HARISH SEJWANI, Kota V. CIT, Kota

ITA 521/JPR/2013

• Counselvise Citation: 52123114 RSA 2013
• Duration Of Justice: 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 10-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K KHENDELWAL
• Assessee Lawyers: N M RANKA; NK JAIN
• Keywords: Rejection of books of accounts; Opportunity of being heard; Difference of opinion; Assessment record; Change of opinion
• Section: 143(3); 142(1); 263

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JAIPUR BENCH : JAIPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 521/JP/2013 (A.Y. 2008-09) SHRI HARISH SEJWANI, VS. THE ACIT, CIRCLE-1, 627, DADABARI, KOTA (RAJASTHAN). KOTA (RAJASTHAN). PAN NO. AJYPK 1708 K (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI N.M. RANKA & SHRI N. K. JAIN DEPARTMENT BY : SHRI S.K. KHENDELWAL - D.R. DATE OF HEARING : 28/01/2014. DATE OF PRONOUNCEMENT : 26/02/2014. O R D E R PER HARI OM MARATHA, J.M THIS APPEAL OF THE ASSESSEE FOR A.Y. 2008-09 IS DI RECTED AGAINST THE ORDER OF LD. CIT (ADMN.), KOTA DATED 07/03/2013 PAS SED UNDER SECTION 263 OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT). 2 BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT REG ULAR ASSESSMENT IN THIS CASE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 31/08/2010 AT 2 TOTAL INCOME OF RS. 24,01,454/- AS AGAINST RETURNED INCOME OF RS. 6,18,230/-. 3 . THE ASSISTANT COMMISSIONER OF INCOME TAX, KOTA WH O HAD PASSED THIS ASSESSMENT ORDER, PROPOSED ON REVISION OF HIS ORDER UNDER SECTION 263 OF THE ACT VIDE LETTER NO. 348 DATED 30/05/2011 TO THE LD. CIT, KOTA, IN RESPECT OF THE FOLLOWING POINTS:- (1) DURING THE ASSESSMENT, GROSS PROFIT WAS ESTIMA TED @19.7%O OF TOTAL RECEIPTS AND. THIS AMOUNTS TO RS. 5820828/-. THEREA FTER, ADDITIONS, TO BE MADE, WERE CALCULATED BY SUBTRACTING GROSS PROFI T DECLARED BY THE ASSESSEE I.E.RS. 4114040/--. THEREFORE, ADDITIONS O F RS. 1706788/ - (582O828 - 4114040) WERE MADE DURING THE ASSESSME NT. HOWEVER, DURING THE REVIEW IT WAS FOUND THAT GROSS PROFIT DE CLARED BY THE ASSESSEE IS RS.2043798/- INSTEAD OF RS.4114040/-. T HEREFORE ADDITIONS REQUIRED TO BE MADE IS RS.3777030/ - INSTEAD OF RS. 1706788/- (2) THE ASSESSEE DEBITED RS.156000/- AS SHOP REND EXPENSES. HOWEVER NO AGREEMENT OF HIRING IS AVAILABLE IN VERIFICATION OF THE EXPENSES CLAIMED. (3) THE ASSESSEE HAS SHOWN UNSECURED LOANS OF RS.8 L 55283/- FROM SIX PERSONS. HOWEVER, CONFIRMATIONS WERE AVAILABLE IN O NLY TWO CASES. IN THESE CASES ALSO NAME, ADDRESS & PAN IS NOT AVAILAB LE. THEREFORE, THESE LOANS ARE NOT VERIFIED. (4) IN THE CASE OF UNSECURED LOANS, ACCOUNT OF SMT . JYOTI JHAMNANI SHOWS OPENING BALANCE OF RS.2219451/- AS ON 01/04/2007 AN D CREDITED RS. 63000/- ON 04/08/2007. IN THE NAME OF SMT. SHALATNT KT DEVI, JAIPUR, IT SHOWS THAT ACCOUNT PERTAINS TO SMT. JYOTI JHAMNANI AND AMOUNT CREDITED IN THE NAME OF SMT. SHAKUNTLA DEVI. NO VER IFICATION WAS MADE IN THIS REGARD. 3 (5) THE ASSESSEE HAS SHOWN INTEREST FREE UNSECURED LOANS OF RS.8155283/- FROM VARIOUS PARTIES. THE RELATION BETWEEN THE ASSE SSEE AND THESE PERSONS ARE NOT ENQUIRED JUSTIFYING THESE INTEREST FREE LOANS. FURTHER CREDITWORTHINESS OF THE PERSONS GIVING INTEREST FRE E LOANS IN NOT ENQUIRED DURING THE ASSESSMENT PROCEEDINGS. (6) THE ASSESSEE HAS MADE WITHDRAWAL OF RS.1225000/ - DURING THE YEAR. ITS UTILITY WAS NOT ENQUIRED DURING THE ASSESSMENT PROCEEDINGS. 4. ON RECEIPT OF THIS PROPOSAL MADE UNDER SECTION 263 OF THE ACT, A SHOW-CAUSE NOTICE UNDER SECTION 263 OF THE ACT VIDE LETTER DATED 02/01/2013, WAS ISSUED THROUGH REGISTERED POST, FIX ING THE DATE OF HEARING AS 17/01/2013 AND INVITING ASSESSEES OBJEC TIONS, IF ANY. IN RESPONSE THERETO WRITTEN SUBMISSION WAS FILED ON 06 /02/2013 FROM THE SIDE OF THE ASSESSEE WHICH READ AS UNDER:- IN THIS REFERENCE IT IS HUMBLY SUBMITTED THAT THE ASSESSMENT WAS COMPLETED U/ S 143(3) OF THE INCOME TAX ACT BY THE LD. INCOME TAX OFFICER BY TAKING DUE CARE OF THE PROVISION OF THE ACT. AGAINST THE ORDER OF LD. ASSESSING OFFICER THE ASSE SSEE PREFERRED AN APPEAL BEFORE THE HON'BLE COMMISSIONER OF INCOME TAX (APPE ALS), KOTA ON THE SUBJECT MATTER OF ADDITION IN GROSS PROFIT RATE AND THE HONOURABLE COMMISSIONER OF INCOME TAX KOTA HAS GIVEN SUBSTANTI AL RELIEF AND ACCEPTED THE CONTENTS OF THE ASSESSEE AND ALLOWED GROSS PROF IT RATE @16.68% OF SELLING PRICE AFTER DUE CONSIDERATION OF RECASTED TRADING A / C SUBMITTED BEFORE ASSESSMENT PROCEEDING AS WELL ON BEFORE THE APPELLA TE AUTHORITY. HOWEVER WE HUMBLY SUBMIT THE DETAILED EXPLANATION A ND SUBMISSION ON THE GROUND TAKEN BY YOUR GOOD SELF 1) TRADING ADDITION :- THE RECASTED TRADING A/ C HAVE BEEN SUBMITTED DURING ASSESSMENT PROCEEDING KEEPING IN MIND THE NO RMS OF EXCISE POLICY AS 4 WELL GENERAL TREND IN THIS TINE OF BUSINESS. WE DRA W YOUR ATTENTION TO THE FOLLOWING FACTS: A) THE ASSESSEE WAS BOUND TO PURCHASE THE IMFL AN D BEER ONLY FROM THE RAJASTHAN STATE BEVERAGES CORPORATIONS LIMITED WHER E THERE WAS NO CHANCE OF NEGOTIATION IN PURCHASE PRICE. B) THE RETAILS TRADE PRICE OF THE ABOVE PRODUCTS WAS ALSO FIXED. C) AS PER THE TERM NO. 5.13 PAGE NO. 32 OF THE EX CISE LIQUOR POLICY THE MAXIMUM RETAIL SALES PRICE FOR THE IMFL AND BEER WA S ALSO FIXED BE THE STATE EXCISE DEPARTMENT WHICH IN ANY COULD NOT EXCEED BY 20% OF MARGIN/ PROFIT BUT RETAILER WAS FREE TO SALE IT AT LOWER PRICE. D) THE GP OF THE ASSESSEE IN RETAIL TRADE COULD N OT EXCEED BY 16% (20/120*100). E) THE SALE BEING OF THE EXCISABLE GOODS WAS SUBJ ECTED TO FREQUENT CHECK BY THE INSPECTORS AND OFFICERS OF THE STATE EXCISE DEPARTMENT. MONTHLY STATEMENT WITH REGARD TO PURCHASE AND SALE OF LIQUO R WERE PREPARED AND SUBMITTED TO THE EXCISE DEPARTMENT. AS REFER ABOVE THERE IS DIRECT PROVISION THAT THE APPELLANT CAN MAXIMUM CHARGE 20% OF THE COST PRICE WHICH EFFECTIVELY COME S TO16% ON SALES PRICE. HENCE THE APPELLANT IS BOUND BY THE LAW AND CANNOT CHARGE ANY EXTRA AMOUNT OVER THE PRE DETERMINED PRICE. LOOKING TO TH E NATURE OF TRADE THE APPELLANT HAS TO OFFER DISCOUNT TO THE VARIOUS CUST OMER WHICH WILL DIRECTLY EFFECT ON THE GROSS PROFIT RATE OF THE APPELLANT BASED ON THESE FACTS ALL THE EXPENSES INCLUDING DI RECT AND INDIRECT ARE CHARGEABLE TO PROFIT AND LOSS ACCOUNT NOR TO TRADIN G ACCOUNT AS THE ASSESSEE CAN REALIZE MAXIMUM OF 16.680/O OF THE SELLING PRIC E WHICH IS FIXED BY RSBCL. THEREFORE THERE IS NO SCOPE ASSUMING OR PRESUMING HIGHER RATE OF GROSS PROFIT OR TRANSFER OF EXPENSES FROM TRADING TO PROFIT AND LOSS A/C OR VICE VERSA. TO MAKE THE FIGURES COMPARABLE WITH THE PREVIOUS Y EAR I.E. 2006-07 AND 2OO7-OB THE RECASTED TRADING A/ C WAS SUBMITTED TO THE ASSESSING OFFICER 5 AND THE SAME WAS ACCEPTED BY HIM AFTER DUE CONSIDER ING THE PROVISION OF EXCISE AS WELL AS PREVIOUS TRACK RECORD OF THE ASSE SSEE. THEREFORE THERE IS NO UNDER ASSE3SMENT OF GROSS PR OFIT BY RS. 2070242/- NOR THE ASSESSMENT IN PREJUDICE TO THE INTEREST OF THE REVENUE ON THE GROUND. YOU ARE HUMBLY REQUESTED TO RECONSIDER THESE FACTS AND PASS THE NECESSARY ORDER. 2) DURING THE GEAR UNDER CONSIDERATION ASSESSEE H AS PAID THE RENT OF RS. 156000/-FOR TWO SHOPS I.E NO 23 AND 27 AMOUNTING RS 66000/- AND RS. 90000/- RESPECTIVELY. THE LIABILITY FOR DEDUCTING T AX AT SOURCE ARRIVES ONLY WHEN RENT PAID EXCEEDS RS 12000O PER ANNUM TO INDIV IDUAL PERSON. HENCE THERE WAS NO NEED TO DEDUCT TAX AT SOURCE. 3) DURING THE YEAR UNDER CONSIDERATION THERE WAS UNSECURED LOAN OUTSTANDING IN THE BALANCE SHEET OF SIX PERSONS. CO NFIRMATIONS FOR TWO PERSONS WERE FILED DURING THE PROCEEDINGS AND RESTS WERE NOT PRODUCED BECAUSE ALL THE BALANCES WERE CARRIED FORWARD FROM THE PREVIOUS YEAR. HOWEVER ALL THE CONFIRMATIONS ARE ENCLOSED WITH THI S LETTER FOR YOUR KIND VERIFICATION.' THE ASSESSEE HAS ALSO FILED COPY OF RENT AGREEMENT, COPY OF CONFIRMATION OF ACCOUNTS FOR VERIFICATION ALSO. HOWEVER, LD. CIT AFTER CONSIDERING THE ABOVE SUBMI SSION OF THE ASSESSEE AND EXAMINATION OF THE ASSESSMENT RECORD F OUND THAT THE ASSESSING OFFICER HAS COMPLETED HIS ORDER IN HASTE AND IN A ROUTINE MANNER. HE ALSO FOUND LACK OF VERIFICATION ON ASSE SSING OFFICER PART. ACCORDING TO HIM, THE ASSESSING OFFICER HAS TAKEN I NCORRECT VIEW OF LAW WHICH AMOUNTS TO AN ERROR BEING PREJUDICIAL TO THE INTEREST OF THE REVENUE. AFTER REFERRING TO CERTAIN DECISIONS/ CAS E LAWS HAS AGREED WITH 6 THE PROPOSED ACTION OF THE ASSESSING OFFICER AND HA S FOUND THE ASSESSMENT ORDER DATED 31/08/2010 AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, HE HAS SET ASID E THE ASSESSMENT ORDER WITH A DIRECTION THAT DENOVO ASSESSMENT ORDER BE MADE AFTER MAKING PROPER VERIFICATION AND CONDUCTING APPROPRIATE ENQU IRIES. AGAINST THIS ORDER, THE ASSESSEE/APPELLANT HAS COME IN APPEAL BE FORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS:- 1. THAT ON THE FACTS, IN TOTALITY OF CIRCUMSTANCES AND IN VIEW OF THE ISSUE RELATING TO GROSS PROFIT/TRADING ADDITION HAVING TR AVELLED IN APPEAL AND DECIDED BY THE HON'BLE COMMISSIONER OF INCOME-T AX (APPEALS), AJMER IN APPEAL NO. 103/2010-11 BY ORDER DATED 30 TH NOVEMBER, 2012, THE LD. COMMISSIONER OF INCOME-TAX GROSSLY ER RED IN SETTING ASIDE THE SAID ISSUE AND RESTORING TO THE LD. ASSES SING OFFICER, WHICH IS IN CONTRAVENTION OF EXPLANATION (C) TO SUB-SEC.(L) OF SEC.263 OF THE ACT, IS UN-AUTHORIZED, WITHOUT JURISDICTION AND UNSUSTAI NABLE ON FACTS AND IN LAW. 2. THAT THE ISSUE WITH REGARD TO SHOP RENT OF RS.1 ,56,000/- SET ASIDE AND RESTORED TO THE LD. ASSESSING OFFICER IS BAD AS THE RENT SO PAID IS SIMILAR TO THAT OF THE IMMEDIATE PAST ASSESSMENT YEAR OF RS .1,74,000/- AND WAS SUPPORTED BY AGREEMENTS FILED. SUCH PAYMENT HAS BEEN ALLOWED IN THE PAST AND THERE BEING NO CHANGE ON FACTS, THE SET ASIDE AND RESTORATION IS BAD AND UN-SUSTAINABLE ON FACTS AND IN LAW. 3. THAT THE THIRD AND FIFTH ISSUE IN RELATION TO U NSECURED LOANS OF RS.81,55,283/- HAS BEEN WRONGLY SET ASIDE AND RESTO RED WHEN THE ISSUE WAS EXAMINED IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, TWO CONFIRMATIONS OF (I) SHRI BHARAT JHAMNANI; AND (II) JYOTI JHAMNANI WERE FILED AND BOTH ARE ASSESSEES; BALANCE CREDITOR S WERE OLD AND NO FRESH AMOUNT WAS RECEIVED DURING THE PREVIOUS YEAR IN QUESTION. THE SET ASIDE AND RESTORATION IS UNSUSTAINABLE ON FACTS AND IN LAW. 7 4. THAT RESTORATION OF THE ISSUE NO.4 IN RESPECT OF UNSECURED LOANS OF JYOTI JHAMNANI & SHAKUNTALA DEVI HAS BEEN WRONGLY S ET ASIDE AND RESTORED WHEN COPY OF BOTH THE ACCOUNTS WERE FILED AND WERE EXPLAINED. 4.1 THAT THE CONFIRMATIONS IN RESPECT OF SMT. JYOT I JHAMNANR AND SMT. SHAKUNTLA DEVI HAVING BEEN FILED, THE RESTORATION I S BAD. 5. THAT COPY OF ACCOUNT HAVING BEEN FILED AND THE WITHDRAWALS OF RS. 12,25,000/- HAVING BEEN EXPLAINED WITH NO TAX EFFEC T, THE RESTORATION IS UNSUSTAINABLE ON FACTS AND IN LAW. 6. THAT THE LD. COMMISSIONER OF INCOME TAX GROSSL Y ERRED IN OBSERVING THAT THE SCRUTINY ASSESSMENT FRAMED BY THE ASSISTAN T COMMISSIONER ON 31.8.2010 IS WITHOUT DUE AND PROPER ENQUIRIES, W HEN ALL DUE NECESSARY AND REQUISITE ENQUIRIES WERE MADE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS AND ORDER WAS MADE AFTER SCR UTINY, VERIFICATION, EXAMINATION AND SATISFACTION. 7. THAT THE IMPUGNED ORDER IS WITHOUT JURISDICTION AS IT DOES NOT SATISFY THE TWIN CONDITIONS OF BEING ERRONEOUS AND PREJUDIC IAL TO THE INTERESTS OF THE REVENUE. 7.1. THAT THE IMPUGNED IS VAGUE, EVASIVE AND UNSUS TAINABLE BECAUSE OF DIFFERENT VIEW POSSIBLE TO BE TAKEN BY LD. COMMISSI ONER OF INCOME-TAX. 8. THAT THE LEARNED COMMISSIONER GROSSLY ERRED IN MECHANICALLY ACCEPTING THE PROPOSAL OF THE ASSISTANT COMMISSIONE R AND MAKING THE ORDER WITHOUT APPRECIATING MATERIAL ON RECORD AND W ITHOUT APPLICATION OF MIND. 9. THAT THE IMPUGNED ORDER DATED 07/03/2013 IS WITH OUT JURISDICTION AND MISUSE OF AUTHORITY IN LAW. 5 . BEFORE US, IT WAS ARGUED BY LEARNED SENIOR ADVOCA TE SHRI N.M. RANKA THAT THE ORDER OF LEARNED COMMISSIONER INCOME TAX I S NOT TENABLE IN THE 8 EYES OF LAW BECAUSE AS PER THE PROVISIONS OF SECTIO N 263 OF THE ACT THE LD. COMMISSIONER HAS TO SATISFY HIMSELF BY APPLYING HIS MIND TO THE ASSESSMENT RECORDS AFTER HEARING THE OTHER PARTY I. E. THE ASSESSEE HAS TO COME TO A CONCLUSION THAT ASSESSMENT ORDER IS NOT O NLY ERRONEOUS BUT IS ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE TO THAT EXTENT, AND THEREAFTER HE CAN REVISE IT IN THE MANNER PRESCRIBE D. IT WAS ARGUED THAT THE ASSESSING OFFICER (ASSTT. COMMISSIONER OF INCOM E-TAX, CIRCLE-1, KOTA) HAS PROPOSED REVISION OF HIS ORDER AND THE LD. CIT EVEN WITHOUT APPLYING HIS OWN MIND HAS FOLLOWED IT DITTO. IT WAS ARGUED THAT THIS FACT IS EVIDENT FROM PARA 3 OF THE APPELLATE ORDER THAT HE HAS NOT APPLIED HIS MIND AT ALL BEFORE ISSUING THE SHOW-CAUSE NOTICE. THUS, HE HAS CONTRAVENED AND IGNORED THE IMPORTANT STEP WHICH IS NECESSARY ASSUM ING JURISDICTION UNDER SECTION 263 OF THE ACT. THE OTHER CONTENTION LEARN ED SENIOR ADVOCATE IS THAT THE COMMISSIONER HAS NOT EVEN APPLIED HIS MIND TO THE REPLY GIVEN IN RESPECT OF THE SHOW-CAUSE NOTICE BY THE ASSESSEE. IT WAS STATED THAT BEFORE THE DATE OF INITIATION OF ACTION UNDER SECTI ON 263 OF THE ACT, THE ASSESSEE HAD ALREADY FILED APPEAL AGAINST THE ASSES SMENT ORDER AND THE LD. CIT(A), KOTA HAD CONSIDERED AND DISPOSED OF THE ISSUE REGARDING ADDITION MADE ON ACCOUNT OF GROSS PROFIT RATE AND T HAT HAD ALREADY MERGED WITH THAT ORDER. LEARNED SENIOR ADVOCATE AR GUED THAT IN LAW 9 LEARNED COMMISSIONER IS NOT EMPOWERED TO REVISE ANY SUCH ITEM OF INCOME WHICH HAS ALREADY BEEN CONSIDERED BY THE HIG HER AUTHORITIES. THUS, ACCORDING TO HIM THE ASSUMPTION OF JURISDICTI ON TO THAT EXTENT IS ILLEGAL AS PER EXPLANATION (1) APPENDED TO SECTION 263 OF THE ACT. THE LD. SENIOR ADVOCATE HAS FILED A DETAILED WRITT EN SUBMISSION IN SUPPORT OF THE GROUNDS RAISED IN HIS APPEAL WHICH A RE BEING EXTRACTED VERBATIM, AS UNDER:- 1. THE ASSESSEE IS AN INDIVIDUAL AND IS PROPRIETOR OF M/S. HARISH KUMAR AND PARTY, KOTA. HE IS RETAIL TRADING IN IMFL & BEER FO R THE LAST SEVERAL YEARS. HE MAINTAINS REGULAR AND PROPER BOOKS OF ACCOUNT SUPPO RTED BY SUPPORTING RECORD. THE ACCOUNTS FOR THE ACCOUNTING YEAR ENDED ON 31.3.2008 STANDS AUDITED BY PAWAN KUMAR LALPURIA, CHARTERED ACCOUNTA NTS, KOTA ON 11.9.2008. RETURN OF INCOME OF RS.6,18,230/- WAS FI LED ON 30 TH SEPTEMBER 2008 WHICH WAS PROCESSED U/S.143(1) ON 26.5.2009. A UDIT REPORT ALONG WITH AUDITED ACCOUNTS WAS SUBMITTED. COPY OF AUDIT REPORT DATED 1 1.9.2008 AND AUDITED ACCOUNTS IS (PB 1 TO 14). 2. THE CASE WAS SELECTED FOR SCRUTINY. NOTICE U/S. 143(2) WAS ISSUED BY THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 1, KOT A ON 29H SEPTEMBER,2009 WHICH WAS COMPLIED WITH. NOTICE U/S. 142(1) ALONG WITH DETAILED QUERY LETTER WAS ISSUED ON 31.3.2010. SHRI VINOD GUPTA, CHARTERED ACCOUNTANT AND A.R. ALONG WITH SHRI ARPIT JAIN, CA AND SHRI ASHISH SHARMA, CA ATTENDED ON VARIOUS DATES AND FILED REPLIES, EXP LANATIONS, CLARIFICATIONS, CONFIRMATIONS ETC. BOOKS OF ACCOUNT AND OTHER DOCUM ENTS WERE PRODUCED WHICH WERE EXAMINED, SCRUTINIZED, VERIFIED AND AFTE R COMPLETE SCRUTINY, VERIFICATION, EXAMINATION AND SATISFACTION, AN ASSE SSMENT U/S.143(3) WAS MADE ON 31.8.2010 COMPUTING TOTAL INCOME AT RS.24,O 1,454/- AGAINST RETURNED INCOME OF RS.6,18,230/-. THUS AN ADDITION OF RS. 17,83,224/- WAS MADE. 10 3. BEING AGGRIEVED FROM REJECTING OF BOOKS OF ACCOU NT, APPLICATION OF SECTION 145(3) OF THE ACT, ESTIMATING GROSS PROFIT AND MAKI NG TRADING ADDITION, AN APPEAL WAS PREFERRED BEFORE THE COMMISSIONER OF INC OME-TAX (APPEALS), AJMER, WHICH WAS REGISTERED AS APPEAL NO.103/2010-1 1. THE DEPARTMENT WAS DULY INFORMED BUT NONE APPEARED BEFORE THE CIT (A). THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) AFTER DETAILED DISCUSSION AND REFERRING TO THE ORDER OF THE HON'BLE ITAT FOR THE IMMEDIATE PAST ASSESSMENT YEAR 2OO7-08 CONSIDERED THE TRADING ADDI TION IN EXTENSO AFTER DEALING IN PARA 4.3 OF ITS ORDER DATED 30.11 .2012. THE ASSESSING OFFICER WAS DIRECTED TO ADOPT THE G.P. RATE OF 16.680/0 AS IN T HE LAST YEAR. BALANCE ADDITION WAS DELETED. IT APPEARS THE ORDER BEING IN ACCORD WITH THE EARLIER ORDERS OF THE HON'BLE TRIBUNAL WAS ACCEPTED BY THE REVENUE AND NO SECOND APPEAL WAS PREFERRED. EFFECT TO THE APPELLATE ORDER WAS GIVEN AND TRADING ADDITION WAS REDUCED. THE ORDER OF THE CIT (A) BECA ME FINAL AND THE ORDER OF THE ASSESSING OFFICER MERGED IN THE ORDER OF THE CIT (A). COPY OF ORDER OF LEARNED CIT (A) DATED 30 TH NOVEMBER, 2OL2 IS (PB 15 TO 20). 4. TO THE UTTER SURPRISE OF THE ASSESSEE, THE ASSES SEE RECEIVED A NOTICE NO. CIT/ITO(T)KTA/2OLI-12 DATED 20.I.2OL2 BY REGISTERED POST ON 2B.I.2OL2 FOR APPEARING AND SHOWING CAUSE AS TO WHY THE POWER BE NOT EXERCISED ULS.263 IN RESPECT OF THE FOLLOWING THREE POINTS:- (I) THERE IS UNDER ASSESSMENT OF RS. 20,70,242/- IN MAK ING TRADING ADDITION; (II) SHOP RENT OF RS. 1,56,O00/ - HAS AGREEMENT PRODUCED ; (III) IN RESPECT OF UNSECURED LOANS, ONLY TWO CONFIRMATIO NS WERE AVAILABLE OUT OF SIX PERSONS. COPY OF THE NOTICE DATED 20/01 /2013 IS PB 21. 4.I IT APPEARS THE LD. COMMISSIONER RECEIVED A PROP OSAL FROM THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 11, KOTA VIDE LE TTER NO.348 DATED 30.5.2011 PROPOSING ACTION U/S.263 OF THE ACT. THE NOTICE DATED 20.1.2O12 AS AFORESAID WAS ISSUED FINDING THE OTHER ISSUES AS NON-EXISTENT AND NOT COVERED U/S.263. IT IS APPARENT. HOWEVER, IT APPEAR S ON CHANGE OF OPINION, THE LD. COMMISSIONER CLAIMS IN PARA 3 OF THE IMPUGN ED ORDER AS TO A SHOW 11 CAUSE NOTICE DATED 2.L,2OL3 ISSUED THROUGH REGISTER ED A.D. FOR HEARING ON L7.L.2OL3, THOUGH NOT RECEIVED BY THE ASSESSEE. 5. REPLY TO THE SHOW CAUSE NOTICE WAS SUBMITTED ON 6.2.2013 OBJECTING TO THE PROPOSED (I) TRADING ADDITION; (II) RENTAL FOR TWO SHOPS; AND THE UNSECURED LOANS. SUBSEQUENTLY, FURTHER OBJECTIONS D ATED 13.2.2O13 AND 26.2.2O13 WERE SUBMITTED ALONG WITH COPY OF RENT AG REEMENTS, CONFIRMATIONS AND OTHER MATERIAL SUPPORTING THE ORI GINAL ASSESSMENT. COPY OF WRITTEN SUBMISSIONS DATED 6.2.2013, 13.2.2OI3 AN D 26.2.2013 ALONG WITH SUPPORTING MATERIAL SUBMITTED BEFORE THE LD. CIT AR E PB 22 TO 38. 6. HOWEVER, THE LD. COMMISSIONER MISCONSTRUING DIFF ERENT DECISIONS RESTORED ALL THE SIX ISSUES WITHOUT UN-REASONED FIN DING, HOLDING THE ASSESSMENT ORDER TO BE ERRONEOUS IN-SO-FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE ERRED IN HOLDING THAT IT IS CLEA R THAT THE ASSESSING OFFICER HAD PASSED ORDER WITHOUT DUE AND PROPER ENQUIRIES W HEREAS DUE AND PROPER ENQUIRIES HAVE BEEN DULY CONDUCTED BY THE LD . ASSESSING OFFICER IN THE SCRUTINY ASSESSMENT. HE RESTORED THE MATTER BAC K FOR FURTHER ENQUIRY AND TO FRAME ASSESSMENT. THE IMPUGNED ORDER IS WITH OUT JURISDICTION AND BAD ON FACTS AND IN LAW. HENCE APPEAL. GROUND NO.1 - GROSS PROFIT / TRADING ADDITION. THE ISSUE WITH REGARD TO THE GROSS PROFIT / TRADIN G ADDITION WAS IN CHALLENGE IN APPEAL BEFORE THE LD. CIT (A). THE LD. CIT (A) F OLLOWING ORDER OF THE HON'BLE TRIBUNAL FOR THE ASSESSMENT YEAR 2006-07 DA TED 29/08/2008 ALLOWED APPEAL IN PART AND REDUCED THE TRADING ADDI TION. HENCE, THE RESTORATION TO THE LD. ASSESSING OFFICER AND ITS CO NSIDERATION BY THE LD. COMMISSIONER IS IN CONTRAVENTION OF EXPLANATION(C) TO SUB-SECTION L OF SEC.263OF THE ACT. THE ACTION IS WITHOUT JURISDICTI ON. CIT V. JAIN CONSTRUCTION CO. (2013) 257 CTR 336 (R) PARA 24. OTHERWISE ALSO IT LAWS FULLY EXPLAINED TO THE LEARNED CIT . GROUND NO.2 - SHOP RENT OF RS. 1,56,000/- TWO SHOPS WERE TENANTED, FOR WHICH, IN THE IMMEDIAT E PAST ASSESSMENT YEAR RENTAL OF RS. 1,74,000/- WAS PAID AND ALLOWED. 12 THE RENT WAS PAID TO THE FOLLOWINGS:- RS.66,000/- SHRI BHARAT JHAMNANI LAST YEAR RS.78,00 0/-. RS.90,00O/- SMT. JYOTI JHAMNANI LAST YEAR RENT OF R S. 96,000/- WAS PAID TO SHRI PARSHURAM JHAMNANI. TWO AGREEMENTS FOR RENT WERE SUBMITTED. BOTH THE O WNERS ARE TAX PAYERS (PB 26 TO 31). NO VALID REASON TO RESTORE. SET ASIDE IS BAD. GROUND NO.3 - UNSECURED LOANS OF RS. 81,85,283/- IN THE COURSE OF ORIGINAL ASSESSMENT TWO CONFORMATI ONS OF (I) SHRI BHARAT JHAMNANI AND (II) SMT. JYOTI JHAMNANI, BOTH ASSESSE ES, WERE FILED BEING FRESH CREDITS (PB 37 TO 38) OTHER CREDITORS WERE OLD AND NO FRESH AMOUNT WAS RE CEIVED DURING THE PREVIOUS YEAR IN QUESTION. HENCE, NO FRESH CONFORMA TION WAS DEMANDED, NOR REQUIRED AND WAS NOT FILED. SHRI K.C. SHAH RS.5.00 LACS (SINCE ASSESSMENT YEAR 2006-07) (PB 36) SMT. SHAKUNTLA DEVI CHATURVEDI - RS.7,12,978 (SINCE ASSESSMENT YEAR 2006- 07) (PB 35) CHAMBAL BREW. & DIST. LTD. 40,29,200/- (SINCE ASS ESSMENT YEAR 2006-07) (PB 33) RAJASTHAN TELEMATICS LIMITED - RS.3,26,000/- (SINCE ASSESSMENT YEAR 2006- 07) (PB 32). THE SET ASIDE IS UNJUSTIFIED AND WITHOUT JURISDICTI ON. GROUND NO.4 - UNSECURED LOANS OF JYOTI JHAMNANI & S MT. SHAKUNTALA DEVI. 13 FRESH CONFIRMATION OF (I) SMT. JYOTI JHAMNANI AND ( II) SMT. SHAKUNTALA DEVI WERE SUBMITTED BEFORE THE LD. CIT (PB 38 - 35). SMT . SHAKUNTALA DEVI HAD OPENING BALANCE OF RS.7.00 LACS. ONLY INTEREST WAS CREDITED AND ALLOWED. SHE GAVE HER PAN NUMBER. THE SET ASIDE IS WITHOUT JURISDICTION. GROUND NO.5 - WITHDRAWALS OF RS. 12,25,000/- COPY OF ACCOUNTS AND SUPPORTING MATERIAL WAS FILED AND WAS EXPLAINED BEFORE THE LD. CIT (A). RESTORATION IS BAD. GROUND NOS. 6-9 AS IS APPARENT ON RECORDS RELEVANT AND NECESSARY MA TERIAL WAS BEFORE THE LD. ASSESSING OFFICER. ALL NECESSARY AND REQUISITE ENQUIRIES WERE DULY MADE BY THE LD. ASSESSING OFFICER. THE LD. COMMISSIONER HAS NOT GIVEN ANY REASON AND VALID REASON FOR RESTORATION. THE IMPUGNED ORD ER IS VAGUE, UNREASONED, WITHOUT APPLICATION OF MIND AND IGNORIN G THE MATERIAL ON RECORD AT THE ASSESSMENT STAGE AND BEFORE THE LD. C IT. THE ORDER OF THE LD. ASSESSING OFFICER IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE RESTORATION IS ARBITRARY, CAPRICIOUS, WITHOUT MATERIAL, CONTRARY TO THE MATERIAL ON RECORD AND WITHOUT ANY DEFINITE DIRECTION. IT IS MISUSE OF POWER CONFERRED, U/S.263. THE ENTIRE ACTION IS WITH OUT JURISDICTION AND THE IMPUGNED ORDER DESERVES TO BE QUASHED. APPEAL DESER VES TO BE ALLOWED WITH COSTS. WE REQUEST ACCORDINGLY. 6 . PER CONTRA, THE LD. CIT D.R. SHRI A.K. KHANDELWAL HAS SUPPORTED THE ORDER OF THE COMMISSIONER PASSED UNDER SECTION 263 OF THE ACT. FURTHER, HE INVITED OUR ATTENTION TOWARDS PARAGRAPH 9, AT PA GE 6, OF THE APPELLATE ORDER. HE OPENLY READ THIS ENTIRE PARA IN WHICH TH E FINDING GIVEN BY LD. 14 COMMISSIONER IN RESPECT OF ALL THE GROUNDS TAKEN IN THE SHOW-CAUSE NOTICE HAS BEEN GIVEN IN THIS PARA 9 OF THE APPELLATE ORDE R WHICH IS BEING EXTRACTED, VERBATIM HEREINUNDER:- 9. THE JURISDICTION U/S 263 OF THE IT ACT 1961 HAS BEEN CONFERRED TO THE COMMISSIONER OF INCOME TAX TO REVISE THE ORDER OF A SSESSING OFFICER WHICH HE FINDS TO BE ERRONEOUS AND PREJUDICIAL TO THE INT EREST OF REVENUE, ONLY BECAUSE THERE IS NO APPEAL FILED BY THE DEPARTMENT AGAINST THE ORDER OF ASSESSING OFFICER. SO THE PRIMARY OBJECTIVES OF TH E PROVISIONS OF THIS SECTION ARE TO VEST SOME CORRECTIVE POWERS IN THE HANDS OF THE COMMISSIONER OF INCOME TAX TO MODIFY OR CANCEL ANY ORDER BY ASSESSI NG OFFICER IF IT IS FOUND TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO T HE INTERESTS OF REVENUE. IT IS CLEAR FROM THE FACTS APPARENT FROM RECORDS THAT THE ASSESSING OFFICER HAD PASSED AN ORDER U/S 143(3) WITHOUT DUE AND PROPER E NQUIRIES WHICH HE IS EXPECTED TO MAKE AS AN INVESTIGATOR AS HE CANNOT RE MAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER INQUIRY. I, THEREFORE, IN THE FACTS AND CIRCUMSTANCES AS DISCUS SED ABOVE AND RESPECTFULLY FOLLOWING THE ABOVE REFERRED JUDGMENTS , CONSIDER IT FIT TO SET ASIDE THE ASSESSMENT WITH A DIRECTION TO THE ASSESS ING OFFICER TO FRAME IT DENOVO AFTER MAKING PROPER ENQUIRY AND VERIFICATION OF BOOKS OF ACCOUNTS AND OTHER RECORD/ DOCUMENTS & AFTER FOLLOWING THE D IRECTIONS GIVEN ABOVE. 7. BEFORE WE CONSIDER THE RIVAL CONTENTIONS, WE WOULD LIKE TO DISCUSS THE SCHEME OF REVISIONARY POWERS PROVIDED UNDER SEC TION 263 OF THE ACT AS UNDER:- THE SUBJECT OF REVISION UNDER SECTION 263 HAS BE EN VASTLY EXAMINED AND ANALYZED BY VARIOUS COURTS INCLUDING THAT OF HO NBLE APEX COURT. THE REVISIONAL POWER CONFERRED ON THE CIT VIDE SECT ION 263 IS OF VIDE AMPLITUDE. IT ENABLES THE CIT TO CALL FOR AND EXAM INE THE RECORDS OF ANY PROCEEDING UNDER THE ACT. IT EMPOWERS THE CIT TO M AKE OR CAUSE TO BE MADE SUCH AN ENQUIRY AS HE DEEMS NECESSARY IN ORDER TO FIND OUT IF ANY ORDER PASSED BY ASSESSING OFFICER IS ERRONEOUS IN S O FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE O NLY LIMITATION ON HIS 15 POWERS IS THAT HE MUST HAVE SOME MATERIAL(S) WHICH WOULD ENABLE HIM TO FORM A PRIMA FACIE OPINION THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. ONCE HE COMES TO THE ABOVE CONCLUSION ON THE BASIS OF THE MATERIAL THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND ALSO PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THE CI T IS EMPOWERED TO PASS AN ORDER AS THE CIRCUMSTANCES OF THE CASE MAY WARRANT. HE MAY PASS AN ORDER ENHANCING THE ASSESSMENT OR HE MAY MO DIFY THE ASSESSMENT. HE IS ALSO EMPOWERED TO CANCEL THE ASS ESSMENT AND DIRECT TO FRAME A FRESH ASSESSMENT. HE IS EMPOWERED TO TA KE RECOURSE TO ANY OF THE THREE COURSES INDICATED IN SECTION 263. SO, IT IS CLEAR THAT THE CIT DOES NOT HAVE UNFETTERED AND UNCHEQURED DISCRETION TO REVISE AN ORDER. THE CIT IS REQUIRED TO EXERCISE REVISIONAL POWER WI THIN THE BOUNDS OF THE LAW AND HAS TO SATISFY THE NEED OF FAIRNESS IN ADMINISTRATIVE ACTION AND FAIR PLAY WITH DUE RESPECT TO THE PRINCIPLE OF AUDI ALTERAM PARTEM AS ENVISAGED IN THE CONSTITUTION OF INDIA AS WELL AS IN SECTION 263. AN ORDER CAN BE TREATED AS ERRONEOUS IF IT WAS PASSE D IN UTTER IGNORANCE OR IN VIOLATION OF ANY LAW; OR PASSED WITHOUT TAKIN G INTO CONSIDERATION ALL THE RELEVANT FACTS OR BY TAKING INTO CONSIDERAT ION IRRELEVANT FACTS. THE PREJUDICE THAT IS CONTEMPLATED UNDER SECTION 263 IS THE PREJUDICE TO THE INCOME TAX ADMINISTRATION AS A WHOLE. THE R EVISION HAS TO BE DONE FOR THE PURPOSE OF SETTING RIGHT DISTORTIONS A ND PREJUDICES CAUSED TO THE REVENUE IN THE ABOVE CONTEXT. THE FUNDAMENT AL PRINCIPLES WHICH EMERGE FROM THE SEVERAL CASES REGARDING THE P OWERS OF THE CIT UNDER SECTION 263 MAY BE SUMMARIZED BELOW: (I) THE CIT MUST RECORD SATISFACTION THAT THE ORDE R OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO T HE INTERESTS OF THE REVENUE. BOTH THE CONDITIONS MUS T BE FULFILLED. (II) SECTION 263 CANNOT BE INVOKED TO CORRECT EAC H AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER AND IT IS ONLY WHEN AN ORDER IS ERRONEOUS, THAT THE SECTION WILL BE ATTRACTED. 16 (III) AN INCORRECT ASSUMPTION OF FACTS OR AN INCORR ECT APPLICATION OF LAW WILL SUFFICE FOR THE REQUIREMENT OR ORDER BEING ERRONEOUS. (IV) IF THE ORDER IS PASSED WITHOUT APPLICATION OF MIND, SUCH ORDER WILL FALL UNDER THE CATEGORY OF ERRONEOUS ORD ER. (V) EVERY LOSS OF REVENUE CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND IF THE ASSESSING OF FICER HAS ADOPTED ONE OF THE COURSES PERMISSIBLE UNDER LA W OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW UNDER WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOU S ORDER, UNLESS THE VIEW TAKEN BY THE ASSESSING OFFIC ER IS UNSUSTAINABLE UNDER THE LAW. (VI) IF WHILE MAKING THE ASSESSMENT, THE ASSE SSING OFFICER EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME, THE CIT, WHILE EXERCISING HI S POWER UNDER SECTION 263, IS NOT PERMITTED TO SUBSTITUTE HIS ESTIMATE OF INCOME IN PLACE OF THE INCOME ESTIMATED BY THE ASSESSING OFFICER. (VII) THE ASSESSING OFFICER EXERCISE QUASI-JUDICIA L POWER VESTED IN HIM AND IF HE EXERCISE SUCH POWER IN 17 ACCORDANCE WITH LAW AND ARRIVES AS A CONCLUSION, SU CH CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE CIT DOES NOT FEEL SATISFIED WITH THE CONCLUSION. (VIII) THE CIT, BEFORE EXERCISING HIS JURISDICTION UNDER SECTION 263, MUST HAVE MATERIAL ON RECORD TO ARRIVE AT A SATISFACTION. (IX) IF THE ASSESSING OFFICER HAS MADE ENQUIRIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON THE RELEVANT ISSUES AND THE ASSESSEE HAS GIVEN DETAILED EXPLANAT ION BE A LETTER IN WRITING AND THE ASSESSING OFFICER AL LOWED THE CLAIM ON BEING SATISFIED WITH THE EXPLANATION O F THE ASSESSEE, THE DECISION OF THE ASSESSING OFFICER CANNOT BE HELD TO BE ERRONEOUS SIMPLY BECAUSE IN HI S ORDER HE DOES NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. ADVERTING TO THE FACTS AND GROUNDS OF THE APPEAL U NDER REFERENCE, WE HAVE FOUND THAT THE LEARNED COMMISSIONER HAS SIM PLY SHOW-CAUSED THE ASSESSEE ON THE BASIS OF PROPOSED GROUNDS REFER RED TO HIM FOR REVISION BY THE ASSESSING OFFICER. THE PROCEDURE, WHICH HAS BEEN FOLLOWED BY THE LEARNED COMMISSIONER, SEEMS TO BE UNKNOWN TO LAW EN VISAGED UNDER SECTION 263(1) OF THE ACT. THE COMMISSIONER AS WE HAVE DISCUSSED ABOVE, MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDI NG UNDERTAKEN UNDER THIS ACT AND IF HE CONSIDERS THAT ANY ORDER PASSED BY THE ASSESSING OFFICER 18 IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE IN TEREST OF THE REVENUE, HE MAY AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE AND AFTER MAKING OR CAUSING TO BE MADE SUCH ENQUIRY AS HE DEE MS NECESSARY, MAY PASS SUCH AN ORDER AS THE CIRCUMSTANCES OF THE CASE MAY JUSTIFY. THE TERM RECORD USED IN THIS SECTION INCLUDES ALL REC ORDS RELATING TO ANY PROCEEDINGS UNDER THIS ACT AVAILABLE AT THE TIME OF EXAMINATION BY THE COMMISSIONER. AS PER EXPLANATION (C) OF SECTION 26 3(1) OF THE ACT IF ANY APPEAL HAS BEEN FILED AGAINST THE ASSESSMENT ORDER AND THE APPELLATE COMMISSIONER HAS CONSIDERED AND DECIDED THE ISSUE T HAT ISSUE CANNOT BE CONSIDERED AND REVISED BY THE COMMISSIONER UNDER SE CTION 263 OF THE ACT. IN THIS CASE, NEITHER COMMISSIONER HAS CALLED FOR T HE RECORD OF THE ASSESSMENT ORDER IN QUESTION NOR HAS EXAMINED THE R ECORD STIPULATED IN THE ACT BUT HE HAS SIMPLY ACTED AS POST OFFICE AN D HAS SHOW-CAUSED ALL ON THE GROUNDS WHICH WERE PROPOSED BY THE ASSESSING OFFICER FOR THE REASONS BEST KNOWN TO HIM, FOR REVISING HIS OWN. T HE MACROSPIC PERUSAL OF THE APPELLATE ORDER CLEARLY ESTABLISHES THAT WIT HOUT GIVING ANY FINDING ON THESE GROUNDS AND WITHOUT DISCUSSING ABOUT THE R EPLY GIVEN BY THE ASSESSEE, HE HAS DISCUSSED THE POWERS INVESTED IN T HE COMMISSIONER UNDER SECTION 263 OF THE ACT AND HAS SET ASIDE THE ASSESSMENT ORDER BY HOLDING THE ASSESSMENT ORDER AS ERRONEOUS AND PREJU DICIAL TO THE INTEREST 19 OF THE REVENUE. HAD HE CONSIDERED THE REPLY OF THE ASSESSEE HE WOULD HAVE DEFINITELY FOUND THAT ONE OF THE GROUNDS RAISE D IN THE PROPOSED ACTION WHICH IS REGARDING ESTIMATED TRADING ADDITIO N, HAS ALREADY MERGED WITH THE ORDER OF LD. CIT(A) AND AS IT HAS GONE OU T OF THE PURVIEW OF HIS POWERS TO REVISE THE SAME. THEREFORE, WE ARE OF TH E CONSIDERED OPINION THAT THE ASSUMPTION OF JURISDICTION BY THE LD. CIT IS INVALID. ANY ACTION TAKEN IN CONTRAVENTION OF THE PROVISIONS OF THE ACT AND WITHOUT APPLICATION OF MIND AND ACTING AS A POST OFFICE, CA NNOT JUSTIFY EVEN THE INITIATION OF REVISIONARY PROCEEDINGS UNDER SECTION 263 OF THE ACT. IN FACT THE APPELLATE ORDER IS AN APT EXAMPLE OF NON-APPLIC ATION OF MIND BY COMMISSIONER HIMSELF HE HAS NOT EVEN CONSIDERED ANY FOUND ANY ERROR IN THE ORDER HIMSELF WHICH CAN BE STATED TO BE PREJUDI CIAL TO THE INTEREST OF THE REVENUE AND HAS RATHER ACTED ON THE PROPOSED G ROUNDS REFERRED TO HIM BY THE ASSESSING OFFICER, WHO PASSED THE ASSESS MENT ORDER. MOREOVER, THE LEARNED COMMISSIONER HAS NOT EVEN EXA MINED THE GROUNDS RAISED IN THE SHOW-CAUSE NOTICE AND HE HAS NOT EVEN DISCUSSED THE REPLY OF THE ASSESSEE GIVEN WITH REGARD THERETO. HE HAS NOT EVEN DISCUSSED THE REASONS FOR HIS CONCLUSION THAT THE ASSESSMENT ORDE R IN QUESTION IS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. THUS, THE ORDER 20 OF THE LEARNED COMMISSIONER HIMSELF SUFFERS FROM TH E VICE OF NON-APPLICATION OF MIND. 8. HAVING HELD AS ABOVE, WE WOULD ALSO LIKE TO DISC USS THE MERITS OF THE GROUNDS ON THE BASIS OF SUBMISSIONS MADE BEFORE US VIS--VIS THE ASSESSMENT ORDER AND THE APPELLATE ORDER, IN ORDER TO SETTLE THE ISSUES FOR GOOD WITH A VIEW TO WARD OF MULTIPLICITY OF PROCEED INGS. 9. WE HAVE FOUND THAT THE ASSESSEE AS AN INDIVIDUAL A ND AS PROPRIETOR OF M/S. HARISH KUMAR PARTY, KOTA, HAS BEEN TRADING IN IMFL & BEER AS A RETAILER FOR THE LAST SEVERAL YEARS. HE MAINTAINED PROPER BOOKS OF ACCOUNTS REGULARLY DURING THE COURSE OF BUSINESS. T HE ACCOUNTS, FOR THE ACCOUNTING YEAR ENDING ON 31/03/2008, ARE AUDITED B Y THE CHARTERED ACCOUNTANT VIDE REPORT DATED 11/09/2008. THE ASSES SEE FILED HIS RETURN OF INCOME ON 30/09/2008 DISCLOSING TOTAL INCOME OF RS. 6,18,230/- ALONG WITH AUDITED REPORT AND AUDITED ACCOUNTS. THE REGU LAR ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT AT A TOTA L INCOME OF RS. 24,01,454/- AS AGAINST RETURNED AT RS. 6,18,230 /- ON 31/08/2010, RESULTING INTO AN ADDITION OF RS. 17,83,224/-. 10 . BEING AGGRIEVED AGAINST THE REJECTION OF BOOKS OF ACCOUNTS AND APPLICATION OF SECTION 145(3) OF THE ACT THE ASSESS EE HAS FILED APPEAL 21 BEFORE THE LD. CIT(A), AJMER WHICH WAS REGISTERED AS APPEAL NO. 103/2010-11 WHO PASSED HIS ORDER. AFTER RELYING ON THE TRIBUNALS ORDER PASSED ASSESSEES OWN CASE FOR THE A.Y. 2007-08 HAS DIRECTED THE ASSESSING OFFICER TO ADOPT GROSS PROFIT RATE OF 16. 68% UNDER SECTION 145(B) AS AGAINST ESTIMATED @ 19.7% BY THE ASSESSING OFFIC ER, AND THE BALANCE ADDITION HAS BEEN DELETED. COPY OF THE ORDER PASSE D BY THE LD. CIT(A) DATED 30/11/2012 IS ENCLOSED AT P.B. 1 TO 20. THER EFORE, THE ISSUE REGARDING TRADING ADDITION CANNOT BE A SUBJECT MATT ER OF REVISION IN VIEW OF SECTION 263(1) EXPLANATION (C) OF THE ACT, AS IT HAS ALREADY MERGED WITH THAT ORDER OF LD. CIT(A). 11 . THE SECOND ISSUE IS REGARDING RENT RECEIPT OF RS. 1,56,000/- REGARDING WHICH IT HAS BEEN MENTIONED THAT THE ASSE SSING OFFICER HAS ACCEPTED THE SAME WITHOUT EXAMINING THE AGREEMENT B ETWEEN THE PARTIES. THE ASSESSEE HAS RECEIVED A RENT FROM TWO PERSONS NAMELY:- (1) FROM SHRI BHARAT JHAMNANI OF RS. 66,000/- AS AGAINS T RECEIVED RS. 78,000/- IN THE LAST YEAR, AND (2) FROM SMT. JYOTI JHAMNANI OF RS. 90,000/- AS AGAINST LAST YEAR RENT OF RS. 96,000/-. THE ASSESSEE PRODUCED COPIES OF RENT AGREEMENTS. BOTH THE PARTIES ARE TAX PAYERS. THIS FACT IS FORTIFIED BY EVIDENCE ENCLOSED AT PB 26-31. IN THI S REGARD, WE HAVE NOT FOUND ANY REASON FOR THE COMMISSIONER IN TREATING I T AS NON-APPLICATION OF 22 MIND BY THE ASSESSING OFFICER. THE ASSESSING OFFIC ER HAD EXAMINED ALL DOCUMENTS AND HAD ALLOWED SUCH RENT RECEIPTS IN THE LAST YEARS. THE LD. COMMISSIONER HAS SIMPLY REVISED THIS ISSUE WHEREAS THE ASSESSING OFFICER HAS FOLLOWED HIS OWN ACTION TAKEN IN PAST YEAR. IN THESE FACTS WE ARE UNABLE TO FIND ANY REASON WITH THE COMMISSIONER TO REVISE HIS ORDER. SUCH A CURSORY ACTION CANNOT BE APPROVED BY US. 12 . THE THIRD GROUND IS REGARDING UNSECURED LOANS. A FTER HEARING BOTH SIDES IT IS FOUND THAT DURING THE COURSE OF ORIGINA L ASSESSMENT PROCEEDINGS THE ASSESSEE FILED CONFIRMATIONS WITH REGARD TO SHR I BHARAT JHAMNANI & SMT. JYOTI JHAMNANI, BOTH ASSESSED TO TAX AND WERE FRESH CREDITORS. COPIES ARE THESE ARE AVAILABLE AT PB 37 TO 38. THE OTHER CREDITORS WERE OLD AND NO FRESH AMOUNT HAS BEEN RECEIVED DURING TH E PREVIOUS YEAR IN QUESTION. IT IS FOUND THAT THE ASSESSING OFFICER D ID NOT DEMAND FRESH CONFIRMATION FROM THE ASSESSEE. SHRI K.C. SHAN IS AN OLD CREDITOR SINCE ASSESSMENT YEAR 2006-07. COPY OF PROOF IS ENCLOSED AT P.B. 35. SMT. SHAKUNTLA DEVI CHATURVEDI IS OLD CREDITOR SINCE ASS ESSMENT YEAR 2006-07, LIKEWISE CHAMBAL BREW & DISTRICT. LTD. IS ALSO AN O LD CREDITOR SINCE 2006- 07, PROOFS COPY ENCLOSED AT PB 33. THE RAJASTHAN T ELEMATICS LTD. IS ALSO AN OLD CREDITOR COPY OF PROOF ENCLOSED AT PB 32. T HUS, IN OUR CONSIDERED OPINION ON MERITS ALSO, NO CASE HAS BEEN MADE OUT T HAT THE ORDER IS BOTH 23 ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. THE ASSESSING OFFICER EXAMINED AND FOUND ALL THE CREDITORS AS EXP LAINED. WHEN THE ASSESSING OFFICER HAS TAKEN ONE VIEW AFTER EXAMININ G THESE ISSUES THE LEARNED COMMISSIONER CANNOT SUBSTITUTE HIS OWN VIEW . 13 . GROUND NO. 4 IS REGARDING UNSECURED LOAN OF JYOTI JHAMNANI & SMT. SHAKUNTALA DEVI. BEFORE ASSESSING OFFICER, THE ASS ESSEE SUBMITTED FRESH CONFIRMATIONS IN REGARD TO BOTH THESE AND WERE ALSO SUBMITTED BEFORE THE CIT P.B. 38-35 SMT. SHAKUNTALA DEVIHADS OPENING BA LANCE IS OF RS. 7 LAC. THE ASSESSEE CREDITED INTEREST WHICH HAS BEEN ALLOW ED. SHE HAS ALSO GIVEN HER PAN NUMBER. THUS, THIS GROUND IS ALSO NO T APPROPRIATE AND THE ASSESSMENT ORDER CANNOT BE REVISED ON THIS GROUND E ITHER. 14 . GROUND NO.5 OF THE SHOW-CAUSE NOTICE IS REGARDING WITHDRAWALS OF RS. 12,25,000/-. IT IS NOTICED BY US THAT BEFORE T HE ASSESSING OFFICER COPIES OF ACCOUNTS AND SUPPORTING MATERIAL WERE FIL ED AND WERE EXPLAINED. BEFORE LD. COMMISSIONER ALSO THIS FACT WAS EXPLAINED BUT WITHOUT RECORDING ANY REASON HE HAS SET ASIDE THIS GROUND. THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. JAI ME WAR WINE CONTRACTORS (2001) 251 ITR 785 (RAJ) HAS HELD THAT WITHOUT TAKI NG AN OBJECTIVE VIEW THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE 24 REVENUE, CANNOT REVISE AN ORDER. WE HAVE DISCUSSED ABOVE THAT THE SATISFACTION OF THE COMMISSIONER HAS TO BE BASED ON OBJECTIVELY JUSTIFIABLE AND CANNOT BE MERE IPSE DIXIT OF THE COMMISSIONER. THE HON'BLE SUPREME COURT LONG BACK HELD WHILE DECIDING THE CASE OF CIT VS. G.M. MITTAL STAINLESS STEEL PVT. LTD. REPORTED IN ( 2003) 263 ITR, THAT THE JURISDICTION UNDER SECTION 263 OF THE ACT CAN BE EX ERCISED ONLY WHEN TWIN CONDITIONS ARE SATISFIED. IN VIEW OF THE FOREGOIN G DISCUSSION, WE ARE OF THE CONSIDERED OPINION THAT THIS IS NOT A FIT CASE FOR REVISION AND ON BOTH COUNTS, THE APPELLATE ORDER HAS TO BE TURNED DOWN. IN SUPPORT OF OUR ABOVE VIEW, WE DRAW SUPPORT FROM THE DECISION OF TH E CASE OF JEEWANRAM CHOUDHARY VS. CIT (2013) 153 TTJ 195 OF THE JODHPUR BENCH, WHO HAS TAKEN A SIMILAR VIEW REGARDING MERGER OF THE GROUND IN APPELLATE AUTHORITY AND APPLICATION OF MIND FOR ASSUMPTION OF JURISDICTION. THE HELD PORTION OF THIS ORDER READS AS UNDER:- AO HAVING REJECTED ASSESSEES BOOKS OF ACCOUNT AF TER DISCOVERING CERTAIN DEFECTS AND DETERMINED THE INCOME BY APPLYI NG NET PROFIT RATE OF 9.5 PER CENT HAVING REGARD TO THE PAST HISTORY O F THE CASE AS AGAINST 8.5 PERCENT DECLARED BY THE ASSESSEE, IT CANNOT BE SAID THAT THE AO DID NOT APPLY HIS MIND WHILE FRAMING THE ASSESSMENT AND THEREFORE, THE ORDER PASSED BY THE AO CANNOT BE HELD TO BE ERRONEO US OR PREJUDICIAL TO THE INTERESTS OF THE REVENUE; ORDER UNDER SECTIO N 263 PASSED BY THE CIT ON THE GROUND THAT THE AO OUGHT TO HAVE APPLIED PROFIT RATE OF 10 PER CENT INSTEAD OF 9.5 PER CENT AND MADE SEPARATE ADDITIONS FOR THE SAID DEFECTS IS NOT SUSTAINABLE. 25 15 . ACCORDINGLY FROM ALL PARAMETERS, WE HAVE FOUND TH AT THE APPELLATE ORDER CANNOT BE SUSTAINED IN THE EYES OF LAW AND DE SERVES TO BE SET ASIDE. THEREFORE, WE SET ASIDE THE APPELLATE ORDER PASSED BY THE LEARNED COMMISSIONER INCOME TAX, ON 07/03/2013 AND RESTORE THE ASSESSMENT ORDER DATED 31/08/2010. 16. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALLOW ED. (ORDER PRONOUNCED IN THE COURT ON 26 TH FEBRUARY, 2014). SD/- SD/- (N.K.SAINI) (HARI OM MARATHA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 26 TH FEBRUARY, 2014. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JAIPUR.