M/s Y.D.M. Charitable Trust, Eluru V. The CIT, Rajahmundry, Rajahmundry

ITA 195/VIZ/2012

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9804 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 24-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P HARI PRASADA RAO
• Keywords: Gift; Depreciation; Charitable institution; Opportunity of being heard; Assessment record; Benefit of exemption
• Section: 143(3); 12AA; 263; 11

Judgement Text

ITA NO.195/VIZAG/2012 VDM CHARITABLE TRUST, ELURU 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.195/VIZAG/2012 ( / ASSESSMENT YEAR: 2009-10) VDM CHARITABLE TRUST, ELURU VS. CIT, RAJAHMUNDRY [PAN: AAATV5072F ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI P. HARI PRASADA RAO, DR / DATE OF HEARING : 15.09.2016 / DATE OF PRONOUNCEMENT : 07.10.2016 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER OF THE CIT, RAJAHMUNDRY U/S 263 OF THE INCOME TAX ACT, 196 1 (HEREINAFTER CALLED AS THE ACT) AND IT PERTAINS TO THE ASSESSM ENT YEAR 2009-10. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A SOCIETY REGISTERED U/S 12AA OF THE ACT, FILED ITS RETURN OF INCOME FOR THE ITA NO.195/VIZAG/2012 VDM CHARITABLE TRUST, ELURU 2 ASSESSMENT YEAR 2009-10 ON 30.9.2009 DECLARING NIL TOTAL INCOME AFTER CLAIMING EXEMPTION U/S 11 OF THE ACT. THE ASSESSME NT WAS COMPLETED ON 14.12.2009 U/S 143(3) OF THE ACT, ACCEPTING RETU RN FILED BY THE ASSESSEE. 3. THE CIT, RAJAHMUNDRY ISSUED A SHOW CAUSE NOTICE DATED 8.8.2011 AND ASKED TO EXPLAIN WHY THE ASSESSMENT ORDER PASSE D BY THE A.O. U/S 143(3) OF THE ACT, DATED 14.12.2009 SHALL NOT BE RE VISED UNDER THE PROVISIONS OF SECTION 263 OF THE ACT. THE CIT PROP OSED TO REVISE THE ASSESSMENT ORDER FOR THE REASON THAT ON EXAMINATION OF ASSESSMENT RECORD, IT IS FOUND THAT THE A.O. HAS FAILED TO EXA MINE CERTAIN ISSUES WHICH RENDERED THE ASSESSMENT ORDER ERRONEOUS, IN S O 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, OBSER VED THAT THE A.O. FAILED TO VERIFY GENUINENESS OF EXPENDITURE CLAIMED UNDER THE HEAD VEHICLE MAINTENANCE, LEASE RENT PAYMENT TO USHA CAR DIAC CENTRE, INSPECTION CHARGES, DONATION PAID TO OTHER TRUST/SO CIETIES, INTEREST ON TERM LOAN AND DEPRECIATION CLAIM MADE BY THE ASSESS EE. THE CIT, FURTHER, OBSERVED THAT THE ASSESSEE HAS SPENT HUGE AMOUNT TOWARDS CONSTRUCTION OF BUILDING AND ACQUISITION OF OTHER F IXED ASSETS, HOWEVER, THE A.O. HAS NOT EXAMINED THE DETAILS OF CONSTRUCTI ON ALONG WITH SOURCES OF AMOUNT INVESTED TOWARDS CONSTRUCTION. IT WAS FU RTHER OBSERVED THAT ITA NO.195/VIZAG/2012 VDM CHARITABLE TRUST, ELURU 3 THE ASSESSEE HAS SHOWN CERTAIN UNSECURED LOANS, HOW EVER, THE A.O. HAS FAILED TO OBTAIN NECESSARY DETAILS WITH REGARD TO T HE NAME AND ADDRESS OF THE LOAN CREDITORS AND THEIR CONFIRMATION LETTER S. THE A.O. WITHOUT EXAMINING THE ABOVE ISSUES, SIMPLY COMPLETED ASSESS MENT BY ACCEPTING RETURN FILED BY THE ASSESSEE WITHOUT DISCUSSING IN THE ASSESSMENT ORDER AS TO WHETHER THE SAID ITEMS HAVE BEEN EXAMINED WIT H REFERENCE TO NECESSARY EVIDENCES, THEREBY THE ASSESSMENT ORDER P ASSED BY THE A.O. APPEARS TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDIC IAL TO THE INTEREST OF THE REVENUE. WITH THESE OBSERVATIONS, ISSUED A SHOW CAU SE NOTICE AND ASKED TO EXPLAIN WHY THE ASSESSMENT ORDER PASSED U/ S 143(3) OF THE ACT, SHALL NOT BE REVISED UNDER THE PROVISIONS OF S ECTION 263 OF THE ACT. 4. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE S UBMITTED THAT THE ASSESSMENT ORDER PASSED BY THE A.O. U/S 143(3) DATE D 14.12.2009 IS NOT ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF THE REVENUE, AS THE A.O. HAS EXAMINED ALL THE ISSUES POINTED OUT IN THE SHOW CAUSE NOTICE AT THE TIME OF ASSESSMENT PROCEEDINGS. THE ASSESSEE FURTHER SUBMITTED THAT IT HAS FURNISHED BOOKS OF ACCOUNTS A ND OTHER RELEVANT INFORMATION IN RESPONSE TO THE QUESTIONNAIRE ISSUED BY THE A.O. AND THE A.O. HAS CALLED FOR EACH AND EVERY DETAILS ABOUT TH E ISSUES POINTED OUT IN THE SHOW CAUSE NOTICE. THE A.O. AFTER SATISFIE D WITH THE EXPLANATIONS OFFERED BY THE ASSESSEE HAS CHOSEN TO ACCEPT THE RE TURN FILED, THEREFORE, ITA NO.195/VIZAG/2012 VDM CHARITABLE TRUST, ELURU 4 THE ASSESSMENT ORDER PASSED BY THE A.O. CANNOT BE C ONSIDERED AS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF THE REVENUE. 5. THE CIT AFTER CONSIDERING THE EXPLANATIONS FURNI SHED BY THE ASSESSEE HELD THAT THE ASSESSMENT ORDER PASSED BY T HE A.O. IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF THE REVENUE, AS THE ASSESSING OFFICER HAS FAILED TO EXAMINE THE ISS UES POINTED OUT IN THE SHOW CAUSE NOTICE. THE CIT, FURTHER, OBSERVED THAT THE A.O. HAS COMPLETED ASSESSMENT BY ACCEPTING RETURN FILED BY T HE ASSESSEE, WITHOUT EXAMINING THE SPECIFIC POINTS REFERRED TO IN THE SH OW CAUSE NOTICE WITH REGARD TO CERTAIN EXPENDITURE AND ADDITIONS TO FIXE D ASSETS. THE CIT, FURTHER, OBSERVED THAT THE A.O. HAS FAILED TO EXAMI NE THE SOURCES FOR INVESTMENT IN CONSTRUCTION OF BUILDING AND ALSO FAI LED TO EXAMINE THE NATURE AND SOURCE OF UNSECURED LOANS. THE CIT QUES TIONED VARIOUS ISSUES RIGHT FROM CORRECTNESS OF CERTAIN EXPENDITUR E CLAIMED BY THE ASSESSEE SUCH AS VEHICLE MAINTENANCE EXPENDITURE, I NSPECTION CHARGES, INTEREST ON TERM LOANS AND DEPRECIATION. ACCORDING TO THE CIT, THE A.O. NEVER EXAMINED THE ABOVE ISSUES WITH REFERENCE TO A NY DOCUMENTARY EVIDENCES AND ALSO THE ASSESSMENT RECORD DOES NOT S HOW AN IOTA OF EVIDENCE SO AS TO SAY THAT THE A.O. HAS CALLED FOR DETAILS BEFORE ACCEPTING THE EXPLANATIONS OFFERED BY THE ASSESSEE. THE CIT FURTHER OBSERVED THAT THE A.O. NOT ONLY EXAMINED THE ISSUE S POINTED OUT IN ITA NO.195/VIZAG/2012 VDM CHARITABLE TRUST, ELURU 5 THE SHOW CAUSE NOTICE, BUT FAILED TO APPLY HIS MIND BEFORE COMPLETION OF ASSESSMENT. THEREFORE, THE ASSESSMENT ORDER PASSED BY THE A.O. IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF THE REVENUE. ACCORDINGLY, SET ASIDE THE ASSESSMENT ORDER PASSED BY THE A.O. AND DIRECTED THE A.O. TO GIVE EFFECT TO ORDER U/S 263 O F THE ACT, BY PASSING A CONSEQUENTIAL ORDER WITHIN THE STIPULATED TIME FRAM E AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. AGGRIEVED BY CIT ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LD. A.R. FOR THE ASSESSEE SUBMITTED THAT THE ASSESSMENT ORDER PASSED BY THE A.O. U/S 143(3) OF THE ACT, DATED 14. 12.2009 IS NOT ERRONEOUS, IN SO FAR AS IT IS PREJUDICIAL TO THE IN TEREST OF THE REVENUE, AS THE A.O. HAS EXAMINED ALL THE ISSUES POINTED OUT BY THE CIT IN THE SHOW CAUSE NOTICE. THE A.R. FURTHER SUBMITTED THAT THE CIT WAS NOT CORRECT IN DIRECTING THE A.O. TO CONDUCT FURTHER ENQUIRIES WIT H REGARD TO THE ISSUES WHICH WERE ALREADY EXAMINED BY THE A.O. AT THE TIME OF ASSESSMENT PROCEEDINGS. THE A.R. FURTHER SUBMITTED THAT THE A .O. HAS EXAMINED ALL THE ISSUES POINTED OUT BY THE CIT BY WAY OF SPECIFI C QUESTIONNAIRE AND THE ASSESSEE HAS SUBMITTED RELEVANT DETAILS ON VARI OUS OCCASIONS, WHICH WAS CONSIDERED BY THE A.O. BEFORE COMPLETION OF ASS ESSMENT. THEREFORE, THE CIT WAS NOT CORRECT IN COMING TO THE CONCLUSION THAT ASSESSMENT ORDER PASSED BY THE A.O. IS ERRONEOUS IN SO FAR AS IT IS ITA NO.195/VIZAG/2012 VDM CHARITABLE TRUST, ELURU 6 PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE A. R. FURTHER SUBMITTED THAT THE CIT HAS RAISED NUMBER OF ISSUES IN THE REV ISION PROCEEDINGS, HOWEVER, FAILED TO COME TO THE DEFINITE CONCLUSION THAT THE A.O. HAS NOT EXAMINED THE ABOVE ISSUES. THE CIT MERELY OBSERVED THAT THE A.O. HAS NOT CONDUCTED PROPER ENQUIRY OR THE ENQUIRIES CONDU CTED BY THE A.O. IS INADEQUATE, THEREFORE, HE WANTS FURTHER VERIFICATIO N ON THE ISSUES. THE ASSESSEE HAS SUBMITTED ALL THE INFORMATION BEFORE T HE A.O. AND THE A.O. HAS VERIFIED ALL THE ISSUES AND APPLIED HIS MIND BE FORE COMPLETION OF ASSESSMENT, THEREFORE, THE CIT CANNOT COME TO THE C ONCLUSION THAT THERE IS LACK OF ENQUIRY ON THE PART OF THE A.O. IN EXAMI NING THE ISSUES. 7. THE LD. A.R. REFERRING TO THE CONSEQUENTIAL ORDE R PASSED BY THE A.O. U/S 143(3) R.W.S. 263 OF THE ACT, SUBMITTED TH AT THE ASSESSING OFFICER HAS PASSED CONSEQUENTIAL ORDER WHEREIN HE H AS ACCEPTED ALL THE ISSUES POINTED OUT BY THE CIT IN THE REVISION PROCE EDINGS, EXCEPT THE ISSUE WITH REGARD TO THE DISALLOWANCE OF INSPECTION CHARGES. THE A.O. HAS DISALLOWED INSPECTION CHARGES FOR WANT OF PROPE R BILLS AND VOUCHERS, EXCEPT THIS ALL THE ISSUES NOTICED BY THE CIT HAVE BEEN EXAMINED AND ACCEPTED AS FOUND TO BE CORRECT. THEREFORE, IT IS ABUNDANTLY CLEAR THAT THE ISSUES POINTED OUT BY THE CIT ARE ALREADY EXAMI NED BY THE A.O. AND HENCE, THE CIT WAS NOT CORRECT IN HOLDING THAT THE ASSESSMENT ORDER ITA NO.195/VIZAG/2012 VDM CHARITABLE TRUST, ELURU 7 PASSED BY THE A.O. IS ERRONEOUS. ON THE OTHER HAND , THE LD. D.R. STRONGLY SUPPORTED THE ORDER OF LD. COMMISSIONER. 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 JURISDICTION TO REVISE THE ASSESSMENT O RDER FOR THE REASON THAT THE A.O. HAS NOT CONDUCTED PROPER ENQUIRY BEFO RE COMPLETION OF ASSESSMENT, THEREFORE, THE ASSESSMENT ORDER PASSED BY THE A.O. U/S 143(3) OF THE ACT DATED 14.12.2009 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE CI T REVISED THE ASSESSMENT ORDER FOR THE REASON THAT THE A.O. HAS C OMPLETED THE ASSESSMENT WITHOUT EXAMINING THE VARIOUS ISSUES WHI CH CAUSED PREJUDICE TO THE INTEREST OF THE REVENUE. THE CIT, FURTHER, WAS OF THE OPINION THAT THE A.O. HAS COMPLETED THE ASSESSMENT BY ACCEPTING RETURN FILED BY THE ASSESSEE. ACCORDING TO THE CIT, THE A SSESSMENT ORDER PASSED BY THE A.O. IS CRYPTIC AND BRIEF. THE A.O. HAS NOT DISCUSSED ANYTHING ABOUT THE ISSUES IN HIS ASSESSMENT ORDER A ND HENCE OPINED THAT THE A.O. HAS NOT EXAMINED THE ISSUES POINTED O UT IN HIS SHOW CAUSE NOTICE. THE CIT FURTHER OBSERVED THAT THE A.O. FAI LED TO EXAMINE CERTAIN EXPENDITURE CLAIMED BY THE ASSESSEE SUCH AS VEHICLE MAINTENANCE, INSPECTION CHARGES, DONATIONS, SALARY AND WAGES, IN TEREST PAID ON TERM LOANS AND DEPRECIATION CLAIM ON FIXED ASSETS. IT W AS FURTHER OBSERVED ITA NO.195/VIZAG/2012 VDM CHARITABLE TRUST, ELURU 8 THAT THE ASSESSEE HAS SPENT HUGE AMOUNT ON ACQUISIT ION OF FIXED ASSETS BEING CONSTRUCTION OF BUILDINGS, HOWEVER, THE SOURC ES FOR SUCH INVESTMENTS HAS NOT BEEN EXAMINED. SIMILARLY, THE ASSESSEE SHOWN CERTAIN UNSECURED LOANS IN THE BALANCE SHEET HOWEVE R, THE A.O. HAS NOT EXAMINED NATURE AND SOURCES OF LOAN CREDITORS WITH NECESSARY CONFIRMATION LETTERS. THE ASSESSMENT RECORD DOES N OT REVEAL AN IOTA OF EVIDENCE SO AS TO SAY THAT THE A.O. HAS CALLED FOR NECESSARY DETAILS BEFORE ACCEPTING EXPLANATIONS FURNISHED BY THE ASSE SSEE. FROM THIS IT IS ABUNDANTLY CLEAR THAT THE A.O. NOT ONLY FAILED TO E XAMINE THE ISSUES, BUT ALSO FAILED TO APPLY HIS MIND ON VARIOUS ISSUES, WH ICH RENDERED THE ASSESSMENT ORDER ERRONEOUS IN SO FAR AS IT IS PREJU DICIAL TO THE INTEREST OF THE REVENUE. 9. IT IS THE CONTENTION OF THE ASSESSEE THAT THE A. O. HAS EXAMINED ALL THE ISSUES POINTED OUT BY THE CIT IN THE SHOW CAUSE NOTICE. THE ASSESSEE FURTHER CONTENDED THAT ALL THE ISSUES POIN TED OUT BY THE CIT HAVE BEEN EXAMINED BY THE A.O. BY WAY OF SPECIFIC Q UESTIONNAIRE ON VARIOUS OCCASIONS AND THE ASSESSEE HAS FILED NECESS ARY DETAILS TO THE SATISFACTION OF THE A.O. THE A.O. AFTER SATISFIED WITH THE EXPLANATIONS FURNISHED BY THE ASSESSEE HAS CHOSEN TO ACCEPT RETU RN FILED BY THE ASSESSEE. THE ORDER PASSED BY THE A.O. MAY BE CRYP TIC AND BRIEF, BUT THAT ITSELF DOES NOT GIVE EVIDENCE TO SAY THAT THE A.O. HAS NOT EXAMINED ITA NO.195/VIZAG/2012 VDM CHARITABLE TRUST, ELURU 9 THE ISSUES POINTED OUT BY THE CIT. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT THE A.O. HAS EXAMI NED THE ISSUES POINTED OUT BY THE CIT IN THE SHOW CAUSE NOTICE AT THE TIME OF COMPLETION OF ASSESSMENT BY WAY OF SPECIFIC QUESTIO NNAIRE. WE FURTHER OBSERVED THAT THE ASSESSEE HAS FILED NECESSARY DETA ILS BEFORE THE A.O. AND THE A.O. HAVING SATISFIED WITH THE EXPLANATIONS FURNISHED BY THE ASSESSEE HAS COMPLETED THE ASSESSMENT. 10. THE ASSESSEE FILED A PAPER BOOK CONTAINING INFO RMATION FILED BEFORE THE A.O. ON VERIFICATION OF THE DETAILS FIL ED BY THE ASSESSEE, WE FIND THAT THE A.O. HAS ISSUED A QUESTIONNAIRE, FOR WHICH THE ASSESSEE HAS FILED ITS REPLY DATED 3.11.2009 EXPLAINING EACH AND EVERY ITEM QUESTIONED BY THE CIT IN THE PROCEEDINGS U/S 263 OF THE ACT. WE FURTHER OBSERVED THAT AS POINTED OUT BY THE LD. A.R. FOR TH E ASSESSEE, THE ASSESSING OFFICER HAS PASSED CONSEQUENTIAL ORDER U/ S 143(3) R.W.S. 263 OF THE ACT. ON PERUSAL OF THE CONSEQUENTIAL ORDER PASSED BY THE A.O., WE FIND THAT THE A.O. HAS ACCEPTED EACH AND EVERY I TEM QUESTIONED BY THE CIT(A) IN THE PROCEEDINGS U/S 263 OF THE ACT, E XCEPT IN RESPECT OF INSPECTION CHARGES, WHERE THE A.O. HAS MADE CERTAIN ADDITIONS BY OBSERVING THAT THE ASSESSEE HAS FAILED TO SUBSTANTI ATE THE EXPENDITURE CLAIM UNDER THE HEAD INSPECTION CHARGES WITH NECESS ARY EVIDENCES. EXCEPT THIS, ALL THE ISSUES POINTED OUT BY THE CIT HAS BEEN ACCEPTED BY ITA NO.195/VIZAG/2012 VDM CHARITABLE TRUST, ELURU 10 THE A.O. FROM THIS IT IS ABUNDANTLY CLEAR THAT THE A.O. HAS EXAMINED THE ISSUES POINTED OUT BY THE CIT AND ACCORDINGLY THE C IT WAS NOT CORRECT IN HOLDING THAT THE A.O. HAS NOT EXAMINED THE ISSUES A T THE TIME OF COMPLETION OF ASSESSMENT. 11. ANOTHER IMPORTANT ASPECT TO BE NOTED HERE IS TH AT EVEN THE A.O. HAS MADE CERTAIN DISALLOWANCES TOWARDS INSPECTION C HARGES, AFTER DISALLOWANCE OF SUCH EXPENDITURE THE TAXABLE INCOME OF THE ASSESSEE IS NIL. THE ASSESSEE IS REGISTERED U/S 12AA OF THE AC T, CLAIMING THE BENEFIT OF EXEMPTION U/S 11 OF THE ACT. DURING THE YEAR UN DER CONSIDERATION, THE ASSESSEE HAS SPENT AMOUNT OVER AND ABOVE THE GR OSS RECEIPTS FROM THE PROPERTY HELD UNDER TRUST TOWARDS CHARITABLE PU RPOSE. AFTER MAKING ADDITIONS TOWARDS INSPECTION CHARGES, STILL THE EXP ENDITURE INCURRED BY THE ASSESSEE TOWARDS CHARITABLE PURPOSE IS WELL WIT HIN THE LIMIT SPECIFIED U/S 11 OF THE ACT, CONSEQUENTLY, THERE IS NO ELEMEN T OF TAXABLE INCOME. THEREFORE, WE ARE OF THE OPINION THAT THE ASSESSMEN T ORDER PASSED BY THE A.O. IS NOT ERRONEOUS IN SO FAR AS IT IS PREJUD ICIAL TO THE INTEREST OF THE REVENUE. 12. THE CIT ASSUMED JURISDICTION TO REVISE THE ASSE SSMENT ORDER ON THE GROUND THAT THERE IS A LACK OF ENQUIRY ON THE P ART OF THE A.O. IN EXAMINING CERTAIN ISSUES REFERRED TO IN HIS SHOW CA USE NOTICE. THE CIT QUESTIONED THE ISSUES RIGHT FROM VERIFICATION OF CE RTAIN EXPENSES, ITA NO.195/VIZAG/2012 VDM CHARITABLE TRUST, ELURU 11 ADDITIONS TO FIXED ASSETS, UNSECURED LOANS AND OTHE R ISSUES. THE ASSESSEE HAS FILED A PAPER BOOK, WHICH CONTAIN THE DETAILS FURNISHED BEFORE THE A.O. ON PERUSAL OF THE PAPER BOOK FILED BY THE ASSESSEE, WE FIND THAT THAT THE ASSESSEE HAS SUBMITTED RELEVANT DETAILS BEFORE THE A.O. AND THE A.O. AFTER SATISFIED WITH THE EXPLANAT ION FURNISHED BY THE ASSESSEE HAS CHOSEN TO COMPLETE THE ASSESSMENT BY A CCEPTING INCOME RETURNED. THEREFORE, WE ARE OF THE VIEW THAT ONCE THE ISSUES WHICH WERE SUBJECT MATTER OF REVISION U/S 263 OF THE ACT, HAVE BEEN EXAMINED BY THE A.O. AT THE TIME OF ASSESSMENT, THEN THE CIT HAS NO JURISDICTION TO ENTERTAIN FRESH ENQUIRY ON THE SAME ISSUES, BECA USE HE HAD A DIFFERENT OPINION ON THE ISSUES. IN OUR VIEW, THE ISSUES POINTED OUT BY THE CIT HAVE BEEN THOROUGHLY EXAMINED BY THE A.O., THEREFORE, THE CIT WAS NOT CORRECT IN COMING TO THE CONCLUSION THAT TH E A.O. HAS NOT EXAMINED THE ISSUES BEFORE COMPLETION OF ASSESSMENT . 13. THE CIT HAS POWER TO REVISE ASSESSMENT ORDER U/ S 263 OF THE ACT, BUT TO INVOKE THE PROVISIONS OF SECTION 263 OF THE ACT, THE TWIN CONDITIONS MUST BE SATISFIED I.E. (1) THE ORDER OF THE A.O. IS ERRONEOUS (2) FURTHER IT MUST BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. UNLESS BOTH THE CONDITIONS ARE SATISFIED, THE CIT CANNOT A SSUME JURISDICTION U/S 263 OF THE ACT. IT IS NOT NECESSARY THAT EVERY ORD ER WHICH IS ERRONEOUS MAY BE PREJUDICIAL TO THE INTEREST OF THE REVENUE O R VICE VERSA. IN SOME ITA NO.195/VIZAG/2012 VDM CHARITABLE TRUST, ELURU 12 CASES THE ORDER PASSED BY THE A.O. MAY BE ERRONEOUS BUT IT MAY NOT BE PREJUDICIAL TO THE INTEREST OF THE REVENUE OR VICE VERSA. UNLESS THE ORDER PASSED BY THE A.O. IS ERRONEOUS AND ALSO PREJUDICIA L TO THE INTEREST OF THE REVENUE, THE CIT CANNOT ASSUME JURISDICTION TO REVISE THE ASSESSMENT ORDER, THIS IS BECAUSE THE TWIN CONDITIO NS I.E. THE ORDER IS ERRONEOUS AND THE SAME IS PREJUDICIAL TO THE INTERE ST OF THE REVENUE ARE CO-EXIST. IN THE ABSENCE OF SPECIFIC OBSERVATION F ROM THE CIT, TO PROVE THE ASSESSMENT ORDER (I) ERRONEOUS AND ALSO PREJUDI CIAL TO THE INTEREST OF THE REVENUE, THE CIT CANNOT REVISE THE ASSESSMENT O RDER. 14. THE ASSESSEE HAS RELIED UPON THE DECISION OF HO NBLE HIGH COURT OF BOMBAY, IN THE CASE OF CIT VS. NIRAV MODI (2016) 13 8 DTR (BOMBAY) 81. THE HONBLE HIGH COURT OF BOMBAY, UNDER SIMILA R CIRCUMSTANCES HELD THAT THE POWER OF REVISION CAN BE EXERCISED ON LY WHERE NO ENQUIRY IS REQUIRED UNDER THE LAW IS DONE. IT IS NOT OPEN TO ENQUIRE IN CASES OF INADEQUATE ENQUIRY. THE RELEVANT PORTION OF THE OR DER IS REPRODUCED HEREUNDER: HELD: IT IS A SETTLED POSITION IN LAW THAT POWERS UN DER S. 263 CAN BE EXERCISED BY THE CIT ON SATISFACTION OF TWIN CONDITIONS VIZ, THE ASS ESSMENT ORDER SHOULD BE ERRONEOUS AND PREJUDICIAL TO THE REVENUE. BY ERRONEOUS IS MEA NT CONTRARY TO LAW. THUS, THIS POWER CANNOT BE EXERCISED UNLESS THE CIT IS ABLE TO ESTABLISH THAT THE ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE REVENUE. THU S WHERE THERE ARE TWO POSSIBLE VIEWS AND THE AD HAS TAKEN ONE OF THE POSSIBLE VIEW S, NO OCCASION TO EXERCISE POWERS OF REVISION, CAN ARISE. NOR CAN REVISIONAL P OWER BE EXERCISED FOR DIRECTING A FULLER INQUIRY TO FIND OUT IF THE VIEW TAKEN IS ERR ONEOUS, WHEN A VIEW HAS ALREADY BEEN TAKEN AFTER INQUIRY. THE POWER OF REVISION CAN BE EXERCISED ONLY WHERE NO INQUIRY AS REQUIRED UNDER THE LAW IS DONE. IT IS NOT OPEN TO ENQUIRE IN CASES OF INADEQUATE INQUIRY. ITA NO.195/VIZAG/2012 VDM CHARITABLE TRUST, ELURU 13 (PARA 6) REVENUE CONTENDS THAT THE EXERCISE OF POWERS UNDER S. 263 IS JUSTIFIED AS IN THIS CASE, AS NO INQUIRY IN RESPECT OF THE GIFTS RECEIVE D DURING THE SUBJECT YEARS WAS DONE BY THE AO. THIS ACCORDING TO THE REVENUE IS EVIDENT FROM THE ASSESSMENT ORDERS DT. 31ST DEC., 2009 AND 30TH DEC., 2010 WHICH DO NOT EV EN MAKE A MENTION OF THE GIFTS RECEIVED MUCH LESS DISCUSS AND/OR DEAL WITH THE SAM E. DURING THE ASSESSMENT PROCEEDINGS FOR BOTH THE ASSESSMENT YEARS, THE AO I SSUED QUERY MEMOS TO THE ASSESSEE, CALLING UPON HIM TO JUSTIFY THE GENUINENE SS OF THE GIFTS. THE ASSESSEE RESPONDED TO THE SAME BY GIVING EVIDENCE OF THE COM MUNICATIONS RECEIVED FROM HIS FATHER AND HIS SISTER I.E. THE DONORS OF THE GIFTS ALONG WITH THE STATEMENT OF THEIR BANK ACCOUNTS. ON PERUSAL, THE AO WAS SATISFIED ABO UT THE IDENTITIES OF THE DONORS, THE SOURCE FROM WHERE THESE FUNDS HAVE COME AND ALS O THE CREDITWORTHINESS/CAPACITY OF THE DONOR. ONCE THE AO WAS SATISFIED WITH REGARD TO THE GIFTS, THERE WAS NO FURTHER REQUIREMENT ON THE PART OF THE AO TO DISCLOSE HIS SATISFACTION IN THE ASSESSMENT ORDER PASSED THEREON . THUS, THIS OBJECTION ON THE PART OF THE REVENUE, CANNOT BE ACCEPTEDIDEA CELLULAR LTD . VS. DY. CIT (2008) 215 CTR (BORN) 288 : (2008) 3 DTR (BORN) 179 : (2008) 301 I TR 407 (BORN) FOLLOWED. (PARA 7) IT IS NEXT SUBMITTED THAT THE DONOR HAD NOT BEEN EXA MINED BY THE AO. IT IS NOT IN EVERY CASE THAT EVERY EVIDENCE PRODUCED HAS TO BE T ESTED BY CROSS-EXAMINATION OF THE PERSON GIVING THE EVIDENCE. IT IS ONLY IN CASES WHERE THE EVIDENCE PRODUCED GIVES RISE TO SUSPICION ABOUT ITS VERACITY THAT FUR THER SCRUTINY IS CALLED FOR. IF THERE IS NOTHING ON RECORD TO INDICATE THAT THE EVIDENCE PRO DUCED IS NOT RELIABLE AND THE AO WAS SATISFIED WITH THE SAME, THEN IT IS NOT OPEN TO THE CIT TO EXERCISE HIS POWERS OF REVISION WITHOUT THE CIT RECORDING HOW AND WHY THE ORDER IS ERRONEOUS DUE TO NOT EXAMINING THE DONORS. THUS, THIS OBJECTION TO THE I MPUGNED ORDER BY THE REVENUE IS ALSO NOT SUSTAINABLE. (PARA 8) ENQUIRY OF A SOURCE OF SOURCE IS NOT THE REQUIREMEN T OF LAW. ONCE THE AO IS SATISFIED WITH THE EXPLANATION OFFERED ON INQUIRY, IT IS NOT OPEN TO THE CIT IN EXERCISE OF HIS REVSIONAL POWERS TO DIRECT THAT FURTHER ENQUIRY HAS TO BE DONE. AT THE VERY HIGHEST, THE CASE OF THE REVENUE IS THAT THIS IS A CASE OF I NADEQUATE INQUIRY AND NOT OF 'NO ENQUIRY.' IT IS WELL-SETTLED THAT THE JURISDICTION UNDER S. 263 CAN BE EXERCISED BY THE CIT ONLY WHEN ITS A CASE LACK OF ENQUIRY AND NOT ON E OF INADEQUATE ENQUIRY. IT IS VERY IMPORTANT TO NOTE THAT THE CIT IN HIS ORDER UN DER S. 263 HAS RECORDED THE FACT THAT THERE HAS BEEN NO ADEQUATE INQUIRY. THUS, THIS IS NOT A CASE OF NO INQUIRY, WARRANTING ORDER UNDER S. 263CIT VS. GABRIAL INDIA LTD. (1993) 114 CTR (BORN) 81 : (1993) 203 ITR 108 (BORN) AND CIT VS. SHREEPATI H OLDINGS & FINANCE (P) LTD. (IT APPEAL NO. 1879 012013, DT. 5TH OCT.; 2013) FOLLOWE D; /TO VS. D.G. HOUSING PROJECTS LTD. (2012) 74 DTR (DEL) 153 (2012) 343 IT R 329 (DEL) AND CIT VS. VIKAS POLYMERS (2010) 236 CTR (DEL) 476: (2010) 47 DTR (D EL) 348: (2012) 341 ITR 537 (DEL) RELIED ON. (PARA 9) ITA NO.195/VIZAG/2012 VDM CHARITABLE TRUST, ELURU 14 THE CIT IN EXERCISE OF ITS POWERS UNDER S. 263 HAS MERELY RESTORED THE ASSESSMENT TO THE AO TO DECIDE WHETHER THE GIFTS WERE GENUINE AND, IF NOT, THEN THE ASSESSMENT COULD BE COMPLETED ON APPLICATION OF S. 68. IN THIS CASE, THE ORDER PASSED BY THE AO IS NOT PER SE ERRONEOUS AND FURTHER THE CIT HAS NOT GIVEN ANY REASONS TO CONCLUDE THAT THE ORDER IS ERRONEOUS. IN FACT, HE DIRECTS T HE AO TO FIND OUT WHETHER THE ORDER IS ERRONEOUS BY MAKING FURTHER ENQUIRY. (PARA 10) 15. THE ASSESSEE HAS RELIED UPON THE DECISION OF CO ORDINATE BENCH OF VISAKHAPATNAM TRIBUNAL, IN THE CASE OF NUTECH ENGIN EERS VS. CIT IN ITA NO.570/VIZAG/2013 DATED 10.6.2016. THE COORDINATE BENCH OF THIS TRIBUNAL, UNDER SIMILAR CIRCUMSTANCES HELD THAT ONC E THE A.O. EXAMINED THE ISSUES ON WHICH THE CIT WANTS FURTHER VERIFICAT ION, THE CIT CANNOT ASSUME JURISDICTION ON THE SAME ISSUES WHICH WERE A LREADY EXAMINED BY THE A.O. BY STATING THAT THE A.O. HAS CONDUCTED INA DEQUATE ENQUIRY OR THERE IS A LACK OF ENQUIRY. THE RELEVANT PORTION O F THE ORDER IS REPRODUCED HEREUNDER: CIT(A) ASSUMED JURISDICTION TO REVISE THE ASSESSME NT ORDER ON THE SOLE GROUND THAT THERE IS A LACK OF ENQUIRY ON THE PART OF THE A.O. IN EXAMINING THE ISSUES REFERRED TO IN HIS SHOW CAUSE NOTICE. TH E QUESTION OF LOW NET PROFIT DECLARED BY THE ASSESSEE AND ALSO TDS ON REN T AND HIRE CHARGES HAVE BEEN CONSIDERED BY THE A.O. AT THE TIME OF COM PLETION OF ASSESSMENT. THE ASSESSES FILED A PAPER BOOK WHICH C ONTAINS THE DETAILS FURNISHED BEFORE THE A.O. AT THE TIME OF ASSESSMENT . ON PERUSAL OF THE PAPER BOOK FILED BY THE ASSESSEE, ITAT FIND THAT TH E A.O. HAS ISSUED A DETAILED QUESTIONNAIRE IN RESPECT OF NET PROFIT AND ALSO TDS IN RESPECT OF RENT AND HIRE CHARGES. THE A.O. AFTER SATISFIED WIT H THE EXPLANATIONS FURNISHED BY THE ASSESSEE HAS ACCEPTED THE INCOME R ETURNED. THEREFORE, ITAT ARE OF THE VIEW THAT ONCE THE ISSUES WHICH ARE SUBJECT MATTER OF REVISION U/S 263 OF THE ACT, HAVE BEEN EXAMINED BY THE A.O. AT THE TIME OF ASSESSMENT, THE CIT HAS NO JURISDICTION TO ENTER TAIN FRESH ENQUIRY ON THE SAME ISSUES, BECAUSE HE HAS A DIFFERENT OPINION ON THE ISSUES. IN ITAT CONSIDERED OPINION, THE ISSUE OF NET PROFIT AND TDS ON RENT AND HIRE CHARGES HAS BEEN EXAMINED BY THE A.O. AT THE TIME O F ASSESSMENT, THEREFORE, THE CIT WAS NOT CORRECT IN COMING TO THE CONCLUSION THAT THE A.O. HAS NOT EXAMINED THE ISSUES. ITA NO.195/VIZAG/2012 VDM CHARITABLE TRUST, ELURU 15 16. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO APPLYING THE RATIOS OF THE CASE LAWS DISCUSSED ABOV E, WE ARE OF THE VIEW THAT THE ASSESSMENT ORDER PASSED BY THE A.O. U/S 14 3(3) OF THE ACT, DATED 14.12.2009 IS NOT ERRONEOUS IN SO FAR AS IT I S PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, WE QUASH THE O RDER PASSED BY THE CIT U/S 263 OF THE ACT AND RESTORE THE ASSESSMENT O RDER PASSED BY THE A.O. U/S 143(3) OF THE ACT. 17. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 7 TH OCT16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 7.10.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT M/S. V.D.M. CHARITABLE TRUST, BI SHOPS HOUSE, XAVIER NAGAR, ELURU 2. / THE RESPONDENT DCIT, CIRCLE-1, ELURU 3. + / THE CIT, RAJAHMUNDRY 4. + ( ) / THE CIT (A), RAJAHMUNDRY 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM