Income Tax Appellate Tribunal - Amritsar
Sh. Babu Singh, Zira vs Pr. C.I.T, , Bathinda on 3 September, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH, AMRITSAR
BEFORE SH. VIKRAM SINGH YADAV, ACCOUNTANT MEMBER AND
SH. N.K.CHOUDHRY, JUDICIAL MEMBER
ITA No.274(Asr)/2017
Assessment Year:2010-11
Sh. Babu Singh, Vs. Pr. CIT,
Village Markhai, Bhatinda.
Tehsil Zira.
[PAN:FFVPS 8729R]
(Appellant) (Respondent)
Appellant by: Sh. P. N. Arora (Ld. Adv.)
Respondent by: Smt. Abha Rani Singh (Ld. CIT-DR)
Date of hearing: 23.07.2019
Date of pronouncement: 03.09.2019
ORDER
PER N.K.CHOUDHRY, JM:
The Assessee has preferred this appeal against the order dated 30.03.2017 impugned herein passed by the Principal Commissioner of Income Tax, Bhatinda u/s 263 of the Income Tax Act, 1961, (hereinafter called as the Act), whereby the assessment order dated 20.07.2014 was cancelled with direction to the Assessing Officer to decide the matter afresh.
2. The brief facts of the case are that the assessee's case was reopened u/s 147 of the Act and statutory notice u/s 148 was issued for the assessment year relevant to the instant case on dated 16.08.2013, in pursuance to which, the return was filed by the assessee by declaring income of Rs.1,45,600/- + Agriculture Income of Rs.2,42,000/- on dated 21.10.2013 which was scrutinized by the Assessing Officer. In the assessment 2 ITA No.274/Asr/2017 (A.Y.2010-11) Babu Singh vs. ACIT proceeding, notice dated 31.01.2012 was issued by the Assessing Officer qua verification of financial transaction of Rs.1,16,37,157/- in the SBI Bank at Zira, during the financial year 2009-10 relevant to the instant case. Thereafter second notice dated 28.12.2012 was issued for verification of the same facts. The assessee replied the notice as under:
To THE INCOME TAX OFFICER, (INTELL.,) ROOM NO.107, C.R. BUILDING, BHATINDA.
SUBJECT: REPLY TO FINALANOPPORTUNITY TO FURNISH THE INFORMATION/DOCUMENTS IN RESPONSE TO THIS OFFICE LETTER/NOTICE F.NO. ITO (INTGELL.) BTD/2011-12/749 DATED 31.01.2012-MATTER REGARDING.
DEAR SIR, Kindly refer your letter No.ITO(Intell.,)/BTI/2012-13/699 dated 28.12,2012 vide some information has been called for and the reply which is given seriatim as under:
1. That it is correct that I am having account No. 11321388010 in some transactions have made to the Rs.l1637157/- in this respect it is submitted that I am employee of M/S Mahavir Tractors, Zira who is holding the Agency of Swaraj Tractors. The company during the financial year 2009-2010 had launched a scheme that if the farmers make purchases direct from the company then he would have to pay less Rs.30,000/- on each tractors to increase the sales. Then firm M/S Mahavir tractors, Zira deputed one of his employee Sh. Babu Singh and said employee used to collect the funds from the farmers directly and make the DD in the name of Mahindra and Mahindra Co., direct and the sale bills were also issued directly by the Mahindra and Mahindra and Co. the photo copies of all the DDs purchased and Bank statement of the State Bank of India, Ferozepur both are also attached. Which will clear the picture of the all the transactions.
2. That the I have duly made the compliance though late on the same letter as and when received.
Thanking you, Yours faithfully, Dated:24.01.2013 (BABU SINGH) S/O SH. HARMANDER SINGH, V.P.O MARKHAI, TEHSIL ZIRA..
DISTT., FEROZEPUR.
3 ITA No.274/Asr/2017 (A.Y.2010-11)Babu Singh vs. ACIT The assessee in support of its contention also filed copy of bank statement of the assessee with State Bank of India, Firozepur for the period of 01.04.2009 to 31.03.2010 and the copies of demand drafts made by the assessee in favour of Mahindra and Mahindra Co. from State Bank of India and other relevant documents pertaining to the said transactions.
2.1 Thereafter, another notice dated 05.07.2013 was issued by the Assessing Officer for verification of AIR/CIB information, regarding the cash deposit of Rs.1,16,37,157/- in State Bank Of India, Zira. The copy of the said notice for brevity and ready reference is reproduced herein below.
Dated: 05-07-2013 To Sh. Babu Singh Sh. Harmander Singh, V&PO Markhai, Tehsil Zira.
Sir, Sub: Verification of AIR/CIB Information-regarding-
As per AIR/CIB information available with this office, during the financial year 2009-10 you have deposited Rs.11637157/- in cash in your bank account maintained with the State Bank of India, Basti Machhian, Zira.
2. In this connection you are requested to the attend my office at Ferozepur on 12/07/2013 at 11.30 AM along with documentary evidence explaining the source of cash deposit in the above said bank.
Yours faithfully, (L.D. BANSAL) Income Tax Officer, Ward-III(2), Ferozepur.
4 ITA No.274/Asr/2017 (A.Y.2010-11)Babu Singh vs. ACIT The said notice dated 05.07 2013 was also replied by the assessee vide its reply dated 06.08.2013, which for the sake of brevity and convenience is also reproduced herein below.
TO THE INCOME TAX OFFICER WARD-III(2), FEROZEPUR.
Subject: VERIFICATION OF AIR/CIB INFORMATION IN THE CASE OF SH. BABU SINGH, V&PO. MAKHAI, TEH., ZIRA - FOR THE ASST. YEAR 2009-2010--REPLY REGARDING.
Dear Sir, Kindly refer your notice under the Income Tax Act, l961 for the verification of the certain transaction which is known as AIR information. In this respect that I have already supplied the required information to the Income tax officer, (Intelligence), Room No. 107, C.R. Building. However, the same is given as under:
1. That it is correct that I have own am saving account No. 11321388010 (Copy attached) and some transaction for purchase of tractors direct in the name of THE Agriculturist.
The list of agriculturist along with description of purchase of DD from the bank in the name of company MAHINDERA AND MAHINDERA LTD., (FES), SWARAJ DIVISION after deposited the cash in my saving account on behalf of the purchases farmers. (Copy attached).
2. That I have made available the direct purchases from the company Mohinder and Mohindera LTD., (FES), SWARAJ DIVISION on behalf of the 28 agriculturist nearly numbers of 28 tractors. The copy of Bill issued by the company of all the tractors was issued directly in the name of the agriculturist. (Photo copy of bills Issued by the company direct of all the 28 tractors issued are also attached herewith).
3. That I used to receive the cash from the farmers and deposited the same in my account and purchased the DD from the bank in the name of the same Agriculturist from SBI, Basti Machhian, Zira who used to give the cash for the purchase of Tractors. (Copy DD and Copy purchase bills issued by the company are attached herewith) I hope the aforesaid explanation will satisfy your good self, however, if any further information is required that will be d u l y supplied.
5 ITA No.274/Asr/2017 (A.Y.2010-11)Babu Singh vs. ACIT Yours faithfully (U.K.BHOLA) ADVOCATE FOR M/S BABU SINGH, ZIRA The assessee in support of its contention also filed various documents such as letter written to the Manager, SBI, Zira for confirmation of Bank drafts made through Saving Bank Account No.11321388010 and the invoice cum dispatch advices.
2.2 Thereafter, a notice dated 16.08.2013 was issued to the assessee u/s 148 of the Act, on the basis of the reasons recorded on 16.08.2013 for initiating the proceedings u/s 147 of the Act. In response to which the assessee filed its return of income on dated 21st October, 2013. Thereafter, statutory notices u/s 142 (1) and 143(2) of the Act have also been issued to the assessee which were also replied by the assessee vide its reply dated 25.08.2014, which for the sake of brevity and convenience is also reproduced herein below.
To THE INCOME TAX OFFICER WARD-III(2), FEROZEPUR.
Subject: REPLY TO NOTICE UNDER SECTION 142(1) AND 143(2) 0F THE INCOME TAX ACTION IN THE CASE OF SH. BABU SINGH. V&PO. MAKHAI, THE., ZIRA--FOR THE ASST. YEAR 2010-2011, REPLY EGARDING.
Dear Sir.
Kindly refer your notices under sections 142(1) and 143(2) of the Income Tax Act, 1961 and the reply of which is given as under:
1. That I am an agriculturist and holding seven acres of agricultural land in my name (The copy Jamanbadi and Gardauwri both are attached herewith (See page 1 to 24) I use to use to oblige 6 ITA No.274/Asr/2017 (A.Y.2010-11) Babu Singh vs. ACIT the farmers on the basis scheme launched by the Newly owned company about the sale of product of Sawraj Tractors directly from the company. And to implement this I use to collect Cash from the farmers deposited in my account and purchased the DD in the name of Company Mohinders and Mohindera Ltd., (FES). On the basis of this Transaction I have received the notice under section 148 of the 1.1'.Act. 1961 for Assessment Year 2010-2011 relevant to the previous year 2009-2010 and in response this notice I have filed my Income Tax Return for the Asstt. Year 2 0 1 0- 2 0 1 1 vide your office receipt No. 4135 on 21.10.2013 along with computation chart (Both Photo copies attached See Page 1 to 2) .
2. That it is correct that 1 have prepared a true account and filed my income tax returns in response to the notice under section 148 of the Income Tax Act, 1961 on the basis of the deposits in the my saving account No. 11321388010 (Copy of bank statement along with accretion statement both are attached herewith See Page -
to11. That all major deposits in my bank account are on account of advances received from the farmers for purchasing the DD from the STATE BANK OF INDIA for the purchase of Sawraj Tractors from company Mohindera & Mohindera directly from the company by the farmers through me as farmers. I used to collect cash from the farmers and deposited in my saving account No.1132138810 and from this bank account I purchased all the DD in the name of individual farmers in whose name bill of tractors was issued. All the DDs purchased from SBI, Zira were sent to the company, on behalf of the farmers, MOHINDERA AND MOHINDERA LTD. (FES), SWARAJ DI VISION (Photo Copy of DD along with Photo copy of bill issued by the company directly in the name of farmers are attached herewith. Since recipient of cash and payer of cash both are agriculturist and by doing none of the person recipient as well as payer has contrived any of the provisions.
3. That I have made available the direct purchase of SAWRAJ TRACTORS to the farmers from the company Mohinder and Mohindera LTD., (FES), SWRAJ Dl VISION on behalf of the approximately 28 agriculturist/farmers nearly 28 t actors. The copy of Bill issued by the company of all the farmers for the sale tractor were issued directly in the name of the agriculturist. (Photo copy of the DD Purchased and Photo copy of bills issued by the company directly of all the 28 tractors issued are also attached herewith See Pages 25 to 86.
4. That all the amount received from the farmers was first deposited in my account as most of the farmers did not have any bank account and from this account the DD was purchased as this the pre -condition of the company that amount will be accepted either account payee cheque or DD duly purchased from the nationalized banks. Accordingly cash collected from the farmers deposited in the account of mine and then DD was purchased in the name each farmers though the SB1, Basti Machhian. Zira and sent to the company and who used issued Sale Bill of Tractors directly in the name of' farmers.
7 ITA No.274/Asr/2017 (A.Y.2010-11)Babu Singh vs. ACIT I hope the aforesaid explanation will satisfy your good self, however, if any further information is required that will be duly supplied.
Dated 25-08-14 Yours Faithfully
(U.K. BHOLA)
ADVOCATE
FOR M/S BABU SINGH, ZIRA
2.3 Thereafter, notice dated 13/18-06-2014 and
questionnaire dated 26.06.2014 were also issued to the
assessee. For the sake of brevity and ready reference
questionnaire is reproduced herein below.
To
Shri Babu Singh S/o Shri Harminder Singh,
V&PO Markhai, Tehsil Zira Distt. Ferozepur. Dear Sir, Subject:- Assessment for the assessment year 2010-11 - Reg. -
In connection with the assessment for the assessment year 2010-11 pending in your case, you are required to produce/furnish the following information:-
1. Give details of all the sources of your income.
2. Furnish copy of ITR alongwith trading account, profit & loss account and balance sheet for the assessment year 2010-11. Also produce copy of ITR for the assessment year 2009-10.
3. Give details of the books of account maintained and produce the same with bills/vouchers and the bank pass books.
4. Furnish statement of all the bank accounts maintained by you for the period 01.04.2010 to 31.03.2011 and original bank pass books be produced for verification.
5. Source of all the credit entries bearing in the above bank accounts alongwith documentary evidence as well as narration thereof. Further, details of utilization of debit/withdrawals be also explained.
6. Details of expenditure/investment made by you during the financial year 2010- 11 i.e. period 01.04.2010 to 31.03.2011.
7. Details of movable / immovable assets owned by you during the period 01.04.2010 to 31.3.2011.8 ITA No.274/Asr/2017 (A.Y.2010-11)
8. Furnish copy of jamabandi/fard in respect of land holdings and also furnish copy of form J. Original these documents be produced for verification.
9. In your submissions dated 25.06.2014, you have made direct purchases of Swaraj Tractors to the farmers from the company Mahindra and Mahindra Ltd. Swaraj Division. Please intimate in which capacity you are doing the business. Are you an agent of the Company or an employee of the company. Are you an employee of any dealer. If so, furnish evidence in this regard.
10. Perusal of the ITR shows that you shown income from other sources. Please give complete details with documentary evidence. Also you have stated that you made direct purchases from a Tractor Company but no business income/ commission income has been reflected. Generally in tractor business, the commission is paid by the Company @ 5% of the cost of the per tractor. Please explain as to why the commission income may not be estimated.
11. Please intimate as to why the provisions of section 44AA and 44AB read with section 271A and 271B of I.T. Act, 1961 may not be applied in your case.
Your case is fixed for hearing for 30.06.2014 at 11.00 AM. Notice u/s 142(1) is also enclosed for compliance.
Yours faithfully (L.D. BANSAL) INCOME TAX OFFICER WARD-III(2), FEROZEPUR 2.4 The said questionnaire dated 26.06.2014 was specifically replied by the assessee vide its reply dated 30.06.2014, which for the sake of brevity and ready reference is also reproduced herein below.
THE INCOME TAX OFFICER WARD-III(2), FEROZEPUR.
Subject:- REPLY TO NOTICE UNDER SECTION 142(1) AND 143(2) OF THE INCOME TAX ACTION IN THE CASE OF Sh. BABBU SINGH, V&PO.MAKHAI, THE, ZIRA-FOR THE ASSTT., YEAR 2010-2011 REPLY REGARDING.
9 ITA No.274/Asr/2017 (A.Y.2010-11)Babu Singh vs. ACIT Dear Sir, Kindly refer your notices under section 142(1 )b and 143(2) of the income Tax Act, 1961 and the reply of which is given as under:
1. That I am an agriculturist and holding seven acres of agricultural land in my name (The Copy Jamabandi and Gardauwri both has already been submitted with previous reply) which the main source of income or amount which left by the farmers out of direct purchase of tractors from Company direct in the name of farmers.
2. That it is correct that I have prepared a true account and filed my income tax returns in response to the notice under section 148 of the Income Tax Act 1961 and which was filed on 21.10.2013 vide your office No.4135. Since my case was opened on the basis of the deposits in the my saving account No. 11321388010 (Copy of bank statement along with accretion statement has already been with my previous reply)
3. That I am maintaining only one saving account in the State Bank Of India, Zira and the copy of my Bank Account No.l 1321388010 along with accretion statement explaining each and every entry of deposit and withdrawals have been explained as already been submitted with my previous and these are the reasons recorded by your good self that cash deposits in the saving account is more than your income and on the basis which your good self has issued me notice u/s 148 for filling my Income Tax returns for the Asstt Year 2010-11 relevant to the previous year 2009-10 (Saving account No. 11321388010).
4. Since I am maintain only one saving account No. 11321388010 and hence accretion statement of same account No.l1321388010 along with copy of Bank Statement have been prepared has already been filed with my previous reply in which I explained each and every entry for the receipts from farmers I being little Knowledge of the direct purchase from Company and not through authorize agency/agent. Because I have been working with M/s Mahavir Tractors before the financial Year 2009-10 and during the year 2009-2010. Since this scheme of direct purchase by the farmers had been started in the financial year 2009-2010 and then I left the services of M/s Mahavir Tractors ,Zira in the 2008-2009 who have been authorized agency for the sale Tractors Swaraj Tractor and even after the taken over this company by the Mahindra and Mahindra.
5. That Sh. Babu Singh use to receive the money direct from farmers under the scheme direct purchase from Mahindra and Mahindra Tractors and deposits the same his saving account No.l1321388010 and got issued Bank drafts in the name of company Mahindra and Mahindra.
Hence all Major deposits in my bank account are on account of amount received from the farmers for purchasing the DD from the STATE BANK OF INDIA for the purchase of Swaraj Tractors from company Mahindra & Mahindra directly from the company by the farmers through me as farmers as lam lone educated person in the sphere. I used to collect cash from the farmers and deposited all the DD in the name of individual 10 ITA No.274/Asr/2017 (A.Y.2010-11) Babu Singh vs. ACIT farmers in whose name bill of tractors was issued. All the DD'S purchased from SBI, Zira were sent to the company on behalf of the farmers, MAHINDRA AND MAHINDRA LTD., (FES),SWARAJ DIVISION (Photo Copy of DD along with photo copy of bill issued by the company directly in the name of farmers are attached herewith. Since recipient of cash and payer of cash both are agriculturist and by doing none of the person recipient as well as payer has contravened any of the provisions if I.T. Act, 1961.
6. That I have already explained in the para-I of the my reply that I agriculturist and my expenditure are being me out of my agricultural income which I have already explained in the return of my Income Tax Return for Asstt. Year 2010-2010 I use to oblige the farmers on the basis scheme launched by the Newly owned company about the sale of old product of Swaraj Tractors directly from the company Mahindra and Mahindra Ltd. ,(FES).
7. That I have not purchase in any new property during the year under consideration and my immovable property i.e. agricultural are ancestral one.
8. That lam an agriculturist as stated in para one of this reply and holding seven acres of agricultural land in my name (The copy Jamabandi and Gardauwri both has already been submitted with previous reply) which the main source income or amount which left by the farmers out of direct purchase of tractors from Company direct in the name of farmers.
9. That I am a farmer and this direct purchase if for farmers direct from company and to prove my contention I have photo copy of the DD issued from my bank saving account and Bills issued directly by the company M/s Mahindra and Mahindra in the name of farmers (Photo copies of DD along with purchase Bill of tractors issued by the company in the name each farmers which as already been submitted with my previous reply.)
10. That I have already explained that all the amount received from the farmers was first deposited in my account as most of the farmers did not have any bank account and from this account the DD was purchased as this the pre condition of the company that amount will be accepted either account payee cheque or DD of any farmers and bill may be got issued in any farmers i.e in his own or in the name his relatives. Accordingly cash collected from the farmers deposited in the account of mine and then DD was purchased in the name each farmers though the SBI, Basti Machhian ,Zira and sent to the company and whose used issued Sale Bill of tractors directly in the name of farmers. That Ihave already prepared the accretion statement by explaining each and every entry of deposit and withdrawals and submitted with my previous and what is left in my account in my income from the other sources during the Asst. Year: 2010- 2011 relevant to the previous year 2009-2010 (Saving Account No. 11321388010) 11 ITA No.274/Asr/2017 (A.Y.2010-11) Babu Singh vs. ACIT
11. That I have already been explained that I received the money and prepared the Bank drafts on behalf of the farmers out of my saving account and sent the Bank drafts to the company who has issued the bills in the names of that farmers. Because receiver and payer both are agriculturist hence none have contravened any provision neither 4AA ,44AB, 269SS AND 269T of the income tax Act, 1961. It is imperative to mention here that neither it is purchase of Sh. Babu Singh nor it is sale of Sh. Babu Singh nor it is loan received by the Sh. Babu Singh nor Babu Singh has repaid the loan to any farmers.
I hope the aforesaid explanation will satisfy your good self, however, if any further information is required that will be duly supplied.
2.4 Ultimately, the Assessing Officer passed the assessment order dated 02.07.2014. The said assessment order came under scrutiny before the Ld. Pr. Commissioner of Income Tax, who vide its notice dated 14.03.2017 issued u/s 263(1) of the Act sought the explanation from the assessee by mentioning the following facts.
"2. During the examination of assessment record of your case for the assessment year 2012-13, it has been observed that you were maintaining a saving bank account No.11321388010 with State Bank of India, Zira wherein cash amounting to Rs.l,16,37,157/-was deposited by you. During the assessment proceeding you revealed that the amounts so deposited were in the form of cash received from the farmers and subsequently DDs were drawn in favour of the supplier company of Tractors. Further, it has been observed from the statement of the account that nearly 34 tractors were sold under the scheme in which you earned commission. at the rate of Rs.30,000/- per tractor totaling to Rs.10,20,000/-. However, there are withdrawals amounting to Rs.12,39,268/-. Therefore, income has been under-assessed at Rs. 10,93,668/- {Rs.12,39,268- Rs.1,45,600} by not taking into account tire whole of taxable income.
3. The AO failed to make proper inquiries into commission earned and failed to assess income correctly. In view of the above facts, the assessment framed by the Assessing Officer on 02.07.2014 u/s 143(3) for the assessment year 2010-11 is erroneous and prejudicial to the interest of revenue. You are hereby called upon to explain as to why the assessment framed on 02.07.2014 in your case for the assessment year 2010-11, may not be revised u/s 263 of the Income Tax Act, 1961. You may file your objections, if any before 17.03.2017.12 ITA No.274/Asr/2017 (A.Y.2010-11)
Babu Singh vs. ACIT
4. The case well be taken up for hearing on 17.03.2017 at 11.45 AM before the undersigned.
2.5 The said notice was replied by the assessee vide its reply dated 27.03.2017, however, the Ld. Pr. CIT did not get impress by the reply of the assessee and vide impugned order dated 30.03.2017 cancelled the assessment order and issued the direction to the Assessing Officer to decide the matter afresh by concluding as under:
"4.2 In respect of the cash deposits and the commission received, the AR has submitted that the assessee being an employee of M/s. Mahavir Tractors, collected cash from various farmers and deposited in his account and paid the same to M/s. Mahindra and Mahindra Tractor Company by way of Demand Drafts and M/s. Mahindra and Mahindra Tractor Company issued bills directly in the names of the farmers. Further i t has been contended that during the period under consideration there was a scheme from M/s. Mahindra and Mahindra Tractor Company that if the farmers directly purchase tractors from the company then it will cost Rs.30,000/- less each tractor to the purchasers. Thus the benefit of the scheme was directly provided to the farmers and not to the assessee who collected money from the farmers and further paid to the company. Further it has been submitted that the assessee did not get any commission on the sale of these tractors. The AO has just accepted the assessee's version without putting any effort to further enquire into the matter.
4. 3 In respect of withdrawals of Rs.9,00,000/- the ld. AR has submitted two affidavits form Sh. Sukhdev Singh S/o Sh. Malkeet Singh R/o Hamad Wala Dist Ferozepur and Sh. Gurdev Singh S/o Sh. Piara Singh R/o Mehar Singh Wala Dist Ferozepur respectively wherein it has been accepted by them that they handed over the amounts to assessee and get the same back as the model of the tractor for which the payments were made were not available under the scheme. But this argument of the id. AR is nothing but mere an afterthought hence cannot be accepted. In any case, affidavits do not qualify as evidence and self- serving documents cannot be accepted.
5 In view of the above, contentions advanced on behalf of the assessee are not acceptable and hence rejected. The AO has made the assessment order without inquiry and in such a casual manner. Thus, the impugned assessment order is held to be erroneous and prejudicial to the interest of the Revenue.
6. In view of the above discussion, the assessment order dated 20.07.2014 is cancelled with the directions to the Assessing Officer to make decide the matter afresh after giving adequate opportunity of being heard to the assessee and examining all relevant evidence. A copy of submissions filed on behalf of the assessee in these proceedings may be transmitted to the Assessing Officer.13 ITA No.274/Asr/2017 (A.Y.2010-11)
Babu Singh vs. ACIT
3. The assessee, by way of this appeal challenged the impugned order on the following grounds of appeal.
"1. That the learned Principal commissioner of Income, Bhatinda Range, Bhatinda was not right in applying the provisions of the section 263 of the Income Tax Act, 1961 on the same issue on which the Assessing officer, Ward-3(2), Ferozepur has recorded the reasons for the issued notice under section 148 of the I.T. Act, 1961 on the point of commission of Rs.30,000/- per tractors which was received by assessee and which has been left to be assessed in the hands of the assessee, which is not correct as this the assumptions and hence the orders passed by the kindly be quashed.
2. That the assesee has worked as catalytic agent between the company and the farmers and the assessee being farmers and know the policy of the new company i.e. Mahindra and Mahindra who has purchased the Swaraj Company the new company was wanted to dispose off the old stock of Swaraj Company. Hence the assessee has not availed any benefits of these transactions of sale of Tractors directly by the company in the name of the farmers.
3. That the assesse has not received any commission of Rs.30,000/-per Tractors as alleged in the orders passed by the Principal Commissioner Of Income Tax, Bhatinda under section 263 rather the said amount of Rs.30,000/- was the benefits amounting to Rs.30,000/- by the new company to the farmers who has purchased Tractors of Swaraj Make, and which is the less price of the company for the sale of Tractors directly farmers. It is, therefore, requested that the orders passed by the Principal Commissioner totally illegal and based on hypothetical assumption and not based of facts and reality. Hence orders passed by the Principal Commissioner of Income Tax, Bhatinda Range, Bhatinda under section 263 may kindly be deleted.
4. That the assessee craves to grant any other relief which this court may deemed fit in the interest of Natural justice."
4. Having heard the parties and perused the material available on record. The Ld. CIT(A) in its notice had noted that during the examination of assessment record in the case of assessee for the assessment year 2010-11, it has been observed that the assessee was maintaining SB Account No.113188010 with SBI, Zira, wherein cash amount of Rs.1,16,37,157/- was deposited by the assessee. During the assessment proceedings, the assessee has revealed that the amounts deposited were in 14 ITA No.274/Asr/2017 (A.Y.2010-11) Babu Singh vs. ACIT the form of cash received from the farmers and subsequently Demand Draft were drawn in favour of the supplier company of Tractors. Further, it has been observed from the statement of account that nearly 34 Tractors were sold under the scheme in which the assessee has earned commission at the rate of Rs.30,000/- per Tractor totaling to Rs.10,20,000/-. However, there are withdrawals amounting to Rs.12,39,268/-. Therefore, income has been under-assessed at Rs.10,93,668/- {Rs.12,39,268- Rs.1,45,600/-} by not taking the whole of the taxable income.
4.1 While perusing the assessment order dated 02.07.2014, we realize that though the assessment order does not reflects the said transactions as highlighted by the Pr. CIT in its notice dated 14.03.2017, however, it is a fact that the Assessing Officer vide its notices dated 31.01.2012 and 28.12.2012, specifically enquired about financial transaction of Rs.1,16,37,157/- carried out by the assessee in State Bank of India during the financial year 2009-10. The notice dated 28.12.2012 was specifically replied by the assessee by narrating the facts qua financial transactions of Rs.1,16,37,157 in State Bank of India. The assessee has also filed Bank Statement and copies of demand drafts and retail invoices cum dispatch advices for consideration of the Assessing Officer. Subsequently vide notice dated 05.07.2013, the Assessing Officer also sought verification of the AIR/CIB information regarding the aforesaid transaction which was also replied by the assessee vide its reply dated 06.08.2013 detailing the facts qua the aforesaid transaction. Thereafter notice u/s 148 dated 16.08.2013 was issued on the basis of 15 ITA No.274/Asr/2017 (A.Y.2010-11) Babu Singh vs. ACIT reasons recorded u/s 147 of the Act on dated 16.08.2013, in response to which the assessee also filed its return of income. Thereafter, notices u/s 142(1) & 143(2) dated 13.06.2014 have also been issued by the Assessing Officer qua the same transaction which were also replied by the Asseeee vide its reply dated 25.08.2014.
4.2 Subsequently, vide questionnaire dated 26.06.2014, the assessee was specifically asked about the transaction qua Swaraj Tractors vide question Nos.9&10 of the PB Page-103. The assessee again replied the said queries vide para No.9 & 10 of its reply dated 30.06.2014. Ultimately the Assessing Officer while considering the peculiar facts and circumstances of the case and on overall consideration passed the assessment order.
4.3 It is the case of the assessee that the assessee had replied notices and questionnaire issued by the assessee and after considering the reply and documents thereto, the Assessing Officer passed the assessment order therefore it cannot be said that the assessment order in any sense is perverse and prejudicial to the interest of Revenue.
4.4 No doubt the Assessing Officer has not given details of each and every item in its order however from the notices, questionnaire and replies thereto it clearly reflects that the Assessing Officer before passing the assessment order thoroughly examined all the issues which were subject matters of the assessment proceedings including the issue raised by the Ld. Pr. CIT, on the basis of which the impugned order has been passed by the Ld. Pr. CIT. Therefore the question arise as to 16 ITA No.274/Asr/2017 (A.Y.2010-11) Babu Singh vs. ACIT whether the assessment order is liable to be cancelled wherein, the A.O. though made the detailed enquiry but did not elaborately discussed the issue in the assessment order.
4.5 The Delhi High Court in CIT vs Vikas Polymers, reported in 341 ITR 537 (Del.) has held "That an inquiry which has been raised during the course of scrutiny by the Assessing Officer and which has been answered to the satisfaction of the Assessing Officer but neither the inquiry nor the answer was reflected in the assessment order, that would not, by itself, lead to the conclusion that the order of the Assessing Officer called for any interference and revision". In the case of CIT Vs Sunbeam Auto Ltd. reported in 332 ITR 167 (Del.), has held "We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the Commissioner of Income-tax under section 263 of the Income- tax Act. As noted above, the submission of learned counsel for the Revenue was that while passing the assessment order, the Assessing Officer did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order, which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the Assessing Officer had not applied his mind on the issue. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between 'lack of inquiry' and 'inadequate inquiry'. If there was any inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has a different opinion in the matter. It is only in cases of 'lack of inquiry' that such a course of action would be open".
17 ITA No.274/Asr/2017 (A.Y.2010-11)Babu Singh vs. ACIT Delhi High Court in the case of CIT Vs. Ashish Rajpal 374 ITR 674, in Para no. 16 has held "The facts that query was raised during the course of scrutiny, which was satisfactory answered by the assessee but did not get reflected in the assessment order, would not by itself lead to a conclusion that there was no enquiry with respect the transactions carried by the assessee. The fact that there was an enquiry can also be demonstrated with the help of the material available on record with the Assessing Officer.
4.6 The Bombay High Court in CIT vs Fine Jewellery (India) Ltd. reported in 372 ITR 303 (Bombay) has held "That if an inquiry is raised during the assessment proceedings and responded to by the assessee, the mere fact that it has not dealt with it in the assessment order would not lead to a conclusion that no mind had been applied to it". In the case of Commissioner of Income-Tax Vs Gabriel India Ltd. 203 ITR 108, also dealt with identical issue and in para no. 7 has held "We have heard learned counsel for the parties and carefully perused the orders of the Income-tax Officer, the Commissioner and the Tribunal. On perusal of the admitted facts, it appears that the Income-tax Officer in the instant case had examined the allowability of the claim of the assessee for deduction of the above amount of Rs. 99,326. While doing so, he asked for an explanation from the assessee in regard to the nature thereof. The assessee furnished a detailed explanation, vide his letter dated September 19, 1975. It was on a consideration of the said explanation and on being satisfied that it was revenue expenditure that the Income- tax Officer allowed the claim for deduction. It is, however, correct that in his order, he did not make any discussion in regard to the query made by him and the explanation submitted by the assessee thereto".
18 ITA No.274/Asr/2017 (A.Y.2010-11)Babu Singh vs. ACIT Further in para no: 15 observed "We may now examine the facts of the present case in the light of the powers of the Commissioner set out above. The Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation in that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. Such decision of the Income-tax Officer cannot be held to be "erroneous" simply because in his order he did not make an elaborate discussion in that regard. Moreover, in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous and that the expenditure was not revenue expenditure but an expenditure of capital nature. He simply asked the Income-tax Officer to re- examine the matter. That, in our opinion, is not permissible. Further inquiry and/or fresh determination can be directed by the Commissioner only after coming to the conclusion that the earlier finding of the Income-tax Officer was erroneous and prejudicial to the interests of the Revenue. Without doing so, he does not get the power to set aside the assessment".
4.6 The Madras High Court in the case of CIT v Valliammal (D) reported in 230 ITR 695 (Mad) has held "That assessment order made after considering all facts and information cannot be revised. Where the assessee had furnished the requisite information and the Assessing Officer had completed the assessment after considering the facts but the commissioner revised the assessment order on the ground that the Assessing Officer had not made proper enquiries, the Tribunal was held to be justified in reversing the order of the commissioner and restoring that of the assessing officer. The Commissioner cannot re- examine accounts and substitute his judgment for that of the Assessing 19 ITA No.274/Asr/2017 (A.Y.2010-11) Babu Singh vs. ACIT Officer. An order cannot be termed as erroneous unless it is not in accordance with law. If assessing officer makes assessment in accordance with law, the same cannot be branded as erroneous by the commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualize a case of substitution of the judgment of the commissioner for that of the Assessing Officer unless the decision is held to be erroneous. Cases may be visualized where the Assessing Officer examines the accounts, makes enquires, applies his mind to the facts and circumstances of the case and determines the income either by making the accounts or by making some estimates himself. The commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer was on lower side and, left to the commissioner, he would have estimated the income at a higher figure that the one determined by the Assessing Officer. That would not vest the Commissioner with the power to re- examine the accounts and determine the income himself at a higher figure".
4.7 In view of dictum of the aforesaid judgments passed by various High Courts, if an inquiry has been raised during the course of scrutiny by the Assessing Officer and which was answered to the satisfaction of the Assessing Officer but neither the inquiry nor the answer to that was reflected in the assessment order, that would not, by itself, lead to the conclusion that the order of the Assessing Officer is erroneous and prejudicial to the interests of the revenue and therefore called for any interference and revision.
4.8 Coming to the instant case, we again perused the documents available on record and realized that though submission of Ld. D R is correct to the effect that the Assessing Officer in the assessment order did not make any discussion in regard to the query made by him and the explanation submitted by the assessee thereto, however from the statutory notices and 20 ITA No.274/Asr/2017 (A.Y.2010-11) Babu Singh vs. ACIT questionnaire issued by the Assessing Officer and replies thereto by assessee and documents available on record, it is undoubtedly clear that the Assessing Officer thoroughly examined and verified the material facts and documents and all the issues raised in the questionnaire including cash deposit of Rs.l,16,37,157/- in saving bank account No.11321388010 with State Bank of India, Zira, relevant for passing the assessment order u/s 143(3)/147 of the Act and therefore it cannot be said that the Assessing Officer has not made any enquiry and thus such decision of the Income-tax Officer cannot be held to be "erroneous" simply because in his order he did not make an elaborate discussion in that regard.
4.9 However the Ld. Pr. CIT issued the notice dated 14.03.2017 u/s 263(1) of the Act. Though the assessee specifically replied the aforesaid notice as well, however the Pr. CIT, without considering the material available on record, facts and circumstances of the case and contentions of the assessee, cancelled the entire original assessment order dated 20.07.2014 with a direction to the A.O. to the frame the assessment fresh after giving due opportunity to the assessee. In our considered view, the Ld. Pr. CIT neither make any exercise for examining the record nor gave plausible reason(s) as to why the assessment order is erroneous and prejudicial to the Revenue while coming to the conclusion before initiating and concluding the proceedings u/s 263 of the Act, therefore, on this aspect as well, the order under challenge cannot sustain.
21 ITA No.274/Asr/2017 (A.Y.2010-11)Babu Singh vs. ACIT 4.10 In crux, as the original assessment order is based upon detailed enquiry, therefore the Ld. Pr. CIT could not have assumed jurisdiction under the law to revise the Assessment Order in this case, hence we do not have any hesitation to quash the impugned order as the same is unjustifiable and suffers from perversity and impropriety, consequently the same is quashed.
5. In the result, the appeal filed by the assessee stands allowed.
Order pronounced in open court on 03.09.2019.
Sd/- Sd/-
(VIKRAM SINGH YADAV) (N.K.CHOUDHRY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 03.09.2019
/PK/ Ps.
Copy of the order forwarded to:
(1) Sh. Babu Singh, Village Markhal, Tehsil Zira (2) The Pr. CIT, Bhatinda (3) The SR DR, I.T.A.T., Amritsar True copy By order