M/s. Goel Industries, Karnataka v. CIT, Kol - XV, Kolkata, Kolkata

ITA 732/KOL/2011 | 2008-2009
Pronouncement Date: 25-11-2011 | Result: Allowed

Appeal Details

RSA Number 73223514 RSA 2011
Assessee PAN AABCG0026G
Bench Kolkata
Appeal Number ITA 732/KOL/2011
Duration Of Justice 6 month(s) 13 day(s)
Appellant M/s. Goel Industries, Karnataka
Respondent CIT, Kol - XV, Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 25-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 25-11-2011
Assessment Year 2008-2009
Appeal Filed On 12-05-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE /AND ! . '# . ) [BEFORE SRI MAHAVIR SINGH JM & SHRI C. D. RAO AM] $ $ $ $ / I.T.A NO. 732/KOL/2011 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR : 2008-09 M/S. GOEL INDUSTRIES VS. COMMISSIONER OF INCOM E-TAX-XV KOLKATA (PAN:AABCG 0026 G) (*+ /APPELLANT ) ( -*+/ RESPONDENT ) DATE OF HEARING: 20.10.2011 DATE OF PRONOUNCEMENT: 25.11.2011 FOR THE APPELLANT: SHRI S. K. TULSIYAN FOR THE RESPONDENT: SHRI D. R. SINDHAL . / ORDER PER MAHAVIR SINGH JM ( ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF REVISION ORDER OF CIT-XV KOLKATA PASSED U/S. 263 OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERR ED TO AS THE ACT) IN M. NO. CIT-XV / KOL /263/AABCG0026G/2011-12/43-45 DATED 07.04.2011. AS SESSMENT WAS FRAMED BY ITO WARD- 43(4) KOLKATA U/S. 143(3) OF THE ACT FOR ASSESSMEN T YEAR 2008-09 VIDE HIS ORDER DATED 31.12.2010. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE REVISION ORDER OF CIT KOL-XV U/S. 263 OF THE ACT HOLDING THE ASSESSMENT AS ERRON EOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. FOR THIS ASSESSEE HAS RAISED FOLLOWING T HREE EFFECTIVE GROUNDS: 1) THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME T AX KOLKATA-XV UNDER SECTION 263 OF THE INCOME TAX ACT 1961 DATED 07.04.2011 HO LDING THE ASSESSMENT AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ALLEGEDL Y FOR THE A.OS FAILURE TO MAKE PROPER INVESTIGATION AND ENQUIRY IS WITHOUT ANY BASIS ARB ITRARY AND HENCE BAD IN LAW. 2.A) THAT THE LD. CIT WITHOUT ANY BASIS ALLEGED THA T THE IMPOUNDED BOOKS OF ACCOUNTS AND DOCUMENTS WERE NOT EXAMINED BY THE A.O WHEN THE SAME WERE DULY EXAMINED AT THE TIME OF ASSESSMENT PROCEEDING. 2.B) THAT THE LD. CIT FURTHER ERRED IN STATING THAT THE TRADE ADVANCES RECEIVED WERE NOT EXAMINED WHEN THE SAME WERE SPECIFICALLY EXAMINED B Y THE A.O. IN HIS NOTICE UNDER SECTION 142(1) AND REPLY SUBMITTED THERETO. 2.C) THAT THE LD. CIT WRONGLY ATTRIBUTED TRANSACTIO N OF IMMOVABLE PROPERTY WHEN THE APPELLANT FIRM DID NOT DEAL WITH IMMOVABLE PROPERTY DURING THE YEAR. 2.D) THAT THE LD. CIT FURTHER ERRED IN STATING THAT CASH INVENTORISED DURING SURVEY WAS NOT EXAMINED WHEN THE A.O. IN FACT EXAMINED THE SAM E IN DETAIL. 2 ITA 732/K/2011 M/S. GOEL INDUSTRIES A.Y. 08-09 3. THAT THE ORDER U/S. 263 SO PASSED BY THE LD. CIT -XV HOLDING THE ASSESSMENT AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E IS NON-SUSTAINABLE AS FINDING IN THE SAID ORDER HAS RECORDED ON SURMISES AND CONJECTURES . 3. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT ASSESSEE IS ENGAGED IN THE BUSINESS OF IRON AND STEEL GOODS. THE ASSESSEE FILED ITS RETUR N OF INCOME ON 30.9.2008. ASSESSEES CASE WAS SCRUTINIZED BY ISSUING NOTICE U/S. 143(2) R.W.S . 142(1) OF THE ACT AS THIS BEING A CASE COVERED UNDER SURVEY CARRIED OUT U/S. 133A OF THE A CT AND SURVEY WAS CARRIED OUT ON 07.02.2008. DURING THE COURSE OF ASSESSMENT PROCEE DINGS THE ASSESSING OFFICER NOTED THAT DURING THE COURSE OF SURVEY CASH AMOUNTING TO RS.9. 95 LACS WAS FOUND AND INVENTORISED BOOKS OF ACCOUNT WERE FOUND AND ALSO THE BOOKS OF ACCOUNT OF OTHER FIRMS/CONCERNS WERE FOUND FROM THE SAME ADDRESS. THE ASSESSING OFFICER NOTED THAT DURING THE COURSE OF SURVEY NO RECONCILIATION OF CASH WAS MADE BUT STATEMENT OF SH RI JAGDISH PRASAD GOEL WAS RECORDED. BEFORE ASSESSING OFFICER ASSESSEE SUBMITTED CASH R ECONCILIATION STATEMENT GIVING DETAILS OF CONCERNED PERSONS TO WHOM CASH BELONGED. ACCORDING LY ASSESSING OFFICER FRAMED ASSESSMENT BY MAKING ADDITION ON ACCOUNT OF CLOSING STOCK ON ACCOUNT OF GROSS PROFIT BY INCREASING G.P. AT 5% AS AGAINST DECLARED GP AT 3.28% AND FRAMED AS SESSMENT U/S. 143(3) OF THE ACT VIDE ORDER DATED 31.12.2010. SUBSEQUENTLY CIT-XV KOLKATA IS SUED SHOW CAUSE NOTICE VIDE NO. CIT.KOL- XV/KOL/U/S.263/2010-11/6607 DATED 03.02.2011 STATIN G THAT ASSESSING OFFICER ACCEPTED THE CLAIM OF ASSESSEE WITHOUT ANY SUPPORTING MATERIAL A ND WITHOUT MAKING ENQUIRY. THE ASSESSEE REPLIED TO THE ABOVE SHOW CAUSE NOTICE VIDE LETTER DATED 14.02.2011 AND ALSO 28.02.2011 BUT FINALLY CIT HELD THE ASSESSMENT ORDER AS ERRONEOUS SO AS TO PREJUDICIAL TO THE INTEREST OF REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT AS THE ASSESSING OFFICER HAD NOT MADE PROPER ENQUIRIES AND INVESTIGATIONS ON THE FOLLOWING POINT S: (A) THIS IS A SURVEY CASE AND DURING SURVEY U/S. 133A OF THE I. T. ACT 1961 CONDUCTED ON 07/02/08 BOOKS OF ACCOUNT MARKED GL-1 TO GL041 W ERE IMPOUNDED AND RETAINED AS ON THE DATE OF ORDER PASSED BY THE AO. THE AO HAS FAIL ED TO EXAMINE THE IMPOUNDED BOOKS AND EVEN UTTERLY FAILED TO RAISE ANY QUESTION/ QUER Y IN THE NOTICE U/S 142(1) OF THE I. T. ACT 1961 REGARDING IMPOUNDED BOOKS. (B) AS EVIDENT FROM THE RECORDS THE ASSESSEE DEALI NG IN TRADE AND CONVERSION OF IRON & STEEL AND HAVING TURNOVER OF RS. 113 LAKH HAS GIVE N AND TAKEN HUGE AMOUNT OF ADVANCE AROUND RS. 718 LAKH AND RS. 172 LAKH RESPECTIVELY. SUCH HUGE AMOUNT OF ADVANCE (GIVEN & TAKEN) DOES NOT COMMENSURATE WITH THE SMALL VOLUME OF BUSINESS OF THE ASSESSEE. THE AO HAS FAILED TO MAKE ANY ENQUIRY WHATSOEVER TO FIND OUT THE BASIC OBJECTIVE LYING BEHIND SUCH HUGE ADVANCE. NO EFFORT HAS ALSO BEEN MADE BY THE AO TO FIND OUT ANY PROBABLE INCOME OF THE ASSESSEE OUT OF SUCH ACTIVITIES TOWAR DS GIVING & TAKING OF ADVANCE. (C) THE RECORDS SHOWS THAT THE VARIOUS GROUP CONCER NS OF THE ASSESSEE HAVE ENTERED INTO AS MANY AS 25 (TWENTY FIVE) IMMOVABLE PROPERTY TRANSAC TIONS. THE AO DID NOT MAKE ANY ENQUIRY TO FIND IT WHETHER SUCH PROPERTY DEALING HA S ANY BEARING ON THE INCOME OF THE ASSESSEE. THE AO WAS SUPPOSED TO MAKE PROPER ENQUIR Y IN THIS REGARD AND TO PASS ON NECESSARY INFORMATION TO THE VARIOUS AOS OF THE GRO UP CONCERNS OF THE ASSESSEE AFTER SPECIFICALLY IDENTIFYING EACH PROPERTY TRANSACTIONS . 3 ITA 732/K/2011 M/S. GOEL INDUSTRIES A.Y. 08-09 (D) COMING TO THE CASH FOR RS. 9 95 000/- AS FOUND DURING SURVEY THE AO APPARENTLY FAILED TO LOOK INTO THE ISSUE ABOUT HOW MUCH CASH RELATES TO GROUP CONCERNS OF THE ASSESSEE. FURTHER THERE HAS BEEN NO EVIDENCE ON RECORD TO SH OW THAT THE AO HAS TAKEN ANY STEP AS REGARDS TO GENUINENESS AND CORRECTNESS OF HUGE PURC HASES (RS. 37.81 LAKHS) AND SALE (RS. 112.85 LAKHS). THE CIT ALSO NOTED THAT THE ASSESSING OFFICER SENT A PROPOSAL U/S. 263 OF THE ACT VIDE LETTER DATED 31.01.2011 WHICH WAS DULY RECOMMENDED BY JCI T RANGE-43 KOLKATA AND IN VIEW OF ASSESSING OFFICERS PROPOSAL A SHOW CAUSE NOTICE U/ S. 263 OF THE ACT WAS ISSUED VIDE DATED 03.02.2011. ACCORDINGLY CIT SET ASIDE THE ASSESSM ENT FRAMED BY ASSESSING OFFICER U/S. 143(3) OF THE ACT DATED 31.12.2010 WITH A DIRECTION TO ASSESSING OFFICER TO FRAME FRESH ASSESSMENT AFTER PROPER ENQUIRY AND INVESTIGATION A ND AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AGGRIEVED NOW ASSESS EE IS IN APPEAL BEFORE US. 4. BEFORE US LD. COUNSEL FOR THE ASSESSEE SHRI S. K. TULSIYAN STATED THAT THE CIT HAS TRIED TO JUSTIFY HIS ACTION FOR REVISION U/S. 263 OF THE ACT MAINLY ON ACCOUNT OF ALLEGED FAILURE ON THE PART OF THE ASSESSING OFFICER TO MAKE ENQUIRY INTO THE FOLLOWING AREAS: (I) ALLEGED FAILURE TO EXAMINE IMPOUNDED BOOKS OF ACCOUNT MARKED GL-1 TO GL-41 AND TO RAISE ANY QUESTION IN THIS REGARD IN THE NOT ICE U/S. 142(1) OF THE ACT. (II) ALLEGED FAILURE TO LOOK INTO THE RECEIPTS AND PAYMENTS OF HUGE ADVANCES BY THE APPELLANT COMPANY. (III) ALLEGED FAILURE TO MAKE ENQUIRY INTO IMMOVABL E PROPERTY TRANSACTIONS OF GROUP CONCERNS AND THEIR IMPACT ON THE INCOME OF THE APPE LLANT. (IV) ALLEGED FAILURE TO DETERMINE HOW MUCH OF THE C ASH OF RS.9 95 000/- FOUND DURING THE COURSE OF SURVEY BELONGS TO THE APPELLANT AND HOW M UCH RELATES TO THE GROUP CONCERNS. (V) ALLEGED FAILURE TO TAKE ANY STEP TOWARDS DETER MINATION OF THE GENUINENESS OF PURCHASES OF RS.37.81 LAKHS AND SALES OF RS.112.85 LAKHS. LD. COUNSEL FOR THE ASSESSEE FURTHER STATED THAT AS SESSING OFFICER HAS EXAMINED AND ANALYSED THE DETAILS DURING THE COURSE OF SCRUTINY ASSESSMEN T REQUIRING THE ASSESSEE TO PRODUCE THE FOLLOWING DETAILS: (1) TO SUBMIT SOURCE OF CAPITAL INTRODUCED BY PAR TNER SRI J. P. GOEL OF RS.34 40 000/- ALONG WITH THE DOCUMENTARY EVIDENCES AND WRITTEN EX PLANATION. (II) TO SUBMIT REASONS OF ADVANCE RECEIVED AGAINST SALES WITH DETAILS OF ADVANCES RECEIVED. (III) TO SUBMIT ADVANCES GIVEN AGAINST PURCHASES AN D ALSO TO FILE THE REASONS FOR NO PURCHASES BEING MADE FROM THE SAID PARTIES ALONG WI TH COPY OF THEIR ACCOUNT. (IV) TO SUBMIT THE COPY OF CONFIRMATION FOR FRESH ADVANCES TAKEN FROM 2 PARTIES DURING THE YEAR. (V) TO SUBMIT THE REASONS FOR NO SALES BEING MADE TO THE PARTIES FROM WHOM ADVANCES WERE TAKEN. 4 ITA 732/K/2011 M/S. GOEL INDUSTRIES A.Y. 08-09 (VI) TO PRODUCE STOCK STATEMENT AND STOCK REGISTER SHOWING QUANTITY RATE AND AMOUNT. (VII) TO SUBMIT ALL BANK STATEMENT WITH BRS IF AN Y. (VIII) TO SUBMIT THE CASH RECONCILIATION STATEMENT ALONG WITH THE DOCUMENTARY EVIDENCE OR THE CASH OF RS. 10 68 170/- INVENTORISED DURING THE COURSE OF SURVEY ALONG WITH NAME ADDRESS AND PAN NO. OF THE CONCERN TO WHOM IT BELON GS. (IX) TO SUBMIT DETAILS OF SALES WITH COMPLETE NAME AND ADDRESS. (X) TO SUBMIT DETAILS OF ADVANCES FROM CUSTOMERS/ PARTIES AGAINST GOODS GIVEN AND TAKEN. (XI) TO SUBMIT LIST OF PURCHASES WITH COMPLETE NAM E AND ADDRESS OF THE PARTIES. (XII) TO SUBMIT LIST OF SUNDRY DEBTORS AND CREDITO RS WITH COMPLETE NAME AND ADDRESSES THEREOF. (XIII) TO SUBMIT DETAILS OF UNSECURED LOAN ALONG W ITH DETAIL OF FRESH LOAN IF ANY WITH CONFIRMATION. (XIV) EXPLANATION REGARDING BOOKS OF ACCOUNTS STO CK DEEDS OF PROPERTIES AND CASH INVENTORISED DURING COURSE OF SURVEY U/S 133A OF I. T. ACT 1961 ALONG WITH CASH BOOK OF THE ASSESSEE. (XV) DETAIL OF CONVERSION CHARGES PAID TO GOLDEN S TEEL CORPORATION REGARDING CONVERSION OF BILLETS INTO H.R. STRIPS 47.560 M.T. (XVI) EXPLANATION REGARDING STOCK OF 144.510 M.T. (96.950 M.T. + 47.560 M.T.) AND THE QUANTITATIVE DETAILS OF OPENING AND CLOSING STO CK ALONG WITH STOCK REGISTER. (XVII) TO SUBMIT COMPARATIVE G.P. AND N.P. CHART. (XVIII) TO SUBMIT REASONS FOR LOW SALES MADE DURIN G THE YEAR. (XIX) TO PRODUCE BOOKS OF ACCOUNT BANK ACCOUNT S TOCK REGISTER BILLS VOUCHERS ETC. 5. HE FURTHER DREW OUR ATTENTION TO DETAILS FILED A ND STATED THAT FOLLOWING DETAILS WERE FILED BEFORE ASSESSING OFFICER: SL. NO. DATE OF HEARING PARTICULARS OF DETAILS FILED BEFORE THE A.O. 1. 16.08.2010 THE AIR FILED THE FOLLOWING: (I) AUDITED STATEMENT OF ACCOUNTS (II) TAX AUDIT REPORT U/S 44AB (III) COMPUTATION OF TOTAL INCOME (IV) HARD COPY OF I.T. ACKNOWLEDGMENT. 2. 20.09.2010 THE AIR FILED THE FOLLOWING: (I) DETAILS OF PURCHASES AND SALES ALONG WITH BOOKS OF ACCOUNT. (II) CASH RECONCILIATION STATEMENT WITH CERTIFICATE S OF PARTIES REGARDING CASH FOUND AND INVENTORISED IN COURSE OF SURVEY ON 07.02.2008. 3. 13.12.2010 THE AIR FILED THE FOLLOWING DETAILS: 5 ITA 732/K/2011 M/S. GOEL INDUSTRIES A.Y. 08-09 (I) BOOKS OF ACCOUNT LEDGERS AND JOURNALS. (II) BILLS AND VOUCHERS ALONG WITH PURCHASE MEMOS AND BANK STATEMENTS. (III) THE DETAILS OF OPENING AND CLOSING STOCK. (IV) LEDGER COPIES SALES AND PURCHASE PARTIES DEBT OR DETAILS. (V) G.P. AND N.P. CHART (VI) REASONS FOR FALL IH G.P. EXPLANATION FOR TRAD ING RESULTS. 4. 20.12.2010 THE AIR FILED THE FOLLOWING: (I) DETAILS OF PROFIT & LOSS ACCOUNT (II) LOAN CONFIRMATIONS OF SUNDRY DEBTORS AND SUNDR Y CREDITORS ADVANCE FROM PARTIES AND ADVANCE TO CUSTOMERS. 5. 28.12.2010 THE AIR FILED THE FOLLOWING: (I) COPIES OF BANK STATEMENTS. (II) BILLS AND VOUCHERS (III) CONFIRMATIONS (IV) LEDGER COPIES OF ACCOUNTS (V) DETAILS OF CONVERSION CHARGES. (VI) DETAILS OF CLOSING STOCK WITH QUANTITY AND VALUATION. (VII) SOURCE OF CAPITAL INTRODUCED BY PARTNER SRI J .P. GOEL OF RS. 34 40 000/- (VIII)DETAILS OF ADVANCES RECEIVED AGAINST SALES WI TH REASONS FOR ADVANCE RECEIVED BUT NO SALES MADE TO SUCH PARTIES. (IX) DETAILS OF ADVANCES GIVEN AGAINST PURCHASES AN D REASONS FOR NO PURCHASES BEING MADE FROM SUCH PARTIES. 6. 30.12.2010 THE AIR FILED THE FOLLOWING: (I) DETAILED WRITTEN SUBMISSION WITH ALL NECESSARY DOCUMENTS MENTIONED IN THE SAID SUBMISSION. (II) DETAILS OF CONVERSION OF BILLETS INTO H.R. STR IPS 47.560 M.T. (III) EXPLANATION FOR LOWER SALES (IV) STOCK STATEMENT AND STOCK REGISTER SHOWING QUANTITY RATE AND AMOUNT (V) COPY OF CONFIRMATION FOR FRESH ADVANCES TAKEN FROM 2 PARTIES. (VI) DETAILS OF CONVERSION CHARGES PAID TO GOLDEN STEEL CORPORATION FOR CONVERSION OF BILLETS INTO H. R. STRIPS 47 560 MT REGARDING STOCK OF 144.510 MT (96.950 M.T. + 47 560 MT). (VII) QUANTITATIVE DETAILS OF OPENING AND CLOSING STOCK ALONG WITH STOCK REGISTER. LD. COUNSEL FOR THE ASSESSEE ALSO FILED THESE DETAI LS IN HIS PAPER BOOK CONSISTING OF PAGES 1 TO 108 WHICH WERE ALREADY FILED BEFORE ASSESSING OFFI CER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HE ALSO ARGUED THAT AFORESAID DETAILS WERE EXAMINED BY ASSESSING OFFICER AND FRAMED ASSESSMENT U/S. 143(3) OF THE ACT WHILE MAKI NG ADDITION ON ACCOUNT OF UNDER-VALUATION 6 ITA 732/K/2011 M/S. GOEL INDUSTRIES A.Y. 08-09 OF STOCK AND ESTIMATING GROSS PROFIT WHICH WAS ALS O CHALLENGED BY ASSESSEE IN APPEAL BEFORE CIT(A). ACCORDING TO LD. COUNSEL THE ALLEGED ORDE R LACKING ENQUIRY AS POINTED OUT BY CIT IN HIS REVISION ORDER ARE ON ACCOUNT OF (I) IMPOUND ED BOOKS OF ACCOUNT (II) ADVANCES GIVEN AND TAKEN (III) TRANSACTIONS IN IMMOVABLE PROPERTY (I V) CASH IMPOUNDED IN COURSE OF SURVEY (V) GENUINENESS OF PURCHASES AND SALES WERE THUS DULY CONSIDERED IN DETAILS BY THE A.O. HE ALSO STATED THAT THE ASSESSING OFFICER AFTER BEING FULLY SATISFIED WITH THE EVIDENCE AND EXPLANATION FILED BY ASSESSEE FRAMED ASSESSMENT U/S. 143(3) OF THE ACT WITHOUT MAKING ANY ADDITION ON THE ABOVE REPLIES. ACCORDING TO ASSESSEES COUNSEL SI NCE ALL THE AFORESAID ISSUES WERE EXPLAINED BY ASSESSEE TO THE SATISFACTION OF ASSESSING OFFICER A ND NOTHING INCRIMINATING WAS FOUND IN RESPECT THERETO DURING THE COURSE OF SURVEY OR DURING THE C OURSE OF SCRUTINY ASSESSMENT ASSESSING OFFICER DID NOT FEEL TO DISCUSS THE AFORESAID ASPEC TS IN HIS ASSESSMENT ORDER. LD. COUNSEL FOR THE ASSESSEE CITED VARIOUS CASE LAWS WHICH WE WILL DIS CUSS IN THE LATTER PART OF THIS ORDER. 6. ON THE OTHER HAND LD. CIT DR SHRI D. R. SINDHAL HEAVILY RELIED ON THE ORDER OF CIT REVISING THE ASSESSMENT AND HE SUPPORTED THE SAME. 7. WE HAVE HEARING RIVAL SUBMISSIONS AND GONE THROU GH FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE GONE THROUGH THE ORDER SHEET ENTRIES FILED IN ASSESSEES PAPER BOOK AT PAGES 26 TO 32 WHICH CLEARLY REVEALED THAT THE SURVEY WAS CO NDUCTED U/S. 133A ON 08.02.2008 AT THE BUSINESS PREMISES OF ASSESSEE M/S. GOEL INDUSTRIES AT 4 INDIA EXCHANGE PLACE. DURING THE COURSE OF SURVEY STATEMENT OF SHRI JAGDISH PRASAD GOEL PARTNER WAS RECORDED AND PLACED ON RECORD. DURING THE COURSE OF SURVEY INVENTORY OF B ANK ACCOUNT CASH ACCOUNT BOOKS OF ACCOUNT OF M/S. GOEL INDUSTRIES M/S. J. P. UDYOG M/S. QU ALITY STEEL PROCESSORS AND 25 PROPERTY DEEDS ARE FOUND AND RECORDED AND PLACED ON RECORD. THE SURVEY PROCEEDINGS WERE CONTINUED IN THE OFFICE OF ASSESSING OFFICER FROM 07.02.2008 TIL L 09.02.2008. THE ASSESSEE FILED RETURN OF INCOME ON 30.9.2008 AND ASSESSING OFFICER ISSUED NO TICE FOR SCRUTINY OF ASSESSEES CASE U/S. 143(2) OF THE ACT ON 09.09.2009. SUBSEQUENTLY ON 1 9.2.2010 THE ASSESSEE WAS ALSO ISSUED NOTICE U/S. 142(1) OF THE ACT FIXING THE CASE FOR H EARING ON 4.3.2010 AND THEN ON 16.8.2003 WHEREIN SHRI ASHISH KR. SHARMA APPEARED WITH WHOM CASE WAS DISCUSSED AND ASKED TO FILE DETAILS AS ASKED FOR IN NOTICE U/S. 142(1) OF THE A CT. ON 20.09.2010 AGAIN SHRI AMIT KR. SHARMA APPEARED AND FILED SAME DETAILS AND CASE WAS DISCUSSED WITH HIM. FINALLY THE ASSESSING OFFICER ON 13.12.2010 REQUIRING THE ASSES SEE TO FILE FOLLOWING DETAILS: 4. TO PRODUCE ALL BANK STATEMENTS GIVING EXPLANAT ION OF TRANSACTION OVER 1 LAC. 5. TO PRODUCE ALL BANK A/CS HELD IN THE NAME OF P ARTNERS. 6. TO PRODUCE ALL DEEDS OF PROPERTY HELD IN THE N AME OF THE FIRM. 7. PLEASE CLARIFY THE ADVANCE AGAINST GOODS SHOWN RS.7 17 53 358 THOUGH YOU HAVE DISCLOSED TOTAL PURCHASE DURING THE YEAR RS.36 35 625/-. 7 ITA 732/K/2011 M/S. GOEL INDUSTRIES A.Y. 08-09 8. YOUR SALES DURING THE YR. SHOWN RS.1 2 84 705/ - BUT S/DRS. SHOWN RS.1 12 90 958/- I.E. MORE THAN SALES PLEASE CL ARIFY. 9. YOU HAVE SHOWN PURCHASE OF RS.36 35 625/- BUT S /CRS. SHOWN FOR GOODS RS.1 96 36 069/- I.E. MORE THAN PER SHARE PLEAS E CLARIFY. 10. PLEASE EXPLAIN THE DETAILS OF INTRODUCTION OF C APITAL BY PARTNERS WITH DOCUMENTS AND PRODUCE DETAILS OF PARTNERS AS PER PROFORMA HANDED OVER TO YOU. ADJ. TO 16.12.10 AT 11.30 AM. 11. PLEASE CLARIFY THE CASH INVENTORISED ON THE DA Y OF SURVEY FROM YOUR PREMISES (BUSINESS) RS.9 95 000/-. 20.12.10 MR. AMIT KR. SHARMA A/R APPEARS PRODUCES LEDGER COPIES OF SOME TRANSACTIONS DETAILS OF PARTNERS AND THE CASE IS DISCUSSED. THE A/R IS ASKED TO PRODUCE EXPLANATIONS OF REQUISITIONS MADE ON 13.1 2.10 AND TO PRODUCE PROCESS OF A/CS POSITIVELY ON 23.12.10 AT 11.30 AM. 13.12.10 IN RESPONSE TO NOTICE U/S. 131 OF THE I. T . ACT MR. AMIT KR. SHARMA A/R APPEARS AND THE CASE IS DISCUSSED. THE FOLLOWING QUESTION IS PUTTING BEFORE HIM: (I) MR. SHARMA WHY DID YOU NOT COMPLY WITH THE N OTICE U/S. 142(1) UPTO THE DATE EVEN AFTER SEVERAL REQUISITIONS? ANS THE A/R HAS NO ANSWER. (II) EVEN AFTER SO MANY LETTERS/NOTICES WHY DID YOU NOT FILE THE DETAILS OF PURCHASES SALES S/DRS. S/CRS. WITH SPECIFIC A DDRESS? ANS. LIST GIVEN BUT WITHOUT ADDRESS. (III) YOU WERE REPEATEDLY ASKD TO PRODUCE DETAILS IN SUPPORT OF YOUR RETURN FILED. WHY DID YOU NOT PRODUCE? ANS. NOW I AM READY TO PRODUCE DETAILS. 13.12.10 THE A/R IS ASKED TO PRODUCE/FILE THE FOLLO WING: (I) SALES PURCHASES S/DRS. S/CRS. ADVANCE F ROM SUNDRY CUSTOMERS S/DRS. (OTHERS) ADVANCE (DR.) AGAINST GOODS S/CRS. (FO R EXPENSES) ADVANCE (OTHERS ADVANCES) WITH SPECIFIC NAMES ADDRESS AND AMOUNT . (2) TO PRODUCE ALL LOAN CONFIRMATION IN DETAILS I.E. COPY OF I. T. ACKNOWLEDGMENTS B/S . BANK STATEMENT OF THE LOAN CRS. (3) TO PRODUCE BOOKS OF A/CS. WITH SUPPORTING EVI DENCES 8. TO THIS THE ASSESSEE APPEARED ON 20.12.2010 THR OUGH HIS AR OF THE ASSESSEE SHRI AMIT KR. SHARMA AND PRODUCED LEDGER COPY OF SOME TRANSAC TIONS DETAILS OF PARTNERS AND CASE WAS DISCUSSED AND ASKED TO PRODUCE EXPLANATIONS OF ALL TRANSACTIONS. FURTHER THE ASSESSEE WAS REQUIRED TO FILE DETAILS ON 28.12.2010 AS UNDER AND CASE WAS ADJOURNED TO 29.12.2010: 28.12.2010 MR. G. L. SINGHAL APPEARS AND THE CASE IS DISCUSSED. THE A/R IS ASKED TO PRODUCE DETAILS AS REQUISITIONED ON 13.12.2010 & 20 .12.2010. HE IS ALSO ASKED TO PRODUCE THE DETAILS. (I) SOURCES OF CAPITAL INTRODUCED BY PARTNERS WITH EXPLANATION. (II) SOURCES AND REASONS OF ADVANCE RECEIVED AGAINS T SALES. 8 ITA 732/K/2011 M/S. GOEL INDUSTRIES A.Y. 08-09 (III) WHERE ADVANCES HAVE MADE AGAINST PURCHASE BUT NO PURCHASE WAS MADE EXPLAIN WITH SOURCES OF ADVANCES MADE. (IV) DESPITE SUBSTANTIAL AMOUNT OF CREDIT BALANCE A PPEARING AGAINST 3 CUSTOMERS TWO OF THEM MADE FURTHER ADVANCES THOUGH NO SALES WER E MADE TO THEM. (V) PRODUCE STOCK STATEMENT IN DETAILS I.E. QUANTIT ATIVE AND QUALITATIVE. (VI) TO PRODUCE BOOKS OF A/CS WITH SUPPORTING EVIDE NCE. ADJ. TO 29.12.10 AT 10.30 AM. THE ASSESSEE FILED DETAILS CALLED FOR ON 30.12.2010 WHICH ARE NOW FILED BEFORE US IN THE ASSESSEES PAPER BOOK. FROM THE ABOVE IT IS SEEN T HAT THE ASSESSING OFFICER HAS EFFECTIVELY STARTED THE ASSESSMENT PROCEEDINGS ONLY FROM 30.12. 10 AND ALSO REQUIRED EFFECTIVE DETAILS ON 28.12.10 WELL AWARE OF THE CONSEQUENCES OF THE CAS E THAT BEING SURVEY CASE AND ENTIRE MATERIAL IS REQUIRED TO BE VERIFIED. THE ASSESSEE FILED COMP LETE DETAILS BEFORE AO BEFORE CONCLUSION OF ASSESSMENT PROCEEDINGS AND HE HAS GONE INTO THESE D ETAILS AS IS EVIDENT FROM THE ASSESSMENT ORDER AND ASSESSING OFFICER AFTER GOING THROUGH THE DETAILS FILED BY ASSESSEE BEFORE CONCLUSION OF ASSESSMENT I.E. ON 30.12.2010 FRAMED ASSESSMENT U/S. 143(3) OF THE ACT WHEREBY HE MADE ADDITION ON ACCOUNT OF UNDER VALUATION OF CLOSING S TOCK AS WELL AS ESTIMATION OF G.P. THESE ADDITIONS ARE SUBJECT MATTER OF CHALLENGE BEFORE CI T(A) IN SEPARATE PROCEEDINGS. THE FIRST AND FOREMOST ARGUMENT OF LD. COUNSEL FOR THE ASSESSEE B EFORE US WAS THAT IT IS EVIDENT FROM THE REVISION ORDER PASSED BY CIT U/S. 263 OF THE ACT IS THAT THE ASSESSING OFFICER SENT THIS PROPOSAL VIDE HIS LETTER DATED 31.10.2011 U/S. 143(3) OF THE ACT AND HAS RECOMMENDED BY JCIT RANGE- 43 KOLKATA JUST TO EXTEND THE TIME LIMIT OF SCRUTI NY ASSESSMENT SO AS HE CAN GO INTO DETAILS AFRESH EVEN THOUGH HE HAS EXAMINED THESE DETAILS EV EN DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 9. NOW QUESTION ARISES WHETHER IN GIVEN FACTS AND CIRCUMSTANCES THE AO CAN SEND THE PROPOSAL FOR REVISION ORDER U/S. 263 OF THE ACT TO CIT FOR REVISING THE ASSESSMENT FOR GOING INTO THE DETAILS WHICH WERE AVAILABLE BEFORE PASSING OF ASSESSMENT ORDER U/S. 143(3) OF THE ACT AND JUST TO EXTEND THE TIME LIMIT FOR ASSESSMENT. WE FIND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS NO INCRIMINATING EVIDENCE WAS FOUND BY REVENUE AGAINST ASSESSEE EVEN THOUGH THE BOOKS OF ACCOUNT WERE IMPOUNDED WHICH WERE DULY EX PLAINED AND AO FAILED TO POINT OUT ANY IRREGULARITY IN THE SAME. WE FIND FROM THE ASSESSM ENT ORDER THAT THE AO DID NOT REFER TO ANY SUCH BOOKS IN THE SCRUTINY ASSESSMENT AND EVEN CASH FOUND DURING SURVEY AMOUNTING TO RS.9.95 LACS WERE APPROPRIATELY EXPLAINED AND RECONCILIATIO N STATEMENT ALONG WITH LETTERS FROM CONCERNED PARTIES OWNING UP CASH WERE FILED EXPLAIN ING SOURCES BEFORE AO. WE FURTHER FIND THAT THE ASSESSEES ADVANCES AMOUNTING TO RS.718 LA CS AND RS.172 LACS WERE EXPLAINED IN HIS WRITTEN SUBMISSIONS BY SUBMITTING DETAILS OF ADVANC ES ALONG WITH THEIR CONFIRMATIONS. AS REGARDS ADVANCES RECEIVED AGAINST SALES THE ASSESSE E HAS TAKEN ADVANCES FROM SIX PARTIES WHICH WERE ALL OLD PARTIES WHOSE BALANCES WERE BROUGHT FO RWARD AND FROM TWO OLDS PARTIES SOME NEW 9 ITA 732/K/2011 M/S. GOEL INDUSTRIES A.Y. 08-09 ADVANCES WERE ALSO TAKEN. THE LIST WITH ADDRESSES WAS SUBMITTED TO THE AO ALONG WITH CONFIRMATIONS PAN NO. THE ASSESSEE FIRM HAS TAKEN ADVANCE OF RS.36.43 LACS DURING THE YEAR WITH AN OPENING BALANCE OF RS.1.35 CR. TOTALING TO AN ADVANCE OF RS.1.72 CRORES. EVEN THE ASSESSEE FIRM HAS ADVANCES RS.7.10 CR. TO VARIOUS P ARTIES AND FOR WHICH THE COMPLETE LIST AND COMPLETE ADDRESSES ALONG WITH PAN NO. AND CONFIRMAT IONS WERE FILED. EVEN THE ABOVE TRANSACTIONS WERE SUPPORTED BY BANK BOOK OF THE FIR M SUPPORTED BY BANK STATEMENT OF ORIENTAL BANK OF COMMERCE WHICH ESTABLISHES THE ABOVE TRANS ACTION AS GENUINE. EVEN AS MANY AS 25 IMMOVABLE PROPERTY TRANSACTIONS WHICH WERE AVAILAB LE BEFORE THE DEPARTMENT AT THE TIME OF SURVEY AND EVEN BEFORE THE AO AT THE TIME OF ASSESS MENT PERTAINS TO FAMILY MEMBERS AND GROUP CONCERNS AND THOSE HAVE BEEN CONSIDERED AND DECLARE D IN RESPECTIVE HANDS AND IN THE RESPECTIVE PERSONAL ASSESSMENTS OF FAMILY MEMBERS AND GROUP CO NCERNS. THE ASSESSEE HAS FILED COMPLETE DETAILS IN RESPECT OF THESE IMMOVABLE PROPERTIES. AS REGARDS TO PURCHASES SALES LOANS SUNDRY CREDITORS SUNDRY DEBTORS AND ADVANCES THE ASSESSEE FILED COMPLETE DETAILS OF CUSTOMERS WITH NAME OF PARTIES COMPLETE MAILING ADDRESS AND AMOUN T. THE AO EXAMINED THE BOOKS OF ACCOUNT WHICH WERE DULY AUDITED AND NO DISCREPANC Y WAS FOUND HENCE ALL THESE TRANSACTIONS AND GENUINE AND CORRECT. IN VIEW OF THE ABOVE FACT S THAT ALL THESE DETAILS WERE AVAILABLE BEFORE AO CAN NOW CIT HAS JURISDICTION FOR REVISION U/S. 263. WE FIND THAT THE ASSESSMENT WAS BARRED BY LIMITATION ON 31.12.2010 AND DETAILS WERE FILED AT THE FAG END OF DECEMBER 2010 DESPITE THE FACT THAT SURVEY WAS CONDUCTED ON 07.02.2008 AND NO TICE U/S. 143(2) OF THE ACT WAS ISSUED AND SERVED ON 17.09.2009. FROM THE ORDER SHEET ENTRY AS REPRODUCED ABOVE IS VERY CLEAR THAT THE ASSESSEE AS AND WHEN CALLED BY REVENUE TO REPLY THE QUERIES IT REPLIED POSITIVELY AND FILED COMPLETE DETAILS. IT IS NOT THE ALLEGATION OF REVE NUE THAT DETAILS WERE NOT BEFORE THE AO AT THE TIME OF FRAMING OF ASSESSMENT WE ARE OF THE VIEW T HAT EVIDENCE GATHERED BY AO COULD BE CONSIDERED AS SUFFICIENT ENQUIRY BEFORE FRAMING AN ASSESSMENT AND WE FIND NO ERROR IN THE ORDER OF AO WHAT TO TALK OF PREJUDICE TO THE REVENUE. WE FIND THAT THE AO HAD MADE REASONABLE ENQUIRIES AND INFORMATION GATHERED BY AO MATCHED WI TH THE INFORMATION GIVEN BY ASSESSEE IN ITS ACCOUNT THE AO WAS JUSTIFIED IN COMPLETING ASS ESSMENT AS COMPLETED BY HIM. IN SUCH CIRCUMSTANCES CAN REVENUE ALLEGE THAT COMPLETE ENQ UIRIES WERE NOT MADE AND ON THAT STRENGTH IT CAN BE HELD THAT IMPROPER ENQUIRIES OR INCOMPLETE E NQUIRIES AS THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. IN OUR VIEW REVENUE CANNOT SAY SO REASON BEING THE ASSESSEE HAS FILED COMPLETE DETAILS AND A O HAS GONE INTO THESE DETAILS BEFORE COMPLETING ASSESSMENT AS IS EVIDENT FROM ORDER SHEE T ENTRIES PRODUCED BEFORE US AND REPRODUCED ABOVE IN THIS ORDER. EVEN OTHERWISE ON THE GIVEN FACTS THE REVISIONAL AUTHORITY HAS TO LOOK INTO FACTS OF THE CASE AND ALSO MATERIAL AV AILABLE ON RECORD IN COMING TO THE CONCLUSION THAT NO ADDITION CAN BE MADE AT THAT JUNCTURE ON TH E BASIS OF AVAILABLE MATERIAL AND AO PROCEEDED TO MAKE ASSESSMENT ACCORDINGLY. EVEN OTH ERWISE THE ASSESSMENT WAS IN PROGRESS 10 ITA 732/K/2011 M/S. GOEL INDUSTRIES A.Y. 08-09 FROM 17.09.2009 AND WAS COMPLETED ON 31.12.2010 IT IS THE DUTY OF THE REVENUE TO SEE THAT ALL SCRUTINY ASSESSMENTS ARE COMPLETED WELL IN TIME AND FOR THIS WE RELY ON THE DECISION OF HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF BERULAL TI WARI VS. CIT (1988) 173 ITR 280 (AP) WHEREIN HONBLE HIGH COURT OBSERVED AS UNDER: WE MUST EXPRESS OUR DISAPPROVAL OF THE WAY IN WHIC H INCOME-TAX OFFICERS DRAG ON ASSESSMENT PROCEEDINGS TILL ALMOST THE LAST MINUTE AND RUSH THROUGH THE ENTIRE PROCESS OF ASSESSMENT WHEN THE LIMITATION IS ABOUT TO SET IN W ITHOUT GIVING ADEQUATE OPPORTUNITY TO THE ASSESSEES. THE COMMISSIONER OF INCOME-TAX EXERC ISING ADMINISTRATIVE JURISDICTION OVER THESE OFFICERS SHOULD KEEP A CLOSE WATCH ON THE PRO CEEDINGS AND SHOULD DISCOURAGE ANY ATTEMPT ON THE PART OF THE TAX OFFICERS TO DRAG ON THE ASSESSMENT PROCEEDINGS TILL THE LAST MINUTE CAUSING DIFFICULTIES BOTH TO THE ASSESSEE AN D TO THE DEPARTMENT.' EVEN OTHERWISE SIMILAR OBSERVATIONS WERE MADE BY I TAT KOLKATA E BENCH IN THE CASE OF PLASTIC CONCERN VS. ACIT (1998) 61 TTJ (CAL) 87. 10. WE AFTER GOING THROUGH THE FACTS OF THIS CASE AND PROVISIONS OF SECTION 263 OF THE ACT FIND THAT COMMISSIONER CAN REVISE ASSESSMENT ORDER PASSED BY ASSESSING OFFICER ONLY IF (I) IT IS ERRONEOUS AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVE NUE. IF THE ORDER SOUGHT TO BE REVISED IS NOT PREJUDICIA L TO THE INTERESTS OF THE REVENUE COMMISSIONER HAS NO JURISDICTION TO REVISE IT. FOR INSTANCE AN ORDER OF ASSESSMENT PASSED BY AN ASSESSING OFFICER WITHOUT COMPLYING WITH THE PROCEDURE LAID D OWN IN THE PRE 1989 SECTION 144B OF THE ACT IS ERRONEOUS BUT CANNOT BE SAID TO BE PREJUDIC IAL TO THE INTERESTS THE REVENUE. SIMILARLY FAILURE OF THE ASSESSING OFFICER TO DEAL WITH THE C LAIM OF THE ASSESSEE IN THE ASSESSMENT ORDER MAY BE AN ERROR BUT AN ERRONEOUS ORDER BY ITSELF I S NOT ENOUGH TO GIVE JURISDICTION TO COMMISSIONER TO REVISE IT UNDER SECTION 263 OF THE ACT. IT MUST FURTHER BE SHOWN THAT THE ORDER WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND IT IS NOT EACH AND EVERY ORDER PASSED BY THE ASSESSING OFFICER WHICH CAN BE REVISED UNDER SECTIO N 263 OF THE ACT. A BARE READING OF SECTION 263(1) MAKES IT CLEAR THAT THE PRE-REQUISITE TO EXE RCISE OF JURISDICTION BY THE COMMISSIONER SUO MOTU UNDER IT IS THAT THE ORDER OF THE AO IS ERRON EOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO B E SATISFIED WITH TWIN CONDITIONS NAMELY (I) THE ORDER OF THE AO SOUGHT TO BE REVISED IS ERR ONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENTIF THE ORD ER OF THE AO IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOU S BUT IS PREJUDICIAL TO THE REVENUERECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. THE ORD ER OF THE AO MAY BE BRIEF AND CRYPTIC BUT THAT BY ITSELF IS NOT SUFFICIENT REASON TO BRAND TH E ASSESSMENT ORDERS AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. WRITING AN ORDER IN DETAIL MAY BE A LEGAL REQUIREMENT BUT THE ORDER NOT FULFILLING THIS REQUIREMENT CANNOT BE SA ID TO BE ERRONEOUS AND PREJUDICIAL TO THE 11 ITA 732/K/2011 M/S. GOEL INDUSTRIES A.Y. 08-09 INTERESTS OF THE REVENUE. IT IS FOR THE COMMISSION ER TO POINT OUT AS TO WHAT ERROR WAS COMMITTED BY THE AO IN HAVING REACHED THE CONCLUSIO N THAT THE INCOME OF ASSESSEE IS ASSESSABLE BUT NOT ASSESSED. THE COMMISSIONER HAVI NG FAILED TO POINT OUT ANY ERROR NO ERROR CAN BE INFERRED FROM THE ORDERS OF THE AO FOR THE S IMPLE REASON THAT THEY ARE BEREFT OF DETAILS EVEN THOUGH DETAILS WERE FILED BEFORE HIM. IF THE O RDER IS NOT ERRONEOUS THEN IT CANNOT BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. EVEN T HIS VIEW OF OURS IS SUPPORTED BY THE DECISION OF HONBLE APEX COURT IN THE CASE OF MALABAR INDUST RIAL CO. LTD. V. CIT (2000) 243 ITR 83 87 (SC). ACCORDINGLY IN THE PRESENT CASE BEFORE US T HE ASSESSMENT FRAMED BY AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENU E AND THIS IS CLEARLY DEMONSTRATED BY FACTS DISCUSSED BY AO IN HIS ORDER AND DOCUMENTS PRODUCED BEFORE US BY ASSESSEE. ACCORDINGLY WE SET ASIDE THE ORDER OF CIT PASSED U/S. 263 OF THE A CT BEING NOT AS PER LAW. APPEAL OF ASSESSEE IS ALLOWED. 11. IN THE RESULT THE APPEAL OF ASSESSEE IS ALLOWE D. 12. ORDER PRONOUNCED IN OPEN COURT ON 25.11.2011. SD/- SD/- . '# '#'# '# . ! (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( #! #! #! #!) )) ) DATED : 25TH NOVEMBER 2011 /0 %12 3 JD.(SR.P.S.) . 4 5 6 5'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT M/S. GOEL INDUSTRIES 89 BURTOLLA STRE ET KOLKATA- 700 007. 2 -*+ / RESPONDENT CIT-XV KOLKATA 3 . .% ( )/ THE CIT(A) KOLKATA 4. .% / CIT KOLKATA 5 . >? % / DR KOLKATA BENCHES KOLKATA -5 / TRUE COPY .%@/ BY ORDER 2 /ASSTT. REGISTRAR .