9911796707
TMI Blog2004 (10) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... ing date of hearing on 6-12-1999 at 12.30 p.m. A detailed written reply dated 20-12-1999 was furnished by the assessee to the Assessing Officer. And before this reply, reply dated 3-12-1998 and 21-12-1998 were also furnished to the Assessing Officer. Thus, these were sufficient materials on the record of the Assessing Officer to take a decision as to whether the creditors in question were genuine or not. In case of his dissatisfaction, he was at liberty to ask the assessee to produce the creditors or issue summons to them to verify their confirmations about the credits to the assessee. The Assessing Officer was, however, satisfied with the genuineness of the creditors, hence he opted to drop the reassessment proceedings vide order dated 7-2-2000. We thus answer the issue in affirmative that claim of the assessee related to the creditors was properly examined by the Assessing Officer during the reassessment proceedings. The view taken by the learned CIT in the revisional order that explanation furnished by the assessee was not sufficient to drop the reassessment proceedings is thus nothing but a change of opinion, which is not allowed to be made a basis for invocation of revisional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly laid down that if there is no application of mind by the Assessing Officer, then Commissioner would have powers to revise such order. Similarly, Hon ble Supreme Court in Shree Manjunathesware Packing Products Camphor Works case [ 1997 (12) TMI 4 - SUPREME COURT] has held that revisional powers conferred on Commissioner under section 263 are of wide amplitude and he can examine the records which were not before the Assessing Officer. Thus, I find nothing wrong with the order of Learned CIT and confirm the same. In the result, appeals are dismissed. Third member order - A bare reading of this provision one can say that the prohibition to make an order u/s 147 after the expiry of 2 years from the end of financial year in which the notice u/s 148 was served. This section does not prohibit the serving of the order any time limitation. The notice u/s 148 for the three years was issued in the financial year 1997-98 on 3-6-1997 in first two years and on 12-5-1997 in third year. Therefore, the time limit within which the order u/s 147 could be made was 31-3-2000 being 2 years from the end of financial year 1997-98 ending on 31-3-1998. Apparently therefore the orders made by the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... my opinion is that the Assessing Officer has made proper inquiries and dropped the proceedings, after due consideration of the reply and details submitted by the assessee. Further, the order of the Assessing Officer cannot be said to be erroneous, and prejudicial to the interest of the Revenue. As observed by the Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT, the Commission has to satisfy twin circumstances viz. order of the Assessing Officer sought to be revised is erroneous and (2) that, the order- is prejudicial to the interest of the Revenue. Section 263 cannot be invoked to correct each and every mistake and/or error committed by the ITO. It is only when the order is erroneous that section will attract. In this case is not the case of CIT(A) that the cash credit were bogus or not genuine. The only reason to set aside his order is that the Assessing Officer has not made proper inquiry, that in my opinion is not correct, if one analyse the facts and circumstances in right perspective. In the present case also, the Assessing Officer made inquiry and the assessee replied to each and every query of the Assessing Officer both in the original proceedings as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m No. 64 is a valid order whereas the aforesaid action is not at all the order of reassessment and time limitation for communication of the order dropped is out of limitation and, therefore, the order passed under section 263 is totally erroneous in law; (4) holding that for action taken under section 263 is sufficient when any order is passed; (5) holding that the order passed under section 147 is without any proper enquiry and the learned Assessing Officer has not brought on record sufficient material to justify the proceedings is the face of glaring adverse facts which have been discussed in the order which necessitated the issue of notice under section 263 which is totally erroneous in law as original order under section 143(3) was passed by the DCIT monitoring as stated in the office note that cash credits confirmation has been obtained and considered as lines indicated in DCIT letter in the above and without confronting Sunil Agrawal after filing his affidavit before ADI, Ahmedabad, and bye-passed the settled principles of law; (6) holding that the order is erroneous as well as it is prejudicial to the interests of revenue in spite of all necessary enquiries have alread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same has no valid existence in the eyes of law or claimed to have come in operation in effect. He refers the judgment of the Hon'ble Supreme Court in the case of State of Andhra Pradesh v. M. Ramakishtaiah & Co. [1994] 93 STC 406 wherein it was held that in the absence of communication, the court shall presume that the order was not made on the date it purported to have been made and that it could have been made after the expiry of period of four years prescribed for passing such an order under revision. He also cites the following judgments:- 1. CIT v. Shree Narayana Chandrika Trust [1995] 212 ITR 456 (Ker.) 2. CIT v. Carborandum Universal Ltd. [1999] 240 ITR 99 (Mad.) 3. Kalyankumar Ray v. CIT [1991] 191 ITR 634 (SC) 4. CIT v. Balkrishna Malhotra [1971] 81 ITR 759 (SC) 5. Peeru Lal Mohan Lal v. CIT [2002] 257 ITR 198 (Raj.) and 6. CIT v. Smt. Raniraj Kaur [1996] 222 ITR 665 (MP). 5. The learned DR, on the other hand, refers the contents of page No. 8194 of the book Income-tax Law authored by Chaturvedi & Pithisaria. He also cites the following judgments:- 1. CIT v. Christian Mica Industries Ltd. [1979] 120 ITR 627 (Cal.) 2. CIT v. Shree Manjunathesware Pack ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings upon the assessee was necessary and if so as lo whether it was served upon the assessee or not? Though the entry of the reassessment order in the D & CR is stated to have been shown on 7-2-2000 but there is nothing on record to suggest that order was communicated to the assessee nor is it the case of the revenue that order was sent through registered post to the assessee to presume deemed service thereof upon the assessee On similar issue the Ahmedabad Bench of the Tribunal in the case of Smt. Vasantikaben J. Dave v. ITO [1989] 28 ITD 220 has held that effectiveness, enforceability and validity of an order very much depends upon its having been communicated to the person concerned. The communication of an order of assessment to the assessee concerned is thus essential requirement for the effectiveness and validity of such an order. The Tribunal has placed reliance on the judgments of the Hon'ble Supreme Court and High Courts in the cases of CIT v. Oriental Rubber Works [1984] 145 ITR 477, Smt. Jeejeebai Shinde v. CGT [1985] 154 ITR 122 (MP) (sic) and CIT v. Badri Prasad Bianwalla [1982] 133 ITR 433 (Cal.). In this case before the Ahmedabad Bench of the Tribunal, the releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the CIT is nothing but his own opinion on the matter. 8. In support of the grounds, the learned AR draws our attention to the contents of page 34 of the paper book i.e. notings made by the Assessing Officer at the bottom of the assessment order under section 143(3) of the Act for the Assessment Year 1991-92 and submits that the Assessing Officer had specifically pointed out that this assessment has been made under DCIT, Ujjain, monitoring and after getting his approval cash credit confirmations have been obtained and scrutinized on the lines indicated in the letter of the DCIT. He also refers contents of pages 11 to 29 of the paper book i.e. confirmation certificate from Sejal Enterprises, Proprietor Sunil T. Agrawal, Sanjay Kumar Agrawal, Tarachand Agrawal/Smt. Premlata Agrawal, Kamalkumar Agrawal and Smt. Anju Parasramka. He also refers assessment orders for the assessment years, under consideration, placed at pages 30 to 43 of the paper book. He also invites our attention to the contents of pages 46 to 51 of the paper book i.e. copies of notices issued under section 147/148 of the Act and the reasons shown therein for initiating reopening proceedings. The learned AR submits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment under section 143(3) was made under DCIT, Ujjain, monitoring and after granting his approval cash credit confirmations were obtained and scrutinized on the lines indicated in the letter of DCIT. The facts are that in these cases a survey under section 133A of the Income-tax Act was conducted in September, 1996 i.e. after completion of original assessment. During the survey operation it was found that the assessee had obtained certain cash credits. On investigation by the Dy. Director (Inv.) Ahmedabad, it was detected that the creditors were not genuine and reported that one Sunil T. Aggarwal had admitted to have given only Hawala entry, assessee had given an equivalent amount to the creditors at Ahmedabad and had obtained it back as a loan. Similar was the case with Anju Parasramka. In all the three assessment years 1991-92, 1992-93 and 1993-94 these creditors are Sejal Enterprises, Sanjay Aggarwal, Tarachand Aggrawal, Anju Parasramka and Kamal Kumar Aggrawal. Shri Sunil T. Aggarwal is proprietor of M/s. Sejal Enterprises. On the basis of these reports of ADI. In some other assessment year the interest paid by the assessee to creditors was disallowed in the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned A.R.:- (i) Kalra Glue Factory v. Sales Tax Tribunal [1987] 167 ITR 498 (SC) (ii) CIT v. U.M. Shah Proprietor Shrenik Trading Co. [1973] 90 ITR 396 (Bom.) (iii) Prakashchand Nahta v. Union of India [1987] 163 ITR 310 (SC) (sic) (iv) Kishinchand Chellaram v. CIT [1980] 125 ITR 713 (SC) (v) Mehta Parikh & Co. v. CIT [1956] 30 ITR 181 (SC) (vi) Malwa Knitting Works v. CIT [1977] 107 ITR 379 (MP) (vii) CIT v. Birbal Khanna & Co. [1983] 14 Taxman 120 (MP) (viii) CIT v. Metachem Industries [2000] 245 ITR 160 (MP) (ix) CIT v. Omrao Ind. Corpn. (P.) Ltd. [2000] 246 ITR 346 (All.) (x) United Electrical Co. (P.) Ltd. v. CIT [2002] 258 ITR 317 (Delhi) Provisions of section 68 of the Act read as under:- "S.68 - Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year." Thus, we are of the view that the Assessing Officer may charge the credited su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was not sufficient to drop the reassessment proceedings is thus nothing but a change of opinion, which is not allowed to be made a basis for invocation of revisional provision under section 263 of the Act. The dropping of the reassessment proceedings, therefore, cannot be termed as erroneous and prejudicial to the interest of revenue. 11. In the result, appeals are partly allowed. 12. ITA No. 269/Ind./02 - The first appellate order has been impugned by the assessee mainly on the following grounds that the learned CIT has erred in - (1) bringing the gross profit of Rs. 27,39,871 in place of correct gross profit of Rs. 38,10,724 and, therefore, has erred in not understanding the gross profit arrived at the rate 9.22 per cent in place of correct GP at the rate of 11.25 per cent as per regular practice of accountancy adopted by the assessee and has erred in taking account of income of Rs. 40,000 already considered in trading account: (2) calculating the average sale price per metre at Rs. 81.85 whereas the survey was carried out in September, 1996 and the average sale price of August, 1996 is Rs. 72.87 per metre and, accordingly, incorrectly calculated the trading profit of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the credits in these assessment years in favour of the assessee in the above appeals and thus interest claimed to have been paid to these creditors during the year relevant for the assessment year in question is held genuine and thus mere was no occasion before the CIT to invoke provisions of section 263 of the Act. Ground No. 3 is thus allowed in favour of assessee. 16. In support of ground Nos. 1 and 2 the learned AR draws our attention to contents of pages 137 to 145 of paper book i.e. particulars of sales-tax as on 31-3-1997 including sales invoices, debit notes and ledger and submits that profit has already been considered in trading account. The learned DR, on the contrary, banks upon the revisional order and submits that profit earned on stock should have been shown. 17. After considering the arguments of parties in view of the material available on record we find force in submission of the learned A.R. as in support of its claim the assessee had furnish cash sales voucher memos dated 31-3-1997 for Rs. 2,12,589 with the submission that profit had already been considered in trading account. Thus, the basis for invocation of provisions of section 263 is not correct. Gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the assessee only on 8-3-2002 after assessee took objection before CIT regarding the service. Since dropping order was served on 8-3-2002, it indicated that same was not passed earlier and was thus time barred. He then referred to pages 98 to 102 which is copy of the reply given in response to notice under section 263 in which reliance was placed on the decision of Supreme Court in the case of State of Bengal v. M.R. Mondal AIR 2001 SC 3471 wherein it was observed by Hon'ble Supreme Court that order passed but not communicated has no valid existence in the eyes of law. Similarly, an order passed but kept in the file without communicating the same to the plaintiff can also have no force of law and the same has no valid existence in the eyes of law. He also relied on State of Andhra Pradesh v. Ramakishtaiah & Co. [1994] 93 STC 409 (SC). He also relied on CIT v. Shree Narayana Chandrika Trust [1995] 212 ITR 456 (Ker.); CIT v. Carborundum Universal Ltd. [1999] 240 ITR 99 (Mad.); Kalyankumar Ray v. CIT [1991] 191 ITR 634 (SC); CIT v. Balkrishna Malhotra [l971] 81 ITR 759 (SC), Peeru Lal Mohan Lal v. CIT [2002] 257 ITR 198 (Raj.) and CIT v. Smt. Raniraj Kaur [1996] 222 ITR 665 (MP) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very clear and Commissioner has powers to make revision against any order passed in any proceedings which are found to be erroneous in so far as they are prejudicial to the interests of the revenue. Such power arises on passing of an order in any proceedings and not after order has been served. Learned Author, Chaturvedi & Pithisaria, in their Commentary on Income Tax Law, Fifth Edition, at page 8194 has opined that the expression 'any proceedings under the Act' is not related to any particular assessment year. The expression covers 'any proceedings' factually taken under the Act. It has been further opined that power of Commissioner is not confined only to an order of assessment passed by the Assessing Officer but it extends to all orders passed by him if the Commissioner considers that such orders are erroneous in so far as they are prejudicial to the interests of the revenue. Similar view was expressed by the Hon'ble Calcutta High Court in Christian Mica Industries Ltd's case. Similar view was also expressed by the Hon'ble Madras High Court in Madras Palayakat Co. (P.) Ltd.'s case. It is also important to note that section 263(1) has used the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 147 for Assessment Years 1991-92, 1992-93 and 1993-94. This reopening was dropped later on. The Commissioner has invoked the provisions of section 263 in respect of these dropping of proceedings initiated under section 147/148 holding that such dropping order was erroneous in so far as it is prejudicial to the interest of the revenue. The dropping of the proceedings was set aside with a direction to Assessing Officer to conduct proper enquiries and frame proper assessment after providing opportunity to the assessee. 22. Before us, learned AR submitted that assessments were completed under section 143(3) for all the relevant years on 20-7-93, 20-10-93 and 31-03-95 for Assessment Years 1991-92, 1992-93 and 1993-94 respectively. He referred to pages 11 to 19 and submitted that: confirmations in respect of all the loans were filed. He then referred to page 34, which is copy of the assessment order for Assessment Year 1991-92 under section 143(3) where in the office note it has been mentioned that assessment was framed in accordance with the directions of DCIT, Ujjain Range because the case had come under DCIT, Monitoring. He then referred to pages 46 to 51 of the paper book, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. In this regard, he relied on CIT v. Shree Manjunathesware Packing Products & Camphor Works [1998] 231 ITR 53 (SC). 24. I have considered the rival submissions carefully and have gone through the relevant material on record. First of all I would like to observe that what is challenged before us is revision order passed under section 263 and not reopening of the assessment initiated under section 147/148. In view of these facts, the decisions of Omrao Industrial Corpn. (P.) Ltd.'s case and United Electrical Co. (P.) Ltd.'s case are of no help to assessee because same were rendered in the context of reopening of assessment under sections 147 and 148. Coming to the facts of the case, I find that some investigations etc. were conducted at Ahmedabad in which it was found that loans raised by the assessee were not genuine. In the meantime, interest on certain unsecured loans was disallowed and assessee had come before the Tribunal in respect of that disallowance. While adjudicating that issue, it was observed by the Tribunal that Assessing Officer should first reopen the assessment and determine the genuineness of loans only after that, question of disallowance of interest wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere reopened in the light of material obtained by the Deptt. that certain loans were not genuine, still Assessing Officer simply accepted the same on the basis of letter without raising further enquiries or obtaining relevant material or asking the assessee to produce such persons. Not a single question was asked about report of Investigation Agencies report. 25. The decision relied by Ld. AR are of no help to assessee. For example, the decision of Mehta Parikh & Co.'s case laid down that affidavit filed by a person cannot be dismissed lightly but in the case before us affidavits were not filed before Assessing Officer or CIT but the same were filed before DDIT (Inv.), Ahmedabad. Similarly in the decisions of Kishinchand Chellaram's case and Kalra Glue Factory's case where it was held that no evidence could be admitted without providing opportunity for cross examination, has not relevance because enquiries were conducted by DDI, Ahmedabad and those matters are not under challenge before us as we have already emphasized above. In U.M. Shah Proprietor, Shrenik Trading Co.'s case, Hon'ble Bombay High Court was concerned whether loans were genuine or not and issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble President may desire: ITA Nos. 266 to 268/IND/2002 1. As to whether the dropping of the proceedings under section 148 served on the assessee on 8-3-2002 is invalid and barred by time limitation in the absence of service within the statutory period? 2. If answer to question No. 1 is in affirmative then as to whether the revisional order under section 263 becomes invalid in consequence? and 3. As to whether under the facts and circumstances of the case, the order passed under section 263 is bad in law on merits of the case? ITA No. 269/IND/2002 As to whether order passed under section 263 related to allowing the claim of payment of interest to the creditors by dropping of the reassessment proceedings by the Assessing Officer is invalid under the facts and circumstances of the case? THIRD MEMBER ORDER Per Shri R.P. Garg, Vice President 20-10-2004 1. As there is a difference of opinion between Judicial Member and Accountant Member, the President, ITAT has referred the matter under section 255(4) of the Act for my opinion, as Third Member, on the following points: ITA Nos. 266, 267 & 268/IND/02 (a) As to whether the dropping of the proceedings under section 148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or assessment year 1994-95, while verifying the genuineness of creditors introduced in various names, enquiries were conducted through ADI, Ahmedabad and ADI, Indore and as per their reports the following unsecured loans were bogus: Amount Date (1) Tarachand Agrawal, 4,50,000 -- (2) Sejal Enterprises, Ahmedabad 10,000 -- 40,000 8-5-1991 (3) K.K. Agrawal, Ahmedabad 20,000 10-5-1991 (4) Sanjay Agrawal, Ahmedabad 60,000 5-4-1991 (iii) For the assessment year 1993-94 During the course of assessment proceedings for assessment year 1994-95 inquiries were conducted through, ADI, Ahmedabad to verify the genuineness as credit introduced in the various names. As per ADI's report the loan of Rs. 1,85,348 in the name of Shri Gulabwala, Ahmedabad was not genuine as per the statement of this person recorded before ADI. 5. It seems that the proceedings initiated under dropped by the Assessing Officer by the order dated 7-2-2000 by observing as under: (i) For the assessment year 1991-92 - "Proceedings filed alter verification & considering reply of the assessee." (ii) For the assessment year - 1992-93 - "Keeping in view the reply of the assessee & du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no valid existence in the eyes of law, in view of Supreme Court decision in the case of State of West Bengal v. M.R. Mondal AIR 2001 SC 3471. Reference was also made in the decision of Madras High Court in the case of CIT v. Carborandum Universal Ltd. [1999] 240 ITR 99 and in the case of CIT v. Shree Narayana Chandrika Trust [1995] 212 ITR 456. 10. The CIT, however, rejected the contention of the assessee by observing as under: "I have considered submissions of the counsel, Madras High Court in the case of CIT v. Palayakat Co. Ltd. 74 ITR 642 has held that 263 is applicable in any proceedings under the Act. It is not continued to an order of assessment only and it extends to all orders passed by the Assessing Officer, 120 ITR 627 (Calcutta). It has been held by Calcutta High Court in this case that dropping the proceedings after obtaining the approval of the Inspecting Assistant Commissioner is also an order which can be revised under section 263 of the Income-tax Act. As regards the submissions that the order has not been communicated, it is stated that before passing of order under section 263 of the Income-tax Act, even this compliance has been made and orders sheet ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view taken by the CIT in the revisional order that explanation furnished by the assessee was not sufficient to drop the reassessment proceedings, was thus, nothing but a change of opinion, which cannot allowed to be made a basis for invocation of revisional provision under section 263 of the Act. 13. The Revenue's contention, on the other hand, is that issue before the Tribunal is not the validity of order passed for dropping of proceedings under section 147, but whether the CIT has powers to revise that order. The order of dropping was made on 7-2-2000 and the revisionary order has been passed on 22-3-2002 i.e., within two years from the end of financial year of the droppings the proceedings under section 147. It was, therefore, a valid order. On merits, he submitted that some investigations were conducted at Ahmedabad in which it is found that loans raised by the assessee were not genuine. Interests on these unsecured loans was disallowed by Assessing Officer in subsequent year and assessee had come before the Tribunal and while adjudicating that issue, the Tribunal observed that the Assessing Officer should first reopen the assessment and determine the genuineness of loan. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s issued in the financial year 1997-98 on 3-6-1997 in first two years and on 12-5-1997 in third year. Therefore, the time limit within which the order under section 147 could be made was 31-3-2000 being 2 years from the end of financial year 1997-98 ending on 31-3-1998. Apparently therefore the orders made by the Assessing Officer on 7-3-2000 are not barred by limitation. The ld. counsel however submitted that an order though made within time limit provided under section 153(2) would be barred by limit if they are not communicated within such period. The orders which were served on 8-3-2002 are therefore not valid order. I do not find any merit in this contention of the assessee. No such provision is there in IT Act to provide that order must also be communicated within such time limit prescribed for making the order. Making of an order and communication of such order are two separate actions and law provides a time limit for the first and not for the second. An order passed within the prescribed limit, in my opinion, can be communicated subsequently and for that there is no barrier of any time limit. It is true that, an order to be effective must be served on the aggrieved party o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s prescribed for first action and no time limit is prescribed for the second, one need not have to read such limitation for both the actions. 16. The assessee relied upon the decision in the case of M.R. Mondal. In that case the order was not communicated at all and therefore that was held to be not valid order. In the present case the order was communicated of the assessee on 8-3-2002 before the exercise of jurisdiction under section 263 and therefore the decision of the Supreme Court in the aforesaid case would be of no help to the assessee. 17. In the case of Shree Narayana Chandrika Trust, the Kerala High Court noted the question but declined to answer the same. In this case a reference was made to earlier decision of the Kerala High Court in the case of Government Wood Workshop v. State of Kerala [1988] 69 STC 62 wherein the High Court observed as under: "The order of any authority cannot be said to be passed unless it is in some way pronounced or published of the party affected has the means of knowing it. It is not enough if the order is made, signed, and kept in the file, because such order may be liable to change at the hands of the authority who may modify it, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Vasundra Leasing Ltd. Rs. 2,00,000 6. M/s. Sanjay Kumar Agrawal Rs. 50,000 7. M/s. Tarachand Rs. 50,000 8. M/s. Sejal Enterprises Rs. 1,00,000 9. Miss Manju Sharma Rs. 50,000 10. M/s. Madanlal Sharma Rs. 50,000 11. M/s. Mohit Leasing & Hire Purchase (P.) Ltd. Rs. 50,000 12. M/s. Akhil Leasing & Hire Purchase (P.) Ltd. Rs. 1,50,000 13. M/s. Munnu Credit & Leasing (P.) Ltd. Rs. 1,00,000 You are requested to please file supporting evidence in respect of the above credits with a view to establishing their creditworthiness. Also please arrange to produce the creditors indicated at Sr. Nos. 2, 4, 5, 8, 12 & 13. (v) In Assessee's letter dated 6-11-1992 addressed to the Assessing Officer, the assessee vide para-3 has stated as under: "3. The cash creditors listed in above sheet are duly supported with respective confirmations. All of them are assessee and their complete addresses and GIR No./PA No. stand submitted. As most of them are from Bombay, Ahmedabad, Delhi and other distant places. Further, confirmations, if necessary, may please be had from their respective ward of assessments." (vi) In Assessment Order for assessment year 1991-92 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the various names. As per ADI's report the loan of Rs. 1,85,348 in the name of Shri P. Gulabwala, Ahmedabad was not genuine. (as per the statement of this person recorded before ADI). You are once again directed to submit your return in response to the said notice." (xi) The ACIT, Circle-I, Ujjain made enquiries about these cash credits vide his letter dated 6-4-1998 addressed to the assessee has stated as under [for assessment year 1991-92]:- "You are requested to please submit the following details/information in connection with your assessment: 1. Copy of account of all such parties where new unsecured loan has been introduced. Kindly mention the cheque/DD No., name of bank, branch, date etc. Also give their present, postal address. This information is essential ascertain the genuineness of the cash credits introduced. Kindly note that the onus of proving their genuineness lies on you. Failure in this regard would constrain the department in treating these as unexplained cash credits under section 68 of the Act." (xii) Assessee vide his letter dated 25-5-1998 submitted information to the ACIT for assessment year 1991-92, which are as under: With r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Almost similar reply was given by the assessee for the assessment year 1992-93 stating as under: With reference to your query about new loans introduced during the year under review, we would like to bring to your kind notice that the case was selected for scrutiny under section 143(3) of Income-tax Act. Details of all loan introduced with their confirmations, GIR number, statement of income and income-tax return are already on record, vide our letter dtd. 24-3-1993. We have already proved the genuineness of parties during the course of proceeding for assessment year 1992-93. (1) With reference to your letter dt. 20-6-1997 stating that the loans of the following persons:- (1) Tarachand Agrawal (2) Sejal Enterprises (3) Anju Parasramka (4) Sanjay Agrawal Are bogus as per the report of ADI, Ahmedabad due to the statement of Shri Sunil Agrawal given to him, we submit here the affidavit of Shri Sunil Agrawal dated 4-11-1997 (i.e. after his statement before A.D.I.) duly notarized on stamp paper. In this affidavit he has clearly mentioned that statement given by him was under pressure and duress. We are also enclosing herewith the confirmation, GIR number and copy of retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital. He was a regular Income-tax assessee. Later on he died and on request of his wife Smt. Premlata Agrawal, loan was transferred to her account and interest paid to her on regular basis. As documentary evidence, of this we are enclosing herewith confirmation letter given by Shri Tarachandji Agrawal, confirmations given by Smt. Premlata Agrawal, her copy of income-tax return and her Balance Sheet for various years. (xvi) Again vide letter dated 21-12-1998, the assessee submitted information as under: (1) The copy of bank statement of (i) Sh. Tarachand Agarwal, (ii) Sejal Enterprises (iii) Sanjay Agarwal & (iv) Anju M. Parasramka are attached. The detail copy of account of the Nutan Synthetics & Devas Silk Mills are also attached herewith since 1990-91. (2) Detail of interest received from M/s. Dewas Silk Mills & Nutan Synthetics are as under: (I) Shri Tarachand Agarwal M/s. Dewas Silk Mills & Nutan Synthetics Asst. yr. Int Rs. Int Rs. 1990-91 308 Nil 1991-92 22,336 5,635 1992-93 22,500 7,500 1993-94 22,500 7,500 1994-95 22,500 7,500 1995-96 22,500 7,500 1996-97 22,500 7,500 1997-98 22,500 7,500 The above mentioned interest received were de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax (Investigation), Ahmedabad in response to his letter dated 3-12-1998 stating as under: (3) Copy of statement of source of lending (Sejal Enterprises and Sanjay T. Agarwal) fund to Dewas Silk Mills & Nutan Synthetics attached herewith. In case of Tarachand Agarwal and Anju M. Parasramka the source of lending are as explained above. (4) A copy of bank pass book and statement of interest received and withdrawal (M/s. Sejal Enterprise and Sanjay T. Agarwal) are attached herewith. (xviii) Another letter was also written to the Dy. Director of Income-tax (Investigation) Ahmedabad by stating that- Shri Kamal T. Agarwal has given a loan of Rs. 60,000 by Cheque No. 004317 dated 4-4-1991 to Sanjay T. Agarwal. In our earlier submission, we submit a bank statement, balance sheet etc. Shri Kamal T. Agrawal has been assessed to Income-tax since long. He assessed in Calcutta prior to 1998-99. His source of income was commission and interest income. Late Shri Tarachand Agrawal deposited Rs. 50,000 on dated 18-3-1991 and Rs. 1,00,000 on dated 5-4-1991 to Dewas Silk Mills. He also deposited Rs. 50,000 on dated 3-7-1991 to Nutan Synthetics. Shri Tarachand was assessed to Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) J.M.T. Granite Exports about Rs. 50,000 in the name of different members of family. (6) That during the course of taking my statement, threatening was continued and after putting me in such a condition of heavy pressure, mental tension and great fear in mind, of imprisonment and fine, the Income-tax Officials put me in duress condition and by reason of pressure and panic, I was compelled to admit to the effect that deposits in the firms i.e. (i) Nutan Synthetics, Dewas (ii) Dewas Silk Mills and (iii) J.M.T. Granite Exports are only Hawala Entries and all these entries are bogus entries. The Income-tax officials, after giving threatening, given an assurance that in case I admitted to the effect that deposits given by me in the above firms are Hawala Entries and all these entries are bogus entries, no action will be taken against me and in case I do not admit then extreme actions under Income-tax Act and I.P.C. Act will be taken against me. (7) That I was under heavy pressure, mental tension and frightened of imprisonment and fine and in such a panic and duress condition, I was asked to reply to one of the questions by admitting to the effect that I have not given deposits to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the Revenue. As observed by the Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83, the Commission has to satisfy twin circumstances viz. order of the Assessing Officer sought to be revised is erroneous and (2) that, the order- is prejudicial to the interest of the Revenue. Section 263 cannot be invoked to correct each and every mistake and/or error committed by the ITO. It is only when the order is erroneous that section will attract. In this case is not the case of CIT(A) that the cash credit were bogus or not genuine. The only reason to set aside his order is that the Assessing Officer has not made proper inquiry, that in my opinion is not correct, if one analyse the facts and circumstances in right perspective. We have narrated above the history of examination of these cash credits in the original assessment and in the reassessment proceeding both by the Assessing Officer, ACITR and DCIT, who were monitoring the assessment and after proper discussion, the proceedings for reopening were dropped. As observed by the Bombay High Court in the case of CIT v. Gabrial India Ltd. [1993] 203 ITR 108, the order cannot be termed as erroneous unless it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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