Shri Ghulam Mohiudin Mir, Kashmir V. The Income-tax Officer, Kashmir

ITA 340/ASR/2014

• Counselvise Citation: 34020914 RSA 2014
• Duration Of Justice: 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 26-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJAN GUPTA CAS; SSH R K GUPTA
• Keywords: Opportunity of being heard; Tax effect
• Section: 143(3); 263; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.340(ASR)/2014 ASSESSMENT YEAR:2009-10 PAN :AGLPM2292D SHRI GHULAM MOHIUDIN MIR, VS. COMMISSIONER OF INCOM E TAX, PROP. M/S. MIR SALES CORPORATION, JAMMU. KADAL BAL, PAMPORA, PULWAMA,. KASHMIR. (APPELLANT) (RESPONDENT) APPELLANT BY:S/SH. R.K.GUPTA & RAJAN GUPTA, CAS RESPONDENT BY::SH.TARSEM LAL, DR DATE OF HEARING:12/03/2015 DATE OF PRONOUNCEMENT:26/03/2015 ORDER PER B.P.JAIN,AM: THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE COMMISSIONER OF INCOME TAX, JAMMU DATED 29.03.2014 AGAINST THE O RDER PASSED U/S 263 OF THE INCOME TAX ACT, 1961 ( IN SHORT, THE ACT). TH E ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE ORDER PASSED BY THE WORTHY COMMISSIONE R OF INCOME TAX, JAMMU IS BAD IN LAW AGAINST THE FACTS OF THE C ASE. ITA NO.340(ASR)/2014 2 2. THAT THE ORDER PASSED UNDER SECTION 263 OF THE I NCOME TAX ACT 1961 FOR THE ASSESSMENT YEAR 2009-10 WITHOUT APPLIC ATION OF JUDICIAL MIND. 3. THAT THE WORTHY COMMISSIONER OF INCOME-TAX DID N OT BOTHER TO UNDERSTAND THAT THE CASH RECEIVED AGAINST SALES DOE S NOT COVER ANY OF THE PROVISIONS OF SECTION UNDER THE INCOME TAX ACT, WHEN THE CASH SALES 100% SUBJECT TO TAX, UNDER THE VAT OF 2005 JAMMU & KASHMIR. 4. THAT INSTEAD OF ENQUIRY TO BE CONDUCTED IN THE C ASE/CASE OF THE ASSESSEE FROM WHOM THE PAYMENT OF SALES RECEIVED BY THE ASSESSEE, THE WORTHY COMMISSIONER OF INCOME-TAX, JA MMU IS OF THE VIEW THAT THE ENQUIRY IS TO BE MADE IN THE CASE OF ASSESSEE WHICH IS FULLY OBJECTED. 5. THAT THE ORDER OF THE WORTHY COMMISSIONER OF INC OME TAX, JAMMU IS ILLEGAL, ARBITRARILY AND AGAINST THE ESTAB LISHED FACTS LIABLE TO BE QUASHED. ANY OTHER GROUNDS OF APPEAL WHICH MAY PLEASE BE PER MITTED TO BE TAKEN AT THE TIME OF HEARING. 2. THE BRIEF FACTS OF THE CASE AS ARISING FROM THE ORDER OF THE LD. CIT ARE REPRODUCED FOR THE SAKE OF CONVENIENCE AS UNDER: IN THIS CASE, THE ASSESSMENT FOR THE A.Y.2009-10 W AS COMPLETED UNDER SECTION 143(3) OF THE I.T. ACT, 1961, BY THE INCOME TAX OFFICER, ANNANTNAG, KASHMIR ON 16.12.2011 AT TOTAL INCOME OF RS.5,05,975/-. THEREAFTER, A PROPOSAL UNDER SECTION 263 OF THE I.T . ACT,1961 WAS RECEIVED FROM THE SAID ASSESSING OFFICER VIDE HIS L ETTER NO.3705 DATED 14-03-2014 WHEREIN IT HAS BEEN SUBMITTED THAT THE T HEN ASSESSING OFFICER HAS ALLOWED THE CREDIT OF PREPARED TAXES OF RS.5,50,787/- WHICH WAS NOT ALLOWABLE, AS THE SAME WAS NOT DEPOSI TED UNDER THE CORRECT PAN AND NO CORRECTION OF THE SAME HAS BEEN CARRIED OUT BY THE THEN ASSESSING OFFICER. THE ASSESSING OFFICER F URTHER, STATED IN HIS ITA NO.340(ASR)/2014 3 PROPOSAL THAT THE ASSESSING OFFICER HAS NOT TAKEN A NY ACTION IN THIS CASE WHERE ASSESSEE HAS ADMITTED TO HAVE RECEIVED C ASH PAYMENT OF MORE THAN RS.20,000/- FROM THE BOGUS SUNDRY DEBTORS FROM WHOM CASH HAS BEEN ALLEGED TO HAVE BEEN RECEIVED AMOUNTING TO RS.2,08,37,841/- ON WHICH THE POTENTIAL TAX EFFECT @ 30% WILL BE ARO UND RS.62,51,352/- BESIDES THE ABOVE TAX EFFECT THE PENALTY UNDER SECT ION 271(1) (C ) OF THE I.T.ACT,1961 AT THE MINIMUM RATE OF 100% SHALL ALSO BE RS.62,51,352/-. ACCORDINGLY, THE ASSESSING OFFICER REQUESTED FOR THE CANCELLATION OF THE ASSESSMENT ORDER PASSED UNDER S ECTION 143(3) FOR THE ASSESSMENT YEAR 2009-10 AS THE ORDER IS ERRONEO US AND IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 2. THE PROPOSAL RECEIVED FROM THE PRESENT ASSESSING OF FICER AND THE RELEVANT RECORDS WERE CAREFULLY EXAMINED AND A SHOW CAUSE NOTICE VIDE NO. 7723 DATED 21-03-2014 WAS SENT TO T HE ASSESSEE WITH A REQUEST TO EXPLAIN AS TO WHY THE ABOVE REFER RED ASSESSMENT MAY NOT BE CANCELLED DIRECTING A FRESH A SSESSMENT TO BE MADE IN HIS CASE IN TERMS OF THE PROVISIONS O F SECTION 263 OF THE I.T. ACT, 1961 AND HEARING WAS FIXED ON 26-0 3-2014. IN RESPONSE TO THE SAID SHOW CAUSE NOTICE, SHRI RANJAN GUPTA, CA ATTENDED THE PROCEEDINGS AND FILED HIS REPLY STATIN G THEREIN AS UNDER:- IN THIS CONNECTION, IT IS SUBMITTED THAT THE ASSE SSEE HAS BEEN DEALING THE ITEMS MENTIONED IN THE ANNEXED TIN NO. OF VAT ACT,2005. THE ABOVE SAID ASSESSEE HAS DULY BEEN REG ISTERED WITH THE COMMERCIAL TAX OFFICER CIRCLE (K) SRINAGAR, KAS HMIR. PHOTOCOPY OF TIN NUMBER AND CST REGISTRATION AS WEL L ANNEXED HERWITH FOR YOUR REFERENCE AND RECORDS. THAT ALL THE ITEMS THE ASSESSEE HAS BEEN DEALING 10 0% EITHER COVERED UNDER VAT, ACT, 2005 OR CST, ACT 1956 ALL THE GOODS IMPORTED EITHER STATE AND/OR INTERSTATE. SINCE ALL THE GOODS IMPORT ED EITHER OF THE CASE, USE TO PASS CHECK POST LOWER MUNDA, NOT EVEN A SING LE ITEM HAS BEEN IMPORTED AND CAN BE IMPORTED WITHOUT A CHECK POST O F LOWER MUNDA. THE SAID FACTS MAY BE VERIFIED AT YOUR OWN LEVEL FO R THE CORRECTNESS OF THE TRANSACTION SO FAR AS PURCHASES ARE CONCERNED. ITA NO.340(ASR)/2014 4 ALL THE PAYMENTS TO THE SUPPLIER, I.E., 100% THROUG H BANK. THE SAID TRANSACTION DULY VERIFIED BY THE A.O AND NOTHING WA S FOUND AGAINST THE ASSESSEE. YOUR GOODSELF HAS MENTIONED IN PARA 2 OF PAGE-3 OF LETTER DATED 21- 03-2014 WHICH IS AS UNDER:- WHILE COMPLETING THE ASSESSMENT FOR THE ASSESSMENT YEAR 2009-10 IN THE CASE OF M/S. MIR SALE CORPORATION KADALBAL, PAMPORE, PULWAMA, IT IS NOTED THAT YOU HAVE MADE PURCHASES I N CASH AMOUNTING FROM M/S. MIR SALES CORPORATION, KADALBAL , PAMPORE, PULWAMA DURING THE PERIOD 01-04-2008 TO 31-03-2009. THAT IT IS WELL SETTLED LAW THAT THE PROVISION OF S ECTION 263 CANT BE INVOKED IF THE INFORMATION IS BASED ON THIRD PARTY AND IT IS AGAINST THE PROVISION OF SECTION 263 WHICH IS AS UNDER:- THE COMMISSIONER MAY CALL FOR OR EXAMINE THE RECORD S OF ANY PROCEEDINGS UNDER THIS ACT, AND IF HE CONSIDERS THA T ANY ORDER PASSED THEREIN BY THE A.O. IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, HE MAY, AFTER GIVING THE ASSES SEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR M ODIFYING THE ASSESSMENT, OR CANCELING THE ASSESSMENT AND DIRECTI NG A FRESH ASSESSMENT. FROM THE BEAR READING OF THE SECTION ARBITRARILY I NVOKED, THERE MUST BE TWO THINGS MANDATORY ON THE PART OF COMMISSIONER THAT THE ORDER OF THE A.O MUST BE ERRONEOUS AND PREJDUCIAL TO THE INTEREST OF REVENUE. SO FAR AS A.O IS CONCERNED HE WAS RIGHTLY MADE THE ASSESSMENT SINCE ALL THE SALES ARE MADE FULLY VOUCHED AND NOT A SING LE DISCREPANCY FOUND DURING THE COURSE OF ASSESSMENT. THE INCOME T AX ACT,1961 RIGHT FROM STARTING TO END DOES NOT BAR THE ASSESSEE TO R ECEIVED THE CASH ON ACCOUNT OF SALES MADE TO THE THIRD PARTIES, IT IS O NLY MANDATORY ON THE PART OF PARTIES WHO GIVE CASH TO THE PURCHASER (FRO M WHOM THE THIRD PARTIES MADE PURCHASERS). IF AT ALL THE PROVISION OF SECTION INVOKED ONLY INV OKED IN THE CASE OF THIRD PARTIES AND NOT IN THE CASE OF ASSESSEE, IF I NVOKED SHALL BE BAD IN LAW AND AGAINST THE PROVISIONS OF THE INCOME TAX AC T,1961. ITA NO.340(ASR)/2014 5 THE ESTABLISHED PRIME FACIA, KEEPING INTO CONSIDERA TION THE PROVISIONS OF SECTION 263, ASSESSMENT ORDER AND NATURE OF PAYM ENT RECEIVED (AGAINST THE SALE PROCEEDS) WILL IT AMOUNT TO INVOK E THE PROVISION OF SECTION 263 WHEN THERE IS NO EXISTENCE OF ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. MOREOVER, ALL THE SALES MADE TO THE THIRD PARTIES A RE FULLY TAXABLE ITEMS FOR WHICH THE ASSESSEE HAS FILED QUARTERLY RE TURNS TO THE CONCERNED COMMERCIAL TAX OFFICER WHICH IS ON RECORD S AND MAY BE VERIFIED BY YOUR GOODSELF FOR INVOKING THE PROVISIO N OF SECTION 263 IN THE CASE OF THIRD PARTIES ONLY AND NOT IN THE CASE OF ASSESSEE. YOUR GOODSELF MUST BE AWARE OF PROVISION OF SECTION MENT IONED IN THE CHAPTER. THE PARTIES MENTIONED IN THE PAGE-4 FROM SERIAL NO. 1 TO 11 NARRATING EXERCISE MADE FOR INVOKING THE PROVISION OF SECTION 263 ARBITRARILY IS FULLY OBJECTED. SINCE THE MATTER IS RELATING TO PREVIOUS YEAR 2008- 09 RELEVANT TO ASSESSMENT YEAR 2009-10 IN THE SAID PERIOD THERE WA S TURMOIL OF AMARNATH YATRA (BAM BAM BHOLE) AND WHOLE OF THE STA TE DISTURBED AND THE ESTABLISHMENTS MOSTLY REMAINED CLOSED FOR M ORE THAN 3 MONTHS. THE MATERIAL IS BEING USED BY WAY OF EXERCI SE MADE AGAINST THE ASSESSEE IS BAD IN LAW. THE POWER VESTED IN THE PROVISION OF SECTION 263 NO T VESTED IF MATERIAL IRREGULARITIES. THE ASSESSEE PROVIDED THE DETAILS OF SUNDRY DEBTORS ARE NOT DENIED BUT THE IDENTITY TO PROVE IS NOT MANDATORY TO PROVE GEN UINENESS OF THE DEBTORS (IN THE CASE CASH RECEIVED AGAINST SALES). IT IS NOT OBLIGATORY ON THE PART OF ASSESSEE TO INQ UIRE FROM THE PURCHASER WHETHER YOU ARE A ASSESSEE AND/OR BONAFID E PURCHASER AND FOR THIS PURPOSE NOT EVEN A SINGLE PROVISION OF SEC TION OF INCOME TAX ACT.1961 ARE APPLICABLE. KINDLY REFER NOTICE UNDER SECTION 154/155 FOR THE A SSESSMENT YEAR 2009-10 VIDE NO.ITR/ANY/2013-14/852 DATED 31-10-201 3 PHOTOCOPY OF THE SAME ANNEXED HEREWITH FOR YOUR REFERENCE AND RECORDS ON THE DAY OF HEARING THE A.O ALLOWED THE TAX PAID TO THE ASSESSEE AFTER VERIFYING FROM OLTAS THAT THE TAX DEPOSITED ON NON- EXISTING PAN. THE ISSUE RAISED SO FAR AS SAID IS CONCERNED DOES N OT EMPOWER YOU TO INVOKE THE PROVISION OF SECTION 263 ARBITRARILY AND WHICH IS FULLY ITA NO.340(ASR)/2014 6 OBJECTED. COPY OF THE INCOME TAX SIDE ALSO ANNEXED HEREWITH FOR YOUR REFERENCE AND RECORDS. IT IS STRANGE HOW YOUR GOODSELF YOU HAVE PROCEEDED AGAINST THE ASSESSEE BY INVOKING THE PROVISION OF SECTION 263 A RBITRARILY WHEN THE SAID ORDER IS NOT EXISTENCE, BECAUSE THE BASIC ORDE R FURTHER RECTIFY WHICH IS ON RECORD. (PHOTOCOPY OF THE NOTICE UNDER SECTION 154/155 DATED 31-10-2013 ANNEXED HEREWITH FOR YOUR REFERENC E AND RECORDS) THE NOTICES ISSUED TO THE SELLERS ON THE BASIS OF N OTICE UNDER SECTION 154/15 TO MANIPULATE TO INVOKE THE PROVISION OF SEC TION 263 SINCE THE PROVISIONS OF SECTION IS ONLY APPLICABLE FOR PRIME FACIE ARITHMETICAL MISTAKE/MISTAKES WHICH IS FULLY OBJECTED. YOUR GOODSELF REPRODUCED IN PAGE-3 NOTICE DATED 21- 03-2014 OF THE LETTER DATED 25-02-2014 OF THE ASSESSING OFFICER WH ICH IS AS UNDER:- CALLING OF INFORMATION FOR THE FINANCIAL YEAR 2008 -09 MATTER REGARDING. YOUR GOODSELF HAS FAILED TO MENTIONED THE LAST PARA OF LETTER DATED 25- 02-2014 OF THE A.O. WHICH IS AS UNDER:- AS THE SAME IS REQUIRED URGENTLY BY THIS OFFICE. PLEASE BE INFORMED THAT IN CASE OF FAILURE TO PROVIDE THE ABOVE INFORM ATION, YOUR CASE WILL BE DEALT AS PER THE PROVISIONS OF INCOME TAX ACT.19 61. IT IS AGAIN STRANGE YOUR ACTION IS ONLY THE BASIS O F LETTER DATED 25-02- 2014 OF THE A.O AND NOT ON THE BASIS OF RECORD ON R ECORD ARBITRARILY. NON APPLICATION OF JUDICIAL MIND TO CHARGE THE ASSE SSEE THAT FURNISHING BOGUS SUNDRY DEBTORS AGAINST THE SALES I S A MATTER OF SERIOUS CONCERN THAT UNDER WHAT CIRCUMSTANCES THE P ROVISIONS OF SECTION INVOKED ARBITRARILY WHICH IS FULLY OBJECTED . WHETHER ON THE ESTABLISHED FACTS AND RULE OF LAW TH E PROVISION OF SECTION 263 CAN BE ARBITRARILY INVOKED IS NOT AMOUN T TO BAD IN LAW. YOUR GOODSELF HAS NOT GONE THROUGH THE RECORD PROPE RTY SINCE THE BASIS ADOPTED BY YOU FOR REOPENING OF THE CASE UNDE R SECTION 263 ARE AS UNDER: (1) ON THE PERUSAL OF THE RECORDS, IT IS SEEN THAT THE ASSESSEE HAS DEPOSITED TAX UNDER PAN ACJPM2292D INSTEAD OF ACLPM 2292D ALSO AS PER AST SHEET UNDER SECTION 143(3) AVAILABL E ON RECORD ITA NO.340(ASR)/2014 7 CREDIT OF PREPAID TAXES HAS BEEN ALLOWED AT NIL. HO WEVER, THE THEN ASSESSING OFFICER HAS ISSUED DEMAND NOTICE OF RS.11 630.00 AFTER ALLOWING OF PREPAID TAXES TO THE TUNE OF RS.555,078 .00 AND NOT RS.5,50,787.00 AS MENTIONED IN THE LETTER DATED 21- 03-2013 WHICH WAS NOT ALLOWABLE AS THE SAME WAS NOT DEPOSITED UND ER THE CORRECT PAN AND NO CORRECTION OF THE SAME HAS BEEN CARRIED OUT BY THE THEN A.O BEFORE AFFORDING CREDIT. (2) IT IS ALSO SEEN THAT AS PER DETAIL ON ACCOUNT OF SU NDRY DEBTORS FROM WHOM YOU HAVE ADMITTED TO HAVE RECEIVE CASH PAYMENT OF MORE THAN RS.20,000.00 DURING THE ASSESSMENT YEAR ARE BO GUS. AS PER RECORD, NO ACTION HAS BEEN TAKEN. SIR, HAD IT BEEN ADMITTED RECORDS OF THE A.O. GONE THROUGH BY YOUR GOODSELF WHY THE NOTICE UNDER SECTION 154/155 DATED 31-10-2013 SLIPPED. ON RECORD THE ALLEGED ORDER DULY RECTIFIED AND AFTE R VERIFYING FROM THE INCOME TAX SITE THAT THE TAX HAS BEEN DEPOSITED ON NON-EXISTENT PAN, RIGHTLY ALLOWED THE CREDIT OF THE SAME BY THE A.O U NDER SECTION 154/155. AS ALLEGED IN THE LETTER DATED 21-03-2014 THAT THE ASSESSEE RECEIVED CASE PAYMENT OF MORE THAN RS.20000.00 DURI NG THE ASSESSMENT YEAR UNDER CONSIDERATION ARE BOGUS. IN THIS CONNECTION IT IS SUBMITTED THAT THE ALLEGE D CASH PAYMENT RECEIVED AGAINST THE SALE PROCEEDS DULY REFLECTED I N THE TRADING ACCOUNT, VAT RETURN AND ON RECORD WHICH WERE NEVER DOUBTED NOR EVEN A SINGLE DISCREPANCY POINTED OUT DURING THE CO URSE OF ASSESSMENT PROCEEDING AND/OR PROCEEDING AFTER THAT. THE INCOME TAX 1961, DOES NOT DEBAR THE ASSESSEE T O RECEIVE CASH PAYMENT AGAINST SALES FROM THIRD PARTY. THE CA SH PAYMENT RECEIVED AGAINST THE SALES ALREADY TAXED IF YOUR GO ODSELF ARBITRARY INVOKED THE PROVISION OF SECTION 263 SHALL NOT AMOU NT TO DOUBTED TAXATION BUT ALSO BAD IN LAW. SIR, BEFORE OPERATING PROVISION OF SECTION 263 OF THE I.T.ACT, 1961, THERE THREE MANDATORY REQUIREMENTS WHICH ARE AGAIN AS UNDER:- (1) RECORDS ITA NO.340(ASR)/2014 8 (2) ERRONEOUS AND (3) IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. SINCE THE RECORD NOT PROPERLY GONE THROUGH AS STATE D ELSEWHERE, THERE EXIST NO MISTAKE/MISTAKES WHICH INVOKE THE WO RD ERRONEOUS AND THERE IS NO LOSS TO THE REVENUE. SIR, THE CASE IS CRYSTAL CLEAR KEEPING IN TO CONSID ERATION THE ESTABLISHED FACTS/EVIDENCES ON RECORD AND PROVISION OF SECTION OF THE I.T.ACT,1961 THE PROCEEDINGS INITIATED UNDER SECTION 263 WITHOUT THE MANDATORY REQUIREMENTS ARE FULLY OBJECT ED. IT IS THEREFORE, REQUESTED THE WRONGLY INITIATED PROCEEDINGS BY INVOKING THE SECTION 263 ARBITRARILY KINDLY BE FILED FOR THE SAKE OF JUSTICE WHICH LIES IN YOUR AU GUST HANDS. 3. AFTER CONSIDERING THE REPLY FILED BY THE COUNSEL OF THE ASSESSEE AND ALSO THE FACTS BROUGHT ON RECORD, I HO LD THAT WHILE PASSING THE ASSESSMENT ORDER UNDER SECTION 143(3) O F THE INCOME TAX ACT,1961 ON 16.11.2011, NO ENQUIRIES HAV E BEEN MADE AND AS SUCH, THE ORDER PASSED IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE, THEREFORE, THE SAID ASSESSMENT ORDER DATED 16.11.2011 IS HEREBY CANCELL ED WITH THE DIRECTIONS TO THE ASSESSING OFFICER TO MAKE A FRESH ASSESSMENT AFTER CONDUCTING PROPER ENQUIRIES AND, AFTER GIVING REASONABLE AND ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE. 3. THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT THE AO ISSUED NOTICE DATED 31.10.2013 U/S 154/155 OF THE ACT, WHEREAS TH E ASSESSMENT WAS MADE FOR THE IMPUGNED ASSESSMENT YEAR ON 16.12.2011 U/S 143(3) OF THE ACT, BY MAKING AN ADDITION OF RS. 19,770/- ON ACCOUNT OF DI SALLOWANCE OF CERTAIN UNVOUCHED EXPENSES. IN THE NOTICE U/S 154/155 OF TH E ACT, THE AO REFERRED TO THE PAYMENT OF TAXES AMOUNTING TO RS.55,078/- HAVIN G BEEN PAID AGAINST THE ITA NO.340(ASR)/2014 9 WRONG PAN AND THE CREDIT OF THE SAME WAS ALLOWED BY THE THEN AO MISTAKENLY AND THEREFORE, THE SAME IS REQUIRED TO BE WITHDRAWN. 4. THE AO AFTER ISSUING THE NOTICE DATED 31.10.2013 HAS NOT TAKEN ANY ACTION AGAINST THE ASSESSEE. HOWEVER, ON THE DATE O F HEARING TO THE NOTICE U/S 154/155, AFTER VERIFYING THE TAX DEPOSITED, THE AO ALLOWED THE TAX PAID AND DID NOT TAKE ANY ACTION THEREAFTER IN THIS REGARD. 5. HOWEVER, THE AO IN THE NOTICE U/S 154/155 DATED 31.10.2013 POINTED THAT SINCE THE PAYMENT OF TAXES HAVE BEEN MADE AGAI NST THE WRONG PAN AND THE CREDIT OF THE SAME IS ALLOWED BY THEN A.O., IS REQUIRED TO BE WITHDRAWN. THE AO STATED THAT ON PERUSAL OF THE ACCOUNT OF SUN DRY DEBTORS, IT IS NOTICED THAT THE ASSESSEE HAS RECEIVED CASH PAYMENTS EXCEE DING RS.20,000/- FROM THE PARTIES/PERSONS MENTIONED IN ANNEXED ANNEXURE A AND THE ASSESSEE WAS REQUESTED TO FURNISH COMPLETE PARTICULARS OF T HESE PERSONS/PARTIES ALONGWITH COMPLETE ADDRESSES, PAN AND THE ASSESSING OFFICER WHERE THE DEBTORS ARE FILING RETURNS OF INCOME. IT WAS ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE THAT NO ACTION U/S 154/155 OF THE ACT WAS TAKEN BY THE AO. BUT THE AO SUBMITTED THE REPORT TO THE LD. C.I.T., WHO ISSU ED A SHOW CAUSE NOTICE U/S 263 OF THE ACT. THE ASSESSEE SUBMITTED THE EXP LANATION, WHICH IS REPRODUCED HEREINABOVE. BUT THE LD. CIT NOT BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND WITHOUT ASSIGNING A NY REASONS PASSED A NON- ITA NO.340(ASR)/2014 10 REASONED NONE-SPEAKING ORDER AND HELD IN PARA 3 OF HIS ORDER THAT THE ORDER OF THE A.O. IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THEREFORE, HE CANCELLED ASSESSMENT ORDER OF TH E AO DATED 16.11.2011 WITH THE DIRECTION TO THE AO TO MAKE A FRESH ASSESS MENT AFTER CONDUCTING PROPER ENQUIRIES AND AFTER GIVING REASONABLE AND A DEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE LD. CIT HAS ONLY G IVEN A SHOW CAUSE NOTICE THAT THE ASSESSEE HAS RECEIVED CASH PAYMENTS EXCEED ING RS.20,000/- FROM THE SUNDRY DEBTORS. THIS WAS THE ONLY OBJECTION IN THE SHOW CAUSE NOTICE OF THE LD. CIT. IT WAS ARGUED BY THE LD. COUNSEL FOR THE A SSESSEE THAT THE ASSESSEE HAD BEEN DEALING IN ITEMS WHICH ARE 100% COVERED U NDER VAT ACT, 2005 OR CST ACT, 1956 AND ALL THE GOODS ARE IMPORTED EITH ER INTERSTATE OR WITHIN STATE. IT WAS STATED THAT SINCE ALL THE GOODS ARE IMPORTED, THEREFORE, THEY USED TO PASS CHECK POST LOWER MUNDA AND NOT EVEN A SINGL E ITEM HAS BEEN IMPORTED WITHOUT PASSING CHECK POST OF LOWER MUND A. THE PAYMENTS TO THE SUPPLIERS OF THE PURCHASES HAVE BEEN MADE THROUGH BANK WHICH HAS BEEN DULY VERIFIED BY THE AO AND NOTHING HAS BEEN FOUND AGAINST THE ASSESSEE. IN THE LETTER DATED 21.03.2014 AT PARA 2 OF PAGE -3, IT HAS BEEN MENTIONED BY THE AO THAT WHILE COMPLETING ASSESSMENT FOR THE ASS ESSMENT YEAR 2009-10, IT WAS NOTICED THAT THE PARTIES LIKE M/S. MIR SALES CO RPORATION, KADALBAL, PAMPORE, PULWAMA HAVE MADE PURCHASES IN CASH DURIN G THE PERIOD ITA NO.340(ASR)/2014 11 01.05.2008 TO 31.03.2009. THESE ARE THE INFORMATION FROM THE THIRD PARTY AND MOREOVER ALL THE SALES MADE TO THIRD PARTY ARE FULLY TAXABLE ITEMS WHICH HAS BEEN DECLARED BY THE ASSESSEE IN ITS QUARTERLY RETURNS TO THE CONCERNED COMMERCIAL TAX OFFICER AND CAN BE VERIFIED BY THE LD. CIT. THE ASSESSEE HAS PROVIDED DETAILS OF ALL THE SUNDRY DEBTORS THA T THE ASSESSEE HAS RECEIVED CASH AGAINST THE SALES MADE AND THEREFORE, IT IS NO T MANDATORY TO PROVE THEIR IDENTITY. IN CASE ANY ENQUIRY IS TO BE MADE, IT HAS TO BE MADE IN THE CASE OF THE SUNDRY DEBTORS AND NOT IN THE CASE OF THE ASSES SEE. THE ASSESSEE HAVING MADE GENUINE PURCHASES FOR WHICH THE PAYMENTS HAVE BEEN MADE 100% THROUGH BANK, IS NOT UNDER DISPUTE. THE SALES HAVE BEEN MADE AGAINST THOSE PURCHASES AGAINST WHICH THE ASSESSEE HAS RECEIVED T HE CASH IS ALSO NOT UNDER DISPUTE AND NO VIOLATION OF ANY OF THE PROVISIONS OF THE ACT HAS BEEN MADE AND THEREFORE, THE AO FOR THE CASH SALES IS NOT RE QUIRED TO MAKE ANY ENQUIRY AND THEREFORE, A VIEW HAS BEEN TAKEN BY THE AO NOT TO MAKE ANY ENQUIRY FROM THE DEBTORS. THE LD. CIT HAVING FORMED AN ANOT HER VIEW CANNOT INVOKE THE PROVISIONS OF SECTION 263 OF THE ACT, ESPECIALL Y WHEN THERE IS NO VIOLATION OF ANY OF THE PROVISIONS OF THE ACT. THER EFORE, IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F MALABAR INDUSTRIAL CO. LTD VS. CIT (2000) 243 ITR 43 (SC), WHERE THE TWO VIEWS OF PROVISIONS OF SECTION 263 OF THE ACT CANNOT BE INVOKED. AS SUCH, THE LD. CIT IS NOT ITA NO.340(ASR)/2014 12 JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT AND THE ORDER OF THE AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. MOREOVER, AS DISCUSSED ABOVE, THE LD. CIT HAS NOT PASSED A WELL REASONED ORDER AND AFTER ISSUANCE OF SHOW CAUSE NOTICE TO A SSESSEE, HAS SIMPLY PROCEEDED IN PARA 3 OF HIS ORDER BY ISSUING DIRECTI ON TO THE AO TO CONDUCT PROPER ENQUIRY BEFORE MAKING FRESH ASSESSMENT SINCE THE ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, PRAYED TO CANCEL THE ORDER OF THE LD.. CIT . 6. THE LD. DR RELIED UPON THE ORDER OF THE LD. CIT. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE UNDISPUTED FACTS IN THE PRESENT CASE ARE THAT T HE ASSESSMENT US/ 143(3) OF THE ACT WAS COMPLETED ON 16.12.2011. THE AO PROCEED ED TO ISSUE NOTICE U/S 154/155 OF THE ACT DATED 31.10.2013 THAT THE AMOUNT OF RS.55,078/- DEPOSITED UNDER WRONG PAN WHICH IN FACT WAS LIABLE TO BE WITHDRAWN. THE AO DID NOT TAKE FURTHER ACTION AND GAVE CREDIT OF T HE SAME. FURTHER, THE AO U/S 154/155 OF THE ACT ISSUED NOTICE DATED 31.10.20 13 OBSERVING THAT THE ASSESSEE HAS RECEIVED CASH PAYMENTS EXCEEDING RS.20 ,000/- AND ASKED THE ASSESSEE TO FURNISH THE PARTICULARS OF THE DEBTORS. AT THE OUTSET, THOUGH THE ASSESSEE IS NOT BEFORE US AGAINST THE ORDER U/S 154 /155 OF THE ACT, SINCE NO ORDER U/S 154/155 HAS BEEN PASSED AND THE AO HAS P RESUMABLY DROPPED THE ITA NO.340(ASR)/2014 13 PROCEEDINGS AFTER GIVING CREDIT OF TAX AS POINTED O UT IN THE SHOW CAUSE NOTICE U/S 154/155 OF THE ACT. THE AO SUBMITTED THE REPORT TO THE LD. CIT, WHO PROCEEDED TO ISSUE NOTICE U/S 263 OF THE ACT. AS A MATTER OF FACT, THE REASON OF RECEIVING THE CASH PAYMENT EXCEEDING RS.20,000 /- HAS BEEN EXPLAINED BY THE ASSESSEE BUT ON THE BASIS OF INFORMATION FROM THE THIRD PARTY, THERE IS NO REASON TO ISSUE NOTICE U/S 263 OF THE ACT. HOWEVER, THE ASSESSEE HAVING MADE PURCHASES OF ALL IMPORTED GOODS THROUGH CHECK POS T LOWER MUNDA AND ALL PAYMENTS HAVING BEEN MADE THROUGH ACCOUNT PAYEE CHE QUES IS A MATTER OF EXPLANATION BY THE ASSESSEE AND ARE ON RECORD BEFOR E THE LD. CIT IN WHICH NO DEFECT HAS BEEN POINTED OUT. THE ASSESSEE HAVING MA DE SALES OUT OF GENUINE PURCHASES SO MADE AND RECEIVING CASH HAS NOT VIOL ATED ANY PROVISIONS OF THE ACT AND THIS ITSELF SHOWS THAT RECEIVING CASH OF MORE THAN RS.20,000/- FROM THE DEBTORS CANNOT BE ANY REASON TO ISSUE NO TICE U/S 263 OF THE ACT. THE AO HAS TAKEN A VIEW THAT NO NOTICE IS REQUIRED TO BE ISSUED UNDER ANY OF THE PROVISIONS OF THE ACT, IN CASE CASH SALES ARE MADE BY THE ASSESSEE. MOREOVER, THE ASSESSEE IS NOT REQUIRED TO MAINTAIN ANY RECORD OF THE DEBTORS AGAINST CASH SALES MADE UNDER ANY OF THE PROVISIONS OF THE ACT. THIS VIEW WAS TAKEN BY THE AO. NOW, THE LD. CIT CANNOT TAKE A NOTHER VIEW, WHICH ITSELF IS AGAINST THE PROVISIONS OF THE ACT. THERE FORE, ONE OF THE TWO VIEWS IS POSSIBLE. THE LD. CIT CANNOT INVOKE THE PROVISIONS OF SECTION 263 OF THE ACT ITA NO.340(ASR)/2014 14 IN VIEW OF THE DECISION OF THE HONBLE SUPREME COUR T IN THE CASE OF MALABAR INDUSTRIAL CO. LTD., VS. CIT (SUPRA). THEREFORE, ON THIS ACCOUNT ALONE, THE ORDER OF THE LD. CIT IS CANCELLED. MOREOVER, THE LD . CIT HAS PASSED A NON- REASONED ORDER AND NO REASON HAS BEEN ASSIGNED IN PARA 3 AS REPRODUCED HEREINABOVE AS TO WHY THE ORDER OF THE AO IS ERRONE OUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, IN THE FACT S AND CIRCUMSTANCES OF THE PRESENT CASE, THE ORDER OF THE LD. CIT IS CANCELLED AND ALL THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.340(ASR)/2014 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON MARCH, 2015. SD/- SD/- (A.D.JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: MARCH, 2015 /SKR/ PRONOUN CED ON 26/03/2015 SD/- JMS COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SHRI GHULAM MOHIUDIN MIR, PULWAMA, KAS HMIR 2. THE CIT, JAMMU. 3. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.