Shri Vinod Bhandari, Indore V. THE PR.CIT-1, Indore

ITA 350/IND/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2324 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-01-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 11-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S MANTRI
• Assessee Lawyers: AYUSH GUPTA A RS; SUMIT NEMA GAGAN TIWARI
• Keywords: Unexplained cash credit; Rejection of books of accounts; Unexplained investment; Unexplained expenditure; Business income; Revision of order; Income from undisclosed sources; Opportunity of being heard; Period of limitation; Source of fund; Question of law; Assessment record; Prejudicial to interest; Revised return; TDS; Set aside; FORM 26AS
• Section: 271(1)(c); 69C; 143(3); 142(1); 133A; 153A; 14A; 80G; 69B; 143(2); 69A; 139(4); 64; 43; 48; 73; 72; 13; 119; 22; 147; 68; 69; 6; 263; 63

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.350/IND/2017 ASSESSMENT YEAR: 2012-13 ITA NO.66/IND/2017 ASSESSMENT YEAR: 2012-13 ITA NO.57/IND/2019 ASSESSMENT YEAR: 2012-13 SHRI VINOD BHANDARI, 21- GF, BHANDARI HOUSE, TALKIES, SCHEME NO.54, VIJAY NAGAR, INDORE VS. PR. CIT(1), INDORE (APPELLANT) (REVENUE ) PAN NO.ABNPB6240M SHRI VINOD BHANDARI, 21- GF, BHANDARI HOUSE, TALKIES, SCHEME NO.54, VIJAY NAGAR, INDORE VS. ACIT - 2(1), INDORE (APPELLANT) (REVENUE ) PAN NO.ABNPB6240M SHRI VINOD BHANDARI, 21- GF, BHANDARI HOUSE, TALKIES, SCHEME NO.54, VIJAY NAGAR, INDORE VS. DCIT - 2(1), INDORE (APPELLANT) (REVENUE ) PAN NO.ABNPB6240M ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 2 APPELLANT BY S/SHRI SUMIT NEMA, GAGAN TIWARI & AYUSH GUPTA, ARS REVENUE BY SHRI S.S.MANTRI, CIT - DR DATE OF HEARING 07.01.2020 DATE OF PRONOUNCEMENT 20 .03.2020 O R D E R PER MANISH BORAD, AM. THE ABOVE CAPTIONED APPEALS ARE FILED AT THE INSTA NCE OF ASSESSEE PERTAINING TO THE ASSESSMENT YEAR 2012-13. ITA NO.350/IND/2017 IS DIRECTED AGAINST THE ORDER OF LD . PR. COMMISSIONER OF INCOME TAX-1 DATED 30.03.2017 PASSE D U/S 263 OF THE ACT. ITA NO.57/IND/2017 IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX-1, INDORE DATED 22.11.20 18 WHICH IS ARISING OUT OF THE ORDER U/S 143(3) R.W.S. 263 OF T HE ACT DATED 27.12.2017 FRAMED BY DCIT-2(1), INDORE. ITA NO.66/I ND/2017 IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF I NCOME TAX-III, INDORE DATED 23.11.2016 WHICH IS ARISING OUT OF THE ORDER U/S 143(3) OF THE ACT DATED 24.03.2015 FRAMED BY ACIT-2 (1), INDORE. 2. AS THE ISSUES RAISED IN THESE APPEALS ARE COMMON AND RELATES TO SAME ASSESSEE THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 3 OFF BY WAY OF THIS CONSOLIDATED ORDER FOR SAKE OF C ONVENIENCE AND BREVITY. 3. BRIEF FACTS AS CULLED OUT FROM THE RECORDS ARE T HAT THE ASSESSEE IS A DOCTOR BY PROFESSION AND EARNS INCOME FROM REM UNERATION, HOUSE PROPERTY, SHARE OF PROFIT AND INCOME FROM OTH ER SOURCES. SURVEY PROCEEDINGS U/S 133A OF THE ACT WAS CARRIED OUT AT THE PREMISES OF M/S BHANDARI HOSPITAL & RESEARCH CENTRE (IN SHORT BHRC) ON 24.09.2011. DURING THE COURSE OF SURVEY P ROCEEDINGS CERTAIN DISCREPANCIES WERE NOTICED. INCRIMINATING MATERIAL IN THE FORM OF HUNDIS WERE FOUND AND IMPOUNDED. THE ASSESS EE IN HIS INDIVIDUAL CAPACITY ADMITTED THE DISCREPANCIES OF U N SECURED LOAN GIVEN TO VARIOUS PERSONS AND SURRENDERED ADDITIONAL INCOME OF RS.7 CRORES FOR FINANCIAL YEAR 2011-12 RELEVANT TO ASSES SMENT YEAR 2012-13. SUBSEQUENTLY ASSESSEE E-FILED RETURN OF I NCOME FOR ASSESSMENT YEAR 2012-13 ON 28.03.2013 DECLARING INC OME OF RS.7,01,74,054/- WHICH WAS FURTHER REVISED ON 18.07 .2013 DECLARING INCOME OF RS.7,41,07,850/- THE CASE WAS SELECTED FOR SCRUTINY AND NOTICES U/S 143(2) AND 142(1) OF THE A CT WERE DULY SERVED UPON THE ASSESSEE. ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 4 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD. A.O OBSERVED THAT THE ORIGINAL RETURN IS A BELATED RETURN AS PRO VIDED U/S 139(4) OF THE ACT AND THUS CANNOT BE REVISED. LD. A.O THEREF ORE TREATED THE REVISED RETURN FILED ON 18.07.2013 AS INVALID RETUR N AND ASSESSMENT PROCEEDINGS WERE CARRIED OUT TAKING THE BASIS OF OR IGINAL RETURN FILED ON 28.03.2013. IN THE ORIGINAL RETURN FILED THE AS SESSEE CLAIMED DEDUCTION OF INTEREST EXPENDITURE U/S 57 AT RS. 93, 56,983/- AND IN THE REVISED RETURN IT WAS CLAIMED AT RS.54,23,189/- . SINCE THE LD. A.O TREATED THE REVISED RETURN AS INVALID THE ALLEG ED DIFFERENCE OF INTEREST EXPENDITURE OF RS. 39,33,844/- (RS.93,56,9 83/- (-) RS.54,23,189/-) WAS DISALLOWED. LD. A.O ALSO OBSER VED THAT THERE WERE HUGE CASH DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE DURING THE MONTH OF FEBRUARY AND MARCH. ASSESSEE CLAIMED THAT THE SURRENDERED INCOME OF RS.7 CRORES WHICH WAS INVESTE D IN THE FORM OF HUNDI MATURED DURING THE YEAR AND THE MONEY SO R ECEIVED (PRINCIPAL AND INTEREST) WAS DEPOSITED IN THE BANK ACCOUNT AND THE SAME WERE DULY RECORDED IN REGULAR BOOKS. HOWEVER L D. A.O IN VIEW OF VYAPAM SCAM WHICH INVOLVED THE ALLEGATION OF BRI BE OF ILLEGAL MONEY FOR ADMISSION IN MEDICAL COLLEGES IN MADHYA P RADESH, TOOK A ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 5 VIEW THAT THE ASSESSEE BEING UNABLE TO EXPLAIN THE SOURCE OF CASH DEPOSITED IN BANK ACCOUNT BY NOT PROVIDING THE INFO RMATION ABOUT THE PERSONS NAMED IN THE HUNDI FOUND DURING THE COU RSE OF SURVEY, DID NOT ACCEPT THE SOURCE OF CASH EXPLAINED BY THE ASSESSEE THUS THE ALLEGED CASH DEPOSIT OF RS.7,34,79,097/- WAS TR EATED AS UNACCOUNTED INCOME EARNED FROM VYAPAM SCAM AND MADE ADDITION THEREOF. ACCORDINGLY INCOME ASSESSED AT RS.14,75,87 ,000/-. AGAINST THE ADDITION MADE BY THE LD. A.O ASSESSEE F ILED APPEAL BEFORE LD. CIT(A) WHO DID NOT GIVE ANY RELIEF TO TH E ASSESSEE AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL VIDE ITA NO.66/IND/2017 WHICH WILL BE DEALT BY US IN THE SUB SEQUENT PARAS. 5. SUBSEQUENT TO THE ASSESSMENT ORDER FOR ASSESSMEN T YEAR 2012-13 FRAMED U/S 143(3) OF THE ACT ON 24.03.2015, LD. PR. CIT-1 ASSUMING JURISDICTION U/S 263 OF THE ACT ISSUED SHO W CAUSE NOTICE AFTER BEING SATISFIED THAT THE ASSESSMENT FRAMED U/ S 143(3) OF THE ACT DATED 24.03.2015 IS ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF REVENUE. LD. PCIT-1 AFTER CONSIDERING THE SUBMISSI ON MADE BY THE ASSESSEE DIRECTED THE LD. A.O TO PASS A FRESH ASSES SMENT AFTER MAKING PROPER ENQUIRIES AND INVESTIGATION AS DIRECT ED IN THE ORDER ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 6 U/S 263 OF THE ACT. AGAINST THE ORDER U/S 263 ASSE SSEE IS IN APPEAL BEFORE THE TRIBUNAL BY WAY OF FILING ITA NO.350/IND /2017. 6. AS REGARDS ITA NO.57/IND/2017 THE SAME IS ARISIN G OUT OF THE ASSESSMENT ORDER U/S 143(3) R.W.S. 263 OF THE ACT W HEREIN THE LD. A.O DID NOT MADE ANY NEW ADDITION AND SAME INCOME O F RS.14,75,87,000/- ASSESSED AS WAS ASSESSED U/S 143( 3) OF THE ACT. AGAINST THIS ORDER ALSO ASSESSEE WENT BEFORE LD. CI T(A) BUT COULD NOT SUCCEED AND NOW THE ASSESSEE IS IN APPEAL BEFOR E THE TRIBUNAL VIDE ITA NO.57/IND/2017. THE FATE OF THIS APPEAL WI LL DEPEND ON THE OUTCOME OF OUR DECISION TO BE TAKEN IN THE CASE OF ITA NO.350/IND/2017. 7. NOW WE FIRST TAKE UP ITA NO.350/IND/2017 WHEREI N THE ASSESSEE HAS RAISED VARIOUS GROUNDS BUT THE SUBSTAN TIAL ISSUE IS CHALLENGING THE ORDER ISSUED U/S 263 OF THE ACT PAS SED BY LD. PCIT- 1 CONTENDING THAT LD. PCIT EXCEEDED HIS JURISDICTIO N BY WRONGLY INVOKING THE PROVISIONS OF 263 OF THE ACT AND THE I MPUGNED ORDER IS BAD IN LAW AND VOID INITIO. FOLLOWING GROUNDS OF A PPEAL HAVE BEEN RAISED:- ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 7 THE ORDER U/S 263 DATED 30.3.2017 IS ILLEGAL, VOID AND WITHOUT JURISDICTION: 1.1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER DATED 30.3.2017 PASSED BY THE COMMISSIONER OF INCOME-TAX (CIT), U/S 263 OF THE INCOME-TAX ACT, 1961 ('THE ACT') SETTING ASIDE THE ASSESSMENT FRAMED U/S 143(3) OF THE ACT AS ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF THE REVENUE IS WITHOUT JURISDICTION, BAD IN LAW AND VOID AB-INITIO. 1.2 THAT THE AO HAVING ALREADY ADDED THE SURRENDERED IN COME OF 7 CRORE THERE CANNOT BE ANY PREJUDICE ATTRIBUTED U/S 263 AND THUS THE ORDER OF ASSESSMENT DATED 24.3.2015 CANNOT BE REGARDED AS PREJUDICIAL TO THE INTEREST OF REVENUE MERELY BECAUSE LD. CIT HELD THA T THE AO SHOULD HAVE ACTED AS A POLICE OFFICER AND NOT AS A TAXING AUTHO RITY AND SHOULD HAVE TRIED TO PROBE THE SOURCE OF ALREADY TAXED INCOME. 1.3 THAT LD. CIT ALSO FAILED TO APPRECIATE THAT, U/ S 263 OF THE ACT, AN ORDER OF ASSESSMENT CANNOT BE SET-ASIDE TO AO TO SIMPLY T O MAKE FURTHER ENQUIRIES ON ALREADY TAXED INCOME AND THEREAFTER PASS FRESH ORDER OF ASSESSMENT. THEREFORE, AND AS SUCH, IMPUGNED ORDER AND DIRECTIONS ISSUED U/S 263 ARE UNTENABLE, CONTRARY TO LAW UNSUSTAINABLE. 2. NO JUSTIFICATION EITHER IN LAW OR ON FACTS FOR THE CIT TO INVOKE HIS POWERS U/S 263 ON THE ALREADY TAXED INCO ME. 2.1 THE POWERS UNDER SECTION 263 CANNOT BE INVOKED TO ASK THE AO TO TARNISH THE IMAGE OF THE ASSESSEE AND THUS THE FOLL OWING DIRECTIONS MADE BY THE CIT IN HIS ORDER DESERVE TO BE QUASHED I) THE AO HAS ACCEPTED SURRENDER OF RS. 7 CRORE AS INC OME FROM OTHER SOURCES WITHOUT EXAMINING THE REAL SOURCE OF SUCH I NCOME. NO CONCLUSIVE INQUIRY REGARDING THE SOURCE OF SUCH INCOME WAS MAD E. II) THE AO WAS REQUIRED TO EXAMINE THE IMPOUNDED MATERIAL PROPERLY TO ASSESS THE CORRECT INCOME OF THE ASSESSEE BUT TH E AO HAS NOT DONE THE SAME. III) THE AO HAS NOT EXAMINED THE SOURCE OF RS. 7 CRORE SURRENDERED WITH THE VYPAM CASE AS TO WHETHER THIS IS INCOME GE NERATED BY CONTRAVENING THE ESTABLISHED LAW. ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 8 IV) THE AO SHOULD HAVE ASKED THE INVOLVED AGENCIE S SUCH AS POLICE, ED ETC THE INFORMATION TO ESTABLISH THE CORRECT SOURCE OF INCOME. 3. NO JUSTIFICATION FOR THE CIT TO ATTRIBUTE NON-INITI ATION OF ( PENALTY ON RS. 39,33,844 AS AN ERROR. 3.1 THAT THE ASSESSMENT ORDER CLEARLY POINTS OUT TH E FACT THAT THE DISALLOWANCE OF RS. 39,33,844 WAS INTIMATED BY THE ASSESSEE HIMSELF AND WAS NOT DISCOVERED BY THE AO THUS THE LD. CIT FAILED TO APPRECIATE THAT THERE WAS NO OCCASION FOR THE AO TO INITIATE PENALTY. 4. NO JUSTIFICATION EITHER IN LAW OR IN FACTS IN EXERCISING JURISIDCTION U/S 263 IN RESPECT OF THE FOLLOWING ITEMS SINCE THERE WAS NO ERROR IN THE ORD ER OF THE ASSESSING OFFICER AND THE ORDER IN RESPECT O F THESE ITEMS WAS PASSED AFTER DUE AND SUFFICIENT ENQUIRY AND THE SAME WAS ALREDAY TAXED :- 4.1 NO JUSTIFICATION TO REGARD INCREASE IN INCOME O F RS. 41,07,848 SHOWN IN THE RETURN AS CAUSING ANY PREJUDICE TO THE INCOME-T AX DEPARTMENT. 4.2 NO JUSTIFICATION TO ASK THE AO TO MAKE INDEPENDENT VERIFICATION OF CERTIFICATE OF DONE ULS 80G(S)(VI) AND LIC RECEIPT AS THESE WERE DULY AND SUFFICIENTLY VERIFIED BY THE AO AND EVEN THE CIT COULD NOT POINT OUT ANY ERROR IN THE DOCUMENTS FILED. 4.3 NO JUSTIFICATION TO ASK THE AO TO MAKE ENQUIRY REGARDING YEAR-WISE INVESTMENT MADE IN MOVABLE AND IMMOVABLE PROPERTIES WHICH WAS ALREADY DONE BY THE AO. THAT EXTENSIVE INFORMATION WAS SOUGHT BY THE AO AND WHICH WAS DULY PRODUCED AND EXAMINED BY THE AO WHICH COVER ALL ASPECTS WHICH HAVE NOW BEEN AGAIN SET-ASIDE FOR REEXAMINATION BY THE CIT UIS 263. THUS THE PRESENT ORDER UIS 263 IS ONLY AN ATTEMPT TO MAKE FISHING AND ROVING ENQUIRIES INTO ALL ASPECTS WHICH HAVE ALL BEEN PREVIOUSLY EXAMINED BY THE AO. THE ORDER U/S 263 IS THEREFORE ILLEGAL, VOID AND WITHOUT ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 9 JURISDICTION. 8. LD. PCIT AFTER PURSUING THE ASSESSMENT RECORDS A ND THE ASSESSMENT ORDER FRAMED U/S 143(3) DATED 24.03.2015 INVOKED THE PROVISIONS OF SECTION 263 OF THE ACT WHICH IS MEANT FOR REVISION OF ORDERS WHICH ARE CONSIDERED AS ERRONEOUS AND PREJUD ICIAL TO THE REVENUE. FOLLOWING SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE ON 15.3.2017. 'A. THE AO HAS ADDED INTEREST. INCOME OF RS. 39,33, 844/-- BASED ON ITS ACCEPTANCE OF THE ASSESSEE IN THE NON-EST RETURN. HOWEVER NO PENALTY U/S 271(1)(C) FOR INACCURATE PARTICULARS OF INCOME FILED IN ORIGI NAL INCOME WAS INITIATED. B. THE AO, HAS NOT OBTAINED THE BREAK-UP OF INCOME OF RS. 41,07,848/- (EXCLUDING 7 CRORES SURRENDERED), WHILE IN EARLIER YEAR INCOME WAS ONLY RS. 6,37,300/- .THE AO HAS ALSO ACCEPTED SURRENDER OF RS.7 CRORES REPRESENTED BY HUNDIS AS 'INCOME FROM OTHER SOURCE S' WITHOUT EXAMINING THE REAL SOURCES OF SAID INCOME. THE AO HERSELF HA S MENTIONED IN PAGE 5 THAT ASSESSEE IS INVOLVED IN VYAPAM CASE AND SOURC ES OF THESE FUNDS SHOULD HAVE BEEN EXAMINED. C. THE AO HAS MENTIONED THAT IMPOUNDED MATERIAL L WAS VERIFIED ON TEST CHECK BASIS WHICH IS NOT PROPER AS IT HAS BE COMPL ETE CHECK IN RESPECT OF IMPOUNDED MATERIAL. THE AO HAS NOT MENTIONED AS TO' FROM WHICH BOOKS OF ACCOUNT SAID VERIFICATION WAS CARRIED OUT. D. THE AO, HAS NOT EXAMINED THE LINK OF SOURCES OF RS. 7 CRORES SURRENDERED WITH THE VYAPAM CASE AS PER WHICH MONEY WAS ILLEGALLY ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 10 OBTAINED FOR ADMISSIONS ETC IN THE MEDICAL COLLEGE CONTROLLED BY ASSESSEE. IN THAT CASE IT WILL BE INCOME GENERATED BY THE ASS ESSEE BY CONTRAVENING THE ESTABLISHED LAW. E. THE AO HAS NOT COLLECTED INFORMATION FROM VARIOU S AGENCIES INVOLVED IN INVESTIGATION OF VYAPAM CASE I.E. POLICE ENFORCEMEN T DIRECTORATE AND OTHER LAW ENFORCEMENT AGENCIES TO DETERMINE CORRECT INCOM E OF THE ASSESSEE. F. IN RESPECT OF CLAIM OF DEDUCTION UNDER CHAPTER V IA, NO. LLC RECEIPT OF RS. 49,062/- IS ON RECORD AND FOR CLAIM OF 8 OG OF RS.26 LAKHS AS DONATION TO SAIMS AND SAIMST, THE CERTIFICATE GIVEN BY THE COMP ETENT AUTHORITY IS ONLY UP TO 31.03.2011. PROPER INVESTIGATION WAS NOT MADE BEFORE ALLOWING THE SAID DEDUCTION AND CLAIM ALLOWED CONTRARY TO LAW. G. THE ENQUIRY REGARDING YEAR WISE INVESTMENT MADE IN MOVABLE AND IMMOVABLE PROPERTY AND ACCRETION IN WEALTH WAS NOT MADE. 9. ON RECEIVING THE SHOW CAUSE NOTICE ASSESSEE MADE DETAILED WRITTEN SUBMISSIONS WHICH READ AS FOLLOWS:- 1. WITH REFERENCE TO THE SHOW CAUSE NOTICE ISSUED T O US, AS A GENERAL SUBMISSION AGAINST ALL OF YOUR OBSERVATIONS, WE WOU LD LIKE TO BRING TO YOUR ATTENTION THAT THE EXPLANATION (2) TO SUB-SECTION 1 OF SECTION 263 HAS BEEN INSERTED W.E.F 1/6/2015 AND IS THUS APPLICABLE TO A SSESSMENT ORDERS PASSED AFTER 1/6/2015. CONSEQUENTLY, THE DISCRETION ARY POWERS BESTOWED ON YOU BY VIRTUE OF SUB-CLAUSE (A) OF EXPLANATION ( 2) ARE NOT APPLICABLE TO THE ASSESSMENT ORDER PASSED IN OUR CASE WHICH WAS PASSED IN JANUARY 2015 AND WHICH IS SUBJECT MATTER, OF YOUR REFERRED NOTICE. ALSO THE EXPLANATION INSERTED IS NOT RETROSPECTIVE IN NATURE AS HAS BEEN CLARIFIED / HELD IN THE FOLLOWING ORDER OF THE SUPREME COURT. 2. THE SUPREME COURT IN CIT V. VATIKA TOWNSHIP P. L TD (2014) 367 ITR ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 11 466 OBSERVED: ' THE FUNDAMENTAL RULE IS THAT NO STA TUTE SHALL BE CONSTRUED TO HAVE A RETROSPECTIVE OPERATION UNLESS SUCH A CON STRUCTION APPEARS VERY DEARLY IN THE TERMS OF THE ACT, OR ARISES BY NECES SARY AND DISTINCT IMPLICATION'. IT HAS BEEN CONSISTENTLY HELD THAT A PROVISION MUST BE READ SUBJECT TO THE RULE THAT IN THE ABSENCE OF AN EXPRE SS PROVISION OR CLEAR IMPLICATION, THE LEGISLATURE DOES NOT INTEND TO ATT RIBUTE TO THE AMENDING PROVISION, A GREATER RETROSPECTIVITY THAN IS EXPRES SLY MENTIONED'. IT IS SETTLED LAW THAT A TAXING PROVISION IMPOSING LIABIL ITY IS GOVERNED BY THE NORMAL PRESUMPTION THAT IT IS NOT RETROSPECTIVE AS HELD IN 5.5. GADGIL V. LAL AND CO. (1964) 531TR 231 (SC). 3. SIR THE ASSESSEE HAD FILED THE REVISED RETURN SU O MOTO ON 18/10/2013 LE. BEFORE THE ISSUE OF NOTICE U/S 143(2) (DT. 14/0 8/2013).THEREFORE THERE IS NO QUESTION OF PENALTY U/S 271(1)(C) IN THE ABO VE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME FILED IN ORIGINAL RETURN OF INCOME. ASSESSEE HAD ALREADY PAID THE APPLICABLE TAXES ON T HE ABOVE BEFORE FILING THE REVISED RETURN. THEREFORE IT CANNOT ALSO BE SAI D THAT THERE WAS ANYTHING PREJUDICIAL TO THE INTEREST OF THE REVENUE. FURTHER MERE NON INITIATION OF PENALTY U/S 271(1)(C ) CANNOT BE CONSIDERED A GOOD GROUND FOR INVOKING SECTION 263 MASTER VIJAY O SWAL ITO [2003] 87 ITO 95 (RAJKOT)(TRIB). 4. TOTAL INCOME OF THE ASSESSEE WAS RS. 7,41,07,848 INCLUDING SURRENDER INCOME. IT IS INCORRECT TO SAY THAT THE AD HAS NOT OBTAINED TH E BREAK-UP OF INCOME OF RS.41,07,848/- (EXCLUDING 7 CRORES SURRENDERED) 1. AO HAD OBTAINED A. COPIES OF RETURN OF INCOME WITH DETAILED COMPU TATION OF INCOME B. CAPLTAL ACCOUNT, STATEMENT OF AFFAIRS WITH (S UBMISSION DT. ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 12 27/08/2013) C. REVISED RETURN OF INCOME 'WITH COMPLETE BREAKU P OF RS.7,41,07,848/- (SUBMISSION DATED 08/08/2014) 2. AO HAD ENQUIRED THE FOLLOWING VIDE HIS (NOTICE DT.14/02/2014 AND REPLY DT. 24TH FEB 2014) A. DETAILS OF SOURCES OF INCOME B. DETAILS OF EXPENSES ABOVE RS.5,OOO/- C. DETAILS OF DECLARED INCOMES DURING SURVEY D. EVIDENCES OF DEDUCTIONS CLAIMED UNDER CHAPTER VI-A 3. AGAIN OBTAINED THE FOLLOWING WITH SUBMISSION DT . 8 TH AUGUST 2014 A. COPY OF HOUSING LOAN CERTIFICATE (WHICH MEANS SHE HAD VERIFIED INCOME FROM HOUSE PROPERTY) B. CERTIFICATE OF APPROVAL U/S 80G OF THE INSTITU TIONS TO WHOM DONATIONS WERE MADE, WHICH- MEANS SHE HAD VERIFIE D THE DEDUCTIONS CLAIMED.- C. DETAILS OF DISALLOWANCE OF EXCESS INTEREST U/S 57 D. DETAILS OF AMOUNTS APPEARING IN 26AS STATEMENT 4. FURTHER THE A.O HAD - IN ITS SHOW CAUSE NOTICE DT./ 18/03/2015 ALSO MENTIONED INTEREST AMOUNT OF RS. 3479097/- IN ADDI TION TO RS.7.00 CRORES SURRENDERED DURING THE SURVEY. FROM ALL THE ABOVE IT IS CLEAR THAT THE A.D HAD O BTAINED THE DETAILS OF ALL THE HEADS OF THE ASSESSMENT PROCEEDINGS. IT MAY KI NDLY BE NOTED THAT THE AMOUNT OF 41,07,848/- WAS HIGHER THAN PREVIOUS YEAR AND TAX H AS ALREADY BEEN PAID ON THE ABOVE. 5. THERE WAS NOTHING IN THE IMPOUND MATERIAL RELATED T O THE ASSESSEE OTHER THAN THE DOCUMENTS ON THE BASIS OF WHICH SURRENDER OF RS.7.0 0 CORES WAS MADE. SO MERE ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 13 MENTION OF TEST CHECK BY THE AD. THAT IMPOUNDED MAT ERIAL DOES NOT RENDER THE ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE SINCE THE AO HAD ALREADY MADE UNJUST AND HIGH PITCHED ORDER IN THE F AVOUR OF REVENUE BY ADDING THE SAME INCOME TWICE. THE AO HAS VERIFIED THE TRANSACTIONS FROM THE FOLL OWING BOOKS A. CASH BOOK AND OTHER BOOKS OF THE ASSESSEE SUBMITTED FOR VERIFICATION ON 16/03/2015 B. CAPITAL ACCOUNT AND STATEMENT OF AFFAIRS OF THE ASS ESSEE C. COPIES OF THE COMPUTA TION OF INCOMES, CAPITAL ACCOUNTS OF THE FIRMS WHERE THE ASSESSEE IS PARTNER. THEREFORE IT IS DEAR THAT FROM THE BOOKS OF ACCOU NT THE AO MEANS THE BOOKS OF THE ASSESSEE ONLY. FROM THE ABOVE IT IS CLEAR THAT BOTH THE REASONS IN CLAUSE C ARE NOT CORRECT. NOTHING HAS BEEN BROUGHT WHICH CAN PROVE THAT THE ORDER WAS ERRONEOUS AND PREJUDICIA L TO THE INTEREST OF REVENUE WITHOUT BRINGING ANYTHING TANGIBLE EVIDEN CE. 6. THE ABOVE IS GROSSLY INCORRECT SINCE THE AO HAD TRIED HERE HARD TO LINK THE ABOVE INCOME WITH VYAPAM CASE WHICH IS ALREADY MENTIONED IN HERE ORDER. SHE ISSUED THE SHOW NOTICE DATED 18/03/2015 AND DESPITE OF OUR CLARIFICATIONS SHE LINKED THE ABOVE AMOUNTS WITH THE VYPAM AND ADDED TO THE INCOME OF ASSESSEE DESPITE OF ASSESSEE HAVING P AID THE TAX ON THE ABOVE IN HIS RETURN OF INCOME. WE HAD CLARIFIED WIT H SUBMISSIONS GIVEN DURING THE COURSE OF HEARING. IT IS NOT CLEAR WHAT HAS NOT BEEN EXAMINED HERE, WHEN SHE ALREADY HAS ADDED THE ABOVE AMOUNT A ND ALSO INITIATED PENALTY ON THE ABOVE. 7. THE ABOVE IS GROSSLY INCORRECT WITH THE SAME ARG UMENT AS AGAINST THE D. THOUGH THE A.O. IS NOT EXPECTED TO. OR REQUIRED TO COLLECT INFORMATION ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 14 FROM VARIOUS AGENCIES INVOLVED IN THE INVESTIGATION SINCE SHE WAS AWARE THAT NOTHING HAD BEEN PROVED AGAINST THE ASSESSEE I N COURT OF LAW AND NOT EVEN CHARGE SHEET WAS FILED AGAINST THE ASSESSE E TILL THE DATE OF PASSING THE ORDER BY HER. ASSESSEE WAS MERE SUSPECT AND NOTHING HAD BEEN PROVED IN THE COURT OF LAW AGAINST THE ASSESSE E TILL THE DATE OF ORDER. REGARDING DR. BHANDARI'S LINKAGE WITH VYAPAM CASE THE FOLLOWING ARE THE RELATED FACTS OF THE CASE AS PER FIR'S/ CHA LLANS FILED BEFORE THE RELEVANT AUTHORITIES. THAT DR. VINOD BHANDARI WAS NAMED AS AN ACCUSED IN CASE NO.12/13.AND CASE NO.14/13. THE CASE NO. 12/13 IS W ITH RESPECT TO PMT 2012 AND CASE NO.14/13 IS WITH RESPECT TO PPG 2012 BOTH OF WHICH HAPPENED IN THE FINANCIAL YEAR 2012-13, WHEREAS THE ASSESSMENT OF THE ASSESSE WHICH IS THE SUBJECT MATTER HERE IS FOR THE FINANCIAL-YEAR 2011-12 (COPY OF FIR OF BOTH THE CASES ENCLOSED AS PAGE NO. _). DR. BHANDARI IS ACCUSED IN THE MATTER OF 6 STUDENTS IN CASE NO.14/13 AND FOR 8 STUDENTS IN CASE NO.12/13. HE HAS NOT BEE N NAMED AS AN ACCUSED IN ANY OTHER CASES OF THIS MATTER. THE TOTAL AMOUNT INVOLVED IN THE ABOVE CASES WAS RS .50.00 LACS AND RS.142.00 LACS IN CASE NO.12/13 AND 14/13 RESPECTIV ELY WHICH HAS ALREADY BEEN FULLY SEIZED FROM SHREE PRADEEP RAGHUV ANSHI'S HOUSE AT INDORE BY THE POLICE AUTHORITIES AS IS BROUGHT OUT IN THE FIR STATEMENT ENCLOSED AS PAGE NO. _. CONSEQUENTLY, THERE IS NO CASH SPECIFIC TO THE ABOV E CASES WHICH IS PRESENTLY NOT FOUND OR NOT SEIZED BY POLICE AUTHORI TIES. FURTHER AND MORE IMPORTANTLY THE MATTER REFERRED IN WHICH DR. VINOD BHANDARI IS ACCUSED IS WITH REFERENCE TO THE F.Y. 2012-13 WHEREAS OUR ASSE SSMENT ORDERS WHICH ARE SUBJECT MATTER OF SHOW CAUSE NOTICE U/S 263 ARE WITH RESPECT TO FY 2011-12 LE. A.Y. 2012-13. ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 15 DESPITE OF ABOVE, AND WITHOUT BRINGING ANY EVIDENCE TO THE CONTRARY AND ONLY BASED ON PURE CONJECTURE, THE A.D. HAS DOUBLE ADDED SURRENDERED INCOME AS INCOME FROM UNKNOWN SOURCES ALLEGING HIS INVOLVEMENT IN VYAPAM CASE. 8. THE ASSESSEE HAD PAID L1C PREMIUM OF RS. 1026737 /- HOWEVER DUE TO ERROR DEDUCTION WAS CLAIMED ONLY FOR RS. 49,062. COPIES OF L1C WERE SUBMITTED ALONG WITH SUBMISSION DATED 26/08/2013 AND. ALSO ABOVE FACT WAS MENTIONED IN LETTER DATED 24/02/2014 POINT NO. 8. THE CERTIFICATE OF 80G APPROVAL WAS GIVEN UP TO 31/ 03/2011 HOWEVER AS PER CIRCULAR NO. 7/2010 [F. NO. 197/21/2010ITAI], D ATED 27102010 (COPY ENCLOSED) IT IS CLARIFIED BY CBDT THAT ANY AP PROVAL IS IN FORCE AS ON 01/10/2009 AND APPROVALS GRANTED THEREAFTER SHALL R EMAIN IN FORCE UNLESS APPROVAL IS WITHDRAWN. THEREFORE THE AO HAD REQUIRED AND ASSESSEE HAD SUBMITTED DECLARATION FROM THE SAID IN STITUTES THAT THERE APPROVAL WAS NOT WITHDRAWN AT ANY TIME IN ITS SUBMI SSION DT, 16/03/2015. 9. WE ARE ENCLOSING THE PAPER DIARY CONTAINING ALL THE RELEVANT NOTICES AND OUR SUBMISSIONS DURING THE ASSESSMENT PROCEEDIN GS FOR YOUR KIND PERUSAL. WITH ALL THE ABOVE AND IN LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS IT IS CLEAR THAT NONE OF THE ISSUES RAISED IN THE S HOW CAUSE NOTICE MEET THE CONDITIONS REQUISITE FOR INVOKING SECTION 263 OF TH E I. T. ACT, 1961. PLEASE ALSO REFER TO THE FOLLOWING JUDICIAL PRONOUNCEMENTS 1. THE FACT THAT AO HAS NOT RECORDED THE INQUIRY AND I TS SATISFACTION IS NOT AN EVIDENCE OR DOES NOT LEADS TO THE PROPOSITIO N THAT HE DID NOT MAKE ANY ENQUIRY ON THIS MATTER WHICH WOULD TRIGGER 263 ON THE SPECIFIC ISSUE. MANISH KUMAR VS CIT (2012) 134 ITD 27 (INDORE TRIB), ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 16 AND ALSO 323 ITR 632 AND MAITHAN INTERNATIONAL VS A CIT 134 ITD 393). 2. MERELY BECAUSE FROM A PERFECTIONIST POINT OF VIEW, IT IS FELT THAT SOME MORE ENQUIRIES AND VERIFICATIONS COULD HAVE BE EN MADE BY THE ASSESSING OFFICER WHILE MAKING ASSESSMENT/ASSESSMEN T ORDER CANNOT BE DECLARED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. (SALORA CLOTH V. ACIT [2006J 991TD 300 (CH ENNAI) (TRIB.) 10. IN THE LIGHT OF THE ABOVE SUBMISSIONS AGAINST YOUR OBSERVATIONS IN THE REFERRED SHOW CAUSE NOTICE, WE TRUST THAT YOU C AN OBSERVE BASED ON OUR SUBMISSIONS THAT THE ASSESSMENT COMPLETED U/S 1 43(3) AND JCIT'S ORDER U/S 144(A) ARE NOT ERRONEOUS AND PREJUDICIAL TO REVENUE. CONSEQUENTLY THE TWIN PRE-CONDITIONS OF RE-OPENING U/S 263 OF THE REFERRED ASSESSMENTS AS ELABORATED UNDER MALABAR INDUSTRIAL CO. LIMITED VS CIT (243 ITR 83) (SC)ARE NOT MET. WE SUBMIT THAT IN VIE W OF THE SAME THE PROCEEDINGS U/S 263 MAY BE DROPPED. 10. AFTER CONSIDERING THE SUBMISSION MADE BY THE AS SESSEE, LD. PCIT WAS NOT CONVINCED AND OBSERVED THAT THE LD. A. O DID NOT OBTAIN BREAK UP OF INCOME OF RS. 41,07,848/-, A.O H AS NOT EXAMINED THE REAL SOURCE OF THE SURRENDERED INCOME OF RS.7 CRORES ALLEGEDLY REPRESENTED BY THE ASSESSEE HAVING EARNED UNACCOUNTED PROFESSIONAL RECEIPTS WHICH WERE INVESTED IN SHORT TERM ADVANCES IN THE FORM OF HUNDIS WHICH MATURED DURING THE YEAR. LD. PCIT ALSO BRUSHED ASIDE THE SUBMISSIONS MADE BY THE ASSESSEE EXPLAINING THAT ALL THE ISSUES RAISED IN THE SHOW CAUSE NOTICE S HAVE ALREADY ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 17 BEEN EXAMINED BY LD. A.O AND ADDITIONS HAVE ALSO BE EN MADE. LD. PCIT DIRECTED THE LD. A.O TO PASS FRESH ASSESSMENT ORDER AFTER MAKING PROPER ENQUIRIES OF INVESTMENTS THEREBY TREA TING THE ASSESSMENT ORDER ISSUED U/S 143(3) DATED 24.3.2015 AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. RELEVA NT EXTRACT IS REPRODUCED BELOW:- 14. IT IS APPARENT THAT AD HAS NOT INVESTIGATED AND EXAMINED THE MATTER PROPERLY WHICH SHOULD HAVE BEEN DONE. 15. THE COMMISSIONER CAN REGARD THE ORDER AS ERRONE OUS, ON THE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSIN G OFFICER SHOULD HAVE MADE FURTHER INQUIRIES. IT IS DUTY OF THE ASSESSING OFFICER TO ASCERTAIN THE TRUTH OF THE FACTS STATED BY THE ASSESSEE. IT IS IN CUMBENT ON THE ASSESSING OFFICER TO INVESTIGATE THE FACTS STATED WHEN CIRCUM STANCES WOULD MAKE SUCH AN INQUIRY PRUDENT. THE WORD 'ERRONEOUS' IN SE CTION INCLUDES THE FAILURE TO MAKE SUCH AN ENQUIRY. HENCE, THE ORDER B ECOMES ERRONEOUS BECAUSE SUCH AN INQUIRY HAS NOT BEEN MADE. 16. THE ASSESSEE RELIES UPON VARIOUS DECISIONS CHAL LENGING THE PROCEEDINGS INITIATED U/S 263. ASSESSEE'S CONTENTIO N IS NOT ACCEPTABLE. AS PER PROVISIONS OF SECTION 263, THE COMMISSIONER OF INCOME TAX MAY CALL FOR AND EXAMINE THE RECORD IF ANY PROCEEDINGS AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER. IS E RRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE M AY AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEAR AND AFTER MAK ING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORD ER ENHANCING OR ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 18 MODIFYING THE ASSESSMENT OR CANCELLING THE ASSESSME NT AND DIRECTING A FRESH ASSESSMENT. 17. ON PERUSAL OF RECORD, IT IS CLEAR THAT THE ENQU IRY AND INVESTIGATION WHICH WERE REQUIRED HAD NOT EXAMINED PROPERLY BY TH E ASSESSING OFFICER. IN THIS REGARD, EXPLANATION-2 OF THE SECTION 263 IS PRODUCED AS UNDER :- 'FOR THE PURPOSE OF THIS SECTION, IT IS HEREBY DEC LARED THAT AN ORDER PASSED BY THE ASSESSING OFFICER SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENU E, IF, IN THE OPINION OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER (A) THE ORDER IS PASSED WITHOUT MAKING ENQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE. (B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQUIRING THE CLAIM; (C) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH ANY ORDER, DIRECTION OF INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119; THE ABOVE EXPLANATION IS CLARIFICATORY IN NATURE. E VEN BEFORE IT THE ORDERS MADE WITHOUT PROPER ENQUIRY WERE WERE LIABLE TO BE REVISED U/S 263 OF I.T.ACT. FURTHER THIS EXPLANATION EXISTS ON THE DAT E ON WHICH PROCEEDINGS U/S 263 HAVE BEEN UNDERTAKEN AND IS EXISTING LAW AS ON DATE. SO IT WILL BE APPLICABLE IN PRESENT PROCEEDINGS. IT IS IMMATERIAL THAT ORDER WAS PASSED U/S 143(3) EARLIER TO 01.06.2015 18. AS DISCUSSED THE PROPER ENQUIRY HAS NOT BEEN MA DE WHICH OUGHT TO HAVE BEEN MADE BY AO AND AO DID NOT APPLY HER MIND TO RELEVANT ISSUES MAKING THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF REVENUE. 19. THE ASSESSMENT ORDER MADE BY THE ASSESSING OFF ICER, IN RESPECT OF EXAMINATION OF FACTS/ISSUES MENTIONED ABOVE IS ERRO NEOUS M SO FAR AS IT IS ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 19 PREJUDICIAL TO THE INTEREST OF REVENUE AND IS THERE FORE HEREBY SET ASIDE U/S 263 OF THE INCOME TAX ACT,,1961 ACCORDINGLY. THE AS SESSING OFFICER IS DIRECTED TO PASS THE FRESH ASSESSMENT ORDER AFTER M AKING PROPER ENQUIRIES AND INVESTIGATION AS DISCUSSED ON AFORESAID ISSUES AND OPPORTUNITIES TO THE ASSESSEE OF BEING HEARD. 11. NOW THE ASSESSEE IS IN APPEAL AGAINST THE ORDER ISSUED U/S 263 OF THE ACT BY ITA NO.350/IND/2017 PERTAINING TO ASSESSMENT YEAR 2012-13. 12. LD. COUNSEL FOR THE ASSESSEE APART FROM REITERA TING THE SUBMISSIONS MADE BEFORE LD. A.O DURING THE COURSE O F ASSESSMENT PROCEEDINGS AND BEFORE LD. PCIT DURING THE COURSE O F PROCEEDINGS U/S 263 OF THE ACT FURTHER ARGUED THAT THE ORDER U/ S 143(3) OF THE ACT IS PASSED BY LD. A.O AFTER MAKING INQUIRIES AND VERIFICATION WHICH SHOULD HAVE BEEN MADE. THE AO, EXERCISING ITS QUASI-JUDICIAL POWER, HAD ISSUED A DETAILED QUESTIONNAIRE U/S 142( 1) WHICH WAS DULY ANSWERED BY WAY OF VARIOUS DETAILS, EXPLANATIO NS AND LETTERS. COMPLETE BOOKS OF ACCOUNT SUPPORTED WITH DOCUMENTAR Y EVIDENCES WERE PRODUCED AND EXAMINED BY THE AO DURING THE ASS ESSMENT PROCEEDINGS. THE APPELLANT HAD APPEARED BEFORE THE AO AND FILED REPLIES, HOWEVER, THE LD. PCIT HAS COMPLETELY IGNOR ED THE DETAILED ENQUIRY CONDUCTED BY THE AO AND HAS, THEREFORE, ERR ED IN EXERCISING ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 20 JURISDICTION U/S 263 OF THE ACT IN RESPECT OF THE I SSUES WHICH WERE ALREADY EXAMINED BY THE AO. 13. RELYING ON THE DECISION OF APEX COURT IN THE CA SE OF MALABAR INDUSTRIAL CO. LTD. V. CIT [(2000) 243 ITR 83], IT IS SUBMITTED THAT THE POWER OF CIT U/S 263 OF THE ACT CAN ONLY BE EXE RCISED BY THE LD. PCIT WHEN THE TWIN CONDITIONS OF THE ORDER BEING ER RONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE, ARE SATI SFIED AND THE SAME CANNOT BE EXERCISED TO SUBSTITUTE ITS OWN FINDING I N PLACE OF THE AO AND THEREFORE, THE LD. PCIT CANNOT RE-EXAMINE THE I SSUES ALREADY INQUIRED INTO BY THE AO. RELIANCE IS ALSO PLACED ON THE BOMBAY HIGH COURT'S DECISION IN THE CASE OF CIT V. GABRIEL INDIA LTD . [(1993) 203 ITR 108] WHEREIN IT IS HELD THAT THE POWER U/S 263 OF THE ACT IS TO BE EXERCISED IN THE CASE OF 'NO INQUIRY' AND NOT IN THE CASE OF 'INADEQUATE INQUIRY' OR 'LACK OF INQUIRY' WHEREAS T HE CASE OF THE ASSESSEE IS NOT EVEN A CASE OF LACK OF INQUIRY. 14. IT IS SUBMITTED THAT UNDER THE JURISDICTION U/S 263 OF THE ACT, THE LD. PCIT HAS INITIATED REVISION PROCEEDINGS IN ORDER TO CARRY OUT FISHING AND ROVING ENQUIRIES IN THE MATTERS WHICH A RE ALREADY CONCLUDED BY THE AO AND THEREFORE THE EXERCISE OF J URISDICTION U/S ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 21 263 OF THE ACT IS BAD IN LAW. THE LD. PCIT HAS ERRE D IN EXERCISING JURISDICTION U/S 263 OF THE ACT WHEN THE ISSUES RAI SED THEREIN WERE ALREADY ENQUIRED INTO BY THE AO DURING THE ASSESSME NT PROCEEDINGS. THE AO HAD PASSED THE ASSESSMENT ORDER ONLY AFTER CONDUCTING DETAILED ENQUIRY ON VARIOUS ISSUES APPE ARING IN THE SHOW CAUSE NOTICE ISSUED U/S 263 OF THE ACT. THE AS SESSMENT ORDER IS PASSED AFTER DUE APPLICATION OF MIND, THEREFORE, THE IMPUGNED NOTICE AND ORDER U/S 263 OF THE ACT ALLEGING THAT P ROPER AND ADEQUATE ENQUIRY WAS NOT MADE, RENDERING THE ASSESS MENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E, IS ARBITRARY BASED ON CONJECTURE AND SURMISES. 15. THE LD. PCIT HAS NOT GIVEN ANY FINDING AS TO HO W AND IN WHAT MANNER THE ORDER OF THE AO ON THE VARIOUS ISSUES NO TED IN ITS ORDER U/S 263 OF THE ACT WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD. PCIT HAS NOT MADE ANY ENQUIRY ON HIS OWN BUT SIMPLY DIRECTED THE AO TO MAKE FURTHER VERIFICA TION AND EXAMINATION THEREFORE, THE ORDER OF THE LD. CIT U/S 263 OF THE ACT DESERVES TO BE SET ASIDE. RECENTLY, THE HON'BLE DEL HI HIGH COURT IN THE CASE OF LD. PCIT V. DELHI AIRPORT METRO EXPRESS PVT. LTD. [ITA ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 22 NO. 705/2017] HAS CATEGORICALLY HELD THAT FOR THE P URPOSE OF EXERCISING JURISDICTION U/S 263 OF THE ACT AND REAC HING A CONCLUSION THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, THE LD. PCIT HAS TO UNDERTAKE SOME MINIMA L INQUIRY AND IN FACT WHERE THE LD. PCIT IS OF THE VIEW THAT AO H AD NOT UNDERTAKEN ANY INQUIRY, IT BECOMES INCUMBENT ON THE LD. PCIT T O CONDUCT SUCH ENQUIRY. FURTHER IN THE CASE OF PCIT V. MODICARE LI MITED [ITA NO. 759/2017] HON'BLE DELHI HIGH COURT HAS FOLLOWED ITS DECISION IN INCOME TAX OFFICER V. DG HOUSING PROJECTS LIMITED [343 ITR 329], DIT V. JYOTI FOUNDATION [357 ITR 388] AND LD. PCIT V. DELHI AIRPORT METRO EXPRESS PVT. LTD. (SUPRA) TO HOLD THA T THE EXERCISE OF JURISDICTION U/S 263 OF THE ACT CANNOT BE OUTSOURCE D BY THE PCIT TO THE AO AND THEREFORE, THE PCIT CANNOT DIRECT THE AO TO PROVIDE DETAILS OF THE FACTS ON THE BASIS OF WHICH THE PROC EEDINGS U/S 263 OF THE ACT COULD HAVE BEEN INITIATED. 16. IN THE INSTANT CASE, THE LD. PCIT, UNMINDFUL OF THE ENQUIRIES CONDUCTED BY THE AO DURING THE ASSESSMENT PROCEEDIN GS AND SUBMISSIONS MADE BY THE ASSESSEE IN RESPONSE TO NOT ICE U/S 263 OF THE ACT, HAS MERELY OBSERVED THAT THE ASSESSMENT OR DER WAS PASSED ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 23 WITHOUT MAKING PROPER ENQUIRIES AND IT IS A MATTER OF RECORD THAT LD. PCIT HAS HIMSELF NOT UNDERTAKEN ANY ENQUIRY TO REACH A CONCLUSION THAT THE ORDER IS ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF REVENUE. THEREFORE, IN THE ABSENCE OF ANY JUSTIFICATION FOR EXERCISE OF JURISDICTION U/S 263 OF THE ACT, TH E ORDER OF LD. PCIT PASSED U/S 263 OF THE ACT IS LIABLE TO BE SET ASIDE . 17. THERE IS DIFFERENCE BETWEEN 'LACK OF ENQUIRY' A ND 'INADEQUATE ENQUIRY'. IT IS FOR THE AO TO DECIDE THE EXTENT OF ENQUIRY TO BE MADE AS IT IS HIS SATISFACTION AS WHAT IS REQUIRED UNDER LAW. RELIANCE IS PLACED ON THE DECISION OF CIT V. SUNBEAM AUTO LTD . [(2010) 332 ITR 167], WHEREIN HON'BLE DELHI HIGH COURT HAS HELD THA T IF THERE WAS ANY INQUIRY, EVEN INADEQUATE, THAT WOULD NOT BY ITS ELF, GIVE OCCASION TO THE LD. PCIT TO PASS ORDER U/S 263 OF THE ACT, M ERELY BECAUSE THE LD. PCIT HAS A DIFFERENT OPINION IN THE MATTER AND THAT ONLY IN CASES WHERE THERE IS NO ENQUIRY, THE POWER U/S 263 OF THE ACT CAN BE EXERCISED. THE LD. PCIT CANNOT PASS THE ORDER U/S 2 63 OF THE ACT ON THE GROUND THAT FURTHER/THOROUGH ENQUIRY SHOULD HAV E BEEN MADE BY AO. ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 24 18. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT EVEN THOUGH THERE HAS BEEN AN AMENDMENT IN THE PROVISIONS OF SECTION 263 OF THE ACT BY WHICH EXPLANATION 2 IS INSERTED, W.E.F. 01.06.2015 BUT THE SAME DOES NOT GIVE UNFETTERED POWERS TO THE CO MMISSIONER TO ASSUME JURISDICTION U/S 263 OF THE ACT TO REVISE EV ERY ORDER OF THE AO TO RE-EXAMINE THE ISSUES ALREADY EXAMINED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE HON'BLE MUMBAI ITAT HAS DEALT WITH EXPLANATION 2 AS INSERTED BY THE FINANCE ACT , 2015 IN THE CASE OF NARAYAN TATU RANE V. INCOME TAX OFFICER [(2016) 70 TAXMANN.COM 227] TO HOLD THAT THE SAID EXPLANATION CANNOT BE SA ID TO HAVE OVERRIDDEN THE LAW AS INTERPRETED BY THE HON'BLE DE LHI HIGH COURT, ACCORDING TO WHICH THE LD. PCIT HAS TO CONDUCT AN E NQUIRY AND VERIFICATION TO ESTABLISH AND SHOW THAT THE ASSESSM ENT ORDER IS UNSUSTAINABLE IN LAW. THE TRIBUNAL HAS FURTHER HELD THAT THE INTENTION OF THE LEGISLATURE COULD NOT HAVE BEEN TO ENABLE THE LD. PCIT TO FIND FAULT WITH EACH AND EVERY ASSESSMENT O RDER, WITHOUT CONDUCTING ANY ENQUIRY OR VERIFICATION IN ORDER TO ESTABLISH THAT THE ASSESSMENT ORDER IS NOT SUSTAINABLE IN LAW, SINCE S UCH AN INTERPRETATION WILL LEAD TO UNENDING LITIGATION AND THERE WOULD NOT ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 25 BE ANY POINT OF FINALITY IN THE LEGAL PROCEEDINGS. THE OPINION OF THE LD. PCIT REFERRED TO IN SECTION 263 OF THE ACT HAS TO BE UNDERSTOOD AS LEGAL AND JUDICIOUS OPINION AND NOT A RBITRARY OPINION. 19. LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THA T DETAILS OF INTEREST INCOME OF RS.39,33,844/- WAS DULY SHOWN IN THE COMPUTATION OF INCOME AND DUE TAXES PAID THEREIN. THE SURRENDERED INCOME OF RS.7 CRORES IS THE UNACCOUNTE D INCOME FROM PROFESSION/ BUSINESS INCOME WHICH WERE INVESTED IN HUNDIS AS SHORT TERM ADVANCES FOR EARNING INTEREST AND THE DE TAILS OF SUCH HUNDIS WHICH WERE IMPOUNDED DURING THE COURSE OF SU RVEY WERE AVAILABLE WITH THE LD. A.O. AS REGARDS THE ALLEGED INVOLVEMENT OF ASSESSEE IN VYAPAM CASE IT WAS SUBMITTED THAT THE A SSESSEE IS ACCUSED IN CASE NO.12/13 AND 14/13 WITH RESPECT TO PMT 2012 AND PPG 2012 WHICH HAPPENED DURING THE FINANCIAL YE AR 2012-13 WHEREAS THE ASSESSMENT OF THE ASSESSEE WHICH IS THE SUBJECT MATTER OF THE APPEAL IS FOR FINANCIAL YEAR 2011-12. HE AL SO SUBMITTED THAT ASSESSEE HAS NOT BEEN NAMED AS ACCUSED IN ANY OTHER CASES OF THIS MATTER AND THE AMOUNT INVOLVED IN THE ALLEGED CASE NO.12/13& 14/13 ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 26 REFERRED ABOVE HAVE ALREADY BEEN SEIZED FROM SHRI P RADEEP RAGHUVANSHIS HOUSE AT INDORE BY THE POLICE AUTHORI TIES. 20. HE ALSO SUBMITTED THAT EVEN THOUGH THERE WAS NO MATTER OF VYAPAM SCAM DURING FINANCIAL YEAR 2011-12, THE LD. A.O DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT DID NOT ACCEPT THE SUBMISSIONS OF ASSESSEE AND MADE ADDITIO N OF CASH DEPOSIT AT RS.7,34,79,097/- WHICH ITSELF PROVES THA T THE ORDER PASSED BY THE LD. A.O IS NEITHER ERRONEOUS NOR PREJ UDICIAL TO THE REVENUE. IN SUPPORT OF THE ABOVE CONTENTION RELIAN CE WAS PLACED ON THE FOLLOWING DECISIONS; (I) CADILA PHARMACEUTICALS LTD (ITAT AHMEDABAD BE NCH) (II) MADHUSUDAN INDUSTRIES LTD (ITAT AHMEDABAD BE NCH) (III) PR. COMMISSIONER OF INCOME TAX VS NARAYAN BA LMUKUND DUBEY (2017) 30 ITJ 335 (M.P) (IV) DIRECTOR OF INCOME TAX V JYOTI FOUNDATION (2 013) 357 ITR 388 (DELHI) (V) COMMISSIONER OF INCOME TAX V/S RATLAM COAL ASH . CO (1988) 171 ITR 141 (MP) (VI) COMMISSIONER OF INCOME TAX V/S MEHROTRA BROT HERS (2004) 270 ITR 157 M.P (VII) COMMISSIONER OF INCOME TAX, DELHI V/S INTER NATIONAL TRAVEL HOUSE LTD (2012) ITR 554 (DELHI) ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 27 (VIII) INCOME TAX OFFICER V/S D.G HOUSING PROJECT S LTD (2002) 343 ITR 329 DELHI (IX) M/S AMIRA PURE FOODS PVT. LTD (ITAT BENCH DE LHI) (X) M/S NARAYAN TATU RANE (ITAT MUMBAI DELHI) 21. RELIANCE IS ALSO PLACED ON THE FOLLOWING DECISI ONS :- A. CIT V/S. SOFTWARE CONSULTANTS 341 ITR 240 (DEL. ) B. CIT V/S. ANIL CORPORATION 213 TAXMANN 19 C. CIT V/S. SUNBEAM AUTO LTD. 332 ITR 167 (DEL.) D. CIT V/S. MAKAL SUTA COTTON CO. P. LTD. 275 ITR 54(M.P) E. CIT V/S R.K. CONSTRUCTION CO., 313 ITR 65 (GUJ. ) F. CIT V/S MAX INDIA, 295 ITR 282 (SC) G. CIT V/S RATLAM COAL ASH CO., 171 ITR 141 (M.P) H. CIT V/S ARVIND JEWELLERS, 259 ITR 502 (GUJ.) I. CIT V/S VODAFONE ESSAR SOUTH LTD, 212 TAXMANN 1 84 (DEL.) J. CIT V/S MEHROTRA BROTHERS, 270 ITR 157 (M.P) K. CIT V/S SHRI GOVINDRAM SEKSARIYA CAHRITY TRUST, 166 ITR 580 (M.P) L. HARI IRON TRADING CO. V/S CIT, 263 ITR 437 (P&H ) M. CIT V/S HARI SINGH & ASSOCIATES, 267 CTR 442 (R AJ.) N. 335 ITR 83, CIT VS. ANIL KUMAR SHARMA (DELHI), O. 341 ITR 537 (DELHI), CIT VS. VIKAS POLYMERS P. 343 ITR 342, CIT VS. HERO AUTO LTD. (DELHI H.C.), Q. 344 ITR 554, CIT VS. INTERNATIONAL TRAVEL HOUSE LTD. (DELHI H.C.), ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 28 R. 343 ITR 329, CIT VS. D.G. HOUSING PROJECTS LTD. (DELHI H.C.), S. 111 ITR 326, J.P. SRIVASTAVA & SONS VS. CIT, (A LLHD. H.C) T. 320 ITR 674, CIT VS. ASHISH RAJPAL (DELHI H.C.). AT U. 323 ITR 632, CIT VS. DESIGN AND AUTOMATION ENGINEERS (BOMBAY) P. LTD. (BOMBAY H.C.), OF V. 323 ITR 206, CIT VS. DEVELOPMENT CREDIT BANK LT D. W. 243 ITR 83, MALABAR INDUSTRIAL CO. LTD. VS. CIT (SC) X. 203 ITR 108 CIT VS. GABRIEL INDIA LTD., (BOMBAY H.C.) Y. MUKESH SHARMA V. CIT 25 ITJ 341 (INDORE ITAT) 22. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE STRO NGLY SUPPORTED THE ORDER U/S 263 OF THE ACT PASSED BY LD . PCIT AND FURTHER SUBMITTED THAT ASSESSEE WAS REQUIRED TO FU RNISH COMPLETE DETAILS OF THE PERSONS NAMED IN THE HUNDIS SO AS TO PROVE THAT THEY WERE GENUINE ADVANCES AND THE CASH WAS RECEIVED ON MATURITY OF SUCH HUNDIS. SINCE NO SUCH EXPLANATION WAS PROVIDE D BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S AND THE LD. A.O HAS ALSO NOT EXAMINED THE LINK OF SOURCE OF RS. 7 CRORES SURRENDERED AND ALSO ABOUT THE MISMATCH IN THE DEDU CTION UNDER CHAPTER VI-A, LD. PCIT HAS RIGHTLY SET ASIDE THE OR DER OF THE LD. A.O ISSUED U/S 143(3) OF THE ACT DATED 23.3.2015 FOR PA SSING A FRESH ASSESSMENT ORDER AFTER MAKING PROPER ENQUIRIES AND INVESTMENTS. ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 29 23. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE JUD GMENTS AND DECISIONS RELIED BY THE ASSESSEE. SOLE ISSUE RAISED IN THIS APPEAL IS CHALLENGING THE VALIDITY OF ORDER U/S 263 OF THE AC T BY LD. PCIT AND WRONGLY ASSUMING JURISDICTION U/S 263 OF THE ACT. 24. THE ASSESSEE WAS SUBJECT TO SURVEY U/S 133A ON 24.9.2011 AND DURING THE COURSE OF SURVEY PROCEEDINGS HE ADMI TTED THE DISCREPANCIES OF UNSECURED LOANS GIVEN TO VARIOUS P ERSONS AND OFFERED RS.7 CRORES AS UNDISCLOSED UNACCOUNTED INCO ME FOR TAX FOR ASSESSMENT YEAR 2011-12. DURING THE COURSE OF SURV EY REVENUE AUTHORITIES IMPOUNDED VARIOUS INCRIMINATING MATERIA L INCLUDING HUNDIS WHICH WERE CLAIMED BY THE ASSESSEE TO HAVE B EEN ISSUED IN LIEU OF ADVANCES GIVEN OUT OF THE UNACCOUNTED INCOM E FROM UNDISCLOSED PROFESSIONAL INCOME AND OTHER SOURCES. THE ASSESSEE HAS DISCLOSED THE SURRENDERED INCOME IN THE RETURN OF INCOME AND OFFERED IT TO TAX. AS REGARDS CASH DEPOSITED IN THE BANK ACCOUNT DURING THE FINANCIAL YEAR 2011-12 AT RS. 7,34,79,09 7/- THE ASSESSEE CLAIMED THAT HE RECEIVED AMOUNT ON MATURITY OF HUND IS DURING THE YEAR ALONG WITH INTEREST THE DETAILS OF WHICH ARE A LSO AVAILABLE WITH ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 30 THE LD. A.O AND THE PRINCIPAL AMOUNT AND INTEREST R ECEIVED THERE ON WAS SUFFICIENT ENOUGH TO EXPLAIN THE CASH DEPOSITED IN THE BANK ACCOUNT. THE LD. A.O WAS NOT SATISFIED WITH THIS S UBMISSION. EVEN THOUGH THE DETAILS OF HUNDIS WITH SPECIFIC INTEREST AMOUNT WERE AVAILABLE ON RECORD BUT LD. A.O RATHER THAN LINKING THE SOURCE OF CASH DEPOSITED FROM HUNDIS TREATED IT AS UNACCOUNTE D INCOME FROM VYAPAM SCAM ALLEGEDLY LINKING WITH THE ASSESSEE A ND TREATED IT AS RECEIPT OF ILLEGAL MONEY AS BRIBE FOR ADMISSION IN MEDICAL COLLEGES IN M.P AND ACCORDINGLY MADE THE ADDITION OF RS. 7,34,7 9,097/-. IN THIS WAY AS AGAINST THE RETURN OF INCOME AT RS.7,01 ,74,054/-, LD. A.O ASSESSED INCOME AT RS.14,75,87,000/- AND THE AD DITIONS INCLUDED THE ADDITION MADE FOR ALLEGED INCOME FROM VYAPAM SCAM. LD. PCIT AFTER ASSUMING THE JURISDICTION U/S 263 OF THE ACT HAS OBSERVED THAT THE ORDER OF THE LD. A.O IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND NEED S TO BE ASSESSED AFRESH AFTER MAKING PROPER ENQUIRIES AND INVESTIGAT IONS. BEFORE PROCEEDING TO EXAMINE THE FACTS OF THE CASE WE WILL FIRST GO THROUGH THE PROVISIONS OF SECTION 263 AND VARIOUS J UDGMENTS AND ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 31 DECISIONS RENDERED WITH REGARD TO SECTION 263 OF TH E ACT. SECTION 263 OF THE ACT READS AS UNDER:- 263. (1) THE PRINCIPAL COMMISSIONER OR COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT , AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFI CER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE RE VENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTE R MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SU CH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSM ENT AND DIRECTING A FRESH ASSESSMENT. EXPLANATION 1.FOR THE REMOVAL OF DOUBTS, IT IS HER EBY DECLARED THAT, FOR THE PURPOSES OF THIS SUB-SECTION, (A) AN ORDER PASSED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988 BY THE ASSESSING OFFICER SHALL INCLUDE (I) AN ORDER OF ASSESSMENT MADE BY THE ASSISTANT COMMISSIONER OR DEPUTY COMMISSIONER OR THE INCOME-TAX OFFICER ON TH E BASIS OF THE DIRECTIONS ISSUED BY THE JOINT COMMISSIONER UNDER SECTION 144A ; (II) AN ORDER MADE BY THE JOINT COMMISSIONER IN EX ERCISE OF THE POWERS OR IN THE PERFORMANCE OF THE FUNCTIONS OF AN ASSESSING OFFICER CONFERRED ON, OR ASSIGNED TO, HIM UNDER THE ORDERS OR DIRECTIONS ISS UED BY THE BOARD OR BY THE PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIO NER OR PRINCIPAL DIRECTOR GENERAL OR DIRECTOR GENERAL OR PRINCIPAL C OMMISSIONER OR COMMISSIONER AUTHORISED BY THE BOARD IN THIS BEHALF UNDER SECTION 120 ; (B) 'RECORD' SHALL INCLUDE AND SHALL BE DEEMED ALW AYS TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PROCEEDING UNDER THIS ACT A VAILABLE AT THE TIME OF EXAMINATION BY THE PRINCIPAL COMMISSIONER OR COMMIS SIONER; (C) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTIO N AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER OF AN Y APPEAL FILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988, THE POWE RS OF THE PRINCIPAL COMMISSIONER OR] COMMISSIONER UNDER THIS SUB-SECTIO N SHALL EXTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED TO SUCH MAT TERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL. EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, IT IS HEREBY DECLARED THAT AN ORDER PASSED BY THE ASSESSING OFFICER SHALL BE D EEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, IF, IN THE OPINION OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER, ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 32 (A) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES O R VERIFICATION WHICH SHOULD HAVE BEEN MADE; (B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOU T INQUIRING INTO THE CLAIM; (C) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH ANY ORDER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119 ; OR (D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WI TH ANY DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE, RENDERED BY THE JUR ISDICTIONAL HIGH COURT OR SUPREME COURT IN THE CASE OF THE ASSESSEE OR ANY OT HER PERSON. (2) NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) AF TER THE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH T HE ORDER SOUGHT TO BE REVISED WAS PASSED. (3) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTI ON (2), AN ORDER IN REVISION UNDER THIS SECTION MAY BE PASSED AT ANY TI ME IN THE CASE OF AN ORDER WHICH HAS BEEN PASSED IN CONSEQUENCE OF, OR T O GIVE EFFECT TO, ANY FINDING OR DIRECTION CONTAINED IN AN ORDER OF THE A PPELLATE TRIBUNAL, NATIONAL TAX TRIBUNAL, THE HIGH COURT OR THE SUPREM E COURT. EXPLANATION.IN COMPUTING THE PERIOD OF LIMITATION FOR THE PURPOSES OF SUB- SECTION (2), THE TIME TAKEN IN GIVING AN OPPORTUNIT Y TO THE ASSESSEE TO BE REHEARD UNDER THE PROVISO TO SECTION 129 AND ANY PERIOD DURING WHICH ANY PROCEEDING UNDER THIS SECTION IS STAYED BY AN ORDER OR INJUNCTION OF ANY COURT SHALL BE EXCLUDED. 25. FROM PERUSAL OF THE AFORESAID SECTION, IT IS AP PARENT THAT THERE ARE MAINLY FOUR FEATURES OF THE POWER FOR REVISION TO BE EXERCISED U/S 263 OF THE ACT BY THE PR. CIT. I. THE PR. CIT MAY CALL FOR AND EXAMINE THE RECOR DS OF ANY PROCEEDINGS UNDER THE ACT AND FOR THIS PURPOSE HE /SHE NEED NOT TO SHOW ANY REASON OR RECORD ANY REASON TO BELIEF AS IT IS REQUIRED U/S 147 OR 143(2) OF THE ACT. ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 33 II. HE/SHE MAY CONSIDER ANY ORDER PASSED BY THE A SSESSING OFFICER AS ERRONEOUS AS WELL AS PREJUDICIAL TO TH E INTEREST OF THE REVENUE. THIS IS EXERCISED BY CALLING FOR AND EXAMINING THE RECORD AVAILABLE AT THIS STAGE. III. IF AFTER CALLING FOR AND EXAMINING THE RECOR DS THE COMMISSIONER CONSIDERS THAT THE ORDER OF THE ASSE SSING OFFICER IS ERRONEOUS IS SO FAR IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE IS BOUND TO GIVE AN OPPORTUNITY TO THE ASSESSEE OF BEING HEARD AND AFT ER THAT AS HE/SHE MAY DEEM FIT, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE MAY JUSTIFY INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELLIN G ASSESSMENT AND DIRECTING A FRESH ASSESSMENT OR MAK E SUCH ENQUIRIES AS HE DEEMS NECESSARY. IV. UNDER THE PROVISIONS OF SECTION 263 OF THE AC T PR. CIT/CIT CAN ENHANCE OR MODIFY THE ASSESSMENT AS A RESULT OF INQUIRY CONDUCTED AND HEARING OF THE AS SESSEE. 26. IT IS WELL SETTLED LAW THAT FOR INVOKING THE P ROVISIONS OF SECTION 263 OF THE ACT BOTH THE CONDITIONS THAT THE ORDER M UST BE ERRONEOUS ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 34 AND PREJUDICIAL TO THE INTEREST OF REVENUE NEEDS T O BE SATISFIED. THIS RATIO STANDS LAID DOWN BY VARIOUS HON'BLE COURTS. 27. HON'BLE JURISDICTIONAL HIGH COURT OF MADHYA PR ADESH IN THE CASE OF H.H. MAHARAJA RAJA POWER DEWAS (1983) 15 TA XMAN 363 IN PARA 10 OF THIS ORDER HELD THAT HOWEVER, THE FIRST ARGUMENT, VIZ., THAT AN ASSESSMENT ORDER WITHOUT C OMPLIANCE WITH THE PROCEDURE LAID DOWN IN SECTION 144B IS ERRONEOU S BUT NOT PREJUDICIAL TO THE INTERESTS OF THE REVENUE CONFERR ING REVISIONAL JURISDICTION ON THE COMMISSIONER UNDER SECTION 263( 1), HAS FORCE. UNDER SECTION 263(1) TWO PRE-REQUISITES MUST BE PRE SENT BEFORE THE COMMISSIONER CAN EXERCISE THE REVISIONAL JURISDICTI ON CONFERRED ON HIM. FIRST IS THAT THE ORDER PASSED BY THE ITO MUS T BE ERRONEOUS. SECOND IS THAT THE ERROR MUST BE SUCH THAT IT IS P REJUDICIAL TO THE INTERESTS OF THE REVENUE. IF THE ORDER IS ERRONEOU S BUT IT IS NOT PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THE CO MMISSIONER CAN NOT EXERCISE THE REVISIONAL JURISDICTION UNDER SECTION 263(1) ..THERE CANNOT BE ANY PREJUDICE TO THE REVEN UE ON ACCOUNT OF THE ITO'S FAILURE TO FOLLOW THE PROCEDUR E PRESCRIBED UNDER SECTION 144B, AND UNLESS THE PREJUDICE TO THE INTER ESTS OF THE REVENUE ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 35 IS SHOWN, THE JURISDICTION UNDER SECTION 263(1) CAN NOT BE EXERCISED BY THE COMMISSIONER, EVEN THOUGH THE ORDER IS ERRONEOU S. THE ARGUMENT THAT SUCH AN ORDER MAY POSSIBLY BE CHALLENGED IN AP PEAL BY THE ASSESSEE, AND FOR THIS REASON IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HAS NO MERIT. SECTION 263(1) CLEARLY CONTE MPLATES THAT THE ORDER OF ASSESSMENT ITSELF SHOULD BE PREJUDICIAL T O THE INTERESTS OF THE REVENUE AND THIS PREJUDICE HAS TO BE PROVED BY REFE RENCE TO THE ASSESSMENT ORDER ONLY. IT CANNOT BE ARGUED THAT THE RE IS SOME POSSIBILITY OF THE ASSESSMENT ORDER BEING CHALLENGE D OR REVISED IN APPEAL AND, THEREFORE, ON ACCOUNT OF THIS CONTINGEN CY, THE ORDER BECOMES PREJUDICIAL TO THE INTERESTS OF THE REVENUE . [EMPHASIS SUPPLIED] 28. HONBLE APEX COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. [2000] 243 ITR 83 ORDER PRONOUNCED ON 10.02.2000 HEAD NOTE 'SECTION 263 OF THE INCOME-TAX ACT, 1961 - REVISION - OF ORDERS PREJUDICIAL TO INTERESTS OF REVENUE - ASSESSMENT YE AR 1983-84 - WHETHER IN ORDER TO INVOKE SECTION 263 ASSESSING O FFICER'S ORDER MUST BE ERRONEOUS AND ALSO PREJUDICIAL TO REVENUE A ND IF ONE OF THEM IS ABSENT, I.E., IF ORDER OF INCOME-TAX OFFICER IS ERRONEOUS BUT IS NOT ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 36 PREJUDICIAL TO REVENUE OR IF IT IS NOT ERRONEOUS BU T IS PREJUDICIAL TO REVENUE, RECOURSE CANNOT BE HAD TO SECTION 263(1) - HELD, YES - WHETHER IF DUE TO AN ERRONEOUS ORDER OF ITO, REVENU E IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO INTERESTS OF REVENUE - HELD, YES - ASSESSEE-COMPANY ENTERED INTO AGREEMENT FOR SALE OF ESTATE OF RUBBER PLANTATION - AS PURCHASER COULD NOT PAY INSTALLMENTS AS SCHEDULED IN AGREEMENT, EX TENSION OF TIME FOR PAYMENT OF INSTALLMENTS WAS GIVEN ON CONDITION OF VENDEE PAYING DAMAGES FOR LOSS OF AGRICULTURAL INCOME AND ASSESSE E PASSED RESOLUTION TO THAT EFFECT - ASSESSEE SHOWED THIS RE CEIPT AS AGRICULTURAL INCOME - RESOLUTION PASSED BY ASSESSEE WAS NOT PLAC ED BEFORE ASSESSING OFFICER - ASSESSING OFFICER ACCEPTED ENT RY IN STATEMENT OF ACCOUNT FILED BY ASSESSEE AND ACCEPTED SAME - COMMI SSIONER UNDER SECTION 263 HELD THAT SAID AMOUNT WAS NOT CONNECTED WITH AGRICULTURAL ACTIVITIES AND WAS LIABLE TO BE TAXED UNDER HEAD 'INCOME FROM OTHER SOURCES' - WHETHER, WHERE ASSESSING OFFI CER HAD ACCEPTED ENTRY IN STATEMENT OF ACCOUNT FILED BY ASSESSEE, IN ABSENCE OF ANY SUPPORTING MATERIAL WITHOUT MAKING ANY ENQUIRY, EXE RCISE OF ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 37 JURISDICTION BY COMMISSIONER UNDER SECTION 263(1) W AS JUSTIFIED - HELD, YES 29. HONBLE GUJARAT HIGH COURT IN THE CASE OF SMT. MINALBEN S. PARIKH [1995] 215 ITR 81 ORDER PRONOUNCED ON 1 7.10.1994 PARA 12 FROM THE AFORESAID, IT CAN WELL BE SAID THAT THE W ELL- SETTLED PRINCIPLE IN CONSIDERING THE QUESTION AS T O WHETHER AN ORDER IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE OR NOT IS TO ADDRESS ONESELF TO THE QUESTION WHETHER THE LEGITIMATE REV ENUE DUE TO THE EXCHEQUER HAS BEEN REALISED OR NOT OR CAN BE REALI SED OR NOT IF HIS ORDERS UNDER CONSIDERATION ARE ALLOWED TO STAND. FO R ARRIVING AT THIS CONCLUSION, IT BECOMES NECESSARY AND RELEVANT TO CO NSIDER WHETHER THE INCOME IN RESPECT OF WHICH TAX IS TO BE REALISE D, HAS BEEN SUBJECTED TO TAX OR NOT OR IF IT IS SUBJECTED TO TA X, WHETHER IT HAS BEEN SUBJECTED TO TAX AT A RATE AT WHICH IT COULD YIELD THE MAXIMUM REVENUE IN ACCORDANCE WITH LAW OR NOT. IF INCOME IN QUESTION HAS BEEN TAXED AND LEGITIMATE REVENUE DUE IN RESPECT OF THAT INCOME HAD BEEN REALISED, THOUGH AS A RESULT OF ERRONEOUS ORDER HAV ING BEEN MADE IN THAT RESPECT, IN OUR OPINION, THE COMMISSIONER CAN NOT EXERCISE POWERS FOR REVISING THE ORDER UNDER SECTION 263 MER ELY ON THE BASIS ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 38 THAT THE ORDER UNDER CONSIDERATION IS ERRONEOUS. I F THE MATERIAL IN THAT REGARD IS AVAILABLE ON THE RECORD OF THE ASSES SEE CONCERNED, THE COMMISSIONER CANNOT EXERCISE HIS POWERS BY IGNORING THAT MATERIAL WHICH LINKS THE INCOME CONCERNED WITH THE TAX REALI ZATION MADE THEREON. THE TWO QUESTIONS ARE INTER-LINKED AND THE AUTHORITY EXERCISING POWERS UNDER SECTION 263 IS UNDER AN OBL IGATION TO CONSIDER THE ENTIRE MATERIAL ABOUT THE EXISTENCE OF INCOME AND THE TAX WHICH IS REALIZABLE IN ACCORDANCE WITH LAW AND FURT HER WHAT TAX HAS IN FACT BEEN REALISED UNDER THE ALLEGED ASSESSMENT ORDERS.[EMPHASIS SUPPLIED] 30. HONBLE KARNATAKA HIGH COURT IN THE CASE OF V. G. KRISHNAMURTHY [1985] 20 TAXMAN 65 ORDER PRONOUN CED ON 19.03.1984 PARA 10 SECTION 263 CAN BE INVOKED BY THE COMMISSIONER ONLY WHEN HE PRIMA FACIE FINDS THAT TH E ORDER MADE BY THE ITO WAS ERRONEOUS AND WAS PREJUDICIAL TO THE IN TERESTS OF THE REVENUE. BOTH THESE FACTORS MUST SIMULTANEOUSLY EXI ST. AN ORDER THAT IS ERRONEOUS MUST ALSO HAVE RESULTED IN LOSS OF REV ENUE OR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. UNLESS BOTH THESE FACTORS CO-EXIST OR EXIST SIMULTANEOUSLY, THE COMMISSIONER CANNOT INVO KE OR RESORT TO ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 39 SECTION 263. IT CANNOT BE EXERCISED TO CORRECT EVER Y CONCEIVABLE ERROR COMMITTED BY AN ITO. BEFORE THE SUOMOTO POWER OF RE VISION CAN BE EXERCISED, THE COMMISSIONER MUST AT LEAST PRIMA FAC IE FIND BOTH THE REQUIREMENTS OF SECTION 263, NAMELY, THAT THE ORDER SOUGHT TO BE REVISED IS PRIMA FACIE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THE OTHER FACTOR WAS ABSENT, THE COMMISSIONER CANNOT EXERCISE THE SUOMOTO POWER OF REVISION UNDER SECTION 263. [EMPHASIS SUPPLIED] 31. IN THE CASE OF CIT V/S NAGESH KNITWEARS P. LTD (2012) 345 ITR 135 (DELHI) THE HONBLE DELHI HIGH COURT HAS ELUCID ATED AND EXPLAINED THE SCOPE OF PROVISION OF SECTION 263 OF THE ACT AND THE SAME HAS BEEN EXTRACTED BY THE HONBLE DELHI HIGH C OURT IN THE CASE OF CIT V/S GOETZE (INDIA) LTD 361 ITR 505 AS UNDER :- THUS, IN CASES OF WRONG OPINION OR FINDING ON MERI TS, THE COMMISSIONER OF INCOME TAX HAS TO COME TO THE CONCL USION AND HIMSELF DECIDE THAT THE ORDER IS ERRONEOUS, BY COND UCTING NECESSARY ENQUIRY, IF REQUIRED AND NECESSARY, BEFOR E THE ORDER UNDER SECTION 263 IS PASSED. IN SUCH CASES, THE ORD ER OF THE ASSESSING OFFICER WILL BE ERRONEOUS BECAUSE THE ORD ER IS NOT SUSTAINABLE IN LAW AND THE SAID FINDING MUST BE REC ORDED. THE COMMISSIONER OF INCOME TAX CANNOT REMAND THE MATTER TO THE ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 40 ASSESSING OFFICER TO DECIDE WHETHER THE FINDINGS RE CORDED ARE ERRONEOUS. IN CASES WHERE THERE IS INADEQUATE ENQUI RY BUT NOT LACK OF ENQUIRY, AGAIN THE COMMISSIONER OF INCOME T AX MUST GIVE AND RECORD A FINDING THAT THE ORDER/INQUIRY MADE IS ERRONEOUS. THIS CAN HAPPEN IF AN ENQUIRY AND VERIFICATION IS C ONDUCTED BY THE COMMISSIONER OF INCOME TAX AND HE IS ABLE TO ES TABLISH AND SHOW THE ERROR OR MISTAKE MADE BY THE ASSESSING OFF ICER, MAKING THE ORDER UNSUSSTAINABLE IN LAW. IN SOME CAS ES POSSIBLY THOUGH RARELY, THE COMMISSIONER OF INCOME TAX CAN A LSO SHOW AND ESTABLISH THAT THE FACTS ON RECORD OR INFERENCE S DRAWN FROM FACTS ON RECORD PER SE JUSTIFIED AND MANDATED FURTH ER ENQUIRY OR INVESTIGATION BUT THE ASSESSING OFFICER HAD ERRONEO USLY NOT UNDERTAKEN THE SAME. HOWEVER, THE SAID FINDING MUST BE CLEAR, UNAMBIGUOUS AND NOT DEBATABLE. THE MATTER CANNOT BE REMITTED FOR A FRESH DECISION TO THE ASSESSING OFFICER TO CO NDUCT FURTHER ENQUIRIES WITHOUT A FINDING THAT THE ORDER IS ERRON EOUS. FINDING THAT THE ORDER IS ERRONEOUS IS A CONDITION OR REQUI REMENT WHICH MUST BE SATISFIED FOR EXERCISE OF JURISDICTION UNDE R SECTION 263 OF THE ACT. IN SUCH MATTERS, TO REMAND THE MATTER/ISSU E TO THE ASSESSING OFFICER WOULD IMPLY AND MEAN THE COMMISSI ONER OF INCOME TAX HAS NOT EXAMINED AND DECIDED WHETHER OR NOT THE ORDER IS ERRONEOUS BUT HAS DIRECTED THE ASSESSING O FFICER TO DECIDE THE ASPECT/QUESTION. SIMILAR VIEW HAS BEEN EXPRESSED BY HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. AMALGAMATIONS LTD (238 ITR 963) ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 41 32. THE LAW INTERPRETED BY THE HONBLE COURTS MAKES IT CLEAR THAT LD. PCIT BEFORE HOLDING THE ORDER OF THE LD. A.O AS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE SHOUL D HAVE TO CONDUCT NECESSARY ENQUIRIES OR VERIFICATION IN ORDER TO SHO W THAT THE FINDINGS GIVEN BY LD. A.O IS UNSUSTAINABLE IN LAW. SIMILAR VIEW WAS TAKEN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF INCOME TAX OFFICER V/S D.G. HOUSING PROJECTS LTD (2012) 343 ITR 329 (DELHI ) WHEREIN THE HONBLE COURT AFTER REFERRING TO JUDGMENTS OF HONB LE HIGH COURT IN THE CASE OF ADDL. CIT V/S GEE VEE ENTERPRISE (1975) 99 ITR 375 (DELHI), CIT V/S SUNBEAN AUTO LTD (2011) 332 ITR 16 7(DELHI), MALABAR INDUSTRIES 243 ITR 83(SC) HELD IN FAVOUR OF THE ASSESSEE CONFIRMING THE ORDER OF THE TRIBUNAL OBSERVING AS F OLLOWS:- 19. IN THE PRESENT CASE, THE FINDINGS RECORDED BY T HE TRIBUNAL ARE CORRECT AS THE CIT HAS NOT GONE INTO AND HAS NO T GIVEN ANY REASON FOR OBSERVING THAT THE ORDER PASSED BY THE A SSESSING OFFICER WAS ERRONEOUS. THE FINDING RECORDED BY THE CIT IS THAT 'ORDER PASSED BY THE ASSESSING OFFICER MAY BE ERRON EOUS'. THE CIT HAD DOUBTS ABOUT THE VALUATION AND SALE CONSIDE RATION RECEIVED BUT THE CIT SHOULD HAVE EXAMINED THE SAID ASPECT HIMSELF AND GIVEN A FINDING THAT THE ORDER PASSED B Y THE ASSESSING OFFICER WAS ERRONEOUS. HE CAME TO THE CON CLUSION ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 42 AND FINDING THAT THE ASSESSING OFFICER HAD EXAMINED THE SAID ASPECT AND ACCEPTED THE RESPONDENTS COMPUTATION FI GURES BUT HE HAD RESERVATIONS. THE CIT IN THE ORDER HAS RECOR DED THAT THE CONSIDERATION RECEIVABLE WAS EXAMINED BY THE ASSESS ING OFFICER BUT WAS NOT PROPERLY EXAMINED AND THEREFORE THE ASS ESSMENT ORDER IS 'ERRONEOUS'. THE SAID FINDING WILL BE CORR ECT, IF THE CIT HAD EXAMINED AND VERIFIED THE SAID TRANSACTION HIMS ELF AND GIVEN A FINDING ON MERITS. AS HELD ABOVE, A DISTINC TION MUST BE DRAWN IN THE CASES WHERE THE ASSESSING OFFICER DOES NOT CONDUCT AN ENQUIRY; AS LACK OF ENQUIRY BY ITSELF RE NDERS THE ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF THE REVENUE AND CASES WHERE THE ASSESSING OFFICER CONDU CTS ENQUIRY BUT FINDING RECORDED IS ERRONEOUS AND WHICH IS ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN LATT ER CASES, THE CIT HAS TO EXAMINE THE ORDER OF THE ASSESSING OFFICER O N MERITS OR THE DECISION TAKEN BY THE ASSESSING OFFICER ON MERI TS AND THEN HOLD AND FORM AN OPINION ON MERITS THAT THE ORDER P ASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF THE REVENUE. IN THE SECOND SET OF CASES, CIT CANNOT DIRECT THE ASSESSING OFFICER TO CONDUCT FURTHER ENQUIRY TO VER IFY AND FIND OUT WHETHER THE ORDER PASSED IS ERRONEOUS OR NOT. T HE CIT IS PATENTLY WRONG IN MENTIONING AND STATING THAT SCHED ULE III TO THE WEALTH TAX ACT, 1957 WAS NOT APPLICABLE BUT, TH E ASSESSING OFFICER SHOULD HAVE ADOPTED THE SAID FORMULA/METHOD . THE AFORESAID REASONING CANNOT BE ACCEPTED AND DOES NOT SHOW OR ESTABLISH THAT THE ASSESSMENT ORDER WAS ERRONEOUS. IN VIEW OF ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 43 THE AFORESAID REASONING, THE QUESTION OF LAW IS ANS WERED IN FAVOUR OF RESPONDENT ASSESSEE AND AGAINST THE REVEN UE AND THE APPEAL IS ACCORDINGLY DISMISSED. NO COSTS. 33. NOW LET US EXAMINE THE FACTS IN THE LIGHT OF AB OVE JUDGMENTS SO AS TO FIND THAT WHETHER THE ASSESSMENT ORDER PAS SED U/S 143(3) IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. LD. PCIT IN THE SHOW CAUSE NOTICE DATED 15.3.2017 H AS RAISED FOLLOWING ISSUES REFERRING TO THE ASSESSMENT PROCEE DINGS CARRIED U/S 143(3) OF THE ACT. (A) PENALTY U/S 271(1)(C) OF THE ACT NOT INITIATING ACTION FOR FURNISHING INACCURATE PARTICULARS OF INCOME FOR CLA IMING AGAINST INTEREST EXPENDITURE OF RS.39,83,844/-. (B) BREAK UP OF INCOME OF RS.41,07,848/- NOT OBT AINED. (C) NOT MENTIONING THE LINK SOURCE OF RS. 7 CRORES SURRENDERED WITH THE VYAPAM CASE. (D) NOT CALLING INFORMATION FROM VARIOUS AGENCIES INVOLVED IN INVESTIGATION OF VYAPAM CASE. ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 44 (E) NO PROPER INVESTIGATION ON CLAIM OF DEDUCTION UNDER CHAPTER VIA. (F) NO ENQUIRY MADE ABOUT THE YEAR WISE INVESTMENT MADE IN MOVEABLE AND IMMOVEABLE PROPERTY. THE FIRST THING WE NEED TO TREAT IS THAT WHAT TYPE OF DETAILS WERE AS KED BY THE LD. A.O DURING THE ASSESSMENT PROCEEDINGS AND REPLIES MADE THERE TO BY THE ASSESSEE AND DETAILS FILED ALONG THERE WITH. 34. WE OBSERVE THAT THE NOTICE U/S 143(2) ISSUED ON 14.8.2013 FIXING THE DATE OF HEARING ON 26.8.2013. CORRESPOND ENCE BETWEEN THE LEARNED ASSESSING OFFICE AND THE ASSESSEE CAN B E SUMMARIZED IN FOLLOWING CHART WHICH ALONG WITH ENCLOSURES WERE FILED BEFORE THE LEARNED PCIT. SR. NO. CORRESPONDE- NCE DATE SUBMISSIONS PAGE NOS OF ENCLOSURE 1. 14/08/2013 NOTICE U/S 143(2) FROM DCIT 2(1) 1 2. 27/08/2013 SUBMISSION OF DOCUMENTS CALLED FOR VI DE NOTICE U/S 143(2) DATED 14/08/2013 INCLUDING THE FOLLOWING: A.) COMPUTATION AND ITR-V FOR AY 2012-13 B.) TDS CERTIFICATES C.) SAT CHALLAN D.) DONATION RECEIPTS CLAIMED U/S 80G E.) LIC PREMIUM RECEIPTS 2 - 47 ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 45 3. 14/02/2014 NOTICE U/S 142(1) WITH DETAILED QUEST IONNAIRE FROM ACIT 2(1) 48 - 50 4. 24/02/2014 SUBMISSION OF DOCUMENTS CALLED FOR VI DE NOTICE U/S 142(1) DATED 14/02/2014 51 - 53 5. 22/07/2014 NOTICE U/S 143(2) REGARDING ASSESSME NT PROCEEDINGS U/S 143(3) FROM DCIT 2(1) 54 6. 08/08/2014 SUBMISSION OF THE INFORMATION CALLED FOR VIDE NOTICE U/S 142(1) DATED 14/02/2014 IN CONNECTION WITH THE ASSESSMENT PROCEEDINGS FOR THE A.Y. 2012-13AND HEARING DATED 24/02/2014 IN CLUDING A.) COPY OF REVISED RETURN, B.) COPY OF ORDER U/S 80G(5)(VI) OF THE INCOME TAX ACT, 1961 FOR SRI AUROBINDO INSTITUTE OF MEDICAL SCIENCES AND SRI AUROBINDO INSTITUTE OF MANAGEMENT SCIENCES & TECHNO LOGY C.) OTHER DOCUMENTS. 55-92 7. 20/08/2014 SUBMISSION OF THE INFORMATION CALLED FOR VIDE NOTICE U/S 142(1). 93 - 94 8. 08/09/2014 NOTICE U/S 143(2) FROM DCIT 2 (1) 95 - 96 9. 23/09/2014 SUBMISSION OF DOCUMENTS CALLED FOR VI DE NOTICE U/S 143(2) DATED 08/09/2014 97 10. 16/03/2015 SUBMISSION OF THE INFORMATION CALLED FOR VIDE NOTICE U/S 142(1)INCLUDING THE FOLLOWING: A.) CONFIRMATION FROM SRI AUROBINDO INSTITUTE OF MANAGE MENT SCIENCE & TECHNOLOGY & SRI AUROBINDO INSTITUTE OF M EDICAL SCIENCES THAT APPROVAL U/S 80G IS NOT CANCELLED. B.) SOURCES OF UNDISCLOSED INCOME SURRENDERED DURING TH E SURVEY PROCEEDINGS. C.) OTHER DOCUMENTS. 98 - 123 11. 18/03/2015 NOTICE U/S 142(1) FROM ACIT 2(1) 124 - 125 12. 23/03/2015 REPLY TO NOTICE U/S 142(1) DATED 18/ 03/2015 126 - 128 13. 24/03/2015 FURTHER SUBMISSION TO NOTICE U/S 142 (1) DT.18/03/2015 129 - 130 ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 46 35. ASSESSEE HAD FILED SUBMISSIONS WITH DOCUMENTAR Y EVIDENCE ON 26.8.13, 24.2.14, 10.3.14, 20.8.14 AND 23.9.15. THE SUBMISSIONS MADE ON THE ABOVE REFERRED DATES ARE M ENTIONED BELOW:- COPY OF LETTER DATED 26.8.2013. WITH REFERENCE TO ABOVE, WE ARE SUBMITTING THE FOL LOWING DOCUMENTS AS REQUIRED BY YOU VIDE ABOVE CITED NOTICE:- I. LETTER OF AUTHORITY 2. COPY OF ACKNOWLEDGEMENT OF INCOME TAX RETURN ALONG WITH COMPUTATION OF INCOME 3. EVIDENCES IN SUPPORT OF PAYMENT OF TAXES A. TDS CERTIFICATES B. SELF ASSESSMENT CHALLAN 4. EVIDENCE IN RESPECT OF DEDUCTION CLAIMED UNDER C HAPTER VIA OF THE ACT A. COPY OF DONATION RECEIPTS TO CERTAIN FUNDS FOR D EDUCTION U/S 80-G COPY OF LETTER DATED 24.2.2014. WE ARE SUBMITTING THE FOLLOWING DOCUMENTS AS REQUIR ED BY YOU VIDE ABOVE CITED NOTICE:- 1. PLEASE SPECIFY THE SOURCE OF YOUR INCOME AND ADDRES S OF HEAD OFFICE AND BRANCHES OF THE BUSINESS CARRIED BY YOU. ASSESSEE IS A DOCTOR PRACTICING IN AS PARTNER INTO FIRMS AS UNDER. SHARE IN FIRMS:- A) BHANDARI HOSPITAL AND RESEARCH CENTRE: FIRM IS RUNNING A HOSPITAL AT SCHEME NO. 54, OPP. MEGHDOOT GARDEN, I NDORE B) INDORE INSTITUTE OF MEDICAL SCIENCES: IIMS IS R UNNING ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 47 PARAMEDICAL COLLEGE PHYSIOTHERAPY AND NURSING COUR SES, WITH ITS OFFICE AT 21-22,GF, SCH. NO.54, OPP. MEGHDOOT GARD EN, VIJAY NAGAR, INDORE. 2.PLEASE GIVE T HE DETAILS OF YOUR FAMILY. SPECIFY OCCUPATION OF ALL THE FAMILY MEMBERS, THEIR PAN, AMOUNT WITHDRAWN BY THEM FOR HOUSEHOLD EXPENSES AND JUSTIFY THE AMOUNT WITHDRAWN BY YOU IN ALONG WITH THEM IN VIEW OF THE EXPENSES OF THE FAMILY. DETAILS OF THE FAMILY MEMBERS AND AMOUNT WITHDRAWN BY THEM DURING THE A.Y. 2012-13 AMOUNT WITHDRAWAL FOR S.NO NAME OF FAMILY RELATION HOUSE HOLD MEMBERS OCCUPATION PAN EXPENSES 1 DR. MANJUSHREE WIFE PRACTICING ABNPB6251C BHANDARI DOCTOR 401302 2 DR. MOHIT BHANDARI SON PRACTICING AFAPB0534R DOCTOR 209332 3 DR. MAHAK BHANDARI SON STUDENT AHLPB9367P 211372 4 SMT. USHA MOTHER PENSIONER AEUPB0914J BHANDARI 60000 5 DR. VINOD BHANDARI SELF WORKING ABNPB6240M PARTNER 359776 TOTAL 1241782 9. PLEASE PRODUCE THE ORIGINAL COPIES OF THE TDS CERTI FICATES, ADVANCE TAX AND SELF ASSESSMENT TAX CHALLAN COPIES OF TDS CERTIFICATES, SELF ASSESSMENT TAX CHA LLAN ALREADY SUBMITTED ON 2IH AUG 2013, ENCLOSED AGAIN NOW. FURT HER THE TAX IS ALREADY APPEARING IN THE FORM 26AS OF THE ASSESSEE SO SAME CAN BE VERIFIED FROM THERE. (COPY ENCLOSED) 10. PLEASE PROVIDE THE COPIES OF THE CHALAN OF BONUS, V AT TAX, C.S.T PAID IN HEAD OFFICE AND PROFESSIONAL TAX, BONUS AND SERV ICE TAXES PAID BY BRANCH OFFICE. THERE WAS PAYMENT TOWARDS VAT, SERVICE TAX OR BONUS ON PROPRIETORSHIP FIRM. COPY OF PROFESSIONAL TAX PAID FOR DR. VINOD B HANDARI TO BE PROVIDED IN NEXT SUBMISSION PLEASE. ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 48 11. PROVIDE THE REGISTERED PURCHASE DEEDS OF LANDS IF ANY DURING THE YEAR. REGISTERED PURCHASE DEEDS OF THE LAND PURCHASED DUR ING THE F. Y. 2011- 12 BY THE ASSESSEE IS ENCLOSED HEREWITH. ADDIT ION DURING THE PARTICULARS YEAR LAND AT BHAWRASALA NO. 5/2 7424500.00 LAND AT BHAWRASALA NO.6/2/1 11315565.00 LAND AT BHAWRASALA NO.6/2/2/1 & 7/3/1/1 15260420.00 LAND AT BHAWRASALA NO.7/2 19052080.00 TOTAL 53052565.00 12. GIVE THE CALCULATION OF AMOUNT DISALLOWABLE U/S 14A OF THE INCOME TAX ACT,1961 IN VIEW OF SECTION 14A, ASSESSEE HAS ALREADY NOT DI SALLOWED BY NOT CLAIMING DEDUCTION OF INTEREST PAID ON TERM LOAN TO BANK OF MAHARASHTRA RS. 33,47,429/WHICH HAS BEEN DEBITED TO THE CAPITAL ACCOUNT. APART FROM ABOVE THERE IS NO OTHER DISALLO WABLE EXPENDITURE U/S 14A OF THE INCOME TAX ACT, 1961. 13. PLEASE PRODUCE ALL THE BOOKS OF ACCOUNTS, VOUCHERS AND BILLS ETC. NA - NO BUSINESS CARRIED BY' THE ASSESSEE SE NO BEC KS OF ACCOUNTS ARE REQUIRED TO BE MAINTAINED BY THE ASSESSEE. COPY OF LETTER DATED 10.3.2014 WITH REFERENCE TO ABOVE, AND FURTHER TO OUR HEARING HELD ON 6 TH AUG 2014 WE ARE SUBMITTING THE FOLLOWING PENDING DOCUMENTS F OR YOUR KIND PERUSAL:- 1 DETAILS OF AIR ENTRIES (PAGE 2) DETAILS OF AIR - ENCLOSED HEREWITH 2 COPY OF HOUSING LOAN CERTIFICATE. (PAGE 3-4) COPY OF HOUSING LOAN ACCOUNT STATEMENT ENCLOSED WH ERE TOTAL INTEREST PAID IS REFLECTED. 3.FURNISH COPY OF CAPITAL ACCOUNT IN PARTNERSHIP FIRMS BHANDARI ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 49 HOSPITAL AND RESEARCH CENTRE AND INDORE INSTITUTE O F MEDICAL SCIENCES. (PAGE 5-19) COPY OF CAPITAL ACCOUNT IN PARTNERSHIP FIRMS BHAND ARI HOSPITAL AND RESEARCH CENTRE AND INDORE INSTITUTE OF MEDICA L SCIENCES ENCLOSED HEREWITH 3 CERTIFICATE FOR APPROVAL U/S 80G DONATIONS GIVEN DURING THE YEAR. (PAGE 20-21) COPY OF ORDER U/S 80G(5)(VI) OF THE LT. ACT 1961 ENCLOSED HEREWITH FOR I. SRI AUROBINDO INSTITUTE OF MEDICAL SCIENCES II. SRI AUROBINDO INSTITUTE OF MANAGEMENT SCIENC ES & TECHNOLOGY 4 COPY OF STATEMENT RECORDED DURING SURVEY PROCEED INGS ENCLOSED (PAGE 22-29) 5 COPY OF WEALTH TAX RETURN FOR AY 2012-1 3 ENCLOSED (PAGE30-34) 6 DISALLOWANCE OF EXCESS INTEREST CLAIMED U/S 57 IN THE RETURN OF INCOME (PAGE 35-38) SIR, THE ASSESSEE HAD IN ORIGINAL RETURN CLAIMED F ULL INTEREST BY ERROR WHICH WAS ALREADY RECTIFIED BY REVISED RETUR N FILED BY THE ASSESSEE WHERE INTEREST CLAIMED U/S 57 HAS BEEN RE STRICTED TO INTEREST EARNED DURING THE YEAR. A COPY OF REVISED RETURN IS ENCLOSED HEREWITH. COPY OF LETTER DATED 20.8.2014 WITH REFERENCE TO ABOVE, AND FURTHER TO OUR HEARING HELD ON 8 TH AUG 2014 WE ARE SUBMITTING THE FOLLOWING PENDING DOCUMENTS F OR YOUR KIND PERUSAL:- 1 DETAILS OF INCOME DECLARED AS TO HOW IT IS INCORP ORATED IN THE CAPITAL ACCOUNT UNDISCLOSED INCOME OF RS. 7.00 CRORES REPRESENTS VA RIOUS CASH LOANS GRANTED BY THE ASSESSEE. THE LOANS WERE RECORDED IN THE BOOKS ON 24/09/2011 AND AMOUNT LATER REALIZED WITH INTEREST IN CASH AND DEPOSITED IN BANK. ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 50 2 DETAILS OF DONATIONS GIVEN AND CORRESPONDING BANK STATEMENTS WHERE THE ABOVE ARE REF L ECTED. A L SO JUSTIFY THAT THE SAI M S I NDORE IS BRANCH OF SAIMS BHOPAL BY DOCUMENTARY EVIDENCE. DETAILS OF DONATIONS ARE ENCLOSED. COPY OF RECEIPT S ARE ALREAD Y FURNISHED TO YOU. AMOUNT PARTICULARS MODE REMARK 31/05/2011 300000 SAIMST CASH RECEIPT ALREADY 16/06/2011 200000 SAIMST CASH FURNISHED 15/11/2011 100000 SAIMST CASH 06/03/2012 2000000 SAIMS CHEQUE BANK STATEMENT 12/03/2012 2600000 SAIMS CHEQUE ENCLOSED A CERTIFICATE FROM THE SAID INSTITUTE IN SUPPORT O F OUR CLAIM THAT SAIMS BHOPAL IS SAME AS SAIMS INDORE IS ENCLOSED H EREWITH FOR YOUR KIND PERUSAL. 3 WHETHER THE ASSESSEE IS A DIRECTOR OF THAT INSTI TUTE OR HOW OTHERWISE INTERESTED TO WHOM DONATIONS WERE GRANTE D. ASSESSEE IS CHAIRMAN OF THE ABOVE INSTITUTES. COPY OF LETTER DATED 23.9.2014 WITH REFERENCE TO ABOVE, WE ARE SUBMITTING THE FOLL OWING DOCUMENTS AS REQUIRED BY YOU VIDE ABOVE CITED NOTICE:- 1. LETTER OF AUTHORITY 2. COPY OF ACKNOWLEDGEMENT OF INCOME TAX RETURN 3. COMPUTATION OF INCOME 4. BALANCE SHEET, PROFIT & LOSS ACCOUNTS, CAPITAL ACCOUNT FOR THE A.Y. 2012-13. HOWEVER IT MAY KINDLY BE NOTED THAT ASSESSMENT YEAR 2012-13 IS ALREADY UNDER ASSESSMENT PROCEEDINGS U/S 143(2) AND IS STILL PENDING FOR ORDER. SO ALL THE REQUIRED DOCUMENTS ARE ALREADY UNDER PROCEEDINGS. 36. THEREAFTER NOTICES WERE ISSUED U/S 143(2) OF TH E ACT ON 18.3.15 SPECIFICALLY CALLING ABOUT THE DETAILS OF T HE SURRENDERED ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 51 INCOME, DETAILS OF HUNDIS. THE COPY OF SHOW CAUSE N OTICE IS REPRODUCED BELOW:- 1. DURING THE ASSESSMENT PROCEEDINGS YOU WERE ASKED TO GIVE DETAILS OF AMOUNT DEPOSITED IN BANK, YOU HAVE SHOWN CASH DEPOSITED IN YOUR ACCOUNT FROM AVAILABLE CASH BALANCE IN YOUR CASH BO OK. FROM C OPY OF WAS THAT DEPOSIT OF WAS SHOWN BY YOU IN FORM REPAYMENT OF UNSECURED LOAN BY VARIOUS PERSONS (AS IN TABLE BELOW]. THESE DEPOSITS AS CLAIMED BY YOU WERE OUT OF REPAYMENT OF LOANS GIVEN BY YOU FROM UNDISCLOSED INCOME OF RS.7,OO,OO,OOO/- DURING SURVEY ACTION U/S 133A IN SEPTEMBER 2011. MOST OF THESE DEPOSITS IN CASH BOOK ARE REFLECTING IN MONTH OF FEBRUARY TO MARCH. HOWEVER AS PER COPIES OF HUNDIS THE NAME OF THESE PERSONS ARE MENTIONED IMPOUNDED THE SURVEY OPERATION DUE DATE ARE MAXIMUM UPTO OCTOBER. THE DESCRIPTION OF CASH DEPOSIT IS AS BELOW: NAME AMOUNT IN RS. DATE OF DEPOSIT DUE DATE BHAVARLAL MAHENDRA KUMAR 50,00,000 + (150410 INTEREST AMOUNT) 23.10.2011 23.07.2011 VIJAY DHAKAD 25,00,000 +(113425 INTEREST AMOUNT) 19.02.2012 19.09.2011 SURENDRA KOTHARI 30,00,000 + (136110 INTEREST AMOUNT) 20.02.2012 20.09.2011 HUKUMCHAND LODHI 50,00,000+ (2,26,850 INTEREST AMOUNT) 23.02.2012 23.09.2011 VIJAY DHAKAD 40,00,000 +(179510 INTEREST AMOUNT) 05.03.2012 05.10.2011 KISHAN SINGH PAWAR 40,00,000 +(189510 INTEREST AMOUNT) 06.03.2012 06.10.2011 RAMESH AGRAWAL 25,00,000+(112195 INTEREST AMOUNT) 08.03.2012 08.10.2011 MANOJ SHRIVAS 50,00,000+(2,62,605 INTEREST AMOUNT) 12.03.2012 13.08.2011 RAMESH CHAND JAIN 50,00,000 +262605 INTEREST AMOUNT) 13.03.2012 13.09.2011 SURESH & SONS 50,00,000+(337810 INTEREST AMOUNT) 19.03.2012 19.07.2011 MANGILAL MOTWANI 40,00,000 +(2,40,658 INTEREST AMOUNT) 24.03.2012 24.08.2011 VIJAY VARGI RATHORE 45,00,000 +(2,36,350 INTEREST AMOUNT) 27.03.2012 27.09.2011 RAM SINGH 2500000 +(114045 INTEREST AMOUNT) 27.03.2012 27.10.2011 NARENDRA KUMAWAT 35,00,000 +(183822 INTEREST AMOUNT) 28.03.2012 28.09.2011 VALLABH CHANDRA 50,00,000 +(2,29,315 28.03.2012 28.1 0.2011 ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 52 MUNDRA INTEREST AMOUNT) SURAJ KULKARNI 50,00,000 +(2,29,315 INTEREST AMOUNT) 28.03.2012 28.11.2011 RAJMOHAN SHAH 45,00,000 + (2,36,345 INTEREST AMOUNT) 29.03.2012 29.09.2011 NOW YOU HAVE NOT GIVEN ADDRESSES AND PERSONS IN REPLY ON 16.03.2015, THEREFORE IT IS NOT VERIFIABLE THAT AFORESAID CASH WERE DEPOSITED BY SAME PERSONS AS CLAIMED BY YOU IN ORDER TO JUSTIFY THE CASH DEPOSITS IN BANK. YOU ARE REQUIRED TO PRODUCE THESE PERSONS FOR JUSTIFICATION OF YOUR CLAIM WITH THEIR ID PROOF AND ADDRESSES ELSE TO SHOW CAUSE THAT WHY AMOUNT OF RS. 7,34,79,097/- SHOULD NOT BE ADDED AS UNEXPLAINED CASH CREDIT UNDER SECTION OF INCOME TAX ACT IN ABSENCE OF JUSTIFICATION OF IDENTITY AND GENUINENESS OF THE SOURCE OF THESE CASH DEPOSITS? 2. YOU ARE ALSO REQUIRED TO FURNISH THE INFORMATION ABOUT THE SOURCE OF IMMOVABLE PROPERTY PURCHASED BY YOU 37. THE ASSESSEE DULY REPLIED TO THE ABOVE SHOW CAU SE NOTICE DATED 16.3.15 GIVING COMPLETE DETAILS ABOUT THE INF ORMATION CALLED FOR IN THE SHOW CAUSE NOTICE AND THE SAME IS EXTRAC TED BELOW:- WITH REFERENCE TO ABOVE, AND FURTHER TO OUR HEARING HELD ON 09/03/2015 WE ARE SUBMITTING THE FOLLOWING PENDING DOCUMENTS F OR YOUR KIND PERUSAL:- 1. CREDIT ENTRIES AND CASH DEPOSITED IN THE BANK AC COUNTS TO BE EXPLAINED. ASSESEEE HAS DULY MAINTAINED HIS BOOKS OF ACCOUNT. ALL THE CREDIT ENTRIES IN BANK ACCOUNT ARE DULY ENTERED BY THE NAME OF PER SON FROM WHOM AMOUNT WAS RECEIVED. AS REGARDS TO THE CASH DEPOSIT ED IN THE BANK ACCOUNT WHICH WAS DEPOSITED OUT OF THE CASH BALANCE AVAILABLE AT THE HAND OF THE ASSESSEE AT PARTICULAR POINT OF TIME DU RING THE YEAR. WE HAVE ENCLOSED THE EXPLANATIONS OF ALL THE CREDIT ENTRIES IN ALL THE BANK ACCOUNTS AND ALSO CASH BOOK OF THE ASSESSEE FOR THE RELEVANT YEAR. [PAGE 1 TO 22] 2. SOURCE OF UNDISCLOSED INCOME SURRENDERED DURING THE SURVEY PROCEEDINGS ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 53 DR. VINOD BHANDARI I.E. ASSESSEE IS RENOWNED DOCTOR OF THE CITY AND IS IN MEDICAL PROFESSIONAL FOR LAST THREE DECADES. HE IS VERY GOOD GENERAL SURGEON. HE HAS ALSO ESTABLISHED ITS OWN HOSPITAL U NDER THE PARTNERSHIP FIRM IN INDORE CITY AND WORKED AS A WORKING PARTNER IN THE FIRM. HE HAS DONE A NUMBER OF SURGERIES, MADE VISITS AND PROVIDE D OPO AND IPO CONSULTATIONS AS A DOCTOR TO THE PATIENTS DURING HI S PRACTICE. INCOME SURRENDERED BY HIM AT THE TIME OF SURVEY PROCEEDING S WAS EARNED BY HIM FROM HIS MEDICAL PROFESSION ONLY AS NO OTHER BUSINE SS IS BEING CARRIED OUT BY HIM. THE AMOUNT WHICH WAS INVESTED IN HUNDIS WHICH WAS S EIZED DURING SEARCH PROCEEDINGS WAS THE AMOUNT WHICH DR. BHANDAR I REALIZED DURING THE FY 2011-12 , BUT PART OF WHICH WAS AGAINST SURG ERIES MEDICAL COUNSELLING LAND GENERALLY MEDICAL SERVICES RENDERE D BY HIM TO NUMBER OF PATIENTS AT DIFFERENT POINTS IN TIME OVER SEVERAL Y EARS, MAYBE REALISED IN THE CURRENT PREVIOUS YEAR OR OTHERWISE, WHICH DUE T O PERSONAL RELATIONS OR LOCAL FAMILY CONSTRAINTS WERE NOT CLARIFIED/ASCERTA INABLE/ COMPUTABLE/REALIZED / DEMANDED IN EARLIER YEARS. DR. BHANDARI REALISED THE AMOUNT IN THE FY 2011-12 DUE TO HIS PLANS FOR CONSTRUCTION OF HIS OWN NEW HOUSE NEAR SAIMS WHICH WAS TO BE COMMENCED IN THE SAID YEAR AND CONSEQUENTLY THE SUR PLUS LIQUIDITY WAS TEMPORARILY PARKED IN HUNDIS AND WHICH WAS DECLARED AS INCOME DURING SURVEY PROCEEDINGS. FROM A SOURCE PERSPECTIVE THEY ARE FROM PROFESSION AND FROM A YEAR PERSPECTIVE THEY HAVE CRYSTALLISED IN THE CURRENT/PREVIOUS YEAR ONLY. 3. A SUBMISSION WHETHER LOANS GIVEN FROM UNDISCLOS ED INCOME WERE RECOVERED DURING THE YEAR, IF YES PLEASE HIGHLIGHT SUCH TRANSACTIONS IN THE BANK STATEMENT LOANS GIVEN OUT OF THE UNDISCLOSED INCOME WERE DULY RECOVERED WITHIN THE YEAR UNDER CONSIDERATION. LOANS WERE REPAID IN CASH BY THE PARTIES AND THEREAFTER DEPOSITED BY THE ASSESSEE IN HIS BAN K ACCOUNT. COPY OF CASH BOOK AND CREDIT ENTRIES BANK BOOK ARE ENCLOSED IN HARD COPY AND ALL BOOKS IN SOFT COPY ALSO. RECEIPTS FROM SUCH LOA NS ARE HIGHLIGHTED IN CASH BOOK. 4. ALSO FURNISH THE NAME AND ADDRESS OF PERSON TO WHO M LOANS WERE GIVEN (RELATED TO UNDISCLOSED INCOME) AND IF AFTER GETTIN G BACK THE AMOUNT IS ADVANCED TO ANY OTHER PERSONS THE NAMES AND ADDRESS ES OF SUCH PERSONS OUT OF THE UNDISCLOSED INCOME LOANS WERE GIVEN TO T HE FOLLOWIN G PARTIES - : S.NO. PAYEE NAME AMOUNT 1 BHAVARLAL MAHENDRA KUMAR 5000000 ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 54 2 HUKAM CHAND LODHI 5000000 3 KISHAN SINGH PAWAR 4000000 4 MANGILAL MOTWANI 4000000 5 MANOJ SHRIVAS 5000000 6 NARENDRA KUMAVAT 3500000 7 RAJMOHAN SHAH 4500000 8 RAM SINGH 2500000 9 RAMESH AGRAWAL 2500000 10 RAMESH CHAND JAIN 5000000 11 SURAJ KULKARNI 5000000 12 SURENDRA KOTHARI 3000000 13 SURESH AND SONS 5000000 14 VALLABH CHAND MUNDRA 5000000 15 VIIAV DHAKAD 2500000 16 VIIAV DHAKAD 4000000 17 VIIAV VARQIVA RATHORE 4500000 TOTAL 70000000 ADDRESSES OR OTHER DETAILS OF THE ABOVE PARTIES ARE NOT AVAILABLE WITH THE ASSESSEE. ASSESSEE HAS ALREADY PAID TAXES ON THIS U NDISCLOSED INCOME. AFTER GETTING BACK THE AMOUNT FROM ABOVE PARTIES IT HAS NOT BEEN FURTHER GIVEN ON LOAN TO ANY OTHER PERSON. 5. TO PRODUCE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS OTHER BOOKS OF ACCOUNTS ENCLOSED IN CD. 6. TO CONFIRM THAT APPROVAL U/S 80G IS NOT CANCELLED IN CASE OF THE INSTITUTES TO WHOM DONATIONS WERE GIVEN DURING THE YEAR. LETTERS GIVEN BY THE SRI AUROBINDO INSTITUTE OF MED ICAL SCIENCES, INDORE AND SRI AUROBINDO INSTITUTE OF MANAGEMENT SC IENCE AND TECHNOLOGY, INDORE TO EFFECT THAT ITS APPROVAL U/S 80G IS STILL IN EFFECT AND HAS NOT BEEN CANCELLED AT ANY POINT OF TIME ARE ENCLOSED. [PAGE 22 TO 24] 38. ALL THE ABOVE REFERRED SUBMISSIONS WERE DULY CO NSIDERED BY THE LD. A.O AND WITH REGARD TO THE VYAPAM CASE THE LD. A.O HAS SPECIFICALLY MENTIONED IN THE ASSESSMENT ORDER ABOU T HIS OBSERVATION ON THIS ISSUE BEFORE MAKING THE ADDITIO N OF UNEXPLAINED ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 55 CASH OF RS.7,34,79,097/- OBSERVING AS FOLLOWS:- IT IS WELL KNOWN THAT ASSESSEE IS ACCUSED OF BEING INVOLVED IN VYPAM SCAM RELATED TO BRIBING ILLEGAL MONEY FOR ADMISSION IN MEDICAL COLLEGES IN STATE OF MADHYA PRADESH. NOW IT BECOMES MORE IMPORTANT TO PROVE THAT THE CASH DEPOSITED IN ACCOUNTS OF ASSESSEE IS BY PE RSONS FROM WHOM IT IS CLAIMING SO AND NOT BY OTHER MEANS. FURTHER ENQUIR ING ABOUT THE CASH DEPOSITS IN ACCOUNT OF ASSESSEE ESPECIALLY IN MONTH OF FEBRUARY AND MARCH BECOMES UTMOST IMPORTANCE KEEPING THE FACT IN MIND, THAT MONTHS OF FEBRUARY TO MAY ARE THE PERIOD WHEN ADMIS SIONS IN THESE COLLEGES TAKE PLACE. ALTHOUGH IT IS IMMATERIAL FOR TAXATION, AS ONCE AN INCOME IS PROVED AS UNEXPLAINED IN THE HANDS OF ASS ESSEE, IT IS TO BE TAXED, IRRESPECTIVE OF THE FACT WHAT THE SOURCE IS, BUT IT REQUIRES SOME DISCUSSIONS IN PURVIEW OF BACKGROUND OF ASSESSEE. BUT WHEN ASSESSEE WAS ASKED TO PROVE HIS CLAIM BY PRODUCING THESE PER SONS OR TO PROVIDE THEIR ADDRESSES, ASSESSEE WAS UNABLE TO PROVE THE I DENTITY AND GENUINENESS OF SOURCE OF CASH DEPOSITS THEREFORE T HE SOURCE OF THESE DEPOSITS IS NOT ESTABLISHED AND KNOWING THE BACKGRO UND OF ASSESSEES ACTIVITIES ACCEPTING HIS ARGUMENT ONLY ON THE BASIS OF ENTRIES IN BOOKS BECOMES DIFFICULT. IT IS TO BE EMPHASIZED THAT ASSESSEE WAS ASKED TO J USTIFY AND PROVE THE CLAIM THAT THE CASH DEPOSITS IN HIS BANK ACCOUNT WE RE DEPOSITED BY THE PERSONS FROM WHOM IT IS CLAIMING SO. AS ASSESSEE H AS FAILED IN DISCHARGING HIS ONUS HENCE THE AMOUNT IS TO BE TREA TED HIS UNEXPLAINED INCOME. THE SOURCE OF WHICH IS UNEXPLAINED TO THE DEPARTMENT, DRAWING CONJECTURES WHETHER ITS SOURCE AND NATURE IS RELATE D TO ILLEGAL ADMISSIONS IN COLLEGES OR ANY OTHER UNEXPLAINED INCOME IS NEIT HER REQUIRED FOR TAXATION PURPOSE NOR IS POSSIBLE AT THIS STAGE, BUT IT IS EQUALLY IMPORTANT LOOKING TO THE BACKGROUND OF THE CASE, THAT SUCH EN TRIES IN HIS BOOKS ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 56 MUST HAVE SUPPORTING PROOFS. AS THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF DEPOSIT OF CASH, THE AMOUNT OF RS. 7,34,79,097/- IS BEING ADDED TO TOTAL INCOME OF ASSESSEE AS UNEXPLAINED CASH DEPOSITS. I AM SATISFIED THAT ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME AND HAS FURNIS HED IN ACCURATE PARTICULARS, HENCE PENALTY UNDER SECTION 271(1)(C) IS INITIATED. 39. AFTER REFERRING TO ALL THE SUBMISSIONS MADE BY THE ASSESSEE WE FIND THAT THE SAME HAVE BEEN DULY CONSIDERED BY THE LD. A.O BEFORE FINALIZING THE ASSESSMENT MAKING ADDITION OF RS.7,7 4,12,941/- TO THE RETURNED INCOME OF RS.7,01,74,054/-. 40. NOW WE TAKE UP EACH ISSUE RAISED BY LD. PCIT IN THE SHOW CAUSE NOTICE SO AS TO SEE THAT WHETHER ENQUIRY WAS CONDUCTED BY THE LD. A.O AND WHETHER THE DECISION SO TAKEN ON DE CIDING THE ISSUE WAS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REV ENUE. (A) AS REGARDS NOT INITIATING THE PENALTY U/S 271(1 )(C) OF THE ACT FOR THE INTEREST INCOME OF RS.7,39,73,844/-, WE OB SERVE THAT THE ASSESSEE FILED THE ORIGINAL RETURN ON 28.3.201 3 AND REVISED RETURN ON 18.3.2015. IN THE REVISED RETURN THE CO RRECT CLAIM OF INTEREST EXPENDITURE WAS MADE. THOUGH THE ORIGINAL RETURN WAS BELATED BUT STILL IN THE GIVEN CASE WHERE THE ASSESSEE HAS ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 57 REVISED THE RETURN BEFORE THE CASE OF THE ASSESSEE BEING SELECTED FOR SCRUTINY PROCEEDINGS THEREBY FURNISHI NG THE CORRECT PARTICULARS OF INCOME AND EVEN OTHERWISE D URING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF IF THE ASS ESSEE FURNISHES THE CORRECT PARTICULARS THEN THE ASSESSE E SHOULD NOT BE VISITED BY PENALTY U/S 271(1)(C) OF THE ACT FOR NOT FURNISHING THE INACCURATE PARTICULARS OF INCOME. HONBLE APEX COURT IN THE CASE OF T. ASHOK PAI VS. CIT 292 ITR 0011, (2007) HELD THAT THE WORD CONCEALMENT INHERENTLY CARRIED WITH IT T HE ELEMENT OF MENS REA . THEREFORE, THE MERE FACT THAT SOME FIGURE OR SOME PARTICULARS HAVE BEEN DISCLOSED BY ITSELF, EVEN IF IT TAKES OUT THE CASE FROM THE PURVIEW OF NON-DISCLOS URE, IT CANNOT BY ITSELF, TAKE OUT THE CASE FROM THE PURVIEW OF F URNISHING INACCURATE PARTICULARS. MERE OMISSION FROM THE RET URN OF AN ITEM OF RECEIPT DOES NEITHER AMOUNT TO CONCEALMENT NOR DELIBERATE FURNISHING OF INACCURATE PARTICULARS OF INCOME UNL ESS AND UNTIL THERE IS SOME EVIDENCE TO SHOW OR SOME CIRCUMSTANC ES FOUND FROM WHICH IT CAN BE GATHERED THAT THE OMISSION W AS ATTRIBUTABLE TO AN INTENTION OR DESIRE ON THE PAR T OF ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 58 THE ASSESSEE TO HIDE OR CONCEAL THE INCOME SO AS T O AVOID THE IMPOSITION OF TAX THEREON. IN ORDER THAT A PENALT Y UNDER S. 271(1)(III) MAY BE IMPOSED, IT HAS TO BE PROVED TH AT THE ASSESSEE HAS CONSCIOUSLY MADE THE CONCEALMENT OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME.' THEREFORE IN THE CASE OF ASSESSEE THE LD. A.O WAS JUSTIFIED IN NOT INITIATING THE PENALTY U/S 271(1)(C) OF THE ACT . (B) AS REGARDS THE BREAK UP OF INCOME OF RS. 41,0 7,848/-, COMPLETE DETAILS WERE FILED BEFORE THE LD. A.O WITH THE COMP UTATION OF INCOME. IN THE SHOW CAUSE NOTICE ISSUED BY LD. A.O HE HIMSELF HAS REFERRED TO THE INTEREST INCOME RECEIVED BY THE ASSESSEE ON THE HUNDIS WHICH FORM PART OF SHOW CAUSE NOTICE DAT ED 18.3.2015. THEREFORE THE ISSUE RAISED IN CLAUSE B O F THE SHOW CAUSE NOTICE ISSUED U/S 263 OF THE ACT ALSO DO NOT STAND FOR. (C) AS REGARDS TYPE OF BOOKS OF ACCOUNTS VERIFIED D URING THE COURSE OF ASSESSMENT PROCEEDINGS IT HAS BEEN SPECIFICALLY MENTIONED IN THE ASSESSMENT ORDER THAT REPRESENTATIVES OF THE ASSESSEE NAMELY CA MANISH MITTAL AND CA SANJAY MEHTA APPEARE D FROM ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 59 TIME TO TIME. HE ALSO MENTIONED THAT BOOKS OF ACCO UNTS ALONG WITH BILLS AND VOUCHERS WHICH WERE CHECKED ON RANDO M BASIS. THIS IS A GENERAL METHOD ADOPTED BY THE ASSESSING O FFICERS DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE RE SEEMS NO LOGIC IN NAMING THE TYPE OF BOOKS AND AMOUNT VER IFIED BECAUSE BOOKS OF ACCOUNTS ITSELF COVER UP THE FINAN CIAL DETAILS MAINTAINED BY THE ASSESSEE FOR THE CONCERNED YEAR. CLAUSE-C OF SHOW CAUSE NOTICE U/S 263 OF THE ACT ALSO DO NOT STAND FOR. (D) AS REGARDS CLAUSE-D WHEREIN LD. PCIT HAS ALLEGE D THAT LD. A.O HAS NOT EXAMINED THE LINK OF SOURCE OF RS.7 CRO RES SURRENDERED WITH THE VYAPAM CASE, WE OBSERVE THAT T HE ASSESSEE HAS SURRENDERED RS.7 CRORES AS HIS UNACCOU NTED UNDISCLOSED INCOME FOR FINANCIAL YEAR 2011-12. THE ASSESSEE IS A MEDICAL PRACTITIONER AND PARTNER OF BHRC WHICH IS ENGAGED IN PROVIDING MEDICAL SERVICES. THE SURREND ERED INCOME WAS LINKED BY THE ASSESSEE TO THE UNSECURED LOANS GIVEN BY HIM IN THE FORM OF HUNDIS WHICH WERE FOUN D AND IMPOUNDED DURING THE COURSE OF SURVEY. IN OTHER WO RDS WHEN THE HUNDIS WERE IMPOUNDED THE ASSESSEE SURRENDERED ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 60 UNACCOUNTED INCOME INVESTED IN THE HUNDIS. THESE H UNDIS ARE FOR SHORT PERIOD NORMALLY GIVEN AS LOANS FOR FE W MONTHS. COMPLETE DETAILS OF HUNDIS WITH RESPECT TO NAME, AM OUNT, INTEREST AND DUE DATE OF RECEIVING THE INTEREST ARE MENTIONED WHICH ALSO FORMS PART OF THE ASSESSMENT ORDER ITSEL F. ON THE HUNDIS AMOUNTING TO RS.7 CRORES, THE INTEREST RECEI VED THEREON IS SHOWN AS 34,79,097/- AND THE DUE DATE OF RECEIPT OF PRINCIPAL AND INTEREST IS BETWEEN 9.7.2007 TO 28.11 .2011. THE CLAIM OF THE ASSESSEE IS THAT THE ORIGINAL HUNDIS I MPOUNDED BY THE INCOME TAX DEPARTMENT WERE RELEASED IN NOVEMBER 2011 &DECEMBER 2011 THEREAFTER ASSESSEE GOT THE MATURITY AMOUNT. THE AMOUNT SO RECEIVED ON MATURITY OF HUNDIES SUBSE QUENTLY DEPOSITED IN THE BANK ACCOUNT. THIS SUBMISSION OF T HE ASSESSEE WAS NOT ACCEPTED BY THE LD. A.O AND HE AFT ER SPECIFICALLY MENTIONING ABOUT THE VYAPAM SCAM THOUG H WITHOUT BRINGING ANY MATERIAL EVIDENCE ON RECORD TO MAKE A FIRM LINK STILL TREATED THE CASH DEPOSIT IN THE BAN K AS UNACCOUNTED INCOME EARNED FROM RECEIVING ALLEGED BR IBE FOR ADMISSION IN MEDICAL COLLEGES. IN THE GIVEN FACTS IT IS CLEARLY ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 61 DISCERNABLE THAT THE LD. A.O HAS MADE ADEQUATE ENQU IRY WITH THE MOTIVE OF LINKING THE SOURCE OF RS.7 CRORES SUR RENDERED DURING THE SURVEY TO THE VYAPAM CASE AND EVEN WHEN THERE WAS NO MATERIAL EVIDENCE ON RECORD TO ESTABLISH BRI BE, HE STILL IN THE INTEREST OF REVENUE MADE THE ADDITION OF R S. 7,34,79,097/-. WE ARE SURPRISED TO NOTE THAT EVEN W HEN THE LD. A.O HAS MADE THE ADDITION OF RS.7,34,79,097/- F OR UNEXPLAINED CASH DEPOSIT HOW COULD LD.PCIT CAN TREA T THE ASSESSMENT ORDER AS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF REVENUE. IN OUR CONSIDERED VIEW THE ISSUE RAIS ED IN CLAUSE- D OF THE SHOW CAUSE NOTICE ALSO DID NOT STAND FOR S O AS TO BE TAKEN AS A BASIS TO INVOKE THE PROVISIONS OF SECTIO N 263 OF THE ACT. (E) AS REGARDS CLAUSE-E OF THE SHOW CAUSE NOTICE WH ERE LD. PCIT ALLEGED THAT THE LD. A.O HAS NOT COLLECTED THE INFO RMATION FROM VARIOUS AGENCIES INVOLVED IN INVESTIGATION OF VYAPA M CASE, WE FIND THAT THE LD. A.O HAS TO COMPLETE THE ASSESSMEN T U/S 143(3) OF THE ACT I.E. WITHIN THE FRAME WORK OF PRO VISION PROVIDED UNDER INCOME TAX ACT. THE LD. A.O IS AN OF FICER WORKING UNDER THE INCOME TAX DEPARTMENT. HIS DUTIES ARE ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 62 CASTED UPON HIM UNDER THE INCOME TAX ACT. HE CANNO T EXCEED HIS JURISDICTION AND WORK IN THE MANNER PROVIDED FO R OTHER DEPARTMENTS WHICH IN THIS CASE ARE POLICE, ENFORCEM ENT DEPARTMENT AND OTHER LAW ENFORCING AGENCIES. UNDER THE INCOME TAX ACT IF THE ASSESSEE DO NOT CREDIT ANY IN COME IN THE BOOKS OF ACCOUNTS MAINTAINED BY IT OR HAS NOT RECOR DED INVESTMENTS IN THE BOOKS OR IS FOUND TO BE THE OWNE R OF MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE S OR ANY OTHER UNEXPLAINED EXPENDITURE AND IS UNABLE TO PROV IDE EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH INC OME THEN SECTION 68 TO 69C OF THE ACT COMES INTO PLAY. FOR BETTER UNDERSTANDING OF PROPER PROVISIONS OF SECTION 68 TO 69C OF THE ACT READS AS FOLLOWS:- SECTION 68 (CASH CREDITS) WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO E XPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR : PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY (NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED), AND THE SUM SO CREDITED CONSISTS OF SHARE APPLICATION MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, ANY EXPLANATIO N OFFERED BY SUCH ASSESSEE-COMPANY SHALL BE DEEMED TO BE NOT SATISFAC TORY, UNLESS ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 63 ( A ) THE PERSON, BEING A RESIDENT IN WHOSE NAME SUCH C REDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS AN EXPLANATIO N ABOUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED; AND ( B ) SUCH EXPLANATION IN THE OPINION OF THE ASSESSING OFFICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IF THE PERSON, IN WHOSE NAME THE SUM REFERRED TO THERE IN IS RECORDED, IS A VENTURE CAPITAL FUND OR A VENTURE CAPITAL COMPANY A S REFERRED TO IN CLAUSE ( 23FB )OF SECTION 10. SECTION 69 (UNEXPLAINED INVESTMENT) WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDING T HE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NOT REC ORDED IN THE BOOKS OF ACCOUNT, IF ANY , MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE VALUE OF THE I NVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR . SECTION 69A (UNEXPLAINED MONEY ETC.) WHERE IN ANY FINANCIAL YEAR THE ASSESSEE IS FOUND T O BE THE OWNER OF ANY MONEY, BULLION, JEWELRY OR OTHER VALUABLE ARTICLE A ND SUCH MONEY, BULLION, JEWELRY OR VALUABLE ARTICLE IS NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY , MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF ACQUISIT ION OF THE MONEY, BULLION, JEWELRY OR OTHER VALUABLE ARTICLE, OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SA TISFACTORY, THE MONEY AND THE VALUE OF THE BULLION, JEWELRY OR OTHER VALUABLE ARTICLE MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR . SECTION 69B (AMOUNT OF INVESTMENT ETC NOT FULLY DIS CLOSED IN BOOKS OF ACCOUNTS) WHERE IN ANY FINANCIAL YEAR THE ASSESSEE HAS MADE INVESTMENTS OR IS FOUND TO BE THE OWNER OF ANY BULLION, JEWELRY OR O THER VALUABLE ARTICLE, AND THE ASSESSING OFFICER FINDS THAT THE AMOUNT EXPEND ED ON MAKING SUCH INVESTMENTS OR IN ACQUIRING SUCH BULLION, JEWELRY OR OTHER VALUABLE ARTICLE EXCEEDS THE AMOUNT RECORDED IN THIS BEHALF IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT SUCH EXCESS A MOUNT OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 64 SATISFACTORY, THE EXCESS AMOUNT MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR . SECTION 69C (UNEXPLAINED EXPENDITURE) WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INCURRED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF, OR THE EXPLANATION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SA TISFACTORY, THE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF, AS THE CASE MAY BE, MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR . PROVIDED THAT, NOTWITHSTANDING ANYTHING CONTAINED I N ANY OTHER PROVISION OF THIS ACT, SUCH UNEXPLAINED EXPENDITURE WHICH IS DEEMED TO BE THE INCOME OF THE ASSESSEE SHALL NOT BE ALLOWED AS A DE DUCTION UNDER ANY HEAD OF INCOME. IT IS CLEAR FROM THE ABOVE REFERRED PROVISIONS THA T IF ANY INCOME FOR WHICH THE ASSESSEE IS UNABLE TO PROVIDE ANY EXP LANATION ABOUT THE NATURE AND ITS SOURCE THEN THE SAME COULD BE OFFERED TO TAX AS UNEXPLAINED INCOME WHICH CAN BE E ITHER UNEXPLAINED CASH CREDIT (SECTION 68), UNEXPLAINED I NVESTMENT (SECTION 69) UNEXPLAINED MONEY ETC (SECTION 69A) AM OUNT OF INVESTMENT WHICH FULLY NOT DISCLOSED (SECTION 69B) AND UNEXPLAINED EXPENDITURE (SECTION 69C). IN THE INST ANT CASE THE ASSESSEE HAS CLAIMED TO HAVE EARNED INCOME FROM UNEXPLAINED SOURCE WHICH IN THIS CASE CAN BE TREATE D AS UNEXPLAINED PROFESSIONAL RECEIPTS SINCE THE ASSESSE E IS A MEDICAL PRACTITIONER. THE UNEXPLAINED UNRECORDED I NCOME OF RS.7 CRORES WAS CLAIMED TO BE INVESTED IN HUNDIES I .E. SHORT ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 65 TERM ADVANCES AND INTEREST EARNED THEREON AND THE M ATURITY PROCEEDS WERE CLAIMED TO HAVE BEEN DEPOSITED IN BAN K ACCOUNT. THE ALLEGED VYAPAM SCAM REFERRED BY LD. PCIT WAS NOT APPLICABLE FOR THE YEAR UNDER APPEAL SINCE THE CAS E NO. 12/13 AND 14/13 WITH RESPECT OF PMT 2012 AND PPG 2012 RE LATES FINANCIAL YEAR 2012-13. EVEN THE AMOUNT INVOLVED IN THESE TWO CASES WAS FULLY SEIZED FROM THE HOUSE OF MR. PRAD EEP RAGHUVANSHI BY THE APPELLATE AUTHORITIES AND THE TAXATION OF SUCH SEIZED AMOUNT MAY HAVE BEEN TAKEN IN THE HANDS OF THE CON CERNED IN THE PROCEEDINGS CARRIED OUT FOR FINANCIAL YEAR 2012-1 3 (A.Y. 2013-14) IN DUE COURSE BUT CERTAINLY IT CANNOT AFFECT THE A SSESSMENT PROCEEDINGS OF FINANCIAL YEAR 2011-12 I.E. ASSESS MENT YEAR 2012- 13. THEREFORE THERE WAS NO REQUIREMENT FOR THE LD . A.O TO CALL FOR THE DETAILS WHICH WERE RELEVANT TO SUBSEQUENT YEAR , EVEN THEN LD. A.O HAS ISSUED SHOW CAUSE NOTICE GIVING DETAIL S OF THE HUNDIS FOUND ASKING THE BASIS OF LINKING THE SAME WITH THE CASH DEPOSIT IN THE BANK IN THE YEAR UNDER APPEAL DURI NG FEBRUARY AND MARCH,2012. THOUGH THE ASSESSEE GAVE THE DET AILS OF LINKING THE MATURITY OF HUNDIS TO THE CASH DEPOSITED IN T HE BANK BUT LD. ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 66 A.O ACTED EXTREMELY IN THE INTEREST OF REVENUE A ND MADE THE ADDITION FOR THE UNEXPLAINED CASH DEPOSITED. IN O UR VIEW THE LD. A.O CONDUCTED NECESSARY ENQUIRY ABOUT THE ISSUE OF SOURCE OF SURRENDERED INCOME AND AFTER DISCUSSING ABOUT THE VYAPAM SCAM IN THE BODY OF THE ASSESSMENT ORDER MADE THE ADDIT IONS OF RS.7,34,79,097/-. THE CLAUSE-E OF THE SHOW CAUSE NOTICE U/S 263 OF THE ACT THEREFORE DID NOT STAND FOR AS A BASIS FOR INVOKING OF PROVISIONS OF SECTION 263 O F THE ACT. EVEN OT HERWISE IN THE ASSESSMENT PROCEEDINGS CARRIED IN PURSUANCE TO THE ORDER OF SECTION 263 OF THE ACT WHICH WERE COMPLETED ON 27. 12.2017, SAME INCOME AS WAS ASSESSED U/S 143(3) OF THE ACT STAND S ASSESSED IN THE ASSESSMENT PROCEEDINGS CARRIED U/S 143(3) R.W. S. 263 OF THE ACT. IN THE ASSESSMENT ORDER DATED 27.12.2017 U/S 143(3) R.W.S. 263 OF THE ACT THE LD. A.O HAS CONSIDERED THE FAC T THAT ON 23.11.2017 THE CENTRAL BUREAU OF INVESTIGATION HA S FILED THE CHARGE SHEET IN THE REGISTERED CASE NO.12/13 BUT A S STATED BY LD. SENIOR COUNSEL FOR THE ASSESSEE NEITHER THE NAME OF THE ASSESSEE NOR ANY OFFICIAL OF THE INSTITUTION OR MEDICAL COL LEGE HAVING CONNECTION WITH THE ASSESSEE HAVE BEEN NAMED AS A CCUSED IN THE SAID CHARGE SHEET. EVEN BEFORE US REVENUE FAIL ED TO BRING ANY EVIDENCE ON RECORD TO REBUT THE CONTENTION OF LD. SENIOR ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 67 COUNSEL FOR THE ASSESSEE. IN THE BACK GROUND OF T HESE FACTS THE ISSUE RAISED BY LD. PCIT IN CLAUSE-E OF THE SHOW C AUSE NOTICE U/S 263 OF THE ACT DO NOT STAND FOR AS A BASIS FOR IN VOKING PROVISIONS U/S 263 OF THE ACT. (F&G) AS REGARDS CLAUSE F & G PERTAINING TO CLAIM OF DEDUCTION UNDER CHAPTER VIA AND YEAR WISE INVESTMENT IN MOVE ABLE AND IMMOVEABLE PROPERTY, WE FIND THAT THE ASSESSEE HAD PAID LIC PREMIUM OF RS.10,26,737/- BUT CLAIMED THE DEDUCTIO N FOR RS.49,062/-. COPIES OF LIC WERE SUBMITTED ALONG W ITH SUBMISSIONS DATED 26.8.2013 AND 24.2.2014. AS REG ARDS THE CERTIFICATE FOR 80G APPROVAL WHICH WAS VALID UP T O 31.3.2011, THE CENTRAL BOARD OF DIRECT TAXES HAS CLARIFIED V IDE ITS CIRCULAR NO.7/10 DATED 27.10.2010 THAT ANY APPROVAL IN FORC E AS ON 1.10.2009 AND APPROVAL GRANTED THEREAFTER SHALL RE MAIN IN FORCE UNLESS APPROVAL IS WITHDRAWN. THUS CLAUSE F & G OF THE SHOW CAUSE NOTICE U/S 263 OF THE ACT DO NOT STAND FOR A S A BASIS FOR INVOKING PROVISIONS U/S 263 OF THE ACT. ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 68 41. IN THE INSTANT CASE, THE LEARNED ASSESSING OFFICER HAS RAISED NUMBER OF QUERIES REGARDING THE ISSUES NOW SOUGHT T O BE REVISED BY THE CIT WHICH WERE REPLIED BY THE ASSESSEE THROUGH DETAILED SUBMISSIONS SUPPORTED BY RELEVANT DOCUMENTS AND OTH ER EVIDENCE COUPLED WITH LEGAL PROPOSITIONS AND DECISIONS. IT I S ALSO PERTINENT TO NOTE THAT THE AO HAS PASSED A DETAILED ORDER / NOTE SHEET ENTRY WHILE DEALING AND ADJUDICATING THE ISSUES. THERE MU ST BE SOME PRIMA FACIE MATERIAL ON THE RECORD TO SHOW THAT THE ORDER IS UNSUSTAINABLE IN LAW AND THE TAX WHICH WAS LEGALLY ELIGIBLE HAS NOT BEEN IMPOSED. THE PRESENT CASE IS NEITHER A CASE OF NO ENQUIRY NOR IS A CASE WHERE THE AO, FAILED TO MAKE NECESSAR Y ENQUIRY AND THE ASSESSMENT ORDER WAS PASSED AFTER MAKING DETAIL ED INQUIRY AND APPLICATION OF MIND. 42. HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. DLF LTD. (2013) 350 ITR 555 (DELHI) LAID DOWN THE RATIO THAT IT IS NOT MERE PREJUDICE TO THE REVENUE OR A MERE ERRONEOUS VIEW W HICH CAN BE REVISED U/S 263 OF THE ACT BUT ALSO THERE SHOULD BE THE ELEMENT OF UNSUSTAINABILITY IN THE ORDER OF THE ASSESSING OF FICER, WHICH EMPOWERS THE COMMISSIONER TO ISSUE NOTICE AND TO PR OCEED TO PASS ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 69 AN APPROPRIATE ORDER. THAT HONBLE HIGH COURT HAS H ELD AS UNDER (AT PAGE 562) : IN THIS CASE, THE RECORD REVEALS THAT THE ASSESSIN G OFFICER HAD ISSUED NOTICE, AND HELD PROCEEDINGS ON SEVERAL DATES (OF HEARING) BEFORE PROCEEDING TO FRAME THE ASSESSM ENT. HE ADDED NEARLY RS. 2 CRORES TO THE INCOME AT THAT TIM E. THE COMMISSIONER TOOK THE VIEW THAT THE ASSESSMENT ORDE R DISCLOSED AN ERROR, IN THAT THE DEDUCTION UNDER SEC TION14 A HAD NOT BEEN MADE. NOW, WHILE THE STATUTORY DIRECTI ON TO THE ASSESSING OFFICER TO CALCULATE, PROPORTIONATELY , THE EXPENDITURE WHICH AN ASSESSEE MAY INCUR TO OBTAIN T HE DIVIDEND INCOME, FOR PURPOSES OF DISALLOWANCE, CANN OT BE LOST SIGHT OF, EQUALLY, SUCH A REQUIREMENT HAS TO B E VIEWED IN THE CONTEXT AND CIRCUMSTANCES OF EACH GIVEN CASE . IN THE PRESENT CASE, IT WAS REPEATEDLY EMPHASIZED THAT THE ASSESSEES DIVIDEND INCOME WAS CONFINED TO WHAT IT RECEIVED FROM INVESTMENT MADE IN A SISTER CONCERN, AND THAT ONLY ONE DIVIDEND WARRANT WAS RECEIVED. THESE FACTS, IN THE OPINION OF THIS COURT, WERE MATERIAL, AND HA D BEEN ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 70 GIVEN WEIGHTAGE BY THE TRIBUNAL IN ITS IMPUGNED ORD ER. THERE IS NO DISPUTE THAT THE INVESTMENT TO THE SIST ER CONCERN, WAS NOT QUESTIONED; EVEN THE COMMISSIONER HAS NOT SOUGHT TO UNDERMINE THIS ASPECT. EQUALLY, THERE IS NO MATERIAL TO SAY THAT APART FROM THAT SINGLE DIVIDEN D WARRANT, ANY OTHER DIVIDEND INCOME WAS RECEIVED. FURTHERMORE, THERE IS NOTHING ON RECORD TO SAY THAT THE ASSESSEE HAD TO EXPEND EFFORT, OR SPECIALLY ALLOCAT E RESOURCES TO KEEP TRACK OF ITS INVESTMENTS, ESPECIA LLY DIVIDEND YIELDING ONES. IN THESE CIRCUMSTANCES, IT CAN BE SAID THAT WHETHER THE DEDUCTION UNDER SECTION 14A W AS WARRANTED, WAS A DEBATABLE FACT. IN ANY EVENT, EVEN IF IT WERE NOT DEBATABLE, THE ERROR BY THE ASSESSING OFFI CER IS NOT UNSUSTAINABLE. POSSIBLY HE COULD HAVE TAKEN A NOTHER VIEW; YET, THAT HE DID NOT DO SO, WOULD NOT RENDER HIS OPINION AN UNSUSTAINABLE ONE, WARRANTING EXERCISE O F SECTION 263. 43. HONBLE GUJARAT HIGH COURT IN THE CASE OF ARVIN D JEWELLERS (259 ITR 502) HELD THAT: ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 71 HELD, THAT THE FINDING OF FACT BY THE TRIBUNAL WAS THAT THE ASSESSEE HAD PRODUCED RELEVANT MATERIAL AND OFFERED EXPLANATIONS IN PURSUANCE OF THE NOTICES ISSUED UND ER SECTION 142(1) AS WELL AS SECTION 143(2) OF THE ACT AND AFTER CONSIDERING THE MATERIAL AND EXPLANATIONS, TH E INCOME-TAX OFFICER HAD COME TO A DEFINITE CONCLUSIO N. SINCE THE MATERIAL WAS THERE ON RECORD AND THE SAID MATER IAL WAS CONSIDERED BY THE INCOME-TAX OFFICER AND A PART ICULAR VIEW WAS TAKEN, THE MERE FACT THAT DIFFERENT VIEW C AN BE TAKEN SHOULD NOT BE THE BASIS FOR AN ACTION UNDER S ECTION 263. THE ORDER OF REVISION WAS NOT JUSTIFIED. 44. HENCE, THE PREPOSITION AND RATIO LAID DOWN BY H ONBLE GUJARAT HIGH COURT IS THAT, WHEN THE ASSESSEE HAD PRODUCED RELEVANT MATERIAL AND OFFERED EXPLANATION IN PURSUANCE OF NO TICES U/S 143(2) AND 142(1) OF THE ACT AND AFTER CONSIDERING THE MAT ERIAL AND EXPLANATIONS, THE AO HAD COME TO A DEFINITE CONCLUS ION. THEIR LORDSHIP FURTHER HELD THAT IN THIS SITUATION, SINCE THE MATERIAL WAS THERE ON RECORD AND THE SAID MATERIAL WAS CONSIDERE D BY THE AO AND A PARTICULAR VIEW WAS TAKEN, THE MERE FACT THAT A D IFFERENT VIEW CAN ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 72 BE TAKEN SHOULD NOT BE THE BASIS FOR A VALID ACTION U/S 263 OF THE ACT AND THEREFORE, DISMISSING THE APPEAL OF THE REV ENUE THE HONBLE HIGH COURT HELD THAT THE ORDER U/S 263 OF THE ACT W AS NOT JUSTIFIED AND VALID. 45. IN THE LIGHT OF ABOVE JUDGMENTS AND APPLYING TH E FACTS OF THE INSTANT CASE AND PERUSAL OF THE ASSESSMENT ORDER, P APER BOOK AND THE NOTE-SHEET OF THE ASSESSMENT PROCEEDINGS SHOW THAT THE AO HAS RAISED SEVERAL QUERIES BY WAY OF NOTE SHEET ENT RIES AND NOTICES. THE ASSESSEE SUBMITTED VARIOUS RELEVANT DOCUMENTS. IT IS ALSO PERTINENT TO NOTE THAT THE AO ADJUDICATED THE ISSUE OF QUERIES AND REPLIES IN REGARD TO SAID CLAIM BY PASSING A DETAIL ED ORDER. FURTHER THE NOTE SHEET ENTRIES CLEARLY SHOWS THE DELIBERATI ONS BETWEEN THE AO AND THE ASSESSEE COMPANY ON ALL THE ISSUES AND A DJUDICATION BY THE AO WHICH WAS FURTHER GUIDED BY ORDER U/S 144A. THEREFORE IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, DETAILS SUBMITTED BEFORE LD. A.O, ENQUIRIES CONDUCTED BY THE LD. A.O, ISSUIN G VARIOUS NOTICES, CONDUCTING ENQUIRY ABOUT THE LINKAGE OF TH E SURRENDERED INCOME OF RS.7 CRORES, CONSIDERING ALL THE DETAILS OF HUNDIS FOUND DURING THE COURSE OF SURVEY, ALLEGED ADDITIONS MADE BY LINKING THE ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 73 CASH DEPOSITED WITH THE UNEXPLAINED INCOME FROM VYA PAM SCAM EVEN THOUGH THE ASSESSEE IS HAVING SUFFICIENT CASH IN HAND IN THE BOOKS OF ACCOUNTS, WE IN VIEW OF JUDGMENT IN THE CA SE OF MALABAR INDUSTRIAL CO. (SUPRA) AS PER WHICH BEFORE INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT LD. PCIT SHOULD HAVE SATISFI ED THE TWIN CONDITIONS, NAMELY ORDER OF THE LD. A.O STATED TO B E ERRONEOUS AND SECONDLY IT IS PREJUDICIAL TO THE INTEREST OF REVEN UE. BUT IN THE INSTANT CASE WHEREIN WE HAVE EXAMINED EACH AND EVER Y ISSUE RAISED BY LD. PCIT IN THE LIGHT OF THE REPLY FILED BY THE ASSESSEE, INFORMATION CALLED BY THE LD. A.O AND THE FINDING I N THE ASSESSMENT ORDER, WE ARE OF THE CONSIDERED VIEW THAT UNDER THE GIVEN FACTS AND IN LAW THE VIEW TAKEN BY THE AO IN THE ORDER PASSED U.S143(3) OF THE ACT DATED 24.3.2015 SEEMS TO BE REASONABLE AND PLA USIBLE WHICH CANNOT BE HELD AS LEGALLY UNSUSTAINABLE AND NOT IN ACCORDANCE WITH LAW. IN OUR VIEW IT IS PASSED WITH COMPLETE APPLIC ATION OF MIND AND THUS IT CAN NEITHER BE HELD AS ERRONEOUS NOR PREJUD ICIAL TO THE INTEREST OF REVENUE. THEREFORE LD. PCIT UNDER THE G IVEN FACTS AND CIRCUMSTANCES OF THE CASE ERRED IN ASSUMING JURISDI CTION U/S.263 OF THE ACT SINCE THE LD. A.O HAS MADE SUFFICIENT ENQUI RY BY WAY OF ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 74 QUESTIONNAIRE TO WHICH DETAILED REPLY HAVE BEEN FIL ED FROM TIME TO TIME AND THE LD. A.O IN THE INTEREST OF REVENUE HAV E ALSO MADE ADDITION OF RS.7,74,12,941/- TO THE INCOME DISCLOSE D BY THE ASSESSEE. IT CLEARLY APPEARS THAT THE LD. A.O HAS A PPLIED HIS MIND AND THEREFORE THE ASSESSMENT ORDER IS NOT VITIATED ON THE GROUND THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE BECAUSE NO ENQUIRY WERE UNDERTAKEN. ACCORDINGLY WE FIND MERIT IN THE CONTENTION OF THE LEARNED SENIOR COUNSEL FOR TH E ASSESSEE AND ARE OF THE CONSIDERED VIEW THAT LD. PCIT GROSSLY ERRED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT ON THE BAS IS OF ISSUES RAISED IN THE SHOW CAUSE NOTICE. THUS THE ORDER OF LD. PC IT OF SETTING ASIDE THE ASSESSMENT ORDER U/S 143(3) OF THE ACT UN DER CONSIDERATION ARE BEYOND THE SCOPE OF SECTION 263 O F THE ACT AND HENCE NOT VALID AND WE ACCORDINGLY QUASH THE RELEVA NT ORDER PASSED BY LD. PCIT U/S 263 OF THE ACT DATED 30.3.2017 AND RESTORE THE ASSESSMENT ORDER U/S 143(3) DATED 24.3.2015. 46. IN THE RESULT ALL THE GROUNDS RAISED BY THE ASS ESSEE IN APPEAL NO.350/IND/2017 ARE ALLOWED. ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 75 47. NOW WE TAKE UP APPEAL NO.57/IND/2017 WHICH IS A RISING OUT OF THE ORDER OF LD. PCIT DATED 29.11.2018 WHICH IS FRAMED AGAINST THE ORDER OF LD. A.O DATED 22.12.2017 FRAMED U/S 14 3(3) R.W.S. 263 OF THE ACT. THE ASSESSMENT SO CARRIED ON THE DIREC TIONS OF LD. PCIT- 1 VIDE ITS ORDER U/S 263 DATED 30.3.2017 TO FRAME F RESH ASSESSMENT ORDER. 48. ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL :- THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD . COMMISSIONER OF INCOME-TAX (APPEALS) WAS NOT JUSTIFIED IN MAKING AN EX-PARTE ORDER AND THE SAME IS BAD IN LAW, ARBITRARY AND IN BREACH OF PRIN CIPLE OF JUSTICE. THAT LD. COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN PASSING EX- PARTE ORDER AND THE SAME IS ILLEGAL AND ARBITRARY A ND THE APPEAL HAS BEEN DISPOSED OFF ON MECHANICAL BASIS WITHOUT PROPER ADJ UDICATION OF VARIOUS GROUNDS ON MERITS. THE LD AO ERRED IN ADDING THE UNEXPLAINED CASH DEPO SIT OF RS 7,34,79,097 U/S 68 OF THE ACT AND NOT ACCEPTING THE ASSESEES EXPLANATION THAT THESE CASH DEPOSITS WERE OUT OF HUNDI LOANS AL READY SURRENDERED AS INCOME IN RETURN. THE LD. ASSESSING OFFICER ERRED IN INITIATING THE PENALTY UNDER SECTION 271(1)(C) OF IN RESPECT TO EXCESS INTEREST ALTHOUGH THE SAME WAS VOLUNTARILY RECTIFIED BY FILING REVISED RETURN COMPUTATION DUR ING THE ASSESSMENT PROCEEDINGS THAT THE ASSESSMENT ORDER DATED 27/12/2017 PASSED U /S 143(3) R/W 263 IS WITHOUT JURISDICTION, ILLEGAL AND BAD IN LAW AS THE ORDER IS PASSED IN PURSUANT TO ORDER PASSED U/S 263 WHICH IS SUBJECT M ATTER OF APPEAL BEFORE THIS TRIBUNAL. THE APPELLANT HUMBLY CRAVES LEAVE TO ADD, ALTER , A ND OR SUPPLEMENT ANY GROUND OR GROUNDS, IF NECESSARY, AT ANY TIME DURING THE APPELLANT PROCEEDING 49. SINCE WHILE DECIDING ITA NO.350/IND/2017 WE HAV E QUASHED THE PROCEEDINGS U/S 263 OF THE ACT CARRIED OUT BY T HE LD. PCIT ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 76 HOLDING THAT LD. PCIT WRONGLY ASSUMED JURISDICTION U/S 263 OF THE ACT. WE HAVE RESTORED THE ASSESSMENT ORDER U/S 143( 3) DATED 28.3.2015. THE INSTANT APPEAL NO.57/IND/2017 WILL B ECOME INFRUCTUOUS SINCE THE VERY BASIS OF ASSESSMENT I.E. ORDER U/S 263 OF THE ACT HAVE BEEN QUASHED THEREFORE THE PROCEEDINGS CARRIED THEREAFTER ARE VOID. ACCORDINGLY ITA NO.57/IND/201 7 IS DISMISSED AS INFRUCTUOUS. 50. NOW WE TAKE UP ITA NO.66/IND/2017 WHEREIN THE A SSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N UPHOLDING THE ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE I NCOME TAX ACT, 1961. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.7,34,79,097/- MADE BY THE ASSESSING OFFICER U /S 68 OF THE ACT. 3. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND, ALT ER OR DELETE ALL OR ANY OF THE FORGOING GROUNDS OF APPEAL. 51. FROM GOING THROUGH THE GROUND WE FIND THAT ADDI TION OF RS. 7,34,79,097/- WAS MADE BY THE LD. A.O U/S 68 OF THE ACT. AT THE COST OF REPETITION BRIEF FACTS ARE THAT THE ASSESSE E SURRENDERED INCOME OF RS. 7 CRORES IN HIS PERSONAL CAPACITY FOR FINANCIAL YEAR 2011-12 DURING THE COURSE OF SURVEY PROCEEDINGS U/S 133A OF THE ACT ON 24.09.2011. THE SURRENDER WAS MADE ON ACCOUN T OF VARIOUS ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 77 HUNDIS FOUND AND IMPOUNDED FROM THE POSSESSION OF T HE ASSESSEE EVIDENCING THAT UNACCOUNTED INCOME GIVEN AS LOAN FO R SHORT TERM BY WAY OF ISSUE OF HUNDIS. IN THE BOOKS OF ACCOUNT S DURING THE FINANCIAL YEAR 2011-12 ASSESSEE ENTERED THE SURREND ERED INCOME BY DEBITING THE PARTY ACCOUNT AND CREDITING THE INCOME FROM UNDISCLOSED SOURCES. THE HUNDIS WERE FOR SHORT PER IOD OF TIME MATURING BETWEEN 19.7.11 AND 28.11.11. THE CASH WA S RECEIVED ON MATURITY I.E. PRINCIPAL AND INTEREST WAS ACCOUNTED FOR IN THE CASH BOOK AND AVAILABLE CASH BALANCE WAS USED TO DEPOSIT THE AMOUNT IN BANK DURING FEBRUARY, 2012 AND MARCH,2012. THERE W AS A GAP OF 2-3 MONTHS BETWEEN THE LAST DATE OF RECEIVING THE A MOUNT AND MATURITY OF HUNDI AND THE AMOUNT DEPOSITED IN THE B ANK. THE LD. A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/ S 143(3) OF THE ACT DIRECTED THE ASSESSEE TO FURNISH THE COMPLETE D ETAILS OF THE PERSONS NAMED IN THE HUNDIS. THE ASSESSEE FAILED T O PROVIDE THE DETAILS EXCEPT THE NAME, AMOUNT, DATE OF MAKING THE HUNDI AND DUE DATE OF PAYMENT. IN ABSENCE OF ID PROOF AND ADDRES S, LD. A.O ADDED RS. 7,34,79,097/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT THEREBY NOT ALLOWING ASSESSEES CLAIM OF GIVING TELESCOPING ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 78 BENEFIT OF THE AMOUNT SURRENDERED TO THE AMOUNT DEP OSITED IN THE BANK ACCOUNT. AGGRIEVED ASSESSEE FILED APPEAL BEFO RE LD. CIT(A) BUT FAILED TO SUCCEED WHO CONFIRMED THE ADDITION OBSERV ING AS FOLLOWS:- 5.1 I HAVE GONE THROUGH THE APPELLANTS CONTENTIONS , THE VERBAL SUBMISSIONS MADE DURING THE APPELLATE PROCEEDINGS A ND THE ASSESSMENT ORDER. THE APPELLANT HAD SUBMITTED DURING THE ASSE SSMENT PROCEEDINGS THAT THE CASH DEPOSITS MADE IN THE BANK WERE OUT OF THE REPAYMENT OF THE HUNDIS WHICH WERE IMPOUNDED DURING THE SURVEY ACTIO N ON ACCOUNT OF WHICH INCOME OF RS.7,00,00,000/- HAD BEEN DISCLOSED . THE SURVEY WAS CONDUCTED IN SEP 2011 AND MOST OF THE HUNDIS WERE T O MATURE IN 2-3 MONTHS. AS MOST OF THE CASH DEPOSITS WERE IN THE M ONTH OF FEBRUARY AND MARCH 2012 THE ASSESSING OFFICER ASKED THE APPELLAN T TO FURNISH THE NAME AND ADDRESSES OF THE PERSONS FROM WHOM REPAYMENT OF HUNDIS WAS BEING CLAIMED. AS THE APPELLANT FAILED TO FURNISH THE SA ID INFORMATION THE ASSESSING OFFICER HELD THAT THE ONUS OF PROVING THE IDENTITY AND GENUINENESS OF SOURCE OF CASH DEPOSITS HAD NOT BEEN DISCHARGED AND TREATED THE SAID AMOUNT AS UNEXPLAINED CASH CREDITS . 5.2 THE APPELLANT HAS CHALLENGED THE ADDITION OF RS .7,34,79,097/- U/S 68. IT IS SUBMITTED THAT AS PER SECTION 68 ANY SUM SHOULD HAVE BEEN CREDITED: IN THE BOOKS OF THE ASSESSEE AND WHICH S HOULD BE UNEXPLAINED. IF SUM IS NOT CREDITED IN THE BOOKS EVEN THOUGH IT IS UNEXPLAINED IT IS NOT TAXABLE UNDER SECTION 68 OF THE IT ACT. THE DETAIL S OF THE ENTRIES PASSED IN THE BOOKS OF ACCOUNTS TO OFFER UNEXPLAINED AMOUNT O F RS.7,00,00,000/- SURRENDERED DURING THE SURVEY HAVE BEEN SUBMITTED A S CAN BE SEEN IN THE APPELLANTS SUBMISSIONS REPRODUCED ABOVE. IT IS SE EN THAT INCOME ACCOUNT HAS BEEN CREDITED WITH RS.7,00,00,000/- AND CASH AM OUNT DEBITED AT THE TIME OF RECOVERING THE AMOUNT FROM THE BORROWERS. THE APPELLANTS ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 79 CONTENTION IS THAT THE CASH DEPOSIT IN THE BANK ACC OUNT CAME FROM CASH AVAILABLE IN HAND, AS PER THE BOOKS OF ACCOUNT WHIC H WAS RECEIVED FROM THE RECOVERY OF LOANS ALREADY OFFERED AS INCOME U/S 69 DURING THE SURVEY PROCEEDINGS. THEREFORE, THERE WAS NO CREDIT TO AN ACCOUNT WHICH WAS NOT ACCEPTED BY THE DEPARTMENT OR WHICH WAS UNEXPLAINED AND NO ADDITION CAN BE MADE U/S 68. THIS CONTENTION OF THE APPELLA NT IS DEVOID OF MERIT. FROM THE DETAILS OF THE HUNDIS AND THE CASH DEPOSIT ED IN THE BANK ACCOUNT AS GIVEN IN THE ASSESSMENT ORDER IT IS SEEN THAT TH E DUE DATE OF THE FOLLOWING DEPOSITS WAS MADE BEFORE THE DATE OF SURV EY. NAME AMOUNT IN RS. DATE OF DEPOSIT DUE DATE BHAVARLAL MAHENDRA KUMAR 50,00,000 23.10.2011 23.07.2011 VIJAY DHAKAD 25,00,000 19.02.2012 19.09.2011 SURENDRA KOTHAN 30,00,000 12.02.2012 20.09.2011 MANOJ SHRIVAS 50,00,000 13.03.2012 13.09.2011 SURESH &SONS 50,00,000 19.03.2012 19.07.2011 MANGILAL MOTWANI 40,00,000 24.03.2012 24.08.2011 TOTAL 2,95,00,000 NO EXPLANATION HAS BEEN GIVEN AS TO WHY THE AMOUNTS WERE NOT RECEIVED ON THE DUE DATE. IN ALL EXCEPT THE FIRST HUNDI THE DEPOSITS IN THE BANK ACCOUNT ARE IN THE MONTH OF FEBRUARY AND MARCH 2012 . 5.3 THE DUE DATES FOR THE REMAINING HUNDIS ARE AS UNDER NAME AMOUNT IN RS. DATE OF DEPOSIT DUE DATE HUKUM CHAND LODHI 50,00,000 23.02.2012 23.09.2011 VIJAY DHAKAD 40,00,000 05.03.2012 05.10.2011 KISHAN SINGH PAWAR 40,00,000 06.03.2012 06.10.2011 RAMESH AGRAWAL 25,00,000 08.03.2012 08.10.2011 VIJAY VARGI RATHORE 45,00,000 27.03.2012 27.09.2011 RAM SINGH 25,00,000 27.03.2012 27.09.2011 NARENDRA KUMAWAT 35,00,000 28.03.2012 28.09.2011 VALLABH CHANDRA MUNDRA 50,00,000 28.03.2012 28.10.2011 SURAJ KULKARNI 50,00,000 28.03.2012 28.11.2011 RAJMOHAN SHAH 45,00,000 29.03.2012 29.09.2011 TOTAL 4,05,00,000 ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 80 AS CAN BE SEEN FROM THE ABOVE TABLE THE DUE DATES F OR THE HUNDIS WERE IN SEPTEMBER AND OCTOBER, 2011 BUT HERE ALSO THE REPAY MENTS ARE SHOWN IN FEBRUARY AND MARCH, 2012 AND NO EXPLANATION HAS BEE N OFFERED TO EXPLAIN THE DELAY IN REPAYMENT. UNDER THE CIRCUMSTANCES TH E ASSESSING OFFICER WAS JUSTIFIED IN ASKING THE APPELLANT TO FURNISH TH E NAME AND ADDRESSES OF THE PERSONS FROM WHOM HE WAS CLAIMING REPAYMENT OF LOAN IN CASH. A SHOW CAUSE NOTICE WAS ISSUED ON 18/03/2015 IN RESPO NSE TO WHICH IT WAS SIMPLY SUBMITTED THAT THERE SHOULD NOT BE DOUBLE TA XATION OF THE SAME AMOUNT. BY SIMPLY PASSING ENTRIES IN THE BOOKS OF ACCOUNTS THE APPELLANT HAS NOT DISCHARGED HIS ONUS OF JUSTIFYING AND PROVI DING THE CLAIM MADE. THE BUNCHING OF ALL THE CASH DEPOSITS IN THE MONTH OF FEBRUARY AND MARCH MAKES IT DUBIOUS CONSIDERING THE BACKGROUND OF THE APPELLANT. 5.4 VARIOUS DECISIONS HAVE BEEN CITED TO CLAIM THE BENE FIT OF TELESCOPING. THE BENEFIT OF TELESCOPING IS ALLOWABLE BUT IT HAD TO BE SHOWN TO THE SATISFACTION OF THE ASSESSING OFFICER THAT THE MONE Y SURRENDERED DURING THE SURVEY IS RECEIVED BACK ALL REPAYMENT OF THE HUNDIS. THE ONUS WAS ON THE APPELLANT TO FURNISH THE DETAILS OF THE PERSONS FROM WHOM HE WAS CLAIMING THE REPAYMENT OF LOAN IN CASH IN FEBRUARY AND MARCH 2012. RELIANCE IS PLACED ON THE DECISION OF HON'BLE I.T.A.T., AGRA IN THE CASE OF POONAM GUPTA DATED 17.07.2013 W HERE IN BENEFIT TELESCOPING WAS NOT ALLOWED AS THE ASSESSEE HAD FAI LED TO FURNISH THE RECONCILIATION REQUIRED FOR THE PURPOSE. IT WAS HE LD AS UNDER:- THE CIT(A) DELETED THE ADDITION ON MERIT WITHOUT CONSIDERING THE CRUX OF THE ASPECT AND WITHOUT APPRECIATING T HE FACTS MERELY MENTIONED THAT M/S DEEPAK SECURITY IS REGI STERED WITH SEBI AND OTHERS THAT ONLY PROVES THE IDENTITY AND NOT THE NATURE OF TRANSACTION AS HAS BEEN POINTED OUT BY THE A.O. THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. KRISHNAVENI AMMAL 158 ITR 826 (MAD) HAS HELD THAT THE LAW OF EVIDENCE MANDATES THAT IF THE BEST EVIDENCE IS NOT PLACED BEFORE THE COURT, AN ADVERSE INFERENCE CAN BE DRAWN AGAINST THE PERSONS WHO OUGHT TO HAVE PRODUCED IT. IN THAT CASE, THE RE WERE ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 81 CROSSED CHEQUES BUT THEY WERE NOT PRODUCED. SIMI LARLY, IN THE CASE UNDER CONSIDERATION , WE ASKED THE ASSESSEE TO FURNISH COPIES OF BANK ACCOUNTS BUT THE SAME WERE NOT PRO DUCED. IN THE LIGHT OF THE FACTS OF THE CASE AND FAILURE ON THE PART OF THE ASSESSEE, THE ADDITION MADE BY THE A.O WHILE MAKI NG ASSESSMENT UNDER SECTION 153A IS CORRECT AND IN A CCORDANCE WITH LAW. 5.5 THE APPELLANT HAS ALSO POINTED OUT THAT IN THE CASE OF THE FIRM BHRC IT HAS BEEN ACCEPTED THAT THE DEPOSITS IN THE BANK ACC OUNT CAME OUT OF THE CASH IN HAND AS PER THE BOOKS OF ACCOUNT OF BHR C IN THE SCRUTINY PROCEEDINGS U/S 143(3) FOR A.Y. 2012-13. THE CASH IN HAND WAS BUILT UP ON ACCOUNT OF RECOVERY OF AMOUNT ADVANCED AS HUN DI LOANS AGAINST WHICH INCOME WAS SURRENDERED DURING SURVEY ACTION B Y BHRC IN THE SAME F.Y. 2012-13. HOWEVER, IT IS NOT SUBMITTED WH ETHER REPAYMENTS OF HUNDI LOANS IN THE CASE OF BHRC WERE ON THE DUE DATES OR BUNCHED IN THE MONTHS FEBRUARY AND MARCH, 2012 LIKE IN THE CASE OF THE APPELLANT. FURTHER, AS POINTED OUT BY THE ASSESSIN G OFFICER THE BACKGROUND OF THE APPELLANT ALSO HAS TO BE TAKEN IN TO CONSIDERATION. THEREFORE, FROM THE DETAILS ON RECORD IT CANNOT BE HELD THAT THE CASE OF APPELLANT IS IDENTICAL TO THAT OF BHRC. THE DECISI ON OF HON'BLE PUNJAB AND HARYANA HIGH COURT RELIED UPON BY THE APPELLANT IS NOT APPLICABLE TO THE FACTS OF THE CASE. 5.6 IN VIEW OF THE ABOVE THE ADDITION OF RS.7,34,79 ,097/- MADE AS UNEXPLAINED CASH CREDIT U/S 68 IS CONFIRMED. GROU ND NO.2 IS DISMISSED 52. NOW THE AGGRIEVED ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 53. LD. SENIOR COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE LD. CIT(A) AND ALSO MENTIONED THAT THER E WAS A DIRECT ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 82 NEXUS OF THE CASH DEPOSIT IN THE BANK ACCOUNT TO TH E MATURITY PROCEEDS OF THE HUNDIS FOUND DURING THE COURSE OF S URVEY PROCEEDINGS. THE UNACCOUNTED RECEIPTS IN CASH WERE USED TO PROVIDE SHORT TERM LOANS AND ADVANCES FOR EARNING I NTEREST INCOME AND FOR THIS PURPOSE HUNDIS WERE ISSUED AND THE SAM E WERE FOUND DURING THE SURVEY PROCEEDINGS. THE MATURITY DATE OF HUNDIS WERE MENTIONED THERE ON. THE LD. A.O HAS HIMSELF NOTED T HE DETAILS IN THE SHOW CAUSE NOTICE. THE SURRENDERED INCOME WHIC H WAS INVESTED IN HUNDIS WERE RECEIVED BACK IN CASH DURIN G THE YEAR UNDER APPEAL ON VARIOUS DATES AS MENTIONED ON THE H UNDIS. THE CASH RECEIPT WERE DULY ACCOUNTED IN THE BOOKS OF AC COUNTS. NO OTHER UNACCOUNTED SOURCE OF INCOME HAS BEEN UNEARTH ED BY THE SURVEY TEAM OR LD. A.O. THE CASH DEPOSIT IN THE BAN K HAS A DIRECT NEXUS WITH THE SURRENDERED INCOME. PLETHORA OF JUD GMENTS ARE THERE SUPPORTING THE ASSESSEE THAT TELESCOPING BENE FIT SHOULD BE GIVEN. 54. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE SUPP ORTED THE FINDINGS OF BOTH THE LOWER AUTHORITIES. ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 83 55. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. THE SOLE GRIEVANCE OF THE ASSESS EE IS AGAINST THE ACTION OF LD. A.O CONFIRMING THE ADDITION OF RS.7,3 4,79,097/- AS UNEXPLAINED CREDIT U/S 68 OF THE ACT. THIS UNEXPLA INED CASH CREDIT IS THE AMOUNT OF CASH DEPOSITED IN THE BANK ACCOUNT HELD IN THE NAME OF THE ASSESSEE DURING FEBRUARY, 2012 AND MARC H, 2012. LD. A.O REFUSED TO ACCEPT THE CONTENTION OF THE ASSESSE E THAT SOURCE OF CASH DEPOSITED IS THE MATURITY PROCEEDS OF THE HUND IS I.E. SHORT TERM ADVANCES FOR WHICH INVESTMENT WAS MADE FROM UN ACCOUNTED INCOME SURRENDERED DURING THE COURSE OF SURVEY AND OFFERED TO TAX IN THE RETURN OF INCOME. LD. A.O MADE THE ADDITION FOR UNEXPLAINED CASH DEPOSIT MERELY IN ORDER TO PROVE THAT SINCE TH E ASSESSEE IS ACCUSED IN VYAPAM CASE CASH SO DEPOSITED SHOULD H AVE BEEN FROM THE INCOME EARNED FROM ALLEGED BRIBE RECEIVED FOR A DMISSION IN MEDICAL COLLEGES. IN THE PRECEDING PARAS WE HAVE O BSERVED THAT THE PROCEEDING INITIATED AGAINST THE ASSESSEE UNDER THE VYAPAM CASE FALL IN FINANCIAL YEAR 2012-13 I.E. SUBSEQUENT YEAR WHEREAS CASH WAS DEPOSITED DURING FINANCIAL YEAR 2011-12. THERE IS NO EVIDENCE ON THE RECORD TO SUBSTANTIATE THIS FACT THAT ASSESS EE RECEIVED ANY ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 84 UNACCOUNTED INCOME IN THE FORM OF BRIBE FOR ADMISSI ON IN MEDICAL COLLEGE DURING FINANCIAL YEAR 2011-12. IT SEEMS TH AT LD. A.O MERELY ON THE BASIS OF SURMISES AND CONJECTURES HAVE TAKEN THIS VIEW. HE IGNORED THE FACT THAT THE ASSESSEE HAS SURRENDERED RS.7 CRORES AS UNACCOUNTED INCOME DURING THE YEAR. THIS UNACCOUNT ED INCOME IN CASH WAS USED IN EARNING INTEREST INCOME BY WAY OF GIVING SHORT TERM ADVANCE ON HUNDIS. SUCH HUNDIS ARE NORMALLY IS SUED THROUGH BROKERS. ONLY THE NAME OF PERSON RECEIVING THE MON EY, HIS SIGNATURE, AMOUNT GIVEN AS ADVANCE, RATE OF INTERES T, DATE OF ENTERING INTO THE HUNDI AGREEMENT AND THE MATURITY DATE OF RECEIVING THE MONEY ARE PROVIDED. WHEN THE ASSESSE E SHOWS THE ORIGINAL HUNDI HE RECEIVES THE PRINCIPAL AND INTERE ST. THE ASSESSEE HAD SURRENDERED HIS INCOME FROM OTHER SOURCE AS UNE XPLAINED MONEY WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUN TS AND THE ASSESSEE FAILED TO OFFER ANY EXPLANATION ABOUT THE NATURE AND SOURCE OF ACQUISITION OF THESE UNEXPLAINED MONEY/IN COME. THE HUNDIS WERE IMPOUNDED DURING THE COURSE OF SURVEY W HICH ITSELF IS SUFFICIENT EVIDENCE THAT UNACCOUNTED INCOME HAS BEE N INVESTED. THE UNACCOUNTED INCOME HAS BEEN OFFERED TO TAX WHIC H IS NOT IN DISPUTE. ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 85 56. WE FIND THAT THE ASSESSEE SUBSEQUENTLY FULLY RE COVERED THE HUNDI LOANS IN THE F.Y. 2011-12 BUT WITH A DELAY FR OM THEIR DUE DATES, ON ACCOUNT OF ORIGINAL RECEIPTS BEING IN POS SESSION OF THE DEPARTMENT. INTEREST ON THE DELAYED PERIOD WAS ALSO RECOVERED. THE TOTAL SUM AGAINST LOANS ADVANCED AND INTEREST THERE ON WAS RECOVERED IN CASH AND DEPOSITED IN BANK ACCOUNTS OF THE APPELLANT. THE APPELLANT DULY INFORMED THE INCOME TAX DEPARTME NT VIDE ITS LETTER FILED ON09/04/2012 OF HUNDI LOANS HAVING BE EN RECOVERED AND DEPOSITED IN HIS BANK ACCOUNT. THIS UNACCOUNTED INCOME WAS GIVEN AS SHORT TERM ADVANCE THROUGH HUNDIS WHICH WE RE FOUND DURING THE COURSE OF SURVEY. NECESSARY ENTRIES IN THE BOOKS OF ACCOUNTS WERE MADE ON THE DATE OF SURVEY BY DEBITIN G PARTIES ACCOUNT AND CREDITING THE INCOME FROM UNDISCLOSED S OURCE OFFERED TO TAX. THE PARTY ACCOUNT WERE MADE ON THE BASIS O F NAMES MENTIONED ON THE HUNDIS. THE ORIGINAL HUNDIS IMPOUN DED BY THE INCOME TAX DEPARTMENT WERE RELEASED AND GIVEN TO AS SESSEE IN NOVEMBER, 2011 AND DECEMBER, 2011. THE AMOUNTS WERE RECOVERED FROM HUNDIS ON FOLLOWING DATES:- DR.VINOD BHANDARI ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 86 DETAILS OF LOAN GIVEN TO HUNDI S. NO. PAYEE NAME AMOUNT GIVEN ON HUNDI INTEREST RECD. ON HUNDI AMOUNT TOTAL AMOUNT RECEIVED DUE DATE OF HUNDI RECEIVED DATE OF HUNDI AMOUNT 1 BHAVARLAL MAHENDRA KUMAR 5000000 150410 5150410 2 3-JUL-11 23-OCT-11 2 HUKAM CHAND LODHI 5000000 226850 5226850 23-SEP-1 1 23-FEB-12 3 KISHAN SINGH PAWAR 4000000 189510 4189510 06-OCT- 11 06-MAR-12 4 MANGILAL MOTWANI 4000000 240658 4240658 24-AUG-11 24-MAR-12 5 MANOJ SHRIVAS 5000000 300822 5300822 13-AUG-11 12 -MAR-12 6 NARENDRA KUMAVAT 3500000 183822 3683822 28-SEP-11 28-MAR-12 7 RAJMOHAN SHAH 4500000 236345 4736345 29-SEP-11 29 -MAR-12 8 RAM SINGH 2500000 114045 2614045 27-OCT-11 27-MAR -12 9 RAMESH AGRAWAL 2500000 112195 2612195 08-OCT-11 0 8-MAR-12 10 RAMESH CHAND JAIN 5000000 262605 5262605 13-SEP- 11 13-MAR-12 11 SURAJ KULKARNI 5000000 229315 5229315 28-NOV-11 28-MAR-12 12 SURENDRA KOTHARI 3000000 136110 3136110 20-SEP-1 1 20-FEB-12 13 SURESH AND SONS 5000000 337810 5337810 19-JUL-11 19-MAR-12 14 VALLABH CHAND MUNDRA 5000000 229315 5229315 28-O CT-11 28-MAR-12 15 VIJAY DHAKAD 2500000 113425 2613425 19-SEP-11 19 -FEB-12 16 VIJAY DHAKAD 4000000 179510 4179510 05-OCT-11 05 -MAR-12 17 VIJAY VARGIYA RATHORE 4500000 236345 4736345 27- SEP-11 27-MAR-12 TOTAL 70000000 3479092 73479092 57. WHEN THE AMOUNT WAS RECOVERED ON BELATED DATES AS AGAINST THE MATURITY DATES MENTIONED IN THE SHOW CAUSE NOTI CE ISSUED BY LD. A.O WHICH INCLUDED PRINCIPAL AND INTEREST, THEY WERE ENTERED IN THE BOOKS AND THE CASH IN HAND KEPT ON INCREASING. TOTAL OF PRINCIPAL AMOUNT IS RS.7 CRORES AND RS. 34,79,097/- BEING THE INTEREST RECEIVED ON VARIOUS DATES AND THE ASSESSEE HAD THIS AMOUNT AS CASH IN HAND WHICH WAS DEPOSITED IN THE BANK ON VARIOUS DATES IN FEBRUARY 2012 AND MARCH, 2012. AP PARENTLY THERE IS A DIRECT NEXUS OF THE CASH SO RECEIVED ON MATURI TY OF HUNDIS WITH ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 87 THE CASH DEPOSITED IN THE BANK ACCOUNT. WHETHER TH E ASSESSEE IS ENTITLED TO THE TELESCOPING BENEFIT OF THE SURRENDE RED INCOME WITH THE CASH DEPOSITED IN THE BANK ACCOUNT NEEDS TO BE ANALYSED IN LIGHT OF FOLLOWING JUDICIAL PRONOUNCEMENTS :- A. IN VEERASINHAIAH & CO VS CIT (1980) 123 ITR 457 (SC), THE SUPREME COURT HAS CL EARLY HELD THAT SECRET PROFIT/ UNDISCLOSED INCOME OF AN APPELLANT EARNED MAY CONSTITUTE A FU ND , EVEN THOUQH CONCEALED FROM WHICH THE APPELLANT MAY DRAW SUBSEQUENTLY... B. IN C IT V.S. K.S.M. GURUSWAMY NADAR & SONS (1984) 149 ITR 127 (MADRAS) IT WAS HELD THAT 'IN THIS CASE, IN ADDITION TO THE BOGUS CASH CREDIT THERE IS AN ADDITION TOWARD S THE SUPPRESSION OF PROFIT, 171 SUCH A CASE AS THIS WHEN THERE ARE TWO ADDITIONS IT IS ALWAYS OPEN TO THE ASSESSEE TO EXPLAIN THAT T HE SUPPRESSED PROFIT DURING THE YEAR HAS BEEN BROUGHT IN AS CASH CREDITS AND THEREFORE ONE HAS TO BE TELESCOPED INTO THE OTHER A ND THERE CAN BE ONLY ONE ADDITION'. C. IN ADDL CIT VS. DHARAMDAS AGRAWAL (L983) 144 ITR 143, THE MADHYA PRADESH HIGH COURT BASED ON THE VEERASINHAIA H & COS DECISION IN SUPREME COURT UPHELD THE ASSESSEE'S CONTENTION OF UNDISCLOSED INCOME OF THE ASSESSEE EARNED IN EARLIE R ASST. YEARS BEING THE SOURCE OF SUBSEQUENT EXPENDITURE AND OR D EBITS IN ASSESSEE'S ACCOUNTS. D. IN ARUN KALA VS. ASSTT. CIT [2005} 98 TT J (JP.) 1046 THE TRIBUNAL RULED THAT 'BY CONSIDERING THE TOTALITY OF THE FACTS AND ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 88 CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT BENEFIT OF TELESCOPING OR SET, OFF OF SECRET PROFITS OR UNDISCLOSED INCOME OF THE ASSESSEE MAY CONSTITUTE A FUND FROM WHICH THE ASSESSEE DRAW SUBSEQUENTLY FOR MEETING' THE EXPENDITURE OR MAKING INVESTMENTS. THE AO MAY ALSO ALLOW BENEFIT O F TELESCOPING/ SETTING OFF OF INCOME AGAINST EXPENDITURE /INVESTMENT , EVEN DURING THE CURRENT YEAR) AFTER LOOKING INTO THE FACT THAT UNEXPLAINED EXPENDITURE/INVESTMENT COULD BE REASONABLY ATTRIBUT ED TO THE PRE-EXISTING FUND OF CONCEALED INCOME OR THEY WERE REASONABLY EXPLAINED BY REFERENCE TO THE CONCEALED INCOME EARNED IN THE RELEVANT YEAR. RELIANCE IS PLACED ON THE CASE OF ANANTHARAM VEERSINGHAIAH & CO, (SUPRA). E. JAQADNMBA CONSTRUCTION CO. VS. IT O [2004] 3 SOT 670 (JODH.) (C) RADHEY SHYAM TANWAR VS. ASST. CIT /20C2] 77 TTJ (JODH. 505.) 58. FROM GOING THROUGH THE ABOVE DECISIONS IT CAN B E INFERRED THAT IF THERE ARE TWO FUNDS ONE WHICH IS ALREADY TAXED A ND OTHER HAS NOT AND THERE WAS REMITTANCES DURING THE ACCOUNTING YEA R FOR CERTAIN SUM, THE SOURCE OF WHICH IS NOT INDICATED THEN THE PRESUMPTION IS THAT THE REMITTANCES SHOULD HAVE BEEN FROM THE FUND WHICH HAS ALREADY SUFFERED TAX. IT IS NOTEWORTHY THAT THE LD . A.O HAS NOT REJECTED THE BOOKS OF ACCOUNTS AND ITS EXTRACTS PRO DUCED BEFORE HIM. IN SUCH SITUATION AS HELD IN THE CASE OF TOLA RAM DAGA V/S CIT 59 ITR 632 SUCH UNCHALLENGED ACCOUNT BOOKS ARE PRIM A FACIE PROOF ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 89 OF THE CORRECTNESS OF THE ENTRIES MADE THEREIN. IT IS ALSO BROUGHT TO OUR NOTICE THAT DURING THE SURVEY PROCEEDINGS HUNDI S OF RS.23.65 CRORES WERE FOUND OUT OF WHICH HUNDIS OF RS.7 CRORE S WERE IN THE NAME OF THE ASSESSEE AND HUNDIS OF RS.16.65 CRORES IN THE NAME OF BHRC. LD. SENIOR COUNSEL FOR THE ASSESSEE STATED T HAT IN THE SCRUTINY PROCEEDINGS U/S 143(3) OF THE ACT CARRIED OUT IN THE CASE OF BHRC FOR ASSESSMENT YEAR 2012-13 THE LD. A.O HAS ACCEPTED THE ASSESSEES CONTENTION THAT THE DEPOSIT IN BANK ACCO UNT OF BHRC ARE OUT OF THE CASH IN HAND AS PER THE BOOKS OF ACCOUNT S OF BHRC WHICH IN TURN WAS BUILT UP ON ACCOUNT OF RECOVERY O F AMOUNT ADVANCED AS HUNDI LOANS AGAINST WHICH INCOME WAS SU RRENDERED DURING SURVEY ACTION. HONBLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF JASWANT RAI (1977) 107 ITR 477 HAS HELD THAT IT WAS NOT OPEN TO DEPARTMENT TO ADOPT DIFFERENT YARD STIC KS IN THE CASE OF DIFFERENT ASSESSES WHERE THE ISSUE OF ADDITION TO W EALTH PERTAINED TO THE SAME COMMON ASSET. ACCORDINGLY HERE ALSO THE HUNDI WHICH WERE SEIZED IN ONE COMMON SURVEY ACCOUNT OF ONE COM MON PARTIES OFFICE LOCATION I.E. IN THE CASE OF ASSESSEE AS WEL L AS BHRC OF WHICH THE ASSESSEE IS THE PARTNER THE DEPARTMENT SHOULD N OT HAVE TAKEN A ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 90 DIFFERENT VIEW. WE, THEREFORE RESPECTFULLY FOLLOWI NG ABOVE DECISIONS ARE OF THE CONFIRMED VIEW THAT ASSESSEE IS ENTITLED FOR THE TELESCOPING BENEFIT OF THE INCOME SURRENDERED DURIN G THE YEAR TO THE CASH DEPOSITED IN THE BANK ACCOUNT AND THUS FIND ME RIT IN THE CONTENTION OF THE LD. SENIOR COUNSEL FOR THE ASSESS EE THAT THE SOURCE OF CASH DEPOSITS OF RS.7,34,79,097/- IS THE MATURITY PROCEEDS OF HUNDIS DURING THE YEAR WHICH WERE MADE OUT OF THE UNACCOUNTED SURRENDERED INCOME OFFERED TO TAX IN TH E RETURN OF INCOME FOR ASSESSMENT YEAR 2012-13. WE THEREFORE S ET ASIDE THE FINDING OF LD. CIT(A) AND FIND NO JUSTIFICATION IN THE ACTION OF THE LD. A.O MAKING ADDITION U/S 68 OF THE ACT FOR UNEXPLA INED CASH CREDIT OF RS.7,34,79,097/-. WE ACCORDINGLY DELETE THE ADD ITION AND ALLOW THE SOLE GROUND NO.2 RAISED BY THE ASSESSEE. 59. THE OTHER GROUNDS ARE GENERAL IN NATURE WHICH N EEDS NO ADJUDICATION. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ITA NOS.350 & 66/IND/2017 & ITANO.57/IND/2019 VINOD BHANDARI 91 60. ACCORDINGLY ASSESSEES APPEALS NO. 350/IND/17, 66/IND/17 ARE ALLOWED AND ITA NO.57/IND/17 IS DISMISSED AS IN FRUCTUOUS. THE ORDER PRONOUNCED IN THE OPEN COURT ON 20.03.2 020. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 20 TH MARCH, 2020 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE