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TMI Blog2018 (8) TMI 1188X X X X Extracts X X X X X X X X Extracts X X X X ..... generally paid for in advance. It could no doubt be so in a particular case, as where the vehicle is identified, and the proposed buyer apprehends loss of opportunity on account of the car dealer (middle-man) not having enough funds to purchase the vehicle. That is, an advance to facilitate the purchase, closing the deal, while in the instant case the purchase remains pending for over eleven months from the date of advance! Further still, the advance of Sh. Rajan Ghai has not been adjusted against any car purchased by him, but against that by his brother Sh. Gagan Ghai, i.e., as explained. The explanation, on the very face of it, is unconvincing and needs further enquiry, which is what the ld. Pr. CIT has directed. Decision of CIT sustained - Decided against the assessee. - I.T.A. No. 288/(Asr)/2016, Cross Objection No. 12/Asr/2016 - - - Dated:- 31-7-2018 - SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER Appellant by : Sh. Rakesh Joshi ( Adv. ) Respondent by: Sh. Bhawani Shankar ( D. R. ) ORDER Per Sanjay Arora, AM This is an Appeal by the Assessee challenging the Order u/s. 263 of the Income-tax Act, 1961 ('the Act' h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee in substantiation of his cash flow statement (i.e., on the touchstone of its reasonableness and the credibility of the materials led in support), that would determine whether a case for invocation section 263 is, under the facts and circumstances, made out in the present case or not. We say so, as it is trite law that lack of proper enquiry renders an order as erroneous to the extent it is prejudicial to the interests of Revenue, and thus liable for revision. 3.2. Toward this aspect, also touched upon by the ld. counsel, Sh. Mishra, upon enquiry by the Bench in relation to one of the explanations (on merits), adverting to the order by the Tribunal in Vegesina Kamala v. ITO [2016] 157 ITD 457 (Vish.), we may, to begin with, state the legal position in the matter with reference to the judicial precedents. We do so as a matter of abundant caution; the case of the assessee before us itself being that there was, in the facts and circumstances of the case, proper enquiry by the AO in the matter in assessment, and that therefore there was no lack of enquiry. In other words, per contra or, admittedly, lack of enquiry is a valid ground for inferring non-application of mind and, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. [emphasis, ours] The principle is well-established, and lack of inquiry renders an order erroneous in- so-far as it is prejudicial to the interests of the Revenue. Case law in the matter is legion, rendered in different fact situations: Thalibhai F. Jain v. ITO [1975] 101 ITR 1 (Kar); CIT (Addl.) vs. Mukur Corporation [1978] 111 ITR 312 (Guj); Swarup Vegetable Products vs. CIT [1991] 187 ITR 412 (All); Tarajan Tea Co. (P.) Ltd. vs. CIT [1994] 205 ITR 45 (Gau); CIT vs. Active Traders (P.) Ltd. [1995] 214 ITR 583 (Cal); CIT vs. Mahavar Traders [1996] 220 ITR 167 (MP); CIT v. Everest Cold Storage [1996] 220 ITR 241 (MP); K.A. Ramaswamy Chettiar vs. CIT [1996] 220 ITR 657 (Mad); CIT v. Kohinoor Tobacco Products (P.) Ltd. [1998] 234 ITR 557 (MP); Mofussil Warehouse Trading Co. Ltd. vs. CIT [1999] 238 ITR 867 (Mad); CIT vs. Export House [2002] 256 ITR 603 (P H); CIT vs. Arunaben Sumankumar [2003] 259 ITR 386 (Guj); Pt. Lashkari Ram vs. CIT [2005] 272 ITR 309 (All); CIT vs. Deepak Kumar Garg [2008] 299 ITR 435 (MP); CIT vs. Toyota Motor Corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oper enquiry and verification, leading to the material on record as the basis for the AO s satisfaction, which has to be a reasonable and objective satisfaction. We, accordingly, proceed to examine the facts of the case. In this regard, on the basis of the hearing and the material on record, we consider that proper enquiry, for the reasons stated here- under, has not been made by the AO qua the following aspects of the assessment: (a) continuous cash withdrawals by the assessee despite having sufficient cash-in- hand as per his cash flow statement; (b) inclusion of cash withdrawn (Rs.1 lac) by one, Yash Pal, on 13.04.2010, in the assessee s cash flow statement; (c) cash stated to be received from S/Sh. Vinod Kumar, Gagan Ghai, and Rajan Ghai on 03.04.2010 and 04.04.2010, at an aggregate of ₹ 1.70 lacs, as advance for purchase of cars by them. The findings by the ld. Pr. CIT qua each of these are as under: (a) Now, if the cash flow statement is looked into, it is quite clear that the assessee kept on withdrawing the cash from the bank account/s despite having sufficient cash-in- hand, for example, if the assessee is having opening cash in hand of ₹ 3,56, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e withdrawal of petty amounts, despite abundant cash-in-hand, only points out to the cash flow statement being not correct or complete, requiring further verification. There is no finding by the AO on this. Then, without doubt, the assessee s counsel arguing before us of another (Sh. Yash Pal) being engaged by the assessee to withdraw ₹ 1 lac cash from his account for want of time, requires to be examined. In fact, the affidavit from Sh. Yash Pal dated 26.02.2014 (PB pg. 20) states of his having withdrawn the amount, though unable to purchase the vehicle arranged by the assessee for him. That is, the money was withdrawn by him on own account and not for and on behalf of the assessee. The version before the AO was clearly different. Then, why would the assessee finance the vehicle purchase of another, even if a friend, when he is financing his own vehicle through a car loan? Further, if anything, it shows that the assessee wanted to help his friend, so that there is no question of his returning cash, much less on the date of the withdrawal, i.e., 13.04.2010, itself. The matters, in the very least, requires to be looked into. The third area of enquiry, as pointed out by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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