Shri Ramesh Damodhar Katruwar, Parbhani V. ITO, Ward 1(4), Parbhani

ITA 898/PUN/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2249 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 07-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K RASTOGI CIT SINGH
• Keywords: Unexplained cash credit; Peak credit; Revised return; Reassessment proceedings
• Section: 43B; 68; 263

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . . , # BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO.898/PN/2012 % % / ASSESSMENT YEAR : 2006-07 SHRI RAMESH DAMODHAR KATRUWAR, PROP. OF M/S. SIDDARTH AGENCIES, MAIN ROAD AT AND POST MANWAT, TALUKA MANWAT, DIST : PARBHANI-431505 PAN NO.AFAPK1764J . / APPELLANT V/S ITO, WARD-1(4), PARBHANI . / RESPONDENT / APPELLANT BY : SHRI SUNIL GANOO / RESPONDENT BY : SHRI S.K. RASTOGI, CIT SINGH / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 22-03-2012 PASSED U/S.263 OF THE I.T. ACT, 1961 BY THE CIT, AURANGABAD RELATING TO ASSESSMENT YEAR 2006-07. 2. GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : THE APPELLANT WOULD LIKE TO CHALLENGE THE IMPUGNED ORDER ON FOLLOWING GROUNDS OF APPEAL WHICH ARE RAISED WITHOUT PREJUDICE TO EACH OTHER: / DATE OF HEARING : 10.08.2015 / DATE OF PRONOUNCEMENT: 08.10.2015 2 ITA NO.898/PN/2012 1. IN THE ABSENCE OF CONDITIONS PRECEDENT FOR ASSUMPTIO N OF REVISIONAL JURISDICTION U/S 263 OF THE I.T.ACT 1961, THE IMPUGNED ORDER PASSED BY THE LEARNED C.I.T. IS PATENTLY ILLEGAL, BAD IN LAW, VOID AB INITIO AND WITHOUT JURISDICTION AND HENCE THE SAME MAY PLEASE BE ANNULLED. 2. THE LEARNED C.LT. HIMSELF HAVING EXAMINED THE MA TTERS HAS FAILED TO ARRIVE AT A POSITIVE CONCLUSION THAT THE ISSUES RAISED BY HIM WERE NOT DEALT WITH BY THE LEARNED ASSESSING OFFICER IN ACCORDAN CE WITH THE PROVISIONS OF LAW AND THE ORDER PASSED BY THE LEARNED A SSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE R EVENUE. IN THE CIRCUMSTANCES THE IMPUGNED ORDER PASSED BY THE LEARNED C..IT. SIMPLY RESTORING THE MATTER TO THE LEARNED ASSESSING OFFICER FO R VERIFICATION BEING CONTRARY TO THE PROVISIONS OF LAW, THE SAME MAY PLEASE BE VACATED. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LEARNED C.I.T. HAS ERRED IN HOLDING THAT THE ASSESSMENT ORDER PA SSED BY THE LEARNED ASSESSING OFFICER U/S 143[3] R.W.S.147 OF THE I.T.ACT 1961 WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTERE ST OF THE REVENUE. IT MAY PLEASE BE HELD THAT THE LEARNED ASSESSING OFFICER PA SSED THE ASSESSMENT ORDER AFTER DUE APPLICATION OF MIND AND AS PE R PROVISIONS OF LAW. IN THE CIRCUMSTANCES THE IMPUGNED ORDER PASSED BY THE LEARNED C.I.T. MAY PLEASE BE ANNULLED. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LEARNED C.I.T. HAS FAILED TO APPRECIATE THE ACCOUNTING ENTRI ES IN RESPECT OF THE VAT PAYABLE AND HAS FURTHER ERRED IN HOLDING THAT AS ON 3 1/03/2006 VAT PAYABLE WAS RS.76,601.00. THE AFORESAID FINDING / CON CLUSION DRAWN BY THE LEARNED C.I.T. BEING ARBITRARY, PERVERSE, DEVOID OF MERITS AND CONTRARY TO THE FACTS THE SAME MAY PLEASE BE VACATED AND CONSEQU ENTLY THE IMPUGNED ORDER PASSED BY THE LEARNED C.I.T. FOR VERIF ICATION OF THE SAID MATTER BE ANNULLED. 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LEARNED C.I.T. HAS FAILED TO APPRECIATE THE BOOKS OF ACCOUNT OF THE APPELLANT IN RESPECT OF HIS AGRICULTURE INCOME AND HAS FURTHER ERRE D IN HOLDING THAT THE LEARNED ASSESSING OFFICER FAILED TO CONDUCT PROPER ENQUIRIES IN RESPECT OF THE AMOUNTS DEPOSITED BY THE APPELLANT DURI NG THE RELEVANT PREVIOUS YEAR IN HIS SAVINGS BANK ACCOUNT WITH MARATH WADA GRAMIN BANK MANWAT. THE AFORESAID FINDING / CONCLUSION DRAWN BY THE LEARNED C.I.T. BEING ARBITRARY, PERVERSE, DEVOID OF MERITS AN D CONTRARY TO THE FACTS THE SAME MAY PLEASE BE VACATED AND CONSEQUENTLY THE IM PUGNED ORDER PASSED BY THE LEARNED C.I.T. FOR VERIFICATION OF THE SAID MATTER BE ANNULLED. 6. THE APPELLANT CRAVES THE PERMISSION TO ADD, AMEND, MODIFY, ALTER, REVISE, SUBSTITUTE, DELETE ANY OR ALL GROUNDS OF APPEAL , IF DEEMED NECESSARY AT THE TIME OF HEARING OF THE APPEAL. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF WHOLESALE AGENCY OF PARLE B ISCUIT, SANTOOR AND OTHER PRODUCTS. HE FILED HIS RETURN OF IN COME ON 3 ITA NO.898/PN/2012 16-11-2006 DECLARING TOTAL INCOME OF RS.99,690/-. THE RETU RN OF INCOME WAS ACCOMPANIED WITH TAX AUDIT REPORT U/S.44AB, PR OFIT AND LOSS ACCOUNT AND BALANCE SHEET. THE SAID RETURN WAS PR OCESSED U/S.143(1) OF THE ACT. THEREAFTER, ON THE BASIS OF AIR INFORM ATION RECEIVED THE AO ISSUED NOTICE U/S.148 DATED 31-01-2009 TO THE ASSESSEE WHO IN RESPONSE TO SUCH NOTICE FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.64,220/- AND AGRICULTURAL INCOM E OF RS.74,400/-. THE AO COMPLETED THE ASSESSMENT U/S.143(3) O N 16- 12-2009 DETERMINING TOTAL INCOME OF RS.1,41,960/-. 4. SUBSEQUENTLY, THE LD.CIT, ON EXAMINATION OF THE ASSESSM ENT RECORDS FOR THE RELEVANT YEAR, CAME TO THE CONCLUSION TH AT THE ORDER PASSED BY THE AO U/S.143(3) R.W.S. 157 IS ERRONEOUS AND P REJUDICIAL TO THE INTEREST OF THE REVENUE FOR THE FOLLOWING REASONS : THE BALANCE SHEET REFLECTS VAT PAYABLE FOR F.Y. 2005 -06 AMOUNTING TO RS.76,601/-. IT IS OBSERVED THAT NEITHER YOU HAVE FUR NISHED PROOF OF PAYMENT OF THE VAT PAYABLE NOR THE AUDITOR HAD MENT IONED IN THE AUDIT REPORT THE DATE OF PAYMENT OF THE SAID LIABILITY. F URTHER, THE AO HAD ALSO NOT VERIFIED THE ISSUE WITH REFERENCE TO THE APPLICAB ILITY OF PROVISIONS OF SEC.43B. PLEASE PRODUCE THE COPY OF CHALLAN FOR VAT PAYMENT, IF PAID. (II) ON VERIFICATION OF RECORDS, IT IS NOTICED THAT Y OU HAVE DEPOSITED RS.11,28,935/- IN THE SAVING ACCOUNT MAINTAINED AT MA RATHAWADA GRAMIN BANK AT MANWAT BRANCH. IT IS OBSERVED FROM THE ACCO UNT EXTRACT THAT YOU HAVE DEPOSITED CASH ON VARIOUS DATES DURING THE YEAR. DURING THE COURSE OF HEARING, THE SAID DEPOSITS WERE CLAIMED ON ACCOUNT OF SALE PROCEEDS OF AGRICULTURAL ITEMS. HOWEVER, YOU HAVE ONLY SUBSTANTI ATED THE FOLLOWING AGRICULTURAL RECEIPTS. SR.NO. ITEM AMOUNT DATE 1 COTTON RS.36,260/ - 17 - 04 - 2005 2 COTTON RS.42,710/ - 16 - 04 - 2005 3 TOOR RS.43,475/ - 06 - 03 - 2006 THE DEPOSITS IN THE BANK ACCOUNT WERE TREATED AS TURN OVER BY THE AO WITHOUT REFERENCE TO SALES AND PURCHASES AND ESTIMATED THE NET PROFIT @5% ON TURNOVER, I.E. RS.57,500/- ON CASH DEPOSITS OF R S.11,28,935/-. THE AO HAS MADE ADDITION OF RS.57,500/- WITHOUT ANY SU PPORTING MATERIAL/EVIDENCE AND WITHOUT MAKING ANY INQUIRY. THEREFORE, THE CASH CREDITS IN THE BANK ACCOUNT ARE UNEXPLAINED CASH CRED ITS IN THE BOOKS OF ACCOUNTS. ACCORDINGLY, THE BALANCE AMOUNT OF RS.9,49 ,300/- (RS.12,28,135-RS.1,22,135/- (EXPLAINED AS AGRICULTURA L INCOME) 4 ITA NO.898/PN/2012 RS.57,500/- (ALREADY CONSIDERED FOR ADDITION BY THE A O) IS PROPOSED TO BE ADDED BACK AS UNEXPLAINED CASH CREDITS U/S.68 OF THE I.T. ACT, 1961. HE THEREFORE ISSUED NOTICE U/S.263 OF THE I.T. ACT TO THE ASSESSEE ASKING HIM TO EXPLAIN WHY ACTION U/S.263 SHOULD NOT BE TAKEN. 5. SO FAR AS THE ISSUE RELATING TO VAT PAYABLE FOR F.Y. 2005 -06 AMOUNTING TO RS.76,601/- AND THE APPLICABILITY OF PROVISIONS OF SECTION 43B ARE CONCERNED, IT WAS SUBMITTED THAT THE SA ID FIGURE OF RS.76,601/- IS VAT PAYABLE ON THE PART OF THE ASSESSEE. HOWEVER, AGAINST THE SAID LIABILITY, AN AMOUNT OF RS.95,079/- IS VAT REC EIVABLE, I.E. VAT OUTPUT. THE NET EFFECT OF THE SAID TRANSACTION IS VA T OF RS.18,478/- REFUNDABLE TO THE ASSESSEE. 6. AS REGARDS THE DEPOSITS IN THE SAVINGS BANK WITH MARA THWADA GRAMIN BANK IS CONCERNED, THE ASSESSEE REITERATED THE S AME SUBMISSIONS AS MADE BEFORE THE AO. IT MAY BE PERTINENT TO NOTE HERE THAT THE ASSESSEE BEFORE THE AO HAS STATED THAT THE DEPOSITS IN THE SAID BANK ACCOUNT ARE OUT OF SALE PROCEEDS OF AGRICULTURA L GOODS AND INTEREST ON SAVINGS BANK ACCOUNT AND TEMPORARY HAND L OAN FROM AGRICULTURISTS. SIMILARLY, THE WITHDRAWALS ARE ALSO FROM THE S AID ACCOUNT. IT WAS FURTHER CONTENDED THAT THE FUNDS OPER ATED FROM SUCH ACCOUNT IS TAKEN TO BE ONE AND THE SAME AND EVEN IF THE PEAK AMOUNT IS TAKEN AS UNEXPLAINED CASH CREDIT, SUCH PEAK CREDIT W ILL BE NIL IN THIS CASE. THE ASSESSEE ALSO CONTENDED THAT THE SAID IN COME CANNOT BE TAXED TWICE. IT WAS FURTHER SUBMITTED THAT THESE D EPOSITS ARE MADE OUT OF WITHDRAWALS AND THEREFORE BY AGGREGATING ALL DEPOSITS, THEY TEND TO GET TAXED TWICE WHICH IS AGAINST THE PRINC IPLES OF TAXATION. 5 ITA NO.898/PN/2012 7. HOWEVER, THE LD.CIT WAS NOT SATISFIED WITH THE EXPLANATI ON GIVEN BY THE ASSESSEE. SO FAR AS THE ISSUE RELATING TO V AT PAYABLE AT RS.76,601/- IS CONCERNED HE HELD THAT THE SUBMISSION OF TH E ASSESSEE THAT NET EFFECT OF THE SAID TRANSACTION IS VAT OF RS.18,478/- RECEIVAB LE HAS NOT BEEN EXAMINED BY THE AO WHILE MAKING THE ASSESS MENT. THEREFORE, HE RESTORED THIS ISSUE TO THE FILE OF THE AO FOR NECESSARY VERIFICATION AFTER ACCORDING PROPER OPPORTUNITY. 8. SO FAR AS DEPOSITS IN THE SAVINGS BANK MAINTAINED WITH MARATHWADA GRAMIN BANK IS CONCERNED, HE NOTED THAT IN THE ORIGINAL RETURN THE ASSESSEE HAS NOT OFFERED ANY AGRICULTURAL INCO ME FOR RATE PURPOSE AND ONLY AFTER THE ISSUE OF NOTICE U/S.148, THE ASSESSEE HAS OFFERED AGRICULTURAL INCOME FOR TAXATION AND TRIED TO JUSTIF Y THE CASH DEPOSITS MADE IN THE SAVINGS BANK ACCOUNT. ACCORDING T O THE LD.CIT, THE SAVINGS BANK ACCOUNT IN QUESTION DOES NOT REFLECT IN THE BOOKS OF ACCOUNT. IT WAS STATED TO BE MAINTAINED FOR AGRICULTURAL RECEIPTS AND EXPENDITURE ONLY. TO SUBSTANTIATE THE SAID TRANSACTIONS THE ASSESSEE HAS PREPARED A LEDGER ACCOUNT ON THE BASIS OF SAVINGS B ANK ACCOUNT COVERING THE AGRICULTURAL RECEIPTS, EXPENSES AND HAND LOAN S RECEIVED/GIVEN ETC. I.E. AFTER ISSUE OF NOTICE U/S.148 OF THE I.T. ACT. HE OBSERVED THAT THERE IS NO NEXUS BETWEEN THE LEDGER S FURNISHED AND ACTUAL DEPOSITS. ALTHOUGH THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS OBTAINED THE SAVINGS BANK A CCOUNT NO.1153 MAINTAINED WITH MARATHWADA GRAMIN BANK, MANWAT FRO M THE BANK AUTHORITIES U/S.133(6) OF THE ACT, HOWEVER, THE AS SESSEE HAS MADE DEPOSITS IN THE SAVINGS BANK IN CASH ON VARIOUS OCC ASIONS. EVERY TRANSACTION OF WITHDRAWAL HAS BEEN MADE THROUGH T HE ISSUE OF CHEQUES. THE AO HAS MISSED ATTENTION OF THE SAID ISSUE. NO ENQUIRIES HAVE BEEN MADE BY THE AO IN RESPECT OF THE CR EDITS/DEBITS 6 ITA NO.898/PN/2012 MADE IN THE BANK ACCOUNT. THE ASSESSEE HAS ALSO FAILED T O EXPLAIN BEFORE THE AO AS WELL AS BEFORE HIM REGARDING THE SOURCE OF THE SAID DEPOSITS EXCEPT SOME RECEIPTS OF AGRICULTURAL INCOME. THER E IS NO SUBSTANCE IN THE ARGUMENT OF THE ASSESSEE THAT THE SA ME CASH WAS DEPOSITED IN THE ACCOUNT AFTER GETTING WITHDRAWAL FROM TH E BANK. HE FURTHER NOTED THAT WHETHER THE AMOUNTS WITHDRAWN FROM THE BANK ACCOUNTS WERE UTILISED FOR BUSINESS PURPOSE AS AND WHEN REQUIRED HAS NOT BEEN VERIFIED BY THE AO. THE SOURCE OF HUGE DEP OSITS IN THE SAID SAVINGS BANK ACCOUNTS AND THE PURPOSE OF SUCH HEA VY WITHDRAWALS HAVE ALSO NOT BEEN EXAMINED BY THE AO. THER EFORE, DISTINGUISHING THE VARIOUS DECISIONS RELIED ON BY THE ASSESS EE BEFORE HIM, THE LD.CIT SET ASIDE THE ORDER PASSED BY THE AO AN D RESTORED THE MATTER TO HIS FILE TO REFRAME THE ASSESSMENT AS PER THE PROVISIONS OF LAW AFTER CONSIDERING PROPER FACTS AND SUBMISSION OF THE ASSESSEE. 9. AGGRIEVED WITH SUCH ORDER OF THE LD.CIT THE ASSESSEE IS IN APPEAL BEFORE US. 10. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY OPPOSED THE ASSUMPTION OF JURISDICTION BY THE LD.CIT. REFERRING TO PAGE 6 OF THE PAPER BOOK THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS FILED AUDIT REPORT U/S.44AB ON 31-10-2006. REFERRING TO PAGE 33 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE COMPUTATION OF INCOME WHICH WAS FILED ALONG WITH THE RETURN OF INCOME ON 16-11-2006. REFERRING TO PAGE 36 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE RETURN OF INCOME FILED ON 31-03-2009 IN RESPONSE TO NOTICE U/S.148. REFERRING TO T HE COMPUTATION OF INCOME PLACED AT PAGE 37 OF THE PAPER BOO K HE SUBMITTED THAT THERE IS ONLY MINOR DIFFERENCE ON ACCOUNT OF DIVIDEND 7 ITA NO.898/PN/2012 OF RS.1,340/- AND INTEREST OF RS.4,595/-. OTHERWISE THERE IS NO DIFFERENCE BETWEEN THE ORIGINAL RETURN FILED AND THE REVISED RETURN OF INCOME FILED. HE SUBMITTED THAT DURING THE REASSESSMENT PROCEEDINGS THE SOURCE OF CASH DEPOSITS IN THE BANK AC COUNT WAS EXPLAINED BEFORE THE AO. THE BOOKS OF ACCOUNT RELATING TO THE AGRICULTURAL INCOME WERE ALSO PRODUCED BEFORE THE AO. REFE RRING TO PAGES 50 TO 53 OF THE PAPER BOOK THE LD. COUNSEL FOR TH E ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE LEDGER ACCOUNT OF THE AGRICULTURAL INCOME FILED BEFORE THE AO. SIMILARLY, REFERRING TO THE PAGES 54 TO 56 OF THE PAPER BOOK HE SUBMITTED THAT TH E SAVINGS BANK ACCOUNT MAINTAINED WITH MARATHWADA GRAMIN BANK WAS ALSO FILED BEFORE THE AO. IT WAS ALSO EXPLAINED DURING THE COURSE O F ASSESSMENT PROCEEDINGS THAT MARATHWADA GRAMIN BANK ACCOUNT IS EXC LUSIVELY FOR AGRICULTURAL INCOME. HE SUBMITTED THAT THE AO HAS THOROU GHLY EXAMINED THE BANK ACCOUNT AND THE LEDGER ACCOUNT CONT AINING THE AGRICULTURAL INCOME. REFERRING TO PARA 3.1 AT PAGE 2 OF THE ASSESSMENT ORDER HE SUBMITTED THAT THE AO HAS INCORPO RATED THE SUBMISSIONS MADE BY THE ASSESSEE THAT IN THE BANK ACCO UNT ALL THE DEPOSITS ARE OUT OF SALE PROCEEDS OF AGRICULTURAL GOODS AN D INTEREST ON SAVINGS BANK ACCOUNT AND THE WITHDRAWALS ARE ALSO FROM T HE SAME ACCOUNT AND THERE ARE SOME TEMPORARY HAND LOANS FROM AGRICULTURISTS. 10.1 AS REGARDS VAT IS CONCERNED HE REFERRED TO PAGES 3 AND 4 OF THE PAPER BOOK AND DREW THE ATTENTION OF THE BENCH TO THE REPLY GIVEN TO THE LD.CIT REGARDING THE VAT PAYABLE. HE SUBMITTED TH AT THE ASSESSEE HAS NOT CLAIMED ANY VAT IN THE PROFIT AND LOSS ACCOUNT. THEREFORE, IF THE ASSESSEE DOES NOT CLAIM ANY DEDUCTION U /S.43B NO DISALLOWANCE CAN BE MADE. 8 ITA NO.898/PN/2012 11. AS REGARDS THE ASSUMPTION OF JURISDICTION BY THE LD.CI T THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER OF TH E AO CANNOT BE TERMED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE WHEN THE ASSESSEE HAS NOT CLAIMED VAT IN THE PROFIT AND LOSS ACCOUNT. THE LD.CIT HURRIEDLY JUMPED TO THE CONCLUSION THAT THE ORDER IS ERRONEOUS SINCE THE AO HAS NOT VERIFIED VAT PAYA BLE AMOUNTING TO RS.76,601/-. 12. REFERRING TO THE DECISION OF THE HONBLE GAUHATI HIGH C OURT IN THE CASE OF INDIA CARBON LTD. VS. INSPECTING ASST. COMMIS SIONER OF INCOME TAX AND ANOTHER REPORTED IN 200 ITR 759 HE SU BMITTED THAT WHEN AN AMOUNT IS NOT CLAIMED AS DEDUCTION AND NOT CHAR GED TO PROFIT AND LOSS ACCOUNT, THE AMOUNT CANNOT BE ADDED BAC K TO INCOME OF ASSESSEE US/.43B OF THE I.T. ACT. REFERRING TO THE DEC ISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NOBLE AND H EWITT INDIA PVT. LTD. REPORTED IN 305 ITR 324 HE SUBMITTED TH AT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HELD THAT WHEN THE AS SESSEE FOLLOWS MERCANTILE SYSTEM OF ACCOUNTING AND DID NOT DEBIT TH E AMOUNT OF SERVICE TAX COLLECTED TO THE PROFIT AND LOSS ACCOUNT AS EXPENDITURE NOR CLAIMED ANY DEDUCTION IN RESPECT OF THE AMOUNT, THE Q UESTION OF DISALLOWING THE DEDUCTION NOT CLAIMED WOULD NOT ARISE. THEREFO RE, FOLLOWING THE RATIO LAID DOWN BY THE ABOVE 2 DECISIONS, WHEN THE ASSESSEE HAS NOT DEBITED THE AMOUNTS OF VAT PAID TO TH E PROFIT AND LOSS ACCOUNT NO DISALLOWANCE U/S.43B CAN BE MADE. REFERRIN G TO THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF C IT VS. INDIA CEMENTS LTD. REPORTED IN 265 ITD 479 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HELD THAT DISAL LOWANCE U/S.43B ON SALES TAX COLLECTED AND SHOWN AS OUTSTANDING LIABILITY IS A DEBATABLE ISSUE AND THEREFORE IT CAN BE SAID THAT THERE WAS A MISTAKE 9 ITA NO.898/PN/2012 APPARENT FROM THE RECORDS WHICH CALL FOR THE EXERCISE OF T HE POWER OF RECTIFICATION U/S.154 OF THE I.T. ACT. IT WAS ACCORDINGLY HELD THAT THE TRIBUNAL WAS JUSTIFIED IN TAKING THE VIEW THAT THERE WAS N O MISTAKE APPARENT ON THE FACE OF THE RECORD AND THE ITO WAS NO T JUSTIFIED IN TAKING PROCEEDINGS U/S.154 OF THE ACT TO DISALLOW THE ALLOWA NCE THAT WAS GRANTED IN THE ORDER OF ASSESSMENT. HE ACCORDINGLY SUBMITTED THAT THE VERY FIRST ISSUE ON WHICH THE LD.CIT HAS INVOKED JURISDICTION U/S.263 IS NOT CORRECT. 13. NOW COMING TO THE SECOND ISSUE ON WHICH THE LD.CIT H AS ASSUMED JURISDICTION U/S.263 HE SUBMITTED THAT THE DEPOS ITS IN THE BANK ACCOUNT WAS EXPLAINED BEFORE THE AO WHO HAS ACCEP TED THE SAME AFTER DUE APPLICATION OF MIND. REFERRING TO THE DECISIO N OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GABRIEL I NDIA LTD. REPORTED IN 203 ITR 108 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HELD THAT CIT CANNOT REVISE ORDER MERELY BECAUSE HE DISAGREES WITH THE CONCLUSION ARRIVED AT BY T HE AO. HE SUBMITTED THAT WHEN THE CIT IS NOT DOUBTING MY AGRICULTU RAL INCOME AND MERELY BECAUSE THE AO DOES NOT WRITE THE ORDER IN AN ELABORATE MANNER THE LD.CIT ON THE BASIS OF PRESUMPTIONS AND SUS PICIONS CANNOT INVOKE JURISDICTION U/S.263 OF THE I.T.ACT. HE ACCO RDINGLY SUBMITTED THAT THE ORDER PASSED BY THE AO IS NEITHER E RRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THEREFORE THE ORDER OF THE CIT BE SET ASIDE AS ASSUMPTION OF JURISDICTION U/S.263 OF THE I.T. ACT IS NOT CORRECT. HE ALSO RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF ITO, WARD-3, SATARA VS. SHRI SURYAJIRAO SHA NKARRAO KADAM VIDE ITA NO.1563/PN/2013 FOR A.Y. 2005-06 AND IN TH E CASE OF ACIT, PUNE VS. SHRI UTKARSH KASHINATH PITRE VIDE ITA NO.388/PN/2010 ORDER DATED 13-12-2011 FOR A.Y. 2006-07. 10 ITA NO.898/PN/2012 14. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF THE LD.CIT. HE SUBMITTED THAT IT IS PROVED FROM THE ORDER PASSED BY THE AO THAT THERE IS NO APPLICATIO N OF MIND BY THE AO ON THE ISSUE OF VAT PAYABLE. SO FAR AS THE AGRICULTURAL INCOME IS CONCERNED HE SUBMITTED THAT THE BANK ACCOUNT WAS N OT REFLECTED IN THE BALANCE SHEET. ONLY ON THE BASIS OF THE AIR INFORMAT ION THAT THE DEPARTMENT CAME TO KNOW OF THE CASH DEPOSITS. THERE IS NOTHING ON RECORD TO SHOW ON WHAT BASIS THE AO HAS ESTIMATED THE INCOME. FURTHER, THE SUBMISSION OF THE ASSESSEE THAT THERE WERE CERTAIN HAND LOANS FROM AGRICULTURISTS WAS ACCEPTED BY THE AO WITHOUT ANY ENQUIRY. HE SUBMITTED THAT WHEN THE AMOUNTS WERE WITH DRAWN BY CHEQUE HOW THE SAME AMOUNT IS AVAILABLE AS CASH DEPOSITE D IN THE BANK ACCOUNT IS ALSO NOT VERIFIED. THEREFORE, IN ABSENCE OF PROPER ENQUIRY BY THE AO, ASSUMPTION OF JURISDICTION U/S.263 BY TH E CIT IS PERMISSIBLE. FOR THE ABOVE PROPOSITION, THE LD. DEPARTMEN TAL REPRESENTATIVE RELIED ON THE DECISION OF THE HONBLE ALLAHAB AD HIGH COURT IN THE CASE OF SMT. LAJJA WATI SINGHAL VS. CIT REPO RTED IN 226 ITR 527 AND THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RAMPYARI DEVI SAROGI REPORTED IN 67 ITR 84. HE ALSO RELIED ON THE DECISION OF CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE O F BASSERA REALTORS PVT. LTD. VS. CIT REPORTED IN 163 TTJ 736 ACCORD ING TO WHICH MERE ACCEPTANCE OF SURRENDERED INCOME WITHOUT ANY ENQ UIRY WOULD MAKE THE ORDER ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF REVENUE. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT BEIN G IN ACCORDANCE WITH LAW SHOULD BE UPHELD AND THE GROUNDS RA ISED BY THE ASSESSEE SHOULD BE DISMISSED. 15. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE LD.CIT(A) AN D THE PAPER 11 ITA NO.898/PN/2012 BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSI DERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND IN THE INSTANT CASE THE ASSESSEE HAS FILED ORIGINAL RETURN OF INCOME ON 16-11-2006 DECLARING TOTAL INCOME OF RS.99,690/- WHICH WAS ACCEPTED U/S.143(1) OF THE I.T. ACT. SUBSEQUENTLY, IN RESPONSE TO NOTICE U/S.148 T HE ASSESSEE FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.64,220 /- AND AGRICULTURAL INCOME OF RS.74,400/-. FROM THE COMPARISON OF T HE COMPUTATION OF TOTAL INCOME, I.E. THE ORIGINAL RETURN AS WELL AS THE REVISED RETURN, WE FIND THE INCOME FROM BUSINESS IN THE ORIG INAL RETURN AS WELL AS REVISED RETURN IS SAME AT RS.46,944/-. SO FAR AS THE INCOME FROM OTHER SOURCES IS CONCERNED IN THE ORIGINA L RETURN THE SASME WAS SHOWN AT RS.52,850/- WHEREAS IN THE REVISED R ETURN IT WAS SHOWN AT RS.58,685/-. THE DIFFERENCE IS DUE TO DIVIDE ND OF RS.1,340/- AND BANK INTEREST/INTEREST ON BONDS AT RS.4,5 95/-. HOWEVER, IN THE REVISED RETURN, THE ASSESSEE HAS CLAIMED DEDUCTION UNDER CHAPTER-VIA AMOUNTING TO RS.41,406/- BEING LIC PR EMIUM PAID AND PPF PAID. FURTHER IN THE REVISED RETURN THE A SSESSEE HAS SHOWN AGRICULTURAL INCOME OF RS.74,400/- WHICH WAS NOT THER E IN THE ORIGINAL RETURN OF INCOME. WE FIND THE AO COMPLETED THE ASS ESSMENT U/S.143(3) R.W.S.147 DETERMINING THE TOTAL INCOME AT RS.1,41,9 60/-. THE LD.CIT INVOKED JURISDICTION U/S.263 ON TWO ISSUES, I.E. (A) THE AO HAS NOT EXAMINED THE APPLICABILITY OF PROVISIONS OF SECTION 4 3B ONVAT PAYABLE AT RS.76,601/- AND (B) APPLICABILITY OF PROVISION S OF SECTION 68 TO THE CASH DEPOSITS IN THE BANK ACCOUNT AT RS.9,49,300/- OUT OF THE TOTAL CASH DEPOSIT OF RS.11,28,935/-. 16. SO FAR AS THE VAT PAYABLE AT RS.76,601/- IS CONCERNED , WE FIND THE ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE ON THAT A CCOUNT IN THE PROFIT AND LOSS ACCOUNT. FURTHER, IT WAS ALSO EXPLAINED BEF ORE THE 12 ITA NO.898/PN/2012 LD.CIT THAT AS AGAINST VAT PAYABLE AT RS.76,601/- VAT R ECEIVABLE HAS BEEN SHOWN IN THE BALANCE SHEET AT RS.95,079/- AND THE NET EFFECT IS THAT VAT RECEIVABLE IS RS.18,478/-. FROM THE VARIO US DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE WE FIND MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE WHEN SUCH AMOUNT IS NOT CLAIMED AS DEDUCTION AND HAS NOT BEEN CH ARGED TO PROFIT AND LOSS ACCOUNT THE SAME CANNOT BE ADDED BACK TO INCOME OF THE ASSESSEE U/S.43B OF THE I.T. ACT. THE DECISION OF HONBLE GAUHA TI HIGH COURT IN THE CASE OF INDIA CARBON LTD, THE DECISION O F HONBLE DELHI HIGH COURT IN THE CASE OF NOBLE AND HEWITT INDIA PVT. LTD. AND THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF I NDIA CEMENTS LTD. (SUPRA) SUPPORT THE CASE OF THE ASSESSEE. THEREFORE, ALTHOUGH THERE IS NO DISCUSSION IN THE ASSESSMENT ORDER REGARDING THE APPLICABILITY OF PROVISIONS OF SECTION 43B TO THE AMOUNT OF VAT PAYABLE SHOWN IN THE BALANCE SHEET AT RS.76,601/-, HOWEVE R, THE ISSUE BEING A DEBATABLE ONE AND SINCE THERE IS NO DEBIT T O THE PROFIT AND LOSS ACCOUNT ON ACCOUNT OF VAT, THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE LD.CIT WAS NOT JUSTIFIED IN INV OKING JURISDICTION U/S.263 ON THE FIRST ISSUE. 17. SO FAR AS THE SECOND ISSUE IS CONCERNED, I.E. THE AO HA S NOT EXAMINED THE SOURCE OF CASH DEPOSITS IN THE BANK ACCOU NT MAINTAINED WITH MARATHWADA GRAMIN BANK IS CONCERNED, WE FIN D DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESS EE HAS CATEGORICALLY EXPLAINED BEFORE THE AO THAT ALL THE DEPOSITS IN THE BANK ACCOUNT ARE OUT OF SALE PROCEEDS OF AGRICULTURAL GOO DS AND INTEREST ON SAVINGS BANK ACCOUNT AND SOME DEPOSITS ARE TEMPORARY HAND LOANS FROM AGRICULTURISTS. FURTHER, THE WITHDRAWALS AR E ALSO FROM THE SAME ACCOUNT. AFTER CONSIDERING THE SUBMISSIONS OF THE 13 ITA NO.898/PN/2012 ASSESSEE THE AO ESTIMATED PROFIT @5% ON THE TURNOVER SHOWN IN THE AGRICULTURAL ACCOUNT AT RS.11,28,935/-. THEREFORE, IT IS NOT A CASE WHERE THE AO HAS NOT APPLIED HIS MIND. AFTER CONSIDERING T HE SUBMISSION OF THE ASSESSEE, THE AO IN HIS WISDOM CAME TO T HE CONCLUSION AND DETERMINED THE AGRICULTURAL INCOME BY ADOPT ING 5% OF THE TOTAL DEPOSITS. 18. WE FIND THE HONBLE BOMBAY HIGH COURT IN THE CASE OF G ABRIEL INDIA LTD. (SUPRA) HAS OBSERVED AS UNDER : . . . . . . . . . . . . . . . . . . . . . . WE, THEREFORE, HOLD THAT IN ORDER TO EXERCISE POWER UNDER SUB SECTION (1) OF SECTION 263 OF THE ACT THERE MUST BE MATERIAL BEFO RE THE COMMISSIONER TO CONSIDER THAT THE ORDER PASSED BY THE INCOME TAX OF FICER WAS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST S OF THE REVENUE. WE HAVE ALREADY HELD WHAT IS ERRONEOUS. IT MUST BE AN ORD ER WHICH IS NOT IN ACCORDANCE WITH THE LAW OR WHICH HAS BEEN PASSED BY TH E INCOME TAX OFFICER WITHOUT MAKING ANY ENQUIRY IN UNDUE HASTE. W E HAVE ALSO HELD AS TO WHAT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE . AN ORDER CAN BE SAID TO BE PREJUDICIAL TO THE INTERESTS OF THE REVENU E IF IT IS NOT IN ACCORDANCE WITH THE LAW IN CONSEQUENCE WHEREOF THE L AWFUL REVENUE DUE TO THE STATE HAS NOT BEEN REALISED OR CANNOT BE REAL ISED. THERE MUST BE MATERIAL AVAILABLE ON THE RECORD CALLED FOR BY THE COMMISSIONER TO SATISFY HIM PRIMA FACIE THAT THE AFORESAID TWO REQUISITES ARE PRESENT. IF NOT, HE HAS NO AUTHORITY TO INITIATE PROCEEDINGS FOR REVISION. EXERCISE OF POWER OF SUO MOTU REVISION UNDER SUCH CIRCUMSTANCES WILL AMOUNT TO ARBITRARY EXERCISE OF POWER. IT IS WELL SETTLED THAT WHEN EXERCI SE OF STATUTORY POWER IS DEPENDENT UPON THE EXISTENCE OF CERTAIN OBJECTIVE FACTS, THE AUTHORITY BEFORE EXERCISING SUCH POWER MUST HAVE MATERIALS ON REC ORD TO SATISFY IT IN THAT REGARD. IF THE ACTION OF THE AUTHORITY IS CH ALLENGED BEFORE THE COURT IT WOULD BE OPEN TO THE COURTS TO EXAMINE WHETHER TH E RELEVANT OBJECTIVE FACTORS WERE AVAILABLE FROM THE RECORDS CALLED FOR AN D EXAMINED BY SUCH AUTHORITY. OUR AFORESAID CONCLUSION GETS FULL SUPPORT FROM A DECISION OF SABYASACHI MUKHARJI J.(AS HIS LORDSHIP THEN WAS) IN RUSSEL L PROPERTIES PVT. LTD. V. A. CHOWDHURY, ADD CIT [1977] 109 ITR 2 29 (CAL). IN OUR OPINION, ANY OTHER VIEW IN THE MATTER WILL AMOUNT T O GIVING UNBRIDLED AND ARBITRARY POWER TO THE REVISING AUTHORITY TO INI TIATE PROCEEDINGS FOR REVISION IN EVERY CASE AND START RE EXAMINATION AND FR ESH ENQUIRIES IN MATTERS WHICH HAVE ALREADY BEEN CONCLUDED UNDER THE LAW. AS ALREADY STATED IT IS A QUASI JUDICIAL POWER HEDGED IN WITH LI MITATION AND HAT TO BE EXERCISED SUBJECT TO THE SAME AND WITHIN ITS SCOPE AND A MBIT. SO FAR AS CALLING FOR THE RECORDS AND EXAMINING THE SAME IS CONC ERNED, UNDOUBTEDLY, IT IS AN ADMINISTRATIVE ACT, BUT ON EXAM INATION 'TO CONSIDER' OR IN OTHER WORDS, TO FORM AN OPINION THAT THE PARTI CULAR ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST S OF THE REVENUE, IS A QUASI JUDICIAL ACT BECAUSE ON THIS CONSIDERATION OR OPI NION THE WHOLE 14 ITA NO.898/PN/2012 MACHINERY OF RE EXAMINATION AND RECONSIDERATION OF A N ORDER OF ASSESSMENT, WHICH HAS ALREADY BEEN CONCLUDED AND CONTRO VERSY WHICH HAS BEEN SET AT REST, IS SET AGAIN IN MOTION. IT IS AN I MPORTANT DECISION AND THE SAME CANNOT BE BASED ON THE WHIMS OR CAPRICE OF TH E REVISING AUTHORITY. THERE MUST BE MATERIALS AVAILABLE FROM THE RECORDS CALLED FOR BY THE COMMISSIONER. 19. SINCE IN THE INSTANT CASE THE ASSESSEE HAS EXPLAINED THE VARIOUS DEPOSITS IN THE MARATHWADA GRAMIN BANK ACCOUNT WHICH HAS BEEN EXAMINED BY THE AO DURING THE COURSE OF ASSES SMENT PROCEEDINGS, THEREFORE, WE ARE OF THE CONSIDERED OPINION TH AT THE LD.CIT WAS NOT JUSTIFIED IN ASSUMING JURISDICTION ON THE SEC OND ISSUE. IN VIEW OF ABOVE DISCUSSION, WE HOLD THAT THE ORDER OF THE AO CANNOT BE HELD AS ERRONEOUS. IT HAS BEEN HELD IN VARIOU S DECISIONS THAT FOR ASSUMING JURISDICTION THE TWIN CONDITIONS NAMELY (A ) THE ORDER OF THE AO IS ERRONEOUS AND (B) THE ORDER IS PREJUD ICIAL TO THE INTEREST OF THE REVENUE MUST BE SATISFIED. SINCE WE HAVE HELD THAT THE ORDER OF THE AO CANNOT BE TERMED AS ERRONEOUS, TH EREFORE, IN OUR OPINION, THE LD.CIT WAS NOT JUSTIFIED IN INVOKING JURISDICTION U/S.263 OF THE I.T. ACT. WE ACCORDINGLY SET ASIDE THE ORDER OF THE LD.CIT. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 20. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08-10-2015. SD/- SD/- ( SUSHMA CHOWLA ) ( R.K. PANDA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER IQ.KS PUNE ; DATED : 08 TH OCTOBER, 2015. LRH'K 15 ITA NO.898/PN/2012 ' (*+ ,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. $ / THE CIT, AURANGABAD 4. % ((), ), IQ.KS / DR, ITAT, A PUNE; 5. - / GUARD FILE. / BY ORDER , % ( //TRUE C % ( //TRUE COPY// /0 ( ) / SR. PRIVATE SECRETARY ), IQ.KS / ITAT, PUNE