R. KESHAVLAL TRADERS P.LTD, MUMBAI V. DCIT CEN CIR 45, MUMBAI

ITA 2795/MUM/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7977 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 03-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 10-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AWUNGSHI GIMSON
• Keywords: Revision of order; Search and seizure; Opportunity of being heard; Accommodation entries
• Section: 143(3); 148; 263

Judgement Text

P A G E | 1 ITA NO. 2795 /MUM/201 3 AY: 2008 - 09 R. KESHAVLAL TRADERS PVT. LTD. VS . CIT CENTRAL - IV IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, M UMBAI BEFORE SHRI P.K. BANSAL , VICE PRESIDENT AND SHRI RAVISH SOOD, JM ITA NO. 2795 /MUM/201 3 ( / ASSESSMENT YEAR: 2008 - 09 ) M/S R. KESHAVLAL TRADERS PVT. LTD., A 504, SILVER BELL , LAXMAN MAHATRE ROAD, DAHISAR (WEST), MUMBAI - 400 0 68 / VS. CIT , CENTRAL IV - MUMBAI 400 020 . ./ ./ PAN NO. AACCR2251F ( / APPELLANT) : ( / RESPONDENT ) / APPELLANT BY : SHRI RAHUL HAKANI , A.R. / RESPONDENT BY : SHRI AWUNGSHI GIMSON , D .R. / DATE OF HEARING : 2 8 .11 .2017 / DATE OF PRONOUNCEMENT : 20 .1 2 .2017 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER: THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (CENTRAL) - IV, MUMBAI (FOR SHORT CIT) , DATED 22.03.2013 PASSED U/S 263 OF THE P A G E | 2 ITA NO. 2795 /MUM/201 3 AY: 2008 - 09 R. KESHAVLAL TRADERS PVT. LTD. VS . CIT CENTRAL - IV INCOME TAX ACT, 1961 (FOR SHORT ACT), WHICH IN ITSELF ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 143(3) OF TH E ACT, DATED 29.12.2010 . THE ASSESSEE ASSAILING THE ORDER OF THE CIT HAD RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL : - 1. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN PASSING THE ORDER U/S 263 EVEN THOUGH THE ASSESSMENT ORDER FRAMED BY THE A.O WAS WHILE DOING SO HE AMONGST OTHER ERRED IN A. HOLDING THAT THE A.O WHILE PASSING THE ORDER HAD NOT VERIFIED THE ENTRIES IN THE LE DGER ACCOUNT OF SUNDRY CREDITORS (AVANI ENTERPRISES AND SHREENATH TRADING COMPANY) B. HOLDING THAT THE A.O WHILE PASSING THE ORDER HAD NOT VERIFIED THE ENTRIES IN THE LEDGER ACCOUNT OF SUNDRY DEBTORS (CHEVRON METAL PRODUCTS PVT. LTD.) C. NOT APPRECIATING THAT TH E A.O HAD MADE NECESSARY VERIFICATION AND ENQUIRY ABOUT THE BALANCES IN THE ACCOUNTS OF SUNDRY CREDITORS/SUNDRY DEBTORS. 2. THE LEARNED COMMISSIONER OF INCOME TAX FAILED TO APPRECIATE THAT THE ORDER PASSED U/S 263 WAS BAD IN LAW AND VOID AB INITIO IN SO FAR AS THERE IS NO FINDING RECORDED TO THE EFFECT THAT THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ON ACCOUNT OF NON VERIFICATION OF ENTRIES IN THE LEDGER ACCOUNTS OF SUNDRY CREDITORS/DEBTORS. THE APPELLANT CRAVES LEAVE TO AD D TO ALTER AMEND AND OR DELETE ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL . 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF TRADING IN IRON , STEEL AND NON FERROUS METALS HAD E - FILED ITS RETURN OF INCOME FOR A.Y. 2008 - 09 ON 08.03.2009 DECLARING NIL INCOME . THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY ASSESSMENT U/S 143(2) AND THE RETURN ED INCOME OF RS. NIL WAS ACCEPTED BY THE A.O. 3. THE CIT CALLED FOR THE RECORD OF THE ASSESSEE AND AFTER PER USING THE SAME OBSERVE D THAT THOUGH THE ASSESSEE HAD IN THE COURSE OF THE ASSESSMENT PROCEEDINGS STATED BEFORE THE A.O THAT NO UNSECURED P A G E | 3 ITA NO. 2795 /MUM/201 3 AY: 2008 - 09 R. KESHAVLAL TRADERS PVT. LTD. VS . CIT CENTRAL - IV LOANS WERE ACCEPTED/REPAID DURING THE YEAR UNDER CONSIDERATION, HOWEVER, A PERUSAL OF THE COPY OF ACCOUNT S OF THE SUNDR Y CREDITORS, VIZ. M/S SHREENATH TRADING COMPANY AND M/S AVANY ENTERPRISES REVEALED THAT THERE WERE CREDITS AND DEBITS IN THEIR RESPECTIVE ACCOUNTS. THE CIT OBSERVED THAT IN THE CASE OF M/S AVANY ENTERPRISES AND M/S SHREENATH TRADING COMPANY THERE WERE CRED ITS ON 31.03.2008 IN THE NAME OF CERTAIN THIRD PARTIES, VIZ. M/S NANDRAJ ENTERPRISES (RS. 75,00,000/ - ), M/S SHARDA SHARES & SECURITIES P. LTD. (RS. 2,50,000/ - ) AND M/S SACVINAM EXPORTS P. LTD. (RS. 8,00,000/ - ). THE CIT AFTER PERUSING THE RECORDS HELD A CON VICTION THAT THE A.O WHILE FRAMING THE ASSESSMENT HAD NEITHER EXAMINED THE GENUINENESS OF THE AFORESAID ENTRIES, NOR MADE ANY VERIFICATION FROM M/S NANDRAJ ENTERPRISES, M/S SHARDA SHARES & SECURITIES P. LTD. AND M/S SACVINAM EXPORTS P. LTD. THE CIT FURTHER OBSERVED THAT THOUGH THE BALANCE SHEET OF THE ASSESSEE ALSO REVEALED A SUNDRY DEBTOR OF RS. 16,21,574/ - UNDER THE NAME OF M/S CHEVRON METAL PRODUCTS P. LTD., HOWEVER , THE A.O HAD FAILED TO MAKE NECESSARY VERIFICATION S AS REGARDS THE SAME DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. THE CIT ON THE BASIS OF HIS AFORESAID OBSERVATIONS HELD A CONVICTION THAT AS THE A.O HAD SUMMARILY ACCEPTED THE RETURNED INCOME WITHOUT VERIFYING/EXAMINING RELEVANT DETAIL S, THEREFORE, T HE ASSESSMENT FRAMED BY HIM WAS RENDERED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE CIT ON THE BASIS OF HIS AFORESAID OBSERVATIONS CALLED UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY THE ASSESSMENT ORDER PASSED BY THE A.O U/S 143(3), DATED 2 9.12.2010 MAY NOT BE REVISED ON THE AFORESAID COUNT. 4. THE ASSESSEE OBJECTED TO THE PROPOSE D REVISION OF THE ASSESSMENT ORDER BY THE CIT AND SUBMITTED THAT THE ORDER PASSED BY THE A.O U/S 143(3) WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF TH E REVENUE. THE ASSESSEE IN ORDER TO DRIVE HOME ITS P A G E | 4 ITA NO. 2795 /MUM/201 3 AY: 2008 - 09 R. KESHAVLAL TRADERS PVT. LTD. VS . CIT CENTRAL - IV AFORESAID CONTENTION, SUBMITTED THAT THE CONFIRMATIONS OF BOTH OF THE SUNDRY CREDITORS, VIZ. M/S SHREENATH TRADING COMPANY AND M/S AVANY ENTERPRISES, ALONGWITH THEIR PAN NUMBER AND RESPECTIVE ADDRESSES WER E FILED WITH THE A.O DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. IT WAS FURTHER SUBMITTED BY THE ASSESSEE THAT THE A.O HAD MADE THE NECESSARY VERIFICATIONS AFTER PERUSING THE BOOKS OF ACCOUNTS AND THE SUPPORTING DOCUMENTS WHICH WERE PRODUCED BEFORE HI M IN THE COURSE OF THE ASSESSMENT PROCEEDINGS . IT WAS THUS THE CLAIM OF THE ASSESSEE BEFORE THE CIT THAT THE A.O HAD PASSED THE ASSESSMENT ORDER AFTER MAKING THOROUGH ENQUIRIES AND APPLICATION OF MIND TO THE FACTS OF THE CASE. 5. THE CIT AFTER DELIBERATING ON THE SUBMISSIONS OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE SAME. THE CIT OBSERVED THAT A PERUSAL OF THE RECORD S OF THE ASSESSEE REVEALED THAT ITS ASSESSMENTS FOR A.Y(S) 2002 - 03 TO 2007 - 08 WERE REOPENED U/S 147, WHEREIN IN THE ASSESSMENTS FRAMED UNDER SEC. 143(3) R.W.S 147 FOR A.Y(S) 2002 - 03, 2003 - 04 AND 2004 - 05 THE SUNDRY CREDITORS ,VIZ. M/S SHREENATH TRADING COMPANY AND M/S AVANY ENTERPRISES WERE HELD AS MERELY ACCOMMODATION ENTRIES , WHEREAS THE PROCEEDING U/S 148 FOR A.Y(S) 2005 - 06 & 200 6 - 07 WERE DROPPED AS THE AFORESAID SUNDRY CREDITORS REVEALED OUTSTANDING BALANCES BROUGHT FORWARD FROM THE PRECEDING YEARS . THE CIT FURTHER OBSERVED THAT IN THE ASSESSMENT FRAMED UNDER SEC. 143(3) FOR A.Y. 2007 - 08 AN ADDITION OF RS. 3,03,35,000/ - WAS MADE BY THE A.O ON ACCOUNT OF SUNDRY CREDITORS. IT WAS OBSERVED BY THE CIT THAT THOUGH THE A.O HAD IN THE COURSE OF FRAMING OF THE ASSESSMENTS IN THE PRECEDING YEARS CONSISTENTLY HELD THAT THE SUNDRY CREDITORS SHOWN BY THE ASSESSES WERE NOT GENUINE AND HAD DISA LLOWED THE SAME IN THE PRECEDING YEARS, HOWEVER, WHILE FRAMING THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION, VIZ. A.Y. 2008 - 09, HE HAD TAKEN A DEPARTURE FROM P A G E | 5 ITA NO. 2795 /MUM/201 3 AY: 2008 - 09 R. KESHAVLAL TRADERS PVT. LTD. VS . CIT CENTRAL - IV THE VIEW TAKEN IN THE PRECEDING YEARS AS REGARDS THE GENUINENESS OF THE CREDITS SHOWN AGAINST T HE AFORESAID PARTIES, VIZ. M/S SHREENATH TRADING COMPANY AND M/S AVANY ENTERPRISES. THE CIT FURTHER OBSERVED THAT THE A.O HAD ALSO NOT ENQUIRED INTO THE TRANSACTIONS OF CREDITS SHOWN IN THE NAMES OF M/S NANDRAJ ENTERPRISES (RS. 75,00,000/ - ), M/S SHARDA SHA RES & SECURITIES P. LTD. (RS. 2,50,000/ - ) AND M/S SACVINAM EXPORTS P. LTD. (RS. 8,00,000/ - ). THE CIT THUS IN THE BACKDROP OF HIS AFORESAID CONVICTION CONCLUDED THAT THOUGH THE ASSESSEE HAD PLACED ON RECORD THE CONFIRMATIONS ALONG WITH THE PAN NUMBERS OF TH E AFOREMENTIONED PARTIES, HOWEVER, THE A.O HAD NOT CALLED FOR THE BOOKS OF ACCOUNTS, BANK STATEMENTS ETC. TO VERIFY THE CORRECTNESS AND GENUINENESS OF THE AFORESAID TRANSACTIONS. THE CIT SPECIFICALLY OBSERVED THAT NOW WHEN IN THE EARLIER ASSESSMENT YEARS, I.E. A.Y. 2007 - 08 THE BALANCE APPEARING IN THE CASE OF M/S SHREENATH TRADING PVT. LTD. AT RS. 3,03,35,000/ - WAS ADDED AS AN UNEXPLAINED SUNDRY CREDITORS, THEREFORE, IT WAS NECESSARY ON THE PART OF THE A.O TO HAVE DEEPLY EXAMINED THE GENUINENESS OF FRESH CR EDITS APPEARING IN THE ACCOUNTS OF THE AFORESAID PARTIES DURING THE YEAR UNDER CONSIDERATION. 6. THAT AS REGARDS THE DEBIT BALANCE OF RS. 16,21,574/ - SHOWN AGAINST THE NAME OF M/S CHEVRON METAL PRODUCTS P. LTD., IT WAS OBSERVED BY THE CIT THAT THE DIRECTOR OF THAT COMPANY, VIZ. MRS. MEHRUNISSA HAD STATED ON O ATH THAT THE SAME WAS MERELY AN ACCOMMODATI ON ENTRY AND SHE HAD DECLARED COMMISSION @ 1% IN THESE CASES. THE CIT THUS OBSERVED THAT THE A.O HAD FAILED TO ENQUIRE INTO THE GENUINENESS OF TRANSACTION OF THE ASSESSEE WITH M/S CHEVRON METALS P. LTD. BY FAILING TO EXAMINE MRS. MEHRUNISSA AND GIVING AN A PPROPRIATE FINDING AS REGARDS THE SAME IN THE ASSESSMENT ORDER. P A G E | 6 ITA NO. 2795 /MUM/201 3 AY: 2008 - 09 R. KESHAVLAL TRADERS PVT. LTD. VS . CIT CENTRAL - IV 7. THE CIT IN THE BACKDROP OF HIS AFORESAID OBSERVATIONS CONCLUDED THAT AS THERE WAS LACK OF ENQUIRY AND NON APPLICATION OF MIND ON THE PART OF THE A.O AS REGARDS VERIFICATION OF THE FRESH E NTRIES OF CREDITS/DEBITS IN THE ACCOUNTS OF SUNDRY CREDITORS, VIZ. M/S SHREENATH TRADING COMPANY AND M/S AVANY ENTERPRISES, THEREFORE, THE ASSESSMENT ORDER PASSED BY THE A.O U/S 143(3) WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE . THE CIT O N THE BASIS OF HIS AFORESAID OBSERVATIONS S ET ASIDE THE ORDER WITH A DIRECTION TO REFRAME THE ASSESSMENT AFTER MAKING NECESSARY ENQUIRIES WITH REGARD TO THE SUNDRY CREDITORS AND DEBTOR , AFTER MAKING NECESSARY ENQUIRIES AND PROVIDING SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . 8. THAT THE ASSESSEE BEING AGGRIEVED WITH THE ORDER PASSED BY THE CIT U/S 263 OF THE ACT HAD THEREIN ASSAILED THE SAME BEFORE US. THE LEARNED AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT THE CIT HAD ERRONEOUSLY ASSUMED JURISDICTION AND REVISED THE ASSESS MENT FRAMED BY THE A.O U/S 143(3) OF THE ACT. IT WAS SUBMITTED BY THE LD. A.R THAT THE A.O HAD PASSED THE ASSESSMENT ORDER U/S 143(3), DATED 29.12.2010 AFTER MAKING NECESSARY VERIFICATIONS AND APPLICATION OF MIND TO THE FACTS OF THE CASE. THE LD. A.R TO DRIVE HOME HIS AFORESAID CONTENTION THEREIN TOOK US THROUGH THE RELEVANT PAGES OF HIS PAPER BOOK (FOR SHORT APB) AND SUBMITTED THAT THE A.O HAD DURING THE COURSE OF FRAMING O F THE ASSESSMENT HAD CALLED FOR THE CONFIRMATIONS IN RESPECT OF THE AFOREMENTIONED PARTIES, VIZ. M/S SHREENATH TRADING COMPANY AND M/S AVANY ENTERPRISES, WHICH WERE PLACED ON HIS RECORD BY THE ASSESSEE ALONG WITH THEIR RESPECTIVE PAN NUMBERS AND ADDRESSES, WHICH AFTER THOROUGH DELIBERATIONS WERE ACCEPTED BY THE A.O. IT WAS THUS SUBMITTED BY THE LD. A.R. THAT IT WAS INCORRECT ON THE PART OF THE CIT TO HOLD THAT THE A.O HAD FAILED TO MAKE ANY VERIFICATION AS REGARDS THE P A G E | 7 ITA NO. 2795 /MUM/201 3 AY: 2008 - 09 R. KESHAVLAL TRADERS PVT. LTD. VS . CIT CENTRAL - IV GENUINENESS AND VERACITY OF THE BALANCES APPEARING AGAINST THE ACCOUNTS OF THE AFOREMENTIONED RESPECTIVE CREDITORS . THE LD. A.R VEHEMENTLY SUBMITTED THAT THE CIT HAD EXCEEDED HIS JURISDICTION BY INITIATING PROCEEDING S U/S 263 , FOR THE REASON THAT THE QUALITY OF VERIFICATIONS CARRIED OUT BY THE A .O DID NOT FIND FAVOUR WITH HIM. IT WAS THUS AVERRED BY THE LD. A.R. THAT AS THE A.O HAD WRONGLY ASSUMED JURISDICTION U/S 263, THEREFORE , THE ORDER OF REVISION SO PASSED BY HIM COULD NOT BE SUSTAINED AND WAS LIABLE TO BE VACATED. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R.) SUBMITTED THAT AS THE A.O WHILE FRAMING THE ASSESSMENT HAD FAILED TO MAKE NECESSARY VERIFICATION S BOTH IN RESPECT OF THE SUNDRY CREDITORS AND THE SUNDRY DEBTOR, THEREFORE, THE ASSESSMENT FRAMED BY HIM BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE WAS RIGHTLY REVISED BY THE CIT. 9. WE HAVE HEARD THE A UTHORIZED REPRESENTATIVES FOR THE BO TH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT OUR INDULGENCE IN THE PRESENT CASE IS SOUGHT FOR ADJUDICATING AS TO WHETHER THE ASSESSMENT FRAMED BY THE A.O UNDER SEC. 143(3), VIDE HIS ORDER DA TED 29.12.2010 HAD RIGHTLY BEEN REVISED BY THE CIT IN EXERCISE OF POWERS VESTED WITH HIM UNDER SEC. 263, OR NOT. WE FIND THAT AS REGARDS THE GENUINENESS AND VERACITY OF THE SUNDRY CREDITORS , VIZ. M/S SHREENATH TRADING COMPANY AND M/S AVANY ENTERPRISES IS C ONCERNED, THE A.O HAD DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS SPECIFICALLY CALLED UPON THE ASSESSEE TO SUBSTANTIATE THE SAME AND FURNISH THE IR COMPLETE ADDRESSES ALONG WITH RESPECTIVE PAN NUMBERS. WE FIND THAT THE FACT THAT THE A.O HAD CARRIED OUT VERIFICATIONS ABOUT THE GENUINENESS AND VERACITY OF THE SUNDRY CREDITORS CAN BE GATHERED FROM THE QUERIES RAISED BY THE A.O VIDE N OTICES ISSUE D BY HIM U/S 143(2)/142(1), DATED 21.06.2010, P A G E | 8 ITA NO. 2795 /MUM/201 3 AY: 2008 - 09 R. KESHAVLAL TRADERS PVT. LTD. VS . CIT CENTRAL - IV WHEREIN AT SR.NO. 4 OF THE QUERIES RAISED BY HIM, HE HAD CATEGORICALL Y DIRECTED THE ASSESSEE TO FURNISH THE DETAILS OF THE SUNDRY CREDITORS WITH THEIR NAME/ADDRESS/PAN NUMBER ( PAGE1 3 OF APB). WE FURTHER FIND THAT AGAIN THE A.O VIDE THE NOTICE ISSUED U/S 142(1), DATED 26.10.2010 ( PAGE 19 - 21 OF APB) AT SR.NO.11 HAD CALLE D UPON THE ASSESSEE TO PLACE ON RECORD THE COPY OF LEDGER ACCOUNT S OF THE SUNDRY CREDITORS WITH THEIR COMPLETE POSTAL ADDRESS ES , PAN NUMBERS AND CONFIRMATION S OF THE TRANSACTIONS. WE HAVE FURTHER DELIBERATED ON THE RECORDS TO WHICH OUR ATTENTION WAS DRAWN BY THE LD. D.R. AND FIND THAT THE ASSESSEE HAD IN COMPLIANCE TO THE DIRECTIONS OF THE A.O , THEREIN VIDE ITS LETTER DATED 22.11.2010 ( PAGE 37 OF APB) PLACED ON RECORD THE RESPECTIVE CONF IRMATIONS OF THE AFOREMENTIONED PARTIES, VIZ. M/S SHREENATH TRADING COMPANY AND M/S AVANY ENTERPRISES ( PAGE 31 - 32 OF APB) . WE HAVE DELIBERATED ON THE AFORESAID FACTS AND ARE OF THE CONSIDERED VIEW THAT THE A.O DURING THE COURSE OF THE ASSESSMENT PROCEEDI NGS HAD CARRIED OUT THE NECESSARY VERIFICATIONS AS REGARDS THE GENUINENESS AND VERACITY IN RESPECT OF THE AFORESAID PARTIES, VIZ. M/S SHREENATH TRADING COMPANY AND M/S AVANY ENTERPRISES, AND IN DUE COMPLIANCE OF THE SAME THE ASSESSEE HAD FURNISHED THE REQU ISITE DETAILS AND THE CONFIRMATIONS OF THE AFORESAID PARTIES WITH THE A.O. WE FIND THAT THE CIT HAD IN THE ORDER PASSED U/S 263 HAD CATEGORICALLY OBSERVED THAT THE A.O HAD FAILED TO DEEPLY EXAMINE THE GENUINENESS OF THE CREDITS PERTAINING TO THE AFOREMENTI ONED PARTIES, VIZ. M/S SHREENATH TRADING COMPANY AND M/S AVANY ENTERPRISES, BY OBSERVING AS UNDER : ONCE IN EARLIER ASSESSMENT YEAR I.E. 2007 - 08 BALANCE IN THE CASE OF SHREENATH TRADING PVT. LTD. AT RS. 3,03,35,000/ - STOOD ADDED AS UNEXPLAINED SUNDRY CRE DITORS, IT WAS NECESSARY TO DEEPLY EXAMINE THE GENUINENESS OF FRESH CREDITS INCLUD ING ENQUIRY FROM THE VARIOUS PARTIES INDICATED IN THESE ACCOUNTS. P A G E | 9 ITA NO. 2795 /MUM/201 3 AY: 2008 - 09 R. KESHAVLAL TRADERS PVT. LTD. VS . CIT CENTRAL - IV 10. WE HAVE DELIBERATED ON THE AFORESAID OBSERVATIONS AND AFTER GIVING A THOUGHTFUL CONSIDERATION ARE OF THE CONSIDERED VIEW THAT IT CAN SAFELY BE CONCLUDED THAT THE CIT HELD A CONVICTION THAT AS IN THE EARLIER YEARS, VIZ. A.Y(S). 2002 - 03, 2003 - 04 AND 2004 - 05 THE A.O IN THE ASSESSMENTS FRAMED U/S 143(3) R.W.S. 147 HAD TREATED THE AFORESAID PARTIES , VI Z M/S SHREENATH TRADING COMPANY AND M/S AVANY ENTERPRISES AS ACCOMMODATION ENTRIES, WHILE FOR IN THE IMMEDIATELY PRECEDING YEAR, VIZ. A.Y. 2007 - 08 IN THE ASSESSMENT FRAMED UNDER SEC. 143(3) HE HAD ADDED THE CREDIT BALANCE OF RS. 3,03,35,000/ - OF M/S SHREEN ATH TRADING COMPANY PVT. LTD. AS AN UNEXPLAINED SUNDRY CREDITOR, THEREFORE, DURING THE YEAR UNDER CONSIDERATION THE A.O IN THE BACKDROP OF THE SAID PAS T HISTORY OF THE ASSESSES CASE OUGHT TO HAVE DEEPLY EXAMINED THE GENUINENESS OF THE FRESH CREDITS APPEA RING IN THE ACCOUNTS OF THE AFORESAID PARTIES. WE ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE AFORESAID REASONING ON THE BASIS OF WHICH THE CIT HAD ASSUMED JURISDICTION U/S 263 OF THE ACT. WE ARE OF THE CONSIDERED VIEW THAT THOUGH POWERS ARE VESTE D WITH THE CIT TO REVISE AN ORDER PASSED BY THE A.O , SUBJECT TO THE FULFILMENT OF THE TWO FOLD CONDITIONS, I.E THE ASSESSMENT ORDER IS FOUND TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST ON THE REVENUE . H OWEVER, AS PER THE SETTLE D POSITION OF LAW , NO SUC H POWERS COULD BE VALIDLY EXERCISE D BY HIM FOR THE REASON THAT HE IS NOT SATISFIED WITH THE MODE AND MANNER OF VERIFICATIONS CARRIED OUT BY THE A.O . WE THOUGH ARE NOT OBLIVIOUS OF THE FACT THAT POWERS OF REVISING AN ASSESSMENT ORDER FOR THE REASON THAT THE SAME IN THE OPINION OF THE CIT WAS PASSED WITHOUT MAKING E NQUIRIES OR VERIFICATIONS WHICH SHOULD HAVE BEEN MADE BY THE A.O HAD BEEN VESTED WITH THE CIT AS PER EXPLANATION 2 OF SEC. 263, HOWEVER, WE ARE AFRAID THAT THE APPLICABILITY OF THE SAME IS W.E.F. 01.06.2015, AND AS SUCH THE SAME CANNOT BE P A G E | 10 ITA NO. 2795 /MUM/201 3 AY: 2008 - 09 R. KESHAVLAL TRADERS PVT. LTD. VS . CIT CENTRAL - IV EXTENDED TO THE CASE OF THE ASSESSEE BEFORE US, AS THE ORDER OF REVISION U/S 263 HAD BEEN PASSED IN ITS CASE ON 22.03.2013. WE ARE OF THE CONSIDERED VIEW THAT THE CIT IN THE EXERCISE OF THE AFORESAID POWERS CAN SA FELY BE CONCLUDED TO HAVE REVISE D THE ORDER OF ASSESSMENT PASSED BY THE A.O FOR THE REASON THAT AS PER HIM THE LATTER HAD CARRIED OUT INADEQUATE INQUIRIES . WE ARE OF THE CONSIDERED VIEW THAT THOUGH THE CIT IS VESTED WITH THE JURISDICTION TO REVISE AN ASS ESSMENT ORDER WHEREIN NO INQUIRY AS REGARDS THE ISSUE HAD BEEN CARRIED OUT BY THE A.O, WHICH THUS HAD RENDERED THE ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, BUT HOWEVER, WE ARE AFRAID THAT NO SUCH POWERS CAN BE EXERCISED FOR THE REAS ON THAT AS PER THE CIT THE INQUIRIES OR VERIFICATIONS MADE BY THE A.O ARE FOUND TO BE INADEQUATE AND NOT TO HIS SATISFACTION. WE FIND THAT OUR AFORESAID VIEW STANDS FORTIFIED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF COMMISSIONER O F INCOME - TAX VS. NIRAV MODI (2017) 390 ITR 292 (BOM) , WHEREIN IT WAS HELD AS UNDER : - THIS IS A CASE WHERE A VIEW HAS BEEN TAKEN BY THE ASSESSING OFFICER ON ENQUIRY. EVEN IF THIS VIEW, IN THE OPINION OF THE CIT IS NOT CORRECT, IT WOULD NOT PERMIT HIM TO EXERCISE POWER UNDER SECTION 263 OF THE ACT. IN FACT, THE APEX COURT IN AMITABH BACHCHAN (SUPRA) HAS OBSERVED THAT THERE CAN BE NO DOUBT THAT WHERE THE VIEW TAKEN BY THE ASSESSING OFFICER IS A POSSIBLE VIEW, INTERFERENCE UNDER SECTION 263 OF THE ACT, IS N OT PERMISSIBLE. WE THUS , IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS ARE UNABLE TO SUBSCRIBE TO THE REASONING ADOPTED BY THE CIT FOR REVISING THE ORDER ON THE AFORESAID COUNT . 10. WE HAVE FURTHER GIVEN A THOUGHTFUL CONSIDERATION TO THE OBSERVATIONS O F THE CIT THAT THE A.O HAD FAILED TO MAKE NECESSARY VERIFICATIONS AS REGARDS THE SUNDRY DEBTOR OF RS. 16,21,574/ - UNDER THE NAME M/S CHEVRON METAL PRODUCTS PVT. LTD., SPECIFICALLY IN THE P A G E | 11 ITA NO. 2795 /MUM/201 3 AY: 2008 - 09 R. KESHAVLAL TRADERS PVT. LTD. VS . CIT CENTRAL - IV BACKDROP OF THE STATEMENT OF THE DIRECTOR OF THE AFORESAID COMPANY, V IZ. MRS MEHRUNISSA, WHICH WAS RECORDED ON O ATH, WHEREIN THE LATTER HAD CATEGORICALLY ADMITTED THAT THE SAID TRANSACTION WAS MERELY AN ACCOMMODATION ENTRY ON WHICH SHE HAD DECLARED COMMISSION INCOME @ 1%. WE THOUGH AT THE FIRST BLUSH FOUND THE AFORESAID REA SONING OF THE CIT FOR ASSUMING JURISDICTION U/S 263 TO BE VERY CONVINCING BUT HOWEVER , ON A PERUSAL OF THE SCHEDULE 4 OF THE BALANCE SHEET ( PAGE 15 OF APB) OF THE ASSESSEE COMPANY FOR THE YEAR UNDER CONSIDERATION, VIZ. A.Y. 2008 - 09 TO WHICH ARE ATTENTI ON WAS DRAWN BY THE LD. A.R., IT EMERGES THAT THE AFORESAID DEBIT BALANCE OF RS. 16,21,574/ - WAS BROUGHT FORWARD FROM THE IMMEDIATELY PRECEDING YEAR, VIZ. A.Y. 2007 - 08. WE ARE OF THE CONSIDERED VIEW THAT NOW WHEN IT REMAINS AS A MATTER OF FACT THAT THE AFO RESAID TRANSACTION LEADING TO TJE AFORESAID DEBIT BALANCE IN THE ACCOUNT OF M/S CHEVRON METAL PRODUCTS PVT. LTD. PERTAIN TO A.Y. 2007 - 08, THEREFORE, EVEN IF THERE WAS ANY INFIRMITY AS REGARDS THE SAID TRANSACTION, NO ADVERSE INFERENCES COULD BE DRAWN IN TH E HANDS OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. WE THUS ARE OF THE CONSIDERED VIEW THAT THE ASSUMPTION OF JURISDICTION BY THE CIT U/S 263 FOR THE REASON THAT THE A.O HAD FAILED THE MAKE NECESSARY VERIFICATIONS IN RESPECT OF M/S CHEVRON METAL PROD UCTS PVT. LTD. IN THE BACKDROP OF THE STATEMENT OF ITS DIRECTOR, BEING NOT RELEVANT TO THE YEAR UNDER CONSIDERATION CANNOT BE SUSTAINED. WE THUS IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS ARE UNABLE TO SUBSCRIBE TO THE REASONING ADOPTED BY THE CIT FOR REVISING THE ORDER ON THE AFORESAID COUNT TOO. 11. WE THUS IN TERMS OF OUR AFORESAID OBSERVATIONS ARE OF THE CONSIDERED VIEW THAT THE CIT IN THE PRESENT CASE HAD WRONGLY ASSUMED JURISDICTION AND REVISED THE ORDER PASSED BY THE A.O U/S 143(3) DATED 29.12.2 010. WE THUS SET ASIDE THE ORDER PASSED BY THE CIT U/S 263 P A G E | 12 ITA NO. 2795 /MUM/201 3 AY: 2008 - 09 R. KESHAVLAL TRADERS PVT. LTD. VS . CIT CENTRAL - IV AND RESTORE THE ASSESSMENT ORDER PASSED BY THE A.O U/S 143(3) OF THE ACT. 1 2 . THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 . 1 2 .2017 SD/ - SD/ - ( P.K. BANSAL ) ( RAVISH SOOD ) VICE PRESIDENT JUDICIAL MEMBER MUMBAI ; 20 .1 2 .2017 PS. ROHIT KUMAR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(X ) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI P A G E | 13 ITA NO. 2795 /MUM/201 3 AY: 2008 - 09 R. KESHAVLAL TRADERS PVT. LTD. VS . CIT CENTRAL - IV