Sri Govind Lal Rathi, Kolkata V. Pr. CIT-15, Kolkata, Kolkata

ITA 525/KOL/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1608 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 20-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S BISWAS
• Keywords: Capital asset; Gift; Revision of order; Depreciation; Cost of acquisition; Fair market value; Assessment record
• Section: 143(3); 2(14); 142(1); 68; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SRI A.T.VARKEY, JM & SHRI M.BALAG ANESH, AM ] I.T.A NO. 525/KOL/201 7 ASSESSMENT YEAR : 2012-1 3 SRI GOVIND LAL RATHI -VS.- PR. C.I.T., KOL-15, KOLKATA KOLKATA [PAN : ADIPR 0507 N] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SUNIL SURANA, ADVOCATE FOR THE RESPONDENT : SHRI R.S.BISWAS, CIT DATE OF HEARING : 14.06.2017. DATE OF PRONOUNCEMENT : 07.07.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE OR DER OF THE PRINCIPAL LEARNED COMMISSIONER OF INCOME TAX, KOLKATA-15, KOLKATA [ I N SHORT THE LD CIT] IN M. NO. PCIT-15/KOLKATA/U/S 263/09/16-17/8781-84. DATED 07. 02.2017 PASSED U/S 263 OF THE ACT AGAINST THE ORDER PASSED BY THE INCOME TAX OFFICER, WARD 44(1), KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) DATED 25.3.2015 FOR THE ASST YEAR 2012-13. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LEARNED ADMINISTRATIVE C.I.T. WAS JUSTIFIED IN INVOKING REVISIONARY JURISD ICTION U/S 263 OF THE ACT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE IS AN INDIVIDUAL AND RUNNING HIS BUSINESS IN THE NAME AND STYLE OF M/S. PARROT HOSI ERY FACTORY ENGAGED IN THE BUSINESS OF MANUFACTURING OF VESTS. THE ASSESSEE ELECTRONICA LLY FILED HIS RETURN OF INCOME FOR THE 2 ITA NO.525/KOL/2017 SRI GOVIND LAL RATHI A.YR.2012-13 2 ASSESSMENT YEAR 2012-13 ON 27.09.2012 DECLARING TAX ABLE INCOME OF RS.9,58,258/- WHICH WAS DULY PROCESSED U/S 143(1) OF THE ACT. LAT ER THE ASSESSMENT WAS SELECTED FOR SCRUTINY AND DURING THE COURSE OF ASSESSMENT PROCEE DINGS THE ASSESSEE APPEARED FROM TIME TO TIME AND PRODUCED THE BOOKS OF ACCOUNTS, BI LLS AND VOUCHERS AND THE SAME WERE DULY TEST CHECKED BY THE LD. AO. IN THE ASSESSMENT PROCEEDINGS THE LD. AO OBSERVED FROM THE PERSONAL BALANCE SHEET OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2012-13 THAT HE HAD SOLD CERTAIN OLD SILVER UTENSILS AMOUNTING TO R S.21,09,203/-. BUT THE SAME WAS NOT OFFERED TO TAX UNDER THE HEAD CAPITAL GAINS. IN R ESPONSE TO THE SHOW CAUSE NOTICE ISSUED IN THIS REGARD, THE ASSESSEE REPLIED THAT TH E OLD USED SILVER UTENSILS SOLD DURING THE YEAR, WERE PERSONAL EFFECTS, AND THEREFORE OUTSIDE THE PURVIEW OF THE DEFINITION OF CAPITAL ASSETS U/S 2(14 ) OF THE ACT., THE LD. AO DID NOT HEED TO THE CONTENTION OF THE ASSESSEE AND CONCLUDED THAT SECTION 2(14) OF THE ACT DEFINES THE EXPRESSION CAPITAL ASSET WHICH MEANS PROPERTY OF ANY KIND HELD BY THE ASSESSEE, WH ETHER OR NOT CONNECTED WITH HIS BUSINESS OR PROFESSION BUT DOES NOT INCLUDE PERSONA L EFFECTS, THAT IS TO SAY, MOVABLE PROPERTY (INCLUDING WEARING APPAREL AND FURNITURE) HELD FOR PERSONAL USE BY THE ASSESSEE OR ANY MEMBER OF HIS FAMILY DEPENDENT ON HIM BUT EX CLUDES (A) JEWELLERY . EXPLANATION FOR THE PURPOSES OF THIS SUB-CLAUSE, JEWELLERY INCLUDES (A)ORNAMENTS MADE OF GOLD, SILVER, PLATINUM OR ANY OTHER PRECIOUS METAL OR ANY ALLOY CONTAINING ONE OR MORE OF SUCH PRECIOUS METALS, WHE THER OR NOT CONTAINING ANY PRECIOUS OR SEMI-PRECIOUS STONE, AND WHETHER OR NOT WORKED O R SEWN INTO ANY WEARING APPARENT. BASED ON THIS DEFINITION AND EXPLANATION THEREON TH E LD. AO CONCLUDED THAT OLD SILVER UTENSILS SHOULD BE TREATED AS CAPITAL ASSET AND ACC ORDINGLY TRANSFER OF SUCH CAPITAL ASSET WOULD HAVE TO BE BROUGHT TO TAX AS CAPITAL GAIN. AC CORDINGLY HE ADDED THE SUM OF RS.21,09,203/- UNDER THE HEAD LONG TERM CAPITAL GA IN IN THE ASSESSMENT ORDER U/S 143(3) OF THE ACT ON 25.03.2015. AGAINST THIS ASSES SMENT THE ASSESSEE HAD PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND THE SAME IS PENDIN G. MEANWHILE THE LD. ADMINISTRATIVE COMMISSIONER OF INCOME TAX SOUGHT TO INVOKE REVISIO NARY JURISDICTION U/S 263 OF THE 3 ITA NO.525/KOL/2017 SRI GOVIND LAL RATHI A.YR.2012-13 3 ACT BY TREATING THE ORDER OF THE LD. AO U/S 143(3) OF THE ACT DATED 25.03.2015 AS ERRONEOUS IN AS MUCH AS PREJUDICIAL TO THE INTEREST OF THE REVENUE BY ISSUING THE FOLLOWING SHOW CAUSE NOTICE :- OFFICE OF THE PR. COMMISSIONER OF INCOME TAX - 15, KOLKATA 3. GOVT. PLACE (WEST). GROUND FLOOR. KOLKATA -700001 NO. PR. CIT - 15/KOLKATA/263/ /2016-17/4763 DATE : 08 /08/2016 TO SHRI GOVIND LAL RATHI, 9/1, SOVA RAM BYSACK STREET, KOLKATA- 700 007 SUB: SHOW CAUSE NOTICE U/ S.263 OF THE INCOME TAX A CT, 1961 IN THE CASE OF SHRI GOVIND LAL RATHI WITH PAN:ADIPR0507N ANDA.Y.2012-13 AGAINST ORDER U/S. 143(3) DATED 25/03/2015 PASSED BY ITO. WD-44(1), KO LKATA - MATTER REGARDING. PLEASE REFER TO THE ABOVE. IT IS NOTICED THAT YOU SOLD UTENSILS MADE OF SILVER AMOUNTING TO RS. 21,09,203/- BUT THE SAME WAS NOT OFFERED FOR TAX UNDER THE HEAD 'CAPITAL GAIN'. IT WAS ARGUED BY YOU THAT SILVER UTENSILS SOLD DURING THE YEAR WE RE PERSONAL EFFECT AND THEREFORE THE MATTER IS OUTSIDE THE PURVIEW OF THE DEFINITION OF CAPITAL ASSETS U/ S. 2(14) OF THE LT. ACT. ACCORDINGLY, NO CAPITAL GAIN WAS OFFERED F OR TAXATION BY YOU. THE A.O. IN HIS ORDER TREATED THE SALE CONSIDERATION AS LONG T ERM CAPITAL GAIN AND ADDED BACK TO YOUR TOTAL INCOME. BUT AS YOU COULD NOT FUR NISH THE DATE OF PURCHASE OF THAT ASSET SO A.O. SHOULD HAVE TREATED THE GAIN AS SHOR T TERM CAPITAL GAIN. THE MISTAKE RESULTED IN AN UNDER-CHARGE OF TAX AND INTE REST OF RS. 6,00,719/- . THE A.O. WHILE COMPLETING YOUR ASSESSMENT U /S. 143(3) DATED 25/03/2015 HAS NOT MADE ANY ENQUIRY INTO THIS ISSUE, ALTHOUGH PRI MA FACIE EVIDENCE AGAINST YOU WAS AVAILABLE ON RECORD. I AM, THEREFORE, OF THE OPINION THAT PRIMA FACIE THE ORDER U/S. 143(3) OF THE I.T. ACT, 1961 DATED 25/03/2015 IS ERRONEOUS AND PREJUDI CIAL TO THE INTEREST OF THE REVENUE. YOU ARE, THEREFORE, REQUESTED TO APPEAR PE RSONALLY OR THROUGH YOUR AUTHORIZED REPRESENTATIVE BEFORE THE UNDERSIGNED ON 29/08/2016 AT 1 P.M. ALONG WITH YOUR WRITTEN SUBMISSION, IF ANY, TO SHOW CAUSE AS TO WHY THE ASSESSMENT MADE U/S. 143(3) ON 25/03/2015 SHOULD NOT BE REVISED U/S . 263 OF THE I.T. ACT, 1961. SD/- (K.C.P.PATNAIK) PR.CIT-15, KOLKATA 4 ITA NO.525/KOL/2017 SRI GOVIND LAL RATHI A.YR.2012-13 4 FROM A PERUSAL OF THE AFORESAID SHOW CAUSE NOTICE I T COULD BE INFERRED THAT THE LD. CIT JUSTIFIED HIS ACTION U/S 263 OF THE ACT ON THE GROU ND THAT NO ENQUIRY WAS MADE ON THE SALE OF SILVER UTENSILS BY THE LD. AO IN THE ASSESS MENT PROCEEDINGS. THE ASSESSEE FILED A REPLY BEFORE THE LD. CIT STATING AS BELOW :- TO THE PR. COMMISSIONER OF INCOME TAX, KOL - 15, KOLKATA DATED:29.8.2016 SIR, SUB: SHOW CAUSE NOTICE U/S 263 - IN THE MATTER OF GOVIND LAL RATHI ::PAN-ADIPR0507N- ASSESSMENT YEAR 2012-13- - REG. WITH REFERENCE TO THE ABOVE, IT IS SUBMITTED THAT T HE ASSESSEE SOLD 38.37 KGS OF; SILVER UTENSILS DURING THE YEAR OUT OF THE SILVER U TENSILS WEIGHING 338 KGS WHICH WERE VERY OLD AND WERE DISCLOSED BY THE ASSESSEE IN THE VDIS SCHEME, 1997 AND TAX THEREON WAS PAID. THE LD CIT ALSO ISSUED CERTIF ICATE FOR THE SAID ACQUISITION OF THE SILVER UTENSILS . .IN SUPPORT OF THE SAME, THE CERTIFICATE OF VDIS IS ENCLOSED ALONG WITH THE DECLARATION MADE DULY SUPPORTED BY A FFIDAVIT. IT IS EVIDENT FROM THE CERTIFICATE SUPPORTED BY THE AFFIDAVIT THAT THE SIL VER UTENSILS WERE ACQUIRED IN ASSESSMENT YEAR 1963-64. THE UTENSILS WERE THEREFOR E HELD EVEN BEFORE 1.4.81. YOUR HONOUR HAS PROPOSED TO EXERCISE JURISDICTION U /S 263 ON THE GROUND THAT THE AO HAS NOT MADE ANY ENQUIRY REGARDING THE DATE OF P URCHASE OF SILVER UTENSILS SO AS TO COME TO THE CONCLUSION THAT THE ASSETS SOLD W ERE LONG TERM IN NATURE. THEREFORE, THE SILVER UTENSILS WERE HELD FOR MORE T HAN 50 YEARS. FURTHER, YOUR HONOUR HAS MISSED TO LOOK INTO THE RECORDS WHEREIN THE AO HAS MADE SPECIFIC REQUISITION REGARDING THE DATE OF PURCHASE OF SILVE R UTENSILS SOLD VIDE POINT NO. 24 OF THE NOTICE ISSUED U/ S 142(1) DATED 14/11/2014, COPY OF WHICH IS ENCLOSED HEREWITH. THE SAME WAS ALSO FILED BEFORE THE AO VID E LETTER DATED 18/12/2014, COPY OF WHICH IS ENCLOSED HEREWITH WHEREIN THE VDIS CERT IFICATES WERE FILED ALONG WITH DECLARATION MADE DULY SUPPORTED BY AFFIDAVIT . THER EFORE, IT IS SUBMITTED THAT PROPER ENQUIRY HAD BEEN MADE BY THE AO REGARDING TH E DATE OF PURCHASE OF SILVER UTENSILS AND HENCE THE ORDER IS NEITHER ERRONEOUS N OR PREJUDICIAL TO THE INTERESTS OF REVENUE. HENCE THE PROCEEDINGS MAY PLEASE BE DROPPE D. APART FROM THAT IT IS SUBMITTED THAT THE OLD HOUSE-HOLD SILVER UTENSILS USED FOR PERSONAL PURPOSES WERE SOLD DURING THE YEAR. THESE UTENSILS WERE OLD AND WERE PERSONAL EFFECTS OF THE ASSESSEE AND THEREFORE OUTS IDE THE PURVIEW OF THE DEFINITION OF CAPITAL ASSETS AS STATED IN SEC. 2(14) OF THE IN COME TAX ACT. THEREFORE, THERE WAS NO CAPITAL GAIN OFFERED FOR TAX DURING THE YEAR. TH E SAME VIEW HAS ALSO BEEN TAKEN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF SHREE KUMARI MUNDHRA VS 5 ITA NO.525/KOL/2017 SRI GOVIND LAL RATHI A.YR.2012-13 5 CIT REPORTED IN 228 ITR 548. THEREFORE, THE FACT TH E MATTER HAS TRAVELLED TO HIGH COURT ITSELF SHOWS THAT TWO OPINIONS ARE POSSIBLE A ND WHERE THE ISSUE IS DEBATABLE, JURISDICTION U/ S 263 CANNOT BE EXERCISED TO TAX TH E SALE OF SILVER UTENSILS AS SHORT TERM CAPITAL GAIN. HENCE, THE PROCEEDINGS MAY PLEASE BE DROPPE D. 4. THE LD. CIT, HOWEVER, DID NOT HEED TO THE CON TENTIONS OF THE ASSESSEE AND PROCEEDED TO PASS AN ORDER U/S 263 OF THE ACT BY OBSERVING A S BELOW :- I HAVE CAREFULLY CONSIDERED THE ISSUES WITH SPECIF IC REFERENCE TO THE RELEVANT ASSESSMENT RECORDS AS WELL AS ADMISSION MADE BY THE ASSESSEE IN HIS WRITTEN SUBMISSION. THE FACTS NARRATED ABOVE AND SUBMISSION MADE BY THE ASSESSEE INDICATES THAT SOME ASPECTS REMAINED TO BE SEEN BY THE A.O. DURING THE ASSESSMENT PROCEEDINGS REGARDING SALE PROCEEDS OF SILVER UTENS ILS. THE ASSESSING OFFICER HAS NOT MADE PROPER ENQUIRY BEFORE COMPLETING ASSESSMEN T REGARDING THE ABOVE ISSUE. BY NOT VERIFYING THE TREATMENT OF SALE PROCEEDS OF SILVER UTENSILS AND BY NOT MAKING ADEQUATE ENQUIRY THE ASSESSING OFFICER HAS NOT ASSE SSED THE PROPER INCOME THUS MAKING THE ORDER ERRONEOUS AND PREJUDICIAL TO THE I NTEREST OR THE REVENUE THE TREATMENT OF SALE PROCEEDS OF SILVER UTENSILS WAS N OT PROPERLY EXAMINED THUS RENDERING THE ASSESSMENT ORDER ERRONEOUS AND PREJUD ICIAL TO THE INTERESTS OF REVENUE. IN VIEW OF THE ABOVE, THE ORDER DATED 25/0 3/2015 PASSED BY I.T.O. W-44( 1), KOLKATA IS FOUND TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND HENCE SET ASIDE ON THE ABOVE LIMITED ISSUE WITH THE DIRECTION TO PASS FRESH ASSESSMENT ORDER AFTER EXAMINING THE EVIDENCES AND DOCUMENTS IN RESPECT OF THE ABOVE ISSUE RAISED AFTER GIVING OPPORTUNITY TO THE ASSESSEE AND IN ACCORDANCE WITH LAW. 5. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US O N THE FOLLOWING GROUNDS:- 1. FOR THAT THE ORDER OF THE LD. CIT IS ARBITRARY, ILLEGAL AND BAD IN LAW. 2. FOR THAT THE LD. CIT ERRED IN ASSUMING JURISDICT ION ON THE ISSUE OF PERIOD OF HOLDING OF SILVER UTENSILS WHICH WAS TAXED AS LONG TERM CAPITAL BY THE AO WHICH WAS ALREADY ENQUIRED INTO AND CONSIDERED BY THE ASS ESSING OFFICER AFTER DUE APPLICATION OF MIND IN THE ASSESSMENT MADE U/ S. 14 3(3). 3. FOR THAT THE LD. CI.T ERRED IN HOLDING THE ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE WHEN ADMITTEDLY ACCORDING T O HIM ENQUIRY WAS MADE REGARDING THE PURCHASE OF SILVER UTENSILS WHICH WAS NOT ADEQUATE AND THEREFORE THE ORDER IS LIABLE TO BE CANCELLED SINCE IT WAS NOT A CASE OF LACK OF ENQUIRY BEING MADE BY THE AO. 6 ITA NO.525/KOL/2017 SRI GOVIND LAL RATHI A.YR.2012-13 6 4. FOR THAT THE LD. CI.T ERRED IN SETTING ASIDE THE ORDER TO THE FILE OF THE AO BY HOLDING THAT SOME ASPECTS REMAINED TO BE SEEN REGAR DING SALE PROCEEDS OF SILVER UTENSILS WHEN THE SHOW CAUSE NOTICE WAS ISSUED REGA RDING THE DATE OF PURCHASE OF THE SILVER UTENSILS FOR CATEGORISING THE GAIN ON SA LE AS LONG TERM AND SHORT TERM AND THEREFORE THE ORDER OF THE LD. CIT IS LIABLE TO BE CANCELLED SINCE THE SAME WAS NOT THE ISSUE IN THE SHOW CAUSE NOTICE. 5. FOR THAT THE LD. CI.T ERRED IN HOLDING THAT SOME ASPECTS REMAINED TO BE SEEN BY THE AO REGARDING THE SALE PROCEEDS WITHOUT PIN POIN TING SPECIFIC ASPECTS WHICH WERE NOT SEEN BY THE AO. 6. FOR THAT THE LD. CI.T SHOULD HAVE HIMSELF EXAMIN ED THE ISSUE WHETHER THE PURCHASE OF SILVER UTENSILS WERE HELD AS SHORT TERM CAPITAL ASSETS OR LONG TERM CAPITAL ASSETS WHEN ALL THE DETAILS AND DOCUMENTS W ERE FILED TO PROVE THE DATES OF PURCHASE. 7. FOR THAT EVEN OTHERWISE THE SILVER UTENSILS HELD BY THE ASSESSEE WERE PERSONAL EFFECTS, OUTSIDE THE DEFINITION OF CAPITAL ASSETS A ND THEREFORE NO JURISDICTION UNDER SEC. 263 CAN BE EXERCISED ON A DEBATABLE ISSUE SPEC IFICALLY WHEN THE MATTER WAS PENDING IN APPEAL BEFORE THE C.I.T(A). 8. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE ORDER OF THE CIT BE MODIFIED AND THE ASSESSEE BE GIVEN THE RELIEF PRAYE D FOR. 9. FOR THAT THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEND ANY GROUND BEFORE OR AT THE TIME OF HEARING. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, WE FIND THAT THE SUBJECT MATTER OF T HE ISSUE REGARDING PURCHASE AND SALE OF SILVER UTENSILS HAVE BEEN DULY EXAMINED BY THE LD. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS EVIDENT FROM THE NOTICE ISSUED U /S 142 (1) OF THE ACT DATED 14.11.2014 ON THE ASSESSEE TOGETHER WITH DETAILED QUESTIONNAIR E COMPRISING OF 25 QUESTIONS WHEREIN IN QUESTION NO.24 THE ASSESSEE WAS DIRECTED TO REPL Y FOR THE FOLLOWING QUESTION :- 24. PLEASE PRODUCE DETAILS OF SALE OF OLD USED SIL VER UTENSILS, IN THE FOLLOWING PROFORMA: ITEMS & QUANTITY COST PRICE DATE OF PURCHASE DATE OF SALE AMOUNT OF SALE IN RESPONSE TO THE SAID QUESTIONNAIRE THE ASSESSEE HAD DULY REPLIED BEFORE THE LD. AO VIDE LETTER DATED 18.12.2014 FURNISHING DETAILS OF SALE OF OLD USED SILVER UTENSILS IN THE DESIRED FORMAT AS REQUIRED BY THE LD. AO WHICH IS E NCLOSED IN PAGES 14 TO 16 OF THE PAPER BOOK. WE ALSO FIND THAT THE ASSESSEE VIDE ANO THER LETTER DATED 27.02.2015 HAD 7 ITA NO.525/KOL/2017 SRI GOVIND LAL RATHI A.YR.2012-13 7 EXPLAINED THE SUBJECT MENTIONED TRANSACTIONS VIDE R EPLY IN PARA-9 OF THIS LETTER AS BELOW :- 9. THE OLD HOUSE-HOLD SILVER UTENSILS SOLD DURING THE YEAR WERE PERSONAL EFFECTS OF THE ASSESSEE AND THEREFORE OUTSIDE THE PURVIEW OF T HE DEFINITION OF CAPITAL ASSETS AS STATED IN SEC.2(14) OF THE INCOME TAX ACT. THEREFOR E, THERE WAS NO CAPITAL GAIN OFFERED FOR TAX DURING THE YEAR. THE SAME VIEW HAS ALSO BEEN TAKEN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHREE KUMA RI MUNDHRA VS. CIT REPORTED IN 228 ITR 548. ALONG WITH THESE DOCUMENTS THE ASSESSEE HAD ALSO EN CLOSED THE DECLARATION MADE UNDER VOLUNTARY DISCLOSURE OF INCOME SCHEME (VDIS) 1997 W HEREIN THE ASSESSEE HAD DISCLOSED 338.6 KGS OF SILVER UTENSILS FOR A.Y.1963 -64. WE FIND THAT THESE SILVER UTENSILS WERE VALUED BASED ON INDEPENDENT VALUERS REPORT AT RS.60,610/- AND THE SAID DECLARATION UNDER VDIS WAS ALSO SUPPORTED BY AN AFF IDAVIT DULY NOTARIZED BY A NOTARY PUBLIC AS REQUIRED TO BE FURNISHED UNDER VDIS 1997. WE FIND FROM PAGE -8 OF THE PAPER BOOK FILED BY THE ASSESSEE THAT THE LD. ADMINISTRAT IVE CIT-VIII HAD ISSUED CERTIFICATE U/S 68(2) OF THE VDIS 1997 ACCEPTING THE DECLARATION MA DE BY THE ASSESSEE AS SILVER UTENSILS PERTAINING TO A.Y.1963-64 IN THE VALUE OF RS.60,610 /-. WHILE THESE DOCUMENTS ARE STARING ON US IT CAN BE CONCLUDED THAT THE SILVER U TENSILS WERE INDEED HELD BY THE ASSESSEE FOR MORE THAN 50 YEARS AND PART OF SUCH SI LVER UTENSILS WERE SOLD BY THE ASSESSEE DURING THE A.Y.2012-13. THE LD. AO IGNORIN G THOSE DOCUMENTS HAD NOT GIVEN ANY DEDUCTION TOWARDS THE PURCHASE COST OF SILVER U TENSILS EVEN BASED ON FAIR MARKET VALUE AS ON 01.04.1981 AND SIMPLY TREATING THE ENTI RE SALE PROCEEDS OF SUCH SILVER UTENSILS AS CAPITAL GAIN WHILE COMPLETING THE ASSES SMENT. MOREOVER, WE FIND THAT THE LD. AO HAD DULY APPRECIATED THE FACT THAT THIS SILVER U TENSILS BEING HELD BY THE ASSESSEE FOR MORE THAN ONE YEAR THEREBY TREATED THE SALE ON GAIN ARISING FROM SALE OF UTENSILS AS LONG TERM CAPITAL GAIN. WE FIND THAT THE LD. CIT INITIAL LY ISSUED A SHOW CAUSE NOTICE TO TREAT THE SUBJECT MENTIONED GAINS ON SALE OF SILVER UTENS ILS AS SHORT TERM CAPITAL GAIN INSTEAD OF LONG TERM CAPITAL GAIN AND IN THIS REGARD HE OBS ERVED THAT THE LD. AO HAD NOT MADE ANY ENQUIRY AT ALL WHILE ISSUING THE SHOW CAUSE NOT ICE. LATER ON GOING THROUGH THE REPLY 8 ITA NO.525/KOL/2017 SRI GOVIND LAL RATHI A.YR.2012-13 8 FILED BY THE ASSESSEE, THE LD. CIT SHIFTED HIS STAN D BY STATING THAT THE LD. AO HAD NOT MADE PROPER ENQUIRY ON THE SUBJECT MENTIONED ISSUE BEFORE COMPLETING THE ASSESSMENT. THIS SHIFTING OF STAND BY THE LD. CIT AND SEEKING T O REVISE THE ORDER U/S 263 OF THE ACT ON THE GROUND OF INADEQUATE ENQUIRY IS FOUND IMPERM ISSIBLE IN LAW AS DECIDED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS NIR AV MODI REPORTED IN (2016) 71 TAXMANN.COM 272 (BOM). 9. IT WAS NEXT SUBMITTED THAT NO ENQUIRY WAS DONE BY T HE ASSESSING OFFICER TO FIND OUT WHETHER THE DONOR MR DEEPAK MODI (FATHER) HAD RECEI VED MONEY FROM M/S. CHANG JIANG AS CLAIMED. NOR ANY INQUIRY WAS DONE TO FIND OUT WHETHER THE SISTER HAD IN FACT EARNED AMOUNTS ON ACCOUNT OF FOREIGN EXCHANGE TRANS ACTIONS AS CLAIMED BY HER. WE FIND THAT THIS ENQUIRY OF A SOURCE OF SOURCE IS NOT THE REQUIREMENT OF LAW. ONCE THE ASSESSING OFFICER IS SATISFIED WITH THE EXPLANATION OFFERED ON INQUIRY, IT IS NOT OPEN TO THE CIT IN EXERCISE OF HIS REVSIONAL POWERS DIRECT THAT FURTHER ENQUIRY HAS TO BE DONE. AT THE VERY HIGHEST, THE CASE OF THE REVENUE IS THAT T HIS IS A CASE OF INADEQUATE INQUIRY AND NOT OF 'NO ENQUIRY.' IT IS WELL SETTLED THAT THE JU RISDICTION UNDER SECTION 263 OF THE ACT CAN BE EXERCISED BY THE CIT ONLY WHEN IT IS A CASE OF LACK OF ENQUIRY AND NOT ONE OF INADEQUATE ENQUIRY. THIS VIEW HAS BEEN TAKEN BY THI S COURT IN THE MATTER OF CIT V. SHREEPATI HOLDINGS & FINANCE (P.) LTD. [ITA 1879 OF 2013 DATED 5TH OCTOBER, 2013], BY THE DELHI HIGH COURT IN CIT V. VIKAS POLYMERS [2 012] 341 ITR 537 AND IN D.G. HOUSING PROJECTS (SUPRA). IN FACT THE DELHI HIGH CO URT IN D.G. HOUSING PROJECTS (SUPRA) WHILE SO HOLDING PLACED RELIANCE UPON THE D ECISION OF THIS COURT IN GABRIEL (INDIA) LTD. (SUPRA). IT IS VERY IMPORTANT TO NOTE THAT THE CIT IN HIS ORDER UNDER SECTION 263 OF THE ACT HAS RECORDED THE FACT THAT THERE HAS BEEN NO ADEQUATE INQUIRY. THUS, THIS IS NOT A CASE OF NO INQUIRY, WARRANTING ORDER UNDER SECTION 263 OF THE ACT. THUS, THIS OBJECTION ON THE PART OF THE REVENUE, IS ALSO NOT S USTAINABLE. 10. THE REVENUE PLACED RELIANCE UPON THE DECISION OF TH E DELHI HIGH COURT IN D.G. HOUSING PROJECTS LTD., (SUPRA) THAT AS THE ASSESSIN G OFFICER HAD NOT ENQUIRED INTO THE SOURCE OF THE SOURCE OF THE GIFTS RECEIVED BY THE A SSESSEE, THE ASSESSMENT ORDER IS ERRONEOUS. THE AFORESAID DECISION HOLDS THAT THE PO WER OF REVISION UNDER SECTION 263 OF THE ACT WOULD NORMALLY BE EXERCISED IN CASE OF NO E NQUIRY AND NOT IN CASES OF INADEQUATE ENQUIRY. HOWEVER, EVEN IN CASE OF INADEQ UATE ENQUIRY BY THE ASSESSING OFFICER, THE ORDER OF THE ASSESSING OFFICER COULD B E ERRONEOUS IN TWO CLASSES OF SITUATION. THE FIRST CLASS WOULD BE WHERE ORDERS PA SSED BY THE ASSESSING OFFICER ARE EX FACIE ERRONEOUS I.E. A DECISION RENDERED IGNORING A BINDING DECISION IN FAVOUR OF THE REVENUE OR WHERE ENQUIRY IS PER SE MANDATED ON THE BASIS OF THE RECORD AVAILABLE BEFORE THE ASSESSING OFFICER AND THAT IS NOT DONE. IN THE SECOND CLASS OF CASES, WHERE THE ORDER IS NOT EX FACIE ERRONEOUS, THEN THE CIT MUST HIMSELF CONDUCT AN ENQUIRY AND DETERMINE IT TO BE SO. THE COURT HELD THAT IT IS NO T PERMISSIBLE TO THE CIT WHILE EXERCISING POWER UNDER SECTION 263 OF THE ACT TO RE MIT THE ISSUE TO THE ASSESSING OFFICER TO RE-EXAMINE THE SAME AND FIND OUT WHETHER EARLIER ORDER OF ASSESSMENT IS ERRONEOUS. IT IS THE CIT WHO MUST HOLD THAT THE ORDER IS ERRON EOUS, DULY SUPPORTED BY REASONS. IN 9 ITA NO.525/KOL/2017 SRI GOVIND LAL RATHI A.YR.2012-13 9 THE PRESENT FACTS, THE CIT IN EXERCISE OF ITS POWER S UNDER SECTION 263 OF THE ACT HAS MERELY RESTORED THE ASSESSMENT TO THE ASSESSING OFF ICER TO DECIDE WHETHER THE GIFTS WERE GENUINE AND, IF NOT, THEN THE ASSESSMENT COULD BE C OMPLETED ON APPLICATION OF SECTION 68 OF THE ACT. IN THIS CASE, THE ORDER PASSED BY TH E ASSESSING OFFICER IS NOT PER SE ERRONEOUS AND FURTHER THE CIT HAS NOT GIVEN ANY REA SONS TO CONCLUDE THAT THE ORDER IS ERRONEOUS. IN FACT, HE DIRECTS THE ASSESSING OFFICE R TO FIND OUT WHETHER THE ORDER IS ERRONEOUS BY MAKING FURTHER ENQUIRY. THIS THE DECIS ION OF THE DELHI HIGH COURT IN D.G. HOUSING PROJECTS LTD. (SUPRA), CLEARLY NEGATES. IN THE ABOVE VIEW, THE DECISION OF DELHI HIGH COURT IN D.G. HOUSING PROJECTS LTD. (SUPRA) WO ULD NOT ASSIST THE REVENUE IN THE PRESENT FACTS. HENCE, THE CASE OF THE ASSESSEE HEREIN DOES NOT FAL L UNDER THE CATEGORY OF LACK OF ENQUIRY FOR WHICH REVISIONARY PROCEEDINGS U/S 263 CANNOT BE INVOKED. 6.1. IN ANY CASE, THE SUBJECT MENTIONED ISSUE IS AL READY THE SUBJECT MATTER OF THE APPEAL BEFORE THE LD. CIT(A) AND HENCE, ON THAT GROUND ALS O THE ACTION OF THE LD. CIT U/S 263 OF THE ACT CANNOT BE SUSTAINED. WE FIND THAT THE ACTIO N OF THE LD CIT WAS IN COMPLETE DISREGARD TO THE SPECIFIC PROVISIONS OF CLAUSE (C ) OF EXPLANATION TO SECTION 263(1) OF THE ACT, WHICH PLACES A CLEAR EMBARGO ON THE LD CIT WIT H RESPECT TO EXERCISE OF REVISIONARY JURISDICTION ON ASSESSMENTS WHICH HAVE BEEN SUBJECT MATTER OF APPEAL. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF OIL INDIA LTD VS CIT REPORTED IN 138 ITR 836 (CAL) WHEREIN, THE HONBLE COURT INTERPRETING THE SCOPE OF POWERS OF THE COMMISSIONER U/S 263 OF THE ACT HELD THAT WHERE AN APPEAL IS PREFERRED BEFORE THE APPELLATE ASSISTANT COMMISSION ER (AAC) AND A SUBJECT IS PARTICULARLY RAISED, THE COMMISSIONER CANNOT REVISE SUCH AN ORDER TAKING INTO ACCOUNT AN ASPECT NOT DEALT BY THE AAC. 6.1.1. WE FIND THAT THE CLAUSE (C ) OF EXPLANATION 1 TO SECTION 263(1) OF THE ACT CLEARLY PROHIBITS THE ACTION OF THE LD CIT FOR INVOKING REV ISIONARY JURISDICTION BY THE LD CIT . FOR THE SAKE OF CONVENIENCE, THE RELEVANT PROVISION S ARE REPRODUCED BELOW:- SECTION 263 - REVISION OF ORDERS PREJUDICIAL TO REV ENUE 10 ITA NO.525/KOL/2017 SRI GOVIND LAL RATHI A.YR.2012-13 10 (1) EXPLANATION 1 FOR THE REMOVAL OF DOUBTS, IT IS HE REBY DECLARED THAT , FOR THE PURPOSES OF THIS SUB-SECTION , - (C ) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTIO N AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER OF ANY APPEAL [ FILED ON OR BEFORE OR AFTER THE 1 ST DAY OF JUNE 1988], THE POWERS OF THE [PRINCIPAL CO MMISSIONER OR] COMMISSIONER UNDER THIS SUB-SECTION SHALL EXTEND [A ND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED] TO SUCH MATTERS AS HAD NOT BEEN C ONSIDERED AND DECIDED IN SUCH APPEAL. HENCE THE EMPHASIS IS TO BE GIVEN ON THE EXPRESSION MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL IN CLAUSE (C ) OF EXPLA NATION 1 TO SECTION 263(1) OF THE ACT. HENCE EVEN IF THE ISSUES RAISED BY THE LD CIT IN TH E REVISION PROCEEDINGS U/S 263 OF THE ACT ARE FOUND TO BE CORRECT, THE SAME COULD VERY WE LL BE DONE BY THE LD CITA IN THE FIRST APPELLATE PROCEEDINGS, IF HE SO DESIRES, IN VIEW OF ENHANCEMENT POWERS PROVIDED TO HIM IN THE STATUTE. IT WOULD BE RELEVANT TO LOOK INTO THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF OIL INDIA LTD VS CIT REPO RTED IN 138 ITR 836 (CAL) IN THIS REGARD, WHEREIN IT WAS HELD THAT :- UPON THIS THE THREE QUESTIONS AS MENTIONED HEREINBE FORE HAVE BEEN REFERRED TO THIS COURT. THE FIRST QUESTION IS DIRECTED TO THE ASPECT WHETHER AFTER THE APPELLATE ORDER WAS PASSED BY THE AAC OR AN APPEAL HAD BEEN PREFERRED, THE COMMISSIONER HAD JURISDICTION IN THE FACTS AND CIRCUMSTANCES OF THIS CASE UNDER S ECTION 263 OF THE ACT. NOW, IT IS WELL SETTLED THAT BEFORE AN APPEAL BEFORE THE AAC CERTAI N ORDERS ARE APPEALABLE. IT IS ALSO WELL SETTLED THAT IN AN APPEAL PREFERRED BEFORE THE AAC THE WHOLE ASSESSMENT IS OPEN FOR REVIEW BY THE AAC. HE IS BOTH THE APPELLATE AS WELL AS THE ADJUDICATING AUTHORITY. BUT HIS JURISDICTION IS LIMITED TO THE APPEAL PREFERRED BEFORE HIM. THERE ARE CERTAIN ORDERS WHICH ARE NOT APPEALABLE BEFORE THE AAC BUT CERTAIN TYPES OF ALLEGATIONS CAN BE TAKEN UP IN AN APPEAL BY SEPARATE APPEALS. APART FROM THO SE TWO CASES IF AN ASSESSMENT IS THE SUBJECT-MATTER OF APPEAL THEN ANY GROUND WHICH WAS HELD IN FAVOUR OF THE ASSESSEE CAN ALSO BE HELD AGAINST HIM THOUGH THE APPEAL WAS PREF ERRED BY THE ASSESSEE. THIS JURISDICTION OF THE AAC IS INDISPUTABLE. IN THIS CA SE THE QUESTION IS WHETHER THE QUANTUM OF ALLOWANCE OR DISALLOWANCE OR DEPRECIATION WAS TH E SUBJECT-MATTER OF APPEAL OR NOT. IT IS TRUE THAT WHETHER DEPRECIATION SHOULD BE CALCULA TED ON THE BASIS OF 12 MONTHS OR IT SHOULD BE CALCULATED ON THE BASIS OF 11 MONTHS WAS NOT A SPECIFIC ASPECT WHICH WAS AGITATED BEFORE THE AAC NOR DID HE GIVE ANY DIRECTI ON ON THIS ASPECT OF THE MATTER BUT HE HAD THIS ASPECT KEPT OPEN FOR ADJUDICATION BY HIM E VEN THOUGH NOT TAKEN BY THE ASSESSEE. THEN, ON THAT, HE COULD HAVE ALLOWED 5% OR 2% DEPR ECIATION AND SHOULD HAVE DIRECTED THE ITO TO COMPUTE THE SAME ON SUCH BASIS AS HE CONSIDERED FIT AND PROPER, NAMELY, 11 MONTHS OR 12 MONTHS ON THE VIEW THAT THE EMPLOYEE OF THE ASSESSEE WAS ON 11 ITA NO.525/KOL/2017 SRI GOVIND LAL RATHI A.YR.2012-13 11 LEAVE FOR ONE MONTH AND AS SUCH COULD NOT BE SAID T O BE ENTITLED TO THIS ACCOMMODATION. IF THAT IS THE POSITION, THEN, IN OUR OPINION, ONCE THE APPEAL HAS BEEN PREFERRED BEFORE THE AAC ON ANY ASPECT OF THE QUANTUM OF DEPRECIATIO N, THE COMMISSIONER CANNOT ASSUME JURISDICTION, OTHERWISE AN ANOMALOUS POSITIO N WOULD ARISE. THE ITO HAS BEEN DIRECTED BY THE AAC TO FIX DEPRECIATION AT A CERTAI N PERCENTAGE, INDICATED BY THE AAC, WITHOUT ANY FURTHER DIRECTION THAT IT SHOULD BE CON FINED TO 11 MONTHS OR 12 MONTHS. BUT, NOW, IF FURTHER CONSIDERATION IS SUPERIMPOSED BY TH E COMMISSIONER BY RECTIFICATION MADE BY THE ITO AS A RESULT OF THE ORDER PASSED BY THE COMMISSIONER UNDER SECTION 263 THEN THAT WOULD BE IN CONFLICT WITH THE DIRECTION G IVEN BY THE AAC IN HIS APPELLATE ORDER . THEREFORE, WHERE AN APPEAL IS PREFERRED AND THE SUB JECT-MATTER OF APPEAL, PARTICULARLY RAISED, IS THE SUBJECT-MATTER BEFORE THE AAC, THEN THAT ORDER, IN OUR OPINION, CANNOT BE THE SUBJECT-MATTER OF AN ORDER OF REVISION BY THE C OMMISSIONER. THIS PRINCIPLE, HOWEVER, COMES WHERE THE APPEAL DOES NOT LIE FROM T HE ORDER OF THE ITO AND BEFORE THE AAC WHERE DIFFERENT KINDS OF APPEAL ARE PROVIDED FO R IN THE SCHEME OF THE INCOME-TAX ACT. THIS PRINCIPLE WAS ENUNCIATED BY THE SUPREME C OURT IN THE CASE OF CIT V. AMRITLAL BHOGILAL & CO. [1958] 34 ITR 130 (SC). THIS WAS ALSO REITERATED IN THE DECISION IN T HE CASE OF JEEWANLAL (1929) LTD. V. ADDL. CIT [1977] 108 ITR 407 (CAL) AND THE DECISION IN THE CASE OF PREMCHAND SITANATH ROY V. ADDL. CIT [1977] 109 ITR 751 (CAL). THE ALLAHABAD HIGH COURT REITERATED THE SAME PRINCIPLE IN THE CASE OF J.K. SYNTHETICS LTD. V. ADDL. CIT [1976] 105 ITR 344 (ALL). THEREFORE, IT APPEARS TO US THAT AS THE QUANTUM OF DEPRECIATION WAS THE SUBJECT-MATTER OF A PPEAL THE COMMISSIONER HAD NO JURISDICTION, IN THE FACTS AND CIRCUMSTANCES OF THI S CASE, TO ISSUE THE NOTICE UNDER SECTION 263 AND TO PASS ANY ORDER ON THIS ASPECT OF THE MAT TER. QUESTION NO. 1 THEREFORE, IN OUR OPINION, MUST BE ANSWERED IN THE NEGATIVE AND IN FA VOUR OF THE ASSESSEE . 6.1.2. WE FIND THAT SIMILAR VIEWS WERE EXPRESSED IN THE FOLLOWING DECISIONS :- A) HONBLE KARNATAKA HIGH COURT IN THE CASE OF DCIT VS VERMA INDUSTRIES LTD REPORTED IN 117 TAXMAN 512 (KAR) B) HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS FAR IDA PRIME TANNERY REPORTED IN 135 TAXMAN 70 (MAD) C) HONBLE SUPREME COURT IN THE CASE OF CIT VS SRI ARB UDA MILLS LTD REPORTED IN 231 ITR 50 (SC) . D) DECISION OF CO-ORDINATE BENCH OF DELHI TRIBUNAL IN THE CASE OF SUJATA GROVER VS ACIT REPORTED IN 74 TTJ 347 . 6.2. IN VIEW OF THE AFORESAID FINDINGS AND RESPECTF ULLY FOLLOWING THE JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE HOLD THAT THE LD. CIT G ROSSLY ERRED IN INVOKING THE 12 ITA NO.525/KOL/2017 SRI GOVIND LAL RATHI A.YR.2012-13 12 REVISIONARY JURISDICTION U/S 263 OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND ACCORDINGLY WE HEREBY QUASH THE REVISION ORDER PASS ED U/S 263 OF THE ACT. ACCORDINGLY THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 07.07.2017 SD/- SD/- [A.T.VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07.07.2017 [RG PS] COPY OF THE ORDER FORWARDED TO: 1. SRI GOVIND LAL RATHI, 9/1, SOVA RAM BYSACK STREE T, KOLKATA-700007. 2. PR. C.I.T., KOL-15, KOLKATA. 3. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S