GIRIRAJ GUPTA, Jaipur V. CIT, Kota

ITA 426/JPR/2013

• Counselvise Citation: 42623114 RSA 2013
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 22-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHASH CHANDRA
• Keywords: Rejection of books of accounts; Charitable institution; Opportunity of being heard; Assessment record; Prejudicial to interest; Revenue expenditure; Capital expenditure
• Section: 143(3); 145; 263; 63

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JAIPUR BENCH : JAIPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 426/JP/2013 (A.Y. 2008-09) SHRI GIRIRAJ GUPTA, VS. THE CIT, KOTA. PROP. M/S. SHREE FALODI TRADING CO., C-108, BHAMASHAH MANDI, KOTA. PAN NO. ABRPG 5319 A (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SHRAWAN KUMAR GUPTA. DEPARTMENT BY : SHRI SUBHASH CHANDRA - D.R. DATE OF HEARING : 21/01/2014. DATE OF PRONOUNCEMENT : 28/02/2014. O R D E R PER N.K. SAINI, A.M THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 07/03/2013 OF LD. CIT, KOTA. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THAT THE IMPUGNED ORDER U/S 263 DATED 07/03/201 3 IS BAD IN LAW AND ON FACTS OF THE CASE FOR WANT OF JURISDICTION A ND FOR VARIOUS OTHER REASONS AND HENCE THE SAME MAY KINDLY BE QUASHED. 2.1 THAT THE LD. CIT KOTA IS ERRED IN LAW AS WELL A S ON THE FACTS OF THE CASE IN INVOKING SECTION 263 OF THE ACT. THE SAME IS BEING PURELY 2 CONTRARY TO THE PROVISIONS OF LAW, THEREFORE, THE I MPUGNED ORDER U/S 263 OF THE ACT MAY KINDLY BE QUASHED. 2.2. THAT THE LD. CIT KOTA IS ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN TAKING THE ACTION U/S 263 OF THE ACT ON THE ALLEGATION THAT:- (A) NO INTEREST HAS BEEN CHARGED ON FARMER DEBTORS OF R S. 16,40,083/- AND ASSESSEE IS PAYING INTEREST TO CRED ITORS. (B) NO INTEREST HAS BEEN CHARGED ON THE ADVANCE OF RS. 11.00 LAC GIVEN TO SH. NAMOKAR AS ADVANCE FOR PROPERTY PU RCHASED. (C) NO INTEREST HAS BEEN CHARGED ON TRADE DEBTORS OF RS . 2,52,000/- OF M/S FALODI EARTH MOVERS. (D) NO DETAILS OBTAINED REGARDING RS. 40,800/- OF SALES TAX DEMAND. (E) NO DEDUCTION REGARDING HOUSE HOLD EXPENSES AND NOT MADE ANY ADDITION IN THIS ACCOUNT. (F) THE ASSESSEE HAS CLAIMED SHORTAGE IN DHANIA @ 3.75% WHICH IS ON HIGHER SIDE AND IS NOT GENUINE IN THIS LINE O F BUSINESS. (G) WEIGHT OF BARDANA HAS NOT BEEN ACCOUNTED FOR IN THE WEIGHT OF GOODS PURCHASED BY THE ASSESSEE. WHICH IS CONTRARY TO THE FACTS AND SUCH A FINDING B EING PERVERSE, THE IMPUGNED ACTION IS BAD IN LAW WITHOUT JURISDICTION AND BEING VOID AB INITIO, THE IMPUGNED ORDER U/S 263 OF THE ACT KINDL Y BE QUASHED. 3. THAT THE LD. CIT IS ERRED IN LAW AS WELL AS ON T HE FACTS OF THE CASE IN SETTING ASIDE THE ASSESSMENT TO BE MADE AFRESH WITH THE DIRECTION TO RE-EXAMINE THE ISSUE IN THE LIGHT OF HIS OBSERVATIO N. THE SAME IS BEING PURELY CONTRARY TO THE PROVISIONS OF LAW, THE REFORE, THE IMPUGNED ORDER U/S 263 OF THE ACT KINDLY BE QUASHED . 4. THE APPELLANT PRAYER YOUR HONOURS INDULGENCE TO ADD, AMEND OR ALTER ALL OR ANY OF THE GROUNDS OF THE APPEAL ON OR BEFORE THE DATE OF HEARING. 2 THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO THE ACTION OF THE LD. CIT IN QUASHING THE ASSESSMENT OR DER BY INVOKING THE PROVISIONS OF SECTION 263 OF THE I.T. ACT, 1961 (HE REINAFTER REFERRED TO AS THE ACT IN SHORT) 3 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 24/09/2008 DECLARING AN INCOME OF RS. 4,8 7,472/- WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE I.T. ACT, 196 1 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT). LATER ON CASE WAS SELEC TED FOR SCRUTINY AND THE ASSESSMENT WAS FRAMED AT AN INCOME OF RS. 6,37,478/ - BY MAKING TRADING ADDITION OF RS. 1,00,000/- IN DHANIYA ACCOUNT AND D ISALLOWANCE OF RS. 50,000/- WAS MADE OUT OF LOSS CLAIMED IN SARSO ACCO UNT. THEREAFTER, ITO, WARD-1(2), KOTA VIDE LETTER DATED 01/04/2011 HAS PR OPOSED ACTION UNDER SECTION 263 OF THE ACT ON THE FOLLOWING POINTS DECI DED AND CONSIDERED IT AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE:- (I) AS PER BALANCE SHEET, THE ASSESSEE HAVE SHOWN FARME R DEBTORS OF RS.1640083/- ON WHICH NO INTEREST HAS BEEN CHARGED FROM THE FARMER DEBTORS WHEREAS THE ASSESSEE WAS PAYING HEAVY INTER EST TO THE CREDITORS. THE AO HAS NOT EXAMINED THIS ISSUE. (II) THE ASSESSEE HAS ADVANCED RS.11.00 LAKHS TO SHRI NA MOKAR MAL JAIN AS ADVANCE FOR PROPERTY. NO INTEREST HAS BEEN CHARGED ON THE AMOUNT BY THE ASSESSEE. THE AO HAS NOT CALLED FOR DOCUMENTARY EVIDENCE REGARDING THIS TRANSACTION. (III) IN THE DEBTORS LIST, THE ASSESSEE HAS SHOWN M/ S. F ALODI EARTH MOVERS AS TRADE DEBTOR AND NO INTEREST HAS BEEN CHARGED ON TH E AMOUNT OF RS.252000/ -. THE SAID FIRM APPEARS TO BE SISTER CO NCERN OF THE ASSESSEE. THE AO HAS NOT EXAMINED THE DEBTOR NOR HAS TAKEN AN Y DOCUMENTARY EVIDENCE OR LEDGER ACCOUNT TO JUSTIFY WHY INTEREST HAS NOT BEEN CHARGED ON THE ABOVE SUM. (IV) THE ASSESSEE HAS DEBITED RS.40800/- IN THE P& L ACCOUNT AS SALES TAX DEMAND. THE AO HAS NOT OBTAINED ANY DETAILS REGARDI NG THE YEAR TO WHICH DEMAND RELATES AND NATURE OF DEMAND OF SALES TAX. 4 (V) THE ASSESSEE AND HIS WIFE HAVE CONTRIBUTED RS. 102000/ - WHICH IS VERY LOW LOOKING TO YOUR BUSINESS AND SOCIAL 'STATUS BUT THE AO HAS NOT DISCUSSED THIS ISSUE NOR WAS MADE ANY ADDITION UNDE R THIS HEAD. (VI) THE ASSESSEE HAS CLAIMED SHORTAGE IN DHANIA @ 3.75% (APPROX) WHICH IS ON HIGHER SIDE AND IS NOT GENUINE IN THIS LINE OF B USINESS BUT THE ASSESSING OFFICER DID NOT EXAMINE THIS ISSUE PROPER LY. (VII) AS PER DETAILS COPIES OF TRADING ACCOUNTS AN D DETAILS OF, DHANIA & SARSON ACCOUNT ON MONTHLY BASIS IN TERMS OF QUANTITY AND A MOUNT FILED BY THE ASSESSEE, IT IS FOUND THAT BARDANA IN NUMBER 44029 HAS BEEN CONSUMED BY THE ASSESSEE IN PACKING OF THE GOODS PURCHASED, SOLD & REMAINED IN CLOSING STOCK. BUT AS PER THE QUANTITATIVE MONTH WI SE DETAILS, IT APPEARS THAT THE WEIGHT OF BARDANA HAS NOT BEEN ACCOUNTED F OR IN THE WEIGHT OF GOODS PURCHASED BY THE ASSESSEE DURING THE YEAR WHI CH RESULTED EITHER THE WEIGHT EQUAL TO BARDANA I.E. 44029 KG. WHICH IN CLUDES ALL THE ITEMS OF AGRICULTURE PRODUCE DEALT IN BY THE ASSESSEE DUR ING THE YEAR WERE SOLD OUT OF BOOKS OR REMAINED WITH THE ASSESSEE AS CLOSI NG STOCK FOR WHICH THE VALUE HAS NOT BEEN SHOWN BY THE ASSESSEE. THIS ISSUE HAS NOT BEEN EXAMINED BY THE AO NOR ANY SUCH INFORMATION IS AVAI LABLE ON RECORD FROM ASSESSEE'S SIDE . 4. ON RECEIPT OF PROPOSAL UNDER SECTION 263 OF THE AC T FROM THE ITO, WARD-1(2), KOTA, A SHOW-CAUSE NOTICE UNDER SECTION 263 OF THE ACT DATED 11/01/2013 WAS ISSUED. THE ASSESSEE FILED WRITTEN SUBMISSION ON 05/02/2013 IN RESPONSE TO THE SAID NOTICE, WHICH RE ADS AS UNDER:- THAT THE ASSESSEE IS A GRAINS MERCHANT AND COMMISS ION AGENT SINCE LONG AND HAVING THE INCOME FROM THIS BUSINESS REGULARLY. DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAS FILED HIS RETURN DECLARI NG AN INCOME OF RS. 487478/ - ON DATED 24.09.2008. THE BOOKS OF ACCOUNT S OF THE ASSESSEE WAS AUDITED UNDER SECTION 44AB OF I.T. ACT. THE CASE OF ASSESSEE HAS BEEN SELECTED FOR SCRUTINY AND FINALLY CASE HAS BEEN COMPLETED UNDER SECTION 143(3) OF THE I.T. ACT, IN WHICH FOLLOWING ADDITIONS HAVE BEEN MADE: 5 (1) TRADING ADDITION IN DHANIA A/C: 100000/- (2) DISALLOWANCE OUT OF LOSS CLAIMED IN SARSOON A/ C: 50000/ - NOW SHOW CAUSE NOTICE UNDER SECTION 263 OF I.T. ACT HAS BEEN ISSUED ON FOLLOWING 6 GROUNDS: 'I) AS PER BALANCE SHEET, YOU HAVE SHOWN FARMER DEB TORS OF RS. 1640083/ - ON WHICH NO INTEREST HAS BEEN CHARGED FROM THE FARM ER DEBTORS WHEREAS YOU WERE PAYING HEAVY INTEREST TO THE CREDITORS. TH E AO HAS NOT EXAMINED THIS ISSUE. II) YOU HAVE ADVANCED RS. 11.00 LACS TO SHRI NAMOKA R MAL JAIN AS ADVANCE FOR PROPERTY. NO INTEREST HAS BEEN CHARGED ON THIS AMOUNT THE ASSESSING OFFICER HAS NOT CALLED FOR DOCUMENTARY EVIDENCE REG ARDING THIS TRANSACTION. III) IN THE DEBTORS LIST, YOU HAVE SHOWN M/ S FALOD I EARTH MOVERS AS TRADE DEBTORS AND NO INTEREST HAS BEEN CHARGED ON THE AMO UNT OF RS. 252000/-. THE SAID FIRM APPEARS TO BE YOUR SISTER CONCERN. TH E AO HAS NOT EXAMINED THE DEBTORS NOR HAS TAKEN ANY DOCUMENTARY EVIDENCE OR LEDGER ACCOUNT TO JUSTIFY WHY INTEREST HAS NOT BEEN CHARGED ON THE AB OVE SUM. IV) YOU HAVE DEBITED RS. 40800/- IN THE P&I- ACCOUN T AS SALES TAX DEMAND. THE AO HAS NOT OBTAINED ANY DETAILS REGARDING THE Y EAR TO WHICH DEMAND RELATES AND NATURE OF DEMAND OF SALE TAX. V) YOU AND YOUR WIFE HAVE CONTRIBUTED RS.102000/- W HICH IS VERY LOW LOOKING TO YOUR BUSINESS AND SOCIAL STATUS BUT THE AO HAS N OT DISCUSSED THIS ISSUE NOR WAS MADE ANY ADDITION UNDER THIS HEAD. VI) YOU HAVE CLAIMED SHORTAGE IN DHANIA @ 3.75% (AP PROX) WHICH IS ON HIGHER SIDE AND IS NOT GENUINE IN THIS LINE OF BUSI NESS BUT THE AO DID NOT EXAMINE THIS ISSUE PROPERLY.' SUBMISSION (I) 'AS PER BALANCE SHEET, YOU HAVE SHOWN FARMER DE BTORS OF RS. 1640083/ - ON WHICH NO INTEREST HAS BEEN CHARGED FROM THE FARM ER DEBTORS WHEREAS 6 YOU WERE PAYING HEAVY INTEREST TO THE CREDITORS. TH E AO HAS NOT EXAMINED THIS ISSUE.' THE BUSINESS OF ASSESSEE IS TRADING IN FOOD GRAIN & COMMISSION AGENT. THE COMMISSION AGENT MEANS KACHCHA ADATIYA' GETTING ADA T COMMISSION FROM FARMERS ON GOODS SOLD BY THEM AT KRISHI UPAJ MANDI SAMITI YARD. THE RITE OF ADAT COMMISSION IS FIXED BY KRISHI UPAJ MANDI SAMIT I. DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAS EARNED ADAT COMMISSION O F RS. 1589512/-, WHICH IS CREDITED IN TRADING A/C. IN GENERAL SYSTEM OF ADAT BUSINESS, KACHCHA ADATIYA GIVES ADVANCE TO FARMERS AT CROPPIN G TIME FOR PURCHASING SEEDS, DIESEL, KHAD FERTILIZERS ETC. THE FARMER WHO IS GETTING ADVANCE FROM KACHCHA ADATIYA SALES HIS CROP GOODS IN THE ADAT OF KACHCHA ADATIYA. KACHCHA ADATIYA GETS ADAT COMMISSION ON CROP SOLD B Y FARMER ON THE SALE CONSIDERATION. THE KACHCHA ADATIYA ADJUSTS HIS OLD DUES (ADVANCE TAKEN BY FARMER ON CROP) AND MAKES BALANCE PAYMENT TO FARMER . IT IS THE REGULAR PROCESS OF BUSINESS TO LEND ADVAN CE MONEY TO FARMERS ON CROP TIME AND FARMERS SALE THEIR CROP WITH THE HELP OF KACHCHA ADATIYA FOR GETTING GOOD PRICE OF THEIR CROP, FOR WHICH ADATIYA GETS COMMISSION. THE ADVANCE GIVEN TO FARMERS WITHOUT INTEREST IS PART O F THIS BUSINESS AND HAS TO BE GIVEN TO BOUND THE FARMERS FOR BINGING THEIR CRO P TO US ONLY FOR SELLING IN THE MANDI YARD AND EARNING ADAT ON THAT. THIS BUSIN ESS AND THESE TRANSACTIONS CAN NOT BE TREATED AS MONEY LENDING BU SINESS. HENCE, THERE IS NO QUESTION OF CHARGING INTEREST ON ADVANCE MONEY G IVEN TO FARMERS. DURING THE YEAR UNDER CONSIDERATION, OUTSTANDING AD VANCE TO FARMERS WAS RS. 1640083/ - ONLY AND OTHER SIDE, ASSESSEE HAS EA RNED ADAT COMMISSION OF RS. 1589512/-. IN THE EVERY CASE OF VARIOUS ASSESSEES OF KRISHI U PAJ MANDI SAMITI DEALERS, THERE IS NO SYSTEM OF CHARGING INTEREST ON ADVANCES TO FARMERS . THE ALLEGATION THAT IT IS NOT EXAMINED BY AO, IN THIS R EGARD. IT IS SUBMITTED THAT ASSESSEE HAS FURNISHED ALL THE DETAILS OF FARMERS A DVANCES OF RS. 1640083/- IN SCHEDULE -X OF RELEVANT AUDIT REPORT, WHICH CLEA RLY SHOWS NAME WISE LIST OF ADVANCES MADE. THE SAME HAS BEEN VERIFIED BY AO FRO M THE BOOKS OF ACCOUNTS PRODUCED BEFORE THE LEARNED AO. WE HAVE PRODUCED COMPLETE BOOKS OF ACCOUNTS, BEFORE THE LEARNED. AO AND THE SAME HAVE BEEN MENTIONED IN THE ASSESSMENT ORDE RS AS PAGE NO. 1 THAT 7 BOOKS OF ACCOUNTS CONSISTING CASH BOOK, LEDGER, STO CK REGISTER, RELEVANT PURCHASE & SALE BILLS AND VOUCHERS FOR EXPENSES, AR E PRODUCED., WHICH WERE EXAMINED ON TEST CHECK BASIS AND CASE WAS DISCUSSED WITH HIM. IT IS SUBMITTED THAT WHEN ALL THE DETAILS SUBMITTED BY ASSESSEE AND AO FRAMED THE ASSTT ORDER THEREON, RELIANCE IS PLACED ON A CASE OF HIGH COURT OF GUJARAT 21 TAXMAN. COMM. 64 (GUJ) COMMISSIONER OF I . TAX V/S AMIT CORPORATION IT HAS BEEN HELD ' WHEN DURING COURSE O F FRAMING OF ASSESSMENT, ASSESSING OFFICER HAD ACCESS TO ALL REC ORDS OF ASSESSEE AND AFTER PERUSING SAID RECORDS, HE FRAMED ASSESSMENT, SAID A SSESSMENT COULD NOT BE RE -OPENED IN EXERCISE OF REVISION POWER UNDER SECT ION 263 FOR MAKING FURTHER INQUIRES .' (II) 'YOU HAVE ADVANCED RS. 11.00 LACS TO SHRI NAMO KAR MAL JAIN AS ADVANCE FOR PROPERTY. NO INTEREST HAS BEEN CHARGED ON THIS AMOUNT. THE AO HAS NOT CALLED FOR DOCUMENTARY EVIDENCE REGARDING THIS TRAN SACTION.' THE ADVANCE AMOUNT WAS PAID FOR PURCHASING PROPERTY . THE FINAL AMOUNT HAS BEEN PAID BY ASSESSEE IN THE SUBSEQUENT YEAR I. E. IN NEXT FINANCIAL YEAR. THE QUESTION REGARDING NON CHARGING OF INTEREST, IT IS SUBMITTED THAT IF ANYONE PURCHASES PROPERTY AND SELLER ALLOWS THE PER IOD FOR FINAL PAYMENT & POSSESSION, THEN HOW INTEREST IS TO BE CHARGED ON A DVANCE AMOUNT PAID BY BUYER? IN FACT, IT IS MERCY OF SELLER THAT HE DOES NOT CHARGE THE INTEREST ON REMAINING PAYMENT FROM BUYER 'FOR GIVING THE PERIOD FOR MAKING FINAL PAYMENT. GENERALLY, NEITHER INTEREST IS TO BE PAID BY BUYER NOR RECOVERED BY SELLER ON BALANCE PAYMENT. THIS IS ALSO THE SYSTEM OF SUCH TRANSACTIONS. ASSESSEE HAS ADVANCED RS. 11.00 LACS TO ONE SHRI NA MOKAR MAL JAIN, THE CAPITAL BALANCE OF ASSESSEE IS RS. 21.31 LACS AS ON 31/03/2010 AND THE AMOUNT PAID RS. 11.00 LAC IS COVERED FROM CAPITAL B ALANCE OF ASSESSEE. THERE IS NO INTEREST BEARING FUNDS HAVE BEEN USED IN ADVA NCE GIVEN FOR PROPERTY. (III) 'IN THE DEBTORS LIST, YOU HAVE SHOWN M/S FALO DI EARTH MOVERS AS TRADE DEBTORS AND NO INTEREST HAS BEEN CHARGED ON THE AMO UNT OF RS. 252000/-. THE SAID FIRM APPEARS TO BE YOUR SISTER CONCERN. TH E AO HAS NOT EXAMINED THE DEBTORS NOR HAS TAKEN ANY DOCUMENTARY EVIDENCE OR LEDGER ACCOUNT TO JUSTIFY WHY INTEREST HAS NOT BEEN CHARGED ON THE AB OVE SUM.' 8 THE AMOUNT HAS BEEN PAID TO M/S FALODI EARTH MOVERS RS. 2.52 LACS AND IT IS SUBSEQUENTLY RECOVERED FROM PARTY. THE QUESTION REG ARDING CHARGING OF INTEREST ON AMOUNT PAID RS. 2.52 LACS DOES NOT ARIS E BECAUSE THE ASSESSEE IS HAVING SUFFICIENT CAPITAL BALANCE OF RS. 21.31 LACS IN HAND AS ON 31/03/2010 AND INTEREST BEARING FUNDS HAVE NOT BEEN USED IN AB OVE REFERRED ADVANCE. DURING THE ASSTT PROCEEDING THE SAME HAS BEEN EXPLA INED TO AO ALSO AND HE HIMSELF WAS SATISFIED. THEREBY NO INFERENCE HAS BEE N MADE BY AO. (IV) 'YOU HAVE DEBITED RS. 40800/- IN THE P&L ACCOU NT AS SALES TAX DEMAND. THE AO HAS NOT OBTAINED ANY DETAILS REGARDING THE Y EAR TO WHICH DEMAND RELATES AND NATURE OF DEMAND OF SALE TAX.' THE AMOUNT PAID FOR VARIOUS OUTSTANDING OF SALE TAX IN THE YEAR UNDER CONSIDERATION WHICH IS CORRECTLY DEBITED IN THE CUR RENT YEAR EXPENSES. THIS DEMAND RELATED TO THE INTEREST AND SALES TAX OF VAR IOUS YEARS, WHICH HAVE BEEN PAID DURING THE YEAR UNDER CONSIDERATION. THE SALE TAX INTEREST LIABILITY IS ALLOWABLE IN THE YEAR OF PAYMENT ONLY. WE ARE EN CLOSING HEREWITH THE COPIES OF ALL THE CHALLANS DEPOSITED FOR ABOVE REFE RRED AMOUNT ALONGWITH THE DEMAND NOTICE AND SALES TAX ASSESSMENT ORDER WI TH ACCOUNT COPY FOR YOUR READY REFERENCE. (PAGE 1 TO 10) (V) 'YOU AND YOUR WIFE HAVE CONTRIBUTED RS.102000/- WHICH IS VERY LOW LOOKING TO YOUR BUSINESS AND SOCIAL STATUS BUT THE AO HAS NOT DISCUSSED THIS ISSUE NOR WAS MADE ANY ADDITION UNDER THIS HEAD.' THE QUERY LETTER DATED 22/06/2010 ISSUED BY AO IS E NCLOSED HEREWITH. ON THE POINT NO. 13 OF QUERY LETTER DATED 22.06.2010, IT IS CLEARLY ASKED BY AO ABOUT HOUSEHOLD EXPENSES. THE QUERY GIVEN BY AO FOR H/H IS REPRODUCED HERE UNDER: (PAGE 11 TO 12) 'DETAILS OF HOUSE HOLD EXPENSES OF YOUR FAMILY ALON G WITH DETAILS OF FAMILY MEMBERS. PLEASE JUSTIFY THE HOUSEHOLD EXPENSES SHOW N BY YOU AND WHO BEARS THESE EXPENSES. IN CASE ANY OTHER PERSON WAS CONTRIBUTED THE HOUSEHOLD EXPENSES. PLEASE FILE COPY OF I.T. RETURN , COMPUTATION OF INCOME AND CAPITAL ACCOUNT OF OTHER PERSON, WHICH CAN PROV E THE CLAIM OF THE ASSESSEE.' 9 IN COMPLIANCE TO QUERY RAISED FOR H/H EXPENSES ASSE SSEE HAS CATEGORICALLY REPLIED WHICH IS REPRODUCED HERE UNDER: 'FAMILY OF THE ASSESSEE CONSIST HIMSELF, WIFE, TWO DAUGHTERS AND ONE SON. HE HAS WITHDRAWAL RS. 58138/- AND HER WIFE SMT. RAJNI GUPTA IS ALSO ASSESSED TO TAX AT WARD 1(1), KOTA AND HER PAN NO. IS AIKPG3 937C AND SHE HAS ALSO WITHDRAWN RS. 48000/- FOR DOMESTIC EXPENSES I.E. TO TAL WITHDRAWAL FOR THE DOMESTIC PURPOSE IS RS. 106138/-. THE ASSESSEE IS L IVING IN THE HOUSE OF HIS FATHER. ACCORDING TO THE LIVING STANDARD AND SIZE O F FAMILY, WITHDRAWALS ARE REASONABLE AND SUFFICIENT. THE PHOTOCOPY COPY OF TH E ACKNOWLEDGEMENT OF THE I.T. RETURN AND PHOTOCOPY OF THE STATEMENT OF A FFAIRS AND CAPITAL A/C OF WIFE SMT. RAJNI GUPTA IS ENCLOSED. '(PAGE 13 TO 14) ON THE PERUSAL OF QUERY RAISED 'BY AO AND REPLY FIL ED BY ASSESSEE ON PARTICULAR QUERY OF H/H EXPENSES, YOUR GOODSELF WOU LD FIND THAT PROPER ENQUIRY HAS BEEN MADE BY AO ON THIS ISSUE. THIS IS NOT A CASE OF LACK OF ENQUIRY OR NO ENQUIRY FROM AO SIDE. THE ASSESSEE HA S REPLIED FOR HOUSEHOLD EXP. WITH COMPLETE DOCUMENTARY EVIDENCE WHICH IS LY ING IN THE ASSESSMENT RECORDS. REFERENCE HAS BEEN MADE TO THE DECISION OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF ANIL BULK CARRIERS (P) LTD. VS. CIT (20 05) 194 CTR (ALL.) 226 : (2OO5) 276 ITR 625 (ALL). THE QUANTUM OF AMOUNT OF H/H EXPENSES IS DEPEND UPO N PERSON TO PERSON AND IT COULD NOT BE SAID THAT ADDITION SHOULD BE MA DE ON EACH AND EVERY TRANSACTION/ ISSUE OF ASSESSEE. IT IS FURTHER SUBMITTED THAT ON THE PERUSAL OF ASSE SSMENT ORDER YOUR GOOD SELF WOULD FIND THAT THERE IS AN ADDITION OF RS. 1. 50 LACS HAS BEEN MADE IN THE INCOME OF ASSESSEE AND ASSESSEE HAS NOT PREFERR ED ANY APPEAL FOR THAT ADDITION. AO HAS NOT MADE SEPARATE ADDITION IN H/H EXP IT DOES NOT MEAN HE HAD NOT APPLIED HIS MIND IN MAKING ASSESSMENT OF INCOME OF ASSESSEE. (VI) 'YOU HAVE CLAIMED SHORTAGE IN DHANIA @ 3.75% ( APPROX) WHICH IS ON HIGHER SIDE AND IS NOT GENUINE IN THIS LINE OF BUSI NESS BUT THE AO DID NOT EXAMINE THIS ISSUE PROPERLY (THE CORRECT SHORTAGE C LAIMED BY THE ASSESSEE IS 2.51% INSTEAD OF THE 3.75%).' 10 ON THE PERUSAL OF PAGE 2 OF ASSESSMENT ORDER PASSED BY AO YOUR GOOD SELF WOULD FIND THAT A COMPLETE ONE AND HALF PAGE HAS BE EN WRITTEN BY AO ON THIS DHANIYA ISSUE. (PAGE 15 TO 18) IN THE LAST PARA OF THIS ISSUE AO HAS SPECIFICALLY MENTIONED THE FOLLOWING: 'AS THE BOOKS OF ACCOUNTS OF THE ASSESSEE /DHANIA G RAIN ARE SUFFERING FROM SPECIFIC DEFECTS, G.P. RATE IS NOT VERIFIABLE FROM PURCHASE & SALE BILLS. THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE REJECTED. INV OKING THE PROVISIONS OF SECTION 145(3) OF THE INCOME TAX ACT, 1961, I MAKE A LUMP-SUM TRADING ADDITION OF RS. 1 LACS AND SAME IS ADDED IN THE TOT AL INCOME OF THE ASSESSEE.' FINALLY IN CONCLUSION ADDITION OF RS. 1 LACS HAS BE EN MADE ON THIS ISSUE. WHEN AO HAS PROPERLY EXAMINED THE RECORD, DISCUSSED THE ISSUE AND MATTER IN DETAIL, REJECTED THE BOOKS OF ACCOUNTS AND APPLI ED PROVISIONS OF SECTION 145 (3) OF IT ACT, ADDITION OF RS. 1 LACS HAS BEEN MADE, THAN THE QUESTION OF REVISION UNDER SECTION 263 OF IT ACT DOES NOT ARISE . THE SHOW CAUSE NOTICE ISSUED U/S. 263 OF I.T. ACT F OR SHORTAGE IN DHANIYA ACCOUNT IS 3.75%, WE WOULD LIKE TO DRAW YOUR KIND A TTENTION THAT AS PER AUDITED BOOKS OF ACCOUNT, THE ACTUAL SHORTAGE WAS O NLY 2.51% INSTEAD OF 3.75%, WHICH IS ALSO MENTIONED BY LEARNED AO IN HIS SAID ASSESSMENT ORDER ON PARAGRAPH NO. 3 OF PAGE NO. 2. AND IN NOTICE YOUR GOODSELF MENTIONED THAT THE SHOR TAGE RATE IS EXCESSIVE, IS NOT CORRECT BECAUSE IN THE FOOD GRAIN TRADE, ASSESS EE PURCHASES DIFFERENT TYPE OF DHANIYA CROP CARRYING DIFFERENT MOISTURE CO NTENT. THE SAME HAS BEEN EXPLAINED IN DETAIL AT THE TIME OF ASSESSMENT AND WHICH HAS BEEN NARRATED IN THE ASSESSMENT ORDER ALSO. THE RANGE OF SHORTAGE IS BETWEEN 1 TO 5% AND IN THE CASE OF ASSESSEE, IT IS WITHIN THE RANGE. THE RELIANCE IS PLACED ON DECISION OF RAJASTHAN HIG H COURT ,IN THE CASE OF COMMISSIONER OF WEALTH TAX VS. GIRDHARI LAL 258 ITR 331 IT IS HELD:- 'WHEN THE ASSESSING OFFICER AFTER GOING THROUGH THE MATERIAL ON RECORD AND AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, MADE SOME ADDITIONS AND 11 REJECTED THE BOOKS OF ACCOUNTS, IT COULD NOT BE SAI D THAT HE HAD NOT APPLIED HIS MIND. IT IS NOT NECESSARY THAT THE EVERY ASSESS EE IN THE LINE OF BUSINESS SHOULD HAVE THE SAME RATE OF PROFIT.' WHEN THE ASSESSING OFFICER HAD CONSIDERED ALL THE R ELEVANT MATERIAL ON RECORD, IT WAS BASICALLY A QUESTION OF FACTS AND IT COULD NOT BE INTERFERED WITH UNLESS THE FINDING OF THE TRIBUNAL WAS FOUND P ERVERSE. CONSIDERING THE MATERIAL ON RECORD, IT COULD NOT BE SAID THAT FINDI NG OF THE TRIBUNAL WAS PERVERSE. THEREFORE, THE TRIBUNAL WAS CORRECT IN CANCELLING T HE ORDER UNDER SECTION 263.' IT IS SUBMITTED THAT DEPARTMENT CAN ASSUME JURISDIC TION UNDER SECTION 263 OF INCOME TAX ACT IF TWIN CONDITIONS OF THE ORDER BEIN G ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ARE SATI SFIED.IF THE VIEW TAKEN BY THE A.O. IS ONE OF THE POSSIBLE VIEWS THEN LEARNED CIT CANNOT ASSUME JURISDICTION. FOR THIS PURPOSE RELIANCE HAS BEEN PL ACED ON THE FALLOWINGS DECISIONS: 1. MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83 (SC) 2. CIT VS MAX INDIA LTD.(2007)213 CTR 266(SC) IT IS FURTHER SUBMITTED THAT PROCEEDINGS UNDER S. 2 63 CANNOT BE TAKEN ON THE GROUND THAT THE AO HAS NOT MADE SUFFICIENT ENQUIRY. THE LEARNED CIT CAN ASSUME JURISDICTION IF THERE HAS BEEN LACK OF ENQUI RY. IN THE INSTANT CASE, THE ENQUIRY HAS BEEN MADE, THOUGH THE ENQUIRY MAY NOT B E SUFFICIENT IN THE OPINION OF THE LEARNED CIT. THE RELIANCE IS PLACED UPON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. HIND USTAN MARKETING & ADVERTISING CO. LTD. [2010] 46 DTP (DEL.) 109. THE ATTENTION IS DRAWN TOWARDS THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. TRUSTEES ANUPAM CHARITABLE TRUST [1987] 65 CTR (RAJ .) 30 : [1987] 167 ITR 129 (RAJ.) THUS IT IS CLEAR THAT ASSESSING OFFICER HAS MADE EN QUIRY BUT SUFFICIENCY OF ENQUIRY CAN BE DEPEND UPON FROM PERSON TO PERSON. T HE AO CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER ENQUIRY. IT IS THE DUTY OF THE AO TO ASCERT AIN THE TRUTH OF THE FACTS STATED IN THE RETURN WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO 12 PROVOKE AN ENQUIRY. THE WORD 'ERRONEOUS' INCLUDES T HE FAILURE TO MAKE ENQUIRY. IT IS SUBMITTED THAT THE AO MADE THE ENQUI RY AND IT IS NOT A CASE OF LACK OF ENQUIRY. THE HON'BLE DELHI HIGH COURT IN TH E CASE OF CIT V. VIKAS POLYMERS [2010] 236 CTR (DEL.) 476 : [2010] 47 DTR (DEL.) 348 HAD AN OCCASION TO CONSIDER THE PASSING OF ORDER UNDER S. 263 OF THE ACT BY THE LEARNED CIT WHEN THE AO MADE AN ENQUIRY AND THE ASS ESSEE FILED THE REPLY. THE HON'BLE DELHI HIGH COURT HELD THAT ASSUMPTION O F JURISDICTION UNDER S. 263 OF THE ACT BY LEARNED CIT IS NOT WARRANTED. IT WILL BE USEFUL TO REPRODUCE THE HEAD NOTE FROM THIS DECISION: 'PROVISIONS OF S. 263 WHEN READ AS A COMPOSITE WHOL E MAKE IT INCUMBENT UPON THE CIT BEFORE EXERCISING REVISIONAL POWERS TO : (I) CALL FOR AND EXAMINE THE RECORD, AND (II) GIVE THE ASSESSEE AN OPPORTUNI TY OF BEING HEARD AND THEREAFTER TO MAKE OR CAUSE TO BE MADE SUCH ENQUIRY AS HE DEEMS NECESSARY. IT IS ONLY ON FULFILLMENT OF THESE TWIN CONDITIONS THAT THE CIT MAY PASS AN ORDER EXERCISING HIS POWER OF REVISION. MIN UTELY EXAMINED, THE PROVISIONS OF THE SECTION ENVISAGE THAT THE CIT MAY CALL FOR THE RECORDS AND IF HE PRIMA FACIE CONSIDERS THAT ANY ORDER PASSED THER EIN BY THE AO IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTER EST OF THE REVENUE, HE MAY AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING H EARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH ENQUIRY AS HE DEEMS NECESSA RY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY. T HE TWIN REQUIREMENTS OF THE SECTION ARE MANIFESTLY FOR A PURPOSE. MERELY BE CAUSE THE CIT CONSIDERS ON EXAMINATION OF THE RECORD THAT THE ORDER HAS BEE N ERRONEOUSLY PASSED SO AS TO PREJUDICE THE INTEREST OF THE REVENUE WILL NO T SUFFICE. THE ASSESSEE MUST BE CALLED, HIS EXPLANATION SOUGHT FOR AND EXAM INED BY THE CIT AND THEREAFTER IF THE CIT STILL FEELS THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, THE CIT MAY PASS REVIS IONAL ORDERS. IF, ON THE OTHER HAND, THE CIT IS SATISFIED, AFTER HEARING THE ASSESSEE, THAT THE ORDERS ARE NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST O F THE REVENUE, HE MAY CHOOSE NOT TO EXERCISE HIS POWER OF REVISION. THI S IS FOR THE REASON THAT IF A QUERY IS RAISED DURING THE COURSE OF SCRU TINY BY THE AO, WHICH WAS ANSWERED TO THE SATISFACTION OF THE AO, BUT NEI THER THE QUERY NOR THE ANSWER WAS REFLECTED IN THE ASSESSMENT ORDER, THIS WOULD NOT BY ITSELF LEAD TO THE CONCLUSION THAT THE ORDER OF THE AO CAL LED FOR INTERFERENCE AND REVISION. IN THE INSTANT CASE, FOR EXAMPLE, THE CIT HAS OBSERVED IN THE ORDER PASSED BY HIM THAT THE ASSESSEE HAS NOT FILED CERTAIN DOCUMENTS ON THE RECORD AT THE TIME OF ASSESSMENT, ASSUMING I T TO BE, SO, THIS 13 DOES NOT JUSTIFY THE CONCLUSION ARRIVED AT BY THE C IT THAT THE AO HAD SHIRKED HIS RESPONSIBILITY OF EXAMINING AND INVESTI GATING THE CASE. MORE SO, IN VIEW OF THE FACT THAT THE ASSESSEE EXPLAINED THAT THE CAPITAL INVESTMENT MADE BY THE PARTNERS, WHICH HAD BEEN CAL LED INTO QUESTION BY THE CIT WAS DULY REFLECTED IN THE RESPECTI VE ASSESSMENTS OF THE PARTNERS WHO WERE INCOME-TAX ASSESSEES AND THE UNSE CURED LOAN TAKEN FROM SC (P) LTD. WAS DULY REFLECTED IN THE AS SESSMENT ORDER OF THE SAID CHIT FUND WHICH WAS ALSO AN ASSESSEE. MERELY O N THE BASIS THAT THE AO HAS NOT EXAMINED THE CASH CREDITS OF THE PARTNER S OR DEPOSITS FROM SC (P) LTD., CIT WAS NOT JUSTIFIED IN INVOKING HIS SUO MOTU POWERS, ESPECIALLY -WHERE THE ASSESSEE HAD EXPLAINED THAT T HE CAPITAL INVESTMENT MADE BY THE PARTNERS, WHICH HAD BEEN CAL LED INTO QUESTION BY THE CIT WAS DULY REFLECTED IN THE RESPECTIVE ASS ESSMENTS OF THE PARTNERS AND THE UNSECURED LOAN TAKEN FROM THE SC ( P) LTD. WAS DULY REFLECTED IN THE ASSESSMENT ORDER OF THE SAID PERSON.' THE RELIANCE IS PLACED IN THE ORDER OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. ANIL KUMAR SHARMA [2010] 38 DTR (DE LHI) 305 : [2011] 335 TTR 83 (DELHI) HAS HELD THAT JURISDICTION UNDER S. 263 CANNOT BE ASSUMED IF . ENQUIRY IS INADEQUATE AS PER OPINION OF THE LEARNED CIT. IT WILL BE USEFUL TO REPRODUCE THE HELD PORTION: 'DISMISSING THE APPEAL THAT PRESENTS CASE WOULD NOT BE ONE OF LACK OF ENQUIRY' EVEN IF THE ENQUIRY WAS TERMED INADEQUATE. THE TRIBUNAL FOUND THAT COMPLETE DETAILS WERE FILED BEFORE THE AO AND THAT HE APPLIED HIS MIND TO THE RELEVANT MATERIAL AND FACTS, ALTHOUGH SUCH APPLICAT ION OF MIND WAS NOT DISCERNIBLE FROM THE ASSESSMENT ORDER. THE TRIBUNAL HELD THAT THE CIT IN PROCEEDINGS UNDER S, 263 ALSO HAD ALL THESE DETAILS AND MATERIAL AVAILABLE BEFORE HIM, BUT HAD NOT BEEN ABLE TO POINT OUT DEFE CTS CONCLUSIVELY IN THE MATERIAL FOR ARRIVING AT A CONCLUSION THAT PARTICUL AR INCOME HAD ESCAPED ASSESSMENT ON ACCOUNT OF NON-APPLICATION OF MIND BY THE AO. THE TRIBUNAL WAS RIGHT AND THE ORDER OF REVISION WAS NOT VALID.' THE RELIANCE IS ALSO PLACED IN THE ORDER OF THE HON 'BLE ITAT AGRA BENCH IN THE CASE OF RISHI KUMAR GUPTA V. COMMISSIONER OF INCOME TAX [2004} 90 TTJ (AGRA) 645 HAS HELD THAT CIT WAS NOT JUSTIFIED IN S ETTING ASIDE THE ASSESSMENT ON THE GROUND THAT AO HAD FAILED TO MAKE 'PROPER ENQUIRY''. IT IS FOR THE AO AND NOT FOR THE CIT TO DECIDE UPTO WHAT EXTENT ENQUIRY IS TO BE MADE. IT WILT BE USEFUL TO REPRODUCE THE HELD PORTI ON OF THE CASE: 14 THAT WHEN THE AO PROCEEDED TO MAKE THE ASSESSMENT ORDER, HE WAS FULLY AWARE OF THOSE DOCUMENTS, WHICH WERE FOUND DURING T HE COURSE OF SURVEY AND FOR HIS SATISFACTION HE REQUIRED THE ASSESSEE T O PRODUCE BOOKS OF ACCOUNT, BILLS, VOUCHERS, DETAILS OF THE STUDENTS A ND OTHER EXPLANATIONS. IT IS NOT A CASE OF NO ENQUIRY, BUT A CASE OF NO PROPER E NQUIRY. ACCORDING TO CITS NOTICE AS WELL AS ORDER UNDER S. 263, THE AO HAS CO NDUCTED ENQUIRIES, BUT HE FAILED TO CONDUCT PROPER ENQUIRIES. THE USE OF WOR D PROPER ENQUIRIES IS A MATTER OF SUBJECTIVITY. IT IS FOR THE AO TO DECIDE WHAT ENQUIRY AND UPTO WHAT EXTENT HE WOULD LIKE TO CONDUCT THE ENQUIRY AND NOT THE CIT. IT IS NOT THE CIT TO DECIDE THAT UPTO WHAT EXTENT, ENQUIRY IS TO BE M ADE, BUT IN FACT, IT IS THE AO TO DECIDE THE MATTER AND TO DRAW INFERENCES. ONC E THE AO HAS DRAWN INFERENCE AFTER MAKING ENQUIRY, THE CIT DOES NOT HA VE ANY JURISDICTION UNDER S. 263 TO CANCEL THE ASSESSMENT ORDER. ENDLESS ENQU IRY IS NOT POSSIBLE AND THE ENQUIRY HAS TO BE CLOSED AT SOME STAGE. IT IS F OR THE AO TO DECIDE TO END THE ENQUIRY. THE CIT CANNOT TRANSGRESS THE JURISDIC TION UNDER S. 263 IS CANCELLED. RELIED ON HINDUSTAN MARKETING & ADVERTIS ING CO. LTD. VS. ITO (1989) 28 ITD 231 (DEL), ASHOK KUMAR PARASRAMKA VS. ASSTT. CIT (1998) 61 TTJ (CAL) 156: (1998) 65 ITD 1 (CAL) AND PROGRESSIV E SERVICES LTD. VS. ITO (1991) 40 TTJ (CAL) 595. THE RELIANCE IS ALSO PLACED IN THE ORDER OF THE HON 'BLE HIGH COURT OF BOMBAY IN THE CASE OF CIT V. GABRIAL INDIA LTD. [1993] 71 TAXMAN 585 (BOM.). IT WILL BE USEFUL TO REPRODUCE THE HELD PORTION OF THE CASE : SECTION 263 OF THE INCOME-TAX ACT, 1961 - REVISION - OF ORDERS PREJUDICIAL TO INTERESTS OF REVENUE - ASSESSMENT YEAR 1973-74 - AS SESSEE CLAIMED A SUM OF RS. 99,326 DESCRIBED 'AS PLANT RELAY OUT EXPENSES' AS REVENUE EXPENDITURE AND ITO, AFTER MAKING ENQUIRIES IN REGARD TO NATURE OF SAID EXPENDITURE AND CONSIDERING EXPLANATION FURNISHED BY ASSESSEE IN TH AT REGARD, ALLOWED ASSESSEE'S CLAIM - SUBSEQUENTLY, COMMISSIONER, EXER CISING POWERS UNDER SECTION 263, CANCELLED ORDER OF THE ITO OBSERVING T HAT ORDER OF ITO DID NOT CONTAIN DISCUSSION IN REGARD TO ALLOWABILITY OF CLA IM FOR DEDUCTION WHICH INDICATED NON-APPLICATION OF MIND AND THAT CLAIM OF ASSESSEE REQUIRED EXAMINATION AS TO WHETHER EXPENDITURE IN QUESTION W AS A REVENUE OR CAPITAL EXPENDITURE AND DIRECTED ITO TO MAKE AFRESH ASSESSM ENT ON LINES INDICATED BY HIM - WHETHER UNDER SECTION 263 SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE ITO IS PERMISSIBLE - H ELD, NO - WHETHER ITO'S CONCLUSION CAN BE TERMED AS ERRONEOUS SIMPLY BECAUS E COMMISSIONER DOES 15 NOT AGREE WITH HIS CONCLUSION - HELD, NO - WHETHER ITO'S ORDER COULD BE HELD TO BE 'ERRONEOUS' SIMPLY BECAUSE IN HIS ORDER HE DI D NOT MAKE AN ELABORATE DISCUSSION - HELD, NO - WHETHER PROVISIONS OF SECTI ON 263 WERE APPLICABLE TO INSTANT CASE AND COMMISSIONER WAS JUSTIFIED IN SETT ING ASIDE ASSESSMENT ORDER - HELD, NO LOOKING TO THE FACTS AND CIRCUMSTANCES MENTIONED AB OVE IT IS PRAYED THAT PROCEEDING INITIATED UNDER SECTION 263 OF IT ACT MA Y VERY KINDLY BE DROPPED.' THEREFORE, PLEASE CONSIDER ABOVE FACTS IN REVISION OF ASSESSMENT ORDER U/S 263 OF I.T. ACT AND PLEASE THE PROCEEDINGS OF NOTIC E AND OBLIGED. 5. THE LEARNED CIT AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED AS UNDER:- 5. THE EXPLANATION OFFERED BY THE ASSESSEE NOW BEF ORE ME IS NOT FOUND TO BE TENABLE ON FACTS AND LAW. EXAMINATIONS OF TH E ASSESSMENT RECORDS REVEAL THAT THE AO COMPLETED THE ASSESSMENT IN A RO UTINE MANNER. I FIND THAT IT IS NOT ONLY THE LACK OF VERIFICATION BUT AL SO MISTAKEN VIEW OF LAW WHICH HAS MADE THE ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. LD. CIT SET ASIDE THE ASSESSMENT WITH A DIRECTION T O THE ASSESSING OFFICER TO FRAME IT DENOVO AFTER MAKING PROPER ENQU IRY AND VERIFICATION OF THE BOOKS OF ACCOUNTS AND OTHER RECORDS/DOCUMENTS. NOW THE ASSESSEE IS IN APPEAL. 6 . LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT I N THE PRESENT CASE, ASSESSMENT WAS FRAMED UNDER SECTION 143(3) OF THE ACT. THEREAFTER, ASSESSING OFFICER MOVED A PROPOSAL UNDE R SECTION 263 OF THE 16 ACT DATED 01/04/2011 TO THE LD. CIT FOR REVISION OF THE ASSESSMENT ORDER AND A SHOW CAUSE NOTICE DATED 11/01/2013 WAS THEN I SSUED BY THE ITO (TECH.) TO THE ASSESSEE REFERENCE WAS MADE TO THE 3 RD PARA OF THE IMPUGNED ORDER. IT WAS FURTHER STATED THAT CONSEQU ENTLY, THE LD. CIT PASSED THE ORDER UNDER SECTION 263 OF THE ACT HOLDI NG THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE ACT WAS WITHOUT DUE AND PROPER ENQUIRY AND WAS MISTAKEN VIE W OF LAW WHICH HAD MADE THE ORDER ERRONEOUS AND PREJUDICIAL TO THE INT EREST OF THE REVENUE. IT WAS EMPHASIZED THAT THE CONDITION PRECEDENT FOR ISSUANCE OF NOTICE UNDER SECTION 263 OF THE ACT IS THAT THE COMMISSION ER OF INCOME TAX IS TO CALL RECORD FOR EXAMINATION OF ANY PROCEEDINGS UNDE R THIS ACT BEFORE FRAMING HIS OPINION THAT THE ORDER PASSED BY THE AS SESSING OFFICER WAS ERRONEOUS SO FAR AS IT WAS PREJUDICIAL TO THE INTER EST OF THE REVENUE. HOWEVER, IN THE PRESENT CASE, AS EVIDENT FROM PARA 2 & 3 OF THE IMPUGNED ORDER, THE LD. CIT INITIATED THE PROCEEDIN GS UNDER SECTION 263 OF THE ACT BY NOT CALLING AND EXAMINING THE RECORDS BUT ONLY ON THE PROPOSAL MOVED BY THE ASSESSING OFFICER VIDE LETTER NO. 14 DATED 01/04/2011, TO REVISE THE ORDER DATED 30/08/2010 PA SSED UNDER SECTION 143(3) OF THE ACT, WHICH WAS AGAINST THE PLAIN LANG UAGE OF SECTION 263 OF THE ACT BECAUSE THE SUGGESTION OF THE ASSESSING OFF ICER CANNOT BE A BASIS 17 FOR REVISION OF THE ASSESSMENT ORDER. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS:- 1) RAJIV ARORA VS. CIT 135 TTJ 01 (JP.) (TRIB.) 2) JHEENDU RAM VS. CIT 130 TTJ 82 (LUCKNOW) (TRIB. ) 3) SMT. LEELA CHOUDHARY VS. CIT 289 ITR 226 (GAU.) 4) SAW PIPES LTD. VS. ACIT 94 TTJ 1036 (DEL) 5) MALABAR INDUSTRIAL CO. LTD. VS. CIT 243 ITR 82 ( SC) 6) CIT VS. GIRDHARI LAL 258 ITR 331 (RAJ.) 7) KAMAL KUMAR GUPTA VS. CIT 142 TTJ 9 (JP) 8) SHRI GYAN CHAND JAIN VS. CIT 50 TW 109 (JP) 9) CHORMA BUSINESS LTD. VS. DCIT 82 TTJ 540 (CAL) 10) SUBRATA KUMAR NAG VS. CIT 127 TTJ 238 (KOL) 11) ARVIND BHARTIYA VIDHYALAYA SAMITI VS. ITO 94 TT J 614 (JP) 12) GYAN CHAND GUPTA VS. CIT 135 TTJ 01 (JP) 13) CIT VS. PARAS COTTON CO. 288 ITR 211 (RAJ.) 14) CIT VS. ANUPAM CHARITABLE TRUST 164 ITR 129 (RA J) 7 . IN HIS RIVAL SUBMISSIONS, LEARNED D.R. STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT AND FURTHER SUBMITTED THAT TH E ASSESSING OFFICER DID NOT MAKE PROPER ENQUIRIES WHILE PASSING THE ASSESSM ENT ORDER. THEREFORE, THE ASSESSMENT ORDER WAS NOT ONLY ERRONE OUS BUT ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. 8 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS ABUNDANTLY CLEAR FROM PARA 2 OF THE IMP UGNED ORDER THAT THE ITO, WARD-1(2), KOTA VIDE LETTER NO. 14 DATED 01/04 /2011 PROPOSED ACTION UNDER SECTION 263 OF THE ACT AND IT WAS NOT THE LD. CIT, WHO 18 HIMSELF CALLED RECORD AND EXAMINED THE SAME FOR ANY PROCEEDING UNDER SECTION 263 OF THE ACT. THEREFORE, IT CAN BE SAID T HAT THE LD. CIT HAD NOT APPLIED HIS MIND BUT THE MATTER WAS REFERRED BY THE ASSESSING OFFICER FOR INITIATING THE PROCEEDING UNDER SECTION 263 OF THE ACT. IN THE PRESENT CASE, FROM PARA 3 OF THE IMPUGNED ORDER, IT IS NOTI CED THAT THE NOTICE DATED 11/01/2013 UNDER SECTION 263 OF THE ACT WAS I SSUED ONLY ON RECEIPT OF THE PROPOSAL UNDER SECTION 263 OF THE ACT FROM T HE ITO, WARD-1(2), KOTA AND THE ASSESSEE EXPLAINED, VIDE WRITTEN SUBMI SSION WHICH HAS BEEN REPRODUCED IN PARA 4 OF THE IMPUGNED ORDER, EACH AN D EVERY OBJECTION RAISED BY THE ITO, WARD-1(2), KOTA. IT IS WELL SET TLED THAT THE LD. CIT WHILE EXERCISING THE REVISIONARY POWERS UNDER SECTI ON 263 OF THE ACT MAY CALL FOR AND EXAMINE THE RECORDS OF ANY PROCEEDINGS AND THEREAFTER IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN IS ERRONEOU S INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MA KING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFIED. THEREFORE, BE FORE TAKING ANY ACTION, LD. CIT HIMSELF SHALL APPLY HIS MIND AFTER EXAMININ G THE RECORD OF ANY PROCEEDINGS AND HIS SATISFACTION IS MUST. HOWEVER, IN THE PRESENT CASE, THE SATISFACTION WAS OF THE ITO (TECH.) WHO PROPOSE D ACTION UNDER SECTION 19 263 OF THE ACT, BUT NOT OF THE LD. CIT. THEREFORE, ISSUANCE OF NOTICE UNDER SECTION 263 OF THE ACT ON THE BASIS OF THE PR OPOSAL MADE BY THE ITO WAS VOID AB INITIO . WE, THEREFORE, SET ASIDE THE SAME. FOR THE AFORE SAID VIEW, WE ARE VERIFIED BY THE FOLLOWING DECISIONS OF VARIOUS BENCHES OF THE TRIBUNALS:- 1) RAJIV ARORA VS. CIT 135 TTJ 01 (JP.) 2) JHEENDU RAM VS. CIT 130 TTJ 82 (LUCKNOW) 3) KAMAL KUMAR GUPTA VS. CIT 142 TTJ 9 (JP.) 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE COURT ON 28 TH FEBRUARY, 2014). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28 TH FEBRUARY, 2014. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JAIPUR.