Dhanraj Harichand Khandelwal, Amravati V. Dy.CIT, Amravati Circle -2, Amravati

ITSSA 45/NAG/2003

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 7958 (ITAT-NAGPUR)
• Duration Of Justice: 16 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 09-04-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR MILIND BHUSARI
• Keywords: Gift; Block assessment; Set aside
• Section: 201

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL BENCH, NAGPUR (AT E - COURT, PUNE) BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI PARTHA SARATHI CHAUDHURY , JM I T (SS) A NO. 45 /NAG /20 03 BLOCK PERIOD: 01. 04.1988 TO 24.02.1999 DHANRAJ HARICHAND KHANDELWAL, NEW CONGRESS NAGAR, AMRAVATI. PAN : ABIPK0881B ....... / APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, AMRAVATI CIRCLE - 2, AMRAVATI. / RESPONDENT A SSESSEE BY : SHRI MAHAVIR ATAL, CA REVENUE BY : DR. MILIND BHUSARI , CIT / DATE OF HEARING : 14 .10 .2019 / DATE OF PRONOUNCEMENT : 15 .10 .2019 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT - III, NAGPUR DATED 28.03.2003 PASSED U/S.263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR THE BLOCK ASSESSMENT YEAR 01.04.1988 TO 24.02.1999 AS PER THE GROUNDS OF APPEAL ON RECORD . 2 IT (SS) A NO. 45 /NAG /20 03 DHANRAJ HARICHAND KHANDELWAL 2. THE CRUX OF THE GRIEVANCE OF THE ASSESSEE IS WITH REGARD TO THE ORDER PASSED U/S.263 OF THE ACT BY THE LD. CIT EXERCISING THE REVISIONARY JURISDICTION. THAT IN THE FIRST ROUND WHEN THE ASSESSMENT WAS COMPLETED BY THE ASSESSING OFFICER, THEREAFTER, REVISIONARY JURISDICTIO N U/S.263 OF THE ACT WAS UNDERTAKEN BY THE LD. CIT. IT WAS OBSERVED BY THE LD. CIT THAT THE ASSESSEE HAD MADE SUB - CONTRACTS PAYMENT TO VARIOUS PERSONS AND IN THIS RESPECT, THERE WAS NO DETAILED FACT FINDING DONE BY THE ASSESSING OFFICER TO THESE SUB - CONTRA CTS PAYMENT AND THEREFORE, HE WAS OF THE OPINION THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 3. THEREAFTER, THE MATTER TRAVELLED BEFORE THE TRIBUNAL AND IT WAS HELD THAT THE ORDER OF THE ASSE SSING OFFICER WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE AND HENCE, THE TRIBUNAL QUASHED THE 263 PROCEEDINGS. 4. THAT BEING FURTHER AGGRIEVED, THE REVENUE PREFERRED APPEAL BEFORE THE HONBLE JURISDICTIONAL HIGH COURT, NAGPUR BEN CH, NAGPUR IN INCOME TAX APPEAL NO.90 OF 2004 DATED 7 TH SEPTEMBER, 2017 WHEREIN IT WAS OBSERVED AND OPINED WHETHER 263 ORDER WAS VALID AS PER LAW, SHOULD BE ANALYZED IN DETAIL AND MORE SPECIFICALLY, IT HAS TO BE ASCERTAINED WHETHER IT IS A CASE OF LACK OF ENQUIRY OR INADEQUATE ENQUIRY . WITH THIS OBSERVATION, THE MATTER WAS REMITTED BACK TO THE TRIBUNAL TO DECIDE IT AS PER THE DIRECTIONS OF THE HONBLE HIGH COURT. 5. AT THE TIME OF HEARING THROUGH E - COURT, THE LD. AR OF THE ASSESSEE VEHEMENTLY ARGUED TH AT THE ISSUE OF PAYMENTS TO SUB - CONTRACT OR S HAS BEEN SPECIFICALLY INQUIRED INTO BY THE ASSESSING OFFICER AND THAT THE ASSESSEE HAD 3 IT (SS) A NO. 45 /NAG /20 03 DHANRAJ HARICHAND KHANDELWAL FURNISHED DETAILED REPLY AS AND WHEN CALLED FOR DURING ASSESSMENT PROCEEDINGS. THERE HAS BEEN EXTENSIVE ENQUIRY CONDUCTED BY THE ASSESSING OFFICER. THAT AS A MATTER OF FACT, THE ASSESSEE HAD FILED AFFIDAVIT WHICH IS AT PAGES 159 TO 160 OF THE PAPER BOOK WHICH IS AN AFFIDAVIT FILED BY THE SUB - CONTRACTORS, MR. ANIL KUMAR JOSHI WHEREIN HE HAS STATED THAT HE WAS WORKIN G AS SUB CONTRACTOR AND AN AGREEMENT HAS BEEN EXECUTED BETWEEN HIM AND THE ASSESSEE. THIS CONTRACTOR WAS ALSO SUMMONED BY THE ASSESSING OFFICER AND THE STATEMENT WAS RECORDED. SIMILARLY IN PAGES 161 TO 167 OF THE PAPER BOOK , THERE ARE COPIES OF OTHER AFFID AVITS FILED BY THE OTHER SUB CONTRACTORS WHO HAVE EXECUTED SUB - CONTRACTS AGREEMENT WITH THE ASSESSEE AND THEY ALL SOLEMNLY AFFIRMED IN THEIR RESPECTIVE AFFIDAVIT S THAT THEY WERE CALLED BY THE INCOME TAX OFFICER AND HAVE BEEN INQUIRED REGARDING THE SUB CONT RACTS WORKS SPECIFICALLY. THE LD. AR THEREAFTER SUBMITTED THAT THE ASSESSMENT ORDER WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE SINCE IT WAS FRAMED AFTER CONDUCTING DETAILED ENQUIRY BY THE ASSESSING OFFICER. THAT FURTHER, THE LD. AR OF THE ASSESSEE STATED THAT REVISIONARY PROCEEDINGS U/S.263 OF THE ACT CAN BE RESORTED TO ONLY IN A CASE OF LACK OF ENQUIRY AND NOT IN THE CASE OF INADEQUATE ENQUIRY. FOR THIS PROPOSITION, THE LD. AR HAS PLACED RELIANCE ON THE FOLLOWING DECISIONS: (I) COMMISSIONER OF INCOME TAX, CENTRAL - III VS. NIRAV MODI, 390 ITR 292 ( BOM.) (II) SLP DISMISSED SUPREME COURT CIT VS. NIRAV MODI 244 TAXMAN 194 (SC) (III) CIT VS. SUNBEAM AUTO LTD. (2009) 289 TAXMAN 436 (DELHI) (HC) (IV) CIT VS. ANIL KUMAR SHARMA 355 IT R 83 (DEL.) (V) NAGNATH HANUMANRAO JALKOTE VS. ACIT (PUNE) 110 ITD 549 4 IT (SS) A NO. 45 /NAG /20 03 DHANRAJ HARICHAND KHANDELWAL 5.1 THE LD. AR OF THE ASSESSEE FURTHER SUBMITTED THAT WHEN ENQUIRY IS BEING CONDUCTED BY THE ASSESSING OFFICER AND ON SAME ISSUE, ORDER U/S.263 OF THE ACT IS PASSED, IT AMOUNTS TO DIFFERENCE OF VIEW BETWEEN LD. CIT AND THE ASSESSING OFFICER AND JUST BECAUSE, THE ASSESSING OFFICER HAS TAKEN A PLAUSIBLE VIEW, THE LD. CIT CANNOT RESORT TO SECTION 263 OF THE ACT. FOR THIS PROPOSITION, THE LD. AR HAS PLACED RELIANC E ON THE FOLLOWING DECISIONS: (I) CIT VS. MAX INDIA LIMITED (2007) 295 ITR 282 (SC) (II) MALBAR INDUSTRIES CO. LTD. VS. CIT (2000) 243 ITR 83 (SC) (III) CIT VS. GABRIEL INDIA LTD., 203 ITR 108 ( BOM.) 6. PER CONTRA, THE LD. DR HAS PLACED STRONG RELIANCE ON THE 263 ORDER PASSED BY THE LD. CIT. 7. WE HAVE PERUSED THE CASE RECORDS AND HEARD THE RIVAL CONTENTIONS. WE HAVE ALSO ANALYZED THE JUDICIAL PRONOUNCEMENTS PLACED BEFORE US. WE OBSERVE FROM THE TRAIL OF EVENTS AND THE DOCUMENTS ON RECORD THAT THE ASSUMPTION OF REVISIONARY JURISDICTION U/S.263 OF THE ACT BY THE LD. CIT WAS WITH RESPECT TO PAYMENT MADE TO SUB - CONTRACTORS BY THE ASSESSEE. THAT HOWEVER THE RECORDS CLEARLY DEMONSTRATE THAT SPECIFIC ENQUIRY HAS BEEN CONDUCTED BY THE ASSESSING OFFICER WITH REGARD TO EACH OF THE SUB - CONTRACTORS AND PAYMENT MADE TO THEM. THESE FACTS ARE PLACED ON RECORD BY WAY OF AFFIDAVIT S BEING SOLEMNLY AFFIRMED BY THO SE RESPECTIVE SUB - CONTRACTORS. IT IS CLEARLY MENTIONED THEREIN THAT THEY HAD ENTERED INTO AN AGREEMEN T WITH THE ASSESSEE AND THEY RECEIVED PAYMENT WITH REGARD TO THEIR WORKS. THAT FURTHER EVEN IN THE 263 ORDER PASSED BY THE LD. CIT, HE STATES THAT I AM OF THE OPINION THAT NO DETAILED FACT FINDINGS WAS DONE BY THE ASSESSING OFFICER BEFORE COMPLETING BLOCK ASSESSMENT WITH REGARD TO SUB - CONTRACTS PAYMENT. THIS ITSELF SHOWS 5 IT (SS) A NO. 45 /NAG /20 03 DHANRAJ HARICHAND KHANDELWAL WHAT THE LD. CIT IS REFERRING TO IS INADEQUATE ENQUIRY AND NOT LACK OF ENQUIRY . THE JUDICIAL CONSENSUS ON THE ISSUE IS THAT WHEN NO ENQUIRY IS CONDUCTED THEN ONLY LD . CIT CAN RESORT T O REVISIONARY JURISDICTION U/S.263 O F THE ACT. HOWEVER, IF IT IS A CASE OF INADEQUATE ENQUIRY , ACCORDING TO THE LD. CIT, AS IN THIS CASE THEN IT AMOUNTS TO THE PRINCIPLE THAT WHERE ONE PLAUSIBLE VIEW HAS BEEN TAKEN BY THE ASSESSING OFFICER ON WHICH THE L D. CIT IS NOT SATISFIED AND JUST FOR THAT MATTER OF FACT, THE LD. CIT CANNOT RESORT TO REVISIONARY JURISDICTION U/S.263 OF THE ACT. 8. IN THE CASE OF COMMISSIONER OF INCOME TAX VS. NIRAV MODI, 77 TAXMANN.COM 15 (SC) , THE ASSESSEE RECEIVED CERTAIN AMOUNT AS GIFTS FROM HIS FATHER AND SISTER WHO WERE NON - RESIDENTS IN INDIA. THE ASSESSING OFFICER AFTER MAKING DETAILED ENQUIRIES, TOOK A VIEW THAT ASSESSEE HAD DULY PROVED IDENTITY, SOURCE AND CREDITWORTHINESS OF DONORS. TH E COMMISSIONER OF INCOME TAX, HOWEVER, PASSED A REVISIONAL ORDER U/S.263 OF THE ACT DIRECTING ASSESSING OFFICER TO ENQUIRE INTO CAPACITY OF DONORS AND TO DECIDE ABOVE GENUINENESS OF GIFTS AFRESH. IT WAS NOTED THAT COMMISSIONER IN HIS ORDER OF REVISION, DID NOT INDICATE ANY DOUBT IN RESPECT OF GENUINENESS OF EVIDENCE PRODUCED BY THE ASSESSEE. MOREOVER, SATISFACTION OF ASSESSING OFFICER ON BASIS OF DOCUMENTS PRODUCED WAS NOT SHOWN TO BE ERRONEOUS. THE TRIBUNAL HAD SET ASIDE THE REVISIONARY ORDER PASSED BY THE LD. CIT PASSED U/S.263 OF THE ACT WHICH THE HONBLE HIGH COURT UPHELD STATING THAT THIS IS A CASE WHERE A VIEW HAD BEEN TAKEN BY THE ASSESSING OFFICER AFTER MAKING PROPER ENQUIRY. THE HONBLE SUPREME COURT DISMISSED THE SLP FILED AGAINST THE ORDER OF THE HONBLE HIGH COURT. 6 IT (SS) A NO. 45 /NAG /20 03 DHANRAJ HARICHAND KHANDELWAL 8.1 THEREFORE, THERE ARE TWO PROPOSITIONS. F IRST, IF THE ORDER OF ASSESSING OFFICER IS BASED ON ENQUIRY THEN EVEN IF THE LD. CIT ON THESE ISSU ES IS OF THE OPINION THAT MORE E NQUIRY SHOULD HAVE BEEN CONDUCTED, THIS CANNOT BE THE GROU ND FOR PASSING REVISIONARY ORDER U/S.263 OF THE ACT. SECOND, AFTER ENQUIRY BY THE ASSESSING OFFICER ON THOSE ISSUES ON WHICH 263 ORDER HAS BEEN PASSED, THE ASSESSING OFFICER HAS TAKEN A PLAUSIBLE VIEW JUST BECAUSE OF THE FACT THAT THE LD. CIT IS NOT CONSEN TING TO THAT VIEW, WILL NOT EMPOWER HIM TO RESORT TO THE REVISIONARY JURISDICTION U/S.263 OF THE ACT. IN THE PRESENT CASE OF THE ASSESSEE, WE FIND IN THE 263 ORDER ITSELF, THE LD. CIT WRITES THAT NO DETAILED FACT FINDING WAS DONE B Y THE ASSESSING OFFICER. MEANING THEREBY THOUGH THE FACT FINDING EXERCISE WAS DONE BY THE ASSESSING OFFICER , AS PER THE LD. CIT, IT WAS NOT DONE IN DETAILED MANNER. THIS CANNOT BE THE BASIS FOR PASSING 263 ORDER BY THE LD. CIT. 9. IN VIEW OF THE AFORESAID EXAMINATION OF FACTS A ND LEGAL PROPOSITIONS, WE SET ASIDE THE ORDER OF LD. CIT PASSED U/S.263 OF THE ACT AND ALLOW THE APPEAL OF THE ASSESSEE. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRO NOUNCED ON 15 TH DAY OF OCTOBER , 201 9 . SD/ - SD/ - D. KARUNAKARA RAO PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 15 TH OCTOBER, 2019. SB 7 IT (SS) A NO. 45 /NAG /20 03 DHANRAJ HARICHAND KHANDELWAL / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT - III, NAGPUR. 4. THE PR. CIT, NAGPUR. 5 . , , / DR, ITAT, NAGPUR. 6. / GUARD FILE. // TRUE COPY // / BY ORDER, / PRIVATE SECRETARY , / ITAT, PUNE . 8 IT (SS) A NO. 45 /NAG /20 03 DHANRAJ HARICHAND KHANDELWAL DATE 1 DRAFT DICTATED ON 14 . 10 .2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 15 .10 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER