DIPTI BHARGAVA, Kota V. CIT, Kota

ITA 446/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99336 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 29-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEENA CIT DHK
• Assessee Lawyers: MUJJAFFAR IQBAL; SIDDARTHA RANKA
• Keywords: Business income; Salary income; Difference of opinion; Assessment record; Reason to believe; Change of opinion
• Section: 80C; 143(3); 263; 63; 2

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA -@ ITA NO. 446/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2008-09. DIPTI BHARGAVA 1-K-58, MAHAVIR NAGAR, KOTA. CUKE VS. COMMISSIONER OF INCOME TAX, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. ADIPB 9426 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SIDDARTHA RANKA & SHRI MUJJAFFAR IQBAL (ADV) JKTLO DH VKSJ LS@ REVENUE BY : SHRI M.S. MEENA (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 16/09/2015. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 30/09/2015. VKNS'K@ ORDER PER T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 07/03/2013 OF THE LEARNED C.I.T., KOTA FOR A.Y. 2008 -09. THE RESPECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1. FOR THAT THE LEARNED CIT, KOTA HAS ERRED IN SETTI NG ASIDE THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WARD 1(1), KOTA U/S 263. 2 ITA NO. 446/JP/2013 DIPTI BHARGAVA VS. CIT 2. FOR THAT THE ASSESSEE FILED THE APPEAL WHICH WAS HEARD AND APPEAL ORDER BY LEARNED CIT (APPEAL) AJMER PASSED ON 11/1/2013 APPEAL NO. 132/2010/2011 IN FAVOUR OF THE ASSESSEE. 3. FOR THAT THE LEARNED CIT, KOTA HAS ERRED IN PASSI NG THE ORDER U/S 163 BEING ASSESSMENT ORDER PASSED BY A.O. WAS NOT PREJUDICIAL TO REVENUE BECAUSE A.O. ENHANCED THE INCOME FROM RS. 2,47,180/- TO 3,45,600/- AND CREATED DEMAND OF RS. 42,181/-. 4. FOR THAT THE LEARNED CIT, KOTA HAS IGNORED THE OR DER PASSED BY CIT APPEAL AJMER WHICH WAS IN THE SAME CASE SAME YEAR AND SAME FACTS AND APPEAL WAS DECIDED IN FAVOUR OF ASSESSEE. 2. IN THIS CASE, ORIGINAL ASSESSMENT WAS COMPLETED B Y THE ASSESSING OFFICER ON 04/10/2010 U/S 143(3) OF THE INCOME TAX A CT, 1961 (IN SHORT THE ACT). THE LD ASSESSING OFFICER OBSERVED THAT DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS THE AR OF THE ASSESSEE HAS F URNISHED A LIST OF STUDENTS OCCUPYING BASANT VINAYAK RESIDENCY. THE ASS ESSEE HAS SHOWN THAT RS. 5,000/- P.M. IS CHARGED FROM EACH GIRL FOR BOARDING AND LODGING. THE HOSTEL CAME INTO FUNCTIONING W.E.F. JULY, 2007 WIT H 30 ROOMS FULLY FURNISHED. AS PER THIS CHART TOTAL RECEIPTS SHOWN FO R 9 MONTHS COMES TO RS. 14,25,000/-. OUT OF WHICH SHE HAS SHOWN RS. 7,00, 000/- AS ANNUAL RENT AGAINST ROOM RENT AND BALANCE RS. 7,25,000/- O N MESSING 3 ITA NO. 446/JP/2013 DIPTI BHARGAVA VS. CIT EXPENSES. THE LD A.O. HAD DEPUTED HIS INSPECTOR TO E NQUIRE ABOUT MESS RECORDS. AS PER HIS REPORT NO MESS REGISTER IS MAIN TAINED AS PER ENQUIRY IT WAS GATHERED THAT THE ASSESSEE HAS INFLATED MESS EXPENSES BUT WITHOUT RECORDS. HENCE, HE HAD REASON TO BELIEVE THA T DUE TO INFLATED MESS EXPENSES SHE COULD AVOID TAX. AS PER ASSESSEE IN THE HOSTEL 27 TO 29 GIRLS ALWAYS REMAINED. HE HAD DEPUTED HIS INSPECT OR TO ENQUIRY ABOUT RUNNING OF MESS IN THE HOSTEL. THIS FACT WAS AL SO JUSTIFIED BY ONE SHRI SANJAY BHARGAVA, WHO WAS LOOKING AFTER THIS HOST EL. IT WAS ALSO ADMITTED BY HIM THAT NO RECORDS WERE MAINTAINED FOR THE PURPOSE OF RUNNING MESS. IN ABSENCE OF ANY RECORDS, HE HAD REA SON TO BELIEVE THAT THE ASSESSEE MUST BE INCURRING 1/3 RD OF RECEIPTS ON RUNNING MESS FOR 9 MONTHS FOR 28 GIRLS APPROX. THE WORKING OF PROPERTY I NCOME IS AS UNDER:- TOTAL RECEIPTS RS. 14,25,000 LESS: MESS EXPENSES RS. 4,75,000 RS. 9,50,000 LESS:- 1. DEDUCTION U/S 24(A) 3,16,666 2. INTT. ON LOAN 1,47,127 RS. 4,63,793 RS. 4,86,206 50% SHARE OF THE ASSESSEE RS. 2,43,103 AFTER DISCUSSION TOTAL INCOME IS COMPUTED AS UNDE R:- INCOME FROM SALARY (CHAPTER-IV A) 174177/- 4 ITA NO. 446/JP/2013 DIPTI BHARGAVA VS. CIT INCOME FROM HOUSE PROPERTY 243103/- INCOME FROM OTHER SOURCES 1563/- GROSS TOTAL INCOME 418843/- LESS: DEDUCTIONS (CHAPTER VI-A) U/S 80C LIC 50000 PPF 5000 G.P.F. 13242 STATE INSURANCE 4800 S.I. & ACC. INSU 200 73242/ - TOTAL INCOME 345601/- R/O 345600/- THE LD CIT, KOTA HAD RECEIVED LETTER FROM THE ITO, WAR D 1(1), KOTA ON 03/10/2012, WHO HAD PROPOSED ACTION U/S 263 OF THE ACT ON THE FOLLOWING POINTS DECIDED BY THE A.O. AS ERRONEOUS AN D PREJUDICIAL TO THE INTEREST OF REVENUE. (I) PROPERTY AT 124, RAJIV GANDHI NAGAR, KOTA CONS ISTS OF 4 STORY, GIRLS HOSTEL BUILDING IN THE NAME OF M/S BAS ANT VINAYAK RESIDENCY. MESS & OTHER RELATED FACILITIES ARE ALSO PROVIDED AT THE HOSTEL ITSELF. HENCE, THE ABOVE SAI D RECEIPTS ARE IN NATURE OF BUSINESS RECEIPTS INSTEAD OF RELAT ED TO INCOME FROM HOUSE PROPERTY. (II) THE ASSESSEE HAS CLAIMED THAT 50% RECEIPTS OF T HE ABOVE SAID HOSTEL BELONGS TO HER. HOWEVER, THE SAID PROPER TY, I.E. 124, RAJIV GANDHI NAGAR, KOTA BELONGS TO THE ASSESS EE (NOT JOINTLY WITH SHRI AJAY BHARGAVA). IT WAS ALLOTT ED TO YOU 5 ITA NO. 446/JP/2013 DIPTI BHARGAVA VS. CIT VIDE ALLOTMENT LETTER 323 DATED 15/02/2003 BY UIT, K OTA. THEREFORE, ENTIRE INCOME IS TO BE TAXED IN THE HANDS OF THE ASSESSEE INSTEAD OF 50% ONLY. THE LD CIT GAVE SHOW CAUSE NOTICE TO THE ASSESSEE VIDE LETTER DATED 01/1/2013, WHICH WAS AVAILED BY THE ASSESSEE VIDE LE TTER DATED 16/01/2013. THE LD CIT REPRODUCED THE ASSESSEES REPL Y ON PAGE NO. 2 OF THE ORDER. AFTER CONSIDERING THE ASSESSEES REPL Y, HE HELD THAT EXAMINATIONS OF THE ASSESSMENT RECORDS REVEALED THA T THE A.O. COMPLETED THE ASSESSMENT IN A ROUTINE MANNER. IT WAS NOT ONLY THE LACK OF VERIFICATION BUT ALSO MISTAKEN VIEW OF LAW WHICH HA S MADE THE ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. HE RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF GEE VEE ENTERPRISES VS. ADDL. CIT 99 ITR 375 (DEL.). THE HON'BLE HIGH CO URT HELD THAT THE INCOME-TAX OFFICER IS NOT ONLY AN ADJUDICATOR BUT A LSO AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN, WHIC H APPARENTLY IS IN ORDER BUT CALLS FOR FURTHER INQUIRY. IT IS HIS DUTY TO ASCERTAIN TRUTH OF FACTS STATED IN THE RETURN WHICH THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE AN INQUIRY. THE WORD ERRONEOUS IN SECTION 2 63 INCLUDES THE FAILURE TO MAKE SUCH AN ENQUIRY. HE FURTHER RELIED ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF K.A. RAMAS WAMY CHETTIAR AND 6 ITA NO. 446/JP/2013 DIPTI BHARGAVA VS. CIT ANR. VS. CIT 220 ITR 657. ON INQUIRY WHICH IS TO BE MA DE BY THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT, IF THE ASSESSING OFFICER DOES NOT MAKE ANY INQUIRY WHICH IS EXPECTED FROM HI M UNDER THE LAW IS REQUIRED INTERFERENCE U/S 263 OF THE ACT. HE FURTHE R RELIED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MUKUR CORPORATION 111 ITR 312 (GUJ.) WHEREIN THE WORDS PREJ UDICIAL TO THE INTERESTS OF THE REVENUE IN SECTION 263 IS CORRELA TED WITH THE ASSESSMENT MADE, WHICH IS NOT IN ACCORDANCE WITH LAW. IN THE CASE OF TARAJAN TEA CO. PVT. LTD. VS. CIT 205 ITR 45 (GAU) WHE REIN THE HON'BLE HIGH COURT HAS HELD THAT ITO HAS NOT MADE ANY PROPE R INQUIRY THAT MAY BE A GOOD GROUND FOR SETTING ASIDE THE ORDER MADE B Y THE ASSESSING OFFICER U/S 263 OF THE ACT. IN THE CASE OF K. VARMA VS. ITO 44 ITD 331, ITAT AHMADABAD BENCH HAS HELD THAT IF THE ASSESSING OFFICER HAS NOT MADE PROPER ENQUIRIES, THE CIT CAN DIRECT THE A.O. T O HOLD FURTHER ENQUIRIES IN THE MATTER. THE HON'BLE SUPREME COURT I N THE CASE OF RAMPYARI DEVI SAROGI VS. CIT (1968) 67 ITR 84 AND TARA DEVI AGGARWAL VS. CIT (1973) 88 ITR 323 HAS HELD THAT THE COMMISSI ONER MAY CONSIDER AN ORDER OF THE ASSESSING OFFICER TO ERRONEOUS NOT ONLY IF IT CONTAINS SOME APPARENT ERROR OF REASONING OR OF LAW OR FACT O N FACE OF IT BUT ALSO 7 ITA NO. 446/JP/2013 DIPTI BHARGAVA VS. CIT BECAUSE IT IS A STEREO TYPED ORDER WHICH SIMPLY ACCE PTS WHAT THE ASSESSEE HAS STATED IN HIS RETURN AND FAIL TO MAKE ENQUIRIES WHICH ARE CALLED FOR IN THE CIRCUMSTANCES OF THE CASE. HE FUR THER RELIED ON THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF DAWJEE DADABHOY & CO. VS. S.P. JAIN (1957) 31 ITR 872, HONBLE KARN ATAKA HIGH COURT DECISION IN THE CASE OF CIT VS. T. NARAYANA PAI (1975 ) 98 ITR 422, HONBLE BOMBAY HIGH COURT DECISION IN THE CASE OF C IT VS. GABRIEL INDIA LTD. (1993) 203 ITR 108 AND HONBLE GUJARAT HIGH COU RT DECISION IN THE CASE OF CIT VS. SMT. MINALBEN S. PARIKH (1995) 215 ITR 81 WHEREIN THE HON'BLE HIGH COURT TREATED LOSS OF TAX AS PREJUDIC IAL TO THE INTERESTS OF THE REVENUE. HE FURTHER OBSERVED THAT EVEN IN THE C ASES WHERE THE FACTS HAVE BEEN DISCLOSED BY THE ASSESSEE TO THE ASSESSIN G AUTHORITY, IF THE CORRECT PROVISIONS OF LAW HAVE NOT BEEN EXAMINED/APP LIED BECAUSE THE FACTS WERE NOT PROPERLY ANALYZED/VERIFIED BY THE A.O ., THE ORDER BECOMES ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. HE RELIED UPON THE DECISION IN THE CASE OF CIT VS. EMERY STONE MFG. & CO. 213 ITR 843 (RAJ.) AND INDIA TEXTILES VS. CIT 157 ITR 112 (MAD). HE FURTHER HELD THAT THIS IS PRECISELY SO IN THIS CASE, ESSENT IAL FACTS RELATED TO VARIOUS CLAIMS MADE IN THE RETURN AS MENTIONED, HAV E NOT BEEN 8 ITA NO. 446/JP/2013 DIPTI BHARGAVA VS. CIT VERIFIED/ANALYSED BY THE ASSESSING OFFICER WHILE PAS SING THE ASSESSMENT ORDER DATED 4/10/2010. HE FURTHER OBSERVED AS UNDER :- THE JURISDICTION U/S 263 OF THE IT ACT, 1961 HAS BEEN CONFERRED TO THE COMMISSIONER OF INCOME TAX TO REVISE THE ORDE R OF ASSESSING OFFICER WHICH HE FINDS TO BE ERRONEOUS AN D PREJUDICIAL TO THE INTEREST OF REVENUE, ONLY BECAUSE THERE IS N O APPEAL FILED BY THE DEPARTMENT AGAINST THE ORDER OF ASSESSING OF FICER. SO THE PRIMARY OBJECTIVES OF THE PROVISIONS OF THIS SECTIO N ARE TO VEST SOME CORRECTIVE POWERS IN THE HANDS OF THE COMMISSI ONER OF INCOME TAX TO MODIFY OR CANCEL ANY ORDER BY ASSESSIN G OFFICER IF IT IS FOUND TO BE ERRONEOUS IN SO FAR AS IT IS PREJ UDICIAL TO THE INTERESTS OF REVENUE. IT IS CLEAR FROM THE FACTS AP PARENT FROM RECORDS THAT THE ASSESSING OFFICER HAD PASSED AN OR DER U/S 143(3) WITHOUT DUE AND PROPER ENQUIRIES WHICH HE IS E XPECTED TO MAKE AS AN INVESTIGATOR AS HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER INQUIRY. I, THEREFORE, IN THE FACTS AND CIRCUMSTANC ES AS DISCUSSED ABOVE AND RESPECTFULLY FOLLOWING THE ABOVE REFERRED JUDGMENTS, CONSIDER IT FIT TO SET ASIDE THE ASSESSMENT WITH A DIRECTION TO THE ASSESSING OFFICER TO FRAME IT DENOVO AFTER MAKING P ROPER ENQUIRY AND VERIFICATION OF BOOKS OF ACCOUNTS AND OTHER RECORDS/DOCUMENTS AND AFTER FOLLOWING THE DIRECTIONS GIVEN ABOVE. 9 ITA NO. 446/JP/2013 DIPTI BHARGAVA VS. CIT 3. BEING AGGRIEVED BY THE ORDER OF THE CIT, KOTA, TH E ASSESSEE BEFORE US. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE CHALLENGED THESE ISSUES BEFORE THE LD CIT(A), AJMER. THE ASSESSEE FILED APPEAL AGAINST THE ORDER OF THE ASSESSING OFFICER A ND MATTER WAS PENDING BEFORE THE CIT(A), AJMER, WHICH IS EVIDENT FR OM THE REPLY DATED 08/11/2011 FILED BEFORE THE CIT(A) WHEREIN THE ASSES SEE CHALLENGED THE ADDITION MADE UNDER THE HEAD INCOME FROM HOUSE PRO PERTY AT RS. 71,666/- ESTIMATED INCOME FROM STUDENTS/TENANTS AND DISALLOWANCE OF EXPENSES. THE LD CIT(A), AJMER HAD DECIDED THE ASSESS EES APPEAL ON 11/1/2013 WHILE THE LD CIT, KOTA HAD ISSUED THE SHO W CAUSE NOTICE ON SAME ISSUE PENDING BEFORE THE LD CIT(A) ON 01/1/201 3. THE LD ASSESSING OFFICERS ORDER HAS BEEN MERGED WITH THE ORDER OF TH E CIT(A), AJMER. DURING THE APPELLATE PROCEEDINGS, THE CIT, KOTA HAVE NO POWER TO CONSIDER THE SAME ISSUE WHICH WAS PENDING BEFORE THE LD CIT(A) U/S 263 OF THE ACT. THEREFORE, HE PRAYED TO SET ASIDE TH E ORDER PASSED BY THE CIT, KOTA. HE FURTHER SUBMITTED THAT THE ASSESSE E FILED RETURN ON 22TH JULY, 2008 ALONGWITH COMPUTATION OF INCOME. THE LD ASSESSING OFFICER SELECTED THE CASE OF THE ASSESSEE FOR SCRUT INY U/S 143(3) OF THE ACT. HE ISSUED QUESTIONNAIRE VIDE LETTER DATED 23/0 9/2009, WHICH WAS 10 ITA NO. 446/JP/2013 DIPTI BHARGAVA VS. CIT REPLIED BY THE ASSESSEE. HE HAS DRAWN OUR ATTENTION ON PAGE NO. 3 OF THE PAPER BOOK WHEREIN THE ASSESSEE HAS SUBMITTED TH AT PLOT NO. 124, RAJIV GANDHI NAGAR, WAS ALLOTTED TO ASSESSEE ON LOTT ERY BASIS BY UIT. THE COST WAS RS. 9,76,275/-. HOWEVER, THE CONSTRUCTION WAS SUPERVISED BY SHRI AJAY BHARGAVA WITH THE HELP OF LOANS TAKEN I N THE JOINT NAME OF ASSESSEE AND ASSESSEES HUSBAND SHRI AJAY BHARGAVA. THE TOTAL INVESTMENT WAS OUT OF JOINT LOAN AS WELL AS SAVINGS O F BOTH THE PERSONS. THEREFORE, THEY EQUALLY DIVIDED THE RECEIPTS OF THE PROPERTY. THE LD ASSESSING OFFICER ALSO EXAMINED THE NUMBER OF ROOMS IN THE HOSTEL WITH NUMBER OF STUDENTS IN HOSTEL. THE AMOUNT CHARGED FR OM THE STUDENT PER MONTH, NUMBER OF STUDENTS RESIDED THERE. THE LD ASSE SSING OFFICER ENHANCED THE TOTAL RECEIPTS SHOWN BY THE ASSESSEE F ROM HOSTEL AT RS. 12.65 LACS, WHICH WAS ASSESSED BY THE ASSESSING OFF ICER AT RS. 14.25 LACS AND ALSO REDUCED THE EXPENSES ON THE GROUND OF INFLATION FROM RS. 5,65,000/- TO RS. 4,75,000/-. THEREAFTER HE CONSIDE RED 50% RECEIPTS UNDER THE HEAD INCOME OF HOUSE PROPERTY AT RS. 2,43 ,103/- IN PLACE OF RS. 1,71,436/- SHOWN BY THE ASSESSEE. THE LD ASSESSI NG OFFICER HAS APPLIED HIS MIND, MADE DETAIL INQUIRY AGAINST THE A SSESSEE AND THEREAFTER HE ACCEPTED THE ASSESSEES INCOME UNDER HEAD INCOME FROM 11 ITA NO. 446/JP/2013 DIPTI BHARGAVA VS. CIT HOUSE PROPERTY. THE LD CIT, KOTA HAD GIVEN DIRECTION TO THE ASSESSING OFFICER FOR MAKING PROPER INQUIRY AND VERIFICATION OF BOOKS OF ACCOUNT AND OTHER RECORD/DOCUMENTS, WHAT LEVEL, THE LD CIT WA NTED TO INQUIRE THE MATTER IS A DIFFERENT OPINION ON SAME FACTS AND CIRCUMSTANCES OF THE CASE. THE PERCEPTION OF THE INQUIRY MAY BE DIFFER FR OM PERSONS TO PERSON, THEREFORE, THE LD CIT IS NOT EMPOWERED U/S 26 3 TO MAKE FURTHER INQUIRY. THERE CANNOT BE SIMILARITY IN THE CONCEPT O F PROPER INQUIRY IN VIEW OF THE TWO PERSONS ACCORDINGLY HE ARGUED THAT LD CIT HAD DIFFERENT PERCEPTIONS OF PROPER INQUIRY TO ASSESSING OFFICER. THE SUCCESSOR ASSESSING OFFICER HAD PROPOSED 263 ON THE SAME FACT S AND CIRCUMSTANCES, IT ALSO AMOUNT TO CHANGE OF OPINION. HE FURTHER RELIED UPON THE DECISION OF HONBLE RAJASTHAN HIGH COURT I N THE CASE OF CIT VS. JAIN CONSTRUCTION COMPANY IN ITA NO. 60/2012 ORDER DATED 24/11/2012 WHEREIN THE HON'BLE HIGH COURT HAS CONSIDERED THE IS SUE OF MERGER OF ASSESSMENT WITH LD CIT(A) AND HELD THAT ONCE THE ORDE R OF ASSESSING OFFICER STOOD MERGED WITH HIGHER APPELLATE AUTHORITY , THE PARALLEL AUTHORITY ON THE ADMINISTRATIVE SIDE NAMELY COMMISS IONER EVEN CANNOT REVIVE LATER ON THE ORDER PASSED BY THE ASSESSING O FFICER WHICH STOOD MERGED WITH THE ORDER OF THE APPELLATE AUTHORITY. H E HAS FURTHER DRAWN 12 ITA NO. 446/JP/2013 DIPTI BHARGAVA VS. CIT OUR ATTENTION ON COORDINATE BENCH DECISION DATED 29 /05/2015 IN THE CASE OF SMT. NIRMALA DEVI CHORDIA VS. CIT ITA NO. 1 50/JP/2015 FOR A.Y. 2006-07 ON PROPER INQUIRY AND VERIFICATION WHEREIN C IT CARRIED A DIFFERENT PERCEPTION ABOUT THE MANNER OF INQUIRY, WH ICH OUGHT TO HAVE BEEN CONDUCTED BY THE ASSESSING OFFICER, WHICH IS HE LD NOT SUFFICIENT TO HOLD THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THEREFORE, THE LD AR HAS PRAYED TO SET ASIDE THE ORDER OF THE LD CIT, KOTA AND ALLOW THE ASSESSEES APPEAL. 4. AT THE OUTSET, THE LD CIT DR VEHEMENTLY SUPPORTED THE ORDER OF THE LD CIT, KOTA AND ARGUED THAT THE ASSESSEE HAS BU SINESS INCOME FROM RUNNING THE HOSTEL, WHICH REQUIRED TO BE ASSESSED UN DER THE HEAD BUSINESS AND PROFESSION. THEREFORE, THE LD CIT WAS RIG HT TO PASS ORDER U/S 263 OF THE ACT AS THE ORDER OF THE ASSESSING OF FICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN TH IS CASE, DETAILED SCRUTINY HAD BEEN MADE ON THIS ISSUE WHETHER THE INC OME FROM RUNNING THE HOSTEL IS TO BE ASSESSED AS INCOME FROM HOUSE P ROPERTY OR BUSINESS PROPERTY. THE DETAILED QUESTIONNAIRE HAD BE EN ISSUED BY THE 13 ITA NO. 446/JP/2013 DIPTI BHARGAVA VS. CIT ASSESSING OFFICER, WHICH WAS REPLIED BY THE ASSESSEE FROM TIME TO TIME. HE NOT ONLY ENHANCED THE HOSTEL RECEIPTS BUT REDUCE D THE HOSTEL EXPENSES AND ASSESSED THE INCOME FROM HOUSE PROPERT Y. HE ALSO ALLOWED 1/3 RD DEDUCTION U/S 24(A) AND INTEREST ON LOAN. THEREFOR E, HE APPLIED HIS MIND AND ALSO MADE DETAILED INQUIRY ON THIS ISSUE. IT IS ALSO A FACT THAT THE ADDITION MADE BY THE ASSESSING OFFICE R WAS CHALLENGED BEFORE THE LD CIT(A), AJMER AT THE SAME ISSUE I.E. I NCOME FROM HOUSE PROPERTY. THEREFORE, ASSESSMENT OF ASSESSEE GOT MERG ED WITH THE CIT(A) ORDER, WHICH WAS PASSED ON 11/1/2013. THEREFORE , HON'BLE RAJASTHAN HIGH COURT DECISION IN THE CASE OF CIT VS . JAIN CONSTRUCTION COMPANY (SUPRA) IS SQUARELY APPLICATION IN THE CASE OF THE ASSESSEE. THE COORDINATE BENCH IN THE CASE OF SMT. NIRMALA DEVI C HORDIA VS. CIT (SUPRA) HAS HELD AS UNDER:- 2.11 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE MATERIALS AVAILABLE ON RECORD. WE FIND FROM THE REC ORD THAT THE ASSESSEE HAD ALREADY FILED THE RETURN OF INCOME DESPITE THAT SHE HAS BEEN WRONGLY ACCUSED OF NOT FILING THE SAME; THIS SUBJECTED THE ASSESSEE TO RIGOR OF AVOIDABLE 148 PR OCEEDINGS. THE RECORD AND SUBMISSIONS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS DID NOT IN ANY MANNER INDICA TE THAT PROPER ENQUIRIES AND VERIFICATION WERE NOT CONDUCTE D. THE 14 ITA NO. 446/JP/2013 DIPTI BHARGAVA VS. CIT ORDER OF THE AO THOUGH SHORT YET CRISP AND CLEAR IN ARRIVING AT PROPER FINDINGS REFLECTING REASONABLE DISCHARGE OF ASSESSMENT WHICH CANNOT BE HELD AS ERRONEOUS. IN OU R CONSIDERED VIEW, THE CASE LAWS CITED BY THE LD. AR IN THE CASE OF CIT VS. SUN BEAM AUTO LTD. (DELH), MALABAR INDUS TRIAL CO. LTD. VS. CIT (SC) AND CIT VS. MAX INDIA LTD. (SUPRA ) SUPPORT ASSESSEES CONTENTIONS. WE ARE OF VIEW THAT 263 PRO CEEDINGS CANNOT BE INVOKED WHERE REASONABLE INQUIRIES ARE CON DUCTED WITH APPLICATION OF MIND; THERE IS CONSPICUOUS DIFF ERENCE BETWEEN THE CASES OF LACK OF ENQUIRY AND PERCEPTION ABOUT THE LEVEL OF ENQUIRY. IN THIS CASE IT EMERGES THAT LD. CIT CARRIED A DIFFERENT PERCEPTION ABOUT THE MANNER OF ENQUIRY WHICH OUGHT TO HAVE BEEN CONDUCTED BY THE AO; HOWEVER IT IS NOT SUFFICIENT TO HOLD THE ASSESSMENT ITA NO. 150/JP/2 015 SMT. NIRMALA DEVI CHORDIA VS. CIT -1, JAIPUR 12 ORDER AS ERRONEOUS AND THEREBY PREJUDICIAL TO THE INTEREST OF REVENUE. THE PLETHORA OF CASE LAWS CITED BY THE ASSESSEE DO NOT SUPPORT SUCH TYPE OF EXERCISE OF POWER U/S 263 OF THE ACT. HENCE 263 ORDER HOLDING THE AOS ORDER AS ERRONEOUS CANNOT BE SUSTAINED MERELY BECAUSE THE LD. CIT HOLDS DIFFEREN T PLAUSIBLE VIEW ABOUT MANNER OF INQUIRY. CONSEQUENTLY, WE ARE UNABLE TO UPHOLD THE IMPUGNED ORDER U/S 263 OF THE ACT PAS SED BY THE LD. CIT WHICH IS QUASHED. THUS THE APPEAL OF TH E ASSESSEE IS ALLOWED. 15 ITA NO. 446/JP/2013 DIPTI BHARGAVA VS. CIT BY RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE RA JASTHAN HIGH COURT ON MERGER AS WELL AS COORDINATE BENCH DECISION ON MA NNER OF INQUIRY, WE SET ASIDE THE ORDER OF THE LD CIT, KOTA. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/09/2015. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 30 TH SEPTEMBER, 2015 RANJAN* VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SMT. DIPTI BHARGAVA, KOTA 2. IZR;FKHZ @ THE RESPONDENT- THE CIT, KOTA 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO.446/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR