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TMI Blog2010 (1) TMI 864X X X X Extracts X X X X X X X X Extracts X X X X ..... cern – Held that:- Commissioner would not be justified to take action u/s 263, Commissioner is not justified in taking cognizance u/s 263 of the Income Tax Act. The appeal of the assessee is allowed and the order passed u/s 263 is quashed. - ITA No. 1960/Del/08 - - - Dated:- 22-1-2010 - Rajpal Yadav, Shamim Yahya, JJ. M.P. Rastogi, Adv., for the Appellant Gajanand Meena, CIT (DR) for the Respondent ORDER Rajpal Yadav: The assessee is in appeal before us against the order of ld. CIT dated 19th March, 2008 passed u/s 263 of the Income Tax Act 1961 in asstt. year 2003-04. The grounds of appeal taken by the assessee are not in consonance with Rule 8 of ITAT Rules. They are descriptive and argumentative in nature. In brief the grievance of assessee is that Ld. CIT has erred in taking action u/s 263 of the Income Tax Act. 2. Ld. Counsel for the assessee while impugning the order of Ld. CIT, apprised us with the facts and circumstances of the case and pointed out that a return of income was filed by the assessee on 11th March, 2004 declaring a total income of Rs.1,95,502/-. The Ld. AO in order to give logical end to the proceeding issued a notice u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... next reason given in the show cause notice for taking u/s 263 is that in the capital account assessee has disclosed a deposit of Rs.20 lacs. The AO has not made any inquiry for accepting this capital account. The Ld. Commissioner thereafter issued one more show cause notice u/s 263 and in this show cause notice he assigned one more reason that the gift of Rs.2,50,000/- and Rs.3 lacs were received from Shri N K Gupta and Shri Balraj Jain by assessee's minor son Master Vaibhav Jain and Master Anubhav jain were not properly enquired by the AO. 4. The Ld. Counsel for the assessee while taking us through the evidence placed in the paper book pointed out that though there is no elaborate discussion made by the AO in the asstt. order but it is the prerogative of the AO, how to pass the asstt. order. if the failed to discuss certain issues with regard to whom he has taken complete details on record and made discussion with the assessee during the asstt. proceedings then assessee cannot help, but simultaneously he cannot be held liable for such lapse. The Ld. Counsel for the assessee drew our attention towards the interim orders recorded by the AO during the asstt. proceedings. He subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO. This indicate contrary finding. Hence the order of the AO is erroneous and prejudicial to the interest of revenue. 6. We have duly considered the rival contentions and gone through the record carefully. The ITAT in the case of Mrs. Khatiza S. Oomerbhoy vs. ITO, Mumbai, 101 TTJ 1095, analyzed in detail various authoritative pronouncements including the decision of Hon'ble Supreme Court in the case of Malabar Industries 243 ITR 83 as well as Hon'ble Bombay High Court rendered in the case of Gabriel India Ltd. and has propounded the following broader principle to judge the action of CIT taken under section 263. "The fundamental principle which emerge from the above cases may be summarized below" (i) The CIT must record satisfaction that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Both the conditions must be fulfilled. (ii) Sec. 263 cannot be invoked to correct each and every type of mistake or error committed by the AO and it was only when an order is erroneous that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice the requirement of order being erro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jain Marble Home and in M/s. New Marble Home. 8. Confirmation with PANo. From parties from whom loans accepted. Explain whether it is interest free or on interest. 9. Name and address of persons in possession of building, flat and godown and shops. The address of each asset has also to be given. 10. Details of rent received which include name and address of tenant monthly rent and description of asset with address given on rent. 11. Nature of loan given to mamta Jain. Explain our relation with her. Also state rate of interest charged on loan given. 12. Copy of a/c with M/s. Nirmal Granite (P) Ltd. for last 3 years. 13. Purchase made in contravention of section 40A(3) 14. Loan or deposit accepted/paid in contravention of section 269 SS/269T. 15. All squared-up a/cs. 16. Details of gift received in the name of family members or himself with documentary evidence and gift-deeds. Case adjourn for 05-09-2005 05-09-2005 On request, the case adjourn for 20.09.2005 20.09.2005 Record of the case received from I.T.O 2 (3), Meerut in view of Ld. CIT's order no. 2886 dated 08.09.2005 u/s 127 (1) of the I.Tax Act. Issued notice u/s 143(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of asstt. proceedings and the details called for by the AO. He has also placed on record copies of the statement of Shri M.P. Bansal and others, recorded during the course of asstt. proceedings. The AO after analysis of the evidence produced by the assessee and examining the persons who have advanced loans or gave the gifts to his minor sons has accepted the genuineness. This indicate that he has not accepted the accounting entries in the books of accounts as it is without making any inquiry. Rather he has issued notices called for information applied his mind and thereafter accepted the details. Against this stand of the AO the grievance of the Ld. Commissioner is that quality of inquiry is not as good as it ought to have been. His other observation is that notices issued to four persons who has advanced loans to the assessee received unserved. According to the AO assessee has filed confirmation their Permanent Account Number and produced those persons before the AO. The one of the observation of the Ld. Commissioner is that so many persons were maintaining bank account where balances are built up mostly by cash and taken out immediately by way of cheques and drafts, thus they are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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