M/s. Garg Cheap Cut Piece House, New Delhi V. CIT, New Delhi

ITA 1905/DEL/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69329 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-09-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 28-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S GILL
• Assessee Lawyers: SUMIT GOEL CAS
• Keywords: Revision of order; Difference of opinion; Assessment record; Change of opinion; Revenue expenditure; Capital expenditure
• Section: 143(3); 133(6); 131; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI T.S. KAPOOR ITA NO. 1905/DEL/2010 ASSTT. YR: 2006-07 M/S GARG CHEAP CUT PIECE HOUSE VS. DCIT, CIRCLE 3( 1), D-1, MAIN ROAD, MAUJ PUR, NEW DELHI. DELHI-110053. PAN NO. AABFG 7897 E ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : S/SHRI RAJ KUMAR & SUMIT GOEL CA S RESPONDENT BY : SHRI R.S. GILL CIT (DR) O R D E R PER R.P. TOLANI, J.M : THIS IS ASSESSEES APPEAL AGAINST THE ORDER DATED 1 6-3-2010 PASSED BY THE COMMISSIONER OF INCOME-TAX, DELHI-XII, NEW DELH I U/S 263 OF THE INCOME-TAX ACT, 1961. 2. FOLLOWING GROUNDS ARE RAISED: 1. THAT THE ORDER PASSED U/S 263 OF THE I.T. ACT I S CONTRARY TO LAW AND FACTS. 2. THAT UNDER THE FACTS AND CIRCUMSTANCES, LD. CIT EXCEEDED HIS JURISDICTION IN INVOKING PROVISIONS OF SEC. 263 OF THE I.T. ACT AS THE ORDER OF LD. A.O. IS NEITHER ER RONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. 3. THAT THERE EXIST NO FACTS AND CIRCUMSTANCES, WHI CH MAY JUSTIFY FOR INVOKING PROVISIONS OF SEC. 263 OF THE I.T ACT IN THE PRESENT CASE. ITA NO. 1905/DEL/2010 M/S GARG CHEAP CUT PIECE HOUSE 2 4. THAT THE ISSUE RAISED IN SHOW CAUSE NOTICE U/ S 263 ALREADY STANDS EXAMINED AND ADJUDICATED BY THE A.O. IN ACCORDANCE WITH LAW, THEREFORE, ON THOSE ISSUES, TH E INITIATION OF PROCEEDINGS U/S 263 IS BAD IN LAW. 5. THAT THE ADDITIONS AND DISALLOWANCES MADE IN THE ORDER U/S 263 ARE NOT COVERED IN SHOW CAUSE NOTICE ISSUED U/S 263, THEREFORE, LD. CIT EXCEEDED HIS JURISDICTION IN TOU CHING UPON THE ISSUES NOT CONFRONTED IN SHOW CAUSE NOTICE AND CONSEQUENTLY ERRED IN MAKING ADDITIONS/ DISALLOWANC ES FOR THE SAME. 6. THAT WITHOUT PREJUDICE LD. CIT FURTHER ERRED IN LAW AND ON FACTS IN MAKING ADDITIONS/ DISALLOWANCES WITHOUT SPECIFICALLY CONFRONTING THOSE ISSUES AND WITHOUT ALLOWING ANY O PPORTUNITY OF HEARING AT ALL ON THOSE ISSUES, THUS, IN MAKING THOSE ADDITIONS/ DISALLOWANCES IN THE MANNER OF BET JUDGM ENT ASSTT. BY GROSSLY VIOLATING THE PRINCIPLES OF NATURAL JUST ICE WHICH MAKES THE ADDITIONS/ DISALLOWANCES ILLEGAL AND UNSU STAINABLE. 7. THAT WITHOUT PREJUDICE, UNDER THE FACTS AND CIRCUMSTANCES, LD. CIT FURTHER ERRED IN MAKING ENH ANCEMENTS, HIMSELF, IN THE ORDER PASSED BY LD. AO AND THAT TO O WITHOUT AFFORDING ANY OPPORTUNITY. 3. BRIEF FACTS ARE: THE ASSESSEE IS A PARTNERSHIP F IRM DEALING IN TEXTILES SUCH AS SUITS, SUITING AND SHIRTING AND SAREES ETC. A SURVEY WAS CONDUCTED ON ASSESSEES BUSINESS PREMISES U/S 133(6) ON 15-2-200 6. DURING THE COURSE OF SURVEY THE FOLLOWING DISCREPANCIES WERE FOUND AND A SSESSEE SURRENDERED THE FOLLOWING AMOUNTS: EXCESS STOCK RS. 89,91,576/- EXCESS CASH RS. 10,13,812/- RS. 1,00,05,388/- ITA NO. 1905/DEL/2010 M/S GARG CHEAP CUT PIECE HOUSE 3 3.1. THE RELEVANT ENTRIES OF SURRENDERED AMOUNT OF RS. 1,00,05,338/- WERE INCORPORATED IN THE BOOKS OF ACCOUNTS OF THE ASSESS EE. AS PER THE FINAL BOOK RESULTS OF THE PREVIOUS YEAR ENDED 31-3-2006, ASSES SEE FILED A RETURN OF INCOME AT RS. 42,44,290/-. THE ASSESSEES CASE WAS TAKEN UP FOR SCRUTINY, DURING THE COURSE THEREOF ASSESSING OFFICER QUERIED ABOUT SURVEY PROCEEDING; THE DIFFERENCE IN STOCK; CASH FOUND AND THE SURREND ER OF THE ASSESSEE. ASSESSING OFFICER HAS RECORDED A FINDING THAT, THE DETAILS AND INFORMATION CALLED FOR HAVE BEEN FILED, EXAMINED WITH REFERENCE TO THE BOOKS OF ACCOUNTS PRODUCED AND PLACED ON RECORD . BESIDES, THE ASSESSING OFFICER REFERRED TO THE DECLINE IN THE G.P. RATE OF THE ASSESSEE. THE A SSESSEES INCOME WAS FINALLY ASSESSED AT RS. 44,01,300/- U/S 143(3). 3.2. THEREAFTER, CIT CALLED FOR THE ASSESSEES RECO RD AND WAS OF THE VIEW THAT THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDI CIAL TO THE INTERESTS OF THE REVENUE AS THE ASSESSED INCOME WAS MUCH LESSER THAN THE SURRENDERED AMOUNT OF RS. 1,00,05,388/-. IF THE SURRENDERED AMO UNT WAS EXCLUDED IT AMOUNTED TO RETURN OF LOSS. THIS FACT WAS NOT EXAMI NED BY THE ASSESSING OFFICER, WHO FAILED TO COMPARE ASSESSEES CURRENT Y EARS TRADING RESULTS WITH THE LAST YEARS TRADING RESULTS; ASSESSING OFFICER FAILED TO APPRECIATE THAT STOCK SURRENDERED HAD NOT BEEN ACCOUNTED FOR PROPERLY. CI T FOUND THE ASSESSMENT ORDER TO BE ERRONEOUS ON FOLLOWING COUNTS: ITA NO. 1905/DEL/2010 M/S GARG CHEAP CUT PIECE HOUSE 4 (I) THE SURRENDERED AMOUNT HAS NOT BEEN DISCLOSED OVER AND ABOVE OF NORMAL INCOME. (II) SURRENDERED STOCK HAS NOT BEEN ACCOUNTED FOR P ROPERLY. (III) PURCHASE SHOWN IN POST SURVEY PERIOD IS PROPO RTIONATELY HIGHER AS COMPARED TO PRE-SURVEY PERIOD. (IV) LD. AO FAILED TO COMPARE FINANCIAL RESULT OF THE YEAR UNDER CONSIDERATION WITH RESPECT TO RESULT OF EARL IER YEAR. 3.4. A NOTICE U/S 263 WAS ISSUED. IN RESPONSE THERE OF ASSESSEE FILED WRITTEN SUBMISSIONS, APPEARED FROM TIME TO TIME AND CONTEN DED AS UNDER: (I) ASSESSING OFFICER HAD MADE ALL RELEVANT INQUIRIES I N RESPECT OF INCORPORATION OF ABOVE ENTRIES IN THE BOOKS OF ACCO UNTS I.E. LOSS, TURN OVER, DISCOUNTED SALE, LOSS THEREON. (II) ALL THE REQUISITE INFORMATION IN THESE ASPECTS WERE FILED WHICH IS PART OF THE ASSESSMENT RECORD. BESIDES, THE ORDER- SHEET ENTRIES REFLECT THAT THESE ISSUES WERE DULY EXAMINED BY AS SESSING OFFICER. (III) THE INQUIRIES HAVING BEEN CONDUCTED, THERE WAS NO E RROR OR PREJUDICE CAUSED TO THE REVENUE IN TERMS OF SEC. 26 3. 3.5. RELIANCE WAS PLACED ON THE RATIO OF DECISIONS IN THE CASES OF : - CIT VS. CIT VS. GABRIEL INDIA LTD. 203 ITR 108 (B OM.). - TARA DEVI AGGARWAL 88 ITR 232 (SC). 3.6. CIT, HOWEVER, HELD THE ASSESSMENT ORDER TO B E ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE AND PROCEE DED TO MODIFY THE ASSESSMENT MADE U/S 143(3) AS UNDER: ITA NO. 1905/DEL/2010 M/S GARG CHEAP CUT PIECE HOUSE 5 ASSESSED INCOME RS. 44,01,300 ADD: A) ON A/C OF GP DIFFERENCE RS. 3,78,603 B) ON A/C OF DISCOUNT SALE ORGANIZED DUE TO MCD SEALING DRIVE RS. 24,34,730 C) ON A/C OF SALE OF DEFECTIVE & OUTDATED STOCK RS. 15,68,835 MODIFIED INCOME RS. 87,83,468 AGGRIEVED, ASSESSEE IS BEFORE US: 4. LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY CONTENDS THAT THE ASSESSEE FILED PROPER TRADING ACCOUNTS PRIOR TO THE DATE OF SURVEY, AFTER THE DATE OF SURVEY, AND CONSOLIDATED TRADING ACCOUNT BY INCLUDI NG THE SURRENDERED AMOUNT, WHICH ARE AS UNDER: TRADING AND PROFIT & LOSS FOR THE PERIOD FROM 1-4-2 005 TO 14-2-2006 (PRE SURVEY) PARTICULARS AMOUNT PARTICULARS AMOUNT (RS.) (RS.) TO OPENING STOCK 4,421,002 BY SALES 9678852 TO PURCHASE (NOTE-1) 9,821,205 BY CLOSING STOCK 140 49292 TO CARTAGE 4,954 LESS: OVER VALUATION OF STOCK 94,502 13954790 TO GROSS PROFIT 10,400,293 BY OTHER INCOME (NOTE-2) 1013812 24,647454 24,647454 TRADING AND PROFIT & LOSS FOR THE PERIOD FROM 15-2- 2006 TO 31-3-2006 (POST SURVEY) PARTICULARS AMOUNT PARTICULARS AMOUNT (RS.) (RS.) TO OPENING STOCK 13,954,790 BY SALES 3,219,151 TO PURCHASE 9,740,959 BY CLOSING STOCK 7,615,41 4 TO CARTAGE 3,135 BY OTHER INCOME (NOTE-3) 8,991, 576 TO GROSS PROFIT (3,872,743) 19,826,141 19,826,141 ITA NO. 1905/DEL/2010 M/S GARG CHEAP CUT PIECE HOUSE 6 TRADING AND PROFIT & LOSS FOR THE YEAR ENDED ON 31- 03-2006 PARTICULARS AMOUNT PARTICULARS AMOUNT (RS.) (RS.) TO OPENING STOCK 4,421,002 BY SALES 12,898,003 TO PURCHASE 19,562,164 BY OTHER INCOME 10,005,3 88 TO CARTAGE 8,089 BY CLOSING STOCK 7,615,414 TO GROSS PROFIT 6,527,550 30,518,805 30,518,805 4.1. THUS ALL THE RELEVANT TRADING ACCOUNTS, FIGUR ES OF SALES AND INCORPORATION OF SURRENDERED AMOUNT IN THE BOOKS OF ACCOUNTS WERE PLACED BEFORE THE ASSESSING OFFICER. 4.2. LD. ASSESSING OFFICER VIDE LETTER DATED 12-9-2 006, PLACED ON PB 14 ISSUED A DETAILED QUESTIONNAIRE ON THESE ISSUES. TH E RELEVANT QUERIES ARE AS UNDER: (4) PLEASE JUSTIFY THE NET PROFIT DECLARED RS. 46 17872 ON GROSS TURN OVER OF RS. 12898003/- SPECIFICALLY IN V IEW OF THE SURRENDER AMOUNTING TO RS. 1005388/- SHOWN CREDITED IN THE TRADING ACCOUNT SURRENDER DURING SURVEY CARRIED OUT ON 14-05 FEB. 2006. (6) PLEASE FURNISH ITEM WISE AND QUANTITY WISE INVE NTORIES OF STOCK UNDER OPENING STOCK, PURCHASES MADE DURING TH E YEAR, GOODS SOLD DURING THEN BALANCE AS ON 31-03-2006 ALO NG WITH THE BILLS AND VOUCHERS. (7) FURNISH TRADING AND P&L ACCOUNT PRE SURVEY OPER ATION AND POST SURVEY OPERATION. . (15) DURING THE SURVEY OPERATION THE ASSESSEE FIRM HAVE VOLUNTARY SURRENDERED AN AMOUNT OF RS. 1,00,05,388/ - UNDER STOCK AND CASH AND ASSESSEE HAS DECLARED NET PROFIT OF RS. ITA NO. 1905/DEL/2010 M/S GARG CHEAP CUT PIECE HOUSE 7 4617872/- ONLY AFTER CREDITING THE SURRENDER AMOUNT IN THE TRADING ACCOUNT PLEASE EXPLAIN AS TO WHY THE NET PR OFIT DECLARED LAST YEAR AT THE SAME RATIO SHOULD BE WORKED OUT AN D ASSESSED THIS YEAR ON TURN OVER OF RS. 1,28,98,003/- IN ADDI TION TO THE SURRENDERED AMOUNT DURING THE SURVEY GIVE REASONS I F ANY. 4.3. THE ASSESSEE REPLIED THEREON VIDE LETTER DATED 27-11-2006 AND APROPOS POINT NO. 4 REPLIED THAT THE JUSTIFICATION OF NET PROFIT OF RS. 4617872/-, I N VIEW OF SURRENDERED AMOUNT OF RS. 1,00,05,388/- IS ENCLOSED HEREWITH . 4.4. THE BREAK UP OF THE SURRENDERED AMOUNTS, THE F ACTORS ABOUT THE SALES ORGANIZED DUE TO MCD SEALING ETC. WERE ENCLOSED TH EREWITH, WHICH ARE PLACED AT PB 17. 4.5. ALL THESE DOCUMENTS WERE BEFORE THE ASSESSING OFFICER AND CIT HAS DONE NOTHING EXCEPT DISALLOWING THE CLAIMS MADE BY THE ASSESSEE I.E. JUST REVERSING THE CLAIMS SUMMARILY. THE FACT OF THE MAT TER REMAINS THAT RELEVANT DETAILS WERE FILED BEFORE THE ASSESSING OFFICER, WH ICH WERE SCRUTINIZED BY THE ASSESSING OFFICER, AFTER CONSIDERATION THEREOF THE ASSESSING OFFICER DETERMINED THE INCOME. 4.6. FURTHER VIDE LETTER DATED 10-1-2007 THE ASSESS EE VIDE ANNEXURE II FILED COMPLETE DETAILS ABOUT ITEM WISE AND QUANTITY WISE INVENTORIES OF STOCK. 4.7. VIDE LETTER DATED 22-1-2007 FILED ON 1-2-2007 THE ASSESSEE FILED A BREAK UP OF PURCHASES IN WHICH THE QUANTITY THEREOF WAS ACCOUNTING IN STOCK DURING THE COURSE OF SURVEY AND BILLS WERE NOT RECE IVED; PRE SURVEY AND POST ITA NO. 1905/DEL/2010 M/S GARG CHEAP CUT PIECE HOUSE 8 SURVEY PROFIT AND LOSS ACCOUNT WAS FILED. THE EVIDE NCE FOR DEFECTIVE/ OUTDATED SALES AND DISCOUNTED SALES WERE FILED WIT H ALL THE RELEVANT DETAILS WHICH ARE ON PB 20 & 21. 4.8. DETAILS OF DISCOUNTED SALES IN THE FORM OF PRI NTED PAMPHLETS; BILL BOOKS (13 NOS.) FOR THE DISCOUNTED SALES; COPY OF ADVERTISEMENT IN DAINIK JAGRAN DATED 14-4-2006 FOR DISCOUNTED SALES WAS FI LED WHICH IS ON PB 21. 4.9. DURING THE COURSE OF ASSESSMENT THE ASSESSING OFFICER ISSUED NOTICES U/S 131 TO THE PRINTER OF PAMPHLETS TO VERIFY WHETH ER THE STATEMENT OF THE ASSESSEE WAS CORRECT OR NOT. ASSESSEE VIDE LETTER D ATED 24-4-2007 FILED RELEVANT DETAILS AND THE AMOUNT OF PRINTING CHARGES OF 8000 HAND BILLS, BILL BOOKS AND 6 BANNERS WERE FILED. 4.10. REFERENCE THEN IS INVITED TO THE PROCEEDINGS SHEETS OF THE ASSESSMENT OBTAINED BY THE ASSESSEE. ON PAGE 2 ASSESSING OFFIC ER ASKED SPECIFIC QUERY ABOUT PRODUCING THE EVIDENCE FOR DEFECTIVE STOCK SA LE AND DISCOUNTED SALE FOR LOSS INCURRED ON THESE TWO COUNTS FOR RECONCILIATIO N OF STOCK VALUATION. RELEVANT QUERIES ARE AS UNDER: 10-12-2006: AT PB 2 ENTRY NO. (7). EVIDENCE FOR DEFECTED STOCK SALE AN D DISCOUNTED SALE FOR LOSS INCURRED ON THESE TWO COUN TS BY RECONCILING STOCK VALUATION. ITA NO. 1905/DEL/2010 M/S GARG CHEAP CUT PIECE HOUSE 9 (8) JUSTIFY WITH EVIDENCE FOR VALUATION OF STOCK FO UND IN THE STOCK INVENTORIES PREPARED DURING SURVEY. (9) TO VERIFY THE STOCK VALUATION AS ON YEAR END WITH B ILLS OF PURCHASE AND SALES. 1/2/07: PRESENT SHRI MANOJ JAINCA/AR. AND FILES PART REPLIES, EXAMINED AND DISCUSSED. ASK ED TO FURNISH REST OF DETAILS AND OTHER REQUIREMENTS MENT IONED ABOVE INCLUDING THE PRESENT ADDRESS OF THE PRINTERS OF PAMPHLETS FILED WITH REPLY FOR CLEARANCE OF DEFECTE D SALES. 4-5-07: DRAFT ORDER IN THIS CASE U/S 143(3) IS PUT UP FOR YOUR KIND DISCUSSION AND ACCORDING APPROVAL. SD/- 4/5/02 JCIT R-34-DELHI. 4.11. THE ASSESSMENT RECORD WITH DRAFT ASSESSMENT O RDER BASED ON INQUIRIES CONDUCTED BY ASSESSING OFFICER WAS SUBMITTED TO JOI NT COMMISSIONER OF INCOME TAX FOR HIS APPROVAL. THE SAME REFERS TO THE CONSIDERATION OF SURVEY RECORD. THE OFFICE NOTE APPENDED BY THE JCIT CIRCLE 34(1), NEW DELHI IS AS UNDER: OFFICE NOTE : 1. BECAUSE OF THE FACT THAT THE SURRENDERED AMOUN T OF RS. 1,00,05,388/- UNDER STOCK AND CASH HAS BEEN DECLARE D BY THE ASSESSEE IN THE COMPUTATION OF INCOME SHOWN IN THE RETURN AND LOSSES INCURRED ON SALE AND PURCHASED RELATED TO PR E SURVEY PERIOD WHICH WERE REMAINED TO BE ENTERED IN THE BOO KS HAVE BEEN FULLY EXAMINED WITH REFERENCE TO THE DOCUMENTA RY EVIDENCES PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND NOTHING HAS BEEN FOUND ADVERSE TO T HE ASSESSEE. ITA NO. 1905/DEL/2010 M/S GARG CHEAP CUT PIECE HOUSE 10 2. AS PER SURVEY RECORD THE IMPOUNDED ANNEXURE A TO C HAVE BEEN VERIFIED WITH THE BOOKS OF A/C PRODUCED. 3. THE ASSESSMENT HAS BEEN COMPLETED AFTER PRIOR DISCUSSION WITH THE LD. JCIT, RANGE 34, NEW DELHI V IDE ORDER SHEET ENTRY DATED 04-05-2007. DCIT CIRCLE 34(1), NEW DELHI. 4.12. LD. COUNSEL FOR THE ASSESSEE ON THE BASIS OF ABOVE CONTENDS THAT: (I) THUS, THE COMPLETE ISSUE OF SURRENDER STANDS FULLY EXAMINED BY ASSESSING OFFICER W.R.T. BOOKS AND OTHER MATERIALS INCLUDING CALLING INFORMATION U/S 131 FROM PRINTER AND VERIFIED BY JC IT (II) THE FACT OF DEFECTIVE SALE, OUTDATED ITEMS SALE AND DISCOUNTED SALES ON ACCOUNT OF MCD CEILING STOOD PROPERLY EXAMINED W.R.T. VARIOUS MATERIALS. (III) THE INVENTORY OF DEFECTIVE/ OUTDATED STOCK ITEMS PR EPARED AT THE TIME OF SURVEY PROVES THE EXISTENCE OF SUCH STOCK. (IV) THUS, CIT IS FACTUALLY INCORRECT IN FORMING OPINION THAT THE ASSESSING OFFICER HAS NOT EXAMINED THE ISSUE OF SUR RENDERED AMOUNT BEING INCLUDED IN THE RETURN AND THEREFORE THE ASSE SSMENT ORDER IS ERRONEOUS. (V) THUS, THE SURRENDERED STOCK AND CASH STAND ACCOUNTE D FOR FULLY AND THIS ASPECT ALSO STANDS EXAMINED BY ASSESSING OFFI CER. (VI) ISSUE OF PURCHASES, SALES AND STOCK INVENTORY IN PO ST SURVEY PERIOD STANDS ALSO FULLY EXAMINED BY ASSESSING OFFICER. (VII) ISSUE OF COMPARISON OF FINANCIAL RESULTS WITH EARLI ER YEARS ALSO STOOD FULLY EXAMINED BY ASSESSING OFFICER. (VIII) THESE ASPECTS FIND DISCUSSION IN ASSTT. ORDER IN PA RA 2. ITA NO. 1905/DEL/2010 M/S GARG CHEAP CUT PIECE HOUSE 11 (IX) ADDITION OF RS. 31,195 WAS MADE ONLY ACCOUNT OF G.P . RATE BY ASSESSING OFFICER, WHICH ALSO REFERS TO COMPARISON WITH EARLIER YEAR. (X) ASSESSMENT ORDER SHEET COPIES, QUERIES AND REPLY DE MONSTRATE THAT THE RELEVANT ASPECTS ABOUT SURRENDER, INCLUSION IN BOOKS AND DEFECTIVE SALE RESULTS WERE INQUIRED. 4.13. LD. COUNSEL THUS PLEADS THAT ALL THESE ARE PA RT OF ASSESSMENT RECORD. ASSESSMENT ORDER IS ONLY A PART OF COMPLETE ASSESSM ENT RECORD AND NOT RECORD BY ITSELF. SECTION 263 ENJOINS ON THE CIT TO CALL FOR THE RECORD AND EXAMINE THE SAME AND ON THAT BASIS TO ASCERTAIN WHE THER ANY ERROR HAS BEEN COMMITTED BY ASSESSING OFFICER WHICH IS PREJUDICIAL TO THE INTEREST OF REVENUE. ALL THESE QUERIES, DOCUMENTS AND CHARTS M ENTIONED ABOVE FORM PART OF THE ASSESSMENT RECORD I.E. BY THE QUERIES O F THE ASSESSING OFFICER RECORDED ON THE ORDER-SHEET; REPLIES OF THE ASSESSE E; DISCUSSIONS THERETO. ALL THESE RECORDS CLEARLY SHOW THAT THE ISSUES REGARD ING THE DISCREPANCY DURING THE COURSE OF SURVEY INCORPORATION IN THE BOOKS, TH E RESULT OF LOSS INCOME CAUSED BY DEFECTIVE SALE, THE JUSTIFICATION THEREOF , THE VERIFICATION OF THE DEFECTIVE STOCK HELD BY THE ASSESSEE WHICH RESULTE D INTO LOSS ALL THESE ASPECTS WERE QUERIED BY THE ASSESSING OFFICER; REPL IED BY ASSESSEE AND EXAMINED BY ASSESSING OFFICER. WHEN THE COMPLETE AS SESSMENT RECORD SHOWS THAT RELEVANT ENQUIRIES WERE MADE THAN MERELY BECAU SE ASSESSING OFFICER HAS FAILED TO USE SOME PARTICULAR WORDS IN THE BODY OF ASSESSMENT ORDER CANNOT ITA NO. 1905/DEL/2010 M/S GARG CHEAP CUT PIECE HOUSE 12 MAKE THE ORDER ERRONEOUS OR PREJUDICIAL TO THE INTE RESTS OF REVENUE. THE PROCEEDINGS FOR REVISION CANNOT BE EXERCISED BY MER E READING OF THE ASSESSMENT ORDER BUT AFTER VERIFYING THE ASSESSMENT RECORD IN ENTIRETY, WHICH IS A CLEAR MANDATE OF SEC. 263 AND SETTLED BY A CAT ENA OF JUDICIAL PRECEDENTS. 4.14. CIT HAS ALSO DONE NOTHING BUT PICKED UP A CHA RT FILED BY THE ASSESSEE AND SIMPLY DISALLOWED WHAT HAS BEEN ALLOWED BY ASSE SSING OFFICER. IT IS A ROUTINE PRACTICE THAT WHEN THE ASSESSING OFFICER IS SATISFIED ABOUT THE EXPLANATION OF THE ASSESSEE ON THE QUERIES RAISED B Y HIM, THESE MAY NOT BE GENERALLY MENTIONED IN THE ASSESSMENT ORDER. WHAT I S CRUCIAL IS WHETHER THE RECORD REFLECTS THAT RELEVANT QUERIES WERE ASKED DU RING THE COURSE OF ASSESSMENT, REPLIED BY ASSESSEE AND EXAMINED BY ASS ESSING OFFICER OR NOT. THE SUCCESSIVE ORDER-SHEET ENTRIES AND RECORD DEMON STRATE THAT AFTER INITIAL COMPLIANCE ALSO THE ASSESSING OFFICER ASKED FURTHER QUERIES IN THIS BEHALF, WHICH SHOWS CLEAR APPLICATION OF MIND AND CONSIDERA TION OF RELEVANT ISSUES. THUS THE ORDER IS NEITHER PREJUDICIAL NOR ERRONEOUS TO THE INTERESTS OF REVENUE. RELIANCE IS PLACED ON THE RATIO OF DECISIO NS IN THE CASES OF: - BRIJ BHUSHAN AGGARWAL (2005) 2 SOT 811 (AGRA) HEL D THAT ASSTT. ORDER PASSED BY THE ITO AFTER CONSULTATION W ITH AND UNDER SUPERVISION OF JT. CIT AND ON APPRECIATION OF EVIDE NCE FURNISHED BY THE ASSESSEE, THOUGH MAY BE CRYPTIC ONE, BUT COU LD NOT BE SAID TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. ITA NO. 1905/DEL/2010 M/S GARG CHEAP CUT PIECE HOUSE 13 - MALABAR INDUSTRIAL CO. LTD. 243 ITR 83 (SC) HELD THAT WHERE TWO VIEWS ARE POSSIBLE AND THE ITO HAS TAKEN ONE VI E WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREAT ED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF REVE NUE UNLESS THE VIEW TAKEN BY THE ITO IS UNSUSTAINABLE IN LAW. - GANPAT RAI BISHNOI 152 TAXMAN 242 (RAJ.) HELD THA T SEC. 263 CANNOT BE INVOKED FOR MAKING SHORT ENQUIRIES OR TO GO INTO THE PROCESS OF ASSTT. AGAIN AND AGAIN MERELY ON THE BAS IS THAT MORE ENQUIRY OUGHT TO HAVE BEEN CONDUCTED TO FIND SOMETH ING. - SALORA INTERNATIONAL LTD. (2005) 2 SOT 705 (DEL)- H ELD THAT MERELY BECAUSE FROM A PERFECTIONIST POINT OF VIEW I T IS FELT THAT SOME MORE ENQUIRIES AND VERIFICATION COULD HAVE BEE N MADE BY THE A.O., THE ORDER CANNOT BE DECLARED TO BE ERRONEOUS. - SUPER CASSEETE INDUSTRIES PVT. LTD. 41 ITD 530 (DEL .) SEC. 263 IS NOT INTENDED FOR CHANGE OF OPINION AND CANNOT BE IN VOKED TO TAKE A DIFFERENT VIEW FROM SUBORDINATE OFFICER. SIMILARLY HAS BEEN HELD IN THE CASE OF JHULELAL LAND DEVELOPMENT CORPORATION 5 6 ITD 345 (BOM.). 4.15. FURTHER RELIANCE IS PLACED ON HONBLE DELHI H IGH COURT JUDGMENT IN THE CASE OF CIT VS. SUNBEAM AUTO LTD. 332 ITR 167 ( DEL.), HOLDING AS UNDER: 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF TH E COUNSEL ON THE OTHER SIDE AND HAVE GONE THROUGH THE RECORDS . THE FIRST ITA NO. 1905/DEL/2010 M/S GARG CHEAP CUT PIECE HOUSE 14 ISSUE THAT ARISES FOR OUR CONSIDERATION IS ABOUT TH E EXERCISE OF POWER BY THE COMMISSIONER OF INCOME-TAX UNDER SECTI ON 263 OF THE INCOME-TAX ACT. AS NOTED ABOVE, THE SUBMISSION OF LEARNED COUNSEL FOR THE ASSESSEE WAS THAT WHILE PASSING THE ASSESSMENT ORDER, THE ASSESSING OFFICER DID NOT CONSIDER THIS ASPECT SPECIFICALLY WHETHER THE EXPENDITURE IN QUESTION WA S REVENUE OR CAPITAL EXPENDITURE. THIS ARGUMENT PREDICATES ON TH E ASSESSMENT ORDER WHICH APPARENTLY DOES NOT GIVE ANY REASONS WHILE ALLOWING THE ENTIRE EXPENDITURE AS REVENUE EX PENDITURE. HOWEVER, THAT BY ITSELF WOULD NOT BE INDICATIVE OF THE FACT THAT THE ASSESSING OFFICER HAD NOT APPLIED HIS MIND ON T HE ISSUE. THERE ARE JUDGMENTS GALORE LAYING DOWN THE PRINCIPL E THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IS NOT RE QUIRED TO GIVE DETAILED REASON IN RESPECT OF EACH AND EVERY ITEM O F DEDUCTION ETC. THEREFORE, ONE HAS TO SEE FROM THE RECORD AS T O WHETHER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE E XPENDITURE I QUESTION AS REVENUE EXPENDITURE. LEARNED COUNSEL FO R THE ASSESSEE IS RIGHT IN HIS SUBMISSION THAT ONE HAS TO KEEP IN MIND THE DISTINCTION BETWEEN LACK OF INQUIRY AND INAD EQUATE INQUIRY. IF THERE WAS ANY INQUIRY, EVEN INADEQUAT4 E, THAT WOULD NOT BY ITSELF, GIVE OCCASION TO THE COMMISSIO NER TO PASS ORDERS UNDER SECTION 263 OF THE ACT, MERELY BECAUSE HE HAS DIFFERENT OPINION IN THE MATTER. IT IS ONLY IN CASE S OF LACK OF INQUIRY, THAT SUCH A COURSE OF ACTION WOULD BE OPE N. 4.16. IT IS PLEADED THAT HONBLE DELHI HIGH COURT HAS CLEARLY HELD THAT IF THE ASSESSING OFFICER HAS APPLIED HIS MIND TO THE ISSUE AND ALLOWED THE CLAIM OF THE ASSESSEE WITHOUT SPECIFICALLY MENTIONING IN THE ASSESSMENT ORDER FOR THE REASON OF ALLOWANCE IT CANNOT BE HELD THAT THE ASSE SSMENT ORDER IS ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF REVENUE. 4.17. THERE IS A CLEAR DISTINCTION IN THE CASES OF LACK OF INQUIRY AND INADEQUATE INQUIRY. HONBLE DELHI HIGH COURT HAS GO NE TO THE EXTENT THAT EVEN IF ANY INADEQUATE INQUIRY IS CONDUCTED THAT BY ITSELF WILL NOT GIVE ITA NO. 1905/DEL/2010 M/S GARG CHEAP CUT PIECE HOUSE 15 OCCASION TO THE COMMISSIONER MERELY BECAUSE HE HOLD S DIFFERENT OPINION ABOUT THE EXTENT OF INQUIRY. THERE IS DEFERENCE IN INADEQUATE INQUIRY AND NO INQUIRY. THIS JUDGMENT IS BINDING AND IS SQUARELY A PPLICABLE TO THE FACTS OF THE ASSESSEES CASE. 4.18. IN ASSESSEES PLETHORA OF RECORD, PRE-SURVEY, POST SURVEY AND CONSOLIDATED TRADING ACCOUNTS, ORDER-SHEET ENTRIES, JCIT APPROVAL ETC. DEMONSTRATE THE FACT THAT ASSESSING OFFICER APPLIE D HIS MIND TO ALL THE ASPECTS OF THE CASE. THIS IS NEITHER AN ASSESSMENT PASSED IN HURRY NOR A CASE OF NO INQUIRY. THE SAME IS PASSED AFTER ABOUT A MONTH AFT ER THE COMPLETE COMPLIANCE. 5. ON THE OTHER HAND LD. CIT(DR) RELIED ON THE ORDE R OF ASSESSING OFFICER. 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE DOCUMENTS FILED BY THE ASSESSEE, I T CLEARLY EMERGES THAT ASSESSEE INCORPORATED THE ENTRIES OF SURRENDER IN I TS BOOKS OF ACCOUNTS, PREPARED PRE SURVEY, POST SURVEY AND FINAL TRADING ACCOUNTS AND PRODUCED IT BEFORE ASSESSING OFFICER DURING THE COURSE OF ASSES SMENT PROCEEDINGS. ASSESSING OFFICER ASKED FOR THE JUSTIFICATION OF RE DUCED INCOME. ASSESSEE ATTRIBUTED THE SAME TO DISCOUNTED SALES OFFERED BY THE ASSESSEE AFTER THE SURVEY, IN THE LAST ONE AND HALF MONTHS OF THE AC COUNTING YEAR. ASSESSING OFFICER CROSS VERIFIED THE FACTUM OF HOLDING OF THE DISCOUNTED SALE WHICH IS ITA NO. 1905/DEL/2010 M/S GARG CHEAP CUT PIECE HOUSE 16 EVIDENCED BY THE NEWSPAPER CUTTING AND THE SALE BIL L BOOKS ALL THIS IS PART OF ASSESSMENT RECORD. THUS, THE ISSUES ABOUT INCORPORA TION OF DISCREPANCIES DURING THE COURSE OF SURVEY, THE BOOKS WERE EXAMINE D. THE LOSS ON ACCOUNT OF DISCOUNTED SALES WAS CROSS VERIFIED. THUS THE R ECORD SHOWS THAT THE ASSESSING OFFICER WAS CONSCIOUS OF ALL THESE FACTS AND CALLED FOR VARIOUS INFORMATION. HIS SATISFACTION ABOUT ASSESSEES EXPL ANATION IS MANIFEST FROM THE FACT THAT HE DID NOT MAKE ANY ADDITION IN THIS BEHALF. THE ASSESSMENT ORDER IS PASSED WITH THE APPROVAL OF JCIT, WHICH IS ACCORDED AFTER VERIFICATION OF ASSESSMENT RECORD. HONBLE DELHI CO URT IN THE CASE OF SUNBEAM AUTO LTD (SUPRA) HAS CLEARLY HELD THAT IF T HE APPLICATION OF MIND BY ASSESSING OFFICER EMERGES FROM THE ASSESSMENT RECOR D, MERELY BECAUSE WHILE ALLOWING THE CLAIM SOME SPECIFIC WORDING IS NOT USE D IN ASSESSMENT ORDER, IT WILL NOT BE AN OCCASION FOR THE COMMISSIONER TO HOL D THE ASSESSMENT ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE. RESPECTFULLY FOLLOWING THE HONBLE DELHI COURTS DECISION IN THE CASE OF SUNBEAM AUTO LTD (SUPRA) WE ARE OF THE VIEW THAT THE ASSESSING OFFICERS ORD ER DOES NOT SUFFER FROM ANY LACK OF INQUIRY OF RELEVANT ISSUES AND NON APPLICAT ION OF MIND. WE FIND NO INFIRMITY IN ASSESSMENT ORDER IN TERMS OF BEING ERR ONEOUS OR PREJUDICIAL TO THE INTERESTS OF REVENUE. ITA NO. 1905/DEL/2010 M/S GARG CHEAP CUT PIECE HOUSE 17 6.1. IN VIEW THEREOF, WE QUASH THE ORDER OF COMMIS SIONER PASSED U/S 263 OF THE ACT. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30-09-2013. SD/- SD/- ( T.S. KAPOOR ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH SEPT. 2013. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR