M/S. ORFINA CERAMIC PVT. LTD.,,MORBI vs. THE PR. CIT-3, , RAJKOT

PER WASEEM AHMED, ACCOUNTANT MEMBER:

This bunch of five appeals by the different assessees are directed against the separate orders passed by the Principal Commissioner of Income Tax-3, Rajkot (‘Pr.CIT’ in short) for Assessment Year 2015-16 under section 263 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) all dated 17/09/2018. Since common issues (except quantum) and facts are involved in these appeals, these are being disposed of by way of this consolidated order for the sake of convenience.

1.0 The grounds of appeal mentioned hereunder are without prejudice to one another. 2.0 The order u/s263 of the Income-tax Act, 1961 [hereinafter referred to as the “Act”] passed by the learned Principal Commissioner of Income Tax-3, Rajkot (hereinafter referred to as the “Pr CIT”) is without jurisdiction and bad in law as also on facts and deserves to be quashed and may kindly be quashed. 3.0 The learned Pr CIT erred on facts as also in law in alleging that the order u/s.143(3) of the Act is not only erroneous but also prejudicial to the interest of revenue as the Assessing Officer (AO) has not made inquiry and verification in respect of (i) genuineness and creditworthiness of unsecured loans borrowed of ₹1,93,49,073/- and thereby setting aside the assessment order passed u/s.143(3) of the Act dated 26.12.2017. The order passed by the learned CIT is totally unjustified on facts as also in law therefore the same may kindly be quashed. 4.0 The learned Pr CIT further erred on facts in not properly considering the facts on record and appellant’s submission that all the details were furnished in the form of confirmation, return of income, bank statement etc. during original assessment proceedings and were verified by the AO and the order under consideration was passed after due inquiry, verification of facts on record

ITA Nos.393,394,395, 397 & 398/Rjt/2018 Winsum Ceramic Pvt.Ltd. and 4 others vs Pr.CIT Asst.Year – 2015-16 - 3 - and due application of mind. Thus, the order passed u/s.263 of the Act is totally unjustified on facts as also in law and may kindly be quashed. 5.0 Your Honour’s appellant craves leave to add, amend, alter or withdraw any or more grounds of appeal on or before the hearing of appeal. 3. The only issue raised by the assessee is that the Ld. Pr.CIT erred in holding that the order framed by the Assessing Officer u/s 143(3) of the Income Tax Act was erroneous and prejudicial to the interest of revenue under section 263 of the Act.

4.1. However, the Ld. Pr.CIT noticed certain defects in the assessment framed by the AO u/s 143(3) of the Act by observing that the assessee has squared up loans/ deposits during the year for Rs. 1,93,49,073.00. Further, there were the cash/cheque deposits in the bank account of the parties who provided loans to the assessee. As per the ld. Pr.CIT, the facts of depositing the cash/ cheque in the bank accounts of parties who advanced loan to the assessee, which were also squared up in the year, were not verified by the AO during the assessment proceedings. Thus the Ld. Pr.CIT accordingly issued notice u/s 263 of the Act.

ITA Nos.393,394,395, 397 & 398/Rjt/2018 Winsum Ceramic Pvt.Ltd. and 4 others vs Pr.CIT Asst.Year – 2015-16 - 4 -

4.2. The assessee in reply to the notice submits that order of the AO is neither erroneous nor prejudicial to the interest of revenue. As such, all the details of the loan received by the assessee were filed i.e. identity of the parties/lenders, income tax returns, confirmations, bank statements etc. to prove the genuineness of transactions and creditworthiness of the lenders. Accordingly the AO after considering all the documents during the assessment proceedings did not make any addition of the loan squared up during the year except for a loan of Rs. 8 Lakhs only.

4.3. The assessee also claimed that there is no specific reference made by the ld. Pr.CIT for the loans squared up during the year and which was not verified by the AO during the assessment proceedings. As such, the learned PCIT has not pointed out any specific defect with regard to the loan squared up in the year under consideration.

4.4. However, the Ld. Pr.CIT disregarded the contention of the assessee by observing that the AO in assessment farmed under section 143(3) of the Act had not verified the bank statement of the parties who provided loan to the assessee. As such, on perusal of the bank statement of the parties, it is revealed that there was the immediate deposit of cash/ cheques in the bank account of the parties.

4.5. The learned Pr.CIT also observed that there was the specific allegation about the parties where the cash/cheques were deposited immediately before the transfer of the loan to the assessee.

ITA Nos.393,394,395, 397 & 398/Rjt/2018 Winsum Ceramic Pvt.Ltd. and 4 others vs Pr.CIT Asst.Year – 2015-16 - 5 -

4.6. In view of the above, the learned held that the order passed by the AO under section 143 (3) of the Act is erroneous insofar prejudicial to the interest of revenue as per the explanation 2 to section 263 of the Act. The relevant finding of the learned Pr.CIT stands as under:

“10.2. Thus, it is evident that, the unsecured loans have not been properly examined by the AO. After obtaining details about the loans, such as their return of income, investment through banking channel etc., the AO kept such replies on record without considering it appropriate to personally examine the depositors or finding out the source of investment by depositors as per the provisions of section 68 of the Act. The Assessing Officer was required to make proper investigation to determine whether the loans were really made by the third party or it has come out of the resources of the assessee itself. The AO ought to have conducted thorough enquiry to reach the source or the real investor. The Assessing Officer is duty-bound to investigate the creditworthiness of the depositors and the genuineness of the transaction.

Being aggrieved by the order of the Ld. Pr.CIT, the assessee is in appeal before us.

ITA Nos.393,394,395, 397 & 398/Rjt/2018 Winsum Ceramic Pvt.Ltd. and 4 others vs Pr.CIT Asst.Year – 2015-16 - 6 - 5. The Ld. AR before us filed a paper book running from pages 1 to 387 and submitted that the case was selected under scrutiny under Computer Assisted Scrutiny Selection (CASS). One of the reasons for such selection of limited scrutiny i.e. CASS was on account of loans squared up during the year. The learned AR in support of his contention drew our attention on page 17 of the paper book where the copy of the notice issued under section 143(2) of the Act for the selection of limited scrutiny was placed. Accordingly, the AO during the year assessment proceedings made detailed investigations about the loans squared up during the year and thereafter framed the assessment under section 143(3) of the Act. The learned AR in support of his contention drew our attention on the notice issued under section 142(1) of the Act and the copy of the reply in response to such notice dated 7th July 2017 placed on pages 18 to 386 of the paper book.

5.1. The learned AR further submitted that the AO during the assessment proceedings has also issued notice under section 133(6) of the Act to most of the lenders for the purpose of the verification. The learned AR also placed reliance on the judgment of Hon’ble Gujarat High Court in the case of CIT Vs. Kamal Galani reported in 95 taxmann.com 261.

5.2. The Ld. AR in view of the above submitted that the order passed by the AO cannot be held erroneous insofar prejudicial to the interest of Revenue on account of non-verification of the facts stated above.

ITA Nos.393,394,395, 397 & 398/Rjt/2018 Winsum Ceramic Pvt.Ltd. and 4 others vs Pr.CIT Asst.Year – 2015-16 - 7 - Act. As such the learned PCIT directed the AO to conduct the enquiries to satisfy the conditions specified under section 68 of the Act i.e. identity, genuineness and creditworthiness. As such, where there is a factual mistake in the order of the AO, the learned PCIT is empowered to direct the AO to conduct the necessary enquiries. The learned DR Vehemently supported the order of the Ld. PCIT passed under section 263 of the Act.

7.1. However, we note that the AO during the assessment proceedings has required the assessee to furnish the details of the expenses claimed against the impugned interest income in the notice issued under section 142(1) of the Act. The relevant extract of the notice issued under section 142(1) of the Act is reproduced as under: “In connection with the assessment for the A.Y. 2015-16, you have made return u/s.139 of the IT Act. A notice u/s.143(2) was served on you. This is a LIMITED scrutiny case and the reasons for selection are as under: a) Large square up loans during the year (Form 3CD). …. 6. Please justify the reason for Large squared up loans during the year (Form 3CD) with documentary evidence.”

ITA Nos.393,394,395, 397 & 398/Rjt/2018 Winsum Ceramic Pvt.Ltd. and 4 others vs Pr.CIT Asst.Year – 2015-16 - 8 - 7.2. We also find that the assessee in response to the above notice has made the submissions as detailed under: “Letter of Authority Enclosed 3. Please justify the reason for large Details of Unsecured loans availed and squared up loans during the year repaid (Squared up) during the year as (Form) per Clause 31(a) of tax audit report along with documentary evidences is enclosed as per Annexure-1”

7.3. On perusal of the reply of the assessee, we note that the assessee has furnished the details of the parties (name & address), PAN, ITRs, Confirmation, Bank statements from whom it has taken the loan which was also squared up during the year.

7.4. In view of the above, we hold that the assessment order was framed under section 143(3) of the Act after due verification by the AO. Accordingly, we are of the view that the order of the AO cannot be held as erroneous insofar prejudicial to the interest of Revenue on account of non-verification of the facts as stated above.

7.5. In holding so, we draw support and guidance from the judgments of the Hon’ble Courts as detailed under:

7.6. Hon’ble Supreme court in the case of Malabar Industrial Co Ltd Vs. CIT reported in 109 Taxman 66 wherein it was held as under:

“In the instant case, the Commissioner noted that the ITO passed the order of nil assessment without application of mind. Indeed, the High Court recorded the finding that the ITO failed to apply his mind to the case in all perspective and the order passed by him was erroneous. It appeared that the resolution passed by the board of the appellant-company was not placed before the Assessing Officer.

ITA Nos.393,394,395, 397 & 398/Rjt/2018 Winsum Ceramic Pvt.Ltd. and 4 others vs Pr.CIT Asst.Year – 2015-16 - 9 - Thus, there was no material to support the claim of the appellant that the said amount represented compensation for loss of agricultural income. He accepted the entry in the statement of the account filed by the appellant in the absence of any supporting material and without making any inquiry. On these facts the conclusion that the order of the ITO was erroneous was irresistible. Therefore, the High Court had rightly held that the exercise of the jurisdiction by the Commissioner under section 263(1) was justified.”

7.7. Hon’ble Gujarat High Court in the case of CIT Vs. Kamal Galani reported in 95 taxmann.com 261 wherein it was held as under: “21. The Assessing Officer having carried out such detailed inquiries, it was not open for the Commissioner to thereafter reopen the issues on mere apprehension and surmises. His two fundamental objections were that the Assessing Officer did not verify whether the remittances were from the own income or sources of the assessee and his brother or were merely by way of hawala transactions. In the process, he was also critical of the Assessing Officer not insisting on collecting the details of the accounts from which the foreign remittances were made to the Indian account of the said two persons. Without any material without any basis, the CIT could not have remanded the proceedings to the Assessing Officer to carry out further inquiries in order to ascertain whether the remittances were genuine or were in the nature of hawala transactions. In the entire order of the Commissioner, we do not find any basis for him to carry such apprehension. His principle thrust was to the effect that assessee did not produce the precise bank details of the foreign remittances even before him. There is nothing on the record to suggest that he called upon the assessee to do so and the assessee failed or refused to do so.”

7.8 Hon’ble Gujarat High Court in the case of CIT Vs. Arvind Jewellers 124 taxman 615 wherein it was held as under: “It is clear that the provisions of section 263 cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous, that section will be attracted and incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the instant case, it was the finding of fact given by the Tribunal that the assessee had produced relevant material and offered explanation in pursuance of the notices issued under section 142(1) as well as section 143(2) and after considering those materials and explanation, the ITO had come to a definite conclusion. The Commissioner did not agree with the conclusion reached by the ITO. Section 263 did not empower him to take action on these facts to arrive at the conclusion that the order passed by the ITO was erroneous and prejudicial to the interest of the revenue. Since the material was there on record and

ITA Nos.393,394,395, 397 & 398/Rjt/2018 Winsum Ceramic Pvt.Ltd. and 4 others vs Pr.CIT Asst.Year – 2015-16 - 10 - the said material was considered by the ITO and a particular view was taken, the mere fact that different view could be taken, should not be the basis for an action under section 263 and it could not be held to be justified. In view of this and following the principles laid down by the Supreme Court in Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83/109 Taxman 66, the Tribunal was justified in setting aside the order passed by the Commissioner under section 263.”

7.9. Hon’ble Gujarat High Court in the case of CIT Vs. Mehsana District Co-op. Milk Producers Union Ltd. 130 Taxman 235 wherein it was held as under: “It is well-settled that the provisions of section 263(1) cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, and it is only when the order is erroneous that the section will be attracted. When two views are possible and the Assessing Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the Assessing Officer is unsustainable in law. It was not shown how the method followed by the assessee to divide the expenses for the purpose of claiming relief under section 80HH was improper or unacceptable. The Assessing Officer as well as the Tribunal had found that the expenses were apportioned on a rational basis and it would not be open for the Court to go beyond that finding which appeared to have been reached on the basis of the material on record which showed that in the earlier years the same proportion for dividing the expenses was consistently followed. The department had not been able to show that for those earlier two years any objection was raised against such apportionment.”

7.10. Hon’ble Gujarat High Court in the case of CIT Vs. Amit Corporation 213 taxman 19 wherein it was held as under: “5. We are of the opinion that the Tribunal committed no error. When, during the course of framing of the assessment, the Assessing Officer had access to all the records of the assessee, after pursuing such record the Assessing Officer framed the assessment, such assessment could not have been re-opened in exercise of revision power under Section 263 of the Act for making further inquiries. In the facts of the case, in our opinion, Tribunal rightly interfered with such order. No question of law arises. Tax Appeal is, therefore, dismissed.”

7.11. We also note that the explanation 2 inserted by the Finance Act, 2015 authorize the Ld. PCIT to hold the order of the AO as erroneous in so far prejudicial to the interest of the revenue even if the inquiry was made by the AO

ITA Nos.393,394,395, 397 & 398/Rjt/2018 Winsum Ceramic Pvt.Ltd. and 4 others vs Pr.CIT Asst.Year – 2015-16 - 11 - but not in the manner in which such inquiries should have been made. The relevant explanation reads as under: Revision of orders prejudicial to revenue. 10 263. (1) The 13[Principal Commissioner or] Commissioner may call for and examine14 the record14 of any proceeding under this Act, and if he considers that any order15 passed therein by the 16[Assessing] Officer is erroneous15 in so far as15 it is 15prejudicial to the interests of the revenue15, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, 15pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment15 and directing a fresh assessment. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX [Explanation 2.—For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,— (a) the order is passed without making inquiries or verification which should have been made;

7.12. Admittedly, the inquiries were conducted by the AO during the assessment proceedings and this fact was also admitted by the ld. Pr.CIT in his order as extracted below: “6. In the present case, the assessee has received unsecured loans during the year under consideration. During the assessment proceedings the AO has called for necessary details to prove the identity, creditworthiness and genuineness of the loan providers. All the submissions received were kept on record without making due inquiries. On careful verification of these replies it is observed that bank accounts of many of the depositors contained cash or cheque deposits of matching amounts of which that person has issued a cheque to the assessee-company in the name of unsecured loans. However, the AO has passed the order u/s.143(3) in total oblivion of these glaring facts. Thus, the AO has passed an erroneous order by passing the assessment order in this manner.”

7.13. If the explanation 2 to section 263 of the Act is applied, then the ld. Pr.CIT can hold each and every order of the AO as erroneous in so far prejudicial to the

ITA Nos.393,394,395, 397 & 398/Rjt/2018 Winsum Ceramic Pvt.Ltd. and 4 others vs Pr.CIT Asst.Year – 2015-16 - 12 - interest of Revenue by finding out the fault in the view of the AO. The Mumbai Tribunal in such situation in the case of Narayan Tatu Rane vs. ITO reported in 70 taxmann.com 227 has held as under: “19. The law interpreted by the High Courts makes it clear that the Ld Pr. CIT, before holding an order to be erroneous, should have conducted necessary enquiries or verification in order to show that the finding given by the assessing officer is erroneous, the Ld Pr. CIT should have shown that the view taken by the AO is unsustainable in law. In the instant case, the Ld Pr. CIT has failed to do so and has simply expressed the view that the assessing officer should have conducted enquiry in a particular manner as desired by him. Such a course of action of the Ld Pr. CIT is not in accordance with the mandate of the provisions of sec. 263 of the Act. The Ld Pr. CIT has taken support of the newly inserted Explanation 2(a) to sec. 263 of the Act. Even though there is a doubt as to whether the said explanation, which was inserted by Finance Act 2015 w.e.f. 1.4.2015, would be applicable to the year under consideration, yet we are of the view that the said Explanation cannot be said to have over ridden the law interpreted by Hon'ble Delhi High Court, referred above. If that be the case, then the Ld Pr. CIT can find fault with each and every assessment order, without conducting any enquiry or verification in order to establish that the assessment order is not sustainable in law and order for revision. He can also force the AO to conduct the enquiries in the manner preferred by Ld Pr. CIT, thus prejudicing the independent application of mind of the AO. Definitely, that could not be the intention of the legislature in inserting Explanation 2 to sec. 263 of the Act, since it would lead to unending litigations and there would not be any point of finality in the legal proceedings. The Hon'ble Supreme Court has held in the case of Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1 that there must be a point of finality in all legal proceedings and the stale issues should not be reactivated beyond a particular stage and the lapse of time must induce repose in and set at rest judicial and quasi- judicial controversies as it must in other spheres of human activity. 20. Further clause (a) of Explanation states that an order shall be deemed to be erroneous, if it has been passed without making enquiries or verification, which should have been made. In our considered view, this provision shall apply, if the order has been passed without making enquiries or verification which a reasonable and prudent officer shall have carried out in such cases, which means that the opinion formed by Ld Pr. CIT cannot be taken as final one, without scrutinising the nature of enquiry or verification carried out by the AO vis-à-vis its reasonableness in the facts and circumstances of the case. Hence, in our considered view, what is relevant for clause (a) of Explanation 2 to sec. 263 is whether the AO has passed the order after carrying our enquiries or verification, which a reasonable and prudent officer would have carried out or not. It does not authorise or give unfettered powers to the Ld Pr. CIT to revise each and every order, if in his opinion, the same has been passed without making enquiries or verification which should have been made. In our view, it is the responsibility of the Ld Pr. CIT to show that the enquiries or verification conducted by the AO was not in

ITA Nos.393,394,395, 397 & 398/Rjt/2018 Winsum Ceramic Pvt.Ltd. and 4 others vs Pr.CIT Asst.Year – 2015-16 - 13 - accordance with the enquiries or verification that would have been carried out by a prudent officer. Hence, in our view, the question as to whether the amendment brought in by way of Explanation 2(a) shall have retrospective or prospective application shall not be relevant.”

7.14 After considering the facts in totality as discussed above, we conclude that the explanation 2 to section 263 of the Act cannot support the order of the ld. Pr.CIT for the reasons as discussed above. Accordingly, we quash the order passed by the Ld. Pr.CIT under section 263 of the Act. Hence, the ground of appeal of the assessee is allowed.

Coming to ITA No.394/Rjt/2018 for AY 2015-16 in the case of M/s. Rex Ceramic Pvt. Ltd.

The assessee has raised the following grounds of appeal: “1.0 The grounds of appeal mentioned hereunder are without prejudice to one another. 2.0 The order u/s263 of the Income-tax Act, 1961 [hereinafter referred to as the “Act”] passed by the learned Principal Commissioner of Income Tax-3, Rajkot (hereinafter referred to as the “Pr CIT”) is without jurisdiction and bad in law as also on facts and deserves to be quashed and may kindly be quashed. 3.0 The learned Pr CIT erred on facts as also in law in alleging that the order u/s.143(3) of the Act is not only erroneous but also prejudicial to the interest of revenue as the Assessing Officer (AO) has not made inquiry and verification in respect of (i) genuineness and creditworthiness of unsecured loans borrowed of ₹1,36,81,700/- and thereby setting aside the assessment order passed u/s.143(3) of the Act dated 27.12.2017. The order passed by the learned CIT is totally unjustified on facts as also in law therefore the same may kindly be quashed.

ITA Nos.393,394,395, 397 & 398/Rjt/2018 Winsum Ceramic Pvt.Ltd. and 4 others vs Pr.CIT Asst.Year – 2015-16 - 14 - 4.0 The learned Pr CIT further erred on facts in not properly considering the facts on record and appellant’s submission that all the details were furnished in the form of confirmation, return of income, bank statement etc. during original assessment proceedings and were verified by the AO and the order under consideration was passed after due inquiry, verification of facts on record and due application of mind. Thus, the order passed u/s.263 of the Act is totally unjustified on facts as also in law and may kindly be quashed. 5.0 Your Honour’s appellant craves leave to add, amend, alter or withdraw any or more grounds of appeal on or before the hearing of appeal.

Coming to ITA No.395/RJT/2018 for AY 2015-16 in the case of M/s. Winmax Ceramic Pvt. Ltd.

The assessee has raised the following grounds of appeal: 1.0 The grounds of appeal mentioned hereunder are without prejudice to one another. 2.0 The order u/s 263 of the Income-tax Act, 1961 [hereinafter referred to as the “Act”] passed by the learned Principal Commissioner of Income Tax-3, Rajkot (hereinafter referred to as the “Pr CIT”) is without jurisdiction and bad in law as also on facts and deserves to be quashed and may kindly be quashed. 3.0 The learned Pr CIT erred on facts as also in law in alleging that the order u/s.143(3) of the Act is not only erroneous but also prejudicial to the interest of revenue as the Assessing Officer (AO) has not made inquiry and verification in respect of (i) genuineness and creditworthiness of unsecured loans borrowed of ₹4,98,77,066/- and thereby setting aside the assessment order passed u/s.143(3) of the Act dated 13.11.2017. The order passed by the learned CIT is totally unjustified on facts as also in law therefore the same may kindly be quashed.

ITA Nos.393,394,395, 397 & 398/Rjt/2018 Winsum Ceramic Pvt.Ltd. and 4 others vs Pr.CIT Asst.Year – 2015-16 - 15 - 4.0 The learned Pr CIT further erred on facts in not properly considering the facts on record and appellant’s submission that all the details were furnished in the form of confirmation, return of income, bank statement etc. during original assessment proceedings and were verified by the AO and the order under consideration was passed after due inquiry, verification of facts on record and due application of mind. Thus, the order passed u/s.263 of the Act is totally unjustified on facts as also in law and may kindly be quashed. 5.0 Your Honour’s appellant craves leave to add, amend, alter or withdraw any or more grounds of appeal on or before the hearing of appeal.

ITA Nos.393,394,395, 397 & 398/Rjt/2018 Winsum Ceramic Pvt.Ltd. and 4 others vs Pr.CIT Asst.Year – 2015-16 - 16 - Pvt.Ltd. shall apply mutatis mutandis to this appeal captioned above. As a result, this appeal of the Assessee in ITA No. 394/RJT/2018 for AY 2015-16 in the case of M/s. Rex Ceramic Pvt. Ltd. is allowed.

Coming to ITA No.397/Rjt/2018 for AY 2015-16 in the case of M/s. Orfina Ceramic Pvt. Ltd.

The assessee has raised the following grounds of appeal: “1.0 The grounds of appeal mentioned hereunder are without prejudice to one another. 2.0 The order u/s263 of the Income-tax Act, 1961 [hereinafter referred to as the “Act”] passed by the learned Principal Commissioner of Income Tax-3, Rajkot (hereinafter referred to as the “Pr CIT”) is without jurisdiction and bad in law as also on facts and deserves to be quashed and may kindly be quashed. 3.0 The learned Pr CIT erred on facts as also in law in alleging that the order u/s.143(3) of the Act is not only erroneous but also prejudicial to the interest of revenue as the Assessing Officer (AO) has not made inquiry and verification in respect of (i) genuineness and creditworthiness of unsecured loans borrowed of ₹7,49,00,000/- and thereby setting aside the assessment order passed u/s.143(3) of the Act dated 27.12.2017. The order passed by the learned CIT is totally unjustified on facts as also in law therefore the same may kindly be quashed. 4.0 The learned Pr CIT further erred on facts in not properly considering the facts on record and appellant’s submission that all the details were furnished in the form of confirmation, return of income, bank statement etc. during original assessment proceedings and were verified by the AO and the order under consideration was passed after due inquiry, verification of facts on record and due application of mind. Thus, the order passed u/s.263 of the Act is totally unjustified on facts as also in law and may kindly be quashed. 5.0 Your Honour’s appellant craves leave to add, amend, alter or withdraw any or more grounds of appeal on or before the hearing of appeal.

ITA Nos.393,394,395, 397 & 398/Rjt/2018 Winsum Ceramic Pvt.Ltd. and 4 others vs Pr.CIT Asst.Year – 2015-16 - 17 - No.397/Rjt/2018 for AY 2015-16 in the case of M/s. Orfina Ceramic Pvt.Ltd. is allowed.

Coming to ITA No.398/Rjt/2018 for AY 2015-16 in the case of M/s. Wintop Vitrified Pvt. Ltd.

The assessee has raised the following grounds of appeal: “1.0 The grounds of appeal mentioned hereunder are without prejudice to one another. 2.0 The order u/s263 of the Income-tax Act, 1961 [hereinafter referred to as the “Act”] passed by the learned Principal Commissioner of Income Tax-3, Rajkot (hereinafter referred to as the “Pr CIT”) is without jurisdiction and bad in law as also on facts and deserves to be quashed and may kindly be quashed. 3.0 The learned Pr CIT erred on facts as also in law in alleging that the order u/s.143(3) of the Act is not only erroneous but also prejudicial to the interest of revenue as the Assessing Officer (AO) has not made inquiry and verification in respect of (i) genuineness and creditworthiness of unsecured loans borrowed of ₹85,49,644/- and thereby setting aside the assessment order passed u/s.143(3) of the Act dated 13.11.2017. The order passed by the learned CIT is totally unjustified on facts as also in law therefore the same may kindly be quashed. 4.0 The learned Pr CIT further erred on facts in not properly considering the facts on record and appellant’s submission that all the details were furnished in the form of confirmation, return of income, bank statement etc. during original assessment proceedings and were verified by the AO and the order under consideration was passed after due inquiry, verification of facts on record and due application of mind. Thus, the order passed u/s.263 of the Act is totally unjustified on facts as also in law and may kindly be quashed. 5.0 Your Honour’s appellant craves leave to add, amend, alter or withdraw any or more grounds of appeal on or before the hearing of appeal.

ITA Nos.393,394,395, 397 & 398/Rjt/2018 Winsum Ceramic Pvt.Ltd. and 4 others vs Pr.CIT Asst.Year – 2015-16 - 18 - mutandis to this appeal captioned above. As a result, this appeal of the Assessee in ITA No.398/Rjt/2018 for AY 2015-16 in the case of M/s. Wintop Vitrified Pvt.Ltd. is allowed.

This Order pronounced in Open Court on 28 / 11 /2019

Sd/- Sd/- ( RAJPAL YADAV ) ( WASEEM AHMED ) JUDICIAL MEMBER ACCOUNTANT MEMBER

Ahmedabad; Dated 28/ 11 /2019 ट�.सी.नायर, व.�न.स./T.C. NAIR, Sr. PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The Pr.CIT-3, Rajkot 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण,राजोकट/DR,ITAT, Rajkot 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, राजोकट / ITAT, Rajkot 1. Date of dictation 25.11.2019(word processed by Hon’ble AM in his computer by dragon) 2. Date on which the typed draft is placed before the Dictating Member …26.11.2019/27.11.19 3. Other Member… 4. Date on which the approved draft comes to the Sr.P.S./P.S…………….. 5. Date on which the fair order is placed before the Dictating Member for pronouncement…… 6. Date on which the fair order comes back to the Sr.P.S./P.S…….28.11.19 7. Date on which the file goes to the Bench Clerk…………………28.11.19 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order………………