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TMI Blog2018 (4) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... d for. 2. The Ld. AR inviting attention to the impugned order submitted that in the facts of the present case the said order is bad in law in view of the fact that on each of the issues addressed by the Pr.CIT the assessing officer admittedly as per facts as recorded in the impugned order itself has carried out complete enquiries. It was his submission that queries on the issues have been raised by the AO in the 143(3) proceedings and they have been replied to. Considering the submissions and the reply the assessment order wherein a GP addition based on estimates is made is sought to be revised. Referring to the record it was submitted that when the show cause notice issued by the Pr.CIT is considered in toto would be evident that similar reply had been given to the Pr.CIT namely that the issues have been completely enquired into and considered. In the said circumstances it was submitted the Pr.CIT ought to have pointed out the error which was noted by him which was prejudicial to the interests of the revenue which has not been done. Accordingly the decision of the Pr.CIT in revising the assessment order passed it was submitted is contrary to law and facts. Carrying us through th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year. b. Details of stock purchase & consumed during the year. c. Calculation of capital gain on sale of share. 2.2 Inviting attention to pages 69 to 79, 80 to 87 and 82 to 122 of the Paper Book it was submitted that these details of immovable property acquired during the year; including details of stock purchased and consumed during the year; calculation of capital gain arising on account of sale were all made available. Attention was invited to the specific documents to demonstrate that these documents which are available on record have been before the assessing officer. As an illustration it was submitted that the documents at page 88 is the calculation of capital gain on sale of shares paper book page number hundred it was submitted is form No. 23 which is filed before the ROC and is a copy of Registration of resolutions passed indicating "buy back of shares". Inviting attention to paper book page 109 it was submitted that the calculation of the capital gain on sale of that is made available to the assessing officer supported by the sale deed and the receipts etc. All these documents it was submitted have been made available to the Pr.CIT also. Inviting attention to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch sufficiently establishes the lack of enquiry by the AO. The reply of the assessee has been considered. It was his submission that a speaking order has been passed where the issues are fully discussed in paragraph 4 by the said authority on which heavy reliance is being placed. Carrying us through the specific finding of the Pr.CIT it was his submission that it has been sufficiently demonstrated that the order sought to be revised was not an order in accordance with law. Specific attention was invited to Explanation to section 263 which has been into inserted w.e.f. 01/06/2015 which has specifically been referred to by the Pr. CIT also. Accordingly it was his submission that the arguments advanced on behalf the assessee in the facts of the present case have no relevance 4. We have heard the submissions and perused the material available on record since admittedly in the facts of the present case the entire issue revolves around the specific show cause notice issued by the Pr. CIT for ready reference the same is extracted from the impugned order: "While examining your assessment record for the assessment year 2012-13, it has been noticed that the order u/s 143(3) of IT Act, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had to be examined whether your wife is actually working as BAMS doctor or not. (v) From the perusal of the account of Mukesh Sharma HUF it has been noticed that you have paid in cash to Mukesh Sharma HUF on 20.11.2012 exceeding Rs. 20,000/- (17000 + 11750). Further perusal of the a/c of Raj Kumar Ram, it has been noticed that you have paid in cash to him exceeding Rs. 20,000/- on 29.12.2011 (15000 + 20000 + 1200). 2. From the aforesaid facts and circumstances of the case, it is noticed that the AO has failed to verify/enquire the aforesaid facts and made any enquiry in this regard. The Hon 'ble Delhi High Court have held in the case of Gee Vee Enterprises Vs. Addl. CIT & Ors 99 ITR 375 (Del) that not making an inquiry warranted on the facts of a case will make the assessment order erroneous. Similar view has been taken by the Hon'ble Madras High Court in the case of K.A. Ramswamy Chettiar & Anr Vs. CIT 220 ITR 657 (Mad.). Therefore, the assessment order passed by the AO u/s 143(3) of the Act for the A.Y. 2012-13 in your case is erroneous in as much as it is prejudicial to the interest of the revenue." 4.1 The case of the assessee has been that the submissions advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion is invited to the fact that the Assessing officer vide his notice dt. 14.07.2014 u/s 142(1) specifically asked the assessee to file confirmed copy of accounts of creditors with balance exceeding Rs. 50,000/- The assessee obtained confirmed copy of accounts from five creditors containing their names and addresses and PAN nos. and filed the same with A.O. vide letter dt. 31.10.2014 under page 1-64 annexed therein. Vide reply, dt. 24.03.2015 in response to order sheet entry dt. 23/03/2015, the assessee further submitted as under :- "Kindly note that assessee submitted confirmations of majority of sundry creditors constituting substantial part of total outstanding sundry creditors as on 31.03.2012. The confirmations of selected few could not be filed as the assessee has no business dealing with them during the current year i.e. F.Y. 2014-15 and their accounts are squared up. However, assessee has duly filed their copy of accounts for the subject year and next A.Y. i.e. 2013-14 as per his books of account. It needs to be appreciated that almost all the payments are through banking channel. The assessee also provided addresses of^ these parties to your good self for necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gains and allowable deduction u/s 54F. Detail of purchase of unlisted equity shares in the past and buyback of shares in the subject year by company is enclosed. Also returns filed with Registrar of Companies, Chandigarh evidencing transfer of unlisted shares is enclosed. We are enclosing herewith relevant details/information for your kind reference as per page no. 36-80. iv) The house hold expenses are self explanatory as the assessee as well his family members are having fairly large income. The ITRs of the family members are available in assessment file. Even otherwise estimated addition of Rs. 878990/- in CP covers the inadequacy of house hold exp. If any detail of family and H.H. exp. enclosed as per page no. 80A. v) The case of Mukesh Sharma HUF pointed by your goodself does not belong to subject year as the date of payment mentioned in your notice is 20.11.2012 which relates to A.Y. 2013-14. As regards payments made to Sh. Raj Kumar exceeding Rs. 20000/- in cash on 29.12.2011, it is submitted that payments were made on far away sight on different dates but the vouchers were entered in cash book on date \ inadvertently. Copy of ledger a/cs and payment vouchers are encl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Under the aforesaid circumstances, the order of the AO was erroneous, as held by the Hon'ble Supreme Court in the case Malabar Industrial company Ltd. Vs. CIT reported at 243 ITR 83 (SC). Further in the case of Gee Vee Enterprise Vs. Addl. CIT & Ors 99 ITR 375 (Del), the Hon'ble Delhi High Court have held in that not making an inquiry warranted on the facts of a case will make the assessment order erroneous. Similar view has been taken by the Hon'ble Madras High Court in the case of K.A. Ramswamy Chettiar & Anr Vs. CIT 220 ITR 657 (Mad.). Moreover, the facts of the case are squarely covered by Explanation 2 of Sec.263, which is inserted w.e.f. 01.06.2015. It reads as under:- "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 interests of the revenue, if, in the opinion of the principal Commissioner or Commissioner,- a) The order is passed without making inquiries or verification which should have been made; b) The order is passed allowing any relief without inquiring into the claim; c) The order has not been made in accordance with an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing books of accounts available and providing all information/documents as called for by the assessing officer from time to time were made available and only after verifying the same the assessment order was passed. We note that the impugned order fails to address these detailed submissions which have been extracted in the impugned order itself. It is seen that in the reply of the assessee before the Pr. CIT it has been argued that on the specific queries raised in the show cause notice the assessing officer in the course of the assessment proceedings vide notice dated 14/07/2014 required the assessee to file confirmed copy of accounts of creditors with balance sheets exceeding Rs. 50,000. The assessee as per the reply extracted in the impugned order itself is found to have stated that the assessee obtained the confirmed copy of accounts from the creditors containing their names, full addresses, PAN numbers etc and the specific information was made available to the assessing officer by letter dated 31/10/2014. Copy of the same was placed before the Pr. CIT alongwith Annexure running into 64 pages. We further note that vide reply dated 24/03/2015 in response to order sheet dated 23/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es at a faraway site. The assessee it is seen is in the construction business. On going through the impugned order we find that the Ld. Pr. CI T has failed to upset the submissions extracted in the order itself and has mechanically drawn the conclusions which are under challenge in the present proceedings. Although the relevant extract has already been extracted in the earlier part of this order it would still not be out of place to extract the conclusions drawn on facts by the the Ld. Commissioner who it is seen has made the following mechanical discussion on facts: 4. I have carefully considered assessee's submissions which are not acceptable on the issue that AO has failed to independently verify the genuineness of sundry creditors as in most of the cases, copies of accounts have been furnished by the assessee himself and AO made the addition by increasing the GP rate without rejecting the books of accounts. The AO accepted the identity and genuineness of the sundry creditors without any application of mind. It is clear from the above that the AO has also failed to verify/enquire about the transactions made with regard to the sale of two properties amounting to Rs. 18 lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 263 that the Pr. CIT should proceed by carrying out some minimum enquiries to show that the conclusion of the assessing officer is erroneous and prejudicial to the interests of the Revenue. Even in the circumstances where the Pr. CIT is of the view that the assessing officer did not undertake any enquiry even then it becomes incumbent upon the Pr. CIT to conduct such an Inquiry and in cases enquiry has been done then it is necessary to demonstrate that the error which the authority seeks to address is set out in the order to show how the error can be said to be prejudicial to the interests of the Revenue. In the facts of the present case we find that the Ld. Pr. CIT has failed to address the replies of the assessee even after extracting them in the order and has passed a bald order without bringing out any error whatsoever let alone an error which can be said to be prejudicial to the interests of the revenue. On going through the Explanation 2 to section 263 of the act which has been inserted w.e.f. 01/06/2015 we concur with the conclusions drawn by the coordinate bench in the case of Naryan Tatu Rane cited supra wherein it has been held that explanation cannot be said t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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