MAHIM PATRAN P. LTD, NEW DELHI V. PR. CIT -2, AGRA

ITA 195/AGR/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2809 (ITAT-AGRA)
• Duration Of Justice: 4 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 01-06-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUNIL BAJPAI
• Assessee Lawyers: R C TOMAR I T P
• Keywords: Reopening of assessment; Opportunity of being heard; Principle of natural justice; Retrospective amendment; Question of law; Difference of opinion; Assessment record; Change of opinion; TDS; Set aside
• Section: 143(3); 234B; 143(1); 205; 195; 208; 263

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI LALIET KUMAR, JUDICIAL MEMBER AND DR. MITHA LAL MEENA, ACCOUNTANT MEMBER ITA NOS. 195 & 196/AGR/2015 ASSESSMENT YEARS: 2010-11 & 2011-12 MAHIM PA T RAN PRIVATE LIMITED, KRIPA/RITAMBHARA BUILDING, TRIBHUVAN COPLEX, ISHWAR NAGAR, WEST, NEW DELHI. PAN-AABCM0886E (APPELLANT) VS. THE PR. COMMISSIONER, OF INCOME-TAX 2, AGRA. (RESPONDENT) APPELLANT BY SH. GAURAV BANSAL, CA & SH. R.C. TOMAR, I.T.P. RESPONDENT BY SH. SUNIL BAJPAI, CIT/DR ORDER PER LALIET KUMAR, J.M.: PRESENT APPEALS ARE FILED BY THE ASSESSEE BEING A GGRIEVED FROM THE ORDERS OF THE PR. CIT, AGRA DATED 30.03.2015 FOR THE ASSESSME NT YEARS 2010-11 AND 2011-12 ON THE FOLLOWING COMMON GROUNDS : 1. THAT THE ORDER IS AGAINST FACTS AND LAW AND. IS B ASED ON WRONG INTERPRETATIONS OF LAW & FACTS HENCE IS LIABLE TO BE STRUCK DOWN. 2. THAT THE LD. PR, CIT WAS INCORRECT IN FACTS AND IN LAW IN INVOKING JURISDICTION U/S 263 OF THE INCOME TAX ACT, 1961. DATE OF HEARING 19.08.2019 DATE OF PRONOUNCEMENT 02 .08.2019 ITA NOS. 195 & 196/AGR/2015 2 3. THAT THE ORDER OF THE LD. AO U/S 143(3) IS NOT ER RONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND HENCE THE ORDER PASSED BY THE LD. PR. CIT U/S 263 DESERVES TO BE QUASHED. 4. THAT THE LD. AO WAS CORRECT IN LAW AND FACTS IN V IEW OF PROVISIONS OF SEC. 205 READ WITH SEC. 199(1) IN ALLOWING THE CREDIT OF TDS TO THE ASSESSEE WHEN THE INCOME EARNED ON WHICH TDS HAS BEEN DEDUCTED HAS DUL Y BEEN ACCOUNTED FOR AND ASSESSED IN THE HANDS OF THE ASSESSEE. 5. THAT RULE 37BA CANNOT OVERRIDE SEC. 199(1). 6. THAT THE LD. PR. CIT HAS ERRED IN RELYING ON THE N ON-EXISTENT FOUR CONDITIONS OF RULE 37BA BY IGNORING THE RETROSPECTIVE AMENDMENT T O THE SAID RULE ON 01.11.2011. 7. THAT FILING OF DECLARATION U/R 37BA IS PROCEDURAL REQUIREMENT AND CAN BE FILED AT ANY TIME AS NO TIME LIMIT OR FORM HAS BEEN PRESC RIBED FOR THE SAME. 8. THAT THE DEMAND NOTICE IS EXCESSIVE AND INCORRECT IN SO FAR AS CREDIT FOR AMOUNT COLLECTED FROM ASSESSEE'S BANK ACCOUNT HAS N OT BEEN ALLOWED. 9. THAT THE APPELLANT PRAYS FOR LEAVE, TO ADD, ALTER , AMEND OR VARY ANY OF THE GROUNDS EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2. THE ASSESSMENT IN THE CASE OF ASSESSEE WAS COMPL ETED BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEARS 2010-11 AND 2011-12 ON 18. 03.2013 AND 14.02.2014 RESPECTIVELY. AT PARAGRAPH 5 OF THE ORDER FOR A.Y. 2010-11, IT WAS MENTIONED BY THE ASSESSING OFFICER AS UNDER : 5. CREDIT OF TDS: THE ASSESSEE HAS SUBMITTED ITS NOTE ON CREDIT OF TDS BY ITS LETTER DATED 11.03.13, 14.03.13 AND 15.03.13 WHICH ARE PLA CED ON RECORD. THE SUM AND SUBSTANCE OF THE SUBMISSION MADE BY THE ASSESSEE IS AS UNDER-(I) THE JOB WORK ITA NOS. 195 & 196/AGR/2015 3 RECEIPTS HAVE BEEN RECEIVED IN THE NAME OF THE ASSE SSEE COMPANY AS WELL AS IN THE NAME OF ITS DIRECTOR SH. MADHUKAR KAPOOR ON BEH ALF OF THE COMPANY. ENTIRE RECEIPT CREDITED IN THE BANK ACCOUNT OF SH. MADHUKA R KAPOOR HAS BEEN ACCOUNTED FOR IN THE HANDS OF THE COMPANY. THE CREDI T OF TDS ON SUCH JOB CHARGES HAS ALSO NOT BEEN CLAIMED BY THE SH. MADHUK AR KAPOOR. THE CREDIT OF TDS IS PARTLY REFLECTED IN FORM NO. 26AS OF THE COMP ANY AS WELL AS THAT OF SH. MADHUKAR KAPOOR, IT HAS BEEN SUBMITTED THAT THE CRE DIT OF TDS REFLECTED IN FORM NO. 26AS IN THE CASE OF SH. MADHUKAR KAPOOR SHOULD HAVE BEEN ALLOWED IN THE HANDS OF THE COMPANY. (II) IT HAS BEEN SUBMITTED THAT THE TOTAL AMOUNT OF TDS HAS NOT BEEN REFLECTED IN FORM NO. 26AS OF THE COMPANY AND SH. MALDHUKAR KAPO OR. IT HAS BEEN SUBMITTED THAT DUE TO CONFIDENTIAL NATURE OF WORK, THE DEDUCT OR HAS NEITHER MENTIONED THE NAME OF THE COMPANY NOR THE PAN OF THE COMPANY IN M ANY CASES AND THEREFORE SUCH JOB WORK IS NOT REFLECTING IN THEIR FORM NO. 2 6AS. (III) IT HAS BEEN SUBMITTED THAT THE ASSESSEE RECEI VED ADVANCES FROM THE UNIVERSITIES AND TDS HAS BEEN DEDUCTED ON SUCH ADVAN CES. THE ASSESSEE USED TO CLAIM CREDIT OF ENTIRE TDS INCLUDING THE TDS DEDUCTE D ON ADVANCES IN THE YEAR OF RECEIPT. THE JOB WORK IN RESPECT OF THE ADVANCES HAS BEEN DONE IN SUBSEQUENT YEAR AND THE SYSTEM OF RECEIVING ADVANCES CONTINUES . IT HAS BEEN SUBMITTED THAT THE TOTAL TDS ON ADVANCES RECEIVED AS ON 31.03.2010 IS RS, 7,44,678/- WHEREAS THE TDS ON ADVANCES AS ON 31.03.2009 WAS RS, 6,44,44 4/-. IT HAS BEEN ADMITTED THAT LEGALLY THE CREDIT OF ADVANCE RECEIVED SHOULD BE ALLOWED IN SUBSEQUENT YEAR IN WHICH THE INCOME IS SHOWN. THE ASSESSEE HAS SUBMITTED DETAILS OF JOB CHARGES, TD S DEDUCTED AND TAN OF THE DEDUCTOR AND ALSO SUBMITTED COPY OF TDS CERTIFICATE S. THE ASSESSEE WAS REQUESTED TO GIVE THE NAME AND ADDR ESS OF DEDUCTORS SO THAT NECESSARY VERIFICATION COULD BE MADE AND HIS LONG S TANDING GRIEVANCE REGARDING NOT GIVING CREDIT OF TDS COULD HAVE BEEN SETTLED. THE ASSESSEE HAS HOWEVER NOT GIVEN SUCH DETAILS. IN VIEW OF THIS, THE ASSESSEE I S REQUESTED TO FURNISH THE DETAILS FOR VERIFICATION. SUBJECT TO ABOVE, THE CREDIT OF TD S REFLECTED IN FORM NO. 26AS OF ITA NOS. 195 & 196/AGR/2015 4 THE ASSESSEE CONCERN OR IN THE ACCOUNT OF SH. MADHU KAR KAPOOR SHALL BE ALLOWED SUBJECT TO THE VERIFICATION THAT CREDIT OF TDS HAS N OT BEEN CLAIMED BY THE SH. MADHUKAR KAPOOR. 2.1 SIMILARLY IN PARAGRAPH NO. 2 OF THE ORDER FOR A SSESSMENT YEAR 2011-12, IT WAS MENTIONED AS UNDER : 2 THE ASSESSEE ENGAGED IN THE BUSINESS OF SECURITY P RINTING & ICE CREAM MANUFACTURING. THE BUSINESS OF ICE CREAM MANUFACTURI NG IS DONE M THE NAME OF ICES PRODUCT SINCE LAST MANY YEARS FROM THE FACTORY AT A-6. SITE-B, UPSIDC ARTONI, AGRA. THE ASSESSEE IS ALSO ENGAGED IN SECURI TY PRINTING. THE ASSESSEE HAS CLAIMED CREDIT OF TDS OF RS. 33475G8/-. IT HAS BEEN SUBMITTED THAT OUT OF TDS CLAIMED AT RS. 3347508/-. TOS OF RS. 106492/- IS APP EARING IN 26AS OF THE ASSESSEE COMPANY AND RS. 1539198/- IS APPEARING M T HE 26AS OF ITS DIRECTOR SH. MADHUKAR KAPUR. IT HAS BEEN SUBMITTED THAT REMAININ G AMOUNT OF TDS RS. 1701818/- IS NEITHER REFLECTED IN 26AS OF THE COMPA NY NOR IN 26AS OF ITS DIRECTOR MADHUKAR KAPUR IT HAS BEEN SUBMITTED THAT THE TDS OF RS. 1539198/- APPEARING IN 26AS OF ITS DIRECTOR MADHUKAR KAPUR HAS NOT BEEN CLAIMED IN HIS RETURN OF INCOME AS THE JOB WORK WAS DONE BY THE ASSESSEE COM PANY AND THE AMOUNT OF RECEIPTS HAS ALSO BEEN ACCOUNTED FOR IN THE HANDS O F ASSESSEE COMPANY. THE SUBMISSION OF THE ASSESSEE THAT THE CREDIT OF TDS OF RS. 1539198/- HAS NO! BEEN CLAIMED IN THE CASE OF SH. MADHUKAR KAPUR IS VERIFI ED, IT IS THEREFORE CLAIMED THAT THE CREDIT OF TDS APPEARING IN THE HANDS OF SH MADHU KAR KAPUR MAY BE ALLOWED IN THE CASE OF THE ASSESSEE COMPANY IT HAS BEEN SUB MITTED THAT REMAINING AMOUNT OF TDS OF RS. 1701818A IS NOT APPEARING IN T HE STATEMENT 26AS BECAUSE OF NON-FURNISHING/INCORRECT FILING OF TDS STATEMENT BY THE DEDUCTORS. THE ASSESSEE VIDE ITS REPLY DATED 13.01.2014 HAS GIVEN NAME & ADDRESS OF THE DEDUCTORS. THEIR TAN NOS BILLING AMOUNT, DEDUCTION, NET JOBWORK, TOTAL TDS, TDS SHOWN IN 2GAS OF THE COMPANY AND SH, MADHUKAR KAPUR IT HAS BEEN SUBMITTED THAT THE AMOUNT RECEIVED FROM THE DEDUCTORS INCLUDE ADVANCE RECEIVED WHICH HAS BEEN ACCOUNTED FOR M SUBSEQUENT YEARS, IT HAS B EEN SUBMITTED THAT AS PER THE PROVISIONS SECTION 199 (1) AS AMENDED BY FINANC E ACT. 2008, THE DEDUCTION OF TDS SHOULD BE ALLOWED IN THE YEAR OF DEDUCTION AND T HERE IS NO CONDITION THAT THE ITA NOS. 195 & 196/AGR/2015 5 INCOME SHOULD BE ACCOUNTED FOR IN THE YEAR OF DEDUC TION. IT HAS BEEN SUBMITTED THAT IN ASSESSES CASE PART OF INCOME OF ACCOUNTED F OR IN THE YEAR AND THE ADVANCE RECEIVED HAS BEEN ACCOUNTED FOR IN SUBSEQUENT YEAR. THIS SYSTEM HAS BEEN REGULARLY FOLLOWED AND THEREFORE, IT WAS REQUESTED THAT THE BENEFIT OF TDS SHOULD BE ALLOWED IN THE YEAR IN WHICH TAX IS DEDUCTED. 3. FROM THE PERUSAL OF THE SUBMISSIONS IN THE ORDER PASSED BY THE ASSESSING OFFICER, IT IS CLEAR THAT THE ASSESSEE HAS CLAIMED THAT THE JOB WORK WAS RECEIVED IN THE NAME OF ASSESSEE COMPANY AS WELL AS IN THE NAME OF MADHUKAR KAPUR. ENTIRE RECEIPTS CREDITED IN THE BANK ACCOUNT OF MADHUKAR K APUR HAD BEEN ACCOUNTED FOR IN THE HANDS OF THE ASSESSEE COMPANY. FURTHER, MADHUKA R KAPUR HAS NOT CLAIMED ANY TDS. IT WAS SUBMITTED THAT THE CREDIT OF TDS REFLEC TED IN FORM NO. 26AS IN THE CASE OF MADHUKAR KAPUR SHOULD HAVE BEEN ALLOWED IN THE HAND S OF THE ASSESSEE COMPANY. THE ASSESSING OFFICER HAD ALLOWED THE CREDIT OF TDS REFLECTED IN THE FORM 26AS OF SHRI MADHUKAR KAPUR, IN THE HANDS OF THE ASSESSEE C OMPANY SUBJECT TO VERIFICATION THAT IT HAS NOT BEEN CLAIMED BY SHRI MADHUKAR KAPUR . 4. FEELING AGGRIEVED BY THE ORDER OF ASSESSING OFFI CER, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) AND AT PAGE 16 OF THE ORDER, THE CIT(A) IN PARAGRAPH NO. 8.2 HAD MENTIONED AS UNDER : PARA 8.2 OF CIT(A) ORDER PAGE 16 NOT FOUND ITA NOS. 195 & 196/AGR/2015 6 5. AS THE ASSESSING OFFICER HAS ALLOWED THE CREDIT OF TDS REFLECTED IN FORM 26AS IN THE ACCOUNT OF MADHUKAR KAPUR SUBJECT TO VERIFIC ATION, THE CREDIT OF TDS HAS NOT BEEN CLAIMED BY MADHUKAR KAPUR, THE PRINCIPAL CIT H AD INVOKED THE JURISDICTION U/S. 263, AS THE PCIT WAS OF THE OPINION THAT THE A SSESSEE DOES NOT FALL WITHIN AN OF THE FOUR CATEGORIES MENTIONED IN CLAUSE (I) OF RULE 37BA(2) RED WITH SECTION 199(3) OF THE ACT. 6. THE PCIT HAD ISSUED NOTICE ON 17.03.2015 CALLING UPON THE ASSESSEE TO FILE THE REPLY TO THE SHOW CAUSE NOTICE. IN PURSUANCE THERET O, THE ASSESSEE FILED THE REPLY AND RAISED FOLLOWING OBJECTIONS : (I). REOPENING OF ASSESSMENT WILL AMOUNT TO CHANGE OF OPINION SINCE CREDIT OF TDS IN THE NAME OF PERSON OTHER THAN THE ASSESSE E IS ALLOWED AFTER DUE DELIBERATION ON THE MATTER. (II). THE ORDER OF THE ASSESSING OFFICER ALLOWING C REDIT OF TDS AFTER DUE VERIFICATION IS NOT PREJUDICIAL TO THE INTEREST OF REVENUE. (III). THE ORDER OF THE ASSESSING OFFICER IS NOT PR EJUDICIAL TO THE INTEREST OF REVENUE IN VIEW OF SECTION 205 OF THE ACT. (IV). THE MATTER IS PENDING BEFORE THE HONBLE ALLA HABAD HIGH COURT, HENCE, SAME MAY BE KEPT IN ABEYANCE. 7. THE PCIT WAS NOT CONVINCED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND THEREAFTER HAS DIRECTED THE ASSESSING OFFICER TO GI VE THE CREDIT TO THE EXTENT OF TDS ITA NOS. 195 & 196/AGR/2015 7 CERTIFICATE ISSUED IN THE NAME OF ASSESSEE ONLY AND WITHDRAW THE TDS CERTIFICATE IN THE NAME OF MADHUKAR KAPUR. FEELING AGGRIEVED BY TH E ORDER, THE ASSESSEE IS BEFORE US. 8. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT FOR T HE ASSESSMENT YEAR 2010-11, THE ISSUE OF COMPUTATION OF TDS WAS EXAMINED BY THE CIT(A) AND THEREFORE, IN VIEW OF CLAUSE (C) OF EXPLANATION 1 TO SUB-SEC. (1) OF S EC.263, THE PCIT HAD NO JURISDICTION TO REVISE SUCH ORDER WHICH HAD BEEN DECIDED BY THE CIT(A). FURTHER, IT WAS SUBMITTED THAT THE CIT(A) AND PRINCIPAL CIT ARE THE OFFICERS OF THE SAME RANK, THOUGH THE PCIT IS EXERCISING SUPERVISORY POWERS WHEREAS T HE CIT(A) IS EXERCISING APPELLATE JURISDICTION. IT WAS SUBMITTED THAT IT IS NOT WITHIN THE DOMAIN OF THE PCIT TO REVISE AN ORDER WHICH HAD ATTAINED FINALITY AT T HE END OF CIT(A). THE LD. AR RELIED UPON FOLLOWING FOUR DECISION TO BUTTRESS HIS ARGUM ENT : (I). S.K. JAIN V. CIT (2010) 27 ITD 217 (AGRA)(TM) (II). CIT V. NIRMA CHEMICALS WORKS PVT. LTD., 309 ITR 67 (III). HARYANA PAPER DISTRIBUTORS (P) LTD. VS. PR. CIT(2018) 95 TAXMANN.COM 152 (GUJRAT) (IV). CIT(E) V. SLUM REHABILITATION AUTHORITY DT. 2 6.03.2019(BOM) 412 ITR 521. 9. FURTHER, NO ORAL ARGUMENTS WERE ADDRESSED BY THE LD. AR. HOWEVER, IN THE WRITTEN SUBMISSIONS, IT WAS SUBMITTED AS UNDER : (2) SECTION 263 CAN BE INVOKED IF BOTH THE FOLLOWIN G TWIN CONDITIONS ARE SATISFIED: - ITA NOS. 195 & 196/AGR/2015 8 - THAT THE ORDER PASSED BY THE A.O. IS ERRONEOUS AND - THAT IT IS PREJUDICIAL TO THE INTEREST OF REVE NUE. IF ONE OF THEM IS ABSENT, THE PROVISIONS OF SECTION 263 CANNOT BE INVOKED. THE TERM 'ERRONEOUS' HAS NOT BEEN DEFINED UNDER THE INCOME-T AX ACT BUT IT IS WELL SETTLED THAT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE A.O. CANNOT BE SAID TO BE AN ERROR. AN ORDER CAN BE SAID TO BE ERRONEOUS IF THERE IS INCOR RECT ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW IN THE ORDER BY THE A.O. IF THE A.O. AFTER MAKING THE ENQUIRIES AND EXAMINING THE RECORDS TAKEN ONE OF THE POSSIBLE VIE W, IT CANNOT BE SAID THAT THE ORDER PASSED BY THE A.O. WAS ERRONEOUS. (3) IN THE CASE AT PRESENT IS THAT THE ASSESSEE CLA IMED TDS CREDIT FOR THE AMOUNT WHICH WAS REFLECTING IN THE 26AS OF MR. MADHUKAR KAPUR. THE R EASON FOR THE SAME WAS THAT DUE TO SECRECY, THE ASSESSEE COMPANY DID NOT ENTER INTO TH E CONTRACT FOR PRINTING BUT IN THE NAME OF ITS DIRECTOR. HOWEVER, SINCE, THE BUSINESS WAS R ELATING TO THE ASSESSEE, THE INCOME WAS OFFERED BY THE ASSESSEE COMPANY AND ALSO CLAIMED TD S CREDIT FOR THE SAME. (4) THE CIT OBSERVED (PAGE NO. 1 OF THE ORDER - AT PAGE 54 OL THE PAPER BOOK) THAT AS PER SUB SECIION (3) OF SECTION 199. THE CREDIT CAN BE C LAIMED BY THE PERSON OTHER THAN THE PERSON REFERRED IN SUB-SECTION (1}. US PER THE RULE MADE BY THE BOARD IN THIS REGARD. BOARD PRESCRIBED RULE 37BA OF THE RULE, WHICH PROVIDED FO UR CASES PRIOR TO ITS SUBSTITUTION ON 1.11.2011. FURTHER AS PER THE PROVISO TO THE SAID R ULE, THE DEDUCTEE WAS REQUIRED TO FILE WITH THE DEDUCTOR A DECLARATION IN THIS REGARD. (5) THE CIT DID NOT APPRECIATE THE FOLLOWING POINTS : - (I) SECTION 199 OF THE ACT, FOR CREDIT OF TD S TO THE ASSESSEE IN WHOSE INCOME THE AMOUNT ON WHICH TDS IS DEDUCTED. II ALSO ALLOWS THE CREDIT TO ANY OTHER PERSON AS PER SUBSECTION (3) OF THE ACT. (II) THOUGH THE RULE 37BA PRESCRIBED BY CBDT REQUIRES CERTAIN PROCEDURE BUT IT CANNOT SUPERSEDE THE PROVISIONS OF LAW. SECTION 199 PROVID ES THAT, '(I) ANY DEDUCTION MADE IN ACCORDANCE -WITH THE FOREGOING PROVISIONS OF THIS CHAPTER AND PAID FO THE CENTRAL GOVERNMENT SHALL BE TREATED AS A PAYMENT OF TAX ON BEHALF OF THE PERSON FROM WHOSE INCOME THE DEDUCTION WAS MADE, OR OF THE OWNER OF THE SECURITY, OR OF THE DEPOSITOR OR OF THE OWNER OF PROPERTY OR OF THE UNI T-HOLDER, OR OF THE SHAREHOLDER, AS THE CASE MAY BE. ITA NOS. 195 & 196/AGR/2015 9 (2) ANY SUM REFERRED TO IN SUB-SECTION (1A) OF SECTI ON 192 AND PAID TO THE CENTRAL GOVERNMENT SHALL BE TREATED AS THE TAX PAID ON BEHALF OF THE PER SON IN RESPECT OF WHOSE INCOME SUCH PAY MEM OF TAX HAS BEEN MADE. (3) THE BOARD MAY, FOR THE PURPOSES OF GIVING CREDI T IN RESPECT OF TAX DEDUCTED OR TAX PAID IN TERMS OF THE PROVISIONS OF THIS CHAPTER, MAKE SUCH RULES AS MAY BE NECESSARY, INCLUDING THE RULES FOR THF PURPOSES OF GIVING CREDIT TO A PERSON OTHER THAN THOSE REFERRED TO IN SUB-SECTION (1) AND SUB-SECTION (2) AND ALSO THE ASSESSMENT YEAR F OR WHICH SUCH CREDIT MAY BE GIVEN. ' (6) RULE37BA PRIOR TO SUBSTITUTION OF CLAUSE (2) W. E.F. 1.11.2011 PROVIDED AS UNDER: - '(1) CREDIT FOR TAX DEDUCTED AT SOURCE AND PAID TO THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XV 11, SHALL BE GIVE N TO THE PERSON TO WHOM PAYMENT HAS BEEN MADE OR CREDIT HAS BEEN GIVEN (HEREINAFTER REFERRED TO AS DEDUCTEE) ON THE BASIS OF INFORMATION RELATING TO DEDUCTION OF TAX FURNISHED BY THE DEDUCTOR TO THE INCOME-TAX AUTHORITY OR THE PERSON AUTHORIZED BY SUCH AUTHORIT Y. (2) (I) IF THE. INCOME ON WHICH TAX HAS BEEN DE-DUCT ED AT SOURCE IS ASSESSABLE IN THE HANDS OF A PERSON OTHER THAN THE DEDUCTEE, CREDIT FOR LAX DEDU CTED AI SOURCE SHALL BE GIVEN TO THE OTHER PERSON IN CASES WHERE (A) THE INCOME OF THE DEDUCTEE IS INCLUDED IN THE T OTAL INCOME OF ANOTHER PERSON UNDER THE PROVISIONS OF SECTION 60, SECTION 61, SECTION 64, S ECTION 93 OR SECTION 94; (B) THE INCOME OF A DEDUCTEE BEING AN ASSOCIATION OF PERSONS OR A TRUST IS ASSESSABLE IN THE HANDS OF MEMBERS OF THE ASSOCIATION OF PERSONS, OR I N THE HANDS OF TRUSTEES, AS THE CASE MAY BE; (C) THE INCOME FROM AN ASSET HELD IN THE NAME OF A DEDUCTEE, BEING A PARTNER OF A FIRM OR A KARTA OF A HINDU UNDIVIDED FAMILY, IS ASSESSABLE AS THE INCOME OF THE FIRM, OR HINDU UNDIVIDED FAMILY, AS THE CASE MAY BE; (D) THE INCOME FROM A PROPERTY, DEPOSIT, SECURITY, UNIT OR SHARE HELD IN THE NAME OF A DEDUCTEE IS OWNED JOINTLY BY THE DEDUCTEE AND OTHER PERSONS AND THE INCOME IS ASSESSABLE IN THEIR HANDS IN THE SAME PROPORTION AS THEIR OWNERSH IP OF THE ASSET: PROVIDED THAT THE DEDUCTEE FILES A DECLARATION WITH THE DEDUCTOR AND THE DEDUCTOR REPORTS THE TAX DEDUCTION IN THE NAME OF THE OTHER PERSON I N THE INFORMATION RELATING TO DEDUCTION OF TAX. REFERRED TO IN SUB-RULE (1). ' (7) CLAUSE (2) OF THE SAID RULE 37BA WAS SUBSTITUTE D W.E.F. 1.11.2011 AS UNDER: - ITA NOS. 195 & 196/AGR/2015 10 (I) WHERE UNDER ANY PROVISIONS OF THE ACT, THE WHOL E OR ANY PART OF THE INCOME ON WHICH TAX HAS BEEN DEDUCTED AT SOURCE IS ASSESSABLE IN THE HAND S OF A PERSON OTHER THAN THE DEDUCTEE, CREDIT FOR THE WHOLE OR ANY PART OF THE TAX DEDUCTE D AT SOURCE, AS THE CASE MAY BE, SHALL BE GIVEN TO THE OTHER PERSON AND NOT TO THE DEDUCTEE: PROVIDED THAT THE DEDUCTEE FILES A DECLARATION WITH THE DEDUCTOR AND THE DEDUCTOR REPORTS THE TAX DEDUCTION IN THE NAME OF THE OTHER PI. NON IN THE INFORMATION RELATING TO DEDUCTION OF TAX REFERRED TO IN SUB-RULE (1). ' (8) W.E.F. 1.11.2011, THE FOUR CONDITIONS WHICH WER E REQUIRED AS PER RULE 37BA WERE DELETED AND STATED THAT WHERE UNDER ANY PROVISIONS OF THE ACT, THE WHOLE OR ANY PART OF THE INCOME IS ASSESSABLE IN THE HANDS OF A PERSO N OTHER THAN DEDUCTEE. THE CREDIT WILL BE ALLOWED TO THE SAID PERSON. (9) REGARDING THE APPLICABILITY OF THE SUBSTITUTED CLAUSE FOR THE IMPUGNED ASSESSMENT YEARS, IT IS STATED THAT IN THE CASE OF BHOORATNAM & CO. (2-13) 357 ITR 396 (AP) THAT, 'RULE 37BA IS A PROCEDURAL PROVISION DEALING WITH T HE MANNER OF GIVING CREDIT FOR TAX DEDUCTED AT SOURCE FOR THE PURPOSES OF SECTION 199. ' IT SHOULD BE APPRECIATED THAT WHERE A NEW PROCEDURE IS PRESCRIBED BY LAW, IT GOVERNS ALL PENDING CASES, ALTERATIONS, IN THE NAME OF PROCEDUR E, ARE ALWAYS RETROSPECTIVE UNLESS THERE IS SOME GOOD REASON WHY THEY SHOULD NOT BE, A ND THE AMENDMENT TO RULE 37BA, AS INTRODUCED BY THE INCOME TAX (8 N AMENDMENT) RULES, 2011. BEING PROCEDURAL IN NATURE , WOULD HAVE RETROSPECTIVE EFFECT. (10) HENCE, THE OBSERVATION OF THE CIT THAT THE RUL E AS APPLICABLE LO PRIOR TO SUBSTITUTION OF CLAUSE (2) WILL BE APPLICABLE IS NOT CORRECT. (1)THE QUESTION ARISES WHETHER THE VIEW TAKEN BY TH E AO IS A POSSIBLE VIEW. THE VIEW TAKEN BY THE AO IS BASED ON THE FOLLOWING CASES WHE REIN IT WAS HELD THAT THE ASSESSEE OTHER THAN THE PERSON IN WHOSE NAME THE TAX WAS DED UCTED AT SOURCE WILL BE ALLOWED TDS CREDIT IF THE INCOME IS TAXABLE IN ITS HANDS AND TH ERE IS NO OBJECTION ON THAT. CIT VS. BHOORATNAM & CO. (357 ITR 396) AP HIGH COURT [PAGE -15 TO 22 OF CASE LAWS PAPER BOOK] 18. RULE 37BA IS A PROCEDURAL PROVISION DEALING WIT H THE MANNER OF GIVING CREDIT FOR TAX DEDUCTED AT SOURCE FOR THE PURPOSES OF SECTION 199. IT THEREFORE APPLIES TO PENDING PROCEEDINGS. AS OBSERVED IN STATE OF MADRAS V. LATE EF HAMID & CO. AIR 1972 SC 1781, WHERE A NEW PROCEDURE IS PRESCRIBED BY LAW, IT GOVE RNS ALL PENDING CASES. ITA NOS. 195 & 196/AGR/2015 11 19. IN TIKARAM & SONS V. COMMISSIONER OF SALES TAX AIR 1968 SC 1286 IT WAS HELD THAT ALTERATIONS IN THE FORM OF PROCEDURE ARE ALV\AYS RE TROSPECTIVE, UNLESS THERE IS SOME GOOD REASON OR OTHER WHY THEY SHOULD NOT BE. THE AMENDME NT TO RULE 37 BA MENTIONED ABOVE WHICH HAS BEEN INTRODUCED BY THE INCOME TAX (8TH AM ENDMENT) RULES, 2011 NOTIFIED VIDE NOTIFICATION NO. 57/2011 DATED 24-10-2011. BEING PR OCEDURAL IN NATURE, WOULD HAVE RETROSPECTIVE EFFECT AND HAS TO BE GIVEN EFFECT TO. 20. THE REVENUE CANNOT BE ALLOWED TO RETAIN TAX DED UCTED AT SOURCE WITHOUT CREDIT BEING AVAILABLE TO ANYBODY. IF CREDIT OF TAX IS NOT ALLOW ED TO THE ASSESSEE, AND THE JOINT VENTURE HAS NOT FILED A RETURN OF INCOME, THEN CREDIT OF TH E TDS CANNOT BE TAKEN BY ANYBODY. THIS IS NOT THE SPIRIT AND INTENTION OF LAW. 21. THEREFORE, IN OUR VIEW, THE ASSESSING OFFICER E RRED IN DENYING THE BENEFIT OF THE TDS MENTIONED IN THE TDS CERTIFICATES FILED BY THE ASSE SSEES ON THE GROUND THAT THE TDS CERTIFICATE IS ISSUED IN THE NAME OF THE JOINT VENT URE OR A DIRECTOR AND NOT THE ASSESSEE. CIT VS. RELCOM [234 TAXMAN 6931 (DELHI) [PAGE - 30 TO 34 OF CASE LAWS PAPER BOOK] THE REVENUE HAVING ASSESSED REPL'S INCOME IN RESPEC T OF SUCH TDS CLAIM, WHICH IT HAS NOT AVAILED, CANNOT DENY THE ASSESSEE'S CLAIM ON THE ME RE TECHNICAL GROUND THAT THE INCOME IN RESPECT OF THE SAID TDS CLAIM WAS NOT THAT OF THE A SSESSEE, GIVEN THAT THE ASSESSEE AND REPL ARE SISTER CONCERNS AND RFI'L HAS NOT RAISED A NY OBJECTION WITH REGARD TO THE ASSESSEE'S TDS CLAIM RS. 1,20,73,097 PARA 7) THE REVENUE'S CONTENTION THAT THE ASSESSEE, INSTEAD OF CLAIMING THE ENTIRE TDS AMOUNT, OUGHT TO HAVE SOUGHT A CORRECTION OF THE VENDOR'S M ISTAKE, WOULD UNNECESSARILY PROLONG THE ENTIRE PROCESS OF SEEKING REFUND BASED ON TDS C REDIT. (PARA 10) PARMANAND TIWARI VS. ITO [20151 54 TAXINANN.COM 25 (KOLKATA - TRIB.) (COPY ENCLOSED) ASSESSEE PARTNER WAS A CHARTERED ACCOUNTANT AND WAS EARNING ON HIS PROFESSION UNDER PARTNERSHIP FIRM - PARTNERSHIP FIRM GOT DISSOLVED A ND ASSESSEE BECAME PROPRIETOR OF SAID FIRM - ASSESSEE CONTENDED THAT HE HAD ALREADY INCLU DED ENTIRE INCOME OF FIRM IN HIS RETURN OF INCOME AND ACCORDINGLY, CREDIT FOR TDS SHOULD BE ALLOWED IN ACCORDANCE WITH RULE 37BA OF INCOME-TAX RULES - ASSESSING OFFICER DISALLOWED SAID CLAIM BY OBSERVING THAT RULE 37BA WAS INSERTED WITH EFFECT FROM 1-4-2009 ONLY AND SAM E WOULD NOT APPLY IN RELEVANT ASSESSMENT YEAR - WHETHER SINCE RULE WAS INSERTED T O REMOVE HARDSHIP FACED BY ASSESSEES AND TO GIVE TRUE MEANING TO PROVISION OF SECTION 19 9. CREDIT OF TDS WAS TO BE ALLOWED - HELD, YES [PARA 4] [IN FAVOUR OF ASSESSEE] ITA NOS. 195 & 196/AGR/2015 12 (12) IN THE CASE AT PRESENT, THE CIT REOPENED THE ASSESSMENT INVOKING SECTION 263 WITHOUT APPRECIATING THAT THE CLAIM OF THE ASSESSEE WAS ALLOWED BY THE ASSESSING OFFICER WAS A POSSIBLE VIEW WHICH WAS TAKEN BY THE DEPARTME NT EARLIER ALSO CONSISTENTLY EXCEPT ASST. YEAR 2009-10 WHICH WAS ALLOWED BY THE CH (A). (13) IF THE AO HAS TAKEN A POSSIBLE VIEW WHICH IS DULY SUPPORTED BY VARIOUS CASE LAWS, THE ORDER PASSED BY THE AO CANNOT BE REGARDED TO BE AN ERRONEOUS ORDER. THE SAID VIEW IS DULY SUPPORTED BY THE FOLLOWING DECISIONS: - MALABAR INDUSTRIAL CO. LTD, VS. CIT, 243 1TR 83 (SO THE PRE-REIJIIISITE TO THE EXERCISE OJ JURISDICTION BY THE COMMISSIONER UNDER SECTION 263 IS THAT THE ORDER OF THE AO IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED OF TWI N CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO HE REVISED /.V ERRONEOUS; AND (IIJ IS PREJUDICIAL TO (HE INTERESTS OF' THE REVENUE. IF ONE OF THEM IS ABSENT- IF THE ORDER OF THE ASSESSING OFFICE IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE - RECOURSE CANNOT BE HAD TO SECTION 263(1). THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONL Y 'WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION O F FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRO NEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL J USTICE OR WITHOUT APPLICATION OF MIND. THE PHRASE 'PREJUDICIAL TO THE INTEREST OF THE REVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EV ERY LOSS OF REVENUE AS A CONSEQUENCE OF THE ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE, IF THE ASSESSING OFFICER HAS ADOPTED ONE OF THE COURSES PERMISSIBLE IN UI\ V AND IT HAS RESULTED IN LOSS OF REVENUE, OR WH ERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIO NER DOES NOT AGREE, IF CANNOT BE SEATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE, _WHILE THE VIEW TAKEN BY THEASSESSING OFFICER IS UNSUSTAINABLE IN LAW. WHERE A SUM NOT EARNED BY A PERSON IS ASSESSED AS INCOME IN HIS HANDS ON HIS SO OFFERING THE ORDER PASSED BY THE ASSESSING OFFICER ACCEPTING THE SAME WITHOUT APPLICATION OF MIND AS SUCH WILL BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. CIT VS. R.K. CONSTRUCTION CO., HON'BLE GUJARAT HIGH COURT 313 ITR 65 (GUJ.) THE DETAIL OF SUB-CONTRACTORS EXAMINED BY (HE AO A S PER THE DIRECTIONS OF CIT IN REVISION PROCEEDINGS, INTER ALIA, INCLUDE THE NAMES OF THESE SUB-CONTRACTORS, THEIR PERMANENT ACCOUNT NUMBERS, THEIR PERMANENT ADDRESSES, AMOUNT GIVEN TO THEM, NAME OF WORK ENTRUSTED TO THEM, NATURE OF SUCH WORK AND STATEMENTS RECORDED B Y THE AO, ETC. THESE DETAILS REVEAL THAT DURING THE COURSE OF EXAMINATION UNDER S. 131, NO Q UESTION WAS PUT TO MANY OF THESE SUB- CONTRACTORS AS TO THE VARIATION IN THEIR SIGNATURES . SIMILARLY, NO QUESTION WAS PUT TO THEM FOR ITA NOS. 195 & 196/AGR/2015 13 THE REASONS OF DISCOUNTING WITH THE SHROFF. IT IS T HE STAND OF THE ASSESSES RIGHT FROM THE BEGINNING THAT ALL THESE SUB-CONTRACTORS WERE MAINLY WORKING FOR THE ASSCSSEE AND THEY DID NOT HAVE ANY OFFICE SET UP AND SINCE THEY WERE WORK ING FOR THE ASSESSEE, THEY HAVE USED ASSESSEE'S ADDRESS FOR CORRESPONDENCE, ESPECIALLY W ITH THE GOVERNMENT FOR TIMELY COMMUNICATION. THESE PERSONS ARE ELIGIBLE UNDER S. 4 4AD TO FILE THEIR RETURNS UNDER PRESUMPTIVE SCHEME OF TAXATION. ALL THESE PERSONS W ERE PRODUCED BEFORE THE AO IN REVISION PROCEEDINGS AND NO QUESTION WAS PUT TO THEM THOUGH THEIR STATEMENTS ON OATH WERE RECORDED. ALL THESE PERSONS HAVE CONFIRMED IN REVIS ION PROCEEDINGS THAT THE MONEY WAS NOT RETURNED BY THEM TO ANY PERSON AND WAS USED FOR THE IR PERSONAL BENEFIT. THE PAYMENTS WERE MADE TO THESE PERSONS BY BANKING CHANNELS AND TAX WA S DEDUCTED AT SOURCE IN ACCORDANCE WITH LAW. THE ASSESSEE HAS ALSO GIVEN COMPLETE DETA ILS WITH RESPECT TO LABOUR EXPENSES CALLED FOR IN ASSESSMENT PROCEEDINGS. THESE DETAILS WERE D ULY VERIFIED BY THE AO WITH THE BOOKS AND RECORDS. NO ADVERSE OBSERVATION WAS MADE BY THE AO AND HENCE, NO ADDITION WAS MADE IN THE REGULAR ASSESSMENT. THE AO HAS ALSO RANDOMLY SE LECTED THE LABOURERS AND EXAMINED THEM AND THEIR STATEMENTS WERE RECORDED UNDER S. 13 1. SINCE ALL NECESSARY DETAILS WERE FURNISHED BY THE ASSESSEE, THERE WAS NO REASON FOR /HE CIT TO INVOKE THE REVISIONAL JURISDICTION UNDER S. 263. THE CIT HAS NOT STOPPED MERELY BY ISSUANCE OF NOTICE UNDER S. 263. ONCE COMPLIANCE IS MADE, HE WENT ON ISSUING NOTICE AFTER NOTICE AND CERTAIN ADVERSE INFERENCE WERE DRAWN BY HIM FROM THE DETAILS COLLEC TED BY HIM DURING THE REVISIONAL PROCEEDINGS. THOSE DETAILS WERE THOROUGHLY CHECKED AND EXAMINED BY THE TRIBUNAL AND IT ARRIVED AT A FACTUAL FINDING THAT THERE WAS NO ILLE GALITY COMMITTED BY THE ASSESSEE IN ENTRUSTING THE WORK TO SUB-CONTRACTORS NOR THERE WAS ANY ILLEGALITY IN MAKING ALL DUE PAYMENTS TO THEM. THE TRIBUNAL HAS ALSO GIVEN SPECIF IC FINDING TO THE EFFECT THAT THERE WAS NO EVIDENCE ON RECORD THAT THESE CONTRACTORS WERE RELA TED TO THE ASSESSEE OR WERE ASSOCIATES OR SISTER CONCERNS OF THE ASSESSEE. THE TRIBUNAL HAS AL SO GIVEN FINDING THAT THE REVENUE HAS NOT DISCHARGED THE ONUS THAT THE PAYMENTS TO SUB-CONTRAC TORS WERE NOT GENUINE. THUS THE TRIBUNAL HAS COME TO THE CONCLUSION THAT NO DISALLOW ANCES CAN BE MADE MERELY ON THE BASIS OF SUSPICION, HOWSOEVER STRONG MAY IT BE, AND THE SU SPICION CANNOT TAKE THE PLACE OF ACTUALITY. AO HAS TAKEN A PARTICULAR VIEW ON THE BAS IS OF EVIDENCE PRODUCED BEFORE HIM. ON THE BASIS OF THE SAID MATERIAL AND MATERIALS WHICH W ERE COLLECTED BY THE CIT IN REVISIONAL PROCEEDINGS, THE CIT HAS TAKEN U DIFFERENT VIEW. HO WEVER, IN THE REVISIONAL PROCEEDINGS UNDER S. 263. IT IS NO/ OPEN FOR THE CIT TO TAKE SU CH A DIFFERENT VIEW. NO SUBSTANTIAL QUESTIONS OF LAW ARISE OUT OF THE ORDER OF THE TRIBUNAL AND HE NCE, THE APPEAL FILED BY THE REVENUE DESERVES TO BE DISMISSED. - CIT VS. ARVIRID JEWELLER S (2002) 177 CTR (GUJ) 546 : (2003) 259 ITR 502 (GTTJ) AND MALABA R INDUSTRIAL CO. LTD. VS. CIT (2000) 159 CTR (SC) I : (2000) 243 ITR 83 (SC) RELIED ON). CIT VS. MAX INDIA LIMITED, 295 ITR 282 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 E XPRESSION 'ERRONEOUS' ORDER PASSED BY ITA NOS. 195 & 196/AGR/2015 14 THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A C ONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE. FOR EXAMPLE, WHEN THE ASSESSING OFFICER ADOPTS ONE OF TWO COURSES PER MISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AN D THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE REVENUE, UNLESS THE VIEW T AKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. (14) IN VIEW OF THE VARIOUS DECISIONS RELIED ON B> ME, YOUR HONOUR WILL APPRECIATE THAT THE VIEW TAKEN BY THE AO FOR ALLOWING THE CREDIT OF THE TDS TO THE ASSESSEE WAS A VIEW DULY SUPPORTED BY THE VARIOUS CASE LAWS AND CANNOT BE HELD TO BE A VIEW WHICH IS CONTRARY TO THE LAW OR ILLEGAL AND WHEN THERE IS A POSSIBLE VIEW TAKEN BY THE AO, UNTIL AND UNLESS SUCH VIEW IS UNSUSTAINABLE IN LAW, THE ORDER PASSED BY THE AO CANNOT BE HELD TO BE ERRONEOUS. I THEREFORE REQUEST TO YOUR HONOURS TO Q UASH THE ORDER PASSED U/S 263 OF THE ACT (15) REGARDING THE DECLARATION TO BE FILED, THE ASS ESSEE HAD GIVEN A DECLARATION IN THIS REGARD. A COPY OF THE SAID DECLARATION IS GIVEN AT PAGE NO. 69 OF THE PAPER BOOK. (16) IT IS FURTHER STATED THAT SECTION 205 OF THE A CT PROVIDES THAT WHERE TAX IS DEDUCTIBLE AT THE SOURCE UNDER THE FOREGOING PROVISIONS OF THIS C HAPTER, THE ASSESSEE SHALL NOT BE CALLED UPON TO PAY THE TAX HIMSELF TO THE EXTENT OF WHICH THE TAX HAS BEEN DEDUCTED FROM THAT INCOME. (17) IF THE SECTION 205 AND 199 ARE READ SIMULTANEO USLY, WHEN THE TAX WAS DEDUCTED AT SOURCE, NO DIRECT DEMAND CAN BE MADE FROM THE ASSES SEE AS PER SECTION 205. SECTION 199 PROVIDES THE CREDIT FOR TAX DEDUCTED. THE ASSESSEE OFFERED THE INCOME AND CLAIMED CREDIT. (18) THIS IS SETTLED LAW THAT THE PROVISIONS UNDER WHICH THE RULES ARE MADE, EVEN THE RULE DOES NOT STATE WHEN AND HOW THE DECLARATION HAS TO BE FILED BY THE OTHER PERSON. (19) CIT OPINED THAT THE BOARD POWERS TO CREATE RUL ES ENTITLES THE BOARD TO OVERRULE THE RIGHT OF THE ASSESSEE GRANTED BY THE PARLIAMENT, IN THIS CASE BY ENACTING SECTION 199(1). - IT IS AGAINST THE CONSTITUTION WHICH HAS ALWAY S HELD THAT THE PARLIAMENT ENACTMENTS ARE SUPREME. THE AUTHORITY DELEGATED TO THE BOARD VIDE SECTION 1 99(3) IS ONLY TO MAKE RULES FOR ALLOWING CREDIT OF TDS. THE SAME CANNOT BE READ TO MEAN THAT THE BOARD IS EMPOWERED TO DISALLOW THE CREDIT OF TDS BY INSERTING RULES. ITA NOS. 195 & 196/AGR/2015 15 IN THIS REGARD, RELIANCE IS PLACED ON THE JUDGEMENT OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS. TAJ MAHAL HOTEL [19711 82 ITR 44 (SO THAT 'THE RULES WERE MEANT ONLY FOR THE PURPOSE OF CARRYING OUT THE PROVISIONS OF THE ACT A ND THEY COULD NOT TAKE AWAY WHAT WAS CONFERRED BY THE ACT OR WHITTLE DOWN ITS EFFECT. ' (20) RULE 37BA MITIGATES THE HARDSHIP FACED BY THE ASSESSEE AND NOT TO CREATE HARDSHIP. IT IS A BENEFICIAL PROVISION MITIGATING THE HARDSHIP O F THE ASSESSEE. (21) FURTHER, THE ORDER OF THE AO WAS ALSO NOT PREJ UDICIAL TO THE INTEREST OF THE REVENUE. THE ASSESSEE COMPANY OFFERED THE INCOME AND CLAIMED CREDIT OF TDS. THE DIRECTOR OF THE ASSESSEE IN WHOSE NAME THE TDS CERTIFICATES WERE IS SUED DID NOT OFFER THE INCOME AND DID NOT CLAIM ANY CREDIT FOR TDS. THUS, THE ORDER OF TH E AO WAS ALSO NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE. (22) SO FAR THE CHALLENGE OF THE ORDER ON MERIT I S CONCERNED, I RELY ON MY AFORESAID SUBMISSION MADE ON THE BASIS OF PROVISIONS OF SECTI ON 199 AND ALSO THE RULING GIVEN IN THE VARIOUS DECISIONS THAT IF THE INCOME IS ASSESSED IN THE HANDS OF THE ASSESSEE, THE ASSESSEE MUST BE ENTITLED FOR THE CREDIT OF THE TAX DEDUCTED ON THE SAID INCOME. (23) SO FAR AS THE ADDITIONAL GROUND IS CONCERNED , THE INTEREST U/S 234A, 234B AND 234C HAS TO BE COMPUTED AFTER DEDUCTING TDS ALONGWITH TH E ADVANCE TAX OUT OF THE TAX COMPUTED ON THE TOTAL INCOME ASSESSED IN REGULAR AS SESSMENT. IN THIS REGARD, I DRAW YOUR ATTENTION TOWARDS THE PROVISIONS OF SECTION 234A, 2 34B AND 234C R.W.S. 215(5) OF THE ACT. 10. PER CONTRA, THE LD. DR HAD SUBMITTED THAT THE C IT(A) CAN ONLY EXERCISE THE JURISDICTION IN APPEAL FOR THE ASSESSMENT YEAR 2010 -11 IF THE ASSESSING OFFICER HAS DENIED THE BENEFIT OF ADJUSTMENT OF TDS MENTIONED I N FORM 26AS OF MR. MADHUKAR KAPUR TO THE ASSESSEE. IT WAS FURTHER SUBMITTED THA T IF THERE IS DENIAL OF THIS ADDITION, THEN THE CAUSE OF ACTION FOR FILING OF APPEAL LIES WITH THE CIT(A) AND IT WAS FURTHER SUBMITTED THAT PARAGRAPH NO. 8.2 REFERRED BY THE LD . AR IS REQUIRED TO BE READ IN THE LIGHT OF QUESTION FRAMED BY THE LD. CIT(A).FURTHER, IT WAS SUBMITTED THAT AS THERE IS SPECIFIC PROHIBITION IN RULE 37BA FOR GIVING BENEFI T OF TDS DEPOSITED IN NAME OF ITA NOS. 195 & 196/AGR/2015 16 THIRD PERSON TO THE ASSESSEE, THE ASSESSEE DO NOT F ALL IN ANY OF THE FOUR CONDITIONS MENTIONED IN RULE 37BA. THEREFORE, THE ORDER PASSED BY THE LD. PCIT IS CORRECT AND THE ORDER PASSED BY THE ASSESSING OFFICER WAS ERRON EOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN PARAGRAPH NO. 5 FOR THE ASSESSMENT YEAR 2010-11, REPRODUCED HEREIN ABOVE, IT IS ABUNDANTLY CLEAR THAT THE ASSESSING OF FICER HAS GRANTED THE RELIEF TO THE ASSESSEE, AS THE ASSESSING OFFICER IN THE ORDER HAD MENTIONED THAT THE CREDIT OF TDS REFLECTED IN FORM NO. 26AS OF THE ASSESSEE AND OF S HRI MADHUKAR KAPUR SHALL BE ALLOWED TO THE ASSESSEE SUBJECT TO THE VERIFICATION THAT THE CREDIT OF TDS HAS NOT BEEN LAIMED BY SHRI MADHUKAR KAPUR. IN VIEW OF THE CATEG ORICAL FINDING GIVEN BY THE ASSESSING OFFICER IN FAVOUR OF THE ASSESSEE THAT TH E CREDIT OF THE TDS MENTIONED IN 26AS OF MADHUKAR KAPUR SHALL BE GIVEN TO THE ASSESS EE FIRM, IN VIEW THEREOF, THERE WOULD NOT HAVE BEEN ANY GRIEVANCE TO THE ASSESSEE T O CHALLENGE THE SAID ORDER BY WAY OF APPEAL BEFORE THE LD. CIT(A). IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT THE ISSUE HAS NOT BEEN SUBJECT MATTER OF SCRUTINY B EFORE THE LD. CIT(A) AND IN VIEW THEREOF, CLAUSE (C) OF EXPLANATION 1 TO SUB-SEC. (1 ) OF SECTION 263 IS NOT APPLICABLE. FURTHER, WE WOULD LIKE TO REPRODUCE GROUND NO. 8 RA ISED BY THE ASSESSEE BEFORE THE ITA NOS. 195 & 196/AGR/2015 17 LD. CIT(A) AS MENTIONED BY THE LD. CIT(A) AT PAGE 2 OF THE ORDER TO THE FOLLOWING EFFECT : 8. CALCULATION OF INCOME TAX AND INTEREST IS WRONG . THE LD. CIT(A) AT PAGE 15 HAD REPRODUCED THE SUBMIS SION OF THE ASSESSEE AND THEREAFTER HAD RECORDED THE FINDING ON GROUND NO. 8 IN PARA 8.2. PARAGRAPH NO. 801 & 8.2 OF THE ORDER OF LD. CIT(A) ARE AS UNDER : 8.1 IN GROUND NO.8, THE APPELLANT HAS DISPUTED CALC ULATION OF INCOME TAX AND INTEREST. WHILE PUTTING UP HIS ARGUMENT IN RESPECT OF THIS GROUND, THE ID. AR FILED A WRITTEN SUBMISSION ON 19.11.2014 AS UNDER: - UNDER THIS GROUND, WE DISPUTE THE CONCLUSION OF TH E LD. AO THAT TDS ON ADVANCES RECEIVED FROM CUSTOMERS IS TO BE ALLOWED ONLY IN TH E YEAR IN WHICH THE INCOME IN RESPECT OF THE SAME IS ACCOUNTED FOR. IT IS SUBMITTED THAT THE ALLOWABILITY OF CREDIT OF TDS IS GOVERNED BY SEC 199(1) WHICH READS AS UNDER : 199. (1) ANY DEDUCTION MADE IN ACCORDANCE WITH THE FOREGOING PROVISIONS OF THIS CHAPTER AND PAID TO THE CENTRAL GOVERNMENT SHALL BE TREATED AS A PAYMENT OF TAX ON BEHALF OF THE PERSON FROM WHOSE INCOME THE DEDUCTION WAS MADE OR OF THE OWNER OF THE SECURITY, OR OF THE DEPOSITOR OR OF THE OWNER OF PROPERTY OR OF THE UNIT-HOLDER, OR OF THE SHAREHOLDER, AS THE CA.SE MAY BE.' SO, ON A PLAIN READING OF THE SECTION, IT IS DEER T HAT IT IS NOWHERE REQUIRED THAT THE CREDIT OF TAX WOULD BE ALLOWABLE ONLY IN THE YEAR IN WHICH TH E INCOME HAS BEEN OFFERRED TO TAX. THE SECTION WAS OVERHAULED THROUGH THE FINANCE ACT 2008 AND PRIOR TO ITS SUBSTITUTION, THE SECTION READ AS UNDER: 199(1) ANY DEDUCTION MADE IN ACCORDANCE WITH THE FO REGOING PROVISIONS OF THIS CHAPTER AND PAID TO THE CREDIT OF THE CENTRAL GOVERNMENT SH ALL BE TREATED AS A PAYMENT OF TAX ON BEHALF OF THE PERSON FROM WHOSE INCOME THE DEDUCTIO N WAS MADE, OR THE OWNER OF THE SECURITY, OR OF THE DEPOSITOR OR OF THE OWNER OF TH E PROPERTY OR OF THE UNIT HOLDER, OR OF THE SHAREHOLDER AS THE CASE MAY BE, AND CREDIT SHALL BE GIVEN TO HIM FOR THE AMOUNT SO ITA NOS. 195 & 196/AGR/2015 18 DEDUCTED IN PRODUCTION OF THE CERTIFICATE FURNISHED UNDER SECTION 203 IN THE ASSESSMENT MADE UNDER THIS ACT FOR THE ASSESSMENT YEAR FOR WHI CH SUCH INCOME IS ASSESSED. FROM THE ABOVE, IT IS DEAR THAT THE REQUIREMENT OF TDS CREDIT BEING ALLOWED FOR THE YEAR IN WHICH THE INCOME IS ASSESSABLE HAS BEEN DONE AWAY W ITH VIDE THE FINANCE ACT 2008 AND NO LONGER IS THERE A NEED TO ESTABLISH A NEXUS BETWEEN THE CREDIT OF TDS, BEING CLAIMED AND THE CORRESPONDING INCOME BEING OFFERED TO TAX. IN ANY CASE, THE AMOUNTS APPEARING AS DOSING ADVANC ES FROM CUSTOMERS HAVE BEEN INCLUDED IN THE INCOME OF THE ASSESSEE IN THE SUBSEQUENT YEA RS. WE HAVE PREPARED AND ENCLOSED A PARTY-WISE SUMMARY OF THE TOTAL AMOUNT RECEIVED FROM PARTIES, TDS DEDUCTED ON TOTAL AMOUNT RECEIVED FROM PARTIES AND TDS AMOUNTS ON ADVANCES RECEIVED. WE SUBMIT THAT THIS CONTENTION OF THE ASSESSEE HAS BEEN ACCEPTED BY THE LD. A.O. IN THE ASSESSMENT PROCEEDINGS FOR AY 2011-12 (COPY OF ORDE R ENCLOSED) AND IN VIEW OF THE SAME, YOUR HONOUR IS REQUESTED TO ALLOW THE ENTIRE CREDIT OF TDS (INCLUDING THAT DEDUCTED ON ADVANCES).' 8.2 I HAVE CONSIDERED THE ABOVE ARGUMENT TAKEN BY THE ID. AR. FOR GIVING CREDIT FOR TDS, THE PROVISIONS OF SECTION 199 OF THE ACT READ WITH RULE 37BA OF INCOME-TAX RULE 1962 IS TO BE FOLLOWED. THEREFORE, THE A.O. IS DIRECTED TO G IVE CREDIT FOR TDS AFTER MAKING NECESSARY VERIFICATION OF TDS CERTIFICATE FILED BY THE ASSESS EE COMPANY AND GIVE CREDIT FOR TDS AS PER THE PROVISIONS OF SECTION 199 READ WITH RULE 37BA. IN VIEW OF MY ABOVE DIRECTION, GROUND NO. 8 IS DECIDED ACCORDINGLY. FROM THE BARE READING OF THE ABOVE FINDING AND THE QUESTION OF LAW AND THE GROUND URGED BEFORE THE LD. CIT(A), IT IS ABUNDANTLY CLEAR THAT THE ISSUE WHETHER TDS CREDIT IN THE ACCOUNT OF MADHUKAR KAPUR, AS MENTIONED IN F ORM 26AS , CAN BE CREDIT TO THE ACCOUNT OF THE ASSESSEE WAS NOT A SUBJECT MATTER OF APPEAL BEFORE THE LD. C IT(A). ITA NOS. 195 & 196/AGR/2015 19 12. IT IS SETTLED PROPOSITION OF LAW THAT THE FINDI NG RECORDED BY THE JUDICIAL AND QUASI JUDICIAL AUTHORITIES ARE REQUIRED TO BE READ IN THE CONTEXT OF GROUNDS URGED BEFORE THEM AND SHOULD NOT BE READ IN ISOLATION AND OUT OF THE CONTEXT. THUS, IT IS CRYSTAL CLEAR THAT THE SUBJECT MATTER OF THE PROCEE DINGS U/S. 263 WAS NOT THE SUBJECT MATTER OF THE PROCEEDINGS BEFORE THE LD.CIT(A) AND IN VIEW THEREOF, THE PRIMARY GROUND RAISED BY THE ASSESSEE IS WITHOUT MERIT AND ACCORDINGLY, THE SAME IS DISMISSED. 13. THE SECOND GROUND RAISED BY THE LD. AR BY WRITT EN SUBMISSIONS IS THAT THE PCIT HAS FAILED TO NOTICE THE TWIN CONDITIONS AS LA ID DOWN BY HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT, 243 ITR 83 (SC) AND IN THE MATTER OF MAX INDIA LTD. AND OTHER JUDGMENTS. 14. BEFORE WE DEAL WITH THE SUBMISSIONS OF THE RESP ECTIVE PARTIES, WE FEEL IT APPROPRIATE TO MENTION THE PRINCIPLE OF LAW WHICH WAS CULLED OUT BY THE VARIOUS AUTHORITIES (HONBLE SUPREME COURT AND HIGH COURT) AND THE TRIBUNAL. WE HAVE A BENEFIT OF GOING THROUGH THE DECISION OF THE HONBL E MADRAS HIGH COURT IN THE MATTER OF CAIRN INDIA LTD. VS. DIT, 87 TAXMANN.COM 310 (MA D)AND ALSO THE DECISION OF THE HONBLE SUPREME COURT IN THE MATTER OF CIT VS. AMIT ABH BACHHAN, 69 TAXMANN.COM ITA NOS. 195 & 196/AGR/2015 20 170 (SC).THE HONBLEMADRAS HIGH COURT IN PARA 8 AND 8.1 HAD BROADLY NOTED THE SCOPE OF AMBIT OF SECTION 263 TO THE FOLLOWING EFFE CT: 8. WE HAVE HEARD THE LEARNED COUNSEL FOR THE PARTIES AND PERUSED THE RECORD. 8.1 HOWEVER, BEFORE WE PROCEED FURTHER, WE MAY SUMMARI SE THE BROAD PRINCIPLES OF LAW, WHICH ARE REQUIRED TO BE KEPT IN MIND BY THE COMMISSIONER, WH ILE EXERCISING HIS POWER UNDER SECTION 263 OF 1961 ACT: ( I ) THE POWER IS SUPERVISORY IN NATURE, WHEREBY THE COM MISSIONER CAN CALL FOR AND EXAMINE THE ASSESSMENT RECORDS. ( II ) THE COMMISSIONER CAN REVISE THE ASSESSMENT ORDER IF THE TWIN CONDITIONS PROVIDED IN THE ACT ARE FULFILLED, THAT IS, THAT THE ASSESSMENT ORDER IS NO T ONLY ERRONEOUS BUT IS ALSO PREJUDICIAL TO THE INT EREST OF THE REVENUE. THE FULFILMENT OF BOTH THE CONDITIO NS IS AN ESSENTIAL PREREQUISITE. [SEE MALABAR INDUSTRIAL CO. LTD . ( SUPRA )] ( III ) AN ORDER IS ERRONEOUS WHEN IT IS CONTRARY TO LAW OR PROCEEDS ON AN INCORRECT ASSUMPTION OF FACTS OR IS IN BREACH OF PRINCIPLES OF NATURAL JUSTICE OR IS PA SSED WITHOUT APPLICATION OF MIND, THAT IS, IS STERE O- TYPED, IN AS MUCH AS, THE ASSESSING OFFICER, ACCEPT S WHAT IS STATED IN THE RETURN OF THE ASSESSEE WITH OUT MAKING ANY ENQUIRY CALLED FOR IN THE CIRCUMSTANCES OF THE CASE, THAT IS, PROCEEDS WITH UNDUE HASTE'. [ GEE VEE ENTERPRISES V. ASSTT. CIT [1975] 99 ITR 375 (DELHI) ] ( IV ) THE EXPRESSION 'PREJUDICIAL TO THE INTEREST OF THE REVENUE' WHILE NOT TO BE CONFUSED WITH THE LOSS OF TAX WILL CERTAINLY INCLUDE AN ERR ONEOUS ORDER WHICH RESULTS IN A PERSON NOT PAYING T AX WHICH IS LAWFULLY PAYABLE TO THE REVENUE. [SEE MALABAR INDUSTRIAL CO. LTD.]. ( V ) EVERY LOSS OF TAX TO THE REVENUE CANNOT BE TREATED AS BEING 'PREJUDICIAL TO THE INTEREST OF THE REVENUE'. FOR EXAMPLE, WHEN THE ASSESSING OFFICER TAKES RECOURSE TO ONE OF THE TWO LEGALLY VIABLE COURSES OR WHERE THERE ARE TWO VIEWS POSSIBLE AND T HE COMMISSIONER DOES NOT AGREE WITH THE VIEW TAKEN BY THE ASSESSING OFFICER WHICH HAS RESULTED I N A LOSS.[SEE CIT V. MAX INDIA LTD . [2007] 295 ITR 282/[2008] 166 TAXMAN 188 (SC) ] ( VI ) THERE IS NO REQUIREMENT OF ISSUANCE OF A NOTICE BEF ORE COMMENCING PROCEEDINGS UNDER SECTION 263 OF THE ACT. WHAT IS REQUIRED IS ADHERENCE TO THE PRINCIPLES OF NATUR AL JUSTICE BY GRANTING TO THE ASSESSEE AN OPPORTUNITY OF BEING HEARD BEFORE PASSING AN ORD ER UNDER SECTION 263. [ CIT V. ELECTRO HOUSE [1971] 82 ITR 824 (SC) ]. ( VII ) IF THE ASSESSING OFFICER ACTS IN ACCORDANCE WITH LA W HIS ORDER CANNOT BE TERMED AS ERRONEOUS BY THE ITA NOS. 195 & 196/AGR/2015 21 COMMISSIONER, SIMPLY BECAUSE ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY'. RECOUR SE CANNOT BE TAKEN TO SECTION 263 TO SUBSTITUTE THE VIEW OF THE ASSESSING OFFICER WITH THAT OF THE COMMISSIONER.[SEE GABRIEL INDIA LTD. ( SUPRA )] ( VIII ) THE EXERCISE OF STATUTORY POWER UNDER SECTION 263 O F THE ACT IS DEPENDENT ON EXISTENCE OF OBJECTIVE FACTS ASCERTAINED FROM PRIMA FACIE MATERIAL ON RECO RD. THE EVALUATION OF SUCH MATERIAL SHOULD SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE WAS NOT IMPOSE D. [SEE GABRIEL INDIA LTD. ( SUPRA )]. 15. FURTHER IN THE MATTER OF AMITABH BACHAN IT WAS HELD AS UNDER : 20. AN ARGUMENT HAS BEEN MADE ON BEHALF OF THE ASSESSE E THAT NOTICE UNDER SECTION 69-C WAS ISSUED BY THE ASSESSING OFFICER AND THEREAFTER ON WITHDRAWAL OF THE CLAIM BY THE ASSESSEE THE ASSESSING OFFICER THOUGHT THAT THE MATTER OUGHT NOT TO BE INVESTIGATE D ANY FURTHER. THIS, ACCORDING TO THE LEARNED COUNS EL FOR THE ASSESSEE, IS A POSSIBLE VIEW AND WHEN TWO V IEWS ARE POSSIBLE ON AN ISSUE, EXERCISE OF REVISION AL POWER UNDER SECTION 263 WOULD NOT BE JUSTIFIED. REL IANCE IN THIS REGARD HAS BEEN PLACED ON A JUDGMENT OF THIS COURT IN MALABAR INDUSTRIAL CO. LTD. V . CIT [2000] 243 ITR 83/109 TAXMAN 66 WHICH HAS BEEN APPROVED IN CIT V. MAX INDIA LTD. [2007] 295 ITR 282/[2008] 166 TAXMAN 188 (SC) 21. THERE CAN BE NO DOUBT THAT SO LONG AS THE VIEW TAK EN BY THE ASSESSING OFFICER IS A POSSIBLE VIEW THE SAME OUGHT NOT TO BE INTERFERED WITH BY THE COMMISS IONER UNDER SECTION 263 OF THE ACT MERELY ON THE GROUND THAT THERE IS ANOTHER POSSIBLE VIEW OF THE M ATTER. PERMITTING EXERCISE OF REVISIONAL POWER IN A SITUATION WHERE TWO VIEWS ARE POSSIBLE WOULD REALLY AMOUNT TO CONFERRING SOME KIND OF AN APPELLATE POWER IN THE REVISIONAL AUTHORITY. THIS IS A COURSE OF ACTION THAT MUST BE DESISTED FROM. HOWEVER, THE ABOVE IS NOT THE SITUATION IN THE PRESENT CASE IN V IEW OF THE REASONS STATED BY THE LEARNED C.I.T. ON THE BASIS OF WHICH THE SAID AUTHORITY FELT THAT THE MAT TER NEEDED FURTHER INVESTIGATION, A VIEW WITH WHICH WE WHOLLY AGREE. MAKING A CLAIM WHICH WOULD PRIMA FACIE DISCLOSE THAT THE EXPENSES IN RESPECT OF WHICH DEDUCTION HAS BEEN CLAIMED HAS BEEN INCURRED AND TH EREAFTER ABANDONING/WITHDRAWING THE SAME GIVES RISE TO THE NECESSITY OF FURTHER ENQUIRY IN THE INT EREST OF THE REVENUE. THE NOTICE ISSUED UNDER SECTI ON 69-C OF THE ACT COULD NOT HAVE BEEN SIMPLY DROPPED ON THE GROUND THAT THE CLAIM HAS BEEN WITHDRAWN. WE, THEREFORE, ARE OF THE OPINION THAT THE LEARNED C.I.T. WAS PERFECTLY JUSTIFIED IN COMING TO HIS CONCLUSIONS INSOFAR AS THE ISSUE NO. (III) IS CONCE RNED AND IN PASSING THE IMPUGNED ORDER ON THAT BASI S. THE LEARNED TRIBUNAL AS WELL AS THE HIGH COURT, THE REFORE, OUGHT NOT TO HAVE INTERFERED WITH THE SAID CONCLUSION. 22. IN THE LIGHT OF THE DISCUSSIONS THAT HAVE PRECEDED AND FOR THE REASONS ALLUDED WE ARE OF THE OPINION THAT THE PRESENT IS A FIT CASE FOR EXERCISE OF THE SUOMOTU REVISIONAL POWERS OF THE LEARNED C.I.T. UNDER SECTION 263 OF THE ACT. THE ORDER OF THE LEARNED C. I.T., THEREFORE, IS RESTORED AND THOSE OF THE LEARN ED TRIBUNAL DATED 28TH AUGUST, 2007 AND THE HIGH COURT DATED 7TH AUGUST, 2008 ARE SET ASIDE. THE APPEAL OF THE REVENUE IS ALLOWED. 23. LEAVE GRANTED. 24. PURSUANT TO THE REVISIONAL ORDER DATED 20TH MARCH, 2006 UNDER SECTION 263 OF THE INCOME TAX ACT SETTING ASIDE THE ASSESSMENT ORDER FOR THE ASSESSME NT YEAR 2001-2002 AND DIRECTING FRESH ASSESSMENT, A FRESH ASSESSMENT HAD BEEN MADE BY THE ASSESSING OFF ICER BY ORDER DATED 29TH DECEMBER, 2006. AGAINST THE SAID ORDER THE RESPONDENT ASSESSEE FILED AN APP EAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX ITA NOS. 195 & 196/AGR/2015 22 (APPEALS). BY ORDER DATED 18TH OCTOBER, 2007 THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS) HAD SET ASIDE THE ASSESSMENT ORDER DATED 29TH DECEMBER, 2006 AS IN THE MEANTIME, BY ORDER DATED 28TH AUGUST, 2007 OF THE LEARNED INCOME TAX APPELLATE TR IBUNAL THE REVISIONAL ORDER DATED 20TH MARCH, 2006 UNDER SECTION 263 OF THE ACT WAS SET ASIDE. THE REV ENUE'S APPEAL BEFORE THE LEARNED TRIBUNAL AGAINST T HE ORDER DATED 18TH OCTOBER, 2007 WAS DISMISSED ON 11T H JANUARY, 2000 AND BY THE HIGH COURT ON 29TH FEBRUARY, 2012. AGAINST THE AFORESAID ORDER OF THE HIGH COURT THIS APPEAL HAS BEEN FILED BY THE REVENU E. AS BY THE ORDER PASSED TODAY IN THE CIVIL APPEAL AR ISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO.1162 1 OF 2009 WE HAVE RESTORED THE SUOMOTU REVISIONAL ORDER DATED 20TH MARCH, 2006 PASSED BY T HE LEARNED C.I.T., WE ALLOW THIS APPEAL FILED BY THE REVENUE A ND SET ASIDE THE ORDER DATED 11TH JANUARY, 2010 PASSED BY THE LEARNED TRIBUNAL AND THE ORDER DATED 29TH FEBRUARY, 2012 PASSED BY THE HIGH COURT REFERRED TO ABOVE. HOWEVER, WE HAVE TO ADD THAT AS THE RE-ASSESSMENT ORDER DATED 29TH DECEMBER, 2006 HAD NOT BEEN TESTED ON MERITS THE ASSESSEE WOULD BE FREE TO DO SO, IF HE IS SO INCLINED AND SO ADVISED . 16. WE MAY ALSO RELY UPON THE DECISION OF JURISDICT IONAL HIGH COURT IN THE MATTER OF COMMISSIONER OF INCOME TAX, MEERUT VS. VAM RESOR TS & HOTELS PVT. LTD. (INCOME TAX APPEAL NO. 107 OF 2015), WHEREIN, IT WAS HELD A S UNDER : 25. AS, CLAUSE (C) OF EXPLANATION 1 TO SECTION 263 OF THE ACT PROVIDES THAT WHEN AN APPEAL IS PENDING BEFORE THE COMMISSIONER, THE E XERCISE OF JURISDICTION UNDER SECTION 263 OF THE ACT BY CIT IS BARRED. THUS, IN THE PRESENT CASE, THE CIT WRONGLY EXERCISED JURISDICTION UNDER SECTION 263 OF THE ACT BY REMANDING BACK THE MATTER TO ASSESSING AUTHORITY ON 25.3.2013, WHILE T HE APPEAL WAS DECIDED BY CIT (A) ON 5.6.2013. THUS, THE ORDER PASSED BY THE ITAT DOES NOT SUFFER FROM ANY IRREGULARITY AND NEEDS NO INTERFERENCE. 26. AS FAR AS THE WORD RECORD APPEARING IN CLAUSE (B) OF EXPLANATION-1 TO SECTION 263 IS CONCERNED, IT MEANS THE RECORD AVAIL ABLE AT THE TIME OF EXAMINATION BY THE COMMISSIONER OF INCOME TAX AND NO T ANY MATERIAL OR RECORD AVAILABLE SUBSEQUENT TO HIS EXAMINATION OR EXERCISE OF POWER UNDER SECTION 263. THUS, ANY ORDER PASSED BY THE AO IN THE ASSESSMENT P ROCEEDINGS AFTER THE REMAND BY THE CIT CANNOT BE LOOKED UPON AND THE ARGU MENT MADE BY THE COUNSEL FOR THE REVENUE FOR RELYING UPON THE FRESH ASSESSMENT ORDER MADE ON 7.3.2004 UNDER SECTION 263/143(3) OF THE ACT CANNOT BE ACCEPTED IN VIEW OF THE ABOVE PROVISION OF LAW. 27. IN THE PRESENT CASE, THE TRIBUNAL HAD RECORDED S PECIFIC FINDING OF FACT THAT THE ASSESSING AUTHORITY HAD EXAMINED EACH AND EVERY ASP ECT OF THE CASE ON WHICH ITA NOS. 195 & 196/AGR/2015 23 THE REMAND ORDER HINGES, AS SUCH THE REMAND ORDER WAS NOT SUSTAINABLE IN THE EYES OF LAW. IN THE MATTER OF MEERUT SUGAR MILLS, WHEREIN IT WAS HELD AS UNDER : 7. THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER; IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SA ME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL J USTICE OR WITHOUT APPLICATION OF MIND. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVE NUE' IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT. UNDERSTOOD IN ITS OR DINARY MEANING, IT IS OF WIDE IMPORT AND IS NOT CONFINED TO LOSS OF TAX. THE HIGH COURT OF CALCUTTA IN DAWJEE DADABHOY & CO. V. S.P. JAIN [1957] 31 ITR 872, THE HIGH COURT OF KARNATAKA IN CIT V. T. NARAYANA PAI [1975] 98 ITR 422, THE HIGH COU RT OF BOMBAY IN CIT V. GABRIEL INDIA LTD. [1993] 203 ITR 208 AND THE HIGH C OURT OF GUJARAT IN CIT V. SMT. MINALBEN S. PARIKH [1995] 215 ITR 81/ 79 TAXMAN 184 TREATED LOSS OF TAX AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 8. MR. ABRAHAM RELIED ON THE JUDGMENT OF THE DIVISI ON BENCH OF THE HIGH COURT OF MADRAS IN VENKATAKRISHNA RICE CO. V. CIT [1987] 163 ITR 129 INTERPRETING 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE'. THE H IGH COURT HELD, 'IN THIS CONTEXT, IT MUST BE REGARDED AS INVOLVING A CONCEPTION OF AC TS OR ORDERS WHICH ARE SUBVERSIVE OF THE ADMINISTRATION OF REVENUE. THERE M UST BE SOME GRIEVOUS ERROR IN THE ORDER PASSED BY THE ITO, WHICH MIGHT SET A BA D TREND OR PATTERN FOR SIMILAR ASSESSMENTS, WHICH ON ABROAD RECKONING, THE COMMISSIONER MIGHT THINK TO BE PREJUDICIAL TO THE INTERESTS OF REVENUE ADMIN ISTRATION'. IN OUR VIEW, THIS INTERPRETATION IS TOO NARROW TO MERIT ACCEPTANCE. TH E SCHEME OF THE ACT IS TO LEVY AND COLLECT TAX IN ACCORDANCE WITH THE PROVISIONS O F THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF DUE TO AN ERRONEOUS OR DER OF THE ITO, THE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CE RTAINLY BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ITA NOS. 195 & 196/AGR/2015 24 9. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE R EVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE A SSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF ASSESSIN G OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EX AMPLE, WHEN AN ITO ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULT ED IN LOSS OF REVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE ITO HAS TAKEN ONE VIE W 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 ITO IS UNSUSTAINABLE IN LAW. IT HAS BEEN HELD BY THIS COUR T THAT WHERE A SUM NOT EARNED BY A PERSON IS ASSESSED AS INCOME IN HIS HANDS ON H IS SO OFFERING, THE ORDER PASSED BY THE ASSESSING OFFICER ACCEPTING THE SAME AS SUCH WILL BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE- RAMPYA RI DEVI SARAOGI V. CIT [1968] 67 ITR 84 (SC) AND IN SMT. TARA DEVI AGGARWAL V. CIT, [1973] 88 ITR 323 (SC). 10. IN THE INSTANT CASE, THE COMMISSIONER NOTED THA T THE ITO PASSED THE ORDER OF NIL ASSESSMENT WITHOUT APPLICATION OF MIND. INDEED, THE HIGH COURT RECORDED THE FINDING THAT THE ITO FAILED TO APPLY HIS MIND TO THE CASE IN ALL PERSPECTIVE AND THE ORDER PASSED BY HIM WAS ERRONEOUS. IT APPEARS THAT THE RESOLUTION PASSED BY THE BOARD OF THE APPELLANT- COMPANY WAS NOT PLACED BEFO RE THE ASSESSING OFFICER. THUS, THERE WAS NO MATERIAL TO SUPPORT THE CLAIM OF THE APPELLANT THAT THE SAID AMOUNT REPRESENTED COMPENSATION FOR LOSS OF AGRICUL TURAL INCOME. HE ACCEPTED THE ENTRY IN THE STATEMENT OF THE ACCOUNT FILED BY THE APPELLANT IN THE ABSENCE OF ANY SUPPORTING MATERIAL AND WITHOUT MAKING ANY INQU IRY. ON THESE FACTS, THE CONCLUSION THAT THE ORDER OF THE ITO WAS ERRONEOUS I S IRRESISTIBLE. WE ARE, THEREFORE, OF THE OPINION THAT THE HIGH COURT HAS R IGHTLY HELD THAT THE EXERCISE OF THE JURISDICTION BY THE COMMISSIONER UNDER SECTION 263(1) WAS JUSTIFIED.' 15. IN THE PRESENT CASE, THE CIT HIMSELF WHILE RELYI NG UPON THE REPLY SUBMITTED BY THE ASSESSEE HAD PARTIALLY ACCEPTED THE CLAIM AS FA R AS INVESTMENT IN SHARE CAPITAL WAS CONCERNED BUT IT DID NOT ACCEPT THE DOC UMENTARY EVIDENCE AND REPLY SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFI CER AS FAR AS UNSECURED LOANS AND CREDITORS ARE CONCERNED. THE RELIANCE PLACED BY THE COUNSEL FOR THE DEPARTMENT ON THE AFORESAID JUDGMENT IS OF NO HELP TO HIM AS HE HAS FAILED TO ITA NOS. 195 & 196/AGR/2015 25 POINT OUT HOW THE ORDER OF THE ASSESSING OFFICER WA S ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. WHILE T HE COUNSEL FOR THE ASSESSEE RELYING UPON PARA NO. 10 OF THE SAID JUDGMENT SUBMI TTED THAT THE ORDER PASSED BY THE ASSESSING AUTHORITY WAS NOT WITHOUT APPLICAT ION OF MIND, AS THE SAME WAS PASSED AFTER THE REPLYING UPON THE DOCUMENTARY EVID ENCE SUBMITTED BY THE ASSESSEE. 16. SIMILARLY, THIS COURT IN CASE OF ANAND KUMAR JA IN (SUPRA) WHILE INTERPRETING THE LANGUAGE OF SECTION 263 HAD HELD THAT WHERE THE ASSESSING OFFICER PASSES AN ORDER WITHOUT APPLICATION OF MIND OR AN INCORRECT S TATEMENT OF FACT OR INCORRECT APPLICATION OF LAW, THEN THE ORDER SO PASSED WOULD BE ERRONEOUS. BUT IN THE PRESENT CASE, ASSESSING OFFICER AFTER ISSUING NOTIC E AND RAISING CERTAIN QUERIES TO THE ASSESSEE PASSED THE ASSESSMENT ORDER WHICH CANN OT BE CALLED AS ERRONEOUS. 17. RELIANCE HAS ALSO BEEN PLACED ON THE JUDGMENT O F SWARUP VEGETABLE PRODUCTS (SUPRA), WHEREIN THIS COURT WHILE DEALING WITH A CASE, WHERE ASSESSEE RECEIVED REFUND OF EXCISE DUTY AND PLACED THE SAID AMOUNT IN SUSPENSE ACCOUNT AND NOT IN PROFIT AND LOSS ACCOUNT AND CLAIMED THAT THIS AMOUNT SHOULD NOT BE INCLUDED IN HIS INCOME, AND STATED BEFORE THE ASSES SING OFFICER THAT LARGE PART OF THIS AMOUNT WAS CLAIMED BY ONE SUGAR MILL WHO HAD F ILED A SUIT AND ALSO A WRIT PETITION CLAIMING THE SAID AMOUNT AND AS SUCH, THIS AMOUNT SHOULD NOT BE INCLUDED IN HIS TAXABLE INCOME. THIS CLAIM WAS ACCEP TED BY THE ITO. HOWEVER, WHEN THE MATTER CAME TO THE NOTICE OF COMMISSIONER, HE EXERCISING POWER UNDER SECTION 263 HELD THAT THE ITO HAD NOT MADE PROPER IN QUIRIES BEFORE ACCEPTING THE CLAIM OF ASSESSEE, AND THE ASSESSMENT ORDER WAS SET ASIDE AND FRESH ASSESSMENT WAS DIRECTED. THIS COURT REFUSED TO INTER FERE IN THE FINDINGS OF THE COMMISSIONER AS THE ORDER OF THE ITO WAS PREJUDICIAL TO THE REVENUE. 18. SIMILARLY, THE CASE RELIED UPON BY THE DEPARTME NT IN CASE OF BHAGWAN DAS (SUPRA) ALSO IS NOT APPLICABLE IN THE PRESENT CASE, AS IN THE CASE IN HAND THE ASSESSING OFFICER AFTER DULY PUTTING THE ASSESSEE U NDER NOTICE AND REQUIRING HIM TO PRODUCE ALL THE RELEVANT DOCUMENTS HAD PASSED TH E ASSESSMENT ORDER. 19. THE ARGUMENT OF THE COUNSEL FOR THE ASSESSEE THA T MERE NON-DISCUSSION AND NON-MENTIONING ABOUT THE REPLY IN THE ORDER OF THE ASSESSING AUTHORITY WOULD ITA NOS. 195 & 196/AGR/2015 26 NOT LEAD TO AN ASSUMPTION THAT THERE WAS NO APPLICA TION OF MIND AND THE ORDER IS ERRONEOUS. IN KRISHNA CAPBOX (P.) LTD. (SUPRA), THI S COURT HELD AS UNDER:- 9. THE TRIBUNAL FURTHER CONSIDERED THE QUESTION WHETH ER DISCUSSION OF QUERIES AND REPLY RECEIVED FROM ASSESSEE, IN ASSESS MENT ORDER, IS NECESSARY OR NOT. RELYING ON TWO JUDGMENTS OF DELHI HIGH COUR T IN CIT VS. VIKASH POLYMERS [2012] 341 ITR 537/ [2010] 194 TAXMAN 57 AND CIT V. VODAFONE ESSAR SOUTH LTD. [2012] 28 TAXMANN.COM 273/ [2013] 212 TAXMAN 184 (DELHI), IT HELD THAT ONCE INQUIRY WAS MADE, A MERE NON DISCUSSION OR NON- MENTION THEREOF IN ASSESSMENT ORDER CANNOT LEAD TO ASSUMPTION THAT ASSESSING OFFICER DID NOT APPLY HIS MIND OR THAT HE HAS NOT MADE INQUIRY ON THE SUBJECT AND THIS WOULD NOT JUSTIFY INTERFERE NCE BY COMMISSIONER BY ISSUING NOTICE UNDER SECTION 263 OF THE ACT. 10. IN VIKASH POLYMERS (SUPRA) RELEVANT PART OF THE OBSERVATIONS IN THIS REGARD READ AS UNDER (PAGE 548 OF 341 ITR): 'THIS IS FOR THE REASON THAT IF A QUERY WAS RAISED D URING THE COURSE OF SCRUTINY BY THE ASSESSING OFFICER, WHICH WAS ANSWERED TO THE SA TISFACTION OF THE ASSESSING OFFICER, BUT NEITHER THE QUERY NOR THE ANSWER WAS R EFLECTED IN THE ASSESSMENT ORDER, THAT WOULD NOT, BY ITSELF, LEAD TO THE CONCL USION THAT THE ORDER OF THE ASSESSING OFFICER CALLED FOR INTERFERENCE AND REVIS ION.' 11. FURTHER, THE RELEVANT OBSERVATION MADE IN VODAF ONE ESSAR SOUTH LTD. (SUPRA) IN THIS REGARD READS AS UNDER (PAGE 531 OF 1 ITR-OL) : 'THE LACK OF ANY DISCUSSION ON THIS CANNOT LEAD TO T HE ASSUMPTION THAT THE ASSESSING OFFICER DID NOT APPLY HIS MIND.' 12. LEARNED COUNSEL FOR THE DEPARTMENT COULD NOT PL ACE ANY OTHER AUTHORITY BEFORE THIS COURT WHEREIN ANY OTHERWISE VIEW HAS BE EN TAKEN. ON THE CONTRARY, LEARNED COUNSEL FOR ASSESSEE HAS PLACED BEFORE US A DECISION OF BOMBAY HIGH COURT IN INCOME TAX APPEAL NO.296 OF 2013 (CIT V. FIN E JEWELLERY (INDIA) LTD.) [2015] 372 ITR 303/230 TAXMAN 641/55 TAXMANN.XOM 514 (BOM.) DECIDED ON FEBRUARY 3, 2015, WHEREIN ALSO BOMBAY HIGH COURT, F OLLOWING ITS EARLIER DECISION ITA NOS. 195 & 196/AGR/2015 27 IN IDEA CELLULAR LTD. VS. DY. CIT [2008] 301 ITR 407 (BOM.) HAS TAKEN A SIMILAR VIEW AND SAID AS UNDER (PAGE 307 OF 372 ITR): '......IF A QUERY IS RAISED DURING ASSESSMENT PROCE EDINGS AND RESPONDED TO BY THE ASSESSEE, THE MERE FACT THAT IT IS NOT DEALT WITH I N THE ASSESSMENT ORDER WOULD NOT LEAD TO A CONCLUSION THAT NO MIND HAD BEEN APPL IED TO IT.' 20. IN CASE OF MAHENDRA KUMAR BANSAL (SUPRA), THIS COURT HELD THAT MERELY BECAUSE THE ORDER OF THE ITO IS NOT LENGTHY, IT WOUL D NOT ESTABLISH THAT THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. RELEVAN T PARA NOS. 11,12 AND 14 ARE EXTRACTED HEREINASUNDER:- '11. IN THE CASE OF GOYAL PRIVATE FAMILY SPECIFIC TR UST [1988] 171 ITR 698, THIS COURT HAS HELD THAT THE ORDER OF THE INCOME-TAX OFF ICER MAY BE BRIEF AND CRYPTIC, BUT THAT BY ITSELF IS NOT SUFFICIENT REASON TO BRAN D THE ASSESSMENT ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE AND IT WAS FOR THE COMMISSIONER TO POINT OUT AS TO WHAT ERROR WAS COMM ITTED BY THE INCOME-TAX OFFICER IN HAVING REACHED TO ITS CONCLUSION AND IN THE ABSENCE OF WHICH PROCEEDINGS UNDER SECTION 263 OF THE ACT IS NOT WAR RANTED. 12. IN THE CASE OF BELAL NISA [1988] 171 ITR 643 THE PATNA HIGH COURT HAS HELD THAT WHERE THE INCOME-TAX OFFICER HAD NOT CARRIED O UT THE NECESSARY ENQUIRY ENJOINED BY SECTION 143(1) OF THE ACT THE COMMISSIO NER IS WITHIN HIS POWER IN TAKING ACTION IN TERMS OF SECTION 263(1) OF THE ACT . SIMILAR VIEW HAS BEEN TAKEN IN BY THE PATNA HIGH COURT IN THE CASE OF SMT. KAUS HALYA DEVI [1988] 171 ITR 686. 14. AS HELD BY THIS COURT IN THE CASE OF GOYAL PRIV ATE FAMILY SPECIFIC TRUST [1988] 171 ITR 698, WE ARE OF THE CONSIDERED OPINION THAT M ERELY BECAUSE THE INCOME- TAX OFFICER HAD NOT WRITTEN LENGTHY ORDER IT WOULD NOT ESTABLISH THAT THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3)/148 OF THE ACT IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE WITHOUT BRINGING ON RECORD SPECIFIC ITA NOS. 195 & 196/AGR/2015 28 INSTANCES, WHICH IN THE PRESENT CASE, THE COMMISSIO NER OF INCOME TAX HAS FAILED TO DO.' 21. IT IS CLEAR THAT AFTER THE NOTICE WAS ISSUED BY THE ASSESSING OFFICER RAISING 28 QUERIES FROM THE ASSESSEE, WHICH WAS ALSO REPLIED B Y HIM ALONG WITH THE DOCUMENTARY EVIDENCE IN REGARD TO EACH OF THE QUERY , THUS THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT WOULD NOT RE NDER THE SAME AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, UNLESS THE COMMISSIONER EXERCISING POWER UNDER SECTION 263 BRINGS ON RECORD TO SHOW TH AT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS, AS THE SAME WAS PAS SED WITHOUT APPLICATION OF MIND OR THE ASSESSING OFFICER HAD MADE AN INCORRECT ASSESSMENT OF FACT OR INCORRECT APPLICATION OF LAW, BUT THE SAME NOT BEIN G THE CASE, AND THE CIT RELYING UPON THE REPLY AND THE DOCUMENTARY EVIDENCE SUBMITT ED BY THE ASSESSEE GRANTED PARTIAL RELIEF, AS SUCH THE ORDER DATED 09.02.2012 PASSED UNDER SECTION 263 RELEGATING BACK THE MATTER TO THE ASSESSING OFFICER AS REGARDS UNSECURED LOANS AND CREDITORS IS UNSUSTAINABLE. 22. HAVING EXAMINED THE MATTER AT LENGTH ON FACTS A S WELL AS ON THE LAW, WE ARE OF THE CONSIDERED OPINION THAT IN THE PRESENT CASE, IT IS ABUNDANTLY CLEAR THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS NEITHER E RRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. 17. ADMITTEDLY, THERE IS NO DENIAL IN THE WRITTEN S UBMISSIONS FILED BY THE ASSESSEE BEFORE PCIT AND BEFORE US THAT AT THE RELEVANT TIME , THE ORDER WAS PASSED BY THE ASSESSING OFFICER, RULE 37BA WAS APPLICABLE. FURTH3 R, THE ASSESSEE HAS FAILED TO MENTION THAT THE CASE OF THE ASSESSEE WOULD FALL IN ANY OF THE INGREDIENTS MENTIONED IN RULE 37BA, AS REPRODUCED BY THE LD. PCIT IN PARA 2 OF THE IMPUGNED ORDER. IN VIEW OF THE LEGAL POSITION, THE OPINION FORMED BY THE PC IT THAT THE ORDER PASSED BY THE ITA NOS. 195 & 196/AGR/2015 29 ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE CANNOT BE FAULTED. 18. THE LD. AR IN THE WRITTEN SUBMISSIONS HAS ALSO RAISED ADDITIONAL GROUND WHICH WAS NOT RAISED BEFORE THE PCIT THAT THE RULE 37BA W HICH WAS SUBSTITUTED W.E.F. 01.11.2011 WAS RETROSPECTIVE IN NATURE AND FOR THAT PURPOSES, THE LD.AR RELIED UPON THE DECISION OF A.P. HIGH COURT IN THE MATTER OF CI T VS. BHOORATNAM & CO., 357 ITR 396, CIT VS. RELCOM, 234 TAXMAN 693 (DELHI), PARMAN AND TIWARI VS. ITO, 54 TAXMANN.COM 25 (KOL. TRIB.). WE HAVE OCCASION TO GO THROUGH ALL THESE DECISIONS AND IN OUR RESPECTFUL UNDERSTANDING, NONE OF THE DECISI ONS ARE APPLICABLE. IN THE FIRST CASE OF BHOORATNAM & CO. , THE FACTS WERE THAT THE ASSESSING OFFICER HAD DENIED TO BENEFIT OF TDS TO THE ASSESSEE WHEREAS THE TDS CERT IFICATE WAS ISSUED IN THE NAME OF JOINT VENTURE. IN THE PRESENT CASE, AS IS CLEAR FRO M THE ASSESSMENT ORDER, THE ASSESSEE WAS DOING JOB WORKS IN THE NAME OF THE COMPANY AND THERE WAS SEPARATE JOB WORK DONE BY THE DIRECTOR SHRI MADHUKAR KAPUR. THEREFORE , THE OBLIGATION TO DEDUCT TDS OF THE DEDUCTOR WAS IN RESPECT OF THE PAYMENT MADE TO THE ASSESSEE AND ALSO TO MADHUKAR KAPUR SEPARATELY. SIMILARLY, THE OTHER DEC ISIONS ARE ALSO NOT APPLICABLE. AS MENTIONED HEREIN ABOVE, RECENTLY BY THE DECISION DATED 20.08.2019, HONBLE JURISDICTIONAL HIGH COURT HAD HELD THAT THE ORDER O F THE PCIT IS REQUIRED TO BE TESTED BASED ON THE MATERIAL AND THE RECORD AVAILABLE AT T HE TIME OF EXAMINING THE ITA NOS. 195 & 196/AGR/2015 30 ASSESSMENT PROCEEDINGS. ONCE THE MATERIAL NOW CITED BEFORE US WAS NOT AVAILABLE WITH THE PR. CIT, THEREFORE, WE DO NOT FIND ANY MIS TAKE IN THE ORDER PASSED BY THE PCIT. 19. LASTLY, WE MAY LIKE TO MENTION THAT BEFORE THE PCIT, IT WAS CONTENDED BY THE ASSESSEE THAT THE MATTER IS SUB-JUDICE BEFORE THE J URISDICTIONAL HIGH COURT BY WAY OF WRIT PETITION. HOWEVER, DURING THE COURSE OF ARGUME NTS, THE ASSESSEE HAD NOT INFORMED ABOUT THE OUTCOME OF THE PROCEEDINGS INITI ATED BY THE ASSESSEE BEFORE THE HONBLE HIGH COURT. IN OUR VIEW, THE ADVERSE INFERE NCE IS REQUIRED TO BE DRAWN AS NOTHING HAS BEEN BROUGHT ON RECORD DE HORS THE PEND ENCY OF WRIT PETITION BEFORE THE HIGH COURT. WE DO NOT FIND ANY MERIT IN THE SUBMISS IONS OF THE ASSESSEE. ACCORDINGLY, BOTH THE APPEALS OF THE ASSESSEE ARE D ISMISSED. 20. IN THE RESULT, THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND SEPTEMBER, 2019. SD/- SD/- (DR. MITHA LAL MEENA) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 ND SEPTEMBER, 2019 *AKS*