Shri Rambhai V. Kuchhadiya, JAMNAGAR V. The Commissioner of Income Tax, JAMNAGAR

ITA 197/RJT/2015

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0476 (ITAT-RAJKOT)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 13-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Right to appeal
• Section: 143(3); 263

Judgement Text

ITA NO . 197 / RJT/201 5 ASSESSMENT YEAR: 2010 - 11 PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, SMC , RAJKOT (CONDUCTED THROUGH E - COURT AT AHMEDABAD) [CORAM: PRAMOD KUMAR AM ] ITA NO. 197 / R JT / 2 0 1 5 ASSESSMENT YEAR: 2010 - 11 RAMBHAI V. KUCHHADIYA ....... .. . ..... APPELLANT (PROP. O F M/S. S.B. ENTERPRISE) PIRAGHAR, KUCHHADI, PORBANDAR. [PAN A OJPK 4758 E ] VS. COMMISSIONER OF INCOME TAX , ....... ..................RESPONDENT JAMNAGAR. APPEARANCES BY: CHETAN AGARWAL FOR THE A PPELLANT YOGESH PANDEY FOR THE RESPONDENT DATE OF CONCLUDI NG THE HEARING : NOVEMBER 30 TH , 201 5 DATE OF PRONOUNCING THE ORDER : NOVEMBER 30 TH , 2015 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 23 RD MARCH, 2015 PASSED BY THE LD. CIT, JAMNAGAR UNDE R SECTION 263 READ WITH SECTION 143(3) OF THE INCOME TAX ACT, 1961 ( THE ACT FOR SHORT) FOR THE ASSESSMENT YEAR 2010 - 11 . 2. TO ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIAL F ACTS ONLY TO BE T AKEN NOTE OF. THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT IN THIS CASE WAS COMPLETED ON 18.03.2013. H OWEVER, ON 26.02.2015 , THE LD . CIT ISSUED A S HOW CAUSE NOTICE CALLING ITA NO . 197 / RJT/201 5 ASSESSMENT YEAR: 2010 - 11 PAGE 2 OF 8 UPON THE ASSESSEE TO STATE AS TO WHY THIS ORDER NOT BEING SUBJECTED TO REVISI O N PROCEEDINGS FOR THE REASONS SET OUT BELOW : - IT IS OBSERVED FROM THE BALANCE SHEET PLACED ON RECORD THAT YOU HAVE SHOWN 4 DIFFERENT PERSONS ON LIABILITY SIDE AS SUNDRY CREDITORS NAMELY JASUBEN N . MARU, KANABHAI K . VADHIYA, LILABHAI T. ODEDR A AND MENSHIBHAI KABABHAI. THESE 4 PERSONS ARE HAVING NO BUSINESS TRANSACT IONS WI T H YOU SO THEY ARE TO CLASSIF Y AS WHO HAVE GIVEN LOANS AND ADVANCES TO THE S.B. ENTERPRISE ANY TIME DURING THE YEAR AND NOT A S SUNDRY CREDITORS. ON OBSERVATION OF THE CONFIRMATORY ACCOUNTS/MONTHLY STATEMENT PLACED ON RECORD REGARDING THESE FOUR PEO PLE IT IS SEEN THAT YOU HAVE REPAID AMOUNT EXCEEDING RS.20,000/ - IN SINGLE ENTRIES. YOU HAVE ONLY ONE BANK ACCOUNT IN BANK OF BAROD A AS PER THE RECORDS PLACED AND THE BANK STATEMENT FOR THE YEAR IN CONSIDERATION IS PLACED ON RECORD, WHEREIN NO TRANSACTION WITH THESE FOUR PERSONS IS SEEN. HENCE IT IS BEYOND DOUBT THAT A LL THE AMOUNTS ARE RECEIVED AND REPAID IN CASE. IT SEEMS THAT YOU HAVE THIS MODUS OPERANDI TO RECEIVE BACK TH E LOAN GIVEN FROM THESE PERSONS IN CASH ON MONTHLY BASIS, ALL AMOUNTS LESS THAN 20,000/ - PER MONTH BUT THE LOANS ARE REPAID BACK IN SINGLE EN T RY WHEREIN AMOUNTS ARE EXCEEDING RS.20,000/ - . THE COPIES OF CONFIRMATORY ACCOUNTS/MONTHLY/STATEMENT OF THESE 4 PERSONS ARE ENCLOSED A LONG WITH . AS PER SEC.269T OF THE IT ACT, NO PERSON SHALL R EPAY ANY LOAN OR DEPOSIT MADE WITH IT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT DRAWN IN THE NAME OF PERSON WHO HAS MADE THE LOAN OR DEPOSIT OF AMOUNT EXCEEDING RS . 20,000/ - . HENCE THE AMOUNT RECEIVED AND PAID BACK TO THESE 4 PE RSONS IS REQUIRED TO BE CONSIDERED NOT AS SUNDRY CREDITORS BUT AS LOANS AND ADVANCES WHICH AR E RECEIVED AND REPAID IN CASH IN VIOLATION OF SEC. 269T OF THE IT ACT AND HENCE REQUIRES TO BE DISALLOWED AND ADD E D BACK TO THE TOTAL TAXABLE INCOME OF THE ASSESSE E. THUS TOTAL UNDER ASSESSMENT OF RS.8,95,000/ - AND CONSEQUENT SHORT LEVY OF TAX OF RS.2,76,555/ - EXCLUDING INTEREST. (E MPHASIS SUPPLIE D BY US) . 3. I AM NOT REALLY CONCERNED, FOR THE REASON S WHICH I WI L L SET OUT IN A SHORT WHILE , ABUT OTHER DEVELOPMENT BARRING THE FACT TH A T T HE LEARNED CIT, HOWE V ER , REVISED THE IMPUGNED ORDER BY OBSERVING AS FOLLOWS: 5. I HAVE CONSIDERED THE SUBMISSION OF THE ASSESSEE. IT CAN BE SEEN FROM THE SUBMISSION THAT THE ASSESSEE HAS CONTENDED THAT IN THE BUSINESS OF CIVIL CON STRUCTION, SUPPLIERS ARE INSISTING FOR CASH PAYMENTS AND HE HAS PURCHASED THE SAND FROM THESE FOUR PERSONS. THE ASSESSEE HAS TAKEN ROUTINE PLEA FOR HIS CLAIM. HOWEVER , THE ASSESSEE HAS NO T SUBMITTED ANY CONCRETE EVIDENCE SO A S TO PROVE THAT THE ASSESSEE HAS PURCHASED THE RAW MATERI A L FROM THE S AID 04 PERSONS. FURTHER, THE ASSESSEE H A S FAILED TO P R ODUCE THE BOOKS OF ACCOUNTS AN D BILLS , V OUCHERS IN SUPPORT OF HIS S TAND. THE COPY OF ACCOUNT ALSO IS ONLY MONTH - W ISE AND NOT D A Y TO DAY BASIS. IN ABSENCE OF T HE SAME, THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED AND THEREFORE, PLEA TAKEN BY THE ASSESSEE IN HIS SAID SUBMISSION IS REJECTED. ITA NO . 197 / RJT/201 5 ASSESSMENT YEAR: 2010 - 11 PAGE 3 OF 8 6. SINCE, THESE FOUR PERSONS ARE HAVING NO BUSINESS TRANSACTIONS WITH THE ASSESSEE, THERE IS NO OPTION EXCEPT TO TREAT THE TRANSACTIONS WITH THE ASSESSEE AS LOAN TRANSACTION. ACCORDINGLY, THE AS SES S EE HAS T AKEN THE LOANS FROM JASUBEN N . MA RU, KANABHAI K. VADHIYA, LILABH A I T . ODEDRA AND MENSHIBHAI KABABHAI OF RS.95,665/ - , RS.74,500/ - , RS.98,260/ - , RS.93,450/ - RESPECTIVELY DURING THE YEAR UNDER CONSIDERATION. SIMILARLY, IT IS OBSERVED THAT THE ASSESSEE HAS REP A ID THE LOAN OF RS.2,35, 000/ - , RS.1,70,242/ - , RS.2,40,000/ - AND RS.2,52,000/ - RESPECTIVELY. THEREFORE, FOR THESE LOAN S ACCEPTED BY THE ASSESSEE DURING THE YEAR ARE L ESS THAN RS.20,000/ - IN CASH ON EACH OCCASION BUT AGGREGATE AMOUNT COMES TO EXCEEDING RS.20,000/ - AS MENTIONED ABOVE FOR WHICH SECTION 269SS OF THE ACT IS ATTRACTED. SIMILARLY, FOR THE RE - PAYMENT OF LOANS TO THE SAID FOUR PERSONS IN C A SH EXCEEDING RS.20,0 00/ - AS MENTIONED ABOVE ON EACH OCCASION ATTRACTS PROVISIONS OF SECTION 269T OF THE IT ACT. 7. FROM THE ABOVE DISCUSSED FACTS, I T IS CLEARLY APPARENT THAT THERE SHOULD HAVE BEEN BETTER APPLICATION OF MIND BY THE AO DURING THE ASSESSMENT PROCEEDINGS AND TH ERE SHOULD HAVE BEEN PROPER VERIFICATION OF THE ABOVE DISCUSSED ASPECTS IN ORDER TO DETERMINING THE COR R EC T TAXABLE INCOME. IN THE LIGHT OF THE ABOVE OBSERVATIONS, IT IS CLEAR T HAT TH E ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF T HE REVENUE, HENCE THE SAME IS HERBY SET - ASIDE WITH THE DIRECTION TO THE AO TO MAKE FRESH ASSESSMENT IN THIS CASE AFTER CALLING FOR SPECIFIC DETAILS ON THE ABOVE ISSUES AND AFTER AFFORDING OPPORTUNITY TO THE ASSESSEE BEING HEARD. 4. THE ASSES SEE IS AGGRIEVED AND IS IN APPEAL BEFORE ME . 5. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLICABLE LEGAL POSITION. 6. AS E VIDENT FROM A PLAIN READING OF THE EXTRACT FROM SHO W CAUSE NO T ICE AND THE RE VISION ORDER , LD . CIT D ID SHIFT THE GOAL POST MID - WAY IN AS MUCH AS WHILE HE INITIATED REVISION PROC EE DINGS ON THE GROUND THERE WERE UNDER AS S E SS M ENT OF RS.8,95,000/ - AND CONSEQUENT SHORT LEVY OF TAX OF RS.2,76,555/ - EXCLUDING INT EREST , H E ENDED UP REVISING THE IMPUGNED ORDER ON THE GROUND THAT THERE SHOULD HAVE BEEN BETTER APPLICATION OF MIND BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS AND THERE SHOULD HAVE BE E N PRO PER VERIFICATION OF THE ABOVE DISCUSSED ASPECT S (IN EXAMINING LEVY OF PENAL T Y UNDER SECTION 269SS AND 269T ON THE FACTS OF THIS CASE ) . THERE IS THUS SIGNIFICANT ITA NO . 197 / RJT/201 5 ASSESSMENT YEAR: 2010 - 11 PAGE 4 OF 8 DEVIATION IN APPROACH FROM THE STA R TING POINT , I.E. WHEN SHOW CAUSE NOTICE WAS ISSUED, AND THE RESULT OF THE ENSURING PROCEEDINGS , I.E. THE I MPUGNED REVISION ORDER. AS TO WHETHER SUCH COURSE OF ACTION I S PERMISSIBLE, I FIND GUIDELINES FRO M THE DECISION OF A C O - ORDINATE BENCH IN THE CASE OF MAXPA K INVESTMENT VS . ACIT 13 SOT 67 (DEL) WHEREIN SPEAKING THROUGH HON BLE SHRI R.V. EASWAR, THE THEN HON BLE VICE P RESIDENT WHO LATER GRACED THE OFFICE OF A JUDGE IN HON BLE DELHI HIGH COURT , THE D IVISION BENCH OBSERVED AS FOLLOWS : - 9. . IN CIT VS. G.K. KABRA (1995) 125 CTR (AP) 55 : (1995) 211 ITR 336 (AP), THE ANDHRA PRADESH HIGH COURT WAS DEALING W ITH AN APPLICATION SEEKING REFERENCE UNDER S. 256(2), INTER ALIA, OF THE FOLLOWING QUESTION : 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS CORRECT IN HOLDING THAT THE CIT LACKS INITIAL JURISDICTION, PARTICULARLY WHEN THE CO NCLUSION MADE BY THE CIT IN THE ORDER UNDER S. 263 WAS ON THE BASIS OF THE INFORMATION FURNISHED IN RESPONSE TO THE INITIAL NOTICE ?' WHILE DECLINING TO REFER THE ABOVE QUESTION, THE HIGH COURT HELD AS UNDER (PP. 339 - 340) : 'THE NECESSARY IMPLICATION IN T HE EXPRESSION 'AFTER GIVING OPPORTUNITY OF BEING HEARD RELATES TO THE POINT ON WHICH THE CIT CONSIDERS THE ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN OTHER WORDS, IT IS NECESSARY FOR THE CIT TO POINT OUT THE EXACT ERROR IN T HE ORDER WHICH HE PROPOSES TO REVISE SO THAT THE ASSESSEE WOULD HAVE AN ADEQUATE OPPORTUNITY OF MEETING THE ERROR BEFORE THE FINAL ORDER IS MADE.' IN THE CASE BEFORE THE HIGH COURT, THE SHOW - CAUSE NOTICE REFERRED TO TWO ISSUES TO WHICH THE ASSESSEE HAD G IVEN SATISFACTORY REPLIES. NO ACTION WAS TAKEN UNDER S. 263 IN RESPECT OF THESE TWO ISSUES. HOWEVER, IN THE SAID ORDER THE CIT MENTIONED THE HIRE CHARGES AS THE GROUND FOR REVISING THE ASSESSMENT. THIS POINT HAD NOT BEEN MENTIONED AS A GROUND IN THE SHOW - C AUSE NOTICE. THE HIGH COURT HELD THAT 'INASMUCH AS THE CIT HAD NOT CHOSEN TO SHOW THESE TWO POINTS AS THE ERRORS IN MAKING THE FINAL ORDER AND THE FINAL ORDER UNDER S. 263 REFERS ONLY TO THE INFERENCE OF HIRE CHARGES BEING EXIGIBLE TO TAX WHICH WAS NOT MEN TIONED AT ALL IN THE SHOW - CAUSE, OBVIOUSLY THE ASSESSEE HAD NO OPPORTUNITY TO MEET THAT POINT'. 10. THE RATIO OF THE DECISION, CLEAR FROM THE ABOVE OBSERVATIONS, IS THAT IF A GROUND OF REVISION IS NOT MENTIONED IN THE SHOW - CAUSE NOTICE ISSUED UNDER S. 263 , THAT GROUND CANNOT BE MADE THE BASIS OF THE ORDER PASSED UNDER THE SECTION, FOR THE SIMPLE REASON THAT THE ASSESSEE WOULD HAVE HAD NO OPPORTUNITY TO MEET THE POINT. IT IS PERTINENT TO NOTE THAT THE HIGH COURT DISTINGUISHED THE DECISION OF THE SUPREME COU RT IN RAMPYARI DEVI SARAOGI VS. CIT (1968) 67 ITR 84 (SC) ON FACTS. IN THE CASE BEFORE THE SUPREME COURT, THE SHOW - CAUSE NOTICE ISSUED BY THE CIT MENTIONED THAT THE AO HAD NOT CARRIED OUT ADEQUATE INVESTIGATIONS. THIS GROUND ITA NO . 197 / RJT/201 5 ASSESSMENT YEAR: 2010 - 11 PAGE 5 OF 8 WAS SUPPORTED IN THE ORDER PASS ED BY THE CIT UNDER S. 33B (OF THE 1922 ACT) BY REFERENCE TO ADDITIONAL FACTS. THE SUPREME COURT HELD THAT THE FACT THAT THE ADDITIONAL MATERIAL HAD NOT BEEN SUPPLIED TO THE ASSESSEE WOULD NOT AFFECT THE VERY BASIC ISSUE THAT THE ASSESSMENT WAS MADE WITHOU T ADEQUATE INVESTIGATION, WHICH WAS THE ERROR SOUGHT TO BE REVISED. WITH REFERENCE TO THE BASIC ISSUE, THE ASSESSEE DID HAVE AN OPPORTUNITY TO MEET IT. IN THE CASE BEFORE US, WE FIND THAT THE FINAL ORDER IS BASED ON S. 36(1)(III) DISALLOWANCE OF INTEREST O N THE GROUND THAT NO BUSINESS ACTIVITY WAS CARRIED ON DURING THE YEAR ABOUT WHICH THERE WAS NO MENTION IN THE SHOW - CAUSE NOTICE. THE CIT HAD MENTIONED THE GROUND IN THE SHOW - CAUSE NOTICE VIZ., THAT THE ASSESSEE DID NOT CARRY ON ANY BUSINESS ACTIVITY DURING THE YEAR, ONLY FOR THE PURPOSE OF DISALLOWING THE ADJUSTMENT OF THE BROUGHT FORWARD LOSSES UNDER S. 72 OF THE ACT AND NOT FOR THE PURPOSE OF DISALLOWING THE INTEREST UNDER S. 36(1)(III). IT IS NO DOUBT TRUE, AS CONTENDED BY THE LEARNED CIT DEPARTMENTAL RE PRESENTATIVE, THAT BOTH FOR THE PURPOSE OF S. 72 AND FOR THE PURPOSE OF S. 36(1)(III) IT IS A CONDITION THAT THE ASSESSEE SHOULD HAVE CARRIED ON BUSINESS DURING THE RELEVANT YEAR, BUT THAT IS NOT THE ONLY CONDITION FOR THE ALLOWABILITY OF THE INTEREST. THE RE ARE OTHER CONDITIONS THAT ARE REQUIRED TO BE FULFILLED BEFORE THE INTEREST CAN BE ALLOWED AS A DEDUCTION. UNDER S. 36(1)(III), THREE CONDITIONS ARE TO BE FULFILLED : (A) THE ASSESSEE MUST HAVE PAID THE INTEREST; (B) HE MUST HAVE BORROWED CAPITAL AND (C) THE CAPITAL MUST HAVE BEEN BORROWED FOR THE PURPOSE OF THE BUSINESS CARRIED ON BY HIM IN THE RELEVANT PREVIOUS YEAR. THE CIT IN THE SHOW - CAUSE NOTICE HAS MENTIONED ONLY THE GROUND THAT THE ASSESSEE DID NOT CARRY ON ANY BUSINESS ACTIVITY DURING THE YEAR. F ROM THIS, IT DOES NOT FOLLOW THAT HE HAD THE PROVISIONS OF S. 36(1)(III) IN MIND. HE HAS EXPRESSLY MENTIONED THE PROVISIONS OF S. 72 IN THE NOTICE AND EVEN FOR THAT SECTION TO APPLY, THE CONDITION IS THAT THE ASSESSEE MUST HAVE CARRIED ON THE BUSINESS DURI NG THE RELEVANT YEAR. WHEN THIS IS THE POSITION, IT CANNOT BE ARGUED THAT THE SHOW - CAUSE NOTICE MUST BE UNDERSTOOD AS CONTAINING A REFERENCE TO S. 36(1)(III) ALSO. THE FACTS OF THE PRESENT CASE, THEREFORE, ARE DISTINGUISHABLE FROM THE FACTS BEFORE THE SUPR EME COURT IN THE CASE OF RAMPYARI SARAOGI (SUPRA). 11. THE OTHER JUDGMENT WHICH SUPPORTS THE CASE OF THE ASSESSEE IS THAT OF THE PUNJAB & HARYANA HIGH COURT IN CIT VS. JAGADHRI ELECTRIC SUPPLY & INDUSTRIAL CO. (1981) 25 CTR (P&H) 94 : (1983) 140 ITR 490 ( P&H). THE NATURE OF THE JURISDICTION OF THE CIT UNDER S. 263 AND THE POWERS OF THE TRIBUNAL WHILE DEALING WITH AN APPEAL AGAINST THE ORDER PASSED UNDER THAT SECTION WERE EXPLAINED IN THAT DECISION. THE CIT HAD FOUND THE ORDER OF THE AO ALLOWING CONTINUATIO N OF REGISTRATION TO THE ASSESSEE - FIRM TO BE ERRONEOUS ON THE GROUND THAT THE ACTUAL DISTRIBUTION OF THE PROFITS WAS DIFFERENT FROM THE RATIO MENTIONED IN THE DEED OF PARTNERSHIP. THE TRIBUNAL SET ASIDE THE ORDER OF THE CIT BUT WHILE DOING SO OBSERVED THAT THERE WAS A CHANGE IN THE NUMBER OF PARTNERS FROM 10 TO 11 WHICH FACT HAD NOT BEEN TAKEN INTO ACCOUNT BY THE AO WHEN HE GRANTED REGISTRATION FOR THE FIRM FOR THE ASST. YR. 1966 - 67 AND THUS THE GRANT OF REGISTRATION WAS ERRONEOUS. ON THE BASIS OF THIS OBSE RVATION IT WAS ARGUED BEFORE THE HIGH COURT ON BEHALF OF THE REVENUE THAT THE TRIBUNAL OUGHT TO HAVE SUSTAINED THE ORDER OF THE CIT ON THAT GROUND. REPELLING THE CONTENTION, IT WAS HELD BY THE HIGH COURT AS UNDER (P. 502 - 3) : 'THE JURISDICTION VESTED IN T HE CIT UNDER S. 263(1) OF THE ACT IS OF A SPECIAL NATURE OR, IN OTHER WORDS, THE CIT HAS THE EXCLUSIVE JURISDICTION UNDER THE ACT TO REVISE THE ORDER OF THE ITO IF HE CONSIDERS THAT ANY ORDER PASSED BY HIM WAS ERRONEOUS INSOFAR AS IT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BEFORE DOING SO, HE IS ALSO REQUIRED TO GIVE AN OPPORTUNITY OF ITA NO . 197 / RJT/201 5 ASSESSMENT YEAR: 2010 - 11 PAGE 6 OF 8 BEING HEARD TO THE ASSESSEE. IF AFTER HEARING THE ASSESSEE IN PURSUANCE OF THE NOTICE ISSUED BY HIM UNDER S. 263(1) OF THE ACT, HE IS NOT SATISFIED, HE MAY PASS THE N ECESSARY ORDERS. OF COURSE, THE ORDER THUS PASSED WILL CONTAIN THE GROUNDS FOR HOLDING THE ORDER OF THE ITO TO BE ERRONEOUS, AS CONTEMPLATED UNDER S. 263(1) OF THE ACT. .........THE TRIBUNAL CANNOT UPHOLD THE ORDER OF THE CIT ON ANY OTHER GROUND WHICH, IN ITS OPINION, WAS AVAILABLE TO THE CIT AS WELL. IF THE TRIBUNAL IS ALLOWED TO FIND OUT THE GROUND AVAILABLE TO THE CIT TO PASS AN ORDER UNDER S. 263(1) OF THE ACT, THEN IT WILL AMOUNT TO A SHARING OF THE EXCLUSIVE JURISDICTION VESTED IN THE CIT, WHICH IS NO T WARRANTED UNDER THE ACT. IT IS ALL THE MORE SO, BECAUSE THE REVENUE HAS NOT BEEN GIVEN ANY RIGHT OF APPEAL UNDER THE ACT AGAINST AN ORDER OF THE CIT UNDER S. 263(1) OF THE ACT..... .UNDER S. 263 OF THE ACT IT IS ONLY THE CIT WHO HAS BEEN AUTHORIZED TO PR OCEED IN THE MATTER AND, THEREFORE, IT IS HIS SATISFACTION ACCORDING TO WHICH HE MAY PASS NECESSARY ORDERS THEREUNDER IN ACCORDANCE WITH LAW. IF THE GROUNDS WHICH WERE AVAILABLE TO HIM AT THE TIME OF THE PASSING OF THE ORDER DO NOT FIND A MENTION IN HIS OR DER APPEALED AGAINST, THEN IT WILL BE DEEMED THAT HE REJECTED THOSE GROUNDS FOR THE PURPOSE OF ANY ACTION UNDER S. 263(1) OF THE ACT. IN THIS SITUATION, THE TRIBUNAL, WHILE HEARING AN APPEAL FILED BY THE ASSESSEE, CANNOT SUBSTITUTE THE GROUNDS WHICH THE CI T HIMSELF DID NOT THINK PROPER TO FORM THE BASIS OF HIS ORDER.' WE RESPECTFULLY UNDERSTAND THIS JUDGMENT AS HOLDING, BY NECESSARY IMPLICATION, THAT IF THE CIT HAS NOT MENTIONED THE GROUND ON WHICH ACTION IS PROPOSED TO BE TAKEN UNDER S. 263 IN THE SHOW - CAU SE NOTICE, IT IS DEEMED THAT HE WAS NOT SATISFIED THAT IT WAS A FIT GROUND FOR TAKING ACTION UNDER THE SECTION, WITH THE RESULT THAT THE FINAL ORDER, IF BASED ON THE GROUND WHICH HE HAD EARLIER CONSIDERED NOT FIT FOR TAKING ACTION UNDER THE SECTION, WILL H AVE TO BE SET ASIDE AS NOT BASED ON ANY GROUND WHICH MAY JUSTIFY HIS BELIEF THAT THE ORDER PASSED BY THE AO WAS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IT IS, THEREFORE, NOT FOR THE TRIBUNAL TO UNDERSTAND THE GROUNDS OF REVI SION IN A MANNER DIFFERENT FROM THE MANNER IN WHICH THE CIT HAS MADE OUT AND TO SEEK TO UPHOLD THE ORDER OF REVISION IN ITS OWN UNDERSTANDING OF THE GROUNDS OF REVISION. 12. THIS IS PRECISELY WHAT APPEARS TO HAVE HAPPENED IN THE CASE BEFORE US. ACCORDING T O THE SHOW - CAUSE NOTICE, THE ACTION FOR REVISION WAS NOT PROPOSED TO BE TAKEN ON THE GROUND THAT THE ALLOWANCE OF INTEREST ON MONIES BORROWED FOR THE ACQUISITION OF THE SHARES UNDER S. 36(1)(III) WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENU E. BUT THIS WAS THE ONLY GROUND ON WHICH THE ULTIMATE ORDER UNDER S. 263 WAS PASSED. THE ORDER CANNOT BE SUSTAINED, IN THE LIGHT OF THE ABOVE TWO JUDGMENTS AND THE ORDERS OF THE TRIBUNAL CITED ABOVE 7. IN VIEW O F THE ABOVE DECISION OF THE DIVISION BENCH, IF A GROUND IS NOT SPECIFICALLY SET OUT IN THE SHOW CAUSE NOTICE ISSUED UNDER SECTION 263 THAT GROUND CANNOT BE MADE BASIS OF THE ORDER PASSED UNDER THAT SECTION ITA NO . 197 / RJT/201 5 ASSESSMENT YEAR: 2010 - 11 PAGE 7 OF 8 8. IN THE LI GHT OF ABOVE BI N DING JUDICIAL PRECEDENTS ANOTHER D I V ISION B ENCH OF THIS T RIBUN AL I N THE CASE OF SYNERGY ENTREPRENEUR SOLUTIONS PVT. LTD. ( 20 1 1 ) 1 3 ITR 377 (MUMBAI) HAD QUASHED THE REVISION PRO CEEDINGS FOR THE REASON THAT THE GROUND ON WHICH THE REVISION ORDER WAS PASSED WAS NOT SET OUT IN THE SHOW CAUSE NOTICE BY WHICH THE REVISION PROCEEDINGS WERE INITIATED. THAT PRECISELY IS THE CASE BEFORE ME IS TODAY. 9. IN VIEW OF ABOVE DISCUSSION AND BEARING IN MIND ENTIRETY OF THE CASE , I AM OF THE CONSIDERED VIEW THAT THE IMPUGNED REVISION ORDER IS UNSUSTAINABLE IN LAW IN AS MUCH AS IT IS S ET OUT IN THE ASSESSMENT ORDER WHICH W A S STATED TO BE REVISION PROCEEDINGS BY IMPUGNED ORDER ON THE GROUND WHICH WAS NOT SPECIFICALLY MENTIONED IN THE SHOW CAUSE NOTICE. I , THEREFORE , VACATE THE SAME . 10. AS I DECIDED THIS MATTER FOR THE SHORT REASON SET OUT ABOVE , I SEE NO NEED TO DEAL WITH OTHER LEGAL CONTENTION ADVANCED BY THE LD . COUNSEL OR TO TOUCH UPON OTHER FACTS WHICH ARE STATED TO BE MATERIAL DEALT WITH THE LD . C OUNSEL FOR THE ASSESSEE. WI T H THESE OBSERVATIONS , THE APPEAL IS ALLOWED. 11. IN TH E RESULT, APPEAL IS ALLOWED. DICTATED AND PRONOUNCED IN THE OPEN COURT TODAY ON 30 TH NOVEMBER, 2015. SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) AHMEDABAD , THE 30 TH DAY OF NOVEMBER , 2015 PBN /* ITA NO . 197 / RJT/201 5 ASSESSMENT YEAR: 2010 - 11 PAGE 8 OF 8 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT