Dipal Piyush Palkiwala , Ahmedabad V. ITO,Ward-4(4), Ahmedabad

ITA 839/AHD/2015

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8868 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 07-08-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 10-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RITA DOKANIA
• Keywords: Salary income; Opportunity of being heard; Principle of natural justice; Period of limitation; Additional evidence; Capital expenditure; Set aside; Capital Gains
• Section: 143(3); 142(1)

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ./ ITA NO.839/AHD/2015 & ./ ITA NO.3462/AHD/2016 { / ASSESSMENT YEAR: 2010-11 DIPAL PIYUSH PALKHIWALA, 27, RIVERA GREENS, GOKULDHAM SARKHEJ-SANAND ROAD, SANATHAL, AHMEDABAD-382210 VS ITO WARD-4(4) 1 ST FLOOR, NAVJEEVAN TRUST BUILDING AHMEDABAD-380014 ! / (APPELLANT) '# ! / (RESPONDENT) APPELLANT BY : SHRI ASEEM THAKKAR, AR REVENUE BY : SMT. RITA DOKANIA, CIT- DR / DATE OF HEARING : 16 /09/2019 / DATE OF PRONOUNCEMENT: 18/09/2019 $%/ O R D E R PER SHRI MANISH BORAD, A.M: THE ABOVE CAPTIONED APPEALS FILED AT THE INSTANCE O F ASSESSEE PERTAINING TO ASSESSMENT YEAR 2010-11 ARE DIRECTED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TA X (APPEALS)-2 (IN SHORT LD.CIT(A)], AHMEDABAD DATED 04.02.2015 & 10.10.2016 WHICH ARE ARISING OUT OF THE ORDER U/S 143(3) R.W.S 263 OF THE ACT, 1961 DATED 01.03.2013 & 21.07 .2015 RESPECTIVELY FRAMED BY ITO, AHMEDABAD. ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 2 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL IN ITA NO.839/AHD/2015. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT ERRED IN ASSUMING HIS JURISDICTION U/S 263 OF THE I.T. ACT, WHEREAS THE MANDATORY CONDITIONS FOR ASSUMING SUCH JURISDICTION ARE TOTALLY ABSENT, WITH THE RESULT TH AT THE IMPUGNED ORDER PASSED U/S 263 IS BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT ERRED IN ARRIVING AT A CONCLUSION WITHOUT ANY B ASIS WHATSOEVER TO THE EFFECT THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD CIT ERRED IN CANCELLING THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER ON OFFICER TO MAKE A FRESH ASSESS MENT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE ORDER PASSED BY THE LD. CIT IS BAD IN LAW SINCE PRO PER OPPORTUNITY OF BEING HEARD IS NOT GIVEN TO THE APPE LLANT BEFORE PASSING THE IMPUGNED ORDER. 5. THE APPELLANT GRAVES LEAVE TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY GROUND OR GROUND OF APPEAL EITHER BEFO RE OR DURING THE COURSE OF HEARING OF THE APPEAL. 3. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL IN ITA NO.3462/AHD/2016 1.IN THE FACTS AND IN THE CIRCUMSTANCES OF THE APP ELLANTS CASE, THE LD. CIT(A) GROSSLY ERRED IN UPHOLDING THE ASSESSMENT ORDER PASSED BY THE LD. AO UNDER SECTION 143(3) R.W.S. 263 OF THE ACT. 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LD. CIT(A) HAS GROSSLY ERRED CONFIRMING THE ADDITION OF RS.23,00,000/- AS CAPITA L GAINS IN THE HANDS OF THE APPELLANT. ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 3 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS.13,60,000/- REPRESENT ING THE AMOUNT OF CASH DEPOSITS MADE BY THE APPELLANT DURIN G THE AY UNDER CONSIDERATION IN SPITE OF THE FACT THAT TH E SAID DEPOSITS WERE MADE OUT OF THE WITHDRAWALS MADE BY T HE APPELLANT DURING THE PRECEDING PREVIOUS YEARS AND H ENCE THE SOURCE OF THE DEPOSITS WAS DULY EXPLAINED. 4. IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APP ELLANTS CASE, THE LD. CIT(A) GROSSLY ERRED IN HOLDING THAT ADDITIONAL EVIDENCES IN FORM OF CASH BOOK CANNOT BE ADMITTED A S SAME WAS NOT SUPPORTED BY THE APPLICATION UNDER 46A WHER EAS APPELLANT HAS ALREADY SUBMITTED CASH BOOK ALONG WIT H LETTER DATE 31.03.2015 FILE ON 13.04.2015 WHICH WAS MUCH BEFORE FINALIZATION OF ASSESSMENT ORDER & NO APPLIC ATION UNDER RULE 46A IS CALLED FOR AS NO NEW ADDITIONAL E VIDENCES WAS SUBMITTED BEFORE CIT(A). 5. THE APPELLANT CRAVE LEAVE TO ADD, TO ALTER, TO A MEND AND /OR WITHDRAW ANY OF THE GROUNDS OR GROUND OF APPEAL EITHER BEFORE OR AT THE TIME OF APPEAL HEARING. 4. WE WILL FIRST TAKE UP ITANO.839/AHD/2015 CHALLEN GING THE ORDER U/S 263 OF THE ACT FRAMED BY LD. CIT. 5. BRIEF FACTS AS CULLED OUT FROM THE RECORDS ARE T HAT THE ASSESSEE IS AN INDIVIDUAL HAVING INCOME FROM SALARY , SHARE OF PROFIT AND INTEREST. INCOME OF RS.50,60,860/- DECLA RED IN THE INCOME TAX RETURN FILED ON 31.10.2010. CASE SELECTE D FOR SCRUTINY FOLLOWED BY SERVING OF NOTICES U/S 143(3) & 142(1) OF THE ACT ALONG WITH ISSUANCE OF DETAILED QUESTIONNAI RE. AFTER CONSIDERING THE SUBMISSIONS FILED BY THE ASSESSEE A SSESSMENT ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 4 COMPLETED U/S 143(3) OF THE ACT ON 01.03.2013, ACCE PTING THE RETURNED INCOME FILED BY THE ASSESSEE. 6. SUBSEQUENTLY, LD. CIT INVOKED THE PROVISIONS OF SECTION 263 OF THE ACT AND HELD THAT THE ORDER U/S 143(3) OF TH E ACT, DATED 01.03.2013 IS ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF THE REVENUE, AS THE ASSESSING OFFICER FAILED TO THE FOL LOWING TWO ISSUES: (I) THE AO HAS NOT MADE ENQUIRY OR CALLED FOR ANY EXPLANATION IN RESPECT OF INCOME CAPITAL GAIN ALLEG ED TO HAVE BEEN EARNED FROM SALE OF JOINTLY OWNED PROPERT Y SITUATE AT AHMEDABAD FOR A SALE CONSIDERATION OF RS.23,00,000/-. (II) FREQUENT CASH DEPOSIT OF RS.13,60,000/- IN ASSESSEE S PERSONAL BANK ACCOUNT WITH BANK OF BARODA WERE NOT EXAMINED BY THE LD. AO. 7. AGGRIEVED ASSESSEE IS IN APPEAL BEFORE THE TRIBU NAL CHALLENGING THE ORDER U/S 263 OF THE ACT DATED 04.0 2.2015 CONTENDING THAT THE LD. CIT WRONGLY ASSUMED JURISDI CTION AND IMPUGNED ORDER PASSED U/S 263 IS BAD IN LAW AND LIA BLE TO BE QUASHED. 8. LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE PA PER BOOK RUNNING FROM PAGES NO. 1 TO 125 DATED 30.11.2016 SU BMITTED THAT SALE CONSIDERATION OF RS.23,00,000/- WAS RECEI VED IN RESPECT OF SALE OF IMMOVABLE PROPERTY AT NANDAKUNJ CO- OPERATIVE HOUSING SOCIETY AT AHMEDABAD. THIS PROPER TY WAS ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 5 PURCHASED DURING THE F.Y. 2000-01 IN JOINT NAME OF ASSESSEES FATHER, ASSESSEES MOTHER, ASSESSEES BROTHER AND A SSESSEE HIMSELF. DURING THE YEAR 2007 THERE WERE FAMILY DIS PUTE AS A RESULT ASSESSEE SHIFTED TO ANOTHER HOUSE. THERE WER E NO TALKING TERMS BETWEEN THE ASSESSEE AND HIS FATHER. IN ORDER TO RELINQUISH HIS RIGHTS IN THE INVESTMENTS MADE BY HI S FATHER IN THE JOINT NAMES, AN AFFIDAVIT WAS EXECUTED ON 25.11 .20017, CLEARLY STATING ON OATH THAT THE ASSESSEE RELINQUIS HES ALL HIS RIGHTS IN FAVOUR OF HIS PARENTS AND INFORMATION ABO UT THE ALLEGED PROPERTY WAS ALSO MENTIONED IN THIS AFFIDAV IT. HE ALSO SUBMITTED THAT POWER OF ATTORNEY WAS EXECUTED AT TH E TIME WHEN FAMILY WAS LIVING TOGETHER. THE ASSESSEE HAD E XECUTED HIS POWER OF ATTORNEY IN FAVOUR OF HIS FATHER SHRI PIYU SH PALKHIWALA WHO UNDERTAKES ALL THE TRANSACTIONS ON BEHALF OF AS SESSEE. THE ALLEGED TRANSACTION FOR SALE OF PROPERTY WAS NOT IN THE KNOWLEDGE OF THE ASSESSEE. THE CONVEYANCE DEED WAS NOT SIGNED BY THE ASSESSEE. TOTAL CONSIDERATION WAS RECEIVED B Y HIS FATHER WHICH WAS INITIALLY CREDITED IN THE JOINT BANK ACCO UNT HELD IN THE NAME OF FAMILY MEMBERS. IT WAS IMMEDIATELY TRAN SFERRED TO THE INDIVIDUAL BANK ACCOUNT OF ASSESSEES FATHER. T HEREFORE, CAPITAL GAIN IF ANY ARISING IN THIS TRANSACTION FRO M SALE OF PROPERTY IS TAXABLE IN THE HANDS OF HIS FATHER AND MOTHER WHO WERE ENJOYING THE RIGHTS IN THE PROPERTY. THE ASSES SEE IS NOT LIABLE FOR ANY CAPITAL GAIN TAX. 9. LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED T HAT LD. CIT GROSSLY ERRED IN OBSERVING THAT THE CONVEYANCE DEED WAS SIGNED BY THE ASSESSEE WHICH IS NOT CORRECT. IT WAS ALSO S UBMITTED THAT ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 6 DURING THE COURSE OF ASSESSMENT PROCEEDINGS DETAILE D QUESTIONNAIRE WAS ISSUED BY THE LD. AO CALLING VARI OUS INFORMATION INCLUDING THE CAPITAL GAINS. ALL THE D ETAILS WERE FILED ALONG WITH THE BANK STATEMENTS AND THE COPY O F CONVEYANCE DEED. INFORMATION WAS ALSO GIVEN THAT TH E ASSESSEE HAS NOT RECEIVED ANY SALE CONSIDERATION. ON THE BAS IS OF DETAILS FILED BY THE ASSESSEE WHICH WERE FOUND TO BE SATISF ACTORY BY THE LD. AO, ASSESSMENT WAS COMPLETED. THEREFORE, IT IS NOT THE CASE OF NO INQUIRY AT THE END OF THE ASSESSING OFFICER. 10. WITH REGARD TO THE OBSERVATION OF LD. CIT THAT NO INQUIRY WAS CONDUCTED ABOUT THE CASH DEPOSITS OF RS.13,60,0 00/- MADE IN THE BANK ACCOUNT OF THE ASSESSEE, IT WAS SUBMITT ED THAT THE ASSESSEE IS SALARIED EMPLOYEE AND HE IS REGULARLY E ARNING INCOME FROM LAST MANY YEARS. COPIES OF BANK ACCOUNT WERE FILED WHICH SHOWS WITHDRAWAL OF CASH ON VARIOUS DATES IN PAST WHICH WERE SUFFICIENT TO COVER THE ALLEGED CASH DEPOSITS AND IN THESE DETAILS WERE EXAMINED BY THE LD. AO. 11. IN SUPPORT OF HIS CONTENTION LD. COUNSEL FOR TH E ASSESSEE RELIED ON THE JUDGMENT OF HONBLE JURISDICTIONAL HI GH COURT IN THE CASE OF CIT VS. KAMAL GALANI (2018) 95 TAXMANN. COM 261(GUJARAT). RELIANCE WAS ALSO PLACED ON ANOTHER J UDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PR . CIT VS. SHREE GAYATRI ASSOCIATES (2019) 105 TAXMANN.COM 30 (GUJARAT) WHICH WAS DECIDED IN FAVOUR OF THE ASSESSEE AND THE REVENUES SPECIAL LEAVE PETITION AGAINST THIS ORDER WAS DISMI SSED BY THE ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 7 HONBLE SUPREME COURT OF INDIA VIDE ORDER DATED 01. 03.2019 REPORTED AT (2019)106 TAXMANN.COM 31 (SC). 12. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE (DR) VEHEMENTLY ARGUED SUPPORTING THE ORDER OF LD. CIT P ASSED U/S 263 OF THE ACT. SHE ALSO SUBMITTED THAT THE AFFIDAV IT REFERRED BY THE ASSESSEE WAS NEVER PLACED BEFORE THE LD. AO. CO PY OF POWER OF ATTORNEY EXECUTED BY THE ASSESSEE IN FAVOUR OF H IS FATHER WAS ALSO NOT PLACED BEFORE LD. AO. THE LD. AO HAS ALSO NOT CONDUCTED ANY INQUIRY ABOUT THE CAPITAL GAIN OFFERE D BY THE ASSESSEES FATHER AND HAS ALSO NOT CALLED FOR THE C OMPLETE CHAIN OF DOCUMENTS INCLUDING THE AFFIDAVIT, PROOF OF REL INQUISHMENT OF RIGHTS. LD. DR ALSO SUBMITTED THAT THERE WAS NO MEN TION ABOUT THE ALLEGED TRANSACTIONS OF CAPITAL GAIN IN THE BOD Y OF ASSESSMENT ORDER WHICH SHOWS THAT THE LD. AO HAS NO T CONDUCTED THE INQUIRY OF THE ALLEGED TRANSACTIONS. IN SUPPORT OF THIS CONTENTION RELIANCE WAS ALSO PLACED ON FOLLOWI NG JUDGMENTS: 1. GLASS LINES EQUIPMENTS CO. LTD. VS. CIT (2001) 1 19 TAXMAN 813 (GUJ) HIGH COURT OF GUJARAT 2. BABULAL S. SOLANKI VS. ITO IN ITANO.3493/AHD/201 6 ITAT, AHMEDABAD 3. M/S GAYATRI ENTERPRISE VS. ITO IN ITANO.825/AHD/ 2016 ITAT, AHMEDABAD 4. M/S THIRD EYE ENTERPRISE VS. PR. CIT-3 IN ITA NO.1214/AHD/2017, ITAT, AHMEDABAD ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 8 13. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US AND CAREFULLY GONE THROUGH JUDGMEN TS REFERRED AND RELIED BY THE BOTH THE PARTIES. THE SOLE GRIEVA NCE OF THE ASSESSEE IN THIS APPEAL IS CHALLENGING THE ORDER PA SSED U/S 263 OF THE ACT IN WHICH LD. CIT HAS HELD THAT THE ORDER OF THE LD. AO U/S 143(3) OF THE ACT DATED 01.03.2013 IS ERRONE OUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS SUFFICIEN T INQUIRY WAS NOT CONDUCTED WITH REGARD TO THE SALE CONSIDERATION OF RS.23,00,000/- RECEIVED FROM SALE OF PROPERTY HELD IN JOINT NAME AND ABOUT THE CASH DEPOSITS OF RS.13,60,000/- IN THE BANK ACCOUNT HELD IN THE NAME OF ASSESSEE. 14. BEFORE PROCEEDING TO ADJUDICATE THE ISSUE WE WI LL LIKE TO GO THROUGH THE PROVISION OF U/S 263 OF THE ACT WHICH R EADS AS FOLLOWS: 263. (1) THE PRINCIPAL COMMISSIONER OR COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSE SSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTA NCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASS ESSMENT. EXPLANATION 1.FOR THE REMOVAL OF DOUBTS, IT IS HER EBY DECLARED THAT, FOR THE PURPOSES OF THIS SUB-SECTION, (A) AN ORDER PASSED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988 BY THE ASSESSING OFFICER SHALL INCLUDE (I) AN ORDER OF ASSESSMENT MADE BY THE ASSISTANT COMMISSIONER OR DEPUTY COMMISSIONER OR THE INCOME-TAX OFFICER ON TH E BASIS OF THE DIRECTIONS ISSUED BY THE JOINT COMMISSIONER UND ER SECTION 144A ; (II) AN ORDER MADE BY THE JOINT COMMISSIONER IN EX ERCISE OF THE POWERS OR IN THE PERFORMANCE OF THE FUNCTIONS OF AN ASSESSING OFFICER CONFERRED ON, OR ASSIGNED TO, HIM UNDER THE ORDERS OR ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 9 DIRECTIONS ISSUED BY THE BOARD OR BY THE PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL DIR ECTOR GENERAL OR DIRECTOR GENERAL OR PRINCIPAL COMMISSION ER OR COMMISSIONER AUTHORISED BY THE BOARD IN THIS BEHALF UNDER SECTION 120 ; (B) 'RECORD' SHALL INCLUDE AND SHALL BE DEEMED ALW AYS TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PROCEEDING UNDER THIS A CT AVAILABLE AT THE TIME OF EXAMINATION BY THE PRINCIPAL COMMISSIONER O R COMMISSIONER; (C) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTIO N AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER OF AN Y APPEAL FILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988, THE P OWERS OF THE PRINCIPAL COMMISSIONER OR] COMMISSIONER UNDER THIS SUB-SECTION SHALL EXTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXT ENDED TO SUCH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN S UCH APPEAL. EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, IT IS HEREBY DECLARED THAT AN ORDER PASSED BY THE ASSESSING OFFICER SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE, IF, IN THE OPINION OF THE PRINCIPAL COMMISSIONER OR COM MISSIONER, (A) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES O R VERIFICATION WHICH SHOULD HAVE BEEN MADE; (B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOU T INQUIRING INTO THE CLAIM; (C) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH ANY ORDER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119 ; OR (D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WI TH ANY DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE, RENDERED BY T HE JURISDICTIONAL HIGH COURT OR SUPREME COURT IN THE CASE OF THE ASSE SSEE OR ANY OTHER PERSON. (2) NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) AF TER THE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH T HE ORDER SOUGHT TO BE REVISED WAS PASSED. (3) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTI ON (2), AN ORDER IN REVISION UNDER THIS SECTION MAY BE PASSED AT ANY TI ME IN THE CASE OF AN ORDER WHICH HAS BEEN PASSED IN CONSEQUENCE OF, OR T O GIVE EFFECT TO, ANY FINDING OR DIRECTION CONTAINED IN AN ORDER OF THE A PPELLATE TRIBUNAL, NATIONAL TAX TRIBUNAL, THE HIGH COURT OR THE SUPREM E COURT. EXPLANATION.IN COMPUTING THE PERIOD OF LIMITATION FOR THE PURPOSES OF SUB-SECTION (2), THE TIME TAKEN IN GIVING AN OPPORT UNITY TO THE ASSESSEE TO BE REHEARD UNDER THE PROVISO TO SECTION 129 AND ANY PERIOD DURING WHICH ANY PROCEEDING UNDER THIS SECTION IS STAYED B Y AN ORDER OR INJUNCTION OF ANY COURT SHALL BE EXCLUDED. ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 10 15. ON A BARE PERUSAL OF THE SUB SECTION-1 OF SECTI ON 263 OF THE ACT, WOULD REVEAL THAT POWERS OF REVISION GRANTED T O THE LEARNED COMMISSIONER HAVE FOUR COMPARTMENTS. IN THE FIRST P LACE, THE LEARNED COMMISSIONER MAY CALL FOR AND EXAMINE THE R ECORDS OF ANY PROCEEDINGS UNDER THIS ACT. FOR CALLING OF THE RECORD AND EXAMINATION, THE LEARNED COMMISSIONER WAS NOT REQUI RED TO SHOW ANY REASON. IT IS A PART OF HIS ADMINISTRATIVE CONTROL TO CALL FOR THE RECORDS AND EXAMINE THEM. THE SECOND FEATUR E WOULD COME WHEN HE WILL JUDGE AN ORDER PASSED BY AN ASSES SING OFFICER ON CULMINATION OF ANY PROCEEDINGS OR DURING THE PENDENCY OF THOSE PROCEEDINGS. ON AN ANALYSIS OF TH E RECORD AND OF THE ORDER PASSED BY THE ASSESSING OFFICER, H E FORMED AN OPINION THAT SUCH AN ORDER IS ERRONEOUS IN SO FAR A S IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BY THI S STAGE THE LEARNED COMMISSIONER WAS NOT REQUIRED THE ASSISTANC E OF THE ASSESSEE. THEREAFTER THE THIRD STAGE WOULD COME. TH E LEARNED COMMISSIONER WOULD ISSUE A SHOW CAUSE NOTICE POINTI NG OUT THE REASONS FOR THE FORMATION OF HIS BELIEF THAT AC TION U/S 263 IS REQUIRED ON A PARTICULAR ORDER OF THE ASSESSING OFF ICER. AT THIS STAGE THE OPPORTUNITY TO THE ASSESSEE WOULD BE GIVE N. THE LEARNED COMMISSIONER HAS TO CONDUCT AN INQUIRY AS H E MAY DEEM FIT. AFTER HEARING THE ASSESSEE, HE WILL PASS THE ORDER. THIS IS THE 4TH COMPARTMENT OF THIS SECTION. THE LEARNED COMMISSIONER MAY ANNUL THE ORDER OF THE ASSESSING O FFICER. HE MAY ENHANCE THE ASSESSED INCOME BY MODIFYING THE OR DER. HE MAY SET ASIDE THE ORDER AND DIRECT THE ASSESSING OF FICER TO PASS A FRESH ORDER. AT THIS STAGE, BEFORE WE DEEM IT PER TINENT TO TAKE ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 11 NOTE OF THE FUNDAMENTAL TESTS PROPOUNDED IN VARIOUS JUDGMENTS RELEVANT FOR JUDGING THE ACTION OF THE CIT TAKEN U/ S 263. THE ITAT IN THE CASE OF MRS. KHATIZA S. OOMERBHOY VS. I TO, MUMBAI, 101 TTJ 1095, ANALYZED IN DETAIL VARIOUS AU THORITATIVE PRONOUNCEMENTS INCLUDING THE DECISION OF HON'BLE SU PREME COURT IN THE CASE OF MALABAR INDUSTRIES 243 ITR 83 AND HAS PROPOUNDED THE FOLLOWING BROADER PRINCIPLE TO JUDGE THE ACTION OF CIT TAKEN UNDER SECTION 263 . (I) THE CIT MUST RECORD SATISFACTION THAT THE ORDE R OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. BOTH THE CONDITIONS MUST BE FULFILLED. (II) SEC. 263 CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE AO AND IT WAS ONL Y WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACT ED. (III) AN INCORRECT ASSUMPTION OF FACTS OR AN INCORR ECT APPLICATION OF LAW WILL SUFFICE THE REQUIREMENT OF ORDER BEING ERRONEOUS. (IV) IF THE ORDER IS PASSED WITHOUT APPLICATION OF MIND, SUCH ORDER WILL FALL UNDER THE CATEGORY OF ERRONEOUS ORD ER. (V) EVERY LOSS OF REVENUE CANNOT BE TREATED AS PREJ UDICIAL TO THE INTERESTS OF THE REVENUE AND IF THE AO HAS ADOPTED ONE OF THE COURSES PERMISSIBLE UNDER LAW OR WHERE TWO VIEWS AR E POSSIBLE AND THE AO HAS TAKEN ONE VIEW WITH WHICH THE CIT DO ES NOT AGREE. IF CANNOT BE TREATED AS AN ERRONEOUS ORDER, UNLESS THE VIEW TAKEN BY THE AO IS UNSUSTAINABLE UNDER LAW ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 12 (VI) IF WHILE MAKING THE ASSESSMENT, THE AO EXAMINE S THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINE THE INCOME, THE CIT, WHILE EXERCISING HIS POWER UNDER S 263 IS NOT PERMI TTED TO SUBSTITUTE HIS ESTIMATE OF INCOME IN PLACE OF THE I NCOME ESTIMATED BY THE AO. (VII) THE AO EXERCISES QUASI-JUDICIAL POWER VESTED IN HIS AND IF HE EXERCISES SUCH POWER IN ACCORDANCE WITH LAW AND ARRIVE AT A CONCLUSION, SUCH CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE CIT DOES NOT FEE STRATIFIED WITH THE CONCLUSION. (VIII) THE CIT, BEFORE EXERCISING HIS JURISDICTION UNDER S. 263 MUST HAVE MATERIAL ON RECORD TO ARRIVE AT A SATISF ACTION. (IX) IF THE AO HAS MADE ENQUIRIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON THE RELEVANT ISSUES AND T HE ASSESSEE HAS GIVEN DETAILED EXPLANATION BY A LETTER IN WRITING AND THE AO ALLOWS THE CLAIM ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, THE DECISION OF THE AO CANNOT BE HELD TO BE ERRONEOUS SIMPLY BECAUSE IN HIS ITA NO.4 7/RJT/2011 AND 701/RJT/2014 ORDER HE DOES NOT MAKE AN ELABORAT E DISCUSSION IN THAT REGARD. 16. APART FROM THE ABOVE PRINCIPLES, WE DEEM IT APP ROPRIATE TO MAKE REFERENCE TO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SUN BEAM AUTO REPORTED IN 227 CTR 113 AND GEE VEE ENTERPRISES LTD VS. ADDL. COMMISSIONER OF INCOME ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 13 TAX (99 ITR 375). IN THE CASE OF SUN BEAM AUTO, THE HON'BLE HIGH COURT HAS POINTED OUT A DISTINCTION BETWEEN LA CK OF INQUIRY AND INADEQUATE INQUIRY. IF THERE IS A LACK OF ENQUIRY, THEN THE ASSESSMENT ORDER CAN BE BRANDED AS ERRONEO US. THE FOLLOWING OBSERVATIONS OF THE HON'BLE DELHI HIGH CO URT ARE WORTH TO NOTE: '12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF TH E COUNSEL ON THE OTHER SIDE AND HAVE GONE THROUGH THE RECORDS. THE FIRST ISSUE THAT ARISES FOR OUR CONSID ERATION IS ABOUT THE EXERCISE OF POWER BY THE COMMISSIONER OF INCOME- TAX UNDER SECTION 263 OF THE INCOME-TAX ACT. AS NOTED ABOVE, THE SUBMISSION OF LEARNED COUNSEL FOR THE RE VENUE WAS THAT WHILE PASSING THE ASSESSMENT ORDER, THE ASSESSING OFFICER DID NOT CONSIDER THIS ASPECT SPEC IFICALLY WHETHER THE EXPENDITURE IN QUESTION WAS REVENUE OR CAPITAL EXPENDITURE. THIS ARGUMENT PREDICATES ON THE ASSESS MENT ORDER WHICH APPARENTLY DOES NOT GIVE ANY REASONS WH ILE ALLOWING THE ENTIRE EXPENDITURE AS REVENUE EXPENDIT URE. HOWEVER, THAT BY ITSELF WOULD NOT BE INDICATIVE OF THE FACT THAT THE ASSESSING OFFICER HAD NOT APPLIED HIS MIND ON THE ISSUE. THERE ARE JUDGMENTS GALORE LAYING DOWN THE P RINCIPLE THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IS NOT REQUIRED TO GIVE DETAILED REASON IN RESPECT OF EACH AND EVERY ITEM OF DEDUCTION, ETC. THEREFORE, ONE HAS TO SEE FROM THE RECORD AS TO WHETHER THERE WAS APPLICATION OF M IND BEFORE ALLOWING THE EXPENDITURE IN QUESTION AS REVE NUE EXPENDITURE. LEARNED COUNSEL FOR THE ASSESSEE IS RI GHT IN HIS SUBMISSION THAT ONE HAS TO KEEP IN MIND THE DISTINC TION BETWEEN 'LACK OF INQUIRY' AND 'INADEQUATE INQUIRY'. IF THERE WAS ANY INQUIRY, EVEN INADEQUATE, THAT WOULD NOT BY ITSELF, GIVE OCCASION TO THE COMMISSIONER TO PASS ORDERS UNDER SECTION 263 OF THE ACT, MERELY BECAUSE HE HAS DIFFERENT OPINION IN THE MATTER. IT IS ONLY IN CASE S OF 'LACK OF INQUIRY', THAT SUCH A COURSE OF ACTION WOULD BE OPE N'. ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 14 17. IN THE CASE OF GEE VEE ENTERPRISE VS. COMMISSIONER OF INCOME TAX REPORTED IN 99 ITR PAGE 375, THE HON'BLE COURT HAS EXPOUNDED THE APPROACH OF LD. ASSESSING OFFICER WHI LE PASSING ASSESSMENT ORDER. THE OBSERVATION OF THE HON'BLE CO URT ON PAGES 386 OF JOURNAL READ AS UNDER:- '... IT IS NOT NECESSARY FOR THE COMMISSIONER TO MA KE FURTHER INQUIRIES BEFORE CANCELLING THE ASSESSMENT ORDER OF THE INCOME-TAX OFFICER. THE COMMISSIONER CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCE S OF THE CASE THE INCOME-TAX OFFICER SHOULD HAVE MADE FURTHE R INQUIRIES BEFORE ACCEPTING THE STATEMENTS MADE BY T HE ASSESSEE IN HIS RETURN. THE REASON IS OBVIOUS. THE POSITION AND FUNCTION OF THE INCOME-TAX OFFICER IS VERY DIFFIDENT FROM THAT OF A CIVIL COURT. THE STATEMENT MADE IN A PLEADING PROVED BY THE MINI MUM AMOUNT OF EVIDENCE MAY BE ADOPTED BY A CIVIL COURT IN THE ABSENCE OF ANY REBUTTAL. THE CIVIL COURT IS NEUTRAL . IT SIMPLY GIVES DECISION ON THE BASIS OF THE PLEADING AND EVI DENCE WHICH COMES BEFORE IT. THE INCOME-TAX OFFICER IS NO T ONLY ON ADJUDICATOR BUT ALSO AN INVESTIGATOR. HE CANNOT REM AIN PASSIVE IN THE FACE OF THE RETURN WHICH IS APPARENT LY IN ORDER BUT CALLED FOR FURTHER INQUIRY. IT IS HIS DUT Y TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN THE RETU RN WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE AN INQUIRY... IT IS BECAUSE IT IS INCUMBENT ON THE INC OME-TAX OFFICER TO FURTHER INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MADE SUCH AN INQUIRY PRUDE NT THAT THE WORD 'ERRONEOUS' IN SECTION 263 INCLUDES THE FAILURE TO MAKE SUCH AN ENQUIRY. THE ORDER BECOMES ERRONEOU S 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.' 18. HONBLE SUPREME COURT IN THE CASE OF MALABAR IN DUSTRIAL CO. LTD. VS. CIT (2000) 243 ITR 83 HAS LAID DOWN A PRINCIPAL ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 15 WHICH IS VERY IRRELEVANT TO ADJUDICATE THE ISSUE RE LATING TO ISSUE U/S 263 OF THE ACT WHICH READS THAT WHEN AN ITO ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULT ED IN LOSS OF REVENUE, OR WHERE TWO VIEW ARE POSSIBLE AND THE ITO HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE , IT CANNOT BE TREATED AS A ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF THE REVENUE UNLESS THE VIEW TAKEN BY THE ITO IS UNSUSTA INABLE. 19. NOW FACTS WHICH NEEDS TO BE EXAMINED ARE WHETHE R THE ALLEGED TRANSACTION REFERRED BY THE LD. CIT IN HIS ORDER U/S 263 OF THE ACT HAD COME FOR CONSIDERATION BEFORE THE LD . AO OR NOT. 20. AS REGARDS THE FIRST TRANSACTION FOR THE SALE C ONSIDERATION OF RS.23,00,000/- RECEIVED FROM SALE OF IMMOVABLE PROP ERTY JOINTLY HOLD BY THE ASSESSEES FAMILY MEMBERS INCLUDING HIS FATHER, MOTHER, BROTHER AND ASSESSEE HIMSELF AND THE DISCLO SURE OF CAPITAL GAIN ARISING THERE FROM, WE FIND THAT AFTER THE SELECTION OF THE ASSESSEES CASE FOR SCRUTINY PROCEEDINGS NOT ICE U/S 142(1) OF THE ACT WAS ISSUED ON 18.06.2012 PLACED I N PAPER BOOK PAGES 15 TO 16. IN THIS NOTICES SPECIFIC INFOR MATION HAS BEEN ASKED AT POINT NO.4 WHICH READS; PLEASE GIVE DETAILS OF MOVABLE (INCLUDING VEHICLES , FIXED DEPOSITS, INVESTMENTS IN SHARES/STOCK ETC.) AND IMM OVABLE PROPERLY HELD BY YOU, EITHER HELD JOINTLY OR IN SIN GLE NAME. ALSO GIVE THE DETAILS OF ANY MOVABLE AND/OR IMMOVAB LE PROPERTY WERE PURCHASED DURING THE YEAR AND ALSO GI VE THE SOURCES OF SUCH PURCHASES. ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 16 21. AT POINT NO.7 LD. AO HAS ASKED TO FURNISH THE COMPLETE DETAILS OF CAPITAL GAIN IF ANY . 22. NOW WE HAVE TO SEE WHETHER THE ASSESSEE HAS GIV EN SPECIFIC REPLY TO THE ABOVE QUESTION. WE FIND THAT IN REPLY DATED 19.01.2013 PLACED AT PAGE 17 OF THE PAPER BOOK. 23. AT POINT NO.4 THE ASSESSEE HAS SUBMITTED THAT WE DID NOT HAVE ANY IMMOVABLE PROPERTY DURING THE F.Y.2009-10 AND ALSO DID NOT PURCHASED ANY IMMOVABLE PROPERTY DURING THE F.Y.2009- 10. 24. IN POINT NO.6 IN THE VERY SAME LETTER ASSESSEE GAVE INFORMATION ABOUT THE CAPITAL GAIN WHICH READS: DURING THE FINANCIAL YEAR 2009-10, MY FATHER HAS SOLD ONE PROP ERTY WHICH WAS JOINTLY HELD WITH MY MOTHER AND ME. I HAVE SOME FAMILY DISPUTE WITH MY FATHER AND HE SOLD THIS PROPERTY WI THOUT INFORMING ME AND I HAVE NOT RECEIVED ANY CONSIDERAT ION FROM SALE OF THIS PROPERTY. PLEASE FIND ATTACHED SALE DEED AN D COPY OF BANK ACCOUNT WITH HDFC BANK OF MY FATHER AND BANK OF BAR ODA WHICH IS JOINT ACCOUNT OF ME, MY FATHER AND MY MOTH ER. 25. WE FIND THAT AGAINST SPECIFIC QUERY RAISED BY T HE LD. AO ASSESSEE HAS DULY REPLIED WITH THE DOCUMENTARY EVID ENCES ABOUT THE ALLEGED TRANSACTION AND INFORMING THAT HE HAS NOT RECEIVED ANY CONSIDERATION FROM THE SALE OF PROPERT Y. THE FACT THAT HE HAS A DISPUTE WITH HIS FAMILY IS ALSO MENTI ONED. 26. NOW ON THE BASIS OF THESE INFORMATIONS LD. AO W AS SATISFIED AND FIND THE REPLY OF THE ASSESSEE TO BE GENUINE AN D DID NOT ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 17 RAISE FURTHER INQUIRY INTO THE MATTER. NOW ROOT CAU SE OF THIS APPEAL LIES ON THIS POINT. THAT WHY THE LD. AO DID NOT INQUIRED FURTHER ABOUT THE ALLEGED TRANSACTION AND ITS GENUI NENESS. IT IS NOT A CASE THAT NO INQUIRY WAS DONE BUT IT IS A CAS E THAT INCOMPLETE INQUIRY WAS DONE. WHETHER AN INQUIRY WAS INCOMPLETE OR COMPLETE DEPENDS ON THE PERSON WHO IS EXAMINING THE TRANSACTIONS. IT MAY BE COMPLETE FOR ONE BUT MAY BE INCOMPLETE FOR ANOTHER. AS PER THE LD. COUNSEL FOR THE ASSESSEE SUFFICIENT INQUIRY WAS CONDUCTED AND ALL T HE INFORMATION RELEVANT THERETO WAS SUPPLIED. ON THE O THER HAND, LD DR HAS SUBMITTED THAT THE LD.AO HAS NOT INQUIRED ABOUT VARIOUS DOCUMENTS WHICH COULD PROVE THAT THE ASSESS EE HAS RELINQUISHED HIS RIGHTS IN THE PROPERTY. 27. WE OBSERVE THAT THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KAMAL GALANI HAVE ADJUDICATED SIMILAR T YPE OF ISSUE REFERRING TO VARIOUS JUDGMENTS. THE RELEVANT ABSTRA CT OF THIS JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN OU R VIEW IS QUITE RELEVANT TO ADJUDICATE THE ISSUE BEFORE US. 15. THE SCOPE OF THE COMMISSIONER'S POWER OF REVISI ON UNDER SECTION 263 HAS BEEN A MATTER OF JUDICIAL CONSIDERATION ON VARIOUS OCASSIONS. IN CASE OF COMMISSIONER OF INCOME TAX VS. SUNBEAM AUTO LTD . REPORTED IN 332 ITR 167 DIVISION BENCH OF DELHI HIG H COURT OBSERVED AS UNDER: '12. ... ... ... THERE ARE JUDGEMENTS GALORE LAYING DOWN THE PRINCIPLE THAT THE ASSESSING OFFICER IN THE ASSESSM ENT ORDER IS NOT REQUIRED TO GIVE DETAILED REASON IN RESPECT OF EACH AND EVERY ITEM OF DEDUCTION ETC. THEREFORE, ONE HAS TO SEE FROM THE RECORD AS TO WHETHER THERE WAS APPLICATION OF MIND ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 18 BEFORE ALLOWING THE EXPENDITURE IN QUESTION AS REVE NUE EXPENDITURE. LEARNED COUNSEL FOR THE ASSESSEE IS RI GHT IN HIS SUBMISSION THAT ONE HAS TO KEEP IN MIND THE DISTINC TION BETWEEN 'LACK OF INQUIRY' AND 'INADEQUATE INQUIRY'. IF THERE WAS ANY INQUIRY, EVEN INADEQUATE, THAT WOULD NOT BE ITSELF, GIVE OCCASION TO THE COMMISSIONER TO PASS ORDERS UNDER SECTION 263 OF THE ACT, MERELY BECAUSE HE HAS DIFFERENT OPINION IN THE MATTER. IT IS ONLY IN CASE S OF 'LACK OF INQUIRY'. THAT SUCH A COURSE OF ACTION WOULD BE OPE N. IN GABRIEL INDIA LTD'S CASE (SUPRA), LAW ON THIS ASPEC T WAS DISCUSSED IN THE FOLLOWING MANNER:... .... ... ] 16. IN CASE OF INCOME TAX OFFICER VS. DG HOUSING PROJECTS LTD . REPORTED IN 343 ITR 329, DELHI HIGH COURT OBSERVE D THAT A FINDING THAT THE ORDER IS ERRONEOUS IS A CON DITION OR REQUIREMENT WHICH MUST BE SATISFIED FOR EXERCISE OF JURISDICTION UNDER SECTION 263 OF THE ACT. THE MATTER CANNOT BE REMITTED FOR A FRESH DECISION TO THE ASSESSING O FFICER TO CONDUCT FURTHER ENQUIRIES WITHOUT SUCH A FINDING. 17. FULL BENCH OF GAUHATI HIGH COURT IN CASE OF COMMISSIONER OF INCOME TAX VS. JAWAHAR BHATTACHARJEE C/TAXAP/1376/2007 JUDGMENT REPORTED IN 341 ITR 434 HELD THAT NOT HOLDING SUCH INQUIRY A S IS NORMAL AND NOT APPLYING MIND TO RELEVANT MATERIAL I N MAKING ASSESSMENT BY THE ASSESSING OFFICER WOULD BE AN ERRONEOUS ASSESSMENT WARRANTING EXERCISE OF REVISIO NAL JURISDICTION. IT WAS HELD AS UNDER: '23. ACCORDINGLY, WE HOLD THAT DAGA ENTRADE P. LTD [2010] 327 ITR 467 (GAUHATI) LAYS DOWN CORRECT LAW AND THE SAME IS NOT IN CONFLICT WITH THE EARLIER ORDER OF THIS C OURT IN RAJENDRA SINGH [1990] 79 STC 10 (GAUHATI). JURISDIC TION UNDER SECTION 263 CAN BE EXERCISED WHENEVER IT IS FOUND THAT THE ORDER OF ASSESSMENT WAS ERRONEOUS AND PREJ UDICIAL TO THE INTEREST OF THE REVENUE. CASES OF ASSESSMENT ORDER PASSED ON WRONG ASSUMPTION OF FACTS, OR INCORRECT APPLICATION OF LAW, WITHOUT DUE APPLICATION OF MIND OR WITHOUT FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE ARE NOT BEYOND THE SCOPE OF SECTION 263 OF THE ACT. ' ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 19 18. IN CASE OF COMMISSIONER OF INCOME TAX VS. ARVIND JEWELLERS REPORTED IN 259 ITR 502 DIVISION BENCH OF THIS COURT REFERRING TO THE JUDGEMENT OF SUPREME COURT I N CASE OF MALABAR INDUSTRIAL CO. LTD VS. CIT REPORTED IN [243 ITR 83 OBSERVED AS UNDER: '6. FROM THE ABOVE OBSERVATIONS MADE BY THE SUPREME COURT, IT IS CLEAR THAT THE PROVISIONS OF SECTION 263 CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAK E OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONL Y WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACT ED AND INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLI CATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. THE SUPREME COURT HAS ALSO MADE IT CLEAR THAT THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REV ENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER P ASSED BY THE ASSESSING C/TAXAP/1376/2007 JUDGMENT OFFICER AND THAT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJU DICIAL TO THE INTERESTS OF THE REVENUE. IT WAS FURTHER EMPHAT ICALLY STATED THAT WHEN AN INCOME-TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN L OSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE IN COME- TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED A S AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW.' 19. IN THE CONTEXT OF PRESENT CASE, APPLYING THE RA TIO OF THE ABOVE NOTED DECISION, THE SCOPE OF THE COMMISSIONER 'S POWER OF REVISION U/S. 263 OF THE ACT WOULD BE, WHE N THE ASSESSING OFFICER CONDUCTS NO INQUIRY OR PROPER INQ UIRIES OR DOES NOT APPLY HIS MIND TO THE LEGAL ISSUES ARISING OUT OF THE MATERIAL ON RECORD, THE REVISIONAL POWERS WOULD BE AVAILABLE. ON THE OTHER HAND, IF THE ASSESSING OFFI CER HAS CONDUCTED PROPER INQUIRIES AND COME TO LEGAL CONCLU SIONS WHICH ARE PLAUSIBLE, THE COMMISSIONER WOULD NOT BE JUSTIFIED IN INVOKING REVISIONAL JURISDICTION DIREC TING FURTHER INQUIRIES OR TAKING A DIFFERENT VIEW. ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 20 20. IN THIS CONTEXT, WE MAY RECALL, THE ASSESSING O FFICER HAD EXAMINED TWO ISSUES. WITH RESPECT TO INTRODUCTION O F THE CAPITAL, THE ASSESSEE HAD POINTED OUT THAT HE WAS A N NRI FOR OVER TWO YEARS AND HE HAD MADE FOREIGN REMITTAN CES OVER A PERIOD OF TIME. WITH RESPECT TO THE UNSECURE D LOAN OF RS. 3.87 CRORES RECEIVED FROM HIS BROTHER ALSO, THE ASSESSEE HAD PROVIDED NECESSARY DETAILS WHICH WERE CALLED UP ON BY THE C/TAXAP/1376/2007 JUDGMENT ASSESSING OFFICER. WE HAVE REPRODUCED SOME OF THE RESPONSES OF THE ASS ESSEE ONLY TO HIGHLIGHT THE NATURE OF INQUIRIES CARRIED O UT BY THE ASSESSING OFFICER AND THE DETAILED ANSWERS GIVEN BY THE ASSESSEE. WITH RESPECT TO HIS BROTHER, THE ASSESSEE POINTED OUT THAT HE WAS RUNNING A SUCCESSFUL BUSINESS OF TR ADING, WAS ENGAGED IN VARIOUS COMMERCIAL AND NON-COMMERCIA L ACTIVITIES. HE WAS MAN OF STANDING AND MEANS. IN FA CT, THE COMMISSIONER HAS GONE ON RECORD TO SUGGEST THAT HE NEITHER DISPUTES THE IDENTITY NOR THE CREDITWORTHINESS OF T HE BROTHER OF ASSESSEE TO LOAN SUCH AMOUNT. 21. THE ASSESSING OFFICER HAVING CARRIED OUT SUCH D ETAILED INQUIRIES, IT WAS NOT OPEN FOR THE COMMISSIONER TO THEREAFTER REOPEN THE ISSUES ON MERE APPREHENSION AND SURMISES . HIS TWO FUNDAMENTAL OBJECTIONS WERE THAT THE ASSESSING OFFI CER DID NOT VERIFY WHETHER THE REMITTANCES WERE FROM THE OWN IN COME OR SOURCES OF THE ASSESSEE AND HIS BROTHER OR WERE MER ELY BY WAY OF HAWALA TRANSACTIONS. IN THE PROCESS, HE WAS ALSO CRITICAL OF THE ASSEESSING OFFICER NOT INSISTING ON COLLECTING THE DETAILS OF THE ACCOUNTS FROM WHICH THE FOREIGN REMITTANCES WER E MADE TO THE INDIAN ACCOUNT OF THE SAID TWO PERSONS. WITHOUT ANY MATERIAL WITHOUT ANY BASIS, THE CIT COULD NOT HAVE REMANDED THE PROCEEDINGS TO THE ASSESSING OFFICER TO CARRY O UT FURTHER INQUIRIES IN ORDER TO ASCERTAIN WHETHER THE REMITTA NCES WERE GENUINE OR WERE IN THE NATURE OF HAWALA TRANSACTION S. IN THE ENTIRE ORDER OF THE COMMISSIONER, WE DO NOT FIND AN Y BASIS FOR HIM TO CARRY SUCH APPREHENSION. HIS PRINCIPLE THRUS T WAS TO THE C/TAXAP/1376/2007 JUDGMENT EFFECT THAT ASSESSEE DID NOT PRODUCE THE PRECISE BANK DETAILS OF THE FOREIGN REMITTANCES EVEN BEFORE HIM. THERE IS NOTHING ON THE RECORD TO SUGGEST THAT HE CALLED UPON THE ASSESSEE TO DO SO AND THE ASSESS EE FAILED OR REFUSED TO DO SO. ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 21 22. ALL IN ALL, WE FIND NO ERROR IN THE VIEW OF THE TRIBUNAL REVERSING VIEW OF THE COMMISSIONER. THE QUESTION IS THUS ANSWERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. TAX APPEAL IS DISMISSED 28. SIMILARLY IN ANOTHER CASE OF PR. CIT VS. SHREE GAYATRI ASSOCIATES (SUPRA) HONBLE JURISDICTIONAL HIGH COUR T DISMISSED THE REVENUES APPEAL OBSERVING THAT IN PARTICULAR , THE TRIBUNAL HAS IN THE IMPUGNED JUDGMENT REFERRED TO THE DETAIL ED CORRESPONDENCE BETWEEN ASSESSING OFFICER AND THE AS SESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS TO COME TO A CONCLUSION THAT THE ASSESSING OFFICER HAD CARRIED O UT DETAILED INQUIRIES WHICH INCLUDES ASSESSEES ON MONEY TRANSA CTION. IT WAS ON ACCOUNT OF THESE FINDINGS THAT THE TRIBUNAL WAS PROMPTED TO REVERSE THE ORDER OF REVISION. AGAINST THE JUDGMENT OF HONBLE JURISDICTION HIGH COURT IN THE CASE OF SHREE GAYATR I ASSOCIATES (SUPRA), SPECIAL LEAVE PETITION FILED BY THE REVENU E BEFORE THE HONBLE SUPREME COURT WAS DISMISSED THEREBY CONFIRM ING THE JUDGMENT OF HONBLE HIGH COURT OF GUJARAT. 29. SO ON THE BASIS OF ABOVE JUDGMENT, WE CAN INFE R THAT IF DETAILED INQUIRY HAS BEEN CONDUCTED BY THE LD. AO A ND ONE OF THE LEGALLY PERMISSIBLE VIEW IS TAKEN BY THE LD. AO WHICH MAY NOT BE REVENUE FAVOURING, CANNOT GIVE POWER TO THE LD. CIT TO ASSUME JURISDICTION U/S 263 AND TO SET ASIDE THE O RDER OF THE LD. AO. IN THE INSTANT CASE THE ASSESSEE HAD PREPAR ED AN AFFIDAVIT ON 23.11.2007 DULY NOTARIZED RELINQUISHIN G HIS RIGHTS FROM ALL THE PROPERTIES JOINTLY HELD WITH HIS FATHE RS FAMILY. GENUINENESS OF THIS AFFIDAVIT HAS NOT BEEN DOUBTED BY THE ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 22 REVENUE AUTHORITIES. IN THE SALE DEED ASSESSEE HAS NOT SIGNED AS A SELLER AS HAS BEEN ALLEGED BY THE LD. CIT WHICH I TSELF SHOWS THAT THE LD. CIT HAS NOT EXAMINED THE DOCUMENTS PRO PERLY. THE TOTAL SALE CONSIDERATION WHICH WAS PRIMARILY CREDIT ED IN THE JOINT ACCOUNT HELD IN THE NAME OF FAMILY MEMBERS HA S BEEN IMMEDIATELY WITHDRAWAN AND DEPOSITED IN THE BANK AC COUNT OF ASSESSEES FATHER. ALL THE SERIES OF DOCUMENTS AND TRANSACTIONS ALSO COME TO CONCLUSION THAT THE ASSESSEE WAS NOT L IABLE TO PAY ANY TAX ON THE CAPITAL GAIN FROM SALE OF ALLEGED PR OPERTY. THE LD. AO IN THIS CASE ON EXAMINING THE SALE DEED CAME TO A CONCLUSION AT THE FIRST STAGE WHICH WAS WELL WITHIN HIS POWER AS IT IS NOT MANDATORY THAT FOR EACH AND EVERY ASPECT THE LD. AO HAS TO DOUBT THE TRANSACTION AND CALL FOR INFORMATI ON AGAIN AND AGAIN. IT IS ON THE DISCRETION, WISDOM AND UNDERSTA NDING OF FACTS BY THE LD. AO WHICH MAY PROMPT HIM TO CALL FO R MORE INFORMATION IF ANY REQUIRED. IN OUR CONSIDERED VIEW AND IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE WE OBSERV E THAT FOR THE ALLEGED TRANSACTION OF CAPITAL GAIN SUFFICIENT INQUIRY WAS CONDUCTED BY THE LD. AO BEFORE ACCEPTING THE CONTEN TION MADE BY THE ASSESSEE. 30. AS REGARDS THE JUDGMENTS REFERRED AND RELIED B Y THE LD. DR THAT IN THE BODY OF ASSESSMENT ORDER THERE IS NO ME NTION ABOUT THE ALLEGED TRANSACTIONS WE ARE OF A DIFFERENT VIEW . IN SERIES OF JUDGMENTS BY THE HONBLE COURTS, IT HAS BEEN CONSIS TENTLY HELD THAT DISCUSSION OF EACH AND EVERY TRANSACTION INQUI RED BY THE LD. AO NEED NOT BE INCORPORATED IN THE BODY OF ASSE SSMENT ORDER. WE AGREE TO THIS VIEW SINCE THE CONDUCTING O F THE ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 23 ASSESSMENT PROCEEDINGS REQUIRES CALLING FOR INFORMA TION ABOUT THE STATEMENTS OF AFFAIRS OF THE ASSESSEE DURING TH E YEAR WHICH INCLUDES ALL THE TRANSACTIONS CARRIED OUT WHICH LEA DS TO INCOME OR LOSS ARISING THERE FROM. AFTER RECEIVING THE NEC ESSARY DETAILS AND DOCUMENTS THE LD. AO EXAMINES VARIOUS TRANSACTI ONS. HE/SHE MAY BE SATISFIED WITH SOME OF THEM AND NOT W ITH THE OTHERS. FOR THE TRANSACTIONS WHICH ARE FOUND TO BE SATISFACTORY BY THE LD. AO MAY NOT BE INCORPORATED IN THE ORDER. IT IS ONLY THE MATTER WHICH REQUIRES ADDITION IN HANDS OF ASSE SSEE NEEDS TO BE INCORPORATED IN DETAIL IN THE ASSESSMENT ORDE R SO AS TO MAKE IT A SPEAKING ORDER. THE PROCEEDINGS ARE DULY MENTIONED IN THE ORDER SHEET AND THE DOCUMENTS PLACED IN THE CASE FILE. THEY ARE THE CONCLUSIVE EVIDENCE ABOUT THE CORRESPO NDENCE BETWEEN LD. AO AND THE ASSESSEE. 31. AS REGARDS THE ALLEGED CASH DEPOSITS IN BANK AC COUNT HELD BY THE ASSESSEE AND ALLEGATION OF LD. CIT THAT THE LD. AO HAS NOT INQUIRED WITH THE ASSESSEE, WE FIND THAT ALL TH E BANK ACCOUNTS IN NAME OF ASSESSEE WERE PLACED BEFORE THE LD. AO. THERE WERE CERTAIN CASH WITHDRAWALS IN THE PAST WHI CH WERE CLAIMED BY THE ASSESSEE AS THE SOURCE TO COVER UP T HE ALLEGED CASH DEPOSIT. THE SAME WERE FOUND TO BE SATISFACTOR Y BY THE LD. AO. 32. WE, THEREFORE, IN THE GIVEN FACTS AND CIRCUMST ANCES OF THE CASE AND DETAILED DISCUSSION HEREINABOVE, ARE OF TH E CONSIDERED VIEW THAT LD. AO CONDUCTED SUFFICIENT INQUIRY OF TH E IMPUGNED TRANSACTION AND TOOK ONE OF THE PERMISSIBLE VIEW PR OVIDED IN THE ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 24 LAW AND THEREFORE LD. CIT ERRED IN ASSUMING JURISDI CTION U/S 263 OF THE ACT. WE ACCORDINGLY QUASH THE ORDER OF L D. CIT U/S 263 OF THE ACT AND RESTORE THE FINDING OF LD. AO GI VEN IN THE ORDER U/S 143(3) OF THE ACT DATED 01.03.2013. THUS, GROUNDS RAISED BY THE ASSESSEE IN ITANO.839/AHD/2015 ARE AL LOWED. 33. NOW WE TAKE UP ITA NO.3462/AHD/2016 THROUGH WHI CH THE ASSESSEE HAS CHALLENGED THE ORDER OF LD. CIT(A) CON FIRMING THE ADDITION MADE BY THE LD. AO IN THE SET ASIDE PROCEE DINGS CARRIED OUT U/S 143(3) R.W.S. 263 OF THE ACT. 34. SINCE WE HAVE ALREADY QUASHED THE ORDER OF LD. CIT U/S 263 OF THE ACT DATED 04.02.2015, THE PROCEEDINGS CARRIE D THEREAFTER BY THE LD. ASSESSING OFFICER BECOMES INFRUCTUOUS, A S THE ORIGINAL ORDER OF ASSESSMENT U/S 143(3) OF THE ACT DATED 01.03.2013 HAS BEEN RESTORED. THEREFORE SINCE THE A SSESSMENT ORDER U/S 143(3) R.W.S 263 OF THE ACT BECOMES INFRU CTUOUS, THE PRESENT APPEAL FILED BY THE ASSESSEE DESERVES TO BE DISMISSED AS INFRUCTUOUS. 35. IN THE RESULT, APPEALS FILED BY THE ASSESSEE I. E ITA NO.839/AHD/2015 IS ALLOWED AND ITA NO.3462/AHD/2016 IS DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED IN THE COURT ON 18.09.2019. SD/- SD/- (AMARJIT SINGH) JUDICIAL MEMBER ( MANISH BORAD) ACCOUNTANT MEMBER AHMEDABAD; DATED 18 /09/2019 PATEL, PS ITA NOS839/AHD/2015 & ITANO. 3462/AHD/2016 DIPAL PIYUSH PALKHIWALA FOR AY 2010-11 25 $% & ''() *$)' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! / CONCERNED CIT 4. ! ( ) / THE CIT(A)- XV, AHMEDABAD 5. $%& '' , , )*++ / DR, ITAT, AHMEDABAD 6. &,- . / GUARD FILE. $% + / BY ORDER, TRUE COPY ,/ - ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD