M/s Jamna Auto Industries Ltd., Yamunanagar V. CIT, Panchkula

ITA 495/CHANDI/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2508 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 07-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KAMAL KHANNA
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 143(3); 14A; 263; 10; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.495/CHD/2015 (ASSESSMENT YEAR : 2010-11) M/S JAMNA AUTO INDUSTRIES LTD., VS. THE C.I.T., JAI SPRING ROAD, INDUSTRIAL AREA, PANCHKULA. YAMUNA NAGAR. PAN: AAACJ3929N (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI SANDEEP SAPRA & KAMAL KHANNA RESPONDENT BY : SHRI MANOJ MISHRA, DR DATE OF HEARING : 07.12.2015 DATE OF PRONOUNCEMENT : 05.01.2016 O R D E R PER RANO JAIN, A.M . : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED PRINCIPAL COMMISSIONE R OF INCOME TAX, PANCHKULA DATED 26.3.2015, PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) FOR ASSESSMENT YEAR 2010-11. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS MADE AS ON 28.1.2013. AFTER PERUSING THE CASE RECORDS FOR THE RELEVANT ASSESSMENT YEAR, THE LEARNED COMMISSIONER OF 2 INCOME TAX OBSERVED THAT THE ASSESSEE HAD MADE INVESTMENT OF RS.5,24,99,200/- IN THE EQUITY SHARES OF SPRING INDIA LTD. AND RS.1,99,99,000/- IN THE EQUIT Y SHARE OF JAI SUSPENSION SYSTEM LIMITED. SINCE THE ASSESSEE IS DEBITING HEAVY AMOUNT OF INTEREST TO TH E PROFIT & LOSS ACCOUNT, THEREFORE, THE PROPORTIONATE INTERE ST DISALLOWANCE SHOULD HAVE BEEN MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE ACT ON ACCOUNT OF INTEREST EXPENDITURE RELATING TO EXEMPT INCOME. A SHOW CAUSE NOTICE UNDER SECTION 263 OF THE ACT WAS ISSUED TO T HE ASSESSEE IN THIS REGARD. 3. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX, THE ASSESSEE MADE ELABORATE SUBMISSIONS AS REGARDS THE INVESTMENT IN SPRING INDIA LTD. AND ALSO IN JAI SUSPENSION SYSTEM LIMITED. SINCE NO ADVERSE VIEW WAS FORMED BY THE LEARNED COMMISSIONER OF INCOME TAX W ITH REGARD TO THE INVESTMENT IN SPRING INDIA LTD., WE W ILL NOT BE REFERRING TO THE FACTS IN THIS REGARD. AS REGAR DS JAI SUSPENSION SYSTEM LIMITED, IT WAS STATED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX THAT THE INVESTM ENT AMOUNTING TO RS.1,96,98,880/- WAS MADE IN ASSESSME NT YEARS 2008-09 AND 2009-10. THE ASSESSEE HAD RECEIVE D DIVIDEND OF RS.2,99,98,500/- ON INVESTMENT MADE IN SHARES OF JAI SUSPENSION SYSTEM LIMITED. THE INVESTMENT AMOU NTING TO RS.2,00,080/- WAS MADE IN ASSESSMENT YEAR 2008-0 9, WHILE THE INVESTMENT OF RS.1,94,98,800/- WAS MADE I N ASSESSMENT YEAR 2009-10. IT WAS SUBMITTED THAT THE 3 INVESTMENT OF RS.2 LACS IN ASSESSMENT YEAR 2008-09 WAS MADE OUT OF THE PROFITS AFTER TAX OF RS.1606.49 LAC S EARNED DURING THE YEAR. FURTHER, THE INVESTMENT OF RS.1,94,98,880/- IN ASSESSMENT YEAR 2009-10 WAS MAD E OUT OF THE SHARE CAPITAL RAISED DURING THE YEAR AND AMOUNT OF RS.1912.59 LACS RECEIVED ON ACCOUNT OF SH ARE CAPITAL AND SHARE PREMIUM. THE ASSESSEE HAD NOT TA KEN ANY LOAN TO MAKE THESE INVESTMENTS. IN FACT, DURIN G THE FINANCIAL YEAR 2008-09, THE ASSESSEE HAD REPAID THE MONEY OF THE LOANS RAISED BY IT IN EARLIER YEARS. IT PRO VES THAT NO FRESH LOANS WERE UTILIZED FOR THE PURPOSES OF MAKIN G THE INVESTMENT IN THE SHARE OF JAI SUSPENSION SYSTEM LI MITED AND THE INVESTMENTS WERE MADE OUT OF ITS SOWN FUNDS WITH THE ASSESSEE IN THE FORM OF PROFITS EARNED AND FRES H CAPITAL RAISED IN THESE YEARS. RELYING OF THE JUD GMENT OF THE HON'BLE JURISDICTIONAL PUNJAB & HARYANA HIGH CO URT IN THE CASE OF CIT VS. WINSOME TEXTILES INDUSTRIES LTD., 319 ITR 204 AND CIT VS. M/S HERO CYCLES LTD., 323 I TR 518. IT WAS SUBMITTED THAT THE PROVISIONS OF SECTI ON 14A OF THE ACT ARE NOT APPLICABLE TO THE PRESENT CASE. FURTHER, ON THE JURISDICTION OF THE COMMISSIONER OF INCOME T AX INVOKED UNDER SECTION 263 OF THE ACT, IT WAS SUBMIT TED THAT THE ASSESSING OFFICER VIDE PARA 20 OF THE QUESTIONNAIRE DATED 24.2.2012 FOR THE YEAR UNDER CONSIDERATION HAS RAISED A QUERY IN RESPONSE TO WHI CH THE ASSESSEE VIDE PARA 12 OF LETTER DATED 18.5.2012 FIL ED DETAILS OF DIVIDEND INCOME IN WHICH IT WAS SPECIFIC ALLY POINTED OUT THAT THE SOURCE OF INVESTMENT IN SHARES OF JAI 4 SUSPENSION SYSTEM LIMITED FROM WHOM THE DIVIDEND INCOME HAS BEEN RECEIVED WAS OUT OF ITS OWN FUNDS. IT WAS FURTHER SUBMITTED THAT IN THE SUCCEEDING ASSESS MENT YEAR 2011-12 IN ASSESSEES OWN CASE THE ASSESSING O FFICER VIDE LETTER DATED 24.2.2014 SPECIFICALLY RAISED QUE RY AS TO WHY THE PROVISIONS OF SECTION 14A OF THE ACT MAY NO T BE APPLIED IN RESPECT OF EXEMPT INCOME WHICH WAS REPLI ED BY THE ASSESSEE VIDE ITS LETTER DATED 24.2.2014 AND AF TER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE, N O DISALLOWANCE UNDER SECTION 14A WAS MADE IN ASSESSME NT YEAR 2011-12. ALL THESE FACTS SHOW THAT THE ASSESS ING OFFICER HAS PROPERLY APPLIED HIS MIND ON THE ISSUE OF DISALLOWANCE UNDER SECTION 14A OF THE ACT. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LEARNED COMMISSIONER OF INCOME TAX D ID NOT FIND FORCE IN THE SAME. HE FOUND THAT THE SHAR E CAPITAL AND SHARE PREMIUM RAISED BY THE ASSESSEE HA D BEEN UTILIZED FOR THE PURPOSES OF REPAYING THE LOAN S AND THE ASSESSEE HAS RAISED FRESH LOANS AMOUNTING TO RS .18.12 CRORES, OUT OF WHICH INVESTMENT IN SHARES OF JAI SUSPENSION SYSTEM LIMITED HAS BEEN MADE. IN THE VI EW OF LEARNED COMMISSIONER OF INCOME TAX, HAD THE ASSESSE E NOT INVESTED IN THE SHARES OF JAI SUSPENSION SYSTEM LIM ITED, IT WAS NOT REQUIRED TO RAISE LOANS TO THAT EXTENT F ROM BANKS AND FINANCIAL INSTITUTIONS. RELIANCE WAS PLA CED ON THE JUDGMENT OF CIT VS. ABHISHEK INDUSTRIES LTD., 2 86 ITR 1. FURTHER, HE HELD THAT SINCE THE ASSESSEE HAS EA RNED 5 DIVIDEND INCOME ON SHARES OF JAI SUSPENSION SYSTEM LIMITED, THE CASE LAWS RELIED ON BY THE ASSESSEE AR E NOT APPLICABLE TO THE PRESENT CASE. ON THE ARGUMENT TA KEN BY THE ASSESSEE AS REGARDS THE APPLICATION OF MIND BY THE ASSESSING OFFICER, IT WAS OBSERVED THAT THE ASSESSI NG OFFICER HAD ONLY ENQUIRED ABOUT THE DETAILS OF DIVI DEND INCOME AND NOWHERE ASKED THE ASSESSEE SPECIFICALLY WITH RESPECT TO THE DISALLOWANCE OF PROPORTIONATE INTERE ST UNDER SECTION 14A OF THE ACT. IN VIEW OF THIS, THE LEARNED COMMISSIONER OF INCOME TAX HELD THAT THE ORDER PAS SED BY THE ASSESSING OFFICER DATED 28.1.2013 BE CANCELL ED TO THE EXTENT OF DISALLOWANCE OF INTEREST EXPENDITURE UNDER SECTION 14A OF THE ACT ON THE INVESTMENT MADE BY TH E ASSESSEE IN PURCHASE OF SHARES OF JAI SUSPENSION SY STEM LIMITED AND FURTHER DIRECTED THE ASSESSING OFFICER TO FRAME A FRESH ASSESSMENT AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. AGGRIEVED BY THIS ORDER, THE ASSESSEE HAS COME UP IN APPEAL. BEFORE US, THE LEARNED COUNSEL FOR T HE ASSESSEE MADE SUBMISSIONS MANIFOLD. THE FIRST SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE WAS THAT THE LEARNED COMMISSIONER OF INCOME TAX DID NO T HAVE JURISDICTION TO REVISE THE ORDER FRAMED BY THE ASSESSING OFFICER AS THE SAME WAS PASSED AFTER DUE APPLICATION OF MIND BY THE ASSESSING OFFICER. IN T HIS REGARD, OUR ATTENTION WAS INVITED TO PAPER BOOK PAG ES 11 TO 16, WHEREBY IN A QUESTIONNAIRE DATED 24.2.2012, THE 6 ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF INVEST MENT, SOURCE OF INVESTMENT IN JAI SUSPENSION SYSTEM LIMIT ED AND DIVIDEND EARNED ON SUCH INVESTMENT. FURTHER ATTENTION WAS INVITED TO PAPER BOOK PAGES 7 TO 20, WHEREBY THE ASSESSEE DULY REPLIED THE SAID QUESTION NAIRE AND AT PAPER BOOK PAGE 21 IN THE FORM OF CHART, THE ASSESSEE HAS GIVEN DETAILS OF AMOUNT OF DIVIDEND RE CEIVED FROM JAI SUSPENSION SYSTEM LIMITED WITH NUMBER OF SHARES HELD AND SOURCE OF INVESTMENT STATED TO BE O UT OF ITS OWN FUNDS OR OUT OF PROFITS OF THE COMPANY. IN THIS WAY, IT WAS SUBMITTED THAT THE ASSESSING OFFICER HA D NOT ONLY SOUGHT DETAILS OF DIVIDEND BUT ALSO SOUGHT THE SOURCE OF INVESTMENT MADE IN SHARES OF JAI SUSPENSION SYST EM LIMITED, WHICH WAS DULY FILED BEFORE THE ASSESSING OFFICER BY SUBMITTING THAT SOURCE OF INVESTMENT WAS ASSESSE ES OWN FUNDS FROM THE PROFITS OF THE COMPANY. THE ASS ESSING OFFICER HAD DULY APPLIED HIS MIND WHILE PASSING TH E ORDER UNDER SECTION 143(3) OF THE ACT AND, THEREFORE, NOT MADE DISALLOWANCE OF INTEREST UNDER SECTION 14A OF THE A CT WITH REGARD TO INVESTMENT IN JAI SUSPENSION SYSTEM LIMIT ED. OUR ATTENTION WAS FURTHER INVITED TO PAPER BOOK PAG ES 22 AND 23, WHICH IS A NOTICE UNDER SECTION 154 DATED 10.3.2014 ISSUED BY THE ASSESSING OFFICER ASKING TH E ASSESSEE WHY NOT A DISALLOWANCE UNDER SECTION 14A O F THE ACT BE MADE ON INVESTMENT IN JAI SUSPENSION SYSTEM LIMITED. THE ASSESSEE HAD FILED THE REPLY TO THE N OTICE UNDER SECTION 154 OF THE ACT DATED 15.7.2014, WHICH IS PLACED AT PAPER BOOK PAGES 24 TO 32 TOGETHER WITH T HE 7 DETAILED NOTE OF DISALLOWANCE UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE INCOME TAX RULES AT PAGES 33 TO 41. THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE IN THIS REGARD WAS THAT IT APPEARS THAT TH E ASSESSING OFFICER BEING SATISFIED WITH THE SUBMISSI ON OF THE ASSESSEE NO ORDER UNDER SECTION 154 OF THE ACT WAS PASSED. ANOTHER ARGUMENT PUT FORWARD BY THE LEARNE D COUNSEL FOR THE ASSESSEE WAS THAT SINCE THE INVESTM ENTS IN JAI SUSPENSION SYSTEM LIMITED WERE BEING MADE FROM EARLIER YEARS, NO DISALLOWANCE UNDER SECTION 14A OF THE ACT WAS EITHER MADE IN EARLIER YEARS OR IN THE SUBS EQUENT YEARS. COPIES OF BALANCE SHEET, PROFIT & LOSS ACCO UNT AND ORDERS PASSED UNDER SECTION 143(3) OF THE ACT FOR ASSESSMENT YEARS 2008-09 TO 2011-12 WERE FILED IN T HE PAPER BOOK. FURTHER, IN ASSESSMENT YEAR 2012-13, IT WAS STATED THAT A SPECIFIC QUESTION WITH REGARD TO SECT ION 14A OF THE ACT HAS BEEN RAISED BY THE ASSESSING OFFICER , WHICH WAS DULY REPLIED BY THE ASSESSEE. ALL THESE PAGES WERE REFERRED TO EMPHASIZE THAT THE MATERIAL, WHICH THE LEARNED COMMISSIONER OF INCOME TAX CAN RELIED ON IN PROCEED INGS UNDER SECTION 263 OF THE ACT INCLUDES NOT ONLY THE RECORD AS IT STANDS AT THE TIME WHEN THE ASSESSMENT ORDER IN QUESTION WAS PASSED BY THE ASSESSING OFFICER BUT AL SO THE RECORD AS IT STANDS AT THE TIME OF EXAMINATION BY T HE LEARNED COMMISSIONER OF INCOME TAX . RELIANCE WAS PLACED ON THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF GLOBUS INFOCOM LTD. VS. CIT, 369 ITR 14. IT WAS STATED THAT THE ASSESSMENT ORDER FOR THE YEAR UNDER 8 CONSIDERATION CANNOT BE HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, PARTICU LARLY WHEN NO DISALLOWANCE OF INTEREST UNDER SECTION 14A OF THE ACT WITH REGARD TO THE SAME INVESTMENT HAS BEEN MAD E IN EARLIER YEARS OR IN SUBSEQUENT YEARS. A COMPARATIV E CHART FOR ASSESSMENT YEARS 2008-09 TOO 2012-13 WAS FILED BEFORE US AND RELIANCE WAS PLACED ON THE JUDGMENT OF HON'B LE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG VS . CIT, 193 ITR 321 AND CIT VS. ARG SECURITIES PRINTER S, 264 ITR 276. ANOTHER ARGUMENT RAISED BY THE LEARNED CO UNSEL FOR THE ASSESSEE WAS THAT THE ORDER FOR THE YEAR UN DER CONSIDERATION COULD NOT BE HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE SINCE TH E ASSESSEE HAD MADE STRATEGIC/BUSINESS INVESTMENT IN SHARES OF JAI SUSPENSION SYSTEM LIMITED. ANOTHER INTERESTING ARGUMENT MADE BY THE LEARNED COUNSEL FO R THE ASSESSEE WAS THAT THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX UNDER SECTION 263 OF TH E ACT IS SELF-CONTRADICTORY AND, THEREFORE, ILLEGAL BECAU SE ON THE ONE HAND, DISALLOWANCE OF INTEREST EXPENSES UNDER S ECTION 14A OF THE ACT WAS DIRECTED TO BE MADE ON THE INVES TMENT IN JAI SUSPENSION SYSTEM LIMITED AND ON THE OTHER H AND, THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICE R HAS BEEN CANCELLED BY ISSUING DIRECTION TO THE ASSESSIN G OFFICER TO FRAME AFRESH ASSESSMENT ORDER AFTER AFFORDING RE ASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ON TH E BASIS ALL THESE SUBMISSIONS, IT WAS PRAYED THAT THE ORDER PASSED 9 BY THE LEARNED COMMISSIONER OF INCOME TAX UNDER SE CTION 263 OF THE ACT BE QUASHED. 6. THE LEARNED D.R. RELIED ON THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX AND FURTHER SUBMITTED THAT THE ISSUE OF DISALLOWANCE UNDER SECT ION 14A OF THE ACT WAS NOT INVESTIGATED BY THE ASSESSIN G OFFICER, THEREFORE, THE ORDER BECOMES ERRONEOUS TO THE EXTENT PREJUDICIAL TO THE INTEREST OF THE REVENUE. RELIANCE WAS PLACED ON THE ORDER OF THE CHANDIGARH BENCH OF THE I.T.A.T. IN THE CASE OF VODAFONE SOUTH LTD. VS. CI T FOR THE PROPOSITION THAT IN CASE NO ENQUIRY WAS MADE BY THE ASSESSING OFFICER ON A PARTICULAR ISSUE, THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE AND HENCE, THE COMMISSIONER OF INCOME TAX HAS JURISDICTION UNDER SECTION 263 OF THE ACT TO REVISE THE SAME. 7. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSES SEE HAD MADE INVESTMENTS AMOUNTING TO RS.1,99,99,000/- IN T HE EQUITY SHARES OF JAI SUSPENSION SYSTEM LIMITED. IN TEREST EXPENDITURE HAVE ALSO BEEN DEBITED TO THE PROFIT & LOSS ACCOUNT. THE DISALLOWANCE UNDER SECTION 14A OF THE ACT MAY BE CALLED FOR IN SUCH CIRCUMSTANCES, BUT THE QU ESTION TO BE DECIDED BY US IS WHETHER THE ORDER OF THE ASS ESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF THE 10 REVENUE SO AS TO GIVE THE COMMISSIONER OF INCOME TA X THE JURISDICTION TO REVISE THE SAME UNDER SECTION 263 O F THE ACT. 8. IT IS A TRITE LAW THAT FOR ASSUMPTION OF JURISDICTION UNDER SECTION 263 OF THE ACT BY THE COMMISSIONER OF INCOME TAX, THE ORDER OF THE ASSESS ING OFFICER HAS TO SATISFY TWIN CONDITIONS OF ITS BEING ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE SIMULTANEOUSLY I.E. THE ORDER HAS TO BE ERR ONEOUS AND AT THE SAME TIME ALSO BE PREJUDICIAL TO THE INT EREST OF REVENUE. WE ARE NOT REFERRING TO THE CASE LAWS FOR THIS PROPOSITION, SINCE WE ARE GUIDED BY THE ACT ITSELF IN THIS REGARD. 9. AN ORDER IS SAID TO BE ERRONEOUS IN CASE THE ASSESSING OFFICER FAILED TO MAKE ANY ENQUIRY ON AN ISSUE WHICH LEADS TO A LOSS OF REVENUE TO THE DEPARTMENT. IN CASE THE ASSESSING OFFICER MAKES THE ENQUIRY WITH R EGARD TO THE ISSUE IN QUESTION AND FORMS AN OPINION IN TH IS REGARD, JUST ON THE BASIS OF AN INADEQUATE ENQUIRY, THE COMMISSIONER OF INCOME TAX CANNOT HOLD THE ORDER TO BE ERRONEOUS. HOWEVER INADEQUATE AN ENQUIRY MAY BE, T HE COMMISSIONER OF INCOME TAX CANNOT IMPOSE HIS OPINIO N OVER THAT OF THE OPINION FORMED BY THE ASSESSING OF FICER. HOWEVER, THERE CAN BE AN EXCEPTION IN CASE OF INADE QUATE ENQUIRY, IF ASSESSING OFFICER FAILS TO DO SOMETHING WHICH HE IS REQUIRED TO DO UNDER THE LAW, THE ORDER MAY B E ERRONEOUS. IN THIS BACKGROUND, WE NOW PROCEED TO 11 EXAMINE THE FACTS OF THE PRESENT CASE. AT PAPER BO OK PAGE 12, QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER D URING THE ASSESSMENT PROCEEDINGS DATED 24.2.2012 IS ANNEX ED, WHEREBY AT POINT NO.20, THE ASSESSING OFFICER HAS R AISED A QUERY WHICH READS AS UNDER : 20. PLEASE FURNISH DETAIL OF DIVIDEND INCOME AMOUNTING TO RS.2,99,98,000/- IN THE FOLLOWING PROFORMA : S.NO. AMOUNT OF NAME OF THE NO.OF OTHER ORIGINAL SOURCE O F DIVIDEND COMPANY SHARE HELD INVESTMENT INVESTMENT FROM WHICH /YEAR OF DIVIDEND ACQUISITION RECEIVED 10. FROM THE ABOVE, IT IS QUITE CLEAR THAT THE ASSESSING OFFICER INTENDED TO RAISE THE QUERY REGAR DING DIVIDEND RECEIVED BY THE ASSESSEE NOT ONLY TO THE E XTENT OF AMOUNT OF DIVIDEND BUT ALSO WITH REGARD TO THE INVESTMENTS MADE AND ALSO THE SOURCE THEREOF. IN RE PLY TO THE SAID QUESTIONNAIRE, THE ASSESSEE FILED A LETTER DATED 18.5.2012 WHICH IS PLACED AT PAPER BOOK PAGE 17, WH EREBY AT PAGE 21, THE DETAILED REPLY IN THE FORMAT AS REQ UIRED BY THE ASSESSING OFFICER IS ENCLOSED. IN THIS REPLY, THE ASSESSEE HAD EXPLAINED THAT AN AMOUNT OF RS.2,99,98,0900/- IS RECEIVED ON 19,99,900 SHARES O F JAI SUSPENSION SYSTEM LIMITED, WHEN ORIGINAL INVESTMENT OF RS.1,96,99,000/- WAS MADE OUT OF OWN FUND, OUT OF P ROFITS OF THE COMPANY. THEREAFTER NO FURTHER QUERY IN THI S REGARD WAS RAISED BY THE ASSESSING OFFICER AND HE PREFERRED NOT TO MAKE ANY DISALLOWANCE UNDER SECTIO N 14A OF THE ACT. 12 11. AS REGARDS THE INVESTMENTS HAVING BEEN MADE OUT OF OWNED FUNDS OF THE ASSESSEE, OUR ATTENTION W AS INVITED TO THE BALANCE SHEET OF THE ASSESSEE AS ON 31.3.2008, WHICH SHOWS THAT AN AMOUNT OF RS.2 LACS WAS INVESTED IN THE SHARES OF JAI SUSPENSION SYSTEM LIM ITED. ON PERUSAL OF PAPER BOOK PAGE 47, WE SEE THAT THE ASSESSEE HAD TOTAL INVESTMENTS OF RS.527 LACS WHILE IT HAD OWNED FUNDS AMOUNTING TO RS.10362.16 LACS, WHICH GO ES TO PROVE THAT THE INVESTMENTS WERE MADE OUT OF OWNE D FUNDS. FURTHER, FROM THE PERUSAL OF BALANCE SHEET AS ON 31.3.2009 PLACED AT PAPER BOOK 74, WE SEE THAT FURT HER INVESTMENT OF RS.194.99 LACS WAS MADE DURING THE YE AR IN EQUITY SHARES OF JAI SUSPENSION SYSTEM LIMITED. FU RTHER, ON PERUSAL OF THE SAME BALANCE SHEET, WE SEE THAT T HE TOTAL INVESTMENTS ARE RS.721.99 LACS WHILE THE OWNE D FUNDS ARE AMOUNTING TO RS.12,371.46 LACS, WHICH FUR THER PROVES THE FACT THAT THESE INVESTMENTS WERE ALSO MA DE OUT OF OWNED FUNDS ONLY. IN VIEW OF THE ABOVE, IT IS T RUE THAT THE ASSESSEE HAS MADE INVESTMENTS OUT OF OWNED FUND S AND NO BORROWED FUNDS WERE USED FOR SUCH INVESTMENT S. IN SUCH A SCENARIO, NO DISALLOWANCE UNDER SECTION 1 4A OF THE ACT IS CALLED FOR. 12. NOW, THE SITUATION EMERGES THAT THE ASSESSING OFFICER RAISED A QUERY WHICH WAS DULY REPLIED BY TH E ASSESSEE. THE ASSESSING OFFICER HAVING GOT SATISFI ED BY THE SAID REPLY OF THE ASSESSEE PREFERRED NOT TO RAI SE FURTHER QUERY IN THIS REGARD, NOR DID HE MAKE ANY S UCH 13 DISALLOWANCE. IN THIS BACKGROUND, WE DO NOT SEE AN Y ERROR IN THE ORDER OF THE ASSESSING OFFICER. THE ASSESSI NG OFFICER WAS FULLY SEIZED OF THE MATTER, HE INITIATE D THE ENQUIRY, WHICH WAS FULLY CO-OPERATED BY THE ASSESSE E. THE ASSESSING OFFICER GOT SATISFIED AND DID NOT MAKE AN Y DISALLOWANCE. IN SUCH A SCENARIO, THE COMMISSIONER OF INCOME TAX CANNOT IMPOSE HIS OPINION ON THE DECISIO N TAKEN BY THE ASSESSING OFFICER. SINCE IT IS ASSESS ING OFFICERS SATISFACTION WHICH MATTERS FOR MAKING SUC H A DISALLOWANCE. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICER DID NOT FIND IT APPROPRIATE T O CARRY ON ANY ELABORATE INVESTIGATION. IT IS ASSESSING OF FICERS PREROGATIVE TO DECIDE THE EXTENT OF ENQUIRY OR INVE STIGATION TO BE CARRIED OUT BY HIM. THERE IS NO LAW WHICH DI RECTS THE ASSESSING OFFICER THE EXTENT OF ENQUIRY TO BE M ADE IN SUCH A CASE. THIS IS, UNDOUBTEDLY, NOT A CASE OF L ACK OF ENQUIRY. THOUGH WE DO NOT FIND IT EVEN A CASE OF INADEQUATE ENQUIRY, EVEN IN THAT CASE, THE COMMISSI ONER OF INCOME TAX DOES NOT GET THE JURISDICTION UNDER S ECTION 263 OF THE ACT. HOWEVER INADEQUATE THE ENQUIRY MAY BE, THE COMMISSIONER OF INCOME TAX CANNOT ENTER INTO TH E SHOES OF THE ASSESSING OFFICER IN THE GARB OF ASSUM ING JURISDICTION UNDER SECTION 263 OF THE ACT. THEREFO RE, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE ASSESSING OFFICER. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME TAX. 14 13. THOUGH, MANY OTHER ISSUES AS REGARDS JURISDICTION OF COMMISSIONER OF INCOME TAX UNDER SE CTION 263 OF THE ACT WERE RAISED BEFORE US, BUT, IN VIEW OF OUR FINDING AS ABOVE, WE DO NOT FIND ANY NEED TO ADJUDI CATE THE SAME. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF JANUARY, 2016. SD/- SD/- (H.L. KARWA) (RANO JAIN) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 5 TH JANUARY, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH