M/S. RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD, JAIPUR v. PR.CIT-2, JAIPUR

ITA 288/JPR/2020 | 2015-2016
Pronouncement Date: 02-03-2021 | Result: Dismissed

Appeal Details

RSA Number 28823114 RSA 2020
Assessee PAN AAGCR4665R
Bench Jaipur
Appeal Number ITA 288/JPR/2020
Duration Of Justice 7 month(s) 2 day(s)
Appellant M/S. RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD, JAIPUR
Respondent PR.CIT-2, JAIPUR
Appeal Type Income Tax Appeal
Pronouncement Date 02-03-2021
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 02-03-2021
Last Hearing Date 08-10-2020
First Hearing Date 08-10-2020
Assessment Year 2015-2016
Appeal Filed On 29-07-2020
Judgment Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENC HES A JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN JM & SHRI VIKRAM SING H YADAV AM VK;DJ VIHY LA- @ ITA NO. 288/JP/2020 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2015-16 M/S RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD. JAIPUR CUKE VS. PRINCIPAL COMMISSIONER OF INCOME TAX - 2 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAGCR4665R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SH. ROHAN SOGANI (CA) & SH. RAJEEV SOGANI (CA) JKTLO DH VKSJ LS @ REVENUE BY : SH. AMRISH BEDI (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 09/12/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 02/03/2021 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. PR. CIT-2 JAIPUR DATED 23.03.2020 U/S 263 OF THE ACT P ERTAINING TO ASSESSMENT YEAR 2015-16. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT T HE ASSESSEE COMPANY FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME O F RS. 2 00 71 040/-. THE MATTER WAS SELECTED FOR COMPLETE SCRUTINY UNDER CAS S THE NOTICE U/S 143(2) WAS ISSUED TO THE ASSESSEE AND ASSESSMENT WA S COMPLETED ACCEPTING THE RETURNED INCOME. SUBSEQUENTLY THE AS SESSMENT RECORDS WERE CALLED FOR BY THE LD. PR. CIT-2 JAIPUR AND A SHOW CAUSE NOTICE U/S ITA NO. 288/JP/2020 M/S RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD. JAIPUR VS. PR. CIT-2 JAIPUR 2 263 DATED 28.02.2020 WAS ISSUED AND AFTER CONSIDERI NG THE SUBMISSIONS OF THE ASSESSEE THE ORDER PASSED BY ASSESSING OFFICER U/S 143(3) WAS HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND WAS SET ASIDE TO BE MADE AFRESH AFTER GIVING OPPORTUNITY T O THE ASSESSEE. AGAINST THE SAID ORDER AND FINDINGS OF THE LD. PR. CIT-2 J AIPUR THE ASSESSEE IS IN APPEAL BEFORE US. 3. AT THE OUTSET WE REFER TO THE SHOW CAUSE NOTIC E DATED 28.02.2020 ISSUED BY THE LD PR CIT AND CONTENTS THEREOF READ A S UNDER:- 3. ON PERUSAL OF THE ASSESSMENT RECORD IT IS NOTI CED THAT IN THE YEAR UNDER REFERENCE THERE IS AN INCREASE IN AUTHOR ISED SHARE CAPITAL AS WELL AS ISSUED AND SUBSCRIBED CAPITAL FROM RS. 5 7 50 00 000/- AS ON 31.03.2014 TO RS. 1 77 50 00 000/- SHOWING AN IN CREASE OF RUPEES 120 CRORE DURING THE YEAR UNDER CONSIDERATIO N. 4. IT IS SEEN THAT BEFORE COMPLETING THE ASSESSMENT AO HAS NOT VERIFIED THE SOURCE OF INCREASE IN SHARE CAPITAL T HOUGH THIS WAS ONE OF THE REASONS FOR SELECTION FOR COMPLETE SCRUTINY IN AS MUCH AS THERE IS NO PAN/ITR DETAILS OR CONFIRMATIONS OF THE PERSONS FROM WHOM RS. 120 CRORE HAS BEEN RECEIVED NOR THE SOURCE OF MONEY IN THE HANDS OF THE ABOVE PERSONS WAS INQUIRED INTO. 5. IT IS SEEN THAT THE COMPANY WAS INCORPORATED ON 24.06.2013. NO REVENUE FROM OPERATIONS IS SHOWN IN THE YEAR UND ER REFERENCE AND SO IN EARLIER YEAR. AO DID NOT MAKE ANY INQUIRI ES TO ASCERTAIN IF THE BUSINESS OF THE ASSESSEE COMPANY GOT SETUP OR N OT. HOWEVER AO HAS ALLOWED CLAIM OF BUSINESS LOSS AMOUNTING TO RS. 56 52 325/- WITHOUT LOOKING INTO THIS ASPECT. ITA NO. 288/JP/2020 M/S RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD. JAIPUR VS. PR. CIT-2 JAIPUR 3 6. IT IS ALSO FOUND THAT YOU HAVE NOT FILED FROM NO . 15CA DURING ASSESSMENT PROCEEDINGS WHICH CONTAINED MANDATORY IN FORMATION OF THE REMITTER REMITTEE THE ACCOUNTANT SIGNING THE CERTIFICATE PARTICULAR OF REMITTANCE AND TDS TAXABILITY UNDER THE PROVISION OF THE ACT ANY CLAIM OF RELIEF UNDER DTAA ETC. IN ABS ENCE OF THE FORM NO. 15CA OUTWARD REMITTANCES TO NON-RESIDENT RECEI PTS OF LARGE VALUE FOREIGN REMITTANCES AS COMPARED TO BUSINESS I NCOME HAVE NOT BEEN VERIFIED THOUGH THIS WAS ALSO ONE OF THE REASO NS FOR SELECTION OF THE CASE UNDER SCRUTINY. 7. IT IS ALSO NOTICED THAT THERE IS AN INCREASE IN TANGIBLE ASSETS BUT NO DETAILS ARE AVAILABLE IN NOTE- 6 TO THE ACCO UNTS. AO ALSO FAILED TO VERIFY PURCHASE OF FIXED ASSETS AMOUNTING TO RS. 63.25 CR MADE DURING THE YEAR. 8. IN VIEW OF THE ABOVE IT APPEARS THAT THE ASSESS MENT ORDER PASSED UNDER SECTION 143(3) OF THE I.T ACT 1961 IN YOUR CASE FOR A.Y 2015-16 ON 13.12.2017 IS ERRONEOUS IN AS FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. 4. ON EACH OF THE FOUR ISSUES RAISED BY THE LD PR C IT IN THE SHOW CAUSE NOTICE WE NOW REFER TO THE CONTENTIONS ADVANCED BY BOTH PARTIES. 5. THE LD. AR SUBMITTED THAT THE RECORDS RELATING T O ANY PROCEEDINGS AGAINST THE ASSESSEE AS WELL AS INQUIRIES U/S 263 O F THE ACT NEEDED TO BE CONSIDERED FOR DECIDING WHETHER THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT WAS SUBMITTED THAT THE LD. PR. CIT DID NOT DISPUTE THE SAID LEGAL PROPOSITION HOWEVER FAILED TO CONSIDER SUFFICIENT MATERIAL WHI CH WERE AVAILABLE ON RECORD IN TERMS OF INQUIRIES CONDUCTED BY THE ASSES SING OFFICER DURING THE ITA NO. 288/JP/2020 M/S RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD. JAIPUR VS. PR. CIT-2 JAIPUR 4 ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT INQUI RIES DURING PROCEEDINGS U/S 133(6) BY THE ASSESSING OFFICER IN QUIRIES BY DDIT(INVESTIGATION) IN THE CASE OF DR. RAJENDRA KUM AR JOSHI INQUIRIES DONE BY THE ENFORCEMENT DIRECTORATE AND THE INQUIRI ES DONE BY LD. PR. CIT DURING PROCEEDINGS U/S 263 OF THE ACT. IT WAS SUBMI TTED THAT THE CONCLUSION OF THE LD. PCIT THAT ASSESSMENT ORDER LA CKED INQUIRY IS THEREFORE ABSOLUTELY UNJUSTIFIED AND CONTRARY TO TH E FACTS AVAILABLE ON RECORD. 6. IT WAS SUBMITTED THAT THE ASSESSMENT ORDER CAN B E REVISED U/S 263 ONLY IF THE TWIN CONDITIONS OF ERROR IN THE ORDER A ND PREJUDICE CAUSE TO THE REVENUE COEXIST AND RELIANCE WAS PLACED ON THE HON BLE SUPREME COURT DECISION IN THE CASE OF MALABAR INDUSTRIAL CO. LTD [2000] 109 TAXMAN 66 (SC). IT WAS SUBMITTED THAT FROM THE EXHAUSTIVE MA TERIAL AVAILABLE ON RECORD AND DIFFERENT ENQUIRIES MADE BY VARIOUS AUTH ORITIES INCLUDING BY THE LD PR CIT IT IS ABUNDANTLY CLEAR THAT NO PREJUDICE IN ANY MANNER WAS CAUSED TO THE INTEREST OF THE REVENUE. IT WAS SUBMI TTED THAT IN ABSENCE OF ANY PREJUDICE TO THE INTEREST OF THE REVENUE ANY A SSUMPTION OF JURISDICTION U/S 263 IS UNJUSTIFIED. 7. IT WAS FURTHER SUBMITTED THAT WITH ALL THE EXHAU STIVE MATERIAL AVAILABLE ON RECORD BEFORE THE LD. PR. CIT HE WAS DUTY BOUND TO REFER TO THE SAME AND THEN COME TO THE CONCLUSION THAT THE O RDER OF THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE INSTEAD THE LD. PR. CIT SIMPLY GAVE DIRECTIONS TO THE LD. AO TO DEC IDE THE MATTER AFRESH. 8. IT WAS SUBMITTED THAT THE SHARES AMOUNTING TO RS . 120 CRORES WERE ALLOTTED TO THE SAME SHAREHOLDERS TO WHOM SHARE CAP ITAL AMOUNTING TO RS. 57.50 CRORES STOOD ALLOTTED IN THE PRECEDING A. Y 2014-15 THE ITA NO. 288/JP/2020 M/S RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD. JAIPUR VS. PR. CIT-2 JAIPUR 5 ASSESSMENT IN RESPECT OF WHICH STOOD COMPLETED U/S 143(3) DATED 18.12.2016. IT WAS SUBMITTED THAT THE SHAREHOLDERS AND THEIR SOURCE REMAINING THE SAME THE INQUIRY CONDUCTED BY THE AS SESSING OFFICER IN THE YEAR UNDER CONSIDERATION WAS JUSTIFIED AND CANNOT BE SAID TO BE LACKING. IT WAS SUBMITTED THAT THE ASSESSMENT FOR A.Y 2016-17 W AS COMPLETED U/S 143(3) DATED 20.12.2018 WHEREIN THERE IS AN INCREAS E IN SHARE CAPITAL BY RS. 76.50 CRORES AND NO ADVERSE INFERENCE WITH RESP ECT TO THE ISSUES TAKEN UP BY LD. PR. CIT IN THE PRESENT CASE WERE DRAWN BY THE ASSESSING OFFICER. SIMILARLY IT WAS SUBMITTED THAT THE ASSESSMENT FOR A.Y 2017-18 HAS BEEN COMPLETED BY THE ASSESSING OFFICER U/S 143(3) DATED 27.12.2019 WHEREIN ALSO THERE IS AN INCREASE IN SHARE CAPITAL BY RS. 9 0 CRORES AND NO ADVERSE INFERENCE HAS BEEN DRAWN BY THE ASSESSING OFFICER. 9. IT WAS FURTHER SUBMITTED THAT THE LD. PCIT HAS P LACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF ALD AUTOMOTIVE (P.) LTD. [2018] 91 TAXMANN.COM 475 (BOMBAY) FOR THE PR OPOSITION THAT THE BUSINESS OF THE ASSESSEE COMPANY HAD NOT BEEN SET U P AND THUS THE ASSESSEE COMPANY WAS NOT ENTITLED TO CLAIM BUSINESS LOSS IN THE YEAR UNDER REFERENCE. IT WAS SUBMITTED THAT THE FACTS OF THE CASE RELIED UPON BY LD. PCIT ARE TOTALLY DIFFERENT FROM THE FACTS O F THE CASE AT HAND. IN THE CASE OF ALD AUTOMOTIVE (P.) LTD. ( SUPRA ) THE ASSESSEE HAD GROSSLY FAILED TO PRODUCE NECESSARY EVIDENCES TO PROVE THAT ITS BU SINESS WAS SET UP. IN THE SAID CASE ALL THAT ASSESSEE COMPANY HAD INCURR ED AS PART OF ITS EXPENSES WAS THE SCHOOL FEES OF THE CHILDREN OF DI RECTOR RENT PAID FOR DIRECTORS RESIDENCE AND THE BROKERAGE ON THE SAME WHEREAS IN THE CASE AT HAND THE ASSESSEE COMPANY HAD ALREADY INCURRED SALARY EXPENSES FOR ITS EMPLOYEES EXPENDITURE ON TRAINING OF SUCH EMPL OYEES FOR THE PURPOSE OF THEM BEING ABLE TO SUBSEQUENTLY IMPART TRAINING FOR SKILL DEVELOPMENT BEING THE MAIN OBJECT OF THE ASSESSEE COMPANY. FOR SUCH PURPOSE TWO OF ITA NO. 288/JP/2020 M/S RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD. JAIPUR VS. PR. CIT-2 JAIPUR 6 ITS EMPLOYEES WERE SENT TO AUSTRIA FOR GETTING TRAI NING ON SKILL DEVELOPMENT AND THESE FACTS WERE EVEN ADMITTED BY T HE LD. PCIT IN HER ORDER. 10. IT WAS FURTHER SUBMITTED THAT THE LD PCIT HAS O BSERVED CERTAIN ERRORS/LACK OF ENQUIRY IN THE ASSESSMENT ORDER AT PARA 5.1 TO 5.4 OF HER ORDER. AT PARA 5.1 PAGE 4 OF THE ORDER LD. PCIT H AS HELD THE LACK OF MEETING OF BOARD OF DIRECTORS FOR ALLOTMENT OF EQUI TY SHARES. AT PARA 5.4 PAGE 4 OF THE ORDER IT IS POINTED OUT THAT IT IS N OT CLEAR AS TO WHAT KIND OF TRAINING WAS IMPARTED TO THESE EMPLOYEES. AT PARA 5 .4 PAGE 5 OF THE ORDER THE REFERENCE OF NO BUSINESS REVENUE BEING G ENERATED TO MAKE IT A CASE OF NON-COMMENCEMENT OF BUSINESS. AT PARA 5.4 PAGE 5 OF THE ORDER IT HAS BEEN MENTIONED THAT NO CLEARANCES/LICENSES H AS BEEN OBTAINED FROM THE REGULATORY AUTHORITIES TO START THE COURSES. IT WAS SUBMITTED THAT SECTION 263 PROCEEDINGS ARE NOT MEANT FOR CORRECTIN G EACH AND EVERY ERROR OF THE LD. AO. MOREOVER THE ISSUES AS POINTED ABOV E ARE NOT AT ALL RELEVANT FOR THE LD. AO TO REACH TO THE CONCLUSION AND IN SU PPORT RELIANCE WAS PLACED ON DECISION OF COORDINATE BENCH IN CASE OF T ORRENT PHARMACEUTICALS LTD. [2018] 173 ITD 130 (AHD). 11. IT WAS ACCORDINGLY SUBMITTED THAT IN VIEW OF TH E ABOVE FACTUAL AND LEGAL POSITION THE LD PR.CIT HAS GROSSLY ERRED IN ASSUMING JURISDICTION UNDER SECTION 263 OF THE ACT AND THE ORDER SO PASSE D THEREFORE MAY BE SET-ASIDE. 12. PER CONTRA THE LD. PR.CIT/DR SUBMITTED THAT TH E CASE OF THE ASSESSEE WAS SELECTED UNDER COMPLETE SCRUTINY UNDER CASS AND ONE OF THE REASONS WAS SUBSTANTIAL INCREASE IN SHARE CAPITAL A ND AFTER GOING THROUGH THE DETAILS SUBMITTED BY THE ASSESSEE DURING THE AS SESSMENT PROCEEDINGS ITA NO. 288/JP/2020 M/S RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD. JAIPUR VS. PR. CIT-2 JAIPUR 7 VIDE ANNEXURE C OF LETTER DATED NIL WHEREIN THE NA ME OF THE SHARE HOLDERS HAVE BEEN MENTIONED AND THE VALUE OF SHARE ALLOTMENT DURING THE MONTH OF DECEMBER 2014 JANUARY 2015 AND MARCH 2 015 ARE ONLY MENTIONED THE LD. PR. CIT HAS GIVEN A FINDING THAT NO DETAILS OF PAN/ITR OF THE PERSONS FROM WHOM AMOUNT OF RS. 120 CR. WAS RECEIVED BY THE ASSESSEE WAS ENQUIRED AND IS NOT THERE ON THE RECOR D APART FROM SOURCE OF INVESTMENT BY THESE ENTITIES. IT WAS FURTHER NOTED THAT THERE IS A CREDIT ENTRY OF RS. 30 CR. ON 06.12.2014 AND OF ANOTHER RS . 30 CR. ON 21.01.2015 IN THE BANK ACCOUNT OF THE ASSESSEE COMPANY THOUGH ASSESSEE COMPANY RECEIVED SHARE CAPITAL OF 10 CR. EACH FROM JAYANT J OSHI JALAJ JOSHI AND NAYAN JOSHI IN DECEMBER 2014 AND JANUARY 2015. IN THE BANK ACCOUNT OF THE ASSESSEE COMPANY CREDIT IS NOT REFLECTED IN THE NAME OF THE THREE INDIVIDUALS BUT A CONSOLIDATED CREDIT ENTRY OF RS. 30 CR. EACH IS SEEN. THE AO DID NOT VERIFY THESE DETAILS AND DID NOT ENQUIRE INTO SOURCE OF MONEY IN THE HANDS OF THESE INDIVIDUALS. THERE ARE NO OTHER DOCUMENTARY EVIDENCES ON RECORD SEEKING ALLOTMENT OF EQUITY SHARES BY THE SE ENTITIES MEETING OF THE BOARD OF DIRECTORS AUTHORIZING ALLOTMENT OF EQU ITY SHARE TO THESE ENTITIES. IT WAS SUBMITTED THAT THE LD PR CIT HAS R IGHTLY HELD THAT AFER THE PROVISO WAS INSERTED TO SECTION 68 OF THE I.T. ACT BY THE FINANCE ACT 2012 WITH EFFECT FROM 01.04.2013 THE AO OUGHT TO HAVE E NQUIRED ABOUT THE SOURCE OF THE AMOUNTS SO CREDITED/INVESTED ALONG WI TH DOCUMENTARY EVIDENCE WHICH AO FAILED TO DO SO IN THE INSTANT C ASE. 13. IN RESPECT OF OTHER ISSUES RAISED IN THE SHOW- CAUSE NOTICE OUR REFERENCE WAS DRAWN TO THE FOLLOWING FINDINGS OF TH E LD PR CIT WHICH READ AS UNDER: 5.2 IT IS SEEN FROM THE BALANCE SHEET THAT TANGIBL E ASSETS ARE SHOWN AT RS. 46 58 48 239/- AS PER THE DETAILS GIVE N IN NOTE-6 BUT ITA NO. 288/JP/2020 M/S RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD. JAIPUR VS. PR. CIT-2 JAIPUR 8 NO NOTE-6 IS APPENDED THERETO AND NO DETAILS IN RES PECT OF THE FIXED ASSETS IS AVAILABLE ON RECORD. IT IS ALSO NOTED THA T CAPITAL WORK IN PROGRESS HAS INCREASED FROM RS. 2.24 CR. TO RS. 32. 49 CR. UNDER THE HEAD CONSTRUCTION OF BUILDING BUT NO DETAILS IN RES PECT THEREOF ARE THERE ON RECORD. AR HAS FURNISHED THE DETAILS VIDE LETTER DATED 09.03.2020 WHICH MAY BE VERIFIED BY THE AO. 5.3 IN THE YEAR UNDER REFERENCE THERE IS LARGE OUTW ARD FOREIGN REMITTANCE TOWARDS PURCHASE OF MACHINERY. AR SUBMIT TED FORM NO. 15CA VIDE REPLY DATED 09.03.2020 WHICH MAY BE VERIF IED BY THE AO. 5.4 IT IS SEEN THAT THE COMPANY WAS INCORPORATED ON 24.06.2013 WITH THE MAIN OBJECTIVE OF ESTABLISHING PROMOTING AND RUNNING OF SKILL DEVELOPMENT CAMPUS FOR DIFFERENT T RADES. IT IS SUBMITTED THAT THE ASSESSEE HIRED EMPLOYEES AND THE IR TRAINING COMMENCED TO ENABLE THEM TO IMPART SKILL DEVELOPMEN T TRAINING. ASSESSEE INCURRED SALARY EXPENDITURE OF RS. 21 69 7 85/- AND EXPENDITURE ON THEIR TRAINING OF RS. 4 13 608/-. IT IS NOTED THAT ASSESSEE HAS DEBITED STAFF RECRUITMENT EXPENSES OF RS. 1 15 274/- WHICH INCLUDES RS. 1 01 124/- PAID TO RIGHT STEP CO NSULTING PVT. LTD. VIDE INVOICE DATED 26.03.2015 FOR RECRUITING F ELIX CHARLESWORTH EXPENDITURE ON THEIR TRAINING IS BASIC ALLY THE TRAVEL EXPENSES PAID TO APPLE TOOLS PVT. LTD. IT IS NOT CL EAR AS TO WHAT KIND OF TRAINING WAS IMPARTED TO THESE EMPLOYEES. A PART FROM THIS IT IS ALSO NOTED THAT THE BUILDING/CAMPUS IS STILL UNDER CONSTRUCTION AND THE MACHINERY WHICH WERE IMPORTED FOR THE PURPOSE OF IMPARTING THE TRAINING WERE YET TO BE IN STALLED. THIS IS EVIDENT FROM NOTE 5 OF NOTES TO THE FINANCIAL STA TEMENTS FOR THE YEAR. DEPRECIATION ON FIXED ASSETS IS PROVIDED FOR ON TH E BASIS OF WRITTEN DOWN VALUE (WDV) METHOD BASED ON USEFUL LIF E OF THE ITA NO. 288/JP/2020 M/S RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD. JAIPUR VS. PR. CIT-2 JAIPUR 9 ASSETS AS PRESCRIBED IN THE SCHEDULE II THE COMPANI ES ACT 2013. PLANT & MACHINERIES WERE PURCHASED DURING THE END F INANCIAL YEAR 2014-15 AND INSTALLATIONS OF THE SAME WERE COMPLETE D DURING THE FINANCIAL YEAR 2015-16 THEREFORE NO DEPRECIATION H AS BEEN CHARGED ON THE SAME FOR THE FINANCIAL YEAR 2014-15. ' IT IS IMPORTANT TO ASCERTAIN THE PREVIOUS YEAR IF A NY INCOME IS TO BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS OR PRO FESSION. THE PREVIOUS YEAR IS DEFINED IN SECTION 3 AS UNDER: 'FOR THE PURPOSE OF THIS ACT 'PREVIOUS YEAR' MEANS THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR. PROVIDED THAT IN THE CASE OF A BUSINESS OR PROFESS ION NEWLY SET UP OR A SOURCE OF INCOME NEWLY COMING INTO EXISTEN CE IN THE SAID FINANCIAL YEAR THE PREVIOUS YEAR SHALL BE THE PERI OD BEGINNING WITH THE DATE OF SETTING UP OF THE BUSINESS OR PROFESSIO N OR AS THE CASE MAY BE THE DATE ON WHICH THE SOURCE OF INCOME NEWL Y COMES INTO EXISTENCE AND ENDING WITH THE SAID FINANCIAL YEAR' FROM THE ABOVE IT IS CLEAR THAT IN ORDER TO ASSESS AN INCOME / LOSS THERE SHOULD BE PREVIOUS YEAR AND THE PREVIOUS YEAR BEGINS FROM THE DATE OF SETTING UP OF THE BUSINESS. THE ASSESSE E COMPANY WAS INCORPORATED ON 24.06.2013 WITH THE MAIN OBJECTIVE 'TO ESTABLISH ACQUIRE PROMOTE RUN OR IN ANY OTHER MANNER CARRY O IN INDIA THE BUSINESS OF A SKILL DEVELOPMENT CAMPUS FOR DIFFEREN T TRADES EQUIPPED WITH ALL NEEDED MACHINES AND FACILITIES TO IMPART PRACTICAL SKILL COMBINED WITH TRADE RELATED THEORETICAL EDUCA TION.' IT IS SEEN THAT THERE WAS NO BUSINESS REVENUE IN THE YEAR UNDE R REFERENCE AND ALSO IN THE PRECEDING YEAR FROM THE DATE OF INC ORPORATION. NO TRAINING PROGRAM AS SUCH HAS BEEN CONDUCTED SO FAR. THE CAMPUS / ITA NO. 288/JP/2020 M/S RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD. JAIPUR VS. PR. CIT-2 JAIPUR 10 BUILDING IS UNDER CONSTRUCTION AND WIP AS ON 31.03. 2015 IS SHOWN AT 32.49CR. ASSESSEE IMPORTED CERTAIN MACHINERIES F OR IMPARTING TRAINING WHICH WERE NOT INSTALLED TILL 31.03.2015. ASSESSEE HAS RECRUITED CERTAIN PERSONNEL IN DECEMBER 2014 ONWAR DS. IT SEEMS THAT TWO OF THE PERSONNEL WERE GIVEN TRAINING IN AU STRIA FOR WHICH ONLY TRAVEL EXPENSES WERE BORNE BY THE COMPANY. THE RE IS NO DETAIL ON RECORD IF THE COMPANY HAD OBTAINED NECESS ARY CLEARANCES / LICENSES AS REQUIRED FROM THE REGULATORY AUTHORIT IES TO START THE COURSES AND IF ANY BROAD OUTLINES / CURRICULUM OF T HE COURSES TO BE IMPARTED WERE DRAFTED/ CONCEIVED. IT SEEMS THAT THI S PROGRAM HAS EVENTUALLY BEEN CARRIED FORWARD BY SETTING UP A SEP ARATE UNIVERSITY BY THE ASSESSEE. IT IS SEEN THAT AO DID NOT CARRY OUT ANY INQUIRY/VERIFICATION TO DETERMINE IF THE BUSINE SS OF THE ASSESSEE GOT SETUP AND IT WAS READY TO COMMENCE BEF ORE ALLOWING THE CLAIM OF BUSINESS LOSS IN THE YEAR UNDER REFERE NCE. RELIANCE IN THIS REGARD CAN BE PLACED ON THE DECISION OF HON'BL E BOMBAY HIGH COURT GIVEN IN THE CASE OF ALD AUTOMOTIVE (P.) LTD. V. DEPUTY COMMISSIONER OF INCOME-TAX-IS(1) [2018] 91 TAXMANN.COM 475 (BOMBAY) IN WHICH HON'BLE HIGH COURT HAS AFFIRMED T HE DECISION OF HON'BLE ITAT DENYING THE BUSINESS LOSS ON THE GR OUND THAT NO BUSINESS WAS SET-UP IN THE PREVIOUS YEAR THOUGH THE APPELLANT HAD PURCHASED TWO VEHICLES AND ALSO TAKEN OFFICE ON HIR E. ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF HON'BLE GUJR AT HIGH COURT IN THE CASE OF SARRASHTRA CEMENT AND CHEMICAL INDUSTRI ES LTD. V. CIT [1973] 91 ITR 170 (GUJ-HC). IT IS SEEN THAT IN THIS CASE MINING LEASE AS WELL AS LICENSE TO ESTABLISH A CEMENT MANU FACTURING PLANT WAS AVAILABLE QUARRYING OPERATIONS FOR EXTRACTING LIMESTONE FROM THE LEASED AREA HAD STARTED AND INSTALLATION OF PLA NT AND MACHINERY WAS COMPLETED IN JUNE 1960 AND MANUFACTU RING ITSELF ITA NO. 288/JP/2020 M/S RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD. JAIPUR VS. PR. CIT-2 JAIPUR 11 HAD STARTED IN OCTOBER 2016. FURTHER THE ISSUE OF SETTING UP OF BUSINESS IS TO BE LARGELY DETERMINED BY THE FACTS O F EACH CASE. AO IS DIRECTED TO VERIFY NECESSARY DETAILS AS MENTIONE D ABOVE WITH REGARD TO SETTING UP OF BUSINESS WHICH IS ESSENTIAL FOR ALLOWING THE BUSINESS LOSS. 14. REGARDING THE CONTENTION OF THE LD AR THAT T HE RECORDS RELATING TO ANY PROCEEDINGS AGAINST THE ASSESSEE AS WELL AS INQ UIRIES U/S 263 OF THE ACT NEEDED TO BE CONSIDERED FOR DECIDING WHETHER TH E ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF THE REVENUE THE LD CIT/DR SUBMITTED THAT THERE IS NO D ISPUTE THAT THE ENTIRE MATERIAL INCLUDING MATERIAL COLLECTED DURING THE CO URSE OF REVISIONARY PROCEEDINGS NEEDS TO BE CONSIDERED. HOWEVER GIVEN THE FACT THAT IT IS A CASE WHERE THE ORDER HAS BEEN PASSED BY THE AO WITH OUT MAKING INQUIRIES AND VERIFICATION WHICH SHOULD HAVE BEEN MADE AND AL LOWING RELIEF OF LOSSES WITHOUT ENQUIRING INTO THE CLAIM THE LD PR CIT HAS RIGHTLY HELD THAT THE ORDER SO PASSED BY THE AO IS DEEMED TO BE ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE IN TERMS OF EXPLANATION TO SECTION 263 AND THE MATTER HAS BEEN SET-ASIDE TO TH E FILE OF THE AO WHERE THE AO SAME EXAMINE ALL THE RELEVANT MATERIAL AVAIL ABLE ON RECORD AND AFTER PROVIDING REASONABLE OPPORTUNITY SHALL DECID E THE MATTER AFRESH. 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE RETURN OF INC OME WAS SELECTED FOR COMPLETE SCRUTINY UNDER CASS AND THE REASONS FOR SU CH SELECTION INTERALIA INCLUDES SUBSTANTIAL INCREASE IN SHARE CAPITAL WHIC H IS ONE OF THE ISSUES RAISED BY THE LD PR CIT IN THE SHOW-CAUSE NOTICE AN D A SUBJECT MATTER OF PRESENT DISPUTE. ITA NO. 288/JP/2020 M/S RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD. JAIPUR VS. PR. CIT-2 JAIPUR 12 16. UNDISPUTEDLY THERE IS AN INCREASE IN SHARE CAP ITAL DURING THE YEAR UNDER CONSIDERATION WHEREIN ADDITIONAL SHARES AMOUN TING TO RS 120 CRORES HAVE BEEN ALLOTTED BY THE ASSESSEE COMPANY TO ITS E XISTING SHAREHOLDERS TO WHOM SHARES AMOUNTING TO RS 57.50 CRORES WERE ALSO ALLOTTED DURING THE PRECEDING YEAR RELEVANT TO ASSESSMENT YEAR 2014-15. IT IS ALSO A FACT THAT THE ASSESSMENT FOR A.Y 2014-15 WAS COMPLETED U/S 14 3(3) HOWEVER THERE IS NOTHING ON RECORD OR BROUGHT TO THE NOTICE OF THE BENCH IN TERMS OF WHETHER MATTER RELATING TO INCREASE IN SHARE CAP ITAL WAS SUBJECT MATTER OF EXAMINATION BY THE AO FOR THE SAID ASSESSMENT YE AR. IN ANY CASE WHERE THE SHARES HAVE BEEN ALLOTTED EVEN TO EXISTIN G SHAREHOLDERS THE QUESTION THAT ARISE FOR CONSIDERATION IS WHETHER IT IS INCUMBENT ON PART OF THE AO TO ENQUIRE ABOUT SOURCE OF FRESH FUNDS TO TH E TUNE OF RS 120 CRORES INFUSED BY WAY OF SHARE CAPITAL DURING THE YEAR ESP ECIALLY WHERE THE SAME IS ONE OF THE REASONS FOR SELECTION OF CASE UNDER C OMPLETE SCRUTINY. TO OUR MIND THE ANSWER TO THE SAME IS CLEARLY IN THE AFFI RMATIVE AS THE AO IS UNDER A STATUTORY OBLIGATION TO EXAMINE THE SAID TR ANSACTION QUA THE SOURCE OF FUNDS INFUSED DURING THE YEAR UNDER CONSI DERATION AND RECORD HIS FINDINGS AND FAILURE TO CARRY OUT SUCH EXAMINATION AND VERIFICATION OF A MATTER WHICH IS SUBJECT MATTER FOR SELECTION OF CAS E FOR SCRUTINY WILL CLEARLY RENDER THE ORDER ERRONEOUS AND PREJUDICIAL TO THE I NTEREST OF REVENUE. 17. FURTHER THE LD PR CIT HAS REFERRED TO THE PROV ISIONS OF SECTION 68 OF THE ACT WHICH READS AS UNDER: WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION OF THE ASSESS ING OFFICER SATISFACTORY THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR ITA NO. 288/JP/2020 M/S RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD. JAIPUR VS. PR. CIT-2 JAIPUR 13 PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY (NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTER ESTED) AND THE SUM SO CREDITED CONSISTS OF SHARE APPLICATION MONEY SHARE CAPITAL SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME C ALLED ANY EXPLANATION OFFERED BY SUCH ASSESSEE-COMPANY SHALL BE DEEMED TO BE NOT SATISFACTORY UNLESS (A) THE PERSON BEING A RESIDENT IN WHOSE NAME SUCH CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS A N EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED ; AND (B) SUCH EXPLANATION IN THE OPINION OF THE ASSESSI NG OFFICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY. 18. THE PROVISIONS OF SECTION 68 THEREFORE HAVE RIG HTLY BEEN HELD BY THE LD PR CIT TO BE ATTRACTED IN THE INSTANT CASE AND I T IS FOR THE ASSESSEE COMPANY TO OFFER AN EXPLANATION ABOUT THE NATURE AN D SOURCE OF SUCH FUNDS INTRODUCED BY WAY OF SHARE CAPITAL AND IN ADD ITION THE SHAREHOLDERS OF THE ASSESSEE COMPANY ARE ALSO REQUIRED TO OFFER AN EXPLANATION ABOUT THE NATURE AND SOURCE OF SHARE CAPITAL SO INTRODUCE D IN THE ASSESSEE COMPANY A COMPANY IN WHICH PUBLIC IS NOT SUBSTANTI ALLY INTERESTED AND THE AO IS REQUIRED TO RECORD HIS SATISFACTION ABOUT THE EXPLANATION SO OFFERED. WHERE THERE IS A FAILURE TO OFFER SUCH EX PLANATION ON PART OF THE ASSESSEE AND ITS SHAREHOLDERS AND IT WOULD BE INCUM BENT ON PART OF THE AO TO SEEK SUCH AN EXPLANATION AND WHERE THE AO HAS NOT SOUGHT SUCH AN EXPLANATION AND THERE IS THUS A FAILURE TO RECORD T HE SATISFACTION BY THE AO THE SAME WILL RENDER THE ORDER ERRONEOUS DUE TO NON -APPLICATION OF RELEVANT PROVISIONS AS APPLICABLE IN THE INSTANT CA SE AND THUS THE ORDER SO PASSED WOULD BE WITHOUT APPLICATION OF MIND. ITA NO. 288/JP/2020 M/S RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD. JAIPUR VS. PR. CIT-2 JAIPUR 14 19. IN THE INSTANT CASE WE FIND THAT DURING THE CO URSE OF ASSESSMENT PROCEEDINGS THE AO VIDE NOTICE U/S 142(1) DATED 24 .08.2017 HAS ENQUIRED ABOUT THE SOURCE OF INCREASE IN SHARE CAPITAL DURIN G THE YEAR UNDER CONSIDERATION ALONG WITH DOCUMENTARY EVIDENCE AND I N RESPONSE THE ASSESSEE COMPANY VIDE LETTER DATED NIL- ANNEXURE C HAS SUBMITTED A CHART GIVING THE NAME OF THE THREE SHAREHOLDERS AN D AMOUNT OF SHARE CAPITAL ALLOTTED TO EACH OF THEM DURING THE MONTH O F DECEMBER 2014 JANUARY 2015 AND MARCH 2015 TOTALLING RS 120 CRORES . THERE IS NO EXPLANATION SUBMITTED REGARDING SOURCE OF SUCH FUND S AND NO DOCUMENTARY EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE COMPANY. THE AO HAS HOWEVER TAKEN THE SAID SUBMISS ION ON FACE VALUE AND NO FURTHER SHOW-CAUSE OR ENQUIRY/EXAMINATION HA S BEEN CONDUCTED BY HIM. 20. IN THIS REGARD USEFUL REFERENCE CAN BE DRAWN T O FACTS AND FINDINGS OF THE HONBLE SUPREME COURT IN CASE OF MALABAR INDUSTRIAL CO. LTD (SUPRA). IN THAT CASE THE APPELLANT ENTERED INTO AN AGREEMENT FOR SALE OF THE ESTATE OF RUBBER PLANTATION AND THE AGREEMENT P ROVIDED INTER ALIA FOR PAYMENT OF THE CONSIDERATION IN INSTALMENTS AS SCHE DULED THEREIN. HOWEVER THE PURCHASER COULD NOT ADHERE TO THE SCHE DULE AND ON HIS REQUEST THE PARTIES AGREED TO THE EXTENSION OF TIM E FOR PAYMENT OF THE INSTALMENTS ON CONDITION OF HIS PAYING COMPENSATION /DAMAGES FOR LOSS OF AGRICULTURAL INCOME AND OTHER LIABILITIES IN A SUM OF RS. 3 66 649. ACCORDINGLY THE APPELLANT PASSED A RESOLUTION ALSO TO THAT EFFECT ON 25-9- 1983 AND THE PURCHASER PAID THE SAID AMOUNT. IN THE ANNEXURE TO THE RETURN FILED BY IT FOR THE ASSESSMENT IN QUESTION THE AMOUNT WAS NOTED AS COMPENSATION AND DAMAGES FOR LOSS OF AGRICULTURAL I NCOME. BY ORDER DATED 31-10-1985 THE ITO ACCEPTED THE SAME AND ENDORSED NIL ASSESSMENT FOR THAT YEAR. THE COMMISSIONER HAVING EXAMINED THE REC ORDS OF THE ITA NO. 288/JP/2020 M/S RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD. JAIPUR VS. PR. CIT-2 JAIPUR 15 ASSESSMENT FOUND THAT THE NIL ASSESSMENT ORDER PASS ED BY THE ITO WAS ERRONEOUS AND IT WAS PREJUDICIAL TO THE INTERESTS O F THE REVENUE AND HELD THAT THE SAID AMOUNT WAS UNCONNECTED WITH ANY AGRIC ULTURAL OPERATION ACTIVITY AND WAS LIABLE TO BE TAXED UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. IN THE SAID FACTUAL MATRIX OF THE CASE O N APPEAL BY THE ASSESSEE THE HONBLE SUPREME COURT WAS PLEASED TO HELD AS UN DER: 10. IN THE INSTANT CASE THE COMMISSIONER NOTED TH AT THE ITO PASSED THE ORDER OF NIL ASSESSMENT WITHOUT APPLICAT ION OF MIND. INDEED THE HIGH COURT RECORDED THE FINDING THAT TH E ITO FAILED TO APPLY HIS MIND TO THE CASE IN ALL PERSPECTIVE AND T HE ORDER PASSED BY HIM WAS ERRONEOUS. IT APPEARS THAT THE RESOLUTIO N PASSED BY THE BOARD OF THE APPELLANT-COMPANY WAS NOT PLACED BEFOR E THE ASSESSING OFFICER. THUS THERE WAS NO MATERIAL TO S UPPORT THE CLAIM OF THE APPELLANT THAT THE SAID AMOUNT REPRESENTED C OMPENSATION FOR LOSS OF AGRICULTURAL INCOME. HE ACCEPTED THE ENTRY IN THE STATEMENT OF THE ACCOUNT FILED BY THE APPELLANT IN THE ABSENC E OF ANY SUPPORTING MATERIAL AND WITHOUT MAKING ANY INQUIRY. ON THESE FACTS THE CONCLUSION THAT THE ORDER OF THE ITO WAS ERRONE OUS IS IRRESISTIBLE. WE ARE THEREFORE OF THE OPINION THA T THE HIGH COURT HAS RIGHTLY HELD THAT THE EXERCISE OF THE JURISDICTION BY THE COMMISSIONER UNDER SECTION 263(1) WAS JUSTIFIED. 21. IN THE INSTANT CASE AS WELL THERE IS NO MATERI AL ON RECORD TO DEMONSTRATE THE SOURCE OF FUNDS SO INFUSED BY WAY O F SHARE CAPITAL IN THE ASSESSEE COMPANY. THE ASSESSING OFFICER HAS MERELY RELIED ON THE STATEMENT OF THE ASSESSEE COMPANY THAT THE SHARES H AVE BEEN ALLOTTED TO THE RESPECTIVE SHAREHOLDERS AND IN SUPPORT ONLY TH E NAME OF THE SHAREHOLDERS AND RESPECTIVE AMOUNT INVESTED BY THEM HAVE BEEN ITA NO. 288/JP/2020 M/S RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD. JAIPUR VS. PR. CIT-2 JAIPUR 16 SUBMITTED. WE THEREFORE FIND THAT THE FACTS OF THE PRESENT CASE ARE PARI- MATERIA WITH THAT OF THE MALABAR INDUSTRIAL (SUPRA) AND FOLLOWING THE SAME THE ORDER SO PASSED BY THE AO IS CLEARLY ERRO NEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 22. HAVING SAID THAT WHEN THE MATTER WAS SELECTED FOR THE PRECISE REASON OF EXAMINATION OF SUBSTANTIAL INCREASE IN SH ARE CAPITAL IT IS ORDINARILY EXPECTED THAT THE ASSESSING OFFICER SHAL L EXAMINE THESE TRANSACTIONS THOROUGHLY AND RECORD HIS SATISFACTION RATHER THAN JUST RELYING ON THE STATEMENT AND BASIC INFORMATION SUBMITTED BY THE ASSESSEE COMPANY. IT IS NOT A QUESTION OF KIND AND EXTENT O F ENQUIRY AND HENCE A DIFFERENCE OF APPROACH AND METHODOLOGY OF EXAMINATI ON OF A PARTICULAR TRANSACTION AS DONE BY THE AO OR SUGGESTED BY THE L D PR CIT. NO DOUBT EVERY ASSESSING OFFICER HAS HIS UNIQUE STYLE OF FUN CTIONING AND NO HARD AND FAST RULE CAN BE LAID DOWN AS TO HOW HE SHOULD COND UCT THE ENQUIRY IN DISCHARGE OF HIS STATUTORY FUNCTIONS. HOWEVER WHER E THE FACTUAL SCENARIO OF A CASE PRIMA FACIE INDICATES CLAIM OF SUBSTANTIA L CAPITAL INFUSION DURING THE YEAR WHICH IS ALSO A MATTER AND REASON FOR SELE CTION OF CASE UNDER COMPLETE SCRUTINY AND THUS CRY FOR LOOKING DEEP INT O IT THEN A MERE ACCEPTANCE OF INFORMATION SIMPLICITIER WITHOUT ANY EVIDENCE OF SOURCE OF SUCH CAPITAL INFUSION AND WITHOUT CONDUCTING ANY FU RTHER VERIFICATION AND EXAMINATION CANNOT BE HELD AS CONDUCTING AN ENQUIRY . IN OUR CONSIDERED VIEW IT IS A CLEAR CASE OF NO ENQUIRY AND LACK OF APPLICATION OF MIND ON PART OF THE ASSESSING OFFICER AND THE ORDER THUS PA SSED IS CLEARLY ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 23. NOW COMING TO THE CONTENTION ADVANCED BY THE L D AR THAT THE RECORDS RELATING TO ANY PROCEEDINGS AGAINST THE ASS ESSEE AS WELL AS INQUIRIES U/S 263 OF THE ACT NEEDED TO BE CONSIDERE D AND WITH ALL THE ITA NO. 288/JP/2020 M/S RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD. JAIPUR VS. PR. CIT-2 JAIPUR 17 MATERIAL AVAILABLE ON RECORD THE LD. PR. CIT WAS D UTY BOUND TO REFER TO THE SAME AND THEN COME TO THE CONCLUSION THAT THE ORDER OF THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. IN THIS REGARD THERE IS NO DISPUTE ON THE LEGAL PROPOSITION THAT T HE RECORD REFERRED TO IN SECTION 263 REFERS TO ALL RELEVANT RECORD AVAILABLE AT THE TIME OF EXAMINATION BY THE LD PR CIT. HOWEVER WHERE IT IS A CASE OF NO ENQUIRY AS WE HAVE DISCUSSED ABOVE AND FRESH MATERIAL AND E VIDENCE HAS BEEN BROUGHT ON RECORD SUBSEQUENT TO CLOSE OF THE ASSESS MENT PROCEEDINGS THE LD PR CIT IS WELL WITHIN HIS JURISDICTION TO REMAND THE MATTER BACK TO THE FILE OF THE AO TO EXAMINE ALL SUCH MATERIAL AND EVI DENCE AND DECIDE THE MATTER A FRESH. WHERE THE MATTER HAS NOT BEEN EXAM INED BY THE AO AT FIRST PLACE THE LAW DOESNT CONTEMPLATE THAT THE L D PR CIT SHOULD STEP IN THE SHOES OF THE AO AND EXAMINE ALL SUCH MATERIAL A ND EVIDENCE FOR THE FIRST TIME. HAD IT BEEN A CASE OF AN ENQUIRY ALREA DY BEEN CONDUCTED BY THE AO IN SUCH A SCENARIO WHERE THE LD PR CIT HOL DS A DIFFERENT POINT OF VIEW IN SUCH A SCENARIO HE HAS TO RECORD AS TO WH Y THE ENQUIRY SO CONDUCTED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THEREFORE THE CONTENTION SO ADVANCED BY THE LD AR CANNOT BE ACCEPTED. 24. NOW COMING TO SECOND MATTER RAISED BY THE LD P R CIT THAT THE AO DID NOT MAKE ANY INQUIRIES TO ASCERTAIN WHETHER THE BUSINESS OF THE ASSESSEE COMPANY WAS SET UP OR NOT AND CONSEQUENT C LAIM OF BUSINESS LOSS AMOUNTING TO RS. 56 52 325/- RENDERING THE ORD ER SO PASSED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. IN THIS REGARD LIMITED CONTENTION WHICH HAS BEEN RAISED BY THE LD AR RELATES TO THE FACT THAT THE CASE LAW RELIED UPON BY THE LD PR CIT IS D ISTINGUISHABLE ON FACTS. THE LD PR CIT HAS ALREADY HELD THAT ISSUE OF SETTIN G UP OF BUSINESS IS TO BE LARGELY DECIDED BY THE FACTS OF EACH CASE AND THE A O HAS BEEN DIRECTED TO ITA NO. 288/JP/2020 M/S RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD. JAIPUR VS. PR. CIT-2 JAIPUR 18 VERIFY THE NECESSARY DETAILS IN CASE OF THE ASSESSE E AND THE DECIDE THE SAME A FRESH. THEREFORE IT IS NOT A CASE THAT THE SAID DECISION HAS BEEN HELD AS BINDING ON THE AO RATHER THE AO HAS BEEN DI RECTED TO APPLY THE LEGAL PROPOSITION SO EMERGING THEREFROM AND APPLY T HE SAME TO THE FACTS OF THE PRESENT CASE. THE AO WAS ALSO DIRECTED TO P ROVIDE AN OPPORTUNITY TO THE ASSESSEE AND THE SAID OPPORTUNITY MAY NOW BE READ AND UNDERSTOOD TO ALSO ALLOW THE ASSESSEE TO BRING THE DISTINGUISHING FEATURES AS SO CONTENDED BY THE AR. 25. REGARDING THE ISSUE OF INCREASE IN TANGIBLE AS SETS WHERE THE AO FAILED TO VERIFY PURCHASE OF FIXED ASSETS AMOUNTING TO RS. 6 3.25 CR MADE DURING THE YEAR THE LD PR CIT HAS RECORDED A FINDI NG THAT NO DETAILS WERE AVAILABLE ON RECORD AND SUCH DETAILS HAVE BEEN SUBM ITTED DURING THE REVISIONARY PROCEEDINGS VIDE LETTER DATED 9.03.2020 AND THE AO HAS BEEN DIRECTED TO VERIFY THE SAME. NO CONTENTION HAS BEE N ADVANCED BY THE LD AR IN THIS REGARD HENCE NO INTERFERENCE IS CALLED FOR. 26. REGARDING OUTWARD FOREIGN REMITTANCE TOWARDS P URCHASE OF MACHINERY WHICH HAS NOT BEEN EXAMINED BY THE AO DUR ING THE ASSESSMENT PROCEEDINGS THE LD PR CIT HAS RECORDED A FINDING T HAT THE ASSESSEE HAS SUBMITTED FORM 15CA VIDE REPLY DATED 9.03.2020 AND THE AO HAS BEEN DIRECTED TO VERIFY THE SAME. NO CONTENTION HAS BEE N ADVANCED BY THE LD AR IN THIS REGARD HENCE NO INTERFERENCE IS CALLED FOR. 27. IN LIGHT OF AFORESAID DISCUSSIONS AND IN THE EN TIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE WE ACCORDINGLY UPHELD TH E ORDER PASSED BY THE LD PR CIT U/S 263 OF THE ACT SETTING ASIDE THE ASSE SSMENT ORDER PASSED BY THE ASSESSING OFFICER FOR THE LIMITED PURPOSES OF E XAMINING THE AFORESAID ITA NO. 288/JP/2020 M/S RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD. JAIPUR VS. PR. CIT-2 JAIPUR 19 ISSUES AFRESH AFTER MAKING NECESSARY EXAMINATION AN D VERIFICATION AND PROVIDING NECESSARY OPPORTUNITY TO THE ASSESSEE. 28. BEFORE PARTING WE MAY ADD THAT WE HAVE ALSO GO NE THROUGH OTHER LEGAL AUTHORITIES ON THE SUBJECT AS BROUGHT TO OUR NOTICE BY THE LD AR WHICH HAVE BEEN RENDERED IN THE CONTEXT OF SPECIFIC FACTS AND CIRCUMSTANCES OF THE INDIVIDUAL CASES HOWEVER THE SAME DOESNT SUPPORT THE CASE OF THE ASSESSEE COMPANY. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/03/2021. SD/- SD/- LANHI XKSLKBZ FOE FLAG ;KNO ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 02/03/2021 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S RAJENDRA AND URSULA JOSHI SKILL DEVELOPMENT P. LTD. JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- PR. CIT-2 JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR ITAT JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 288/JP/2020} VKNS'KKUQLKJ@ BY ORDER LGK;D IATHDKJ@ ASST. REGISTRAR