M/s Kangaro Industries Ltd., Ludhiana V. Pr. CIT (C), Ludhiana

ITA 519/CHANDI/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1613 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 24-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR GULSHAN RAJ
• Keywords: Bogus Share capital; Related party transaction; Revision of order; Depreciation; Transfer pricing; Opportunity of being heard; Permanent establishment; Fair market value; Corroborative evidences; Assessment record; Revenue expenditure; Capital expenditure
• Section: 263; 143(3); 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A CHANDIGARH !, ' # . %.. . & , '( # BEFORE: SMT. DIVA SINGH, JM & DR. B.R.R.KUMAR, AM ITA NO. 519/CHD/2018 ASSESSMENT YEAR : 2013-14 M/S KANGARO INDUSTRIES LTD. B-XXX-6754, FOCAL POINT, LUDHIANA. VS THE PR. CIT (CENTRAL), LUDHIANA. PAN NO: AAACK6603L APPELLANT RESPONDENT ITA NO. 520/CHD/2018 ASSESSMENT YEAR : 2013-14 M/S KANIN INDIA, B-XXX-6754, FOCAL POINT, LUDHIANA. VS THE PR. CIT (CENTRAL), LUDHIANA. PAN NO: AABFK2551P APPELLANT RESPONDENT !' ASSESSEE BY : SHRI TEJ MOHAN SINGH #!' REVENUE BY : DR. GULSHAN RAJ, CIT (DR) $ %! & DATE OF HEARING : 25.09.2018 '()*! & D ATE OF PRONOUNCEMENT : 27/11/2018 ')/ ORDER PER BENCH THESE TWO APPEALS FILED BY DIFFERENT ASSESSEES ARE BEING DECIDED BY COMMON ORDER. IT WAS THE COMMON STAND OF BOTH THE PA RTIES BEFORE THE BENCH THAT THE ISSUES RAISED IN THESE TWO APPEALS ARE ID ENTICAL, CONSEQUENTLY THE ARGUMENTS ADVANCED IN ITA 520/CHD/2 018, IT HAS BEEN SUBMITTED, WOULD APPLY MUTATIS-MUTANDIS TO ITA 519 /CHD/2018. THE ORDERS ASSAILED BY THE RESPECTIVE ASSESSEES IN THE PRESENT PROCEEDINGS ARE SEPARATE ORDERS PASSED U/S 263 OF THE INCOME TAX ACT DATED 31.03.2018 OF PR. CIT (CENTRAL) LUDHIANA PERTAINING TO 2013-14 ASSESSMENT YEAR. ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 2 OF 29 2. ACCORDINGLY, IN TERMS OF THE SUBMISSIONS OF THE PARTIES, WE TAKE UP THE GROUNDS RAISED BY THE ASSESSEE IN ITA 520/CHD/201 8 FOR ADJUDICATION FIRST. THESE READ AS UNDER: 1. THAT THE LD. COMMISSIONER OF INCOME TAX HAS WRONGLY ASSUMED JURISDICTION UNDER SECTION 263 OF THE ACT TO SET-ASIDE THE ASSESSMENT ORDER DATED 25.05.2015 PASSED BY THE ASSESSING OFFICER IN AS MUCH AS THE ORDER IS NE ITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE AND AS SUCH THE ASSUMPTI ON OF JURISDICTION UNDER SECTION 263 OF THE ACT IS BEYOND HIS COMPETENCE. 2. THAT THE LD. COMMISSIONER OF INCOME TAX HAS ERRED I N FAILING TO CONSIDER THE VARIOUS REPLIES AND SUBMISSIONS PLACED ON RECORD IN -PROCEEDINGS BEFORE HIM WHICH IS ARBITRARY AND UNJUSTIFIED. 3. THAT THE ASSESSMENT ORDER HAVING BEEN PASSED BY THE ASSESSING OFFICER AFTER DUE APPLICATION OF MIND AND TAKING INTO CONSIDERATION T HE VARIOUS REPLIES, MATERIAL ON RECORD AND BOOKS OF ACCOUNT, THE ACTION RESORTED TO BY THE COMMISSIONER OF INCOME TAX IS UNWARRANTED AND UNCALLED FOR. 3. THE LD. AR INVITING ATTENTION TO THE IMPUGNED ORDER AN D THE PAPER BOOK FILED SUBMITTED THAT THE SPECIFIC ISSUES RAISED BY THE PR. CIT IN THE SHOW CAUSE NOTICE ISSUED TO THE ASSESSEE WHICH HAS BEE N EXTRACTED IN THE IMPUGNED ORDER ITSELF HAS BEEN A SUBJECT MATTER OF D ETAILED ENQUIRIES AND QUERIES BY THE AO IN THE COURSE OF THE REGULAR SCR UTINY ASSESSMENT PROCEEDINGS. THIS FACT, IT WAS SUBMITTED, IS BORNE OUT FROM THE REPLY OF THE ASSESSEE BEFORE THE PR. CIT. INVITING ATTENTION TO T HE REPLY OF THE ASSESSEE WHICH HAS ALSO BEEN EXTRACTED IN THE IMPUGNED ORDER, SPECIFIC ATTENTION WAS INVITED TO THE VARIOUS PAGES IN THE PAPER BOOK WHICH, IT WAS SUBMITTED, DEMONSTRATED AND SUPPORTED THE CLAIM OF THE ASSESSEE. REFERENCE WAS MADE TO VARIOUS REPLIES OF THE ASSESSEE B EFORE THE AO AND THE SPECIFIC QUERIES RAISED BY THE AO IN THE COURSE OF TH E ORIGINAL PROCEEDINGS. THESE FACTS IT WAS SUBMITTED ARE NOT DISPUTE D BY THE REVENUE NAMELY THAT ON THE ISSUES RAISED BY THE PR. CI T, THE ASSESSING OFFICER HAD RAISED QUERIES AND REPLIES OF THE ASSESSEE WE RE ALSO AVAILABLE ON RECORD. RELYING UPON THE SAME, IT WAS SUBMITTED, THAT WHEN THESE ARE READ ALONGWITH THE REPLIES MADE AVAILABLE TO THE AO WHERE UPON FURTHER QUERIES AND QUESTIONNAIRES ETC. WERE ALSO ISSUED BY HIM W HICH HAD ALSO BEEN REPLIED TO BY THE ASSESSEE, THE ASSESSEE HAD SUCC ESSFULLY DEMONSTRATED ITS CLAIM. ADDRESSING THESE IT WAS HIS SUBM ISSION THAT WHEN THESE ARE READ ALONGWITH THE SUBMISSIONS ADVANCED BEFORE THE PR. CIT, IT WILL BE SEEN THAT NONE OF THESE ARGUMENTS AND SUP PORTING DOCUMENTS HAVE BEEN DISPUTED OR UPSET BY THE PR.CIT. THUS, IN THIS BACKGROUND, THE CURSORY OBSERVATIONS OF THE PR. CIT ON THE BASIS OF WHICH HE HAS COME TO AN INCORRECT CONCLUSION THAT THERE WAS A LACK OF ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 3 OF 29 ENQUIRY BY THE AO IN THE FACTS OF THE PRESENT CASE, IT W AS HIS SUBMISSION, WAS COMPLETELY CONTRARY TO THE FACTS ON RECORD. 4. THE SPECIFIC SHOW CAUSE NOTICE U/S 263DATED 07.03.2018 IS REPRODUCED AS UNDER : IN THIS CASE, ASSESSMENT WAS COMPLETED U/S 143(3) O F THE IT ACT, VIDE ORDER DATED 25.05.2015. THE RECORD OF THE ASSESSMENT PROCEEDING S HAVE BEEN EXAMINED. IT IS NOTED THAT ASSESSMENT IN THIS CASE WAS COMPLETED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE AND THEREFORE, THE ORDE R PASSED BY THE ASSESSING OFFICER IS CONSIDERED TO BE ERRONEOUS IN SO FAR AS IT IS PREJU DICIAL TO THE INTEREST OF REVENUE. THE ERRORS SO MADE IN THE ASSESSMENT ARE AS UNDER:- (I) IT IS NOTED THAT THE FIRM HAS MADE PAYMENTS IN FOREIGN CURRENCY AND AS PER FORM NO.L5CB AVAILABLE ON RECORD THESE PAYMENTS ARE MADE TO NON RESIDENTS WITHOUT DEDUCTION OF TDS. A COPY OF THE LEDGER ACCOUNT OF P AYMENTS MADE IN FOREIGN CURRENCY IS AVAILABLE ON RECORD. HOWEVER, THE AO HAS NOT EXA MINED THE NATURE OF THESE PAYMENTS NOR CAUSED ANY VERIFICATION OR INQUIRIES B EFORE ALLOWING THE IMPUGNED EXPENDITURE. (II) IT IS NOTED THAT THE FIRM HAS CLAIMED LOSS ON ACCOUNT OF FOREIGN CURRENCY VARIATION OF RS.4.19 CRORES IN THE PROFIT & LOSS ACCOUNT. THE AO HAS NEITHER EXAMINED NOR CARRIED OUT ANY VERIFICATION TO DETERMINE WHETHER T HE LOSS INCURRED IS WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES OR WHETHER THE SA ME IS ON REVENUE OR CAPITAL ACCOUNT. (III) IT IS NOTED FROM RECORD THAT SUBSTANTIAL ADDI TIONS ARE MADE TO THE FIXED ASSETS DURING THE YEAR AS UNDER:- MACHINERY 53.98 LACS PLANT &MACHINERY 3.58 CRS. BUILDING 2.94 CRS. FURNITURE & FIXTURE 58.54 LACS FAN & COOLER 6.44 LACS CAR 1.63 CRS. COMPUTER 21. 14 LACS THE AO HAS ALLOWED THE ENTIRE CLAIM OF DEPRECIATION WITHOUT MAKING ANY INQUIRIES OR VERIFICATION TO ASCERTAIN WHETHER THE ASSETS WERE I NSTALLED AND PUT TO USE IN THE PREVIOUS YEAR. (IV) PURCHASES MADE FROM PERSONS COVERED U/S 40A(2) (B) :- AS PER ANNEXURE C OF BALANCE SHEET, THE FIRM HAS RAISED UNSECURED LOANS FROM THE PERSONS SPECIFIED IN SECTION 40A(2)(B) AND ALSO MADE PURCHASES AND GOT JOB WORK DONE FROM THEM. THE A.O. HAS NOT EXAMINED AS TO WHETHER EXPENDITURE INCURRED ON ACCO UNT OF SUCH PURCHASES AND SERVICES IS EXCESSIVE OR UNREASONABLE HAVING REGARD TO THE F AIR MARKET VALUE OF THE GOODS AND SERVICES FOR WHICH THE PAYMENTS HAVE BEEN MADE OR T HE LEGITIMATE NEEDS OF THE BUSINESS OF THE FIRM OR BENEFIT DERIVED BY OR ACCRUING TO TH E FIRM FROM SUCH EXPENDITURE. (V) IT IS NOTED FROM RECORD THAT THE FIRM HAS CLAIMED COMMISSION EXPENSES AT RS.69.06 -L ACS. COPY OF COMMISSION PAID ACCOUNT AS APPEARING IN THE BOOKS IS FILED DURING ASSESSMENT PROCEEDINGS. THE AO ALLOWED THE ENTIRE CLAIM OF COM MISSION PAYMENT WITHOUT CAUSING ANY INQUIRIES OR VERIFICATION REGARDING THE GENUINE NESS OF THE CLAIM, NATURE OF SERVICES RENDERED BY THE RECIPIENTS TO DETERMINE WHETHER THE COMMISSION PAYMENT IS INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES. IN LIGHT OF THE ABOVE, IT IS EVIDENT THAT THE ASSES SMENT ORDER PASSED ON 25.05.2015 IS ERRONEOUS IN SO FAR AS IT IS PREJUDIC IAL TO THE INTEREST OF REVENUE WITHIN THE MEANING OF EXPLANATION 2 OF SECTION 263(1) OF THE I T ACT, 1961. ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 4 OF 29 IN VIEW OF THE ABOVE, YOU ARE BEING GIVEN AN OPPORT UNITY OF BEING HEARD IN THE MATTER. IF YOU WISH TO FURNISH ANY WRITTEN SUBMISSIONS OR BE HEARD IN THE MATTER PERSONALLY/THROUGH AUTHORIZED REPRESENTATIVE (AR), YOU MAY DO SO ON 16 .03.2018 AT 10.30 A.M. IN CASE NOTHING IS HEARD FROM YOU BY THE APPOINTED DATE, IT WILL BE ASSUMED THAT YOU HAVE NOTHING TO SAY IN THE MATTER AND THE PROCEEDINGS WILL BE CONCLUDED ON MERITS AND AS PER LAW. 5. REFERRING TO THE FIRST ISSUE, ATTENTION WAS INVITED TO PAP ER BOOK PAGE 429 WHICH IS THE REPLY OF THE ASSESSEE BEFORE THE PR. CIT. TO DEMONSTRATE THE FACT THAT THE ISSUE HAD BEEN FULLY LOOKE D INTO BY THE AO, ATTENTION WAS INVITED TO PAPER BOOK PAGE 223 TO 224 WH ICH WAS THE QUESTIONNAIRE ISSUED BY THE AO IN THE COURSE OF THE ASSE SSMENT PROCEEDINGS DATED 11.05.2015. IT WAS SUBMITTED THAT IT C AN BE SEEN THAT THE SPECIFIC ISSUE ADDRESSED BY THE PR. CIT HAS BEEN QUE STIONED BY THE AO VIDE POINT 3. THE RELEVANT EXTRACT FROM THE SUBMISSION S ADVANCED BEFORE PR. CIT HEAVILY RELIED UPON ON BEHALF OF THE ASSESSE E IS REPRODUCED HEREUNDER : 3. ISSUE OF APPORTIONMENT OF EXPENSES: DURING THE COURSE OF 'ASSESSMENT PROCEEDINGS IT WAS NOTED THAT THE APPORTIONMENT OF VARIOUS EXPENSES I.E FOREIGN TRAVELLING AD FOREIGN TRADE FA IR EXPENSES; HAVE NOT BEEN ALLOCATED NALAGARH AND SAMBA UNIT. ACCORDINGLY, THE AR WAS RE QUIRED TO SUBMIT , THE DETAILS OF PROPORTIONATE AMOUNT OF THESE 'EXPENSES WITH RES PECT TO NALAGARH & SAMBA UNIT AND SHOW CAUSE AS TO WHY THESE PROPORTIONATE EXPENSES B E NOT DISALLOWED AS BELONGS TO THOSE UNITS IN RESPECT OF WHICH DEDUCTIONS U/S 80IB AND 8 0IC HAD ALREADY BEEN CLAIMED. IN RESPONSE THE AR OF. THE 'ASSESSEE SUBMITTED THAT FOREIGN TRAVELLING & FOREIGN TRADE FARE HAVE NOT BEEN APPORTIONED BECAUSE THERE IS NO EXPO RT FROM NALAGARH & SAMBA UNIT. THE ASSESSEE FURTHER STATED THAT ISSUE HAS BEEN DEC IDED IN. THEIR FAVOUR BY THE CIT (A) -FOR THE A.Y, 20 10- 11. THE REPLY OF THE AR ALONGWITH THE . FACTS OF THE C ASE ON THIS ISSUE HAVE BEEN TAKEN ON RECORD AND CONSIDERED BUT FOUND TO BE UNTENABLE. SINCE THE ASSESSEE HAS NOT ALLOCATED FOREIGN TRAVELLING EXPENSES AND TRADE FAIR .EXPENSES TO NAL AGARH & SAMBA UNIT AS SUCH THESE EXPENSES ARE ALLOCATED ON PROPORTIONATE BASIS ON TH E BASIS OF TOTAL TURNOVER. THERE FOR AN AMOUNT OF RS,4,22,818/- IS ALLOCATED T O NALAGARH UNIT WHICH IS TAX FREE UNIT U/S 801C IS HEREBY DISALLOWED AND ADDED B ACK TO THE INCOME OF THE ASSESSEE AND AN AMOUNT OF RS. 3,57,030/- IS ALL OCATED TO SAMBA UNIT WHICH IS TAX FREE UNIT U/S 80IB ARE HEREBY DISALLOWED AND AD DED BACK TO THE INCOME OF THE ASSESSEE COMPANY. I AM ALSO SATISFIED THAT THE ASSESSEE HAS FURNIS HED INACCURATE PARTICULARS OF ITS INCOME ON THIS ACCOUNT AND THEREFORE PENALTY PROCE EDINGS U/S 271(L}(C) OF THE I.T. ACT ARE HEREBY INITIATED SEPARATELY, HEAD TOTAL ALLOCATION LUDHIANA UNIT-M NALAGARH SAMBA ADDITION 66.69 18.06 15.25 FOREIGN TRAVELLING, 13,91,533 9,28,013 2,51,311 2,1.2,209 4,63,520 FOREIGN TRADE FAIR 9,49,648 633,320 1,71,507 1,44,821 3,16328 TOTAL 23,41,181 15,61,333 4,22,818 3,57,030 7,79,848 ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 5 OF 29 4. ISSUE OF PYMENT OF BOUNES AND LEAVE WITH WAGES: ON PERUSAL OF THE EXPENSES VOUCHERS REVEALED THAT ON SOME VOUCHERS THE SIGNAT URES ARE NOT LEGIBLE, HENCE, SAME IS NOT POSSIBLE AND THE CLAIM OF EXPENSES UNDE R THE VARIOUS HEADS APPEARS BE HIGHER SIDE. THEREFORE A DISALLOWANCE OF RS1,50000/ - IS MADE ON THIS ACCOUNT 5.1. THESE SUBMISSIONS, IT WAS SUBMITTED THE ASSESSEE HAD SUPPORTED BY DOCUMENTARY EVIDENCES I.E. THE REPLY OF THE ASSESSEE IN THE SCRUTINY PROCEEDINGS BEFORE THE AO WHICH WAS ALSO MADE AVAILABLE T O THE PR. CIT. THE SAME IT WAS SUBMITTED IS AVAILABLE AT PAGES 225-227 I N THE PAPER BOOK FILED. SPECIFIC ATTENTION WAS INVITED TO PAGE 226 ALO NGWITH 227 WHICH WOULD SHOW THAT THE SAID REPLY WAS ACCOMPANIED BY COPIES OF FORM-15 CB REFLECTING THEREIN ALL THE NECESSARY DETAILS ALON GWITH SUPPORTING SAMPLE BILLS OF PURCHASE/IMPORT. IT WAS SUBMITTED THAT IN THE COURSE OF THE HEARINGS, THE ENTIRE RECORDS WERE MADE AV AILABLE BEFORE THE AO. ATTENTION WAS INVITED TO THE ENCLOSURES ATTACHED WITH THE SAID REPLY I.E. FORM 15CB AT PAGES 228 AND 229 WHICH IS DULY CERTIFIED BY ACCOUNTANT IN TERMS OF RU LE 37BB. THE NAME OF THE PARTY TO WHOM REMITTANCE IS MADE IT WAS SUBMITTED IS COMPLETELY NARRATED THERE AND THE NATURE OF THE REMITTANCE IS MENTIONED THERE. IT WAS SUBMITTED, THAT THE PAYMENT WAS BEING MADE TO NON-RESIDENTS FOR PURCHASE OF GOODS WHICH IS ALL DISCLOS ED THEREIN. THUS IT WAS ARGUED THAT ALL NECESSARY DETAILS WERE ENQU IRED INTO BY THE AO AND WERE SEEN BY THE AO. FOR READY REFERENCE, WE EX TRACT THE RELEVANT PORTION OF THE DOCUMENT: FORM NO. 15CB (SEE RULE 37BB) CERTIFICATE OF AN ACCOUNTANT I/WE HAVE/EXAMINED THE AGREEMENT (WHEREVER APPLICAB LE) BETWEEN M/S KANIN (INDIA), B- XXX-6754, FOCAL POINT, LUDHIANA. AND M/S. MANGELS I NDUSTRIA E. COMERCIO LTDA. RUA MAX MANGELS SENIOR, 777 CEP: 09895-900 SAO BERNARDO-DO CAMPO -SP- BRAZIL REQUIRING THE (REMITTERS) (BENEFICIARY) ABOVE REMITTANCE AS WELL AS THE RELEVANT DOCUMENTS AND BOOKS OF ACCOUNT REQUIRED FOR ASCERTAINING THE NATURE OF REM ITTANCE AND FOR DETERMINING THE RATE OF DEDUCTION OF TAX AT SOURCE AS PER PROVISIONS OF SUB-SECTION (6) OF SECTION 195. WE-HEREBY CERTIFY THE FOLLOWING:- A NAME AND' ADDRESS OF THE BENEFICIARY OF THE REMITTANCE M/S, MANGELS INDUSTRIA E COMERCIO LTDA. RUA MAX MANGELS SENIOR, 777 CEP: 09895-900 SAO BERNARDO DO CAMPO -SP-BRAZIL B 1 COUNTRY TO WHICH REMITTANCE IS MADE COUNTRY: BRAZIL J CURRENCY: US$ 10. NATURE OF REMITTANCE AS PER AGREEMENT/ DOCUMENT IMPORT OF RAW MATERIAL 13. IN CASE REMITTANCE IS FOR SUPPLY OF ARTICLES OR THI NGS (E.G PLANT ,MACHINERY EQUIPMENT ETC.) PLEASE INDICATE, YES (A) WHETHER THE RECIPIET OF REMITTANCE HAS ANY PERMANE NT ESTABLISHMENT (PE) IN INDIA THROUGH WHICH THE BENEFICIARY OF THE REMI TTANCE IS DIRECTLY OR INDIRECTLY CARRYING ON SUCH ACTIVITY OF SUPPLY OF ARTICLES OR THINGS. NO ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 6 OF 29 (B) WHETHER SUCH REMITTANCE IS ATTRIBUTABLE TO OR CONNE CTED WITH SUCH PERMANENT ESTABLISHMENT NO (C) IF THE REPLY ITAM NO. (B) ABOVE IS YES THE AMOUNT OF INCOME COMPRISED IN SUCH REMITTANCE WHICH IS LIABLE TO TEX. (D) IF NOT, THE REASONS IN BRIEF THEREOF. PAYMENT IS BEING MADE TO NON RESIDENT FOR PURCHASE OF GOODS. 5.2 IT WAS HIS SUBMISSION THAT SIMILARLY AT PAGES 230 TO 2 31 AND 232 ONWARDS TO 284, SIMILAR SUPPORTING CERTIFICATES ARE AVAILABL E WHEREIN ALL THE REQUISITE INFORMATION IS AVAILABLE. AS AN ILLUSTRATION, ATTEN TION WAS INVITED TO PAGE 230 WHICH IS ALSO A COPY OF FORM 15CB CE RTIFICATE OF CHARTERED ACCOUNTANT VERIFYING THAT THE PAYMENT HAS B EEN MADE TO KAPOOR JATINDER SINGH, ADDRESS OF THE CONCERNED PERSON IS APPT. 25 DOM 57 REMITTED TO RUSSIA IN US DOLLARS WORTH 12692.40 AND IT HAS ALSO BEEN SIMILARLY DISCLOSED IN COLUMN 13(D) OF THE SAID FORM THAT THE PAYMENT IS MADE TO NON-RESIDENT WHO HAS NO PERMANENT ESTABLISHMENT IN INDIA . 5.3 IT WAS HIS SUBMISSION THAT CERTIFICATE FOR EACH AND EV ERY PAYMENT IS AVAILABLE ON RECORD, RIGHT UPTO PAGE 275 AND SAMPLE INVO ICES FOR ALL HAVE BEEN PLACED ON RECORD. COMPLETE RECORDS, IT WAS SU BMITTED, WERE MADE AVAILABLE TO THE A.O. ACCORDINGLY, IT WAS ARGUED THAT IT IS NOT A CASE OF NON-ENQUIRY. 6. REFERRING TO THE SECOND ISSUE RAISED BY THE PR. CIT, AT TENTION WAS INVITED TO THE REPLY OF THE ASSESSEE BEFORE THE PR. CIT AVAILABLE ON PAPER BOOK SPECIFIC PAGE 430. HEREIN ALSO, IT WAS SUBMITTED THE AS SESSEE HAS SUPPORTED ITS ARGUMENT THAT THE ISSUE HAD BEEN ENQUIRE D INTO BY THE AO BY FILING COPIES OF SPECIFIC QUERIES RAISED BY THE AO IN THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS. ATTENTION WAS INVITED TO PAPER BOOK PAGE 63 TO 66 WHICH IS QUESTIONNAIRE DATED 28.10.2014 ISSUED BY TH E AO. THE SPECIFIC QUESTION QUA THE ISSUE HAS BEEN RAISED BY TH E AO IN PARA 10 REQUIRING THE ASSESSEE TO PLACE COMPARATIVE CHART OF VAR IOUS EXPENSES, DEBITED TO TRADING AND P&L ACCOUNT SEPARATELY DURING T HE LAST THREE YEARS. INVITING ATTENTION TO PAPER BOOK PAGE 70 TO 73, ATTENTION WAS INVITED TO REPLY AT POINT NO. 5 WHICH HAS BEEN ELABORATED AT PAGE 185. INVITING ATTENTION TO PAPER BOOK PAGE 223 THEREAFTER, IT WAS HIS SUBMISSION THAT THE AO REQUIRED THE ASSESSEE TO FURTHER SUPPLEMENT THIS EXPLANATION AND ON GOING THROUGH THE DETAILS MADE AVAILAB LE, HE ALSO REQUIRED THE ASSESSEE TO JUSTIFY THE FOLLOWING EXPENDITURE EXTRACTED BY HIM IN HIS QUESTIONNAIRE DATED 11.05.2015 AVAILABLE AT PAGES 223-224. FOR READY REFERENCE, SAME IS REPRODUCED HEREUNDER : ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 7 OF 29 2. FROM THE EXAMINATION OF PROFIT & LOSS ACCOUNT IT IS NOTED THAT LARGE AMOUN6T OF OTHER EXPENSES WERE CLAMED MAJOR AMONG THEM ARE AS UNDER EXPENSES FY 2012-13 COMMISSION TO AGENTS 69,06,007 FOREIGN TRAVELLING EXPENSES 6731961 TRAVELING EXPENSES 35,55,232 MARKETING STAFF TRAVELING EXPENSES 6091048 SEA /AIR FREIGHT ON EXPORT 5685939 INLAND FRIGHT &FORWARDING ON EXPORTS 1,02,59 ,616 TRADE FAIR EXPENSES 35 ,48169 BUSINESS PROMOTION EXPENSES 73,35,578 REPAIR &MAINTENANCE 1 ,45,08,760 FOREIGN CURRENCY VARIATION 4,19,01,735 YOU ARE REQUIRED TO JUSTIFY THE LARGE AMOUNT OF ABO VE MENTIONED EXPENSES ALONGWITH DOCUMENTARY EVIDENCES SUCH AS BILLS OF EXPENSES CLA MED PURPOSE OF FOREIGN AND OTHER TRAVELING AND REPAIR AND MAINTENANCE EXPENSES YOU ARE ALSO REQUIRED TO JUSTIFY HUGE AMOUNT OF FOREIGN CURRENCY VARIATION EXPENSES CLAMED ALONG WITH DETAILS AND WORKING OF LOSS ON ACCOUNT OF FOREIGN CURRENCY VARIATION. 3. FROM THE EXAMINATION OF DETAILS AND AIR, IT IS NOTED THAT LARGE AMOUNT OF OUTWARD REMITTANCES WERE MADE DURING THE YEAR ON ACCOUNT OF COMMISSION AND IMPORT OF GOODS. YOU ARE REQUIRED TO JUSTIFY THE LARGE AMOUNT OF OUTWARD REMITTANCES ALONGWITH PURPOSE OF EXPENSES AND THE DETAILS OF TDS THEREON. FURTHER YO U ARE REQUIRED TO SUBMIT FORM NO. 15CB IN SUPPORT OF YOUR CONTENTION. (EMPHASIS SUPPLIED) 7. THE NEXT ISSUE RAISED BY THE PR. CIT, IT WAS SUBMITTE D, IS THE FOREIGN CURRENCY VALUATION WHICH WAS ALSO ENQUIRED INTO BY THE AO. AS PER QUESTIONNAIRE AND REPLY DATED 11.05.2015 REFERRED TO IN THE EARLIER ARGUMENT (REPRODUCED IN PARA 6 ABOVE) IT WAS SUBMITTED, IT IS THE LIST OF THE EXPENSES DETAILED THEREIN. THE REPLY OF THE ASSESS EE, IT WAS SUBMITTED, TO THE AO IS AVAILABLE AT PAGE 226 WHEREIN IT HA S BEEN CLARIFIED THAT THE ASSESSEE IS NOT A DEALER IN FOREIGN EXCHA NGE. THE ASSESSEE IS AN EXPORTER AND HAS ENTERED INTO FORWARD C ONTRACTS WITH THE CANARA BANK FOR THE PURPOSE OF HEDGING LOSS ETC. WHICH MA Y ARISE DUE TO FLUCTUATION IN FOREIGN EXCHANGE FOR THE EXPORT CONTRACTS E NTERED. THE TRANSACTION SLIPS ETC. ISSUED BY THE CANARA BANK, LUDHIAN A AS THIRD PARTY INDEPENDENT EVIDENCES WERE RELIED UPON IN SUPPORT OF THE ASSERTIONS MADE. FOR READY REFERENCE, RELEVANT EXTRACT OF THE SUBMISSIONS MADE TO THE AO IN THE COURSE OF THE SCRUTINY PROCEEDINGS ALSO REFERRED TO BEFORE THE PR. CIT AT PAGE 226 IS EXTRACTED HEREUN DER : THE ASSESSEE IS AN EXPORTER AND FOR THE PURPOSE OF HEDGING THE LOSS DUE TO FLUCTUATION IN FOREIGN EXCHANGE WHILE IMPLEMENTING THE EXPORT C ONTRACTS. THE ASSESSEE HAD ENTERED INTO FORWARD CONTRACTS WITH THE CANARA BANK . IN SOME CASES, THE EXPORT COULD NOT BE EXECUTED WITHIN THE TIME FRAME OR THE PAYMENT HAS NOT RECEIVED AS ENVISAGED AT THE TIME OF ENTERING INTO FORWARD CONT RACT. THEREFORE THE ASSESSEE HAS TO PAY DIFFERENCE BETWEEN THE EXCHANGE RATE TO THE BANK FOR THE CANCELLATION OF FORWARD CONTRACT NOT UTILIZED OR UNDERUTILIZED. WE ARE ALSO PRODUCING TRANSACTION SLIPS ISSUED BY CANARA BANK, B.N.C, LUDHIANA FOR TH E CHARGES DEBITED BY THEM ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 8 OF 29 IT IS PERTINENT TO MENTION THAT THE ASSESSEE IS NOT A DEALER IN FOREIGN EXCHANGE AND THE FORWARD CONTRACTS ARE BOOKED IN OUR REGULAR COU RSE OF BUSINESS AND ARE INCIDENTAL TO ASSESSEE'S BUSINESS. 7.1 ATTENTION WAS INVITED TO THE DETAILS AS PER THE LEDGER ACCOUNT OF THE FOREIGN CURRENCY FLUCTUATION MADE AVAILABLE TO THE AO AND A LSO BEFORE THE PR. CIT WHICH HAVE BEEN PLACED AT PAGES 287-425. THE LED GER ACCOUNT, IT WAS SUBMITTED, CONTINUES UPTO PAGE 308 AND FROM 309 ONW ARDS, THE EVIDENCES AND DETAILS QUA THE FORWARD CONTRACTS SPECIFY ING THE PERIOD, THE CONTRACT ORDER, EXPORT AMOUNT ENTERED INTO ON A N ON-JUDICIAL STAMP PAPER WHICH HAS BEEN PLACED ON RECORD. IT WAS SUBMITTED THAT THE EVIDENCE WAS FURTHER SUPPORTED BY COPIES OF BANK STATE MENTS FILED ALONGWITH THE COPIES OF THE CONTRACTS ENTERED INTO WITH C ANARA BANK SPECIFYING THE PURPOSE. THESE EVIDENCES, IT WAS SUBMITTED , WERE ALL AVAILABLE BEFORE THE AO AND THIS ARGUMENT ALONGWITH SUPPOR TING EVIDENCES WAS MADE BEFORE THE PR. CIT ALSO. THESE EVIDEN CE, IT WAS SUBMITTED, GO ON UPTO 425 OF THE PAPER BOOK. INVITING AT TENTION TO PAPER BOOK PAGE 445, IT WAS SUBMITTED, THAT THE ASSESSEE BEFOR E THE PR. CIT ALSO PROVIDED A CHART OF MONTH-WISE U.S. DOLLAR RATE IN IND IAN RUPEES RIGHT FROM APRIL, 2011 AT WHICH POINT OF TIME, IT WAS, HOWEVER, AROUND 44.30 INR AND THEREAFTER HAD PEAKED TO 55.15 INR IN MAY , 2012 AND AUGUST,2012. IN MARCH, 2013 IT HOVERED AROUND 54.20 IN R. IT WAS HIS SUBMISSION THAT NO ERROR IN ANY OF THESE SUBMISSIONS HAVE BEEN POINTED OUT BY THE PR. CIT. THE AO ADMITTEDLY ON GOING THROUGH THE REPLIES OF THE ASSESSEE ON THE QUERIES RAISED ALSO TOOK INTO CONSIDERAT ION THE FACT THAT THE NET PROFIT RATE OF THE ASSESSEE WAS 11.57% AND THE GP RATE OF 13.19% AND THUS BEING SATISFIED WITH THE EXPLANATION OFFERED PASSE D THE ORDER. THE PAYMENTS, IT WAS RE-ITERATED WERE EVIDENCED FROM THE COPY OF THE BANK STATEMENTS BY THE CANARA BANK WHICH IS THIRD PART Y EVIDENCE AND HAD BEEN ARGUED SO BEFORE THE PR. CIT. 8. INVITING ATTENTION TO THE THIRD ISSUE RAISED BY THE PR. CIT, ATTENTION WAS INVITED TO THE EXPLANATION MADE BEFORE THE AO WHICH H AS BEEN EXTRACTED IN THE IMPUGNED ORDER ALSO AND IS AVAILABLE AT P AGE 433 OF THE SAME. REFERRING TO THE SAME, IT WAS SUBMITTED THAT THE P R. CIT PICKED UP THE WRITTEN DOWN VALUE OF THE ASSETS AS ON 01.04.2012 AN D REQUIRED THE ASSESSEE TO EXPLAIN THESE ADDITIONS. IT WAS HIS SUBMISSION THAT IT IS NOT FOR HIM TO CRITICIZE THE SAID AUTHORITY FOR THE QUERIES RAISE D AND REFERENCE IS ONLY MADE TO HIGHLIGHT THE PREJUDICED AND BIASED MINDSE T OF THE SAID PARTY IN THE EXERCISE OF POWER. IT WAS HIS SUBMISSION THA T NO INFORMED ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 9 OF 29 PERSONH IN HIS RIGHT MIND WOULD EVER CALL FORTH FOR ACCRETIO N OF ASSETS WHILE REFERRING TO THE WRITTEN DOWN VALUE OF THE ASSET AS ON DATE, AS THE VERY USE OF THE TERM WRITTEN DOWN VALUE WOULD SUGGEST T HE OBSOLESCENCE OF THE ASSET ON ACCOUNT OF FLUX OF TIME WHICH IS WHY STATU TORILY DEPRECIATION IS FACTORED IN. THUS, THE OCCASION TO CONSIDER IT AS AN ADDITION IN THE YEAR UNDER CONSIDERATION DOES NOT ARISE. THE SAID FACT IT WAS SUBMITTED TO THE ASSETS WAS POINTED OUT IN THE POLIT EST OF LANGUAGE BY WAY OF WRITTEN SUBMISSION BEFORE THE SAID AUTHORITY. IN VITING ATTENTION TO PAGE 433 OF THE REPLY IT WAS SUBMITTED, THA T THE ASSESSEE HAS POLITELY POINTED OUT THIS ISSUE. APART FROM THIS, IT WAS ALSO SUBMITTED IT HAD ALSO BEEN BROUGHT TO THE NOTICE OF THE PR. CIT THAT THE AO HAD REQUIRED THE ASSESSEE TO SPECIFICALLY ADDRESS THIS ISSUE E VEN OTHERWISE. FOR THE SAID PURPOSES, ATTENTION WAS INVITED TO THE FIRST QUESTIONNAIRE OF THE AO DATED 28.10.2014. SPECIFIC ATTENTION WAS INVITED TO PAGE 66 QUERY NO. 21 RAISED IN REGARD TO THE SAID ISSUE. FOR REA DY REFERENCE, THE FORMAT IN WHICH THE A.O REQUIRED THE ASSESSEE TO SPECIFY IS EXTRACTED HEREUNDER : PROVIDE DETAILS OF ADDITIONS IN FIXED ASSETS IN THE FOLLOWING TABLE (PLEASE DONT ATTACH BILLS) DESCRIPTION OF ASSETS DATE OF PURCHASE DATW ON WHICH PUT TO USE TOTAL AMOUNT 8.1 REPLY TO THE ABOVE, IT WAS SUBMITTED, HAD ALSO BEEN SUBMITTED BEFORE THE PR. CIT. THE REPLY OF THE ASSESSEE, IT WAS SUBMITTED, IS AVAILABLE FROM PAGE 70 ONWARDS AND THE SPECIFIC ISSUE WAS A DDRESSED AT PAGE 72 IN POINT NO. 15 AND ELABORATED AT PAPER BOOK P AGE 186 TO 192. THESE SUBMISSIONS OF THE ASSESSEE, IT WAS SUBMITTED, WER E ALSO SUPPORTED BY SAMPLE VOUCHERS FILED BEFORE AO BEFORE WHOM ENTIRE RECORD WAS MADE AVAILABLE AND THESE WERE ALSO MADE AVAILABLE TO T HE PR. CIT. ATTENTION WAS INVITED TO PAPER BOOK PAGE 190 TO SHOW T HAT THE ASSESSEE HAD INCLUDED THE PARTICULARS SHOWING DATE OF PURCHASE, DAT E ON WHICH THE ASSET WAS PUT TO USE AND THE SAMPLE INVOICES. IT W AS SUBMITTED THAT THESE DETAILS ARE AVAILABLE FROM PAGES 193 TO 222. IT WAS HIS SUBMISSION THAT THE ASSESSEE HAD INCLUDED SAMPLE INVOICES BEFORE THE AO IN RESPONSE TO HIS QUERY, HOWEVER, IN THE COURSE OF THE HEA RING, THE ASSESSEE HAD CARRIED OUT COMPLETE SALE BILLS, INVOICES, BOOKS OF ACCOUNT ETC. AND IT IS NOT EVEN THE ALLEGATION OF THE PR. CIT, THAT THE COMPLETE DETAILS WERE NOT MADE AVAILABLE. THESE DETAILS IT WAS REIT ERATED WERE ALSO ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 10 OF 29 MADE AVAILABLE TO THE PR. CIT, IT WAS SUBMITTED, AND THEY H AVE NOT BEEN UPSET BY HIM. 9. ADDRESSING THE FOURTH ISSUE RAISED BY THE PR. CIT, ATTE NTION WAS INVITED TO THE REPLY OF THE ASSESSEE BEFORE THE PR. CIT AVAILABLE AT PAGES 435 TO 438 OF THE PAPER BOOK. IT WAS HIS SUBMISSION THA T ON A PERUSAL OF THE SAME, IT CAN BE SEEN THAT HEREIN ALSO, THE ASSESSEE SUBMITTED THAT THE COMPLETE DETAILS HAD BEEN ENQUIRED INTO AND FOR THE SAID PURPOSE, HE HAD ALSO EXTRACTED PARA 3 AND 13 OF THE QUESTIONNAIRE ISSUED. COP Y OF THE SAID QUESTIONNAIRE, IT WAS SUBMITTED, IS AVAILABLE AT PAPER BO OK PAGES 63 TO 66 WHEREIN THE SPECIFIC QUESTIONS HAD BEEN RAISED BY T HE POINTS 3 AND 13 WHICH HAVE BEEN EXTRACTED IN THE REPLY TO THE PR. C IT. ATTENTION WAS INVITED TO PAPER BOOK PAGE 70-71 WHEREIN AT SR.NO.1, THE COMPLETE DETAILS OF THE SISTER CONCERN AND AT SR.NO. 8 DETAILS REGA RDING PAYMENT MADE TO SPECIFIED PERSONS U/S 40A(2) APART FROM THE COMPLE TE DETAILS OF TRANSACTION OF THE SISTER CONCERNS ETC. WERE ALSO ALL MAD E AVAILABLE. THE SAID REPLY, IT WAS SUBMITTED, WAS SUPPORTED BY THE REPOR T OF THE CHARTERED ACCOUNT IN FORM NO. 3CEB. SPECIFIC ATTENTION WAS INVITED TO PAPER BOOK PAGE 58 WHEREIN IN SR.NO. 21 AT PAGES 58 TO 61, THE ASSESSEE IN SR.NO. 21 TO 22, AS PER LAW SUPPORTED THE SUBMISSIONS C LEARLY DISCLOSING THE NAME OF THE RELATED PARTY PROVIDING ITS FULL ADD RESS AND THE DESCRIPTION OF THE BUSINESS CARRIED OUT BY THE SAID PARTY ALONGWITH ITS COMPLETE PAN DETAIL. IN SR.NO. 22, FOR THE SAID TRANSACTIO N, THE NATURE OF THE TRANSACTION HAD BEEN GIVEN DISCLOSING THE AMOUNTS A S PER BOOKS OF THE ASSESSEE DISCLOSING THE METHOD FOR DETERMINING ARMS LE NGTH PRICE AS RESALE METHOD FOR PURCHASE OF GOODS FOR EXPORT AS COMPA RABLE UNCONTROLLED PRICE USING COMPARABLE UNCONTROLLED PRICE MET HOD IN REGARD TO PURCHASE OF GOODS FOR RESALE. SIMILARLY, CUP METH OD HAD BEEN USED FOR ACTIVITY OF PURCHASE OF RAW MATERIAL ETC. ALL THESE DISCLOSURES HAD BEEN MADE, REPLIES HAD BEEN MADE, ATTENTION OF THE A O HAD BEEN INVITED TO THESE DOCUMENTS. ATTENTION WAS INVITED TO PAPE R BOOK PAGE 43 WHEREIN PARTICULARS OF PAYMENTS MADE TO PERSONS SPECIFIED IN SECTION 40A(2)(A) AS ANNEXURE-5 FORMING PART OF FORM NO. 3CD AND REP LY TO QUESTION NO. 18 HAD BEEN PROVIDED DISCLOSING THE NATURE OF PAYMENT MADE TO RELATED PARTIES WITH THE AMOUNTS AND THEIR PANS CLEARLY SPECIFYING WHEREVER PAYMENTS WERE TOWARDS INTEREST OR PURCHASE OF JOB WORK OR RENT OR TOWARDS PARTNERS SALARY. ATTENTION W AS ALSO INVITED TO PAPER BOOK PAGE 74 WHICH WERE THE DETAILS OF THE SISTER CONCERNS, HEREIN ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 11 OF 29 ALSO FULL DISCLOSURE ABOUT THE MANUFACTURING ACTIVITY I.E. THE N ATURE OF BUSINESS CARRIED OUT INCLUDING THE NAME OF THE PARTY INCLUD ING PARTICULARS OF THEIR ADDRESS ALONGWITH NAME OF THE PARTNE RS/DIRECTORS, THE PERCENTAGE OF THEIR SHARE ETC. HAD BEEN DISCLOSED. T HESE DETAILS, IT WAS SUBMITTED, CARRY ON TILL PAGE 184 OF THE PAPER BOOK. THE CLAIMS WERE SUPPORTED BY SUPPORTING CERTIFICATES OF CHARTERED A CCOUNTANTS. THESE EVIDENCES AND ARGUMENTS HAVE BEEN ADVANCED AND RELIED UPON BEFORE THE PR. CIT. RELYING UPON THE INVOICES WHICH WERE S PECIFICALLY FILED BY WAY OF SAMPLE INVOICES BEFORE THE PR. CIT ALSO IT WAS SUBMITTED, THESE WOULD SHOW THAT COMPLETE DETAILS OF PURCHASES ETC. FROM PA GE 446 TO 510 WERE MADE AVAILABLE. IN THE CIRCUMSTANCES IT WAS SUBMITTE D BY THE LD. AR IT WAS INCUMBENT UPON THE PR. CIT TO SUPPORT HIS CO NCLUSION THAT THERE WAS NO ERROR IN THE ORDER OF THE A.O BY REFERRING TO ATLEAST SOME FACT OR EVIDENCE ON RECORD TO UPSET THE CONCLUSIONS DRA WN. THE PR. CIT HAS ONLY CASTED DOUBTS THAT THERE COULD BE AN ERROR BUT THAT IS NOT ENOUGH. IT WAS SUBMITTED THAT AS PER LAW, HE IS TO DEMO NSTRATE THAT THERE IS AN ERROR AND THAT TOO, SUCH AN ERROR WHICH C AN BE SAID TO BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN ORDER TO EXERCISE THE REVISIONARY POWER THE SAID EXERCISE HAS TO BE DONE BY HIM. 10. ON A READING FROM THE IMPUGNED ORDER, IT WAS HIS SUBMIS SION THAT ON ALL THE ABOVE ISSUES, THERE IS NO WHISPER TO SHOW THAT ANY OF THE REPLIES AND EVIDENCES CONSIDERED BY THE AO WERE INCORREC T ON FACTS. THE JUSTIFICATION MADE AVAILABLE TO THE AO ON FACTS HAS NOT BEE N POINTED OUT TO BE INCORRECT, NOR HAS IT BEEN SHOWN TO BE SO. THE DOCUMENTS SUPPORTING THE CLAIMS HAVE NOT BEEN UPSET. IT WAS HIS S UBMISSION THAT THERE IS NO WHISPER OF ANY SUCH DISCUSSION IN THE IMPUGNED ORDER. THE PR. CIT SEEKS TO PENALIZE THE ASSESSEE AT HIS WHIMS BY V ISITING UPON HIM FRESH ASSESSMENT PURSUANT TO 263 PROCEEDINGS WITHOUT FIR ST BRINGING OUT AN ERROR AND THAT TOO SUCH AN ERROR WHICH CAN BE SAID TO BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IT WAS HIS SUBMISSION THAT ATLEAST THE EVIDENCES RELIED UPON BEFORE THE A.O ALSO MADE AVAILABLE TO THE PR. CIT SHOULD HAVE BEEN REBUTTED. 11. INVITING ATTENTION TO THE LAST ISSUE ADDRESSED BY PR. CIT NAMELY THE COMMISSION INCOME, ATTENTION WAS INVITED TO PAGE 439 TO 44 0 OF THE PAPER BOOK WHICH IS REPLY GIVEN BY THE ASSESSEE BEFORE THE PR. CIT TO THE SHOW THAT QUA THIS ISSUE ALSO, THE AO HAD SHOW CAUSED THE ASSESSEE TO EXPLAIN AND JUSTIFY ITS CLAIM. SPECIFIC ATTENTION WAS INVITED T O THE QUERY ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 12 OF 29 RAISED BY THE AO ON 28.10.2014. COPY PLACED AT PAPER BO OK PAGES 63 ONWARDS REFERRING TO THE SAME IT WAS SUBMITTED THAT THE SAID ISSUE SPECIFICALLY WAS ENQUIRED INTO BY WAY OF QUERY 10 AT PAGE 64 BY THE A.O. REPLY OF THE ASSESSEE, IT WAS SUBMITTED, IS AVAILABLE AT PA PER BOOK PAGE 70 AND THE SPECIFIC ISSUE HAS BEEN ADDRESSED THEREIN IN POINT NO. 5 AND HAS BEEN ELABORATED AT PAPER BOOK PAGE 223 WHEREIN TH E DETAIL OF EXPENSES WERE ALL GIVEN. THE ISSUE QUESTIONED BY THE AO ALONGWITH JUSTIFICATION WAS REQUIRED FOR THE COMMISSION PAYMENT OF RS. 69,06,007/- WHICH ADMITTEDLY WAS SPECIFICALLY ENQUIRED INTO. REPLY OF THE ASSESSEE RELIED UPON, IT WAS SUBMITTED, IS AVAILABLE AT PAGE S 225 IN PARA 2. THE SAME IS REPRODUCED HEREUNDER FOR READY REFERENCE : 2. IN REPLY TO PARA 2 IT IS SUBMITTED THAT THE ASS ESSEE IS UNDERTAKING HUGE AMOUNT OF EXPORTS THROUGHOUT THE WORLD AND FOR EXHIBITING IN TRADE FARES FOR PROCUREMENT OF ORDER PRODUCT FEEDBACK AND OTHER INCIDENTAL MATTERS ARE ADDRESSED BY THE ASSESSEES REPRESENTATIVE ON REGULAR BASIS AND HAS TO UNDERTAK E FOREIGN TRAVELLING. IT MAY FURTHER BE MENTIONED THAT THIS IS NOT FIRST YEAR OF EXPORT AND EXPORTS ARE BEING MADE FOR MORE THAN A DECADE IN NORMAL COURSE AND EX PENSES ARE COMMENSURATE AS WELL AS INCIDENTAL TO THE BUSINESS. SIMILARLY OTHER EXPENSES ARE INCIDENTAL TO BUSINESS. THAT ALL EXPENSES ARE VOUCHED AND BOOKS O F ACCOUNT ARE KEPT IN NORMAL COURSE. WE ARE PRODUCING DOCUMENTARY EVIDENC E OF EXPENSES CLAIMED AS DESIRED BY YOU. 11.1 ATTENTION WAS INVITED TO PAPER BOOK PAGE 230 WHICH IS CERTIFICATE OF AN ACCOUNTANT U/S 15CB WHEREIN THE SPECIFIC PAYMENT MAD E TO JATINDER SINGH KAPOOR AS PER COLUMN NO. 10 HAS CLEARLY BEEN SHOW N AS PAYMENT TOWARDS COMMISSION. THE FACT THAT IT HAS BEEN MADE IN FORE IGN CURRENCY I.E. IN U.S. DOLLARS IS ALSO CLEARLY MENTIONED. THE ADDRESS O F THE PARTY RECEIVING COMMISSION IN RUSSIA IS GIVEN. IT HAS BEEN CLEARL Y VERIFIED THAT PAYMENT IS MADE TO NON RESIDENT INDIAN HAVING NO PERMAN ENT ESTABLISHMENT IN INDIA. SIMILARLY, ATTENTION WAS INVITED TO PA GE 234 WHICH IS ALSO A COMMISSION INCOME AS PER SR.NO. 10 AND HAS BEEN MADE IN U.S. DOLLARS TO DIMPLE AGENCIES IN MUMBASA, KENYA. THE ADDR ESS IS PROVIDED. PAYMENT HERE ALSO IS MADE TO NON-RESIDENT HAV ING NO PERMANENT ESTABLISHMENT IN INDIA. SIMILARLY, ATTENTION WAS IN VITED TO PAGE 244 WHICH IS PAYMENT MADE TO HARINDERPAL SINGH OF DU BAI, UAE. PAYMENT IS MADE IN U.S. DOLLARS AS COMMISSION TO A PERSON W HO IS A NON-RESIDENT HAVING NO PERMANENT ESTABLISHMENT IN INDIA. THESE EXAMPLES AND ILLUSTRATIONS, IT WAS SUBMITTED, ARE AVAILABLE ON RECORD D ULY CERTIFIED BY CHARTERED ACCOUNTANTS. THESE HAVE BEEN MA DE AVAILABLE TO THE AO AND HE HAS ENQUIRED INTO THE ISSUES, THESE HAVE BEEN SEEN BY HIM AND HAVE ALSO BEEN MADE AVAILABLE TO THE PR. CIT WHO ALSO HAS SEEN THESE. ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 13 OF 29 12. NO INFIRMITY IN THE EVIDENCES ON RECORD OR ANY CONTRAR Y EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE PR. CIT. THUS, ON THE BASIS OF ALL THESE SUBMISSIONS AND FACTS, REFERRING TO THE CASUAL OBSER VATIONS OF THE PR. CIT IT WAS SUBMITTED THAT THE EXERCISE OF POWER IS AR BITRARY AND WHIMSICAL AND THUS IT MAY BE QUASHED. IT WAS SUBMITTED TH AT THE ISSUES HAD BEEN EXTENSIVELY LOOKED INTO AND ENQUIRED INTO BY TH E AO AND THERE IS NOTHING IN THE ORDER OF THE PR. CIT TO POINT OUT ANY ERROR. ON A RE ADING OF THE SAME, IT WAS SUBMITTED THAT THERE IS NOT EVEN AN IOTA OF DISCUSSION LET ALONE ANY EVIDENCE TO SHOW THAT THERE WAS AN ERROR IN THE ORDER PASSED BY THE AO WHICH CAN BE SAID TO BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IT WAS HIS SUBMISSION THAT COMPLETE BOOKS OF ACCOUNTS ALONGWITH SUPPORTING DOCUMENTS HAVE BEEN MADE AVAILABLE, THE DETAILS HAD ALSO BEEN MADE AVAILABLE. IT WAS HIS SUBMISSION THAT WH EN ON FACTS, THE ASSESSEE HAD SUCCESSFULLY DEMONSTRATED BEFORE THE PR. CIT THAT THE ISSUES HAD BEEN FULLY ENQUIRED INTO BY THE AO THEREAFTER , IN THE CIRCUMSTANCES, IF HE HAD TO COME TO A CONTRARY FINDING, TH EN IT WAS INCUMBENT UPON THE PR. CIT TO SHOW AS TO WHAT ISSUE ST ILL REMAINED TO BE CONSIDERED AND WHAT WAS THE ERROR. 13. ON THE BASIS OF THESE ARGUMENTS ON FACTS, IT WAS ARG UED THAT THE ASSESSEE IS ASSAILING THE LEGALITY OF THE ORDER ON THE REAS ONING THAT THE EXPLANATION INVOKED BY THE PR. CIT ON FACTS COULD NOT HAV E BEEN INVOKED QUA THE ORDER WHICH WAS DATED 25.05.2015. EXPLANATION, IT WAS SUBMITTED, CAME ON THE STATUTE ON 01.06.2015. IT WAS HI S SUBMISSION THAT THE EXPLANATION IS PROSPECTIVE IN NATURE AND CANNOT BE RETROS PECTIVE. SAID PROPOSITION OF LAW, IT WAS SUBMITTED, WAS SUPPORTED BY THE DECISION OF THE APEX COURT IN THE CASE OF VATIKA TOWNSHIP REPORTED IN 366 IT R 466 (S.C.). SPECIFIC ISSUE, IT WAS SUBMITTED, HAS BEEN ADDRESSED B Y THE COURT AT PAGE 489 OF THE SAID DECISION. CHALLENGING THE IMPUGNED O RDER, IT WAS HIS SUBMISSION THAT THE ALLEGATION OF THE PR. CIT IS THAT IT WAS A CASE OF LACK OF ENQUIRY. THE SAID CONCLUSION IT WAS SUBMITTED HAS T O BE DEMONSTRATED BY SOME EVIDENCE OF MATERIAL TO JUSTIFY. RE ADING FROM THE ORDER IT WAS SUBMITTED THAT THERE IS NOTHING IN THE ORDE R TO SUPPORT THE CONCLUSION. THE ALLEGATION OF THE PR. CIT(A) BASED ON WHIMS IS INCORRECT ON FACTS WHEN HE HAS SEEN THE ISSUES RAISED BY THE AO BY WAY OF SPECIFIC QUESTIONNAIRES IN THE COURSE OF THE ASSESSMENT PROCEEDIN GS AND CONSIDERING THE REPLIES GIVEN BY THE ASSESSEE AND CONSID ERED BY THE AO. ALONGWITH SUPPORTING DOCUMENTS, THE ORDER OF THE PR. CIT MAY BE ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 14 OF 29 QUASHED. THE PR. CIT, IT WAS SUBMITTED, HAS NOT ASSAILED THE DOCUMENTARY EVIDENCES FILED BEFORE THE AO WHICH HAS ALSO B EEN MADE AVAILABLE TO THE PR. CIT. THUS, CONSIDERING THE QUERIES R AISED IN THE SCRUTINY PROCEEDINGS AND THE REPLIES AVAILABLE ON RECORD, IT WAS SUBMITTED THAT IT CANNOT BE A CORRECT OBSERVATION THAT THE ISSUES WERE NOT ENQUIRED INTO AND IN CASE THE PR. CIT WANTS TO HOLD THAT THE ENQUIRY MADE BY THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INT ERESTS OF THE REVENUE, THEN IT IS NECESSARY AND INCUMBENT UPON HIM TO AT LEAST CARRY OUT A SEMBLANCE OF ENQUIRY TO DEMONSTRATE THE ERROR MA DE BY THE AO AND THAT TOO, SUCH AN ERROR WHICH CAN BE SAID TO BE PREJUD ICIAL TO THE INTERESTS OF THE REVENUE. INVITING ATTENTION TO DECISION O F THE DELHI HIGH COURT IN THE CASE OF ITAT DELHI BENCH ORDER DATED 05.0 9.2017 IN ITA 705/2017(DEL) IN THE CASE OF PR.CIT VS DELHI AIRPORT METRO E XPRESS P. LTD. ( COPY FILED) IT WAS SUBMITTED, THE HON'BLE HIGH COURT IN FACTS SIMILAR TO THE PRESENT CASE IN A RECENT ORDER DATED 05. 09.2017 WAS PLEASED TO OBSERVE THAT IT APPEARS THAT NO INQUIRY, AS SUCH, WAS UNDERTAKEN BY THE PCIT TO COME TO THE CONCLUSION THA T THE ORIGINAL ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. INVITING ATTENTION TO THE CLEAR JUDICIAL MANDATE, IT WAS HIS SUBMISSION THAT THE COURT HAS CASTIGATED THE PR. CIT IN THE FACTS OF THE SAID CASE AND HELD THAT THE EXERCISE OF THE POWER U/S 2 63 HAS TO BE PROCEEDED BY ATLEAST SOME MINIMUM ENQUIRY. SIMILAR VIEW IT W AS SUBMITTED WAS FOLLOWED BY DELHI BENCH OF THE ITAT IN THE CA SE OF M/S AMIRA PURE FOODS PVT. LTD. VS PR. CIT. COPY OF THE SAM E, IT WAS SUBMITTED, IS ALSO AVAILABLE AT PAGES 6-42 OF THE PAPER BOO K WHEREIN VIDE ORDER DATED 29.11.2017 CONSIDERING A NEAR IDENTICAL CASE WHERE THE ASSESSEE HAD RAISED SIMILAR ARGUMENTS THAT ALL ISSUES HAD BEEN EXAMINED BY THE AO IN THE COURSE OF THE ASSESSMENT PR OCEEDINGS THE ITAT CRITICALLY HELD IT WAS INCUMBENT FOR THE LD. PCIT TO MAKE SOME MINIMUM INDEPENDENT ENQUIRY TO REACH TO THE CONCLUSIO N THAT THE ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL THAT TO THE INTER EST OF REVENUE. THE RELIANCE IS RIGHTLY PLACED ON THE DECISIONS OF DELHI HIGH COURT IN LD. PCIT V. DELHI AIRPORT METRO EXPRESS PVT. LTD. (SUPRA). IT WAS HIS SUBMISSION THAT THE SAID DECISION HAD ALSO BEEN RELIED UPON THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF ITO V D.G. HOUSING PROJECT LTD. 343 ITR 329 (DEL) WHEREIN THE SPECIFIC POWER VESTED BY THE ACT IN THE P R. CIT HAS BEEN DISCUSSED AND THE COURT WAS VERY CLEAR IN DRAWING A DIST INCTION WITH ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 15 OF 29 CASES WHERE THE AO DOES NOT CONDUCT AN ENQUIRY AND IN SUCH CASES THE COURT HAS CLEARLY HELD THAT THE COMMISSIONER HAS TO EXA MINE THE ORDER OF THE AO ON MERITS AND THE COURT HELD THAT IN THOSE CIR CUMSTANCES ALSO, THE REVISIONARY AUTHORITY HAS TO FORM AN OPINION ON MERIT S THAT THE ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COURT IN CLEAR TERMS HAS HELD THAT T HE COMMISSIONER EXERCISING HIS REVISIONARY POWERS CANNOT DIRECT THE AO TO CONDUCT FURTHER ENQUIRY TO VERIFY AND FIND OUT WHETHER THE ORDER PASSED IS ERRONEOUS OR NOT. RELIANCE FOR SIMILAR PROPOSITION WAS ALSO PLACED UPON THE ORDER DATED 09.04.20-18 IN ITA 771/CHD/2017 IN THE CASE OF ABHIMANYU GUPTA V PR.CIT. SPECIFIC ATTENTION WAS INVITED TO P AGE 44-46 WHERE SIMILAR ISSUE HAS BEEN CONSIDERED IN PARA 4.4 (COPY P LACED AT PAGES 54 TO 66 OF THE PAPER BOOK) WHEREIN SPECIFIC FINDING ADDRESSING THE LEGAL POSITION ON FACTS IN NEAR SIMILAR FACTS RELYING UPON THE DECISIONS OF THE DELHI HIGH COURT IN THE CASE OF DELHI AIRPORT METRO EX PRESS (SUPRA) AND CONSIDERING THE DECISION OF THE ITAT IN THE CASE OF NA RAIN TATU RANE V ITO 70 TAXMANN.COM 227 (MUM) (COPY PLACED AT PAGES 43 TO 54, 263 ), THE ITAT QUASHED THE 263 PROCEEDINGS. 13.1 IT WAS SUBMITTED THAT EVEN WHERE THE REVISIONARY A UTHORITY WAS OF THE VIEW THAT FURTHER ENQUIRY WAS REQUIRED, THE DELHI HIG H COURT IN THE CASE OF DCIT VS JYOTI FOUNDATION 357 ITR 388 (DEL) ADDRES SING THE POSITION OF LAW HAS CLEARLY HELD THAT IN SUCH A CASE ALSO SUCH AN ENQUIRY SHOULD HAVE BEEN MADE BY THE REVISIONARY AUTHORITY HIMS ELF AND THE SAID AUTHORITY WAS REQUIRED TO RECORD A FINDING BASED ON FACTS THAT THE ASSESSMENT ORDER PASSED BY THE AO WAS ERRONEOUS AND PREJUDICIAL IN THE INTERESTS OF THE REVENUE AND NOT LEAVE THE ISSUE OPEN. RELIANCE WAS ALSO PLACED UPON THE RECENT ORDER DATED 08.08.2018 PASSED B Y THE AHMEDABAD BENCH IN THE CASE OF TORRENT PHARMACEUTICAL LTD. VS DCIT IN ITA 164/AHD/2018, COPY AVAILABLE AT PAGE 124 TO 152 OF THE PAPER BOO K. 13.2 IT WAS HIS SUBMISSION THAT THE EXPLANATION-2 SECTION 263 INVOLVED BY THE PR. CIT IS NOT APPLICABLE. FOR THIS PROPOSITION RELIAN CE IS PLACED UPON THE DECISION IN THE CASE OF M/S AMIRA PURE FOODS PV T. LTD. AND NARAIN TATU RANE V ITO (SUPRA) AS WELL AS THE DECISION OF THE CHANDIG ARH BENCH IN THE CASE OF ABHIMANYU GUPTA (SUPRA) AND TORREN T PHARMACEUTICALS PASSED BY THE AHMEDABAD BENCH OF THE TRIBUNAL. COPIES OF THESE DECISIONS ARE AVAILABLE IN THE PAPER BOOK FILED. ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 16 OF 29 13.3. IT WAS HIS SUBMISSION THAT THE ALLEGATION OF THE PR. CI T IS THAT IT IS A CASE OF LACK OF ENQUIRY WHEREAS ON THE FACTS OF THE PR ESENT CASE, ADMITTEDLY IT IS THE CASE OF MORE THAN SUFFICIENT ENQUIRY. WIT HOUT CONCEDING IT WAS HIS SUBMISSION THAT IF FOR THE SAKE OF AN ARGUMENT, IT IS TO BE CONSIDERED THAT THERE MAY BE A CASE OF INADEQUAT E OR IMPROPER ENQUIRY, EVEN IN SUCH CASES, THE COURTS HAVE CONSISTENT LY HELD THAT IT IS INCUMBENT UPON THE PR. CIT TO POINT OUT THE ERROR AND THAT TOO SUCH AN ERROR WHICH IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE . IT WAS HIS SUBMISSION THAT NO SUCH EFFORT OR EVIDENCE IS REFERRED TO BY THE PR. CIT. THE PR. CIT CANNOT GIVE UP HIS RESPONSIBILITY APART FROM TH E VARIOUS DECISIONS CITED. RELIANCE WAS FURTHER PLACED UPON ORDER DA TED 14.03.2018 PASSED BY VISHAKHAPATNAM BENCH OF THE TRIBUNA L IN THE CASE OF M/S FUSION VOICE SOLUTION INDIA (P) LTD. VS ITO REPO RTED IN (2018) 3 TMI 736. COPY OF THE SAID DECISION IS AVAILABLE AT P AGE 80 TO 88 OF THE PAPER BOOK. THE VIEW, IT WAS SUBMITTED, IS ALSO SUPP ORTED BY THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF JYOTI FOUNDA TION (CITED SUPRA) AND ANOTHER DECISION OF THE DELHI HIGH COURT IN THE CASE OF SUNBEAM AUTOMOBILE 332 ITR 167 (DELHI AND IN THE CASE OF ANIL KUMAR SHARMA 335 ITR 83. 13.4 BY WAY OF ABUNDANT CAUTION, IT WAS HIS SUBMISSION THAT EVEN IF THE DEPARTMENT WOULD WANT TO ALLEGE THAT THE ASSESSMENT OR DER IS A SHORT ORDER AND DISCUSSION ON THESE ISSUES IS NOT COMING OUT O F THE ORDER. IN THE FACE OF SUCH A POSSIBLE ARGUMENT RELIANCE IS PLACED ON HARI IRON TRADING 263 ITR 437 (P&H). IT WAS SUBMITTED THAT THE CO URT HAS CLEARLY HELD THAT IF THE ISSUES HAVE BEEN ACCEPTED BY THE AO, TH EN IT MAY NOT NECESSARILY REQUIRE HIM TO MAKE A MENTION OF THE SAME. REFERRING TO CIT VS EICHER LTD. 294 ITR 310, IT WAS SUBMITTED THAT WHERE ALL MATERIAL FACTS ARE DISCLOSED IN ASSESSMENT STAGE BEFORE THE AO TO APPLY HIS MIND, FAILURE OF THE AO TO RECORD A FINDING IN THE ASSESSMENT ORD ER DOES NOT MEAN THAT INCOME HAS ESCAPED ASSESSMENT. THE MERE FAC T THAT THE ORDER IS A SHORT ORDER OR A CRYPTIC ORDER DOES NOT LAY THE O RDER OPEN TO 263 PROCEEDINGS. ACCORDINGLY, IT WAS HIS SUBMISSION THAT ON T HE BASIS OF THESE FACTS AND ARGUMENTS, THE 263 ORDERS IN THE RESPE CTIVE APPEALS DESERVES TO BE QUASHED AS THE EXERCISE OF THE POWER IN THE FACTS OF THE PRESENT CASE IN THE MANNER DONE, WAS NOT WARRANTED. ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 17 OF 29 14. IT WAS HIS SUBMISSION THAT ALTHOUGH IT HAS BEEN ARGU ED THAT THE FACTS AND SUBMISSIONS IN ITA 520/CHD/2018 WOULD FULLY APPL Y TO ITA 519/CHD/2018, HOWEVER FOR THE SAKE OF COMPLETENESS, IT WA S SUBMITTED, HE WOULD INVITE ATTENTION TO THE ASSESSMENT ORDER TO SH OW THAT THE AO AFTER ISSUING IDENTICAL QUESTIONNAIRES AND ORDERSHEET ENTRIE S FINALLY CONCLUDED THE PROCEEDINGS BY PASSING AN ORDER U/S 143(3 ) DATED 14.05.2015 AND BEFORE THE PASSING THE ORDER, THE A.O HAD ISSUED DETAILED SHOW CAUSE NOTICES. THE QUESTIONNAIRES HAD BEEN REPLIED TO BY THE ASSESSEE AND AS IN THE EARLIER CITED CASE, IT HAD BEEN SO ARGUED BEFO RE THE PR. CIT SUPPORTED BY THE QUESTIONNAIRES AND THE REPLIES OF THE ASSESSEE AVAILABLE IN THE PAPER BOOK FILED BY THE ASSESSEE BEFORE TH E AO AND ALSO MADE AVAILABLE TO THE PR. CIT(A) ARE ALSO RELIED UPON TO S UPPORT SIMILAR ARGUMENTS. 14.1 THE FIRST ISSUE IN THE FACTS OF THE PRESENT CASE, IT WAS STATED WAS FULLY IDENTICAL. 14.2 THE SECOND ISSUE RAISED BY THE PR. CIT, IT WAS SUBM ITTED, THERE IS A LITTLE EXTRA DISCUSSION. FOR THE SAID PURPOSES, ATTENTION W AS INVITED TO COPY OF THE QUESTIONNAIRE DATED 20.09.2014 ISSUED BY THE AO AVAILABLE AT PAGES 65 TO 68 WHERE THE SAID ISSUE HAD BEEN ENQUIRED INTO BY QUERY NO. 3. THE REPLY TO THE PR. CIT, IT WAS SUBMITTED, IS AVAILABLE AT PAGED 105 AND IT IS SUPPORTED BY PAPER BOOK PAGE 65 TO 66, 69 TO 70, 73, 117, 118 TO 120 WERE HIGHLIGHTED. THE ISSUE THUS, HERE ALSO FULLY STO OD CONSIDERED BY THE AO AND NO DEFICIENCY OF FACT OR EVIDENCE CONSIDERED HAS BEEN POINTED OUT. 14.3. ADDRESSING NEXT ISSUE OF RELATED PARTY TRANSACTIONS , IT WAS HIS SUBMISSION THAT THE ALLEGATION THAT INTEREST OF 14% HAD BEEN PAID, WAS AN INCORRECT ALLEGATION, FOR THE SAID PURPOSES ATTENTIO N WAS INVITED TO PAPER BOOK SPECIFIC PAGE 107 TO SHOW THAT THE ISSUES HA D BEEN ENQUIRED INTO BY THE AO AND ALL THE RELATED PARTIES WERE PAID INTE REST @ 11%. IT WAS SUBMITTED THAT ONLY IN THE CASE OF MUNIX (INDIA) PVT . LTD. EVIDENTLY INTER-CORPORATE LOAN TO THE ASSESSEE @ 14% INTEREST HA D BEEN GIVEN. THE REASON FOR THE SAME, IT WAS SUBMITTED, WAS BECAUSE OF THE FACT THAT THE BANK HAD CHARGED THE SAID COMPANY @ 13.50%. THE SAID S UBMISSION MADE BEFORE THE A.O, IT WAS SUBMITTED, WAS SUPPORTED BY COPY OF THE SANCTION LETTER OF THE BANK WHICH WOULD SHOW THE RATE OF INTEREST SANCTIONED BY THE BANK WAS 13.50% AND THE ASSESSEE HAD SUPPORTED THIS ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 18 OF 29 SUBMISSION BY PLACING LETTER OF THE CREDIT FACILITIES AVAILED BY M/S MUNIX INDIA P.LTD. FOR THE SAID PURPOSES, ATTENTION WAS INVITED T O COPY OF SANCTION LETTER FROM THE CANARA BANK, PAPER BOOK PAGE 2 33, 244 WHICH WAS ALSO SHOWN TO THE PR. CIT. IT WAS HIS SUBMISSION THA T ALL THE UNSECURED LOANS HAD BEEN USED FOR THE BUSINESS PURPOSE S I.E. THERE WERE USED FOR INVENTORY, TRADE RECEIVABLE OR PAYMENT OF TRADE PAYABLE. THE FACT THAT THE FUNDS HAVE BEEN USED FOR BUSINESS PURPOSE WERE EXPLAINED BEFORE THE AO AND THE EXPLANATION HAD BEEN ACCEPTED BY HIM. THE SAID EXPLANATION ALONGWITH SUPPORTING EVIDENCES WAS MADE AVAILAB LE EVEN BEFORE THE PR. CIT WHO HAS NOT FAULTED IT. ACCORDINGLY, IN T HE CIRCUMSTANCES, RELIANCE WHICH THE REVENUE MAY SEEK TO PL ACE ON THE CONCLUSIONS OF THE PR. CIT WHICH THE REVENUE MAY WANT TO ARGUE IS A SPEAKING ORDER CANNOT BE UPHELD AS THE SUBMISSIONS OF TH E ASSESSEE PARTLY EXTRACTED IN THE ORDER HAVE REMAINED COMPLETEL Y UNREBUTTED AND UNADDRESSED BY PR. CIT. SPECIFIC ATTENTION WAS INVITED TO PAPER BOOK PAGE 65, SPECIFIC PAGE 67 AT S.NO. 13 DEMONSTRATE THAT QU ERIES HAVE BEEN RAISED AND THE ISSUES HAVE BEEN REPLIED. FOR READY REFER ENCE, THE RELEVANT EXTRACT OF THE DETAILS REQUIRED TO BE SHOWN BY THE AO IS EXTRACTED HEREUNDER : 13. DETAILS OF ADDITION TO UNSECURED LOANS ALONG W ITH COMPLETE NAMES OF THE PERSONS/PARTIES. CONFIRMATIONS TO BE FILED IN FOLLO WING FORMAT: NAME ADRESS AMOUNT OF LOAN RATE AT WHICH INTERST PAID ADDITION DURING THE YEAR PAN NO RANGE CONFIRMATION ATTACHED OR NOT 14.3.1 REPLY OF THE ASSESSEE, IT WAS SUBMITTED, IS AVAILABLE A T PAPER BOOK PAGE 70 AND THE SPECIFIC REPLY IS AT PAGE 71 AT SR .NO. 9. ATTENTION WAS INVITED TO PAPER BOOK PAGE 75. REFERRING TO THE SAM E, IT WAS SUBMITTED, IT WAS CLEARLY EVIDENT THAT ONLY QUA MUNIX I NDIA, THE RATE OF INTEREST PAID WAS 14% AND FOR ALL THE OTHERS, IT WAS EITHE R NIL OR 11%. IT WAS RE-ITERATED THAT THESE SUBMISSIONS ON FACTS HAVE NO T BEEN FAULTED WITH BY THE PR. CIT. CONFIRMATIONS FROM THE SPECIFIC PARTIE S HAS BEEN ATTACHED GIVING COMPLETE DETAILS LIKE THEIR PAN NUMBERS, THE IR ADDRESSES AND ALL THE RELEVANT DETAILS MENTIONED AT PAPER BOOK PAGE 76. PAGE 56 TO 62 OF THE PAPER BOOK, IT WAS SUBMITTED IS COPY OF FORM NO. 3CEB AND SPECIFIC INFORMATION QUA THE ISSUE IS AVAILABLE AT S.NO. 21 AND 22 PAGE ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 19 OF 29 60-62. INVITING ATTENTION TO PAPER BOOK PAGE 88, IT WAS SUBMITTED THAT ADDITIONAL QUERIES HAD BEEN RAISED BY THE AO BY WAY OF O RDER-SHEET ENTRIES ON 20.04.2015 AND QUA THE ISSUE UNDER CONSIDERAT ION, SAME HAD BEEN REPLIED TO IN PARA 3 IS AVAILABLE AT PAGE 89 ONWARDS AND THE SPECIFIC REPLY IS AVAILABLE IN PARA 3. 14.4. ADDRESSING NEXT ISSUE WHICH IS SUBJECT MATTER OF CONSIDERATION IN THE PRESENT PROCEEDINGS I.E. THE COMMISSIO N EXPENSES. IN ORDER TO ADDRESS THE SAME, ATTENTION WAS INVITED TO REPLY ADDRESSED BEFORE THE PR. CIT. ATTENTION WAS INVITED TO THE SPECIFIC P AGE 109. REFERRING TO THE SAME IT WAS SUBMITTED THAT , IT HAD BEEN ARGUED BEFORE PR. CIT THAT THE AO HAD RAISED A QUESTIONNAIRE. COPY O F THE SAME WAS AVAILABLE AT PAGE 70 POINT NO. 5. SPECIFIC PAGE 66 WAS ALSO REFERRED TO WHICH WAS THE ORIGINAL QUESTIONNAIRE WHERE ALL THE EXPENSE S HAD TO BE SEGREGATED WHICH IS FURTHER REQUIRED TO BE JUSTIFIED IN QUE STIONNAIRE AT PAGE 70. REPLY OF THE ASSESSEE, IT WAS SUBMITTED, WAS A VAILABLE AT PAGE 73. COMMISSION PAID TO THE AGENTS IS ELABORATED AT PAGE 93 DULY CERTIFIED BY THE CHARTERED ACCOUNTANTS IN SIMILAR MANNER AS REFERR ED TO EARLIER ARE AVAILABLE AT PAGES 93, 95, 97 ONWARDS. REFERRING TO THE S AME, IT WAS SUBMITTED AS AN ILLUSTRATION, IT CAN BE SEEN THAT COMMISSI ON IS PAID TO THE AGENT IN RUSSIA, IN FOREIGN CURRENCY DISCLOSED IN COLUMN NO. 10 AND 13(D) WOULD SHOW THAT IT WAS FOR COMMISSION AND THE PAYME NT WAS MADE TO NON-RESIDENT HAVING NO PERMANENT ESTABLISHMENT. AS AN ILLUSTRATION, ATTENTION WAS ALSO INVITED TO PAGE 93 WHICH REFLECTS THAT PAYME NT IS MADE TO KAPOOR JATINDER SINGH WITH ALL NECESSARY DISCLOSURES. S IMILAR FACTS WERE AVAILABLE IN ITA 519/CHD/2018. IN THE SIMILAR SET OF FA CTS AND CIRCUMSTANCES RELYING UPON SIMILAR ARGUMENTS ON THE SAM E SET OF FACTS AS IN ITA 320/CHD/2018, RELYING UPON SIMILAR PROPOSITIONS O F LAW, IT WAS HIS SUBMISSION THAT IN THE FACTS OF THE SAID CASE ALSO , REVISIONARY ORDER PASSED BY THE PR. CIT ON FACTS IS NOT JUSTIFIED. F OR READY REFERENCE, ATTENTION WAS INVITED TO SIMILAR QUESTIONNAIRES ISSUED BY T HE AO. REPLIES THEREOF ARE ALSO AVAILABLE WHICH WERE ALSO SUPPORTED BY FO RM 15CB IN SIMILAR MANNER. 14.5 THE LAST ISSUE IN ITA 519/CHD/2018 WAS ALSO FLAGGED B Y THE A.O AND REPLIES BY THE ASSESSEE. SINCE THE REPLY GIVEN BY T HE ASSESSEE WAS ACCEPTED BY THE PR. CIT. ACCORDINGLY THE ISSUE IS NOT B EING ADDRESSED. ACCORDINGLY, IT WAS SUBMITTED THAT ON ALL THE OTHER ISSUE THE ARGUMENTS ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 20 OF 29 ADVANCED IN ITA 520/CHD/2018 WOULD FULLY APPLY TO THE P RESENT CASE ALSO. 15. THE LD. CIT-DR SUBMITTED THAT THE ARGUMENTS ADVANC ED ON BEHALF OF THE REVENUE WOULD ADDRESS BOTH THE APPEALS AS ISSUES ARE SIMILAR. HEAVILY RELYING UPON THE RESPECTIVE ORDERS OF THE PR. CI T, IT WAS SUBMITTED THAT THE ORDERS ARE SPEAKING ORDERS AND CO NSEQUENTLY THE APPEALS OF THE ASSESSEES ARE DVOID OF MERIT. CARRYING US THROUGH THE IMPUGNED ORDER IN ITA 520/CHD/2018 IT WAS SUBMITTED THE PR. CIT HAS HELD THE ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE IN TERESTS OF THE REVENUE ON FIVE SPECIFIC ISSUES WHICH HAVE BEEN CONFRONTED TO THE ASSESSEE. SHOW CAUSE NOTICE ISSUED TO THE ASSESSEE HAS BEEN EXTRACTED IN THE ORDER BY THE PR. CIT. REPLIES OF THE ASSESSEE, IT WA S SUBMITTED, HAVE ALSO BEEN EXTRACTED IN THE RESPECTIVE ORDERS. THE POSIT ION IS SIMILAR IN ITA 519/CHD/2018 ALSO. THE REPLY HAS BEEN CONSIDERED B Y THE PR. CIT WHO ON GOING THROUGH THE SAME, HAS HELD THAT ON THESE SPECIFIC ISSUES, THERE WAS A LACK OF ENQUIRY BY THE A.O. AS AN ILLUSTRATION , ATTENTION WAS INVITED TO THE ADDITION TO THE FIXED ASSETS IN ITA 520/C HD/2018 WHICH WAS STATED TO HAVE BEEN ENQUIRED INTO BY THE AO. IT W AS ARGUED THAT THE ASSESSEE HAS FILED A MERE CHART TO SHOW THE DATE OF PU RCHASE AND THE DATE OF THE USE. IT WAS QUESTIONED WHAT IS THE ENQUIRY CARRIED OUT BY THE AO ON THIS TO SHOW THAT THE ASSERTIONS OF THE ASSESSEE ARE CORRECT. SIMILAR WAS THE POSITION ON EACH OF THE OTHER QUERIES STAT ED TO HAVE BEEN RAISED BY THE AO. ON THE ISSUES, IT WAS SUBMITTED, SPEAKIN G FINDINGS OF THE PR. CIT WERE AVAILABLE ON RECORD AND THESE WERE HEA VILY RELIED UPON BY THE REVENUE IN BOTH THE APPEALS. 15.1 HE FURTHER RELIED UPON THE WRITTEN SUBMISSIONS FILED ON BEHALF OF THE REVENUE IN BOTH THE APPEALS. THE DECISION OF APEX COU RT IN THE CASE OF MALABAR INDUSTRIES CO. LTD., SURYA JYOTI SOFTWARE OF THE DELHI HIGH COURT AND DENIEL MERCHANTS PVT. LTD. OF THE CALCUTTA HIGH COURT REFERRED TO THEREIN WERE HEAVILY RELIED UPON. FOR READY REFERENCE , WRITTEN SUBMISSIONS FILED BY CIT-DR DR.GULSHAN RAJ ARE REPRODUCED HEREUNDE R : MAY IT PLEASE YOUR HONOURS SUB: WRITTEN SUBMISSION IN THE ABOVE CASE- REG. IN THIS REGARD, IT IS HUMBLY SUBMITTED THAT EXPLANA TION 2 HAS BEEN INSERTED IN SECTION 263 OF I.T.ACT BY FINANCE ACT 2015 W.E.F 0 1.06.2015 WHICH IS REPRODUCED BELOW: ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 21 OF 29 EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, IT IS HEREBY DECLARED THAT AN ORDER PASSED BY THE ASSESSING OFFICER SHALL BE DEEMED TO BE ERRONEOUS 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 VER IFICATION WHICH SHOULD HAVE BEEN MADE; (B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQ UIRING 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 WITH AN Y DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE, RENDERED BY THE JURISD ICTIONAL HIGH COURT OR SUPREME COURT IN THE CASE OF THE ASSESSEE OR ANY OT HER PERSON. IN THE ABOVE CASE, IT IS HUMBLY SUBMITTED THAT THE FOLLOWING DECISION MAY KINDLY BE CONSIDERED WITH REGARD TO VALIDITY OF PROCEEDINGS U /S 263 OF I.T.ACT: 1. MALABAR INDUSTRIAL CO. LTD. VS CIT [20001 109 TA XMAN 66 (SC)/(2000) 243 ITR 83 (SC) (2000) 159 CTR 1 (SO WHERE HON'BLE SUPREME COU RT HELD THAT WHERE ASSESSING OFFICER HAD ACCEPTED ENTRY IN STATEMENT OF ACCOUNT FILED BY ASSESSEE, IN ABSENCE OF ANY SUPPORTING MATERIAL WITHOUT MAKING A NY ENQUIRY, EXERCISE OF JURISDICTION BY COMMISSIONER UNDER SECTION 263(1) W AS JUSTIFIED. 2. SURYA JVOTI SOFTWARE PVT. LTD. VS PCIT. I.T.A. N O.2158/DEL/2017. ITAT DELHI WHERE HON'BLE ITAT DELHI HAS HELD THAT THE PR. CIT HAS AMPLY DEMONSTRATED IN HIS IMPUGNED ORDER THAT THIS ISSUE WAS NEITHER ENQUIRED INTO NOR WAS VERIFIED BY THE ASSESSING OFFICER ONCE THE INFORMATION AND THE MATE RIAL IN HARD COPY AND IN FORM OF CD WAS MADE AVAILABLE TO HIM. HENCE, ASSESSMENT ORD ER IS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF REVENUE 3 DENIEL MERCHANTS PVT. LTD, VS. ITO. GA NO .599 OF 2016 WITH ITAT NO.118 OF 2016. CALCUTTA HIGH COURT 2016: WHERE HON'BLE HIGH COURT HAS HELD THAT LAW LAID DOWN IN SUBHLAKSHMI VANIJYA PVT. LTD VS. CIT 1 55 ITD 171 (KOL), RAJMANDIR ESTATES 386 ITR 162 (CAL) ETC THAT THE CIT IS ENTIT LED TO REVISE THE ASSESSMENT ORDER U/S 263 ON THE GROUND THAT THE AO DID NOT MAK E ANY PROPER INQUIRY WHILE ACCEPTING THE EXPLANATION OF THE ASSESSEE INSOFAR A S RECEIPT OF SHARE APPLICATION MONEY IS CONCERNED CANNOT BE INTERFERED WITH. 16. THE LD. AR IN REPLY SUBMITTED THAT THE ASSESSEE ALSO IS RELYING UPO N THE PROPOSITION OF LAW AS LAID DOWN BY THE APEX COURT IN T HE CASE OF MALABAR INDUSTRIAL CO. LTD. ADDRESSING THE DECISION OF THE DELHI ITAT IN THE CASE OF SURYA JYOTI SOFTWARE RELIED UPON BY THE REVE NUE, IT WAS HIS SUBMISSION THAT THIS WAS THE CASE OF RE-OPENING IN THE CASE OF SHRI S.K.JAIN AN ALLEGED ENTRY OPERATOR AS PER THE DEPARTMEN T WHERE THERE WERE DOCUMENTS DEMONSTRATING ALLEGATIONS OF RUNNING THE A LLEGED BUSINESS IN A CONCERTED MANNER INVOLVING A COMMON MODUS- OPERANDI. IT WAS ARGUED THE SPECIFIC OBSERVATIONS REFERRED TO THEREIN WERE VERY FACT SPECIFIC TO THE SAID CASE AND THERE IS NO SUCH ALLEGATION A GAINST THE ASSESSEE INVOLVING EVEN A REMOTELY IDENTICAL MODUS-OPERAN DI AS NOTED IN SHRI S.K.JAIN RELATED CASES AND THE SAID DECISION AS SUCH HAS NO APPLICATION TO THE FACTS OF THE ASSESSEE ON THE ISSUES AT HAND. SIMILAR WAS THE POSITION IN THE CASE OF DENIEL MERCHANTS PVT. LTD . ALSO RELIED UPON BY THE REVENUE. IT WAS SUBMITTED THAT THE ISSUE T HEREIN WAS ALSO ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 22 OF 29 VERY FACT SPECIFIC INVOLVING ALLEGED BOGUS SHARE APPLICATION MO NEY AND THE ASSESSEE IN THE FACTS OF THE PRESENT CASE IS NOT A LLEGED TO BE EITHER AN ENTRY OPERATOR OR INVOLVED IN ALLEGED BOGUS SHARE APPLICATION CASES. 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE DECISIONS CITED BEFORE US AND THE RELEVANT P AGES OF THE PAPER BOOK RELIED UPON ALONGWITH THE ARGUMENTS OF THE PARTIES W RITTEN AND ORAL, ALL HAVE BEEN TAKEN INTO CONSIDERATION. ON A CONSIDER ATION THEREOF, WE FIND THAT IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, THE ORDERS PASSED BY THE PR. CIT CANNOT BE UPHELD. TH E PARTIES HAVE EXTENSIVELY ARGUED THE ISSUES ITA 520/CHD/2018 WITH TH E UNDERSTANDING THAT THE ARGUMENTS ADVANCED THEREIN WOU LD FULLY APPLY TO SIMILAR SET OF FACTS AND CIRCUMSTANCES OF THE CASE IN ITA 519/CHD/2018. WE FIND ON GOING THROUGH THE SPECIFIC FINDINGS OF THE PR. CIT IN ITA 520/CHD/2018 WHICH ON EACH OF THE ISSUES HAS BEEN ADDR ESSED IN THE PRESENT PROCEEDINGS AT PAGE 5, 7, 9, 10 AND 11 RESPECT IVELY IN THE IMPUGNED ORDER AND FIND THAT NO ERROR IN THE ORDER PASS ED BY THE AO HAS BEEN REFERRED TO BY THE PR. CIT IN THE ORDER PASSED BY THE AO LET ALONE SUCH AN ERROR WHICH CAN BE SAID TO BE PREJUDICED TO TH E INTERESTS OF THE REVENUE. THE RELEVANT EXTRACTS OF THE SPECIFIC FINDINGS ON EACH OF THESE ISSUES WHICH ARE BEING EXTRACTED IN THE FOREGOING PARAS FO R THE SAKE OF COMPLETENESS FULLY SUPPORTS THE CONCLUSIONS DRAWN. ADMITT EDLY, ON EACH OF THESE ISSUES FLAGGED BY THE PR. CIT, THE A.O RAISE D QUERIES BY WAY OF QUESTIONNAIRES AND ORDER SHEET ENTRIES. ADMITTEDLY TH ESE ARGUMENTS SO MADE WERE STRENGTHENED BY SUPPORTING DOCUMENTS. WE FIND THAT NO CONTRARY EVIDENCE OR FACT HAS BEEN REFERRED TO BY THE PR. CIT LET ALONE ANY JUSTIFICATION FOR EXERCISING HIS REVISIONARY POWERS. ON A PER USAL OF THE RECORD, WE FIND THAT ADMITTEDLY THE ISSUES HAVE BEEN ENQ UIRED INTO BY THE AO AT LENGTH AND REPLIED TO BY THE ASSESSEE IN DETAIL. ON SOME OF THESE FURTHER QUERIES BY WAY OF QUESTIONNAIRES AND ORDER-SHEET ENTRIES HAVE ALSO BEEN RAISED WHICH ALSO HAVE BEEN REPLIED TO. IN THE SE PECULIAR FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW CONSIDERING THE JU DICIAL PRECEDENT AVAILABLE THAT IT WAS INCUMBENT UPON THE PR. CIT TO DEMON STRATE THE ERROR MADE BY THE AO IN THE PASSING OF HIS ORDER THAT TOO SUCH AN ERROR WHICH COULD BE SAID TO BE PREJUDICIAL TO THE INTERESTS OF T HE REVENUE. BEFORE WE PROGRESS TO ADDRESS THE FURTHER REASONING FO R THE AFOREMENTIONED CONCLUSION, IT WOULD BE APPROPRIATE TO EXTRA CT THE ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 23 OF 29 RELEVANT FINDINGS OF THE PR. CIT WHICH WE FIND CANNOT BE UPH ELD AT THIS JUNCTURE : 4. OUTWARD REMITTANCES : .. .. THE SUBMISSIONS FURNISHED BY THE AR IS CAREFULLY CO NSIDERED. THE FIRM HAS MADE PAYMENTS IN FOREIGN CURRENCY AS PER FORM 15CB AVAIL ABLE ON RECORD. IT IS NOTED THAT THE AO HAS NOT EXAMINED THE NATURE OF PA YMENTS WHICH AS PER FORM 15CB ARE MADE FOR IMPORT OF RAW MATERIAL, COMMISSIO N EXPENSE, REGISTRATION OF TRADE MARK ETC. NO ENQUIRY OR VERIFICATION WHATSOEV ER IS MADE REGARDING THE PAYMENTS ESPECIALLY ON ACCOUNT OF COMMISSION AND RE GISTRATION OF TRADE MARK WITHOUT DEDUCTION OF TAX AT SOURCE AND THE APPLICAB ILITY OF PROVISIONS U/S 40(A)(I) OF THE ACT TO THE IMPUGNED TRANSACTIONS. FURTHER NO INQUIRY OR VERIFICATION IS MADE REGARDING THE SERVICES RECEIVED FROM THE RECIP IENTS OF COMMISSION AS TO WHETHER THE SAME IS INCURRED WHOLLY OR EXCLUSIVELY FOR BUSINESS. 5. CURRENCY VARIATIONS : . . THE SUBMISSIONS OF THE LD. AR IS CONSIDERED. THE A SSESSING OFFICER HAD CALLED FOR A CHART ON THE GP/NP RATE FOR A COMPARATIVE VIE W. HOWEVER DETAILS OF THE TRANSACTIONS RESULTING IN LOSS ARISING ON ACCOUNT O F FOREIGN EXCHANGE CURRENCY VARIATION IS NOT CALLED FOR NOR AND EXAMINED BY THE AO. ADMITTEDLY THE ASSESSEE IS ALSO AN EXPORTER BUT WHETHER THE SAID LOSS HAS ARISEN WI TH REFERENCE TO EXPORTS AND THE CANCELLATION OF FORWARD CONTRACTS INCIDENTAL THERET O TO DETERMINE WHETHER THE LOSS CLAIMED IS ARISING ON ACCOUNT OF REGULAR BUSINESS T RANSACTIONS HAS NOT BEEN EXAMINED. THERE IS LACK OF INQUIRY BY THE AO ON THI S ISSUE BEFORE ALLOWING THE LOSS CLAIMED. 6. ADDITIONS IN FIXED ASSETS .. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE AR. IN THE SHOW CAUSE NOTICE WDV OF VARIOUS FIXED ASSETS ARE RECORDED AS ADDITIONS MADE DURING THE YEAR. THE ASSESSING OFFICER DID CALL FOR THE DETAILS OF A SSETS ADDED DURING THE YEAR WHICH HAVE BEEN PLACED ON RECORD WITHOUT ANY VERIFI CATION REGARDING ITS INSTALLATION AND USER DURING THE YEAR. HE HAS NOT CALLED FOR THE INVOICES OF THE FIXED ASSETS INSTALLED DURING THE YEAR EVEN ON RANDOM BASIS. ON THIS GROUND THEREFORE THERE IS LACK OF INQUIRY BY THE AO. 7. PURCHASES MADE FROM PERSONS COVERED U/S 40A(2)( B) OF IT ACT,1961 . . IT IS NOTED FROM THE ASSESSMENT RECORD THAT FORM N O.3CEB DETAILING TRANSACTIONS' WITH ASSOCIATED ENTERPRISES WITH WHOM THE ASSESSEE HAS ENTERED INTO SPECIFIED DOMESTIC TRANSACTIONS IS FUR NISHED. HOWEVER THE AO HAS NOT MAKE ANY VERIFICATION OR INQUIRY TO DETERMINE T HAT THE SAID TRANSACTIONS ARE AT ARM'S LENGTH. THESE TRANSACTION S ARE NOT SCRUTINIZED AND EXAMINED AS TO WHETHER SUCH EXPENDITURE IS I EXCESSIVE OR UNREASONABLE HAVING REGARD TO THE FAIR MARKET VALUE OF THE GOODS SERVICES OR FACILITY FOR WHICH THE PAYMENT IS MADE BEFORE AC CEPTING THE VERSION OF THE ASSESSEE. THEREFORE EVEN ON THIS ACCOUNT THERE IS C OMPLETE LACK OF INQUIRY ON THE PART OF THE AO. 8. COMMISSION PAYMENT . .. THE SUBMISSIONS OF THE AR IS PERUSED. ON THIS GROU ND ALSO THERE IS LACK OF INQUIRY. THE ASSESSING OFFICER HAS ALLOWED SALES COMMISSION WITHOUT CALLING FOR ANY AGREEMENT OR DOCUMENTATION GOVERNING THE COMMISSION PAYMENT. THE ASSESSING OFFICER HAS NOT MADE ANY INQUIRY WITH THE RECIPIENT S OF THE COMMISSION OR NOR ANY ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 24 OF 29 CONFIRMATION IS CALLED FOR. NO VERIFICATION WHATSOE VER ON THE NATURE OF SERVICES RECEIVED FROM THE RECIPIENTS IS MADE. THE ENTIRE CO MMISSION PAYMENT IS ALLOWED WITHOUT ANY INQUIRY OR VERIFICATION. 17.1. ON THE BASIS OF THE ABOVE REASONING, THE ORDER WA S HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENU E BY THE PR. CIT HOLDING AS UNDER : 9. THE LD. AR HAS ALSO RELIED ON CERTAIN JUDGMENT S IN SUPPORT OF HIS CONTENTIONS. ALL THE CASES RELIED UPON ARE WITH REF ERENCE TO PROVISIONS OF SECTION 263 PRIOR TO THE AMENDMENT BY WHICH EXPLANATION 2 WAS I NSERTED BY THE FINANCE ACT, 2015 WITH EFFECT FROM 01.06.2015 IN THE SUBJECT SEC TION AND THEREFORE NOT APPLICABLE TO THE FACTS OF THE CASE. 10. IN THE LIGHT OF-THE ABOVE FACTS AND AS DISCUS SED ABOVE, IN MY OPINION THE ASSESSMENT MADE BY THE AO VIDE ORDER DATED 25.0 5.2015 PASSED U/S 143(3) OF THE IT ACT, 1961 FOR THE A.Y. 2013-14 ON THE ISSUES DIS CUSSED IN THE SHOW CAUSE NOTICE IS HELD TO BE ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF REVENUE, AS THE ORDER HAS BEEN MADE WITHOUT MAKING INQUIRIES OR VER IFICATION WHICH SHOULD HAVE BEEN MADE IN VIEW OF EXPLANATION 2 TO SECTION 263 OF THE IT ACT, 1961. THE AMENDMENT U/S 263 OF THE ACT BY INSERTION OF EXPLANATION 2 TO SECTION 263 OF THE ACT IN THE STATUTE IS DECLARATORY AND CLARIFICATORY IN NATURE TO DECLA RE THE LAW AND PROVIDE CLARITY ON THE ISSUE WHEREBY IF THE A.O FAILED TO MAKE ANY ENQ UIRY OR NECESSARY VERIFICATION WHICH SHOULD HAVE BEEN MADE, THE ORDER BECOMES ERRO NEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. IN VIEW OF THE AFORESAID, THE IMPUGNED ORDE R PASSED BY THE A.O. U/S 143(3) OF THE ACT FOR A.Y. 2013-14 IS SET ASIDE TO BE MADE AFRESH ON THE ISSUES DISCUSSED ABOVE IN PARA 5 TO 8 AND THE SHOW CAUSE NOTICE (SUPRA) AFTER PROPERLY EXAMINING THE SUBJECT ISSUES AND CONDUCTING INQUIRIES AND VERIFICATION AF TER GIVING SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 17.2. WE HAVE SEEN THAT THE PR. CIT HAS INVOKED EXPLANA TION-2 TO SECTION 263. FOR READY REFERENCE, THE RELEVANT PROVISION IS REPRODUCED HEREUNDER : 'REVISION OF ORDERS PREJUDICIAL TO REVENUE. 263. (1) ........................... EXPLANATION 1. .................. A) .......................................... B)... C) EXPLANATION 2.. (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 AC CORDANCE WITH ANY ORDER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 11 9; OR (D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WITH AN Y DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE, RENDERED BY THE JURISDICTIONAL HIGH C OURT OR SUPREME COURT IN THE CASE OF THE ASSESSEE OR ANY OTHER PERSON.] 17.3. AS NOTED EARLIER IN THE FACTS OF THE PRESENT CASE, IT IS EMINENTLY BORNE OUT FROM THE RECORD THAT ON EACH OF THE ISSUES FLA GGED BY THE PR. CIT THE AO HAS MORE THAN ADEQUATELY ENQUIRED INTO THE SE AT LENGTH IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. THE SAID FAC T EVIDENT ON RECORD WAS SPECIFICALLY BROUGHT TO THE NOTICE OF THE PR. CIT ON BEHALF OF THE ASSESSEE. THE ARGUMENTS, WE FIND WERE SUPPORTED B Y RELEVANT DOCUMENTS AND EVIDENCES TO DEMONSTRATE ITS CLAIM. THE FACT THAT THE ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 25 OF 29 SUBMISSIONS AS ADVANCED ON THE QUESTIONNAIRES AND QUER IES AS RAISED BY THE A.O HAVE BEEN REPLIED TO BY THE ASSESSEE IS NOT DISPUTED BY THE PR. CIT. THE PRESUMPTIONS MADE IN THE PECULIAR FACTS AND CIRC UMSTANCES THAT IT WAS NOT ENQUIRED INTO IS UNSUPPORTED BY ANY CON TRARY FACT OR EVIDENCE. THUS, TO SEEK TO DISCARD THE ASSESSEE'S EXPLAN ATION IN THE ABSENCE OF FACT OR EVIDENCE CANNOT BE SUPPORTED. ONCE ALL NECESSARY FACTS AND EVIDENCES WERE AVAILABLE BEFORE THE PR. CIT THEN EVEN IN TERMS OF EXPLANATION-2 TO SECTION 263, IT WAS INCUMBENT UPON THE PR. CIT TO DEMONSTRATE THAT THE ORDER PASSED IS ERRONEOUS AND P REJUDICIAL TO THE INTERESTS OF THE REVENUE. IN ORDER TO DEMONSTRATE THA T IT WAS INCUMBENT UPON HIM TO ATLEAST ATTEMPT TO MAKE A SEMBLANCE OF SAME MINIMALISTIC ENQUIRY TO ASSAIL THE FACTS AND EVIDENCES AVAILABLE ON REC ORD TO SHOW THAT THE A.O HAS JUST SAT ON THE REPLIES AND NOT CONSIDERED THEM. IT IS FOR THE PR. CIT TO SHOW THAT HAD ANY FURTHER QUERIES BEEN MA DE BY THE A.O THEN THE ORDER PASSED COULD NOT HAVE BEEN PASSED AS IT WOULD HAVE BEEN ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENU E. WITHOUT ASSAILING THE FACTS AND EVIDENCES THE PRESUMPTION BASED O N MERE SUSPICIONS THAT NO ENQUIRIES OR VERIFICATION WAS MADE, DOE S NOT CLOTHE THE PR. CIT WITH THE POWERS TO EXERCISE HIS REVISIONARY P OWERS. IN THE ABSENCE OF THE SAME IT IS AN ATTEMPT AT FISHING AND ROVING ENQUIRIES BY THE PR. CIT INVOKING EXPLANATION-2(A) OR 2(B) OF SECTION 263 WHICH PRESUMABLY HAS BEEN INVOKED AS IN ORDER TO DEMONSTRA TE THAT EXPLANATION 2(C) OR 2(D) OF SECTION 263 WAS INVOKED, NOTHING H AS BEEN PLACED ON RECORD BY THE PR. CIT. SO IT IS PRESUMED THAT THE PR. CIT SO UGHT TO INVOKE EITHER EXPLANATION 2(A) OR 2(B) OF SECTION 263. T HE REVISIONARY POWER VESTED IN THE PR. CIT, IT IS EXPECTED, WOULD BE EXERCISED IN A CAR EFUL AND RESPONSIBLE MANNER. ADMITTEDLY ON EACH OF THE ISSUE S FLAGGED BY THE PR. CIT, THE ASSESSEE'S REPLIES MADE AVAILABLE HAVE BEEN C ARELESSLY AND ARBITRARILY BRUSHED ASIDE BY STATING THAT AO HAS NOT MA DE ANY VERIFICATION OR ENQUIRY. IN ORDER TO DEMONSTRATE THAT TH ERE WAS AN ERROR, IN TERMS OF THE JUDICIAL PRECEDENT AVAILABLE, THE PR. CIT SH OULD HAVE CARRIED THE ISSUE TO ITS LOGICAL CONCLUSION AND NOT REMAND ED THE ORDER WITH THE BLAND DIRECTION DIRECTING THAT THE ASSESSMENT B E MADE AFRESH. FOR THE EXERCISE OF REVISIONARY POWER, THE ERROR IN THE PASSING OF THE ORDER SHOULD HAVE BEEN DEMONSTRATED. IN THE ABSENCE OF THE SAME, THE POWER EXERCISED BY THE PR. CIT IS OPEN TO THE CHALLENGE OF BEING ARBITRARILY WHIMSICAL AND AT BEST A FISHING AND ROVING ENQ UIRY. THE FACT ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 26 OF 29 THAT THE ASSESSMENT ORDER PASSED IS A CRYPTIC ORDER B Y ITSELF AT BEST CAN GIVE RISE TO SUSPICION. NOTWITHSTANDING THE FACT THAT THE W RITING OF THE ORDER IS NOT IN THE HANDS OF THE ASSESSEE, THE ASSESSE E AT BEST CAN RELY ON THE QUESTIONNAIRES ISSUED BY THE A.O REQUIRING THE ASSESSEE T O ADDRESS AND EXPLAIN THE FLAGGED ISSUE. THE FACT REMAINS THAT HAVING RAISED VARIOUS ISSUES BY WAY OF QUESTIONNAIRES, THE AO FURT HER RAISED QUESTIONNAIRES AND ORDER-SHEET ENTRIES ETC. THE ASSESSE E IS WELL JUSTIFIED IN RELYING UPON THE PRESUMPTION THAT THE AO WAS SATISFIED BY THE EXPLANATION OF THE ASSESSEE. IT IS WELL ACCEPTED THAT IT IS NOT NECESSARY FOR THE A.O TO REFER AND INCLUDE IN HIS ORDER THE DISCUSSIO N ON ISSUES ON WHICH HE IS SATISFIED BY THE EXPLANATION OFFERED. THE SAID LEGA L POSITION IS WELL SETTLED. THE PR. CIT IN THE CIRCUMSTANCES NEEDS TO DEMONSTRATE THE ERROR AND SUCH AN ERROR WHICH IS ALSO PREJUDICIAL TO THE INTERESTS OF THE REVENUE. HE IS NOT EXPECTED TO SIT OVER THE EXPLANATION AND EVIDENCES ON RECORD. WE MAY REFER TO THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS M/S FINE JEWELLERY INDIA WHEREIN RELIANCE HAS BEEN PLACED UPON IDEA CELLULAR LTD. VS DCIT (2008) 301 ITR 407 WHERE IN COURT HAS HELD; IF A QUERY IS RAISED DURING THE ASSESSMENT PROCEEDI NGS AND RESPONDED TO BY THE ASSESSEE, THE MERE FACT THAT IT I S NOT DEALT WITH IN THE ASSESSMENT ORDER WOULD NOT LEAD TO A CONCLUSION THAT N O MIND HAD BEEN APPLIED TO IT. THE SPECIFIC EXTRACT OF THIS OBSERVATION FROM THE CASE OF M/S FINE JEWELLERY INDIA EXTRACTED HEREUNDER: 8. WE FIND THAT THE IMPUGNED ORDER OF THE TRIBUNA L DOES RECORD THE FACT THAT SPECIFIC QUERIES WERE MADE DURING THE ASSESSMENT PR OCEEDINGS WITH REGARD TO DETAILS OF EXPENDITURE CLAIMED UNDER THE HEAD 'MISC ELLANEOUS EXPENSES' AGGREGATING TO RS.2.94 CRORES. THE RESPONDENT-ASSES SEE HAD RESPONDED TO THE SAME AND ON CONSIDERATION OF RESPONSE OF THE RESPON DENT-ASSESSEE, THE ASSESSING OFFICER HELD THAT OF AN AMOUNT OF RS. 17. 98 LAKHS INCURRED ON ACCOUNT OF REPAIRS AND MAINTENANCE OUT OF RS.2.94 CORES IS CAPITAL EXPENDITURE. THIS ITSELF WOULD BE INDICATION OF APPLICATION OF MIND B Y THE ASSESSING OFFICER WHILE PASSING THE IMPUGNED ORDER. THE FACT THAT THE ASSES SMENT ORDER ITSELF DOES NOT CONTAIN ANY DISCUSSION WITH REGARD TO THE BALANCE A MOUNT OF EXPENDITURE OF RS.1.76 CRORES I.E. RS.2.94 CRORES LESS RS.17.98 LA KHS CLAIMED AS REVENUE EXPENDITURE WOULD NOT BY ITSELF INDICATE NON APPLIC ATION OF MIND TO THIS ISSUE BY THE ASSESSING OFFICER IN VIEW OF SPECIFIC QUERIE S MADE DURING THE ASSESSMENT PROCEEDINGS AND THE RESPONDENT-ASSESSEE'S RESPONSE TO IT. IN FACT THIS COURT IN THE CASE OF 'IDEA CELLULAR LTD. VS. DEPUTY COMMISSI ONER OF INCOME TAX & ORS., [(2008) 301 ITR 407 (BOM.)]HAS HELD THAT IF A QUERY IS RAISED DURING ASSESSMENT PROCEEDINGS AND RESPONDED TO BY THE ASSE SSEE, THE MERE FACT THAT IT IS NOT DEALT WITH IN THE ASSESSMENT ORDER WOULD NOT LEAD TO A CONCLUSION THAT NO MIND HAD BEEN APPLIED TO IT. 17.4. REFERENCE MAY ALSO BE MADE TO THE STRICT VIEW TAKE N BY THE DELHI HIGH COURT IN THE CASE OF STATUTORY LIMITATION OF TWO YEARS FOR THE ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 27 OF 29 REVISIONARY AUTHORITY WHILE EXERCISING THE REVISIONARY POWER U/S 263 WHICH CAN BE EXTRAPOLATED TO THE STRICT VIEW TAKEN BY T HE COURTS THAT THE REVISIONARY POWER CANNOT BE EXERCISED CASUALLY AND WHIMS ICALLY TO CARRY OUT FISHING AND ROVING ENQUIRIES. REFERENCE IS BEING MADE H EREIN QUA LIMITATION OF TWO YEARS IN THE CASE OF TULSI TRACOM P.LTD. V C IT (2018) 161 DTR 0148 WHERE COURT HAS HELD; CIT(A) WHO ISSUED ORDER U/S 263 OUGHT TO HAVE BEE N FULLY SATISFIED THAT ADEQUATE OPPORTUNITY WAS GIVEN TO ASSESSEE TO CONTR OVERT FACTS STATED IN NOTICE U/S 263 AND TO EXPLAIN CIRCUMSTANCES SURROUN DING SUCH FACTS SECTION 263(2) WAS CLEAR BAR FOR ANY ORDER BEING PA SSED PURSUANT TO NOTICE U/S 263, AFTER EXPIRY OF TWO YEARS FROM END OF FINANCIAL YEAR IN W HICH ORDER SOUGHT TO BE REVISED WAS PASSEDTHUS, THERE WAS OUTER LIMIT IN STATUTE U/S 263 WHICH, WAS 31 ST MARCH, 2013SINCE, NO USEFUL PURPOSE WOULD BE SERVED IN GIVING OPPORTUNITY TO APPELLANT OF BEING HEARD AT THIS STAGE, QUESTION ANSWERED IN FAVOUR OF ASSESSEEASSESSEES APPEAL ALLOWED. 17.5 IN THE FACTS OF THE PRESENT CASE, IN THE ABSENCE OF ANY EVIDENCE OR FACT HAVING BEEN BROUGHT ON RECORD BY THE PR. CIT, WE A RE OF THE VIEW THAT THE ASSESSMENT ORDER HAS BEEN PASSED TAKING DETAILED E NQUIRIES ADMITTEDLY ON ALL THE ISSUES FLAGGED BY THE PR,. CIT. ON G OING THROUGH THE RECORD, WE FIND THAT THE PR. CIT HAS FAILED TO GIVE ANY FINDING AS TO HOW AND IN WHAT MANNER THE ORDER OF THE AO ON THE VAR IOUS ISSUES NOTED BY HIM CAN BE SAID TO BE ERRONEOUS LET ALONE PREJUDICIAL T O THE INTERESTS OF THE REVENUE. WE NOTE THAT NO ENQUIRY HAS BEEN MADE BY THE PR. CIT AT HIS OWN INSTANCE. CONSIDERING THE DETAILED REPLIES MADE AVAILABLE TO HIM, IT WAS INCUMBENT UPON HIM TO CARRY OUT ATLEAST SOME ENQUIRIES TO DEMONSTRATE THAT THE ORDER PASSED IS ERRONEOUS AND P REJUDICIAL TO THE INTERESTS OF THE REVENUE AND HE HAS MERELY DIRECTED TH E AO TO PASS AN ORDER AFTER PROPERLY EXAMINING THE SUBJECTS AND CONDUCTIN G ENQUIRIES AND VERIFICATION AFTER GIVING SUFFICIENT OPPORTUNITY OF B EING HEARD TO THE ASSESSEE. ON CONSIDERING THE JUDICIAL PRECEDENT CITED, EVEN THE DE CISION OF THE APEX COURT IN THE CASE OF M/S MALABAR INDUSTRIAL C O. LTD. (SUPRA) ON WHICH BOTH THE PARTIES RELY, THE LAW IS WELL SETTLED; IT IS FIRST NECESSARY FOR THE REVISIONARY AUTHORITY TO DEMONSTRATE THE ERROR IN THE ORDER AND THAT TOO SUCH AN ERROR WHICH IS PREJUDICIAL TO THE INTERE STS OF THE REVENUE. THE LAW REQUIRES THAT THE ORDER PASSED BY TH E PR. CIT SHOULD BE A SPEAKING ORDER POINTING OUT THE ERROR AS IN THE AB SENCE OF THE SAME, IT IS AN ARBITRARY EXERCISE WHICH CANNOT BE UPHELD. REFERE NCE MAY ALSO BE MADE TO THE DECISION OF THE DELHI HIGH COURT IN THE C ASE OF DCIT VS DELHI AIRPORT METRO EXPRESS PVT. LTD. (SUPRA) WHEREIN IN UN AMBIGUOUS WORDS THE COURT HAS HELD THAT THE LAW ENVISAGES BEFORE THE EXERCISE OF REVISIONARY POWERS THAT THE PR. CIT SHOULD FIRST PROCEED BY CARRYING OUT ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 28 OF 29 SOME MINIMAL ENQUIRIES TO SHOW THAT THE CONCLUSION OF THE A O IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENU E. IN FACT THE COURTS HAVE HELD THAT EVEN WHERE THE AO DID NOT UNDER TAKE ANY ENQUIRY, EVEN IN SUCH A SITUATION, IT BECOMES INCUMBENT UPON THE R EVISIONARY AUTHORITY TO CONDUCT SUCH AN ENQUIRY AND IN CASES WHE4 RE NOTHING HAS BEEN DONE, THEN IT IS NECESSARY FOR THE REVISIONARY AUTH ORITY TO DEMONSTRATE THAT THE ERROR WHICH THE AUTHORITY SEEKS TO ADDRESS IS CLEARLY SET OUT IN THE ORDER TO SHOW HOW THE ERROR CA N BE SAID TO BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN THE FACTS OF THE PRESENT CASE, THE PR. CIT HAS EXERCISED THE POWER BY MERELY FLAG GING CERTAIN ISSUES EXTRACTING THE SHOW CAUSE NOTICE, EXTRACTING PART OF THE REPLY OF THE ASSESSEE AND WITHOUT CARING TO ADDRESS THE SAME H AS SUMMARILY ARRIVED AT THE CONCLUSION IGNORING THE FACTS, EVIDENCES A ND PLETHORA OF JURISPRUDENCE AVAILABLE ON THE ISSUE WHICH CASTS RESPONS IBILITY ON THE PR. CIT TO POINT BEING OUT THE ERROR AND NOT ANY AND EVER Y ERROR BUT SUCH AN ERROR WHICH IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE . THE TWIN REQUIREMENTS AND THE SINE-QUA-NON FOR EXERCISING THE RE VISIONARY POWER CANNOT BE LEFT AT THE MERCY OF WHIMS AND FANCIES OF REVISION ARY AUTHORITY THE SAME SHOULD BE BROUGHT OUT ON RECORD MERE SUSPICIO NS ARE NOT ENOUGH. IN ORDER TO SUPPORT THE CONCLUSION DRAWN REFERE NCE MAY ALSO BE MADE TO THE DECISION OF THE CO-ORDINATE BENCHES IN NARAIN TATU RANE V ITO (SUPRA) WHICH CLEARLY BRINGS OUT THAT THE EXPLANATION CANNOT BE SAID TO HAVE OVERRIDDEN THE LAW AS INCORPORATED BY VARIOUS H IGH COURTS WHICH HAVE CONSISTENTLY HELD THAT BEFORE REACHING TO THE CONC LUSION THAT THE ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTER ESTS OF THE REVENUE, THE REVISIONARY AUTHORITY ITSELF HAS TO UNDERTAKE SOME ENQUIRIES TO ESTABLISH THAT THE ASSESSMENT ORDER IS ERRO NEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 18. ALTHOUGH EACH OF DECISIONS WHICH HAVE BEEN CITED BY T HE PARTIES HAVE ALL BEEN TAKEN INTO CONSIDERATION BEFORE ARRIVING AT A CONCLUSION, HOWEVER, SPECIFIC REFERENCE IS BEING MADE TO THE DECISIONS C ITED BY THE CIT-DR TO THE CASE OF SURYA JYOTI SOFTWARE AND DENIEL ME RCHANTS PVT. LTD. (SUPRA) WHICH WE NOTE ARE DECISIONS THAT OPERATE IN D IFFERENT SET OF FACTS AND CIRCUMSTANCES AND ARE VERY FACT SPECIFIC AND HA VE NO APPLICATION TO THE FACTS IN HAND AS WHEREAS THE FIRST DECIS ION REFERRED TO IS IN THE CONTEXT OF ELABORATE MODUS OPERANDI NOTICED IDEN TICALLY IN THE CASE OF ENTRY PROVIDES THE SECOND CASE WAS IN THE BACKGROUN D OF ALLEGEDLY ITA 519 & 520/CHD/2018 A.Y. 2013-14 PAGE 29 OF 29 BOGUS SHARE APPLICATION MONEY WHERE THE SOURCES OF INVES TMENT MADE WERE FOUND TO BE NOT ADEQUATELY EXPLAINED AND AVAILABLE. T HE DECISIONS ARE FACT SPECIFIC AND HAVE NO APPLICATION TO THE FACTS AT HAND. 19. ACCORDINGLY, ON A CONSIDERATION OF MATERIAL AVAILABLE ON R ECORD ALONGWITH THE ARGUMENTS OF THE PARTIES AND THE JUDICIAL P RECEDENT AVAILABLE FOR THE DETAILED REASONS SET OUT HEREINABOVE WE HOLD THAT THE ORDER PASSED BY THE PR. CIT IN ITA 520/CHD/2018 BEING DEVOID OF MERIT DESERVES TO BE QUASHED. ORDERED ACCORDINGLY. 20. SINCE THE PARTIES HAVE CANVASSED THAT FACTS AND CIRC UMSTANCES IN ITA 519/CHD/2018 REMAIN IDENTICAL AS CONSIDERED IN ITA 520/CHD/2018 AS HEREIN ALSO, SIMILAR QUESTIONNAIRE ETC. WERE RAISED BY THE AO AND SIMILAR REPLIES OF THE ASSESSEE WERE MADE AVAILA BLE ON ISSUES WHICH WERE FURTHER QUESTIONED BY THE AO, THE ORDER PASS ED U/S 143(3) HEREIN WAS ALSO SIMILARLY CRYPTIC. HEREIN ALSO, THESE VERY S PECIFIC ISSUES WERE FLAGGED BY THE PR. CIT AND CONSIDERING SIMILAR REPLIES, T HE SIMILAR ORDER EXCEPT FOR THE ONE ISSUE ON WHICH THE EXPLANATION OFFERED WAS ACCEPTED WE FIND THAT CONSIDERING SIMILAR REASONING ORDER PASSED BY THE PR. CIT IN ITA 519/CHD/2018 IS ALSO DEVOID OF MERIT AND IS ACCORDINGLY QUASHED. ORDERED ACCORDINGLY. 21. IN THE RESULT, BOTH THE APPEALS OF THE DIFFERENT ASSE SSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER 2018. SD/- SD/- ( . %.. . & ) ( ! ) (DR. B.R.R. KUMAR) (DIVA SINGH) '( #/ ACCOUNTANT MEMBER ' #/ JUDICIAL MEMBER + , / ,!(.) /POONAM/AG (+! ,-.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT - 2. THE RESPONDENT - 3. $ / CIT 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR, ITAT, CHANDIGARH 6. 8:% GUARD FILE (+ $ BY ORDER, ; # ASSISTANT REGISTRAR