AMAR SINGH CHAUDHARY, JABALPUR V. PRINCIPLE COMMISSIONER OF INCOME TAX -1, JABALPUR

ITA 28/JAB/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4342 (ITAT-JABALPUR)
• Duration Of Justice: 3 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 30-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ABHAY KUMAR SINGH
• Assessee Lawyers: G N PUROHIT
• Keywords: Capital asset; Principle of natural justice; Avoidance of tax; Prejudicial to interest; Set aside; Capital Gains
• Section: 143(3); 142(1); 43; 48; 2(A); 13; 153C; 263

Judgement Text

ITA NO. 28/JAB/2017 (AY 2009-10) AMAR SINGH CHOUDHARY V. PR. CIT 1 | P A G E IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR BEFORE SHRI NRS GANESAN, JUDICIAL MEMBER &SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.28/JAB/2017 ASSESSMENT YEAR: 2009-10 AMAR SINGH CHOUDHARY, 415,SOUTH CIVIL LINES, JABALPUR (PAN AJEPC5714A) VS. PR. COMMISSIONER OF INCOME TAX-2, CENTRAL REVENUE BUILDING, NAPIER TOWN, JABALPUR (APPELLANT ) (RESPONDENT) APPELLANT BY SHRI G.N.PUROHIT, SR. ADV. RESPONDENT BY SHRI ABHAY KUMAR SINGH, CIT-DR DATE OF HEARING 15/09/2020 DATE OF PRONOUNCEMENT 27/10/2020 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE AGITATING THE ORD ER BY THE PRINCIPAL COMMISSIONER OF INCOME TAX-2, JABALPUR (PR. CIT F OR SHORT) DATED 28.03.2017 IN RESPECT OF HIS ASSESSMENT UNDER SECTION 153C R/W S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) DATED 27.03.2015 FOR ASSESSMENT YEAR (AY) 2009-10. 2. THE BRIEF BACKGROUND FACTS OF THE CASE ARE THAT DURING THE COURSE OF A SEARCH U/S.132(1) OF THE ACT ON MOKHA GROUP OF CASE S ON 14.12.2011, AN AGREEMENT FOR SALE OF LAND DATED 05.9.2003 WAS FOUN D, WHEREBY MOKHA BUILDERS AND PROMOTERS, JABALPUR, THE BUILDER AND DEVELOPER OF A RESIDENTIAL PROJECT BY THE NAME APSARA APARTMENTS , WAS TO, IN LIEU OF THE ASSESSEES LAND, MADE ITA NO. 28/JAB/2017 (AY 2009-10) AMAR SINGH CHOUDHARY V. PR. CIT 2 | P A G E AVAILABLE BY HIM THERETO FOR DEVELOPMENT, FOLLOWED BY TRANSFER, PROVIDE 46 FLATS AND 4 DUPLEXES IN THE SAID RESIDENTIAL COMPLEX TO T HE ASSESSEE WITHOUT ANY ADDITIONAL COST , I.E., BESIDES AN UPFRONT PAYMENT OF RS.50 LACS. O F THE SAME, 12 FLATS AND 4 DUPLEXES WERE RECEIVED BY THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR, AND THE BALANCE FLATS DURING THE FOLLOWING TW O YEARS, I.E., AT 19 AND 15 FOR AYS. 2010-11 AND 2011-12 RESPECTIVELY. THE ASSESSEE RETURNED A CAPITAL GAIN OF RS.72 LACS IN RESPONSE TO THE NOTICE U/S. 153A(1) R /W S. 153C, AGAINST WHICH RS.30 LACS WAS CLAIMED AS COST OF IMPROVEMENT U/S . 48 TOWARDS MARBLE FLOORING (IN BED ROOMS) AND GRANITE PLATFORMS IN TH E KITCHEN. IT IS THE ALLOWANCE OF THIS CLAIM, ALLEGED TO BE WITHOUT PROPER ENQUIRY BY THE ASSESSING OFFICER (AO) IN ASSESSMENT, WHICH CONSTITUTES THE PRINCIPAL OBJECTION BY THE PR. CIT IN EXERCISE OF HIS REVISIONARY POWER U/S. 263 OF THE A CT. THE SECOND OBJECTION BY HIM IS THAT THE AO HAD NOT INSISTED ON THE PRODUCTI ON OF SALE DEEDS IN RESPECT OF THE SEVEN (OF THE TWELVE RECEIVED) FLATS SOLD BY TH E ASSESSEE DURING THE YEAR, AND EXAMINE THE SAME TOWARD VERIFICATION OF THE STATED SALE VALUES. HE, ACCORDINGLY, DIRECTED THE AO TO PASS A SUITABLE ORDER, I.E., AFT ER MAKING PROPER INQUIRY, IN ACCORDANCE WITH LAW, AND AFTER ALLOWING THE ASSESSE E PROPER OPPORTUNITY TO PRESENT HIS CASE BEFORE HIM. THE RESPECTIVE CASES 3.1 THE ASSESSEES CASE IS THAT DUE ENQUIRY IN RESP ECT OF THE COST OF IMPROVEMENT CLAIMED WAS MADE BY THE AO IN MAKING TH E ASSESSMENT, CAUSING IN FACT PHYSICAL VERIFICATION OF THE IMPROVEMENT EF FECTED THROUGH HIS INSPECTOR ON 24.3.2015 (PB PG. 34), WHO REPORTED FAVORABLY. T HIS IS BORNE OUT BY THE RECORD, THROUGH THE OFFICE NOTE (ON) TO THE IMPUGNE D ASSESSMENT ORDER, WHICH IS A COMBINED ORDER FOR AYS. 2006-07 TO 2012-13, ST ATING THE REPORT OF THE INSPECTOR TO BE IN CONFIRMATION OF THE SUBMISSIONS OF THE ASSESSEE (PB PGS. 32- 33). THERE IS, THEREFORE, NO BASIS TO SAY THAT NO E NQUIRY OR, NO PROPER ENQUIRY, HAD BEEN MADE BY THE ASSESSING AUTHORITY IN ALLOWIN G THE ASSESSEES CLAIM OF ITA NO. 28/JAB/2017 (AY 2009-10) AMAR SINGH CHOUDHARY V. PR. CIT 3 | P A G E COST OF IMPROVEMENT. FURTHER, EVEN CONSIDERING THAT THE SAID COST, ADMITTEDLY INCURRED FOR ALL THE RESIDENTIAL UNITS, WAS TO BE A LLOWED PROPORTIONATELY, I.E., AS RELATABLE TO THE FLATS AND DUPLEXES RECEIVED DURING THE RELEVANT YEAR, THE FACT OF THE MATTER IS THAT IT WOULD BE OF NO CONSEQUENCE AS THE SAID CLAIM STANDS MADE BY THE ASSESSEE ONLY FOR THE CURRENT YEAR, SO THAT THE CAPITAL GAINS RETURNED FOR THE FOLLOWING TWO YEARS, BEING WITHOUT DEDUCTING, S IMILARLY, PROPORTIONATE COST OF IMPROVEMENT, IS HIGHER TO THAT EXTENT. THERE IS , THUS, NO LOSS OF REVENUE; THE TAX RATE ON CAPITAL GAINS BEING THE SAME FOR ALL TH E YEARS FALLING WITHIN THE BLOCK PERIOD (AYS. 2006-07 TO 2011-12). AS REGARDS THE NO N-SUBMISSION OF THE SALE DEEDS, THE SAME, DULY CALLED FOR VIDE NOTICE U/S. 1 42(1) DATED 16.3.2015 (PB PGS. 16-17), WERE SUBMITTED AND EXAMINED DURING THE ASSESSMENT PROCEEDINGS. THE NON-MENTION THEREOF IN THE ASSESSMENT ORDER WOU LD THEREFORE BE OF NO MOMENT; THAT BEING PURELY A MATTER OF CHOICE OF THE AO, I.E., AS TO WHICH AREAS OF THE ASSESSEES RETURN, FOUND SATISFACTORY BY HIM ON VERIFICATION, FIND MENTION IN HIS ORDER, AN ASPECT OVER WHICH THE ASSESSEE HAS NO CONTROL. 3.2 THE REVENUES CASE, ON THE OTHER HAND, IS THAT THERE IS NO SUBSTANTIATION OF THE ASSESSEES CLAIM QUA THE COST OF IMPROVEMENT (RS.30 LACS), CONSIDERING WHICH, THE INSPECTORS REPORT, VAGUE AND AMBIGUOUS, WOULD BE BY ITSELF OF NO MOMENT. THE DEVELOPMENT AGREEMENT CLEARLY PROVIDES FOR MOSAIC FLOORING AND GRANITE PLATFORMS FOR ROOMS AND KITCHEN RESPECTIVEL Y, SO THAT THE CLAIM BECOMES SUSPECT. THIS IS MORE SO IN THE ABSENCE OF ANY AGRE EMENT OR MOU BETWEEN THE PARTIES TOWARD THE STATED MODIFICATION. IN ANY CASE , IT IS ONLY THE DIFFERENCE, I.E., BETWEEN THE COST OF THE MATERIAL WHICH WAS INITIALL Y AGREED TO BE PROVIDED, AND THE MATERIAL SUBSEQUENTLY PROVIDED, I.E., AT THE AS SESSEES INSTANCE, THAT WOULD HAVE TO BE ALLOWED. AS REGARDS THE SALE DEEDS, THER E IS NOTHING TO EVIDENCE THEIR PRODUCTION BEFORE THE AO, MUCH LESS THEIR EXAMINATI ON BY HIM. ITA NO. 28/JAB/2017 (AY 2009-10) AMAR SINGH CHOUDHARY V. PR. CIT 4 | P A G E 4. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE M ATERIAL ON RECORD. STATUS OF INQUIRY 4.1 OUR FIRST OBSERVATION IN THE MATTER IS A COMPLE TE OPAQUENESS AS TO WHAT TRANSPIRED DURING THE ASSESSMENT PROCEEDINGS IN RES PECT OF THE ASSESSEES CLAIM FOR COST OF IMPROVEMENT FOR RS. 30 LACS. NOTICE U/S . 142(1) WAS ISSUED ON 16.3.2015 FOR 20.3.2015. THE SAME, EVEN AS THE CAPT IONED SUBJECT MENTIONS ONLY AY 2011-12, IS FOR ALL THE YEARS INASMUCH AS THE QU ERIES RAISED WERE COMMON FOR ALL THE YEARS. REPLY THERETO, PRESUMABLY FURNIS HED, HAS, VERY STRANGELY, NOT BEEN PLACED ON RECORD. THERE IS, IN FACT, NO QUERY IN RESPECT OF THE COST OF IMPROVEMENT IN THE SAID NOTICE . THE SAID CLAIM, AS IT APPEARS, CAME TO LIGHT ON THE ASSESSEE FURNISHING THE DETAILS OF THE CAPITAL GAINS, SOUGHT PER PARA (V) OF THE NOTICE. WHAT WERE THESE DETAILS? WHETHER AND WHAT, IF ANY, QUERY IN RESPECT OF COST OF IMPROVEMENT WAS, IF AT ALL, MADE WHICH WO ULD IN FACT DEPEND UPON THE DISCLOSURE AND THE STATEMENT OF THE NATURE AND THE COST OF IMPROVEMENT CLAIMED BY THE ASSESSEE? HOW WAS THIS COMMUNICATED TO THE A SSESSEE? WHAT WAS THE ASSESSEES REPLY THERETO? WAS ANY MATERIAL CALLED F OR, OR FURNISHED, IN SUBSTANTIATION? THERE IS, INEXPLICABLY, NO REFERENCE TO ANY SUCH MA TERIAL EITHER IN THE REVISIONARY PROCEEDINGS OR EVEN BEFORE US . WHY? WHILE THE ON STATES OF THE INSPECTORS REPORT BEING IN CONFIRMATION OF THE ASSESSEES SUBMISSIONS, THE SAID SUBMISSIONS ARE THEMSELVES CONSPICUOUS BY THEI R ABSENCE. AS IT WOULD APPEAR TO US, THERE WERE NO SUBMISSIONS, AND THE CL AIM FOR COST OF MARBLE FLOORING IN BED ROOMS AND GRANITE PLATFORMS IN KITC HEN WAS MADE THROUGH THE WORKING OF THE CAPITAL GAINS, CALLED FOR. EVEN THE SAME, I.E., THE SAID WORKING, HAS NOT BEEN BROUGHT ON RECORD. CONTINUING FURTHER, HOW WAS THE CHARGE ON THE ASSESSEE RAISED? HOW WAS THE SAME ARRIVED AT, WHICH WOULD PRESUMABLY BE, EVEN AS STATED BY THE LD. PR. CIT, THE DIFFERENCE B ETWEEN THE COST OF THE MATERIAL TO BE PROVIDED AND THAT SOUGHT BY THE ASSESSEE. THE SIGNIFICANCE OF THIS STATEMENT BY THE LD. PR. CIT, WHICH IS ONLY UNDERST ANDABLE, AND NEITHER DENIED ITA NO. 28/JAB/2017 (AY 2009-10) AMAR SINGH CHOUDHARY V. PR. CIT 5 | P A G E NOR CLARIFIED BY THE ASSESSEE, IS TOWARD THE QUANTU M OF THE CLAIM, WHICH THEREFORE OUGHT TO BE IN A FAR LOWER SUM, ON WHICH ASPECT, AGAIN, THERE HAS BEEN NO INQUIRY. THEN, WHEN AND HOW WAS THE AMOUNT PAID ? WAS IT RECEIPTED, AS IT OUGHT TO BE? IF NOT, INASMUCH AS THERE IS NO RECEIP T, WHY? 4.2 WE MAY, NEXT, IN VIEW OF THE COMPLETE ABSENCE O F ANY EVIDENCE LED BY THE ASSESSEE TOWARD ITS CLAIM, EXAMINE IT FROM THE STAND-POINT OF LOGISTICS. THE STATED MODIFICATION NECESSARILY IMPLIES THE ASSESSE E SPECIFYING THE QUALITY OF THE MARBLE AND GRANITE TO BE USED AND, FURTHER, AN AGRE EMENT ON THEIR RESPECTIVE RATES, AS WELL AS THAT OF THE MATERIAL SUBSTITUTED, AS ALSO THE QUANTITY/S THEREOF. THE LATTER, THOUGH AGREED TO BE PROVIDED FREE-OF-CO ST, A VALUE WOULD HAVE TO BE IMPUTED IN ITS RESPECT INASMUCH AS THE SAME STANDS SUBSTITUTED, REQUIRING THE ASSESSEE TO PAY AN ADDITIONAL SUM. RATHER, IN-AS-MU CH AS THE CHANGE INVOLVES SPECIAL EFFORT ON THE PART OF THE BUILDER AND, BESI DES, AS APPARENT, A CHANGE IN THE PROFILE OF THE LABOUR WORK, THE BUILDER MIGHT W ELL HAVE RAISED A CHARGE IN ITS RESPECT, IF NOT TOWARD ITS MARGIN AS WELL. IN ANY CASE, ALL THIS COULD NOT BE, FIRSTLY, WITHOUT SPECIFICS (AND, FURTHER, AGREED TO BETWEEN THE PARTIES) AND, SECONDLY, WHOLLY UNDOCUMENTED , AS IS STRANGELY THE CASE. EVEN IF, AS IT APPEARS, A LUMP SUM FIGURE (OF RS.30 LACS) WAS FINALLY AGREED UPON, THE SAME WOULD ONLY BE ON THE BASIS OF SOME UNDERLYING DATA OR ESTIMATE S, ALBEIT INFORMED WHOLLY ABSENT , AS INDEED IS ANY EVIDENCE AS TO THE SAME BEING AGREED UPON. WHY, THE MODIFICATION ITSELF CANNOT BE CARRIED OUT IN THE AB SENCE OF THESE, BASIC DETAILS . THE AGREEMENT ITSELF IS NO MEAN TASK, INVOLVE AS IT DOES A NUMBER OF IMPONDERABLES AND PARAMETERS, AND WHICH EXPLAINS OU R STATING OF THE LACK, NAY, A COMPLETE ABSENCE OF ANY MATERIAL EVIDENCING THE S AME, AS STRANGE. THE MARBLE AND GRANITE TO BE USED INSTEAD, WOULD HAVE TO BE SP ECIFIED BY THE ASSESSEE. GIVEN THE WIDE VARIETY AVAILABLE IN THE MARKET, WIT H FURTHER THEIR RATES SUBJECT TO CONSTANT CHANGE, THIS SPECIFICATION IS ITSELF REMAR KABLE. ONLY ONE WITH A CONSIDERABLE KNOWLEDGE AND EXPERIENCE IN THE TRADE WOULD BE IN A POSITION TO ITA NO. 28/JAB/2017 (AY 2009-10) AMAR SINGH CHOUDHARY V. PR. CIT 6 | P A G E BARGAIN IN ITS RESPECT WITH THE BUILDER/DEVELOPER, WHO, BEING BULK BUYERS, ARE THEREFORE ABLE TO BARGAIN RATES (FROM THE SUPPLIERS ) NOT ACCESSIBLE TO INDIVIDUAL BUYERS AS THE ASSESSEE. WHY WOULD IT, THEN, PASS ON THE BENEFIT OF SUCH LOWER RATES ON THE SUBSTITUTED MATERIAL, COST OF WHICH IS TO BE NONE-THE-LESS, AS AFORE- NOTED, IMPUTED. LIKEWISE, FOR THE REPLACEMENT MATER IAL. IN FACT, EVEN THE QUANTITY/S ASPECT WOULD NEED RESOLUTION INASMUCH AS , APART FROM MEASUREMENT, QUA WHICH THE ASSESSEE MAY NOT HAVE THE RELEVANT MAPS AS THE SAME DO NOT GENERALLY FORM PART OF THE AGREEMENT, IS THE ASPECT OF WASTAGE, AS BOTH, MARBLE AND GRANITE FITTING ENTAILS CONSIDERABLE WASTAGE, S O THAT THE COST INCURRED AND, THUS, CHARGED, WOULD ONLY BE WITH REFERENCE TO THE GROSS QUANTITY/S OF THE MATERIAL. WHY, THE MARKET IS SO DYNAMIC THAT IT IS INCONCEIVABLE TO PREDICATE THE MATERIALS WHICH WOULD BE USED FIVE YEARS HENCE, MUC H LESS THEIR RATES. THE ASSESSEE SUBSTITUTING GRANITE WITH GRANITE, I.E ., IN KITCHENS, THE SAME WOULD ONLY BE DUE TO A CHANGE IN THE QUALITY/SPECIFICATIO N, SUBSTITUTING IT PERHAPS WITH ONE THAT IS MORE IN VOGUE AT THE RELEVANT TIME. HOW DID THE ASSESSEE KNOW OF THE QUALITY OF THE GRANITE TO BE USED, BEING SURELY NOT SPECIFIED IN THE AGREEMENT, TO ASK FOR A DIFFERENT QUALITY THEREOF, AGAIN IMPLYING A COMMUNICATION BE TWEEN THE TWO QUA THE SAME? IN ANY CASE, IT IS ONLY AN AGREEMENT OVE R THE SPECIFICS, IMPLYING THEIR KNOWLEDGE AND COMMUNICATION AND, IN FACT, AN AGREEMENT ON ALL RELATED ASPECTS, WHICH COULD RESULT IN THE CRYSTALL IZATION OF THE JOB TO BE PERFORMED AS WELL AS ITS COST. IN SUM, THE NEGOTIATIONS, INTEGRAL AND INTRINSIC TO THE PROCESS, FOR ARRIVING AT A MEETING OF MINDS, IN VOLVE PROPOSAL/S AND COUNTER PROPOSAL/S, WHICH RATHER CONTINUE EVEN AFTER THE AG REEMENT, I.E., SPILL OVER TO THE PERFORMANCE PART OF THE CONTRACT, ALL OF WHICH IS COMPLETELY MISSING . FURTHER, EVEN IF ONE WERE TO IGNORE ALL THIS, AND P ROCEED ON THE BASIS THAT THE BUILDER WAS A TRUSTED PARTY, ON WHOM THE ASSESS EE THEREFORE RELIED FOR ALL THE SPECIFICS, I.E., AS TO QUALITY, QUANTITY, RATE/S OF THE MATERIAL, LABOR, ETC., AND AGREED TO PAY WHAT WAS ASKED FOR, WHY, ONE WONDERS, DIDNT HE SAY SO . THE REVENUE, WHERE IT WISHED TO, COULD IN VERIFICATION SEEK CLARIFICATION FROM THE ITA NO. 28/JAB/2017 (AY 2009-10) AMAR SINGH CHOUDHARY V. PR. CIT 7 | P A G E BUILDER, WHO WOULD, HAVING, AS STATED, CARRIED OUT THE MODIFICATION, WHERE REQUIRED TO, FURNISH THE NECESSARY DETAILS, INCLUDI NG EVIDENCE AS TO THE COST INCURRED. THIS IN FACT WAS THE ASSESSEES ARGUMENT BEFORE US, PUT FORTH BY ITS COUNSEL, SH. PUROHIT, IN RESPONSE TO THE REVENUES ARGUMENT OF THE COST CLAIMED BEING WHOLLY UNSUBSTANTIATED. THE COST, HE WOULD AV ER, HAVING BEEN IN FACT INCURRED BY THE BUILDER, ONLY IT WOULD BE IN POSSES SION OF THE RELEVANT VOUCHERS, SO THAT THE SAME COULD NOT BE EXPECTED TO BE FURNIS HED BY THE ASSESSEE. IN OTHER WORDS, NO ADVERSE INFERENCE COULD BE, UNDER THE CIR CUMSTANCES, DRAWN FROM THE ASSESSEES FAILURE TO FURNISH THE SAID EVIDENCE. TR UE, BUT THEN, WHAT, IN ITS STEAD, IS THE EVIDENCE/S LED BY THE ASSESSEE? THE BASIS OF THE ASSESSEES CLAIM IS THE AGREEMENT ARRIVED AT BETWEEN HIM AND THE BUILDER, S O THAT THE SAME IS THE MINIMUM THAT THE ASSESSEE, GIVEN HIS STAND, WAS EXP ECTED TO PRODUCE IN EVIDENCING HIS CLAIM QUA THE COST OF IMPROVEMENT. AND WHICH COULD, AS INDICATED EARLIER, WHERE DEEMED PROPER, AS IT OUGHT TO HAVE BEEN, CROSS VERIFIED BY THE REVENUE, INCLUDING THE INCURRING OF THE ADDI TIONAL COST AND BOOKING OF THE REVENUE THERE-AGAINST BY THE BUILDER. THE ABSEN CE OF THE AGREEMENT, VITAL TO THE ASSESSEES CASE, IS UNEXPLAINED; RATHER, EVEN N OT INQUIRED INTO, AND DEMONSTRATES AN ABSENCE OF APPLICATION OF MIND BY T HE AO. ON THE CONTRARY, AS WE SHALL PRESENTLY SEE, THE BUILDER HAS AN ENTIRELY DIFFERENT STORY TO TELL ABOUT THE SAME. 4.3 WE, NEXT, CONSIDER THE INSPECTORS REPORT, WHIC H FORMS THE FULCRUM OF THE ASSESSEES CASE. THE FIRST THING THAT STRIKES ONE, LOOKING THEREAT, IS THAT IT IS AN UNSIGNED DOCUMENT, NOT BEARING EVEN THE NAME OF THE INSPECTOR WHO HAD OSTENSIBLY CARRIED OUT THE INSPECTION. THE SAME, THEREFORE, HAS NO SANCTITY, MUCH LESS EVIDENTIARY VALUE, IN LAW . THE SAME, ACCORDINGLY, ONLY NEEDS TO BE REJECTED OUTRIGHT. WE MAY, NEVERTHELESS, IF ONLY TO UNDERSTA ND THE NATURE OF THE ENQUIRY MADE, OR STATED TO BE, EXAMINE IT. PER THE SAME, DA TED 24.3.2015, THE INSPECTOR, I.E., PRESUMABLY, IN-AS-MUCH AS HIS CAPACITY (DESIG NATION) AS SUCH, WHICH IS ITA NO. 28/JAB/2017 (AY 2009-10) AMAR SINGH CHOUDHARY V. PR. CIT 8 | P A G E NORMALLY STATED BELOW THE NAME MISSING IN THIS CA SE, HAS ALSO NOT BEEN STATED, HAS, IN COMPLIANCE OF THE DIRECTION BY THE ITO, WAR D-2(5), JABALPUR, CARRIED OUT AN INSPECTION OF THE FLATS/DUPLEXES BUILT UNDER THE APSARA PROJECT, AGAIN PRESUMABLY ON 24/3/2015. IT STATES THAT IN ALMOST A LL THE FLATS MARBLE/GRANITE, WHICH SEEMED EXPENSIVE, HAD BEEN USED IN ALL THE RO OMS AND KITCHEN RESPECTIVELY. THE SAME, THUS, HAS NO BEARING ON THE COST STATED T O HAVE BEEN INCURRED TOWARD THE IMPROVEMENT (OF THE CAPITAL ASS ET), CLAIMED AND ALLOWED , AND ITS SCOPE IS ONLY TOWARD VERIFYING THE SAID IMP ROVEMENT. EVEN WITH REGARD THERETO, I.E., THE SAID VERIFICATION, THE SAME (REP ORT) IS NEITHER HERE NOR THERE . IT DOES NOT STATE IF THE FLATS/DUPLEXES INSPECTED WERE THOSE ALLOTTED TO THE ASSESSEE, WHICH ONLY WOULD MAKE THE REPORT MEANINGFUL. THAT W OULD, IN THE FIRST PLACE, REQUIRE THE ASSESSEE TO PROVIDE A LIST OF ALL SUCH FLATS/DUPLEXES, ALONG WITH THEIR IDENTIFICATION NUMBERS, ETC. TO THE AO. WHEN & HOW WAS THIS DONE? FURTHER, AS THE REPORT SAYS, HE INSPECTED ALMOST ALL THE FLATS/ DUPLEXES, IN WHICH CASE THE ENQUIRY, RATHER, GOES AGAINST THE ASSESSEE IN-AS-MU CH AS, IF, AS STATED, MARBLE AND GRANITE HAD IN FACT BEEN USED IN ALL OF THEM, NO DI FFERENCE STANDS OBSERVED BETWEEN THE FLATS GIVEN TO THE ASSESSEE AND TO OTHE RS. ALSO, IT CANNOT BE THAT HE INSPECTED ONLY THE ASSESSEES FLATS, WHICH AGAIN WO ULD BE OF NO CONSEQUENCE. IT IS ONLY WHEN THE RESIDENTIAL UNITS OF THE ASSESSEE DETAILS OF WHICH ARE ABSENT, ARE INSPECTED AND, FURTHER, COMPARED WITH OTHERS (S O THAT THE SAME WOULD ALSO REQUIRE BEING INSPECTED), FINDING A DIFFERENCE BETW EEN THE FLOORING (IN THE ROOMS) AND QUALITY OF THE GRANITE USED (IN THE KITC HEN) IN ONE SET OF APARTMENTS VIS-A-VIS THE OTHER, THAT THE REPORT WOULD BE VALID , AND IN SATISFACTION OF THE PURPOSE IT SETS OUT TO ATTAIN, I.E., VERIFY THE STA TED MODIFICATION HAVING BEEN CARRIED OUT IN THE RESIDENTIAL UNITS DELIVERED TO T HE ASSESSEE. EVEN HERE, THE INSPECTION BEING CARRIED OUT IN MARCH, 2015, I.E., YEARS LATER, BY WHICH TIME ALL THE FLATS WOULD HAVE BEEN, AS INDEED STATED, SOLD B Y THE ASSESSEE, IT MIGHT WELL BE THAT THE MODIFICATION OBSERVED HAD BEEN CARRIED OUT BY THE PRESENT OWNERS (OR IF DIFFERENT FROM THE PERSON/S TO WHOM THE ASSESSEE SOLD THE SAME, EVEN THE ITA NO. 28/JAB/2017 (AY 2009-10) AMAR SINGH CHOUDHARY V. PR. CIT 9 | P A G E PREVIOUS OWNERS). AS SUCH, FACTORS SUCH AS ENQUIRY WITH THE OWNERS REGARDING THE FLOORING, ETC., AND, EQUALLY, THE NATURE AND UNIFORMITY OF THE DIFFERENCE BETWEEN THE TWO SETS OF FLATS/DUPLEXES, ETC. WOULD ONLY COMPLETE THE ENQUIRY, ESTABLISHING, COMPLETELY MISSING , WHETHER THE STATED MODIFICATION WAS ACTUALLY CARRIED OUT AND, IF SO, AT THE ASSESSEES INSTANCE, JUSTIFYING PAYMENT OF ADDITIONAL SUM BY HIM, AT WHATEVER VALUE, TO THE BUILDER. THEN , AGAIN, WHILE THE ASSESSEE CLAIMS MARBLE FLOORING ONLY IN THE BED ROOMS , THE REPORT SAYS OF IT BEING IN ALL THE ROOMS. WHAT DOES THAT MEAN: HAS THE BUILDER, IN BENEVOLENCE, PROVIDED MARBLE EVEN WHERE NOT SOUGHT BY THE ASSESSEE? THE I NSPECTION BY THE INSPECTOR, I.E., ASSUMING SO, IS, THUS, WORTHLESS AND, IN ANY CASE, FARCICAL, IF NOT A PRETENSE. THE SAID REPORT WHICH DOES NOT CONCERN THE COST A SPECT IS TO BE, THUS, AT THE HIGHEST, IGNORED, AND, IN THE LEAST, CONSIDERED A S HAM DOCUMENT. THAT IS, TO BE, EITHER WAY, RUBBISHED. 4.4 COMING BACK TO OUR EARLIER OBSERVATION (PARA 4. 2) OF THE BUILDER HAVING IN FACT, RATHER THAN CONFIRMING, REFUTED THE ASSESSEE S STAND AS TO THE PAYMENT THERETO BEING TOWARD COST OF IMPROVEMENT. TO CLARIFY MATTERS, THERE WAS IN FACT NO ENQUIRY BY THE AO WITH THE BUILDER . OUR STATEMENT IS BASED ON THE BUILDERS STAND QUA THE PAYMENT OF RS.30 LACS, BESIDES ANOTHER IN THE SUM OF RS.10 LACS, BEFORE ITS AO. THE ABSENCE OF ANY REFERENCE BY THE ASSESSEE TO THE SUM OF RS. 10 LACS IS SURPRISING AS THE SAME, GIVEN HIS CONTRA CTUAL RELATIONSHIP WITH THE BUILDER (VIDE AGREEMENT DATED 05.9.2003), WOULD IMP ACT THE CAPITAL GAIN ARISING TO HIM. THE BUILDERS REPLY (DATED 23.12.2013), AS FURNISHED IN ITS ASSESSMENT PROCEEDINGS, IS EXTRACTED IN THE RELEVANT PART IN T HE ON. THE SAME, ALSO READ OUT DURING HEARING, READS AS UNDER: 14) REPLY TO QUERY NO. 66 THE ASSESSEE FIRM ENTERED INTO AN AGREEMENT FOR DEV ELOPMENT OF PROPERTY AND SALE THEREOF WITH AMAR SINGH CHOUDHARY. THE PROJECT NAME IS APS ARA APARTMENTS. THE COPY OF AGREEMENT IS ATTACHED. ITA NO. 28/JAB/2017 (AY 2009-10) AMAR SINGH CHOUDHARY V. PR. CIT 10 | P A G E AS PER THE AGREEMENT, A SUM OF RS. 50,00,000/- WAS TO BE PAID UP-FRONT AND LATER SHARE OF CONSTRUCTION WAS TO BE GIVEN. THE PAYMENT WAS MADE TO SHRI AMAR SINGH CHOUDHARY A S MENTIONED HEREUNDER:- SR. NO. CHEQUE NO. DATED AMOUNT 1 120560 05.09.2003 RS. 25,00,000 2 943569 12.04.2004 RS. 5,00,000 3 696838 18.08.2005 RS. 10,00,000 TOTAL RS. 40,00,000 DUE TO DISPUTE IN THE FAMILY OF LAND OWNERS, STAY W AS BY THE COURT OF LAW. THEREFORE THE BALANCE OF RS. 10,00,000 [RS. 50 LACS LESS RS. 40 L ACS] AS ORIGINALLY AGREED UPON BY THE FIRM AND LAND OWNERS, WAS NOT GIVEN. INSTEAD (THE) FIRM DEMANDED COMPENSATION FOR STOPPAGE OF WORK . THE LAND OWNERS PAID THE COMPENSATION FOR DELAY O F WORK BY CHQ. NO. 008285 DATED 16.07.2007 FOR RS. 30,00,000/-. THE CO MPENSATION RECEIVED WAS TRANSFERRED TO P&L A/C AS MISC. INCOME. COPY OF LEDGER FOR PAYM ENT MADE AND RECEIVED TO AMAR SINGH CHOUDHARY IS ATTACHED . (EMPHASIS, OURS) THE BUILDER, THUS, CLAIMS TO HAVE: (A) WITHHELD THE PAYMENT OF THE OUTSTANDING AMOUNT OF R S.10 LACS OUT OF THE CASH COMPONENT OF THE CONSIDERATION, I.E., RS.50 LA CS; AND (B) RECEIVED, INSTEAD, ANOTHER SUM OF RS.30 LACS FROM T HE ASSESSEE (VIDE CHEQUE NO.008285, DATED 16.7.2007), BY WAY OF COMPENSATION FOR STOPPAGE OF WORK, STATED TO BE ON ACCOUNT OF A DISPUTE IN THE FAMILY OF THE LAND OWNERS. SHRI PURO HIT, ON BEING REQUIRED TO EXPLAIN THIS ANOMALY DURING HEARING; THERE BEING IN EXPLICABLY NO WHISPER OF ANY SUCH DISPUTE OR COMPENSATION BY THE ASSESSEE, WOULD SUBMIT THAT IT IS ONE MANS WORD AGAINST ANOTHER, AND THE AO CHOSE TO GO BY THE ASSESSEES VERSION, TAKING A POSSIBLE VIEW IN THE MATTER. THE QUESTION, HOWEVER, IS, ON WHAT BASIS ? FURTHER, IF THIS IS NOT REASON ENOUGH TO UNDERTAKE ENQUIRY OR, AS THE CASE MAY BE, FURTHER INQUIRY, WHAT, ONE MAY ASK, WOULD BE? WE HAVE ALREA DY DISCUSSED THE INTRICACIES AND COMPLEXITIES INVOLVED IN THE SEEMIN GLY STRAIGHT FORWARD WORK OF REPLACEMENT OF MATERIAL, I.E., GIVEN THE REALITIES OF THE COMMERCIAL WORD AND THE CONFLICT OF INTEREST, REQUIRING RESOLUTION, THROUGH NEGOTIATIONS, OF A RANGE OF ITA NO. 28/JAB/2017 (AY 2009-10) AMAR SINGH CHOUDHARY V. PR. CIT 11 | P A G E ISSUES, HIGHLIGHTING SOME. AND, FURTHER, OF A COMPL ETE ABSENCE OF ANY EVIDENCE TOWARD THE SAME, FURTHER SUGGESTING THAT PERHAPS A TRUST BETWEEN THE TWO PARTIES, FOSTERED OVER THE YEARS (OF WHICH THERE IS THOUGH N O INDICATION), MAY HAVE OBVIATED THE PROTRACTED PROCESS, LEADING TO AN UNDE RSTANDING BETWEEN THEM, EVEN AS THE ABSENCE OF ANY AGREEMENT, IN MODIFICATION OF THE EARLIER ONE, I.E., TO THAT EXTENT, WOULD CONTINUE TO REMAIN UNEXPLAINED . AND HERE WE HAVE, INSTEAD OF A CONFIRMATION OR UNDERSTANDING, A DIFFERENT STORY AL TOGETHER OF THE MATTER, AND OF WHICH THE AO WAS IN FACT AWARE . THE NEED FOR ENQUIRY, IT NEEDS TO BE APPRECIATED, IS TO ASCERTAIN THE TRUTH OF THE MATTE R, WHICH GETS ALL THE MORE ACCENTUATED IN VIEW OF THE CONFLICTING CLAIMS. IT I S ONLY WHERE THE EVIDENCE AND THE CIRCUMSTANCES IN FAVOUR OF THE ASSESSEES STAND OUTWEIGHS OR, IS, IN THE MINIMUM, IN BALANCE WITH THAT IN FAVOUR OF THE OPPO SING VIEW, THAT THE AO COULD BE SAID TO BE JUSTIFIED IN CHOOSING THE ASSES SEES STAND IN PREFERENCE TO THAT OF THE BUILDER, TAKING A POSSIBLE VIEW. AND WHICH WOULD, RATHER, REQUIRE EXTENSIVE, I.E., EVEN MORE THAN THE USUAL, INQUIRY . NOT ONLY IS THE ASSESSEES STAND BEREFT OF ANY EVIDENCE, NO ENQUIRY STANDS UND ERTAKEN BY THE AO. WAS THE AMOUNT OF RS.10 LACS RECEIVED BY THE ASSESSEE? IF, AS THE ASSESSEE SAYS (REFER PARA 11 OF THE ASSESSMENT ORDER), OF HAVING RECEIVE D RS. 5 LACS THEREOF IN CASH (LEGAL TENDER), WHAT IS THE EVIDENCE IN ITS RESPECT , AS THE SAME COULD NOT POSSIBLY BE WITHOUT A RECEIPT. RATHER, IT BEING A TRADE EXPE NSE FOR THE BUILDER, HIT BY S. 40A(3), WHY, ONE WONDERS, WOULD IT PAY IN CASH? WE CONSIDER THIS ASPECT (OF RECEIPT OF RS.10 LACS) RELEVANT AS THE SAME, AS APP ARENT, IS, AS PER THE VERSION OF THE BUILDER, INTERTWINED WITH THE RECEIPT OF RS.30 LACS FROM THE ASSESSEE BOTH BEING TOWARD COMPENSATION DEMANDED BY THE BUILDER, AND SETTLED, THUS, AT RS. 40 LACS. FURTHER, WAS THERE A DISPUTE IN THE FAMILY OF THE LAND OWNERS, AS STATED BY THE BUILDER, OR IS THE SAME A FIGMENT OF ITS IM AGINATION? WHY, AND ON WHAT BASIS DOES IT STATE SO? DID THE MATTER TRAVEL TO TH E COURT, WITH IT GRANTING STAY, RESULTING IN STOPPAGE OF WORK? IF SO, FROM WHEN TO WHEN? WAS ANY COMPENSATION DEMANDED? WHEN AND HOW? WAS IT PAID? W HEN AND HOW? AGAIN, ITA NO. 28/JAB/2017 (AY 2009-10) AMAR SINGH CHOUDHARY V. PR. CIT 12 | P A G E THE BUILDER HAVING ADMITTEDLY RECEIVED THE SUM OF R S.30 LACS OR, AS THE CASE MAY BE, RS. 40 LACS, SO THAT THERE IS NO OUTSTANDIN G CLAIM BY ANY PARTY AGAINST THE OTHER, WHY WOULD THE BUILDER NOT STATE THE TRUT H? RATHER, SUBSTITUTION OF MATERIAL, I.E., AS PER THE ASSESSEES VERSION, WOUL D ENABLE IT TO SET OFF THE ADDITIONAL COST OF MATERIAL (AS WELL AS IN FACT OF ADDITIONAL LABOUR) AGAINST THE ADDITIONAL RECEIPT OF RS.30 LACS, WHILE THE COMPENS ATION TOWARD STOPPAGE OF WORK, AS STATED BY IT, IS NET INCOME, AS INDEED ACC OUNTED FOR, LIABLE, AND INDEED OFFERED, TO TAX IN WHOLE. THE AO NOTES A COMPLETE V ARIANCE IN THE STANDS OF THE TWO SIDES, THE ASSESSEE AND THE BUILDER, AND YET CH OOSES TO IGNORE THE SAME, STATING (IN THE ON) THE SAME TO BE RATHER A REASON FOR RE-EXAMINATION IN THE CASE OF THE BUILDER. THE SAME IS INCOMPREHENSIBLE AS, FI RSTLY, IT IS HIS PRIME DUTY TO CONSIDER THE VALIDITY OF THE CLAIMS OF THE ASSESSEE WHOLLY UN-EVIDENCED AND, TWO, THE AVOIDANCE OF TAX, IF ANY, IS, AS WOULD BE APPARENT FROM THE FOREGOING, IN THE ASSESSEES CASE. THE ASSESSEE HAS REPORTED RECE IPT OF RS. 45 LACS BY CHEQUE/S, AS AGAINST RS. 40 LACS STATED BY THE BUILDER, TOWAR D CASH COMPONENT OF THE CONSIDERATION ON TRANSFER OF LAND. BUT, THEN, THE S AME WOULD STAND TO BE CONFIRMED WITH REFERENCE TO THE LATTERS BOOKS AND, WHERE ACCOUNTED, AS IT, BEING BY CHEQUE/S, WOULD PRESUMABLY BE, DOES NOT RESULT I N/LEAD TO ANY LOSS OF REVENUE. AS SUCH, THE AO SEEKING, ON THE CONTRARY, A RE-EXAMINATION OF THE BUILDERS CASE, IS PERVERSE AND, IN ANY CASE, ITSELF PROVES THE NEED FOR VERIFICATION TO RESOLVE THE CONTRADICTING CLAIMS OF THE PARTIES. FURTHER, IT PUT PAYS THE ASSESSEES CLAIM THAT THE COST OF IMPROVEMENT H AVING BEEN INCURRED BY THE BUILDER, HE OUGHT TO BE ABSOLVED OF THE REQUIREMENT OF SUBSTANTIATING INCURRING THE RELEVANT EXPENDITURE. IN FACT, THE BURDEN TO PR OVE HIS CLAIM/S CONTINUES IN LAW TO BE ON THE ASSESSEE, THOUGH THE ONUS THEREON GETS UNDER THE CIRCUMSTANCES DISCHARGED, I.E., WHERE THE BUILDER ISSUES A CONFIR MATION, FURNISHING ITS ACCOUNTS, INCLUDING VOUCHERS, IN SUBSTANTIATION. ITA NO. 28/JAB/2017 (AY 2009-10) AMAR SINGH CHOUDHARY V. PR. CIT 13 | P A G E 4.5 THE SECOND AREA QUA WHICH THE LD. PR. CIT FOUND THE IMPUGNED ASSESSMENT ERRONEOUS AND PREJUDICIAL TO THE INTERES TS OF THE REVENUE, IS THE NON- EXAMINATION OF THE SALE DEEDS BY THE AO, STATED TO BE INCORRECT BY SHRI PUROHIT. THERE IS THUS A TACIT ADMISSION OF THE RELEVANCE OF THE SAID DEEDS, AS WELL AS THEIR EXAMINATION BY THE ASSESSING AUTHORITY. HE, HOWEVER , COULD NOT EXHIBIT THEIR PRODUCTION IN THE ASSESSMENT PROCEEDINGS, MUCH LESS THEIR EXAMINATION. EVEN AS MUCH AS A LETTER OR COMMUNICATION, I.E., IN REPLY T O THE QUERIES/REQUISITION DATED 16.3.2015, HAS NOT BEEN BROUGHT ON RECORD. HOW COUL D, ONE WONDERS, THE DIRECTION BY THE LD. PR. CIT FOR THEIR PRODUCTION A ND EXAMINATION BY THE AO, UNDER THE CIRCUMSTANCES, BE REGARDED AS UNJUSTIFIED OR NOT VALID IN LAW. CASE LAW 5.1 BOTH THE PARTIES BEFORE US HAVE RELIED ON DECIS IONS, INCLUDING BY THE HONBLE JURISDICTIONAL HIGH COURT, WITHOUT IN ANY M ANNER MEETING THOSE CITED BY THE OTHER, BEING BY THE REVENUE (PER THE IMPUGNED ORDER) MALABAR INDUSTRIAL CO. LTD. VS. CIT [2000] 243 ITR 83 (SC) RAMPYARI DEVI SAROGI VS. CIT [1968] 67 ITR 84 (SC) CIT V . DEEPAK KUMAR GARG [2007] 299 ITR 435 (MP) CIT V. HIMACHAL PRADESH FINANCIAL CORP. [2010]186 TAXMAN 105 (HP) SWARUP VEGETABLE PRODUCTS V. CIT [1991] 187 ITR 412 (ALL) GEE VEE ENTERPRISES VS. ADDL. CIT [1975] 99 ITR 375 (DEL) BY THE ASSESSEE CIT V. RATLAM COAL ASH CO . [1988] 171 ITR 141 (MP) CIT V. KRISHNA CAPBOX (P.) LTD . [2015] 372 ITR 310 (ALL) (BESIDES THESE TWO, COPIES OF WHICH ARE ON RECORD, OTHERS, AS UNDER, WHERE ALSO MENTIONED DURING HEARING, EVEN AS THEIR COPIES NOT ON RECORD, WERE NEITHER REFERRED TO, NOR COULD POSSIBLY BE RESPONDED TO BY THE OTHER SIDE: CIT V. V. DHANA REDDY & CO . [2018] 407 ITR 96 (AP) ITA NO. 28/JAB/2017 (AY 2009-10) AMAR SINGH CHOUDHARY V. PR. CIT 14 | P A G E ITO V. DG PROJECTS LTD . [2012] 343 ITR 329 (DEL) CIT V. HINDUSTAN MKTG. & ADV. CO. LTD . [2010] 46 DTR 109 (DEL)) SURPRISINGLY, EVEN THE DECISION BY THE APEX COURT S ETTLING THE LAW IN THE MATTER WERE NOT REFERRED TO DURING HEARING OR MET BY THE O THER SIDE. THE APEX COURT IN MALABAR INDUSTRIAL CO. LTD. (SUPRA) ENUMERATED A FOUR-WAY TEST FOR AN ORDER BEING ERRONEOUS, I.E., WRONG ASSUMPTION OF FACT/S; INCORRECT APPLICATION OF LAW; NON-APPLICATION OF MIND; AND AN OMISSION TO OBSERVE THE PRINCIPLES OF NATURAL JUSTICE. IT IS THE NON-APPLICATION OF MIND WITH WHI CH WE ARE CONCERNED WITH IN THE INSTANT CASE. FOR INSTANCE, IN TARA DEVI AGGARWAL V. CIT [1973] 88 ITR 323 (SC), AN ASSESSMENT MADE BY ACCEPTING THE INCOME RE TURNED AS SUCH, WITHOUT INQUIRING IF THE INCOME RETURNED HAD INDEED BEEN EARNED BY T HE PERSON RETURNING THE SAME, WAS HELD BY THE APEX COURT TO BE ERRONEOU S AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE CASE LAW IN THE MATTE R IS LEGION, FOLLOWED, AS AFORE-STATED, BY THE HONBLE COURTS, INCLUDING THE APEX COURT (AS IN TOYOTA MOTOR CORP. V. CIT [2008] 306 ITR 52 (SC)), ALL THROUGH . WE THEREFORE DO NOT CONSIDER IT NECESSARY OR PROPER TO DWELL ON THE CIT ED DECISIONS, HAVING, AS AFORE- STATED, NOT BEEN MET BY EITHER SIDE. THE SAID DECIS IONS, AS THEIR BARE READING WOULD SHOW, ARE NEITHER CONTRADICTORY NOR AGAINST T HE PRINCIPLES LAID DOWN BY THE APEX COURT. NOTHING THEREFORE TURNS THEREON. TH E DIFFERENCE IN THE FINAL VERDICT IN EACH CASE IS IN VIEW OF THE OBTAINING FA CTUAL FINDING, WHILE WHAT IS RELEVANT AND BINDING IS THE PRINCIPLE/S LAID DOWN O R ADOPTED, I.E., THE RATIO DECIDENDI . CONTINUING FURTHER, THE REFERENCE TO LACK OF ENQUIR Y IS ONLY TOWARD THE NON-APPLICATION OF MIND IN-AS-MUCH AS IT IS INDICAT IVE THEREOF AND, RATHER, ITS MANIFESTATION. AS EXPLAINED IN GEE VEE ENTERPRISES (SUPRA), FURTHER ADVERTING TO A HOST OF DECISIONS, PRIMARILY BY THE APEX COURT, I NCLUDING RAMPYARI DEVI SAROGI (SUPRA) AND TARA DEVI AGARWAL (SUPRA), ALSO REFERRED TO IN MALABAR INDUSTRIAL CO. LTD . (SUPRA), THAT THE AO, BEING BOTH AN INVESTIGATING AND ITA NO. 28/JAB/2017 (AY 2009-10) AMAR SINGH CHOUDHARY V. PR. CIT 15 | P A G E ADJUDICATING AUTHORITY, CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER INQUIRY . IN ITS WORDS: IT IS NOT NECESSARY FOR THE COMMISSIONER TO MAKE FU RTHER INQUIRIES BEFORE CANCELLING THE ASSESSMENT ORDER OF THE INCOME-TAX OFFICER. THE COMMISSIONER CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUM STANCES OF THE CASE THE INCOME-TAX OFFICER SHOULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE STATEMENTS MADE BY THE ASSESSEE IN HIS RETURN. THE REASON IS OBVIOUS. THE POSITION AND FUNCTION OF THE INCOME-TAX OFFICER IS VERY DIFFERENT FROM THAT OF A CIVIL COURT. THE STATEMENTS MADE IN A PLEADING PROVED BY THE MINIMUM AMOUNT OF EVIDENCE MAY BE ADOPTED BY A CIVIL COURT IN THE ABSENCE OF ANY REBUTTAL. THE CIVIL COU RT IS NEUTRAL. IT SIMPLY GIVES DECISION ON THE BASIS OF THE PLEADING AND EVIDENCE WHICH COM ES BEFORE IT. THE INCOME-TAX OFFICER IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVE STIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER B UT CALLS FOR FURTHER INQUIRY. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN THE RETURN WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE AN INQUIRY . IT IS BECAUSE IT IS INCUMBENT ON THE INCOME-TAX OFFICER TO FURTHER INVESTIGATION THE FAC TS STATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MAKE SUCH AN INQUIRY PRUDENT TH AT THE WORD ERRONEOUS IN SECTION 263 INCLUDES THE FAILURE TO MAKE SUCH AN IN QUIRY. THE ORDER BECOMES ERRONEOUS BECAUSE SUCH AN INQUIRY HAS NOT BEEN MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WITH THE ORDER IF ALL THE FACTS STAT ED THEREIN ARE ASSUMED TO BE CORRECT . (EMPHASIS, SUPPLIED) 5.2 A LOT IS OFTEN MADE, AS INDEED WAS BEFORE US, O F AN ENQUIRY HAVING BEEN MADE, SO THAT THE NOTION OF PROPER INQUIRY, A SUB JECTIVE MATTER, WAS VAGUE, AND NOT WELL-FOUNDED. THE ARGUMENT IS MISPLACED. NO INQ UIRY, FIRSTLY, HAS BEEN FOUND TO HAVE BEEN MADE IN THE INSTANT CASE. EVEN O N A GENERAL PLANE, SUCH AN ARGUMENT IS MISCONCEIVED. ENQUIRY, ITS RANGE AND DE PTH, IS A MATTER OF FACT. THE RELEVANCE OF, OR REFERENCE TO, ENQUIRY IS ONLY TOWA RD EXHIBITING, OR LACK OF, APPLICATION, OR MORE APTLY, DUE APPLICATION OF MIND . THE ENQUIRY BY THE ASSESSING AUTHORITY, IT MAY BE APPRECIATED, IS NOT AN END IN ITSELF, BUT A MEANS TO AN END, I.E., TO DETERMINE THE TRUTH OF THE MATTER. AS SUCH, IT IS ONLY AN ENQUIRY WHICH RESULTS IN PROPER DETERMINATION OF THE MATTER , I.E., THE FACTS OF THE CASE, BASED ON CREDIBLE MATERIAL, AS WOULD ENABLE ANY REA SONABLE PERSON, PROPERLY INSTRUCTED IN LAW, TO ARRIVE AT A DECISION, THAT CO ULD BE REGARDED AS DUE OR PROPER ENQUIRY, EXHIBITING APPLICATION OF MIND. THAT IS, O NLY AN INQUIRY AS WARRANTED IN THE FACTS AND CIRCUMSTANCES OF THE CASE WOULD SATIS FY THE TEST OF INQUIRY, AND IT IS ITA NO. 28/JAB/2017 (AY 2009-10) AMAR SINGH CHOUDHARY V. PR. CIT 16 | P A G E THIS THAT THE QUALIFYING WORDS DUE OR PROPER, P REFIXING IT, SEEK TO SIGNIFY. THE REFERENCE BY THE HONBLE COURT TO FURTHER INQUIRY O R INQUIRIES THAT SHOULD BE MADE OR ARE CALLED FOR, IN GEE VEE ENTERPRISES (SUPRA), AS WOULD ALSO BE CLEAR FROM A READING OF THE EXTRACTED PART, IS ONLY TOWAR D THIS. SURE, NO QUANTITATIVE TEST OR MEASURE IN THIS REGARD HAS BEEN DEVELOPED B Y SCIENCE, AS INDEED FOR APPRAISING OR EVALUATING AN EVIDENCE, EVEN AS OBSER VED BY THE APEX COURT IN CIT V . DURGA PRASAD MORE [1971] 82 ITR 540 (SC), SO THAT THE MATTER HAS TO BE CONSIDERED IN LIGHT OF THE ENTIRETY OF THE FACTS AN D CIRCUMSTANCES, INCLUDING SURROUNDING, AND PREPONDERANCE OF PROBABILITIES. 5.3 THE CONDITION AS TO INQUIRY HAS SINCE, I.E., BY FINANCE ACT, 2015, W.E.F. 01.6.2015, BEEN INCORPORATED IN THE STATUTE, BY WAY OF EXPLANATION 2(A) TO SECTION 263, WHICH DEEMS AN ABSENCE OF ENQUIRY, I.E ., AS SHOULD HAVE BEEN MADE , AS A CASE OF THE RELEVANT ORDER BEING ERRONEOUS A ND PREJUDICIAL TO THE INTERESTS OF THE REVENUE, LIABLE FOR REVISION U/S. 263. THIS, IT WOULD BE NOTED, IS PRECISELY WHAT STANDS SOUGHT TO BE CLARIFIED HEREIN BEFORE AS BEING THE LAW AS EXPLAINED BY THE APEX COURT AND, THUS, WHAT IT HAS ALWAYS BEEN, ALSO EXPLAINED PER A PLETHORA OF DECISIONS BY THE HONBLE HIGH COU RTS IN DIFFERENT FACT SETTINGS, REFERENCE TO WHICH WOULD ONLY BURDEN THIS ORDER. TH E LAW, THEREBY, HAS THUS BEEN ONLY MADE MORE EXPLICIT IN THE MATTER. THE SAM E IN FACT RENDERS THE DISCUSSION AFORE-MADE (AT PARA 5.1 & 5.2), TO A LAR GE EXTENT, UNNECESSARY, AND ITS VALUE WOULD BE LARGELY IN DEMONSTRATING THE CLEAR J UDICIAL VIEW, AND OF THE CHANGE IN LAW BEING CLARIFICATORY, BESIDES ADDRESSI NG THE ARGUMENTS RAISED BEFORE US. WE MAY, THOUGH, CLOSE THIS DISCUSSION BY REPRODUCING FROM SOME OF THE DECISIONS BY THE HONBLE JURISDICTIONAL HIGH CO URT. IN CIT V . DEEPAK KUMAR GARG [2007] 299 ITR 435 (MP), IT HELD AS UNDER: (PG. 43 7) THE ASSESSING OFFICER ACCEPTED THE VERSION OF THE A SSESSEE WITHOUT PROPER ENQUIRY AND A RESULT A SUBSTANTIAL AMOUNT OF TAXABLE INCOME WAS NOT BROUGHT TO TAX. IN SUCH A CASE THE ASSESSMENT ORDER WOULD BE ERRONEOUS AND PR EJUDICIAL TO THE INTEREST OF THE REVENUE BECAUSE LAW ENJOINS UPON THE ASSESSING OFFICER TO M AKE THE ASSESSMENT ORDER BRINGING ALL TAXABLE INCOME TO TAX . THE ENQUIRY HELD IN A PERFUNCTORY MANNER ITA NO. 28/JAB/2017 (AY 2009-10) AMAR SINGH CHOUDHARY V. PR. CIT 17 | P A G E COULD NOT BE SAID TO BE A PROPER ENQUIRY BEFORE PAS SING THE ASSESSMENT ORDER. THIS CANNOT BE A GROUND TO SHUT OUT THE JURISDICTION OF THE COMMISSIONER OF INCOME-TAX THAT AN ADEQUATE ENQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER . (EMPHASIS, SUPPLIED) SIMILARLY, IN CIT V . MAHAVAR TRADERS [1996] 220 ITR 167 (MP), IT WAS HELD: HELD, THAT THE INCOME TAX OFFICER SHOULD HAVE EXAMINED THE MATTER IN THE LIGHT OF THE CONDITIONS MENTIONED IN BOTH THE SECTIONS BEFORE GR ANTING RELIEF . THE COMMISSIONER OF INCOME-TAX HAD NOT GIVEN ANY FINDING BUT ONLY RE MANDED THE CASE TO THE INCOME TAX OFFICER FOR MAKING ASSESSMENT AFRESH. THE TRIBU NAL, INSTEAD OF APPROACHING THE MATTER IN THE PROPER PERSPECTIVE, HAD ON THEIR OWN STARTED MAKING INQUIRIES AND FOUND THAT THE ORDER PASSED BY THE INCOME TAX OFFICER WAS CORRECT. THIS WAS ERRONEOUS. THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX WAS VALID . (EMPHASIS, OURS) CONCLUSION 6. THE ASSESSEES CASE IS, IN VIEW OF THE FOREGOING , BOTH, WHOLLY UNPROVED AND WHOLLY UNEXAMINED, I.E., QUA THE TWO ASPECTS REFERRED TO BY THE LD. PR. CIT. TO SAY, THEREFORE, THAT THE AO HAS TAKEN A POSSIBLE , REASONABLE VIEW IN THE MATTER, IS, UNDER THE CIRCUMSTANCES, A COMPLETE MIS STATEMENT ON FACTS. HE HAS, IN OUR VIEW, ACTED WITH HASTE AND WITHOUT DUE APPLICAT ION OF MIND, ACCEPTING THE ASSESSEES VERSION, WHOLLY UNSUBSTANTIATED, WITHOUT AS MUCH AS CAUSING ITS SUBSTANTIATION, MUCH LESS VERIFICATION THEREOF AND, IN FACT, ON ONE ASPECT, IN FACE OF CONTRARY EVIDENCE/MATERIAL. WE, ACCORDINGLY, FIN D NO REASON TO INTERFERE WITH THE IMPUGNED ORDER. THE ASSESSMENT AUTHORITY SHALL IN THE SET ASIDE PROCEEDINGS OBSERVE THE MANDATE OF THE IMPUGNED ORDER IN LETTER AND SPIRIT. WE DECIDE ACCORDINGLY. 7. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. ORDER PRONOUNCED ON OCTOBER 27, 2020 UNDER RULE 34 (4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963 SD/- SD/- (N.R.S.GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27/10/2020 // TRUE COPY //