT SUSTAINABLE. IT WAS ALSO HELD THAT IN MOST CASES OF ALLEGED INADEQUATE INVESTIGATION IT WILL BE DIFFICULT TO HOLD THAT THE ORDER OF THE AO, WHO HAD CONDUCTED INQUIRIES AND HAD ACTED AS INVEST IGATOR IS ERRONEOUS WHEN CIT CONDUCTED VERIFICATION /INQUIRY. THE ORDER OF THE AO MAY OR MAY NOT BE ITA NO.218/DEL/2015 AY: 2011-12 23 WRONG BUT THE CIT CANNOT DIRECT RECONSIDERATION OF THIS GROUND BUT ONLY WHEN THE ORDER IS ERRONEOUS. THE ORDER OF REMIT/REMAND CANNOT BE PASSED BY THE CIT TO ASK THE AO TO DECIDE WHETHER THE ORDER WAS ERRON EOUS AND THIS IS NOT PERMISSIBLE U/S 263 OF THE ACT. 15. THE PRESENT CASE IS NOT A CASE OF NO INQUIRY AN D WHEN THE AO HAD ADOPTED ONE OF THE COURSES PERMISSIBLE AND AVAILABLE TO HIM UNDER THE PROVISIONS OF THE ACT AND ACT OF THE AO HAS RESULTED IN LOSS TO THE R EVENUE OR TWO VIEWS WERE POSSIBLE AND THE AO HAS ADOPTED ONE VIEW WHICH WAS NOT AGREEABLE TO THE CIT, THEN THE SAID ASSESSMENT ORDER CANNOT BE TREATED AS ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF REVENUE UNLESS THE VIEW ADOPTED BY THE AO IS HELD AS UNSUSTAINABLE AND NOT IN ACCORDANCE WITH LAW. IN S UCH CASES, CIT IS REQUIRED TO GIVE A FINDING THAT THE VIEW TAKEN BY THE AO IS NOT SUSTAINABLE AS PER PROVISIONS OF THE ACT AND LAW AND THEREFORE, THE ORDER IS ERRO NEOUS AND THE CIT MUST ALSO SHOW THAT PREJUDICE HAS BEEN CAUSED TO THE INTEREST OF REVENUE. IN THIS CONTEXT, THE HONBLE SUPREME COURT IN THE CASE OF MALABAR IN DUSTRIAL COMPANY LTD. VS CIT (SUPRA) HAD OBSERVED THAT THE PHRASE PREJUDICI AL TO THE INTEREST OF REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORD ER PASSED BY THE AO. 16. IN THE PRESENT CASE, THE AO INQUIRED ABOUT THE CASH DEPOSITED BY THE ASSESSEE DURING THE RELEVANT FINANCIAL PERIOD AND T HE ASSESSEE SUBMITTED HIS REPLY STATING THE DETAILS OF CASH DEPOSITS TO ALL SEVEN B ANK ACCOUNTS INCLUDING ALLEGED BY THE DEPARTMENT THROUGH AIR INFORMATION WHICH WAS CONSIDERED AND ITA NO.218/DEL/2015 AY: 2011-12 24 EXAMINED BY THE AO. SINCE THE ASSESSEE COULD NOT S UBMIT BOOKS OF ACCOUNTS AND FINANCIAL RESULTS BEFORE THE AO AND THE ASSESSE E ALSO LODGED AN FIR WITH POLICE STATION, NARAINA IN THIS REGARD, THE AO, AFT ER CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PROCEEDED TO ESTIMATE THE BUSINESS INCOME OF THE ASSESSEE @8% OF GROSS RECEIPTS AND MA DE AN ADDITION OF RS. 6,11,230/- WHICH WAS ACCEPTED BY THE ASSESSEE WITHO UT ANY FURTHER LITIGATION. HOWEVER, WE CANNOT IGNORE THAT THE AO IN THE OPERAT IVE PART OF THE ASSESSMENT ORDER HAS REFERRED TO SECTION 44AF OF THE ACT WHILE ESTIMATING THE BUSINESS INCOME @8% OF GROSS RECEIPTS BUT AS PER SAID PROVIS ION, THE BUSINESS INCOME HAS TO BE ASSESSED @5% OF THE TOTAL TURNOVER DURING THE PREVIOUS YEAR ON ACCOUNT OF SUCH BUSINESS PROVIDED TOTAL TURNOVER OF THE ASSESSEE DOES NOT EXCEED AN AMOUNT OF RS.40 LAKH IN THE RELEVANT PREVIOUS YE AR. 17. FURTHERMORE, IN THE PRESENT CASE, THE AO HAS NO T TAKEN TOTAL TURNOVER OF ASSESSEE IN THE TRADING OF CLOTH AND THE AO HAS ADO PTED HIGHER FIGURE TAKING TOTAL AMOUNT OF GROSS RECEIPTS OF RS.76,40,380 DURING THE RELEVANT FINANCIAL PERIOD. THE CIT HAS NOT BROUGHT OUT ANY FACT TO ESTABLISH T HAT THE ASSESSEE HAD NOT UNDERTAKEN ANY INQUIRY IN REGARD TO THE ALLEGED CAS H DEPOSITED TO HIS BANK ACCOUNT AND THE CIT HAS NOT BROUGHT OUT ANY FACT T O THIS EFFECT THAT IN ABSENCE OF AMOUNT AND OTHER RECORDS, WHICH WERE LOST BY THE AS SESSEE, THE AO WAS NOT CORRECT IN MAKING ESTIMATION OF BUSINESS INCOME @8% OF GROSS RECEIPTS AND THE CONCLUSION DRAWN BY THE AO WAS NOT IN ACCORDANCE WI TH THE PROVISIONS OF THE ITA NO.218/DEL/2015 AY: 2011-12 25 ACT AND THUS, THE SAME WAS UNSUSTAINABLE IN LAW. P ER CONTRA, AS WE HAVE ALREADY NOTED THAT THE AO INQUIRED FROM THE ASSESSEE ABOUT THE AMOUNT OF CASH DEPOSITED DURING THE RELEVANT FINANCIAL PERIOD AND AFTER CONS IDERING THE REPLY OF THE ASSESSEE WHEREIN THE ASSESSEE STATED THAT HE HAD LO ST HIS BOOKS OF ACCOUNTS AND OTHER RECORDS, THEN THE AO HAD NO ALTERNATIVE BUT T O ESTIMATE THE BUSINESS INCOME OF THE ASSESSEE BY TAKING A REASONABLE AND A PPROPRIATE RECOURSE. THEREAFTER, THE AO PROCEEDED TO ESTIMATE THE BUSINE SS INCOME OF THE ASSESSEE @8% OF GROSS RECEIPTS BY MERELY REFERRING TO SECTIO N 44AF OF THE ACT. WE CANNOT IGNORE THIS FACT THAT IN THE LETTER DATED 20 .12.2013, THE ASSESSEE PRESSING INTO SERVICE HIS REVISED COMPUTATION OF INCOME PLEA DED THAT THE SURRENDERED AMOUNT MAY BE CONSIDERED AS BUSINESS INCOME BEING 5 % OF GROSS RECEIPTS BUT THE AO ADOPTED HIGHER PERCENTAGE OF 8% FOR ESTIMATI ON OF BUSINESS INCOME WHICH IS VERY FAVOURABLE TO THE REVENUE. IT IS ALSO RELEVANT TO POINT OUT THAT THE AO HAS TAKEN 5% ON GROSS TURNOVER FOR AY 2010-11 VI Z. PRECEDING ASSESSMENT YEAR TO THE PRESENT ASSESSMENT YEAR IN THE ASSESSME NT ORDER PASSED U/S 143(3) OF THE ACT (ASSESSEES PAPER BOOK PAGE 16-20). 18. ON THE BASIS OF FOREGOING DISCUSSION, WE RE ACH TO A LOGICAL CONCLUSION THAT THE VIEW AND APPROACH TAKEN BY THE AO IN FRAMING OR IGINAL ASSESSMENT ORDER PASSED U/S 143(3) WAS QUITE JUSTIFIED, REASONABLE A ND IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. AS WE HAVE ALREADY NOTED TH AT THE CIT PROCEEDED TO CANCEL THE SAID ASSESSMENT ORDER WITHOUT DRAWING AN Y CONCLUSION THAT THE ORDER ITA NO.218/DEL/2015 AY: 2011-12 26 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REV ENUE, MERELY REFERRING TO SOME CITATIONS DIRECTED THE AO TO FRAME A FRESH ASSESSME NT AND THUS THE ORDER OF THE CIT FALLS WITHIN THE TEETH OF THE RATIO LAID DOWN B Y THE HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF ITO VS DG HOUSIN G PROJECTS LTD. (SUPRA) AND RESPECTFULLY FOLLOWING THE SAME, WE ARE INCLINED TO HOLD THAT THE ISSUANCE OF NOTICE U/S 263 OF THE ACT AND THE IMPUGNED ORDER PA SSED BY THE CIT DIRECTING THE AO TO FRAME FRESH ASSESSMENT IS NOT VALID ASSUM PTION OF JURISDICTION AND HENCE, WE QUASH THE SAME. ACCORDINGLY, SOLE GROUND OF THE ASSESSEE IS ALLOWED. 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED AND IMPUGNED NOTICE U/S 263 OF THE ACT AND THE IMPUGNED ORDER PASSED IN PURSUANCE THERETO ARE QUASHED. ORDER PRONOUNCED IN THE OPEN COURT ON 7.10.2015. SD/- SD/- (N.K.SAINI) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7TH OCTOBER, 2015 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR