Sanjay Kumar Jain, v. CIT,

ITA 1960/DEL/2008 | 2003-2004
Pronouncement Date: 22-01-2010 | Result: Allowed

Appeal Details

RSA Number 196020114 RSA 2008
Bench Delhi
Appeal Number ITA 1960/DEL/2008
Duration Of Justice 1 year(s) 8 month(s) 3 day(s)
Appellant Sanjay Kumar Jain,
Respondent CIT,
Appeal Type Income Tax Appeal
Pronouncement Date 22-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 22-01-2010
Date Of Final Hearing 04-01-2010
Next Hearing Date 04-01-2010
Assessment Year 2003-2004
Appeal Filed On 19-05-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G NEW DELHI BEFORE SHRI RAJPAL YADAV JUDICIAL MEMEBR AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A NO. 1960/DEL/08 ASSESSMENT YEAR - 2003-04 SANJAY KUMAR JAIN C/O JAIN MARBLE HOUSE 47 SADAR BAZAR (KABARI) MEERUT. VS. COMMISSIONER OF INCOME TAX MEERUT. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.P. RASTOGI ADVOCATE RESPONDENT BY : SHRI GAJANAND MEENA CIT (DR) ORDER PER RAJPAL YADAV JM: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT DATED 19 TH MARCH 2008 PASSED U/S 263 OF THE INCOME TAX ACT 19 61 IN ASSTT. YEAR 2003-04. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RULE 8 OF ITAT RULES. THEY ARE DESCRIPTIVE AND ARGUMENTATIVE IN NA TURE. IN BRIEF THE GRIEVANCE OF ASSESSEE IS THAT LD. CIT HAS ERRED IN TAKING ACTION U/S 263 OF THE INCOME TAX ACT. ITA NO. 1960/DEL/08 ASSTT. YEAR 2003-04 2 2. LD. COUNSEL FOR THE ASSESSEE WHILE IMPUGNING THE ORDER OF LD. CIT APPRISED US WITH THE FACTS AND CIRCUMSTANCES OF THE CASE AND POINTED OUT THAT A RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 11 TH MARCH 2004 DECLARING A TOTAL INCOME OF RS. 1 95 502/-. THE LD. AO IN ORDER TO GIVE LOGICAL END TO THE PROCEEDING ISSUED A NOTICE U/S 143(2) OF THE ACT AND THEREAFTER ISSUED A DETAILED QUESTIONNAIRE U/S 142(1) OF THE ACT. HE HAS EXAMINED ALL THE ASPECTS RELATAB LE TO THE ASSTT. OF ASSESSEEES INCOME AND CALLED FOR RELEVANT INFORMATIONS. AFTER A LONG DISCUSSION IN THE ASSTT. PROCEEDING HE ACCEPTED THE RETURN OF INCOME AT RS. 1 95 500/- VIDE AN ASSTT. ORDER DATED 31 ST MARCH 2006 PASSED U/S 143 (3) OF THE ACT. 3. LD. COMMISSIONER ON AN ANALYSIS OF ASSESSEES PE DIGREE OBSERVED THAT ASSESSEE IS SON OF LATE SHRI SURAJ PRAKASH JAIN WHO EXPIRED IN 1995. IN HIS FAMILY HE HAS THREE BROTHERS THEIR WIVES HIS MOTHER AND FIVE CHILDREN. ONE SON AND ONE DAUGHTER TO HIS BROTHER SHRI DEEPAK KUMAR JAIN ONE SON TO HIS BROTHER SHRI PAWAN KUMAR JAIN AND TWO SONS TO THE ASSESSEE. THE DEPART MENT CAME TO KNOW THAT GIFTS OF RS. 42 LACS HAVE BEEN RECEIVED BY THE WIVES OF T WO BROTHERS SMT. ARTI JAIN RS. 16 LACS (2002-03) SMT. ARTI JAIN RS. 10 LACS (2003-04 ) SMT. ALKA JAIN RS. 16 LACS (2002-03). ACCORDING TO THE LD. COMMISSIONER ON AN INQUIRY MADE BY THE INCOME TAX DEPARTMENT IN RESPECT OF THESE GIFTS THE ASSESS EES WERE UNABLE TO PRODUCE THE DONORS OR THE PERSONS FROM WHOSE BANK ACCOUNTS THE DRAFTS WERE ISSUED. ON AN ANALYSIS OF THIS FAMILY HISTORY THE LD. COMMISSION ER FORMED AN OPINION THAT IN THE CASE OF ASSESSEE THE AO HAD NOT CONDUCTED A PROPER INQUIRY ON THE ISSUES INVOLVED IN HIS ASSESSMENT. ACCORDING TO THE LD. CIT AO DID NOT ISSUE LETTERS TO THE BANK TO VERIFY AS TO FROM WHICH BANK ACCOUNT THE ALLEGED DR AFTS WERE PURCHASED WHICH WERE SHOWN IN THE CAPITAL ACCOUNT OF THE ASSESSEE. HE IS SUED A SHOW CAUSE NOTICE U/S ITA NO. 1960/DEL/08 ASSTT. YEAR 2003-04 3 263 OF THE INCOME TAX ACT WHICH HAS BEEN REPRODUCED IN THE IMPUGNED ORDER AT PARAGRAPH 7 AND 8. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE THE LD. COMMISSIONER SOUGHT TO TAKE ACTION AGAINST THE ASSE SSEE U/S 263 MAINLY ON FOUR REASONS. THE FIRST REASON RELATES TO NON-DISCLOSURE OF ADEQUATE HOUSE PROPERTY INCOME FROM THE HOUSE PROPERTIES POSSESSED BY THE A SSESSEE. THE SECOND REASON ASSIGNED BY THE LD. CIT IS THAT ASSESSEE HAS SHOWN LOAN LIABILITY OF RS. 40 24 885/-. THE LD. AO HAS NOT EXAMINED THE SOURCE OF THE LOAN AND WHY THE ASSESSEE HAS NOT DISCLOSED THESE LOANS IN THE BALANCE SHEET FILED BY HIM. THE THIRD REASON ASSIGNED BY THE LD. CIT IS THAT A SUM OF RS. 23.062/- HAS BEEN SHOWN AS RECEIPT FROM SHRI S.A. GAIROLA. THE AO HAS NOT TAKEN ANY CONFIRMATION COM PLETE ADDRESS AND SOURCE OF THIS DEPOSIT. THE NEXT REASON GIVEN IN THE SHOW CAU SE NOTICE FOR TAKING U/S 263 IS THAT IN THE CAPITAL ACCOUNT ASSESSEE HAS DISCLOSED A DEPOSIT OF RS. 20 LACS THE AO HAS NOT MADE ANY INQUIRY FOR ACCEPTING THIS CAPITAL ACCOUNT. THE LD. COMMISSIONER THEREAFTER ISSUED ONE MORE SHOW CAUSE NOTICE U/S 26 3 AND IN THIS SHOW CAUSE NOTICE HE ASSIGNED ONE MORE REASON THAT THE GIFT OF RS. 2 50 000/- AND RS. 3 LACS WERE RECEIVED FROM SHRI N.K. GUPTA AND SHRI BALRAJ JAIN BY ASSESSEES MINOR SON MASTER VAIBHAV JAIN AND MASTER ANUBHAV JAIN WERE NOT PROPE RLY ENQUIRED BY THE AO. 4. THE LD. COUNSEL FOR THE ASSESSEE WHILE TAKING US THROUGH THE EVIDENCE PLACED IN THE PAPER BOOK POINTED OUT THAT THOUGH TH ERE IS NO ELABORATE DISCUSSION MADE BY THE AO IN THE ASSTT. ORDER BUT IT IS THE PR EROGATIVE OF THE AO HOW TO PASS THE ASSTT. ORDER. IF HE FAILED TO DISCUSS CERTAIN I SSUES WITH REGARD TO WHOM HE HAS TAKEN COMPLETE DETAILS ON RECORD AND MADE DISCUSSIO N WITH THE ASSESSEE DURING THE ASSTT. PROCEEDINGS THEN ASSESSEE CANNOT HELP BUT S IMULTANEOUSLY HE CANNOT BE HELD LIABLE FOR SUCH LAPSE. THE LD. COUNSEL FOR THE ASSE SSEE DREW OUR ATTENTION TOWARDS ITA NO. 1960/DEL/08 ASSTT. YEAR 2003-04 4 THE INTERIM ORDERS RECORDED BY THE AO DURING THE AS STT. PROCEEDINGS. HE SUBMITTED THAT THE AO HAS CALLED EVERY INFORMATION WHICH HAS BEEN HIGHLIGHTED BY THE LD. CIT IN THE ORDER U/S 263. THE ASSESSEE HAS SUPPLIED THO SE INFORMATION TO THE AO. HE HAS PRODUCED THE ALLEGED CREDITOR AS WELL AS DONOR BEFO RE THE AO. THEIR STATEMENTS WERE RECORDED AND THEREAFTER AO HAS ACCEPTED THE CAPITAL ACCOUNT AS WELL AS THE LIABILITY OF LOAN SHOWN BY HIM IN THE ACCOUNTS. IT IS NOT A C ASE WHERE AO HAS NOT MADE ANY INQUIRY. THE LD. COMMISSIONER APPEARS TO HAVE BEEN SWAYED AWAY FROM THE OUTCOME OF OTHER ASSTT. ORDERS IN THE CASE OF OTHER ASSESSEES OF ASSESSEES FAMILY MEMBERS. ACCORDING TO THE LD. COMMISSIONER IN THE C ASE OF SMT. ARTI JAIN LOAN MADE BY VISHNU KUMAR JAIN WAS TREATED AS A BOGUS BY THE AO AND IF THAT BE THE CASE THEN HOW IT CAN BE ACCEPTED IN THE ASSESSEES CASE. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE IT IS THE QUALITY OF EVIDE NCE PRODUCED BY ANY ASSESSEE DURING THE ASSTT. PROCEEDINGS WHICH WOULD ENABLE AN AO TO DECIDE THE ISSUE IN THAT ASSESSMENT PROCEEDING. HE FURTHER POINTED OUT THAT LD. COMMISSIONER HAS BASED HIS FINDING ON INFERENCES. HE NOWHERE ESTABLISHED HOW T HE ORDER OF THE AO IS ERRONEOUS. HE IS SUPPOSED TO INDICATE THE FULFILLMENT OF BOTH THE CONDITIONS I.E. ERRONEOUS OF THE ORDER AND HOW IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE TOOK US THROUGH THE REPLY OF ASSESSEE REPRODUCED BY THE LD. COMMISSIONE R ON PAGE 4 TO 7 OF THE IMPUGNED ORDER. PUTTING RELIANCE UPON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIES REPORTED IN 243 ITR 85 H E CONTENDED THAT LD. CIT IS NOT JUSTIFIED IN SETTING ASIDE THE ORDER OF AO AND DIRE CTING HIM TO MAKE AN ADDITION OF RS. 25.5 LACS REPRESENTING LOANS AND GIFTS RECEIVED BY THE ASSESSEE. 5. LD. DR ON THE OTHER HAND RELIED UPON THE ORDER O F LD. CIT. HE TOOK US THROUGH PARAGRAPH NO. 17 OF THE IMPUGNED ORDER AND POINTED OUT THAT THE FAMILY MEMBERS OF ITA NO. 1960/DEL/08 ASSTT. YEAR 2003-04 5 THE ASSESSEE HAVE RECEIVED LARGE NUMBER OF GIFTS FR OM THE SAME PERSONS IN DIFFERENT ASSTT. YEARS AND ALLEGED DONORS WERE HAVING VERY ME AGER INCOME. THUS AO HAS ACCEPTED THE CONTENTION OF ASSESSEE WITHOUT PROPER VERIFYING THESE LOANS / GIFTS. THE LD. COMMISSIONER HAS RIGHTLY HELD THAT ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. HE POINTED OUT THAT A G IFT OF RS. 5 LACS WAS RECEIVED BY SMT. ARTI JAIN FROM ONE SHRI VISHNU KUMAR. THIS GIF T WAS TREATED AS BOGUS. THE LOAN OF RS. 5 LACS HAS BEEN ACCEPTED BY THE AO. THIS IN DICATE CONTRARY FINDING. HENCE THE ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. THE ITAT IN THE CASE OF MRS. KHATIZA S. OOMERBHOY VS. ITO MUMBAI 101 TTJ 1095 ANALYZED IN DETAIL VARIOUS AUTHORITATIVE PRONOUNCEMENTS INCLUDING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MA LABAR INDUSTRIES 243 ITR 83 AS WELL AS HONBLE BOMBAY HIGH COURT RENDERED IN THE C ASE OF GABRIEL INDIA LTD. AND HAS PROPOUNDED THE FOLLOWING BROADER PRINCIPLE TO J UDGE THE ACTION OF CIT TAKEN UNDER SECTION 263. THE FUNDAMENTAL PRINCIPLE WHICH EMERGE FROM THE AB OVE CASES MAY BE SUMMARIZED BELOW (I) THE CIT MUST RECORD SATISFACTION THAT THE ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. BOT H THE CONDITIONS MUST BE FULFILLED. (II) SEC. 263 CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE AO AND IT WAS ONLY WHEN A N ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. (III) AN INCORRECT ASSUMPTION OF FACTS OR AN INCORR ECT APPLICATION OF LAW WILL SUFFICE THE REQUIREMENT OF ORDER BEING ERRONEOUS. (IV) IF THE ORDER IS PASSED WITHOUT APPLICATION OF MIND SUCH ORDER WILL FALL UNDER THE CATEGORY OF ERRONEOUS ORDER. ITA NO. 1960/DEL/08 ASSTT. YEAR 2003-04 6 (V) EVERY LOSS OF REVENUE CANNOT BE TREATED AS PREJ UDICIAL TO THE INTERESTS OF THE REVENUE AND IF THE AO HAS ADOPTED ONE OF THE COURSES PERMISSIBLE UNDER LAW OR WHERE TWO VIEWS ARE POSSIB LE AND THE AO HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE I F CANNOT BE TREATED AS AN ERRONEOUS ORDER UNLESS THE VIEW TAKEN BY THE AO IS UNSUSTAINABLE UNDER LAW. (VI) IF WHILE MAKING THE ASSESSMENT THE AO EXAMINE S THE ACCOUNTS MAKES ENQUIRIES APPLIES HIS MIND TO THE FACTS AND CIRCUM STANCES OF THE CASE AND DETERMINE THE INCOME THE CIT WHILE EXERCISING HIS POWER UNDER S. 263 IS NOT PERMITTED TOS SUBSTITUTE HIS ESTIMATE OF INCOME IN PLACE OF THE INCOME ESTIMATED BY THE AO. (VII) THE AO EXERCISES QUASI-JUDICIAL POWER VESTED IN HIS AND IF HE EXERCISES SUCH POWER IN ACCORDANCE WITH LAW AND ARRIVE AT A C ONCLUSION SUCH CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE CIT DOES NOT FEEL SATISFIED WITH THE CONCLUSION. (VIII) THE CIT BEFORE EXERCISING HIS JURISDICTION UNDER S. 263 MUST HAVE MATERIAL ON RECORD TO ARRIVE AT A SATISFACTION. (IX) IF THE AO HAS MADE ENQUIRIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON THE RELEVANT ISSUES AND THE ASSESSEE HAS GIVEN DETAILED EXPLANATION BY A LETTER IN WRITING AND THE AO ALLOWS THE CLAIM ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSE SSEE THE DECISION OF THE AO CANNOT BE HELD TO BE ERRONEOUS SIMPLY BECAUS E IN HIS ORDER HE DOES NOT MAKE AN ELABORATE DISCUSSION IN THAT REGAR D. 7. IN THE LIGHT OF THE ABOVE PROPOSITION LET US EXA MINE THE FACTS OF THE PRESENT CASE. LD. AO HAS CALLED FOR LOT OF INFORMATION AS D ISCERNABLE FROM THE FOLLOWING INTERIM ORDER - 23.8.2005 SHRI R.K. GARG ADVOCATE ATTENDED THE CASE WAS FIXE D ON 24.8.2005 BUT ON REQUEST THE CASE HAS BEEN TAKEN TODAY. HE IS REQUIRED TO SU BMIT. REQUIREMENTS 1. LIST OF CREDITORS WITH COMPLETE POSTAL ADDRESS. 2. DETAILS OF CAPITAL A/C FOR THE LAST 3 YEARS. 3. COPY OF A/C OF THE ASSESSEE IN FIRM M/S. JAIN MA RBLE HOME DELHI FOR THE LAST 3 YEARS. 4. DETAILS OF ALL BANKS WITH A/C NO. (S) 5. DETAILS OF FAMILY MEMBERS WITH AGE AND THEIR OCC UPATION IF ASSESSED TO TAX GIVE THEIR PANO. 6. DETAILS OF BANK A/CS IN THE NAME OF FAMILY MEMBE RS GIVE A/C NO.(S) ITA NO. 1960/DEL/08 ASSTT. YEAR 2003-04 7 7. COPY OF A/C IN M/S. JAIN MARBLE HOME AND IN M/S. NEW MARBLE HOME. 8. CONFIRMATION WITH PANO. FROM PARTIES FROM WHOM L OANS ACCEPTED. EXPLAIN WHETHER IT IS INTEREST FREE OR ON INTEREST. 9. NAME AND ADDRESS OF PERSONS IN POSSESSION OF BUI LDING FLAT AND GODOWN AND SHOPS. THE ADDRESS OF EACH ASSET HAS ALS O TO BE GIVEN. 10. DETAILS OF RENT RECEIVED WHICH INCLUDE NAME AND ADDRESS OF TENANT MONTHLY RENT AND DESCRIPTION OF ASSET WITH ADDRESS GIVEN ON RENT. 11. NATURE OF LOAN GIVEN TO MAMTA JAIN. EXPLAIN OUR RELATION WITH HER. ALSO STATE RATE OF INTEREST CHARGED ON LOAN GIVEN. 12. COPY OF A/C WITH M/S. NIRMAL GRANITE (P) LTD. F OR LAST 3 YEARS. 13. PURCHASE MADE IN CONTRAVENTION OF SECTION 40A(3 ) 14. LOAN OR DEPOSIT ACCEPTED /PAID IN CONTRAVENTION OF SECTION 269 SS / 269T. 15. ALL SQUARED-UP A/CS. 16. DETAILS OF GIFT RECEIVED IN THE NAME OF FAMILY MEMBERS OR HIMSELF WITH DOCUMENTARY EVIDENCE & GIFT-DEEDS. CASE ADJOURN FOR 05-09-2005 05-09-2005 ON REQUEST THE CASE ADJOURN FOR 20.09.2005. 20.09.2005 RECORD OF THE CASE RECEIVED FROM I.T.O 2 (3) MEERU T IN VIEW OF LD. CITS ORDER NO. 2886 DATED 08.092005 U/S 127 (1) OF THE I.TAX ACT. ISSUED NOTICE U/S 143(2) & 142(1) FOR 27.09.2005. 27.09.2005 NONE ATTENDED 29.11.2005 NOTICE U/S 142(1) NOTICE ISSUED & FIXED ON 13.12.2 005. SHRI SANJAY KUMAR JAIN A.Y. 2003-04 ORDER SHEET 13-12-2005 ON WRITTEN REQUEST ADJOURN TO 22.12.2005 ITO 22-12-2005 SHRI R.K. GARG ADVOCATE ATTENDED & REQUESTED FOR A DJOURNMENT. DISCUSSED & HE IS ASKED TO FILE THE REQUIRED DETAILS / DOCUMENTS WITH OUT FAILS. ALOS NOTICE U/S 131 ISSUED TO THE ASSESSEE FOR 03-01-2006. 26-12-2005 LETTER ISSUED TO MANAGER B.O.B. ABU LANE OF B.O.B. ABU LANE MEERUT. ITA NO. 1960/DEL/08 ASSTT. YEAR 2003-04 8 03-01-2006 SHRI R.K. GARG ADVOCATE ATTENDED & FILED WRITTEN RE QUEST. DISCUSSED. HE IS REQUESTED TO FILE THE REQUIRED DETAILS / DOCUMENTS WITHOUT FURTHER DELAY & ALSO PLEASE EXPLAIN THE CREDIT / DEBIT ENTRIES EXCEEDING RS. 1 LAC OF S/B A/C NO. 528692 OF B.O.B. ABU LANE MEERUT FOR PD. 01-04-2002 TO 31-0 3-2003 & S/B A/C NO. 559920 OF MASTER VAIBHAV & S/B A/C NO. 559954 OF MASTER AN UBHAV JAIN OF B.O.B. ABU LANE MEERUT. ADJOURN TO 13-01-2006 ITO 13-01-2006 SHRI R.K. GARG ADVOCATE ATTENDED & FILED REQUIRED D ETAILS / DOCUMENTS IN PARTS. AFTER DISCUSSION HE IS REQUESTED TO EXPLAIN CR./DR. ENTR IES AS DESIRED EARLIER. ADJOURN TO 25-01-2006 ITO 25-01-2006 SHRI R.K. GARG ADVOCATE ATTENDED & FILED REQUIRED DETAILS & DOCUMENTS & ALSO EXPLAINED CR./DR. ENTRIES AS DESIRED. DISCUSSED. AF TER DISCUSSION HE IS REQUESTED TO FILE NECESSARY CONFIRMATIONS ASSTT. PARTICULARS & BANK STATEMENT IN RELATION TO CREDITORS AS DECLARED & MENTIONED IN WRITTEN REPLY. ADJOURN TO 06-02-2006. XXXXX 16-03-2006 AT 4 PM STATEMENT ON OATH OF SHRI SANJAY KUMAR JAIN (ASSE SSEE) HAS BEEN RECORDED AND IS PLACED ON RECORDS. ALSO HE IS REQUESTED TO PRODUCE CREDITORS ALONG WITH RELEVANT DOCUMENTS AND I.D. ETC. I.T.I.- TO PLEASE RECORD ST ATEMENTS OF CREDITORS / DONORS. ITO 17-03-2006 STATEMENT ON OATH OF SHRI BALRAJ JAIN DONOR HAS B EEN RECORDED AND IS PLACED ON RECORDS. ITO 20-03-2006 STATEMENT ON OATH OF SHRI SHAYM LAL CREDITOR HAS B EEN RECORDED AND IS PLACED ON RECORDS. ITO 27-03-2006 STATEMENT ON OATH OF SHRI M.P. BANSAL HAS BEEN REC ORDED AND IS PLACED ON FILE. ITO 28-03-2006 STATEMENT ON OATH OF SHRI SURESH GARG HAS BEEN RE CORDED AND IS PLACED ON FILE. ITA NO. 1960/DEL/08 ASSTT. YEAR 2003-04 9 8. THE ASSESSEE HAS PLACED ON RECORD COPI ES OF THE REPLIES SUBMITTED BY HIM DURING THE COURSE OF ASSTT. PROCEEDINGS AND THE DET AILS CALLED FOR BY THE AO. HE HAS ALSO PLACED ON RECORD COPIES OF THE STATEMENT OF SH IR M.P. BANSAL AND OTHERS RECORDED DURING THE COURSE OF ASSTT. PROCEEDINGS. T HE AO AFTER ANALYSIS OF THE EVIDENCE PRODUCED BY THE ASSESSEE AND EXAMINING THE PERSONS WHO HAVE ADVANCED LOANS OR GAVE THE GIFTS TO HIS MINOR SONS HAS ACCEP TED THE GENUINENESS. THIS INDICATE THAT HE HAS NOT ACCEPTED THE ACCOUNTING EN TRIES IN THE BOOKS OF ACCOUNTS AS IT IS WITHOUT MAKING ANY INQUIRY. RATHER HE HAS ISS UED NOTICES CALLED FOR INFORMATION APPLIED HIS MIND AND THEREAFTER ACCEPTED THE DETAI LS. AGAINST THIS STAND OF THE AO THE GRIEVANCE OF THE LD. COMMISSIONER IS THAT QUALI TY OF INQUIRY IS NOT AS GOOD AS IT OUGHT TO HAVE BEEN . HIS OTHER OBSERVATION IS THAT NOTICES ISSUED TO FOUR PERSONS WHO HAS ADVANCED LOANS TO THE ASSESSEE RECEIVED UNSERVE D. ACCORDING TO THE AO ASSESSEE HAS FILED CONFIRMATION THEIR PERMANENT ACC OUNT NUMBER AND PRODUCED THOSE PERSONS BEFORE THE AO. THE ONE OF THE OBSERVA TION OF THE LD. COMMISSIONER IS THAT SO MANY PERSONS WERE MAINTAINING BANK ACCOUNT WHERE BALANCES ARE BUILT UP MOSTLY BY CASH AND TAKEN OUT IMMEDIATELY BY WAY OF CHEQUES AND DRAFTS THUS THEY ARE WORKING AS ENTRY PROVIDER. THE CONTENTION OF T HE ASSESSEE BEFORE LD. CIT QUA THIS ASPECT IS THAT IS HOW THESE CREDITORS ARE MAIN TAINING THEIR AFFAIRS IS NONE OF THE ASSESSEES CONCERN. ON A DETAILED ANALYSIS OF THE L D. COMMISSIONERS ORDER AND THE MATERIAL AVAILABLE ON RECORD WE FIND A DIFFERENCE O F OPINION BETWEEN THE LD. CIT AND THE AO IN APPRECIATING THE EVIDENCE QUA A PARTICUL AR TRANSACTIONS. THE OPINION FORMED BY THE AO FAILED TO MATCH WITH THE CONCLUSIO N DRAWN BY THE LD. COMMISSIONERS. IN SUCH SITUATION THE LD. COMMISSION ER WOULD NOT BE JUSTIFIED TO TAKE ITA NO. 1960/DEL/08 ASSTT. YEAR 2003-04 10 ACTION U/S 263. THE FACTS OF THIS CASE DULY FALL WI THIN THE AMBIT OF TEST AT SR. NO. VI & VII PROPOUNDED BY US WHILE TAKING COGNIZANCE OF THE TRIBUNALS ORDER IN THE CASE OF M/S. KHATIJA (SUPRA). THEREFORE TAKING INTO CONSIDE RATION THE FACTS AND CIRCUMSTANCES THE LD. COMMISSIONER IS NOT JUSTIFIED IN TAKING COG NIZANCE U/S 263 OF THE INCOME TAX ACT. THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE ORDER PASSED U/S 263 IS QUASHED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON 22.1.10. [SHAMIM YAHYA ] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER VEENA DATED: COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT