SUNIL KUMAR GIRDHAR, Jaipur V. CIT, Alwar

ITA 513/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5051 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 09-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEENA CIT DHK
• Section: 143(3); 263

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO.513/JP/16 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 SHRI SUNIL KUMAR GIRDHAR, 33 SCHEME NO.2, ALWAR CUKE VS. THE PRINCIPAL CIT, ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ADHPG 8645 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI M.S. MEENA ( CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 19.09.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT: 26/09/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. PR. COMMISSIONER OF INCOME TAX, ALWAR PASSED U/S 263 OF THE I.T. ACT, 1961 DATED 29.03.2016 WHEREIN THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: (1) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX U/S 263 IS ILLEGAL & BAD IN LAW AND THE SAME BE QUASHED. (2) THE LD. CIT HAS ERRED ON FACTS AND IN LAW IN HOLDIN G THAT NO ENQUIRY/VERIFICATION HAS BEEN CONDUCTED BY THE AO O N THE ISSUES COVERED BY NOTICE ISSUED U/S 263 OF THE ACT IGNORING THAT AO HAS MADE THE NECESSARY ENQUIRIES ON THE ISSUES RAISED IN THE NO TICE AND AFTER HAVING BEEN SATISFIED WITH THE SAME PASSED THE ORDER WHICH CANT BE HELD AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E ONLY ON SURMISES AND CONJECTURES. ITA NO. 513/JP/16 SHRI SUNIL KUMAR GIRDHAR VS. PR. CIT, ALWAR 2 (3) THE LD. CIT HAS ERRED ON FACTS AND IN LAW IN DIREC TING THE AO TO ALSO CONSIDER THE ISSUE WHICH MAY SUBSEQUENTLY COME TO T HE NOTICE OF THE AO DURING THE SET ASIDE ASSESSMENT PROCEEDINGS U/S 143 (3)/263 OF THE IT ACT. SUCH DIRECTION ARE AGAINST LAW AND BE DIRECTED TO B E QUASHED. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT DURING TH E YEAR UNDER CONSIDERATION, THERE WAS A CASH DEPOSIT OF RS. 21,58,258 IN THE AS SESSEES BANK ACCOUNT MAINTAINED WITH THE ICICI BANK. IN ASSESSMENT PROC EEDINGS U/S 143(3), THE ASSESSEE EXPLAINED THE SOURCE OF CASH DEPOSIT AND T HAT THE SAME IS DULY RECORDED IN THE BOOKS OF ACCOUNTS. THE AO HOWEVER, DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND CONSIDER THIS AMOUN T AS SALE AND AFTER REJECTING THE BOOKS OF ACCOUNTS ASSESSED THE INCOME BY APPLYING PROFIT RATE OF 10% ON THE SALES (DECLARED SALE RS.31,83,499/- + CASH DEPOSIT IN BANK RS. 21,58,369/-) VIDE ASSESSMENT ORDER DATED 16.01.2014 . THE LD. CIT HELD THAT AO HAS NOT MADE ENQUIRY/VERIFICATION IN RESPECT OF DEP OSIT OF RS. 21,58,258/- IN THE BANK ACCOUNT AND ALSO IN RESPECT OF PURCHASES OF RS. 15,30,436/-. HE THEREFORE, HELD THAT THE ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 2.1 THE LD AR SUBMITTED THAT THE AO IN THE ORIGINAL ASSESSMENT PROCEEDINGS HAS EXAMINED THE ISSUE OF DEPOSIT IN THE ICICI BANK ACCOUNT AND ALSO EXAMINED THE BOOKS OF ACCOUNTS INCLUDING PURCHASE/SALE BILLS AND VOUCHERS. THE ASSESSEE HAS GIVEN AN EXPLANATION ON THESE ISSUES AND ONLY A FTER CONSIDERING THE SAME, AO MADE THE ASSESSMENT. THE ORDER PASSED BY AO U/S 143(3), THEREFORE CANNOT BE HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE CIT HAS WRONGLY HELD THAT NO ENQUIRY/VERIFICATI ON HAS BEEN CONDUCTED BY THE AO ON THE ISSUES COVERED BY THE NOTICE ISSUED U /S 263 OF THE IT ACT. TO WHAT EXTENT, THE AO SHOULD MAKE INVESTIGATION IS A MATTER LEFT TO THE WISDOM ITA NO. 513/JP/16 SHRI SUNIL KUMAR GIRDHAR VS. PR. CIT, ALWAR 3 OF THE AO U/S 143(3). THEREFORE THE ORDER PASSED BY CIT U/S 263 IS NOT VALID IN LAW. FOR THIS, RELIANCE IS PLACED ON THE FOLLOWING CASES : 1. CIT VS. GANPAT RAM BISHNOI (2008) 296 ITR 292 (R AJ)(HC) 2. CIT VS. NEW DELHI TELEVISION LTD. (2013) 360 ITR 44/94 DTR 21(DEL. HC) 3. CIT VS. SUNBEAM AUTO LTD. (2011) 332 ITR 167(D EL. HC) 4. CIT VS. GABERIL INDIA LTD. 203 ITR 108,113,114 ( BOM)(HC) 5. CIT VS. AMIT CORPN (2012) 213 TAXMAN 19 (GUJ) (H C) (MAG.) 6. CIT VS. LEISURE WEAR EXPORTS LTD. (2011)341 ITR 166/201 TAXMAN 130 (MAGZ.) (DELHI)(HC) 2.2 THE LD AR FURTHER SUBMITTED THAT THE LD. CIT HA S ALSO REFERRED TO THE AMENDMENT MADE U/S 263 W.E.F. 1.06.2015. HOWEVER, T HE ASSESSEES CASE DO NOT FALL UNDER ANY OF THE CLAUSE MENTIONED THEREIN AND THEREFORE, THE ORDER PASSED U/S 263 IS EVEN NOT AS PER THE AMENDED LAW. 2.3 THE LD AR FURTHER SUBMITTED THAT THE CIT HAS GI VEN THE DIRECTION TO THE AO TO CONSIDER ANY OTHER ISSUE WHICH MAY COME TO HI S NOTICE DURING THE FRESH ASSESSMENT PROCEEDINGS U/S143(3)/263. SUCH DIRECTI ON IS BEYOND THE SCOPE AND POWER OF CIT U/S 263. IN AN ORDER U/S 263 CIT HAS TO POINT THE EXACT ERROR IN THE ORDER. IT CANNOT BE KEPT AT LARGE FOR THE AO TO BRING FURTHER ERROR IN THE ORDER OF HIS PREDECESSOR WHILE FRAMING THE ORDER U /S 143(3)/263. RELIANCE IN THIS CONNECTION IS PLACED IN CASE OF CIT VS. G.K. K ABRA (1995) 211 ITR 336 (HC/AP) WHERE IT IS HELD THAT IT IS NECESSARY FOR T HE CIT TO POINT OUT THE EXACT ERROR IN THE ORDER WHICH HE PROPOSES TO REVISE SO T HAT THE ASSESSEE WOULD HAVE AN ADEQUATE OPPORTUNITY OF MEETING THAT ERROR BEFOR E THE FINAL ORDER IS MADE. ITA NO. 513/JP/16 SHRI SUNIL KUMAR GIRDHAR VS. PR. CIT, ALWAR 4 3. WE NOW REFER TO THE OBSERVATION/FINDINGS OF THE LD PR. CIT, ALWAR WHICH READS AS UNDER: THE REPLY OF THE ASSESSEE HAS BEEN CAREFULLY CONSI DERED AND NOT FOUND TENABLE SINCE THE ASSESSEE HAS CLAIMED THAT THE DEPOSITS OF RS. 21,58,258/- IN HIS SAVING BANK ACCOUNT MAINTAINED AT ICICI BANK WAS MADE BY T HE SUNDRY DEBTORS AND NOT FROM CASH SALES, BUT HAS NOT ADDUCED ANY DOCUM ENTARY EVIDENCES IN ORDER TO SUBSTANTIATE HIS CLAIM. THE ASSESSING OFFICER HA D TREATED THE ABOVE DEPOSITS AS CASH SALES WHICH WERE NOT CHALLENGED BY THE ASSE SSEE BEFORE THE APPELLATE AUTHORITIES. IT MEANS THE ASSESSEE IS QUITE SATIS FIED FROM THE DECISION OF THE ASSESSING OFFICER. THE AO HAS NOT OBTAINED ANY PRO OF/DOCUMENTARY EVIDENCE IN RESPECT OF THE SAID CASH SALES AND TREATED THE AMOU NT OF THE SAID CASH DEPOSITS AS CASH SALES PROCEEDS IN THE ASSESSMENT ORDER. TH US THE AO FAILED TO MAKE PROPER ENQUIRIES AND VERIFICATIONS WHICH HE WAS REQ UIRED TO MAKE REGARDING THE CLAIM OF SALES RECEIPTS, DETAILS AND VERIFICATI ON FROM THE TRANSACTING PARTIES. LIKEWISE, PURCHASES OF RS.15,30,436/- HAS BEEN SHO WN BY THE ASSESSEE, BUT IT IS OBSERVED THAT NO CREDITOR HAS BEEN SHOWN OUTSTANDIN G ON 31.03.2011 INDICATING THEREBY THAT MOST OF THE PURCHASES WERE MADE IN CASH. THIS PLEA WAS ALSO ACCEPTED BY THE AO. AS PER THE REPLY MOST OF THE BILLS AMOUNT IS BELOW RS. 20,000/- INDICATING REGULAR CASH PAYMENTS. FUR THER SOME PAYMENTS WERE SHOWN TO BE MADE THROUGH BANKING CHANNELS. THE ASS ESSEE HAS NOT GIVEN PROPER JUSTIFICATION REGARDING CASH PAYMENTS MADE AGAINST THE CASH PURCHASES NOR EXPLAINED THE NATURE/DETAILS AND JUSTIFICATION IN RESPECT OF THE PAYMENTS MADE THROUGH BANKING CHANNELS. THE HAS NOT MADE PR OPER ENQUIRY REGARDING THE CASH PURCHASES AND HAS NOT RAISED ANY QUERY REG ARDING THE PAYMENTS MADE THROUGH BANKING CHANNEL. IN THE PRESENT CASE, NO ENQUIRY/VERIFICATION HAS B EEN CONDUCTED BY THE AO ON THE ISSUES COVERED BY THE NOTICE ISSUED UNDER SECTION 263 OF THE IT ACT. IN ITA NO. 513/JP/16 SHRI SUNIL KUMAR GIRDHAR VS. PR. CIT, ALWAR 5 VIEW OF THE ABOVE, THE ORDER PASSED BY THE ASSESSI NG OFFICER FOR ASSESSMENT YEAR 2011-12 DATED 16.01.2014 IS DEEMED TO BE ERR ONEOUS IN SO FAR IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, AS I AM OF THE OPINION THAT THE ORDER HAS BEEN PASSED WITHOUT MAKING ENQUIRIES OR VERIFICATIO N WHICH SHOULD HAVE BEEN MADE. I THEREFORE, CANCEL THE ASSESSMENT ORDER PA SSED BY THE AO U/S 143(3) ON 16.01.2014 WITH THE DIRECTION TO THE AO TO PASS THE ASSESSMENT ORDER AFTER CONSIDERING THE ABOVE MENTIONED ISSUES, APART FROM OTHER ISSUES DISCUSSED IN THE ASSESSMENT ORDER DATED 16.01.2014 AND ALSO THE ISSUES WHICH MAY SUBSEQUENTLY COME INTO THE NOTICE OF THE ASSESSING OFFICER DURING THE SET ASIDE ASSESSMENT PROCEEDINGS U/S 143(3)/263 OF THE IT ACT , 1961. CONSEQUENTLY, THE ORDER PASSED U/S 143(3) OF THE ACT IS SET ASIDE UND ER SECTION 263 OF THE ACT WITH THE DIRECTION THAT THE AO SHOULD PROPERLY EXAMINE A LL THE ISSUES RAISED IN THE FOREGOING PARAS AND PASS THE ASSESSMENT ORDER AFRES H AFTER MAKING PROPER ENQUIRIES AND AFTER AFFORDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. 4. THE LD DR IS HEARD AND SUBMITTED THAT THE SOURCE OF CASH DEPOSIT IN THE ASSESSES BANK ACCOUNT HAS NOT BEEN EXAMINED BY THE AO. THE AO HAS NOT OBTAINED ANY PROOF/DOCUMENTARY EVIDENCE IN RESPECT OF THE SAID CASH SALES AND TREATED THE AMOUNT OF THE SAID CASH DEPOSITS AS CAS H SALES PROCEEDS IN THE ASSESSMENT ORDER. THUS THE AO FAILED TO MAKE PROPE R ENQUIRIES AND VERIFICATIONS WHICH HE WAS REQUIRED TO MAKE REGARD ING THE CLAIM OF SALES RECEIPTS, DETAILS AND VERIFICATION FROM THE TRANSAC TING PARTIES. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOTED THAT THE ASSESSING OFFICER HAS MADE THE NECESSARY ENQUIRY FROM THE ASSESSEE REGARDING THE NATURE AND SOURCE OF DEPOSIT IN HIS BANK ACCOUNT MAINTAINED WITH THE ICICI BANK. THE A SSESSEE IN RESPONSE HAS SUBMITTED HIS EXPLANATION REGARDING THE NATURE AND SOURCE OF SUCH DEPOSITS AND THE FACT THAT THE SAME HAS BEEN RECORDED IN HIS BOOKS OF ACCOUNTS. THE ITA NO. 513/JP/16 SHRI SUNIL KUMAR GIRDHAR VS. PR. CIT, ALWAR 6 ASSESSING OFFICER WAS HOWEVER NOT SATISFIED WITH TH E EXPLANATION OF THE ASSESSEE AND BROUGHT THE WHOLE AMOUNT OF DEPOSIT IN THE BANK ACCOUNT AS UNRECORDED SALES AND ESTIMATED THE PROFITS THEREON WHICH WAS BROUGHT TO TAX. THEREFORE, IT IS NOT A CASE OF LACK OF ENQUIRY. FU RTHER, WHERE THE WHOLE OF THE CASH DEPOSIT HAS BEEN BROUGHT TO TAX, WE FAIL TO UN DERSTAND HOW THE ACTION OF THE ASSESSING OFFICER IS PREJUDICIAL TO THE INTERES T OF THE REVENUE. INFACT, THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE TO THE EFFECT THAT THE AMOUNT HAS ALREADY BEEN RECORDED IN THE BO OKS OF ACCOUNTS AND HAVING SAID THAT, BROUGHT THE WHOLE AMOUNT OF CASH DEPOSIT TO TAX. IN LIGHT OF ABOVE, WE ARE OF THE VIEW THAT THE LD. CIT WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WA S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THAT VIEW OF THE MATTER, WE SET- ASIDE THE IMPUGNED ORDER UNDER SECTION 263 OF THE ACT PASSED BY THE LD. CIT AND THE ASSESSMENT ORDER PASSED BY THE ASSESSING OF FICER IS RESTORED. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/09 /2016. SD/- SD/- ( KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 26/09/2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI SUNIL KUMAR GIRDHAR, ALWAR 2. IZR;FKHZ@ THE RESPONDENT- THE PR. CIT, ALWAR ITA NO. 513/JP/16 SHRI SUNIL KUMAR GIRDHAR VS. PR. CIT, ALWAR 7 3. VK;DJ VK;QDR@ CIT ALWAR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)- 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.513 /JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR