EJAZ AHMED MEHMOOD MUQRI, V. ITO WD 1(1),

ITA 7271/MUM/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3904 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 16-08-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 24-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJIV DUTT
• Assessee Lawyers: DR P DANIAL SHRI M P MAKHI JA
• Keywords: Gift; Assessment record; Set aside
• Section: 43B; 143(3); 56(2); 133(6); 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER. AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO.7271/MUM./2008 (ASSESSMENT YEAR : 200506 ) DATE OF HEARING: 16.8.2010 SHRI EJAZ AHMED MEHMOOD MUQRI PROPRIETOR, M/S. ENERGY FABRICS 18, WAJA MOHALLA, BHIWANDI PAN ABZPM6951G .. APPELLANT V/S INCOME TAX OFFICER, WARD 1(1) RAVI MASSION, MURBAD ROAD KALYAN 0 WEST) .... RESPONDENT ASSESSEE BY : DR. P. DANIAL / SHRI M.P. MAKHI JA REVENUE BY : SHRI SANJIV DUTT O R D E R PER S.V. MEHROTRA, A.M. THIS APPEAL BY THE ASSESSEE, IS DIRECTED AGAINST TH E IMPUGNED ORDER DATED 14 TH NOVEMBER 2008, PASSED BY THE LEARNED CITII, MUMB AI, UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ), FOR ASSESSMENT YEAR 200506. 2. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE, AN INDIVIDUAL AND PROPRIETOR OF M/S. ENERGY FABRICS, IN THE RELEVANT ASSESSMENT YEAR, WAS ENGAGED IN THE MANUFACTURING OF CLOTH. HE HAD FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF ` 2,14,609 ACCOMPANIED WITH TAX AUDIT REPORT UNDER SECTION 44AB IN THE SPECIFIED FORMS NO.3CB AN D 3CD. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 13 TH JULY 2007, AFTER MAKING THE ITA NO. 7271/MUM./2008 SHRI EJAZ AHMED MEHMOOD MUQRI 2 ADDITIONS OF ` 2,07,605 UNDER SECTION 40A(2)(B) AND ` 90,000 ON ACCOUNT OF LOW HOUSE HOLD WITHDRAWALS. 3. THE LEARNED CIT EXAMINED THE ASSESSMENT RECORDS AND ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE ON 4 TH SEPTEMBER 2008, POINTING OUT THAT THE ASSESSMENT ORDER WAS PRIMA FACIE PREJUDICIAL TO THE INTERESTS OF REVENUE ON ACCOUNT OF THE REASONS THAT (I) THE CLAIM OF GIFTS OF ` 8,83,700 WAS NOT TRUE AND, THEREFORE, REQUIRED FURTHER SCRUTINY AND DISAL LOWANCE; (II) THE ASSESSING OFFICER, WITH REGARD TO UNSECURED LOANS TO THE EXTE NT OF ` 45,66,000, COULD NOT VERIFY THIS ASPECT AND MADE NECESSARY ADDITIONS IN RESPECT OF UNPROVED SUNDRY CREDITORS AND CERTAIN CONSEQUENTIAL CASH CRE DIT TO THE EXTENT OF ` 21,41,000. THE LEARNED CIT, AFTER CONSIDERING THE A SSESSEES REPLY DATED 13 TH OCTOBER 2008, FURTHER MADE INQUIRIES VIDE HIS LETTE R DATED 13 TH OCTOBER 2008, TO WHICH THE ASSESSEE FILED HIS DETAILED REPLY ON 2 7 TH OCTOBER 2008. AFTER CONSIDERING THE ASSESSEES REPLY, THE LEARNED CIT P ASSED HIS ORDER UNDER SECTION 263 ON 14 TH NOVEMBER 2008, DIRECTING THE ASSESSING OFFICER TO MAKE ADDITIONS WITH REGARD TO CERTAIN ITEMS AND TO MAKE FURTHER INQUIRIES WITH REGARD TO OTHER ITEMS. THE ASSESSEE, BEING AGGRIEVE D BY THE ORDER PASSED BY THE LEARNED CIT, IS IN APPEAL BEFORE THE TRIBUNAL. 4. LEARNED COUNSEL FOR THE ASSESSEE, BEFORE US, REFERR ED TO PAGE 57 OF THE PAPER BOOK, WHEREIN, THE SHOW CAUSE NOTICE DATE D 4 TH SEPTEMBER 2008, ISSUED BY THE LEARNED CIT IS CONTAINED. HE POINTED OUT THAT, IN THE SAID SHOW CAUSE NOTICE, THE LEARNED CIT, INTER ALIA, POINTED OUT THAT AS REGARDS THE GIFTS RECEIVED BY THE ASSESSEE, FURTHER SCRUTINY AND DISA LLOWANCE WAS CALLED FOR. SIMILARLY, AS REGARDS UNPROVED SUNDRY CREDITORS AND CONSEQUENTIAL CASH CREDIT TO THE EXTENT OF ` 21,41,000, THE LEARNED CIT OBSERVED THAT THE SAME NEEDS TO BE BROUGHT TO TAX. THUS, THE LEARNED COUNS EL POINTED OUT THAT THE LEARNED CIT, EVEN BEFORE THE VERIFICATION, CAME TO THE CONCLUSION THAT THE DISALLOWANCE WAS CALLED FOR AS REGARDS THE CLAIM OF GIFTS AND ADDITIONS WERE REQUIRED AS REGARDS UNPROVED SUNDRY CREDITORS. ITA NO. 7271/MUM./2008 SHRI EJAZ AHMED MEHMOOD MUQRI 3 5. LEARNED COUNSEL FURTHER REFERRED TO PAGE 61 OF THE PAPER BOOK, WHEREIN, THE SECOND NOTICE DATED 13 TH OCTOBER 2008 ISSUED BY THE LEARNED CIT IS CONTAINED AND POINTED OUT THAT IN PARA 3 OF THE SAID NOTICE, THE LEARNED CIT, INTER ALIA, OBSERVED THAT THE ALLEGED GIFTS FROM MRS. MEH RUNISSA W/O SHRI MOHD,. ABBAS MUQRI, WAS FROM THE WIFE OF F ATHERS YOUNGER BROTHER, AND, HENCE, THERE WAS NO LINEAL RELATIONSHIP, AS RE QUIRED UNDER THE LAW. THUS, THE ONLY ISSUE BEFORE THE LEARNED CIT WAS WHE THER OR NOT IT COULD BE BROUGHT TO TAX UNDER SECTION 56(2)(V) OF THE ACT. I N THIS REGARD, LEARNED COUNSEL REFERRED TO THE PROVISIONS OF SECTION 56(2) (V) AND POINTED OUT THAT IN EXPLANATION (IV), RELATIVE HAS BEEN DEFINED AS BROT HER OR SISTER OF EITHER OF THE PARENTS OF THE INDIVIDUAL. FURTHER, IN CLAUSE ( VII) OF EXPLANATION, SPOUSE OF THE PERSONS AS REFERRED TO IN CLAUSE (II) TO (VI ) HAS BEEN INCLUDED. THUS, HE SUBMITTED THAT IT IS A CASE OF ASSESSEES RELATIVE. 6. LEARNED COUNSEL FURTHER REFERRED TO PAGE 43B OF THE PAPER BOOK, WHEREIN, BANK STATEMENT OF THE ASSESSEE IS CONTAINE D, SHOWING CREDIT OF DEMAND DRAFT IN THE BANK ACCOUNT. HE REFERRED TO PA GE 48 OF THE PAPER BOOK, WHEREIN, NOTICE ISSUED UNDER SECTION 133(6) B Y THE ASSESSING OFFICER TO VARIOUS DONORS IS CONTAINED IN WHICH THE ASSESSI NG OFFICER HAD REQUIRED THE DECLARATION REGARDING MODES OF TRANSACTIONS. TH EREAFTER, LEARNED COUNSEL REFERRED TO PAGES 48A TO 50 OF THE PAPER BOOK TO DEMONSTRATE THAT THE DONOR MRS. MEHRUNISSA MOHD,. ABBAS MUQRI, WAS A LAD Y OF MEANS AND COULD GIFT THE IMPUGNED AMOUNTS. LEARNED COUNSEL SUBMITTE D THAT THE DONORS HUSBAND SHRI MOHD,. ABBAS MUQRI, DIED LONG BACK AND SHE HAS NO CHILD. HE REFERRED TO DECLARATION OF GIFT CONTAINED AT PAGE 47 OF THE PAPER BOOK WHICH WAS FILED BEFORE THE ASSESSING OFFICER ALSO. AS REG ARDS OTHER THREE GIFTS, LEARNED COUNSEL REFERRED TO PAGES 43 AND 43A OF THE PAPER BOOK, WHEREIN, THE PHOTOCOPY OF THREE DEMAND DRAFTS RECEIVED FROM SHRI MUFTI BARKATULLA, S/O SHRI ABDUL QADIR, ARE DETAILED AS UNDER: DEMAND DRAFT NO. DATE AMOUNT ( ` ) 317514 10.5.2004 1,59,500 317472 5.5.2004 1,60,000 317586 26.5.2004 1,64,200 ITA NO. 7271/MUM./2008 SHRI EJAZ AHMED MEHMOOD MUQRI 4 7. LEARNED COUNSEL REFERRED TO THE BANK STATEMENT AT P AGE 43 OF THE PAPER BOOK, WHEREIN, THESE DEMAND DRAFTS HAVE BEEN CREDITED. HE SUBMITTED THAT THESE ARE WELL KNOWN PERSONS AND THERE IS NO D OUBT ON THEIR IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS. H E FURTHER REFERRED TO PAGES 34 TO 36 OF THE PAPER BOOK, WHEREIN, THE ASSESSEES SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER ARE CONTAINED. HE FURTHER REFERRED TO PAGES 37 TO 41 OF THE PAPER BOOK, WHEREIN, THE DECLARATIO N OF GIFT IS CONTAINED AND ALSO PAGES 44 TO 47, WHEREIN, THE AFFIDAVIT OF THE DONOR IS CONTAINED CONFIRMING THREE DEMAND DRAFTS GIVEN AS G IFT TO THE ASSESSEE. WITH REFERENCE TO ALL THE ABOVE DOCUMENTS, LEARNED COUNS EL SUBMITTED THAT THE ASSESSING OFFICER, AFTER DUE VERIFICATION OF THESE DOCUMENTS, TOOK ONE POSSIBLE VIEW ACCEPTING THE GIFTS AND, THEREFORE, T HE LEARNED CIT WAS RIGHT IN INVOKING THE PROVISIONS OF SECTION 263. 8. LEARNED COUNSEL REFERRED TO VARIOUS CASE LAWS IN SU PPORT OF HIS SUBMISSIONS THAT ONCE THE ENQUIRY HAS BEEN CONDUCTE D, MERELY BECAUSE THE ASSESSMENT ORDER IS CRYPTIC OR DOES NOT MAKE A REFE RENCE TO THE ENQUIRY MADE BY THE ASSESSING OFFICER, WOULD NOT MAKE THE A SSESSMENT ORDER ERRONEOUS. IN CIT V/S MAHENDRA KUMAR BANSAL, (2008) 297 ITR 99 (ALL.), THE HONBLE ALLAHABAD HIGH COURT, AT PAGES 105 AND 106, INTER ALIA, OBSERVED AS UNDER: IN THE CASE OF GOYAL PRIVATE FAMILY SPECIFIC TRUST (1988) 171 ITR 698, THIS COURT HAS HELD THAT THE ORDER OF THE INCO ME TAX OFFICER MAY BE BRIEF AND CRYPTIC, BUT THAT BY ITSELF IS NOT SUF FICIENT REASON TO BRAND THE ASSESSMENT ORDER AS ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF THE REVENUE AND IT WAS FOR THE COMMISSIONER TO POIN T OUT AS TO WHAT ERROR WAS COMMITTED BY THE INCOME TAX OFFICER IN HA VING REACHED TO HIS CONCLUSION AND IN THE ABSENCE OF WHICH PROCEEDINGS UNDER SECTION 263 OF THE ACT IS NOT WARRANTED. AS HELD BY THIS COURT IN THE CASE OF GOYAL PRIVATE FAMILY SPECIFIC TRUST (1988) 171 ITR 698, WE ARE OF THE CONSIDERED OPINION THAT MERELY BECAUSE THE INCOME TAX OFFICER HAD NOT WRITT EN LENGTHY ORDER IT WOULD NOT ESTABLISH THAT THE ASSESSMENT OR DER PASSED UNDER SECTION 143(3)/148 OF THE ACT IS ERRONEOUS AN D PREJUDICIAL TO THE INTERESTS OF THE REVENUE WITHOUT BRINGING ON RECORD SPECIFIC INSTANCES, WHICH IN THE PRESENT CASE, THE COMMISSIONER OF INCOME TAX HAS FAILED TO DO. ITA NO. 7271/MUM./2008 SHRI EJAZ AHMED MEHMOOD MUQRI 5 9. IN SIMPLEX CONCRETE PILES (INDIA) P. LTD. VS CIT (C AL.), (2006) 286 ITR 470, THE HONBLE CALCUTTA HIGH COURT HAS HELD THAT THE PROVISIONS OF SECTION 263 CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYP E OF MISTAKE OR ERRORS COMMITTED BY THE ASSESSING OFFICER. IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL APPLY AND INCORRECT ASSUMPTIO N OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. LEARNED COUNSEL POINTED OUT THAT THERE IS NO INCORR ECT ASSUMPTION OF FACT OR INCORRECT ASSUMPTION OF LAW BECAUSE THE ASSESSING O FFICER HAS ADOPTED ONE POSSIBLE VIEW. FURTHER, IT WAS HELD IN THIS CASE TH AT THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EV ERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER PASSED BY THE ASSESSING OFF ICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 10. THE HONBLE RAJASTHAN HIGH COURT IN CIT V/S GANPAT RAM BISHNOI, (2008) 296 ITR 292 (RAJ.), HAS, INTER ALIA, OBSERVED JURISDICTION UNDER SECTION 263 CANNOT BE INVOKED FOR MAKING SHORT ENQU IRIES OR TO GO INTO THE PROCESS OF ASSESSMENT AGAIN AND AGAIN MERELY ON THE BASIS THAT MORE ENQUIRY OUGHT TO HAVE BEEN CONDUCTED TO FIND SOMETH ING. IT WAS, INTER ALIA, HELD THAT WHEN AN ENQUIRY HAD BEEN CONDUCTED AND TH E ASSESSING OFFICER HAD REACHED TO A PARTICULAR CONCLUSION, THOUGH REFERENC E TO SUCH ENQUIRIES HAD NOT BEEN MADE IN THE ORDER OF THE ASSESSMENT, IT WA S APPARENT FROM THE RECORD THAT WITHOUT ANYTHING TO SHOW AS TO HOW AND WHY THE ENQUIRY CONDUCTED BY THE ASSESSING OFFICER WAS NOT IN ACCOR DANCE WITH LAW, THE INVOCATION OF JURISDICTION BY THE COMMISSIONER WAS UNSUSTAINED. 11. LEARNED COUNSEL SUBMITTED THAT IN ORDER TO VERIFY A S TO WHETHER THE ASSESSING OFFICER HAD ACTUALLY CONDUCTED THE ENQUIR IES OR NOT, THE ASSESSMENT RECORDS MAY BE VERIFIED. IN THIS REGARD, LEARNED COUNSEL REFERRED TO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN CIT V/S ASHISH RAJPAL, (2009) 180 TAXMAN 623, WHEREIN, IT HAS BEEN HELD TH AT IF UPON A PERUSAL OF THE RECORD FILED BY THE ASSESSEE WITH THE ASSESSING OFFICER, THE TRIBUNAL FORMS A VIEW THAT THERE HAD BEEN AN ENQUIRY WHICH H AD NOT BEEN CONDUCTED ITA NO. 7271/MUM./2008 SHRI EJAZ AHMED MEHMOOD MUQRI 6 WITH UNDUE HASTE, THEN, INVOCATION OF JURISDICTION UNDER SECTION 263 CANNOT BE JUSTIFIED. 12. IN DHRUV N. SHAH V/S DCIT, (2005) 273 ITR (AT) 59 ( BOM.) (TM), THE TRIBUNAL HELD THAT IF THE EXPLANATION OFFERED BY TH E ASSESSEE WAS ACCEPTED BY THE ASSESSING OFFICER, THEN THE ASSESSMENT ORDER CA NNOT BE HELD TO BE ERRONEOUS AND, THEREFORE, THE ORDER UNDER SECTION 2 63 IS NOT JUSTIFIED. 13. IN MODI XEROX LTD. V/S DCIT, (1998) 67 ITD 252 (DEL .), THE TRIBUNAL HELD AS UNDER: . THE PREJUDICE, THAT IS CONTEMPLATED UNDER SECT ION 263 IS PREJUDICE TO THE INCOME TAX ADMINISTRATION AS A WHO LE. SECTION 263 IS TO BE INVOKED NOT AS A JURISDICTIONAL CORRECTIVE OR AS A REVIEW OF A SUBORDINATE ORDER IN EXERCISE OF THE SUPERVISORY PO WER. IT IS TO BE INVOKED AND EMPLOYED ONLY FOR THE PURPOSE OF SETTIN G RIGHT DISTORTIONS AND PREJUDICES TO THE REVENUE. IT IS BEYOND DISPUTE THAT UNDER SECTION 263, COMMISSIONER DOES HAVE THE POWER TO SET ASIDE THE ASSESSMENT ORDER AND SEND THE MATTER FOR A DENOVO INVESTIGATIO N IF HE IS SATISFIED THAT FURTHER ENQUIRIES NEEDED AND THE ORDER OF THE ASSESSING OFFICER IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. FOR ASS UMING JURISDICTION UNDER SECTION 263, IT IS SINE QUA NON, THAT THE IMP UGNED ORDER MUST BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. BOTH THE CONDITIONS MUST BE SATISFIED. 14. IN GIRDHARI LAL B. ROHRA V/S CIT, (2004) 86 TTJ (MU M.) 177, THE TRIBUNAL, INTER ALIA, HELD THAT THE JURISDICTION UNDER SECTION 263 CANNOT BE ASSUMED BY THE COMMISSIONER OF INCOME TAX IN A CASU AL AND ARBITRARY MANNER IF THERE IS NO MATERIAL ON RECORD TO SATISFY PRIMA FACIE THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICI AL TO THE INTERESTS OF THE REVENUE. MERELY STATING THAT NO FURTHER ENQUIRIES W ERE MADE BY THE ASSESSING OFFICER, WOULD NOT SUFFICE INVOCATION OF JURISDICTION UNDER SECTION 263 AND THERE MUST BE SOME MATERIAL WHICH MUST BE P OINTED OUT TO SHOW AS TO HOW LACK OF ENQUIRY HAS CAUSED PREJUDICE TO THE REVENUE. 15. IN TRIVENI ENGINEERING WORKS LTD. V/S DCIT, (2004) 87 TTJ (DEL.) 93, THE TRIBUNAL HELD THAT THE COMMISSIONER OF INCOME T AX DOES NOT HAVE UNRESTRICTED AND UNFLATTERED POWERS TO SET ASIDE TH E ORDER MODIFYING AN ASSESSMENT MERELY ON THE BASIS OF DIFFERENCE OF OPI NION. COMMISSIONER OF ITA NO. 7271/MUM./2008 SHRI EJAZ AHMED MEHMOOD MUQRI 7 INCOME TAX CANNOT INVOKE JURISDICTION UNDER SECTION 263 MERELY BECAUSE HE FEELS THAT A PARTICULAR LINE OF INVESTIGATION WHICH WOULD HAVE BEEN EFFECTIVE AND USEFUL FOR THE REVENUE HAD NOT BEEN ADOPTED BY THE ASSESSING OFFICER. 16. LEARNED COUNSEL FURTHER SUBMITTED THAT IN THE TAX A UDIT REPORT OF THE ASSESSEE THE CAPITAL ACCOUNT HAD BEEN ENCLOSED WHIC H IS CONTAINED AT PAGE 5 OF THE PAPER BOOK IN WHICH THE GIFTS RECEIVED BY TH E ASSESSEE WERE DULY REFLECTED. THUS, IN SUB AND SUBSTANCE, LEARNED COUN SEL SUBMITTED THAT SINCE THE ASSESSMENT ORDER HAD BEEN PASSED AFTER MAKING D UE ENQUIRY, THEN MERELY BECAUSE THE COMMISSIONER OF INCOME TAX CONSI DERED A DIFFERENT LINE OF ENQUIRY TO BE MORE USEFUL TO THE REVENUE, COULD NOT RENDER THE ASSESSMENT ORDER AS ERRONEOUS AND, HENCE, THE INVOC ATION OF JURISDICTION UNDER SECTION 263 WAS NOT IN ACCORDANCE WITH LAW. 17. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER H AND, RELIED ON THE ORDER OF THE LEARNED CIT. AT THE TIME OF HEARING, T HE LEARNED DEPARTMENTAL REPRESENTATIVE PRODUCED THE ASSESSMENT RECORDS IN W HICH THE FOLLOWING NOTINGS HAVE BEEN RECORDED WHICH ARE REPRODUCED HER EIN BELOW: OFFICE NOTE THIS CASE HAS BEEN SELECTED FOR SCRUTINY ON THE GRO UNDS OF UNSECURED LOANS AND CAPITAL INTRODUCED AS PER COMPU LSORY SCRUTINY SELECTION CRITERIA ISSUED BY CBDT. THESE POINTS HAV E BEEN VERIFIED FROM CONFIRMATIONS. BANK ACCOUNT EXTRACT OF PERSON GIVING UNSECURED LOAN. AS REGARD CAPITAL INTRODUCED WHICH INCLUDES G IFT ELEMENT HAS BEEN VERIFIED BY THE IDENTITY AND CREDIT WORTHINESS OF D ONOR AND GENUINENESS OF THE GIFT FROM THE DOCUMENTS PRODUCED, I.E., GIFT DEED, COPY OF INSTRUMENT AND BANK ACCOUNT ETC AND FOUND TO BE GEN UINE. NECESSARY DOCUMENTS ARE KEPT ON RECORD. ADDITION ON THE GROUNDS OF LOW WITHDRAWAL FOR HOUS EHOLD EXPENSES AND ENHANCING NET PROFIT ON THE GROUNDS OF SUPPRESSED SALES, INFLATED PURCHASES AND WEAVING CHARGES AND ATTRACTI ON OF PROVISION OF SECTION 40A(2)(B), ETC., AMOUNTING TO ` 2,97,605 HAS BEEN MADE. 18. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE OR DERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. THE JURISDICTION UNDER SECTION 263, HAS BEEN GIVEN TO THE COMMISSIONER OF INCOME TAX, AS HE IS ITA NO. 7271/MUM./2008 SHRI EJAZ AHMED MEHMOOD MUQRI 8 IN ADMINISTRATIVE CONTROL OF REVENUE COLLECTION AND FOR THAT PURPOSE, HE HAS TO ENSURE THAT DUE REVENUE REACHES TO PUBLIC TREASU RY AND IF ON ACCOUNT OF SOME MISTAKE OF LAW OR FACT COMMITTED BY THE ASSESS ING OFFICER WHICH RENDERED THE ASSESSMENT ORDER ERRONEOUS, THE CIT CA N CANCEL THAT ORDER AND REQUIRE THE CONCERNED ASSESSING OFFICER TO PASS A F RESH ORDER. BUT THIS POWER HAS TO BE EXERCISED WITH DUE CAUTION AND ONLY WHEN IT IS EVIDENT THAT THE ASSESSMENT ORDER IS PASSED IN A MANNER WHICH DEMONS TRATE THE COMPLETE NON APPLICATION OF MIND BY THE ASSESSING OFFICER TO CERTAIN ISSUES FUNDAMENTAL TO PASSING OF A REASONED ORDER. BEFORE INVOKING THE JURISDICTION UNDER SECTION 263, IT IS WELL SETTLED LAW THAT THE TWIN CONDITIONS OF THE ASSESSMENT ORDER BEING ERRONEOUS INSOFAR AS IT IS P REJUDICIAL TO THE INTERESTS OF THE REVENUE HAVE TO BE SATISFIED. MERELY BECAUSE THE ASSESSING OFFICER AFTER MAKING ENQUIRIES DOES NOT MAKE A REFERENCE TO THE SAME IN THE ASSESSMENT ORDER, THAT WOULD NOT MAKE THE ASSESSMEN T ORDER ERRONEOUS. IN THE PRESENT CASE, THE LEARNED CIT INVOKED JURISDICT ION UNDER SECTION 263 FOR THE REASON THAT THE GIFTS AGGREGATING TO ` 8,83,700 RECEIVED BY THE ASSESSEE AND CREDITED TO HIS CAPITAL ACCOUNT, WERE NOT DULY ENQUIRED BY THE ASSESSING OFFICER. IN THIS REGARD, HE HAD ISSUED A DETAILED Q UESTIONNAIRE TO THE ASSESSEE WHICH WAS REPLIED BY THE ASSESSEE EXPLAINI NG ALL THE QUERIES RAISED BY THE COMMISSIONER OF INCOME TAX. FURTHER, AS REGA RD GIFT OF ` 4,00,000 RECEIVED FROM MRS. MEHRUNISSA MOHD,. ABBAS MUQRI, T HE MAIN OBJECTION OF THE LEARNED CIT WAS THAT THE SAID GIFT COULD NOT BE SAID TO BE A GIFT FROM RELATIVE AS CONTEMPLATED UNDER SECTION 56(2)(V). ON THIS ASPECT, IT HAS DULY BEEN DEMONSTRATED THAT THE GIFT HAD BEEN RECEIVED F ROM ASSESSEES AUNTY I.E., FATHERS BROTHERS WIFE AND THIS RELATION COM ES UNDER THE LIST PROVIDED UNDER SECTION 56(2)(V) R/W EXPLANATION (VII). THUS, THE OBJECTION OF LEARNED CIT ON THIS COUNT WAS DULY ANSWERED BY THE ASSESSEE AND, THEREFORE, ON THIS COUNT, EVEN ON MERITS, THE OBJECTION OF LEARNED CIT WAS NOT IN ACCORDANCE WITH LAW. THE OFFICE NOTE REPRODUCED EARLIER, CLEAR LY DEMONSTRATE THAT THE ASSESSING OFFICER HAD MADE ENQUIRIES IN REGARD TO T HE GENUINENESS OF GIFTS FOR WHICH DECLARATIONS ARE AVAILABLE ON RECORD AND, THEREFORE, ONCE HE HAD TAKEN A POSSIBLE VIEW AFTER MAKING ENQUIRIES, THEN, MERELY BECAUSE THE COMMISSIONER OF INCOME TAX FELT THAT DETAILED ENQUIRY WAS REQUIRED, THE ITA NO. 7271/MUM./2008 SHRI EJAZ AHMED MEHMOOD MUQRI 9 ASSESSMENT ORDER COULD NOT BE TREATED AS ERRONEOUS. CONSEQUENTLY, THE ORDER UNDER SECTION 263 PASSED BY THE LEARNED CIT I S SET ASIDE. 19. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.11.2010. SD/- VIJAY PAL RAO JUDICIAL MEMBER SD/- S.V. MEHROTRA ACCOUNTANT MEMBER MUMBAI, DATED: 15.11.2010 COPY TO : (1) THE ASSESSEE (2) THE RESPONDENT (3) THE CIT(A), MUMBAI, CONCERNED (4) THE CIT, MUMBAI CITY CONCERNED (5) THE DR, I BENCH, ITAT, MUMBAI TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ITA NO. 7271/MUM./2008 SHRI EJAZ AHMED MEHMOOD MUQRI 10 DATE INITIAL 1. DRAFT DICTATED ON 10.11.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 11.11.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 11.11.2010 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 11.11.2010 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 11.11.2010 SR.PS/PS 6. DATE OF PRONOUNCEMENT 15.11.2010 SR.PS 7. FILE SENT TO THE BENCH CLERK 15.11.2010 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER 4. LEARNED COUNSEL FOR THE ASSESSEE, BEFORE US, CONTEN DED THAT THE ASSESSEE HAD APPLIED FOR INSPECTION OF RECORDS ON 1 6 TH DECEMBER 2009, _ _ _