TaxTMI 
TaxTMI 
TaxTMI 
2014 (4) TMI 771
X X X X Extracts X X X X
X X X X Extracts X X X X
....g three aspects in respect of which he alleged that no inquiry was conducted by the Assessing Officer :- (i) Applicability of Section 2(22)(e) with reference to alleged loan of Rs. 37.40 lakhs from the company M/s Ankush Credit India Ltd. (hereinafter referred to as 'ACIL'). (ii) Claim of deduction under Section 54F amounting to Rs. 61,71,020/- for the purpose of investment in residential house. (iii) Allocation of income under the various heads so as to claim the benefit of deduction under Section 54F, 111A and 88E. 4. The learned counsel stated that the allegation of the CIT in respect of all the above three points is wrong. She referred to the queries raised by the Assessing Officer during assessment proceedings from time to time and pointed out the replies furnished by the assessee thereto. With reference to the loan from ACIL, she referred to the queries raised by the Assessing Officer vide letter dated 22.7.2010 which is placed at page 27 of the assessee's paper book. She specifically referred to query No.3, 4, 6, 7 etc. so as to point out that the Assessing Officer asked the assessee to submit the details of unsecured loans taken and squared up during the year, nam....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bmitted that the order of learned CIT is factually and legally both incorrect. She submitted that in this case, a detailed inquiry was made by the Assessing Officer but, now, it is a settled position of law that even if some inquiry is made, though inadequate, Section 263 cannot be invoked. Section 263 can be invoked when no inquiry is made at all. But, merely because in the opinion of the CIT the inquiry made by the Assessing Officer was inadequate, would be no ground for invoking the provisions of Section 263. In this regard, she relied upon the following decisions :- (i) CIT Vs. Max India Ltd. - [2007] 295 ITR 282 (SC). (ii) CIT Vs. Sunbeam Auto Ltd. - ITA No.1399 of 2006 dated 11th September, 2009 (Delhi High Court). (iii) DIT Vs. Jyoti Foundation - [2013] 357 ITR 388 (Delhi). (iv) CIT Vs. Vodafone Essar South Ltd. - [2012] 28 taxmann.com 273 (Delhi). (v) CIT, Delhi-V Vs. New Delhi Television Ltd. - [2013] 39 taxmann.com 135 (Delhi). 6. The learned counsel further submitted that when a query is raised by the Assessing Officer and a reply is given, merely because the Assessing Officer does not discuss the same in the assessment order, would not be a ground to presume that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....om her husband Shri R.P. Goel. Except the above, the assessee denied to have received any other loan. That the copy of account of ACIL has been filed by the assessee only with reference to the claim of STT and sale of shares by the assessee to ACIL. He referred to the copy of account of ACIL at page 56 of the assessee's paper book and stated that the assessee has received the payment from ACIL in the month of May, June, September and October etc. and the same was squared up against the sale of shares by the assessee to ACIL on 31st March, 2008. Therefore, the sale of shares by the assessee was subsequent to the loan taken by the assessee. That neither there is any query by the Assessing Officer nor any explanation with regard to applicability of Section 2(22)(e) in respect of loan taken by the assessee from ACIL which is squared up subsequently against the sale of shares. 9. With regard to applicability of Section 54F, though the Assessing Officer raised the query and assessee furnished the explanation, but, thereafter, there is no application of mind by the Assessing Officer. He simply accepted the income returned. The learned CIT-DR referred to the assessment order dated 9th Dec....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Hon'ble Jurisdictional High Court held as under:- "It is also trite that there is a fine, though subtle distinction between 'lack of inquiry' and 'inadequate inquiry'. It is only in cases of 'lack of inquiry' that the Commissioner is empowered to exercise his revisional powers by calling for and examining the records of any proceedings under the Act and passing orders thereon." 12. In the case of Sunbeam Auto Ltd. (supra), Hon'ble Jurisdictional High Court held as under:- "dismissing the appeal, (i) that the Assessing Officer allowed the claim on being satisfied with the explanation of the assessee. Such decision of the Assessing Officer could not be held to be erroneous simply because in his order he did not make an elaborate discussion in that regard. The Assessing Officer had called for explanation on the very item from the assessee and the assessee had furnished its explanation. This fact was conceded by the Commissioner himself in his order. This showed that the Assessing Officer had undertaken the exercise of examining as to whether the expenditure incurred by the assessee in the replacement of dies and tools was to be treated as revenue expenditure or not. Theref....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in reply thereto, the assessee has claimed that she has taken unsecured loan only from her husband Shri Raj Parkash Goel and from no other person. The second query i.e. query No.4 was regarding sundry creditors/debtors which the assessee claimed that it does not have any sundry creditors/debtors at the end of the year. The assessee had submitted further reply with reference to the same letter dated 22nd July, 2010 of the Assessing Officer. This reply is dated 11th August, 2010. It reads as under:- "I am pleased to submit the following for your kind consideration or perusal:- 1) A self certified copy of certificate/confirmation under form No.10 DB (STT Confirmation) issued by Varun Capital Services Ltd, share broker, is enclosed herewith. The original confirmation/certificate has already been filed with the return of income with your office. Also enclosed is a copy of my account in the books of Varun Capital Services Ltd, for the share trading done by me during the financial year 2007-08. 2) 82000 equity shares of Swastik Khatha Pvt.Ltd. were sold to Ankush Credit India Ltd, New Delhi. These shares were hold for more than 5-10 years. A confirmation from Ankush Credit India Ltd a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... sale of shares by the assessee to ACIL was on 31st March, 2008. In ordinary course, the sale proceed of the shares would become due only on sale of shares and not prior thereto. Therefore, money received by the assessee prior to sale of shares would be loan to the assessee from the said party. It is contended by the assessee before the CIT that as per agreement between the assessee and ACIL, they were required to make the payment in advance. In support of this contention, the correspondence between ACIL and the assessee was filed before the CIT. However, we find that no such material was placed before the Assessing Officer and the Assessing Officer has not at all examined the applicability of Section 2(22)(e) with reference to the loan taken by the assessee from ACIL. In fact, before the Assessing Officer, the assessee denied to have taken any loan. It is only before the CIT that the assessee came with the explanation that the amount received from ACIL was against the sale proceeds of the shares. On these facts, we are of the opinion that the Assessing Officer has not at all examined the applicability of Section 2(22)(e) and, therefore, it is a case of lack of inquiry with referen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llocation of the income under various heads of income, we find that the trading account as well as the profit & loss account of the assessee reads as under:- 25. The computation of income of the assessee reads as under:- 26. From the above, it is evident that there is only one trading account in which sales and purchases are given in two divisions - one as "sales business" and another is "sales capital". The gross profit is taken to the profit & loss account. In the profit & loss account, there is credit of various other incomes and net profit is at Rs. 81,86,608/-. Now, in the computation of income, the assessee has shown income as per profit & loss account twice. First under the head income from business Rs. 4,50,329/- is shown with the narration "profit as per profit & loss a/c". Second under the head income from speculation business, again, the profit of Rs. 3,74,663/- is shown with the narration "profit as per profit & loss a/c". Now, it is not at all clear how this working is made by the assessee and from the questionnaire issued by the Assessing Officer, we do not find any such query relating to the allocation of the income under the various heads by the assessee. N....