Monika Gupta, Delhi V. Pr. CIT- 21, New Delhi

ITA 2859/DEL/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4500 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2014-2015
• Appeal Filed On: 08-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Wholly owned subsidiary; Wrong claim; Assessment record; TDS
• Section: 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER I.T.AS. NO.2858 & 2859/DEL/2017 ASSESSMENT YEARS: 2013-14 & 2014-15 MONIKA GUPTA, C/O KAPIL GOEL ADV., F-26/124 SECTOR, 7 ROHINI, DELHI. V. PR. COMMISSIONER OF INCOME TAX-21, NEW DELHI. TAN/PAN: AETPG 8505R (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI KAPIL GOEL, ADV. RESPONDENT BY: SHRI S.S. RANA, CIT-DR DATE OF HEARING: 06 12 2019 DATE OF PRONOUNCEMENT: 14 02 2019 O R D E R PER AMIT SHUKLA JM: THE AFORESAID APPEALS HAVE BEEN FILED BY THE ASSESS EE AGAINST SEPARATE IMPUGNED ORDERS OF EVEN DATE, 17 TH APRIL, 2017, PASSED U/S. 263 BY LD. PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI-21 FOR THE ASSESSMENT YEARS 2013- 14 AND 2014-15. SINCE ISSUES INVOLVED IN BOTH THE APPEALS ARE COMMON, THEREFORE, SAME WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER. 2. IN VARIOUS GROUNDS OF APPEAL IN BOTH THE AP PEALS, THE ASSESSEE HAS CHALLENGED THE JURISDICTION OF LD. PRI NCIPAL COMMISSIONER OF INCOME TAX U/S.263 IN SETTING ASIDE THE ASSESSMENT ORDER DATED 30.03.2016 FOR THE ASSESSMEN T YEAR I.T.AS. NO.2858 & 2859/DEL/2017 2 2013-14 DATED 26.10.2016; FOR THE ASSESSMENT YEAR 2 014-15 ON VARIOUS GROUNDS. WE WILL FIRST TAKE UP THE APPEA L FOR THE ASSESSMENT YEAR 2013-14. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND CHARTERED ACCOUNTANT BY PROFESSION, NOT ONLY DE RIVING INCOME FROM BUSINESS OR PROFESSION BUT ALSO INCOME FROM HOUSE PROPERTY. THE ASSESSEE HAS FILED HER RETURN O F INCOME ON 30.09.2013, DECLARING TOTAL INCOME OF RS.67,59,3 10/-. THE CASE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY, AFT ER DETAILED SCRUTINY PROCEEDINGS, ASSESSMENT WAS COMPLETED AT A N INCOME OF RS.71,39,230/- AFTER MAKING VARIOUS DISAL LOWANCE CLAIMED UNDER CERTAIN HEADS OF EXPENDITURE AND ON A CCOUNT OF DIFFERENCE IN TDS RECONCILIATION ON PROFESSIONAL FE ES. LATER ON, LD. PR.CIT ISSUED SHOW CAUSE NOTICE U/S.263 IN HIS REVISIONARY JURISDICTION ON THE GROUND THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR IT IS PREJ UDICIAL TO THE INTEREST OF THE REVENUE. IN SHOW CAUSE NOTICE, LD. PCIT HAS STATED THAT IN THE ASSESSMENT PROCEEDINGS OF SOME D IFFERENT ASSESSEE, I.E., M/S. UT STARCOM INC., WHICH WAS COM PLETED VIDE ORDER DATED 29.04.2016, I.E., AFTER THE COMPLE TION OF ASSESSMENT IN THE CASE OF THE ASSESSEE, IT WAS OBSE RVED THAT UT STARCOM HAS CLAIMED HUGE EXPENSES AS ALLOWABLE B USINESS EXPENDITURE UNDER THE HEAD LEGAL & PROFESSIONAL CH ARGES; AND OUT OF SAME, SUBSTANTIAL AMOUNT WAS PAID TO THE PRESENT ASSESSEE. THE ASSESSING OFFICER IN THE CASE OF M/S. UT STARCOM INC. CAME TO THE CONCLUSION THAT SAID ARRAN GEMENT HAS BEEN MADE TO SIPHON OFF THE MONEY FROM THE PROF ITS OF THE I.T.AS. NO.2858 & 2859/DEL/2017 3 SAID COMPANY TO AVOID THE PAYMENT OF TAXES, AND SUC H PAYMENT WAS NOT FOR BUSINESS EXPEDIENCY AND NOT REL ATED TO THE PROJECTS IN HAND OF THE ASSESSEE COMPANY. CONSE QUENTLY, IN THE ASSESSMENT ORDER OF M/S. UT STARCOM INC. AN AMOUNT OF RS.4,03,44,630/- WAS DISALLOWED. LD. PR.CIT HAS FURTHER STATED IN HIS NOTICE THAT THE ASSESSEE HAS CLAIMED HUGE EXPENSES ESPECIALLY UNDER THE HEAD SALARY AND ADMIN ISTRATIVE EXPENSES THAT REQUIRES VERIFICATION. ON THIS BASIS, HE WAS OF THE VIEW THAT ASSESSING OFFICER DID NOT CARRY OUT I NVESTIGATION WHICH HE WAS REQUIRED TO DO SO. 4. IN RESPONSE TO THE SHOW CAUSE NOTICE, ASSESSEE CHALLENGED THE NOTICE ON THE GROUND THAT IT IS VAGU E AND LACKS MATERIAL PARTICULARS AND ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER CANNOT TERMED AS ERRONEOUS UNLESS IT IS SHOWN THAT IT HAS NOT BEEN PASSED IN ACCORDANCE WIT H LAW. IT WAS SUBMITTED THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAD CALLED FOR REGULAR BOOKS OF ACCOUNT AND HAS SCRUTINIZED EACH AND EVERY ENTRY RE FLECTED IN P&L ACCOUNT VIS--VIS BILLS AND INVOICES AND BALANC E-SHEET AND THEREAFTER HAS COMPLETED THE ASSESSMENT. ONCE, ASSESSING OFFICER HAS CONDUCTED DETAILED INQUIRY AF TER EXAMINING EACH AND EVERY POINT; THEN, SUCH AN ORDER CAN NEITHER BE TERMED TO BE ERRONEOUS NOR PREJUDICIAL T O THE INTEREST OF REVENUE. REGARDING SPECIFIC POINT RAISE D BY THE LD. PR.CIT IT WAS SUBMITTED AND STATED AS UNDER: WITHOUT PREJUDICE TO THE AFORESAID SUBMISSIONS, TH E FOLLOWING AD-SERIATIM SUBMISSIONS ARE MADE ON MERIT S ON THE I.T.AS. NO.2858 & 2859/DEL/2017 4 PARTICULAR OF ALLEGED ERRORS PROPOSED TO BE RECTIFI ED BY YOUR GOODSELF; A) I AM A PRACTICING CHARTERED ACCOUNTANT AND I HAV E RENDERED PROFESSIONAL SERVICES TO M/S. U.T. STARCOM INC. FOR WHICH I HAD RAISED PROFESSIONAL BILLS. THESE BILLS WERE PAID BY M/S. UT STARCOM INC. BY WAY OF ACCOUNT PAYEE CHEQUES AFTER DEDUCTING IDS. THE ASSESSING OFFICER OF M/S. U T STARCOM INC. HAS RAISED A DOUBT ABOUT THE PAYMENT BECAUSE ACCORDING TO THE ASSESSING OFFICER, IT WAS HUGE. IT IS WELL KNOWN THAT VARIOUS CHARTERED ACCOUNTANTS HAVE VARIOUS FEE STRUCTURES F OR THE SAME SET OF WORK AND THEREFORE IT WAS WRONG ON THE PART OF THE ASSESSING OFFICER OF M/S. U.T. STARCOM INC, TO DECI DE OR CATEGORIZE ANY FEES CHARGED AS HUGE OR SMALL. E XCEPT MAKING BALD OBSERVATIONS, THE ASSESSING OFFICER OF M/S. U T STARCOM INC, HAS NOT BROUGHT ANY EVIDENCE ON RECORD WHICH ESTABLISHES THAT THERE WAS ANY ARRANGEMENT BETWEEN ME AND MY CLIENT (M/S. U.T. STARCOM INC.) TO SIPHON OFF MO NEY FROM THE PROFITS OF THE COMPANY, AS ALLEGED BY HIM, IN FACT, IT IS UNCALLED FOR THE ASSESSING OFFICER TO MAKE ANY DEFA MATORY INSINUATIONS AGAINST A PRACTICING CHARTERED ACCOUNT ANT ON THE BASIS OF SURMISES AND CONJECTURES. IT IS ALSO IMPOR TANT TO MENTION THAT THE ACCOUNTS OF MY CLIENT M/S. U T STA RCOM INC. FOR THE ASSESSMENT YEAR 2013-14 WERE DULY AUDITED B Y A REPUTED FIRM OF CHARTERED ACCOUNTANTS I.E. PRICE WA TERHOUSE & CO. (PWC) AND THE AUDITORS HAS NOT QUALIFIED THEIR AUDIT REPORT. IF, THE ASSESSING OFFICER HAD MATERIALS IN HIS POSS ESSION THAT THE AUDIT REPORT/BOOKS OF ACCOUNTS ARE INCORRECT, H E SHOULD HAVE REJECTED THE SAME WHICH HAS NOT BEEN DONE. B) THAT WHATEVER EXPENSES HAS BEEN INCURRED BY ME FOR I.T.AS. NO.2858 & 2859/DEL/2017 5 THE PURPOSE OF PROFESSION, HAS BEEN DEBITED IN MY B OOKS OF ACCOUNTS AND DULY REFLECTED IN THE PROFIT AND LOSS ACCOUNTS WHICH WERE PRODUCED BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT AND THE ASSESSING OFFICER VERIFIED TH E BOOKS OF ACCOUNTS/PROFIT AND LOSS ACCOUNTS, VOUCHERS ETC. WH ICH HE FOUND TO BE SATISFACTORY. THIS FACT ALSO FINDS MENT ION IN THE ORDER PASSED BY THE ASSESSING OFFICER. THEREFORE, O NCE THE ASSESSING OFFICER HAS FOUND THE EXPENSES DEBITED IN THE PROFIT AND LOSS ACCOUNT TO BE SATISFACTORY, IT CANNOT BE S AID THAT THERE WAS LACK OF INQUIRY BY THE ASSESSING OFFICER. THE EXPENSES WERE DULY VERIFIED BY THE ASSESSING OFFICE R AND THEREFORE INVOKING THE PROVISIONS OF SECTION 263 FO R 'RE- VERIFICATION IS NOT WARRANTED IN LAW. C) IT IS INCORRECT TO SUGGEST THAT NECESSARY INVES TIGATIONS WERE NOT CARRIED OUT BY THE ASSESSING OFFICER AND A NY TRANSACTION REMAINED UNEXPLAINED, IT IS SUBMITTED T HAT ALL THE TRANSACTIONS WERE DULY EXPLAINED TO THE SATISFACTIO N OF THE ASSESSING OFFICER. EVEN IN THE NOTICE ISSUED BY YOU R GOODSELF, YOU HAVE NOT SPECIFIED ANY PARTICULAR TRANSACTION W HICH THE ASSESSING OFFICER HAS FAILED TO CHECK OR TRANSACTIO NS THAT REMAINED UNEXPLAINED A GENERALIZED AND OMNIBUS OBSE RVATION THAT THE ASSESSING OFFICER DID NOT CARRY OUT THE IN VESTIGATION WHICH HE WERE REQUIRED TO DO AND VARIOUS ENTRIES AN D TRANSACTION HAVE REMAINED UNEXPLAINED CANNOT BE A G ROUND FOR INITIATING SECTION 263 PROCEEDINGS. D) IT IS A SETTLED POSITION IN LAW THAT SECTION 26 3 CANNOT BE INVOKED FOR RE-VERIFICATION' OR TO REVIEW THE ORDE R PASSED BY THE ASSESSING OFFICER ONLY BECAUSE THE COMMISSIONER S VIEW IS DIFFERENT FROM THE VIEW OF THE ASSESSING OFFICER. T HERE IS NO I.T.AS. NO.2858 & 2859/DEL/2017 6 ILLEGALITY IN THE ACTIONS/VIEWS OF THE ASSESSING OF FICER AND HENCE THE INITIATION OF PROCEEDINGS UNDER SECTION 2 63 IS BAD IN LAW AND ALSO IN FACTS. E) IN VIEW OF THE AFORESAID SUBMISSIONS ON LEGALITY AS WELL AS ON MERITS PRAYED THAT THE PROCEEDINGS UNDER SECTION 263 MAY BE DROPPED.' 5. HOWEVER, THE LD. PCIT REJECTED THE ASSESSEES CO NTENTION AND OBSERVED THAT SHE IS A CHARTERED ACCOUNTANT BY PROFESSION AND RENDERED ALL KIND OF SERVICES IN THE FIELD OF DIRECT AND INDIRECT TAXES AND OTHER RELATED AREAS. IN THE PROFIT & LOSS ACCOUNT, ASSESSEE HAS REFLECTED A TURNOVER O F RS. 4.33 CRORES AND IN THE EXPENDITURE SIDE SHE HAD SHOWN SA LARY OF RS.73,62,000 AND ADMINISTRATIVE EXPENSES OF RS. 2,91,76,253/-. MOST OF THE RECEIPTS ARE FROM M/S. U .T. STARCOM INC., A NON-RESIDENT COMPANY AND A TAX RESI DENT OF USA WHICH IS GLOBAL TELECOM INFRASTRUCTURE PROVIDER , DURING THE YEAR. THE ASSESSEE HAD RECEIVED FOLLOWING RECEI PTS FROM VARIOUS COMPANIES OF M/S. UT STARCOM INC. WHICH HAS NOTED IN PARAGRAPH 3 OF THE IMPUGNED ORDER: THE ASSESSEE HAS RECEIVED A TOTAL SUM OF RS. 1,50,7 8,548/- FROM U.T. STARCOM - BSNL- MULTIPLAY (2010-13), AND RS. 1,97,06,487/- FROM UT STARCOM - BSNL PROJECT 2 (SIN CE 2010) AND RS.55,59,595/- FROM V.T. STARCOM - MTNL - PROJE CT (SINCE 2010), AGGREGATING RS. 4,03,44,630/- M/S U.T. STARC OM INC. WAS AWARDED TURN KEY PROJECTS BY BSNL & MTNL FOR SU PPLY AND INSTALLATION OF TELECOMMUNICATION INSTRUMENTS. IN A DDITION, CERTAIN OTHER PAYMENTS WERE MADE TO M/S. MONICA GUP TA & I.T.AS. NO.2858 & 2859/DEL/2017 7 CO. BY M/S. U.T. STARCOM INDIA TELECOM PRIVATE LTD. (PAN AAACU7110N), WHICH IS A WHOLLY OWNED SUBSIDIARY (WO S) OF U.T. STARCOM INC. 6. LD. PCIT FURTHER OBSERVED THAT ASSESSEE HAS CLAI MED HUGE EXPENSES PARTICULARLY ON ACCOUNT OF SALARY AND ADMINISTRATIVE EXPENSES, WHICH CANNOT BE WHOLLY AND EXCLUSIVELY EXPENDED FOR THE PURPOSE OF BUSINESS AS IT LACKS BUSINESS PRUDENCE AND REQUIRE PROPER INQUIRY AND VERIFICATION. AFTER CITING VARIOUS CASE LAWS, HE HE LD THAT THERE IS VITAL FLAW IN THE ISSUE UNDER CONSIDERATION, AND THEREFORE, HE HAD SET ASIDE THE ASSESSMENT ORDER AFTER OBSERVI NG AND HOLDING AS UNDER:- I HAVE FOUND VITAL FLAWS SO FAR AS THE ISSUE UNDER CONSIDERATION IS CONCERNED, ATTRIBUTABLE TO THE DEF IANT AND DELIBERATE APPROACH OF THE ASSESSEE. THEREFORE, CON SIDERING THE FACTS OF THE CASE AND TOTALITY OF CIRCUMSTANCES , THE ASSESSMENT MADE BY THE ASSESSING OFFICER U/S.143 (3 ) OF THE ACT, DATED 30.03.2016 IS TREATED AS ERRONEOUS AND P REJUDICIAL TO THE INTEREST OF REVENUE ON THE ISSUE UNDER CONSI DERATION AS NOT ONLY THE ASSESSMENT ORDER IS PASSED IN HASTE AN D IN A CRYPTIC MANNER, BUT THE A.O. HAS WRONGLY BELIEVED T HE VERSION OF THE ASSESSEE AS REGARDS THE ALLOWABILITY OF INCO ME U/S.28 AND ALSO EXPENSES U/S.37(1) OF THE ACT. THEREFORE, THE ORDER PASSED BY THE ASSESSING OFFICER U/S.143(3) OF THE A CT, DATED 30.03.2016 IS HEREBY CANCELLED AND THE ASSESSING OF FICER IS HEREBY DIRECTED TO MAKE A FRESH ASSESSMENT ORDER AF TER CONSIDERING THE FACTUAL AND LEGAL POSITION IN THIS REGARD, AS SUGGESTED IN THE ORDER. I.T.AS. NO.2858 & 2859/DEL/2017 8 7. BEFORE US, LEARNED COUNSEL SUBMITTED THAT, NOWHE RE THE LD. PR.CIT HAS POINTED OUT WHAT IS THE LACK OF INQU IRY ON THE PART OF THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT U/S.143(3). HERE, IN THIS CASE, LD. PR.CIT IS TRYIN G TO MAKE OUT A CASE THAT ASSESSEE HAS CLAIMED HUGE EXPENSES WHIC H CANNOT BE SAID TO BE WHOLLY AND EXCLUSIVELY EXPENDED FOR T HE PURPOSE OF BUSINESS AS IT LACKS BUSINESS PRUDENCE THAT REQU IRE PROPER VERIFICATION. NOWHERE, HE HAS POINTED OUT AS TO HOW SUCH EXPENSES ARE NOT CONNECTED WITH THE ASSESSEES BUSI NESS OR PROFESSION AND SIMPLY STATING THAT CERTAIN EXPENSES DEBITED IN P&L ACCOUNT ARE ON A HIGHER SIDE, I.E., SALARY AND ADMINISTRATIVE EXPENSES, WILL NOT MAKE THE ASSESSME NT ORDER ERRONEOUS. BECAUSE, ASSESSING OFFICER HERE IN THIS CASE HAS ISSUED VARIOUS QUERIES FROM TIME TO TIME NOT ONLY A SKING FOR EACH AND EVERY DETAILS OF ITEMS APPEARING IN THE PR OFIT & LOSS ACCOUNT AND BALANCE-SHEET BUT ALSO REQUIRED FOR MON TH-WISE DETAIL OF EXPENSES SHOWN UNDER VARIOUS HEADS INCLUD ING DETAILS OF SALARY, WHEREIN HE HAS ASKED FOR PERSON- WISE AND MONTH-WISE AND BENEFIT GIVEN TO THE EMPLOYEES ALONG WITH WAGES AND LABOUR CHARGES. AFTER EXAMINING THESE DET AILS ASSESSING OFFICER HAS MADE CERTAIN DISALLOWANCES. T HE ENTIRE IMPUGNED REVISION ORDER IS BASED ON PREMISE THAT IN THE ASSESSMENT ORDER OF A DIFFERENT ASSESSEE, PROFESSIO NAL PAYMENT MADE TO THE ASSESSEE HAS BEEN HELD TO BE FO R NON BUSINESS PURPOSE. THAT FACT ITSELF DOES NOT MEAN TH AT ASSESSMENT ORDER PASSED IN THE CASE OF THE ASSESSEE NEEDS TO BE SET ASIDE, BECAUSE THESE AMOUNTS HAVE BEEN SHOWN AS I.T.AS. NO.2858 & 2859/DEL/2017 9 INCOME FROM PROFESSION ON WHICH ASSESSEE HAS OFFERE D TAX. IF SUCH AN AMOUNT HAS BEEN OFFERED FOR TAX THEN HOW IT CAN BE HELD THAT TO BE PREJUDICIAL TO THE INTEREST OF REVEN UE. THUS, THE ENTIRE BASIS FOR SETTING ASIDE IS NOT ONLY VAGU E BUT ALSO NON APPRECIATION OF FACTS AND MATERIAL ON RECORD. H E HAS ALSO STRONGLY RELIED UPON THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF PR.CIT VS. KRISHAK BHARATI CO-OPERAT IVE LTD., ITAS NO.578 & 579/2016 JUDGMENT AND ORDER DATED 21.04.2017, WHEREIN THE HON'BLE HIGH COURT HAS OBSE RVED THAT IF ASSESSING OFFICER HAS MADE QUERIES AND ALSO CONSIDERED THE EXPLANATION OF THE ASSESSEE, THEN SU CH AN ASSESSMENT ORDER CANNOT BE HELD TO BE ERRONEOUS REQ UIRING REVISION. HE ALSO STRICTLY RELIED UPON THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SHRI NIRAV MODI, ITA NO.117 & 119/2014, JUDGMENT AND ORDER DATED 16 TH JUNE, 2016. 8. ON THE OTHER HAND, LD. CIT-DR STRONGLY RELIED UP ON THE ORDER OF THE PR.CIT AND SUBMITTED THAT, ONCE MATERI AL IN THE FORM OF ASSESSMENT ORDER HAS COME ON RECORD EVEN TH OUGH AFTER COMPLETION OF ASSESSMENT AND IF SUCH A MATERI AL GOES TO SHOW THAT ASSESSMENT ORDER PASSED IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, THEN ALSO LD . PR.CIT IS WITHIN THE JURISDICTION TO SET ASIDE SUCH AN ASSESS MENT ORDER PASSED U/S.263. HE FURTHER SUBMITTED THAT, NOW IN V IEW OF EXPLANATION 2 TO SECTION 263, THE STATUTE LAYS DOWN THAT, IF NO INQUIRY HAS BEEN DONE BY THE ASSESSING OFFICER ON T HE POINTS RAISED BY THE LD. PR.CIT, THEN SUCH AN ASSESSMENT O RDER IS I.T.AS. NO.2858 & 2859/DEL/2017 10 DEEMED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF REVENUE HERE. IN SUPPORT OF THIS PROPOSITION THAT S UBSEQUENT INFORMATION OR MATERIAL CAN BE CONSIDERED AS PART O F ASSESSMENT RECORD, HE RELIED UPON THE JUDGMENT OF HO N'BLE SUPREME COURT IN THE CASE OF CIT VS SHRI MANJUNATH EESHWARE PACKING PRODUCTS AND CAMPHOR WORKS, 231 IT R 53 (SC). HERE IN THIS CASE, BASED ON SPECIFIC INFORMA TION IN THIS PARTICULAR CASE, LD. PR. CIT HAS DIRECTED THE ASSES SING OFFICER TO CARRY OUT THE INQUIRY AND VERIFICATION OF EXPENS ES, FOR WHICH THERE COULD BE NO GRIEVANCE. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDERS AS WELL AS MATERIAL REFERRED TO BEFORE US. AS STATED IN THE EA RLIER PART OF THE ORDER, THE ASSESSEES CASE WAS SELECTED FOR SCR UTINY AND DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E LD. ASSESSING OFFICER HAD RAISED SPECIFIC QUERY WITH RE GARD TO SUBMITTING OF VARIOUS DETAILS OF EXPENSES AND RECEI PTS OF PROFESSIONAL INCOME. FROM THE PERUSAL OF THE QUESTI ONNAIRE / QUERY LETTER DATED 16.04.2014 ISSUED BY THE LD. ASS ESSING OFFICER (PLACED IN THE PAPER BOOK AT PAGES 13 AND 1 4), IT IS SEEN THAT ASSESSING OFFICER HAD SPECIFICALLY REQUIR ED THE ASSESSEE TO FURNISH THE DETAILS OF; GROSS OR NET PR OFIT FOR THE YEAR UNDER CONSIDERATION COMPARED WITH THE EARLIER YEARS; MONTH-WISE DETAILS AND EXPENSES SHOWN UNDER THE VAR IOUS HEAD IN P&L ACCOUNT; DETAILS OF SALARY GIVEN TO EAC H PERSON AND MONTH-WISE DETAILS INCLUDING BENEFIT GIVEN TO T HE EMPLOYEES; LIST OF JOB WORKERS; STATEMENT OF TDS DED UCTED I.T.AS. NO.2858 & 2859/DEL/2017 11 THEREON; LABOUR AND WAGES CHARGES CLAIMED, ETC. FUR THER, VIDE NOTICE DATED 11.04.2015, HE AGAIN ASKED FOR VARIOUS DETAIL RELATING TO ENTRIES IN P&L ACCOUNT AND BALANCE SHEE T FROM THE ASSESSEE. IN RESPONSE, THE ASSESSEE HAS FURNISHED T HESE DETAILS ALONG WITH BOOKS OF ACCOUNT BEFORE THE ASSE SSING OFFICER AND ALL THESE DETAILS WHICH WERE FURNISHED BEFORE THE ASSESSING OFFICER ALONG WITH THEIR REPLIES HAD ALSO BEEN FURNISHED IN THE PAPER BOOK. THEREAFTER, ASSESSING OFFICER COMPLETED THE ASSESSMENT AFTER MAKING VARIOUS ADDIT IONS / DISALLOWANCES. 10. NOW, IN THE REVISIONARY PROCEEDINGS U/S 263 , IT IS SEEN THAT, FIRST OF ALL, LD. PR.CIT HAS OBSERVED THAT IN THE CASE OF US BASED NON-RESIDENT COMPANY, M/S. UT STARCOM INC., ASSESSMENT ORDER WAS COMPLETED WHICH WAS AFTER THE DATE OF COMPLETION OF ASSESSMENT ORDER IN THE CASE OF THE A SSESSEE, WHEREIN DISALLOWANCE WAS MADE ON ACCOUNT OF PAYMENT MADE TO THE ASSESSEE BY THE SAID COMPANY CLAIMED UNDER T HE HEAD LEGAL AND PROFESSION CHARGES OF RS.4,03,44,630/-,O N THE GROUND THAT SAME CANNOT BE HELD TO BE EXPENDITURE I NCURRED WHOLLY AND FULLY FOR THE PURPOSE OF BUSINESS. THERE AFTER, THE LD. PR.CIT IN A VERY CASUAL MANNER HAS OBSERVED THA T ASSESSEE HAS CLAIMED HUGE EXPENSES THAT REQUIRE VERIFICATION , WITHOUT EVEN POINTING OUT AS TO WHAT VERIFICATION/INQUIRY H AS NOT BEEN CARRIED OUT BY THE ASSESSING OFFICER FOR EXAMINATIO N OF EXPENSES. HE HIMSELF HAS NOTICED THAT THE ASSESSEE HAS RECEIVED VARIOUS AMOUNTS TOWARDS PROFESSIONAL CHARG ES FROM M/S. U.T. STARCOM INC. FOR VARIOUS PROJECTS IN INDI A AND I.T.AS. NO.2858 & 2859/DEL/2017 12 ASSESSEE WAS PAID BY M/S. U.T. STARCOM INDIA TELECO M PVT. LTD., WHICH WAS WHOLLY OWNED SUBSIDIARY OF M/S. UT STARCOM INC. THERE IS NO WHISPER OR A FINDING IN THE IMPUGN ED ORDER OR IN THE ASSESSMENT ORDER OF M/S. UT STARCOM INC THAT , EITHER THE ASSESSEE WAS RELATED TO SAID NON-RESIDENT COMPA NY IN ANY MANNER OR ASSESSEE HAS NOT SHOWN AND OFFERED THIS I NCOME AS A PROFESSIONAL INCOME IN HER RETURN OF INCOME. IN F ACT, THE AMOUNT RECEIVED BY M/S. U.T. STARCOM INC. HAS DULY BEEN SHOWN AS PROFESSIONAL RECEIPT/INCOME WHICH HAS BEEN OFFERED TO TAX BY THE ASSESSEE AFTER DEDUCTING THE EXPENDIT URE. EVEN FOR ARGUMENTS SAKE IT IS BELIEVED THAT IN THE CASE OF M/S. U.T. STARCOM INC. SUCH A PAYMENT HAS BEEN DISALLOWED FOR NON- BUSINESS PURPOSE, BUT THAT DOES NOT MEAN THAT IN TH E HANDS OF THE RECIPIENT SUCH PAYMENT IS UNDISCLOSED INCOME . HERE THE PRESENT ASSESSEE HAS SHOWN THIS PAYMENT AS HER PROF ESSIONAL INCOME. NOWHERE, IT IS THE CASE OF THE LD. PR.CIT T HAT THE PROFESSIONAL INCOME SHOWN BY THE ASSESSEE WAS NOT A PROFESSIONAL INCOME OR IT IS SOME KIND OF INCOME FR OM OTHER SOURCES. ONCE, THE PAYMENT RECEIVED FROM M/S. UT ST ARCOM INC. FOR SUMS AMOUNTING TO RS.4,03,44,630/- HAS BEE N SHOWN AS PROFESSIONAL INCOME WHICH HAS NOT BEEN DISTURBED , THEN WE ARE UNABLE TO APPREHEND HOW AN ADVERSE INFERENCE CAN BE DRAWN IN THE CASE OF THE ASSESSEE. 11. HERE IN THIS CASE, ULTIMATELY, THE REASON FO R SETTING ASIDE THE ASSESSMENT ORDER BY THE LD. PCIT IS THAT, ASSES SEE HAS CLAIMED HUGE EXPENSES PARTICULARLY ON ACCOUNT OF SA LARY AND ADMINISTRATIVE EXPENSES WHICH MAY NOT BE FOR WHOLLY AND I.T.AS. NO.2858 & 2859/DEL/2017 13 EXCLUSIVELY EXPENDED FOR THE PURPOSE OF BUSINESS AS IT LACKS BUSINESS PRUDENCE. SUCH AN OBSERVATION IS DELUSIVE, BECAUSE LD. PCIT CANNOT QUESTION THE BUSINESS PRUDENCE OF T HE ASSESSEE AS TO WHY SUCH EXPENDITURE HAS BEEN INCURR ED OR HOW MUCH IT HAS BEEN INCURRED. IF ASSESSEE HAS SHOW N EXPENSES ON ACCOUNT OF SALARY AND ADMINISTRATIVE EX PENSES, THEN SAME CANNOT BE DISALLOWED OR QUESTIONED UNLESS IT HAS BEEN FOUND THAT ANY PARTICULAR EXPENDITURE IS NOT F OR THE PURPOSE OF BUSINESS. NO SUCH DEFECT OR SHORT COMING HAS BEEN POINTED OUT BY THE LD. PR.CIT QUA THE EXPENSES CLAIMED UNDER THESE HEADS. IN ANY CASE, ONCE THE ASSESSING OFFICE R HAS ASKED FOR THE ENTIRE DETAIL OF EXPENDITURES AND AFT ER EXAMINING THE SAME HAS PASSED THE ASSESSMENT ORDER, THEN WHERE THE QUESTION OF ANY LACK OF INQUIRY OR VERIFI CATION IS. IT IS A TRITE AND SETTLED POSITION OF LAW IS THAT, EXE RCISE OF REVISIONARY POWER U/S. 263 BY LD. CIT/PCIT CANNOT B E EXERCISED MERELY FOR DIRECTING MORE INQUIRY TO FIND OUT IF THE VIEW TAKEN BY THE ASSESSING OFFICER IS ERRONEOUS OR NOT WHEN ALREADY A VIEW AND OPINION HAS BEEN FORMED BY THE A SSESSING OFFICER TAKEN AFTER PROPER INQUIRY AND VERIFICATION . HERE, IN THIS CASE, AS STATED ABOVE, ASSESSING OFFICER HAS R AISED SPECIFIC QUERY FOR EACH AND EVERY ITEMS OF EXPENSES INCLUDING SALARY AND ADMINISTRATIVE EXPENSES, AND IN RESPONSE TO WHICH, ASSESSEE HAS FILED MONTH-WISE AND PERSON-WIS E DETAILS INCLUDING ALL THE BILLS AND VOUCHERS. ALL THESE DET AILS HAVE NOT ONLY BEEN CHECKED AND VERIFIED BY THE ASSESSING OFF ICER, BUT ALSO, AFTER NOTING SPECIFIC DISCREPANCY ASSESSING O FFICER HAS I.T.AS. NO.2858 & 2859/DEL/2017 14 DISALLOWED CERTAIN EXPENDITURE UNDER DIFFERENT HEAD S. THUS, IT CANNOT BE A CASE OF LACK OF INQUIRY AT ALL. NOWHERE IN THE IMPUGNED ORDER, LD. PR.CIT HAS SPECIFIED AS TO WHAT IS THE LACK OF INQUIRY WHICH ASSESSING OFFICER SHOULD HAVE CARRIED OUT NOR HAS HE POINTED OUT ANY DEFECT OR DISCREPANC Y FROM THE ASSESSMENT RECORDS TO SHOW THAT THE ADMINISTRATIVE AND SALARY EXPENSES ARE NOT FOR THE PURPOSE OF BUSINESS OR ARE BOGUS CLAIMS. LD. PR.CIT BEFORE SETTING ASIDE THE A SSESSMENT ORDER ON ANY POINT IS AT LEAST REQUIRED TO CONDUCT PRIMA FACIE INQUIRY SO AS TO COME TO A CONCLUSION THAT THE INQU IRY MADE BY THE ASSESSING OFFICER WAS NOT CORRECT OR THERE W AS A LACK OF PROPER INQUIRY. ONCE SUCH AN INQUIRY HAS NOT BEEN D ONE BY THE LD. PR.CIT HIMSELF, THEN HE CANNOT NEGATE THE I NQUIRY CONDUCTED BY THE ASSESSING OFFICER. HERE, IN THIS C ASE, FIRST OF ALL, LD. PR.CIT HAS TRIED TO DRAW AN ADVERSE INFERE NCE BASED ON ASSESSMENT ORDER PASSED IN CASE OF SOME NON-RESIDEN T ASSESSEE WHICH TOO WAS SUBSEQUENT TO THE PASSING OF IMPUGNED ASSESSMENT ORDER, WHICH CANNOT BE HELD TO ASSESSMENT RECORD OF ASSESSEE BUT OF SOME DIFFERENT ASSESSEE AND DIFFERENT ASSESSMENT RECORD. IN THAT CASE, THE PAYMENT MADE TO THE ASSESSEE HAS BEEN DISALLOWED ON THE GRO UND IT WAS FOR NON BUSINESS PURPOSE. IF THE PAYMENT HAS BE EN MADE AFTER DEDUCTING TDS AND ASSESSEE HAS DULY DISCLOSED THIS INCOME AS PROFESSIONAL RECEIPT AND HAS OFFERED TO T AX AS PROFESSIONAL INCOME WHICH HAS BEEN ACCEPTED EVEN BY THE LD. PCIT, THEN HOW IT IS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF REVENUE, IS UNFATHOMABLE. MOREOVER, IT IS NOT A CASE AT ALL I.T.AS. NO.2858 & 2859/DEL/2017 15 HERE THAT THERE IS EVIDENCE ON RECORD WHICH ESTABLI SHES THAT THERE IS ANY SHAM ARRANGEMENT BETWEEN THE ASSESSEE AND HER CLIENT ONLY TO SIPHON OF THE MONEY FROM THE SAID CO MPANY OR TO SUPPRESS THE PROFIT ESPECIALLY WHEN ACCOUNTS OF THE ASSESSEE HAS BEEN DULY AUDITED BY A REPUTED FIRM OF CHARTERED ACCOUNTANT, I.E., PRICE WATERHOUSE & CO. (PWC). FURTHER, IT IS ALSO NOT A CASE THAT ASSESSEE IS A R ELATED PARTY OF THE SAID NON-RESIDENT COMPANY. THE ASSESSEE IS A PR ACTICING CHARTERED ACCOUNTANT, WHO HAS RENDERED PROFESSIONAL SERVICES AND HAS DULY OFFERED TO TAX THE PAYMENT RE CEIVED AS A PROFESSIONAL INCOME AND SUCH RECEIPTS HAS NEITHER B EEN DOUBTED BY THE ASSESSING OFFICER NOR BY THE LD. PR. CIT. WHILE SETTING ASIDE THE ASSESSMENT ORDER, LD. PCITS ONLY OBSERVATION IS THAT CERTAIN EXPENDITURE NEEDS FURTH ER VERIFICATION AND THAT TO BE WITHOUT POINTING OUT AN Y DISCREPANCY OR DEFECT IN SUCH AN EXPENDITURE CLAIME D BY THE ASSESSEE. THUS, IN THE FACTS AND CIRCUMSTANCES OF T HE CASE, WE DO NOT FIND ANY REASON TO UPHOLD THE IMPUGNED OR DER, AND THEREFORE, THE SAME IS QUASHED. ACCORDINGLY, THE IM PUGNED ORDER PASSED U/S.263 IS SET ASIDE AND THE ASSESSMEN T ORDER PASSED BY THE ASSESSING OFFICER IS RESTORED. 12. IN ASSESSMENT YEAR 2014-15 ALSO, THE LD. PCIT HAS CITED PRECISELY SIMILAR REASONS AND IN THIS YEAR ALSO, HE HAS HELD THAT ASSESSEE HAS CLAIMED EXPENSES WHICH ARE ON HIG HER SIDE PARTICULARLY ON ACCOUNT OF SALARY AND ADMINISTRATIV E EXPENSES WHICH CANNOT BE SAID TO BE WHOLLY AND EXCLUSIVELY E XPENDED FOR THE PURPOSE OF BUSINESS. HERE AGAIN, LD. PCIT H AS NOT I.T.AS. NO.2858 & 2859/DEL/2017 16 POINTED OUT AS TO WHAT IS DEFECT AND DISCREPANCY IN THE CLAIM OF SUCH EXPENDITURE AND HOW SUCH AN EXPENDITURE CAN NOT BE HELD TO BE WHOLLY AND EXCLUSIVELY EXPENDED FOR THE PURPOSE OF BUSINESS. AS STATED ABOVE, LD. PR. CIT HAS TO CONDU CT SOME PRIMA FACIE INQUIRY TO POINT OUT THAT EITHER THE INQUIRY CONDUCTED BY THE ASSESSING OFFICER WAS INADEQUATE O R HE HIMSELF HAS FOUND CERTAIN DISCREPANCY IN THE CLAIM OF EXPENDITURE. ACCORDINGLY, IN THIS ASSESSMENT YEAR A LSO, THE ORDER OF THE LD. PR. CIT U/S.263 IS HEREBY QUASHED. 13. ONE MORE PLEA WHICH HAS BEEN RAISED BY THE L D. COUNSEL BY WAY OF ALTERNATIVE ARGUMENT IN THIS YEAR, IS THA T, ASSESSMENT FOR THE ASSESSMENT YEAR 2014-15 WAS SELE CTED FOR A LIMITED SCRUTINY, WHICH WAS WITH REGARD TO; FIRSTLY , TWO ENTRIES IN SCHEDULE FOR ASSETS AND LIABILITIES; AND SECONDLY , HIGHER TURNOVER WAS REPORTED IN SERVICE TAX RETURN AS AGAINST SHOWN IN THE ITR. THERE WAS NO MANDATE FOR THE ASSE SSING OFFICER TO GO BEYOND THE POINTS RAISED IN THE SELEC TED LIMITED SCRUTINY IN CASS. IN SUPPORT, HE RELIED UPON THE CB DT INSTRUCTIONS 29 TH DECEMBER, 2015, WHEREIN CBDT HAS DIRECTED THE ASSESSING OFFICER TO COMMUNICATE TO TH E ASSESSEE ONLY THOSE ISSUES WHICH ARE SELECTED FOR LIMITED SC RUTINY AND ALSO THE QUESTIONNAIRE SHOULD BE CALLED ONLY ON THO SE POINTS AND ISSUES FOR WHICH CASE HAS BEEN SELECTED FOR SCR UTINY AND THE SCOPE OF INQUIRY SHALL BE ONLY CIRCUMSCRIBED TO LIMITED ISSUES. IF ONLY LIMITED POINTS WERE REQUIRED TO BE EXAMINED, THEN WHERE WAS THE MANDATE TO THE ASSESSING OFFICER TO EXAMINE OTHER ISSUES? LD. PCIT IN HIS REVISIONARY JU RISDICTION I.T.AS. NO.2858 & 2859/DEL/2017 17 CANNOT TRANSGRESS THE SCOPE OF LIMITED SCRUTINY MAT TER SO AS TO E EXPAND IT FOR OTHER ISSUES. 14. THOUGH IT IS VERY VALID POINT RAISED BY HI M, BUT, SINCE, WE HAVE QUASHED THE IMPUGNED ORDERS U/S 263, ON MER ITS; THEREFORE, THE ARGUMENT RAISED BY THE LEARNED COUNS EL IS TREATED AS PURELY ACADEMIC AND IS LEFT UPON. 15. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH FEBRUARY, 2018. SD/- SD/- [L.P. SAHU] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14 TH FEBRUARY, 2018 PKK