9911796707
TMI Blog2016 (6) TMI 1272X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and circumstances of the case, the learned Pr. CIT erred in assuming jurisdiction u/s. 263 of the I T Act, in respect of order passed by assessing officer with prior approval of the Additional Commissioner of Income Tax by treating the same erroneous and prejudicial to the interest of revenue. 3. On the facts and circumstances of the case, the learned Pr. CIT erred in coming to the conclusion that the Assessing Officer ought to have examined the applicability of provision of section 69 of the Act which he has failed to do and thereby treating the order as erroneous and prejudicial to the interest of revenue. 4. On the facts and circumstances of the case, the learned Pr. CIT erred in coming to the conclusion that Assessing Officer has failed to carry out necessary verification and inquiries before allowing deduction u/s. l0B and thereby treating the order as erroneous and prejudicial to the interest of revenue. 5. On the facts and circumstances of the case, the learned Pr. CIT erred in coming to the conclusion that assessing officer has failed to carry out necessary verification and inquiries with regard to trading activity at UAE and thereby treating the order as er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder passed by the DCIT was found to be prima facie erroneous in so far as prejudicial to the interest of Revenue. Therefore, proceedings u/s.263 of the Act were initiated by issuance of notice dated 07.03.2016 requesting the assessee to show cause as to why assessment order passed by Assessing Officer on 31.03.2014 should not be set aside for de novo consideration as per provisions of Section 263 of the Act. The relevant portion of show cause notice is reproduced hereunder: "2. On verification of the assessment record, including the seized material, for A. Y. 2006-07 it is noticed that the assessment order passed by the DCIT CC-10, Mumbai (pre-restructuring), in the above case is found to be prima facie erroneous in so far as it is prejudicial to the interest of the revenue for the following reasons:- (i) The AO had given a finding in para 10.3 of the assessment order that the cash transactions found as per seized material vide Annexure1 to 14 [Party No. 17] of Sterling Biotech Limited, Sandesara, Vadodara and Annexure-1 to 21 [Party No. 11] of PMT Machines Ltd. at 20/B, Khatau Building, Fort, Mumbai were sourced from the unaccounted sale of bye-products by the assessee and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d (W), Mumbai which is also part of core documents (Annexure 1- pages 80 to 81), In these companies Shri Chetan Sandesara has substantial interest. These companies form a part of the aforesaid 151 companies. The C.A. of the group, Shri H.S.Haathi stated that these are paper companies, used by the assessee. However, later on during the course of assessment proceedings, it was claimed that most of these companies are clients of Shri H.S.Haathi with which the assessee did not have any nexus. Despite such contradictory statements, the A.O. accepted the assessee's claim without any verification. (v) During the course of search, certain documents were found and seized, for instance material found and seized from the premises of SBL at BKC Office Mumbai (Annexure A. 9) indicating investment in off-shore entities at locations like Nigeria, USA and Dubai, etc. The AO has not caused any verification in respect of these transactions entered into with offshore entities by the assessee. (vi) During the course of the search, an admission was made by Shri H. S.Hathi, CA of the assessee group regarding the bogus capital expenses on account of purchase of capital assets. Though the AO had m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m. You may appear on the stipulated date and time either in person, or through your authorized representative. If you do not wish to avail the opportunity of being heard, you may send written submission which will be duly considered before passing the order u/s 263 of the Act." 6. In compliance to the show-cause notice, written submissions dated 21/03/2016 were filed on behalf of assessee, relevant part of the same is reproduced below: "From the above, it may be seen that the assessee has already been scrutinized and investigated by the Department at three stages. Now, the Department is envisaging to again verify the same documents and same information which have already been verified and examined at three stages. If the Department proposes to review the assessment already made earlier twice, there would never be finality in the assessment proceedings. This will be against the observation of the Hon'ble Bombay High Court in CIT vs. Gabriel India Ltd (1993) 203 ITR 108, wherein the Hon'ble High Court held that such an action is against the well accepted policy of law that there must be finality in all legal proceedings and that issues should not be reactivated beyond the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is unsustainable in Law. In this connection, attention is invited to the decision of the Supreme Court in the case of Malabar Industrial Co. Ltd. (243 ITR 83) wherein the Apex Court has held that - 'A bare reading of this provision makes it clear that the pre-requisite to the exercise of jurisdiction by the Commissioner suo motto under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent - if the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue recourse cannot be had to S. 263(1) of the act. There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer; it is only when an order is erroneous that the Section will be attracted. An incorrect assumption of facts or an incorrect application of Law will satisfy the requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er him to take action on these facts to arrive at the conclusion that the order passed by the Income-tax Officer is erroneous and prejudicial to the interests of the Revenue. Since the material was there on record and the said material was considered by the Income-tax Officer and a particular view was taken, the mere fact that a different view can be taken, should not be the basis for an action under Section 263 of the Act and it cannot be held to be justified. " The Calcutta Tribunal has also in the case of Usha Martin Industries Ltd. (86 ITD 261) held that unless it can be established that the view taken by the AO is a perverse, or impossible view, Commissioner cannot invoke the revisionary powers conferred upon him by the statute under Section 263. Further, it is submitted that the learned Pr.CIT has not given any finding as to how the issues raised by him have led to any loss in revenue. In the absence of any such finding, interference u1s.263 is not permitted as held in the case of Thangamaliagi reported in 259 ITR 129. As already stated earlier, the assessment order has been passed by the AO u/s. 153A of the Act. In such cases, the entire case has already been analyzed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act on its export of Co-enzyme Q10 from Massar Plant was allowed by the AO without causing necessary enquiries . to ascertain the veracity of its claim that it is exporting the co-enzyme Q10 to UAE at an average price of Rs. 2,55,000/- per kg as compared to the rate of Rs. 15,000 per kg at which it exported the same to France and the domestic sale price of Rs. 1,226/-per kg. The AO failed to take cognizance of the important fact that the department of Customs and Central Excise, Ahmedabad had dearly stated that during the relevant period i.e. 01.04.2005 to 31.03.2013 only two consignments of Co-enzyme Q10, of 50 kg each, valued at Rs. 15,48,816/- were exported to France by the assessee and that no other export has taken place in respect of this product, either by the assessee or any other party. No evidence in the form of export bills or export realization certificates was furnished by the assessee. The A.O. has accepted the claim of the assessee on the basis of confirmations filed in respect of a few parties in this regard and some of these confirmations are apparently signed by the same person. In this connection, it is submitted that the issue raised is irrelevant as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies form a part of the aforesaid 151 companies. The C.A. of the group, Shri H. S. Hathi stated that these are paper companies, used by the assessee. However, later on during the course of assessment proceedings, it was claimed that most of these companies are clients of Shri H.S. Haathi with which the assessee did not have any nexus. Despite such contradictory statements, the A.O. accepted the assessee's claim without any verification. In this connection, it is submitted that the list of 151 entities (which also includes 16 entities found from the premises at 4th floor, Chavda Commercial Centre, Link road, Malad (W), Murnbai) found during the search were the clients of H.S. Hathi. As in the statements recorded on 2810612011, Shri H. S. Hathi was not confronted with the said list and hence the question of his stating that these are paper entities does not arise. There was no contradictory statements as contended by your honour. Moreover, except for the list, no incriminating documents have been found. The show cause reads as under: v) During the course of search, certain documents were found and seized, for instance material found and seized from the premises of SBL at B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO was merely based on presumption, though even the said conclusion of the AO is devoid of any merits. Moreover, no incriminating material has been found in this regard during the search. The show cause is absolutely silent as to how there is a loss of revenue in the instant case. The show cause reads as under: vii) During the course of search, it was found that 18 entities of the Sterling Group have subscribed to the Share Capital of SBL to the tune of Rs. 45 crores. It was admitted by Shri H S Hathi in his statement during search that this was a mere paper entry and the money actually belongs to the assessee. This issue has also not been properly examined by the A.O. In this connection, it is submitted that during the search a document containing share application money aggregating to Rs. 45 crores received from 18 companies was found. It is alleged that though Shri H.S. Hathi was admitted that this is merely a paper entry, the same has not been properly examined by the AO. In this connection, it is respectfully submitted that entities are promoters of the assessee company. The share application moneys were received in the financial years 2001-02 and 2002-03. As the shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular case revision proceedings have been initiated on the basis of different views taken by the Assessing Officer on specific instances. According to CIT, show cause notice also clearly indicates loss of revenue due to lack of proper enquiries by the Assessing Officer. 9. Moreover, Explanation-2 to sub-section (1) to Section 263 (inserted by the Finance Act w.e.f. 01.06.2015) was found relevant and the same is reproduced hereunder for the sake of clarity: "Explanation-2 - For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner, (a) The order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his regard, emphasis was drawn towards para 9.1 of the assessment order which reads as under:- "In the course of discussions with C.A. Shri H. S. Hathi representing the group and also with Shri Nitin Sandesara, the key person, they have taken a stand that these documents have nothing to do with them and that if an employee is indulging in any cash dealings on his own behalf, the company from whose premises such documents have been seized, cannot be held responsible." 13. Assessee in assessment proceedings has denied that these documents had any relation with the assessee's group and has totally disowned these documents on the ground that they were maintained by the employees independently without knowledge of the assessee company. However, without prejudice to their stand assessee company has requested for adjustments of these transactions against the additions made by the Assessing Officer in respect of cash sale or cash income, which has been accepted by the Assessing Officer. However, assessee's contention that it had submitted explanation for the transactions recorded in each and every page of the loose papers/documents/note books was found patently wrong by CIT. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom enclosed annexure containing year wise details bone consumption, production of gelatin and DCP and consequent loss. You are herewith required to explain the basis of loss so appearing in the manufacturing process. 3. It is also brought to your knowledge that the evidences collected in the course of search have confirmed undisclosed sales of DCP being undertaken by the company. There are direct evidences to confirm that DCP is being sold to farmers in cash. In this connection statement of Shri H. S. Haathi, chartered Accountant of the group needs mention. Referring to Annexure A-1 page no.73 impounded from the premises at 4th Floor, Chawda Commercial Centre, Malad (W), Mumbai - 64 being the office of group companies as also office of the group Chartered Accountant Shri H. S. Haathi has submitted an annexure bearing number 'C' forming part of his statement which elaborates the comparative picture for three years, F.Y. 06-07 to 08-09. It can be seen that while DCP is being sold in cash to farmers during F.Y. 2006-07 and 2007-08, no such sales are shown in subsequent years. The assessee is indulging into undisclosed sales as evidenced by these documents. It is accordingly propose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as all cash transactions of M/s Sterling Biotech Ltd. were kept at that premises. It is pertinent to mention that during course of survey action at this premises the statement of oath was also recorded from Shri Ashok C. Gandhi. Accounts Officer on 28- 06.2011 wherein he has stated that some of these documents pertain to M/s Sterling Biotech Ltd as he is handling cash transactions for and on behalf of M/s Sterling Biotech Ltd., In view of the above facts you are requested to furnish evidences to Show that the transactions noted in impounded Annexure A-1 to A-23 and claimed to be pertaining to M/s Sterling Biotech Ltd. are recorded in your regular books of accounts failing which the cash expenses revealed from these evidences will be considered as unexplained and added to your total income by treating it as undisclosed income. 7. You are requested to furnish the above details with evidences on or before 20.3.2014 failing which the assessment on this issue shall be finalized as proposed above. This information is being called for u/s142(1) of the I.T. Act for which this letter may be treated as Notice u/s.142(1)." 16. Same was replied to the concerned Deputy Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer concluded 5% instead of assessee's claim 30%. To be more precise on the point of telescoping, observation of Assessing Officer is reproduced as under: "10.3 Both the set of documents evidencing cash transactions have been analyzed in great details and an exercise was undertaken, where assessee's representative was associated, of working out the cash impact on a day to day basis thereby giving the cash incidence on a year to year basis. This exercise was done keeping in mind that in making addition to income on account of undisclosed sales of DCP and other by-products, the source of cash has been identified. Therefore, what remains to be analyzed is the outgo of cash evidenced by these documents, either in the form of expenditure or in any other manner. The position of outgo of cash on a yearly basis is worked out in the Annexure to this order forming an integral part of this order. In that table, summary of each document under seizure has been given. Further, in the table coming up in succeeding paragraph, the same working has been given year wise, the cash outgo for all the documents taken together, their impact for each year separately. At the same time, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of assessee as discussed above. Thus, the ratio of Jawanmal Gemaji Gandhi (supra) supports the proposition of applicability of telescopy as requested by the assessee. 19. We also find that Hon'ble Supreme Court in case of CIT vs. Max India Ltd. (2007) 295 ITR 282(SC) held as under: "The phrase "prejudicial to the interests of the Revenue" in section 263 of the Income-tax Act, 1961, has to be read in conjunction with the expression "erroneous" order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when the Assessing Officer adopts one of two courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Assessing Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the Revenue, unless the view taken by the Assessing Officer is unsustainable in law." It shows that Assessing Officer can adopt one possible view as has been shown by Assessing Officer in this case. In such a situation, order of the Assessing Officer on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the AO is actually erroneous and also prejudicial to the interest of the revenue. Simply mentioning the phrase in the order that the "assessment order is erroneous and so far as it is prejudicial to the interest of the revenue" is not sufficient. The Ld. CIT after examining the records and the contentions of the assessee before him, has to give a specific finding and then he can set aside the assessment order, which here in this case has not been done. Thus, we hold that, the impugned order passed by CIT in the section 263 cancelling the assessment / setting aside the assessment for examination of exemption u/s 54F cannot be sustained as the CIT has duly examined the issue during the course of the assessment proceedings and Ld. CIT under the scope of section 263 cannot be said to be sitting as a reviewing authority and cancel the assessment without pointing out how the assessment order is erroneous or prejudicial to the interest of the revenue. Thus, we quash the impugned order passed by the CIT and allow the grounds raised by the assessee. Again Commissioner has not given any comment on the argument of ld. Authorized Representative on the issue before him but he is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation cannot be said to have over ridden the law interpreted by Hon'ble Delhi High Court, referred above. If that be the case, then the Ld Pr. CIT can find fault with each and every assessment order, without conducting any enquiry or verification in order to establish that the assessment order is not sustainable in law and order for revision. He can also force the AO to conduct the enquiries in the manner preferred by Ld Pr. CIT, thus prejudicing the independent application of mind of the AO. Definitely, that could not be the intention of the legislature in inserting Explanation 2 to sec. 263 of the Act, since it would lead to unending litigations and there would not be any point of finality in the legal proceedings. The Hon'ble Supreme Court has held in the case of Parashuram Pottery Works Co. Ltd Vs. ITO (1977)(106 ITR 1) that there must be a point of finality in all legal proceedings and the stale issues should not be reactivitated beyond a particular stage and the lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. 20. Further clause (a) of Explanation states that an order shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be taken as final one without scrutinizing the nature of enquiry or verification carried out by Assessing Officer vis-à-vis its reasonableness in its facts and circumstances. In view of the above, in our view, the question as to whether the amendment brought in by way of Explanation 2(a) shall have retrospective or prospective applications shall not be relevant. 25. To sum up according to us during course of assessment proceedings u/s.153A of the Act, Assessing Officer has asked for explanation in respect of various notings made in loose papers/note book/ pad found during the search carried out in various premises of assessee. The assessee contended that in the alternative the expenditure should be telescoped against the income. This was examined in detail by the Assessing Officer and also discussed in his order. This is certainly one of the possible view taken by the Assessing Officer. In view of this, the review of same u/s.263 of the Act is not justified as discussed above. Similar issue arose in A.Y.2007-08, 2008-09, 2009-10, 2010-11, 2011-12 & 2012-13. Facts being similar so following same reasoning, this issue in all these years is decided in favour of assessee. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 14 IO, very limited items of capital assets were purchased. However, during course of assessment proceedings, it was claimed by assessee that the machinery purchased from Torrent was not being used for production of Q-10 on which deduction u/s.10B of the Act was being claimed by assessee company. According to assessee, it has exported majority of Q-10 to a lone party, namely Richmond Overseas P. Ltd. at Dubai. The cost of production of Q10 as per assessee's books was Rs. 12,341/- per kg. The average domestic sale was at a price of Rs. 19,973/- only whereas assessee has claimed that it had exported to Richmond Overseas P. Ltd. @ Rs. 2,25,686/- per kg. As per the information received from the Custom and Central Excise authorities at Ahmedabad, assessee has exported a total of 100 kg of Q-10 only to a party named Capsugel France @ Rs. 13,000/- per kg for one consignment of 50 kg and at the rate of Rs. 13,500/- per kg for another consignment of 50 kg in F.Y.2010-11. The Customs and Central Excise authorities further confirmed that between the period F.Y. 2005-06 to F.Y. 2013-14, no other party has exported Q-l0 and assessee has also not exported any consignment other than these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 40 to 50. Form 14 IO is for imported capital goods for production of Co- Q10. Santosh Bhaktpratap stated that we are using old machineries but no where he has mentioned that old machineries are used for manufacturing Co-enzyme Q 10 as detailed on page nos. 17 to 32 of the paper book. In response to various claims made by Assessing Officer, assessee had made submissions dated 24.12.2013 in regard to usage of plant purchased from Torrent wherein installation Certificate was also submitted. Assessee submitted the various permission obtained from Kandla Economic Zone of Ministry of Commerce & Industry, copies of invoices of new machineries obtained and installed in EOU Unit of Masar Plant for manufacturing Co-enzyme Q10 as detailed on page nos.51 to 173. In this background, it was submitted that Assessing Officer has made enquiries for the said subject matter and all the replies with documentary evidences were placed on record. If assessee's explanation was found to be correct, matter cannot be set aside by CIT. It is a matter of record that Assessing Officer has made various enquiries and in reply, assessee submitted on 24.12.2013 an explanation that exports were made to Capsugel F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries. The copies of invoices of new machineries obtained and installed in EOU Unit of Masar Plant for manufacturing Co-enzyme Q 10 have been placed on page nos. 51 to 173, certified to be before Assessing Officer at relevant point of time. Assessing Officer has made relevant enquiries in this regard, same were replied on behalf of assessee. Even with regard to export, enquiries were made which were replied by assessee. Even rate difference of domestic sale and export was stated before Assessing Officer inter alia submitting that there was a big quality difference in both sales i.e. domestic and foreign with regard to one consignment to France at lower rate it was not sale but sample sale in which amount is not material. It was done on minimum price just for the sake of custom clearance. Assessee can not show zero amount of sale of these sample, so nominal cost was taken for custom purpose. In such a situation, provisions of Section 263 of the Act is not justified and same is set aside. Similar issue arose in A.Y. 2008-09, 2009-10, 2010-11, 2011-12 & 2012-13. Facts being similar so following same reasoning, we set aside the order of CIT on this issue in all these years. 27. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich are enclosed to this letter." 27.2 Thus, we find that confirmations were called from parties with whom transactions of sale and purchase carried out. Thus, Assessing Officer called for information and same were responded at relevant point of time with regards to the transactions carried out at Dubai. For the example, our attention was drawn to page no.36 of paper book I, letter dated 15th February, 2014 addressed to assessee by concerned party i.e. Trading Inc. Similarly attention drawn to the letter of one Blue Mark Mercantile Ltd. dated 26th February, 2014 addressed to assessee regarding confirmation of accounts of Sterling Biotech Limited. This shows that Assessing Officer has examined the transactions of assessee at Dubai. In this situation, it cannot be said that no details were verified by the assessee regarding off shore transactions. Moreover, Assessing Officer has called for audited accounts of offshore branch of assessee company for verification of assessee's claim in this regard. In such situation, CIT was not justified in invoking provisions of Section 263 of the Act with regards to the transactions at Dubai as discussed above. So, same is set aside on this issue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with me in my house." It shows that Ramani Iyer has not stated in clear words that said office is being used by assessee group companies, which is evident from the answer of question no.8 which reads as under: "Q.8. Will you please tell what kind of records the Sterling group is keeping in your above flat? Ans. I don't know clearly but records belongs to various companies of Sterling Biotech Group are kept there." Thus, again Ramani Iyer was not certain what kind of files are there in said office. 28.2 Ld. Authorized Representative also drew out attention to page no.1 regarding 18 out of 151 companies group, the details of company was discussed by Assessing Officer whereby he was satisfied on this issue. In this situation, the direction of CIT to again verify 151 entities was not justified. However, the same have been clearly verified as mentioned in page no.1 of paper book II which addressed to Asstt. Commissioner of Income Tax inter alia explaining with regard to documents found of 151 companies in the case of search action conducted on Sterling Biotech Limited Group dated 24.12.2013, wherein it was stated that: "With regard to above and in addition to the details subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operated by Sterling Biotech Limited for their benefit as all companies other then promoter companies are independent companies and are regular in filing their respective tax returns." 28.3 It shows that assessee in certain situation has given its premises to M/s. H. S. Hathi & Co., Chartered Accountants, to use this premise to run its office because of renovation in its office 18 out of 151 details belongs to assessee group and rest belongs to M/s. H. S. Hathi & Co's. clients as mentioned above. Thus, this clear cut factual finding arrived by Assessing Officer at relevant point of time. The assessee had submitted name, address, PAN number, details of Jurisdictional Officers in respect of 151 parties. In such a situation, CIT was not justified in giving direction to verify the details of all 151 companies assuming the same to be belonging to the assessee group. 28.4 As regards to issue of 18 entities as raised in ground no.9 by assessee from which subscription to the share capital of assessee company to the tune of Rs. 45 crore was admitted as merely a paper entry by Shri H.S. Hathi. It was claimed by assessee that share application money was returned in December, 2006. CIT obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om term lending bank highlighting the condition for capital expansion is enclosed for your perusal (Annexure - 1 A-7). The above companies have applied for the shares along with share application form. All 18 companies have paid the share application money of Rs. 2.50 Crores each to Sterling Biotech Limited prior to 31.03.2003 which is not in the purview of the block assessment. Further we are not keeping any records related to the 18 companies for the year ended 31.03.2003 or prior as it is 10 years old record, which is not traceable. Sterling Biotech Limited being listed companies, we have enclosed herewith the balance sheet of Sterling Biotech Limited showing the share application money as Rs. 45Crores in the year ending 31.03.2003 (Annexure - 1A-6). Further we enclose herewith board resolution for receiving share application money dated 30th April, 2005 (Annexure - 1A-1). However due to management decision in the F.Y. ended 31.03.2007 it was decided to refund the share application money back to all 18 companies instead of allotment of equity shares. Copy of the Board resolution passed at the meeting of the board of directors held on 15th November, 2006 for refund of the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the income tax returns of these applicant companies is also submitted for your perusal. We have also enclosed copy of bank statement of 18 companies reflecting the transaction of money returned by Sterling Biotech Limited along with the copies of bank statement of Sterling Biotech Limited reflecting the payout of the said money. 28.5 This gives the details of investors and also details of refund of the same to 18 companies as discussed above and was available before Assessing Officer at relevant point of time. It shows that 18 companies belong to assessee and transactions with the same have been clearly specifically asked in assessment proceedings and same were replied by the assessee. So, CIT was not justified in invoking provisions of Section 263 of the Act with regard to transactions with 18 parties as discussed above because same were duly verified at assessment level. Regarding remaining other than 18 out of 151, same did not belong to assessee as discussed above because same belong to client of M/s. H. S. Hathi & Co. who was using the premises in question on temporary basis as discussed above. In any case the share applications money of Rs. 45 crore had been received from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee. On other hand, ld. Departmental Representative supported the order of CIT. 29.1 Before us, ld. Authorized Representative drew our attention to page no.21 of the paper book II having invoice of Burnish Infrastructure Pvt. Ltd. which reads as under: Work Description Unit Price Total Price Mobile Harbor Cranes 2000 TPH for multipurpose cargo berth Design, engineering, procurement, supply and Erection Total Order Value (Ex CGS, Dahej) Rs. 35,51,00,000 Rs.71,02,00,000 Advance Towards start of works Rs.28,40,80,000 Total Advance Due Rs.28,40,80,000 BankDetails Bank Name Axis Bank Ltd Branch Goregaon Link Road Branch, Mumbai Account No 910020017038117 RTGS Code UTIB0000219 This shows that letter of Burnish Infrastructure Private Limited dated May 10,2011 was addressed to Sterling Port Limited and this document reveals the facts that advances have made by Sterling Port Limited towards start of works of Rs. 28,40,80,000/-. This document evidenced the transactions between Burnish Infrastructure Pvt. Ltd. and Sterling Port Limited. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Burnish Infrastructure Private Limited was having transaction with Sterling Port Limited towards start of works of Rs. 28,40,80,000/-. According to the details at page nos. 39- 40 of paper book II, said company was engaged in the business of developing port at Dahej (Gujarat). All details in this regard had been appreciated by Assessing Officer indicating that said transaction was between Burnish Infrastructure Pvt. Ltd. and Sterling Port Limited not with assessee. All records found as discussed above in preceding para and records were not belonged to assessee company. The said contention of assessee was accepted by Assessing Officer after due consideration of the facts because in assessment proceedings, explanation for all documents were seized and submitted. In response to the queries, submissions were made to the Assessing Officer on 24.12.2013 with regard to capital advances made by Sterling Port Limited as placed on Page 37-38 of paper book part II. Assessment of said Sterling Port Limited was also completed by same Assessing Officer and all related documents and explanations were filed in said assessment. The said transaction is nothing to do with the assessee Sterling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsequent suppression of sale does not stand on any factual or logical footing, when all the relevant materials and data was at his disposal. He should have carried out proper examination of seized data and in particular manufacturing report, before arriving at any conclusion in this regard. His failure to do so and the method of estimation as discussed above clearly resulted in the assessment order being totally erroneous and prejudicial to the interest of revenue. 30.1 In this regard, the stand of assessee has been that wastage at 30% was reduced to 5% by Assessing Officer. Ld. Authorized Representative relied on the written submission filed on page no.105 of the paper book II and he drew our attention to the page no.41 of the paper book II inter alia submitted that Deputy Commission of Income Tax called for information and same was submitted by assessee vide letter dated 06.02.2014 which reads as under: "During the course of hearing of the above company your good self has called for certain information/ documents I records. We are herewith submitting the information in the following manner along with annexures. 1) Copy of last page of RG-1 register of Gelatin for the years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y- wise with relevant invoices and documents at assessment stage. CIT observed that no such evidences like invoices etc. were found on the record indicating necessary enquiry having been carried out in this regard. Considering the facts that inflation of capital asset has been admitted by assessee, Assessing Officer ought to have carried out due verification of addition with regard to fixed assets during the relevant year in all other instances as well. Therefore, contention of assessee was not found acceptable and provision of Section 263 of the Act was invoked by CIT. 31.1 Before us, In this regard, ld. Authorized Representative drew our attention to order of Assessing Officer inter alia questionnaire was issued with regards to fixed assets by Assessing Officer as details on page nos.12 to 18 of the paper book duly certified before the Assessing Officer. In response to above questionnaire, assessee submitted details before the Assessing Officer as detailed on page nos. 190 to 197 of the paper book. In this background, it was submitted that it is not correct that Assessing Officer has not done verification of addition to the fixed assets. Similar explanation was submitted before ..... X X X X Extracts X X X X X X X X Extracts X X X X
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