Radhika Corporation, Surat V. Pr. CIT (Central) Circle, Surat

ITA 65/SRT/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3018 (ITAT-SURAT)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 20-05-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RASESH SHAH
• Keywords: Unexplained investment; Unexplained expenditure; Income from undisclosed sources; Document seized; Principle of natural justice; Period of limitation; Assessment record; Time period of passing order; Bogus loan; Documents seized; Bogus
• Section: 263; 139; 143(3); 142(1); 133A; 143(2); 207; 192; 13; 22; 153C; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA NOS.65/SRT/2021 A.Y: 2016-17 (H EARING IN VIRTUAL COURT) RADHIKA CORPORATION, PLOT NO. 47, TP NO. 37, NEAR BESNA RADHIKA CIRCLE, TADWADI, VARIYAU, SURAT. PAN: AASFR 3668 P VS. THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL), CIRCLE, SURAT. APPLICANT /ASSESSEE RESPONDENT/ REVENUE ASSESSEE BY SHRI RASESH SHAH CA REVENUE BY SHRI RITESH MISHRA CIT - DR DATE OF HEARING 15.09.2021 DATE OF PRONOUNCEMENT 18.10.2021 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER : 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. PRINCIPAL COMMISSIONER OF INCOME TAX [LD. PCIT], CENTRAL, SURAT PASSED UNDER SECTION 263 OF THE ACT DATED 28.03.2021FOR THE ASSESSMENT YEAR (AY) 2016- 17. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL. 1.ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED PR.CIT HAS ERRED IN PASSING THE ORDER U/S. 263, ALTHOUGH THE ASSESSMENT ORDER PASSED U/S.143(3) R.W.S 153C OF THE I. T. ACT, 1961 WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. 2. IT IS THEREFORE PRAYED THAT ABOVE ORDER PASSED BY PR. CIT U/S. 263 MAY PLEASE BE QUASHED OR MODIFIED AS YOUR HONOURS DEEM IT PROPER. ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 2 3. APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ANY GROUND(S) EITHER BEFORE OR IN THE COURSE OF HEARING OF THE APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM. THE ASSESSEE IS ENGAGED IN THE CONSTRUCTION AND DEVELOPMENT ACTIVITIES. THE ASSESSEE FIRM HAVE FIVE PARTNERS. THE NAMES AND SHARES OF PARTNERS ARE AS FOLLOWS; 1 ASHOK NARSHIBHAI 18% 2 DILIPBHAI DEVRAJBHAI KATHIRIYA 20% 3 KAMLSEH BABUBHAI BHESANIYA 17% 4 MUKESHBHAI ARJANBHAI MARODIYA 27% 5 RAMESH KUMAR GORDHANBAI KATHIRIYA 18% 3. A SURVEY ACTION UNDER SECTION 133A OF THE ACT WAS CARRIED OUT ON ASSESSEES BUSINESS PREMISES. A SURVEY ACTION WAS CARRIED OUT IN SRK GROUP, SURAT ON 19.07.2016. THE ASSESSEE IS PART OF SRK GROUP. DURING THE COURSE OF SEARCH AND SURVEY PROCEEDINGS CERTAIN INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED. DURING THE SEARCH, CERTAIN ENTRIES PERTAINING TO THE ASSESSEE WERE ALSO FOUND. CONSEQUENT UPON, NOTICE UNDER SECTION 153C DATED 29.11.2018 WAS ISSUED ON ASSESSEE FIRM FOR VARIOUS ASSESSMENT YEARS INCLUDING FOR THE SUBJECT ASSESSMENT YEAR. IN RESPONSE TO NOTICE UNDER SECTION 153C OF THE ACT, THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y 2016-17 ON 12.12.2018 DECLARING NILL INCOME. THE ASSESSING OFFICER (AO) RECORDED THAT NOTICE UNDER SECTION 142(1) ALONG WITH DETAILED QUESTIONNAIRES WAS SERVED ON THE ASSESSEE TO FILE THE REQUIRED DOCUMENTS AND INFORMATION ON 14.12.2018. ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 3 IN RESPONSE THERETO, THE ASSESSEE FILED DETAILED REPLY. THE ASSESSEE ALSO FURNISHED RELEVANT DETAILS AND INFORMATION AS REQUIRED BY THE AO. THE AO AFTER PROVIDING ADEQUATE OPPORTUNITY AND HEARING THE SUBMISSION OF THE ASSESSEE ACCEPTED THE RETURN OF INCOME FILED BY ASSESSEE. THE AO PASSED THE ASSESSMENT ORDER UNDER SECTION 143(3) R.W.S 153C OF THE ACT ON 29.12.2018 AFTER OBTAINING PRIOR APPROVAL OF JOINT COMMISSIONER OF INCOME TAX (LD. JCIT) CENTRAL RANGE. 4. SUBSEQUENTLY, THE ASSESSMENT ORDER WAS REVISED BY LD. PR.CIT BY EXERCISING HIS POWER UNDER SECTION 263 VIDE ORDER DATED 28.03.2021. THE LD. PCIT BEFORE PASSING THE ORDER UNDER SECTION 263 OF THE ACT, ISSUED SEPARATE SHOW CAUSE NOTICES UNDER SECTION 263 OF THE ACT DATED 10.03.2021 FIXING THE DATE OF HEARING ON 15.03.2021. IN THE SHOW CAUSE NOTICE, THE LD. PCIT IDENTIFIED FOLLOWING COMMON ISSUES; NON-VERIFICATION OF CASH CREDIT OF RS.2.28 CRORE, NON-VERIFICATION OF CASH IN HAND OF RS. 75 LAKHS. UNDERSTATEMENT OF INCOME OF THE PROJECT, NON-MENTIONING REFERENCE OF SEIZED DOCUMENT/EVIDENCE IN THE SATISFACTION NOTE UNDER SECTION 153C OF THE ACT, VALIDITY OF DECLARATION IDS-2016. 5. THE ASSESSEE FILED ITS REPLY DATED 24.03.2021. IN THE REPLY, THE ASSESSEE BESIDES MAKING REPLY ON VARIOUS ISSUES IDENTIFIED BY LD. PCIT, THE ASSESSEE EXPLAINED THAT THEY ARE ENGAGED IN THE ACTIVITY OF CONSTRUCTION, DEVELOPMENT, ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 4 SALE OF PROJECT, RADHIKA RESIDENCY AT FP NO.47, TP NO.37, BLOCK NO. 1161, SURAT. THE ASSESSEE FILED ITS RETURN OF INCOME UNDER SECTION 139 OF THE ACT FOR SUBJECT ASSESSMENT YEAR 2016-17 IN TIME DECLARING NIL INCOME. A SURVEY WAS CARRIED OUT ON THE ASSESSEE ON 19.07.2016 AND A SEARCH ACTION ON THE SAME DAY ON SRK GROUP. THE ASSESSEE IS PART OF SRK GROUP. THERE WAS ONLY SURVEY ACTION ON THE ASSESSEE. DESPITE CARRYING OUT THE SURVEY ACTION, THE AO ISSUED NOTICE UNDER SECTION 153C OF THE ACT ON 29.11.2018 FOR 2016- 17. THE ASSESSEE FILED ITS RETURN OF INCOME FOR & 2016-17 ON 12.12.2018 DECLARING NIL INCOME. THE ASSESSEE FURTHER STATED THAT BEFORE ISSUING NOTICE UNDER SECTION 153C FOR AY 2016-17 THE ASSESSEE HAVE FILED DECLARATION UNDER IDS DECLARING UNDISCLOSED INCOME OF RS.4.00 CRORE ( RS.1.50 CRORE FOR AY 2014-15, RS. 1.50 CRORE FOR AY 2015-16 AND RS.1.0 CRORE FOR AY 2016-17). THE IDS WAS ACCEPTED BY DESIGNATED AUTHORITY I.E. LD. PCIT ON 14.10.2017. THE CERTIFICATE OF ACCEPTANCE OF DISCLOSURE MADE BY ASSESSEE WAS ALSO FURNISHED. THE ASSESSEE FURTHER STATED THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED COMPLETE BOOKS OF ACCOUNTS OF UNACCOUNTED TRANSACTION BASED ON MATERIAL IMPOUNDED DURING THE COURSE OF SURVEY. AS PER THE IMPOUNDED MATERIAL, PROFIT OF RS.37,97,085/- FOR THE A.Y. 2016-17 WAS COMPUTED, ACCORDINGLY, THE ASSESSEE MADE A DECLARATION OF IDS CONSIDERING THESE FIGURES OF PROFIT. DURING THE ASSESSMENT, THE AO ISSUED ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 5 NOTICE UNDER SECTION 142(1) TO FILE REQUIRES DETAILS ON 14.12.2018. THE ASSESSEE FILED DETAILED EXPLANATION VIDE TWO DIFFERENT LETTERS IN THE COURSE OF ASSESSMENT PROCEEDINGS. ALL DETAILS WERE VERIFIED BY AO AFTER DISCUSSING WITH THE REPRESENTATIVE OF ASSESSEE. SUCH OBSERVATION ABOUT VERIFICATION OF DETAILS WAS MADE BY AO IN THE ASSESSMENT ORDER ITSELF. ACCORDINGLY, AN ASSESSMENT ORDER WAS FRAMED ON 29.12.2018 DETERMINED TOTAL INCOME AT NIL INCOME AFTER OBTAINING APPROVAL OF LD. JOINT COMMISSIONER OF INCOME TAX (JCIT). THE INCOME ON THE BASIS OF IMPOUNDED MATERIAL WAS QUANTIFIED LESS THAN THE INCOME DECLARED UNDER IDS. THE INCOME DECLARED UNDER IDS DOES NOT FORM PART OF TOTAL INCOME AS PER SECTION 188 OF THE FINANCE ACT, 2016 AND THEREFORE, THE ASSESSEE REQUESTED THE AO TO DROP THE ASSESSMENT PROCEEDINGS. THE AO DID NOT ACCEPT THE CONTENTION OF ASSESSEE AND CARRIED OUT FULL SCRUTINY AFTER VERIFYING THE FACT THAT DISCLOSURE MADE UNDER IDS WAS MUCH HIGHER THAN THE INCOME REFLECTED IN THE IMPOUNDED MATERIAL, THE AO PASSED THE ASSESSMENT ORDER. 6. ON THE ISSUE OF NON-VERIFICATION OF CASH CREDIT AND CASH IN HAND THE ASSESSEE IN PARA -8 OF ITS REPLY SUBMITTED THAT DURING THE COURSE OF SURVEY, A ROJMAL OF ALL UNACCOUNTED TRANSACTION WAS IMPOUNDED WHEREIN ALL UNACCOUNTED CASH RECEIPT AND PAYMENTS WERE DULY NOTED. THE ASSESSEE FIRM FURNISHED COMPLETE DAY TO DAY BOOKS OF ACCOUNTS AS PREPARED FROM THE IMPOUNDED ROJMAL AND ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 6 GOING THROUGH THE SAID DETAILS, IT IS APPARENT THAT THERE IS NO TRANSACTION OF UNSECURED LOAN WHEREBY CASH STANDS PAID FOR UNSECURED LOAN AVAILED AND HENCE THE IMPOUNDED MATERIAL ITSELF PROVED THE GENUINENESS UNSECURED LOAN. THE ASSESSEE FIRM HAS SUBMITTED THE COMPLETE DETAILS OF THE UNSECURED LOAN DURING THE COURSE OF PERSONAL HEARING THROUGH SEPARATE SUBMISSIONS. HENCE, IT IS NOT NECESSARY THAT THE AO SHOULD HAVE MADE INQUIRY IN RESPECT OF LOAN. FURTHER, ON THE ISSUE OF CASH DEPOSIT OF RS. 20,20,000/- AND CASH IN HAND OF RS. 75,08,500/-, THE ASSESSEE SUBMITS THAT THERE WAS NO CASH DEPOSIT OF RS. 20,20,000/- IN THE BANK ACCOUNT AS IT IS CLEARLY VERIFIABLE FROM THE BANK STATEMENT ON RECORD. IT WAS STATED THAT CASH DEPOSIT WAS ONLY OF RS.6,00,000/- ON 23.03.2016 AND NOT RS.20,20,500/- AS MENTIONED IN THE SHOW CAUSE NOTICE UNDER SECTION 263. FURTHER, COMPLETE CASH BOOK AND BANK BOOK WAS VERIFIED BY THE AO AND THUS THE OBSERVATION IN THE SHOW CAUSE NOTICE UNDER SECTION 263 IS INCORRECT. 7. ON THE ISSUE UNDERSTATEMENT OF INCOME IN SHOW CAUSE NOTICE THE ASSESSEE REPLIED THAT ALL THE TRANSACTION IN THE BANK STATEMENT ARE FULLY ACCOUNTED IN THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNTED FILED WITH THE RETURN OF INCOME. THERE IS CLOSING STOCK OF WORK IN PROGRESS (WIP) OF RS. 4,07,504/- AT THE END OF THE YEAR WHICH IS FULLY REFLECTED IN THE RETURN OF INCOME AND THUS, LD PCIT HAS WRONGLY STATED THAT THERE IS NO STOCK OF WIP. NO SALE DEED ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 7 WAS REGISTERED DURING THIS ASSESSMENT YEAR NOR POSSESSION OF ANY UNIT WAS HAND OVER, THUS, THERE IS NO QUESTION OF EARNING ANY INCOME. THE ASSESSEE HAS MADE DISCLOSE OF RS.1.00 CRORE IN THE YEAR UNDER CONSIDERATION ON THE BASIS OF BOOKS OF ACCOUNT PREPARED FROM THE IMPOUNDED MATERIAL IN RESPECT OF UNACCOUNTED CASH TRANSACTIONS FOR WHICH COMPLETE DETAILS IS PART OF ASSESSMENT RECORD. ON THE ISSUE OF NON-REFERENCE OF SEIZED MATERIAL, THE ASSESSEE SUBMITTED THAT WHEN LD PCIT HIMSELF HELD THAT NOTICE AS WELL AS ORDER UNDER SECTION 153C IS PASSED / ISSUED WITHOUT THERE BEING ANY SEIZED DOCUMENTS BEING ILLEGAL, THUS THERE IS NO QUESTION OF REVISION OF SUCH ORDER. THE PROCEEDINGS UNDER SECTION 153C CAN ONLY BE INITIATED WHEN MATERIAL RELATING TO OR PERTAINING TO OR BELONGING TO THE ASSESSEE ARE FOUND IN THE CASE OF SEARCH OF OTHER PERSON 8. ON THE ISSUE IN SHOW CAUSE NOTICE RELATED WITH VALIDATION OF DISCLOSURE MADE IN IDS, THE ASSESSEE SUBMITTED BY ASSESSEE FIRM PREPARED AND SUBMITTED DAY TO DAY BOOKS OF ACCOUNTS ON THE BASIS OF ENTIRE IMPOUNDED MATERIAL AND HAS MADE DISCLOSER UNDER IDS MUCH IN EXCESS OF THE INCOME REFLECTED IN THE IMPOUNDED MATERIAL AND EACH AND EVERY ENTRY IN THE BOOKS OF ACCOUNTS WERE VERIFIED WITH THE IMPOUNDED MATERIAL BY AO DURING THE ASSESSMENT. THE ALLEGATION IN THE SHOW CAUSE NOTICE THAT THE AO HAS NOT VERIFIED THE UNACCOUNTED INCOME VIS-A VIS IDS IS ABSOLUTELY INCORRECT. ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 8 9. THE ASSESSEE IN ITS REPLY FURTHER EXPLAINED THAT TWIN CONDITION THAT ASSESSMENT ORDER SHOULD BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE SHOULD BE SATISFIED CUMULATIVELY. NONE OF THESE CONDITIONS ARE SATISFIED IN THIS CASE. THE REVISION PROCEEDINGS CAN BE EXERCISED ONLY IN CASE OF LACK OF ENQUIRY AND NOT IN INADEQUATE ENQUIRY. THE ASSESSEE RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT VS. GABRIEL INDIA LTD 203 ITR 108 (BOMBAY)ON THE POINT OF DISTINCTION ON LACK OF ENQUIRY AND INADEQUATE ENQUIRY AND HAD SUBMITTED THAT LD. PCIT CANNOT INITIATE PROCEEDINGS WITH A VIEW TO START FISHING AND ROVING ENQUIRIES WHICH ARE ALREADY CONCLUDED. THE ASSESSEE ALSO RELIED ON VARIOUS CASE LAWS. 10. THE LD. PCIT RECORDED THAT ASSESSEE FILED WRITTEN SUBMISSION ALONG WITH POINT WISE EXPLANATION THROUGH ITBP PORTAL VIDE LETTER DATED 24.03.2021 [PARA 3 OF THE REVISION ORDER]. THE SOME OF THE CONTENTS OF REPLY OF THE ASSESSEE IS RECORDED IN PARA 10 TO 16 OF THE ORDER OF LD. PCIT. THE LD. PCIT AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT AO PASSED ORDER IN HASTE AND WITHOUT MAKING DUE ENQUIRIES AND VERIFICATION IN RESPECT OF ENTRIES FOUND IN THE DOCUMENT IMPOUNDED AND IN RESPECT OF UNSECURED LOAN AND CASH IN HAND AND THE ASSESSMENT WAS TAKEN AT THE FAG END OF LIMITATION ON 07.12.2018 AND COMPLETED IN A VERY SHORT PERIOD OF TIME. THERE IS NO REFERENCE OF SEIZED DOCUMENTS IN THE SATISFACTION NOTE FOR INITIATING THE ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 9 PROCEEDINGS. THE ASSESSMENT ORDER IS SUFFERED FROM LACK OF APPLICATION OF MIND AND HENCE, PROCEEDINGS INITIATED BY AO WERE VOID-AB-INITIO AND DESERVE TO BE ANNULLED. THE LD. PCIT HELD THAT ASSESSMENT ORDER TO BE ERRONEOUS INSOFAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ACCORDINGLY ANNULLED THE SAME DIRECTING THE AO TO TAKE NECESSARY ACTION FOR FRESH ASSESSMENT KEEPING IN VIEW THE ISSUE OF LIMITATION. AGGRIEVED, BY THE ORDER OF THE LD. PCIT, THE ASSESSEE HAS PRESENTED THIS APPEAL BEFORE THIS TRIBUNAL. 11. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED AUTHORISED REPRESENTATIVE (LD.AR) OF THE ASSESSEE AND LEARNED COMMISSIONER OF INCOME TAX - DEPARTMENTAL REPRESENTATIVE (CIT-DR) FOR THE REVENUE AND HAVE GONE THROUGH THE REVISIONS ORDER PASSED BY LD PCIT AND THE ASSESSMENT ORDERS PASSED BY AO IN ALL THREE ASSESSMENT YEARS. THE LD AR FOR THE ASSESSEE SUBMITS THAT ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF HOUSING PROJECT. A SEARCH AND SURVEY ACTION WAS CARRIED OUT BYTHE REVENUE ON ASSESSEE AND ITS GROUP ON 19.07.2016. ON THE BUSINESS PREMISES OF ASSESSEE, ONLY SURVEY TOOK PLACE. DURING THE COURSE OF SEARCH PROCEEDINGS IN ASSESSEE GROUP, CERTAIN INCRIMINATING MATERIAL IN THE FORM OF PAPERS AND DOCUMENTS WERE FOUND. THE ASSESSEE AND ITS GROUP I.E. RADHIKA CONSTRUCTION, RADHIKA CORPORATION, ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 10 RADHIKA INFRASTRUCTURE, AMRUT SAROVAR AND SHYAM TEXTILE PARK ALL ARE ENGAGED IN CONSTRUCTION AND DEVELOPMENT OF VARIOUS PROJECTS. ON THE BASIS OF MATERIAL FOUND IN THE COURSE OF SEARCH AND SURVEY ACTION, THE ASSESSEE PREPARED BOOKS OF ACCOUNTS. THE BOOKS OF ACCOUNTS SO PREPARED WERE PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. BEFORE ISSUING THE NOTICE UNDER SECTION 153C OF THE ACT, THE ASSESSEE MADE DISCLOSURE UNDER INCOME DISCLOSURE SCHEME (IDS) 2016. THE LD AR FOR THE ASSESSEE FILED THE FOLLOWING BIFURCATION OF AMOUNT DISCLOSED IN IDS; NAME OF FIRMS DISCLOSER AMOUNT AYS RADHIKA CONSTRUCTION RS. 3.50 CRORE 2015-16 RS. 53 LAKHS 2016-17 TOTAL (1) RS. 4.03 CRORE AMRUT SAROVAR RS. 2.05 CRORE 2014-15 RS. 1.55 CRORE 2015-16 RS. 1.90 CRORE 2016-17 TOTAL (2) RS. 5.50 CRORE SATYAM TEXTILE PARK RS. 5.00 CRORE 2016-17 TOTAL (3) RS. 5.00 CRORE RADHIKA CORPORATION RS. 1.00 CRORE 2016-17 TOTAL (4) RS. 1.00 CRORE RADHIKA INFRASTRUCTURE RS. 1.70 CRORE 2015-16 RS. 1.80 CRORE 2016-17 TOTAL (5) RS. 3.50 CRORE VALLABHAI B. PAGHDAL RS. 60 LAKHS 2012-13 TOTAL (6) RS. 1.20 CRORE TOTAL (1+2+3+4+5+6) RS. 19.63 CRORE 12. IN THE IDS, THE ASSESSEE DECLARED INCOME OF RS.1.50 CRORE FOR THE A.Y. 2014-15, RS. 1.50 CRORE FOR AY 2015-16 AND RS.1.00 CRORE FOR THE A.Y. ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 11 2016-17. THUS, THE ASSESSEE DECLARED TOTAL INCOME OF RS.4.00 CRORE FOR THE A.Y. 2014-15 TO 2016-17. THE DISCLOSURE MADE BY ASSESSEE WAS ACCEPTED BY LD. PCIT VIDE FORM NO.4 UNDER RULE 4(5) OF IDS, VIDE RECEIPT NO.243013130141017 DATED 14.10.2017. THE INCOME DECLARED BY ASSESSEE UNDER IDS WAS ACCEPTED WITHOUT ANY VARIATION OR OBJECTION. 13. THE LD AR FOR THE ASSESSEE SUBMITS THAT THE AO ISSUED NOTICE UNDER SECTION 153C OF THE ACT ON 29.11.2018 REQUIRING THE ASSESSEE TO FILE RETURN OF INCOME FOR THE A.Y. 2011-12 TO 2016-17 WITHIN 5 DAYS OF SERVICE OF NOTICE. IN RESPONSE TO NOTICE UNDER SECTION 153C OF THE ACT, THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE 2016-17 ON DECLARING NIL INCOME. THE AO THEREAFTER ISSUED NOTICE UNDER SECTION 142(1) OF THE ACT. IN THE NOTICE UNDER SECTION 142(1) DATED 03.12.2018, THE AO REQUIRED VARIOUS DETAILS ON VARIOUS ISSUES. THE LD.AR SUBMITS THAT COPY OF NOTICE UNDER SECTION 142(1) IS FILED ON RECORD. THE ASSESSEE FILED ITS DETAILED REPLY. THE COPY OF DETAILED REPLY FILED BY THE ASSESSEE BEFORE AO IS ALSO PLACED ON RECORD. THE AO AFTER CONSIDERING THE VARIOUS SUBMISSIONS AND EVIDENCE FURNISHED BY THE ASSESSEE PASSED THE ASSESSMENT ORDER AND ACCEPTED THE RETURNED INCOME. THE AO PASSED THE ASSESSMENT ORDER AFTER PROPER APPROVAL OF LD. JCIT AS REQUIRED UNDER SECTION 153D OF THE ACT. THESE FACTS ARE CLEARLY ASCERTAINABLE BY THE ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 12 CONTENTS OF PARA 6 OF THE ASSESSMENT ORDER DATED PASSED UNDER SECTION 143(3) RWS 153C DATED 29.12.2018 OF AY 2016-17. 14. THE LD AR FOR THE ASSESSEE FURTHER SUBMITS THAT LD. PCIT AT THE FAG END OF LIMITATION PERIOD EXERCISED ITS POWER UNDER SECTION 263 OF THE ACT AND ISSUED SHOW CAUSE NOTICE. THE COPY OF SHOW CAUSE NOTICE IS ALSO PLACED ON RECORD. IN THE SHOW CAUSE NOTICE FOR AY 2016-17, THE LD. PCIT BASICALLY IDENTIFIED FIVE ISSUES. 15. ON FIRST ISSUE WHICH RELATES TO UNSECURED LOAN AS IDENTIFIED LD. PCIT THE LD.AR OF THE ASSESSEE SUBMITS THAT REGARDING THE ISSUE OF NON VERIFICATION UNSECURED LOAN IN ASSESSMENT YEAR AS MENTIONED BY THE PCIT IN THE SHOW CAUSE NOTICE AND REVISION ORDER. THE LD AR FOR THE ASSESSEE SUBMITTED THAT THE ISSUE WAS RAISED IN NOTICE UNDER SECTION. 142(1) ISSUED ON 03.12.2018. IN REPLY TO THIS NOTICE, ASSESSEE VIDE LETTER, COPY OF WHICH IS PLACED AT PAGE 27 & 28 OF THE PAPER BOOK SUBMITTED THE DETAILS OF UNSECURED LOANS WERE UNDER COMPILATION AND THE SAME WOULD BE FURNISHED SHORTLY. THEREAFTER, ASSESSEE FURNISHED THE DETAILS AS CALLED FOR. THE FINDING OF THE PCIT THAT ASSESSING OFFICER HAS NOT CALLED FOR SUCH DETAILS / CONFIRMATION AND NOR THE ASSESSEE HAS SUBMITTED THE SAME IS WRONG. FURTHER IT IS SUBMITTED THAT IN THE COURSE OF SEARCH AND SURVEY ACTION CONDUCTED IN VARIOUS CASES OF THE GROUP ASSESSEE, NO EVIDENCES WERE FOUND INDICATING THAT ASSESSEE RECEIVED ANY BOGUS LOAN OR ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 13 ACCOMMODATION ENTRY. ASSESSEE FIELD THE ORIGINAL RETURN OF INCOME ON 26.12.2016 FOR AY 2016-17 AND THEREFORE, IT IS A CASE OF UNABATED ASSESSMENT AS THE TIME LIMIT FOR ISSUE OF NOTICE UNDER SECTION 143(2) HAS ALREADY EXPIRED FOR & 2016-17, WHEN NOTICE UNDER SECTION 153C WAS ISSUED ON 30.09.2017. ACCORDINGLY, EVEN OTHERWISE NO ADDITION CAN BE MADE FOR THE LOAN REFLECTED IN THE BOOKS OF ACCOUNTS AS PER THE FOLLOWING DECISION OF COURTS. PCIT VS SAUMYA CONSTRUCTION [ 81 TAXMANN.COM 292] (GUJ HC) CIT VS GURINDER SINGH BAWA [386 ITR 0483] (BOMBAY HC) CIT VS CONTINENTAL WAREHOUSING CORP. LTD [58 TAXMANN.COM 78] (BOM) CIT VS KABUL CHAWLA [ 93 CCH 0210] (DEL HC) CIT V/S MEETA GUTGUTIA [395 ITR 0296] (DEL HC) CIT V. LANCY CONSTRUCTIONS [383 ITR 168] (KAR. HC) 16. ON THE SECOND ISSUE IDENTIFIED BY LD. PCIT WHICH RELATES TO NO VERIFICATION OF CASH IN HAND OF RS. 75.08 LAKHS WITH REFERENCE TO CASH DEPOSIT OF RS. 20.20 LAKHS. THE LD AR FOR THE ASSESSEE SUBMITS THAT THERE IS NO CASH DEPOSIT OF RS. 20,20,000/- IN THE SAID BANK ACCOUNT AS IS CLEARLY VERIFIABLE FROM THE BANK STATEMENT ON RECORD. IN THE YEAR UNDER CONSIDERATION, THE TOTAL CASH DEPOSITED IS ONLY RS. 6,00,000/- ON 23.03.2016 AND NOT RS. 20,20,000/- AS STATED IN THE IMPUGNED NOTICE UNDER SECTION 263. IT WAS SUBMITS THAT COMPLETE CASH BOOK AND THE BANK BOOK WERE VERIFIED BY THE AO DURING PERSONAL HEARING AND ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 14 HENCE, LD. PCIT IS NOT CORRECT IN HOLDING THAT THE CASH DEPOSIT AND THE CASH BALANCE WAS NOT VERIFIED BY THE ASSESSING OFFICER. 17. ON THIRD ISSUE IDENTIFIED BY LD. PCIT, WHICH RELATES TO UNDERSTATEMENT OF INCOME OF THE PROJECT. THE LD AR FOR THE ASSESSEE SUBMITS THAT LD PCIT IN THE SHOW CAUSE NOTICE OBSERVED THAT THE AO HAS MERELY ACCEPTED SUBMISSION OF DISCLOSURE MADE IN IDS WITHOUT MAKING ANY EFFORTS TO VERIFY THE SAME AND MAKING ANY CORRELATION BETWEEN THE FIGURES WITH THE AMOUNT REFLECTING THE INCRIMINATING DOCUMENTS AS CLAIMED. ASSESSEE IN ITS SUBMISSION STATED THAT ALL THE TRANSACTIONS IN THE BANK STATEMENT ARE FULLY ACCOUNTED FOR IN THE BALANCE SHEET AND P & L ACCOUNT FILED WITH THE RETURN OF INCOME. SECONDLY, IT MAY BE NOTED THAT THERE IS CLOSING WIP OF RS. 4,07,504/- AS AT THE YEAREND WHICH IS FULLY REFLECTED IN THE RETURN OF INCOME AND THUS, LD PCIT HAS WRONGLY STATED THAT THERE IS NO STOCK OF WIP. FURTHER, IT MAY BE NOTED THAT IN THE YEAR UNDER CONSIDERATION, THERE WAS NO EXECUTION OF REGISTERED SALE DEED AND NOT HANDING OVER THE POSSESSION OF ANY UNIT BY THE ASSESSEE FIRM AND HENCE, THERE IS NO ANY QUESTION OF EARNING ANY PROFIT. THE DISCLOSURE OF RS. 1,00,00,000/- WAS MADE IN THE YEAR UNDER CONSIDERATION UNDER IDS, OUT OF THE TOTAL DISCLOSURE OF RS. 4,00,00,000/-,(FOR THREE AYS) ON THE BASIS OF THE BOOKS OF ACCOUNTS PREPARED FROM THE IMPOUNDED MATERIAL IN RESPECT OF THE UNACCOUNTED CASH TRANSACTIONS FOR WHICH THE COMPLETE DETAILS / WORKING IS ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 15 FORMING PART OF THE ASSESSMENT RECORD. THE LD AR FOR THE ASSESSEE FURNISHED THE FOLLOWING WORKING; SR NO. PARTICULARS AY 2015-16 AY 2016-17 TOTAL A INCOME AS PER SEIZED MATERIAL NET PROFIT RS. 6,30,000/- RS.37,97,085/- RS. 44,27,085 /- B ASSET AS PER SEIZED MATERIAL -CASH -RECEIVABLES / SUNDRY CREDITORS RS. 6,30,000/- RS.30,000/- RS.1,03,21,670/- RS.6,60,000/- RS. 1,03,21,670/- RS. 6,30,000/- RS. 1,03,21,670/- RS. 1,09,81670/- C NET PROFIT % UNACCOUNTED BOOKING ADVANCES FOR ENTIRE PROJECT NET PROFIT @ 15% RS.25,00,00,000/- X 15% RS. 3,75,00,00/- D NET PROFIT RESIDENTIAL 216770SQ FT X RS.100/- PER SQ FEET COMMERCIAL 34441 SQ FT X RS.200 PER SQ FEET RS. 70,88,200/- RS.2,16,77,000/- -------------------- RS.2,87,65,00/- HIGHER OF ABC&D RS.2,87,65,200/- INCOME DISCLOSED IN IDS RS. 4,00,00,000/- 18. THE LD AR FOR THE ASSESSEE FURTHER SUBMITTED THAT ASSESSEE FILED ALL THE IMPORTANT MATERIALS AS REQUIRED BY THE ASSESSING OFFICER VIDE ITS DETAILED SUBMISSION PLACED AT PAGE NO 22 TO 25 OF THE PAPER BOOK. ASSESSEE ALSO, THROUGH THIS SUBMISSION, STATED THAT THE NET PROFIT AS PER SEIZED MATERIAL IS MUCH LESS THAN THE DECLARATION MADE BY THE ASSESSEE UNDER IDS. THE LD AR FOR THE ASSESSEE SUBMITS THAT THE JURISDICTIONAL GUJARAT HIGH COURT IN VARIOUS ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 16 DECISION HELD THAT ONLY NET PROFIT OF SUPPRESSED RECEIPTS IS REQUIRED TO BE ESTIMATED AS INCOME. THE RATE OF 15% IS MOST REASONABLE IN THE CONSTRUCTION PROJECT, PARTICULARLY WHEN IN COURSE OF SEARCH AND SURVEY OPERATION, NO UNEXPLAINED INVESTMENT OR UNEXPLAINED EXPENDITURE WERE DETECTED. THE RELIANCE IS PLACES ON DECISION OF GUJARAT HIGH COURT IN CASE OF ABHISHEK CORPORATION [I.T. REFERENCE NO 15 OF 2003] PRONOUNCED ON 07.11.2014 IN WHICH OTHER DECISION OF THE GUJARAT HIGH COURT WERE CITED. IT IS TO BE NOTED THAT ASSESSEE HAD PAID MORE TAX THAN THE NORMAL RATE UNDER IDS, SO EVEN IN NORMAL ASSESSMENT, THE INCOME ASSESSED WOULD HAVE BEEN LESS THAN THE DECLARATION MADE UNDER IDS. 19. ON THE FOURTH ISSUE WHICH RELATES TO NON-REFERENCE OF SEIZES EVIDENCE IN THE SATISFACTION NOTE, THE LD AR FOR THE ASSESSEE SUBMITS THAT EVEN WHEN NO REFERENCE OF SEIZED MATERIAL WAS MADE IN THE SATISFACTION NOTE, THE ASSESSING OFFICER VERIFIED ALL THE SEIZED MATERIAL AND AFTER CONSIDERING THE SAME, THE ASSESSMENT ORDER UNDER SECTION 153C OF THE ACT WAS FRAMED UNDER THE SUPERVISION OF LD. JCIT. IN WITHOUT PREJUDICE AND ALTERNATIVE SUBMISSION, THE LD.AR FOR ASSESSEE SUBMITS THAT IF IT BE SO, THE ASSESSMENT FRAMED IS ITSELF INVALID BEING VOID-AB-INITIO. AND IF THE ASSESSMENT IS INVALID AND VOID-AB- INITIO, THE LD. PCIT CANNOT GIVE NEW LEASE OF LIFE TO SUCH ASSESSMENT ORDER, ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 17 ACCORDINGLY, THE REVISION ORDER PASSED BY LD. PCIT WILL NOT SURVIVE ON THIS AUSPECT ALONE. 20. ON THE LAST AND FIFTH ISSUE IDENTIFIED BY LD PCIT, THE LD AR FOR THE ASSESSEE SUBMITS THAT THAT WHEN THE IDS DECLARATION WAS MADE, THE NOTICE UNDER SECTION . 153C WAS NOT ISSUED AND THEREFORE THE PROCEEDINGS WERE NOT PENDING. FURTHER IT IS SUBMITTED THAT IDS DECLARATION WAS ACCEPTED BY THE LD. PCIT AND THEREFORE, THE ASSESSING OFFICER, OR SUPERVISORY JCIT COULD NOT REJECT IDS DECLARATION. THE IDS DECLARATION WAS NOT MADE BY MISREPRESENTING FACTS AND THEREFORE IT IS PERFECTLY VALID. THE CERTIFICATE ISSUED BY LD. PCIT WAS NOT REVOKED AND TAX PAID UNDER IDS WERE NOT REFUNDED TO THE ASSESSEE. EVEN OTHERWISE, ASSESSEE DECLARED MORE INCOME AND PAID MORE TAX THAN PAYABLE AS PER NORMAL PROVISIONS OF THE ACT. 21. THE LD.AR FOR THE ASSESSEE SUBMITS THAT ASSESSMENT IS COMPLETED UNDER SECTION 143(3) R.W.S 153C OF THE ACT AFTER TAKING PRIOR APPROVAL OF LD. JCIT AND NO REVISION OF SUCH ORDER IS PERMISSIBLE AS HAS BEEN HELD BY VARIOUS TRIBUNALS AND HIGHER COURTS. TO SUPPORT HIS SUBMISSION, THE LD.AR RELIED UPON THE FOLLOWING DECISION OF TRIBUNAL RASIKLAL M. DHARIWAL (HUF) VS. CIT IN ITA NO.1102 TO 1104/PUN/2014DATED 28.12.2016, B.U. BHANDARI SCHEMES VS. PCIT IN ITA NO.637 TO 641/PUN/2018 DATED 14.11.2018, ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 18 VISHWA INFRAWAYS PVT. LTD., VS. CIT IN ITA NO.596, 597 & 599/PUN /2015 DATED 28.11.2018 AND CIT VS DR. ASHOK KUMAR IN ITA NO. 192 OF 2000 DATED 06.08.2012 OF HONBLE ALLAHABAD HIGH COURT. 22. THE LD.AR FOR THE ASSESSEE FURTHER SUBMITS THAT IF THE AO DURING THE COURSE OF ASSESSMENT MADE DETAILED ENQUIRY, THE ASSESSEE GIVEN DETAILED EXPLANATION IN WRITING, ALL THE QUESTIONS AND ANSWERS FURNISHED BY THE ASSESSEE ARE PART ON RECORD OF THE CASE AND CLAIMS OF ASSESSEE ARE ALLOWED BY AO BEING SATISFIED WITH THE EXPLANATION OF ASSESSEE. SUCH ORDER OF THE AO CANNOT BE HELD TO BE ERRONEOUS, SIMPLY BECAUSE IN HIS ORDER, THE AO DID NOT MAKE ELABORATE DISCUSSION. THE LD. PCIT HIMSELF EVEN AFTER INITIATING THE PROCEEDINGS AND CONSIDERING THE SUBMISSION OF ASSESSEE HAVE NOT GIVEN ANY FINDING AS TO HOW THE CLAIMS ARE NOT ALLOWABLE. THE LD. PCIT HAS NOT GIVEN ANY FINDING AS TO WHAT OTHER ENQUIRY WAS REQUIRED TO BE MADE BY THE AO. IF THE ASSESSMENT ORDER IS REVISED IN SUCH AN APPROACH, THERE WOULD NO END FOR SUCH ENQUIRIES. THE LD.AR OF THE ASSESSEE FURTHER SUBMITTED THAT ASSESSEE MADE DECLARATION UNDER IDS WHICH IS MORE THAN THE INCOME THAT CAN BE ACCESSED ON THE BASIS OF IMPOUNDED / SEIZED MATERIALS. THE ASSESSEE WAS ELIGIBLE TO MAKE DECLARATION UNDER IDS AS DECLARATION WAS FILED BEFORE ISSUE OF NOTICE U/S. 153C. BY DECLARING THE INCOME UNDER IDS, THE ASSESSEE IN FACT PAID MORE TAX THAN THE TAX PAYABLE AS PER NORMAL PROVISION. THE ASSESSING ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 19 OFFICER IS NOT COMPETENT TO DISREGARD THE IDS DECLARATION WHICH WAS ACCEPTED BY THE PCIT. IT IS NOT THE CASE OF PCIT THAT ASSESSEE HAS MADE ANY MISREPRESENTATION OF ANY FACTS IN IDS DECLARATION. THE DECLARATION UNDER IDS WAS NEITHER REVOKED NOR THE TAX PAID BY THE ASSESSEE, WAS REFUNDED TO IT. IT IS WELL SETTLED THAT THE WHOLE SUPPRESSED GROSS RECEIPTS CANNOT BE TAXED, ONLY PROFIT ELEMENT EMBEDDED IN SUCH RECEIPTS CAN BE ESTIMATED. ASSESSEE'S DECLARATION AT 15% OF THE GROSS RECEIPTS WAS MOST REASONABLE WHICH WAS ACCEPTED BY THE ASSESSING OFFICER CONSIDERING THE NATURE OF BUSINESS OF THE ASSESSEE. 23. ALTHOUGH AS PER CIRCULAR NO 25 OF 2016 ISSUED BY CBDT, ASSESSEE IS NOT REQUIRED TO GIVE INFORMATION REGARDING THE SOURCE OF INCOME, ASSESSEE DISCLOSED THE SOURCE OF INCOME AT THE TIME OF ASSESSMENT BY INCORPORATION ALL THE ENTRIES OF IMPOUNDED / SEIZED MATERIALS IN THE BOOKS OF ACCOUNTS. THE ASSESSEE ALSO FILED THE CALCULATION IN SUPPORT OF DECLARATION FILED UNDER IDS AT THE TIME OF FILING THE DECLARATION AS WELL AS IN THE COURSE OF ASSESSMENT PROCEEDING. THE SURVEY AND SEARCH ACTION IS ULTIMATE WEAPON WITH THE DEPARTMENT TO UNEARTH THE BLACK MONEY. IN THIS CASE, THE SURVEY ACTIONS WERE CONDUCTED IN CASE OF FIRMS AND SEARCH ACTIONS WERE CONDUCTED IN THE CASE OF THE PARTNERS OF THE FIRMS. EVEN AFTER THESE ACTIONS, THE DISCRETE INQUIRY WAS MADE BY THE ASSESSING OFFICER AND THE ASSESSMENTS WERE MADE IN THE GROUP ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 20 CASES ON THE BASIS OF INCRIMINATING MATERIALS IMPOUNDED / SEIZED IN COURSE OF SEARCH / SURVEY ACTION. IN THE COURSE OF THESE ACTIONS, NO UNEXPLAINED VALUABLES WERE FOUND. ACCORDINGLY, ASSESSMENTS WERE FRAMED CONSIDERING ALL THESE FACTS AND CIRCUMSTANCES OF THE CASE AND THEREFORE, THEY ARE NOT LIABLE FOR REVISION. ACCORDINGLY, IT IS A CASE OF SUFFICIENT AND PROPER INQUIRY MADE BY THE ASSESSING OFFICER. THE LD PCIT DID NOT MAKE ANY INQUIRY ALTHOUGH IN HIS OPINION, THE INQUIRY WAS INSUFFICIENT. ACCORDINGLY, THE PCIT ARRIVED AT SUBJECTIVE SATISFACTION. NEEDLESS TO SAY THE SATISFACTION MUST BE ONE WHICH IS OBJECTIVELY JUSTIFIABLE AND CANNOT BE THE MERE IPSE DIXIT OF THE PCIT. THE ASSESSEE HAS PLACED FOLLOWING DOCUMENTS ON RECORD. NOTICE ISSUED UNDER SECTION 153C DATED 29.11.2018, TAX AUDIT REPORT WITH FINANCIAL STATEMENTS AND DETAILS OF EXPENSES FOR AY 2016-17, NOTICE ISSUED UNDER SECTION 142(1) DATED 03.12.2018 WITH ITS ANNEXURE, REPLY FILED IN RESPONSE TO NOTICE U/S.142(1) FOR AY 2016-17, ALONG WITH ANNEXURE, EXHIBIT SHOWING CALCULATIONS UNDER IDS SCHEME, COPY OF FORM 4 IDS, 2016 FOR AY 2016-17, NOTICE ISSUED UNDER SECTION 263 FOR AY 2016-17 AND COPIES OF REPLY FILED IN RESPONSE TO NOTICE UNDER SECTION 263 FOR AY 2016-17. 24. TO BUTTRESS HIS ALL SUBMISSIONS, THE LD.AR OF THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS: CIT VS. MAX INDIA LTD. [295 ITR 0282 (SC)] MALABAR INDUSTRIES CO. LTD. VS CIT [ 243 ITR 0083] (SC) ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 21 CIT VS M. MITTAI STAINLESS STEEL PVT LTD [263 ITR 0255] (SC) CIT VS AMIT CORPORATION [81 CCH 0069] (GUJ HC) CIT VS ARVIND JEWELLERS [259 ITR 05021 (GUJ HC) BILAG INDUSTRIES PVT. LTD. VS. CIT(A) [SCA NO. 24128 OF 2005] (GUJ HC) CIT VS. R K CONSTRUCTION CO. [313 ITR 0065] (GUJ HC) CIT VS. NIRMA CHEMICALS WORKS. PVT. LTD. [309 STR 0067] (GUJ HC) RAYON SILK MILLS VS. CIT(A) [221 ITR 0155] (GUJ HC) PCIT VS. SHREEJI PRINTS PVT. LTD. [TAX APPEAL NO. 828 OF 2019] (GUJ) CIT VS. NIRAV MODI [390 ITR 0292 (BOM. HC)] CIT VS GABRIEL INDIA LTD. [203 ITR 108(BOM) MOIL LTD. VS CIT [ 81 TAXMANN.COM 420 (BOM. HC)] CIT VS. FINE JEWELLERY INDIA LTD. [55 TEXMANN.COM 514 ] (BOM HC) ANILKUMAR SHARMA [335 ITR 0083] (DELHI HC) ITO VS. DG HOUSING PROJECTS LIMITED [343 ITR 329](DEI HC)] CIT VS. SUNBEAM AUTO LTD. [189 TAXMAN 0436 (DEL.)] PCIT VS. DELHI AIRPORT METRO EXPRESS PVT. LTD. [ITA NO. 705/2017(DEL CIT V/S. VIKA POLYMERS [341 ITR 537] (DELHI HC) CIT VS GANPAT RAM BISHNOI [296 ITR 0292] (RAJ HC) CIT VS. JAIN CONSTRUCTIONS CO [257 ITR 0336] (RAJ HC) CIT VS. KELVINATOR OF INDIA LTD. [ 256 ITR 1 ](DEI. HC) CIT VS. SR. SURESH G. SHAH [ 289ITR 110 ]( GUJ. HC ) CIT VS. PARMANAND M. PATEL [ 278 ITR 3 ]( GUJ. HC ) CIT VS. ABHISHEK CORPORATION [ IT REF. NO. 15 OF 2003 ] ( GUJ. HC ) R.SRINIVASAN VS. DCIT [ 29 TAXMANN.COM 279 ]( MAD. HC) VISHWAINFRAWAYSPVT. LTD VS. CIT [ ITA 596,597 & 599/PUN/2015 ] SREEALANKAR VS. PCIT [ ITA NO. 108/CTK/2018 ] ( CTK TRIH.) JRD TATA TRUST T VS. DCST [ 122 TAXMANN.COM 275 ] (MUM. TRIB.) NARAYAN TATURANE V/S ITO [2016] 70 TAXMANN.COM 227 (MUM) (TRIB) INDUS BEST HOSPITALITY & REALTORS PVT LTD. VS. PCIT [ITA NO. 3125/MUM/2017] (MUM TRIB) ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 22 SHANTI KRUPA ESTATE PVT. LTD. VS. AC IT - [1252/AHD/2015] (AHDTRIB) PLASTIC CONCERN VS. ACIT (1998) 61 TTJ 0087 (KOL. TRIB.) ACIT VS. SUBHODH MENON [2019] 103 TAXMANN.COM 15 (MUM TRIB.) 25. ON THE OTHER HAND, THE LD. CIT-DR FOR THE REVENUE SUPPORTED THE ORDER OF LD. PCIT. THE LD. CIT-DR SUBMITS THAT IN THE SHOW CAUSE NOTICE UNDER SECTION 263 OF THE ACT, THE LD. PCIT HAS ELABORATELY DISCUSSED THE NON- EXAMINATION OF VARIOUS ISSUES. IN PARA 5 OF THIS SHOW CAUSE NOTICE, THE LD. PCIT CLEARLY HELD THAT INSPITE OF HAVING RELEVANT EVIDENCE ON RECORD AND CALLING FOR EXPLANATION IN DETAILED QUESTIONNAIRE, THE AO HAS NOT MADE ANY FURTHER EFFORT TO VERIFY THE SAME OR CARRIED OUT NECESSARY ENQUIRIES THEREOF AND ACCEPTED THE SUBMISSION ON THE ISSUES IDENTIFIED BY LD. PCIT. THE AO ACCEPTED THE EXPLANATION OF ASSESSEE ELABORATELY DISCUSSING THE ISSUE. FAILURE ON THE PART OF AO TO CARRY OUT PROPER VERIFICATION ON THE VARIOUS ISSUES, WHICH WERE TAKEN FOR ENQUIRIES AT THE INITIAL STAGE BY AO HIMSELF, SHOWN LACK OF APPLICATION OF MIND OR PROPER APPRECIATION OF FACTS. IT WAS THE DUTY OF THE AO TO ASCERTAIN ALL THE FACTS ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. THE AO IN NOT CARRYING OUT FURTHER VERIFICATION OR ENQUIRIES TO ASSESS TOTAL INCOME OF THE ASSESSEE AS EVIDENT FROM THE INCRIMINATING MATERIAL AND TO VERIFY IF IT HAS ANY CO-RELATION WITH THE DISCLOSURE MADE IN THE IDS AS CLAIMED BY ASSESSEE. FAILURE ON THE PART OF AO TO CARRY OUT SUCH ENQUIRIES AS DISCUSSED SHOWN THAT ASSESSMENT ORDER PASSED BY AO IS ERRONEOUS INSOFAR AS ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 23 PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD. CIT-DR FOR THE REVENUE SUBMITS THAT THE TWIN CONDITION AS ENUNCIATED IN SECTION 263 ARE FULFILLED IN THE PRESENT CASE. THE LD. CIT-DR FOR THE REVENUE PRAYED FOR UPHOLDING THE ORDER OF LD. PCIT. 26. IN REJOINDER SUBMISSION, THE LD.AR OF THE ASSESSEE SUBMITS THAT ON CAREFUL PERUSAL OF SHOW CAUSE NOTICE UNDER SECTION 263 OF THE ACT ISSUED BY THE LD. PCIT, IT IS CLEARLY DISCERNIBLE THAT THE LD. PCIT IDENTIFIED ISSUES ONLY ON THE BASIS NOTICE ISSUED BY AO UNDER SECTION 142(1) OF THE ACT. NO NEW ISSUES ARE IDENTIFIED BY LD. PCIT. THE LD. PCIT HAS NOT MADE ANY ENQUIRY OF HIS OWN BEFORE HOLDING THAT ASSESSMENT ORDER IS ERRONEOUS OR ERRONEOUS AND INSOFAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE ON ANY OF THE ISSUE. THE LD. PCIT HAS NOT SPECIFIED AS TO WHAT KIND OF INFORMATION OR FURTHER DETAILS OR QUESTIONNAIRE OR EFFORT WAS REQUIRED TO BE MADE BY AO. THE AO BEFORE ACCEPTING THE SUBMISSION OF ASSESSEE OBTAINED PRIOR APPROVAL OF RANGE HEAD. THE APPROVAL GRANTED BY RANGE HEAD IS IN ACCORDANCE WITH LAW. NO DEFICIENCY IS POINTED OUT BY LD. PCIT IN THE APPROVAL GRANTED BY RANGE HEAD. IN ABSENCE OF ANY FINDING AS TO HOW THE ORDER ON PARTICULAR ISSUE IS ERRONEOUS, THE REVISION ORDER UNDER SECTION 263 OF THE ACT IS NOT ALLOWABLE. THE LD.AR OF THE ASSESSEE REITERATED THAT IF THE VALIDITY OF APPROVAL GRANTED BY RANGE HEAD IS NOT DISPUTED BY LD. PCIT, THEN IT WOULD NOT BE JUSTIFIED IN ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 24 INTERFERING IN THE APPROVAL GRANTED BY RANGE HEAD FOR FRAMING ASSESSMENT ORDER; THEREFORE, THERE IS NO REASON FOR SETTING ASIDE THE ASSESSMENT ORDER FOR THE SUBJECT ASSESSMENT YEARS. 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND HAVE DELIBERATED ON VARIOUS CASE LAWS RELIED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE ON RECORD. BEFORE DISCUSSING THE FACTS OF THE CASE IN HAND, LET US REFERRED CERTAIN LEADING CASE LAWS ON THE SCOPE OF REVISIONARY JURISDICTION OF LD. PCIT. THE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 832 HELD THAT A BARE READING OF SECTION 263 OF THE INCOME-TAX ACT, 1961, MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF THE JURISDICTION BY THE COMMISSIONER SUO-MOTU UNDER IT, IS THAT THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, ( I ) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND ( II ) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT - IF THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE - RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. * THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER; IT IS ONLY WHEN AN ORDER IS ERRONEOUS, THAT THE SECTION WILL ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 25 BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE' IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT. UNDERSTOOD IN ITS ORDINARY MEANING IT IS OF WIDE IMPORT AND IS NOT CONFINED TO LOSS OF TAX. THE SCHEME OF THE ACT IS TO LEVY AND COLLECT TAX IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF DUE TO AN ERRONEOUS ORDER OF THE INCOME-TAX OFFICER, THE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER, CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN INCOME-TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. (* UNDERLINE BY US) ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 26 28. THE HONBLE BOMBAY HIGH COURT IN CIT VS GABRIEL INDIA LTD (233 ITR 108 BOM) (71 TAXMAN 585) HELD THAT THE POWER OF SUO MOTU REVISION UNDER SUB- SECTION (1) OF SECTION 263 IS IN THE NATURE OF SUPERVISORY JURISDICTION AND THE SAME CAN BE EXERCISED ONLY IF THE CIRCUMSTANCES SPECIFIED THEREIN EXIST. TWO CIRCUMSTANCES MUST EXIST TO ENABLE THE COMMISSIONER TO EXERCISE POWER OF REVISION UNDER THIS SUB-SECTION, VIZ., (I) THE ORDER IS ERRONEOUS; AND (II) BY VIRTUE OF THE ORDER BEING ERRONEOUS PREJUDICE HAS BEEN CAUSED TO THE INTERESTS OF THE REVENUE. IT HAS, THEREFORE, TO BE CONSIDERED FIRSTLY AS TO WHEN AN ORDER CAN BE SAID TO BE ERRONEOUS. ONE FINDS THAT THE EXPRESSIONS 'ERRONEOUS', 'ERRONEOUS ASSESSMENT' AND 'ERRONEOUS JUDGMENT' HAVE BEEN DEFINED IN BLACK'S LAW DICTIONARY. ACCORDING TO THE DEFINITION, 'ERRONEOUS' MEANS 'INVOLVING ERROR; DEVIATING FROM THE LAW'. 'ERRONEOUS ASSESSMENT' REFERS TO AN ASSESSMENT THAT DEVIATES FROM THE LAW AND IS, THEREFORE, INVALID, AND IS A DEFECT THAT IS JURISDICTIONAL IN ITS NATURE, AND DOES NOT REFER TO THE JUDGMENT OF THE ASSESSING OFFICER IN FIXING THE AMOUNT OF VALUATION OF THE PROPERTY. SIMILARLY, 'ERRONEOUS JUDGMENT' MEANS 'ONE RENDERED ACCORDING TO COURSE AND PRACTICE OF COURT, BUT CONTRARY TO LAW, UPON MISTAKEN VIEW OF LAW, OR UPON ERRONEOUS APPLICATION OF LEGAL PRINCIPLES. THE HONBLE COURT FURTHER HELD THAT FROM THE ABOVE SAID DEFINITIONS IT IS CLEAR THAT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN ASSESSING OFFICER ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 27 ACTING IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SECTION DOES NOT VISUALIZE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE ITO, WHO PASSED THE ORDER, UNLESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALIZED WHERE THE ITO WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATE HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOULD HAVE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN THE ONE DETERMINED BY THE ITO. THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO RE-EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE. IT IS BECAUSE THE ITO HAS EXERCISED THE QUASI-JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUSION. IT MAY BE SAID IN SUCH A CASE THAT IN THE OPINION OF THE COMMISSIONER THE ORDER IN QUESTION IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BUT THAT BY ITSELF WILL NOT BE ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 28 ENOUGH TO VEST THE COMMISSIONER WITH THE POWER OF SUO MOTU REVISION BECAUSE THE FIRST REQUIREMENT, VIZ., THAT THE ORDER IS ERRONEOUS, IS ABSENT. SIMILARLY, IF AN ORDER IS ERRONEOUS BUT NOT PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THEN ALSO THE POWER OF SUO MOTU REVISION CANNOT BE EXERCISED. ANY AND EVERY ERRONEOUS ORDER CANNOT BE THE SUBJECT-MATTER OF REVISION BECAUSE THE SECOND REQUIREMENT ALSO MUST BE FULFILLED. THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED. THEREFORE, IN ORDER TO EXERCISE POWER UNDER SECTION 263(1) THERE MUST BE MATERIAL BEFORE THE COMMISSIONER TO CONSIDER THAT THE ORDER PASSED BY THE ITO WAS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND THAT IT MUST BE AN ORDER WHICH IS NOT IN ACCORDANCE WITH THE LAW OR WHICH HAS BEEN PASSED BY THE ITO WITHOUT MAKING ANY ENQUIRY IN UNDUE HASTE. AN ORDER CAN BE SAID TO BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE IF IT IS NOT IN ACCORDANCE WITH THE LAW IN CONSEQUENCE WHEREOF THE LAWFUL REVENUE DUE TO THE STATE HAS NOT BEEN REALIZED OR CANNOT BE REALIZED. THERE MUST BE MATERIAL AVAILABLE ON THE RECORD CALLED FOR BY THE COMMISSIONER TO SATISFY HIM PRIMA FACIE THAT THE AFORESAID TWO REQUISITES ARE PRESENT. IF NOT, HE HAS NO AUTHORITY TO INITIATE PROCEEDINGS FOR REVISION. ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 29 EXERCISE OF POWER OF SUO MOTU REVISION UNDER SUCH CIRCUMSTANCES WILL AMOUNT TO ARBITRARY EXERCISE OF POWER. IT IS WELL-SETTLED THAT WHEN EXERCISE OF STATUTORY POWER IS DEPENDENT UPON THE EXISTENCE OF CERTAIN OBJECTIVE FACTS, THE AUTHORITY BEFORE EXERCISING SUCH POWER MUST HAVE MATERIALS ON RECORD TO SATISFY IT IN THAT REGARD. IF THE ACTION OF THE AUTHORITY IS CHALLENGED BEFORE THE COURT, IT WOULD BE OPEN TO THE COURTS TO EXAMINE WHETHER THE RELEVANT OBJECTIVES WERE AVAILABLE FROM THE RECORDS CALLED FOR AND EXAMINED BY SUCH AUTHORITY. THE DECISION OF THE ITO COULD NOT BE HELD TO BE 'ERRONEOUS' SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. MOREOVER, THE COMMISSIONER HIMSELF, EVEN AFTER INITIATING PROCEEDINGS FOR REVISION AND HEARING THE ASSESSEE, COULD NOT SAY THAT THE ALLOWANCE OF THE CLAIM OF THE ASSESSEE WAS ERRONEOUS, HE SIMPLY ASKED THE ITO TO RE-EXAMINE THE MATTER, WHICH WAS NOT PERMISSIBLE. 29. THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS ARVIND JEWELLERS (259 ITR 502), WHILE RELYING ON THE DECISION OF HONBLE APEX COURT HAS TAKEN A VIEW THAT THE PROVISIONS OF SECTION 263 CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS, THAT SECTION WILL BE ATTRACTED AND INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. THE SUPREME COURT HAS ALSO MADE ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 30 IT CLEAR THAT THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER AND THAT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IT WAS FURTHER EMPHATICALLY STATED THAT WHEN AN ITO ADOPTS ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ITO HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE ITO IS UNSUSTAINABLE IN LAW. 30. THE HON'BLE JURISDICTIONAL HIGH COURT IN ARYAN ARCADE LTD., VS PCIT (2019) 412 ITR 277 (GUJARAT) HELD THAT MERELY BECAUSE COMMISSIONER HELD A DIFFERENT BELIEF THAT WOULD NOT PERMIT HIM TO TAKE THE ORDER IN REVISION, IT IF FURTHER HELD THAT WHEN ASSESSING OFFICER MADE FULL ENQUIRY, HE MADE UP HIS MIND, THE NOTICE OF REVISION IS NOT VALID. ( EMPHASIS ADDED BY US ). 31. FURTHER, HON'BLE MADRAS HIGH COURT IN CIT VS MEPCO INDUSTRIES LTD., (2007) 207 CTR 462 (MADRAS) HELD THAT WHEN TWO VIEWS ARE POSSIBLE ON AN ISSUE AND IT IS NOT THE CASE OF THE COMMISSIONER THAT THE VIEW TAKEN BY ASSESSING OFFICER IS NOT PERMISSIBLE IN LAW, COMMISSIONER CANNOT INVOKE HIS JURISDICTION UNDER SECTION 263 OF THE ACT. ( EMPHASIS ADDED BY US). ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 31 16. THE HONBLE DELHI HIGH COURT IN CIT VS VIKAS POLYMERS (341 ITR 537 DELHI) HELD THAT IT IS A PRE-REQUISITE THAT THE COMMISSIONER MUST GIVE REASONS TO JUSTIFY THE EXERCISE OF SUO MOTU REVISIONAL POWERS BY HIM TO REOPEN A CONCLUDED ASSESSMENT. A BARE REITERATION BY HIM THAT THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE WILL NOT SUFFICE. THE EXERCISE OF THE POWER BEING QUASI-JUDICIAL IN NATURE, THE REASONS MUST BE SUCH AS TO SHOW THAT THE ENHANCEMENT OR MODIFICATION OF THE ASSESSMENT OR CANCELLATION OF THE ASSESSMENT OR DIRECTIONS ISSUED FOR A FRESH ASSESSMENT WERE CALLED FOR, AND MUST IRRESISTIBLY LEAD TO THE CONCLUSION THAT THE ORDER OF THE INCOME-TAX OFFICER WAS NOT ONLY ERRONEOUS BUT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THUS, WHILE THE INCOME-TAX OFFICER IS NOT CALLED UPON TO WRITE AN ELABORATE JUDGMENT GIVING DETAILED REASONS IN RESPECT OF EACH AND EVERY DISALLOWANCE, DEDUCTION, ETC., IT IS INCUMBENT UPON THE COMMISSIONER NOT TO EXERCISE HIS SUO MOTU REVISIONAL POWERS UNLESS SUPPORTED BY ADEQUATE REASONS FOR DOING SO*. IT WAS FURTHER HELD THAT APPLYING THE AFORESAID LAW TO THE FACTS OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THE EXERCISE OF REVISIONAL POWER BY THE COMMISSIONER IN THE INSTANT CASE WAS UNCALLED FOR AND UNJUSTIFIED. IT WAS MORE IN THE NATURE OF ROVING AND FISHING ENQUIRY. THE COMMISSIONER HAS PROCEEDED ON THE ASSUMPTION THAT NO SUCH INFORMATION, AS WAS FURNISHED TO HIM, WAS FURNISHED ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 32 AT THE TIME OF ASSESSMENT. THE COMMISSIONER HAS MENTIONED THAT THE INCOME-TAX OFFICER HAS NOT EXAMINED THE CASH CREDITS OF THE PARTNERS OR DEPOSITS OF CHIT FUND. ASSUMING THIS TO BE SO (THOUGH THERE DOES NOT APPEAR TO BE ANY JUSTIFICATION FOR THE AFORESAID OBSERVATION), THIS MAY MAKE THE ORDER ERRONEOUS, BUT HOW IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE HAS NOT BEEN STATED BY THE COMMISSIONER AS HE DID NOT DEAL WITH THE EXPLANATION GIVEN BY THE ASSESSEE IN THE COURSE OF SECTION 263 PROCEEDINGS. (*UNDERLINE BY US) 32. NOW ADVERTING TO THE FACTS OF THE PRESENT CASE. WE FIND THE THERE IS NO DISPUTE THAT THE AO WHILE PASSING THE ASSESSMENT ORDER ACCEPTED THE CLAIMS OF THE ASSESSEE IN NON- SPEAKING ORDER. IT IS NOT THE CASE OF LD PCIT THAT THE AO IS NOT ALLOWED TO ACCEPTED THE RETURN OF INCOME IN NON-SPEAKING ORDER. WE HAVE SEEN THAT THE AO WHILE PASSING THE ASSESSMENT ORDER RECORDED THAT THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE VIDE VARIOUS ORDER SHEET ENTRIES HAVE FURNISHED THE RELEVANT DETAILS AND INFORMATION CALLED FOR. AFTER AFFORDING AMPLE AND ADEQUATE OPPORTUNITIES OF BEING HEARD TO THE ASSESSEE, ASSESSMENT PROCEEDINGS HAVE BEEN COMPLETED ON THE BASIS OF THE SUBMISSIONS AND DETAILS COLLECTED AND IN CONSEQUENCE UPON THE CONCLUSION OF PROCEEDING AND HEARING OF EVIDENCES, ASSESSMENT IS MADE BY THIS ORDER. A PERUSAL OF SHOW CAUSE NOTICE UNDER SECTION 263 DATED 10.03.2021, CLEARLY ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 33 DEMONSTRATE THAT THE LD PCIT IDENTIFIED ALL THE ISSUES WHICH WERE THE SUBJECT MATTER OF THE NOTICE UNDER SECTION 142(1) AND THE QUESTIONNAIRE ATTACHED THERETO, WERE ISSUED BY THE ASSESSING OFFICER. THE LD PCIT IN HIS SHOW CAUSE NOTICE (SCN) UNDER SECTION 263 HAS ACCEPTED THAT THE AO MADE DETAILED QUESTIONNAIRE DATED 03.12.2018. AND ON PERUSAL RECORD AND DETAILS /EVIDENCES AVAILABLE ON RECORD, THE PCIT NOTED THAT AO HAS NOT MADE FURTHER INQUIRY. THUS, THE LD. PCIT HAS NOT MADE A CASE THAT THERE WAS NO ENQUIRY OR LACK OF INQUIRY RATHER RECORDED THAT THE AO CALLED DETAILED INQUIRY. WE FIND THAT THE LD. PCIT HAS NOT SPECIFIED THAT WHAT KIND OF FURTHER INQUIRY WAS REQUIRED, WHEN THE INCOME DISCLOSED IN IDS WAS DULY ACCEPTED BY HIGHER AUTHORITY. WE FIND THAT DECLARATION MADE IN IDS-16, WAS NEVER QUESTIONED BY BOARD OR OTHER SUPERIOR AUTHORITY OF THE REVENUE. IN OUR VIEW IT IS THE DISCRETION OF THE AO, HAVING REGARDS TO THE FACTS OF THE CASE AND THE MATERIAL PLACED BEFORE HIM IN RESPONSE TO THE VARIOUS SHOW CAUSE NOTICES, TO TAKE A CONSCIOUS DECISION IF ANY FURTHER INQUIRY IS REQUIRED OR NOT. FURTHERMORE, WE FIND THAT THE ASSESSMENT ORDER WAS DULY APPROVED BY THE LD. JCIT. THERE IN NOT FINDING OF LD PCIT THAT THE APPROVAL GRANTED BY THE JCIT IS NOT PROPER OR NON-APPLICATION OF PROPER PROCEDURE AND PRACTICE OF THE REVENUE. 33. WE FIND THAT IN THE CASE IN HAND THE AO HAS MADE REQUIRED INQUIRY AND CAME TO A POSSIBLE CONCLUSION IN ALLOWING THE CLAIMS TO THE ASSESSEE. WE ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 34 ALSO FIND THAT ON THE ISSUES OF VALIDITY OF DISCLOSER IN IDS, THE LD PCIT HAS NOT SPECIFIED THAT WHILE MAKING DECLARATION, THE ASSESSEE MADE ANY MISREPRESENTATION OF ANY FACTS. ONCE THE IDS IN ALL CASES WERE ACCEPTED BY LD. PCIT, THE AO OR THE RANGE HEAD NO AUTHORITY TO RELOOK OR POWER TO REVOKE OR TO EXAMINE ITS VALIDITY. WE FURTHER FIND THAT THE LD PCIT WHILE DIRECTING THE AO HAS NOT HIMSELF REVOKED THE IDS NOR DIRECTED TO REFUND THE PAYMENT OF TAX TO THE ASSESSEE. FURTHER, WE FIND THAT IN THE IDS THE ASSESSEE HAS PAID MORE TAX TO THE REVENUE THEN THE RATE OF NORMAL TAX, SO THERE IS NO LOSS OF REVENUE. 34. WE FURTHER FIND THAT THE AO WHILE PASSING THE ASSESSMENT ORDER HAS MADE INQUIRY AND TOOK REASONABLE, PLAUSIBLE AND LEGALLY SUSTAINABLE VIEW. THE HONBLE DELHI HIGH COURT IN CIT VS KELVINATOR OF INDIA LTD (SUPRA) HELD THAT IF THE AO HAS ADOPTED ONE OF THE COURSE PERMISSIBLE IN LAW, WHICH RESULTED IN LOSS OF REVENUE OR WHERE TWO VIEW IS POSSIBLE AND THE AO HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF REVENUE UNLESS VIEW TAKEN BY THE AO IS NOT SUSTAINABLE IN LAW. AT THE COST OF REPETITION, WE MAY NOTE THAT THE LD PCIT NEITHER IN HIS SHOW CAUSE NOTICE NOR IN ULTIMATE / FINAL ORDER HAS HELD THAT THE ORDER PASSED BY THE AO IS UNSUSTAINABLE IN LAW. ITA NO. 65/SRT/2021 RADHIKA CORPORATION (AY 2016-17) 35 35. IN VIEW OF THE AFORESAID DISCUSSIONS, WE ARE OF THE CONSIDERED VIEW THAT THE LD PCIT WAS NOT JUSTIFIED IN SUBJECTING THE ASSESSMENT ORDER TO REVISION PROCEEDINGS BY TAKING VIEW THAT THE AO HAS NOT MADE FURTHER INQUIRY, THEREFORE WE QUASH THE REVISION ORDER FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. IN THE RESULT THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED. 36. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER ANNOUNCED ON 18 OCTOBER 2021 BY PLACING THE RESULT ON THE NOTICE BOARD. AS SD/- SD/- (DR ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER SURAT, DATED: 18/10/2021 / ( SELF) COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR 6. GUARD FILE BY ORDER / / TRUE COPY / / SR. PVT. SECRETARY, ITAT, SURAT