Sh. Asrar Ahmed, New Delhi V. Pr. CIT, Ghaziabad

ITA 3279/DEL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7207 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 24-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY GOEL
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Principle of natural justice; Source of fund; Reason to believe; Reassessment proceedings; Set aside
• Section: 147; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI O.P. KANT, ACCOUNTANT MEMBER I.T.A. NO. 3279/DEL/2017 ASSESSMENT YEAR: 2010-11 ASRAR AHMAD, C/O. M/S. RRA TAXINDIA, D-28, SOUTH EXTENSION PART-I, NEW DELHI. V. PR. CIT, GHAZIABAD. TAN/PAN: AHCPA 4276H (APPELLANT) (RESPONDENT) APPELLANT BY: DR. RAKESH GUPTA, ADV. & SHRI SOMIL AGGARWAL, CA RESPONDENT BY: SHRI SANJAY GOEL, CIT-D.R. DATE OF HEARING: 17 01 2019 DATE OF PRONOUNCEMENT: 15 04 2019 O R D E R PER AMIT SHUKLA, JUDICIAL MEMBER THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 22.03.2017 PASSED BY THE PRINCIPAL COMMISSIONER OF INCOME TAX, GHAZIABAD IN HIS REVISIONARY JURISDICTION U/S.263 FOR THE ASSESSMENT YEAR 2010-11. IN THE GROUNDS OF APPEAL, ASSESSEE HAS RAI SED FOLLOWING GROUNDS. 1. THAT HAVING REGARD TO FACTS & CIRCUMSTANCES OF THE CASE, LD. PR. CIT HAS ERRED IN LAW AND ON FACTS IN ASSUMING JURIS DICTION U/S 263 AND HAS FURTHER ERRED IN OBSERVING THAT AO DID NOT EXAM INE THE ISSUE OF CASH DEPOSITS AND FURTHER ERRED IN HOLDING THE REASSESSM ENT ORDER DATED 30- 12-2014 IS CLEARLY AND APPARENTLY ERRONEOUS AND PRE JUDICIAL TO THE INTEREST OF REVENUE. 2. THAT HAVING REGARD TO FACTS & CIRCUMSTANCES OF THE CASE, LD. I.T.A. NO.3279/DEL/2017 2 PR. CIT HAS ERRED IN LAW AND ON FACTS IN ASSUMING J URISDICTION U/S 263 AND FURTHER ERRED IN SETTING ASIDE THE ISSUE TO THE FILE OF LD. AO WITH A DIRECTION TO EXAMINE THE ISSUE IN THE LIGHT OF OBSERVATIONS MADE IN PARA 1 TO 10 OF THE IMPUGNED ORDER AND THAT TOO WITHOUT OBSERVING THE PRINCIPLES OF NATURAL JUSTICE. 2. THE FACTS IN BRIEF ARE THAT ASSESSEE IS AN INDIV IDUAL ENGAGED IN THE BUSINESS OF TRADING OF WOOD AND PROP ERTY DEALING, WHO HAS FILED HIS RETURN OF INCOME ON 01.0 2.2011 DECLARING INCOME OF RS.1,15,960/-. THEREAFTER, ON T HE BASIS OF AIR INFORMATION THAT ASSESSEE HAS DEPOSITED CASH AG GREGATING TO RS.33,15,000/- IN HIS SAVINGS BANK ACCOUNT WITH PUNJAB NATIONAL BANK DURING THE FINANCIAL YEAR 2009-10, A NOTICE U/S.148 WAS ISSUED TO EXAMINE THE CASH DEPOSITS. 3. BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE, SHR I RAKESH GUPTA SUBMITTED THAT HERE IN THIS CASE, PRIOR TO TH E ISSUANCE OF NOTICE U/S.148, A QUERY LETTER WAS ISSUED BY THE ASSESSING OFFICER ON 23.11.2012 REGARDING SOURCE OF CASH DEPO SIT OF RS.33,15,000/-. IN RESPONSE, THE ASSESSEE HAD SUBMI TTED DETAILS OF INCOME TAX PARTICULARS, PAN AND INCOME T AX RETURN. THEREAFTER, NOTICE U/S.148 WAS ISSUED ON 11 .07.2013 AND THE ASSESSING OFFICER AND IN THE COURSE OF ASSE SSMENT PROCEEDINGS, FROM TIME TO TIME ASSESSING OFFICER HA S RAISED SPECIFIC QUERY WITH REGARD SOURCE OF CASH DEPOSIT I N SAVING BANK ACCOUNT WITH PUNJAB NATIONAL BANK ALONG WITH OT HER DETAILS AND ON VARIOUS OTHER ISSUES. THE SPECIFIC Q UERY RAISED BY THE ASSESSING OFFICER WITH REGARD TO EACH AND EV ERY ENTRY IN THE BANK ACCOUNT WERE AS UNDER:- I.T.A. NO.3279/DEL/2017 3 7. PLEASE EXPLAIN EXACT SOURCE OF CASH DEPOSIT OF RS. 33,15,000/- INTO YOUR S.B. A/C WITH PUNJAB NATIONAL BANK AS UND ER; RS.50,000/- ON 15.04.2010, RS 50,000/- ON 20.04.200 9 RS. 1,50,000/- ON 04.07.2009, RS.1,00,000/- ON 11.07.20 09, RS.10,00,000/- ON 11.02.2010, RS.6,00,000/- ON 18.0 2.2010 AND RS.9,00,000/- ON 24.02.2010, RS.2,30,000/- ON 08.03 .2010. RS.2,00,000/- ON 19.03.2010. PLEASE EXPLAIN SOURCE OF ABOVE CASH DEPOSIT WITH DOCUMENTARY EVIDENCE. 8. PLEASE ALSO EXPLAIN CASH/CHEQUE WITHDRAWAL AMOUN T OF RS. 1,00,000/- ON 24.09.2009, RS.4,49,784 ON 23.10.2010 , RS. 1,12,500/- ON 24.02.2010, TRANSFER AMOUNT OF RS.1,1 2,450/- ON 02.03.2010 AND RS. 18,00,000/- ON 04.03.2010 AND RS .2,00,000/- ON 12.03.2010. PLEASE EXPLAIN WHERE THE ABOVE AMOUN T WAS INVESTED BY YOU. 9. PLEASE EXPLAIN YOUR SOURCES OF INCOME ALONG WITH DETAILS OF FAMILY MEMBERS AND WITHDRAWALS FOR HOUSE HOLD EXPEN SES. 10. PLEASE PROVIDE THE DETAIL OF ALL THE BANK A/C M AINTAINED BY YOU. 11. IF YOU HAVE TAKEN UNSECURED LOANS THEN PLEASE F URNISH THE NAME AND COMPLETE ADDRESSES OF MONEY LENDERS FROM W HOM UNSECURED LOANS WERE TAKEN. IT SHOULD BE SUPPORTED BY IDENTITY PROOF OF MONEY LENDERS, CONFIRMATIONS, BANK ACCOUNT S ACKNOWLEDGEMENT SLIP OF INCOME TAX RETURNS OF THE M ONEY LENDERS OF THE RELEVANT FINANCIAL YEAR, IF THEY ARE FILLING TH EIR INCOME TAX RETURN. IF MONEY LENDERS ARE AGRICULTURIST THEN COGENT PROO F OF THEIR AGRICULTURAL LAND HOLDINGS AND AGRICULTURAL INCOME. 12. PLEASE ALSO FURNISH PROFIT AND LOSS A/C ALONG-W ITH YOUR BALANCE SHEET AS ON 31.03.2010 AND FURNISH STATEMEN T OF AFFAIRS FOR THE YEAR UNDER CONSIDERATION. COPY OF ALL BANK ACCOUNT STATEMENT FOR THE RELEVANT PERIOD. I.T.A. NO.3279/DEL/2017 4 4. IN RESPONSE, THE ASSESSEE VIDE LETTER DATED 14.1 1.2014 HAS SUBMITTED HIS REPLY/EXPLANATION AS UNDER:- 2. THE ASSESSEE IS AN INDIVIDUAL AND WAS ENGAGED I N TRADING OF WOOD DURING THE YEAR UNDER CONSIDERATION. BESIDES T HIS HE WAS ALSO DOING THE BUSINESS OF SALE PURCHASE OF PROPERT Y ON COMMISSION BASIS. 3. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS DEPOSITED TOTAL RS. 33,15,000.00 IN CASH IN HIS BANK ACCOUNT WITH PUNJAB NATIONAL BANK. THIS AMOUNTS INCLUDES RS. 4,50,000.0 0 OUT OF THE SALE PROCEED OF WOOD AND RS. 26,00,000.00 FROM DIFF ERENT PERSONS FOR PURCHASE OF PROPERTY ON THEIR BEHALF. REST OF T HE AMOUNT RS. 2,65,000.00 IS THE RE-DEPOSIT OF CASH WITHDRAWN BY THE ASSESSEE DURING THE COURSE OF HIS BUSINESS. 4. REGARDING PURPOSE FOR WITHDRAWAL IS CONCERNED IT IS SUBMITTED THAT IT WAS MEANT FOR THE PURPOSE OF REFU ND OF AMOUNT TO THE PROSPECTIVE BUYERS WHO HAD GIVEN THE AMOUNT FOR PURCHASE OF LAND. REGARDING RS. 1,12,450.00 TRANSFER ON 02.03.2 010 IT WAS TRANSFERRED FOR PURCHASE OF DRAFT AND DEPOSITED THE SAME AS PLOT BOOKING ADVANCE WITH BKDA, BULANDSHAHR. LATER ON TH IS AMOUNT WAS REFUNDED BECAUSE OF FAILURE IN ALLOTMENT OF PLO T. 5. THE ASSESSEE HAS NOT TAKEN AS UNSECURED LOAN FRO M ANY PERSON DURING THE YEAR. 6. SINCE THE ASSESSEE HAS NOT MAINTAINED ANY REGULA R BOOKS OF ACCOUNTS, HE HAS FILED HIS RETURN OF INCOME BY SHOW ING INCOME U/S 44AF. 7. IF ANY MORE INFORMATION IS REQUIRED, THE ASSESSE E IS READY TO FURNISH. 5. APART FROM THAT ASSESSEE HAS ALSO FILED CONFIRMA TORY LETTER AND AFFIDAVITS OF VARIOUS PERSONS FROM WHOM ASSESSEE I.T.A. NO.3279/DEL/2017 5 HAS RECEIVED ADVANCES OF RS.26 LACS FOR DEALING IN PROPERTY. THE ASSESSEE HAS ALSO FILED DATE-WISE CASH FLOW STA TEMENT INCLUDING THE SUMMARY OF BANK ACCOUNT AND INCOME TA X RETURNS FOR VARIOUS ASSESSMENT YEARS. IN RESPONSE T O ASSESSING OFFICERS SUMMON TO PRODUCE ALL THE PERSO NS, THE ASSESSEE HAD PRODUCED ALL THE PERSONS, WHOSE STATEM ENT WERE RECORDED BY THE ASSESSING OFFICER; AND BEFORE THE A SSESSING OFFICER THESE PERSONS IN THEIR STATEMENTS HAVE ALSO FILED THEIR BANK STATEMENT. 6. IT WAS AFTER CONSIDERING THE ENTIRE EVIDENCES FI LED BY THE ASSESSEE AND MATERIAL ON RECORD AND EXAMINING EACH AND EVERY SOURCE OF THE CASH DEPOSIT AND ALSO THE ASSES SEES EXPLANATION THAT RS.26 LAC WAS RECEIVED BY WAY OF A DVANCES FROM VARIOUS PERSONS AS A PROPERTY DEALER, ASSESSIN G OFFICER HAS COMPLETED THE ASSESSMENT AFTER EXAMINING EACH A ND EVERY PERSON AND THEREAFTER HAS ACCEPTED THE RETURN OF INCOME ON THE ASSESSEE. THE RELEVANT OBSERVATION OF THE LD . ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT ORDER IN THIS RE GARD READS AS UNDER:- DEPOSITS MADE INTO THE S.B. A/C NO.456800010001253 3 PUNJAB NATIONAL BANK- BRANCH, YAMUNAPURAM, BULANDSHAHAR:- ON PERUSAL OF THE AFORESAID BANK A/C IT WAS FOUND THAT THE ASSESS EE HAS DEPOSITED TOTAL AMOUNTS OF RS. 33,15,000/- INTO P.N.B DURING THE FINANCIAL YEAR OF 2009-10 RELEVANT TO THE ASSESSMENT YEAR 2010-11. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE WAS ASKED TO EXPLAIN THE EXACT SOURCES OF DEPOSITS OF RS. 33,15,000/-THE ASS ESSEE VIDE HIS REPLY DT. 05.1 2.2014 EXPLAINED THE SOURCES OF DEPO SITS ARE AS FOLLOWS:- I.T.A. NO.3279/DEL/2017 6 'THAT THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN TRADING OF WOOD DURING THE YEAR UNDER CONSIDERATION. BESIDES THIS H E WAS ALSO DOING THE BUSINESS OF SALE PURCHASE OF PROPERTY ON COMMISSION BASIS. THE ASSESSEE HAS DEPOSITED TOTAL AMOUNT OF RS. 33,15,000/- CASH IN HIS BANK ACCOUNT PUNJAB NATIONA L BANK. THIS AMOUNTS INCLUDES RS.4,50,000/- OUT OF THE SALE PROC EED OF WOOD AND RS.26,00,000/- FROM DIFFERENT PERSONS FOR PURCH ASE OF PROPERTY ON THEIR BEHALF. REST OF THE AMOUNT RS.2,65,000/- I S THE RE-DEPOSIT OF CASH WITHDRAWN BY ASSESSEE DURING THE COURSE OF HIS BUSINESS. REGARDING PURPOSE FOR WITHDRAWAL IS CONCERNED IT IS SUBMITTED BY THE ASSESSEE THAT IT WAS MEANT FOR THE PURPOSE OF R EFUND OF AMOUNT TO THE PROSPECTIVE BUYERS WHO HAD GIVEN THE AMOUNT FOR PURCHASE OF LAND REGARDING RS.1,12,450/- TRANSFER ON 02.03.2010 IT WAS TRANSFERRED FOR PURCHASE OF DEPOSITED THE SAME AS P LOT BOOKING ADVANCE WITH BKDA, BULANDSHAHR. LATER ON THIS AMOUN T REFUNDED BECAUSE OF FAILURE IN ALLOTMENT OF PLOT. THE ASSESS EE HAS NOT TAKEN AS UNSECURED LOAN FROM ANY PERSON DURING THE YEAR. SINCE THE ASSESSEE HAS NOT MAINTAINED ANY REGULAR BOOKS OF AC COUNTS, HE HAS FILED HIS RETURN OF INCOME BY SHOWING INCOME U/S.44 AF. IN SUPPORT OF EVIDENCE ABOVE PERSON GIVEN COPY OF T HE BANK PASS BOOK, CONFIRMATORY LETTERS IN THE FORM OF AFFIDAVIT ALONG WITH PHOTO ID AS PROOF OF RECEIPT OF RS.26,00,000/- FROM DIFFE RENT PERSONS FOR DEALING IN PROPERLY AND OTHER DOCUMENT ARE PLACE ON FILE. CONSIDERING THE ABOVE FACTS THE AMOUNT OF RS.33,15, 000/- IS CONCERNED, IT IS FOUND THAT ASSESSEE RECEIVED RS.4, 50,000/- OUT OF THE SALE PROCEED OF WOOD RS.26,00,000/- FROM DIFFER ENT PERSONS FOR PURCHASE OF PROPERTY, WHO HAS ACCEPTED IN HIS STATE MENT TO THIS AMOUNT. RS.2,65,000/- IS RE-DEPOSIT OF CASH WITHDRA WN BY THE ASSESSEE DURING THE COURSE OF HIS BUSINESS. THE AMO UNT OF RS.26,00,000/- IS RECEIVED BY ASSESSEE FROM DIFFERE NT PERSONS FOR PURCHASE OF PROPERTY RS.9,50,000/- RECEIVED FROM SH . TAIYAB I.T.A. NO.3279/DEL/2017 7 HASAN, RS. 10,00,000/- RECEIVED FROM SH. ANSAR AHME D, RS.3,00,000/- RECEIVED FROM SH. JULFIKAR. RS.3.50.0 00/- RECEIVED FROM MOHD. TALIB. ALL THE ABOVE PERSONS HAS GIVEN A FFIDAVIT AND ACCEPTED IN THEIR STATEMENT THAT THEY HAVE GIVEN AB OVE ADVANCE THROUGH CASH FOR PURCHASE OF PROPERTY, BUT ON FAILU RE IN GETTING THE DEAL FINALIZED, THEY HAVE RECEIVED BACK THE ABOVE A MOUNT FROM ASRAR AHMED DURING THE F.Y. 2009-10 THROUGH CASH, W HICH IS REFLECTED IN BANK ACCOUNT PASSBOOK. ON VERIFICATION IT IS FOUND GENUINE AND SATISFACTORY EXPLAINED BY PROPER EVIDEN CE. HENCE THE EXPLANATION OF THE ASSESSEE IS CORRECT. AFTER DISCUSSION INCOME RETURNED BY THE ASSESSEE OF RS. 1,58,960/- IS ACCEPTED, AND ASSESSMENT IS COMPLETED ON AN INCOME OF RS.1,58,960/- U/S. 143(3)/147 OF THE I.T. ACT. N OTICE OF DEMAND AND CHALLAN ISSUED ACCORDINGLY. 7. FROM THE PERUSAL OF THE IMPUGNED ORDER, IT SEEN THAT ADDITIONAL COMMISSIONER OF INCOME TAX, BULANDSHAHR HAS REFERRED THE MATTER TO THE PR.CIT TO INVOKE JURISDI CTION U/S.263, AFTER RECEIVING SUCH PROPOSAL SHOW CAUSE N OTICE WAS ISSUED BY THE LD. PR.CIT ONLY ON ISSUE OF CASH DEPO SIT. THE RELEVANT CONTENTS OF SHOW CAUSE NOTICE READS AS UND ER: SHOW CAUSE NOTICE U/S 263 OF THE I.T. ACT. 1961 ASSESSMENT ORDER IN THIS CASE WAS PASSED ON 30.12.2 014 U/S 143(3)/147 OF THE I.T. ACT, 1961 FOR A.Y. 2010-11 O N RETURNED INCOME OF RS L,58,960/-BY THE INCOME TAX OFFICER, W ARD-1, BULANDSHAHR. ON PERUSAL OF THE RECORDS, IT IS NOTICED THAT THE A.O. FAILED TO EXAMINE THE CREDITWORTHINESS OF THE FOUR PERSONS (B ROKERS) FROM WHOM THE ASSESSEE CLAIMED TO HAVE TAKEN ADVANCES IN CASH TOTALING TO RS. 26,00,000/- FOR ARRANGING PURCHASE OF IMMOVABLE I.T.A. NO.3279/DEL/2017 8 PROPERTIES. THE ASSESSEE HAS FILED THE AFFIDAVITS O F THESE PERSONS AND STATEMENTS OF THESE PERSONS WERE ALSO RECORDED. IN THE AFFIDAVIT THE FOUR PERSONS WERE CLAIMED THAT THEY A RE BROKERS ENGAGED IN THE TRADE OF SALE/ PURCHASE OF PROPERTIE D WHEREAS DURING THE RECORDING OF STATEMENT THEY CLAIMED THAT THEY ARE AGRICULTURISTS AND ARE NOT ASSESSED TO TAX. THE A.O . DID NOT CALL FOR EVIDENCES/ DOCUMENTS SO AS TO PROVE THEIR LINE OF B USINESS. SECONDLY, IN THE STATEMENT RECORDED AS WELL AS IN T HE AFFIDAVIT FILED BY THESE FOUR PERSONS, THERE ARE NO DETAILS OF PROP ERTY, NO DATE ON WHICH ADVANCES RECEIVED BY NO DATE OF REPAYMENT OF ADVANCES AGAINST WHICH ADVANCES IN CASH WERE RECEIVED BY THE ASSESSEE. THIRDLY, THE ASSESSING OFFICER HAS FAILED TO EXAMI NE HOW THE SAID CASH WAS UTILIZED BY THE ASSESSEE. LAST BUT NOT THE LEAST, THE A.O. DID NOT RAISE ANY QUERY FOR JURISDICTION OF GIVING ADVANCES IN CASH WHILE ALL T HE ABOVE BROKERS WERE HAVING BANK ACCOUNT AND HAD BEEN MAKING VARIOU S TRANSACTION THROUGH BANKING CHANNELS. IN FACT THE A SSESSEE IS ALSO MAINTAINING A BANK ACCOUNT BUT THE ASSESSING OFFICE R NEVER ENQUIRED AS TO WHY THE REPAYMENTS WERE MADE IN CASH . IN VIEW OF THE ABOVE FACTS, THE ORDER PASSED BY TH E A.O. APPEARS TO BE ERRONEOUS AND PREJUDICIAL TO THE REVENUE. THEREF ORE, WHY IT MAY NOT BE CANCELLED OR MODIFIED BY INVOKING THE PROVIS IONS OF SECTION 263 OF THE I.T. ACT, 1961. I HAVE BEEN DIRECTED TO REQUEST YOU TO APPEAR BEFORE THE PR. COMMISSIONER OF INCOME TAX, C .G.O. COMPLEX- 1, HAPUR CHUNGI, GHAZIABAD ON 19.01.2017 AT 12.30 P .M. EITHER IN PERSON OR THROUGH AUTHORIZED REPRESENTATIVE AND FUR NISH YOUR EXPLANATION WITH SUPPORTING DOCUMENTARY EVIDENCES. PLEASE NOTE THAT IN CASE OF NON-COMPLIANCE NECESSARY ORDER WILL BE PASSED ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. I.T.A. NO.3279/DEL/2017 9 8. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESS EE HAS FILED ITS DETAILED REPLY BY SUBMISSION DATED 03.03. 2017. 9. SHRI RAKESH GUPTA POINTED OUT THAT HERE IN THIS CASE, FIRSTLY, THE ENTIRE REOPENING U/S.147 WAS DONE ON T HE BASIS OF INFORMATION OF CASH DEPOSITS IN THE BANK ACCOUNT AN D EVEN THE REASSESSMENT PROCEEDINGS ENSUED THEREAFTER WAS ONLY FOR THE PURPOSE OF EXAMINING THE SOURCE OF SUCH CASH DE POSIT. THE ASSESSING OFFICER HAS NOT ONLY EXAMINED THE ENT IRE DEBIT AND CREDIT ENTRIES BUT ALSO EXAMINE THE SOURCE OF A DVANCE RECEIVED BY THE ASSESSEE BY EXAMINING ALL THE PERSO NS PRODUCED BEFORE HIM. THIS IS EVIDENT FROM THE COPY OF AFFIDAVITS FILED BY THESE PERSONS AND THE STATEMENT RECORDED BY THE ASSESSING OFFICER, WHO HAD EVEN EXAMINED THE IR BANK STATEMENT SO AS TO SATISFY HIMSELF THAT THE CASH AD VANCED BY THEM WERE FROM THEIR OWN SOURCES. AGAIN, IN THE SHO W CAUSE NOTICE, THE ONLY ISSUE RAISED BY THE LD. PR.CIT WAS WITH REGARD TO THE CASH DEPOSIT. HOWEVER IN THE IMPUGNED ORDER, THE LD. PCIT WITHOUT EVEN GIVING ANY SHOW CAUSE NOTICE OR CONFRONTING THE ASSESSEE HAS SET ASIDE THE ASSESSME NT AFTER GIVING DIRECTION TO THE ASSESSING OFFICER TO EXAMIN E SEVERAL OTHER ISSUES WHICH WERE NEITHER COVERED UNDER SHOW CAUSE NOTICE NOR WAS PART OF THE REASONS RECORDED. THUS , VARIOUS OTHER ISSUES RAISED BY THE LD. PCIT DESERVE TO BE Q UASHED. 10. ON THE ISSUE OF CASH DEPOSIT ALSO, HE SUBMITT ED THAT, NOWHERE THE LD. PCIT HAS HELD THAT THERE WAS ANY LA CK OF INQUIRY BY THE ASSESSING OFFICER OR PROPER INQUIRY HAS NOT BEEN DONE. FROM THE OBSERVATION MADE AT PAGE 9 OF T HE I.T.A. NO.3279/DEL/2017 10 IMPUGNED ORDER, IT CAN BE SEEN THAT HE HAS DIRECTED THE ASSESSING OFFICER TO RE-VERIFY THE CONTENTION OF TH E ASSESSEE REGARDING RECEIPT OF ADVANCE FROM SUCH PERSONS AND IN CASE SAME ARE NOT PROPERLY EXPLAINED THEN IT SHOULD BE T REATED AS UNEXPLAINED INCOME. THUS, HERE IT NOT A CASE OF LAC K OF INQUIRY OR VERIFICATION OF MATERIAL PLACED ON RECOR D BUT TO RE- VERIFY ONCE AGAIN WHICH CANNOT BE THE PURPOSE FOR I NVOKING REVISIONARY JURISDICTION U/S.263. THUS IMPUGNED ORDE R DESERVES TO BE QUASHED. 11. ON THE OTHER HAND, LD. CIT-DR SUBMITTED THAT NO W IN VIEW OF EXPLANATION 2 TO SECTION 263 OF THE ACT, LD. PR.CIT CAN SET ASIDE THE ASSESSMENT IF THE ORDER HAS BEEN PASS ED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE. HE SUBMITTED THAT ASSESSING OFFICER SHOULD HA VE EXAMINED THE SOURCE OF CASH DEPOSIT TAKING INTO CONSIDERATION, WHETHER THE EXPLANATION AND THE CONT ENTION RAISED BY THE ASSESSEE IS SUBSTANTIATED BY ANY EVID ENCE OR NOT, WHICH HERE IN THIS CASE ASSESSING OFFICER HAS NOT CONDUCTED PROPER INQUIRY, AND THEREFORE, SUCH AN AS SESSMENT ORDER HAS TO BE HELD AS PREJUDICIAL TO THE INTEREST OF REVENUE. IN SUPPORT OF HIS CONTENTION, HE RELIED UPON THE FO LLOWING JUDGMENT. HONBLE SUPREME COURT IN THE CASE OF DENIEL MERCHAN TS PVT. LTD. VS. ITO(APPEAL NO. 2396/2017) DATED 29.11.2017 . IN THIS GROUP OF CASES, HONBLE SUPREME COURT HAS DISMISSED SLPS IN CASES WHERE AO DID NOT MAKE ANY PROPER INQUIRY WHILE MAKI NG THE ASSESSMENT AND ACCEPTING THE EXPLANATION OF THE ASS ESSEE(S) INSOFAR AS RECEIPT OF SHARE APPLICATION MONEY IS CONCERNED. ON THAT BASIS THE I.T.A. NO.3279/DEL/2017 11 COMMISSIONER OF INCOME TAX HAD, AFTER SETTING ASIDE THE ORDER OF THE ASSESSING OFFICER, SIMPLY DIRECTED THE ASSESSING OF FICER TO CARRY THOROUGH AND DETAILED INQUIRY THE RELEVANT JUDGEMEN T OF HONBLE CALCUTTA HIGH COURT N R S CASE S ALSO ENCLOSED. 2. MALABAR INDUSTRIAL CO. LTD. VS CIT R20001 109 TA XMAN 66 (SC)/F20001 243 ITR 83 (SC)/R20001 159 CTR 1 (SC) WHERE HONBLE SUPREME COURT HELD THAT WHERE ASSESSI NG OFFICER HAD ACCEPTED ENTRY IN STATEMENT OF ACCOUNT FILED BY ASS ESSEE, IN ABSENCE OF ANY SUPPORTING MATERIAL WITHOUT MAKING ANY ENQUI RY, EXERCISE OF JURISDICTION BY COMMISSIONER UNDER SECTION 263(1) W AS JUSTIFIED. 12. REGARDING VARIOUS OTHER ISSUES RAISED BY THE LD . PR.CIT, HE THOUGH ADMITTED THAT, SAME WERE NOT ARISING OUT OF SHOW CAUSE NOTICE, BUT ASSESSING OFFICER WHILE EXAMINING THE ISSUE OF CASH DEPOSIT WAS REQUIRED TO LOOK INTO VARIOUS O THER ASPECTS. THUS, HE STRONGLY SUPPORTED THE ORDER OF T HE LD. PCIT. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD AND THE O BSERVATIONS AND FINDING GIVEN IN THE IMPUGNED ORDER. AS STATED ABOVE, HERE IN THIS CASE THE PROCEEDINGS HAVE BEEN INITIAT ED U/S.147 SOLELY TO EXAMINE THE CASH DEPOSITED IN SAVINGS BAN K ACCOUNT OF THE ASSESSEE WITH PNB FOR SUMS AGGREGATING TO RS.33,15,000/-. THE REASONS RECORDED BY THE ASSES SING OFFICER ARE REPRODUCED HEREUNDER:- I HAVE CERTAIN INFORMATION IN MY POSSESSION, WHICH REVEALS THAT DURING THE FINANCIAL YEAR 2009-10 RELEVANT TO THE A SSESSMENT YEAR 2010-11, THE ABOVE PERSON, SHRI ASRAR AHMED S/O SHR I KHALIL AHMED, HAS DEPOSITED CASH AMOUNTING TO RS.33,15,000/- ON V ARIOUS DATES, I.T.A. NO.3279/DEL/2017 12 INTO HIS SAVING BANK A/C WITH THE PUNJAB NATIONAL B ANK. HENCE, THIS AMOUNT OF RS 33,15,000/- REPRESENTS UNDISCLOSED INC OME OF THE ABOVE SAID PERSON. THE ABOVE PERSON HAS ALSO FAILED TO EX PLAIN THE EXACT SOURCE OF THESE DEPOSITS OF RS. 33,15,000/-. HENCE, INCOME OF RS.33,15,000/- HAS ESCAPED ASSESSMENT. SINCE, THE ABOVE PERSON HAS DEPOSITED AMOUNT OF RS 33,15,000/- ON VARIOUS DATES, THROUGH UNKNOWN SOURCES OF INCOME . HENCE, IT IS CLEAR CUT CASE OF ESCAPEMENT OF INCOME. THEREFORE, THERE IS AN ESCAPEMENT OF INCOME OF RS.33,15,000/- HAVE BEEN MA DE BY THE ABOVE PERSON. IN VIEW OF THE AFORESAID FACTS OF THE CASE I HAVE REASON TO BELIEVE THAT INCOME OF RS 33,15,000/- CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. ACCORDINGLY, TO ASSESS THE ESCA PED INCOME OF RS 33,15,000/- A NOTICE U/S. 148 READ WITH SECTION 147 IS BEING HEREBY ISSUED. 14. THUS, THE JURISDICTION WAS ACQUIRED BY THE ASSE SSING OFFICER U/S.147 TO REOPEN THE CASE ONLY FOR THE PUR POSE OF EXAMINING THE CASH DEPOSIT OF RS.33,15,000/-. FOR E XAMINING THE SOURCE, AS STATED ABOVE, ASSESSING OFFICER HAS RAISED PINPOINT QUERIES TO THE ASSESSEE. IN RESPONSE TO SU CH QUERIES, THE ASSESSEE HAD SUBMITTED THAT OUT OF TOTAL DEPOSI T OF RS.33,15,000/-, THE SOURCE OF CASH OF RS.4,50,000/- WAS OUT OF SALE PROCEED OF GOODS AS ASSESSEE WAS TRADING IN WOOD; SUM OF RS.26 LACS HAVE BEEN RECEIVED FROM DIFFERENT PER SONS FOR PURCHASE OF PROPERTY ON THEIR BEHALF; AND BALANCE RS.2,60,000/- WAS RE-DEPOSITED OUT OF CASH WITHDRAW N BY THE ASSESSEE DURING THE COURSE OF HIS BUSINESS. IN SUPP ORT OF THE SOURCE OF THE AMOUNT OF RS.26 LACS RECEIVED FROM FO UR DIFFERENT PERSONS, THE ASSESSEE HAD FIRST OF ALL, H AS FILED THEIR AFFIDAVITS; AND WHEN ASSESSING OFFICER ASKED TO PRO DUCED ALL I.T.A. NO.3279/DEL/2017 13 THE FOUR PERSONS ALONG WITH THEIR PASSBOOK AND ID P ROOF. IN RESPONSE, THE ASSESSEE HAD PRODUCED ALL THE FOUR PE RSONS, WHO HAD DULY APPEARED BEFORE THE ASSESSING OFFICER AND THEIR STATEMENT WERE RECORDED ON OATH AND HAVE ALSO PRODU CED THEIR RESPECTIVE BANK PASSBOOK BEFORE THE ASSESSING OFFICER. THE COPIES OF STATEMENT ALONG WITH THEIR PASSBOOK A RE APPEARING FROM PAGES 29 TO 43 OF THE PAPER BOOK FIL ED BEFORE US. THEREAFTER, ASSESSEE HAS ALSO FILED DATE-WISE C ASH FLOW STATEMENT ALONG WITH COMPUTATION OF INCOME AND RETU RN OF INCOME FOR THE EARLIER YEARS ALSO. AFTER EXAMINING ALL THESE PERSONS, MATERIAL PLACED ON RECORD AND SOURCE OF CA SH DEPOSIT, ASSESSING OFFICER HAS ACCEPTED IT TO BE GE NUINE. 15. LD. PR.CIT HAS EXERCISED HIS REVISIONARY JURISD ICTION U/S.263, BASED ON SHOW CAUSE NOTICE, WHEREIN THE ON LY ISSUE RAISED WAS WITH REGARD TO THE CASH AMOUNT OF RS.26 LACS WHICH IS EVIDENT FROM THE EXTRACT OF SHOW CAUSE NOT ICE INCORPORATED ABOVE. IN RESPONSE, THE ASSESSEE HAS G IVEN HIS DETAILED SUBMISSION ONCE AGAIN ALONG WITH VARIOUS C ASE LAWS. LD. PR.CIT WITHOUT REBUTTING THOSE SUBMISSIONS OR F INDING OUT ANY DISCREPANCY OR DEFECT IN THE INQUIRY CARRIED OU T IN THE SCRUTINY PROCEEDINGS AND VERIFICATION CARRIED OUT B Y THE ASSESSING OFFICER, HAS SET ASIDE THE ASSESSMENT ORD ER NOT ONLY ON THE POINT OF CASH DEPOSIT, BUT HAS ALSO RAISED M ANY OTHER ISSUES NOT CONFRONTED TO THE ASSESSEE AT ANY STAGE RIGHT FROM SHOW CAUSE NOTICE OR DURING PROCEEDINGS BEFORE HIM, WHICH ACCORDING TO HIM NEEDS TO BE EXAMINED BY THE ASSESS ING OFFICER, LIKE; I.T.A. NO.3279/DEL/2017 14 1. TO CONFIRM THE GENUINENESS OF THE OPENING CASH-IN- HAND; 2. TO EXAMINE THE CASH DEPOSIT OF RS.50,000/- ON 15.04.2009. 3. TO EXAMINE THE DETAILS OF SALES, PROFIT, OPENING ST OCK CLOSING STOCK ETC. 4. TO EXAMINE THE COMMISSION AMOUNT OF RS.58,500/- RECEIVED FROM PROPERTY DEALING BUSINESS AND; 5. LASTLY, HE ASKED THE ASSESSING OFFICER TO VERIFY A LL THE PERSONS WHO HAVE STATED TO HAVE GIVEN ADVANCES TO T HE ASSESSEE FOR THE PURCHASE OF PROPERTY. 16. ONCE, ALL THOSE ISSUES HAVE NEITHER BEEN RAISED IN THE SHOW CAUSE NOTICE NOR EVER CONFRONTED TO THE ASSESS EE DURING THE COURSE OF REVISIONARY PROCEEDINGS, THEN SUCH A DIRECTION TO THE ASSESSING OFFICER CANNOT BE GIVEN AS IT IS COMP LETELY IN VIOLATION OF NATURAL JUSTICE AND ALSO BEYOND THE SCO PE OF PROCEEDINGS U/S.263. IF DURING THE COURSE OF REVISI ONARY PROCEEDINGS, LD. PR.CIT HAS NOTICED ANY OTHER ISSUE , THEN HE HAS TO CONFRONT TO THE ASSESSEE. DURING THE COURSE OF HEARING, IN ORDER TO ASCERTAIN THIS FACT, WE HAD ASKED THE L D. CIT-DR TO PRODUCE THE ORDER-SHEET ENTRY OF THE PROCEEDINGS U/ S.263. IN RESPONSE, THE CERTIFIED COPY OF THE SAME HAS BEEN F ILED BEFORE US. FROM THE PERUSAL OF THE ORDER SHEET ENTRIES, IT IS SEEN THAT ONLY EFFECTIVE DATE OF HEARING WAS 03.03.2017, WHER EIN HE HAS NOTED THAT SHRI P.K. JAIN, FCA FILED REPRESENTATION AND REPLIES I.T.A. NO.3279/DEL/2017 15 TO THE SHOW CAUSE NOTICE AND CASE IS HEARD. THUS, N OWHERE THE ADDITIONAL ISSUES RAISED BY HIM WERE EVER CONFR ONTED TO THE ASSESSEE. IN ANY CASE, HERE SCOPE OF ENTIRE REA SSESSMENT WAS BASED ON THE REASONS RECORDED BY THE ASSESSIN G OFFICER AND LD. PR.CIT CANNOT TRAVELLED BEYOND THE REASONS TO ROPE IN OTHER ISSUES NOT FALLING IN THE REASONS RECORDED. T HUS, WE AGREE WITH THE CONTENTION OF THE LEARNED COUNSEL TH AT ANY SUCH DIRECTION IS BEYOND THE SCOPE OF RE-ASSESSMENT PROCEEDINGS AS THE SAME CANNOT BE RAISED IN REVISIO NARY JURISDICTION U/S 263. HENCE, ALL OTHER DIRECTION GIV EN BY THE LD. PCIT IS QUASHED. 17. EVEN ON THE ISSUE OF CASH DEPOSIT, AS HAS ST ATED ABOVE, ASSESSING OFFICER HAS DULY EXAMINED NOT ONLY ALL TH E PERSONS WHO HAVE GIVEN THE ADVANCE TO THE ASSESSEE BUT ALSO THE ENTIRE CASH FLOW STATEMENT, VIS--VIS THE ASSESSEE S COMPUTATION OF INCOME AND CASH FLOW STATEMENT COMIN G FROM ASSESSMENT YEAR 2009-10. LD. PR.CIT WITHOUT FINDING ANY DEFECT IN THE INQUIRY CONDUCTED BY THE ASSESSING OF FICER HAS SIMPLY CANCELLED THE ASSESSMENT ORDER WHICH CANNOT BE SUSTAINED. IN CASE HE IS OF THE OPINION THAT ASSESS ING OFFICER INQUIRY AND VERIFICATION IS LACKING, THEN IT IS INC UMBENT UPON THE LD. PR.CIT TO HIMSELF CONDUCT PRIMA FACIE INQUIRY ON HIS OWN SO AS TO REACH TO A CONCLUSION THAT, EITHER THE ASSESSING OFFICERS INQUIRY WAS NOT PROPER OR THERE IS ANY IN HERENT LACK OF APPLICATION OF MIND. THE HON'BLE DELHI HIGH COUR T IN THE FOLLOWING CASES:- I) DIT VS. JYOTI FOUNDATION 357 I TR 388 (DEL); II) CIT VS. SUNBEAM AUTO LTD., 332 ITR 167 (DEL); AND I.T.A. NO.3279/DEL/2017 16 III) ITO VS. D.G. HOUSING PROJECTS LTD, 343 ITR 329 (DEL), HAS CATEGORICALLY HELD, THE REVISING AUTHORITY MUST MAK E AN INQUIRY BEFORE MAKING A BELIEVE THAT ASSESSMENT ORD ER WAS ERRONEOUS AND WITHOUT MAKING ANY SUCH INQUIRY HE CA NNOT REMAND BACK THE ISSUE ONCE AGAIN TO CONDUCT THE INQ UIRY WHEN ASSESSING OFFICER HAS CONDUCTED INQUIRY BEFORE CONCLUSION OF ASSESSMENT. THUS, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND THAT IT I S A FIT CASE FOR CANCELLING THE ASSESSMENT FOR FRAMING FRESH EVE N ON THE ISSUE OF EXAMINING THE SOURCE OF CASH DEPOSIT, BECA USE WHAT LD. PR.CIT HAS DIRECTED THE ASSESSING OFFICER TO RE -VERIFY THE RECEIPT OF ADVANCE FROM THE PERSONS WHICH HAS BEEN DULY EXAMINED BY THE ASSESSING OFFICER IN THE MANNER DIS CUSSED ABOVE. ACCORDINGLY, THE IMPUGNED ORDER U/S.263 IS Q UASHED. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH APRIL, 2019. SD/- SD/- [O.P. KANT] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15 TH APRIL, 2019 PKK: