SH. BABU SINGH, ZIRA V. PR. C.I.T, , BATHINDA

ITA 274/ASR/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0941 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-07-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 15-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHA RANI SINGH LD
• Assessee Lawyers: P N ARORA LD
• Keywords: Business income; Opportunity of being heard; Assessment record; Revenue expenditure; Capital expenditure; Set aside
• Section: 143(3); 142(1); 143(2); 147; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. VIKRAM SINGH YADAV , ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBE R ITA NO.274(ASR)/2017 ASSESSMENT YEAR:2010-11 SH. BABU SINGH, VILLAGE MARKHAI, TEHSIL ZIRA. [PAN:FFVPS 8729R] VS. PR. CIT, BHATINDA. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. P. N. ARORA (LD. ADV.) RESPONDENT BY: SMT. ABHA RANI SIN GH (LD. CIT-DR) DATE OF HEARING: 23.07.2019 DATE OF PRONOUNCEMENT: 03.09.2019 ORDER PER N.K.CHOUDHRY, JM: THE ASSESSEE HAS PREFERRED THIS APPEAL AGAI NST THE ORDER DATED 30.03.2017 IMPUGNED HEREIN PASSED BY THE PRINCIPAL COMMISSIONER OF INCOME TAX, BHATINDA U/S 263 OF THE INCO ME TAX ACT, 1961, (HEREINAFTER CALLED AS THE ACT), WHEREBY THE ASSESSMENT ORDER DATED 20.07.2014 WAS CANCELLED WITH DIRECT ION TO THE ASSESSING OFFICER TO DECIDE THE MATTER AFRESH. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEES CASE WAS REOPENED U/S 147 OF THE ACT AND STATUTORY NOTICE U/S 14 8 WAS ISSUED FOR THE ASSESSMENT YEAR RELEVANT TO THE INSTANT CASE ON DATED 16.08.2013, IN PURSUANCE TO WHICH, THE RETURN W AS FILED BY THE ASSESSEE BY DECLARING INCOME OF RS.1,45,600/- + AGRICUL TURE INCOME OF RS.2,42,000/- ON DATED 21.10.2013 WHICH WAS SCRUTINIZED BY THE ASSESSING OFFICER. IN THE ASSESSMENT 2 ITA NO.274/ASR/2017 (A.Y.2010-11) BABU SINGH VS. ACIT PROCEEDING, NOTICE DATED 31.01.2012 WAS ISSUED BY THE ASSESSING OFFICER QUA VERIFICATION OF FINANCIAL TRANSACTION OF RS.1,16,37,157/- IN THE SBI BANK AT ZIRA, DURING THE FINANCIAL YEAR 2009-10 RELEVANT TO THE INSTANT CASE. THEREAFTER SECOND NOTICE DATED 28.12.2012 WAS ISSUED FOR VERIFICATION OF T HE SAME FACTS. THE ASSESSEE REPLIED THE NOTICE AS UNDER: TO THE INCOME TAX OFFICER, (INTELL.,) ROOM NO.107, C.R. BUILDING, BHATINDA. SUBJECT: REPLY TO FINALANOPPORTUNITY TO FURNISH THE INFORMATION/DOCUMENTS IN RESPON SE TO THIS OFFICE LETTER/NOTICE F.NO. IT O (INTGELL.) BTD/2011-12/749 DATED 31.01.2012-M ATTER REGARDING. DEAR SIR, KINDLY REFER YOUR LETTER NO.ITO(INTELL.,)/BTI/2 012-13/699 DATED 28.12,2012 VIDE SOME INFORMATION HAS BEEN CALLED FO R AND THE REPLY WHICH IS GIVEN SERIATIM AS UNDER: 1. THAT IT IS CORRECT THAT I AM HAVING ACCOUNT NO. 11321388010 IN SOME TRANSACTIONS HAVE MADE TO THE RS.L1637157/- IN THIS RESPECT IT IS SUBMITTED THAT I AM EMPLOYEE OF M/S MAHAVIR TRAC TORS, ZIRA WHO IS HOLDING THE AGENCY OF SWARAJ TRACTORS. THE COMPAN Y DURING THE FINANCIAL YEAR 2009-2010 HAD LAUNCHED A SCHEME THAT IF THE FARMERS MAKE PURCHASES DIRECT FROM THE COMPANY THEN HE WOUL D HAVE TO PAY LESS RS.30,000/- ON EACH TRACTORS TO INCREASE THE SA LES. THEN FIRM M/S MAHAVIR TRACTORS, ZIRA DEPUTED ONE OF HIS EMPLO YEE SH. BABU SINGH AND SAID EMPLOYEE USED TO COLLECT THE FUNDS F ROM THE FARMERS DIRECTLY AND MAKE THE DD IN THE NAME OF MAHINDRA AN D MAHINDRA CO., DIRECT AND THE SALE BILLS WERE ALSO ISSUED DIR ECTLY BY THE MAHINDRA AND MAHINDRA AND CO. THE PHOTO COPIES OF A LL THE DDS PURCHASED AND BANK STATEMENT OF THE STATE BANK OF I NDIA, FEROZEPUR BOTH ARE ALSO ATTACHED. WHICH WILL CLEAR THE PICTUR E OF THE ALL THE TRANSACTIONS. 2. THAT THE I HAVE DULY MADE THE COMPLIANCE T HOUGH LATE ON THE SAME LETTER AS AND WHEN RECEIVED. THANKING YOU, YOURS FAITHFULLY, DATED:24.01.2013 (BABU SINGH) S/O SH. HARMANDER SINGH, V.P.O MARKHAI, TEHSIL ZIRA.. DISTT., FEROZEPUR. 3 ITA NO.274/ASR/2017 (A.Y.2010-11) BABU SINGH VS. ACIT THE ASSESSEE IN SUPPORT OF ITS CONTENTION ALSO FILED COPY OF BANK STATEMENT OF THE ASSESSEE WITH STATE BANK OF INDIA , FIROZEPUR FOR THE PERIOD OF 01.04.2009 TO 31.03.201 0 AND THE COPIES OF DEMAND DRAFTS MADE BY THE ASSESSEE IN FAVOUR OF MAHINDRA AND MAHINDRA CO. FROM STATE BANK OF INDIA AND OTHER RELEVANT DOCUMENTS PERTAINING TO THE SAID TRANSACTIONS. 2.1 THEREAFTER, ANOTHER NOTICE DATED 05.07.2013 W AS ISSUED BY THE ASSESSING OFFICER FOR VERIFICATION OF AIR/CIB INFO RMATION, REGARDING THE CASH DEPOSIT OF RS.1,16,37,157/- IN STAT E BANK OF INDIA, ZIRA. THE COPY OF THE SAID NOTICE FOR BREVITY A ND READY REFERENCE IS REPRODUCED HEREIN BELOW. DATED: 05-07-2013 TO SH. BABU SINGH SH. HARMANDER SINGH, V&PO MARKHAI, TEHSIL ZIRA. SIR, SUB: VERIFICATION OF AIR/CIB INFORMATION-REGA RDING- AS PER AIR/CIB INFORMATION AVAILABLE WITH THI S OFFICE, DURING THE FINANCIAL YEAR 2009-10 YOU HAVE DEPOSITED RS.1163715 7/- IN CASH IN YOUR BANK ACCOUNT MAINTAINED WITH THE STATE BANK OF INDIA, BASTI MACHHIAN, ZIRA. 2. IN THIS CONNECTION YOU ARE REQUESTED TO THE A TTEND MY OFFICE AT FEROZEPUR ON 12/07/2013 AT 11.30 AM ALONG WITH DOCUM ENTARY EVIDENCE EXPLAINING THE SOURCE OF CASH DEPOSIT IN T HE ABOVE SAID BANK. YOURS FAITHFUL LY, (L.D. BANSAL) INCOME TAX OFFIC ER, WARD-III(2), FEROZEPU R. 4 ITA NO.274/ASR/2017 (A.Y.2010-11) BABU SINGH VS. ACIT THE SAID NOTICE DATED 05.07 2013 WAS ALSO REPLI ED BY THE ASSESSEE VIDE ITS REPLY DATED 06.08.2013, WHICH FOR THE S AKE OF BREVITY AND CONVENIENCE IS ALSO REPRODUCED HEREIN BELOW. TO THE INCOME TAX OFFICER WARD-III(2), FEROZEPUR. SUBJECT: VERIFICATION OF AIR/CIB INFORMATION IN TH E CASE OF SH. BABU SINGH, V&PO. MAKHAI, TEH., ZIRA - FOR THE ASST. YEAR 2009-2010REPLY REGARDING. DEAR SIR, KINDLY REFER YOUR NOTICE UNDER THE INCO ME TAX ACT, L961 FOR THE VERIFICATION OF THE CERTAIN TRANSACTIO N WHICH IS KNOWN AS AIR INFORMATION. IN THIS RESPECT THAT I HA VE ALREADY SUPPLIED THE REQUIRED INFORMATION TO THE IN COME TAX OFFICER, (INTELLIGENCE), ROOM NO. 107, C.R. BUILDIN G. HOWEVER, THE SAME IS GIVEN AS UNDER: 1. THAT IT IS CORRECT THAT I HAVE OWN AM SAVI NG ACCOUNT NO. 11321388010 (COPY ATTACHED) AND SOME TRANSACTIO N FOR PURCHASE OF TRACTORS DIRECT IN THE NAME OF THE AGRI CULTURIST. THE LIST OF AGRICULTURIST ALONG WITH DESCRIPTION OF PURCHASE OF DD FROM THE BANK IN THE NAME OF COMPANY MAHINDERA A ND MAHINDERA LTD., (FES), SWARAJ DIVISION AFTER DEPOSI TED THE CASH IN MY SAVING ACCOUNT ON BEHALF OF THE PURC HASES FARMERS. (COPY ATTACHED). 2. THAT I HAVE MADE AVAILABLE THE DIRECT PURCHAS ES FROM THE COMPANY MOHINDER AND MOHINDERA LTD., (FES), SWA RAJ DIVISION ON BEHALF OF THE 28 AGRICULTURIST NEARLY N UMBERS OF 28 TRACTORS. THE COPY OF BILL ISSUED BY THE COMPANY OF ALL THE TRACTORS WAS ISSUED DIRECTLY IN THE NAME OF THE AGRICULTURIST. (PHOTO COPY OF BILLS ISSUED BY THE C OMPANY DIRECT OF ALL THE 28 TRACTORS ISSUED ARE ALSO ATTAC HED HEREWITH). 3. THAT I USED TO RECEIVE THE CASH FROM THE FARM ERS AND DEPOSITED THE SAME IN MY ACCOUNT AND PURCHASED THE DD FROM THE BANK IN THE NAME OF THE SAME AGRICULTURIST FROM SBI, BASTI MACHHIAN, ZIRA WHO USED TO GIVE THE CASH FOR THE PURCHASE OF TRACTORS. (COPY DD AND COPY PURCHASE BI LLS ISSUED BY THE COMPANY ARE ATTACHED HEREWITH) I HOPE THE AFORESAID EXPLANATION WILL SAT ISFY YOUR GOOD SELF, HOWEVER, IF ANY FURTHER INFORMATION IS R EQUIRED THAT WILL BE DULY SUPPLIED. 5 ITA NO.274/ASR/2017 (A.Y.2010-11) BABU SINGH VS. ACIT YOURS FAITHFULLY (U.K.BHOLA) ADVOCATE FOR M/ S BABU SINGH, ZIRA THE ASSESSEE IN SUPPORT OF ITS CONTENTION ALSO FILED VARIOUS DOCUMENTS SUCH AS LETTER WRITTEN TO THE MANAGER, SBI, ZIRA FOR CONFIRMATION OF BANK DRAFTS MADE THROUGH SAVING BANK ACCOUNT NO.11321388010 AND THE INVOICE CUM DISPATCH ADVICES. 2.2 THEREAFTER, A NOTICE DATED 16.08.2013 WAS ISSUED TO THE ASSESSEE U/S 148 OF THE ACT, ON THE BASIS OF THE REASONS RECORDED ON 16.08.2013 FOR INITIATING THE PROCEEDINGS U/S 147 OF THE ACT. IN RESPONSE TO WHICH THE ASSESSEE FILED ITS RETURN OF INCOME ON DATED 21 ST OCTOBER, 2013. THEREAFTER, STATUTORY NOTICES U/S 142 (1) AND 143(2) OF THE ACT HAVE ALSO BEEN ISSUED TO THE ASSESSEE WHICH WERE ALSO REPLIED BY THE ASSESSEE VIDE ITS REPLY DATED 25.08.2014, WHICH FOR THE SAKE OF BREVITY AND CONVENIENCE IS ALSO REPRODUCED HEREIN BELOW. TO THE INCOME TAX OFFICER WARD-III(2), FEROZEPUR. SUBJECT: REPLY TO NOTICE UNDER SECTION 142(1) AND 1 43(2) 0F THE INCOME TAX ACTION IN THE CASE OF SH. BABU SINGH. V&PO. MAKHAI, THE., ZIRA--FOR THE ASST. YEAR 2010-2011, REPLY EGARDING. DEAR SIR. KINDLY REFER YOUR NOTICES UNDER SECT IONS 142(1) AND 143(2) OF THE INCOME TAX ACT, 1961 AND THE REPLY OF WHICH IS GIVEN AS UNDER: 1. THAT I AM AN AGRICULTURIST AND HOLDING SEVEN ACRE S OF AGRICULTURAL LAND IN MY NAME (THE COPY JAMANBADI AN D GARDAUWRI BOTH ARE ATTACHED HEREWITH (SEE PAGE 1 TO 24) I USE TO USE TO OBLIGE 6 ITA NO.274/ASR/2017 (A.Y.2010-11) BABU SINGH VS. ACIT THE FARMERS ON THE BASIS SCHEME LAUNCHED BY THE NEW LY OWNED COMPANY ABOUT THE SALE OF PRODUCT OF SAWRAJ TRACTOR S DIRECTLY FROM THE COMPANY. AND TO IMPLEMENT THIS I USE TO COLLECT CASH FROM THE FARMERS DEPOSITED IN MY ACCOUNT AND PURCHASED THE D D IN THE NAME OF COMPANY MOHINDERS AND MOHINDERA LTD., (FES). ON THE BASIS OF THIS TRANSACTION I HAVE RECEIVED THE NOTICE UNDER S ECTION 148 OF THE 1.1'.ACT. 1961 FOR ASSESSMENT YEAR 2010-2011 RELEVA NT TO THE PREVIOUS YEAR 2009-2010 AND IN RESPONSE THIS NOTICE I HAVE FILED MY INCOME TAX RETURN FOR THE ASSTT. YEAR 2010-2011 VIDE YOUR OFFICE RECEIPT NO. 4135 ON 21.10.2013 ALONG WITH CO MPUTATION CHART (BOTH PHOTO COPIES ATTACHED SEE PAGE 1 TO 2). 2. THAT IT IS CORRECT THAT 1 HAVE PREPARED A TRUE AC COUNT AND FILED MY INCOME TAX RETURNS IN RESPONSE TO THE NOTICE UND ER SECTION 148 OF THE INCOME TAX ACT, 1961 ON THE BASIS OF THE DEP OSITS IN THE MY SAVING ACCOUNT NO. 11321388010 (COPY OF BANK STATEM ENT ALONG WITH ACCRETION STATEMENT BOTH ARE ATTACHED HEREWITH SEE PAGE TO11. THAT ALL MAJOR DEPOSITS IN MY BANK ACCOUNT AR E ON ACCOUNT OF ADVANCES RECEIVED FROM THE FARMERS FOR PURCHASING T HE DD FROM THE STATE BANK OF INDIA FOR THE PURCHASE OF SAWRAJ TRAC TORS FROM COMPANY MOHINDERA & MOHINDERA DIRECTLY FROM THE COM PANY BY THE FARMERS THROUGH ME AS FARMERS. I USED TO COLLECT CA SH FROM THE FARMERS AND DEPOSITED IN MY SAVING ACCOUNT NO.11321 38810 AND FROM THIS BANK ACCOUNT I PURCHASED ALL THE DD IN TH E NAME OF INDIVIDUAL FARMERS IN WHOSE NAME BILL OF TRACTORS W AS ISSUED. ALL THE DDS PURCHASED FROM SBI, ZIRA WERE SENT TO THE C OMPANY, ON BEHALF OF THE FARMERS, MOHINDERA AND MOHINDERA LTD. (FES), SWARAJ DI VISION (PHOTO COPY OF DD ALONG WITH PHOTO COPY OF BILL ISSUED BY THE COMPANY DIRECTLY IN THE NAME OF FARME RS ARE ATTACHED HEREWITH. SINCE RECIPIENT OF CASH AND PAYER OF CAS H BOTH ARE AGRICULTURIST AND BY DOING NONE OF THE PERSON RECIP IENT AS WELL AS PAYER HAS CONTRIVED ANY OF THE PROVISIONS. 3. THAT I HAVE MADE AVAILABLE THE DIRECT PURCHASE OF SAWRAJ TRACTORS TO THE FARMERS FROM THE COMPANY MOHINDER A ND MOHINDERA LTD., (FES), SWRAJ DL VISION ON BEHALF OF THE APPROXIMATELY 28 AGRICULTURIST/FARMERS NEARLY 28 T ACTORS. THE COPY OF BILL ISSUED BY THE COMPANY OF ALL THE FARMERS FO R THE SALE TRACTOR WERE ISSUED DIRECTLY IN THE NAME OF THE AGRICULTURI ST. (PHOTO COPY OF THE DD PURCHASED AND PHOTO COPY OF BILLS ISSUED BY THE COMPANY DIRECTLY OF ALL THE 28 TRACTORS ISSUED ARE ALSO ATT ACHED HEREWITH SEE PAGES 25 TO 86. 4. THAT ALL THE AMOUNT RECEIVED FROM THE FARMERS WAS FIRST DEPOSITED IN MY ACCOUNT AS MOST OF THE FARMERS DID NOT HAVE ANY BANK ACCOUNT AND FROM THIS ACCOUNT THE DD WAS PURCH ASED AS THIS THE PRE -CONDITION OF THE COMPANY THAT AMOUNT WILL BE ACCEPTED EITHER ACCOUNT PAYEE CHEQUE OR DD DULY PURCHASED FR OM THE NATIONALIZED BANKS. ACCORDINGLY CASH COLLECTED FROM THE FARMERS DEPOSITED IN THE ACCOUNT OF MINE AND THEN DD WAS PU RCHASED IN THE NAME EACH FARMERS THOUGH THE SB1, BASTI MACHHIAN. Z IRA AND SENT TO THE COMPANY AND WHO USED ISSUED SALE BILL OF TRA CTORS DIRECTLY IN THE NAME OF' FARMERS. 7 ITA NO.274/ASR/2017 (A.Y.2010-11) BABU SINGH VS. ACIT I HOPE THE AFORESAID EXPLANATION WILL SATISFY YOUR GOOD SELF, HOWEVER, IF ANY FURTHER INFORMATION IS REQUIRED THA T WILL BE DULY SUPPLIED. DATED 25-08-14 YOURS FAITHFULLY (U.K. BHOLA) ADVOCATE FOR M/S BABU SINGH, ZIRA 2.3 THEREAFTER , NOTICE DATED 13/18-06-2014 AND QUESTIONNAIRE DATED 26.06.2014 WERE ALSO ISSUED TO THE ASSESSEE. FOR THE SAKE OF BREVITY AND READY REFERENCE QUESTIONNAIRE IS REPRODUCED HEREIN BELOW. TO SHRI BABU SINGH S/O SHRI HARMINDER SINGH, V&PO MARKHAI, TEHSIL ZIRA DISTT. F EROZEPUR. DEAR SIR, SUBJECT:- ASSESSMENT FOR THE ASSESSMENT YEAR 2010-11 - REG. - IN CONNECTION WITH THE ASSESSMENT FOR THE ASSESSMENT YEAR 2010-11 PENDING IN YOUR CASE, YOU ARE REQUIRED TO PRODUCE/F URNISH THE FOLLOWING INFORMATION:- 1. GIVE DETAILS OF ALL THE SOURCES OF YOUR INCOME. 2. FURNISH COPY OF ITR ALONGWITH TRADING ACCOUNT, PRO FIT & LOSS ACCOUNT AND BALANCE SHEET FOR THE ASSESSMENT YEAR 2010-11. ALSO PRODUCE COPY OF ITR FOR THE ASSESSMENT YEAR 2009-10. 3. GIVE DETAILS OF THE BOOKS OF ACCOUNT MAINTAINED A ND PRODUCE THE SAME WITH BILLS/VOUCHERS AND THE BANK PASS BOOKS. 4. FURNISH STATEMENT OF ALL THE BANK ACCOUNTS MAINTA INED BY YOU FOR THE PERIOD 01.04.2010 TO 31.03.2011 AND ORIGINAL BANK P ASS BOOKS BE PRODUCED FOR VERIFICATION. 5. SOURCE OF ALL THE CREDIT ENTRIES BEARING IN THE A BOVE BANK ACCOUNTS ALONGWITH DOCUMENTARY EVIDENCE AS WELL AS NARRATION THEREOF. FURTHER, DETAILS OF UTILIZATION OF DEBIT/WITHDRAWALS BE ALSO EXPLAINED. 6. DETAILS OF EXPENDITURE/INVESTMENT MADE BY YOU DUR ING THE FINANCIAL YEAR 2010- 11 I.E. PERIOD 01.04.2010 TO 31.03.2011. 7. DETAILS OF MOVABLE / IMMOVABLE ASSETS OWNED BY YO U DURING THE PERIOD 01.04.2010 TO 31.3.2011. 8 ITA NO.274/ASR/2017 (A.Y.2010-11) BABU SINGH VS. ACIT 8. FURNISH COPY OF JAMABANDI/FARD IN RESPECT OF LAND HOLDINGS AND ALSO FURNISH COPY OF FORM J. ORIGINAL THESE DOCUMENTS BE PRODUCED FOR VERIFICATION. 9. IN YOUR SUBMISSIONS DATED 25.06.2014, YOU HAVE MA DE DIRECT PURCHASES OF SWARAJ TRACTORS TO THE FARMERS FROM TH E COMPANY MAHINDRA AND MAHINDRA LTD. SWARAJ DIVISION. PLEASE INTIMATE IN WHICH CAPACITY YOU ARE DOING THE BUSINESS. ARE YOU AN AGENT OF THE COMP ANY OR AN EMPLOYEE OF THE COMPANY. ARE YOU AN EMPLOYEE OF ANY DEALER. I F SO, FURNISH EVIDENCE IN THIS REGARD. 10. PERUSAL OF THE ITR SHOWS THAT YOU SHOWN INCOME FROM OTHER SOURCES. PLEASE GIVE COMPLETE DETAILS WITH DOCUMENTARY EVIDE NCE. ALSO YOU HAVE STATED THAT YOU MADE DIRECT PURCHASES FROM A TRACTO R COMPANY BUT NO BUSINESS INCOME/ COMMISSION INCOME HAS BEEN REFLECT ED. GENERALLY IN TRACTOR BUSINESS, THE COMMISSION IS PAID BY THE C OMPANY @ 5% OF THE COST OF THE PER TRACTOR. PLEASE EXPLAIN AS TO WHY THE CO MMISSION INCOME MAY NOT BE ESTIMATED. 11. PLEASE INTIMATE AS TO WHY THE PROVISIONS OF SECTIO N 44AA AND 44AB READ WITH SECTION 271A AND 271B OF I.T. ACT, 1961 MAY NOT BE APPLIED IN YOUR CASE. YOUR CASE IS FIXED FOR HEARING FOR 30.06.2014 AT 11.00 AM . NOTICE U/S 142(1) IS ALSO ENCLOSED FOR COMPLIANCE. YOURS FAITHFULLY (L.D. BANSAL) INCOME TAX OFFICER WARD-III(2), FEROZEPUR 2.4 THE SAID QUESTIONNAIRE DATED 26.06.2014 WAS SPECIFICALLY REPLIED BY THE ASSESSEE VIDE ITS REPLY DATED 30.06.2014, WHICH FOR THE SAKE OF BREVITY AND READY REFERENCE IS ALSO REP RODUCED HEREIN BELOW. THE INCOME TAX OFFICER WARD-III(2), FEROZEPUR. SUBJECT:- REPLY TO NOTICE UNDER SECTION 142(1) AND 143(2) OF THE INCOME TAX ACTION IN THE CASE OF SH. BABBU SINGH, V&PO.MAKHAI, THE, ZIRA-FOR THE ASSTT., YEAR 2010-2011 REPLY REGARDING. 9 ITA NO.274/ASR/2017 (A.Y.2010-11) BABU SINGH VS. ACIT DEAR SIR, KINDLY REFER YOUR NOTICES UNDER SECTION 1 42(1 )B AND 143(2) OF THE INCOME TAX ACT, 1961 AND THE REPLY OF WHICH IS GIVEN AS UNDER: 1. THAT I AM AN AGRICULTURIST AND HOLDING SEVEN ACRES OF AGRICULTURAL LAND IN MY NAME (THE COPY JAMABANDI AND GARDAUWRI B OTH HAS ALREADY BEEN SUBMITTED WITH PREVIOUS REPLY) WHICH T HE MAIN SOURCE OF INCOME OR AMOUNT WHICH LEFT BY THE FARMERS OUT OF D IRECT PURCHASE OF TRACTORS FROM COMPANY DIRECT IN THE NAME OF FARMERS . 2. THAT IT IS CORRECT THAT I HAVE PREPARED A TRU E ACCOUNT AND FILED MY INCOME TAX RETURNS IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT 1961 AND WHICH WAS FILED ON 21.10.201 3 VIDE YOUR OFFICE NO.4135. SINCE MY CASE WAS OPENED ON THE BASIS OF T HE DEPOSITS IN THE MY SAVING ACCOUNT NO. 11321388010 (COPY OF BANK STA TEMENT ALONG WITH ACCRETION STATEMENT HAS ALREADY BEEN WITH MY P REVIOUS REPLY) 3. THAT I AM MAINTAINING ONLY ONE SAVING ACCOUNT IN THE STATE BANK OF INDIA, ZIRA AND THE COPY OF MY BANK ACCOUNT NO.L 132 1388010 ALONG WITH ACCRETION STATEMENT EXPLAINING EACH AND EVERY ENTRY OF DEPOSIT AND WITHDRAWALS HAVE BEEN EXPLAINED AS ALREADY BEEN SUB MITTED WITH MY PREVIOUS AND THESE ARE THE REASONS RECORDED BY YOUR GOOD SELF THAT CASH DEPOSITS IN THE SAVING ACCOUNT IS MORE THAN YOUR IN COME AND ON THE BASIS WHICH YOUR GOOD SELF HAS ISSUED ME NOTICE U/S 148 FOR FILLING MY INCOME TAX RETURNS FOR THE ASSTT YEAR 2010-11 RELEV ANT TO THE PREVIOUS YEAR 2009-10 (SAVING ACCOUNT NO. 11321388010). 4. SINCE I AM MAINTAIN ONLY ONE SAVING ACCOUNT NO. 11321388010 AND HENCE ACCRETION STATEMENT OF SAME ACCOUNT NO.L13213 88010 ALONG WITH COPY OF BANK STATEMENT HAVE BEEN PREPARED HAS ALREA DY BEEN FILED WITH MY PREVIOUS REPLY IN WHICH I EXPLAINED EACH AND EVE RY ENTRY FOR THE RECEIPTS FROM FARMERS I BEING LITTLE KNOWLEDGE OF T HE DIRECT PURCHASE FROM COMPANY AND NOT THROUGH AUTHORIZE AGENCY/AGENT. BEC AUSE I HAVE BEEN WORKING WITH M/S MAHAVIR TRACTORS BEFORE THE FINANC IAL YEAR 2009-10 AND DURING THE YEAR 2009-2010. SINCE THIS SCHEME OF DIRECT PURCHASE BY THE FARMERS HAD BEEN STARTED IN THE FINANCIAL YEAR 2009-2010 AND THEN I LEFT THE SERVICES OF M/S MAHAVIR TRACTORS ,ZIRA IN THE 2008-2009 WHO HAVE BEEN AUTHORIZED AGENCY FOR THE SALE TRACTORS S WARAJ TRACTOR AND EVEN AFTER THE TAKEN OVER THIS COMPANY BY THE MAHIN DRA AND MAHINDRA. 5. THAT SH. BABU SINGH USE TO RECEIVE THE MONEY DIRECT FROM FARMERS UNDER THE SCHEME DIRECT PURCHASE FROM MAHINDRA AND MAHINDRA TRACTORS AND DEPOSITS THE SAME HIS SAVING ACCOUNT NO.L132138 8010 AND GOT ISSUED BANK DRAFTS IN THE NAME OF COMPANY MAHINDRA AND MAHINDRA. HENCE ALL MAJOR DEPOSITS IN MY BANK ACCOUNT ARE ON ACCOUNT OF AMOUNT RECEIVED FROM THE FARMERS FOR PURCHASING THE DD FRO M THE STATE BANK OF INDIA FOR THE PURCHASE OF SWARAJ TRACTORS FROM CO MPANY MAHINDRA & MAHINDRA DIRECTLY FROM THE COMPANY BY THE FARMERS T HROUGH ME AS FARMERS AS LAM LONE EDUCATED PERSON IN THE SPHERE. I USED TO COLLECT CASH FROM THE FARMERS AND DEPOSITED ALL THE DD IN THE NA ME OF INDIVIDUAL 10 ITA NO.274/ASR/2017 (A.Y.2010-11) BABU SINGH VS. ACIT FARMERS IN WHOSE NAME BILL OF TRACTORS WAS ISSUED. ALL THE DDS PURCHASED FROM SBI, ZIRA WERE SENT TO THE COMPANY O N BEHALF OF THE FARMERS, MAHINDRA AND MAHINDRA LTD., (FES),SWARAJ DIVISI ON (PHOTO COPY OF DD ALONG WITH PHOTO COPY OF BILL ISS UED BY THE COMPANY DIRECTLY IN THE NAME OF FARMERS ARE ATTACHED HEREWI TH. SINCE RECIPIENT OF CASH AND PAYER OF CASH BOTH ARE AGRICULTURIST AND B Y DOING NONE OF THE PERSON RECIPIENT AS WELL AS PAYER HAS CONTRAVENED A NY OF THE PROVISIONS IF I.T. ACT, 1961. 6. THAT I HAVE ALREADY EXPLAINED IN THE PARA-I O F THE MY REPLY THAT I AGRICULTURIST AND MY EXPENDITURE ARE BEING ME OUT O F MY AGRICULTURAL INCOME WHICH I HAVE ALREADY EXPLAINED IN THE RETURN OF MY INCOME TAX RETURN FOR ASSTT. YEAR 2010-2010 I USE TO OBLIGE THE FARMERS ON THE BASIS SCHEME LAUNCHED BY THE NEWLY OWNED COMPANY ABOUT TH E SALE OF OLD PRODUCT OF SWARAJ TRACTORS DIRECTLY FROM THE COMPAN Y MAHINDRA AND MAHINDRA LTD. ,(FES). 7. THAT I HAVE NOT PURCHASE IN ANY NEW PROPERTY DURING THE YEAR UNDER CONSIDERATION AND MY IMMOVABLE PROPERTY I.E. AGRICU LTURAL ARE ANCESTRAL ONE. 8. THAT LAM AN AGRICULTURIST AS STATED IN PARA ON E OF THIS REPLY AND HOLDING SEVEN ACRES OF AGRICULTURAL LAND IN MY NAME (THE COPY JAMABANDI AND GARDAUWRI BOTH HAS ALREADY BEEN SUBMI TTED WITH PREVIOUS REPLY) WHICH THE MAIN SOURCE INCOME OR AMO UNT WHICH LEFT BY THE FARMERS OUT OF DIRECT PURCHASE OF TRACTORS FROM COMPANY DIRECT IN THE NAME OF FARMERS. 9. THAT I AM A FARMER AND THIS DIRECT PURCHASE I F FOR FARMERS DIRECT FROM COMPANY AND TO PROVE MY CONTENTION I HAVE PHOTO COP Y OF THE DD ISSUED FROM MY BANK SAVING ACCOUNT AND BILLS ISSUED DIRECT LY BY THE COMPANY M/S MAHINDRA AND MAHINDRA IN THE NAME OF FARMERS (P HOTO COPIES OF DD ALONG WITH PURCHASE BILL OF TRACTORS ISSUED BY THE COMPANY IN THE NAME EACH FARMERS WHICH AS ALREADY BEEN SUBMITTED WITH M Y PREVIOUS REPLY.) 10. THAT I HAVE ALREADY EXPLAINED THAT ALL THE AMO UNT RECEIVED FROM THE FARMERS WAS FIRST DEPOSITED IN MY ACCOUNT AS MOST O F THE FARMERS DID NOT HAVE ANY BANK ACCOUNT AND FROM THIS ACCOUNT THE DD WAS PURCHASED AS THIS THE PRE CONDITION OF THE COMPANY THAT AMOUNT W ILL BE ACCEPTED EITHER ACCOUNT PAYEE CHEQUE OR DD OF ANY FARMERS AND BILL MAY BE GOT ISSUED IN ANY FARMERS I.E IN HIS OWN OR IN THE NAME HIS RELAT IVES. ACCORDINGLY CASH COLLECTED FROM THE FARMERS DEPOSITED IN THE ACCOUNT OF MINE AND THEN DD WAS PURCHASED IN THE NAME EACH FARMERS THOUGH THE S BI, BASTI MACHHIAN ,ZIRA AND SENT TO THE COMPANY AND WHOSE US ED ISSUED SALE BILL OF TRACTORS DIRECTLY IN THE NAME OF FARMERS. T HAT IHAVE ALREADY PREPARED THE ACCRETION STATEMENT BY EXPLAINING EACH AND EVERY ENTRY OF DEPOSIT AND WITHDRAWALS AND SUBMITTED WITH MY PREVI OUS AND WHAT IS LEFT IN MY ACCOUNT IN MY INCOME FROM THE OTHER SOUR CES DURING THE ASST. YEAR: 2010- 2011 RELEVANT TO THE PREVIOUS YEAR 2009 -2010 (SAVING ACCOUNT NO. 11321388010) 11 ITA NO.274/ASR/2017 (A.Y.2010-11) BABU SINGH VS. ACIT 11. THAT I HAVE ALREADY BEEN EXPLAINED THAT I RECE IVED THE MONEY AND PREPARED THE BANK DRAFTS ON BEHALF OF THE FARMERS O UT OF MY SAVING ACCOUNT AND SENT THE BANK DRAFTS TO THE COMPANY WHO HAS ISSUED THE BILLS IN THE NAMES OF THAT FARMERS. BECAUSE RECEIVE R AND PAYER BOTH ARE AGRICULTURIST HENCE NONE HAVE CONTRAVENED ANY PROVI SION NEITHER 4AA ,44AB, 269SS AND 269T OF THE INCOME TAX ACT, 1961. IT IS IMPERATIVE TO MENTION HERE THAT NEITHER IT IS PURCHASE OF SH. BAB U SINGH NOR IT IS SALE OF SH. BABU SINGH NOR IT IS LOAN RECEIVED BY THE SH . BABU SINGH NOR BABU SINGH HAS REPAID THE LOAN TO ANY FARMERS. I HOPE THE AFORESAID EXPLANATION WILL SAT ISFY YOUR GOOD SELF, HOWEVER, IF ANY FURTHER INFORMATION IS REQUIRED THA T WILL BE DULY SUPPLIED. 2.4 ULTIMATELY, THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER DATED 02.07.2014. THE SAID ASSESSMENT ORDER CAME U NDER SCRUTINY BEFORE THE LD. PR. COMMISSIONER OF INCOME TAX, WHO VIDE ITS NOTICE DATED 14.03.2017 ISSUED U/S 263(1) OF TH E ACT SOUGHT THE EXPLANATION FROM THE ASSESSEE BY MENTIONING THE FOLLOWING FACTS. 2. DURING THE EXAMINATION OF ASSESSMENT RECORD OF YOU R CASE FOR THE ASSESSMENT YEAR 2012-13, IT HAS BEEN OBSERVED THAT YOU WERE MAINTAINING A SAVING BANK ACCOUNT NO.11321388010 WI TH STATE BANK OF INDIA, ZIRA WHEREIN CASH AMOUNTING TO RS.L,16,37,157 /-WAS DEPOSITED BY YOU. DURING THE ASSESSMENT PROCEEDING YOU REVEALED THAT THE AMOUNTS SO DEPOSITED WERE IN THE FORM OF CASH RECEIVED FROM THE FARMERS AND SUBSEQUENTLY DDS WERE DRAWN IN FAVOUR OF THE SUPPLI ER COMPANY OF TRACTORS. FURTHER, IT HAS BEEN OBSERVED FROM THE ST ATEMENT OF THE ACCOUNT THAT NEARLY 34 TRACTORS WERE SOLD UNDER THE SCHEME IN WHICH YOU EARNED COMMISSION. AT THE RATE OF RS.30,000/- PER TRACTOR T OTALING TO RS.10,20,000/-. HOWEVER, THERE ARE WITHDRAWALS AMOUN TING TO RS.12,39,268/-. THEREFORE, INCOME HAS BEEN UNDER-ASS ESSED AT RS. 10,93,668/- {RS.12,39,268- RS.1,45,600} BY NOT TAKING INTO ACCOUNT TIRE WHOLE OF TAXABLE INCOME. 3. THE AO FAILED TO MAKE PROPER INQUIRIES INTO COMMISSION EARNED AND FAILED TO ASSESS INCOME CORRECTLY. IN VIEW OF T HE ABOVE FACTS, THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER ON 02.07. 2014 U/S 143(3) FOR THE ASSESSMENT YEAR 2010-11 IS ERRONEOUS AND PR EJUDICIAL TO THE INTEREST OF REVENUE. YOU ARE HEREBY CALLED UPON TO EXPLAIN AS TO WHY THE ASSESSMENT FRAMED ON 02.07.2014 IN YOUR CASE FOR TH E ASSESSMENT YEAR 2010-11, MAY NOT BE REVISED U/S 263 OF THE INCOME T AX ACT, 1961. YOU MAY FILE YOUR OBJECTIONS, IF ANY BEFORE 17.03.2017. 12 ITA NO.274/ASR/2017 (A.Y.2010-11) BABU SINGH VS. ACIT 4. THE CASE WELL BE TAKEN UP FOR HEARING ON 1 7.03.2017 AT 11.45 AM BEFORE THE UNDERSIGNED. 2.5 THE SAID NOTICE WAS REPLIED BY THE ASSESSEE VIDE ITS REPLY DATED 27.03.2017, HOWEVER, THE LD. PR. CIT DID NOT GET IMPRESS BY THE REPLY OF THE ASSESSEE AND VIDE IMPUGNED ORDER DA TED 30.03.2017 CANCELLED THE ASSESSMENT ORDER AND ISSUED THE DIRECTION TO THE ASSESSING OFFICER TO DECIDE THE MATTER A FRESH BY CONCLUDING AS UNDER: 4.2 IN RESPECT OF THE CASH DEPOSITS AND TH E COMMISSION RECEIVED, THE AR HAS SUBMITTED THAT THE ASSESSEE BEING AN EMPLO YEE OF M/S. MAHAVIR TRACTORS, COLLECTED CASH FROM VARIOUS FARME RS AND DEPOSITED IN HIS ACCOUNT AND PAID THE SAME TO M/S. MAHINDRA AND MAHINDRA TRACTOR COMPANY BY WAY OF DEMAND DRAFTS AND M/S. MAHINDRA A ND MAHINDRA TRACTOR COMPANY ISSUED BILLS DIRECTLY IN THE NAMES OF THE FARMERS. FURTHER IT HAS BEEN CONTENDED THAT DURING THE PERIO D UNDER CONSIDERATION THERE WAS A SCHEME FROM M/S. MAHINDRA AND MAHINDRA TRACTOR COMPANY THAT IF THE FARMERS DIRECTLY PURCHA SE TRACTORS FROM THE COMPANY THEN IT WILL COST RS.30,000/- LESS EACH TRAC TOR TO THE PURCHASERS. THUS THE BENEFIT OF THE SCHEME WAS DIRE CTLY PROVIDED TO THE FARMERS AND NOT TO THE ASSESSEE WHO COLLECTED MONEY FROM THE FARMERS AND FURTHER PAID TO THE COMPANY. FURTHER IT HAS BEE N SUBMITTED THAT THE ASSESSEE DID NOT GET ANY COMMISSION ON THE SALE OF THESE TRACTORS. THE AO HAS JUST ACCEPTED THE ASSESSEES VERSION WITHOUT PUTTING ANY EFFORT TO FURTHER ENQUIRE INTO THE MATTER. 4.3 IN RESPECT OF WITHDRAWALS OF RS.9,00,000/- TH E LD. AR HAS SUBMITTED TWO AFFIDAVITS FORM SH. SUKHDEV SINGH S/O SH. MALKEET SINGH R/O HAMAD WALA DIST FEROZEPUR AND SH. GURDEV SINGH S /O SH. PIARA SINGH R/O MEHAR SINGH WALA DIST FEROZEPUR RESPECTIVE LY WHEREIN IT HAS BEEN ACCEPTED BY THEM THAT THEY HANDED OVER THE AMO UNTS TO ASSESSEE AND GET THE SAME BACK AS THE MODEL OF THE TRACTOR F OR WHICH THE PAYMENTS WERE MADE WERE NOT AVAILABLE UNDER THE SCH EME. BUT THIS ARGUMENT OF THE ID. AR IS NOTHING BUT MERE AN AFTERT HOUGHT HENCE CANNOT BE ACCEPTED. IN ANY CASE, AFFIDAVITS DO NOT QUALIFY AS EVIDENCE AND SELF- SERVING DOCUMENTS CANNOT BE ACCEPTED. 5 IN VIEW OF THE ABOVE, CONTENTIONS ADVANCED ON BEHALF OF THE ASSESSEE ARE NOT ACCEPTABLE AND HENCE REJECTED. THE AO HAS MADE THE ASSESSMENT ORDER WITHOUT INQUIRY AND IN SUCH A CASU AL MANNER. THUS, THE IMPUGNED ASSESSMENT ORDER IS HELD TO BE ERRONEO US AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 6. IN VIEW OF THE ABOVE DISCUSSION, THE ASSES SMENT ORDER DATED 20.07.2014 IS CANCELLED WITH THE DIRECTIONS TO TH E ASSESSING OFFICER TO MAKE DECIDE THE MATTER AFRESH AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND EXAMINING ALL RELEV ANT EVIDENCE. A COPY OF SUBMISSIONS FILED ON BEHALF OF THE ASSESSEE IN THESE PROCEEDINGS MAY BE TRANSMITTED TO THE ASSESSING OFFICER. 13 ITA NO.274/ASR/2017 (A.Y.2010-11) BABU SINGH VS. ACIT 3. THE ASSESSEE, BY WAY OF THIS APPEAL CHALLENGED THE IMPUGNED ORDER ON THE FOLLOWING GROUNDS OF APPEAL. 1. THAT THE LEARNED PRINCIPAL COMMISSIONER OF INCOME, BHATINDA RANGE, BHATINDA WAS NOT RIGHT IN APPLYING THE PROVI SIONS OF THE SECTION 263 OF THE INCOME TAX ACT, 1961 ON THE SAME ISSUE ON WHICH THE ASSESSING OFFICER, WARD-3(2), FEROZEPUR HAS RECO RDED THE REASONS FOR THE ISSUED NOTICE UNDER SECTION 148 OF THE I.T. ACT, 1961 ON THE POINT OF COMMISSION OF RS.30,000/- PER TRACTO RS WHICH WAS RECEIVED BY ASSESSEE AND WHICH HAS BEEN LEFT TO BE ASSESSED IN THE HANDS OF THE ASSESSEE, WHICH IS NOT CORRECT AS THIS THE ASSUMPTIONS AND HENCE THE ORDERS PASSED BY THE KINDLY BE QUASHE D. 2. THAT THE ASSESEE HAS WORKED AS CATALYTIC AG ENT BETWEEN THE COMPANY AND THE FARMERS AND THE ASSESSEE BEING FARM ERS AND KNOW THE POLICY OF THE NEW COMPANY I.E. MAHINDRA AND MAH INDRA WHO HAS PURCHASED THE SWARAJ COMPANY THE NEW COMPANY WAS WA NTED TO DISPOSE OFF THE OLD STOCK OF SWARAJ COMPANY. HENCE THE ASSESSEE HAS NOT AVAILED ANY BENEFITS OF THESE TRANSACTIONS OF SALE OF TRACTORS DIRECTLY BY THE COMPANY IN THE NAME OF THE FARMERS. 3. THAT THE ASSESSE HAS NOT RECEIVED ANY COMMISS ION OF RS.30,000/-PER TRACTORS AS ALLEGED IN THE ORDERS PAS SED BY THE PRINCIPAL COMMISSIONER OF INCOME TAX, BHATINDA UNDE R SECTION 263 RATHER THE SAID AMOUNT OF RS.30,000/- WAS THE BENEFI TS AMOUNTING TO RS.30,000/- BY THE NEW COMPANY TO THE FARMERS WHO HA S PURCHASED TRACTORS OF SWARAJ MAKE, AND WHICH IS THE LESS PRIC E OF THE COMPANY FOR THE SALE OF TRACTORS DIRECTLY FARMERS. IT IS, T HEREFORE, REQUESTED THAT THE ORDERS PASSED BY THE PRINCIPAL COMMISSIONE R TOTALLY ILLEGAL AND BASED ON HYPOTHETICAL ASSUMPTION AND NOT BASED OF FACTS AND REALITY. HENCE ORDERS PASSED BY THE PRINCIPAL COMMI SSIONER OF INCOME TAX, BHATINDA RANGE, BHATINDA UNDER SECTION 263 MAY KINDLY BE DELETED. 4. THAT THE ASSESSEE CRAVES TO GRANT ANY OTHER RELIEF WHICH THIS COURT MAY DEEMED FIT IN THE INTEREST OF NATURAL JUS TICE. 4. HAVING HEARD THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. CIT(A) IN ITS NOTICE HAD NOTED THAT DURING THE EXAMINATION OF ASSESSMENT RECORD IN THE CASE OF ASSESSEE FOR THE ASSESSMENT YEAR 2010-11, IT HAS BEEN OBSERVE D THAT THE ASSESSEE WAS MAINTAINING SB ACCOUNT NO.113188010 WITH SBI, ZIRA, WHEREIN CASH AMOUNT OF RS.1,16,37,157/ - WAS DEPOSITED BY THE ASSESSEE. DURING THE ASSESSMENT PROCEEDINGS , THE ASSESSEE HAS REVEALED THAT THE AMOUNTS DEPOSITED WERE IN 14 ITA NO.274/ASR/2017 (A.Y.2010-11) BABU SINGH VS. ACIT THE FORM OF CASH RECEIVED FROM THE FARMERS AND SUBSEQUENT LY DEMAND DRAFT WERE DRAWN IN FAVOUR OF THE SUPPLIER CO MPANY OF TRACTORS. FURTHER, IT HAS BEEN OBSERVED FROM THE STATE MENT OF ACCOUNT THAT NEARLY 34 TRACTORS WERE SOLD UNDER THE SCHEME IN WHICH THE ASSESSEE HAS EARNED COMMISSION AT THE RATE OF RS.30,000/- PER TRACTOR TOTALING TO RS.10,20,000/-. HOW EVER, THERE ARE WITHDRAWALS AMOUNTING TO RS.12,39,268/-. TH EREFORE, INCOME HAS BEEN UNDER-ASSESSED AT RS.10,93,668/- {RS.12,39,268- RS.1,45,600/-} BY NOT TAKING THE WHOLE OF THE TAXABLE INCOME. 4.1 WHILE PERUSING THE ASSESSMENT ORDER DATED 02.07.201 4, WE REALIZE THAT THOUGH THE ASSESSMENT ORDER DOES NOT REF LECTS THE SAID TRANSACTIONS AS HIGHLIGHTED BY THE PR. CIT IN ITS NOTICE DATED 14.03.2017, HOWEVER, IT IS A FACT THAT THE ASSESSI NG OFFICER VIDE ITS NOTICES DATED 31.01.2012 AND 28.12.2012, SPECIF ICALLY ENQUIRED ABOUT FINANCIAL TRANSACTION OF RS.1,16,37,157/ - CARRIED OUT BY THE ASSESSEE IN STATE BANK OF INDIA DURING THE F INANCIAL YEAR 2009-10. THE NOTICE DATED 28.12.2012 WAS SPECIFICAL LY REPLIED BY THE ASSESSEE BY NARRATING THE FACTS QUA FINA NCIAL TRANSACTIONS OF RS.1,16,37,157 IN STATE BANK OF INDIA. THE ASSESSEE HAS ALSO FILED BANK STATEMENT AND COPIES OF DEMAND DRAFTS AND RETAIL INVOICES CUM DISPATCH ADVICES FOR CONSIDERA TION OF THE ASSESSING OFFICER. SUBSEQUENTLY VIDE NOTICE DATED 05.07.2013, THE ASSESSING OFFICER ALSO SOUGHT VERIFICATION OF THE AIR/CIB INFORMATION REGARDING THE AFORESAID TRANSACTIO N WHICH WAS ALSO REPLIED BY THE ASSESSEE VIDE ITS REPLY DATED 06.0 8.2013 DETAILING THE FACTS QUA THE AFORESAID TRANSACTION. THE REAFTER NOTICE U/S 148 DATED 16.08.2013 WAS ISSUED ON THE BASIS OF 15 ITA NO.274/ASR/2017 (A.Y.2010-11) BABU SINGH VS. ACIT REASONS RECORDED U/S 147 OF THE ACT ON DATED 16.08.2013, IN RESPONSE TO WHICH THE ASSESSEE ALSO FILED ITS RETURN OF INCOM E. THEREAFTER, NOTICES U/S 142(1) & 143(2) DATED 13.06.20 14 HAVE ALSO BEEN ISSUED BY THE ASSESSING OFFICER QUA THE SAME TRANSACTION WHICH WERE ALSO REPLIED BY THE ASSEEEE VIDE I TS REPLY DATED 25.08.2014. 4.2 SUBSEQUENTLY, VIDE QUESTIONNAIRE DATED 26.06.2014, THE ASSESSEE WAS SPECIFICALLY ASKED ABOUT THE TRANSACTION QUA SWAR AJ TRACTORS VIDE QUESTION NOS.9&10 OF THE PB PAGE-103. THE ASSESSEE AGAIN REPLIED THE SAID QUERIES VIDE PARA NO.9 & 10 OF ITS REPLY DATED 30.06.2014. ULTIMATELY THE ASSESSING OFFICER WHILE CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE AND ON OVERALL CONSIDERATION PASSED THE ASSESSMENT ORDER. 4.3 IT IS THE CASE OF THE ASSESSEE THAT THE ASSESSEE HAD REPLIED NOTICES AND QUESTIONNAIRE ISSUED BY THE ASSESSEE AND AFTER CONSIDERING THE REPLY AND DOCUMENTS THERETO, THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER THEREFORE IT CANNOT BE SAID THAT THE ASSESSMENT ORDER IN ANY SENSE IS PERVERSE AND PREJUDICIAL TO THE INTEREST OF REVENUE. 4.4 NO DOUBT THE ASSESSING OFFICER HAS NOT GIVEN DETAILS OF EACH AND EVERY ITEM IN ITS ORDER HOWEVER FROM THE NOT ICES, QUESTIONNAIRE AND REPLIES THERETO IT CLEARLY REFLECTS TH AT THE ASSESSING OFFICER BEFORE PASSING THE ASSESSMENT ORDER THOROUGHLY EXAMINED ALL THE ISSUES WHICH WERE SUBJECT MAT TERS OF THE ASSESSMENT PROCEEDINGS INCLUDING THE ISSUE RAISED BY THE LD. PR. CIT, ON THE BASIS OF WHICH THE IMPUGNED ORDER HAS BEEN PASSED BY THE LD. PR. CIT. THEREFORE THE QUESTION ARISE AS TO 16 ITA NO.274/ASR/2017 (A.Y.2010-11) BABU SINGH VS. ACIT WHETHER THE ASSESSMENT ORDER IS LIABLE TO BE CANCELLED WH EREIN, THE A.O. THOUGH MADE THE DETAILED ENQUIRY BUT DID N OT ELABORATELY DISCUSSED THE ISSUE IN THE ASSESSMENT ORDER. 4.5 THE DELHI HIGH COURT IN CIT VS VIKAS POLYMERS, RE PORTED IN 341 ITR 537 (DEL.) HAS HELD 'THAT AN INQUIRY WHICH HAS BEEN RAISED DURING THE COURSE OF SCRUTINY BY THE ASSESSIN G OFFICER AND WHICH HAS BEEN ANSWERED TO THE SATISFACTION OF THE ASSESSING OFFICER BUT NEITHER THE INQUIRY NOR THE ANSWER WAS REFLECTED IN THE ASSESS MENT ORDER, THAT WOULD NOT, BY ITSELF, LEAD TO THE CONCLUSION THAT THE ORDER OF THE ASSESSING OFFICER CALLED FOR ANY INTERFERENCE AND REVISION'. I N THE CASE OF CIT VS SUNBEAM AUTO LTD. REPORTED IN 332 ITR 167 (DEL.), H AS HELD 'WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE COUNSE L ON THE OTHER SIDE AND HAVE GONE THROUGH THE RECORDS. THE FIRST ISSUE THAT ARIS ES 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 SUB MISSION OF LEARNED COUNSEL FOR THE REVENUE WAS THAT WHILE PASSING THE ASSESSME NT ORDER, THE ASSESSING OFFICER DID NOT CONSIDER THIS ASPECT SPECIFICALLY W HETHER THE EXPENDITURE IN QUESTION WAS REVENUE OR CAPITAL EXPENDITURE. THIS A RGUMENT PREDICATES ON THE ASSESSMENT ORDER, WHICH APPARENTLY DOES NOT GIVE AN Y REASONS WHILE ALLOWING THE ENTIRE EXPENDITURE AS REVENUE EXPENDITURE. HOWE VER, THAT BY ITSELF WOULD NOT BE INDICATIVE OF THE FACT THAT THE ASSESSING OFFICE R HAD NOT APPLIED HIS MIND ON THE ISSUE. THERE ARE JUDGMENTS GALORE LAYING DOWN THE PRINCIPLE THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IS NOT RE QUIRED TO GIVE DETAILED REASON IN RESPECT OF EACH AND EVERY ITEM OF DEDUCTI ON, ETC. THEREFORE, ONE HAS TO SEE FROM THE RECORD AS TO WHETHER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE EXPENDITURE IN QUESTION AS REVE NUE EXPENDITURE. LEARNED COUNSEL FOR THE ASSESSEE IS RIGHT IN HIS SU BMISSION THAT ONE HAS TO KEEP IN MIND THE DISTINCTION BETWEEN 'LACK OF INQUIRY' A ND 'INADEQUATE INQUIRY'. IF THERE WAS ANY INQUIRY, EVEN INADEQUATE THAT WOULD N OT BY ITSELF GIVE OCCASION TO THE COMMISSIONER TO PASS ORDERS UNDER SECTION 263 O F THE ACT, MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER. IT IS ONL Y IN CASES OF 'LACK OF INQUIRY' THAT SUCH A COURSE OF ACTION WOULD BE OPEN'. 17 ITA NO.274/ASR/2017 (A.Y.2010-11) BABU SINGH VS. ACIT DELHI HIGH COURT IN THE CASE OF CIT VS. ASHISH RAJPAL 374 ITR 674, IN PARA NO. 16 HAS HELD ' THE FACTS THAT QUERY WAS RAISED DURING THE COURSE OF SCRUTINY, WHICH WAS SAT ISFACTORY ANSWERED BY THE ASSESSEE BUT DID NOT GET REFLECTED IN THE ASSESSMENT ORDER, WOULD NOT BY ITSELF LEAD TO A CON CLUSION THAT THERE WAS NO ENQUIRY WITH RESPECT THE TRANSACT IONS CARRIED BY THE ASSESSEE. THE FACT THAT THERE WAS AN ENQUIRY CAN ALSO BE DEMONSTRATED WITH THE HELP OF THE MATER IAL AVAILABLE ON RECORD WITH THE ASSESSING OFFICER. 4.6 THE BOMBAY HIGH COURT IN CIT VS FINE JEWELLERY (INDIA ) LTD. REPORTED IN 372 ITR 303 (BOMBAY) HAS HELD 'THAT IF AN INQUIRY IS RAISED DURING THE ASSESSMENT PROCEEDINGS AND RESPON DED TO BY THE ASSESSEE, THE MERE FACT THAT IT HAS NOT DEALT WITH IT IN THE ASSE SSMENT ORDER WOULD NOT LEAD TO A CONCLUSION THAT NO MIND HAD BEEN APPLIED TO IT'. IN THE CASE OF COMMISSIONER OF INCOME-TAX VS GABRIEL INDIA LTD. 203 ITR 108 , ALSO DEALT WITH IDENTICAL ISSUE AND IN PARA NO. 7 HAS H ELD ' WE HAVE HEARD LEARNED COUNSEL FOR THE PARTIES AND CAREFULLY P ERUSED THE ORDERS OF THE INCOME-TAX OFFICER, THE COMMISSIONER AND THE TRIBUNA L. ON PERUSAL OF THE ADMITTED FACTS, IT APPEARS THAT THE INCOME-TAX O FFICER IN THE INSTANT CASE HAD EXAMINED THE ALLOWABILITY OF THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF THE ABOVE AMOUNT OF RS. 99,326. WHILE D OING SO, HE ASKED FOR AN EXPLANATION FROM THE ASSESSEE IN REGARD TO THE NAT URE THEREOF. THE ASSESSEE FURNISHED A DETAILED EXPLANATION, VIDE HIS LETTER DATED SEPTEMBER 19, 1975. IT WAS ON A CONSIDERATION OF THE SAID EXPLANATION AND ON BEING SATISFIED THAT IT WAS REVENUE EXPENDITU RE THAT THE INCOME- TAX OFFICER ALLOWED THE CLAIM FOR DEDUCTION. IT IS, HOWEVER, CORRECT THAT IN HIS ORDER, HE DID NOT MAKE ANY DISCUSSION I N REGARD TO THE QUERY MADE BY HIM AND THE EXPLANATION SUBMIT TED BY THE ASSESSEE THERETO'. 18 ITA NO.274/ASR/2017 (A.Y.2010-11) BABU SINGH VS. ACIT FURTHER IN PARA NO: 15 OBSERVED '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 EXPENDITURE INCURRED BY THE ASSESSEE. THE ASSESSEE HAD GIVEN DETAILED EXPLANATION IN THAT REGARD BY A LETTER IN WRITING. ALL THESE ARE PART OF 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 HELD TO BE 'ERRONEOUS' SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. MOREOVER, IN THE INSTANT CASE, THE COMMISSIONER HIMSELF, EVEN AFTER INITIATING PRO CEEDINGS FOR REVISION AND HEARING THE ASSESSEE, COULD NOT SAY TH AT THE ALLOWANCE OF THE CLAIM OF THE ASSESSEE WAS ERRONEOU S AND THAT THE EXPENDITURE WAS NOT REVENUE EXPENDITURE BUT AN EXPE NDITURE OF CAPITAL NATURE. HE SIMPLY ASKED THE INCOME-TAX OFFI CER TO RE- EXAMINE THE MATTER. THAT, IN OUR OPINION, IS NOT PE RMISSIBLE. FURTHER INQUIRY AND/OR FRESH DETERMINATION CAN BE DI RECTED BY THE COMMISSIONER ONLY AFTER COMING TO THE CONCLUSION TH AT THE EARLIER FINDING OF THE INCOME-TAX OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. WITHOUT DOING SO, HE DOES NOT GET THE POWER TO SET ASIDE THE ASSESSMENT'. 4.6 THE MADRAS HIGH COURT IN THE CASE OF CIT V VALLIAMMAL (D) REPORTED IN 230 ITR 695 (MAD) HAS HELD ' THAT ASSESSMENT ORDER MADE AFTER CONSIDERING ALL FACTS AND INFORMATION CA NNOT BE REVISED. WHERE THE ASSESSEE HAD FURNISHED THE REQUISITE INFORMATION AN D THE ASSESSING OFFICER HAD COMPLETED THE ASSESSMENT AFTER CONSIDERING THE FACT S BUT THE COMMISSIONER REVISED THE ASSESSMENT ORDER ON THE GROUND THAT THE ASSESSING OFFICER HAD NOT MADE PROPER ENQUIRIES, THE TRIBUNAL WAS HELD TO BE JUSTIFIED IN REVERSING THE ORDER OF THE COMMISSIONER AND RESTORING THAT OF THE ASSES SING OFFICER. THE COMMISSIONER CANNOT RE- EXAMINE ACCOUNTS AND SUBSTITUTE HIS JUDG MENT FOR THAT OF THE ASSESSING 19 ITA NO.274/ASR/2017 (A.Y.2010-11) BABU SINGH VS. ACIT OFFICER. AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLE SS IT IS NOT IN ACCORDANCE WITH LAW. IF ASSESSING OFFICER MAKES ASSESSMENT IN ACCORDANCE WITH LAW, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIO NER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN W RITTEN MORE ELABORATELY. THIS SECTION DOES NOT VISUALIZE A CASE OF SUBSTITU TION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE ASSESSING OFFICE R UNLESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALIZED WHERE THE ASS ESSING OFFICER EXAMINES THE ACCOUNTS, MAKES ENQUIRES, APPLIES HIS MIND TO THE F ACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY MAKING THE ACCOUNTS OR BY MAKING SOME ESTIMATES HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER WAS O N LOWER SIDE AND, LEFT TO THE COMMISSIONER, HE WOULD HAVE ESTIMATED THE INCOME AT A HIGHER FIGURE THAT THE ONE DETERMINED BY THE ASSESSING OFFICER. THAT WOULD NOT VEST THE COMMISSIONER WITH THE POWER TO RE- EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE'. 4.7 IN VIEW OF DICTUM OF THE AFORESAID JUDGMENTS PASSED BY VARIOUS HIGH COURTS, IF AN INQUIRY HAS BEEN RAISED DURIN G THE COURSE OF SCRUTINY BY THE ASSESSING OFFICER AND WHICH WAS ANSWERED TO THE SATISFACTION OF THE ASSESSING OFFICER BUT NEITHER THE INQUIRY NOR THE ANSWER TO THAT WAS REFLECTED IN TH E ASSESSMENT ORDER, THAT WOULD NOT, BY ITSELF, LEAD TO THE CONCLUSION THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONE OUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND TH EREFORE CALLED FOR ANY INTERFERENCE AND REVISION. 4.8 COMING TO THE INSTANT CASE, WE AGAIN PERUSED THE DOCUMENTS AVAILABLE ON RECORD AND REALIZED THAT THOUGH SUBMISSION OF LD. D R IS CORRECT TO THE EFFECT THAT THE ASSE SSING OFFICER IN THE ASSESSMENT ORDER DID NOT MAKE ANY DISCUSSIO N IN REGARD TO THE QUERY MADE BY HIM AND THE EXPLANATION SUBMITTED BY THE ASSESSEE THERETO, HOWEVER FROM THE STATUTORY NOTI CES AND 20 ITA NO.274/ASR/2017 (A.Y.2010-11) BABU SINGH VS. ACIT QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER AND REPLIES TH ERETO BY ASSESSEE AND DOCUMENTS AVAILABLE ON RECORD, IT IS UNDOUBTEDLY CLEAR THAT THE ASSESSING OFFICER THOROUGHLY EXAMINED AND VERIFIED THE MATERIAL FACTS AND DOCUMENTS AND ALL THE ISSUES RAISED IN THE QUESTIONNAIRE INCLUDING CASH DEPOSI T OF RS.L,16,37,157/- IN SAVING BANK ACCOUNT NO.11321388010 WITH STATE BANK OF INDIA, ZIRA, RELEVANT FOR PASSING THE A SSESSMENT ORDER U/S 143(3)/147 OF THE ACT AND THEREFORE IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY AND T HUS SUCH DECISION OF THE INCOME-TAX OFFICER CANNOT BE HELD T O BE 'ERRONEOUS' SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. 4.9 HOWEVER THE LD. PR. CIT ISSUED THE NOTICE DATED 14.03.2017 U/S 263(1) OF THE ACT. THOUGH THE ASSESSEE SPECIFICALLY REPLIED THE AFORESAID NOTICE AS WELL, HOWEVE R THE PR. CIT, WITHOUT CONSIDERING THE MATERIAL AVAILABLE ON R ECORD, FACTS AND CIRCUMSTANCES OF THE CASE AND CONTENTIONS OF THE ASSESSE E, CANCELLED THE ENTIRE ORIGINAL ASSESSMENT ORDER DATED 20. 07.2014 WITH A DIRECTION TO THE A.O. TO THE FRAME THE ASSESSMENT FRESH AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. IN OUR CO NSIDERED VIEW, THE LD. PR. CIT NEITHER MAKE ANY EXERCISE FOR E XAMINING THE RECORD NOR GAVE PLAUSIBLE REASON(S) AS TO WHY THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE REVE NUE WHILE COMING TO THE CONCLUSION BEFORE INITIATING AND CO NCLUDING THE PROCEEDINGS U/S 263 OF THE ACT, THEREFORE, ON THIS ASPECT AS WELL, THE ORDER UNDER CHALLENGE CANNOT SUSTAIN. 21 ITA NO.274/ASR/2017 (A.Y.2010-11) BABU SINGH VS. ACIT 4.10 IN CRUX, AS THE ORIGINAL ASSESSMENT ORDER IS BASED UPON DETAILED ENQUIRY, THEREFORE THE LD. PR. CIT COULD NO T HAVE ASSUMED JURISDICTION UNDER THE LAW TO REVISE THE ASSESSMENT ORDER IN THIS CASE, HENCE WE DO NOT HAVE ANY HESITATION TO QUASH THE IMPUGNED ORDER AS THE SAME IS UNJUSTIFIABLE AND SUF FERS FROM PERVERSITY AND IMPROPRIETY, CONSEQUENTLY THE SAME IS QUA SHED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STAN DS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 03.09.2019. SD/- SD/- ( VIKRAM SINGH YADAV ) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 03.09.2019 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) SH. BABU SINGH, VILLAGE MARKHAL, TEHSIL ZIRA (2) THE PR. CIT, BHATINDA (3) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER