M/s. Wintop Vitrified Pvt. Ltd., Morbi V. The Pr. CIT-3, Rajkot

ITA 398/RJT/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2412 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 23-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M.J. RANPURA
• Keywords: Revision of order; Opportunity of being heard; Assessment record
• Section: 68; 263; 143(3); 142(1); 201; 80HH; 143(2); 2(A); 13; 20

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER S L. NO(S) ITA NO(S) ASSESSMENT YEAR(S) APPEAL(S) BY APPELLANT VS. RESPONDENT APPELLANT RESPONDENT 1. 393/RJT/2018 201 5 - 1 6 M/S.WINSUN CERAMIC PVT.LTD. SR.NO.661/P3, AT. RANPAR, JETPAR ROAD MORBI 363 642 PAN:AABCW5044N THE PR.CIT - 3 , RAJKOT 2. 394/RJT/2018 20 15 - 1 6 M/S.REX CERAMIC PVT.LTD. R.S.NO.407/1, AT RANGPAR MORBI-363642 PAN:AAGCR8306M - DO - 3. 395/RJT/2018 2015 - 1 6 M/S.WINMAX CERAMIC PVT.LTD. SR.NO.176P1 & P2, AT.DHUVA WANKANER DIST. MORBI 363 622 PAN:AABCW4056A - DO - 4. 397/RJT/2018 2015 - 16 M/S.ORFINA CERAMIC PVT.LTD. SR.NO.296P1, 296P2, 296P3, VILLAGE RANGPAR DIST.MORBI PAN: AABCO9786B - DO - 5. 398/RJT/2018 2015 - 16 M/S.WINTOP VITRIFIED PVT.LTD. S.R.NO.104, OPP.INTEL CERAMIC 9-A NATIONAL HIGHWAY AT.JAMBUDIA MORBI 363 642 PAN:AABCW0513E - DO - ASSESSEE BY : SHRI M.J. RANPURA, AR REVENUE BY : SHRI JITENDRA KUMAR, CIT-DR / DATE OF HEARING 19/11/2019 / DATE OF PRONOUNCEMENT 28/11/2019 ITA NOS.393,394,395, 397 & 398/RJT/2018 WINSUM CERAMIC PVT.LTD. AND 4 OTHERS VS PR.CIT ASST.YEAR 2015-16 - 2 - O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THIS BUNCH OF FIVE APPEALS BY THE DIFFERENT ASSESSE ES ARE DIRECTED AGAINST THE SEPARATE ORDERS PASSED BY THE PRINCIPAL COMMISSIONE R OF INCOME TAX-3, RAJKOT (PR.CIT IN SHORT) FOR ASSESSMENT YEAR 2015-16 UND ER SECTION 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) ALL DATED 17/09/2018. SINCE COMMON ISSUES (EXCEPT QUANTUM) AND FACTS ARE INVOLV ED IN THESE APPEALS, THESE ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ALL THESE APPEALS, THE FACTS AND QUESTION FOR DETERMINATION ARE BROADLY SIMILAR. THEREFORE, FIRST WE TAKE UP ASSESSEES AP PEAL IN ITA NO. 393/RJT/2018 FOR AY 2015-16 (IN THE CASE OF M/S WINSUN CERAMIC P VT.LTD.) AS A LEAD CASE, WHEREIN ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL: 1.0 THE GROUNDS OF APPEAL MENTIONED HEREUNDER ARE WITHOUT PREJUDICE TO ONE ANOTHER. 2.0 THE ORDER U/S263 OF THE INCOME-TAX ACT, 1961 [ HEREINAFTER REFERRED TO AS THE ACT] PASSED BY THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX -3, RAJKOT (HEREINAFTER REFERRED TO AS THE PR CIT) IS WITHOUT JURISDICTION AND BAD IN LAW AS ALSO ON FACTS AND DESERVES TO BE QUASHED AND MAY KINDLY BE QUASHED. 3.0 THE LEARNED PR CIT ERRED ON FACTS AS ALSO IN L AW IN ALLEGING THAT THE ORDER U/S.143(3) OF THE ACT IS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO T HE INTEREST OF REVENUE AS THE ASSESSING OFFICER (AO) HAS NOT MADE INQUIRY AND VERIFICATION IN RESPE CT OF (I) GENUINENESS AND CREDITWORTHINESS OF UNSECURED LOANS BORROWED OF 1,93,49,073/- AND THEREBY SETTING ASIDE THE ASSESSM ENT ORDER PASSED U/S.143(3) OF THE ACT DATED 26.12.2017. THE ORDER PASSED BY THE LEARNED CIT IS TOTALLY UNJUSTIFIED ON FACTS AS ALSO IN LAW THEREFORE THE S AME MAY KINDLY BE QUASHED. 4.0 THE LEARNED PR CIT FURTHER ERRED ON FACTS IN N OT PROPERLY CONSIDERING THE FACTS ON RECORD AND APPELLANTS SUBMISSION THAT ALL THE DETAILS WERE FU RNISHED IN THE FORM OF CONFIRMATION, RETURN OF INCOME, BANK STATEMENT ETC. DURING ORIGINAL ASSESSM ENT PROCEEDINGS AND WERE VERIFIED BY THE AO AND THE ORDER UNDER CONSIDERATION WAS PASSED AFTER DUE INQUIRY, VERIFICATION OF FACTS ON RECORD ITA NOS.393,394,395, 397 & 398/RJT/2018 WINSUM CERAMIC PVT.LTD. AND 4 OTHERS VS PR.CIT ASST.YEAR 2015-16 - 3 - AND DUE APPLICATION OF MIND. THUS, THE ORDER PASSE D U/S.263 OF THE ACT IS TOTALLY UNJUSTIFIED ON FACTS AS ALSO IN LAW AND MAY KINDLY BE QUASHED. 5.0 YOUR HONOURS APPELLANT CRAVES LEAVE TO ADD, AM END, ALTER OR WITHDRAW ANY OR MORE GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF APPEAL. 3. THE ONLY ISSUE RAISED BY THE ASSESSEE IS THAT TH E LD. PR.CIT ERRED IN HOLDING THAT THE ORDER FRAMED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF RE VENUE UNDER SECTION 263 OF THE ACT. 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF MANUFACTURING OF CERAMIC TILES. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION FILED THE RETURN OF INCOME DECLARING TOTAL LOSS AT RS. 1,46,47,401.00. SUBSEQUENTLY, THE CASE OF THE ASSES SEE WAS SCRUTINIZED UNDER SECTION 143(3) OF THE ACT. THE AO COMPLETED THE ASS ESSMENT U/S 143(3) OF THE ACT, AT A TOTAL LOSS OF RS.1,38,47,401.00 VIDE ORDER DAT ED 26-12-2017 AFTER MAKING AN ADDITION OF RS. 8,00,000.00 ON ACCOUNT OF UNEXPLAIN ED CASH CREDIT UNDER SECTION 68 OF THE ACT. 4.1. HOWEVER, THE LD. PR.CIT NOTICED CERTAIN DEFE CTS IN THE ASSESSMENT FRAMED BY THE AO U/S 143(3) OF THE ACT BY OBSERVING THAT THE ASSESSEE HAS SQUARED UP LOANS/ DEPOSITS DURING THE YEAR FOR RS. 1,93,49,073.00. FU RTHER, THERE WERE THE CASH/CHEQUE DEPOSITS IN THE BANK ACCOUNT OF THE PAR TIES WHO PROVIDED LOANS TO THE ASSESSEE. AS PER THE LD. PR.CIT, THE FACTS OF DEPOS ITING THE CASH/ CHEQUE IN THE BANK ACCOUNTS OF PARTIES WHO ADVANCED LOAN TO THE ASSESS EE, WHICH WERE ALSO SQUARED UP IN THE YEAR, WERE NOT VERIFIED BY THE AO DURING THE ASSESSMENT PROCEEDINGS. THUS THE LD. PR.CIT ACCORDINGLY ISSUED NOTICE U/S 263 OF THE ACT. ITA NOS.393,394,395, 397 & 398/RJT/2018 WINSUM CERAMIC PVT.LTD. AND 4 OTHERS VS PR.CIT ASST.YEAR 2015-16 - 4 - 4.2. THE ASSESSEE IN REPLY TO THE NOTICE SUBMITS THAT ORDER OF THE AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENU E. AS SUCH, ALL THE DETAILS OF THE LOAN RECEIVED BY THE ASSESSEE WERE FILED I.E. IDENT ITY OF THE PARTIES/LENDERS, INCOME TAX RETURNS, CONFIRMATIONS, BANK STATEMENTS ETC. TO PROVE THE GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE LENDERS. A CCORDINGLY THE AO AFTER CONSIDERING ALL THE DOCUMENTS DURING THE ASSESSMENT PROCEEDINGS DID NOT MAKE ANY ADDITION OF THE LOAN SQUARED UP DURING THE YEAR EXC EPT FOR A LOAN OF RS. 8 LAKHS ONLY. 4.3. THE ASSESSEE ALSO CLAIMED THAT THERE IS NO SPECIFIC REFERENCE MADE BY THE LD. PR.CIT FOR THE LOANS SQUARED UP DURING THE YEAR AND WHICH WAS NOT VERIFIED BY THE AO DURING THE ASSESSMENT PROCEEDINGS. AS SUCH, THE LEARNED PCIT HAS NOT POINTED OUT ANY SPECIFIC DEFECT WITH REGARD TO THE LOAN SQU ARED UP IN THE YEAR UNDER CONSIDERATION. 4.4. HOWEVER, THE LD. PR.CIT DISREGARDED THE CO NTENTION OF THE ASSESSEE BY OBSERVING THAT THE AO IN ASSESSMENT FARMED UNDER SE CTION 143(3) OF THE ACT HAD NOT VERIFIED THE BANK STATEMENT OF THE PARTIES WHO PROVIDED LOAN TO THE ASSESSEE. AS SUCH, ON PERUSAL OF THE BANK STATEMENT OF THE PARTI ES, IT IS REVEALED THAT THERE WAS THE IMMEDIATE DEPOSIT OF CASH/ CHEQUES IN THE BANK ACCOUNT OF THE PARTIES. 4.5. THE LEARNED PR.CIT ALSO OBSERVED THAT THERE WAS THE SPECIFIC ALLEGATION ABOUT THE PARTIES WHERE THE CASH/CHEQUES WERE DEPOSITED I MMEDIATELY BEFORE THE TRANSFER OF THE LOAN TO THE ASSESSEE. ITA NOS.393,394,395, 397 & 398/RJT/2018 WINSUM CERAMIC PVT.LTD. AND 4 OTHERS VS PR.CIT ASST.YEAR 2015-16 - 5 - 4.6. IN VIEW OF THE ABOVE, THE LEARNED HELD THA T THE ORDER PASSED BY THE AO UNDER SECTION 143 (3) OF THE ACT IS ERRONEOUS INSOFAR PRE JUDICIAL TO THE INTEREST OF REVENUE AS PER THE EXPLANATION 2 TO SECTION 263 OF THE ACT. THE RELEVANT FINDING OF THE LEARNED PR.CIT STANDS AS UNDER: 10.2. THUS, IT IS EVIDENT THAT, THE UNSECURED LO ANS HAVE NOT BEEN PROPERLY EXAMINED BY THE AO. AFTER OBTAINING DETAILS ABOUT THE LOANS, S UCH AS THEIR RETURN OF INCOME, INVESTMENT THROUGH BANKING CHANNEL ETC., THE AO KE PT SUCH REPLIES ON RECORD WITHOUT CONSIDERING IT APPROPRIATE TO PERSONALLY EXAMINE TH E DEPOSITORS OR FINDING OUT THE SOURCE OF INVESTMENT BY DEPOSITORS AS PER THE PROVISIONS O F SECTION 68 OF THE ACT. THE ASSESSING OFFICER WAS REQUIRED TO MAKE PROPER INVESTIGATION T O DETERMINE WHETHER THE LOANS WERE REALLY MADE BY THE THIRD PARTY OR IT HAS COME OUT O F THE RESOURCES OF THE ASSESSEE ITSELF. THE AO OUGHT TO HAVE CONDUCTED THOROUGH ENQUIRY TO REACH THE SOURCE OR THE REAL INVESTOR. THE ASSESSING OFFICER IS DUTY-BOUND TO I NVESTIGATE THE CREDITWORTHINESS OF THE DEPOSITORS AND THE GENUINENESS OF THE TRANSACTION. 11. CONSIDERING THE TOTALITY OF THE FACTS AND THE CIRCUMSTANCES AS NARRATED ABOVE, THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER IS TREAT ED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE TO THAT EXTENT. THEREFORE, I F IND THAT IT IS FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF ASSESSING OFFICER FOR NECESSA RY INQUIRIES. 12. THE A.O. IS DIRECTED TO CARRY OUT THOROUGH AND DETAILED ENQUIRIES IN THE CASE. HE SHOULD CARRY OUT INQUIRIES ABOUT THE VARIOUS LAYERS THROUGH WHICH THE LOAN MONEY HAS BEEN ROTATED AND LANDED AS LOANS TO THE ASSESSEE-CO MPANY. THE A.O. IS ALSO DIRECTED TO SUMMON THE UNSECURED LOAN PROVIDERS AND EXAMINE THE M. THE SOURCE OF THE MONEY IN THEIR HANDS EITHER THROUGH CASH OR THROUGH CHEQUE N EEDS TO BE EXAMINED PROPERLY AND THOROUGHLY. SUBSEQUENT TO THE INQUIRES & VERIFICAT ION OF ALL RELEVANT ASPECTS OF THE CASE, THE A.O. SHOULD PASS A SPEAKING ORDER. 13. WHILE GIVING EFFECT TO THESE DIRECTIONS, THE A SSESSING OFFICER SHALL GIVE DUE AND FAIR OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND DECI DE THE MATTER IN ACCORDANCE WITH THE LAW BY WAY OF PASSING ASSESSMENT ORDER. BEING AGGRIEVED BY THE ORDER OF THE LD. PR.CIT, THE ASSESSEE IS IN APPEAL BEFORE US. ITA NOS.393,394,395, 397 & 398/RJT/2018 WINSUM CERAMIC PVT.LTD. AND 4 OTHERS VS PR.CIT ASST.YEAR 2015-16 - 6 - 5. THE LD. AR BEFORE US FILED A PAPER BOOK RUNNI NG FROM PAGES 1 TO 387 AND SUBMITTED THAT THE CASE WAS SELECTED UNDER SCRUTINY UNDER COMPUTER ASSISTED SCRUTINY SELECTION (CASS). ONE OF THE REASONS FOR S UCH SELECTION OF LIMITED SCRUTINY I.E. CASS WAS ON ACCOUNT OF LOANS SQUARED UP DURING THE YEAR. THE LEARNED AR IN SUPPORT OF HIS CONTENTION DREW OUR AT TENTION ON PAGE 17 OF THE PAPER BOOK WHERE THE COPY OF THE NOTICE ISSUED UNDER SECT ION 143(2) OF THE ACT FOR THE SELECTION OF LIMITED SCRUTINY WAS PLACED. ACCORDING LY, THE AO DURING THE YEAR ASSESSMENT PROCEEDINGS MADE DETAILED INVESTIGATIONS ABOUT THE LOANS SQUARED UP DURING THE YEAR AND THEREAFTER FRAMED THE ASSESSMEN T UNDER SECTION 143(3) OF THE ACT. THE LEARNED AR IN SUPPORT OF HIS CONTENTION DR EW OUR ATTENTION ON THE NOTICE ISSUED UNDER SECTION 142(1) OF THE ACT AND THE COPY OF THE REPLY IN RESPONSE TO SUCH NOTICE DATED 7 TH JULY 2017 PLACED ON PAGES 18 TO 386 OF THE PAPER B OOK. 5.1. THE LEARNED AR FURTHER SUBMITTED THAT THE A O DURING THE ASSESSMENT PROCEEDINGS HAS ALSO ISSUED NOTICE UNDER SECTION 13 3(6) OF THE ACT TO MOST OF THE LENDERS FOR THE PURPOSE OF THE VERIFICATION. THE LE ARNED AR ALSO PLACED RELIANCE ON THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS. KAMAL GALANI REPORTED IN 95 TAXMANN.COM 261. 5.2. THE LD. AR IN VIEW OF THE ABOVE SUBMITTED THAT THE ORDER PASSED BY THE AO CANNOT BE HELD ERRONEOUS INSOFAR PREJUDICIAL TO THE INTEREST OF REVENUE ON ACCOUNT OF NON-VERIFICATION OF THE FACTS STATED ABOVE. 6. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THERE IS NO PREJUDICE TO THE ASSESSEE OUT OF THE DIRECTION ISSUED BY THE LEARNED PCIT UNDER SECTION 263 OF THE ITA NOS.393,394,395, 397 & 398/RJT/2018 WINSUM CERAMIC PVT.LTD. AND 4 OTHERS VS PR.CIT ASST.YEAR 2015-16 - 7 - ACT. AS SUCH THE LEARNED PCIT DIRECTED THE AO TO CO NDUCT THE ENQUIRIES TO SATISFY THE CONDITIONS SPECIFIED UNDER SECTION 68 OF THE AC T I.E. IDENTITY, GENUINENESS AND CREDITWORTHINESS. AS SUCH, WHERE THERE IS A FACTUAL MISTAKE IN THE ORDER OF THE AO, THE LEARNED PCIT IS EMPOWERED TO DIRECT THE AO TO C ONDUCT THE NECESSARY ENQUIRIES. THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE LD. PCIT PASSED UNDER SECTION 263 OF THE ACT. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH T HE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE LD. PR.CIT HAS HELD THAT THE ORDER OF THE AO AS ERRONEOUS INSOFAR PREJUDICIAL TO THE INTEREST OF REVENUE ON ACCOUNT OF NON-VERIFICATION OF THE LOAN SQUARED UP IN THE YEAR UNDER CONSIDERATION. 7.1. HOWEVER, WE NOTE THAT THE AO DURING THE ASSE SSMENT PROCEEDINGS HAS REQUIRED THE ASSESSEE TO FURNISH THE DETAILS OF THE EXPENSES CLAIMED AGAINST THE IMPUGNED INTEREST INCOME IN THE NOTICE ISSUED UNDER SECTION 142(1) OF THE ACT. THE RELEVANT EXTRACT OF THE NOTICE ISSUED UNDER SECTION 142(1) OF THE ACT IS REPRODUCED AS UNDER: IN CONNECTION WITH THE ASSESSMENT FOR THE A.Y. 201 5-16, YOU HAVE MADE RETURN U/S.139 OF THE IT ACT. A NOTICE U/S.143(2) WAS SERVED ON YOU. THIS IS A LIMITED SCRUTINY CASE AND THE REASONS FOR SELECTI ON ARE AS UNDER: A) LARGE SQUARE UP LOANS DURING THE YEAR (FORM 3CD). . 6. PLEASE JUSTIFY THE REASON FOR LARGE SQUARED UP LOANS DURING THE YEAR (FORM 3CD) WITH DOCUMENTARY EVIDENCE. ITA NOS.393,394,395, 397 & 398/RJT/2018 WINSUM CERAMIC PVT.LTD. AND 4 OTHERS VS PR.CIT ASST.YEAR 2015-16 - 8 - 7.2. WE ALSO FIND THAT THE ASSESSEE IN RESPONSE TO THE ABOVE NOTICE HAS MADE THE SUBMISSIONS AS DETAILED UNDER: LETTER OF AUTHORITY ENCLOSED 3 . PLEASE JUSTIFY THE REASON FOR LARGE SQUARED UP LOANS DURING THE YEAR (FORM) DETAILS OF UNSECURED LOANS AVAILED AND REPAID (SQUARED UP) DURING THE YEAR AS PER CLAUSE 31(A) OF TAX AUDIT REPORT ALONG WITH DOCUMENTARY EVIDENCES IS ENCLOSED AS PER ANNEXURE-1 7.3. ON PERUSAL OF THE REPLY OF THE ASSESSEE, WE NOTE THAT THE ASSESSEE HAS FURNISHED THE DETAILS OF THE PARTIES (NAME & ADDRES S), PAN, ITRS, CONFIRMATION, BANK STATEMENTS FROM WHOM IT HAS TAKEN THE LOAN WHI CH WAS ALSO SQUARED UP DURING THE YEAR. 7.4. IN VIEW OF THE ABOVE, WE HOLD THAT THE ASSE SSMENT ORDER WAS FRAMED UNDER SECTION 143(3) OF THE ACT AFTER DUE VERIFICATION BY THE AO. ACCORDINGLY, WE ARE OF THE VIEW THAT THE ORDER OF THE AO CANNOT BE HELD AS ERRONEOUS INSOFAR PREJUDICIAL TO THE INTEREST OF REVENUE ON ACCOUNT OF NON-VERIFICAT ION OF THE FACTS AS STATED ABOVE. 7.5. IN HOLDING SO, WE DRAW SUPPORT AND GUIDANCE FROM THE JUDGMENTS OF THE HONBLE COURTS AS DETAILED UNDER: 7.6. HONBLE SUPREME COURT IN THE CASE OF MALABA R INDUSTRIAL CO LTD VS. CIT REPORTED IN 109 TAXMAN 66 WHEREIN IT WAS HELD AS UN DER: IN THE INSTANT CASE, THE COMMISSIONER NOTED THAT T HE ITO PASSED THE ORDER OF NIL ASSESSMENT WITHOUT APPLICATION OF MIND. INDEED, THE HIGH COURT RECORDED THE FINDING THAT THE ITO FAILED TO APPLY HIS MIND TO TH E CASE IN ALL PERSPECTIVE AND THE ORDER PASSED BY HIM WAS ERRONEOUS. IT APPEARED THAT THE RESOLUTION PASSED BY THE BOARD OF THE APPELLANT-COMPANY WAS NOT PLACED BEFOR E THE ASSESSING OFFICER. ITA NOS.393,394,395, 397 & 398/RJT/2018 WINSUM CERAMIC PVT.LTD. AND 4 OTHERS VS PR.CIT ASST.YEAR 2015-16 - 9 - THUS, THERE WAS NO MATERIAL TO SUPPORT THE CLAIM OF THE APPELLANT THAT THE SAID AMOUNT REPRESENTED COMPENSATION FOR LOSS OF AGRICUL TURAL INCOME. HE ACCEPTED THE ENTRY IN THE STATEMENT OF THE ACCOUNT FILED BY THE APPELLANT IN THE ABSENCE OF ANY SUPPORTING MATERIAL AND WITHOUT MAKING ANY INQU IRY. ON THESE FACTS THE CONCLUSION THAT THE ORDER OF THE ITO WAS ERRONEOUS WAS IRRESISTIBLE. THEREFORE, THE HIGH COURT HAD RIGHTLY HELD THAT THE EXERCISE O F THE JURISDICTION BY THE COMMISSIONER UNDER SECTION 263(1) WAS JUSTIFIED. 7.7. HONBLE GUJARAT HIGH COURT IN THE CASE OF C IT VS. KAMAL GALANI REPORTED IN 95 TAXMANN.COM 261 WHEREIN IT WAS HELD AS UNDER: 21. THE ASSESSING OFFICER HAVING CARRIED OUT SUCH DETA ILED INQUIRIES, IT WAS NOT OPEN FOR THE COMMISSIONER TO THEREAFTER REOPEN THE ISSUES ON MERE APPREHENSION AND SURMISES. HIS TWO FUNDAMENTAL OBJECTIONS WERE THAT THE ASSESS ING OFFICER DID NOT VERIFY WHETHER THE REMITTANCES WERE FROM THE OWN INCOME OR SOURCES OF THE ASSESSEE AND HIS BROTHER OR WERE MERELY BY WAY OF HAWALA TRANSACTIONS. IN THE PROCES S, HE WAS ALSO CRITICAL OF THE ASSESSING OFFICER NOT INSISTING ON COLLECTING THE D ETAILS OF THE ACCOUNTS FROM WHICH THE FOREIGN REMITTANCES WERE MADE TO THE INDIAN ACCOUNT OF THE SAID TWO PERSONS. WITHOUT ANY MATERIAL WITHOUT ANY BASIS, THE CIT COULD NOT H AVE REMANDED THE PROCEEDINGS TO THE ASSESSING OFFICER TO CARRY OUT FURTHER INQUIRIES IN ORDER TO ASCERTAIN WHETHER THE REMITTANCES WERE GENUINE OR WERE IN THE NATURE OF H AWALA TRANSACTIONS. IN THE ENTIRE ORDER OF THE COMMISSIONER, WE DO NOT FIND ANY BASIS FOR HIM TO CARRY SUCH APPREHENSION. HIS PRINCIPLE THRUST WAS TO THE EFFECT THAT ASSESSE E DID NOT PRODUCE THE PRECISE BANK DETAILS OF THE FOREIGN REMITTANCES EVEN BEFORE HIM. THERE IS NOTHING ON THE RECORD TO SUGGEST THAT HE CALLED UPON THE ASSESSEE TO DO SO A ND THE ASSESSEE FAILED OR REFUSED TO DO SO. 7.8 HONBLE GUJARAT HIGH COURT IN THE CASE OF C IT VS. ARVIND JEWELLERS 124 TAXMAN 615 WHEREIN IT WAS HELD AS UNDER: IT IS CLEAR THAT THE PROVISIONS OF SECTION 263 CAN NOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS, THAT SECTION WILL BE ATTRACTED AND INCOR RECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE INSTANT CASE, IT WAS THE FINDING OF FACT GIVEN BY THE TRIBU NAL THAT THE ASSESSEE HAD PRODUCED RELEVANT MATERIAL AND OFFERED EXPLANATION IN PURSUA NCE OF THE NOTICES ISSUED UNDER SECTION 142(1) AS WELL AS SECTION 143(2) AND AFTER CONSIDERING THOSE MATERIALS AND EXPLANATION, THE ITO HAD COME TO A DEFINITE CONCLUS ION. THE COMMISSIONER DID NOT AGREE WITH THE CONCLUSION REACHED BY THE ITO. SECTION 263 DID NOT EMPOWER HIM TO TAKE ACTION ON THESE FACTS TO ARRIVE AT THE CONCLUSION THAT THE ORDER PASSED BY THE ITO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. SIN CE THE MATERIAL WAS THERE ON RECORD AND ITA NOS.393,394,395, 397 & 398/RJT/2018 WINSUM CERAMIC PVT.LTD. AND 4 OTHERS VS PR.CIT ASST.YEAR 2015-16 - 10 - THE SAID MATERIAL WAS CONSIDERED BY THE ITO AND A P ARTICULAR VIEW WAS TAKEN, THE MERE FACT THAT DIFFERENT VIEW COULD BE TAKEN, SHOULD NOT BE THE BASIS FOR AN ACTION UNDER SECTION 263 AND IT COULD NOT BE HELD TO BE JUSTIFIED. IN VIEW OF THIS AND FOLLOWING THE PRINCIPLES LAID D OWN BY THE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83/109 TA XMAN 66 , THE TRIBUNAL WAS JUSTIFIED IN SETTING ASIDE THE ORDER PASSED BY THE COMMISSION ER UNDER SECTION 263. 7.9. HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MEHSANA DISTRICT CO-OP. MILK PRODUCERS UNION LTD. 130 TAXMAN 235 WHEREIN IT WAS HELD AS UNDER: IT IS WELL-SETTLED THAT THE PROVISIONS OF SECTION 263(1) CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASS ESSING OFFICER, AND IT IS ONLY WHEN THE ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. WHEN TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIO NER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF T HE REVENUE UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. IT WAS N OT SHOWN HOW THE METHOD FOLLOWED BY THE ASSESSEE TO DIVIDE THE EXPENSES FOR THE PURPOSE OF CLAIMING RELIEF UNDER SECTION 80HH WAS IMPROPER OR UNACCEPTABLE. THE ASSESSING OFFICER AS WELL AS THE TRIBUNAL HAD FOUND THAT THE EXPENSES WERE APPORTIONED ON A RATIONAL BASIS AND I T WOULD NOT BE OPEN FOR THE COURT TO GO BEYOND THAT FINDING WHICH APPEARED TO HAVE BEEN REA CHED ON THE BASIS OF THE MATERIAL ON RECORD WHICH SHOWED THAT IN THE EARLIER YEARS THE SAME PRO PORTION FOR DIVIDING THE EXPENSES WAS CONSISTENTLY FOLLOWED. THE DEPARTMENT HAD NOT BEEN ABLE TO SHOW THAT FOR THOSE EARLIER TWO YEARS ANY OBJECTION WAS RAISED AGAINST SUCH APPORTIONMENT . 7.10. HONBLE GUJARAT HIGH COURT IN THE CASE OF C IT VS. AMIT CORPORATION 213 TAXMAN 19 WHEREIN IT WAS HELD AS UNDER: 5. WE ARE OF THE OPINION THAT THE TRIBUNAL COMMITTED NO ERROR. WHEN, DURING THE COURSE OF FRAMING OF THE ASSESSMENT, THE ASSESSING OFFICER HAD ACCESS TO ALL THE RECORDS OF THE ASSESSEE, AFTER PURSUING SUCH RECORD THE ASSESSING OFFICER FRAMED THE ASSESSMENT, SUCH ASSESSMENT COULD NOT HAVE BEEN RE-OPENED IN EXERCIS E OF REVISION POWER UNDER SECTION 263 OF THE ACT FOR MAKING FURTHER INQUIRIES. IN THE FACTS OF THE CASE, IN OUR OPINION, TRIBUNAL RIGHTLY INTERFERED WITH SUCH ORDER. NO QUE STION OF LAW ARISES. TAX APPEAL IS, THEREFORE, DISMISSED. 7.11. WE ALSO NOTE THAT THE EXPLANATION 2 INSERTED BY THE FINANCE ACT, 2015 AUTHORIZE THE LD. PCIT TO HOLD THE ORDER OF THE AO AS ERRONEOUS IN SO FAR PREJUDICIAL TO THE INTEREST OF THE REVENUE EVEN IF THE INQUIRY WAS MADE BY THE AO ITA NOS.393,394,395, 397 & 398/RJT/2018 WINSUM CERAMIC PVT.LTD. AND 4 OTHERS VS PR.CIT ASST.YEAR 2015-16 - 11 - BUT NOT IN THE MANNER IN WHICH SUCH INQUIRIES SHOUL D HAVE BEEN MADE. THE RELEVANT EXPLANATION READS AS UNDER: REVISION OF ORDERS PREJUDICIAL TO REVENUE. 10 263. (1) THE 13 [PRINCIPAL COMMISSIONER OR] COMMISSIONER MAY CALL F OR AND EXAMINE 14 THE RECORD 14 OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSID ERS THAT ANY ORDER 15 PASSED THEREIN BY THE 16 [ASSESSING] OFFICER IS ERRONEOUS 15 IN SO FAR AS 15 IT IS 15 PREJUDICIAL TO THE INTERESTS OF THE REVENUE 15 , HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUS ING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, 15 PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSES SMENT, OR CANCELLING THE ASSESSMENT 15 AND DIRECTING A FRESH ASSESSMENT. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX [EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, I T IS HEREBY DECLARED 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 REVENUE, IF, IN THE OPINION OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER, (A) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VER IFICATION WHICH SHOULD HAVE BEEN MADE; 7.12. ADMITTEDLY, THE INQUIRIES WERE CONDUCTED BY THE AO DURING THE ASSESSMENT PROCEEDINGS AND THIS FACT WAS ALSO ADMITTED BY THE LD. PR.CIT IN HIS ORDER AS EXTRACTED BELOW: 6. IN THE PRESENT CASE, THE ASSESSEE HAS RECEIVE D UNSECURED LOANS DURING THE YEAR UNDER CONSIDERATION. DURING THE ASSESSMENT PROCEE DINGS THE AO HAS CALLED FOR NECESSARY DETAILS TO PROVE THE IDENTITY, CREDITWORT HINESS AND GENUINENESS OF THE LOAN PROVIDERS. ALL THE SUBMISSIONS RECEIVED WERE KEPT ON RECORD WITHOUT MAKING DUE INQUIRIES. ON CAREFUL VERIFICATION OF THESE REPLIE S IT IS OBSERVED THAT BANK ACCOUNTS OF MANY OF THE DEPOSITORS CONTAINED CASH OR CHEQUE DEP OSITS OF MATCHING AMOUNTS OF WHICH THAT PERSON HAS ISSUED A CHEQUE TO THE ASSESSEE-COM PANY IN THE NAME OF UNSECURED LOANS. HOWEVER, THE AO HAS PASSED THE ORDER U/S.143(3) IN TOTAL OBLIVION OF THESE GLARING FACTS. THUS, THE AO HAS PASSED AN ERRONEOUS ORDER BY PASSI NG THE ASSESSMENT ORDER IN THIS MANNER. 7.13. IF THE EXPLANATION 2 TO SECTION 263 OF THE ACT IS APPLIED, THEN THE LD. PR.CIT CAN HOLD EACH AND EVERY ORDER OF THE AO AS ERRONEOU S IN SO FAR PREJUDICIAL TO THE ITA NOS.393,394,395, 397 & 398/RJT/2018 WINSUM CERAMIC PVT.LTD. AND 4 OTHERS VS PR.CIT ASST.YEAR 2015-16 - 12 - INTEREST OF REVENUE BY FINDING OUT THE FAULT IN THE VIEW OF THE AO. THE MUMBAI TRIBUNAL IN SUCH SITUATION IN THE CASE OF NARAYAN T ATU RANE VS. ITO REPORTED IN 70 TAXMANN.COM 227 HAS HELD AS UNDER: 19. THE LAW INTERPRETED BY THE HIGH COURTS MAKES IT CL EAR THAT THE LD PR. CIT, BEFORE HOLDING AN ORDER TO BE ERRONEOUS, SHOULD HAVE CONDU CTED NECESSARY ENQUIRIES OR VERIFICATION IN ORDER TO SHOW THAT THE FINDING GIVE N BY THE ASSESSING OFFICER IS ERRONEOUS, THE LD PR. CIT SHOULD HAVE SHOWN THAT THE VIEW TAKE N BY THE AO IS UNSUSTAINABLE IN LAW. IN THE INSTANT CASE, THE LD PR. CIT HAS FAILED TO D O SO AND HAS SIMPLY EXPRESSED THE VIEW THAT THE ASSESSING OFFICER SHOULD HAVE CONDUCTED EN QUIRY IN A PARTICULAR MANNER AS DESIRED BY HIM. SUCH A COURSE OF ACTION OF THE LD P R. CIT IS NOT IN ACCORDANCE WITH THE MANDATE OF THE PROVISIONS OF SEC. 263 OF THE ACT. T HE LD PR. CIT HAS TAKEN SUPPORT OF THE NEWLY INSERTED EXPLANATION 2(A) TO SEC. 263 OF THE ACT. EVEN THOUGH THERE IS A DOUBT AS TO WHETHER THE SAID EXPLANATION, WHICH WAS INSERTED BY FINANCE ACT 2015 W.E.F. 1.4.2015, WOULD BE APPLICABLE TO THE YEAR UNDER CONSIDERATION , YET WE ARE OF THE VIEW THAT THE SAID EXPLANATION CANNOT BE SAID TO HAVE OVER RIDDEN THE LAW INTERPRETED BY HON'BLE DELHI HIGH COURT, REFERRED ABOVE. IF THAT BE THE CASE, TH EN THE LD PR. CIT CAN FIND FAULT WITH EACH AND EVERY ASSESSMENT ORDER, WITHOUT CONDUCTING ANY ENQUIRY OR VERIFICATION IN ORDER TO ESTABLISH THAT THE ASSESSMENT ORDER IS NOT SUSTA INABLE IN LAW AND ORDER FOR REVISION. HE CAN ALSO FORCE THE AO TO CONDUCT THE ENQUIRIES IN T HE MANNER PREFERRED BY LD PR. CIT, THUS PREJUDICING THE INDEPENDENT APPLICATION OF MIN D OF THE AO. DEFINITELY, THAT COULD NOT BE THE INTENTION OF THE LEGISLATURE IN INSERTING EX PLANATION 2 TO SEC. 263 OF THE ACT, SINCE IT WOULD LEAD TO UNENDING LITIGATIONS AND THERE WOULD NOT BE ANY POINT OF FINALITY IN THE LEGAL PROCEEDINGS. THE HON'BLE SUPREME COURT HAS HE LD IN THE CASE OF PARASHURAM POTTERY WORKS CO. LTD. V. ITO [1977] 106 ITR 1 THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS AND THE STALE ISSUES SHOULD N OT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THE LAPSE OF TIME MUST INDUCE REPOSE IN A ND SET AT REST JUDICIAL AND QUASI- JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. 20. FURTHER CLAUSE (A) OF EXPLANATION STATES THAT AN O RDER SHALL BE DEEMED TO BE ERRONEOUS, IF IT HAS BEEN PASSED WITHOUT MAKING ENQ UIRIES OR VERIFICATION, WHICH SHOULD HAVE BEEN MADE. IN OUR CONSIDERED VIEW, THIS PROVIS ION SHALL APPLY, IF THE ORDER HAS BEEN PASSED WITHOUT MAKING ENQUIRIES OR VERIFICATION WHI CH A REASONABLE AND PRUDENT OFFICER SHALL HAVE CARRIED OUT IN SUCH CASES, WHICH MEANS T HAT THE OPINION FORMED BY LD PR. CIT CANNOT BE TAKEN AS FINAL ONE, WITHOUT SCRUTINISING THE NATURE OF ENQUIRY OR VERIFICATION CARRIED OUT BY THE AO VIS--VIS ITS REASONABLENESS IN THE FACTS AND CIRCUMSTANCES OF THE CASE. HENCE, IN OUR CONSIDERED VIEW, WHAT IS RELEVA NT FOR CLAUSE (A) OF EXPLANATION 2 TO SEC. 263 IS WHETHER THE AO HAS PASSED THE ORDER AFT ER CARRYING OUR ENQUIRIES OR VERIFICATION, WHICH A REASONABLE AND PRUDENT OFFICE R WOULD HAVE CARRIED OUT OR NOT. IT DOES NOT AUTHORISE OR GIVE UNFETTERED POWERS TO THE LD PR. CIT TO REVISE EACH AND EVERY ORDER, IF IN HIS OPINION, THE SAME HAS BEEN PASSED WITHOUT MAKING ENQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE. IN OUR VI EW, IT IS THE RESPONSIBILITY OF THE LD PR. CIT TO SHOW THAT THE ENQUIRIES OR VERIFICATION CONDUCTED BY THE AO WAS NOT IN ITA NOS.393,394,395, 397 & 398/RJT/2018 WINSUM CERAMIC PVT.LTD. AND 4 OTHERS VS PR.CIT ASST.YEAR 2015-16 - 13 - ACCORDANCE WITH THE ENQUIRIES OR VERIFICATION THAT WOULD HAVE BEEN CARRIED OUT BY A PRUDENT OFFICER. HENCE, IN OUR VIEW, THE QUESTION A S TO WHETHER THE AMENDMENT BROUGHT IN BY WAY OF EXPLANATION 2(A) SHALL HAVE RETROSPECTIVE OR PROSPECTIVE APPLICATION SHALL NOT BE RELEVANT. 7.14 AFTER CONSIDERING THE FACTS IN TOTALITY AS D ISCUSSED ABOVE, WE CONCLUDE THAT THE EXPLANATION 2 TO SECTION 263 OF THE ACT CANNOT SUPPORT THE ORDER OF THE LD. PR.CIT FOR THE REASONS AS DISCUSSED ABOVE. ACCORDIN GLY, WE QUASH THE ORDER PASSED BY THE LD. PR.CIT UNDER SECTION 263 OF THE ACT. HEN CE, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN THE CASE OF M/S.WINSUN CERAMIC PVT.LTD. IN ITA NO.393/RJT/2018 FOR AY 2015-16 IS A LLOWED. COMING TO ITA NO.394/RJT/2018 FOR AY 2015-16 IN THE CASE OF M/S. REX CERAMIC PVT. LTD. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1.0 THE GROUNDS OF APPEAL MENTIONED HEREUNDER ARE WITHOUT PREJUDICE TO ONE ANOTHER. 2.0 THE ORDER U/S263 OF THE INCOME-TAX ACT, 1961 [ HEREINAFTER REFERRED TO AS THE ACT] PASSED BY THE LEARNED PRINCIPAL COMMISSIONER OF INC OME TAX-3, RAJKOT (HEREINAFTER REFERRED TO AS THE PR CIT) IS WITHOUT JURISDICTIO N AND BAD IN LAW AS ALSO ON FACTS AND DESERVES TO BE QUASHED AND MAY KINDLY BE QUASHED. 3.0 THE LEARNED PR CIT ERRED ON FACTS AS ALSO IN L AW IN ALLEGING THAT THE ORDER U/S.143(3) OF THE ACT IS NOT ONLY ERRONEOUS BUT ALSO PREJUDICI AL TO THE INTEREST OF REVENUE AS THE ASSESSING OFFICER (AO) HAS NOT MADE INQUIRY AND VER IFICATION IN RESPECT OF (I) GENUINENESS AND CREDITWORTHINESS OF UNSECURED LOANS BORROWED OF 1,36,81,700/- AND THEREBY SETTING ASIDE THE ASSESSMENT ORDER PASSED U /S.143(3) OF THE ACT DATED 27.12.2017. THE ORDER PASSED BY THE LEARNED CIT IS TOTALLY UNJU STIFIED ON FACTS AS ALSO IN LAW THEREFORE THE SAME MAY KINDLY BE QUASHED. ITA NOS.393,394,395, 397 & 398/RJT/2018 WINSUM CERAMIC PVT.LTD. AND 4 OTHERS VS PR.CIT ASST.YEAR 2015-16 - 14 - 4.0 THE LEARNED PR CIT FURTHER ERRED ON FACTS IN N OT PROPERLY CONSIDERING THE FACTS ON RECORD AND APPELLANTS SUBMISSION THAT ALL THE DETA ILS WERE FURNISHED IN THE FORM OF CONFIRMATION, RETURN OF INCOME, BANK STATEMENT ETC. DURING ORIGINAL ASSESSMENT PROCEEDINGS AND WERE VERIFIED BY THE AO AND THE OR DER UNDER CONSIDERATION WAS PASSED AFTER DUE INQUIRY, VERIFICATION OF FACTS ON RECORD AND DUE APPLICATION OF MIND. THUS, THE ORDER PASSED U/S.263 OF THE ACT IS TOTALLY UNJUSTIF IED ON FACTS AS ALSO IN LAW AND MAY KINDLY BE QUASHED. 5.0 YOUR HONOURS APPELLANT CRAVES LEAVE TO ADD, AM END, ALTER OR WITHDRAW ANY OR MORE GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF APPEA L. 9. BOTH THE SIDES CONSENTED THAT IDENTICAL ISSUE S ARE INVOLVED IN THIS APPEAL AS WELL. THUS, FOR PARITY OF REASONS NOTED ABOVE, OUR VIEW IN ITA NO.393/RJT/2018 FOR AY 2015-16 IN THE CASE OF M/S.WINSUN CERAMIC PVT.L TD. SHALL APPLY MUTATIS MUTANDIS TO THIS APPEAL CAPTIONED ABOVE. AS A RESULT, THIS APPEAL OF THE ASSESSEE IN ITA NO. 394/RJT/2018 FOR AY 2015-16 IN THE CASE OF M/S. REX CERAMIC PVT. LTD. IS ALLOWED . COMING TO ITA NO.395/RJT/2018 FOR AY 2015-16 IN THE CASE OF M/S. WINMAX CERAMIC PVT. LTD. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1.0 THE GROUNDS OF APPEAL MENTIONED HEREUNDER ARE WITHOUT PREJUDICE TO ONE ANOTHER. 2.0 THE ORDER U/S 263 OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT] PASSED BY THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX -3, RAJKOT (HEREINAFTER REFERRED TO AS THE PR CIT) IS WITHOUT JURISDICTION AND BAD IN LAW AS ALSO ON FACTS AND DESERVES TO BE QUASHED AND MAY KINDLY BE QUASHED. 3.0 THE LEARNED PR CIT ERRED ON FACTS AS ALSO IN L AW IN ALLEGING THAT THE ORDER U/S.143(3) OF THE ACT IS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO T HE INTEREST OF REVENUE AS THE ASSESSING OFFICER (AO) HAS NOT MADE INQUIRY AND VERIFICATION IN RESPE CT OF (I) GENUINENESS AND CREDITWORTHINESS OF UNSECURED LOANS BORROWED OF 4,98,77,066/- AND THEREBY SETTING ASIDE THE ASSESS MENT ORDER PASSED U/S.143(3) OF THE ACT DATED 13.11.2017. THE ORDER PASSED BY THE LEARNED CIT IS TOTALLY UNJUSTIFIED ON FACTS AS ALSO IN LAW THEREFORE THE S AME MAY KINDLY BE QUASHED. ITA NOS.393,394,395, 397 & 398/RJT/2018 WINSUM CERAMIC PVT.LTD. AND 4 OTHERS VS PR.CIT ASST.YEAR 2015-16 - 15 - 4.0 THE LEARNED PR CIT FURTHER ERRED ON FACTS IN N OT PROPERLY CONSIDERING THE FACTS ON RECORD AND APPELLANTS SUBMISSION THAT ALL THE DETAILS WERE FU RNISHED IN THE FORM OF CONFIRMATION, RETURN OF INCOME, BANK STATEMENT ETC. DURING ORIGINAL ASSESSM ENT PROCEEDINGS AND WERE VERIFIED BY THE AO AND THE ORDER UNDER CONSIDERATION WAS PASSED AFTER DUE INQUIRY, VERIFICATION OF FACTS ON RECORD AND DUE APPLICATION OF MIND. THUS, THE ORDER PASSE D U/S.263 OF THE ACT IS TOTALLY UNJUSTIFIED ON FACTS AS ALSO IN LAW AND MAY KINDLY BE QUASHED. 5.0 YOUR HONOURS APPELLANT CRAVES LEAVE TO ADD, AM END, ALTER OR WITHDRAW ANY OR MORE GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF APPEAL. 10. BOTH THE SIDES PRIMA FACIE CONSENTED THAT ID ENTICAL ISSUES ARE INVOLVED IN THIS APPEAL AS WELL EXCEPT THAT THE DETAILS OF SOME PART IES AS WELL AS COPIES OF ITR WERE NOT AVAILABLE IN THE ASSESSMENT RECORDS. IN THIS RE GARD, THE LD. DR SUBMITTED THAT THERE WERE LOAN TRANSACTIONS WITH 41 PARTIES BUT TH E RECORDS IN THE ASSESSMENT ORDER ARE AVAILABLE WITH RESPECT 12 PARTIES ONLY. AS SUCH THERE WAS NO INFORMATION AVAILABLE WITH RESPECT TO BALANCED 29 PARTIES. SIMI LARLY, THE LD. DR FURTHER SUBMITTED THAT THE COPIES OF THE ITR OF ALL THE LOA N PARTIES WERE NOT AVAILABLE IN THE ASSESSMENT RECORDS. ON THE CONTRARY, THE LEARNED AR DREW OUR ATTENTION ON THE EXCEL SHEET PLACED ON PAGES 23 TO 25 WHERE THE NECE SSARY DETAILS SUCH AS NAME, ADDRESS, PAN, MOBILE NUMBER, INCOME TAX RETURN, BAN K STATEMENT AND CONFIRMATION OF THE PARTIES WERE FURNISHED. THEREFORE, WE INFER THAT ALL THE DETAILS ABOUT THE LOAN PARTIES AS DISCUSSED ABOVE WERE AVAILABLE WITH THE AO DURING THE ASSESSMENT PROCEEDINGS. SIMILARLY, WE ALSO HOLD THAT NON-AVAIL ABILITY OF ALL THE ITRS OF THE LOAN PARTIES CANNOT BE THE CRITERIA TO HOLD THE ORD ER OF THE AO AS ERRONEOUS IN SO FAR PREJUDICIAL TO THE INTEREST OF REVENUE. IT IS BECAU SE THE COPIES OF THE PAN OF ALL THE LOAN PARTIES WERE AVAILABLE WITH THE AO AS EVIDENT FROM THE DETAILS FURNISHED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. ACC ORDINGLY, WE HOLD THAT THE FACTS OF THE CASE WERE IDENTICAL. THUS, FOR PARITY OF REASONS NOTED ABOVE, OUR VIEW IN ITA NO.393/RJT/2018 FOR AY 2015-16 IN THE CASE OF M/S.WINSUN CERAMIC ITA NOS.393,394,395, 397 & 398/RJT/2018 WINSUM CERAMIC PVT.LTD. AND 4 OTHERS VS PR.CIT ASST.YEAR 2015-16 - 16 - PVT.LTD. SHALL APPLY MUTATIS MUTANDIS TO THIS APPEAL CAPTIONED ABOVE. AS A RESULT, THIS APPEAL OF THE ASSESSEE IN ITA NO. 394/RJT/2018 FOR AY 2015-16 IN THE CASE OF M/S. REX CERAMIC PVT. LTD. IS ALLOWED . COMING TO ITA NO.397/RJT/2018 FOR AY 2015-16 IN THE CASE OF M/S. ORFINA CERAMIC PVT. LTD. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1.0 THE GROUNDS OF APPEAL MENTIONED HEREUNDER ARE WITHOUT PREJUDICE TO ONE ANOTHER. 2.0 THE ORDER U/S263 OF THE INCOME-TAX ACT, 1961 [ HEREINAFTER REFERRED TO AS THE ACT] PASSED BY THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX -3, RAJKOT (HEREINAFTER REFERRED TO AS THE PR CIT) IS WITHOUT JURISDICTION AND BAD IN LAW AS ALSO ON FACTS AND DESERVES TO BE QUASHED AND MAY KINDLY BE QUASHED. 3.0 THE LEARNED PR CIT ERRED ON FACTS AS ALSO IN L AW IN ALLEGING THAT THE ORDER U/S.143(3) OF THE ACT IS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO T HE INTEREST OF REVENUE AS THE ASSESSING OFFICER (AO) HAS NOT MADE INQUIRY AND VERIFICATION IN RESPE CT OF (I) GENUINENESS AND CREDITWORTHINESS OF UNSECURED LOANS BORROWED OF 7,49,00,000/- AND THEREBY SETTING ASIDE THE ASSESS MENT ORDER PASSED U/S.143(3) OF THE ACT DATED 27.12.2017. THE ORDER PASSED BY THE LEARNED CIT IS TOTALLY UNJUSTIFIED ON FACTS AS ALSO IN LAW THEREFORE THE S AME MAY KINDLY BE QUASHED. 4.0 THE LEARNED PR CIT FURTHER ERRED ON FACTS IN N OT PROPERLY CONSIDERING THE FACTS ON RECORD AND APPELLANTS SUBMISSION THAT ALL THE DETAILS WERE FU RNISHED IN THE FORM OF CONFIRMATION, RETURN OF INCOME, BANK STATEMENT ETC. DURING ORIGINAL ASSESSM ENT PROCEEDINGS AND WERE VERIFIED BY THE AO AND THE ORDER UNDER CONSIDERATION WAS PASSED AFTER DUE INQUIRY, VERIFICATION OF FACTS ON RECORD AND DUE APPLICATION OF MIND. THUS, THE ORDER PASSE D U/S.263 OF THE ACT IS TOTALLY UNJUSTIFIED ON FACTS AS ALSO IN LAW AND MAY KINDLY BE QUASHED. 5.0 YOUR HONOURS APPELLANT CRAVES LEAVE TO ADD, AM END, ALTER OR WITHDRAW ANY OR MORE GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF APPEAL. 11. BOTH THE SIDES CONSENTED THAT IDENTICAL ISSUES ARE INVOLVED IN THIS APPEAL AS WELL. THUS, FOR PARITY OF REASONS NOTED ABOVE, OUR VIEW IN ITA NO. 393/RJT/2018 FOR AY 2015-16 AND 395/RJT/2018 FOR AY 2015-16 IN T HE CASE OF M/S. WINSUN CERAMIC PVT.LTD. AND WINMAX CERAMIC PVT. LTD. SHALL APPLY MUTATIS MUTANDIS TO THIS APPEAL CAPTIONED ABOVE. AS A RESULT, THIS APP EAL OF THE ASSESSEE IN ITA ITA NOS.393,394,395, 397 & 398/RJT/2018 WINSUM CERAMIC PVT.LTD. AND 4 OTHERS VS PR.CIT ASST.YEAR 2015-16 - 17 - NO.397/RJT/2018 FOR AY 2015-16 IN THE CASE OF M/S. ORFINA CERAMIC PVT.LTD. IS ALLOWED . COMING TO ITA NO.398/RJT/2018 FOR AY 2015-16 IN THE CASE OF M/S. WINTOP VITRIFIED PVT. LTD. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1.0 THE GROUNDS OF APPEAL MENTIONED HEREUNDER ARE WITHOUT PREJUDICE TO ONE ANOTHER. 2.0 THE ORDER U/S263 OF THE INCOME-TAX ACT, 1961 [ HEREINAFTER REFERRED TO AS THE ACT] PASSED BY THE LEARNED PRINCIPAL COMMISSIONER OF INC OME TAX-3, RAJKOT (HEREINAFTER REFERRED TO AS THE PR CIT) IS WITHOUT JURISDICTIO N AND BAD IN LAW AS ALSO ON FACTS AND DESERVES TO BE QUASHED AND MAY KINDLY BE QUASHED. 3.0 THE LEARNED PR CIT ERRED ON FACTS AS ALSO IN L AW IN ALLEGING THAT THE ORDER U/S.143(3) OF THE ACT IS NOT ONLY ERRONEOUS BUT ALSO PREJUDICI AL TO THE INTEREST OF REVENUE AS THE ASSESSING OFFICER (AO) HAS NOT MADE INQUIRY AND VER IFICATION IN RESPECT OF (I) GENUINENESS AND CREDITWORTHINESS OF UNSECURED LOANS BORROWED OF 85,49,644/- AND THEREBY SETTING ASIDE THE ASSESSMENT ORDER PASSED U /S.143(3) OF THE ACT DATED 13.11.2017. THE ORDER PASSED BY THE LEARNED CIT IS TOTALLY UNJU STIFIED ON FACTS AS ALSO IN LAW THEREFORE THE SAME MAY KINDLY BE QUASHED. 4.0 THE LEARNED PR CIT FURTHER ERRED ON FACTS IN N OT PROPERLY CONSIDERING THE FACTS ON RECORD AND APPELLANTS SUBMISSION THAT ALL THE DETA ILS WERE FURNISHED IN THE FORM OF CONFIRMATION, RETURN OF INCOME, BANK STATEMENT ETC. DURING ORIGINAL ASSESSMENT PROCEEDINGS AND WERE VERIFIED BY THE AO AND THE OR DER UNDER CONSIDERATION WAS PASSED AFTER DUE INQUIRY, VERIFICATION OF FACTS ON RECORD AND DUE APPLICATION OF MIND. THUS, THE ORDER PASSED U/S.263 OF THE ACT IS TOTALLY UNJUSTIF IED ON FACTS AS ALSO IN LAW AND MAY KINDLY BE QUASHED. 5.0 YOUR HONOURS APPELLANT CRAVES LEAVE TO ADD, AM END, ALTER OR WITHDRAW ANY OR MORE GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF APPEA L. 12. BOTH THE SIDES CONSENTED THAT IDENTICAL ISSU ES ARE INVOLVED IN THIS APPEAL AS WELL. THUS, FOR PARITY OF REASONS NOTED ABOVE, OUR VIEW IN ITA NO.393/RJT/2018 FOR AY 2015-16 IN THE CASE OF M/S.WINSUN CERAMIC PVT.LT D. SHALL APPLY MUTATIS ITA NOS.393,394,395, 397 & 398/RJT/2018 WINSUM CERAMIC PVT.LTD. AND 4 OTHERS VS PR.CIT ASST.YEAR 2015-16 - 18 - MUTANDIS TO THIS APPEAL CAPTIONED ABOVE. AS A RESULT, THIS APPEAL OF THE ASSESSEE IN ITA NO.398/RJT/2018 FOR AY 2015-16 IN THE CASE OF M /S. WINTOP VITRIFIED PVT.LTD. IS ALLOWED. 13. IN THE COMBINED RESULT, ALL THE FIVE APPEALS OF THE DIFFERENT ASSESSEES ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 28 / 11 /2019 SD/- SD/- ( RAJPAL YADAV ) ( WASEEM AHMED ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 28/ 11 /2019 ..,. ../ T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. '# / THE APPELLANT 2. $%'# / THE RESPONDENT. 3. &'& ( / CONCERNED CIT 4. ( ( ) / THE PR.CIT-3, RAJKOT 5. ,-.$ , , /DR,ITAT,RAJKOT 6. .9:; / GUARD FILE. / BY ORDER, %,$ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !', / ITAT, RAJKOT 1. DATE OF DICTATION 25.11.2019 (WORD PROCESSED BY HONBLE AM IN HIS COMPUTER BY DR AGON) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 26.11.2019/27.11.19 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.28.11.19 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 28.11.19 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER