Smt.Mithra Paul, Muvattupuzha V. The ITO,Wd-1, Thodupuzha

ITA 421/COCH/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9564 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-08-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 17-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R SRIDHAR
• Assessee Lawyers: SHANTHAM BOSE
• Keywords: Gift; Principle of natural justice; Wrong claim; Set aside
• Section: 44AD; 143(3); 142(1); 69B; 201; 143(2); 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFOR E S/ SHRI CHANDRA POOJARI , AM & GEORGE GEORGE K., J M I .T . A . NO . 421 /COCH/2 01 9 ASSESSMENT YEAR : 201 4 - 15 SMT. MITHRA PAUL, 8/243, POTTAYIL HOUSE, MEKKADAMBU P.O., MUVATTUPUZHA - 682 316. [PAN: ANGPP 7357Q] . VS. THE INCOME TAX OFFICER, WARD - 1, THODUPUZHA. ( ASSESSEE - APPELLANT) ( REVENUE - RESPONDENT) ASSES SEE BY SHRI SHANTHAM BOSE, CIT(DR) REVENUE BY SHRI R. SRIDHAR, CA D ATE OF HEARING 2 8 /08/2019 DATE OF PRONOUNCEMENT 20 / 0 9 /201 9 O R D E R PER CHANDRA POOJARI, AM: TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE PR. CIT, KOCHI PASSED U/S. 263 OF THE I.T. ACT DATED 2 1 /0 2 /201 9 AND PERTAIN TO THE ASSESSMENT YEAR 20 14 - 15 . 2. THE ASSESSEE HAS RAISED T HE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE PCIT IS BAD AND ERRONEOUS IN LAW AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 2. THE PCIT ERRE D IN NOT CONSIDERING THE WRITTEN SUBMISSION IN PROPER PERSPECTIVE. I.T.A. NO 421/COCH/2019 2 3. THE PCIT ERRED IN NOT CONSIDERING THE VITAL ISSUE THAT THE ORDER DATED 07/10/2016, STATED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AS PER THE SHOW CAUSE NOTICE DATED 26/10/2018 AND 21/01/2019, DOES NOT EXIST AT ALL AND THE REPLY/OBJECTION BY THE ASSESSEE VIDE SUBMISSI ON DATED 16/02/2019 TO THAT EFFECT, WAS NOT AT ALL CONSIDERED BY THE PCIT. 3. THE FACTS OF THE CASE ARE THAT FROM THE PERUSAL OF THE RECORDS, IT WAS NOTICED THAT THE ORDER U/S. 143(3) DATED 11 - 11 - 2016 FOR THE ASSESSMENT YEAR 2014 - 15 PASSED BY THE ASSESS ING OFFICER WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTEREST OF REVENUE FOR THE REASONS MENTIONED BELOW: I) CASH DEPOSIT MADE BY THE ASSESSEE DURING THE PERIOD AMOUNTING TO RS.95,00,000/ - WERE NOT DISCLOSED BY THE ASSESSEE IN THE RETURN OF INC OME FOR THE AY 2014 - 15. THIS AMOUNT WAS DEPOSITED INTO BANK BY SALE OF LATERITE AND GRAVEL EARTH FROM HER LAND AND NO ACCOUNTS WERE MAINTAINED BY THE ASSESSEE. AS A CONSOLIDATED TURNOVER IS LESS THAN ONE CRORE, INCOME CAN BE COMPUTED AS PER SEC. 44AD. H OWEVER, ASSESSEE OFFERED 10% OF THE TURNOVER AND ADDITION WAS MADE AMOUNTING TO RS.9,50,000/ - . DURING THE RELEVANT PREVIOUS YEAR, THE ASSESSEE ADMITTED THE RECEIPT OF RS.35,00,000/ - ON SALE OF LATERITE AND GRAVEL EARTH AND ALSO RS.60,00,000/ - AS GIFT FROM SISTER. HER SISTER ALSO CONFIRMED TRANSFER OF RS.60,00,00/ - AS GIFT TO THE ASSESSEE VIDE LETTER DATED 23/08/2016. THE ASSESSEE HAD NOT REVEALED THESE RECEIPTS TANTAMOUNT TO RS.95,00,000/ - IN THE RETURN OF INCOME. THE ASSESSING OFFICER ADDED BACK AN AMO UNT OF RS.9,50,000/ - AS UNDISCLOSED INCOME, WHICH IS 10% OF THESE RECEIPTS. AS THERE WERE NO EXPENSES INVOLVED IN THE SALE OF LATERITE, GRAVEL EARTH AND GIFT, THE ENTIRE AMOUNT OF RS.35,00,000/ - WHICH STANDS UNDISCLOSED IN THE RETURN OF INCOME OF THE ASS ESSEE SHOULD BE ADDED BACK AND ASSESSED IN THE HANDS OF THE ASSESSEE U/S. 69B AND THE TAX SHOULD BE LEVIED @30% U/S. 115BBE OF THE INCOME TAX ACT. II) THE GIFT RECEIVED FROM ASSESSEES SISTER AND MOTHER AMOUNTING TO RS.60,00,000/ - WAS ALSO NOT FOUND PROPE RLY EXAMINED BY THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT ORDER. HENCE, THE PCIT INVOKED THE PROVISIONS OF SECTION 263 OF THE ACT PROPOSING FOR REVISION OF ASSESSMENT. I.T.A. NO 421/COCH/2019 3 4. THE PCIT OBSERVED THAT THESE ISSUES WERE NOT CONSIDERED BY THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT ORDER. ACCORDING TO THE PCIT, THE RELEVANT ISSUES, I.E. RS.25,00,000/ - OUT OF THE RECEIPT OF RS.35,00,000/ - ON SALE OF LATERITE AND GRAVEL EARTH AND ALSO THE GIFT RECEIVED FROM ASSESSEES SISTER AND MOTHER AMOUNTING T O RS.60,00,000/ - REMAINED TO BE ADDED BACK AND ALSO TAX WAS TO BE COMPUTED ON UNDISCLOSED INCOME @ 30% U/S. 115BBE. THE PCIT OBSERVED THAT IN RESPECT OF THE ABOVE, THE ASSESSING OFFICER HAD NEITHER MADE ANY FINDING NOR OBTAINED ANY SUPPORTING DOCUMENTS FR OM THE ASSESSEE WHILE ALLOWING. THUS, THE PCIT OBSERVED THAT NO REQUISITE DISALLOWANCE/VERIFICATION HAD BEEN MADE BY HER WHILE COMPLETING THE ASSESSMENT. ACCORDINGLY, THE PCIT HELD THAT THE ASSESSMENT ORDER WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ACCORDINGLY, THE PCIT SET ASIDE THE ASSESSMENT ORDER TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO EXAMINATION AND TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AND PER TIME LIMIT SPECIFIED U/S. 153 OF THE I.T. ACT, AFT ER AFFORDING DUE OPPORTUNITY TO THE ASSESSEE. 5. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. AR SUBMITTED THAT SECTION 263 CAN BE I N VOKED ONLY WHEN THE ASSESSMENT ORDER IS ERRONEOUS IN SO FAR AS IT IS P REJUDICIAL TO THE R E VE NUE. IT WAS SUBMITTED THAT PERUSAL OF THE ASSESSMENT ORDER, IN UNEQUIVOCAL TERMS, SHOW ED T HAT THERE HAS BE E N ENQUIRY BY THE ASSESSING OFFICER WITH REGARD TO CASH DEPOSITS IN THE BANK ACCOUNT AND THAT THE ASSESSING OFFICER, HAVING CALLED FOR THE RECORDS, HAS EXAMINED THE SAME, MORE PARTICULARLY, IN THE ASSESSMENT ORDER, IT HAS BEEN MENTIONED SO TWICE. HENCE, IT WAS SUBMITTED THAT I.T.A. NO 421/COCH/2019 4 ONCE THE M ATTER, IN THE ASSESSMENT PROCEEDINGS, HA D BEEN EXAMINED BY THE ASSESSING OFFICER, RESORT TO ISSUE OF NOTICE U/S.263 WAS NOT LEGALLY TENABLE. IT WAS SUBMITTED THAT THE ASSESSEE HAD SUBMITTED CONFIRMATION LETTER FROM HER SISTER AND ALSO EVIDENCES OF SEEKING PERMISSION FOR EXTRACTION OF LATERITE AND GRAVEL EARTH FROM THE MINING AND GEOLOGY DEPARTMENT WHICH FORMED PART OF THE RECORD OF T HE CASE. IT WAS SUBMITTED THAT THE CLAIM WAS CONSIDERED AND AFTER EXAMINATION, THE SAME WAS ALLOWED BY THE ITO ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. THE LD. AR SUBMITTED THAT SUCH DECISION OF THE ITO CANNOT BE HELD TO BE 'ERRONEOUS' SIMP L Y BECAUSE IN THE ASSESSMENT ORDER THE ITO DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. THE LD. AR RELIED ON THE JUDGMENT OF THE BOMBAY HIGH COURT (203 ITR 108) . 5.1 THE LD AR SUBMITTED THAT SECTION 263 CANNOT BE INVOKED TO CORRECT EACH A ND EVERY OR ERROR COMMITTED BY THE ASSESSING OFFICER; IT IS ONLY WHEN AN ORDER IS ERRONEOUS, THAT SECTION WILL BE ATTRACTED AND INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. REL IANCE WAS PLACED ON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD . VS. CIT (2000) 243 ITR 83 WHEREIN I T WAS HELD AS UNDER: EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PRE JUDIC IAL TO THE INTERESTS OF REVENUE . FOR EXAMPLE, WHEN AN INCOME - TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME - TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE , IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE , UNLESS THE VIEW TAKEN BY THE INCOME - TAX OFFICER IS UNSUSTAINABLE IN LAW'. I.T.A. NO 421/COCH/2019 5 IT WAS SUBMITTED THAT S INCE MATERIAL WAS ON RECORD AND MATERIAL WAS CONSIDERED BY ITO AND PARTICUL AR VIEW WAS TAKEN , THE MERE FACT THAT A DIFFERENT VIEW MAY BE TAKEN SHOULD NOT BE BASIS FOR ACTION UNDER 263 OF THE ACT . 5 .2 THE LD. AR RELIED ON THE JUDGMENT OF THE G UJARAT HIGH C OUR T IN 259 ITR 502 AND 313 ITR 65 . IN CASE REPORTED IN 259 ITR 502 IT WAS HELD AS FOLLOWS: 'COMING TO THE FACTS OF THE PRESENT CASE, IT IS THE FINDING OF FACT GIVEN BY THE TRIBUNAL THAT THE ASSESSE HAS PRODUCED RELEVANT MATERIAL AND OFFERED EXPLANATIONS IN PURSUANCE OF THE NOTICES ISSUED UNDER SECTION 142(1) AS WELL AS SECTION 143(2) OF THE ACT AND AFTER CONSIDERING THE MATERI ALS AND EXPLANATION, THE INCOME - TAX OFFICER HAS COME TO A DEFINITE CONCLUSION . THE COMMISSIONER OF INCOME TAX DID NOT AGREE WITH CONCLUSION REACHED BY THE INCOME - TAX OFFI CER. SECTION 263 OF THE ACT DOES NOT EMPOWER HIM TO TAKE ACTION ON THESE FACTS TO ARRIVE AT THE CONCLUSION THAT THE ORDER PASSED BY THE INCOME - TAX OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. SINCE THE MATERIAL WAS THERE ON RECORD AND SAID MATERIAL WAS CONSIDERED BY THE INCOME - TAX OFFICER AND A PARTICULAR VIEW WAS TAKEN, THE MERE FACT THAT A DIFFERENT VIEW CAN BE TAKEN, SHOULD NOT BE THE BASIS FOR AN ACTION UNDER SECTION 263 OF THE ACT AND IT CANNOT BE HELD TO BE JUSTIFIED'. 5.3 THE LD. AR SUBMITTED THAT THE DECISION WAS APPLICABLE HERE AS ALSO THE PRINCIPLES ENUNCIATED IN THE DECISION REPORTED IN 313 ITR 65. IN THIS CASE IT WAS HELD AS FOLLOWS: IN SUPPORT OF HIS SUBMISSION, MR. SAPARKAR HAS RELIED ON THE DECISION OF THIS COURT IN THE CASE OF CIT VS. ARVIND JEWELERS (2003) 259 ITR 502 WHEREIN IT IS HELD THAT THE FINDING OF THE FACT GIVEN BY THE TRIBUNAL WAS THAT THE ASSESSEE HAD PRODUCED RELEVANT MATERIAL AND OFFERED EXPLANATION IN PURSUANCE OF THE NOTICES ISSUED UNDER SECTION 14 2(1) AS WELL AS SECTION 143(2) OF THE ACT AND AFTER CONSIDERING THE MATERIAL AND EXPLANATION, THE INCOME - TAX OFFICER HAD COME TO A DEFINITE CONCLUSION. SINCE MATERIAL WAS THERE ON RECORD AND MATERIAL WAS CONSIDERED AND A PARTICULAR VIEW WAS TAKEN, THE MERE FACT THAT DIFFERENT VIEW C A N BE T A KEN SHOULD NOT BE THE BASIS F OR ACTION UNDER SECTION 263. THIS COURT, THEREFORE, TOOK THE VIEW THAT THE ORDER OF REVISION WAS NOT JUSTIFIED. I.T.A. NO 421/COCH/2019 6 5.4 WITH REGARD TO GIFT FROM MOTHER AND SISTER IT WAS MENTIONED IN NOTICE DATED 21 - 01 - 2019 AND NOT IN THE EARLIER NOTICE DATED 26 - 10 - 2018 THAT 'THE GIFT RECEIVED FROM ASSESSE S SISTER A ND MOTHER AMOUNTING TO RS.60, 00,000/ - IS ALSO NOT FOUND PROPERLY EXAMINED BY THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT ORDER DATED 11 - 1 1 - 2016'. IT WAS SUBMITTED THAT D URING THE COURSE OF ASSESSMENT PROCEEDINGS THE EVIDENCE OF GIFTS AND HOW THEY WERE MADE WERE MADE CLEA R IN THE LETTER OF THE DONORS. IT WAS SUBMITTED THAT O NCE THE ASSESSING OFFICER WAS SATISFIED WITH REGARD TO THE SAME, TH ERE WAS NO FURTHER REQUIREMENT ON THE PART OF THE ASSESSING OFFICER TO DISCLOSE HIS SATISFACTION IN THE ASSESSMENT ORDER PASSED UPON CONCLUSION OF THE ASSESSMENT PROCEEDINGS. IT WAS SUBMITTED THAT O NCE THE ASSESSING OFFICER IS SATISFIED WITH THE EXPLANATI ON OFFERED ON INQUIRY, IT IS NOT OPEN TO THE COMMISSIONER IN EXERCISE OF REV I SIONAL POWER TO TAKE A VIEW THAT FURTHER ENQUIRY HAS TO BE DONE. AT THE VERY HIGHEST, IT WAS SUBMITTED THAT THE CASE OF THE REVENUE IS THAT THIS IS A CASE OF INADEQUATE INQUIRY A ND NOT OF NO ENQUIRY . IT WAS SUBMITTED THAT T HE JURISDICTION UNDER SECTION 263 CAN BE EXERCISED BY THE COMMISSIONER ONLY WHEN IT IS A CASE OF LACK OF ENQUIRY AND NOT ONE OF INADEQUATE ENQUIRY. THE LD. AR REFERRED TO THE NOTICE U/S. 263 WHEREIN IT WAS MENTIONED THAT 'THE GIFT RECEIVED FROM ASSESSES SISTER AND MOTHER AMOUNTING TO RS.60, 00,000 / - WAS ALSO NOT FOUND PROPERLY EXAMINED BY THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT ORDER D A TED 11 - 11 - 2016'. THUS, IT WAS SUBMITTED THAT THIS WAS NOT A CAS E OF NO INQUIRY, WARRANTING ORDER UNDER SECTION 263. I.T.A. NO 421/COCH/2019 7 5.5 IN THE PRESENT FACTS, IT WAS SUBMITTED THAT THE ASSESSING OFFICER WAS SATISFIED, CONSEQUENT TO MAKING AN ENQUIRY AND EXAMINING THE EVIDENCES PRODUCED BY THE ASSESSEE AND TH IS IS A CASE WHERE A VI EW HAS BEEN TAKEN BY THE ASSESSING OFFICER ON ENQUIRY. RELIANCE WAS PLACED ON 390 ITR. 292 (BOM) . THUS, IT WAS SUBMITTED THAT THE ASSESSING OFFICER HAD MADE DUE ENQUIRIES WITH REGARD TO CASH DEPOSITS INTO THE BANK ACCOUNT, MORE PARTICULARLY, AFTER EXAMIN ING THE DETAILS/EXPLANATION FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS. HENCE, IT WAS PRAYED THAT THE ORDER PASSED U/S. 263 OF THE ACT BY THE PCIT MAY BE DROPPED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. SECTION 263 OF THE INCO ME - TAX ACT SEEKS TO REMOVE THE PREJUDICE CAUSED TO THE REVENUE BY THE ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. IT EMPOWERS THE COMMISSIONER TO INITIATE SUO MOTO PROCEEDINGS EITHER WHERE THE ASSESSING OFFICER TAKES A WRONG DECISION WITHOUT CONSIDERI NG THE MATERIALS AVAILABLE ON RECORD OR HE TAKES A DECISION WITHOUT MAKING AN ENQUIRY INTO THE MATTERS, WHERE SUCH INQUIRY WAS PRIMA FACIE WARRANTED. THE COMMISSIONER IS WELL WITHIN HIS POWERS TO TREAT AN ORDER AS ERRONEOUS ON THE GROUND THAT THE ASSESSING OFFICER SHOULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE WRONG CLAIMS MADE BY THE ASSESSEE. THE ASSESSING OFFICER CANNOT REMAIN PASSIVE IN THE FACE OF A CLAIM, WHICH CALLS FOR FURTHER ENQUIRY TO KNOW THE GENUINENESS OF IT. IN OTHER WORDS, HE MUST C ARRY OUT INVESTIGATION WHERE THE FACTS OF THE CASE SO REQUIRE AND ALSO DECIDE THE MATTER JUDICIOUSLY ON THE BASIS OF MATERIALS COLLECTED BY HIM AS ALSO THOSE PRODUCED BY THE ASSESSEE BEFORE HIM. THE ASSESSING OFFICER WAS STATUTORILY REQUIRED TO MAKE THE AS SESSMENT UNDER I.T.A. NO 421/COCH/2019 8 SECTION 143(3) AFTER SCRUTINY AND NOT IN A SUMMARY MANNER AS CONTEMPLATED BY SUB - SECTION (1) OF SECTION 143. THE ASSESSING OFFICER IS THEREFORE, REQUIRED TO ACT FAIRLY WHILE ACCEPTING OR REJECTING THE CLAIM OF THE ASSESSEE IN CASES OF SCRUTI NY ASSESSMENTS. THE ASSESSING OFFICER SHOULD PROTECT THE INTERESTS OF THE REVENUE AND TO SEE THAT NO ONE DODGED THE REVENUE AND ESCAPED WITHOUT PAYING THE LEGITIMATE TAX. THE ASSESSING OFFICER IS NOT EXPECTED TO PUT BLINKERS ON HIS EYES AND MECHANICALLY AC CEPT WHAT THE ASSESSEE CLAIMS BEFORE HIM. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED AND THE GENUINENESS OF THE CLAIMS MADE IN THE RETURN. THE ORDER PASSED BY THE ASSESSING OFFICER BECOMES ERRONEOUS WHEN AN ENQUIRY HAS NOT BEEN MADE BEFORE A CCEPTING THE GENUINENESS OF THE CLAIM WHICH RESULTED IN LOSS OF REVENUE. FURTHER, THE LD. AR POINTED OUT CERTAIN DEFECTS IN THE ISSUE OF NOTICE U/S. 263 OF THE I.T. ACT REGARDING MENTIONING THE DATE OF ASSESSMENT ORDER IN THE NOTICE ISSUED U/S. 263 OF THE I.T. ACT BY THE PCIT. IT IS A CLERICAL ERROR WHICH CANNOT MAKE THE ORDER U/S. 263 AS BAD IN LAW. 6.1 IN THE PRESENT CASE, AT THE TIME OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAD CALLED FOR DETAILS FROM THE ASSESSEE AND THE ASSESSEE HAS REPLIED VIDE TWO LETTERS DATED 27/08/2016 AND 23/08/2016 WHICH CONTAINED THE FOLLOWING DETAILS: FROM, MITHRA PAUL 8/243, POTTAYAIL HOUSE MEKKADAMPU (P O ) M UVATTAPUZHA ERNAKULAM - 682316 TO, I.T.A. NO 421/COCH/2019 9 THE INCOME TAX OFFICER WARD - 1 THODUPUZHA DEAR SIR/MADAM, SUB: PA NO. ANGPP 7357Q ASSESSMENT YEAR 2014 - 15 CONTINUATION OF HEARING CONDUCTED ON 19 - 08 - 2016 FURTHER TO T HE ABOVE I AM FURNISHING THE DETAILS CALLED FOR AT THE TIME OF HEARING. 1. I HAD RECEIVED A RENT OF RS. 9,350/ - PER MONTH FROM M/S AHALYA FOUNDATION ON HOUSE PROPERTY AT X/X, MARKET (PO), KADATHY, MUVATTUPUZHA. I HAD ALSO RECEIVED RENT OF RS. 7,500/ - PER MONTH FROM SRI. MURALIDHARAN FOR AN ATTACHED ANNEXE BUILDING. THE TOTAL RENT RECEIVED FOR THE F.Y. 2013 - 14 AMOUNTED TO RS, 1,82,65 0 / - AS FOLLOWS: FROM AHALYA FOUNDATION 92,650 FROM SRI. MURALIDH ARAN 90,000 1,82,650 THE INCOME FROM HOUSE PROPERTY WOULD WORK OUT AS FOLLOWS: RENTAL INCOME 1,82,650 30% STANDARD DEDUCTION 54,795 1,27,855 LESS: INTEREST ON LOAN TAKEN FOR THE HOUSE PROPERTY FROM ICICL BANK 7 , 97,115 INCOME ( - ) 6,69 , 260 SINCE THE NET INCOME FROM THE HOUSE PROPERTY WAS A LOSS, I HAVE NOT INCLUDED THE SAME IN THE RETURN. 2. I AM ENCLOSING A CONFIRMATION LETTER DATED 23 - 08 - 2016 FROM MY SISTER REGARDING GIFT BY HER AND MY MOTHER TO ME DURING THE F.Y, 2013 - 14.1 HAD ALSO EXTRACTED AND SOLD GRAVEL EARTH FROM PROPERTY AT KANIKACHAL VILLAGE, CHANGANASSERY JOINTLY HELD WITH MY NEICE NIKITHA FOR ABOUT RS.35 LAKHS IN F.Y. 2013 - 14. TH ANKING YOU, I.T.A. NO 421/COCH/2019 10 YO URS FAITHFULLY SD/ - MITHRA PAUL FROM, CHITHRA SHIRILSON 8/243,. POTTAYIL HOUSE, MEKKADAMPU(PO) MUVATTUPUZHA, ERNAKULAM - 682316. TO, THE INCOME TAX OFFICER, WARD - 1 THODUPUZHA. DEAR SIR/MADAM SUB: CONFIRMATION OF GIFT TO MY SISTER MITHRA PAUL I HEREBY CONFIRM THE FOLLOWING FACTS. 1. I AM ENCLOSING A COPY OF LEGAL HEIRSHIP CERTIFICATE ISSUED UPON DEMISE OF MY FATHER, S RI. P.V . PAULOSE (CERTIFICATE DATED 24 - 07 - 2001). T HE LEGAL HEIRS OF SRI. P.V. PAULOSE ARE: I. THANKAMMA PAULOSE (WIFE) II. CHITHRA SHIRILSON (DAUGHTER) III. MITHRA PAUL (DAUGHTER) 2. SMT. THANKAMMA PAULOSE DIED ON 16 - 01 - 2016 AND THE LEGAL HEIRS OF SMT. THANKAMMA PAULOSE ARE AS FOLLOWS: I. CHITHRA SHIRILSON (DAUGHTER) II. MITHRA PAUL (DAUGHTER) COPY OF LEGAL HE IRSHIP CERTIFICATE IS ENCLOSED. 3. MYSELF, MY MOTHER SMT. THANKAMMA PAULOSE AND MITHRA MY SISTER HAD INHERITED 1.5 ACRES OF RUBBER PLANTATION AT VALAKOM VILLAGE UPON DEMISE OF OUR FATHER SRI. P. V. PAULOSE. COPY OF LAND TAX RECEIPT DT. 21 - 04 - 2016 IS ENC LOSED. 4. RUBBER PLANTATION WAS VERY OLD AND IT WAS REACHING ITS SAG END OF NATURAL LIFE. ALSO SINCE RUBBER PLANTATION WAS NOT ECONOMICAL DUE TO FALL IN PRICES AND SCARCITY OF WORKERS FOR TAPPING AND MAINTENANCE, WE OPTED TO CLEAR THE RUBBER I.T.A. NO 421/COCH/2019 11 PLANTATION AND LEVEL THE HILLY SLOPE INTO A PLAIN GROUND. IN THE PROCESS WE EXTRACTED SUBSTANTIAL QUANTITY OF HARD LATERITE (VETTUKAL) AND LOOSE EARTH. THE SALE PROCEEDS AT THE SAME IN F. Y. 2013 - 2014 AMOUNT TO APPROXIMATELY RS. 60 LAKHS. 5. OTHER THAN MITHRA, ONL Y MYSELF AND MY MOTHER THANKAMMA PAUJOSE WERE THE OWNERS. I CONFIRM T H AT MYSELF AND SMT. THANKAMMA PAU L OSE ALLOWED MIT H RA, MY SISTER T O ENJOY THE PROCEEDS OF THE SALE OF HARD LATERITE (VETTUKA L ) BY HERSELF AND MADE A GIFT OF OUR SHARE OF SALE PROCEE DS TO HER. SINCE THANKAMMA PAULOSE IS NO MORE AND I AM THE ONLY OTHER HEIR TO THE PROPERTY, I CONFIRM THE ABOVE FACTS ON BEHALF OF MY DECEASED MOTHER SMT. THANKAMMA PAULOSE ALSO. THANKING YOU. YOURS FAITHFULLY SD/ - CHITHRA SHIRILSON 6.3 FURTHER, T HE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER DATED 11/11 /2016 BY OBSERVING AS FOLLOWS: 2. THE CASE WAS SELECTED FOR SCRUTINY TO VERIFY THE ASPECT OF CASH DEPOSITS IN SAVINGS BANK ACCOUNT. DETAILS HAVE BEEN CALLED FOR AND EXAMINED. 3. REGARDING THE CASH DEPOSIT MADE BY THE ASSESSEE INTO THE SAVINGS BANK AC COUNT NO. 013500900004300 WITH DHANALAKSHMI BANK LTD., MUVATTUPUZHA BRANCH DURING THE PREVIOUS YEAR UNDER CONSIDERATION, DETAILS HAVE BEEN CALLED FOR AND EXAMINED. AS PER THE EXP LANATION GIVEN IN A LETTER DATED 03 - 10 - 2 016 FILED AND ALSO WHEN APPEARED FOR H EARING DURING THE COURSE OF ASSESSMENT, ASSSSEE REVEALED THAT SHE HAS CARRIED OUT THE SALE OF LATERITE AND GRAVEL EARTH FROM T HE LANDS OWNED BY HER IN MUVA TTU PUZHA AND C HANGANASSERY WHI CH WAS NOT DISCLOSED IN THE RETURN OF INCOME FILED F OR THE YEAR. THE ASSESSEE EXPLAINED THAT THE CASH DEPOSITS MADE INTO HER BANK ACCOUNT WERE OUT OF SAID LATERITE AND GRAVEL EARTH BUSINESS. IT WAS RE VEALED THAT NO BOOKS OF ACCOUNTS WERE MAINTAINED FOR SAID BUSINESS AND THE TURNOVER WAS BELOW RS. 1 CRORE DURING THE PREVIOUS YEAR. THE VOLUME OF CASH DEPOSITS AND THE DISCLOSURE MADE BY THE ASSESSEE, LEAD TO THE CONCLUSION THAT ASSESSEES TURNOVER OF SAID BUSINESS WAS BELOW RS. 1 CRORE AND THEREFORE INCOME CAN BE COMPUTED AS PER SECTION 44AD OF THE INCOME TAX ACT. HOWEVER, AS THE ASSESSEE OFFERED 10% TURNOVER AS INCOME FROM THE LATERITE AND GRAVEL EARTH BUSINESS AN AMOUNT OF RS.9,50,000/ - WHICH BEING 10% OF THE TOTAL TURNOVER RS.95,00,000/ - IS ASSESSED TO TAX NOW. I.T.A. NO 421/COCH/2019 12 3.1 . ASSESSEE CONCEALED PARTICULARS OF HI S INCOME FOR THE YEAR AND THEREFORE PENALTY U/S 271 (1)(C) OF THE ACT IS ATTRACTED IN THE CASE. ADDITION: 9 , 50 , 000/ - 6.4 AS SEEN FROM THE ABOVE, , THE ASSESSING OFFICER WHILE FRAMING THE ASSE SSMENT U/S. 143(3) OF THE I.T. ACT CONSIDERED THE DEPOSITS MADE INTO THE BANK ACCOUNT WITH DHANALAKSHMI BANK LTD., MUVATTUPUZHA AT RS.95,00,000/ - AND CALLED FOR EXPLANATION FROM THE ASSESSEE. IT WAS SUBMITTED BY THE ASSESSEE AT THE TIME OF ASSESSMENT THAT THE ASSESSEE CARRIED OUT THE SALE OF LATERITE AND GRAVEL EARTH FROM THE LANDS OWNED BY HER IN MUVATTUPUZHA AND CHANGANASSERY AND THE CASH DEPOSITS MADE INTO HER BANK ACCOUNT WERE OUT OF SALE OF SAID LATERITE AND GRAVEL EARTH BUSINESS. SINCE THE ASSESSEE S TURNOVER WAS LESS THAN RS.1 CRORE DURING THE PREVIOUS YEAR, THE ASSESSING OFFICER HAD TAKEN A CLUE FROM THE PROVISIONS OF SECTION 44AD OF THE I.T. ACT AND APPLIED 10% OF THE TOTAL INCOME AS INCOME OF THE ASSESSEE FROM THE SAID BUSINESS AND MADE AN ADDIT ION OF RS.9,50,000/ - TO THE RETURNED INCOME OF THE ASSESSEE. 6.5 THE PCIT WAS NOT AGREEING WITH THIS VIEW OF THE ASSESSING OFFICER . A CCORDING TO HIM, THE IMPUGNED AMOUNT DEPOSITED INTO THE BANK ACCOUNT IS TO BE RE - EXAMINED BY THE ASSESSING OFFICER. I N OUR OPINION, SINCE THE ASSESSING OFFICER WHILE FRAMING THE ORIGINAL ASSESSMENT, HAD CONSIDERED THE ENTIRE MATERIAL, WAS SATISFIED WITH THE ABOVE FACTUAL ASPECT AND THEREAFTER, ESTIMATED THE INCOME OF THE ASSESSEE AT 10% AND MADE AN ADDITION OF RS.9,50,00 0/ - . THE ASSESSING OFFICER HAD TAKEN ONE POSSIBLE VIEW WHERE TWO VIEWS ARE POSSIBLE. WHEN THE PCIT DOES NOT AGREE , THE I.T.A. NO 421/COCH/2019 13 ASSESSMENT CANNOT BE TREATED AS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE , SINCE THE VIEW TAKEN BY THE A SSESSING OFFICER IS NO T UNSUSTAINABLE IN LAW . I N OTHER WORDS, WHEN AN ASSESSING OFFICER ADOPTS ONE OF THE COURSES PERMISSIBLE IN LAW WHICH RESULTS IN LOSS OF REVENUE OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH T HE PCIT/COMMISSIONER DOES NOT AGREE, THE ASSESSMENT ORDER CANNOT BE TREATED AS ERRONEOUS ORDER IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. ANY AND EVERY ERRONEOUS ORDER CANNOT BE THE SUBJECT MATTER FOR REVISION U/S. 263 OF THE I.T. ACT UNLESS THE SECOND REQUIREMENT OF SECTION 263 OF THE ACT BEING PREJUDICIAL TO THE INTERESTS OF THE REVENUE PREVAILS. IN THIS CASE, THERE WAS NO MATERIAL TO SHOW AS TO HOW THE ORDER OF THE ASSESSING OFFICER WAS ERRONEOUS IN SO FAR AS IT WOULD BECOME PREJUDICIAL TO THE INTERESTS OF THE REVENUE TO INVOKE THE JURISDICTION U/S. 263 OF THE ACT. T O T AKE THIS VIEW, WE RELY ON THE JUDGMENT S OF THE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT (243 ITR 83), CIT VS. MAX INDIA LTD. (295 ITR 282) AND CIT VS. GABRIEL INDIA LTD. (203 ITR 108) [BOMBAY] . BEIN G SO, THE ASSESSING OFFICER AFTER APPLYING HER MIND HAS TAKEN CONSCIOUS DECISION ON THIS ISSUE RAISED BY THE PCIT IN HIS ABOVE O RDER U/S. 263 OF THE ACT. THE PCIT CANNOT SUBSTITUTE HIS VIEW ON THE ISSUE CONSIDERED BY THE ASSESSING OFFICER WHICH IS NOT JUSTIFIED. IN OUR OPINION, I NVOKING OF PROVISIONS OF SECTION 263 OF THE ACT FOR MAKING ROVING ENQUIRY IS UNJUSTIFIED. ACCORDINGLY , WE QUASH THE ORDER OF THE PCIT PASSED U/S. 263 OF THE ACT. THUS, THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. I.T.A. NO 421/COCH/2019 14 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH SEPTEMBE R , 2019. (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 20 TH SEP TEMBER , 2019 GJ COPY TO: 1 . SMT. MITHRA PAUL, 8/243, POTTAYIL HOUSE, MEKKADAMBU P.O., MUVATTUPUZHA - 682 316. 2. THE INCOME TAX OFFICER, WARD - 1, THODUPUZHA. 3 . THE PR. COMMISSIONER OF INCOME - TAX, KO CHI. 4 . D. R., I.T.A.T., COCHIN BENCH, COCHIN. 5. . GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN