Smt. Kusum Lata, Panchkula, Panchkula V. CIT, Panchkula

ITA 824/CHANDI/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68575 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-11-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 07-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Keywords: Unexplained cash credit; Principle of natural justice; Assessment record; Prejudicial to interest
• Section: 143(3); 133(6); 68; 263; 2; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 824/CHD/2013 ASSESSMENT YEAR : 2008-09 SMT. KUSUM LATA V C.I.T., PANCHKULA PROP. AAKRIOTI ENTERPRISES H NO. 750, SECTOR 2 PANCHKULA ABWPL 3948 H (APPELLANT) (RESPONDENT) APPELLANT BY SHRI SUDHIR SEHGAL RESPONDENT BY: SHRI J.S. NAGA R DATE OF HEARING 25.11.2013 DATE OF PRONOUNCEMENT 28.11 .2013 O R D E R PER T.R.SOOD, A.M THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 20. 3.2013 OF THE LD. CIT(A), PANCHKULA. 2 IN THIS APPEAL THE ASSESSEE HAS RAISED FOLLOWING GROUNDS. 1 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX, PANC HKULA HAS ERRED IN HOLDING THAT THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER VIDE ORDER, DATED 07.10.2010 IS ERRONEOUS AND PREJU DICIAL TO THE INTEREST OF REVENUE. 2. THAT THE WORTHY COMMISSIONER OF INCOME TAX, HAS ALSO ERRED IN CANCELLING THE ASSESSMENT ALREADY FRAMED VIDE ORDER , DATED 20.03.2013 U/S 263 AND DIRECTING THE ASSESSING OFFICER TO MAKE THE DENOVO ASSESSMENT. 3. THAT THE CIT, HAS FAILED TO APPRECIATE THE FACT THAT THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER VIDE ORDER, DATED 0 7.10.2010 WAS FRAMED AFTER PROPER APPLICATION OF MIND AND AFTER D UE CONSIDERATION OF ALL THE FACT AND, THUS, THE SETTING ASIDE OF THE ASSESS MENT ALREADY FRAMED IS AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THIS APPEAL IS LATE BY 74 DAYS AND THE ASSESSEE HAS FILED THE CONDONATION PETITION. 2 4. THE LD. COUNSEL OF THE ASSESSEE REFERRED TO THE CONDONATION PETITION AND SUBMITTED THAT THE ORDER P ASSED BY THE LD. COMMISSIONER U/S 263 WAS RECEIVED ON 25.3.2 003 AND THE APPEAL WAS REQUIRED TO BE FILED ON 24.5.2003 AN D THIS APPEAL IS LATE BY 74 DAYS. IT WAS SUBMITTED THAT B ROTHER-IN-LAW OF THE ASSESSEE SHRI PRADEEP ATTRI WAS SERIOUSLY IL L AND HIS KIDNEYS WERE DAMAGED. HE WAS ADMITTED IN FORTIS HO SPITAL, MOHALI. THE ASSESSEE HAD TO LOOK AFTER HIM. SHRI PRADEEP ATTRI ULTIMATELY EXPIRED ON 22.6.2013 AND THEREFORE , THE ASSESSEE WAS IN A DEPRESSED MOOD AND ALSO HAD TO AT TEND CERTAIN CEREMONIES AND THE FILING OF THE APPEAL WAS DELAYED. HE MADE A PRAYER THAT IN THESE CIRCUMSTANCES THE DE LAY MAY BE CONDONED. 5 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE OP POSED THE SUBMISSIONS. 6 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE ARE SA TISFIED THAT THE ASSESSEE HAS A SUFFICIENT CAUSE FOR FILING OF THE APPEAL LATE BECAUSE OF THE ILLNESS OF SHRI PRADEEP ATTRI W HO IS THE BROTHER-IN-LAW OF THE ASSESSEE. MEDICAL REPORTS AS WELL AS THE DEATH CERTIFICATE HAS BEEN SUBMITTED ALONG WITH THE CONDONATION PETITION. AFFIDAVIT HAS ALSO BEEN FILE D. IN THESE CIRCUMSTANCES, WE CONDONE THE DELAY. 7 IN THIS CASE ASSESSMENT WAS COMPLETED AT AN INCOM E OF RS. 6,54,151/- U/S 143(3) OF THE ACT ON 7.10.10. T HE LD. COMMISSIONER AFTER EXAMINING THE ASSESSMENT RECORD OBSERVED THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CO NTRACT AND MANUFACTURING ACTIVITIES. HOWEVER, THE ASSESSING O FFICER HAS NOT DISCUSSED THE NATURE OF CONTRACT AND MANUFACTUR ING ACTIVITIES. THE ASSESSING OFFICER HAS ALSO NOT ASK ED FOR SEPARATE PROFIT AND LOSS ACCOUNT FOR MANUFACTURING AND CONTRACT RECEIPTS. EVEN THE TDS HAVE NOT BEEN RECONCILED. IT WAS FURTHER NOTICED THAT THE ASSESSING OFFICER HAS ASKE D FOR THE CONFIRMATIONS FROM SUNDRY DEBTORS AND CREDITORS AND THE SAME WERE FILED BUT THE SOME OF SUCH CONFIRMATIONS WERE SIGNED BY AUTHORIZED SIGNATORY. IT WAS NOT CLEAR IN WHAT CAP ACITY SUCH CONFIRMATIONS WERE SIGNED AND THE ASSESSING OFFICER SHOULD 3 HAVE ASKED PROPER CONFIRMATIONS. EVEN THE ADDRESSE ES HAVE NOT BEEN GIVEN BY THE CONFIRMING PARTIES. FURTHER THE ASSESSEE HAD NOT GIVEN PAN DETAILS. THE ASSESSING OFFICER H AD NOT OBTAINED THE DETAILS ABOUT VARIOUS CONTRACTS RECEIP TS. IT WAS ALSO NOTICED THAT THE ASSESSING OFFICER HAS NOT ASK ED FOR THE DETAILS OF LABOUR EXPENSES WHICH WAS A MAJOR EXPENS E. IT WAS ALSO NOTICED THAT THE GP RATE DECLARED BY THE ASSES SEE WAS 10% AND IN THE EARLIER YEAR ALSO IT WAS 10%. HOW S UCH RATE CAN BE 10%. ACCORDINGLY THE ASSESSEE WAS GIVEN A S HOW CAUSE NOTICE TO SHOW WHY THE ASSESSMENT ORDER SHOUL D NOT BE TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF THE REVENUE. IN RESPONSE IT WAS EXPLAINED THAT THE ASSE SSEE WAS MAINLY ENGAGED IN THE BUSINESS OF ADVERTISING BUSIN ESS AND THE ASSESSEE WAS SEARCHING, PROVIDING AND INSTALLING HO ARDINGS AND GLOWSIGN BOARDS FOR VARIOUS TELECOMMUNICATION COMPA NIES SUCH AS AIRTEL, HUTCH, RELIANCE ETC. THE BUSINESS CONSI STED OF TWO TYPES OF WORK NAMELY (I) FIXING OF HOARDINGS (II) P ROVISION OF SPACE ON RENTAL BASIS AND FIXING OF HOARDINGS ON IN VOLVED PREPARATION AND INSTALLATION OF THE HOARDINGS AND S IGN BOARDS AT THE PREMISES OF THE DEALERS OF THE COMPANIES AS WEL L AS THE SITES PROCURED BY THE ASSESSEE FOR SUCH TELECOMMUN ICATION COMPANIES. THE SECOND PART OF THE ACTIVITY COMPRIS ED MAINLY TO HIRE THE PREMISES ON RENT FOR DISPLAY OF HOARDIN GS AND INSTALLATIONS OF SUCH HOARDINGS AT SUCH PLACES. SE COND ACTIVITY MAINLY CONSISTED OF NOT ONLY THE PAYMENT OF RENT BU T ALSO INSTALLATION OF HOARDINGS WHICH INCLUDED CONVEYANCE CHARGES, MATERIAL PURCHASE, CONSUMABLE, FREIGHT CHARGES AND LABOUR CHARGES ETC. IT WAS PLEADED THAT JOBS WERE PART AN D PARCEL OF BUSINESS ACTIVITY AND ASSESSEE STRICTLY SPEAKING COULD NOT CALLED A CONTRACTOR. IT WAS SUBMITTED THAT THE CLI ENTS OF THE ASSESSEE ARE MULTINATIONAL COMPANIES AND ALL THE PA YMENTS WERE RECEIVED THROUGH CHEQUE. IT WAS FURTHER SUBMIT TED THAT COMPLETE ADDRESSES OF SUNDRY DEBTORS AND CREDITORS WERE ENCLOSED. IT WAS FURTHER SUBMITTED THAT THE NATURE OF WORK WAS SPECIALIZED WHICH REQUIRED SKILLED LABOUR AND THAT IS WHY THE MAJOR EXPENDITURE TO THE EXTENT OF 55%-60% WAS LABO UR. COPY OF THE DETAILED LABOUR ACCOUNT WAS FURNISHED. MATE RIAL FOR LABOUR AS WELL AS CONSUMABLES WAS BEING PURCHASED B Y THE 4 ASSESSEE AND COPIES OF THE PURCHASE OF MATERIAL AND CONSUMABLE ALONG WITH INVOICES WAS ALSO FURNISHED B EFORE THE LD. CIT. IT WAS ALSO SUBMITTED THAT THE ASSESSEE H AD PAID RENT FOR VARIOUS SITES TO INSTALL HOARDINGS BUT FOR NON E OF THE SITES THE AMOUNT OF RENT WAS COVERED BY THE LIMITS PRESCR IBED IN THE TDS. 8 THE LD. CIT EXAMINED THESE DOCUMENTS AND SUBMISSI ONS AND FURTHER GOT CONDUCTED SOME ENQUIRIES. IT WAS N OTED THAT NO CONFIRMATION WAS AVAILABLE IN THE CASE OF FOLLOWING PARTIES: CREDITORS: A M/S ANIL ENTERPRISES RS. 32,000 B M/S AMAR STEEL RS. 23,523 C M/S JETAGE MULTIMEDIA GALLARY RS. 7,600 D M/S GAGAN HANDLOOM RS. 51,386 E WIPRO LTD. RS. 55,165 F PEARL GRAPHICS RS. 41,460 DEBTORS: A M/S PEHOWA CO. SOCEITY B YOGINDER SHARMA THEREAFTER THE ASSESSEE WAS GIVEN A FURTHER SHOW CA USE NOTICE DATED 22.2.2013 IN RESPONSE TO WHICH IT WAS SUBMITT ED THROUGH WRITTEN REPLY DATED 15.3.2013 AS UNDER: IN THIS CONNECTION YOUR GOODSELF HAS POINTED OUT CERTAIN DISCREPANCIES IN THE BOOKS OF ACCOUNT/VOUCHERS/INFORMATION/DETAIL S/DOCUMENTS/REPLY FURNISHED BY THE ASSESSEE. TO COVER-UP THESE DISCRE PANCIES, THE ASSESSEE AGREES TO AN ADDITION OF RS. 2,11,134 SUBJ ECT TO NO PENALTY U/S 271(1)(C) OF THE I.T. ACT, 1961, TO THE RETURNED IN COME DURING THE ASSESSMENT YEAR 2008-09. THEREAFTER THE LD. CIT MADE CERTAIN OBSERVATIONS AN D DECIDED THE ISSUE VIDE PARA 4 & 4.1 WHICH IS AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CSE AND GONE THROUGH THE DETAILS FILED BY THE ASSESSEE. THE INDEPENDENT VERI FICATIONS W.R.T SUNDRY DEBTORS AND SUNDRY CREDITORS CARRIED OUT BY THIS OF FICE, REVEAL THAT SOME OF THE SUNDRY CREDITORS AND SUNDRY DEBTORS ARE BOGU S AS THESE HAVE NOT BEEN VERIFIED. FURTHER, THE ASSESSEE HAS HIMSELF AC CEPTED THESE TO BE ADDED TO THE INCOME OF THE ASSESSEE. IT IS THUS CLE AR THAT THE ASSESSMENT ORDER PASSED BY THE AO IS PREJUDICIAL TO THE INTERE ST OF REVENUE. IT IS THEREFORE, APPROPRIATE THAT THE CLAIM OF THE ASSESS EE W.R.T OTHER EXPENSES AND RECEIPTS ETC. IS ALSO INQUIRED INTO PR OPERLY. THEREFORE, ACTION UNDER SECTION 263(1) IS WARRANTED. 5 4.1 IT IS EVIDENT FROM THE FACTS STATED ABOVE THAT AO HAS NOT MADE DETAILED INQUIRIES IN THIS CASE WHICH MAKES THE ORD ER ERRONEOUS. REFERENCE IN THIS REGARD IS MADE TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TARA DEVI AGGRAWAL VS. CIT 88 ITR 323, WHEREIN IT HAS BEEN HELD THAT COMMISSIONER MAY CONSIDER AN ORD ER OF THE ASSESSING OFFICER TO BE ERRONEOUS NOT ONLY IF THERE IS SOME APPARENT ERROR OF REASONING OR OF LAW OR OF FACT OF THE CASE BUT ALSO WHEN IT IS A STEREOTYPED ORDER WHICH SIMPLY ACCEPTS WHAT THE ASS ESSEE HAS STATED IN HIS RETURN AND FAILS TO MAKE INQUIRES WHICH ARE CAL LED FOR IN THE CIRCUMSTANCES OF THE CASE. IT IS NOT NECESSARY FOR THE COMMISSIONER TO MAKE FURTHER INQUIRES BEFORE CANCELLING THE ASSESSM ENT OF THE ASSESSING. FURTHER THE HONBLE RAJASTHAN HIGH COURT IN THE CAS E OF SMT. RENU GUPTA VS. CIT 301 ITR 45, HAS ALSO TAKEN A SIMILAR VIEW RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F SMT. TARA DEVI (SUPRA) AND HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. EXPORT HOUSE 256 ITR 603. RELIANCE IS ALSO PLACED O N THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF GEE VEE ENT ERPRISES VS. ADDL. CIT 99 ITR 375, AND ALSO MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. DEEPAK KUMAR GARG 299 ITR 435. IN VIEW OF THE ABOVE FACTS, I AM OF THE CONSIDERED VIEW THAT FOR WANT OF ENQUIRIES, THE ASSESSMENT ORDER FRAMED BY THE AO IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. IN VIEW OF THE ABOVE THE ASSESSMENT FRAMED IS CANCELLED U/S 263(1) TO BE MAD E FRESH AFTER PROPER VERIFICATION OF THE RECEIPTS, EXPENSES AND OTHER DE TAILS FILED BY THE ASSESSEE. 9 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMIT TED THAT ORIGINAL RETURN WAS FILED FOR RS. 5,04,770/- AND TH E INCOME WAS ASSESSED AT RS. 6,54,151/- AFTER MAKING ADDITION OF RS. 1,49,381/- U/S 143(3) OF THE ACT. THE ASSESSING OF FICER HAS MADE IN DEPTH ENQUIRIES BEFORE COMPLETION OF THE AS SESSMENT AND IN THIS REGARD HE REFERRED TO PAGE 17 WHICH IS A COPY OF THE QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER. LAT ER ON ONE MORE QUESTIONNAIRE WAS ISSUED ALONG WITH THE NOTICE ON 4.6.2010 (COPY OF WHICH IS PLACED AT PAGE 44 OF THE PAPER BOOK). HE POINTED OUT TO VARIOUS DOCUMENTS IN THE PAPER BOOK FILED FROM PAGE 18 TO 75 WHICH WERE FILED IN RESPON SE TO VARIOUS QUERIES BEFORE THE ASSESSING OFFICER. 10 COMING TO THE SPECIFIC POINT HE SUBMITTED THAT I T IS WRONG TO SAY THAT THE ASSESSING OFFICER HAS NOT DISCUSSED SEPARATELY REGARDING BUSINESS OF THE CONTRACTOR AND MANUFACTUR ING. HE POINTED OUT THAT THERE WAS NO MANUFACTURING INVOLVE D AS SUCH THE ASSESSEE WAS PREPARING AND INSTALLING HOARDINGS AND SIGN BOARD AT VARIOUS SITES AS DIRECTED BY THE CUSTOMERS . IN ANY CASE THE NATURE OF THIS BUSINESS WAS EXPLAINED BEFO RE THE ASSESSING OFFICER VIDE LETTER (COPY OF WHICH IS FIE LD AT PAGE 46 OF THE PAPER BOOK). THE OBSERVATION THAT THE ASSES SING OFFICER 6 HAS NOT RECONCILED THE TDS, IS WRONG BECAUSE TDS CE RTIFICATES WERE ISSUED BY THE MULTINATIONAL COMPANIES AND SAME TALLIED WITH THE RECEIPTS OWNED BY THE ASSESSEE AND THIS FA CT WAS POINTED OUT TO THE ASSESSING OFFICER AND THIS HAS B EEN FURTHER POINTED OUT TO THE DCIT (HQ) WHO WAS DOING THE ENQU IRIES ON BEHALF OF THE LD. CIT AND IN THIS REGARD HE REFERRE D TO COPY OF THE LATTER DATED 15.3.2011 WHICH IS PLACED ON RECOR D AT PAGE 81 TO 84 OF THE PAPER BOOK) AND PARTICULARLY INVITED O UR ATTENTION TO PAGE 82 WHERE IT HAS BEEN CLARIFIED THAT TDS CER TIFICATES TALLY WITH THE RECEIPTS AND EVEN THE DCIT (HQ) FOUN D NOTHING WRONG WITH THE SAME. IT WAS POINTED OUT THAT ALL T HE CONFIRMATIONS WERE FILED (COPIES PLACED AT PAGE 19 TO 27 OF THE PAPER BOOK) AND COMPLETE ADDRESSES WERE ALSO GIVEN . EVEN LD. CIT CONDUCTED ENQUIRIES AND DID NOT FINE ANY PA RTICULAR CREDITOR AS BOGUS AS GIVEN IN THE GENERAL OBSERVATI ON THAT CREDITORS ARE BOGUS. HE SUBMITTED THAT THE LD. CIT COULD NOT MAKE SUCH OBSERVATIONS WITHOUT MAKING SPECIFIC FIND ING IN RESPECT OF SPECIFIC ISSUE. HE POINTED OUT THAT IT IS WRONG ON THE PART OF THE LD. COMMISSIONER TO SAY THAT NO DET AILS HAVE BEEN OBTAINED IN RESPECT OF JOB WORK AND RENT ETC. BECAUSE SUCH DETAILS WERE FILED BEFORE THE ASSESSING OFFIC ER (COPY OF THE SAME IS AVAILABLE AT PAGE 18 & 46 OF THE PAPER BOOK). IN RESPECT OF THE EXPENSES ALSO ALL THE DETAILS AS DE SIRED BY HIM, WERE FILED AND MORE OVER THE BOOKS OF ACCOUNT WERE PRODUCED BEFORE HIM. IN RESPECT OF GROSS PROFIT IT WAS S UBMITTED THAT THE ASSESSEE IS MAKING VERY NEGLIGIBLE SALE OF SIGN BOARDS. THIS POSITION WAS EXPLAINED TO DCIT(HQ) THROUGH PAG E 87 AND WHO HAS NOT DRAWN ANY ADVERSE INFERENCE. 11 THE LD. COUNSEL OF THE ASSESSEE ALSO SUBMITTED T HAT INVESTIGATIONS WERE CONDUCTED BY THE LD. COMMISSION ER THROUGH THE OFFICE OF DCIT(HQ) WHO MADE ENQUIRIES I N RESPECT OF CERTAIN PARTIES. ULTIMATELY IT WAS SUGGESTED T HAT WHOLE MATTER WILL BE CLOSED IF THE ASSESSEE IS READY TO M AKE SURRENDER. IN THIS REGARD AN AFFIDAVIT OF SHRI MUN ISH KHULLAR, ADVOCATE WAS ALSO FILED BECAUSE OF THIS SUGGESTION THE ASSESSEE ULTIMATELY AGREED TO MAKE A SURRENDER OF R S. 2,11,134/- WHICH IS ON ACCOUNT OF PURCHASES MADE I N THE MONTH OF DECEMBER TO MARCH FROM VARIOUS PARTIES. H OWEVER, 7 DESPITE THIS SUGGESTION OF SURRENDER OFFERED BY THE ASSESSEE, NO DIRECTION WAS GIVEN TO MAKE THIS ADDITION. THIS ITSELF SHOWS THAT THE LD. COMMISSIONER WAS NOT SURE ABOUT THE SH ORTCOMINGS IN THE ASSESSMENT RECORD. THE LD. COUNSEL OF THE A SSESSEE ALSO FILED A SEPARATE PAPER BOOK CONTAINING VARIOUS JUDGMENTS IN WHICH ABOUT 30 JUDGMENTS HAVE BEEN ENCLOSED BUT AT THE TIME OF HEARING HE PRESSED INTO SERVICE THE FOLLOWI NG DECISIONS: R.S. WAREHOUSING VS. ITO, ITA NO. 310/CHD/2011 (CHANDIGARH) AMRIK SINGH VS. ACIT, 36 DTR (CHANDIGARH) 111 ITO VS. D.G HOUSING PROJECTS LTD, 343 ITR 329 (DEL ) CIT VS. KANDA RICE MILLS, 178 ITR 446 (PH) CIT VS. MRP FIRM, 56 ITR 67 (S.C) 12 HE FURTHER SUBMITTED THAT THIS IS NOT THE CASE W HICH CAN BE DESCRIBED AS A CASE OF LACK OF ENQUIRIES. THE A SSESSING OFFICER HAS CALLED FOR VARIOUS DETAILS AND EXAMINED THE SAME. AT BEST THE ASSESSING OFFICER HAS TAKEN A POSSIBLE VIEW AND THEREFORE, THE ASSESSMENT ORDER CANNOT BE CALLED E RRONEOUS. NO SPECIFIC FINDING HAS BEEN GIVEN BY THE LD. COMMI SSIONER HOW AND IN WHAT RESPECT THE ASSESSMENT ORDER IS ERR ONEOUS WHICH WAS PASSED AFTER DUE APPLICATION OF MIND. 13 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE S TRONGLY SUPPORTED THE ORDER OF THE LD. COMMISSIONER. 14 WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY A ND FIND THAT THE ORDER U/S 263 HAS BEEN PASSED MAINLY BECAU SE ACCORDING TO THE LD. COMMISSIONER PROPER ENQUIRIES HAVE NOT BEEN MADE. THIS IS NOT CORRECT POSITION. THE LD. COUNSEL OF THE ASSESSEE RIGHTLY POINTED OUT THAT THAT PROPER ENQUI RIES WERE CONDUCTED BY THE ASSESSING OFFICER WHICH IS CLEAR F ROM THE FACT THAT A DETAILED QUESTIONNAIRE WAS ISSUED ON 4.1.201 0 (COPY OF WHICH IS PLACED AT PAGE 17 OF THE PAPER BOOK). AGA IN ON 4.6.2010 FURTHER ENQUIRIES WERE MADE ALONG WITH NOT ICE ON 4.6.2010 (COPY OF WHICH IS PLACED AT PAGE 44 TO 45 OF THE PAPER BOOK). NO DOUBT REVISIONARY POWERS ARE AVAILABLE T O THE LD. 8 COMMISSIONER WHEREVER AN ORDER PREJUDICIAL TO THE I NTEREST OF THE REVENUE HAS BEEN PASSED BUT AT THE SAME TIME IT IS NOT EVERY ORDER WHICH CAN BE CALLED ERRONEOUS AND PREJU DICIAL TO THE INTEREST OF THE REVENUE. IN THIS REGARD WE WOUL D RECALL THE FAMOUS OBSERVATIONS OF HON'BLE SUPREME COURT IN CAS E OF MALABAR INDUSTRIAL COMPANY VS. CIT, 243 ITR 83 AT P AGE 87 WHICH IS AS UNDER: A BARE READING OF THIS PROVISION MAKES IT CLEAR THA T THE PREREQUISITE TO THE EXERCISE OF JURISDICTION BY THE COMMISSIONER SU O MOTU UNDER IT, IS THAT THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEO US IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE CO MMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS P REJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT- IF THE OR DER OF THE INCOME-TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE RECOU RSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED B Y THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN I NCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING T HE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. THUS THE POWER U/S 263 IS NOT AVAILABLE FOR CORRECT ING EACH AND EVERY TYPE OF MISTAKE. IN CASE BEFORE US, FIRST OBJ ECTION RAISED BY THE LD. COMMISSIONER IS THAT THE ASSESSEE WAS EN GAGED IN THE BUSINESS OF CONTRACTOR AND MANUFACTURING BUT TH E ASSESSING OFFICER HAS NOT CALLED FOR DETAILS AND HAS NOT DIS CUSSED. THE ASSESSEE HAS PLACED A LETTER BEFORE THE ASSESSING O FFICER (COPY OF WHICH IS PLACED AT PAGE 46 OF THE PAPER BO OK) IN WHICH NATURE OF BUSINESS WAS DESCRIBED. IT WAS ALSO EXPL AINED BEFORE THE LD. COMMISSIONER THAT THE ASSESSEE WAS MAINLY D OING ADVERTISING BUSINESS AND WHICH INVOLVED TWO ACTIVIT IES I.E. PREPARATION AND INSTALLATION OF GLOW SIGN BOARDS AN D HOARDINGS. SECOND ACTIVITY WAS PROCURING ON RENT PREMISES FOR INSTALLATION OF SUCH HOARDINGS FOR WHICH THE ASSESSEE IN TURN WO ULD CHARGE RENT FROM ITS CLIENTS. THIS MAKES IT VERY CLEAR TH AT PRACTICALLY IT IS ONE BUSINESS AND NO CONTRACTING AS SUCH IN THE S ENSE BEING A CIVIL, ELECTRICAL OR MECHANICAL CONTRACT IS THERE . SIMILARLY THE ASSESSEE CANNOT BE SAID TO BE A MANUFACTURER AS THE LD. COMMISSIONER HAS HERSELF OBSERVED THAT THE ASSESSIN G OFFICER HAS CALLED FOR VARIOUS DETAILS BUT IT WAS POINTED O UT BY HER THAT 9 CONFIRMATIONS FILED IN RESPONSE TO THE QUERY RAISED BY THE ASSESSING OFFICER, ARE NOT PROPERLY SIGNED. IT WAS POINTED OUT THAT VARIOUS COPIES OF ACCOUNTS WERE FILED BEFORE T HE ASSESSING OFFICER (PLACED AT PAGE 19 TO 27, 34 TO 44 OF THE P APER BOOK) GENERAL COMMENTS HAVE BEEN GIVEN THAT THESE HAVE BE EN SIGNED BY VARIOUS AUTHORIZED SIGNATORY. THE LD. COM MISSIONER WAS REQUIRED TO KEEP IN MIND THAT THESE ARE DISCLOS ED ACCOUNTS FROM SMALL SUPPLIERS WHO HAD CONFIRMED THE AMOUNT O UTSTANDING SHOWN BY THE ASSESSEE ON THE COPY OF ACCOUNT FURNIS HED BY THE ASSESSEE HERSELF. SHE HAS ALSO OBSERVED THAT ASSES SMENT ORDER IS SILENT ABOUT THE WORK EXECUTED BY THE ASSE SSEE AND PARTICULARLY NO DETAILS HAVE BEEN GIVEN FOR THE FOL LOWING WORK: JOB WORK (12.36%) RS. 28,92,152/- JOB WORK (12.24%) RS. 18,05,962/- JOB WORK RS. 25,53,209/- RENT RECEIVED RS. 42,135/- RENT RECEIVED(12.24%) RS. 4,96,782/- RENT RECEIVED (12.36%) RS. 19,61,405/- WE FAIL TO UNDERSTAND WHAT DETAILS ARE REQUIRED. T HE ASSESSEE HAS SIMPLY CARRIED OUT VARIOUS TYPES OF INSTALLATIO NS OF HOARDINGS FOR WHICH BILLS HAVE BEEN RAISED. ALL TH E DETAILS FOR EXPENSES AND OTHER INFORMATIONS WERE DULY FURNISHED BEFORE THE ASSESSING OFFICER. ORDER PASSED U/S 263 HAS BEEN H ELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE ON THE BASIS OF PARA 4 & 4.1 WHICH WE HAVE ALREADY REPROD UCED. IN RESPECT OF THE CONFIRMATION OF CREDITORS AND DEBTOR S IT SEEMS THAT THE ENQUIRIES WERE ALSO CONDUCTED ON BEHALF OF THE LD. COMMISSIONER BY DCIT(HQ). FINALLY HE WROTE A LETTE R ON 22.2.2013 TO THE ASSESSEE WHICH IS AS UNDER: SMT. KUSUM LATA, PROP AAKRITI ENTERPRISES, H.NO. 750, SECTOR-2, PANCHKULA, MADAM, SUB:- SHOW CAUSE NOTICE UNDER SECTION 263 OF THE IN COME TAX ACT- REGARDING PLEASE REFER TO THE ONGOING PROCEEDING UNDER SECTIO N 263 OF THE INCOME TAX ACT 1961 10 IN THIS REGARD I HAVE BEEN DIRECTED TO BRING TO YOU R KIND NOTICE THAT INQUIRY LETTERS UNDER SECTION 133(6) WERE WRITTEN TO CREDITORS APPE ARING IN YOUR BOOKS OF ACCOUNTS. IN THIS REGARD THE INFORMATION RECEIVED I S AS FOLLOWS: SR. NO. NAME AMOUNT REMARKS 1 M/S ANIL ENTERPRISES, PROP. MR. ANIL SHARMA, PLOT NO. 1012, IT, PARK ROAD, VILLAGE KISHANGARH. 32,000 RETURN TO SENDER 2 M/S AMAR STEEL PLOT NO. 119, IND. AREA-I PANCHKULA 23,523 NO REPLY 3 M/S JETAGE MULTIMEDIA GALLERY, SCO-12, 1 ST FLOOR, SECTOR-17E, CHANDIGARH 7,600 NO REPLY 4 M/S GAGAN HANDLOOM SCO-5, SECTOR-11, PANCHKULA 51,386 NO REPLY 5 M/S GOBINDGARH STEEL PIPES, R.G. MILL ROAD, SIRHIND SIDE, MANDI GOBINDGARH, PUNJAB 2,02,990 NO REPLY 6 WIPRO LTD. # 185-186, MARKENDEY COMPLEX, DENA NAGAR, AMBALA CITY 55,165 AMOUNT NOT MATCHING 7 PEARL GRAPHICS, PLOT NO. 313, IND. AREA-I CHANDIGARH. 41,460 RETURN TO SENDER YOU ARE REQUESTED TO SHOW CAUSE AS TO WHY ALL THE A BOVE AMOUNTS SHOULD NOT BE ADDED BACK TO YOUR INCOME AS UNEXPLAINED CREDIT UND ER SECTION 68 OF THE INCOME TAX ACT. YOUR CASE IS NOW REFINED FOR 28 TH FEBRUARY AT 11:30 A.M. YOURS FAITHFULLY, (LAGANPREET SANDHU) DY. COMMISSIONER OF INCOME TAX(HQ), O/O COMMISSIONER OF INCOME TAX, PANCHKULA ABOVE CLEARLY SHOWS THAT MERE REPLIES WERE NOT RECE IVED FROM CERTAIN PARTIES AND THE ASSESSEE WAS RATHER FORCED TO SURRENDER THE AMOUNTS. THIS ALSO BECOME CLEAR FROM THE AFFID AVIT OF SHRI MUNISH KHULLAR FILED BEFORE US WHICH READS AS UNDER : 1. THAT I HAD BEEN ENGAGED AS COUNSEL IN THE CASE O F MRS. KUSUM LATA, PROP. M/S. AAKRITI ENTERPRISES, H.NO. 750, SE CTOR: 2, PANCHKULA, FOR PROCEEDINGS U/S 263, INITIATED BY THE COMMISSIONER OF INCOME TAX, PANCHKULA FOR THE ASSESSMENT YEAR: 2008-09. 2. THAT I HAD APPEARED BEFORE THE DCIT(HQ) REPRESEN TING C.I.T. PANCHKULA, ON FEW OCCASIONS IN CONNECTION WITH PROC EEDINGS FOR THE ABOVE SAID CASE. 3 THAT DURING THE COURSE OF PROCEEDINGS, ALL THE IN FORMATION / RECORDS, AS DESIRED, WERE PROVIDED. INDEPENDENT ENQ UIRIES WERE MADE BY DCIT(HQ) PANCHKULA FROM THE CREDITORS. AFTER ENQUIR IES, CERTAIN OBSERVATIONS WERE MADE BY THE COMMISSIONER OF INCOM E TAX, PANCHKULA, WITH REGARD TO BALANCE CONFIRMATION OF SOME OF THE CREDITORS. AFTER DISCUSSION WITH THE DCIT (HQ) PANCHKULA, I AGREED T O SURRENDER A SUM OF 11 RS. 2,11,134.00 WITH THE ASSURANCE THAT THE PROCEED INGS U/S 263 SHALL BE DROPPED. UNDER SUCH CIRCUMSTANCES, I OFFERED THE AM OUNT OF RS. 2,11,134.00 SUBJECT TO NO PENALTY TO BUY PEACE OF M IND AND SETTLE THE CASE ONCE FOR ALL. IF THE LD. COMMISSIONER WAS DOUBTFUL ABOUT ABOVE SA ID PARTIES THEY SHOULD HAVE GIVEN A FINDING THAT THESE CREDITO RS ARE NOT GENUINE AND THE ASSESSING OFFICER SHOULD EXAMINE TH E SAME. SECTION 263 NOWHERE GIVE POWER TO THE LD. COMMISSIO NER TO ASK THE ASSESSEE TO MAKE SURRENDER OF A PARTICULAR ITEM. NO DOUBT THE LD. COMMISSIONER CAN ENHANCE THE INCOME B UT THAT CAN BE DONE IF A PARTICULAR ITEM HAS NOT BEEN CONSI DERED BY THE ASSESSING OFFICER CORRECTLY AND ONLY THEN THE INCOM E CAN BE ENHANCED. THE LD. COMMISSIONER HAS NO POWER TO SUB STITUTE HIS OR HER OPINION IN RESPECT OF ENQUIRIES THEN AC TUAL ENQUIRIES CONDUCTED BY THE ASSESSING OFFICER. IN THIS REGARD THE OBSERVATION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN CASE OF CIT V. KANDA RICE MILLS, 178 ITR 446 (PH) ARE RELEL VANT. HEAD NOTE READS AS UNDER: R EVISION - E XPERIENCE OF REVISIONAL JURISDICTION BY C OMMISSIONER P REREQUISITES A SSESSMENT ORDER MUST BE ERRONEOUS AND PREJUDICIAL TO INTERESTS OF R EVENUE C OMMISSIONER HAS TO COME TO FIRM CONCLUSION ITO COMPLETING ASSESSMENT OF ASSESSEE C OMMISSIONER SETTING ASIDE ASSESSMENT ORDER WITH DIRECTION TO MA KE FRESH ASSESSMENT ON GROUND THAT BUSINESS LOSS DETERMINED AFTER ADJUSTING DEDUCTIONS UNDER SECTION 80 J AND ALLOWED TO BE CARRIED FORWARD C OMMISSIONER NOT GIVING HIS OPINION OR CONSIDERING C ITED CASES OR ARGUMENT RAISED M ERELY OBSERVING THAT CERTAIN POINTS DESERVED CONSIDERATION N O FIRM CONCLUSIONS ARRIVED AT BY C OMMISSIONER O RDER OF C OMMISSIONER LIABLE TO BE SET ASIDE I NCOME - TAX A CT , 1961, S. 263. 15 IT IS INTERESTING TO NOTE THAT DESPITE OF OBTAIN ING SURRENDER FROM THE ASSESSEE THE LD. COMMISSIONER HAS NOT DIR ECTED THE ASSESSING OFFICER TO MAKE ADDITION EVEN FOR A SUM O F RS. 2,11,134/-. FURTHER VIDE PARA 4.1 IT HAS BEEN OBSE RVED THAT THE ASSESSING OFFICER HAS NOT MADE DETAILED ENQUIRIES T HEREFORE, IT IS CLEAR THAT IT CAN BE TERMED AS A CASE OF LACK OF ENQUIRIES. ONLY THING WHICH HAS HAPPENED THAT THE ENQUIRIES HA D NOT BEEN CONDUCTED AS PER THE VIEW OF THE LD. COMMISSIONER W HICH IS NOT WITHIN THE SCOPE OF POWERS U/S 263 OF THE ACT. 16 THEREFORE, IN VIEW OF VARIOUS ENQUIRIES RAISED BY THE ASSESSING OFFICER ASSESSING OFFICER AS WELL AS DETA ILED REPLIED 12 FILED BY THE ASSESSEE, IT CANNOT BE SAID THAT THE A SSESSMENT ORDER WAS PASSED WITHOUT CONDUCTING ENQUIRIES. FUR THER SINCE THE LD. COMMISSIONER HAS NOT GIVEN A PARTICULAR FIN DING ABOUT A PARTICULAR ERROR THEREFORE, IN OUR OPINION, THE RE VISIONARY ORDER PASSED U/S 263 IS WRONG AND ACCORDINGLY THE SAME I S QUASHED. 17 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 28.11.2013 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28.11.2013 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR