Sardhana Papers Pvt. Ltd., Meerut V. CIT, Meerut

ITA 3222/DEL/2013

• Counselvise Citation: 322220114 RSA 2013
• Duration Of Justice: 2 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 16-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 22-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SULEKHA VERMA
• Assessee Lawyers: S KRISHNA
• Keywords: Principle of natural justice; Assessment record
• Section: 143(3); 142(1); 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH. N.K.SAINI , ACCOUNTANT MEMBER I.T.A .NO. - 3222 /DEL/201 3 (ASSESSMENT YEAR - 200 8 - 0 9 ) SARDHANA PAPERS PVT.LTD., MEERUT ROAD, SARDANA, MEERUT PAN - AABCS9548K (APPELLANT) VS CIT, AAYAKAR BHAWAN, BHAINSALI GROUND, MEERUT (RESPONDENT ) APPELLANT BY SH. K.SAMPATH, SR. ADV. & SH.S.KRISHNA, ADV. RESPONDENT BY SMT. SULEKHA VERMA, CIT DR ORDER PER DIVA SINGH, JM THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASSAILING THE CORRECTNESS OF THE ORDER DATED 18.03.2013 OF CIT, MEERUT PASSED U/S 263 OF THE INCOME TAX ACT, 1961 PERTAINING TO 2008 - 09 ASSESSMENT YEAR ON TH E FOLLOWING GROUNDS: - A. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ORDER OF THE COMMISSIONER OF INCOME - TAX PASSED AFTER INVOKING SEC. 263 OF THE INCOME - TAX ACT, 1961 IN THE SUBJECT CAS E AND IN SETTING ASIDE THE ASSESSMENT ORDER DATED 16.11.2010 FRAMED U/S 143 (3) OF THE ACT AND DIRECTING A FRESH ASSESSMENT IS DEVOID OF JURISDICTION AND IS MISCONCEIVED, ERRONEOUS, ILLEGAL AND UNWARRANTED AND MUST BE QUASHED. B. ADDITIONALLY, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE COMMISSIONER OF INCOME TAX ERRED IN INVOKING THE REVISIONARY POWERS U/S 263 OF THE INCOME - TAX ACT, 1961 DESPITE THE FACT THAT EVEN AFTER A THOROUGH EXAMINATION, NO SPECIFIC ERROR IN THE A SSESSMENT ORDER CAUSING PREJUDICE TO THE REVENUE HAS BEEN IDENTIFIED AND THE REVISION IS ORDERED MERELY ON THE BASIS THAT DATE OF HEARING 18 .0 6 .2015 DATE OF PRONOUNCEMENT 26 .08 .2015 I.T.A .NO. - 3222/DEL/2013 PAGE 2 OF 18 NECESSARY ENQUIRIES DO NOT APPEAR TO HAVE BEEN MADE. THE ORDER BEING AB INITIO ILLEGAL AND VOID MUST BE QUASHED. 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE DECLARED AN INCOME OF RS.79,08,143/ - BY WAY OF FILING ITS RETURN ON 23.09.2008 WHICH WAS PROCESSED U/S 143(1). SUBSEQUENTLY THE SAID RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT BY ISSUANCE OF NOTICE U/S 143(2) ETC . THE ASSESSMENT WAS CONCLUDED BY THE AO VIDE HIS OR DER DATED 16.11.2010 U/S 143(3) ACCEPTING THE RETURNED INCOME. 2.1. SUBSEQUENTLY, THE SAID ORDER WAS REVIS ED BY THE CIT, MEERUT EXERCISING H ER POWERS U/S 263 OF THE INCOME TAX ACT, 1961. THE LD.CIT, MEERUT AFTER HEARING THE ASSESSEE SET ASIDE THE AFORESAID ASSESSMENT ORDER THEREBY DIRECTING THE ASSESSING OFFICER TO PASS A FRESH ORDER AFTER EXAMINING THE ISSUES PROPERLY. THE SAID ORDER IS UNDER CHALLENGE IN THE PRESENT PROCEEDINGS. 3. THE LD. AR INVITING ATTENTION TO THE ORDER UNDER CHALLENGE IN THE CONTEXT OF THE GROUNDS RAISED SUBMITTED THAT IN THE FACTS OF THE PRESENT CASE, THE IMPUGNED ORDER DESERVES TO BE SET ASIDE. THE SAID PRAYER IT WAS SUBMITTED IS BASED ON THE FACT THAT NO ERROR HAS BEEN POINTED BY THE CIT AND FURTHER THERE IS NOTHING TO SHOW THAT THE ORDER IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE . THE LAW MANDATES IT WAS SUBMITTED THAT BOTH THESE REQUIREMENTS ARE TO BE MET BY THE COMMISSIONER. 3.1. IT WAS HIS SUBM ISSION THAT THE IMPUGNED ORDER SUFFERS FROM MULTIPLE ERRORS OF LAW. AS PER THE SETTLED LEGAL POSITION IT WAS SUBMITTED THE CIT WAS REQUIRED TO ADDRESS WHAT WAS T H E ERROR IN THE ORDER WHICH WAS REQUIRED TO BE ADDRESSED BY RESORTING TO SECTION 263 OF THE ACT. 3 .2. THE COMMISSIONER IT WAS SUBMITTED INSTEAD OF POINTING TO ANY ERROR HAS MERELY HELD THAT THE MATTER REQUIRED A PROPER ENQUIRY AND PROPERLY TO BE CONSIDERED . THE USAGE OF THESE WORDS IT WAS SUBMITTED ITSELF DEMONSTRATES THE FACT THAT THE CIT WAS CONV INCED THAT IN THE FACTS OF THE PRESENT CASE, AN ENQUIRY HAD BEEN MADE. IN THE SAID BACKGROUND IT WAS HIS ARGUMENT THAT THE COMMISSIONER SHOULD HAVE LOOKED AT THE RECORDS AND THE RESPONSE OF THE ASSESSEE AND BROUGHT OUT IN HER ORDER WHAT ARE THE ERRORS COM MITTED IN THE ASSESSMENT ORDER. THE EXERCISE CANNOT BE UNDERTAKEN ON I.T.A .NO. - 3222/DEL/2013 PAGE 3 OF 18 CASUAL WHIMS. IN THE ABSENCE OF ANY REASONING TO DEMONSTRATE THAT THE ASSESSMENT ORDER WAS ERRONEOUS THE ATTEMPT TO RE - LOOK AT THE ISSUES WITHOUT ASSIGNING ANY COGENT REASONS, IT WAS S UBMITTED SHOULD NOT BE ALLOWED. 3. 3 . IT WAS HIS SUBMISSION THAT CIT, MEERUT HAS REFERRED TO VARIOUS DECISIONS WITHOUT CARING TO ADDRESS HOW ON FACTS THEY WERE APPLICABLE. THE DECISIONS, IT WAS SUBMITTED ARE ENTIRELY DISTINGUISHABLE. THE CONCLUSION ARRI VED AT IN THOSE DECISIONS AND ORDERS, IT WAS SUBMITTED ARE THE FINDING S ARRIVED IN THE PECULIAR FACTS OF THOSE CASES . W ITHOUT CARING TO ESTABLISH THAT FACTS WERE PARI - MATERIA RELIANCE PLACED ON THE DECISIONS AT RANDOM IT WAS SUBMITTED IS MISPLACED. 3. 4 . IN SUPPORT OF THE SAID CLAIM REFERRING TO THE JUDGEMENT OF THE HON BLE APEX COURT IN THE CASE OF MALABAR INDUSTRIES COMPANIES 243 ITR 83 (SC) RELIED UPON BY HER INCLUDING THE OTHER JUDGEMENTS REFERRED IN PARAS 4 & 5 OF THE IMPUGNED ORDER, IT WAS HIS SUBM ISSION THAT CERTAIN PRINCIPLES HAVE BEEN EXTRACTED BY THE CIT, MEERUT SELECTIVELY AND INCORPORATED IN HER ORDER SO AS TO JUSTIFY THE STAND. AS AN ILLUSTRATION IT WAS SUBMITTED THAT THE DECISION I N MALABAR INDUSTRIES CASE (CITED SUPRA) WAS CITED BY THE CO MMISSIONER FOR THE FOLLOWING PROPOSITIONS: - I. AN INCORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW WILL SUFFICE THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. II. IF THE ORDER I S PASSED WITHOUT APPLICATION OF MIND, SUCH ORDER WILL FALL UNDER THE CATEGORY OF ERRONEOUS ORDER. 3.4 .1. REFERRING TO THE ABOVE PRINCIPLES EXTRACT E D , IT WAS SUBMITTED THAT NO EFFORT HAS BEEN MADE BY THE COMMISSIONER TO SHOW WHAT WAS THE INCORRECT ASSUMPTION OF FACTS ; OR THE INCORRECT APPLICATION OF LAW BY WHICH THE ORDER SUFFERED. FURTHER IT WAS SUBMITTED NOTHING HAS BEEN PLACED ON RECORD TO DEMONSTRATE THAT THE ORDER WAS PASSED WITHOUT APPLI CATION OF MIND. 3. 4 .2. REFERRING TO THE DECISION, IT WAS SUBMITTED THAT THE COMMISSIONER C OULD NOT HAVE CLAIMED TO NOT BE AWARE O F T H E F A C T THAT THE JUDGEMENT QUOTED BY HER IS MORE OFTEN QUOTED FOR ANOTHER IMPORTANT PRINCIPLE I.E. THE FULFILLMENT OF THE TWIN REQUIREMENTS OF ESTABLISHING THAT THERE IS AN ERROR IN THE ORDER AND THAT THE ERROR IS OF SUCH A MAGNITUDE THAT IT IS PR E - JUDICIAL TO I.T.A .NO. - 3222/DEL/2013 PAGE 4 OF 18 THE INTERESTS OF THE REVENUE. THESE ARE THE TWIN CONDITIONS WHICH AS PER THE LEGAL PRECEDENT THE COMMISSIONER IN THE EXERCISING OF HER POWER S WAS REQUIRED TO MEET. REFERRING TO THE AFORE - SAID JUDGEMENT SPECIFIC ATTENTION WAS INVI TED TO THE FOLLOWING EXTRACT THEREFROM WHICH ILLUSTRATED THE ARGUMENT ADVANCED : - A BARE READING OF THIS PROVISION MAKES IT CLEAR THAT THE PREREQUISITE TO THE EXERCISE OF JURISDICTION BY THE COMMISSIONER SUO MOTU UNDER IT, IS THAT THE ORDER OF THE INCOME - TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL T O THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT - IF THE ORDER OF THE INCOME - TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE - RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE A CT. THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. (EMPHASIS PROVIDED) 3. 4 .3. THE FULFILLMENT OF THE ABOVE TWI N REQUIREMENTS, IT WAS SUBMITTED HAS SPECIFICALLY BEEN LEFT OUT BY THE LD.CIT WHILE EXERCISING HER REVISIONARY POWERS. 3. 5 . SIMILARLY RELIANCE PLACED ON CIT VS V.N.M.A. RATHINASABAPATHY NADAR, (1995) 215 ITR 309(MADRAS); AND SWARUP VEGETABLE PRODUCTS INDU STRIES LTD. VS CIT (1991) 187 ITR 412, 415 - 416 (ALL.) , IT WAS SUBMITTED IS MISPLACED. WHEREAS A PERUSAL OF THE DECISION RENDERED BY THE HON BLE MADRAS HIGH COURT, IT WAS SUBMITTED WOULD SHOW THAT THE ORDER THEREIN WAS PASSED IN IGNORANCE WITHOUT TAKIN G INTO CONSIDERATION THE RELEVANT FACTS AND IN THAT BACKGROUND IT LAYS DOWN THE PROPOSITION THAT IF FINDING ARRIVED AT IS AFFECTED BY IRRELEVANT FACTS THEN THE ORDER BECOME ERRONEOUS. 3.5 .1. IN THE FACTS OF THE PRESENT CASE, IT WAS HIS SUBMISSION THAT NO SUCH ALLEGATION HAS BEEN L E V E L L E D AGAINST THE ORDER. THUS, I T IS NOT APPLICABLE AS NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT AN IRRELEVANT FACT WAS CONSIDERED THUS THE PROPOSITION OF LAW DOES NOT HELP THE REVENUE IN ANY MANNER. I.T.A .NO. - 3222/DEL/2013 PAGE 5 OF 18 3.6 . SIMILARLY I T WAS SUBMITTED THAT RELIANCE PLACED BY THE COMMISSIONER ON THE JUDGEMENT OF THE HON BLE ALLAHABAD HIGH COURT IN THE CASE OF SWARUP VEGETABLE PRODUCTS INDUSTRIES LTD. (CITED SUPRA), IT WAS SUBMITTED IS MISPLACED AS AFTER THE JUDGEMENT OF THE APEX COURT IN THE CASE OF MALABAR IND.CO.LTD. VS CIT (2000) 243 ITR 83 (SC) , THE PRINCIPLE LAID DOWN IN THE CASE OF SWARUP VEGETABLE PRODUCTS INDUSTRIES LTD. (CITED SUPRA) WOULD NOT BE OF MUCH HELP TO THE REVENUE. 3. 6 .1. NOTWITHSTANDING THE SAID ARGUMENT IT WAS HIS SUBMISSION THAT EVEN OTHERWISE THE JUDGEMENT RENDERED BY THE HON BLE ALLAHABAD HIGH COURT PROCEEDED ON FACTS PECULIAR TO ITS OWN WHEREIN ADMITTEDLY THE REFUND OF EXCISE DUTY WAS RECEIVED BY THE ASSESSEE AND WAS PLACED IN THE SUSPENSE ACCOUNT AND NOT IN THE P&L A/C CONSEQUENTLY THE ASSESSMENT ORDER WAS FOUND TO BE ERRONEOUS AND PRE - JUDICIAL TO THE INTEREST OF THE REVENUE WHICH IS NOT THE FACT IN THE PRESENT PROCEEDINGS. 3.7 . SIMILARLY IT WAS SUBMITTED THAT THE PROPOSITION LAID DOWN IN THE REMAINING DECISIONS CITED BY THE LD. CIT, MEERUT IN THE ORDER WERE OF NO RELEVANCE AS IN THE FACTS OF THE PRESENT CASE AS PER THE COMMISSIONER HERSELF THE ISSUES WERE ENQUIRED INTO BY THE AO AND HER ONLY GRIEVANCE WAS THAT THE ENQUIRY ACCORDING TO HER WAS NOT PROPER . WHY IT WAS NOT PROPER IT WAS SUBMITTED HAS NOT BEEN ADDRESSED BY THE COMMISSIONER. 3. 8 . AS A FURTHER ILLUSTRATION, REFERENCE WAS MADE TO THE FACTS OF JAGDISH KUMAR GULATI VS CIT 269 ITR 71 (ALL.) RELIED UPON BY THE LD. COMMISSIONER. THE ASSESSMENT IN THE FACTS OF THAT CASE IT WAS SUBMITTED WAS COMPLETED IN HASTE WITHOUT MAKING ANY ENQUIRIES AS IT WAS BECOMING TIME BARRED CONSEQUENTLY THE JURISDICTION ASSUMED BY THE CIT(A) U/S 263 WAS HELD TO BE CORRECTLY INVOKED . 3. 9 . ADDRESSING THE RELIANCE PLACED UPON BY THE LD. COMMISSIONER ON THE PRINCIPLE LAID DOWN BY THE HON BLE DELHI HIGH COURT IN THE CASE OF GEE VEE ENTERPRISES VS ACIT 99 ITR 375 (DEL.) , IT WAS SUBMITTED IT NEEDS TO BE CONSIDERED IN THE CONTEXT OF THE CONSISTENT JUDGEMENTS OF THE HON BLE DELHI HIGH COURT WHERE THE PROPOSITION/PRINCIPLE LAID DOWN IN THE SAID JUDGEMENT WAS EXAMINED ELABORATELY IN GREAT DETAIL BY THE DECISION RENDERED ON 10.09.2013 IN THE CASE OF CIT VS NDTV LTD. (2013) 262 CTR 604 (DEL .) WHERE I.T.A .NO. - 3222/DEL/2013 PAGE 6 OF 18 THE VIEW TAKEN IN ANOTHER RECENT DECISION IN ITO VS DG HOUSING PROJECTS LTD. [2012] 343 ITR 329/20 TAXMANN.COM 587/[2013] 212 TAXMAN 132 (DEL.) WAS AGAIN EXAMINED AS HEREIN ALSO THE DECISION RENDERED IN GEE VEE ENTERPRISES (CITED SUPRA) HAD BEEN C ONSIDERED. SPECIFIC ATTENTION WAS INVITED TO PARA 10 OF THE DECISION IN THE CASE OF CIT VS NDTV LTD. (CITED SUPRA) WHICH WOULD SHOW THAT THE DECISIONS REFERRED TO BY THE CIT IN PARA 5.3 HAVE BEEN FULLY TAKEN INTO CONSIDERATION AND THE VIEW TAKEN IN DG HOU SING PROJECTS LTD. (CITED SUPRA) HAS BEEN FOLLOWED BY THEIR LORDSHIPS IN CIT VS NDTV LTD. 3. 10 . THE PROPOSITION WHICH EMERGES ON CONSIDER ATION OF THE DECISION S IT WAS SUBMITTED IS THAT WHERE THE AO FAILS TO CARRY OUT ANY INVESTIGATION, HE COMMITS AN ERROR AND THE FAILURE TO MAKE AN ENQUIRY RESULTS IN AN ERRONEOUS ORDER. THUS, REFERRING TO THE FACTS OF THE PRESENT CASE, IT WAS HIS SUBMISSION THAT WHENEVER ON FACTS IT CAN BE DEMONSTRATED BY THE REVENUE THAT IT IS A CASE OF THE NO - ENQUIRY THE ORDER NECESS ARILY CAN BE REVISED. HOWEVER IT WAS HIS SUBMISSION THAT WHERE ON FACTS AN ENQUIRY HAS BEEN DONE AS IS THE CASE IN THE PRESENT PROCEEDINGS THE REVENUE IS RESTRAINED FROM REVISING THE ORDER. 3.1 1 . IN THE SITUATION WHERE AN ENQUIRY HAS BEEN MADE BY THE AO AS PER THE SETTLED LEGAL POSITION IT WAS SUBMITTED THE REVISIONARY POWERS CAN NOT BE INVOKED MERELY BECAUSE THE COMMISSIONER IS OF THE VIEW THAT THE ENQUIRY SHOULD BE DONE IN SOME OTHER MANNER. 3.1 2 . INVITING ATTENTION TO PARA 7 OF THE IMPUGNED ORDER IT WAS HIS SUBMISSION THAT THE COMMISSIONER REPEATEDLY USES THE WORD THAT THE CLAIM OF THE UNSECURED LOAN HAS BEEN ACCEPTED WITHOUT PROPER CONFIRMATIONS AND IN THE VERY SAME PARA, THE CLAIM OF SUNDRY CREDITORS, SHE SETS ASIDE THE ISSUE DIRECTING THE AO TO PROPERLY LOOK INTO THE SAME. IT WAS HIS SUBMISSION THAT BEFORE DIRECTING THE COMMISSIONER WAS FIRST REQUIRED TO MEET THE TWIN CONDITIONS OF ERROR AND PREJUDICE TO THE REVENUE. 3.1 3 . INVITING FURTHER ATTENTION TO THE IMPUGNED ORDER AT PAGE 8, IT WAS SUBMI TTED THAT THE COMMISSIONER HAS AGAIN ASSAILED THE AO FOR NOT PROPERLY ENQUIRING INTO THE NEGLIGIBLE PROFIT RATE AND ALSO FOR NOT EXAMINING AND ENQUIRING PROPERLY INTO EACH AND EVERY ASPECT RELATING TO MANUFACTURING, TRADING AND P&L A/C OF THE ASSESSEE. WHAT WAS IMPROPER IN I.T.A .NO. - 3222/DEL/2013 PAGE 7 OF 18 THE ENQUIRY MADE IT WAS SUBMITTED HAS BEEN COMPLETELY LEFT UNADDRESSED BY HER. 4. INVITING ATTENTION TO THE PAPER BOOK FILED, IT WAS HIS SUBMISSION THAT AS FAR AS THE FIRST ISSUE WAS CONCERNED, IT HAS BEEN ENQUIRED INTO AND REPLIE D TO IN DETAIL BEFORE THE AO AS PER PAPER BOOK PAGES 17, 19, 20, 22, 27 & 28 ON RECORD. 4.1. SIMILARLY ON THE SECOND ISSUE OF SUNDRY CREDITORS, THE DETAILED QUERIES OF THE AO AND REPLIES OF THE ASSESSEE IT WAS SUBMITTED CAN BE FOUND AT PAPER BOOK PAGES 1 7, 20, 27 & 28 MADE AVAILABLE TO THE AO . 4.2. ON THE 3 RD ISSUE THE REPLY OF THE ASSESSEE TO THE QUERIES OF THE AO IT WAS SUBMITTED IS AT PAGES 8, 9, 18, 24, 20, 25, 27 & 28 AND SIMILARLY ON THE FOURTH ISSUE THE ASSESSEE S RESPONSE BEFORE THE AO ON QUERIES IS AT PAPER BOOK PAGE 9 ONWARDS. 4.3. P AGES 17 - 18 IT WAS SUBMITTED CONTAIN THE REPLY DATED 19.05.2010 TO THE NOTICE U/S 142(1) AND AT PAGES 19 - 21 THE REPLY OF THE ASSESSEE DATED 07.09.2010 IS PLACED TO THE QUERIES RAISED IN NOTI CE U/S 142(1). REFERRING TO PAPER BOOK PAGES 22 - 23 IT WAS SUBMITTED IS THE REPLY TO THE NOTICE U/S 142(1) DATED 09.11.2010. THE CHART RELATING TO THE EXPENDITURE AND GP RATE AS FILED BEFORE THE AO IN REPLY TO THE NOTICE U/S 142(1) DATED 19.05.2010 IT WAS SUBMITTED IS AT PAPER BOOK PAGE 24, COPY OF THE NOTICE U/S 142(1) DATED 10.05.2010 ALONGWITH THE QUESTIONNAIRE REQUIRING THE ASSESSEE TO EXPLAIN IT WAS SUBMITTED IS AT PAGES 25 - 27. PAGES 28 - 29 OF THE PAPER BOOK IT WAS HIS SUBMISSION IS THE LIST OF DOCUME NTS REQUISITIONED BY THE AO ON 19.08.2010 AND THE COPY OF THE NOTICE U/S 143(2), IT WAS HIS SUBMISSION DATED 13.10.2010 IS AT PAPER BOOK PAGE 30. 5. ADDRESSING THESE FACTS AND EVIDENCE S WHICH THE AO REQUIRED THE ASSESSEE TO EXPLAIN IT WAS SUBMITTED THAT THE REPLIES WOULD DEMONSTRATE THAT THE QUERIES ON EACH OF THE ISSUES RAISED BY THE COMMISSIONER WERE RAISED BY THE AO. THE RECORD IT WAS SUBMITTED WOULD ALSO SHOW THAT THEY WERE REPLIED TO AND THERE IS NO THING ON RECORD TO SHOW THAT THESE REPLIES WERE NOT CONSIDERED BY THE AO BEFORE PASSING THE ORDER . ON A CONSIDERATION OF THE SAME, IT WAS SUBMITTED THAT IT CANNOT LEAVE ANY DOUBT IN THE MINDS OF THE MOST SUSPICIOUS OF PERSONS THAT THE AO HAD COME TO THE CONCLUSIONS ONLY I.T.A .NO. - 3222/DEL/2013 PAGE 8 OF 18 AFTER MAKING A FULL AND PROPER ENQ UIRY ON ALL THE ISSUES SUGGESTED BY THE CIT AND THE ASSESSEE HAD MADE ALL NECESSARY DETAILS AVAILABLE TO THE AO ADDRESSING THE QUERIES. 5.1. INVITING ATTENTION TO PAPER BOOK PAGE NO. - 1 WHICH IS THE NOTICE ISSUED BY THE CIT U/S 263 DATED 12.03.2013 IT WAS HIS SUBMISSION THAT THE ASSESSEE HAD INFACT SUBMITTED THIS VERY RESPONSE IN ITS REPLY DATED 15.03.2013 TO THE COMMISSIONER . REFERRING TO COPY OF THE SAME PLACED AT PAGES 2 - 3 OF THE PAPER BOOK IT WAS SUBMITTED THAT ON BEHALF OF THE ASSESSEE IT WAS BROUG HT TO THE NOTICE OF THE COMMISSIONER THAT THE AO BEFORE THE PASSING OF THE ORDER U/S 143(3), HAD CARRIED OUT A DETAILED ENQUIRY AND EXAMINATION OF BOOKS OF ACCOUNTS COVERING EACH AND EVERY ASPECT OF THE CASE WHICH WERE SOUGHT TO BE LOOKED INTO BY THE COMMI SSIONER AGAIN . INVITING ATTENTION TO PARA 3 OF THE SAID REPLY IT WAS SUBMITTED THAT ON BEHALF OF THE ASSESSEE IT HAD BEEN STATED THAT THE PROPOSED REASONS FOR INITIATING PROCEEDINGS U/S 263 WERE VAGUE AND GENERAL. INVITING ATTENTION YET AGAIN TO THE SAME, IT WAS REITERATED THAT IT WAS AGAIN BROUGHT TO THE NOTICE OF THE COMMISSIONER THAT THE FACTS HAD CLEARLY BEEN LOOKED INTO BY THE AO. 5.2. THE COMMISSIONER IT WAS SUBMITTED CAN INVOKE HIS POWERS U/S 2 63 ONLY AFTER CONSIDERING THE MATERIAL ON RECORD A N D I T GOES W ITHOUT SAYING AND THIS WAS THE MATERIAL ON RECORD. REFERRING TO THE SAME, IT WAS SUBMITTED THAT IF NOT BEFORE INITIATING ATLEAST AFTER ISSUANCE OF NOTICE THESE PLEADINGS BY THE ASSESSEE WHICH WERE PLACED BEFORE THE COMMISSIONER, IT CAN BE PRESUMED THAT TH ESE FACTS MUST HAVE BEEN LOOKED INTO. IT WAS SUBMITTED THAT IF IT HAD BEEN LOOKED INTO THEN IT WAS INCUMBENT ON THE COMMISSIONER TO P O I N T OUT THE ERROR AND THERE SHOULD HAVE BEEN NO REASON FOR THE COMMISSIONER TO USE VAGUE AND GENERAL WORDS LIKE NEEDS T O BE PROPERLY ENQUIRED NOT PROPERLY ENQUIRED . THE FACT THAT NO ERROR HAS BEEN POINTED OUT IT WAS SUBMITTED IS BECAUSE AFTER LOOKING CAREFULLY EVEN THE COMMISSIONER COULD FIND NO ERROR. IN SUCH A POSITION THE EXERCISE OF POWER MECHANICALLY WITHOUT POINT I N G ERROR WITHOUT REASON TO JUSTIFY THE VAGUE CONCLUSION AND INFACT IS A FISHING AND ROVING EXERCISE WHICH THE LAW DOES NOT PERMIT . IT WAS SUBMITTED THAT THE LAW MANDATES THAT THE COMMISSIONER BEFORE PUTTING THE ASSESSEE THROUGH THE RIGOURS OF REVISION ARY POWERS I.T.A .NO. - 3222/DEL/2013 PAGE 9 OF 18 ATLEAST MAKES THE EFFORT TO BRING OUT IN HER ORDER THE ERROR COMMITTED BY THE AO. AS PER SETTLED LEGAL JURISPRUDENCE IT WAS SUBMITTED THE LAW FURTHER REQUIRES THE COMMISSIONER TO BRING OUT THE FACT THAT THE ERROR IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE POWERS IT WAS SUBMITTED CANNOT BE INVOKED ON MERE WHIMS AND FANCIES. 5.3. REFERRING TO THE DETAILED REPLY BEFORE THE COMMISSIONER IT WAS SUBMITTED THE COMMISSIONER S OMISSION IN POINTING OUT ERROR IS VERY CLEAR AS THERE IS NO ERROR. FOR READY - REFERENCE, PARAS 3 - 5 FROM THE SAID LETTER DATED 15.03.2013 ARE EXTRACTED: - 3. BESIDES THE FACT, THAT THE PROPOSED REASONS FOR INITIATING PROCEEDINGS U/S 263 ARE VERY GENERAL AND VAGUE AND DO NOT MENTION ANY SPECIFIC ERROR IN THE ASSESSMENT ORDE R FOR WHICH IT COULD BE HELD TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE, IT MAY BE MENTIONED THAT ALL THESE ASPECTS HAVE BEEN INQUIRED INTO AND EXAMINED BY THE A.O. WITH REFERENCE TO ASSESSEE S REPLIES THEREOTO. ALL THESE REPLIES AND ANNEXURES THERET O WHICH HAVE BEEN FILED ALONG WITH THESE REPLY LETTERS ARE ALREADY AVAILABLE IN THE ASSESSMENT RECORDS WHICH TO ASSESSEE BELIEF HAVE ALREADY BEEN GONE THROUGH BY YOUR GOODSELF BEFORE ISSUING THE IMPUGNED NOTICE. 4. YOU HAVE ALSO REQUIRED THE ASSESSEE TO PR ODUCE COMPLETE BOOKS OF ACCOUNTS AND SUPPLEMENTARY RECORDS ON THE DATE OF HEARING VIDE THIS NOTICE ITSELF WHICH IS REALLY SURPRISING SINCE IT INDICATES THAT YOU HAVE ALREADY MADE UP YOUR MIND TO REOPEN THE ASSESSMENT U/S 263 EVEN WITHOUT CONSIDERING THE AS SESSEE S EXPLANATION AND REPLY TO YOUR IMPUGNED SHOW CAUSE NOTICE. 5. AS REQUIRED BY YOU COMPLETE BOOKS OF ACCOUNTS AND SUPPLEMENTARY RECORDS (INCLUDING PURCHASE BILLS, SALE BILLS, BANK STATEMENTS, DAILY STOCK RECORDS ETC.) ARE PRODUCED. 5. 4 . ACCORDINGLY IN VIEW OF THESE FACTS, ARGUMENTS AND POSITION OF LAW, IT WAS HIS SUBMISSION THAT FOLLOWING THE PRINCIPLE LAID DOWN BY THE DELHI HIGH COURT IN THE CASE OF DG HOUSING PROJECTS LTD. (CITED SUPRA) AND CIT VS NDTV LTD. [2013] 39 TAXMANN.COM 135 (DEL.) WHICH HAVE CONSIDERED THE JUDGEMENT OF THE GEE VEE ENTERPRISES VS ACIT 99 ITR 375 AND THE JUDGEMENT OF THE APEX COURT IN THE CASE OF MALABAR IND.CO.LTD. (CITED SUPRA), THE IMPUGNED ORDER DESERVES TO BE QUASHED. 6. THE LD. CIT DR, SMT. SULEKHA VERMA ON THE OTHER HAND RELYING UPON THE JUDGEMENT OF THE DELHI HIGH COURT IN THE CASE OF DUGGAL & CO. VS CIT 7 TAXMAN 331 AND GEE VEE ENTERPRISES (CITED SUPRA) ALONGWITH THE ORDER OF THE TRIBUNAL ORDER DATED 21.01.2011 IN ITA NO. - 2595/DEL/2009 IN THE CASE OF SH. VIRENDRA KR . GUPTA VS. CIT (COPY PROVIDED IN THE COURT) SUBMITTED THAT I.T.A .NO. - 3222/DEL/2013 PAGE 10 OF 18 THE IMPUGNED ORDER DESERVES TO BE UPHELD. INVITING ATTENTION TO THE BRIEF AND CRYPTIC ASSESSMENT ORDER WHICH WAS READ OUT BY HER, IT WAS HER SUBMISSION THAT ON A REA DING OF THE SAME, IT WAS CLE ARLY EVIDENT THE AO HAS BLINDLY ACCEPTED WHAT THE ASSESSEE HAS RETURNED AS ITS INCOME. 6.1. ADDRESSING THE REPLIES GIVEN BY THE ASSESSEE BEFORE THE AO SO AS TO JUSTIFY THAT THE 4 ISSUES WERE ENQUIRED INTO, IT WAS HER SUBMISSION THAT THEY HAVE NOT BEEN S UFFICIENTLY ENQUIRED INTO BY THE AO. IT WAS ALSO HER SUBMISSION THAT WITHOUT MAKING ANY EFFORT TO ENQUIRE INTO THE EVIDENCE OF THE THIRD PARTY, HOW CAN THE AO BE SATISFIED. IT WAS SUBMITTED THAT WHERE THE SATISFACTION IS ARRIVED A T WITHOUT MAKING ANY FURTHE R ENQUIRY THE COMMISSIONER HAS THE POWER TO RE - OPEN THE ASSESSMENT EXERCISING HER REVISIONARY POWERS. THE LD.CIT DR SUBMITTED THAT THE INTENTION OF THE LEGISLATURE WAS NOT TO MERELY ACCEPT A SITUATION WHERE THE AO CALLS FOR EVIDENCE AND FAILS TO LOOK INTO THE SAME. 6.2. IT WAS SUBMITTED THAT T HE JUDGEMENT OF THE HON BLE HIGH COURT IN THE CASE OF DUGGAL & COMPANIES 220 ITR 456 WAS HEAVILY RELIED UPON BY THE REVENUE . IT WAS SUBMITTED THAT IN THE FACTS OF THAT CASE, IT HAS BEEN HELD THAT THE COMMISSIONER WAS PERFECTLY COMPETENT TO EXERCISE HIS POWERS U/S 263 WHENEVER HE FOUND THAT THERE WAS NEED TO INQUIRE IF THE INTERESTS OF THE REVENUE HAD SUFFERED BY AN ORDER OF ASSESSMENT. THE BASIS OF THE ORDER OF COMMISSIONER IT WAS SUBMITTED IS A QUESTION OF FACT AND WHETHER IT IS CORRECT OR NOT SHALL BE FOUND OUT ONLY AFTER THE INQUIRY OF THE AO AND THE ASSESSEE HAS NO BASIS TO OBJECT TO THE ORDER AT THIS STAGE . 6.3. ASSAILING THE ARGUMENTS OF THE LD. AR IT WAS SUBMITTED THAT IN THE FACTS OF THE PRESENT CASE THAT THE COMMISSIONER HAS CORRECTLY RELIED UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF GEE VEE ENTERPRISES (C ITED SUPRA) AS THE MATTER WAS REQUIRED TO BE ENQUIRED INTO FURTHER. 6.4. INVITING ATTENTION TO THE DECISION OF THE ITAT IN THE CASE OF VIRENDER KUMAR GUPTA DATED 21.01.2011 IN ITA NO. - 2595/DEL/2009 (COPY FILED) IT WAS SUBMITTED THAT THE SAID DECISION FUL LY APPLIES ON FACTS. SPECIFIC ATTENTION WAS INVITED TO PAGE 5 PARA 6 OF THE SAID DECISION. IN THE FACTS OF THAT CASE, IT WAS SUBMITTED NO ENQUIRY WAS CONDUCTED IN RESPECT OF CREDITORS I.T.A .NO. - 3222/DEL/2013 PAGE 11 OF 18 AND SUNDRY CREDITORS AND THE TRUTHFULNESS OF THE CONFIRMATIONS WAS ACC EPTED BY THE AO WITHOUT DEMUR. IN ORDER TO CANVASS THAT FACTS WERE PARI - MATERIA, ATTENTION WAS INVITED TO THE ASSESSMENT ORDER UNDER CONSIDERATION DATED 16.11.2010. REFERRING TO THE SAME, IT WAS SUBMITTED THAT THE TWO PAGED ORDER DOES NOT INSPIRE ANY CO NFIDENCE WHATSOEVER AND CLEARLY SHOWS THAT THE AO BLINDLY ACCEPTS THE ASSESSEE S CLAIMS AS HE HAS NOT EVEN CARED TO ADDRESS THE DISCUSSION ON ANY ISSUE WHICH HE IS PRESUMED TO HAVE CONSIDERED. ACCORDINGLY IT WAS HER ARGUMENT THAT THE IMPUGNED ORDER DESERV ES TO BE UPHELD. 7. IN REPLY THE LD. AR SUBMITTED THAT APART FROM RELYING UPON THE ARGUMENTS ADVANCED AND THE DECISIONS CITED HE WOULD MERELY WANT TO ADD THAT THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF DUGGAL & COMPANIES IS NOT APPLICABLE AT ALL . IT WAS HIS SUBMISSION THAT IT WAS RENDERED IN THE SCENARIO WHERE THE ONLY DECISION AVAILABLE AT THAT POINT OF TIME WAS THE DECISION OF THE DELHI HIGH COURT IN GEE VEE ENTERPRISES (CITED SUPRA). THUS THE DECISION WHICH DOES NOT HAVE THE BENEFIT OF THE LATEST DECISION ON THE ISSUE IT WAS SUBMITTED SHOULD NOT BE FOLLOWED. REFERRING TO THE LATEST DECISIONS OF THE DELHI HIGH COURT IN THE CASE OF NDTV AND DG HOUSING CASE WHICH BOTH HAVE CONSIDERED THE PRINCIPLE AND THE PROPOSITIONS OF LAW IN GEE VEE ENTERP RISES IT WAS SUBMITTED THAT THE DECISION BEING LATEST IN POINT OF TIME SHOULD BE PREFERRED. APART FROM THIS PRINCIPLED OBJECTION IT WAS SUBMITTED THAT EVEN OTHERWISE ON FACTS THE DECISION IS DISTINGUISHABLE. IN THE FACTS OF THAT CASE, IT WAS SUBMITTED TH E ASSESSEE S FIRM WAS PAYING INTEREST ON ITS BORROWINGS AT VARYING RATES FROM 9 TO 12 % WHILE THE ASSESSEE CHARGED INTEREST @ 4 % ONLY FROM M/S ATUL GLASS INDUSTRIES. THE MATTER AS PER RECORD WAS NOT ENQUIRED INTO BY THE AO AND THUS WHERE THE FIRM WAS PRO BABLY DIVERTING A PART OF ITS BORROWINGS FOR ITS INVESTMENT FOR CONSIDERATION OTHER THAN THAT OF BUSINESS, THE REVISIONARY POWERS OF THE COMMISSIONER IT WAS SUBMITTED WAS HELD TO BE CORRECTLY INVOKED. IN THE FACTS OF THE PRESENT CASE IT WAS ARGUED THERE IS NO SUCH ALLEGATION OR FINDING. 7.1. ADDRESSING THE PROPOSITION LAID DOWN BY THE DELHI HIGH COURT IN THE CASE OF GEE VEE ENTERPRISES (CITED SUPRA) IT WAS SUBMITTED THE RATIO LAID DOWN THEREIN HAS CONSISTENTLY BEEN CONSIDERED BY THE HON BLE DELHI HIGH I.T.A .NO. - 3222/DEL/2013 PAGE 12 OF 18 COU RT IN THE CASE OF DG HOUSING (CITED SUPRA) AND AGAIN RE - AFFIRMED IN THE CASE OF NDTV LTD.(CITED SUPRA). 7.2. ADDRESSING THE SECOND LIMB OF THE ARGUMENTS OF THE LD. CIT DR IT WAS SUBMITTED THAT THE LAW IS WELL - SETTLED AS ADDRESSED BY THE DECISION OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF HARI IRON TRADING COMPANIES VS CIT 263 ITR 437 (DEL.) WHEREIN THEIR LORDSHIPS CATEGORICALLY HELD THAT THE MERE FACT THAT THERE IS NO MENTION IN THE ASSESSMENT ORDER ABOUT THE ENQUIRIES MADE BY THE AO IS NOT DECIS IVE OF THE FACT THAT THE ISSUES WERE NOT ENQUIRED INTO. IN THE FACTS OF THE PRESENT CASE, IT WAS RE - ITERATED THE CLAIM OF THE REVENUE IS NOT THAT NO ENQUIRY WAS DONE AS EVEN THE COMMISSIONER ACCEPTS THAT THERE WERE ENQUIRIES. 7.2.1. SIMILARLY RELYING UPON THE DECISION RENDERED BY THE DELHI HIGH COURT IN THE CASE OF CIT VS ANIL KUMAR SHARMA 335 ITR 083 (DEL.) WHICH AFFIRMED THE POSITION TAKEN UP BY THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS SUNBEAM AUTO LTD. 332 ITR 0167 (DEL.) IT WAS SUBMITTED THAT LIKE THESE CASES THE PRESENT CASE ALSO IS NOT A CASE OF LACK OF ENQUIRY AS EVIDENTLY ENQUIRY HAS BEEN MADE. THEIR LORDSHIP OF THE DELHI HIGH COURT IT WAS SUBMITTED HAVE CONSISTENTLY HELD IN THE AFORE - MENTIONED DECISIONS THAT IF THE ENQUIRY IS INADEQUATE , RE VISION CAN NOT BE RESORTED TO. ACCORDINGLY IT WAS HIS SUBMISSION THAT THE APPEAL OF THE ASSESSEE MAY BE ALLOWED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE FACTS OF THE PRESENT CASE, IT IS SEEN THAT THE AO HAS PASSED A CRYPTIC ORDER DATED 16.11.2010 ON THE BASIS OF WHICH IT HAS BEEN RESPECTIVELY CANVASSED BY THE PARTIES BEFORE THE BENCH THAT THE ORDER WAS PASSED AFTER MAKING DUE ENQUIRIES WITH FULL APPLICATION OF MIND OF THE AO AS PER ASSESSEE S STAND AN D THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AS PER THE DEPARTMENTAL STAND . CONSIDERING THIS ORDER IT IS SEEN THAT THE LD. COMMISSIONER HAS PASSED THE ORDER UNDER CHALLENGE DATED 18.03.2013 SETTING ASIDE THE AFORE - SAID ASS ESSMENT ORDER DIRECTING THE AO TO PROPERLY ENQUIRE INTO THE F O U R ISSUES NOTIFIED BY HER. 8.1. THE LD. CIT DR RELYING UPON THE SAID ORDER HAS TAKEN THE POSITION THAT THE ENQUIRES MADE WERE NOT CARRIED TO THE LOGICAL CONCLUSION BY THE AO ON THE FOUR ISSUES OF UNSECURED LOANS, THE NET PROFIT OF THE ASSESSEE, THE I.T.A .NO. - 3222/DEL/2013 PAGE 13 OF 18 ADDITION TO PLANT & MACHINERY AND THE SUNDRY CREDITORS ETC. FOR THE SAID PURPOSE PROPER ENQUIRY ON FACTS ACCORDING TO HER WAS JUSTIFIABLY WARRANTED. 8.2. THE LD. AR ON THE OTHER HAND HAS CANVASSED THAT THE LAW MANDATE THAT THE COMMISSIONER IN HER ORDER IS BOUND TO ADDRESS THE ERROR COMMITTED BY THE AO AND NEEDS TO DEMONSTRATE THAT THE ERROR IS OF SUCH A MAGNITUDE WHICH ALSO MEETS THE TEST OF BEING PRE - JUDICIAL TO THE INTERESTS OF THE REVENUE. REFERRING TO THE ORDER IT HAS BEEN CANVASSED THAT SINCE THERE IS NO SUCH FINDING OF ANY ERROR BEING POINT OUT ON RECORD, THE ORDER UNDER CHALLENGE HAS BEEN PASSED MECHANICALLY INVOKING THE POWERS WITHOUT ANY LEGAL MANDATE ON FACTS. ON THE BASIS OF THE PAPER BOOK FILED AND THE VARIOUS PAPERS REFERRED TO THEREIN, THE LD. AR HAS SOUGHT TO CANVASS THAT ON EACH OF THE ISSUES, NOW SOUGHT TO BE PROPERLY ENQUIRED INTO BY THE COMMISSIONER THE AO HAS ALREADY RAISED QUERIES AND HAS REQUIRED THE ASSESSEE TO EXPLAIN THE SAME AND ONLY AFTER CONSIDERING THE REPLIES OF THE ASSESSEE AVAILABLE ON RECORD THE AO HAS BEEN SATISFIED WITH THE EXPLANATION OFFERED AND HAS PASSED THE ORDER AFTER DUE APPLICATION OF MIND. THE LD. CIT DR REFERRING TO THE CRYPTIC ORDER HAS C ANVASSED THAT IT DOES NOT R E F L E CT WHETHER THE ISSUES WERE ACTUALLY ENQUIRED INTO AS THERE IS NO DISCUSSION IN THE ORDER. THE LD.AR ON THE BASIS OF THE QUERIES RAISED AND REPLIES ADDRESSING HAS CANVASSED THAT THE AO HAS FULLY ENQUIRED INTO THE ISSUES BEFORE THE PASSING OF THE ORDER. THE FACT THAT THE ASSESSMENT ORDER IS CRYPTIC THE LD.AR HAS TAKEN THE STAND THAT IT IS NOT FOR THE ASSESSEE TO DICTATE HOW THE ASSESSMENT ORDER IS TO BE WRITTEN . RELYING UPON THE CASE OF HARI IRON TRADING COMPANIES DECISION O F THE PUNJAB & HARYANA HIGH COURT (CITED SUPRA) AND THE DECISIONS OF THE HON BLE DELHI HIGH COURT IN THE CASE OF ANIL KUMAR SHARMAJI; AND SUNBEAM AUTO LTD., IT HAS BEEN PLEADED THAT IN THE ABSENCE OF ANY DEMONSTRATION BY THE REVENUE MERELY BECAUSE THE ASSE SSMENT ORDER IS CRYPTIC IT HAS BEEN ARGUED IT CANNOT DECIDE THAT THE ORDER HAS BEEN PASSED WITHOUT APPLICATION OF MIND. SIMILARLY BECAUSE THE ORDER DOES NOT MAKE A REFERENCE TO THE QUERIES RAISED IN THE FACE OF THE EVIDENCE ON RECORD CANNOT LEAD TO THE PR ESUMPTION THAT IT IS A CASE OF NO ENQUIRY . HOW THE ORDER IS TO BE WRITTEN ONLY THE AO CAN DECIDE BUT THIS LACK OF DISCUSSION IN THE ORDER IN THE FACE OF THE CONSISTED REPLIES BEFORE THE AO AND RELIANCE ON THE SAME I.T.A .NO. - 3222/DEL/2013 PAGE 14 OF 18 BEFORE THE COMMIS SIONER WHICH IS NOT DISPUTED IT HAS BEEN ARGUED MAKES IT A CASE OF ENQUIRES BEING MADE A N D T H I S POSITION NOT DISPUTED BY THE COMMISSIONER. ACCORDINGLY THE ORDER UNDER CHALLENGE IT HAS BEEN STATED IS NOT MAINTAINABLE. VARIOUS OTHER DECISIONS AND PROPOSITIONS HAVE B EEN ARGUED BY BOTH THE SIDES SO AS TO CONTEND THAT LEGALLY THE ISSUES IS COVERED IN THEIR FAVOUR. 8. 3 . BEFORE WE PROCEED TO ADDRESS THE SAME, IT IS CONSIDERED NECESSARY TO FIRST REFER TO THE ORDER UNDER CHALLENGE. A PERUSAL OF THE 10 PAGED ORDER OF THE LD. COMMISSIONER OF INCOME TAX (MEERUT) SHOWS THAT THE EXERCISE OF POWER BY THE LD. COMMISSIONER IS HESITANT UNSURE AND INFACT THE LD. COMMISSIONER REPEATEDLY HOLDS THAT PROPER ENQUIRY IS REQUIRED. THIS CONCLUSION IS DRAWN F ROM A READING OF THE ORDER UNDER CHALLENGE AS REPEATEDLY IN THE FACE OF THE CLEAR - CUT ARGUMENTS OF THE ASSESSEE THE LD. COMMISSIONER SHIRKS TO ADDRESS THE ISSUE HEAD ON AND INSTEAD TAKES A STAND THA T THE ISSUES BE LOOKED INTO PROPERLY FOR VAGUE REASONS . BEFORE CONSIDERING THAT THE ORDER IS TO BE REVISED AS PER SETTLED LEGAL JURISPRUDENCE THE LD. COMMISSIONER SHOULD HAVE ATLEAST SOMEWHERE IN THE ORDER ON THE ISSUES CONSIDERED BY HER OUGHT TO HAVE ADDRESSED WHAT WAS THE ERROR. WE HAVE CAREFULLY GONE THROUGH THE ORDER AND H A V E FOUND T H A T T H E R E I S NO SUC H CONCLUSION. INFACT THE HESITANCY IN HOLDING THAT THERE IS AN ERROR COUPLE D WITH THE USAGE OF WORD S NOT PROPERLY LOOKED INTO NEEDS TO BE PROPERLY ENQUIRED MAKES THE LD. COMMISSIONER RAN FOUL OF THE SETTLED LEGAL POSITION THAT THE REVISIONARY POWERS C ANNOT BE INVOKED ON THE REASONING THAT THE MANNER IN WHICH THE AO HAS ENQUIRED BE SUBSTITUTED BY HOW THE LD. COMMISSIONER WOULD WANT THE ISSUES TO BE ENQUIRED INTO. THE LD. COMMISSIONER IS TO ADDRESS THE ERROR WHICH SHE INTENDS TO CORRECT THE ERROR SHOULD BE SUCH WHICH IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. A REFERENCE TO PARAS 2 & 3 OF THE IMPUGNED ORDER W OULD ILLUSTRATE HOW THE ISSUE HAS BEEN ADDRESSED : - 2. ON EXAMINATION OF RECORDS, IT WAS FOUND THAT THE ASSESSMENT WAS DONE WITHOUT PROPER ENQ UIRY IN SO FAR AS DISCUSSED IN SUBSEQUENT PARAS. 3. ACCORDINGLY, NOTICE UNDER SECTION 263 OF THE INCOME - TAX ACT, 1961 WAS ISSUED POINTING OUT AS FOLLOWS: - I.T.A .NO. - 3222/DEL/2013 PAGE 15 OF 18 (A) UNSECURED LOANS OF RS.4,65,16,878/ - HAVE NOT BEEN ENQUIRED INTO PROPERLY BEFORE ACCEPTING THE SAME. (B) SIMILARLY A.O. DID NOT PROPERLY INVESTIGATE THE REASON WHAT DECREASE IN NET PROFIT RATE IN COMPARISON TO LAST YEAR AND ALSO REASONS FOR SO LOW PROFIT RATE. (C) THE ASSESSEE HAS MADE ADDITION OF RS.4,82,49,995/ - IN THE PLANT & MACHINERY, BUT A.O. DID NOT RAISE ANY QUERY ON THIS ISSUE AND DID NOT ENQUIRE INTO VARIOUS ASPECTS OF THE SAME. (D) SUNDRY CREDITORS OF RS.58,38,160/ - HAVE NOT BEEN ENQUIRED INTO PROPERLY BEFORE ACCEPTING THE SAME. 8. 4 . A PERUSAL OF PAGES 2 TO 5 OF THE ORDER UNDER CHAL LENGE ( PARAS 4 TO 5.7 ) DEMONSTRATE THAT REFERENCE IS MADE TO VARIOUS DECISIONS AND VARIOUS PROPOSITIONS OF LAW AS A JUSTIFICATION WITHOUT FIRST ADDRESSING HOW THE FACTS WERE FOUND TO BE PARI - MATERIA. REFERENCE TO THE ARGUMENTS ADVANCED ON BEHALF OF THE AS SESSEE IS MADE IN PARAS 6 & 6.1 AT PAGES 5 & 6 OF THE ORDER HOWEVER TO SUPPORT THE CONCLUSION THAT WHY ARGUMENTS ON BEHALF OF THE ASSESSEE WERE NOT AGREED TO IS DUCKED AND THE CONCLUSION IS ARRIVED AT THAT THE ASSESSMENT ORDER IS PASSED WITHOUT PROPER ENQ UIRY. THE INSISTENCE OF THE ASSESSEE TO CONSIDER THE REPLIES GIVEN TO THE AO IN THE ASSESSMENT PROCEEDINGS AND THE REPLY GIVEN BEFORE THE COMMISSIONER TO THE NOTICE ISSUED U/S 263 IS DISMISSED AS NOT RELEVANT AND WAS CONSIDERED ONLY FOR REPLYING TO THE QU ERIES U/S 263. THE OBJECTIONS OF THE ASSESSEE THAT THE REQUIREMENTS OF PRODUCING THE BOOKS OF ACCOUNTS BEFORE THE COMMISSIONER WHICH WERE COMPLIED WITH IN THE FACE OF THE CONCLUSION OF THE LD. COMMISSIONER TO INVOKE HER POWERS WITHOUT CARING TO CONSIDER H AS BEEN CONSIDERED IN THE FOLLOWING MANNER: - IT WAS FURTHER ARGUED THAT SINCE THE BOOKS OF ACCOUNT WERE ALSO REQUIRED TO BE PRODUCED ON THE DATE OF HEARING VIDE NOTICE ITSELF, IT INDICATED THAT THE CIT HAS MADE HER MIND TO REOPEN THE ASSESSMENT UNDER SECT ION 263 EVEN WITHOUT CONSIDERING THE ASSESSEE S EXPLANATION AND REPLY TO THE SHOW CAUSE NOTICE. THE LEGAL POSITION IN THIS REGARD IS AGAIN ABSOLUTELY CLEAR AS PER WHICH NO SHOW CAUSE NOTICE NEEDS TO BE GIVEN FOR INITIATION OF PROCEEDINGS UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 AN ASSESSMENT ORDER IS SUBJECT TO REVISION UNDER SECTION 263 OF THE I.T.ACT WHICH HAS BEEN FOUND TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND COMMISSIONER IS THE AUTHORITY TO START PROCEEDINGS FOR WHICH NO PRI OR NOTICE TO THE ASSESSEE IS REQUIRED TO BE GIVEN BEFORE SUCH COMMENCEMENT OF 263 PROCEEDINGS. HENCE, THE GROUND REMAINS UNTENABLE AND WITHOUT ANY PROPER BASIS. I.T.A .NO. - 3222/DEL/2013 PAGE 16 OF 18 8. 5 . ON EACH OF THE ABOVE ISSUES THE LD.AR HAS REFERRED TO MATERIAL ON RECORD WHICH WAS CONS IDERED BY THE AO. IN THE AFORE - MENTIONED P E C U L I A R F A C T S A N D C I R C U S M T N A C E S IN THE ABSENCE OF ANY REBUTTAL ON THIS FACTUAL POSITION, WE FIND THAT IN THE FACTS OF THE PRESENT CASE THE POWER U/S 263 HAVE BEEN WRONGLY INVO K ED BY THE LD. COMMISSIONER, MEERUT. 8.6 . AS WE HAVE ALREADY DISCUSSED IN GREAT DETAIL IN THE EARLIER PART OF THIS ORDER THE DECISION RELIED UPON IN THE FACTS OF THE PRESENT CASE ARE OF NO HELP TO THE REVENUE. THE LD.CIT DR HAS SOUGHT TO PRESS INTO ACTION THE DECISION OF THE CO - ORDINATE BENCH IN THE CASE OF SHRI VIRENDRA KUMAR GUPTA VS CIT (CITED SUPRA), A PERUSAL OF THE SAME SHOWS THAT IT WAS A CASE OF NO ENQUIRY . THIS FACT IS BROUGHT ON FROM THE FOLLOWING PARA WHICH WAS RELIED UPON BY THE LD.CIT DR HERSELF: - 6. WE HAVE CONSIDERED THE FACTS AND THE SUBMI SSIONS MADE BEFORE US. THE FACTS ARE THAT THE ASSESSEE HAD FILED ITS RETURN ON 31.10.2005 DECLARING TOTAL INCOME OF RS.3,41,860/ - . THE CASE WAS SELECTED FOR SCRUTINY ON ACCOUNT OF LOW PROFIT, HIGH SUNDRY CREDITORS, ADVANCES AND LOANS. THE ASSESSEE SOUGH T A NUMBER OF ADJOURNMENTS. HOWEVER, BOOKS OF ACCOUNT AND VOUCHERS WERE PRODUCED BEFORE THE ASSESSING OFFICER. CONFIRMATIONS OF CREDITORS AND SUNDRY CREDITORS WERE FILED ON OR ABOUT 17.05.2007. THE CASE WAS DISCUSSED ON 30.05.2007 AND THE ASSESSMENT ORDE R WAS PASSED ON THE SAME DAY. THERE IS NO EVIDENCE THAT ANY INQUIRY WAS CONDUCTED IN RESPECT OF CREDITORS AND SUNDRY CREDITORS AND THE TRUTHFULNESS OF THE CONFIRMATION LETTER WAS ACCEPTED WITHOUT DEMUR. THE QUESTION IS - WHETHER THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE? 8. 7 . THE REPLIES ON THE ISSUES BEFORE AO IT IS SEEN START FROM 19.05.2010 AND CONTINUE TILL 09.11.2010 LEADING TO THE PASSING OF THE ORDER ON 16.11.2010. THE FACT THAT THE ORDER IS CRYPTIC IS EVIDENT FROM RECORD. THE FACT THAT IT IS WITHOUT APPLICATION OF MI ND IS A CONCLUSION WHICH IS NOT DEMONSTRATED BY THE LD. COMMISSIONER IN HER ORDER ESPECIALLY SINCE THE ENTIRE FACTS, PLEADINGS AND EVIDENCES WERE BEFORE HER. HOW AN ASSESSING OFFICER WRITES THE ORDER IT IS NOT FOR THE ASSESSEE TO DICTATE. THE FACT THAT THE REVENUE SUFFERS FROM SUCH CRYPTIC ORDERS IS TO BE ADDRESSED IN HOUSE BY THE DEPARTMENT; THE TAX PAYERS AT LARGE CANNOT BE MADE TO PAY FOR THE LAPSES OF THE ASSESSING OFFICER AND IT WOULD NOT BE OUT OF PLACE TO REFER TO THE POINTED REFERENCE MADE TO THE KNOWLEDGE AND EXPERIENCE OF THE TAX I.T.A .NO. - 3222/DEL/2013 PAGE 17 OF 18 ASSESSOR S AS MADE BY THE APEX COURT IN PARSHURAM POTTERY WORKS. THE L D . COMMISSIONER EXERCISING THE POWERS U/S 263 CANNOT SHIRK THE LEGAL MANDATE OF POINTING OUT THE ERROR IN THE ASSESSMENT ORDER COUPLED WITH THE REQUIREME NT TO POINT OUT THAT THE ERROR IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IT IS NOT EACH AND EVERY ERROR WHICH THE LAW PERMITS THE C OMMISSIONER TO REVISE AS IS SETTLED BY THE APEX COURT IN MALABAR INDUSTRIES AND CONSISTENTLY FOLLOWED BY VARIOUS COURT S . EVEN OTHERWISE T HE PRESENT CASE IS A CASE OF ENQUIRY AND IS NOT A CASE OF NO ENQUIRY . IT IS WELL - SETTLED THAT THE COMMISSIONER U/S 263 CANNOT REVISE THE ORDER ON THE REASONING THAT THE ENQUIRY AS CONDUCTED BY THE AO BE SUBSTITUTED BY HER METHOD OF EN QUIRY WITHOUT FIRST MEETING THE TWIN CONDITIONS. THE ENQUIRY OF THE AO CANNOT BE SUBSTITUTED BY THE COMMISSIONER . THE LAW PERMITS THE DOING OF A THING IN A PARTICULAR MANNER AND THE LAW DOES NOT PERMIT A FISHING AND ROVING ENQUIRY BASED ON SUSPICIO N S AN D SURMISES. THE COMMISSIONER EXERCISING THE POWERS U/S 263 OF THE ACT CANNOT DIRECT A SECOND INVESTIGATION WITHOUT FIRST FINDING THE ORDER ERRONEOUS AND THAT TOO SUCH AN EXTENT THAT IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. POINTING OUT OF AN ER ROR BY THE COMMISSIONER IS NOT AN EMPTY FORMALITY. THESE TWIN REQUIREMENTS WHICH THE LD. COMMISSIONER IS REQUIRED, FULFILLED CANNOT BE SAID TO BE MET BECAUSE THE COMMISSIONER IS OF THE VIEW THAT ANOTHER VIEW MAY BE POSSIBLE. 8.8. THE DECISION OF THE DELHI HIGH COURT N A M E L Y D U G G A L & C O . STRONGLY RELIED UPON BY THE LD.CIT DR IT IS SEEN IS DISTINGUISHABLE ON FACTS AND THE PRINCIPLE ARRIVED AT IN THOSE FACTS CANNOT BE SELECTIVELY PICKED AND APPLIED TO FACTS WHICH ARE ENTIRELY DISTINGUISHABLE. IN THE FACTS OF THAT CASE THE ASSE SSEE COMPANY WAS FOUND TO BE PAYING HIGHER RATE OF INTEREST TO THE EXTENT OF 9 TO 12 % ON ITS BORROWING WHILE IT CHARGED LESSER RATE OF INTEREST ON ADVANCES MADE TO A PARTICULAR FIRM. IT WAS IN THESE CIRCUMSTANCES WHERE DIVERSION OF A PART OF ITS BORROWIN GS FOR ITS INVESTMENTS FOR CONSIDER ATIONS OTHER THAN THAT OF BUSINESS THAT THE ACTION OF THE COMMISSIONER IN INVOKING THE PROVISION OF SECTION 263 WAS CONSISTENTLY UPHELD. IN THE FACTS OF THE PRESENT CASE THERE IS NO SUCH ERROR AND IT IS ONLY A CASE OF SU SPICION THAT IF I.T.A .NO. - 3222/DEL/2013 PAGE 18 OF 18 PROPER ENQUIRY IS DONE A DIFFERENT PICTURE MAY RESULT. SUCH SUSPICIOUS DO NOT JUSTIFY THE INVOKES O F THE POWER U/S 263. 8.9. SIMILARLY THE DECISION THE DELHI HIGH COURT IN THE CASE OF GEE VEE; THE PRINCIPLE THEREIN AND HOW THE COURTS HAV E CONSIDERED ITS APPLICATION IN DG HOUSING, NDTV (CITED SUPRA) INCLUDING VARIOUS OTHER DECISIONS HAVE ALL BEEN TAKEN INTO REFERENCE THERETO IS NOT RELEVANT AS THE FINDING ARRIVED AT IS FACT SPECIFIC AND IN THE EARLIER PART OF THIS DECISION THE APPLICABILIT Y OF THE DECISION HAS ALREADY BEEN ADDRESSED. 9. ACCORDINGLY O N A CONSIDERATION OF THE ENTIRE FACTUAL AND LEGAL CONSPECTUS OF THE ISSUES AND THE ARGUMENTS OF THE PARTIES BEFORE THE BENCH, WE HOLD THE SECTION 263 IN THE FACTS OF THE PRESENT CASE HAS WRONGLY BEEN INVOKED. ACCORDINGLY THE SAME ORDER IS QUASHED AND THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 10 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 2 6 T H OF AUGUST, 2015. S D / - S D / - ( N.K.SAINI ) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 6 /08/2015 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI