Bhiva Shankar Rane, Pune V. Commissioner of Income-tax - V,

ITA 814/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1095 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 23-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DILIP SHARMA
• Keywords: Question of law; Bad and doubtful debts; Reassessment proceedings
• Section: 143(3); 148; 263; 63

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , !', $ % BEFORE SHRI VIKAS AWASTHY, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NOS.813 & 814/PN/2014 ASSESSMENT YEARS : 2008-09 & 2009-10 SHRI BHIVA SHANKAR RANE, GAT NO.52, DEHU ALANDI ROAD, TALAWADE, PUNE 412 114. PAN : AARPR6579A . APPELLANT VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 9, PUNE. . RESPONDENT / APPELLANT BY : SHRI M. K. KULKARNI / RESPONDENT BY : SHRI DILIP SHARMA / DATE OF HEARING : 02.08.2016 / DATE OF PRONOUNCEMENT: 12.08.2016 & / ORDER PER PRADIP KUMAR KEDIA, AM : BOTH THE CAPTIONED APPEALS FILED BY THE ASSESSEE AR E DIRECTED AGAINST SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX-V , PUNE (IN SHORT THE COMMISSIONER), BOTH DATED 28.03.2014 WHEREBY THE T WO DIFFERENT ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER I.E. IN RELA TION TO ASSESSMENT YEAR 2008- 09 PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE IN COME TAX ACT, 1961 (IN SHORT THE ACT) AND ORDER PASSED UNDER SECTION 143 (3) OF THE ACT IN RELATION TO ASSESSMENT YEAR 2009-10, BOTH DATED 16.12.2011 RESP ECTIVELY WERE HELD TO BE ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE IN TERESTS OF THE REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT. 2. BOTH THE APPEAL WERE CLUBBED AND HEARD TOGETHER AS THESE APPEALS RELATE TO THE SAME ASSESSEE AND INVOLVE SIMILAR ISSUES. TH E FACTUAL DIFFERENCES 2 ITA NOS.813 & 814/PN/2014 HOWEVER HAVE BEEN DEALT WITH SEPARATELY FOR EACH AS SESSMENT YEAR. A CONSOLIDATED ORDER HAS BEEN PASSED FOR THE SAKE OF BREVITY. ITA NO.813/PN/2014 (A.Y. 2008-09) : 3. THE ASSESSEE IN ITA NO.813/PN/2014 HAS RAISED TH E FOLLOWING GROUNDS OF APPEAL :- 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ACTION TAKEN BY LD. CIT-V, PUNE UNDER S. 263(1) OF THE ACT AND ORDER PA SSED DT. 28-3-2014 IS CONTRARY TO LAW AND FACTS. THE ORDER IS UNSUSTAINABLE IN LAW AND IT BE QUASHED. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW AND IN VIEW OF THE FACT THAT THE SIMILAR MATTER WAS IN APPEAL BEFORE CIT(A) -V, PUNE AND THEREFORE THE PROVISIONS OF S. 263(1)(C) SQUARELY APPLIED. NO ACT ION WAS THEN POSSIBLE U/S 263 OF THE ACT. THE ORDER U/S 263(1) PASSED BY CIT BE QUAS HED. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE ASSESSMENT ORDER WHICH MERGED INTO APPEAL ORDER OF THE CIT(A) COULD NOT BE TERMED AS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF REVENUE. AL SO UNDER S. 263 THE LD. CIT IS NOT SUPPOSED TO DIRECT FISHING AND ROVING ENQUIRIES BY ISSUING DIRECTIONS TO A. O. THE CIT IS EXPECTED TO EXERCISE HIS POWERS WITHIN THE B OUNDS OF LAW. THE ORDER PASSED BY LD. CIT U/S 263(1) IS THEREFORE, WITHOUT JURISDICTI ON. IT BE QUASHED. 4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE ORDER OF THE A. O. THAT MERGED WITH CIT(A) ORDER CANNOT BE BRANDED AS ERRONEOUS AS IT WAS SO PASSED IN ACCORDANCE WITH THE PROVISIONS OF LAW AND CIT CA NNOT INITIATE ACTION UNDER S. 263(1) OF THE ACT SIMPLY BECAUSE HE DIFFERS FROM HI M. THE ORDER U/S 263(1) PASSED BY LD. CIT BEING WITHOUT JURISDICTION BE QUASHED. 5) THE APPELLANT CRAVES/LEAVE TO ADD, AMEND OR ALTE R ANY OF THE ABOVE GROUNDS OF APPEAL. 4. IN THIS APPEAL, THE ASSESSEE HAS RAISED MULTIPLE GROUNDS OF APPEAL BUT THE ASSESSEE IN SUBSTANCE SEEKS TO ASSAIL THE ACTIO N OF THE COMMISSIONER IN INVOKING SECTION 263 OF THE ACT AND CONTENDS THAT T HE SUBJECT ASSESSMENT ORDER FRAMED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT P ASSED BY THE ASSESSING OFFICER CANNOT BE TERMED AS ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF THE REVENUE. 5. THE RELEVANT FACTS, IN BRIEF, ARE THAT THE ASSES SMENT UNDER SECTION 143(3) R.W.S. 147 OF THE ACT FOR THE ASSESSMENT YEAR 2008- 09 WAS COMPLETED BY THE ASSESSING OFFICER DETERMINING THE TOTAL INCOME AT R S.1,20,02,498/- AGAINST THE RETURNED INCOME OF RS.60,54,000/- VIDE ORDER DATED 16.12.2011. THEREAFTER, 3 ITA NOS.813 & 814/PN/2014 THE COMMISSIONER IN EXERCISE OF HIS REVISIONARY POW ER, ISSUED NOTICE UNDER SECTION 263 OF THE ACT DATED 24.03.2014 REQUIRING T HE ASSESSEE TO SHOW-CAUSE AS TO WHY THE ASSESSMENT SO FRAMED UNDER SECTION 14 3(3) R.W.S. 147 SHOULD NOT BE SET-ASIDE OR MODIFIED. IT WAS ALLEGED BY THE CO MMISSIONER THAT EXAMINATION OF RECORDS REVEALED THAT ASSESSMENT ORDER SO PASSED IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE FOR THE REASONS THAT THE ASSESSING OFFICER HAS FAILED TO CONDUCT PROPER ENQUIRIES/VERI FICATIONS/EXAMINATIONS IN RESPECT OF TRADING RESULTS DECLARED IN EXCLUSION TO EXTRAORDINARY INCOME DECLARED BY WAY OF WRITE BACK OF CERTAIN CREDITS. SECONDLY, THE COMMISSIONER OBSERVED THAT CERTAIN FIGURES OF INCOME OF RS.2,40, 21,887/- AS AN AMOUNT WRITTEN BACK DOES NOT TALLY WITH CORRESPONDING BREA KUP OF RS.2,36,44,153/- SUBMITTED IN THE COURSE OF ASSESSMENT PROCEEDINGS O F AY 2007-08. THE COMMISSIONER ALLEGED THAT THE ASSESSING OFFICER HAS FAILED TO VERIFY THIS DISCREPANCY AS WELL AS THE AUTHENTICITY OF THE DISC LOSURE. 6. IN RESPONSE, THE ASSESSEE SUBMITTED BEFORE CIT T HAT THE IMPUGNED RE- ASSESSMENT ORDER SOUGHT TO BE SET-ASIDE HAS BEEN CA RRIED IN APPEAL BEFORE THE CIT(A) AND THE CIT(A) PASSED APPELLATE ORDER ON 27. 07.2012 WITH CERTAIN RELIEFS GRANTED TO THE ASSESSEE. THE DEPARTMENT AL SO FILED SECOND APPEAL BEFORE THE ITAT, PUNE AGAINST THE AFORESAID ORDER OF CIT(A ). IN VIEW OF THE SAME, IT WAS ARGUED THAT THE ISSUES BEING SIMILAR, EXPLANATI ON (C) TO SECTION 263 WILL BE APPLICABLE WHICH PROHIBITS REVISION UNDER SECTION 2 63 IN SUCH CASES. AS REGARDS INCOME CREDITED TOWARDS WRITTEN BACK AMOUNT , THE ASSESSEE QUOTED THE PROVISIONS OF SECTION 41(1) OF THE ACT AND SUBMITTE D THAT ASSESSEE IN THIS CASE HAS UNILATERALLY ADMITTED THE CESSATION OR REMISSIO N OF LIABILITY TO THE EXTENT OF RS.2,40,04,153/- WHICH WAS ACCEPTED BY THE CIT(A). IT WAS FURTHER STATED BEFORE THE COMMISSIONER THAT THERE WAS NO FAILURE O N THE PART OF THE ASSESSING OFFICER IN MAKING ENQUIRIES SINCE THE ASSESSMENT WA S COMPLETED ON UNILATERAL WRITE BACK OF LIABILITIES BY ASSESSEE AND THUS BEYO ND THE INCOME WRITTEN BACK, NO INQUIRY WAS PLAUSIBLE AND CALLED FOR. IT WAS ALS O STATED THAT IT COULD NOT BE SAID THAT ENQUIRY WAS INADEQUATE AS COMPLETE DETAIL S WERE PROVIDED TO THE 4 ITA NOS.813 & 814/PN/2014 ASSESSING OFFICER. THEREFORE, THE PROPOSED ACTION I S NOT PERMISSIBLE UNDER SECTION 263 OF THE ACT. 7. HOWEVER, THE COMMISSIONER DID NOT ACCEPT THE AFO RESAID PLEAS RAISED BY THE ASSESSEE. THE COMMISSIONER OBSERVED THAT THE A SSESSMENT WAS COMPLETED BY THE ASSESSING OFFICER IN HASTE WITHOUT PROPER EX AMINATION OF MATERIAL AVAILABLE ON RECORD AND WITHOUT PROPER APPLICATION OF MIND. IT WAS FURTHER OBSERVED BY THE COMMISSIONER THAT ON THE FACE OF WR ITTEN BACK OF AN AMOUNT OF RS.2,36,44,153/-, MEAGER INCOME OF RS.60,54,000/- D ECLARED IN ASSESSMENT YEAR 2008-09 APPEARS UNBELIEVABLE ON A SUBSTANTIAL TURNOVER OF RS.41.36 CRORES AS AFTER EXCLUDING THE EXTRA ORDINARY PROFIT OF RS. 2.36 CRORES, THE REGULAR PROFITS WOULD IN FACT BE A HUGE LOSS. THUS, THE COMMISSION ER DID NOT AGREE WITH THE CONTENTIONS OF THE ASSESSEE AND OBSERVED THAT THE A SSESSING OFFICER FAILED TO MAKE REQUISITE ENQUIRY ON THE ISSUES INVOLVED AND I N THE ABSENCE OF ENQUIRY/VERIFICATIONS ON THE VITAL ISSUE OF HUGE LO SS DECLARED, THE ASSESSMENT IS RENDERED ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL T O THE INTERESTS OF THE REVENUE. CONSEQUENTLY, THE COMMISSIONER SET-ASIDE THE ASSESS MENT MADE UNDER SECTION 143(3) R.W.S. 147 WITH DIRECTIONS TO RE-FRAME THE A SSESSMENT AFTER CONDUCTING PROPER ENQUIRIES ON THE ISSUES INVOLVED. 8. AGGRIEVED BY THE AFORESAID REVISIONARY ORDER OF THE COMMISSIONER UNDER SECTION 263, THE ASSESSEE HAS PREFERRED AN APPEAL B EFORE THE TRIBUNAL. 9. THE LD. COUNSEL FOR THE ASSESSEE, SHRI M. K. KUL KARNI REITERATED THE AFOREMENTIONED FACTS AND SUBMITTED AT THE OUTSET TH AT IMPUGNED ASSESSMENT ORDER WHICH HAS BEEN SOUGHT TO BE SET-ASIDE WAS SUB JECTED TO APPEAL BEFORE THE CIT(A) AND THEREAFTER BEFORE THE ITAT. HE ADVERTED TO THE ORDER OF THE TRIBUNAL IN THE CASE OF ACIT VS. BHIVA S. RANE IN I TA NOS.2058 & 2059/PN/2012, ORDER DATED 27.09.2013 IN THIS REGARD . HE SUBMITTED WITH REFERENCE TO THE APPELLATE ORDERS THAT THE QUESTION ON WRITE BACK OF AN AMOUNT REFERRED UNDER SECTION 41(1) STANDS CONCLUDED. HE THEREAFTER SUBMITTED THAT IT IS NOT IN DISPUTE THAT THE ASSESSEE FURNISHED THE T RADING RESULTS TOGETHER WITH THE 5 ITA NOS.813 & 814/PN/2014 ACCOUNT OF WRITE BACK OF CREDITORS, ETC. IN THE COU RSE OF HEARING. ALL THE RELEVANT DETAILS WERE SUBMITTED AS CALLED FOR BY AS SESSING OFFICER. HE FINALLY SUBMITTED THAT THERE WAS NO ERROR PER SE IN TERMS OF SECTION 263 IN THE ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT A ND THEREFORE POWER EXERCISED BY THE COMMISSIONER UNDER SECTION 263 IS VITIATED IN LAW. CONSEQUENTLY, THE ORDER FRAMED UNDER SECTION 263 OF THE ACT DATED 28.03.2014 REQUIRES TO BE SET-ASIDE. 10. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR TH E REVENUE, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE COMMISSION ER AND SUBMITTED THAT IN THE ABSENCE OF REQUISITE ENQUIRY ON THE PERTINENT I SSUES AS POINTED OUT IN THE ORDER OF THE COMMISSIONER, THE ACTION OF THE COMMIS SIONER UNDER SECTION 263 WAS IN ACCORDANCE WITH LAW AND JUSTIFIED. 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. SECTION 263 OF THE INCOME-TAX ACT, 1961 (THE ACT) CONFERS THE POWER UPON THE COMMISSIONER TO CALL FOR AND EXAMINE THE RECORDS OF A PROCEEDING UN DER THE ACT AND REVISE ANY ORDER IF HE CONSIDERS THE SAME TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER CAN TAKE RECOURSE TO REVISION UNDER SECTION 263 WHERE THE ASSESSMENT ORDER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. THE TWIN CONDITIONS ARE REQUIR ED TO BE SATISFIED SIMULTANEOUSLY. THE COMMISSIONER IN THE PRESENT CAS E HAS PURPORTED TO ACT IN EXERCISE OF POWER UNDER SECTION 263 AND THEREBY HAS SOUGHT TO SET ASIDE THE REASSESSMENT ORDER OF THE ASSESSING OFFICER PASSED UNDER S. 147. THE CIT OBSERVED THAT THE ONCE THE PROFITS IN THE NATURE OF EXTRA ORDINARY INCOME ARE EXCLUDED, THE TRADING RESULTS DECLARED BY THE ASSES SEE IS, IN ESSENCE, A HUGE LOSS. THE GROUND FOR IMPUGNED ACTION UNDER S. 263 I S THAT THE ASSESSING OFFICER HAS FAILED TO MAKE REQUISITE ENQUIRY INTO THE BONAF IDES OF LOSS DECLARED IN THE TRADING RESULTS SANS THE AMOUNT WRITTEN BACK AS INC OME TOWARDS REMISSION OF LIABILITY ON ACCOUNT OF OUTSTANDING CREDITORS IN TE RMS OF SECTION 41(1) WHICH IS AN EXTRAORDINARY ITEM. IT IS THE CASE OF COMMISSION ER THAT ASSESSING OFFICER OUGHT TO HAVE CONDUCTED ENQUIRY ON THE ASPECTS GIVI NG RISE TO LOSS IN TRADING 6 ITA NOS.813 & 814/PN/2014 RESULTS WHILE ACCEPTING THE BOOK RESULTS. ANOTHER S TAND TAKEN BY THE COMMISSIONER FOR INVOKING REVISIONARY JURISDICTION UNDER SECTION 263 IS THAT CERTAIN AMOUNT WRITTEN BACK TOWARDS UNPAID CREDITS AS NOTED ABOVE DO NOT TALLY VIS--VIS THE AMOUNT POINTED OUT IN THE COURSE OF ASSESSMENT PROCEEDINGS OF ASSESSMENT YEAR 2007-08. HENCE, IN THE ABSENCE OF PROPER ENQUIRY ON THE ISSUES INVOLVED, THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 12. ON THE POINT OF LACK OF ENQUIRY ON ISSUES POINT ED OUT BY THE CIT, THE LD. COUNSEL, IN RESPONSE TO QUERY FROM BENCH, SUBMITTED THAT THE RE-OPENING ACTION UNDER SECTION 147/148 WAS TAKEN AS FOLLOW UP ACTION ON THE BASIS OF ASSESSMENT CARRIED OUT FOR THE ASSESSMENT YEAR 2007-08 ON THE ISSUE OF INCOME ARISING FROM WRITE BACK OF UNPAID CREDITS UNDER SECTION 41( 1) OF THE ACT AS APPEARING IN THE BOOKS. 12.1 A PERTINENT QUESTION OF LAW THAT ARISES IN THE SUBJECT MATTER OF APPEAL IS THE SCOPE OF REVISIONARY POWERS OF THE CIT UNDER S. 263 TO A RE-ASSESSMENT ORDER PASSED IN PURSUANCE OF SECTION 147 / 148 OF T HE ACT. 12.2 AS THE ASSESSMENT SOUGHT TO BE REVISED WAS MAD E UNDER SECTION 143(3) R.W.S. 147 OF THE ACT, IT IS OSTENSIBLE THAT THE AS SESSING OFFICER WAS REQUIRED TO FRAME RE-ASSESSMENT OF THE INCOME CHARGEABLE TO TAX WHICH IS FOUND TO HAVE ESCAPED ASSESSMENT IN THE LIGHT OF REASONS RECORDED UNDER S. 148(2) BEFORE ISSUANCE OF NOTICE. INDEED, THE JURISDICTION OF TH E ASSESSING OFFICER UNDER S. 147 ALSO EXTENDS TO OTHER INCOME WHICH MAY COME T O HIS NOTICE SUBSEQUENTLY IN THE COURSE OF RE-ASSESSMENT PROCEEDINGS. HOWEVER , PRECISE QUESTION THAT EMERGES IS WHETHER THE ASSESSING OFFICER IN EXERCIS E OF POWERS CONFERRED UNDER S. 147 IS UNDER STATUTORY DUTY TO PEDDLE ROVING ENQ UIRIES TO EXPLORE THE POSSIBILITY OF ESCAPEMENT ON EVERY OTHER ITEM THAT MAY POSSIBLY GIVE RISE TO SOME CHARGEABLE INCOME IN THE HANDS OF AN ASSESSEE IN THE GARB OF ASSESSMENT OF OTHER INCOME WITHOUT THERE BEING ANY RELEVANT MATERIAL IN THE POSSESSION OF THE AO IN THIS REGARD. 7 ITA NOS.813 & 814/PN/2014 12.3 SECTION 147 PROVIDES THAT THE AO MAY ALSO ASSE SS OR REASSESS OTHER INCOME WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN T HE COURSE OF PROCEEDINGS IN ADDITION TO THE ESCAPED INCOME FOR WHICH THE ASS ESSMENT WAS REOPENED. THUS THE TEXT OF S. 147 I.E. COMES TO HIS NOTICE UNMISTAKABLY SUGGESTS PASSIVE NATURE OF AUTHORITY AVAILABLE WITH THE AO TO ASSESS OTHER INCOME TOO ALONG WITH ESCAPED INCOME FOR WHICH THE CASE WAS REOPENED . OSTENSIBLY, UNLIKE A REGULAR ASSESSMENT, S. 147 DOES NOT COMPREHEND A PR O-ACTIVE PROBE OF GENERIC NATURE AND RANDOM ENQUIRIES INTO ALL ASPECTS OF THE ASSESSMENT PER SE. IN ORDINARY PARLANCE, WITCH HUNTING IS NOT INTENDED. T HUS THE EXERCISE OF JURISDICTION TO INCLUDE OTHER INCOME CAN NOT BE S TRETCHED TO HOLD FISHING AND ROVING ENQUIRIES WITHOUT SOME PROBABLE CAUSE THAT A SSESSEE HAS OMITTED OR FAILED TO DISCLOSE SUCH OTHER INCOME. TO REITERAT E, NO FISHING ENQUIRY IS PERMISSIBLE TO MERELY EXPLORE IF SOME OTHER INCOME HAS ALSO ESCAPED OR NOT. IN THIS CONTEXT, REFERENCE MAY ALSO BE GAINFULLY MA DE TO THE OBSERVATIONS OF THE HONBLE SUPREME COURT IN THIS REGARD. THE HONBLE A PEX COURT IN THE CASE OF CIT VS. ALAGENDRAM FINANCE LTD. (2007)) 293 ITR 1 R ELEVANT TO AY 1994-95 CLEARLY OBSERVED THAT THERE MAY NOT BE ANY DOUBT OR DISPUTE THAT ONCE AN ORDER OF THE REASSESSMENT IS REOPENED, THE PREVIOUS UNDER ASSESS MENT WILL BE HELD TO BE SET ASIDE AND THE WHOLE PROCEEDINGS WOULD START AFRESH, BUT THAT WOUL D NOT MEAN THAT EVEN WHEN THE SUBJECT MATTER OF REASSESSMENT IS DISTINCT AND DIFFERENT, T HE ENTIRE PROCEEDINGS WOULD BE DEEMED TO HAVE BEEN REOPENED. KEEPING IN MIND THE DICTUM AS SET OUT BY THE HONBL E APEX COURT, IT IS MANIFEST THAT NOT CONDUCTING ROVING EN QUIRIES ON UNCONNECTED ISSUES CANNOT BE VIEWED AS FAILURE TO DISCHARGE STA TUTORY DUTY CAST UPON ASSESSING OFFICER IN A REASSESSMENT PROCEEDINGS. CO NSEQUENTLY, SUCH ALLEGED FAILURE TO CONDUCT ENQUIRY ON UNCONNECTED ISSUES CA N NOT, IN OUR VIEW, COME WITHIN THE SWEEP OF EXPRESSION ERRONEOUS FOR THE PURPOSES OF SECTION 263 OF THE ACT. 12.4 TO CONCLUDE, A COMBINED READING OF SECTION 263 AND SECTION 147 WOULD CLEARLY SUGGEST THAT REVISIONARY POWERS UNDER S. 26 3 CANNOT BE READ IN A MANNER TO EXPAND THE SCOPE OF SECTION 147 OF THE AC T. S. 263 READ IN THE CONTEXT OF REASSESSMENT PROCEEDINGS CANNOT BE EXERC ISED UNLESS THERE IS A CAUSE AVAILABLE ON OBJECTIVE FACTS TO DEMONSTRATE T HAT DETAILED PROBE OR 8 ITA NOS.813 & 814/PN/2014 ENQUIRIES WERE WARRANTED TO ENCOMPASS ESCAPEMENT OF OTHER POSSIBLE INCOME IN A GIVEN SET OF FACTS. CONSEQUENTLY, THE ALLEGE D INACTION OF THE AO ON THE ISSUE OF CORRECTNESS OF TRADING RESULTS IN REASSESS MENT PROCEEDINGS IS NOT FATAL OR ERRONEOUS FOR THE PURPOSES OF SECTION 263 OF THE ACT. HENCE, THE REASSESSMENT ORDER PASSED WITHIN THE FOUR CORNER OF ITS AUTHORITY CANNOT BE DUBBED AS ERRONEOUS PER SE AND IS THUS IS NOT SUSCE PTIBLE TO REVIEW CONTEMPLATED UNDER S. 263 OF THE ACT. 12.5 WE NOW PROCEED TO EXAMINE THE ISSUE OF LACK OF ENQUIRY ON UNCONNECTED ISSUES IN A REASSESSMENT PROCEEDING FROM A DIFFEREN T PERSPECTIVE. IT IS WELL SETTLED THAT EXERCISE OF STATUTORY POWERS UNDER S. 263 IS DEPENDENT UPON THE EXISTENCE OF CERTAIN OBJECTIVE FACTS. IN OUR VIEW, PROPOSED ACTION AS SUGGESTED BY THE CIT RUNS CONTRARY TO THE WELL ACCEPTED POLIC Y OF LAW THAT THERE MUST BE A POINT OF FINALITY ON ALL LEGAL PROCEEDINGS. NEEDLES S TO SAY, THE DISCRETION GIVEN TO THE COMMISSIONER IS REQUIRED TO BE EXERCISED IN A JUDICIOUS MANNER. ON FACTS, WE NOTICE THAT THE COMMISSIONER HAS MERELY E NTERTAINED STRONG SUSPICION ON THE BONA-FIDE OF TRADING RESULTS OWING TO HUGE LOSSES AND OBSERVED THAT IN THE ABSENCE OF INCOME REPORTED ON ACCOUNT OF CREDIT TOWARDS WRITE BACK OF CERTAIN AMOUNTS UNDER SECTION 41(1), THE ASSESSEE HAS DECLARED TRADING LOSSES ON A SUBSTANTIAL TURNOVER WHICH OUGH T NOT TO HAVE BEEN ACCEPTED WITHOUT EMBARKING UPON A DETAILED ENQUIRY. THE SHOW -CAUSE ACTION OF THE COMMISSIONER UNDER SECTION 263 SEEKING TO UPSET THE REASSESSMENT ORDER IS THUS CLEARLY ACTUATED IN THE REALM OF SUCH SUSPICIO N. IN OTHER WORDS, AS PER THE COMMISSIONER, THE ASSESSING OFFICER WHILE FRAMING T HE ASSESSMENT IN A PROCEEDING UNDER S. 147 OUGHT TO UNLEASH FISHING AN D ROVING ENQUIRY TO ASCERTAIN THE CORRECTNESS OF REPORTED LOSS WHICH WE RE ALREADY STOOD CONCLUDED EARLIER AND WAS NOT UNDER REFERENCE IN THE RECORDED REASONS. AS NOTED EARLIER, INDULGING IN ROVING ENQUIRY UNDER S. 147 ON UNCONNE CTED ISSUES IS A CASE OF OVERREACHING OF POWERS WHICH IS NOT PERMISSIBLE IN LAW. THE ASSESSING OFFICER IN HIS QUASI JUDICIAL CAPACITY HAS ACCEPTED THE TRADING RESULTS. A MERE DIFFERENT PERCEPTION OF COMMISSIONER FOUNDED UPON SUSPICION O N THE ISSUE IS NOT SUFFICIENT TO LEGITIMIZE JURISDICTION UNDER SECTION 263 OF THE ACT. IT WOULD BE 9 ITA NOS.813 & 814/PN/2014 FARFETCHED TO PRESUME THAT THE PURPORTED SUBSTANTIA L TURNOVER PER SE WOULD NECESSARILY GIVE RISE TO PRESUMPTION OF PROFITS THE REON. THE ALLEGATION OF REASSESSMENT ORDER BEING ERRONEOUS BY THE COMMISSIO NER IS PURELY FOUNDED UPON SUSPICION AND SURMISES ON LOSSES DECLARED. TH E EXERCISE OF REVISIONARY POWER BASED ON SUCH SUSPICION IS IN OUR VIEW NOT PE RMISSIBLE IN LAW. 13. WE SHALL NOW ADVERT TO SECOND GROUND OF ACTION UNDER SECTION 263 OF THE ACT. THE FIGURES OF WRITE BACK OF RS.2,40,21,887/- OFFERED IN THE TRADING AND PROFIT & LOSS ACCOUNT FOR THE ASSESSMENT YEAR 2008- 09 IS ALLEGEDLY FOUND TO BE IN MISMATCH WITH THE CORRESPONDING AMOUNT OF REV ENUE INCOME MENTIONED AT RS.2,36,44,153/- IN THE COURSE OF ASSESSMENT PRO CEEDINGS FOR A.Y. 2007-08. IT IS MANIFEST FROM THESE FIGURES THAT THE INCOME D ECLARED BY THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR 2008-09 IS HIGHER THAN THE INCOME GIVEN IN THE ASSESSMENT YEAR 2007-08 AS AN AMOUNT WRITTEN BACK U NDER SECTION 41(1) OF THE ACT. APPARENTLY, NO PREJUDICE HAS THUS CAUSED TO TH E INTEREST OF REVENUE BY DECLARING HIGHER INCOME COMPARED TO WHAT WAS PROVID ED IN THE COURSE OF ASSESSMENT IN THE EARLIER YEAR. THE CONDITION PRECE DENT FOR EXERCISE OF POWERS UNDER S. 263 IS THUS SORELY MISSING. HENCE, WE FAIL TO VISUALIZE ANY RATIONALE IN THIS GROUND SET OUT BY THE COMMISSIONER FOR INVOKIN G REVISIONARY POWERS. NOTWITHSTANDING AFORESAID, THE SECTION 41(1) IS ATT RACTED ONLY TO THE EXTENT OF REMISSION GRANTED BY THE CREDITOR I.E. ASSESSEE. A HIGHER REMISSION BY A UNILATERAL ACT TO THE PREJUDICE OF THE ASSESSEE CAN NOT BE ORDINARILY FORCED. THEREFORE, THIS GROUND FOR INVOKING SECTION 263 IS ALSO NOT SUSTAINABLE IN LAW. IN THE CONTEXT, WE ALSO SIMULTANEOUSLY OBSERVE THAT AMOUNT WRITTEN BACK UNDER S. 41(1) WAS ASSESSED AND SOME ADDITIONS THEREON WE RE ALSO MADE BY THE ASSESSING OFFICER. THE ASSESSMENT WAS SUBJECTED TO APPELLATE PROCEEDINGS BEFORE THE CIT(A) AND ITAT AND THUS STOOD CONCLUDED . THEREFORE, THE DOCTRINE OF MERGER WOULD APPLY IN SO FAR AS THIS ASPECT OF T HE MATTER IS CONCERNED AND HENCE THIS ISSUE ON CORRECTNESS OF QUANTUM OF CREDI TS WRITTEN BACK UNDER S. 41(1) COULD NOT HAVE BEEN RE-VISITED BY THE COMMISS IONER IN VIEW OF SECTION 263(1)(C) OF THE ACT. THUS, IN VIEW OF SECTION 263( 1)(C) OF THE ACT, THE ACTION 10 ITA NOS.813 & 814/PN/2014 OF COMMISSIONER ON THE SAME ISSUE IS OUTSIDE THE PA LE OF ITS COMPETENCE AND THUS BAD IN LAW ON THIS SCORE ALSO. 14. IN THE LIGHT OF AFORESAID DISCUSSION, WE FIND T HAT THE ACTION OF THE COMMISSIONER IS WITHOUT AUTHORITY OF LAW AND THEREF ORE CANNOT BE SUSTAINED. IN CONSEQUENCE, THE ORDER PASSED UNDER SECTION 263 FOR ASSESSMENT YEAR 2008- 09 DATED 28.03.2014 IS SET-ASIDE AND QUASHED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.813/PN/2014 RELATING TO ASSESSMENT YEAR 2008-09 IS ALLOWED. ITA NO.814/PN/2014 (A.Y. 2009-10) : 16. FOR THE RELEVANT ASSESSMENT YEAR 2009-10, THE C OMMISSIONER INVOKED HIS REVISIONARY POWER UNDER SECTION 263 AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE ACT D ATED 16.12.2011 ON THE GROUND AS NOTED IN THE SHOW-CAUSE NOTICE ISSUED FOR THIS PURPOSE AS UNDER :- IT IS SEEN THAT DURING THE COURSE OF ASSESSMENT PR OCEEDINGS THAT ASSESSEE HAS WRITE OFF AMOUNT OF RS.1,17,39,724/- AND WRITTEN BACK OF RS.62,00,313/- AND THE NET EFFECT OF RS.55,39,411/- (RS.1,17,39,724.00 62,00,313.00 ) HAS BEEN DEBITED TO THE P&L ACCOUNT. HOWEVER, IT IS OBSERVED THAT THE A.O. HAS NOT VERIFIED THE WRITE OFF AMOUNT OF RS.1,17,39,724/- DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 17. WHILE FRAMING THE ORDER UNDER SECTION 263, THE COMMISSIONER ALLEGED THAT THE ASSESSING OFFICER WAS CONFRONTED WITH THE MATERIAL THAT THE ASSESSEE HAS WRITTEN OFF AN AMOUNT OF RS.1,17,39,724/- AND H AS ALSO WRITTEN BACK AN AMOUNT OF RS.62,00,313/- HAVING A NET EFFECT OF RS. 55,39,411/- IN THE PROFIT & LOSS ACCOUNT, THE ASSESSING OFFICER ACCEPTED THE AM OUNT WRITTEN OFF WITHOUT EXAMINING THE DETAILS OF THE AMOUNT SO WRITTEN OFF. 18. ON CAREFUL EXAMINATION OF THE ASSESSMENT ORDER AND THE ORDER OF THE COMMISSIONER UNDER SECTION 263 OF THE ACT, WE DO NO T FIND ANY MERIT IN THE ALLEGATIONS MARSHALED BY THE COMMISSIONER. THE COM MISSIONER IN EXERCISE OF 11 ITA NOS.813 & 814/PN/2014 POWER UNDER SECTION 263 CANNOT DIRECT THE ASSESSING OFFICER AS TO IN WHAT MANNER THE ENQUIRY IS REQUIRED TO BE CONDUCTED. A CERTAIN AMOUNT HAS BEEN WRITTEN OFF BY THE ASSESSEE PURPORTEDLY AS BAD DEBT NOTED ABOVE, THE PARTICULARS OF WHICH WERE DULY MADE AVAILABLE TO THE ASSESSING OFFICER. SECTION 36(1)(VII) R.W.S. 36(2) REQUIRES THE ASSESSEE TO WRITE OFF THE AMOUNT TOWARDS CLAIM OF BAD DEBTS. THE HONBLE SUPREME COURT IN THE CASE OF T. R.F. LTD. VS. CIT, (2010) 323 ITR 397 (SC) HAS HELD THAT THE ASSESSEE NEED NO T PROVE THE DEBTS TO BE IRRECOVERABLE UNDER SECTION 36(1)(VII) OF THE ACT. IT IS SUFFICIENT IF THE DEBTS INCIDENTAL TO BUSINESS ARE WRITTEN OFF FOR THE PURP OSE OF MAKING CLAIMS. IN THE LIGHT OF THE AFORESAID DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF T.R.F. LTD. VS. CIT (SUPRA), IT WAS NOT UNREASONABL E FOR THE ASSESSING OFFICER TO ACCEPT THE DEBTS WRITTEN OFF. FURTHER, THE COMM ISSIONER HAS NOT BROUGHT ON RECORD ANY GOOD REASON TO HOLD TO THE CONTRARY. IN THIS VIEW OF THE MATTER, WE DO NOT SEE ANY ERROR COMMITTED BY THE ASSESSING OFF ICER IN ADMITTING AMOUNTS WRITE OFF TOWARDS BAD DEBTS AND GRANT DEDUCTION OF THE SAME WITH SIMILAR AMOUNTS WRITTEN BACK. IN THE LIGHT OF AFORESAID DI SCUSSION, THE ACTION OF THE COMMISSIONER UNDER SECTION 263 IS OUTSIDE THE BOUND S OF LAW AND THUS CANNOT BE SUSTAINED. IN CONSEQUENCE, THE ORDER PASSED UNDE R S. 263 FOR THE ASSESSMENT YEAR 2009-10 DATED 28.03.2014 REQUIRES TO BE SET AS IDE AND QUASHED. WE DO SO ACCORDINGLY. 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.814/PN/2014 RELATING TO ASSESSMENT YEAR 2009-10 IS ALSO ALLOWED. 20. RESULTANTLY, BOTH THE CAPTIONED APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS 12 TH DAY OF AUGUST, 2016. SD/- SD/- ( VIKAS AWATHY ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE ; DATED : 12 TH AUGUST, 2016. 12 ITA NOS.813 & 814/PN/2014 & ' () *+( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT-V, PUNE; 4) THE DR B BENCH, I.T.A.T., PUNE; 5) GUARD FILE. &, / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE