NKB Infrastructure (P) Ltd, Rewari V. Pr. CIT , Faridabad

ITA 450/DEL/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9947 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2015-2016
• Appeal Filed On: 19-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Depreciation; Audit objection; Earning of tax free income; Question of law; Assessment record; Revised return; Rule 8D; Set aside
• Section: 68; 263; 143(3); 14A; 139(5); 205; 113; 13; 119; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: E NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER [THROUGH VIDEO CONFERENCING] ITA NO.450/DEL/2021 ASSESSMENT YEAR: 2015-16 M/S. NKB INFRASTRUCTURE (P) LTD., BEHIND OLD PNB BUILDING, QUTABPUR, REWARI, HARYANA VS. PR. CIT, FARIDABAD PAN :AADCN5591K (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER DATED 16/03/2021 PASSED BY THE LEARNED PRINCI PAL COMMISSIONER OF INCOME-TAX, FARIDABAD [IN SHORT TH E LEARNED PCIT] UNDER SECTION 263 OF THE INCOME-TAX ACT 1961 (IN SHORT THE ACT) FOR ASSESSMENT YEAR 2015-16, RAISING FOLLOWIN G GROUNDS: APPELLANT BY SH. GAUTAM JAIN, ADV. SH. LALIT MOHAN, CA RESPONDENT BY MS. PRAMITA M. BISWAS, CIT(DR) DATE OF HEARING 12.07.2021 DATE OF PRONOUNCEMENT 27.07.2021 2 ITA NO.450/DEL/2021 1. THAT ORDER DATED 16.3.2021 U/S 263 OF THE ACT B Y LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX, FARIDABAD HAS BEEN MADE WITHOUT SATISFYING THE STATUTORY PRECONDITIONS CONT AINED IN THE ACT AND IS THEREFORE WITHOUT JURISDICTION AND THUS, DES ERVES TO BE QUASHED AS SUCH. 1.1 THAT THE LEARNED PR. COMMISSIONER OF INCOME TA X HAS FAILED TO APPRECIATE THAT ONCE THE LEARNED ASSESSING OFFICER ON EXAMINATION OF THE FACTS ON RECORD AND AFTER MAKING ALL POSSIBL E ENQUIRIES HAD ACCEPTED CLAIM OF THE APPELLANT THEN SUCH AN ORDER OF ASSESSMENT COULD NOT BE REGARDED AS ERRONEOUS IN AS MUCH AS PR EJUDICIAL TO THE INTEREST OF REVENUE MERELY BECAUSE THE LEARNED COMMISSIONER OF INCOME TAX HAD A DIFFERENT OPINION AND THAT TOO, WITHOUT; HAVING ESTABLISHED IN ANY MANNER THAT, VIEW ADOPTED BY THE LEARNED ASSESSING OFFICER WAS AN IMPOSSIBLE VIEW. 1.2 THAT THE LEARNED PRINCIPAL COMMISSIONER OF INC OME TAX HAS FAILED TO APPRECIATE THAT ACTION U/S 263 OF THE ACT IS OTH ERWISE TOO INAPPLICABLE ON THE FACTUAL MATRIX OF THE FACTS OF THE INSTANT CASE SINCE ADMITTEDLY, UNDISPUTEDLY AND UNDENIABLY NOT A CASE OF LACK OF ENQUIRY OR LACK OF INVESTIGATION AND PE RUSAL OF THE SHOW CAUSE NOTICE ITSELF WOULD SHOW THAT IT HAS NOT BEEN DENIED OR DISPUTED THAT ALL RELEVANT INFORMATION INCLUDING BOOKS OF ACCOUNTS HAVE BEEN FURNISHED/OBTAINED IN THE COURSE OF ASSESSMENT PROCEEDING AND THEREFORE IN ABSENCE OF A NY ENQUIRIES BY THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX THE INVOCATION U/S 263 OF THE ACT IS NOT IN ACCORDANCE WITH LAW. 1.3 THAT THE LEARNED PR. COMMISSIONER OF INCOME TA X HAS ALSO FAILED TO APPRECIATE THAT, U/S 263 OF THE ACT, AN ORDER OF ASSESSMENT CANNOT BE SET- ASIDE TO SIMPLY TO MAKE FURTHER ENQU IRIES AND THEREAFTER PASS FRESH ORDER OF ASSESSMENT AND AS SU CH, IMPUGNED ORDER IS CONTRARY TO LAW AND HENCE, UNSUSTAINABLE. 1.4 THAT VARIOUS ADVERSE FINDINGS RECORDED IN THE NOTICE U/S 263 OF THE ACT AND, ALSO IN IMPUGNED ORDER ARE FACTUALLY I NCORRECT, VAGUE, LEGALLY MISCONCEIVED AND UNTENABLE. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT DURING T HE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY WAS ENGAG ED IN THE BUSINESS OF MANUFACTURING OF GRIT, STONE DUST AND G SB, CARRIES SUPPLY OF ROAD CONSTRUCTION WORK ETC. THE ASSESSEE FILED RETURN OF INCOME ON 31/10/2015, DECLARING LOSS OF 2,83,67,943/-. SUBSEQUENTLY, THE ASSESSEE REVISED ITS RETURN OF IN COME ON 23/06/2016 REDUCING THE LOSS TO 1,59,41,161/-. THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT WA S PASSED BY 3 ITA NO.450/DEL/2021 THE ASSESSING OFFICER ON 27/12/2017 AT INCOME OF RS .(-) 1,56,41,161/- AFTER MAKING AN ADDITION OF 3 LAKH TO THE RETURNED INCOME. THE LEARNED PCIT CALLED FOR RECORD S AND FOUND THAT THE ASSESSMENT ORDER WAS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND, THE REFORE, HE SET ASIDE THE ORDER OF THE ASSESSING OFFICER AND DIRECT ED FOR MAKING FRESH ASSESSMENT. AGGRIEVED WITH THE SAID DIRECTION OF LEARNED PCIT, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL RAISING THE GROUNDS AS REPRODUCED ABOVE. 3. BEFORE US, THE PARTIES APPEARED THROUGH VIDEO CONF ERENCING FACILITY. THE ASSESSEE FILED A PAPER-BOOK CONTAININ G PAGES 1 TO 276. 4. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE LEARNED PCIT HAS HELD THE ORDER OF THE ASSESSING OF FICER ERRONEOUS INSOFAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE ON THREE COUNTS. FIRSTLY, THE DISCREPANCY IN THE REVIS ED AND ORIGINAL AUDIT REPORT; SECONDLY, NO ENQUIRY IN CASE OF UNSEC URED LOANS; AND THIRDLY, NO ENQUIRY IN CASE OF SUNDRY CREDITORS AND DEBTORS. 4.1 THE LEARNED COUNSEL OF THE ASSESSEE REFERRED TO PA GE-3 OF PAPER-BOOK FILED BY THE ASSESSEE AND SUBMITTED THAT IN THE ORIGINAL RETURN OF INCOME LOSS OF RS.2,83,67,943/- WAS CLAIMED FOR CARRY FORWARD AND THIS LOSS WAS DUE TO DEPRECIATION LOSS OF RS.8,36,54,720/-. HE REFERRED TO LIST OF FIXED ASSE TS ON WHICH SAID DEPRECIATION WAS CLAIMED AVAILABLE ON PAGE 4 OF THE PAPER-BOOK. HE FURTHER SUBMITTED THAT ASSESSEE REVISED ITS LOSS TO 1,59,41,161/- DUE TO REDUCTION IN CLAIM OF THE DEPR ECIATION TO 2,07,12,27,938/-, ASSET-WISE DETAIL OF WHICH IS AVA ILABLE ON PAGE 47 OF THE PAPER-BOOK. 4 ITA NO.450/DEL/2021 4.2 THE LEARNED COUNSEL FURTHER SUBMITTED THAT IN THE R EVISED RETURN, RATHER THAN INCREASE WHICH COULD HAVE BECOM E A CAUSE OF ENQUIRY, THERE IS A FALL IN CLAIM OF LOSS. HE SUBMI TTED THAT LEARNED PCIT HAS MADE NO SPECIFIC FINDING AS HOW THE ASSESS MENT ORDER IS ERRONEOUS INSOFAR AS THE ISSUE OF CLAIM OF REDUCED LOSS IN REVISED RETURN. THE LEARNED COUNSEL FURTHER SUBMITTED THAT REVISED RETURN HAS BEEN FILED VALIDLY IN TERMS OF SECTION 139(5) O F THE ACT AND ONCE VALID REVISED RETURN IS FILED, IT SUBSTITUTES THE ORIGINAL RETURN OF INCOME AND, THEREFORE, THE ONLY RETURN THAT HAS TO BE ASSESSED IS THE REVISED RETURN AND THUS, THE BASIS ADOPTED B Y THE LEARNED PCIT IS NOT SUSTAINABLE. IN SUPPORT OF THE CONTENTI ON THAT IF A REVISED RETURN IS FILED UNDER SECTION 139(5) OF THE ACT, THE ASSESSMENT CAN BE COMPLETED ONLY ON THE BASIS OF TH E REVISED RETURN AND NOT OTHERWISE, THE LEARNED COUNSEL RELIE D ON THE DECISION OF THE HONBLE ODISHA HIGH COURT IN THE CA SE OF ORISSA RURAL HOUSING DEVELOPMENT CORPORATION LTD. VS. ACIT REPORTED IN 343 ITR 316. 4.3 AS FAR AS THE ISSUES OF UNSECURED LOANS AND SUNDRY CREDITORS AND DEBTORS IS CONCERNED, THE LEARNED COUNSEL OF TH E ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAD MADE INQUI RIES AND RECEIVED REPLIES FROM THE ASSESSEE AND, THEREFORE, THERE WAS NO VALID JUSTIFICATION FOR LEARNED PCIT TO ALLEGE, ASS UME AND CONCLUDE THAT THE ORDER OF ASSESSMENT WAS ERRONEOUS AND INSOFAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LEARNED COUNSEL REFERRED TO QUESTIONNAIRE ISSUED BY THE ASSESSING O FFICER ON 10/08/2017 (AVAILABLE ON PAGE 112 OF THE PAPER-BOO K), REPLY DATED 24/08/2017 (AVAILABLE ON PAGE 113 TO 115 OF T HE PAPER- BOOK), QUESTIONNAIRE DATED 17/10/2017 (AVAILABLE ON PAGE 116 OF 5 ITA NO.450/DEL/2021 THE PAPER-BOOK), REPLY DATED 08/11/2017 (AVAILABLE ON PAGE 117 TO 118 OF THE PAPER-BOOK) AND REPLY DATED 23/11/20 17 (AVAILABLE ON PAGE 119 TO 120 OF THE PAPER-BOOK). 4.4 THE LEARNED COUNSEL SUBMITTED THAT IN SUCH CIRCUMS TANCES THE OBSERVATION OF THE LEARNED PCIT THAT THE ASSESS EE DID NOT FURNISH COMPLETE DETAILS BEFORE THE ASSESSING OFFIC ER, IS COMPLETELY MISCONCEIVED, MISPLACED AND UNTENABLE. T HE LEARNED COUNSEL SUBMITTED THAT AS FAR AS UNSECURED LOAN IS CONCERNED, DURING THE YEAR THERE IS INCREASE OF 2,94,79,167/- FOR PARTIES WHICH ARE MAINLY DIRECTORS OF THE COMPANY AND ALL T HOSE CASES WERE ASSESSED WITH THE SAME ASSESSING OFFICER ONLY. THE CONFIRMATION IN RESPECT OF ALL THESE PERSONS WERE D ULY FILED BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE LEARNED PCIT AND NO ADVERSE INFERENCE HAS BEEN DRAWN BY THE LEARNED PCI T. 4.5 THE LEARNED COUNSEL FURTHER SUBMITTED THAT ENTIRE TRADING RESULTS ARE BASED ON AUDITED BOOKS OF ACCOUNT OF WH ICH COMPLETE DETAILS WERE FURNISHED DURING THE COURSE OF ASSESSM ENT PROCEEDING. HE SUBMITTED THAT ONCE THE TRADING RESU LTS ARE ACCEPTED, ANY ADVERSE OBSERVATION ON SUNDRY DEBTORS /CREDITORS IS FUNDAMENTALLY MISCONCEIVED AND MISPLACED. ACCORDING TO HIM, THE BOOKS OF ACCOUNT STAND ACCEPTED, NO ADDITION CA N BE MADE OUT OF SUNDRY CREDITORS UNDER SECTION 68 OF THE ACT PARTICULARLY WHEN THE TRADING RESULTS ARE ACCEPTED BY THE LEARNE D ASSESSING OFFICER AS WELL AS BY THE LEARNED PCIT. IN SUPPORT, HE RELIED ON FOLLOWING DECISIONS: 1. ITA NO. 325/2008(DEL) CIT VS RITU ANURAG AGARWAL 2. 205 CTR 444 (ALL) CIT VS PANCHAMDASS JAIN 6 ITA NO.450/DEL/2021 4.6 THE LEARNED COUNSEL REFERRED TO THE SUBMISSIONS MA DE BEFORE THE LEARNED PCIT. REGARDING THE DISCREPANCY IN AUDIT REPORT, HE SUBMITTED BEFORE THE LEARNED PCIT THAT R ETURN OF INCOME WAS REVISED DUE TO CHANGE IN DEPRECIATION AN D SOME FIGURES IN ORIGINAL BALANCE-SHEET WERE MENTIONED ER RONEOUSLY UNDER WRONG HEADS, WHICH WERE LATER ON OBSERVED AND RECTIFIED AS THE AUDITOR HAS RECTIFIED THE FIGURE WHILE FURNISHI NG REVISED AUDIT REPORT. REGARDING UNSECURED LOAN, THE LEARNED COUNS EL SUBMITTED THAT CONFIRMATION IN RESPECT OF ALL THE U NSECURED LOAN WERE FURNISHED BEFORE THE LEARNED PCIT. REGARDING S UNDRY CREDITOR, THE LEARNED COUNSEL SUBMITTED THAT ALL EV IDENCE TO THE EFFECT THAT INFORMATION WERE FILED BEFORE THE ASSES SING OFFICER, WERE PRODUCED BEFORE THE LEARNED PCIT. 4.7 IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE LEARNE D PCIT THAT PROPER INQUIRIES WERE MADE BY THE ASSESSING OF FICER AND, THEREFORE, THE ASSESSMENT ORDER IS NOT ERRONEOUS AN D PREJUDICIAL. THE LEARNED COUNSEL FURTHER RELYING ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ETT LTD VS CIT REPORT ED IN 112 TAXMANN.COM 321 (DEL), SUBMITTED THAT LEARNED PCIT HAS NOT GIVEN ANY FINDING AS HOW THE ASSESSMENT ORDER I S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THUS IT IS LIABLE TO BE QUASHED. IN SUPPORT OF HIS CONTENTION HE ALSO RELIED ON FOLLOWING DECISIONS: 1. CIT VS VIJAY KUMAR KOGANTI, 275 TAXMAN 394 (MAD.) 2. ABDUL HAMID VS ITO , 117 TAXMANN.COM 986 (GAUHATI) 4.8 THE LEARNED COUNSEL SUBMITTED THAT IN ABSENCE OF A N ERROR INVOCATION OF SECTION 263 OF THE ACT IS NOT IN ACCO RDANCE WITH LAW. 7 ITA NO.450/DEL/2021 IN SUPPORT OF ABOVE RATIO, THE LEARNED COUNSEL RELI ED ON THE FOLLOWING DECISIONS: 1. PCIT VS DELHI AIRPORT METRO EXPRESS P LTD 398 ITR 8 (DELHI) 2. ITO VS DG HOUSING PROJECTS LTD 343 ITR 329 (DELHI) 3. PCIT VS VINITA CHAURASIA 394 ITR 758 (DELHI) 4. ITA NO. 771/CHD/2017 SHRI ABHIMANYU GUPTA VS PCIT 5. NARAYAN TATU RANE VS ITO, 70 TAXMANN.COM 227 5. ON THE CONTRARY, THE LEARNED DR REFERRED TO EXPLAN ATION-2(I) BELOW THE SECTION 263 OF THE ACT. SHE SUBMITTED THA T IN VIEW OF THE EXPLANATION WHICH HAS BEEN INSERTED BY THE FINA NCE ACT, 2015 WITH EFFECT FROM 01/06/2015, THE ASSESSMENT OR DER WOULD BE DEEMED TO BE ERRONEOUS, IF THE SAME IS PASSED WI THOUT MAKING INQUIRIES OR VERIFICATION WHICH OUGHT TO HAVE BEEN MADE. RELYING ON THE EXPLANATION, SHE SUBMITTED THAT NO ENQUIRY H AS BEEN CONDUCTED BY THE ASSESSING OFFICER ON THE ISSUE OF DIFFERENCE IN AMOUNT BETWEEN THE REVISED RETURN AND ORIGINAL RETU RN OF INCOME, UNSECURED LOANS AND SUNDRY CREDITORS AND DEBTORS AN D THEREFORE THE LEARNED PCIT IS JUSTIFIED IN SETTING ASIDE THE ASSESSMENT ORDER HOLDING THE SAME TO BE ERRONEOUS INSOFAR AS PREJUDI CIAL TO THE INTEREST OF THE REVENUE. 6. WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES ON T HE ISSUE IN DISPUTE AND PERUSED THE RELEVANT MATERIAL ON REC ORD. THE ISSUE IN DISPUTE BEFORE US IS WHETHER THE ASSESSMENT ORDE R PASSED BY THE ASSESSING OFFICER SATISFIES THE TWIN CONDITIONS OF SECTION 263 OF THE ACT. THOSE TWO CONDITIONS ARE THAT, THE ORDE R SHOULD BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND 8 ITA NO.450/DEL/2021 IF THESE TWO CONDITIONS ARE SATISFIED, THE LEARNED PCIT IS JUSTIFIED IN SETTING ASIDE THE ORDER OF THE ASSESSING OFFICER . 6.1 THE HONBLE DELHI HIGH COURT IN THE CASE OF ETT LT D. VS CIT (SUPRA) THAT LEARNED CIT OR PCIT MUST CONDUCT PRIMA -FACIE INQUIRIES AND COME TO A CONCLUSION THAT ASSESSMENT ORDER IS ERRONEOUS. WITHOUT CONCLUDING ENQUIRIES TO HOLD THA T THE ORDER IS ERRONEOUS, SUCH ACTION OF THE LEARNED CIT/PCIT IS N OT JUSTIFIED. THE RELEVANT FINDING OF THE HONBLE HIGH COURT IS R EPRODUCED AS UNDER: 35. THE REVISIONARY JURISDICTION U/S. 263 CANNOT B E EXERCISED SIMPLY TO MAKE ROVING AND FISHING ENQUIRY. IT IS A WELL SETTLED LAW DECIDED BY THE VARIOUS COURTS IN THE JUDGMENTS RELI ED UPON BY THE LD. COUNSEL THAT, THE REVISIONARY AUTHORITY FIR ST OF ALL SHOULD GIVE A FINDING AS TO HOW THE ASSESSMENT ORDE R IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REV ENUE. IF SUCH AN AUTHORITY IS OF THE VIEW THAT THE ASSESSING OFFICER DID NOT MAKE ANY ENQUIRY, THEN IT IS INCUMBENT UPON CIT TO SPECIFY AS TO WHAT KIND OF INQUIRY OR VERIFICATION H AS NOT BEEN DONE AND EVEN LD. CIT CAN ALSO CONDUCT SOME PRIMA-FA CIE ENQUIRY HIMSELF OR THROUGH AO TO REACH TO A CONCLUS ION OR INFERENCE THAT THE ASSESSMENT ORDER PASSED BY THE AS SESSING OFFICER IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. SUCH AN ENQUIRY OR EXERCISE BY THE LD. CIT IS COMPLETELY LACKING IN THE PRESENT CASE. IF THE ASSE SSING OFFICER HAS CARRIED OUT DETAILED ENQUIRY AND HAS EXAMINED ALL T HE RECORDS CALLED UPON BY HIM AFTER RAISING QUERIES, THEN LD. CIT WIT HOUT POINTING OUT AS TO HOW SUCH AN ENQUIRY IS INADEQUATE OR NOT PROP ER CANNOT SET ASIDE THE ASSESSMENT. EVEN THE FICTION CREATED BY E XPLANATION 2 TO SECTION 263 WHEREIN IT IS DEEMED THAT ASSESSMENT OR DER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE IF THE O RDER PASSED BY THE ASSESSING OFFICER IS WITHOUT MAKING ENQUIRIES OR VE RIFICATION WHICH SHOULD HAVE BEEN DONE. HERE IN THIS CASE, WE HAVE A LREADY FOUND THAT ASSESSING OFFICER HAS MADE PROPER ENQUIRIES AN D VERIFICATION AFTER CALLING FOR ALL THE RECORDS AND AFTER APPLYIN G HIS MIND HAS ALLOWED THE DEDUCTION IN ACCORDANCE WITH LAW. THE L D. CIT NOW CANNOT SIT ON THE JUDGMENT OF THE ASSESSING OFFICER WITHOUT POINTING OUT ANY LEGAL OR FACTUAL INFIRMITY OR WITHOUT CARRY ING OUT HIS OWN ENQUIRY. HE SIMPLY CANNOT SET ASIDE THE ORDER OF TH E ASSESSING OFFICER STATING THAT NO PROPER ENQUIRY HAS BEEN DON E. ACCORDINGLY, IN VIEW OF OUR DISCUSSION AND FINDING GIVEN ABOVE, WE SET ASIDE THE IMPUGNED ORDER OF LD. CIT PASSED U/S. 263 AND UPHOL D THE 9 ITA NO.450/DEL/2021 ASSESSMENT ORDER DATED 11.08.2015. THE IMPUGNED ORD ER THUS, STANDS QUASHED. 39. IT IS NOT CLEAR FROM PERUSAL OF RECORDS AS TO W HAT WAS THE CAUSE OF ACTION FOR INITIATION OF PROCEEDINGS U/S. 263 OF IT ACT; SUCH AS, WHETHER THERE WAS ANY AUDIT OBJECTION, OR WHETHER A NY OTHER NEW INFORMATION FROM OUTSIDE THE ASSESSMENT RECORDS WER E RECEIVED BY THE LD. CIT. BE THAT AS IT MAY, NUMEROUS HEARINGS W ERE FIXED BY THE LD. CIT, INCLUDING ON 07.11.2017, 29.11.2017, 11.12 .2017, 10.01.2018, 08.02.2018 AND 23.02.2018. EVENTUALLY T HE AFORESAID IMPUGNED ORDER DATED 31.03.2018 WAS PASSED BY THE L D. CIT ON 31.03.2018. THUS, IT IS SEEN THAT ALTHOUGH THE REVI SION PROCEEDINGS U/S. 263 OF IT ACT PROLONGED FOR A FEW MONTHS, THE IMPUGNED ORDER WAS PASSED BY THE LD. CIT ON THE LAST DAY OF LIMITA TION PERIOD, I.E. ON 31.03.2018. A PERUSAL OF THE AFORESAID IMPUGNED REVISION ORDER DT. 31.03.2018 PASSED U/S. 263 OF IT ACT SHOWS THAT ALTHOUGH SUBMISSIONS MADE BY THE ASSESSEE VIDE AFORESAID WRI TTEN SUBMISSIONS DATED 08.02.2018 AND 23.02.2018 HAVE BE EN MENTIONED; THE CONTENTS OF THESE SUBMISSIONS HAVE N OT AT ALL BEEN DISCUSSED BY THE LD. CIT. EVEN AS FAR AS AFORESAID WRITTEN SUBMISSIONS DATED 11.12.2017 IS CONCERNED, ONLY A S MALL PORTION OF IT HAS FOUND MENTION IN AFORESAID IMPUGNED REVISION ORDER DATED 31.03.2018 PASSED BY LD. CIT U/S. 263 OF IT ACT. TH US, IT IS OBVIOUS THAT THE MATERIAL BROUGHT BY THE ASSESSEE FOR THE C ONSIDERATION OF LD. CIT HAVE NOT BEEN FULLY FACTORED IN BY THE LD. CIT; AND THE LD. CIT HAS NOT FULLY DEALT WITH THE ENTIRE FORCE OF AS SESSEE'S SUBMISSIONS BEFORE MAKING AN ADVERSE DECISION AGAIN ST THE ASSESSEE. MOREOVER, THE LD. CIT HAS OBSERVED IN A C RYPTIC, SUMMARY AND NONSPEAKING MANNER IN AFORESAID ORDER DATED 31. 03.2018, THAT THE AO HAD NOT CONDUCTED REQUISITE ENQUIRY/INVESTIG ATION ON EXEMPT INCOME EARNED BY THE ASSESSEE AND APPLICABILITY OF THE PROVISION OF SECTION 14A OF THE IT ACT, READ WITH RULE 8D OF I.T . RULES, 1962; WITHOUT DEALING WITH SUBMISSIONS MADE AND MATERIALS PLACED BY THE ASSESSEE BEFORE THE LD. CIT VIDE AFORESAID LETTERS DATED 11.12.2017 AND 23.02.2018, AS PER FOREGOING PARAGRAPHS (38.1.1 ) AND (38.1.1.2) OF THIS ORDER. IT IS ALSO FOUND, IN VIEW OF FOREGOI NG PARAGRAPH (37.2) (I) OF THIS ORDER, THAT THE ALLEGATIONS OF THE LD. CIT AGAINST THE AO, NARRATED BY HIM IN PARAGRAPH 4 OF THE AFORESAID ORD ER DATED 31.03.2018, FLUCTUATE IN SEVERITY AND DESCRIPTION. FROM THESE FEATURES OF THE AFORESAID ORDER DATED 31.03.2015 OF LD. C1T; IT CAN BE CONCLUDED THAT THE ORDER HAS BEEN PASSED BY LD. CIT IN A HASTY MANNER, WITHOUT DUE APPLICATIONS OF MIND, WITHOUT F ULLY TAKING INTO CONSIDERATION THE SUBMISSIONS MADE AND MATERIALS PL ACED BY THE ASSESSEE BEFORE LD. CIT, AND WITHOUT DEALING WITH T HE FULL FORCE OF ASSESSEE'S SUBMISSIONS AND CONTENTIONS: AND PART OF THE ORDER IS ALSO CRYPTIC, SUMMARY AND NON-SPEAKING IN NATURE. A N ORDER SUCH AS THIS, IS LIABLE TO BE QUASHED. (EMPHASIS SUPPLIED EXTERNALLY) 10 ITA NO.450/DEL/2021 6.1.1 SIMILARLY, THE HONBLE MADARAS HIGH COURT IN THE CASE OF VIJAY KUMAR KOGANTI (SUPRA) HELD THAT THE LEARNED PC IT HAS TO POINT OUT SPECIFICALLY THAT HOW THE ASSESSMENT ORDE R IS ERRONEOUS. THE RELEVANT FINDING OF THE HONBLE HIGH COURT IS R EPRODUCED AS UNDER: 10. THE HON'BLE SUPREME COURT, IN THE DECISION IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. V. CIT (2000) 109 TAXMA N 66/243 ITR 83 HELD THAT FOR EXERCISE OF JURISDICTION UNDER SEC TION 263 OF THE ACT, IT WAS NECESSARY THAT THE ORDER OF ASSESSMENT SHOUL D BE NOT MERELY ERRONEOUS, BUT ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. BEARING THIS LEGAL PRINCIPLE IN MIND, IF WE TEST TH E CORRECTNESS OF THE ORDER PASSED BY THE TRIBUNAL, AS RIGHTLY POINTED OU T BY THE TRIBUNAL, THE PCIT DID NOT POINT OUT ANYTHING SPECIFICALLY AS T O HOW THE ASSESSMENT ORDER DATED 23-12-2016 WAS ERRONEOUS. AFTER RENDERING A FINDING ON SUCH ASPECT, THE PCIT WAS RE QUIRED TO RENDER A FINDING THAT IT WAS ALSO PREJUDICIAL TO THE INTER EST OF THE REVENUE. 12. WHEN THE PCIT ISSUED THE SHOW CAUSE NOTICE DATE D 13-11-2018 CALLING UPON THE ASSESSEE TO EXPLAIN WITH REGARD TO THE INCREASE IN CAPITAL AND ALSO CONVERSION OF PREFERENCE SHARES DU RING THE RELEVANT YEARS, THE ASSESSEE GAVE A REPLY DATED 2-1-2019. TH IS HAS BEEN EXTRACTED BY THE TRIBUNAL IN PARAGRAPH 3.2 OF THE I MPUGNED ORDER. WE FIND THE EXPLANATION TO BE COGENT AND IN FACT, T HE FACTUAL MATRIX WAS APPRECIATED BY THE TRIBUNAL TO HOLD THAT THE PC IT COULD NOT HAVE INVOKED THE REVISIONARY JURISDICTION UNDER SEC TION 263 OF THE ACT MAINLY ON THE GROUND THAT SUBSTANTIAL INCREASE IN CAPITAL INVESTMENT REFLECTED BY THE ASSESSEE IN HIS BALANCE SHEET AS COMPARED TO THE PRECEDING YEAR. THE TRIBUNAL FURTHE R POINTED OUT THAT THESE ISSUES WERE RAISED BY THE ASSESSING OFFI CER IN THE SCRUTINY ASSESSMENT AND THAT THE ASSESSEE HAD GIVEN PROPER EXPLANATION, WHICH WAS TAKEN NOTE OF BY THE ASSESSI NG OFFICER WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3) OF T HE ACT. (EMPHASIS SUPPLIED EXTERNALLY) 6.1.2 THE HONBLE GAUHATI HIGH COURT IN THE CASE OF ABDUL HAMID (SUPRA) HAS HELD THAT FOR INVOKING SECTION 26 3 OF THE ACT, LD. PCIT SHOULD POINT OUT A SPECIFIC ERROR OR MISTA KE ON THE ORDER OF THE ASSESSING OFFICER RATHER THAN USING PROBABIL ITY OR GUESS 11 ITA NO.450/DEL/2021 WORK. THE RELEVANT FINDING OF THE HONBLE HIGH COUR T IS REPRODUCED AS UNDER: 19. WE ALSO NOTE THAT ID PCIT IN HIS ORDER U/S 263 OF THE ACT, VIDE PARA 5 OF HIS ORDER, HAS STATED THAT 'THE ASSESSING OFFICER MADE SOME PARTIAL APPLICATION OF MIND'. WE NOTE THAT THE RE IS NO CONCEPT OF 'PARTIAL APPLICATION OF MIND', IT SHOULD BE EITHER APPLICATION OF MIND OR NON APPLICATION OF MIND. THE RELEVANT PARA NO. 5 OF HIS ORDER IS REPRODUCED BELOW: '5. CONSIDERING THE SUBMISSION OF THE ASSESSEE, FAC TS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE, 1 AM OF THE OPINION THAT THE ASSESSING OFFICER MADE SOME PARTIAL APPLIC ATION OF MIND RELATING TO POINT NO. 3(/7) MENTIONED ABOVE/AND REG ARDING POINT NO. 3(/) MENTIONED ABOVE, THE ASSESSMENT ORDER PASSED O N 30-12-2016 U/S 143(3) OF THE ACT WAS ERRONEOUS IN SO FAR AS PR EJUDICIAL TO THE INTERESTS OF THE REVENUE. IN THE FACTS AND CIRCUMST ANCES OF THE CASE, I AM OF THE CONSIDERED VIEW THAT THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER TO TREAT AND TAX THE UNDISCLOSED INCOME OF RS. 3,95,933/- AS PER PROVISIONS OF SECTI ON 115BBE OF THE INCOME-TAX ACT, 1961.' FROM THE ABOVE CONCLUDING PARA OF THE ORDER OF ID P CIT UNDER SECTION 263 OF THE ACT, IT IS ABUNDANTLY CLEAR THAT ID PCIT IS USING THE PROBABILITY, LIKELIHOOD AND CHANCES THAT ASSESSING O FFICER MIGHT OR MIGHT NOT HAVE APPLIED HIS MIND. IT MEANS, ID PCIT HAS FAILED TO POINT OUT THE SPECIFIC ERROR OR MISTAK E IN THE ORDER OF AO AS HE IS USING PROBABILITY AND GUESS WOR K WHICH IS NOT PERMITTED UNDER THE INCOME TAX PROCEEDINGS. T HE ID PCIT IS A SENIOR OFFICER AND PLAYS A SUPERVISORY ROLE ON THE INCOME-TAX OFFICER WORKING BELOW HIM THEREFORE, IT IS EXPECTED FROM HIM THAT HE SHOULD FIND SPECIFIC ERROR IN THE A SSESSMENT ORDER AND LET IT KNOW, TO THE INCOME-TAX OFFICER RA THER THAN TO USE PROBABILITY AND GUESS WORK. IT IS NECESSARY FOR THE ID PCIT TO POINT OUT EXACT ERROR IN THE ASSESSMENT ORDER PR OPOSED TO BE REVISED BY HIM AS HELD IN CIT V. GK KABRA, CO-OPE RATIVE INDUSTRIAL ESTATE [1994] 75 TAXMAN 503 (AP). THUS, WE NOTE THAT SINCE THE ID PCIT HAS USED ONLY PROBABILITY AND LIKELIHOOD TO FIND THE ERROR IN THE ASSESSMENT ORDER WHICH IS NOT PERMITTED, HE OUGHT TO FIND OUT SPECIFIC ERROR IN THE ASSESSMENT ORDER, AND GUIDE THE ASSESS ING OFFICER, SINCE HE HAS FAILED TO DO SO IN THE ASSESS EE'S CASE UNDER CONSIDERATION, THEREFORE ORDER PASSED BY THE A SSESSING OFFICER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. SINCE THE ORDER OF THE ASSESSING OFFICER CANNOT BE HELD TO BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTER EST OF REVENUE IN THE FACTS AND CIRCUMSTANCES NARRATED ABOVE, THE USU RPATION OF JURISDICTION EXERCISING REVISIONAL JURISDICTION BY THE PRINCIPAL CIT IS 12 ITA NO.450/DEL/2021 'NULL' IN THE EYE OF LAW AND THEREFORE WE ARE INCLI NED TO QUASH THE VERY ASSUMPTION OF JURISDICTION TO INVOKE REVISIONA L JURISDICTION U/S 263 BY THE PC1T. THEREFORE, WE QUASH THE ORDER OF L D. PC1T DATED 11-12-2018 BEING AB INITIO VOID. (EMPHASIS SUPPLIED EXTERNALLY) 6.1.3 THE HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS DELHI AIRPORT METRO EXPRESS PRIVATE LIMITED (SUPRA) HAS M ADE SIMILAR OBSERVATION AND HELD THAT THE BURDEN IS ON THE PCIT TO SHOW THAT THERE IS AN ERROR IN THE ORDER OF THE ASSESSMENT. I N ABSENCE OF WHICH, ACTION UNDER SECTION 263 IS NOT JUSTIFIED. T HE RELEVANT FINDING OF THE HONBLE HIGH COURT IS REPRODUCED AS UNDER: 10. FOR THE PURPOSES OF EXERCISING JURISDICTION UN DER SECTION 263 OF THE ACT, THE CONCLUSION THAT THE ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE HAS TO BE PRECEDED BY SOME MINIMAL INQUIRY. IN FACT, IF THE PCIT IS OF TH E VIEW THAT THE AO DID NOT UNDERTAKE ANY INQUIRY, IT BECOMES INCUMBENT ON THE PCIT TO CONDUCT SUCH INQUIRY. ALL THAT PCIT HAS DONE IN THE IMPUGNED ORDER IS TO REFER TO THE CIRCULAR OF THE CBDT AND CONCLUD E THAT IN THE CASE OF THE ASSESSEE COMPANY, THE AO WAS DUTY BOUND TO C ALCULATE AND ALLOW DEPRECIATION ON THE BOT IN CONFORMITY OF THE CBDT CIRCULAR 9/2014 BUT THE AO FAILED TO DO SO. THEREFORE, THE O RDER OF THE AO IS ERRONEOUS INSOFAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. 11. IN THE CONSIDERED VIEW OF THE COURT, THIS CAN H ARDLY CONSTITUTE THE REASONS REQUIRED TO BE GIVEN BY THE PCIT TO JUS TIFY THE EXERCISE OF JURISDICTION UNDER SECTION 263 OF THE ACT. IN THE C ONTEXT OF THE PRESENT CASE IF, AS URGED BY THE REVENUE, THE ASSES SEE HAS WRONGLY CLAIMED DEPRECIATION ON ASSETS LIKE LAND AND BUILDI NG, IT WAS INCUMBENT UPON THE PCIT TO UNDERTAKE AN INQUIRY AS REGARDS WHICH OF THE ASSETS WERE PURCHASED AND INSTALLED BY THE A SSESSEE OUT OF ITS OWN FUNDS DURING THE AY IN QUESTION AND, WHICH WERE THOSE ASSETS THAT WERE HANDED OVER TO IT BY THE DMRC. THA T BASIC EXERCISE OF DETERMINING TO WHAT EXTENT THE DEPRECIATION WAS CLAIMED IN EXCESS HAS NOT BEEN UNDERTAKEN BY THE PCIT. 13. THEREFORE, THE COURT IS OF THE VIEW THAT THE IT AT WAS NOT IN ERROR IN SETTING ASIDE THE IMPUGNED ORDER OF THE PCIT UND ER SECTION 263 OF THE ACT. NO SUBSTANTIAL QUESTION OF LAW ARISES. 6.1.4 THE HONBLE DELHI HIGH COURT IN THE CASE OF ITO VS D G HOUSING PROJECT LTD (SUPRA) ALSO HELD THAT THE CIT OR PCIT HAS TO EXAMINE THE ORDER OF THE ASSESSING OFFICER ON MERIT AND THEN FORM 13 ITA NO.450/DEL/2021 AN OPINION THAT ORDER WAS ERRONEOUS. THE RELEVANT F INDING OF THE HONBLE HIGH COURT IS REPRODUCED AS UNDER: 19. IN THE PRESENT CASE, THE FINDINGS RECORDED BY THE TRIBUNAL ARE CORRECT AS THE CIT HAS NOT GONE INTO AND HAS NOT GI VEN ANY REASON FOR OBSERVING THAT THE ORDER PASSED BY THE ASSESSIN G OFFICER WAS ERRONEOUS. THE FINDING RECORDED BY THE CIT IS THAT 'ORDER PASSED BY THE ASSESSING OFFICER MAY BE ERRONEOUS'. THE CIT HA D DOUBTS ABOUT THE VALUATION AND SALE CONSIDERATION RECEIVED BUT T HE CIT SHOULD HAVE EXAMINED THE SAID ASPECT HIMSELF AND GIVEN A F INDING THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS . HE CAME TO THE CONCLUSION AND FINDING THAT THE ASSESSING OFFIC ER HAD EXAMINED THE SAID ASPECT AND ACCEPTED THE RESPONDENT'S COMPU TATION FIGURES BUT HE HAD RESERVATIONS. THE CIT IN THE ORDER HAS R ECORDED THAT THE CONSIDERATION RECEIVABLE WAS EXAMINED BY THE ASSESS ING OFFICER BUT WAS NOT PROPERLY EXAMINED AND THEREFORE THE ASSESSM ENT ORDER IS 'ERRONEOUS'. THE SAID FINDING WILL BE CORRECT, IF T HE CIT HAD EXAMINED AND VERIFIED THE SAID TRANSACTION HIMSELF AND GIVEN A FINDING ON MERITS. AS HELD ABOVE, A DISTINCTION MUST BE DRAWN IN THE CASES WHERE THE ASSESSING OFFICER DOES NOT CONDUCT AN ENQ UIRY ; AS LACK OF ENQUIRY BY ITSELF RENDERS THE ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND CASES WHERE THE ASS ESSING OFFICER CONDUCTS ENQUIRY BUT FINDING RECORDED IS ERRONEOUS AND WHICH IS ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN LATTER CASES, THE CIT HAS TO EXAMINE THE ORDER OF THE ASSESSING OFFICER O N MERITS OR THE DECISION TAKEN BY THE ASSESSING OFFICER ON MERITS A ND THEN HOLD AND FORM AN OPINION ON MERITS THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF THE REVENUE. IN THE SECOND SET OF CASES, CIT CANNOT DIRECT THE ASSE SSING OFFICER TO CONDUCT FURTHER ENQUIRY TO VERIFY AND FIND OUT WHET HER THE ORDER PASSED IS ERRONEOUS OR NOT. 6.1.5 THE MUMBAI BENCH OF THE ITAT IN THE CASE OF NARAYAN TATU RANE (SUPRA) HAS ALSO ARRIVED AT SIMILAR FINDING HO LDING THAT WHERE THE PCIT HAS NOT BROUGHT ANY MATERIAL ON RECO RD BY MAKING INQUIRIES OR VERIFICATION TO SUBSTANTIATE HI S INFERENCE, THE LEARNED PCIT IS NOT JUSTIFIED IN HOLDING THE ASSESS MENT ORDER AS ERRONEOUS. THE RELEVANT FINDING OF THE TRIBUNAL IS EXTRACTED AS UNDER: 21. IN THE INSTANT CASE, AS NOTICED EARLIER, THE A O HAS ACCEPTED THE EXPLANATIONS OF THE ASSESSEE, SINCE THERE IS NO FOO L PROOF EVIDENCE TO LINK THE ASSESSEE WITH THE DOCUMENT AND M/S RNS INF RASTRUCTURE 14 ITA NO.450/DEL/2021 LTD, FROM WHOSE HANDS IT WAS SEIZED, ALSO DID NOT I MPLICATE THE ASSESSEE. THUS, THE ASSESSEE HAS BEEN EXPECTED TO P ROVE A NEGATIVE FACT, WHICH IS HUMANELY NOT POSSIBLE. NO OTHER CORR OBORATIVE MATERIAL WAS AVAILABLE WITH THE DEPARTMENT TO SHOW THAT THE EXPLANATIONS GIVEN BY THE ASSESSEE WERE WRONG OR INCORRECT. UNDE R THESE SET OF FACTS, THE AO APPEARS TO HAVE BEEN SATISFIED WITH T HE EXPLANATIONS GIVEN BY THE ASSESSEE AND DID NOT MAKE ANY ADDITION . WE HAVE NOTICED THAT THE HON'BLE SUPREME COURT HAS HELD IN THE CASE OF CENTRAL BUREAU OF INVESTIGATION VS. V.C. SHUKLA AND OTHERS (SUPRA) THAT THE ENTRIES IN THE BOOKS OF ACCOUNT BY THEMSEL VES ARE NOT SUFFICIENT TO CHARGE ANY PERSON WITH LIABILITY. HEN CE, IN OUR VIEW, IT CANNOT BE HELD THAT THE ASSESSING OFFICER DID NOT C ARRY OUT ENQUIRY OR VERIFICATION WHICH SHOULD HAVE BEEN DONE, SINCE THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE INCRIMINATING DOC UMENT WAS NOT CONSIDERED TO BE STRONG BY THE AO TO IMPLICATE THE ASSESSEE. THUS, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS T AKEN A PLAUSIBLE VIEW IN THE FACTS AND CIRCUMSTANCES OF THE CASE. EV EN THOUGH THE LD PR. CIT HAS DRAWN CERTAIN ADVERSE INFERENCES FROM T HE DOCUMENT, YET IT CAN SEEN THAT THEY ARE DEBATABLE IN NATURE. FURT HER, AS NOTICED EARLIER, THE LD PR. CIT HAS NOT BROUGHT ANY MATERIA L ON RECORD BY MAKING ENQUIRIES OR VERIFICATIONS TO SUBSTANTIATE H IS INFERENCES. HE HAS ALSO NOT SHOWN THAT THE VIEW TAKEN BY HIM IS NO T SUSTAINABLE IN LAW. THUS, WE ARE OF THE VIEW THAT THE LD PR. CIT H AS PASSED THE IMPUGNED REVISION ORDERS ONLY TO CARRY OUT FISHING AND ROVING ENQUIRIES WITH THE OBJECTIVE OF SUBSTITUTING HIS VI EWS WITH THAT OF THE AO. HENCE WE ARE OF THE VIEW THAT THE LD PR. CIT WA S NOT JUSTIFIED WAS NOT CORRECT IN LAW IN HOLDING THAT THE IMPUGNED ASSESSMENT ORDERS WERE ERRONEOUS. 6.1.6 THE TRIBUNAL CHANDIGARH BENCH IN THE CASE OF ABHIMA NYU GUPTA (SUPRA) ALSO FOLLOWING THE DECISION OF THE HO NBLE DELHI HIGH COURT IN THE CASE OF DELHI AIRPORT METRO EXPRE SS PRIVATE LIMITED (SUPRA) HELD THAT IT IS NECESSARY TO DEMONS TRATE THAT THE ERROR WHICH THE AUTHORITY SEEKS TO ADDRESS IS SET O UT IN THE ORDER TO SHOW HOW THE ERROR TO BE PREJUDICIAL TO THE INTE REST OF THE REVENUE. THE RELEVANT FINDING OF THE TRIBUNAL IS RE PRODUCED AS UNDER: 4.4 IN THE FACTS OF THE PRESENT CASE WE FIND THAT THE PR. CIT HAS FAILED TO POINT OUT THE ERROR COMMITTED BY THE ASSE SSING OFFICER LET ALONE SUCH AN ERROR WHICH CAN BE CONSIDERED TO BE P REJUDICIAL TO THE INTERESTS OF THE REVENUE. THE LAW DOES NOT PERMIT T HE AUTHORITY THE 15 ITA NO.450/DEL/2021 EXERCISE OF REVISIONARY POWERS TO INITIATE FISHING SHRI ABHIMANYU GUPTA ITA NO. 771 /CHD/2017 ASSESSMENT YEAR : 2012- 13 AND ROVING ENQUIRIES. THE ASSESSING OFFICER IN THE FACT S OF THE PRESENT CASE WE NOTE HAS PASSED AN ORDER AFTER CONDUCTING D ETAILED ENQUIRIES ON ALL THE ISSUES THE PR. CIT HAS FLAGGED VARIOUS ISSUES AND ON GOING THROUGH THE RECORD WE NOTE THAT HE HAS FAILED TO GIVE ANY FINDING AS TO HOW AND IN WHAT MANNER THE ORDER OF THE ASSESSING OFFICER ON THE VARIOUS ISSUES NOTED BY HI M CAN BE SAID TO BE ERRONEOUS LET ALONE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. WE NOTE THAT NO ENQUIRY HAS BEEN MADE BY THE PR. CIT A T HIS OWN INSTANCE AND HE HAS MERELY DIRECTED THE ASSESSING O FFICER TO PASS AN ORDER IN ACCORDANCE WITH LAW. THE LAW ENVISAGES THA T FIRST THE LD. PR.CIT IS TO POINT OUT HOW THE ORDER CAN BE SAID TO BE ERRONEOUS WITHOUT SUCH AN EXERCISE THE DIRECTION TO PASS THE ORDER IN ACCORDANCE WITH LAW BECOMES MEANINGLESS. THE RESPON SIBILITY TO DO SO CANNOT BE SHUNNED OR ABROGATED BY THE SAID AUTHO RITY WHIMSICALLY. THE LAW REQUIRES THAT THE ORDER PASSED BY THE PR. CIT SHOULD BE A SPEAKING ORDER POINTING OUT THE ERROR A S IN THE ABSENCE OF THE SAME IT IS AN ARBITRARY EXERCISE WHICH CANNO T BE COUNTENANCED. WE FIND SUPPORT FROM THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF DCIT VERSUS DELHI AIRPORT METRO EXPRESS PRIVATE APART FROM VARIOUS OTHER DECISIONS CITED BY THE PARTIES. THE COURT IN CATEGORIC TERMS HAS HELD THAT THE LAW ENVI SAGES BEFORE THE REVISIONARY AUTHORITY EXERCISES JURISDICTION UNDER SECTION 263 THAT THE PR. CIT SHOULD PROCEED BY CARRYING OUT SOME MIN IMUM ENQUIRIES TO SHOW THAT THE CONCLUSION OF THE ASSESSING OFFICE R IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. EVEN I N THE CIRCUMSTANCES WHERE THE PR. CIT IS OF THE VIEW THAT THE ASSESSING OFFICER DID NOT UNDERTAKE ANY ENQUIRY EVEN THEN IT BECOMES INCUMBEN T UPON THE PR. CIT TO CONDUCT SUCH AN INQUIRY AND IN CASES ENQUIRY HAS BEEN DONE THEN IT IS NECESSARY TO DEMONSTRATE THAT THE ERROR WHICH THE AUTHORITY SEEKS TO ADDRESS IS SET OUT IN THE ORDER TO SHOW HOW THE ERROR CAN BE SAID TO BE PREJUDICIAL TO THE INTEREST S OF THE REVENUE. IN THE FACTS OF THE PRESENT CASE WE FIND THAT THE LD. PR. CIT HAS FAILED TO ADDRESS THE REPLIES OF THE ASSESSEE EVEN AFTER EXTR ACTING THEM IN THE ORDER AND HAS PASSED A BALD ORDER WITHOUT BRINGING OUT ANY ERROR WHATSOEVER LET ALONE AN ERROR WHICH CAN BE SAID TO BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ON GOING THROUGH THE EXPLANATION 2 TO SECTION 263 OF THE ACT WHICH HAS BEEN INSERTED W.E. F. 01/06/2015 WE CONCUR WITH THE CONCLUSIONS DRAWN BY THE COORDIN ATE BENCH IN THE CASE OF NARYAN TATU RANE CITED SUPRA WHEREIN IT HAS BEEN HELD THAT EXPLANATION CANNOT BE SAID TO HAVE OVERRIDDEN THE LAW AS SHRI ABHIMANYU GUPTA ITA NO. 771 /CHD/2017 AS S ES S M E N T Y EAR : 2 0 12-13 INTERPRETED BY VARIOUS HIGH COURTS AND THE HIGH COURTS HAVE CONSISTENTLY HELD THAT BEFORE REACHING THE CONCLUSI ON THAT THE ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTER ESTS OF THE REVENUE THE COMMISSIONER HIMSELF HAS TO UNDERTAKE SOME ENQU IRY TO ESTABLISH THAT THE ASSESSMENT ORDER IS ERRONEOUS AN D PREJUDICIAL TO 16 ITA NO.450/DEL/2021 THE INTERESTS OF THE REVENUE. IN THE FACTS OF THE P RESENT CASE WE FIND THAT NO SUCH EXERCISE HAS BEEN DONE. 6.2 IN VIEW OF THE ABOVE JUDICIAL PRECEDENTS, WE ARE O F THE OPINION THAT IT IS PREREQUISITE FOR THE PCIT TO CAR RY OUT MINIMAL INQUIRIES ON THE ISSUES ON WHICH HE HAS PROPOSED TO SET ASIDE THE ORDER OF THE ASSESSING OFFICER AND THEREAFTER DEMON STRATE HOW THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS. SIMPLY , OBSERVING BY THE LEARNED PCIT THAT THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY ON THE ISSUE IS NOT SUFFICIENT AND HE IS RE QUIRED TO DEMONSTRATE ERROR IN THE ORDER OF THE ASSESSING OFF ICER AFTER GOING THROUGH REPLY OF THE ASSESSEE OR AFTER CARRYING OUT INQUIRIES WHICH ARE DEEMED FIT. 6.3 WE FIND THAT IN THE INSTANT CASE, THE LEARNED PCIT HAS HELD THE ASSESSMENT ORDER AS ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF THE REVENUE THAT NO INQUIRIES HAVE BEEN CARRIED OUT BY THE ASSESSING OFFICER ON FOLLOWING ISSUES. 1. DIFFERENCE IN FIGURES OF REVISED RETURN AND ORIGINA L RETURN 2. UNSECURED LOANS 3. SUNDRY CREDITORS AND DEBTORS 6.4 WE FIND THAT BEFORE US, THE LEARNED COUNSEL OF TH E ASSESSEE HAS REFERRED TO VARIOUS QUERIES RAISED BY THE ASSES SING OFFICER AND REPLY SUBMITTED BY THE ASSESSEE. FOR READY REFE RENCE, THE DATE-WISE QUESTIONNAIRE BY THE ASSESSING OFFICER AN D REPLY BY THE ASSESSEE ARE REPRODUCED AS UNDER: 10/08/2017 QU ESTIONNAIRE ISSUED BY THE ASSESSING OFFICER ( PAGE 112 OF PAPER-BOOK) 24/08/2017 REPLY FILED BY THE ASSESSEE ( PAGE 113 - 115 OF PAPER - BOOK) 17/10/2017 QUESTION ISSUED BY THE ASSESSING OFFICER (PAGE 116 OF PAPER-BOOK) 17 ITA NO.450/DEL/2021 08/11/2017 REPLY FILED BY THE ASSESSEE (PAGE 117 - 118 OF PAPER - BOOK) 23/11/2017 REPLY FILED BY THE ASSESSEE (PAGE 119 - 120 OF THE PAPER-BOOK) 07/12/2017 REPLY FILED BY THE ASSESSEE ( PAGE 1221 - 123 OF PAPER - BOOK) 6.5 THE LEARNED PCIT HAS MADE FOLLOWING OBSERVATIONS ON THE THREE ISSUES: SR. NO. PARTICULARS OBSERVATIONS I) DISCREPANCIES IN THE REVISED AND ORIGINAL AUDIT REPORT THE PERUSAL OF BOTH THE REVISED AND ORIGINAL ITR AND AUDIT REPORT REVEAL THAT THERE IS DIFFERENCE IN THE FIGURES UNDER HEAD LONG TERM LIABILITIES, SURPLUS, PAYMENT TO RELATED PARTIES, DEPRECIATION, CASH IN HAND AND SOME OTHER HEADS. NEITHER THE AO ASKED FOR THE DETAILS OF CHANGES MADE IN THE BALANCE SHEET NOR THE ASSESSEE SUBMITTED ANY EXPLANATION DURING ASSESSMENT PROCEEDINGS. NO RECONCILIATION OF VARIOUS ENTRIES HAS BEEN SUBMITTED DURING THE PRESENT PROCEEDINGS. HENCE THE CHANGES IN THE VARIOUS HEADS IN THE REVISED ITR AND AUDIT REPORT REMAIN UNEXPLAINED. THE AO IS DIRECTED TO OBTAIN ALL THE DETAILS OF HEADS WHEREVER CHANGES HAVE BEEN MADE AND TAKEN NECESSARY ACTION UN DER THE PROVISIONS OF INCOME TAX ACT. II) UNSECURED LOANS NEITHER THE AO CALLED FOR COMPLETE CONFIRMATIONS TO PROVE IDENTIT Y, CREDITWORTHINESS AND GENUINENESS OF THE LENDERS NOR THE ASSESSEE SUBMITTED THE SAME. DURING THE PRESENT PROCEEDINGS THE ASSESSEE ONLY SUBMITTED COPY OF LEDGERS. NO BANK ACCOUNT STATEMENTS OR COPY OF ITR OF THE LENDERS HAS BEEN SUBMITTED. HENCE. UNSECURED LOAN OF RS. 2,95,26,933/ - REMAINED UNEXPLAINED. THE AO IS DIRECTED TO VERIFY THESE UNSECURED LOANS AND TAKE APPROPRIATE ACTIONS AS PER THE RELEVANT PROVISIONS OF INCOME TAX ACT. 18 ITA NO.450/DEL/2021 III) CREDITORS AND DEBTORS IN RESPONSE TO QUESTIONNAIRE THE ASSESSEE SUBMITTED LIST OF CREDITORS AND DEBTORS. HOWEVER, THE LIST CONTAINED ONLY NAME OF CREDITORS AND DEBTORS. NO ADDRESS OR PAN WERE PROVIDED. THE AO DID NOT MAKE ANY INDEPENDENT VERIFICATION ABOUT THE GENUINENESS OF CREDITORS NOR DID ASSESSEE SUBMIT CONFIRMATIONS FROM THE CREDITORS AND DEBTORS. DURING THE PRESENT PROCEEDINGS ALSO THE ASSESSEE DID NOT SUBMIT CONFIRMATIONS OF CREDITORS A ND DEBTORS. HENCE, THE SAME REMAIN UNVERIFIED. THE AO IS DIRECTED TO VERIFY THESE CREDITORS AND DEBTORS AND TAKE APPROPRIATE ACTIONS AS PER THE RELEVANT PROVISIONS OF INCOME TAX ACT. 6.6 IN THE FIRST ISSUE OF DISCREPANCIES IN THE REVISE D AND ORIGINAL AUDIT REPORT, THE LEARNED COUNSEL OF THE ASSESSEE H AS REFERRED TO VARIOUS PAGES OF THE PAPER-BOOK AND SHOWN TO US THA T REVISION WAS DONE DUE TO CHANGE IN THE DEPRECIATION AND SOME FIGURES IN ORIGINAL BALANCE-SHEET, MENTIONED ERRONEOUSLY UNDER WRONG HEADS, WHICH WERE LATER ON OBSERVED AND RECTIFIED. IN OUR OPINION ONCE THE ASSESSEE HAS REVISED HIS RETURN WITHIN THE PERMISSIBLE PERIOD, THEN SAID RETURN SUBSTITUTE THE ORIGINAL RE TURN OF INCOME FOR ALL PURPOSES AND THE ORIGINAL RETURN IS TO BE I GNORED. THE ASSESSEE HAS ALREADY FILED REVISED AUDIT REPORT, WH ICH IN ITSELF IS SELF-EXPLANATORY AS HOW THE LOSS CLAIMED BY THE ASS ESSEE HAS BEEN REDUCED DUE TO THE REDUCTION IN CLAIM OF THE DEPREC IATION. WE ALSO FIND THAT THE REVISED RETURN THE ASSESSEE HAS REDUC ED THE LOSS AS COMPARED TO THE ORIGINAL RETURN AND HENCE THERE WAS NO OCCASION OF ANY SUSPICION OF EXCESS CLAIM, WHICH WARRANT COM PARISON OF THE FIGURES WITH THE ORIGINAL RETURN. BEFORE THE LE ARNED PCIT, THE ASSESSEE HAS PRODUCED ALL THE DETAILS OF THE ORIGIN AL RETURN AND REVISED RETURN ALONG WITH ENCLOSURES, BUT LEARNED P CIT HAS NOT 19 ITA NO.450/DEL/2021 POINTED OUT ANY ERROR IN THE SAID EXPLANATION OF TH E ASSESSEE. HE HAS MERELY DIRECTED THE ASSESSING OFFICER TO OBTAIN ALL THE DETAILS AND TAKE NECESSARY ACTION. THIS ACTION OF THE LEARN ED PCIT IS NOT JUSTIFIED IN VIEW OF THE PRECEDENTS DISCUSSED ABOVE . 6.7 ON THE ISSUE OF THE UNSECURED LOANS, THE ASSESSEE FILED ALL THE CONFIRMATIONS OF UNSECURED LOANS BEFORE THE LEA RNED PCIT AND DETAILED IN RESPECT OF ADDITION TO LOAN DURING THE YEAR UNDER CONSIDERATION. THOUGH THE LEARNED PCIT HAS MENTIONE D THAT NO BANK STATEMENT OR COPY OF IT RETURN HAS BEEN FILED IN RESPECT OF THE LENDERS AND THEREFORE DIRECTED THE ASSESSING OF FICER TO VERIFY AND TAKE APPROPRIATE ACTION. WE FIND THAT LEARNED P CIT HAS NOT POINTED OUT AS WHICH LOANS HAVE BEEN ACCEPTED ERRON EOUSLY BY THE ASSESSING OFFICER. SIMILARLY, ON THE ISSUE OF S UNDRY CREDITORS, IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE LEARNED PCIT THAT ONCE TRADING RESULTS ARE ACCEPTED BY THE ASSESSING OFFICER, NO ADDITION CAN BE MADE FOR SUNDRY CREDITORS UNDER SEC TION 68 OF THE ACT. IT HAS BEEN SUBMITTED BY THE LEARNED COUNSEL O F THE ASSESSEE THAT ENTIRE AUDITED BOOKS OF ACCOUNTS WERE PRODUCED BEFORE THE ASSESSING OFFICER. THE LEARNED PCIT, THO UGH MENTIONED IN HIS ORDER THAT NO ADDRESS OR PAN OF SU NDRY CREDITORS WERE PROVIDED TO HIM, HOWEVER, HE HIMSELF DID NOT VERIFY AS TO WHICH CREDITOR WAS PRIME FACIE NOT GENUINE. 6.8 WE ALSO NOTE FROM THE SUBMISSION OF THE ASSESSEE BEFORE THE LEARNED PCIT THAT THE INFORMATION IN RESPECT OF CLA IM OF THE DEPRECIATION, UNSECURED LOANS AND SUNDRY CREDITORS IN PRESCRIBED PERFORM WERE DULY FILED BY THE ASSESSEE. THE PAPER BOOK PAGE 116 IS A COPY OF QUERY LETTER ISSUED BY THE ASSESSING O FFICER ON 17.10.2017. IN THE SAID QUERY LETTER, HE HAS INQUIR ED ABOUT 20 ITA NO.450/DEL/2021 CONFIRMATION OF UNSECURED LOANS AND ALSO INQUIRED A S WHY THERE WAS INCREASE IN INTEREST ON UNSECURED LOANS. THE RE PLY OF ASSESSEE IN RESPECT OF THE ABOVE QUERY RAISED BY TH E AO IS PLACED ON PAGE 118 OF THE PAPER-BOOK. IN SAID REPLY, THE A SSESSEE HAS COMPLIED THE DIRECTION OF THE AO AND EVEN JUSTIFIED REASONS FOR INCREASE IN INTEREST ON UNSECURED LOAN. MOREOVER, I N THE YEAR UNDER CONSIDERATION, LOAN WAS ADDED IN CASE OF SH. B.K. GUPTA, SH. K.L. GUPTA, SH. N.K. GUPTA AND SH. TANUJ DATTA. ALL THESE PERSONS ARE EITHER DIRECTOR OR RELATIVE OF DIRECTOR AND ASSESSED UNDER THE SAME ASSESSING OFFICER, AND THUS ALL INFO RMATION IN RESPECT OF THESE PARTIES WERE ALREADY AVAILABLE WIT H THE AO AND HE WAS NOT REQUIRED TO CALL FOR SUCH INFORMATION FROM THE ASSESSING OFFICER. SIMILARLY, FOR VERIFICATION OF LEDGER ACCO UNTS OF SUNDRY CREDITORS, BOOKS OF ACCOUNTS ALONGWITH VOUCHERS WER E PRODUCED BEFORE THE ASSESSING OFFICER. THE ASSESSEE HAS FILE D COMPLETE DETAILS OF SUNDRY CREDITORS BEFORE THE PCIT, A COPY OF WHICH IS PLACED ON PAGE 161 OF THE PAPER-BOOK. WE FIND THAT THE ASSESSING OFFICER HAS ACCEPTED THE TRADING RESULTS OF THE ASS ESSEE AND LD. PCIT HAS ALSO NOT POINTED OUT ANY ERROR. WHEN THE L D. AO HAS ACCEPTED THE TRADING RESULTS, IT IS DEEMED THAT HE HAS VERIFIED THE SUNDRY CREDITORS/DEBTORS. THUS, TO ALLEGED THAT NO ENQUIRY WAS DONE BY THE AO AS REGARD TO SUNDRY CREDITOR IS NOT CORRECT. MOREOVER, THE ADDITION CANNOT BE MADE FOR SUNDRY CR EDITOR, WITHOUT DISALLOWING PURCHASE AS HELD IN THE CASE OF RITU ANURAG AGARWAL (SUPRA). IN THE CASE OF ASSESSEE, TRADING R ESULTS ARE ACCEPTED AND NO PURCHASE ARE DISALLOWED. IN THE CIR CUMSTANCES, IT CANNOT BE SAID THAT NO INQUIRY HAS BEEN DONE BY THE AO, WHICH SHOULD HAVE BEEN DONE IN THE CASE. IN OUR OPINION, RELIANCE BY LD. 21 ITA NO.450/DEL/2021 DR ON EXPLANATION -2 BELOW SECTION 263 IS MISPLACED AND THIS EXPLANATION WHICH DEEMED THE ASSESSMENT ORDER AS ER RONEOUS, IF NO INQUIRY IS DONE WHICH SHOULD HAVE BEEN, IS NOT A TTRACTED IN THE INSTANT CASE. 6.9 IN THE FACTS AND CIRCUMSTANCES, WE ARE OF THE OPI NION THAT LD PCIT HAS FAILED TO POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE LEARNED ASSESSING OFFICER AND IN ABSENCE OF WHI CH TWIN CONDITIONS OF SECTION 263 OF THE ACT ARE NOT SATISF IED AND THEREFORE WE QUASH THE FINDING OF THE LD. PCIT AND SET ASIDE THE SAID ORDER OF THE PCIT. THE GROUNDS OF THE APPEAL OF THE ASSES SEE ARE ACCORDINGLY ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JULY, 2021. SD/- SD/- (KUL BHARAT) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27 TH JULY, 2021. RK/- (DTDC) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI