TRANS IMPEX P.LTD, MUMBAI V. CIT 2, MUMBAI

ITA 3568/MUM/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2494 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 18-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 18-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJUNATH SWAMY
• Assessee Lawyers: Y K WADIA
• Keywords: Deemed to accrue or arise in india; Deemed dividend
• Section: 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI E BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER. ITA. NOS. 3567 & 3568/MUM/2012 (ASSESSMENT YEARS: 2007-08 & 2009-10) M/S. TRANS IMPEX PVT. LTD., 4 TH FLOOR, DARABSHAW HOUSE, S.V.MARG, BALLARD ESTATE, MUMBAI 400 001 APPELLANT VS. COMMISSIONER OF INCOME TAX-2, ROOM NO.355, 3 RD FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI 400 020 RESPONDENT PAN: AAACT5093R / BY ASSESSEE : SHRI MADHUR AGARWAL & MR. Y. K. WADIA, A.R. / BY REVENUE : MR. MANJUNATH SWAMY, D.R. /DATE OF HEARING : 23.06.2016 /DATE OF PRONOUNCEMENT : 20.07.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THESE TWO APPEALS HAVE BEEN FILED BY ASSESSE AGAINS T THE ORDERS OF COMMISSIONER OF INCOME TAX-2, MUMBAI, DAT ED 27.03.2012 FOR BOTH A.YS. 2007-08 & 2009-10. SINCE , THESE ITA NOS.3567 & 3568/MUM/12 A.YS. 07-08 & 09-10 [M/S. TRANS IMPEX PVT, LTD. VS. CIT] PAGE 2 APPEALS PERTAIN TO SAME ASSESSEE AND ON ALMOST SIMI LAR ISSUE, SO THEY ARE BEING DISPOSED OF BY COMMON ORDER FOR T HE SAKE OF CONVENIENCE. 2. IN ITA NO.3567/MUM/2012 FOR A.Y.2007-08, ASSESSE E HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS: THIS APPEAL IS AGAINST THE ORDER DATED 27/03/2012 UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTE R REFERRED TO AS THE ACT) PASSED BY THE COMMISSIONER OF INCO ME TAX 2, MUMBAI (HEREINAFTER REFERRED TO AS THE CIT). THE UNDER MENTIONED GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO ONE ANOTHER: 1. THE CIT ERRED IN WRONGLY ASSUMING JURISDICTION A ND IN FRAMING ORDER DATED 27/03/2012 UNDER SECTION 263 OF THE ACT. 3. PROCEEDINGS U/S.263 WERE INITIATED IN CONTEXT OF ASSESSMENT ORDER COMPLETED U/S.143(3) OF THE ACT ON 15.12.2009 BY ISSUANCE OF NOTICE DATED 02.08.2010. THE OPERATIVE PORTION OF SAME IS AS FOLLOWS: ON PERUSAL OF YOUR RECORDS FOR A.Y. 2007-08, IT IS SEEN VIDE LETTER DATED 09.12.2009 FROM M/S. P.A. DHANBHORRA & CO. C.AS. THAT YOU HAVE FILE SCHEDULE FOR DUES TO COMPA NIES IN WHICH DIRECTORS ARE INTERESTED FOR THE YEAR ENDED 3 1.3.2007, WHEREIN ONE OF THE CREDITORS TO THE TUNE OF RS.96,0 2,367/-, WAS M/S. TRANS OCEAN SHIPPING AGENCY PVT. LTD. (M/S . TOSAPL), MUMBAI. HOWEVER, ON VERIFICATION OF THE RECORDS OF M/S. TOS APL MUMBAI FOR A.Y. 2007-08 AND THE SCHEDULE I REFLECTI NG THE DUES FROM THE COMPANIES IN WHICH THE DIRECTORS ARE INTERESTED AS ON 31.3.2007 FOR A.Y.2007-08, NO SUCH CREDITOR IS APPEARING IN THE SAID SCHEDULE. IN THE CIRCUMSTANCES, THE ASSESSMENT ORDER DATED 15.12.2009 FOR A.Y.2007-08 IN YOUR CASE IS ERRONEOU S IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF REVENU E. ITA NOS.3567 & 3568/MUM/12 A.YS. 07-08 & 09-10 [M/S. TRANS IMPEX PVT, LTD. VS. CIT] PAGE 3 IN RESPONSE THERETO, ASSESSEE THROUGH ITS AUTHORIZE D REPRESENTATIVE: (I) THERE HAS BEEN NO ERROR IN THE ASSESSMENT FRAM ED BY THE ASSESSING OFFICER BECAUSE THE ASSESSMENT WAS FR AMED AFTER DETAILED AND MINUTE ENQUIRIES AND INVESTIGATI ONS, EXTENDING FOR ABOUT A YEAR AND THE TOTAL INCOME WAS ASSESSED AT RS.2,58,80,490/- AGAINST THE TOTAL INCO ME RETURNED BY THE ASSESSEE AT RS.17,48,170/-. THE DE TAILS ASKED FOR WERE DULY SUBMITTED. (II) THE BALANCE OF RS.96,02,367/- DUE TO M/S.TOSAP L FEATURING IN THE BALANCE SHEET HAS BEEN CORRECTLY S HOWN. THE SAID AMOUNT WAS RECEIVED SOMEWHERE IN THE LATE 1990S AND THE AMOUNT IS STILL DUE AND PAYABLE TO THAT PAR TY. FURTHER, NO TRANSACTION OF FUNDS AS RECEIVED OR TAK EN HAS TAKEN PLACE DURING THE FINANCIAL YEAR UNDER CONSIDE RATION THAT WOULD GO TO ESTABLISH THAT A SUM OF RS.96,02,3 67/- HAS BEEN RECEIVED FROM M/S. TOSAPL IN THIS PERIOD. (III) EVEN OTHERWISE, THE AMOUNT IN QUESTION CANNOT BE TAXED U/S.68 AS THERE IS NOTHING ON RECORD TO SHOW THAT THE AMOUNT HAS BEEN RECEIVED DURING THE YEAR. (IV) VIEWING THE SITUATION FROM THE POINT OF VIEW O F REMISSION OF LIABILITY, THE ASSESSEE CONTINUES TO A CKNOWLEDGE ITS LIABILITY TO PAY M/S. TOSAPL. BY WRITING OFF O F THE AMOUNT RECEIVABLE, M/S. TOSAPL HAS NOT FORGONE ITS CLAIM WITH RESPECT TO THIS AMOUNT. (V) THE BALANCE SHEET OF M/S. TOSAPL IS NOT A RECOR D OF THE ASSESSEE COMPANY AND HENCE CANNOT BE A GROUND F OR INVOKING SECTION 263. (VI) IN VIEW OF THE RATIOS OF THE FOLLOWING CASES, THERE IS NO CASE FOR ACTION U/S.263:- (A) BISMILLAH TRADING CO. VS. INTELLIGENCE OFFICER, SQUAD NO.II, AGRICULTURAL INCOME TAX AND SALES TAX & OTHERS (2001) 248 ITR 292 (KER.) (B) (B) VENKATAKRISHNA RICE COMPANY VS. CIT (1987) 163 ITR 129 (MAD.) ITA NOS.3567 & 3568/MUM/12 A.YS. 07-08 & 09-10 [M/S. TRANS IMPEX PVT, LTD. VS. CIT] PAGE 4 (C) THALIBAI F. JAIN AND OTHERS VS. ITO ASSESSMENT 4, HUBLI AND ANOTHER (1975) 101 ITR 1 (KARN.) 3.1 LD. AUTHORIZED REPRESENTATIVE SUBMITTED OTHER SUBMISSIONS WHICH ARE REPRODUCED AS UNDER: MEANWHILE, AFTER MAKING THESE SUBMISSIONS, BUT AND BEFORE ANY ORDER U/S.263 COULD BE PASSED BY YOUR HONOUR, T HE ASSESSEE COMPANYS ASSESSING OFFICER INCOME TAX OFF ICER 2(3)(3), AAYAKAR BHAVAN, MUMBAI HAS ADDED THE AMOUN T OF RS.96,02,367/- AS REMISSION OF LIABILITY U/S.41(1) OF THE ACT VIDE THE ASSESSMENT ORDER DATED 30.12.2011. A COPY OF THE SAID ASSESSMENT ORDER IS ENCLOSED HEREWITH FOR YOUR READY REFERENCE AND RECORDS. AS THE ASSESSEE COMPANYS ASSESSMENT ORDER FOR A.Y. 2007- 08 WAS SOUGHT TO BE REVISED BY YOUR HONOUR ON ACCOU NT OF / FOR INDENTICAL AMOUNT, AND IDENTICAL REASON, WE HUM BLY SUBMIT THAT NO REVISION OF THE ASSESSMENT ORDER FOR A.Y.2007-08 CAN NOW BE MADE AS THE VERY SAME ITEM H AS BEEN BROUGHT TO TAX BY THE ASSESSING OFFICER IN A.Y .2009- 10. 3.2 REGARDING ARGUMENT OF ASSESSEE THAT ASSESSMENT HAS BEEN FRAMED AFTER DUE DILIGENCE AND DETAILED SCRUTI NY WAS NOT FOUND CORRECT BY CIT. HE OBSERVED THAT THERE IS A DIFFERENCE IN THE BALANCE SHEET OF ASSESSEE COMPANY AND ITS SISTE R CONCERN AS FAR AS THE MONEY DUES FROM ASSESSEE IS CONCERNED . WHEREAS, NO AMOUNT APPEARS RECEIVABLE FROM ASSESSEE IN THE BALANCE SHEET OF M/S.TOSAPL IN ASSESSEES BOOKS, TH E AMOUNT OF RS.96,02,367/- APPEARED VERY REGULARLY. ACCORDI NG TO CIT, THIS ISSUE WAS NOT LOOKED AT ALL BY ASSESSING OFFIC ER. REGARDING ASSERTION THAT ASSESSEE STILL ADMITTED THAT AMOUNT IN QUESTION IS A LIABILITY, WHILE OTHER PARTY HAS WRITTEN IT OF F, CIT OBSERVED THAT ASSESSING OFFICER HAD NOT MADE SOME SENSIBLE E NQUIRIES AND CROSS VERIFICATION. BOOKS OF ACCOUNTS OF BOTH PARTIES HAVE NOT BEEN VERIFIED, STATEMENTS HAVE NOT BEEN RECORDE D, RECORDS ITA NOS.3567 & 3568/MUM/12 A.YS. 07-08 & 09-10 [M/S. TRANS IMPEX PVT, LTD. VS. CIT] PAGE 5 WITH OTHER GOVERNMENT AGENCIES HAVE NOT BEEN CROSS VERIFIED. SINCE, TWO COMPANIES WERE RELATED BY COMMON DIRECTO RS, IT WAS NECESSARY FOR THE ASSESSING OFFICER TO PIERCE THE V IAL OF ARRANGEMENT AND THEN ONLY FORM AN OPINION AS TO WHE THER THIS WAS IN ANY WAY A MEASURE TO DEFRAUD THE REVENUE OR NOT. ACCORDING TO CIT, ASSESSING OFFICER HAS NOT TAKEN A NY STEP IN THIS REGARD WHICH WAS EXPECTED OF HIM TO PROTECT TH E INTEREST OF REVENUE. CIT FURTHER OBSERVED THAT THE INFORMATION CONTAINED IN ASSESSEES RECORD WAS A MISREPRESENTATION. SINCE , ASSESSING OFFICER HAS NOT CROSS VERIFIED THE DETAILS, SO, INV OKING PROVISIONS OF SECTION 263 OF THE ACT WAS HELD JUSTI FIED BY CIT. 3.3 REGARDING INFORMATION FURNISHED VIDE ASSESSEES LETTER DATED 21.02.2012 ABOUT THE COMPLETION OF ASSESSMENT FOR A.Y.2009-10, CIT OBSERVED THAT AUTHORIZED REPRESENT ATIVES STAND CAN BE FAULTED ON A NUMBER OF ISSUES. CIT OB SERVED THAT ASSESSING OFFICER IN COMPLETING THE ASSESSMENT FOR A.Y. 2009- 10, THERE WAS ALREADY A NOTICE U/S.263 OF THE ACT O N RECORD, HAD ACTED ERRONEOUSLY. TO CURE THIS ILL-DIRECTED A CTION, A SEPARATE NOTICE U/S.263 OF THE ACT WAS ISSUED TO AS SESSEE AND SAID ASSESSMENT WAS ALSO SET ASIDE FOR DETAILED REA SON GIVEN IN THAT ORDER. HENCE, THE ACTION OF ASSESSING OFFICER FOR A.Y. 2009-10 CANNOT BE A DETERRENT TO THE PRESENT PROCEE DINGS OBSERVED BY THE CIT. SUMMING UP THE SITUATION, CIT OBSERVED THAT ASSESSMENT ORDER DATED 15.12.2009 IS ERRONEOUS AS THE ASSESSING OFFICER HAS NOT MADE ANY SCRUTINY AND CRO SS VERIFICATION BEFORE COMPLETING THE ASSESSMENT AND T HEREFORE NOT MADE THE DESIRED ADDITIONS U/S.41(1) OF THE ACT. S INCE, THE ITA NOS.3567 & 3568/MUM/12 A.YS. 07-08 & 09-10 [M/S. TRANS IMPEX PVT, LTD. VS. CIT] PAGE 6 AMOUNT INVOLVED IS RS.96,02,367/-, OBVIOUSLY INACTI ON BY ASSESSING OFFICER IS PREJUDICIAL TO THE INTEREST OF REVENUE. THEREFORE, INVOKING OF PROVISIONS OF SECTION 263 OF THE ACT, ASSESSMENT ORDER DATED 15.12.2009 WAS SET ASIDE TO THE LIMITED EXTENT OF CONSIDERING ASSESSEES LOAN TRANS ACTION OF RS.96,02,367/-. 4. SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF ASS ESSEE. LD. AUTHORIZED REPRESENTATIVE DREW OUR ATTENTION TO PAGE NOS.15 & 16 OF PAPER BOOK, WHICH WAS ITS REPLY DATE D 27.08.2010 IN RESPONSE TO NOTICE U/S.263 OF THE ACT . THE SPECIAL ATTENTION WAS DRAWN TO PARA (D) OF PARA 3 W HICH READS AS UNDER: (D) WE SUBMIT THAT THERE IS NO EVENT THAT HAS ARIS EN OR TAKEN PLACE DURING THE F.Y.31.03.2007 THAT WOULD GO TO ESTABLISH THAT A SUM OF RS.96,02,367/- WAS RECEIVED BY TRANS IMPEX PVT. LTD. FROM TRANS OCEAN SHIPPING AGE NCY DURING F.Y. 2006-07. WE THEREFORE SUBMIT THAT THE AMOUNT OF RS.96,02,367/- DUE TO TRANS OCEAN SHIPPING AGENC Y PVT. LTD. REMAINS UNCHANGED OVER THE YEARS. OUR CLIENT SUBMITS THAT THE BALANCE SHEET OF TRANS IMPEX PVT. LTD. AND THE ANNEXURES THERETO FOR THE YEAR ENDED 31.03.2006 SHO WS THAT THERE HAS BEEN NO CHANGE IN THE BALANCE OF RS.96,02,367/- DUE TO TRANS OCEAN SHIPPING AGENCY P VT. LTD. FROM THE BALANCE DUE TO THEM AS ON 31.03.2006. WE ENCLOSE HEREWITH THE BALANCE SHEET AND PROFIT AND L OSS A/C OF THE ASSESSEE COMPANY AS ON 31.03.2006 WHICH IS A LREADY ON RECORD OF THE A.O. AND WHICH CLEARLY SHOWS THAT THE BALANCE DUE TO TRANS OCEAN SHIPPING AGENCY PVT. LTD . HAS NOT CHANGED SINCE 1 ST APRIL, 2006. OUR ATTENTION WAS ALSO DRAWN TO PAGE NOS.1 & 2, WHI CH IS NOTICE FROM DEPUTY COMMISSIONER DATED 04.12.2009, W HEREIN DEPUTY COMMISSIONER AS ASSESSING OFFICER HAS ASKED THE ITA NOS.3567 & 3568/MUM/12 A.YS. 07-08 & 09-10 [M/S. TRANS IMPEX PVT, LTD. VS. CIT] PAGE 7 DETAILS OF TRANSACTIONS WITH THE PARTIES. SAME WAS REPLIED BY ASSESSEE VIDE LETTER DATED 09.12.2009 INTER ALIA SU BMITTING AS UNDER: 2. NAME AND COMPLETE ADDRESS OF THE PARTIES TO WHO M SUM OF RS.2,04,00,198.20 WAS DUE UNDER THE SUB-HEAD CURRENT LIABILITIES UNDER THE HEAD CURRENT LIABILIT IES & PROVISIONS. WE BRING TO YOUR KIND ATTENTION HERE T HAT THE NOTICE DATED 04/12/09 SENT BY YOUR OFFICE ASKING US TO FURNISH INFORMATION FOR THE SAME HAS MENTIONED AN A MOUNT OF RS.10,05,69,281.69 WHICH IS INCORRECT. DETAILS FOR THE SAME HAVE BEEN PROVIDED FOR THE SUM OF RS.2,04,00,1 98.20 FOR YOUR READY REFERENCE AND RECORDS AS THIS IS THE SUM WHICH APPEARS IN THE BALANCE SHEET. FURTHER THE SU M OF RS.2,04,00,198.20 IS IN THE FORM OF TRADE DEBITS AN D NOT LOANS, HENCE THE QUESTION OF DEEMED DIVIDEND DOES N OT ARISE. IN THIS CONNECTION, LD. AUTHORIZED REPRESENTATIVE D REW OUR ATTENTION TO PAGE NO.47 OF PAPER BOOK WHICH REFLECT S THE SAID AMOUNT IN ASSESSEES BOOKS ACCOUNT. IT WAS ALSO SU BMITTED THAT IN EARLIER YEAR SIMILAR AMOUNT WAS SHOWN IN BA LANCE SHEET AS ON 31.03.2006. LD. AUTHORIZED REPRESENTATIVE AL SO DREW OUR ATTENTION TO PAGE NO.63 WHICH IS SCHEDULE FOR D UES TO COMPANIES WHEREIN AMOUNT IN QUESTION WAS REFLECTED. ACCORDING TO LD. AUTHORIZED REPRESENTATIVE, THERE I S NO DISCUSSION BUT IT WAS ON THE RECORD OF ASSESSING OF FICER AND HE WITHOUT DISCUSSING THE SAME HAS TAKEN VIEW ON THE P OINT. IN THIS REGARD, OUR ATTENTION WAS ALSO DRAWN TO PAGE N O.179 WHICH IS LETTER FROM TRANS OCEAN SHIPPING AGENCY LTD. TO INCOME TAX OFFICER WHICH READS AS UNDER: WE CONFIRM THAT AN AMOUNT OF RS.96,02,367/42 IS RECEIVABLE BY US FROM TRANS IMPEX P. LTD. HOWEVER B EFORE 1997-98, THE SAME WAS ERRONEOUSLY WRITTEN OFF BY US . WE STATE THAT AS AND WHEN TRANS IMPEX P. LTD. PAYS US THE ITA NOS.3567 & 3568/MUM/12 A.YS. 07-08 & 09-10 [M/S. TRANS IMPEX PVT, LTD. VS. CIT] PAGE 8 SAME WE SHALL OFFER IT FOR THE TAXATION AND PAY TAX IF ANY IN THAT YEAR. TO SHOW THAT OTHER PARTIES HAVE ERRONEOUSLY LEFT BU T NOW ACKNOWLEDGING THE SAME TO BE RECEIVABLE. IN SUPPOR T OF LETTER AT PAGE 179, AFFIDAVIT OF MR. TUSHAD BEHRAM DUBASH WAS FILED WHICH IS PLACED AT PAGE NO.175 OF PAPER BOOK READS AS UNDER: I, MR. TUSHAD BEHRAM DUBASH, INDIAN INHABITANT, DIRECTOR OF M/S TRANSOCEAN SHIPPING AGENCY LIMITED HAVING ADDRESS AT DARABSHAW HOUSE, BALLARD ESTATE, MUMBAI 400001 DO HEREBY SOLEMNLY SWEAR AND STATE ON OATH AS UNDER: 1. I AM A DIRECTOR OF M/S TRANSOCEAN SHIPPING AGENC Y LIMITED. 2. AN AMOUNT OF RS.96,02,367/- WAS GIVEN TO M/S TRANS IMPEX PRIVATE LIMITED AS A LOAN IN LATE 1990 S. 3. TRANSOCEAN SHIPPING AGENCY LIMITED HAS SUBMITTED CONFIRMATION STATING THAT THE SAID AMOUNT IS RECOVE RABLE FROM TRANS IMPEX PRIVATE LIMITED FOR A.Y. 2009-10 A ND WILL BE OFFERED TO TAX IN THE YEAR IN WHICH THE AMO UNT WILL BE RECOVERED. 4. I SAY THAT THE AMOUNT OF RS.96,02,367/-, IS YET DUE AND RECOVERABLE FROM M/S. TRANS IMPEX PRIVATE LIMIT ED. 4.1 IN THIS BACKGROUND, LD. AUTHORIZED REPRESENTATI VE PLACED RELIANCE ON THE DECISION OF HONBLE GUJARAT HIGH CO URT IN CASE OF CIT VS. BHOGILAL RAMJIBHAI ATARA [2014] 43 TAXMA NN.COM 55 (GUJARAT), WHEREIN ON THE POINT REMISSION OR CESSAT ION OF TRADING LIABILITY, ASSESSEE HAD SHOWN A CERTAIN AMO UNT BY WAY OF HIS DEBTS. HE SUPPLIED DETAILS OF 27 DIFFERENT CREDITORS. ASSESSING OFFICER UNDERTOOK EXERCISE TO VERIFY RECO RDS OF SO ITA NOS.3567 & 3568/MUM/12 A.YS. 07-08 & 09-10 [M/S. TRANS IMPEX PVT, LTD. VS. CIT] PAGE 9 CALLED CREDITORS AND FOUND THAT CREDITORS HAD NOT D EALING WITH ASSESSEE. ASSESSING OFFICER FURTHER HAVING FOUND T HAT DEBTS WERE OUTSTANDING SINCE SEVERAL YEARS APPLIED SECTIO N 41(1) OF THE ACT AND ADDED INCOME AS ASSESSEES INCOME. THE RE WAS NOTHING ON RECORD TO SUGGEST THAT THERE WAS REMISSI ON OR CESSATION OF LIABILITY THAT TOO DURING PREVIOUS YEA R RELEVANT ASSESSMENT YEAR. IT WAS ALSO POINTED BY LD. AUTHOR IZED REPRESENTATIVE THAT HONBLE GUJARAT HIGH COURT IN C ASE OF PRINCIPAL CIT VS. MATRUPRASAD C. PANDEY [2015] 377 ITR 363 (GUJ), WHEREIN ON THE POINT OF REMISSION OF LIABILI TY, AMOUNTS WERE SHOWN FOR SEVERAL YEARS AS DUE TO SUNDRY CREDI TORS. AMOUNTS NOT WRITTEN OFF DURING RELEVANT PREVIOUS YE ARS. GENUINENESS OF CREDITS NOT DOUBTED. AMOUNT WAS NOT ASSESSABLE U/S.41OF THE ACT. IN THESE CIRCUMSTANCE S, THE AMOUNT IN QUESTION SHOULD NOT BE ADDED BACK TO THE INCOME OF ASSESSEE AS DEEMED INCOME U/S.41(1) OF THE ACT WAS NOT DEDUCTIBLE IN THE YEAR UNDER CONSIDERATION BY CREDI TOR. 5.1 ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTAT IVE SUPPORTED THE ORDER OF CIT AND STRONGLY SUBMITTED T HAT ASSESSMENT ORDER DATED 15.12.2009 IS ERRONEOUS AS N OT MADE ANY SCRUTINY OR CROSS VERIFICATION BEFORE COMPLETIN G THE ASSESSMENT AND THEREFORE NOT MADE THE DESIRED ADDIT IONS U/S.41(1) OF THE ACT. SINCE, THE AMOUNT INVOLVED I S RS.96,02,367/-, OBVIOUSLY INACTION BY ASSESSING OFF ICER IS PREJUDICIAL TO THE INTEREST OF REVENUE. THEREFORE, CIT RIGHTLY SET ASIDE THE ORDER IN QUESTION. LD. DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON FOLLOWING DECISIO NS: ITA NOS.3567 & 3568/MUM/12 A.YS. 07-08 & 09-10 [M/S. TRANS IMPEX PVT, LTD. VS. CIT] PAGE 10 I. ARVEE INTERNATIONAL VS. ADDL.CIT [2006] 101 ITD 495 (MUMBAI) II. HORIZON INVESTMENT CO. LTD. VS. CIT IN ITA NO.1593/MUM/2013 FOR A.Y.2008-09 ETC. 6. AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATERI AL ON RECORD, WE FIND THAT ISSUE BEFORE US WITH REGARD TO INVOKING PROVISIONS OF SECTION 263 OF THE ACT ON ACCOUNT OF NO ACTION BY ASSESSING OFFICER ON THE POINT OF REMISSION OF LIAB ILITY TO PAY RS.96,02,367/- TO M/S.TOSAPL WHO HAS NOT SHOWN THE SAME IN ITS BOOKS OF ACCOUNT. ASSESSING OFFICER SHOULD HAVE LOOKED INTO IT AT THE TIME OF ASSESSMENT AND ACTION WOULD HAVE BEEN TAKEN FOR REMISSION OF LIABILITY ON THIS ACCOUNT. ACCORDING TO LD. AUTHORIZED REPRESENTATIVE, ALL ENQUIRIES WERE M ADE BY ASSESSING OFFICER AT RELEVANT POINT OF TIME AS HE H AS CALLED FOR ALL DETAILS OF LIABILITY AT ASSESSMENT STAGE AND SA ME WAS FURNISHED ON BEHALF OF ASSESSEE AS DISCUSSED ABOVE. MOREOVER, M/S. TOSAPL HAS CONVEYED CLARIFICATION IN THIS REGA RD THAT ASSESSEE IS LIABLE TO PAY THIS AMOUNT AND INADVERTE NT MISTAKE DONE BY THEM HAS BEEN RECTIFIED ON THIS POINT IN TH EIR ACCOUNTS. IN THIS SITUATION, IT CANNOT BE SAID THA T ASSESSEE HAS NOT MADE ANY ENQUIRY ON THE POINT. IT MAY BE THE C ASE OF INADEQUATE ENQUIRY BUT IT IS NOT THE CASE OF NO ENQ UIRY IN THIS REGARD. IN SUCH A SITUATION, ACTION U/S. 263 OF TH E ACT IS NOT JUSTIFIED. 6.1 MOREOVER, MR. TUSHAD BEHRAM DUBASH AS DIRECTOR OF M/S. TOSAPL HAS DEPOSED ON OATH THAT THE SAID AMOUN T IS STILL RECEIVABLE FROM ASSESSEE. CONTENTS OF AFFIDAVIT SH OULD NORMALLY ITA NOS.3567 & 3568/MUM/12 A.YS. 07-08 & 09-10 [M/S. TRANS IMPEX PVT, LTD. VS. CIT] PAGE 11 NOT BE REJECTED WITHOUT CONFRONTING CONTENTS OF SAM E TO THE ASSESSEE. 6.2 WE ALSO FIND THAT ASSESSEE HAS BEEN SHOWING THI S AMOUNT AS LIABILITY TO M/S. TOSAPL FOR SEVERAL YEAR WHICH WAS NOT DOUBTED IN EARLIER YEAR. NO CAUSE OF ACTION AROSE I N THIS YEAR FOR INVOKING PROVISIONS OF SECTION 263 OF THE ACT. SO, ACTION U/S.263 OF THE ACT ON THIS ACCOUNT IS NOT JUSTIFIED AS HELD IN BHOGILAL RAMJIBHAI ATARA (SUPRA) I.E. IN ABSENCE OF ANY CAUSE OF ACTION IN THE YEAR UNDER CONSIDERATION, SO, ACTION UNDER PROVISIONS OF SECTION 263 OF THE ACT IS NOT JUSTIFI ED. 6.3 RELIANCE WAS PLACED BY LD. DEPARTMENTAL REPRESE NTATIVE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN SOL ID CONTAINERS LTD. VS. DEPUTY CIT (2009) 308 ITR 417 ( BOM.) DOES NOT APPLY TO CASE BEFORE US BECAUSE IN SOLID CONTAI NERS LTD. (SUPRA), THERE WAS IN FACT REMISSION OF LIABILITY W HICH EVIDENT FROM FACT THAT BY CONSENT BETWEEN PARTIES LIABILITY CAME TO AN END. WHILE IN CASE BEFORE US IS LIABILITY STILL EXI ST AND NO CAUSE OF ACTION AROSE IN THE YEAR UNDER CONSIDERATION FOR INVOKING PROVISIONS OF SECTION 263 OF THE ACT ON ACCOUNT OF REMISSION OF LIABILITY. REGARDING RELIANCE OF LD. DEPARTMENTAL REPRESENTATIVE ON DECISION OF HONBLE DELHI HIGH COURT IN CASE OF ROLLATAINERS LTD. VS. CIT [2011] 15 TAXMANN.COM 111 (DELHI), WHE REIN PARTIAL WAIVER BY BANKER IN BIFR ACTION WAS ON RECO RD TO ESTABLISH REMISSION OF LIABILITY SO INVOKING ACTION U/S.41(1) WAS JUSTIFIED TO THAT EXTENT BUT IN CASE BEFORE THERE I S NOTHING ON ITA NOS.3567 & 3568/MUM/12 A.YS. 07-08 & 09-10 [M/S. TRANS IMPEX PVT, LTD. VS. CIT] PAGE 12 RECORD TO SUGGEST THERE WAS PARTIAL OR COMPLETE REM ISSION OF LIABILITY IN THE YEAR UNDER CONSIDERATION. 6.4 IN ANY MANNER, INVOKING PROVISIONS OF SECTION 2 63 OF THE ACT ON ACCOUNT OF ALLEGED REMISSION OF LIABILITY IS NOT JUSTIFIED. SO, THE ORDER OF CIT IS SET ASIDE. 7. AS A RESULT, APPEAL OF ASSESSEE IS ALLOWED. 8. IN ITA NO.3568/MUM/2012 FOR A.Y.2009-10, ASSESSE E HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS: THIS APPEAL IS AGAINST THE ORDER DATED 27/03/2012 UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTE R REFERRED TO AS THE ACT) PASSED BY THE COMMISSIONER OF INCO ME TAX 2, MUMBAI (HEREINAFTER REFERRED TO AS THE CIT). THE UNDER MENTIONED GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO ONE ANOTHER: 1. THE CIT ERRED IN WRONGLY ASSUMING JURISDICTION A ND IN FRAMING ORDER DATED 27/03/2012 UNDER SECTION 263 OF THE ACT. 8.1 WE FIND THAT CIT HAS INVOKED ACTION U/S.263 OF THE ACT BY OBSERVING AS UNDER: 15. HENCE IN MY VIEW, IT WOULD BE INCORRECT TO SAY THAT ASSESSING OFFICER HAD FORMED A CERTAIN VIEW AS DIST INCT FROM WHAT HAD BEEN STATED IN THE NOTICE U/S.263 AND EVEN IF THE SAID VIEW WAS FORMED, THE SAID VIEW WAS NOT AN INFO RMED VIEW BECAUSE, HE HARDLY MADE ANY ENQUIRIES TO SUPPO RT AND VINDICATE HIS VIEW. IT IS NOW AN ESTABLISHED JUDIC IAL OPINION THAT LACK OF ENQUIRIES LEADS TO AN ERRONEOUS ORDER. THE ORDER IN THE PRESENT CASE IS NOT OF INADEQUATE ENQU IRIES, BUT INSTEAD, OF SHEER LACK OF ENQUIRIES AND SCRUTINY. 16. REFERENCE HAS ALSO BEEN MADE TO THE FACT THAT A N APPEAL HAVING BEEN FILED BEFORE CIT(A) RENDERS THE ITA NOS.3567 & 3568/MUM/12 A.YS. 07-08 & 09-10 [M/S. TRANS IMPEX PVT, LTD. VS. CIT] PAGE 13 PROCEEDINGS U/S.263 NULL AND VOID. THIS IS COMPLET ELY FALLACIOUS ARGUMENT/BELIEF ON THE PART OF THE ASSES SEE. MERGER OF THE ORDER TAKES PLACE ONLY WHEN AN APPELL ATE ORDER IS PASSED. THAT IS THE MEANING OF THE EXPRES SION HAD BEEN THE SUBJECT MATTER OF ANY APPEAL IN EXPLANATI ON (C) TO SECTION 263(1). HENCE THAT ASPECT CANNOT BE A BAR FOR INVOKING JURISDICTION U/S.263. 17. ON THE REVERSE, AN INTERESTING FACT IS THAT THO UGH THE ASSESSEE IS CHALLENGING THE PROCEEDINGS U/S. 263 AR GUING THAT THE ORDER IS NOT ERRONEOUS, YET IT IS A MATTER OF RECORD THAT THE ORDER HAS NOT BEEN ACCEPTED BY IT AND APPE AL HAS BEEN FILED BEFORE CIT(A) ON THE SAME ISSUE. I THINK THIS SIMPLE FACT DEMOLISHES ALL THE ARGUMENTS ON BEHALF OF THE ASSESSEE CHALLENGING THE PROCEEDINGS. 18. THEREFORE, CONSIDERING ALL THE FACTS AND CIRCUM STANCES, THE ASSESSMENT ORDER DATED 30.12.2011 IS HELD AS ER RONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF R EVENUE. THEREFORE, THERE IS A CLEAR CASE OF REVISION U/S. 2 63 CF THE ASSESSMENT FRAMED. 19. MEANWHILE, VIDE ORDER OF EVEN DATE, THE ASSESSM ENT ORDER FOR A.Y. 200708 HAS BEEN SET ASIDE TO BE REFR AMED AFTER MAKING DETAILED ENQUIRIES, AS REFERRED TO IN THAT ORDER AND ALLUDED TO HERE ALSO. 20. IN ORDER TO AVOID UNNECESSARY LITIGATION AND EX PENSE OF TIME, THE PRESENT ASSESSMENT ORDER FOR AY. 2009-10 IS SET ASIDE TO THE FOLLOWING LIMITED EXTENT :- (I) TO MAKE ENQUIRIES AND INCORPORATE THE FINDING O F ENQUIRIES AS SUGGESTED IN THE BODY OF THE PRESENT O RDER IN COMING TO THE CONCLUSION FOR APPLICATION OF SECT ION 41(1). (II) TO TREAT THE ADDITION MADE U/S. 41(1) ON PROTECTIVE BASIS BUT ONLY AFTER HAVING MADE THE ADDITION IN A.Y. 2007-08, ON SIMILAR GROUND ON SUBSTANTIVE BASIS. NEEDLESS TO ADD, THE ASSESSEE SHALL BE GIVEN DUE OPPORTUNITIES BEFORE DRAWING ANY ADVERSE CONCLUSION . ITA NOS.3567 & 3568/MUM/12 A.YS. 07-08 & 09-10 [M/S. TRANS IMPEX PVT, LTD. VS. CIT] PAGE 14 8.2 IN THE BACKGROUND OF SET ASIDE OF ORDER OF ASSE SSING OFFICER IN A.Y. 2007-08 U/S.263 OF THE ACT ACTION W AS TAKEN U/S.263 OF THE ACT IN THE YEAR UNDER CONSIDERATION. PRACTICALLY CIT HAS INVOKED ACTION U/S.263 OF THE ACT TO AVOID UNNECESSARY LITIGATION AND EXPENSE OF TIME WITH DIR ECTION AS DISCUSSED ABOVE. WE HAVE DISCUSSED AND DECIDED ISS UE OF ACTION U/S.263 OF THE ACT IN A.Y. 2007-08 WHEREBY W E HAVE QUASHED THE ORDER OF CIT U/S.263 OF THE ACT. IN SA ID BACKGROUND, ANY ACTION U/S.263 OF THE ACT IS NOT JU STIFIED IN THE YEAR UNDER CONSIDERATION AS WELL. MOREOVER, OV ER THIS AVOIDANCE OF ALLEGED UNNECESSARY LITIGATION AND EXP ENSES OF TIME IS NOT JUSTIFIED TO INVOKE THE PROVISIONS OF S ECTION 263 OF THE ACT. SAME IS SET ASIDE IN A.Y. 2009-10 AS WELL . 9. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 20 TH DAY OF JULY, 2016. SD/- SD/- ( RAJESH KUMAR ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R MUMBAI: DATED 20/07/2016 S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ()*+ ,--. . / DR, ITAT, MUMBAI 0+1234 / GUARD FILE. ITA NOS.3567 & 3568/MUM/12 A.YS. 07-08 & 09-10 [M/S. TRANS IMPEX PVT, LTD. VS. CIT] PAGE 15 BY ORDER / . / . .