M/S DIN DAYAL PURSOTAM LAL,SIRSA vs. PR.CIT, ROHTAK

आदेश/ORDER

PER A.D.JAIN, VICE PRESIDENT

ITA 146/CHD/2021

2. In this appeal for assessment year 2011-12, the assessee has raised the following grounds of appeal :

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 2 1. That order dated 20.3.2021 u/s 263 of the Act by learned Principal Commissioner of Income Tax, Rohtak has been made without satisfying the statutory preconditions contained in the Act and is therefore without jurisdiction and thus, deserves to be quashed as such.

2. That the conclusion of learned Principal Commissioner of Income Tax that "the assessment order dated 21.12.2018 passed by the AO is erroneous in so far as it is prejudicial to the interests of the revenue to the extent of verification of purchases and examining of applicability of section 40A(3) against cash purchase" is based on fundamental misconception of facts and provisions of law and thus not in accordance with law and, therefore untenable. 2.1 That the finding that "purchases from M/s Gaja Nand Pardeep Kumar of Rs.58,42,492/- should have been disallowed as/bogus purchases']and also the observation that "assessee has made cash purchases from open market as the sales have been confirmed; However AO has failed to acknowledge this fact and no disallowance were made as per provision of section 40A(3) of the Act" are factually incorrect, legally misconceived, contrary to evidence on record; and in any case is vague, based on surmiseful considerations; and therefore unsustainable. 2.2 That the learned Principal Commissioner of Income Tax has erred in holding that it is a case of "lack of enquiry" and, further failing to appreciate that alleged inadequate enquiry in the manner, suggested without any independent evidence and, without any further enquiries by him, cannot be a basis for assumption of jurisdiction u/s 263 of the Act. 2.3 That the learned Pr. Commissioner of Income Tax has failed to appreciate that once the learned Assessing Officer on examination of the facts on record and after making all possible enquiries, had accepted claim of the appellant then such an order of assessment could not be regarded as erroneous in as much as prejudicial to the interest of revenue merely because the learned Pr. Commissioner of Income Tax had a different opinion and that too, without having established in any manner that the view adopted by the learned Assessing Officer was an impossible view. 2.4 That the learned Pr. Commissioner of Income Tax has also failed to appreciate that, u/s 263 of the Act, an order of assessment cannot be set-aside to simply to make further enquiries and thereafter pass fresh order of assessment, and as such, impugned order is contrary to law and hence, unsustainable. 2.5 That the learned Principal Commissioner of Income Tax has failed to appreciate that surmises, conjecture and suspicion could not be a basis much less a valid basis to invoke section 263 of the Act.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 3 2.6 That while passing the order u/s 263 of the Act the learned Principal Commission of Income Tax cannot travel beyond the show cause notice and. therefore, findings and observations and also the material relied upon not referred in the show cause notice but made part of the order could not neither in law and nor on tact be made a basis to assume jurisdiction u/s 263 of the Act; and thus order on this ground alone deserve to be quashed as such. 2.7 That various other adverse findings recorded in the notice u/s 263 of the Act and, also in impugned order are factually incorrect, vague, legally misconceived and untenable.

3. That the learned Principal Commissioner of Income Tax has framed the impugned order without granting sufficient opportunity to the appellant and therefore the order made is illegal, invalid and, vitiated order.

4. That since neither the initiation of proceedings u/s 147 of the Act and, nor order of assessment u/s 147/143(3) of the Act was in accordance with law, therefore the impugned order made u/s 263 of the Act is also void-ab-initio. 4.1 That since the notice u/s 148 of the Act had been issued mechanically without application of mind much less independent application of mind and without having any tangible, relevant credible material to form a reason to believe that income of the appellant has escaped assessment therefore the order of assessment u/s 147/143(3) of the Act was without jurisdiction and as such the impugned order is also without jurisdiction.

4. The ld. DR did not raise any specific objection.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 4 5. In view of the submissions made by both the parties, the delay is hereby condoned and appeal of the assessee is admitted for adjudication.

8. Apropos Ground Nos.2 to 2.7, the facts are that the ld. PCIT issued a Show Cause Notice dated 06.08.2019 to the assessee u/s 262 of the Income Tax Act as follows :

2. The assessment record for the period under consideration was called upon and examined. On such examination, it has been noticed that you have made bogus purchases from M/s Gaja Nand Pardeep Kumar which is non-existent party. It was also confirmed by the third party enquiry i.e., Market Committee, Dabwali vide letter No.1527 dated 14.11.2018 that there is no firm registered by the name of M/s Gaja Nand Pardeep Kumar, Shop No. 209, NGM, Dabwali during the year 2010-11. Further, the summons u/s 131 of the Income Tax Act, 1961 was issued on 31.10.2018 to ascertain the genuineness of the firm but on the given address no such firm is found existing. In view of the above, the AO should have disallowed the total purchases of Rs.58,42,590/-from the above party being bogus purchases.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 5 3. The sales have been confirmed meaning thereby you have purchased cotton from the open market in cash. The purchases being made in cash from open market, the applicability of provision of Section 40A(iii) of the Income Tax Act, 1961 should have been examined. Therefore, AO has not carried out proper investigation and enquiry to unearth the facts involved in the case which should have been made.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 6 had made an addition of Rs.1,86,110/- towards the taxable income of the assessee; that the proposed revision was on a difference of opinion, where the ld. PCIT intended to substitute his opinion in place of the decision taken by the AO, and revision u/s 263 is not permitted on a difference of opinion; that this view is supported by the decision of “Spectra Shares and Scrips (P) Ltd.”, 2013 (6)………..173 Andhra Pradesh High Court (sic-incomplete citation was given), in which, it was held that merely because of difference of opinion, the Pr. CIT cannot invoke his power u/s 263 once the AO had taken a conscious decision and had acted in accordance with law and had made assessment, the same could not be branded as erroneous by the Commissioner, as simply according to him, the AO should have made further enquiries. The assessee placed reliance on the decision of the Hon'ble Supreme Court in the case of “Quality Steel”, 395 ITR 1 (S.C), wherein, it has been held that where two views are possible and the AO had taken one view and the CIT revised the said order on the ground that he did not agree with the view taken by the AO, the assessment order could not be treated as an erroneous order or prejudicial to the interests of the Revenue; that the ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 7 reason is simple, i.e., that while exercising the revisionary jurisdiction, the CIT is not setting in appeal. The assessee also relied on “Malabar Industries Co. Ltd. Vs CIT”, (2000)

243 ITR 83 (S.C), wherein it was held that jurisdiction u/s 263 of the Act cannot be assumed in respect of a debatable issue. As per the assessee, this was reiterated in “CIT Vs Max India Ltd.” (2007) 295 ITR 282 (S.C); “Mohammad Haji Adam &Co.”, (2019) 2 TMI 1632 Bombay High Court; “Paramshakti Distributors Pvt. Ltd.” (2019) 7 TMI 832 Bombay High Court.

9.1 The ld. PCIT, however, was not satisfied with the reply of the assessee. He observed that it had been noticed that the assessee had submitted documents which had already been filed during the assessment proceedings in his reply; that no additional document had been submitted by the assessee to prove the genuineness of the firm, M/s Gaja Nand Pardeep Kumar; that during the assessment proceedings, summons u/s 131 of the Income Tax Act, 1961 were issued on 31.10.2018 to ascertain the genuineness of the firm but on the given address, no such firm was found existing; that also, in third party enquiry, i.e., Market Committee, Dabwali, vide letter dated 14.11.2018, it had ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 8 been found that there was no firm registered in the name of M/s Gaja Nand Pardeep Kumar, Shop No. 209, NGM, Dabwali during the year 2010-11; that from this, it was very clear that there was no firm existing at the given address and the assessee had shown bogus purchases from the mentioned party; that the AO had failed to acknowledge this fact; that the purchases from the said party, of Rs.58,42,492/- should have been disallowed as bogus purchases; that the assessee had made cash purchases from the open market, as the sales had been confirmed; that however, the AO had failed to acknowledge this fact and no disallowed had been made as per the provisions of Section 40A(3) of the Act; that hence, it was a clear case of lack of enquiry and, therefore, the assessment order was erroneous and prejudicial to the interests of the Revenue; that the AO should conduct detailed enquiries on the said issues, on the basis of documentary evidences; that purchases should be examined in detail; that the applicability of the provisions of Section 40A(3) with respect to the purchases should also be considered. The ld. CIT(A) placed reliance on the “Malabar Industries Ltd. Vs CIT” 243 ITR 83 (S.C); “Ram Pyari Devi

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 9 Saraogi Vs CIT”, 67 ITR 84 (S.C) and “Smt. Tara Devi Aggarwal Vs CIT”, 88 ITR 323 (S.C).

9.2 It was held that evidently, the assessment order was erroneous and so far as it was prejudicial to the interests of the Revenue to the extent of verification of purchases and examination of the applicability of Section 40A(3) against cash purchases. The AO was directed to decide this issue afresh as per law.

9.3 The ld. Counsel for the assessee has contended that the ld. PCIT has erred in passing the impugned order since the AO had accepted the claim of the assessee only on examination of the facts on record and after making possible enquiries, due to which the assessment order could not be termed as either erroneous or prejudicial to the interests of the Revenue; that it was only because the ld. PCIT had an opinion different from that held by the AO, that the impugned order was passed illegally, without establishing as to how the view of the AO was an impossible view in any manner; that the ld. PCIT has failed to appreciate that under the provisions of Section 263 of the Act, an order of assessment cannot be set aside simply to make further enquiries and to thereafter pass a fresh order; that the ld.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 10 PCIT has failed to appreciate that surmises, conjectures and suspicion could not be a valid basis to invoke the provisions of Section 263 of the Act; that the ld. PCIT has erred in acting beyond the Show Cause Notice issued u/s 263 of the Act and, therefore, findings, observations and material relied on but not referred to in the Show Cause Notice, but made part of order, could not have been made the basis for assumption of jurisdiction u/s 263 of the Act.

9.4. The ld. DR, on the other hand has placed strong reliance on the impugned order. It has been contended that the ld. PCIT has correctly observed that the assessee did not produce on record any documents other than those submitted during the assessment proceedings, to prove the genuineness of the firm, M/s Gaja Nand Pardeep Kumar ; that it remains undisputed that when summons were issued during the assessment proceedings to ascertain the genuineness of the firm, no such firm was found existing at the given address; that even in third party enquiry of the Market Committee, Dabwali, it was found that there was no firm registered in the name of M/s Gaja Nand Pardeep Kumar, Shop No. 209, NGM, Dabwali during the year 2010- 11; that from this, clearly, no firm was found existing at the ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 11 given address and the purchases shown by the assessee to have been made from the said firm, were bogus purchases, which purchases, amounting to Rs.58,42,492/- should have been disallowed by the AO as bogus purchases, which was not done; that the ld. PCIT has also correctly observed that though the assessee made cash purchases from the open market, since the sales had been confirmed, no disallowance was made by the AO under the provisions of Section 40A(3) of the Act; that therefore, the assessment order was an erroneous order prejudicial to the interests of the Revenue, which was rightly set aside by the ld. PCIT, remitting the matter to the AO for fresh assessment.

9.5. The first issue is as to whether it is a case of lack of enquiry, as held by the ld. PCIT, or whether there was adequate enquiry conducted by the AO, as contained on behalf of the assessee. The assessee is a partnership firm engaged in the business of trading of cotton, guwar and other commodities. It filed its return of income on 25.09.2011, declaring income of Rs. 33,78,180/- for the year under consideration. Vide order dated 21.02.2024 (APB 34- 42), the assessee's income was assessed at Rs.65,15,880/-, by making addition of Rs.31,37,700/-, u/s 143(3) of the Act

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 12 on 22.03.2018, a notice (APB 50) was issued to the assessee u/s 133(6) of the Act, asking the assessee to furnish copies of cash book, ledger account and bank statement for the Financial Year 2010-11, relevant to assessment year 2011- 12, copy of account with M/s Gaja Nand Pardeep Kumar, Proprietor Shri Pardeep Kumar for the said party and details of assets purchased/sold alongwith documentary evidences during the said party. The assessee filed reply (APB 51), stating that the assessee had made payment of Rs.15,50,000/- on 01.11.2010, vide cheque No. 009050 of State Bank of Patiala towards purchase of cotton made on 23.10.2010 from M/s Gaja Nand Pardeep Kumar. Copies of account of M/s Gaja Nand Pardeep Kumar and bank statements were enclosed. On 30.03.2018, a notice (APB 57) u/s 148 of the Act was issued to the assessee. Then, notice u/s 142(1) was issued on 27.08.2018 (APB 64). On 31.10.2018, a summon (APB 65) was issued to Shri Pardeep Kumar, Proprietor M/s Gaja Nand Pardeep Kumar u/s 131 of the Act. On 26/31.10.2018, notice (APB 66-67) was issued to the Market Committee, Dabwali, u/s 133(6) of the Act.

On 14.11.2018, a reply (APB 68) was filed by the Market Committee, Dabwali, before the AO, stating that as per their

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 13 office record available, there was no firm registered as M/s Gaja Nand Pardeep Kumar, Shop No.209, New Grain Market, Dabwali during the year 2010-11. On 11.12.2018, a reply (APB 69-78) was filed by the assessee before the AO alongwith copies of ledger (APB 110) of M/s Gaja Nand Pardeep Kumar in the audited books of account, purchase bill and transportation bilty of tansporter (APB 111-125) and C-Form issued to M/s Gaja Nand Pardeep Kumar. Vide order dated 21.12.2018, the AO made a further addition of Rs.1,86,110/-, to the already assessed income of Rs.65,15,880/- u/s 143(3) of the Act.

9.6 As correctly submitted on behalf of the assessee, the claim made representing the purchases could have been added to the income of the assessee and only the profit margins embedded therein could be subjected to tax. The AO did precisely this by disallowing the higher purchase cost, as alleged, on purchases made from M/s Gaja Nand Pardeep Kumar, as compared to other independent parties.

The assessee had made purchase of Rs.58,42,590/- during the year from M/s Gaja Nand Pardeep Kumar. It had made payment of Rs.58,29,620/-, availing a trade discount of Rs.12,970/-, as available from the ledger (APB 110) of the ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 14 account of M/s Gaja Nand Pardeep Kumar for the period from 01.04.2010 to 31.03.2011.

9.7 Now notice (APB 50) dated 22.03.2018, issued u/s 133(6) of the Act to the assessee, the assessee was asked to furnish copies of cash book, ledger account and bank statement for the Financial Year 2010-11, relevant to assessment year 2011-12, copy of account with M/s Gaja Nand Pardeep Kumar, for the said period and details of assets purchased/sold alongwith documentary evidences, during the said period. Vide reply (APB 51) dated 26.03.2018, the assessee stated that it had made payment of Rs.15,50,000/- on 01.11.2010, vide cheque No.009050 of State Bank of Patiala towards purchase of cotton made on 23.10.2010 from M/s Gaja Nand Pardeep Kumar. A copy of account of M/s Gaja Nand Pardeep Kumar, copy of bank statement and copy of assessment order (APB 110, 127-132 and 79-92 respectively) were enclosed. On 26.03.2018, the AO recorded his reasons (APB 53) to believe escapement of income, stating that (relevant portion) “……….para 2…after the completion of the assessment u/s 143(3) in this case, this office is in possession of certain information that during the Financial Year 2010-11, relevant to assessment year

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 15 2011-12, the assessee has carried out unaccounted purchase of Rs.15,50,000/- from M/s Gaja Nand Pardeep Kumar, NGM-209, Dabwali, District – Sirsa. Vide this (sic) office letter dated 22.03.2018, the assessee was specifically required to explain the details of purchases made from the abovesaid party. In response thereto, the assessee has intimated that he made purchases from M/s Gaja Nand Pardeep Kumar, Proprietor Pardeep Kumar amounting to Rs.58,42,590/-. As per information received from ITO (Investment), Gurugram, the DDIT (Investigation), Hissar afforded too many opportunities to Shri Pardeep Kumar to appear or file any written reply as regard to purchase made with the parties, but he has neither appeared nor filed any written reply. A letter was sent to him by Registered Post on his residential address i.e., ……..2875, Gandhi Memorial Vidhalya, Abohar by specifically mentioning that the entries in the account will be treated as his income from other sources and action will be initiated against him as per provisions of Income Tax Act, but no reply furnished by him.

As Shri Pardeep Kumar has not submitted any reply or clarified his credit entries in his bank account, it is clear that he is not doing any business activity but merely an ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 16 entry provider. As per reply submitted by the counsel of the assessee on 26.03.2016 stated that they have made purchases from M/s Gaja Nand Pardeep Kumar, Dabwali to the tune of Rs.58,42,590/-. As M/s Gaja Nand Pardeep Kumar, is found to be a non existing entity, total purchases of the assessee are bogus purchases and only bills have been raised. The assessee thus, found to have concealed its income by booking bogus expenses. From perusal of the records, it has been noticed that the case of the assessee already assessed at an income of Rs.65,15,880/- u/s 143(3) of the Income Tax Act, 1961 previously, hence it covers under Explanation 2(c) to Section 147 of the Act where the assessee has under stated his income.

9.8 Owing to failure on the part of the assessee to explain the reason carrying out aforementioned unaccounted business transactions, in support of which the Department is having tangible information which is not accounted in the books of the assessee. I have reasons to believe that an income of Rs.58,42,590/- chargeable to tax for the assessment year 2011-12, besides any other income which comes to notice subsequently during the course of assessment proceedings under this Section, has escaped

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 17 assessment within the meaning of Section 147 of the Act.

Although the case has already been finalized u/s 143(3) of the Income Tax Act, 1961, yet it is not covered under first proviso to Section 147 of the Act as income chargeable to tax for the assessment year 2011-12 as escaped assessment for the reason of failure on the part of the assessee to disclose all the material facts fully and truly, which are necessary for the assessment in the case of the assessee on the issue involved……….”

9.9 Then, in the notice (APB 64) dated 27.08.2018, issued to the assessee u/s 142(1) of the Act, it was stated that “assessment u/s 143(3) of the Income Tax Act, 1961 was completed on 21.02.2014. Now, as per information available with this office, you have made unaccounted business transaction of Rs.58,42,590/- with M/s Gaja Nand Pardeep Kumar, NGM-909, Dabwali, District-Sirsa. Further it appears that M/s Gaja Nand Pardeep Kumar is found to be a non existing entity, total purchases from this firm are bogus purchases and only bills have been raised. Please furnish complete documentary evidence to prove the transaction made with M/s Gaja Nand Pardeep Kumar is genuine and duly accounted for in the books of account……….”

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 18 9.10. In its reply (APB 69-78) dated 11.12.2018, the assessee submitted relevant portion at APB 69-70) that; 9.11 Details of purchases made by the assessee from M/s Gaja Nand Pardeep Kumar, with copies of purchase bills have been filed at APB 111-125.

9.12 Copies of transportation bilty of the transporter who had lifted the goods from M/s Gaja Nand Pardeep Kumar,

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 19 have been filed at APB 111-125. Copies of sale bills have also been enclosed. Copy of ledger of M/s Gaja Nand Pardeep Kumar in the books of the assessee, for the period from 01.04.2010 to 31.03.2011, has been filed at APB 110.

9.13 Copies of relevant pages of bank statement of the assessee, pertaining to State Bank of Patiala has been filed at APB 127-128 and that concerning Punjab National Bank, has been filed at APB 129-132. These bank statements show payments made by the assessee to M/s Gaja Nand Pardeep Kumar against purchases made from M/s Gaja Nand Pardeep Kumar/ 9.14 The copy of C-Form issued by the assessee to M/s Gaja Nand Pardeep Kumar has been filed at APB 126.

9.15 Details of purchases made from M/s Gaja Nand Pardeep Kumar, in the form of bilty number, have been placed at APB 111, 114, 117, 123 and 120. The details with regard to the sales, in the shape of ledger account of the party, are at APB 137-138 concerning Fertichem Cotspin Ltd. and at APB 136, concerning Cheema Spintex Ltd. The respective bills have been placed at APB 113-116, 119, 125 and 122. The relevant pages of the Purchase Book and Sale

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 20 Book have been filed at APB 133-135, showing a direct one to one nexus between the respective purchases and hence, the purchases and sales have been depicted in a tabular form, as above.

9.16 As correctly contended on behalf of the assessee, it is seen that it was on having considered the aforesaid detailed reply filed by the assessee alongwith the concerned evidences, that the AO, vide order (APB 79-92) dated 21.12.2018, passed under Sections 147/143(3) of the Act, the AO made addition on account of difference of purchase price concerning purchases made by the assessee from M/s Gaja Nand Pardeep Kumar, in comparison to purchases made from other entities, on the same day. It would be appropriate to here reproduce, for ready reference, the relevant portion of the said assessment order :

“………………..Para (3). To ascertain the genuineness of the existence of firm M/s Gaja Nand Pardeep Kumar, summon u/s 131 of the Income Tax Act, 1961 was issued on 31.10.2018, but on the given address of the firm, no such firm was found. On enquiry, whereabouts of Shri Pardeep Kumar are also not known to anybody in the market. Further, Information u/s 133(6) of the Income Tax Act, 1961 was called for vide letter No. 276 dated 26/31.10.2018 from the Market Committee,

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 21 Dabwali to furnish the auction records of godown in respect of M/s Gaja Nand Pardeep Kumar appearing in their records.The said authority, in compliance thereto, vide his letter No. 1524 dated 14.11.2018 has reported that as per their record, no such firm is registered in their record.

4. From the above noted reply and after examination of books of account, it has been emerged that the purchases made from the abovesaid party as recorded in the books of account are not proved for the reason that the abovesaid party is not in existence as discussed in detail in succeeding paras. It appears that the assessee has made purchases from the grey market at the price much less than the price recorded in the books of account, however, the assessee have obtained bogus higher rate purchase bills from the abovesaid party. The main reason for using the methodology is to suppress gross/net profit from the business activity. Therefore, it is held that the assessee has made purchases of Rs.58,42,590/- from the open market which he has stated to be purchased form (sic) M/s Gaja Nand Pardeep Kumar at much lower price than the price disclosed in the books of account. The assessee has shown purchased (sic) of 570.26 qtl. Cotton from M/s Gaja Nand Pardeep Kumar for Rs.58,42,590/-. Out of total purchased, it notice (sic) that assessee has purchased 175.86 qtl. (89.46 + 86.41) cotton J-34 @ Rs. .10931.14 from M/s Gaja Nand Pardeep Kumar, Dabwali on 01.11.2010 and also purchased same type ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 22 of cotton @ Rs.9872.85 from M/s Neelkamal Industries, Jaitsar on the same day i.e., 01.11.2010. Therefore, it is clear that assessee has purchased cotton on higher rate of Rs.1058.29 from M/s Gaja Nand Pardeep Kumar in comparison to the other party.

9.17 The application of mind on the part of the AO in the aforesaid assessment order is evident from the fact that the AO clearly held that in the enquiry conducted by issuance of summons and by calling for information from the Market Committee, Dabwali, the stated firm of M/s Gaja Nand Pardeep Kumar, Dabwali was found to be non existent. It was on these basis, that the AO held that it appeared that the assessee had made purchases from the grey market at prices much lower than that recorded in the books of account and that the assessee had obtained bogus higher rate purchase bills from the said party, in order to suppress gross/net profit. The AO, therefore, made addition on account of difference of purchase price and added an ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 23 amount of Rs.1,86,110/- further to the income of the assessee, i.e., further to the addition of Rs.31,37,700/- which stood already made in the original scrutiny assessment order dated 21.02.2014.

9.18 To reiterate, under the facts and circumstances, it was only the profit margin embedded in the entire stated purchases, which could have been brought to tax. It was exactly this that was ordered by the AO, by disallowing the alleged higher purchases caused on the purchases claimed by the assessee could have been made from M/s Gaja Nand Pardeep Kumar, as compared to the other independent party.

9.19 In this regard, reliance has also been placed on the decision of the Hon'ble Gujrat High Court in the case of “CIT Vs Bhola Nath Poly Fab pvt. Ltd.”, 355 ITR 290 (Guj), holding that purchases worth Rs.40,69,546/- were unexplained, the AO in that case disallowed the expenditure claimed by the assessee. The total income of the assessee was computed at Rs.41,10,187/-. The stand of the Revenue that the purchases had been made from bogus parties, was concurred with by the Tribunal. It was observed that the AO had issued notices to all the parties from whom such purchases had allegedly been made; that these notices had ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 24 been returned unserved by the postal authorities with the remark that the addresses were incomplete. Even the Inspector deputed by the Department could not find any of the parties available at the given addresses. The assessee had not been able to produce any confirmations from any of the parties. The assessee had claimed payment by Account Payee Cheques, qua which, on verification, it was found that the cheques were encashed by parties and not by the alleged sellers. Despite these facts, the Tribunal opined that even the parties from whom the purchases had been statedly made were bogus. The purchases themselves were not bogus. It was concluded that the entire quantity of opening stock, purchases and the quantity manufactured during the year had been sold by the assessee, and that therefore, the entire 102514 meters of cloth purchased were sold during the year. Thus, the Tribunal accepted the assessee's contention that the finished goods were, in fact, purchased by the assessee, though not from the parties shown in the accounts. The Tribunal held that it was not the entire amount of purchases, but the profit margin embedded therein, which would be subjected to tax. On appeal, the Hon'ble Gujrat High Court held that the Tribunal had ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 25 committed no error; that whether the purchases themselves were bogus or whether the parties from whom such purchases were allegedly made were bogus, was essentially a question of fact; that the Tribunal, having examined the evidence on record, had come to the conclusion that the assessee did purchase the cloth and sold the finished goods; that as a natural corollary, it was not the entire amount covered under such purchase, but the profit element embedded therein, which would be subject to tax.

9.20 Reliance has also correctly been placed on behalf of the assessee, on “Pr. CIT Vs Jagdish H Patel”, 84 taxmann.com 259 (Guj). Therein, the Tribunal while sustaining the findings of the ld. CIT(A) regarding bogus purchases, reduced the addition to 8% from that of 25%, as made by the ld. CIT(A). The Tribunal confirmed the action of the ld. CIT(A) in not separately taxing the sum of Rs.61.05 lacs as admitted by the assessee in the statement recorded during the survey. The Hon'ble High Court held that both, the ld. CIT(A) and the Tribunal had accepted the assessee's contention that adopting the entire amount of bogus purchases would give a completely distorted figure and the gross profit would end up being higher than the total

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 26 turnover; that such bogus purchases were for off-setting the purchases from producers and agriculturists who would not have the billing facility; that the only question seriously posed was as to whether the Tribunal was justified in adopting the gross profit rate of 8% as against that of 25% adopted by the ld. CIT(A); that when additions are made on the basis of gross profit rates, a limited amount of estimation and guess work is always inbuilt; that the assessee had pointed out that when the additions, the gross profit for the year under consideration was approximately 7%; that the Tribunal, therefore, did not commit any error in accepting the gross profit rate of 8% on the purchases, which were otherwise found in-genuine; that the disclosure of Rs.61.05 lacs made by the assessee in his statement pertained to the bogus purchases and was, therefore, rightly assessed by the ld. CIT(A) and the Tribunal; that no question of law arose; and that the appeals were being dismissed.

9.21 The situation, mutatis-mutandis, is exactly similar in the case at hand, as discussed. To reiterate, it was only the profit element embedded in the entire purchases made, that could have been brought to tax, which is exactly what has ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 27 been done by the AO. To the same effect, under similar facts and circumstances, the decisions in the following cases : i) 351 ITR 150 (Guj) C1T vs. Sathyanarayan P. Rathi ii) dated 5.11.2014 Shri Ganpatraj A Sanghavi vs. ACIT iii) 221 Taxman 436 (Guj) CIT vs. Pradeep Shantilal Patel (section 44AF) iv) ITA No. 116/Ahd/2011 dated 30.5.2014 Narpat Singh vs. 1TO v) 355 ITR 290 (Guj) CIT vs. Bholanath Poly Fab (P) Ltd. vi) 152 ITD 874 (Ahd) Dineshbhai Dhansukhlal Mithaiwala vs. ITO vii) ITA No. 2446 & 2447/Mum/2015 DCIT v. Allied Blende.s and Distillers (P) Ltd. viii) ITA NO. 5313/Mum/2013 Vishal P. Mehta v. DCIT 9.22 Further, in “Vaghasiya Exports”, order dated 27.07.2021 passed by the Mumbai Bench of the Tribunal in made was with regard to suspicious purchases made by the assessee from various entities of a tainted group. Specific queries had been raised by the AO requiring the assessee to substantiate the purchased under suspicion. The assessee furnished their requisite details and documentary evidences before the AO. Such evidence included stock record and quantitative details of opening stock, closing stock, purchase, sale etc. The assessee also demonstrated before the AO, the corresponding sales made against the purchases.

In support of the purchase transaction, copies of purchase

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 28 invoices sales ledger extracts were furnished. It was on considering all these evidences, that the AO came to a conclusion that since sales had been offered and adequate quantitative details had been produced by the assessee, the conclusion to be drawn was that the goods were purchased from the grey market, whereas the bills were obtained from accommodating suppliers. The AO exercised the only option available, that was, to estimate the suppressed profits on these transacstions. Considering the applicable VAT rate, the AO estimated a further addition of 1.6% against the purchases. The ITAT observed that these facts showed that the AO had taken one of the possible views with due application of mind, which termed as perverse, could not, in any manner, be termed as ‘perverse’; that there could be no sale without actual purchase of goods, considering the nature of the assessee’s business; that the action of the AO was in conformity with numerous decisions, as quoted in the assessment order; that it could thus, well be said that the view of the AO was a possible view which was not contrary to law or unsustainable in law; that merely because the Pr. CIT held a view that the estimation should have been at higher rates, or that the entire purchases should have been ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 29 disallowed, this would not make the assessment order erroneous, unless it was found that the action of the AO was not in accordance with law or perverse; that therefore, the revision could not be held to be justified as per the decision in “Grasim Industries Ltd. Vs CIT”, 321 ITR 92 (Bom); that further, it was seen that in the assessee's own case, for assessment year 2009-10 also, revisional jurisdiction had been exercised in similar facts; that in that case, the revision had been quashed by the Tribunal, holding that a similar factual matrix existed in the year under consideration and the ratio in “Grasim Industries Ltd.” was applicable to the said year also. The Tribunal held the revisional jurisdiction to have been invalidly exercised and it was, accordingly, set aside.

10.1 In “Rakesh Prabhu Das Doshi Vs PCIT”, vide order dated 02.11.2018, passed by the Mumbai Tribunal in the Tribunal observed that it had been found from the record that while passing order u/s 143(3) read with Section 147 of the Income Tax Act, the AO had considered the factual position with regard to the assessee having made purchases from different persons, who had made additions of Rs.6,26,847/-. It had been found that the completed assessment had been reopened on the ground of information received from the Investigation Wing of the Department that the assessee had made purchases from alleged bogus suppliers. The AO, after having made detailed enquiry and investigation, found that the corresponding sales had been duly accounted for by the assessee in its books. The AO found that accordingly, the entire purchases could not be added. He, as such, estimated extra profit of 6% on such purchases and added the same to the assessee's income. The Tribunal held that it had also considered the various decisions wherein under identical facts and circumstances, 2% additions on bogus purchases had been ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 31 made; that since the additions in such type of cases depend on the facts of each case, the provisions of Section 263 of the Act could not have been invoked by the ld. CIT. The grounds raised by the assessee were, accordingly, allowed.

10.2 In ‘Raj Lakshmi B Vs PCIT”, the Mumbai Bench of the Tribunal, vide order dated 18.03.2019, passed in it was observed that the facts on record revealed that the assessee had been subjected to re- assessment proceedings and the assessee had been saddled with an estimated addition of 12.5% on account of certain alleged bogus purchases. While doing so, the AO relied on the decision of the Hon'ble Gujrat High Court in the case of “Simit P. Sheth”, 356 ITR 451 (Guj). Subsequently, however, on perusal of record, the ld. PCIT noted that the assessee had not been maintaining any quantitative register and it could not substantiate the delivery of the material; and that as such, the entire amount was required to be disallowed and not restricted to 12.5%, as estimated by the AO.

Keeping in view the decision of the Hon'ble Supreme Court in “N.K. Proteins Ltd. Vs DCIT”, 84 taxmann.com………Applying clauses (a) (d)of Explanation 2 to Section 263(1) of the Act, the assessment order was treated as erroneous and ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 32 prejudicial to the interests of the Revenue . The Tribunal quashed the revisional order and restored the order of the AO, following the Co-ordinate Bench decision in “Rajal Enterprises Vs Pr. CIT”, order dated 31.10.2018, passed in the AO had reopened the completed assessment on the basis of specific information received indicating that the purchases made by the assessee were bogus; that in the assessment proceedings, the AO had conducted necessary enquiry by calling for information from the assessee and also making enquiries independently to ascertain the genuineness of the purchases made by the assessee; that on examining the material made available on record, though the AO was of the opinion that the assessee had failed to prove the genuineness of the purchases made, he found that not only the assessee shown the purchases made in the books of account, the assessee had also recorded the corresponding sales effected; that thus, the AO proceeded to make addition of the profit element embedded in the bogus purchases by estimating the same at 10%; that thus, the AO proceeded to make addition not only having conducting due enquiry to ascertain the genuineness of the purchases made by the ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 33 assessee, but had also made addition on account of bogus purchases in accordance with the judicial proceedings; that the PCIT had held the assessment order to be erroneous and prejudicial to the interests of the Revenue, primarily for two reasons; firstly, due to non consideration of the decision of the Supreme Court in the case of “N.K.Proteins” (supra) and secondly due to lack of proper enquiry ; that the Tribunal did not agree with the view of the PCIT that it was a case of lack of proper enquiry to find out the genuineness of the purchases; that as regards the PCIT’s allegation of non consideration of the decision in “N.K. Proteins” (supra), the said decision had been rendered by the Hon'ble Supreme Court on 16.01.2017, much after the date of the passing of the assessment order, i.e., 02.03.2016; that this being so, there was no occasion for the AO to consider “N.K. Proteins”

(supra); that this being the case, exercise of power u/s 263 of the Act for the alleged non consideration of the Supreme Court decision in “N.K.Proteins”, was wholly misconceived; that in any case, addition to be made on the basis of bogus purchases is a purely factual issue and varies from case to case, depending on the facts of each case; that in the case of “N.K.Proteins” (supra), there had been a search & seizure

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 34 operation carried out in the case of “N.K.Proteins”, during which, various incriminating documents including blank “check books in the name of different entities” were found which conclusively proved that the assessee had not made any purchases; that it was in the context of these facts that 100% addition on account of bogus purchases was upheld; that on the other hand, in the case of the assessee in “Raj Lakshmi B”, no such facts were involved; that rather, when the assessee was able to link the purchases with corresponding sales, the logical conclusion which could be arrived at was that the assessee might not have purchased goods from the declared source, but from some other parties; that in such an event, only the profit element embedded in the bogus purchases could be considered for addition, and not the entire purchases; and that therefore, the AO’s decision to restrict the addition to 10% of the bogus purchases was in tune with the consistent view of the Tribunal and different High Courts in cases of similar nature; that therefore, the exercise of power u/s 263 of the Act was invalid. The Tribunal, on these observations, had quashed the order passed u/s 263 of the Act and the assessment order had been restored.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 35 10.3. The facts and circumstances at hand are exactly in pari materia with those in “Raj Lakshmi B Vs PCIT”

(supra), wherein the Tribunal had quashed the revisional order, following “Rajal Enterprises” (supra).

10.4 Similar is the position in “PCIT Vs Rishabh Development Techno”, 424 ITR 338 (Bom) and “Subhash Chander Gupta Vs ITO”, order dated 23.03.2023 passed by the Chandigarh Bench of the Tribunal in ITA No. 362/CHD/2022.

Such finding is based merely on surmises and conjectures.

This being so, there was no occasion for the ld. PCIT to conclude that the AO had not made disallowances as per the ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 36 provisions of Section 40A(3) of the Act. In this regard, in “Shri Ganapat Raj A Sanghavi Vs ACIT”, vide order dated 05.11.2014, passed in the Mumbai Bench of the Tribunal held that the copies of bank account collected by the AO showed the assessee to have made the payments to the stated parties by way of account payee cheques, showing that the transactions had been routed through bank accounts; that also, it was not the case of the AO that the assessee had indulged in accounting of bogus purchases; that when the assessee submitted that he could not effected the sales when making corresponding purchases, the AO took the view that the assessee could have effected purchases from the grey market; that such a conclusion was, in fact, not supported by any material; that it was under this impression only, that the AO had further expressed the view that the assessee would have purchased the materials by paying cash, thus, violating the provisions of Section 40A(3) of the Act; that this occasion, was based only on surmises; that in the absence of any material to support this view, such view taken by the taxing authorities, that the purchases amount was liable to be disallowed under the provisions of Section 40A(3)of the Act, could not be ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 37 agreed with; that it was on the same expression, that in the remand report, the AO had expressed the view that the purchases amount was also liable to be assessed u/s 69C of the Act, as the sources of the purchased had not been proved; that again, such a conclusion was based only on surmises, which could not be sustained; that it had also been seen that the AO had accepted the fact that the quantity details of purchases and sales had been reconciled by the assessee; and that various decisions relied on by the assessee also supported his case; and that therefore, the CIT(A) was not justified in confirming the disallowance of purchases. It was on this basis, that the order of the ld. CIT(A) was set aside and the AO was directed to delete the disallowance of the purchases.

11.1 Likewise in the case at hand, the conclusion arrived at by the ld. PCIT, that the AO had erred in not making disallowance under the provisions of Section 40A(3) of the Act is unsustainable. As in the cited case, here also, there is no evidence worth its name to incriminate the assessee and this conclusion has been arrived at only on premises and conjectures, rendering it unsustainable in the eye of law.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 38 12. Then, it is patent on record that the assessee is a duly registered partnership firm engaged in the business of trading of cotton, guwar and other commodities, since 1971.

Proper books have been maintained. They were examined by the AO in both, the original assessment proceedings as well as the re-assessment proceedings. These books are duly audited under the provisions of Section 44AB of the Act. As

per the books, there was sale of Rs.5,17,05,63,370/- and purchase of Rs.5,18,27,26,557/-. There is no evidence to dispute or controvert any of these transactions. The total purchases of Rs.5,18,27,26,557/-, includes purchases of Rs.58,42,590/- made by the assessee from M/s Gaja Nand Pardeep Kumar, Dabwali. Corresponding sales were made, as reflected in the books of account. The books of account maintained by the assessee were not doubted, much less rejected either by the taxing authorities in the assessment and re-assessment, nor were they called into question by the ld. PCIT in the revisional proceedings. The assessee produced the relevant bank statements depicting the payments made to M/s Gaja Nand Pardeep Kumar (APB 127- 132) against purchases made from M/s Gaja Nand Pardeep Kumar. The assessee had shown delivery of the goods and

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 39 payment of consideration for such delivery, which are the two things required to establish the purchases made. In the absence of any evidence on record to the contrary, purchases amounting to Rs.58,42,492/- could not be said to be bogus purchases calling for disallowance. In fact, neither the AO, nor the PCIT disputed either the delivery of goods, or the payment of the consideration for such delivery. Rather, remarkably, the sales and closing stock had been accepted in the assessment proceedings, both in the original assessment proceedings as well as the re-assessment proceedings. It is also not in question that the consideration paid as flowed from the bank account of the assessee. It has also not even been contended, much less proved that the amount of the consideration had been ploughed back to the bank of the assessee. It being a transaction of sale and purchase, the factum of delivery of goods and payment of consideration therefore having not been questioned, the manner and mode thereof and the alleged misconduct of the supply cannot be held to be attributable to the assessee, in any manner, so as to decline the claim of such expenditure by the assessee.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 40 12.1 Further, so far as regards the assessee, the burden caused on the assessee stood duly and amply discharged, since the assessee had furnished before the AO, documentary evidence in the shape of copies of audited financial statements, copies of invoices issued by the sellers alongwith transport bilties, copies of corresponding sales bills issued by the assessee and audited books of account and payment and proof of payment through banking channels. Moreover, to reiterate, in the assessment order, the books of account having been challenged by the AO.

12.2 In this regard, in “ACIT Vs Mahesh K Shah”, 184 TTJ 702 (Mum), it was held that it was evident from the assessment order that it was primarily on the basis of information/details obtained from the Sales Tax Department, Government of Maharashtra that the AO had issued Show Cause to the assessee, to explain the purchases and had issued notices u/s 133(6) of the Act to the 12 parties from whom the said purchases had been made, to which , there was no response; that the AO had relied on, primarily, the information obtained from the Sales Tax Department to hold purchases amounting to Rs.96,45,645/- to be bogus. Such information comprised of statements/affidavits given before

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 41 the Sales Tax Department by the parties. The Tribunal noted that whereas it might be true that the parties did not appear before the AO, for whatever reason, the fact remained that the assessee had filed copies of purchase invoices and matrix of stock ledger showing entry exit of materials, copies of bank statements, showing that payments for these purchases had been made through normal banking channels, to establish the genuineness of the purchasers. It was observed that from the record, it was evident that the AO h addition not doubted the sales affected by the assessee and, therefore, it was logical to conclude that when corresponding purchases have been made, the assessee could not have effected sales; that the AO had not brought any evidence on record to conclusively prove that the purchases were bogus; that mere reliance on the information obtained from the Sales Tax Department, or on the statements/affidavits of the twelve parties before the Sales Tax Department, or on the fact that these parties did not respond to notices issued u/s 133(6) of the Act, would not, by itself lead to the conclusion that the purchases were to be treated as bogus, making addition u/s 69C of the Act; that in case the AO doubted the genuineness of the purchases, it was incumbent upon him to ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 42 cause further enquiries so as to ascertain the genuineness or otherwise all these transactions; that in the absence of further enquiries in respect of the purchases, the AO could not make addition u/s 69C of the Act by merely relying on the information obtained from the Sales Tax Department, the statements/affidavits of the third party without affording opportunity of cross-examination of these persons to the assessee, for not having responded to the requirements of providing of information u/s 133(6) of the Act. It was observed that the AO had failed to make any enquiry to establish his suspicion that the purchases were bogus, whereas the assessee had produced on record documentary evidence to establish the genuineness of the purchase transactions; that the AO had brushed aside these evidences, which could not be accepted; that in “CIT Vs Ashish International”, in of 2009, the Hon'ble Bombay High Court had held that the genuineness of the statements relied on by the Revenue was not established when the assessee disputed the correctness thereof and had not been provided opportunity to cross examine the parties; that moreover, when the payments for the purchases had been made through proper banking channels and nothing

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 43 had been brought on record by the AO to establish that these payments were routed back to the assessee, the addition made by the AO was unsustainable and that therefore, no interference was required in the order of the ld. CIT(A) and the deletion of the addition of Rs.96,45,645/- made u/s 69C of the Act, as unexplained expenditure in respect of the purchases, was to be upheld.

12.3 Again, the facts are exactly similar. To reiterate, here also, the AO made the addition merely on the basis of conjectures and surmises, without bringing on record anything to prove the purchases to be bogus. In contradistinction, the assessee had furnished on record voluminous documentary evidence establishing that the delivery of the purchases had been made and that the payment for the same had been made through banking channels. The Department has also not made out any case that the payments made for the purchase by the assessee were routed back to the assessee. “Mahesh k Shah (supra) is, therefore, squarely applicable.

12.4 In “Maruti Impex Vs JCIT” order dated 09.03.2016 passed by the Mumbai Tribunal in ITA 3823/Mum/2014, again, it was held, under similar circumstances, following ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 44 the decision of the Hon'ble Bombay High Court in the case of ‘CIT Vs Nikunj Eximp Enterprises P. Ltd.”, 372 ITR 619 (Bom), that in a case of alleged bogus purchases, the theory that the transaction defies human probability cannot be applied to purchases in isolation, but has to be applied to the entire transaction in the light of documentary evidences produced by the assessee; and that where the sales are accepted as genuine, the purchases cannot be disallowed.

12.5 The decision of the Delhi Bench of the Tribunal in the case of “Paramount Residency (P) Ltd. Vs DCIT” rendered in ITA 49707/Del/2014 and that of the Calcutta Bench of the Tribunal in “Ghanshyam Das Agarwal Vs ACIT” passed in are to the same effect.

12.6 In the case of “Tejua Rohit Kumar Kapadia”, the Hon'ble Gujrat High Court, in of 2017, dismissed the appeal of the Department as bearing no question of law, holding that the purchases made by the assessee were duly supported by bills and payments were made by account payee cheque and there was no evidence to show that the amount was recycled back to the assessee, particularly when it was found that the assessee, the trader, had also shown sales out of purchases made which also were ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 45 accepted by the Department. The SLP filed by the Department was dismissed vide theory No. 12670/2018.

i) M/s Fancy Wear Vs ITO, 167 ITD 621 (Mum) ii) CIT Vs Oswal Chemical & Fertilizers Ltd. 200 taxman 170 (Del) iii) CIT Vs Nikunj Exim P. Ltd. 372 ITR 619 (Bom) iv) Ramanand Sagar Vs DCIT 256 ITR 134 (Bom) v) Babulal C Borana V ITO 282 ITR 251 (Bom) vi) CIT Vs M.K.Brothers 163 ITR 249 (Guj) vii) CIT V Nangalia Fabrics (P) Ltd. 220 taxman 17 (Guj) viii) CIT V Famish Enterprises 276 CTR 89 (Cal) ix) CIT V Precious Jewels Corporation 205 taxman 22 (Raj( (MAG) x) E-land International P.Ltd. V DCIT 124 TTJ 554 (Del)

13.1 Particularly, in “Precious Jewels Corporation Ltd.”

(supra) it was held that on the one hand, the assessee had furnished all the necessary information supported with documents to establish the genuineness of the claimed purchases made from the parties, whereas, there was no positive evidence on record to support the allegation of the ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 46 AO that the stated parties were not genuine; that the AO had not come with any positive evidence to establish that the goods were not purchased from those parties, but from some one else and that the amount paid by the assessee in consideration against the supply of goods to them was ultimately returned by them to the assessee; that merely because the assessee could not produce the suppliers or, in some cases the parties did not respond to the summons served on them, it could not be concluded beyond doubt that the purchases claimed and the suppliers were not genuine, especially when the export of the goods had not been denied by the AO.

13.2 Further, it is well settled that once the quantity details are accepted and the books of account are accepted, and the payments are made through banking channels, non compliance by the suppliers is no basis of disallowance.

13.3 In cases where sales are accepted by the Revenue, as a natural corollary by reverse logic, the purchases have to be treated as genuine, since once there are sales, there would be purchases also.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 47 13.4 In “ITO Vs Rajpal Singh” 91 TTJ 993 (Mum), it has been held that if sales are disputed, purchases cannot be disallowed. The following decisions are also to the same effect : i) M/s Beauty Tex ITA 508/JP/2016 ii) Shri Heera Lal Chuni Lal Jain V ITO, order dated 01.01.2016, passed in ITA No.4547/Mum/2014 iii) M/s Imperial Imp & Exp V ITO, order dated 18.03.2016, passed in ITA No. 5427/Mum/2015 iv) ITO V Shri Sanjay V Dhruv, order dated 29.02.2016, in ITA No. 5089/Mum/2014 v) ITO Vs M/s Vaman International P Ltd. order dated 16.11.2016 in ITA No. 794/Mum/2015 vi) CIT Vs M/s Ashish International, order dated 22.02.2011, passed in (Mum) vii) J.R. Solvent Industries (P) Ltd. V ACIT 68 ITD 65 CHD, and viii) Rupesh Chiman Lal V ITO, order dated 30.01.2017 in ITA Nos. 6179-6182/Mum/2016 13.5 Then, it is well settled that the assessee cannot be expected to be after the person with whom he has entered in the business transactions and the assessee's onus is to establish the identity of the party and once the payment has been made through account payee cheque, that identity is well established.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 48 13.6 The following decisions are eloquent on this issue : i) Addl.CIT, Bihal Vs Hanuman Agarwal 151 ITR 150 (Patna) ii) Mather & Platt (I) Ltd. V CIT 168 ITR 493 (Cal) iii) Addl. CIT V Bahri Bros P.Ltd. 154 ITR 244 iv) Order of the Mumbai Bench of the Tribunal in the case of Prabhat Gupta V ITO in and in M/s Vision Advertising P Ltd. V CIT, order dated 12.08.2018, in ITA No. 890/Mum/2015 13.7 Then, it has rightly been contended that the AO has passed the order after making all possible enquiries and the ld. PCIT has gone wrong in holding it to be a case of lack of enquiry, attracting the provisions of Section 263 of the Act.

13.8 As discussed, it is patent that during the assessment proceedings, the AO had made all possible enquiries into the matter of purchases. The ld. PCIT, on the other hand erred in not repeating the categorical response made by the assessee by way of its reply (APB 50-52).

13.9 In this regard, it is settled that there is a distinction between lack of enquiry and inadequate enquiry and as that it is only not case of lack of enquiry that revisional power

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 49 can be exercised. This proposition stands settled, inter-alia in the following decisions : i) CIT V Vikas Polymers 341 ITR 537 (Del) ii) CIT Vs Sunbeam Auto Ltd. 332 ITR 16 (Del) iii) ITO V D.G. Housing Projects Ltd. 343 ITR 329 (Del); and iv) PCIT V Delhi Airport Metro Express (P) Ltd. 398 ITR 8 (Del) 13.10 Moreover, as noted, where two views are possible and the AO has taken a view with which the CIT/PCIT does not agree, the assessment order cannot be termed as erroneous and prejudicial to the interests of the Revenue unless the view taken by the AO is unsustainable in law.

The following decisions support this : i) CIT Vs DLF 350 ITR 555 (Del), holding that possibly the AO could have taken another view, but that he did not do so, would not render his opinion to be an unsustainable opinion requiring exercise of revisional powers. ii) In Garg Brothers (P) Ltd. V DCIT vide order dated 18.04.2018, the was found to have adopted one of the courses permissible in law. It was held that even if it had resulted in loss to the Revenue, the decision of the AO could not be treated as erroneous and prejudicial to the interests of the Revenue. The Bench followed the decision of the Hon'ble Supreme Court in the case of Malabar Industries Ltd. V CIT 243 ITR 83 (S.C.).

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 50 14. As correctly pointed out, it is seen that the facts and the report of the Investigation Wing of the Department were all available with the AO during the assessment proceedings and there was no new fact having emerged after the passing of the assessment order or any fact that had been skipped by the AO. Proper enquiries had been conducted by the AO and the assessment had been framed thereon. The assessment, therefore, had wrongly been treated by the ld. PCIT as erroneous within the meaning of the provisions of Section 263 of the Act.

14.1 In CIT Vs DLF 350 ITR 555 (Del) it has been held that once the AO had accepted the claim of the assessee on examination of the facts on record and after making all possible enquiries, the assessment order could not be termed as erroneous and prejudicial to the interests of the Revenue; that where two views are possible and the AO has taken a view with which the PCIT does not agree, the assessment order cannot be held to be erroneous and prejudicial to the interests of the Revenue. Similarly, the decision in the case of Garg Brothers Pvt. Ltd. Vs DCIT, rendered vide order dated 18.04.2018 in ITA 2519/KOL/2017.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 51

Therefore, again, the assessment order cannot be said to be erroneous and prejudicial to the interests of the Revenue. In this regard, the following decisions are to the same effect : i) CIT Vs Max India Ltd. 295 ITR 282 (S.C.) ii) Malabar Industrial Co.Ltd. V CIT 243 ITR 83 iii) 171 ITR 698 (All) CIT v. Goyal Private Family Specific Trust iv) 170 ITR 28 (All) CIT v. Kashnl Nath & Company v) 171 ITR 141 (MP) CIT v. Ratlam Coal Asn. & Co. vi) 430 ITR 55 (Kar) CIT vs. Cyber Park Development & Construction Ltd. vii) dated 18.4.2018 Garg Brothers (P) Ltd. vs. DCIT viii) 1TA Nos. 3281-3284/D/2015 dated 11.10.2019 Smt. Shumana Sen vs. DCIT ix) ITA No. 5239/D/2019 dated 21.2.2020 M/s Sunrays Cotspln (P) Ltd. vs. PCIT x) ITA No. 3207/Ahd/2009 Gujarat Laxmi Majur Kamgar Sahkari Mandi Ltd. vs. CIT xi) ITA No. 499/Chd/2016 dated 9.11.2016'Sh. Paramjit Singh vs. POT 15.1 Then, the assessment order, as rightly stated is not based on either incorrect application of law or incorrect application of facts or non application of mind on the part of the AO. There is nothing on record to show that the income assessed has not been assessed in accordance with law. The requirements of invocation of the provisions of Section 263 of the Act are not fulfilled and so, the revision itself is not ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 52 sustainable in law, it being, at best, a case of two possible views, of which, one view has been adopted by the AO. The following decisions are to the same effect : i) 112 taxmann.com 321 (Del) ETT Ltd vs CIT ii) 120 taxmann.com 1 87 (Mad) CIT vs Padmavathi iii) 275 Taxman 394 (Mad) CIT vs Vijay Kumar Koganti iv) 117 taxmann.com 986 (Gauhati) Abdul Hamid vs 1TO 15.2 Then, the revision is also not sustainable, since it has not been ordered on any independent enquiry carried out by the PCIT. The notice to show cause, issued u/s 263 of the Act itself is based on the averment that the AO has failed to consider the relevant seized material. In this regard, in “Jeewanlal Ltd. V Addl. CIT, 108 ITR 407 (Cal), following the decision of the Hon'ble Supreme Court in the case of “Sirpur Paper Mills Ltd. Vs CWT, 77 ITR 6 (S.C), it has been held that while exercising revisionary powers, the Commissioner must have an unbiased mind and he must decide the dispute in accordance with the procedure which is consistent with the principle of natural justice and that he cannot permit his mind to be influenced by the dictation of another authority; and that he cannot permit his judgement to be influenced by matters not disclosed to the assessee.

The following decisions are also decisions to the same effect:

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 53 i) 290 ITR 395 (Gau) B & A Plantation & Industries Ltd. vs. CIT ii) 296 ITR 238 (P&H) CIT vs. Sohana Woolen Mills iii) A.Y. 2005-06 dated 9.3.2012 Sh. Jaswinder Singh vs. CIT v) ITA No. 367/Chd/2012 A.Y. 2007-08 dated 7.3.2013 Aarti International vs. CIT vi) 384 ITR 147 (Del) CIT vs. G&G Pharma India Ltd. vii) ITA No. 7785/2015 (Del) dated 13.10.2015 Pr. CIT vs. Rakam Money Matters (P) Ltd.

15.3 It is also settled, as in the case of CIT Vs Leisure Ware Exports Ltd. 341 ITR 166 (Del) that the provisions of Section 263 of the Act cannot be invoked to make deeper enquiry in presumption and assumption that something new may come out.

15.4 In “DCIT Vs Jyoti Foundation” 357 ITR 388 (Del), it has been held that orders passed without enquiry or investigation are treated as erroneous and prejudicial to the interests of the Revenue, but orders which are passed after enquiry/investigation on the question/issue are not per-se or normally treated as erroneous and prejudicial to the interests of the Revenue because the revisionary authority feels and opines that further enquiry/investigation was required or deeper or further scrutiny should be undertaken.

These decisions are also to this effect :

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 54 i) 332 ITR 167 (Del) CIT vs. Sunbeam Auto Ltd ii) 341 ITR 537 (Del) CIT vs. Vikas Polymers Income Tax Appellate Tribunal iii) dated 27.1.2020 M/s Klaxon Trading (P) Ltd. vs. PCIT (Delhi Tribunal) iv) ITA No. 1781/D/2016 dated 24.4.2019 Sanjeev Singh vs. PCIT (Delhi Tribunal )

15.5 Then, it is also settled that for holding that the assessment order prejudicial to the interests of the Revenue but is also erroneous, there has to be some minimal enquiry preceding such a conclusion is held in “PCIT Vs Delhi Airport Metro Express (P) Ltd,. 398 ITR 8 (Del), if the PCIT is of the view that AO did not undertake any enquiry, it becomes incumbent on the PCIT to conduct such enquiry.

Where such basic exercise has not been carried out by the PCIT, the revisionary order is not sustainable. Such decision is in conformity with the following decisions : i) 1TA No. 771/CHD/2017 Shri Abhimanyii Gupta Vs. PC1T ii) 70 taxmann.com 227 (Mum) Narayan Tatu Rane vs. 1T0 iii) 1TA No. 339l/D/2018 dated 8.1.2019 Arun Kumar Garg HUF vs. PC1T iv) dated 21.6.2019 Champ Info Software vs. PC1T v) ITA No. 3097/D/2014 dated 1.7.2019 Dwarkadhis Buildwell (P) ltd. vs. CIT 15.6 Then, in “CIT Vs Neerav Modi” 398 ITR 292 (Bom), it was held that the AO was satisfied, consequent to making an enquiry and examining the evidence produced by the ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 55 assessee, establishing the identity and credit worthiness of the donor, as also the genuineness of the gift; that the CIT, in his order, had not indicated any doubt in respect of the evidence produced by the assessee; that the satisfaction of the AO on the basis of the documents produced had not been shown to be erroneous, in the absence of making a further enquiry; that it was a case where a view had been taken by the AO on enquiry; that even if this view, in the opinion of the CIT, was not correct, it would not permit exercise of power u/s 263 of the Act; and that in fact, in the case of “Amitabh Bachchan”, the Supreme Court had observed that there can be no doubt that where the view taken by the AO is a possible view, interference u/s 263 of the Act is not permissible. SLP filed by the Department against the aforesaid order, stands dismissed, in SLP No. (C)22149/2016, reported in 244 taxman 194 (S.C.). Besides, the following decisions are also to the same effect : i) M/s Amira Pure Foods (P) Ltd. v. PCIT ii) ITA No. 574/Del/2018 dated 19.06.2018 M/s Vidya Prakashan Mandir (P) Ltd. vs PrCIT iii) ITA no. 2539/Del/2018 dated 29.08.2018 Durgesh Autofin P Ltd. Vs Pr. CIT

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 56 15.7 Besides, it is also settled that when, as in the present case, the reasons recorded for re-opening the assessment were the same as for which jurisdiction u/s 263 had been invoked, such invocation of the provisions of Section 263 was not tenable. In the present case, evidently, the reasons recorded (APB 53) for re-opening the assessment u/s 147 of the Act and those (APB 93-94) for which the ld. PCIT sought to invoke his revisionary jurisdiction, are the same. In similar facts and circumstances, revision has been held to be not sustainable ;

(i) CIT Vs Suresh Paul Bansal 2 taxmann.com 260 (Mad), following CIT Vs Vikram Aditya & Associates (P) Ltd. 287 ITR 268 (Mad) and CIT Vs Prudent Advisory Services (P) Ltd., order dated 28.02.2007, passed in IT Appeal No. 170 of 2007, against which last order, the SLP filed by the Department has been dismissed vide order dated 15.01.2000 in SLP (Civil) [CC No. 13518/2007]. (ii) Sri Bala Forgings (P) Ltd. Vs PCIT 175 DTR 57 (Del) (Trib) is also to the same effect. (iii) Too, once the order passed u/s 147/143(3) of the Act is invalid, the consequential proceedings u/s 263 are also invalid, as held in ; i) 341 1TR 240 (Del) CIT v. Software Consultants ii) 49 ITR (T) 0406 (Mum) dated 24.6.2016 M/s Westlife Development Ltd v. Pr. CIT iii) ITA No. 2857/Del./2017 dated 10.12.2018 in the case of M/s. SPJ Hotels Pvt. Ltd. vs The PCIT-8 iv) M/s Aas Research and Solutions (P) Ltd. (since kaizen Products (P) Ltd.) vs. PCIT affirmed by Delhi High Court in the case of Pr. CIT v. Kaizen Products (P Ltd. presently known as Aas Research & Solutions (P) Ltd. in ITA No. 466/2017 dated 2.5.2017. v) 220 TTJ 0273 (Jodhpur-Tribunal) dated 9.5.2019 M/s Vinod Commodities Ltd. vs. ACIT

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 57 vi) to 766/Kol/2014 dated 5.4.2017 M/s Classic Flour & Food Processing (P) Ltd. vs. CIT vii) ITA No. 2269/D/2017 dated 10.12.2018 M/s Supersonic Technologies (P) Ltd. vs. PCIT viii) l.TA. No.50/DEL/2021 Assessment year: 2017-18 Mikado Realtors (P) Ltd. vs. Pr. CIT (Central)

i) 142 ITR 778 (Pat) CIT vs. Shanti Lai Aggarwala ii) 96 ITR 310 (All) CIT vs. Late Sunder Lal iii) 111 ITR 326 (All) J.P. Srivastava & Sons v. CIT iv) 170 ITR 28 (All) CIT vs. Kashi Nath & Co. iv) 394 ITR 758 (Del) PCIT.v. Vinita Chaurasia 16.1 Then, in “CIT Vs Gabriel India Ltd.” 203 ITR 108 (Bom) and “CIT Vs Software Consultants” 341 ITR 240 (Del), it has been held that the revisional authority cannot simply ask the AO to re-examine the matter and that this can be done only after the assessment order is found to be erroneous and prejudicial to the interests of the Revenue.

16.2 In “CIT V Trustees Anupam Charitable Trust” 167 ITR 129, Jaipur (Trib), it has been held that error in the ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 58 assessment should be one which had depended on fact or law and was not a mere possibility or guess work.

16.3 Where the assessment order has been set aside without giving reasons, it is a vitiated order, as held in : i) 96 ITR 310 (All) CIT vs. Sunder Lal iii) 111 ITR 326 (All) J. P. Srivastava & Sons Ltd. vs. CIT iv) 170 ITR 28 (All) CIT vs. Kashi Nath & Co. 16.4 The following decisions hold that a revisional order cannot be passed unless there is total non-application of mind by the AO : i) 100 ITD 173 (Mum) Mrs. Khatiza S. Oomerbhoy vs. ITO ii) 100 ITD 441 (Kol) Al-Haz Amir Hasan Properties Pvt. Ltd. vs. Asst. C1T iii) 203 1TR 108 (Bom) CIT vs. Gabriel India Ltd. iv) 171 ITR 141 (MP) CIT vs. Ratlam Coal Ash Co.

16.5 It has also been held that where all particulars are furnished before the AO by the assessee and he has applied his mind thereto, revision of the assessment order is not valid. The following decisions are on the issue : i) 130 TTJ 669 (Del) Regency Park Property Management Services Pvt. Ltd. vs. CIT ii) 125 TT.I 428 (Del) Rajiv Agnihotri vs. CIT iii) 131 ITD 58 (Jai) Rajiv Arora vs. CIT v) 137 TTJ 67 (Pat) Ramakant Singh vs. CIT

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 59 16.6 Courts have also on to hold that proceedings u/s 263 of the Act have to be confined to the findings recorded by the AO, as follows : i) 140 ITR 490 (P&H) Jagadhri Electric and Supply Co. vs. CIT ii) 192 ITR 547 (Kar) CIT vs. L.F.D. Silva iii) 192 ITR 50 (Mad) CIT vs. LateT.S. Srinivasa Iyer iv) 60 ITD 295 (Del) Jagjit Industries Ltd vs. ACIT v) 61 ITD 307 (Ahd) Satishbhai Jayantilal Shah vs. ACIT vi) 125 Taxation 188 (AP) CIT vs. G.K. Kabra Cooperative Ind. Estate vii) 61 ITD 317 (Mad) Sanco Trans Ltd. vs. ACIT

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 60 ITA 147/CHD/2021

1. That order dated 20.3.2021 u/s 263 of the Act by learned Principal Commissioner of Income Tax, Rohtak has been made without satisfying the statutory preconditions contained in the Act and is therefore without jurisdiction and thus, deserves to be quashed as such.

2. That the conclusion of learned Principal Commissioner of Income Tax that "the assessment order dated 21.12.2018 passed by the AO is erroneous in so far as it is prejudicial to the interests of the revenue to the extent of genuineness and creditworthiness of unsecured loans Verification of sundry creditors and payments made to the partners is based on fundamental misconception of facts and provisions of law and thus not in accordance with law and, therefore untenable.

2.1 That the finding that "the AO has failed to verify the genuineness and creditworthiness of unsecured loans" and also the observation that "AO has not called for any ledger documents and confirmation of accounts of the parties from whom the assessee had taken unsecured loan"; However "AO has failed to make any independent enquiry to verify the genuineness of the loans" is factually incorrect, legally misconceived, contrary to evidence on record; and in any case is vague, based on surmiseful considerations; and therefore unsustainable. 2.2 That further finding that "the AO has failed to verify the genuineness and creditworthiness of sundry creditors and also the observation that "AO has not called for any ledger documents and confirmation of accounts of the sundry creditors"; However "AO has failed to make any independent enquiry to verify the genuineness of the creditors" is factually incorrect, legally misconceived, contrary to evidence on record; and in any case is vague, based on surmiseful considerations; and therefore unsustainable. 2.3 That also finding that "the AO has failed to check whether all the payments made to partners is accordance with partnership deed and Income Tax Act, 1961 and also the observation that AO has not even called for the copy of partnership deed and brought the same on record" is patently erroneous, unsupported by any evidences, cryptic and, untenable.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 61 2.4 That the learned Principal Commissioner of Income Tax has erred in holding that it is a case of "'lack of enquiry" and, further failing to appreciate that alleged inadequate enquiry in the manner suggested without any independent evidence and, without any further enquiries by him cannot be a basis for assumption of jurisdiction u/s 263 of the Act. 2.5 That the learned Pr. Commissioner of Income Tax has failed to appreciate that once the learned Assessing Officer on examination of the facts on record and after making all possible enquiries had accepted claim of the appellant then such an order of assessment could not be regarded as erroneous in as much as prejudicial to the interest of revenue merely because the learned Pr. Commissioner of Income Tax had a different opinion and that too, without having established in any manner that, view adopted by the learned Assessing Officer was an impossible view 2.6 That the learned Pr. Commissioner of Income Tax has also failed to appreciate that, u/s 263 of the Act, an order of assessment cannot be set-aside to simply to make further enquiries and thereafter pass fresh order of assessment and as such, impugned order is contrary to law and hence, unsustainable. 2.7 That the learned Principal Commissioner of Income Tax has failed to appreciate that surmises, conjecture and suspicion could not be a basis much less a valid basis to invoke section 263 of the Act. 2.8 That while passing the order u/s 263 of the Act the learned Principal Commission of Income Tax cannot travel beyond the show cause notice and therefore findings and observation and also the material relief upon not referred in the show cause notice but made part of the order could neither in law and nor on fact be made a basis to assume jurisdiction u/s 263 of the Act; and thus order on this ground alone deserve to be quashed as such. 2.9 That various other adverse findings recorded in the notice u/s 263 of the Act and, also in impugned order are factually incorrect, vague, legally misconceived and untenable.

3. That the learned Principal Commissioner of Income Tax has framed the impugned order without granting sufficient opportunity to the appellant and therefore the order made is illegal, invalid and, vitiated order.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 62 that the period of delay is covered by the decision of the Hon'ble Supreme Court wherein the period of Covid-19 Pandemic was directed to be excluded for the purpose of limitation. It was, accordingly, submitted that the delay in filing the present appeal may be condoned.

i) Genuineness and credit worthiness of unsecured loans ii) Verification of sundry creditors, and iii) Payments to partners

25.1 Apropos the issue of genuineness and credit worthiness of the unsecured loans, the ld. PCIT has observed

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 63 that perusal of the assessment record showed that the replies filed during the assessment proceedings were just placed on record and that the AO had failed to verify the genuineness and credit worthiness of the unsecured loans; that the AO had not called for any ledger document and confirmation of accounts of the parties from whom the assessee had taken unsecured loans; that the AO had also failed to make any independent enquiry to verify the genuineness of the loans; that the assessee had submitted supporting documents related to unsecured loans only in response to the notice u/s 263 of the Act; that therefore, the assessment order was erroneous and prejudicial to the interests of the Revenue; that the AO should have brought the same on record and make independent enquiry and also carry out examination of the parties to verify the genuineness and credit worthiness of the parties; and that there is a clear cut lack of enquiry on this issue.

25.2 The stand of the assessee is that the unsecured loans amount to Rs.19,33,54,914/-; that of 10 lenders from whom, in addition to brought forward loans, the assessee had received fresh borrowings during the year under consideration, amounting to Rs.12,76,80,548/- and that ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 64 there are 23 lenders, from whom no fresh loans were received by the assessee during the year and the loans from whom amounted to Rs.6,56,74,365/-. The details of all the unsecured loans, amounting to Rs.19,33,54,914/-, i.e., name of the lender, opening balance, as on 01.04.2014, fresh borrowings, interest, TDS, repayment and closing balance as on 31.03.2015, have been tabulated as under, alongwith a reference to the relevant copy of ledger, as placed in APB-II :

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 65

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 66

26.1 The summary of the unsecured loans has, as such, been tabulated as under :

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 67 Loss Account, it appeared that the firm had paid interest and carrying of Rs.93,82,166/- and bank interest of Rs.5,41,93,875/-, and had received interest and carrying of Rs.3,77,10,670/-. The assessee was asked to furnish the rate of interest allowed and charged. Details of tax deducted at source u/s 194A alongwith its payment into the Government account was also required to be furnished. In case no tax had been deducted, the assessee was required to give reasons thereof. The assessee was required to furnish details of loans/deposits accepted/repaid during the year otherwise than by account payee cheques or bank drafts alongwith details of accounts consisting of loans/deposits.

The assessee was required to furnish copies of accounts alongwith complete address with PAN, contact number, e- mail Id, etc. in respect of unsecured loans of Rs.19,33,54,914/-, trade creditors of Rs.19,42,87,255/-, sundry debtors of Rs.66,39,17,817/-, as appearing in the balance sheet, with full narration against the entry where the outstanding balance was of Rs.2 lacs and above. The assessee was also asked to furnish details of loans squared up during the year.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 68 27.1 Vide reply (APB 46-47) dated 04.12.2018, the assessee stated that details of interest paid and interest charged during the year would be produced during the manual hearing and that the rate of interest charged and paid are given in the said details. It was stated that there were no loans/deposits accepted or repaid during the year otherwise than by account payee cheques or bank drafts. It was stated that copies of accounts alongwith complete address with PAN, contact number, e-mail Id in respect of unsecured loans of Rs.19,33,54,914/-, trade creditors of Rs.19,42,87,255/- and sundry debtors of Rs.66,39,17,817/-, as appearing in the balance sheet, with full narration against the entry where the outstanding balance was of Rs.2 lacs and above, would be produced during the year, with documentary evidence would also be produced during the manual hearing.

27.2 Vide notice (APB 48-49) dated 11.12.2018, issued u/s 142(1) of the Act, the assessee was required to attend the AO’s office on 17.12.2018 alongwith the required information/documents, and also to produce the books of account.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 69 27.3 In the ordersheet entry (APB 59) dated 21.12.2018, the AO noted that the counsel of the assessee had submitted the required documents/information and had also produced the books of account, which had been test checked, and that the case had been discussed with the counsel of the assessee.

27.4 In the assessment order (APB 50-59) dated 21.12.2018, passed u/s 143(3) of the Act, the AO observed, inter-alia, that the response of the assessee to the notices had been received and the assessee had requested for personal hearing for submission of complete information/documents; that accordingly, notice u/s 142(1) of the Act had been issued on 11.12.2018, fixing the case for 17.12.2018 for personal hearing; that in response, the authorized representative of the assessee had appeared, with whom the case had been discussed; that the assessee produced the books of account, which were test checked; and that the requisite documents/information had been furnished, which had been placed on record after examination.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 70 were pertaining to earlier years and they were brought forward as pending balances. Now, it is well settled that sums pertaining to earlier years, brought forward as pending balance cannot be taxed under the provisions of Section 68 of the Act. It has been so held, inter-alia in the following decisions : i) 152 1TR 583 (Del) CIT vs. Om Prakash Mahajan ii)301 ITR 384 (Del) CIT vs. Usha Stud Agricultural Farms Ltd.

iii) 89 DTR 265 (Del) CIT vs. Jain Exports Pvt. Ltd.

"22. We may also add that, admittedly, no credit entry has been made in the books of the assessee in the previous year relevant to the assessment year 2008- 2009. The outstanding balances reflected as payable to M/s Elephanta Oil & Vanaspati Ltd. are the opening balances which are being carried forward for several years. The issue as to the genuineness of a credit entry, thus does not arise in the current year and this issue could only be examined in the year when the liability was recorded as having arisen, that is. in the year 1984-1985. The department having accepted the balances outstanding over several years, it was not open for the CIT (Appeals) to confirm the addition of the amount of" 1,53,48,850/- on the ground that the assessee could not produce sufficient evidence to prove the genuineness of the transactions which were undertaken in the year 1984-85." iv) 301 ITR 404 (Raj) CIT vs. Prameshwar Bohra v) 349 ITR 260 (All) CIT vs. Raghuraji Agro Industries (P) Ltd. vi) 45 taxmann.com 441 (Guj) CIT vs. Jagatkumar Satishbhai Patel

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 71

INCOME TAX APPELLATE TRIBUNAL i) Kamal Industry, HUF vs. DCIT ii) ITA No. 1946/D/2010 AY 2000-01 dated 26.3.2018 Ravina Khurana v. DCIT iii) ITA No. 3736/D/2017 dated 27.11.2020 ACIT vs. SPG Finvest (P) Ltd. (in respect of investments pertains to earlier years) iv) 21 SOT 22 (Delhi) (URO) Suraj Bhan Bajaj vs. ITO v) 65 TTJ 476 (Del) Jagtar Singh vs. ITO vi) ITA No 1219/Mum/2013 Rita Stephen Pinto vs. 1TO vii) ITA No. 2927/Mum/2017 dated 15.6.2018 Syntensia Network Security India (P) Ltd. vs. ITO viii) ITA No 1078/Bang/2014 Glen Willians vs ACIT ix) ITA No 305/Mds/2016 M/s. Sooraj Leathers vs. ITO x) ITA No 557/LKW/20M dated 17.3.2016 ITO vs. Shri Kamal Raheja xi) 157 ITD 924 (Calcutta - Trib.) DCIT vs. Global Mercantiles (P) Ltd.

28.1 With regard to the sum of Rs.12,76,80,548/-, undisputedly, these are outstanding balances reflected as payable and are opening balances carried forward with regard thereto , the issue as to the genuineness of credit entries therefore, does not arise in the year under consideration. The said issue could only be examined in the year when the liability was recorded as having a reason.

28.2 The relation of the assessee, with the lenders pertaining to those loans pertaining to earlier years,

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 72 amounting to Rs.12,76,80,548/-, has been tabulated as under :

28.3 It has been stated that apart from the loans from DDPL Commodities Pvt. Ltd., assessee has also entered into trading transactions, for which the assessee had maintained a separate trading account, which resulted into ‘nil’ balance at the end of the year. The details of the purchases made from lender have been filed at APB 313. It has also been stated that apart from the loans taken from Fertichem Cotspin Ltd., too the assessee had also entered into the trading transactions and that for that also, the assessee had ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 73 maintained a separate trading account, which resulted into a debit balance of Rs.74,40,279/-, as is available from APB 14.

28.4 The position of unsecured loans from the ten lenders, from whom the amount of Rs.12,76,80,548/-, being loans pertaining to earlier years brought forward as pending balance, stands tabulated as under :

28.5 It is seen that the unsecured loans received are from group entities. That being so, no adverse inference with regard thereto can be drawn against the assessee, as held in the following decisions, under similar facts and circumstances :

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 74 i) dated 07.08.2018 Pr C1T vs M/s. Chain House International (P) Ltd.), (Mad) in SLP dismissed by Apex court in SLP (C) No. 1992/2019 dated 18.02.2019. ii) 257 Taxman 390(Del) dated 7.7.2018 Pr. C1T v. Hi-Tech Residency (P) Ltd. affirmed by Hon'ble Apex Court in 257 Taxman 335 (SC) iii) 105 taxman.com 158 (Del) PC1T vs. E-Smart Systems (P) Ltd. affirmed by Hon'ble Apex Court in 263 Taxman 373 (SC) dated 3.12.2018. iv) 361 ITR 155 (Del) CIT Vs Nipun Auto (P) Ltd. v) 62 ITR (T) 512 (Del) ACIT Vs Shyam Indus Power Solutions (P) Ltd.

28.6 It is seen that with regard to these ten lenders, the assessee has produced the following evidences :

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 75

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 76 28.7 The above evidence with regard to each of these lenders remains patent on record and uncontroverted.

Further, to reiterate, with regard to these loans carried out from earlier years, the assessee has also paid interest thereon after deduction of TDS. Now, evidently, the department cannot be allowed to approbate and reprobate, as has wrongly been done in the present case. The following are some of the decisions on this issue :

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 77 that the AO has not called for any ledger documents and confirmation of accounts of the parties from whom the assessee had taken the unsecured loans and that the AO has failed to make any independent enquiry to verify the genuineness of the lenders. As discussed, these findings are diametrically opposite to the facts placed by the assessee on record, which evidence, as noted, has remained unshaken.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 78 examination to verify the genuineness and credit worthiness of the sundry creditors.

29.1 As per the balance sheet (APB 7 read with APB 12- 13), the closing balances of sundry creditors during the year is of Rs.9,42,87,205/-. The details thereof, i.e., the name of the party alongwith its copy of ledger placed in the Paper Book, the opening balance, the purchase made during the year, the payment made during the year/other adjustment, if any and the closing balance with regard to these sundry creditors had been tabulated as under :

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 79

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 80 29.2 It is seen that vide notice (APB 41-44) dated 18.10.2018, issued u/s 142(1) of the Act, the AO asked the assessee to intimate the names and complete addresses of the persons from whom purchases and sales exceeding Rs.2 lacs had been made and to also intimate the total purchases/sales made during the year from these parties.

The assessee was asked to also furnish copies of account of purchase and sales for the amounts, duly confirmed by the parties.

29.3 Vide reply (APB 46-47) dated 04.12.2018, the assessee stated that the names, complete address and copies of persons from whom purchases and sales exceeding Rs.2 lacs had been made during the year, would be produced during the manual hearing.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 81 29.4 Vide notice (APB 48-49) dated 11.12.2018, issued u/s 142(1) of the Act, the assessee was asked to attend the Assessing Officer’s office on 17.12.2018 alongwith the required information/documents, and also to produce the books of account.

29.5 In ordersheet entry (APB 59) dated 21.12.2018, the AO noted that the counsel of the assessee was present and had submitted the required documents/information and had also produced books of account, which had been test checked, and that the case had been discussed with the counsel of the assessee.

29.6 In the assessment order (APB 50-59) dated 21.12.2018, passed u/s 143(3) of the Act, the AO noted that the response of the assessee had been received; that the assessee had requested for personal hearing for submission of complete information/documents; that accordingly, notice u/s 142(1) had been issued on 11.12.2018, fixing the case for 17.12.2018 for personal hearing; that in response, the CA/authorized representative of the assessee company had appeared, with whom, the case had been discussed, that the assessee had produced books of account, which had been test checked; and that the requisite documents/information

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 82 had been furnished, which had been placed on record after examination.

29.7 The assessee has produced on record, during the assessment proceedings, as before us, copies of ledger accounts of the sundry creditors, for the year under consideration, as follows :

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 83 29.8 We find that as rightly been contended on behalf of the assessee that once the purchases made are accepted, thereby accepting the trading results, no adverse inference can be drawn out of sundry creditors u/s 68 of the Act. This position stands settled vide inter-alia, the following decisions : i) (Del) CIT vs. Ritu Anurag Agarwal "As there was no case for disallowance for corresponding purchases, no addition could be made under Section 68 in as much as it is not in dispute that the creditors outstanding related to purchases and the trading results were accepted by the AO. We are, therefore, of the opinion that no substantial question of law arises for consideration in this case. The appeal is accordingly dismissed." ii) 205 CTR 444 (All) CIT vs. Pancham Dass Jain 3. We have heard Shri Shambhoo Chopra, learned standing counsel for the Revenue.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 84 He submitted that as the respondent-assessee was unable to produce the alleged creditors the provisions of s. 68 of the Act was squarely attracted in the present case and the assessing authority has rightly added the two amounts at the hands of the respondent-assessee. According to him s. 68 of the Act also covers up the case of purchases made on credit.

xiii) 95 TTJ 71 (Del) Annamaria Travels & Tours (P) Ltd. vs. DCIT iv) 67 SOT 52 (Mum) DCIT v Rajeev G. Kalathil xiv) 167 ITD 621 (Mum) M/s. Fancy Wear vs ITO., 6.But,we will like to decide the issue on merits also. The AO or the FAA have not rejected the books of accounts of the assessee nor have doubted the purchases made by it. The recognised principles of accountancy and tax jurisprudence hold that no sales can take place without purchases. Thus, the case under appeal is not about non genuineness of purchases itself, but it is about non genuineness of suppliers. Whether provisions of section 69C of the Act can be applied in the matters where all the purchase and sales transactions part of regular books of accounts. Basic precondition for invoking the section 69C is that the expenditure incurred by the assessee should be out of books of accounts. Here, the payments to the suppliers, as stated earlier, have been made by cheques. So,it cannot be held that expenses were incurred by the assessee outside the books of accounts. Section 69C was introduced in to the statute with a specific purpose. A bare reading of the section makes it clear that if the assessee incurred

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 86 any expenditure, but offered no explanation about the source of such expenditure or part thereof, or the explanation so offered is not satisfactory, such expenditure may be deemed to be the income of the assessee. The assessee has offered satisfactory explanation about the source of the expenditure in the case before us. xv) 100 TTJ 892 (Ahd) Rajesh P Soni v ACIT 29.9 Further besides the above, as available from the assessee's reply (APB 67-69) before the ld. PCIT, the assessee has filed evidence, ledger account of the sundry creditors in the assessee's books of account, from where, it is evident that payment was made to them by the assessee through the banking channels in the subsequent years. The summary of such payments made by the assessee in the subsequent years is at APB 73-76 and the copy of ledger accounts has been furnished at APB 243-311.

29.10 From the above, we are of the considered opinion that the purchases having been duly accepted, adverse inference against the assessee was wrongly drawn with regard to sundry creditors u/s 68 of the Act. The ld. PCIT evidently erred in holding that the AO had failed to verify the genuineness and credit worthiness of the sundry creditors.

The ld. PCIT further went wrong in observing, in the face of the evidence produced by the assessee, that the AO had not called for any ledger documents and confirmation of ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 87 accounts of the sundry creditors. The ld. PCIT further went wrong in holding that the AO had failed to make any independent enquiry to verify the genuineness of the creditors. The impugned order in this regard is also set aside and reversed and the assessment order is revived with regard to the issue of sundry creditors also.

29.11 So far as regards the issue of payments made to partners, the ld. PCIT observed that as per the assessment record, the replies filed during the assessment proceedings were just placed on record and the AO had failed to check whether all the payments made to the partners were in accordance with the Partnership Deed and the Income Tax Act, 1961; that the AO had not even called for the copy of the Partnership Deed and had not brought the same on record during the assessment proceedings; that in the absence of the Partnership Deed, all the payments made to the partners remained unverified; that the copy of the Partnership Deed had been submitted by the assessee only in response to the notice issued u/s 263; that therefore, the assessment order was erroneous and prejudicial to the interests of the Revenue and that the AO should bring the same on record and verify and check whether all the ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 88 payments made to the partners are in accordance with the deed and the Income Tax Act, 1961.

29.12 The payments made to the partners have been tabulated as follows :

Sr. Name of Partner Interest Remuneration No. (in Rs.) (in Rs.) i) Lalit Mohan Sharda 8.98.170 3,00,000 ii) Mahesh Sharda 19,69,555 6,00,000 iii) Pankaj Sharda 17,66,511 3,00,000 Total 46,34,236 12,00,000 29.13 Further, the status of the partners’ remuneration and interest paid to partners has been shown as follows :

Sr. Assessment Partners Interest Disallowance Assessed Assessment No. Remuneration paid to Partners i) 2011-12 16.00,000 17,04,834 — DCIT 143(3) ii) 2012-13 16.00.000 20,33.464 Circle — iii) 2013-14 4,80.000 29,92.937 Sirsa — iv) 2014-15 12,00,000 40,26.827 ~ v) 2015-16 12,00,000 46,34,236 — vi) 2016-17 12,00.000 96.94,384 —

i) 358 ITR 295 (SC) CIT vs. Excel Industries Ltd. ii) 308 ITR 161 (SC) CIT vs. J. K. Charitable Trust iii) 266 ITR 99 (SC) CIT v. Berger Paints iv) 394 ITR 449 (SC) Godrej & Boyce Manufacturing company Ltd. vs. DCIT 30.1 Otherwise too, as rightly contended, both the payments, i.e., either on account of remuneration paid to partners, or on account of interest paid to partners is taxable in their respective hands and not in the hands of the assessee. Therefore, no adverse inference under the provisions of Section 263 of the Act could have been drawn.

30.2 As such, here also, we find the grievance of the assessee to be justified. We hold that the ld. PCIT has erred in holding that the AO had failed to check whether all the payments made to partners were in accordance with the Partnership Deed and the Income Tax Act. The ld. PCIT also went wrong in observing that the AO had not even called for the copy of the Partnership Deed and had not brought the same on record.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 90 30.31 The assessee's contentions are to the effect that the AO had passed the assessment order after making all possible enquiries; that the AO had adopted one of two possible view; that the revisional order is based on highly vague and cryptic observations; that the provisions of Section 263 do not permit revision on the basis of merely suspicion, conjectures and surmises; that revisionary powers cannot be invoked to make deeper enquiry; that to arrive at a conclusion of the assessment order being erroneous and prejudicial to the interests of the Revenue, the same minimal enquiry has to be there; that the revisionary action is based on receipt of proposal from the AO; that Commissioner of Income Tax cannot simply ask the Assessing Officer to re- examine the matter, he can do so only after finding order of assessment is erroneous and prejudicial to interest of Revenue; that error should be one which depended on fact or law and not mere poss1blity or guess work; that proceedings u/s 263 have to be confined to findings recorded by learned Assessing Officer and not beyond.

ITA 148/CHD/2021

1. That order dated 20.3.2021 u/s 263 of the Act by learned Principal Commissioner of Income Tax, Rohtak has been made without satisfying the statutory preconditions contained in the Act and is therefore without jurisdiction and thus, deserves to be quashed as such.

failed to make any independent enquiry to verify the genuineness of the loans" is factually incorrect, legally misconceived, contrary to evidence on record; and in any case is vague, based on surmiseful considerations; and therefore unsustainable. 2.2 That further finding that "the AO has failed to verify the genuineness and creditworthiness of sundry creditworthiness of sundry creditors" and also the observation that "AO has not called for any ledger documents and confirmation of accounts of the sundry creditors"; However "AO has failed to make any independent enquiry to verify the genuineness of the creditors" is factually incorrect, legally misconceived, contrary to evidence on record; and in any case is vague, based on surmiseful considerations; and therefore unsustainable. 2.3 That also finding that "the AO has failed to check whether all the payments made to partners is accordance with partnership deed and Income Tax Act, 1961 and also the observation that AO has not even called for the copy of partnership deed and brought the same on record" is patently erroneous, unsupported by any evidences, cryptic and, untenable. 2.4 That the learned Principal Commissioner of Income Tax has erred in holding that it is a case of "lack of enquiry" and, further failing to appreciate that alleged inadequate enquiry in the manner suggested without any independent evidence and, without any further enquiries by him cannot be a basis for assumption of jurisdiction u/s 263 of the Act. 2.5 That the learned Pr. Commissioner of Income Tax has failed to appreciate that once the learned Assessing Officer on examination of the facts on record and after making all possible enquiries had accepted claim of the appellant then such an order of assessment could not be regarded as erroneous in as much as prejudicial to the interest of revenue merely because the learned Pr. Commissioner of Income Tax had a different opinion and that too, without having established in any manner that, view adopted by the learned Assessing Officer was an impossible view. 2.6 That the learned Pr. Commissioner of Income Tax has also failed to appreciate that, u/s 263 of the Act, an order of assessment cannot be set-aside to simply to make further enquiries and thereafter pass fresh order of assessment and as such, impugned order is contrary to law and hence, unsustainable. 2.7 That the learned Principal Commissioner of Income Tax has failed to appreciate that surmises, conjecture and suspicion could not be a basis much less a valid basis to invoke section 263 of the Act. 2.8 That while passing the order u/s 263 of the Act the learned Principal Commission of Income Tax cannot travel beyond the show cause notice and therefore findings and observation and also the material relied upon not referred in the show cause notice but made part of the order could neither in ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 93 law and nor on fact be made a basis to assume jurisdiction u/s 263 of the Act; and thus order on this ground alone deserve to be quashed as such. 2.9 That various other adverse findings recorded in the notice u/s 263 of the Act and, also in impugned order are factually incorrect, vague, legally misconceived and untenable.

3. That the learned Principal Commissioner of Income Tax has framed the impugned order without granting sufficient opportunity to the appellant and therefore the order made is illegal, invalid and vitiated order

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 94 38. Apropos Ground Nos. 2 to 2.9, the facts are, mutatis-mutandis , similar to those present in dealt with herein by us, in the preceding portion of this order. That being so, our findings on these grounds, qua assessment year 2011-12 (supra) are squarely applicable to the year under consideration also, i.e., assessment year 2017-18. Following the reasons recorded by us in this regard for assessment year 2011-12, for the year under consideration also, the revisional proceedings, culminating in the impugned order are not sustainable in law.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 95 31 SOT 353 (Chennai) (SB), “Daniel Merchants” (2017) TIOL 455 (SC)(IT) & “Daniel Merchants” (2017) TIOL 2526 (HC)

(KOL) (IT).

39.1 In this regard, we find that no such objection was raised by the CIT in the impugned order. It is well settled that the case of the Commissioner cannot be improved upon by the DR. Reference, in this regard, can be made to “CIT v.Jagadhiri Electric Supply & Industrial Co.” 140 ITR 490 (P&H), “M/s Sabh Infrastructure Ltd. vs. ACIT”,398 ITR 198 (Del) and “Sarogi Credit Corporation v. Commissioner Of Income-Tax, Bihar” 03 ITR 344 (Patna).

39.2 In view of the above, finding that in this matter, the revisionary proceedings, culminating in the impugned order are not sustainable in law, the case looked at from any angle. Accordingly, the grievance of the assessee in this regard is justified. It is accepted as such. The order under appeal is set aside and quashed and that passed by the AO is revived. Ordered accordingly.

ITA 146,147 & 148/CHD/2021 A.Y. 2011-12, 2015-16 & 2016-17 96

Order pronounced on 04.03.2024.