Virendra Kumar Gupta,, Meerut v. CIT, Meerut

ITA 2595/DEL/2010 | 2005-2006
Pronouncement Date: 21-01-2011 | Result: Dismissed

Appeal Details

RSA Number 259520114 RSA 2010
Bench Delhi
Appeal Number ITA 2595/DEL/2010
Duration Of Justice 7 month(s) 21 day(s)
Appellant Virendra Kumar Gupta,, Meerut
Respondent CIT, Meerut
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted H
Tribunal Order Date 21-01-2011
Date Of Final Hearing 08-11-2010
Next Hearing Date 08-11-2010
Assessment Year 2005-2006
Appeal Filed On 31-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H NEW DELHI) BEFORE SHRI A.D. JAIN JUDICIAL MEMBER AND SHRI K.G . BANSAL ACCOUNTANT MEMBER ITA. NO.2595/D/2009 ASSESSMENT YEAR: 2005-06 SHRI VIRENDRA KUMAR GUPTA VS. COMMISSIONER OF 87 VIJAY NAGAR MEERUT INCOME-TAX MEERUT PAN NO.AARPG 5528N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.S. KASHYAP FCA RESPONDENT BY : SMT. REENA SINHAPURI CIT- DR ORDER PER K.G. BANSAL: THE ASSESSEE HAD FILED THE RETURN ON 31.10. 2005 DECLAR ING TOTAL INCOME OF `3 41 860/-. THE RETURN WAS PROCESSED U/S 143 (1) OF THE INCOME-TAX ACT 1961. SUBSEQUENTLY THE CASE WAS SELEC TED FOR SCRUTINY AND A NOTICE U/S 143(2) WAS SERVED ON THE ASSESSEE ON 30.10.2006. THEREAFTER NOTICES U/S 142(1) WERE ALSO I SSUED. THE ASSESSEE HAD DEBITED EXPENSES UNDER THE HEAD TRAVELING AN D CONVEYANCE VEHICLE REPAIRS AND MAINTENANCE TELEPHO NE AND DEPRECIATION. THE ASSESSEE WAS REQUIRED TO PRODUCE BOOK S OF ACCOUNT ALONG WITH BILLS AND VOUCHERS. THE BOOKS WERE PRODUCE D FOR THE EXAMINATION OF THE ASSESSING OFFICER. IT WAS FOUND THAT ALL THE EXPENSES WERE NOT FULLY VOUCHED. IN VIEW THEREOF 20% OF THE EXPENSES DEBITED UNDER THE HEAD TRAVELING AND CONVEYANCE VE HICLE REPAIRS AND MAINTENANCE TELEPHONE AND DEPRECIATION ON CAR FOR PERSONAL USE WAS DISALLOWED. THE TOTAL DISALLOWANCE WORKED OUT TO `23 445/-. THUS THE TOTAL INCOME WAS COMPUTED AT `3 65 310/-. 2595-2010-NKGUPTA 2 2. THE RECORD OF THE ASSESSEE WAS EXAMINED BY THE CIT M EERUT. IT WAS FOUND THAT THE CASE WAS SELECTED FOR SCRUTINY ON ACC OUNT OF LOW PROFIT AND HIGH SUNDRY CREDITORS ADVANCES AND LOANS. THE ASSESSING OFFICER DID NOT EXAMINE THESE ASPECTS. THEREFORE NOT ICE U/S 263 WAS ISSUED REQUESTING THE ASSESSEE TO EXPLAIN AS TO WHY THE ORD ER MAY NOT BE SET ASIDE AS IT WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE ASSESSEE MADE VARIOUS SUBMISSIONS BOTH ON FAC TS AND LAW BEFORE THE LEARNED CIT. HOWEVER THE LEARNED CIT WAS NOT CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE. IT HAS BEEN MENTIONED THAT THE ASSESSING OFFICER ACCEPTED THE VERSIO N OF THE ASSESSEE WITHOUT MAKING ANY INQUIRY OR VERIFICATION. I T IS THE SETTLED LAW THAT MERE FAILURE TO MAKE INQUIRIES NECESSARY FOR MAKING THE ASSESSMENT RENDERS THE ORDER TO BE ERRONEOUS AND PREJUDI CIAL TO THE INTEREST OF THE REVENUE. THEREFORE THE ASSESSMENT ORDE R WAS SET ASIDE WITH A DIRECTION TO THE ASSESSING OFFICER TO EXAMINE VA RIOUS ISSUES PROPERLY IN RESPECT OF THE POINTS MENTIONED IN THE RE VISIONARY ORDER. AGGRIEVED BY THIS ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE ASSESSEE HAS TAKEN THREE SUBSTANTIVE GROUNDS IN THE APPEAL. IT IS MENTIONED THAT THE LEARNED CIT HAS NOT FULFILLE D PRE-CONDITIONS FOR PASSING REVISIONARY ORDER I.E. THE ASSESSMENT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE ASSESSE E HAD FILED CONFIRMED ACCOUNTS IN RESPECT OF UNSECURED LOANS AND C REDITORS WHICH WERE EXAMINED BY THE ASSESSING OFFICER. THE ASSESSEE HAS MA INTAINED BOOKS OF ACCOUNT WHICH WERE PRODUCED BEFORE THE ASSESSI NG OFFICER. THEREFORE THE LEARNED CIT WAS NOT JUSTIFIED IN GIVIN G A FINDING THAT THE REQUISITE INQUIRIES WERE NOT MADE. 4. BEFORE US IT HAS BEEN SUBMITTED BY THE LEARNED COU NSEL FOR THE ASSESSEE THAT THE ASSESSEE HAD FILED THE RETURN OF INCOME WHICH HAD BEEN PROCESSED ON 31.10.2005. THE ASSESSMENT ORDER HAD B EEN 2595-2010-NKGUPTA 3 PASSED ON 30.05.2007. THE LEARNED CIT HAD ISSUED NOTI CE U/S 263 ON 26.02.2010 AND FINALLY THE ORDER HAS BEEN PASSED ON 26 .03.2010. 4.1 IT IS FURTHER SUBMITTED THAT CONFIRMATIONS HAD BEE N FILED IN RESPECT OF LOANS AND CREDITORS BEFORE THE ASSESSING OFFICE R. THESE CONFIRMATIONS WERE AGAIN FILED IN THE COURSE OF REVISI ONARY PROCEEDINGS. THE LOAN CONFIRMATIONS HAVE NOW BEEN PLACED IN THE P APER BOOK ON PAGE NOS. 20 TO 25. THESE PERTAIN TO HANUMAIN KRISH NA RANI NARENDRA GUPTA PRAMILA GUPTA RINKY GUPTA AND VIVE K GUPTA IN RESPECT OF `7 41 009.60; `2 66 004/-; `2 20 000/-; ` 75 777/-; `64 813/-; AND `1 51 418/- RESPECTIVELY. IT IS FURTHER SUBMITTE D THAT CONFIRMATIONS IN RESPECT OF SUNDRY CREDITORS HAVE BEEN PLACED IN THE PAPER BOOK ON PAGE NOS. 26 TO 39. IT HAS BEEN ARGUED THAT ALL THE CONFIRMATIONS HAD BEEN FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS WHICH WERE EXAMINED BY THE ASSESSING OFFICER. 4.2 OUR ATTENTION HAS BEEN DRAWN TOWARDS PARAGRAPH N OS.6 12 & 13 OF THE REVIONARY ORDER. IN PARAGRAPH NO.6 IT HAS B EEN INTER ALIA MENTIONED THAT THE ASSESSMENT ORDER IS SKETCHY AND STEREOT YPED ONE WHICH ACCEPTS IN A ROUTINE MANNER WHAT THE ASSESSEE HAD SHOWN BARRING A PART DISALLOWANCE FROM THE EXPENSES. IN PAR AGRAPH NO.12 IT HAS BEEN MENTIONED THAT THE ASSESSING OFFICER ACCEPTED T HE VERSION OF THE ASSESSEE WITHOUT MAKING ANY INQUIRY OR VERIFICATION WHEREAS IT IS A VERY SETTLED LAW THAT MERE FAILURE TO MAKE INQUIRIES MAKES AN ORDER ERRONEOUS. THE ERROR MAY NOT BE APPARENT ON THE BASI S OF THE ORDER. THE CIT MAY CONSIDER AN ORDER TO BE ERRONEOUS NOT ONL Y IF IT CONTAINS SOME APPARENT ERROR OF FACTS OR LAW BUT ALSO IF IT IS A STEREO-TYPED ORDER WHICH SIMPLY ACCEPTS THE SUBMISSIONS OF THE ASSESSEE WITHOUT MAKING INQUIRIES WHICH ARE CALLED FOR IN THE CIRCUMSTANCES O F THE CASE. IN THIS CONNECTION RELIANCE HAS BEEN PLACED ON THE DECISION OF THE APEX COURT IN THE CASE OF RAMPYARI DEVI SARAOGI VS. CIT (1968 ) 67 ITR 84 AND TARA DEVI AGGARWAL VS. CIT (1973) 88 ITR 323. IN PA RAGRAPH NO.13 IT 2595-2010-NKGUPTA 4 HAS BEEN MENTIONED THAT IT IS NOT NECESSARY FOR THE CIT TO MAKE FURTHER INQUIRIES BEFORE SETTING ASIDE THE ASSESSMENT ORDER. HE CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMST ANCES OF THE CASE THE ASSESSING OFFICER SHOULD HAVE MADE FURTHER INQ UIRIES BEFORE ACCEPTING THE SUBMISSIONS MADE BY THE ASSESSEE. THE REASON IS THAT THE ASSESSING OFFICER IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVESTIGATOR WHO CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHI CH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER INQUIRY. IT IS HIS DUT Y TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN THE RETURN. FOR THIS PURPOSE R ELIANCE HAS BEEN PLACED ON THE DECISION OF HONBLE DELHI HIGH COURT I N THE CASE OF GEE VEE ENTERPRISES (1975) 99 ITR 386. IN THIS CONNECTIO N HE STRONGLY RELIED ON THE UNREPORTED DECISION OF HONBLE DELHI H IGH COURT IN THE CASE OF CIT VS. M/S VIKAS POLYMERS IN ITR NO.3/1991 DATE D 16.08.2010; CIT VS. INTERNATIONAL TRAVEL HOUSE LIMITED IN I.T.A. NO.94/10 DATED 13.09.2010 COPIES OF WHICH HAVE BEEN FILED ON RECOR D. IT IS STRONGLY CONTENDED THAT IN VIEW OF THESE DECISIONS THE LEARNED CIT ERRED IN PASSING THE REVIONARY ORDER. 5. IN REPLY THE LEARNED DR SUBMITTED THAT THE ASSESSEE WAS REQUIRED TO FILE VARIOUS DETAILS BEFORE THE ASSESSING OFF ICER ON 02.11.2006. A NUMBER OF ADJOURNMENTS WERE SOUGHT AND FINALLY NONE ATTENDED ON 29.01.2007. THEREAFTER FRESH NOTICE WA S ISSUED ON 15.02.2007. NONE ATTENDED IN RESPONSE THERETO ALSO. SIMILARLY NONE ATTENDED IN RESPONSE TO NOTICE DATED 01.03.2007. NON E ATTENDED IN RESPONSE TO NOTICE DATED 04.04.2007. FINALLY THE ASSE SSEE WAS REQUIRED TO FILE THE DETAILS ON 10.05.2007. THESE D ETAILS WERE FILED ON 07.05.2007. THE ORDER WAS PASSED ON 30.05.2007. IT IS OBVIOUS FROM THE AFORESAID HISTORY THAT THERE WAS NO TIME LEFT WITH THE ASSESSING OFFICER TO EXAMINE THE DETAILS FILED BY THE ASSESSEE. T HE CASE WAS SELECTED FOR SCRUTINY IN RESPECT OF LOW NET PROFIT AND HIGH UNSECURED LOANS SUNDRY CREDITORS AND SUNDRY ADVANCES. THESE MATTE RS WERE 2595-2010-NKGUPTA 5 ACCEPTED WITHOUT MAKING ANY INQUIRY INTO THE DETAIL S. MERE PRODUCTION OF BOOKS OF ACCOUNT IS NOT SUFFICIENT TO SATISFY THE C ONDITION THAT REQUISITE INQUIRY AS CALLED FOR ON THE FACTS AND IN T HE CIRCUMSTANCES OF THE CASE HAS BEEN MADE BY THE ASSESSING OFFICER. THE FACT OF THE MATTER IS THAT THERE WAS NO TIME FOR MAKING ANY INQUI RY WHATSOEVER. THEREFORE A SKETCHY ORDER WAS PASSED IN WHICH A PART O F THE EXPENSES WAS DISALLOWED ON AN AD HOC BASIS. OUR ATTENTION HAS BE EN DRAWN TOWARDS VARIOUS CONFIRMATIONS WHICH DO NOT MENTION T HE PERMANENT ACCOUNT NUMBERS. THE CASE OF M/S VIKAS POLYMERS HAS BEEN DISTINGUISHED ON FACTS. THEREFORE IT IS STRONGLY ARGU ED THAT THE ORDER OF THE LEARNED CIT MAY BE UPHELD. 6. WE HAVE CONSIDERED THE FACTS AND THE SUBMISSIONS MAD E BEFORE US. THE FACTS ARE THAT THE ASSESSEE HAD FILED ITS RETURN ON 31.10.2005 DECLARING TOTAL INCOME OF `3 41 860/-. THE CASE WAS SELECTED FOR SCRUTINY ON ACCOUNT OF LOW PROFIT HIGH SUNDRY CREDIT ORS ADVANCES AND LOANS. THE ASSESSEE SOUGHT A NUMBER OF ADJOURNMENTS. H OWEVER BOOKS OF ACCOUNT AND VOUCHERS WERE PRODUCED BEFORE TH E ASSESSING OFFICER. CONFIRMATIONS OF CREDITORS AND SUNDRY CREDI TORS WERE FILED ON OR ABOUT 17.05.2007. THE CASE WAS DISCUSSED ON 30.05.20 07 AND THE ASSESSMENT ORDER WAS PASSED ON THE SAME DAY. THERE IS NO E VIDENCE THAT ANY INQUIRY WAS CONDUCTED IN RESPECT OF CREDITOR S AND SUNDRY CREDITORS AND THE TRUTHFULNESS OF THE CONFIRMATION LET TER WAS ACCEPTED WITHOUT DEMUR. THE QUESTION IS WHETHER THE ORDER I S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE? 6.1 THE ASSESSEE HAS RELIED ON THE DECISION OF HONBLE DE LHI HIGH COURT IN THE CASE OF INTERNATIONAL TRAVEL HOUSE LIMIT ED (SUPRA). THE FACTS ARE THAT THE ASSESSEE FILED ITS RETURN ON 28.11.200 3 DECLARING TOTAL INCOME OF `3 37 35 810/- AND LONG TERM CAPITA L GAIN OF `7 788/-. THE RETURN WAS PROCESSED U/S 143(1) ON 28.06.2004. THE ASSESSEE FILED A REVISED RETURN ON 31.03.2005 REDUCING ITS IN COME TO 2595-2010-NKGUPTA 6 `3 17 16 700/-. ASSESSMENT PROCEEDINGS WERE INITIATED B Y ISSUING NOTICE ON 08.10.2004. IN THE COURSE OF PROCEEDINGS THE ASSESSEE INTER ALIA FILED DETAILS OF FOREIGN TRAVEL EXPENSES OF `4 02 421/-. THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE DETAIL S DID NOT PROVE THAT THE FOREIGN TRAVELS WERE UNDERTAKEN FOR THE PUR POSE OF BUSINESS THEREFORE 50% OF THE EXPENDITURE WAS DISALLOWED. TH E RECORD WAS EXAMINED BY THE CIT AND A NOTICE U/S 263 WAS ISSUED. I T WAS SUBMITTED THAT THE ASSESSEE CLAIMED CREDIT OF THE TAX DE DUCTED AT SOURCE; THAT IT HAD BOOKED TICKETS IN VARIOUS AIRLINES FOR ITS CUSTOMERS FOR WHICH IT RECEIVED COMMISSION @7% ON INTERNATIONAL TICKETS AND 5% ON DOMESTIC TICKETS; THAT THE ASSESSEE RECEIVED PERFORMAN CE LINKED BONUS AND OVER-RIDING COMMISSION ON SALE OF TICKETS; TH AT A PART OF THE COMMISSION WAS PASSED ON TO THE CUSTOMERS BY WAY OF DISCOUN TS AND NET COMMISSION WAS CREDITED IN THE BOOKS OF ACCOUNT. T HIS EXPLAINED THE DISCREPANCY BETWEEN THE COMMISSION CREDITED IN THE BOOKS OF ACCOUNT AND COMMISSION COMPUTED ON THE BASIS OF TDS CER TIFICATES; BEING `15 52 78 515/- (`27 46 18 000 - `11 93 39 48 5). THE CIT HELD THAT IN ORDER TO TAKE A FINAL VIEW FURTHER EXAMINAT ION OF BOOKS OF ACCOUNT WOULD BE NECESSARY WHICH CAN BE DONE BY THE A SSESSING OFFICER ONLY. THEREFORE HE SET ASIDE THE ASSESSMENT FOR THE VERIFICATION OF THE ACCOUNTING TO THE COMMISSION. VA RIOUS ARGUMENTS WERE MADE BEFORE THE HONBLE COURT IN THIS MATTER. I T IS MENTIONED THAT THE TRIBUNAL HAD OPINED THAT THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN WHY THE COMMISSION RECEIVED BY HIM FROM AI RLINES WHICH HAD BEEN PASSED TO THE CUSTOMERS BY WAY OF DISCOUNT SHOULD N OT BE ADDED TO THE TOTAL INCOME. THE ASSESSEE HAD FURNISHED EXPLAN ATION IN THIS REGARD WHICH WAS ACCEPTED BY THE ASSESSING OFFICER. TH EREFORE IT WAS HELD THAT THERE WAS NO ERROR IN THE ASSESSMENT AND T HERE CANNOT BE ANY PREJUDICE CAUSED TO THE REVENUE AS TO ASSESSMENT HA D BEEN FRAMED AFTER PROPER APPLICATION OF MIND. THE HONB LE COURT HELD THAT THE COMMISSIONER REALLY MADE AN EFFORT TO CAUSE A ROUT INE INQUIRY TO BE 2595-2010-NKGUPTA 7 MADE WITH REGARD TO A MATTER WHICH HAD BEEN CONCLUD ED WHICH MEANS THAT HE THOUGHT THAT HE HAD THE POWER TO BEGIN A FR ESH LITIGATION BECAUSE OF THE VIEW ENTERTAINED BY HIM. THIS APPROAC H IS NOT PERMISSIBLE. 6.2 THE LEARNED COUNSEL ALSO RELIED ON THE DECISION O F THE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S VIKAS POLY MERS. THE FACTS OF THE CASE ARE THAT THE ASSESSMENT FOR ASSESSMENT YEAR 1982-8 3 WAS COMPLETED BY THE ASSESSING OFFICER ON 19.09.1984 ON A T OTAL INCOME OF `90 031/- AGAINST THE RETURN INCOME OF `69 500/-. T HE CIT EXAMINED THE RECORDS AND A NOTICE WAS ISSUED TO THE ASSESSEE THAT T HE GENUINENESS OF CAPITAL INVESTED BY TWO PARTNERS SMT. RA TNA DEVI AND SHRI SAGAR MAL OF `49 000/- AND `40 000/- RESPECTIVE LY AND UNSECURED LOANS OF `98 500/- FROM STUTEE CHIT AND FINANCE (P) LTD. WERE NOT EXAMINED. IT WAS ALSO OBSERVED THAT MANUFACTURING ACC OUNT WAS NOT EXAMINED BY THE ASSESSING OFFICER. FINALLY THE ASSESSMENT WAS SET ASIDE HOLDING THE ORDER TO BE ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF THE REVENUE. THE TRIBUNAL HELD THAT THE COMMISSIO NER FAILED TO JUSTIFY HOW THE ORDER WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. VARIOUS ARGUMENTS WERE MADE BEFORE THE HONBLE HIGH C OURT. IT WAS MENTIONED THAT THERE ARE PRE-REQUISITE CONDITIONS FOR EXERCISING REVISIONERY POWERS. THEREFORE A BARE REITERATION TH AT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVE NUE WILL NOT SUFFICE. THE EXERCISE OF POWER IS QUASI JUDICIAL IN NATURE. TH EREFORE THE REASON MUST BE SHOWN THAT ENHANCEMENT MODIFICATION OR CANCE LLATION OF THE ASSESSMENT WAS REQUIRED FOR MAKING A FRESH ASSESSMENT. THE FACTS MUST LEAD TO A CONCLUSION THAT THE ASSESSMENT ORDER WAS NO T ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDINGLY IT WAS MENTIONED THAT IF A QUERY IS RAISE D IN THE ASSESSMENT PROCEEDINGS WHICH HAS BEEN ANSWERED TO THE SATI SFACTION OF THE ASSESSING OFFICER BUT NEITHER THE QUERY NOR THE ANSWER WAS 2595-2010-NKGUPTA 8 REFLECTED IN THE ASSESSMENT ORDER THIS WOULD NOT LEAD TO A CONCLUSION THAT REVISION WAS CALLED FOR. IN THIS CASE THE COMM ISSIONER OBSERVED THAT THE ASSESSEE DID NOT FILE CERTAIN DOCUMENTS. ASSUMIN G IT TO BE SO THIS DOES NOT LEAD TO A CONCLUSION ARRIVED AT BY THE C OMMISSIONER THAT THE ASSESSING OFFICER HAD SHIRKED HIS RESPONSIBILITY OF EXA MINING AND INVESTIGATING THE CASE. 6.3 ON THE OTHER HAND THE LEARNED DR RELIED ON THE ORDER OF HONBLE SUPREME COURT IN THE CASE OF RAMPYARI DEVI SARAOGI ( SUPRA). IN THIS CASE THE CIT ISSUED A NOTICE U/S 33B OF THE INCOME-TAX ACT 1922 FOR REVISING THE ORDER PASSED FOR ASSESSMENT YEARS 1952-53 TO 1 960-61. IN THE SHOW CAUSE NOTICE IT WAS MENTIONED THAT YOU HAVE NEITHER RESIDED NOR CARRIED ON ANY BUSINESS FROM THE ADDRESS MENTIONED I N THE RETURN OF INCOME. FURTHER THE ASSESSING OFFICER WAS NOT JUSTIF IED IN ACCEPTING THE INITIAL CAPITAL GIFTS RECEIVED SALE OF JEWELLER Y AND INCOME FROM BUSINESS WITHOUT MAKING ANY INQUIRY. THEREAFTER THE COMMISSIONER CANCELLED THE ORDER DIRECTING THE ASSESSING OFFICER TO MAKE FRESH ASSESSMENT ORDER. THE MATTER TRAVELED UPTO THE HONBLE SUPREME COURT. THE HONBLE COURT UPHELD THE ORDER BY MAKIN G THE FOLLOWING OBSERVATIONS:- IN OUR VIEW THE HIGH COURT WAS RIGHT IN OVERRULIN G THE CONTENTION OF THE ASSESSEE. THE ORDER OF THE COMMISSION ER IS A DETAILED ORDER. THERE IS NO DOUBT THAT HE DOES M ENTION SOME FACTS WHICH WERE NOT INDICATED OR COMMUNICATED T O THE ASSESSEE AND WHICH THE ASSESSEE HAD HAD NO OPPORTUNITY OF MEETING. FOR INSTANCE IN PARAGRAPH 9 IT IS STATED: IT HAS BEEN ASCERTAINED THAT THE INCOME TAX OFFICER D WARD HOWRAH HAD NO JURISDICTION OVER TH E ASSESSEE AND HENCE ALL THE ASSESSMENTS MADE BY HIM ARE AB INITIO NULL AND VOID. IT HAS ALSO BEEN LEARNT FR OM LOCAL ENQUIRIES THAT THE ASSESSEE NEVER RESIDED NOR CARRIED ON ANY BUSINESS FROM 7 HARAGENJ ROAD SALKIA HOWRAH AN D THAT THE ASSESSEES FATHER-IN-LAW SHRI SAGARMALL SARAO GI AND HIS SONS HAVE BEEN DOING BUSINESS OF FOOD GRAINS BESIDES OWNING A RICE FACTORY AND FLOUR GRINDING MACH INE FROM 90 FIDDER ROAD BELGHARIA 24-PARGANAS. HE F URTHER 2595-2010-NKGUPTA 9 OBSERVED: MOREOVER THE NAME OF THE ASSESSEE IS RAMPIYARI DEVI SARAOGI AND AS THE INCOME TAX OFFICE R D WARD HAWRAH WHO HAS MADE THE ASSESSMENTS HAD ONLY JURISDICTION OVER CASES OF NEW ASSESSES WHOSE NAMES BEGAN WITH THE ALPHABETICAL LETTERS FROM S TO Z WITH A VIEW TO CAMOUFLAGE THE NAME AND MAKE IT APPEAR TO F ALL WITHIN THE JURISDICTION OF THE INCOME TAX OFFICER T HE NAME HAS BEEN GIVEN IN THE REVERSE ORDER BY PUTTING THE SURNAME FIRST AND HER OWN NAME AFTERWARDS AS WILL BE APPARENT FROM THE RETURNS FILED. IN THE RETURN OF I NCOME FOR THE ASSESSMENT YEAR 1961-62 THE ASSESSEE HAS GIVEN HER RESIDENTIAL ADDRESS AS 90 FEEDER ROAD BELGHARIA CALCUTTA WHILE IN THAT FOR 1962-63 THE OFFICE ADD RESS HAS BEEN GIVEN AS 90 FEEDER ROAD BELGHARIA CALCUTTA. HE THEN CONCLUDED: IT IS APPARENT THAT WITH A VIEW TO FALL WITHIN THE JURISDICTION OF THIS PARTICULAR INCOME TA X OFFICER I.E. INCOME TAX OFFICER D-WARD HAWRAH A FICTITI OUS ADDRESS WAS GIVEN AND THE ORDER OF THE NAMES REVERSED. HENCE ALL THE ASSESSMENTS MADE ARE WITHOUT JURISDICTION AB INITO NULL AND VOID. WE AGREE WITH THE HIGH CO URT THAT ALL THIS MATERIAL WAS SUPPORTING MATERIAL AND DID NOT CONSTITUTE THE BASIC GROUNDS ON WHICH THE ORDERS U/S 33B WERE PASSED BY THE COMMISSIONER. THERE WAS AMPLE MATERIAL TO SHOW THAT THE INCOME TAX OFFICER MADE TH E ASSESSMENTS IN UNDUE HURRY. THE ASSESSEE WAS A NEW ASSESSEE AND FILED VOLUNTARY RETURNS IN RESPECT OF A NUMB ER OF YEARS I.E. FROM ASSESSMENT YEARS 1952-53 TO 1960-61. THE RETURN FOR THE ASSESSMENT YEAR 1953-54 IS UNDATED. THE RETURNS FOR THE ASSESSMENT YEARS 1952-53 AND 1954-5 5 TO 1957-58 ARE DATED MARCH 21 1961 AND THOSE FOR T HE ASSESSMENT YEARS 1958-59 TO 1960-61 ARE DATED APRIL 26 1961. ON MARCH 21 1961 THE ASSESSEE MADE A DECLARATION GIVING THE FACTS REGARDING INITIAL CAPIT AL THE ORNAMENTS AND PRESENTS RECEIVED AT THE TIME OF MARRIAG E OTHER GIFTS RECEIVED FROM HER FATHER-IN-LAW ETC. SH OULD HAVE PUT ANY INCOME TAX OFFICER ON HIS GUARD. BUT T HE INCOME TAX OFFICER WITHOUT MAKING ANY ENQUIRIES TO SA TISFY HIMSELF PASSED THE ASSESSMENT ORDER ON MARCH 30 1961 FOR THE ASSESSMENT YEARS 1952-53 TO 1957-58 AND ON APRI L 26 1961 FOR THE ASSESSMENT YEARS 1958-59 TO 1960-61. NO BANK ACCOUNT OR ANY PROPER BOOKS OF ACCOUNT WERE MAINTAINED BY THE ASSESSEE OR PRODUCED BEFORE THE INCOM E TAX OFFICER. A SHORT STEREO-TYPED ASSESSMENT ORDER WAS MADE FOR EACH ASSESSMENT YEAR. AS A SAMPLE THE COMMISSIONER HAS REPRODUCED THE ASSESSMENT ORDER FOR THE AY 1952-53 IN HIS ORDER. PROFIT FOR SPECULATION WAS 2595-2010-NKGUPTA 10 SHOWN AS `3 085/- AND INTEREST `600 AND `500 WAS ADDED FOR WANT OF BOOKS OF ACCOUNT AND EVIDENCE. NO EVIDE NCE WHATSOEVER WAS PRODUCED IN RESPECT OF THE MONEY-LENDIN G BUSINESS DONE AND INTEREST INCOME SHOWN TO HAVE BEEN RECEIVED BY THE ASSESSEE. NO NAMES WERE GIVEN AS TO THE PARTIES TO WHOM THE LOANS WERE ADVANCED WITH AMOUNTS AND RATE OF INTEREST AND AS TO WHEN THE INTEREST INCOM E WAS RECEIVED. 6.4 FURTHER RELIANCE HAS BEEN PLACED ON THE DECISION IN THE CASE OF SMT. TARA DEVI AGGARWAL (SUPRA) IN WHICH THE FINDIN G OF THE COURT IN THE CASE OF RAMPYARI DEVI SARAOGI WAS FOLLOWED TO THE EFFECT THAT AN ASSESSMENT MADE IN AN UNDUE HURRY LEADS TO AN ASSESSMENT OR DER WHICH IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE ALSO RELIED ON THE DECISION IN THE CASE OF GEE VEE ENT ERPRISES (SUPRA) IN WHICH IT WAS INTER ALIA HELD THAT (1) IT IS NOT N ECESSARY FOR THE COMMISSIONER TO MAKE FURTHER INQUIRIES BEFORE CANCELIN G THE ASSESSMENT ORDER; AND (2) THE COMMISSIONER CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES OF T HE CASE THE ASSESSING OFFICER SHOULD HAVE MADE FURTHER INQUIRIES BEFO RE ACCEPTING THE STATEMENTS MADE BY THE ASSESSEE IN HIS RETURN. POINT NO.2 ABOVE WAS ELABORATED AS UNDER:- THE REASON IS OBVIOUS. THE POSITION AND FUNCTION OF T HE INCOME TAX OFFICER IS VERY DIFFERENT FROM THAT OF A CIVIL COURT. THE STATEMENTS MADE IN A PLEADING PROVED BY T HE MINIMUM AMOUNT OF EVIDENCE MAY BE ACCEPTED BY A CIV IL COURT IN THE ABSENCE OF ANY REBUTTAL. THE CIVIL COU RT IS NEUTRAL. IT SIMPLY GIVES DECISION ON THE BASIS OF THE PLEADING AND EVIDENCE WHICH COMES BEFORE IT. THE IN COME TAX OFFICER IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER /BUT CALLS FOR FU RTHER INQUIRY. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF TH E FACTS STATED IN THE RETURN WHEN THE CIRCUMSTANCES OF THE CAS E ARE SUCH AS TO PROVOKE AN INQUIRY. THE MEANING TO BE GIVEN TO THE WORD ERRONEOUS IN SECTION 263 EMERGES O UT OF THIS CONTEXT. IT IS BECAUSE IT IS INCUMBENT ON THE INCOME TAX OFFICER TO FURTHER INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MAKE SUCH AN INQUIRY 2595-2010-NKGUPTA 11 PRUDENT THAT THE WORD ERRONEOUS IN SECTION 263 INCL UDES THE FAILURE TO MAKE SUCH AN INQUIRY. THE ORDER BECO MES ERRONEOUS BECAUSE SUCH AN INQUIRY HAS NOT BEEN MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WITH THE ORDER IF ALL THE FACTS STATED THEREIN ARE ASSUMED TO BE CORRECT. 6.5 COMING TO THE FACTS OF THE CASE IT WAS SELECTED FOR SCRUTINY IN ORDER TO VERIFY LOW GROSS PROFIT HIGH SUNDRY CREDITORS ADVANCES AND FRESH LOANS. THE ASSESSMENT ORDER DOES NOT SHOW THAT ANY INQUIRY WAS MADE REGARDING LOW PROFIT ALTHOUGH BOOKS OF ACCOUNT AND VOUCHERS WERE PRODUCED. CONFIRMATIONS WERE FILED IN RESPECT OF CREDITORS AND SUNDRY CREDITORS BUT THOSE WERE ACCEPTED WITHOUT ANY VERIFICATION. IN THE CASE OF INTERNATIONAL TRAVEL HOUSE LIMITED THE ASSESSING OFFICER HAD RAISED A QUESTION AS TO WHY THE DISCOUNT ALLOWED TO THE CUSTOMERS SHOULD NOT BE ADDED TO THE INCOME. THE ASSESSEE HAD FURNISHED AN EXPLANATION WHICH WAS FOUND SATISFACTORY BY THE ASSESSING OFFICER. THE TRIBUNAL FURTHER OPINED THAT THE REVENUE COULD NOT POINT OUT ANY DEFECT IN THE SYSTEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE IN RESPECT OF COMMISSION RECEIVED AND DISCOUNT PAID TO THE CUSTOMERS. THEREFORE THE COURT CAME TO THE CONCLUSION THAT THE COMMISSIONER IT APPEARS WANTED TO START A FRESH LITIGATION. THE FACTS OF THIS CASE ARE DISTINGUISHABLE. THERE IS NO SHOW CAUSE OR EXPLANATION ON RECORD REGARDING LOW NET PROFIT. ALTHOUGH THE ASSESSEE HAS FILED CONFIRMATIONS NO VERIFICATION WAS MADE WHICH WAS CALLED FOR IN VIEW OF THE REASONS FOR TAKING UP THE CASE FOR SCRUTINY. COMING TO THE CASE OF M/S VIKAS POLYMERS THE FINDING OF THE HONBLE COURT IS THAT THE EXERCISE CARRIED OUT BY THE COMMISSIONER WAS IN THE NATURE OF MAKING ROVING AND OR FISHING 2595-2010-NKGUPTA 12 INQUIRY. HE PROCEEDED ON THE ASSUMPTION THAT THE DETAILS FURNISHED BEFORE HIM WERE NOT FILED AT THE TIME OF ASSESSMENT. IT WAS MENTIONED THAT THE ASSESSING OFFICER HAS NOT EXAMINED CASH CREDITS OF PARTNERS OR DEPOSITS OF CHIT FUND. THIS MAY MAKE THE ORDER ERRONEOUS BUT HOW IT CAN BE PREJUDICIAL TO THE INTEREST OF REVENUE HAS NOT BEEN STATED BY HIM. THE FACTS OF THIS CASE ARE ALSO DISTINGUISHABLE. THE BOOKS OF ACCOUNT AND CONFIRMATIONS WERE UNDOUBTEDLY FILED BEFORE THE ASSESSING OFFICER. THE CONCLUSION ARRIVED AT BY HER IS THAT THE THESE CALLED FOR FURTHER VERIFICATION AS THE ASSESSMENT WAS TAKEN UP FOR SCRUTINY ONLY FOR THE PURPOSE OF SUCH INQUIRY. IN THE CASE OF RAMPYARI DEVI SARAOGI THE HONBLE SUPREME COURT CAME TO THE CONCLUSION THAT NON-VERIFICATION OF INITIAL CAPITAL GIFTS SALE OF O RNAMENTS AND PROFITS FROM BUSINESS LEAD TO AN ASSESSMENT WHICH IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. TO OUR MIND THE RATIO OF THIS CASE IS APPLICABLE TO THE FACTS OF CASE AT HAND. IN TH E CASE OF SMT. TARA DEVI AGGARWAL THE HONBLE COURT REITERATED THE RAT IO OF THE CASE OF RAMPYARI DEVI SARAOGI AND MENTIONED THAT ASSESSMENT MAD E IN UNDUE HURRY IS AN ASSESSMENT WHICH IS ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF REVENUE. WE HAVE FURNISHED THE CHRONOLOG Y OF THE HEARING OF THE CASE AND IT IS CLEAR THAT THE ASSESSMENT WAS MADE WITHOUT VERIFICATION AND IN A HURRIED MANNER AFTER RECEIPT OF CONFIRMATIONS FROM THE ASSESSEE ON 17.05.2007 AND THAT TOO WITHOUT VERIFI CATION WHICH WAS CALLED FOR. THEREFORE THE RATIO OF THIS CASE IS A LSO APPLICABLE. IN THE CASE OF GEE VEE ENTERPRISES (SUPRA) THE HONBLE COU RT CLEARLY MENTIONED THAT THE ASSESSING OFFICER CANNOT REMAIN PASSIV E IN THE FACE OF THE RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER INQUIRY. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STAT ED IN THE RETURN WHEN THE CIRCUMSTANCES ARE SUCH AS TO PROVOKE AN INQUIR Y. LOOKING TO 2595-2010-NKGUPTA 13 THE REASONS FOR TAKING UP THE CASE FOR SCRUTINY IT WA S INCUMBENT ON THE ASSESSING OFFICER TO MAKE INQUIRIES INTO GENUINENESS O F BOOK PROFITS AND CREDITS. NOTHING LIKE THAT HAS BEEN DONE. THE LEARNED DR ALSO RELIED ON THE DECISION OF THE TRIBUNAL IN THE CA SE OF M/S UNION HIDE COMPANY IN I.T.A. NO.2043/D/10 FOR ASSESSMENT YEAR 2005 -06 DATED 31.08.2010 A COPY OF WHICH HAS BEEN PLACED ON RECOR D. IN THIS CASE THE CIT EXERCISED REVISIONERY POWER ON THE GROUND THA T THE ASSESSING OFFICER DID NOT MAKE PROPER INVESTIGATION TO ASCERTAI N THE GENUINENESS OF THE CREDITS. RELYING ON THE DECISION IN THE CASE O F GEE VEE ENTERPRISES THE ORDER OF THE CIT WAS UPHELD. THE FAC TS OF OUR CASE ARE IN PARI-MATERIA WITH THE FACTS OF OUR CASE ON THIS POI NT. ON CONSIDERATION OF THESE CASES WE ARE OF THE VIEW THAT T HE LEARNED CIT WAS RIGHT IN EXERCISED HER REVISIONERY JURISDICTION. 7. IN RESULT THE APPEAL IS DISMISSED. THIS ORDER WAS PRONOUNCED IN OPEN COURT ON 21-01-2011 . SD/- SD/- ( A.D. JAIN ) ( K.G. BAN SAL ) JUDICIAL MEMBER ACCOUNTANT ME MBER DT.21/01/2011 NS COPY FORWARDED TO:- 1. SHRI VIRENDRA KUMAR GUPTA 87 VIJAY NAGAR MEERUT. 2. COMMISSIONER OF INCOME-TAX MEERUT. 3. THE CIT 4. THE CIT (A) NEW DELHI. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DEL HI. TRUE COPY BY ORDER (ITAT NEW DELHI).