M/s. B.Sahoo and Partners, Cuttack V. CIT, Cuttack

ITA 266/CTK/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5445 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 29-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUNAL SINGH
• Assessee Lawyers: P R MOHANTYD S JETHI
• Keywords: Gift; Source of fund; Bad and doubtful debts; Assessment record
• Section: 40A(3); 68; 263

Judgement Text

1 ITA NO. 266/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 266/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 M/S. B.SAHOO AND PARTNERS, BHOLAMIAN BAZAR, MANSINGHPATNA, TULSIPUR, CUTTACK VS. CIT, CUTTACK PAN/GIR NO. AAIFB 2818 B (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P .R.MOHANTY/D.S.JETHI, AR REVENUE BY : SHRI KUNAL SINGH, CIT DR DATE OF HEARING : 10 /08/ 2017 DATE OF PRONOUNCEMENT : 17 /08/ 2017 O R D E R PER N.S.SAINI, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER U/S.263 OF THE ACT OF THE CIT, CUTTACK DA TED 18.3.2014 FOR THE ASSESSMENT YEAR 2010 - 2011. 2. IN THIS APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE ORDER PASSED BY THE CIT U/S.263 DESERVES TO BE QUASHED AS SECTION 263 HAS NO APPLICATION IN ABSENCE OF CUMULATIVE CONDITION NECESSARY FOR INVOCATION OF SECTION 263 I.E. NEITHER THE ORDER IS ERRONEOUS NOR IT IS PREJUDICIAL TO THE INTERE ST OF THE REVENUE. 2 ITA NO. 266/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 3. THE BRIEF FACTS OF THE CASE ARE THAT ON VERIFICATION OF MATERIALS AVAILABLE IN THE ASSESSMENT RECORD AND THE FINDINGS OF THE ASSESS ING OFFICER, THE CIT OBSERVED THAT IN THE AUDITED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31.3.2010 , THE ASSESSEE HAS DEBITED RS.1,18,40,332/ - UNDER THE HEAD MATERIALS AND WAGES. ON VERIFICATION OF THE BANK STATEMENT OF STATE BANK OF INDIA MAINTAINED AT CHANDINICHOWK BRANCH CUTTACK A/C NO.10861708906 , IT IS FOUND THAT PAYMENTS HAVE BEEN MADE MORE T HAN RS.20,000/ - OTHER THAN ACCOUNT PAYEE C HEQUE OR BANK DRAFT, AGGREGATE OF WHICH IS RS.73,60,000/ - . THE CIT OBSERVED THAT THE ASSESSING OFFICER HAS NOT CONSIDERED THE APPLICATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT. 4. THE CIT FROM THE BALANCE SHE ET OF THE ASSESSEE FOUND THAT THE ASSESSEE FIRM HAS SHOWN INTRODUCTION OF FRESH CAPITAL OF RS.8,00,000/ - BY SMT. GITA SAHU AND RS.14 LAKHS BY SMT. BANALATA SAHU. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER HAS NOT EXAMINED THE SOURCE OF INVESTM ENT, CREDITWORTHINESS AND MODE OF INTRODUCTION OF SUCH CAPITAL BY THE PARTNERS. HENCE, THE INTRODUCTION OF RS.22 LAKHS AS CAPITAL WAS REQUIRED TO BE ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE U/S. 68 OF THE I.T.ACT. FURTHER, THE CIT OBSERVED THAT I N THE PROFIT &LOSS ACCOUNT FOR THE YEAR EN DED 31.03.2010, THE ASSESEE HAS CLAIMED DEDUCTION OF RS.2,52,980 UNDER THE HEAD' OTHER DEDUCTION'. HE OBSERVED THAT NO SUCH DEDUCTIONS HAVE BEEN MADE BY THE TAX DEDUCTORS REGARDING THE CONTRACT DUES AS PER FORM NO. 16 ISSUED TO THE ASSESSEE. THE ASSESSING OFFICER 3 ITA NO. 266/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 HAS NOT VERIFIED THE NATURE OF SUCH 'OTHER DEDUCTION' AND SUCH CLAIM OF DEDUCTION WITHOUT ANY BASIS WHICH IS NO T DEDUCTIBLE IN P&L ACCOUNTS ARE REQUIRED TO BE ADDED TO THE TOTAL INCOME. THE CIT OBSERVE D THAT THE ABOVE NARRATED FACTS SHOW THAT WHILE FRAMING THE ASSESSMENT ORDER WAS APPARENTLY IN ERROR IN NOT EXAMINING THE AFORESAID ISSUES HAVING DIRECT IMPACT ON THE COMPUTATION OF THE ASSESSABLE TOTAL INCOME. THEREFORE, HE HELD THAT THE ASSESSMENT ORDE R FRAMED U/S.143(3) OF THE I.T.ACT,1961 DATED 2 9.03.2013 WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTERESTS OF REVENUE. ACCORDINGLY , HE ISSUED A SHOW CAUSE NOTICE U/S.263 O F THE I.T.ACT,1961 AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE , RESTORED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER BY SETTING ASIDE THE ORDER PASSED U/S.143(3) DATED 29.3.2013 BY OBSERVING AS UNDER: I. THE ASSESSING OFFICER HAS TO CALL FOR AUDITED BOOKS OF ACCOUNT RELATING TO THE FINANCIAL YEAR:2009 - 10 AN D EXAMINE THE STATUTORY APPLICATION OF SECTION 40A(3) REGARDING CASH PAYMENT OF 73,60,000 AND PURPOSE OF 265 ATM WITHDRAWS MADE DURING THE FINANCIAL YEAR:2009 - 10. II. THE ASSESSING OFFICER HAS TO VERIFY THE EXPENSES CLAIMED UNDER THE HEAD 'OTHER DEDUCTI ON' OF RS.2,52, 9 80 IN THE P&L ACCOUNTS. III. THE ASSESSING OFFICER HAS TO EXAMINE THE SOURCE OF INVESTMENT, CREDITWORTHINESS OF PARTNERS AND MODE OF INTRODUCTION OF SUCH FRESH INTRODUCTION OF CAPITAL OF RS.22,00,000 DURING THE FINANCIAL YEAR 2009 - 10 . 5. LD A.R. OF THE ASSESSEE DURING THE COURSE OF HEARING FILED BEFORE US CERTIFIED COPY OF ORDER SHEET FROM THE ASSESSMENT R ECORDS. HE POINTED OUT THAT THE ASSESSING OFFICER HAS RECORDED ON DIFFERENT DATES AS UNDER: 4 ITA NO. 266/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 20.7.2012: SRI D.S.JETHI , ADV, AR OF THE ASSESSEE APPEARED. HAZIRA FILED FOR HEARING ALONGWITH BANK STATEMENT, COPY OF AUDIT REPORT. THE CASE IS HEARD & DISCUSSED PARTLY. ADJOURNED TO 31.7.12 AT 4.30 PM. 2.11.2012 : SRI D.S.JETHI, ADV. AR OF THE ASSESSEE APPEARED. HAZIRA FILED FOR HEARING ALONG WITH 2 NOS. OF ORIGINAL TDS CERTIFICATES, 2 NOS BILLS STATEMENT, COPY OF RETURN ACKNOWLEDGEMENT. THE CASE IS HEARD & DISCUSSED PARTLY. HE IS REQUESTED TO PRODUCE BALANCE DETAILS AS CALLED FOR AS PER ANNEXURE ENCLOSED WITH THE NOTICE U/S .142(1) DT.3.7.12. ADJ. TO 12.11.2012. 12.11.2012: SRI D.S.JETHI, ADV. AR OF THE ASSESSEE APPEARED. HAZIRA FILED FOR HEARING. THE CASE IS HEARED & DISCUSSED PARTLY. HE IS REQUESTED TO PRODUCE THE FOLLOWING IN THE NEXT HEARING. I) HARD COPY OF I.T.RETURN F OR A.Y. 2010 - 2011 DULY SIGNED BY THE M.PARTNER. 2) ADDITION TO FIXED ASSETS. 3) DETAILS OF SECURED LOAN & UNSECURED LOAN. 4) S.DEBTORS & CREDITORS WITH CONFIRMATION. 5) COPY OF PARTNERSHIP DEED. 6) DETAILS OF EXPENSES CLAIMED UNDER THE HEAD - WORK IN PROGRE SS, MATERIALS, SALARY & WAGES, VAT, OTHER DEDUCTIONS, BILLS RECEIVABLE WITH DOCUMENTS. 7) DETAILS OF AMOUNT WITHHELD RS.22,54,158/ - 8) CASH PAYMENT MORE THAN RS.20,000/ - 9) ALL BOOKS OF ACCOUNT & BILLS/VOUCHERS. ADJOURNED TO 19.11.2012. 18.2.2013 : SRI D.S.JETHI, ADV. AR OF THE ASSESSEE APPEARED. HAZIRA FILED FOR HEARING ALONG WITH DETAILS OF BILLS RECEIVABLES & CAPITAL INTRODUCTION. THE CASE IS HEARD & DISCUSSED PARTLY. ADJ. TO 4.3.2013 AT 11.30 AM. 25.3.2013: SRI D.S.JETHI , ADV. AR OF THE ASSESSEE APPEARED. HAZIRA FILED ALONGWITH REPLY TO SHOW CAUSE LETTER, CREDITORS CONFIRMATION & LEDGER A/C OF TRANSPORTATION CHARGES. THE CASE IS HEARD & DISCUSSED. 5 ITA NO. 266/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 6. BY REFERRING TO THE ABOVE ORDER SHEET ENTRIES OF THE ASSESSING OFFICE R, HE POINTED OUT THAT THE ASSESSING OFFICER HAS VERIFIED ALL THE DETAILS BY CALLING INFORMATION AND EVIDENCE FROM THE ASSESSEE THE ISSUE REGARDING P AYMENT FOR MATERIALS & WAGES AND R EGARDING CAPITAL INTRODUCTION BY TWO PARTNERS, SMT. GITA SAHU AND SMT BAN ALATA SAHU AND REGARDING OTHER DEDUCTIONS IN THE PROFIT AND LOSS ACCOUNT CLAIMED OF RS.2,52, 980/ - . AFTER BEING SATISFIED ON ALL THE THREE ISSUES, HE HAS PASSED THE ASSESSMENT ORDER U/S.143(3) DATED 29.3.2013. THEREFORE, THE CIT W AS NOT JUSTIFIED IN HOLDI NG THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AS THE ASSESSING OFFICER HAS NOT VERIFIED THREE ISSUES POINTED OUT BY HIM BEFORE FRAMING THE ASSESSMENT. HE SUBMITTED THAT SIMPLY BECA USE THE ASSESSING OFFICER AFTER BEING SATISFIED WITH THE REPLY OF THE ASSESSEE ON THE QUERIES RAISED BY HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS NOT MADE ANY MENTION OF THE SAME IN THE ASSESSMENT ORDER BY ITSELF WILL NOT MAKE THE ASSESSMENT ORDE R ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. FOR THIS, HE PLACED RELIANCE ON THE DECISION S OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS ASHIS RAJPAL(2009) 320 ITR 674 (DELHI), CIT VS. VIKAS POLYMERS (2010) 194 TAXMAN 57 (DEL), WHEREIN, IT WAS HELD T HAT WHERE THE ASSESSING OFFICER DURING THE SCRUTINY ASSESSMENT PROCEEDINGS RAISED A QUERY, WHICH WAS ANSWERED BY THE ASSESSEE TO THE SATISFACTION OF THE ASSESSING OFFICER , BUT THE SAME WAS NOT REFLECTED IN THE ASSESSMENT ORDER BY HIM, A CONCLUSION CAN NOT BE DRAWN BY THE CIT 6 ITA NO. 266/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 THAT NO PROPER ENQUIRY WITH RESPECT TO THE ISSUE WAS MADE BY THE ASSESSING OFFICER, AND ENABLE HIM TO ASSUME JURISDICTION U/S.263 OF THE ACT. HE RELIED ON THE DECISION OF MUMBAI BENCHES OF THE TRIBUNAL IN THE CASE OF A NIL SHAH VS. CIT, 162 TAXMAN 3 9 (MUM) (TRIB) , WHEREIN, IT WAS HELD THAT IF THE ASSE SSING OFFICER ALLOWED A CLAIM ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, ON A N ENQUI RY MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE DECISION OF THE ASSESSING OFFICER CANNOT BE HELD TO BE ERRONEOUS , ON GROUND THAT THERE IS NO ELABORATE DISCUSSION IN THAT REGARD IN THE ORDER . IT IS THE PRACTICE THAT WHENEVER ANY CLAIM OF THE ASSESSEE IS ACCEPTED, THE ASSESSING OFFICER MAY NOT DISCUSS THE SAME IN TH E ORDER. 7. HE ALSO ARGUED THAT WHERE THERE WAS NO ENQUIRY AT AL L BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ORDER OF THE ASSESSING OFFICER MAY BE TERMED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE BUT WHERE ENQUIRY HAS BEEN MADE WHICH IS NOT ACCORDING TO THE CIT A PROPER E NQUIRY, THE ORDER CANNOT BE TERMED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. FOR THIS, HE RELIED ON THE DECISION OF THE DELHI BENCHES OF THE TRIBUNAL IN THE CASE OF SALORA INTERNATIONAL LTD. VS ADDITIONAL CIT, 2 SOT 705 (DELHI) , WHEREIN, IT WAS HELD THAT MERELY BECAUSE FROM A PERFECTIONIST POINT OF VIEW, IT IS FELT THAT SOME MORE ENQUIRIES AND VERIFICATIONS COULD HAVE BEEN MADE BY THE ASSESSING OFFICER, WHILE MAKING THE ASSESSMENT/ASSESSMENT ORDER, CANNOT BE DECLARED TO BE 7 ITA NO. 266/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 ERRO NEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE FURTHER RELIED ON THE DECISION OF CHANDIGARH BENCHES OF THE TRIBUNAL IN THE CASE OF AMRIK SINGH VS ITO (2003) 127 TAXMAN 87 (MAG) (CHD) AND BALIES VS ACIT (2003) 127 TAXMAN 150 (MAG) (CHD), WHEREI N, IT WAS HELD THAT ASSESSMENT FRAMED U/S.143(3) OF THE ACT CANNOT BE REVISED ON THE GROUND THAT DESIRED ENQUIRY WAS NOT MADE. 8. ANOTHER ARGUMENT MADE BY LD A.R. IS THAT IN ORDER TO INVOKE PROVISIONS OF SECTION 263 OF THE ACT, THE PRIMARY CONDITION WHICH HAS TO BE SATISFIED BY THE CIT IS THAT THE ORDER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT WAS THE SUBMISSION OF LD A.R. THAT THE MATTER CANNOT BE RESTORED TO THE FILE OF THE ASSESSING OFFICER TO DECIDE BY CONDUCTING FURTHER ENQUIRY TO FIND OUT THE ORDER IS ERRONEOUS OR NOT. FOR THIS, HE RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ITO VS. DG HOUSING P ROJE C TS LTD, (2012 ) 343 ITR 329 (DEL) . 9. ON THE OTHER HAND, LD CIT DR VEHEMENTLY ARGUED AND S UPPORTED THE ORDER OF THE CIT . HE RELIED ON THE DECISION OF DELHI BENCHES OF THE TRIBUNAL IN THE CASE OF ANIL KUMAR VS ACIT (2005) 147 TAXMAN 5 (DEL)(MAG), WHERE IN, IT WAS HELD THAT THE ORDER OF THE ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE WHERE IT WAS FOUND BY THE CIT THAT THE ASSESSING OFFICER ACCEPTED GIFTS CLAIMED BY THE ASSESSEE WITHOUT MAKING PROPER ENQUIRY. AS REGARDS TO CREDITWORTHINESS OR FINANCIAL CAPACITY OF THE DONORS BY 8 ITA NO. 266/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 EXAMINING/VERIFYING SOURCE OF FUNDS IN THEIR BANK ACCOUNTS WHERE FROM GIFTS WERE PAID TO THE ASSESSEE . 10. FURTHER, THE LD CIT DR RELIED ON THE DECISION OF THE CHENNAI BENCHES OF THE TRIBUNAL IN T HE CASE OF SUPER CLOTH VS ACIT (2006) 99 ITD 300 (CHENNAI), WHEREIN, IT WAS HELD THAT WHERE THE ASSESSING OFFICER ACCEPTED THE CLAIM OF THE ASSESSEE THAT ADVANCES MADE WERE TRADE ADVANCES AND, THEREFORE, THERE WAS NO INTEREST CHARGED ON THESE ADVANCES AS T HERE WAS NO PROVISION IN THE PARTNERSHIP DEED WITHOUT CONDUCTING ANY FURTHER ENQUIRIES. THE TRIBUNAL HELD THAT THE CIT WAS JUSTIFIED IN PASSING ORDER U/S.263 OF THE ACT HOLDING THE ORDER TO BE PREJUDICIAL AND ERRONEOUS TO THE INTEREST OF THE REVENUE. 11. H E FURTHER RELIED ON THE DECISION OF THE CHENNAI BENCHES OF THE TRIBUNAL IN THE CASE OF BHARAT OVERSEAS BANK LTD VS CIT, 139 ITD 154 (CHENNAI), WHEREIN, THE TRIBUNAL HELD THAT WHILE ALLOWING THE CLAIM FOR DEDUCTION OF BAD DEBTS U/S.36(I)(VIIA), NO ENQUIRY W AS MADE BY THE ASSESSING OFFICER AND IT WAS HELD THAT THE CIT WAS JUSTIFIED IN EXERCISING HIS JURISDICTION U/S.263 OF THE ACT BY HOLDING THE ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE, THEREFORE, PRAYED THAT THE ORDER OF THE CIT SHOULD BE UPHELD. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ORIGINAL ASSESSMENT WAS COMPLETED ON 29.3.2013 U/S.143(3) OF THE ACT BY THE ASSESSING OFFICER DETERMINING TOTAL INCOME AT RS.4,30,260/ - . 9 ITA NO. 266/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 THE SAID ORDER WAS CONSIDERED AS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVE NUE BY THE CIT AND THE CIT DIRECTED THE ASSESSING OFFICER TO MAKE ASSESSMENT AFRESH IN RESPECT OF THE FOLLOWING THREE ISSUES: I. THE ASSESSING OFFICER HAS TO CALL FOR AUDITED BOOKS OF ACCOUNT RELATING TO THE FINANCIAL YEAR:2009 - 10 AND EXAMINE THE STATUTO RY APPLICATION OF SECTION 40A(3) REGARDING CASH PAYMENT OF 73,60,000 AND PURPOSE OF 265 ATM WITHDRAWS MADE DURING THE FINANCIAL YEAR:2009 - 10. II. THE ASSESSING OFFICER HAS TO VERIFY THE EXPENSES CLAIMED UNDER THE HEAD 'OTHER DEDUCTION' OF RS.2,52, 9 80 IN THE P&L ACCOUNTS. III. THE ASSESSING OFFICER HAS TO EXAMINE THE SOURCE OF INVESTMENT, CREDITWORTHINESS OF PARTNERS AND MODE OF INTRODUCTION OF SUCH FRESH INTRODUCTION OF CAPITAL OF RS.22,00,000 DURING THE FINANCIAL YEAR 2009 - 10. 13. BEFORE US, A COPY OF FRESH ORDER OF ASSESSMENT PASSED IN PURSUANCE TO THE ABOVE ORDER OF THE CIT BY THE ASSESSING OFFICER U/S.263/143(3) OF THE ACT DATED 14.1.2016 WAS FILED. A PERUSAL OF THIS ORDER OF FRESH ASSESSMENT SHOWS THAT NO ADDITION WAS MADE IN RESPECT OF ISS UES NOS.1 & 2 MENTIONED ABOVE. THUS, THE APPEAL IN RESPECT OF ABOVE TWO ISSUES HAS BECOME ONLY ACADEMIC IN NATURE AND REQUIRES NO SEPARATE ADJUDICATION BY US. 14. THE ONLY REAL GRIEVANCE OF THE ASSESSEE WHICH EXISTS IS IN RESPECT OF ISSUE NO.3 ABOVE I.E. INTRODUCTION OF FRESH CAPITAL OF RS.22,00,000/ - BY TWO PARTNERS. 10 ITA NO. 266/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 15. IN RESPECT OF ABOVE ISSUE, LD A.R. SUBMITTED THAT DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAD ASKED THE ASSESSEE TO FURNISH DETAILS OF FRESH INTRODUCT ION OF CAPITAL BY TWO PARTNERS ALONGWITH EVIDENCES. IN REPLY THERETO, THE ASSESSEE ON 18.2.2013 DULY FILED BEFORE THE ASSESSING OFFICER A COPY OF LEDGER ACCOUNT OF THE PARTNERS, COPY OF BALANCE SHEET AND RETURN OF INCOME AS ON 31.3.2009 AND AS ON 31.3.201 0 OF THE TWO PARTNERS FROM WHOM FRESH CAPITAL WAS INTRODUCED. IT WAS EXPLAINED TO THE ASS ESSING OFFICER THAT RS.15 LAKHS , WHICH WAS THE LIABILITY OF THE FIRM TOWARDS RETIRI NG PARTNERS WAS TAKEN OVER BY THE TWO NEW INCOMING PARTNERS. THUS, FRESH CAPITAL I NTRODUCTION WAS MERELY RS.7 LAKHS BY THE SAID TWO INCOMING PARTNERS, WHICH WAS RS.3 LAKHS BY SMT. GITA SAHU AND RS.4 LAKHS BY SMT. BANA LATA SAHU. FURTHER, FROM THE BALANCE SHEET OF THE SAID PARTNERS, IT WAS EXPLAINED TO THE ASSESSING OFFICER THAT THEY HA VE CAPACITY TO MAKE SUCH CAPITAL CONTRIBUTION AND THEIR INVESTMENT IN THE ASSESSEES FIRM WAS DULY REFLECTED IN THEIR BALANCE SHEET AND RETURN OF INCOME. THE ASSESSING OFFICER AFTER DULY SATISFIED WITH THE CAPACITY OF THE PARTNERS AND GENUINENESS OF THE T RANSACTION ON THE BASIS OF THE ABOVE EVIDENCE S ACCEPTED INTRODUCTION OF CAPITAL BY THEM. THEREFORE, THE CIT WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSING OFFICER ACCEPTED INTRODUCTION OF CAPITAL BY THE TWO PARTNERS WITHOUT MAKING ANY ENQUIRY. 16. WE FIND THAT NO MATERIAL COULD BE BROUGHT BEFORE US BY LD D.R. TO CONTROVERT THE ABOVE SUBMISSION OF THE ASSESSEE. IN OUR CONSIDERED VIEW, 11 ITA NO. 266/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 IT IS A WELL SETTLED POSITION OF LAW THAT LACK ENQUIRY MAY PROVIDE BASIS FOR REVISION U/S.263 OF THE ACT BUT MERELY MAKING OF ENQUIRY IN THE MANNER WHICH IS CONSIDERED SUFFICIENT OR APPROPRIATE BY THE CIT CANNOT CONFER JURISDICTION TO MAKE REVISION U/S.263 OF THE ACT. IN THE INSTANT CASE, WE FIND THAT THE ASSESSING OFFICER IN THE COURSE OF ORIGINAL ASSESSMENT PROCEEDIN GS ACCEPTED INTRODUCTION OF CAPITAL BY TWO PARTNERS AFTER MAKING ENQUIRY AND, THEREFORE, THE CIT WAS NOT JUSTIFIED IN REVISING THE SAID ORDER OF ASSESSMENT ON THE GROUND OF LACK OF ENQUIRY. THEREFORE, THE ORDER OF THE CIT ON THIS ISSUE IS SET ASIDE. CONS EQUENTLY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 1 7 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 /08/2017. SD/ - SD/ - ( PAVAN KUMAR GADALE) ( N.S SAINI) JUDICIALMEMBER A CCOUNTANT MEMBER CUTTACK; DATED 17 /08/2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : M/S. B.SAHOO AND PARTNERS, BHOLAMIAN BAZAR, MANSINGHPATNA, TULSIPUR, CUTTACK 2. THE RESPONDENT. CIT, CUTTACK 3. THE CIT(A) - 4. PR.CIT - CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//