Synthesis Developers Pvt. Ltd, Ahmedabad V. The Principal CIT-4, Ahmedabad

ITA 550/AHD/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5217 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 05-12-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 02-04-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RITA DOKANIA
• Assessee Lawyers: PARIN SHAH ARS; S N SOPARKAR
• Keywords: Opportunity of being heard; Competent authority; Assessment record; TDS; Set aside
• Section: 143(3); 263

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SMT. MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO. 550/AHD/2019 ( ASSESSMENT YEAR : 2014-15) SYNTHESIS DEVELOPERS PVT. LTD. 701, SAFAL PEGASUS, NR. AUDA GARDEN, PRAHLADNAGAR, AHMEDABAD / VS. PRINCIPAL COMMISSIONER OF INCOME TAX-4(PCIT) 311, C WING, 3 RD FLOOR, PRATYAKSHKAR BHAVAN, AMBAWADI, AHMEDABAD - 380015 ./ ./ PAN/GIR NO. : AAMCS3092D ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S. N. SOPARKAR & SHRI PARIN SHAH, A.RS. / RESPONDENT BY : SMT. RITA DOKANIA, CIT. D.R. DATE OF HEARING 12/12/2019 !'# / DATE OF PRONOUNCEMENT 20/02/2020 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME TAX - 4, AHMEDABAD (CIT IN SHORT), DATED 06.03.2019 ARISIN G IN THE ASSESSMENT ORDER DATED 16.11.2016 PASSED BY THE ASSESSING OFFI CER (AO) UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT) CONCER NING AY 2014-15. ITA NO. 550/AHD/19 [SYNTHESIS DEVELOPERS PVT. LTD. VS. PR.CIT] A.Y. 2014-15 - 2 - 2. THE ASSESSEE, IN THE PRESENT CASE, HAS CHALLENGE D THE REVISIONAL JURISDICTION OF THE PR.CIT INVOKED UNDER S.263 OF T HE ACT WHEREBY THE ORDER OF THE AO UNDER S.143(3) OF THE ACT DATED 16. 11.2016 IS SOUGHT TO BE SET ASIDE BY THE PR.CIT FOR FRESH ASSESSMENT ON THE GROUNDS OF LACK OF ENQUIRY INTO CERTAIN VITAL ASPECTS. 3. BRIEFLY STATED, THE ASSESSEE, A PRIVATE COMPANY, IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND SELLING OF RESIDENTIAL FLATS. THE RETURN OF INCOME OF ASSESSEE FOR AY 2014-15 WAS SUBJECTED TO SCRUTINY ASSESSMENT AND CONSEQUENTLY, ASSESSMENT ORDER WAS FRAMED UNDER S.143(3) OF THE ACT. THE AO SIMPLY ACCEPTED THE INCOME RETURNED AT RS.3,73,08,493/- AS ASSESSED INCOME WITHOUT ANY ADJUSTMENT WHATSOEVER B Y A BRIEF AND A NON-DESCRIPT ORDER. ON VERIFICATION OF ASSESSMENT RECORDS, THE PR.CIT FOUND THAT THE ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE PR .CIT ACCORDINGLY INVOKED REVISIONAL JURISDICTION CONFERRED UNDER S.2 63 OF THE ACT TO SHOW CAUSE THE ASSESSEE ON THE ALLEGED INFIRMITY IN THE ASSESSMENT ORDER WHICH IS BROADLY NARRATED HEREUNDER FOR READY REFERENCE: SUB: SHOW CAUSE NOTICE U/S. 263 OF THE I.T. ACT, 1961 FO R A.Y. 2014- 15-REGARDING- PLEASE REFER TO THE ABOVE. 2. IN THIS CASE, THE RETURN OF INCOME FOR A.Y. 2014 -15 WAS FILED ON 30/09/2014 SHOWING TOTAL INCOME OF RS.3,73,08,493/- AND THE ASSESSMENT WAS COMPLETED VIDE ORDER U/S.143(3) OF T HE I.T. ACT, 1961 DATED 16/11/2016 BY THE DCIT, CIRCLE-4(1)(1), AHMED ABAD, ACCEPTING THE RETURNED INCOME. 3. FROM PERUSAL OF THE P&L ACCOUNT, SCHEDULE-22 THE REOF, THE ASSESSEE HAS SHOWN PENDING EXPENSES OF RS.4,94,83,7 47/- AS ON 31/03/2014. NO SUCH PENDING EXPENSES WAS SHOWN OUT STANDING AS ON 31/03/2013. IT IS NOTICED THAT THE ASSESSEE HAS CO MPLETED THE PROJECT DURING THE YEAR AND SOLD THE INVENTORIES AND FINISH ED GOODS I.E. FLAT YET TO BE SOLD AT THE END OF THE YEAR, IS ONLY RS.2.41 CRORES, WHEREAS THE SALE ACCOUNTED DURING THE YEAR RS.30.16 CRORES. TH EREFORE, THE INVENTORIES OUTSTANDING, IS LESS THAN 10% OF THE SA LES. THE A.O. WHILE COMPLETING THE ASSESSMENT HAD NOT AT ALL EXAMINED T HAT WHEN THE PROJECT HAS BEEN COMPLETED, THE PENDING EXPENSES CA NNOT EXIST. 3.1 SECONDLY, THE ASSESSEE HAS NOT CONSIDERED THE E XPENSES PENDING AS PART OF VALUE OF WIP/FINISHED GOODS. THIS HAS M ADE THE ASSESSMENT ITA NO. 550/AHD/19 [SYNTHESIS DEVELOPERS PVT. LTD. VS. PR.CIT] A.Y. 2014-15 - 3 - ERRONEOUS AND THE ASSESSMENT ORDER PASSED BY THE A. O. IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 4. IN VIEW OF THE ABOVE, IT IS EVIDENT THAT THE ASS ESSMENT ORDER IN THE ASSESSEE COMPANYS CASE FOR THE YEAR UNDER REFE RENCE HAS BEEN PASSED BY THE ASSESSING OFFICER WITHOUT PROPER INQU IRY, APPLICATION OF MIND OR CROSS-VERIFICATION OF CORRECT FACTS OF THE CASE AS POINTED OUT IN PARA-3 ABOVE. THEREFORE, THE ASSESSMENT ORDER IS E RRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 5. YOU ARE, THEREFORE, REQUIRED TO EXPLAIN AS TO WH Y THE ASSESSMENT ORDER PASSED BY THE DCIT, CIRCLE-4(1)(1), AHMEDABAD FOR A.Y. 2014-15 U/S. 143(3) OF THE INCOME TAX ACT, 1961 DATED 30/09 /2016 IN THE CASE OF THE ASSESSEE COMPANY SHOULD NOT BE HELD TO BE ERRON EOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 6. YOU ARE HEREBY GIVEN AN OPPORTUNITY OF BEING HEA RD IN PERSON ALONGWITH DOCUMENTS AND EVIDENCE JUSTIFYING YOUR SU BMISSION. YOU MAY, IF YOU SO DESIRE, SUBMIT YOUR CONTENTIONS IN W RITING OR THROUGH AN AUTHORIZED REPRESENTATIVE ALSO. THE HEARING FOR TH IS PURPOSE IS FIXED ON 28/02/2019 AT 12.30 PM. 4. THE PR.CIT, IN ESSENCE, ALLEGED THAT STAGGERING AMOUNT OF PENDING EXPENSES OF RS.4,94,83,747/- AS AT THE END OF FY 20 13-14 IN THE CONTEXT OF THE CASE OUGHT NOT TO EXIST WHERE THE PROJECT HA S BEEN COMPLETED AND NEARLY SOLD WITH OUTSTANDING INVENTORIES HELD BY TH E DEVELOPER ASSESSEE IS LESS THAN 10% OF THE SALES. IT WAS SIMULTANEOUS LY NOTICED BY THE PR.CIT THAT NO SUCH PENDING EXPENSES WERE SHOWN TO BE OUTSTANDING AT THE END OF THE IMMEDIATELY PRECEDING FY 2012-13. I T WAS THUS ALLEGED THAT AO OUGHT TO HAVE VERIFIED AND ASCERTAIN BONAFI DES AND PROPER ENQUIRY OUGHT TO HAVE BEEN MADE FOR SUCH WHOPPING A MOUNT CLAIMED AS REVENUE EXPENSES AND REMAINING OUTSTANDING FOR PAYM ENT. FOR ASSUMPTION OF REVISIONAL JURISDICTION, IT WAS THUS ESSENTIALLY THE CASE OF THE PR.CIT THAT THE AO HAS INAPPROPRIATELY ACCEPTED THE BONAFIDES OF SUCH LARGE AND DISPROPORTIONATE PENDING EXPENSES SU MMARILY WITHOUT MAKING ANY REQUISITE ENQUIRY IN THIS REGARD. IN TH E REVISIONAL ORDER, THE PR.CIT OBSERVED THAT OUT OF 42 FLATS IN THE PROJECT , 40 FLATS WERE ALREADY SOLD TILL 31.03.2014 WHILE MASSIVE EXPENDITURE OF R S.4.94 CRORES REMAINS OUTSTANDING WITHOUT PAYMENT OUT OF TOTAL CONSTRUCTI ON EXPENSES OF RS.13.62 CRORES. THE PENDING EXPENSES THUS NEARLY WORK OUT TO 36% OF THE TOTAL DIRECT EXPENSES WHICH IS SHOWN TO BE OUTS TANDING VIS--VIS SALE OF FLATS EXCEEDING 90% OF THE TOTAL INVENTORY. CON TEXTUALLY, THE PR.CIT ITA NO. 550/AHD/19 [SYNTHESIS DEVELOPERS PVT. LTD. VS. PR.CIT] A.Y. 2014-15 - 4 - ALSO OBSERVED THAT BU PERMISSION WAS GRANTED W.E.F. 05.10.2013 AND THEREFORE TWO OF THE THREE PROJECTS WERE COMPLETED SIX MONTHS PRIOR TO THE END OF THE YEAR AND 3 RD WING OF THE PROJECT STOOD COMPLETED WITHIN NEXT THREE MONTHS. IN THE CIRCUMSTANCES, 36% OF TH E EXPENSES REMAINING OUTSTANDING IN SUCH A COMPLETED PROJECT STATUS IS N OT MANIFESTLY JUSTIFIED AND PROVIDES CAUSE OF ACTION FOR PROPER ENQUIRY TO ASCERTAIN THE NATURE AND BONAFIDES OF CLAIMS MADE. THE PR.CIT ALSO OBSE RVED THAT OUT OF DETAILS OFRS.4.94 CRORES SUBMITTED BY THE ASSESSEE, THE PENDING AMOUNT TOWARDS SERVICES AND LABOUR COST CHARGE ITSELF STAN DS AT RS.2.55 CRORE. THE VERIFICATION TOWARDS GENUINENESS AND BUSINESS C ONNECTION OF SUCH EXPENSES WAS IMPERATIVE. THE AO HAS ALSO NOT VERIF IED WHETHER THE TDS HAS BEEN DEDUCTED ON SUCH EXPENSES AS PER THE PROVI SIONS OF LAW. HAVING OBSERVED THESE INFIRMITIES, THE PR.CIT SET A SIDE THE ASSESSMENT PASSED UNDER S.143(3) OF THE ACT WITH A DIRECTION T O THE AO TO MAKE REQUISITE ENQUIRIES AND VERIFICATIONS IN THIS REGAR D. 5. AGGRIEVED BY THE REVISIONAL ACTION OF THE PR.CIT SETTING ASIDE THE ORIGINAL ASSESSMENT MADE UNDER S.143(3) OF THE ACT, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL AND CHALLENGED THE USURPATION OF THE REVISIONAL JURISDICTION BY THE PR.CIT. 6. THE LEARNED SENIOR COUNSEL FOR THE ASSESSEE SUBM ITTED AT THE OUTSET THAT THE NECESSARY BACKGROUND FOR EXERCISE OF REVIS IONAL POWER OF PR.CIT DOES NOT EXIST. THE LEARNED SENIOR COUNSEL POINTED OUT THAT ALL THE ISSUES RAISED IN THE REVISIONAL ORDER WERE PROPERLY EXPLAI NED DURING ASSESSMENT PROCEEDINGS. THE AO HAD ASKED FOR ALL THE DETAILS W HICH WERE SUBMITTED BY THE ASSESSEE. THE AO HAS PASSED THE ASSESSMENT O RDER AFTER DUE VERIFICATION AS HE CONSIDERED EXPEDIENT. THE ASSESS MENT ORDER THUS SO PASSED WAS A WELL STUDIED AND WELL INFORMED ORDER W HICH OUGHT NOT TO HAVE BEEN INTERFERED WITH BY THE PR.CIT. IT WAS FU RTHER ASSERTED THAT IT IS NOT NECESSARILY INCUMBENT UPON THE AO TO FRAME ELAB ORATE ORDER AND DISCUSS ALL CLAIMS MADE BY THE ASSESSEE SO LONG AS THE ASSESSMENT ORDER WAS PASSED WITH APPLICATION OF MIND. FOR THIS PROP OSITION, THE LEARNED SENIOR COUNSEL REFERRED TO AND RELIED UPON THE DECI SION RENDERED BY THE ITA NO. 550/AHD/19 [SYNTHESIS DEVELOPERS PVT. LTD. VS. PR.CIT] A.Y. 2014-15 - 5 - HONBLE GUJARAT HIGH COURT IN RAYLON SILK MILLS VS. CIT [1996] 221 ITR 155 (GUJ) AND CIT VS. NIRMA CHEMICALS WORKS PVT. LTD. [2009] 309 ITR (GUJ). IT WAS THUS CONTENDED THAT DISCUSSION NOT PROVIDED IN THE BODY OF ORDER WOULD NOT NECESSARILY AFFECT THE SANCTITY OF THE ASSESSMENT ORDER ONCE FRAMED AFTER APPLICATION OF MIND AND WHERE A P LAUSIBLE VIEW EXISTS ON SUCH ISSUE AS OUTCOME OF ENQUIRY. THE LEARNED S ENIOR COUNSEL REFERRED TO REPLY DATED 07.07.2016 WHEREIN THE DETA ILS OF EXPENSES, LEDGER COPIES AND DETAILS OF PENDING EXPENSES WERE ANNEXED BEFORE THE AO. THE LEARNED SENIOR COUNSEL SUBMITTED THAT THE ISSUE INVOLVED TOWARDS PENDENCY OF SO CALLED LARGE EXPENSES IS A P URE FACT RELATED ISSUE WHERE THE AO HAS TAKEN A VIEW BASED ON APPRECIATION OF MATERIAL PLACED BEFORE HIM. IT WAS THUS CONTENDED THAT THE PR.CIT WAS NOT ENTITLED TO SUBSTITUTE HIS OPINION IN PLACE OF THE AO AND ALLEG E INADEQUATE ENQUIRY AND CONSEQUENT REVISIONARY ACTION. IN RELATION TO SCOPE OF SECTION 263 OF THE ACT, THE LEARNED AR REFERRED TO THE DECISION OF THE CO-ORDINATE BENCH OF TRIBUNAL RENDERED IN THE CASE OF SMT. MINAL NAYAN SHAH VS. PR.CIT [2019] 111 TAXMANN.COM 516 (AHMEDABAD-TRIB.) FOR THE PROPOSITION THAT THE REVISIONAL JURISDICTION CANNOT BE INVOKED TO CO RRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE AO. A VI EW WHICH IS LEGALLY PLAUSIBLE AND ADOPTED BY THE AO CANNOT BE DISTURBED MERELY ON THE GROUND OF EXISTENCE OF OTHER POSSIBLE VIEW. IT WAS CONTENDED THAT A PLAUSIBLE VIEW ADMITTED AT ASSESSMENT STAGE IN EXER CISE OF QUASI-JUDICIAL FUNCTION CANNOT BE DISLODGED IN A LIGHT HEARTED MAN NER IN THE NAME OF INADEQUACY IN ENQUIRIES OR VERIFICATION AS PERCEIVE D IN THE OPINION OF THE REVISIONAL AUTHORITY. 7. THE LEARNED SENIOR COUNSEL ACCORDINGLY CONCLUDED THAT THE EXERCISE OF SUPERVISORY JURISDICTION OF REVIEW BY THE PR.CIT IS NOT COMPATIBLE WITH THE SCOPE AND AMBIT OF SECTION 263 OF THE ACT. IT WAS THUS SUBMITTED THAT PR.CIT WAS NOT JUSTIFIED IN INVOKING ITS POWER UNDER S.263 OF THE ACT TO SET ASIDE THE ASSESSMENT FRAMED IN TH E ABSENCE OF ANY PERCEPTIBLE CAUSE OF ACTION. ITA NO. 550/AHD/19 [SYNTHESIS DEVELOPERS PVT. LTD. VS. PR.CIT] A.Y. 2014-15 - 6 - 8. THE LEARNED CIT.DR, ON THE OTHER HAND, RELIED UP ON THE ORDER OF THE PR.CIT. IN FURTHERANCE, THE LEARNED DR SUBMITT ED THAT THE REVISIONAL ORDER HAS POINTED OUT VISIBLE ABNORMALITY IN THE OU TSTANDING AND PENDING EXPENSES OF REVENUE NATURE CLAIMED TO BE RELATABLE TO THE RESIDENTIAL PROJECT QUA THE ATTENDANT FACTS AND CIRCUMSTANCES. THE LEARNE D CIT.DR SUBMITTED THAT SUCH HUGE AMOUNT OF OUTSTANDING EXPE NSES IN RELATION TO PROJECT AS COMPARED TO NIL OUTSTANDING IN THE EARLI ER YEAR OUGHT TO HAVE EVOKED A MINIMUM APPETITE FOR ENQUIRY ON BEHEST OF THE AO MORE PARTICULARLY WHEN THE ENTIRE PROJECT STOOD COMPLETE D AND NEARLY SOLD OFF. THE AO OUGHT TO HAVE TAKEN COGNIZANCE OF THE FACT T HAT THE MUNICIPAL PERMISSION WAS GIVEN LONG BACK IN TWO OUT OF THREE PROJECTS AND THEREFORE, SUCH LARGE OUTSTANDING EXPENSES WHICH IN CLUDE SUBSTANTIAL AMOUNT OF OUTSTANDING LABOUR EXPENSES AS WELL AS SE RVICE CHARGES OUGHT TO HAVE EVOKED CAUTION IN THE MIND OF THE AO FOR VE RIFICATION TOWARDS BONAFIDE OF SUCH EXPENSES. 8.1 AT THE DIRECTION OF THE BENCH, THE LEARNED CIT. DR ALSO PRESENTED THE ASSESSMENT RECORDS FOR INSPECTION OF THE BENCH AND ADDED THAT A BARE GLANCE OF THE ASSESSMENT RECORDS AND THE ORDER SHEE T WOULD SHOW THAT THE ASSESSMENT WAS FRAMED WITHOUT ANY RELEVANT ENQUIRY ON THE ISSUE OF DISPROPORTIONATELY LARGE PENDING EXPENSES WHATSOEVE R. MAKING REFERENCE TO THE ORDER SHEET PREPARED BY THEN AO FOR CLOSURE OF ASSESSMENT PROCEEDINGS, IT WAS SUBMITTED THAT IT IS NOT KNOWN FROM THE ASSESSMENT RECORDS AS TO WHETHER ANY QUERY WAS RAISED BY THE A O AT THE TIME OF ORIGINAL ASSESSMENT IN RESPECT OF PENDING EXPENSES AT ALL. THE DETAILS FILED BY THE ASSESSEE APPEAR SUO MOTTO AND DOES NOT SHOW NEXUS WITH ANY PERTINENT QUESTION RAISED ON THE POINT. NOTWITHSTA NDING, THE ASSESSEE HAS ONLY FILED SOME BASIC DETAILS TOWARDS INCURRING OF PENDING EXPENSES WHICH HAS BEEN SUMMARILY ACCEPTED BY THE AO AND KEP T ON RECORD WITHOUT GOING INTO ITS BONAFIDES AND RELEVANCY OR B USINESS CONNECTION. NO INDEPENDENT ENQUIRY IS DISCERNIBLE TO HAVE BEEN CARRIED OUT AT ALL AND DETAILS WHATEVER, HAS BEEN FILED BY THE ASSESSEE HA S BEEN SIMPLY KEPT IN FILE AS A FORMALITY. ITA NO. 550/AHD/19 [SYNTHESIS DEVELOPERS PVT. LTD. VS. PR.CIT] A.Y. 2014-15 - 7 - 8.2 THE ORDER SHEET RECORDED BY THE AO WAS THUS CLA IMED TO BE TOTALLY INCOHERENT AND INADEQUATE AND DOES NOT GIVE ANY IND ICATION ABOUT THE NATURE OF ENQUIRY CARRIED OUT ON THE DETAILS FILED BY THE ASSESSEE. THE ASSESSMENT ORDER ALSO REMAINS SILENT ON THE MATERIA L ASPECTS OF THE ASSESSMENT. 8.3 IT WAS NEXT CONTENDED THAT THE DEPARTMENT HAS N O RIGHT TO FILE ANY APPEAL ON SUCH ARBITRARY EXPEDITIONS OF AO ON MATER IAL ASPECTS SERIOUSLY AFFECTING THE RESULTANT TAXABLE INCOME. THE PR.CIT THUS HAD NO CHOICE EXCEPT TO THE EXERCISE OF POWER UNDER S.263 OF THE ACT. IT WAS CONTENDED THAT THE INSTANT CASE IS NOT MERELY A CASE OF LESSE R DEGREE OF ENQUIRY ON PERTINENT POINT BUT A CASE WHERE NO OBJECTIVE APPLI CATION OF MIND HAS BEEN APPLIED BY THE AO AT ALL. SUCH ASSESSMENT ORD ER WITHOUT PUTTING ANY EFFORTS AND APPLICATION OF MIND CANNOT BE SAID TO HAVE BEEN PASSED IN DISCHARGE OF QUASI-JUDICIAL FUNCTION AND IS UNWORTHY OF RELIANCE. THE LEARNED CIT.DR MADE REFERENCE TO THE DECISION OF TH E CO-ORDINATE BENCH OF TRIBUNAL IN GAYATRI ENTERPRISES VS. ITO ITA NO.825/AHD/2016 ORDER DATED 28.02.2019 AND BABULAL S. SOLANKI VS. ITO 104 TAXMANN.COM 155 (AHMEDABAD-TRIB.) AND SUBMITTED THAT THERE OVERTLY EXISTS NON- APPLICATION OF MIND ON A CORE ISSUE AND THE CLAIM O F THE ASSESSEE TOWARDS ASYMMETRIC OUTSTANDING EXPENSES ACCEPTED WITHOUT AN Y TANGIBLE ENQUIRY IS SELF-EVIDENT FROM THE ASSESSMENT RECORDS. THE PR .CIT HAS RIGHTLY DISLODGED SUCH ASSESSMENT ORDER PASSED BY THE AO IN A ROUTINE AND PERFUNCTORY MANNER. THE LEARNED DR SUBMITTED THAT MERE FILING OF CERTAIN LEDGER ACCOUNTS IN SUPPORT OF SUCH ABNORMAL OUTSTANDING EXPENSES WITHOUT ANY CORRESPONDING ENQUIRY IN THE G IVEN SET OF FACTS WARRANTED SOME POSITIVE ENQUIRY AS TO HOW SUCH LARG E PENDING EXPENSES HAS CROPPED UP AND CONTINUED TO REMAIN OUTSTANDING IN THE CURRENT YEAR AGAINST THE NIL PENDING EXPENSES IN THE PRECEDING Y EAR. THE EXISTENCE OF ABNORMAL OUTSTANDING IN THE CONTEXT OF TOTAL EXPENS ES BOOKED WOULD INEVITABLY TRIGGER ENQUIRY IN THE MIND OF ANY RATIO NAL PERSON. IT WAS FURTHER CONTENDED THAT THE AO IN THE INSTANT CASE H AS ALSO NOT MADE ANY ENQUIRY ON ASPECTS OF DEDUCTION OF TDS ON LABOUR EX PENSES ETC. AS WELL AS THE REASONS FOR NONPAYMENT OF SUCH EXPENSES FOR SUCH LONG TIME WHICH ITA NO. 550/AHD/19 [SYNTHESIS DEVELOPERS PVT. LTD. VS. PR.CIT] A.Y. 2014-15 - 8 - CAST ASPERSIONS ON BONAFIDES. IT WAS FINALLY SUBMI TTED THAT THE PR.CIT HAS NOT MERELY EVOKED THE PROVISIONS OF SECTION 263 OF THE ACT TOWARDS LACK OF ENQUIRY BUT HAS PAINSTAKINGLY EXPLAINED THE CONTEXT IN WHICH SOME ENQUIRIES WERE DEFINITELY WARRANTED AS POINTED OUT ABOVE. IT WAS PRINTED OUT THAT THE PR.CIT HAS MERELY SET ASIDE TH E ASSESSMENT ORDER AND A FRESH OPPORTUNITY HAS BEEN GIVEN TO THE ASSESSEE TO EXPLAIN THE BONAFIDES OF PENDING EXPENSES ON MERITS AND THEREFO RE, NO SERIOUS PREJUDICE HAS BEEN CAUSED TO THE ASSESSEE WHEREAS T HE REVISIONAL ORDER IF CANCELLED, WOULD CAUSE AN IRREPARABLE PREJUDICE TO THE REVENUE FOR THE PALPABLE NEGLIGENCE OF THE AO. THE LEARNED DR ACCO RDINGLY SUBMITTED THAT NO INTERFERENCE WITH THE ORDER OF THE PR.CIT I S CALLED FOR. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE REVISIONAL ORDER PASSED BY THE PR.CIT UNDER S.2 63 OF THE ACT AS WELL AS ORIGINAL ASSESSMENT RECORDS PRESENTED ON BEHALF OF THE REVENUE IN THE COURSE OF THE HEARING. RELEVANT MATERIALS REFERRED TO AND RELIED UPON BY THE RESPECTIVE PARTIES AND CASE LAWS CITED HAVE ALS O BEEN PERUSED. 9.1 SUPERVISORY JURISDICTION VESTED UNDER SECTION 2 63 OF THE ACT ENABLES THE CONCERNED PR.CIT/CIT TO REVIEW THE RECO RDS OF ANY PROCEEDINGS AND ORDER PASSED THEREIN BY THE AO. IT EMPOWERS THE REVISIONAL COMMISSIONER CONCERNED TO CALL FOR AND E XAMINE THE RECORDS OF ANY PROCEEDING UNDER THE ACT AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, THEN HE MAY (AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUS ING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY), PASS SUCH ORDER THE REON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING THE OR DER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELLING THE ASSESSME NT AND DIRECTING AFRESH ASSESSMENT. THUS, THE REVISIONAL POWERS CON FERRED ON THE PR.CIT/CIT UNDER S.263 OF THE ACT ARE OF VERY WIDE AMPLITUDE WITH A VIEW TO ADDRESS THE REVENUE RISKS WHICH ARE OBJECTI VELY JUSTIFIABLE. ITA NO. 550/AHD/19 [SYNTHESIS DEVELOPERS PVT. LTD. VS. PR.CIT] A.Y. 2014-15 - 9 - 9.2 IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE SUBSTANTIVE ISSUE THAT EMERGES FOR ADJUDICATION IS WHETHER THE PR.CIT UNDER THE UMBRELLA OF REVISONARY POWERS IS ENTITLED TO UPSET THE FINAL ITY OF ASSESSMENT PROCEEDINGS BEFORE THE AO WHERE THE AO HAS ALLEGEDL Y COMMITTED ERROR IN PASSING ASSESSMENT ORDER WITHOUT PROPER VERIFICA TION OF EXPENSES CLAIMED. 9.3 ON PERUSAL OF THE SHOW CAUSE NOTICE AND CONSEQU ENT REVISIONAL ORDER PASSED BY THE PR.CIT UNDER S.263 OF THE ACT, WE NOTICE THAT THE DECLARATION MADE BY THE ASSESSEE TOWARDS OUTSTANDIN G / PENDING EXPENSES OF REVENUE NATURE WAS ABNORMALLY HIGH IN THE CONTEX T OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS NOTED IN PARA 4 (SUPRA ). THE PR.CIT ON FACTS HAS OBSERVED THAT SUCH UNUSUALLY LARGE AND DISPROPO RTIONATE EXPENSES CLAIMED TO REMAIN OUTSTANDING AT THE END OF THE YEA R WOULD WARRANT SOME ENQUIRY TO PEEP INTO THE BONAFIDES OF THE CLAIM. T HE OUTSTANDING EXPENSES WERE SHOWN TO BE NEARLY 36% OF THE TOTAL D IRECT EXPENSES WHICH IS APPARENTLY VERY HIGH MORE PARTICULARLY WHEN THE DEVELOPMENT PROJECT STOOD COMPLETED AND THE 90% OF THE TOTAL INVENTORY WERE ALSO SOLD BEFORE THE END OF THE FY 2013-14 IN QUESTION. TO SATISFY T HE ANXIETY OF THE BENCH ON THE ALLEGATIONS LABELED AGAINST THE AO, TH E ASSESSMENT RECORDS WERE ALSO PRODUCED BY THE REVENUE. A PERUSAL OF TH E ASSESSMENT RECORDS, SQUARELY CLINCHES THE CONCLUSION MADE BY T HE REVISIONAL COMMISSIONER. THE ORDER SHEET PREPARED BY THE AO W HICH IS MEANT TO NOTE DAY-TO-DAY EVENTS AND OCCURRENCES IN RESPECT O F ONGOING PROCEEDING AND WHAT TRANSPIRED IN THE COURSE OF HEARING WAS PR EPARED IN AN INCREDULOUS AND CAVALIER MANNER. THE ORDER SHEET DO ES NOT REFLECT ANY PATTERN OF INQUIRY MADE ON ANY ASPECT OF THE ASSESS MENT. THE ASSESSMENT RECORDS HOWEVER CONTAINS A REPLY FROM ASSESSEE (WIT HOUT ANY REFERENCE TO ANY QUESTIONNAIRE) WHEREIN DETAILS OF PENDING EXPEN SES TOGETHER WITH LEDGER ACCOUNT IS CLAIMED TO HAVE BEEN ANNEXED. A PERUSAL OF THE SO- CALLED DETAILS SHOW NO MARKING WHATSOEVER AT THE EN D OF THE AO. THE DETAILS OF APPEALS TO HAVE BEEN SIMPLY KEPT IN FILE WITHOUT EVEN A GLANCE AT IT. IT IS ALSO NOT KNOWN AS TO WHAT COMPELLED T HE ASSESSEE TO FILE SUCH DETAILS. NO DATA ANALYTICS HAVE BEEN PERFORMED ON SUCH DISPROPORTIONATE ITA NO. 550/AHD/19 [SYNTHESIS DEVELOPERS PVT. LTD. VS. PR.CIT] A.Y. 2014-15 - 1 0 - LARGE OUTSTANDING EXPENSES INTRODUCED IN THE BOOKS. NO INQUIRY OF ANY TYPE IS SEEN TO BE CARRIED OUT EITHER. THE ASSESSM ENT RECORDS CLEARLY SHOW THAT THE ASSESSMENT HAS BEEN COMPLETED IN A MO ST PERFUNCTORY MANNER WITHOUT LOOKING INTO ANY CRUCIAL ASPECT OF T HE ASSESSMENT. THE ASSESSMENT ORDER FINALLY PASSED IS CRYPTIC AND NON- DESCRIPT. THE ISSUE RED FLAGGED, WHEN LOOKED BY ATTACHING WEIGHT TO ALL FACTS CUMULATIVELY, IT IS GLARING THAT THE ACTION OF THE AO DOES NOT ACCOR D WITH NORMAL CONDUCT OF A RESPONSIBLE STATUTORY FUNCTIONARY. PERTINENT H ERE TO SAY, THE PROCEEDINGS BEFORE THE AO ARE QUASI JUDICIAL PROCEEDINGS AND ALL THE INCIDENTS OF SUCH PROCEEDINGS ARE EXPECTED TO BE OB SERVED WITHOUT LAXITY BEFORE THE RESULT OF THE PROCEEDINGS ARE DETERMINED . THE PR.CIT HAS DEMONSTRATED THE EXISTENCE OF DEFINITE CAUSE OF ACT ION FOR ENQUIRY IN UNEQUIVOCAL TERMS WHEN SEEN CONTEXTUALLY. THE PR.CI T IN DISCHARGE OF ITS SOLEMN DUTY UNDER S.263 OF THE ACT COULD NOT RE MAIN OBLIVIOUS OF THE FACT OBJECTIVELY DRAWN. 9.4 HAVING REGARD TO THE SWEEPING CONDUCT OF THE AO IN FINALIZING THE ASSESSMENT WITHOUT MAKING REQUISITE ENQUIRY ON THE ABNORMAL CHARACTER OF OUTSTANDING EXPENSES HAVING DIRECT BEARING ON TH E ASSESSED INCOME, THERE APPEARS TO BE AN APPARENT PLAUSIBILITY IN THE ACTION OF THE PR.CIT BY RESORTING TO POWERS UNDER S.263 OF THE ACT WHICH AR E OF WIDE AMPLITUDE. AS NARRATED, THE CIRCUMSTANCES CLEARLY EXISTED WHIC H DEMANDED ENQUIRY WHICH WAS NOT DONE BY THE AO WHILE DISCHARGING ITS STATUTORY FUNCTION. THUS, ARMED WITH FAIRLY EXTENSIVE POWERS, THE PR.CI T, IN OUR VIEW, HAS TAKEN ACTION COMPATIBLE WITH CIRCUMSTANCES. WHILE HOLDING SO, WE ALIVE TO THE PLEA ON BEHALF OF THE ASSESSEE THAT REASONAB LE DETAILS WERE PLACED WITH REGARD TO THE PENDING EXPENSES. WE ARE NOT IM PRESSED BY SUCH LINE OF ARGUMENT WHEN TESTED ON THE TOUCHSTONE OF SECTIO N 263 OF THE ACT. THE RECORD CLEARLY SPEAKS OF INDIFFERENT CONDUCT BY THE AO ACCEPTING THE BOOK RESULTS. THEREFORE, THE CAUSE OF ACTION DID E XIST FOR INVOCATION OF SECTION 263 OF THE ACT. HENCE, THE PR.CIT WAS FULL Y JUSTIFIED IN INVOKING ITS POWER UNDER S.263 OF THE ACT TO SET AS IDE THE ASSESSMENT ITA NO. 550/AHD/19 [SYNTHESIS DEVELOPERS PVT. LTD. VS. PR.CIT] A.Y. 2014-15 - 1 1 - FRAMED WITHOUT ANY APPLICATION OF MIND ON THE CRUCI AL ASPECT WHICH IS SELF-REVEALING IN THE CONTEXT OF THE CASE. 9.5 WE ALSO WOULD LIKE TO TAKE NOTE OF OBJECTION ON BEHALF OF THE ASSESSEE THAT THE PR.CIT HAS OBJECTED TO THE ACTION OF THE AO INTER ALIA ON THE GROUND OF DEDUCTION OF TDS ON PENDING EXPENS ES CLAIMED APART FROM THEIR GENUINENESS AND BUSINESS CONNECTION. IT WAS CONTENDED ON BEHALF OF ASSESSEE THAT THE PR.CIT COULD NOT HAVE A DDED THIS FACET IN THE REVISIONAL ORDER WITHOUT GIVING OPPORTUNITY TO THE ASSESSEE. WHILE IT IS TRUE THAT GRANTING AN OPPORTUNITY ON THIS FACET WOU LD HAVE CONDUCED TO MORE EFFECTIVE ADMINISTRATION OF REVISIONAL POWER, WE SIMULTANEOUSLY OBSERVE SUCH ASPECT IS INTEGRALLY CONNECTED TO THE BONAFIDES OF THE CLAIM OF PENDING EXPENSES AND IS ONLY SUBSERVIENT TO THE CORE ISSUE OF ENQUIRY ON ELIGIBILITY OF EXPENSES CLAIMED. WE THEREFORE D ECLINE TO ENTERTAIN THE AFORESAID OBJECTION AS WELL. 9.6 THE JUDICIAL PRECEDENTS RELIED UPON ON BEHALF O F THE ASSESSEE ARE NOT FOUND TO BE OF ANY ASSISTANCE. THE DECISIONS R EFERRED TOO ARE BROADLY BASED ON THE CIRCUMSTANCES WHERE EITHER RELEVANT MA TERIAL WAS NOT FOUND OR WHERE IT WAS FOUND IS A MATTER OF FACT THAT THER E WAS NO FAILURE ON THE PART OF THE AO IS TO MAKE INQUIRIES. NEEDLESS TO S AY, THE SCOPE OF SECTION 263 OF THE ACT IS QUITE DIFFERENT. IN ORDE R TO INVOKE SECTION 263 OF THE ACT, THE COMPETENT AUTHORITY IS REQUIRED TO FIND THAT ORDER SOUGHT TO BE REVISED IS ERRONEOUS AND CAUSED PREJUDICE TO THE REVENUE. A LACK OF INQUIRY ON A PERTINENT POINT WHICH DEMONSTRATES POSSIBLE REVENUE LEAKAGE OF STAGGERING AMOUNT WOULD DEFINITELY TANTA MOUNT TO THE ORDER BEING BOTH ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. CONSEQUENT UPON THE ACTION OF PR.CIT, THE ASSESSMENT ORDER IS MERELY CANCELLED AND SET ASIDE TO THE FILE OF THE A O FOR MAKING RELEVANT INQUIRIES AS SPECIFIED FOR WHICH OBJECTIVE MATERIAL IS AVAILABLE AT THE THRESHOLD. THE ASSESSEE HAS NOT ESTOPPED IN ANY MA NNER FROM DEALING WITH THE INQUIRY AS SPECIFIED TO THE AO AND TO REBU T THE PERCEPTION ON ERROR IN THE ORIGINAL ORDER. THE ASSESSEE IS NOT P REVENTED FROM ITA NO. 550/AHD/19 [SYNTHESIS DEVELOPERS PVT. LTD. VS. PR.CIT] A.Y. 2014-15 - 1 2 - SUPPORTING ITS CASE IN ANY MANNER BEFORE THE AO IN THE PROCEEDINGS PURSUANT TO SECTION 263 OF THE ACT. WE THUS DO NOT SEE ANY JUSTIFIABLE REASON TO INTERFERE WITH THE REVISIONAL ACTION OF T HE PR.CIT. 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. SD/- SD/- (MADHUMITA ROY) (PRADIP KUMAR K EDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 20/02/2020 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 20/02/202 0