Sh. Gagan Deep Kathuria, SRIGANGANAGAR V. ACIT, SRIGANGANAGAR

ITA 6/JODH/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3026 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-02-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 04-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SEHGAL
• Keywords: Business income; Audit objection
• Section: 143(3); 142(1); 133A; 6; 263

Judgement Text

1 IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 06/JODH/2012 (A. Y. 2007-08) SHRI GAGAN DEEP KATHURIA VS. ACIT P/O M/S SHIVAM PROPERTY DEALER SRIGANGANAGAR KHINCHI CHOWK SRIGANGANAGAR PAN NO. : AMJPK 6483 G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SURESH OJHA DEPARTMENT BY : SHRI DEEPAK SEHGAL - DR DATE OF HEARING : 14/03/2013. DATE OF PRONOUNCEMENT : 30/04/2013. PER HARI OM MARATHA, J.M:- THIS APPEAL OF THE ASSESSEE FOR A.Y. 2007-08 IS DIR ECTED AGAINST THE ORDER OF THE LD. CIT, BIKANER DATED 3.10.2011. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A SSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME-TAX ACT, 1961 [H EREINAFTER REFERRED TO AS 'THE ACT', FOR SHORT] ON 30.12.2009 AT TOTAL INCOME OF RS. 74,75,000/-. SURVEY PROCEEDINGS U/S 133A OF THE ACT HAD BEEN CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 8.12.2006. 2 DURING SURVEY PROCEEDINGS, THE ASSESSEE HAD MADE A SURRENDER OF RS. 74 LAKHS FOR A.Y. 2007-08. THE ASSESSEE IS PURSUIN G THE BUSINESS OF A PROPERTY DEALER. THE LD. CIT, AFTER CALLING FOR RE CORDS OF THIS A.Y., FOUND THAT IT IS NOT ONLY ERRONEOUS BUT ALSO PREJUD ICIAL TO THE INTEREST OF THE REVENUE. ACCORDINGLY, HE HAS SET ASIDE THE ASSESSMENT ORDER FOR MAKING IT AFRESH. NOW THE ASSESSEE HAS FILED THIS APPEAL BY RAISING THE FOLLOWING GROUNDS: 1. THAT THE ORDER PASSED U/S 263 OF THE INCOME-TAX ACT, 1961 BY THE LD. CIT IS BAD IN LAW, ILLEGAL AND AGAINST FACTS. 2. THAT THE LD. CIT ERRED IN PASSING THE ORDER U/S 263 OF THE ACT EVEN WHEN THE MATTERS WERE PROPERLY DEAL T BY THE ACIT AT THE TIME OF ASSESSMENT PROCEEDINGS. 3. THAT THE LD. CIT ERRED IN HOLDING THAT THE ASSES SEE HAS MADE TOTAL INVESTMENT OF RS. 132.03 LAKHS IN VARIO US PROPERTIES OUT OF HIS UNDISCLOSED INCOME AND SURRE NDERED RS. 72 LAKHS ONLY AND DIRECTING THE A.O. TO MAKE A DDITION OF RS. 60.03 LAKHS TO THE TOTAL INCOME OF THE ASSE SSEE. 4. THAT THE LD. CIT ERRED IN SETTING ASIDE THE CASE ON ISSUE OF VERIFICATION OF NEW CASH CREDITORS INTRODUCED DURI NG THE YEAR AMOUNTING TO RS. 13,50,000/-. 3 5. THE LD. CIT ERRED IN SETTING ASIDE THE CASE ON A CCOUNT OF ALLOWING TELESCOPIC BY THE A.O. OF RS. 2 LAKHS SUR RENDERED DURING THE COURSE OF SURVEY. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. IT WAS SUBMITTED BY THE LD. A.R. THAT THE A.O. HAS MADE ALL THE NECESSARY ENQUIRIES FROM THE ASSESSEE AND HAS LEGALLY PASSED HIS ORDER AND THERE IS NO ERROR IN THIS ORDER AS HAS BEEN ALLEGED BY THE LD. CIT. ON THE OTHER HAND, TH E LD. CIT, DR HAS SUPPORTED THE FINDING OF THE LD. CIT AND HAS REITER ATED ALL THE REASONS TAKEN BY HIM TO SET ASIDE THE ASSESSMENT ORDER FOR REDOING THE SAME. 4. ASSESSMENT WAS COMPLETED IN THIS CASE U/S 143(3) OF THE ACT ON 30.12.2009 AT A TOTAL INCOME OF RS. 74,75,000/- AS WE HAVE MENTIONED EARLIER. THE A.O. HAS ISSUED NOTICE U/S 142(1) OF THE ACT DATED 16.12.2009, A COPY OF WHICH IS ENCLOSED AT PAGES 1 TO 4 OF THE ASSESSEES PAPER BOOK. THE ASSESSEE SUBMITTED ITS REPLY REGARDING RS. 60,03,000/- AND ALSO IN RESPECT OF OTHER QUERIES RA ISED BY THE A.O. VIDE LETTER DATED 16.12.2009 WHICH ARE ENCLOSED AT PAGES 6,7 AND 9 OF ASSESSEES PAPER BOOK. THE LD. CIT ISSUED SHOW-CAU SE NOTICE, COPY OF WHICH IS ENCLOSED AT PAGES 15 & 16 OF ASSESSEES PA PER BOOK. RELEVANT PORTION OF THIS SHOW CAUSE NOTICE READS AS UNDER: 4 1. THE A.O. HAS COMPLETED THE ASSESSMENT IN A ROUT INE MANNER WITHOUT MAKING PROPER ENQUIRY AND INVESTIGAT ION REGARDING THE INVESTMENT AND ITS SOURCE AMOUNTING T O RS. 60,03,000/- MADE BY THE ASSESSEE IN THE VARIOUS PRO PERTIES DURING THE YEAR UNDER CONSIDERATION. THE AMOUNT OF SURRENDER OF RS. 72.00 LAKHS WERE MADE DURING THE COURSE OF S URVEY ON ACCOUNT OF ADVANCE PAID FOR PURCHASE OF LAND SITUAT ED AT 4 ML, SRIGANGANAGAR, WHICH IS DIFFERENT THAT THE AMOUNT O F RS. 60.03 LAKHS INVESTED IN OTHER PROPERTIES. ACCORDING TO T HE LD. CIT, THE A.O. SHOULD HAVE MADE A SEPARATE ADDITION OF RS. 60 .03 LAKHS. 2. THE A.O. HAS NOT PROPERLY EXAMINED AND VERIFIED THE NEW CREDITORS/LOAN OF RS. 13,50,000/- INTRODUCED DURING THE YEAR. 3. DETAILS REGARDING BUSINESS RECEIPTS FROM PROPERT Y BROKERAGE OF THE ASSESSEE HAS NOT BEEN VERIFIED BY THE A.O. AND THE A.O. HAS NOT MADE ANY ENQUIRY IN RESPECT OF INV ESTMENT IN RESIDENTIAL PROPERTY SITUATED AT 154 G BLOCK SRIGAN GANAGAR. 5. WE HAVE HEARD BOTH SIDES IN DETAIL. WE HAVE ALSO P ERUSED CAREFULLY THE ENTIRE EVIDENCES AVAILABLE ON RECORD. IT IS TRITE THAT AN ORDER CAN BE REVISED ONLY AND ONLY IF TWIN CONDITIONS OF ERROR IN THE ORDER AND 5 PREJUDICE CAUSED TO THE REVENUE CO-EXIST. THE SU BJECT OF REVISION UNDER SECTION 263 HAS BEEN VASTLY EXAMINED AND ANALYZED BY VARIOUS COURTS INCLUDING THAT OF HONBLE APEX COURT. THE REVISION AL POWER CONFERRED ON THE CIT VIDE SECTION 263 IS OF VIDE AMPLITUDE. IT ENAB LES THE CIT TO CALL FOR AND EXAMINE THE RECORDS OF ANY PROCEEDING UNDER THE ACT . IT EMPOWERS THE CIT TO MAKE OR CAUSE TO BE MADE SUCH AN ENQUIRY AS HE D EEMS NECESSARY IN ORDER TO FIND OUT IF ANY ORDER PASSED BY ASSESSING OFFICE R IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. TH E ONLY LIMITATION ON HIS 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 INT EREST OF THE REVENUE. ONCE HE COMES TO THE ABOVE CONCLUSION ON THE BASIS OF T HE MATERIAL THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND ALS O PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THE CIT IS EMPOWERED TO P ASS AN ORDER AS THE CIRCUMSTANCES OF THE CASE MAY WARRANT. HE MAY PASS AN ORDER ENHANCING THE ASSESSMENT OR HE MAY MODIFY THE ASSESSMENT. HE IS ALSO EMPOWERED TO CANCEL THE ASSESSMENT AND DIRECT TO FRAME A FRESH A SSESSMENT. HE IS EMPOWERED TO TAKE RECOURSE TO ANY OF THE THREE COUR SES INDICATED IN SECTION 263. SO, IT IS CLEAR THAT THE CIT DOES NOT HAVE UN FETTERED AND UNCHEQURED DISCRETION TO REVISE AN ORDER. THE CIT IS REQUIRED TO EXERCISE REVISIONAL POWER WITHIN THE BOUNDS OF THE LAW AND HAS TO SATIS FY THE NEED OF FAIRNESS IN ADMINISTRATIVE ACTION AND FAIR PLAY WITH DUE RESPEC T TO THE PRINCIPLE OF AUDI ALTERAM PARTEM AS ENVISAGED IN THE CONSTITUTION OF INDIA AS WELL AS IN 6 SECTION 263. AN ORDER CAN BE TREATED AS ERRONEOUS IF IT WAS PASSED IN UTTER IGNORANCE OR IN VIOLATION OF ANY LAW; OR PASSED WIT HOUT TAKING INTO CONSIDERATION ALL THE RELEVANT FACTS OR BY TAKING I NTO CONSIDERATION IRRELEVANT FACTS. THE PREJUDICE THAT IS CONTEMPLATED UNDER SECTION 263 IS THE PREJUDICE TO THE INCOME TAX ADMINISTRATION AS A WHO LE. THE REVISION HAS TO BE DONE FOR THE PURPOSE OF SETTING RIGHT DISTORTION S AND PREJUDICES CAUSED TO THE REVENUE IN THE ABOVE CONTEXT. THE FUNDAMENTAL PRINCIPLES WHICH EMERGE FROM THE SEVERAL CASES REGARDING THE POWERS 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 MUST BE FULFI LLED. (II) SECTION 263 CANNOT BE INVOKED TO CORRECT EAC H AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFI CER AND IT IS ONLY WHEN AN ORDER IS ERRONEOUS, THAT THE SECTIO N WILL BE ATTRACTED. (III) AN INCORRECT ASSUMPTION OF FACTS OR AN INCORR ECT APPLICATION OF LAW WILL SUFFICE FOR THE REQUIREMENT OR ORDER BE ING ERRONEOUS. (IV) IF THE ORDER IS PASSED WITHOUT APPLICATION OF MIND, SUCH ORDER WILL FALL UNDER THE CATEGORY OF ERRONEOUS ORDER. (V) EVERY LOSS OF REVENUE CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND IF THE ASSESSING OFFICE R HAS 7 ADOPTED ONE OF THE COURSES PERMISSIBLE UNDER LAW OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HA S TAKEN ONE VIEW UNDER WITH WHICH THE CIT DOES NOT AGREE, I T CANNOT BE TREATED AS AN ERRONEOUS ORDER, UNLESS THE VIEW T AKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE UNDER THE LA W. (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 IN COME, THE CIT, WHILE EXERCISING HIS POWER UNDER SECTION 2 63, IS NOT PERMITTED TO SUBSTITUTE HIS ESTIMATE OF INCOME IN P LACE 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 ACCORDANCE WIT H LAW AND ARRIVES AS A CONCLUSION, SUCH CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE CIT DOES NOT FEEL S ATISFIED WITH THE CONCLUSION. (VIII) THE CIT, BEFORE EXERCISING HIS JURISDICTION UNDER SECTION 263, MUST HAVE MATERIAL ON RECORD TO ARRIVE AT A SATISFA CTION. (IX) IF THE ASSESSING OFFICER HAS MADE ENQUIRIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON THE RELEVANT ISSUES AN D THE ASSESSEE HAS GIVEN DETAILED EXPLANATION BE A LETTER IN WRITING AND THE ASSESSING OFFICER ALLOWED THE CLAIM ON BEIN G SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, THE DECISION OF THE ASSESSING OFFICER CANNOT BE HELD TO BE ERRONEOUS SI MPLY BECAUSE IN HIS ORDER HE DOES NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. 8 6. REVERTING TO THE FACTS OF THIS CASE, WE HAVE FOU ND FROM THE PERUSAL OF THE ASSESSMENT ORDER THAT THE A.O. HAS EXAMINED IN RESPECT OF THE AMOUNT OF RS. 60.03 LAKHS AND HAS SPECIFICALLY RAISED A QU ERY AS TO WHY THIS AMOUNT SHOULD NOT BE ADDED IN ASSESSEES INCOME. AFTER CO NSIDERING THE ASSESSEES REPLY AND THE AFFIDAVIT AND AFTER APPLYING HIS MIND , THE A.O. HAS REACHED TO THE CONCLUSION THAT IN THE TOTALITY OF THE FACTS AN D CIRCUMSTANCES OF THE CASE, I FIND THE REPLY AS PLAUSIBLE. HE HAS STATE D THAT HE APPLIED HIS MIND AND IN HIS OPINION THERE WAS NO POINT IN MAKING THI S ADDITION SEPARATELY AS IT STOOD COVERED IN THE SURRENDERED INCOME OF RS. 74 L AKHS MADE BY THE ASSESSEE AT THE TIME OF SURVEY. THUS, IT CANNOT BE SAID THAT THE A.O. HAS NOT APPLIED HIS MIND TO THIS ISSUE. IN VIEW OF THE LEG AL POSITION ON THIS SUBJECT OF REVISION TO BE MADE U/S 263 OF THE ACT AS DISCUSSED ABOVE, THE LD. CIT CANNOT REPLACE HIS OPINION WHEN THE A.O. HAS TAKEN ONE OF THE POSSIBLE VIEWS AFTER APPLYING HIS MIND TO A SPECIFIC ITEM OF INCOME. THE ASSESSEE HAD RELIED ON VARIOUS DECISIONS IN THIS REGARD WHICH HA VE ALSO BEEN CONSIDERED BY THE A.O. THE HON'BLE JURISDICTIONAL HIGH COURT HA S TAKEN SIMILAR VIEW THAT WHEN THE A.O. TAKES A DECISION AFTER GOING THROUGH THE MATERIAL AVAILABLE ON RECORD AND AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, IT CANNOT BE SAID THAT HE HAS NOT APPLIED HIS MIND. IN THIS REG ARD, THE FOLLOWING DECISIONS OF THE HON'BLE RAJASTHAN HIGH COURT ARE R ELEVANT: 1. CIT VS. GIRDHARI LAL 258 ITR 331 [RAJ] 2. CIT VS. GANPAT RAM VISHNOI 296 ITR 292 [RAJ] 3. CIT VS. SHIV HARI MADHUSUDAN 233 ITR 649 [RAJ] 9 IT IS SETTLED POSITION OF LAW THAT WHEN THE A.O. AD OPTS ONE OF THE PERMISSIBLE COURSE OF LAW, THE LD. CIT DOES NOT AGREE WITH IT, THE ORDER CANNOT BE TREATED AS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE UNLESS THE VIEW TAKEN BY THE A.O. IS UNSUST AINABLE IN LAW. IT IS WELL SETTLED PROPOSITION OF LAW AS LAID DOWN BY THE HON' BLE PUNJAB AND HARYANA HIGH COURT IN CIT VS. SOHARA WOLLEN MILLS REPORTED IN 296 ITR 278 IN WHICH IT HAS BEEN LAID DOWN THAT MERE AUDIT OBJECTION AND BE CAUSE DIFFERENT VIEW COULD BE TAKEN ARE NOT ENOUGH TO SAY THAT THE ORDER OF THE A.O. IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF T HE REVENUE. THUS WE DO NOT FIND THIS GROUND TO BE ERRONEOUS AS HAS BEEN CLAIME D BY THE LD. CIT. 7. REGARDING CASH CREDITORS, AGAIN THIS MATTER WAS PROPERLY EXAMINED BY THE A.O. THE ASSESSEE FILED ITS REPLY STATING ALL FACTS IN HIS LETTER DATED 18.8.2011. THE A.O. APPLIED HIS MIND AND TOOK A DE CISION. THE ASSESSEE ALSO FILED AFFIDAVIT, WHICH WAS CONSIDERED BY THE A .O. THE CONTENTS OF THE AFFIDAVIT ARE DEEMED TO BE ACCEPTED IN THE ABSENCE OF CROSS-EXAMINATION. IN THIS REGARD, DECISION OF THIS BENCH IN THE CASE REP ORTED IN 36 TW 1 IS RELEVANT. 8. REGARDING INVESTMENT IN HOUSE AT 154 G-BLOCK, SR IGANGANAGAR, THE A.O. MADE ENQUIRIES. THE ASSESSEE SURRENDERED RS. 2 LAK HS OF BROKERAGE RECEIPT, WHICH IS MENTIONED IN FIRST PARA AT PAGE 9 OF THE A SSESSMENT ORDER. THUS, IN VIEW OF THE AFOREMENTIONED LEGAL POSITION AND THE F ACTS OF THIS CASE, WE ARE 10 OF THE CONSIDERED OPINION THAT THE ASSESSMENT ORDER IS NEITHER ERRONEOUS AND WHEN THE TWIN CONDITIONS DO NOT CO EXIST, THE ORDER CANNOT BE REVISED. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE. 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL 2013. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH APRIL, 2013. VL COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR