Shri Hajarilal Joharmal Jain (HUF), Indore V. The CIT-II, Indore

ITA 320/IND/2013

• Counselvise Citation: 32022714 RSA 2013
• Duration Of Justice: 2 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 17-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJEEV VARSHANEY
• Assessee Lawyers: ASHISH GOEL; N D PATWA S
• Keywords: Revision of order; Assessment record; Revenue expenditure; Capital expenditure
• Section: 69C; 40A(3); 6; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NO.320/IND/2013 ASSESSMENT YEAR : 2009-10 SHRI HAJARILAL JOHARMAL JAIN (HUF), CIT-II, INDORE. KHANDWA VS APPELLANT RESPONDENT PAN NO.AAAHJ6043G APPELLANT BY : SHRI ASHISH GOEL AND SHRI N. D. PATWA, ADVOCATES RESPONDENT BY : SHRI RAJEEV VARSHANEY, CIT DR DATE OF HEARING : 02 . 09 .2015 . DATE OF PRONOUNCEMENT : 03.11. 2015 SHRI HAJARILAL JOHARMAL JAIN, KHANDWA VS. CIT-II,IN DORE, I.T.A.NO. 320/IND/2013 A.Y. 2009-10 2 2 O R D E R PER GARASIA, J.M. THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT-II, INDORE, DATED 20.03.2013 FOR THE ASSESS MENT YEAR 2009-10. 2. THE SHORT FACTS OF THE CASE ARE AS UNDER. 3. THE ASSESSEE IS ENGAGED IN MAINTENANCE AND RENOVATION OF OLD MONUMENTS OF ARCHAEOLOGICAL IMPOR TANCE HAVING RECEIPTS AS A CONTRACTOR AND IS ALSO TRADING IN FURNITURE. ON VERIFICATION OF THE RECORD FOR THE RE LEVANT ASSESSMENT YEAR REVEALED THAT THE ASSESSEE HAS PAID A SUM OF RS. 11,71,760/- TO THE SITE CONTRACTORS AS BECOMES CLEAR FROM THE COPY OF THE ACCOUNT OF THE SITE CONTRACTORS WHE REIN CASH PAYMENTS IN EXCESS OF RS. 20,000/- ON DIFFERENT DAT ES WERE MADE. HOWEVER, IT WAS NOTICED FROM THE BALANCE SHE ET THAT A SUM OF RS. 11,71,760/- WAS REFLECTED AS PAYABLE TO THE SITE CONTRACTORS, WHEN NO SUCH LIABILITY SHOULD HAVE BEE N REMAINED SHRI HAJARILAL JOHARMAL JAIN, KHANDWA VS. CIT-II,IN DORE, I.T.A.NO. 320/IND/2013 A.Y. 2009-10 3 3 UNDER THE HEAD SITE CONTRACTORS, BECAUSE THE PAYM ENT IN CASH WAS NEVER MADE TO THEM AS PER THEIR COPY OF THE LED GER ACCOUNTS ON RECORD. IN VIEW OF THESE FACTS THERE WA S NO LIABILITY TO PAY UNDER THIS HEAD AS HAVING ALREADY BEEN PAID MEANING THEREBY THAT WHAT REMAINED AS OUTSTANDING IN THE BA LANCE SHEET WAS NON-GENUINE LIABILITY WHICH WAS ALLOWED. ASSESSING OFFICER BY NOT ADDING THE SAME TO THE INCOME PASSED AN ORDER WHICH WAS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL T O THE INTERESTS OF REVENUE. THE AMOUNT OF RS. 11,71,760/ - IN THE BALANCE SHEET IS LIABLE TO BE TAXED UNDER SECTION 6 9C OF THE INCOME-TAX ACT, 1961. ALTERNATIVELY, THE AMOUNT IN CASH PAYMENT EXCEEDING RS. 20,000/- PAID TO DIFFERENT IN DIVIDUALS ATTRACT TAXATION U/S 40A(3) OF THE ACT. SIMILARLY, PAYMENT OF LABOUR CHARGES IS ALSO NON-GENUINE LIABILITY, WHICH IS RS. 9,54,650/-. THEREFORE, THE COMMISSIONER WAS OF THE VIEW THAT THE SITE CONTRACTOR AMOUNT PAYABLE SHOWN IN THE ACC OUNTS IS PREJUDICIAL TO THE INTERESTS OF REVENUE. 4. THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THE WRITTEN SUBMISSION, WHICH READS AS UNDER :- SHRI HAJARILAL JOHARMAL JAIN, KHANDWA VS. CIT-II,IN DORE, I.T.A.NO. 320/IND/2013 A.Y. 2009-10 4 4 IT HAS BEEN STATED IN YOUR AFORESAID LETTER THAT AN AMOUNT OF RS. 11,71,760/- IS REQUIRED TO BE TAXED U/S 69C OR ALTERNATIVELY DISALLOWANCE OF THE SAME WAS REQUIRED TO BE MADE U/S 40A(3) SINCE THE AMOUNT PAID IN CASH EXCEEDED RS. 20,000/-. IT HAS ALSO BEEN STATED FURTHER THAT LIKE TREATMENT WAS AL SO REQUIRED TO BE GIVEN IN RESPECT OF LABOUR CHARGES PAYMENT OF RS. 9,54,650/-. ON BOTH THESE GROUNDS, ASSESSMENT SO MADE BY THE LD. AO IS PROPOSED TO BE SET ASIDE U/S 263 VIDE YOUR LETTER UNDER REFERENCE. FROM THE FOLLOWING DISCUSSION MADE IN THE MATTER, THE PROPOSED ACTION U/S 263 IS NOT LIABLE IN THE CA SE OF THE ASSESSEE AND PROCEEDINGS SO INITIATED U/S 26 3 ARE REQUIRED TO BE DROPPED. THE ASSESSEE HAS RECEIVED A CONTRACT WORK OF MAINTENANCE IN NATURE FROM ARCHAEOLOGICAL SURVEY OF INDIA. ACCORDING TO THE AGREEMENT, SUCH SPECIFIED WORK WAS TO BE CARRIED OUT AT 24 DIFFERENT PLACES OF THE STATE OF MADHYA PRADESH SHRI HAJARILAL JOHARMAL JAIN, KHANDWA VS. CIT-II,IN DORE, I.T.A.NO. 320/IND/2013 A.Y. 2009-10 5 5 COVERING FROM GWALIOR, UJJAIN, BURHANPUR, JABALPUR, DHAR, MORENA DISTRICTS. THE ASSESSEE WAS STATIONED AT KHANDWA AND FROM THIS PLACE, HE HAS TO MANAGE ALL SUCH RELATED WORK. TO HANDLE SUCH TYPE OF WORK, THE ASSESSEE-HAD TO MANAGE ALL SUCH WORK BY DEPUTING THE SITE INCHARGE. THE AMOUNT OF RS.11, 71,650/- IS SHOWN IN THE BALANCE SHEET UNDER THE GROUP SUMMARY OF SUNDRY CREDITORS AMOUNTING TO RS.28,45,693/- I.E. SCHEDULE '0' OF BALANCE SHEET. THE AFORESAID AMOUNT OF RS. 11.71 LACS WAS OUTSTANDING AT THE YEAR END. COPY OF LEDGER ACCOUNT OF IMMEDIATELY NEXT YEAR'S ACCOUNTING YEAR IS ALSO ENCLOSED HEREWITH IN ORDER TO MAKE SATISFACTION OF YOUR GOOD-SELF RELATING TO VERIFICATION OF PAYMENTS OF SUCH AMOUNTS IN THAT YEAR ONLY. FURTHER AS REGARD THE CASH PAYMENT IN EXCESS OF SHRI HAJARILAL JOHARMAL JAIN, KHANDWA VS. CIT-II,IN DORE, I.T.A.NO. 320/IND/2013 A.Y. 2009-10 6 6 RS 20000 WE HAVE TO SUBMIT THAT THE ASSESSEE HAS NOT MADE SUCH PAYMENT TO THIRD PARTY BUT AMOUNT WAS HANDED OVER TO SITE-IN-CHARGE WHO SUBSEQUENTLY MADE PAYMENT TO DIFFERENT PARTIES & NOT TO SINGLE PARTY. CONSOLIDATED PAYMENT TO VARIOUS PARTIES ARE REFLECTED IN THE NARRATION WRITTEN ALONG WITH THE ENTRY SO PASSED. SIR, LOOKING TO THE NATURE OF WORK UNDER TAKEN BY TILE ASSESSEE I.E. MAINTENANCE WHICH REQUIRES SEVERAL PETTY AGENCIES THAT TO ON DIFFERENT 24 LOCATIONS, THERE IS NO SUCH SCOPE WHERE PAYMENT TO A SINGLE PARTY EXCEEDED RS 20000/- IN ANY YEAR I.E. FY 2008-09 & 2009-10. AS REGARD THE ALLEGATION THAT PAYMENT HAS ALREADY BEEN MADE TO 'SITE CONTRACTORS' & STILL IT APPEARS AS OUTSTANDING, WE HAVE TO SUBMIT THAT THIS CONFUSION IS THE RESULT OF WRONG MENTIONING OF THE WORD 'PAID ' IN NARRATION IN THE LEDGER A/C OF 'SITE CONTRACTOR' AGAINST THE PROPER WORD TO BE SHRI HAJARILAL JOHARMAL JAIN, KHANDWA VS. CIT-II,IN DORE, I.T.A.NO. 320/IND/2013 A.Y. 2009-10 7 7 MENTIONED AS 'TO BE PAID' I 'PAYABLE' BY THE MISTAKE OF THE ACCOUNTANT. EVEN THOUGH, IT DID NOT AFFECT THE PROFITABILITY OF THE BUSINESS. THE NARRATION WRITTEN IN THE LEDGER A/C IS CONFLICT FROM THE NATURE OF BOOK ENTRY. AND BOOK ENTRY HAS SUBSTANCE OVER THE NARRATION. IT IS HUMBLY SUBMITTED THAT THE FUNDAMENTAL PRINCIPAL OF ACCOUNTING LAYS THAT WHENEVER SUCH ENTRY IS PASSED THROUGH JOURNAL, THE CASH OF THE BUSINESS IS NOT REDUCED CORRESPONDINGLY TO THAT EXTENT BUT INDIRECTLY A PROVISION FOR SUCH AMOUNT IS MADE IN THE BOOKS OF ACCOUNT SO MAINTAINED BY CREDITING THE AMOUNT OF CREDITORS AS REQUIRED IN THE MERCANTILE SYSTEM OF ACCOUNTING. TO JUSTIFY OUR NOTION, WE WOULD LIKE TO DRAW YOUR HONOUR'S KIND ATTENTION ON THE SAME LEDGER A/C OF 'SITE CONTRACTOR' AND SUBMIT AS UNDER:- WHEN PAYMENT IS MADE, THE RELATED ACCOUNT SHRI HAJARILAL JOHARMAL JAIN, KHANDWA VS. CIT-II,IN DORE, I.T.A.NO. 320/IND/2013 A.Y. 2009-10 8 8 IS REQUIRED TO BE DEBITED. HERE 'SITE CONTRACTOR' ACCOUNT IS CREDITED. FURTHER, WHEN CASH IS PAID OFF, THEN CASH BALANCE HAS TO BE REDUCED AND ENTRIES ARE ROUTED THROUGH CASH-BOOK. BUT HERE, THE ENTRIES ARE ROUTED THROUGH JOURNAL FOR THE REASON THAT THESE ENTRIES ARE PROVISIONARY IN NATURE. THE FACT THAT THESE ENTRIES ARE ROUTED THROUGH JOURNAL, IS VERIFIABLE FROM THE COPY OF SAME LEDGER A/C WHERE IT IS CLEARLY MENTIONED AS 'JOURNAL'. THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE MAINTAINED ON THE ACCOUNTING SOFTWARE NAMED AS 'TALLY'. IN WHICH BOTH TYPE OF ENTRIES LIKE 'PAID' & 'TO BE PAID' CAN NOT SIMULTANEOUSLY BE MADE. AND ENTRY FOR ANY PAYMENT IS TO BE MADE FROM CASH BOOK & IT CANNOT BE MADE THROUGH JOURNAL. UNDER THE CIRCUMSTANCES, IT IS RESPECTFULLY SUBMITTED THAT THERE IS NO SCOPE FOR DOUBT TO TREAT SHRI HAJARILAL JOHARMAL JAIN, KHANDWA VS. CIT-II,IN DORE, I.T.A.NO. 320/IND/2013 A.Y. 2009-10 9 9 'SITE CONTACTORS A/C AS ALREADY PAID OFF BECAUSE THE BALANCE IN THE ACCOUNT IS CREDIT BALANCE. EXTRACT OF CASH-BOOK FOR THE RELEVANT DATES ARE ENCLOSED FOR YOUR HONOUR'S KIND PERUSAL & VERIFICATION. ON PERUSAL OF THE SAME YOUR HONOUR WILL APPRECIATE THE FACT THAT NO PAYMENT WAS MADE TO 'SITE CONTACT OR' IN THESE DATES. THE WORD 'PAID ' WRONGLY USED IN NARRATION HAS NO IMPACT ON THE CASH BALANCE OF THE CONCERN. AND THEREFORE IT CAN SAFELY BE CONCLUDED THAT THERE IS NO LOSS TO REVENUE BECAUSE IT DOES NOT AFFECT THE PROFIT OF THE CONCERN. IN FACT NARRATION IS AN ADDITIONAL INFORMATION & IT CAN NOT CHANGE THE END RESULT OF TRANSACTION. THE RESULT OF TRANSACTION CAN ONLY BE ACHIEVED BY THE ENTRY ITSELF. IT WILL ALSO BE CLEAR THERE FROM THE DETAILS SO FURNISHED THAT PROVISIONS OF SECTION 40(3) ARE ALSO NOT APPLICABLE THERE. SHRI HAJARILAL JOHARMAL JAIN, KHANDWA VS. CIT-II,IN DORE, I.T.A.NO. 320/IND/2013 A.Y. 2009-10 10 10 SIMILARLY, AN AMOUNT OF RS. 9,54,650/- APPEARS AGAINST SITE CONTRACTOR & LABOUR IN SCHEDULE 'E' TO THE BALANCE SHEET WHICH COVERS THE ENTIRE AMOUNT OF RS. 9,90,135/- AS THE AMOUNT OF EXPENSES PAYABLE. THIS ENTIRE AMOUNT ALSO OUTSTANDING AT THE YEAR END & PAID OUT IN THE SUCCEEDING ACCOUNTING YEAR I.E. F.Y. 2009-10. FROM THE ELABORATE DISCUSSION ALREADY MADE IN THE MATTER, IT IS QUITE APPARENT THAT BOTH THESE AMOUNTS IN QUESTION I.E. RS. 11,71,760/- AND RS.9,54,650/- WERE OUTSTANDING AT THE END OF THE YEAR I.E. NO PAYMENTS IN RESPECT OF THESE AMOUNTS WERE MADE DURING THE ACCOUNTING YEAR AND FOR THIS REASON THE QUESTION OF APPLICABILITY OF PROVISIONS OF SECTION 40A(3) IN RESPECT OF THESE AMOUNTS, DO NOT ARISE AS FAR AS ASSESSMENT YEAR 2009-10 IS CONCERNED. FROM THE DISCUSSION/SUBMISSION SO MADE IN SHRI HAJARILAL JOHARMAL JAIN, KHANDWA VS. CIT-II,IN DORE, I.T.A.NO. 320/IND/2013 A.Y. 2009-10 11 11 EARLIER PARAS, IT IS CRYSTAL CLEAR THAT THE ORDER PASSED BY THE AO IS NOT ERRONEOUS SO FAR AS IT CAN BE TREATED TO BE PREJUDICIAL TO THE INTEREST OF REVENUE. THEREFORE IN OUR HUMBLE OPINION NO ACTION U/S 263 IS REQUIRED. TAKING INTO CONSIDERATION ALL THESE FACTS OF THE CASE, IT IS ON CE AGAIN SUBMITTED THAT PROCEEDINGS SO INITIATED U/S 263 MAY KINDLY BE DROPPED. 5. ON THE OTHER HAND, THE LD. DR RELIED UPON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF MA LABAR INDUSTRIAL COMPANY LIMITED, 243 ITR 83 ( S.C.) AND RAMPYARI DEVI SARAOGI, 676 ITR 84 ( S. C.) AND GEE VEE ENTER PRISES, 99 ITR 375 (DEL). THE LD. DR SUBMITTED THAT THE ORDER PASSED U/S 263 IS VALID ONE AS THE AO, HAS NOT MADE ANY IN QUIRY REGARDING THE MATERIAL AVAILABLE ON RECORD AND ALLO WED THE CLAIM IN UNDUE HASTE AND HURRY WITHOUT APPLICATION OF MIND. THEREFORE, THE ORDER OF THE AO IS NOT ONLY ERRONEOU S BUT ALSO PREJUDICIAL TO THE INTERESTS OF REVENUE. SHRI HAJARILAL JOHARMAL JAIN, KHANDWA VS. CIT-II,IN DORE, I.T.A.NO. 320/IND/2013 A.Y. 2009-10 12 12 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PA RTIES. WE HAVE ALSO CONSIDERED THE SUBMISSIONS MADE BY THE ASSESSEE IN RESPECT OF THE ISSUE UNDER REFERENCE. T HE PLEA THAT PROPOSED ACTION U/S 263 IS NOT WARRANTED IS TOTALLY MISPLACED. THE FACTS ARE THAT IN THEIR BALA NCE SHEET, THE ASSESSEE HAD SHOWN THE AMOUNT OF RS. 11,71,760/- & RS. 9,54,650/- AS PAYABLE ON ACCOUNT OF SUNDRY CREDITORS AND SITE CONTRACTOR AND LABOUR CHA RGES RESPECTIVELY, WHEREAS AS PER THE NARRATION CONTAINE D IN CORRESPONDING LEDGER ACCOUNTS, THE AMOUNTS HAD ALREADY BEEN PAID IN CASH. FROM THE RELEVANT LEDGER ACCOUNTS, IT WAS ALSO NOTED THAT AMOUNT IN CASH EXCEEDING RS. 20,000/- WAS ALSO PAID TO VARIOUS PERSONS. THUS, THE BALANCES SHOWN STILL IN THE BALA NCE SHEET WERE TO BE TREATED AS NON GENUINE LIABILITY A ND THE AO OUGHT TO HAVE ADDED THE SAME U/S 69C OF THE INCOME-TAX ACT, 1961. MOREOVER, THE PROVISIONS OF SECTION 40A(3) WAS ALSO ATTRACTED. THE ASSESSEE HAS TAKEN A PLEA THAT IN RELEVANT LEDGER ACCOUNT, THOUG H THE SHRI HAJARILAL JOHARMAL JAIN, KHANDWA VS. CIT-II,IN DORE, I.T.A.NO. 320/IND/2013 A.Y. 2009-10 13 13 NARRATION TO THE EFFECT THAT AMOUNT PAID WAS MENTIONED BUT ACTUALLY NO SUCH AMOUNT WAS PAID. IT IS PLEADED THAT THE BALANCES SHOWN IN THE BALANCE SHEE T WERE THEIR GENUINE LIABILITY AND THE SAME COULD NOT BE ADDED TO THEIR TOTAL INCOME. THE CLAIM OF THE ASSES SEE REQUIRES DUE VERIFICATION. ON THE FACE OF IT THE NAR RATION BEING TO THE EFFECT THAT 'AMOUNT PAID' WOULD MEAN T HAT SUCH LIABILITIES HAVE BEEN DISCHARGED BY WAY OF PAY MENT IN CASH. SINCE THE BALANCE SHEET STILL REFLECTED TH OSE LIABILITIES, A LOGICAL INFERENCE WOULD BE THAT THE PAYMENT SO MADE IN CASH TO THOSE PARTIES WERE OUT OF UNDISCLOSED INCOME AND THUS ADDITIONS WERE CALLED F OR U/S 69C. AFTER HAVING CONSIDERED THE ISSUE UNDER REFERENCE, REPLY OF THE ASSESSEE THEREON FILED BEFO RE US AND ON PERUSING THE ASSESSMENT PROCEEDINGS AS CONTAINED IN THE NOTE SHEET AND THE DOCUMENTS PLACED IN THE ASSESSMENT RECORD, WE FIND THAT THE AO HAD COMPLETED THE ASSESSMENT WITHOUT MAKING REQUISITE ENQUIRIES. THE LACK OF ENQUIRY ON THE PART OF THE A O AS SHRI HAJARILAL JOHARMAL JAIN, KHANDWA VS. CIT-II,IN DORE, I.T.A.NO. 320/IND/2013 A.Y. 2009-10 14 14 WELL AS NON APPLICATION OF MIND ON ISSUE UNDER REFERENCE LEAD THE ASSESSMENT ORDER MADE BY HIM NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST S OF REVENUE. THE RELIANCE WAS ALSO PLACED ON TO THE DECISIONS IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. 243 ITR 83 (SC} ; RAMPYARI DEVI SARAOGI, 67 ITR 84 (S.C .); SW ARUP VEGETABLE PRODUCTS INDUSTRIES LTD. 187 ITR 412 (AII.); GEE VEE ENTERPRISES 99 ITR 375 (DEL.); RAJLAXMI MILLS LTD. 121 ITD 343 (ITAT SB CHENNAI) & 313 ITR {AT} 182. THE RATIO LAID DOWN BY THE HON'BLE COURTS IN THESE CASES ALSO SUPPORTS THE ACTION FOR REVISION U /S 263 OF THE ASSESSMENT ORDER THAT WAS MADE BY AO WITHOUT PROBING THE MATERIAL AVAILABLE ON RECORD IN UNDUE HASTE AND HURRY WITHOUT APPLICATION OF MIND. FROM THE FACTS OF THE CASE AS DISCUSSED ABOVE, THE AO'S ASSESSMENT ORDER IS FOUND NOT ONLY TO BE ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTERESTS OF REVENUE AND TH EREFORE DESERVES TO BE SET ASIDE. SHRI HAJARILAL JOHARMAL JAIN, KHANDWA VS. CIT-II,IN DORE, I.T.A.NO. 320/IND/2013 A.Y. 2009-10 15 15 6. WE ALSO GET SUPPORT FROM THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SUNBEAM AUTO LIMITED, (2011) 332 ITR 167 (DEL), WHEREIN IT WAS OBSERVED AS UNDER :- 'WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE COUNSEL ON THE OTHER SIDE AND HAVE GONE THROUGH THE RECORDS, THE FIRST ISSUE THAT ARISES FOR OUR CONSIDERATION IS ABOUT THE EXERCISE OF POWER BY THE COMMISSIONER OF INCOME-TAX UNDER SECTION 263 OF THE INCOME-TAX ACT, AS NOTED ABOVE, THE SUBMISSION OF LEARNED COUNSEL FOR THE REVENUE WAS THAT WHILE PASSING THE ASSESSMENT ORDER, THE ASSESSING OFFICER DID NOT CONSIDER THIS ASPECT SPECIFICALLY WHETHER THE EXPENDITURE IN QUESTION WAS REVENUE OR CAPITAL EXPENDITURE. THIS ARGUMENT PREDICATES ON THE ASSESSMENT ORDER, WHICH APPARENTLY DOES NOT GIVE ANY SHRI HAJARILAL JOHARMAL JAIN, KHANDWA VS. CIT-II,IN DORE, I.T.A.NO. 320/IND/2013 A.Y. 2009-10 16 16 REASONS 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, THERE ARE JUDGMENTS GALORE LAYING DOWN THE PRINCIPLE THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IS NOT REQUIRED TO GIVE DETAILED REASON IN RESPECT OF ,EACH AND EVERY ITEM OF .DEDUCTION, ETC, THEREFORE, ONE HAS TO SEE FROM THE RECORD AS TO WHETHER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE EXPENDITURE IN QUESTION AS REVENUE EXPENDITURE. LEARNED 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 SHRI HAJARILAL JOHARMAL JAIN, KHANDWA VS. CIT-II,IN DORE, I.T.A.NO. 320/IND/2013 A.Y. 2009-10 17 17 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. IN GABRIEL INDIA LTD, (1993) 203 ITR 108 (BORN), LAW ON THIS ASPECT WAS DISCUSSED IN THE FOLLOWING MANNER (PAGE 113) .FROM A RENDING OF SUB-SECTION (1) OF SECTION 263, IT IS CLEAR THAT THE POWER OF SUO MOTU REVISION CAN BE EXERCISED BY THE COMMISSIONER ONLY IF, ON EXAMINATION OF THE RECORDS OF ANY PROCEEDINGS UNDER THIS ACT, HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE INCOME-TAX OFFICER IS 'ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE'. IT IS NOT AN ARBITRARY OR UNCHARTERED POWER, IT CAN BE EXERCISED ONLY ON FULFILMENT OF THE REQUIREMENTS LAID DOWN SHRI HAJARILAL JOHARMAL JAIN, KHANDWA VS. CIT-II,IN DORE, I.T.A.NO. 320/IND/2013 A.Y. 2009-10 18 18 IN SUB-SECTION (1). THE CONSIDERATION OF THE COMMISSIONER AS TO WHETHER AN ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, MUST BE BASED ON MATERIALS ON THE RECORD OF THE PROCEEDINGS CALLED FOR BY HIM. IF THERE ARE NO MATERIALS ON RECORD ON THE BASIS OF WHICH IT CAN BE SAID THAT THE COMMISSIONER ACTING IN A REASONABLE MANNER COULD HAVE COME TO SUCH A CONCLUSION, THE VERY INITIATION OF PROCEEDINGS BY HIM WILL BE ILLEGAL AND WITHOUT JURISDICTION, THE COMMISSIONER CANNOT INITIATE PROCEEDINGS WITH A VIEW TO STARTING FISHING AND ROVING ENQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED. SUCH ACTION WILL BE AGAINST THE WELL-ACCEPTED POLICY OF LAW THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUES SHOULD NOT SHRI HAJARILAL JOHARMAL JAIN, KHANDWA VS. CIT-II,IN DORE, I.T.A.NO. 320/IND/2013 A.Y. 2009-10 19 19 BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI- JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY, (SEE PARASHURAM POTTERY WORKS CO, LTD. V . ITO (1977) 106 ITR 1 (SC) AT PAGE 10) . FROM THE AFORESAID DEFINITIONS IT IS CLEAR THAT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW, IF AN INCOME-TAX OFFICER ACTING IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME-TAX OFFICER, WHO PASSED THE SHRI HAJARILAL JOHARMAL JAIN, KHANDWA VS. CIT-II,IN DORE, I.T.A.NO. 320/IND/2013 A.Y. 2009-10 20 20 ORDER UNLESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALISED WHERE THE INCOME-TAX OFFICER WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATE HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOULD HAVE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN THE ONE DETERMINED BY THE INCOME-TAX OFFICER. THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO RE-EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE. IT IS BECAUSE THE INCOME-TAX OFFICER HAS EXERCISED THE QUASI- SHRI HAJARILAL JOHARMAL JAIN, KHANDWA VS. CIT-II,IN DORE, I.T.A.NO. 320/IND/2013 A.Y. 2009-10 21 21 JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT BE FORMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUSION ... THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED. . 7. RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE DELH I HIGH COURT, WE ARE OF THE VIEW THAT IN THE INSTANT CASE, THE LD. CIT IS JUSTIFIED IN HIS ACTION AND NECESSARY INQUIR Y AND INVESTIGATION IS NOT MADE BY THE ASSESSING OFFICER. THEREFORE, THE LD. COMMISSIONER IS JUSTIFIED IN GIVING THE DIR ECTION. WE UPHOLD HIS ACTION. SHRI HAJARILAL JOHARMAL JAIN, KHANDWA VS. CIT-II,IN DORE, I.T.A.NO. 320/IND/2013 A.Y. 2009-10 22 22 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 3 RD NOVEMBER, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 3 RD NOVEMBER, 2015. CPU* 1928