TMI Blog2010 (10) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... uilders for sale of property to the tune of ₹ 3,00,000 on account of alleged unexplained cash credits. (5) It is, therefore, prayed that- (a)the order passed under s. 263 of the Act by the learned CIT without jurisdiction be quashed as void ab initio and (b)the above additions made by the learned CIT be deleted. (6) The appellant prays for granting such other relief as may be deemed just and proper by Your Honours considering the factual and legal aspects of the case of the appellant. (7) The appellant craves leave to add, amend, alter, substitute, change, modify, or delete all or any of the grounds or ground of appeal. 2. Facts, in brief, as per relevant orders are that return declaring income of ₹ 9,43,370 filed on 31st Oct., 2001 by the assessee, trading in tubes and tyres, was selected for scrutiny with the issue of notice under s. 143(2) of the IT Act, 1961 (hereinafter referred to as the Act ). The assessment was completed by the Assessing Officer ( AO in short) vide order dt. 25th Feb., 2004 on an income of ₹ 18,93,370, with the addition of ₹ 9,50,000 under s. 68 of the Act. Subsequently, the learned CIT-III, Surat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions vide letter dt. 17th Feb., 2004 and the accordingly, the AO accepted the genuineness of the deposit after proper application of mind. In the light of these facts, while relying upon decisions in CIT v. Gabrial India Ltd. [1993] 114 CTR (Bom) 81/[1993] 203 ITR 108 (Bom), Nabha Investments (P) Ltd. v. Union of India Ors. [2000] 162 CTR (Del) 420/[2000] 246 ITR 41 (Del), Bharat Dairy Farm v. Dy. CIT [1997] 57 TTJ (Pune) 257/[1997] 60 ITD 321 (Pune), SRF Ltd. v. Dy. CIT [2002] 74 TTJ (Del) 648 , Modi Xerox Ltd. v. Dy. CIT [1999] 63 TTJ (Del) 278, Fattechand Rajmal Jain v. IAC [1997] 57 TTJ (Pune) 341, Sandvik A.B. Sweden v. IAC [1996)] 55 TTJ (Pune) 144, Super Cassettes Industries (P) Ltd. v. CIT [1992] 41 ITD 530 (Del), A.G. Mannesmann Demag v. Dy. CIT [1995] 53 ITD 533 (Del), National Plastic Allied Industries v. Dy. CIT [2000] 67 TTJ (Mumbai) 824, D H Secheron Electrodes Ltd. v. Dy. CIT [1999] 70 ITD 214 (lndore), Blue Dart Express Ltd. v. Jt. CIT [2001] 71 TTJ (Mumbai) 548/[2000] 75 ITD 414 (Mumbai), Ashoke Kumar Parasramka v. Asstt. CIT [1998] 61 TTJ (Cal) 156 , Vinod Kumar Gupta v. ITO [1990] 32 ITD 254 (Chd), Jhulelal Land Development Corporation v. Dy. CIT [1996] 56 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e/confusion in this bill too : the weight of 13 bags of 100.00 packing would work out to 1,300 and not 1,250, as has been worked out in the bill. And final amount figure is worked out on the basis of 1,250 and not 1,300. Other features of the copies of bills on record too suggest that these are not the genuine bills, from a genuine trader. None of the bills is on a regular letter pad, which is usually the case with regard to the bills issued by commission agents; neither mentions about any registration number, local sales-tax number, Central sales-tax number which is usually the case with such bills. There are no permanent/printed serial numbers on the bills issued. The bill dt. 13th Feb., 2001 is numbered as 002, while the bill dt. 17th Feb., 2001 is numbered 003, suggesting that this commission agent is working only for this HUF, and making purchases from it only, and from nobody else. In view of the above, the bills are not genuine, the agriculture produce has apparently not been sold and the bills have been manipulated/fabricated, just to prove the genuineness of the credit. But even going by the final amounts worked out in the two bills, the total works out to ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er pad, which is usually the case with regard to the bills issued by commission agents, and it neither mentions about any registration number, local sales-tax number, Central sales-tax number etc. which is usually the case with such bills. There are no permanent/printed serial numbers on the bills issued. The bill dt. 21st Feb., 2001 is numbered 009 while the bill dt. 23rd Feb., 2001 is numbered 010, suggesting that this commission agent is working only for this HUF and making purchases only from it, and from nobody else. Other details on record too suggest that the evidence has been manipulated/fabricated to mislead the AO. The total of the two bills, for example, works out to ₹ 3,07,600 and that is the amount even credited to the bank account No. SB/407 of creditor HUF maintained in Indian Bank (a copy of which has been filed by the assessee during the course of the proceedings before the AO), but as per a handwritten narration on these bills, the amount actually received is only ₹ 1,53,800. As per the narration (and it is the same narration on both the bills mentioning the same cheque number, date and bank) only an amount of ₹ 1,53,800 was received by cheq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Even after receipt of assessee s first submission dt. 28th Feb., 2006, I did not jump to the conclusion. Instead I brought it to the notice of assessee s representative that there are glaring facts/contradictions on record which require revision even after consideration of assessee s submission dt. 28th Feb., 2006, and that he should look into them and reconcile them, if possible. Many of these were specifically pointed out during the course of discussion. As a result, assessee has made another submission dt. 4th March, 2006, the relevant portion of which is reproduced below. During the course of hearing, Your Honour had desired to know the details of utilization of impugned three sums. Required details are as under. Sl. No. Date of receipt of amount Amount Date when the cheque was issued against the receipt of amount Details of utilization 1. 27-6-2000 3,00,000 28-6-2000 Introduced as capital in M/s Nanavati Motors 2. 22-3-2001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nuineness of the loans claimed to have been received during the year were required to be appropriately verified by the AO by bringing all relevant and requisite details on record and make proper enquiries, which has not been done. Lot of evidence did come on record during the course of assessment proceedings, but that, as pointed out to the Authorised Representative of the assessee during the course of hearing before me, gave rise to more queries than it answered. The assessee was expected to answer those queries during the course of hearing before me by bringing some more evidence to explain the existing evidence on record, if necessary, so that the CIT could be satisfied that the loans were genuine and their sources were explainable, and drop the proceedings under s. 263. The assessee has not chosen that option apparently because he has no explanation/reconciliation about the facts and details on record and no evidence to explain the source and genuineness of the credits. Replies given by the assessee (quoted above) leave no doubt in my mind that the assessee is convinced that it has no case on facts, and, therefore, she should fight his case on technical grounds by challenging t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration. Further it has been emphasized in the case of Triveni Engineering Works Ltd. v. Dy. CIT [2004] 87 TTJ (Del) 93 Tribunal Delhi that the failure of the AO to make enquiries into the facts on record which are glaring, apparently unusual and staring in the face from the record would clearly make the order of the AO erroneous and prejudicial to the interest of Revenue . Going by this principle, there cannot be better case of revision than the order under consideration. Thus, all the judgments/decisions cited by the assessee make it very clear that in view of facts and legal position, it is a fit case for s. 263. Prima facie, the representative of the assessee has not thoroughly gone through them and submitted them for the sake of submission. (v)In view of the above, I have no doubt that the assessee failed to explain the sources and genuineness of the two loans received from the two HUFs and listed at serial No. 1 and serial No. 2 in my show-cause notice. These are, therefore, straightway added to the assessee s taxable income. II.As regards the third amount of ₹ 3,00,000 claimed to have been received from Jay Builders, the assessee has credited his accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 185/[2009] 314 ITR 81 (SC) the learned Authorised Representative vehemently argued that the learned CIT wrongly assumed jurisdiction in this case. On the other hand, the learned Departmental Representative supported the findings of the CIT while relying upon decision in Martin Burn Ltd. v. CIT [1992] 108 CTR (SC) 71/[1993] 199 ITR 606 (SC). The learned Departmental Representative added that the AO having not applied mind to the facts of the case, the learned CIT correctly assumed jurisdiction under s. 263 of the Act. 4. We have heard both the parties and gone though the facts of the case as also the aforecited decisions. Since the issue relates to assumption of jurisdiction by the CIT under s. 263 of the Act, we may, at the outset, have a look at the relevant provisions, which read as under : 263. (1) The CIT may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the AO is erroneous insofar as it is prejudicial to the interests 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Revenue. In this context, Hon ble Rajasthan High Court in Aravali Trading Co. v. ITO [2008] 220 CTR (Raj) 622/[2008] 8 DTR (Raj) 199/[2010] 187 Taxman 338 (Raj) held that once the existence of the creditors is proved and such persons own the credits which are found in the books of the assessee, the assessee s onus stands discharged and the latter is not further required to prove the source from which the creditors could have acquired the money deposited with him either in terms of s. 68 or on general principle. As is apparent from the aforesaid provisions of s. 263 of the Act, the power of suo motu revision exercisable by the CIT is undoubtedly supervisory in nature. The opening words of s. 263 empower the CIT to call for and examine the record of any proceedings under the Act. A bare reading of s. 263 also makes it clear that the CIT has to be satisfied of twin conditions, namely (i) the order of the AO sought to be revised is erroneous and (ii) it is prejudicial to the interest of the Revenue. If one of them is absent i.e., if the order of the AO is erroneous but is not prejudicial to the Revenue or if it is not erroneous but it is prejudicial to the Revenue-recourse cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is a fine though subtle distinction between lack of inquiry and inadequate inquiry, it is only in cases of lack of inquiry that the CIT can exercise his revisional jurisdiction. As held in Gabrial India Ltd. (supra), the CIT cannot initiate proceedings with a view to start fishing and roving enquiries in matters or orders which are already concluded. Hon ble Bombay High Court further observed in the said decision as under : From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an ITO acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the CIT simply because, according to him, the order should have been written more elaborately. This section does not visualize a case of substitution of the judgment of the CIT for that of the ITO, who passed the order unless the decision is held to be erroneous. Cases may be visualized where the ITO while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in Greenworld Corporation (supra). 4.6 Similarly, Hon ble Gujarat High Court in the case of CIT v. R.K. Construction Co. [2009] 221 CTR (Guj) 415/[2008] 12 DTR (Guj) 210/[2009] 313 ITR 65 (Guj) held as under : As far as law is concerned, the AO has taken a particular view on the basis of evidence produced before him. On the basis of the said material and materials which were collected by the CIT in revisional proceedings, the CIT has taken a different view. However, in the revisional proceedings under s. 263, it is not open for the CIT to take such a different view in view of the decisions of the Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 159 CTR (SC) 1/[2000] 243 ITR 83 (SC). There is nothing on record to suggest that the view taken by the AO is unsustainable at law. This Court has also taken the same view in case of CIT v. Arvind Jewellers [2002] 177 CTR (Guj) 546/[2003] 259 ITR 502 (Guj) whereby the order passed by the CIT under s. 263 of the Act was quashed and set aside. 4.7 In the case of CIT v. Arvind Jewellers [2002] 177 CTR (Guj) 546/[2003] 259 ITR 502 (Guj) it was observed that the finding of fact given by the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied upon by the learned Departmental Representative, the issue was as to whether the Tribunal has the power to restore an order under s. 263 back to the CIT. Apparently, this decision is not of any help to the Revenue. 5. In the light of view taken in the aforesaid decisions, it is apparent that the CIT has to give reasons to justify the exercise of suo motu revisional powers by him to reopen a concluded assessment. In the instant case, a query was raised during the course of scrutiny by the AO, which was answered to the satisfaction of the AO but neither the query nor the answer was reflected in the assessment order. But this would not by itself lead to the conclusion that the order of the AO was erroneous and prejudicial to the interest of Revenue. The AO had not shirked his responsibility of examining and investigating the case. More so, in view of the fact that the assessee filed the confirmations of the aforesaid lenders and furnished their PAN. Apparently, the AO was satisfied with the explanation of the assessee regarding genuineness of the credits on the basis of the confirmations filed by the assessee. A change of opinion or view would not enable the CIT to exercise j ..... X X X X Extracts X X X X X X X X Extracts X X X X
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