M/S. SANEE INFRASTRUCTURE PVT. LTD., Bhopal V. THE Pr CIT , Bhopal

ITA 742/Ind/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1162 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 10-09-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Revision of order; Opportunity of being heard; Audit objection; Rule of consistency; Cost of acquisition; Assessment record; Revised return; TDS; Set aside
• Section: 263; 143(3); 142(1); 143(2); 207; 13; 119; 20

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.742/IND/2018 ASSESSMENT YEAR: 2015-16 APPELLANT BY SHRI A RUN JAIN , C A REVENUE BY SHRI S. B . PRASAD , CIT DATE OF HEARING 12 .0 3 .2020 DATE OF PRONOUNCEMENT 01 .0 6 .2020 O R D E R PER MANISH BORAD, AM. THE ABOVE CAPTIONED APPEAL FILED AT THE INSTANCE OF ASSESSEE PERTAINING TO ASSESSMENT YEAR 2015-16 IS DIRECTED A GAINST THE ORDERS OF LD. PR. COMMISSIONER OF INCOME-2 (IN SHOR T LD.PCIT], BHOPAL PASSED U/S 263 OF THE ACT DATED 31.07.2018. M/S. SANEE INFRASTRUCTURE PVT. LTD, D-1, MACHNA COLONY, 6 NO BUS STOP, BHOPAL VS. PR. CIT - 2, BHOPAL (APPELLANT) (REVENUE ) PAN NO. A A GCS8307M ITANO.742/IND/2018 SANEE INFRASTRUCTURE PVT. LTD 3 DIRECTORS TRAVELLING EXPENSES, EMPLOYEES BENEFIT EX PENSES AND OTHER EXPENSES RESPECTIVELY. THUS AFTER MAKING ADD ITION OF RS.6,10,586/- INCOME WAS ASSESSED AT RS.53,08,610/- . SUBSEQUENTLY LD. PCIT ON EXAMINING THE ASSESSMENT R ECORDS OBSERVED THAT THE LD. A.O FAILED TO EXAMINE THE REA SONS FOR WHICH LIMITED SCRUTINY WAS TAKEN UP. HE ALSO OBSERVED TH AT WHAT WAS REQUIRED TO BE EXAMINED HAD NOT AT ALL BEEN CARRIED OUT BY THE LD. A.O AND THEREFORE THE ASSESSMENT FRAMED ON 2.5.17 I S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. LD. PC IT ACCORDINGLY WITHIN HIS REVISIONARY POWERS U/S 263 OF THE ACT SE T ASIDE THE ASSESSMENT ORDER AND DIRECTED THE LD. A.O TO ASSESS IT AFRESH AS PER THE DIRECTION GIVEN IN THE ORDER U/S 263 OF THE ACT . 3. AGGRIEVED ASSESSEE IS NOW IN APPEAL BEFORE THE T RIBUNAL CHALLENGING THE ORDER U/S 263 OF THE ACT PASSED BY PR. CIT RAISING FOLLOWING GROUNDS OF APPEAL:- 1.THAT IN THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE THE LD PRINCIPAL CIT-2, BHOPAL ERRED IN FACTS AND ALSO IN LAW IN INV OKING THE PROVISIONS OF S. 263 OF THE INCOME TAX ACT AND DIRECTING SETTING ASI DE OF THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT BY THE DCIT- 5 (L), BHOPAL DT. 02.0 5 .2017. 2. THAT THE PROCEEDINGS U/S 263 OF THE ACT BY THE PRINCIPAL CIT -2, BHOPAL ITANO.742/IND/2018 SANEE INFRASTRUCTURE PVT. LTD 5 PCIT WAS JUSTIFIED AND WAS WITHIN HIS JURISDICTION TO INVOKE THE PROVISIONS OF SECTION 263 OF THE ACT THEREBY SETTIN G ASIDE THE ASSESSMENT ORDER DATED 02.05.2017 OBSERVING AS FOLL OWS:- 10. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND RE LATED RECORDS AND ALSO CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE ASSESSEE IN WHICH IT HAS BEEN ARGUED THAT NO MISTAKE HAS OCCURRED IN THE ORDER PASSED AND THE ASSESSMENT ORDER IS NEITHER ERRONEOUS NOR PREJ UDICIAL TO THE INTERESTS OF THE REVENUE AND THEREFORE THE PROPOSED ACTION U/S 263 BE DROPPED. I 1. FROM THE ASSESSMENT RECORD. IT IS SEEN THAT NOTHING WAS BROUGHT ON RECORD BY TH E ASSESSING OFFICER IN SUPPORT OF EXPENSES CLAIMED BY THE ASSESSEE WITH RESPECT TO SALARY & WAGE THE ORDER SHEET ENTRIES WERE WRITTEN IN GENERA L NATURE AND DID NOT SHOW WHAT TYPE OF RECORD , BILLS/VOUCHERS, LEDGERS ETC. WERE EXAMINED AND VERIFIED DURING THE ASSESSMENT PROCEEDINGS, IT IS ALSO OBSER VED THAT NO THIRD PARTY ENQUIRY HAS BEEN MADE F OR VERIFICATION OF VOUCHERS RELATED TO EXPENSES. THE A SSESSING OFFICER FAILED TO VERIFY ATTENDANCE REGISTER. SALARY REGISTER, PROVID ENT FUND CHALLANS AND VARIOUS FORMS SUBMITTED TO EPFO, ESIC CHALLAN, LABOUR LICENSE AS NO RECORD WAS MAINTAINED REGARDING THE PRODUCTION OF SALARY R EGISTER. ATTENDANCE REGISTER AND VARIOUS FORMS SUBMITTED TO FPFO. THE NATURE OF SUB CONTRACT EXPENSES OF RS. I. J 0 CRORE WERE NOT EXAMINED BY THE ASSESSING OFFICER. IN SPITE OF CLAIMING ALL THE CONCEIVABLE EXPENSES, .THE ASSESSEE HAS CLAIMED RS. 1.42 CRORE UNDER THE HEAD 'OTHER EXPENSES' WHICH WERE NOT VERIFIED AND EXAMINED BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. TRADING RESULTS ACCEPTED BY THE ASSESSING OFFICER WITHOUT MAKING THOROUGH INQUIRY/INVESTIGATION AND G ENUINENESS OF SALES/PURCHASES/EXPENSES AND FURTHER WITHOUT ENQUIR ING OR INVESTIGATING INDEPENDENTLY. THE ASSESSING OFFICER VIDE NOTICE U/ S L42( I) DT. 06/03/2017 ASKED THE ASSESSEE TO GIVE CLARIFICATION WITH REGARDS TO REASONS FOR THE SELECTION OF THE CASE FOR SCRUTINY MENTIONING ONLY THE REASONS ILL THE NOTICE. NO FURT HER QUERIES WERE MADE. ITANO.742/IND/2018 SANEE INFRASTRUCTURE PVT. LTD 7 3. CIT V BHAGWAN DAS (2005) 272 [TR 367 (ALL,) (HC), THE HON'BLE HIGH COURT HAS HELD THAT NON-APPLICATION OF MIND BY THE ASSESSING OFFICER WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 4.- PRATAP FOOTWEAR V ACIT (2003) SOT 638 (JABALPU R) (TRIB.) THE HONBLE TRIBUNAL HAS HELD THAT NON-APPLICATION OF MIND BY THE ASSESSING 0FFIEER WAS PREJUDICIAL TO THE INTEREST OR REVENUE. 5. CIT V. JAWAHAR BHALLACHARJEE (2012/341 J711 434 (GAUHATI) (HCJ (FB), THE HON'BIE HAS HELD THAT ERROR IN ASSESSMENT ORDER ARISING BY IGNORING RELEVANT MATERIAL OR ON INCORRECT ASSUMPT ION OF FACTS OR INCORRECT APPLICATION OF LAW AMENABLE TO REVISION U/S 263. 6. (2017) (HIMACHAL PRADESH (2017) 298 CTR 393, VI RBHADRA SINGH (HUF) VS. PRINCIPAL COMMISSIONER OF INCOME-TAX (HI MACHAL PRADESH). WHERE NO INQUIRY WAS CONDUCTED BY ASSESSING OFFICE R IN PASSING ASSESSMENT ORDER AFTER ACCEPTING REVISED RETURN FI LED BY ASSESSEE. COMMISSIONER WAS WELL WITHIN HIS POWER UNDER SECTI ON 263 TO DIRECT FRESH ASSESSMENT. IN VIEW OF THE DETAILED REASONS GIVEN AND DISCUSSIO NS MADE HEREIN ABOVE, THE ASSESSMENT ORDER U/S 143(3) DATED 02.05.2017 MADE B Y THE DCIT 5(1), BHOPAL FOR THE AY 2015-16 IS HEREBY SET ASIDE U/S 263 WITH THE DIRECTION TO THE AO TO MAKE IT DE NOVO ON AFTER GIVING REASONABLE OPPORTUN ITY TO THE ASSESSEE OF BEING HEARD AND AFTER BRINGING ON RECORDS THE RELEVANT SU PPORTING MATERIAL AND EVIDENCES IN SUPPORT OF THE ACTION OF THE AO. IN THIS REGARD, THE AMENDMENT MADE TO CLAUSE (A) TO EXPLANATION 2 (INSERTED BY FINANCE ACT 2015 W.E.F. 1.6.2015 OF SECTION 263( I) OF I.T. ACT WHICH IS REPRODUCED HERE BELOW MAY ALSO BE KEPT IN MIND FOR GUIDANCE BY THE AO WHILE PASSING THE FRESH ASSESSMENT ORDER PURSUANT T O THIS ORDER U/S 263. 5. LD. COUNSEL FOR THE ASSESSEE REFERRED TO THE FOL LOWING WRITTEN ITANO.742/IND/2018 SANEE INFRASTRUCTURE PVT. LTD 9 SCRUTINY AND ASSESSMENT ORDERS OF LAST 6 YEARS. ASS ESSEE SUBMITTED ITS REPLY ON 24.03.2017 ALONG WITH SUPPORTING DOCUMENTS . ASSESSING OFFICER HAS REPRODUCED THIS SUBMISSION DT. 24.03.2017 IN TH E ASSESSMENT ORDER. AGAIN STATEMENTS OF BANK ACCOUNTS WERE ASKED AND AS SESSEE SUBMITTED ON 01.05.2017. BOOKS OF ACCOUNTS AND VOUCHERS WERE VERIFIED BY THE ASSESSING OFFICER. AS MENTIONED IN THE PARA 5, 6 & 7 OF THE ASSESSMENT ORDER, ASSESSING OFFICER HAS CAREFULLY TEST CHECKED THE PROFIT & LOSS ACCOUNT AS SHOWN BY THE ASSESSEE IN AUDIT REPORT AND ALSO TEST CHECKED THE BOOKS OF ACCOUNT, BILL AND VOUCHERS. AFTER VERIFICATION OF RECORDS, A SSESSING OFFICER HAS MADE ADDITION OF~ 6105861- INTO THE INCOME OF ASSESSEE. 2.2 LD PR.CIT HAS SPECIFIED CERTAIN DOCUMENTS AND MANNER OF EXAMINATION OF THE DOCUMENTS WHICH SHOULD HAVE BEEN FOLLOWED BY THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS BUT ASSESSING OFFICER FAILED TO EXAMINE. THESE ARE AS UNDER- LOW NET PROFIT OR LOSS SHOWN FROM LARGE GROSS RECEI PTS IT IS ALSO OBSERVED THAT NO THIRD PARTY ENQUIRY HAS BEEN MADE FOR VERIFICATION OF VOUCHERS RELATED TO EXPENSES. THE A SSESSING OFFICER FAILED TO VERIFY ATTENDANCE REGISTER, SALARY REGISTER, PROVID ENT FUND CHALLANS AND VARIOUS FORMS SUBMITTED TO EP FO, ESIC CHALLAN, LAB OUR LICENSE AS NO RECORD WAS MAINTAINED REGARDING THE PRODUCTION OF S ALARY REGISTER, ATTENDANCE REGISTER AND VARIOUS FORMS SUBMITTED TO EP FO. MY SUBMISSION ASSESSING OFFICER HAS VERIFIED BOOKS OF ACCOUNT AND BILLS & VOUCHERS OF SALARY & WAGES OF ~19532623/- AND STAFF WELFARE EXP. RS 2383483/- AS MENTIONED IN PARA 6 OF ASSESSMENT ORDER. AFTER VERI FICATION OF RECORDS, ITANO.742/IND/2018 SANEE INFRASTRUCTURE PVT. LTD 11 CRORES, RS.1.32 CRORES IS PROVISION FOR PERFORMANCE GUARANTEE WHICH HAS BEEN FOUND JUSTIFIED BY THE HON'BLE ITAT, INDORE IN THE ORDER DT. 19.07.2018 FOR AY 2008-09 IN THE ASSESSEE'S CASE. OTHER EXPENSES IN PROFIT & LOSS ACCOUNT IS RS. 7,71,40,909/- BUT ID. PR.CIT HAS CHOSEN ONE ACCOUNT SUB-CONTRACT WORK AMOUNTING TO RS. 1,10,08,059/- IN WHICH SHE FOUND THAT THIS ACCOUNT HAS NOT BEEN VERIFIED PROPERLY. INADEQUATE ENQUIRY FOR VERIFICATION OF ONE ACCOUNT CANNOT BE CONSIDERE D AS NON- APPLICATION OF MIND BY ASSESSING OFFICER IN THE WHOLE ASSESSMENT. MISMATCH IN AMOUNT PAID TO RELATED PERSONS U/S 40A (2)(B) REPORTED IN AUDIT REPORT AND ITR NO FURTHER QUERIES WERE MADE REGARDING GENUINENESS OF THE PAYMENT TO RELATED PERSON U/S-40A (2)(B). AD HAS ACCEPTED THE REPLY OF ASSESSEE DT. 24.03.2017 THAT PAYMENT TO RELATED PERSONS IS GENUINE. MY SUBMISSION AS REQUIRED BY THE REASON, MISMATCH IS TO BE VERIFI ED AND NOT THE VERIFICATION OF PAYMENTS. THERE IS NO MISMATCH IN T HE AMOUNT PAID TO RELATED PERSONS U/S 40A(2)(B) REPORTED IN AUDIT REP ORT AND ITR. IN THE INCOME TAX ACT, THERE IS NO PROVISION WHICH PRESCRIBES THE SPECIFIC DOCUMENT AND MANNER OF EXAMINATION OF THESE DOCUMEN TS, WHICH SHOULD BE FOLLOWED BY THE ASSESSING OFFICER DURING ASSESSM ENT PROCEEDINGS. IT IS PREROGATIVE POWER OF THE ASSESSING OFFICER TO EXAMI NE THE RECORDS ACCORDING TO HIS WISDOM, DISCRETION AND A MANNER WH ICH HE THINKS PROPER. IT IS HIS POWER AND DISCRETION TO ALLOW OR DISALLOW ANY EXPENDITURE. ASSESSING OFFICER HAS APPLIED HIS MIND AND DUE DILIGENCE IN PASSING THE ASSESSMENT ORDER WITH DISALLOWANCE OF RS. 610586/-.. ASSESSING OFFICER HAS MADE FULL ENQUIRIES AND VERIF ICATIONS ON THE ISSUES ITANO.742/IND/2018 SANEE INFRASTRUCTURE PVT. LTD 13 BE LACK OF PROPER ENQUIRY BY AO FOR REVISION U/S 26 3. AO HAVING MADE SUFFICIENT ENQUIRIES AND PASSED ORDER AFTER DUE APP LICATION OF MIND, REVISION U/S 263 WAS NOT WARRANTED. WHERE TWO VIEWS ARE POSSIBLE AND THE ITO HAS TAKEN ONE VIEW WITH WHICH CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE IN TEREST OF THE REVENUE. IN THE CASE OF CIT VS INTERNATIONAL TRACTORS LTD. ( 2017) 297 CTR (DEL) 119, IT WAS HELD THAT IF INTERPRETATION OF PROVISION IS DEBATABLE AND FURTHER IT IS CONTRARY TO THE PRINCIPLE OF CONSISTENCY, ORDER U/S 263 WAS NOT WARRANTED. IN THE CASE OF CIT VS SOHANA WOLLEN MILLS (2007) 20 7 CTR (P&H) 178 IT WAS HELD THAT MERE AUDIT OBJECTION AND MERELY BECAU SE A DIFFERENT VIEW CAN BE TAKEN ARE NOT ENOUGH TO HOLD THAT ORDER OF A O IS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE. 3. GROUND NO. 4 LD PR. CIT IN HER ORDER U/S 263 OF THE ACT HAS PRES CRIBED CERTAIN DOCUMENTS WHICH SHOULD BE CHECKED BY ASSESSING OFFI CER TO VERIFY EXPENSES. LD PR. CIT HAS FOLLOWING OBSERVATION IN P ARA 11 OF HER ORDER- IT IS ALSO OBSERVED THAT NO THIRD PARTY ENQUIRY HAS BEEN MADE FOR VERIFICATION OF VOUCHERS RELATED TO EXPENSES. THE A SSESSING OFFICER FAILED TO VERIFY ATTENDANCE REGISTER, SALARY REGISTER, PROVID ENT FUND CHALLANS AND VARIOUS FORMS SUBMITTED TO EP FO, ESIC CHALLAN, LAB OUR LICENSE AS NO RECORD WAS MAINTAINED REGARDING THE PRODUCTION OF S ALARY REGISTER, ATTENDANCE REGISTER AND VARIOUS FORMS SUBMITTED TO EP FO IT IS THE DISCRETION OF ASSESSING OFFICER HOW TO VE RIFY EXPENSES FOR HIS SATISFACTION AND WHAT DOCUMENTS SHOULD BE ASKED TO VERIFY EXPENSES. L' D PR. CIT CANNOT NOT DICTATE OR SPECIFY THE DOCUMENTS AND MANNER OF VERIFICATION OF EXPENSES. INCOME TAX ACT HAS BESTOW ED DISCRETIONARY POWER ITANO.742/IND/2018 SANEE INFRASTRUCTURE PVT. LTD 15 HENCE EXPECTATION OF PR. CIT FOR IN-DEPTH VERIFICATION OF RECORDS IS UNWARRANTED AND ILLEGAL. 6. LD. COUNSEL FOR THE ASSESSEE ALSO REFERRED AND R ELIED FOLLOWING JUDGMENTS/DECISIONS; (I) SATYA PRAKASH SHARMA VS PRCIT (2019) 77 CCH 0296 KOL TRIB (II) SRINIVASA HAIR INDUSTRIES VS ACIT (2019) 55 CCH 008 9 VISHAKAPATNAM TRIB. (III) CIT VS MAX INDIA LTD (2007) 213 CTR (SC) 266. (IV) CIT VS INTERNATIONAL TRACTORS LTD. (2017) 297 CTR (DEL) 119 (V) CIT VS SOHANA WOLLEN MILLS (2007) 207 CTR (P&H) 17 8 (VI) MALABAR INDUSTRIAL CO. LTD V/S CIT 243 ITR 83 (SC) (VII) SMT. TARADEVI AGRAWAL V/S CIT 88 ITR 323 (SC) (VIII) RAMPYARIDEVI SARAOGI V/S CIT 67 ITR 84 (SC) (IX) CIT V/S NAGESH KNITWEARS PVT. LTD 345 ITR 135 (DELH I HC) (X) GEE VEE ENTERPRISES V/S ADDL. CIT 99 ITR 375 (DELHI HC) (XI) BHUSHAN STEEL LTD V/S ACIT ITAT A BENCH DELHI (XII) CIT V DEEPAK KUMAR GARG 299 ITR 435 (M.P) (XIII) CIT V MAHAVAR TRADERS 220 ITR 167 (M.P) (XIV) SMT. RENU GUPTA V CIT 301 ITR 45 (RAJASTHAN) (XV) PT LASHKARI RAM V CIT 272 ITR 309 (ALLAHABAD) (XVI) CIT V HIMACHAL PRADESH FINANCIAL CORPN. 186 TAXMAN 105 (HIMACHAL PRADESH) (XVII) CIT V/S PRAFULLA C PANT AND DHARAM VEER JJ 176 ITANO.742/IND/2018 SANEE INFRASTRUCTURE PVT. LTD 17 FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE R EVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFT ER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS S UCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING A N ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESS MENT AND DIRECTING A FRESH ASSESSMENT. EXPLANATION 1.FOR THE REMOVAL OF DOUBTS, IT IS HE REBY DECLARED THAT, FOR THE PURPOSES OF THIS SUB-SECTION, (A) AN ORDER PASSED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988 BY THE ASSESSING OFFICER SHALL INCLUDE (I) AN ORDER OF ASSESSMENT MADE BY THE ASSISTANT COMMISSIONER OR DEPUTY COMMISSIONER OR THE INCOME-TAX OFFICER ON TH E BASIS OF THE DIRECTIONS ISSUED BY THE JOINT COMMISSIONER UNDER SECTION 144A ; (II) AN ORDER MADE BY THE JOINT COMMISSIONER IN EX ERCISE OF THE POWERS OR IN THE PERFORMANCE OF THE FUNCTIONS OF AN ASSESS ING OFFICER CONFERRED ON, OR ASSIGNED TO, HIM UNDER THE ORDERS OR DIRECTIONS ISSUED BY THE BOARD OR BY THE PRINCIPAL CHIEF COMMI SSIONER OR CHIEF COMMISSIONER OR PRINCIPAL DIRECTOR GENERAL OR DIREC TOR GENERAL OR PRINCIPAL COMMISSIONER OR COMMISSIONER AUTHORISED B Y THE BOARD IN THIS BEHALF UNDER SECTION 120 ; (B) 'RECORD' SHALL INCLUDE AND SHALL BE DEEMED ALW AYS TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PROCEEDING UNDER THIS ACT A VAILABLE AT THE TIME OF EXAMINATION BY THE PRINCIPAL COMMISSIONER OR COMMIS SIONER; (C) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECT ION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER OF AN Y APPEAL FILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988, THE POWE RS OF THE PRINCIPAL COMMISSIONER OR] COMMISSIONER UNDER THIS SUB-SECTIO N SHALL EXTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED TO SUCH MAT TERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL. EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, I T IS HEREBY DECLARED THAT AN ORDER PASSED BY THE ASSESSING OFFICER SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, IF, IN THE OPINION OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER, (A) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE; (B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHO UT INQUIRING INTO THE CLAIM; (C) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WIT H ANY ORDER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119 ; OR (D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE W ITH ANY DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE, RENDERED BY THE JUR ISDICTIONAL HIGH COURT OR SUPREME COURT IN THE CASE OF THE ASSESSEE OR ANY OT HER PERSON. ITANO.742/IND/2018 SANEE INFRASTRUCTURE PVT. LTD 19 OTHER WORDS ASSESSING OFFICER IS REQUIRED TO DECIDE THE MATTER JUDICIOUSLY AND IS ALSO STATUTORY REQUIRED TO MAKE AN ASSESSMENT U/S 143(3) OF THE ACT AFTER SCRUTINY AND NOT IN SUM MARY MANNER AS CONTEMPLATED BY SUB SECTION 1 OF SECTION 143 OF THE ACT. THE A.O SHOULD PROTECT THE INTEREST OF THE REVENUE AND TO S EE THAT NO ONE DODGE THE REVENUE TO ESCAPE THE LEGITIMATE TAX. TH E A.O IS NOT EXPECTED TO PUT BLINKERS ON HIS EYES AND ACCEPT THE CLAIM HIM. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED AND THE GENUINENESS OF THE CLAIM MADE IN THE REPORT. 11. WE OBSERVE THAT THE CASE OF THE ASSESSEE WAS SE LECTED FOR LIMITED SCRUTINY ON ACCOUNT OF FOLLOWING REASONS :- (I) HIGH RATIO OF REFUND TO TDS (II) LOW NET PROFIT OR LOSS SHOWN FROM LARGE GROSS RECEIPTS (III) LARGE OTHER EXPENSES CLAIMED IN THE PROFIT & LOSS A/C (IV) MISMATCH IN AMOUNT PAID TO RELATED PERSONS U/ S 40A(2)(B) REPORTED IN AUDIT REPORT AND ITR. (V) MISMATCH BETWEEN INCOME/RECEIPT CREDITED TO P& L A/C CONSIDERED UNDER OTHER HEADS OF INCOME AND INCOME FROM HEADS TO INCOME OTHER THAN BUSINESS/PROFESSION. ITANO.742/IND/2018 SANEE INFRASTRUCTURE PVT. LTD 21 THAT WOULD NOT BY ITSELF GIVE AN OCCASION TO THE PR. CIT TO INTERDICT AND INTERFERE BY EXERCISING HIS REVIS IONAL JURISDICTION MERELY BECAUSE HE IS OF THE OPINION TH AT SOME MORE ENQUIRIES SHOULD HAVE BEEN CONDUCTED IN T HE MATTER. 14. RELIANCE WAS ALSO PLACED ON THE DECISION OF THE CO-ORDINATE BENCH IN THE ASSESSEES OWN CASE VIDE ITA NO.289/IN D/2017 ORDER DATED 19.7.2018 WHEREIN TRIBUNAL OBSERVED AS UNDER: - 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED MATERIAL ON GOING THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE LD. CIT(A) IS EMPOWERED TO INVOKE THE PROVISIONS OF SECTION 263 WHERE HE CO NSIDERS THAT ANY ORDERS PASSED BY THE AO IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LAW IS WELL SETTLED THAT IN ABSENCE OF ANY OF THIS CONDITION WOULD MAKE THE ORDER INVALID. IT IS ALSO A SETTLED POSITION OF LAW THAT WHERE THE AO HAS APPLIED HIS MIND AND MADE INQUIRIES AND AFTER MAKIN G SUCH INQUIRY, HE ADOPTS ONE OF THE POSSIBLE VIEWS IN THA T EVENT ORDER U/S 263 WOULD NOT BE JUSTIFIED. 9. ADMITTEDLY, IN THE PRESENT CASE REOPENING WAS AL SO BASED ON THE SAME GROUND ON WHICH THE LD. CIT(A) PRECEDED TO EXERCISE U/S 263 OF THE ACT. THE HON'BLE MADRAS HIGH COURT I N THE CASE OF INDIRA INDUSTRIES VS. PR. CIT (SUPRA)HELD THAT T HE PRINCIPLE OF ITANO.742/IND/2018 SANEE INFRASTRUCTURE PVT. LTD 23 15. THOUGH LD. DEPARTMENTAL REPRESENTATIVE HAS N OT SPECIFICALLY REFERRED TO ANY DECISION BUT SINCE HE HAD RELIED TO THE FINDING OF LD. PCIT, WE NEED TO CONSIDER THE JUDGMENTS REFERRED AN D RELIED BY THE LD. PCIT. 16. HON'BLE APEX COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD V/S CIT (2000) 243 ITR 83 (SUPRA) THAT NON APPLICATION OF MIND BY THE ASSESSING AUTHORITY ON A PARTICULAR ISSUE RENDE RS THE ASSESSMENT ORDER SUSCEPTIBLE TO REVISION. 17. HON'BLE APEX COURT IN THE CASE OF RAM PYARI SARAOGI VS CIT 67 ITR 84 (SC) HAS HELD THAT THE ASSESSMENT MADE ON UNDUE BASIS AND WITHOUT MAKING ENQUIRIES WHICH ARE CALLED FOR IN TH E CIRCUMSTANCES OF THE CASE IS ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF REVENUE. 18. THE HON'BLE APEX COURT IN THE CASE OF AMITABH B ACCHAN CIVIL PETITION NO.5009 OF 2016 IS ALSO RELEVANT WHEREIN T HE HON'BLE COURT HELD AS UNDER ; THERE CAN BE NO DOUBT THAT SO LONG AS THE VIEW TAK EN BY THE ASSESSING OFFICER IS A POSSIBLE VIEW THE SAME OUGHT NOT TO B E INTERFERED WITH THE COMMISSIONER UNDER SECTION 263 OF THE ACT MERELY ON THE GROUND THAT THERE IS ANOTHER POSSIBLE VIEW OF THE MATTER. PER MITTING EXERCISE OF REVISIONAL POWER IN A SITUATION WHERE TWO VIEWS A RE POSSIBLE WOULD REALLY AMOUNT TO CONFERRING SOME KIND OF AN APPELLATE POW ER IN THE REVISIONAL ITANO.742/IND/2018 SANEE INFRASTRUCTURE PVT. LTD 25 (I) HIGH RATIO OF REFUND TO TDS (II) LOW NET PROFIT OR LOSS SHOWN FROM LARGE GROSS RECEIPTS (III) LARGE OTHER EXPENSES CLAIMED IN THE PROFIT & LOSS A/C (IV) MISMATCH IN AMOUNT PAID TO RELATED PERSONS U/ S 40A(2)(B) REPORTED IN AUDIT REPORT AND ITR. (V) MISMATCH BETWEEN INCOME/RECEIPT CREDITED TO P& L A/C CONSIDERED UNDER OTHER HEADS OF INCOME AND INCOME FROM HEADS TO INCOME OTHER THAN BUSINESS/PROFESSION. 20. NOW AS REGARDS THE INFORMATION CALLED BY THE LD . A.O AND THE INFORMATION SUPPLIED BY THE ASSESSEE DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, WE FIND THAT QUESTIONNAIRE WAS ISSUED U/S 142(1) OF THE ACT ON 03.01.2017 CALLING VARIOUS INF ORMATION FROM THE ASSESSEE. IN REPLY THERETO ASSESSEE SUBMITTED HIS REPLY ON 01.02.2017 SUBMITTING FOLLOWING DOCUMENTS :- 1. ACKNOWLEDGEMENT ALONG WITH COMPUTATION OF INCOME FOR AY 2015-16. 2. FINAL ACCOUNTS FOR FY 2014-15 ARE ENCLOSED. 3. LIST OF BANK ACCOUNTS IS ENCLOSED. 4. NO IMMOVABLE PROPERTY HAS BEEN PURCHASED DURING TH E YEAR. 5. TAX AUDIT REPORT FOR FY 2014-15 IS ENCLOSED. 6. ASSESSMENT ORDER U/S 143(3) OF THE ACT FOR AY 2014-15 IS ENCLOSED. ITANO.742/IND/2018 SANEE INFRASTRUCTURE PVT. LTD 27 (B) LOW NET PROFIT OR LOSS SHOWN FROM LARGE GROSS R ECEIPTS REASON FOR LOWER PROFIT IS THE SAME AS MENTIONED IN POINT (A) ABOVE. (C) LARGE OTHER EXPENSES CLAIMED IN PROFIT & LOSS ACCOUNT RS. 34570900/- HAS BEEN SHOWN IN THE PROFIT & LOSS ACCOUNT FILLED IN THE RETURN OF INCOME FILED. CERTAIN HEAD OF ACCOUNT HAS BEEN GIVEN IN THE PROFIT & LOSS ACCOUNT IN THE RETURN OF INCOME; HENCE REMAINI NG ACCOUNTS ARE TAKEN INTO OTHER EXPENSES. OTHER EXPEN SES OF RS. 3.45 CRORES IS 12.37% OF TURNOVER WHICH IS REASONABLE. C OPY OF ACCOUNTS OF ALL OTHER EXPENSES IS ENCLOSED HEREWITH. (D) MISMATCH IN AMOUNT AID TO RELATED PERSONS U/S 40A 2 B REPORTED IN AUDIT RE ORT AND ITR PAYMENT TO RELATED PERSONS IS GENUINE HENCE THESE WERE NOT DISALLOWED IN THE AUDIT REPORT. MISMATCH B ETWEEN INCOME/RECEIPT CREDITED TO PROFIT & LOSS ACCOUNT CONSIDERED UNDER OTHER HEADS OF INCOME AND INCOME FROM HEADS OF INCOME OTH ER THAN BUSINESS/PROFESSION DETAILS OF OTHER HEADS OF INCOME IN RETURN OF INCOM E IS AS UNDER- INTEREST ON BANK FDR 3727467 DIVIDEND 32877 PURCHASE DISCOUNT 19647 SHORT TERM CAPITAL GAIN 337286 VAT REFUND 45603 416288 0 ITANO.742/IND/2018 SANEE INFRASTRUCTURE PVT. LTD 29 23. THE ABOVE THREE REPLIES SUBMITTED BY THE ASSESS EE SHOWS THAT EXCEPT THESE THREE SUBMISSIONS WHICH WERE IN REPLY TO THE INFORMATION ASKED IN THE NOTICE ISSUED U/S 142(1) O F THE ACT, LD. A.O HAS EXAMINED THE BOOKS OF ACCOUNTS ON TEST BASI S BUT THERE IS NO FURTHER QUESTIONING TO THE ASSESSEE WHICH COULD SHOW THAT LD. A.O HAS TRIED TO INVESTIGATE/EXAMINE ALL THE REASON S FOR WHICH LIMITED SCRUTINY WAS TAKEN UP BY THE DEPARTMENT 24. IT IS ALSO NOTEWORTHY TO NOTE THAT WHEN THE CAS E IS SELECTED FOR NORMAL SCRUTINY THE AREA OF EXAMINING THE RECORDS I S MUCH LARGER THAN THE ONE REQUIRED IN THE CASE OF LIMITED SCRUTI NY CASE. BECAUSE WHEN THE CASE IS SELECTED FOR NORMAL SCRUTINY EACH AND EVERY ASPECT OF THE FINANCIAL STATEMENT IS TO BE LOOKED INTO AND A.O MAY RESORT TO SOME TEST CHECK BASIS EXAMINATION THEORY SO AS TO COMPLETE THE ASSESSMENT BUT THE SITUATION IS LITTLE DIFFERENT FO R LIMITED SCRUTINY CASE. THE REASONS MENTIONED IN THE LIMITED PURPOSE SCRUTINY CASES ARE NOT BEEN PREPARED BY THE LD. A.O EXAMINING THE RECORDS BUT THEY ARE GENERATED WITH THE ASSISTANCE OF COMPUTER SOFTWARE. IN THE PRESENT CASE ASSESSEE E-FILES INCOME TAX RETURNS, A ND TAX AUDIT REPORT. THE COMPUTERS ON THE BASIS OF PROGRAMMES L OADED THEREIN ITANO.742/IND/2018 SANEE INFRASTRUCTURE PVT. LTD 31 THE PROFIT & LOSS ACCOUNT AND REASON NO.5 I.E. MISMATCH BETWEEN INCOME/RECEIPT CREDITED TO P&L A/C CONSIDERED UNDE R OTHER HEADS OF INCOME AND INCOME FROM HEADS TO INCOME OTHER THA N BUSINESS/ PROFESSION, ARE CONCERNED WE FIND THAT THE LD. A.O HAS CLEARLY OBSERVED IN THE ASSESSMENT ORDER THAT HE HAS CHECKE D THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS AND HAS CONDUCTED SUFF ICIENT ENQUIRY AND HAD MADE SOME DISALLOWANCE OF EXPENSES. ONCE E NQUIRY HAS BEEN CONDUCTED WITH SPECIFIC OBSERVATION OF HAVING CHECKED THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS THEN IN THESE CIRCUMSTANCES LD. PCIT WAS NOT JUSTIFIED IN INVOKING THE PROVISIO NS U/S 263 OF THE ACT AND HOLDING THAT THE ASSESSMENT NEEDS TO BE SET ASIDE SINCE THE LD. A.O HAS NOT EXAMINED PROPERLY THE REASONS NO. 3 & 5 MENTIONED HEREIN ABOVE WHICH WERE ALSO THE REASONS FOR SELECTING THE CASE OF LIMITED SCRUTINY. 27. NOW WE NEED TO SEE THAT WHETHER PROPER ENQUIRY WAS CONDUCTED BY THE LD. A.O WITH REGARD TO REASONS NO. 1 & 2 AND 4. REASONS NO.1 & 2 ARE INTER RELATED WHICH RELATES TO HIGH RATIO OF REFUND TO TDS AND LOW NET PROFIT OR LOSS SHOWN FROM LARGE GROSS RECEIPTS AND THE REASON NO.4 RELATES TO MISMATCH IN AMOUNT PAID TO ITANO.742/IND/2018 SANEE INFRASTRUCTURE PVT. LTD 33 PERCENTAGE OF DECREASE IN TURNOVER IS NOT IN CONSON ANCE WITH THE PERCENTAGE OF DECREASE IN COST OF MATERIAL PURCHASE D. PERCENTAGE OF COST OF MATERIAL PURCHASED WHICH WAS APPROXIMATELY 44.92% IN ASSESSMENT YEAR 2013-14 HAS INCREASED TO 60% FOR AS SESSMENT YEAR 2014-15 BUT INTERESTINGLY SALARY, WAGES EXPENS ES HAS COME DOWN FROM 7.5% OF THE TURNOVER TO 7%. NOW ONCE THE SE FIGURES WERE IN FRONT OF LD. A.O WHICH IS THE MAIN BASIS OF REASONS NO. 1 & 2 THE MINIMUM REQUIRED ENQUIRY WAS TOWARDS EXAMININ G DECREASE IN TURNOVER AND THE INCREASE IN COST OF MATERIAL CO NSUMPTION. THE DETAILS OF SALES MADE IN THE PRECEDING AND CURRENT YEAR AND THE DETAILS FOR INCREASE IN PURCHASE COST WERE THE BARE MINIMUM DETAILS WHICH THE LD. A.O COULD HAVE GONE THROUGH TO FORM A N OPINION. MERELY ACCEPTING THE FEW LINER REPLY OF THE ASSESSE E CANNOT BE HELD TO BE SUFFICIENT OR MINIMUM ENQUIRY IN CASE OF SUCH LIMITED SCRUTINY. THE ENQUIRY CONDUCTED BY THE LD. A.O IN THE INSTANT CASE FOR REASONS 1 & 2 CANNOT BE TERMED AS ADEQUATE ENQU IRY. RATHER LOOKING TO THE REPLY GIVEN BY THE ASSESSEE WHICH IS NOT AT ALL CLEAR IN ITSELF, IN OUR VIEW THE LD. A.O HAS NOT CONDUCTED A NY ENQUIRY WITH REGARD TO REASONS NO. 1 & 2 RELATING TO HIGH RATIO OF REFUND OF TDS AND LOW NET PROFIT OR LOSS SHOWN FOR LARGE GROSS RE CEIPTS. THUS LD. ITANO.742/IND/2018 SANEE INFRASTRUCTURE PVT. LTD 35 ASSESSEE AND GIVES THE DETAILS OF THE RELATIVES WIT H THE AMOUNT OF PAYMENT AND THE NATURE OF SUCH EXPENDITURE IN THE F ORMAT PROVIDED IN FORM 3CD. THESE DETAILS MAY HELP THE ASSESSING O FFICER TO EXAMINE THE PAYMENT RELATED PERSONS IF THE CASE IS SELECTED FOR SCRUTINY. WE CAN SAY THAT THESE DETAILS ASSIST THE ASSESSING OFFICER TO FRAME A CORRECT ASSESSMENT AND ENERGY IS SAVED T O GATHER RELATED INFORMATION FROM THE HUGE FINANCIAL DATA MAINTAINED BY THE ASSESSEE. THERE IS HARDLY ANY OCCASION THAT SUCH P AYMENT TO RELATIVES IS DISALLOWED BY THE TAX AUDITOR IN HIS R EPORT BY WAY OF QUALIFICATION OF AUDIT REPORT AND THE SAME AMOUNT I S MENTIONED IN THE ITR. SINCE NO DISALLOWANCE IS MADE BY THE TAX AUDITOR THE DETAILS OF PAYMENT MADE TO THE RELATIVES IS MENTION ED IN REPORT BUT THE AMOUNT IN ITR IS NIL THERE OCCURS MISMATCH. 31. NOW WHEN THE CASE HAS BEEN SELECTED FOR LIMITED SCRUTINY U/S 143(2) OF THE ACT WITH ONE OF THE REASONS RELATING TO THE MISMATCH TO PAYMENT MADE TO RELATIVES IT IS NOT THAT SIMPLE THA T THE LD. A.O MERELY MATCHES THE I.T RETURN TO THE TAX AUDIT RET URN AND COMES TO A CONCLUSION THAT THERE IS NO MISMATCH. IT WILL BE TOO NARROW APPROACH WHICH CANNOT BE ACCEPTED IN SCRUTINY CASES . SO WHAT IS ITANO.742/IND/2018 SANEE INFRASTRUCTURE PVT. LTD 37 32. WE THUS IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE IN VIEW OF THE DISCUSSIONS AND JUDICIAL PRONOUNCEMENTS REFERRED ABOVE ARE OF THE CONSIDERED VIEW THAT THE ACTION OF LD. P CIT OF INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT AND SETTI NG ASIDE THE ASSESSMENT ORDER DATED 2.5.2017 IS PARTLY HELD TO B E JUSTIFIED. WE ACCORDINGLY HOLD THAT FOR THE REASONS NO.1, 2 & 4 N AMELY HIGH RATE OF REFUND OF TDS, LOW NET PROFIT OR LOSS SHOWN FOR LARGE GROSS RECEIPTS AND MISMATCH IN AMOUNT PAID TO RELATED PE RSONS U/S 40A(2)(B) REPORTED IN AUDIT REPORT AND ITR, ACTION OF THE LD. PCIT IS CONFIRMED AND THE MATTER HAS BEEN RIGHTLY SET ASIDE TO THE LD. A.O FOR AFRESH ADJUDICATION IN THE LIGHT OF OUR ABOVE F INDING AS WELL AS THE FINDING OF CIT/PCIT. HOWEVER WITH REGARD TO RE ASONS NO. 3 & 5 LARGE OTHER EXPENSES CLAIMED IN PROFIT & LOSS ACCO UNT AND MISMATCH BETWEEN INCOME/ RECEIPT CREDITED TO PROFIT & LOSS ACCOUNT CONSIDERED UNDER OTHER HEADS OF INCOME AND INCOME F OR HEADS OF INCOME OTHER THAN BUSINESS/PROFESSION , IN OUR CONSIDERED VIEW A PROPER ENQUIRY WAS CONDUCTED BY THE LD. A.O AND DET AILS WERE DULY EXAMINED BEFORE CONCLUDING THE ASSESSMENT BY DISALL OWING CERTAIN EXPENSES AND ONCE THE ENQUIRY HAS BEEN CONDUCTED TH EN THE ACTION OF LD. PCIT TO MAKE ENQUIRY AS PER HIS OPINION IS U NCALLED-FOR AND