1 ITA NO. 188/ALLD/2013 IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH ALLAHABAD BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER AND MS.SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.188/ALLD/2013 ASSESSMENT YEAR: 2008-09 SHRI KRISHNA JI VISHWAKARMA 150B/7A-1, HARWARRA, MEERAPATTI ALLAHABAD PAN: AASPV0676P VS. COMMISSIONER OF INCOME TAX, ALLAHABAD (APPELLANT) (RESPONDENT) REVENUE BY SHRI RAJKUMAR LACHHIRAMANKA, CIT DR ASSESSEE(S) BY : SHRI ABHINAV MEHROTRA, ADV / DATE OF HEARING : 29/06/2017 /DATE OF PRONOUNCEMENT: 29/08/2017 ORDER PER SUCHITRA KAMBLE: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 28/02/2013 PASSED BY THE COMMISSIONER OF INCOME TAX, ALLAHABAD UNDER SECTION 263 OF THE INCOME TAX ACT, 1961. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX ALLAHABAD, IN TREATING THE ASSESSMENT MADE BY ASSES SING -OFFICER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REV ENUE IS, BOTH, BAD IN LAW AND ON FACTS AND DESERVES TO BE ANNULLED . 2. THAT IN THE ORDER U/S263 OF THE INCOME TAX ACT, PASSED BY 2 ITA NO. 188/ALLD/2013 CIT, IT HAS BEEN HELD THAT THE ASSESSING OFFICER FA ILED TO MAKE ANY CONCRETE ENQUIRY WITH REGARD TO VERIFICATION OF V IOLATION OF PROVISIONS OF SECTION 1941, COMMITTED BY THE ASSESS EE AND THAT THE SAID EXPENDITURE SHOULD HAVE BEEN DISALLOWED U/S40( A)(IA) OF THE I.T. ACT 1961, WHEREAS THE VARIOUS PROCEDURES RECOM MENDED BY THE LD.CIT(A) AMOUNTS TO TRANSGRESSING THE AUTHORIT Y OF THE ASSESSING OFFICER IN MAKING ASSESSMENT AND THE SAME IS UNWARRANTED BY LAW AND HENCE THE ACTION OF THE CIT DESERVES TO BE ANNULLED. 3. THE LD. CIT HAS NOT POINTED OUT AS TO HOW THE S AID NON INVESTIGATION LEADS TO THE ORDER OF ASSESSMENT BEIN G ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, IN A CASE WHERE THE ALLEGED PROVISIONS OF SECTION 1941 ARE NOT EVEN APP LICABLE TO THE ASSESSEE AS THE RENT PAYMENT IS BELOW THE EXEMPTION LIMIT. 4 THAT, WITHOUT PREJUDICE TO ABOVE AND IN THE ALTERNATIVE, THE LD. CIT HAS NOT INVESTIGATED AS TO WHETHER THE AMOUNT P AID BY THE ASSESSEE HAS BEEN OFFERED FOR TAXATION BY THE PAYEE WHICH ESSENTIAL TO CONCLUDE THAT THE ORDER PASSED -BY THE AO IS CAU SING PREJUDICE TO THE REVENUE. 5. THAT THE ORDER PASS BY LD. CIT DESERVE TO BE QU ASHED IN THE LIGHT OF DETAILED ASSESSMENT PROCEEDING CARRIED OUT BY THE AO, GATHERING AN APPROPRIATE, LEGALLY PERMISSIBLE, VIEW IN THE PRESENT FACTS AND CIRCUMSTANCE OF THE CASE. 6. ANY OTHER GROUND OF APPEAL THAT THE ASSESSEE MA Y DESIRE TO RAISE DURING THE HEARING OF APPEAL. 3. THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY BY ISSUING NOTICE U/S 143(2) AND ASSESSMENT ORDER WAS PASSED U/S 143(3) O F THE ACT AFTER DETAILED HEARING AND PROCEEDINGS CONDUCTED BY THE THEN ASSES SING OFFICER ON VARIOUS DATES ON VARIOUS ISSUES. FROM PERUSAL OF THE ASSES SMENT ORDER FOR ASSESSMENT YEAR 2008-09 IT CAN BE SEEN THAT THE ASSESSING OFFI CER CATEGORICALLY MENTIONED THAT THE ASSESSEE APPEARED BEFORE HIM FROM TIME TO TIME AND FILED REQUIRED DETAILS/DOCUMENTS WHICH WAS PLACED ON RECORD AND WA S GONE THROUGH BY THE 3 ITA NO. 188/ALLD/2013 ASSESSING OFFICER. BESIDES THE POINTS RAISED/CONSI DERED FOR SELECTION OF SCRUTINY OTHER POINTS WERE ALSO RAISED AND WRITTEN SUBMISSIONS/EXPLANATIONS WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL AVAILABLE ON RECORD SOUGHT FROM TIME TO TIME AND REQUISITE EVIDENCES/EX PLANATIONS/PAPERS WERE FURNISHED BY THE ASSESSEE TO THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. IN ADDITIONS, BOOKS OF ACCOUNTS WERE ALSO PRODUCED WHICH WERE EXAMINED AND CASE WAS DISCUSSED IN DEPTH BY THE ASS ESSING OFFICER. THUS, THE ORDER MADE U/S 143(3) OF THE ACT AS PER THE ASSESSE E WAS CORRECT ORDER AFTER SCRUTINIZING AND CONSIDERING ALL FACTS AND EVIDENCE S PRODUCED/EXPLAINED AND EXAMINED BY THE THEN A.O. BASED ON INFORMATION THA T ASSESSMENT ORDER U/S 143(3)/147 OF THE INCOME TAX ACT DATED 26/7/2010 AN D FURTHER RECTIFIED U/S 154 OF THE ACT DATED 29/4/2012 IN THE CASE OF THE A SSESSEE FOR ASSESSMENT YEAR 2008-09. THE COMMISSIONER OF INCOME TAX, ALLA HABAD FOUND THAT THE SAME IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST O F REVENUE. THEREFORE, A SHOW CAUSE NOTICE DATED 15/1/2013 WAS ISSUED TO THE ASSESSEE U/S 263 OF THE ACT. THE NOTICE READS AS UNDER:- SUB: NOTICE U/S 263 OF THE I.T. ACT, 1961 FOR A.Y 2 008-09-REG:- IT TRANSPIRED FROM THE PERUSAL OF THE ASSESSMENT O RDER DATED 26/7/2010 FOR THE ASSESSMENT YEAR 2008-09 PASSED U/S 143(3) OF I.T. ACT, 1961 IN YOUR CASE THAT SAID ASSESSMENT ORDER IS ERRONEOUS AND PR EJUDICIAL TO THE INTEREST OF REVENUE FOR THE FOLLOWING REASONS:- 2- YOU HAVE DEBITED RS. 1,22,562/- AS PAYMENT OF SH OP RENT IN P/1 A/C FOR THE A.Y. 2008-09. THE A.O. HAS ALLOWED THE EXPENSES, U/S 40 (A)(IA) OF THE INCOME TAX ACT 1961, RS. 1,22,562/- WHICH SHOUL D HAVE BEEN DISALLOWED AND ADDED TO YOUR TOTAL INCOME FOR NON DEDUCTION OF TAX FOR PAYMENT OF SHOP RENT AS PER PROVISIONS OF SEC. 194 1 OF L.T. ACT 19 61. 3. IT HAS THEREFORE COME TO LIGHT THAT PROPER VERIFICA TION WITH REGARD TO NON DEDUCTION OF TAX IN VIEW OF PROVISIONS OF SECTI ON 1941 HAVE NOT BEEN 4 ITA NO. 188/ALLD/2013 MADE AND THE SAID EXPENDITURE SHOULD HAVE BEEN DISA LLOWED U/S 40(A)(IA) OF THE I.T. ACT 1961. 3. IT HAS THEREFORE, YOU ARE REQUIRED TO, SHOW CAUSE AS TO WHY ORDER PASSED BY THE A.O. FOR THE A.Y. 2008-09 ON THE ABOV E ISSUES MAY NOT BE REVIEWED U/S 263 OF THE I.T. ACT 1961. * 4. IN CASE YOU HAVE ANY OBJECTION TO THIS PRO POSAL, YOU MAY APPEAR BEFORE THE UNDERSIGNED IN PERSON OR THROUGH A DULY AUTHORIZED REPRESENTATIVE ON 31-01-2013 AT 12.00 P.M. IN SUPPORT OF YOUR CONT ENTION. SD/- (D.ROY CHOUDHURY ) COMMISSIONER OF INCOME TAX, ALLAHABAD 2.1. THIS NOTICE WAS RETURNED BY THE POST OFFICE, U NDELIVERED WITH THE REMARKS. 24.1.2013 4. THE ASSESSEE FILED ITS REPLY AND ALSO EXPLAINED THAT THE FINDING/REASONS GIVEN FOR ADDITION OF RS.1,22,562/- BEING RENT PAID WITHOUT DEDUCTION OF INCOME TAX ACT SOURCE IS NOT BASED ON FACTS. THE A SSESSEE REPRODUCED THE DETAILS OF RENT PAID AS PER PROFIT AND LOSS ACCOUNT WHICH IS AS UNDER:- SHOP RENT PAID TO JAGJEET SINGH@ RS. 9000/- P.M. RS.1,08,000.00 PROVISION ON ACCRUAL BASIS OF ELECTRICITY BILL OF THE SHOP FOR THE RELEVANT PERIOD PAID IN NEXT RS. 14,562.00 FINANCIAL YEAR THROUGH ACCOUNT PAYEE CHEQUE. RS.1 ,22,562.00 FROM THE ABOVE IT IS EVIDENT THAT NO TDS WAS REQUIR ED AGAINST RENT PAID OF RS. 108,000/- AS THE RENT PAID IS BELOW THE LIMIT OF RE NT ATTRACTING PROVISIONS OF 5 ITA NO. 188/ALLD/2013 TDS U/S 194 I OF THE INCOME TAX ACT, 1961. 5. THE ASSESSEE WAS FURTHER ASKED TO PRODUCE CONCER NED RENT AGREEMENT AND OTHER DETAILS INCLUDING BOOKS OF ACCOUNTS WHICH WAS PRODUCED BY THE ASSESSEE. THE COMMISSIONER OF INCOME TAX WHILE PAS SING THE ORDER U/S 263 OF THE ACT WHEREBY ENHANCING THE TOTAL INCOME BY MAKIN G ADDITION U/S 40(A)(IA) OF THE ACT. 6. THE LD. AR SUBMITTED THAT THE ASSESSEE PRODUCED ALL THE REQUISITE DOCUMENTS BEFORE THE ASSESSING OFFICER AND THE SPEC IFIC QUERIES WERE RAISED BY THE ASSESSING OFFICER DURING THE REGULAR ASSESSMENT PROCEEDINGS WHICH WAS FURTHER SATISFIED BY THE ASSESSEE. ORDER U/S 263 O F THE ACT DOES NOT HAVE ANY BEARING AS IT IS MERELY A SECOND OPINION WHICH IS N OT PERMISSIBLE UNDER THE ACT. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. IT IS UNDISPUTED FACT THAT THE ASSESSEE PRODUCED ALL THE REQUISITE D OCUMENTS BEFORE THE ASSESSING OFFICER. DURING THE REGULAR ASSESSMENT PR OCEEDINGS, THE SPECIFIC QUERIES RAISED BY THE ASSESSING OFFICER WERE FURTHE R SATISFIED BY THE ASSESSEE. ORDER U/S 263 OF THE ACT DOES NOT HAVE ANY BEARING AS IT IS MERELY A SECOND OPINION WHICH IS NOT PERMISSIBLE UNDER THE ACT. RE VISIONARY POWER U/S 263 OF THE ACT IS CONFERRED BY THE ACT ON THE COMMISSIONER WHEN AN ORDER IS PASSED BY THE AUTHORITY IS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF THE REVENUE. ORDERS WHICH ARE PASSED WITHOUT INQUIRY OR INVESTIG ATION ARE TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE, BUT WHICH ARE PASSED AFTER INQUIRY/INVESTIGATION ON THE QUESTION/ISSUE A RE NOT PER SE ARE NORMALLY TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF THE REVENUE. BECAUSE, THE REVISIONARY AUTHORITY FEELS AND OPINES THAT FUR THER INQUIRY/INVESTIGATION WAS REQUIRED OR DEEPER OR FURTHER SCRUTINY SHOULD B E UNDERTAKEN, THE SAME CANNOT BE INITIATED WITHOUT FOLLOWING THE PROPER PR OVISIONS U/S 263 OF THE ACT. IN THE PRESENT CASE THE ASSESSING OFFICER HAS MADE ALL THE INQUIRIES AND AFTER VERIFYING THE DOCUMENTS/ MATERIAL ON RECORD PASSED A REASONED ASSESSMENT 6 ITA NO. 188/ALLD/2013 ORDER. THEREFORE, THE COMMISSIONER DOES NOT HAVE AN Y LOCUS STANDI TO MAKE FURTHER INQUIRY. THEREFORE, ORDER U/S 263 OF THE A CT IN PRESENT APPEAL IS NOT JUSTIFIED AND IS SET ASIDE HEREWITH. THEREFORE, THE ORDER U/S 263 IS PASSED BY THE COMMISSIONER OF INCOME TAX IS SET ASIDE. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON THE 29 TH DAY OF AUGUST, 2017. SD/- SD/- (R. K. PANDA) ( SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDI CIAL MEMBER DATED: 29/08/2017 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT AS SISTANT REGISTRAR ITAT ALLAHABAD DATE 1. DRAFT DICTATED ON 11/07/2017 PS 2. DRAFT PLACED BEFORE AUTHOR 11/07/2017 PS 7 ITA NO. 188/ALLD/2013 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 12.09.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 12.09 .2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.