Shri Bhupinder Singh, New Delhi V. ITO, New Delhi

ITA 2500/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6677 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-10-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 23-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Keywords: Business income; Revision of order; Principle of natural justice; Prejudicial to interest
• Section: 143(3); 14A; 263; 63; 144; 2; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA: JUDICIAL MEMBER ITA NO. 2500/DEL/2014 A.Y. 2007-08 BHUPINDER SINGH VS. INCOME-TAX OFFICER, 10/3, OLD RAJINDER NAGAR, WARD-33(4), NEW DELHI. NEW DELHI. PAN: AAUPS 9406 N ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI SALIL AGARWAL ADV. & SHRI SHAILESH GUPTA CA RESPONDENT BY : SHRI RAVI JAIN CIT(DR). DATE OF HEARING: 20.10.2016 DATE OF ORDER: 11.11.2016. O R D E R PER S.V. MEHROTRA, A.M: THIS IS AN APPEAL FILED BY THE DEPARTMENT AGAINST T HE ORDER DATED 26.03.2014 PASSED BY THE COMMISSIONER OF INCOME-TAX, DELHI-XI, NEW DELHI, U/S 263 OF THE INCOME-TAX ACT, 1961, RELATING TO A.Y. 2007-08. 2. BRIEF FACTS CULMINATING TO THE PROCEEDINGS U/S 2 63 ARE THAT IN THIS CASE ORIGINAL ASSESSMENT ORDER WAS PASSED U/S 144 OF THE INCOME-TAX ACT DATED 18.12.2009 CONTAINED AT PAGES 13 & 14 OF THE PB. AS AGAINST THE RETURNED INCOME OF RS. 1,11,998/-, THE ASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF 2 RS.14,11,848/- AFTER MAKING ADDITION OF RS. 12,99,8 50/- U/S 68 OF THE INCOME-TAX ACT. THE TOTAL CASH OF RS. 10,99,850/- DEPOSITED BY THE ASSESSEE IN HIS SAVING BANK ACCOUNT, MAINTAINED WITH CENTURION BANK OF PUNJAB L TD., EAST PATEL NAGAR MARKET, NEW DELHI, DURING THE PERIOD RELEVANT TO ASSESSMEN T YEAR UNDER CONSIDERATION, WAS TREATED AS UNEXPLAINED AS ASSESSEE DID NOT ATTE ND THE PROCEEDINGS. ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A), WHO, VIDE H IS ORDER DATED 14.11.2011, CONTAINED AT PAGES 40 TO 52 OF THE PB, DISMISSED TH E ASSESSEES APPEAL. THE ASSESSEE PREFERRED APPEAL BEFORE THE ITAT, WHICH VI DE ITS ORDER DATED 15.10.2012, CONTAINED AT PAGES 53 TO 59 OF THE PB, RESTORED THE MATTER TO THE FILE OF THE AO WITH THE DIRECTION TO ALLOW ONE FINAL OPPORTUNITY TO THE ASSESSEE TO ESTABLISH THE NEXUS OF HIS BUSINESS RECEIPTS WITH CASH DEPOSITED IN THE BA NK AS ALSO TO EXPLAIN THE NATURE OF TRANSACTION IN THE SAID ACCOUNT AND, THEREAFTER, PASS APPROPRIATE ORDERS IN ACCORDANCE WITH LAW. CONSEQUENT TO THESE DIRECTIONS , THE AO, INTER ALIA, ISSUED NOTICE DATED 2.9.2013 CONTAINED AT PAGES 73 TO 75 O F PB, WHEREIN THE AO, INTER ALIA, OBSERVED AS UNDER: THE LD. ITAT HAS TOO ISSUED DIRECTIONS FOR THE ASSE SSEE TO PLACE BEST EVIDENCE BEFORE THE A.O, SO THAT MATTER COULD BE DISPOSED OR EXPEDITIOUSLY . IT HAS ALSO SPECIFICALL Y BEEN ORDERED THAT ' IN (THE EVENT THE ASSESSEE DOES NOT AVAIL TH E OPPORTUNITY PROVIDED BY THE A.O, OR DOES NOT ESTABLISH THE NE XUS OF HIS BUSINESS RECEIPTS WITH THE CASH DEPOSITED IN THE BA NK A/C, THE ADDITION SHALL STAND CONFIRMED', {PARA- 6 AT PAGE, 12). 3 VIDE YOUR REPLY DATED 12-04-20 13, SUBMITTED THROUG H YOUR A. R IN RESPONSE TO MY PREDECESSORS LETTER/NOTICE DA TED 20-03- 2013 FOR 28-03-2013, YOU HAVE ONLY FURNISHED COPY OF YOUR BANK A/C, COMPUTATION OF INCOME. NEITHER NARRATIO N OF BANK ENTRIES NOR ANY SUPPORTING DOCUMENTARY EVIDENCE TO PROVE THE NEXUS OF EACH DEPOSITS WITH BUSINESS RECEIPTS, AS P OINTED OUT BY THE APPELLATE AUTHORITIES, HAVE NOW BEEN FURNISHED. YOUR ATTENTION IS FURTHER DRAWN TO PARA 6 AT PAGE 1 1 & 12 OF THE LD. ITAT'S ORDER, WHEREIN ATTENTION HAS BEEN D RAWN THAT THE CASH DEPOSITED IN BANK A/C ARE ALMOST 40% HIGH ER THAN THE BUSINESS RECEIPTS DECLARED AT RS. 9,56,780/- ON WH ICH PROVISIONS OF SECTION 44AF HAVE BEEN APPLIED. IT HA S ALSO BEEN OBSERVED THAT WHETHER THE ENTIRE CASH WAS DEPOSITE D IN THE BANK, HAS NOT BEEN ESTABLISHED BY THE ASSESSEE. WE FIND FROM THE COPY OF BANK STATEMENT THAT CASH OF RS. 18,800/ - . THERE ARE NUMBER OF ENTRIES OF DEPOSIT OF CASH AND PAYMEN TS IN CASH, INCLUDING TO ONE KIRPAL SINGH. NOT EVEN ONE ENTRY H AS BEEN EXPLAINED BEFORE THE AO OR THE LD. CIT(A) AND EVEN BEFORE US. THE LD. AR ON BEHALF OF THE ASSESSEE, THOUGH RELIE D UPON NUMBER OF JUDGMENTS, DID NOT EVEN ATTEMPT TO CORREL ATE THE DEPOSITS IN CASH IN THE BANK ACCOUNT OF THE ASSESSE E WITH HIS BUSINESS RECEIPTS. THE ONUS IS UPON THE ASSESSEE TO ESTABLISH THAT THE CASH DEPOSITED IN THE BANK ORIGINATED FROM HIS TURNOVER OF THE BUSINESS. IN VIEW OF THE ABOVE REFERRED OBSERVATIONS OF THE A PPELLATE AUTHORITIES, YOU ARE HEREBY GIVEN AN OPPORTUNITY TO FURNISH AND PRODUCE THE FOLLOWING:- 1. PRODUCE SALE BILLS TO VERIFY THE CORRECTNESS OF SALES DISCLOSED FOR ASSTT. AND VERIFY ITS NEXUS WITH CASH DEPOSITED IN BANK A/C. 2. DETAILED NOTE 'AS TO YOUR BUSINESS ACTIVITY IN P AST 2 YEARS AND SUBSEQUENT 2 YEARS. WHETHER FACTS SIMILAR, BANK A/C SAME. IF YES, FURNISH COPY OF COMPUTATION, RETURN AND BA NK DETAILS. 3. NARRATION AND DOCUMENTARY EVIDENCE FOR CREDITS OTHER THAN THOSE NOT TAKEN AS BUSINESS RECEIPTS BY YOU, F AILING WHICH 4 WHY THESE MAY NOT BE TREATED AS UNEXPLAINED CASH DE POSITS AS PER SECTION 68 OF THE IT ACT. 4. PRODUCE CASH BOOK TO VERIFY AS TO WHETHER THE E NTIRE CASH SALES WERE DEPOSITED IN BANK A/C AND NOTHING REMAIN ED TO BE DEPOSITED. 5. DOCUMENTARY EVIDENCE WITH NAME AND ADDRESS OF T HE PARTIES FOR CASH DEPOSITS MENTIONED BY THE LEI. ITA T IN PARA-6 OF PAGE- 11, AND FOR ANY OTHER SIMILAR TYPE OF CASH DEPOSITS IN YOUR BANK, OUTSIDE DELHI TO VERIFY THAT THESE REPRE SENT YOUR RETAIL SALE RECEIPTS ONLY & AS WELL AS WHETHER THE ENTIRE SALE AMOUNT HAVING BEEN DEPOSITED. 6. RANDOM VIEW OF CASH DEPOSIT & WITHDRAWAL IN THE BEGINNING OF THE YEAR REVEAL THE POSITION AS UNDER - DATE AMT (DEPOSITED (RS.) AMT. WITHDRAWN (RS.) 04.04.2006 18800 15000 10-04-2006 20000 20000 10-04-2006 11800 10000 28.04.2006 19000 28/04(I) 7000 28/04 (II) 10000 29/04 (III) 2000 AS PER THE ABOVE TRANSACTIONS, IT CAN BE SEEN THAT A NORMAL PRUDENT BUSINESS-MAN & MORE-SO HAVING SMALL RETAIL BUSINESS RECEIPTS, AS BEING ALLEGED BY YOU, WILL HAVE REPEA TED VISITS MORE THAN ONCE A DAY TO DEPOSIT AND THEN WITHDRAW A LMOST THE SAME AMOUNT FOR BUSINESS PURPOSES FROM A BANK SITU ATED AT A DISTANCE AND WILL ALSO INCUR, TRAVELLING EXPENSES F OR NO GAIN FROM BANKING TRANSACTION, HENCE THE DEPOSITS IN THI S BANK A/C CANNOT BE KNOWN TO YOU ONLY . 3. LD. COUNSEL POINTED OUT THAT IN RESPONSE TO THIS NOTICE ASSESSEE FILED ITS FIRST REPLY DATED 9.9.2013, CONTAINED AT PAGES 76 TO 79 O F THE PB AND FURTHER FILED REPLY 5 DATED 4.10.2013, CONTAINED AT PAGES 60 & 61 OF THE PB. HE SUBMITTED THAT ALL THE QUERIES RAISED BY AO WERE DULY REPLIED AND, THEREAF TER, AFTER CONSIDERING THE SAME, THE AO PASSED THE ASSESSMENT ORDER ON 17.10.2013. L D. COUNSEL POINTED OUT THAT THIS ASSESSMENT ORDER HAS BEEN REVISED BY LD. COMMI SSIONER. HE REFERRED TO PAGES 64 & 65 OF THE PB, WHEREIN THE NOTICE DATED 17.2.2 014 U/S 263, ISSUED TO ASSESSEE BY LD. COMMISSIONER, IS CONTAINED. THE ASSESSEE FIL ED ITS REPLY DATED 26.2.2014 CONTAINED AT PAGES 66 TO 72 OF PB. AFTER CONSIDERIN G THESE, LD. COMMISSIONER PASSED THE ORDER DATED 26.3.2014. 4. LD. COUNSEL POINTED OUT THAT IN THE CASE OF MALA BAR INDUSTRIES CO. LTD. VS. CIT 243 ITR 83 (SC), IT HAS BEEN HELD THAT AN ORDER CAN BE REVISED, INTER-ALIA, IF THERE WAS NON-APPLICATION OF MIND. HE SUBMITTED THA T IN THE PRESENT CASE TWO REPLIES WERE FILED, AS NOTED EARLIER, BY THE ASSESS EE BEFORE AO AND, AFTER CONSIDERING THEM, THE AO PASSED ORDER U/S 143(3)/25 4. HE POINTED OUT THAT AS AGAINST THE DECLARED INCOME OF RS. 1,11,998/-, THE ASSESSEE ACCEPTED THE INCOME AT RS. 1,70,153/-. LD. COUNSEL FURTHER REFERRED TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ITO VS. D.G. HOUSING PROJECTS LTD. 343 ITR 329 (DEL.), WHEREIN IT HAS BEEN HELD THAT WITHOUT RECORDING THE FINDINGS THAT THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF REVENUE, REVISION OF ORDER COULD NOT BE ALLOWED. HE SUBMITTED THAT NO QUERY HA D BEEN RAISED BY 6 COMMISSIONER ON THE DETAILED REPLIES FILED BEFORE H IM AND, THEREFORE, LD. CITS ORDER WAS CONTRARY TO THE LAW LAID DOWN BY HONBLE DELHI HIGH COURT IN THE CASE OF D.G. HOUSING PROJECTS LTD. (SUPRA). 5. LD. COUNSEL REFERRED TO THE DECISION IN THE CASE OF DIRECTOR OF INCOME TAX VS. JYOTI FOUNDATION, 357 ITR 388 AND SUBMITTED THAT LD . COMMISSIONER COULD NOT MERELY SET ASIDE THE MATTER TO AO WITHOUT RECORDING FINDING. HE SUBMITTED THAT LD. COMMISSIONER HAS RECORDED A FINDING THAT ASSESSEE W AS WHOLESELLER WHICH IS COMPLETELY WRONG FINDING ON MISCONCEIVED FACTS. HE SUBMITTED THAT THERE WERE ONLY THREE SALES TO OUTSIDERS AGGREGATING TO RS. 1 ,92,000/- AND, THEREFORE, ASSESSEE COULD NOT BE BRANDED AS A WHOLESALER. HE SUBMITTED THAT ASSESSEE HAS THROUGHOUT BEEN A SMALL RETAILER AND THIS FACT HAS BEEN ACCEPT ED IN AY 2009-10 ALSO BY AO. A COPY OF THE ORDER FOR AY 2009-10 WAS ALSO FILED IN COURSE OF HEARING. 6. LD. COUNSEL POINTED OUT THAT ASSESSEE HAD FILED RETURN U/S 44AF. IN THIS REGARD HE REFERRED TO PAGE 2 OF PB, WHEREIN COMPUTA TION OF TOTAL INCOME IS CONTAINED, WHEREIN ASSESSEE HAD DISCLOSED INCOME U/ S 44AF AT RS. 1,25,250/- AT A GROSS TURNOVER OF RS. 9,56,760/-. 7. LD. COUNSEL FURTHER REFERRED TO PAGES 80 TO 101, WHEREIN THE BANK STATEMENT IS CONTAINED. FURTHER, HE REFERRED TO PAGES 102-108 WHEREIN THE NARRATION OF THE CASH DEPOSITS IN CENTURION BANK OF PUNJAB LTD. IS G IVEN. 7 8. LD. COUNSEL FURTHER REFERRED TO PAGE 109 OF THE PB, WHEREIN THE CASH FLOW STATEMENT IS CONTAINED TO DEMONSTRATE THAT PRIMARIL Y THE SALE RECEIPTS WERE FROM BUSINESS. IN SUPPORT OF THESE SUBMISSIONS LD. COUNS EL ALSO REFERRED TO PAGES 116- 117 OF THE PAPER BOOK, WHEREIN MONTH-WISE DETAILS O F CASH DEPOSITS AND WITHDRAWALS IN CENTURION BANK AND RECONCILIATION OF CASH DEPOSITED AT BANK BRANCH OUTSIDE DELHI AT POLICE BRANCH AT LUDHIANA, IS CONT AINED. 9. LD. COUNSEL REFERRED TO PAGES 118 TO 126 OF THE PB WHEREIN THE LEDGER ACCOUNT OF SALES IS CONTAINED. FURTHER FROM PAGES 1 27 TO 227 THE COPIES OF CASH MEMOS ARE CONTAINED. HE POINTED OUT THAT ALL THESE DOCUMENTS WERE FILED BEFORE AO AND AFTER CONSIDERING ALL THESE HE ACCEPTED THE ASSESSEES CONTENTION THAT ALL THE CASH DEPOSITS PERTAINED TO BUSINESS RECEIPTS. LD. C OUNSEL POINTED OUT THAT NO ERROR HAS BEEN POINTED OUT BY LD. COMMISSIONER IN THE DET AILS FURNISHED BY ASSESSEE. 10. LD. DR REFERRED TO THE TRIBUNALS ORDER CONTAIN ED AT PAGES 53 TO 59 AND READ OUT THE FOLLOWING SPECIFIC DIRECTIONS GIVEN BY THE TRIBUNAL: IN THESE CIRCUMSTANCES, ESPECIALLY WHEN THE COMPLE TE FACTS ARE NOT BEFORE US, WE CONSIDER IT FAIR AND APPROPRIATE TO VACATE THE FINDINGS OF LD. CIT(A) AND RESTORE THE MATTER TO TH E FILE OF THE AO WITH THE DIRECTIONS TO ALLOW ONE FINAL OPPORTUNI TY TO THE ASSESSEE TO ESTABLISH THE NEXUS OF HIS BUSINESS REC EIPTS WITH CASH DEPOSITED IN THE BANK AS ALSO TO EXPLAIN THE N ATURE OF TRANSACTIONS IN THE AID ACCOUNT AND THEREAFTER PASS APPROPRIATE ORDERS IN ACCORDANCE WITH LAW. THE ASSESSEE IS ALSO DIRECTED TO PLACE HIS BEST EVIDENCE BEFORE THE AO SO THAT MATTE R COULD BE 8 DISPOSED OF EXPEDITIOUSLY. IN THE EVENT THE ASSESSE E DOES NOT AVAIL THE OPPORTUNITY PROVIDED BY THE AO OR DOES NO T ESTABLISH NEXUS OF HIS BUSINESS RECEIPTS WITH THE CASH DEPOSI TED IN THE AFORESAID BANK ACCOUNT, THE ADDITION SHALL STAND CO NFIRMED. WITH THESE DIRECTIONS, GROUND NOS. 2,4(B) AND THE R EMAINING PORTION OF GROUND NO. 5 ARE DISPOSED OF. 11. HE SUBMITTED THAT ASSESSEE OFFERED SOME ADDITIO NAL INCOME WHICH WAS ACCEPTED BY AO WITHOUT CARRYING OUT THE DIRECTIONS OF ITAT. HE REFERRED TO THE ASSESSMENT ORDER AND POINTED OUT THAT THE ORDER IS VERY CRYPTIC. HE REFERRED TO PAGE 64 OF PB, WHEREIN THE SHOW CAUSE NOTICE OF LD. COMM ISSIONER IS CONTAINED AND POINTED OUT THAT LD. COMMISSIONER PRIMARILY ISSUED THIS NOTICE, BECAUSE ASSESSEE FAILED TO ESTABLISH NEXUS OF BUSINESS RECEIPTS WITH THE CASH DEPOSIT IN THE BANK ACCOUNT AS WAS SPECIFICALLY DIRECTED BY ITAT TO BE ESTABLISHED. HE SUBMITTED THAT THE OBSERVATIONS OF LD. COMMISSIONER AS REGARDS WHO LESELLER WAS NOT MATERIAL FOR DECIDING WHETHER AOS ORDER WAS ERRONEOUS OR NOT. H E SUBMITTED THAT SUBMISSION OF DETAILS BY ASSESSEE, WITHOUT DUE APPLICATION OF MIND ON THE SAME, COULD NOT BE ACCEPTED AS FULFILLING THE SPECIFIC DIRECTIONS GIVE N BY TRIBUNAL. HE REFERRED TO THE ORDER OF THE ITAT AHMEDABAD BENCH IN THE CASE OF M/ S SONALANK INVESTMENT & TRADING PVT. LTD. VS. CIT - ITA NO. 1343/AHD/2011 D ATED 3.2.2012 AND RELIED ON FOLLOWING OBSERVATIONS: 9 AN ASSESSMENT ORDER CAN BE ERRONEOUS EITHER IN LAW OR IN FACT. AN ASSESSMENT ORDER CAN BE AN ERRONEOUS ONE WHEN PR IMA FACIE A CLAIM IS ALLOWED WHICH ACCORDING TO THE LEARNED C IT WAS AGAINST THE PROVISIONS OF LAW. AN ASSESSMENT ORDER CAN BE HELD AS PREJUDICIAL TO THE INTEREST OF THE REVENUE IF I N THE OPINION OF THE LEARNED CIT THE INQUIRY WAS NOT ADEQUATE OR NO INQUIRY AT ALL HAS BEEN MADE. WE MAY LIKE TO MENTION THAT THE AO IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVESTIGATOR. THE A O CANNOT REMAIN A PASSIVE SPECTATOR WHILE DEALING WITH A RET URN OF INCOME FILED BY THE TAX PAYER. IF, ON THE FACE OF T HE RETURN IT IS APPARENT THAT AN INQUIRY IS REQUIRED: THEN IT IS EX PECTED FROM THE AO TO CONDUCT AN INVESTIGATION SO AS TO ASCERTA IN CORRECTNESS OF THE RETURN FILED AS ALSO THE INCOME DECLARED THEREIN. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF T HE FACTS STATED IN THE RETURN. WHERE THE CIRCUMSTANCES INDICATE TO PRO VOKE AN INQUIRY, THEN THE SAME SHOULD NOT BE WITHHOLD. IN A LANDMARK DECISION IN THE CASE OF G. V. ENTERPRISES, 99 ITR 375, THE HON'BLE DELHI HIGH COURT HAS HELD THAT 'INADEQUACY OF INQUIRY IS A GOOD REASON F OR INVOKING THE PROCEEDINGS U/S 263 OF THE ACT.' IN ANY CASE, W E ARE NOT CONFINING OUR DECISION ENTIRELY ON THE ISSUE OF 'LA CK OF INQUIRY' OR 'INADEQUATE INQUIRY'. FROM THE SIDE OF THE ASSES SEE THE LEARNED AR, MR. TUSHAR P. HLMANI HAS ARGUED THAT TH IS IS NOT THE CASE OF LACK OF INQUIRY BY A.O. AND THAT IF THE AO HAD MADE INADEQUATE INQUIRY THEN THAT SHOULD NOT BE A GROUND TO APPLYING THE PROVISIONS OF SECTION 263 OF THE IT ACT. NEVERT HELESS, WE ARE ON THE ISSUE THAT NO INQUIRY AT -ALL HAS BEEN MADE BY THE AO IN RESPECT OF THE DETERMINATION OF THE NATURE OF THE T RANSACTION. THE LAW IS VERY CLEAR THAT THE AO HAS QUASI-JUDICIA L POWERS VESTED ON HIM. BY EXERCISING THOSE POWERS IT IS NEC ESSITATED TO PASS A REASONED ORDER. IF THE REASONING IS LACKING IN AN ASSESSMENT ORDER, THEN ALSO THE LEARNED CIT CAN INV OKE THE REVISIONARY POWERS. THERE MUST BE SOME PRIMA FACIE MATERIALS ON RECORD TO SHOW THAT THE TAX WHICH WAS OFFERED BY THE ASSESSEE WAS LAWFULLY EXCISABLE ON THE ASSESSEE AND , THEREFORE, IT WAS ACCEPTED BY THE AO WITHOUT ANY CHANGE OR ALT ERATION . 10 12. LD. DR FURTHER REFERRED TO PARA 17 OF THE ORDE R OF ITAT DELHI BENCH F IN THE CASE OF PVS MULTIPLEX (INDIA) LTD. IN ITA NO. 2 370/DEL/2013 DATED 14.8.2015, AS REPRODUCED BELOW: IN VIEW OF ABOVE, IF WE ANALYSE FACTS AND CIRCUMST ANCES OF THE PRESENT CASE, WHEREIN THE ASSESSING OFFICER CONDUCT THE ASSESSMENT PROCEEDING AND PASSED IMPUGNED ASSESSMEN T ORDER ACCEPTING THE RETURN OF INCOME OF THE ASSESSEE WE C LEARLY OBSERVE THAT THE ASSESSING OFFICER HAS NOT MADE INQ UIRY ON THE ISSUE OF INTEREST FREE ADVANCES AND PROPORTIONATE D ISALLOWANCE OF INTEREST THEREON, ON THE ISSUE OF VERIFICATION O N TDS AND ON THE CLAIM AND CALCULATION OF THE ASSESSEE FOR THE P URPOSE OF DEDUCTION U/S 80IB(7A) OF THE ACT SPECIALLY ON THE ISSUE OF EXCLUSION OF INCOME/RECEIPT ON SALE OF SHOP AND FDR INTEREST. IN THIS SITUATION, WE HAVE NO HESITATION TO HOLD TH AT THE ORDER OF THE AO WHICH IS APPARENTLY VERY PRECISE AND CRYPTIC , WAS NOT PASSED AFTER DUE EXAMINATION AND VERIFICATION OF CE RTAIN OR ISSUE AND THEREFORE, THERE WAS AN ERROR ON THE PART OF AO WHICH LEADS TO A CORRECT CONCLUSION OF THE CIT WITH THE O RDER OF THE AO IS NOT ONLY ERRONEOUS OR ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. WE MAY FURTHER POINT OUT THAT THE ASSESSME NT ORDER SUFFERS LACK OF NECESSARY ENQUIRY ON CERTAIN IMPORT ANT ISSUES WHICH HAVE BEEN RAISED BY THE CIT IN THE NOTICE ISS UED TO THE ASSESSEE AND IMPUGNED ORDER U/S 263 OF THE ACT. THE REFORE, WE REACH TO A CONCLUSION THAT THE ASSESSMENT ORDER IS NOT SUSTAINABLE AND IN ACCORDANCE WITH THE PROVISIONS O F THE ACT WHICH IS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. 13. LD. DR POINTED OUT THAT IN THE PRESENT CASE LD. COMMISSIONER POINTED OUT AS TO WHAT THE AO WAS REQUIRED TO DO. HE SUBMITTED TH AT AO HAS NOT MENTIONED HIS VIEW ON THE DIRECTIONS OF ITAT. HE SUBMITTED THAT A O WAS REQUIRED TO ESTABLISH 11 NEXUS BETWEEN THE CASH DEPOSITS WITH THE BUSINESS R ECEIPTS ON WHICH THERE IS NO FINDING. 14. LD. DR FURTHER REFERRED TO THE DECISION OF HON BLE GAUHATI HIGH COURT IN THE CASE OF CIT VS. SHRI JAWAHAR BHATTACHARJEE RENDERED IN ITA NO. 2 OF 2008 DATED 7.2.2012. PARA 22 OF THE DECISION READS AS UNDER: 22. WE HAVE ALREADY REFERRED TO JUDGMENTS OF THIS COURT IN RAJENDRA SINGH AND TWO SINGLE BENCH JUDGMENTS FOLLO WING THE SAID JUDGMENT IN BONGAIGAON REFINERY AND PETROCHEMI CALS LTD. AND SHYAM SUNDAR AGARWAL AS ALSO THE SECOND DIVISIO N BENCH JUDGMENT IN DAGA ENTRADE P. LTD. NO DOUBT, IN RAJEN DRA SINGH, AN OBSERVATION WAS MADE THAT ERRONEOUS ASSESSMENT R EFERRED TO THE DEFECT WHICH IS JURISDICTIONAL IN NATURE, AS AG AINST SUBSTITUTION OF ONE VIEW FOR THE OTHER, MERELY ON T HE GROUND THAT A DIFFERENT VIEW WAS POSSIBLE. IF READ AS A WHOLE, THE JUDGMENT DOES NOT EXCLUDE ERROR IN ASSESSMENT ORDER, BY IGNO RING RELEVANT MATERIAL. NOT HOLDING SUCH INQUIRY AS IS N ORMAL AND NOT APPLYING MIND TO RELEVANT MATERIAL WOULD CERTAI NLY BE 'ERRONEOUS' ASSESSMENT WARRANTING EXERCISE OF REVIS IONAL JURISDICTION. JUDGMENT HAS TO BE READ AS A WHOLE AN D AN OBSERVATION DURING THE COURSE OF REASONING IN THE J UDGMENT SHOULD NOT BE DIVORCED FROM THE CONTEXT IN WHICH IT WAS USED. THE JUDGMENT IS NEITHER TO BE INTERPRETED AS AN ACT OF PARLIAMENT NOR AS A HOLY BOOK. IF THIS PRINCIPLE IS KEPT IN MIND, WE DO NOT FIND ANY CONFLICT IN THE VIEW TAKEN IN RA JENDRA SINGH AND DAGA ENTRADE P. LTD. DISAGREEMENT IN DAGA ENTRA DE P. LTD. IS ONLY TO THE INTERPRETATION WHICH LIMITS THE RATIO OF THE JUDGMENT BY RELYING ONLY ONE SENTENCE IN ISOLATION DIVORCED FROM THE ENTIRE JUDGMENT. AN INCORRECT ASSUMPTION O F FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE RE QUIREMENT OF THE ORDER BEING 'ERRONEOUS' NON-APPLICATION OF MIND AND OMISSION TO FOLLOW NATURAL JUSTICE IS IN SAME CATEG ORY . 12 15. WITH REFERENCE TO THIS DECISION LD. DR POINTED OUT THAT IF AO FAILED TO CARRY OUT PROPER SCRUTINY OF FACTS THEN ORDER BECOMES ERR ONEOUS. 16. LD. DR FURTHER SUBMITTED THAT IT IS NOT CLEAR WHETHER REPLY DATED 9.9.2013 WAS FILED BY ASSESSEE BEFORE AO OR NOT BECAUSE THIS REPLY HAS NOT AT ALL BEEN REFERRED TO BY AO IN THE IMPUGNED ORDER. AO HAS RE FERRED TO REPLY DATED 4.10.2013 WHEREIN, BY REFERRING TO PARA 3, THE AO O BSERVED THAT ASSESSEE SUBMITTED THAT IN ORDER TO BUY PEACE AND AVOID LITIGATION, TH E ASSESSEE AGREED FOR ASSESSMENT OF BUSINESS INCOME AT RS. 1,70,150/- AS AGAINST THE DECLARED INCOME OF RS.1,25,250/-. 17. LD. COUNSEL IN HIS REJOINDER SUBMITTED THAT LD. COMMISSIONER CANNOT DIRECT HOW AO SHOULD WRITE THE ORDER. HE FURTHER POINTED O UT THAT VIEW TAKEN BY AO WAS PLAUSIBLE VIEW. HE FURTHER POINTED OUT THAT THE CAS ES RELIED UPON BY LD. DR ARE DISTINGUISHABLE AS THEY RELATE TO CASES OF NO INQUI RY. 18. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE RECORD OF THE CASE. WE HAVE EARLIER REPRODUCED THE DIRECTIONS OF ITAT WHEREIN OPPORTUNITY WAS REQUIRED TO BE AFFORDED TO THE ASSE SSEE TO ESTABLISH THE NEXUS OF HIS BUSINESS RECEIPTS WITH THE CASH DEPOSITS IN THE BAN K AND ALSO TO EXPLAIN THE NATURE OF TRANSACTIONS IN THE SAID ACCOUNT. IN ORDER TO FI ND OUT WHETHER THE ASSESSMENT ORDER IS ERRONEOUS OR NOT, WE HAVE TO EXAMINE WHETH ER THESE DIRECTIONS WERE 13 CARRIED OUT BY AO IN TRUE SPIRIT OR NOT. IN THIS RE GARD IF WE REFER TO THE ASSESSMENT ORDER, WE FIND THAT AO IN PARA 1 AND 2 HAS OBSERVED AS UNDER: RETURN OF INCOME FOR THE AY 2007-08 IN THE CASE WA S FILED VIDE ACK. NO.3131005896 DATED 04-01-2008 DECLARING AN IN COME OF RS.1,11,998/- AFTER CLAIMING DEDUCTION UNDER CHAPTE R VI A AMOUNTING TO RS.13,252/-. THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 144 ON 18/12/2009, WHICH HAS BEEN SET -ASIDE BY THE LD. ITAT. VIDE ORDER DATED 15/10/2012 IN ITA NO.526/DEL/2012 DIRECTING THE AO VERIFY THE NEXUS O F BANK DEPOSITS WITH REFERENCE TO RECEIPTS DECLARED. PURS UANT TO THIS, NOTICE U/S 143(2) ISSUED. THE AR OF THE ASSESSEE S H. BISHAN GUPTA ADVOCATE ATTENDED AND FURNISHED THE DETAILS C ALLED FOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AR WAS REQUIRED TO SHOW CAUSE THAT AS TO WHY THE ENTIRE CA SH DEPOSITED IN BANK AMOUNTING TO RS. 12,99,873/- MAY NOT BE TRE ATED AS YOUR GROSS RECEIPTS AND PROFIT BE CALCULATED ACCORD INGLY ON THE BASIS OF PERCENTAGE I.E. 13.09% DECLARED ORIGINALLY BY THE ASSESSEE WHILE FURNISHING HIS RETURN OF INCOME SINC E IN THE BUSINESS LIKE YOURS IT CANNOT BE RULED OUT THAT THE RE IS ALWAYS A POSSIBILITY OF NON ISSUE OF BILLS AND CASH AVAILABL E DUE TO SALES DEPOSITED IN BANK ACCOUNT. 19. THUS, PRIMARILY AO DISPUTED THE GROSS RECEIPTS BEING RS. 12,99,873/- AS AGAINST THE DECLARED RECEIPTS OF RS. 9,56,750/-. TH IS DOES NOT LEAD TO THE CONCLUSION THAT AO CARRIED OUT THE DIRECTIONS OF TRIBUNAL OF E STABLISHING NEXUS OF BUSINESS RECEIPTS VIS-A-VIS CASH DEPOSITS IN BANK A/C. HE HA S IN PARA 1 OF HIS ORDER REFERRED TO THE TRIBUNALS DECISION WHEREIN HE SPECIFICALLY MEN TIONED THAT THE DIRECTION WAS TO THE AO TO VERIFY THE NEXUS OF BANK DEPOSITS WITH RE FERENCE TO RECEIPTS DECLARED AND PURSUANT TO THIS NOTICE U/S 143(2) WAS ISSUED. HE F URTHER OBSERVED THAT AR OF THE 14 ASSESSEE HAD FURNISHED DETAILS CALLED FOR. HOWEVER , HE HAS NOT GIVEN ANY SPECIFIC FINDING ON THIS ISSUE, WITH REFERENCE TO THE DETAIL S FILED BY ASSESSEE. 20. LD. COUNSEL HAS POINTED OUT THAT IN THE SHOW CA USE NOTICE, REPRODUCED EARLIER, THE AO HAD CLEARLY GIVEN NOTICE IN CONSONANCE WITH THE DIRECTIONS ISSUED BY TRIBUNAL. THEREFORE, THE ASSESSMENT ORDER HAS TO BE READ ALONG WITH THE AOS NOTICE AND REPLIES FILED BY ASSESSEE IN WHICH ASSES SEE GAVE ALL THE DETAILS REGARDING SALE BILLS ETC.. HOWEVER, THIS HAS TO BE CONSIDERE D IN THE LIGHT OF DIRECTIONS OF TRIBUNAL WHICH AO HAD TO SPECIFICALLY CARRY OUT. H E WAS REQUIRED TO RECORD SPECIFIC FINDING QUA THE DIRECTIONS OF TRIBUNAL. T HERE IS NO FINDING IN THE ASSESSMENT ORDER IN RESPECT OF TRIBUNALS DIRECTION S. 21. LD. DR HAS EXPRESSED HIS RESERVATIONS ABOUT TH E REPLY DATED 9.9.2013 CONTAINED FROM PAGES 76 TO 79 BECAUSE THIS REPLY DO ES NOT FIND MENTION IN THE ASSESSMENT ORDER. HOWEVER, THERE IS NO DISPUTE THAT THE REPLY DATED 4.10.2013 CONTAINED AT PAGES 60-61 OF PB HAS BEEN TAKEN NOTE BY THE AO IN HIS ORDER. IN THIS REPLY IN PARA 2 IT WAS STATED AS UNDER: THE ASSESSEE IS ENGAGED IN THE RETAIL BUSINESS OF - CAR ACCESSORIES ON A VERY SMALL SCALE. IN SUPPORT OF TH E GROSS TURNOVER OF RS.9,56,7601- AND SOURCE OF CASH DEPOSI TS OF RS.12,99,8501-, FOLLOWING DOCUMENTS / INFORMATION H AVE ALREADY BEEN GIVEN :- 15 (I) DATEWISE DETAILS OF SALES IN RESPECT OF TOTAL TURNOVER OF RS.9,56,7601- WITH PHOTOCOPIES OF SOME SALES' BILLS / VOUCHERS REQUIRED. (II) COPIES OF BANK STATEMENTS IN RESPECT OF SB. A /C NO. 17SB 11142781 MAINTAINED BY THE ASSESSEE WITH CENTURIAN BANK OF PUNJAB, EAST PATEL 'NAGAR, NEW DELHI, (III) DETAILS OF DEPOSITS AND WITHDRAWALS (NARRATI ON OF EACH ENTRY) OF THE SAID SAVINGS BANK ALE. (IV) SUMMARY OF CASH FLOW STATEMENT SHOWING OPENIN G BALANCE OF CASH, TOTAL- DEPOSITS IN THE BANK A/C, T OTAL WITHDRAWALS OF CASH FROM THE BANK A/C, TOTAL EXPENS ES INCLUDING PURCHASES AND CLOSING BALANCE OF CASH IN HAND, . - (V) AFFIDAVIT OF THE ASSESSEE RELATING TO PAYMENTS I WITHDRAWALS THROUGH MR. BOBY KUMAR AND MR. KIRPAL SINGH, WHO WE RE - WORKING AS 'SALESMEN AND FOR DOING THE BANKING WORK ETC. WITH THE ASSESSEE. IN THIS AFFIDAVIT, THE DETAILS OF - W ITHDRAWALS MADE BY THESE EMPLOYEES HAVE BEEN GIVEN WHICH TALLY WITH THE BANK STATEMENT. (VI) AFFIDAVIT OF THE ASSESSEE CONTAINING COMPLETE EXPLANATION ABOUT CASH DEPOSIT IN THE BANK A/C FROM BRANCHES OU TSIDE DELHI, INCLUDING MODUS OPERANDI OF THE BUSINESS TRANSACTIO N. (VII) A PHOTOCOPY OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2009-10 PASSED U/S 143(3) OF THE I. T. ACT IN THE CASE OF THE ASSESSEE WHERE BUSINESS INCOME DECLARED U/S 44A F HAS BEEN ACCEPTED AND NO ADDITION I DISALLOWANCES HAVE BEEN MADE . 22. THUS, IT APPEARS THAT THIS REPLY IS IN CONTINUA TION TO THE REPLY FILED EARLIER. BE THAT AS IT MAY, WITHOUT GOING INTO THIS ASPECT, WE ARE OF THE OPINION THAT SINCE AO HAS REFERRED TO ONLY PARA 3 OF THE REPLY, THEREFORE , IT IS EVIDENT THAT HE HAS ONLY CONSIDERED THE DISCREPANCY REGARDING GROSS RECEIPTS BUT DID NOT CARRY OUT ANY 16 INQUIRY IN REGARD TO THE NEXUS BETWEEN BUSINESS REC EIPTS AND CASH DEPOSITS WHICH WAS THE SPECIFIC DIRECTION OF THE TRIBUNAL. WHETHER THERE WAS APPLICATION OF MIND OR NOT IS TO BE EXAMINED HAVING REGARD TO THE FACT THAT HOW A PERSON ABREAST OF THE NUISANCES OF LAW WOULD PROCEED IN THE GIVEN CIRCUMS TANCES. THIS IS A CASE OF NOT ONLY INADEQUATE ENQUIRY BUT COMPLETE LACK OF ENQUIR Y. LD. COUNSEL HAS RELIED ON THE DECISION IN THE CASE OF D. G. HOUSING PROJECTS LTD. (SUPRA). IN THIS CASE, IT WAS, INTER-ALIA , HELD THAT LACK OF ENQUIRY BY ITSELF RENDERS THE O RDER ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. A DISTINC TION WAS DRAWN BETWEEN THE CASES OF LACK OF ENQUIRY AND CASES WHEN THE AO CONDUCTS A N ENQUIRY BUT THE FINDING RECORDED IS ERRONEOUS AND WHICH IS ALSO PREJUDICIAL TO THE INTERESTS OF REVENUE. IN THE PRESENT CASE, SINCE AO HAS NOT RECORDED ANY SPE CIFIC FINDING ON THE DIRECTIONS OF TRIBUNAL, THEREFORE, THIS CASE FALLS IN THE FIRS T CATEGORY OF LACKS OF ENQUIRY. WE, THEREFORE, ARE OF THE OPINION, THAT THIS DECISION I S OF LITTLE ASSISTANCE TO ASSESSEE. 23. LD. COUNSEL ALSO RELIED ON THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. DLF LTD., 350 ITR 555 FOR THE PROPO SITION THAT ERROR OF AO SHOULD BE UNSUSTAINABLE AND IF THE ASSESSMENT ORDER IS O THERWISE SUSTAINABLE IN LAW THEN IT CANNOT BE HELD TO BE ERRONEOUS. WE ARE OF THE O PINION THAT THIS DECISION ALSO IS OF LITTLE ASSISTANCE TO ASSESSEE BECAUSE THE OBSERVATI ONS WERE MADE IN THE CONTEXT OF THE FACTS THAT AO ISSUED NOTICE AND HELD PROCEEDING S ON SEVERAL DATES BEFORE 17 ASSESSMENT. THE AO HAD NOT MADE ANY DISALLOWANCE U /S 14A THOUGH ASSESSEE HAD EARNED CONSIDERABLE DIVIDEND INCOME. LD. CIT REVIS ED THE ASSESSMENT ORDER. HONBLE DELHI HIGH COURT NOTICED THAT ASSESSEES DI VIDEND INCOME CONFINED TO RECEIPT FROM INVESTMENT IN SISTER CONCERN AND ONLY ONE DIVIDEND WARRANT WAS RECEIVED. THERE WAS NOTHING TO SHOW THAT ASSESSEE SPENT EFFORT OR RESOURCES TO EARN DIVIDEND. HONBLE HIGH COURT HELD THAT WHETHER DIS ALLOWANCE U/S 14A WAS WARRANTED OR NOT, ITSELF WAS DEBATABLE AND, THEREFO RE, IT COULD NOT BE HELD THAT AO'S ORDER WAS ERRONEOUS AND PREJUDICIAL TO INTEREST OF REVENUE. THE FACTS OF THE PRESENT CASE ARE ENTIRELY DIFFERENT. 24. LD. COUNSEL ALSO RELIED ON THE DECISION OF JYOT I FOUNDATION (SUPRA). THIS DECISION IS ALSO OF LITTLE ASSISTANCE TO ASSESSEE B ECAUSE IN THIS CASE IT WAS HELD THAT IN CASES WHERE THERE IS INADEQUATE ENQUIRY BUT NOT LACK OF ENQUIRY, THE COMMISSIONER MUST RECORD A FINDING THAT THE ORDER/E NQUIRY MADE IS ERRONEOUS. HOWEVER, IN THE PRESENT CASE, AO HAS NOT RECORDED A NY FINDING ON THE DECISIONS OF TRIBUNAL, THEREFORE, ORDER WAS ERRONEOUS. 25. THE ORDER WAS ALSO PREJUDICIAL TO THE INTEREST OF REVENUE BECAUSE IN THE ABSENCE OF ASSESSEE SUCCEEDING TO ESTABLISH THE NEX US BETWEEN CASH DEPOSITS AND BUSINESS RECEIPTS, ENTIRE DEPOSITS WERE TO BE ADDED . WE, THEREFORE, ARE IN AGREEMENT WITH THE LD. COMMISSIONER THAT THE ASSESS MENT ORDER WAS ERRONEOUS IN 18 SO FAR AS IT WAS PREJUDICIAL TO THE INTERESTS OF RE VENUE. ACCORDINGLY, WE DECLINE TO INTERFERE WITH THE ORDER OF LD. COMMISSIONER PASSED U/S 263 OF THE ACT. 26. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 11-11-2016. SD/- SD/- (SUDHANSHU SRIVASTAVA) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11/11/2016. *MP*/SUJEET COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI.