Shri Harji Premji Patel, Bhuj V. The Commissioner of Income Tax-I, RAJKOT-GUJARAT

ITA 347/RJT/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6736 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-11-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 29-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Revision of order; Maximum Marginal Rate; Fair market value; Assessment record
• Section: 143(3); 50C; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE: SHRI RAJPAL YADAV, JUDICIAL MEMBER AND S H RI AMARJIT SINGH , ACCOUNTANT MEMBER [CONDUCTED THROUGH E - COURT AT AHMEDABAD] SHRI HARJI PREMJI PATEL NAVAVAS, POST: MANKUVA, BHUJ - KUTCH PAN:AELPP6638J (APPELLANT) VS THE CIT - I, RAJKOT (RESPONDENT) REVENUE B Y : S H RI YOGESH PANDEY , D . R. ASSESSEE BY: S H RI M.J. RANPURA , A.R. DATE OF HEARING : 16 - 1 1 - 2 017 DATE OF PRONOUNCEMENT : 09 - 01 - 2 017 / ORDER P E R : AMARJIT SINGH, ACCOUNTANT MEMBER : - THI S ASSESSEE S APPEAL FOR A.Y. 2007 - 08 , AR ISES FROM ORDER OF THE CIT - I, RAJKOT DATED 2 8 - 03 - 2012 , IN PROCEEDINGS UNDER SECTION 263 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 347 / RJT /20 12 A SSESSMENT YEAR 200 7 - 08 I.T.A NO. 34 7/RJT /20 12 A.Y. 2007 - 08 PAGE NO SHRI HARJI PREMJI PATEL VS. CIT 2 2. THE ASSESSEE HAS RAISED FOL LOWING GROUNDS OF APPEAL: - 1.0 THE GROUNDS OF APPEAL MENTIONED HEREUNDER ARE WITHOUT PREJUDICE TO ONE ANOTHER. 2.0 THE ORDER U/S 263 OF THE INCOME - TAX ACT, 1961 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX - L, RAJKOT (HEREINAFTER REFERRED TO A S THE 'CIT') IS WITHOUT JURISDICTION AND BAD IN LAW AS ALSO ON FACTS. 3.0 THE LEARNED CIT ERRED ON FACTS AS ALSO IN LAW IN ALLEGING THAT THE ASSESSING OFFICER (AO) HAS NOT VERIFIED THE FOLLOWINGS THOUGH ALL THE REQUISITE DETAILS WERE FURNISHED AT THE TIME OF ASSESSMENT PROCEEDINGS AND VERIFIED BY THE AO: I. ALLEGED INFUSION OF CAPITAL OF RS. 1 .43 CRORES II. PURCHASE OF BENTO NITE OF RS. 50.27 LACS MADE FROM PATEL MINES, A PERSON SPECIFIED U/S. 40(A)(2)(B) OF THE ACT III. UNSECURED LOAN OF RS. 9,00,000/ - T AKEN FROM SMT. AMRUTABEN HARJI JODHANI IV. APPLICABILITY OF SECTION 50C OF THE ACT ON SALE OF PLOT V. EXPENSES CLAIMED OF RS. 3,46,334/ - THE ID. CIT ERRED ON FACTS AS ALSO IN LAW IN DIRECTING THE AO TO REFRAME THE ASSESSMENT WITHOUT EITHER ESTABLISH ING THE SPECIFIC ERRORS OR PREJUDICIAL FINDING FROM THE ASSESSMENT ORDER UNDER REVIEW. THE ORDER PASSED U/S 263 OF THE ACT, WITHOUT DISCUSSING AND ESTABLISHING TWO BASIC CONDITIONS AS TO ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE IS TOTALLY UNJUS TIFIED ON FACTS AS ALSO IN LAW AND DESERVES TO BE QUASHED, MAY KINDLY BE CANCELLED. 3. IN THIS CONNECTION, THE ASSESSEE HAS FILED RETURN OF INCOME ON 29/10/2007 DECLARING TOTAL INCOME OF RS. 4 , 48 , 090/ - . THE ASSESSING OFFICER HAD ASSESSED THE INCOME U/S. 143(3) AT RS. 4 , 18 , 280/ - ADDING RS. 40 , 000/ - ON ACCOUNT OF DEFECTIVE VOUCHERS. SUBSEQUENTLY, THE LD. CIT HAS INITIATED PROCEEDINGS U/S. 263 OF THE ACT. THE PROCEEDINGS U/S. 263 OF THE ACT WAS ISSUED ON THE BASIS OF PROPOSAL FOR REVISION I.T.A NO. 34 7/RJT /20 12 A.Y. 2007 - 08 PAGE NO SHRI HARJI PREMJI PATEL VS. CIT 3 U/S. 263 RECEIVE D FROM THE ASSESSING OFFICER. THE REASON MENTIONED IN THE PROPOSAL FOR REVISION U/S. 263 ARE STATED AS UNDER: - (1) THE SUM OF RS. 1.43 CRORE CREDITED IN THE CAPITAL A/C OF THE PROPRIETARY CONCERN OF THE ASSESSEE REMAINED TO BE SCRUTINIZED. (2) THE ASSES SEE HAS MADE PURCHASE OF BENTONITE FROM PATEL MINES, A PERSON SPECIFIED U/S.40(A)(2)(B) FOR RS.50.27 LAKHS, WHICH REMAINED TO BE SCRUTINIZED. (3) THE ASSESSEE HAS RAISED UN - SECURED LOAN OF RS. 9,00,000/ - FROM SMT. AMRUTABEN HARJI JODHANI, WHICH REMAINED TO BE SCRUTINIZED. (4) THE ASSESSEE HAS SHOWN CAPITAL GAIN ON SALE OF PLOT FOR RS.2.02 LAKH. APPLICABILITY OF PROVISION OF SECTION 50C OF THE IT ACT, REMAINED TO BE VERIFIED. (5) ON PERUSAL OF THE STATEMENT OF INCOME, IT IS NOTICED THAT THE AS SESSEE HAS REDUCED RS.3,46,334/ - FROM THE NET PROFIT OF RS.4,32,430/ - ON ACCOUNT OF EXPENSED DEBITED TO P&L A/C. HOWEVER THE SAID AMOUNT HAS NEITHER BEEN ADDED TO THE TOTAL INCOME NOR HAS BEEN SHOWN UNDER ANY OTHER HEADS OF INCOME. THE INCOME OF RS.3,46,343/ - HAS THEREFORE ESCAPED ASSESSMENT. THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE ASSESSMENT ORDER SHOULD NOT BE REVISED WITHIN THE MEANING OF SECTION 263 OF THE ACT. IN THIS CONNECTION, THE ASSESSEE VIDE ITS WRITTEN SUBMISSIO N HAS SUBMITTED AS UNDER: - 3. THE ASSESSEE, VIDE ITS WRITTEN SUBMISSION DATED 01 - 11 - 2010, SUBMITTED AS UNDER: - 'YOUR ABOVE ASSESSEE HAS BEEN SERVED WITH A NOTICE ISSUED UNDER SECTION 263 OF THE ACT REQUIRING HIM TO SHOW CAUSE WHY ACTION AS PROVIDED UNDER SECTION 263 OF THE ACT SHOULD N OT BE INITIATED FOR ASSESSMENT Y EAR 2007 - 08. UNDER HIS INSTRUCTIONS, I WISH TO MAKE FOLLOWING SUBMISSION FOR YOUR KIND AND SYMPATHETIC CONSIDERATION. YOUR ASSESSEE OBJECTS THE ACTION PROPOSED UNDER SECTION 263 OF THE ACT FOR THE FACT THAT THE IMPUGNED ASSESSMENT ORDER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. YOUR ASSESSEE SUBMITS HERE UNDER REPLY ON EACH OF THE ISSUES RAISED IN THE NOTICE WHICH IN YOUR OPINION WARRANTS ACTION UNDER SECTION 263 OF TH E ACT. IT. IS SUBMITTED THAT ON EACH OF THE ISSUES, DETAIL REPLY WERE FILED AND DELIBERATION TOOK PLACE DURING THE COURSE OF ASSESSMENT I.T.A NO. 34 7/RJT /20 12 A.Y. 2007 - 08 PAGE NO SHRI HARJI PREMJI PATEL VS. CIT 4 PROCEEDINGS. AO HAS AFT ER EXAMINING THE/ACTS AND THE MATERIAL PRODUCED BEFORE HIM PASSED ORDER U /S 143( 3 ) OF THE ACT . QU ESTIONNAIRE ISSUED AND SUBMISSIONS MADE DURING THE COURSE OF ASS ESSMENT PROCEEDINGS ARE AVAILABLE WITH THE CASE RE CORD. HOWEVER, I WISH TO CLARIFY AND OFFER EXPLANATION ON EACH OF THE POINT RAISED IN THE NOTICE AS UNDER: A: ALLEGED INTRODUCTION OF NEW CAPI TAL OFRS 1,24,98,639/ - YOUR ASSESSEE SUBMITS THAT HE IS A PROPRIETOR OF M/S SHRI HARI IMPEX HAVING ITS PRINCIPAL PLACE OF BUSINESS AT VILLAGE MANKUVA IN TALUKA BHUJ. HE HAS MAINTAINED REGULAR BOOKS OF ACCOUNTS OF THE SAID PROPRIETARY BUSINESS. HE HAS ALSO MAINTAINED PERSONAL BOOKS OF ACCOUNTS IN THE NAME OF 'HARJI PREMJI PATEL'. ALL PERSONAL TRANSACTIONS ARE RECORDED IN THIS BOOKS OF ACCOUNTS. HE HAVE KEPT CASH BOOK, LEDGERS, BANK BOOKS ETC. SEPARATELY. THE CAPITAL ACCOUNT IN 'SHRI HARI IMPEX' IS REFLECTED . DURING THE YEAR, AS PER THE BUSINESS REQUIREMENT, YOUR ASSESSEE HAS TRANSFERRED HIS CAPITAL FROM PERSONAL BOOKS OF HARJI PREMJI PATEL TO THE BOOKS OF SHRI HARI IMPEX. IN THE BALANCE SHEET OF BOTH THE BOOKS, AMOUNT TRANSFERRED DURING THE YEAR HAVE BEEN DU LY REFLECTED. COPY OF CAPITAL ACCOUNT WITH CONTRA ACCOUNT FROM THE PERSONAL BOOKS OF THE ASSESSEE WAS PRODUCED BEFORE THE AO. ISSUE OF INTRODUCTION OF CAPITAL WAS DISCUSSED WITH THE AO AND IT WAS PROVED BY EVIDENCE THAT THERE WAS NO INTRODUCTION OF ANY NEW CAPITAL AND THAT IT WAS MERELY A TRANSFER OF FUND FROM PERSONAL BOOK OF THE ASSESSEE TO THE BOOKS OF SHRI HARI IMPEX WHERE IN ASSESSEE IS A P ROPRIETOR. AFTER VERIFICATION OF THE ACCOUNTS, AO WAS SATISFIED THAT ASSESSEE H AS NOT INTRODUCED ANY FRESH CAPITAL BUT WAS UNDER TRANSFER OF FUNDS FROM THE BOOKS TO OTHER. IN SUPPORT OF ABOVE, ASSESSEE SUBMITS HERE WITH COPY OF CAPITAL ACCOUNT FROM BOTH THE BOOKS ALONG WITH COPY OF DULY AUDITED AND CERTIFIED BALANCE SHEET. IN VIEW OF THE FACTS NARRATED AS ABOVE, YOU R ASSESSEE SUBMITS THAT AO WAS JUSTIFIED IN ACCEPTING THE EXPLANATION OFFERED BY THE ASSESSEE. AO'S ACTION IS THEREFORE JUSTIFIED AND IT CAN NOT BE SAID THAT THE SUBJECT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. (PAGE 6 TO 12) B: P URCHASES OF BENTONITE FROM PERSONS COVERED UNDER SECTION 40A(2)(B) OF THE ACT: DURING THE YEAR UNDER ASSESSMENT, YOUR ASSESSEE PURCHASED BE NTONITE FROM M/S PATEL MINES, A SISTER CONCERN WHO IS A PERSON COVERED UNDER SECTION 40A (2)(B) OF THE ACT. YOUR ASSE SSEE SUBMITS HERE WITH COPY OF BENTONITE PURCHASE ACCOUNT FROM HIS BOOKS OF ACCOUNTS. IT IS SUBMITTED THAT SUCH PURCHASES WERE MADE AT THE I.T.A NO. 34 7/RJT /20 12 A.Y. 2007 - 08 PAGE NO SHRI HARJI PREMJI PATEL VS. CIT 5 PREVAILING MARKET RATE OF DIFFERENT GRADE AND QUALITY. MARKET RATE OF BENTONITE IS DETERMINED ON THE BASIS OF ITS QUA LITY AND GRADE. DIFFERENT RATES ARE THERE FOR PROCESSED AND NON PROCESSED BENTONITE. IT M AY PLEASE BE SEEN FROM THE COPY OF ACCOUNT FURNISHED HERE WITH THAT ASSESSEE HAS MADE PURCHASES OF RS 50.27 LACS FROM THE SISTER CONCERN. WE SUBMIT HERE WITH A CO MP ARATIVE STATEMENT OF PURCHASES MADE BY ASSESSEE T O ESTA BLISH THAT NO EXCESSIVE PAYMENT HAS BEEN MADE TO THE SISTER CONCERN. SIMILARLY, COMPARATIVE STATEMENT WITH RATE IS ALSO FURNISHED FOR SALES EFFECTED BY SISTER CONCERN DURING THE YEAR. BOTH THE ABOVE STATEMENT WILL PROVE THAT PURCHASES MADE FROM SISTER CONCERN WAS AS PER THE PREVAILING MARKET RATE OF PARTICULAR GRADE AND QUALITY. IT IS FURTHER SUBMITTED THAT SISTER CONCERN PATEL MINES IS A PARTNERSHIP FIRM AND ASSESSED TO TAX AS SUCH. SAID FIRM IS ALS O ASSESSED TO TAX AT MAXIMUM MARGINAL RATE OF TAX APPLICABLE TO ASSESSEE FIRM. UNDER THE CIRCUMSTANCES, IT IS NOT A CASE OF EVADING, TAX BY DERIVING ANY PROFIT TO THE SISTER CONCERN. YOUR ASSESSEE FURNISHES HERE WITH THE PHOTO COPIES OF SALE BILLS ISSUED BY PATEL MINES TO YOUR ASSESSEE GIVING DETAILS OF GRADE & QUALITY ARE REFLECTED IN THE SALES BILLS. YOUR ASSESSEE HAS PURCHASED BENTONITE LUMPS TWICE IN THE F. Y. 2006 - 07. THE FIRST PURCHASE WA S ON 10 - 06 - 2006 BY BILL NO. 1 OF RS.32,83,200/ - . THE RATE OF TH E BENTONITE WAS RS. 456/ - PER TON AND THE QUALITY OF THE BENTANITE WAS GRADE A (EXPORT QUALITY} WHILE SECOND PURCHASE WAS ON 31 - 12 - 200 6 BY BILL NO.4 OF RS. 17, 44,21 8/ - AT THE RATE OF RS. 109/ - PER TON AND THE QUALITY OF THE BENTONITE WAS NORMAL - GRADE. M/S . PATEL MINES HAD ALSO SOLD THE BENTONITE TO OTHER PARTIES AT THE RATE OF RS.328/ - PER TON AND RS.I60/ - PER TON. SO, THERE IS NO QUESTION OF VARIATION IN THE RATE OF BENTONITE LUMPS AFFECTING THE PROFIT RATIO OF SHRI HARI IMPEX IN F. Y. 2006 - 07. (PAGE 13 T O 18) C: VERIFICATION OF UNSECURED LOAN OF RS 9,00,000/ - FROM AMRUTBEN H. JODHANI: DURING THE YEAR, YOUR ASSESSEE ACCEPTED A LOAN OF RS. 9,00,000/ - FROM HIS WIFE AMRUTBEN HARJIBHAI JODHANI. AS THIS WAS A NEW CREDIT APPEARING IN THE BOOKS OF THE ASSESSE, A.O. SOUGHT CLARIFICATION FOR THE SAME. IT WAS SUBMITTED THAT TH E CREDITOR IS ALSO ASSESSED TO T AX AND HAS HER INDEPENDENT SOURCE OF INCOME. IT WAS ALSO SUBMITTED THAT THE CREDITOR IS ASSESSED TO TAX SINCE LAST SEVEN YEARS. SHE HAS REGULARLY MAINTAINED H ER BOOKS OF ACCOUNTS. COPY OF ASSESSEE 'S I.T.A NO. 34 7/RJT /20 12 A.Y. 2007 - 08 PAGE NO SHRI HARJI PREMJI PATEL VS. CIT 6 ACCOUNT FROM HER BOOKS DULY CONFIRMED BY HER ALONG WITH COPY OF BALANCE SHEET IS PRODUCED. COPY OF ACKNOWLEDGEMENT OF HER RETURN OF INCOME IS ALSO PRODUCED. IT IS SUBMITTED THAT THE AMOUNT WAS RECEIVED BY CHAQUE. I N LIGHT OF THE FACTS AS ABOVE, IDENTITY OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION IS PROVED. COPY OF BALANCE SHEET PRODUCED FURTHER ESTABLISHES THE CREDITWORTHINESS OF THE CREDITOR. AO WAS THEREFORE JUSTIFIED IN TREATING THE SAID CREDIT AS EXPLAIN ED AND HIS THIS ACTION CAN NOT BE TERMED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. (PAGE 19 TO 22) D: APPLICABILITY OF SECTION 50C OF THE ACT FOR DEEMED CONSIDERATION U/S 48 OF THE ACT: DURING THE YEAR YOUR ASSESSEE HAD TRANSFERRED HIS L EASEHOLD RIGHT INTO THE PLOTS SITUATED AT WARD NO. 2 - B, ADIPUR KACHCHH AND IN FAVOUR OF SHRI KANYALAL LAXMANDAS BHAWNANI OF GANDHIDHAM KACHCHH. SALE CONSIDERATION RECEIVED WAS CREDITED INTO THE BOOKS OF ACCOUNTS AND TAX DUE TO LONG TERM CAPITAL GAIN WAS AL SO PAID. COPY OF THE REGISTERED SALE DEED WAS PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ON THE BASIS OF THE MATERIAL PRODUCED, AO ACCEPTED THE AMOUNT OF SALE CONSIDERATION AS CORRECT AND REPRESENTI NG THE FAIR MARKET VALUE OF THE LEASE HOLD PROP ERTY OF THE AREA. THUS. AO HAS NOT ERRED IN ACCEPTING THE SALE CONSIDERATION FACTUALLY AND LEGALLY BOTH. IT IS SUBMITTED T HAT LAND IN QUESTION IS OWNED BY KARIDLA FORT TRUST WHO IS ADMINISTERED BY THE MAJOR PORT TRUST ACT. THE LAND OWNED BY KPT WAS THAN T RANSFERRED ON 99 YEAR LEASE TO THE SINDHU RESETTLEMENT CORPORATION FOR DEVELOPMENT OF THE SAME. SRC THEN TRANSFERRED AND SUB LEASED THE LAND TO VARIOUS LEASE HOLDERS. THESE SUB LEASE HOLDERS WERE ENTITLED TO DEVELOP AND TRANSFER THEIR LEASE RIGHT TO ANY PR IVATE PARTY SUBJECT TO PRIOR APPROVAL OF KPT. KPT. ON RECEIPT OF APPLICATION FOR TRANSFER OF LAND, SCRUTINIZES THE VALUE AT WHICH THE LAND IS TRANSFERRED AND THEN IT CHARGES THE 'TRANSFER FEE' ON THE BASIS OF THE CONSIDERATION RECEIVED. IN THE CASE OF VOW ASSESSEE ALSO. KPT HAS GIVEN APPROVAL FOR TRANSFER OF LAND VIDE LETTER DATED 30/05/2006 BY LETTER NUMBER ES'SRI 3560/1 611 REFERRED TO IN PARA 8 OF THE REGISTERED SALE DEED. IT CAN THUS BE SAID THAT KPT HAS ACCEPTED AND WAS SATISFIED ABOUT THE AMOUNT OF C ONSIDERATION AS REPRESENTING T HE FAIR MARKET VALUE OF THE SUBJECT LAND. I.T.A NO. 34 7/RJT /20 12 A.Y. 2007 - 08 PAGE NO SHRI HARJI PREMJI PATEL VS. CIT 7 SECTION 50 C OF THE INCOME TAX ACT IS APPLICABLE ONL Y IN CAS ES WHERE THERE IS A VALUATION BY STAMP DUTY VALUATION OFFICER OF THE SAME PROPERTY AND THAT VALUATION IS H IGHER THAN THE VAL UE DECLARED IN THE SALE DEED. IN ABSENCE OF ANY SUCH MATERIAL AVAILABLE BEFORE THE AO , HE WAS JUSTIFIED IN ACCEPTING THE SALE CONSIDERATION AS DECLARED IN THE DEED YOUR ASSESSEE SUBMITS THAT VARIOUS LEASE HOLDERS HAVE TRANSFERRED THEIR LEASE HOLD PROPERTI ES DURING THE YEAR AND SALE CONSIDERATION RECEDED HAS BEEN AT PAR WITH THAT OF YOUR ASSESSEE. KPT HAS GIVEN APPROVAL TO SUCH TRANSFERS AS THE SALE CONSIDERATION WAS AS PER THE RATE PREVAILING IN THE MA RKET. IT IS ALSO SUBMITTED THAT VALUE AS DETERMINED BY STAMP DUTY VALUATION AUTHORITY CAN NOT SUBSTITUTE THE REAL CONSIDERATION UNLESS SUCH VALUATION IS CORROBORATED BY SOME OTHER MATERIAL ON RECORD THA T SUGGEST THAT ASSESSEE HAS IN F ACT RECEIVED CONSIDERATION HIGHER THAN WHAT HAS BEEN SHOWN IN THE DOCUMENT I T IS SUBMITTED THAT SECTION 50C IS NOT APPLICABLE TO THE TRANSFERS OF LEASE HOLD PROPERTIES BECAUSE IT IS ALWAYS SUBJECT TO THE CONTROL AND APPROVAL OF THE OWNER. FAIR MARKET VALUE OF THE FREE HOLD LAND CAN NOT BE COMPARED WITH THE LEASE HOLD LAND. AO WAS THEREFORE JUSTIFIED AND HAS NOT ERRED IN ACCEPTING THE YOUR ASSESSEE SUBMITS THAT ANY VALUATION AS ADOPTED BY STAMP DUTY VALUATION OFFICER FOR THE PURPOSE OF PAYMENT OF STAMP DUTY CAN NOT BE TAKEN AS SALE CONSIDERATION RECEIVED FOR THE PURPOSE OF SECTION 4 8 OF THE ACT. SECTION 50C IS DEEMING PROVISION FOR PURPOSE OF BRINGING TO TAX THE DIFFERENCE AS CAPITAL GAIN. HOWEVER, IN ABSENCE OF ANY LEGALLY ACCEPTABLE EVIDENCE, VALUATION DONE FOR THE PURPOSE OF SECTION 50C WOULD NOT REPRESENT THE ACTUAL CONSIDERATION PASSED ON TO THE SELLER. YOUR ASSESSEE SEEK SUPPORT FRONT THE DECISION OF THE PUNJAB AND HARIYANA HIGH COURT IN THE CASE OF CIT VS CHANDNI BHUCHAR REPORTED IN (2010) 229 CTR (P&H) 190. IN LIGHT OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE OF YOUR ASSE SSEE ORDER OF THE A.O. WAS NOT ERRONEOUS NOR WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE WARRANTING ACTION UNDER SECTION 263 OF THE ACT. IT IS THEREFORE REQUESTED THAT THE ACTION INITIATED U/S 263 OF THE ACT MAY PLEASE BE DROPPED AND OBLIGE. (PAGE 2 3 TO 38) E: ALLEGED DEDUCTION OF RS 3,46,334/ - FROM THE G ROSS INCOME OF THE ASSESSEE: I.T.A NO. 34 7/RJT /20 12 A.Y. 2007 - 08 PAGE NO SHRI HARJI PREMJI PATEL VS. CIT 8 IT HAS BEEN POINTED THAT YOUR ASSESSEE HAS REDUCE THE INCOME BY RS.3,46,334/ - IN STATEMENT OF INCOME AND HENCE INCOME HAS ESCAPED ASSESSMENT WARRANTING ACTION UNDER SECTION 263 OF THE ACT. YOUR ASSESSEE WISHES TO CLARIFY THAT NO SUCH INCOME HAS ESCAPED ASSESSMENT. IT IS SUBMITTED THAT EXPENDITURE AMOUNTING TO RS 3, 46, 3 3 4/ - WAS DEBITED TO THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE. THIS EXPENDITURE PERTAINS TO BANK INTER EST AND CHARGES ON SECURED LOANS. THOUGH THIS EXPENDITURE IS LEGALLY PERMISSIBLE, ASSESSEE HAS NOT CLAIMED THE DEDUCTION OF SAME. WE SUBMIT HERE WITH THE GENERAL PROFIT AND LOSS ACCOUNT OF YOUR ASSESSEE AND STATEMENT OF INCOME ATTA CHED WITH THE RETURN OF I NCOME. YOUR HONOR CAN VERIFY THAT YOUR ASSESSEE HAS CALCULATED ALL INCOME SEPARATELY AND CORRECTLY COMPUTED HIS TAXABLE INCOME. NO DEDUCTION OF THE EXPENSES AS ALLEGED WAS CLAIMED IN THE COMPUTATION OF INCOME. HAD THE ASSESSEE CLAIMED SUCH EXPENSES, HIS IN COME WOULD HAVE, FURTHER REDUCED BY THE SUM OF RS. 3, 46 , 334/ - THUS, THERE IS NO UNDER ASSESSMENT WHICH NEEDS REOPENING UNDER SECTION 263 OF THE ACT. (PAGE 39 TO 44) WE HOPE THAT ABOVE DETAILS AND CLARIFICATION WILL MEET THE SATISFACTION OF YOUR HONOUR AN D ACTION INITIATED UNDER SECTION 263 OF THE ACT MAY PLEASE BE DROPPED. HOWEVER, IF ANY FURTHER DETAIL, INFORMATION OR CLARIFICATION IS CONSIDERED ESSENTIAL, WE MAY PLEASE BE INTIMATED ACCORDINGLY GIVING US REASONABLE TIME TO COMPLY WITH THE SAME. ' THE L D. CIT STATED THAT ON FURTHER SCRUTINY OF ASSESSMENT RECORD, IT WAS NOTICED THAT AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED BEFORE THE ADIT O N 22.01.2008 WHO ON THE PERUSAL OF THE VOUCHERS NOTED THE FOLLOWING DISCREPANCIES: - (A) THE VOUCHERS WERE NOT NUMBERED. (B) THERE WAS OVERWRITING, EITHER IN NAME, AMOUNT OR PARTICULARS, IN ALMOST ALL VOUCHERS. (C) IN THE CASES OF PAYMENTS MADE ILLITERATE PERSONS, THERE THUMB IMPRESSIONS WERE NOT IDENTIFIED. (D) THE VOUCHERS ARE NOT COMPLETELY FILLE D UP I.E. IN SOME OF THE VOUCHERS, ONLY VEHICLE NUMBERS WERE MENTIONED. (E) IT CAN BE CONSTRUED FROM THE PAPER QUALITY OF THE VOUCHERS, THAT IT HAS BEEN PREPARED AT THE WILL OF THE ASSESSEE AND NOT AT THE TIME OF MAKING ACTUAL PAYMENT, BECAUSE IF THEY ARE ACTUALLY SIGNED BY THE I.T.A NO. 34 7/RJT /20 12 A.Y. 2007 - 08 PAGE NO SHRI HARJI PREMJI PATEL VS. CIT 9 LAY MAN LIKE DRIVERS, THERE SHOULD HAVE BEEN WEAR AND TEARS ON THE VOUCHERS. THE LD. CIT FURTHER STATED THAT THE ADIT HAS IMPOUNDED THE VOUCHERS AND FURTHER ASKED THE AUTHORIZED REPRESENTATIVE TO FURNISH THE EXPLANATION REGARDING AFORESAID FACTS. BECAUSE OF NON - COMPLIANCE, THE ADIT HAS PROPOSED THE FOLLOWING ACTION FROM THE ASSESSING OFFICER: - (1) WHILE FINALIZING THE ASSESSMENT THE A.O. WAS REQUESTED TO CALL FOR COMPLETE VOUCHERS IN RESPECT OF LABOUR AND PROCESSING EXPENSES , TRANSPORTATION EXPENSES ETC. AND ALSO VERIFY THE SAME FROM THE CONTRA PARTY % EXERCISING POWERS U/S.133(6)/131(1A) OF THE I.T. ACT. (2) A PERUSAL OF THE CASH BOOK FOR THE F.Y.2006 - 07 SHOWED HUGE MOVEMENT OF CASH. THE SOURCES OF CASH RECEIPT AND GENUINENESS IN RESPECT OF CASH EXPENDITURE WAS REQUIRED TO BE VERIFIED. (3) STATEMENT OF ALL THE BANK ACCOUNTS WAS TO BE CALLED FOR, FROM THE BANKS OF MAKING REQUISITION U/S. 133(6). THE SOURCES OF DEPOSIT IN THE BANK ACCOUNT AND IN THE WITHDRAWAL TRANSACTIONS, APPLICATIONS OF CASH WAS REQUIRED TO BE VERIFIED. (4) FINALLY THE A.O. WAS REQUESTED TO FINALIZE YOUR ASSESSMENT KEEPING IN MIND THE AFORESAID FACTS, ALL THE BANK STATEMENTS, YOUR BOOKS OF ACCOUNTS AND OF CALLING FURTH ER DETAILS, IF REQUIRED. THE LD. CIT FURTHER STATED THAT THE ADIT HAD FORWARDED THE INQUIRY FOLDER ALONG WITH THE IMPOUNDED MATERIALS TO THE ASSESSING OFFICER FOR TAKING NECESSARY ACTION AT THE TIME OF FINALIZATION OF ASSESSMENT IN THE CASE OF THE ASSES SEE. I.T.A NO. 34 7/RJT /20 12 A.Y. 2007 - 08 PAGE NO SHRI HARJI PREMJI PATEL VS. CIT 10 THE LD. CIT FURTHER STATED THAT THE ASSESSING OFFICER HAD FINALIZED THE ASSESSMENT IN THE CASE OF THE ASSESSEE IN A ROUTINE MANNER BY MAKING A LUMP - SUM DISALLOWANCE OF RS. 40,000/ - WITHOUT CONDUCTING NECESSARY INQUIRIES INTO THE MATTER. THE LD. CIT ALSO STATED THAT THE REPLY OF THE ASSESSEE HAS BEEN CONSIDERED CAREFULLY AND FURTHER ADDED THAT THE FOLLOWING JUDICIAL JUDGMENTS HAVE ALSO BEEN TAKEN INTO CONSIDERATION . 991 ITR (DEL) IN THE CASE OF GEE VEE ENTERPRISES VS. ADDL. CIT: - THE COMMISSION ER CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE, THE AS SESSING OFFICER SHOULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE STATEMENT MADE BY THE ASSESSEE IN HIS RETURN. 220 ITR 657 IN THE CASE OF K.A. RAMSWAMY CHET TIAR AND ANR. V. CIT: - W HEN THE ASSESSING OFFICER IS EXPECTED TO MAKE AN ENQUIRY OF A PARTICULAR ITEM OF INCOME AND IF HE DOES NOT MAKE ON ENQUIRY AS EXPECTED TH A T WOULD BE A GROUND FOR THE COMMISSIONER OF INCOME TAX TO INTERFERE UNDER SECTION 263 OF THE A CT. III ITR 312 (GUJ) IN THE CASE OF CIT VS. MUKUR CORPORATION: - T HE WORDS PREJUDICIAL TO THE INTEREST OF REVENUE HAS NOT BE DEFINED IN SECTION 263 OF THE ACT BUT THEY MUST MEAN THAT THE ORDERS OF ASSESSMENT CHALLENGED ARE SUCH AS ARE NOT IN ACCORDANCE W ITH LAW. 205 ITR 45 IN THE CASE OF TARJAN TEA CO. PVT. LTD. ITO HAS NOT MADE PROPER ENQUIRIES MAY BE A GOOD GROUND FOR SETTING ASIDE THE ORDER MADE BY THE ASSESSING OFFICER U/S. 263 OF THE ACT. I.T.A NO. 34 7/RJT /20 12 A.Y. 2007 - 08 PAGE NO SHRI HARJI PREMJI PATEL VS. CIT 11 44 ITD 331IN THE CASE OF K. VARMA OF AHMEDABAD BENCH OF THE ITAT I F THE ASSESSING OFFICER HAS NOT MADE PROPER ENQUIRIES, THE CIT CAN DIRECT THE ASSESSING OFFICER TO HOLD FURTHER ENQUIRIES IN THE MATTER. 88 ITR 323 IN THE CASE OF THE TARA D EVI AGARWAL AND 67 ITR 84 IN THE CASE OF RAMPYARI DEVI SARAGI T HE COMMISSIONE R MAY CONSIDER AN ORDER OF THE ASSESSING OFFICER ERRONEOUS NOT ONLY IF IT CONTAINS SOME APPARENT ERROR O F REASONING OR OF LAW OR FACT ON FACE OF IT BUT ALSO BECAUSE IT IS A STEREO TYPED ORDER WHICH SIMPLY ACCEPTS WHAT T HE ASSESSE HAS STATED IN HIS RETURN A ND FAIL TO MAKE ENQUIRIES WHICH ARE CALLED FOR IN THE CIRCUMSTANCES OF THE CASE . THE LD. CIT CONCLUDED THE ASSESSING OFFICER FAILED TO MAKE PROPER ENQUIRIES IN VIEW OF THE REPORT OF THE ADIT(INV.); THEREFORE, THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT. THE LD. CIT SET ASIDE THE ASSESSMENT TO THE ASSESSING OFFICER TO FRAME IT DE NOVO AFTER MAKING PROPER ENQUIRY AND VERIFICATION OF BOOKS OF ACCOUNTS AND OTHER RECORD/DOCUMENTS. 4 . DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL CONTENDED THAT THE LD. CIT HAS ERRED ON FACTS A ND ALSO IN LAW IN DIRECTING THE ASSESSING OFFICER TO MAKE DE N O VO ASSESSMENT WITHOUT ESTABLISHING THAT THE ASSESSMENT ORDER MADE BY THE ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THIS CONNECTION, HE REFERRED TO PARA10 AND PARA 4 OF THE I.T.A NO. 34 7/RJT /20 12 A.Y. 2007 - 08 PAGE NO SHRI HARJI PREMJI PATEL VS. CIT 12 ORDER PASSED BY THE LD. CIT U/S. 263 WITHOUT SPECIFICALLY ESTABLISHING THAT HOW THE ORDER IS ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF THE REVENUE. 5 . ON THE OTHER HAND, THE LD. D.R. POINTED OUT THAT THE REAL ISSUE WAS THAT THE ASSESSING OFFICER HAS NOT CONDUCTED NECESSARY INQUIRY IN THIS CASE. HE HAS ALSO PLACED RELIANCE IN THE CASE OF CIT MUMBAI VS. AMITABH B ACHCHAN 3841 ITR 200 OF HON BLE SUPREME COURT. 6 . WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD CAREFULLY. WE FIND THAT THE LD. CIT HAS SET ASIDE THE ORDER OF THE ASSESSING OFFICER FOR FRAMING DE NOVO ASSESSMENT ON THE REASONING THAT T HE ASSESSING OFFICER HAD PASSED AN ORDER U/S. 143(3) WITHOUT DUE AND PROPER ENQUIRIES AS STATED SUPRA IN THIS ORDER. IN THIS CONNECTION, WE NOTICED THAT ASSESSING OFFICER VIDE LETTER DATED 23/04/2009 DURING THE COURSE OF ASSESSMENT PROCEEDINGS HA D ASKED T HE ASSESSEE TO FURNISH THE FOLLOWING DETAILS: - (I) BRIEF NOTE ON BUSINESS ACTIVITIES CARRIED OUT BY YOU,, DURING THE PREVIOUS YEAR. (II) G.P/N.P RATIO WITH REFERENCE TO TURNOVER, FOR THREE PRECEDING YEAR, INCLUDING YEAR UNDER CONSIDERATION. (III) I N RESPECT OF UN SECURED LOAN RAISED DURING THE YEAR, FURNISH COPY OF LEDGER A/C, CONFIRMATION, PAN AND COPY OF ACKNOWLEDGEMENT OF RETURN FILED FOR A.Y 06 - 07. (IV) FURNISH DETAILS OF BANK A/CS, HELD EITHER IN YOUR NAME OR IN THE NAME OF FAMILY MEMBERS. (V) ON VERIFICATION YOUR CAPITAL, IT IS NOTICED THAT YOU HAVE INTRODUCED SUBSTANTIAL CAPITAL. IN THIS CONNECTION, FURNISH COMPLETE DETAILS OF SUCH INTRODUCTION OF CAPITAL ALONG WITH SOURCE/EVIDENCE THEREOF. I.T.A NO. 34 7/RJT /20 12 A.Y. 2007 - 08 PAGE NO SHRI HARJI PREMJI PATEL VS. CIT 13 (VI) FURNISH COMPLETE DETAILS OF HOUSE HOLD EXPENS ES, ALONG WITH SOURCE THEREOF. (VI) FURNISH COPIES OF REGISTERED SALE AGREEMENT IN RESPECT OF PLOTS/LAND SOLD DURING THE YEAR. (VII) FURNISH COPY OF LEDGER A/C OF TRANSPORT: EXPENSE, SHIPPING CHARGE EXPENSES, LABOR & PROCESS & SHIPPING CHARGE EXPENSES AND CLEARING & FORWARDING EXPENSES. (IX) FURNISH COPIES OF LEDGER A/C OF SUNDRY CREDITORS HAVING OUT STANDING BALANCE, EXCEEDING RS. 50000/ - AS ON 31 - 03 - 07. ALSO FURNISH THE REASON AS TO HOW THE LIABILITY HAS ARISED. WE HAVE FURTHER NOTICED THAT THE ASS ESSEE VIDE LETTER DATED 01/05/2009 HA D FURNISHED THE REQUIRED DETAILS ALONG WITH SUPPORTING AS REQUIRED BY THE ASSESSING OFFICER. WE HAVE PERUSED THE COMMENT OF THE LD. CIT STATING THAT THE FAILURE BY THE ASSESSING OFFICER TO MAKE PROPER ENQUIRIES IN VIEW OF THE REPORT OF THE ADIT (INV.) RESULTED IN PASSING AN ASSESSMENT ORDER WHICH WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT. IN THIS CONNECTION, WE FIND THAT THE LD. CIT HAS MENTIONED IN ORDER U/S. 263 OF THE ACT ABOUT THE DISCREPANCIES MAINLY NOTICED IN THE VOUCHERS OF THE ASSESSEE BY THE ADIT (INV.) AS ELABORATED ABOVE IN THIS ORDER. THESE DISCREPANCIES WERE MAINLY RELATED TO THE IRREGULARITIES OBSERVED IN THE VOUCHERS, LIKE OVERWRITING NOT NUMBE RED THUMP IMPRESSION IDENTIFICATION, INCOMPLETE VOUCHERS ETC. ON THIS CONNECTION, WE HAVE NOTICED THAT THE ASSESSING OFFICER HAS STATED IN THE ASSESSMENT ORDER THAT THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED AND FURNISHED THE REQUIRED DETAILS AND PRODUCED B OOKS OF ACCOUNTS AND VOUCHERS WHICH WERE TEST CHECKED. HE FURTHER STATED IN THE ASSESSMENT ORDER THAT THE SOURCE OF RECEIPT IN CASH AS WELL AS EXPENDITURE INCURRED IN CASH WERE VERIFIED. WE HAVE FURTHER I.T.A NO. 34 7/RJT /20 12 A.Y. 2007 - 08 PAGE NO SHRI HARJI PREMJI PATEL VS. CIT 14 NOTICED THAT THE ASSESSING OFFICER HA S MENTIONED ALL THE DISCREPANCIES RELATED TO THE LD. CIT IN THE ORDER OF U/S. 263 OF THE ACT. WE FIND THAT AFTER CONSIDERING THE VARIOUS DISCREPANCIES IN T HE VOUCHERS OF VARIOUS EXPENDITURE, THE ASSESSING OFFICER HAS SHOW CAUSED THE ASSESSEE AS TO WHY LUM P - SUM ADDITION OF RS. 40,000/ - SHOULD NOT BE MADE ON ACCOUNT OF DEFECTIVE VOUCHERS. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HA D AGREED TO THE PROPOSED ADDITION MADE BY THE ASSESSING OFFICER. THE ABOVE STATED FACTS AND FINDINGS MAKE IT CLEAR THAT TH E ASSESSING OFFICER HAS SCRUTINIZED THE DETAILS FURNISHED BY THE ASSESSEE AND ALSO CONDUCTED INQUIRIES AND VERIFICATION WHILE COMPUTING THE ASSESSMENT IN THE CASE OF THE ASSESSEE AS ELABORATED ABOVE IN THIS ORDER. WE HAVE ALSO PERUSED THE JUDGMENT OF THE HON BLE COURT OF GUJARAT IN THE TAX APPEAL NO. 2583 OF 2010 IN THE CASE OF CIT VS. AMIT CORPORATION IN WHICH IT WAS HELD THAT WHEN DURING THE COURSE OF FRAMING OF ASSESSMENT, ASSESSING OFFICER HAD ACCESS TO ALL RECORDS OF ASSESSEE AND AFTER PERUSING SUCH RECORD ASSESSING OFFICER FRAMED ASSESSMENT, SUCH ASSESSMENT COULD NOT HAVE BEEN RE - OPENED IN EXERCISE OF REVISIONAL POWER U/S. 263 FOR MAKING FURTHER INQUIRIES WHICH WAS RELIED BY THE LD. COUNSEL. WE HAVE ALSO PERUSED THE JUDICIAL PRONOUNCEMENTS RELIED U PON BY THE LD. CIT IN THE ORDER PASSED U/S. 263 OF THE ACT. WE FIND THAT CASE OF GEE VEE ENTERPRISES 99 ITR 375 RELATE TO MAKING FIRST ASSESSMENT BY THE ASSESSING OFFICER WITHOUT ASCERTAINING THE TRUTH OF FACTS ON THE BASIS OF WHICH REGISTRATION WAS GRANT ED TO THE ASSESSEE FIRM. THE CASE OF K.A. RAMASWAMY CHELTIAR RELATE TO MAK ING I.T.A NO. 34 7/RJT /20 12 A.Y. 2007 - 08 PAGE NO SHRI HARJI PREMJI PATEL VS. CIT 15 ASSESSMENT WITHOUT MAKING INQUIRIES WITH REGARD TO THE VALUE OF THE PROPERTIES WHICH SUBSEQUENTLY FOUND IN SEARCH ACTION THAT ASSESSE HAD PAID ON MONEY TO THE SELLERS. MUKUR CORPORATION CASE PERTAIN TO THE F ACTS WHERE THE PERSON WHO TRANSFERRED THE PROPERTY TO THE ASSESSEE, SUBSEQUENTLY FOUND TO BE BENAMIDAR OF THE ASSESSEE ON THE BASIS OF AFFIDAVIT MADE BY THE BENAMIDAR OWNER OF THE PROPERTY. THE CASE OF TARJAN TEA CO. PV T. LTD RELATES TO THE ISSUE WHETHER ORDER OF ITO PASSED ON BASIS OF DIRECTION ISSUED BY IAC DO NOT MERGE WITH ORDER OF IAC GIVING DIRECTION. THE CASE OF RAMPYARI DEVI SARAOGI MENTIONED IN THE ORDER U/S. 263 PERTAINS TO THE ISSUE WHERE COMMISSIONER CONCLU D ED THAT ASSESSEE HAD NEITHER RESIDED NOR CARRIED OUT ANY BUSINESS FROM ADDRESS DECLARED IN RETURN. THE CASE OF SMT. TARA DEVI AGRAWAL RELATES TO THE ISSUE WHERE AN INCOME HAS NOT BEEN EARNED AND IS NOT ASSESSABLE MERELY BECAUSE ASSESSEE WANTS IT BE ASSES SED IN HIS OR HER HAND IN ORDER TO ASSIST SOMEONE ELSE WHO WOULD HAVE BEEN ASSESSED TO A LARGER AMOUNT. THE CASE OF AMITABH BACHCHAN REFERRED BY THE LD. DEPARTMENTAL REPRESENTATIVE DISTINGUISHED FROM THE FACT OF THE CASE OF THE ASSESSEE. IN THAT CASE THE LD. CIT HAD FRAMED HIS VIEWS ON THE SPECIFIC FINDINGS SUPPORTED WITH THE RELEVANT EVIDENCES RELATING TO EXPENSES IN SUPPORT OF WHICH DEDUCTION HAD BEEN CLAIMED AND HAD BEEN INCURRED , THEREAFTER , ABANDONING/WITHDRAWING THE SAME GAVE RISE TO THE NECESSITY O F FURTHER ENQUIRY IN THE INTEREST OF REVENUE. WE FIND THAT THE ASSESSING OFFICER HAD FRAMED THE ASSESSMENT SPECIFICALLY ON THE ISSUE POINTED OUT BY THE ADI REGARDING VERIFICATION I.T.A NO. 34 7/RJT /20 12 A.Y. 2007 - 08 PAGE NO SHRI HARJI PREMJI PATEL VS. CIT 16 OF THE DISCREPANCIES POINTED OUT IN THE VOUCHERS. THE ASSESSING OFFICER HA D MENTIONED IN THE ASSESSMENT ODER AT PAGE 1 AND PAGE 2 THAT DURING THE VERIFICATION OF BOOKS OF ACCOUNTS AND VOUCHERS THE FOLLO WING DISCREPANCIES WERE NOTICED : - ( A ) THE VOUCHERS WERE NOT NUMBERED. (B) THERE WAS OVERWRITING, EITHER IN NAME, AMOUNT OR PARTICULARS, IN ALMOST ALL VOUCHERS. (C) IN THE CASES OF PAYMENTS MADE ILLITERATE PERSONS, THERE THUMB IMPRESSIONS WERE NOT IDENTIFIED. (D) THE VOUCHERS ARE NOT COMPLETELY FILLED UP I.E. IN SOME OF THE VOUCHERS, ONLY VEHICLE NUMBERS WERE MENTIONED. ( E) IT CAN BE CONSTRUED FROM THE PAPER QUALITY OF THE VOUCHERS, THAT IT HAS BEEN PREPARED AT THE WILL OF THE ASSESSEE AND NOT AT THE TIME OF MAKING ACTUAL PAYMENT, BECAUSE IF THEY ARE ACTUALLY SIGNED BY THE LAY MAN LIKE DRIVERS, THERE SHOULD HAVE BEEN WEAR AND TEARS ON THE VOUCHERS. IT IS APPARENTLY CLEAR AT PARA 4 OF THE ASSESSMENT ORDER THAT LOOKING TO THE KIND OF DISCREPANCIES IN THE VOUCHERS OF VARIOUS EXPENDITUR E AS MENTIONED ABOVE THE ASSESSING OFFICER HAD ARRIVED AT THE CONCLUSION TO MAKE ADDITIO N OF RS.40,000/ ON ACCOUNT OF DEFECTIVE VOUCHERS. THESE FACTS INDICATE THAT THE ASSESSING OFFICER HAD TAKEN INTO CONSIDERATION, VERIFICATION AND EXAMINATION THE REPORT OF THE ADI DURING THE COURSE OF ASSESS MENT PROCEEDINGS. I N VIEW OF THE ABOVE STATED FACT S AND FINDINGS, WE ARE NOT IN AGREEMENT WITH THE CIT THAT NO INQUIRIES WERE CONDUCTED BY THE ASSESSING OFFICER . T HEREFORE, CONSIDERING THE ABOVE STATED FACTS , FINDINGS AND MATERIAL ON RECORD WE FIND THAT THE ASSESSMENT ORDER CANNOT BE SAID TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. I.T.A NO. 34 7/RJT /20 12 A.Y. 2007 - 08 PAGE NO SHRI HARJI PREMJI PATEL VS. CIT 17 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OUR T ON 09 - 01 - 201 7 SD/ - SD/ - (RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 0 9 /01 /201 7 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, RAJKOT