M/s Vikram Publishors, Vijayawada V. THE ACIT, CIRCLE - 2(1), Vijayawada

ITA 137/VIZ/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0196 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 25-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G GURUSWAMY
• Keywords: Revision of order; Opportunity of being heard; Audit objection; Non-deduction of tax; Assessment record
• Section: 143(3); 263; 63

Judgement Text

ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . . . . , ,, , . . . . , , , , % % % % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER . .. ./ // / I.T.A.NO.137/VIZAG/2014 ( / ASSESSMENT YEAR : 2009-10 ) M/S. VIKRAM PUBLISHERS VIJAYAWADA VS. ACIT CIRCLE - 2(1) VIJAYAWADA [ PAN: AABFV 7914M] (, , , , / APPELLANT) (-., -., -., -., / RESPONDENT ) , / / APPELLANT BY : SHRI C. SUBRAHMANYAM, AR -., / / RESPONDENT BY : SHRI G. GURUSWAMY, CIT(DR) / 3 / DATE OF HEARING : 03.11.2015 / 3 / DATE OF PRONOUNCEMENT : 20.11.2015 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF COMMISSIONER OF INCOME TAX, VIJAYAWADA, DATED 07-0 3-2014 PASSED U/S 263 OF THE INCOME TAX ACT, 1961 FOR THE A.Y. 20 09-10. ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 2 2. THE BRIEF FACTS OF THE CASE , IS THAT THE ASSESS EE IS A PARTNERSHIP FIRM, WHICH IS ENGAGED IN THE BUSINESS OF PUBLISHIN G ACADEMIC BOOKS, FILED ITS RETURN OF INCOME FOR THE A.Y. 2009-10 ON 8-09-2009, DECLARING TOTAL INCOME OF RS. 25,15,053/-. THE CASE WAS SELEC TED FOR SCRUTINY ASSESSMENT AND STATUTORY NOTICES U/S 143(2) AND 142 (1) ALONG WITH DETAILED QUESTIONNAIRE WERE ISSUED TO THE ASSESSEE. IN RESPONSE TO NOTICE, THE ASSESSEE AUTHORISED REPRESENTATIVE SRI. N. LALITHAPRASAD OF M/S BRAHMAYYA&CO, APPEARED FROM TIME TO TIME AND SU BMITTED BOOKS OF ACCOUNTS, BILLS & VOUCHERS AND OTHER DETAILS AS PER THE QUESTIONNAIRE. THE ASSESSING OFFICER, AFTER VERIFICATION OF BOOKS OF ACCOUNTS COMPLETED THE ASSESSMENT AND MADE ADDITIONS OF RS. 1,00,000/- BEING ROUND SOME DISALLOWANCES OF EXPENDITURE AND RS. 3,716/- BEING BELATED PAYMENT OF EMPLOYEES PROVIDENT FUND CONTRIBUTIONS. THUS, THE A SSESSING OFFICER COMPLETED THE ASSESSMENT AND DETERMINED TOTAL INCOM E OF RS. 22,18,769/- AS AGAINST THE INCOME RETURNED OF RS. 2 1,15,769/-. 3. THE COMMISSIONER OF INCOME TAX, VIJAYAWADA, ISSU ED SHOW-CAUSE NOTICE U/S 263 DATED 08-11-2012 AND PROPOSED TO REV ISE THE ASSESSMENT ORDER. THE CIT, PROPOSED TO REVISE THE ASSESSMENT O RDER ON THE REASON THAT ON EXAMINATION OF ASSESSMENT RECORDS, CERTAIN ERRONEOUS COMMISSIONS AND OMISSIONS WERE NOTICED, WHICH RENDE RED THE SAID ASSESSMENT ORDER ERRONEOUS INSOFAR AS IT IS PREJUDI CIAL TO THE INTEREST OF ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 3 THE REVENUE IN TERMS OF SECTION 263 OF THE INCOME T AX ACT, 1961. THE CIT, IN THE SHOW CAUSE NOTICE, OBSERVED THAT THE A. O. FAILED TO VERIFY THE CORRECTNESS OF SALES DECLARED IN THE PROFIT & LOSS ACCOUNT AS THE ASSESSEE CLAIMED HUGE SALES RETURNS AND DISCOUNTS. THE A.O. FAILED TO EXAMINE THE CLOSING STOCK VALUATION AS THE ASSESSEE VALUED ITS CLOSING STOCK ON COST PRICE AFTER DEDUCTING 60% PROFIT MARGIN (40% D EALER + 20% ASSESSEE) FROM MRP WHILE ARRIVING AT COST PRICE. TH E CIT FURTHER OBSERVED THAT THE ASSESSEE CLAIMED HUGE EXPENDITURE UNDER THE HEAD REMUNERATION TO WRITERS WHICH ATTRACTS TDS, BUT THE A.O. FAILED TO VERIFY THE SAME WHILE COMPLETING THE ASSESSMENT. WITH THESE OBSERVATIONS, THE CIT WAS OF THE OPINION THAT THE A.O. COMPLETED THE ASSESSMENT WITHOUT EXAMINING THE ABOVE ISSUES, THUS, THE ASSESSMENT OR DER PASSED U/S 143(3) IS ERRONEOUS, INSOFAR IT IS PREJUDICIAL TO T HE INTEREST OF THE REVENUE IN TERMS OF SECTION 263 OF THE ACT, THEREFO RE ISSUED SHOW CAUSE NOTICE DATED 8-11-2012. 4. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE T HROUGH HIS AUTHORISED REPRESENTATIVE FILED A LETTER DATED 10-1 2-2012 AND SUBMITTED DETAILS OF ALL THE ISSUES ADDRESSED BY THE CIT IN H IS SHOW CAUSE NOTICE. THE ASSESSEE SUBMITTED THAT THE A.O. AFTER VERIFIED THE BOOKS OF ACCOUNT, BILLS AND VOUCHERS AND OTHER DETAILS PASSE D THE ASSESSMENT ORDER, THEREFORE, THE ASSESSMENT ORDER IS NOT ERRON EOUS AND ALSO NOT ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 4 PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE ASS ESSEE FURTHER SUBMITTED THAT THE A.O. HAS ISSUED DETAILED QUESTIO NNAIRE DATED 21-10- 2011 WHEREIN, HE HAD CALLED FOR EACH AND EVERY ITEM OF EXPENDITURE DEBITED TO PROFIT & LOSS ACCOUNT, QUANTITATIVE DETA ILS OF CLOSING STOCK, DETAILS OF SALES AND SALES RETURNS AND PARTICULARS OF PAYMENTS WHICH ATTRACTS TDS PROVISIONS. THE ASSESSEE, VIDE HIS LET TER DATED 31-10-2011 FURNISHED ALL THE DETAILS BEFORE THE A.O. AND THE A .O. AFTER SATISFIED WITH THE EXPLANATIONS COMPLETED THE ASSESSMENT, THEREFOR E, THE ASSESSMENT ORDER IS NOT ERRONEOUS INSOFAR AS IT IS NOT PREJUDI CIAL TO THE INTEREST OF REVENUE. THE ASSESSEE FURTHER SUBMITTED THAT THE SA LE QUANTIFIED BY YOU IS INCORRECT, AS YOU HAVE ADOPTED WRONG DENOMINATOR OF 40, WHEREAS THE CORRECT DENOMINATOR TO BE ADOPTED TO QUANTIFY THE S ALES IS 60 WHEN YOU HAVE 20% MARGIN ON YOUR COST. AS FOR AS THE ISSUE O F TDS IS CONCERNED, THE ASSESSEE EXPLAINED THAT IT HAS COMPLIED WITH TH E TDS PROVISIONS WHEREVER APPLICABLE, IN FEW CASES, THOUGH TDS IS NO T DEDUCTED, THESE PAYMENTS WERE ALREADY MADE WITHIN THE FINANCIAL YEA R, THEREFORE DISALLOWANCE U/S 40A(IA) CANNOT BE MADE IN VIEW OF THE SPECIAL BENCH JUDGMENT IN THE CASE OF MERLYN SHIPPING AND THIS FA CT WAS BROUGHT TO THE NOTICE OF A.O. AT THE TIME OF ASSESSMENT PROCEE DINGS. THEREFORE, FOR THE VERY SAME REASONS DISALLOWANCES CANNOT BE MADE. THE CIT, HOWEVER, AFTER CONSIDERING THE SUBMISSION OF THE AS SESSEE HELD THAT THE ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 5 A.O. DID NOT PROPERLY VERIFIED THE ISSUES AT THE TI ME OF ASSESSMENT PROCEEDINGS, THEREFORE, THE ASSESSMENT ORDER DATED 12-12-2011 IS ERRONEOUS INSOFAR IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, IN TERMS OF SECTION 263 OF THE ACT. WITH THESE OBSERVATIONS, TH E CIT SET ASIDE THE ASSESSMENT ORDER DATED 12-12-2011 AND DIRECTED THE A.O. TO REDO THE ASSESSMENT, AFRESH, AFTER GIVING OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE. AGGRIEVED BY THE CIT ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE, SUBMITTED THAT THE A.O. AFTER VERIFIED THE BOOKS OF ACCOUNTS AND ALSO AFTER CONSIDERING ALL THE RELEVANT MATERIALS COMPLETED TH E ASSESSMENT, THEREFORE, THE CIT IS NOT CORRECT IN ASSUMING JURIS DICTION U/S 263, ESPECIALLY WHEN THE CIT DID NOT POINTED OUT ANY ERR OR OR MISTAKE IN THE ASSESSMENT ORDER. THE LEARNED AUTHORISED REPRESENTA TIVE FURTHER SUBMITTED THAT THE A.O. EXAMINED THE ISSUES RAISED BY THE CIT IN THE REVISION PROCEEDINGS, BUT FOR THE SAME ISSUES CIT C ANNOT ATTRIBUTE NON APPLICATION OF MIND. THE A.R. FURTHER SUBMITTED THA T THE ADVERSE OBSERVATION MADE BY THE CIT ON SHORTAGE OF SALES IS FACTUALLY INCORRECT. THE ASSESSEE MAINTAINED COMPLETE BOOKS OF ACCOUNTS AND ALSO PARTICULARS OF CLOSING STOCK WHICH WAS PART OF RECO RDS SUBMITTED BEFORE THE A.O. AT THE TIME OF ASSESSMENT. THE A.R. SUBMIT TED THAT THE CIT ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 6 FAILED TO TAKE NOTE OF THE CORRECT SALES DECLARED I N THE FINANCIAL STATEMENTS, IN FACT THE SALES ARRIVED AT BY THE CIT BY APPLYING HIS OWN FORMULA IS TOTALLY INCORRECT. THE CIT HAS TAKEN THE WRONG DENOMINATOR OF 40 AS AGAINST THE CORRECT DENOMINATOR TO BE TAKEN A T 60, WHEN THE ASSESSEE COST OF GOODS IS AT 40 AND MARGIN OF PROFI T IS AT 20. IT IS FURTHER SUBMITTED THAT THE CIT ERRONEOUSLY ARRIVED THE SALE S FIGURE OF RS. 17,01,89,709/- AND COMPARED WITH NET SALES OF RS. 1 2,98,95,897/- DECLARED IN THE PROFIT & LOSS ACCOUNT AND ARRIVED A T SHORTAGE OF RS. 4,02,93,812, WITHOUT CONSIDERING THE SALES RETURNS AND SALES DISCOUNT OF RS. 9,59,25,118/-. IF THE SALES RETURNS OF RS. 9,59 ,25,118/- IS SUBTRACTED FROM THE SALES OF RS. 17,01,89,709/- ARRIVED AT BY THE CIT, THEN NET SALES COMES TO RS. 7.42 CRORES, AS AGAINST THIS, TH E ASSESSEE HAS REPORTED NET SALES OF RS. 12.98 CRORES. THE CIT HAS ERRONEOUSLY COMPUTED THE SALES BY APPLYING HIS OWN FORMULA FOR THE REASONS BEST KNOWN TO HIM. 6. THE LEARNED AUTHORISED REPRESENTATIVE, SUBMITTE D THAT AS FOR AS THE ISSUE OF DISALLOWANCES U/S 40A(IA) IS CONCERNED , THE ASSESSEE HAS EXPLAINED THE EVERY PAYMENT MADE TO WRITER AND WHY TDS WAS NOT DEDUCTIBLE ON SUCH PAYMENTS. THE A.R. FURTHER SUBMI TTED THAT THOUGH THE ACT DOES NOT STIPULATE DEDUCTION OF TAX AT SOUR CE, THE TAX WAS DEDUCTED OUT OF ABUNDANT CAUTION ONLY TO AVOID LITI GATION, WHEREVER ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 7 INDIVIDUAL PAYMENTS EXCEEDS THRESHOLD LIMIT OR THE AGGREGATE AMOUNT EXCEEDS RS. 50,000/- PER PERSON. THIS FACT WAS BROU GHT TO THE NOTICE OF A.O AT THE TIME OF ASSESSMENT PROCEEDINGS AND THE A .O. AFTER VERIFICATION OF DETAILS ACCEPTED THE PAYMENTS. THE A.R. FURTHER SUBMITTED THAT WITHOUT PREJUDICE TO THE ABOVE SUBMISSIONS, IT IS FURTHER SUBMITTED THAT DISALLOWANCES U/S 40A(IA) IS NOT WARRANTED AS THESE AMOUNTS HAVE BEEN PAID DURING THE SAME FINANCIAL YEAR. TO SUPPOR T HIS CONTENTION, THE A.R. RELIED UPON THE SPECIAL BENCH JUDGMENT IN THE CASE OF MERLYN SHIPPING & TRANSPORT REPORTED IN 136 ITD 23. THE A. R. FURTHER SUBMITTED THAT AS FOR AS THE ALLEGED NON RECORDING OF SALES RETURNS AMOUNTING TO RS. 35,09,896/-, IT WAS EXPLAINED THAT THESE SALES RETURNS PERTAINS TO THE WHOLE YEAR RECEIVED FROM TIME TO TI ME FROM THE PARTIES AND THESE WERE TAKEN IN TO ACCOUNT AT THE END OF TH E YEAR. IT IS FURTHER SUBMITTED THAT THESE ARE OUTDATED GUIDES AND TEST P APERS AND THESE HAVE NO RESALE VALUE. THEREFORE, THE SAME ARE CONSI DERED AS OBSOLETE STOCK AND TAKEN IN TO CLOSING STOCK VALUE. THE CIT WITHOUT POINTING OUT ANY ERROR OR MISTAKE, MADE OBSERVATIONS ON SURMISE AND SUSPICIOUS MANNER THAT THESE ARE NOT ACCOUNTED IN THE BOOKS. T HE A.O. HAS VERIFIED THE DETAILS OF STOCK IN THE ASSESSMENT PROCEEDINGS AND ACCEPTED THE ASSESSEE CLAIM. THEREFORE, THE CIT, IN THE ABSENCE OF FINDING THAT THERE IS LOSS OF REVENUE, CANNOT ASSUME JURISDICTION U/S 263. THE A.R. FURTHER ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 8 SUBMITTED THAT THE OTHER OMISSIONS/COMMISSIONS OBSE RVED BY THE CIT HAS LOST ITS RELEVANCE AS THE A.O. HAS PASSED CONSE QUENTIAL ORDER TO GIVE EFFECT TO ORDER U/S 263 AND DROPPED THE ISSUES RAIS ED BY THE CIT AFTER DULY VERIFIED THE DETAILS SUBMITTED BY THE ASSESSEE . THE A.R. FURTHER SUBMITTED THAT THE CIT HAS CONSIDERED THE ISSUES WH ICH ARE NOT PART OF SHOW CAUSE NOTICE, THEREFORE, ADDITIONS MADE ON ANY GROUND WHICH IS NOT PART OF SHOW CAUSE NOTICE CANNOT BE SUSTAINED. IN SUPPORT HIS VIEWS, PLACED RELIANCE ON JUDGEMENT REPORTED IN 320 ITR 67 4, 317 ITR 249 AND 280 ITR 275. 7. THE LEARNED D.R. ON THE OTHER HAND, STRONGLY SUP PORTED THE ORDER OF THE CIT. THE D.R. FURTHER SUBMITTED THAT THERE I S SHORTAGE OF SALES TO THE EXTENT OF RS. 4,02,93,812/- WHEN COMPARED TO SA LES COMPUTED BY CIT AND SALES REPORTED BY THE ASSESSEE, THEREFORE, THE ASSESSMENT ORDER IS ERRONEOUS AND ALSO PREJUDICIAL TO THE INTEREST O F THE REVENUE. THE D.R. FURTHER SUBMITTED THAT THERE IS NO MISTAKE IN THE N ET SALES COMPUTED BY THE CIT, THEREFORE, HIS ORDER SHOULD BE UPHELD. THE D.R. FURTHER SUBMITTED THAT IN ADDITION TO SHORTAGE OF SALES, TH E CIT POINTED OUT MISTAKES IN TDS PROVISIONS, AS THE ASSESSEE FAILED TO DEDUCT TDS ON PAYMENT OF RS. 3,90,200/-. THE A.O. DID NOT EXAMINE D THE ISSUE AT THE TIME OF ASSESSMENT, THEREFORE, HIS ORDER IS ERRONEO US AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. THE D.R. FU RTHER SUBMITTED THAT, ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 9 THERE ARE OTHER OMISSIONS/COMMISSIONS IN RESPECT OF SALES RETURNS AND PURCHASES REPORTED IN FINANCIAL STATEMENTS AND VAT RETURNS, WHICH WAS NOT EXAMINED BY THE A.O. WHILE COMPLETING THE ASSES SMENT. THEREFORE, THE CIT ORDER SHOULD BE UPHELD. 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE CIT ASSUMED THE REVISION POWERS ON THE REASONS THAT THE A.O. HAS NOT CONDUCTED PROPER ENQUIRY BEFORE PASSING ASSESSMENT ORDER, THEREBY HIS ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL T O THE INTEREST OF THE REVENUE. THE CIT HAS RAISED NUMBER OF ISSUES IN THE REVISION PROCEEDINGS. ON PERUSAL OF SHOW CAUSE NOTICE ISSUED BY THE CIT, ASSESSMENT ORDER AND PAPER BOOK FILED BY THE ASSESS EE, IT WAS NOTICED THAT ALL THE ISSUES QUESTIONED BY THE CIT IN THE PR OCEEDINGS WERE ALREADY EXAMINED BY THE ASSESSING OFFICER IN THE AS SESSMENT PROCEEDINGS. THE CIT WAS OF THE OPINION THAT SALES DECLARED BY THE ASSESSEE IS UNDERSTATED TO THE EXTENT OF RS. 4,02,9 3,812/-. THE CIT ARRIVED THE SALES FIGURE BY USING HIS OWN CALCULATI ONS AND AS PER SUCH CALCULATION HE ARRIVED AT GROSS SALES OF RS. 17,01, 89,709 AND THEN COMPARED WITH SALES DECLARED BY THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT OF RS. 12,98,95,897/- TO ARRIVE SHORTAGES. THE ASSESSEE SUBMITTED THAT ITS COST OF GOODS SOLD IS 40% AND IT S PROFIT MARGIN IS 20% ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 10 AND IT ALLOWS 40% MARGIN FOR DEALERS TO ARRIVE AT M RP. THEREFORE, TO ARRIVE ITS SALES 40% DEALER MARGIN SHOULD BE EXCLUD ED FROM THE MRP AND IF YOU EXCLUDE 40% FROM MRP, THEN REMAINING 60% IS MY COST OF GOODS SOLD AND PROFIT. THEREFORE, CORRECT DENOMINATOR FOR ARRIVING SALES IS 60% BUT, NOT 40% AS CONSIDERED BY THE CIT. THE ASSESSEE CONTENTION IS THAT THE CIT HAS WRONGLY ADOPTED THE DENOMINATOR OF 40 A S AGAINST THE CORRECT DENOMINATOR TO BE TAKEN AT 60. WE HAVE EXAMI NED THE WORKINGS OF CIT AND SUBMISSIONS OF THE ASSESSEE ON THIS ISSU E. ON PERUSAL OF CIT ORDER, WE FIND THAT THE CIT HAS ERRONEOUSLY ARRIVED THE SALES FIGURE AND THEN COMPARED WITH SALES DECLARED BY THE ASSESSEE W ITHOUT TAKING INTO ACCOUNT SALES RETURNS AND SALES DISCOUNT CLAIMED BY THE ASSESSEE. IN FACT, THE GROSS SALE COMPUTED BY THE CIT AT PAGE NO . 3 AND 11 OF HIS ORDER IS TOTALLY INCORRECT. THE CIT COMPUTED GROSS SALES OF RS. 28,36,49,515/- AT PAGE NO. 3 BY TAKING THE DENOMINA TOR OF 40 INSTEAD OF 60 AND THEN COMPARED WITH GROSS SALES OF RS. 22,58, 21,015/- DECLARED BY THE ASSESSEE TO ARRIVE AT A SHORTAGE OF RS. 5,78 ,28,500/- WHICH IS INCORRECT. THE CIT REWORKED THE SALES AT PAGE NO. 1 1 OF HIS ORDER, WHEREIN HE HAD ARRIVED AT GROSS SALES OF RS. 17,01, 89,709/- BY TAKING 40 DENOMINATOR AND THEN COMPARED WITH NET SALES OF RS. 12,98,95,897/- TO ARRIVE SHORTAGE OF RS. 4,02,93,812/- WHICH IS ALSO INCORRECT. THE CIT AT ONE PLACE CONSIDERED WRONG DENOMINATOR AND ANOTHER PLACE COMPUTED ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 11 THE COST OF GOODS SOLD AND THEN COMPARED WITH NET S ALES DECLARED BY THE ASSESSEE. FROM THIS CONDUCT OF CIT, WE ARE OF THE O PINION THAT THE CIT TOTALLY CONFUSED HIMSELF, BUT DETERMINED TO ARRIVE THE SHORTAGE OF SALES WHICH DOES NOT EXIST IN THE PRESENT CASE. THEREFORE , CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT, THERE IS NO SHORTAGE OF SALES AS COMPUTED BY THE CIT WHICH L EADS TO REVISION OF ASSESSMENT ORDER U/S 263. IN OUR CONSIDERED OPINION , THE CIT IS ERRED IN ASSUMING JURISDICTION U/S 263 TO REVISE THE ASSESSM ENT ORDER. 9. COMING TO THE SECOND ISSUE OF DISALLOWANCE U/S 4 0A(IA) FOR ALLEGED NON DEDUCTION OF TDS ON PAYMENT OF REMUNERATION TO WRITERS. THE CIT WAS OF THE OPINION THAT THE ASSESSEE HAS NOT DEDUCT ED TDS ON REMUNERATION PAID TO WRITERS, BUT, THE A.O. FAILED TO EXAMINE THE ISSUE THEREFORE, THE ASSESSMENT ORDER IS ERRONEOUS INSOFA R AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. THE ASSESSEE CONTENTION IS THAT IT HAS EXPLAINED EACH & EVERY PAYMENT MADE TO WRITER AND W HY TDS WAS NOT DEDUCTIBLE ON SUCH PAYMENTS. IT IS FURTHER SUBMITT ED THAT TDS HAS BEEN DEDUCTED ON REMUNERATION, WHEREVER INDIVIDUAL PAYME NTS EXCEEDS THRESHOLD LIMIT OR THE AGGREGATE AMOUNT EXCEEDS RS. 50,000/- PER PERSON. THIS FACT WAS BROUGHT TO THE NOTICE OF A.O AT THE TIME OF ASSESSMENT PROCEEDINGS AND THE A.O. AFTER VERIFICAT ION OF DETAILS ACCEPTED THE PAYMENTS. THE A.R. FURTHER SUBMITTED T HAT WITHOUT ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 12 PREJUDICE TO THE ABOVE SUBMISSIONS, IT IS SUBMITTED THAT DISALLOWANCES U/S 40A(IA) IS NOT WARRANTED AS THESE AMOUNTS HAVE BEEN PAID DURING THE SAME FINANCIAL YEAR. TO SUPPORT HIS CONTENTION, THE A.R. RELIED UPON THE SPECIAL BENCH JUDGMENT IN THE CASE OF MERLYN SH IPPING & TRANSPORT REPORTED IN 136 ITD 23. WE HAVE GONE THROUGH THE ORD ERS OF CIT AND ALSO SUBMISSIONS OF ASSESSEE. ON PERUSAL OF SUBMIS SIONS, WE FIND THAT THE ASSESSEE HAS DEDUCTED TDS WHEREVER APPLICABLE. FURTHER, IT IS OBSERVED THAT ALL THESE AMOUNTS WERE ALREADY PAID I N THE FINANCIAL YEAR. THE A.O. EXAMINED THE ISSUE AND COME TO THE CONCLUS ION THAT THE CLAIM OF THE ASSESSEE IS CORRECT. ONCE, THE ISSUE IS EXAM INED AND CONSIDERED BY THE A.O. THE CIT HAS NO JURISDICTION TO ENTERTAI N FRESH INQUIRY ON THE SAME ISSUE BECAUSE HE HAS A DIFFERENT OPINION ON TH E ISSUE. IN OUR OPINION, THE ISSUE OF DISALLOWANCE U/S 40A(IA) IS V ERIFIED BY THE A.O. IN THE ASSESSMENT PROCEEDINGS, WHICH CANNOT BE TERMED AS ERRONEOUS. THERE MAY BE LOSS OF REVENUE BECAUSE OF THE DECISIO N TAKEN BY THE A.O., BUT, EVERY LOSS OF REVENUE AS A RESULT OF AN ASSESS MENT ORDER CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF REVENUE. THE A.O. AFTER FULLY SATISFIED WITH THE ASSESSEE EXPLANATION, DECIDED NO T TO INVOKE SECTION 40A(IA) OF THE ACT TO DISALLOW THE PAYMENTS. THEREF ORE, WE ARE OF THE OPINION THAT THERE IS NO ERROR IN THE ASSESSMENT OR DER AND IT CANNOT BE TERMED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 13 10. COMING TO THE OTHER ISSUES WHICH LEAD TO REVISI ON OF ASSESSMENT ORDER. THE CIT WITHOUT POINTING OUT ANY SPECIFIC LA PSES, MADE GENERAL OBSERVATION AND HELD THAT THE A.O. DID NOT CONDUCT PROPER ENQUIRY ON SALES RETURNS AND PURCHASES WHILE COMPLETING THE AS SESSMENT, THEREFORE DIRECTED THE A.O. RE DO THE ASSESSMENT. THE CIT OBS ERVED THAT THE ASSESSEE FAILED TO CONSIDER THE SALES RETURNS TO TH E EXTENT OF RS. 35,65,896/- IN THE CLOSING STOCK. THE CIT FURTHER O BSERVED THAT THERE IS DIFFERENCE IN SALES AND PURCHASES AS PER BOOKS WHEN COMPARED TO SALES TAX RETURNS AND THE A.O. DID NOT VERIFIED THIS ASPE CT AT THE TIME OF ASSESSMENT PROCEEDINGS. THE LEARNED A.R., AT THE TI ME HEARING BEFORE US, ARGUED THAT THESE ISSUES DISCUSSED BY THE CIT I N THE REVISION PROCEEDINGS WERE IN FACT EXAMINED BY THE A.O. DURIN G THE CONSEQUENTIAL ASSESSMENT PROCEEDINGS AND ACCEPTED THE ISSUES WITH OUT FURTHER ADDITIONS AND FILED COPY OF ASSESSMENT ORDER DATED 24/03/2015. WE HAVE EXAMINED THE ASSESSMENT ORDER AND FIND THAT TH E A.O. DID NOT MADE ANY ADDITIONS ON THESE ISSUES. THEREFORE, IN OUR OPINION, THE CIT WITHOUT POINTING OUT ANY MISTAKES IN THE ASSESSMENT ORDER, DIRECTED THE A.O. TO RECONSIDER THE ISSUE TO REPLACE HIS VIEW, W HICH HE CANNOT DO SO IN THE REVIEW PROCEEDINGS. IN OUR CONSIDERED OPINIO N, THE CIT HAS EXCEEDED HIS AUTHORITY BY STEPPING INTO THE SHOES O F A.O. TO DO THE REASSESSMENT WHICH IS NOT PERMITTED UNDER SECTION 2 63. ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 14 11. THE CIT HAS POWER TO REVISE ASSESSMENT ORDER. B UT, TO INVOKE THE PROVISIONS OF SECTION 263 OF THE ACT, THE TWIN COND ITIONS MUST BE SATISFIED I.E. THE ORDER OF THE ASSESSING OFFICER I S ERRONEOUS AND FURTHER IT MUST BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. UNLESS BOTH CONDITIONS ARE SATISFIED, THE CIT CANNOT ASSUME JUR ISDICTION U/S 263 OF THE ACT. IT IS NOT NECESSARY THAT EVERY ORDER WHIC H IS ERRONEOUS, ALSO PREJUDICIAL TO THE INTEREST OF REVENUE OR VICE VERS A. UNLESS THE A.OS ORDER IS NOT ERRONEOUS, NO ACTION CAN BE TAKEN BY T HE CIT U/S 263 OF THE ACT, THIS IS BECAUSE THE TWIN CONDITIONS I.E. (1) T HE ORDER IS ERRONEOUS AND (2) THE SAME IS ALSO PREJUDICIAL TO THE INTERES T OF THE REVENUE ARE NOT CO-EXISTS. IN THE PRESENT CASE, THE A.O. HAS C ONDUCTED DETAILED ENQUIRY AND ALSO EXAMINED THE POINTS ON WHICH THE C IT WANTS FURTHER VERIFICATION. THE ASSESSING OFFICER AFTER VERIFICAT ION OF BOOKS OF ACCOUNTS AND RELEVANT DETAILS FURNISHED BY THE ASSESSEE, ALL OWED THE DEDUCTION TOWARDS SUCH EXPENDITURES WHICH FINDS PLACE IN THE SHOW CAUSE NOTICE ISSUED BY THE CIT IN 263 PROCEEDINGS. THE CONTENTI ON OF THE CIT WAS THAT THE A.O. HAS NOT CONDUCTED PROPER ENQUIRY AND ALSO NOT APPLIED HIS MIND BEFORE ALLOWING THE DEDUCTION. WE DO NOT AGREE WITH THE CIT FOR THE REASON THAT THERE IS A DISTINCTION BETWEEN LACK OF ENQUIRY AND INADEQUATE ENQUIRY. IF THERE IS AN INADEQUATE ENQU IRY THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE CIT TO ASSUME JURISDICT ION U/S 263 OF THE ACT, ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 15 MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MA TTER. THE CIT CAN DO THIS, ONLY WHEN THERE IS A LACK OF ENQUIRY BY TH E ASSESSING OFFICER. ACCORDING TO CIT, THE ASSESSING OFFICER HAS CONDUCT ED ENQUIRY BUT, IT IS IN-ADEQUATE, THEREFORE HE WANTED FURTHER ENQUIRY, T HIS FACT WAS NOT DISPUTED BY THE REVENUE. IN OUR OPINION, THE COMMIS SIONER CANNOT INITIATE REVISION PROCEEDINGS WITH A VIEW TO CONDUC T FISHING AND REVOLVING ENQUIRY IN THE MATTERS WHICH ARE ALREADY EXAMINED B Y THE A.O. THE DEPARTMENT CANNOT DO FRESH ASSESSMENT IN THE GUISE OF REVISION ON THE MATTERS WHICH ARE EXAMINED AND CONCLUDED BY THE A.O . THUS, IT CANNOT BE SAID THAT IT IS A CASE OF LACK OF ENQUIRY. 12. THE LEARNED A.R. ARGUED THAT THE A.O. EXAMINED ALL THE ISSUES WHICH LEAD TO REVISION OF ASSESSMENT ORDER U/S 263. WE HAVE OBSERVED THAT THE ASSESSING OFFICER VIDE HIS QUESTIONNAIRE D ATED 21-10-2011 MADE ELABORATE INQUIRY INTO ALL THE MATTER. THE A.O. IN THE SAID LETTER RAISED AS MANY AS 22 QUESTIONS WHEREIN, HE HAD CALLED FOR EXP LANATIONS FROM ALL THE ISSUES WHICH ARE SUBJECT MATTER OF PROCEEDINGS U/S 263. THE COPIES OF QUESTIONNAIRE AND REPLY FURNISHED BY THE A.O. AR E PLACED BEFORE US. ON PERUSAL OF THE DETAILS PLACED BEFORE US, WE ARE OF THE OPINION THAT THE A.O. HAS MADE DETAILED ENQUIRY ABOUT ALL THE IS SUES AND PASSED DETAILED ASSESSMENT ORDER. IN OUR OPINION, THE LD. COMMISSIONER HAS WRONGLY PRESUMED THAT THE ASSESSING OFFICER HAD NOT PROPERLY EXAMINED ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 16 THE ISSUE. THE ORDER OF THE ASSESSING OFFICER MAY B E BRIEF AND CRYPTIC, BUT THAT BY ITSELF DOES NOT SUFFICIENT REASON TO BR AND THE ASSESSMENT ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IT IS WELL SETTLED LAW THAT WRITING AN ORDER IN DETAIL MAY BE A LEGAL REQUIREMENT, BUT THE ORDER NOT FULFILLING THIS REQUIREMENTS CANN OT BE SAID TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. IT IS APPARENT FROM THE RECORDS THAT THE ASSESSEE SUBMITTED ITS REPLY A ND ALSO FURNISHED THE REQUISITE INFORMATION OR DETAILS TO SUBSTANTIATE IT S CLAIM DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAVIN G CONSIDERED ALL THESE ISSUES ON WHICH THE ASSESSMENT ORDER IS REVIS ED U/S 263, THE EXERCISE OF POWERS U/S 263 IS BAD IN LAW. IT IS ALS O TRUE THAT IF AN ENQUIRY IS MADE BY THE ASSESSING OFFICER AND THEN OBJECTION OF THE CIT IS THAT SUCH INQUIRY IS NOT ADEQUATE, THE CIT WOULD HAVE NO JURISDICTION U/S 263 OF THE ACT TO REVISE THE ORDER OF THE ASSESSING OFF ICER. IN OUR CONSIDERED VIEW THE ASSESSING OFFICER HAS MADE PROPER AND DESI RED ENQUIRES BEFORE PASSING THE ASSESSMENT ORDER. THEREFORE, THE VIEW T AKEN BY THE LD. CIT CANNOT BE HELD JUSTIFIABLE. WHILE TAKING SUCH A VIE W WE ARE INFLUENCED BY THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GABRIAL INDIA LTD (1992) 203 ITR 108 (BOMBAY), WHER EIN IT HAS BEEN HELD THAT A.O HAD MADE ENQUIRES IN REGARD TO THE NA TURE OF THE EXPENDITURE INCURRED BY THE ASSESSEE. THE ASSESSEE HAD GIVEN DETAILED ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 17 EXPLANATION IN THAT REGARD BY A LETTER IN WRITING. ALL THESE ARE PART OF THE RECORD OF THE CASE. THE HON'BLE HIGH COURT FURTHER OBSERVED THAT THE CLAIM WAS ALLOWED BY THE ASSESSING OFFICER ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. THE HON'BLE HIGH COURT OPINED THAT SUCH DECISION OF THE A.O CANNOT BE HELD TO BE ERRONEOUS SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE ANY ELABORATE DISCUSSION IN THAT REGARD. 13. THE SECOND ASPECT OF THE ISSUE ARISING BEFORE U S, IS THE BASIS ON WHICH THE PRESENT PROCEEDINGS UNDER SECTION 263 OF THE ACT HAVE BEEN INITIATED. THE LEARNED A.R. OF THE ASSESSEE SUBMITT ED THAT THE CIT ASSUMED JURISDICTION BASED ON AUDIT OBJECTION AND T HERE IS NO INDEPENDENT APPLICATION OF MIND BY THE CIT TO COME TO THE CONCLUSION THAT THE ORDER IS ERRONEOUS AND ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE A.R. SUBMITTED THAT AN AUDIT OBJECTION DOES NOT CONSTITUTE RECORDS FOR THE PURPOSE OF SECTION 263. THE CIT WHI LE EXERCISING JURISDICTION UNDER SECTION 263 IS EMPOWERED TO CALL FOR AND EXAMINE THE RECORDS AND WHERE HE THINKS THAT THE ASSESSMENT ORD ER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF REV ENUE, HE MAY AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE MAY PASS SUCH ORDER WHICH DEEM NECESSARY IN THE CIRCUMSTANCES OF THE CASE. IN THE PRESENT CASE ON HAND, THE CIT ISSUED SHOW CAUSE NOTICE BASED ON AUD IT OBJECTION WHICH IS BAD IN LAW. IN SUPPORT OF ITS CONTENTION, RELIED UPON THE COORDINATE ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 18 BENCH DECISION OF ITAT CHANDIGARH BENCH IN THE CASE OF SH. JASWINDER SINGH VS. CIT AND FURNISHED COPY OF THE ORDER. WE H AVE EXAMINED THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE CASE LAW REFERRED BY THE AUTHORISED REPRESENTATIVE AND FIND THAT SIMILAR ISS UE CAME UP FOR CONSIDERATION BEFORE THE COORDINATE BENCH OF ITAT, CHANDIGARH, WHEREIN THE BENCH HELD THAT AUDIT OBJECTIONS UNDER NO CIRCU MSTANCES CAN BE CALLED AS RECORDS EMPOWERING THE CIT TO EXERCISE JU RISDICTION UNDER SECTION 263 AND SUCH EXERCISE OF POWER IS NOT TENAB LE IN LAW. 14. NOW IT IS RELEVANT TO CONSIDER THE JUDGMENTS RE FERRED BY THE LD. AUTHORISED REPRESENTATIVE. THE A.R. RELIED UPON CO- ORDINATE BENCH DECISION IN THE CASE OF SMT. SUSHEELA DEVI BOTHRA J AIN VS. ITO, WARD -1, RAJHAMUNDRY, ITA. NO. 279/VIZ/2014, WHEREIN THE HON BLE TRIBUNAL AFTER CONSIDERING THE DELHI HIGH COURT DECISION IN THE CA SE OF DIRECTOR OF INCOME TAX VS. JYOTI FOUNDATION (SUPRA), CIT, SUNBE AM AUTO LTD (2011) 332 ITR 167 (DEL) AND HONBLE ANDHRA PRADESH HIGH C OURT DECISION IN THE CASE OF SPECTRA SHARES AND SCRIPS PVT LTD VS. C IT, (2013) 354 ITR 35(AP), QUASHED THE ORDER PASSED BY CIT. 15. IN THE CASE OF SPECTRA SHARES AND SCRIPS PVT. L TD., (2013) 354 ITR 35, THE HONBLE A.P. HIGH COURT HAS CULLED OUT PRIN CIPLES LAID DOWN BY THE HONBLE SUPREME COURT AND ALSO VARIOUS HIGH COU RTS ON THE ISSUE OF ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 19 EXERCISE OF JURISDICTION BY THE CIT U/S 263 OF THE ACT. IT READS AS FOLLOWS: '(A) THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUG HT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERE STS OF THE REVENUE. IF ONE OF THEM IS ABSENTIF THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IT IS PREJUDICIAL TO THE REVENUERECOURSE CANNOT BE HAD TO SECT/ON 263(1) OF THE ACT. (B) EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE. FOR EXAMPLE, WHEN AN INCOME-TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE OR WH ERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VI EW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED A S AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. (C) TO INVOKE THE SUOMOTU REVISIONAL POWERS TO REOPEN A CONCLUDED ASSESSMENT UNDER SECTION 263, THE COMMISSIONER MUST GIVE REASONS; THAT A BARE REITERATION BY HIM THAT THE ORDER OF THE INCOME -TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE, WILL NOT SUFFICE; THAT THE REASONS MUST BE SUCH AS TO SH OW THAT THE ENHANCEMENT OR MODIFICATION OF THE ASSESSMENT OR CA NCELLATION OF THE ASSESSMENT OR DIRECTIONS ISSUED FOR A FRESH ASSESSM ENT WERE CALLED FOR, AND MUST IRRESISTIBLY LEAD TO THE CONCLUSION THAT THE O RDER OF THE INCOME-TAX OFFICER WAS NOT ONLY ERRONEOUS BUT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THUS, WHILE THE INCOME-TAX OFFICER IS NOT C ALLED UPON TO WRITE AN ELABORATE JUDGMENT GIVING DETAILED REASONS IN RESPE CT OF EACH AND EVERY DISALLOWANCE, DEDUCTION, ETC., IT IS INCUMBENT UPON THE COMMISSIONER NOT TO EXERCISE HIS SUOMOTU REVISIONAL POWERS UNLESS SUPPO RTED BY ADEQUATE REASONS FOR DOING SO; THAT IF A QUERY IS RAISED DURING THE COURSE OF THE SCRUTINY BY THE ASSESSING OFFICER, WHICH WAS ANSWERED TO THE SA TISFACTION OF THE ASSESSING OFFICER, BUT NEITHER THE QUERY NOR THE AN SWER WERE REFLECTED IN THE ASSESSMENT ORDER, THIS WOULD NOT BY ITSELF LEAD TO THE CONCLUSION THAT THE ORDER OF THE ASSESSING OFFICER CALLED FOR INTER FERENCE AND REVISION. (E) THE COMMISSIONER CANNOT INITIATE PROCEEDINGS WI TH A VIEW TO START FISHING AND ROVING INQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED , THAT THE DEPARTMENT CANNOT BE PERMITTED TO BEGIN FR ESH LITIGATION BECAUSE OF NEW VIEWS THEY ENTERTAIN ON FACTS OR NEW VERSIONS W HICH THEY PRESENT AS TO WHAT SHOULD BE THE INFERENCE OR PROPER INFERENCE EI THER OF THE FACTS DISCLOSED OR THE WEIGHT OF THE CIRCUMSTANCE; THAT I F THIS IS PERMITTED, LITIGATION WOULD HAVE NO END EXCEPT WHEN LEGAL INGE NUITY IS EXHAUSTED. ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 20 (F) WHETHER THERE WAS APPLICATION OF MIND BEFORE AL LOWING THE EXPENDITURE IN QUESTION HAS TO BE SEEN; THAT IF THERE WAS AN IN QUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE COMMI SSIONER TO PASS ORDERS UNDER SECTION 263 MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER; THAT IT IS ONLY IN CASES OF LACK OF INQUIRY THAT SUCH A COURSE OF ACTION WOULD BE OPEN; THAT AN ASSESSMENT ORDER MADE BY THE INCOME-TAX OFFICER CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTE N MORE ELABORATELY, THERE MUST BE SOME PRIMA FADE MATERIAL ON RECORD TO SHOW THAT THE TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLE TE INTERPRETATION, A LESSER TAX THAN WHAT WAS JUST, HAS BEEN IMPOSED. (G) THE POWER OF THE COMMISSIONER UNDER SECTION 263 (1) IS NOT LIMITED ONLY TO THE MATER/AL WHICH WAS AVAILABLE BEFORE THE AO AND, IN ORDER TO PROTECT THE INTERESTS OF THE REVENUE, THE COMMISSIONER IS ENTIT LED TO EXAMINE ANY OTHER RECORD WHICH ARE AVAILABLE AT THE TIME OF EXAMINATI ON BY HIM AND TO TAKE INTO CONSIDERATION EVEN THOSE EVENTS WHICH AROSE SUBSEQU ENT TO THE ORDER OF ASSESSMENT.' 16. THE ASSESSEE RELIED UPON HONBLE DELHI HIGH COU RT DECISION IN THE CASE OF DIRECTOR OF INCOME TAX VS. JYOTI FOUNDATION , (2013) 357 ITR 388 (DELHI), WHEREIN, THE HONBLE COURT OBSERVED AS UND ER. IT WAS HELD THAT REVISIONARY POWER U/S 263 IS CONF ERRED ON THE COMMISSIONER/DIRECTOR OF INCOME TAX WHEN AN ORDER P ASSED BY THE LOWER AUTHORITY IS ERRONEOUS AND PREJUDICIAL TO THE INTER EST OF THE REVENUE. BUT ORDERS WHICH ARE PASSED WITHOUT INQUIRY/INVESTIGATI ON ARE TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE, BUT ORDERS WHICH ARE PASSED AFTER INQUIRY/INVESTIGATION ON THE QUESTION/ISSUE ARE NOT PER SE OR NORMALLY TREATED AS ERRONEOUS AND PRE JUDICIAL TO THE INTEREST OF THE REVENUE BECAUSE THE REVISIONARY AUTHORITY FEELS AND OPINES THAT FURTHER INQUIRY/INV ESTIGATION WAS REQUIRED OR DEEPER OR FURTHER SCRUTINY SHOULD B E UNDERTAKEN. IN THE CASE OF INCOME TAX OFFICER VS. DG HOUSING PR OJECTS LIMITED, (2012) 343 ITR 329 (DELHI) IT WAS HELD THAT IN CASE S OF WRONG OPINION OR FINDING ON MERITS, THE CIT HAS TO COME T O THE CONCLUSION AND HIMSELF DECIDE THAT THE ORDER IS ERR ONEOUS, BY CONDUCTING NECESSARY ENQUIRY, IF REQUIRED AND NECES SARY, BEFORE THE ORDER U/S 263 IS PASSED. IN SUCH CASES, THE ORD ER OF THE AO WILL BE ERRONEOUS BECAUSE THE ORDER PASSED IS NOT S USTAINABLE IN LAW AND THE SAID FINDING MUST BE RECORDED. CIT C ANNOT REMAND THE MATTER TO THE AG TO DECIDE WHETHER THE F INDINGS ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 21 RECORDED ARE ERRONEOUS. IN CASES WHERE THERE IS INA DEQUATE ENQUIRY BUT NOT LACK OF ENQUIRY, AGAIN THE CIT MUST GIVE AND RECORD A FINDING THAT THE ORDER/INQUIRY MADE IS ERR ONEOUS. THIS CAN HAPPEN IF AN ENQUIRY AND VERIFICATION IS CONDUC TED BY THE CIT AND HE IS ABLE TO ESTABLISH AND SHOW THE ERROR OR MISTAKE MADE BY THE AG, MAKING THE ORDER UNSUSTAINABLE IN L AW. IN SOME CASES POSSIBLY THOUGH RARELY, THE CIT CAN ALSO SHOW AND ESTABLISH THAT THE FACTS ON RECORD OR INFERENCES DR AWN FROM FACTS ON RECORD PER SE JUSTIFIED AND MANDATED FURTH ER ENQUIRY OR INVESTIGATION BUT THE AO HAD ERRONEOUSLY NOT UNDERT AKEN THE SAME. HOWEVER, THE SAID FINDING MUST BE CLEAR, UNAM BIGUOUS AND NOT DEBATABLE. THE MATTER CANNOT BE REMITTED FO R A FRESH DECISION TO THE AG TO CONDUCT FURTHER ENQUIRIES WIT HOUT A FINDING THAT THE ORDER IS ERRONEOUS. FINDING THAT THE ORDER IS ERRONEOUS IS A CONDITION OR REQUIREMENT WHICH MUST BE SATISFI ED FOR EXERCISE OF JURISDICTION U/S 263. IN SUCH MATTERS, TO REMAND THE ISSUE TO THE AG WOULD IMPLY / THE CIT HAS NOT EXAMI NED AND DECIDED WHETHER OR NOT THE ORDER IS ERRONEOUS BUT H AS DIRECTED THE AG TO DECIDE THE ASPECT/QUESTION. AN ORDER OF R EMIT CANNOT BE PASSED BY THE CIT TO ASK THE AG TO DECIDE WHETHE R THE ORDER WAS ERRONEOUS. THIS IS NOT PERMISSIBLE. AN ORDER IS NOT ERRONEOUS, UNLESS THE CIT HOLD AND RECORDS REASONS WHY IT IS ERRONEOUS. THEREFORE JURISDICTIONAL PRECONDITION ST IPULATED IS THAT THE CIT MUST COME TO THE CONCLUSION THAT THE ORDER IS ERRONEOUS AND IS UNSUSTAINABLE IN LAW. THE MATERIAL WHICH THE CIT CAN RELY INCLUDES NOT ONLY THE RECORD AS IT STANDS AT T HE TIME WHEN THE ORDER IN QUESTION WAS PASSED BY THE AG BUT ALSO THE RECORD AS IT STANDS AT THE TIME OF EXAMINATION BY T HE CIT. (PARA 4) IN THE PRESENT CASE, INQUIRIES WERE CERTAINLY CONDU CTED BY THE AO. IT IS NOT A CASE OF NO INQUIRY. THE ORDER U/S 2 63 ITSELF RECORDS THAT THE DIRECTOR FELT THAT THE INQUIRIES W ERE NOT SUFFICIENT AND FURTHER INQUIRIES OR DETAILS SHOULD HAVE BEEN CALLED. HOWEVER, IN SUCH CASES, AS OBSERVED IN THE CASE OF DG HOUSING PROJECTS LIMITED, THE INQUIRY SHOULD HAVE B EEN CONDUCTED BY THE COMMISSIONER OR DIRECTOR HIMSELF TO RECORD T HE FINDING THAT THE ASSESSMENT ORDER WAS ERRONEOUS. HE SHOULD NOT HAVE SET ASIDE THE ORDER AND DIRECTED THE AO TO CONDUCT THE SAID INQUIRY. REVENUE'S APPEAL DISMISSED. 17. THE HONBLE SUPREME COURT IN THE CASE OF MALABA R INDUSTRIAL CO. LTD VS. COMMISSIONER OF INCOME TAX, (2000) 243 ITR 83, HELD AS UNDER. ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 22 5. TO CONSIDER THE FIRST CONTENTION, IT WILL BE AP T TO QUOTE S. 263(1) WHICH IS RELEVANT FOR OUR PURPOSE: '263. REVISION OF ORDERS PREJUDICIAL TO REVENUE.(1 ) THE CIT MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT , AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE AO IS ERRONEOUS INS OFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE MAY, AFTER GIVI NG THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUS ING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THER EON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING O R MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECT ING A FRESH ASSESSMENT. EXPLANATION : XXXXXXXXXXXXXXX' A BARE READING OF THIS PROVISION MAKES IT CLEAR THA T THE PREREQUISITE TO EXERCISE OF JURISDICTION BY THE CIT SUO MOTU UNDER IT, IS THAT THE ORDER OF THE ITO IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO TH E INTERESTS OF THE REVENUE. THE CIT HAS TO BE SATISFIED OF TWIN CONDITIONS, NAM ELY, (I) THE ORDER OF THE AO SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS P REJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENTIF THE ORD ER OF THE ITO IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS N OT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUERECOURSE CANNOT BE HAD TO S. 263(1) OF THE ACT. THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED B Y THE AO; IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTR ACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SA ME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NA TURAL JUSTICE OR WITHOUT APPLICATION OF MIND. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REV ENUE' IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT. UN DERSTOOD IN ITS ORDINARY MEANING IT IS OF WIDE IMPORT AND IS NOT (CONFERRED) TO LOSS OF TAX. THE HIGH COURT OF CALCUTTA IN DAWJEE DADABHOY & CO. VS. S.P. JAIN & ANR. (1957) 31 ITR 872 (CAL) : TC 57R.129, THE HIGH COURT OF KARNA TAKA IN CIT VS. T. NARAYANA PAI (1975) 98 ITR 422 (KAR) : TC 57R.185, THE HIGH COURT OF BOMBAY IN CIT VS. GABRIEL INDIA LTD. (1993) 114 CTR (BORN) 81 : (1993) 203 ITR 108 (BORN) : TC 57R.213 AND THE HIGH COURT OF G UJARAT IN CIT VS. SMT. MINALBEN S. PARIKH (1995) 127 CTR (GUJ) 333 : (1995 ) 215 ITR 81 (GUJ) : TC 57R.312 TREATED LOSS OF TAX AS PREJUDICIAL TO THE I NTEREST OF THE REVENUE. 6. MR. ABRAHAM RELIED ON THE JUDGMENT OF THE DIVISION BENCH OF THE HIGH COURT OF MADRAS IN VENKATAKRISHNA RICE COMPANY VS. CIT (1987) 62 CTR (MAD) 152 : (1987) 163 ITR 129 (MAD) : TC 57R.303 I NTERPRETING 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE'. THE HIGH COURT HE LD, 'IN THIS CONTEXT, IT MUST BE REGARDED AS INVOLVING A CONCEPTION OF ACTS OR ORDERS WHICH ARE SUBVERSIVE OF THE ADMINISTRATION OF REVENUE. THERE MUST BE SOM E GRIEVOUS ERROR IN THE ORDER PASSED BY THE ITO, WHICH MIGHT SET A BAD TREN D OR PATTERN FOR SIMILAR ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 23 ASSESSMENTS, WHICH ON A BROAD RECKONING, THE CIT MI GHT THINK TO BE PREJUDICIAL TO THE INTERESTS OF REVENUE ADMINISTRAT ION'. IN OUR VIEW THIS INTERPRETATION IS TOO NARROW TO MERIT ACCEPTANCE. T HE SCHEME OF THE ACT IS TO LEVY AND COLLECT TAX IN ACCORDANCE WITH THE PROVISIONS O F THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF DUE TO AN ERRONEOUS OR DER OF THE ITO, THE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 7. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REV ENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE A O. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF AO CANNOT B E TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN ITO ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN L OSS OF REVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE ITO HAS TAKEN ONE VIEW W ITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER P REJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE ITO IS UNS USTAINABLE IN LAW. IT HAS BEEN HELD BY THIS COURT THAT WHERE A SUM NOT EARNED BY A PERSON IS ASSESSED AS INCOME IN HIS HANDS ON HIS SO OFFERING, THE ORDE R PASSED BY THE AO ACCEPTING THE SAME AS SUCH WILL BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. RAMPYARI DEVI SARAOGI VS. CIT (1968) 67 IT R 84 (SC) : TC 57R.202 AND IN SMT. TARA DEVI AGGARWAL VS. CIT 1973 CTR (SC ) 107 : (1973) 88 ITR 323 (SC) : TC 57R.206. 18. IN THE CASE OF SH.JASWINDER SINGH VS. CIT, IN I TA. NO. 690/CHD/2010, THE ITAT CHANDIGARH BENCH HELD AS UND ER. IN THE BACK DROP OF THE ABOVE SAID SETTLED LEGAL P RECEDENTS, WE FIND THAT THE COMMISSIONER OF INCOME TAX IN THE PRESENT CASE HAD ALSO INITIATED THE PROCEEDINGS UNDER SECTION 263 OF THE ACT ON THE BASIS OF THE AUDIT OBJECTIONS. S HOW CAUSE NOTICE WAS ISSUED IN THE PRESENT CASE FOR NON-DEDUCTION OF TAX AT SOURCE, OUT OF CERTAIN EXPENSES INCURRED BY THE ASSESSEE AND ORDER PASSED BY THE COMMISSIONER OF INCOME TAX UNDER SECTION 263 OF THE ACT DIRECTING THE ASSESSING OFFICER TO RE- DETERMINE THE INCOME OF THE ASSESSEE BY APPLYING A RATE OTHER THAN THE RATE APPLIED BY THE ASSESSING OFFICER, BEING WITHOUT JUR ISDICTION, IS NOT TENABLE IN LAW. WE FIND NO MERIT IN THE PLEA OF THE LEARNED D.R. FO R THE REVENUE THAT THE SOURCE OF INFORMATION IN THE PRESENT CASE WAS AUDIT OBJECTION , BUT THERE WAS INDEPENDENT APPLICATION OF MIND BY THE COMMISSIONER OF INCOME T AX. THE PROVISIONS OF SECTION 263 OF THE ACT ARE CLEAR AND ABSOLUTE THAT THE POWER IS TO BE EXERCISED BY THE COMMISSIONER OF INCOME TAX FROM THE EXAMINATION OF THE RECORDS OF THE PROCEEDINGS UNDER THE ACT. THE EXPLANATION U NDER SECTION 263 OF THE ACT DEFINES 'RECORDS' AS ALL RECORDS RELATING TO ANY PR OCEEDINGS UNDER THE ACT AVAILABLE AT THE TIME OF EXAMINATION BY THE COMMISS IONER. THE AUDIT OBJECTIONS UNDER NO CIRCUMSTANCES CAN BE CALLED AS RECORD EMPO WERING THE COMMISSIONER OF INCOME TAX TO EXERCISE JURISDICTION UNDER SECTION 26 3 OF THE ACT. FURTHER IT IS APPARENT THAT THE COMMISSIONER OF INCOME TAX HAS IN ITIATED THE REVISION PROCEEDINGS ONLY ON THE BASIS OF AUDIT OBJECTION. S UCH EXERCISE OF POWER UNDER SECTION 263 OF THE ACT IS NOT TENABLE IN LAW. ACCOR DINGLY, WE SET-ASIDE THE ORDER ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 24 PASSED BY THE COMMISSIONER OF INCOME TAX UNDER SECT ION 263 OF THE ACT. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS A LLOWED. 19. IN VIEW OF THIS AND ALSO APPLYING THE RATIOS OF THE JUDGMENTS DISCUSSED ABOVE, WE ARE OF THE OPINION THAT THE ASS ESSMENT ORDER PASSED BY THE A.O. IS NOT ERRONEOUS AND ALSO NOT PR EJUDICIAL TO THE INTEREST OF THE REVENUE, THEREFORE, THE ORDER PASSE D U/S 263 OF THE ACT IS NOT MAINTAINABLE. ACCORDINGLY, WE QUASHED THE CIT O RDER U/S 263 AND RESTORE THE ASSESSMENT ORDER. 20. IN THE RESULT, THE ASSESSEE APPEAL IS ALLOWED . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 20 TH NOV15. SD/- SD/- ( (( ( . .. . ) ) ) ) ( (( ( . . . . ) ) ) ) ( (( ( V. DURGA RAO ) )) ) ( (( ( G. MANJUNATHA) / // / JUDICIAL MEMBER / // / ACCOUNTANT MEMBER /VISAKHAPATNAM: 6 / DATED : 20.11.2015 VG/SPS / - 7 / COPY OF THE ORDER FORWARDED TO :8 1. , / THE APPELLANT M/S. VIKRAM PUBLISHERS, 30-4-15, RAMASWAMY STREET, DURGA AGRAHARAM, VIJAYAWADA 2. -., / THE RESPONDENT ACIT, CIRCLE-2(1), VIJAYAWADA 3. : / THE CIT, VIJAYAWADA 4. : () / THE CIT (A), VIJAYAWADA ITA NO.137/VIZAG/2014 M/S. VIKRAM PUBLISHERS, VIJAYAWADA 25 5. -, , / // / DR, ITAT, VISAKHAPATNAM 6 . . . . / GUARD FILE / BY ORDER // TRUE COPY // @A ( SR.PRIVATE SECRETARY ) , / // / ITAT, VISAKHAPATNAM SL. NO. DESCRIPTION DATE INITIALS 1. DATE OF DICTATION BY THE AUTHOR SR.PS 2. DRAFT PLACED BEFORE THE DICTATING MEMBER SR.PS 3. DRAFT PLACED BEFORE THE SECOND MEMBER SR. PS 4. DRAFT APPROVED BY THE SECOND MEMBER SR. PS 5. DATE OF APPROVED ORDER COMES TO THE SR. PS SR. PS 6. DATE OF PRONOUNCEMENT OF ORDER SR. PS 7. DATE OF FILE SENT TO THE BENCH CLERK SR. PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK HD. C LK 9. DATE OF DISPATCH OF ORDER SR. PS