Loknath Prasad Gupta, Kolkata V. DCIT, CC-XXV, KOLKATA, Kolkata

ITA 1096/KOL/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0503 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 20-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAR SINGH
• Keywords: Business income; Depreciation; Business expenditure; Rectification of order; Opportunity of being heard; Principle of natural justice; Period of limitation; Reason to believe; Revenue expenditure; Capital expenditure
• Section: 44AD; 43B; 143(3); 142(1); 27; 37; 263; 12; 28; 154; 15; 139

Judgement Text

I.T.A. NO . 1096 / KOL ./20 1 4 ASSESSMENT YEAR : 200 9 - 20 10 PAGE 1 OF 19 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.K. BANSAL , ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH , JUDICIAL MEMBER I.T.A. NO. 1096 / KOL / 20 14 ASSESSMENT YEAR : 2009 - 2010 LOK NATH PD. GUPTA,............ ................ .............. ..... .APP ELL ANT R.K. DEB PATH, TITAGARH, 24 - PARGANAS (NORTH), KOLKATA - 700 119 [PAN : AD UPG 5810 F ] - VS. - DEPUTY COMMISSIONER OF INCOME TAX , ,......... . RESPONDENT CENTRAL CIRCLE - XXV, KOLKATA, AAYAKAR BHAWAN (POORVA), 110, SHANTIPA LLI, KOLKATA - 700 107 APPEARANCES BY: SHRI S.K. BAGARIA, SR. ADVOCATE, SHRI A.K. TULSIYAN, FCA, SHRI GOPAL DAS, ADVOCATE, SHRI SAURABH BAGARIA, ADVOCATE , FOR THE ASSESSEE SHRI AJAY KUMAR SINGH, CIT, D.R. , FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : MAY 1 8 , 2 01 5 DATE OF PRONOUNCING THE ORDER : JUNE 10 , 201 5 O R D E R PER P.K. BANSAL : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (CENTRAL) - III, KOLKATA DATED 25.03.2014 FOR THE ASSESSMENT YEAR 20 09 - 10. 2. BRIEF FACTS OF THE CASE ARE THAT IN THIS CASE THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 24.11.2011. SUBSEQUENTLY THE SAID ORDER WAS RECTIFIED BY THE ASSESSING OFFICER VIDE ORDER DATED 24.05.2013 AGAINST WHICH THE ASSESSEE WENT IN APPEA L BEFORE THE CIT. CIT DISPOSED OF THE APPEAL VIDE ORDER DATED 20.01.2014 ANNULLING RECTIFICATION. CIT ISSUED THE SHOW - CAUSE NOTICE DATED 05.03.2014 ON THE FOLLOWING ISSUES: - (I) A CLAIM FOR EXPENDITURE TOWARDS PAYMENT OF EXCISE DUTY AND INTEREST THEREON OF RS.29,17,01,515/ - AND RS.12,93,62,086/ - RESPECTIVELY PERTAINING TO AYS 2001 - 02 TO 2005 - 06, ON THE GROUND THAT THE SAME WAS PAID IN THE FY 2008 - 09 (AY 2009 - 10) HAS BEEN ALLOWED DESPITE NOT BEING DISCLOSED IN THE REGULAR BOOKS OF ACCOUNTS, WHICH IS BAD IN L AW WITH REFERENCE TO THE FOLLOWING OBSERVATIONS: - I.T.A. NO . 1096 / KOL ./20 1 4 ASSESSMENT YEAR : 200 9 - 20 10 PAGE 2 OF 19 (A) THE EXPENDITURE WAS RESULTED FROM UNDISCLOSED PRODUCTION AND SALES WHICH WAS NOT PART OF REGULAR BOOKS OF ACCOUNTS. (B) THE ASSESSEE DID NOT DISCLOSE ANY DETAILS REGARDING LIABILITY TOWARDS UNPAID EXCIS E DUTY, WHICH THE ASSESSEE WSA LIKELY TO HAVE INCURRED ON ACCOUNT OF ORDER BY CESTAT (CENTRAL EXCISE SETTLEMENT COMMISSION). HENCE, IT IS EVIDENT THAT THE ASSESSEE HIMSELF DID NOT ACKNOWLEDGE LIABILITY TOWARDS EXCISE DUTY AND INTEREST LEVIABLE ON UNDISCLOS ED PRODUCTION, AND SALES FOR THE AY 2001 - 02 TO 2007 - 08 IN THE STATEMENT OF INCOME SUBMITTED BEFORE HON BLE ITSC (INCOME TAX SETTLEMENT COMMISSION). ACCORDINGLY HE IS BARRED FROM CLAIMING BENEFIT OF SUCH EXPENDITURE IN THE YEARS OF PAYMENT I.E. AY 2009 - 10. (C) ON PERUSAL OF THE ASSESSEE S ORIGINAL APPLICATION AND LETTER DATED 28.03.2008, IT IS EVIDENT THAT THE ISSUE OF UNPAID EXCISE DUTY WAS NOT DISCLOSED BEFORE THE ITSC, HENCE HE WAS PREVENTED FROM CLAIMING DEDUCTION IN RESPECT OF PAYMENT OF SUCH LIABILITY IN THE YEAR OF PAYMENT I.E. AY 2009 - 10. (D) FURTHER VIDE PARA 9 OF THE ORDER UNDER SECTION 245D(4), THE ITSC HAS ALLOWED CAPITALIZATION OF ADDITIONAL INCOME OFFERED BEFORE THE ITSC. HENCE THE USE OF ADDITIONAL INCOME FOR PAYMENT OF UNPAID EXCISE DUTY AND INTEREST LEVIED BY THE EXCISE DEPARTMENT ON UNDISCLOSED SALE, IS NOT ALLOWABLE AS PER ITSC S ORDER, AS OBVIOUS AND EVIDENT FROM ITSC S ORDER . 3. SUBSEQUENTLY AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE CIT TOOK THE VIEW THAT THE ORDER PASSED UNDER SE CTION 143(3) DATED 24.11.2011 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ACCORDINGLY HE SET ASIDE THE ORDER WITH THE DIRECTION THAT THE ASSESSING OFFICER SHALL MAKE ASSESSMENT AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE FOR PROPER EXA MINATION OF THE FACTS INVOLVED AND ALSO TO EXAMIN E THE ISSUE S DISCUSSED. 4. LD. A.R. BEFORE US VEHEMENTLY CONTENDED THAT THE CIT L ACK S JURISDICTION TO REVISE THE ORDER PASSED UNDER SECTION 143(3) AS IT GOT RECTIFIED BY THE ORDER PASSED UNDER SECTION 154. RELIANCE WAS PLACED IN THIS REGARD ON THE ORDER OF THE HON BLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. - VIPPY SOLVES PRODUCTS PVT. LTD. REPORTED IN 228 ITR 587 (M.P.). IT WAS FURTHER CONTENDED THAT T WO IS SUES INVOLVED IN THE SHOW - CAUSE NOTICE A BOUT THE CLAIM OF THE EXPENDITURE TOWARDS THE PAYMENT OF EXCISE DUTY AND INTEREST THEREON AMOUNTING TO RS.29,17,01,515/ - AND RS.12 , 93 , 62,086/ - RESPECTIVELY . I.T.A. NO . 1096 / KOL ./20 1 4 ASSESSMENT YEAR : 200 9 - 20 10 PAGE 3 OF 19 THESE ISSUES HAVE ALREADY BEEN DEALT WITH BY THE CIT(A) AND THE ASSESSMENT ORDER GOT MERGED WITH TH E ORDER OF THE CIT(APPEALS) DATED 20.01.2014. IN THIS REGARD, OUR ATTENTION WAS DRAWN TOWARDS CLAUSE (C) UNDER EXPLANATION TO SECTION 263(1 ) OF THE INCOME TAX ACT. RELIANCE WAS ALSO PLACED ON THE FOLLOWING DECISIONS: - (I) CIT VS . - MANDSAUR ELECTRIC SUPP LY CO. LTD. 140 ITR 677 (MP(FB); (II) CIT VS. - SHALIMAR HOUSING & FINANCE LTD. [320 ITR 157 (MP)]; (III) SLP AGAINST THE DECISION WAS DISMISSED BY THE HON BLE SUPREME COURT [322 ITR (ST.)14]; (IV) GENERAL BEOPAR CO. (P) LTD. VS. - CIT [167 ITR 86 (CAL .)]; (V) CIT VS. - AMRITLAL BHOGILAL & CO. [34 ITR 130 (SC)]; (VI) GOPAL CHANDRA SEN VS. - ITO [50 ITR 87 (CAL.)]; (VII) ADDL. CIT VS. - J.K. SYNTHETICS LTD. [169 ITR 533 (SC)]; (VIII) CIT VS. - ARVIND MILLS LTD. [231 ITR 50 (SC)]; (IX) CIT VS. - JAY KUMAR B. PATEL [236 ITR 469] IT WAS FURTHER SUBMITTED THAT THE SUBJECT MATTER OF THE EXCISE DUTY AND THE INTEREST THEREON WAS ADJUDICATED BY THE CIT(APPEALS) WHILE ADJUDICATING THE GROUND NO. 3 IN HIS ORDER PASSED UNDER SECTION 250 DATED 20.01.2014 AN D OUR ATTENTION IN THIS REGARD WAS DRAWN TOWARDS THE ORDER OF CIT(APPEALS). THE OBSERVATIONS MADE IN SUB - PARA (A), (B), (C) AND (D) OF THE NOTICE WERE ALSO ADJUDICATED BY THE CIT(APPEALS) WHILE ADJUDICATING THE GROUNDS NO. 3 & 5. THE SAID AMOUNT OF EXCISE DUTY OF RS.29,17,01,551/ - WAS PAID DURING THE FINANCIAL YEAR 2008 - 09 IN PURSUANCE TO THE DEMAND AS PER THE ORDER OF THE HON BLE CUSTOMS & CENTRAL EXCISE SETTLEMENT COMMISSION. THE PROVISIONS OF SECTION 43B ( A) ARE EXPLICIT LY CLEAR THAT THE SAID PAYMENT HAS TO BE ALLOWED ON PAYMENT BASIS IRRESPECTIVE OF THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. BASED ON THE ORDER OF THE SETTLEMENT COMMISSION OF CUSTOMS AND CENTRAL EXCISE AN INCOME OF RS.105,00,00,000/ - FOR THE ASSESSMENT YEARS 2001 - 02 TO 2007 - 08 WAS SETTLED BY THE SETTLEMENT COMMISSION OF INCOME TAX VIDE ORDER PASSED UNDER SECTION 245D DATED 28.03.2008. THUS THE SALES/INCOME AS PER THE ORDER OF THE HON BLE CUSTOMS AND CENTRAL EXCISE SETTLEMENT COMMISSION WAS DULY DISCLOSED BEFORE THE INCOME TAX SETTL EMENT COMMISSION. RELIANCE WAS PLACED IN THIS REGARD ON THE DECISION OF THE HON BLE ITAT, MUMBAI BENCH IN THE CASE OF EURO RSCG ADVERTISING (P.) LTD. VS. - ACIT REPORTED IN 53 I.T.A. NO . 1096 / KOL ./20 1 4 ASSESSMENT YEAR : 200 9 - 20 10 PAGE 4 OF 19 SOT 90 IN WHICH IT WAS HELD THAT THE DEDUCTION CLAIMED BY THE ASSESSEE IN RESPE CT OF ANY SUM PAID BY WAY OF TAX, DUTY, CESS, OR FEE, SHALL BE ALLOWED ONLY IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 OF THAT PREVIOUS YEAR IN WHICH SUCH SUM IS ACTUALLY PAID BY HIM, IRRESPECTIVE OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY W AS INCURRED ON THE PAYMENT OF SUCH SUM AS PER METHOD OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE AS PER SECTION145. FOR THE CLAIM OF DEDUCTION OF THE SUM PAID AGAINST THE LIABILITY OF TAX, DUTY, CESS, FEE, ETC., THE YEAR OF PAYMENT IS RELEVANT WHICH I S TO BE TAKEN INTO ACCOUNT , THE YEAR IN WHICH THE ASSESSEE INCURRED THE LIABILITY TO PAY SUCH TAX, DUTY ETC. HAS NO RELEVANCE AND CANNOT BE LINKED IN THE MATTER OF GIVING BENEFIT OF DEDUCTION UNDER SECTION 43B. RELIANCE WAS ALSO PLACED ON THE DECISION OF T HE HON BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. C.L. GUPTA & SONS, REPORTED IN (2003) 259 ITR 513(ALL). SIMILAR PROPOSITION HAS BEEN HELD IN THE CASE CIT VS. DHARAMPAL SATYAPAL SONS PVT. LTD., REPORTED IN (2011) 50 DTR 287 (DELHI). THE ASSESSEE E WAS REQUIRED TO PAY THE INTEREST O N DELAYED PAYMENT OF THE EXCISE DUTY A S DETERMINED BY THE SETTLEMENT COMMISSION, CUSTOMS AND EXCISE. THE INTEREST AMOUNTING TO RS.12,93,62,086/ - WAS PAID UNDER SECTION 11AF OF THE CENTRAL EXCISE ACT, 1944 AND SUCH COMPENSATO RY PAYMENT OF INTEREST CANNOT BE DESCRIBED AS PENALTY IMPOSED FOR INFRINGEMENT OF LAW BUT ON ACCOUNT OF COMPENSATION PAID FOR THE GOVERNMENT VIDE CHALLAN OF THE EXCISE DUTY. SUCH INTEREST IS ALLOWABLE EXPENDITURE UNDER SECTION 37. IN THIS REGARD ATTENTION WAS DRAWN TOWARDS THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF PRAKASH COTTON MILLS VS. - CIT [201 ITR 684] AND THAT OF MAHALAXMI SUGAR MILLS VS. - CIT [123 ITR 429]. THUS IT WAS CONTENDED THAT THE PROCEEDINGS INITIATED UNDER SECTION 263 ARE I NVALID AND VOID. THE ASSESSEE IS ENTITLED FOR THE DEDUCTION UNDER SECTION 43B AS WELL AS UNDER SECTION 37 EVEN IF THERE TWO VIEWS ARE POSSIBLE. THE CIT IS NOT EMPOWERED TO TAKE SHELTER UNDER SECTION 263. IN THIS REGARD, RELIANCE WAS PLACED ON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. - CIT REPORTED IN 243 ITR 83. 5. LD. D.R. ON THE OTHER HAND, RELIED ON THE ORDER OF CIT AND CONTENDED THAT THE PROCEEDINGS INITIATED WERE VALID AS ON THE DATE WHEN THE PROCEEDINGS UNDER SECTION 263 WERE INITIATED. THE ORDER PASSED UNDER SECTION 154 WAS ALREADY ANNULLED AND THUS WAS NOT INEXISTENCE. THEREFORE, THE PROCEEDINGS WERE INITIATED AGAINST THE ORDER PASSED UNDER SECTION 143(3). CIT(APPEALS) ANNULLED THE ORDER UNDER SECTION 1 54. THE APPEAL DOES NOT RELATE TO THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3), THEREFORE, IT I.T.A. NO . 1096 / KOL ./20 1 4 ASSESSMENT YEAR : 200 9 - 20 10 PAGE 5 OF 19 CANNOT BE SAID THAT THE ORDER OF CIT(APPEALS) GOT MERGED WITH THE ORDER OF ASSESSING OFFICER. IT IS A CASE WHERE THE ASSESSING OFFICER HAS ALLOWED THE DEDUCTI ON OF THE ASSESSEE WITHOUT EXAMINING WHETHER THE ASSESSEE IS ENTITLED FOR THE DEDUCTION IN RESPECT OF EXCISE DUTY AS WELL AS INTEREST THEREON. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDER OF TAX AUTHORITIES BELOW. NOW THE QUESTION BEFORE US IS WHETHER THE ORDER PASSED BY THE CIT UNDER SECTION 263 IS WITHIN THE FOUR CORNERS OF HIS ORDER AS IS ENVISAGED ON HIM UNDER THE INCOME TAX ACT, 1961. BEFORE DECIDING THE ISSUE WHETHER THE ORDER PASSED BY THE CIT I S VALID , IT IS NECESSARY TO DISCUSS THE PROVISION OF SECTION 263 WHICH EMPOWERS THE CIT TO REVISE THE ASSESSMENT ORDER UNDER SECTION 263, WHICH READS AS UNDER: - 263. (1) THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDI NG UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAU SING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. EXPLANATION. - FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT, FOR THE PURPOSES OF THIS SUB - SECTION, - (A) AN ORDER PASSED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988 BY THE ASSESSING OFFICER SHALL INCLUDE - (I) AN ORDER OF ASSESSMENT MADE BY THE ASSISTANT COMM ISSIONER OR DEPUTY DIRECTOR OR THE INCOME - TAX OFFICER ON THE BASIS OF THE DIRECTIONS ISSUED BY THE JOINT COMMISSIONER UNDER SECTION 144A; (II) AN ORDER MADE BY THE JOINT COMMISSIONER IN EXERCISE OF THE POWER OR IN THE PERFORMANCE OF THE FUNCTIONS OF AN AS SESSING OFFICER CONFERRED ON, OR ASSIGNED TO, HIM UNDER THE ORDERS OR DIRECTIONS ISSUED BY THE BOARD OR BY THE CHIEF COMMISSIONER OR DIRECTOR GENERAL OR COMMISSIONER AUTHORISED BY THE BOARD IN THIS BEHALF UNDER SECTION 120; (B) 'RECORD' SHALL INCLUDE AND S HALL BE DEEMED ALWAYS TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PROCEEDING UNDER THIS ACT AVAILABLE AT THE TIME OF EXAMINATION BY THE COMMISSIONER; (C) WHERE ANY ORDER REFERRED TO IN THIS SUB - SECTION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJ ECT MATTER OF ANY APPEAL FILED ON OR I.T.A. NO . 1096 / KOL ./20 1 4 ASSESSMENT YEAR : 200 9 - 20 10 PAGE 6 OF 19 BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988, THE POWERS OF THE COMMISSIONER UNDER THIS SUB - SECTION SHALL EXTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED TO SUCH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH AP PEAL. (2) NO ORDER SHALL BE MADE UNDER SUB - SECTION (1) AFTER THE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE REVISED WAS PASSED. (3) NOTWITHSTANDING ANYTHING CONTAINED IN SUB - SECTION (2), AN ORDER IN REVISION UND ER THIS SECTION MAY BE PASSED AT ANY TIME IN THE CASE OF AN ORDER WHICH HAS BEEN PASSED IN CONSEQUENCE OF OR TO GIVE EFFECT TO, ANY FINDING OR DIRECTION CONTAINED IN AN ORDER OF THE APPELLATE TRIBUNAL, THE HIGH COURT OR THE SUPREME COURT. EXPLANATION. - IN C OMPUTING THE PERIOD OF LIMITATION FOR THE PURPOSES OF SUB - SECTION (2), THE TIME TAKEN IN GIVING AN OPPORTUNITY TO THE ASSESSEE TO BE REHEARD UNDER THE PROVISO TO SECTION 129 AND ANY PERIOD DURING WHICH ANY PROCEEDING UNDER THIS SECTION IS STAYED BY AN ORDE R OR INJUNCTION OF ANY COURT SHALL BE EXCLUDED. 7 . FROM THE PERUSAL OF THE AFORESAID SECTION, IT IS APPARENT THAT THERE ARE FOUR MAIN FEATURES OF THE POWER OF REVISION TO BE EXERCISED U/S 263 BY THE COMMISSIONER OF INCOME - TAX. FIRSTLY, THE COMMISSIONER MA Y CALL FOR AND EXAMINE THE RECORDS OF ANY PROCEEDINGS UNDER THE ACT AND FOR THIS PURPOSE HE NEED NOT TO SHOW ANY REASON OR RECORD ANY REASON TO BELIEVE. IT IS A PART OF HIS ADMINISTRATIVE POWER TO CALL FOR THE RECORD AND EXAMINE THEM RELATING TO ANY ASSES SEE. SECONDLY HE MAY CONSIDER ANY ORDER PASSED BY THE ASSESSING OFFICER AS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THIS CONSIDERATION HAVING REGARD TO THE LANGUAGE OF SECTION 263 APPARENTLY IS A CONSIDERATION WHICH HE EXERCISES BY CALLING FOR AND EXAMINING THE RECORD AVAILABLE AT THIS STAGE. THERE IS NO QUESTION OF THE ASSESSEE TO APPEAR AND MAKE SUBMISSION. THIRDLY, IF AFTER CALLING FOR AND EXAMINING THE RECORDS THE COMMISSIONER CONSIDERS THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE IS BOUND TO GIVE AN OPPORTUNITY TO THE ASSESSEE OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH ENQUIRY AS HE MAY DEEM FIT, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE MAY JUSTIFY INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCE L LING ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. THIS EMPOWERS THE C.I.T. TO CAUSE OR MAKE SUCH ENQUIRIES AS HE DEEMS NECESSARY. FOURTHLY THE C.I.T. U/S 263 CAN ENHANCE OR MODIFY THE ASSESSMENT. 8 . IT IS A SETTLED LAW THAT FOR INVOKING THE PROVISIONS OF SECTION 263 THE CIT MUST SATISFY BOTH THE CONDITIONS THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND ALSO THAT IT IS PREJUDICIAL TO THE INTEREST OF THE RE VENUE. IF ONE OF THE CONDITIONS IS I.T.A. NO . 1096 / KOL ./20 1 4 ASSESSMENT YEAR : 200 9 - 20 10 PAGE 7 OF 19 ABSENT, THE ORDER PASSED BY THE CIT BY INVOKING THE PROVISIONS OF SECTION 263 WILL NOT BE LEGAL. THE TERM ERRONEOUS HAS NOT BEEN DEFINED UNDER THE INCOME - TAX ACT BUT IT IS WELL SETTLED THAT EACH AND EVERY TYPE OF MISTA KE OR ERROR COMMITTED BY THE ASSESSING OFFICER CANNOT BE SAID TO BE AN ERROR. AN ORDER CAN BE SAID TO BE ERRONEOUS IF THERE IS AN INCORRECT ASSUMPTION OF FACT OR INCORRECT APPLICATION OF LAW IN THE ORDER PASSED BY THE ASSESSING OFFICER. IF THE ASSESSING OF FICER AFTER MAKING THE ENQUIRIES AND EXAMINING THE RECORDS, TAKEN ONE OF THE POSSIBLE VIEWS, IT CANNOT BE SAID THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS. 9 . IT IS ALSO APPARENTLY CLEAR THAT THE POWER S OF THE CIT ARE THREE FOLD S . ONE IS PRIOR TO THE INITIATION OF THE PROCEEDINGS U/S 263. SECOND IS AT THE TIME OF INITIATION OF THE PROCEEDINGS. THIRD, IS THE FINAL OUTCOME AFTER THE INITIATION OF THE PROCEEDING. POWER OF THE CIT PRIOR TO THE INITIATION INCLUDES CALL FOR AND EXAMINE THE RECO RDS OF ANY PROCEEDINGS UNDER THIS ACT. THE WORD RECORD IS VERY IMPORTANT, BECAUSE ON THE BASIS OF THE RECORD OF THE PROCEEDINGS THE CIT WILL FORM AN OPINION THAT THE ORDER PASSED IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ONC E HE FORMS AN OPINION, HE HAS TO GIVE AN OPPORTUNITY TO THE ASSESSEE OF BEING HEARD AND AFTER MAKING OR CAUSING THE ENQUIRY HE CAN PASS AN ORDER. MOREOVER THE INQUIRY IS CONDUCTED ONCE THE CIT FORMS AN OPINION ON THE BASIS OF RECORD THAT THE ORDER PASSED IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE WORD RECORD HAS BEEN DEFINED UNDER EXPLANATION (B) OF SECTION 263 TO MEAN THAT THE RECORD SHALL INCLUDE AND SHALL BE DEEMED ALWAYS TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PROCEEDING UNDE R THIS ACT AVAILABLE AT THE TIME OF EXAMINATION BY THE COMMISSIONER. THE EXAMINATION OF THE RECORD IS TO BE CARRIED BY THE COMMISSIONER PRIOR TO THE FORMING AN OPINION THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. ONCE THE REC ORD IS EXAMINED AND THE CIT ON THE BASIS OF EXAMINATION OF THE RECORD FORMS AN OPINION THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE IS EMPOWERED AFTER GIVING THE OPPORTUNITY TO THE ASSESSEE, TO MAKE SUCH ENQUIRY AS HE MAY DEEM NECESSARY. THEREFORE, THE ENQUIRY TO BE CONDUCTED BY THE CIT IS AN ACT ONCE THE CIT ARRIVES AT A CONCLUSION THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AFTER EXAMINING THE RECORD. THUS ENQ UIRY PRECEDES THE RECORD AND THE MATERIAL COLLECTED DURING THE COURSE OF THE ENQUIRY CANNOT BE THE PART OF THE RECORD OF THE PROCEEDINGS WHEN THE CIT FORMS AN OPINION THAT THE I.T.A. NO . 1096 / KOL ./20 1 4 ASSESSMENT YEAR : 200 9 - 20 10 PAGE 8 OF 19 ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF THE REVENUE. 10. FROM THE SHOW - CAUSE NOTICE DATED 05.03.2014, IT IS APPARENT THAT THE CIT HAS INVOKED THE JURISDICTION UNDER SECTION 263 WITH REGARD TO THE FOLLOWING TWO ISSUES. CLAIM OF THE EXPENDITURE TOWARDS THE PAYMENT OF EXCISE DUTY PERTAINING TO THE ASSESSMENT YEARS 2001 - 02 TO 2005 - 06 ON THE GROUND THAT THE SAME WAS PAID IN THE IMPUGNED ASSESSMENT YEAR DESPITE THE SAME BEING NOT DISCLOSED IN THE REGULAR BOOKS OF ACCOUNT. THE OTHER ISSUE RELATES TO THE CLAIM OF INTEREST AMOUNTING TO RS.12,93,62, 086/ - PERTAINING TO THE ASSESSMENT YEARS 2001 - 02 TO 2005 - 06 IN ACCORDANCE WITH THE EXCISE ACT ON THE GROUND THAT THE SAME WAS PAID IN THE ASSESSMENT YEAR 200 9 - 10 AND HAS BEEN ALLOWED IN THE SAME ASSESSMENT YEAR EVEN THOUGH THE ORDER OF CENTRAL EXCISE SETTL EMENT COMMISSIONER WAS PASSED IN THE ASSESSMENT YEAR 2008 - 09. FROM THE FACTS NARRATED TO US, IT IS APPARENT THAT THE NOTICE UNDER SECTION 154 OF THE ACT HAS BEEN GIVEN BY THE ASSESSING OFFICER ON 21.11.2012 IN RESPECT OF THE AFORESAID EXCISE DUTY PAYMENT O F RS.29.17 CRORES AS WELL AS INTEREST PAYMENT OF RS.12.93 CRORES AND ULTIMATELY THE ASSESSING OFFICER PASSED AN ORDER DATED 24.05.2013 DISALLOWING THE AFORESAID CLAIM. WHEN THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(APPEALS), CIT(APPEALS) ALLOWED THE APPEA L OF THE ASSESSEE VIDE ORDER DATED 20.01.2014. SO FAR AS THE ISSUE NO. 1 REGARDING THE PAYMENT OF THE EXCISE DUTY IS CONCERNED, WE NOTED THAT THE PROVISIONS OF SECTION 43B UNDER WHICH THE CLAIM BY THE ASSESSEE WAS ALLOWED BY THE ASSESSING OFFICER IN THE OR IGINAL ASSESSMENT READ AS UNDER: - 43B : NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, A DEDUCTION OTHERWISE ALLOWABLE UNDER THIS ACT IN RESPECT OF - ( A ) ANY SUM PAYABLE BY THE ASSESSEE BY WAY OF TAX, DUTY, CESS OR FEE, BY WHATEVER NAM E CALLED, UNDER ANY LAW FOR THE TIME BEING IN FORCE, OR - ( B ) ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER BY WAY OF CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATION FUND OR GRATUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF EMPLOYEES, ( C ) ANY SUM REFERRED T O IN CLAUSE (II) OF SUB - SECTION (1) OF SECTION 36, OR ( D ) ANY SUM PAYABLE BY THE ASSESSEE AS INTEREST ON ANY LOAN OR BORROWING FROM ANY PUBLIC FINANCIAL INSTITUTION OR A STATE FINANCIAL CORPORATION OR A STATE INDUSTRIAL INVESTMENT CORPORATION, IN ACCORDANCE WI TH THE TERMS AND CONDITIONS OF THE AGREEMENT GOVERNING SUCH LOAN OR BORROWING, OR I.T.A. NO . 1096 / KOL ./20 1 4 ASSESSMENT YEAR : 200 9 - 20 10 PAGE 9 OF 19 ( E ) ANY SUM PAYABLE BY THE ASSESSEE AS INTEREST ON ANY LOAN OR ADVANCES FROM A SCHEDULED BANK IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE AGREEMENT GOVERNING SUCH LOAN OR ADVANCES, OR ( F ) ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER IN LIEU OF ANY LEAVE AT THE CREDIT OF HIS EMPLOYEE, SHALL BE ALLOWED (IRRESPECTIVE OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED BY THE ASSESSEE ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY HIM) ONLY IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 OF THAT PREVIOUS YEAR IN WHICH SUCH SUM IS ACTUALLY PAID BY HIM: PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY IN RELATION TO ANY SUM, WHICH IS AC TUALLY PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING THE RETURN OF INCOME UNDER SUB - SECTION (1) OF SECTION 139 IN RESPECT OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED AS AFORESAID AND THE E VIDENCE OF SUCH PAYMENT IS FURNISHED BY THE ASSESSEE ALONG WITH SUCH RETURN . 11. IT IS NOT DENIED BY THE LD. D.R. BEFORE US THAT THE EXCISE DUTY PAID BY THE ASSESSEE IS COVERED BY THE PROVISIONS OF SECTION 43B(A). EXCISE DUTY IS A DUTY IMPOSED BY THE CENTRAL GOVERNMENT UNDER THE CENTRAL EXCISE DUTY ACT. THE PROVISIONS OF SECTION 43B(A), IN OUR OPINION, ARE EXPLICIT CLEAR AND IT ALLOWS THE DEDUCTION IN COMPUTING THE INCOME UNDER THE HEAD INCOME FROM BUSINESS IN THE YEAR IN WHICH THE EXCISE DUTY IS ACT UALLY PAID BY THE ASSESSEE IRRESPECTIVE OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM ARISE BY THE ASSESSEE, ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE. IN VIEW OF SPECIFIC PROVISIONS OF SECTION 43B(A), I T IS A CASE WHERE NO OTHER VIEW CAN BE TAKEN. THE ONLY VIEW POSSIBLE IN VIEW OF THE SPECIFIC PROVISIONS OF SECTION 43B ( A) IS THAT THE EXCISE DUTY HAS TO BE ALLOWED IN THE YEAR IN WHICH IT IS ACTUALLY PAID. IT IS NOT DENIED BY THE REVENUE THAT THE ASSESSEE HAS PAID THE EXCISE DUTY DURING THE IMPUGNED ASSESSMENT YEAR. SINCE DICTUM OF LAW ON THIS COUNT DOES NOT REQUIRE ANY OTHER INTERPRETATION, THEREFORE, WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE ASSESSING OFFICER CANNOT BE REGARDED TO BE ERRONEOUS COUPL ED WITH THE ERRORS. FOR INVOCATION OF THE PROVISIONS OF SECTION 263 BOTH THE CONDITIONS THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE MUST BE SATISFIED. SINCE, IN OUR OPINION, THERE WAS NO ERROR IN THE ORDER OF THE ASSESSING OFFICER ALLOWING THE DEDUCTION TO THE ASSESSEE IN THE ORIGINAL ASSESSMENT PASSED UNDER SECTION 143(3) IN RESPECT OF THE EXCISE DUTY AMOUNTING TO RS.29,17,01,515/ - IN RESPECT I.T.A. NO . 1096 / KOL ./20 1 4 ASSESSMENT YEAR : 200 9 - 20 10 PAGE 10 OF 19 OF WHICH THE PROCEEDING UNDER SECTION 263 HAS BEEN CARRIED OUT BY THE CIT , W E, THEREFORE, ON T HIS BASIS ITSELF, SET ASIDE THE ORDER OF THE CIT PASSED UNDER SECTION 263. 12 . NOW COMING TO THE INTEREST PAID AMOUNTING TO RS.12,93,62,086/ - , WE NOTED THAT THIS ISSUE HAS DULY BEEN EXAMINED BY THE ASSESSING OFFICER AS IS APPARENT FROM THE ORDER - SHEET DATED 24.10.2011, WHICH READS AS UNDER: - SRI MUKESH KUMAR, FCA, AR APPEARED WITH BOOKS OF ACCOUNT. HE FILED THE WRITTEN SUBMISSION IN RESPECT OF THE QUERIES RAISED VIDE NOTICE U/S 142(1), I.E. EXP LANATION WHY TDS IS NOT REQUIRED IN THE CASE OF ASSESSEE FOR GETTING THE PRINTING WORK DONE FROM M/S. LAMICOAT INTERNATIONAL PVT. LTD. & M/S. JAI SAI LAMINATORS PVT. LTD., HE FILED THE SUBMISSION WHY THE INTEREST PAID TO COMPLY WITH THE SECTION 11AB OF CEN TRAL EXCISE DUTY WOULD NOT BE DISALLOWED. BOTH THE CONTENTION HAS BEEN FILED SEPARATELY ALONG WITH SOME CASE LAWS. FURTHER, THE AR HAS FILED ONE SEPARATE SUBMISSION CONTAINED WITH DETAILS OF CONTENTION WHY THE DEPRECIATION ON HUMMER CAR AND OTHER INCIDENTA L BUSINESS EXPENDITURE SHOULD NOT BE DISALLOWED. HE ARGUED THAT BEING AN INDUSTRIALIST/MANUFACTURER THE ASSESSEE HAS TO PAY FREQUENT VISIT TO ITS DISTRIBUTORS TO SURVIVE IN COMPETITION. AS A MANUFACTURER, WHEN THE SOCIETY IS FOND OF...., MOREOVER, THE ASSE SSEE HAS UNIT AT HARIDWAR, DELHI, KOLKATA. THUS, VISIT TO DISTRIBUTORS AND COORDINATION AMONG THE MANUFACTURING UNITS CENTRED AT DELHI AND KOLKATA. THEN THE AR CLARIFIED THAT THE INTEREST PAID ON UNSECURED LOAN PROPORTIONATE TO THE LOAN ADVANCED WITHOUT CH ARGING ANY INTEREST TO THE SON OF THE ASSESSEE AND M/S. LOGOTECH (I) PVT. LTD. HAVE BEEN MADE FROM BUSINESS RECEIPTS FROM......AND EXPLAINED IN WRITING . 13 . FROM THIS WE NOTED THAT IT IS APPARENT THAT THE ASSESSING OFFICER HAS AFTER EXAMINING THE SUBMISSI ONS OF THE ASSESSEE AS WELL AS MAKING THE ENQUIRY ON THIS ISSUE TAKEN A CONSCIOUS DECISION. THUS IT IS A CASE WHERE THE ASSESSING OFFICER HAS EXAMINED THE ISSUE BY MAKING ENQUIRY ON THE BASIS OF WHICH THE CIT INVOKED JURISDICTION UNDER SECTION 263. IT IS N OT A CASE OF LACK OF ENQUIRY ON THE PART OF ASSESSING OFFICER THE ASSESSING OFFICER AFTER MAKING ENQUIRIES ALLOWED THE CLAIM OF THE ASSESSEE ON THAT ISSUE. IT IS NOT NECESSARY THAT THE ASSESSING OFFICER SHOULD DISCUSS IN DETAIL THE FINDING IN HIS ORDER, AL THOUGH THE ASSESSING OFFICER HAS GIVEN CLEAR - CUT FINDING IN THIS REGARD. I.T.A. NO . 1096 / KOL ./20 1 4 ASSESSMENT YEAR : 200 9 - 20 10 PAGE 11 OF 19 14 . IF THE ASSESSING OFFICER HAS NOT DISCUSSED THE INQUIRY MADE BY HIM IN THE CASE OF ASSESSEE IN RESPECT OF WHICH, HE ISSUED SHOW - CAUSE TO ASSESSEE, WE CANNOT SAY THAT ORDER IS ER RONEOUS AS THE ASSESSING OFFICER HAS NOT MADE ANY INQUIRY INTO THE MATTER. THE ASSESSEE CANNOT DICTATE THE ASSESSING OFFICER WHAT SHOULD HE INCORPORATE IN THE ASSESSMENT ORDER AND HOW HE SHOULD DRAFT THE ASSESSMENT ORDER. WE FIND THAT THE HON BLE BOMBAY HI GH COURT IN THE CASE OF CIT VS. - GABRIEL INDIA LIMITED REPORTED IN 203 ITR 108 HAS HELD IN THIS REGARD AS UNDER: - HELD, THAT THE INCOME TAX OFFICER IN THIS CASE HAD MADE ENQUIRIES IN REGARD TO THE NATURE OF THE EXPENDITURE INCURRED BY THE ASSESSEE. THE A SSESSEE HAD GIVEN A DETAILED EXPLANATION IN THAT REGARD BY A LETTER IN WRITING. ALL THESE WERE 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. THIS DECISION OF THE INCOME TAX OFFICER COULD NOT 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 H EARING THE ASSESSEE, COULD NOT SAY THAT THE DISALLOWANCE 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 WAS NOT PERMISSIBLE. THE TRIBUNAL WAS JUSTIFIED IN SETTING ASIDE THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX UNDER SECTION 263 . 15 . SIMILAR VIEW HAS BEEN TAKEN BY THE HON BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. - MAHENDER KUMAR BANSAL , 297 ITR 099 IN WHICH RESPECTFULLY FOLLOWING THE DECISION OF ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. - GOYAL PRIVATE FAMILY SPECIFIC TRUST, 171 ITR 698 (ALLD.) HAS HELD UNDER PARA NO. 12 AS UNDER: - AS HELD BY THIS COURT IN THE CASE OF GOYAL PRIVATE F AMILY SPECIFIC TRUST (SUPRA), WE ARE OF THE CONSIDERED OPINION THAT MERELY BECAUSE THE ITO HAD NOT WRITTEN LENGTHY ORDER, IT WOULD NOT ESTABLISH THAT THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3)/148 OF THE ACT IS ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF THE REVENUE WITHOUT BRINGING ON RECORD SPECIFIC INSTANCES, WHICH IN THE PRESENT CASE, THE CIT HAS FAILED TO DO . I.T.A. NO . 1096 / KOL ./20 1 4 ASSESSMENT YEAR : 200 9 - 20 10 PAGE 12 OF 19 NO CONTRARY DECISION WAS BROUGHT TO OUR KNOWLEDGE BY EITHER OF THE SIDES. 16 . WE NOTED THAT HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. - LEISURE WEAR EXPORTS LTD., 341 ITR 166 (DEL.) HAS CLEARLY HELD AS UNDER: - THE POWER OF REVISION IS NOT MEANT TO BE EXERCISED FOR THE PURPOSE OF DIRECTION THE AO TO HOLD ANOTHER INVESTIGATION WITHOUT DESCRIBING AS TO HOW THE ORDER OF THE AO IS ERRONE OUS. FROM THIS IT ALSO FOLLOWS THAT WHERE THE ASSESSMENT ORDER HAS BEEN PASSED BY THE AO AFTER TAKING INTO ACCOUNT THE ASSESSEE S SUBMISSIONS AND DOCUMENTS FURNISHED BY HIM AND NO MATERIAL WHATSOEVER HAS BEEN BROUGHT ON RECORD BY THE CIT WHICH SHOWED THAT THERE WAS ANY DISCREPANCY OR FALSITY IN EVIDENCES FURNISHED BY THE ASSESSEE, THE ORDER OF THE AO CANNOT BE SET ASIDE FOR MAKING DEEP INQUIRY ONLY ON THE PRESUMPTION AND ASSUMPTION THAT SOMETHING NEW MAY COME OUT. FOR MAKING A VALID ORDER UNDER SECTION 263 IT IS ESSENTIAL THAT THE CIT HAS TO RECORD AN EXPRESS FINDING TO THE EFFECT THAT ORDER PASSED BY THE AO IS ERRONEOUS WHICH HAS CAUSE LOSS TO THE REVENUE. FURTHERMORE, WHERE ACTING IN ACCORDANCE WITH LAW THE AO FRAMES CERTAIN ASSESSMENT ORDER, SAME CANNOT BE BRANDED AS ERRONEOUS SIMPLY BECAUSE ACCORDING TO THE CIT, THE ORDER SHOULD BE WRITTEN MORE ELABORATELY . 17 . IN THE CASE OF DIT VS. - JYOTI FOUNDATION, 357 ITR 388 (DEL.), THE HON BLE DELHI HIGH COURT HAS HELD AS UNDER: - REVISIONARY POWER UNDER SECTI ON 263 IS CONFERRED BY THE ACT ON THE COMMISSIONER/DIRECTOR OF INCOME TAX WHEN AN ORDER PASSED BY THE LOWER AUTHORITY IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. ORDERS WHICH ARE PASSED WITHOUT INQUIRY OR INVESTIGATION ARE TREATED AS ERRON EOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, BUT ORDERS WHICH ARE PASSED AFTER INQUIRY/INVESTIGATION ON THE QUESTION/ISSUE ARE NOT PER SE OR NORMALLY TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE BECAUSE THE REVISIONARY AUTHOR ITY FEELS AND OPINES THAT FURTHER INQUIRY/INVESTIGATION WAS REQUIRED OR DEEPER OR FURTHER SCRUTINY SHOULD BE UNDERTAKEN . 18 . THUS IN VIEW OF SETTLED LAW AS DISCUSSED ABOVE, WE ARE OF THE FIRM VIEW THAT IT IS A CASE WHERE DUE INQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER AS IS APPARENT FROM ASSESSMENT ORDER ON THIS ISSUE ON WHICH CIT INVOKED JURISDICTION UNDER SECTION 263. IT IS NOT THE CASE OF LD. D.R. THAT THE VIEWS TAKEN BY ASSESSING OFFICER ARE UNSUSTAINABLE IN LAW. I.T.A. NO . 1096 / KOL ./20 1 4 ASSESSMENT YEAR : 200 9 - 20 10 PAGE 13 OF 19 19 . IT IS A SETTLED LAW THAT IF TH E AO HAS TAKEN ONE OF THE POSSIBLE VIEWS, IT CANNOT BE SAID THAT THERE IS AN ERROR IN THE ORDER PASSED UNLESS AND UNTIL THE VIEW TAKEN BY THE AO IS UNSUSTAINABLE IN LAW. THE SAID VIEW HAS BEEN TAKEN BY THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR IN DUSTRIAL CO. LTD. VS. CIT, 243 ITR 83 (SC) WHEREIN THEIR LORDSHIPS HAS HELD AS UNDER : - 'THE PRE - REQUISITE TO THE EXERCISE OF JURISDICTION BY THE COMMISSIONER UNDER SECTION 263 IS THAT THE ORDER OF THE AO IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT - IF THE O RDER OF THE ASSESSING OFFICE IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE - RECOURSE CANNOT BE HAD TO SECTION 263(1). THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSES SING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED W ITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. THE PHRASE 'PREJUDICIAL TO THE INTEREST OF THE REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONS EQUENCE OF THE ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE, IF THE ASSESSING OFFICER HAS ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIE WS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. WHERE A SUM NOT EARNED BY A PERSON IS ASSESSED AS INCOME IN HIS HANDS ON HIS SO OFFERING THE ORDER PASSED BY THE ASSESSING OFFICER ACCEPTING THE SAME WITHOUT APPLICATION OF MIND AS SUCH WILL BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE . 20. IN THE CASE OF CIT VS. R.K. CONSTRUCTION CO., HON BLE GUJARAT HIGH COURT 313 ITR 65 (GUJ.) AS CONFIRMED BY SUPREME COURT HAS HELD AS UNDER: - THE DETAILS OF SUB - CONTRACTORS EXAMINED BY THE AO AS PER THE DIRECTIONS OF CIT IN REVISION PROCEEDINGS, IN TER ALIA, INCLUDE THE NAMES OF THESE SUB - CONTRACTORS, THEIR PERMANENT ACCOUNT NUMBERS, THEIR PERMANENT ADDRESSES, AMOUNT GIVEN TO THEM, NAME OF WORK ENTRUSTED TO THEM, NATURE OF SUCH WORK AND STATEMENTS RECORDED BY THE AO, ETC. THESE DETAILS REVEAL THAT D URING THE COURSE OF EXAMINATION UNDER S. 131, NO QUESTION WAS PUT TO MANY OF THESE SUB - CONTRACTORS AS TO THE VARIATION IN THEIR SIGNATURES. SIMILARLY, NO QUESTION WAS PUT TO THEM FOR THE REASONS OF DISCOUNTING WITH THE SHROFF. IT IS THE STAND OF THE ASSE SSEE RIGHT FROM THE BEGINNING THAT ALL THESE SUB - CONTRACTORS WERE MAINLY WORKING FOR THE ASSESSEE AND THEY DID NOT HAVE ANY OFFICE SET UP AND SINCE THEY WERE WORKING FOR I.T.A. NO . 1096 / KOL ./20 1 4 ASSESSMENT YEAR : 200 9 - 20 10 PAGE 14 OF 19 THE ASSESSEE, THEY HAVE USED ASSESSEE S ADDRESS FOR CORRESPONDENCE, ESPECIALLY WITH TH E GOVERNMENT FOR TIMELY COMMUNICATION. THESE PERSONS ARE ELIGIBLE UNDER S. 44AD TO FILE THEIR RETURNS UNDER PRESUMPTIVE SCHEME OF TAXATION. ALL THESE PERSONS WERE PRODUCED BEFORE THE AO IN REVISION PROCEEDINGS AND NO QUESTION WAS PUT TO THEM THOUGH THEIR STATEMENTS ON OATH WERE RECORDED. ALL THESE PERSONS HAVE CONFIRMED IN REVISION PROCEEDINGS THAT THE MONEY WAS NOT RETURNED BY THEM TO ANY PERSON AND WAS USED FOR THEIR PERSONAL BENEFIT. THE PAYMENTS WERE MADE TO THESE PERSONS BY BANKING CHANNELS AND TAX WAS DEDUCTED AT SOURCE IN ACCORDANCE WITH LAW. THE ASSESSEE HAS ALSO GIVEN COMPLETE DETAILS WITH RESPECT TO LABOUR EXPENSES CALLED FOR IN ASSESSMENT PROCEEDINGS. THESE DETAILS WERE DULY VERIFIED BY THE AO WITH THE BOOKS AND RECORDS. NO ADVERSE OBSERVAT ION WAS MADE BY THE AO AND HENCE, NO ADDITION WAS MADE IN THE REGULAR ASSESSMENT. THE AO HAS ALSO RANDOMLY SELECTED TWO LABOURERS AND EXAMINED THEM AND THEIR STATEMENTS WERE RECORDED UNDER S. 131. SINCE ALL NECESSARY DETAILS WERE FURNISHED BY THE ASSESSE E, THERE WAS NO REASON FOR THE CIT TO INVOKE THE REVISIONAL JURISDICTION UNDER S. 263. THE CIT HAS NOT STOPPED MERELY BY ISSUANCE OF NOTICE UNDER S. 263. ONCE COMPLIANCE IS MADE, HE WENT ON ISSUING NOTICE AFTER NOTICE AND CERTAIN ADVERSE INFERENCE WERE D RAWN BY HIM FROM THE DETAILS COLLECTED BY HIM DURING THE REVISIONAL PROCEEDINGS. THOSE DETAILS WERE THOROUGHLY CHECKED AND EXAMINED BY THE TRIBUNAL AND IT ARRIVED AT A FACTUAL FINDING THAT THERE WAS NO ILLEGALITY COMMITTED BY THE ASSESSEE IN ENTRUSTING TH E WORK TO SUB - CONTRACTORS NOR THERE WAS ANY ILLEGALITY IN MAKING ALL DUE PAYMENTS TO THEM. THE TRIBUNAL HAS ALSO GIVEN SPECIFIC FINDING TO THE EFFECT THAT THERE WAS NO EVIDENCE ON RECORD THAT THESE CONTRACTORS WERE RELATED TO THE ASSESSEE OR WERE ASSOCIAT ES OR SISTER CONCERNS OF THE ASSESSEE. THE TRIBUNAL HAS ALSO GIVEN FINDING THAT THE REVENUE HAS NOT DISCHARGED THE ONUS THAT THE PAYMENTS TO SUB - CONTRACTORS WERE NOT GENUINE. THUS THE TRIBUNAL HAS COME TO THE CONCLUSION THAT NO DISALLOWANCES CAN BE MADE MERELY ON THE BASIS OF SUSPICION, HOWSOEVER STRONG MAY IT BE, AND THE SUSPICION CANNOT TAKE THE PLACE OF ACTUALITY. AO HAS TAKEN A PARTICULAR VIEW ON THE BASIS OF EVIDENCE PRODUCED BEFORE HIM. ON THE BASIS OF THE SAID MATERIAL AND MATERIALS WHICH WERE CO LLECTED BY THE CIT IN REVISIONAL PROCEEDINGS, THE CIT HAS TAKEN A DIFFERENT VIEW. HOWEVER, IN THE REVISIONAL PROCEEDINGS UNDER S. 263, IT IS NOT OPEN FOR THE CIT TO TAKE SUCH A DIFFERENT VIEW. NO SUBSTANTIAL QUESTIONS OF LAW ARISE OUT OF THE ORDER OF THE TRIBUNAL AND HENCE, THE APPEAL FILED BY THE REVENUE DESERVES TO BE DISMISSED. CIT VS. ARVIND JEWELLERS (2002) 177 CTR (GUJ) 546 : (2003) 259 ITR 502 (GUJ) AND MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 159 CTR (SC) 1 : (2000) 243 ITR 83 (SC) RELIED ON). I.T.A. NO . 1096 / KOL ./20 1 4 ASSESSMENT YEAR : 200 9 - 20 10 PAGE 15 OF 19 2 1 HON BLE SUPREME COURT IN THE CASE OF CIT VS. MAX INDIA LIMITED, 295 ITR 282 (SC) HAS HELD AS UNDER: - THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE REVENUE IN SECTION 263 OF THE INCOME - TAX ACT, 1961, HAS TO BE READ IN CONJUNCTION WITH THE EXPRESSI ON ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE, WHEN THE ASSESSING OFFICER ADOPTS ONE OF TWO COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE REVENU E, UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. 2 2 . IN CIT VS. RATLAM COAL ASH CO., 171 ITR 141 (MP), MADHYA PRADESH HIGH COURT HAS HELD AS UNDER: - IT IS WELL SETTLED THAT WHERE THE ITO MADE THE ASSESSMENT IN UNDUE HURRY, ACCE PTING WHAT THE ASSESSEE STATES IN THE RETURN WITHOUT MAKING ANY ENQUIRIES IN THE CIRCUMSTANCES OF THE CASE, THE CIT WOULD BE JUSTIFIED IN HOLDING THE ORDER OF THE ITO TO BE ERRONEOUS. IN THE INSTANT CASE, HOWEVER, THE TRIBUNAL HAS FOUND THAT THE ASSESSEE HAD FURNISHED ALL THE REQUISITE INFORMATION AND THAT THE ITO, CONSIDERING ALL THE FACTS, HAD COMPLETED THE ASSESSMENT. THE TRIBUNAL FURTHER HELD THAT IN THE CIRCUMSTANCES OF THE CASE, IT COULD NOT BE HELD THAT THE ITO HAD MADE ASSESSMENT WITHOUT MAKING PR OPER ENQUIRIES. IN VIEW OF THESE FINDINGS, THE TRIBUNAL WAS JUSTIFIED IN LAW IN REVERSING THE ORDER PASSED BY THE CIT. 2 3 . IN CIT VS. ARVIND JEWELLERS, 259 ITR 502 (GUJ), HON BLE GUJRAT HIGH COURT HAS HELD AS UNDER: - IT IS THE FINDING OF FACT GIVEN BY T HE TRIBUNAL THAT THE ASSESSEE HAS PRODUCED RELEVANT MATERIAL AND OFFERED EXPLANATION IN PURSUANCE OF THE NOTICES ISSUED UNDER S. 142(1) AS WELL AS S. 143(2) AND AFTER CONSIDERING THOSE MATERIALS AND EXPLANATION, THE ITO HAS COME TO A DEFINITE CONCLUSION. THE CIT DID NOT AGREE WITH THE CONCLUSION REACHED BY THE ITO. SEC. 263 DOES NOT EMPOWER HIM TO TAKE ACTION ON THESE FACTS TO ARRIVE AT THE CONCLUSION THAT THE ORDER PASSED BY THE ITO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. SINCE THE MATERIAL WAS THERE ON RECORD AND THE SAID MATERIAL WAS CONSIDERED BY THE ITO AND A PARTICULAR VIEW WAS TAKEN, THE MERE FACT THAT DIFFERENT VIEW CAN BE TAKEN, SHOULD NOT BE THE BASIS FOR AN ACTION UNDER S.263 AND IT CANNOT BE HELD TO BE JUSTIFIED. HAVING R EGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN SETTING ASIDE THE ORDER PASSED BY THE CIT UNDER S. 263. MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 159 CTR (SC) 1: (2000) 243 ITR 83 (SC) FOLLOWED. I.T.A. NO . 1096 / KOL ./20 1 4 ASSESSMENT YEAR : 200 9 - 20 10 PAGE 16 OF 19 2 4 . IN THE CASE OF INCOME - TAX OFFICER V. DG HOUSING PROJECTS LTD. 343 ITR 329 (DEL), DELHI HIGH COURT HAS HELD AS UNDER: - A FINDING THAT THE ORDER IS ERRONEOUS IS A CONDITION OR REQUIREMENT WHICH MUST BE SATISFIED FOR EXERCISE OF JURISDICTION UNDER SECTION 263 OF THE INCOME - TAX AC T, 1961. THE MATTER CANNOT BE REMITTED FOR A FRESH DECISION TO THE ASSESSING OFFICER TO CONDUCT FURTHER ENQUIRIES WITHOUT A FINDING THAT THE ORDER IS ERRONEOUS. IN SUCH MATTERS, TO REMAND THE MATTER TO THE ASSESSING OFFICER WOULD IMPLY THE COMMISSIONER HAS NOT EXAMINED AND DECIDED WHETHER OR NOT THE ORDER IS ERRONEOUS BUT HAS DIRECTED THE ASSESSING OFFICER TO DECIDE THE QUESTION. THE ORDER OF THE ASSESSING OFFICER MAY OR MAY NOT BE WRONG. THE COMMISSIONER CANNOT DIRECT RECONSIDERATION ONLY WHEN THE ORDER IS ERRONEOUS. AN ORDER OF REMIT CANNOT BE PASSED BY THE COMMISSIONER TO ASK THE ASSESSING OFFICER TO DECIDE WHETHER THE ORDER WAS ERRONEOUS. THIS IS NOT PERMISSIBLE. THE COMMISSIONER MUST AFTER RECORDING REASONS HOLD THAT THE ORDER IS ERRONEOUS. A DISTINCTI ON MUST BE DRAWN IN THE CASES WHERE THE ASSESSING OFFICER DOES NOT CONDUCT AN ENQUIRY ; AS LACK OF ENQUIRY BY ITSELF RENDERS THE ORDER ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND CASES WHERE THE ASSESSING OFFICER CONDUCTS AN ENQUIRY BUT T HE FINDING RECORDED IS ERRONEOUS AND WHICH IS ALSO PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN THE LATTER CASES, THE COMMISSIONER HAS TO EXAMINE THE ORDER OR THE DECISION TAKEN BY THE ASSESSING OFFICER ON THE MERITS AND THEN FORM AN OPINION ON THE MERI TS THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN THE SECOND SET OF CASES, THE COMMISSIONER CANNOT DIRECT THE ASSESSING OFFICER TO CONDUCT FURTHER ENQUIRY TO VERIFY AND FIND OUT WHETHER THE O RDER PASSED IS ERRONEOUS OR NOT. 2 5 . IN THE CASE OF COMMISSIONER OF INCOME - TAX V. SUNBEAM AUTO LTD. 332 ITR 167(DEL ) , HON BLE DELHI HIGH COURT HAS TAKEN FOLLOWING VIEW: - THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IS NOT REQUIRED TO GIVE A DETAILED REASON IN RESPECT OF EACH AND EVERY ITEM OF DEDUCTION, ETC. WHETHER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE EXPENDITURE IN QUESTION HAS TO BE SEEN. IF THERE WAS ANY INQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE COMMISSION ER TO PASS ORDERS UNDER SECTION 263 OF THE INCOME - TAX ACT, 1961, 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. AN ORDER CANNOT BE TERMED ERRONEOUS UNLESS IT IS N OT IN ACCORDANCE WITH LAW. IF AN INCOME - TAX OFFICER ACTING IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT, IT CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. SECTI ON 263 DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME - TAX OFFICER WHO PASSED THE ORDER UNLESS THE DECISION IS HELD TO BE ERRONEOUS. WHERE THE INCOME - TAX OFFICER HAS EXERCISED THE QUASI - JUDICIAL POWER VE STED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION SUCH A CONCLUSION CANNOT BE FOUND TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUSION. THERE MUST BE SOME I.T.A. NO . 1096 / KOL ./20 1 4 ASSESSMENT YEAR : 200 9 - 20 10 PAGE 17 OF 19 PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED. THE ASSESSEE WAS A MANUFACTURER OF CAR PARTS. ITS RETURN F OR THE ASSESSMENT YEAR 2001 - 02 WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT WAS COMPLETED. IN REVISIONAL PROCEEDINGS, THE SOLITARY OBJECTION OF THE COMMISSIONER WAS THAT THE EXPENDITURE ON TOOLS AND DIES AGGREGATING TO RS. 10,56,69,367 WAS ALLOWED AS REVENUE E XPENDITURE WITHOUT A DETAILED INVESTIGATION. AFTER CONSIDERING ALL THE MATERIALS FURNISHED BY THE ASSESSEE THE COMMISSIONER TOOK THE VIEW THAT THE ACCOUNTING PRACTICE FOLLOWED BY THE ASSESSEE TO DEBIT THE ENTIRE COST OF TOOLS AND DIES IN THE YEAR OF INSTAL LATION WAS NOT CORRECT AND HE REMITTED THE CASE TO THE ASSESSING OFFICER FOR RE - EXAMINATION. THE TRIBUNAL ALLOWED THE CLAIM OF THE ASSESSEE. ON APPEAL : _ HELD, _ DISMISSING THE APPEAL, (I) THAT THE ASSESSING OFFICER ALLOWED THE CLAIM ON BEING SATISFIED WI TH 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 IT EM 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. THEREFORE, IT COULD NOT BE SAID THAT IT WAS A CASE OF LACK OF INQUIRY. THE ACCOUNTING PRACTICE FOLLOWED FOR A NUMBER OF YEARS HAD THE APPROVAL OF THE INCOME - TAX AUTHORITIES. EVEN FOR FUTURE ASSESSMENT YEARS, THE VERY SAME ACCOUNTING PRACTICE WAS ACCEPTED. (II) THAT THE DIES WERE COMPONENTS OF THE MACHINES. THEY NEEDED CONSTANT REPLACEMENT, AS THEIR LIFE WAS NOT MORE THAN A YEAR. THE ASSESSEE ALSO EXPLAINED T HAT SINCE THE PARTS WERE MANUFACTURED FOR THE AUTOMOBILE INDUSTRY, WHICH HAD TO WORK ON COMPLETE ACCURACY AT HIGH SPEED FOR A LONGER PERIOD, REPLACEMENT OF THE PARTS AT SHORT INTERVALS BECOMES IMPERATIVE TO RETAIN THE ACCURACY. WITH THE REPLACEMENT OF TOOL S AND DIES NO NEW ASSET COMES INTO EXISTENCE NOR WAS THEIR BENEFIT OF ENDURING NATURE. THEY DID NOT EVEN ENHANCE THE LIFE OF THE EXISTING MACHINE OF WHICH THE TOOLS AND DIES WERE ONLY PARTS. THEREFORE, THE VIEW TAKEN BY THE ASSESSING OFFICER WAS ONE OF THE POSSIBLE VIEWS AND THE ASSESSMENT ORDER PASSED BY HIM COULD NOT BE HELD TO BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE OPINION OF THE ASSESSING OFFICER IN TREATING THE EXPENDITURE AS REVENUE EXPENDITURE WAS PLAUSIBLE AND THUS THERE WAS NO MATERIAL BEFORE THE COMMISSIONER TO VARY THAT OPINION AND ASK FOR FRESH INQUIRY . 2 6 . IN VIEW OF THE AFORESAID DECISION S , WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE CIT UNDER SECTION 263 IS BEYOND THE JURISDICTION AND CANNOT BE SUSTAINED. IF THE ORDER PASSED B Y THE CIT IS SUSTAINED, THEN IT LEGALITY WILL BE ALLOWED TO BE CONTINUED. ON THIS BASIS ITSELF, WE QUASH THE ORDER OF THE CIT UNDER SECTION 263. LD. A.R. BEFORE US HAS ALSO TAKEN AN ALTERNATIVE ARGUMENT THAT BOTH THE ISSUES ON THE BASIS OF WHICH THE JURISDIC TION I.T.A. NO . 1096 / KOL ./20 1 4 ASSESSMENT YEAR : 200 9 - 20 10 PAGE 18 OF 19 UNDER SECTION 263 HAVE BEEN CONSIDERED AND DECIDED BY THE CIT(APPEALS). THIS IS A FACT THAT THE ORIGINAL ASSESSMENT PASSED UNDER SECTION 143(3) HAS BEEN RECTIFIED BY THE ASSESSING OFFICER VIDE ORDER DATED 24.05.2013 AND IN THE ORDER PASSED UNDER SECTI ON 154, THE ASSESSING OFFICER DISALLOWED THE EXCISE DUTY PAYMENT OF RS.29,17,01,515/ - AS WELL AS THE INTEREST AMOUNTING TO RS.12,93,62,086/ - . THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(APPEALS). CIT(APPEALS) DULY CONSIDERED THE SUBMISSIONS OF THE ASSESSEE WHETHER THE DEDUCTION IS AVAILABLE TO THE ASSESSEE IN RESPECT OF THE EXCISE DUTY PAID AS WELL AS THE INTEREST PAID. CIT NOT ONLY ANNULLED THE RECTIFICATION ORDER BUT HAS ALSO ALLOWED THE RELIEF TO THE ASSESSEE ON MERIT AND TOOK THE VIEW THAT THE ASSESSEE I S ENTITLED FOR DEDUCTION IN RESPECT OF BOTH THE PAYMENTS. WE NOTED THAT CLAUSE (C) OF PROVISO TO SECTION 263 MANDATES THAT THE CIT DOES NOT HAVE JURISDICTION TO REVISE THE ASSESSMENT ON THE ISSUE WHICH HAS BEEN CONSIDERED AND DECIDED BY THE CIT(APPEALS). I T IS APPARENTLY CLEAR THAT BOTH THE ISSUES HAVE DULY BEEN CONSIDERED AND DECIDED BY THE CIT(APPEALS) VIDE ITS ORDER DATED 25.03.2014. ONCE THESE ISSUES HAVE BEEN MERGED WITH THE ORDER OF THE CIT UNDER THE CLAUSE (C) OF THE EXPLANATION TO SECTION 263, IN OU R OPINION, CIT COULD NOT EXERCISE THE JURISDICTION UNDER SECTION 263. ONCE THE ORDER PASSED UNDER SECTION 143(3) IS RECTIFIED UNDER SECTION 154, THE ORDER PASSED UNDER SECTION 143(3) GET MERGED WITH THE ORDER PASSED UNDER SECTION 154 AND THE NATUR AL CONSE QUENCE WILL BE THAT THE ORDER PASSED BY THE CIT(APPEALS) WILL ALSO GET MERGED WITH THE ORDER PASSED BY THE ASSESSING OFFICER. IT IS NOT DENIED THAT BOTH THE ISSUES IN RESPECT OF WHICH THE PROCEEDING UNDER SECTION 263 HAS BEEN INITIATED WERE DULY CONSIDERED AND DECIDED BY THE CIT(APPEALS) BEFORE ISSUING SHOW - CAUSE NOTICE BY THE CIT. IN VIEW OF THIS FACT, WE, THEREFORE, ON THIS BASIS QUASH THE ORDER OF CIT PASSED UNDER SECTION 263. 2 7 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCE D IN THE OPEN COURT ON 10 TH JUNE , 201 5 . SD/ - SD/ - MAHAVIR SINGH P.K. BANSAL ( JUDICIAL MEMBER) ( ACCOUNTANT MEMBER) KOLKATA, THE 1 0 TH D AY OF JUNE , 201 5 I.T.A. NO . 1096 / KOL ./20 1 4 ASSESSMENT YEAR : 200 9 - 20 10 PAGE 19 OF 19 COPIES TO : (1) LOK NATH PD. GUPTA, R.K. DEB PATH, TIT AGARH, 24 - PARGANAS (NORTH), KOLKATA - 700 119 (2) DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - XXV, KOLKATA, AAYAKAR BHAWAN (POORVA), 110, SHANTIPALLI, KOLKATA - 700 107 ( 3 ) COMMISSIONER OF INCOME TAX, KOLKATA ( 4 ) COMMISSIONER OF INCOME TAX (APPEALS) ( 5 ) THE DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA B ENCHES, KOLKATA LAHA/SR. P.S .