J G INTERNATIONAL, Uttar Pradesh V. PCIT, PCIT NOIDA

ITA 822/DEL/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2963 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2016-2017
• Appeal Filed On: 01-07-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Depreciation; Initiation of penalty proceedings; Set aside
• Section: 68; 263; 143(3); 142(1); 133(6); 201; 69A; 113; 2(A); 73; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’ NEW DLEHI BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA No. 822/Del/2021 Assessment Year: 2016-17 J.G. International, vs. PCIT, Noida. 259, Old, Anaj Mandi, Nyadar Ganj, Gautam Budh Nagar, Noida. PAN : AAHFJ5298C (Appellant) (Respondent) Appellant by : Sh. Suresh K. Gupta, CA Respondent by: J.S. Minhas, CIT/DR Date of hearing: 21.04.2022 Date of order : 05.05.2022 ORDER PER C.M. GARG, J.M. This is an appeal filed by the assessee against the order dated 30.03.2021 passed by ld. PCIT, Noida for the assessment year 2016- 17 u/s. 263 of the Income-tax Act, 1961 (“the Act” for short) on the following solitary ground : “1. The Ld. Pr. CIT has assumed power u/s. 263 of the Act holding the assessment order dated 17.12.2018 as erroneous and prejudicial to the interest of revenue on the ground that no independent enquiry or verification of the details were made by the A.O. Such assumption of power by the Ld. Pr. CIT is not proper in absence of any minimal inquiry conducted by P. CIT to support his finding that the order under revision is prejudicial to the interest of revenue and erroneous.” 2 2. We have heard the arguments of both the sides and perused the material available on record including paper book spreading over 268 pages, case laws paper book and written synopsis/arguments of the appellant/assessee. 3. Learned assessee’s Authorised Representative (AR) briefly reiterated the written synopsis, which is being reproduced below for the sake of completeness of this order : “MAY YOUR HONOUR PLEASE BE 1. The order under revision was passed by the ITO Ward 5(1) (5) Noida on 17.12.2018 u/s 143(3) on the returned loss of Rs 2,90,850/-. The Ld Pr CIT assumed revisionary jurisdiction u/s 263 of the Act and issued a show cause notice (SCN) dated 25.01.2021 (PB 144-146) requiring the appellant to show cause as to why the assessment be not set aside being erroneous and prejudicial to the interest of revenue based on the discrepancies identified in the SCN. The discrepancies identified in the SCN are as under; (i). Non initiation of penalty proceedings u/s 271B; (ii).Improper disclosure of unsecured loans in the return of income; (iii)Failure of the appellant to furnish proof of source of investment in the fixed assets in new venture by the appellant; (iv)Non- verification of the source of cash investment of Rs 34,00,000/- by a partner. 2. The appellant submitted detailed reply to the SCN vide letter dated 13.02.2021 (PB 147-224) and subsequent replies dated 02.03.2021 (PB 240- 268) and 19.03.202 (PB 225-239) wherein the appellant dealt with the objection of the Ld Pr CIT in the SCN and also raised during the hearing conducted in the office of the revisionary authority (RA). The Ld RA imputed the charge of failure of the Ld AO in examining the following aspects of the case (para 8 page 15 of the impugned order): a. Addition of capital account by a partner Rs 34,00,000/- being in cash (read with para 5 page 12 of the order) which was explained to be withdrawal from the liquor business of the partner; 3 b. Unsecured loans failure of the AO to examine the credit worthiness of the loan creditors (read with para 5 page 12 of the order); c. Addition on account of fixed assets. The appellant challenges the impugned order qua the grounds raised inter alia with the following submission: a. Addition of capital account by a partner Rs 34,00,000/- being in cash The Ld RA discussed the back ground of the objection in para(v) page 2/3 of the order under appeal. There is no dispute that out of introduction of total capital Rs 1,38,00,000/- by the partner Sh Saurabh Goyal, the amount of Rs 34,00,000/- was in cash and the same was drawn from his proprietary liquor business where the receipts are predominantly in cash. The objection of the RA on this issue are dealt in para 5 of the revision order. The Ld RA rejected the explanation regarding the source the cash investment of Rs 34,00,000/-of the partner being from the liquor business was rejected on the ground that the cash sales were regularly deposited in the bank account of the said business and that the liquor business was situated in Bareilly and Lucknow being in far off places from Noida the place where cash was utilized for construction of hotel. On that reasoning, the Ld Pr CIT was not inclined to accept the logic that transfer of cash could be without routing the same through bank account. Coming to the allegation that the source of cash investment by the partner has not been verified in the original assessment is far from correct. In fact, the AO vide notice u/s 142(1) dated 08.10.2018 in item No 3 (PB 59) required the appellant assessee to furnish complete capital account as per books, complete details of capita introduced i.e. dates and mode of payment also to prove source thereof with documentary evidence. In reply thereto, the appellant vide letter dated 29.11.2018 (PB100) explained the source of investment of the partner in question and further vide letter dated 12.12.2018(PB105) supported the source of cash with the explanation that the sales of the liquor business being Rs 42 Crore and detailed source of investment by said partner. The source of cash investment of Rs 34,00,000/- was also explained specifically at page 106 and the same was supported with statement of affairs of Saurabh Goyal as on 31.03.2016(PB 107), cash book (PB 108-110), and the audited balance sheet of the liquor business for AY 2016-17 (PB 111-125) and Bank statement 4 (PB 126-133). The Ld AO called information directly from the partner u/s 133(6) of the Act on 03.12.2018 (PB 134) and in reply the said partner explained the source of capital introduced vide letter dated 06.12.2018 (PB 135-136). These very evidences were produced by the partner in compliance of the above notice. From the above enquiry conducted by the AO on the pertinent issue of investment by the partner, it is therefore not tenable for the Ld Pr CIT to make out present case as case of no enquiry. It is a case where reasonable enquiry was made regarding the particular issue and a possible view was taken that when the receipts of the business were in cash, the proprietor could have withdrawn the cash for investment elsewhere. Such possible view remains unrebutted specially in the light of the fact that out capital investment of Rs 1,04,00,000/- through bank, the source of investment as per the chart of the letter dated 06.12.2018 aggregates to Rs 34,00,000/- is in cash which fact has been accepted to be indicating genuine transaction. If that is the case there was no reason for not accepting cash investment by the partner in the appellant partnership firm. On the objection of the Ld RA regarding the distance of location of the liquor business and the reason why the cash will be transferred without routing the same through the bank account, the submission of the appellant is that the bank account of the liquor business is in Noida only (PB 126-133) where the cash is deposited out of the cash sale. In view of these facts, since the cash in any case in normal course is carried to Noida for deposit, the explanation of the appellant/ the partner sounds plausible and the objection of the Ld RA without any application of mind. The cash transaction is due to urgency of payments in the construction business where the payments are largely in cash incurred for labor or petty expenses, which constitutes a sizable amount. The urgency of payments sometimes overweighs the logic of routing the same through cheques due to the time consumed in the transition of funds through banking channels. Here it is important to mention that the said objection on failure of the AO in making addition for unverified source of investment by a partner, the said action is contrary to the settled law that when the investing partner has resources and he has accepted the investment and when there is no material that the credit is the undisclosed income of the assessee, the credit in the name of the partner cannot be assessed in the hands of the partnership even if 5 the source of funds in the hands of the partner are not satisfactorily explained. The identical issue came to be considered in CIT v Taj Borewells [2007] 291 ITR 232 (Mad), where the Court taking note of the fact that Section 68 is a charging section and also a deeming provision, it was held that once the firm had offered explanation and established that the capital was contributed by the partners, the same could not be assessable in the hands of the firm. Once the firm had offered an explanation and established that the capital was contributed by the partners, the same could not be assessable in the hands of firm. Unless there are contradictions or in consistencies in the statement of the partners, the credit cannot be treated as unexplained and cannot be added under section 68 of the Act in the hands of the assessee firm. To support the above proposition reliance is placed on the following authorities including the jurisdictional Allahabad High Court: i. CIT Vs Jaiswal Motor Finance 141 ITR 706 (All) ii.CIT Vs Metachem Industries 245 ITR 160 (MP) iii. CIT Vs Burma Electro Corporation 252 ITR 344 (P&H) iv. Abhyudaya Pharmaceuticals Vs CIT 350 ITR 358 (All) v. Kesharwani Sheetalaya Sahsaon vs CIT ITA No. 17 of 2007 dt: 24.04.2020 (All) vi. CIT vs. Md. Perwez Ahmad & Ors [2004] 268 ITR 381 (Patna) vii. CIT vs. Metal & Metals of India (ll)TMI 630 (P&H) If detailed inquires made by AO. revision u/s 263 not sustainable If an order is passed after making inquiry on an issue and after having examined the replies of the Assessee with due application of mind, it is not the case where no inquiry was made. Therefore, such a case cannot be treated as a case of "no inquiry” and thus proceedings u/s 263 of the Act cannot be initiated in such a case. Further, an assessment order should not be subject to revision u/s 263 merely because another view is possible on the issue decided by the AO. Following decisions are relied to support the above proposition of law: • Greenworld Corporation - [2009] 181 Taxman 111 (SC) 6 • CIT v. Vodafone Essar South Ltd. - [2012] 28 taxmann.com 273 (Delhi) • CIT v. Anil Kumar Sharma - [2010] 194 Taxman 504 (Delhi) Lack of enquiry/no enquiry is different from inadequate enquiry and it is only in case of no enquiry by the AO, Pr. CIT/CIT can exercise jurisdiction u/s 263 of the Act and not in case where the AO has made enquiries as seems appropriate in the facts and circumstances of the case. Similar proposition was upheld in the following rulings: • Braham Dev Gupta v. PCIT- [2017] 88 taxmann.com 831 (Del- tri) • CIT v. Nirav Modi - [2016] 71 taxmann.com 272 (Bombay) [revenue’s SLP dismissed by SC] From the above facts there cannot be any dispute on the fact that the AO had made detailed enquiry for verifying the transaction of addition to the capital by the Partner in question and it is not therefore case of no enquiry. The Hon'ble Supreme Court in the case of PCIT vs. Shree Gayatri Associates - [2019] 106 taxmann.com 31 (SC) held that where Commissioner passed a revisional order making addition to assessee’s income under section 69A in respect of on-money receipts, however, said order was set aside by Tribunal holding that AO had made detailed enquiries in respect of on-money receipts and said view was also confirmed by High Court, SLP filed against decision of High Court was to be dismissed Further the Supreme Court in the case of PCIT vs. Sumatichand Tolamal Gouti - [2019] 111 faxmann.com 287 (SC) upheld Tribunal’s order accepting the contention of the assessee that AO had made detailed enquiries while allowing claim for deduction of business expenditure and, thus, revisional order passed by Commissioner was not sustainable, SLP filed against High Court’s order dismissed. When the Assessing Officer takes one of the two views permissible in law and which the Commissioner does not agree with and which results in a loss of revenue, it cannot be treated as erroneous order prejudicial to the interest of revenue, unless the view taken by the Assessing Officer is completely unsustainable in law. . CIT v. Max India Limited [2007] 295 ITR 282 (SC) 7 • Malbar Industries Co Ltd v. CIT [2000] 243 ITR 83 (SC) • PCIT vs. V. Dhana Reddy & Co. - [2018] 100 taxmann.com 358 (SC) • CIT vs. International Society For Krishna Consciousness - [2020] 117 taxmann.com 799 (SC) b. Unsecured loans failure of the AO to examine the credit worthiness of the loan creditors. A chart of fresh unsecured loans is at page 7 of the impugned order from which it can be noted that following fresh loans have been accepted by the appellant; I. Sh Lokesh Chand PAN ABIPC1790L Opening balance Rs 5,00,000/- and fresh addition Rs 33,00,000/- (Father of one of the partner) The objection of the Ld RA is that there had been cash deposit before advancement of loan to the appellant. The Ld RA was not convinced with the creditworthiness of the creditor here. In this connection, it may kindly be noted that source of cash deposited again is the cash sale in the liquor business of the said creditor. Copy of the liquor business audited accounts and tax audit report of the said creditor is part of the records (PB 255-268) produced before the Ld Pr CIT. There is no dispute about the tact that the sale in liquor business is in cash and that the turnover of the creditor is Rs.8.26 Crore (PB 264). The copy of liquor licence (PB 239) was also provided to the Ld RA which fact confirms the source of the investment by the loan creditor in question. The loan creditor is engaged in liquor business having income of Rs 18.33 Lakh and the loan appears in the audited balance sheet at page 267. The Ld RA was required to conduct minimal enquiry to show that the order qua the above reason is erroneous for the reason of no enquiry. It is a case of enquiry conducted by the Ld AO vide notice dated 08.10.2018 (PB 59) item No 5 and the appellant vide letter dated 14.11.2018 (PB 73-95) furnished copy of ITR’s all the lenders, Bank statement and the confirmations Hence it is case of enquiry conducted by the AO and claim of the appellant is not accepted without conducting any enquiry. The source of the cash is also proved from the Audited accounts which were provided to the Ld RA. The Ld RA is not entitled to hold the assessment order under revision erroneous or prejudicial to the interest of revenue when enquiry has been conducted by the AO and in the situation the authority invoking revisionary jurisdiction should conduct 8 enquiry to show that order is erroneous/ prejudicial to the interest of the revenue. II. Smt Manju Goyal PAN AGKPG6501E Fresh Loan Rs 5,00,000/- (Mother of one of the partner) The facts and back ground of the case is identical to that of Sh Lokesh Chand. She is engaged in liquor business showing source of cash deposit from that business. The relevant evidences are on records: Confirmation of loan PB 86 Copy of ITR PB 87 Copy of bank statement PB 88 Audited accounts with tax audit report PB 243-254 (Turnover Rs.3.84 Crore and current income Rs.7.38 lakh) III. Smt Sarika Goyal PAN: AGMPG4438J Fresh Loan Rs.45,25,000/-(Wife of one of the partner) The facts and back ground of the case is identical to that of Sh Lokesh Chand and Smt Manju Goyal. She is engaged in liquor business licenses at 12 locations in Uttar Pradesh showing source of cash deposit from that business. The relevant evidences are on records: Confirmation of loan PB 89 Copy of ITR PB 90 Copy of bank statement PB 91-95 Copy of liquor licenses at Pages 226-231, 233-238 Audited accounts with tax audit report, computation of income and ITRV Document No.15 (Turnover Rs.26.89 Crore and Current income Rs.48.78 Lakh) c. Addition to the fixed assets This objection of Ld Pr CIT does not survive as in consequential order passed by the AO u/s 143(3)/263/l 44B dt: 31.03.2022, the AO did not make any addition/disallowance. Without prejudice to above, the Ld Pr CIT found that there had been addition to the fixed assets for Rs. 5,08,18,048/- during the year in different items of fixed assets. And also, a claim of depreciation Rs 38,66,339/- para iii of page 2 of the order under appeal. The source of investment in the fixed assets had not been furnished by the 9 assessee with supporting documentary evidences. The appellant during the revision proceedings before the Ld Pr CIT explained that during assessment proceedings the complete bank statement was provided to the Ld AO and the schedule of fixed assets are part of the assessment records where the claim of depreciation is also supported with the Tax Audit report. The appellant before the Ld RA gave complete detail of addition to the fixed asset reproduced in the revision order as per which the net amount paid is Rs 3,74,63,742/- and source of the said expenditure was explained in detail. The appellant also produced the copies of the invoices to support the acquisition of fixed assets. These facts have been emphatically acknowledged by the Ld Pr CIT in the order on page 11 para 4(ii). The Ld Pr CIT did not find any fault or error mistake in the evidences furnished before him in the revision proceedings. In view of these facts there was no sustainable reason to support the finding that the order under revision was erroneous and prejudicial to the interest of revenue. Status of records to be examined u/s 263 The Hon'ble Delhi High Court in the case of Commissioner of Income Tax vs. Sunbeam Auto Ltd elucidated that the material which the CIT can rely and which includes not only the record as it stands at the time when the order in question-was passed by the Assessing Officer but also the record as it stands at the time of examination by the CIT which is consonance with the decision in CIT vs. Shree Manjunathesware Packing Products, 231 ITR 53 (SC)]. Nothing bars/prohibits the CIT from collecting and relying upon new/additional material/evidence to show and state that the order of the Assessing Officer is erroneous or otherwise The perusal of the 263 orders would show that the PCIT has made observations at various places that the assessment order has been passed without making proper enquires. However, the PCIT has failed to point out what more enquires the AO ought to have made. The phrase "proper enquires" and "inadequate enquires has been considered by various benches of the High Courts and the Tribunal and everywhere it has been held that cases where there is complete lack of enquiry would certainly fall in the ambit of secfion 263. However, in cases where the allegation is of "proper enquires", the burden is on CIT to conduct further enquires by himself and he cannot simply set aside the order of the AO for further enquiries. For the above proposition reliance is placed on the following decisions: - 10 o CIT Vs DG Housing 343 ITR 239(Del); o CIT vs. Sunbeam Auto Ltd. (2011) 332 ITR 167 (Del), o PCIT v. Delhi Airport Metro Express Pvt. Ltd. [ITA No. 705/2017] ; o Pr CIT vs. Mera Baba Reality Associates Pvt Ltd (Delhi High Court) ITA No.637, 507, 508, 509/2017 Dated: 21.08.2017; o BSES Rajdhani Power Ltd vs. Pr CIT ITA No.387/2017 (Del); o PCIT v. Modicare Limited [ITA No. 759/2017] (Del); o DIT v. Jyoti Foundation [357 ITR 388] (Del); Applicability of Explanation 2(a) to section 263 Merely because from a perfectionist point of view, it is felt that some more enquiries and verifications could have been made by the AO, assessment order cannot be declared to be erroneous and prejudicial to the interests of revenue. This view is taken by the Delhi Tribunal Special Bench in the case of Salora International Ltd. v. Addl. CIT [2005] 2 SOT 705 (Delhi) (Trib.)]. Moreover, the Explanation cannot override the substantive provision of section 263(1). • Crompton Greaves Limited v. CIT [2016] 46 ITR(T) 465 (Mumbai - Trib.) It is the Commissioner’s responsibility to demonstrate that the enquiries or verification conducted by the TOs were not in accordance with the enquiries or verification that would have been carried out by a prudent officer. • Mumbai ITAT in the case of Shri Narayan Tatu Rane vs. ITO - ITA No. I.T.A. No. 2690/Mu m/2016 [6 May 201 6] • Delhi ITAT has occasioned to discuss this explanation in the case of M/s Amira Pure Foods Pvt. Ltd vs. Pr. CIT - ITA No. 3205/DEL/2017 • Kolkata ITAT has occasioned to discuss this Explanation in the case of Khetawat Properties Ltd. vs. Pr. CIT - [2020] 113 taxmann.com 8 (Kolkata - Trib.) and held that the opinion of the Ld. CIT has to be in consonance with that of the well settled judicial principles and cannot be arbitrarily made discarding the judicial precedent on the subject. Explanation to substantive section should be read as to harmonize with and clear up any ambiguity in the main section and should not be so construed as to widen the ambit of the section. Explanation (2) inserted by the Parliament u/s 263 cannot override the main section i.e. sec. 263( 1) of the Act. 11 Prayer: In view of above the revision order under appeal needs be set aside being passed," without complying with the mandate of Section 263 of the Act.” 4. The main points/submissions made by the ld. AR, challenging the validity of revisionary order u/s. 263 of the Act can be summarized in following paragraphs. 5. On the issue of addition of capital account by the partner of Rs.34,00,000/- in cash, the Assessing Officer issued notice u/s. 142(1) of the Act along with questionnaire where in question No.3, the Assessing Officer asked the assessee to furnish capital account, complete details of capital introduced, i.e., date and mode of payment and source thereof along with documentary evidence. Ld. AR submitted that in reply to said notice, the assessee filed detailed submissions vide reply dated 29.11.2018 and copy of ITR. On the same issue, assessee also filed additional reply vide dated 03.12.2018 along with copy of ledger account of partners capital account for the period 01.04.2015 to 31.03.2016, ITR for A.Y. 2016-17 and evidences for source of capital introduced by the partner Shri Saurabh Goyal. Therefore, ld. PCIT was not correct in alleging that there was no enquiry by the Assessing Officer on this issue. Pressing into service the proposition rendered by Hon’ble jurisdictional High Court of Allahabad in the case of M/s. Kesharwani Sheetalaya Sahsoon vs. CIT, ITA No. 17 of 2007 dated 24.04.2020, ld. AR submitted that when the assessee firm had discharged its onus by proving three things, i.e., identity of the partner, his creditworthiness and genuineness of the 12 transaction through banking channel, then onus is deemed to be discharged. Therefore, it is open for the Assessing Officer to take any action against the contributing partners for any enquiry and no addition can be made in the hands of the assessee. He further submitted that the assessee firm discharged its onus by submitting all the relevant and possible details of contributing partner Shri Saurabh Goel in the form of copy of ledger account, copy of ITR for A.Y. 2016-17, source of capital introduced, his name and address, then the onus lay on the shoulders of the assessee firm is discharged. Therefore, ld. PCIT was wrong in alleging the assessment order as erroneous and prejudicial to the interest of Revenue on this ground. 6. Further drawing our attention towards judgment of Hon’ble Supreme Court in the case of Greenworld Corporation, 181 Taxman 111 (SC) and other decisions, ld. AR submitted that lack of inquiry/no inquiry is quite distinct and different from the inadequate inquiry and in case of no enquiry by the Assessing Officer, ld. PCIT can exercise jurisdiction u/s. 263 of the Act and not in a case where the Assessing Officer has made sufficient enquiries which seems appropriate in the facts and circumstances of the case. He also placed relied on the decision in the case of PCIT vs. Sumatichand Tolamal Gouti (supra) to submit that when the Assessing Officer had made detailed enquiry while allowing the claim of assessee then revisionary order u/s. 263 of the Act cannot be sustained. 13 7. On the second issue of unsecured loan creditors, ld. AR submitted that ld. PCIT has alleged that no enquiry has been made with regard to unsecured loan creditors, i.e., Shri Lokesh Chand, Smt. Manju Goyal and Smt. Sarika Goyal. The ld. Counsel submitted that the Assessing Officer vide notice dated 08.10.2018, item No. 5, asked the assessee to furnish the details of secured and unsecured loans with confirmations and documentary evidence, which was replied by the assessee on 14.11.2018 (assessee’s paper book page 73 to 95), wherein the assessee submitted the details of four unsecured loan creditors, which includes all the three creditors as alleged by the ld. PCIT, namely, Shri Lokesh Chand, Smt. Manju Goyal and Smt. Sarika Goyal and after being satisfied, the Assessing Officer did not make any addition in this regard. Ld. AR submitted that the assessee furnished ITR of all the lenders, relevant bank statements and confirmations and therefore, the Assessing Officer after conducting sufficient and adequate enquiry on the issue of unsecured loan creditors accepted the same by taking a plausible view. Therefore, the assessment order cannot be alleged to be erroneous and prejudicial to the interest of the Revenue. As regards the source of creditors, the evidences filed with the Assessing Officer clearly show that the amount of loan given to the assessee firm is not more than their declared and returned income for the relevant assessment year, which is self explanatory regarding the source of loan in the hands of creditors. Therefore, ld. PCIT was not correct in holding the assessment as erroneous and prejudicial to the interest of Revenue. 14 8. On the third issue, learned AR further submitted that in the assessment order passed by the Assessing Officer vide dated 31.03.2022, the Assessing Officer has not made any addition on account of addition to the fixed assets by the assessee firm. Therefore, the objection of ld. PCIT does not survive to allege the previous assessment order as erroneous and prejudicial to the interest of Revenue. 9. Ld. AR pressing into service various judgments and decisions including the judgment of Hon’ble Delhi High Court in the case of CIT vs. DG Housing (supra), CIT vs. Sunbeam Auto Ltd. (supra) and recent judgment in the case of PCIT vs. Delhi Airport Metro Express Pvt. Ltd. (supra), submitted that in a case where ld. PCIT alleges that the Assessing Officer has not made sufficient or proper inquiry, he is duty bound to make inquiry himself to hold that the impugned assessment order is erroneous and prejudicial to the interest of revenue. Without making any inquiry himself and only directing the Assessing Officer to redo the assessment or to make further enquiries is not correct, valid and sustainable as per mandate of section 263 of the Act. Ld. AR lastly submitted that merely because from perfectionist points of view, it is felt that some more enquiries and verifications could have been made by the Assessing Officer, the assessment order cannot be declared to be erroneous and prejudicial to the interests of revenue as per judgment of Special Bench of Tribunal in the case of Salora International Ltd. vs. Addl. CIT (supra). He also submitted that Explanation 2 (a) to section 263 of the Act 15 cannot override sub-sec. (1) of this section. Therefore, ld. PCIT was not correct in holding that the assessment order is erroneous and prejudicial to the interests of revenue and therefore, the same may kindly be quashed and subsequent assessment, proceedings and orders may also be quashed. 10. Replying to the above, ld. DR except pointing out defects in framing of grounds of appeal did not controvert the factual position and arguments of the ld. AR. However, drawing our attention towards page 13 of the revisionary order and placing reliance on the judgment Hon’ble Delhi High Court in the case of Gee Vee Enterprises, 99 ITR 375 (Del), submitted that it is not necessary for the PCIT to make further inquiry before cancelling the assessment order. Learned PCIT can regard the assessment order as erroneous on the ground that in the circumstances of the case, the Assessing Officer should have made further enquiries before accepting the statement made by the assessee in his return of income. 11. Placing rejoinder to the above, ld. AR submitted that in the case of PCIT vs. Delhi Airport Metro Express Pvt. Ltd. (supra), their lordship has considered all the situations and it has been lucidly held that in a case of no enquiry or lack of enquiry, PCIT is not required to make enquiry and he is empowered to direct the Assessing Officer to redo the assessment after making sufficient enquiry, but in a case when the Assessing Officer has made enquiry and after examination and verification of explanation and documentary evidence of the 16 assessee has taken a plausible and sustainable view then it is required for the PCIT for assuming valid jurisdiction to allege assessment order as prejudicial to the interest of revenue to carry out further enquires himself and thereafter only he can allege the assessment order as erroneous and prejudicial to the interest of revenue in exercising revisionary powers u/s. 263 of the Act. 12. On careful consideration of the rival submissions, we are of the considered view that the ld. AR has specifically demonstrated that the Assessing Officer has made enquiries on the issue of capital introduced by the partner Shri Saurabh Goyal amounting to Rs.1.38 crores, out of which 1.04 crores were received by the assessee through banking channel and Rs.34,00,000/- in cash. From the notice issued by the Assessing Officer u/s. 142(1) dated 08.10.2018, question No. 3 there under (assessee’s paper book page 59 to 60), it is amply clear that the Assessing Officer asked the assessee to file all the details relating to capital introduction by the partners. Further from the replies of the assessee vide dated 29.11.2018 and 12.12.2018, it is clear that the assessee submitted statement of affairs, cash book and audited balance sheet of the liquor business for A.Y. 2016-17, bank statements and ITRs of contributing partner Shri Saurabh Goyal, which clearly reveal that the assessee firm has demonstrated that Shri Saurabh Goyal has introduced capital in the firm and he submitted all the relevant details regarding such contributing partner. The Assessing Officer also called information directly from Shri Saurabh Goyal by invoking provisions of section 17 133(6) (assessee’s paper Book 134) and in reply to said notice, partner Shri Saurabh Goyal vide letter dated 06.12.2018 (assessee’ paper book page 135 – 136) submitted all the relevant details before the Assessing Officer substantiating the source of capital introduced in assessee-firm. Therefore, in our considered opinion, the Assessing Officer has made sufficient enquiry on the issue of capital introduced by the partner during the relevant year. We may also point out that as per decision of Hon’ble Allahabad High Court in the case of Kesharwani Sheetalaya (supra), the onus lay on the assessee firm regarding capital introduced by the partners is discharged and the Assessing Officer was quite correct and justified in accepting the explanation of the assessee in this regard. Therefore, we are compelled to hold that the Assessing Officer has made sufficient enquiries on this issue and therefore, ld. PCIT was not correct in holding the assessment order as erroneous and prejudicial to the interests of revenue on this count. 13. On the issue of enquiry regarding unsecured loan creditors, we observe that the Assessing Officer has issued notice dated 08.10.2018 along with questionnaire where in question No. 5, assessee was asked to furnish the details of secured and unsecured loans along with confirmation and documentary evidence, which was replied by the assessee vide letter dated 14.11.2018 along with documentary evidence, copy of which is available at page 76 to 90 of the assessee’s paper book, which clearly reveals that the ld. PCIT has picked up three creditors whereas the Assessing Officer has made 18 enquiry on 4 creditors including the three creditors which have been picked up by the ld. PCIT for alleging the assessment order as erroneous and prejudicial to the interests of revenue. From the above, it is clearly discernible that during the scrutiny assessment proceedings, the Assessing Officer asked the assessee to furnish the details of secured and unsecured loans and the assessee discharged its onus before the Assessing Officer by way of filing copies of ITR of all the lenders, their bank statements and relevant confirmations. Therefore, we are not in agreement with the contention of the department that the Assessing Officer has not made enquiries during the assessment proceedings on the issue of unsecured loan creditors. We may also point out that if we logically value the reply filed by the assessee we find that the creditor Lokesh Chand is father of one of the partners and opening balance was Rs.5,00,000/- and fresh addition was Rs.33,00,000/-. Copy of its audited books of account were placed before the authorities below which reveal that the sale of liquor business is in cash and turnover was Rs.8.26 crores having income of Rs.18.33 lacs and loan was also shown in the balance sheet. Therefore, there was no iota of doubt regarding identity and creditworthiness of this loan creditor and the Assessing Officer was right in not pointing out any doubt. Regarding another loan creditor Smt. Manju Goyal, who is mother of one of the partners, it is discernible that she is also earning income from liquor business having turnover of Rs.3.84 crores and gave loan to the assessee firm only of Rs.5 lacs, which is less than her returned 19 income. Similar case is of third loan creditor Smt. Sarika Goyal, who is wife of one of the partners and gave loan of Rs.45,25,000/- to the assessee firm. Smt. Sarika Goyal is also earning income from liquor business having turnover of Rs.26.89 crores and returned income of Rs.48.78 lacs which is higher to the fresh loan given to the assessee firm. Therefore, we are unable to see any ambiguity, perversity or any valid reason to disturb the view taken by the Assessing Officer and accepting the unsecured loan creditors as shown by the assessee. Therefore, we feel satisfied that the Assessing Officer has made sufficient enquiry on the issue on unsecured loan creditors and thereafter allowed the claim of assessee regarding unsecured loans shown in the balance sheet. Therefore, we are not in agreement with the conclusion drawn by the ld. PCIT that the Assessing Officer has not made enquiry in this regard and therefore, the assessment order is erroneous and prejudicial to the interest of revenue. 14. Learned CIT/DR also has not disputed that in the consequential order passed by the Assessing Officer in pursuance to the impugned revisionary order u/s. 263 of the Act, which was passed by the Assessing Officer on 31.03.2022 u/s. 143(3) r.w.s. 263 of the Act, the Assessing Officer has not made addition/disallowance on the issue of addition in fixed assets. Therefore, there is no sustainable reason to hold that the assessment order was erroneous and prejudicial to the interest of revenue. 20 15. In the present case from the careful reading of the impugned revisionary order, we observe that the ld. PCIT has noted the factual circumstances of the case. Thereafter in para 6.1 to 6.6 he mentioned some case laws in support of his order and thereafter in para 7 & 8 without making any further enquiry himself proceeded to hold the assessment order erroneous and prejudicial to the interests of revenue without considering the reply and explanations of the assessee to the notice u/s. 263 of the Act available at page 147 to 224 of assessee’s paper book vide dated 16.02.2021. Therefore, respectfully following the judgment of Hon’ble High court as relied by the ld. AR including the recent judgment of Hon’ble Delhi High court in the case of Delhi Airport Metro Express P. Ltd. (supra), we hold that the ld. PCIT can exercise revisionary powers u/s. 263 of the Act in case he feels that the Assessing Officer has not made adequate and sufficient enquiry on a particular issue, then the ld. PCIT is required to undertake enquiries himself to allege the assessment order as erroneous and prejudicial to the interest of Revenue and without such exercise, valid jurisdiction to revise assessment order u/s. 263 of the Act cannot be assumed and exercised. Therefore, in view of foregoing discussion, we reach to a logical conclusion that the ld. PCIT was not correct in alleging the impugned assessment order passed u/s. 143(3) dated 17.12.2018 as erroneous and prejudicial to the interest of Revenue and thus, the impugned revisionary order u/s. 263 of the Act dated 30.03.2021 is not sustainable being bad in law. Consequently, the impugned 21 revisionary order and all consequent proceedings and orders are hereby quashed. 16. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 05/05/2022 Sd/- Sd/- (PRADIP KUMAR KEDIA) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 05/05/2022 ‘aks’