BHAGWAN DAS HARWANI, AJMER V. PR.CIT, UDAIPUR

ITA 5/JPR/2021

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2665 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 15-02-2021
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B.K. GUPTA PR
• Assessee Lawyers: SUBHASH PORWAL
• Keywords: Revision of order; Opportunity of being heard; Prejudicial to interest
• Section: 263; 143(3); 133(6); 113

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HES B JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA- @ ITA NO. 05/JP/2021 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2016-17 BHAGWAN DAS HARWANI, PROP. M/S PARWATI OIL MILL, AJAY NAGAR, AJMER CUKE VS. PR. CIT, UDAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABHPH1392L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SH. SUNIL PORWAL (CA) & SH. SUBHASH PORWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI B. K. GUPTA (PR.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 16/06/2021 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 22/06/2021 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. PR. CIT, UDAIPUR DATED 29.01.2021 WHEREIN THE ASSESSEE HAS T AKEN THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE NOTICE AS ISSUED U/S 263 OF INCOME TAX ACT, 1961 BY PCIT, UDAIPUR IS BAD IN LAW AND REQUESTED TO BE QU ASHED. 2. THAT THE LD. AO HAS PASSED THE ORDER AFTER CONSI DERING ALL MATERIAL FACTS AND BALANCE CONFIRMATION OF UNSECURED LOANS BEING OPENING BALANCES ETC. 2. DURING THE COURSE OF HEARING, THE LD. AR SUBMITT ED THAT FOR THE LD PR CIT TO EXERCISE JURISDICTION U/S 263, FIRSTLY, THE ORDE R PASSED BY THE ITO MUST BE ITA NO. 05/JP/2021 BHAGWAN DAS HARWANI, AJMER VS. PR. CIT, UDAIPUR 2 ERRONEOUS AND SECONDLY, THE ERROR MUST BE SUCH THAT IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF THE ORDER IS ERRONEOUS BUT IT IS NOT PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THE COMMISSIONER CANN OT EXERCISE THE REVISIONAL JURISDICTION UNDER SECTION 263(1) AND RELIANCE WAS PLACED ON THE DECISION IN CASE OF H.H. MAHARAJA RAJA POWER DEWAS V. CIT(1982) 138 ITR 518 (M.P.). 3. IT WAS FURTHER SUBMITTED THAT IN RESPONSE TO PCI TS SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED AS UNDER:- (A) BHARAT HARWANI: AS PER CONFIRMATION FILED AS PER E- SUBMISSION DATED 17.09.2018, THERE WAS NO OPENING BALANCE SHOWN FOR THE F.Y. 01.04.2015 TO 31.03.2016. IT IS ON 17.04.2015 THAT A SBBJ CHEQUE FOR RS. 10,00,000.00 WAS RECEIVED DURING THE YEAR & SAME WAS CLOSING BALANCE AS ON 31.03.2016. KINDLY FIND ENCLOSED THE COPY OF SAME DOCUMENT E-FILED ON 17.09.2018 FOR VERIFICATION OF THE FACTS TO AVOID ANY FURTHER OVERSITE/MISTAKE AS MADE WHILE RECORDING OBSERVATION BY THE LD PR CIT TO CLAIM THE ORDER OF A.O. AS ERRONEOUS & PREJUDICIAL U/SEC. 263 OF ACT. (B) RAHUL HARWANI: IT WAS SUBMITTED THAT IN THIS CASE, THE OPENING BALANCE AS ON 01.04.2015 WAS RS. 3,95,000 AS CREDIT APPEARI NG IN ASSESSEES BOOKS AND THE CLOSING BALANCE AS ON 31.03.2016 WAS RS. 10,44, 730 WHERE COMPLETE CONFIRMATION CUM ACCOUNT COPY OF LEDGER OF SAID PAR TY HAS BEEN ENCLOSED. THUS THE OBSERVATION FOR NON FILING OF CONFIRMATION IS AGAIN AN OVERSITE/ MISTAKE. RS. 3,50,000.00 WAS RECEIVED FROM PARTY ON 03.06.2015 THROUGH SBBJ BANK; REST OF THE CREDITS ARE JOURNAL ENTRIES FOR P URCHASE EXPENSES ALLOWANCES. IT SHOWS THAT COMPLETE LEDGER COPY CUM CONFIRMATION IS THERE ON RECORD. (C) SUNIL ISRANI: KINDLY FIND RE-ENCLOSED THE COPY OF L EDGER CUM CONFIRMATION OF SAID DEPOSITORS ACCOUNT STATEMENTS; WHERE THERE IS NO OPENING BALANCE ITA NO. 05/JP/2021 BHAGWAN DAS HARWANI, AJMER VS. PR. CIT, UDAIPUR 3 SHOWN OUTSTANDING, RS. 5,00,000 WAS RECEIVED VIDE S BBJ CHEQUE ON 03.04.2015 WHICH PROBABLY WRONGLY UNDERSTOOD BY YOU R OFFICE AS OPENING BALANCE AS ON 01.04.2015. FURTHER INTEREST PAID TO HIM FOR RS. 60,000.00 FOR THE YEAR QUARTERWISE & THUS SAME AMOUNT OF RS. 5,00 ,000 AS RECEIVED ON 03.04.2015 REMAINED CLOSING BALANCE AS ON 31.03.201 6. 4. IT WAS SUBMITTED THAT AFTER GOING THROUGH THE E- FILED DOCUMENTS & PAPER BOOK, THE A.O. HAS CORRECTLY & JUDICIOUSLY EXAMINED & DECIDED THE ISSUE. IT IS FURTHER TO INFORM THAT A.O. IS SUPPOSE TO TAKE ALL SUCH DOCUMENTS, EVIDENCES TO HIS SATISFACTION & A.O. HAS ONLY AFTER EXAMINING TH E EVIDENCES, AS E-FILED & NECESSARILY REQUIRED FOR ASSESSMENT PROCEEDINGS HAV E SOUGHT THE DETAILS, EXAMINED, VERIFIED. EVEN ALL OF THE CONFIRMATION AS FILED WERE EXAMINED & RE- VERIFIED U/SEC. 133(6) OF ACT. THUS, FROM ABOVE E-F ILED DOCUMENTS DURING ASSESSMENT PROCEEDINGS & SUBMISSIONS TO LD PCIT, TH E LD PCIT HAS ONLY CLAIMED FOR WRONG INFERENCE. THIS WRONG INFERENCE H AS EVEN NOT BEEN LOOKED PROPERLY WITH THE DOCUMENTS E-FILED DURING THE PROC EEDINGS U/S 263. THE PCIT HAS NEVER DENIED THAT THESE CONFIRMATIONS AS E-FILE D HAVE NOT BEEN EXAMINED BY A.O. U/S 133(6) OF THE ACT NOR THE LD PCIT COULD DENY THE FACTS AS PER SUBMISSIONS ARE WRONG. IN CASE OF RAHUL HARWANI THE JOURNAL OF ENTRIES FOR PURCHASES/EXPENSES CLEARLY STATES THAT IT IS NOT A CASH RECIEPT BUT CREDIT TRANSACTIONS. THUS, THE WRONG INFERENCE AS MADE BY LD PCIT IS THE ONLY REASON FOR CONSIDERING THE CASE AS ERRONEOUS & PREJUDICIAL TO REVENUE. THE CREDITS IN ACCOUNT FOR PURCHASES/EXPENSES ARE NOT IN NATURE OF LOANS & ADVANCES IN TERMS OF SECTION 269SS; AS CONSIDERED BY PCIT. THUS , ALL INFERENCE AS MADE BY PCIT ARE WRONG ON FACTS & CANNOT BE TANTAMOUNT TO P REJUDICIAL TO REVENUE OR ERRONEOUS FOR ANY REASON. THE PCIT HAS TO PROVE BOT H INGREDIENTS OF ERRONEOUS & PREJUDICIAL TO REVENUE AS PER FACTS . MERELY A.O. HAS NOT MENTIONED THE DETAILED PROCEDURE ADOPTED IN DEP TH IN ASSESSMENT ORDER DOES NOT MEAN THAT A.O HAS NOT EXAMINED THE FACTS O R PROPER VERIFICATION HAS ITA NO. 05/JP/2021 BHAGWAN DAS HARWANI, AJMER VS. PR. CIT, UDAIPUR 4 NOT BEEN MADE. THE PCIT VIDE ISSUING NOTICE U/S 263 AND BY RECORDING THE REASONS FOR SUCH NOTICE U/S 263 HAS NOT MENTIONED A NYTHING ON THE LAPSES IF ANY. 5. IT WAS SUBMITTED THAT THE A.O. HAS TAKEN COMPLET E CONFIRMATIONS, VERIFICATIONS CONDUCTED TO HIS SATISFACTION AND ONL Y AFTER COMPLETE EXAMINATION OF FACTS, EVIDENCES, CROSS-VERIFICATIONS HAVE ACCEP TED THE GENUINENESS OF SUCH CASH, CREDITORS/DEPOSITORS AND THUS, THE WRONG INFE RENCE AS MADE BY PCIT OUT OF SAME RECORD DOES NOT JUSTIFY THE PARAMETERS AS L AID DOWN FOR INVOKING THE PROVISIONS OF SECTION 263 AS HELD IN CASE OF CIT V/ S NIRAV MODI (2017) 390 ITR 292 (BOM) (HC) WHEREIN IT WAS HELD THAT IT HAS BEEN HELD THAT ENQUIRIES WERE MADE BY THE A.O. AND SUCH ENQUIRIES NEED NOT R EFLECT IN ORDER OF ASSESSMENT ESPECIALLY IF THE A.O. ACCEPTED THE CLAI M, FOR IF THE ISSUES WHICH HAVE ATTAINED FINALITY ARE DISCUSSED IN ORDER OF AS SESSMENT, IT WOULD BECOME AN EPITOME AND NOT A JUDICIAL ORDER AND THAT THE ORDER OF ASSESSMENT SIMPLY RECORDS THE DISSATISFACTION OF THE A.O. WITH RESPEC T TO AMOUNTS CLAIMED OR WHERE TAX HAS ESCAPED ASSESSMENT. THE COMMISSIONER HAD TO BE SPECIFIC AND MUST ARRIVE AT FINDINGS AS TO HOW THE ORDER IN QUES TION IS ERRONEOUS. THE DUTY CANNOT CAST ON A.O. BY DIRECTING HIM TO EXAMINE IF HIS OWN ORDER IS ERRONEOUS. LASTLY, THAT THE VIEW TAKEN BY A.O. WAS CERTAINLY, A POSSIBLE VIEW. 6. PER CONTRA, THE LD. PR CIT/DR RELIED ON THE FIND INGS OF THE LD. PR. CIT AND OUR REFERENCE WAS DRAWN TO PARAS 6 AND 7 OF THE IMP UGNED ORDER CONTENT THEREOF READS AS UNDER:- 6. THE ASSESSMENT ORDER U/S 143(3) OF THE I.T. ACT FOR THE A.Y 2016- 17 DATED 12.12.2018 WAS PASSED BY THE ASSESSING OFF ICER IN THIS CASE, WITHOUT MAKING PROPER ENQUIRIES AND THERE IS LACK O F VERIFICATION ON THE ISSUE OF UNSECURED LOANS, DESPITE THE FACT THAT THI S WAS ONE OF THE KEY REASONS FOR SCRUTINY SELECTION. ITA NO. 05/JP/2021 BHAGWAN DAS HARWANI, AJMER VS. PR. CIT, UDAIPUR 5 FURTHER, THE UNDERSIGNED HAS ISSUED THE NOTICE U/S 263 OF THE I.T. ACT AFTER BEING SATISFIED THAT THE CASE OF THE ASSESSEE IS A FIT CASE FOR ISSUE OF NOTICE U/S 263 OF THE I.T. ACT AS IT IS ERRONEOUS A ND PREJUDICIAL TO THE INTEREST OF REVENUE. NOW COMING TO THE MERITS OF THE CASE, IT IS PERTINE NT TO MENTION HERE THAT THE ASSESSEE HAS NOT ONLY FAILED TO FURNISH THE REQ UISITE DOCUMENTARY EVIDENCES AT THE TIME OF ASSESSMENT PROCEEDINGS BUT ALSO AT THE TIME OF REVISION PROCEEDINGS U/S 263 OF THE I.T. ACT AS DIS CUSSED HEREUNDER :- A) AS REGARDS UNSECURED LOAN OF RS. 10 LACS FROM SH . BHARAT HARWANI, THE ASSESSEE HAS FURNISHED A PHOTOCOPY OF LEDGER CONFIRMATION, WHICH DOES NOT HAVE ANY SIGNATURE FRO M SH. BHARAT HARWANI. FURTHER NO ITR AND BANK STATEMENT HAS BEEN FURNISHED OF SH. BHARAT HARWANI SO AS TO ESTABLISH / PROVE THE GENUI NENESS AND CREDITWORTHINESS IN RESPECT OF THIS UNSECURED LOAN. B) AS REGARD UNSECURED LOAN FROM SH. RAHUL HARWANI HAVING CLOSING BALANCE OF RS. 10,44,730/-, THE ASSESSEE HAS FURNIS HED A PHOTOCOPY OF LEDGER CONFIRMATION FROM SH. RAHUL HARWANI. HOWEVER , ON EXAMINATION OF THE SAME IT IS SEEN THAT OUT OF TOTAL CREDITS OF RS. 13,19,548/- DURING THE YEAR, ONLY RS. 5,64,548/- HAVE BEEN SHOWN TO BE RECEIVED THROUGH CHEQUE AND REMAINING ENTRIES ARE GENERAL ENTRIES PE RTAINING TO PURCHASE EXPENSE ETC., I.E. THEY ARE NOT THROUGH AC COUNT PAYEE CHEQUE OR ACCOUNT PAYEE DRAFT OR USE OF ELECTRONIC CLEARIN G SYSTEM THROUGH A BANK ACCOUNT. HENCE, THERE SEEMS TO BE VIOLATION OF PROVISION OF SECTION 269SS OF THE I.T. ACT. C) AS REGARDS UNSECURED LOAN OF RS. 5 LAKH RECEIVED FROM SH. SUNIL ISRANI, THE ASSESSEE HAS FURNISHED A PHOTOCOPY OF L EDGER CONFIRMATION. ITA NO. 05/JP/2021 BHAGWAN DAS HARWANI, AJMER VS. PR. CIT, UDAIPUR 6 FURTHER, NO ITR AND BANK STATEMENT HAS BEEN FURNISH ED OF SH. SUNIL ISRANI SO AS TO ESTABLISH / PROVE THE GENUINENESS A ND CREDITWORTHINESS IN RESPECT OF THIS UNSECURED LOAN. 7. THE ASSESSMENT ORDER U/S 143(3) OF THE I.T. ACT FOR THE A.Y. 2016-17 DATED 12.12.2018, THEREFORE, WAS PASSED BY THE ASSESSING OFFICER IN THIS CASE, WITHOUT MAKING NECESSARY ENQU IRIES AND PROPER VERIFICATION OF THE ISSUE WHETHER THE LOANS AND ADV ANCES RECEIVED ARE GENUINE AND FROM DISCLOSED SOURCES AS DISCUSSED IN PRECEDING PARAS. HENCE, ASSESSMENT ORDER U/S 143(3) OF THE I.T. ACT FOR THE A.Y. 2016- 17 DATED 12.12.2018 HAS THUS BEEN RENDERED ERRONEOU S AND PREJUDICIAL TO INTEREST OF REVENUE ON THE ABOVE ISSUE. THE SAME IS THEREFORE SET- ASIDE/CANCELLED AND RESTORED BACK TO THE FILE OF AO ON THIS ISSUE WITH THE DIRECTION TO PASS FRESH ASSESSMENT ORDER, AFTER CONDUCTING PROPER VERIFICATION AND ENQUIRY AND ALSO EXAMINE THE APPLI CABILITY OF PROVISIONS OF SECTION 269SS / 269T OF THE I.T. ACT AND AS A RE SULT OF SUCH ENQUIRY/VERIFICATION MAKE NECESSARY ADDITION TO THE TOTAL INCOME OF THE ASSESSEE AS PER PROVISIONS OF INCOME TAX ACT., 1961 WHEREVER REQUIRED. HOWEVER, THE AO IS DIRECTED TO ENSURE THA T OPPORTUNITY OF BEING HEARD IS GIVEN TO THE ASSESSEE BEFORE PASSING THE ORDER. 7. FURTHER, LD. PR CIT/DR RELIED ON THE FOLLOWING D ECISIONS IN SUPPORT OF HIS CONTENTIONS AS UNDER:- VIRBHADRA SINGH (HUF) VS PCIT [2017] 86 TAXMANN.COM 113 (HIMACHAL PRADESH) CIT VS BALLARPUR INDUSTRIES LTD. [2017] 85 TAXMANN. COM 10 (BOMBAY) JEEVAN INVESTMENT & FINANCE (P.) LTD VS. CIT [2017] 88 TAXMANN.COM 552 (BOMBAY) RAMPYARI DEVI SARAOGI V. CIT [1968] 67 ITR 84 (SC) ITA NO. 05/JP/2021 BHAGWAN DAS HARWANI, AJMER VS. PR. CIT, UDAIPUR 7 DANIEL MERCHANTS P LTD AND OTHERS (SLP NO. 23976/20 17 DATED 29.11.2017) GOA SESA STERLITE LIMITED (ERSTWHILE SESA GOA LTD) VS. CIT (TAX APPEALS NO. 27/2015 AND 28/2015 DATED 2 ND NOVEMBER, 2020). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PURUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT ONE OF THE KEY REASONS FOR SCRUTINY SELECTION WAS VERIFICATION OF UNSECURED LOANS AND THEREFORE, IT W AS INCUMBENT ON THE PART OF THE ASSESSING OFFICER TO CARRY OUT NECESSARY EXAMIN ATION BY CALLING FOR INFORMATION/DOCUMENTATION FROM THE ASSESSEE AND VER IFYING SUCH INFORMATION/DOCUMENTATION SO SUBMITTED BEFORE TAKIN G ANY VIEW IN THE MATTER. 9. IN RESPECT OF UNSECURED LOAN OF RS. 10 LACS FROM SH. BHARAT HARWANI, THE LD PR CIT HAS RECORDED A FINDING THAT THE ASSES SEE HAS FURNISHED A PHOTOCOPY OF LEDGER CONFIRMATION, WHICH DOES NOT HA VE ANY SIGNATURE FROM SH. BHARAT HARWANI AND FURTHER NO ITR AND BANK STAT EMENT HAS BEEN FURNISHED OF SH. BHARAT HARWANI SO AS TO ESTABLISH/ PROVE THE GENUINENESS AND CREDITWORTHINESS IN RESPECT OF THIS UNSECURED L OAN. TO OUR MIND, WHAT THE LD PR CIT HAS STATED ARE BASIC DOCUMENTATION WH ICH IS REASONABLY EXPECTED TO BE CALLED FOR AND EXAMINED BY THE AO AS PART OF STANDARD OPERATING PROCEDURE FOR VERIFYING THE GENUINENESS O F LOAN TRANSACTION AND CREDITWORTHINESS OF THE LENDER. THERE IS NOTHING ON RECORD THAT THE AO ON RECEIPT OF SO CALLED CONFIRMATION HAS CALLED FOR AN Y FURTHER INFORMATION/DOCUMENTATION FROM THE ASSESSEE OR CARR IED OUT ANY INDEPENDENT EXAMINATION U/S 133(6) OF THE ACT. GIV EN THAT THE AO BASIS A MERE CONFIRMATION SO FILED BY THE ASSESSEE WHICH IN REALITY IS NOT A CONFIRMATION IN ABSENCE OF SIGNATURE AND AUTHENTICA TION HAS ACCEPTED THE LOAN TRANSACTION IS CLEARLY NOT JUST A CASE OF LACK OF ENQUIRY BUT A CASE OF NO ENQUIRY RENDERING THE ORDER SO PASSED AS CLEARLY ER RONEOUS AND PREJUDICIAL TO ITA NO. 05/JP/2021 BHAGWAN DAS HARWANI, AJMER VS. PR. CIT, UDAIPUR 8 THE INTEREST OF REVENUE. SIMILAR FACT PATTERN EXIST IN RESPECT OF OTHER TWO TRANSACTIONS WITH SH. RAHUL HARWANI AND SH. SUNIL I SRANI AND WE AGREE WITH THE FINDINGS OF THE LD PR CIT THAT THE ORDER SO PAS SED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HO WEVER, THE CREDITS BY WAY OF JOURNAL ENTRIES IN ACCOUNT OF SH RAHUL HARWANI F OR PURCHASES/EXPENSES CANNOT BE TERMED IN THE NATURE OF LOANS AND ADVANC ES IN TERMS OF SECTION 269SS AND TO THIS EXTENT, THE FINDINGS OF THE LD PR CIT ARE SET-ASIDE. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/06/2021. SD/- SD/- LANHI XKSLKBZ FOE FLAG ;KNO ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 22/06/2021 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- BHAGWAN DAS HARWANI, AJMER 2. IZR;FKHZ@ THE RESPONDENT- PR. CIT, UDAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 05/JP/2021} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR