M/s. Nine Star Enterpreses P. Ltd, Hyd, Hyderabad V. ACIT Circle -16(1), Hyderabad

ITA 1054/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66586 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 30-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M RAVINDER SAI
• Assessee Lawyers: KALYAN DAS
• Keywords: Business income; Revision of order; Depreciation; Principle of natural justice; Earning of tax free income; Cost of acquisition; Assessment record; Right to appeal
• Section: 143(3); 14A; 133(6); 131; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1054/HYD/2011 ASSESSMENT YEAR 2006-07 M/S. NINESTAR ENTERPRISES (P) LTD., HYDERABAD PAN: AAACN8024C VS. THE ASST. CIT CIRCLE-16(1) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI KALYAN DAS RESPONDENT BY: SRI M. RAVINDER SAI DATE OF HEARING: 19.11.2012 DATE OF PRONOUNCEMENT: 31.12.2012 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT- IV, HYDERABAD DATED 28.3.2011 FOR ASSESSMENT YEAR 2 006-07. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE REVISION ORDER OF LEARNED COMMISSIONER OF INCOME TAX IS CONTRARY TO LAW AND THE FACTS. 2. THE ID. CIT ERRED IN SETTING ASIDE THE ASSESSMENT O RDER U/S. 143(3) OF THE ACT WITH A DIRECTION TO RE DO TH E ASSESSMENT. 3. THE APPELLANT CONTENDS THAT REVISION ORDER SINCE IS BASED ON SURMISES, SUSPICION AND GUESS WORK AND FOR CAUSING ENQUIRES WHICH DID NOT RENDER THE ASSESSMEN T ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 4. THE ID. CIT GROSSLY ERRED IN SETTING ASIDE THE ASSESSMENT ORDER ON PRESUMPTIONS AND GUESS WORK THAT THE APPELLANT HAS NOT FURNISHED THE INFORMATIO N IN THE ASSESSMENT PROCEEDINGS. 5. THE ID. CIT FURTHER ERRED IN HOLDING THAT NO QUESTIONNAIRE WAS ISSUED BY ASSESSING OFFICER CALLI NG FOR THE DETAILS OF DATES OF ACQUISITION OF SHARES. 6. THE ID. CIT ERRED IN HOLDING THAT THE ASSESSING OFF ICER OMITTED TO EXAMINE THE DATES OF ACQUISITION OF SHAR ES IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 2 HELD BY THE APPELLANT, WHILE THE SHARES WERE HELD B Y THE APPELLANT FOR MORE THAN A YEAR, WHICH IS EVIDEN T FROM THE DETAILS FILED ON RECORD. 7. THE ID. CIT IS NOT CORRECT IN HOLDING THAT THE ASSE SSING OFFICER CONFIRMED THAT NO DEMAT ACCOUNT HAD BEEN FILED BY THE ASSESSEE COMPANY AND THAT THE ASSESSME NT WAS COMPLETED UNDER SCRUTINY WITHOUT BRINGING ON RECORD EVIDENCE OF DATE OF ACQUISITION OF SHARES. 8. THE ID. CIT FURTHER IS NOT CORRECT IN HOLDING THAT EXEMPTION OF CAPITAL GAINS WAS GRANTED TO THE APPELLANT U/S 10(38) OF THE ACT, WITHOUT THE INFORMATION OF DATE OF ACQUISITION OF SHARES. 9. THE ID. CIT FAILED TO NOTE THAT ASSESSING OFFICER ALLOWED EXEMPTION BASED ON THE EVIDENCE OF DEMAT ACCOUNT DATE OF ACQUISITION OF SHARES AND PARTICULA RS OF SALE TRANSACTION OF SHARES UNDER SECURITIES TRANSACTION TAX (STT). 10. THE ID. CIT IS NOT CORRECT IN HOLDING THAT NO EVIDE NCE FOR RECEIPT OF DIVIDENDS TO CLAIM EXEMPTION U/S. 10 (34) OF ACT WAS FILED BY THE APPELLANT. APPELLANT CONTE NDS THAT EXEMPTION WAS ALLOWED ON VERIFICATION OF EVIDENCE. 11. THE ID. CIT FURTHER ERRED IN DEALING ON ISSUES IN T HE REVISION ORDER WHICH WERE NOT RAISED IN THE SHOW CAUSE NOTICE DT 04-02-2011. REVISION PROCEEDINGS THEREFORE ARE BAD IN LAW. 12. THE ID. CIT ERRED IN HOLDING THAT THE APPELLANT PURCHASED 56,400 SHARES NOT DISCLOSED TO THE INCOME TAX DEPARTMENT AND DIRECTING THE ASSESSING OFFICER TO ASSESSES ITS VALUE RS. 1,10,48,210 TO TAX AS UNDISC LOSED INVESTMENT AGAINST LONG TERM CAPITAL GAINS CLAIMED EXEMPT ON SALE OF ABOVE SHARES. 13. THE ID. CIT FAILED TO NOTE THAT THE ABOVE SHARES AR E BONUS SHARES RECEIVED BY THE APPELLANT AT NIL COST ON THE BASIS OF ORIGINAL SHARES HELD IN THE YEAR 2000 WHICH DID NOT CONSTITUTE INCOME FOR ASSESSMENT. 14. THE ID CIT FURTHER ERRED IN HOLDING THAT THE INTERE ST INCOME OF RS 11,89,745 IS 'INCOME FROM OTHER SOURCE S' WHILE THE SAME CONSTITUTE BUSINESS INCOME AND WAS BEING ASSESSED AS SUCH. 15. THE ID CIT FURTHER ERRED IN HOLDING THAT EXPENDITUR E RELATING TO DIVIDENDS INCOME SHOULD NOT HAVE BEEN ALLOWED U/S. 14A OF THE ACT, WHILE THE SAME WAS ALLOWED IN ACCORDANCE WITH LAW. 16. THE ID. CIT GROSSLY ERRED IN HOLDING THAT THE ASSES SING IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 3 OFFICER MADE THE ASSESSMENT WITHOUT APPLICATION OF MIND AND OMITTED TO EXAMINE THE MATERIAL IN THE ASSESSMENT PROCEEDINGS. 17. THE ID CIT ERRED IN DIRECTING THE ASSESSING OFFICER TO RECOMPUTE CAPITAL GAINS ON WRONG ASSUMPTIONS OF THE FACTS. 18. THE ID CIT ERRED IN HOLDING THAT THE ASSESSMENT ORD ER PASSED U/S. 143(3) IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE RELYING UPON THE DECISION O F DELHI HIGH COURT (99 ITR 375), IGNORING CATENA OF JUDGMENTS OF SEVERAL HIGH COURTS AND SUPREME COURT THAT REVISION ORDER BASED ON PRESUMPTION AND GUESS WORKS, SUSPICION AND SURMISES BAD IN LAW. 19. FOR THESE AND OTHER GROUNDS ARGUED AT THE TIME OF HEARING, THE APPELLANT PRAYS REVISION ORDER U/S. 26 3 OF THE ACT BEING BAD IN LAW REQUIRES TO BE VACATED AND CANCELLED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAD F ILED RETURN OF INCOME FOR THE ASST YEAR 2006-07 ON 25.11.2006 DECL ARING TOTAL INCOME OF RS 17,36,424/-. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-16(1), HYDERABAD HAD COMPLETED THE ASSESSMENT U/S 143(3) O N 30.09.2008 ASSESSING THE TOTAL INCOME AT RS. 21,01,889/- . 4. AFTER EXAMINING THE ASSESSMENT RECORDS FOR A.Y. 200 6-07, THE CIT ASSUMED THE JURISDICTION U/S. 263 OF THE I.T. ACT. 1961, HE HAD ISSUED A NOTICE, SETTING OUT THE GROUNDS OF ERROR AND PREJUD ICE AND CALLING UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY THE ASSESSMENT SHO ULD NOT BE REVISED OR SET ASIDE. THE GROUNDS OF PROPOSED REVISION WERE AS UNDER. (I) THE ASSESSEE HAD CLAIMED EXEMPTION U/S. 10(38) OF T HE I.T ACT IN RESPECT OF LONG TERM CAPITAL GAINS OF RS. 2, 41,99,132 ON TRANSFER OF EQUITY SHARES OF COMPANIES AND UNITS OF EQUITY ORIENTED MUTUAL FUNDS. THE ASSESSING OFFICER HAD OM ITTED TO EXAMINE THE DATES OF ACQUISITION OF THESE SHARES AN D UNITS. NO QUESTIONNAIRE WAS ISSUED BY ASSESSING OFFICER CA LLING FOR THE DETAILS OF DATES OF ACQUISITION. THERE IS NO OR DER-SHEET ENTRY OR OTHER CORRESPONDENCE AVAILABLE ON RECORD I NDICATING THAT THE DATES OF ACQUISITION OF SHARES AND UNITS W ERE EXAMINED OR CONSIDERED. IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 4 (II) DEMAT ACCOUNTS FOR THE YEARS IN WHICH SHARES AND UN ITS WERE ACQUIRED AND ALSO FOR THE FINANCIAL YEAR 2005-06 WE RE NEITHER CALLED FOR NOR FURNISHED BY THE ASSESSEE. T HE ASSESSING OFFICER HAS CONFIRMED THAT NO SUCH DEMAT ACCOUNTS HAD BEEN FILED BY THE ASSESSEE, THAT HE HA D COMPLETED THE SCRUTINY ASSESSMENT WITHOUT BRINGING ON RECORD ANY EVIDENCE REGARDING DATES OF ACQUISITION OF EQUITY SHARES ETC. THE ITO (HQRS) HAS EXAMINED EACH OF THE PAGES IN ASSESSMENT FOLDER BUT NO DEMAT ACCOUNT FOR THE M ATERIAL PERIOD WAS FOUND. IN OTHER WORDS, THE ASSESSMENT WA S COMPLETED GRANTING EXEMPTION WITHOUT EXAMINING MATE RIAL EVIDENCE ON MATERIAL POINTS DESIDERATED FOR GRANTIN G SUCH EXEMPTION. DATES OF ACQUISITION ARE NECESSARY INFOR MATION FOR DECIDING WHETHER A PARTICULAR SHARE/EQUITY SALE TRANSACTION IS LONG TERM OR SHORT TERM. (III) NO EVIDENCE FOR RECEIPT OF DIVIDENDS SUCH AS DIVIDE ND WARRANTS FOR CLAIM OF EXEMPTION U/S 10(34) WAS CALL ED FOR BY ASSESSING OFFICER OR FILED BY THE ASSESSEE. (IV) INTEREST INCOME OF RS 11,89,745/- SHOULD HAVE BEEN BROUGHT TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. BU T THE ASSESSING OFFICER, AGAINST THIS INCOME, ALLOWED DED UCTION OF EXPENDITURE RELATING TO INCOMES WHICH WERE CLAIMED AND GRANTED AS EXEMPT, THEREBY IGNORING THE PROVISION O F SECTION 14A OF THE I .T. ACT, 1961. (V) THE ASSESSING OFFICER HAD OMITTED TO EXAMINE THESE MATERIAL POINTS AND ALLOWED THE ASSESSEE'S CLAIMS WITHOUT AP PLICATION OF MIND. 5. IN RESPONSE TO NOTICES, THE ASSESSEE'S AR APPEARED FROM TIME TO TIME AND MADE WRITTEN SUBMISSIONS BEFORE THE CIT. AFTER GOING THROUGH THE RELEVANT RECORDS AS WELL AS THE SUBMISSIONS MAD E BY THE ASSESSEE, THE CIT OBSERVED AS FOLLOWS: IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 5 (I) THE FIRST ISSUE IS REGARDING THE ASSESSEE'S CLAIM O F EXEMPTION U/S 10(38) OF THE INCOME TAX ACT, 1961 IN RESPECT OF LO NG TERM CAPITAL GAINS OF RS. 2,41,99,132/- ON TRANSFER OF E QUITY SHARES/UNITS OF EQUITY ORIENTED MUTUAL FUNDS. IN TH E COURSE OF THE PROCEEDING BEFORE THE CIT, THE ASSESSEE SUBMITT ED THE RELEVANT DETAILS AND COPIES OF SOME OF THE RELEVANT DOCUMENTS. EXAMINING SUCH DETAILS AND DOCUMENTS, THE CIT NOTED THAT THE ASSESSEE'S CLAIM OF LONG TERM CAPITAL GAINS I.E., R S. 2.41 CRORES INCLUDED (ERRONEOUSLY) SHORT TERM CAPITAL GAINS IN RESPECT OF SALE OF BONUS SHARES OF IPCA LABORATORIES LIMITED. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE H APPENED TO SELL 800 BONUS SHARES OF IPCA LABORATORIES LIMITED ON 26.08.2005. THE 800 BONUS SHARES WERE SOLD IN TWO L OTS I.E., 20 BONUS SHARES WERE SOLD AS A PART OF THE LOT OF 820 SHARES ON 26.08.2005. THE REST OF THE BONUS SHARES I.E., 780 WERE SOLD ON THE SAME DAY I.E., 26.08.2005 FOR THE CONSIDERATION OF RS. 3,48,872/- (THE COST ACQUISITION BEING NIL). THE SA LE CONSIDERATION IN RESPECT OF 20 BONUS SHARES WORKS O UT TO RS 8,945.43 (COST OF ACQUISITION BEING NIL). HENCE, TH E TOTAL SALE CONSIDERATION IN RESPECT OF 800 BONUS SHARES WORKS OUT TO RS. 3,57,817/- [RS. 3,48,872 + 8,945]. THE RECORD DATE MENTIONED IN THIS LETTER IS 31.01.2005. THE DATE OF CREDIT OF BONUS SHARES TO THE DEMAT A/C OF THE ASSESSEE HAS BEEN STATED AS 01 .03.05. THE DATE OF SALE OF THE BONUS SHARES IS ADMITTEDLY 26.0 8.05. HENCE, THE DURATION OF HOLDING OF BONUS SHARES IS EVIDENTL Y LESS THAN ONE YEAR I.E., THE MINIMUM PERIOD NECESSARY FOR CHA RACTERIZING THE TRANSACTION AS 'LONG TERM CAPITAL GAIN'. HENCE, THE AMOUNT OF RS. 3,57,817/- IS EVIDENTLY 'SHORT TERM CAPITAL GAINS'. BUT THE ASSESSEE HAS ERRONEOUSLY INCLUDED IT IN THE LONG TE RM CAPITAL GAINS EXEMPTION OF CLAIM OF RS. 2.41 CRORES. THE AU THORIZED REPRESENTATIVE HAS CONCEDED THIS POINT (VIDE ORDER- SHEET NOTING DATED 07.03.2011. HENCE, THE ASSESSING OFFICER IS D IRECTED TO BRING THE SAID AMOUNT OF RS. 3,57,817/- TO TAX. IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 6 (II) ANOTHER EQUITY TRANSACTION OF THE ASSESSEE WHICH WA S TAKEN UP FOR IN-DEPTH ENQUIRY AND EXAMINATION PERTAINS TO VI SUAL SOFT TECHNOLOGIES LIMITED. ALONG WITH THE RETURN FILED F OR THE ASST. YEAR 2006-07, THE ASSESSEE HAD ENCLOSED ANNUAL REPO RT FOR THE PERIOD 2005-06 WHICH, INTER ALIA, CONTAINED SCHEDUL E RELATING TO INVESTMENTS. UNDER THE HEAD 'LONG TERM - NON-TRADE' , THE ASSESSEE HAD GIVEN PARTICULARS OF NUMBER OF SHARES / BONDS / UNITS AS AT 31.03.2005 AND AS AT 31.03.2006. IN THI S SCHEDULE THE TOTAL NUMBER OF EQUITY SHARES OF VISUAL SOFT TE CHNOLOGIES LIMITED HAS BEEN STATED AS 73,107 AS AT 31.03.2005 AND 13,107 AS AT 31.03,2006 I.E., AT THE END OF THE RELEVANT P REVIOUS YEAR UNDER CONSIDERATION. IT CAN BE SEEN FROM THIS DOCUM ENT THAT AGAINST THE EQUITY OF VISUAL SOFT TECHNOLOGIES LIMI TED, THERE IS ABSOLUTELY NO INDICATION NOR MENTION OF ANY BONUS S HARES WHEREAS THERE ARE CLEAR MENTIONS OF BONUS SHARES IN RESPECT OF TATA INFOTEC LIMITED, TATA IRON & STEEL COMPANY, UN ICHEM LABORATORIES LIMITED, WOCKHARDT LIMITED AND ALL ON THE SAME PAGE ALONG WITH VISUAL SOFT TECHNOLOGIES LIMITED. T HUS, DURING THE ASST YEAR UNDER CONSIDERATION, THE ASSESSEE CLA IMED TO HAVE SOLD 60,000 SHARES OF VISUAL SOFT TECHNOLOGIES LIMI TED FOR A TOTAL CONSIDERATION OF RS. 1,17,53.414/-. THE ASSES SEE CLAIMED THE ENTIRE 60,000 SHARES OF VISUAL SOFT TECHNOLOGIE S LIMITED AS BONUS SHARES AND HENCE CLAIMED THAT THE COST OF ACQ UISITION WAS NIL. IT CLAIMED EXEMPTION OF ENTIRE CAPITAL GAINS OF RS. 1.17 CRORES U/S 10(38) OF THE INCOME TAX ACT. IN THE COU RSE OF PROCEEDING BEFORE CIT, THE ASSESSEE WAS CALLED UPON TO PRODUCE EVIDENCE IN SUPPORT OF ITS CLAIM I.E., 60,000 SHARE S WERE BONUS SHARES. THE ASSESSEE SUBMITTED THE BONUS SHARES ALL OTMENT LETTER DATED 20.09.2000 ISSUED BY VISUAL SOFT TECHN OLOGIES LIMITED. IN THIS LETTER, THE RECORD DATE HAS BEEN S TATED AS 25.08.2000. ON THE SAID RECORD DATE, THE NUMBER OF SHARES HELD BY THE ASSESSEE HAS BEEN STATED AS 8,209. AS PER T HE DECISION OF THE BOARD OF DIRECTORS, TWO BONUS SHARES FOR EVERYO NE SHARE IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 7 HELD IN THE COMPANY WAS THE ENTITLEMENT OF A SHAREH OLDER. HENCE, THE SAID LETTER EVIDENCES THAT THE TOTAL NUM BER OF BONUS SHARES CREDITED TO THE ACCOUNT OF THE ASSESSEE WERE STATED AS 16,418 (8,209 X 2). IN OTHER WORDS, ON RECORD DATE I.E., 25.08.2000, THE ASSESSEE HAD 8,209 SHARES AS PER TH E RECORDS OF THE SAID COMPANY I.E., VISUAL SOFT TECHNOLOGIES LIM ITED. HENCE, IT WAS ALLOTTED 16,418 BONUS SHARES BY THE LETTER D ATED 20.09.2000. AS THE ASSESSEE'S CLAIM WAS 72,818 BONU S SHARES IT WAS CALLED UPON TO PRODUCE EVIDENCE OF BONUS SHARES ALLOTMENT LETTER IN RESPECT OF REST OF THE BONUS SHARES I.E., 56.400. DESPITE SEVERAL OPPORTUNITIES GIVEN TO THE ASSESSEE BY THE CIT, THE ASSESSEE COULD NOT PRODUCE EVIDENCE OF BONUS ALLOTM ENT LETTER FROM VISUAL SOFT TECHNOLOGIES LIMITED IN RESPECT OF ALLEGED 56,400 BONUS SHARES I.E., IN ADDITION TO ALLOTMENT LETTER. THE AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE RELEVA NT EVIDENCE HAS BEEN LOST. IN THIS CONTEXT, THE PAST ASSESSMENT RECORDS, GOING BACK TO THE ASST. YEAR 2001-02, WERE CALLED F OR AND EXAMINED WITH REGARD TO THE VISUAL SOFT TECHNOLOGIE S LIMITED EQUITY. THERE IS NO DISPUTE THAT THE YEAR OF ALLOTM ENT OF BONUS SHARES OF VISUAL SOFT TECHNOLOGIES LIMITED WAS FINA NCIAL YEAR 2000-01 RELEVANT TO THE ASST. YEAR 2001-02. AS ON 0 1.04.2000 THE ASSESSEE WAS IN POSSESSION OF 50,100 SHARES OF VISUAL SOFT TECHNOLOGIES LIMITED, VALUED BY THE ASSESSEE AT RS. 70,27,453/-. ADMITTEDLY, THERE WERE ABSOLUTELY NO BONUS SHARES I N THESE 50,100 SHARES AS ON 01.04.2000. ALONG WITH THE RETU RN FILED BY THE ASSESSEE FOR THE A.Y. 2001-02 ON 31.10.2001, TH E ASSESSEE HAD ENCLOSED 'ANNEXURE-II' CONTAINING PARTICULARS O F LONG TERM CAPITAL GAINS WHICH, INTER ALIA, RECORDED SALES OF SHARES OF VISUAL SOFT TECHNOLOGIES LIMITED. AS PER THIS DOCUMENT, TH E TOTAL LONG TERM CAPITAL GAINS HAVE BEEN SHOWN AT RS. 9,66,37,0 83/- WHICH INCLUDES SALE OF 10,866 SHARES OF VISUAL SOFT TECHN OLOGIES LIMITED IN THE PERIOD FROM 1 ST APRIL 2000 TO 24.08.2000. THERE WERE NO SALES OF SHARES BY THE ASSESSEE OF VISUAL S OFT IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 8 TECHNOLOGIES LIMITED AFTER 24.08.2000, IN THE FINAN CIAL YEAR 2000-01 I.E., AS PER THE ASSESSMENT RECORD OF THE A SSESSEE. BUT, IN THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDING S RELATING TO THE A.Y. 2001-02, THE ASSESSEE, ONCE AGAIN, SUBMITT ED PARTICULARS OF LONG TERM CAPITAL GAINS SHOWING THE LONG TERM CAPITAL GAINS AS THE SAME FIGURE I.E., RS. 9,66,37, 083/- (ONE RUPEE DIFFERENCE). BUT, IN THE SECOND SET THE TOTAL NUMBER OF SHARES OF VISUAL SOFT TECHNOLOGIES LIMITED SOLD DUR ING THE SAME PERIOD I.E., 01.04.2000 TO 24.08.2000 HAS BEEN CLAI MED AT THE HIGHER FIGURE I.E., 11,791 AS AGAINST THE EARLIER C LAIM OF 10,866 SHARES. THE TOTAL NUMBER OF VISUAL SOFT TECHNOLOGIE S LIMITED SHARES IN THE POSSESSION OF THE ASSESSEE AS AT 31.0 3.2001 HAS BEEN SHOWN AS 1,11,127 VALUED BY THE ASSESSEE AT RS . 66,09,317/- AND OUT OF THE SAID 1,11,127 THE ASSESSEE HAD CLAIM ED 72,818 AS BONUS SHARES. IF ONE CALCULATES BACK AS PER THE ASS ESSEE'S CLAIM OF 72,818 BONUS SHARES, ONE WILL GET THE FOLLOWING RESULTS: A. IN ORDER TO GET 72,818 BONUS SHARES, THE ASSESSEE M UST HAVE HAD 36,409 SHARES ON THE RECORD DATE I.E., 25.08.20 00. UNDISPUTEDLY, THE ASSESSEE WAS HAVING 50100 SHARES ON 01.04.2000 AND IN THE PERIOD FROM 01.04.2000 TO 24.08.2000, THE ASSESSEE HAD ADMITTEDLY SOLD 11,791 SHARES. THUS, GOING BY THE ASSESSEE'S VERSION, AS ON RECORD DATE I.E., 25.08.2000, THE ASSESSEE WOULD BE IN POSSESSION OF 38,309 SHARES OF VISUAL SOFT TECHNOLOGIES LIMITED (50,100 - 11,791). IN THAT CASE THE ASSESSEE SHOULD GET TWICE THAT NUM BER OF BONUS SHARES I.E., 38,309 X 2 = 76,618. HENCE, AS O N 31.03.2001 THE ASSESSEE SHOULD BE HAVING CLOSING ST OCK OF RS. 1,14,927 (76,618 + 38,309) I.E., AS AGAINST THE ASSESSEE'S FIGURE OF RS. 1,11,127. IF ONE TAKES THE SALE OF V ISUAL SOFT TECHNOLOGIES LIMITED SHARES IN THE PERIOD FROM 01.0 4.2000 TO 24.08.2000 AT 10,866 THE CLOSING STOCK WOULD STI LL BE HIGHER. IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 9 6. THE CIT OBSERVED THAT THUS, GOING BY THE ASSESSEE'S VERSION, THERE IS CLEAR EVIDENCE OF UNACCEPTABLE DISCREPANCY. THIS DI SCREPANCY BECOMES SERIOUS WHEN VIEWED IN CONJUNCTION WITH THE BONUS S HARES ALLOTMENT LETTER OF VISUAL SOFT TECHNOLOGIES LIMITED WHICH HAD ALLOT TED ONLY 16,418 BONUS SHARES. THE SERIOUS DISCREPANCIES WERE COMMUNICATED TO THE ASSESSEE VIDE HIS LETTER DATED 18.03.2011. THE ASSESSEE AR MISERA BLY FAILED TO FURNISH ANY RATIONAL, CONVINCING AND ACCEPTABLE EXPLANATION . THE CONTENTIONS CANVASSED BY THE ASSESSEE ARE ONLY TWO VIZ., (I) THAT THE FIGURE OF BONUS SHARES IN THE ASSESSEES DE MAT ACCOUNT MAINTAINED WITH KARVY ARE 16.418 + 56.400. A LETTER WAS ADDRESSED TO KARVY STOCK BROKING LIMITED HYDERABAD CALLING FOR RELEVANT INFORMATION U/S 133(6) OF THE I.T ACT I.E. : RELATING TO VISUAL SOFT TECHNOLOGIES LIMITED IN THE CASE OF THE ASSESSEE. THE REPLY RECEIVED FROM KARVY REITERATED THE ASSESSEE'S VERSION WITHOUT THROWING ILLUMINATING LIGHT ON THE EVIDENT DISCREPANCY. IN THE COURSE OF THE PROCEEDING BEFORE THE CIT, THE SR. MANAGER SRI V SEETHARAM WAS SUMMONED U/S 131 OF THE IT ACT. HE APPEARED AND NARRATED THE VERSION OF THE ASSESSEE O RALLY. A QUESTION WAS PUT TO SRI V SEETHARAM AS TO HOW THE E NTIRE ALLEGED BONUS SHARES I.E., 72,818 COULD BE CREDITED IN THE KARVY DEMAT A/C WHEN THE BALANCE IN THE SAID DEMAT A/C WITH KA RVY AS ON 14.08.2000 IS ONLY 8,209 SHARES OF VISUAL SOFT TECH NOLOGIES LIMITED. SRI V SEETHARAM ADMITTED THAT SINCE THE BA LANCE OF SHARES OF VISUAL SOFT TECHNOLOGIES LIMITED IN THE D EMAT A/C OF THE ASSESSEE AS ON 14.08 2000 WAS ONLY 8,209, IN NO RMAL CIRCUMSTANCES, THE APPROPRIATE CREDIT OF BONUS SHAR ES WOULD HAVE BEEN ONLY 16.418. HOWEVER, HE ORALLY SUBMITTED SPECULATIVE POINT THAT THE ASSESSEE MIGHT BE HAVING CERTAIN VISUAL SOFT TECHNOLOGIES LIMITED SHARES IN PHYSICAL FORM NOT KNOWN TO THE COMPANY I.E., VISUAL SOFT TECHNOLOGIES LIMITED. THIS DOES NOT AT ALL INSPIRE BELIEF. THE CIT HAD A LSO VISITED KARVY PREMISES IN HYDERABAD IN ORDER TO SEE FIRSTHA ND RELEVANT COMPUTER SCREEN SHOTS AND COLLECTED RELEVANT COMPUT ER SCREEN IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 10 SHOTS RELATING TO 16,418 BONUS SHARES. IN THIS, THE FINAL REMARK WRITTEN IS VERIFIED RELATING TO THE ALLEGED 56,400. IN THIS, THERE IS NO SUCH COMMENT AS 'VERIFIED' AND THE TRANSACTION I S RECORDED AS 'CLOSED AND SETTLED'. AT THE TIME OF THE CIT VISIT THERE WAS AN OFFICER-IN-CHARGE, APART FROM SRI V SEETHARAM. WHE N ASKED AS TO THE BASIS ON WHICH THE ENTRY REGARDING THE ALLEG ED BONUS SHARES OF 56.400 HAS BEEN MADE IN THE ASSESSEE'S DE MAT A/C., THEY COULD NOT GIVE ANY REPLY OTHER THAN TO INSIST THAT THE BASIS MUST HAVE BEEN GIVEN BY THE COMPANY VISUAL SOFT TEC HNOLOGIES LIMITED. A LETTER WAS DULY ADDRESSED TO VISUAL SOFT TECHNOLOGIES LIMITED, HYDERABAD (MERGED SINCE OCTOBER. 2006 WITH MEGASOFT LIMITED), CALLING FOR RELEVANT INFORMATION U/S 133(6) OF THE LT. ACT. THE AUTHORITIES OF VISUAL SOFT TECHNOL OGIES LIMITED FAILED TO GIVE ANY REPLY. STRANGELY, THE CIT LETTER TO THEM WAS SENT BY THEM IN TURN TO M/S. KARVY STOCK BROKING LI MITED, HYDERABAD FOR FURNISHING THE NECESSARY REPLY. THUS , DESPITE STRENUOUS EFFORTS MADE BY THE CIT TO GATHER THE REL EVANT EVIDENCE FROM OBJECTIVE SOURCE, NO RELIABLE EVIDENC E COULD BE FOUND AND THE ASSESSEE AND THE AUTHORIZED REPRESENT ATIVE ALSO MISERABLY FAILED TO PRODUCE ACCEPTABLE EVIDENCE IN SUPPORT OF THE ALLEGED BONUS SHARES I.E., 56.400. IN THE ABS ENCE OF RELIABLE EVIDENCE AND IN VIEW OF THE BONUS SHARES ALLOTMENT LETTER OF VISUAL SOFT TECHNOLOGIES LIMITED DATED 20 TH SEPTEMBER, 2000 WHICH HAD ALLOTTED ONLY 16,418/- BONUS SHARES, IT H AS TO BE TAKEN THAT THE ASSESSEE HAD ONLY GOT BONUS SHARES OF 16,4 18. AS AGAINST THIS, THE ASSESSEE CLAIMED ALLEGED BONUS SH ARES OF 56,400/-. THE ONLY POSSIBLE RATIONAL INFORMATION IN THE GIVEN FACTS AND CIRCUMSTANCES WOULD BE THAT THE ASSESSEE MUST HAVE PURCHASED THE SHARES AND NOT DISCLOSED THE SAME TO THE DEPARTMENT. IT IS THE MATTER ON RECORD THAT THE AS SESSEE'S PREMISES HAD BEEN COVERED UNDER SEARCH OPERATION IN 1998- 1999 IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 11 (II) IT IS THE CLAIM OF THE ASSESSEE THAT IT HAS SOLD 60 ,000 BONUS SHARES DURING THE ASST. YEAR UNDER CONSIDERATION. O UT OF THESE 60.000 ALLEGED BONUS SHARES, 56,400 HAPPEN TO BE TH E ALLEGED BONUS SHARES FOR WHICH THE ASSESSEE HAS NO EVIDENCE AND THE ONLY RATIONAL INFERENCE POSSIBLE IS THAT THESE 56,4 00 SHARES MUST HAVE BEEN PURCHASED BY THE ASSESSEE WITH UNDIS CLOSED INVESTMENT. THAT WOULD LEAVE 3600 GENUINE BONUS SHA RES. AT THE RATE OF SALE CONSIDERATION ADMITTED BY THE ASSE SSEE, THE SALE VALUE OF 3600 BONUS SHARES WOULD BE RS 7,05,204. TH E ASSESSING OFFICER IS DIRECTED TO TREAT THIS AMOUNT AS GENUINE CLAIM ON LONG TERM CAPITAL GAINS AND TO ALLOW THE S AME AS CLAIMED AFTER VERIFYING THE STT PAYMENT IN THE ORIG INAL DOCUMENT. THE TOTAL SALE CONSIDERATION ADMITTED BY THE ASSESSEE IS RS 1,17,53,414/-. AFTER DEDUCTING RS 7,05,204/- . THE BALANCE SALE CONSIDERATION WILL BE RS. 1,10,48,210. THIS W OULD APPARENTLY RELATE TO THE ALLEGED BONUS SHARES OF 56 ,400 WHICH ARE UNPROVED. THE MARKET VALUE OF VISUAL SOFT TECHN OLOGIES LIMITED SHARES PEAKED IN THE PERIOD MAY, JUNE, JULY AND AUGUST GOING UP TO RS 5,850.04 PS PER SHARE. HENC E, IN TERMS OF RATIONAL PROBABILITY THE ASSESSEE WOULD INCLINE TO MAKE HAY BY SELLING ITS SHAREHOLDING I E. 50,100 SHARES RELATIN G TO VISUAL SOFT TECHNOLOGIES LIMITED. BUT, OUT OF 50,100 SHARES HEL D AS ON 01.04.2000 THE ASSESSEE APPARENTLY SOLD ONLY 11,791 SHARES, KEEPING BACK AS MANY AS 38,309 SHARES. THIS WOULD B E INCONCEIVABLE. HOWEVER AS ON 31 03.2001, THE SHARE VALUE HAD STEEPLY DECLINED TO RS. 223.30 PS PER SHARE. TAKIN G THE LEAST POSSIBLE COST OF ACQUISITION DURING THE YEAR 2000-0 1 I.E., RS 223.30 PS THE COST OF ACQUISITION OF 56.400 SHARES WORKS OUT TO RS. 1.25,94.120/- THIS IS THE LEAST POSSIBLE COST O F ACQUISITION AND AS THE ADMITTED SALE CONSIDERATION IS RS. 1.17 CRORES, THERE OUGHT TO HAVE BEEN LONG TERM CAPITAL LOSS. BUT THE ASSESSEE HAS DISCLOSED INCOME OF RS. 1,1 0,48,210 RELATING TO TH ESE SO-CALLED BONUS SHARES I.E., 56,400. HENCE, THIS AMOUNT HAS TO BE TREATED IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 12 AS INCOME FROM 'OTHER SOURCES'. THE ASSESSING OFFIC ER IS DIRECTED TO BRING THIS AMOUNT OF RS. 1,10,48,210 TO TAX AS 'INCOME FROM OTHER SOURCES', NOT AS INCOME FROM LON G TERM CAPITAL GAINS/ LOSS 7. REGARDING THE SECOND ISSUE I.E., REGARDING THE EXEMPTION CLAIM OF THE ASSESSEE U/S., 10(34) IN RESPECT OF THE DIVIDEN DS, THE CIT NOTED THAT THE ORIGINAL ASSESSMENT HAD BEEN COMPLETED WITHOUT EXAMINING OR ENQUIRING INTO THE EVIDENCE RELATING TO THE DIVIDEN D WARRANTS. THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THIS MATTE R WITH REFERENCE TO ORIGINAL DIVIDEND WARRANTS AND TO ALLOW THE EXEMPTI ON CLAIM ONLY, IF THE ASSESSEE DISCHARGES THE BURDEN OF ESTABLISHING ITS ENTITLEMENT TO THE EXEMPTION CLAIMED BY PRODUCING PROPER EVIDENCE. 8. REGARDING THE THIRD ISSUE I.E., REGARDING INTEREST INCOME OF RS. 11,89,745/- THE CIT OBSERVED THAT THERE IS NO DISPU TE THAT THIS INCOME FALLS UNDER THE HEAD INCOME FROM OTHER SOURCES'. THIS OU GHT TO HAVE BEEN ASSESSED AS INCOME FROM OTHER SOURCES I.E., THE ENT IRE AMOUNT OF RS. 11,89,745/-. BUT THE ASSESSING OFFICER HAD ALLOWED CERTAIN DEDUCTION FROM THIS INCOME I.E., DEDUCTION OF EXPENDITURE RELATING TO EXEMPT INCOME. SEC 14A OF THE IT ACT DOES NOT ALLOW SUCH DEDUCTION. HE NCE, THE CIT DIRECTED THE ASSESSING OFFICER TO BRING TO TAX THE ENTIRE AM OUNT OF RS. 11,89,745/- AS INCOME FROM 'OTHER SOURCES' 9. THE CIT OBSERVED THAT WHILE COMPLETING THE ORIGINAL ASSESSMENT, THE ASSESSING OFFICER HAD NOT AT ALL ENQUIRED INTO THE ISSUES STATED IN THE SHOW-CAUSE NOTICE. HE HAD MECHANICALLY COMPLETED TH E ASSESSMENT ON THE ERRONEOUS ASSUMPTION OF THE CORRECTNESS OF THE ASSE SSEE'S CLAIMS OF EXEMPTIONS AND DEDUCTION. HE HAD NOT CALLED FOR THE RELEVANT EVIDENCE REGARDING DATES OF ACQUISITION OF SHARES, NOR THE R ELEVANT DEMAT A/C. ETC. THESE SERIOUS OMISSIONS ON HIS PART HAVE RENDERED T HE ASSESSMENT NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF REVENUE IN THE LIGHT OF THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF GEE VEE ENTERPRISES VS. ADDL. CIT AND OTHERS 99 ITR 375 (DE LHI) AS WELL AS IN THE IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 13 LIGHT OF THE DECISION OF HON'BLE SUPREME COURT IN T HE CASE OF MALABAR INDUSTRIAL COMPANY LTD. VS. CIT (109 TAXMAN 66). IT IS PERTINENT TO EXTRACT THE RELEVANT PORTION OF THE LAND MARK JUDGM ENT OF HONBLE APEX COURT AS UNDER 'AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS IN THE SAME CATEGORY FALL ORDERS PA SSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. XXXX THE SCHEME OF THE ACT IS TO LEVY AND COLLECT TAX IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF DUE TO AN ERRONEOUS OR DER OF THE INCOME TAX OFFICER, THE REVENUE IS LOSING TAX L AWFULLY PAYABLE BY A PERSON IT WILL CERTAINLY BE PREJUDICIA L TO THE INTERESTS OF THE REVENUE' 10. IN VIEW OF THE AFORESAID, THE CIT HELD THAT THE ASS ESSMENT COMPLETED BY THE DCIT, CIRCLE-16(1), HYDERABAD IS E RRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE REFORE, HE SET ASIDE THE SAID ASSESSMENT ORDER WITH THE DIRECTION TO THE ASS ESSING OFFICER TO REDO THE SAME IN THE LIGHT OF THE ABOVE FINDINGS, OBSERV ATIONS AND DIRECTIONS. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 11. THE LEARNED AR SUBMITTED THAT THE COMMISSIONER OF I NCOME TAX- IV HYDERABAD INITIATED REVISION PROCEEDINGS U/S. 26 3 OF THE IT ACT FOR THE ASSESSMENT YEAR 2006-07 ON THE ALLEGED GROUNDS THAT WHILE THE ASSESSING OFFICER PASSED ASSESSMENT ORDER U/S. 143 (3) OF THE IT ACT DID NOT CONSIDER THE FOLLOWING ISSUES: (I) AO OMITTED TO EXAMINE THE DATES OF THE ACQUISITION OF THE BONUS SHARES (II) NO QUESTIONNAIRE CALLING FOR DETAILS OF DATES OF TH E ACQUISITION OF SHARES WAS ISSUED (III) DEMAT ACCOUNTS WERE NEITHER CALLED FOR NOR FURNISHE D BY THE ASSESSEE. (IV) ASSESSMENT WAS COMPLETED GRANTING EXEMPTION WITHOUT EXAMINING THE MATERIAL IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 14 (V) NO EVIDENCE OF RECEIPT OF DIVIDEND WARRANTS TO CLAI M EXEMPTION U/S. 10(34) OF THE ACT WAS FILED. (VI) EXPENDITURE ON EXEMPTED INCOME WAS ALLOWED IGNORING PROVISIONS OF SECTION 14(A) OF THE ACT 12. THE AR SUBMITTED THAT THE ASSESSEE FILED INCOME TAX RETURN ALONG WITH VARIOUS DETAILS AND THAT DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, AS DIRECTED BY THE ASSESSING OFFICER, THE ASSESSEE HAS FILED SEVERAL DETAILS AND AFTER DUE CONSIDERATION OF SUCH DETAILS, ASSESSMENT WAS MADE U/S. 143(3) OF THE ACT. 13. THE AR FURTHER SUBMITTED THAT AMONG VARIOUS DETAILS FILED ALONG WITH THE RETURN OF INCOME FOR ASSESSMENT PURPOSES I NCLUDE COMPUTATION OF INCOME AND ANNEXURES DISCLOSING ACQUISITION OF S HARES OF VARIOUS COMPANIES INCLUDING EQUITY SHARES OF VISUAL SOFT TE CHNOLOGIES LTD IN THE YEAR 1998. FURTHER IN THE COURSE OF SCRUTINY ASSE SSMENT PROCEEDINGS AS DIRECTED BY THE ASSESSING OFFICER THE ASSESSEE FILE D VARIOUS DETAILS THROUGH LETTERS DATED 1 ST AND 10 TH SEPTEMBER 2008. THEREFORE, IT IS NOT CORRECT TO STATE THAT THE ASSESSEE DID NOT FILE REQUIRED DETAI LS RELATING TO THE DATE OF ACQUISITION OF SHARES AND OTHER DETAILS. THE ASSESS ING OFFICER WAS SATISFIED WITH THE INFORMATION FILED AND BASED ON THE ABOVE I NFORMATION ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT AND THE FINDIN GS OF THE ASSESSING OFFICER ARE AS FOLLOWS: 'IN RESPONSE TO THE NOTICE AND QUESTIONNAIRE ISSUED , THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE, SHRI A . PRAKASH, ACCOUNTS MANAGER ATTENDED FROM TIME TO TIME AND FIL ED INFORMATION CALLED FOR BOOKS OF ACCOUNT PRODUCED WE RE VERIFIED. AFTER EXAMINATION OF INFORMATION FURNISHE D AND CONSIDERING SUBMISSIONS MADE BY THE ASSESSEE, THE ASSESSMENT IS COMPLETED AS UNDER: IT IS OBSERVED FROM THE PROFIT AND LOSS ACCOUNT THAT THE TOTAL INCOME DERIVED FROM VARIOUS ACTIVITIES AM OUNTS TO RS. 2,63,87,772 OUT OF WHICH RS. 2,50,99,222 IS CLAIMED AS EXEMPT INCOME FROM SALE OF SHARES AND MUTUAL FUNDS AND RECEIPTS OF DIVIDENDS. HOWEVER, THE ASSESSEE HAS CL AIMED PERSONAL AND ADMINISTRATIVE EXPENSES OF RS. 1,29,48 7 + R S. 9,40,187 RESPECTIVELY. THIS EXPENDITURE IS IN RELATION TO BOTH THE ACTIVITIES OF EARNING OF TAXABLE INCOMES AND EX EMPT IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 15 INCOMES AS CLAIMED BY THE ASSESSEE. HENCE, THE ENTIRE EXPENDITURE HAS TO BE SEGREGATED AS PER NOTIFICATION NO. S.O. 547(E) DATED 24.03.2008 ISSUED BY THE CBDT. ACCORDINGLY, THE DISALLOWABLE EXPENDITURE WORKS OUT TO RS. 3,66,465 AS GIVEN BELOW' 14. THE AR SUBMITTED THAT FROM THE ABOVE FINDINGS OF TH E ASSESSING OFFICER IT MAY BE NOTED THAT THE QUESTIONNAIRE WAS ISSUED BY THE ASSESSING OFFICER AND INFORMATION CALLED FOR WAS FILED BY THE ASSESSEE AND BOOKS OF ACCOUNT WERE PRODUCED BEFORE THE ASSESSING OFFICER WHICH WERE VERIFIED AND AFTER EXAMINATION OF INFORMATION FURNISHED AND SUBMISSIONS MADE BY THE ASSESSEE DURING ORIGINAL ASSESSMENT PROCEEDINGS , ASSESSMENT WAS COMPLETED. FURTHER AS REGARDS TO EXPENDITURE ON EXE MPTED INCOME THE ASSESSING OFFICER RECORDED HIS FINDINGS BASED ON CB DT NOTIFICATION DATED 24.3.2008 AND DISALLOWED RS. 3.66 LAKH EXPENDITURE U/S 14A OF THE ACT. IN THE ABOVE FACTS AND CIRCUMSTANCES THE ALLEGATION TH AT THE ASSESSING OFFICER PASSED ASSESSMENT ORDER U/S 143(3) OF THE ACT WITHO UT CALLING FOR DETAILS AND INFORMATION IS . CONTRARY TO THE FACTS ON RECOR D AND, THEREFORE, REVISION ORDER U/S 263 OF THE ACT IS HIGHLY ARBITRA RY AND BAD IN LAW AND REQUIRES TO BE SET ASIDE AND CANCELLED. 15. THE AR SUBMITTED THAT IN THE REVISION PROCEEDINGS O NE OF THE ALLEGATIONS MADE BY THE ID CIT THAT THE ASSESSEE DI D NOT FILE ANY EVIDENCE IN SUPPORT OF RECEIPT OF DIVIDENDS AND CLAIMED EXEM PTION U/S. 10(34) OF THE IT ACT AND THE SAME WAS ALLOWED. HE SUBMITTED T HAT BASED ON DIVIDEND WARRANTS, THE ASSESSEE MADE A CLAIM IN THE RETURN OF INCOME AND FURNISHED THE DIVIDEND WARRANTS AND AFTER VERIFICAT ION EXEMPTION WAS ALLOWED BY THE ASSESSING OFFICER. FURTHER THE ID CI T IN THE REVISION ORDERS U/S 263 OF THE ACT DIRECTED THE ASSESSING OF FICER TO EXAMINE/INVESTIGATE THE CLAIM AND ALLOW EXEMPTION U /S 10(34) OF THE ACT. THE ASSESSING OFFICER ACCORDINGLY AFTER DUE VERIFIC ATION AND EXAMINATION OF THE CLAIM WITH THE MATERIAL ON RECORD, ALLOWED E XEMPTION OF DIVIDENDS INCOME U/S 10(34) OF THE ACT WHICH IS INCONFORMITY WITH THE CLAIM ALLOWED IN THE ORIGINAL ASSESSMENT ORDER. COPY OF THE CONSE QUENTIAL ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) R.W.S. 263 OF T HE ACT DATED 30.06.2011 IS FORMING PART OF PAPER BOOK FILED VIDE PAGE 50 TO 52. IT IS SUBMITTED, IN IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 16 THE ABOVE FACTS AND CIRCUMSTANCES REVISION ORDERS U /S 263 OF THE ACT HAVE BEEN PASSED TO EXAMINE AND INVESTIGATE THE CLAIM IN RESPECT OF DIVIDENDS INCOME ORIGINALLY ALLOWED. IT IS SETTLED LAW REVISI ON U/S 263 OF THE DOES NOT SURVIVE WHERE DIRECTIONS ARE GIVEN FOR EXAMINAT ION AND INVESTIGATION OF THE ISSUES. REVISION ORDER IS HIGHLY ARBITRARILY AND MADE ON PRESUMPTION CONJECTURES AND SUSPICION AND THEREFORE IS REQUIRED TO BE VACATED AND CANCELLED. 16. THE AR SUBMITTED THAT AS REGARDS TO EXEMPTION OF LO NG TERM CAPITAL GAIN ON SALE OF BONUS SHARES OF VISUAL SOFT, THE AS SESSEE HAD FILED STATEMENT OF ACQUISITION OF SHARES ALONG WITH THE R ETURN OF INCOME VIDE PAGE 12 TO 21 OF THE PAPER BOOK. FURTHER ASSESSEE F ILED COPIES OF INVOICES/BROKERS CONTRACT NOTES AND DEMAT ACCOUNTS IN RESPECT OF SALE OF THE ABOVE SHARES IN THE ORIGINAL ASSESSMENT PROCEED INGS VIDE LETTER DATED 10.9.2008 PAGES 1 TO 5 OF THE PAPER BOOK. FROM THE PERUSAL OF DEMAT ACCOUNT (PAPER BOOK PAGES 40-42) MAINTAINED BY THE ASSESSEE COMPANY WITH M/S. KARVY SHARE BROKING LTD FILED ON RECORD D URING ORIGINAL ASSESSMENT PROCEEDINGS IT MAY BE NOTED THE DEMAT AC COUNT DISCLOSED BONUS SHARES OF VISUAL SOFT RECEIVED BY THE ASSESSE E IN SEPT 2000. 17. THE AR SUBMITTED THAT THE ASSESSEE WAS HOLDING ORIG INALLY, EQUITY SHARES OF VISUAL SOFT TECHNOLOGIES LTD SINCE 1998. AT THE TIME OF ALLOTMENT OF BONUS SHARES IN SEPTEMBER 2000, THE ASSESSEE WAS HOLDING 36,409 ORIGINAL EQUITY SHARES OF THE ABOVE COMPANY. OUT OF THE ABOVE SHARES, 8209 EQUITY SHARES WERE PARKED IN DEMAT ACCOUNT WIT H M/ S. KARVY STOCK BROKING LIMITED AND THE REMAINING 28,200 SHARES WER E CONTINUED TO BE HELD BY THE ASSESSEE IN PHYSICAL FORM. FURTHER, VI SUAL SOFT TECHNOLOGIES LTD DECLARED BONUS SHARES IN SEPTEMBER 2000 IN THE RATIO OF 2 BONUS SHARES ON EACH ORIGINAL SHARE HELD BY THE SHAREHOLD ERS. THE ASSESSEE SINCE WAS HOLDING 36409 ORIGINAL SHARES AS DISCLOSE D ABOVE RECEIVED 72818 BONUS SHARES AND ENTIRE BONUS SHARES ISSUED B Y VISUAL SOFT TECHNOLOGIES LTD CAME TO BE CREDITED IN THE DEMAT A CCOUNT WITH M/S. KARVY STOCK BROKING LTD VIDE THE FOLLOWING TRANSACT ION ENTRIES ON PAGE 41 OF THE PAPER BOOK. IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 17 1. ON SEPT. 21, 200 UNDER TRANSACTION NO. 319 BONUS SHARES 16,418 2. ON SEPT. 27, 2000 UNDER TRANSACT ION NO. 3238 BONUS SHARES UNDER CAPTION 'CORPORATE ACTION' 56,400 TOTAL BONUS SHARES RECEIVED BY THE ASSESSEE COMPANY IN SEPTEMBER, 2000 72,818 18. THE AR SUBMITTED THAT THE ABOVE FACTS WERE BROUGHT TO THE NOTICE OF THE ID CIT IN THE REVISION PROCEEDINGS THROUGH L ETTER DATED 16.3.2011 ALONG WITH STATEMENT OF DEMAT ACCOUNTS VIDE PAGE NO S. 44 TO 48 FORMING PART OF THE PAPER BOOK. FROM THE ABOVE IT MAY BE NO TED THAT THE ABOVE 72618 BONUS SHARES WERE BEING HELD BY THE ASSESSEE IN THE DEMAT ACCOUNT WITH M/S. KARVY STOCK BROKERING LTD SINCE 21.9.2000 /27.9.2000. OUT OF THE ABOVE BONUS SHARES THE ASSESSEE COMPANY SOLD 60 ,000 BONUS SHARES IN THE YEAR RELEVANT TO THE ASSESSMENT YEAR 2006-07 UNDER CONSIDERATION. THE BONUS SHARES SINCE WERE HELD FROM SEPT 2000 AND SALE IN THE ASSESSMENT YEAR 2006-07 WAS CHARGED TO SECURITIES T RANSACTION TAX (STT) THE ASSESSEE CLAIMED EXEMPTION OF CAPITAL GAI NS U/S. 10(38) OF THE INCOME TAX ACT. COST OF THE BONUS SHARES SINCE WAS NIL ENTIRE GROSS SALE CONSIDERATION WAS DISCLOSED FOR CAPITAL GAINS. THE ABOVE INFORMATION WAS FILED ON RECORD WITH THE ASSESSING OFFICER IN THE O RIGINAL ASSESSMENT PROCEEDINGS THROUGH LETTER DATED 1 ST & 10 TH SEPTEMBER 2008 REFERRED TO ABOVE. IN THE SCRUTINY PROCEEDINGS THE ASSESSING OF FICER THUS GOT SATISFIED ABOUT THE CORRECTNESS OF THE CLAIM MADE IN RESPECT OF LONG TERM CAPITAL GAINS ON SALE OF BONUS SHARES AND ALLOWED EXEMPTION OF CAPITAL GAINS U/S 10(38) OF THE IT ACT. IN THE ABOVE FACTS AND CIRCUM STANCES, ALLEGATION OF ID CIT THAT THE ASSESSEE COMPANY DID NOT FILE DETAILS OF ACQUISITION OF BONUS SHARES AND SALE OF BONUS SHARES IS NOT CORRECT. 19. THE AR SUBMITTED THAT IN THE COURSE OF REVISION PRO CEEDINGS THE ID CIT MADE INVESTIGATION IN DEPTH IN RESPECT OF SALE OF BONUS SHARES AND PERIOD OF ACQUISITION OF SUCH SHARES WITH REFERENCE S TO TRANSACTIONS RECORDED IN DEMAT ACCOUNTS RIGHT FROM 1 ST JANUARY, 1998 TO 31 ST MARCH, 2006 WITH M/S. KARVY STOCK BROKING LIMITED WHEREIN 72818 BONUS SHARES WERE FOUND CREDITED HAVING RECEIVED BY THE A SSESSEE COMPANY IN IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 18 SEPT 2000. HE FURTHER SUBMITTED THAT OUT OF 72,818 BONUS SHARES, CREDITED IN THE DEMAT ACCOUNT WITH M/S. KARVY STOCK BROKING LTD IN RESPECT OF 56,400 BONUS SHARES ENTRY WAS MADE UNDER CAPTION 'C ORPORATE ACTION '. AS REQUIRED BY THE ID CIT THE ASSESSEE THOUGH PROVI DED CLARIFICATION IN RESPECT OF CAPTION 'CORPORATE ACTION' THAT THE SAME REPRESENTED CREDIT IN RESPECT OF BONUS SHARES FROM BODY CORPORATE AND SUC H CAPTION 'CORPORATE ACTION' IS COMMONLY USED UNDER COMMERCIA L TERMS. THE ID CIT REQUIRED FURTHER CLARIFICATION AND CONFIRMATION ON THIS CAPTION 'CORPORATE ACTION' FROM M/S. KARVY STOCK BROKING LT D. THE ASSESSEE COMPANY THEREFORE REQUESTED M/S. KARVY STOCK BROKIN G LTD THROUGH LETTER DATED 10.3.2011 TO CLARIFY AND EXPLAIN THE N ATURE OF CAPTION 'CORPORATE ACTION'. M/S. KARVY STOCK BROKING LTD AC CORDINGLY CLARIFIED THAT THE ABOVE TRANSACTION WAS IN RESPECT OF ALLOTM ENT OF BONUS SHARES CREDIT ENTRY IS THROUGH CORPORATE BODY. FURTHER FOR EASY UNDERSTANDING PURPOSES ISSUED ONE MORE COPY OF THE DEMAT ACCOUNT WHEREIN AGAINST CORPORATE ACTION ALLOTMENT OF BONUS SHARES RECEIVED FROM THE COMPANY WAS MENTIONED THERE IN VIDE CLARIFICATION LETTER AN D DEMAT ACCOUNT PAGE 45 & 47 FORMING PART OF PAPER BOOK. 20. THE AR FURTHER SUBMITTED THAT NOT BEING SATISFIED W ITH THE ABOVE CLARIFICATION GIVEN BY M/S. KARVY STOCK BROKING LTD , ON SUSPICION THE ID CIT REQUIRED THE SR. MANAGER MR V. SEETHARAM OF KAR VY STOCK BROKING LTD WHO HAD GIVEN THE LETTER OF CLARIFICATION, DULY SIGNED, TO APPEAR BEFORE HIM PERSONALLY. IN PURSUANCE TO ABOVE, THE MANAGER APPEARED BEFORE THE ID CIT AND REAFFIRMED THE ABOVE CLARIFICATION. FURT HER NOT HAVING GOT SATISFIED WITH THE TESTIMONY OF THE SAID MANAGER, T HE ID CIT PERSONALLY VISITED THE OFFICE OF M/S. KARVY STOCK BROKING LTD AND VERIFIED THE CORRECTNESS OF BONUS SHARE TRANSACTIONS FROM THE CO MPUTER DISCS AND BOOKS OF ACCOUNT. 21. THE AR SUBMITTED THAT THE ASSESSEE-COMPANY RECEIVED 72818 BONUS SHARES OF VISUAL SOFT IN SEPT 2000, WHICH IS EVIDEN T FROM DELIVERY/ALLOTMENT RECORDED IN THE DEMAT ACCOUNTS A S MENTIONED ABOVE. THE ID CIT AS STATED ABOVE ALLEGED THAT THE SALE OF ABOVE SHARES ARE NOT IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 19 BONUS SHARES AND THEY HAVE BEEN PURCHASED BY THE AS SESSEE FROM THEIR UNDISCLOSED INCOME AND DIRECTED THE AO TO ASSESS THE GROSS SALE CONSIDERATION RECEIVED AS THE UNDISCLOSED INCOME OF THE ASSESSEE FOR TAX PURPOSES. IT MAY BE NOTED THAT IN THE EVENT THE ID CIT IS OF THE OPINION THAT THE SHARES SOLD ARE NOT BONUS SHARES AND SUCH SHARES WERE ACQUIRED FROM OUT OF UNDISCLOSED INCOME, FOR ARGUMENT SAKE I T IS SUBMITTED THAT THE SAID SHARES HAVING BEEN RECEIVED BY THE ASSESSEE IN SE PT 2000, UNDISCLOSED INCOME IF ANY, SHOULD HAVE BEEN ASSESSE D IN THE ASSESSMENT YEAR 2001-2002 AND NOT IN THE YEAR OF SALE IN THE A SSESSMENT YEAR 2006- 07. FURTHER THE ABOVE SALE IN THE ASSESSMENT YEAR 2 006'-07 SINCE WAS CHARGED TO SECURITIES TRANSACTION TAX (STT) CAPITAL GAINS IN ANY EVENT ARE EXEMPT FROM TAX U/S. 10(38) OF THE ACT. CONSIDERED FROM ANY POINT OF VIEW THE ACTION INITIATED BY THE ID CIT U/S. 263 OF THE ACT IS HIGHLY ARBITRARY PRESUMPTUOUS AND REQUIRES TO BE VACATED. 22. THE AR FURTHER SUBMITTED THAT IN THE REVISION PROCE EDINGS THE ID CIT AGAIN INTERFERED WITH THE METHOD AND COMPUTATIO N OF EXPENDITURE DETERMINED BY THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT FOR DISALLOWANCE U/S. 14A OF THE ACT. THE ASSESSING OFFICER SEGREGATED TAXABL E INCOME AND THE EXEMPTED INCOME AS PER THE CBDT CIRC ULAR DATED 24.3.2008 AND DETERMINED THE EXPENDITURE TO BE DISA LLOWED U/S 14A OF THE ITA ACT IN RESPECT OF EXEMPTED INCOME AT RS. 3.66 L AKHS. 23. THE AR SUBMITTED THAT FOR DISALLOWANCE OF EXPENDITU RE ON EXEMPTED INCOME U/S 14A OF THE ACT REVENUE HAS TO ESTABLISH THAT THE EXPENDITURE SOUGHT TO BE DISALLOWED IS BASED ON EVI DENCE AND NOT ON AD- HOC OR ESTIMATE BASIS. FURTHER DISALLOWANCE OF EXPE NDITURE AS REQUIRED TO BE MADE IN ACCORDANCE WITH RULE 8D OF THE IT RULES WHICH IS EFFECTIVE FROM 24.3.2008 AND APPLICABLE FROM THE ASSESSMENT Y EAR 2008-2009 AS HELD BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE O F GODREJ CO. (328 ITR 81). THE ASSESSMENT UNDER CONSIDERATION SINCE I S RELATED TO THE ASSESSMENT YEAR 2006-07, ACTUAL EXPENDITURE INCURRE D ONLY IS REQUIRED TO BE DISALLOWED. HAVING REGARD TO THE ABOVE AND LAW B EARING ON THE SUBJECT, THE ASSESSING OFFICER BY ADOPTING A PARTICULAR METH OD DETERMINED THE IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 20 DISALLOWANCE OF EXPENDITURE U/S 14A OF THE ACT AT RS. 3,66,465. WHILE THE FACTS ON RECORD BEING AS ABOVE, THE LD. CIT IN THE REVISION ORDERS DIRECTED THE ASSESSING OFFICER FOR DISALLOWANCE OF ENTIRE EX PENDITURE OF THE ASSESSEE RS. 10.69 LAKHS WITH A DIRECTION TO ASSESS THE AMOUNT UNDER OTHER SOURCES. IT IS SUBMITTED THAT THE ASSESSING OFFICER MADE ASSESSMENT ON DUE CONSIDERATION OF THE FACTS OF THE CASE AND DISA LLOWED A PART OF THE EXPENDITURE RS. 3.66 LAKHS IN THE ORIGINAL ASSESSME NT, AND THE SAME CANNOT BE SUBSTITUTED UNDER REVISION PROCEEDINGS U/S 263 OF THE ACT. IN THE ABOVE FACTS AND CIRCUMSTANCES WE SUBMIT THE REV ISION ORDER U/S. 263 OF THE ACT IS HIGHLY ARBITRARY AND BAD IN LAW REQUI RED TO BE CANCELLED AND VACATED. 24. THE AR SUBMITTED THAT IN THE MATTER OF REVISION U/S . 263 OF THE ACT SEVERAL COURTS AND TRIBUNALS HAVE LAID DOWN THE LAW AND HAVING REGARD TO THE LAW RELIED UPON BY THE ASSESSEE IN THE FOLLOWIN G DECISIONS THE REVISION ORDER U/S. 263 OF THE ACT IS HIGHLY ARBITRARY UNTEN ABLE AND BAD IN LAW AND REQUIRES TO BE CANCELLED AND VACATED. HE RELIED ON THE RATIO LAID DOWN IN THE FOLLOWING CASE LAW: (A) CIT VS HONDA SIEL POWER PRODUCTS LIMITED (333 ITR 547) (DEL) WHEREIN HELD THAT THERE WAS NO MATERIAL TO INDICATE THAT THE AO HAD NOT APPLIED HIS MIND TO THE PROVISIONS OF THE IT AC T. PRESUMPTION THAT THE ASSESSMENT ORDER PASSED U/S. 143(3) BY THE AO HAD BEEN PASSED UPON, APPLICATION OF MIND HAD NOT BEEN REBUT TED BY THE REVENUE. NO ADDITIONAL FACTS WERE NECESSARY BEFORE AO FOR ALLOWING EXEMPTION - REVISION ORDER WAS NOT CORRECT. (B) CIT VS. GIRIDHARI LAL (258 ITR 331) (RAJ) WHEREIN HELD, AO AFTER GOING THROUGH MATERIAL ON RECORD AND AFTER CONSIDER ING THE EXPLANATION OF THE ASSESSEE ASSESSMENT WAS MADE. IT COULD NOT BE SAID AO HAD NOT APPLIED HIS MIND. ITAT WAS CORRECT IN CANCE LLING THE ORDER U/S 263 OF THE ACT. (C) CIT VS. ARVIND JEWELLERS (259 ITR 502) (GAUHATI): HELD, THE ASSESSEE HAD PRODUCED RELEVANT MATERIAL AND OFFERED EXPLANATIONS IN PURSUANCE OF THE NOTICES ISSUED UNDER SECTION 14 2(1) AS WELL AS SECTION 143(2) OF THE ACT AND AFTER CONSIDERING THE MATERIAL AND EXPLANATIONS, THE INCOME-TAX OFFICER HAD COME TO A DEFINITE CONCLUSION. THE MERE FACT THAT DIFFERENT VIEW CAN B E TAKEN SHOULD NOT BE THE BASIS FOR AN ACTION UNDER SECTION 263. T HE ORDER OF REVISION WAS NOT JUSTIFIED. IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 21 (D) CIT VS. GABRIEL INDIA LTD (203 ITR 108) (BOM). THE DECISION OF THE AO COULD NOT BE HELD ERRONEOUS SIMPLY BECAUSE IN HI S ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION. THE CIT AFTER INI TIATING 263 PROCEEDINGS HE COULD NOT STATE ABOUT THE EXPENDITUR E. CIT SIMPLY ASKED THE AO TO RE-EXAMINE THE MATTER THAT WAS NOT POSSIBLE. IT AT WAS RIGHT IN SETTING ASIDE THE ORDER U/S 263 OF THE ACT. (E) KSHATRIYA GIRLS SCHOOL MANAGING BOARD VS. CIT (199 9) [(151 CTR (MAD) 204]: EXEMPTION GRANTED U/S. 19(22) FOR EARLI ER AND SUBSEQUENT YEARS REVISION ORDERS NOT VALID. (F) RAMAKANTH SINGH VS. CIT 137 TTJ (PAT) 67 AO EXAMINED BOOKS OF ACCOUNT DETAILS AND EXPLANATION WERE GIVEN BY THE A SSESSEE AND HENCE CANNOT BE SAID THAT NO ENQUIRY WAS MADE BY AO . IT CAN BE CASE A OF INADEQUATE ENQUIRY WHICH DOES NOT PERMIT ACTION U/S 263 OF THE IT ACT. (G) CIT VS. SMT. D. VALLIAMMAL (230 ITR 695) (MAD): C IT SET ASIDE THE ORDER FOR VERIFICATION OF ACCOUNTS - ORDER NOT VALI D. (H) PIEM HOTELS LTD. VS. DY CIT (135 TTJ 228) (MUM): M ERELY BECAUSE ACCORDING TO THE CIT AO HAS NOT EXAMINED AS TO THE EXEMPTION AND NOT APPLIED HIS MIND REVISION ORDER CANNOT BE SUSTA INED. (I) AP PAPER MILLS LTD VS. ACIT 128 TTJ 596 (HYD) ' AO WAS JUSTIFIED IN ALLOWING DEPRECIATION ON SUCH GOODWILL AND CIT W AS NOT CORRECT IN INVOKING THE PROVISIONS OF S. 263 - MOREOVER AO HAS FOLLOWED ONE OF THE COURSES OF ACTION PERMITTED BY LAW - THU S, THE ORDER CANNOT BE SAID TO BE ERRONEOUS SO FAR AS IT IS PREJ UDICIAL TO THE INTEREST OF REVENUE'. (J) SMT. ZUBI KOCHAR VS. ACIT (309 ITR 192) (DEL): DIRE CTION GIVEN BY CIT U/S 263 OF THE ACT TO AO TO EXAMINE THE ISSUE, REVISION NOT TENABLE IN LAW. (K) CIT VS MAX INDIA LIMITED (295 ITR 282) (SC): WHERE 2 VIEWS ARE POSSIBLE AND AO HAS TAKEN ONE VIEW WITH WHICH THE C IT DOES NOT AGREE. IT WOULD NOT BE TREATED AS ERRONEOUS ORDER P REJUDICIAL TO THE REVENUE. (L) ANTALA SAJAY KUMAR RAVJIBHAI VS. CIT (135 ITD 506) (RAJKOT) )135 ITD 506) : WHERE AO HAS TAKEN A PARTICULAR VIEW CON SCIOUSLY AFTER CONSIDERING THE FACTS OF THE CASE. SUBSEQUENTLY CIT WANTED TO SUBSTITUTE HIS VIEWS WITH THE AO . REVISION NOT PERMISSIBLE AND SET ASIDE. 25. THE DR RELIED ON THE ORDER OF THE CIT. IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 22 26. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IN VIEW OF THE FOREGOING, IT CAN SAFELY BE SAID THA T AN ORDER PASSED BY THE ASSESSING OFFICER BECOMES ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNDER SECTION 263 IN THE FOLLOWING CASES: (I) THE ORDER SOUGHT TO BE REVISED CONTAINS ERROR OF REASONING OR OF LAW OR OF FACT ON THE FACE OF IT. (II) THE ORDER SOUGHT TO BE REVISED PROCEEDS ON IN CORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW . IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHO UT APPLICATION OF MIND. (III) THE ORDER PASSED BY THE ASSESSING OFFICER IS A STEREOTYPE ORDER WHICH SIMPLY ACCEPTS WHAT THE ASSESSEE HAS STATED IN HIS RETURN OR WHERE HE FAILS TO MAKE THE REQUISITE ENQUIRIES OR EXAMINE THE GENUINENESS OF THE CLAIM WHICH IS CALLED FOR IN THE CIRCUMSTANCES OF THE CASE. 27. WE SHALL NOW TURN TO THE FACTS OF THE CASE TO SEE W HETHER THE CASE BEFORE US IS COVERED BY THE AFORESAID PRINCIPLES. P ERUSAL OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER DOES NOT SHOW ANY APPLICATION OF MIND ON HIS PART. HE SIMPLY ACCEPTED THE CLAIM OF T HE ASSESSEE WITH REGARD TO THE ISSUES CONSIDERED BY THE CIT. THIS IS A CASE WHERE THE ASSESSING OFFICER MECHANICALLY ACCEPTED WHAT THE ASSESSEE WAN TED HIM TO ACCEPT WITHOUT ANY APPLICATION OF MIND OR ENQUIRY. THE EV IDENCE AVAILABLE ON RECORD IS NOT ENOUGH TO HOLD THAT THE RETURN OF THE ASSESSEE WAS OBJECTIVELY EXAMINED OR CONSIDERED BY THE ASSESSING OFFICER. I T IS BECAUSE OF SUCH NON-CONSIDERATION OF THE ISSUES ON THE PART OF THE ASSESSING OFFICER THAT THE RETURN FILED BY THE ASSESSEE STOOD AUTOMATICALL Y ACCEPTED WITHOUT ANY PROPER SCRUTINY. THE ASSESSMENT ORDER PLACED BEFORE US IS CLEARLY ERRONEOUS AS IT WAS PASSED WITHOUT PROPER EXAMINATI ON OR ENQUIRY OR VERIFICATION OR OBJECTIVE CONSIDERATION OF THE CLAI M MADE BY THE ASSESSEE. THE ASSESSING OFFICER HAS COMPLETELY OMITTED TO EXA MINE THE ISSUES IN QUESTION FROM CONSIDERATION AND MADE THE ASSESSMENT IN AN ARBITRARY MANNER. HIS ORDER IS A COMPLETELY NON-SPEAKING ORDE R ON THE ISSUES HEREIN. IN OUR VIEW, IT WAS A FIT CASE FOR THE LEAR NED COMMISSIONER TO EXERCISE HIS REVISIONAL JURISDICTION UNDER SECTION 263 WHICH HE RIGHTLY EXERCISED BY CANCELLING THE ASSESSMENT ORDER AND DI RECTING THE ASSESSING IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 23 OFFICER TO PASS A FRESH ORDER CONSIDERING THE ISSU ES RAISED BY THE CIT. IN OUR VIEW, THE ASSESSEE SHOULD HAVE NO GRIEVANCE IN THE ACTION OF LEARNED COMMISSIONER IN EXERCISING THE JURISDICTION U/S. 26 3 OF THE IT ACT. 28. IT WAS HOWEVER CONTENDED BY THE LEARNED COUNSEL THA T THE ASSESSING OFFICER HAD TAKEN A CORRECT VIEW IN ACCEP TING THE RETURN OF THE ASSESSEE WITH REFERENCE TO THE ISSUE IN DISPUTE AND HENCE, THE COMMISSIONER WAS NOT JUSTIFIED IN ASSUMING THE REVI SIONAL JURISDICTION UNDER SECTION 263. WE HAVE GIVEN OUR THOUGHTFUL CON SIDERATION TO THE AFORESAID SUBMISSIONS. AS ALREADY STATED EARLIER, A N ORDER BECOMES ERRONEOUS BECAUSE INQUIRIES, WHICH OUGHT TO HAVE BE EN MADE ON THE FACTS OF THE CASE, WERE NOT MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WITH THE ORDER IF ALL THE FACTS STATED OR THE CLAIMS MAD E IN THE RETURN ARE ASSUMED TO BE CORRECT. THUS, IT IS MERE FAILURE ON THE PART OF THE ASSESSING OFFICER TO MAKE THE NECESSARY INQUIRIES OR TO EXAMI NE THE CLAIM MADE BY THE ASSESSEE IN ACCORDANCE WITH LAW, WHICH RENDERS THE RESULTANT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. NOTHING MORE IS REQUIRED TO BE ESTABLISHED IN SUCH A CASE. ONE WOUL D NOT KNOW AS TO WHAT WOULD HAVE HAPPENED IF THE ASSESSING OFFICER HAD MA DE THE REQUISITE INQUIRIES OR EXAMINED THE CLAIM OF THE ASSESSEE IN ACCORDANCE WITH LAW. HE COULD HAVE ACCEPTED THE ASSESSEE'S CLAIM. EQUALLY, HE COULD HAVE ALSO REJECTED THE ASSESSEE'S CLAIM DEPENDING UPON THE RE SULTS OF HIS ENQUIRY OR EXAMINATION INTO THE CLAIM OF THE ASSESSEE. THUS, T HE FORMATION OF ANY VIEW BY THE ASSESSING OFFICER WOULD NECESSARILY DEP END UPON THE RESULTS OF HIS INQUIRY AND CONSCIOUS, AND NOT PASSIVE, EXAMINA TION INTO THE CLAIM OF THE ASSESSEE. IF THE ASSESSING OFFICER PASSES AN OR DER MECHANICALLY WITHOUT MAKING THE REQUISITE INQUIRIES OR EXAMINING THE CLA IM OF THE ASSESSEE IN ACCORDANCE WITH LAW, SUCH AN ORDER WILL CLEARLY BE ERRONEOUS IN LAW AS IT WOULD NOT BE BASED ON OBJECTIVE CONSIDERATION OF TH E RELEVANT MATERIALS. IT IS THEREFORE, THE MERE FAILURE ON THE PART OF THE A SSESSING OFFICER IN NOT MAKING THE INQUIRIES OR NOT EXAMINING THE CLAIM OF THE ASSESSEE IN ACCORDANCE WITH LAW THAT PER SE RENDERS THE RESULTANT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. NOTHING ELSE IS REQUIRED TO BE IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 24 ESTABLISHED IN SUCH A CASE TO SHOW THAT THE ORDER S OUGHT TO BE REVISED IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. 29. WE ARE UNABLE TO ACCEPT THE SUBMISSION OF THE LEARN ED COUNSEL FOR TWO OTHER REASONS ALSO. FIRST REASON IS THAT THE VI EW SO TAKEN BY THE ASSESSING OFFICER WITHOUT MAKING THE REQUISITE INQU IRIES OR EXAMINING THE CLAIM OF THE ASSESSEE WILL PER SE BE AN ERRONEOUS VIEW AND HENCE WILL BE AMENABLE TO REVISIONAL JURISDICTION UNDER SECTION 2 63. SECOND REASON IS THAT IT IS NOT TAKING OF ANY VIEW THAT WILL TAKE TH E MATTER UNDER THE SCOPE OF SECTION 263. THE VIEW TAKEN BY THE ASSESSING OFFICE R SHOULD NOT BE A MERE VIEW IN VACUUM BUT A JUDICIAL VIEW. IT IS WELL ESTA BLISHED THAT THE ASSESSING OFFICER BEING A QUASI-JUDICIAL AUTHORITY CANNOT TAK E A VIEW, EITHER AGAINST OR IN FAVOUR OF THE ASSESSEE / REVENUE, WITHOUT MAK ING PROPER INQUIRIES AND WITHOUT PROPER EXAMINATION OF THE CLAIM MADE BY THE ASSESSEE IN THE LIGHT OF THE APPLICABLE LAW. AS ALREADY STATED EA RLIER, WE ARE NOT ABLE TO APPRECIATE ON WHAT MATERIAL WAS PLACED BEFORE THE A SSESSING OFFICER AT THE ASSESSMENT STAGE TO TAKE SUCH A VIEW. THE ASSESSEE HAS ALSO NOT BEEN ABLE TO LEAD ENOUGH EVIDENCE TO SHOW TO US THAT ANY INQU IRY WAS MADE BY THE ASSESSING OFFICER IN THIS REGARD. THEREFORE MERE AL LEGATION THAT THE ASSESSING OFFICER HAS TAKEN A VIEW IN THE MATTER WI LL NOT PUT THE MATTER BEYOND THE PURVIEW OF SECTION 263 UNLESS THE VIEW S O TAKEN BY THE ASSESSING OFFICER IS A JUDICIAL VIEW CONSCIOUSLY BA SED UPON PROPER INQUIRIES AND APPRECIATION OF ALL THE RELEVANT FACT UAL AND LEGAL ASPECTS OF THE CASE. THE JUDICIAL VIEW TAKEN BY THE ASSESSING OFFICER MAY PERHAPS PLACE THE MATTER OUTSIDE THE PURVIEW OF SECTION 263 UNLESS IT IS SHOWN THAT THE VIEW SO TAKEN BY THE ASSESSING OFFICER CONTAINS SOME APPARENT ERROR OF REASONING OR OF LAW OR OF FACT ON THE FACE OF IT. 30. WE HAVE CAREFULLY GONE THROUGH THE VARIOUS CASE-LAW CITED BY THE AR. 'ADOPTING' ONE OF THE COURSES PERMISSIBLE IN L AW NECESSARILY REQUIRES THE ASSESSING OFFICER TO CONSCIOUSLY ANALYSE AND EV ALUATE THE FACTS IN THE LIGHT OF RELEVANT LAW AND BRING THEM ON RECORD. IT IS ONLY THEN THAT HE CAN BE SAID TO HAVE 'ADOPTED' OR CHOSEN ONE OF THE COUR SES PERMISSIBLE IN LAW. THE ASSESSING OFFICER CANNOT BE PRESUMED OR ATTRIBU TED TO HAVE 'ADOPTED' IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 25 OR CHOSEN A COURSE PERMISSIBLE IN LAW WHEN HIS ORDE R DOES NOT SPEAK IN THAT BEHALF. SIMILARLY, 'TAKING' ONE VIEW WHERE TWO OR MORE VIEWS ARE POSSIBLE ALSO NECESSARILY IMPORTS THE REQUIREMENT O F ANALYSING THE FACTS IN THE LIGHT OF APPLICABLE LAW. THEREFORE, PROPER EXAM INATION OF FACTS IN THE LIGHT OF RELEVANT LAW IS A NECESSARY CONCOMITANT IN ORDER TO SAY THAT THE ASSESSING OFFICER HAS ADOPTED A PERMISSIBLE COURSE OF LAW OR TAKEN A VIEW WHERE TWO OR MORE VIEWS ARE POSSIBLE. IT IS ONLY AF TER SUCH PROPER EXAMINATION AND EVALUATION HAS BEEN DONE BY THE ASS ESSING OFFICER THAT HE CAN COME TO A CONCLUSION AS TO WHAT ARE THE PERM ISSIBLE COURSES AVAILABLE IN LAW OR WHAT ARE THE POSSIBLE VIEWS ON THE ISSUE BEFORE HIM. IN CASE HE COMES TO THE CONCLUSION THAT MORE THAN ONE VIEW IS POSSIBLE THEN HE HAS NECESSARILY TO CHOOSE A VIEW, WHICH IS MOST APPROPRIATE ON THE FACTS OF THE CASE. IN ORDER TO APPLY THE AFORESAID OBSERV ATIONS TO A GIVEN CASE, IT MUST THEREFORE FIRST BE SHOWN THAT THE ASSESSING OF FICER HAS 'ADOPTED' A PERMISSIBLE COURSE OF LAW OR, WHERE TWO VIEWS ARE P OSSIBLE, THE ASSESSING OFFICER HAS 'TAKEN' ONE SUCH POSSIBLE VIEW IN THE O RDER SOUGHT TO BE REVISED UNDER SECTION 263. THIS REQUIRES THE ASSESS ING OFFICER TO TAKE A CONSCIOUS DECISION; ELSE HE WOULD NEITHER BE ABLE T O 'ADOPT' A COURSE PERMISSIBLE IN LAW NOR 'TAKE' A VIEW WHERE TWO OR M ORE VIEWS ARE POSSIBLE. IN OTHER WORDS, IT IS THE ASSESSING OFFICER WHO HAS TO ADOPT A PERMISSIBLE COURSE OF LAW OR TAKE A VIEW WHERE TWO OR MORE VIEW S ARE POSSIBLE. IT IS DIFFICULT TO COMPREHEND AS TO HOW THE ASSESSING OFF ICER CAN BE ATTRIBUTED TO HAVE 'ADOPTED' A PERMISSIBLE COURSE OF LAW OR 'T AKEN' A VIEW WHERE TWO OR MORE VIEWS ARE POSSIBLE WHEN THE ORDER PASSED BY HIM DOES NOT SPEAK IN THAT BEHALF. WE CANNOT ASSUME, IN ORDER TO PROVI DE LEGITIMACY TO THE ASSESSMENT ORDER, THAT THE ASSESSING OFFICER HAS AD OPTED A PERMISSIBLE COURSE OF LAW OR TAKEN A POSSIBLE VIEW WHERE HIS OR DER DOES NOT SAY SO. THE SUBMISSIONS MADE BY THE LEARNED COUNSEL, IF ACCEPTE D, WOULD REQUIRE US TO FORM, SUBSTITUTE AND READ OUR VIEW IN THE ORDER OF THE ASSESSING OFFICER WHEN THE ASSESSING OFFICER HIMSELF HAS NOT TAKEN A VIEW. IT COULD HAVE BEEN A DIFFERENT POSITION IF THE ASSESSING OFFICER HAD 'ADOPTED' OR 'TAKEN' A VIEW AFTER ANALYSING THE FACTS AND DECIDING THE M ATTER IN THE LIGHT OF THE APPLICABLE LAW. HOWEVER, IN THE CASE BEFORE US, THE ASSESSING OFFICER HAS IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 26 NOT AT ALL EXAMINED AS TO WHETHER ONLY ONE VIEW WAS POSSIBLE OR TWO OR MORE VIEWS WERE POSSIBLE AND HENCE, THE QUESTION OF HIS ADOPTING OR CHOOSING ONE VIEW IN PREFERENCE TO THE OTHER DOES N OT ARISE. THE AFORESAID OBSERVATIONS DO NOT, IN OUR VIEW, HELP THE ASSESSEE ; AND RATHER THEY ARE AGAINST THE ASSESSEE. 31. IT WAS NEXT CONTENDED BY THE LEARNED AUTHORISED REP RESENTATIVE THAT THE ASSESSING OFFICER HAD CONSIDERED ALL THE R ELEVANT ASPECTS OF THE CASE CAREFULLY WHILE PASSING THE ORDER. ACCORDING T O HIM, THE MERE FACT THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING O FFICER WAS SHORT WOULD NEITHER MEAN FAILURE ON HIS PART IN NOT EXAMINING T HE MATTER CAREFULLY NOR WOULD RENDER HIS ORDER ERRONEOUS SO LONG AS THE VIE W TAKEN BY HIM WAS A POSSIBLE VIEW. IN OUR VIEW, THE AFORESAID SUBMISSIO N OF THE ASSESSEE MUST FAIL FOR THE REASONS ALREADY EXPLAINED IN THE FOREG OING PARAS OF THIS ORDER AS THE ORDER, WHICH IS SOUGHT TO BE REVISED UNDER SECTION 263 REFLECTS NO PROPER APPLICATION OF MIND BY THE ASSESSING OFFICER AND THUS BE AMENABLE TO REVISION UNDER SECTION 263. IN THIS CASE BEFORE US, THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER LACKS JUDICIAL STRE NGTH TO STAND. IT IS NOT A CASE WHERE THE ORDER IS SHORT BUT IS NOT SUPPORTED BY JUDICIAL STRENGTH. IT IS IN THIS VIEW OF THE MATTER THAT WE FEEL THAT THE LE ARNED COMMISSIONER HAS CORRECTLY EXERCISED HIS REVISIONAL JURISDICTION UND ER SECTION 263. 32. IN OUR OPINION, THE ASSESSING OFFICER HAS BEEN ENTR USTED THE ROLE OF AN INVESTIGATOR, PROSECUTOR AS WELL AS ADJUDICATOR UNDER THE SCHEME OF THE INCOME-TAX ACT. IF HE COMMITS AN ERROR WHILE DISCHA RGING THE AFORESAID ROLES AND CONSEQUENTLY PASSES AN ERRONEOUS ORDER CA USING PREJUDICE EITHER TO THE ASSESSEE OR TO THE STATE EXCHEQUER OR TO BOT H, THE ORDER SO PASSED BY HIM IS LIABLE TO BE CORRECTED. AS MENTIONED EARLIER , THE ASSESSEE CAN HAVE THE PREJUDICE CAUSED TO HIM CORRECTED BY FILING AN APPEAL; AS ALSO BY FILING A REVISION APPLICATION UNDER SECTION 264. BUT THE S TATE EXCHEQUER HAS NO RIGHT OF APPEAL AGAINST THE ORDERS OF THE ASSESSING OFFICER. SECTION 263 HAS, THEREFORE, BEEN ENACTED TO EMPOWER THE COMMISS IONER TO CORRECT AN ERRONEOUS ORDER-PASSED BY THE ASSESSING OFFICER WHI CH HE CONSIDERS TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE COM MISSIONER HAS ALSO BEEN IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 27 EMPOWERED TO INVOKE HIS REVISIONAL JURISDICTION UND ER SECTION 264 AT THE INSTANCE OF THE ASSESSEE ALSO. THE LINE OF DIFFEREN CE BETWEEN SECTIONS 263 AND 264 IS THAT WHILE THE FORMER CAN BE INVOKED TO REMOVE THE PREJUDICE CAUSED TO THE STATE THE LATER CAN BE INVOKED TO REM OVE THE PREJUDICE CAUSED TO THE ASSESSEE. THE PROVISIONS OF SECTION 2 63 WOULD LOSE SIGNIFICANCE IF THEY WERE TO BE INTERPRETED IN A MA NNER THAT PREVENTED THE COMMISSIONER FROM REVISING THE ERRONEOUS ORDER PASS ED BY THE ASSESSING OFFICER, WHICH WAS PREJUDICIAL TO THE INTEREST OF T HE REVENUE. IN FACT, SUCH A COURSE WOULD BE COUNTER-PRODUCTIVE AS IT WOULD HAVE THE EFFECT OF PROMOTING ARBITRARINESS IN THE DECISIONS OF THE ASS ESSING OFFICERS AND THUS DESTROY THE VERY FABRIC OF SOUND TAX DISCIPLINE. IF ERRONEOUS ORDERS, WHICH ARE PREJUDICIAL TO THE INTEREST OF THE REVENUE, ARE ALLOWED TO STAND, THE CONSEQUENCES WOULD BE DISASTROUS IN THAT THE HONEST TAX PAYERS WOULD BE REQUIRED TO PAY MORE THAN OTHERS TO COMPENSATE FOR THE LOSS CAUSED BY SUCH ERRONEOUS ORDERS. FOR THIS REASON ALSO, WE ARE OF THE VIEW THAT THE ORDERS PASSED ON AN INCORRECT ASSUMPTION OF FACTS O R INCORRECT APPLICATION OF LAW OR WITHOUT APPLYING THE PRINCIPLES OF NATURA L JUSTICE OR WITHOUT APPLICATION OF MIND OR WITHOUT MAKING REQUISITE INQ UIRIES WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF THE REVENUE WITHIN THE MEANING OF SECTION 263. 33. ADVERTING TO THE FACTS OF THE PRESENT CASE, THERE I S NO ENQUIRY BY THE ASSESSING OFFICER WHATSOEVER ON THE ISSUE IN DISPUT E. HE JUST ACCEPTED THE CLAIM OF SET OFF OF EARLIER YEAR UNABSORBED DEPRECI ATION IN THE ASSESSMENT YEAR UNDER CONSIDERATION. BEING SO, THE CIT ASSUME D JURISDICTION U/S. 263 OF THE ACT. THE ARGUMENT OF THE ASSESSEE'S COUNSE L IS THAT THERE ARE DECISIONS IN FAVOUR OF THE ASSESSEE. THEREFORE, TH E VIEW ADOPTED BY THE ASSESSING OFFICER IS ONE OF THE POSSIBLE VIEWS. TH E GENERAL LAW ON THE QUESTION OF REVISIONAL JURISDICTION IS THAT AN ORDE R PASSED BY THE ASSESSING OFFICER CANNOT BE HELD TO BE ERRONEOUS, IF THE ASSE SSING OFFICER HAS FOLLOWED ONE OF THE POSSIBLE VIEWS ON THE SUBJECT. BUT IN THIS CASE THE ASSESSING OFFICER NOT ADOPTED ANY VIEW ON THE ISSUE RAISED BY THE CIT. FURTHER, THE ASSESSEE'S COUNSEL HARPED UPON THAT TH E BONUS SHARES OF 56,400 WERE ALLOTTED TO THE ASSESSEE IN RELATION TO ORIGINAL EQUITY SHARES OF IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 28 28,200 AND 14,408 BONUS SHARES WERE ALLOTTED WITH R EGARD TO ORIGINAL SHARES HELD BY THE ASSESSEE AT 8,209. IN SUPPORT O F THIS, THE ASSESSEE FILED A LETTER DATED 27 TH NOVEMBER, 2012 FROM MEGASOFT LTD., CHENNAI. 34. WE HAVE CAREFULLY GONE THROUGH THE ARGUMENTS AS WEL L AS CONTENTS OF THE LETTER FROM MEGASOFT LTD. WE HAVE ALSO COMP ARED THIS LETTER WITH THE DEMAT ACCOUNT PLACED IN PAPER BOOK AT PAGES 40 TO 42. WE HAVE NOTICED FROM THE DEMAT ACCOUNT THAT AS ON 14 TH AUGUST, 2000 THE ASSESSEE IS HOLDING ONLY 8,209 SHARES. CONSEQUENT TO THIS O N 21 ST SEPTEMBER, 2000 THE ASSESSEE GOT BONUS OFFER AT 16,418 SHARES. THU S, THE TOTAL BALANCE ON THIS DATE IS AT 24,627 SHARES. LATER, ON 27 TH SEPTEMBER, 2000 THERE WAS AN ENTRY BY TRANSACTION NO. 3238 WITH NARRATION 'BY TR ANSACTION NO. 3238 BY CORPORATION ACTION' AT 56,400 SHARES. IT IS TO BE NOTED HEREIN THAT THERE IS NO MENTION OF ANYTHING ABOUT BONUS OFFER OR MENTION OF ANY ORIGINAL SHARES IN RELATION TO WHICH 56,400 SHARES WERE ALLO TTED. THE ARGUMENT OF THE ASSESSEE'S COUNSEL IS TOTALLY MISLEADING AND FA RAWAY FROM TRUTH. BEING SO, WE ARE NOT IN A POSITION TO GIVE ANY CREDIT TO THE LETTER FILED BY THE ASSESSEE FROM MEGASOFT LTD., AS THE DEMAT ACCOUNT H AVING NO MENTION ABOUT THE ORIGINAL SHARES OF 28,200 AGAINST WHICH P URPORTED TO BE BONUS SHARES WERE ALLOTTED. ON THIS ISSUE, WE HAVE NO HESITATION TO CONFIRM THE ORDER OF THE CIT WHO HAS TAKEN GREAT PAIN IN BRINGI NG THE VARIOUS TRUE FACTS RELATED WITH THIS ISSUE. 35. REGARDING THE OTHER ISSUE, THE CIT HAS ONLY GIVEN T HE DIRECTION TO THE ASSESSING OFFICER TO ENQUIRE AND REDO THE ASSES SMENT IN ACCORDANCE WITH LAW. WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE CIT PASSED U/S. 263 OF THE INCOME-TAX ACT, 1961 AND THE SAME IS CON FIRMED. 36. IN THE RESULT, ASSESSEE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST DECEMBER, 2012. SD/ - (SAKTIJIT DEY) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 31 ST DECEMBER, 2012 IT A NO. 1054/HYD/2011 M/S. NINESTAR ENTERPRISES (P) LTD. ========================= 29 COPY FORWARDED TO: 1. M/S. NINESTAR ENTERPRISES (P) LTD., C/O. M/S. KALYA NDAS & CO., CHARTERED ACCOUNTANTS, NO. 15, VENKATESHWARA COLONY , NARAYANAGUDA, HYDERABAD-500 029. 2. THE ASST. CIT, CIRCLE - 16(1), HYDERABAD. 3. THE CIT - IV, HYDERABAD. 4. THE JCIT, RANGE - 16, HYDERABAD. 5. THE DR A BENCH, ITAT, HYDERABAD. TPRAO