M/s Radhishwari Devlopers P Ltd, Indore V. Pr CIT -2 Indore, Indore

ITA 493/Ind/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0010 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-03-2021
• Assessment Year: 2013-2014
• Appeal Filed On: 28-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S MANTRI
• Assessee Lawyers: PIYUSH PARASHAR ADVS
• Keywords: Unexplained cash credit; Unexplained investment; Revision of order; Depreciation; Opportunity of being heard; Audit objection; Principle of natural justice; Period of limitation; Source of fund; Corroborative evidences; Accommodation entries; Assessment record; Prejudicial to interest; Onus to prove; Revised return; Unabsorbed depreciation; Set aside
• Section: 69C; 143(3); 142(1); 133(6); 143(2); 64; 43; 48; 9(1); 9(1); 9(1); 73; 72; 13; 119; 22; 68; 263; 63; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HONBLE RAJPAL YADAV, VICE PRESIDENT AND HONBLE MANISH BORAD, ACCOUNTANT MEMBER VIRTUAL HEARING ITA NO.493/IND/2018 ASSESSMENT YEAR 2013-14 M/S. RADHISHWARI DEVELOPERS P. LTD. (NOW KNOWN AS R.C. WAREHOUSING PVT. LTD. ) INDORE : APPELLANT PAN :AAFCR1916A V/S PR. CITO-2 : RESPONDENT INDORE APPELLANT BY S/SHRI SUMIT NEMA SR. ADV. WITH GAGAN TIWARI & PIYUSH PARASHAR ADVS. REVENUE BY SHRI S.S. MANTRI, CIT-DR DATE OF HEARING 24.05.2021 DATE OF PRONOUNCEMENT 20.07.2021 O R D E R PER MANISH BORAD, A.M THE ABOVE CAPTIONED APPEAL FILED AT THE INSTANCE O F THE ASSESSEE FOR ASSESSMENT YEAR 2013-14 IS DIRECTED AG AINST THE M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 2 ORDER U/S 263 OF THE ACT FRAMED ON 28.03.2018 BY LD . PR. COMMISSIONER OF INCOME TAX-2 (IN SHORT LD. CIT], I NDORE, RAISING FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER OF THE LD. PRO COMMISSIONER OF INCOM E TAX, INDORE U/ S 263 OF THE ACT IS ILLEGAL, VOID AN D WITHOUT JURISDICTION. 2. THAT THE LD. PRO COMMISSIONER OF INCOME TAX, INDORE HAS WRONGLY INVOKED PROVISION OF SECTION 263 OF THE ACT . THE ASSESSMENT ORDER WAS FRAMED U/S 143(3) AFTER MAKING DUE ENQUIRY AND WAS NOT ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE. 3. THAT THE LD. PCIT HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE SUFFICIENT INQUIRIES WERE NOT MADE TO ASCERTAIN THE GENUINENESS AND CREDIT WORTHINESS OF THE LOAN CREDITORS IN RESPECT OF UNSECURED LOAN UNDERTA KEN BY THE ASSESSEE IN THE ASSESSMENT YEAR 2013-14. 4. THAT THERE IS A DISTINCTION BETWEEN 'LACK OF ENQUIR Y' AND 'INADEQUATE ENQUIRY'. IN THE PRESENT CASE THE ASSES SING OFFICER COLLECTED NECESSARY DETAILS, EXAMINED THE S AME AND THEN FRAMED THE ASSESSMENT U/S. 143(3) OF THE A CT. SINCE THE ASSESSING OFFICER HAD INVESTIGATED/ EXAMI NED THE ISSUE AND APPLIED HIS MIND TOWARDS THE WHOLE RE CORD MADE AVAILABLE BY THE ASSESSEE AND COLLECTED BY THE AO U/S 133(6) DURING ASSESSMENT PROCEEDINGS AND UNCONTROVERTEDLY, NECESSARY DETAILS/REPLY TO THE QUESTIONNAIRE WERE FILED/PRODUCED BY THE ASSESSEE A ND THE SAME WERE EXAMINED BY THE ASSESSING OFFICER, THEREFORE, THE PRESENT CASE IS NOT A CASE OF LACK O F ENQUIRY BY THE ASSESSING OFFICER AND THUS SECTION 263 CANNO T BE INVOKED BY THE PRO CIT. M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 3 5. THAT EXPLANATION 2 TO S. 263 INSERTED W.E.F. 01.06.2015 DOES NOT OVERRIDE THE LAW AS INTERPRETED BY THE VAR IOUS HIGH COURTS WHEREBY IT IS HELD THAT THE CIT CANNOT TREAT THE AO'S ORDER AS BEING ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF REVENUE WITHOUT HIMSELF CONDUCTING AN E NQUIRY AND RECORDING A FINDING. IF THE EXPLANATION IS INTE RPRETED OTHERWISE, THE CIT WILL BE EMPOWERED TO FIND FAULT WITH EACH AND EVERY ASSESSMENT ORDER AND ALSO TO FORCE T HE AO TO CONDUCT ENQUIRIES IN THE MANNER PREFERRED BY THE CIT, THUS PREJUDICING THE MIND OF THE AO AS HAS BEEN DON E IN THE PRESENT CASE. THUS THE ENTIRE ORDER U/ S 263 IS VITIATED AND BAD IN LAW ON ACCOUNT OF THE FAILURE OF THE PR, CIT TO HIMSELF FIRST MAKE AN INQUIRY AND ONLY THEN TO ARRI VE AT ANY FAULT IN THE ASSESSMENT ORDER. 6. THAT FOR THE PURPOSES OF EXERCISING JURISDICTION U/ S 263, THE CONCLUSION OF THE CIT THAT THE ORDER OF THE AO IS E RRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE HAS TO BE PRECEDED BY SOME MINIMAL INQUIRY. IF THE PCIT IS OF THE VIEW THAT THE AO DID NOT UNDERTAKE ANY INQUIRY, IT BECOM ES INCUMBENT ON THE PCIT TO CONDUCT SUCH INQUIRY. THE SECOND OPTION AVAILABLE U] S 263 (1) OF SENDING THE ENTIRE MATTER BACK TO THE AO FOR A FRESH ASSESSMENT. CAN BE EXERC ISED BY THE PCIT ONLY AFTER HE UNDERTAKES AN INQUIRY HIMSEL F AND NOT OTHERWISE. THUS THE PRESENT ORDER U/ S 263 IS VITIA TED ON THIS GROUND ALONE. 2. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE R ECORDS ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF PURCHASE, SALE, TAKING O N LEASE, LETTING OUT DEVELOPMENT/ CONSTRUCTION OF PROPERTY. E- M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 4 RETURN OF INCOME FILED ON 27.09.2013 DECLARING LOSS OF RS.51,72,569/- WHICH COMPRISES OF DEPRECIATION LOSS AT RS.1,53,066/- AND BUSINESS LOSS OF RS.50,19,503/-. CASE SELECTED FOR SCRUTINY ASSESSMENT THROUGH CASS FOR T HE REASON LARGE UNSECURED LOANS. NOTICES U/S 143(2) & 142(1) OF THE ACT DULY SERVED UPON THE ASSESSEE ALO NG WITH DETAILED QUESTIONNAIRE SEEKING VARIOUS INFORMATION FROM THE ASSESSEE INCLUDING THE DETAILS OF UNSECURED LOA NS. REPLY WAS FILED BY THE ASSESSEE REPLYING EACH AND E VERY INFORMATION ASKED BY THE LD. AO INCLUDING FILING TH E COPIES OF INCOME TAX RETURN, BANK STATEMENT, CONFIRMATION OF ACCOUNT AND BALANCE SHEET OF ALL THE CASH CREDITORS / LENDER COMPANIES. LD. AO COMPLETED THE ASSESSMENT U/S 143( 3) OF THE ACT AFTER MAKING ADDITION OF RS.10,81,220/- AND ASSESSED THE BUSINESS LOSS AT RS.39,38,283/- AND UNABSORBED DEPRECIATION AT RS.1,53,066/- TO BE CARR Y FORWARD FOR SET UP IN SUBSEQUENT YEARS. 3. AFTER PASSING OF THE ASSESSMENT ORDER U/S 143(3) OF THE ACT, LD. PR. CIT EXAMINED THE ASSESSMENT RECORDS AN D DOCUMENTS FILED BY THE ASSESSEE AND NOTICE THAT THE M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 5 ASSESSMENT ORDER IS PRIMA FACIE , ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ACCORDINGLY ISSU ED FOLLOWING SHOW CAUSE NOTICE DATED 18.01.2018 TO THE ASSESSEE U/S 263 OF THE ACT: F. NO.PR. CIT-2/INDITECH/263117-L8 DATE 18.01.2018 TO, M/S RADHISHWARI DEVELOPERS PVT. LTD., F/H-198, SCHEME NO. 54, VIJAY NAGAR, INDORE SUB:- SHOW CAUSE NOTICE ILLS 263 OF THE INCOME TAX ACT, 1961, IN THE CASE OF M/S RADHISHWARI DEVELOPERS PVT. LTD., F/H-198, SCHEME NO. 54, VIJAY NAGAR, INDORC FOR A.V. 2013-14 PAN: AAFCR1916A_ REG . PLEASE REFER TO THE ASSESSMENT ORDER DATED 07/03/2016 FOR A. Y. 2013- 14 IN YOUR CASE. ON PERUSAL OF CASE RECORD IN YOUR CASE FOR THE A. Y. 2013-14 IT IS FOUND THAT YOU HAVE FURNISHED YOUR RE TURN OF INCOME DECLARING TOTAL LOSS AT RS. 50,19.5031- ON 27.09.2013. ASSESSMENT IN YOUR CASE U/S 143(3) OF LT. ACT 1961 WAS COMPLETED BY THE ITO - 4(2), INDORE VIDE ORDER DATED 07/03/2016 ASSESSING TOTAL LOSS AT RS. J ,53,066/-. 2. THE ENTIRE RECORDS WERE GONE THROUGH BY ME AND O N PERUSAL AND EXAMINATION OF RECORDS IT IS FOUND THAT THE ORDER D ATED 07/03/2016 FOR A. Y. 2013-14 IS ERRONEOUS IN SO FAR AS IT IS PREJUDIC IAL TO THE INTEREST OF REVENUE ON ACCOUNT OF PASSING OF THE ORDER WITHOUT MAKING REQUIRED ENQUIRIES/ INVESTIGATIONS. M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 6 3. AS PER AVAILABLE RECORDS IT IS SEEN THAT IN THIS CASE A.O. HAS NOT PROPERLY VERIFIED THE UNSECURED LOAN RECEIVED BY THE ASSESSEE AT RS. 75,00,000/- FROM M/S GLITER DEAL MART PVT. LTD., KOLKATA. IN THIS CASE T HE COMPANY GIVING LOANS HAS FILED RETURN OF INCOME SHO WING TOTAL INCOME AT RS. 2,620/- AND THE AMOUNT RECEIVED BY THE ASSESSEE HAS BEEN DEPOSITED BY THE LENDER ON THE SAME DATE OF GIVING LOAN TO THE ASSESSEE, THE CREDITWORTHINESS OF THE LENDER IS NOT PROVED. 4. THE A.O. SHOULD HAVE INQUIRED ABOUT THE SURROUNDING CIRCUMST ANCES IN RESPECT OF THE LOAN IN QUESTION. ON VERIFICATION OF DETAILS SUBMITTED BY M/S GLITER DEAL MART PVT. LTD IT IS SEEN THAT THE R EGISTERED OFFICE OF THE SAID C0111PANY IS BASED AT KOLKATA, IT IS FURTHER S EEN THAT THE COMPANY HAS SHOWN INCOME FOR A.Y. 2013-14 AT RS. 11,457/-. ON PERUSAL OF ANNUAL ACCOUNT SUBMITTED BY M/S GLITER DEAL MART PVT. LTD IT IS NOTICED THAT THE COMPANY IS HAVING SHARE CAPITAL OF RS. 32. 42 LAKHS AND IS HAVING SECURITY PREMIUM ACCOUNT OF RS 7.96 CRORES. DESPITE HAVING SUCH HUGE RESERVES AND SURPLUS THE COMPANY HAS NOT SHOWN ANY SIGNIFICANT BUSINESS TRANSACTIONS AND NET INCOME FOR 31.03.2013 IS SHOWN AT RS. 3540/- ONLY. AS REGARDS THE SOURCE OF FUNDS IT IS S EEN THAT THE LENDER COMPANY HAS RECEIVED AN AMOUNT OF RS. 55,00,000/- F ROM M/S GIELLE INVESTMENT ON 28/02/2013 OUT OF WHICH RS. 45,00,000 1- HAS BEEN GIVEN TO THE ASSESSEE ON THE SAME DATE. IN THE SAME WAY RS. 30,00,000/- HAS BEEN RECEIVED FROM GIELIE INVESTME NT ON 28/02/2013 AND GIVEN TO THE ASSESSEE ON THE SAME DATE. IT IS A LSO OBSERVED FROM THE BANK ACCOUNT OF M/S GLITTER THAT THE COMPANY HAS GI VEN ADVANCES OF HUGE AMOUNTS TO MANY PARTIES. THEREFORE, PRIMA FACI E THE COMPANY APPEARS TO BE INVOLVED IN PROVIDING ACCOMMODATIVE E NTRIES. IT IS A WELL KNOWN MODUS OPERANDI OF SUCH PAPER COMPANIES OF KOL KATA TO RAISE FUNDS THROUGH HUGE PREMIUM DESPITE HAVING NO WORTH ON PAPERS AND THEN USE THESE FUNDS FOR ACCOMMODATIVE ENTRIES. THE REFORE LOOKING TO THE CIRCUMSTANCES SURROUNDING THE TRANSACTIONS, THE A.O . SHOULD HAVE MADE INQUIRIES REGARDING THE CREDITWORTHINESS OF THE LEN DER COMPANY AND ALSO M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 7 THE SOURCE OF SUCH A HUGE AMOUNTS IN THE HANDS OF T HE LENDER COMPANY. 5. ON PERUSAL OF RECORDS IT IS ALSO NOTICED THAT TH E ASSESSEE HAS RECEIVED UNSECURED LOANS WORTH RS. 21.85 CRORES FROM VARIOUS PARTIES WHICH INCLUDES SOME OTHER KOLKATA BASED COMPANIES WHO HAV E ENTERED INTO TRANSACTIONS FOR LOAN WITH THE ASSESSEE ON ALMOST I DENTICAL METHOD DISCUSSED ABOVE. THE DETAILS OF LOANS FROM SUCH COM PANIES ARE GIVEN HERE UNDER:- SI.NO. NAME OF THE COMPANY AMOUNT RECEIVED 1. M/S APANAPAN MERCANTILE PVT. LTD. RS.33,00,000/- 2. M/S BHIMTHAL NIRMAN PVT. LTD. RS.25,00,000/- 3. M/S CONFIDENT VINIMAY PVT. LTD. RS.65,00,000/- 4. M/S CREST VANIJYA PVT. LTD. RS.31,00,000/- 5. M/S GIEILE INVESTMENT PVT. LTD. RS.51,00,000/- 6. M/S TROPICAL VYAPAR PVT. LTD. RS.28,00,000/- 7. M/S WINSHER COMMERCIAL PVT. LTD. RS.89,00,000/- TOTAL RS.3,22,00,000/- 6. ALL THE AFORE-SAID HUGE LOANS ARE FROM KOLKATA B ASED COMPANIES WHO HAVE GIVEN THESE UNSECURED LOANS TO THE ASSESSEE WI THOUT ANY SECURITIES. THE COMPANIES ARE NOT DOING ANY MAJOR F INANCIAL ACTIVITIES AND THE SAME APPEARS TO BE PAPER COMPANIES CREATED THROUGH THE RECEIPT OF HUGE PREMIUMS ON SHARES WHICH ITSELF IS DOUBTFUL. FURTHER THE SOURCE IN THE HANDS OF THESE COMPANIES IS RTGS/CHEQ UES RECEIVED FROM SOME OTHER PARTIES ON THE VERY SAME DAY. THE CREDIT WORTHINESS OF THESE COMPANIES SHOULD HAVE THEREFORE HAVE BEEN VERIFIED BY THE A.O. PROPERLY AND THE GENUINENESS OF THE CASH CREDIT SHOULD ALSO HAVE BEEN VERIFIED IN VIEW OF THE FACT THAT THE AMOUNT IN THE BANK ACCOUN T OF THE ASSESSEE HAS BEEN DEPOSITED JUST BEFORE ADVANCING LOAN TO THE AS SESSEE. IT IS NOT. OUT OF PLACE TO MENTION HERE THAT THE ASSESSEE HAS RECE IVED TOTAL UNSECURED LOANS AT RS. 21.07 CRORE DURING THE YEAR UNDER CONS IDERATION WHICH M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 8 INCLUDES UNSECURED LOANS OF RS. 1,85,50,000/- DURIN G THE YEAR FROM M/S JAYANT SECURITES AND FINANCE LTD., BARODA, LOANS FR OM THE SAID COMPANY WAS HELD AS UNEXPLAINED CASH CREDIT IN THE CASE OF MUKTILAL LADURAM PROP. SHIVASHAKTI TRADING, CO. , SENDHWA FO R A. Y . 2014-15. THEREFORE, IN THIS CASE ALSO THE UNSECURED LOAN FRO M THE SAID COMPANY SHOULD HAVE BEEN TREATED AS UNEXPLAINED CASH CREDIT . YOU ARE, THEREFORE, REQUIRED TO SHOW CAUSE WHY PROVISIONS OF SECTION 26 3 BE NOT INVOKED IN YOUR CASE FOR THE REASONS MENTIONED ABOVE AS THE OR DER OF AO DATED 07/03/2016 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. 7. YOU ARE, ACCORDINGLY, GIVEN AN OPPORTUNITY TO AT TEND MY OFFICE ON 25.01.2018 AT 3:30 P.M. AND PRODUCE NECESSARY EVIDENCES, EXPLANATION, ETC IN SUPPORT OF YOUR CONTENTIONS AND ARGUMENTS. IF YOU FAIL TO ATTEND THE HEARING, IT SHALL BE PRESUMED THAT YO U HAVE NOTHING TO SAY IN THE MATTER AND ORDER U/S 263 SHALL BE PASSED ON MERIT AND ON THE BASIS OF FACTS AVAILABLE ON RECORD. YOURS FAITHFULLY, SD/- (SHELLEY JINDAL) PR. COMMISSIONER OF INCOME TAX -2 INDORE 4. AFTER THE ISSUANCE OF NOTICE U/S 263 OF THE ACT ASSESSEE APPLIED FOR THE INSPECTION OF THE CASE RECORDS AND ON GETTI NG THE PERMISSION PERUSED THE CASE RECORDS OBSERVING THAT POST ASSESSMENT U/S 143(3) OF THE ACT AUDIT OBJECTION W AS RAISED BY THE AUDIT PARTY AND THE SAME WAS DULY DEALT AND REP LIED WITH BY THE LD. ASSESSING OFFICER AND SATISFIED THE AUDIT P ARTY. IN REPLY M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 9 FILED BY THE ASSESSEE ON.09.02.2018 TO THE SHOW CAU SE NOTICE U/S 263 OF THE ACT IT WAS SUBMITTED THAT ROOT CAUSE FOR THE ISSUE OF SHOW CAUSE NOTICE BY LD. PR. CIT WAS AUDIT OBJECTIO N RAISED BY THE AUDIT PARTY. IT WAS ALSO SUBMITTED THAT ALL THE INF ORMATION ASKED BY THE LD. ASSESSING OFFICER WERE DULY REPLIED AND REQUISITE INFORMATION WAS RECEIVED FROM THE FOLLOWING CASH CR EDITORS TO WHOM NOTICE U/S 133(6) OF THE ACT WAS ISSUED:- A M/S. APANAPAN MERCANTILE PVT. LTD. B M/S. BHIMTHAL NIRMAN PVT. LTD. C M/S. CONFIDENT VINIMAY PVT.LTD. D M/S.CREST VANIJYA PVT. LTD. E M/S. GIELLE INVESTMENT PVT. LTD. F M/S. TROPICAL VYAPAR PVT. LTD. G M/S. WINSHER COMMERCIAL PVT. LTD. H GLITTER DEALMARK P. LTD. I JAYANT SECURITIES & FINANCE LTD. 5. IT WAS ALSO SUBMITTED THAT ALL DOCUMENTARY EVIDE NCES WHICH COULD SATISFY THE IDENTITY OF THE CASH CREDITORS, G ENUINENESS OF THE LOAN TRANSACTIONS AND THE CREDITWORTHINESS OF THE C ASH CREDITORS WERE FILED BEFORE THE LD. ASSESSING OFFICER AND IND EPENDENT ENQUIRY WAS ALSO CONDUCTED BY THE LD.AO CALLING INF ORMATION U/S 133(6) OF THE ACT TO WHICH MOST OF THE CASH CREDITO RS HAVE REPLIED CONFIRMING THAT THEY HAVE GIVEN UNSECURED LOAN TO T HE ASSESSEE M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 10 ON INTEREST. IT WAS ALSO SUBMITTED BEFORE LD. PR. C IT THAT INTEREST ON ALL THE UNSECURED LOANS WAS DULY PAID/CREDITED A FTER DEDUCTION OF TAX AT SOURCE AND THESE UNSECURED LOAN HAVE BEEN REPAID IN SUBSEQUENT YEARS. RELIANCE WAS ALSO PLACED ON VARIO US JUDGMENTS SUBMITTING THAT SINCE THE LD. ASSESSING OFFICER HAS MADE PROPER APPLICATION OF MIND, CONDUCTED REQUISITE ENQUIRY, T AKEN ONE OF THE PLAUSIBLE VIEWS PERMISSIBLE UNDER THE ACT, THE REVI SIONARY POWER USED BY THE LD. PR. CIT WAS NOT JUSTIFIED AND LIABL E TO BE DROPPED. IT WAS ALSO SUBMITTED THAT THE MOST OF THE CASH CRE DITORS MENTIONED BY THE LD. PR. CIT IN THE SHOW CAUSE NOTI CE REFERRING THEM TO BE ACCOMMODATION ENTRY PROVIDER IS NOT CORR ECT SINCE MOST OF THESE CASH CREDITORS HAVE BEEN ASSESSED AFT ER SCRUTINY BY THE REVENUE AUTHORITIES U/S 143(3) OF THE ACT AND E VEN SOME OF THE CASH CREDITORS HAVE EVEN MOVED TO THE HIGHER JU DICIAL FORUMS CHALLENGING THE ORDERS OF LD. ASSESSING OFFICER & L D. CIT(A) WHICH ITSELF PROVE THEIR IDENTITY AND GENUINENESS. IT WAS ALSO SUBMITTED THAT ALL THE ALLEGED PARTIES MENTIONED IN THE SHOW CAUSE NOTICE HAVE GIVEN UNSECURED LOANS TO THE ASSESSEE THROUGH BANKING CHANNELS AND THERE WAS NO CASH DEPOSIT JUST BEFORE THE ISSUANCE OF CHEQUE/BANK TRANSFER TO THE ASSESSEE. ALL THESE COMPANIES HAVE SUFFICIENT FINANCIAL STRENGTH IN THE FORM OF S HARE CAPITAL, M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 11 SHARE PREMIUM AND ACCUMULATED RESERVES TO LEND THE MONEY TO THE ASSESSEE COMPANY ON INTEREST. 6. HOWEVER, PR. CIT WAS NOT CONVINCED WITH THESE AR GUMENTS AND SUBMISSIONS MADE BY THE ASSESSEE AND IS OF THE VIE W THAT ALLEGED CASH CREDITORS IN THE SHOW CAUSE NOTICE ARE NOT COM PANIES WITH REQUISITE FINANCE MEANS SO AS TO PROVIDE HUGE LOANS TO THE ASSESSEE. LD. PR. CIT COMMONLY OBSERVED THAT MOST O F THESE COMPANIES ARE ACCOMMODATION ENTRY PROVIDER AND THER E ARE BANK TRANSFERS FROM SOME OTHER COMPANIES JUST BEFORE THE DATE OF TRANSFER OF LOAN TO ASSESSEE WHICH ARE IN THE FORM OF ACCOMMODATION ENTRIES. LD. PR. CIT ALSO REFERRED TO LEGAL POSITION REGARDING THE POWERS U/S 263 OF THE ACT. FOR SAKE O F CONVENIENCE THE FINDING OF LD. PR. CIT IS ABSTRACTED BELOW: 2.1 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, THE ASSESSMENT RECORDS AND THE WRITTEN SUBMISSION GIVEN BY THE ASS ESSEE. THE ISSUE INVOLVED IS ACCEPTANCE OF UNSECURED LOANS BY THE AS SESSEE WHICH WERE APPARENTLY NOT PROPERLY INVESTIGATED BY THE AO FOR ASCERTAINING WHETHER ANY ADDITION SHOULD BE MADE IN THE INCOME TAX ACT I F THE SAME WERE NOT FOUND PROPER I.E. THE GENUINENESS, CREDITWORTHINESS AND THE IDENTITY OF THE DEPOSITORS WAS PROPER. IT WAS INCUMBENT UPON TH E AO TO HAVE VERIFY EVERYTHING PROPERLY BY MAKING NECESSARY INVESTIGATI ON AND VERIFICATION BEFORE ACCEPTING THE DEPOSITS AS CORRECT. THE RECOR DS SHOWS THAT THE AO ISSUED A QUESTIONNAIRE TO THE ASSESSEE ON 12.01.201 6 AND THE ASSESSEE IS ASKED TO SUBMIT INFORMATION ABOUT UNSECURED LOAN S TAKEN DURING M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 12 PREVIOUS YEAR GIVEN COMPLETE DETAIL THEREOF. THE AS SESSEE IS ALSO ASKED TO PROVE THE IDENTITY OF THE SUBSCRIBED, GENUINENES S OF THE TRANSACTION AND CREDITWORTHINESS OF THE SUBSCRIBERS ALSO. THE A SSESSEE VIVE REPLY DATED 08.02.2016 SUBMITTED CERTAIN INFORMATION WHIC H INCLUDED CONFIRMATION OF 21 DEPOSITORS. THE BALANCE SHEET, B ANK STATEMENT ACKNOWLEDGEMENT AND COMPUTATION OF INCOME OF THESE DEPOSITORS WERE ALSO FILED THEREAFTER IT APPEARS THAT AO HAS ISSUED 133(6) NOTICE TO THE DEPOSITORS AND CERTAIN REPLIES FROM THE DEPOSITORS ARE ON RECORD WHICH HAVE BEEN FILED CONSEQUENCE TO 133(6) NOTICES. IT A PPEARS THAT SOMEBODY ON BEHALF OF THOSE PARTIES FILED THE INFORMATION BE FORE THE AS THERE IS NO EVIDENCE OF THE MODE I.E. WHETHER IT WAS RECEIVED B Y COURIER OR POST, IS THERE THESE PARTIES ARE:- SR. NO. NAME 1 APANAPAN MERCANTILE P. LTD 2 JAYANT SECURITY & FINANCE 3 VISHWAJYOTI TRADING LTD. 4 CREATIVE TECHNOCOM P. LTD. 5 ENIT INVESTMENT P. LTD. IT IS FURTHER OBSERVED FROM RECORDS THAT THE LETTE R ISSUED BY SPEED POST TO JAYANT SECURITY & FINANCE LTD. WAS RECEIVED BACK UNSERVED WITH THE REMARK NOT KNOW/LEFT HOWEVER, SUBSEQUENTLY SOME BODY FILED THE INFORMATION/CONFIRMATION ON BEHALF OF JAYANT SECURI TY & FINANCE LTD. WITH THE LETTER 1 ST APRIL 2013 WHEREAS THE NOTICE CALLING FOR INFORMAT ION WAS ISSUED ON 16.02.2016. FURTHER, INFORMATION BY POST WAS RECEIVED FROM CRE ST VANIJYA P. LTD. BHIMTAL NIRMAN P. LTD., TROPICAL VYAPAR P. LTD ., WINSHER COMMERCIAL P. LTD. GLITER DEALMARK P. LTD. ON PERUSAL OF THE INFORMATION IN THE ASSESSMENT RE CORD AND VARIOUS CONFIRMATIONS WHICH HAVE BEEN PLACED ON REC ORD BY THE AO IT IS SEEN THAT THE AO HAS MADE NO EFFORT TO FURTHER EAMI NE THE M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 13 CREDITWORTHINESS AND IDENTITY OF THE DEPOSITORS AND GENUINENESS OF THE TRANSACTION. FOR EXAMPLE IF WE TAKE THE CASE OF GLI TER DEALMARK P. LTD. THE COMPANY HAS SHOWN INCOME FOR AY 2013-14 OF RS. 11,457/-. THE COMPANY IS HAVING SHARE CAPITAL OF 32.42 LACS AND I S HAVING SECURITY PREMIUM OF RS. 7.96 CRORES. IN SPITE OF HAVING SUCH HUGE FUNDS THERE IS NO SIGNIFICANT BUSINESS ACTIVITY AND THE INCOME FOR THE YEAR ENDING 31.03.2013 IS ONLY RS. 3540/-. THE COMPANY HAVE REC EIVED RS. 55 LACS FROM M/S GIELLE INVESTMENT ON 28.02.2013 OUT OF WHI CH 45 LACS WAS GIVEN TO THE ASSESSEE ON THE SAME DAY SIMILARLY, RS . 30 LAC WAS RECEIVED FROM THE SAME COMPANY AND GIVEN TO THE ASS ESSEE ON THE SAME DAY. INCIDENTALLY THIS COMPANY I.E. GIELLE INVESTME NT HAS ALSO GIVEN AN UNSECURED LOAN TO THE ASSESSEE. AN EXAMINATION OF T HE BANK ACCOUNT SHOWS THAT THERE ARE SIMILAR CIRCULATING ENTRIES IN THE ACCOUNT WHICH SHOW THAT PRIMAFACIE THE COMPANY IS INVOLVED IN PRO VIDING ACCOMMODATION ENTRIES. THIS OBSERVATION SIGNIFICANT IN THE LIGHT OF DETECTION OF SEVERAL SHELL COMPANIES IN KOLKATA WHI CH WERE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES AND GIVEN BOGUS SHA RE CAPITAL. THE DEPARTMENT OF INCOME TAX, COMPANY AFFAIRS AND SEBI HAS TAKEN STRONG ACTION AGAINST SUCH COMPANIES. IN THIS BACKGROUND I T WAS IMPERATIVE FOR THE AO TO HAVE FURTHER ENQUIRED WHETHER THE COMPANY WAS GENUINE OR WAS SHELL COMPANIES AS PRIMAFIACIE, AS DISCUSSED AB OVE, THE INDICATIONS ARE THAT IT SHOULD BE A SHELL COMPANY ENGAGED IN BU SINESS OF PROVIDING ACCOMMODATION ENTRIES. HE HAS SIMPLY OBTAINED THE I NFORMATION AND DID NOT MAKE ANY EFFORT TO INVESTIGATE FURTHER. THEREFO RE, THIS TYPE OF ACTION IS A CASE OF NO ENQUIRY AT ALL. FURTHER, AS MENTIONED ABOVE THE LETTER ISSUED TO J AYANT SECURITY AND FINANCE LTD. WAS RECEIVED BACK UNSERVED WITH TH E REMARK NOT KNOWN/LEFT AND SOMEONE FILED THE INFORMATION BEFORE THE AO. IN THE CIRCUMSTANCES IT IS A CLEAR CASE FOR SUSPICION FOR THE AO AND HE SHOULD HAVE MADE FURTHER ENQUIRIES ABOUT THE EXISTENCE OF THE COMPANY AS IN THIS CASE THE CONFIRMATION WAS DATED 1 ST APRIL 2013 WHEREAS THE QUERY WAS RAISED IN THE YEAR 2016. IT APPEARS THAT THE AS SESSEE HAS HIMSELF M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 14 FILED THE CONFIRMATION BEFORE THE AO. IT IS INTERES TING TO NOTE THAT ONE CONFIRMATION FOR JAYANT SECURITY WAS FILED BY THE A SSESSEE HIMSELF IN RESPONSE TO THE QUESTIONNAIRE AND ANOTHER CONFIRMAT ION FOR THE SAME COMPANY WAS FILED BEFORE THE AO IN RESPONSE TO NOTI CE U/S 133(6). BOTH THE CONFIRMATIONS ARE DATED 01.04.2013 AND HAVE BEE N SIGNED BY SOMEONE FROM JAYANT SECURITY & FINANCE LTD. HOWEVER , THE SIGNATURES ON BOTH THE CONFIRMATION S ARE DIFFERENT. THERE IS ANOTHER CONFIRMATION ON RECORD WHICH IS DATED 19.02.2016 THE SIGNATURES ON THESE CONFIRMATIONS DO NOT MATCH WITH THE CONFIRMATION FILED EARLIER. T HESE SIGNS ARE CLEARLY THAT OF A COMPANY WHICH IS INVOLVED IN ENTRY BUSINE SS OR IS EXISTING MERELY ON PAPER. THE AO HAS FAILED TO MAKE FURTHER INQUIRY IN THIS CASE AS WELL. INCIDENTALLY THIS COMPANY HAS NOT ATTACHED ITS BANK ACCOUNT WITH THE REPLY FILED IN RESPONSE TO NOTICE U/S 133( 6). HOWEVER , THE BANK ACCOUNT WAS FILED BY THE ASSESSEE HIMSELF DURING TH E COURSE OF SCRUTINY PROCEEDINGS. THE BANK ACCOUNTS OF THIS COMPANY ALSO SHOW CIRCULATING ENTRIES AND THEREFORE, THIS IS ALSO CLEAR CASE OF F URTHER INVESTIGATION. THE MOST IMPORTANT POINT IS THAT ALL THIS LOANS ARE WIT HOUT ANY SECURITY. IT MAY NOT BE OUT OF PLACE TO MENTION HERE THAT AN ANO THER CASE RUNNING TO THIS CHARGE THE LOAN GIVEN BY THIS COMPANY TOTALING TO RS. 1.855 LACS WAS HELD AS UNEXPLAINED. SIMILAR FACTOR SUCH AS HUGE SHARE PREMIUM RESERVE, CIRCULATING ENTRIES IN THE BANK ACCOUNT AND INSIGNIFICANT BUSIN ESS ACTIVITY AS COMPARED TO THE FUNDS IN THE COMPANY IS ALSO OBSERV ED IN OTHER COMPANIES FROM WHICH THE ASSESSEE AS TAKEN LOW THE NAMES OF SUCH SUSPECTS COMPANIES ARE MENTIONED IN PRECEDING DISCU SSION AND ALOS IN THE SHOW CAUSE ALL THESE COMPANIES HAVE MADE HAVE G IVEN UNSECURED LOANS OF HUGE AMOUNTS. IT IS ALSO NOTED THAT THE DIRECTOR OF GLITTER DEALM ARK SHRI SANTOSH JAIN IS ALSO DIRECTOR IN ONE ANOTHER COMPANY NAMELY CREST V ANIJYA P. LTD. IT IS ALSO IMPORTANT TO NOTE THAT THE COMPANIES SUCH AS B HIMTAL NIRMAN P. LTD., WINSHER COMMERCIAL P. LTD., TROPICAL VYAPAR P . LTD. ARE OPERATING FOR THE SAME ADDRESS AT KOLKATA AND HAVE CROSS ENTR IES OF TAKING AND M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 15 GIVING LOANS. AS PER THE PRELIMINARY INFORMATION RE CEIVED FROM THE INVESTIGATION DIRECTORATE KOLKATA, ALL COMPANIES AT KOLKATA FROM WHICH THE ASSESSEE COMPANY HAS TAKEN LOAN PERTAIN TO ONE GROUP NAMELY RAJESH JAIN. IT APPEARS THAT THESE COMPANIES ARE CO NTROLLED AND MANAGED BY SAME SET OF PERSONS AND IT IS VERY SUSPI CIOUS THAT HOW THREE COMPANIES FAN GIVE LOAN OF SEVERAL LACS WITHOUT ANY SECURITY TO A COMPANY BASED IN INDORE. THEREFORE, THE AO SHOULD H AVE MADE FURTHER ENQUIRIES ABOUT THE CREDITWORTHINESS OF THE LOANS R ECEIVED FROM THESE COMPANIES. IN THIS CONNECTION FURTHER PRELIMINARY ENQUIRIES WE RE MADE BY THE UNDERSIGNED FROM THE INVESTIGATION DIRECTORATE INCO ME TAX DEPARTMENT, KOLKATA ABOUT WHETHER THESE COMPANIES ARE APPEARING IN THE LIST OF THE COMPANIES WHO WERE INVOLVED IN GIVING ACCOMMODATION ENTRIES. IT HAS BEEN INFORMED BY THE ADDL. DIT, INVESTIGATION, KOLK ATA THAT WINSHER COMMERCIAL AND TROPICAL VYAPAR P. LTD. WERE FOUND I NVOLVED IN BOGUS LTCG TRANSACTIONS. FURTHER, THE DATABASE AVAILABLE WITH THIS OFFICE ALSO SHOULD THAT VISHVJYOTI TRADING LTD. WAS ALSO INVOLV ED IN BOGUS LTCG TRANSACTIONS. THESE SET OF FACTS CLEARLY INDICATES THAT THERE IS A CLEAR NEED TO INVESTIGATE THE TRANSACTIONS FROM THE BANK ACCOUNT TO ASCERTAIN THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHI NESS OF THE DEPOSITOR COMPANIES. I HAVE ALSO WRITTEN A LETTER TO INVESTIG ATION DIRECTORATE, KOLKATA FOR MAKING FURTHER INVESTIGATION IN THE LOA N TRANSACTIONS VIDE THIS OFFICE LETTER DATED 23.03.2018. THE REPORT STILL A WAITED. REGARDING JAYANT SECURITIES AND FINANCE LTD. IT HAS FURTHER BEEN NOTED THAT IN THE CASE OF GIRISH KUMAR TAYALIN CIRCLE-5(1 ) INDORE THE LOAN TRANSACTIONS FROM THIS COMPANY WERE INVESTIGATED AN D THE STATEMENTS OF THE DIRECTORS WERE ALSO RECORDED IN WHICH THEY HAVE ADMITTED ABOUT THE BOGUS NATURE OF TRANSACTIONS. THIS ALSO CLEARLY SHO WS THAT THE CREDIT ENTRIES FROM THIS COMPANY ARE ALSO NOT ABOVE BOARD. IN THIS CASE ALSO I HAVE WRITTEN A LETTER TO PR. DIT, INVESTIGATION , S URAT IN WHOSE JURISDICTION THE REGISTERED OFFICE OF THE COMPANY FALLS, TO FURT HER INVESTIGATE THE TRANSACTIONS OF THE ASSESSEE WITH THE COMPANY. M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 16 IT IS CLEAR FROM THE ABOVE THAT THE ASSESSING OFFIC ER HAS NOT MADE SUFFICIENT ENQUIRY AND INVESTIGATION EVEN IN SPITE OF SEVERAL REASONS FOR DOING SO. HE SHOULD HAVE MADE COMPLETE ENQUIRY REGA RDING IN THE CREDITWORTHINESS OF THE DEPOSITORS AS THE BALANCE S HEET, BANK ACCOUNT AND OTHER FACTS THAT THE LOAN WAS WITHOUT SECURITY. MANY COMPANIES WERE OPERATING FROM KOLKATA WHICH IS A KNOWN PLACE FOR GIVING ACCOMMODATION ENTRIES AND THE MANNER IN WHICH REPLI ES WERE FILED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. FURTHER, THE ANALYSIS AND PRELIMINARY INVESTIGATION CARRIED OUT BY THIS OFFICE SHOW THAT SOME OF THE ENTRIES FROM WHICH THE LOANS HAVE BEEN TAKEN WERE FOUND INVOLVED IN BOGUS LTCG TRANSACTIONS. AS PER T HE DATABASE OF BOGUS LTCG, PENNY STOCK COMPANIES AVAILABLE WITH TH IS OFFICE THE NAME OF VISHVJYOTI TRADING LTD. APPEARS IN THE LIST. THE REFORE, THE CREDENTIALS OF THIS COMPANY ARE DOUBTFUL AND COMPLETE INVESTIGATIO N IS REQUIRED TO BE MADE IN RESPECT OF TRANSACTIONS OF THE ASSESSEE WIT H THIS COMPANY ALSO. IN THIS CONNECTION, I HAVE ALSO ISSUE A LETTER TO P R. DIT (INV.), MUMBAI FOR CARRYING OUT THE ENQUIRIES. RECENTLY INFORMATION HAS ALSO BEEN RECEIVED FROM IN VESTIGATION WING THAT ONE OF THE LENDERS NAMELY KCL INFRA PROJECTS FROM W HOM THE ASSESSEE HAS TAKEN SUBSTANTIAL LOAN DURING THE YEAR HAS ALSO BEEN FOUND TO BE INVOLVED IN PENNY STOCK TRANSACTIONS. THEREFORE, IT APPEARS THAT THIS COMPANY IS ALSO INVOLVED IN ACCOMMODATIVE TRANSACTI ONS. THE BALANCE SHEET OF THE ASSESSEE SHOW IN OPENING BALANCE OF RS . 10,73,677/- AND CLOSING BALANCE OF RS. 57,67,284/-. ACCORDINGLY, TH E UNSECURED LOAN RECEIVED FROM THIS COMPANY IS ALSO SUSPICIOUS AND N EEDS TO BE FURTHER INVESTIGATED. SINCE, MAJORITY OF THE CREDITORS OF THE COMPANY HAV E BEEN FOUND TO BE OF SUSPICIOUS NATURE THE UNDERSIGNED ALSO EXAMINED THE INFORMATION RECEIVED FROM THE REMAINING CREDITOR COMPANIES. IT IS NOTED FROM THERE THAT THE COMPANIES ARE AGAIN THE ONE WITH LOW TURNO VER, LOW BUSINESS PROFIT AND APPARENTLY THE CREDITWORGHINESS AND GENU INENESS IS REQUIRED TO BE INVESTIGATED PROPERLY. ACCORDINGLY, IT WAS R EQUIRED THAT ALL THE M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 17 CREDITORS/ DEPOSITORS SHOULD HAVE BEEN PROPERLY EXA MINED TO ASCERTAIN WHETHER THE DEPOSITS WERE GENUINE OR THE SAME WERE ACCOMMODATION ENTRIES. IN THIS CONNECTION LETTERS FOR CONDUCTING ENQUIRY HAVE ALSO BEEN ISSUED TO PR. DIT (INVESTIGATION), BHOPAL, AHMEDABA D AND NAGPUR. THE ABOVE DISCUSSION CLEARLY SHOWS THAT THE ASSESSM ENT ORDER BEING ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF REVENUE AS PER THE PROVISION OF SECTION 263 AND EXPLANATION 2 TO THE S ECTION. THE AO COMPLETED THE ASSESSMENT WITHOUT MAKING NECESSARY I NVESTIGATION AND ENQUIRIES WHICH WERE NECESSARY TO ARRIVE AT THE COR RECT TAXABLE INCOME OF THE ASSESSEE. HE DIDNT EXAMINE THE CREDITORS FROM THE POINT OF VIEW OF PROVISO TO SECTION 68, WHICH IS APPLICABLE FROM 01. 04.2013. HE SHOULD HAVE ENQUIRED IN DETAIL ABOUT THE SOURCES OF THE CR EDIT GIVEN BY THE CREDITORS. IT MAY NOT BE OUT OF PLACE TO REFER TO T HE PROVISIONS OF EXPLANATION-2 TO SECTION 263 WHICH READS AS UNDER : - EXPLANATION 2.- FOR THE PURPOSE OF THIS SECTION, IT IS HEREBY DECLARED THAT AN ORDER PASSED BY THE ASSESSING OFFICER SHAL L BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE, IF, IN THE OPINION OF THE PRINCIPAL COMMISSIONER OR COMMIS SIONER. (A) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE; (B) THE ORDER IS PASSED ALLOWING ANY RELIEF WIHTOUT INQUIRING INTO THE CLAIM; (C) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH ANY ORDER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119; OR (D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WIT H ANY DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE, RENDERED BY T HE JURISDICTIONAL HIGH COURT OR SUPREME COURT IN THE CASE OF THE ASSESSEE OR ANY OTHER PERSON. ACCORDINGLY, THE PROVISIONS OF CLAUSE (A) OF THE EX PLANATION ARE APPLICABLE IN THE PRESENT CASE. 2.2 REMARKS ON THE ASSESSEES SUBMISSION :- M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 18 THE FIRST OBJECTION RAISED THE 263 PROCEEDINGS ARE BEING INITIATED DUE TO AUDIT OBJECTION RAISED BY THE AUDIT PARTY. THE OBJE CTION IS NOT ACCEPTABLE AS THE AUDIT HAS ONLY SUGGESTED THAT THE MATTER SHO ULD BE EXAMINED. THE NOTICE U/S 263 WAS ISSUED AFTER DDETAILED EXAMINATI ON OF THE CASE RECORD AND EXAMINING INFORMATION ABOUT EACH CREDITOR. THER E HAS BEEN PROPER APPLICATION OF MIND BY THE UNDERSIGNED AND PROPER R EASONS FOR TREATING THE ORDER OF THE AO AS ERRONEOUS HAVE BEEN GIVEN IT IS NOT A CASE WHERE BLINDLY THE REMARKS OF THE AUDIT HAVE BEEN FOLLOWED WITHOUT APPLICATION OF MIND. THE JUDGMENTS RELIED BY THE ASSESSEE ARE A LSO ACCORDINGLY DISTINGUISHED. THE AUDIT PARTY CAN POINT OUT CERTAI N INFIRMITIES AND MISTAKES IN THE ORDER AND IF AFTER DUE APPLICATION OF MIND THE SAME IS FOUND TO BE CORRECT AND ACTIONABLE, THERE IS NOBAR AND TAKING THE ACTION ON SUCH SUGGESTION. RELIANCE IS PLACED ON THE JUDGM ENT OF ALLAHABAD HIGH COURT IN THE CASE OF MANNULAL MATADEEN 277 I TR 346. IT HAS ALSO BEEN POINTED OUT BY THE ASSESSEE THE AS SESSING OFFICER MADE INDEPENDENT ENQUIRY U/S 133(6). IN THIS CONENECTION IT IS POINTED OUT THAT IT HAS BEEN HAD IN THE PRECEDING DISCUSSION THAT WH Y THE ACTION OF THE AO IN ACCEPTING THE INFORMATION WAS ERRONEOUS. THE OBJECTION IS THEREFORE NOT ACCEPTED. THE ASSESSEE HAS ALSO POINTED OUT TO THE INTERNAL C ORRESPONDENCE WHICH WAS MADE BY THE AO WITH THE UNDERSIGNED REGARDING T HE AUDIT OBJECTION IN WHICH HE HAD RELIED ON CERTAIN JUDGEMENTS FOR JU STIFYING THE ACTION OF THE AO AND NOT ACCEPTING THE AUDIT OBJECTION. FIRST OF ALL THE INTERNAL CORRESPONDENCE MADE BY THE OFFICER WITH ITS SUPERIO R CAN NOT BE RELIED BY THE ASSESSEE AS AN EVIDENCE OR AN OPINION. HOWEVER, THE ACTION OF THE AO I.E. THE ASSESSMENT ORDER WAS ERRONEOUS AND THAT IS WHY THE SAME IS BEING SET A SIDE BY INVOKING THE PROVISION 263 THER EFORE, THE VIEWS TAKEN BY THE AO CANNOT SUPERSEDE THE VIEW TAKEN BY THE SU PERIOR AUTHORITY I.E. PR. COMMISSIONER EXERCISING ITS JUDICIAL POWERS AS PER THE PROVISIONS OF THE ACT. M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 19 THE ASSESSEE HAS POINTED OUT THAT THE INVOCATION OF 263 PROCEEDINGS WITHOUT MAKING REQUIRE ENQUIRIES/INVESTIGATION. THE OBJECTION IS NOT ACCEPTABLE AS THERE WERE SEVERAL INDICATORS AND EVI DENCES AVAILABLE ON RECORD WHICH SHOWS THAT THE ASSESSING OFFICER HAS N OT MAKE ANY SUFFICIENT ENQUIRIES OR VERIFICATION IN THE MATTER. THE JUDGEMENT RELIED BY THE ASSESSEE IN THE CASE OF HOTZ INDUSTRIES LTD. (4 9 TAXMAN.COM367) (DELHI) IS ALSO RESPECTFULLY DISTINGUISHED. IN THE PRESENT CASE IT IS CLEAR FROM THE FACTS THAT THE CREDITWORTHINESS OF THE CRE DITORS WAS NOT ADEQUATE. REGARDING THE ISSUE OF INADEQUATE ENQURIY/LACK OF E NQUIRY/NO ENQUIRY, THE OBJECTION IS NOT ACCEPTABLE AS WITH THE AMENDEM ENT IN EXPLANATION 2 TO SECTION 263 THE ISSUE HAS BEEN TAKING CARE OF. T HE PRESENT CASE IS THE CASE WHERE INADEQUATE ENQUIRY OR LACK OF ENQUIRY IS THERE. HE JUST ISSUED NOTICE U/S 133(6) AND DIDNT MAKE ANY FURTHER INVES TIGATION INSPITE OF SO MANY APPARENT DISCREPANCIES IN THE RESPONSES RECEIV ED. THE JUDGMENTS WHICH HAVE BEEN RELIED BY THE ASSESSEE ARE PRIOR TO AMENDEMENT OF EXPLANATION 2. THE RELIANCE IS ALSO TO PLACED ON TH E JUDGEMENT OF ITAT KOLKATA IN THE CASE OF SUBHLAKSHMI VANIJYA P. LTD. 172 TTJ 721 (KOL). THIS JUDGMENT HAS BEEN DISCUSSED IN DETAIL IN THE S UBSEQUENT PARAS. THE JUDGEMENTS IN THE CASE OF AMEERA ENETERPRISES L TD. AND NARYAN RANE WHICH DEALS WITH THE AMENDED EXPLANATION 2 ARE ALSO RESPECTFULLY FDISTINGUISHED AS THEH FACTS OF THE PRESENT CASE AR E DIFFERENT FOR WHICH THE DETAILEED DISCUSSION HAS BEEN MADE IN THE PRECE DING PARAS. THE ASSESSEE HAS ALSO SUBMITTED THAT BOTH THE LIMBS OF SECTION 263 SHOULD BE SATISFIED THE OBJECTION IS NOT ACCEPTED A S THE AO ERRED IN MAKING SUFFICIENT ENQUIRY WHICH RESULTED IN AN ORDE R PREJUDICIAL TO THE INTEREST OF REVENUE. THE JUDGEMENTS RELIED BY THE A SSESSEE IN SUPPORT OF ITS CLAIM REGARDING THE ACCEPTANCE OF CREDITS U/S. 68. THE JUDGEMENTS ARE RESPECTFULLY DISTINGUISHED AS IT HAS CLEARLY BEEN H ELD IN THE PRECEDING DISCUSSION THAT FURTHER ENQUIRIES ARE REQUIRED TO B E MADE TO ASCERTAIN THE CREDITWORTHINESS AND GENUINENESS OF THE COMPANIES. M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 20 THE ASSESSEE HAS ALSO SUBMITTED THAT THE LOANS HAVE BEEN REPAID THROUGH PROPER BANKING CHANNEL. THE SUBMISSION HAS NO RELEVANCE AS THE REPAYMENT OF LOAN CANNOT ACT AS A PROOF OF CREDITWO RTHINESS AND GENUINENESS OF THE TRANSACTION. 3.0 LEGAL POSITION ON POWER OF COMMISSIONER FOR RE VISION U/S 263: CASE LAWS ON THE POWER OF COMMISSIONER, FAVOUR REVE NUE, IN FOLLOIWNG SITUATIONS AS REGARDS ENQUIRY BY ASSESSING OFFICER : A. COMPLETE FAILURE TO CONDUCT RELEVANT ENQUIRY. B. CONDUCTING ENQUIRY BUT NOT TAKING IT TO ITS LOGI CAL CONCLUSION. C. CONDUCTING ENQUIRY BUT DRAWING THE WRONG CONCLUS ION. 6.1 REFERENCE IS INVITED TO RECENT JUDGEMENT OF KOL KATA TRIBUNAL IN THE CASE OF MARIGOLD NIRMAN PVT. LTD. AND RELATED CASES ITA 1365/KOL/2013 J.DATED 30.07.15, ALSO REPORTED AS SU BHLAKSHMI VANIJYA (P.) LTD. IN 172 TTJ 721 (KOL) HAS......... .VIRTUALLY THE WHOLE LAW ON 263. IT HAS ANSWERED FOLLOWING QUESTIONS MOST CL ARITY; Q. WHETHER THE ENQUIRY CONDUCTED BY THE ASSESSING O FFICER IN SUCH CASES CAN BE AS A PROPER ENQURIY ? A. THOUGH THE ASSESSING OFFICER ISSUED NOTICES UNDE R SECTION 133(6) BUT IT FAILED TO COMPREHEND THE RATIONALE OR LOGIC BEHIND.............., NOR TO EXAMINE ANY OF THE ....................IT IS HIGHLY IMPROBABLE FOR ANY PERSON HAVING SOUND MIND TO PURCHASE AT ARMS LENGTH THE S HARES OF A PRIVATE LIMITED COMPANY, HARDLY HAVING ANY WORTH, WITH FACE VALUE OF RS.10 AT A PREMIUM OF RS.190. THIS MERE FACT SHOULD HAVE BEEN CORNERSTONE FOR THE ASSESSING OFFICER TO EMBARK UPON FURTHER ENQUIRY TO UNEARTH THE TRUTH. THE GENUINENESS OF TRANSACTIONS OF ISSUE OF SHARE A T SUCH HEFTY PREMIUM IN THIS BACKGROUND OF THE MATTER WAS UNDER DARK CLO UD AND IT SKIPPED THE ATTENTION OF THE ASSESSING OFFICER. [PARA 17.C. ] THERE REMAINS NO DOUBT WHATSOEVER THAT IN THE GIVEN CIRCUMSTANCES, THE ASSESSING OFFICER CONDUCTED HALF-BAKED ENQUIRY IGNO RING VITAL ASPECTS WHICH WERE REQUIRED TO BE EXAMINED, ............... .........CONFRONTED WITH M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 21 SUCH PECULIAR AND HAIR-RAISING CIRCUMSTANCES, THE A SSESSING OFFICER SHOULD HAVE NOT ALERTED AND DUG THE MATTER DEEP FOR UNEARTHING THE REALITY OF THE TRANSACTION. UNFORTUNATELY, NOTHING OF THIS SORT WAS DONE BY HIM. IT IS A PERFECT CITATION FOR A COMPLETE NON-AP PLICATION OF MIND BY THE ASSESSING OFFICER AND OF PASSING THE ASSESSMENT ORD ER IN UNDUE HASTE. [PARA 17.H] THUS, THERE CAN BE NO ESCAPEE FROM AN AXIOMATIC CON CLUSION THAT IN ALL THESE CASES THE ENQUIRY CONDUCTED BY THE ASSESSING OFFICERS IS EXCEEDINGLY INADEQUATE AND HENCE FALL IN THE CATEGO RY OF NO ENQUIRY CONDUCTED BY THE ASSESSING OFFICER, WHAT TO TALK OF CHARACTERING IT AS AN INADEQUATE ENQUIRY. THE HIGHLY INADEQUATE ENQUIRY CONDUCTED BY THE ASSESSING OFFICER RESULTING IN DRAWING INCORRECT AS SUMPTION OF FACTS, MAKES THE ORDERS ERRONEOUS AND PREJUDICIAL TO THE I NTERESTS OF THE REVENUE. [PARA 17.I] Q. WHETHER COMMISSIONER CAN SET ASIDE THE ASSESSMEN T ORDER AND DIRECT THE ASSESSING OFFICER TO CONDUCT A THOROUGH ENQUIRY, THEREBY INTERFERING WITH THE JURISDICTION OF THE ASSESSING OFFICER CONFERRED ON HIM IN TERMS OF SECTIONS 142(1) AND 143(2) OF THE ACT ? A. A CAREFUL PERUSAL OF THE PROVISIONS OF SECTION 1 42(1)/143(2) UNVEILS THAT IT IS THE PREROGATIVE OF THE ASSESSING OFFICER TO REQUIRE THE INFORMATION ON SUCH POINTS OR MATTERS AS HE MAY R EQUIRE. ORDINARILY IT IS NOT POSSIBLE FOR THE ASSESSING OFFICER TO INQUIRE I NTO EACH AND EVERY ENTRY RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. H E HAS TO EXERCISE HIS ACUMEN IN EXTRACTING OUT THE RELEVANT POINTS OR MAT TERS ON WHICH HE WANTS TO CONCENTRATE. BUT, WHAT IS IMPORTANT IN THI S REGARD IS THAT THE OPERATION OF SECTION 142(1)/143(2) COMES TO AN END WHEN AN ASSESSMENT IS COMPLETED AFTER EXAMINING SUCH POINT OR MATTERS WHICH THE ASSESSING OFFICER FEELS TO INQUIRE BEFORE FINALIZING THE ASSE SSMENT. IT IS ONLY THEREAFTER THAT THE REVISIONAL POWERS OF THE COMMIS SIONER UNDER SECTION 263 CAN COME INTO PLAY FOR ASCERTAINING IF THE ASSE SSING OFFICER EXAMINED ALL THE RELEVANT POINTS, WHICH OUGHT TO HA VE BEEN EEXAMINED. IF M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 22 THE COMMISSIONER, ON EXAMINATION OF TRECORDS OF ASS ESSMENT, COMES TO THE CONCLUSION THAT THE ASSESSING OFFICER FAILED TO ENQUIRE INTO CERTAIN OTHER RELEVANT ASPECTS WHICH, IN FACTS, NECESSITATE D THOROUGH INVESTIGATION, THEN HE HAS ALL THE POWER TO REVISE THE ASSESSMENT ORDER. IN THE INSTANT CASE, THE ASSESSMENT ALREADY STANDS FINALIZED AND NOW TEH COMMISSIONER IS EXAMINING WHETHER THE ASSESSING OFFICER PROPERLY EXAMINED THE FACTS OF THE CASE. IN SUCH CIRCUMSTANC ES, IT IS IMPERMISSIBLE TO HAVE A RECOURSE TO THE PROVISIONS OF SECTIONS 14 2(1) AND 143(2) FOR DEMOLISHING THE ORDER UNDER SECTION 263 [PARA 18.B] Q. WHETHER INADEQUATE INQUIRY CONDUCTED BY THE ASSE SSING OFFICER EMPOWERS THE COMMISSIONER TO REVISE THE ASSESSMENT ORDER ? A. IT IS IMPERATIVE FOR THE ASSESSING OFFICER TO CO NDUCT ENQUIRY TO SATISFY HIMSELF ABOUT THE GENUINENESS OF TRANSACTIO NS. SCOPE OF THE TERM ENQUIRY CAN BE DIVERSE IN DIFFERENT CIRCUMSTANCES . THERE CANNOT BE STRAITJACKKET FORMULA TO POSITIVELY CONCLUDE AS TO CONDUCTING OR NON- CONDUCTING OF ENQUIRY BY THE ASSESSING OFFICER. I T DEPENDS ON THE FACTS AND CIRCUMSTANCES OF EACH CASE. WHERE THE FACTS ARE JUST ORIDINARY AND PRIMA FACIE THERE IS NOTHING UNTOWARD THE RECORDED TRANSACTION, IN SUCH CIRCUMSTANCES, THE OBTAINING OF THE DOCUMENTS AND T HE APPLICATION OF MIND THEREON, WITHOUT A FURTHER OUTSIDE ENQURIY, MA Y MEAN THAT THE ASSESSING OFFICER DID CONDUCT ENQUIRY, LEAVING THE QUESTION OPEN AS TO WHETHER IT WAS A PROPER OR AN IMPROPER ENQUIRY. BUT , WHERE THE FACTUAL SCENARIO OF A CASE PRIMA FACIE INDICATES ABNORMALIT IES AND CRY FOR LOOKING DEEP INTO IT, THEN A MERE COLLECTION OF DOCUMENTS C ANNOT BE HELD AS CONDUCTING ENQUIRY, LEAVE ASIDE, ADEQUATE OR INADEQ UATE. IN SUCH LATER CASES, ONLY WHEN THE ASSESSING OFFICER, AFTER COLLE CTION OF THE INITIAL DOCUMENTS, EMBARKS UPON FURTHER INVESTIGATION, THAT IT CAN BE SAID THAT HE INITIATED ENQUIRY. WHERE THE FACTS OF A PARTICUL AR TRANSACTION CRY HOARSE ABOUT ITS NON-GENUINENESS AND EVEN A CASUAL LOOK AT SUCH FACTS, PRIMA FACIE, DIVULGES FOUL PLAY, THEN THE ALARM BEL L MUST RING IN THE MIND OF THE ASSESSING OFFICER FOR MAKING FURTHER EXAMINA TION. COLLECTION OF PAPERS ON RECORD IN SUCH CIRCUMSTANCES CANNOT BE CO NSTRUED AS M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 23 CONDUCTING A PROPER ENQUIRY. IF IN SUCH CIRCUMSTANC ES, THE ASSESSING OFFICER SIMPLY GATHERS DOCUMENTS AND KEEPS THEM ON RECORD, THEN SUCH NOMINAL ENQUIRY FALLS WITHIN THE OVERALL CATEGORY O F NO ENQUIRY BECAUSE OF THE INACTION ON THE PART OF THE ASSESSING OFFICE R TO READ A WRITING ON THE WALL. [PARA 19.A) THUS, THE INSTANT CASE IS A GLARING EXAMPLE OF NOT MAKING RELEVANT ENQUIRY, WHICH AMOUNTS TO NO ENQURIY AND HENCE IT BECOMES A CASE OF NON-APPLICATION OF MIND BY THE ASSESSING OFFICER. [ PARA 19.E] Q. WHETHER THE ORDER OF THE COMMISSIONER WAS BASED OR IRRELEVANT CONSIDERATION AND WAS HE SUPPOSED TO POINT OUT SPEC IFICALLY WHERE THE ASSESSING OFFICER WENT WRONG IN NOT PROPERLY EXAMIN ING THE ISSUE OF SHARE CAPITAL ? WHERE THE ASSESSING OFFICER HAS MADE PROPER ENQURI Y AND STILL COMES TO A WRONG CONCLUSION, WHICH RENDERS THE ASSE SSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE, IT BECOMES THE DUTY OF THE COMMISSIONER TO EXPRESSLY POINT OUT WHE RE THE ASSESSING OFFICER WENT WRONG ON MERITS. BUT IN A CASE, WHERE NO ENQUIRY HAS BEEN CONDUCTED AT ALL OR THE SO-CALLED ENQUIRY CONDUCTED BY THE ASSESSING OFFICER IS AS GOOD AS ON ENQUIRY, AS IS THE CASE UN DER CONSIDERATION , IN SUCH CIRCUMSTANCES, THE COMMISSIONER SIMPLY NEEDS T O POINT OUT THOSE RELEVANT ASPECTS OF ASSESSEENT, WHICH THE ASSESSING OFFICER LOST SIGHT OF, BUT WERE REQUIRED TO BE PROPERLY PROBED. THERE CAN BE NO WAY FOR THE COMMISSIONER TO TELL ERRONEOUS APPROACH OF THE ASSE SSING OFFICER ON MERITS IN SUCH CIRCUMSTANCES BECAUSE THE VIEW OF TH E ASSESSING OFFICER ON MERITS IS NOT AVAILABLE. REQUIRING THE COMMISSIO NER TO INDICATE WHERE THE ASSESSING OFFICER WENT WRONG ON MERITS IN THE C ASES OF NO ENQUIRY CASES, IS LIKE REQUIRING AN IMPOSSIBLE THING TO BE DONE. IT IS AXIOMATIC THAT THE LAW DOES NOT REQUIRE AN IMPOSSIBLE TO BE COMPLI ED WITH. IN THE INSTANT CASE THE EXTENT OF ENQUIRY CONDUCTED BY THE ASSESSI NG OFFICER, BEING AS GOOD AS NO ENQUIRY, IS SUFFICIENT IN ITSELF TO EMPO WER TH COMMISSIONER FOR INVOKING HIS JURISDICTION UNDER SECTION 263. UNDER SUCH CIRCUMSTANCES, M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 24 NO IMPOSSIBLE BURDEN CAN BE CAST ON THE COMMISSIONE R TO SHOW THE POSITIVE LEAKAGE OF INCOME IN CONCRETE TERMS, WHEN HE HAS SIMPLY SET ASIDE THE ASSESSMENT ORDER AND RESTORED THIS ASPECT OF THE ASSESSMENT TO THE FILE OF THE ASSESSING OFFICER FOR MAKING A P ROPER ENQUIRY AND THEN DECIDING . [PARA 20.G] Q. IF THE ASSESSING OFFICER HAS TAKEN A POSSIBLE VI EW, CAN STILL THE REVISION BE ORDERED ? A. WHERE THE ASSESSING OFFICER FAILS TO CONDUCT AN ENQUIRY OR PROPER ENQUIRY, WHICH IS CALLED FOR IN THE GIVEN CIRCUMSTA NCES, THE COMMISSIONER IS EMPOWERED TO SET ASIDE TREH ASSESSMENT ORDER BY TREATING IT AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. IN SUCH CIRCUMSTANCES, THE ASSESSING OFFICER CANT BE SAID TO HAVE TAKEN A POSSIBLE VIEW AND IT IS NOT FURTHER REQUIRED ON THE PART OF THE COMMISSIONER TO EXPRESSLY SHOW WHERE THE ASSESSMENT ORDER WENT WRONG. THE VERY FACT THAT NO ENQUIRY WAS CONDUCTED OR NO PROPER ENQUIRY WAS CONDUCTED IN THE REQUIRED CIRCUMSTANCES, IS SUF FICIENT IN ITSELF TO INVOKE THE PROVISIONS OF SECTION 263. [PARA 21.G] 6.2 THE EXCERPTS FROM OTHER IMPORTANT JUDGMENTS ON THE REVISIONARY POWERS OF COMMISSIONER ARE REPRODUCED HEREUNDER. 6.2.1 CIT VS AMITABH BACHCHAN [2016] 384 ITR 20 (SC ): MAKING A CLAIM WHICH WOULD PRIMA FACIE DISCLOSE TH AT THE EXPENSE IN RESPECT OF WHICH DEDUCTION HAD BEEN CLAIMED HAD BEEN INCURRED AND THEREAFTER ABANDONING/WITHDRAWING THE SAME GAVE RIS E TO THE NECESSITY OF FURTHER ENQUIRY IN THE INTEREST OF THE REVENUE. THE NOTICE ISSUED UNDER SECTION 69C COULD NOT HAVE BEEN SIMPLY DROPPED ON T HE GROUND THAT THE CLAIM HAS BEEN WITHDRAWN. THEREFORE, THE COMMISSION ER WAS PERFECTLY JUSTIFIED IN COMING TO HIS CONCLUSIONS IN RESPECT O F THIS ISSUE. [PARA 21] 6.2.2 TOYOTA MOTOR CORPN. [2008] 174 TAXMAN 395 (D ELHI) AFFIRMED IN [2008] 173 TAXMAN 458 (SC) THE REASONING GIVEN BY THE TRIBUNAL COULD NOT BE A CCEPTED SIMPLY BECAUSE THE ASSESSING OFFICER HIMSELF DID NOT SAY A NY SUCH THING IN HIS M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 25 ORDER. THERE IS NO DOUBT THAT THE PROCEEDINGS BEFOR E THE ASSESSING OFFICER ARE QUASI-JUDIUCIAL PROCEEDINGS AND A DECIS ION TAKEN BY HIM IN THIS REGARD MUST BE SUPPORTED BY REASONS. OTHERWISE , EVERY ORDER, SUCH AS THE ONE PASSED BY THE ASSESSING OFFICER, COULD R ESULT IN A THEORETICAL POSSIBILITY THAT IT MAY BE REVISED BY THE COMMISSIO NER UNDER SECTION 263. SUCH A SITUATION IS CLEARLY IMPERMISSIBLE. [PA RA 9] IT IS ALSO NECESSARY FOR THE PARTIES TO KNOW THE R EASONS THAT HAVE WEIGHED WITH THE ADJUDICATING AUTHORITY IN COMING T O A CONCLUSION. THE ORDER PASSED BY THE ASSESSING OFFICER SHOULD BE A S ELF-CONTAINED ORDER GIVING THE RELEVANT FACTS AND REASONS FOR COMING TO THE CONCLUSION BASED ON THOSE FACTS AND LAW. [PARA 10] THEREFORE, THE MATTER WAS TO BE REMANDED TO THE FIL E OF THE ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH IN TERMS OF THE ORDER PASSED BY THE COMMISSIONER UNDER SECTION 263. [PARA-12] 6.2.3 JAGDISH KUMAR GULATI [2004] 139 TAXMAN 369 (A LL) WHEN AN ASSESSMENT IS DONE UNDER SECTION 143(3), IT IS EXPECTED THAT THE ASSESSING OFFICER WILL MAKE A DETAILED ENQUIRY TO F IND OUT THE CORRECT INCOME OF THE ASSESSEE AND NOT TO TAKE THE FACTS PL ACED BY TEH ASSESSEE ON THEIR FACE VALUE. NO PROPER ENQUIRY APPEARED TO HAVE BEEN MADE BY THE ASSESSING OFFICER IN THE INSTANT CASE. IT IS WE LL SETTLED THAT IF THE ASSESSING OFFICER FAILS TO MAKE A PROPER ENQUIRY TH IS IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. [PARA 1 3] 6.2.4 MALABAR INDUSTRIAL CO. LTD. [2000] 109 TAXMA N 66 (SC) WHETHER IN ORDER TO INVOKE SECTION 263 ASSESSING OF FICERS ORDER MUST BE ERRONEOUS AND ALSO PREJUDICIAL TO REVENUE AND IF ON E OF THEM IS ABSENT, I.E. IF ORDER OF INCOME-TAX OFFICER IS ERRONEOUS BU T IS NOT PREJUDICIAL TO REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIA L TO REVENUE, RECOURSE CANNOT BE HAD TO SECTION 263(1) HELD, YES- WHETHE R IF DUE TO AN ERRONEOUS ORDER OF ITO, REVENUE IS LOSING TAX LAWFU LLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO INTERES TS OF REVENUE HELD, YES. M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 26 AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT AP PLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOU S. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PR INCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDIT IONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IF O NE OF THEM IS ABSENT IF THE ORDER OF THE ITO IS ERRONEOUS ............PREJU DICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE ........ .ECOURSE CANNOT BE HAD TO SECTION 263(1). ..........ROMPTON GREAVES LTD. [2017] 82 TAXMANN.CO M 246 [MUMBAI-ITAT ...........C) .......THAT ON PERUSAL OF THE SAID ASSESSMENT ORDER IT WAS CLEAR THAT THE ASSESSING ........HAD NOT MADE ANY ENQUIRY WITH RES PECT TO THE CLAIM OF DEDUCTION OF THE ASSESSEE-COMPANY WITH RESPECT TO P ROVISIONS FOR WARRANTY CHARGES, EXCISE DUTY, .......TAX AND LIQUI DITY DAMAGES AMOUNTING TO RS.17.72 CRORES CLAIMED AS DEDUCTION B Y THE ASSESSEE- COMPANY FROM THE INCOME OF THE ASSESSEE-COMPANY AND THE CLAIM MADE BY THE ASSESSEE-COMPANY WAS ACCEPTED BY THE ASSESSI NG OFFICER WITHOUT ANY FURTHER ENQUIRY, EXAMINATION OR VERIFICATION AS WAS WARRANTED. 6.2.6 COMMISSIONER OF INCOME V/S VALLABHDAS VITHALD AS- GUJARAT HIGH COURT (2002) 253 ITR 0543] HELD THAT REVISION RECORD OF PROCEEDINGS- STATEMEN TS OF THIRD PARTY IN SEARCH OPERATIONS EXPLANATION TO S. 263 CLARIFIES THAT RECORD WOULD INCLUDE ALL RECORDS RELATING TO ANY PROCEEDINGS UND ER THE ACT AVAILABLE AT THE TIME OF ....AMINATION BY THE CIT- PROVISIONS OF SAID EXPLANATION ARE TO BE DEEMED TO HAVE ALWAYS BEEN IN EXISTENCE- THUS, I T CANNOT BE SAID THAT POWER UNDER S.263 CAN BE EXERCISED ONLY ON THE BASIS OF THE STATEMENTS WHICH ARE RECORDED IN THE COURSE OF SEAR CH AND SEIZUE OPERATIONS IN RESPECT OF THE VERY ASSESSEE AND NOT IN RESPECT OF ANY OTHER M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 27 PERSON- FOR THE PURPOSE OF EXERCISING HIS POWER, TH E EXAMINATION BY CIT IS NOT REQUIRED TO BE CONFINED TO THE RECORD IN ASS ESSEES CASE. 6.2.7 [2016] 237 TAXMAN 211 (MADRAS) N. MOHAMMED AL I VS. INCOME- TAX OFFICER, WARD-VII(2), CHENNAI DURING RELEVANT YEAR, ASSESSEE MADE CASH PAYMENTS T O SUPPLIERS OF CRACKERS-WITHOUT EXAMINING DETAILS OF EXPENDITURE I NVOLVED, ASSESSING OFFICER ALLOWED SAID PAYMENTS- COMMISSIONER FOUND T HAT ASSESSEE HAD MADE CASH PAYMENTS IN EXCESS OF RS.20,000 TO SOME S UPPLIERS ON DAY- TO-DAY BASIS- HE THUS PASSED A REVISIONAL ORDER DIS ALLOWING SAID PAYMENTS UNDER SECTION 40A (3)- WHETHER ON FACTS, I MPUGNED REVISIONAL ORDER DID NOT REQUIRE ANY INTERFERENCE- HELD, YES [ PARA-16] [ IN FAVOUR OF REVENUE] 4.0 THEREFORE, IN VIEW OF THE ABOVE DISCUSSION I AM OF THE CONSIDERED OPINION THAT THE ORDER DATED: 06.01.2016 FOR A.Y. 2 013-14 IS ERRONEOUS IN SO FAR AS IT IS ALSO PREJUDICIAL TO THE INTEREST OF REVENUE ON ACCOUNT OF PASSING OF THE ORDER WITHOUT MAKING REQUIRED ENQUIR IES/INVESTIGATIONS. ACCORDINGLY, I AM SATISFIED THAT PROVISIONS OF SECT ION 263 OF I.T. ACT. 1961 ARE REQUIRED TO BE INVOKED. THEREFORE, THE ASSESSME NT FOR A.Y.2014-15 FRAMED ON 06.01.2016 IS HEREBY SET-ASIDE TO THE FIL E OF AO TO RE-EXAMINE ALL THE UNSECURED LOANS TAKEN BY THE ASSESSEE COMPA NY WHICH ARE REFLECTED IN SCHEDULE NOTE 6 OF THE ANNUAL AUDITED ACCOUNTS FOR FY 2012- 13 SUBMITTED BY THE ASSESSEE BEFORE THE AO DURING T HE ASSESSMENT PROCEEDINGS HE IS DIRECTED TO GET COMPLETE INVESTIG ATION DONE ABOUT VARIOUS UNSECURED LOANS TAKEN BY THE ASSESSEE COMPA NY. HE IS DIRECTED TO ALSO VERIFY THE ENTRIES IN THE BANK ACCOUNT, NAT URE OF BUSINESS OF THE COMPANY AND CHECK FROM THE INVESTIGATION DIRECTORAT E OF THE JURISDICTION TO WHICH THE LENDER COMPANY BELONGS. THE DATABASE W HICH CONTAINS INFORMATION ABOUT THE PENNEY STOCK/SHELL COMPANIES AND THE COMPANIES IN THE BUSINESS OF ISSUING ACCOMMODATION ENTRIES SH OULD BE VERIFIED TO CHECK WHETHER THESE COMPANIES ARE INVOLVED IN THIS BUSINESS AND WHETHER ANY INVESTIGATION HAS BEEN DONE BY THE DEPA RTMENTAL M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 28 AUTHORITIES EARLIER. FOR THIS PURPOSE, HE IS DIRECT ED TO TAKE HELP OF THE INVESTIGATION WING TO GET THE MATTER COMPLETELY EXA MINED. THE LINE OF INVESTIGATION/INQUIRY IS ONLY INCLUSIVE AND HE IS F REE TO MAKE ANY OTHER INVESTIGATION ON THE ISSUE AS DEEMED FIT BY HIM. HE IS FURTHER DIRECTED TO PASS A DETAILED SPEAKING ORDER AS PER THE LAW AFTER MAKING NECESSARY VERIFICATION, INQUIRIES AND INVESTIGATIONS AS INDIC ATED ABOVE., 7. BEING DISSATISFIED WITH THE IMPUGNED ORDER U/S 2 63 OF THE ACT THE ASSESSEE PREFERRED AN APPEAL BEFORE THIS TRIBUN AL. LD. SENIOR COUNSEL FOR THE ASSESSEE FIRSTLY TOOK US THROUGH FO LLOWING SUBMISSIONS FILED BY THE ASSESSEE BEFORE LD. PR. CI T DURING THE PROCEEDINGS U/S 263 OF THE ACT. ON THE DATE OF HEARING WHICH WAS FIXED FOR 25.01.20 18, AN ADJOURNMENT WAS SOUGHT FOR COMPILATION OF DETAILS AS WELL AS IN SPECTION AND OBTAINING OF COPY OF CASE RECORDS OF THE LEARNED ASSESSING OF FICER. OUR REQUEST WAS ACCEPTED AND DATE OF HEARING WAS ADJOURNED FOR 09.0 2.2018. THEREAFTER, WE HAVE OBTAINED THE COPY OF ASSESSMENT RECORD FROM THE LEARNED ASSESSING OFFICER, WHICH CONSIST OF THE FOLLOWING : - 1. COPY OF RETURN AND BALANCE SHEET OF THE COMPANY: 2. NOTICE U/S 142(1) DATED: 27.11.2015. 3. REPLY DATED: 30.12.2015 IN RESPONSE TO NOTICE U/S.1 42(1) 4. QUESTIONNAIRE DATED: 12.01.2016 5. REPLY DATED: 18.01.2016 AND 08.02.2016 IN RESPONSE TO QUESTIONNAIRE DATED:12.01.2016 6. REPLIES ALONGWITH REQUISITE INFORMATION RECEIVED FR OM FOLLOWING CASH CREDITORS TO WHOM NOTICE U/S. 133(6) WERE ISSUED :- A M/S. APANAPAN MERCANTILE PVT. LTD. B M/S. BHIMTHAL NIRMAN PVT. LTD. C M/S. CONFIDENT VINIMAY PVT.LTD. D M/S.CREST VANIJYA PVT. LTD. M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 29 E M/S. GIELLE INVESTMENT PVT. LTD. F M/S. TROPICAL VYAPAR PVT. LTD. G M/S. WINSHER COMMERCIAL PVT. LTD. H GLITTER DEALMARK P. LTD. I. JAYANT SECURITIES & FINANCE LTD. 7. ASSESSMENT ORDER DATED: 07.03.2016. IN THE LIGHT OF SHOW-CAUSE NOTICE U/S.263 ISSUED BY YOUR HONOUR, INSPECTION OF CASE RECORDS WERE TAKEN BEFORE THE LE ARNED ASSESSING OFFICER. PERUSAL OF CASE RECORDS DURING THE COURSE OF INSEPCTION REVEALS THAT AUDIT OBJECTION WAS RAISED BY THE AUDIT PARTY AND THE SAME WAS BEING DEALT WITH. IT SEEMS THAT TO SETTLE THE OBJEC TION OF TRHE AUDIT REPLY WAS FORWARDED. THUS, IT SEEMS THAT THE AUDIT OBJECT ION MAY BE THE ROUTE FOR ISSUE OF SHOW-CASUE NOTICE U/S 263 OF THE ACT. HOWEVER, IT IS SUBMITTED THAT IT IS ALMOST A SETTLED LAW THAT ON T HE BASIS OF AUDIT OBJECTION OR EVEN RECOMMENDATION OF THE ASSESSING O FFICER, PROVISIONS OF SECTION 263 CANNOT BE INVOKED. IT IS THE PREROGATIV E OF THE PRINCIPAL COMMISSIONER OF INCOME TAX, ON EXAMINATION OF CASE RECORDS SUO-MOTO TO INVOKE THE PROVISIONS OF SECTION 263, IF HE CONSIDE RS THAT ANY ORDER PASSED BY THE LEARNED ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, CONSIDER ING THE INSPECTION OF RECORDS OF THE LEARNED ASSESSING OFFICER.......BEIN G AUDIT OBJECTION WAS DEALT BY HIM AND THUS, ISSUING NOTICE U/S 263 IS .. ..VOID. IN THIS REGARD RELIANCE IS PLACED ON THE FOLLOWING DECISIONS :- IN VIEW OF THE ABOVE, THE SHOW-CAUSE NOTICE U/S 263 IS AB-INITIO VOID AND REQUIRES TO BE QUASHED. WITHOUT PREJUDICE TO THE ABOVE AND PERUSAL OF THE R ECORDS OF THE LEARNED ASSESSING OFFICER REVEALS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS REQUIRED DETAILS OF UNSECURED LOANS SUC H AS CONFIRMATION LETTERS, AUDITED FINAL ACCOUNTS, ITR WITH COMPUTATI ONS WERE FILED. THE LEARNED ASSESSING OFFICER HAS ALSO, MADE INDEPENDEN T REQUIRED INQUIRIES FROM LOAN CREDITORS U/S 133(6) INCLUDING THE CREDIT ORS AS SPECIFIED HEREINABOVE. THAT MOST OF THE REPLIES WERE RECEIVED FROM LOAN CREDITORS IN M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 30 RESPONSE TO NOTICE U/S 133(6). AFTER REACHING TO TH E SATISFACTION WITH THE AFTER INQUIRY, THE LEARNED ASSESSING OFFICER HAS PA SSED THE ORDER. DURING THE COURSE OF INSPECTION OF RECORDS WITH ASSESSING OFFICER IT IS FOUND THAT THE REPLY WAS FORWARDED WHEREIN AUDIT OBJECTION WAS NOT ACCEPTED FOR THE REASON THAT THERE WAS NO EVIDENCE ON RECORD WHICH W AS NOT CONSIDERED BY THE THEN ASSESSING OFFICER WHILE ACCEPTING CASH CRE DITORS AS PROPER. IT IS FURTHER SUBMITTED THAT THE LEARNED ASSESSING OFFICER RELIED ON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE O F CIT V/S METACHEM INDUSTRIES (245 ITR 160) (MP) HAVE HELD THAT ONCE T HE CREDITOR HAS CONFIRMED THE TRANSACTION BY OWNING THE SAME, IT IS TREATED THAT THE ASSESSE HAS DISCHARGED HIS ONUS. AFTER THAT IT IS F OR THE ASSESSING OFFICER OR DEPARTMENT TO VERIFY THE TRANSACTION IN THE HAND S OF CREDITOR. IN THIS REGARD FURTHER, IT IS SUBMITTED BY HIM THAT IN THE CASE OF SONA ELECTRIC COMPANY V/S. CIT (1985) (152 ITR 507) (DEL HI HC), IT IS HELD THAT IT IS PREROGATIVE OF THE ASSESSING OFFICER TO REJEC T THE EXPLANATION OFFERED BY THE ASSESSE ON COGENT REASONS. NON-ACCEPTANCE OF CREDITS ON PRESUMPTIONS IS NOT POSSIBLE. IN VIEW OF THE ABOVE IT WAS SUBMITTED THAT AS THE R ESPONSIBILITY OF THE ASSESSEE IS CONCERNED, IT IS SATISFACTORILY DISCHAR GED. AS SUCH AS SATISFACTORY EXPLANATION WAS GIVEN IT IS TREATED TH AT ONUS IS DISCHARGED. THEREAFTER IT IS OPEN TO THE ASSESSING OFFICER TO I NITIATED ACTION AGAINST THE CREDITOR. IN VIEW OF THE AFORESAID DISCUSSIONS AND FACTS OF T HE CASE AND PERUSAL OF RECORDS REVEALS THAT THE LEARNED ASSESSING OFFICER EXERCISING HIS QUASIJUDICIAL POWER HAD ISSUED A DETAILED QUESTIONN AIRE U/S 142 (1) OF THE ACT, WHICH WAS DULY ANSWERED BY WAY OF VARIOUS DETA ILS, EXPLANATIONS AND LETTERS. COMPLETE BOOKS OF ACCOUNT, DETAILS OF INCOMES, SUPPORTED WITH DOCUMENTARY EVIDENCES WERE PRODUCED AND EXAMINED BY THE LEARNED ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS . THE COUNSEL OF THE ASSESSEE COMPANY HAD APPEARED BEFORE THE LEARNED AS SESSING OFFICER AND FILED REPLIES. THEREAFTER, AFTER DUE/REQUIRED E NQUIRY/ VERIFICATION U/S M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 31 133(6), WHICH SHYOULD HAVE BEEN DONE AT THE END OF THE LEARNED ASSESSING OFFICER, ORDER WAS PASSED U/S.143(3). THUS, THE PRIME REASON SO MENTIONED IN THE SHOW-CAU SE NOTICE FOR INVOKING OF SECTION 263 IS WITHOUT MAKING REQUIRED ENQUIRIES/INVESTIGATION IS HAVING NO FORCE. OUR CONTENTION FINDS SUPPORT FR OM THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE CIT-IV V. HOTZ INDUSTRIES LTD. 226 TAXMAN 0252, WHEREIN IT IS HELD THAT COMMISSIONER IN THE ORFDER UNDER SECTION 263 OBSER VED THAT THE ASSESSING OFFICER IT APPEARS HAD NOT CAUSED ANY I NQUIRIES OR INVESTIGATION, BUT ACCEPTED THE CONTENTION OF THE A SSESSEE. COMMISSIONER OBSERVED, THEREFORE, MEANINGFUL INQUIRY SHOULD BE CONDUCTED. THIS DOES NOT MEET THE REQUIREMENT THAT THE DECISION OF THE A SSESSING OFFICER SHOULD BE ERRONEOUS. ONCE INQUIRIES WERE CONDUCTED AND A D ECISION WAS REACHED BY THE ASSESSING OFFICER, IT CANNOT BE SAID THAT IT WAS A CASE OF NO INQUIRY. IN SUCH CASES, THE COMMISSIONER MUST REACH A FINDIN G THAT THE FINDING OF THE ASSESSING OFFICER WAS ERRONEOUS, NOT BECAUSE NO INQUIRIES WERE CONDUCTED, BUT BECAUSE THE FINAL FINDING WAS WRONG AND UNTENABLE. ONCE INQUIRIES WERE HELD AND THE ASSESSING OFFICER FORMED A BELIEF, THE FINDING/OPINION FORMED CAN BE SET ASIDE ONLY WHEN I T IS ERRONEOUS AND NOT BECAUSE NO INQUIRIES OR INADEQUATE INQUIRIES WERE C ONDUCTED. FROM THE ABOVE IT IS CLEAR THAT THE POWER U/S 263 I S TO BE EXERCISED IN THE CASE OF NO INQUIRY AND NOT IN THE CASE OF INADEQ UATE INQUIRY OR LACK OF INQUIRY WHEREAS THE CAWE OF THE ASSESSEE IS NOT EV EN A CASE OF LACK OF INQUIRY. THE LEARNED ASSESSING OFFICER HAD PASSED T HE ASSESSMENT ORDER ONLY AFTER CONDUCTING DETAILED ENQUIRY ON VARIOUS I SSUES INCLUDING UNSECURED LOANS TAKEN/AVAILED BY THE ASSESSEE COMPA NY. THE ASSESSMENT ORDER IS PASSED AFTER DUE APPLICATION OF MIND, THEREFORE THE IMPUGNED NOTICE U/S 263 OF THE CHALLENGING THAT PRO PER AND ADEQUATE ENQUIRY WAS NOT MADE, RENDERING THE ASSESSMENT ORDE R ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, IS HAVING N O FORCE. SIMILAR, VIEWS HAVE ALSO, BEEN TAKEN BY VARIOUS JUDICIAL AUTHORITI ES, AS UNDER :- M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 32 A. MERELY BECAUSE FROM A PERFECTIONIST POINT OF VIE W, IT IS FELT THAT SOME MORE ENQUIRIES AND VERIFICATIONS COULD HAVE BEEN MA DE BY ASSESSING OFFICER WHILE MAKING ASSESSMENT/ASSESSMENT ORDER CA NNOT BE DECLARED TO BE ERRONEOUS AND PREJUDICIAL TO INTEREST OF REVENUE . SALORA INTERNATIONAL LTD. V. ADDL. CIT 2 SOT 705 (DELHI) (TRIB.); B. WHEN THE ASSEESSING OFFICER TAKES ONE OF THE TWO VIEWS PERMISSIBLE IN LAW AND WHICH THE COMMISSIONER DOES NOT AGREE WI TH AND WHICH RESULTS IN A LOSS OF REVENUE, IT CANNOT BE TREATED AS ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF REVENUE, UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS COMPLETELY UNSUSTAINABLE IN LA W. CIT V. MAX INDIA LIMITED 295 ITR 282(SC), MALBAR INDUSTRIES CO. LTD. V. CIT 243 ITR 83 (SC); D. SINCE THE ASSESSING OFFICER MADE PROPER ENQUIRY AND EXAMINED ACCOUNTS, IT COULD NOT BE SAID THAT THERE WAS NON-A PPLICATION OF MIND BY HIM. HENCE, THE ACTION UNDER SECTION 263 WAS HELD I NVALID. ANTALA SANJAY KUMAR RAVIJI BHAI V. CIT 135 ITD 506 (RAJKOT) (TRIB .), ROSHAN LAL VEGETABLE PRODUCTS (P) LTD. V. ITO 51 SOT 1 (URO) ( ASR.)(TRIB.), FINE JEWELLERY (INDIA) LTD. V. ACIT 19 ITR 746 (MUM.) (T RIB.); E. IN CASE, WHERE THE HIGH COURT FOUND THAT THE ASS ESSING OFFICER EXAMINED ALL THE DETAILS WITH RESPECT TO ASSESSEES CLAIM OF DEDUCTION, THE ORDER COULD NOT BE SAID TO BE ERRONEOUS OR WAS PASS ED WITHOUT APPLICATION OF MIND MERELY BECAUSE THE SAME WAS NOT ELABORATE O RDER. CIT V. DESIGN & AUTOMATION ENGINEERS (BOMBAY)(P) LTD. 323 ITR 632 (BOM.)(HC), MANISH KUMAR V. CIT 134 ITD 27 (INDORE) (TRIB); F. PRAKASH ASPHALTING & TOLL HIGHWAYS (INDIA) LTD.V S. PR. COMMISSIONER OF INCOME TAX (ITAT, INDORE BENCH, IND ORE) (32 ITJ 141); G. SHRI NARAYAN TATU RANE VS. ITO, MUMBAI (MUMBAI I TAT). H. IT THE INCOME TAX APPELLATE TRIBUNAL, DELHI A BENCH, NEW DELHI IN ITA NO. 3206/DEL/2017, M/S. AMIRA ENTERPRISES LTD. VS. THE PR. C.I.T. WHEREIN IT IS HELD THAT THE ID. PCIT HAS NOT REFERR ED TO EXPLANATION 2 OF SECTION 263 WHICH HAS BEEN INSERTED WITH EFFECT FRO M 01.06.2015 HOWEVER M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 33 WE AGREE WITH THE FINDING OF THE COORDINATE BENCH I N THE CASE OF NARAYN TATU RANE (SUPRA), WHEREIN IT HAS BEEN HELD THAT EX PLANATION CANNOT SAID TO HAVE OVERRIDDEN THE LAW AS INTERPRETED BY THE VA RIOUS HIGH COURTS, WHERE THE HIGH COURTS HAVE HELD THAT BEFORE REACHIN G A CONCLUSION THAT THE ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, THE COMMISSIONER HIMSELF HAS TO UNDERTAKE SOME ENQU IRY TO ESTABLISH THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF REVENUE. IN THE CASE OF NARYAN RANE A DOUBT IS ALSO EXPRESSE D REGARDING THE APPLICABILITY OF EXPLANATION 2, WHICH WAS INSERTED BY FINANCE ACT.2015 W.E.F. 01.06.2015, THE BENCH ALSO OBSERVED THAT IF THE EXPLANATION IS INTERPRETED TO HAVE OVERRIDDEN THE LAW AS LAID DOWN BY VARIOUS HIGH COURTS, THEN THE SAME WOULD EMPOWER THE PR. CIT TO FIND FAULT WITH EACH AND EVERY ASSESSMENT ORDER AND ALSO TO FORCE THE AO TO CONDUCT ENQUIRIES IN THE MANNER PREFERRED BY THE PRT. CIT, THUS PREJU DICING THE MIND OF THE AO, HOWEVER, THE INTENTION OF THE LEGISLATURE BEHIN D THE EXPLANATION COULD NOT HAVE BEEN SO AS THE SAME WOULD LEAD TO UNENDING LITIGATION AND NO FINALITY IN THE LEGAL PROCEEDINGS. ACCORDINGLY, IN VIEW OF OUR DETAILED DISCUSSION, WE ALLOW THE GROUNDS OF APPEAL RAISED B Y THE ASSESSEE. IN SUCH CIRCUMSTANCES, THE WORDS WITHOUT MAKING ENQ UIRIES/VERIFICATION WHICH SHOULD HAVE BEEN MADE HAVE BEEN INTERPRETED B EYOND THE INTENT OF LAW. THE INTENT OF LAW IS THAT WHERE NO ENQUIRY IS MADE, WHICH THE ASSESSING OFFICER SHOULD HAVE DONE IN SUCH CASE THE PROVISIONS OF SECTION 263 CAN BE INVOKED. IT IS THEREFORE, PRAYED THAT TH E LEARNED ASSESSING OFFICER HAS MADE PROPER ENQUIRY AND PASSED ORDER U/ S 143(3) AND THUS, THE REASON FOR SHOW-CAUSE IS HAVING NO FORCE AND NE EDS TO BE QUASHED. THIS CONTENTION ALSO, FINDS SUPPORT FROM THE REPLY OF THE LEARNED ASSESSING OFFICER ADDRESSED TO AUDIT OBJECTION (SUPRA). WITHOUT PREJUDICE TO THE ABOVE FURTHER, IT IS SUBMI TTED THAT IF AN INCOME TAX OFFICER ACTING IN ACCORDANCE WITH LAW MAKES A C ERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMM ISSIONER OF INCOME M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 34 TAX, SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SH OULD HAVE BEEN WRITTEN MORE ELABORATELY. IT IS PERTINENT TO NOTE T HAT THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LIMITED V. CIT 243 ITR 83 (SC), HAVE HELD THAT WHEN THE ASSESSING OFFICER TAKES ONE OF TH TWO VIEWS PERMISSIBLE IN LAW AND WHICH THE COMMISSIONER DOES NOT AGREE WITH AND WHICH RESULTS IN A LOSS OF REVENUE, IT CANNOT BE TR EATED AS ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF REVENUE, UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS COMPLETELY UNSUSTAINABLE IN LA W. IN THIS REGARD RELIANCE IS ALSO PLACE ON THE FOLLOWING DECISIONS : - A. SECTION 263 DOES NOT VISUALIZE A CASE OF SUBSTIT UTION OF JUDGMENT OF COMMISSIONER FOR THAT OF THE ASSESSING OFFICER, UNL ESS THE DECISION IS HELD TO BE ERRONEOUS. ANTALA SANJAY KUMAR RAVJIBHAI V. C IT 135 ITD 506 (RAJKOT) (TRIB.), MANISH KUMAR V. CIT 134 ITD 27 (I NDORE) (TRIB.) B. THE ERROR ENVISAGED BY SECTION 263 IS NOT ONE TH AT DEPENDS ON POSSIBILITY OR GUESS WORK, BUT IT SHOULD ACTUALLY B E AN ERROR EITHER OF FACT OR OF LAW. ACIT V. TECHNIP ITALY SPA 150 TAXMAN 13 (DELHI) TRIB.), PRATAP FOOTWEAR V. ACIT SOT 638 (JABALPUR) (TRIB.). C. CIT V. GABRIEL INDIA LTD. [203 ITR 108] BOM HC). FROM THE AFORESAID DISCUSSIONS IT IS CLEAR THAT THE ORDER SO PASSED BY THE LEARNED ASSESSING OFFICER IN THE INSTANT CAS E CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT I ACCORDANCE WITH LAW. S INCE, THERE IS NO ISSUE IN THE ORDER WHICH CAN BE SAID THAT THE SAME IS UNS USTAINABLE IN LAW AND THEREFORE, THE FIRST LIMB OF SECTION 263 I.E. THE O RDER IS ERRONEOUS, IS ABSENT AND NEEDS TO BE QUASHED. WITHOUT PREJUDICE FURTHER, TO THE ABOVE FIT IS SUBMITTED THAT THE SECOND LIMB OF SECTION 263 IE. THE SUBJECT ORDER IS PREJUD ICIAL TO THE INTEREST OF REVENUE. IT IS SUBMITTED THAT THE INSTANT CASE IS R ELATED TO RECEIPT OF UNSECURED LOANS AND THE SAME IS COVERED BY THE PROV ISIONS OF SECTION 68 OF THE ACT, WHICH HAVE BEEN JUDICIALLY CONSIDERED B Y SEVERAL COURTS OF LAW, WHEREIN IT IS CATEGORICALLY BEEN HELD THAT ADDITION U/S 68 CAN BE MADE M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 35 WHERE AN ASSESSEE FAILS TO PROVE IDENTITY OF THE CR EDITOR; HIS CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION . IN THE PRESENT CASE IT IS NECESSARY TO PROVE THAT ON ALL 3 INGREDIENTS THE ASSESSEE HAD FAILED AND, THEREFORE, ADDITION IS WARRANTED. IT IS ADDITI ON U/S 68 OF THE ACT. IN THIS CASE ALL THE EVIDENCES WERE FILED WHICH HAVE B EEN VERIFIED BY THE LEARNED ASSESSING OFFICER INDEPENDENTLY BY WAY OF I SSUE OF NOTICES U/S 133(6) OF THE ACT TO THE LOAN CREDITOR COMPANIES, W HICH WERE DULY SERVED AT THE ADDRESSES FURNISHED BY THE ASSESSEE. THIS PR OVES THE IDENTITIES OF THE LOAN CREDITOR COMPANIES. FURTHER, IN RESPONSE T O THE SAID NOTICE U/S 133(6), LOAN CREDITOR COMPANIES HAVE FURNISHED THE IR REPLIES CONFIRMING THE TRANSACTIONS WITH THE ASSESSEE COMPANY. THE LOA N CREDITOR COMPANIES NOT ONLY ADMITTED THE FACT OF GRANTING OF LOAN TO T HE ASSESSEE COMPANY, BUT ALSO, SUBSTANTIATED THEIR CONFIRMATION BY FILIN G COPIES OF THE AUDITED ACCOUNTS, BANK STATEMENT, ACKNOWLEDGEMENT OF FILING OF I.T. RETURNS FOR THE ASSESSMENT YEAR UNDER CONSIDERATION SO ALSO, THE DE TAILS OF CHEQUE OF LOANS. IN THE AUDITED ACCOUNTS OF THE LOAN CREDITOR COMPANIES AND ALSO, IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, THE IMPUGNED LOADN TRANSACTIONS BY ACCOUNT PAYEE CHEQUES HAVE BEEN DULY REFLECTED. THE LOAN CREDITOR COMPANIES HAVE ALSO EXPLAINED THE IMMEDIATE SOURCE OUT OF WHICH THEY HAVE CLAIMED TO HAVE GRANTED LOANS TO THE ASSESSEE COMPANY. FURTHER, FROM THE BANK STATEMENTS OF THE LOAN CREDITOR COMPA NIES IT IS REVELED THAT NO CASH WAS DEPOSITED PRIOR TO ACKNOWLEDGEMENT OF C HEQUES OR SUCH LOANS. IT IS PERTINENT TO MENTION HERE THAT THE ASS ESSING OFFICER AT HIS OWN COLLECTED THE ABOVE INFORMATION/EVIDENCES DIRECTLY FROM THE LOAN CREDITOR COMPANIES, U/S 133(6) OF THE ACT. IT IS ALSO, A FAC T APPEARING FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAS NOT DISPUTED THE CORRECTNESS OF ALL THESE DOCUMENTS OR MADE ANY ADVE RSE COMMENTS IN RESPECT OF THE SAME. FURTHER, THERE IS NO ADVERSE I NFORMATION FROM INVESTIGATION WING OR FROM ANY OTHER SOURCE. THESE FACTS WITH SUPPORTING EVIDENCES, THEREFORE, CUMULATIVELY PROVE THE IDENTI TY OF THE LOAN CREDITORS, THEIR CRTEDITWORTHINESS AND GENUINENESS OF THE TRAN SACTIONS. THERE IS THUS NO GROUND OR BASIS TO DISPUTE THE CORRECTNESS OF TH E LOAN TRANSACTIONS AS M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 36 THE SAME IS FULLY SUPPORTED FROM FACTS AND SETTLED LEGAL PRINCIPLES LAID DOWN FROM TIME-TO-TIME. THEREFORE, THE ONUS CAST ON THE ASSESSEE U/S 68 OF THE ACT WAS DULY DISCHARGED BY IT. THEREFORE, WH EN ALL THE INGREDIENTS CONTAINED IN SECTION 68 ARE FULFILLED, THERE IS HAR DLY ANY SCOPE TO INVOKE THE PROVISIONS OF SECTION 263 OF THE ACT, ALLEGING INTRODUCTION OF UNEXPLAINED FUNDS IN THE FORM OF CASH CREDITS. THE BURDEN SO SHIFTS ON REVENUE TO ESTABLISH THAT SUCH CREDITS HAS ACTUALLY COME FROM ASSEESSEE COMPANY ITSELF. HOWEVER, AS STATED ABOVE, NO EVIDEN CE WAS AVAILABLE ON RECORD BY WHICH THE DEPARTMENT MAY REACH TO THE CON CLUSION THAT THE UNSECURED LOAN MONEY HAS BEEN BROUGHT IN THE NAME O F THE LOAN CREDITOR COMPANIES BY THE ASSESSEE COMPANY ITSELF. IN THIS R EGARD RELIANCE IS PLACED ON THE FOLLOWING DECISIONS.:- A. JT. CIT V. DURGA CHARITABLE SOCIETY & VICE-VERS A 2017 TAXPUB(DT) 4549 (DEL-TRIB); B. RELIANCE CORPOATION & ANR. V. ITO & ANR. 2017 T AXPUB(DT) 1443 (MUM-TRIP); C. ACIT V. PREM ANAND 2017 TAXPUB(DT 1296 (DEL-TRI P); D. SANGHVI REALTY (P) LTD. V. DY. CIT 060 ITR (TRI B) 0150 (MUM-TRIB). HONBLE APEX COURT IN THE CASE OF CIT VS. DAULAT R AM RAUTMAL 87 ITR 349 (SC) HAS HELD THAT ONUS TO PROVE THAT THE APPAR ENT IS NOT THE REAL IS ON THE PERSON WHO CLAIMS IT TO BE SO. THEREFORE, THE O NUS IS ON THE DEPARTMENT TO PROVE THAT THE UNSECURED LOAN GRANTED TO THE ASSESSEE COMPANY BY THE ABOVE NAMED LOAN CREDITOR COMPANIES ARE NOT THE MONEY OF THE LOAN CREDITOR COMPANIES BUT, OF THE ASSESSEE COMPANY. HOWEVER, YOUR GOODSELF HAS DOUBTED THE GENUINENESS OF THE IN SECURED LOAN MONEY ON SURMISES AND CONJECTURE AND HAS NOT BROUGHT COGE NT MATERIAL ON RECORD TO ESTABLISH THE BOGUS NATURE OF THE SUBJECT TRANSA CTIONS. THIS, UNDER SUCH CIRCUMSTANCES THE ORDER PASSED BY THE LEARNED ASSES SING OFFICER U/S 143(3) CANNOT BE SAID AS PREJUDICIAL TO THE INTERES T OF THE REVENUE AND THUS, NEEDS TO BE QUASHED. M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 37 WITHOUT PREJUDICE FURTHER, TO THE ABOVE IT IS SUBMITTED THAT THE RECOURSE TO SECTION 263(1) CAN BE TAKEN AS TWIN CONDITIONS V IZ ORDER MUST BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE MUST BE SATISFIED SIMULTANEOUSLY. THUS IF ANY ORDER SO PASS ED IS PROVED TO BE NON- ERRONEOUS ONE THEN PROVISIONS OF SECTION 263 CANNOT BE INVOKED EVEN IF THE SAME IS PREJUDICIAL TO THE INTEREST OF REVENUE. IN THIS REGARD RELIANCE IS PLACED ON THE DECISION OF APEX COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83 (SC) AND IT IS SUBMIT TED THAT THE POWER OF CIT U/S 263 CAN ONLY BE EXERCISED BY THE PCIT WHEN THE TWIN CONDITIONS OF THE ORDER BEING ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE, ARE SATISFIED AND THE SAME CANNOT BE EXERC ISED TO SUBSTITUTE ITS OWN FINDING IN PLACE OF THE AO THEREFORE, THE PCIT CANNOT RE-EXAMINE THE ISSUES ALREADY INQUIRED INTO BY AO, SIMILAR VIEWS H AVE BEEN TAKEN IN THE FOLLOWING DECISIONS:- A. CIT V. VIKASH POLYMERS 194 TAXMAN 57 (DELHI) (H C) B. S. MURUGAN. V. ITO 135 ITD 527 (CHENNAI) (TRIB. ), C. J.K. CONSTRUCTION CO . V. ITO 162 TAXMAN 46 (JO DHPUR) (TRIB). IN VIEWOF THE FACTS OF THE CASE AND LEGAL POSITION ON THIS ISSUE, IT IS THEREFORE, PRAYED THAT THE PROPOSAL OF REASSESSMENT BY INVOKING THE PROVISIONS OF SECTION 263 MAY KINDLY BE DROPPED. WITHOUT PREJUDICE TO THE ABOVE AS FAR AS MERIT OF THE ISSUES REAISED IN SHOW-CAUSE NOTICE IN QUESTION ARE CONCERNED, WE HAVE TO SUBMIT THAT THE LEARNED ASSESSING OFFICER HAS ISSUED NOTICES U/ S 133(6) IN LOAN CREDITOR COMPANIES (SUPRA). THAT AFTER GETTING THE REQUISITE DETAILS AND SATISFYING WITH THE DOCUMENTS / EVIDENCES, THE LEAR NED ASSESSING OFFICER HAS ACCEPTED ALL THE LOAN CREDITS AS GENUINE. THIS, FROM THE PERUSAL OF THE AUDIT OBJECTION REVE ALS THAT AUDIT PARTY WAS SATISFIED WITH THE ENQUIRIES AND THE ISSUES UND ER THE PRESENT ASSESSMENT RELATED TO CREDITS ON ACCOUNT OF ACCEPTA NCE OF LOANS, WHICH WAS EXPLAINED AND JUSTIFIED INITIALLY BY PROVIDING REQUISITE DETAILS BY THE M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 38 ASSESSEE COMPANY AND SUBSEQUENTLY INDEPENDENT ENQUI RIES WERE MADE BY THE LEARNED ASSESSING OFFICER BY WAY OF ISSUE OF NOTICE U/S 133(6). SUCH DETAILS MUST HAVE BEEN EXAMINED BY THE DEPARTM ENTAL AUDIT TEAM AND AFTER THEIR EXAMINATION ONLY IN THE MATTER OF M/S GLITER DEALMART P. LTD. THEY COULD HAVE OBSERVED THAT CREDIT WORTHINES S WAS NOT ESTABLISHED. IN THIS REGARD IT IS SUBMITTED THAT ON CE THE ENQUIRIES HAVE BEEN MADE AND THE ASSESSING OFFICER IS SATISFIED AS PER HIS OWN DISCRETION, NO COMMENT IS PERMISSIBLE UNLESS CONTRA RY IS AVAILABLE IN CASE RECORDS. PRESUMING BUT, NOT ADMITTING THE OBSERVATI ON OF THE LEARNED AUDIT PARTY IS WITHIN THEIR JURISDICTION, THEIR OBSERVATI ON IS ALSO, HAVING NO FORCE. IN THIS REGARD IT IS SUBMITTED THAT THE SAID COMPAN Y HAS ADVANCED FUNDS IN ORDINARY COURSE OF THEIR ACTIVITIES TO THE ASSEE SSEE COMPANY AND SO ALSO, REPLIED TO THE SUMMONS / NOTICE ISSUED TO IT U/S 133(6) BY THE LEARNED ASSESSING OFFICER. THE PERUSAL OF THE BALAN CE SHEET OF THE SAID CREDITOR REVEALS THAT AS ON 31.03.2012 NET WORTH OF THE COMPANY8 WAS AT RS. 8,28,82,924/- AND AS ON 31.03.2013 WAS AT RS. 8 ,28,88,407/-. REVENUE FROM OPERATIONS OF THESE TWO YEARS WERE AT RS. 15,29,013/- AND RS. 65,84,827/- RESPECTIVELY. THIS, OBJECTION RAISE D BY THE AUDIT TEAM ON CREDITWORTHINESS OF SAID TENDER IS FACTUALLY INCORR ECT. THAT PERUSAL OF THEIR BALANCE SHEET ALSO, REVEALS THAT THERE IS NO INCREA SE IN SHARE CAPITAL AND/OR LOANS DURING THE YEAR IN QUESTION AND CONSID ERING THE FACT THAT THE LENDER COMPANY IS HAVING SUBSTANTIAL FUNDS, TO MAKE ADVANCE TO ASSESSEE COMPANY. THE AVAILABILITY OF FUNDS WITH LO AN CREDITOR COMPANY WAS ASSESSED U/S 143(3) FOR THE ASSESSMENT YEAR IN QUESTION (COPY ENCLOSED). THIS, IT IS A MATTER OF QUEST WORK WITHO UT ANY COGENT MATERIAL BY STATING IN NOTICE U/S 263 THAT PRIMA FACIE THE C OMPANY APPEARS TO BE INVOLVED IN PROVIDING ACCOMMODATIVE ENTRIES. IT IS A WELL-KNOWN MODUS OPERANDI OF SUCH PAPER COMPANIES OF KOLKATA TO RAIS E FUNDS THROUGH HUGE PREMIUM DESPITE HAVING NO WORTH ON PAPERS AND THEN HUGE THESE FUNDS FOR ACCOMMODATIVE ENTRIES. IN ABSENCE OF ANY OBJECTION TOWARDS CREDITORS STAT ED HEREIN ABOVE EXCEPT M/S GLITTER DEALMAMRT P.LTD., IT SEEMS THAT AUDIT PARTY WAS M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 39 SATISFIED WITH THE ACCEPTANCE OF CASH CREDITS BY TH E LEARNED ASSESSING OFFICER. THIS THE REASONS SO STIPULATED IN THE SHOW CAUSE NOTICE THAT ALL THE AFORESAID HUGE LOANS ARE FROM KOLKATA BASED COM PANIES WHO HAVE GIVEN THESE UNSECURED LOANS TO THE ASSESSEE WITHOUT ANY SECURITIES. THE COMPANIES ARE NOT DOING ANY MAJOR FINANCIAL ACTIVIT Y AND THE SAME APPEARS TO BE PAPER COMPANIES CREATED THROUGH THE R ECEIPT OF HUGE PREMIUMS ON SHARES WHICH ITSELF IS DOUBTFUL. FURTHE R, THE SOURCE IN THE HANDS OF THESE COMPANIES RTGS/ CHEQUS RECEIVED FROM SOME OTHER PARTIES ON THE VERY SAME DAY IS A GUESS WORK. IT IS PERTINENT THAT WHEN AUDIT PARTY WAS SATISFIED WITH REMAINING COMPANIES , AFTER PERUSAL OF COMPLIANCES AND INFORMATION OBTAINED U/S 133(6), TH ERE SEEMS TO BE NO REASON TO RAISE DOUBT, ONLY BASED ON PRESUMPTION. T HAT BEING FINANCE COMPANIES, FUNDS WERE UTILIZED FOR OPTIMUM YIELD AN D THUS, THE OBSERVATION THAT FUNDS WERE RECEIVED ON THE SAME DA Y THROUGH RTGS/ CHEQUES, IS HAVING NO FORCE. IT IS ALSO, PERTINENT TO NOTE THAT FUNDS WITH THE LOAN CREDITOR COMPANIES ARE NOT PERTAINING TO T HE YEAR IN QUESTION. EVEN THOUGH IN SUPPORT OF GENUINENESS WE ARE ENCLOS ING HEREWITH COPIES OF ASSESSMENT ORDERS PASSED IN THE CASE OF FOLLOWIN G COMPANIES, WHEREVER POSSIBLE:- A. TROPICAL VYAPAAR P.LTD.; B. BHIMATAL NIRMAN P.LTD; C. WINSHER COMMERICAL P.LTD.; AS REGARDS THE OBSERVATION REGARDING UNSECURED LOA N SHOWN IN THE NAME OF M/S JAYANT SECURITIES & FINANCE LTD. AT RS. 1,85,50,000/- EVEN NO QUESTION WAS RAISED ON THE GENUINENESS OF SUCH L ENDERS IN AUDIT OBJECTION AND IT IS REFERRED ONLY IN SHOW-CAUSE NOT ICE U/S 263 STATING THAT LOANS FROM THE SAID COMPANY WAS HELD AS UNEXPLAINED CASH CREDIT IN THE CASE OF MUKTILAL LADURAM PROP. SHIVASHAKTI TRADING COMPANY, SENDHWA, FOR A.Y. 2014-15. IN THIS REGARDIT IS SUBMITTED THA T THE ACTS OF THE ABOVE CASE ARE NOT MADE KNOWN TO THE ASSESSEE COMPANY. IT IS MANDATORY FOR THE AUTHORITIES TO PROVIDE COPY OF EVIDENCES, IF TH E SAME IS BEING USED M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 40 AGAINST THE ASSESSEE. IT IS ALSO, PERTINENT TO NOTE THAT THE ASSESSMENT OF M/S JAYANT SECURITIES AND FINANCE LTD. WAS COMPLETE D U/S 143(3) (COPY ENCLOSED). THUS, THE ALL INGREDIENTS ARE AUTOMATICA LLY TREATED AS COMPLIED WITH AS THE ASSESSMENT IS COMPLETED U/S 143(3) OF T HE CASH CREDITOR COMPANY. AND THUS, THERE IS NO REASON TO TREAT THE CASH CREDITS IN THE NAME OF M/S JAYANT SECURITIES & FINANCE LTD., AS UN EXPLAINED ON THE STRENGTH OF ADDITION MADE IN OTHER CASES AND THEREF ORE, THE REASON ABOUT ALLEGED PAPER COMPANIES IS HAVING NO FORCE. IT IS ALSO, IMPORTANT TO NOTE THAT MOST OF THE LOA N CREDITS HAVE BEEN REPAID THROUGH PROPER BANKING CHANNELS. COPIES OF A CCOUNTS OF AFORESAID CREDITORS AND ENCLOSED HEREWITH. IN VIEW OF LEGAL AS WELL AS FACTURAL POSITION DISC USSED HEREINABOVE IT IS __RED BEYOND DOUBT THAT THERE WAS NO LACK OF INQUIRY IN THE CASE OF ASSESSEE COMPANY AND THUS, SHOW-CAUSE NOTICE SO ISS UED U/S 263 IS VOID AB-INITIO AND ------ IT IS PRAYED THAT THE PROCEED INGS SO INITIATED U/S 263 MAY KINDLY BE DROPPED AND OBLIGE. 8. LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT IN THE SHOW CAUSE NOTICE ISSUED U/S 263 OF THE ACT LD. PR. CIT HAS DOUBTED THE GENUINENESS AND CREDITWORTHINESS OF FOLLOWING 9 COMPANIES WHICH HAVE GIVEN UNSECURED LOAN TO THE ASSESSEE OF RS.5,82,50,000/-: S.NO. NAME OF THE COMPANY AMOUNT RECEIVED 1 M/S. APANAPAN MERCANTILE PVT. LTD. RS.33,00,000/- 2 M/S. BHIMTHAL NIRMAN PVT. LTD. RS.25,00,000/- 3 M/S. CONFIDENT VINIMAY PVT.LTD. RS.65,00,000/ - 4 M/S.CREST VANIJYA PVT. LTD. RS.31,00,000/- 5 M/S. GIELLE INVESTMENT PVT. LTD. RS.51,00,000/- M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 41 6 M/S. TROPICAL VYAPAR PVT. LTD. RS.28,00,000/- 7 M/S. WINSHER COMMERCIAL PVT. LTD. RS.89,00,000/- 8 M/S. JA YANT SECURITIES AND FINANCE LTD. RS.1,85,50,000/ - 9 M/S. GLITER DEAL MART PVT. LTD. RS.75,00,,000/- TOTAL RS.5,82,50,000/- 9. BUT LD. PR. CIT WHILE GIVING FINDING OF SETTING ASIDE THE ISSUE TO THE LD. ASSESSING OFFICER FOR EXAMINING THE UNSECUR ED LOANS HAS DIRECTED TO EXAMINE ALL THE 21 CASH CREDITORS WHO G AVE UNSECURED LOANS OF RS.21.07 CR. WHICH IN VIEW OF RATIO LAID DOWN IN FOLLOWING DECISIONS WAS NOT CORRECT AS THE ORDER U/S 263 OF T HE ACT CANNOT TRAVEL BEYOND THE SHOW CAUSE NOTICE:- A. CIT VS. CONTIMETERS ELECTRICALS (P) LTD. [2009] 317 ITR 249(DELHI) B. CIT VS. ASHISH RAJPAL [2010] 320 ITR 674 (DELHI) C. CIT VS. D.N. DOSANI (2008) 280 ITR 275 10. LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THA T LD. PR. CIT HAS HIMSELF OBSERVED THAT THE SOURCE OF UNSECURED LOANS RECEIVED FROM THE ALLEGED CASH CREDITORS WAS TRANSFERRED FRO M OTHER COMPANIES TO THE CASH CREDITORS. SO THE SOURCE OF S OURCE IS THROUGH BANKING CHANNEL ONLY. MOST OF THE CASH CRED ITORS HAVE BEEN ASSESSED UNDER THE PROVISIONS OF SECTION 143(3 ) OF THE ACT M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 42 AND NO ADVERSE VIEW HAS BEEN TAKEN BY THE REVENUE A UTHORITIES IN THE ASSESSMENT ORDER SO PASSED. ALL THE CASH CREDIT ORS ARE HAVING SUFFICIENT FUNDS TO GIVE LOAN TO THE ASSESSEE. THEY ARE HAVING SUFFICIENT SHARE CAPITAL, SHARE PREMIUM AND RESERVE S & SURPLUS AND ALSO CARRYING OUT REGULAR BUSINESS ACTIVITIES A ND ARE MOSTLY ENGAGED IN THE BUSINESS OF EARING INTEREST. MOST OF THESE COMPANIES HAVE REPLIED TO NOTICE U/S 133(6) OF THE ACT. DETAILED ENQUIRY WAS CONDUCTED BY THE LD. ASSESSING OFFICER TO EXAMINE THIS ASPECT. 11. LD. SR. COUNSEL FOR THE ASSESSEE FURTHER SUBMIT TED THAT PROVISO INSERTED BY THE FINANCE ACT 2010 W.E.F. 01. 04.2013 U/S 68 OF THE ACT IS NOT APPLICABLE IN THE INSTANT CASE AS THIS PROVISO REFERS TO THE CASH CREDITS DURING THE YEAR WHICH AR E IN THE NATURE OF SHARE APPLICATION MONEY, SHARE CAPITAL, SHARE PR EMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME. SPECIFICALLY IT DOES NOT TALK ABOUT THE UNSECURED LOANS WHERE AS IN THE INSTANT A PPEAL THE ASSESSEE HAVE MERELY RECEIVED UNSECURED LOAN FROM S OME COMPANIES FOR BUSINESS PURPOSE OF WHICH SOURCE OF S OURCE IS THROUGH BANKING CHANNEL AND THE SAME HAS BEEN REPAI D IN THE SUBSEQUENT YEARS AFTER PAYING REGULAR INTEREST AND DEDUCTING TAX M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 43 AT SOURCE ON THE SAME. 12. LD. SENIOR COUNSEL FOR THE ASSESSEE ALSO SUBMIT TED THAT THE CASE LAW OF CIT VS. AMITABH BACHCHAN (2016) 384 ITR 200 (SC) RELIED ON BY THE LD. PR. CIT IN THE IMPUGNED ORDER U/S 263 OF THE ACT IS DISTINGUISHABLE, AS THE FACTS IN THIS CASE A RE THAT THE ASSESSEE HAD FILED REVISED RETURN CLAIMING ADDITION AL EXPENSES. WHEN THE LD. ASSESSING OFFICER ENQUIRED ABOUT THESE ADDITIONAL EXPENSES THE ASSESSEE WITHDREW THIS CLAIM AND THE L D. ASSESSING OFFICER ACCEPTED THE SAME AND DID NOT MAKE ANY FURT HER ENQUIRY. THUS, IN THIS CASE THE ENQUIRY WHICH WAS TO BE COND UCTED WAS ABATED BY THE LD. ASSESSING OFFICER, WHEREAS IN THE PRESENT CASE DETAILED ENQUIRY HAVE BEEN CONDUCTED BY THE LD. ASS ESSING OFFICER CALLING REQUISITE INFORMATION AND ALSO ISSUING NOTI CE U/S 133(6) OF THE ACT WHICH WERE DULY REPLIED AND THUS THE EXPLAN ATION FILED BY THE ASSESSEE WAS FOUND TO BE SATISFACTORY IN THE OP INION OF THE LD. ASSESSING OFFICER. 13. LD. SENIOR COUNSEL FOR THE ASSESSEE FURTHER SUB MITTED THAT EVEN THOUGH DETAILED ENQUIRY WAS CONDUCTED BY THE L D. ASSESSING OFFICER, BUT DURING THE COURSE OF REVISIONARY PROCE EDINGS U/S 263 OF THE ACT LD. PR. CIT IS ALSO DUTY BOUND TO CONDUC T SUCH ENQUIRY M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 44 AS HE DEEM FIT BEFORE HOLDING THE ORDER OF THE LD. ASSESSING OFFICER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REV ENUE. IN THE INSTANT CASE, LD. PR. CIT HAS REFERRED TO THE LETTE RS WRITTEN BY HIM TO INVESTIGATION DIRECTORATE, KOLKATA DATED 23.03.3 013 AND PR. DIT (INVESTIGATION), BHOPAL, AHMEDABAD AND NAGPUR B UT SURPRISINGLY, LD. PR. CIT HAS PASSED THE IMPUGNED O RDER WITHOUT RECEIVING ANY REPLIES TO THE LETTERS SO SENT WHICH SHOWS THAT THE IMPUGNED ORDER WAS PASSED BY THE LD. PR. CIT WITHOU T CONDUCTING ANY FURTHER ENQUIRY WHICH IN ITSELF MAKES THE PROCE EDINGS VOID IN VIEW OF THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF D.G. HOUSING PROJECTS LTD. 92012) 343 ITR 329 (DELHI) . 14. FURTHER RELIANCE WAS ALSO PLACED ON THE FOLLOWI NG DECISIONS: S.NO PARTICULARS PAGE NOS. 01 CADILA PHARMACEUTICALS LTD (ITAT AHMEDABAD BENCH) 01-10 02 MADHUSUDAN INDUSTRIES LTD (ITAT AHMEDABAD BENCH) 13-22 03 PR COMMISSIONER OF INCOME-TAX VS NARAYAN BALMUKAND DUBEY [2017 30 ITJ 335 (M.P)] 23-35 04 DIRECTOR OF INCOME TAX VS JYOTI FOUNDATION [(2013) 357 ITR 355 (DELHI)] 36-41 05 COMMISSIONER OF INCOME TAX VS RATLAM COAL ASH. CO [(1988) 171 ITR 141 (M.P)] 42-43 06 COMMISSIONER OF INCOME TAX VS MEHROTRA BROTHERS [(2004) 270 ITR 157 (M.P)] 43-44 07 COMMISSIONER OF INCOME TAX, DELHI VS INTERNATIONAL TRAVEL HOUSE LTD [(2012 ITR 554 (DELHI)] 45-51 M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 45 08 INCOME TAX OFFICER VS D.G HOUSING PROJECTS LTD. [(2012) 343 ITR 329 (DELHI)] 52-59 09 M/S AMIRA PURE FOODS PVT LTD (ITAT DELHI BENCH) 60-96 10 M/S NARAYAN TATU RANE (ITAT MUMBAI BENCH) 97-117 11 PR COMMISSIONER OF INCOME TAX V DELHI AIRPORT METR O EXPRESS PVT LTD (HIGH COURT OF DELHI) 118-122 12 MOIL LTD V COMMISSIONER OF INCOME TAX-1 NAGPUR((201 7 81 TAXMAN 420 BOMBAY) 123-126 13 COMMISSIONER OF INCOME TAX-DELHI V CONTIMETERS ELECTRICALS (P) LTD [(2009) 178 TAXMAN 422 (DELHI) 127-129 14 COMMISSIONER OF INCOME TAX-XIII V ASHISH RAJPAL [(2 009) 180 TAXMAN 623 (DELHI)] 130-140 15. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE (DR) VEHEMENTLY ARGUED SUPPORTING THE DETAILED FINDING OF LD. PR. C IT AND VARIOUS JUDGMENTS AND DECISIONS REFERRED THEREIN WHICH ALRE ADY STANDS REPRODUCED IN THE PRECEDING PARAS. VIDE LETTER DATE D 25.05.2021 LD. DR FURNISH ENQUIRY REPORT IN THE CASE OF ASSESS EE WHICH ARE DATED 06.11.2018 ISSUED BY DIT(INVESTIGATION) KOLKA TA. 16. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE VAR IOUS PAPER BOOK & JUDGMENTS REFERRED AND RELIED BY THE ASSESSE E. THOUGH THE ASSESSEE HAS RAISES SIX GROUNDS OF APPEAL BUT T HE SOLE GRIEVANCE IS CHALLENGING THE ORDER OF LD. PR. CIT W RONGLY INVOKING THE PROVISION OF SECTION 263 OF THE ACT HOLDING THE ORDER U/S 143(3) OF THE ACT DATED 07.03.2016 AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND FURTHER DIRECTING TH E LD. AO TO M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 46 REEXAMINE ALL THE UNSECURED LOANS TAKEN BY THE COMP ANY DURING F.Y. 20120-13. 17. WE OBSERVE THAT THE ASSESSEE IS A BUILDER AND D EVELOPER. LOSS WAS DECLARED IN THE E-RETURN OF INCOME FILED U/S 13 9(1) OF THE ACT. CASE SELECTED FOR SCRUTINY THROUGH CASS FOR THE REA SON LARGE UNSECURED LOANS TAKEN DURING THE YEAR AND ITRS OF F EW COMPANIES NOT FILED. DETAILED QUESTIONNAIRE ISSUED BY THE LD . AO. NOTICE U/S 142(1) WAS DULY REPLIED. INDEPENDENT INFORMATIO N CALLED U/S 133(6) OF THE ACT FROM VARIOUS CASH CREDITORS. AFTE R MAKING FEW ADDITION INCOME ASSESSED U/S 143(3) OF THE ACT. SUB SEQUENTLY, NOTICE U/S 263 OF THE ACT WAS ISSUED BY LD. PR. CIT MENTIONING FEW CASH CREDITORS ALLEGED TO BE ACCOMMODATION ENTR Y PROVIDER. ASSESSEE APPLIED FOR INSPECTING THE ASSESSMENT RECO RDS AS SUBMITTED BY THE ASSESSEE IN THE SUBMISSION FILED D URING THE REVISIONARY PROCEEDINGS THAT AUDIT OBJECTION WAS WI TH REGARD TO ONE OF THE CASH CREDITOR AND CERTAIN DOCUMENTS WERE NEEDED. THE SAME STOOD FILED IN THE ASSESSMENT RECORDS AND LD. AO DULY REPLIED TO THE AUDIT TEAM. 18. HOWEVER, LD. PR. CIT HAS OBSERVED THAT HE HAD M ADE AN INDEPENDENT DECISION ON THE BASIS OF HIS EXAMINATIO N OF M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 47 ASSESSMENT RECORDS TO INVOKE THE PROVISIONS OF SECT ION 263 OF THE ACT AND ISSUED SHOW CAUSE NOTICE. 19. BEFORE PROCEEDING TO EXAMINE THE FACTS OF THE C ASE AS TO WHETHER LD. PR. CIT HAS RIGHTLY ASSUMED JURISDICTIO N U/S 263 OF THE ACT AND WHETHER HE HAS JUSTIFIED IN HOLDING THE ORDER OF LD. A.O AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, WE WILL FIRST GO THROUGH THE RELEVANT PROVISION OF SECTION 263 OF THE ACT AND SETTLED JUDICIAL PRECEDENCE:- 263. (1) THE PRINCIPAL COMMISSIONER OR COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT , AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFI CER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD A ND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSA RY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUST IFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CAN CELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. EXPLANATION 1.--FOR THE REMOVAL OF DOUBTS, IT IS HE REBY DECLARED THAT, FOR THE PURPOSES OF THIS SUB-SECTION,-- (A) AN ORDER PASSED ON OR BEFORE OR AFTER THE 1ST D AY OF JUNE, 1988 BY THE ASSESSING OFFICER SHALL INCLUDE-- (I) AN ORDER OF ASSESSMENT MADE BY THE ASSISTANT CO MMISSIONER OR DEPUTY COMMISSIONER OR THE INCOME-TAX OFFICER ON TH E BASIS OF THE DIRECTIONS ISSUED BY THE JOINT COMMISSIONER UNDER SECTION 144A ; (II) AN ORDER MADE BY THE JOINT COMMISSIONER IN EXE RCISE OF THE POWERS OR IN THE PERFORMANCE OF THE FUNCTIONS OF AN ASSESS ING OFFICER CONFERRED ON, OR ASSIGNED TO, HIM UNDER THE ORDERS OR DIRECTI ONS ISSUED BY THE BOARD OR BY THE PRINCIPAL CHIEF COMMISSIONER OR CHI EF COMMISSIONER OR PRINCIPAL DIRECTOR GENERAL OR DIRECTOR GENERAL OR P RINCIPAL COMMISSIONER OR COMMISSIONER AUTHORISED BY THE BOARD IN THIS BEH ALF UNDER SECTION 120 ; (B) 'RECORD' SHALL INCLUDE AND SHALL BE DEEMED ALWA YS TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PROCEEDING UNDER THIS A CT AVAILABLE AT THE TIME OF EXAMINATION BY THE PRINCIPAL COMMISSIONER O R COMMISSIONER; (C) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER OF AN Y APPEAL FILED ON OR M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 48 BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988, THE POWE RS OF THE PRINCIPAL COMMISSIONER OR] COMMISSIONER UNDER THIS SUB-SECTIO N SHALL EXTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED TO SUCH MAT TERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL. EXPLANA TION 2.--FOR THE PURPOSES OF THIS SECTION, IT IS HEREBY DECLARED THA T AN ORDER PASSED BY THE ASSESSING OFFICER SHALL BE DEEMED TO BE ERRONEO US IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, IF, IN THE OPINION OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER,-- (A) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE; (B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQUIRING INTO THE CLAIM; (C) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH ANY ORDER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119 ; OR (D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WI TH ANY DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE, RENDERED BY T HE JURISDICTIONAL HIGH COURT OR SUPREME COURT IN THE CASE OF THE ASSESSEE OR ANY OTHER PERSON. (2) NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) AF TER THE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH T HE ORDER SOUGHT TO BE REVISED WAS PASSED. (3) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTI ON (2), AN ORDER IN REVISION UNDER THIS SECTION MAY BE PASSED AT ANY TI ME IN THE CASE OF AN ORDER WHICH HAS BEEN PASSED IN CONSEQUENCE OF, OR T O GIVE EFFECT TO, ANY FINDING OR DIRECTION CONTAINED IN AN ORDER OF THE A PPELLATE TRIBUNAL, NATIONAL TAX TRIBUNAL, THE HIGH COURT OR THE SUPREM E COURT. EXPLANATION.--IN COMPUTING THE PERIOD OF LIMITATION FOR THE PURPOSES OF SUB- SECTION (2), THE TIME TAKEN IN GIVING AN OPPOR TUNITY TO THE ASSESSEE TO BE REHEARD UNDER THE PROVISO TO SECTION 129 AND ANY PERIOD DURING WHICH ANY PROCEEDING UNDER THIS SECTION IS STAYED B Y AN ORDER OR INJUNCTION OF ANY COURT SHALL BE EXCLUDED. 20. ON A BARE PERUSAL OF THE SUB-SECTION (1) WOULD REVEAL THAT THE POWERS OF REVISION GRANTED BY SECTION 263 TO THE LEARNED COMMISSIONER HAVE FOUR COMPARTMENTS. IN THE FIRST P LACE, THE LEARNED COMMISSIONER MAY CALL FOR AND EXAMINE THE R ECORDS OF ANY PROCEEDINGS UNDER THIS ACT. FOR CALLING OF THE RECORD AND M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 49 EXAMINATION, THE LEARNED COMMISSIONER WAS NOT REQUI RED TO SHOW ANY REASON. IT IS A PART OF HIS ADMINISTRATIVE CONT ROL TO CALL FOR THE RECORDS AND EXAMINE THEM. THE SECOND FEATURE WOULD COME WHEN HE WILL JUDGE AN ORDER PASSED BY AN ASSESSING OFFIC ER ON CULMINATION OF ANY PROCEEDINGS OR DURING THE PENDEN CY OF THOSE PROCEEDINGS. ON AN ANALYSIS OF THE RECORD AND OF TH E ORDER PASSED BY THE ASSESSING OFFICER, HE FORMED AN OPINION THAT SUCH AN ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BY THIS STAGE THE LEARNED COMMISSIONER WAS NOT REQUIRED THE ASSISTANCE OF THE ASSESSEE. THEREAFTER THE THIRD STAGE WOULD COME. THE LEARNED COMMISSIONER WOULD ISSUE A SHOW- CAUSE NOTICE POINTING OUT THE REASONS FOR THE FORMA TION OF HIS BELIEF THAT ACTION UNDER SECTION 263 IS REQUIRED ON A PARTICULAR ORDER OF THE ASSESSING OFFICER. AT THIS STAGE THE O PPORTUNITY TO THE ASSESSEE WOULD BE GIVEN. THE LEARNED COMMISSIONER H AS TO CONDUCT AN INQUIRY AS HE MAY DEEM FIT. AFTER HEARIN G THE ASSESSEE, HE WILL PASS THE ORDER. THIS IS THE FOURT H COMPARTMENT OF THIS SECTION. THE LEARNED COMMISSIONER MAY ANNUL THE ORDER OF THE ASSESSING OFFICER. HE MAY ENHANCE THE ASSESSED INCOME BY MODIFYING THE ORDER. M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 50 21. IT IS WELL SETTLED LAW THAT FOR INVOKING THE PR OVISIONS OF SECTION 263 OF THE ACT BOTH THE CONDITIONS THAT THE ORDER MUST BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E NEEDS TO BE SATISFIED. THIS RATIO STANDS LAID DOWN BY VARIOUS H ON'BLE COURTS. 22. HON'BLE JURISDICTIONAL HIGH COURT OF MADHYA PRA DESH IN THE CASE OF H.H. MAHARAJA RAJA POWER DEWAS (1983) 15 TAXMAN 363 IN PARA 10 OF THIS ORDER HELD THAT 'HOWEVER, THE FIRST ARGUMENT, VIZ., THAT AN ASSESSMENT ORDER WITHOUT COMPLIANCE W ITH THE PROCEDURE LAID DOWN IN SECTION 144B IS ERRONEOUS BUT NOT PREJUDICIAL TO THE INTERESTS OF THE REVENUE CONFERR ING REVISIONAL JURISDICTION ON THE COMMISSIONER UNDER SECTION 263(1) , HAS FORCE. UNDER SECTION 263(1) TWO PRE-REQUISITES MUST BE PRESENT BEFORE THE COMMISSIONER CAN EXERCISE THE REVISIONAL JURIS DICTION CONFERRED ON HIM. FIRST IS THAT THE ORDER PASSED BY THE ITO MUST BE ERRONEOUS. SECOND IS THAT THE ERROR MUST BE SUCH TH AT IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF THE ORDER IS ERRONEOUS BUT IT IS NOT PREJUDICIAL TO THE INTERESTS OF THE R EVENUE, THE COMMISSIONER CAN NOT EXERCISE THE REVISIONAL POWERS UNDER SECTION 263(1) OF THE ACT. THERE CANNOT BE ANY PREJUDICE TO THE R EVENUE ON ACCOUNT OF THE ITO'S FAILURE TO FOLLOW THE PROCEDUR E PRESCRIBED M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 51 UNDER SECTION 144B , AND UNLESS THE PREJUDICE TO THE INTERESTS OF THE REVENUE IS SHOWN, THE JURISDICTION UNDER SECTION 263(1) CANNOT BE EXERCISED BY THE COMMISSIONER, EVEN THOUGH THE ORDE R IS ERRONEOUS. THE ARGUMENT THAT SUCH AN ORDER MAY POSSIBLY BE CHA LLENGED IN APPEAL BY THE ASSESSEE, AND FOR THIS REASON IT IS P REJUDICIAL TO THE INTERESTS OF THE REVENUE, HAS NO MERIT. SECTION 263(1) CLEARLY CONTEMPLATES THAT THE ORDER OF ASSESSMENT ITSELF SH OULD BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND THI S PREJUDICE HAS TO BE PROVED BY REFERENCE TO THE ASSESSMENT ORDER ONLY . IT CANNOT BE ARGUED THAT THERE IS SOME POSSIBILITY OF THE ASSESS MENT ORDER BEING CHALLENGED OR REVISED IN APPEAL AND, THEREFORE, ON ACCOUNT OF THIS CONTINGENCY, THE ORDER BECOMES PREJUDICIAL TO THE I NTERESTS OF THE REVENUE. ' [EMPHASIS SUPPLIED] 23. HON'BLE APEX COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. - [2000] 243 ITR 83 - ORDER PRONOUNCED ON 10.02.2000 - HEAD NOTE - 'SECTION 263 OF THE INCOME-TAX ACT, 1961 - REVISION - OF ORDERS PREJUDICIAL TO INTERESTS OF REVENUE - ASSESS MENT YEAR 1983- 84 - WHETHER IN ORDER TO INVOKE SECTION 263 ASSESSI NG OFFICER'S ORDER MUST BE ERRONEOUS AND ALSO PREJUDICIAL TO REV ENUE AND IF ONE OF THEM IS ABSENT, I.E., IF ORDER OF INCOME-TAX OFF ICER IS ERRONEOUS BUT M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 52 IS NOT PREJUDICIAL TO REVENUE OR IF IT IS NOT ERRON EOUS BUT IS PREJUDICIAL TO REVENUE, RECOURSE CANNOT BE HAD TO S ECTION 263(1) - HELD, YES - WHETHER IF DUE TO AN ERRONEOUS ORDER OF ITO, REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CE RTAINLY BE PREJUDICIAL TO INTERESTS OF REVENUE - HELD, YES - A SSESSEE-COMPANY ENTERED INTO AGREEMENT FOR SALE OF ESTATE OF RUBBER PLANTATION - AS PURCHASER COULD NOT PAY INSTALLMENTS AS SCHEDULED I N AGREEMENT, EXTENSION OF TIME FOR PAYMENT OF INSTALLMENTS WAS G IVEN ON CONDITION OF VENDEE PAYING DAMAGES FOR LOSS OF AGRI CULTURAL INCOME AND ASSESSEE PASSED RESOLUTION TO THAT EFFECT - ASS ESSEE SHOWED THIS RECEIPT AS AGRICULTURAL INCOME - RESOLUTION PA SSED BY ASSESSEE WAS NOT PLACED BEFORE ASSESSING OFFICER - ASSESSING OFFICER ACCEPTED ENTRY IN STATEMENT OF ACCOUNT FILED BY ASS ESSEE AND ACCEPTED SAME - COMMISSIONER UNDER SECTION 263 HEL D THAT SAID AMOUNT WAS NOT CONNECTED WITH AGRICULTURAL ACTIVITI ES AND WAS LIABLE TO BE TAXED UNDER HEAD 'INCOME FROM OTHER SO URCES' - WHETHER, WHERE ASSESSING OFFICER HAD ACCEPTED ENTRY IN STATEMENT OF ACCOUNT FILED BY ASSESSEE, IN ABSENCE OF ANY SUP PORTING MATERIAL WITHOUT MAKING ANY ENQUIRY, EXERCISE OF JURISDICTIO N BY COMMISSIONER UNDER SECTION 263(1) WAS JUSTIFIED - H ELD, YES M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 53 24. HON'BLE GUJARAT HIGH COURT IN THE CASE OF SMT. MINALBEN S. PARIKH - [1995] 215 ITR 81 - ORDER PRONOUNCED ON 17.10.1994 - PARA 12 - 'FROM THE AFORESAID, IT CAN WELL BE SAID THAT THE W ELL- SETTLED PRINCIPLE IN CONSIDERING THE QUESTION AS TO WHETHER AN ORDER IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE OR N OT IS TO ADDRESS ONESELF TO THE QUESTION WHETHER THE LEGITIMATE REVE NUE DUE TO THE EXCHEQUER HAS BEEN REALISED OR NOT OR CAN BE REALIS ED OR NOT IF HIS ORDERS UNDER CONSIDERATION ARE ALLOWED TO STAND. FO R ARRIVING AT THIS CONCLUSION, IT BECOMES NECESSARY AND RELEVANT TO CONSIDER WHETHER THE INCOME IN RESPECT OF WHICH TAX IS TO BE REALISED, HAS BEEN SUBJECTED TO TAX OR NOT OR IF IT IS SUBJECTED TO TAX, WHETHER IT HAS BEEN SUBJECTED TO TAX AT A RATE AT WHICH IT COU LD YIELD THE MAXIMUM REVENUE IN ACCORDANCE WITH LAW OR NOT. IF I NCOME IN QUESTION HAS BEEN TAXED AND LEGITIMATE REVENUE DUE IN RESPECT OF THAT INCOME HAD BEEN REALISED, THOUGH AS A RESULT O F ERRONEOUS ORDER HAVING BEEN MADE IN THAT RESPECT, IN OUR OPIN ION, THE COMMISSIONER CANNOT EXERCISE POWERS FOR REVISING TH E ORDER UNDER SECTION 263 MERELY ON THE BASIS THAT THE ORDER UNDER CONSIDERATION IS ERRONEOUS. IF THE MATERIAL IN THAT REGARD IS AVAILABLE ON THE RECORD OF THE ASSESSEE CONCERNED, THE COMMISSIONER CANNOT EXERCISE HIS POWERS BY IGNORING THAT MATERIAL M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 54 WHICH LINKS THE INCOME CONCERNED WITH THE TAX REALI ZATION MADE THEREON. THE TWO QUESTIONS ARE INTER-LINKED AND THE AUTHORITY EXERCISING POWERS UNDER SECTION 263 IS UNDER AN OBLIGATION TO CONSIDER THE ENTIRE MATERIAL ABOUT THE EXISTENCE OF INCOME AND THE TAX WHICH IS REALIZABLE IN ACCORDANCE WITH LAW AND FURTHER WHAT TAX HAS IN FACT BEEN REALISED UNDER THE ALLEGED ASS ESSMENT ORDERS.[EMPHASIS SUPPLIED] 25. HON'BLE KARNATAKA HIGH COURT IN THE CASE OF V. G. KRISHNAMURTHY - [1985] 20 TAXMAN 65 - ORDER PRONOUNCED ON 19.03.1984 - PARA 10 - ' SECTION 263 CAN BE INVOKED BY THE COMMISSIONER ONLY WHEN HE PRIMA FACIE FINDS THAT TH E ORDER MADE BY THE ITO WAS ERRONEOUS AND WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BOTH THESE FACTORS MUST SIMULTANEOUSLY EXIST. AN ORDER THAT IS ERRONEOUS MUST ALSO HAVE RESULTED IN LOSS O F REVENUE OR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. UNLES S BOTH THESE FACTORS CO-EXIST OR EXIST SIMULTANEOUSLY, THE COMMI SSIONER CANNOT INVOKE OR RESORT TO SECTION 263 . IT CANNOT BE EXERCISED TO CORRECT EVERY CONCEIVABLE ERROR COMMITTED BY AN ITO. BEFORE THE SUOMOTO POWER OF REVISION CAN BE EXERCISED, THE COMMISSIONE R MUST AT LEAST PRIMA FACIE FIND BOTH THE REQUIREMENTS OF SECTION 263 , NAMELY, THAT M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 55 THE ORDER SOUGHT TO BE REVISED IS PRIMA FACIE ERRON EOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THE OTHER FACTOR WAS ABSENT, THE COMMISSIONER CANNOT EXERCISE THE SU OMOTO POWER OF REVISION UNDER SECTION 263 .' [EMPHASIS SUPPLIED] 26. AT THIS STAGE, BEFORE CONSIDERING THE MULTI-FOL D CONTENTIONS OF THE LEARNED REPRESENTATIVES, WE DEEM IT PERTINENT T O TAKE NOTE OF THE FUNDAMENTAL TESTS PROPOUNDED IN VARIOUS JUDGMEN TS RELEVANT FOR JUDGING THE ACTION OF THE COMMISSIONER OF INCOM E-TAX TAKEN UNDER SECTION 263 . THE INCOME-TAX APPELLATE TRIBUNAL IN THE CASE OF MRS. KHAIIZA S. OOMERBHOY V. ITO [2006] 101 TIJ 1095 (MUM ), ANALYSED IN DETAIL VARIOUS AUTHORITATIVE PRONOUNCEM ENTS INCLUDING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83 (SC) AND HAS PROPOUNDED THE FOLLOWING BROADER PRINCIPLE TO JUDGE THE ACTION OF THE COMMISSIONER OF INCOME-TAX TAKEN UNDE R SECTION 263 . (I) THE COMMISSIONER OF INCOME-TAX MUST RECORD SATI SFACTION THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOU S AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BOTH T HE CONDITIONS MUST BE FULFILLED. (II) SECTION 263 CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 56 AND IT WAS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. (III) AN INCORRECT ASSUMPTION OF FACTS OR AN INCORR ECT APPLICATION OF LAW WILL SUFFICE THE REQUIREMENT OF ORDER BEING ERRONEOUS. (IV) IF THE ORDER IS PASSED WITHOUT APPLICATION OF MIND, SUCH ORDER WILL FALL UNDER THE CATEGORY OF ERRONEOUS ORD ER. (V) EVERY LOSS OF REVENUE CANNOT BE TREATED AS PREJ UDICIAL TO THE INTERESTS OF THE REVENUE AND IF THE ASSESSING O FFICER HAS ADOPTED ONE OF THE COURSES PERMISSIBLE UNDER LAW OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HA S TAKEN ONE VIEW WITH WHICH THE COMMISSIONER OF INCOME-TAX DOES NOT AGREE. IF CANNOT BE TREATED AS ERRONEOUS ORDER, UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAI NABLE UNDER LAW . (VI) IF WHILE MAKING THE ASSESSMENT, THE ASSESSING OFFICER EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMI NE THE INCOME, THE COMMISSIONER OF INCOME-TAX, WHILE EXERC ISING HIS POWER UNDER SECTION 263 IS NOT PERMITTED TO SUBSTITUTE HIS ESTIMATE OF INCOME IN PLACE OF THE INCOME ESTIM ATED BY THE ASSESSING OFFICER. (VII) THE ASSESSING OFFICER EXERCISES QUASI-JUDICIA L POWER VESTED IN HIM AND IF HE EXERCISES SUCH POWER IN ACC ORDANCE WITH LAW AND ARRIVE AT A CONCLUSION, SUCH CONCLUSIO N CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMIS SIONER OF INCOME-TAX DOES NOT FEEL SATISFIED WITH THE CONC LUSION. (VIII) THE COMMISSIONER OF INCOME-TAX, BEFORE EXERC ISING HIS JURISDICTION UNDER SECTION 263 MUST HAVE MATERIAL ON RECORD TO ARRIVE AT A SATISFACTION. (IX) IF THE ASSESSING OFFICER HAS MADE ENQUIRIES DU RING THE COURSE ASSESSMENT PROCEEDINGS ON THE RELEVANT ISSUE S AND THE ASSESSEE HAS DETAILED EXPLANATION BY A LETTER I N WRITING AND THE ASSESSING ALLOWS THE CLAIM ON BEING SATISFI ED WITH THE EXPLANATION OF THE ASSESSEE, THE DECISION OF TH E M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 57 ASSESSING OFFICER CANNOT BE HELD TO BE SIMPLY BECAU SE IN HIS ORDER HE DOES NOT MAKE AN ELABORATE DISCUSSION IN T HAT REGARD. 27. NOW EXAMINING THE FACTS OF THE INSTANT APPEAL I N LIGHT OF THE ABOVE STATED LEGAL POSITION AND BROADER PRINCIPLES LAID DOWN, WE NOTE THAT IN THE SHOW CAUSE NOTICE ISSUED U/S 263 O F THE ACT BY LD. PR. CIT RAISED DOUBTS WITH REGARD TO FOLLOWING 9 COMPANIES FROM WHICH TOTAL UNSECURED LOANS TO THE TUNE OF RS. 5,82,00,000/- WAS TAKEN DURING THIS YEAR: S.NO. NAME OF THE COMPANY AMOUNT RECEIVED 1 M/S. APANAPAN MERCANTILE PVT. LTD. RS.33,00,000/- 2 M/S. BHIMTHAL NIRMAN PVT. LTD. RS.25,00,000/- 3 M/S. CONFIDENT VINIMAY PV T.LTD. RS.65,00,000/- 4 M/S.CREST VANIJYA PVT. LTD. RS.31,00,000/- 5 M/S. GIELLE INVESTMENT PVT. LTD. RS.51,00,000/- 6 M/S. TROPICAL VYAPAR PVT. LTD. RS.28,00,000/- 7 M/S. WINSHER COMMERCIAL PVT. LTD. RS.89,00,000/- 8 M/S. JAYANT SECURITIES AND FINANCE LTD. RS.1,85,50,000/- 9 M/S. GLITER DEAL MART PVT. LTD. RS.75,00,,000/- TOTAL RS.5,82,50,000/- 28. OBSERVATION OF LD. PR. CIT WAS THAT MOST OF THE ABOVE STATED M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 58 COMPANIES ARE KOLKATA BASED AND HAVE GIVEN UNSECURE D LOANS TO ASSESSEE WITHOUT ANY SECURITY. ALL THESE COMPANIES ARE NOT HAVING ANY MAJOR FINANCIAL ACTIVITIES AND THEY APPEAR TO B E PAPER COMPANIES. HOWEVER, IN THE IMPUGNED ORDER LD. PR. C IT ON ONE HAND REFERRED TO 9 CASH CREDITORS IN THE SHOW CAUSE NOTICE AND ALSO DISCUSSED THE FINANCIAL SHORT COMING AND RAISE D DOUBTS ON THE WORKING OF ALL THESE 9 CASH CREDITORS BUT SURPR ISINGLY IN THE END WHILE SETTING ASIDE THE ORDER U/S 143(3) OF THE ACT DATED 07.03.2016 DIRECTED THE ASSESSEE TO EXAMINE ALL THE UNSECURED LOAN TAKEN BY THE ASSESSEE COMPANY DURING F.Y. 2012 -13 AMOUNTING TO RS.21.07 CR. IT IS A SETTLED JUDICIAL PRINCIPLE AND HELD BY VARIOUS HON'BLE COURTS INCLUDING THOSE IN T HE CASE OF CIT VS. CONTIMETERS ELECTRICALS (P) LTD. [2009] 317 ITR 249(DELHI), CIT VS. ASHISH RAJPAL [2010] 320 ITR 674 (DELHI) & C. C IT VS. D.N. DOSANI (2008) 280 ITR 275 THAT LD. PR. CIT CANNOT GO BEYOND THE REASONS MENTIONED IN THE SHOW CAUSE NOTICE AND THER EFORE, GIVING DIRECTION TO EXAMINE ALL THE UNSECURED LOANS IS PRIMA FACIE NOT AT ALL JUSTIFIED AND BEYOND JURISDICTION OF LD. PR. CI T. WE WILL, THEREFORE, CONFINE OUR FURTHER ADJUDICATION WITH RE GARD TO THE 9 LENDER COMPANIES MENTIONED IN THE SHOW CAUSE NOTICE ISSUED U/S 263 OF THE ACT. M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 59 29. NOW COMING TO THE ASPECTS THAT WHETHER LD. AO C ONDUCTED SUFFICIENT ENQUIRY WITH REGARD TO UNSECURED LOANS T AKEN BY THE ASSESSEE COMPANY DURING THE YEAR. IT IS NOT DISPUTE D AT THE END OF REVENUE THAT NOTICE ISSUED BY THE LD. AO UNDER CASS WAS WITH REGARD TO THE REASON OF LARGE UNSECURED LOANS REC EIVED BY THE ASSESSEE DURING THE YEAR. AFTER SELECTING THE CASE FOR SCRUTINY UNDER CASS, NOTICES U/S 143(2) & 142(1) WERE SERVE D ON 29.12.2014AND17.11.2015 WHICH WAS REPLIED ON 30.12.2015 ENCLOSING COPY OF ITR COMPUTATION, DETAI LS OF BUSINESS, BANK STATEMENT AND TAX AUDIT REPORTS. AGA IN A DETAILED QUESTIONNAIRE WAS ISSUED ON 12.01.2016 IN CONNECTIO N TO ASSESSMENT PROCEEDINGS DIRECTING TO THE ASSESSEE TO REPLY TO 24 POINTS WHICH INCLUDED VARIOUS DETAILS OF ITEMS APPE ARING IN PROFIT AND LOSS AND BALANCE SHEET. SPECIFIC INFORMATION WA S CALLED BY LD. AO WITH REGARD TO UNSECURED LOANS TAKEN DURING THE YEAR IN POINT NOS.15 TO 19 WHICH ARE REPRODUCED BELOW: 15. PLEASE GIVE THE DETAILS OF ANY LOANS OR DEPOSIT S OR THE AGGREGATE OF ANY SUCH LOANS OR DEPOSITS EXCEEDING R S.20,000/- OR MORE TAKEN OR ACCEPTED OTHERWISE THAN BY AN ACCOUNT OF PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT. IF THERE ARE AN Y, YOU ARE REQUESTED TO EXPLAIN THE REASONS FOR THE SAME IN DE TAIL, WITHIN THE M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 60 MEANING OF SECTION 269SS AND AS TO WHY APPROPRIATE ACTION BE NOT TAKEN AGAINST YOU AS PER LAW. 16. PLEASE GIVE THE DETAILS OF ANY LOANS OR DEPOSIT S OR THE AGGREGATE OF ANY SUCH LOANS OR DEPOSITS EXCEEDING R S.20,000/- OR MORE TAKEN OR ACCEPTED OTHERWISE THAN BY AN ACCOUNT OF PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT. IF THERE ARE AN Y, YOUR ARE REQUESTED TO EXPLAIN THE REASONS FOR THE SOME IN DE TAIL WITHIN THE MEANING OF SECTION 269T AND AS TO WHY APPROPRIATE A CTIONS NOT TAKEN AGAINST YOUR AS PER LAW. 17. PLEASE GIVE THE DETAILS OF THE INCOME IN THE SH ARE CAPITAL OR SHARE APPLICATION MONEY WITH THE NAMES, COMPLETE PO STAL ADDRESSES OF THE SUBSCRIBERS AND THE MODE OF RECEIP T OF MONEY WITH DETAILS. PLEASE FURNISH THE CONFIRMATION OF SU CH SHARE CAPITAL WITH THE PAN OF SUCH SUBSCRIBERS. YOU ARE KINDLY RE QUESTED TO PROVE THE IDENTITY OF THE SUBSCRIBERS, THE GENUINEN ESS OF THE TRANSACTIONS AND THE CREDIT WORTHINESS OF THE SUBSC RIBERS AS REQUIRED AS PER LAW. 18. PLEASE GIVE THE CONFIRMATION OF ALL UNSECURED L OANS TAKEN DURING THE PREVIOUS YEAR AND OF ALL ADDITIONS TO TH E OLD UNSECURED LOANS. PLEASE GIVE THE CONFIRMATIONS OF THE SQUARED -UP LOANS AS WELL. THE CONFIRMATIONS SHOULD BE IN THE STANDARD F ORMAT(COMPLETE IN ALL RESPECT) GIVING ALL DETAILS LIKE THE LEDGER ACCOUNTS, PAN OF LENDER, COMPLETE POSTAL ADDRESS, HIS SIGNATURE WITH DATE, THE SIGNATURE OF THE ASSESSEE AND SO ON AND SO FORTH. Y OU ARE KINDLY REQUESTED TO PROVE THE IDENTITY OF THE SUBSCRIBERS, THE GENUINENESS OF THE TRANSACTIONS AND THE CREDITWORTHINESS OF THE SUBSCRIBERS AS REQUIRED AS PER LAW. M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 61 19. PLEASE GIVE THE DETAILS OF THE SECURITY IN THE FORM OF PROPERTIES/ASSETS/VALUABLES ETC. MORTGAGED WITH THE BANKS ETC. FOR TAKING LOANS AND OTHER FACILITIES ETC. PLEASE ALSO PROVIDE THE OWNERSHIP DETAILS OF SUCH SECURITIES AND THE INCOME DERIVED, IF ANY FROM SUCH PROPERTIES. 30. THE ASSESSEE REPLIED ON 16.02.2016 FILING SOME OF THE DETAILS STATING AS FOLLOWS:- 1. DETAILS OF PURCHASE OF LAND HAS BEEN ANNEXED IN ANNEXURE NO.1 CONTAINING DETAILS OF SELLER OF THE ASSETS, SU RVEY NO., AREAS IN HECTARE, COST OF LAND, STAMP VALUE, REGIST RY EXPENSES AND TOTAL VALUE OF LAND. IN THE ABOVE ANNEXURE S.NO .28 REGISTRY EXPENSES AMOUNTING TO RS.3,81,220/- HAVE N OT BEEN DEBITED IN PROFIT & LOSS ACCOUNT. ASSESSEE WASNT T O VOLUNTARILY OFFER THE AMOUNT OF RS.3,81,220/- TO BU Y PEACE AND AVOID LITIGATION WITH THE DEPARTMENT. 2. CONFIRMATION, BALANCE SHEET, PROFIT & LOSS ACCOU NT & ACKNOWLEDGEMENT OF GILLE INVESTMENT LIMITED HAS BEE N ANNEXED IN ANNEXURE NO.2 31. AGAIN ON 08.02.2016 ANOTHER REPLY WAS SUBMITTED , REPLYING TO THE POINTS RAISED BY THE LD. AO AND IN PARA 11 OF T HIS REPLY (PAGE ON 175 OF THE PAPER BOOK) ASSESSEE FILED THE CONFIR MATION OF THE UNSECURED LOANS AUDITED BALANCE SHEET, BANK STATEME NT, ACKNOWLEDGEMENT AND COMPUTATION OF INCOME TAX RETUR NS OF FOLLOWING LENDER COMPANIES: M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 62 1) APNAPAN MERCHANTILE PRIVATE LIMITED 2) BERYL DRUGS LIMITED 3) BERYL SECURITIES LIMITED 4) BHIMTAL NIRMAN PRIVATE LIMITED 5) 5) CMM INFRAPROJECTS LIMITED 6) CONFIDENT VINIMAY PRIVATE LIMITED 7) 7) CREATIVE TECHNOCHEM PRIVATE LIMITED 8) CREST VANIJYA PRIVATE LIMITED 9) DISHMAN PHARMACEUTICALS AND CHEMICALS LIMITED. 10) ENIT INVESTMENT PRIVATE LIMITED 11) HITWIN FINANCE COMPANY PRIVATE LIMITED 12) GLITER DEAL MART PRIVATE LIMITED 13) JV MODI SECURITIES PRIVATE LIMITED 14) JAYANT SECURITIES AND FINANCE LIMITED 15) JAY JYOTI INDIA PRIVATE LIMITED 16) KCL INFRAPROJECTS LIMITED 17) PALASIA LEASING AND INVESTMENTS PRIVATE LIMITED 18) RONIMA FINANCE AND INVESTMENT PRIVATE LIMITED 19) TROPICAL VYAPAR PRIVATE LIMITED 20) VISHWAJYOTI TRADING LIMITED 21) WINSHER COMMERCE PRIVATE LIMITED 32. AFTER RECEIVING THIS REPLY OF 08.02.2016 LD. AO FURTHER MADE THE ENQUIRY BY ISSUING NOTICE U/S 133(6) OF THE ACT TO VARIOUS CASH CREDITORS SO AS TO BE SATISFIED WITH THE IDENTITY O F CASH CREDITORS, GENUINENESS OF THE LOAN TRANSACTIONS AND CREDITWORT HINESS OF THE M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 63 CASH CREDITORS. SAMPLE OF ONE OF THE NOTICE ISSUED U/S 133(6) OF THE ACT FOR THE INFORMATION CALLED FROM M/S. WINSH ER COMMERCIAL PVT. LTD. (ONE OF THE CASH CREDITOR MENTIONED IN TH E SHOW CAUSE NOTICE ISSUED BY LD. PR. CIT) IS REPRODUCED BELOW: M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 64 M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 65 33. SAME TYPE OF NOTICES WERE ALSO ISSUED TO OTHER COMPANIES WHICH ARE MENTIONED IN THE SHOW CAUSE NOTICE ISSUED U/S 263 OF THE ACT (PAPER BOOK NO.3 DATED 23.01.2019) AND ALL HAVE REPLIED TO NOTICE 133(6) OF THE ACT, DETAILS OF WHICH ARE S UMMARIZED AS FOLLOWS: S. NO. ANNEXURE PARTICULARS PAGE NO. III SUBMISSIONS/DOCUMENTS FILED BY CREDITOR COMPANIES IN RESPONSE TO NOTICE ISSUED U/S 133(6) OF THE ACT DURING THE ASSESSMENT PROCEEDINGS OF M/S RADHESWARI DEVELOPERS PVT. LTD. A REGARDING M/S WINSHER COMMERCIAL PVT. LTD . 1 NOTICE ISSUE U/S 133(6) TO M/S WINSHER COMMERCIAL PVT. LTD. DATED 16.2.2016 BY ITO INDORE 1 2 SUBMISSION MADE IN RESPONSE TO NOTICE U/S 133(6) OF THE ACT DATED 29.2.2016 ALOWNG WITH ANNEXURES 2 A-1 LEDGER ACCOUNT FOR THE TRANSACTION WITH THE M/S. RADHESWARI DEVELOPERS PVT. LTD. DURING THE F.Y.2012 - 13 3 A-2 DETAILS OF MODE OF TRANSACTION 4 A-3 BANK STATEMENT FROM 01.09.2012 TO 30.11.2012 5-7 A-4 AUDITORS REPORT AND BALANCE SHEET FOR F.Y. 2011-12 AND 2012-13 8-27 A-5 LOANS & ADVANCES (GROUP SUMMARY) 28-30 B REGARDING M/S. JAYANT SECURITY & FINANCE LIMITED 1 NOTICE ISSUE U/S 133(6) TO M/S. JAYANT SECURITY & FINANCE LIMITED DATED 16.2.2016 BY ITO INDORE 31 2 SUBMISSION MADE IN RESPONSE TO NOTICE U/S 133(6) OF THE ACT DATED 19.2.2016 ALONG WITH ANNEXURES 32 M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 66 B-1 LEDGER ACCOUNT FOR THE TRANSACTION WITH THE M/S. RADHESWARI DEVELOPERS PVT. LTD. DURING THE F.Y.2012-13 33-34 B-2 BANK STATEMENT FROM 25.04.2012 TO 30.03.2013 35-44 B-3 CONFIRMATION OF ACCOUNT FROM 1.4.2012 TO 31.3.2013 45-46 B-4 INCOME TAX RETURN (ITR) ACKNOWLEDGMENT FOR A.Y. 2013-14 47 B-5 AUDITED BALANCE SHEET, P & L ACCOUNT FOR THE A.Y. 2012-13 & 2013-14 48-66 C REGARDING M/S APNAPAN MERCANTILE PVT. LTD. 1 SUBMISSION MADE IN RESPONSE TO NOTICE U/S 133(6) OF THE ACT DATED 22.2.2016 ALONG WITH ANNEXURES 67 C-1 LEDGER ACCOUNT FOR THE TRANSACTION WITH THE M/S. RADHESWARI DEVELOPERS PVT. LTD. DURING THE F.Y.2012 - 13 68 C-2 AUDIT REPORT FOR THE F.Y. 2011-12 & 2012-13 69-88 C-3 BANK STATEMENT FROM 09.10.2012 TO 04.01.2013 89-90 D REGARDING M/S CREST VANIJYA PVT. LTD. 1 SUBMISSION MADE IN RESPONSE TO NOTICE U/S 133(6) OF THE ACT DATED 23.2.2016 ALONG WITH ANNEXURES 91 D-1 INCOME TAX RETURN (ITR) ACKNOWLEDGMENT FOR A.Y. 2012-13 & 2013-14 92-93 D-2 AUDIT REPORT FOR THE F.Y. 2012-13 94-104 D-3 LOANS & ADVANCES (GROUP SUMMARY) 105 D-4 LEDGER ACCOUNT FOR THE TRANSACTION WITH THE M/S. RADHESWARI DEVELOPERS PVT. LTD. DURING THE F.Y.2012 - 13 106 D-5 BANK STATEMENT FROM 01.09.2012 TO 05.12.2012 107 D-6 COPY OF POSTAL ACKNOWLEDGMENT 108 E REGARDING M/S BHIMTAL NIRMAN PVT. LTD. 1 SUBMISSION MADE IN RESPONSE TO NOTICE U/S 133(6) OF THE ACT DATED 23.2.2016 ALONG WITH ANNEXURES 109 M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 67 E-1 INCOME TAX RETURN (ITR) ACKNOWLEDGMENT FOR A.Y. 2012-13 & 2013-14 110-111 E-2 AUDIT REPORT FOR THE F.Y. 2012-13 112-121 E-3 LOANS & ADVANCES (GROUP SUMMARY) 122 E-4 LEDGER ACCOUNT FOR THE TRANSACTION WITH THE M/S. RADHESWARI DEVELOPERS PVT. LTD. DURING THE F.Y.2012-13 123 E-5 BANK STATEMENT FROM 01.07.2012 TO 11 .12.2012 124 E-6 COPY OF POSTAL ACKNOWLEDGMENT 125 F REGARDING M/S. GLITER DEALMARK PVT. LTD. 126 1 SUBMISSION MADE IN RESPONSE TO NOTICE U/S 133(6) OF THE ACT DATED 23.2.2016 ALONG WITH ANNEXURES 127-128 F-1 INCOME TAX RETURN (ITR) ACKNOWLEDGMENT FOR A.Y. 2012-13 & 2013-14 129-138 F-2 AUDIT REPORT FOR THE F.Y. 2012-13 139 F-3 LOANS & ADVANCES (GROUP SUMMARY) 140 F-4 LEDGER ACCOUNT FOR THE TRANSACTION WITH THE M/S. RADHESWARI DEVELOPERS PVT. LTD. DURING THE F.Y.2012-13 F-5 BANK STATEMENT FROM 10.07.2012 TO 04.03.2013 141 G REGARDING M/S TROPICAL VYAPAR PVT. LTD. SUBMISSION MADE IN RESPONSE TO NOTICE U/S 133(6) OF THE ACT DATED 24.2.2016 ALONG WITH ANNEXURES 142 G-1 INCOME TAX RETURN (ITR) ACKNOWLEDGMENT FOR A.Y. 2012-13 & 2013 - 14 143-144 G-2 AUDIT REPORT FOR THE F.Y. 2012-13 145-154 G-3 LOANS & ADVANCES (GROUP SUMMARY) 155 G-3 LEDGER ACCOUNT FOR THE TRANSACTION WITH THE M/S. RADHESWARI DEVELOPERS PVT. LTD. DURING THE F.Y.2012 - 13 156 M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 68 G-5 BANK STATEMENT FROM 13.11.2012 TO 20.11.2012 157 G-6 COPY OF POSTAL ACKNOWLEDGMENT 158 34. NOW GOING THROUGH THE ABOVE DISCUSSION REGARDIN G THE ENQUIRY CONDUCTED BY THE LD. AO, IT IS CRYSTAL CLEA R THAT THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY TO EXAMI NE THE LARGE UNSECURED LOANS. ALL DOCUMENTARY EVIDENCES TO ESTA BLISH THE IDENTITY, GENUINENESS AND CREDITWORTHINESS WERE CAL LED FOR BY THE LD. AO AND EACH OF SUCH INFORMATION WAS PROMPTLY RE PLIED BY THE ASSESSEE. LD. AO FURTHER ENQUIRED BY CALLING INFORM ATION U/S 133(6) OF THE ACT WHICH WAS ALSO REPLIED BY MOST OF THE CASH CREDITORS ASCERTAINING THE FACTS THAT UNSECURED LOA NS HAVE BEEN GIVEN TO THE ASSESSEE. IN THE BANK STATEMENT OF THE CASH CREDITORS THERE IS NO DEPOSIT OF CASH IMMEDIATELY BEFORE THE ISSUE OF CHEQUE/BANK TRANSFER TO THE ASSESSEE. THERE WAS EIT HER SUFFICIENT BANK BALANCE OR THERE WAS TRANSFER IN THE BANK ACCO UNT OF THE CASH CREDITOR WHICH WAS USED TO GIVE UNSECURED LOAN S. INTERESTS HAVE BEEN PAID ON ALL THE UNSECURED LOANS AND INCOM E TAX AT SOURCE HAS BEEN DEDUCTED. NOW IN THE LIGHT OF ALL T HESE DOCUMENTARY EVIDENCES AND DETAILED ENQUIRY AS PER W ISDOM OF THE LD. AO IT CAN BE SAFELY CONSTRUED THAT THE LD. AO M ADE DETAILED M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 69 ENQUIRY, MADE PROPER APPLICATION OF MIND AND EXAMIN ED ALL THE CASH CREDITORS BY CALLING VARIOUS INFORMATION AND W AS SATISFIED WITH THE THREE PARAMETERS I.E. IDENTITY OF LENDER, GENUINENESS OF LOAN TRANSACTION AND CREDITWORTHINESS OF LENDER COM PANY AND WAS FURTHER SATISFIED THAT NONE OF THESE UNSECURED LOAN S FALL UNDER THE CATEGORY OF UNEXPLAINED CASH CREDIT U/S 68 OF THE A CT. THUS AFTER EXAMINING THE FACTS OF THE CASE WE FIND THAT A DETA ILED ENQUIRY WAS CONDUCTED BY THE LD. AO AND HE ADOPTED ONE OF T HE POSSIBLE VIEW PERMISSIBLE IN LAW AND COMPLETED ASSESSMENT U/ S 143(3) OF THE ACT. 35. HON'BLE SUPREME COURT IN THE CASE OF CIT VS. MA X INDIA 295 ITR 282 (SC) HELD THAT THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE' IN SECTION 263 OF THE INCOME-TAX ACT, 1961, HAS TO BE READ IN CONJUNCTION WITH THE EXPRESSION 'ERRONEOUS' ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE, WHEN THE ASSESSING OFFICER ADOPTS ONE OF TWO COURSES PERMISSIBLE IN LA W AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED A S AN ERRONEOUS M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 70 ORDER PREJUDICIAL TO THE REVENUE, UNLESS THE VIEW T AKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. 36. HON'BLE APEX COURT IN THE CASE OF CIT VS. GREEN WORLD CORPORATION 314 ITR 81(SC) HAS HELD THAT T HE INCOME-TAX OFFICER, WHILE PASSING AN ORDER OF ASSESSMENT PERFORMS A JUD ICIAL FUNCTION. A REVISION APPLICATION LIES BEFORE THE COMMISSIONER. IT IS TRITE THAT THE JURISDICTION EXERCISED BY THE REVISIONAL AUTHORITY PERTAINS TO HIS APPELLATE JURISDICTION. THE JURISDICTION UNDER SECTION 263 CAN BE EXERCISED ONLY WHEN BOTH THE FOLLOWING CONDITIONS ARE SATISFIED (I ) THE ORDER OF THE ASSESSING OFFICER SHOULD BE ERRONEOUS, AND (II) IT SHOULD BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THESE CONDITIONS ARE CONJUNCTIVE. AN ORDER OF ASSESSMENT PASSED BY THE ASSESSING OFFICER SHOULD N OT BE INTERFERED WITH ONLY BECAUSE ANOTHER VIEW IS POSSIBLE. 37. IN THE LIGHT OF THE ABOVE JUDGMENTS OF HON'BLE SUPREME COURT AND THE FACTS NARRATED ABOVE, THE VIEW TAKEN BY THE LD. PR. CIT THAT THE LD. AO HAS NOT CONDUCTED DETAILED ENQUIRY DOES NOT HOLD GOOD AND THUS CANNOT SAID TO BE A SOUND BASIS TO IN VOKE THE PROVISION OF SECTION 263 OF THE ACT. 38. NOW COMING TO THE SECOND ASPECT THAT WHETHER LD . PR. CIT HIMSELF CONDUCTED ANY ENQUIRY BEFORE HOLDING THE AS SESSMENT ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF REVENUE. M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 71 THIS ISSUE CAME BEFORE HON'BLE DELHI HIGH COURT IN THE CASE OF ITO VS. D.G. HOUSING PROJECTS LTD. (SUPRA) WHEREIN HON'BLE COURT AFTER EXAMINING ENTIRE LAW ON THE ISSUE HELD AS UND ER: '16. THUS, IN CASES OF WRONG OPINION OR FINDING ON MERITS, THE CIT HAS TO COME TO THE CONCLUSION AND HIMSELF DECIDE THAT THE ORDER IS ERRONEOUS, BY CONDUCTING NECESSARY ENQUIRY, IF REQUIRED AND NE CESSARY, BEFORE THE ORDER UNDER SECTION 263 IS PASSED. IN SUCH CASES, THE ORDER OF THE ASSESSING OFFICER WILL BE ERRONEOUS BECAUSE THE ORD ER PASSED IS NOT SUSTAINABLE IN LAW AND THE SAID FINDING MUST BE REC ORDED. CIT CANNOT REMAND THE MATTER TO THE ASSESSING OFFICER TO DECID E WHETHER THE FINDINGS RECORDED ARE ERRONEOUS. IN CASES WHERE THE RE IS INADEQUATE ENQUIRY BUT NOT LACK OF ENQUIRY, AGAIN THE CIT MUST GIVE AND RECORD A FINDING THAT THE ORDER/INQUIRY MADE IS ERRONEOUS. T HIS CAN HAPPEN IF AN ENQUIRY AND VERIFICATION IS CONDUCTED BY THE CIT AN D HE IS ABLE TO ESTABLISH AND SHOW THE ERROR OR MISTAKE MADE BY THE ASSESSING OFFICER, MAKING THE ORDER UNSUSTAINABLE IN LAW. IN SOME CASE S POSSIBLY THOUGH RARELY, THE CIT CAN ALSO SHOW AND ESTABLISH THAT TH E FACTS ON RECORD OR INFERENCES DRAWN FROM FACTS ON RECORD PER SE JUSTIF IED AND MANDATED FURTHER ENQUIRY OR INVESTIGATION BUT THE ASSESSING OFFICER HAD ERRONEOUSLY NOT UNDERTAKEN THE SAME. HOWEVER, THE S AID FINDING MUST BE CLEAR, UNAMBIGUOUS AND NOT DEBATABLE. THE MATTER CANNOT BE REMITTED FOR A FRESH DECISION TO THE ASSESSING OFFI CER TO CONDUCT FURTHER ENQUIRIES WITHOUT A FINDING THAT THE ORDER IS ERRON EOUS. FINDING THAT THE ORDER IS ERRONEOUS IS A CONDITION OR REQUIREMENT WH ICH MUST BE SATISFIED FOR EXERCISE OF JURISDICTION UNDER SECTION 263 OF THE ACT. IN SUCH MATTERS, TO REMAND THE MATTER/ISSUE TO THE ASSESSIN G OFFICER WOULD IMPLY AND MEAN THE CIT HAS NOT EXAMINED AND DECIDED WHETHER OR NOT THE ORDER IS ERRONEOUS BUT HAS OM PRAKASH BADAYA DI RECTED THE ASSESSING OFFICER TO DECIDE THE ASPECT/QUESTION. M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 72 17. THIS DISTINCTION MUST BE KEPT IN MIND BY THE CI T WHILE EXERCISING JURISDICTION UNDER SECTION 263 OF THE ACT AND IN THE ABSENCE OF THE FINDING THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, EXERCISE OF JURISDICTION UNDER THE SAID SE CTION IS NOT SUSTAINABLE. IN MOST CASES OF ALLEGED 'INADEQUATE I NVESTIGATION', IT WILL BE DIFFICULT TO HOLD THAT THE ORDER OF THE ASSESSIN G OFFICER, WHO HAD CONDUCTED ENQUIRIES AND HAD ACTED AS AN INVESTIGATO R, IS ERRONEOUS, WITHOUT CIT CONDUCTING VERIFICATION/INQUIRY. THE OR DER OF THE ASSESSING OFFICER MAY BE OR MAY NOT BE WRONG. CIT CANNOT DIRE CT RECONSIDERATION ON THIS GROUND BUT ONLY WHEN THE ORDER IS ERRONEOUS . AN ORDER OF REMIT CANNOT BE PASSED BY THE CIT TO ASK THE ASSESSING OF FICER TO DECIDE WHETHER THE ORDER WAS ERRONEOUS. THIS IS NOT PERMIS SIBLE. AN ORDER IS NOT ERRONEOUS, UNLESS THE CIT HOLD AND RECORDS REAS ONS WHY IT IS ERRONEOUS. AN ORDER WILL NOT BECOME ERRONEOUS BECAU SE ON REMIT, THE ASSESSING OFFICER MAY DECIDE THAT THE ORDER IS ERRO NEOUS. THEREFORE CIT MUST AFTER RECORDING REASONS HOLD THAT THE ORDER IS ERRONEOUS. THE JURISDICTIONAL PRECONDITION STIPULATED IS THAT THE CIT MUST COME TO THE CONCLUSION THAT THE ORDER IS ERRONEOUS AND IS UNSUS TAINABLE IN LAW. WE MAY NOTICE THAT THE MATERIAL WHICH THE CIT CAN RELY INCLUDES NOT ONLY THE RECORD AS IT STANDS AT THE TIME WHEN THE ORDER IN Q UESTION WAS PASSED BY THE ASSESSING OFFICER BUT ALSO THE RECORD AS IT STANDS AT THE TIME OF EXAMINATION BY THE CIT [SEE CIT VS. SHREE MANJUNATHESWARE PACKING PRODUCTS , 231 ITR 53 (SC)]. NOTHING BARS/PROHIBITS THE CIT FROM COLLECTING AND RELYING UPON NEW/ADDITIONAL MATERIAL /EVIDENCE TO SHOW AND STATE THAT THE ORDER OF THE ASSESSING OFFICER I S ERRONEOUS. 18. IT IS IN THIS CONTEXT THAT THE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD. VS. COMMISSIONER OF INCOME TAX , (2000) 243 ITR 83 (SC), HAD OBSERVED THAT THE PHRASE PREJUDICIAL OM PRAKASH BA DAYA TO THE INTEREST OF REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS O F REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CA NNOT BE TREATED AS M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 73 PREJUDICIAL TO THE INTEREST OF REVENUE. THUS, WHEN THE ASSESSING OFFICER HAD ADOPTED ONE OF THE COURSES PERMISSIBLE AND AVAI LABLE TO HIM, AND THIS HAS RESULTED IN LOSS TO REVENUE; OR TWO VIEWS WERE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE CIT MAY NOT AGREE; THE SAID ORDERS CANNOT BE TREATED AS AN ERRONEOUS O RDER PREJUDICIAL TO THE INTEREST OF REVENUE UNLESS THE VIEW TAKEN BY TH E ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. IN SUCH MATTERS, THE CIT MUST GIVE A FINDING THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAI NABLE IN LAW AND, THEREFORE, THE ORDER IS ERRONEOUS. HE MUST ALSO SHO W THAT PREJUDICE IS CAUSED TO THE INTEREST OF THE REVENUE. 19. IN THE PRESENT CASE, THE FINDINGS RECORDED BY T HE TRIBUNAL ARE CORRECT AS THE CIT HAS NOT GONE INTO AND HAS NOT GIVEN ANY REASON FOR OBSERVING THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS. THE FINDING RECORDED BY THE CIT IS THAT 'ORDER PASSED B Y THE ASSESSING OFFICER MAY BE ERRONEOUS'. THE CIT HAD DOUBTS ABOUT THE VALUATION AND SALE CONSIDERATION RECEIVED BUT THE CIT SHOULD HAVE EXAMINED THE SAID ASPECT HIMSELF AND GIVEN A FINDING THAT THE ORDER P ASSED BY THE ASSESSING OFFICER WAS ERRONEOUS. HE CAME TO THE CON CLUSION AND FINDING THAT THE ASSESSING OFFICER HAD EXAMINED THE SAID AS PECT AND ACCEPTED THE RESPONDENT S COMPUTATION FIGURES BUT HE HAD RESERVATIONS. THE CIT IN THE ORDER HAS RECORDED THAT THE CONSIDERATION RE CEIVABLE WAS EXAMINED BY THE ASSESSING OFFICER BUT WAS NOT PROPE RLY EXAMINED AND THEREFORE THE ASSESSMENT ORDER IS 'ERRONEOUS'. THE SAID FINDING WILL BE CORRECT, IF THE CIT HAD EXAMINED AND VERIFIED THE S AID TRANSACTION HIMSELF AND GIVEN A FINDING ON MERITS. AS HELD ABOV E, A DISTINCTION MUST BE DRAWN IN THE CASES WHERE THE ASSESSING OFFICER D OES NOT CONDUCT AN ENQUIRY; AS LACK OF ENQUIRY BY ITSELF RENDERS THE O RDER BEING ERRONEOUS AND OM PRAKASH BADAYA PREJUDICIAL TO THE INTEREST O F THE REVENUE AND CASES WHERE THE ASSESSING OFFICER CONDUCTS ENQUIRY BUT FINDING RECORDED IS ERRONEOUS AND WHICH IS ALSO PREJUDICIAL TO THE I NTEREST OF THE REVENUE. IN LATTER CASES, THE CIT HAS TO EXAMINE THE ORDER O F THE ASSESSING OFFICER M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 74 ON MERITS OR THE DECISION TAKEN BY THE ASSESSING OF FICER ON MERITS AND THEN HOLD AND FORM AN OPINION ON MERITS THAT THE OR DER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF THE REVENUE. IN THE SECOND SET OF CASES, CIT CANNOT DIR ECT THE ASSESSING OFFICER TO CONDUCT FURTHER ENQUIRY TO VERIFY AND FI ND OUT WHETHER THE ORDER PASSED IS ERRONEOUS OR NOT. 39. IN LIGHT OF THE ABOVE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF D.G. HOUSING PROJECT LTD. (SUPRA), ON PERUSAL OF THE IMPUGNED ORDER WE FIND THAT AT FEW PLACES LD . PR. CIT HAD MENTIONED OF HAVING CALLED FOR SOME INFORMATION FRO M THE INVESTIGATION WING AT KOLKATA & OTHER PLACES BUT SU RPRISINGLY BEFORE RECEIVING SUCH REPORTS FROM THE ABOVE STATED INVESTIGATION WING, THE IMPUGNED ORDER WAS PASSED, WHICH THUS CLE ARLY SHOWS THAT THE FINDING OF LD. PR. CIT IS NOT SUPPORTED BY ANY ENQUIRY CONDUCTED BY HIM INDEPENDENTLY. WE, ALSO NOTE THAT IN PARA 2 OF THE IMPUGNED ORDER WHEREIN LD. PR. CIT HAS GIVEN TH E FINDING, HE SEEMS TO HAVE GIVEN THE SAME ON SURMISES AND CONJECTURE. FOR INSTANCE IN PARA 2.1 OF THE IMPUGNED ORDER ON ONE HAND HE RECORDS FINDING THAT THE ASSESSEE WAS ASKED BY THE LD. AO TO PROVE THE IDENTITY OF THE SUBSCRIBERS, GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE SUBSCRIBER S TO WHICH THE ASSESSEE HAS REPLIED TO ALL THE INFORMATION FOR 21 DEPOSITORS M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 75 ALONG WITH FILING THE BALANCE SHEET, BANK STATEMENT , ACKNOWLEDGMENT AND COMPUTATION OF INCOME. THEREAFTE R LD. PR. CIT RECORDS A FINDING THAT LD. AO HAS ISSUED NOTICE S U/S 133(6) OF THE ACT TO THE DEPOSITORS AND REPLY FROM DEPOSITORS ARE ON RECORD SO LD. PR. CIT ACCEPTED THAT LD. AO HAS RAISED ENQU IRY, COLLECTED INFORMATION FROM ASSESSEE AND ALSO COLLECTED INFORM ATION FROM INDEPENDENT SOURCE. THEN LD. PR. CIT MENTIONS THAT IT APPEARS THAT SOMEBODY ON BEHALF OF THOSE PARTIES FILED THE INFORMATION. 40. AGAIN WITH REGARD TO INFORMATION FILED IN THE C ASE OF M/S. JAYANT SECURITY FINANCE LTD. IT IS MENTIONED THAT SUBSEQUENTLY SOMEBODY FILED THE INFORMATION/CONFIRMATION . SIMILARLY, HE CALLS FOR A REPORT FROM INVESTIGATION WING BUT HE DOES NO T WAIT FOR IT BEFORE FRAMING HIS VIEW. SO IT IS AN ADMITTED FACT THAT NO NEW ENQUIRY WAS CONDUCTED BY LD. PR. CIT TO COME TO THE CONCLUSION OF HOLDING THE ASSESSMENT ORDER AS ERRONEOUS SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE EVEN WHEN HE HIMSELF MENTIO NS THAT THE VARIOUS ENQUIRIES WERE CONDUCTED BY THE LD. AO INCL UDING THE INFORMATION CALLED U/S 133(6) OF THE ACT BUT STILL TERMS IT AS INADEQUATE ENQUIRY. M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 76 41. WE OBSERVE THAT THERE IS NO SPECIFIC PROCEDURE PROVIDED UNDER THE ACT OR RULES TO EXAMINE THE UNSECURED LOANS/CAS H CREDITS REGARDING THE THREE ASPECTS I.E. IDENTITY, GENUINEN ESS AND CREDITWORTHINESS AND LD. ASSESSING OFFICER VESTS WI TH A DISCRETION TO BE SATISFIED ON THE BASIS OF DOCUMENTS WHICH HE/ SHE DEEMS FIT TO BE CALLED FOR. LD. AO IS A QUASI-JUDICIAL AUTHOR ITY VESTED WITH THE SAME POWERS AS ARE VESTED IN A COURT UNDER THE CODE OF CIVIL PROCEDURE, 1908 (5 OF 1908) AND IS A WELL-TRAINED OFFICER OF THE INCOME TAX DEPARTMENT AND KNOWN TO BE HAVING KNOWLE DGE ABOUT THE INCOME TAX ACT AND INCOME TAX RULES. IN THE INS TANT CASE WE FIND THAT LD. AO HAS CONDUCTED ADEQUATE ENQUIRY BY CALLING REQUISITE INFORMATION IN THE FORM OF ITR, AUDIT REP ORTS, BANK STATEMENT AND ISSUING NOTICES U/S 133(6) OF THE ACT TO EXAMINE ALL THE UNSECURED LOANS INCLUDING PARTIES REFERRED BY T HE LD. PR. CIT IN THE SHOW CAUSE NOTICE U/S 263 OF THE ACT. IT IS ALSO STATED BY LD. SENIOR COUNSEL FOR THE ASSESSEE THAT MOST OF TH E UNSECURED LOANS INCLUDING THE LOAN TAKEN FROM ALLEGED CASH CR EDITORS HAVE BEEN REPAID IN SUBSEQUENT YEAR/YEARS AND THE COPY O F LEDGER ACCOUNTS STANDS FILED IN THE PAPER BOOK. THE DETAIL OF PAID UP SHARE CAPITAL, RESERVES & SURPLUS, BALANCE SHEET ON 31.03.2012 AND 31.03.2013 OF THE ALLEGED 9 PARTIES (REFERRED BY THE LD. PR. CIT IN THE IMPUGNED ORDER) SUPPORTS THE FACT THAT T HESE PARTIES ARE HAVING SOUND FINANCIAL POSITION TO GIVE THE LOA N TO THE ASSESSEE AND THE DETAILS ARE AS FOLLOWS:- M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 77 NAME OF CREDITOR AS ON 31.03.20 12 PAID UP SHARE CAPITAL RESERVE & SURPLUS CASH AND BANK BALANCE GLITERDEAL MART PVT. LTD. 32,42,400 7,96,46,007 4,91,586 APNAPAN MERCANTILE PVT. LTD. 13,05,000 5,90,46,971 2,54,378 BHIMTAL NIRMAN PVT. LTD. 22,72,400 9,27,00,568 76,408 WINSER COMMERCIAL PVT. LTD. 1,34,09,300 28,75,79,224 35,48,721 CREST VANIJYA PVT. LTD. 8,94,000 3,89,09,628 8,69,704 TROPICAL VYAPAR PVT. LTD. 7,93,880 12,11,88,583 29,778 JAYANT SECURITIES & FINANCE LTD. 2,84,18,000 2,06,05,823 83,96,995 CONFIDENT VINIMAY PVT. LTD. 12,07,000 7,83,68,708 7,32,75,226 GILLS INVESTMENT LTD. 6,00,000 4,40,364 1,12,152 NAME OF CREDITOR AS ON 31.03.20 13 PAID UP SHARE CAPITAL RESERVE & SURPLUS CASH AND BANK BALANCE GLITERDEAL MART PVT. LTD. 32,42,400 7,96,40,524 10,78,109 APNAPAN MERCANTILE PVT. LTD. 13,05,000 5,88,49,812 22,62,991 BHIMTAL NIRMAN PVT. LTD. 22,72,400 9,26,70,936 3,67,096 WINSER COMMERCIAL PVT. LTD. 1,34,09,300 28,73,00,396 95,26,271 CREST VANIJYA PVT. LTD. 8,94,000 3,88,68,340 17,39,179 TROPICAL VYAPAR PVT. LTD. 7,93,880 12,11,61,536 15,28,037 JAYANT SECURITIES & FINANCE LTD. 2,84,18,000 18,66,24,192 13,45,225 CONFIDENT 12,07,000 7,85,75,475 7,79,42,367 M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 78 VINIMAY PVT. LTD. GILLS INVESTMENT LTD. 6,00,000 4,89,498 23,71,254 42. FURTHER IT IS ALSO APPEARING FROM RECORDS THAT OUT OF THE 9 PARITIES IN CASE OF 8 CASH CREDITORS ASSESSMENT U/ S 143(3) OF THE ACT HAVE BEEN COMPLETED IN A.Y.2012-13 TO 2014-15 A ND THE REVENUES AUTHORITIES HAVE NOT MADE ANY SUCH ADDITI ON FOR UNEXPLAINED INVESTMENT AND UNEXPLAINED CASH CREDIT IN THEIR HANDS. THIS FACT HAS BEEN ACCEPTED BY THE LD. PR. C IT ALSO THAT IN ALL CASES THERE WAS A CORRESPONDING BANK ENTRY IN T HE ACCOUNT OF CASH CREDITORS OUT OF WHICH FEW WERE FROM THE ALLEG ED PARTIES ALSO. FOR INSTANCE OF M/S. GLITER DEAL MARK PVT. LTD. GAV E UNSECURED LOAN OF RS.75,00,000/- TO ASSESSEE FOR WHICH M/S. G LITER DEAL MARK PVT. LTD. RECEIVED SUM OF RS.55,00,000/- AND RS.44,00,000/- FROM M/S GIELLE INVESTMENT PVT. LTD. ON 28.02.2013 AND THIS FUND WAS USED TO GIVE LOAN TO T HE ASSESSEE COMPANIES. SO EVEN THE SOURCE OF SOURCE HAS BEEN ME NTIONED AND ACCEPTED BY LD. PR. CIT IN CASE OF FEW CASH CREDITO RS. 43. EVEN ONE OF THE ALLEGED CASH CREDITOR NAMELY M/ S. JAYANT SECURITIES & FINANCE LTD. WHICH LD. PR. CIT HAS RE FERRED AS AN ACCOMMODATION ENTRY PROVIDER, IT IS REVEALED THAT T HIS COMPANY IS M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 79 REGULARLY ASSESSED TO TAX FOR LAST MANY YEARS AND S CRUTINY PROCEEDING U/S 143(3) OF THE ACT WERE COMPLETED IN CASE OF THIS COMPANY. OBSERVATION OF THE LD. PR. CIT ABOUT LETTE R ISSUED TO M/S. JAYANT SECURITY & FINANCE LIMITED RECEIVED BA CK UNSECURED AND THEN STATING THAT SOMEBODY FILED INFORMATION ON BEHALF OF THE M/S. JAYANT SECURITY & FINANCE LTD. DOES NOT FIND A NY MERIT AS THIS COMPANY IS REGULARLY FILING APPEAL BEFORE THE JUDICIAL FORUMS INCLUDING TRIBUNAL AT AHMEDABAD BENCHES AND BEFORE HON'BLE HIGH COURT OF GUJARAT, COPY OF WHICH IS PLACED AT P APER BOOK NO.4 OF PAGE 10 TO 23 WHICH SHOWS THAT THIS COMPANY IS N OT A DUMMY COMPANY. 44. WE, THEREFORE, UNDER THE GIVEN FACTS AND CIRCUM STANCES OF THE CASE, FIND THAT DETAILED INFORMATION WAS CALLED FOR BY THE LD. AO, SPECIFIC REPLY SUBMITTED TO EACH OF SUCH QUERY BY T HE ASSESSEE, INDEPENDENT ENQUIRY CONDUCTED BY THE LD. AO BY ISSU ANCE OF NOTICE U/S 133(6) OF THE ACT AND ARE SATISFIED THAT THE LD. AO HAS CONDUCTED ADEQUATE AND DETAILED ENQUIRY TO INVESTIG ATE AND EXAMINE ALL THE UNSECURED LOAN TAKEN DURING THE YEA R INCLUDING THE LOAN TAKEN FROM CASH CREDITORS NAMED IN THE SHO W CAUSE NOTICE ISSUED U/S 263 OF THE ACT AND FIND THAT THE LD. AO HAS M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 80 TAKEN ONE OF THE PERMISSIBLE VIEW IN LAW BY VERIFYI NG THE IDENTITY OF THE CASH CREDITORS, GOT SATISFIED WITH THE GENUI NENESS OF THE TRANSACTIONS BETWEEN THE ASSESSEE AND CASH CREDITOR S AND ALSO SATISFIED WITH THE CREDITWORTHINESS OF THE CASH CRE DITORS. WE FURTHER FIND THAT THIS IS NOT A CASE OF NO ENQUIRY OR INADEQUATE ENQUIRY AND ALSO FIND THAT LD. PR. CIT HAD NOT CARR IED OUT ANY INDEPENDENT ENQUIRY AT HIS END AND THUS GROSSLY ERR ED IN OBSERVING THAT THE ORDER OF THE LD. AO U/S 143(3) O F THE ACT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. THE IMPUGNED ORDER DESERVES TO BE QUASHED IN LIGHT OF T HE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. COMMISSIONER OF INCOME TAX , (SUPRA), MAX INDIA LTD (SUPRA) AND GREEN WORLD CORPORATION (SUPRA) AND ALSO THE DECISION OF COORDINATE BENCH MUMBAI IN THE CASE OF ITO VS. SHRI NARAYAN TATU RANE IN ITANO.2690 & 2691/MUM/2016 DATED 06.05.2016 AND THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF D.G. HOUSING PROJECTS LTD.(SUPRA). IN THE INSTANT CASE LD. PR. CIT FAILED TO SHOW THA T BOTH CONDITIONS EXISTS I.E. NEITHER IT HAS BEEN PROVED T HAT ORDER IS ERRONEOUS NOR IT HAS BEEN PROVED TO BE PREJUDICIAL TO THE INTEREST OF REVENUE. WE THUS FIND MERIT IN THE CONTENTIONS O F THE ASSESSEE THAT THE REVISIONARY ORDER PASSED BY THE LD. PR. CI T IN THE YEARS M/S. RADHESHWARI DEVELOPERS PVT. LTD. ITA NO.493/IND/2018 81 UNDER APPEAL I.E. A.Y. 2013-14 IS BEYOND THE SCOPE OF SECTION 263 AND HENCE NOT VALID. THUS THE ACTION OF THE LD. PR. CIT IS CONTRARY TO THE RATIO LAID DOWN BY BINDING PRECEDENCE. WE, T HEREFORE, QUASH THE IMPUGNED ORDER AND DECIDE IN FAVOUR OF TH E ASSESSEE. ALL THE GROUNDS RAISED IN THIS APPEAL BY THE ASSESS EE ARE ALLOWED AND THE ASSESSMENT ORDER U/S 143(3) OF THE ACT DATE D 07.03.2016 IS RESTORED. 45. IN THE RESULT, ASSESSEES APPEAL IN ITANO.493/IND/2019 IS ALLOWED. THE ORDER PRONOUNCED AS PER RULE 34 OF ITAT RULES, 1963 ON 20 TH JULY, 2021. SD/- SD/- (RAJPAL YADAV) (MANISH BORAD) VICE PRESIDENT ACCOUNT ANT MEMBER / DATED : 20.07.2021 PATEL/PS COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE