Sri Hari Gopal Lunani, Eluru V. The CIT, Rajahmundry, Rajahmundry

ITA 190/VIZ/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2156 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-11-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 24-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G GURUSWAMY
• Keywords: Earning of tax free income; Initiation of penalty proceedings; Corroborative evidences; Assessment record
• Section: 143(3); 142(1); 14A; 147; 148; 263; 63

Judgement Text

ITA NO.190/VIZAG/2012 HARIGOPAL LUNANI, GAVARAVARAM 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.190/VIZAG/2012 ( / ASSESSMENT YEAR : 2006-07) HARIGOPAL LUNANI GAVARAVARAM VS. CIT RAJAHMUNDRY [ PAN: AAVTL4979Q] ( / APPELLANT) ( / RESPONDENT ) / APPELLANT BY : SHRI G.V.N. HARI, AR #$ / RESPONDENT BY : SHRI G. GURUSWAMY, DR ( / DATE OF HEARING : 27.11.2015 ( / DATE OF PRONOUNCEMENT : 22.01.2016 / O R D E R PER V.DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT, RAJAHMUNDRY DATED 22.2.2012, PASSED U/S 263 OF THE INCOME-TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2006-07. ITA NO.190/VIZAG/2012 HARIGOPAL LUNANI, GAVARAVARAM 2 2. THE BRIEF FACTS OF THE CASE, ARE THAT THE ASSESS EE IS AN INDIVIDUAL CARRIED ON THE BUSINESS IN THE NAME OF KARNI ENGINE ERING COMPANY AND IS ALSO A PROPRIETOR OF M/S. JAI GURU DATTA TRANSPO RT, FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 ON 31.3.2007 DECLARING TOTAL INCOME OF RS.2,39,270/-. THE TOTAL INCOME COMPRISE OF INCOME FROM TRANSPORT BUSINESS, INCOME FROM LONG TERM CAPITAL G AIN AND INCOME FROM OTHER SOURCES. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE ACT ON 5.6.2007. SUBSEQUENTLY, THE CASE WAS REOPEN ED U/S 147 OF THE ACT BY ISSUING A NOTICE U/S 148. IN RESPONSE TO NO TICE U/S 148 OF THE ACT, THE ASSESSEE HAS FILED A LETTER ON 12.3.2009, STATING THAT THE RETURN FILED U/S 139(1) OF THE ACT ON 31.3.2007 MAY BE CON SIDERED AS THE RETURN FILED IN RESPONSE TO THE NOTICE U/S 148 OF T HE ACT. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGLY NO TICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED. IN RESPONSE TO NOTI CES, THE ASSESSEE HAS FILED THE DETAILS CALLED FOR. THE A.O. AFTER CONSI DERING THE DETAILS FURNISHED BY THE ASSESSEE COMPLETED THE ASSESSMENT ON 31.12.2009 AND DETERMINED TOTAL INCOME OF RS.3,52,730/-. IN THE S AID ASSESSMENT, THE A.O. MADE ADDITIONS TOWARDS (1) EXCESS OF ASSETS OV ER LIABILITIES AT RS.15,000/- (2) DIFFERENCE IN CONTRACT RECEIPTS OF RS.45,180/- AND (3) DISALLOWANCE OF INTEREST PAID ON EXEMPT INCOME U/S 14A OF THE ACT OF RS.53,286/-. ITA NO.190/VIZAG/2012 HARIGOPAL LUNANI, GAVARAVARAM 3 3. THE CIT, RAJAHMUNDRY ISSUED A SHOW CAUSE NOTICE U/S 263 OF THE ACT DATED 5.8.2011 AND PROPOSED TO REVISE THE ASSES SMENT ORDER. THE CIT PROPOSED TO REVISE THE ASSESSMENT ORDER FOR THE REASON THAT ON EXAMINATION OF ASSESSMENT RECORDS, CERTAIN OMISSION S AND COMMISSIONS WERE NOTICED, WHICH RENDERED THE ASSESSMENT ORDER E RRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE 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 ERRONEOUSLY ALLOWED FURTHER DEDUCTIONS TOW ARDS EXPENDITURE AGAINST THE ESTIMATED INCOME FROM CONTRACT BUSINESS . THEREFORE, THE ORDER U/S 147 R.W.S. 143(3) OF THE ACT IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE CI T FURTHER WAS OF THE OPINION THAT THOUGH THE RECEIPTS OF THE BUSINESS EX CEEDS RS.40 LAKHS, THE A.O. AFTER TAKING EXPLANATION FROM THE ASSESSEE HAS DROPPED THE PENALTY PROCEEDINGS U/S 271B OF THE ACT. THE CIT F URTHER WAS OF THE OPINION THAT THE A.O. OUGHT TO HAVE LEVIED THE PEN ALTY IN THE BACKROUND OF THE FACTS OF THE CASE. THE CIT FURTHER OBSERVED THAT THE ASSESSEE HAS DECLARED A NET LOSS OF RS.1,63,221/- FROM THE BUSIN ESS OF MONEY LENDING, WHEREAS HE HAS CLAIMED NET LOSS OF RS.2,01,033/- IN THE STATEMENT OF COMPUTATION OF TOTAL INCOME, THIS RESULTED IN EXCES S CLAIM OF LOSS OF RS.37,812/-. WITH THESE OBSERVATIONS, THE CIT WAS O F THE OPINION THAT THE A.O. HAS COMPLETED THE ASSESSMENT WITHOUT EXAMI NING THE ABOVE ITA NO.190/VIZAG/2012 HARIGOPAL LUNANI, GAVARAVARAM 4 ISSUES, THUS THE ASSESSMENT ORDER PASSED U/S 147 R. W.S. 143(3) OF THE ACT IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE IN TERMS OF SECTION 263 OF THE ACT. 4. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE H AS FILED WRITTEN SUBMISSION ON 13.2.2012 AND CONTENDED THAT REVISION OF ASSESSMENT ORDER, BASED ON THE AUDITED PARTY OBJECTION ALONE I S INCORRECT. THE ASSESSEE FURTHER SUBMITTED THAT THE ORDER PASSED BY THE A.O. IS NOT ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF THE REVENUE, AS THE A.O. HAS VERIFIED ALL THE ISSUES, WHICH ARE POI NTED OUT BY THE CIT IN HIS SHOW CAUSE NOTICE. THE ASSESSEE FURTHER SUBMIT TED THAT THE CIT CANNOT REVISE THE ASSESSMENT ORDER FOR INITIATION O F PENALTY PROCEEDINGS AND FOR ESTIMATION OF NET PROFIT, AS THE NET PROFIT DECLARED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE A.O. AT THE TIME OF ASSESSMENT. THE ASSESSEE FURTHER SUBMITTED THAT THE A.O. PASSED ORD ER AFTER PROPER APPLICATION OF MIND AND HENCE, INTERFERENCE BY THE CIT BY INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT IS BAD IN LAW AS PER THE SETTLED PROPOSITION OF LAW. 5. THE CIT, HOWEVER, AFTER CONSIDERING THE EXPLANAT ION SUBMITTED BY THE ASSESSEE AND ALSO IN THE LIGHT OF THE OBSERVATI ONS MADE BY HIM IN HIS SHOW CAUSE NOTICE, SET ASIDE THE ORDER PASSED BY TH E A.O. U/S 147 R.W.S. ITA NO.190/VIZAG/2012 HARIGOPAL LUNANI, GAVARAVARAM 5 143(3) OF THE ACT DATED 31.12.2009 AND REMIT BACK T HE FILE TO THE A.O. WITH SPECIFIC DIRECTION TO EXAMINE ALL THE ISSUES N ARRATED ABOVE AND TO FRAME A LOGICAL ASSESSMENT ON SOUND LEGAL FOOTING. IN DOING SO, THE A.O. SHOULD STRAIGHTAWAY ESTIMATE THE INCOME FROM TRANSP ORT BUSINESS AT 6% WITHOUT GIVING ANY FURTHER DEDUCTIONS TOWARDS EXPEN SES. LIKEWISE, THE PENALTY PROCEEDINGS ALREADY DROPPED NEED TO BE INIT IATED AGAIN AND FINALISE AS PER LAW. THE A.O. SHOULD CORRECTLY WOR KOUT, WHETHER THE ASSESSEE HAS RIGHTLY CLAIMED THE LOSS FROM MONEY LE NDING BUSINESS WITH SUPPORTING EVIDENCES. WITH THESE DIRECTIONS, THE CI T HELD THAT ORDER PASSED BY THE A.O. IS ERRONEOUS, IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, DIRECTED THE A .O. TO COMPLETE THE ASSESSMENT WITHIN THE TIME ALLOWED UNDER ACT, AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. AGGRIEVED BY THE CIT ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SU BMITTED THAT THE ASSESSMENT ORDER IS NOT ERRONEOUS, IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, AS THE A.O. HAS MADE DETAI LED ENQUIRIES AT THE TIME OF ASSESSMENT, WITH REGARD TO THE ISSUES RAISE D BY THE CIT. THE A.R. FURTHER SUBMITTED THAT DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THE A.O. ISSUED DETAILED QUESTIONNAIRE DATED 5.11.2009, WHEREIN ALL THE DETAILS ABOUT THE ISSUES RAISED BY THE CIT ARE CALLED FOR ITA NO.190/VIZAG/2012 HARIGOPAL LUNANI, GAVARAVARAM 6 AND EXAMINED. THE A.R. FURTHER SUBMITTED THAT THE A.O. HAS PASSED CONSEQUENTIAL ORDER U/S 143(3) R.W.S. 263 OF THE AC T AND HAS ACCEPTED ALL THE ISSUES RAISED BY THE CIT, EXCEPT TO THE EXT ENT OF DISALLOWANCE OF EXPENDITURE CLAIMED AGAINST ESTIMATION OF NET PROFI T FROM THE TRANSPORT BUSINESS. THE A.R. FURTHER SUBMITTED THAT AS REGAR DS TRANSPORT BUSINESS, THE CIT WAS NOT CORRECT IN COMING TO THE CONCLUSION THAT THE ASSESSEE HAS ESTIMATED NET PROFIT OF 6% AND CLAIMED FURTHER DEDUCTION TOWARDS EXPENDITURE. THE FACT IS THAT THE ASSESSEE HAS EST IMATED GROSS PROFIT OF 6% AND CLAIMED FURTHER DEDUCTIONS TOWARDS EXPENDITU RE LIKE SALARIES, BANK COMMISSION, ETC. THEREFORE, THE CIT WAS COMPL ETELY ERRED IN COMING TO THE CONCLUSION THAT THE EXPENDITURE WAS C LAIMED AGAINST THE NET PROFIT ESTIMATED FROM THE BUSINESS. THE A.R. F URTHER SUBMITTED THAT AS FAR AS ISSUE OF PENALTY IS CONCERNED, THE A.O. H AS CHOSEN TO DROP THE PENALTY PROCEEDINGS AFTER CONSIDERING THE EXPLANATI ONS OF THE ASSESSEE. THEREFORE, THE CIT WAS NOT CORRECT IN DIRECTING THE A.O. TO REOPEN THE PENALTY PROCEEDINGS IN THE REVISION PROCEEDINGS U/S 263 OF THE ACT. 7. ON THE OTHER HAND, THE LD. D.R. STRONGLY SUPPORT ED THE ORDER OF THE CIT. THE LD. D.R. FURTHER SUBMITTED THAT THE A SSESSMENT ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF THE REVENUE, AS THE A.O. HAS WRONGLY ALLOWED THE FURTHER DEDUCTIONS TOWARDS EXPENDITURE AGAINST THE NET PROFIT ESTIMATED FROM T HE CONTRACT BUSINESS. ITA NO.190/VIZAG/2012 HARIGOPAL LUNANI, GAVARAVARAM 7 THEREFORE, THE ORDER IS ERRONEOUS, HENCE, THE CIT H AS RIGHTLY REVISED THE ASSESSMENT ORDER AND HIS ORDER SHOULD BE UPHELD. 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE CIT ASSUMED THE JURISDICTION TO REVISE THE ASSESSME NT ORDER FOR THE REASON THAT THE A.O. HAS NOT CONDUCTED PROPER ENQUI RY BEFORE COMPLETING THE ASSESSMENT ORDER, THEREBY THE ASSESS MENT ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF THE REVENUE. THE CIT HAS RAISED NUMBER OF ISSUES IN THE REVISON PROC EEDINGS. ON PERUSAL OF THE SHOW CAUSE NOTICE ISSUED BY THE CIT, ASSESSM ENT ORDER AND PAPER BOOK FILED BY THE ASSESSEE, WE FIND THAT ALL THE IS SUES QUESTIONED BY THE CIT IN THE PROCEEDINGS WERE ALREADY EXAMINED BY THE A.O. IN THE ASSESSMENT PROCEEDINGS. THE A.R. FILED THE PAPER B OOK CONTAINING DETAILS FILED BEFORE THE A.O. AT THE TIME OF ASSESS MENT PROCEEDINGS. ON PERUSAL OF THE PAPER BOOK, WE FIND THAT THE A.O. HA S ISSUED A QUESTIONNAIRE WHEREIN HE HAS CALLED FOR EACH AND EV ERY DETAIL ABOUT THE ISSUES REGARDING ESTIMATION OF NET PROFIT FROM THE TRANSPORT BUSINESS, NET LOSS FROM THE MONEY LENDING BUSINESS ETC.,. ON FUR THER VERIFICATION OF ASSESSMENT ORDER, WE FIND THAT THE A.O. HAS MADE AD DITIONS TOWARDS DIFFERENCE IN TURNOVER ADMITTED FROM THE TRANSPORT BUSINESS. WE FURTHER NOTICED THAT THE A.O. HAS EXAMINED THE NET LOSS FRO M THE MONEY LENDING ITA NO.190/VIZAG/2012 HARIGOPAL LUNANI, GAVARAVARAM 8 BUSINESS AND ALSO DISALLOWED PORTION OF INTEREST CL AIMED UNDER SEC. 14A OF THE ACT. THESE FACTS ARE CLEARLY INDICATES THAT THE A.O. HAS EXAMINED THE ISSUES AT THE TIME OF ASSESSMENT PROCEEDINGS, O N WHICH THE CIT WANTS FURTHER VERIFICATION. THEREFORE, THE CIT WAS NOT CORRECT IN OBSERVING THAT THE A.O. DID NOT CONDUCT PROPER VERI FICATION OF THE ISSUES BEFORE COMPLETION OF THE ASSESSMENT. 9. THE CIT ASSUMED THE JURISDICTION TO REVISE THE A SSESSMENT ORDER ON THE SOLE GROUND THAT THERE IS A LACK OF ENQUIRY ON THE PART OF A.O. IN EXAMINING THE ISSUES REFERRED TO IN HIS SHOW CAUSE NOTICE. THE CIT QUESTIONED THE ESTIMATION OF NET PROFIT FROM TRANSP ORT BUSINESS AND FURTHER DEDUCTIONS TOWARDS EXPENDITURE AGAINST THE ESTIMATED INCOME. THE ASSESSEE CONTENDED THAT HE HAS NOT ESTIMATED TH E NET PROFIT FROM THE TRANSPORT BUSINESS AND CLAIMED FURTHER DEDUCTIO NS TOWARDS EXPENDITURE. THE ASSESSEE HAS ARRIVED AT THE DIFFE RENCE BETWEEN GROSS RECEIPTS AND PAYMENTS MADE TO CONTRACTORS AND AGAIN ST WHICH FURTHER DEDUCTION WAS CLAIMED TOWARDS EXPENDITURE SUCH AS S ALARIES, BANK COMMISSION, ETC. AND WHICH WAS EXAMINED BY THE A.O. AT THE TIME OF ASSESSMENT AND DECIDED TO ALLOW THE CLAIM OF THE AS SESSEE. ONCE, THE A.O. EXAMINED THE ISSUE AND COME TO THE CONCLUSION THAT THE CLAIM OF THE ASSESSEE IS CORRECT, THE CIT WAS NOT CORRECT IN ASSUMING JURISDICTION AND TO REVISE THE ASSESSMENT ORDER ON THE GUISE OF LACK OF ENQUIRY. ITA NO.190/VIZAG/2012 HARIGOPAL LUNANI, GAVARAVARAM 9 10. AS FAR AS THE ISSUE OF PENALTY IS CONCERNED, TH E CIT WAS OF THE OPINION THAT THE A.O. HAS DROPPED THE PENALTY PROCE EDINGS WITHOUT EXAMINING THE REASONABLENESS OF THE CLAIM AND ALSO IN A ROUTINE MANNER. BUT, WE DO NOT SEE ANY MERITS IN THE OBSERVATION OF THE CIT FOR THE REASON THAT ONCE THE A.O. HAS CHOSEN TO DROP THE PE NALTY PROCEEDINGS, AFTER SATISFIED WITH THE EXPLANATION OFFERED BY THE ASSESSEE, THE CIT HAS NO JURISDICTION TO REVISE THE ASSESSMENT ORDER FOR INITIATION OF PENALTY PROCEEDINGS. IN OUR OPINION, THE CIT HAS EXCEEDED HIS AUTHORITY BY STEPPING INTO THE SHOES OF THE A.O. AND DIRECT HIM TO REINITIATE THE PENALTY PROCEEDINGS. 11. COMING TO THE OTHER ISSUES, WHICH LEADS TO THE REVISION OF ASSESSMENT ORDER. THE CIT HAS POINTED OUT MANY LAP SES IN ASSESSMENT ORDER WHILE ASSUMING THE JURISDICTION U/S 263 OF TH E ACT. THE A.R. OF THE ASSESSEE AT THE TIME OF HEARING FURNISHED A COPY OF THE CONSEQUENTIAL ORDER PASSED BY THE A.O., WHEREIN THE A.O. HAS ACCE PTED THE ASSESSEES EXPLANATIONS WITH REGARD TO THE OTHER ISSUES RAISED BY THE CIT IN THE REVISION PROCEEDINGS, EXCEPT THE ISSUE WITH REGARD TO THE DISALLOWANCE OF EXPENDITURE AGAINST THE ESTIMATION OF NET PROFIT FR OM THE TRANSPORT BUSINESS. THEREFORE, WE ARE OF THE OPINION THAT TH E CIT WITHOUT ANY PROPER REASONS SIMPLY, REVISED THE ASSESSMENT ORDER ON THE GUISE OF REVISION WHICH IS NOT PERMISSIBLE UNDER LAW. ITA NO.190/VIZAG/2012 HARIGOPAL LUNANI, GAVARAVARAM 10 12. THE CIT HAS POWER TO REVISE THE ASSESSMENT ORDE R UNDER SEC. 263 OF THE ACT. BUT, TO INVOKE THE PROVISIONS OF SECTIO N 263 OF THE ACT, THE TWIN CONDITIONS MUST BE SATISFIED, I.E. (1) THE ORD ER OF THE ASSESSING OFFICER IS ERRONEOUS (2) AND FURTHER IT MUST BE PRE JUDICIAL TO THE INTEREST OF THE REVENUE. UNLESS, BOTH THE CONDITIONS ARE SA TISFIED, THE CIT CANNOT ASSUME JURISDICTION TO REVISE THE ASSESSMENT ORDER. IT IS NOT NECESSARY THAT EVERY ORDER WHICH ERRONEOUS MAY NOT BE PREJUDI CIAL TO THE INTEREST OF THE REVENUE OR VICE VERSA. UNLESS THE A.O. ORDER IS NOT ERRONEOUS, NO ACTION CAN BE TAKEN BY THE CIT U/S 263 OF THE ACT. THIS IS BECAUSE THE TWIN CONDITIONS I.E. (1) THE ORDER IS ERRONEOUS AND (2) THE SAME IS ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE ARE CO-E XIST. IN THE PRESENT CASE ON HAND, THE A.O. HAS CONDUCTED DETAILED ENQUI RY AND ALSO EXAMINED THE POINTS ON WHICH THE CIT WANTS FURTHER VERIFICATION. THE ASSESSING OFFICER AFTER VERIFICATION OF BOOKS OF AC COUNTS AND RELEVANT DETAILS FURNISHED BY THE ASSESSEE ACCEPTED THE NET PROFIT DECLARED BY THE ASSESSEE FROM TRANSPORT BUSINESS, SUBJECT TO ADDITI ONS REGARDING DIFFERENCE IN TURNOVER AND ALSO NET LOSS DECLARED B Y THE ASSESSEE FROM FINANCE BUSINESS. THE CONTENTION OF THE CIT WAS TH AT THE A.O. HAS NOT CONDUCTED PROPER ENQUIRY AND ALSO NOT APPLIED HIS M IND BEFORE ALLOWING DEDUCTIONS. WE DO NOT AGREE WITH THE CIT FOR THE RE ASONS THAT THERE IS A DISTINCTION BETWEEN LACK OF ENQUIRY AND INADEQUAT E ENQUIRY. IF THERE IS ITA NO.190/VIZAG/2012 HARIGOPAL LUNANI, GAVARAVARAM 11 AN INADEQUATE ENQUIRY, THAT WOULD NOT BY ITSELF GIV E OCCASION TO THE CIT TO ASSUME JURISDICTION U/S 263 OF THE ACT, MERELY B ECAUSE HE HAS A DIFFERENT OPINION ON THE ISSUES. THE CIT CAN DO TH IS, IF THERE IS A LACK OF ENQUIRY BY THE A.O. IN THE PRESENT CASE, THE ASSES SMENT ORDER IS A DETAILED ONE AND ALSO THE A.O. HAS PASSED THE REMAR K IN THE ASSESSMENT ORDER ON ALL THE ISSUES, ON WHICH THE CIT WANTS FUR THER VERIFICATION. ACCORDING TO THE CIT, THE A.O. HAS CONDUCTED ENQUIR Y, BUT IT IS INADEQUATE, THEREFORE, HE WANTED FURTHER ENQUIRY AN D THIS FACT WAS NOT DISPUTED BY THE REVENUE. THE COMMISSIONER CANNOT I NITIATE REVISION PROCEEDINGS WITH A VIEW TO CONDUCT FISHING AND REVO LVING ENQUIRY ON THE MATTERS WHICH ARE ALREADY EXAMINED BY THE A.O. THE DEPARTMENT CANNOT DO FRESH ASSESSMENT IN THE GUISE OF REVISION , ON THE MATTERS WHICH ARE EXAMINED AND ALLOWED BY THE A.O. IN THE A SSESSMENT PROCEEDINGS. 13. NOW, IT IS PERTINENT TO DISCUSS HEREIN THE CASE LAW RELIED UPON BY THE ASSESSEE. THE ASSESSEE RELIED UPON THE COORDIN ATE BENCH DECISION OF VISAKHAPATNAM, IN THE CASE OF SRI SAI CONTRACTOR S VS. ITO WARD-1 IN ITA NO.109/VIZAG/2012, WHEREIN THE COORDINATE BENCH OF THIS TRIBUNAL, CONSIDERED THE ISSUE ELABORATELY AND HELD IN FAVOUR OF THE ASSESEE. THE RELEVANT PORTION IS EXTRACTED BELOW: ITA NO.190/VIZAG/2012 HARIGOPAL LUNANI, GAVARAVARAM 12 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIALS AVAILABLE ON RECORD. WE ALSO CONSIDERED THE CASE LAWS CITED BY EITHER OF THE PARTIES. THE CIT ASSUMED THE REVISION POWERS ON THE REASONS THAT THE A.O. HAS NOT CONDUCTED PROPER ENQUIRY BEFORE PASSING ASSESSMENT ORDER, THEREBY HI S ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. T HE CIT FURTHER, OBSERVED THAT THE ASSESSEE HAS CLAIMED HUGE EXPENDITURE UNDER THE HEA D WAGES AND CENTERING CHARGES AND THESE EXPENSES ARE SUPPORTED BY SELF-MA DE VOUCHERS. THE CIT WAS OF THE OPINION THAT THE A.O., HAS NOT CONDUCTED PROPER ENQUIRY BEFORE COMPLETION OF ASSESSMENT WITH REGARD TO THE ABOVE EXPENDITURES, I NSTEAD MADE ROUND SOME DISALLOWANCES OF RS. 1,00,000/-, WHICH IS A CLEAR C ASE OF LACK OF ENQUIRY AND NON- APPLICATION OF MIND. THE CIT FURTHER OBSERVED THAT THERE IS DIFFERENCE IN PARTNERS CAPITAL ACCOUNTS, WHICH ARE CLEARLY SHOWS THAT THE BOOKS OF ACCOUNTS ARE NOT PROPER. THE A.O., WITHOUT REJECTING THE BOOKS OF ACCOUNTS J UST COMPLETED THE ASSESSMENT, WHICH IS AGAIN A CASE OF NON- APPLICATION OF MIND. ACCORDING TO THE CIT, THE A.O., ALLOWED THE REMUNERATION TO PARTNERS WITHOUT CONSI DERING THE SERVICES RENDERED BY THEM. THE CIT WAS OF THE OPINION THAT THE PROFIT DE CLARED BY THE ASSESSEE IS VERY LOW, THEREBY, THE A.O., SHOULD HAVE REJECTED THE BO OKS OF ACCOUNTS AND ESTIMATED THE NET PROFIT. THE CIT HAS GIVEN ELABORATE DISCUSS ION ON THE ISSUES IN HIS ORDER AND JUSTIFIED THE REVISION OF ASSESSMENT ORDER UNDER SE CTION 263. WHILE DOING SO, HE HAS RELIED UPON VARIOUS CASE LAWS AS INDICATED IN HIS O RDER. 10. TO INVOKE THE PROVISIONS OF SECTION 263 OF THE ACT, THE TWIN CONDITIONS MUST BE SATISFIED I.E. THE ORDER OF THE ASSESSING OFFICE R IS ERRONEOUS AND FURTHER IT MUST BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. UNLESS BOTH CONDITIONS ARE SATISFIED, THE CIT CANNOT ASSUME JURISDICTION TO PASS ORDER U/S 26 3 OF THE ACT. IT IS NOT NECESSARY THAT EVERY ORDER WHICH IS PREJUDICIAL TO THE INTERE ST OF REVENUE IS ALSO ERRONEOUS. UNLESS THE A.OS ORDER IS NOT ERRONEOUS, NO ACTION CAN BE TAKEN BY THE CIT U/S 263 OF THE ACT, THIS IS BECAUSE THE TWIN CONDITIONS I.E . (1) THE ORDER IS ERRONEOUS AND (2) THE SAME IS ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE ARE NOT CO-EXISTS. IN THE PRESENT CASE, THE A.O. HAS CONDUCTED ENQUIRY BEFORE ALLOWING DEDUCTION TOWARDS WAGES AND CENTERING EXPENSES AND ALSO EXAMINED THE POINTS ON WHICH THE CIT WANTS FURTHER VERIFICATION. THE ASSESSING OFFICER A FTER CAREFULLY EXAMINED THE BOOKS OF ACCOUNTS AND RELEVANT VOUCHERS FURNISHED BY THE ASSESSEE PASSED THE ASSESSMENT ORDER AS INDICATED IN HIS ORDER, WHICH IS CLEARLY E VIDENT FROM THE ASSESSMENT ORDER. THE CONTENTION OF THE CIT WAS THAT THE A.O. HAS NOT CONDUCTED PROPER ENQUIRY AND ALSO NOT APPLIED HIS MIND BEFORE ALLOWING THE DEDUC TION. BUT, WE DO NOT AGREE WITH THE CIT FOR THE REASON THAT THERE IS A DISTINCTION BETWEEN LACK OF ENQUIRY AND INADEQUATE ENQUIRY. IF THERE IS AN INADEQUATE ENQU IRY THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE CIT TO ASSUME JURISDICTION U/S 263 OF THE ACT, MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER. THE CIT CAN DO THIS ONLY, WHEN THERE IS A LACK OF ENQUIRY BY THE ASSESSING OFFICER. IN THE PRESENT C ASE, THE ASSESSMENT ORDER IS DETAILED ONE AND ALSO, THE A.O. HAS PASSED A REMARK S IN THE ASSESSMENT ORDER ON TWO ISSUES, ON WHICH THE CIT ASSUMED JURISDICTION, I.E. DISALLOWANCE OF ROUND SOME EXPENDITURE OF RS. 1,00,000/- UNDER THE HEAD WAGES AND CENTERING CHARGES AND ALSO PARTNERS CAPITAL ACCOUNTS, WHERE THE ADDITION WAS RS. 66,825/-.THE A.O. HAD CALLED FOR EXPLANATION AND THE ASSESSEE HAS FURNISHED ITS EXPLANATION. BUT, THE CIT WAS OF THE OPINION THAT THE ASSESSING OFFICER COULD HAVE D O WELL TO EXPLORE THE POSSIBILITY OF REJECTING THE BOOKS OF ACCOUNTS AND ESTIMATE THE PR OFIT. ACCORDING TO CIT, THE ITA NO.190/VIZAG/2012 HARIGOPAL LUNANI, GAVARAVARAM 13 ASSESSING OFFICER HAS CONDUCTED ENQUIRY BUT, IN ADE QUATE, THEREFORE HE WANTED FURTHER ENQUIRY ON THE ISSUE ON WHICH HE ASSUMED JU RISDICTION. THIS FACT HAD NOT BEEN DISPUTED BY THE REVENUE. THE COMMISSIONER CANN OT INITIATE REVISION PROCEEDINGS, WITH A VIEW TO CONDUCT FISHING AND REV OLVING ENQUIRY IN THE MATTERS WHICH ARE ALREADY EXAMINED BY THE A.O. THE DEPARTME NT CANNOT DO FRESH ASSESSMENT IN THE GUISE OF REVISION ON THE MATTERS WHICH ARE EXAMINED AND CONCLUDED BY THE A.O. THE A.O. BEING A QUASI JUDIC IAL AUTHORITY, SHALL HAVE THE AUTHORITY TO EXERCISE RIGHT JUDGEMENT AND DISCRETIO N ON THE BASIS OF INFORMATION AVAILABLE BEFORE HIM. IN THE PRESENT CASE ON HAND, THE ASSESSING OFFICER AFTER CONSIDERING VOUCHERS, MADE AN ROUND SOME ADDITION O F RS.1,00,000/- WHICH IS ONE OF THE POSSIBLE VIEW AVAILABLE FOR HIM, WHICH THE CIT SHALL NOT TERM IT AS LACK OF ENQUIRY OR NON APPLICATION OF MIND. THUS, IT CANNOT BE SAI D THAT IT IS A CASE OF LACK OF ENQUIRY OR NON APPLICATION OF MIND. 11. NOW, IT IS RELEVANT TO CONSIDER THE CASE LAWS R ELIED ON BY THE PARTIES. THE ASSESSEE RELIED ON THE HONBLE DELHI HIGH COURT DEC ISION IN THE CASE OF DIRECTOR OF INCOME TAX VS. JYOTI FOUNDATION, (2013) 357 ITR 388 (DELHI), WHEREIN, THE HONBLE COURT OBSERVED AS UNDER. IT WAS HELD THAT REVISIONARY POWER U/S 263 IS CONF ERRED ON THE COMMISSIONER/DIRECTOR OF INCOME TAX WHEN AN ORDER P ASSED BY THE LOWER AUTHORITY IS ERRONEOUS AND PREJUDICIAL TO THE INTER EST OF THE REVENUE. BUT ORDERS WHICH ARE PASSED WITHOUT INQUIRY/INVESTIGATI ON ARE TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE, BUT ORDERS WHICH ARE PASSED AFTER INQUIRY/INVESTIGATION ON THE QUESTION/ISSUE ARE NOT PER SE OR NORMALLY TREATED AS ERRONEOUS AND PRE JUDICIAL TO THE INTEREST OF THE REVENUE BECAUSE THE REVISIONARY AUTHORITY FEELS AND OPINES THAT FURTHER INQUIRY/INV ESTIGATION WAS REQUIRED OR DEEPER OR FURTHER SCRUTINY SHOULD B E UNDERTAKEN. IN THE CASE OF INCOME TAX OFFICER VS. DG HOUSING PR OJECTS LIMITED, (2012) 343 ITR 329 (DELHI) IT WAS HELD THAT IN CASE S OF WRONG OPINION OR FINDING ON MERITS, THE CIT HAS TO COME T O THE CONCLUSION AND HIMSELF DECIDE THAT THE ORDER IS ERR ONEOUS, BY CONDUCTING NECESSARY ENQUIRY, IF REQUIRED AND NECES SARY, BEFORE THE ORDER U/S 263 IS PASSED. IN SUCH CASES, THE ORD ER OF THE AO WILL BE ERRONEOUS BECAUSE THE ORDER PASSED IS NOT S USTAINABLE IN LAW AND THE SAID FINDING MUST BE RECORDED. CIT C ANNOT REMAND THE MATTER TO THE AG TO DECIDE WHETHER THE F INDINGS RECORDED ARE ERRONEOUS. IN CASES WHERE THERE IS INA DEQUATE ENQUIRY BUT NOT LACK OF ENQUIRY, AGAIN THE CIT MUST GIVE AND RECORD A FINDING THAT THE ORDER/INQUIRY MADE IS ERR ONEOUS. THIS CAN HAPPEN IF AN ENQUIRY AND VERIFICATION IS CONDUC TED BY THE CIT AND HE IS ABLE TO ESTABLISH AND SHOW THE ERROR OR MISTAKE MADE BY THE AG, MAKING THE ORDER UNSUSTAINABLE IN L AW. IN SOME CASES POSSIBLY THOUGH RARELY, THE CIT CAN ALSO SHOW AND ESTABLISH THAT THE FACTS ON RECORD OR INFERENCES DR AWN FROM FACTS ON RECORD PER SE JUSTIFIED AND MANDATED FURTH ER ENQUIRY OR INVESTIGATION BUT THE AO HAD ERRONEOUSLY NOT UNDERT AKEN THE ITA NO.190/VIZAG/2012 HARIGOPAL LUNANI, GAVARAVARAM 14 SAME. HOWEVER, THE SAID FINDING MUST BE CLEAR, UNAM BIGUOUS AND NOT DEBATABLE. THE MATTER CANNOT BE REMITTED FO R A FRESH DECISION TO THE AG TO CONDUCT FURTHER ENQUIRIES WIT HOUT A FINDING THAT THE ORDER IS ERRONEOUS. FINDING THAT THE ORDER IS ERRONEOUS IS A CONDITION OR REQUIREMENT WHICH MUST BE SATISFI ED FOR EXERCISE OF JURISDICTION U/S 263. IN SUCH MATTERS, TO REMAND THE ISSUE TO THE AG WOULD IMPLY / THE CIT HAS NOT EXAMI NED AND DECIDED WHETHER OR NOT THE ORDER IS ERRONEOUS BUT H AS DIRECTED THE AG TO DECIDE THE ASPECT/QUESTION. AN ORDER OF R EMIT CANNOT BE PASSED BY THE CIT TO ASK THE AG TO DECIDE WHETHE R THE ORDER WAS ERRONEOUS. THIS IS NOT PERMISSIBLE. AN ORDER IS NOT ERRONEOUS, UNLESS THE CIT HOLD AND RECORDS REASONS WHY IT IS ERRONEOUS. THEREFORE JURISDICTIONAL PRECONDITION ST IPULATED IS THAT THE CIT MUST COME TO THE CONCLUSION THAT THE ORDER IS ERRONEOUS AND IS UNSUSTAINABLE IN LAW. THE MATERIAL WHICH THE CIT CAN RELY INCLUDES NOT ONLY THE RECORD AS IT STANDS AT T HE TIME WHEN THE ORDER IN QUESTION WAS PASSED BY THE AG BUT ALSO THE RECORD AS IT STANDS AT THE TIME OF EXAMINATION BY T HE CIT. (PARA 4) IN THE PRESENT CASE, INQUIRIES WERE CERTAINLY CONDU CTED BY THE AO. IT IS NOT A CASE OF NO INQUIRY. THE ORDER U/S 2 63 ITSELF RECORDS THAT THE DIRECTOR FELT THAT THE INQUIRIES W ERE NOT SUFFICIENT AND FURTHER INQUIRIES OR DETAILS SHOULD HAVE BEEN CALLED. HOWEVER, IN SUCH CASES, AS OBSERVED IN THE CASE OF DG HOUSING PROJECTS LIMITED, THE INQUIRY SHOULD HAVE B EEN CONDUCTED BY THE COMMISSIONER OR DIRECTOR HIMSELF TO RECORD T HE FINDING THAT THE ASSESSMENT ORDER WAS ERRONEOUS. HE SHOULD NOT HAVE SET ASIDE THE ORDER AND DIRECTED THE AO TO CONDUCT THE SAID INQUIRY. REVENUE'S APPEAL DISMISSED. 12. THE ASSESSEE RELIED ON CO-ORDINATE BENCH DECISI ON IN THE CASE OF SMT. SUSHEELA DEVI BOTHRA JAIN VS. ITO, WARD -1, RAJAHMUNDRY, ITA . NO. 279/VIZ/2014, WHEREIN THE HONBLE TRIBUNAL AFTER CONSIDERING THE DELHI HIGH C OURT DECISION IN THE CASE OF DIRECTOR OF INCOME TAX VS. JYOTI FOUNDATION (SUPRA) , CIT, SUNBEAM AUTO LTD (2011) 332 ITR 167 (DEL) AND HONBLE ANDHRA PRADESH HIGH C OURT DECISION IN THE CASE OF SPECTRA SHARES AND SCRIPS PVT LTD VS. CIT, (2013) 3 54 ITR 35(AP), QUASHED THE ORDER PASSED BY CIT. 13. A SIMILAR ISSUE CAME BEFORE THE CO-ORDINATE BEN CH IN THE CASE OF AGRI GOLD CONSTRUCTIONS PVT LTD VS. THE COMMISSIONER OF INCOME -TAX, VIJAYAWADA, ITA. NO. 452/VIZ/2012, WHEREIN THE HONBLE TRIBUNAL HELD THA T THE CIT CANNOT SEEK TO SUBSTITUTE HIS OPINION ON THE PERCENTAGE OF PROFIT THAT HAS TO BE APPLIED IN THE PLACE OF OPINION OF ASSESSING OFFICER UNDER THE GRAB OF R EVISIONARY POWERS, SPECIFICALLY WHEN THE AO HAS DISCUSSED THE ISSUES IN DETAIL AND PASSED AN ORDER AFTER DUE APPLICATION OF MIND. 14. IN THE CASE OF SPECTRA SHARES AND SCRIPS PVT. LT D., (2013) 354 ITR 35, THE HONBLE A.P. HIGH COURT HAS CULLED OUT PRINCIPLES L AID DOWN BY THE HONBLE SUPREME ITA NO.190/VIZAG/2012 HARIGOPAL LUNANI, GAVARAVARAM 15 COURT AND ALSO VARIOUS HIGH COURTS ON THE ISSUE OF EXERCISE OF JURISDICTION BY THE CIT U/S 263 OF THE ACT. IT READS AS FOLLOWS: '(A) THE COMMISSIONER HAS TO BE SATISFIED OF TWIN C ONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. IF ONE OF THEM IS ABSENTIF THE ORDER OF THE INCOME-TAX OFFICER IS ERR ONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOU S BUT IT IS PREJUDICIAL TO THE REVENUERECOURSE CANNOT BE HAD TO SECT/ON 263(1) OF THE ACT. (B) EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE. FOR EXAMPLE, WHEN AN INCOME-TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE OR WH ERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VI EW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED A S AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. (C) TO INVOKE THE SUO MOTU REVISIONAL POWERS TO REOPEN A CONCLUDED ASSESSMENT UNDER SECTION 263, THE COMMISSIONER MUST GIVE REASONS; THAT A BARE REITERATION BY HIM THAT THE ORDER OF THE INCOME -TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE, WILL NOT SUFFICE; THAT THE REASONS MUST BE SUCH AS TO SH OW THAT THE ENHANCEMENT OR MODIFICATION OF THE ASSESSMENT OR CA NCELLATION OF THE ASSESSMENT OR DIRECTIONS ISSUED FOR A FRESH ASSESSM ENT WERE CALLED FOR, AND MUST IRRESISTIBLY LEAD TO THE CONCLUSION THAT THE O RDER OF THE INCOME-TAX OFFICER WAS NOT ONLY ERRONEOUS BUT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THUS, WHILE THE INCOME-TAX OFFICER IS NOT C ALLED UPON TO WRITE AN ELABORATE JUDGMENT GIVING DETAILED REASONS IN RESPE CT OF EACH AND EVERY DISALLOWANCE, DEDUCTION, ETC., IT IS INCUMBENT UPON THE COMMISSIONER NOT TO EXERCISE HIS SUO MOTU REVISIONAL POWERS UNLESS SUPP ORTED BY ADEQUATE REASONS FOR DOING SO; THAT IF A QUERY IS RAISED DURING THE COURSE OF THE SCRUTINY BY THE ASSESSING OFFICER, WHICH WAS ANSWERED TO THE SA TISFACTION OF THE ASSESSING OFFICER, BUT NEITHER THE QUERY NOR THE AN SWER WERE REFLECTED IN THE ASSESSMENT ORDER, THIS WOULD NOT BY ITSELF LEAD TO THE CONCLUSION THAT THE ORDER OF THE ASSESSING OFFICER CALLED FOR INTER FERENCE AND REVISION. (E) THE COMMISSIONER CANNOT INITIATE PROCEEDINGS WI TH A VIEW TO START FISHING AND ROVING INQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED , THAT THE DEPARTMENT CANNOT BE PERMITTED TO BEGIN FR ESH LITIGATION BECAUSE OF NEW VIEWS THEY ENTERTAIN ON FACTS OR NEW VERSIONS W HICH THEY PRESENT AS TO WHAT SHOULD BE THE INFERENCE OR PROPER INFERENCE EI THER OF THE FACTS DISCLOSED OR THE WEIGHT OF THE CIRCUMSTANCE; THAT I F THIS IS PERMITTED, LITIGATION WOULD HAVE NO END EXCEPT WHEN LEGAL INGE NUITY IS EXHAUSTED. (F) WHETHER THERE WAS APPLICATION OF MIND BEFORE AL LOWING THE EXPENDITURE IN QUESTION HAS TO BE SEEN; THAT IF THERE WAS AN IN QUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE COMMI SSIONER TO PASS ORDERS UNDER SECTION 263 MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER; THAT IT IS ONLY IN CASES OF LACK OF INQUIRY THAT SUCH A COURSE OF ACTION ITA NO.190/VIZAG/2012 HARIGOPAL LUNANI, GAVARAVARAM 16 WOULD BE OPEN; THAT AN ASSESSMENT ORDER MADE BY THE INCOME-TAX OFFICER CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTE N MORE ELABORATELY, THERE MUST BE SOME PRIMA FADE MATERIAL ON RECORD TO SHOW THAT THE TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLE TE INTERPRETATION, A LESSER TAX THAN WHAT WAS JUST, HAS BEEN IMPOSED. (G) THE POWER OF THE COMMISSIONER UNDER SECTION 263 (1) IS NOT LIMITED ONLY TO THE MATER/AL WHICH WAS AVAILABLE BEFORE THE AO A ND, IN ORDER TO PROTECT THE INTERESTS OF THE REVENUE, THE COMMISSIONER IS E NTITLED TO EXAMINE ANY OTHER RECORD WHICH ARE AVAILABLE AT THE TIME OF EXA MINATION BY HIM AND TO TAKE INTO CONSIDERATION EVEN THOSE EVENTS WHICH ARO SE SUBSEQUENT TO THE ORDER OF ASSESSMENT.' -. 15. WE ALSO, CONSIDERED THE JUDGMENT OF HONBLE HIG H COURT OF ANDHRA PRADESH, IN THE CASE OF CIT VS VARANASI KANTHA RAO, I.T.T.A. NO. 36 OF 2004, DATED MARCH, 31 2015, WHEREIN THE COURT HELD AS UNDER: ON A READING OF THE PROVISION OF SECTION 263 IT IS CLEAR THAT THE ONLY PRE-CONDITION FOR REVISING THE ORDER OF ASSESSING O FFICER IS THAT THE ORDER OF THE ASSESSING OFFICER SHOULD BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE CO MMISSIONER POINTS OUT THE ERRORS IN THE ORDER OF THE ASSESSING OFFICER AND A PERUSAL OF THE ERRORS WOULD CLEARLY DISCLOSE, THE P REJUDICIAL INTEREST OF THE REVENUE. THE VESTING OF SUCH POWER IN THE HA NDS OF THE COMMISSIONER UNDER SECTION 263 IS TO SEE THAT THE A SSESSING OFFICER DOES NOT COMMIT ANY ERROR AFFECTING THE INTERESTS O F THE REVENUE. [PARA 11] IN THE INSTANT CASE, A PERUSAL OF THE ORDER OF THE ASSESSING OFFICER WOULD SHOW THAT THE RETURN OF INCOME FILED BY THE A SSESSEE WAS ACCEPTED AND THE TAX WAS FINALIZED. FROM THE ORDER OF THE ASSESSING OFFICER, ONE CANNOT DEDUCE WHETHER THE ERRORS POINT ED OUT BY THE COMMISSIONER WERE CONSIDERED BY THE ASSESSING OFFIC ER OR NOT. THE COMMISSIONER NOT ONLY POINTED OUT THE ERRORS, BUT A LSO HAD SHOWN THE EFFECT OF THE SAME ON THE REVENUE. IT IS NOT KN OWN HOW THE TRIBUNAL HAS COME TO THE CONCLUSION THAT THE ERRORS HAVE NO EFFECT ON THE REVENUE. THE, TRIBUNAL OUGHT NOT TO H AVE TAKEN INTO CONSIDERATION THE EXPLANATION SUBMITTED BY THE ASSE SSEE BEFORE THE COMMISSIONER FOR COMING TO THE CONCLUSION THAT THE ERRORS POINTED OUT BY THE COMMISSIONER HAVE NO EFFECT ON THE REVEN UE. ULTIMATELY, IT IS FOR THE ASSESSING OFFICER, AT THE TIME OF DE NOVO ENQUIRY, TO CONSIDER WHETHER, THE EXPLANATION OFFER ED BY THE ASSESSEE TO THE POINTS RAISED BY THE COMMISSIONER IS PROPER OR NOT. WHEN ONCE THE COMMISSIONER HAS GOT POWER TO POINT OUT THE ERR ORS WHICH HAD THE EFFECT ON THE REVENUE, THE TRIBUNAL CANNOT SIT AS AN APPELLATE AUTHORITY ON THE ORDER OF THE COMMISSIONER PASSED U NDER SECTION ITA NO.190/VIZAG/2012 HARIGOPAL LUNANI, GAVARAVARAM 17 263 OF THE ACT. IF THE POWER EXISTS IN THE COMMISSI ONER AND IS EXERCISED BY HIM AFTER SATISFYING HIMSELF ON THE FA CTS OF THE CASE, IT IS NOT FOR THE TRIBUNAL TO RE-APPRECIATE THE SAI D SATISFACTION OF THE COMMISSIONER. IT IS ONLY WHEN THE COMMISSIONER DOES NOT EXERCISE THE POWER PROPERLY BY SATISFYING THE TWIN TEST CONTEMPLATED UNDER SECT ION 263, THE ORDER OF THE COMMISSIONER CAN BE HELD TO BE PERVERSE. A P RIMA FACIE PERUSAL OF THE ORDER OF THE COMMISSIONER SHOWED THAT HE WAS SATISFIED THAT THERE WERE ERRORS WHICH HAD EFFECT ON THE INTERESTS OF TH E REVENUE AND IT NEEDED A FURTHER ROBE BY THE ASSESSING OFFICER. [PARA 16] IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS O PINED THAT THE ORDER PASSED BY THE COMMISSIONER IS PROPER AND AS P ER POWERS CONFERRED ON HIM UNDER SECTION 263. ACCORDINGLY, TH E ORDER OF THE TRIBUNAL IS SET ASIDE. [PARA 17] 16. THE HONBLE CALCUTTA HIGH COURT, IN THE CASE OF CIT VS. MAITHAN INTERNATIONAL (2015) 375 ITR 123 (CAL-HC), WHEREIN THE COURT HELD AS UNDER. THE AO WAS REQUIRED TO MAKE PROPER INVESTIGATION T O DETERMINE WHETHER THE MONEY WAS REALLY LENT BY THE THIRD PARTY OR IT HAS COME OUT OF THE RESOURCES OF THE ASSESSEE HIMSELF. THE SOURCE OF TH E - APPARENT SOURCE IS A RELEVANT ENQUIRY. THAT THE ASSESSING OF FICER HAS FAILED TO APPLY HIS MIND TO ALL ASPECTS OF THE CASE, IS, THER EFORE, SELF-EVIDENT. SUCH NON-APPLICATION MIND CONSTITUTED PASSING OF AN ERRO NEOUS ORDER WHICH IS ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. 17. WE HAVE EXAMINED THE JUDGMENT OF HONBLE ANDHRA PRADESH HIGH COURT (SUPRA), AND HONBLE CALCUTTA HIGH COURT IN THE CAS E OF CIT VS. MAITHAN INTERNATIONAL (2015) 375 ITR 123 (CAL-HC), CITED BY THE DEPARTMENTAL REPRESENTATIVE, IN THE LIGHT OF THE FACTS OF THIS C ASE AND COME TO A CONCLUSION THAT THE FACTS OF THE CASES REFERRED BY THE REVENUE ARE DIFFERENT FROM THE FACTS OF THE PRESENT CASE. THE CASE BEFORE THE HONBLE ANDHRA PR ADESH HIGH COURT WAS THAT THE ASSESSING OFFICER HAS ACCEPTED THE RETURN OF INCOME FILED BY THE ASSESSEE AND FINALIZED THE TAX. SIMILARLY, THE CASE BEFORE THE H ONBLE CALCUTTA HIGH COURT WAS THAT THE AO, AFTER EXAMINATION OF BANK PASS BOOK, P ROFIT & LOSS ACCOUNT AND BALANCE SHEET TREATED THE LOAN AS GENUINE BUT, THE CIT AFTER MAKING ENQUIRY FOUND THAT THE LOANS WERE NOT GENUINE AND CREDITORS WERE NOT HAVING SUFFICIENT MEANS TO GIVE THE LOAN. IN THE PRESENT CASE ON HAND, THE AO, HAS MADE ALL POSSIBLE ENQUIRY AND PASSED A REMARKS IN THE ASSESSMENT ORDER ON THE ISSUES ON WHICH THE CIT ASSUMED JURISDICTION. 18. IN THIS VIEW OF THE ABOVE AND ALSO CONSIDERING T HE RATIOS OF THE JUDGMENTS REFERRED BY THE COUNSELS, WE ARE OF THE OPINION THA T THE A.O. EXAMINED THE ISSUES ON WHICH THE CIT ASSUMED JURISDICTION. THE CIT ASSUME S JURISDICTION AND REVISED THE ASSESSMENT ORDER U/S 263 OF THE ACT WITHOUT POINTIN G OUT ANY MISTAKES IN THE A.OS ORDER WITH A DIFFERENT OPINION, WHICH ITSELF IS NOT A GROUND FOR ASSUMING JURISDICTION ITA NO.190/VIZAG/2012 HARIGOPAL LUNANI, GAVARAVARAM 18 U/S 263 OF THE ACT. THEREFORE, WE QUASH THE CITS ORDER U/S 263 AND RESTORE THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER. 14. IN THIS VIEW OF THE ABOVE AND ALSO APPLYING RATIO O F THE COORDINATE BENCH DECISION REFERRED (SUPRA), WE ARE OF THE OPIN ION THAT THE ASSESSMENT ORDER IS NOT ERRONEOUS SO FAR AS IT IS P REJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, THE ORDER PASS ED BY THE CIT U/S 263 OF THE ACT IS NOT MAINTAINABLE. ACCORDINGLY, WE QU ASHED THE CITS ORDER AND RESTORE THE ASSESSMENT ORDER. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 22 ND JAN16. SD/- SD/- ( . ) (. ) ( G. MANJUNATHA) ( V. DURGA RAO ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER , /VISAKHAPATNAM: 0 / DATED : 22.01.2016 VG/SPS # 2, 3,/ COPY OF THE ORDER FORWARDED TO :- 1. / THE APPELLANT SHRI HARI GOPAL LUNANI, PROP: JAI GURU DATTA TRANSPORT, GURUKRUPA COLONY, GAVARAVARAM, ELURU 2. #$ / THE RESPONDENT THE CIT, RAJAHMUNDRY 3. 6 () / THE CIT (A), RAJAHMUNDRY 4. , # :, ( : , , / DR, ITAT, VISAKHAPATNAM 5 . / GUARD FILE / BY ORDER // TRUE COPY // >? : ( SR.PRIVATE SECRETARY ) ( : , , / ITAT, VISAKHAPATNAM