SHRI NARESH AGARWAL, ALWAR V. PRINCIPAL COMMISSIONER OF INCOME TAX, ALWAR

ITA 699/JPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3708 (ITAT-JAIPUR)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 22-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Keywords: Business income; Business expenditure; Audit objection; Assessment record; Set aside
• Section: 143(3); 142(1); 37(1); 143(1); 263

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NOS. 699 & 700/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2013-14 & 14-15. SHRI NARESH AGARWAL, 47, SCHEME NO. 1, ARYA NAGAR, ALWAR. CUKE VS. THE PRINCIPAL CIT, ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO.: ABIPA 1067 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C. PARWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI VARINDER MEHTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 02/08/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 03/08/2018 VKNS'K@ ORDER PER BENCH : THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST TWO SEPARATE ORDERS OF LD. PRINCIPAL CIT, ALWAR BOTH DATED 22.03.2018 P ASSED UNDER SECTION 263 OF THE I.T. ACT FOR THE ASSESSMENT YEARS 2013-14 AND 14-15 RESPECTIVELY. THE ASSESSEE HAS RAISED THE COMMON GROUNDS IN THESE APPEALS. THE GR OUND RAISED FOR THE ASSESSMENT YEAR 2013-14 ARE REPRODUCED AS UNDER :- 1. THE ORDER PASSED BY THE LD. PCIT U/S 263 IS IL LEGAL AND BAD IN LAW. 2 ITA NOS. 699 & 700/JP/2018 SHRI NARESH AGARWAL, ALWAR. 2. THE LD. PCIT HAS ERRED ON FACTS AND IN LAW IN HO LDING THE ORDER PASSED BY AO AS ERRONEOUS AND PREJUDICIAL TO THE IN TEREST OF REVENUE ONLY ON ACCOUNT OF AUDIT OBJECTION RAISED B Y THE AUDIT PARTY IGNORING THAT AO HAS NOT ACCEPTED THE AUDIT O BJECTION. 3. THE LD. PCIT HAS ERRED ON FACTS AND IN LAW IN HO LDING THAT ORDER PASSED BY AO U/S 143(3) DT. 10.02.2016 ALLOWING THE CLAIM OF INTEREST PAYMENT AGAINST THE INTEREST RECEIPT IS WI THOUT MAKING PROPER ENQUIRY OR VERIFICATION IGNORING THAT THE AO HAS EXAMINED THE CLAIM OF INTEREST PAYMENT AND ALLOWED THE SAME AFTER MAKING COMPLETE ENQUIRY/VERIFICATION. 4. THE ASSESSEE CRAVES TO AMEND, ALTER AND MODIFY A NY OF THE GROUNDS OF APPEAL. 5. NECESSARY COST BE ALLOWED TO THE ASSESSEE. 2. SINCE COMMON ISSUES ARE ARISES IN BOTH THE APPEA LS AND THE FACTS AND CIRCUMSTANCES ARE ALSO IDENTICAL LEADING TO THE REV ISION ORDER UNDER SECTION 263 OF THE ACT, THEREFORE, FOR THE PURPOSE OF HEARING, THE SE TWO APPEALS WERE CLUBBED TOGETHER AND ARE BEING DISPOSED OFF BY THIS COMPOSI TE ORDER. THE APPEAL FOR THE ASSESSMENT YEAR 2013-14 IS TAKEN AS A LEAD CASE FOR THE PURPOSES OF DESCRIBING THE FACTS ON THE ISSUES. THE ASSESSEE FILED HIS RETURN OF INCOME ON 30 TH JULY, 2013 DECLARING TOTAL INCOME AT RS. 11,96,470/- AND LOSSE S OF THE CURRENT YEAR TO BE CARRIED FORWARD RS. 1,57,580/-. THE AO COMPLETED THE ASSES SMENT UNDER SECTION 143(3) ON 10 TH FEBRUARY, 2016 ACCEPTING THE RETURNED INCOME DECLA RED BY THE ASSESSEE. SUBSEQUENTLY ON EXAMINATION OF THE RECORD, THE PRIN CIPAL CIT FOUND THAT THE ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF THE REVENUE DUE TO LACK OF MAKING PROPER ENQUIRY/EXAMINATION IN RESPEC T OF THE DEDUCTION ON ACCOUNT OF INTEREST PAID AMOUNTING TO RS. 19,26,409/- AS AGAIN ST INTEREST RECEIPT OF RS. 6,08,668/- RESULTING IN LOSS OF RS. 13,17,741/- WHI CH WAS ALLOWED BY THE AO. 3 ITA NOS. 699 & 700/JP/2018 SHRI NARESH AGARWAL, ALWAR. FURTHER, THE BALANCE SHEET OF THE ASSESSEE REFLECTS INCREASE IN UNSECURED LOANS AMOUNTING TO RS. 1,44,63,110/- AND THE GENUINENESS OF THESE LOANS WERE NOT SUPPORTED BY ANY EVIDENCE. THIRDLY, AN ADVANCE OF RS. 10,00,000/- HAS BEEN SHOWN IN THE BALANCE SHEET TO ONE SHRI BANWARI LAL MEENA BUT THE DETAILS OF INTEREST RECEIVED DO NOT REVEAL ANY INCOME RECEIVED FROM HIM . SIMILARLY, THE ASSESSEE HAS SHOWN LOAN REPAYMENTS TO SHRI KAPOOR CHAND JAIN OF RS. 8,50,000/- AND KAPOOR CHAND JAIN BOOKING OF RS. 5,70,000/- RESPECTIVELY B UT THE SAME STAND OUTSTANDING IN THE BALANCE SHEET. FINDING ALL THESE DISCREPANCIES ON RECORD, THE LD. PR. CIT ISSUED A SHOW CAUSE NOTICE DATED 7 TH FEBRUARY, 2018 UNDER SECTION 263. IN RESPONSE, TH E ASSESSEE FILED REPLY DATED 15.03.2018 AND CLAIMED D EDUCTION ON ACCOUNT OF INTEREST PAID ON BORROWED FUNDS AS AN ALLOWABLE EXPENDITURE UNDER SECTION 37(1) AS WELL AS UNDER SECTION 57(III) OF THE ACT. THE OTHER ISSUES RAISED BY THE LD. PR. CIT IN THE SHOW CAUSE NOTICE WERE ALSO EXPLAINED BY THE ASSESS EE. THE LD. PR. CIT AFTER CONSIDERING THE REPLY, SET ASIDE THE ORDER PASSED B Y THE AO DATED 10 TH FEBRUARY, 2016 BEING ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF THE REVENUE ON ACCOUNT OF NOT MAKING PROPER ENQUIRY OF FACTS/MATERIAL AND DIR ECTED THE AO TO PASS THE ASSESSMENT ORDER AFRESH AFTER CONSIDERING THE OBSER VATIONS OF THE LD. PR. CIT ON THESE ISSUES. 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS HAS S UBMITTED THAT AS PER THE ASSESSMENT ORDER IT IS CLEAR THAT THE ASSESSEE HAS PRODUCED ALL THE RELEVANT DETAILS BEFORE THE AO WHICH WERE EXAMINED AND CONSIDERED BY THE AO AND ON HIS SATISFACTION, THE CLAIM OF THE ASSESSEE WAS ALLOWED . THUS IT IS NOT A CASE OF NON- CONDUCT OF ENQUIRY BY THE AO BUT WHEN THE AO WAS SA TISFIED WITH THE CLAIM, SHE HAS 4 ITA NOS. 699 & 700/JP/2018 SHRI NARESH AGARWAL, ALWAR. ACCEPTED WITHOUT GIVING ANY DETAILED OR ELABORATE F INDING ON THE ISSUES. THE LD. A/R HAS FURTHER CONTENDED THAT ONCE THE AO HAS SATISFIE D WITH THE CLAIM, THEN THERE WAS NO REQUIREMENT OF GIVING ANY DETAILED FINDING ON TH ESE ISSUES. THEREFORE, ONCE THE AO HAS CONDUCTED PROPER ENQUIRY, THEN THE LD. PR. C IT CANNOT EXERCISE HIS POWER UNDER SECTION 263 MERELY BECAUSE THE AO HAS NOT PAS SED AN ELABORATE ORDER. THE LD. A/R HAS FURTHER SUBMITTED THAT EVEN THERE WAS AN AU DIT OBJECTION ON THESE ISSUES WHICH WERE SUBJECT MATTER OF SECTION 263 AND THE AO ISSUED A SHOW CAUSE NOTICE DATED 21 ST JULY, 2017 WHICH WAS SUBSEQUENT TO THE ASSESSMENT ORDER WAS PASSED. THE ASSESSEE REPLIED THE SAID SHOW CAUSE NOTICE VID E LETTER DATED 10.08.2017 AND AFTER EXAMINATION OF THE ISSUES, THE AO DID NOT AGR EE WITH THE AUDIT OBJECTIONS RAISED ON THESE ISSUES. THUS THE LD. A/R HAS SUBMIT TED THAT THE LD. PR. CIT HAS INITIATED THE PROCEEDINGS UNDER SECTION 263 ON THE BASIS OF THE AUDIT OBJECTIONS RAISED BY THE AUDIT PARTY WHICH WERE ALREADY CONSID ERED BY THE AO AND DID NOT AGREE WITH THESE OBJECTIONS. THUS ONCE THE AO HAS T AKEN A POSSIBLE VIEW, THEN THE LD. PR. CIT CANNOT INVOKE THE PROVISIONS OF SECTION 263 MERELY BECAUSE HE DID NOT AGREE WITH THE VIEW TAKEN BY THE AO. THE LD. A/R H AS ALSO REFERRED TO THE DETAILS OF THE INTEREST PAID BY THE ASSESSEE AS WELL AS THE IN TEREST RECEIVED FROM VARIOUS PARTIES AS WELL AS THE PARTNERSHIP FIRM IN WHICH THE ASSESS EE IS A PARTNER AND ALSO FROM THE COMPANY IN WHICH THE ASSESSEE IS A DIRECTOR AND THU S IT IS CLEAR THAT THE ASSESSEE WAS EARNING INTEREST FROM THE PARTNERSHIP FIRM ON T HE CAPITAL IN THE PARTNERSHIP WHICH IS DECLARED AS INCOME UNDER CHAPTER-5D AS BUS INESS INCOME. THE INTEREST PAID AGAINST THE SAID INCOME IS CLAIMED AS BUSINESS EXPENDITURE WHEREAS THE INTEREST PAID IN RESPECT OF THE LOAN AMOUNT USED FOR GIVING ADVANCES AND LOAN WHICH IS 5 ITA NOS. 699 & 700/JP/2018 SHRI NARESH AGARWAL, ALWAR. OFFERED TO TAX AS INCOME FROM OTHER SOURCES WAS CLA IMED UNDER SECTION 57(III) OF THE ACT. THE LD. A/R HAS REFERRED TO THE COMPUTATION O F TOTAL INCOME AND SUBMITTED THAT THE ASSESSEE HAS PROPERLY BIFURCATED THE INTEREST I NCOME AND RECEIPT FROM THE PARTNERSHIP FIRM AGAINST THE CAPITAL OF THE ASSESSE E AS BUSINESS INCOME AND, THEREFORE, THE EXPENDITURE TO THE EXTENT OF THE BOR ROWED FUND INTRODUCED IN THE PARTNERSHIP FIRM AS CAPITAL WAS CLAIMED AS BUSINESS EXPENDITURE. THE REST OF THE INTEREST EXPENDITURE IS CLAIMED AGAINST THE INCOME FROM OTHER SOURCES. HE HAS FURTHER SUBMITTED THAT THE ENTIRE RECORD AND DETAIL S WERE AVAILABLE IN THE ASSESSMENT RECORD AND, THEREFORE, IT IS NOT A CASE OF THE CLAI M WHICH IS NOT PERMISSIBLE UNDER THE LAW. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED U PON THE FOLLOWING DECISIONS :- CIT VS. MAX INDIA LTD. 295 ITR 282 (SC) MALABAR INDUSTRIAL CO. LTD. VS. CIT 243 ITR 83 (SC) HONDA MOTORCYCLE & SCOOTERS INDIA PVT. LTD. VS. P CIT 53 CCH 241 (TRIB.)(DEL.) ORDER DATED 26.06.2018. GE CAPITAL SERVICES INDIA VS. ACIT 52 CCH 372 (RTRIB)(DEL.) ORDER DATED 23.04.2018. 3.1. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED T HAT IT IS APPARENT FROM THE ASSESSMENT ORDER THAT THE AO HAS ACCEPTED THE RETUR NED INCOME OF THE ASSESSEE IN A SUMMARY MANNER AND BY PASSING A SNAP SHOT ASSESSMEN T ORDER WITHOUT CONDUCTING ANY ENQUIRY ON THE ISSUES. HE HAS REFERRED TO EXPL ANATION-2 TO SECTION 263(1) OF THE ACT AND SUBMITTED THAT AFTER THE AMENDMENT AND INTR ODUCTION OF THE EXPLANATION-2 THE LACK OF PROPER ENQUIRY RENDERS THE ORDER OF THE AO AS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD . D/R HAS FURTHER CONTENDED THAT 6 ITA NOS. 699 & 700/JP/2018 SHRI NARESH AGARWAL, ALWAR. THE AO HAS NOT CONDUCTED ANY ENQUIRY IN THE CONTEXT OF THE TIME PERIOD FOR WHICH THE LOAN WAS TAKEN AND GIVEN BY THE ASSESSEE AS WEL L AS ALLOWABILITY OF THE CLAIM UNDER SECTION 57(III) OF THE ACT. MERELY ACCEPTANC E OF THE CLAIM WITHOUT CONDUCTING ANY ENQUIRY IS A CLEAR CASE OF LACK OF ENQUIRY AS T HE AO SHOULD HAVE CONDUCTED WHILE PASSING THE ASSESSMENT ORDER. HE HAS RELIED UPON T HE IMPUGNED ORDER OF THE LD. PR. CIT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE ORIGINAL ASSESSMENT UNDER SECTION 143( 3) WAS PASSED BY THE AO ON 10 TH FEBRUARY, 2016 AS UNDER :- ASSESSMENT ORDER THE ASSESSEE HAS FILED HIS RETURN OF INCOME ON 30. 07.2013 DECLARING TOTAL INCOME OF RS. 12,05,000/-. THE RETU RN WAS PROCESSED U/S 143(1) OF INCOME TAX ACT, 1961 ON 10.05.2013. T HE CASE WAS SELECTED UNDER SCRUTINY THROUGH CASS AND NOTICE U/S 143(2) WAS ISSUED ON 05.09.2014. THE PRELIMINARY QUERY LETTER WAS ISS UED ON 30.10.2014. IN COMPLIANCE TO THESE NOTICES, SH. RAVINDRA SHAH, CA AND A/R OF THE ASSESSEE ATTENDED THE HEARING TIME TO TIME AND FILE D THE DETAILS WHICH ARE PLACED ON RECORD. THE CASE IS DISCUSSED WITH HI M. THE ASSESSEE IS PARTNER IN M/S. AJANTA PLASTIC INDU STRIES AND M/S. VISHAL AGENCIES AND HAS SHOWN INTEREST FROM TH ESE FIRMS. THE ASSESSEE IS DERIVING SALARY FROM M/S. NANGALWALA IM PEX PVT. LTD AND M/S. ZIBAA BUILDERS PVT. LTD. APART FROM THESE, THE ASSESSEE HAS DECLARED INCOME FROM HOUSE PROPERTY, CAPITAL GAIN A ND INCOME FROM OTHER SOURCES. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HA S EARNED INCOME FROM ABOVE SAID SOURCES AS MENTIONED. AFTER EXAMINING RELEVANT DETAILS/DOCUMENTS AND AFTER DISCUSSION RET URNED INCOME OF RS. 12,05,000/- AS DECLARED BY THE ASSESSEE IS HEREBY A CCEPTED. ASSESSED U/S 143(3) OF THE INCOME TAX ACT 1961. THE INCOME TAX COMPUTATION FORM GENERATED FROM THE SOFTWARE SYSTEM OF THE DEPARTMENT, GIVING THEREIN THE DETAILS OF TAX, INTE REST, CREDIT FOR PREPAID TAXES ETC., FORMS PART OF THIS ORDER, IS AT TACHED HEREWITH. 7 ITA NOS. 699 & 700/JP/2018 SHRI NARESH AGARWAL, ALWAR. SD/- ( ASMITA PATHAK ) INCOME-TAX OFFICER, WARD 1(1), ALWAR. PLACE : ALWAR DATED : THUS IT IS CLEAR THAT THE AO ACCEPTED THE RETURNED INCOME IN THE SUMMARY PROCEEDINGS WHEREAS THERE ARE MULTIPLE TRANSACTIONS OF LOANS TAKEN BY THE ASSESSEE AS WELL AS GIVEN BY THE ASSESSEE. THE LD. PR. CIT HAS GIVEN THE DETAILS AT PAGES 4 & 5 OF THE IMPUGNED ORDER AS UNDER :- INTEREST RECEIVED (ALL AMOUNTS IN RUPEES) NAME OF PERSON TO WHOM MONEY LENT OPENING BALANCE AS ON 01.04.2012 AMOUNT LENT/ REPAID DURING THE YEAR (+ -) BALANCE INTEREST RECEIVED FOR THE YEAR RATE OF INTER EST NANGALWAL IMPEX PVT. LTD. (ASSESSEE IS A DIRECTOR) 1,04,89,313 (-) 80,33,000 24,56,313 2,78,164 15% GOLDEN VEGPRO LTD. 21,86,007 1,33,721 23,19,728 3,43,222 15% ZIBRA BUILDERS PVT. LTD. (ASSESSEE IS A DIRECTOR) 1,93,06,838 24,00,000 2,7,06,838 37,24,864 18% AJANTA PLASTIC INDUSTRIES (PARTNERS CAPITAL 49,15,426 (-) 60,41,698 (-) 11,26,272 3,95,400 12% VISHAL AGENCIES (PARTNERS CAPITAL) 2,43,949 28,21,000 30,64,949 2,13,202 12% BOB 24,313 - 24,313 7,950 UBI 2,188 (-) 2,188 - 42 BOB, DELHI 19,654 (-) 5,925 13,727 534 BOB, HC 6,10,505 (-) 6,09,1001, 1,405 HDFC BANK 27,956 (-) 27,956 - TOTAL 3,78,26,149 (-) 93,65,146 2,84,61,100 49,63,444 INTEREST PAID (ALL AMOUNTS IN RUPEES) NAME OF PERSON FROM WHOM MONEY BORROWED OPENING BALANCE AS ON 01.04.2012 AMOUNT BORROWED/ REPAID DURING THE YEAR (+ -) BALANCE INTEREST PAID FOR THE YEAR RATE OF INTEREST AMIT JAIN 2,00,000 - 2,00,000 24,000 12% ASHOK KUMAR JAIN 20,00,000 - 20,00,000 2,40,000 12% BOMBAY ELECTRICALS 5,00,000 5,00,000 - 58,500 12% GANPATI TRADERS 10,00,000 - 10,00,000 1,20,000 12% KRANTI CHAND JAIN HUF 2,00,000 - 2,00,000 24,000 12% KRANTI CHAND JAIN 2,00,000 - 2,00,000 24,000 12% MEENAKSHI JAIN 2,00,000 - 2,00,000 24,000 12% PREETI TOMER 4,00,000 - 4,00,000 60,000 15% 8 ITA NOS. 699 & 700/JP/2018 SHRI NARESH AGARWAL, ALWAR. RAM SINGH 5,00,000 2,00,000 7,00,000 92,500 15.6% SHEETAL JAIN 2,00,000 - 2,00,000 24,000 12% SHUSHILA AGARWAL 6,50,000 (-) 1,50,000 5,00,000 76,438 15% VISHAL AGENCIES (PARTNER OD) 1,07,02,272 - 1,07,02,272 19,26,409 18% LIC LOAN 1,15,000 - 1,15,000 10,350 9% LIC LOAN 3,22,000 - HDFC LOAN 2,03,95,832 (-) 11,96,891 1,91,98,941 22,28,677 12.75% TOTAL : 3,72,63,104 (-) 16,46,891 3,56,16,213 52,32,874 AS IT IS EVIDENT FROM THE ABOVE DETAILS THAT THERE ARE VARIOUS TRANSACTIONS OF LOANS GIVEN BY THE ASSESSEE AS WELL AS CAPITAL INTRODUCED IN THE OLD PARTNERSHIP FIRMS BY USING THE BORROWED FUNDS FROM VARIOUS PARTIES AS WE LL AS FROM THE PARTNERSHIP FIRM. THUS THE ASSESSEE HAS BORROWED THE FUND FROM THE PA RTNERSHIP FIRM M/S. VISHAL AGENCIES IN THE CATEGORY OF OVER-DRAWING AND AT THE SAME TIME A CAPITAL OF RS. 28,21,000/- WAS ALSO INTRODUCED IN THE SAME FIRM. T HIS IS NOT A NEWLY FORMED FIRM BUT THIS IS AN OLD PARTNERSHIP FIRM AND, THEREFORE, IT IS NOT AN INITIAL INTRODUCTION OF CAPITAL BY THE PARTNERS. FURTHER, WE FIND THAT THE AO WHILE PASSING THE ASSESSMENT ORDER HAS NOT RAISED EVEN A QUERY ABOUT THE ALLOWAB ILITY OF THE INTEREST UNDER SECTION 57(III) OF THE ACT. THERE IS NO SUCH QUERY RAISED EITHER IN THE NOTICE ISSUED UNDER SECTION 142(1) OR OTHERWISE AND, THEREFORE, EVEN IF THE DETAILS FILED BY THE ASSESSEE WERE CONSIDERED BY THE AO BUT IF THE SAME ARE NOT E XAMINED IN THE CONTEXT OF ALLOWABILITY OF THE CLAIM UNDER SECTION 57(III), TH EN THE CASE WOULD CERTAINLY FALL IN THE CATEGORY OF COMPLETE LACK OF ENQUIRY ON A PARTICULA R ISSUE OF ALLOWABILITY OF THE CLAIM OF INTEREST EXPENDITURE UNDER SECTION 57(III) OF TH E ACT. FURTHER, THE DETAILS REVEALED THAT THE ASSESSEE HAS RECEIVED THE INTEREST @ 12% F ROM M/S. VISHAL AGENCIES, THE PARTNERSHIP FIRM AS AGAINST THE INTEREST CHARGED BY THE SAME FIRM FROM THE ASSESSEE @ 18%, HENCE THERE IS A DIFFERENCE OF 6% IN THE INT EREST RECEIVED AND PAID BY THE 9 ITA NOS. 699 & 700/JP/2018 SHRI NARESH AGARWAL, ALWAR. ASSESSEE. ALL THESE ASPECTS WERE NOT EVEN EXAMINED BY THE AO. FURTHER, THERE IS NO BAR FOR CONSIDERING THE AUDIT OBJECTIONS BY THE LD. PR. CIT IF THE AUDIT OBJECTION REVEALS CERTAIN RELEVANT AND CRUCIAL FACTS ABOUT TH E ALLOWABILITY OF THE CLAIM. THEREFORE, WE DO NOT FIND ANY SUBSTANCE OR MERIT IN THE CONTENTION OF THE LD. A/R ON THIS POINT AS IT IS CLEAR THAT IT IS A CASE OF LACK OF ENQUIRY PARTICULARLY ON THE ISSUE OF ALLOWABILITY OF THE CLAIM UNDER SECTION 57(III) OF THE ACT. THUS THE ORDER OF THE AO SUFFERS FROM ERROR SO FAR AS IT IS PREJUDICIAL TO T HE INTEREST OF THE REVENUE. HENCE THE LD. PR. CIT HAS RIGHTLY INVOKED THE PROVISIONS OF S ECTION 263 OF THE ACT AND DIRECTED THE AO TO CONDUCT A PROPER ENQUIRY ON THIS ISSUE. AS REGARDS THE OTHER ISSUES RAISED BY THE LD. PR. CIT IN THE SHOW CAUSE NOTICE, THOSE WERE NOT SPECIFICALLY DISCUSSED IN THE IMPUGNED ORDER AS THE ASSESSEE EXPLAINED SOME O F THE ISSUES WHICH WERE FACTUALLY FOUND TO BE CORRECT. ACCORDINGLY, WE RES TRICT THE FRESH ADJUDICATION OF THE MATTER ONLY ON THE ISSUE OF ALLOWABILITY OF THE CLA IM UNDER SECTION 57(III) OF THE ACT, TO THAT EXTENT THE IMPUGNED ORDERS OF LD. PR. CIT I S UPHELD. 5. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/08/2 018. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 03/08/2018. DAS/ 10 ITA NOS. 699 & 700/JP/2018 SHRI NARESH AGARWAL, ALWAR. VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI NARESH AGARWAL, ALWAR. 2. THE RESPONDENT THE PRINCIPAL CIT, ALWAR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 699 & 700/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR