Shri Satyanarayan Kunnaram Bhardwaj, Mehsana V. The CIT, Gandhinagar

ITA 934/AHD/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85526 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 04-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T P KRISHNA KUMAR
• Assessee Lawyers: M K PATEL
• Keywords: Rectification of order; Principle of natural justice; Third party statement; Prejudicial to interest; Revised return
• Section: 143(3); 142(1); 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD 0 0 , , BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ ITA NO . 934 / AHD/ 201 3 [ [ / ASSESSMENT YEAR : 200 8 - 0 9 SATYANARAYAN KUNNARAM BHARDWAJ, 15, MUNICIPAL MARKET, OPP. POLICE STATION, NR. CIVIL HOSPITAL, THREE GATE, VISNAGAR, DIST. MEHSANA PAN : AIQPB 5895 A VS THE COMMISSIONER OF INCOME TAX, GANDHINAGAR / (APPELLANT) / (RESPONDENT) ASSESSEE(S) BY : SHRI M. K. PATEL, AR REVENUE BY : SHRI T.P. KRISHNAKUMAR, CIT - DR / DATE OF HEARING : 29 /1 2 /2014 / DATE OF PRONOUNCEMENT: 09 / 01 /201 5 / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX , GANDHINAGAR DATED 11 .0 3 .201 3 FOR ASSESSMENT YEAR 200 8 - 0 9 . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : - 1. THAT ON FACTS AND IN LAW, THE LEARNED CIT HAS GRIEVOUSLY ERRED IN ASSUMING JURISDICTION U/S 263 OF THE ACT. 2. THAT ON FACTS AND IN LAW, THE ENTIRE ORDER U/S 263 OF THE ACT IS INVALID AS THERE IS NEITHER ANY ERROR NOR PREJUDICE TO THE INTEREST OF REVENUE, AS THE ASSESSMENT ORDER IS PASSED U/S 143(3) OF THE ACT AFTER DETAILED INQUIRY AND AFTER CONSIDERING ALL DETAILS FILED. ITA NO. 934/AHD/2013 SATYANARAYAN K. BHARDWAJ VS. CIT FOR AY 2008 - 09 2 3. THAT THE LEARNED CIT IS NOT JUSTIFIED IN SETTING ASIDE THE ORDER U/S 143(3) OF THE ACT, WITHOUT POINTING OUT AS TO HOW THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND ANY GROUND OF APPEAL. 3. THE CIT - GANDHINAGAR, AHMEDABAD ISSUED A NOTICE TO THE ASSESSEE VIDE NO.GNR/263/SKB/2010 - 11 DATED 13.10.2010 U/S 263 OF THE ACT, WHICH IS REPRODUCED HEREUNDER : - NO. GNR/263/SKB/2010 - 11 DATE: 13.10.2010 TO, SHRI SATYANARAYAN K. BHARADWAJ, AT: KHABDOSAN, TA L : VISNAGAR, MEHSANA DIST. SUB: RE - OPENING OF ASSESSMENT PROCEEDINGS U/S. 263 OF THE IT ACT FOR A.Y. 2008 - 09 - REGARDING THE ASSESSMENT ORDER U/S. 143(3) WAS MADE ON 19/04/2010 DETERMINING TOTAL INCOME A T RS. 1,15,990/ - AS AGAINST RS.90,990/ - DECLARED BY THE ASSESSEE. 2. ON GOING THROUGH THE RETURN OF INCOME, IT HAS BEEN FOUND THAT REPORT UNDER THE CONTRACT WORK HAS BEEN DIS CLOSED AT RS. 99,84,332/ - WHEREAS THE NET PROFIT DECLARED IS RS. 90,992/ - WHICH IS AROUND 1% OF THE GROSS RECEIPT . 3. THE A.O. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS DID NOT CALL FOR THE DETAILS OF THE FOLLOWING: (I) RAW MATERIAL EXPS. RS. 10,47,040/ - (II) DIESEL & FUEL EXPS. RS. 14,3 8 ,751/ - (III) LABOUR EXPS. RS. 17 ,48 ,095/ - (IV) SPARE PARTS EX PS RS. 1,19,533/ - (V) SITE EXPS RS. 1,79,250/ - (VI) SALARY T O STAFF RS . 12,82,800/ - (VII) SITE RENT EXPS RS. 4 8 ,000/ - ( V III) OFFICE RENT EXPS. RS. 6,000/ - ITA NO. 934/AHD/2013 SATYANARAYAN K. BHARDWAJ VS. CIT FOR AY 2008 - 09 3 (IX) BONUS TO STAFF RS. 2,13,800/ - (X) OFFICE EXPS. RS. 96,055/ - (XI) WATER EXPS. RS. 1,33,800 / - 3. ON GOING THROUGH THE BALANCE SHEET THERE WERE FOLLOWING CREDITORS: (I) KETAN CONSTRUCTION CO. RS. 1,07,803/ - (II) GAYATRI CORPORATION RS.5,98,000/ - (III) ASHUTOSH MARKETING RS.1,81,775/ - (IV) ASHOKKUMAR RS. 2,90,000/ - (V) SANTISH V.PATEL RS. 38,000/ - (VI) SWAMY NARAYN CONSTRUCTION RS.1,37,000/ - (VII) AUDIT FEES R S. 10,618/ - THE COPIES OF LEDGER ACCOUNTS AS APPEARING IN THE BOOKS OF ACCOUNTS WERE NOT PLACED ON RECORD NOR CONTRA CONFIRMATION COPIES OF ACCOUNTS WERE CALLED FOR FROM THESE PARTIES. 4. THE COPIES OF LEDGER ACCOUNTS OF THE FOLLOWING PARTIES WERE NOT PLACED ON RECORDS ENABLING VERIFICATION OF VERIFY OF THE SAME. (I) SARASWATI CONSTRUCTION RS.1,02,980/ - (II) SARASWATI BUIDER RS.1,82,605/ - 5. THE TDS CERTIFICATE IN FORM NO. 16 A REVEAL THE FOLLOWING PAYMENT BUT IN WHICH OF BANK ACCOUNT, THE SAID PAYMENTS WERE ACCOUNTED FOR IS NOT VERIFIABLE. (I) RS. 6575S/ - ON 1 - 10 - 2007 (II) RS.1013025/ - ON 6 - 11 - 2007 ( II) RS.3351332/ - ON 1 - 12 - 2007 (III) RS.939961/ - ON 08 - 02 - 2008 (IV) RS.198994/ - ON 1 - 3 - 20 08 (V) RS. 19003001 ON 31 - 03 - 2008 6. ON GOING THROUGH THE COPIES OF BANK STATEMENT AS APPEARED IN THE BOOKS OF ACCOUNTS, THERE WERE FOLLOWING PAYMENTS: (I) RAJARAM 23 - 4 - 07 RS.33000 (II) RANCHHODBHAI 24 - 4 - 07 RS.80000 (III) GAYATRI CORPORATION 7 - 5 - 07 RS .70000 (IV) RAMNIVAS BHARDWAJ 12 - 5 - 2000 RS.40000 (V) DR. KANARAMJI 12 - 5 - 2000 RS . 55230 (VI) RAMURAM 24 - 7 - 2007 RS.50540 (VII) KANCHAN ENTERPRISE 2 - 8 - 2007 RS.65000 ITA NO. 934/AHD/2013 SATYANARAYAN K. BHARDWAJ VS. CIT FOR AY 2008 - 09 4 (VIII) HEMANT TYRE 26 - 7 - 2007 RS.21500 (IX) CHARNUNDA TRADING 2 - 8 - 2009 RS.100000 (X) GAYATRI CORPORATION 11 - 9 - 2007 RS.45000 (XI) DR. SURESH PATEL 8 - 11 - 2007 RS.15000 (XII)DR. BHAGWATI TRANSPORT 13 - 11 - 2007 RS.10000 (XIII) DR. SWAMINARAYAN 14 - 11 - 2007 RS.50000 CONSTR UCTION (XIV) DR. GAYATRI CORPORATION 15 - 11 - 2007 RS.50000 (XV) MAHESHWARI PROFILE 15 - 12 - 2007 RS.9500 (XVI) UMA AGRO IND. 11 - 03 - 2008 RS.12000 (XVII) ASHUTOSH MARKETING 11 - 03 - 2008 RS.1180000 (XVIII)NARESHBHAI 18 - 3 - 2008 RS.45000 (XIX) NAVJIVAN QUARRY WORKS 18 - 3 - 2008 RS.150000 (XX) CHAMUNDA TRADING CO. 19 - 3 - 2008 RS.125000 (XXI) AASHUTOSH MARKTING 19 - 3 - 2008 RS.75000 (XXII) BABULAL SHARMA 31 - 3 - 2008 RS.50000 WHY AFORESAID PAYMENTS WERE MADE IS NOT ASCERTAINAB LE AND COPIES OF LEDGER ACCOUNTS OF ALL THESE PARTIES WERE NOT AVAILABLE ON RECORD. 7. ON GOING THROUGH THE COPIES OF BANK ACCOUNTS IN THE BOOKS OF ACCOUNTS , THE FOLLOWING RECEIPTS HAVE BEEN NOTICED. (I) SARASWATI CONSTRUCTION RS.200000 ON 16 - 4 - 2007 (II) SARASWATI BUILDER RS.40000 ON 24 - 05 - 2007 (III) BABULAL SHARMA RS.100000 ON 6 - 2 - 2008 (IV) SARASWATI CONSTRUCTION RS.215000 ON 26 - 2 - 2008 (V) BABULAL SHARMA RS. 100000 ON 19 - 3 - 2007 (VI) NARENDRAKUMAR RS.50000 ON 26 - 3 - 2008 WHETHER THESE ARE CASH CREDITS/LOANS ARE NOT ASCERTAINABLE AS NO CONFIRMATIONS FROM THE PARTIES ARE AVAILABLE ON RECORD. IF IT IS CONTRACT RECEIPT, WHY THE SAME WERE REMAIN UNDISCLOSED IS NOT KNOWN. 8. IN THE ALL ITEMS LEDGER ACCOUNT, THERE ARE FOLLOWING DEBIT AND CREDIT. DENA BANK THARA (7875) (1) CHAMUNDA TRADING CO. PAYMENT RS.200000 ON 3 - 7 - 2007 (2) NANDRAM RS.61960 ON 11 - 7 - 2007 (3) RAMKUMAR SHARMA RS.10000 ON 11 - 7 - 2007 (4) DO - RS.20000 ON 22 - 9 - 2007 (5) DO - RS.10000 ON 25 - 10 - 2007 (6) DO - RS.10000 ON 29 - 10 - 2007 ITA NO. 934/AHD/2013 SATYANARAYAN K. BHARDWAJ VS. CIT FOR AY 2008 - 09 5 (7) DO - RS.20000 ON 30 - 11 - 2007 (8) VELJIBHAI BAHUBHAI CHAUDHARY RS.10000 ON 18 - 10 - 2007 (9) DO - RS.10000 ON 2 - 11 - 2007 (10) DO - RS.7000 ON 8 - 11 - 2007 (11) BAUBLKAL SHARMA RS.150000 ON 1 - 1 - 2008 THE NATURE OF PAYMENT AND COPIES OF LEDGER ACCOUNTS ARE NOT PLACED ON RECORD. 8. IN RESPECT OF TRACTOR RENT AND MACHINERY RENT, THE COPIES OF LEDGER ACCOUNTS OF THE PARTIES TO WHOM PAYMENT WERE MADE ARE NOT PLACED ON RECORD ENABLING VERIFICATION OF THE SAME. IN VIEW OF THE AFORESAID DEFECTS, THE SAID ORDER U/S. 1 43(3) DATED 19/4/2010 IS TREATED AS ERRONEOUS AND P REJUDICIAL TO THE INTEREST OF REVENUE. PLEASE EXPLAIN WHY DIRECTION TO SET ASIDE THE SAID ASSESSMENT SHOULD NOT BE ISSUED . FOR THIS PURPOSE, YOUR CASE IS FIXED FOR HE ARING ON 22 - 10 - 2010 AT 11.00A.M. SD/ - [M.H. PANDAV] COMMISSIONER OF INCOME - TAX GANDHINAGAR, AHMEDABAD 4. IN REPLY TO THE AFORESAID NOTICE, T HE ASSESSEE SUBMITTED BEFORE THE CIT - GANDHINAGAR, AHMEDABAD AS UNDER: - DATE : 08.12.2011 TO COMMISSIONER OF INCOME TAX, GANDHINAGAR 1S T FLOOR, VASANT NATURE VIEW BUILDING ASHRAM ROAD, AHMEDABAD. SUB: ASSESSMENT PROCEEDING U/S 263 OF INCOME TAX ACT. A.Y : 2008 - 09 RESPECTED SIR, WE ARE IN RECEIPT OF LETTER NO:GNR/263/ SKB/ 2010 - 11 DATED 13 - 10 - 2010. WE REPLAY AS UNDER: 1. REPLY TO PARA 3 : ITA NO. 934/AHD/2013 SATYANARAYAN K. BHARDWAJ VS. CIT FOR AY 2008 - 09 6 AS PER NOTICE U/S 142 (1) OF ACT DATED 22/02/2010 (REFER PARA 4) ASSESSEE HAS SUBMITTED ON DATED 17/03/2010 DETAILS OF RAW MATERIALS EXPE NSES, DIESE L AND FUE L EXPENSES, LABOUR EXP, SPARE PARTS EXP, SITE EXP, SALARY TO STAFF, SITE RENT EXP, OFFICE RENT EXP, BONUS TO STAFF, OFFICE EXP. AND WATER EXP. WHICH HAS BEEN EXAMINED AND VERIFIED BY ASSESSING OFFICER AND FOUND CORRECT AS PER BOOKS OF ACCOUNTS AND RECORDS. FOR YOUR READY REFERENCE, WE AGAIN SUBMIT AFORESAID DETAILS FOR YOUR KIND VERIFICATION.(REFER PAGE NO: 1 TO 15) 2. REPLY TO PARA 3/A: AS PER NOTICE U/S 142 (1) OF AC T DATED 22/02/2010 (REFER PARA 3) ASSESSEE HAS SUBMITTED ON DATED 17/03/2010 COPY OF LED GER A/C WITH CONTRA CONFIRMATION OF KETAN CONSTRUCTION CO, GAYATRI CORPORATION, ASHUTOSH MARKETING, ASHOKKUMAR, SANTISH V PATEL, SWAMY NARAYAN CONSTRUCTION, AND AUDIT FEES WHICH HAS BEEN EXAMINED AND VERIFIED BY ASSESSING OFFICER AND FOUND CORRECT AS PER B OOKS OF ACCOUNTS AND RECORDS. FOR YOUR READY REFERENCE, WE AGAIN SUBMIT AFORE SAID DETAILS FOR YOUR KIND VERIFICATION. (REFER PAGE NO: 16 TO 27) 3. REPLY TO PARA 4 : AS PER NOTICE U/S 142 (1) OF ACT DATED 22/02/2010 (REFER PARA 3) ASSESSEE HAS SUBMITTED ON DATED 17/03/2010 COPY OF LEDGER A/C WITH CONTRA CONFIRMATION OF SARASWATI CONSTRUCTION, AND SARASWATI BUILDERS WHICH HAS BEEN EXAMINED AND VERIFIED BY ASSESSING OFFICER AND FOUND CORRECT AS PER BOOKS OF ACCOUNTS AND RECORDS. FOR YOUR READY REFERE NCE, WE AGAIN SUBMIT AFORE SAID DETAILS FOR YOUR KIND VERIFICATION . (REFER PAGE NO: 28 TO 31) 4. REPLY TO PARA 5 : AS PER NOTICE U/S 142 (1) OF ACT DATED 22/02/2010 (REFER PARA 1 & 8 ) ASSE SSEE HAS SUBMITTED ON DATED 17/03/2010 COPY OF T DS CERTIFICATE AND BANK STATEMENTS FOR VERIFICATION OF TDS CERTIFICAT E ENTRY WITHY BANK STATEMENT WHICH HAS BEEN EXAMINED AND VERIFIED BY ASSESSING OFFICER AND FOUND CORRECT AS PER BOOKS OF ACCOUNTS AND RECORDS. ITA NO. 934/AHD/2013 SATYANARAYAN K. BHARDWAJ VS. CIT FOR AY 2008 - 09 7 FOR YOUR READY REFERENCE, WE AGAIN SUBMIT AFORE SAID DETAILS F OR YOUR KIND VERIFICATION. (REFER PAGE NO: 32 TO 49) 5. REPLY TO PARA 6 : AS PER NOTICE U/S 142 (1) OF ACT DATED 22/02/2010 (REFER PARA 8) ASSESSEE HAS SUBMITTED ON DATED 17/03/2010 COPY OF BANK STATEMENTS AND BOOKS OF ACCOUNTS WHEREIN PAYMENT MADE TO I TEM NO I TO XXII AS STATED IN YOUR NOTICE DATED 13/10/2010, WITH STATEMENT OF LEDGER ACCOUNT AND CONTRA CONFIRMATION WHICH HAS BEEN EXAMINED AND VERIFIED BY ASSESSING OFFICER AND FOUND CORRECT AS PER BOOKS OF ACCOUNTS AND RECORDS. FOR YOUR READY REFERENCE , WE AGAIN SUBMIT AFORE SAID DETAILS FOR YOUR KIND VERIFICATION. (REFER PAGE NO: 50 TO 73 AND 144 TO 152 ) 6. REPLY TO PARA 7 : AS PER NOTICE U/S 142 (1) OF ACT DATED 22/02/2010, (REFER PARA 8) ASSESSEE HAS SUBMITTED ON DATED 17/03/2010 COPY OF BANK STATEMENTS, TDS CERTIFICATES FOR VERIFICATION OF RECEIPT WITH STATEMENT OF LEDGER ACCOUNT AND CONTRA CONFIRMATION WHICH HAS BEEN EXAMINED AND VERIFIED BY ASSESSING OFFICER AND FOUND C ORRECT AS PER BOOKS OF ACCOUNTS AND RECORDS. FOR YOUR READY REFERENCE, WE AGAIN SUBMIT AFORE SAID DETAILS FOR YOUR KIND VERIFICATION. (REFER PAGE NO: 74 TO 80) 7. REPLY TO PARA 8 : AS PER NOTICE U/S 142 (1) OF ACT DATED 22/02/2010, (REFER PARA 8) ASSESSEE HAS S UBMITTED ON DATED 17/03/2010 COPY OF BANK STATEMENTS OF DENA BANK THARA WITH BOOKS OF ACCOUNTS WHICH HAS BEEN EXAMINED AND VERIFIED BY ASSESSING OFFICER AND FOUND CORRECT AS PER BOOKS OF ACCOUNTS AND RECORDS. FOR YOUR READY REFERENCE, WE AGAIN SUBMIT AFORE SAID DETAILS FOR YOUR KIND VERIFICATION. (REFER PAGE NO: 81 TO 93) 8. REPLY TO PARA 8 /A : AS PER NOTICE U/S 142 (1) OF ACT DATED 22/02/2010, (REFER PARA 5) ASSESSEE HAS SUBMITTED ON DATED 17/03/2010 COPY OF TRACTOR RENT AND MACHINERY RENT WITH PART Y TO WHOM PAYMENT WHERE MADE WITH CONTRA ACCOUNTS WHICH HAS BEEN EXAMINED AND VERIFIED ITA NO. 934/AHD/2013 SATYANARAYAN K. BHARDWAJ VS. CIT FOR AY 2008 - 09 8 BY ASSESSING OFFICER AND FOUND CORRECT AS PER BOOKS OF ACCOUNTS AND RECORDS. FOR YOUR READY REFERENCE, WE AGAIN SUBMIT AFORE SAID DETAILS FOR YOUR KIND VERIFICATION. (R EFER PAGE NO: 94 TO 117 AND 118 TO 143) (A)THE ORDER IS NOT ERRONEOUS AND PREJUDICIAL TO INTEREST OF REVENUE BECAUSE OF : (1) I N THE RECENT DECISION IN THE CASE OF MALABAR INDUSTRIAL COMPANY LTD. VS. CIT (243 ITR 83), THE HONOURABLE SUPREME COURT OBSERVED 'A BARE READING OF SECTION 263(1) MAKES IT CLEAR THAT THE PREREQUISITE TO EXERCISE OF JURISDICTION BY THE COMMISSIONER SUO MOTU UNDER IT, IS THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED WITH TWIN CONDITIONS, NAMELY, (A) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS, AND (B) IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IF ONE OF THEM IS ABSENT - IF THE ORDER OF THE A SSESSING OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE, OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE - RECOURSE CANNOT BE HAD TO SECTION 263(1)' WHAT THE HONOURABLE SUPREME COURT LAYS DOWN IS THAT THE ORDER UNDER CONSIDERATION HAS TO BE ERRONEOUS AND THAT ERROR MUST BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE WORDS 'PREJUDICIAL TO THE INTEREST OF THE REVENUE' HAVE NOT BEEN DEFINED BUT LEGALLY IT IS WELL SETTLED THAT THEY MEAN THAT THE ORDERS UNDER CONSIDERATION ARE SUCH AS A RE NOT IN ACCORDANCE WITH LAW, IN CONSEQUENCE WHEREOF THE LAWFUL REVENUE DUE TO THE STATE HAS NOT BEEN REALIZED OR CANNOT BE REALIZED. (2) IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT (SUPRA) THE HONOURABLE SUPREME COURT HAD AN OPPORTUNITY TO DEAL WITH THE ISSUE AS TO WHAT IS AN ERROR. THE HONOURABLE SUPREME COURT THUS OBSERVED 'THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER I S ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FAIL THE ORDERS PASSED WITHOUT APPLYING THE PRINCIPLE OF NAT URAL JUSTICE OR WITHOUT APPLICATION OF MIND.' (3) IN CTI VS. BHAGAT SHYAM & CO (188 ITR 608) THE HONOURABLE ALLAHABAD HIGH COURT QUASHED THE REVISIONAL PROCEEDINGS BECAUSE THE COMMISSIONER HAD INITIATED SUCH ITA NO. 934/AHD/2013 SATYANARAYAN K. BHARDWAJ VS. CIT FOR AY 2008 - 09 9 PROCEEDING WITHOUT PROPERLY CONSIDERING ALL T HE FACTS AND CIRCUMSTANCES OF THE CASE. THE HONOURABLE CALCUTTA HIGH COURT, IN THE CASE OF JEEWANLAL (1929) LTD. VS. ADDITIONAL CIR (108 ITR 407) QUASHED THE REVISIONARY PROCEEDINGS AND HELD THAT THE COMMISSIONER PURPORTED TO EXERCISE HIS POWER OF REVISION WITHOUT EXERCISING HIS OWN DISCRETION AND JUDGMENT AND HE ACTED AT MERE SUGGESTION OF AUDIT DEPARTMENT. (4) IN CIT VS. SHRI MANJUNATHESHWARE PACKING PRODUCTS AND COMPANY WORKS (231 ITR 53), THE HONOURABLE SUPREME COURT HELD THAT EVEN THOUGH THE MATERIAL WAS NOT AVAILABLE AT THE TIME OF FRAMING OF THE ASSESSMENT ORDER, THE SAME, IF IT HAD COME ON RECORD DURING, THE COURSE OF THE INQUIRY BY THE COMMISSIONER, CAN BE TAKEN INTO CONSIDERATION. HOWEVER, AS PER THE EXPLANATION (B) TO SECTION 263 (1) REC ORD MEANS ALL THE RECORDS AVAILABLE AT THE TIME OF EXAMINATION BY THE COMMISSIONER AND NOT ACQUIRED DURING THE COURSE OF THE SAID INQUIRY. (5) THE HONOURABLE GUJARAT HIGH C OURT IN THE CASE OF CIT VS. M.M . KHAMBAT W ALA (198 ITR 144) HELD THAT THE COMMISSIONER CAN EXERCISE THE POWER OF REVISION EVEN IN A CASE WHERE THE ISSUE IS DEBATABLE. IT FURTHER HELD THAT REVISIONAL POWER UNDER SECTION 263 IS NOT COMPARABLE WITH A POWER OF RECTIFICATION OF MISTAKE UNDER SECTION 15 4. HOWEVER, THE HONOURABLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL COMPANY LTD .VS. CIT ( SUPRA) HAS HELD THAT WHEN ASSESSING OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSI BLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF REVENUE, UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. AFTER TH IS DECISION, THE QUESTIONS OF LAW DECIDED BY THE ASSESSING OFFICER BY CHOOSING ONE LINE OF JUDGMENTS AGAINST THE OTHER LINE OF JUDGMENTS CANNOT BE A SUBJECT MATTER OF REVISIONAL JURISDICTION UNDER SECTION 263 OF THE ACT. (6) (RAYON SILK MILLS VS. CIT ( 221 ITR 155) (GUJ.)). IN THE THIRD STAGE THE COMMISSIONER IS REQUIRED TO GIVE AN OPPORTUNITY OF A PERSONAL HEARING TO THE ASSESSEE. THE FIRST TWO STAGES WERE PURELY ADMINISTRATIVE WHILE THIS STAGE ACQUIRES THE CHARACTER OF QUASI JUDICIAL PROCEEDINGS. UNDER SECTION 263, THIS COMMISSIONER ACT AS A QUASI JUDICIAL AUTHORITY AND THEREFORE THE PRINCIPLE OF NATURAL JUSTICE HAS TO BE STRICTLY ADHERED TO. FURTHER THE ORDER PASSED UNDER THIS SECTION MUST BE REASONED ORDERS OTHERWISE THE SAME WOULD BE VITIATED. ITA NO. 934/AHD/2013 SATYANARAYAN K. BHARDWAJ VS. CIT FOR AY 2008 - 09 10 (B) D URING THE COURSE OF ASSESSMENT PROCEEDING WE HAD SUBMITTED DETAILS DATED 17/03/2010 BEFORE ASSESSING OFFICERS WHICH ARE CONSIDERED AS PART OF OUR REPLY IN VIEW OF THE AFORESAID OBSERVATION, THE ORDER U/S 143(3) DATED 19 - 04 - 2010 IS NOT TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. WITH THANKS YOURS FAITH FULLY SD/ - SATYANARAYAN K BHARDWAJ PROPRIETOR 5. T HE CIT - GANDHINAGAR, AHMEDABAD HAS HELD AS UNDER: - ORDER UNDER SECTION 263 OF THE I .T. ACT , 196 1 THE ASSESSMENT IN THIS CASE WAS COMPLETED U/S.143 (3) ON 19/04/2010 ON A TOTAL INCOME OF RS.1,15,990/ - AS AGAINST THE REVISED RETURNED INCOME OF RS.90,990/ - . WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER HAS DISA LLOWED PART OF TELEPHONE EXPENSES, OFFICE EXPENSES AND TRAVELLING EXPENSES, TOTALING TO RS.25,000/ - . SUBSEQUENTLY ON EXAMINATION OF THE CASE RECORDS IT WAS FOUND THAT THE ASSESSING OFFICER HAD NOT EXAMINED . (I) IN THE XEROX COPY OF TDS CERTIFICATE THE PAGE NO.2 OF THE TDS CERTIFICATE AS DIFFERENCE SERIAL NO. AND DOES NOT MATCH. (II) THE ASSESSEE HAS SHOWN TOTAL CONTRACT RECEIPT AT RS.99,84 , 332 / - FROM SADBHAV ENGG. LTD. HOWEVER, AS PER DETAILS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE TOTAL R ECEIPT FROM SADBHAV ENGG. LTD. WAS RS.1,07,33,184/ - . THE NET PROFIT DECLARED WAS RS. 90992/ - WHICH WAS AROUND THE 1% OF THE GROSS RECEIPT (III) THE ASSESSEE HAS SHO WN MOBILIZATION ADVANCE OF RS.6, 75 , 406/ - ON WHICH TDS OF RS.17 , 862/ - WAS MADE THE SAME HAS NOT SHOWN UNDER CONTRACT INCOME, AND TAKEN INTO THE CREDITOR SIDE OF THE BALANCE SHEET. (IV) THE ASSESSEE HAS MADE HUGE PAYMENTS WORTH RS 33.88 LACS UNDER THE HEAD MACHINERY AND TRACTOR RENT IN THE P&L ACCOU NT. HOWEVER, NO TDS HAS BEEN DEDUC TED WITH RESP ECT TO PAYMENT UNDER THE HEAD MACHINERY RENT AND TRACTOR RENT. ITA NO. 934/AHD/2013 SATYANARAYAN K. BHARDWAJ VS. CIT FOR AY 2008 - 09 11 THIS WILL MAKE A PR IMA FACIE DISALLOWANCE U/S 40A (IA) OF THE IT ACT. (V) THE AO HAS ALSO NOT VERIFIED THE FOLLOWING ITEM LISTED IN SHOW CAUSE NOTICE DATED 13/10/2010 A) EXPENDITURE ON ACCOUNT OF RAW MATERIAL, DIESEL AND FUEL, SALARY TO STAFF ETC. B) CREDITORS CONFIRMATION, C) ACCOUNTS OF SARASWATI CONSTRUCTION, SARASWATI BUILDERS. D) BANKS ACCOUNTS. E) THE AMOUNT PAID AS PER TDS CERTIFICATE IS NOT VERIFIABLE AS TO IN WHICH BANK AMOUNT IS DEPOS ITED. THE ASSESSMENT ORDER WAS THEREFORE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IT WAS THEREFORE PROPOSED TO PASS NECESSARY ORDERS U/S.263 AS THE FACTS AND CIRCUMSTANCES OF THE CASE JUSTIFIED. THE ASSESSEE WAS GIVEN AN OPPORTUNITY OF HEARIN G BY LETTER DATED 1 3/10/2010, 03/11/2011, 26/12/2012 & FINAL NOTICE ON 26/02/2013 TO EXPLAIN ITS STAND IN CASE IT HAD ANY OBJECTION TO THE PROPOSED ACTION. SHRI V. S. PATEL, C.A. ATTENDED AND WAS HEARD. WRITTEN SUBMISSIONS DATED 08/12/2011 HAVE BEEN FILED WHICH HAVE BEEN DULY CONSIDERED. 2. THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT ALL NECESSARY INFORMATION WAS SUBMITTED DURING THE ASSESSMENT PROCEEDINGS AS REQUIRED BY THE ASSESSING OFFICER ALONG WITH THE DETAILS IN CONNECTION WITH THE TRACTOR RENT AND MACHINERY RENT. IT WAS CONTENDED THAT THE ORDER U/S 143(3) DATED 19/04/2010 NOT TO TREAT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 3. AS STATED ABOVE, THE EXAMINATION OF THE CASE RECORDS OF THE ASSESSEE SHOWED THAT THE LEDGER ACCOUNTS OF SADBHAV ENGG. LTD. CONTRACT RECEIPT RE CEIVED WAS RS. 1,07,33,184/ - INCLUDES MOBILIZATION ADVANC E CREDITED ON 15/02/2008 OF RS. 675406/ - , SAME WAS IN THE NATURE OF ADVANCES HENCE THIS AMOUNT NOT TREATED AS REVENUE THEREFORE, REDUCED FROM THE TOTAL (SHOWN IN ACCOUNT) RECEIPT OF RS.1,07,33,184/ - . I N VIEW OF THIS THERE IS A DIFFERENCE AS PER P&L ACCOUNT AND AS PER LEDGER ACCOUNT COMES TO RS.73,476/ - (RS 10733184 - RS.675406) . ITA NO. 934/AHD/2013 SATYANARAYAN K. BHARDWAJ VS. CIT FOR AY 2008 - 09 12 4. AS PER THE DETAILS AVAILABLE ON RECORD, THE ASSESSING OFFICER DID NOT CALLED FOR THE DETAILS. IN RESPECT OF TRACTOR RENT AND MACHINERY RENT, ON VERIFICATION OF THE LEDGER ACCOUNTS OF THE PARTIES TO WHOM THE PAYMENTS WERE MADE IT IS SEEN THAT THE MOST OF THE PERSON HAS GIVEN CONFIRMATION WITHOUT PAN, ADDRESS AND IDENTITY THEREFORE, IT I S NOT POSSIBLE TO CONFIRM WHETHER IT PERTAIN TO TRACTOR RENT OR MACHINERY RENT AND IF PRIMA FACIE APPLICABLE U/S 40A (IA) OF THE ACT OR NOT. 5. THE ABOVE FACTS CLEARLY SHOW THAT PROPER VERIFICATION IN RESPECT OF TRACTOR RENT AND MACHINERY RENT AND OTHER ITEM LISTED AS PER PARAS (I) & (V) HAVE NOT BEEN VERIFIED BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAS ALSO NOT CONDUCTED ANY ENQUIRY SO AS TO ESTABLISH THE IDENTITY OF THE PERSON TO WHOM THE TRACTOR R ENT AND MACHIN ERY RENT WAS PAID. 6. THE CONTENTIONS RAISED HAVE BEEN CONSIDERED. IT IS CLEAR FROM THE FACTS AVAILABLE ON RECORD THAT THE ASSESSING OFFICER HAD FAILED TO CARRY OUT HIS STATUTORY DUTY OF VERIFYING AND ENQUIRING I N RESPECT OF VARIOUS ITEMS LISTED AND DISCU SSED IN ABOVE PARAS. FURTHER, THERE IS A DIFFERENCE AS PER P&L ACCOUNT AND AS PER LEDGER ACCOUNT OF RS.73,476/ - (RS.10733184 - RS. 6 75406) IN CONTRACT RECEIPT. 7. IN VIEW OF THE ABOVE FACTS, I HOLD THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS PROPER ENQUIRY AND VERIFICATION WAS NOT CARRIED OUT IN REGARD TO THE TRACTOR RENT AND MACHINERY RENT, EXPENDITURE OF RAW MATERIAL, DIESEL AND FUEL, SALARY TO STAFF ETC., CREDITORS CONFIRMATION AND BANKS ACCOUNTS WERE NOT VERIFIED FURTHER, THERE IS A DIFFERENCE AS PER P&L ACCOUNT AND AS PER LEDGER ACCOUNT OF RS.73,476/ - IN CONTRACT RECEIPTS. I THEREFORE SET ASIDE THE ASSESSMENT ORDER DATED 19.04.2010 PASSED U/S.143 (3) OF THE ACT AND AO IS DIRECTED TO DO THE ASSESSMENT DE NOVO AFTER GIVING PROPER OPPORTUNITY TO THE ASSESSEE . 6 . THE CONTENTION OF THE ASSESSEE IS THAT THE CIT HAS PASSED THE IMPUGNED ORDER U/S 263 OF THE ACT WITHOUT CONSIDERING THE SUBMISSIONS MADE BEFORE HIM. HE ALSO CONTENDED THAT A LL THE ISSUES RAISED BY THE CIT WERE RAISED BY THE ASSESSING OFFICER IN HIS NOTICE DATED 22.02.2010 ISSUED U/S 142(1) OF THE ACT AND IN REPLY TO THE SAME , THE ASSESSEE FILED ITA NO. 934/AHD/2013 SATYANARAYAN K. BHARDWAJ VS. CIT FOR AY 2008 - 09 13 ALL DETAILS WHICH WERE VERIFIED BY THE ASSESSING OFFICER AND AFTER BEING SATISFIED , HE PASSED THE ORDER U/S 143(3) OF THE ACT DATED 19.04.2010. THEREFORE, HE SUBMITTED THAT THE ORDER OF THE CIT U/S 263 SHOULD BE CANCELLED. 7. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE CIT. 8. WE FIND THAT THE CIT PASSED THE IMPUGNED ORDER WITHOUT DEALING WITH VARIOUS SUBMISSIONS MADE BY THE ASSESSEE BEFORE HIM. IN OUR CONSIDERED VIEW, THE CIT CANNOT PASS AN ORDER U/S 263 OF THE ACT WITHOUT CONTROVERTING THE SUBMISSIONS OF THE ASSESSEE MADE BEFO RE HIM. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, IN OUR CONSIDERED VIEW IT SHALL BE JUST AND FAIR TO SET ASIDE THE ORDER OF THE CIT AND RESTORE THE MATTER BACK TO HIS FILE FOR ADJUDICATING THE ISSUE AFRESH AFTER PROPER APPRECIATION OF TH E SUBMISSIONS OF THE ASSESSEE BY PASSING A SPEAKING ORDER ON EACH OF THE ISSUE RAISED IN THE NOTICE ISSUED U/S 263 OF THE ACT. NEEDLESS TO MENTION THAT HE SHALL ALLOW REASONABLE AND PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE ADJUDICATING THE ISSU E AFRESH. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE CO URT ON F R I D A Y , 0 9 T H OF JANUARY , 201 5 AT AHMEDABAD. SD/ - SD/ - (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 0 9 / 01/2015 BIJU T., PS ITA NO. 934/AHD/2013 SATYANARAYAN K. BHARDWAJ VS. CIT FOR AY 2008 - 09 14 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A ) 5. , , / DR, ITAT, AHMEDABAD 6. [ / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD