SHRI NARAYAN SARAF,KOLKATA vs. PR.C.I.T.-12, KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘C’ BENCH, KOLKATA [Before Shri J. Sudhakar Reddy, Hon’ble Accountant Member & Shri Aby T. Varkey, Hon’ble Judicial Member] I.T.A. No. 2214/Kol/2019 Assessment Year: 2014-2015 Shri Narayan Saraf………………………….................……....……………..…..……...……………...…Appellant 56, N.S. Road 2nd Floor Kolkata – 700 001 [PAN: AKKPS 6352 B] Vs. Pr. Commissioner of Income Tax -12, Kolkata………………………..........….....……......Respondent Appearances by: Shri Soumitra Choudhury, Advocate & Shri Jaydeep Chakraborty, Advocate, appeared on behalf of the assessee. Dr. P.K. Srihari, JCIT, Sr. D/R, appearing on behalf of the Revenue Date of concluding the hearing : November 13th, 2019 Date of pronouncing the order : November 29th, 2019 O R D E R Per J. Sudhakar Reddy, AM :- This appeal filed by the assessee is directed against the order of the Learned Principal Commissioner of Income Tax, Kolkata -12, (hereinafter the “ld. Pr. CIT”), passed u/s. 263 of the Income Tax Act, 1961 (the ‘Act’), dt. 14/03/2019, for the Assessment Year 2014-15. 2. At the outset we find that there is a delay of 131 (one hundred thirty one) days in filing of this appeal. After perusing the petition for condonation, we are convinced that the assessee was prevented by sufficient cause from filing the appeal on time. Hence the delay is condoned and the appeal is admitted.

2 I.T.A. No. 2214/Kol/2019 Assessment Year: 2014-2015 Shri Narayan Saraf pages 4 to 6 of his order. A perusal of this showcause notice demonstrates that the pages 4 to 6 of his order. A perusal of this showcause notice demonstrates that the pages 4 to 6 of his order. A perusal of this showcause notice demonstrates that the ld. Pr. CIT observed as follows: bserved as follows:- a) During the period of demonetization, Shri Narayan Saraf, deposited cash to During the period of demonetization, Shri Narayan Saraf, deposited cash to During the period of demonetization, Shri Narayan Saraf, deposited cash to the tune of Rs.9,44,05,500/ the tune of Rs.9,44,05,500/-. b) Several shortcomings arose due to lack of examination by the Assessing Several shortcomings arose due to lack of examination by the Assessing Several shortcomings arose due to lack of examination by the Assessing Officer while passing the order u/s 143(3) of the Act, for Officer while passing the order u/s 143(3) of the Act, for the Assessment the Assessment Year 2014-15. These are listed at pages 4 to 6 of the showcause notice. 15. These are listed at pages 4 to 6 of the showcause notice. 15. These are listed at pages 4 to 6 of the showcause notice. c) The assessee did not appear and hence, the ld. CIT(A) cancelled the order of The assessee did not appear and hence, the ld. CIT(A) cancelled the order of The assessee did not appear and hence, the ld. CIT(A) cancelled the order of assessment passed on 18/07/2016 and directed the Assessing Officer to assessment passed on 18/07/2016 and directed the Assessing Officer to assessment passed on 18/07/2016 and directed the Assessing Officer to pass a speaking order pass a speaking order afresh, in view of the infirmities.

3 I.T.A. No. 2214/Kol/2019 Assessment Year: 2014-2015 Shri Narayan Saraf In point (c), it is stated that copy of rental agreement was not examined and (c), it is stated that copy of rental agreement was not examined and (c), it is stated that copy of rental agreement was not examined and hence the genuineness of the re hence the genuineness of the rent could not be verified. Here also, the error in the nt could not be verified. Here also, the error in the assessment order and the prejudice caused to the revenue, is not specified. the prejudice caused to the revenue, is not specified. the prejudice caused to the revenue, is not specified. At point (d), the ld. Pr. CIT directs the Assessing Officer to investigate the , the ld. Pr. CIT directs the Assessing Officer to investigate the , the ld. Pr. CIT directs the Assessing Officer to investigate the genuineness of the receipt of Rs.3,26,23,561/ genuineness of the receipt of Rs.3,26,23,561/-, being liability from Ashadeep , being liability from Ashadeep Commodities Pvt. Ltd. This amount is on account of joint venture with Ashadeep Commodities Pvt. Ltd. This amount is on account of joint venture with Ashadeep Commodities Pvt. Ltd. This amount is on account of joint venture with Ashadeep Commodities Pvt. Ltd. and this Commodities Pvt. Ltd. and this amount has been reflected in annexure(h) of the has been reflected in annexure(h) of the annual accounts for Financial Year 2013 annual accounts for Financial Year 2013-14 and it was also replie 14 and it was also replied to the Assessing Officer during the course of the original assessment Assessing Officer during the course of the original assessment, in reply to notice in reply to notice u/s 142(1) of the Act dt. 04/03/2016, a 42(1) of the Act dt. 04/03/2016, at point no. 19, that the payments made to that the payments made to Ashadeep Commodities Pvt. Ltd., were made to persons Ashadeep Commodities Pvt. Ltd., were made to persons specified u/s 40A(2)(b) of u/s 40A(2)(b) of the Act, indicating that this aspect has been examined by the Assessing Officer. Act, indicating that this aspect has been examined by the Assessing Officer. Act, indicating that this aspect has been examined by the Assessing Officer. This is not a case of non-application of mind by the Assessing Officer. A possible application of mind by the Assessing Officer. A possible application of mind by the Assessing Officer. A possible view has been taken. The error in the assessment order is not brought out by the The error in the assessment order is not brought out by the The error in the assessment order is not brought out by the ld. Pr. CIT. Point (e), is non-examination of net profit declared by the assessee. This examination of net profit declared by the assessee. This examination of net profit declared by the assessee. This also cannot be a ground for revision of assessment. also cannot be a ground for revision of assessment. Point (f) is alleged non enquiry Point (f) is alleged non enquiry into the profits earned by the assessee on profits earned by the assessee on account of joint venture with M/s. Ashadeep Commodi account of joint venture with M/s. Ashadeep Commodities Pvt. Ltd. This also ties Pvt. Ltd. This also cannot be a ground for revision as the ld. Pr. CIT has not communicated as to what cannot be a ground for revision as the ld. Pr. CIT has not communicated as to what cannot be a ground for revision as the ld. Pr. CIT has not communicated as to what is the prejudice caused to the revenue by conducting enquiries himself. is the prejudice caused to the revenue by conducting enquiries himself. is the prejudice caused to the revenue by conducting enquiries himself. At point (g), he refers to question no. 2 & 3 of the notice issued u/s 142( At point (g), he refers to question no. 2 & 3 of the notice issued u/s 142( At point (g), he refers to question no. 2 & 3 of the notice issued u/s 142(1) of the Act, dt. 04/03/2016 and directs fresh examination. No error has been of the Act, dt. 04/03/2016 and directs fresh examination. No error has been of the Act, dt. 04/03/2016 and directs fresh examination. No error has been pointed out in the assessment order much less the prejudice caused to the revenue pointed out in the assessment order much less the prejudice caused to the revenue pointed out in the assessment order much less the prejudice caused to the revenue is pointed out. Point (h) refers to adjustment entries against Lord Ganesha and Goddess adjustment entries against Lord Ganesha and Goddess adjustment entries against Lord Ganesha and Goddess Lakshmi. These are traditional accounts and some amount is always shown as due Lakshmi. These are traditional accounts and some amount is always shown as due Lakshmi. These are traditional accounts and some amount is always shown as due to Gods. The prejudice caused to the revenue has not been brought out. to Gods. The prejudice caused to the revenue has not been brought out. to Gods. The prejudice caused to the revenue has not been brought out.

4 I.T.A. No. 2214/Kol/2019 Assessment Year: 2014-2015 Shri Narayan Saraf 6. In all these cases, it can be seen that the ld. Pr. CIT has not bothered to In all these cases, it can be seen that the ld. Pr. CIT has not bothered to In all these cases, it can be seen that the ld. Pr. CIT has not bothered to enquire into any of these issues at least preliminarily issues at least preliminarily and bring out what is the and bring out what is the error in the order of the Tribunal in the order of the Assessing Officer which error in the order of the Tribunal in the order of the Assessing Officer which error in the order of the Tribunal in the order of the Assessing Officer which caused prejudice to the revenue. He has simply set aside the matter to the file of caused prejudice to the revenue. He has simply set aside the matter to the file of caused prejudice to the revenue. He has simply set aside the matter to the file of the Assessing Officer for fresh examin for fresh examination and adjudication, because he had ation and adjudication, because he had certain doubts in mind. A perusal of the notice certain doubts in mind. A perusal of the notices issued by the Assessing Officer issued by the Assessing Officer during the course of original assessment proceedings on 28/08/2015, during the course of original assessment proceedings on 28/08/2015, during the course of original assessment proceedings on 28/08/2015, and on 04/03/2016 and the replies of the assessee 04/03/2016 and the replies of the assessee given on 08/10/2015 and reply to the 5 and reply to the notice dt. 04/03/2016, additional replies given which are at pages 142 and replies notice dt. 04/03/2016, additional replies given which are at pages 142 and replies notice dt. 04/03/2016, additional replies given which are at pages 142 and replies on 16.05.2016 and 06/06/2016 demonstrates that the allegation of the ld. Pr. CIT on 16.05.2016 and 06/06/2016 demonstrates that the allegation of the ld. Pr. CIT on 16.05.2016 and 06/06/2016 demonstrates that the allegation of the ld. Pr. CIT that there was no application of mind by the Assessing Officer, is incorr that there was no application of mind by the Assessing Officer, is incorr that there was no application of mind by the Assessing Officer, is incorrect. Most of the points raised by the ld. Pr. CIT, has been considered and examined by the the points raised by the ld. Pr. CIT, has been considered and examined by the the points raised by the ld. Pr. CIT, has been considered and examined by the Assessing Officer. 7. The ld. Pr. CIT has to conduct verification and enquiry himself The ld. Pr. CIT has to conduct verification and enquiry himself The ld. Pr. CIT has to conduct verification and enquiry himself and then come to a conclusion that there is an error which is prejudicial to the revenue come to a conclusion that there is an error which is prejudicial to the revenue come to a conclusion that there is an error which is prejudicial to the revenue. Such decision cannot be taken based on surmises and conjectures. Assessments Such decision cannot be taken based on surmises and conjectures. Assessments Such decision cannot be taken based on surmises and conjectures. Assessments cannot be set aside based on doubts and suspicion. cannot be set aside based on doubts and suspicion. The following case The following case-law lay down the position:- DIRECTOR OF INCOME TAX vs. JYOTI FOUNDATION 357 ITR 388 (Delhi High Court ) DIRECTOR OF INCOME TAX vs. JYOTI FOUNDATION 357 ITR 388 (Delhi High Court ) DIRECTOR OF INCOME TAX vs. JYOTI FOUNDATION 357 ITR 388 (Delhi High Court ) It was held that revisionary power u/s 263 is conferred on the It was held that revisionary power u/s 263 is conferred on the It was held that revisionary power u/s 263 is conferred on the Commissioner/Director of Income Tax when an order passed by the lower Commissioner/Director of Income Tax when an order passed by the lower Commissioner/Director of Income Tax when an order passed by the lower authority is erroneous and prejudicial to the interest of the Revenue. authority is erroneous and prejudicial to the interest of the Revenue. authority is erroneous and prejudicial to the interest of the Revenue. Orders which are passed without inquiry or investiga which are passed without inquiry or investigation are treated as erroneous tion are treated as erroneous and prejudicial to the interest of the Revenue, but orders which are passed and prejudicial to the interest of the Revenue, but orders which are passed and prejudicial to the interest of the Revenue, but orders which are passed after inquiry/investigation on the question/issue are not per se or normally after inquiry/investigation on the question/issue are not per se or normally after inquiry/investigation on the question/issue are not per se or normally treated as erroneous and prejudicial to the interest of the Revenue becau treated as erroneous and prejudicial to the interest of the Revenue becau treated as erroneous and prejudicial to the interest of the Revenue because the revisionary authority feels and opines that further inquiry/investigation the revisionary authority feels and opines that further inquiry/investigation the revisionary authority feels and opines that further inquiry/investigation was required or deeper or further scrutiny should be undertaken. was required or deeper or further scrutiny should be undertaken. was required or deeper or further scrutiny should be undertaken. (Emphasis ours) INCOME TAX OFFICER vs. DG HOUSING PROJECTS LTD343 ITR 329 (Delhi) INCOME TAX OFFICER vs. DG HOUSING PROJECTS LTD343 ITR 329 (Delhi) Revenue does not have any r Revenue does not have any right to appeal to the first appellate authority ight to appeal to the first appellate authority against an order passed by the Assessing Officer. S. 263 has been enacted to against an order passed by the Assessing Officer. S. 263 has been enacted to against an order passed by the Assessing Officer. S. 263 has been enacted to empower the CIT to exercise power of revision and revise any order passed empower the CIT to exercise power of revision and revise any order passed empower the CIT to exercise power of revision and revise any order passed

5 I.T.A. No. 2214/Kol/2019 Assessment Year: 2014-2015 Shri Narayan Saraf by the Assessing Officer, if two cumulative conditions ar by the Assessing Officer, if two cumulative conditions are satisfied. Firstly, e satisfied. Firstly, the order sought to be revised should be erroneous and secondly, it should the order sought to be revised should be erroneous and secondly, it should the order sought to be revised should be erroneous and secondly, it should be prejudicial to the interest of the Revenue. The expression "prejudicial to be prejudicial to the interest of the Revenue. The expression "prejudicial to be prejudicial to the interest of the Revenue. The expression "prejudicial to the interest of the Revenue" is of wide import and is not confined to merely the interest of the Revenue" is of wide import and is not confined to merely the interest of the Revenue" is of wide import and is not confined to merely loss of tax. The term "erroneous" means a wrong/incorrect decision of tax. The term "erroneous" means a wrong/incorrect decision of tax. The term "erroneous" means a wrong/incorrect decision deviating from law. This expression postulates an error which makes an deviating from law. This expression postulates an error which makes an deviating from law. This expression postulates an error which makes an order unsustainable in law. order unsustainable in law. The Assessing Officer is both an investigator and an adjudicator. If the The Assessing Officer is both an investigator and an adjudicator. If the The Assessing Officer is both an investigator and an adjudicator. If the Assessing Officer as Assessing Officer as an adjudicator decides a question or aspect and makes an adjudicator decides a question or aspect and makes a wrong assessment which is unsustainable in law, it can be corrected by a wrong assessment which is unsustainable in law, it can be corrected by a wrong assessment which is unsustainable in law, it can be corrected by the Commissioner in exercise of revisionary power. As an investigator, it is the Commissioner in exercise of revisionary power. As an investigator, it is the Commissioner in exercise of revisionary power. As an investigator, it is incumbent upon the Assessing Officer to investigate incumbent upon the Assessing Officer to investigate the facts required to be the facts required to be examined and verified to compute the taxable income. If the Assessing examined and verified to compute the taxable income. If the Assessing examined and verified to compute the taxable income. If the Assessing Officer fails to conduct the said investigation, he commits an error and the Officer fails to conduct the said investigation, he commits an error and the Officer fails to conduct the said investigation, he commits an error and the word "erroneous" includes failure to make the enquiry. In such cases, the word "erroneous" includes failure to make the enquiry. In such cases, the word "erroneous" includes failure to make the enquiry. In such cases, the order becomes erroneous because enquiry or verification has not been mes erroneous because enquiry or verification has not been mes erroneous because enquiry or verification has not been made and not because a wrong order has been passed on merits made and not because a wrong order has been passed on merits. Thus, in cases of wrong opinion or finding on merits, the CIT has to come to Thus, in cases of wrong opinion or finding on merits, the CIT has to come to Thus, in cases of wrong opinion or finding on merits, the CIT has to come to the conclusion and himself decide that the order is errone the conclusion and himself decide that the order is errone the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the order conducting necessary enquiry, if required and necessary, before the order conducting necessary enquiry, if required and necessary, before the order under s. 263 is passed. In such cases, the order of the Assessing Officer will under s. 263 is passed. In such cases, the order of the Assessing Officer will under s. 263 is passed. In such cases, the order of the Assessing Officer will be erroneous because the order passed is not sustainable in law and the be erroneous because the order passed is not sustainable in law and the be erroneous because the order passed is not sustainable in law and the said finding must be re said finding must be recorded. CIT cannot remand the matter to the corded. CIT cannot remand the matter to the Assessing Officer to decide whether the findings recorded are erroneous. Assessing Officer to decide whether the findings recorded are erroneous. Assessing Officer to decide whether the findings recorded are erroneous. In cases where there is inadequate enquiry but not lack of enquiry, again the cases where there is inadequate enquiry but not lack of enquiry, again the cases where there is inadequate enquiry but not lack of enquiry, again the CIT must give and record a finding that the order/inquiry mad CIT must give and record a finding that the order/inquiry mad CIT must give and record a finding that the order/inquiry made is erroneous. This can happen if an enquiry and verification is conducted by erroneous. This can happen if an enquiry and verification is conducted by erroneous. This can happen if an enquiry and verification is conducted by the CIT and he is able to establish and show the error or mistake made by the CIT and he is able to establish and show the error or mistake made by the CIT and he is able to establish and show the error or mistake made by the Assessing Officer, making the order unsustainable in Law. In some cases the Assessing Officer, making the order unsustainable in Law. In some cases the Assessing Officer, making the order unsustainable in Law. In some cases possibly though rarely, the possibly though rarely, the CIT can also show and establish that the facts on CIT can also show and establish that the facts on record or inferences drawn from facts on record per se record or inferences drawn from facts on record per se justified and justified and mandated further enquiry or investigation but the Assessing Officer had mandated further enquiry or investigation but the Assessing Officer had mandated further enquiry or investigation but the Assessing Officer had erroneously not undertaken the same. However, the said finding m erroneously not undertaken the same. However, the said finding m erroneously not undertaken the same. However, the said finding must be clear, unambiguous and not debatable. clear, unambiguous and not debatable. The matter cannot be remitted for a The matter cannot be remitted for a fresh decision to the Assessing Officer to conduct further enquiries without fresh decision to the Assessing Officer to conduct further enquiries without fresh decision to the Assessing Officer to conduct further enquiries without a finding that the order is erroneous. a finding that the order is erroneous. Finding that the order is erroneous is Finding that the order is erroneous is a condition or requi a condition or requirement which must be satisfied for exercise of rement which must be satisfied for exercise of jurisdiction under s. 263 of the Act. In such matters, to remand the jurisdiction under s. 263 of the Act. In such matters, to remand the jurisdiction under s. 263 of the Act. In such matters, to remand the matter/issue to the Assessing Officer would imply and mean the CIT has not matter/issue to the Assessing Officer would imply and mean the CIT has not matter/issue to the Assessing Officer would imply and mean the CIT has not examined and decided whether or not the order is erroneous but ha examined and decided whether or not the order is erroneous but ha examined and decided whether or not the order is erroneous but has directed the Assessing Officer to decide the aspect/question. directed the Assessing Officer to decide the aspect/question. This distinction must be kept in mind by the CIT while exercising This distinction must be kept in mind by the CIT while exercising This distinction must be kept in mind by the CIT while exercising jurisdiction under s. 263 of the Act and in the absence of the finding that the jurisdiction under s. 263 of the Act and in the absence of the finding that the jurisdiction under s. 263 of the Act and in the absence of the finding that the order is erroneous and prejudicial to the inte order is erroneous and prejudicial to the interest of Revenue, exercise of rest of Revenue, exercise of jurisdiction under the said section is not sustainable. jurisdiction under the said section is not sustainable. In most cases of In most cases of alleged "inadequate investigation", it will be difficult to hold that the order alleged "inadequate investigation", it will be difficult to hold that the order alleged "inadequate investigation", it will be difficult to hold that the order of the Assessing Officer, who had conducted enquiries and had acted as an of the Assessing Officer, who had conducted enquiries and had acted as an of the Assessing Officer, who had conducted enquiries and had acted as an investigator, is erroneous, without CIT conducting verification/inquiry. The investigator, is erroneous, without CIT conducting verification/inquiry. The investigator, is erroneous, without CIT conducting verification/inquiry. The

6 I.T.A. No. 2214/Kol/2019 Assessment Year: 2014-2015 Shri Narayan Saraf order of the Assessing Officer may be or may not be wrong. CIT cannot order of the Assessing Officer may be or may not be wrong. CIT cannot order of the Assessing Officer may be or may not be wrong. CIT cannot direct reconsideration on this ground but only when the order is erroneous. direct reconsideration on this ground but only when the order is erroneous. direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passe An order of remit cannot be passed by the CIT to ask the Assessing Officer to d by the CIT to ask the Assessing Officer to decide whether the order was erroneous. This is not permissible. An order is decide whether the order was erroneous. This is not permissible. An order is decide whether the order was erroneous. This is not permissible. An order is not erroneous, unless the CIT hold and records reasons why it is erroneous. not erroneous, unless the CIT hold and records reasons why it is erroneous. not erroneous, unless the CIT hold and records reasons why it is erroneous. An order will not become erroneous because on remit, the A An order will not become erroneous because on remit, the Assessing Officer ssessing Officer may decide that the order is erroneous. Therefore CIT must after recording may decide that the order is erroneous. Therefore CIT must after recording may decide that the order is erroneous. Therefore CIT must after recording reasons hold that the order is erroneous. The jurisdictional precondition reasons hold that the order is erroneous. The jurisdictional precondition reasons hold that the order is erroneous. The jurisdictional precondition stipulated is that the CIT must come to the conclusion that the order is stipulated is that the CIT must come to the conclusion that the order is stipulated is that the CIT must come to the conclusion that the order is erroneous and is unsustainable in law. It may be noticed that the material unsustainable in law. It may be noticed that the material unsustainable in law. It may be noticed that the material which the CIT can rely includes not only the record as it stands at the time which the CIT can rely includes not only the record as it stands at the time which the CIT can rely includes not only the record as it stands at the time when the order in question was passed by the Assessing Officer but also the when the order in question was passed by the Assessing Officer but also the when the order in question was passed by the Assessing Officer but also the record as it stands at the time of examinatio record as it stands at the time of examination by the CIT. Nothing n by the CIT. Nothing bars/prohibits the CIT from collecting and relying upon new/additional bars/prohibits the CIT from collecting and relying upon new/additional bars/prohibits the CIT from collecting and relying upon new/additional material/evidence to show and state that the order of the Assessing Officer material/evidence to show and state that the order of the Assessing Officer material/evidence to show and state that the order of the Assessing Officer is erroneous. (Emphasis Ours) Emphasis Ours)

COMMISSIONER OF INCOME TAX vs. J. L. MORRISON (INDIA) LTD. 366 ITR COMMISSIONER OF INCOME TAX vs. J. L. MORRISON (INDIA) LTD. 366 ITR As regard the submission on behalf of the Revenue that power under As regard the submission on behalf of the Revenue that power under As regard the submission on behalf of the Revenue that power under Section 263 of the Act can be exercised even in a case where the issue is Section 263 of the Act can be exercised even in a case where the issue is Section 263 of the Act can be exercised even in a case where the issue is debatable, it was held that the case of CIT vs. debatable, it was held that the case of CIT vs. M. M. Khambhatwala was not M. M. Khambhatwala was not applicable. The observation that the Commissioner can exercise power applicable. The observation that the Commissioner can exercise power applicable. The observation that the Commissioner can exercise power under Section 263 of the Act even in a case were the issue is debatable was under Section 263 of the Act even in a case were the issue is debatable was under Section 263 of the Act even in a case were the issue is debatable was a mere passing remark which is again contrary to the view taken by the a mere passing remark which is again contrary to the view taken by the a mere passing remark which is again contrary to the view taken by the Apex Court in thecase of Malabar Industrial Company Ltd. & Max India Ltd. n thecase of Malabar Industrial Company Ltd. & Max India Ltd. n thecase of Malabar Industrial Company Ltd. & Max India Ltd. If the Assessing Officer has taken a possible view, it cannot be said that the If the Assessing Officer has taken a possible view, it cannot be said that the If the Assessing Officer has taken a possible view, it cannot be said that the view taken by him is erroneous nor the order of the Assessing Officer in that view taken by him is erroneous nor the order of the Assessing Officer in that view taken by him is erroneous nor the order of the Assessing Officer in that case can be set aside in revision. case can be set aside in revision. It has to be shown unmistakably that the has to be shown unmistakably that the order of the Assessing Officer is unsustainable. Anything short of that would order of the Assessing Officer is unsustainable. Anything short of that would order of the Assessing Officer is unsustainable. Anything short of that would not clothe the CIT with jurisdiction to exercise power under Section 263 of not clothe the CIT with jurisdiction to exercise power under Section 263 of not clothe the CIT with jurisdiction to exercise power under Section 263 of the Act. CIT vs. M. M. Khambhatwala reported in 198 ITR 144; CI the Act. CIT vs. M. M. Khambhatwala reported in 198 ITR 144; CI the Act. CIT vs. M. M. Khambhatwala reported in 198 ITR 144; CIT vs. Ralson Industries Ltd. reported in 288 ITR 322 (SC), not applicable; Ralson Industries Ltd. reported in 288 ITR 322 (SC), not applicable; Ralson Industries Ltd. reported in 288 ITR 322 (SC), not applicable; Malabar Industrial Co. Ltd. v. CIT reported in 243 ITR 83, relied on. Malabar Industrial Co. Ltd. v. CIT reported in 243 ITR 83, relied on. (Emphasis ours) As regard the third question as to whether the assessment order was passed As regard the third question as to whether the assessment order was passed As regard the third question as to whether the assessment order was passed by the Assessing Officer without application of mind, it was held that the ficer without application of mind, it was held that the ficer without application of mind, it was held that the Court has to start with the presumption that the assessment order was Court has to start with the presumption that the assessment order was Court has to start with the presumption that the assessment order was regularly passed. There is evidence to show that the assessing officer had regularly passed. There is evidence to show that the assessing officer had regularly passed. There is evidence to show that the assessing officer had required the assessee to answer 17 questions and to fil required the assessee to answer 17 questions and to file documents in e documents in regard thereto. It is difficult to proceed on the basis that the 17 questions regard thereto. It is difficult to proceed on the basis that the 17 questions regard thereto. It is difficult to proceed on the basis that the 17 questions raised by him did not require application of mind. Without application of raised by him did not require application of mind. Without application of raised by him did not require application of mind. Without application of mind the questions raised by him in the annexure to notice under Section mind the questions raised by him in the annexure to notice under Section mind the questions raised by him in the annexure to notice under Section 142 (1) of the Act could not have been formulated. The Assessing Officer ct could not have been formulated. The Assessing Officer ct could not have been formulated. The Assessing Officer was required to examine the return filed by the assessee in order to was required to examine the return filed by the assessee in order to was required to examine the return filed by the assessee in order to ascertain his income and to levy appropriate tax on that basis. When the ascertain his income and to levy appropriate tax on that basis. When the ascertain his income and to levy appropriate tax on that basis. When the Assessing Officer was satisfied that the return, filed by Assessing Officer was satisfied that the return, filed by the assessee, was in the assessee, was in

7 I.T.A. No. 2214/Kol/2019 Assessment Year: 2014-2015 Shri Narayan Saraf accordance with law, he was under no obligation to justify as to why was he accordance with law, he was under no obligation to justify as to why was he accordance with law, he was under no obligation to justify as to why was he satisfied. On the top of that the Assessing Officer by his order dated 28 satisfied. On the top of that the Assessing Officer by his order dated 28 satisfied. On the top of that the Assessing Officer by his order dated 28th March, 2008 did not adversely affect any right of the assessee nor was any March, 2008 did not adversely affect any right of the assessee nor was any March, 2008 did not adversely affect any right of the assessee nor was any civil right of the assessee prejudiced. He was as such under no obligation in ight of the assessee prejudiced. He was as such under no obligation in ight of the assessee prejudiced. He was as such under no obligation in law to give reasons. The fact, that all requisite papers were summoned and law to give reasons. The fact, that all requisite papers were summoned and law to give reasons. The fact, that all requisite papers were summoned and thereafter the matter was heard from time to time coupled with the fact thereafter the matter was heard from time to time coupled with the fact thereafter the matter was heard from time to time coupled with the fact that the view taken by him is not show that the view taken by him is not shown by the revenue to be erroneous and n by the revenue to be erroneous and was also considered both by the Tribunal as also by us to be a possible view, was also considered both by the Tribunal as also by us to be a possible view, was also considered both by the Tribunal as also by us to be a possible view, strengthens the presumption under Clause (e) of Section 114 of the strengthens the presumption under Clause (e) of Section 114 of the strengthens the presumption under Clause (e) of Section 114 of the Evidence Act. A prima facie evidence, on the basis of the aforesaid Evidence Act. A prima facie evidence, on the basis of the aforesaid Evidence Act. A prima facie evidence, on the basis of the aforesaid presumption, is thus converted into a conclusive proof of the fact that the ption, is thus converted into a conclusive proof of the fact that the ption, is thus converted into a conclusive proof of the fact that the order was passed by the assessing officer after due application of mind. order was passed by the assessing officer after due application of mind. order was passed by the assessing officer after due application of mind. Meerut Roller Flour Mills Pvt. Ltd. vs. C.I.T., ITA No. 116 /Coch/ 2012; CIT vs. Meerut Roller Flour Mills Pvt. Ltd. vs. C.I.T., ITA No. 116 /Coch/ 2012; CIT vs. Meerut Roller Flour Mills Pvt. Ltd. vs. C.I.T., ITA No. 116 /Coch/ 2012; CIT vs. Infosys Technologies Ltd., 341 I Infosys Technologies Ltd., 341 ITR 293 (Karnataka); S.N. Mukherjee vs. TR 293 (Karnataka); S.N. Mukherjee vs. Union of India, AIR 1990 SC 1984; A. A. Doshi vs. JCIT, 256 ITR 685; Union of India, AIR 1990 SC 1984; A. A. Doshi vs. JCIT, 256 ITR 685; Union of India, AIR 1990 SC 1984; A. A. Doshi vs. JCIT, 256 ITR 685; Hindusthan Tin Works Ltd. Vs. CIT, 275 ITR 43 (Del), distinguished. Hindusthan Tin Works Ltd. Vs. CIT, 275 ITR 43 (Del), distinguished. (Paras 90-92, 102) 92, 102)

7.1. The propositions of law laid down in the above case The propositions of law laid down in the above case-law is that, it is the law is that, it is the duty of the Commissioner of Income Tax to conduct verification and enquiry into duty of the Commissioner of Income Tax to conduct verification and enquiry into duty of the Commissioner of Income Tax to conduct verification and enquiry into the factual position and then come to a conclusion that there is an error in the the factual position and then come to a conclusion that there is an error in the the factual position and then come to a conclusion that there is an error in the order passed by the Assessing Officer which has caused prejudice to the interest of Assessing Officer which has caused prejudice to the interest of Assessing Officer which has caused prejudice to the interest of the revenue. As this was not done and in view of our discussion in this order, As this was not done and in view of our discussion in this order, As this was not done and in view of our discussion in this order, we quash the order of the ld. Pr. CIT passed u/s 263 of the Act, quash the order of the ld. Pr. CIT passed u/s 263 of the Act, as the same is not in as the same is not in accordance with law. 8. In the result, appeal of the assessee is the result, appeal of the assessee is allowed.

Kolkata, the Kolkata, the 29th day of November, 2019 9. Sd/- Sd/- [Aby T. Varkey] [J. Sudhakar Reddy] J. Sudhakar Reddy] Judicial Member Accountant Member Accountant Member Dated : 29.11.2019 {SC SPS}

8 I.T.A. No. 2214/Kol/2019 Assessment Year: 2014-2015 Shri Narayan Saraf

Copy of the order forwarded to: opy of the order forwarded to: 1. Shri Narayan Saraf 56, N.S. Road 2nd Floor Kolkata – 700 001 2. Pr. Commissioner of Income Tax Pr. Commissioner of Income Tax -12, Kolkata