T.Naga Mohan Reddy, Ravulapalem V. THE ACIT, Rajahmundry

ITA 140/VIZ/2015

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9798 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 22-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M B REDDY
• Keywords: Revision of order; Depreciation; Opportunity of being heard; Assessment record
• Section: 40A(3); 143(3); 142(1); 263

Judgement Text

ITA NO.140/VIZAG/2015 SRI T. NAGA MOHAN REDDY, RAVULAPALEM 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.140/VIZAG/2015 ( / ASSESSMENT YEAR: 2010-11) SRI T. NAGA MOHAN REDDY, RAVULAPALEM VS. ACIT, CIRCLE - 2(1), RAJAHMUNDRY [PAN: AFGPT4735E ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI C. SUBRAHMANYAM, AR / RESPONDENT BY : SHRI M.B. REDDY, DR / DATE OF HEARING : 24.08.2016 / DATE OF PRONOUNCEMENT : 07.10.2016 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE CIT, RAJAHMUNDRY U/S 263 OF THE INCOME TAX ACT, 196 1 (HEREINAFTER CALLED AS 'THE ACT') FOR THE ASSESSMENT YEAR 2010-1 1. ITA NO.140/VIZAG/2015 SRI T. NAGA MOHAN REDDY, RAVULAPALEM 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E, AN INDIVIDUAL ENGAGED IN THE BUSINESS OF CIVIL CONTRACTS FILED HI S RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11 ON 29.9.2010 DECLARING TOTAL INCOME OF ` 17,02,790/-. THE RETURN WAS PROCESSED U/S 143(1) O F THE ACT AND SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY TH ROUGH CASS. STATUTORY NOTICES U/S 143(2) & 142(1) OF THE ACT WE RE ISSUED. IN RESPONSE TO NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND PRODUCED BOOKS OF AC COUNTS AND BILLS AND VOUCHERS. THE ASSESSMENT FOR THE YEAR HAS BEEN COMPLETED U/S 143(3) OF THE ACT AND DETERMINED TOTAL INCOME OF ` 21,02,790/- BY MAKING ADHOC DISALLOWANCE OF ` 4 LAKHS TOWARDS EXPENDITURE LIKE GRAVEL PURCHASE, LABOUR CHARGES AND SAND PURCHASED FOR WAN T OF BILLS AND VOUCHERS. 3. THE CIT, RAJAHMUNDRY ISSUED A SHOW CAUSE NOTICE DATED 5.2.2015 AND ASKED TO EXPLAIN WHY THE ASSESSMENT ORDER PASSE D BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT DATED 9.1.2013 SHALL NOT BE REVISED UNDER THE PROVISIONS OF SECTION 263 OF THE ACT. THE CIT, PROPOSED TO REVISE THE ASSESSMENT ORDER FOR THE REASON THAT ON EXAMINA TION OF ASSESSMENT RECORDS, CERTAIN OMISSIONS AND COMMISSIONS WERE NOT ICED WHICH RENDER THE ASSESSMENT ORDER ERRONEOUS IN SO FAR AS IT IS P REJUDICIAL TO THE ITA NO.140/VIZAG/2015 SRI T. NAGA MOHAN REDDY, RAVULAPALEM 3 INTEREST OF THE REVENUE IN TERMS OF SECTION 263 OF THE ACT. THE CIT IN THE SAID SHOW CAUSE NOTICE, OBSERVED THAT THE A.O. HAS NOT VERIFIED THE ISSUES MENTIONED IN THE SHOW CAUSE NOTICE AT THE TI ME OF COMPLETION OF ASSESSMENT. THE CIT, FURTHER, OBSERVED THAT THE A. O. HAS COMPLETED ASSESSMENT WITHOUT EXAMINING THE ISSUES SUCH AS COR RECTNESS OF CONTRACT WORK EXPENSES CLAIMED BY THE ASSESSEE, DEP RECIATION CLAIMED ON MOBILE PHONES, DETAILS OF UNSECURED AND SECURED LOANS, SUB CONTRACT WORKS RECEIVED FROM GVPR ENGINEERS LIMITED, AND AMO UNT ADVANCED TO M/S. M.R. CONSTRUCTIONS. THE A.O. WITHOUT EXAMININ G ABOVE ISSUES, SIMPLY COMPLETED ASSESSMENT BY MAKING CERTAIN ADHOC DISALLOWANCES WHICH RENDERED THE ASSESSMENT ORDER ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREF ORE, ISSUED SHOW CAUSE NOTICE AND ASKED TO EXPLAIN WHY ASSESSMENT ORDER SH ALL NOT BE REVISED UNDER THE PROVISIONS OF SECTION 263 OF THE ACT. 4. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE S UBMITTED THAT THE ORDER PASSED BY THE A.O. U/S 143(3) OF THE ACT, DAT ED 9.1.2013 IS NOT ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF THE REVENUE, AS THE A.O. HAS EXAMINED ALL THE ISSUES POINTED OUT IN THE SHOW CAUSE NOTICE AT THE TIME OF COMPLETION OF ASSESSMENT. TH E ASSESSEE FURTHER SUBMITTED THAT IT HAS FURNISHED BOOKS OF ACCOUNTS A ND OTHER RELEVANT ITA NO.140/VIZAG/2015 SRI T. NAGA MOHAN REDDY, RAVULAPALEM 4 INFORMATION BEFORE THE A.O., THE A.O. HAS ISSUED SH OW CAUSE NOTICES ON VARIOUS OCCASIONS AND SPECIFICALLY ASKED DETAILS AB OUT THE EXPENDITURE DEBITED IN THE PROFIT & LOSS ACCOUNT, SUCH AS WORK CONTRACT EXPENSES, DETAILS OF DEPRECIATION CLAIMED ON FIXED ASSETS, SE CURED AND UNSECURED LOANS, SUB CONTRACT DETAILS AND LOANS AND ADVANCES GIVEN TO VARIOUS PARTIES. THE ASSESSEE FURTHER SUBMITTED THAT AS RE GARDS SUB CONTRACT WORK EXPENSES AND OTHER EXPENSES DEBITED IN THE PRO FIT & LOSS ACCOUNT, THE A.O. AFTER VERIFIED WITH THE BOOKS OF ACCOUNTS HAS CHOSEN TO DISALLOW AN ADHOC DISALLOWANCE OF ` 4 LAKHS IN THE ABSENCE OF PROPER BILLS AND VOUCHERS. AS REGARDS DEPRECIATION ON FIXED ASSETS, THE A.O., AT THE TIME OF ASSESSMENT HAS CALLED FOR SPECIFIC DETAILS OF BI LLS AND VOUCHERS OF ADDITIONS MADE TO FIXED ASSETS AND HAVING SATISFIED WITH THE DETAILS FILED BY THE ASSESSEE HAS ACCEPTED THE CLAIM. AS REGARDS UNSECURED LOANS AND SECURED LOANS, THE ASSESSEE HAS FILED LEDGER AC COUNT COPIES OF LOAN ACCOUNTS ALONG WITH BANK STATEMENTS, WHEREVER THE S ECURED LOANS ARE BORROWED FROM BANK. SIMILARLY, WITH REGARD TO ADVA NCE GIVEN TO M/S. M.R. CONSTRUCTIONS, THE ASSESSEE HAS GIVEN AN AMOUN T OF ` 5 LAKHS ON 26.3.2010, HOWEVER YOUR ALLEGATION THAT AN AMOUNT O F ` 45 LAKHS WAS WITHDRAWN IN THE NAME OF M/S. M.R. CONSTRUCTIONS TH ROUGH CHEQUE NO.46685 IS NOT CORRECT, AS THE SAID AMOUNT OF ` 45 LAKHS WAS SELF- WITHDRAWN BY THE ASSESSEE VIDE CHEQUE NO.46685. TH E A.O. AFTER ITA NO.140/VIZAG/2015 SRI T. NAGA MOHAN REDDY, RAVULAPALEM 5 CONSIDERING THE DETAILS FURNISHED BY THE ASSESSEE, ACCEPTED THE EXPLANATIONS AND COMPLETED THE ASSESSMENT, THEREFOR E, THE ASSESSMENT ORDER PASSED BY THE A.O. CANNOT BE HELD AS ERRONEOU S IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 5. THE CIT, AFTER CONSIDERING THE EXPLANATIONS OF T HE ASSESSEE HELD THAT THE ASSESSMENT ORDER PASSED BY THE A.O., U/S 1 43(3) OF THE ACT, DATED 9.1.2013 IS ERRONEOUS IN SO FAR AS IT IS PREJ UDICIAL TO THE INTEREST OF THE REVENUE, AS THE ASSESSING OFFICER HAS FAILED TO EXAMINE THE ISSUES POINTED OUT IN THE SHOW CAUSE NOTICE WITH REFERENCE TO BOOKS OF ACCOUNTS AND RELEVANT DETAILS. THE CIT, FURTHER, O BSERVED THAT THE A.O. HAS COMPLETED ASSESSMENT BY MAKING ADHOC DISALLOWAN CE OF EXPENDITURE OF ` 4 LAKHS WITHOUT EXAMINING THE SPECIFIC POINTS REFE RRED TO IN THE SHOW CAUSE NOTICE WITH REGARD TO WORK CONTRACT EXPE NSES, DEPRECIATION OF FIXED ASSETS, SECURED AND UNSECURED LOANS, LOANS AND ADVANCES, APPLICABILITY OF TDS PROVISIONS AND LOW NET PROFIT DECLARED BY THE ASSESSEE, WHICH SHOWS THAT THE A.O. HAS NEVER APPLI ED HIS MIND BEFORE COMPLETION OF THE ASSESSMENT WHICH CAUSED PREJUDICE TO THE INTEREST OF REVENUE. SINCE, THE A.O. DID NOT VERIFY THE ISSUE AND DID NOT EXAMINE THE ISSUES PROPERLY AT THE TIME OF COMPLETION OF AS SESSMENT, THE ASSESSMENT ORDER DATED 9.1.2013 NEEDS TO BE REVISED AS PREJUDICE WAS ITA NO.140/VIZAG/2015 SRI T. NAGA MOHAN REDDY, RAVULAPALEM 6 CAUSED TO THE INTEREST OF THE REVENUE BECAUSE OF TH E ERRORS COMMITTED BY THE A.O. WITH THESE OBSERVATIONS, SET ASIDE THE ASSESSMENT ORDER PASSED BY THE A.O. U/S 143(3) OF THE ACT AND DIRECT ED THE A.O. TO RE-DO THE ASSESSMENT ON THE LINES DISCUSSED IN HIS ORDER WITHIN THE TIME ALLOWED AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. THE LD. A.R. SUBMITTED THAT THE ASSESSMENT ORDER PASSED BY THE A.O. U/S 143(3) OF THE ACT, IS NOT ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, AS THE A.O. HAS EXA MINED ALL THE ISSUES POINTED OUT BY THE CIT, RIGHT FROM VERIFICATION OF EXPENDITURE TO LOANS AND ADVANCES, SECURED AND UNSECURED LOANS AND APPLI CABILITY OF THE PROVISIONS OF TDS ON VARIOUS EXPENDITURE. THE A.O. HAS CALLED FOR SPECIFIC DETAILS ABOUT ALL THE ISSUES, AT THE TIME OF COMPLETION OF ASSESSMENT BY A QUESTIONNAIRE AND THE ASSESSEE HAS REPLIED POINT BY POINT TO THE ISSUES RAISED BY THE A.O. THE A.O. AF TER SATISFIED WITH THE EXPLANATIONS OFFERED BY THE ASSESSEE, CHOSEN TO MAK E ADHOC DISALLOWANCE OF ` 4 LAKHS TO COVER UP THE DEFICIENCIES IN THE FORM O F PROPER BILLS AND VOUCHERS, EXCEPT THAT HAS ACCEPTED THE RETURN OF INCOME FILED BY THE ASSESSEE. THE A.R. FURTHER SUBMITTED THAT THE CIT HAS FAILED TO POINT OUT ANY SPECIFIC DEFECTS IN THE ASSESSMENT ORDER TO INVOKE THE JURISDICTION U/S 263 OF THE ACT. WITHOUT POINTING OUT ANY SPECIFIC ITA NO.140/VIZAG/2015 SRI T. NAGA MOHAN REDDY, RAVULAPALEM 7 DEFECTS, AS TO THE ASSESSMENT ORDER PASSED BY THE A .O. IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, SIMPLY DIRECTED THE A.O. FOR FURTHER VERIFICATION OF THE ISSUES WHI CH HAVE BEEN ALREADY EXAMINED BY THE A.O. AT THE TIME OF COMPLETION OF A SSESSMENT. THE A.R. FURTHER SUBMITTED THAT THE A.O. HAS ISSUED A Q UESTIONNAIRE ON 16.11.2012 CALLING FOR INFORMATION OF ISSUES WHICH WERE SUBJECT MATTER OF REVISION PROCEEDINGS BY THE CIT AND THE ASSESSEE VIDE HIS LETTER DATED 29.11.2012 HAS SUBMITTED ALL THE DETAILS WITH REGAR D TO THE EXPENDITURE DEBITED TO P&L ACCOUNT, LOANS AND ADVANCES, SECURED AND UNSECURED LOANS, SUB CONTRACT DETAILS, DETAILS OF TDS AND ALS O EXPLAINED THE NET PROFIT DECLARED FOR THE YEAR WITH NECESSARY EVIDENC ES. AS REGARDS THE ALLEGATION OF THE CIT THAT THE ASSESSEE HAS PURCHAS ED A DIFFERENT ASSET AND CLAIMED DEPRECIATION OF SOME OTHER ASSETS, THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS PURCHASED AN AIR COMPRESSOR F OR AN AMOUNT OF ` 6,40,000/-, HOWEVER BY OVERSIGHT MENTIONED AS CELL PHONE IN THE SCHEDULE OF DEPRECIATION. BUT, THE FACT IS THAT TH E ASSESSEE HAS PURCHASED AN AIR COMPRESSOR FOR WHICH A COPY OF BIL L ISSUED BY THE SUPPLIER HAS BEEN FURNISHED TO THE CIT, THE CIT HAS BRUSHED ASIDE THE EVIDENCES FILED BY THE ASSESSEE AND INVOKED THE JUR ISDICTION OF SECTION 263 OF THE ACT WHICH IS NOT CORRECT. ITA NO.140/VIZAG/2015 SRI T. NAGA MOHAN REDDY, RAVULAPALEM 8 7. THE A.R. REFERRING TO THE CONSEQUENTIAL ORDER PA SSED BY THE A.O. U/S 143(3) R.W.S. 263 OF THE ACT, SUBMITTED THAT TH E ASSESSING OFFICER HAS PASSED CONSEQUENTIAL ORDER WHEREIN HE HAD ACCEPTED THE EXPLANATIONS OFFERED BY THE ASSESSEE WITH REGARD TO THE ALLEGATI ONS MADE BY THE CIT IN THE PROCEEDINGS U/S 263 OF THE ACT, EXCEPT TO TH E EXTENT OF DISALLOWANCE OF A FURTHER SUM OF ` 10,27,780/- UNDER THE HEAD CONTRACT WORK EXPENSES BY INVOKING THE PROVISIONS OF SECTIO N 40A(3) OF THE ACT BY STATING THAT THE ASSESSEE HAS MADE CASH PAYMENTS BEYOND THE SPECIFIED LIMIT PROVIDED UNDER THE ACT. EXCEPT THI S, THE A.O. HAS ACCEPTED THE EXPLANATION WITH REGARD TO THE OTHER I SSUES POINTED OUT BY THE CIT, THEREFORE, THE REVISION ORDER PASSED BY TH E CIT IS INCORRECT. 8. ON THE OTHER HAND, THE LD. D.R. STRONGLY SUPPORT ED THE ORDER OF CIT. THE D.R. REFERRING TO THE CONSEQUENTIAL ORDER , SUBMITTED THAT WHEN THE ASSESSEE DOES NOT HAVE ANY GRIEVANCE WITH REGAR D TO THE ISSUES POINTED OUT BY THE CIT HAS ACCEPTED A FURTHER ADDIT ION OF ` 6,27,780/- TOWARDS EXPENDITURE ACCOUNT, CHALLENGED THE REVISIO N ORDER PASSED BY THE CIT. THE D.R. FURTHER SUBMITTED THAT WHEN THE ASSESSEE HIMSELF HAS AGREED FOR FURTHER ADDITION, THEN THERE IS A VALID REASON FOR THE CIT TO REVISE THE ASSESSMENT ORDER WHICH IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, THEREFORE, THE CIT ORDER S HOULD BE UPHELD. ITA NO.140/VIZAG/2015 SRI T. NAGA MOHAN REDDY, RAVULAPALEM 9 9. 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 JURISDICTION TO REVISE THE ASSESSMENT ORDER FOR THE REASON THAT THE A.O. HAS NOT CONDUCTED PROPER ENQUIRY BEFORE CO MPLETION OF ASSESSMENT, THEREBY THE ASSESSMENT ORDER PASSED BY THE A.O. IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF THE REVENUE. THE CIT REVISED THE ASSESSMENT ORDER FOR THE REASON THA T THE A.O. HAS COMPLETED THE ASSESSMENT WITHOUT EXAMINING THE ISSU ES POINTED OUT IN HIS SHOW CAUSE NOTICE WHICH CAUSED PREJUDICE TO THE INTEREST OF THE REVENUE. THE CIT HAS OBSERVED VARIOUS ISSUES IN TH E REVISION PROCEEDINGS. ACCORDING TO THE CIT, THE A.O. HAS FA ILED TO EXAMINE THE EXPENDITURE DEBITED TO P&L ACCOUNT. THE CIT, FURTH ER, OBSERVED THAT THE A.O. HAS NOT CALLED FOR ANY DETAILS WITH REGARD TO THE ACQUISITION OF FIXED ASSETS AND CLAIM OF DEPRECIATION, SECURED AND UNSECURED LOANS, LOANS AND ADVANCES, APPLICABILITY OF TDS PROVISIONS AND LOW NET PROFIT DECLARED BY THE ASSESSEE. THE A.O. NOT ONLY FAILED TO EXAMINE THE ISSUES, BUT ALSO FAILED TO APPLY HIS MIND ON VARIOU S ISSUES WHICH RENDERED THE ASSESSMENT ORDER ERRONEOUS IN SO FAR A S IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. ITA NO.140/VIZAG/2015 SRI T. NAGA MOHAN REDDY, RAVULAPALEM 10 10. IT IS THE CONTENTION OF THE ASSESSEE THAT THE A .O. HAS EXAMINED THE ISSUES POINTED OUT BY THE CIT IN THE SHOW CAUSE NOT ICE. THE ASSESSEE FURTHER CONTENDED THAT ALL THE ISSUES POINTED OUT B Y THE CIT, HAVE BEEN EXAMINED BY THE A.O. AT THE TIME OF ASSESSMENT BY A SPECIFIC QUESTIONNAIRE WHICH WAS DULY ANSWERED BY THE ASSESS EE WITH NECESSARY EVIDENCES. THE A.O. AFTER CONSIDERING THE EXPLANAT IONS FURNISHED BY THE ASSESSEE CHOSEN TO ACCEPT THE EXPLANATIONS AND COMP LETED THE ASSESSMENT BY MAKING ADHOC DISALLOWANCES OF ` 4 LAKHS FOR WANT OF PROPER BILLS AND VOUCHERS IN RESPECT OF CERTAIN EXP ENDITURE DEBITED TO THE P&L ACCOUNT. THE ASSESSEE FURTHER CONTENDED TH AT THE CIT ASSUMED JURISDICTION TO REVISE THE ASSESSMENT ORDER WITHOUT POINTING OUT ANY SPECIFIC DEFECTS IN THE ASSESSMENT ORDER PASSED BY THE A.O. THE CIT HAS NOT SPELT OUT AS TO HOW THE ORDER PASSED BY THE A.O. IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. WI THOUT MAKING ANY ALLEGATION AS TO THE ORDER OF THE A.O. TO SAY THAT IT IS ERRONEOUS AND ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE, THE CIT SIMPLY ASSUMED JURISDICTION FOR FURTHER VERIFICATION OF THE ISSUES WHICH HAVE ALREADY BEEN EXAMINED BY THE A.O., THEREFORE, THE REVISION ORDER PASSED BY THE CIT IS INCORRECT. ITA NO.140/VIZAG/2015 SRI T. NAGA MOHAN REDDY, RAVULAPALEM 11 11. THE CIT ASSUMED JURISDICTION TO REVISE THE ASSE SSMENT ORDER ON THE GROUND THAT THERE IS A LACK OF ENQUIRY ON THE P ART OF THE A.O. IN EXAMINING THE ISSUES REFERRED TO IN THE SHOW CAUSE NOTICE. THE CIT QUESTIONED THE ISSUES RIGHT FROM EXAMINATION OF EXP ENDITURE DEBITED TO PROFIT & LOSS ACCOUNT TO LOW NET PROFIT DECLARED BY THE ASSESSEE. THE ASSESSEE HAS FILED A PAPER BOOK WHICH CONTAINS THE DETAILS FILED BEFORE THE A.O. AT THE TIME OF ASSESSMENT. ON PERUSAL OF THE PAPER BOOK FILED BY THE ASSESSEE, WE FIND THAT THE ASSESSEE HAS LIST ED OUT THE ISSUES POINTED OUT BY THE CIT IN THE SHOW CAUSE NOTICE IN A TABULAR FORM. ON FURTHER VERIFICATION OF THE DETAILS FILED BY THE AS SESSEE, WE NOTICED THAT THE ASSESSEE HAS SUBMITTED ALL THE DETAILS WITH REG ARD TO EACH AND EVERY ISSUES RAISED BY THE CIT IN THE SHOW CAUSE NOTICE A ND EXPLAINED BEFORE THE A.O. THE A.O. AFTER SATISFIED WITH THE EXPLANA TIONS FURNISHED BY THE ASSESSEE COMPLETED THE ASSESSMENT BY MAKING ADHOC D ISALLOWANCE OF ` 4 LAKHS TOWARDS CERTAIN EXPENDITURE FOR WANT OF PRO PER BILLS AND VOUCHERS. WE FURTHER OBSERVED THAT THE A.O. HAS PA SSED CONSEQUENTIAL ORDER U/S 143(3) R.W.S. 263 OF THE ACT, WHEREIN HE HAD ACCEPTED THE EXPLANATION OFFERED BY THE ASSESSEE WITH REGARD TO ALL THE ISSUES POINTED OUT BY THE CIT IN THE REVISION PROCEEDINGS, EXCEPT FURTHER DISALLOWANCE OF ` 6,27,780/- IN RESPECT OF CERTAIN CASH EXPENDITURE INCURRED UNDER THE HEAD WORK CONTRACT EXPENSES FOR WHICH THE ASSESSE ES A.R. HAS ITA NO.140/VIZAG/2015 SRI T. NAGA MOHAN REDDY, RAVULAPALEM 12 AGREED. EXCEPT THIS, THE A.O. HAS ACCEPTED ALL THE ISSUES POINTED OUT BY THE CIT, THEREFORE, WE ARE OF THE VIEW THAT THE CIT IS INCORRECT IN HOLDING THAT THE A.O. HAS NOT CONDUCTED PROPER ENQUIRY OF T HE ISSUES BEFORE COMPLETION OF ASSESSMENT. IN OUR CONSIDERED VIEW, THE ISSUES POINTED OUT BY THE CIT HAVE BEEN THOROUGHLY EXAMINED BY THE A.O., THEREFORE, THERE IS NO REASON FOR THE CIT TO REVISE THE ASSESS MENT ORDER. 12. THE CIT HAS POWER TO REVISE THE ASSESSMENT ORDE R U/S 263 OF THE ACT, BUT TO INVOKE THE PROVISIONS OF SECTION 263 OF THE ACT, THE TWIN CONDITIONS MUST BE SATISFIED I.E. (I) THE ORDER OF THE A.O. IS ERRONEOUS (II) FURTHER IT MUST BE PREJUDICIAL TO THE INTEREST OF T HE REVENUE. UNLESS BOTH THE CONDITIONS ARE SATISFIED, THE CIT CANNOT ASSUME JURISDICTION U/S 263 OF THE ACT. IT IS NOT NECESSARY THAT EVERY ORDER W HICH IS ERRONEOUS MAY BE PREJUDICIAL TO THE INTEREST OF THE REVENUE OR VI CE VERSA. IN SOME CASES, THE ORDER PASSED BY THE A.O. MAY BE ERRONEOU S, BUT IT MAY NOT BE PREJUDICIAL TO THE INTEREST OF THE REVENUE OR VI CE VERSA. UNLESS THE ORDER PASSED BY THE A.O. IS ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF THE REVENUE, THE CIT CANNOT ASSUME JURISDICTION TO REVISE THE ASSESSMENT ORDER, THIS IS BECAUSE THE TWIN CONDITIO NS I.E. THE ORDER IS ERRONEOUS AND THE SAME IS PREJUDICIAL TO THE INTERE ST OF THE REVENUE ARE CO-EXIST. ITA NO.140/VIZAG/2015 SRI T. NAGA MOHAN REDDY, RAVULAPALEM 13 13. IN THE PRESENT CASE ON HAND, ON PERUSAL OF THE FACTS AVAILABLE ON RECORD, WE FIND THAT THE A.O. HAS CONDUCTED DETAILE D ENQUIRY AND ALSO EXAMINED ALL THE ISSUES POINTED OUT BY THE CIT IN H IS SHOW CAUSE NOTICE. THE ASSESSEE HAS EXPLAINED EACH AND EVERY ITEM WITH NECESSARY EVIDENCES, THEREFORE, WE ARE OF THE VIEW THAT THE C IT WAS INCORRECT IN ASSUMING JURISDICTION TO REVISE THE ASSESSMENT ORDE R, ONCE ASSESSEE EXPLAINED THAT IT HAD FILED ALL THE DETAILS BEFORE THE A.O. ON THE ISSUES ON WHICH CIT WANTS FURTHER VERIFICATION. IT IS A GENE RAL PRESUMPTION OF LAW THAT THE A.O. HAS CONSIDERED ALL THE DETAILS BEFORE COMPLETION OF ASSESSMENT AND THE CIT CANNOT PRESUME THAT THE ENQU IRIES CONDUCTED BY THE A.O. IS INSUFFICIENT AND ALSO THE A.O. HAS N OT APPLIED HIS MIND, UNLESS CIT CATEGORICALLY PROVES THAT THE ASSESSMENT ORDER PASSED BY THE A.O. IS ERRONEOUS. THOUGH, THE A.O. MADE FURTHER D ISALLOWANCE OF ` 6,27,780/- IN THE CONSEQUENTIAL PROCEEDINGS TOWARDS CASH EXPENDITURE UNDER THE HEAD CONTRACT WORK EXPENSES WHICH EARNS MORE REVENUE TO THE DEPARTMENT WHICH IS ONLY DISALLOWED ON ESTIMATI ON BASIS FOR WANT OF FURTHER BILLS AND VOUCHERS. TO THIS EXTENT, THE OR DER PASSED BY THE A.O. MAY BE PREJUDICIAL TO THE INTEREST OF THE REVENUE, BUT IT IS NOT ERRONEOUS, BECAUSE THE A.O. HAS EXAMINED THE ABOVE ISSUES AT T HE TIME OF COMPLETION OF ASSESSMENT U/S 143(3) OF THE ACT, WHI CH IS EVIDENT FROM THE ASSESSMENT ORDER, WHEREIN THE A.O. HAS SPECIFIC ALLY DISCUSSED ABOUT ITA NO.140/VIZAG/2015 SRI T. NAGA MOHAN REDDY, RAVULAPALEM 14 THE WORK CONTRACT EXPENDITURE. UNDER THE PROVISION S OF SECTION 263 OF THE ACT, THE CIT CAN ASSUME JURISDICTION ONCE THE A SSESSMENT ORDER PASSED BY THE A.O. IS ERRONEOUS AND ALSO IT IS PREJ UDICIAL TO THE INTEREST OF THE REVENUE. IN THE PRESENT CASE ON HAND, THOUG H THE ORDER PASSED BY THE A.O. IS PREJUDICIAL TO THE INTEREST OF THE R EVENUE BUT IT IS NOT ERRONEOUS, THEREFORE, THE CIT CANNOT ASSUME JURISDI CTION TO REVISE THE ASSESSMENT ORDER PASSED BY THE A.O. U/S 143(3) OF T HE ACT. 14. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS CASE, WE ARE OF THE VIEW THAT THE ASSESSMENT ORDER PASSED BY THE A.O. U /S 143(3) OF THE ACT DATED 9.1.2013 IS NOT ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, WE QUASH THE O RDER PASSED BY THE CIT U/S 263 OF THE ACT AND RESTORE THE ORDER PASSED BY THE A.O. U/S 143(3) OF THE ACT. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 7 TH OCT16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 7.10.2016 VG/SPS ITA NO.140/VIZAG/2015 SRI T. NAGA MOHAN REDDY, RAVULAPALEM 15 )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SRI T. NAGA MOHAN REDDY, D.NO.8- 979, NEAR ADILAKSHMI TEMPLE, RAVULAPALEM, E.G. DIST. 2. / THE RESPONDENT THE ACIT, CIRCLE-2(1), RAJAHMUN DRY 3. + / THE CIT, RAJAHMUNDRY 4. + ( ) / THE CIT (A), RAJAHMUNDRY 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM