Shantai Exim Ltd., Ahmedabad V. Commissioner of Income Tax-2, Surat

ITA 787/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9455 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-01-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 07-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R I PATEL
• Assessee Lawyers: K H SHAH
• Keywords: Bogus purchase; Business income; Revision of order; Loose papers; Opportunity of being heard; Principle of natural justice; Source of fund; Speculation loss; Difference of opinion; Non compliance; Retraction; Change of opinion
• Section: 143(3); 133A; 133(6); 131; 263; 63

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA K. YADAV, JUDICIAL MEMBER AN D SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA NO. 787/AHD/2015 / ASSESSMENT YEAR: 2010-11 SHANTAI EXIM LTD., C/O. KETAN H. SHAH, ADVOCATE, 903, SAPPHIRE COMPLEX, NR. CARGO MOTORS, C.G. ROAD, AHMEDABAD .. APPELLANT PAN : AAECM 1115 D VS COMMISSIONER OF INCOME-TAX-2, AAYAKAR BHAVAN, SURAT .. RESPONDENT ASSESSEE(S) BY : SHRI K. H. SHAH, AR REVENUE BY : SHRI R.I. PATEL, CIT - DR / DATE OF HEARING 13/01/2016 /DATE OF PRONOUNCEMENT 19/02/2016 / O R D E R PER SHAILENDRA K. YADAV, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX-2, SURAT DATED 30.03 .2015 FOR ASSESSMENT YEAR 2010-11, WHEREIN THE ASSESSEE HAS R AISED FOLLOWING GROUNDS:- IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT HAS ERRED ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 2 1 IN INVOKING THE REVISIONARY POWERS MERELY FOR ROV ING INQUIRY BASED ON THE OPINION OF THE AO THAT, THE OR DER PASSED BY HIS PREDECESSORS IS ERRONEOUS AS ADMITTED BY CIT IN THE ORDER U/S.263, PARA 2, THEREOF. IT IS PRAYED THAT, THE REVISIONARY POWER STARTED ON THE B ASIS OF THE AO'S LETTER IS ILLEGAL AND LIABLE TO BE QUAS HED. 1.1 IN INVOKING HIS REVISIONARY POWERS, HE COULD NOT HA VE ACTED OR STARTED SUCH POWERS ON THE BASIS OF ATTENTION DRAWN BY THE WARD OFFICER. THEREFORE, THE ORDER PASSED IS BAD IN LAW. 1.2 IN STARTING THE PROCEEDINGS ON THE BASIS OF AO'S REPORT AND ALSO ERRED IN REMANDING MATTER TO THE AO AGAIN, THEREFORE, THERE IS NO SUCH INDEPENDENT APPLICATION OF MIND. THEREFORE, THE PRESENT ORDER PASSED IN BAD IN LAW AND LIABLE TO BE QUASHED. 2. IN NOT APPRECIATING THE FACTS THAT THE AO HAS COMPLETED THE ASSESSMENT ONLY AFTER SATISFYING HIMSELF ON THE POINTS RAISED DURING ASSESSMENT PROCEEDINGS AND AFTER CONSIDERING THE DETAILED REPL Y FILED BY THE APPELLANT BEFORE HIM AND, THEREFORE, T HE CIT HAS NO JURISDICTION TO INVOKE THE REVISIONARY POWERS U/S.263 OF THE ACT. 2.1 IN NOT APPRECIATING THE FACTS THAT THE AO AFTER EXAMINING THE DETAILS HAS ADOPTED A POSSIBLE OPINIO N ON THE SEVERAL POINTS RAISED IN THE SHOW CAUSE NOTICES ISSUED BY HIM AND, THEREFORE, THE CIT LACKS JURISDICTION TO INVOKE S.263 AND HE CANNOT SEEK TO IMPOSE HIS OWN ERRONEOUS OPINION ON THOSE FACTS TO PASS SUCH AN ORDER. 2.2 THE CIT ALSO ERRED IN PASSING THE ORDER U/S.263 EVEN AFTER PERUSING THE DETAILED REPLY FILED BY THE APPE LLANT AND, THEREFORE, THE REVISION ORDER IS DEVOID OF MAT ERIAL TO SUSTAIN SUCH AN ACTION. 2.3 IN NOT APPRECIATING FACTS THAT THE ORDER U/S. 143(3) PASSED ON 30.03.2013 AND THE SURVEY U/S.133A MADE ON 11.07.2011 AND, THEREFORE, THERE IS NO SUCH ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 3 NEW MATERIAL AND/OR 'RECORD' AVAILABLE BEFORE THE C IT AND AS SUCH THE ORDER PASSED IS BAD IN LAW AND VOID . 2.3.1 IN NOT APPRECIATING THE FACTS THAT, THE DOCUM ENTS MENTIONED BY THE CIT AS PER HIS ORDER PARA 5, WHERE ALREADY ON THE RECORD OF AO AT THE TIME OF PASSING THE ORDER, THEREFORE, THE POWER U/S.263 IS BAD IN LAW A ND LIABLE TO BE QUASHED. 2.4 IN NOT APPRECIATING THE FACTS THAT, WHEN THE A O HAS MADE INQUIRY BY ISSUING VARIOUS NOTICES INCLUDING U/S. 133(6), HE HAVE ALREADY ON RECORD SURVEY REPOR T AND SEIZED MATERIAL ETC. AND, THEREFORE, THE PRESEN T ORDER U/S.263 IS CHANGE OF OPINION. 2.5 IN NOT APPRECIATING THE FACTS THAT, THE JURISDI CTION U/S.263 CAN BE INVOKED FOR LACK OF INQUIRY BUT NOT FOR INSUFFICIENT INQUIRY AND, THEREFORE, THE PRESENT OR DER PASSED IS LIABLE TO BE QUASHED. 3. THE CIT HAS ALSO ERRED IN GIVING FINDING IN HIS ORDER AT PARA 5 TO 9, WHICH IS NOT FOUND A PLACE IN A SHO W CAUSE NOTICE MENTIONED IN ORDER PARA 3 AND, THEREFORE, THE ASSESSEE HAS NO OCCASION TO MEET OUT THE ALLEGATION MADE AND, THEREFORE, THE ORDER PASSE D IS PREJUDICIAL TO THE INTEREST OF THE ASSESSEE AND ALSO LIABLE TO BE QUASHED. 3.1 THAT CIT HAS TRAVEL BEYOND HER JURISDICTION SINCE THE ALLEGATION MADE IN PARA 5 TO 9 IS NOT FORMING PART OF THE SHOW CAUSE NOTICE AND, THEREFORE, LIABLE TO BE QUASHED. 4. IN NOT APPRECIATING THE FACTS THAT, THE FIN DING IN PARA 11 REGARDING ADVANCE IS RECEIVED FROM DEBTORS/CUSTOMERS ARE NOT FOUND PLACE IN THE SHOW CAUSE NOTICE AND, THEREFORE, THIS FINDING IS LIABLE TO BE QUASHED. 5. IN NOT CONSIDERING THE VARIOUS CASE LAWS SIT ED BY THE ASSESSEE IN A SUBMISSION/OBJECTION DATED 09.02.2015, SINCE THE CIT HAS ONLY ABSTRACTED THE ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 4 ASSESSEE'S OBJECTION UPTO PAGE 3, PARA 12.1, HOWEVE R, SUBSEQUENT PARA (I) UPTO (XIII) HAS NOT BEEN TAKEN IN TO CONSIDERATION AND, THEREFORE, THE PRESENT ORDER PASSED IS PREJUDICIAL TO THE INTEREST OF ASSESSEE A ND ALSO AGAINST RULE OF NATURAL JUSTICE AND, THEREFORE , LIABLE TO BE QUASHED. 5.1 IN NOT GIVING HIS COMMENTS IN REFERENCE TO OB JECTION OF ASSESSEE AS PER PARA 4, PARA 5, PARA 7 TO 11 IN THE BODY OF THE ORDER AND, THEREFORE, THE ORDER PASSED BY CIT WITHOUT REBUTTING THE OBJECTIONS IS BAD IN LAW AND LIABLE TO BE QUASHED. 6. IN NOT APPRECIATING THE FACT THAT, ASSESSEE HAS SUBMITTED VARIOUS REPLIES ALONGWITH BANK STATEMENTS AND ALSO INVOICES PAN, ADDRESSES OF ALL THE PURCHAS E PARTIES IN VARIOUS BOX FILES AND THEREFORE, EVEN ON MERITS, THE ORDER PASSED BY CIT IS LIABLE TO BE CANCELLED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E-COMPANY FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSI DERATION ON 26.09.2010 DECLARING TOTAL INCOME OF RS.59,07,546/- . THE SAME WAS SELECTED FOR SCRUTINY; ACCORDINGLY, THE AS SESSING OFFICER PASSED THE ASSESSMENT ORDER U/S. 143(3) OF THE I.T. ACT DETERMINING TOTAL INCOME AT RS.87,89,730/- ON 30.03 .2013. A PROPOSAL U/S.263 DATED 16.07.2014 WAS RECEIVED IN T HE OFFICE OF CIT-2, SURAT FROM ACIT, CIRCLE-4, SURAT THROUGH THE JT.CIT, RANGE-4, SURAT VIDE LETTER NO.SRT/JCIT/RANGE-4/263/ 2014-15 DATED 18.07.2014. THE CONCERNED ASSESSING OFFICER I N THE PROPOSAL HAS SUBMITTED THAT VARIOUS ISSUES REMAINED TO BE ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 5 VERIFIED DURING THE COURSE OF ASSESSMENT PROCEEDING S WHICH HAD MADE THE ORDER ERRONEOUS IN SO FAR AS IT WAS PREJUD ICIAL TO THE INTEREST OF REVENUE. FOR THE SAME OF CONVENIENCE, THE SAID PROPOSAL IS REPRODUCED AS UNDER:- '2. A PROPOSAL U/S.263 DATED 16.07.2014 WAS RECEIV ED IN THIS OFFICE FROM ACIT, CIRCLE-4, SURAT THROUGH THE JT.CIT, RANGE-4, SURAT VIDE LETTER NO.SRT/CIT/RANGE- 4/263/2014-15 DATED 18.07.2014. THE A.O. IN THE PROPOSAL HAS SUBMITTED THAT VARIOUS ISSUES REMAINED TO BE VERIFIED DURING THE COURSE OF ASSESSMENT PROCEEDING S WHICH HAD MADE THE ORDER ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTEREST OF REVENUE. ' 2.1 ON RECEIPT OF ABOVE PROPOSAL, THE RELEVANT ASSE SSMENT RECORDS WERE REQUISITIONED FROM THE OFFICE OF THE D CIT, CIRCLE- 2(3), SURAT AND AFTER PERUSAL OF THE SAME, FOLLOWIN G SHOW CAUSE WAS ISSUED TO THE ASSESSEE:- 'ON GOING THROUGH THE RECORDS OF THE INCOME-TAX ASSESSMENT PROCEEDINGS IN YOUR CASE FOR THE ASSESSM ENT YEAR 2010-11, IT IS NOTICED THAT DURING THE YEAR YO U HAD SHOWN TO HAVE MADE PURCHASE FROM THE FOLLOWING RELA TED PARTIES. SR.NO. NAME OF THE ASSESSEE AMOUNT (RS) 1. 2. 3. 4. 5. 6. 7. 8. DHAVNI ORGANISATION H.M. ORGANISATION J.N.D. TEXTILE J. B. ORGANISATION PRACHI ENTERPRISE R.J. ENTERPRISE R.S. ORGANISATION RIYA ENTERPRISE 3,04,25,288/- 3,01,43,507/- 1,20,91,573/- 3,00,00,801/- 2,99,66,262/- 2,97,06,455/- 3,01,42,434/- 3,00,13,767 ---------------- 22,24,90,087 ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 6 2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y.2010-11, NOTICES U/S.133(6) OF THE ACT WERE ISS UED TO DHWANI ORGANISATION, H.M. ORGANISATION, J.B. ORGANISATION, PRACHI ENTERPRISE, R.J. ENTERPRISE AN D RIYA ENTERPRISE AT THE ADDRESS PROVIDED BY THE ASSESSEE. IN THE CASE OF RIYA ENTERPRISE, R.J. ENTERPRISE, J.B. ORGA NISATION AND DHAVNI ORGANISATION, THE NOTICE REMAINED UNSERV ED BECAUSE THE PARTIES HAD LEFT THE ADDRESSES. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y.2012-13 IT WAS FOUND THAT THESE PARTIES WERE RU NNING THEIR BUSINESS FROM 56, POONAM NAGAR SOCIETY, BHATA R, SURAT WHICH IS A RESIDENTIAL PREMISE. FURTHER, ON P ERUSAL OF BANK STATEMENT OF THESE PARTIES, IT IS FOUND THA T THESE PARTIES HAD DONE TRANSACTIONS ONLY WITH SHANTAI EXI M LTD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y . 2010-11 THE A.O. DID NOT MAKE ANY INDEPENDENT VERIFICATION BUT ACCEPTED THESE TRANSACTIONS BY REL YING SOLELY ON THE CONFIRMATION FILED BY THE ASSESSEE. T HIS HAS RESULTED IN THE ASSESSMENT ORDER PASSED BY A.O. TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT AWDHESH INTERNATIONAL AND HARSH FASHIO N HAD DONE JOB WORK FOR ASSESSEE COMPANY OF MORE THAN RS.25 LAKHS EACH. THE A.O. HAD ISSUED NOTICES U/S.1 33(6) OF THE ACT TO THESE PARTIES BUT REPLIES WERE NOT RE CEIVED FROM BOTH THE PARTIES. THE A.O. HAD BROUGHT THIS FA CT TO THE NOTICE OF THE ASSESSEE AND ASKED IT TO SUBMIT T HE ORIGINAL BILLS OF EACH AND EVERY TRANSACTION. THE A SSESSEE DID NOT SUBMIT THE BILLS. DESPITE THE FACT THAT THE NOTICES U/S. 133(6) REMAINED UN-SERVED AND EVEN ASSESSEE DI D NOT SUBMIT THE COPIES OF BILLS, THE A.O. ACCEPTED THE C LAIM OF PAYMENT ON ACCOUNT OF JOB WORK CHARGES. THIS HAS RESULTED IN THE ASSESSMENT ORDER TO BE ERRONEOUS AN D PREJUDICIAL TO THE INTEREST OF REVENUE. 5. THE COMPANY HAS GIVEN LOAN TO MURLI F. SAWLANI A ND HARISH F. SAWLANI WHO HAVE 10% SHARE HOLDING IN THE ASSESSEE COMPANY. THE A.O. HAS NOT EXAMINED WHETHER THE PROVISIONS OF SECTION 2(22)(E) OF THE I. T. ACT ARE ATTRACTED ON THIS TRANSACTION. ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 7 6. I, THEREFORE, PROPOSE TO PASS AN ORDER U/S. 263 OF THE ACT SO AS TO SET-ASIDE THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER FOR THE A.Y.2010-11 AS IT IS ERRO NEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 7. IN CASE, YOU HAVE ANY OBJECTION TO THE PROPOSED ACTION, YOU ARE REQUESTED TO APPEAL BEFORE ME EITHER PERSON ALLY OR THROUGH YOUR AUTHORIZED REPRESENTATIVE ON 28/01/201 5 AT 11.15 A.M. AT MY OFFICE AT 227, AAYAKR BHAVAN, MAJU RA GATE, SURAT AND TO SHOW CAUSE AS TO WHY SUCH ORDER SHOULD NOT BE PASSED. IN CASE OF NON COMPLIANCE ON YOUR PART, THE MATTER WILL BE DECIDED ON MERITS.' 2.2 IN RESPONSE TO THE ABOVE SHOW CAUSE NOTICE, TH E AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ATTENDED AND MADE A WRITTEN SUBMISSION BEFORE THE CIT(A) ON 09.02.201 5 WHICH READS AS UNDER:- 1. IN THIS CASE, THE ASSESSMENT HAS BEEN FINALIZED U/S. 143(3) VIDE ORDER DATED 30.03.2013 BY ACIT, CIRCLE- 4, SWAT VIZ. PIYUSH KUMAR SINGH YADAV, WHEREIN THE ADD ITION OF RS. 28,82,184/- HAS BEEN MADE. 2. THAT THEREAFTER, THE APPEAL HAS BEEN PREFERRED B Y THE ASSESSEE AND THE HON'BLE CIT (APPEALS) HAS DECIDED THE MATTER VIDE ORDER DATED 09.06.2014 IN APPEAL NO. 13 1/13- 14 AND ADDITION MADE HAS BEEN DELETED IN TOTO. 3. THAT IN THE BODY OF THE ORDER PASSED U/S. 143(3) , THERE IS MENTIONING AT PAGE-1, PARA 1 THAT QUESTIONNAIRE/ NOTICES HAVE BEEN ISSUED ON 16.05.2012 AND ALSO ON 18.03.20 12. IN THIS CONNECTION, WE SAY THAT IN QUESTIONNAIRE DA TED 16.05.2012, THE ISSUE REGARDING APPLICABILITY U/S. 2(22)(E) HAS ALREADY BEEN RAISED AND CONSIDERED IN PARA 8. FURTHER, THE QUERY WAS ALSO RAISED IN REFERENCE TO PURCHASES ABOVE RS. 5,00,000/- AS PER PARA 14, QUER Y REGARDING JOB WORK DONE A PER PARA 15 AND 16, QUERY REGARDING OUTSTANDING CREDITORS ABOVE RS. 5,00,000/ - AS ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 8 PER PARA 17, CLOSING STOCK, REGISTER DETAILS AS PER PARA 18 AND G.P./N.P WORKING THE ISSUE WAS RAISED IN PARA 2 5 OF THE QUESTIONNAIRE DATED 16.05.2012. 4. NOW, AS STATED IN THE BODY OF THE ORDER, THERE I S ANOTHER QUESTIONNAIRE DATED 18.03.2012, WHEREIN REGARDING S O- CALLED BOGUS PURCHASES IN REFERENCE TO INQUIRY U/S. 133(6) WAS ALSO REFERRED AS PER SHOW CAUSE NOTICE PARA (IV )(A)(B). IN PARA (VI), DETAILS REGARDING ALL MAJOR EXPENDITU RE HAVE ALSO BEEN CALLED-FOR AND SUPPLIED. FURTHER, IN REFE RENCE TO LOAN GIVEN TO DIRECTORS/RELATIVES/PARTNERS, THE DET AILS WERE CALLED-FOR AS PER PARA (X)(V)(II). 5. ALL REQUIRED DETAILS HAVE BEEN COMPLIED BY US IN OUR SUBMISSIONS DATED 22.03.2013 MADE BEFORE THE THEN ASSESSING OFFICER IN REFERENCE TO SHOW CAUSE NOTICE DATED 18.03.2013 AND ALSO VARIOUS PAPERS MENTIONING RELEV ANT PARA, WHICH WAS FILED BEFORE THE ASSESSING OFFICER ALONG WITH COPIES OF INVOICES, CONFIRMATION ETC. 6. IT IS SAID THAT IT IS NOT CASE THAT THE ASSESSIN G OFFICER HAS NOT RAISED ANY QUERY IN REFERENCE TO SO-CALLED PURCHASES INTER ALIA IN REFERENCE TO APPLICABILITY OF SECTION 2(22)(E). IN FACT, THE SPECIFIC QUERY WAS RAISED AN D HAS BEEN FULLY COMPLIED AND THEREAFTER AFTER HAVING SATISFACTION BY THE THEN ASSESSING OFFICER, HE HAS NOT ISSUED ANOTHER SHOW CAUSE NOTICE REQUIRING FURTHER DETAILS TO BE SUBMITTED BY THE ASSESSEE, AND THEREFORE, WE SAY THAT TOUCHING THE SAME ISSUE BY WAY OF REVISION IS AMOUNT TO CHANGE OF OPINION AND SAME CANNOT BE PERMITTED. 7. IT IS SAID THAT, ALL THE PARTIES FROM WHOM THE A SSESSEE HAS MADE PURCHASES ARE ASSESSED TO TAX AND THEIR BO OKS ARC ALSO AUDITED. 8. THAT, AS ALLEGED IN YOUR NOTICE PARA 2, YOU HAVE STATED THAT THE NOTICE U/S. 133(6) HAS BEEN RETURNED UNSER VED IN REFERENCE TO PARTY NUMBER 1,4,6,8. THIS ISSUE HAS A LREADY BEEN RAISED BY THE AO IN HIS NOTICE DATED 18.03.201 3, PARA (IV) AND THE QUERY HAS ALREADY BEEN COMPILED B Y THE ASSESSEE VIDE SUBMISSION DATED 22.03.2013 AND, ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 9 THEREFORE, THE ISSUE RAISES NOW BY YOUR HONOUR IN P ARA 2 HAS BEEN TAKEN CARE BY THE AO BY RAISING SPECIFIC Q UERY. 9. IN PARA 3, YOU HAVE STATED THAT THE .SAID PARTIE S HAS MADE TRANSACTIONS ONLY WITH THE ASSESSEE. IN THIS CONNECTION WE SAY THAT FIRST OF ALL, THE ASSESSEE H AS ENTERED IN TO THE ORAL AGREEMENT WITH THE ALL THE P ARTIES WHEREBY WHICH OUR SELLER IS NOT REQUIRED TO SEARCH THE BUSINESS AND, THEREFORE, WE ALSO WILL BE BENEFITED BY MAKING PURCHASE WITH THIS PARTIES AT REASONABLE RAT E IN COMPARE TO THE MARKET RATE. THEREFORE, IT IS IN A B ENEFIT OF BOTH THE PARTIES TO MAKE SUCH ARRANGEMENT. IN ANY C ASE THE ORDER CANNOT BE ERRONEOUS AND PREJUDICIAL TO BE INTEREST OF THE REVENUE. SINCE WE HAVE SATISFIED TH E CONCERN AO AS PER BEST OF HIS KNOWLEDGE AND ABILITY . 10. THE ALLEGATION MADE IN PARA 3 IS FACTUALLY IN C ORRECT BECAUSE THE AO HAS MADE DUE INQUIRY AS PER SHOW CAU SE NOTICE DATED 16.05.2012, ANNEXURE PARA 8, 14, 15, 1 6, AND 25 ISSUED BY DY. CIT, CIRCLE-4, SURAT NAMELY SH RI LOVE KUMAR AND ALSO FURTHER INQUIRY WAS DONE BY SHO W CAUSE NOTICE DATED 18.03.2013 WHICH HAS BEEN COMPLI ED VIDE REPLY DATED 22.03.2013. THUS THEREFORE, THE FI NDING GIVEN IN PARA 3 IS FACTUALLY INCORRECT. 11. NOW IN REFERENCE TO PARA 4, IN REFERENCE TO AVD HESH INTERNATIONAL AND HARSH FASHION, REGARDING JOB WORK , DONE IN THE CASE OF AVDHESH INTERNATIONAL, IT IS FO R RS.27,86,229/- AND IN REFERENCE TO HARSH FASHION IT IS OF RS. 26,08,630/- AND THE DETAILS HAS BEEN FILED AS P ER POINT NO. 15 OF SHOW CAUSE NOTICE DATED 16.05.2012. THE D ETAILS HAS BEEN GIVEN IN THE PROFORMA AS PER PARA 15 AND T HERE IS NO DOUBT REGARDING NATURE OF QUERY RAISED AND COMPL IED WITH. THEREAFTER, NO SUCH COPY ON INVOICES FOR ASKE D FOR AND, THEREFORE, THERE IS NO QUESTION OF MAKING ANY COMPLIANCE IN ABSENCE OF ANY FURTHER QUERY AND/OR N O SUCH INVOICES WAS ASKED FOR. WE ARE NOT AWARE AS TO WHETHER THE AO HAS ISSUED ANY NOTICE U/S. 133(6) TO BOTH THESE PARTIES AND, THEREFORE WE ARE NOT ABLE TO MAK E ANY COMMENTS. FURTHER THE AO HAS NOT BROUGHT TO OUR NOT ICE THIS FACTS, OTHERWISE WE WOULD HAVE TRIED TO MAKE COMPLIANCE AFTER PRESSURIZING THESE TWO PARTIES. IN ANY ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 10 EVENT, THE INQUIRY MADE BUT IT HAS NOT BEEN CONFRON TED TO THE ASSESSEE IS ITSELF PREJUDICIAL TO THE ASSESSEE AND NOT TO THE DEPARTMENT. AS PER SEC. 142(3) IT IS MANDATORY TO INFORM TO THE ASSESSEE, REGARDING ANY INQUIRY DONE, NOW YOUR HONOUR WANTS TO MAKE THE REVISION OF THE ORDER , ON THE GROUND THAT, THERE WAS SOME ENQUIRY MADE AND PA RTY HAS NOT RESPONDED IS NOT A GROUND TO APPLY SEC. 263 . WITHOUT PREJUDICE, WE HEREBY ENCLOSE COPY OF ACCOUN T, BANK STATEMENT AND INCOME TAX RETURN OF THESE TWO PARTIES, AS WE HAVE COLLECTED. KINDLY ALSO REFER PA RA (XIII) OF THIS LETTER WHEREIN WE SAY THAT WITHOUT PREJUDICE, ONLY PROFIT ELEMENT IS REQUIRED TO BE TAXED. 12. NOW REGARDING PARA 5 OF YOUR NOTICE, IN REFEREN CE TO SEC. 2(22)(E), WE BEG TO SUBMIT AS UNDER: 12.1 THE QUERY RAISED BY YOU IS IN REFERENCE TO, MU RLI F. SAVLANI AND HARSH F. SAVLANI, COPY OF ACCOUNT OF BO TH THE PARTIES ARC ENCLOSED HEREWITH ALONGWITH SHAREHOLDIN G LIST FROM WHICH IT IS FOUND THAT SHRI MURLI, F. SAVLANI IS HAVING 9.77% SHAREHOLDING AND HARSH F. SAVLANI IS HAVING 9 .94% AND, THEREFORE, THE PROVISION OF SEC. 2(22) (E) NOT APPLICABLE. A COPY OF THE ACCOUNT OF ABOVE BOTH SHAREHOLDER ALONG WITH THE SHAREHOLDING LIST IS ENC LOSED HEREWITH '. 2.3 ON PERUSAL OF THE WRITTEN SUBMISSION, THE CIT OBSERVED THAT A SURVEY U/S. 133A OF THE ACT WAS CONDUCTED ON THE ASSESSEE COMPANY ON 11.07.2011 AND DURING THE COURS E OF SURVEY, CERTAIN LOOSE PAPERS WERE FOUND, INVENTORIS ED AND IMPOUNDED. FROM THE COPY OF IMPOUNDED DOCUMENTS MAR KED SEL-I TO XIV, IT WAS SEEN THAT DURING THE F.Y. 2009 -10 PERTAINING TO A.Y. 2010-11 THE COMPANY HAS MADE PUR CHASES FROM EIGHT PARTIES AS MENTIONED ABOVE. THE TOTAL P URCHASES ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 11 MADE FROM THESE PARTIES AMOUNT TO RS. 23.38 CR. FR OM THE SURVEY REPORT, IMPOUNDED DOCUMENTS, BANK A/C., STAT EMENT RECORDED, THE CIT OBSERVED THAT ALL THESE PARTIES W ERE FOUND TO BE THE FAMILY CONCERNS OF SHRI SHAILESH DAMOR, AN E MPLOYEE OF THE ASSESSEE COMPANY. THESE CONCERNS HAD ALL GIVEN THE SAME ADDRESS WHICH WAS 56, POONAM NAGAR SOCIETY, BHATAR, SURAT AND (III) INQUIRIES REVEALED THAT NO BUSINESS ACTIV ITIES WERE BEING CARRIED OUT FROM THAT PREMISES. DURING THE COURSE O F SURVEY, PURCHASE BILLS WERE IMPOUNDED VIDE FILES MARKED SEL -I TO XIV. FROM PERUSAL OF THESE IMPOUNDED PURCHASE BILLS IT I S SEEN THAT IN CASES OF TRANSACTIONS WITH PARTIES, OTHER THAN T HE ONES LISTED ABOVE, THE BILLS BORE THE PAID STAMP WHICH CLEARLY MENTIONED PAYMENT DETAILS LIKE BANK, CHEQUE NO., DATE, AMOUNT WHEREAS IN CASES OF BILLS RAISED BY PARTIES RUNNING THEIR B USINESS FROM 56, POONAM NAGAR SOCIETY, BHATAR, SURAT NAMELY DHAV NI ORGANIZATION, , R.J. ENTERPRISE, J. N. D. TEXTILES, RIYA ENTERPRISE, PRACHI ENTERPRISE ETC NO SUCH PAYMENT/ BANK DETAILS WERE MENTIONED ON THE BILLS. THE CIT FURTHE R OBSERVED THAT THE BILLS OF THESE CONCERNS WERE NOT HAVING SA LES TAX NO., VAT NO. AND GST NO. THERE ARE NO TRANSPORTATION BI LLS/LORRY RECEIPTS/ DELIVERY CHALLANS FOR GOOD PURCHASED FROM THESE ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 12 CONCERNS. THESE PARTIES HAVE SOLD GOODS ONLY TO THE ASSESSEE COMPANY AND TO NO OTHER PARTY. THE RETURNS OF INCOM E OF THESE PARTIES FOR A.Y.- 2010-11 WERE ANALYZED FROM WHICH IT WAS OBSERVED THAT (I) ALL THE RETURNS HAVE BEEN FILED B Y SHRI VIRAL VORA, WHO IS THE CFO & DIRECTOR OF THE ASSESSEE COM PANY ON 29.08.2010. THE TOTAL SALES SHOWN BY THESE PARTIES ARE THE PURCHASES SHOWN BY THE ASSESSEE FROM THESE CONCERNS . IN OTHER WORDS THESE CONCERNS HAVE SOLD GOODS ONLY TO THE AS SESSEE COMPANY IN A.Y. 2010-11, 2011-12 & 2012-13. THESE CONCERNS HAVE DEBITED NEGLIGIBLE VAT/SALES TAX COMPARED TO T HE SALES SHOWN IN THEIR RETURN OF INCOME. THE SAME IS THE SI TUATION IN OTHER CONCERNS FROM WHOM THE ASSESSEE HAS MADE PURC HASES DURING THE YEAR. IN GUJARAT VAT/ST IS 4% AND THE AM OUNT OF VAT/ST SHOWN TO BE DEBITED IN THEIR PROFIT AND LOSS ACCOUNT BY THE CONCERNS CASTS DOUBT ABOUT THE GENUINENESS OF T HE TRANSACTIONS UNDERTAKEN BY THESE CONCERNS. THESE CO NCERNS HAVE NOT SHOWN ANY TRANSPORTATION/OCTROI/DELIVERY E XPENSES. IN REPLY, TO THE QUESTION NO. 18 IN HIS STATEMENT RECO RDED U/S. 131 ON 01.08.2011, SHRI MURLI FATANDAS SAWLANI HAD STAT ED THAT: 'IT IS THE RESPONSIBILITY OF THE SUPPLIER TO PROVID E US THE GOODS AT OUR PREMISES. THE CHARGES OF THE TRANSACTI ON ARE TO BE BORNE BY THE SUPPLIER HIMSELF. WE HAVE RECEIV ED THE COPY OF CHALLANS AS A PROOF OF DELIVERY OF GOODS AT OUR ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 13 PREMISES. SO, THERE IS NO REQUIREMENT FOR US TO KEE P THE COPY OF TRUCK/LORRY RECEIPT.' 2.4 IT IS THUS SEEN THAT NEITHER THE PURCHASER NOR THE SELLER HAS SHOWN ANY TRANSPORTATION/OCTROI/DELIVERY EXPENS ES. NONE OF THESE CONCERNS HAVE SHOWN ANY OPENING OR CLOSING STOCK IN THEIR STATEMENT OF ACCOUNT FILED WITH THEIR RETURN OF INCOME FOR A.Y.- 2010-11. NONE OF THESE CONCERNS HAVE DISCL OSED ANY BANK A/C. IN THEIR RETURN OF INCOME. VERY NEGLIGIB LE EXPENSES HAVE BEEN DEBITED BY THESE CONCERNS AND WHATEVER LI TTLE HAS BEEN DEBITED IS ON ACCOUNT OF SALARIES AND WAGES/CO NVEYANCE EXPENSE/AUDIT FEE/OTHER EXPENSES. ALL THESE CONCERN S HAVE OPENED THEIR BANK A/C. ON SAME DATE I.E. 04.04.2011 IN THE SAME BANK, BANK OF BARODA, INTRODUCED BY THE SAME P ERSON. 2.5 ACCORDING TO CIT, THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY WITH SALES TAX AUTHORITIES WHETHER THESE CO NCERNS WERE REGISTERED WITH THEM OR OBTAINED COPY OF THEIR SALE S TAX RETURNS TO VERIFY THE TRANSACTIONS SHOWN THEREIN. T HIS WAS IMPORTANT ESPECIALLY AS IMPOUNDED FILE MARKED SEL- XIV PAGES 170 TO 172 CONTAIN LETTERS WRITTEN BY THE ASSESSEE COMPANY TO COMMERCIAL TAX OFFICIALS THAT TWO CONCERNS FROM WHO M THEY HAD MADE TRANSACTIONS ARE BOGUS CONCERNS AND THEY P AID TAXES ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 14 AND PENALTY ACCORDINGLY. DURING THE COURSE OF SURVE Y U/S. 133A ON 11.07.2011, STATEMENTS U/S. 131 OF THE ACT OF SH RI ROHIT VINODRAI RAWAL, MARKETING EXECUTIVE AND OF SHRI MUR LI FATANDAS SAWLANI, DIRECTOR OF SHANTAI EXIM LTD, ON 01.08.2011 WERE RECORDED U/S. 131 OF THE ACT AND THEY WERE CON FRONTED WITH THE ABOVE FACTS AND ASKED TO ESTABLISH THE GEN UINENESS OF TRANSACTIONS DONE WITH THE ABOVE PARTIES. SHRI ROHI T VINODRAI RAWAL, MARKETING EXECUTIVE, EXPRESSED HIS INABILITY TO EXPLAIN THESE DISCREPANCIES AND SUBMITTED THAT THE DIRECTOR COULD THROW LIGHT ON THESE WHILE SHRI MURLI FATANDAS SAWL ANI, DIRECTOR OF SHANTAI EXIM LTD, HAD SOUGHT FURTHER TI ME. FURTHER, DURING THE FINANCIAL YEAR 2009-10, THE TOTAL PURCHA SES SHOWN IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY FR OM THESE CONCERNS WAS TO THE TUNE OF RS. 23.38 CR. THE CIT O BSERVED THAT THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT U/S 143(3) OF THE I.T. ACT WITHOUT GOING THROUGH THE SURVEY FO LDER, IMPOUNDED DOCUMENTS, STATEMENTS RECORDED U/S 131 DU RING AND AFTER THE SURVEY PROCEEDINGS AND THE SURVEY REP ORT. HE FURTHER OBSERVED THAT THE ASSESSING OFFICER DID NOT MAKE ANY INDEPENDENT VERIFICATION TO ESTABLISH THE GENUINENE SS OF THE PURCHASE TRANSACTION OF THE ASSESSEE COMPANY WITH T HESE ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 15 CONCERNS AMOUNTING TO RS. 23.38 CR. THIS HAS RESULT ED IN THE ORDER BEING ERRONEOUS IN SO FAR AS IT IS PREJUDICIA L TO THE INTEREST OF REVENUE. THE CIT ALSO OBSERVED THAT DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, NOTICE U/S. 133(6) WERE ISS UED TO CERTAIN PARTIES BY THE ASSESSING OFFICER TO VERIFY THE ASSESSEE COMPANY'S TRANSACTIONS WITH THEM. HOWEVER, IN SOME CASES THERE WAS NO COMPLIANCE TO NOTICE U/S. 133(6) AND T HE ASSESSEE DID NOT FILE ANY DETAILS IN SUPPORT OF THESE TRANSA CTIONS DESPITE FINAL SHOW CAUSE NOTICE DTD. 18.03.2013 ISSUED BY T HE ASSESSING OFFICER. WITH REGARD TO JOB-WORK PAYMENT S MADE TO AVDHESH INTERNATIONAL AND HARSH FASHION, NOTHING WA S FOUND ON RECORD IN SUPPORT OF GENUINENESS OF THE TRANSACT ION DESPITE NOTICE US/S. 133(6) ISSUED TO THESE PARTIES. FURTHE R, IN THE CASE OF THE SHRI LAXMI TEX PRINTS PVT. LTD., ONLY TWO BI LLS WERE ON RECORD WHILE THE JOB-WORK EXPENSES DEBITED IN THE N AME OF THIS PARTY WAS RS.1,21,20,767/-. THEREFORE, THE CIT OBSE RVED THAT THE ACTION OF ASSESSING OFFICER IN COMPLETING THE A SSESSMENT U/S. 143(3), DESPITE THE PARTIES FAILED TO COMPLY W ITH THE NOTICE U/S. 133(6) ISSUED TO THEM, DESPITE THE ASSESSEE FA ILED TO FILE THE DETAILS IN COMPLIANCE TO THE FINAL SHOW CAUSE N OTICE AND DESPITE THERE BEING NO DOCUMENTARY EVIDENCE SUBMITT ED BY THE ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 16 PARTIES OR ASSESSEE TO ESTABLISH THE GENUINENESS OF THESE TRANSACTION, HAS RESULTED THE ASSESSMENT ORDER PASS ED U/S 143(3) ON 30.03.2013 ERRONEOUS IN SO FAR AS IT IS P REJUDICIAL TO THE INTEREST OF REVENUE. 2.6 CONSIDERING THE NARRATED FACTS AND CIRCUMSTANCE S, THE ASSESSMENT ORDER PASSED U/S. 143(3) ON 30.03.2013 B Y THE ASSESSING OFFICER WAS FOUND TO BE ERRONEOUS IN SO F AR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY , THE ASSESSMENT ORDER WAS SET ASIDE BY THE CIT VIDE HIS ORDER U/S 263 DATED 30.03.2015 WITH THE DIRECTION TO THE ASSE SSING OFFICER TO FRAME THE ASSESSMENT AFRESH DENOVO. 3. AGGRIEVED BY THE AFORESAID ORDER OF THE COMMISSI ONER OF INCOME-TAX-2, SURAT, THE ASSESSEE IS IN APPEAL BEFO RE US, INTER ALIA, SUBMITTING THAT THE CIT HAS ERRED IN INVOKING THE REVISIONARY POWERS MERELY FOR ROVING INQUIRY BASED ON THE OPINION OF THE ASSESSING OFFICER THAT THE ORDER PAS SED BY HIS PREDECESSORS WAS ERRONEOUS AS ADMITTED BY CIT IN TH E ORDER U/S 263. THE AUTHORIZED REPRESENTATIVE FOR THE ASS ESSEE FURTHER SUBMITTED THAT THE CIT ERRED IN NOT APPRECI ATING THE FACTS THAT THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 17 ONLY AFTER SATISFYING HIMSELF ON THE POINTS RAISED DURING ASSESSMENT PROCEEDINGS AND AFTER CONSIDERING THE DE TAILED REPLY FILED BY THE ASSESSEE BEFORE HIM AND, THEREFORE, TH E CIT HAS NO JURISDICTION TO INVOKE THE REVISIONARY POWERS U/S.2 63 OF THE ACT. HE FURTHER SUBMITTED THAT THE CIT ERRED IN NOT APPR ECIATING THE FACTS THAT THE ASSESSING OFFICER AFTER EXAMINING TH E DETAILS HAS ADOPTED A POSSIBLE OPINION ON THE SEVERAL POINTS RA ISED IN THE SHOW CAUSE NOTICES ISSUED BY HIM AND, THEREFORE, TH E CIT LACKS JURISDICTION TO INVOKE S.263. HE FURTHER SUBMITTED THAT THE CIT ERRED IN NOT APPRECIATING THE FACTS THAT THE FINDIN G IN PARA 11 REGARDING ADVANCE WAS RECEIVED FROM DEBTORS/CUSTOME RS DID NOT FIND PLACE IN THE SHOW CAUSE NOTICE AND, THEREF ORE, THIS FINDING IS LIABLE TO BE QUASHED. BESIDES THE ASSES SEE HAS RELIED UPON VARIOUS CASE LAWS SITED BY THE ASSESSEE IN A SUBMISSION/OBJECTION DATED 09.02.2015. SINCE THE CI T HAS ONLY ABSTRACTED THE ASSESSEE'S OBJECTION UPTO PAGE 3, PA RA 12.1, HOWEVER, SUBSEQUENT PARA (I) UPTO (XIII) HAS NOT BE EN TAKEN IN TO CONSIDERATION AND, THEREFORE, THE PRESENT ORDER PAS SED WAS PREJUDICIAL TO THE INTEREST OF ASSESSEE AND ALSO AG AINST RULE OF NATURAL JUSTICE AND, THEREFORE, LIABLE TO BE QUASHE D. ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 18 4. ON THE OTHER HAND, DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE CIT AND SUBMITTED THAT A SURVEY U/S. 133A OF THE ACT WAS CONDUCTED ON THE ASSESSEE COMPANY ON 11.07.2011 AND DURING THE COURSE OF SURVEY, CERT AIN LOOSE PAPERS WERE FOUND, INVENTORISED AND IMPOUNDED. FROM THE COPY OF IMPOUNDED DOCUMENTS MARKED SEL-I TO XIV, IT WAS SEEN THAT DURING THE F.Y. 2009-10 PERTAINING TO A.Y. 2010-11 THE ASSESSEE COMPANY HAS MADE PURCHASES FROM EIGHT PART IES AS DISCUSSED ABOVE. THE TOTAL PURCHASES MADE FROM THE SE PARTIES AMOUNT TO RS. 23.38 CR. FROM THE SURVEY REPORT, IM POUNDED DOCUMENTS, BANK A/C., STATEMENT RECORDED, IT WAS FO UND THAT ALL THESE PARTIES WERE THE FAMILY CONCERNS OF SHRI SHAILESH DAMOR, AN EMPLOYEE OF THE ASSESSEE COMPANY AND THES E CONCERNS HAD ALL GIVEN THE SAME ADDRESS WHICH WAS 5 6, POONAM NAGAR SOCIETY, BHATAR, SURAT. DURING THE COU RSE OF SURVEY, PURCHASE BILLS WERE IMPOUNDED VIDE FILES MA RKED SEL-I TO XIV. FURTHERMORE THE BILLS OF THESE CONCERNS WER E NOT HAVING SALES TAX NUMBER, VAT NUMBER AND GST NUMBER. THERE WERE NO TRANSPORTATION BILLS/LORRY RECEIPTS/ DELIVERY CH ALLANS FOR GOOD PURCHASED FROM THESE CONCERNS. THESE PARTIES HAVE S OLD GOODS ONLY TO THE ASSESSEE COMPANY AND TO NO OTHER PARTY. THE TOTAL ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 19 SALES SHOWN BY THESE PARTIES ARE THE PURCHASES SHOW N BY THE ASSESSEE FROM THESE CONCERNS. IN OTHER WORDS THESE CONCERNS HAVE SOLD GOODS ONLY TO THE ASSESSEE COMPANY IN A.Y . 2010-11, 2011-12 & 2012-13. THESE CONCERNS HAVE DEBITED NEG LIGIBLE VAT/SALES TAX COMPARED TO THE SALES SHOWN IN THEIR RETURN OF INCOME. THE DEPARTMENTAL REPRESENTATIVE SUBMITTED T HAT IN GUJARAT VAT/ST IS 4% AND THE AMOUNT OF VAT/ST SHOWN TO BE DEBITED IN THEIR PROFIT AND LOSS ACCOUNT BY THE CON CERNS CASTS DOUBT ABOUT THE GENUINENESS OF THE TRANSACTIONS UND ERTAKEN BY THESE CONCERNS. MOREOVER, THESE CONCERNS HAVE NOT S HOWN ANY TRANSPORTATION/OCTROI/DELIVERY EXPENSES. IN THESE BACKGROUND, THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE CIT WAS JUSTIFIED IN OBSERVING THAT THE ASSESSING OFFICER D ID NOT MAKE ANY INDEPENDENT VERIFICATION TO ESTABLISH THE GENUI NENESS OF THE PURCHASE TRANSACTION OF THE ASSESSEE-COMPANY WITH T HESE CONCERNS AMOUNTING TO RS.23.38 CR, WHICH RESULTED T HE ORDER OF ASSESSING OFFICER BEING ERRONEOUS IN SO FAR AS IT I S PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREFORE, THE ORDER OF CIT BE UPHELD. THE DEPARTMENTAL REPRESENTATIVE RELIED UPON THE DECISIONS AND REQUESTED THAT THE ORDER OF THE CIT, BEING ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE, BE ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 20 UPHELD. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON VARIOUS CASE LAWS WHICH WILL BE DISCUSSED LATER. 5. THE ISSUE BEFORE US IS REGARDING THE MERIT OF TH E ORDER PASSED BY THE CIT U/S 263 OF THE ACT. THE CIT HAS MAINLY PASSED THE ORDER ON THE FACT THAT THE ASSESSING OFF ICER DID NOT MAKE ANY INDEPENDENT VERIFICATION TO ESTABLISH THE GENUINENESS OF THE PURCHASE TRANSACTION OF THE ASSESSEE-COMPANY WITH EIGHT PARTIES STATED ABOVE. IT IS NOT IN DISPUTE THAT TH E CIT HAS INVOKED SECTION 263 MERELY ON THE BASIS OF INFORMAT ION AND PROPOSAL RECEIVED FROM THE CONCERNED ASSESSING OFFI CER I.E. ACIT, CIRCLE-4 THROUGH JT. CIT, RANGE-4 DATED 16.07 .2014 AND 18.07.2014. AS STATED ABOVE, THE RELEVANT FINDING GIVEN BY CIT IN HIS ORDER PARA 2 READS AS UNDER: '2. A PROPOSAL U/S.263 DATED 16.07.2014 WAS RECEIVE D IN THIS OFFICE FROM ACIT, CIRCLE-4, SURAT THROUGH THE JT.CIT, RANGE-4, SURAT VIDE LETTER NO.SRT/CIT/RANGE- 4/263/2014-15 DATED 18.07.2014. THE A.O. IN THE PROPOSAL HAS SUBMITTED THAT VARIOUS ISSUES REMAINED TO BE VERIFIED DURING THE COURSE OF ASSESSMENT PROCEEDING S WHICH HAD MADE THE ORDER ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTEREST OF REVENUE. ' THE ACTION U/S.263 INITIATED ON THE BASIS OF RECOMMENDATION BY THE CONCERNED ASSESSING OFFICER/J T. CIT. THE SAID ASSESSING OFFICER HAS CATEGORICALLY HELD T HAT THE ORDER ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 21 OF HIS PREDECESSOR IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THERE AFTER THE CASE RECORD WAS CALLED FOR BY THE CIT AS MENTIONED IN THE ORDER U/S.263 DATED 30.03.2015. IF THE RECOMMENDATION WOULD NOT HAVE RECEIVED FROM THE SUC CESSOR- ASSESSING OFFICER, THEN THE CIT WOULD EVEN NOT HAVE INITIATED THE PROCEEDINGS U/S.263. THEREFORE, IT COULD NOT BE TERMED THAT THE CIT HIMSELF HAS CALLED FOR THE RECORDS. IN THIS CASE, THE RECORD HAS BEEN CALLED FOR ONLY AFTER THE RECOMMEND ATION RECEIVED FROM THE SUCCESSOR ASSESSING OFFICER. IN SIMILAR SITUATION, THE ITAT, MUMBAI A BENCH IN THE CASE O F ASHOKKUMAR SHIVPURI VS. CIT, DATED 07.11.2014, IN I TA NO.631/M/2014, HELD THAT THE REVISION PROCEEDINGS S IMPLY ON THE BASIS OF PROPOSAL FROM THE ASSESSING OFFICER IS NOT VALID, BECAUSE SECTION 263(1) SAYS THAT THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORDS OF ANY PROCEEDINGS UNDE R THIS ACT, AND IF HE CONSIDERS. WHICH MEANS THAT PROPOSAL FO R INITIATION OF REVISION PROCEEDINGS MUST BE INITIATED BY THE CI T. IT IS THE CIT WHO HAS TO CALL FOR AND EXAMINE THE RECORDS; BU T IN THE INSTANT CASE THE PROPOSAL CAME FROM THE ASSESSING O FFICER AND ON RECEIPT OF THE PROPOSAL, THE CIT INITIATED REVIS ION PROCEEDINGS, WHICH IS NOT JUSTIFIED AS HELD BY THE MUMBAI A ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 22 BENCH OF ITAT IN THE CASE OF ASHOK KUMAR SHIVPURI ( SUPRA). FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION IN TH E CASE OF ASHOK KUMAR SHIVPURI (SUPRA) IS REPRODUCED AS UNDER : 16. WE FURTHER FIND THAT THE PROPOSAL WAS RECEIVED BY THE CIT FROM THE AO, WHICH CLEARLY MEANS THAT THERE HAS BEEN NO INDEPENDENT APPLICATION OF MIND BY THE CIT, BECA USE SECTION 263(1) CLEARLY SAYS, THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORDS OF ANY PROCEEDINGS UNDE R THIS ACT, AND IF HE CONSIDERS , WHICH MEANS THAT PROPO SAL FOR INITIATION OF REVISION PROCEEDINGS MUST BE INITIATE D BY THE CIT, BECAUSE, IT IS THE CIT WHO HAS TO CALL FOR AND EXAMINE THE RECORDS. BUT IN THE INSTANT CASE THE PROPOSAL C AME FROM THE AO AND ON RECEIPT OF THE PROPOSAL, THE CIT INITIATED REVISION PROCEEDINGS. THEREFORE, IN OUR O PINION, THE PROCEEDING GETS FLAGGED AT THE THRESHOLD. 17. SINCE THE PROCEEDINGS GOT IN THE INFIRMITY ZONE AT THE FIRST STAGE, IT IS NOT NECESSARY FOR US TO PROCEED FURTHER ON MERITS. 18. WE, THEREFORE, HOLD THAT THE PROCEEDINGS WERE B AD IN LAW AND THUS SUBSEQUENT PROCEEDINGS ARE ANNULLED. 19. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. IN THIS BACKGROUND, LD. AUTHORIZED REPRESENTATIVE F OR THE ASSESSEE IS JUSTIFIED TO CONTEND THAT THE ORDER OF THE CIT BASED ON PROPOSAL OF ERSTWHILE ASSESSING OFFICER IS NOT J USTIFIED. 5.1 WITHOUT BEING PREJUDICE TO ABOVE, WE FIND THAT IN ITAT PUNE BENCH IN THE CASE OF ORIENT (GOA) LTD VS. DCIT , REPORTED IN 66 ITD 479 WHEREIN THE ASSESSING OFFICER HAD EXA MINED THE THREE ISSUES REGARDING WHICH APPRAISAL REPORTS WERE DULY ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 23 FORWARDED BY INVESTIGATION WING. CONSIDERING ALL T HE FACTS, THE ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE DID NOT MAKE ANY EXCESS PAYMENT TO ITS SISTER CONCERNS. REGARDI NG SHORTAGES IN IRON ORE, HE FOUND SIMILAR CLAIM WAS MADE BY OTH ER MINE OWNERS AS WELL, SO THE ASSESSING OFFICER DECIDED TO ACCEPT THE SHORTAGE AS REASONABLE ON THE BASIS OF AVAILABLE FA CTS. ISSUE OF INFLATION OF PURCHASES WAS ALSO INVESTIGATED BY ASS ESSING OFFICER. ISSUE RAISED IN APPRAISAL REPORTS WERE DE ALT WITH BY ASSESSING OFFICER ON MERITS. FURTHER, CIT WAS APPR AISED OF THE INVESTIGATIONS AND HE HAD DIRECTED THE ASSESSING OF FICER TO COMPLETE ASSESSMENTS IN ACCORDANCE WITH LAW. CIT IN VOKED THE PROVISIONS OF S. 263 MERELY ON THE BASIS OF APPRAIS AL REPORTS WAS HELD NOT JUSTIFIED. IT WAS FURTHER OBSERVED TH AT IN THE AFORESAID CASE THAT SECTION 263 CONTEMPLATES A NOTI CE TO ASSESSEE. CIT DID NOT CONSIDER THE SUBMISSIONS OF A SSESSEE. CIT HAS TO DEAL WITH EACH AND EVERY OBJECTION AND C OME TO AN OBJECTIVE FINDING. FAILURE TO FOLLOW THE ABOVE PRO CEDURE WOULD AMOUNT TO FAILURE OF NATURAL JUSTICE. IN THIS BACKG ROUND, IN THE CASE OF ORIENT (GOA) LTD (SUPRA), IT WAS HELD THAT THE CIT WAS NOT JUSTIFIED IN ASSUMING REVISIONAL JURISDICTION U NDER S. 263. IN THE CASE BEFORE US THE CIT HAS NOT TAKEN INTO CO NSIDERATION ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 24 THE OBJECTION DATED 09.02.2015, FILED ON BEHALF OF THE ASSESSEE, AS ENCLOSED IN THE PAPER-BOOK PAGE 28 TO 33. FURTH ER, THE CIT HAS APPLIED SECTION 263 MERELY ON THE BASIS OF SURV EY PROCEEDINGS U/S 133A CONDUCTED ON 11.07.2011 THOUGH THE ORDER U/S 143(3) SUBJECTED TO REVISION DATED 30.03. 2013. THE CITS ORDER IS BASED ONLY ON SAME SURVEY PROCEEDING S, BUT THOSE FINDINGS WERE NOT FOUND IN PLACE IN THE SHOW- CAUSE NOTICE ISSUED TO HIM. THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT ONLY AFTER SATISFYING HIMSELF ON THE POI NTS RAISED BEFORE HIM DURING THE ASSESSMENT PROCEEDINGS AND AF TER CONSIDERING THE DETAILED REPLY FILED BY THE ASSESSE E BEFORE HIM AND THEREFORE, THE CIT HAS NO JURISDICTION TO INVOK E THE REVISIONARY POWERS U/S 263 OF THE IT ACT, 1961. TH E ASSESSING OFFICER HAS DULY APPLIED HIS MIND AFTER RAISING SPE CIFIC QUERY AND QUESTIONNAIRES AS STATED ABOVE AND ARGUED BEFOR E THE CIT IN 263 PROCEEDINGS. FOR THIS THE AUTHORIZED REPRES ENTATIVE FOR THE ASSESSEE TOOK US THROUGH THE QUESTIONNAIRE DATE D 16.05.2012, WHICH IS PLACED AT PAGE 74 TO 77 AS WEL L AS VARIOUS ANNEXURES/PAPERS FILED IN RESPONSE TO THE SAME. F URTHER QUESTIONNAIRE DATED 18.03.2013 AND ITS REPLY WAS FI LED ON 22.03.2013. THE CIT HAS STATED THAT IN SURVEY, THE REVENUE ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 25 AUTHORITIES IMPOUNDED DOCUMENT, BANK ACCOUNT, STATE MENT RECORDED AND ALL THE PARTIES FROM WHOM THE PURCHASE WAS MADE WERE FAMILY CONCERN FROM SRI SHAILESH DAMOR, AN EMP LOYEE OF THE ASSESSEE COMPANY, SAME ADDRESS GIVEN. DURING TH E SURVEY PROCEEDINGS, THE PURCHASE BILLS WERE IMPOUNDED AS P ER FILE NO. 'SEL-I TO SEL-XIV' ON 11.07.2011. IN THIS REGARD, I T WAS STATED THAT FIRST OF ALL SURVEY WAS ON 11.07.2011 AND ORDE R U/S. 143(3) PASSED ON 30.03.2013. ALL THE DETAILS MENTIONED BY CIT IN THIS REGARD HAVE ALREADY BEEN CONSIDERED BY ASSESSING OF FICER SINCE THE SAME WERE AVAILABLE IN SURVEY FOLDER. IT IS NOT A CASE THAT SURVEY HAS TAKEN PLACE AFTER PASSING THE ORDER U/S. 143(3). MOREOVER, THE PAYMENT HAS BEEN MADE BY ACCOUNT PAYE E CHEQUES AND THERE IS NO EVIDENCE FOUND DURING THE C OURSE OF SEARCH THAT AMOUNT PAID BY ASSESSEE CAME BACK TO AS SESSEE IN CASH. IT MAY BE CASE OF INSUFFICIENT ENQUIRY BUT IT IS NOT A CASE OF NO ENQUIRY. SO, INVOKING THE PROVISIONS OF SECT ION 263 IN THESE FACTS AND CIRCUMSTANCES ARE NOT JUSTIFIED. 5.2 WITH REGARD TO ABSENCE OF TRANSPORTATION BILLS, THE STAND OF THE ASSESSEE HAS BEEN THAT THE DELIVERY HAS BEEN GI VEN TO THE ASSESSEE BY DIRECTLY AT THE FACTORY BY THE SELLER O F THE SELLER OF THE GOODS. THE STATEMENT OF ONE OF THE DIRECTOR SHR I MURLIBHAI ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 26 WAS RECORDED ON 01.08.2011 WHEREIN VIDE ANSWER NO.1 8 HE WAS CLARIFIED REGARDING DELIVERY OF GOODS IN A MANNER A S ABSTRACTED BY CIT IN HER ORDER. THUS, THE WHOLE SITUATION WAS CLARIFIED AT ASSESSMENT STAGE ITSELF AND THE ASSESSING OFFICER H AVING APPLIED HIS MIND TO THE FACTS OF THE CASE, PASSED THE ASSES SMENT ORDER WHICH IS SUBJECT MATTER BEFORE US. IN SUCH SITUATI ON, INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT ARE NOT JU STIFIED. 5.3 THE CIT HAS EXERCISED POWER U/S.263 MERELY ON T HE GROUND THAT THERE WAS SURVEY ON 11.07.2011. HOWEVER , SURVEY REPORT AND LOOSE PAPERS FOUND HAS BEEN CONSIDERED B Y THE ASSESSING OFFICER WHILE PASSING THE ORDER U/S.143(3 ) DATED 30.03.2013. THE SURVEY FOLDER AND ALSO LOOSE PAPERS FILES WERE ALREADY AVAILABLE TO THE ASSESSING OFFICER AT THE T IME OF PASSING THE ORDER U/S. 143(3) AND ONLY THEREAFTER HE HAS CA LLED FOR CERTAIN DETAILS AND CONFIRMATION FROM THE SO-CALLED DISPUTED PARTIES. THEREAFTER, AT HIS WISDOM AND AFTER MAKING SATISFACTION AND AFTER VERIFICATION OF PAN ONLINE TOOK CERTAIN V IEWS. MOREOVER, HE ALSO ISSUED SUMMONS TO TWO PARTIES TO WHOM THE ASSESSEE HAS PAID JOB WORK. THEREFORE, IT CANNOT BE SAID THAT THE ASSESSING OFFICER WAS UNAWARE REGARDING SURVEY ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 27 PROCEEDINGS AND NO ENQUIRY HAS BEEN MADE BY HIM AT RELEVANT POINT OF TIME. 5.4 THE COMMISSIONER MAY CALL FOR AND EXAMINE THE R ECORD OF ANY PROCEEDING UNDER THIS ACT, AND, IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE CONCERNED ASSESSING OFF ICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE. THE CIT MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MA DE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THER EON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORD ER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSE SSMENT AND DIRECTING A FRESH ASSESSMENT. IT SHOWS THAT THE POW ER OF SUO MOTU REVISION CAN BE EXERCISED BY THE COMMISSIONER ONLY IF, ON EXAMINATION OF THE RECORDS OF ANY PROCEEDINGS UNDER THIS ACT, HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE A SSESSING OFFICER IS 'ERRONEOUS IN SO FAR AS IT IS PREJUDICIA L TO THE INTEREST OF THE REVENUE'. IT IS NOT AN ARBITRARY OR UNCHARTE RED POWER. IT CAN BE EXERCISED ONLY ON FULFILLMENT OF THE REQUIREM ENT LAID DOWN IN SUB-SECTION(1). THE CONSIDERATION OF THE CO MMISSIONER AS TO WHETHER AN ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, MUST BE BASED ON M ATERIALS ON ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 28 RECORD OF THE PROCEEDINGS CALLED FOR BY HIM. IF THE RE ARE NO MATERIALS ON RECORD ON THE BASIS OF WHICH IT CAN BE SAID THAT THE COMMISSIONER ACTING IN A REASONABLE MANNER COULD HA VE COME TO SUCH A CONCLUSION, THE VERY INITIATION OF PROCEE DINGS BY HIM WOULD BE ILLEGAL AND WITHOUT JURISDICTION. HONBLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF SIRPUR PAPER MILLS LT D VS. ITO, REPORTED IN (1978) 114 ITR 404, OBSERVED THAT THE DEPARTMENT CANNOT BE PERMITTED TO BEGIN FRESH LITIGATIONS BECA USE OF NEW VIEWS THEY ENTERTAIN ON FACTS OR NEW VERSIONS WHICH THEY PRESENT AS TO WHAT SHOULD BE THE INFERENCE OR PROPE R INFERENCE AS OF THE FACTS DISCLOSED OR THE WEIGHT OF THE CIRC UMSTANCES. THE POWER OF 'SUO MOTU' REVISION UNDER SUB-S. (1) I S IN THE NATURE OF SUPERVISORY JURISDICTION AND THE SAME CAN BE EXERCISED ONLY IF THE CIRCUMSTANCES SPECIFIED THERE IN EXIST. TWO CIRCUMSTANCES MUST EXIST TO ENABLE THE COMMISSIONER TO EXERCISE POWER OF REVISION UNDER THIS SUB-SECTION, VIZ. (I) THE ORDER IS ERRONEOUS; (II) BY VIRTUE OF THE ORDER BEING ERRONEOUS PREJUDI CE HAS BEEN CAUSED TO THE INTEREST OF THE REVENUE. IF AN ASSESSING OFFICER ACTING IN ACCORDANCE WITH L AW MAKES CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDE D AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE ACCORD ING TO ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 29 CIT THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORA TELY. THIS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION O F JUDGMENT OF THE COMMISSIONER FOR THAT OF THE ASSESSING OFFICER WHO PASSED THE ORDER, UNLESS THE DECISION IS HELD TO BE ERRONE OUS. CASES MAY BE VISUALISED WHERE ASSESSING OFFICER WHILE MAK ING 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 ACCOU NTS OR BY MAKING SOME ESTIMATES HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTI MATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND, LE FT TO THE COMMISSIONER, HE WOULD HAVE ESTIMATED THE INCOME AT A HIGHER FIGURE THAN THE ONE DETERMINED BY THE ASSESSING OFF ICER. THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO RE-EX AMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGH ER FIGURE. IT IS BECAUSE THE ASSESSING OFFICER HAS EXERCISED T HE QUASI- JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT BE TER MED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUSION. IT MAY BE SAID IN SU CH A CASE THAT, IN THE OPINION OF THE COMMISSIONER, THE ORDER IN QUESTION ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 30 IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. BUT THAT BY ITSELF WILL NOT BE ENOUGH TO VEST THE COMMISSIONER WITH TH E POWER OF SUO MOTU REVISION BECAUSE THE FIRST REQUIREMENT, NA MELY, THE ORDER IS ERRONEOUS, IS ABSENT. SIMILARLY IF AN ORDE R IS ERRONEOUS BUT NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE, THEN ALSO THE POWER OF SUO MOTU REVISION CANNOT BE EXERCISED. ANY AND EVERY ERRONEOUS ORDER CANNOT BE SUBJECT-MATTER OF REVISIO N BECAUSE THE SECOND REQUIREMENT ALSO MUST BE FULFILLED. THER E MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO ESTABLISH TH AT 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. IN THIS BACKGROUND, CIT WAS NOT JUSTIFIED IN REVISING THE ORDER OF THE ASSESSING OFFICER PASSED BY HIM AF TER APPLICATION OF HIS MIND TO THE FACTS OF THE CASE. 5.5 WITHOUT PREJUDICE TO THE ABOVE, THE SO-CALLED B OGUS PURCHASE IN SHOW-CAUSE NOTICE WAS AS PER PARA 1, 2 AND 3, WHEREIN THERE WAS NO SUCH FINDING/SHOW CAUSE NOTICE IN REFERENCE TO THE SEIZED MATERIAL FOUND AND SURVEY T AKEN PLACE AS WELL AS VARIOUS FINDING GIVEN BY THE CIT IN A FI NDING PORTION OF THE ORDER. IN THE SHOW-CAUSE NOTICE PARAGRAPH 4 REGARDING ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 31 AVADHESH INTERNATIONAL AND HARSH FASHION, IN REFERE NCE TO NON-FILING OF INVOICES, IT WAS SAID THAT NO SUCH IN VOICES WAS AKSED FOR BECAUSE THE PAYMENT HAS BEEN MADE BY ACCO UNT PAYEE CHEQUES AS PER ASSESSEES BANK ACCOUNT SUBMIT TED AND AS PER THE CONFIRMATION AND ADDRESS FILED DURING TH E COURSE OF ORIGINAL ASSESSMENT. REGARDING THE CIT ORDER WITH REGARD TO THE ADVANCES FROM DEBTORS/CREDITORS, THERE WAS NO S UCH SHOW- CAUSE NOTICE IN REFERENCE TO THIS FINDING. IN VIEW OF THE ABOVE, THE ORDER PASSED BY THE CIT U/S 263 IS PREJUDICIAL TO THE INTEREST OF ASSESSEE, MORE PARTICULARLY, WHEN CIT H AS GIVEN CONTRADICTORY FINDING IN THE ORDER PASSED IN COMPAR ISON TO THE SHOW-CAUSE NOTICE ISSUED. VARIOUS EVIDENCES AND SEI ZED MATERIALS HAVE NOT BEEN RELIED UPON IN THE SHOW-CAU SE NOTICE. IN SUCH SITUATION, ACTION U/S 263 IS NOT JUSTIFIED. 5.6 WITHOUT PREJUDICE TO THE ABOVE, WE FIND THAT IT AT, HYDERABAD BENCH, IN THE CASE OF GANNA SARVAIAH VS. INCOME TAX OFFICER IN ITA NO.1649/HYD/2013, WHEREIN THE AS SESSEE AN INDIVIDUAL WAS ENGAGED IN RETAIL CLOTH BUSINESS. A SURVEY U/S 133A WAS CARRIED OUT IN BUSINESS PREMISES OF ASSESS EE, DURING COURSE OF WHICH ASSESSEE WAS FOUND TO HAVE MADE INV ESTMENT IN CONSTRUCTION OF A FUNCTION HALL. THEREAFTER, ASS ESSEE FILED HIS ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 32 RETURN OF INCOME, DECLARING CERTAIN INCOME APART FR OM AGRICULTURAL INCOME AND EXPLAINED THAT SOURCE OF FU NDS FOR CONSTRUCTION OF FUNCTION HALL WAS PROCEEDS SENT BY HIS SON AND DAUGHTER-IN-LAW FROM ABROAD, WHICH WERE DEPOSITED I N BANK ACCOUNT OF ASSESSEE. DURING COURSE OF ASSESSMENT PR OCEEDINGS, ISSUE RELATING TO INVESTMENT MADE BY ASSESSEE IN CO NSTRUCTION OF FUNCTION HALL WAS EXAMINED BY THE ASSESSING OFFI CER AND EXPLANATION OF ASSESSEE IN RESPECT OF SOURCE OF INV ESTMENT WITH REFERENCE TO ENTRIES MADE IN HIS TWO BANK ACCOUNTS MAINTAINED WITH INDUSIND BANK AND STATE BANK OF HYDERABAD WAS PARTLY ACCEPTED AND PARTLY REJECTED BY THE ASSESSING OFFIC ER AND ADDITION ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS WA S MADE IN RESPECT OF BANK ACCOUNT IN STATE BANK OF HYDERABAD. THE CIT INVOKED JURISDICTION U/S 263 ON GROUND THAT THERE W AS FAILURE ON PART OF THE ASSESSING OFFICER TO MAKE NECESSARY VERIFICATION REGARDING THE DEPOSITS MADE BY ASSESSEE IN HIS BANK ACCOUNT WITH INDUS IND BANK, AND THE ASSESSMENT MADE BY THE ASSESSING OFFICER WAS ERRONEOUS AS WELL AS PREJUDIC IAL TO INTERESTS OF REVENUE AND ASSESSMENT ORDER PASSED BY ASSESSING OFFICER WAS SET ASIDE. IN APPEAL, THE TRIBUNAL HEL D THAT THE ENTRIES IN BANK ACCOUNT OF ASSESSEE MAINTAINED WITH INDUSIND ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 33 BANK WERE NOT ONLY CONSIDERED BY THE ASSESSING OFFI CER, BUT SOURCE OF DEPOSITS FOUND TO BE MADE IN SAID BANK AC COUNT AS EXPLAINED BY ASSESSEE AS THE MONEY RECEIVED BY HIM FROM HIS SON AND DAUGHTER IN LAW IN USA THROUGH PROPER BANKI NG CHANNEL WAS ACCEPTED BY THE ASSESSING OFFICER, AFTE R APPLYING HIS MIND. IN THIS REGARD, IT COULD NOT BE SAID THA T SOURCE OF DEPOSITS FOUND TO BE MADE IN THE BANK ACCOUNT OF TH E ASSESSEE WITH INDUSIND BANK WERE NOT VERIFIED BY THE ASSESSI NG OFFICER AND THERE WAS AN ERROR IN ORDER OF THE ASSESSING OF FICER. IF COMMISSIONER CONTEMPLATED THAT THE ASSESSING OFFICE R SHOULD HAVE ENQUIRED INTO THE SOURCE OF FUNDS IN THE HANDS OF THE SON AND DAUGHTER-IN-LAW OF ASSESSEE, SAME, WOULD AMOUNT TO VERIFYING THE SOURCE OF SOURCE, WHICH IS NOT PERMIS SIBLE. THUS, THE TRIBUNAL HELD THAT THERE WAS NO ERROR IN ASSESS MENT MADE BY THE ASSESSING OFFICER AND THE ORDER PASSED BY CI T(A) IN EXERCISE OF JURISDICTION U/S 263 WAS SET ASIDE. EVE N IN THE CASE BEFORE US, THE ENQUIRY HAS BEEN MADE BY THE ASSESSI NG OFFICER AT THE RELEVANT POINT OF TIME. IT IS NOT THE CASE OF NO ENQUIRY BUT IT IS A CASE OF INSUFFICIENT ENQUIRY. THE AHM EDABAD C BENCH OF TRIBUNAL IN THE CASE OF ASHOK MANILAL THAK KAR VS. ACIT, REPORTED IN (2006) 99 TTJ 1262, WHEREIN SURVE Y WAS ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 34 CONDUCTED AT THE BUSINESS PREMISES OF ASSESSEE AND AT THAT TIME HE DISCLOSED ADDITIONAL INCOME OF RS. 40 LAKHS AND RS. 20 LAKHS FOR TWO ASSESSMENT YEARS ON ACCOUNT OF INCOME EARNED BY HIM THROUGH FOUR ACTIVITIES. SUBSEQUENTLY A LETTER OF RETRACTION TO DISCLOSURE WAS FILED. WHILE PASSING ORDER UNDER SECTION 143(3), THE ASSESSING OFFICER FOUND NO MATERIAL IND ICATING THAT ASSESSEE WAS ACTUALLY ENGAGED IN ANY OF THE FOUR AC TIVITIES ON THE BASIS OF WHICH THE DISCLOSURE WAS MADE. ACCORDI NGLY, THE ASSESSING OFFICER AFTER SCRUTINISING ALL THE MATERI AL, EVIDENCES AND BOOKS OF ACCOUNT PASSED THE ORDER OF ASSESSMENT ASSESSING THE INCOME AS RETURNED. IT CANNOT AT ALL BE INFERRE D THAT THE ASSESSING OFFICER HAD DRAWN ANY INCORRECT ASSUMPTIO N OF FACTS OR HE HAD INCORRECTLY APPLIED THE LAW IN NOT MAKING ANY ADDITION OF THE INCOME DISCLOSED BY THE ASSESSEE. IT WAS HELD BY ITAT THAT THE ORDER PASSED BY THE ASSESSING OFFI CER CANNOT BE SAID TO BE ERRONEOUS WITHIN THE MEANING OF SECTI ON 263. THERE BEING NO MATERIAL TO ESTABLISH EXISTENCE OF U NDISCLOSED INCOME. IT CANNOT BE SAID THAT SUCH INCOME WAS ASSE SSABLE. IN THE ABSENCE OF ANY ADVERSE MATERIAL, EXCEPT A STATE MENT RECORDED UNDER S. 133A(3)(III) THE VIEW TAKEN BY TH E ASSESSING OFFICER COULD NOT BE SAID TO BE A VIEW IMPERMISSIBL E IN LAW AND ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 35 HENCE, IT COULD NOT ALSO BE SAID THAT THE ORDER PAS SED BY THE ASSESSING OFFICER WAS PREJUDICIAL TO THE INTEREST O F THE REVENUE. THESE RATIOS HELP THE CASE OF THE ASSESSEE BEFORE U S. IN THE CASE ON HAND, IT IS NOT THE CASE OF NO INQUIRY BUT IT IS A CASE OF INADEQUATE INQUIRY, BECAUSE ALL DETAILS WITH REGARD TO THE PURCHASES WERE FILED BEFORE THE LOWER AUTHORITIES, AS HELD BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SUN BEAM AUTO LTD, REPORTED IN (2011) 332 ITR 167 (DEL). SINCE A LL THE PARTIES ARE ASSESSED TO TAX, INQUIRIES WERE MADE, CONFIRMAT IONS WERE FILED AND THE ORDER WAS PASSED U/S 143(3) AFTER CON SIDERING THE SURVEY REPORT AND OTHER MATERIAL; IN SUCH SITUATION INVOKING PROVISIONS OF SECTION 263 OF THE ACT ARE NOT JUSTIF IED. 5.7. WITH REGARD TO JOB CHARGES, AVDHESH INTERNATIO NAL AND HARSH FASHION, INQUIRIES WERE MADE U/S 133(6), BUT NO ORIGINAL BILL WAS FOUND. IN FACT, BILLS WERE SEIZED DURING THE COURSE OF SURVEY PROCEEDINGS AS PER SUBMISSION DATED 22.03.20 13. BOTH THE PARTIES ARE ASSESSED TO INCOME-TAX. SO ABSENCE OF ORIGINAL BILLS, WHICH WERE LYING WITH REVENUE AT THE RELEVAN T POINT OF TIME, CANNOT BE THE SOUND BASIS FOR INVOKING PROVIS IONS OF SECTION 263 OF THE ACT. AHMEDABAD C BENCH OF THE TRIBUNAL IN THE CASE OF HITENDRA A. NANAVATI VS. CIT, REPORT ED IN [2011] ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 36 135 TTJ 17, HELD THAT WHERE THE ASSESSING OFFICER W AS SATISFIED WITH THE EXPLANATION OF ASSESSEE REGARDING GENUINEN ESS OF CREDITS ON BASIS OF CONFIRMATIONS FILED BY THE ASSE SSEE, A CHANGE OF OPINION OR VIEW WOULD NOT ENABLE COMMISSIONER TO EXERCISE JURISDICTION U/S 263. THE RATIO OF THIS DECISION S UPPORTS THE CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE. 6. REGARDING THE RELIANCE PLACED BY THE LD. DEPARTM ENTAL REPRESENTATIVE IN THE CASE OF CIT VS. INFOSYS TECHN OLOGIES LTD, REPORTED IN 17 TAXMANN.COM 203, WHEREIN THE QUESTIO N WAS WHETHER EVERY CONCLUSION AND FINDING BY ASSESSING A UTHORITY SHOULD BE SUPPORTED BY REASONS, HOWEVER, IN A SITUA TION WHERE IT IS ONLY A QUESTION OF COMPUTATION IN ACCORDANCE WITH RELEVANT ARTICLES OF A DOUBLE TAXATION AVOIDANCE AGREEMENTS, IT SHOULD BE CLEARLY INDICATED IN ORDER OF ASSESSING AUTHORIT Y, WHETHER OR NOT ASSESSEE HAD GIVEN PARTICULARS OR DETAILS OF IT AND IF ASSESSING AUTHORITY FAILS IN THAT, ORDER DEFINITELY CONSTITUTES AN ORDER NOT MERELY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF REVENUE AND COMMISSIONER WOULD BE JUSTIFIED IN E XERCISING JURISDICTION U/S 263. IN THE CASE BEFORE US, THE A SSESSING OFFICER HAS LOOKED INTO THESE FACTS BASED ON SURVEY PROCEEDINGS AS DISCUSSED ABOVE. IT SHOWS THAT THE ASSESSING OF FICER HAS ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 37 APPLIED HIS MIND TO THE FACTS AS DISCUSSED ABOVE. THE SECOND RELIANCE PLACED BY THE DEPARTMENTAL REPRESENTATIVE IS ON THE DECISION OF HONBLE GAUHATI HIGH COURT IN THE CASE OF CIT VS. JAWAHAR BATTACHARJEE, 24 TAXMANN.COM 215, WHEREIN THE ISSUE WAS WHETHER CASES OF ASSESSMENT ORDER PASSED ON WRONG ASSUMPTION OF FACTS ON INCORRECT APPLICATION OF LAW , WITHOUT DUE APPLICATION OF MIND OR WITHOUT FOLLOWING PRINCIPLES OF NATURAL JUSTICE ARE NOT BEYOND SCOPE OF SECTION 263. WHETH ER NOT HOLDING SUCH INQUIRY AS IS NORMAL AND NOT APPLYING MIND TO RELEVANT MATERIAL WOULD CERTAINLY BE ERRONEOUSLY ASSESSMENT WARRANTING EXERCISE OF REVISIONAL JURISDICTION. RA TIO OF THIS JUDGMENT IS NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US, BECAUSE IT IS NOT A CASE OF NO APPLICATION OF MIND ON THE PART OF THE ASSESSING OFFICER. IN FACT, ASSESSING OFFICER HAS REACHED TO CERTAIN CONCLUSIONS, AFTER APPLYING HIS MIND, ON MA TERIAL GATHERED AND ON THE BASIS OF SURVEY PROCEEDINGS. I N THE PRESENT CASE, IT IS NOT A CASE OF NO INQUIRY ON THE PART OF THE ASSESSING OFFICER. IT MAY BE A CASE OF INADEQUATE OR INSUFFICIENT INQUIRY WITH THE ANGLE OF CIT, WHICH C ANNOT BE THE BASE FOR INVOKING PROVISION U/S 263. THE LD. DEPAR TMENTAL REPRESENTATIVE HAS ALSO PLACED ON RELIANCE ON THE D ECISION OF ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 38 HONBLE DELHI HIGH COURT IN THE CASE OF GEE VEE ENT ERPRISES VS. ACIT, 99 ITR 375 (DELHI), WHEREIN IT WAS HELD THAT THE COMMISSIONER CAN REGARD THE ORDER AS ERRONEOUS ON T HE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE THE ITO SHOUL D HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE STATEMENTS M ADE BY THE ASSESSEE IN HIS RETURN. THE POSITION AND FUNCTION O F THE ITO IS VERY DIFFERENT FROM THAT OF A CIVIL COURT. THE ORD ER BECOMES ERRONEOUS BECAUSE SUCH AN INQUIRY HAS NOT BEEN MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WITH THE ORDER IF A LL THE FACTS STATED THEREIN ARE ASSUMED TO BE CORRECT. IN THE C ASE BEFORE US, IT IS NOT THE CASE OF NO ENQUIRY, BUT MAY BE THE CA SE OF INADEQUATE INQUIRY, WHICH IS NOT SOUND BASIS OF INV OKING PROVISIONS OF SECTION 263 OF THE ACT. THE OTHER DE CISION RELIED UPON BY THE DEPARTMENTAL REPRESENTATIVE IS THE JUDG MENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF ADANI AGR O (P) LTD VS. DCIT, 32 TAXAMNN.COM 356 (GUJ.), WHEREIN THE ASSESS EE CLAIMED SET OFF OF CERTAIN GAIN ON SALE OF SHARES A GAINST UNABSORBED SPECULATION LOSS. THE ASSESSING OFFICER ALLOWED SUCH CLAIM. SUBSEQUENTLY, THE COMMISSIONER HAVING F OUND THAT THE ASSESSING OFFICER HAD ALLOWED ASSESSEES CLAIM WITHOUT PROPER ENQUIRY TOOK REVISIONAL PROCEEDINGS UNDER SE CTION 263 ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 39 AND REMANDED THE PROCEEDINGS TO ASSESSING OFFICER F OR VERIFICATION OF CERTAIN DETAILS BEFORE ACCEPTING AS SESSEES CLAIM. TRIBUNAL DISMISSED THE APPEAL OF THE ASSESSEE ON PL EA THAT COMMISSIONERS ORDER WAS NOT ERRONEOUS. IN THIS CAS E, IT WAS HELD THAT CIT AFTER RECORDING COGENT REASONS FOUND THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS AND ALSO PREJUDICIAL TO THE INTEREST OF THE REVEUE; THEREFOR E, HE WAS ENTITLED TO EXERCISE REVISIONAL POWERS U/S 263. WH ILE DOING SO, HE REMANDED THE PROCEEDINGS BEFORE THE ASSESSING OF FICER FOR FULL INQUIRY AND FRESH CONSIDERATION. THE MAIN ISS UE IN THE CASE OF ADANI AGRO (P) LTD WAS THAT THE ASSESSING OFFICE R HAS ALLOWED THE ASSESSEES CLAIM WITHOUT INQUIRY; SO THE PROVIS ION OF 263 WAS INVOKED BY THE CIT. AS DISCUSSED ABOVE, AS LAI D DOWN IN THE CASE OF SUNBEAM AUTO (SUPRA), IN THE CASE BEFOR E US, THERE MAY BE CASE OF INADEQUATE INQUIRY BUT NOT A LACK OF INQUIRY BECAUSE CONFIRMATION FILED, ADDRESS GIVEN, PAN GIVE N; THEREFORE, THE RATIO OF DECISION IN THE CASE OF ADANI AGRO (P) LTD. DOES NOT SUPPORT THE CASE OF THE REVENUE. FURTHER RELIANCE HAS BEEN MADE BY THE LD. DEPARTMENTAL REPRESENTATIVE IN THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF JYOTI ELE CTRIC MOTORS VS. CIT, REPORTED IN (1999) 237 ITR 280 (GUJ). TH E RATIO OF THIS ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 40 DECISION DOES NOT APPLICABLE TO THE FACTS OF THE PR ESENT CASE BECAUSE IN THE SAID CASE THE MATTER WAS REMANDED BA CK TO THE ITO WITH THE DIRECTION TO EXAMINE THE TERMS OF AGRE EMENT BETWEEN THE PARTIES AND DECIDE THE MATTER AFRESH. IN THE PRESENT CASE, THERE IS NOTHING LIKE AGREEMENT BETWE EN THE PARTIES WHICH CAN BE DECIDED IN THE SET ASIDE PROCE EDINGS. SO THE RATIO OF JYOTI ELECTRIC MOTORS (SUPRA) IS NOT A PPLICABLE TO THE FACTS OF THE CASE BEFORE US. THE LD. DEPARTMENTAL R EPRESENTATIVE ALSO PLACED RELIANCE ON THE DECISION OF HONBLE GUJ ARAT HIGH COURT IN THE CASE OF CIT VS. MM KHAMBHATWALA, REPOR TED IN (1992) 198 ITR 144 (GUJARAT), WHEREIN IT WAS HELD T HAT THE COMMISSIONER CAN EXERCISE THE POWER UNDER SECTION 2 63 EVEN IN THE CASE WHERE THE ISSUE IS DEBATABLE. IN THE PRESENT CASE, THERE IS NO DEBATABLE ISSUE; THEREFORE, THE RATIO O F THIS DECISION DOES NOT APPLY TO THE PRESENT CASE. FURTHER RELIA NCE WAS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TOYOTA MOTOR CORPORATION VS. CIT, (2008) 173 TAXMAN 458 (SC), WHEREIN THE ASSESSING OFFICER DISPOSED OF PROCEEDIN GS STATING THAT PENALTY PROCEEDINGS INITIATED IN THE CASE UNDE R SECTION 271C R.W.S. 274, WERE TO BE DROPPED. ON REVENUES APPEAL, TRIBUNAL REFERRED TO CERTAIN ASPECT AND HELD THAT I NITIATION OF ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 41 PROCEEDINGS U/S 263 WAS IMPERMISSIBLE WHEN CONSIDER ED IN BACKGROUND OF MATERIALS PURPORTEDLY PLACED BY ASSES SEE BEFORE THE ASSESSING OFFICER. ON FURTHER APPEAL, HIGH COUR T OPINED THAT TRIBUNAL COULD NOT HAVE SUBSTITUTED ITS OWN RE ASONINGS WHICH WERE REQUIRED TO BE RECORDED BY ASSESSING OFF ICER. ACCORDINGLY, HIGH COURT REMANDED THE MATTER TO THE ASSESSING OFFICER FOR DISPOSAL AFRESH BY PASSING A REASONED O RDER. THE HONBLE SUPREME COURT HELD THAT THE ORDER PASSED BY THE HONBLE HIGH COURT DID NOT REQUIRE ANY INTERFERENCE . HOWEVER, IN THE PRESENT CASE, THERE IS NO CASE OF SUBSTITUTI ON OF REASONINGS BY ANY AUTHORITIES AS IT WAS A CASE OF I NADEQUATE INQUIRY BY THE ASSESSING OFFICER. THEREFORE, THE D ECISION IN THE CASE OF TOYOTA MOTOR CORPN (SUPRE) IS NOT APPLICABL E TO THE FACTS OF THE PRESENT CASE. IN VIEW OF THE ABOVE FACTUAL A ND LEGAL DISCUSSION, THE ORDER OF THE CIT IS SET ASIDE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 19TH FEBRUARY 2016 AT AHMEDABAD. SD/- SD/- ANIL CHATURVEDI SHAILENDRA KUMAR YA DAV (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD; DATED 19/02/2016 BIJU T., PS ITA NO. 787/AHD/2015 SHANTAI EXIM LTD VS. CIT AY 2010-11 42 !' #'$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! ' ' # / CONCERNED CIT 4. ' ' # ( ) / THE CIT(A) 5. &'( ! , ' ! , / DR, ITAT, AHMEDABAD 6. (- . / GUARD FILE. / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD