Mehtab Alam, Kanpur V. The Commissioner of Income Tax (Central), Kanpur

ITA 288/LKW/2014

• Counselvise Citation: 28823714 RSA 2014
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-10-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 21-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK MISHRA
• Keywords: Reopening of assessment; Revision of order; Search and seizure; Opportunity of being heard; Assessment record; Revenue expenditure
• Section: 143(3); 153A; 147; 131; 68; 148; 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER ITA NOS.288 TO 294/LKW/2014 ASSESSMENT YEARS:2005-06 TO 2011-12 MEHTAB ALAM SULTAN VILLA, JAJMAU KANPUR V. ASTT. CIT CENTRAL CIRCLE II KANPUR PAN/PAN:AARPA0259L (APPELLANT) (RESPONDENT) ITA NOS.295 TO 301/LKW/2014 ASSESSMENT YEARS:2005-06 TO 2011-12 SMT. NAUSHEEN FARAH LARI SULTAN VILLA, JAJMAU KANPUR V. ASTT. CIT CENTRAL CIRCLE II KANPUR PAN/PAN:AAOPF0736G (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI. VIVEK MISHRA, CIT (DR) DATE OF HEARING: 17 10 2014 DATE OF PRONOUNCEMENT: 18 11 2014 O R D E R PER SUNIL KUMAR YADAV: THESE APPEALS ARE PREFERRED BY THE ASSESSEES AGAINST THE RESPECTIVE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX PASSED UNDER SECTION 263 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') PERTAINING TO ASSESSMENT YEARS 2005-06 TO 2011-12. 2. SINCE COMMON ISSUES ARE INVOLVED IN THESE APPEALS AND THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. :- 2 -: 3. IN ALL THESE APPEALS, COMMON GROUNDS ARE RAISED BY THE ASSESSEES AND FOR THE SAKE OF REFERENCE, WE EXTRACT THE GROUNDS RAISED IN I.T.A. NO. 288/LKW/2014 AS UNDER:- 1. BECAUSE THE ORDER PASSED UNDER SECTION 263 OF THE INCOME-TAX ACT, 1961 BY THE CIT (CENTRAL), DATED 28.02.2014 IS WITHOUT JURISDICTION, BAD IN LAW AND BE QUASHED. 2. BECAUSE THE CIT (CENTRAL) HAS ERRED ON FACT AND IN LAW IN HOLDING THAT THE ORDER PASSED BY THE ITO UNDER SEC.153A R/W SECTION 143(3) OF THE ACT DATED 31.03.2013 IS PREJUDICIAL AS WELL AS ERRONEOUS TO THE INTEREST OF REVENUE. 3. BECAUSE THE CIT HAS FAILED TO MAKE INDEPENDENT INQUIRIES AS MANDATED IN SECTION 263(1) '............, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY. .............. THERE BEING NO INQUIRY BY THE CIT, THE ORDER PASSED UNDER SECTION 263 IS BAD IN LAW AND BE QUASHED. 4. BECAUSE THE ORDER PASSED BY THE ASSESSING OFFICER HAVING BEEN APPROVED BY THE JCIT, U/S 153D OF THE ACT, AND APPROVAL MEANS APPLICATION OF MIND, THE ORDER OF THE ASSESSING OFFICER HAVING BEEN MERGED WITH THAT OF THE JCIT, THE CIT (CENTRAL) CEASED TO HAVE POWER TO EXERCISE U/S 263 OF THE ACT. 5. BECAUSE THE ASSESSING OFFICER HAVING FRAMED THE- ASSESSMENT ORDER U/S 153A/143(3) OF THE ACT AFTER MAKING DETAILED ENQUIRIES, WHICH PROCEEDINGS BEING MATTER OF SEARCH, AND WAS SUBJECT TO APPROVAL BY THE ADDL. CIT/JCIT U/S 153D, CANNOT BE SAID TO BE ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE. THE CIT (CENTRAL) HAS WRONGLY INFERRED TO BE SO, THE ORDER BE ANNULLED. 6. BECAUSE THERE BEING NO SEPARATE NOTICE U/S 263 OF THE ACT AS MANDATED BY THE STATUTE AND THERE BEING NO INDEPENDENT :- 3 -: SATISFACTION OF THE CIT (CENTRAL), THE COMBINED NOTICE ISSUED U/S 263 FOR ALL THE ASSESSMENT YEARS I.E. A.Y. 2005-06 TO 2010- 11 IS WITHOUT JURISDICTION, VOID ABINITIO, BAD IN LAW AND THE ORDER PASSED THEREON BEING ILLEGAL BE QUASHED. 7. BECAUSE NONE OF THE ISSUES RAISED BY THE CIT (CENTRAL) IN HIS NOTICE U/S.263 DATED 06.09.2013 RELATING TO A.Y. 2005-06 TO 2010-11 ARISING OUT OF THE ASSESSMENT ORDER PASSED BY THE AO, THE VERY SHOW CAUSE NOTICE IS BAD IN LAW AND THE ORDER PASSED U/S.263 BE QUASHED. 8. BECAUSE THE ORDER PASSED U/S 263 OF THE ACT, HOLDING THAT THE ASSESSMENT ORDERS FOR THE A.Y. 2005-06 TO 2011-12 (SPECIALLY WHEN THERE IS NO NOTICE FOR A.Y. 2011-12) PASSED BY THE ASSESSING OFFICER TO BE SET ASIDE U/S 263 IS BAD IN LAW BE QUASHED. 9. BECAUSE THE CIT (CENTRAL) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE ASSESSING OFFICER HAS FAILED TO MAKE NECESSARY ENQUIRIES AS WOULD HAVE BEEN RELEVANT FOR THE PURPOSE OF ASSESSMENT, AND AS SUCH, HAS ERRED IN SETTING ASIDE THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER. 10. BECAUSE ALL NECESSARY ENQUIRIES HAYING BEEN MADE BY THE ASSESSING OFFICER AND THE ASSESSMENT ORDER BEING A SELF SPEAKING, THE CIT(CENTRAL) HAS ERRED ON FACTS AND IN LAW IN ARBITRARILY HOLDING THAT THE ORDER PASSED BY THE ASSESSING OFFICER U/S 153A/143(3) OF THE ACT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 11. BECAUSE WITHOUT PREJUDICE TO THE ABOVE, THE ISSUE IN DISPUTE BEING RECOVERY OF RS.2 CRORES FROM THE POSSESSION OF THE ASSESSEE, THE CIT (CENTRAL) HAVING SIMULTANEOUSLY TAKEN ACTION U/S 263 IN THE CASE OF SMT. NAUSHEEN FARAH LARI HIMSELF IS NOT CONFIRMED/SATISFIED AS TO IN WHOSE HAND THE ADDITION SHOULD OUGHT TO HAVE BEEN MADE. THE ABOVE ACTION OF THE CIT(CENTRAL) CLEARLY SPEAKS THAT CIT(CENTRAL) HAS FAILED TO MAKE ANY INDEPENDENT ENQUIRIES AS MANDATED IN SECTION 263 :- 4 -: OF THE ACT, THE ORDER PASSED IS BAD IN LAW AND BE QUASHED. 4. THE BRIEF FACTS INVOLVED IN THESE APPEALS ARE THAT A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT ON 24.9.2010 UPON THE ASSESSEE AT CHOUDHARY CHARAN SINGH AIRPORT, AMAUSI, LUCKNOW WHERE IT WAS FOUND THAT SHRI. MEHTAB ALAM AND HIS WIFE, SMT. NAUSHEEN FARAH LARI WERE CARRYING CASH OF RS.1 CRORE EACH IN THEIR TWO BAGS (TOTALING TO RS.2 CRORES). A WARRANT UNDER SECTION 132 OF THE ACT WAS ISSUED BY THE DIT (INVESTIGATION), KANPUR AND SERVED ON BOTH OF THEM AND PANCHNAMA DATED 24.9.2010 WAS ALSO DRAWN EVIDENCING THE SEIZURE OF RS.2 CRORES FROM SHRI. MEHTAB ALAM AND SMT. NAUSHEEN FARAH LARI. A STATEMENT UNDER SECTION 131(1A) OF THE ACT WAS ALSO RECORDED AND IN THE STATEMENT OF SHRI. MEHTAB ALAM HE INTRODUCED HIMSELF AS DIRECTOR IN THE COMPANY, M/S MODEL TANNERS (INDIA) PVT. LTD., SULTAN VILLA, JAJMAU, KANPUR AND HIS WIFE, SMT. NAUSHEEN FARAH LARI AS PARTNER IN MODEL EXIMS, SULTAN VILLA, JAJMAU, KANPUR. REGARDING SOURCE OF CASH OF RS2 CRORES, IT WAS STATED BY SHRI. MEHTAB ALAM THAT CASH WAS BEING CARRIED BY THEM FOR PURCHASE OF RAW HIDES THROUGH JET AIRWAYS, FLIGHT NO.9W24621 FROM LUCKNOW TO KOLKATA. IN SUPPORT OF CASH BEING CARRIED BY THEM, THEY PRODUCED PHOTOCOPIES OF FIVE UNDATED LETTERS WRITTEN BY THE DIRECTOR OF M/S MODEL TANNERS (INDIA) PVT. LTD., JAJMAU, KANPUR; PARTNER OF M/S MODEL EXIMS, JAJMAU, KANPUR; DIRECTOR OF M/S MODEL ECHOES PVT. LTD., JAJMAU, KANPUR, PROPRIETOR OF M/S S. K. ENTERPRISES, KANPUR AND PARTNER OF M/S AL-RAZEEQ TRADERS, JAJMAU, KANPUR ADDRESSING TO THE BRANCH MANAGERS OF DIFFERENT BANKS. CONSEQUENT TO SEARCH, THE CASE OF SHRI. MEHTAB ALAM GROUP WAS CENTRALIZED UNDER SECTION 127 OF THE ACT AND THEREAFTER NOTICES UNDER SECTION 153A OF THE ACT, DATED 19.1.2012 WERE ALSO SERVED UPON THE ASSESSEES REQUIRING THEM TO FILE THE RETURN OF INCOME WITHIN 30 DAYS. CONSEQUENTLY RETURNS WERE FILED AND THE ASSESSMENTS WERE FRAMED. :- 5 -: 5. THE LD. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, KANPUR RE- EXAMINED THE ASSESSMENT RECORDS AND HAS NOTICED THAT THE STATEMENT OF SHRI. MEHTAB ALAM RECORDED DURING THE COURSE OF SEARCH OPERATION WAS FOUND UNTRUE AND INCORRECT IN THE LIGHT OF EXPLANATIONS FURNISHED BY THE ASSESSEE, SHRI. MEHTAB ALAM AND DENOMINATION OF THE CURRENCY FOUND DURING THE COURSE OF SEARCH. THE LD. COMMISSIONER OF INCOME-TAX ACCORDINGLY FORMED A VIEW THAT THE ASSESSING OFFICER HAS NOT TAKEN THE FOLLOWING FACTS INTO CONSIDERATION WHILE COMPLETING THE ASSESSMENT UNDER SECTION 153A OF THE ACT:- (1) SOURCE OF CASH OF RS.2 CRORES FOUND AND SEIZED DURING THE COURSE OF SEARCH. (2) DETAILS OF HOUSE PROPERTY CONSTRUCTED IN A.Y. 2005-06 AND LATER YEARS. (3) DETAILS REGARDING HOUSE HOLD EXPENSES. 6. HE WAS ALSO OF THE VIEW THAT THE ASSESSING OFFICER HAS NOT MADE PROPER ENQUIRY FROM THE BANKERS WITH REGARD TO THE AVAILABILITY OF CASH IN DIFFERENT ACCOUNTS. THEREFORE, THE ORDERS OF THE ASSESSING OFFICER FRAMED ON 31.3.2013 FOR ASSESSMENT YEARS 2005-06 TO 2011-12 ARE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD. COMMISSIONER OF INCOME-TAX ACCORDINGLY ISSUED SHOW CAUSE NOTICES UNDER SECTION 263(1) OF THE ACT TO THE ASSESSEES AS TO WHY ORDER DATED 31.3.2013 FOR ASSESSMENT YEARS 2005-06 TO 2011-12 PASSED UNDER SECTION 153A OF THE ACT READ WITH SECTION 143(3) OF THE ACT SHOULD NOT BE CONSIDERED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHIN THE MEANING OF SECTION 263(1) OF THE ACT. IN RESPONSE THERETO, THE LD. COUNSEL FOR THE ASSESSEES HAS SUBMITTED VARIOUS REPLIES FROM TIME TO TIME EXPLAINING THE SOURCE OF AVAILABILITY OF CASH RS.2 CRORES FOUND FROM THE POSSESSION OF THE ASSESSEES :- 6 -: DURING THE COURSE OF SEARCH OPERATION AT CHOUDHARY CHARAN SINGH AIRPORT. IN REPLY, IT WAS ALSO STATED THAT CASH BELONG TO THE FOLLOWING PERSONS:- 1) MODEL TANNERS (INDIA) PVT. LTD. : RS.50 LAKHS 2) MODEL EXIMS : RS.25 LAKHS 3) MODEL ECHOES PVT. LTD. : RS.25 LAKHS 4) S. K. ENTERPRISES : RS.30 LAKHS 5) A. L. RAZEEK : RS.70 LAKHS 7. THE COPIES OF CASH BOOKS OF THE AFORESAID DIFFERENT COMPANIES WERE ALSO FURNISHED ALONG WITH DETAILED REPLY. BEING NOT CONVINCED WITH THE EXPLANATIONS OF THE LD. COUNSEL FOR THE ASSESSEE, THE LD. COMMISSIONER OF INCOME-TAX HAS OBSERVED THAT THE CASH OF RS.2 CRORES FOUND FROM THE POSSESSION OF SHRI. MEHTAB ALAM AND SMT. NAUSHEEN FARAH LARI IS REMAINED UNEXPLAINED AND SHOULD ACCORDINGLY BE TREATED AS INCOME FROM UNDISCOUSED SOURCE OF THE ASSESSEES AS PER SECTION 68 OF THE ACT. HE ACCORDINGLY HELD THAT THOUGH THE ASSESSING OFFICER HAD INFORMATION WITH HIM, YET HE DID NOT APPLY HIS MIND TO IT. STILL HE TOOK AN ERRONEOUS DECISION RESULTING INTO INCOME OF RS.2 CRORES NOT BEING ASSESSED TO TAX AND THIS ERROR HAS CAUSED PREJUDICE TO THE INTEREST OF THE REVENUE. HAVING HELD THE ASSESSMENT ORDERS TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, THE LD. COMMISSIONER OF INCOME-TAX HAS SET ASIDE THE ASSESSMENT ORDERS AND DIRECTED THE ASSESSING OFFICER TO REFRAME THE ASSESSMENTS AFTER TAKING INTO ACCOUNT THE POINTS HE MADE ABOUT ON MERIT AS WELL AS THE DOCUMENTS SUBMITTED BY THE ASSESSEES DURING THE COURSE OF ASSESSMENT PROCEEDINGS. SINCE THE ASSESSMENT WAS MADE AFTER OBTAINING APPROVAL FROM THE JOINT COMMISSIONER OF INCOME-TAX (JCIT) IN TERMS OF PROVISIONS OF SECTION 153D OF THE ACT, THE LD. COMMISSIONER OF INCOME-TAX HAS ALSO SET ASIDE THE APPROVAL GRANTED BY THE JCIT UNDER SECTION 153D OF THE ACT. :- 7 -: 8. AGGRIEVED, THE ASSESSEES HAVE PREFERRED APPEALS BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT DURING THE COURSE OF SEARCH, THE STATEMENT OF THE ASSESSEE WAS RECORDED AND IN THAT STATEMENT THE ASSESSEE HAS EXPLAINED THE SOURCE OF AVAILABILITY OF CASH WITH THE CONTENTIONS THAT HE WAS GOING TO KOLKATA TO PURCHASE RAW HIDES. THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER AND THE REPLY SUBMITTED BY THE ASSESSEE WITH RESPECT TO THE AVAILABILITY OF CASH AT THE TIME OF SEARCH OPERATION AT CHOUDHARY CHARAN SINGH AIRPORT. 9. THE COPY OF THE QUESTIONNAIRE ISSUED TO THE ASSESSEE, SMT. NAUSHEEN FARAH LARI DATED 14.5.2012 IS PLACED ON RECORD AT SL. NO.312 TO 313 OF THE COMPILATION FILED IN THE CASE OF SMT. NAUSHEEN FARAH LARI, THROUGH WHICH A SPECIFIC QUERY WAS RAISED WITH REGARD TO THE AMOUNT OF RS.2 CRORES SEIZED BY THE INCOME-TAX DEPARTMENT DURING THE COURSE OF SEARCH AND SEIZURE OPERATION ON 24.9.2010 AT CHOUDHARY CHARAN SINGH AIRPORT, LUCKNOW FROM HER POSSESSION. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO HOW MUCH AMOUNT BELONG TO THE ASSESSEE AND WHAT WAS THE SOURCE OF THE SAME. THIS QUESTIONNAIRE WAS DULY REPLIED BY THE ASSESSEE VIDE LETTER DATED 16.11.2012 STATING THEREIN THAT THE SAID AMOUNT OF RS.2 CRORES BELONG TO MODEL TANNERS (INDIA) PVT. LTD.; MODEL EXIMS ; MODEL ECHOES PVT. LTD. ; S. K. ENTERPRISES ; A. L. RAZEEK. THEIR PAN DETAILS WERE ALSO FURNISHED TO THE ASSESSING OFFICER. 10. AGAIN IN THE CASE OF SHRI. MEHTAB ALAM, A DETAILED REPLY IN THIS REGARD WAS ALSO FURNISHED BEFORE THE ASSESSING OFFICER VIDE LETTER DATED 16.11.2012. COPY OF THE REPLY IS AVAILABLE AT PAGES 383 TO 385 OF THE COMPILATION FILED IN THE CASE OF SHRI. MEHTAB ALAM. HE HAS ALSO INVITED OUR ATTENTION TO THE QUESTIONNAIRE ISSUED TO SHRI. MEHTAB ALAM DATED 14.5.2012, IN WHICH THROUGH QUESTION NO.22, A DETAILED EXPLANATION WAS SOUGHT FROM SHRI. MEHTAB ALAM. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER CONTENDED THAT IN THE LIGHT OF THESE FACTS, IT HAS BEEN ESTABLISHED THAT THE DETAILED ENQUIRY WAS MADE BY THE ASSESSING OFFICER DURING THE :- 8 -: COURSE OF ASSESSMENT PROCEEDINGS AND WHEN THE ASSESSING OFFICER WAS SATISFIED WITH THE EXPLANATIONS OF THE ASSESSEES RELATING TO SOURCE OF AVAILABILITY OF CASH, NO ADDITION WAS MADE IN THE HANDS OF THE ASSESSEES. THE LD. COUNSEL FOR THE ASSESSEES HAS PLACED RELIANCE UPON THE FOLLOWING JUDICIAL PRONOUNCEMENTS IN SUPPORT OF HIS CONTENTION THAT THE ASSESSMENT ORDER CANNOT BE SET ASIDE OR REVISED UNDER SECTION 263 OF THE ACT ON ACCOUNT OF INADEQUATE ENQUIRY:- 1. CIT VS. VIKAS POLYMERS (2010) 194 TAXMAN 57 (DELHI) 2. HARYANA COACH BODY BUILDERS VS. ITO, ROHTAK (2006) 10 SOT 736 (DELHI). 3. CIT VS. GANPAT RAM BISHNOI (2006) 152 TAXMAN 242 (RAJ.) 4. BALRAM MANMANI VS. ACIT, 7 SOT 368 (LUCKNOW). 5. SALORA INTERNATIONAL VS. ACIT, 2 SOT 705 (DELHI). 6. MALABAR INDUSTRIAL CO. LTD. VS. CIT, 243 ITR 83 (SC) 7. CIT VS. GABRIEL INDIA LTD., 203 ITR 108 (BOM). 8. CIT VS. MAX INDIA LIMITED [2007] 295 ITR 282 (SC) 9. CIT VS. SUNBEAM AUTO LTD., 332 ITR 167 (DEL) 11. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER CONTENDED THAT WHILE COMPLETING THE ASSESSMENT, APPROVAL WAS OBTAINED FROM THE JCIT UNDER SECTION 153D OF THE ACT AND ONCE THE JCIT HAS ALSO APPLIED HIS MIND TO THE FACTS OF THE CASE, THE ASSESSMENT ORDERS CANNOT BE REVISED OR SET ASIDE UNDER SECTION 263 OF THE ACT. IN SUPPORT OF THIS CONTENTION, HE HAS PLACED RELIANCE UPON THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. DR. ASHOK KUMAR IN APPEAL NO.192 OF 2000; 163 OF 2008; 413 OF 2012 AND 414 OF 2012 VIDE ORDER DATED 6.9.2012 AND IN THE CASE OF AKIL GULAMALI SOMJI VS. ITO IN I.T.A. NO. 455 TO 458 (PUNE) VIDE ORDER DATED 30.3.2012. :- 9 -: 12. IT WAS ALSO CONTENDED THAT THE INVOCATION OF PROVISIONS OF SECTION 263 OF THE ACT IS ALSO BAD ON ACCOUNT OF ISSUANCE OF JOINT SHOW CAUSE NOTICE UNDER SECTION 263 OF THE ACT. IN SUPPORT OF THIS CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE UPON THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF MOHD. AYUB VS. ITO, 346 ITR 30 (ALLD), IN WHICH ASSESSMENT WAS REOPENED BY ISSUING A COMBINED NOTICE FOR FOUR YEARS AND THE HON'BLE HIGH COURT HAS HELD THAT NOTICE UNDER SECTION 148 OF THE ACT ARE TO BE ISSUED FOR EACH YEAR SEPARATELY, THEREFORE, THE COMBINED NOTICE ISSUED FOR ALL THE FOUR YEARS, THE REASSESSMENT IS NOT VALID. BESIDES, RELIANCE WAS ALSO PLACED ON VARIOUS JUDGMENTS IN SUPPORT OF HIS CONTENTION THAT FOR INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT, THE LD. COMMISSIONER OF INCOME-TAX IS REQUIRED TO MAKE OUT A CASE THAT THE ASSESSMENT ORDER IS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. 13. COPY OF THE ASSESSMENT ORDERS IN THE CASES OF MODEL TANNERS (INDIA) PVT. LTD.; MODEL EXIMS ; MODEL ECHOES PVT. LTD. ; S. K. ENTERPRISES AND A. L. RAZEEK WERE ALSO FILED IN SUPPORT OF HIS CONTENTION THAT THE ISSUE OF SEIZURE OF CASH OF RS.2 CRORES WAS ALSO EXAMINED BY THE CONCERNED ASSESSING OFFICER IN THE CASES OF THESE CONCERNS AND HAVING CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEES WITH REGARD TO THE AVAILABILITY OF CASH IN THE RESPECTIVE ACCOUNTS, NO ADDITIONS WERE MADE IN THOSE CASES. IN THE LIGHT OF THESE FACTS, THE ISSUE OF SEIZURE OF CASH OF RS.2 CRORES WAS THOROUGHLY EXAMINED BY THE REVENUE AUTHORITIES NOT ONLY IN THE ASSESSEES OWN CASE BUT ALSO IN THOSE CASES TO WHICH THIS CASH RELATES. THEREFORE, THE ASSESSMENT ORDERS CANNOT BE SET ASIDE OR REVISED ONLY FOR THE REASON THAT THE LD. COMMISSIONER OF INCOME-TAX WAS NOT SATISFIED WITH THE ASSESSMENT ORDER. IT WAS FURTHER CONTENDED THAT THE LD. COMMISSIONER OF INCOME-TAX CANNOT THRUST UPON HIS OPINION/WISDOM UPON THE ASSESSING OFFICER. THEREFORE, THE ORDERS OF THE LD. CIT(A) PASSED UNDER SECTION 263 OF THE ACT DESERVE TO BE SET ASIDE. :- 10 -: 14. THE LD. D.R., ON THE OTHER HAND, BESIDES PLACING HEAVY RELIANCE UPON THE ORDERS OF THE LD. COMMISSIONER OF INCOME-TAX PASSED UNDER SECTION 263 OF THE ACT, HAS SUBMITTED THAT THE ASSESSING OFFICER HAS NOT EXAMINED THE ISSUE OF SEIZURE OF RS.2 CRORES FROM THE ASSESSEE AT THE CHOUDHARY CHARAN SINGH AIRPORT IN THE LIGHT OF EVIDENCE COLLECTED. 15. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE RESPECTIVE PARTIES AT LENGTH AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW AND THE DOCUMENTS FILED BEFORE US, WE FIND THAT DURING THE COURSE OF SEARCH OPERATION, THE STATEMENT OF THE ASSESSEE I.E. SHRI. MEHTAB ALAM WAS RECORDED UNDER SECTION 131 OF THE ACT AND IN HIS STATEMENT IT WAS CATEGORICALLY STATED BY THE ASSESSEE THAT HE WAS CARRYING CASH OF RS.2 CRORES FOR PURCHASE OF RAW HIDES FROM KOLKATA. IN SUPPORT OF CASH BEING CARRIED BY THEM, THEY PRODUCED THE PHOTOCOPIES OF FIVE UNDATED LETTERS, WHICH ARE AS UNDER:- 1. LETTER WRITTEN BY THE DIRECTOR M/S MODEL TANNERS (INDIA) PVT. LTD., JAJMAU, KANPUR, UNIT-11, TO AGM, CANARA BANK, OVERSEAS BRANCH, CIVIL LINES, KANPUR. 2. LETTER WRITTEN BY THE PARTNER M/S MODEL EXIMS, JAJMAU, KANPUR TO CANARA BANK, OVERSEAS BRANCH, CIVIL LINES, KANPUR. 3. LETTER WRITTEN BY THE DIRECTOR M/S MODEL ECHOES PVT. LTD., JAJMAU, KANPUR TO AGM, CANARA BANK, OVERSEAS BRANCH, KANPUR. 4. LETTER WRITTEN BY THE PROP. OF M/S S.K. ENTERPRISES, 95/26, FARRASH KHANA, KANPUR TO THE MANAGER, IDBI BANK, MG ROAD, KANPUR 5. LETTER WRITTEN BY THE PARTNER FOR M/S AI-RAZEEQ TRADERS, JAJMAU, ROAD, OPP. SULTAN TANNERS, KANPUR TO BRANCH MANAGER, IDBI BANK, MG ROAD, KANPUR. :- 11 -: 16. CONSEQUENT TO THE SEARCH, THE CASE OF SHRI. MEHTAB ALAM GROUP WAS CENTRALIZED. THEREAFTER NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED AND CONSEQUENT THERETO ASSESSEE FILED REPLY ENCLOSING THEREWITH COPY OF THE ASSESSMENT ORDER PASSED UNDER SECTION 143 OF THE ACT WITH THE SUBMISSION THAT THE RETURN ALREADY FILED MAY BE TREATED AS RETURN IN COMPLIANCE TO THE NOTICE UNDER SECTION 153A OF THE ACT. THEREAFTER THE ASSESSING OFFICER HAS ISSUED A QUESTIONNAIRE TO THE ASSESSEE VIDE LETTER DATED 14.5.2012 AND THROUGH QUESTION NO.22 A DETAILED QUERY WAS RAISED WITH REGARD TO THE AVAILABILITY OF CASH OF RS.2 CRORES AND THE LETTERS FOUND FROM THE POSSESSION OF THE ASSESSEE RELATING TO DIFFERENT AMOUNT OF CASH. COPY OF THE QUESTIONNAIRE IS AVAILABLE AT PAGES 386 TO 389 OF THE COMPILATION OF THE ASSESSEE. FOR THE SAKE OF REFERENCE, WE EXTRACT THE QUERY NO.22 RAISED BY THE ASSESSING OFFICER IN THE CASE OF SHRI. MEHTAB ALAM AS UNDER:- 22. AN AMOUNT OF RS. 2 CRORE WAS SEIZED BY THE INCOME TAX DEPARTMENT DURING THE COURSE OF SEARCH & SEIZURE OPERATION DATED 24.09.2010 AT THE AIRPORT LUCKNOW. FIVE LETTERS/ DOCUMENTS WERE ALSO SEIZED U/S 132 OF THE IT. ACT FROM YOUR POSSESSION WHICH ARE MENTIONED AS UNDER AND COPIES OF ALL THE FIVE DOCUMENT ARE ENCLOSED HEREWITH FOR YOUR PERUSAL. SL.NO LETTER ADDRESSED TO LETTER WRITTEN BY DATE OF LETTER REMARKS 1. AGM CANARA BANK OVERSEAS BRANCH CIVIL LINES, KANPUR DIRECTOR M/S MODEL TANNERS INDIA PVT. LTD. UNIT-II, JAJMAU, KANPUR NIL THAT WE DRAW THE CASH RS.50,00,000/- FROM YOUR BRANCH FOR THE PURPOSE OF RAW HIDES FROM KOLKATA DUE TO LESS PRICE PREVAIL IN THE MARKET AND CASH CARRIED BY MR. MEHTAB ALAM. IN THIS LETTER A REQUEST MADE TO ISSUE A CERTIFICATE FOR MENTIONED PURPOSE. :- 12 -: 2 -DO- DIRECTOR M/S MODEL ECHOES PVT. LTD, JAJMAU, KANPUR NIL THAT WE DRAW THE CASH RS.25,00,000/- FROM YOUR BRANCH FOR THE PURPOSE OF RAW HIDES FROM KOLKATA DUE TO LESS PRICE PREVAIL IN THE MARKET AND CASH CARRIED BY MR. MEHTAB ALAM. IN THIS LETTER A REQUEST MADE TO ISSUE A CERTIFICATE FOR MENTIONED PURPOSE. 3 -DO- PARTNER M/S MODEL EXIMS PVT. LTD, JAJMAU, KANPUR NIL THAT WE DRAW THE CASH RS.25,00,000/- FROM YOUR BRANCH FOR THE PURPOSE OF RAW HIDES FROM KOLKATA DUE TO LESS PRICE PREVAIL IN THE MARKET AND CASH CARRIED BY MR. MEHTAB ALAM. IN THIS LETTER A REQUEST MADE TO ISSUE A CERTIFICATE FOR MENTIONED PURPOSE. 4 THE MANAGER IDBI BANK M.G. ROAD, KANPUR PROP. M/S S.K ENTERPRISES, 95/26, FARASH KHANA, KANPUR NIL THAT WE DRAW THE CASH RS. 30,00,000/- FROM YOUR BRANCH FOR THE PURPOSE OF RAW HIDES FROM KOLKATA DUE TO LESS PRICE PREVAIL IN THE MARKET AND CASH CARRIED BY MR. MEHTAB ALAM. IN THIS LETTER A REQUEST MADE TO ISSUE A CERTIFICATE FOR MENTIONED PURPOSE :- 13 -: 5. -DO- PARTNER AL - RAZEEQ TRADERS JAJMAU, KANPUR NIL THAT WE DRAW THE CASH RS. 70,00,0007- FROM YOUR BRANCH FOR THE PURPOSE OF RAW HIDES FROM KOLKATA DUE TO LESS PRICE PREVAIL IN THE MARKET AND CASH CARRIED BY MR. MEHTAB ALAM. IN THIS LETTER A REQUEST MADE TO ISSUE A CERTIFICATE FOR MENTIONED PURPOSE YOU ARE REQUIRED TO EXPLAIN THE SOURCE OF AMOUNT OF RS. 2 CRORE FOUND AND SEIZED FROM YOUR POSSESSION WITH REFERENCE TO THE ABOVE 5 LETTERS. THE LANGUAGES OF THESE LETTERS INDICATE THAT THE MENTIONED AMOUNTS HAVE BEEN WITHDRAWN FROM THE RESPECTIVE BANKS ON A PARTICULAR DATE. PLEASE EXPLAIN ON WHICH PARTICULARS DATES THESE AMOUNTS WERE WITHDRAWN AND FROM WHICH BANK ACCOUNT THESE AMOUNTS WERE WITHDRAWN. PLEASE SUBMIT YOUR REPLY WITH ALL NECESSARY DOCUMENTS AND EVIDENCE. 17. THIS QUERY WAS DULY REPLIED BY THE ASSESSEE VIDE HIS LETTER DATED 16.11.2012, IN WHICH DETAILED REPLY WITH REGARD TO THE AVAILABILITY OF CASH AND ITS SOURCE WERE EXPLAINED. FOR THE SAKE OF REFERENCE, WE EXTRACT THIS REPLY AS UNDER:- WITH REFERENCE TO THE ASSESSMENT PROCEEDINGS IN THE ABOVE MENTIONED CASE AND IN RESPONSE TO YOUR QUERY REGARDING SOURCE AND ACQUISITION OF RS. 2 CRORES FOUND FROM THE POSSESSION OF THE ASSESSES ON 24.09.2010 AT CHAUDHARI CHARAN SINGH AIRPORT, IT IS SUBMITTED AS UNDER FOR YOUR HONOUR'S KIND CONSIDERATION: THAT THE ASSESSEE WAS TRAVELLING ON THE MORNING OF 24.09.2010 ALONGWITH HIS WIFE NAUSHEEN FARAH LARI TO CALCUTTA FROM KANPUR. ON :- 14 -: WAY TO LUCKNOW AIRPORT, HE WAS APPREHENDED AND A SUM OF RS.2 CRORES WAS RECOVERED FROM THEIR CUSTODY. THAT THE AFORESAID AMOUNT RS. 2 CRORES RECOVERED FROM THE CUSTODY OF THE ASSESSEE WAS SEIZED AND RETAINED BY THE DEPARTMENT AND HAS BEEN DEPOSITED IN PD ACCOUNT IN STATE BANK OF INDIA, LUCKNOW. THAT THE PURPOSE OF CARRYING SO MUCH CASH TO CALCUTTA BY THE ASSESSEE WAS PURELY FOR THE PURPOSE OF BUSINESS FOR PURCHASE OF RAW HIDES. ON OR AROUND THE LAST WEEK OF SEPTEMBER, 2010 DECISION IN THE CASE OF RAM JANAM BHUMI BABRI MASJID WAS TO BE ANNOUNCED BY THE HON'BLE ALLAHABAD HIGH COURT BENCH AT LUCKNOW. THERE WAS LOT OF .TENSION IN THE PUBLIC AT LARGE AND THERE WAS GREAT APPREHENSION THAT THERE MAY TAKE PLACE A COMMUNAL RIOT. VILLAGERS AND TRADERS FEARING THE POSSIBILITY OF COMMUNAL RIOTS WERE NOT ONLY HESITANT BUT WERE EXTREMELY RELUCTANT TO SUPPLY RAW HIDES IN THE MARKET IN KANPUR AND ITS SURROUNDING. THIS RESULTED INTO SHORT SUPPLY OF RAW HIDES AT KANPUR. THE SHORT SUPPLY OF RAW HIDES STARTED AFFECTING THE BUSINESS. THE BUSINESS OF THE ASSESSEE AND HIS BUSINESS CONCERNS IS PURCHASE OF RAW HIDES AND EXPORT OF FINISHED LEATHER/LEATHER GOODS, THE ASSESSEE WAS DUTY BOUND TO MEET ITS EXPORT COMMTMENTS. FAILURE ON THE PART OF THE ASSESSEE'S BUSINESS CONCERNS TO MEET ITS EXPORT OBLIGATIONS WOULD HAVE CAUSED TREMENDOUS FINANCIAL LOSS ON ACCOUNT OF BOTH CANCELLATION OF ORDERS AND FORFEITURE OF FUNDS AND AS WELL AS JEOPARDIZE THE GOODWILL. CALCUTTA IS A VERY GOOD MARKET FOR RAW HIDES. RAW HIDE IS A PRODUCT OF ANIMAL HUSBANDRY AND IS CASH BUSINESS. THUS, THE BUSINESS CONCERNS OF THE ASSESSEE, BEING DESPERATE MADE A MOVE TO PURCHASE RAW HIDES FROM CALCUTTA MARKET AND IT WAS IN THIS CONTEXT THAT THE ASSESSEE PROCEEDED TO CALCUTTA TO PURCHASE RAW HIDES. HERE ITS MAY BE MENTIONED THAT PURCHASE OF RAW HIDE IN CASH IS SPECIFICALLY EXEMPT AS PER RULE-6DD OF SEC. 40A(3). THE OTHER REASON OF CARRYING CASH WAS THAT THE AGENTS/SUPPLIERS/PRODUCERS OF RAW HIDES INSIST ON CASH PAYMENT ALONE. THAT 24.09.2010 WAS FRIDAY AND THE NEXT DAY BEING SATURDAY AND SUNDAY, IT WOULD NOT HAVE BEEN POSSIBLE TO ENTER INTO THE TRANSACTIONS THROUGH BANK. MOREOVER THE TRANSACTIONS THROUGH BANK :- 15 -: IS NOT FEASIBLE FOR THE REASON OF TIME FACTOR AS WELL AS THE IDENTITY OF THE SELLER. BESIDES THE ASSESSEE AND HIS CONCERNS DO NOT HAVE ANY PURCHASE CENTRE AT KOLKATTA. UNLESS AND UNTIL RAW HIDES ARE NOT INSPECTED IT IS NOT POSSIBLE MAKE THE DEAL GO THRU. THAT THE ASSESSEE IS INTERESTED, AS A DIRECTOR AND PARTNER IN MODEL TANNERS, MODEL ECHOES AND MODEL EXIMS. LIKEWISE HIS WIFE IS ALSO INTERESTED IN THE SAID CONCERNS EITHER AS DIRECTOR AND PARTNERS. M/S S.K. ENTERPRISES AND AL RAZEEK ARE SEPARATE CONCERNS OF DIFFERENT PERSONS WHO SUPPLY RAW HIDES TO THE ASSESSEE'S CONCERNS AND ALSO TO OTHER PERSONS. THE AFORESAID AMOUNT WAS BEING CARRIED BY THE ASSESSEE FOR PURCHASE OF RAW HIDES FROM CALCUTTA. THE ASSESSEE THROUGH ABOVE MENTIONED COMPANIES, IS IN THE BUSINESS OF PURCHASE OF RAW HIDES, TANNING THE SAME, MANUFACTURE OF LEATHER GOODS AND EXPORT THEREOF. M/S. S.K. ENTERPRISES AND AL RAZEEK ARE COMMISSION AGENTS WHO PURCHASE RAW HIDE FROM THE MARKET AND SUPPLY THE SAME TO THE ABOVE MENTIONED COMPANIES AND AS WELL AS IN THE OPEN MARKET. THE AFORESAID AMOUNT OF RS.2 CRORES FOUND FROM THE CUSTODY OF THE ASSESSEE AND HIS WIFE BELONGED TO THE FOLLOWING PERSONS: 1. MODEL TANNERS (INDIA) PVT. LTD. AAACM9319D RS. 50,00,000/- 2. MODEL EXIMS (A PARTNERSHIP FIRM)AADFM6163H RS. 25,00,000/- 3. MODEL ECHOES PVT. LTD. AAACM9691A RS. 25,00,000/- 4. S.K.ENTERPRISES PROP. ANGPK6161M RS. 30,00,000/- 5. AL RAZEEK PROP. AALFA4858M RS. 70,00,000/- COPIES OF ACCOUNTS AS WELL AS EXTRACTS OF THE CASH BOOKS FROM, THE RESPECTIVE PARTIES AS REFERRED TO ABOVE HAVE ALREADY BEEN FILED. THAT AN INSPECTION WAS CONDUCTED BY THE INTELLIGENCE WING ON THE DATE OF THE INCIDENT ITSELF WHEREIN THE CASH BOOKS OF THE ABOVE CONCERNS WERE INSPECTED AND EXTRACTS OF THE SAME WERE TAKEN BY THE DEPARTMENT BOTH AT LUCKNOW AND AT KANPUR. THE CASH BALANCES APPEARING IN THE BOOKS OF THE ABOVE FIRMS ARE AS UNDER:- 1. MODEL TANNERS (INDIA) PVT. LTD. RS. 54,24,814.66 :- 16 -: 2. MODEL EXIMS (A PARTNERSHIP FIRM) RS. 25,33,713.67 3. MODEL ECHOES PVT. LTD. RS. 32,26,903.45 4. S.K.ENTERPRISES PROP. RS. 34,41,496.45 5. A.L.RAZEEK (A PARTNERSHIP FIRM) RS. 77,80,504.00 THE ASSESSEE GIVE THE SAME EXPLANATION AT THE TIME WHEN HE WAS APPREHENDED. THE SAME AS WELL AS SUBSEQUENT EVENTS THEREOF HAVE NOT BEEN FOUND TO BE FALSE OR UNTRUE. EVIDENCE OF POSSESSING CASH IS DULY SUPPORTED BY WITHDRAWALS MADE FROM BANK FROM TIME TO TIME. COPIES OF THE BANK STATEMENT AS WELL AS LETTERS FROM BANK CERTIFYING THE WITHDRAWALS HAVE ALREADY BEEN PLACED ON FILE. COPIES OF ALL THE ABOVE PAPERS WAS FURNISHED BOTH BEFORE THE INVESTIGATION WING ALSO AS WELL AS BEFORE THE AO I.E. DCIT-L (1), KANPUR WITH WHOM MAHTAB ALAM AND NAUSHEEN FARAH WERE BEING ASSESSED TO TAX. IT MAY BE SUBMITTED THAT CARRYING CASH IS NOT PROHIBITED. THERE IS NO ANY UNLAWFUL INCIDENT AGAINST THE ASSESSEE. THE EXPLANATION OF THE ASSESSEE THAT THE AMOUNT WAS BEING CARRIED FOR THE PURPOSE OF BUSINESS CANNOT BE DISBELIEVED AND SUSPECTED. THE PERSONS TO WHOM THIS MONEY BELONGS OR RELATES, HAVE ALL ADMITTED AS ONE BELONGING TO THEM BY WAY OF PRODUCING THEIR CASH BOOKS, THEIR BANK ACCOUNTS AND ALSO BY THE NATURE OF THE BUSINESS. THEY ARE ALL ASSESSED TO TAX. THERE IS NO DENIAL FROM ANY OF THESE PERSONS VIS-A-VIS THE CASH FOUND AND OWNED BY THEM. CONFIRMATION FROM THEM DULY STANDS SUPPORTED BY THE EXTRACTS OF THE CASH BOOK. IN THE FACTS AND CIRCUMSTANCES, IT IS PRAYED THAT THE SOURCE AND ACQUISITION OF CASH OF R.2 CRORES FOUND FROM THE POSSESSION OF THE ASSESSES AND HIS WIFE IS TOTALLY EXPLAINED. THE PURPOSES/REASONS FOR CARRYING SUCH CASH HAS ALSO BEEN EXPLAINED ABOVE. THE SAME IS RELATED AND FOR THE PURPOSES OF BUSINESS. NO PART OF THE SAME BELONGS TO THE ASSESSEE OR TO HIS WIFE INDIVIDUALLY. WE TRUST YOU WILL FIND ABOVE IN ORDER AND DO THE NEEDFUL. HOWEVER, IF YOUR HONOUR NEEDS ANY FURTHER INFORMATION IN THIS RESPECT, THE SAME SHALL BE FURNISHED ON HEARING OF THE SAME. :- 17 -: 18. SIMILARLY, QUERIES IN THIS REGARD WERE ALSO RAISED IN THE CASE OF OTHER ASSESSEE, SMT. NAUSHEEN FARAH LARI VIDE LETTER DATED 14.5.2012 THROUGH QUERY NO.22. THIS QUERY WAS AGAIN REPLIED BY THE ASSESSEE, SMT. NAUSHEEN FARAH LARI VIDE HER LETTER DATED 16.11.2012. FOR THE SAKE OF REFERENCE, THE LETTER WRITTEN BY THE ASSESSEE, SMT. NAUSHEEN FARAH LARI IS ALSO EXTRACTED HEREUNDER:- WITH REFERENCE TO THE ASSESSMENT PROCEEDINGS IN THE ABOVE MENTIONED CASE AND IN RESPONSE TO YOUR QUERY REGARDING SOURCE AND ACQUISITION OF RS. 2 CRORES FOUND FROM THE POSSESSION OF THE ASSESSEE ON 24.09.2010 AT CHAUDHARI CHARAN SINGH AIRPORT, IT IS SUBMITTED AS UNDER FOR YOUR HONOUR'S KIND CONSIDERATION: THAT THE ASSESSEE WAS TRAVELLING ON THE MORNING OF 24.09.2010 ALONGWITH HER HUSBAND MEHTAB ALAM TO CALCUTTA FROM KANPUR. ON WAY TO LUCKNOW AIRPORT. MY HUSBAND WAS CARRYING CASH AMOUNTING TO RS. 2 CRORES. THAT THE SAID AMOUNT OF RS. 2 CRORES BELONGED TO THE FOLLOWING PERSONS: 1. MODEL TANNERS (INDIA) .PVT. LTD. AAACM9319D RS. 50,00,000/- 2. MODEL EXIMS (A PARTNERSHIP FIRM) AADFM6163H RS. 25,00,000/- 3. MODEL ECHOES PVT. LTD. AAACM9691A RS. 25,00,000/- 4. SJCENTERPRISES PROP. ANQP.TC6161M RS. 30,00,0007- 5. AL RAZEEK PROP. AALFA4858M RS. 70,00,000/- A DETAILED REPLY HAS ALREADY BEEN SUBMITTED IN THIS RESPECT BY MY HUSBAND MAHTAB ALAM. NO PART OF THE SAID AMOUNT EITHER BELONGS TO ME OR TO MY HUSBAND. IT IS ALL BUSINESS MONEY. 19. IT IS ALSO OBVIOUS FROM THE RECORD THAT WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER HAS OBTAINED APPROVAL FROM THE JCIT. :- 18 -: THEREFORE, THE JCIT HAS ALSO APPLIED HIS MIND TO THE FACTUM OF SEIZURE OF CASH OF RS.2 CRORES FROM THE ASSESSEE AND AFTER OBTAINING APPROVAL, THE ASSESSMENT WAS FRAMED AND HAVING CONVINCED WITH THE EXPLANATIONS FURNISHED BY THE ASSESSEE WITH REGARD TO THE AVAILABILITY OF CASH, NO ADDITION WAS MADE. OUR ATTENTION WAS ALSO INVITED TO THE ASSESSMENT ORDERS FRAMED IN THE CASES OF MODEL EXIMS; MODEL ECHOES PVT. LTD. ; MOHD. KHALID, PROP. S. K. ENTERPRISES AND A. L. RAZEEK TRADERS, OF WHICH COPIES ARE AVAILABLE AT PAGES 209 TO 309 OF THE COMPILATION OF THE ASSESSEE, SMT. NAUSHEEN FARAH LARI. THESE ASSESSMENT ORDERS WERE FRAMED UNDER SECTION 153C READ WITH SECTION 153A OF THE ACT CONSEQUENT TO THE SEARCH AND SEIZURE OPERATION CONDUCTED UPON THE ASSESSEE, IN WHICH CASH OF RS.2 CRORES WERE FOUND. THEREFORE, THE ISSUE OF SEIZURE OF RS.2 CRORES WAS ALSO EXAMINED BY THE REVENUE AUTHORITIES IN THE HANDS OF THE CONCERNED PERSONS TO WHOM THE CASH RELATE. OUR ATTENTION WAS ALSO INVITED TO THE COPIES OF THE EXTRACT OF CASH BOOK IN THE CASE OF MODEL TANNERS (INDIA) PVT. LTD.; MODEL EXIMS; MODEL ECHOES PVT. LTD.; S. K. ENTERPRISES AND A. L. RAZEEK TO ESTABLISH THE AVAILABILITY OF CASH IN THEIR BOOKS OF ACCOUNT. 20. FROM A CAREFUL PERUSAL OF THESE EVIDENCES, WE ARE OF THE CONSIDERED OPINION THAT WHILE COMPLETING THE ASSESSMENT NOT ONLY IN THE CASE OF THE ASSESSEES BUT ALSO IN THE CASE OF OTHER ASSESSEES, TO WHOM THE CASH WAS CLAIMED TO RELATE, WERE THOROUGHLY EXAMINED BY THE ASSESSING OFFICERS IN THEIR RESPECTIVE HANDS BY MAKING DETAILED ENQUIRIES/INVESTIGATIONS AND ONCE THE ASSESSING OFFICER WAS CONVINCED WITH THE EXPLANATIONS WITH REGARD TO THE SOURCE OF CASH OF RS.2 CRORES FOUND FROM THE ASSESSEE DURING THE COURSE OF SEARCH, NO ADDITION WAS MADE BY THE ASSESSING OFFICER EITHER IN THE HANDS OF THE ASSESSEE OR IN THE HANDS OF THE RESPECTIVE PARTIES TO WHOM THE CASH OF RS.2 CRORES RELATE. 21. IT IS ALSO PLACED ON RECORD THAT THE ASSESSING OFFICER HAS FRAMED THE ASSESSMENT IN THE ASSESSEES CASE AFTER OBTAINING APPROVAL FROM THE JCIT. THEREFORE, NOT ONLY THE ASSESSING OFFICER BUT THE JCIT HAS ALSO APPLIED HIS :- 19 -: MIND TO THE FACTUM OF SEIZURE OF CASH OF RS.2 CRORES FROM THE ASSESSEE DURING THE COURSE OF SEARCH. THEREFORE, IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND OR HAS NOT PROPERLY MADE NECESSARY ENQUIRIES WITH REGARD TO THE ISSUE OF RECOVERY OF CASH OF RS.2 CRORES DURING THE COURSE OF SEARCH OPERATION FROM THE CHOUDHARY CHARAN SINGH AIRPORT. 22. SO FAR AS THE LEGAL POSITION IS CONCERNED, IT IS SETTLED POSITION OF LAW THAT THE ASSESSMENT ORDER CANNOT BE SET ASIDE OR REVISED FOR INADEQUATE ENQUIRY BY THE LD. COMMISSIONER OF INCOME-TAX UNDER SECTION 263 OF THE ACT. 23. IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT, 243 ITR 83 (SC), IT HAS BEEN HELD BY THE HON'BLE APEX COURT THAT THE LD. COMMISSIONER OF INCOME-TAX CAN INVOKE SECTION 263 OF THE ACT IF THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND IT IS ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. BOTH THE CONDITIONS MUST COEXIST. IF DUE TO AN ERRONEOUS ORDER OF THE INCOME-TAX OFFICER, THE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IT WAS ALSO HELD THAT IF THE CLAIM OF THE ASSESSEE IS ACCEPTED WITHOUT MAKING ANY ENQUIRY BY THE ASSESSING OFFICER, THE ORDER OF THE ASSESSING OFFICER IS CERTAINLY ERRONEOUS AND EXERCISE OF JURISDICTION BY THE LD. COMMISSIONER OF INCOME-TAX UNDER SECTION 263 OF THE ACT IS JUSTIFIED. 24. IN THE CASE OF CIT VS. GABRIEL INDIA LTD., 203 ITR 108 (BOM)., THE HON'BLE BOMBAY HIGH COURT REAFFIRMED THE VIEW THAT FOR INVOKING JURISDICTION UNDER SECTION 263 OF THE ACT, THE ORDER SOUGHT TO BE REVISED MUST BE ERRONEOUS AND ALSO BY VIRTUE OF IT BEING ERRONEOUS PREJUDICE HAS BEEN CAUSED TO THE INTERESTS OF THE REVENUE. 25. SECTION 263 OF THE ACT DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME-TAX OFFICER, UNLESS THE DECISION IS HELD TO BE ERRONEOUS. THE ORDER IS ERRONEOUS WHEN IT IS NOT :- 20 -: IN ACCORDANCE WITH LAW AND IS PREJUDICIAL WHEN IT HAS CAUSED LOSS OF THE REVENUE. THERE MUST BE MATERIAL BEFORE THE LD. COMMISSIONER OF INCOME- TAX TO SATISFY HIMSELF PRIMA FACIE THAT THE TWO REQUISITES ARE PRESENT. POWER CANNOT BE EXERCISED AT THE WHIMS AND CAPRICE OF THE LD. COMMISSIONER OF INCOME-TAX. IN THAT CASE, THE INCOME TAX OFFICER HAS MADE ENQUIRIES IN REGARD TO THE NATURE OF EXPENDITURE INCURRED BY THE ASSESSEE. THE ASSESSEE HAD GIVEN DETAILED EXPLANATION IN THAT REGARD BY LETTER IN WRITING. ALL THESE ARE PART OF THE RECORD OF THE CASE. SUCH DECISION OF THE INCOME TAX OFFICER CANNOT BE HELD TO BE ERRONEOUS SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE ANY ELABORATE DISCUSSION IN THAT REGARD. THEREFORE, THE HON'BLE HIGH COURT HAS HELD THAT WITHOUT FINDING THE ORDER OF THE INCOME TAX OFFICER AS ERRONEOUS, THE LD. COMMISSIONER OF INCOME-TAX CANNOT SET ASIDE THE SAME AND DIRECT THE INCOME TAX OFFICER TO RE-EXAMINE THE FACTS. 26. AGAIN IN THE CASE OF CIT VS. MAX INDIA LIMITED [2007] 295 ITR 282 (SC), THEIR LORDSHIPS OF THE HON'BLE APEX COURT HAVE RE-EXAMINED THE SCOPE OF PROVISIONS OF SECTION 263 OF THE ACT AND HAS HELD THAT WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. 27. SIMILAR VIEW WAS AGAIN REITERATED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SUNBEAM AUTO LTD., 332 ITR 167 (DEL) AND THEIR LORDSHIPS HAVE OBSERVED THAT FOR INADEQUATE ENQUIRY, THE ORDER OF THE ASSESSING OFFICER CANNOT BE HELD TO BE ERRONEOUS. THEIR LORDSHIPS HAVE EXAMINED THE DIFFERENCE BETWEEN LACK OF PROPER ENQUIRY AND INADEQUATE ENQUIRY AND HAVE HELD THAT THERE IS A DISTINCTION BETWEEN LACK OF ENQUIRY AND INADEQUATE ENQUIRY. IF THERE WAS ANY INQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE COMMISSIONER TO PASS ORDERS UNDER SECTION 263 OF THE ACT, MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER. SUCH A COURSE OF ACTION IS OPEN ONLY IN CASES OF LACK OF INQUIRY. :- 21 -: THE CONTENTION OF THE REVENUE THAT THE ASSESSING OFFICER DID NOT CONSIDER AS TO WHETHER THE EXPENDITURE IN QUESTION WAS CAPITAL OR REVENUE EXPENDITURE CANNOT BE ACCEPTED. ALTHOUGH APPARENTLY THE ASSESSMENT ORDER DOES NOT GIVE ANY REASON WHILE ALLOWING THE ENTIRE EXPENDITURE AS REVENUE EXPENDITURE. HOWEVER, THAT BY ITSELF WOULD NOT BE INDICATIVE OF THE FACT THAT THE ASSESSING OFFICER HAD NOT APPLIED HIS MIND ON THE ISSUE. THE ASSESSING OFFICER IS NOT REQUIRED TO GIVE DETAILED REASONS FOR EACH AND EVERY ITEM OF DEDUCTION IN THE ASSESSMENT ORDER. THEREFORE ONE HAS TO SEE FROM THE RECORD AS TO WHETHER THERE WAS AN APPLICATION OF MIND BEFORE ALLOWING THE EXPENDITURE IN QUESTION AS REVENUE EXPENDITURE. THEIR LORDSHIPS FURTHER HELD THAT COUNSEL FOR THE ASSESSEE IS RIGHT IN HIS SUBMISSION THAT ONE HAS TO KEEP IN MIND THE DISTINCTION BETWEEN LACK OF INQUIRY AND INADEQUATE INQUIRY. IF THERE WAS ANY INQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE COMMISSIONER TO PASS ORDERS UNDER SECTION 263 OF THE ACT, MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER. IT IS ONLY IN CASES OF LACK OF INQUIRY THAT SUCH A COURSE OF ACTION WOULD BE OPEN . 28. IN THE CASE OF INCOME TAX OFFICER VS. DG. HOUSING PROJECTS LTD. (SUPRA) THEIR LORDSHIPS OF THE HON'BLE DELHI HIGH COURT AGAIN OBSERVED THAT IN CASES WHERE THERE IS INADEQUATE ENQUIRY BUT NOT LACK OF ENQUIRY, AGAIN THE LD. COMMISSIONER OF INCOME-TAX MUST GIVE AND RECORD A FINDING THAT THE ORDER OF ENQUIRY IS ERRONEOUS. THIS CAN ONLY HAPPEN IF ANY ENQUIRY OR VERIFICATION IS CONDUCTED BY THE LD. COMMISSIONER OF INCOME-TAX AND HE IS ABLE TO ESTABLISH AND SHOW ERROR OR MISTAKE MADE BY THE ASSESSING OFFICER MAKING THE ORDER UNSUSTAINABLE IN LAW. THE LD. COMMISSIONER OF INCOME- TAX CANNOT DIRECT THE ASSESSING OFFICER TO CONDUCT FURTHER ENQUIRY WITHOUT RECORDING A FINDING THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS. 29. AGAIN IN THE CASE OF CIT VS. VIKAS POLYMERS (SUPRA), THEIR LORDSHIPS HAVE HELD HAT FOR INVOKING THE JURISDICTION UNDER SECTION 263 OF THE ACT, BOTH THE TWIN CONDITIONS NAMELY (1) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (2) IT IS PREJUDICIAL TO THE INTEREST OF :- 22 -: THE REVENUE, MUST COEXIST. IF ONE OF THEM IS ABSENT I.E. IF THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IT IS PREJUDICIAL TO THE REVENUE RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. IT IS A PRE-REQUISITE THAT THE COMMISSIONER MUST GIVE REASONS TO JUSTIFY THE EXERCISE OF SUO MOTU REVISIONAL POWERS BY HIM TO REOPEN A CONCLUDED ASSESSMENT. A BARE REITERATION BY HIM THAT THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, WILL NOT SUFFICE. IF A QUERY IS RAISED DURING THE COURSE OF SCRUTINY BY THE ASSESSING OFFICER, WHICH WAS ANSWERED TO THE SATISFACTION OF THE ASSESSING OFFICER, BUT NEITHER THE QUERY NOR THE ANSWER WERE REFLECTED IN THE ASSESSMENT ORDER, THIS WOULD NOT BY ITSELF LEAD TO THE CONCLUSION THAT THE ORDER OF THE ASSESSING OFFICER CALLED FOR INTERFERENCE AND REVISION. IN THAT CASE THE ASSESSEE EXPLAINED THAT THE CAPITAL INVESTMENT MADE BY THE PARTNERS, WHICH HAD BEEN CALLED INTO QUESTION BY THE COMMISSIONER, WAS DULY REFLECTED IN THE RESPECTIVE ASSESSMENTS OF THE PARTNERS WHO WERE INCOME-TAX ASSESSEES AND THE UNSECURED LOAN WAS DULY REFLECTED IN THE ASSESSMENT ORDER OF THE SAID CREDITOR, WHICH WAS ALSO AN ASSESSEE. THEIR LORDSHIPS IN THAT CASE HAS HELD THAT PROVISIONS OF SECTION 263 OF THE ACT HAVE NOT BEEN RIGHTLY INVOKED. 30. AGAIN IN THE CASE OF CIT VS. GANPAT RAM BISHNOI (SUPRA), THEIR LORDSHIPS OF HON'BLE RAJASTHAN HIGH COURT HAVE ALSO EXPRESSED SIMILAR VIEW BY HOLDING THAT RECORD OF THE PROCEEDINGS CLEARLY SHOWS THAT THE ASSESSING OFFICER HAS FRAMED ASSESSMENT AFTER DUE APPLICATION OF MIND AND HOLDING ENQUIRY INTO ALL AREAS, WHICH ACCORDING TO THE LD. COMMISSIONER OF INCOME- TAX, HAVE NOT BEEN AT ALL ENQUIRED INTO AND THE ASSESSING OFFICER HAS ACTED ON MERE FURNISHING EVIDENCE ON ONE SINGLE DATE. THE TRIBUNAL NOTICED THAT AS PER THE RECORD OF THE PROCEEDINGS, THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PRODUCE DOCUMENTS OR MATERIAL IN RELATION TO 10 DIFFERENT ITEMS, WHICH INCLUDED THE DETAILS OF CAPITAL CONTRIBUTED BY PARTNERS, DETAILS OF PURCHASES MADE IN EXCESS OF RS. 20,000/- WITH EVIDENCE, CONFIRMATION OF :- 23 -: UNSECURED LOANS, AMONGST OTHER MATTERS, WHICH THE ASSESSING OFFICER DESIRED TO ENQUIRE INTO. THE ASSESSEE HAS PRODUCED THE DESIRED INFORMATION AND THE ASSESSMENT WAS FRAMED. THE HON'BLE HIGH COURT HELD THAT THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME-TAX UNDER SECTION 263 OF THE ACT PRIMARILY ON THE BASIS THAT NO ENQUIRY WAS CONDUCTED, IS NOT SUSTAINABLE. 31. BESIDES OTHER JUDGMENTS WERE ALSO REFERRED BY THE ASSESSEE IN THIS REGARD AND WE HAVE ALSO CAREFULLY EXAMINED THE SAME AND WE FIND THAT SIMILAR VIEWS WERE EXPRESSED BY VARIOUS JUDICIAL AUTHORITIES. 32. WE HAVE ALSO EXAMINED THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. DR. ASHOK KUMAR (SUPRA) ON AN ISSUE WHETHER THE ASSESSMENT ORDER WAS PASSED WITH THE APPROVAL OF THE ADDL. CIT AND THEIR LORDSHIPS HAVE HELD THAT THE ASSESSING OFFICER WAS FULLY ALIVE ABOUT THE FACTS OF THE CASE AND THAT IS WHY HE GOT NECESSARY APPROVAL OF THE ADDL. CIT BEFORE COMPLETING THE ASSESSMENT ORDERS FOR ALL THE ASSESSMENT YEARS AND ONCE THAT IS NOT DISPUTED BY THE REVENUE, THEN THE LD. COMMISSIONER OF INCOME-TAX WOULD NOT BE JUSTIFIED IN INTERFERING IN THE APPROVAL ACCORDING BY THE ADDL. CIT FOR FRAMING THE ASSESSMENT ORDER AND THUS THERE WAS NO CASE FOR SETTING ASIDE THE ASSESSMENT ORDER FOR THE ASSESSMENT YEARS IN QUESTION. 33. THOUGH THE ASSESSEE HAS ALSO PLACED RELIANCE UPON THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF MOHD. AYUB VS. INCOME TAX OFFICER (SUPRA) IN SUPPORT OF HIS CONTENTION THAT COMBINED SHOW CAUSE NOTICE FOR INITIATING ACTION UNDER SECTION 263 OF THE ACT CANNOT BE ISSUED AND IF ISSUED, THE ORDER CONSEQUENT THERETO IS NOT VALID IN LAW, BUT IN THIS JUDGMENT THE JURISDICTIONAL HIGH COURT HAS DEALT WITH THE ISSUE OF COMMON NOTICE ISSUED FOR REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT. UNDISPUTEDLY NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO ASSUME JURISDICTION TO REFRAME ASSESSMENT AFTER REOPENING OF ASSESSMENT. THEREFORE, THE CONTROVERSY INVOLVED IN THIS CASE IS NOT COVERED BY THIS :- 24 -: JUDGMENT. HOWEVER, AN ANALOGY CAN BE DRAWN IN FAVOUR OF THE ASSESSEE, BUT ON MERIT WE FIND FORCE IN THE CONTENTION OF THE ASSESSEE. 34. TURNING TO THE FACTS OF THE CASE, WE FIND THAT THESE ASSESSMENTS ARE FRAMED UNDER SECTION 153A OF THE ACT CONSEQUENT TO THE SEARCH OPERATION UPON THE ASSESSEES IN WHICH CASH OF RS.2 CRORES WERE FOUND. WHILE FRAMING THE ASSESSMENTS, QUESTIONNAIRES WERE ISSUED WITH REGARD TO THE AVAILABILITY OF CASH AND SOURCE AND THE SAME WERE DULY REPLIED BY THE ASSESSEES. ACCORDING TO THE ASSESSEES, THIS CASH BELONGS TO CERTAIN OTHER PARTIES/CONCERNS IN WHOSE CASES ASSESSMENTS WERE ALSO FRAMED UNDER SECTION 153C OF THE ACT. THEREFORE, IN THE CASE OF THE ASSESSEES AS WELL AS IN THE CASE OF OTHER CONCERNS, TO WHICH THE CASH RELATES, THIS ISSUE WAS EXAMINED BY THE ASSESSING OFFICER. UNDER THESE CIRCUMSTANCES, IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND TO THE FACTUM OF SEIZURE OF CASH DURING THE COURSE OF SEARCH OPERATION. 35. IN THE REVISIONAL ORDER, THE LD. COMMISSIONER OF INCOME-TAX HAS MADE AN OBSERVATION THAT THE ASSESSING OFFICER OUGHT TO HAVE MADE CERTAIN MORE ENQUIRIES BUT HE HAS NOT MADE OUT A CASE OF LACK OF ENQUIRY. AT THE MOST IT CAN BE A CASE OF INADEQUATE ENQUIRY BUT FOR WHICH ASSESSMENT ORDER CANNOT BE SET ASIDE OR REVISED UNDER SECTION 263 OF THE ACT. FROM THE AFORESAID VARIOUS JUDICIAL PRONOUNCEMENTS, IT IS SETTLED POSITION OF LAW THAT HE LD. COMMISSIONER OF INCOME-TAX CANNOT INVOKE JURISDICTION UNDER SECTION 263 OF THE ACT FOR SETTING ASIDE THE ASSESSMENT ORDER IF HE DOES NOT AGREE WITH THE CONCLUSION OF THE ASSESSING OFFICER ON A PARTICULAR ISSUE. IN THE LIGHT OF THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT SINCE THE FACTUM OF SEIZURE OF CASH DURING THE COURSE OF SEARCH OPERATION WAS DULY EXAMINED BY THE ASSESSING OFFICER, INVOCATION OF PROVISIONS OF SECTION 263 OF THE ACT FOR SETTING ASIDE THE ASSESSMENT ORDER IS NOT VALID AND DESERVES TO BE QUASHED AND WE ACCORDINGLY SET ASIDE THE ORDERS OF THE LD. COMMISSIONER OF INCOME- TAX IN ALL THESE CASES PASSED UNDER SECTION 263 OF THE ACT. 36. IN THE RESULT, APPEALS OF THE ASSESSEES ARE ALLOWED. :- 25 -: ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18 TH NOVEMBER, 2014 JJ:101111 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR