Ankush Holdings Limited, Ahmedabad V. The CIT,A;bad-I, Ahmedabad

ITA 1617/AHD/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1788 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 14-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHELLY JINDAL
• Assessee Lawyers: P D SHAHA R; S N SOPARKAR
• Keywords: Opportunity of being heard; Difference of opinion; Corroborative evidences; Change of opinion
• Section: 143(3); 142(1); 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND D. C. AGRAWAL , AM) ITA NO. 1617/AHD/2010 A. Y.: 2005-06 ANKUSH HOLDINGS LIMITED, C/O. MEHTA LODHA & CO., CHARTERED ACCOUNTANTS, 105, SAKAR-I, ASHRAM ROAD, AHMEDABAD 380 009 VS THE C. I. T- I, AHMEDABAD AHMEDABAD PA NO. AACDA 7765 Q (APPELLANT) (RESPONDENT) APPELLANT BY S/SHRI S. N. SOPARKAR AND P.D. SHAH,A R RESPONDENT BY SHRI SHELLY JINDAL, CIT. DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF THE COMMISSIONER OF INCOM E TAX - I, AHMEDABAD DATED 18 TH MARCH, 2010 CHALLENGING THE ORDER U/S 263 OF THE IT ACT FOR ASSESSMENT YEAR 2005-06. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASS ESSEE COMPANY IS ENGAGED IN THE BUSINESS OF EARTH FILLING WORK. RETU RN OF INCOME WAS FILED AT RS.4,96,290/-. THE CASE WAS SELECTED FOR S CRUTINY AND THE AO COMPLETED THE ASSESSMENT ON 20-12-2007 U/S 143(3) A SSESSING THE TOTAL INCOME AT RS.6,46,286/- BY MAKING DISALLOWANC E OF RS.1,50,000/- ON ACCOUNT OF LABOUR PAYMENTS. THE AS SESSMENT RECORDS WERE EXAMINED BY THE LEARNED COMMISSIONER O F INCOME TAX. ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 2 IT WAS OBSERVED THAT DURING THE YEAR, THE ASSESSEE COMPANY HAS RECEIVED SUBCONTRACT WORK FROM M/S. SIMPLEX CONCRET E PILES (INDIA) LTD. (IN SHORT SCPIL) TO CARRY OUT MANUAL DREDGING, FORMATION OF DYKE WITH DREDGED EARTH BERTHS OF GUJARAT ADANI PORT LTD . (GAPL) AT MUNDRA. THE CONSIDERATION OF THE SUB-CONTRACT DID N OT COVER THE COST OF ANY MATERIALS AND WAS ONLY FOR EXECUTING THE WOR K WITHOUT ANY MATERIAL. THE SAID FACT IS CONFIRMED BY OTHER CLAUSES IN THE WORK ORDER. IN VIEW OF THE FACT, THE EXPENDITURE CLAIMED BY THE ASSESSEE COMPANY TOWARDS PURCHASE OF MATERIALS CANNOT BE CON SIDERED TO HAVE BEEN EXPENDED WHOLLY AND EXCLUSIVELY FOR THE P URPOSE OF THE BUSINESS OF THE ASSESSEE COMPANY. HOWEVER, THE SAME HAS NOT BEEN DISALLOWED BY THE ASSESSING OFFICER. THUS, THE ASSE SSING OFFICER HAS NOT EXAMINED THE ISSUE AND HAS ALLOWED THE SAID EXP ENDITURE WITHOUT VERIFICATION. IT IS FURTHER OBSERVED THAT AN AMOUNT OF RS.60 LAKHS BEING CONSULTANCY FEES HAVE BEEN PAID TO M/S. B2C INDIA LTD. FOR PROVIDING CONSULTANCY SERVICES TO CARRY OUT THE PROJECT AND A LSO FOR PROVIDING PLANTS AND MACHINERY, EQUIPMENTS ETC. HOWEVER, VARIOUS CLAUSES OF THE WORK ORDER SHOWS THAT THE PROJECT WAS TO BE CARRIED OUT UNDER THE INSTRUCTIONS OF SCPIL'S PROJECT MANAGER. THUS, THERE WAS NO REQUIREMENT FOR THE ASSESSEE COMPANY TO ENGAGE TECHNICAL CONSULTANTS / SUPERVISORS AND ALSO FOR HIRING PLANT AND MACHINERY ETC. IN VIEW OF THESE, EXPENDITURE CLAIMED BY THE ASSESSEE COMPANY TOWARDS THESE EXPENDITURES WAS ALLOWED BY THE ASSES SING OFFICER WITHOUT MAKING ANY EXAMINATION / VERIFICATION OF TH E FACTS. SINCE THE AO HAD FINALIZED THE ASSESSMENT WITHOUT MAKING DUE INQUIRY AND ANALYZING THE NECESSARY DETAILS, SO THE SAID ASSESS MENT ORDER DATED 2 0.12.2007 PASSED BY THE AO IN THE ASSESSEE CASE FOR A.Y. 2005-06 ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 3 APPEARED TO BE ERRONEOUS AND PREJUDICIAL TO THE INT EREST OF THE REVENUE. IN VIEW OF ABOVE, A SHOW CAUSE NOTICE UNDE R SECTION 263(1) WAS ISSUED ON 04.02.2010 AS BELOW:- '2. ON PERUSAL OF YOUR CASE RECORDS, IT IS NOTICED THAT IN YOUR COMPANY FILED ITS RETURN OF INCOME FOR A.Y. 2005-06 ON 31.08.2005 DECLARING TOTAL INCOME OF RS.4,96,290/-. AN ASSESSMENT ORDER U/S 143(3) HAS BEEN PASSED ON 20.12.2007 DETERMINING TOTAL INCOME OF RS.6,46,286/-. 3. ON VERIFICATION OF RECORD, IT IS NOTICED THAT DU RING THE YEAR UNDER CONSIDERATION, YOUR COMPANY WAS ENGAGED IN EARTH FILLING WORK. DURING THE PREVIOUS YEAR RELEVANT TO A.Y.2005-06, YOUR COMPANY EXECUTED THE SUB-CONTRACT (WORK ORDER) GIVEN BY M/S. SIMPLEX CONCRETE PILES (INDIA) LTD. (NOW ON SCPIL) FOR A CONSIDERATION OF RS.4,89,54,750/-. SCPIL HAD RECEIVED THE CONTRACT (WORK ORDER] FOR CONSTRUCTION OF BERTHS AND OTHER WORKS AT THE PORT FROM M/S. GUJARAT ADANI PORT LTD. (NOW ON GAPL). A PART OF THE CONTRACT WAS SUBCONTRACTED TO YOUR COMPANY BY SCPIL. THE SUB-CONTRACT REQUIRED YOUR COMPANY TO CARRY OUT MANUAL DREDGING, FORMATION OF DYKE WITH DREDGED EARTH AND CONSTRUCTION OF ACCESS ROAD BEHIND THE EXISTING/ PROPOSED BERTHS OF GAPL AT MUNDRA. THE BREAK UP OF THE CONSIDERATION OF RS.4,89,54,750/- WORK-WISE REVEAL THAT A SUM OF RS.3,75,00,000/- WAS AGAINST WORK OF MANUAL DREDGING, TRANSPORTATION OF DREDGED MATERIAL AND, CONSTRUCTION OF EARTHEN DYKE IN THE BACK UP AREAS OF THE BERTH WITH THE DREDGED EARTH. FURTHER, THE CONS/AERATION FOR WORK SUCH AS BOX CUTTING OR FIFING IN ROAD EMBANKMENT INCLUDING, UPROOTING AND REMOVING PLANTS AND JUNGLES AS NECESSARY; MIXING CLEAN, CRUSHED GRADED STONE AGGREGATE AND GRANULAR MATERIAL PREMIXED WITH WATER IN A POWER MIXER, ETC. WAS FIXED AT ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 4 RS. 1,14,54,750/-. FOR BOTH THESE WORKS YOUR COMPANY WAS REQUIRED TO SUPPLY ALL PLANT, EQUIPMENT, LABOURERS, ETC. 4. THUS, THE WORK ORDER DID NOT REQUIRE YOUR COMPANY TO PROCURE OR SUPPLY MATERIALS LIKE BRICK, STONE, CEMENT, CONCRETE, ETC. THE EARTHEN DYKE WAS TO BE CONSTRUCTED WITH DREDGED EARTH. THE CONSIDERATION OF RS.4,89,54,750/- DID NOT COVER THE COST OF ANY MATERIALS AND WAS ONLY FOR EXECUTING TH E WORK WITHOUT MATERIAL. FURTHER, YOUR SUBMISSION DATED 15.2.2007, MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS CONFIRM THAT YOUR COMPANY HAD EXECUTED THE WORK IN CONFORMITY WITH THE WORK ORDER ONLY. FURTHER, IN CLAUSE 7 OF ANNEXURE-M TO THE WORK ORDER, IT WAS MENTIONED THAT: 'ALL CONSTRUCTION MATERIALS AND CONSUMABLES ISSUED TO YOU IN CONNECT/ON WITH THE ABOVE WORK SHALL HAVE TO BE RECONCILED AND ACCOUNTED FOR AS AND WHEN REQUIRED, TO THE ENTIRE SATISFACTION OF PROJECT MANAGER AT SITE AND/OR THE AUTHORIZED REPRESENTATIVE TO BE NOMINATED BY HIM. THE FINAL BILL SHALL BE ACCOMPANIED WITH SUCH RECONCILIATION STATEMENT. UNLESS SUCH RECONCILIATION STATEMENT IS ACCOMPANIED WITH THE FINAL BILL, WE RESERVE THE RIGHT TO WITHHOLD ANY AMOUNT FROM THE PAYMENT OF YOUR FINAL BILL AS MAY BE DEEMED FIT' 5. THEREFORE AS PER THE ABOVE CLAUSE IT IS SEEN THA T THAT ALL CONSTRUCTION MATERIALS AND CONSUMABLES ISSUED TO YOUR COMPANY HAD TO BE RECONCILED AND ACCOUNTED FOR. IT STATED THAT SCPIL HAD THE RIGHT TO WITHHOLD PAYMENT FROM FINAL BILL, IF RECONCILIATION STATEMENT DID NOT ACCOMPANY THE BILL. THIS MAKES IT AMPLY CLEAR THAT THE OWNERSHIP OF THE CONSTRUCTION MATERIALS ISSUED, VESTED WITH SCPIL AND MATERIALS WERE, PROVIDED BY SCPIL. HAD IT BEEN OUTRIGHT ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 5 PURCHASE BY YOUR COMPANY THEN THERE WAS NO NEED ON THE PART OF YOUR COMPANY TO RECONCILE OR GIVE AN ACCOUNT OF THE MATERIALS ISSUED. THUS, AS PER THE WORK ORDER, CONSTRUCTION MATERIALS AND CONSUMABLES WERE ISSUED FREE OF COST BY SCPIL. 6. PERUSAL OF THE RECORDS REVEALED THAT YOUR COMPANY CHARGED THE PROM AND LOSS ACCOUNT WITH EXPENSE OF RS. 3,40,00,000/- INCURRED FOR PURCHASE OF MATERIALS LIKE BRICKS, CEMENT, CONCRETE, STONE, ETC. FROM M/S. B2C INDIA LTD. HOWEVER, ACCORDING TO THE WORK ORDER, CONSTRUCTION MATERIALS AND CONSUMABLES WERE ISSUED BY SCPJL; THEREFORE, QUESTION OF ITS PURCHASE BY YOUR COMPANY FROM M/S.B2C INDIA LTD. DID NOT ARISE. 7. IN VIEW OF THE FACT, THAT THE CONTRACT DID NOT REQUIRE YOUR COMPANY TO PROCURE ANY MATERIALS AND THE EXPENDITURE CLAIMED BY YOUR COMPANY TOWARDS PURCHASE OF MATERIALS AMOUNTING TO RS.3,40,00,000/- CANNOT BE CONSIDERED TO HAVE BEEN EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ITS BUSINESS, WHICH HAS NOT BEEN DISALLOWED BY THE ASSESSING OFFICER . THUS, THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE IN THIS RESPECT. 8. FURTHER, YOUR COMPANY HAS DEBITED AN AMOUNT OF RS.60,00,000/- BEING CONSULTANCY FEES PAID TO M/S. B2C INDIA LTD. (BIL). BIL IN ITS LETTER DATED NIL T O THE ASSESSING OFFICER CLAIMED THAT IT PROVIDED CONSULTANCY SERVICES TO YOUR COMPANY IN THE PROJECT FOR CARRYING OUT MANUAL DREDGING, FORMULATION OF DYKE WITH DREDGED EARTH, ETC. AND THAT THE ENTIRE PROJECT WAS COMPLETED UNDER ITS SUPERVISION. IT ALS O CLAIMS TO HAVE PROVIDED PLANT AND MACHINERY, EQUIPMENTS, ETC. AGAINST THE CONSIDERATION OF RS.60,00,000/-. HOWEVER, FOLLOWING FACTS EMERGE FROM THE WORK ORDER. ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 6 IN CLAUSE 6 OF ANNEXURE III TO THE WORK ORDER, YOUR COMPANY IS REQUIRED TO RETURN TO SCPIL ALL PLANT AN D EQUIPMENT SUPPLIED IN CONNECTION WITH EXECUTION OF WORK IN GOOD WORKING CONDITION. IN CLAUSE 3 IBID IT IS STATED THAT THE RATES FIXED INCLUDE THE COST OF 'ALL SMALL TOOLS AND APPLIANCES AND LABOURERS DEPLOYED BY YOUR COMPANY. IT ALSO ALLOWS YOUR COMPANY TO TAKE THE SMALL TOOLS AND APPLIANCES OUT OF THE PROJECT PREMISES AFTER SATISFACTORY COMPLETION OF WORK. THUS, IT IS CLEAR THAT THE CONSIDERATION TO YOUR COMPANY INCLUDED ONLY THE COST FOR LABOUR AND SMALL TOOLS/ APPLIANCES. PLANT AND EQUIPMENTS; WERE SUPPLIED BY SCPIL AND YOUR COMPANY WAS NOT REQUIRED TO MOBILIZE THEM. YOUR COMPANY WAS TO ACQUIRE ONLY SMALL TOOLS. CLAUSE 15 OF ANNEXURE III TO THE WORK ORDER GIVEN BY SCPIL SUGGESTS THAT YOUR COMPANY WAS MERELY A LABOUR CONTRACTOR. BECAUSE, THE CLAUSE STIPULATE THAT THE PROJECT MANAGER OF SCPIL SHALL B E THE SOLE AUTHORITY TO DECIDE THE DEPLOYMENT OF THE NUMBER, OF SKILLED AND SEMI-SKILLED WORKERS FROM TIME TO TIME, IN CONNECTION WITH THE EXECUTION OF T HE WORK. THUS, YOUR COMPANY DID NOT HAVE GIVEN THE LIBERTY TO ENGAGE WORKERS FOR EXECUTION OF THE WORK ORDER, AS IT CONSIDERED NECESSARY. SIMILARLY, IN CLAUSE 20 OF ANNEXURE III, IT IS STATED THAT SCPIL WAS AT LIBERTY TO 'GET THE WORK DONE FRO M ANY OTHER CONTRACTOR(S) OR AGENCY / (IES)' IF YOUR COMPANY'S WORKERS LEAVE THE SITE WITHOUT COMPLETING THE WORK ASSIGNED TO THEM. THUS, THE WORKERS HAD TO TAKE INSTRUCTIONS FROM SCPIL AND NOT YOUR COMPANY. FOR FAILURE ON THE PART OF THE WORKER S TO TAKE INSTRUCTIONS FROM SCPIL; THE CONTRACT COULD EVEN BE CANCELLED. 9. ABOVE CLAUSES AND OTHER CLAUSES OF THE ANNEXURE- LL AND III MAINLY REFER TO THE REQUIREMEN TS ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 7 OF LABOUR AND PROVISION FOR THEM. IT SUGGESTS THAT SCPIL'S PROJECT MANAGER WAS THE WORKERS HAD TO PERFORM RATHER THAN YOUR COMPANY. THUS, YOUR COMPANY WAS NO MORE THAN A LABOUR CONTRACTOR. SINCE, PROJECT MANAGER OF SCPIL WAS THE AUTHORITY WHO DECIDED THE NUMBER OF WORKERS TO BE DEPLOYED AND ASSIGNED WORK TO WORKERS, IT IS DEAR THAT YOUR COMPANY'S WORKERS HAD ONLY TO EXECUTE THE WORK ASSIGNED AND SPECIFIED BY THE PROJECT MANAGER OF SCPIL THUS, THERE WAS NO SCOPE FOR YOUR COMPANY TO ENGAGE TECHNICAL CONSULTANTS/ SUPERVISORS AS THE WORK WAS TO BE EXECUTED AS PER THE DIRECTIONS OF TH E PROJECT MANAGER. SIMILARLY, THE PLANT AND EQUIPMENTS WERE, AS PER THE TERMS OF CONTRACT SUPPLIED BY SCPIL. THEREFORE, THE EXPENDITURE OF RS.60,00,000/- CLAIMED BY YOUR COMPANY HAS NOT BEEN PROPERLY VERIFIED AND NEEDS TO BE DISALLOWED. 10. IN VIEW OF FOREGOING, THE ORDER PASSED U/S 143(3) OF THE I.T. ACT 1961 DATED 20/12/2007 APPEARS TO BE NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. IT IS PROPO SED TO PASS APPROPRIATE ORDER U/S.263 (L) IN YOUR CASE FOR ASSESSMENT YEAR 2005-06. 11. YOU ARE, THEREFORE, REQUESTED TO SHOW CAUSE AS TO WHY APPROPRIATE ORDER U/S 263 (1) BE NOT PASSED IN YOUR CASE. HEARING IN YOUR CASE IS FIXED ON 12/02/2010 AT 12.15 P.M. IN CASE NOTHING IS HEARD FROM YOU BY THE SAID DATE, IT SHALL BE PRESUMED THA T YOU HAVE NO OBJECTION TO THE PROPOSED ACTION AND MATTER SHALL BE DECIDED ON MERITS'. 3. IN RESPONSE TO SAME, ASSESSES HAS SUBMITTED AS UNDER: 'WE HAVE RECEIVED THE NOTICE DT. 04/02/2010 FOR THE INITIATION OF THE PROCEEDINGS U/S 263 OF THE INCOME TAX ACT, 1961. WE HEREWITH SUBMIT OUR SUBMISSION IN OUR CASE FOR YOUR KIND CONSIDERATION: ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 8 SIR, DURING THE YEAR UNDER CONSIDERATION, WE HAVE RECEIVED THE WORK ORDER OF RS. 4,89,54,750/- FOR CARRYING OUT MANUAL DREDGING, FORMATION OF DYKE WITH DREDGED EARTH AND CONSTRUCTION OF ACCESS ROAD BEHIND THE EXISTING/PROPOSED BERTHS OF GAPL AT MUNDRA FROM SIMPLEX CONCRETE PILES (INDIA) LIMITED. IT IS ALLEGED IN THE NOTICE THAT THE WORK ORDER DID NOT REQUIRE OUR COMPANY TO PROCURE OR SUPPLY MATERIALS LIKE BRICK , STONE, CEMENT CONCRETE ETC. FURTHER, THE REFERENCE HAS BEEN QUOTED OF CLAUSE 7 OF ANNEXURE- LLL OF WORK ORDER DATED 5 TH AUGUST, 2004, WHERE IT IS STATED THAT ALL THE CONSTRUCTION MATERI ALS ISSUED TO US IS TO BE RECONCILED BY US. IN THIS REGARD, WE WOULD LIKE TO SUBMIT THAT OUR COMPANY WAS LIABLE TO INCUR THE EXPENSES OF ALL THE CONSTRUCTION MATERIALS AND WORK ORDER OF RS. 489.54 LACS WAS A COMPOSITE CONTRACT. WE WOULD LIKE TO STATE THAT CLAUSE 7 OF ANNEXURE-/// OF WORK ORDER DATED 5 TH AUGUST, 2004 WAS MISLEADING AND THEREFORE IT WAS RECTIFIED BY THE SIMPLEX CONCRETE PILES (INDIA) LIMITED AND THE NEW LETTER DATED 12 TH AUGUST, 2004 WAS ISSUED BY SIMPLEX CONCRETE PILES (INDIA) LIMITED TO OUR COMPANY. THE COPY OF THE LETTER DARED 12 TH AUGUST, 2004, WHERE CLAUSE 7 OF ANNEXURE- LLL HAS BEEN REVISED IS ENCLOSED HEREWITH FOR YOUR KIND CONSIDERATION. THE NEW CLAUSE 7 OF ANNEXURE III, WHERE IT IS CLEARLY STATED THAT OUR WORK ORDER OF RS. 489.54 LACS WAS INCLUSIVE OF MATERIALS IS REPRODUCED AS UNDER: 'ALL CONSTRUCTION MATERIALS AND CONSUMABLES ISSUED TO YOU IN CONNECTION WITH THE ABOVE WORK SHALL HAVE TO BE RECONCILED AND ACCOUNTED FOR AS AND WHEN REQUIRED, TO THE ENTIRE SATISFACTION OF PROJECT MANAGER AT SITE AND/OR THE AUTHORIZED REPRESENTATIVE TO BE NOMINATED BY HIM. ALL CONSTRUCTION MATERIALS ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 9 AND CONSUMABLES ISSUED TO YOU, SHALL BE CHARGED AND DEDUCTED FROM YOUR BILL PAYMENT. FINAL BILL SHALL BE ACCOMPANIED WITH SUCH RECONCILIATION STATEMENT. UNLESS SUCH RECONCILIATION STATEMENT IS ACCOMPANIED WITH THE FINAL BILL, WE RESERVE THE RIGHT TO WITHHOLD ANY AMOUNT FROM THE PAYMENT OF YOUR FINAL BILL AS MAY BE DEEMED FIT.' WITHOUT PREJUDICE TO ABOVE, WE WOULD TIKE TO SUBMIT THAT, IF THE WORK ORDER WAS OF RS. 489.54 LA CS ONLY OF THE LABOUR WITHOUT MATERIALS AWARDED TO US AND WE HAVE USED ONLY LABOUR OF RS. 77.60 LACS, THEN THERE CANNOT BE SO MUCH GROSS MARGIN OF PROFIT OF RS. 411.94 LACS I.E. 84% OF THE TOTAL WORK ORDER VALUE. SIR, NO COMPANY WILL GIVE ANY JOB /WORK ORDER, WHERE THERE IS MARGIN OF 84%. SIR, TO TAKE A VIEW THAT WORK ORDER WAS ONLY OF THE LABOUR WILL GIVE AN ABSURD RESULT AND NOT ACCORDING TO ACCEPTED COMMERCIAL PRACTICE. SIR, OUR COMPANY IS A NEW COMPANY IN THIS FILED OF WORK AND THEREFORE WE HAVE APPOINTED M/S B2C INDIA LTD. (BIL) FOR GETTING THE CONSULTATION FOR EXECUTING THE WORK ORDER. WE HAVE PAID RS. 60 LACS TO BIL FOR THE CONSULTANCY AND ALSO DEDUCTED THE APPROPRIATED TDS FROM THE PAYMENT. IT IS MENTIONED IN THE NOTICE THAT ENTIRE PROJECT WAS UNDER CLOSE SUPERVISION. SIR, WE WOULD LIKE TO SUBMIT THAT PROJ ECT WAS SUPERVISED BY THE PROJECT MANAGER OF SIMPLEX CONCRETE PILES (INDIA) LIMITED FROM TIME TO TIME, L IKE IT HAPPEN IN ANY OTHER CONTRACT. FOR E.G. IN THE RO AD CONSTRUCTION CONTRACT THE ROAD WORK DONE BY THE CONTRACTOR, IS MEASURED AND CHECKED/SUPERVISED BY THE OFFICER OF ROAD & DEVELOPMENT AUTHORITY OF THE GOVERNMENT. IF THE ROAD IS NOT PROPER AFTER TAKING THE SAMPLE, THEY SOMETIMES GIVE DIRECTION TO RECONSTRUCT. IN THE SAME MANNER, OUR WORK WAS ALSO SUPERVISED BY THE PROJECT MANAGER OF THE SIMPLEX ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 10 CONCRETE PILES (INDIA) LIMITED AND GIVING THE GUIDELINES FROM TIME TO TIME. CLAUSE 6 OF ANNEXURE- LLL TO THE WORK ORDER STATES THAT PLANT AND MACHINERY SUPPLIED TO US SHOULD BE RETURNED. SIR, HERE IT IS UNDERSTOOD THAT ANY SPECIALIZED EQUIPMENT NECESSARY FOR THE WORK GIVEN TO US SHOULD BE RETURNED. THIS IS NORMAL CONDITION OF THE WORK ORDER AND IT DOES NOT CHANGE OUR POSITION OR THE NATURE OF THE WORK TO BE DONE. CLAUSE 3 OF ANNEXURE-III TO THE WORK ORDER RATES AR E INCLUSIVE THE COST OF ALL SMALL TOOLS AND APPLIANCE S AND THE LABOURERS. IT DOES NOT MEAN THAT CONSIDERATION TO COMPANY INCLUDES THE COST OF LABOUR AND SMALL APPLIANCES ONLY. IT IS CLEARLY CLARIFIED IN THE CLAUSE 7 OF THE WORK ORDER THAT AL L THE VALUE OF CONSTRUCTION MATERIALS ISSUED TO US ON SITE SHOULD ALSO BE BORNE BY US. CLAUSE 15 OF ANNEXURE- LLL TO THE WORK ORDER NUMBER OF LABOUR SHOULD BE DECIDED BY THE PROJECT MANAGER. THE MAIN INTENTION OF THIS CLAUSE WAS THAT THE NUMBER OF THE LABOUR OF SKILLED AND SEMI-SKILLE D SHOULD BE IN CONSULTATION WITH THE PROJECT MANAGER. AS WE HAVE TO COMPLETE THE WORK WITHIN THE STIPULATED TIME PERIOD, THE PROJECT MANAGER FORCE U S TO DEPLOY MORE LABOUR SO THAT THE WORK IS NOT HAMPERED AND THEREFORE SIR, IN CLAUSE 20 OF ANNEXURE III, IT WAS PROVIDED THAT OUR LABOUR IS NOT COMPLETING THE WORK IN TIME, THE SIMPLEX CONCRETE PILES (INDIA) LIMITED HAS LIBERTY TO GET THE WORK D ONE FROM ANOTHER AGENCY AND WE HAVE TO BEAR THE COST FOR OUR DEFAULT. AS THE WORK WAS TIME BOUNDING, THI S TYPE OF CLAUSE WERE INCORPORATED, WHICH WERE ACCORDING TO THE NORMAL TRADE PRACTICE. SIR, CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES, YOU ARE REQUESTED TO CONSIDER THE ORDER PASSED U/S ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 11 143(3) OF THE I.T. ACT, 1961, AS THE SAME IS NOT ERRONEOUS AND NOT PREJUDICIAL TO THE INTEREST OF TH E REVENUE'. 4. THE LEARNED COMMISSIONER OF INCOME TAX HOWEVER, SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE AO TO ADJUDIC ATE ON THE ISSUES OF CLAIM OF EXPENDITURE TOWARDS PURCHASE OF MATERIALA OF RS.3.40 CRORES AND CLAIM OF CONSULTANCY FEES OF RS. 60 LACS AFRESH AND DECIDE THE SAME IN ACCORDANCE WITH LAW BY GIVIN G REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. HIS FINDINGS IN PARA 5 TO 8 ARE REPRODUCED AS UNDER: 5. THE ASSESSEE'S EXPLANATIONS HAVE BEEN CONSIDERED CAREFULLY AND THE SAME ARE FOUND NOT ACCEPTABLE. THE ASSESSEE HAS SUBMITTED THAT THEIR W ORK ORDER WAS A COMPOSITE CONTRACT AND THAT THE COMPANY WAS LIABLE TO INCUR THE EXPENSES OF ALL THE CONSTRU CTION MATERIALS. IN THIS REGARD, IT IS FURTHER STATED THA T THE CLAUSE 7 OF ANNEXURE 3 OF WORK ORDER DTD. 05/08/2004 WAS MISLEADING AND THE SAME WAS RECTIFIED BY SCPIL ON 12/08/2004 AND THE SAME IS REPRODUCED AS UNDER:- 'ALL CONSTRUCTION MATERIALS AND CONSUMABLES ISSUED TO YOU IN CONNECTION WITH THE ABOVE WORK SHALL HAVE TO BE RECONCILED AND ACCOUNTED FOR AS AND WHEN REQUIRED, TO THE ENTIRE SATISFACTION OF PROJECT MANAGER AT SITE AND/OR THE AUTHORIZED REPRESENTATIVE TO BE NOMINATED BY HIM. ALL CONSTRUCTION MATERIALS AND CONSUMABLES ISSUED TO YOU, SHALL BE CHARGED AND DEDUCTED FROM YOUR BILL PAYMENT. THE FINAL BILL SHALL BE ACCOMPANIED WITH SUCH RECONCILIATION STATEMENT. UNLESS SUCH RECONCILIATION STATEMENT IS ACCOMPANIED WITH THE FINAL BILL, WE RESERVE THE RIGHT TO WITHHOLD ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 12 ANY AMOUNT FROM THE PAYMENT OF YOUR FINAL BILL AS MAY BE DEEMED FIT.' IT IS ALSO STATED THAT IF THE WORK ORDER WAS WITHOU T MATERIAL, THAN THE GROSS MARGIN OF PROFIT WOULD BE 84% OF THE TOTAL WORK ORDER VALUE AND NO COMPANY WILL GIVE ANY JOB/W ORK ORDER WHERE THERE IS A MARGIN OF 84%. FROM THE SUBMISSION OF THE ASSESSEE, IT IS CLEAR THAT THE RE VISED CLAUSE 7 REFERRED TO ABOVE WAS NOT FURNISHED BEFORE THE ASSESSING OFFICER. THE SAME, THEREFORE, NEEDS VERIF ICATION BY THE ASSESSING OFFICER. 5.1 ON THE ISSUE OF CONSULTANCY EXPENSES PAID TO B2 C INDIA LTD., IT IS SUBMITTED THAT THE ASSESSEE COMPA NY WAS NEW IN THIS FIELD OF WORK SO THEY HAVE APPOINTED B2C INDIA LTD. FOR CONSULTATION TO EXECUTE THE WORK ORDER. ON THE PAYMENT MADE TO B2C INDIA LTD., TAX HAS ALSO BEEN DEDUCTED AT THE APPROPRIATE RATE. SUPERVISION FROM SCPIL WAS FROM TIME TO TIME ONLY. IT IS FURTHER STATED THAT CLAUSE 6 TO ANNEXURE III REGARDING PLANT AND MACHINERY IS OF GENERAL NATURE AND IS NORMAL CONDITION OF THE WORK. HOWEVER, SUBMISSION OF THE ASSESSEE ON THE ISSUE WAS NOT OBTAINED BY THE ASSESSING OFFICER NEITHER IT WA S EXAMINED BY THE ASSESSING OFFICER. IT IS, THEREFORE , REQUIRED TO BE EXAMINED / VERIFIED ON THE PART OF THE ASSESSING OFFICER. 6. FROM THE FACTS NARRATED ABOVE IT IS EVIDENT THAT THE ASSESSING OFFICER HAD NOT MADE ANY INQUIRY ON THE ISSUES OF CLAIM OF EXPENDITURE TOWARDS PURCHASE OF MATERIALS OF RS.3, 40,00,000/- AND CLAIM OF CONSULTANCY FEES OF RS.60,00,000/-. IT IS SETTLED LEGAL ISSUE THAT IF THE ASSESSING OFFICER HAS COMPLETED ANY ASSESSMENT WITHOUT MAKING ANY PROPER INQUIRY/VERIFICATIONS, THEN SUCH ORDER WILL ALWAYS BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. AS LONG AS THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE THE C1T CAN ALWAYS SET ASIDE SUCH ASSESSMENT U/S 263 OF THE ACT. RELIANCE IN THIS RESPECT IS PLACED ON THE FOLLOWING DECISIONS. ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 13 A. TARAJAN TEA CO. P LTD. VS. CIT 205 ITR 45 (GAU) - WHEREBY THE HON'BLE COURT HELD THAT A DECISION TAKEN WITHOUT CONSIDERING THE RELEVANT ASPECT OF A PARTICULAR POINT WOULD CERTAINLY BE ERRONEOUS AND SUCH A DECISION IN FAVOUR OF THE ASSESSEE WITHOUT SUCH CONSIDERATIO N WOULD BE PREJUDICIAL TO THE INTEREST OF THE REVENUE SO AS TO EMPOWER THE COMMISSIONER TO EXERCISE HIS REVISIONAL POWER U/S 263 OF THE ACT. SIMPLY BECAUSE THE FACTS HAVE BEEN DISCLOSED BY THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS, IT DOES NOT GIVE THE IMMUNITY FROM REVISIONAL JURISDICTION WHICH THE COMMISSIONER CAN EXERCISE U/S 263 OF THE ACT. B. CIT VS. SESHASAYEE PAPER & BOARDS LTD. 242 ITR 490 (MAD)- WHEREBY THE HONBLE COURT HELD THAT FAILURE OF THE AO TO MAKE AN INQUIRY BEFORE GRANTING DEDUCT ION WOULD RENDER THE ASSESSMENT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. C. CIT VS. SOUTH INDIA SHIPPING CORPORATION LTD. 233 ITR 546 (MAD)- WHEREBY THE HONBLE COURT HELD THAT THE ORDER OF THE AO MAY BE ERRONEOUS IN LAW OR FACT. IT MAY BE ERRONEOUS IN THE SENSE THAT THE AO HAD PASSED THE ORDER WITHOUT PROPERLY CONDUCTING THE INQUIRY IN COMPLETION OF THE ASSESSMENT AND THE ORD ER MAY ALSO BE ERRONEOUS WHEN THE EXPENDITURE ALLOWED WAS AGAINST THE PROVISION OF LAW. D. CIT VS. EMERY STONE MFG. CO. 213 ITR 843 (RAJ) - WHEREBY THE HONBLE COURT HELD THAT ALLOWING CERTAI N CLAIM OR DEDUCTION WITHOUT PROVING THE CLAIM OR WIT HOUT PROPER VERIFICATION IN IGNORANCE OF THE PROVISIONS OF LAW ARE THE VARIOUS INSTANCES ON THE BASIS OF WHICH THE ORDER COULD BE CONSIDERED PREJUDICIAL TO THE REVENU E AND COULD BE SET RIGHT IN REVISIONAL JURISDICTION. E. MANNULAL MATADEEN VS. CIT 277 ITR 346 (AH) - WHEREBY THE HONBLE COURT HELD THAT THE ORDER OF TH E REVISION WAS VALID AS THE AO HAD NOT MADE NECESSARY ENQUIRIES BEFORE ALLOWING DEDUCTION OF INTEREST. ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 14 7. IN VIEW OF ABOVE REFERRED FACTS AND LEGAL POSITI ON IT IS HELD THAT THE ASSESSMENT ORDER U/S 143(3) DATED 20/12/2007 PASSED BY THE AO FOR A.Y. 2005-06 IN THE CASE OF THE ASSESSEE IS ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF REVENUE, TO THE EXTENT OF NON-VERIFICAT ION OF ISSUES OF CLAIM OF EXPENDITURE TOWARDS PURCHASE OF MATERIALS OF RS.3,40,00,000/- AND CLAIM OF CONSULTA NCY FEES OF RS.60,00,000/- NEED TO BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR RE-ADJUDICATION, AS THE D ETAILS AND EXPLANATIONS SUBMITTED BY THE ASSESSEE DURING T HE COURSE OF PROCEEDINGS U/S 263 OF THE ACT WERE NOT ADJUDICATED BY THE ASSESSING OFFICER. 8. ACCORDINGLY, THE ABOVE REFERRED ASSESSMENT ORDER DATED 20/12/2007 IS SET ASIDE TO THE EXTENT THAT TH E ASSESSING OFFICER WILL ADJUDICATE ON THE ISSUES OF CLAIM OF EXPENDITURE TOWARDS PURCHASE OF MATERIALS OF RS.3,40,00,000/- AND CLAIM OF CONSULTANCY FEES OF RS.60,00,000/- AFRESH AND DECIDE THE SAME AS PER L AW IN ACCORDANCE WITH THE ABOVE SAID DISCUSSION. NEEDL ESS TO SAY THAT, THE ASSESSING OFFICER WILL PROVIDE SUF FICIENT OPPORTUNITIES TO THE ASSESSEE OF BEING HEARD. 5. THE ASSESSEE AGITATED THE PROCEEDINGS U/S 263 O F THE IT ACT AND THE FINDINGS OF THE LEARNED COMMISSIONER OF INC OME TAX CHALLENGING THE IMPUGNED ORDER. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT PROPER INQUIRIES HAVE BEEN DONE BY THE AO ON BOTH THE ISSUES. THE AO ISSUED NOTICE U/S 142(1) OF THE IT ACT DATED 29-1-2007 (PB-1) WHEREIN DETAILS REGARDING BO TH THE ISSUES HAVE BEEN CALLED FOR BY THE AO NOTED AT SR. 5 AND 6 OF THE SAID NOTICE. HE HAS SUBMITTED THAT THE ASSESSEE IN RESPO NSE TO THE QUERIES RAISED BY THE AO FILED REPLY DATED 15-2-200 7 (PB- 2 AND 3) IN WHICH ON BOTH THE ISSUES THE ASSESSEE FILED REPLY B EFORE THE AO AS WELL AS COMPLETE DOCUMENTS HAVE BEEN EXAMINED BY TH E AO AT THE ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 15 ASSESSMENT STAGE. HE HAS SUBMITTED THAT THE ASSESSE E ATTENDED THE PROCEEDINGS BEFORE THE AO TIME TO TIME AND PRODUCED THE BOOKS OF ACCOUNTS AND SUPPORTING DOCUMENTS WHICH HAVE BEEN E XAMINED BY THE AO. THE SUBMISSIONS OF THE ASSESSEE WERE ALSO K EPT ON RECORD AND THE SAME HAVE BEEN NOTED BY THE AO IN THE ASSES SMENT ORDER ALSO. HE HAS SUBMITTED THAT THE SUCCESSOR OF THE AO SENT THE PROPOSAL U/S 263 OF THE IT ACT TO THE LEARNED COMMI SSIONER OF INCOME TAX (DR PB-3 TO 5) AND AFTER REAPPRAISING EVIDENCE S AND MATERIAL ON RECORD REQUESTED THE LEARNED COMMISSIONER OF INCOME TAX TO INVOKE JURISDICTION U/S 263 OF THE IT ACT, DESPITE THE FA CT THAT THE AO MADE COMPLETE INQUIRIES ON BOTH THE MATTERS IN ISSUE AND APPLIED HIS MIND TO ALL THE EVIDENCES AND MATERIAL ON RECORD AFTER C ONSIDERING THE REPLY AND SUBMISSIONS OF THE ASSESSEE. THE LEARNED COUNSE L FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT SUCH AN APPROAC H IS UNSUSTAINABLE IN LAW AND EVEN NO DEFINITE FINDING H AS BEEN GIVEN THAT ANY CASE U/S 263 OF THE IT ACT IS MADE OUT. HE HAS SUBMITTED THAT ACCOUNTS OF THE ASSESSEE ARE AUDITED. HE HAS RELIED UPON THE FOLLOWING ORDERS OF THE HONBLE DELHI HIGH COURT: 1) CIT VS INTERNATIONAL TRAVEL HOUSE LTD. ITA NO.94 /2010 DATED 13-09-2010 2) CIT VS M/S.VIKAS POLYMERS ITR3/1991 DATED 16-08- 2010 THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT WHEN QUERY IS RAISED BY THE AO DURING THE SCRUTINY PROCEEDINGS WH ICH HAVE BEEN ANSWERED TO THE SATISFACTION OF THE AO, BUT NEITHER OF THE QUERY NOR THE ANSWERS WERE REFLECTED IN THE ASSESSM ENT ORDER, WOULD NOT BY ITSELF LEAD TO THE CONCLUSION THAT THE ORDER OF THE AO CALLED FOR ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 16 ANY REVISION AS IS HELD IN THE CASE OF M/S. VIKAS P OLYMERS (SUPRA). THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LEARNED COMMISSIONER OF INCOME TAX DID NOT DISCUSS THE REPL Y OF THE ASSESSEE IN THE IMPUGNED ORDER AND THE ORDER OF REV ISION IS PASSED WITHOUT CONSIDERING THE EXPLANATIONS OF THE ASSESSE E. THEREFORE, THE ORDER OF REVISION IS NOT VALID. HE HAS RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUST RIAL CO. LTD. 243 ITR 83 IN WHICH IT WAS HELD THAT WHEN THE AO ADOPTS ONE OF THE TWO COURSES PERMISSIBLE UNDER LAW AND IT HAS RESULT ED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE A O HAS TAKEN ONE OF THE VIEWS WITH WHICH THE COMMISSIONER DOES N OT AGREE, IT CANNOT BE TREATED AS ERRONEOUS OR PREJUDICIAL TO TH E INTEREST OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE AO IS UNS USTAINABLE IN LAW. HE HAS SUBMITTED THAT FOR MAKING NO ADEQUATE INQUI RY, THE CASE WOULD NOT FALL WITHIN THE PARAMETERS OF SECTIO N 263 OF THE IT ACT. HE HAS SUBMITTED THAT SINCE THE ASSESSEE SUBMITTED REQUIRED DETAILS BEFORE THE AO AND THE AO HAS CONSIDERED AND APPLIED HIS MIND ON THE SAME, THEREFORE, NO INTERFERENCE IS CALLED FOR IN THE MATTER. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSIONS MADE BEFORE THE LEARNED COMMISSIONER OF INCOME TAX AND S UBMITTED THAT PROPER EXPLANATION WAS ALSO FIELD BEFORE THE LEARNE D COMMISSIONER OF INCOME TAX WHICH HAS NOT BEEN DEALT WITH BY THE LEA RNED COMMISSIONER OF INCOME TAX. THEREFORE, ORDER U/S 26 3 OF THE IT ACT IS LIABLE TO BE QUASHED. 6. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E IMPUGNED ORDER AND SUBMITTED THAT NO INQUIRY WAS MADE BY THE AO ON BOTH THE ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 17 ISSUES; THEREFORE, IT IS A CASE OF LACK OF INQUIRY IN RESPECT OF THE EXPENDITURE TOWARDS PURCHASE OF MATERIALS AND CONSU LTANCY FEES. THE SUCCESSOR AO HAS ISSUED LETTER TO THE LEARNED COMMI SSIONER OF INCOME TAX U/S 263 OF THE IT ACT AS ROUTINE PROPOSA L FOR INITIATING PROCEEDINGS U/S 263 OF THE IT ACT WHICH IS PERMISSI BLE UNDER LAW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL AVAILABLE ON RECORD. THE HONBLE SUPREME COURT IN T HE CASE OF CIT VS MAX INDIA LTD. 295 ITR 282 RELYING UPON ITS EARL IER DECISION IN THE CASE OF MALLABAR INDUSTRIAL CO. LTD. (SUPRA) HELD A S UNDER: EXPORT PROFITS DEDUCTION INCOME-TAX ACT, 1961, 80 HHC. THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE REV ENUE IN SECTION 263 OF THE INCOME-TAX ACT, 1961, HAS TO BE READ IN CONJUNCTION WITH THE EXPRESSION ERRONEOUS ORDER P ASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CA NNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. 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 A S AN ERRONEOUS ORDER PREJUDICIAL TO THE REVENUE, UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABL E IN LAW. 7.1 THE HONBLE GUJARAT HIGH COURT IN THE CASE OF C IT VS R. K. CONSTRUCTION CO. 313 ITR 65 HELD AS UNDER: HELD, DISMISSING THE APPEAL, THAT SINCE ALL THE NE CESSARY DETAILS WERE FURNISHED TO THE ASSESSING OFFICER, TH ERE WAS NO REASON FOR THE COMMISSIONER TO INVOKE THE REVISI ONAL JURISDICTION UNDER SECTION 263 OF THE ACT. THE ASSE SSING ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 18 OFFICER HAD TAKEN A PARTICULAR VIEW ON THE BASIS OF THE EVIDENCE PRODUCED BEFORE HIM. ON THE BASIS OF THE EVIDENCE BEFORE THE ASSESSING OFFICER AND MATERIALS WHICH WERE COLLECTED BY THE COMMISSIONER IN REVISIO NAL PROCEEDINGS, THE COMMISSIONER HAD TAKEN A DIFFERENT VIEW. HOWEVER, IN THE REVISIONAL PROCEEDINGS UNDER SECTION 263, IT WAS NOT OPEN FOR THE COMMISSIONER T O TAKE SUCH A DIFFERENT VIEW. THERE WAS NOTHING ON RECORD TO SUGGEST THAT THE VIEW TAKEN BY THE ASSESSING OFFICE R WAS UNSUSTAINABLE IN LAW. 7.2 THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS GIRDHARI LAL 258 ITR 331 HELD AS UNDER: HELD, THAT WHEN THE ASSESSING OFFICER AFTER GOING THROUGH THE MATERIAL ON RECORD AND AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, MADE SOME ADDITIONS AN D REJECTED THE BOOKS OF ACCOUNT, IT WOULD NOT BE SAI D THAT HE HAD NOT APPLIED HIS MIND. IT IS NOT ALWAYS NECES SARY THAT EVERY ASSESSEE IN THE LINE OF THE BUSINESS SHO ULD HAVE THE SAME RATE OF PROFIT. THE TRIBUNAL WAS CORR ECT IN CANCELING THE ORDERS UNDER SECTION 263 OF THE INCOM E-TAX ACT FOR THE ASSESSMENT YEARS 1977-78, 1979-80 TO 19 81- 82. 7.3 THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS DEEPAK MITTAL 324 ITR 411 HELD AS UNDER: CHANGE OF OPINION BY REAPPRAISING THE EVIDENCE IS NOT WITHIN THE PARAMETERS OF REVISIONAL JURISDICTIO N OF THE COMMISSIONER UNDER SECTION 263 OF THE INCOME-TAX AC T, 1961. HELD, DISMISSING THE APPEAL, THAT THE TRIBUNAL HAD FOUND THAT THE ASSESSING OFFICER HAD GIVEN A CATEGO RICAL FINDING THAT THE ASSESSEE WAS ENGAGED IN THE PROCES S OF MANUFACTURING OF PRODUCTS AND ACCORDINGLY HE HAD GRANTED CONCESSION UNDER SECTION 80-IB. THE CLAIM O F THE ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 19 ASSESSEE HAD BEEN FOUND TO BE GENUINE. THE ASSESSIN G OFFICER HAD ALSO EXAMINED THE VARIOUS WORKERS OF TH E ASSESSEE AND THEN RECORDED THE FINDING. THE ASSESSI NG OFFICER WAS JUSTIFIED IN GRANTING THE SPECIAL DEDUC TION UNDER SECTION 80IB. THE ORDER OF REVISION DISALLOW ING THE SPECIAL DEDUCTION WAS NOT VALID. 7.4 THE HONBLE GAUHATI HIGH COURT IN THE CASE OF S MT. LILA CHOUDHURY VS CIT AND OTHERS 289 ITR 226 HELD THAT EXPLANATION OF THE ASSESSEE IN RESPONSE TO NOTICE U/S 263 OF TH E ACT MUST BE CONSIDERED, ORDER OF REVISION WITHOUT CONSIDERING E XPLANATION WOULD NOT BE VALID. IT WAS FURTHER HELD AS UNDER: HELD, THAT IN THE ORDER THE COMMISSIONER HAD NOT RECORDED ANY OPINION THAT THE ORDER OF ASSESSMENT O F THE PETITIONER FOR THE ASSESSMENT YEAR 1992-93 WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THAT WAS THE OPINION RECORDED IN THE NOTIC E DATED AUGUST 14/19, 1996, BUT THE OPINION BEING RECORDED IN A NOTICE ISSUED TO THE PETITIONER ASKIN G TO SHOW CAUSE MUST BE UNDERSTOOD TO BE REBUTTABLE. SUCH OPINION WAS REQUIRED TO BE REITERATED AFTER HEARING THE PETITIONER AND AFTER HOLDING THE NECESS ARY ENQUIRY. ON RECEIPT OF THE SHOW CAUSE NOTICE, THE PETITIONER SUBMITTED AN ELABORATE REPLY. THE COMMISSIONER ON RECEIPT OF THE REPLY OF THE PETITIO NER COULD NOT HAVE IGNORED THE SAME. RATHER, IT WAS INCUMBENT ON THE COMMISSIONER TO CONSIDER THE EXPLANATIONS OFFERED AND ON THAT BASIS TO RECORD HI S OPINION/CONCLUSION. MOREOVER, THE COMPETENT CRIMINAL COURT HAD EXONERATED THE SON-IN-LAW OF THE PETITIONER FROM ANY LIABILITY ON ACCOUNT OF THE HOU SE PROPERTY IN QUESTION HOLDING IT TO BELONG TO THE PETITIONER. THE FINDINGS RECORDED BY THE CRIMINAL COURT IN THIS REGARD COULD NOT BE BRUSHED ASIDE. HENCE, ANY DE NOVO PROCEEDINGS AT THIS STAGE WOULD BE FUTILE. THE ORDER OF REVISION HAD TO BE QUASHED. ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 20 THE ASSESSMENT OF THE PETITIONER FOR THE ASSESSMENT YEAR 1992-93 MADE BY ORDER DATED MAY 16, 1994, HAD TO BE CONSIDERED COMPLETE AND FINAL. 7.5. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UP ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS INTERNATIONAL TRAVEL HOUSE LTD. (SUPRA) COPY OF WHICH IS PLACED O N RECORD IN WHICH IN PARA 19 IT WAS HELD AS UNDER: 19. IF THE OBTAINING OF FACTUAL MATRIX IS TESTED ON THE ANVIL OF THE AFORESAID PRONOUNCEMENT OF LAW, IT IS QUITE CLEAR THAT THE COMMISSIONER HAS REALLY MAD E AN EFFORT TO CAUSE A ROUTINE INQUIRY WITH REGARD TO THE MATTER THAT HAD ALREADY BEEN CONCLUDED. THE COMMISSIONER, AS IT APPEARS, HAS THOUGHT THAT HE HA S THE AUTHORITY TO BEGIN A FRESH LITIGATION BECAUSE O F THE VIEW ENTERTAINED BY HIM. THE AFORESAID INEXHAUSTIBL E APPROACH IS NOT PERMISSIBLE. HE WAS REQUIRED TO ARRIVE AT A DEFINITE CONCLUSION BUT HE HAD NOT DONE SO. 7.6 THE LEARNED COUNSEL FOR THE ASSESSEE ALSO RELIE D UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS M/S. VIKAS POLYMERS (SUPRA) COPY OF WHICH IS ALSO PLACED ON RECORD IN WHICH IN PARA 15 AND 18 IT WAS HELD AS UNDER: 15. APPLYING THE AFORESAID LAW TO THE FACTS OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THE EXERCISE OF REVISIONAL POWER BY THE COMMISSIONER IN THE INSTANT CASE WAS UNCALLED FOR AND UNJUSTIFIED. IT WAS MORE IN THE NATURE OF ROVING AND FISHING ENQUIRY. THE COMMISSIONER HAS PROCEEDED ON THE ASSUMPTION THAT NO SUCH INFORMATION, AS WAS FURNISHED TO HIM, WAS FURNISHED AT THE TIME OF ASSESSMENT. THE COMMISSIONER HAS MENTIONED THAT THE INCOME-TAX OFFICER HAS NOT EXAMINED THE CASH CREDITS OF THE ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 21 PARTNERS OR DEPOSITS OF CHIT FUND. ASSUMING THIS TO BE SO (THOUGH THERE DOES NOT APPEAR TO BE ANY JUSTIFICATION FOR THE AFORESAID OBSERVATION), THIS MAY MAKE THE ORDER ERRONEOUS, BUT HOW IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE HAS NOT BEEN STATED BY THE COMMISSIONER AS HE DID NOT DEAL WITH THE EXPLANATIO N GIVEN BY THE ASSESSEE IN THE COURSE OF SECTION 263 PROCEEDINGS. 18. WE ARE THUS OF THE OPINION THAT THE PROVISIONS OF SECTION 263 OF THE ACT, WHEN READ AS A COMPOSITE WHOLE MAKE IT INCUMBENT UPON THE COMMISSIONER BEFORE EXERCISING REVISIONAL POWERS TO: (I) CALL FO R AND EXAMINED THE RECORD, AND (II) GIVE THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND THEREAFTER TO MAKE O R CAUSE TO BE MADE SUCH ENQUIRY AS HE DEEMS NECESSARY. IT IS ONLY ON FULFILLMENT OF THESE TWIN CONDITIONS THAT THE COMMISSIONER MAY PASS AN ORDER EXERCISING HIS POWER OF REVISION. MINUTELY EXAMINED , THE PROVISIONS OF SECTION ENVISAGE THAT THE COMMISSIONER MAY CALL FOR THE RECORDS AND IF HE PRIMA FACIE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE MAY AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH ENQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY. THE TWIN REQUIREMENT OF THE SECTION IS MANIFESTLY FOR A PURPOSE. MERELY BECAUSE THE COMMISSIONER CONSIDERS ON EXAMINATION OF THE RECORD THAT THE ORD ER HAVE BEEN ERRONEOUSLY PASSED SO AS TO PREJUDICE THE INTEREST OF THE REVENUE WILL NOT SUFFICE. THE ASS ESSEE MUST BE CALLED, HIS EXPLANATION SOUGHT FOR AND EXAMINED BY THE COMMISSIONER, AND THEREAFTER IF THE COMMISSIONER STILL FEELS THAT THE ORDER IS ERRONEOU S AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, THE COMMISSIONER MAY PASS REVISIONAL ORDERS. IF, ON THE OTHER HAND, THE COMMISSIONER IS SATISFIED, AFTER HEARING THE ASSESSEE, THAT THE ORDERS ARE NOT ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 22 ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE MAY CHOSE NOT TO EXERCISE HIS POWER OF REVISION. THIS IS FOR THE REASON THAT IF A QUERY IS RAISED DURING THE COURSE OF SCRUTINY BY THE ASSESSING OFFICER, WHICH WAS ANSWERED TO THE SATISFACTION OF THE ASSESSING OFFICER, BUT NEITHER THE QUERY NOR THE ANSWER WERE REFLECTED IN THE ASSESSMENT ORDER, THIS WOULD NOT BY ITSELF LEAD TO THE CONCLUSION THAT THE ORDER OF THE ASSESSING OFFICER CALLED FOR INTERFERE NCE AND REVISION. IN THE INSTANT CASE, FOR EXAMPLE, THE COMMISSIONER HAS OBSERVED IN THE ORDER PASSED BY HIM THAT THE ASSESSEE HAS NOT FILED CERTAIN DOCUMENTS ON THE RECORD AT THE TIME OF ASSESSMENT. ASSUMING IT TO BE SO, IN OUR OPINION, THIS DOES NOT JUSTIFY THE CONCLUSION ARRIVED AT BY THE COMMISSION ER THAT THE ASSESSING OFFICER HAD SHIRKED HIS RESPONSIBILITY OF EXAMINING AND INVESTIGATING THE CASE. MORE SO, IN VIEW OF THE FACT THAT THE ASSESSE E EXPLAINED THAT THE CAPITAL INVESTMENT MADE BY THE PARTNERS, WHICH HAD BEEN CALLED INTO QUESTION BY TH E COMMISSIONER, WAS DULY REFLECTED IN THE RESPECTIVE ASSESSMENTS OF THE PARTNERS WHO WERE INCOME-TAX ASSESSEES AND THE UNSECURED LOAN TAKEN FROM M/S. STUTEE CHIT & FINANCE (P) LTD. WAS DULY REFLECTED I N THE ASSESSMENT ORDER OF THE SAID CHIT FUND WHICH WAS ALSO AN ASSESSEE. 8. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT O F THE ABOVE DECISIONS, IT IS CLEAR THAT THE IMPUGNED ORDER IS N OT SUSTAINABLE IN LAW. THE AO WHILE FINALIZING THE ASSESSMENT ISSUED NOTI CE U/S 142(1) OF THE IT ACT DATED 29-1-2007 (PB-1) SEEKING DETAILS O F LEGAL AND PROFESSIONAL FEES OF RS.60,11,120/- GIVING NAME AND COMPLETE ADDRESS TO WHOM PAID, AMOUNT AND PURPOSE. THE AO FU RTHER CALLED FOR THE DETAILS OF EXPENSES SHOWN UNDER THE HEAD P URCHASES OF RS.3.40 CRORES. THE ASSESSEE IN RESPONSE TO THE SHO W CAUSE NOTICE ISSUED BY THE AO, SUBMITTED THE REPLY DATED 15-2-20 07 (PB 2) IN ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 23 WHICH THE ASSESSEE ON BOTH THE ISSUES HAVE SUBMITTE D BEFORE THE AO THAT THE ASSESSEE HAS PAID LEGAL AND PROFESSIONAL F EES TO M/S. B2C INDIA LTD. FOR GUIDING THE ASSESSEE FOR COMPLETION OF WORK AT SITE I.E. GUJARAT ADANI PORT LTD. (GAPL) AT MUNDRA , GUJARAT. THE ASSESSEE SUBMITTED LEDGER ACCOUNTS, TDS CERTIFICATE AND COUN TER-FOILS OF CHALLANS FOR PERUSAL OF THE AO. FURTHER, IT WAS SUB MITTED THAT THE ASSESSEE HAS PURCHASED MATERIALS LIKE BRICKS, CEMEN T, CONCRETE ETC. FOR DOING THE WORK AT SITE AND ANNEXED THE COPY OF THE LEDGER ACCOUNTS FOR PERUSAL OF THE AO. THE AO NOTED IN THE ASSESSMENT ORDER DATED 20-12-2007 THAT THE ASSESSEE HAS SHOWN NET PROFIT RATE AT 1.01% AND THAT THE ASSESSEE ATTENDED THE SCRUTIN Y PROCEEDINGS BEFORE HIM TIME TO TIME, PRODUCED THE BOOKS OF ACCO UNTS AND SUPPORTING EVIDENCES ETC. WHICH HAVE BEEN TEST CHEC KED BY HIM. THE AO ALSO NOTED IN THE ASSESSMENT ORDER THAT THE SUBM ISSIONS FILED BY THE ASSESSEE TIME TO TIME HAVE ALSO BEEN KEPT ON RE CORD. IT WOULD, THEREFORE, SHOW THAT ON BOTH THE MATTERS IN ISSUE T HE AO CALLED FOR THE EXPLANATION OF THE ASSESSEE ALONG WITH DETAILS AND EVIDENCES AND ON FILING THE SAME REPLY AND EVIDENCES BEFORE THE AO, THE AO HAS EXAMINED THE EVIDENCES AND MATERIAL BEFORE HIM IN T HE LIGHT OF THE SUBMISSIONS OF THE ASSESSEE ON BOTH THE ISSUES UNDE R CONSIDERATION. IT IS ALSO A FACT THAT THE SUCCESSOR AO AFTER COMPL ETION OF THE ASSESSMENT PROCEEDINGS SENT A PROPOSAL TO THE LEARN ED COMMISSIONER OF INCOME TAX U/S 263 OF THE IT ACT DA TED 30-12-2009. COPY OF THE SAME IS FILED IN THE PAPER BOOK FILED B Y THE LEARNED DR AT PAGE 3 TO 5 IN WHICH THE AO INTERPRETING THE DOCUME NTS AND MATERIALS ON RECORD OF THE AO FORMED HIS OPINION THAT M/S. SC PIL HAS ISSUED THE CONSTRUCTION MATERIALS FOR COMPLETION OF THE PR OJECT FREE OF COST ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 24 AND FURTHER IT APPEARED TO HIM THAT EXPENDITURE ON ACCOUNT OF CONSULTANCY FEES WAS UNJUSTIFIED. IT IS, THEREFORE, CLEAR THAT THE SUCCESSOR AO ON INTERPRETING THE EVIDENCES AND DOCU MENTS, ON HIS OWN WAY CAME TO THE CONTRARY FINDING AND SENT THE P ROPOSAL TO THE LEARNED COMMISSIONER OF INCOME TAX FOR INVOKING JUR ISDICTION U/S 263 OF THE IT ACT ON BOTH THE ISSUES. HOWEVER, IT IS A FACT THAT THE AO CONSIDERED BOTH THE ISSUES AT THE ORIGINAL ASSESSME NT STAGE AND TOOK ONE OF THE POSSIBLE VIEWS PERMISSIBLE UNDER LAW. TH US, CHANGE OF OPINION BY REAPPRAISING THE EVIDENCES AND MATERIALS ON RECORD WOULD NOT BE WITHIN THE PARAMETERS OF REVISIONAL JURISDIC TION OF THE COMMISSIONER OF INCOME TAX U/S 263 OF THE IT ACT. I T IS ALSO A FACT THAT THE ASSESSEE FILED THE RELEVANT DETAILS BEFORE THE LEARNED COMMISSIONER OF INCOME TAX IN THE PROCEEDINGS U/S 2 63 OF THE IT ACT AND EXPLAINED THAT THE RELEVANT CLAUSE OF ANNEXURE III OF THE WORK ORDER WAS MISLEADING; THEREFORE, IT WAS RECTIFIED B Y M/S. SCPIL VIDE LETTER DATED 12-8-2004 CLARIFYING THAT ALL THE CONS TRUCTION MATERIALS AND CONSUMABLES ISSUED TO THE ASSESSEE SHALL BE CHA RGED AND DEDUCTED FROM THE ASSESSEES BILL PAYMENT AND THE F INAL BILL SHALL BE ACCOMPANIED WITH SUCH RECONCILIATION STATEMENT. EVE N ON GOING THROUGH THE ORIGINAL CLAUSE 7 OF ANNEXURE III AS IS NOTED ABOVE WOULD NOT SAY THAT M/S. SCPIL WOULD ISSUE THE CONSTRUCTIO N MATERIALS TO THE ASSESSEE FREE OF COST. THE LANGUAGE OF THE ORIGINAL CLAUSE WOULD ALSO SUPPORT THE CONTENTION OF THE ASSESSEE THAT THE MAT ERIAL ISSUED BY THE CONTRACTEE PARTY WOULD BE RECONCILED AND ACCOUNTED FOR IN THE BILL WOULD SHOW THAT WHATEVER MATERIALS WERE SUPPLIED BY M/S. SCPIL WOULD BE ADJUSTED IN THE FINAL PAYMENT MADE TO THE ASSESSEE. FURTHER, THE ASSESSEE EXPLAINED THAT IF THE EARTH F ILLING WORK IS TO BE ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 25 COMPLETED ON THE AMOUNT OF WORK ORDER OF RS.489.54 LACS AND ONLY LABOUR PAYMENT IS MADE THEN THE PROFIT MARGIN COME TO 84% WHICH IS HIGHLY IMPROPER AND IMPOSSIBLE. THUS, THE ASSESSEE EXPLAINED THE FACTS BEFORE THE LEARNED COMMISSIONER OF INCOME TAX ALSO THAT THE WORK ORDER OF RS.489.54 LACS WAS INCLUSIVE OF MATER IALS EVEN AS PER THE ORIGINAL CLAUSE OF THE WORK ORDER AS WELL AS TH E REVISED CLAUSE AND IT IS IMPOSSIBLE TO EARN NET PROFIT OF 84% OUT OF T HE TOTAL WORK AS AGAINST THE NET PROFIT SHOWN BY THE ASSESSEE AT 1.0 1%. FURTHER, THE ASSESSEE EXPLAINED THAT IN THIS LINE OF BUSINESS TH E ASSESSEE WAS NEW ONE AND APPOINTED M/S. BIL FOR GETTING THE CONS ULTANCY FOR EXECUTING THE WORK ORDER FOR WHICH PROPER PAYMENT W AS MADE BY DEDUCTING TDS. SPECIFIC REPLIES WERE ALSO FILED ON BOTH THE ISSUES TO SHOW THAT THE PROJECT MANAGER WAS TO SUPERVISE THE WORK SO THAT WORK IS COMPLETED WITHIN THE STIPULATED PERIOD. THE SUCCESSOR AO MERELY STATED IN THE PROPOSAL THAT IT APPEARED TO H IM THAT IT IS A COLORABLE DEVICE TO EVADE TAX. IT IS, THEREFORE, CL EAR FROM THE ABOVE DISCUSSIONS THAT THE ASSESSEE FILED COMPLETE DETAIL S BEFORE THE AO WHICH HAVE BEEN EXAMINED BY THE AO AND HE CAME TO T HE FINAL CONCLUSION ON THE SAME AND NO ADVERSE FINDING HAS B EEN GIVEN AGAINST THE ASSESSEE. COMPLETE DETAILS AND SUBMISSI ONS WERE ALSO FILED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX ON WHICH THE LEARNED COMMISSIONER OF INCOME TAX DID NOT CONSIDER THE EXPLANATION OF THE ASSESSEE IN PROPER PERSPECTIVE A ND WITHOUT CONSIDERING THE EXPLANATION OF THE ASSESSEE PASSED THE ORDER. THEREFORE, SUCH ORDER OF THE LEARNED COMMISSIONER O F INCOME TAX WOULD NOT BE VALID. WE RELY UPON THE DECISION OF TH E HONBLE GAUHATI HIGH COURT IN THE CASE OF SMT. LILA CHOUDHURY (SUPR A). IT IS ALSO CLEAR ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 26 FROM THE FACTS OF THE CASE THAT IT IS A CASE OF MER E CHANGE OF OPINION BY THE SUCCESSOR AO AND THE LEARNED COMMISSIONER OF INCOME TAX BY REAPPRAISING THE EVIDENCES WHICH IS NOT PERMISSI BLE U/S 263 OF THE IT ACT. THE LEARNED COMMISSIONER OF INCOME TAX HAD NOT COME TO ANY DEFINITE CONCLUSION THAT THE ORDER OF THE AO WA S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LEA RNED COMMISSIONER OF INCOME TAX HAS NOT GIVEN ANY FINDING THAT THE OR DER OF THE AO WAS NOT SUSTAINABLE IN LAW. THE LEARNED COMMISSIONER OF INCOME TAX WAS ALSO NOT JUSTIFIED IN HOLDING THAT THE SUBMISSION O F THE ASSESSEE WAS NOT OBTAINED BY THE AO WITH REGARD TO CONSULTANCY E XPENSES PAID TO M/S. B2C INDIA LTD. SINCE COMPLETE DETAILS WERE FIL ED BEFORE THE AO WHICH HAVE BEEN EXAMINED BY THE AO AND THE AO TOOK ONE OF THE POSSIBLE VIEWS UNDER LAW AND THAT COMPLETE DETAILS WERE FURNISHED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX ON WH ICH NO FINDING HAS BEEN GIVEN BY HIM WOULD SHOW THAT THE LEARNED C OMMISSIONER OF INCOME TAX WITHOUT ANY JUSTIFICATION QUASHED THE IM PUGNED ORDER U/S 263 OF THE IT ACT JUST FOR THE PURPOSE OF MAKING RO UTINE INQUIRY WITH REGARD TO THE MATTERS IN ISSUE WHICH HAD ALREADY BE EN CONCLUDED BY THE AO. IN VIEW OF THE ABOVE, THE ORDER OF THE LEAR NED COMMISSIONER OF INCOME TAX CANNOT BE SUSTAINED UNDER LAW. 9. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AS NOTED ABOVE IN THE LIGHT OF THE ABOVE DISCUSSIONS, WE FIN D THAT THE IMPUGNED ORDER IS NOT SUSTAINABLE IN LAW. WE ACCORDINGLY, SE T ASIDE THE IMPUGNED ORDER U/S 263 OF THE IT ACT AND RESTORE TH E ORDER OF THE AO DATED 20-12-2007 PASSED U/S 143 (3) OF THE IT ACT. ITA NO.1617/AHD/2010 ANKUSH HOLDINGS LTD. VS CIT-I, AHMEDABAD 27 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED ON 25-03-2011 SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 25-03-2011 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD