A. Menarini India Pvt. Ltd. ( Formerly known as M/s. Invida India Pvt. Ltd. ), Ahmedabad V. The Pr. CIT-1, Ahmedabad

ITA 1461/AHD/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0631 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 22-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N B SHAH
• Section: 143(3); 142(1); 56; 263; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ I.T.A. NO.1461/AHD/2015 ( / ASSESSMENT YEAR : 2010-11) A.MENARINI INDIA PVT.LTD. ( FORMERLY KNOWN AS M/S.INVIDA INDIA PVT.LTD. ) B-801, SAFAL PEGASUS PRAHALAD NAGAR ROAD ANANDNAGAR ROAD AHMEDABAD-380 015 / VS. THE PRINCIPAL COMMISSIONER OF INCOME TAX-1 AHMEDABAD $ ./ ./ PAN/GIR NO. : AAACI 9822 K ( $& / APPELLANT ) .. ( '($& / RESPONDENT ) $&) / APPELLANT BY : SHRI N.B. SHAH, AR '($&*) / RESPONDENT BY : SHRI JAMES KURIAN, SR.DR +* / DATE OF HEARING 29/07/2016 ,-./* / DATE OF PRONOUNCEMENT 31/08/2016 / O R D E R PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME TAX-1, AHMEDABAD D ATED 31/03/2015 FOR THE ASSESSMENT YEAR (AY) 2010-11 PASSED U/S.263 OF THE ACT. ITA NO.1461/AHD /2015 A. MENARINI INDIA PVT.LTD. VS. THE PR.CIT ASST.YEAR 2010-11 - 2 - 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- 2.1. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUSINESS OF TRADING IN PHARMACEUTICAL PRODUCTS ON WHOLESALE BAS IS. ASSESSEE FILED ITS RETURN OF INCOME FOR AY 2010-11 ON 30/09/2010 DECLA RING TOTAL INCOME OF RS.7,66,12,650/-. THE CASE WAS FINALIZED U/S.1 43(3) VIDE ORDER DATED 28/03/2013 AND THE TOTAL INCOME WAS DETERMINED AT R S.10,68,65,351/-. THEREAFTER, ON EXAMINATION OF THE ASSESSMENT RECOR DS, LD.CIT NOTICED THAT AS PER COMPUTATION OF INCOME ASSESSEE HAD CLAI MED TDS OF RS.3,16,99,286/- AS AGAINST THE PROFESSIONAL INCOME OF RS.29,19,49,163/- SHOWN BY THE ASSESSEE IN THE PROFIT & LOSS A/C. (P& L A/C.). AS PER LD.CIT, ON THE BASIS OF TDS CERTIFICATES, THE GROSS INCOME SHOULD HAVE BEEN RS.31,69,92,860/- AND THUS ACCORDING TO LD.CIT ASSESSEE HAD SHOWN LESS INCOME TO THE EXTENT OF RS.2,50,43,697/- (RS.3 1,69,92,860 - RS.29,19,49,163). HE ACCORDINGLY ISSUED NOTICE TO THE ASSESSEE ASKING TO SHOW-CAUSE AS TO WHY APPROPRIATE ORDER U/S.263 OF T HE ACT BE NOT PASSED. IN RESPONSE TO NOTICE, ASSESSEE INTER-ALIA SUBMITTE D THAT THE INFERENCE DRAWN BY LD.CIT OF SHOWING LESS INCOME TO THE EXTEN T OF RS.2.5 CRORES (ROUNDED OFF) IS FACTUALLY INCORRECT BECAUSE THE T DS WAS DEDUCTED ON THE AMOUNT OF BILL INCLUDING SERVICE TAX. SINCE SERVIC E TAX WAS NOT THE INCOME OF THE ASSESSEE, ASSESSEE WAS NOT CREDITING OR DEBITING SERVICE TAX TO ITS P&L A/C. ASSESSEE ALSO INTER-ALIA OBJECTED TO THE INITIATION OF ITA NO.1461/AHD /2015 A. MENARINI INDIA PVT.LTD. VS. THE PR.CIT ASST.YEAR 2010-11 - 3 - PROCEEDINGS U/S.263 OF THE ACT. THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO LD.CIT. HE HELD THAT ASSESSEE HAD NOT DISCLOSED THE INCOME CORRESPONDING TO THE AMOUNT OF TDS CLAIM OF RS.3,32,94,191/-. HE ALSO HELD THAT AO WHILE COMPUTING THE ASSESSMENT HAD NOT CHARGED INTEREST U/S.220(2) TO THE TUNE OF RS.6,59,919/- AN D THEREFORE THE ORDER OF AO WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE ACCORDINGLY CANCELLED THE ORDER PASSED U/S.143(3) OF THE ACT BY THE AO DATED 28/03/2013 AND DIRECTED THE AO TO MAKE FRESH ASSESS MENT OF THE TOTAL INCOME. AGGRIEVED BY THE ORDER OF LD.CIT, ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED FOLLOWING GROUNDS:- 1. A) THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX-1, AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE IN ASSUMING JURISDICTION U /S. 263 OF THE INCOME TAX ACT AND P ASSING THE ORDER UNDER THAT SECTION WHEREBY BY HE HAS CANCELLED THE ASSESSMENT ORDER U/S. 143(3) DATED 28/03/2013 PASSED BY THE DEPUTY C OMMISSIONER OF INCOME TAX, CIRCLE 4, AHMEDABAD BY CAPRICIOUSLY HOL DING THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF THE REVENUE. B) THE LEARNED PRINCIPAL COMMISSIONER OF INC OME TAX-1, AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CAS E IN PASSING THE IMPUGNED ORDER ON THE PREMISES OF ASSUMPTION, PRESU MPTION, SURMISES AND CONJECTURES THAT SINCE THE APPELLANT ASS ESSEE HAS CLAIMED CREDIT FOR TDS AMOUNTING TO RS.3,16,99,286/- THE CORRESPONDING INCOME RELATING TO SUCH TDS SHOULD BE RS.31,69,92,8 60/- AGAINST WHICH THE APPELLANT HAS DISCLOSED RECEIPTS OF RS.29,19,49 ,163/- AND THUS THE APPELLANT ASSESSEE HAS UNDERSTATED ITS INCOME TO TH E EXTENT OF RS.2,50,43,697/-. ITA NO.1461/AHD /2015 A. MENARINI INDIA PVT.LTD. VS. THE PR.CIT ASST.YEAR 2010-11 - 4 - THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX-1, AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE IN PASSING TH E IMPUGNED ORDER WITHOUT APPRECIATING THE FACT THAT WHILE MAKING THE PAYMENTS TO THE APPELLANT ASSESSEE TOWARDS THE PROFESSIONAL FEES, T HE DEDUCTOR COMPANY HAS ALSO MADE TDS FROM THE SERVICE TAX CHARGED BY T HE APPELLANT ON THE INVOICES OF THE DEDUCTOR COMPANY AND THAT THE SERVI CE TAX SO COLLECTED BY THE APPELLANT IS NOT REVENUE RECEIPT OR INCOME C HARGEABLE TO TAX IN THE HANDS OF THE APPELLANT COMPANY AND THEREFORE T HE SAME IS NOT INCLUDIBLE IN THE INCOME OF THE APPELLANT COMPANY. THUS, IN REALITY, THERE IS NO UNDERSTATEMENT OF INCOME OF RS.2,50,43, 697/- AS ALLEGED IN THE IMPUGNED ORDER. THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX-1, AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE IN PASSING TH E IMPUGNED ORDER IN UTTER DISREGARD TO THE FACT THAT THE SERVICE TAX TO TALING TO RS.3,00,70,763/- FROM WHICH THE PAYER HAS DEDUCTED TAX AT SOURCE IS NOT INCLUDIBLE IN THE TOTAL INCOME OF THE APPELLANT COM PANY AND THAT THE APPELLANT COMPANY HAS NOT INCLUDED THE SAME IN THE RECEIPTS AND ALSO THAT THE APPELLANT HAS NOT SEPARATELY CLAIMED DEDUC TION FOR THE SERVICE TAX BY SEPARATELY DEBITING IT TO THE PROFIT & LOSS ACCOUNT. THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX-1, AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE IN PASSING TH E IMPUGNED ORDER WITHOUT APPRECIATING THE FACT THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y. 2010-11, THE AO HAS MADE DETAI LED ENQUIRIES AND THE ISSUE WITH RESPECT TO THE INCOME FROM ALL OPERA TIONS WERE CALLED FOR BY THE AO ALONG WITH NECESSARY EVIDENCE. THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX-1, AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE IN PASSING TH E IMPUGNED ORDER IGNORING THE FACT THAT AS PER SR. NO. 37 OF THE QUE STIONNAIRE, THE AO HAS ASKED THE APPELLANT 'TO FURNISH THE DETAILS IN RESP ECT OF INCOME FROM ALL OPERATIONS ALONG WITH NECESSARY EVIDENCE' AND INCOM PLIANCE THEREFORE THE APPELLANT HAD VIDE WRITTEN SUBMISSION DATED 27/ 11/2012 FURNISHED THE REQUISITE INFORMATION. THUS, THE ISSUE WITH RES PECT TO THE PROFESSIONAL RECEIPTS FROM WHICH TDS OF RS.3,16,99, 286/- WAS MADE HAS ITA NO.1461/AHD /2015 A. MENARINI INDIA PVT.LTD. VS. THE PR.CIT ASST.YEAR 2010-11 - 5 - ALSO BEEN DULY CONSIDERED AND VERIFIED BY THE ASSES SING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS THEREFORE PRAYED THAT THE IMPUGNED ORDER MAY PLEASE BE CANCELLED. 2. A) THE LEARNED PRINCIPAL COMMISSIONER O F INCOME TAX-1, AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE IN PASSING THE IMPUGNED ORDER ON THE GROUND THAT WHILE COMPLETING THE ASSESSMENT, THE AO HAS NOT CHARGED INTEREST U/S. 220(2) OF THE I.T. ACT TO THE TUNE OF RS.6,59,919/-. B) THE LEARNED PRINCIPAL COMMISSIONER OF INC OME TAX-1, AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE IN PASSING THE IMPUGNED ORDER IN 1 UTTER DISREGARD TO THE FACT THAT INTEREST U/S. 220 (2) IS CHARGEABLE ONLY IF AND WHEN THE DEMAND SPECIFIED IN THE NOTICE U/S. 156 IS NOT PAID WITHIN THE SPECIFIED TIME OF 30 DAY S. THE PR. CIT FAILED TO APPRECIATE THAT THE ISSUE OF CHARGING INTEREST U /S. 220(2) DOES NOT ARISE AT THE STAGE OF PASSING THE ASSESSMENT ORDER U/S. 143(3) BUT ARISES ONLY WHEN THE ASSESSEE FAILS TO PAY THE DEMAND RAIS ED AS PER THE ASSESSMENT ORDER WITHIN THE STIPULATED TIME. THERE IS NO PROVISION IN THE INCOME TAX ACT FOR CHARGING INTEREST U/S. 220(2) BE FORE THE DEMAND HAS FALLEN DUE FOR PAYMENT. THEREFORE, THERE IS NO ERRO R IN THE ASSESSMENT ORDER U/S. 143(3) DATED 28/03/2013 IN SO FAR AS THE ISSUE OF CHARGING THE INTEREST U/S. 220(2) IS CONCERNED. C) THE LEARNED PRINCIPAL COMMISSIONER OF INC OME TAX-1, AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE IN PASSING THE IMPUGNED ORDER FOR NOT CHARGING THE INTEREST U/S. 2 20(2) IN THE ASSESSMENT ORDER ITSELF IN UTTER DISREGARD TO THE F ACT THAT AS A RESULT OF THE APPELLATE ORDER PASSED BY THE CIT(A) DATED 20/0 2/2015, THE ENTIRE DEMAND RAISED AS PER THE ASSESSMENT ORDER HAS BEEN REDUCED TO NIL. IT IS THEREFORE PRAYED THAT THE IMPUGNED ORDER MAY PLEASE BE CANCELLED. 3. A) THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX-1, AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE IN PASSING THE IMPUGNED ORDER HOLDING THAT THE ASSESSMENT ORDER WA S MADE WITHOUT ITA NO.1461/AHD /2015 A. MENARINI INDIA PVT.LTD. VS. THE PR.CIT ASST.YEAR 2010-11 - 6 - APPRECIATING THE PROVISIONS OF LAW CORRECTLY AND TH E INCOME OF THE ASSESSEE WAS ASSESSED AFTER ALLOWING IN ADMISSIBLE DEDUCTIONS WITHOUT PINPOINTING IN THE IMPUGNED ORDER ANY ITEM OF DEDUC TION THAT IS INADMISSIBLE BUT HAS BEEN ALLOWED BY THE AO. IN POI NT OF FACT, AGAINST THE RETURNED INCOME OF RS.7,66,12,650/-, THE ASSESS ING OFFICER HAS MADE ASSESSMENT ON TOTAL INCOME OF RS.10,68,65,351/- AFT ER MAKING ADDITION/DISALLOWANCE OF RS.3,02,52,701/-. B) THE LEARNED PRINCIPAL COMMISSIONER OF INC OME TAX-1, AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE IN PASSING THE IMPUGNED ORDER WITHOUT APPRECIATING THE FACT THAT T HE ASSESSING OFFICER HAD MADE PROPER ENQUIRIES BEFORE PASSING THE ASSES SMENT ORDER U/S. 143(3) DATED 28/03/2013, NOTICE U/S. 143(2) WAS ISS UED ON 24/08/2011 AND DETAILED QUESTIONNAIRE AND NOTICE U/S. 142(1) W ERE ISSUED AND THE ASSESSING OFFICER HAD MADE ENQUIRIES IN ACCORDANCE WITH THE PROVISIONS OF THE INCOME TAX ACT. THE CLAIM OF CREDIT FOR TAX DEDUCTED AT SOURCE AND THE CORRESPONDING INCOME RELATING TO SUCH TDS W AS ALSO EXAMINED BY THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS THEREFORE PRAYED THAT THE IMPUGNED ORDER MAY PLEASE BE CANCELLED. 4. THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX-1, AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE IN PASSIN G THE IMPUGNED ORDER IN UTTER DISREGARD TO THE FACT THAT THE ISSUE WITH RESPECT TO QUANTIFICATION OF TOTAL INCOME FOR A.Y. 2010-11 WAS A SUBJECT MATT ER OF APPEAL BEFORE THE CIT (APPEALS), WHO HAS PASSED APPELLATE ORDER D ATED 25/02/2015. THUS, THE ISSUE RELATING TO QUANTIFICATION OF THE T OTAL INCOME OF THE APPELLANT ASSESSEE FOR A.Y. 2010-11 HAS ALREADY MER GED WITH THE APPELLATE ORDER PASSED BY THE CIT(A) AND THEREFORE THE PR. COMMISSIONER OF INCOME TAX IS NOT JUSTIFIED IN EXER CISING REVISIONARY POWER U/S. 263 IN RESPECT OF AN ASSESSMENT ORDER WH ICH HAS ALREADY MERGED WITH AN APPELLATE ORDER PASSED BY THE CIT(AP PEALS) WHICH INCLUDED THE ISSUE RELATING TO DETERMINATION OF THE TOTAL INCOME. 3. AT THE TIME OF HEARING IT WAS POINTED TO LD.AR T HAT THE GROUNDS RAISED BY THE ASSESSEE ARE NOT IN CONSONANCE WITH R ULE 8 OF THE INCOME ITA NO.1461/AHD /2015 A. MENARINI INDIA PVT.LTD. VS. THE PR.CIT ASST.YEAR 2010-11 - 7 - TAX (APPELLATE TRIBUNAL) RULES 1963 AS THEY ARE DES CRIPTIVE AND ARGUMENTATIVE IN NATURE TO WHICH LD.AR SUBMITTED TH AT THOUGH THE ASSESSEE HAS RAISED VARIOUS GROUNDS, THE SOLE CONTR OVERSY WHICH IS TO BE DECIDED IS ABOUT THE INVOCATION OF THE REVISIONARY POWERS VESTED U/S.263 OF THE ACT. CONSIDERING THE SUBMISSION OF LD.AR, W E PROCEED TO DISPOSE OF THE APPEAL. 3.1. BEFORE US, LD.AR SUBMITTED THAT IN THE PRESENT CASE THE PREREQUISITE CONDITIONS SPECIFIED U/S.263 OF THE ACT WERE NOT SA TISFIED AND THEREFORE THE PROCEEDINGS U/S.263 LACKS JURISDICTION AND ARE BAD IN LAW. HE FURTHER SUBMITTED THAT THE INITIATION OF REVISIONARY PROCEE DINGS HAS BEEN INITIATED AT THE INSTANCE OF AUDIT PARTY OBJECTIONS. HE FURT HER SUBMITTED THAT THE ASSESSMENT ORDER HAS BEEN PASSED AFTER PROPER VERIF ICATION OF THE FACTS AND THE EVIDENCES PRODUCED BY THE AO AND THERE IS N O LOSS OF REVENUE TO THE EXCHEQUER AS ALLEGED BY LD.CIT IN THE ORDER PAS SED U/S.263 OF THE ACT. HE FURTHER SUBMITTED THAT BEFORE PASSING THE ORDER U/S.143(3), THE AO HAD ISSUED DETAILED NOTICE AND QUESTIONNAIRE AND CALLED FOR THE DETAILS AND THE ASSESSEE HAD ALSO REPLIED TO THE QUERIES RAISED IN QUESTIONNAIRE AND AFTER VERIFYING THE CONTENTION OF THE ASSESSEE, THE INCOM E WAS ACCEPTED BY THE AO. ON THE MERITS, LD.AR REITERATED THE SUBMISSIONS MADE BEFORE THE LD.CIT AND FURTHER SUBMITTED THAT WITH RESPECT TO T HE SERVICE INCOME, THE ASSESSEE WAS CHARGING SERVICE TAX @10.3% ON THE BI LLS RAISED BY IT. THE ASSESSEE WAS ALSO RAISING DEBIT NOTES FOR REIMBURSE MENT OF EXPENSES. THE ITA NO.1461/AHD /2015 A. MENARINI INDIA PVT.LTD. VS. THE PR.CIT ASST.YEAR 2010-11 - 8 - RECIPIENT OF THE SERVICES WERE DEDUCTING TDS ON THE GROSS AMOUNT WHICH INCLUDED SERVICE TAX AND WERE ALSO DEDUCTING TDS ON THE REIMBURSEMENT OF EXPENSES. HE SUBMITTED THAT ASSESSEE WAS FOLLOW ING MERCANTILE SYSTEM OF ACCOUNTING WHEREIN ON THE BASIS OF INVOIC ES RAISED, THE INCOME WAS BOOKED AT THE TIME OF RAISING OF INVOICE ITSELF AND THE PAYMENTS WAS RECEIVED LATER ON AND IN SUCH SITUATION THE QUESTIO N OF NOT RECOGNIZING THE REVENUE DID NOT ARISE. HE FURTHER SUBMITTED THAT T HE SERVICE TAX COLLECTED BY THE ASSESSEE DOES NOT CONSTITUTE INCOME CHARGEAB LE TO TAX AND THEREFORE THE AMOUNT OF SERVICE TAX WAS RIGHTLY EXC LUDED BY THE ASSESSEE IN ITS PROFIT & LOSS A/C. WHILE CREDITING THE PROFE SSIONAL SERVICE INCOME. HE SUBMITTED THAT THE ASSESSEE WAS CONSISTENTLY FOL LOWING THE SAME ACCOUNTING METHOD EVEN IN EARLIER YEARS AND NO ADDI TION WAS MADE TO THE PROFESSIONAL INCOME IN EARLIER YEARS. WITH RESPEC T TO CHARGING OF INTEREST U/S.220(2) OF THE ACT HE SUBMITTED THAT SECTION 220 (2) COMES INTO PLAY ONLY IN A CASE WHERE THERE IS FAILURE ON THE PART O F THE ASSESSEE TO PAY THE AMOUNT SPECIFIED AS TAX PAYABLE IN A NOTICE OF DEMA ND ISSUED U/S.156 OF THE ACT. IN THE PRESENT CASE FOR AY 2010-11, AT TH E TIME OF PASSING THE ASSESSMENT ORDER U/S.143(3) OF THE ACT THERE WAS NO TAX PAYABLE BY THE ASSESSEE PURSUANT TO NOTICE OF DEMAND ISSUED U/S.1 56 OF THE ACT OR AN INTIMATION ISSUED U/S.143(1) FOR THAT YEAR AND THER EFORE THE QUESTION OF CHARGING OF ANY INTEREST U/S.220(2) AT THE TIME OF PASSING OF ORDER U/S.143(3) DOES NOT ARISE. HE THEREFORE, SUBMITTED THAT THE ORDER PASSED BY THE LD.CIT NEEDS TO BE SET ASIDE BOTH ON THE GRO UND OF JURISDICTION AND ITA NO.1461/AHD /2015 A. MENARINI INDIA PVT.LTD. VS. THE PR.CIT ASST.YEAR 2010-11 - 9 - EVEN ON MERITS. LD.SR.DR, ON THE OTHER HAND SUPP ORTED THE ORDER OF AO AND LD.CIT. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS ABOUT THE INVOKING OF PROVISIONS OF SECTION 263 BY LD. CIT. 4.1. SECTION 263(1) OF THE ACT, THE POWERS UNDER W HICH LD. CIT HAS ASSUMED POWER FOR REVISION READS AS UNDER: THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECO RD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ITO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING H EARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSA RY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, I NCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSE SSMENT AND DIRECTING A FRESH ASSESSMENT. 4.2. THE READING OF THE ABOVE PROVISIONS MAKES IT VERY CLEAR THAT THE POWER OF SUO MOTU REVISION U/S 263(1) IS IN THE NAT URE OF SUPERVISORY JURISDICTION AND THE SAME CAN BE EXERCISED ONLY IF THE CIRCUMSTANCES SPECIFIED THEREIN EXIST. TWO CIRCUMSTANCES MUST EXI ST TO ENABLE THE COMMISSIONER TO EXERCISE POWER OF REVISION U/S 263, NAMELY (I) THE ORDER IS ERRONEOUS (II) BY VIRTUE OF BEING ERRONEOUS PREJ UDICE HAS BEEN CAUSED TO THE INTERESTS OF THE REVENUE. 4.3. IN THE PRESENT CASE, IT IS SEEN THAT SECTIO N 263 HAS BEEN INVOKED BY LD.CIT ON TWO GROUNDS NAMELY ASSESSEE HAD NOT OFFER ED THE INCOME ITA NO.1461/AHD /2015 A. MENARINI INDIA PVT.LTD. VS. THE PR.CIT ASST.YEAR 2010-11 - 10 - CORRESPONDING TO THE CLAIM OF TDS MADE BY ASSESSEE AND AO HAD NOT CHARGED INTEREST U/S.220(2) OF THE ACT. 4.4. IN THE PRESENT CASE, WE FIND THAT DURING THE C OURSE OF ASSESSMENT PROCEEDINGS AO HAD RAISED A SPECIFIC QUERY WHEREIN THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF INCOME FROM ALL OPE RATIONS ALONGWITH THE NECESSARY EVIDENCES. THE QUERY WAS REPLIED BY THE ASSESSEE . IT IS SEEN THAT ON RECEIPT OF REPLY FROM ASSESSEE, NO ADJUSTME NT TO THE SALES WAS MADE BY AO MEANING THEREBY THAT THE AO WAS SATISFIE D WITH THE REPLY OF ASSESSEE. THUS, IT CAN BE SEEN THAT THE ISSUE OF N OT OFFERING THE SALES INCOME TO TAX ON WHICH LD. CIT HAS RESORTED TO REV ISIONARY PROCEEDINGS U/S. 263 OF THE ACT, HAD BEEN EXAMINED BY THE AO. 4.5. AS FAR AS THE 2 ND ISSUE NAMELY CHARGING OF INTEREST U/S.220(2) IS CONCERNED, THERE IS NOTHING ON RECORD TO DEMONSTRAT E THAT AT THE TIME OF PASSING OF ORDER U/S.143(3) OF THE ACT, THERE WAS A NY TAX THAT WAS PAYABLE BY THE ASSESSEE PURSUANT TO THE NOTICE U/S.156 OF T HE ACT AND THAT THERE WAS FAILURE ON THE PART OF ASSESSEE TO PAY THE TAX. 4.6. ON THE ISSUE OF WHAT ORDERS CAN BE TERMED AS E RRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, WE WOULD LI KE TO REFER TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. GABRIAL INDIA LTD (1993) 203 ITR 108 (BOM) WHERE THE HONBL E BOMBAY HIGH COURT HAS HELD AS UNDER:- AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT I S NOT IN ACCORDANCE WITH LAW. IF AN ITO ACTING IN ACCORDANCE WITH LAW MAKES CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSI ONER SIMPLY BECAUSE ACCORDING TO HIM THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS ITA NO.1461/AHD /2015 A. MENARINI INDIA PVT.LTD. VS. THE PR.CIT ASST.YEAR 2010-11 - 11 - SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION O F JUDGMENT OF THE COMMISSIONER FOR THAT OF THE ITO, WHO PASSED THE OR DER, UNLESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALISED WHERE ITO WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATES HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE L OWER SIDE AND, LEFT TO THE COMMISSIONER, HE WOULD HAVE ESTIMATED THE INCOME AT A HIGHER FIGURE THAN THE ONE DETERMINED BY THE ITO. THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO RE-EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE. IT IS BECAUSE THE ITO HAS EXERCISED THE QUASI-JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCL USION. IT MAY BE SAID IN SUCH A CASE THAT IN THE OPINION OF THE COMMISSIONER THE ORDER IN QUESTION IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. BUT THA T BY ITSELF WILL NOT BE ENOUGH TO VEST THE COMMISSIONER WITH THE POWER OF SUO MOTU REVISION BECAUSE THE FIRST REQUIREMENT, NAMELY, THE ORDER IS ERRONEOUS, IS ABSENT. SIMILARLY IF AN ORDER IS ERRONEOUS BUT NOT PREJUDICIAL TO THE INTER EST OF THE REVENUE, THEN ALSO THE POWER OF SUO MOTU REVISION CANNOT BE EXERCISED. ANY AND EVERY ERRONEOUS ORDER CANNOT BE SUBJECT-MATTER OF REVISION BECAUSE THE SECOND REQUIREMENT ALSO MUST BE FULFILLED. 4.7. WE ALSO FIND THAT HONBLE APEX COURT IN THE CASE OF CIT VS. MAX INDIA LTD. 295 ITR 282 (SC) HAD HELD THAT WHERE TWO VIEWS ARE POSSIBLE AND ITO HAS TAKEN ONE VIEW WHICH LD. CIT DOES NOT A GREE THE ORDER OF A.O CANNOT BE TREATED AS ERRONEOUS ORDER PREJUDICIA L TO THE INTEREST OF REVENUE UNLESS THE VIEW TAKEN BY THE A.O IS UNSUSTA INABLE IN LAW. 4.8 BEFORE US, REVENUE HAS NOT BROUGHT ANY MATERIA L ON RECORD TO DEMONSTRATE THAT THE VIEW TAKEN BY THE A.O WAS AN I MPERMISSIBLE VIEW, OR WAS CONTRARY TO LAW OR WAS UPON WRONG APPLICATIO N OF LEGAL PRINCIPLES WHICH REQUIRED INITIATING THE EXERCISING OF REVISI ONARY POWERS U/S. 263 OF ITA NO.1461/AHD /2015 A. MENARINI INDIA PVT.LTD. VS. THE PR.CIT ASST.YEAR 2010-11 - 12 - THE ACT. IN VIEW OF THE AFORESAID FACTS AND IN THE LIGHT OF THE DECISIONS CITED HEREINABOVE, WE ARE OF THE VIEW THAT IN THE P RESENT CASE LD. CIT WAS NOT JUSTIFIED IN RESORTING TO REVISIONARY POWER S U/S. 263 OF THE ACT, WE THEREFORE SET ASIDE THE ORDER OF CIT CANCELLING THE ORDER DATED 28/03/2013 PASSED U/S. 143(3) OF THE ACT. THUS, THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 5. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOW ED. THIS ORDER PRONOUNCED IN OPEN COURT ON 31/08/2016 SD/- SD/- () () (RAJPAL YADAV) ( ANIL CHATURVEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 31/ 08 /2016 3..,.../ T.C. NAIR, SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT. 3. 456 7 / CONCERNED CIT-2, AHMEDABAD 4. PR. 7 / THE PR.CIT-1, AHMEDABAD 5. 89:'56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<=+ / GUARD FILE. / BY ORDER, (8' //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD