ATR Infra Projects Pvt. Ltd., Nashik V. Commissioner of Income-tax (Central),

ITA 601/PUN/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9569 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 30-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHASHI B PRASAD
• Assessee Lawyers: KAPIL GOYAL
• Keywords: Invalid notice; Gift; Search and seizure; Document seized; Documents seized
• Section: 143(3); 263; 63; 132; 15; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , ! ' , #$ BEFORE SHRI R.K PANDA, AM AND SHRI VIKAS AWASTHY, J M / ITA NOS. 600, 601 & 602/PUN/2015 #% & '& / ASSESSMENT YEARS : 2009-10, 2010-11 & 2011-12 ATR INFRA PROJECTS PVT. LTD. 11, RAMESHWAR BUILDING, OPPO. ASHOKA HOUSE, ASHOKA MARG, WADALA, NASHIK, PIN-422011 PAN : AAHCA4703C .... APPELLANT % / V/S. COMMISSIONER OF INCOME TAX (CENTRAL) NAGPUR / RESPONDENT ASSESSEE BY : SHRI KAPIL GOYAL REVENUE BY : SHRI SHASHI B. PRASAD / DATE OF HEARING : 08.03.2017 / DATE OF PRONOUNCEMENT : 17.04.2017 ( / ORDER PER VIKAS AWASTHY, JM THESE THREE APPEALS HAVE BEEN FILED BY THE ASSESSEE AS SAILING THE ORDER OF COMMISSIONER OF INCOME TAX (CENTRAL) DATED 27.03.20 15 PASSED U/S 263 OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRE D TO AS THE ACT) COMMON FOR THE ASSESSMENT YEARS 2009-10 TO 2011- 2012. 2 ITA NOS. 600, 601 & 602/PUN/2015 AYS. 2009-10, 2010-11 & 2011-12 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE REC ORD ARE: THE ASSESSEE IS A PRIVATE COMPANY, ENGAGED IN CIVIL CONSTRUCT ION BUSINESS. THE ASSESSEE COMPANY IS A SUB-CONTRACTOR OF M/S ASHOK A BUILDCON LIMITED (M/S ABL). A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT WAS CARRIED OUT ON ASHOKA GROUP ON 20.04.2010. DURING THE CO URSE OF SEARCH INCRIMINATING DOCUMENTS PERTAINING TO THE ASSESSEE WERE SEIZED FROM THE PREMISES OF M/S ABL. NOTICE U/S 153C OF THE ACT WAS ISSUED TO THE ASSESSEE ON 10.07.2012. IN PURSUANCE TO THE SAID NOTICE, THE ASSESSEE FILED ITS RETURN OF INCOME U/S 153C FOR THE ASSES SMENT YEARS 2009-10 AND 2010-11. FOR THE ASSESSMENT YEAR 2011-12 , THE ASSESSEE HAD FILED REGULAR RETURN OF INCOME U/S 139 OF THE ACT. THE ASSESSMENT ORDER FOR THE ASSESSMENT YEARS 2009-10 AND 2010-11 W ERE PASSED U/S 143(3) R.W.S 153C OF THE ACT. FOR THE ASSESSMENT YEAR 20 11-12, THE ASSESSMENT ORDER WAS PASSED U/S 143(3) OF THE ACT. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ACCEPTED THE INCOME RETURNED BY THE ASSESSEE WITHOUT MAKING ANY FURTHER ADDITION. 3. THE COMMISSIONER OF INCOME TAX INVOKED REVISIONAL JURISD ICTION AND ISSUED NOTICE DATED 20.03.2015 U/S 263 OF THE ACT FOR THE ASSESSMENT YEARS 2009-10 TO 2011-12. THEREAFTER, THE COMMISSIONER OF INCOME TAX VIDE ORDER DATED 27.03.2015 COMMON FOR ALL T HE THREE ASSESSMENT YEARS UNDER APPEAL HELD THAT ASSESSMENT ORDER PAS SED U/S 143(3) R.W.S 153C OF THE ACT FOR THE ASSESSMENT YEARS 20 09-10 AND 2010-11 AND ASSESSMENT ORDER U/S 143(3) OF THE ACT FOR THE ASSESSMENT YEAR 2011-12 ARE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND SET ASIDE THE SAME. THE COMMISSIONER OF IN COME TAX FURTHER DIRECTED THE ASSESSING OFFICER TO FRAME ASSESSMENT S AFTER 3 ITA NOS. 600, 601 & 602/PUN/2015 AYS. 2009-10, 2010-11 & 2011-12 MAKING PROPER ENQUIRIES. AGGRIEVED BY THE ACTION OF COMM ISSIONER OF INCOME TAX INVOKING REVISIONAL JURISDICTION U/S 263 OF THE A CT, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN THE APPEAL FOR ASSESSMENT YEAR 2009-10 ; 1. THE LEARNED CIT ERRED IN PASSING ORDER U/S263 O F THE I.T ACT AND SETTING ASIDE THE ASSESSMENT ORDER DT.22.03.2013, P ASSED U/S143(3) R.W.S 153C. THEREFORE, IT IS PRAYED TO CANCEL THE R EVISION ORDER PASSED U/S 263. 2. THE LEARNED CIT ERRED IN HOLDING THAT , NO PROPE R ENQUIRIES WERE CARRIED OUT WITH RESPECT TO THE SEIZED/IMPOUNDED MA TERIAL, IN SPITE OF THE FACT THAT THE ENQUIRIES CARRIED OUT BY THE A.O . IN RELATION TO THE SEIZED MATERIAL WERE BROUGHT ON RECORD BY THE APPEL LANT, DURING THE COURSE OF REVISION PROCEEDINGS. THEREFORE, IT IS PR AYED TO CANCEL THE REVISION ORDER PASSED U/S 263. 3. IN ANY CASE THE LEARNED CIT ERRED IN PASSING REV ISION ORDER U/S 263 WITH RESPECT TO THE INVALID ASSESSMENT ORDER PA SSED INCONSEQUENCE OF INVALID NOTICE U/S 153C. THEREFORE, IT IS PRAYED TO CANCEL THE REVISION ORDER PASSED U/S 263. 4. APPELLANT CRAVES LEAVE TO ADD/ AMEND/ALTER ANY G ROUNDS OF APPEAL AND/ OR PRAYERS BEFORE OR AT THE TIME OF HEARING. IDENTICAL GROUNDS HAVE BEEN RAISED BY THE ASSESSEE IN THE APPEALS FOR ASSESSMENT YEARS 2010-11 AND 2011-12, ASS AILING THE ORDER OF COMMISSIONER OF INCOME TAX. 5. SHRI KAPIL GOYAL APPEARING ON BEHALF OF THE ASSESSEE SU BMITTED THAT A PERUSAL OF THE SHOW CAUSE NOTICE ISSUED U/S 2 63 OF THE ACT WOULD SHOW THAT THE COMMISSIONER OF INCOME TAX HAS NOT FORMED HIS FIRM OPINION WITH RESPECT TO ESCAPEMENT OF INCOME DURING AS SESSMENT PROCEEDING. THE EXPRESSION USED BY THE COMMISSIONER OF IN COME TAX SUCH AS MAY HAVE NOT CARRIED OUT SOME OF THE WORK, THIS ISSUE NEEDS DETAILED VERIFICATION BY CAUSING SUITABLE ENQUIRIES, TH E ASSESSING OFFICER DID NOT CARRY OUT PROPER VERIFICATION ON V ARIOUS ASPECT ARISEN FROM THE EVIDENCES, FOUND IN THE SEIZED MATE RIALS AND 4 ITA NOS. 600, 601 & 602/PUN/2015 AYS. 2009-10, 2010-11 & 2011-12 EXPENSES CLAIMED AND FAILED TO VERIFY AUTHENTICITY/ GENUINEN ESS OF THE EXPENSES CLEARLY SHOW THAT COMMISSIONER OF INCOME TAX HAS NO FIRM OPINION ABOUT THE ASSESSMENT ORDER BEING PREJUDICIAL TO THE INTEREST OF REVENUE AND BEING ERRONEOUS. THE COMMISSIONER OF INCOME TAX HAS DIRECTED THE ASSESSING OFFICER TO MAKE ROVING AND FISHING E NQUIRY AND TO RE-EXAMINE THE SAME MATERIAL WHICH THE ASSESSING OFFICE R HAS ALREADY EXAMINED BEFORE PASSING OF ASSESSMENT ORDERS. 5.1 THE LD. AR MADE MULTIPLE SUBMISSIONS ASSAILING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). THE LD. AR SUBMITTED THAT NO INCRIMINATING MATERIAL WAS FOUND DURING SEARCH AGAINST THE ASSESSEE. IT IS A WELL SETTLED LAW THAT WHEN THERE IS NO INCRIMINATING MATERIAL, NO ADDITION CAN BE MADE. IN SUPPORT OF HIS SUBMISSION, THE LD. AR PLACED RELIANCE ON THE FOLLOWING DECISIONS: I) CIT V/S. SINHAGAD EDUCATION SOCIETY REPORTED IN 378 ITR 84 II) CIT V/S. CENTRAL WARE HOUSING CORPORATION (NHAVA-SH EVA) REPORTED IN 374 ITR 645 THE LD. AR CONTENDED THAT TRANSACTIONS FOUND IN THE DO CUMENTS SEIZED DURING SEARCH HAVE ALREADY BEEN REFLECTED IN THE BOOKS O F ACCOUNT OF THE ASSESSEE AND HENCE, NO FURTHER ADDITION WAS MADE BY THE ASSESSING OFFICER DURING ASSESSMENT. FURTHER, TO BUTTRESS HIS SUBMISSIONS, THE LD. AR PLACED RELIANCE ON THE DECISION OF CO -ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DR. D.Y PATIL PRATISTH AN V/S. DCIT IN ITA NO. 1586/PN/2011, ASSESSMENT YEAR 2000-01 DECIDE D ON 07.09.2012. 5.2 THE NEXT SUBMISSION OF THE LD. AR IS THAT THE ASSESSIN G OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAD MADE ENQUIRIES WITH 5 ITA NOS. 600, 601 & 602/PUN/2015 AYS. 2009-10, 2010-11 & 2011-12 RESPECT TO DOCUMENTS SEIZED DURING THE COURSE OF SEARC H AT THE PREMISES OF M/S ABL. THE LD. AR REFERRED THE QUESTIONNA IRE DATED 28.02.2013 ISSUED TO THE ASSESSEE DURING ASSESSMENT PR OCEEDINGS FOR THE ASSESSMENT YEARS 2009-10, 2010-11 AND 2011-12. TH E LD. AR POINTED THAT ASSESSING OFFICER HAD ASKED SPECIFIC QUESTIONS WITH R EGARD TO FURNISHING OF DETAILS OF LABOUR CHARGES/SUB-CONTRACTOR C HARGES PAID ALONG WITH TDS DEDUCTED BY THE ASSESSEE IN RESPECT THE REOF. THE LD. AR REFERRING TO QUESTIONNAIRE FURTHER SUBMITTED THAT A PERUS AL OF THE QUESTIONNAIRE WOULD SHOW THAT THE ASSESSING OFFICER HAD MA DE QUERIES IN RESPECT OF DOCUMENTS SEIZED DURING THE COURSE OF SURV EY FROM THE PREMISES OF M/S ABL. THE ASSESSEE GAVE DETAILED REPLY TO THE QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER ON 06.03.2013. THUS, IT IS EVIDENT FROM THE DOCUMENTS ON RECORD THAT ASSESSING OFFICER MADE ENQUIRIES WITH RESPECT TO THE WORK PERFORMED BY THE ASS ESSEE AND ALSO ON THE DOCUMENTS SEIZED DURING SURVEY ACTION FROM THE P REMISES OF ASHOKA GROUP. IT IS NOT A CASE OF NO ENQUIRY, AT THE BEST IT CAN BE A CASE OF INADEQUATE ENQUIRY. IT IS A WELL SETTLED LAW THA T WHERE INADEQUATE ENQUIRY IS CONDUCTED BY THE ASSESSING OFFICER D URING ASSESSMENT PROCEEDINGS, THE COMMISSIONER OF INCOME TAX CAN NOT INVOKE REVISIONAL JURISDICTION AND DIRECT THE ASSESSING OFFIC ER TO RE- CONDUCT THE ENQUIRY IN A PARTICULAR MANNERS. THUS, REVIS IONAL JURISDICTION CANNOT BE INVOKED WHERE IT IS A CASE OF INADEQ UATE ENQUIRY TO MAKE ADDITION. IN SUPPORT OF HIS CONTENTIONS, THE LD. A R PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V/S. NIRAV MODI REPORTED AS 390 ITR 292. 6 ITA NOS. 600, 601 & 602/PUN/2015 AYS. 2009-10, 2010-11 & 2011-12 5.3 THE NEXT ARGUMENT RAISED BY THE LD. AR AGAINST THE IMPUGNED ORDER IS THAT THE COMMISSIONER OF INCOME TAX HAS ERRED IN REMITTING THE CASE BACK TO THE FILE OF ASSESSING OFFICER WITH A DIREC TION TO MAKE FURTHER ENQUIRIES. THE COMMISSIONER OF INCOME TAX CANNOT GIVE SUCH DIRECTIONS TO THE ASSESSING OFFICER. UNDER THE PROVISIONS OF SECTION 263 OF THE ACT, THE COMMISSIONER OF INCOME TAX HAS POWER TO CONDUCT ENQUIRY. THE COMMISSIONER OF INCOME TAX CANNOT DIRECT THE ASSESSING OFFICER TO CONDUCT ROVING AND FISHING ENQUIRIES. 5.4 THE LD. AR CONTENDED THAT A PERUSAL OF NOTICE ISSUE D U/S 263 OF THE ACT AND THE IMPUGNED ORDER WOULD SHOW THAT THE CO MMISSIONER OF INCOME TAX HAS ENLARGED THE SCOPE OF ENQUIRY. THE REAS ONS GIVEN IN THE SHOW CAUSE NOTICE U/S 263 OF THE ACT FOR INVOKING RE VISIONAL JURISDICTION WERE VERY LIMITED. WHILE PASSING ORDER U/S 263 O F THE ACT, THE COMMISSIONER OF INCOME TAX HAS GONE MUCH BEYOND TH E REASONS FOR EXERCISING REVISION POWER. THUS, THE COMMISSIONER OF INC OME TAX HAS ERRED IN TRAVELLING BEYOND SHOW CAUSE NOTICE ISSUED U/S 263 OF THE ACT. IN SUPPORT OF HIS CONTENTIONS THE LD. AR PLACED RELIAN CE ON THE DECISION OF HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF K. SUDHAKAR REDDY V/S. AITO IN ITA NO. 624/HYD/2010 DECID ED ON 07.11.2012. 6. ON THE OTHER HAND, SHRI SHASHI B. PRASAD REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE ACTION OF COMMISSIO NER OF INCOME TAX IN INVOKING REVISIONAL POWERS U/S 263 OF THE AC T. THE LD. D.R. SUBMITTED THAT ASSESSING OFFICER HAS NOT CONDUCTED AN Y ENQUIRY WITH RESPECT TO INCRIMINATING DOCUMENTS SEIZED DURING SEAR CH FROM THE PREMISES OF M/S ABL. THE COMMISSIONER OF INCOME TAX (APPEA L) HAS 7 ITA NOS. 600, 601 & 602/PUN/2015 AYS. 2009-10, 2010-11 & 2011-12 GIVEN SPECIFIC INSTANCES TO SHOW THAT PAYMENT MADE BY M/ S ABL TO ASSESSEE, WERE RECEIVED BACK BY M/S ABL IN THE FORM OF LOAN AND ADVANCES. THE LD. DR FURTHER SUBMITTED THAT CONTRACT A GREEMENT BETWEEN M/S ABL AND THE ASSESSEE WAS SIGNED BY ONE S HRI SANJAY KANKARIYA ON BEHALF OF THE ASSESSEE. THE SAID SHRI SANJAY KANKARIYA IS SENIOR EXECUTIVE IN THE OFFICE OF M/S ABL. AFTER VERIFICATION OF SEIZED MATERIALS, IT IS EVIDENT THAT THE SUB CONTRACT WORK OF M/S ABL ARE ROUTED THROUGH THE ASSESSEE FOR FINANCIAL YEAR 2008-09 O NWARDS AND FUNDS WERE SIPHONED OFF THROUGH INFLATION OF EXPENSES UNDER VARIOUS HEADS INCLUDING MATERIALS, PURCHASES, THE SUB CONTRACT EX PENSES ETC. THE LD. DR REFERRING TO THE DETAILED FINDINGS OF THE COMMI SSIONER OF INCOME TAX (APPEALS) AT PARA-5 OF THE IMPUGNED ORDER SU BMITTED THAT THE ASSESSING OFFICER HAS FAILED TO CONDUCT PROPER ENQUIRY DURING ASSESSMENT PROCEEDINGS. THE LD. DR POINTED THAT AFTER ASS ESSMENTS WERE SET ASIDE IN REVISION PROCEEDING, THE ASSESSING OFFICER CONDUCTED DETAILED ENQUIRIES AND HAS PASSED ASSESSMENT ORDERS MA KING SUBSTANTIAL ADDITIONS. THE LD. DR IN SUPPORT OF HIS SUBMISSIO NS PLACED RELIANCE ON THE FOLLOWING DECISIONS: I) RAJMANDIR ESTATES (P.) LTD. V/S. PR. CIT, KOLKAT A-III, 77 TAXMANN.COM 285 (SC) II) ANUJ JAYENDRA SHAH V/S. PR. CIT-35, MUMBAI, 67 TAXMANN.COM 38 ( MUMBAI-TRIB) III) CIT-II, VISAKHAPATNAM V/S. VARANASI KHANTA RAO 59 TAXMANN.COM 175 ( ANDHRA PRADESH) IV) APPOLLO TYRES LTD. V/S DCIT 46 TAXMANN.COM 421 (KERALA) V) VIKRANT AUTO SUSPENSION V/S. ACIT, CIRCLE-22(2), MUMBAI 45 TAXMANN.COM 344 (MUMBAI- TRIB) VI) COMMISSIONER OF INCOME TAX V/S. JAWAHAR BHATTA CHARJEE 20 TAXMANN.COM 652 ( GUAHATI) 8 ITA NOS. 600, 601 & 602/PUN/2015 AYS. 2009-10, 2010-11 & 2011-12 VII) MALABAR INDUSTRIAL CO. LTD. V/S COMMISSIONER O F INCOME TAX 109 TAXMAN 66 (SC) THE LD. DR DEFENDING THE ORDER OF COMMISSIONER OF INCOM E TAX PASSED U/S 263 OF THE ACT, PRAYED FOR UPHOLDING THE IMP UGNED ORDER AND DISMISSING THE APPEALS OF THE ASSESSEE. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENT ATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDER OF AUTHORITIES BELO W. WE HAVE ALSO CONSIDERED THE DECISIONS ON WHICH THE RIVAL SIDES HAVE PLACED RELIANCE AND THE DOCUMENTS FURNISHED BY THE ASSESSEE IN THE FORM OF PAPER BOOK. THE ASSESSEE IN APPEALS HAS ASSAILED THE OR DER OF COMMISSIONER OF INCOME TAX PASSED U/S 263 SETTING ASIDE THE ASSESSMENTS FOR ASSESSMENT YEARS 2009-10, 2010-11 AND 2011- 12. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AT THE PREMISES OF M/S ABL. SOME INCRIMINATING DOCUMENTS WERE ALLEGEDLY FOUN D AT THE PREMISES OF M/S ABL IN RESPECT OF THE ASSESSEE. NOT ICE U/S 153C WAS ISSUED TO THE ASSESSEE FOR THE ASSESSMENT YEARS 2 009-10 AND 2010-11. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILE D RETURN OF INCOME DECLARING INCOME AS WAS RETURNED IN THE ORIGINAL RE TURN OF INCOME FILED U/S 139 OF THE ACT. THE CONTENTION OF THE ASSE SSEE IS THAT ASSESSEE HAS ALREADY DISCLOSED THE AMOUNTS IN ITS RETURN OF INCOME AS HAS BEEN FOUND IN THE DOCUMENTS SEIZED FROM THE PREMISES OF M/S ABL. THE LD. AR HAS CHALLENGED THE INVOKING OF JURISDICTION U/ S 263 BY THE COMMISSIONER OF INCOME TAX BY RAISING FOUR OBJECTIONS. I) SINCE NO INCRIMINATING MATERIAL WAS FOUND DURING SEARCH FRO M THE PREMISES OF M/S ABL, THEREFORE, NO ADDITION CAN BE MAD E IN THE HANDS OF THE ASSESSEE. 9 ITA NOS. 600, 601 & 602/PUN/2015 AYS. 2009-10, 2010-11 & 2011-12 II) THE ASSESSING OFFICER HAD MADE DETAILED ENQUIRIES AT T HE TIME OF ASSESSMENT BY ISSUING QUESTIONNAIRE TWICE WHICH WAS DUL Y REPLIED BY THE ASSESSEE HENCE IT CANNOT BE SAID THAT THERE WA S LACK OF ENQUIRY, AT THE BEST IT CAN BE A CASE OF INADEQUATE ENQUIRY. III) THE COMMISSIONER OF INCOME TAX HAS ENLARGED THE SCOP E OF ENQUIRY. THE COMMISSIONER OF INCOME TAX HAS GONE BEYOND THE NOTICE ISSUED U/S 263 OF THE ACT WHILE PASSING REVISION ORDER. IV) THE COMMISSIONER OF INCOME TAX HAS ERRED IN REMITTING THE MATTER BACK TO THE ASSESSING OFFICER FOR CONDUCTING ROVING AND FISHING ENQUIRY AND TO RE-EXAMINE THE SAME MATERIAL WHICH THE AS SESSING OFFICER HAS ALREADY APPRECIATED AND THEREAFTER PASSED THE ASSESSMENT ORDER. 8. BEFORE PROCEEDING FURTHER, IT WOULD BE RELEVANT TO HAVE GLANCE AT THE NOTICE ISSUED BY THE COMMISSIONER OF INCOME TAX U/S 263 OF THE ACT. THE RELEVANT CONTENTS OF THE NOTICE ARE REPRODUCED HERE IN BELOW : 2. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THE OFFICE PREMISES OF ASHOKA GROUP OF CASES AND RESIDENTIAL P REMISES OF RELATED PERSONS AND A SURVEY OPERATION WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 20.04.2010 AND BOOKS AN D DOCUMENTS WERE FOUND AND IMPOUNDED. ON VERIFICATION OF RECORD S, IT IS SEEN THAT THE ASSESSEE IS SUB-CONTRACTOR OF ASHOKA GROUP OF CASES . THE DOCUMENTS FOUND HAVE VARIOUS EVIDENCES WHICH REQUIRE CROSS VE RIFICATION WITH REFERENCE TO RECORDS AND THIRD PARTIES. THE ASSESSE E HAS RECEIVED CONTRACT RECEIPTS AND CLAIMED HUGE EXPENSES. FROM T HE RECORDS IT IS ALSO LEARNT THAT THE ASSESSEE MAY HAVE NOT CARRIED OUT S OME OF THE WORKS THOUGH CLAIMED HUGE EXPENDITURE WITHOUT HAVING ACTU AL EXPENDITURE. THIS ISSUE NEEDS DETAILED VERIFICATION BY CAUSING S UITABLE ENQUIRIES. THE ASSESSEES TURNOVER OF CONTRACT RECEIPTS AND EXPENS ES ARE AS PER THE FOLLOWING: ASSTT. YEAR TURNOVER EXPENDITURE CLAIMED 2009-10 31,52,50,624 29,66,67,895 2010-11 1,45,75,88,533 1,34,58,07,738 2011-12 1,20,88,09,762 1,15,88,12,511 10 ITA NOS. 600, 601 & 602/PUN/2015 AYS. 2009-10, 2010-11 & 2011-12 3. ON PERUSAL OF THE RECORD, IT IS SEEN THAT THE AS SESSING OFFICER HAS NOT ENQUIRED/ VERIFIED THE EVIDENCES FOUND AND THE CLAIM OF ANY EXPENSES BY THE ASSESSEE AGAINST THE CONTRACT RECEI PTS AND ACCEPTED THE INCOMES DISCLOSED BY THE ASSESSEE AND PASSED OR DERS U/S 143(3) R.W.S 153C AND U/S 143(3) OF THE INCOME TAX ACT. 4. THEREFORE, IT IS CLEAR THAT THE A.O. DID NOT CAR RY OUT PROPER VERIFICATION OF VARIOUS ASPECTS ARISING FROM THE EV IDENCES FOUND IN THE SEIZED MATERIAL AND EXPENSES CLAIMED AND FAILED TO VERIFY THE AUTHENTICITY/GENUINENESS OF EXPENSES AS BROUGHT OUT ABOVE REFLECTED IN THE BOOKS OF ACCOUNT AND TAX IMPLICATIONS BEFORE PA SSING THE SAID ASSESSMENT ORDER. THE RECORD SHOWS THAT THE ASSESSI NG OFFICER HAS NOT VERIFIED ANY EXPENSES. IT IS ALSO SEEN THAT NO JUST IFICATION WAS PLACED ON RECORD BY THE A.O. BEFORE PASSING THE ASSESSMENT OR DER WITH REFERENCE TO EXPENSES CLAIMED AND THE INCOME DISCLOSED BY THE ASSESSEE. THE FAILURE ON THE PART OF THE A.O. HAS RENDERED THE AS SESSMENT ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVE NUE. A PERUSAL OF THE ABOVE NOTICE REVEALS THAT THE COMMISSION ER OF INCOME TAX IS OF THE OPINION THAT PROPER ENQUIRY WAS NO T CONDUCTED BY THE ASSESSING OFFICER WITH RESPECT TO THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH AT THE PREMISES OF M/S ABL. THE APPRE HENSION OF COMMISSIONER OF INCOME TAX THAT INCOME OF THE ASSESSEE H AS ESCAPED ASSESSMENT ARISES FROM THE FACT THAT THE ASSESSEE HAS CLAIMED HUGE EXPENDITURE. THE COMMISSIONER OF INCOME TAX AT THE TIME OF PASSING OF THE ORDER U/S 263 HAS MENTIONED CERTAIN INSTANCES WHICH ACCORDING TO THE COMMISSIONER OF INCOME TAX RAISES AN EYE OF SUSPICION OVER THE MANNER IN WHICH THE ASSESSEE HAS CONDUCTED ITS BUSINES S AND THE ASSOCIATION OF ASSESSEE WITH M/S ABL. 9. A PERUSAL OF THE DOCUMENTS ON RECORD REVEAL THAT THE QUESTIONNAIRE WAS ISSUED TO THE ASSESSEE DURING THE COU RSE OF ASSESSMENT PROCEEDINGS FOR THE YEARS 2005-06 TO 2011- 12. THE FIRST QUESTIONNAIRE WAS ISSUED TO THE ASSESSEE BY THE ASSESS ING OFFICER ON 27.11.2012. THE ASSESSEE GAVE DETAILED REPLY TO THE QUES TIONNAIRE ON 11.12.2012 AND 14.12.2012. THE REPLY OF THE ASSESSEE IS AT PAGE NO. 6 TO 10 OF THE PAPER BOOK. A PERUSAL OF THE REPLY REVEALS THAT QUESTIONS 11 ITA NOS. 600, 601 & 602/PUN/2015 AYS. 2009-10, 2010-11 & 2011-12 WERE RAISED BY THE ASSESSING OFFICER WITH RESPECT TO DOCU MENT FOUND/ IMPOUNDED DURING THE COURSE OF SEARCH AT THE PREMISES O F M/S ABL. THEREAFTER, ANOTHER QUESTIONNAIRE WAS SENT TO THE ASSES SEE BY THE ASSESSING OFFICER ON 28.02.2013. THE ASSESSEE VIDE COMMUNICA TION DATED 06.03.2013 GAVE DETAILED REPLY TO THE ASSESSING OFFIC ER ANSWERING THE QUERIES RAISED BY THE ASSESSING OFFICER. IN THE SECOND QUESTIONNAIRE, THE ASSESSING OFFICER HAD RAISED FURTHER QUE RIES WITH RESPECT TO THE DOCUMENTS SEIZED FROM THE PREMISES OF M/S ABL. THUS, FROM THE DOCUMENTS ON RECORD, IT IS EVIDENT THAT ASSESSING OFFICER HAD MADE ENQUIRIES DURING COURSE OF ASSESSMENT PRO CEEDINGS WITH RESPECT TO THE DOCUMENT SEIZED/ IMPOUNDED FROM THE PREMISES OF M/S ABL. WE FIND MERIT IN THE SUBMISSIONS OF THE LD. AR THAT IT IS NOT A CASE OF NO ENQUIRY. HOWEVER, A PERUSAL OF THE ASSESSM ENT ORDERS FOR ALL THE THREE ASSESSMENT YEARS UNDER QUESTION SHOW THA T ASSESSING OFFICER WHILE FRAMING ASSESSMENT HAS NOT DISCUSSED AT ALL T HE FACT REGARDING ENQUIRIES MADE DURING THE COURSE OF ASSESSMENT WITH RESPECT TO ALLEGED INCRIMINATING MATERIALS SEIZED FROM THE PR EMISES OF M/S ABL AGAINST THE ASSESSEE. IF THE ASSESSING OFFICER HA S MADE ENQUIRIES DURING ASSESSMENT PROCEEDINGS AND AFTER EXAMININ G THE DOCUMENTS HAS MADE NO ADDITION, THE COMMISSIONER OF INCOM E TAX CANNOT INVOKE THE PROVISIONS OF SECTION 263 MERELY FOR TH E REASON THAT THE ASSESSING OFFICER HAS NOT PASSED ELABORATE ORDER GIV ING DETAILS OF THE ENQUIRIES MADE AND THE FINDINGS OF ASSESSING OFFICER THEREON. 10. IT IS A WELL SETTLED LAW THAT COMMISSIONER OF INCOME T AX CAN INVOKE THE PROVISIONS OF SECTION 263 IF TWIN CONDITIONS AS EN VISAGED UNDER THE SECTION ARE SATISFIED I.E. 12 ITA NOS. 600, 601 & 602/PUN/2015 AYS. 2009-10, 2010-11 & 2011-12 (I) THE ASSESSMENT ORDER SHOULD BE ERRONEOUS ; AND (II) IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. THE REVISIONAL POWERS CANNOT BE EXERCISED UNLESS BOTH T HE CONDITIONS ARE FULFILLED. IF THE ASSESSING OFFICER HAS TAKEN ON E OF THE POSSIBLE VIEWS WHILE PASSING THE ASSESSMENT ORDER AND IT I S EVIDENT FROM RECORD THAT THE ASSESSMENT ORDER HAS BEEN PASSE D AFTER CONDUCTING ENQUIRY, THE COMMISSIONER OF INCOME TAX CANNO T EXERCISE REVISIONAL JURISDICTION. THE COMMISSIONER OF INCOME TAX CANN OT DIRECT THE ASSESSING OFFICER TO RE-CONDUCT ENQUIRY IN A PARTICULAR MANNER BY EXERCISING REVISIONAL POWERS. 11. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V/S . NIRAV MODI (SUPRA) HAS HELD THAT IF DURING ASSESSMENT PROCEEDIN GS QUERIES WERE RAISED AND THE ASSESSEE HAS RESPONDED TO THE S AME, THEN EVEN IF AN ASSESSMENT ORDER DOES NOT MENTION THE SAME, IT DOES NOT MEAN T HAT ASSESSING OFFICER HAS NOT APPLIED HIS MIND TO THE ISSUES. T HE RELEVANT EXTRACT OF THE JUDGMENT READS AS UNDER: 7. FIRSTLY, THE REVENUE CONTENDS THAT THE EXERCISE OF POWERS UNDER SECTION 263 OF THE ACT IS JUSTIFIED AS IN THIS CASE , AS NO INQUIRY IN RESPECT OF THE GIFTS RECEIVED DURING THE SUBJECT YEARS WAS DONE BY THE ASSESSING OFFICER FOR THE ASSESSMENT ORDERS FOR ASSESSMENT YE ARS 2007-08 AND 2008-09. THIS ACCORDING TO THE REVENUE IS EVIDENT F ROM THE ASSESSMENT ORDERS DATED 31ST DECEMBER, 2009 AND 30TH DECEMBER, 2010 WHICH DOES NOT EVEN MAKE A MENTION OF THE GIFTS RECEIVED MUCH LESS DISCUSS AND/OR DEAL WITH THE SAME. THIS ISSUE IS NO LONGER RES INTEGRA AS THIS COURT IN IDEA CELLULAR LTD. V. DY. CIT [2008] 301 I TR 407 ( BOM.) HAS HELD THAT IF DURING ASSESSMENT PROCEEDINGS QUERIES WERE RAISED AND THE ASSESSEE RESPONDED TO THE SAME, THEN EVEN IF AN ASS ESSMENT ORDER DOES NOT MENTION THE SAME, IT DOES NOT MEAN THAT TH E ASSESSING OFFICER HAS NOT APPLIED HIS MIND TO THE ISSUES. IT WOULD BE WELL-NIGH IMPOSSIBLE FOR AN ASSESSING OFFICER TO COMPLETE ALL ASSESSMENT S ASSIGNED TO HIM UNDER SECTION 143(3) OF THE ACT IF HE IS REQUIRED T O DEAL WITH ALL ISSUES WHICH AROSE DURING THE ASSESSMENT PROCEEDINGS. THUS , THE ASSESSMENT ORDER PRIMARILY DEAL WITH ONLY THOSE ISSUES IN RESP ECT OF WHICH THE ASSESSEE HAS NOT BEEN ABLE TO SATISFY HIM AND GIVE REASONS FOR HIS 13 ITA NOS. 600, 601 & 602/PUN/2015 AYS. 2009-10, 2010-11 & 2011-12 CONCLUSION. THIS WOULD ENABLE THE ASSESSEE TO CHALL ENGE THE SAME, IF AGGRIEVED. IN FACT THE GUJARAT HIGH COURT IN CIT V. NIRMA CHEMICAL WORKS LTD.[2009] 309 ITR 67/182 TAXMAN 183 HAS OBSE RVED THAT IF AN ASSESSMENT ORDER WERE TO INCORPORATE THE REASONS FO R UPHOLDING THE CLAIM MADE BY AN ASSESSEE, THE RESULT WOULD BE AN E PITOME AND NOT AN ASSESSMENT ORDER. IN THIS CASE, DURING THE ASSESSME NT PROCEEDINGS FOR BOTH THE ASSESSMENT YEARS, THE ASSESSING OFFICER IS SUED A QUERY MEMOS TO THE ASSESSEE, CALLING UPON HIM TO JUSTIFY THE GENUINENESS OF THE GIFTS. THE RESPONDENT-ASSESSEE RESPONDED TO THE SAME BY GIVING EVIDENCE OF THE COMMUNICATIONS RECEIVED FROM HIS FA THER AND HIS SISTER I.E. THE DONORS OF THE GIFTS ALONG WITH THE STATEME NT OF THEIR BANK ACCOUNTS. ON PERUSAL, THE ASSESSING OFFICER WAS SAT ISFIED ABOUT THE IDENTITIES OF THE DONORS, THE SOURCE FROM WHERE THE SE FUNDS HAVE COME AND ALSO THE CREDITWORTHINESS/CAPACITY OF THE DONOR . ONCE THE ASSESSING OFFICER WAS SATISFIED WITH REGARD TO THE SAME, THERE WAS NO FURTHER REQUIREMENT ON THE PART OF THE ASSESSING OF FICER TO DISCLOSE HIS SATISFACTION IN THE ASSESSMENT ORDER PASSED THEREON . THUS, THIS OBJECTION ON THE PART OF THE REVENUE, CANNOT BE ACC EPTED. 8. IT IS NEXT SUBMITTED THAT THE DONOR HAD NOT BEEN EX AMINED BY THE ASSESSING OFFICER. IT IS NOT IN EVERY CASE THAT EVE RY EVIDENCE PRODUCED HAS TO BE TESTED BY CROSS EXAMINATION OF THE PERSON GIVING THE EVIDENCE. IT IS ONLY IN CASES WHERE THE EVIDENCE PRODUCED GIV ES RISE TO SUSPICION ABOUT ITS VERACITY THAT FURTHER SCRUTINY IS CALLED FOR. IF THERE IS NOTHING ON RECORD TO INDICATE THAT THE EVIDENCE PRODUCED IS NO T RELIABLE AND THE ASSESSING OFFICER WAS SATISFIED WITH THE SAME, THEN IT IS NOT OPEN TO THE CIT TO EXERCISE HIS POWERS OF REVISION WITHOUT THE CIT RECORDING HOW AND WHY THE ORDER IS ERRONEOUS DUE TO NOT EXAMINING THE DONORS. THUS, THIS OBJECTION TO THE IMPUGNED ORDER BY THE REVENUE IS ALSO NOT SUSTAINABLE. 9. IT WAS NEXT SUBMITTED THAT NO ENQUIRY WAS DONE BY T HE ASSESSING OFFICER TO FIND OUT WHETHER THE DONOR MR DEEPAK MOD I (FATHER) HAD RECEIVED MONEY FROM M/S. CHANG JIANG AS CLAIMED. NO R ANY INQUIRY WAS DONE TO FIND OUT WHETHER THE SISTER HAD IN FACT EAR NED AMOUNTS ON ACCOUNT OF FOREIGN EXCHANGE TRANSACTIONS 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 EX PLANATION OFFERED ON INQUIRY, IT IS NOT OPEN TO THE CIT IN EXERCISE OF H IS REVSIONAL POWERS DIRECT THAT FURTHER ENQUIRY HAS TO BE DONE. AT THE VERY HI GHEST, THE CASE OF THE REVENUE IS THAT THIS IS A CASE OF INADEQUATE INQUIR Y AND NOT OF 'NO ENQUIRY.' IT IS WELL SETTLED THAT THE JURISDICTION UNDER SECTION 263 OF THE ACT CAN BE EXERCISED BY THE CIT ONLY WHEN IT IS A C ASE OF LACK OF ENQUIRY AND NOT ONE OF INADEQUATE ENQUIRY. THIS VIEW HAS BEEN TAKEN BY THIS 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 [2012] 341 ITR 537/194 TAXMAN 57 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 U PON THE DECISION OF THIS COURT IN GABRIEL (INDIA) LTD. (SUPRA). IT IS V ERY IMPORTANT TO NOTE THAT THE CIT IN HIS ORDER UNDER SECTION 263 OF THE ACT H AS RECORDED THE FACT 14 ITA NOS. 600, 601 & 602/PUN/2015 AYS. 2009-10, 2010-11 & 2011-12 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. [ EMPHASIZED BY US] 12. IN THE PRESENT CASE, DOCUMENTS ON RECORD CLEARLY ESTABLISH THAT ASSESSING OFFICER HAS MADE ENQUIRIES AND AFTER APPLYING HIS MIND ON THE MATERIALS SUBMITTED BY THE ASSESSEE IN RESPONSE TO THE QUESTIONNAIRE HAS ACCEPTED RETURN OF INCOME WITHOUT MAKI NG FURTHER ADDITION. ONCE ASSESSING OFFICER HAS TAKEN A VIEW AFTER COND UCTING ENQUIRIES AND EXAMINING THE DOCUMENTS, IT IS NOT OPEN TO THE COMMISSIONER OF INCOME TAX UNDER REVISIONAL JURISDICTION TO DIRECT THE ASSESSING OFFICER TO RE-EXAMINE THE SAME MATERIAL. UNDISPUT EDLY, THE PRESENT CASE IS NOT THE ONE WHICH SUFFERS FROM LACK OF EN QUIRY. AT THE BEST THE PRESENT CASE CAN BE ONE OF THOSE WHERE THE RE WAS INADEQUATE ENQUIRY. UNDER SUCH CIRCUMSTANCES, THE COMMISSIONER OF IN COME TAX CANNOT EXERCISE HIS REVISIONAL JURISDICTION. 13. THE DEPARTMENT HAS PLACED RELIANCE ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF RAJMANDIR ESTATES (P) LTD V/S. PR. CIT (SUPRA) TO SAY THAT WHERE ASSESSING OFFICER COMPLETED ASSE SSMENT WITHOUT HOLDING REQUISITE INVESTIGATION EXCEPT CALLING FOR REC ORDS INVOKING OF REVISIONAL JURISDICTION U/S 263 OF THE ACT IS JUSTIFIED. WE ARE OF CONSIDERED VIEW THAT THE HONBLE SUPREME COUR T OF INDIA IN THE AFORESAID CASE UPHELD THE REVISIONAL JURISDICTION INVOKED BY COMMISSIONER OF INCOME TAX U/S 263, AS IT WAS A CASE OF LACK OF REQUISITE ENQUIRY. IN THE PRESENT CASE, IT CANNOT BE SAID THAT THE ASSESSING OFFICER CALLED FOR THE RECORDS AND THEREAFTER DID NOT SCRUTINIZE OR EXAMINE THE SAME. THE ASSESSING OFFICER ISSUE D FIRST 15 ITA NOS. 600, 601 & 602/PUN/2015 AYS. 2009-10, 2010-11 & 2011-12 QUESTIONNAIRE TO THE ASSESSEE ON 27.11.2012. AFTER ANALY ZING THE REPLY OF THE ASSESSEE TO THE SAID QUESTIONNAIRE, THE ASSESSING OFFICER ISSUED SECOND QUESTIONNAIRE TO THE ASSESSEE ON 28.02.1013. IN B OTH THE QUESTIONNAIRES, QUESTIONS ASKED BY THE ASSESSING OFFICER WE RE INTER ALIA RELATED TO DOCUMENTS SEIZED DURING SEARCH FROM THE PREMISES OF M/S ABL. THIS SHOWS THAT THE ASSESSING OFFICER DID APPLY H IS MIND. WHATEVER QUERIES WERE LACKING IN FIRST QUESTIONNAIRE, THE AS SESSING OFFICER COMPLETED IN SECOND QUESTIONNAIRE. THEREFORE, WE ARE OF THE VIEW THAT THE DECISION OF HONBLE SUPREME COURT OF INDIA RELIED ON BY THE LD. DR WILL NOT SUPPORT THE CASE OF THE DEPARTMENT BE ING DISTINGUISHABLE ON FACTS. THE OTHER DECISIONS ON WHICH THE LD. DR HAS PLACED ARE A LSO DISTINGUISHABLE ON FACTS AND HENCE DOES NOT SUPPORT THE CASE OF REVENUE. 14. THUS, IN THE LIGHT OF THE FACTS OF CASE DISCUSSED ABOV E AND THE LAW LAID DOWN IN THE CASE OF CIT V/S NIRAV MODI (SUPRA), WE S ET ASIDE THE IMPUGNED ORDER AND ALLOW THE APPEALS OF THE ASSESSEE. ORDER PRONOUNCED ON MONDAY, THE 17 TH DAY OF APRIL, 2017. SD/- SD/- ( / R.K PANDA) ( ! ' /VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; !' / DATED : 17 TH APRIL, 2017. 16 ITA NOS. 600, 601 & 602/PUN/2015 AYS. 2009-10, 2010-11 & 2011-12 SB ()*#+,!-!'+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (CENTRAL), NAGPUR. #$ %&' () , * () , + +,- , / DR, ITAT, B BENCH, PUNE. 5. './01 / GUARD FILE. // TRUE COPY // *2 / BY ORDER, /ASSISTANT REGISTRAR * () , / ITAT, PUNE