M/s. P.K. Cotton Mills Pvt. Ltd., Meerut V. CIT, Meerut

ITA 2055/DEL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6672 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 24-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 09-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANKUR GARG
• Assessee Lawyers: VINOD KR GOEL
• Keywords: Capital asset; Depreciation; Business expenditure; Principle of natural justice
• Section: 43B; 143(3); 142(1); 263; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F NEW DELHI BEFORE SH. H.S. SIDHU , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO. 2055 /DEL/ 2013 ASSESSMENT YEAR: 2008 - 09 M/S. P.K. COTTON MILLS PVT. LT D., 202, NEW MOHAN PURI, MEERUT. VS. COMMISSIONER OF INCOME TAX, MEERUT PAN : AADCP4270D (APPELLANT) (RESPONDENT) APPELLANT BY SH. VINOD KR. GOEL, ADV. RESPONDENT BY SH. ANKUR GARG, CIT(DR) DATE OF HEARING 24.08.2016 DATE OF PRONOUNCEMENT 18.11.2016 ORDER PER O.P. KANT , A. M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 18/03/2013 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX , MEERUT UNDER SECTION 263 OF THE INCOME - TAX A CT , 1961( IN SHORT THE ACT ) REVISING THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT FOR ASSESSMENT YEAR 2008 - 09. THE ASSESSEE REVISED ITS GROUNDS OF APPEAL VIDE LETTER DATED 07/07/2015, WHICH ARE REPRODUCED AS UNDER: 1. THAT NOTICE U/S 263 ISSUED BY CIT, MEERUT WAS VAGUE AND IS BASED UPON INCORRECT FACTS AND LAW AND NO REASONABLE A ND PROPER OPPORTUNITY BEING HEARD WAS ALLOWED. HENCE, ENTIRE PROCEEDING IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. 2. THAT LD. CIT, MEERUT HAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 49,46,196/ - CLAIMED BY THE ASSESSEE AS LOSS ON ACCOUNT OF MACHINERY, WHICH IS AFTER DUE CONSIDERATION ACCEPTED BY THE LD. A.O.. THIS ADDITION IS AGAINST LAW AND FACTS OF THE CASE. 2 ITA NO. 2055/DEL/2013 AY: 2008 - 09 3. THAT THE LD. CIT HAS GIVEN DIRECTION TO THE A.O. TO INQUIRE FOLLOWING: (I) CORRECTNESS OF THE CLAIM TOWARDS FINANCIAL CHARGES. (II) CORRECTNESS OF THE UNSECURED LOAN AND SUNDRY CREDITORS. (III)FRIGHT DEBITED RS. 6,93,000/ - TO EXAMINE THE PROVISION OF TDS AND DISALLOW U/S 40A(IA). THESE ISSUES ARE ALREADY CONSIDERED BY THE A.O. AND AFTER GOING THROUGH THE BOOKS OF ACCOUNT, BILLS AN D VOUCHERS, THE A.O. WAS SATISFIED AND NOT MADE ANY ADDITION IN THE TOTAL INCOME OF THE ASSESSEE. THE VIEW TAKEN BY THE A.O. ONE OF THE BEST, WHILE HE FRAMING ASSESSMENT U/S 143(3) OF I.T. ACT, TO SET ASIDE THESE ISSUES FOR FURTHER INQUIRY IS NOTHING BUT DUPLICACY OF WORK, WHICH NOT PERMITTED U/S 263 OF I.T. ACT 4 . THAT PENALTY PROCEEDING INITIATED BY THE CIT IS ARBITRARY, UNJUST AND ROUTINE & MECHANICAL MANNER, WHICH IS AGAINST THE LAW. 5. THAT THE ASSESSEE HAS RIGHT TO ADD, DELETE OR MODIFY ANY GROUND S DURING THE APPEAL PROCEEDING. 2. THE FACTS IN BRIEF OF THE CASE ARE THAT THE ASSESSEE , A PRIVATE LIMITED COMPANY, WAS ENGAGED IN THE BUSINESS OF TEXTILES. THE ASSESSEE FILED RETURN OF INCOME ON 30/09/2008 , DECLARING NET LOSS OF RS.1,75, 55,380/ - . THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED AND COMPLIED WITH. IN THE SCRUTINY ASSESSMENT COMPLETED UNDER SECTION 143(3) OF THE ACT ON 26/11/2010, THE ASSESSING OFFICER MADE FOLLOWING TWO ADDITIONS: 1. DISALLOWANCE OF RS. 41,253/ - TOWARDS EXPENSES ON DUTIES AND TAXES ON THE GROUND THAT SAME WERE NOT RELATED TO BUSINESS EXPENSES AND DISALLOWED UNDER SECTION 43B OF THE ACT ; 2. DISALLOWANCE OF RS. 21,744/ - TO COVER OF THE POSSIBLE LEAKAGE DUE TO SELF - MADE AND INTERNAL VOUCHERS UNDER THE HEAD REPAIR AND MAINTENANCE, WELFARE EXPENSES, FREIGHT AND CARTAGE AND VEHICLE MAINTENANCE, AT THE RATE OF 10% OF THE EXPENSES. 3 ITA NO. 2055/DEL/2013 AY: 2008 - 09 3. SUBSEQUENTLY, THE LEARNED COMMISSIONER OF INCOME T AX EXAMINE D THE RECORDS AND ISSUED NOTICE UNDER SECTION 263 DATED 06/03/2013 STATING THAT THE ASSESSMENT ORDER WAS ERRONEOUS SO AS TO PREJUDICIAL TO THE INTEREST OF REVENUE AND IT WAS PASSED WITHOUT INQUIRING ON THE FOLLOWING POINTS: (A) THE LOSS OF RS.1,75,74, 887 / - ON THE TOTAL TURNOVER OF RS.1,69,62, 106/ - ; (B) T HE LOSS ON SALE OF MACHINERY AT RS. 49 ,46, 196/ - UNDER THE HEAD SELLING AND ADMINISTRATIVE EXPENSES OF RS.56,74, 304/ - ; (C) (I) T HE TRANSACTION OF ADDITION OF NEW MACHINERY IN THE YEAR ENDING 31/03/2007 AND OUT OF WHICH SALE OF MACHINERY WORTH 1.05 CRORE RESULTI NG INTO LOSS TO THE TUNE OF RS.49,46, 196 / - , AND WHETHER IT WAS A COLLUSIVE ONE OR IF THE SALES MADE TO THE PARTIES COVERED UND ER SECTION 40A(2)(B) OF THE ACT; (C)(II) THE HIGHL Y INFLATED CLAIM OF DEPRECIATION DURING THE YEAR UNDER CONSIDERATION AND CORRECTNESS OF THE ACCRETION IN THE FIXED ASSET SHOWN IN THE BALANCE SHEET ENDING ON 31/03/2007 VIS - A - VIS 31/03/2008 ; (D) T HE CORRECTNESS OF CLAIMS TOWARDS FINANCIAL CHARGES, WHIC H HAD DOUBLED DURING THE YEAR UNDER CONSI DERATION FOR NO APPARENT REASON; (E) THE ASSES SEE CLAIMED DEPRECIATION OF RS.28,23, 005/ - ON PLANT AND MACHINERY AND SIMULTANEOUSLY DEBITED LOSS ON SALE OF MACHINERY AMOUNTING TO RS.49,46, 196/ - IN PROFIT AND LOSS ACCOUNT, WHEREAS SALE AND PURCHASE OF ANY ASSET UNDER ANY BLOCK CAN ONLY INCREASE/ DECREASE IN VALUE OF BLOCK AND DEPRECIATION CAN BE ACCORDINGLY CLAIMED/ALLOWED AND AS SUCH THE LOSS ON SALE OF PLANT AND MACHINERY WAS NOT ALLOWABLE; (F) UNSECURED LOAN OF RS.30 .00 LAKHS; 4 ITA NO. 2055/DEL/2013 AY: 2008 - 09 (G) SUNDRY CREDITORS OF RS.7,16,533/ - ; (H) APPLICABILITY OF SECTION 40(A)(IA) ON FREIGHT EXPENSES OF RS.6,93,425/ - . 4. I N RESPONSE TO THE NOTICE, THE ASSESSEE SUBMITTED THAT ALL THE DETAILS IN RESPECT OF ABOVE ISSUES WERE DULY SUBMITTED BEFORE THE ASSESSING OFFICER AND CONSIDERED BY HIM AND HE FORMED AN OPINION ON THE BASIS OF THE MATERIAL ON RECORD AND HENCE POWER GIVEN UNDER SECTION 263 OF THE ACT CANNOT BE RESORTED TO AS THE ORDER OF THE ASSESSING OFFICER WAS NEITH ER PREJUDICIAL TO THE INTEREST OF R EVENUE NO R ERRONEOUS. 5. H OWEVER, THE LEARNED COMMISSIONER OF INCOME T AX HELD THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF R EVENUE. ON THE ISSUE OF LOSS FROM SALE OF MA CHINERY, THE ADDITION OF RS.49,46, 196/ - WAS QUANTIFIED AND ON OTHER ISSUES, DIRECTIONS FOR MAKING ENQUIR IES WERE GIVEN AS UNDER: A. THE ASSESSING OFFICER DID NOT ENQUIRE INTO THE LOSS OF THE MAGNITUDE, WHICH IS EVEN HIGHER THAN THE ENTIRE TURNOVER ; B. THE AO IS DIRECTED TO LOOK INTO AN D VERIFY THE RELEVANT ACCOUNTS PROPERLY BEFORE ASCERTAINING AND DETERMINING THE ACTUAL PROFIT/LOSS, AF TER EXAMINING BOOKS OF ACCOUNTS WHICH WERE NOT PRODUCED DURIN G THE COURSE OF 263 PROCEEDINGS; C. T HE LOSS ON SALE OF MACHINERY AMOUNT ING TO RS.49,46, 196/ - WAS CLAIMED WRONGLY BECAUSE THE SAME WAS TO BE TAKEN TO THE BALANCE SHEET IN THE FIXED ASSET AS BLOCK OF ASSET EXISTED THERE. THE ASSESSING OFFICER ALSO FAILED TO LOOK INTO WHETHER THE TRANSACTION WAS COLLUSIVE ONE OR WHETHER THE SALE S WERE MADE TO PARTIES COVERED UNDER SECTION 40A(2 )(B) OF THE ACT; D. T HE AO IS DIRECTED TO INQUIRE INTO CORRECTNESS OF THE CLAIM TOWARDS FINANCIAL CHARGES WHICH CLAIMED IT MORE THAN DOUBLE OF THE PREVIOUS YEAR ; 5 ITA NO. 2055/DEL/2013 AY: 2008 - 09 E. THE ASSESSING OFFICER DID NOT ENQUIRE INTO UNSE CURED LOAN AND SUNDRY CREDITORS AND THE ASSESSEE FAILED TO EXPLAIN THE SAME ; F. THE AO IS FURTHER DIRECTED TO INQUIRE INTO CORRECTNESS OF APPLICABILITY OF TDS AND DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT IN RESPECT OF FREIGHT EXPENSES DEBITED TO THE TU NE OF RS. 6.93 LACS. 4. AGAINST THE ABOVE ORDER UNDER SECTION 263 OF THE ACT PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX , THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL RAISING GROUNDS AS REPRODUCED ABOVE. 5. THE GROUND NO. 1 WAS NOT PRESSED BY THE LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE AND THEREFORE DISMISSED AS INFRUCTUOUS. 6. IN GROUND NO. 2, THE ASSESSEE HAS CHALL ENGED IN MAKING ADDITION OF RS.49,46, 196/ - CLAIMED BY THE ASSESSEE FOR LOSS ON ACCOUNT OF MACHINERY. IT WAS CONTENDED BY TH E LEARNED AUTHORIZED REPRESENTATIVE THAT LOSS WAS ACCEPTED BY THE ASSESSING OFFICER AFTER DUE CONSIDERATION. IT WAS SUBMITTED BY THE LEARNED AUTHORIZED REPRESENTATIVE THAT THE ASSESSEE DEBITED THE LOSS ON SALE OF MACHINERY, WHICH WAS AN ACCOUNTING ENTRY MA DE IN ACCORDANCE WITH C OMPANIES ACT, 1956 AND GUIDELINES ISSUED BY THE INSTITUTE OF CHARTERED A CCOUNTANTS OF INDIA, AND WHICH IS FURTHER SUPPORTED BY CLAUSE (1) OF SECTION 50 OF THE ACT. HE FURTHER SUBMITTED THAT THE ASSESSEE SOLD A CAPITAL ASSET, WHICH WAS PART OF BLOCK OF ASSET AND THE ASSESSEE DEDUCTED THE SALE CONSIDERATION OF MACHINERY FROM THE WRITTEN DOWN VALUE AND THE RESULTANT FIGURE BEING THE LOSS WAS RIGHTLY DEBITED TO THE PROFIT AND LOSS ACCOUNT. THIS LOSS WAS DISCLOSED TRULY AND CORRECTLY AND WHICH WAS CHECKED BY THE ASSESSING OFFICER AND ACCORDINGLY ACCEPTED THE SAME. IT WAS FURTHER EXPLAINED THAT SALE OF MACHINERY WAS MADE TO REGISTERED UNRELATED PARTIES AND COPY OF ENTIRE SALE BILLS ALONG WITH C FORMS APPLICABLE IN SALES TAX WERE 6 ITA NO. 2055/DEL/2013 AY: 2008 - 09 SUBMITTE D BEF ORE THE ASSESSING OFFICER. THE A UDITOR HAS ALSO NOT MADE ANY ADVERSE REPORTING IN TAX AUDIT IN RESPECT OF THE SALE OF MACHINERY. THE LEARNED AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THAT T HE ASS ESSING OFFICER HAD MADE ENOUGH I NQUIRY ON THE ISSUE OF ACQUISITION OF ASSET, LOSS ON SALE OF MACHINERY AS WELL AS DEPRECIATION CLAIMED AND , THEREFORE , IT WAS NOT OF THE CASE OF LACK OF ENQUIRY WARRANTING INVOKING OF JURISDICTION BY THE LEARNED CO MMISSIONER OF INCOME T AX UNDER S ECTION 263 OF THE ACT. 4. IN GROUND NO. 3, THE ASSESSEE HAS RAISED THE ISSUE THAT ENQUIRIES WERE MADE BY THE ASSESSING OFFICER IN RESPECT OF THE ISSUES OF CORRECTNESS OF THE CLAIM TOWARDS FINANCIAL CHARGES, CORRECTNESS OF UNSECURED LOAN AND SUNDRY CREDITORS AND PROVISION S OF TDS AN D DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT IN RESPECT OF THE FREIGHT EXPENSES OF RS.6.93 L ACS. 5. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE REFERRED TO PAGES N O. 14 AND 15 OF THE ASSESSEE S PAPER BOOK, WHICH IS A COPY OF NOT ICE UNDER SECTION 142(1) OF THE ACT CALLING FOR INFORMATION IN RESPECT OF THE ASSESSMENT YEAR AND SUBMITTED THAT THE ASSESSING OFFICER CALLED FOR CONFIRMATION OF SUNDRY CREDITORS & UNSECURED LOAN CREDITORS AND EXAMINED TDS LIABILITY . HE SUBMITTED THAT THE ASSESSEE ALSO DULY COMPLIED WITH THE QUERIES ASKED BY THE ASSESSING OFFICER AND THE ASSESSMENT HAS BEEN COMPLETED AFTER CONSIDERING ALL THE SUBMISSION OF THE ASSESSEE AND, THEREFORE , ON THOSE ISSUES THERE IS NO LACK OF ENQUIRY BY THE ASSESSING OFFICER. HE FURTHER SUBMITTED THAT THE VIEW TAKEN BY THE ASSESSING OFFICER WAS ONE OF THE BEST, WHILE FRAMING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT AND SETTING ASIDE THOSE ISSUES FOR FURTHER INQUIRY WAS NOTHING BUT DUPLICATION OF WORK, WHICH WAS NOT PERMITTED UNDER SECTION 263 OF THE ACT. 7 ITA NO. 2055/DEL/2013 AY: 2008 - 09 4.1 HE FURTHER SUBMITTE D THAT LEARNED COMMISSIONER OF INCOME T AX HAS NOT CARRIED OUT ENQUIRIES IN THE RESPECT OF THE ABOVE ISSUES HIMSELF AND ARRIVED AT WHETHER THE ORDER WAS ERRONEOUS AS WELL AS PREJ UDICIAL TO THE INTEREST OF THE R EVENUE. 4.2 IN RESPONSE TO THIS, THE LEARNED COMMISSIONER OF INCOME TAX (DEPARTMENTAL REPRESENTATIVE) SUBMITTED THAT THE ASSESSING OFFICER DID NOT CALL FOR ANY INFORMATION IN RESPECT OF LOSS CLAIMED ON SALE OF MACHINERY AND , THEREFORE , THIS IS THE CASE OF TOTAL LACK OF ENQUIRY BY THE ASSESSING OFFICER, WHICH RIGHTLY WARRANTED INVOKING OF JURISDICTION BY THE LEARNED COMMISSIONER OF I NCOME T AX , UNDER SECTION 263 OF THE ACT. FURTHER , IN RESPECT OF THE OTHER ISSUES, ALSO HE SUBMITTED THAT THE ASSESSING OFFICER, THOUGH CALLED FOR INFORMATION IN RESPECT OF SUNDRY CREDITORS AND UNSECURED LOANS BUT NO CONFIRMATIONS WERE FILED IN RESPECT OF SUNDRY CREDITORS AND NO BANKS AND OTHER DETAILS WERE FILED IN RESPECT OF UNSECURED LOAN. HE FURTHER SUBMITTED THAT THE A SSESSING OFFICER HAS NOT EXAMINE D THE LIABILITY OF DEDUCTING TDS ON FREIGHT EXPENSES. HE ALSO SUBMITTED THAT IT IS EVIDENT FROM THE QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER, WHICH HAS BEEN SUBMITTED BY THE ASSESSEE IN THE PAPER BOOK BEFORE THE TRIBUNA L, NO QUERY WAS RAISED IN RESPECT OF CLAIM OF EXPENSES TOWARD FINANCE CHARGES. IN VIEW OF THE ABOVE FACTS , THE CASE OF THE ASSESSEE FALLS UNDER THE CATEGORY OF THE LACK OF ENQUIRY. HE FURTHER SUBMITTED THAT EVEN SINGLE ERROR FOUND IN THE ORDER OF ASSESSIN G OFFICER, THE COMMISSIONER OF INCOME T AX CAN REVISE THAT ORDER. IN SUPPORT OF THE CONTENTION THAT THE COMMISSIONER OF INCOME T AX COULD REMAND THE MATTER TO THE ASSESSING OFFICER A S THE ASSESSING OFFICER HAD NOT CONDUCTED PROPER ENQUIRY TO VERIFY CASH CREDITS AND TRADE CREDITORS ETC, HE RELIED ON THE JUDGMENT OF THE J URISDICTIONAL HIGH COURT OF ALLAHABAD IN THE CASE OF MEERUT ROLLER F LOUR MILLS LTD VS. COMMISSIONER OF INCOME - TAX (2013) RE PORTED IN 35 TAXMANN.COM 183 (ALLAHABAD). IN SUPPORT OF THE 8 ITA NO. 2055/DEL/2013 AY: 2008 - 09 CONTENTION THAT IT WAS NOT NEC ESSARY FOR THE COMMISSIONER OF INCOME T AX TO COME TO A FIRM CONCLUSION THAT THE ORDER OF THE ASSESSING OFFICER WAS ERRONEOUS , INSOFAR AS , IT IS PREJUDICIAL TO THE INT EREST OF REVENUE AND THE COMMISSIONER OF INCOME T AX CAN REMAND THE MATTER TO THE ASSESSING OFFICER TO MAKE FRESH ASSESSMENT AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE , H E RELIED ON THE JUDGEMENT OF THE HON BLE GUJARAT HIGH COURT IN THE CASE OF ADDITIONAL COMMISSIONER OF INCOME T AX VS. MUKUR CORPORATION REPORTED IN 111 ITR 312 (GUJ). 4.3 WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RELEVANT MATERIAL ON RECORD INCLUDING THE PAPER BOOK CONTAINING 32 PAGES FILED BY THE ASSESS EE. THE MANDATE OF SECTION 263 OF THE ACT IS ATTRACTED ONLY WHEN THE ASSESSMENT ORDER IS FOUND TO BE ERRONEOUS INSOFAR AS TO BE PREJ UDICIAL TO THE INTEREST OF THE R EVENUE. THESE TWIN CONDITIONS HAVE TO BE CUMULATIVELY SATISFIED FOR OBTAINING A VALID JURISD ICTION UNDER THIS SECTION. IF THE ASSESSMENT ORDER IS ONLY PREJ UDICIAL TO THE INTEREST OF THE R EVENUE, IT IS NOT SUFFICIENT TO INVOKE THE JURISDICTION UNDER SECTION 263 , UNLESS IT IS SHOWN THAT IT IS ERRONEOUS ALSO. AN ASSESSMENT ORDER MAY BE TERMED AS ERR ONEOUS IN VARIOUS CIRCUMSTANCES. NOT MAKING ENQUIRY ON THE RELEVANT ISSUES, WHICH THE ASSESSING OFFICER IS REQUIRED TO LOOK INTO, MAKES THE ASSESSMENT ORDER ERRONEOUS. SIMILARLY, AFTER MAKING INVESTIGATION BUT THEREAFTER TAKING THE PATENTLY ERRONEOUS VIEW, ALSO MAKES AN ORDER ERRONEOUS. BUT , HOWEVER , IF THERE ARE TWO POSSIBLE VIEW ON THE POINT OF ISSUE, THEN ORDER CANNOT BE SAID TO BE ERRONEOUS. IN OTHER WORDS, IF ISSUE IS DEBATABLE AND THE ASSESSING OFFICER HAS TAKEN ONE POSSIBLE AND LEGALLY SUSTAINABLE VI EW, THEN THE COMMISSIONER OF INCOME T AX, CANNOT BE ALLOWED TO SUBSTITUTE HIS VIEW HOLDING THE ORDER AS ERRONEOUS. IN ANOTHER SITUATION , ANY ORDER MAY BE ERRONEOUS DUE TO LACK OF ENQUIRY ON THE ISSUE. WHEN THE INVESTIGATION WAS MADE BY THE ASSESSING OFFICER, BUT THE CIRCUMSTANCES 9 ITA NO. 2055/DEL/2013 AY: 2008 - 09 WARRANT THAT FURTHER INVESTIGATION WAS REQUIRED , AND THE ASSESSING OFFICER FAILED TO CARRY OUT SUCH ENQUIRY, THIS W OULD ALSO MAKE THE ASSESSMENT ORDER ERRONEOUS. HOWEVER, IF THE ASSESSING OFFICER CARRIED OUT PROPER INVESTIGATION AND GETS SATISFIED DURING THE COURSE OF HEARING AFTER PROPER EXAMINATION, THE ASSESSMENT ORDER CANNOT BE CHARACTERIZED AS ERRONEOUS SIMPLY BEC AUSE THERE IS NO DISCUSSION IN THE ASSESSMENT ORDER ON SUCH ASPECTS. IN THIS REGARD, AS LONG AS THERE IS MATERIAL TO SUGGEST THAT ENQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER AND THE ASSESSEE FILED COMPLETE INFORMATION ON THAT ASPECT, THE ASSESSMENT ORDE R CANNOT BE HELD AS ERRONEOUS, UNTIL IT IS SHOWN T HAT CIRCUMSTANCES REQUIRED THE ASSESSING O FFICER TO CONDUCT FURTHER ENQUIRIES ON THAT ASPECT. 4.4 COMING TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE MAIN ISSUE INTO FIRST FIVE OBJECTIONS RAISED BY THE COMMISSIONER OF INCOME T AX WAS OF NO ENQUIRY IN RESPECT OF PURCHASE AND SALES OF ASSETS, DEPRECIATION THEREOF AND THE LOSS CLAIMED ON SALE OF MACHINERY . WE HAVE PERUSED THE QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER, WHICH IS AVAILABL E ON PAGES 14 - 1 5 OF THE ASSESSEE S PAPER BOOK. BEFORE US, THE ASSESSEE HAS NOT SUBMITTED COPY OF ANY OTHER QUESTIONNAIRE ISSUED OR QUERY RAISED BY THE ASSESSING OFFICER IN ORDER SHEET OTHER THAN QUESTIONNAIRE AVAILABLE ON PAGES 14 - 15 OF THE PAPER BOOK . IT IS EVIDENT THAT THIS NOTICE WAS ISSUED ON 13/05/2010 . ACCORDING TO THE NOTICE , THE HEARING WAS FIXED ON 20/05/ 2010 AND THE ASSESSEE WAS ASKED TO FURNISH VARIOUS DETAILS LISTED AT SERIAL NO S . 1 TO 10 , INTER ALIA , BUSINESS ACTIVITY, AUDIT REPORT , BANK ACCOUNTS, DIRECTOR/S HAREHOLDERS, CONFIRMATION OF SUNDRY CREDITORS, PROOF OF PAYMENT UNDER SECTION 43B, CONFIRMATION OF UNSECURED LOANS AND DETAILS IN TABLE FORMA T, GROSS PROFIT/NET PROFIT RATE, LIABILITY OF TDS ETC . A FURTHER REMINDER/NOTICE UNDER SECTION 142(1) OF THE ACT WA S ISSUED ON 23/06/2010 CALLING FOR THE REPLY IN RESPECT OF THE INFORMATION AS CALLED FOR 10 ITA NO. 2055/DEL/2013 AY: 2008 - 09 VIDE NOTICE UNDER SECTION 142(1) OF THE ACT DATED 13/05/2010. IN RESPONSE TO THE SAID QUERIES RAISED BY THE ASSESSING OFFICER, THE REPLY SUBMITTED BY THE ASSESSEE IS P LACED ON PAGES 11 TO 12 OF THE PAPER BOOK. BEFORE US, T HE ASSESSEE HAS ALSO SUBMITTED A COPY OF REPLY DATED 15/11/2010 CLAIMED AS SUBMITTED TO THE ASSESSING OFFICER ON HIS VERBAL QUERIES. THIS REPLY CONTAINS COMPUTATION OF LOSS ON SALE OF MACHINERY. ONE MO RE REPLY OF THE ASSESSEE , WHICH IS SIGNED BY THE COUNSEL OF THE ASSESSEE ON 25/11/2010, IS AVAILABLE ON PAGE 9 OF THE PAPER BOOK, WHICH CONTAIN S JUSTIFICATIONS OF THE LOSS AND SALE OF MACHINERY TO M/S APIN T AX . BOTH THE REPLY DATED 15/11/2010 AND 22/11/201 0 ARE NOT BEARING ANY STAMP OF ACKNOWLEDGEMENT EITHER BY T HE ASSESSING OFFICER OR BY THE INCOME T AX DEPARTMENT. A PERUSAL OF THE QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER MANIFEST THAT NO QUERY IN RESPECT OF ACQUISITION AND SALE OF ASSETS INCLUDING MAC HINERY WAS RAISED BY THE ASSESSING OFFICER. IT IS ALSO CLEAR THAT NO QUERY IN RESPECT OF SALE OF MACHINERY WAS MADE BY THE ASSESSING OFFICER. IN ABSENCE OF ANY STAMP OF ACKNOWLEDGEMENT BY THE DEPARTMENT ON THE LETTER DATED 15/11/2010 AND 25/11/2010, IT CAN NOT BE TREATED THAT SAME WERE FIL ED BEFORE THE ASSESSING OFFICER . EVEN IF IT IS CONSIDERED THAT THE ASSESSEE FILED REPLY DATED 15/11/2010 AND 25/11/2010 BEFORE THE ASSESSING OFFICER, THE ASSESSING OFFICER WAS REQUIRED TO CARRY OUT INQUIRY IN RESPECT OF THE CLAIM OF LOSS ON SALE OF MACHINERY , HOWEVER , NO SUCH ENQUIRY WAS MADE BY THE ASSESSING OFFICER , A ND , THEREFORE , THE CASE OF THE ASSESSEE FALLS IN THE CATEGORY OF COMPLETE LACK OF INQUIRY ON THE ISSUE OF LOSS FROM SALE OF MACHINERY. IN VIEW OF ABOVE, WE ARE OF CONSIDERED OPINION THAT THE ASSESSMENT ORDER ON THE ISSUE IS ERRONEOUS INSOFAR AS PREJ UDICIAL TO THE INTERE ST OF THE R EVENUE AND THE LEARNED COMMISSIONER OF IN COME T AX IS RIGHT IN ASSUMING JURISDICTION UNDER SECTION 263 OF THE ACT. 11 ITA NO. 2055/DEL/2013 AY: 2008 - 09 4.5 INSOFAR AS OBJECTIONS RAISED IN GROUND NO. 3 , IN RESPECT OF CORRECTNESS OF THE CLAIM TOWARD FINANCIAL CHARGES, CORRECTNESS OF UNSECURED LOAN IN SUNDRY CREDITORS, TO EXAMINE THE PROVISIONS OF TDS ON FREIGHT DEBITED OF RS.6, 93,000/ - AND DISALLOW UNDER SECTION 40(A)(IA) OF THE ACT, WE FIND FROM THE QUESTIONNAIRE DATED 13/05/10 THAT FOLLOWING QUERIES WERE MADE IN RESPECT OF SUNDRY CRE DITORS, UNSECURED LOANS AND TDS. QUERY NO. 5 : CONFIRMATION OF SUNDRY CREDITORS ALONGWITH THERE PAN AND COMPLETE ADDRESS AND COPY OF RETURN OF INCOME TO PROVE THEIR IDENTITY, GENUINENESS OF TRANSACTION AND CREDITWORTHINESS. QUERY NO. 7 : CONFIRMATION OF UNSECURED LOANS WITH THE COPY OF THE RELEVANT PAGE OF BANK PASSBOOK OF THE LOAN CREDITOR, THEIR PAN, PROF IT OF MONEY AVAILABILITY AS ON THE DAY OF ADVANCEMENT OF LOAN, ASSESSMENT JURISDICTION AND COPY OF RETURN OF INCOME. Q UERY NO. 9 : PLEASE FURNISH WHET HER YOU WERE LIABLE TO DEDUCT TDS AND IF YES THE EVI DENCE OF DEDUCTION OF THE SAME. 4.6 I N RESPONSE TO THE ABOVE QUERIES, THE ASSESSEE REPLIED VIDE LETTER DATED 21 /10/10 , WHICH IS AVAILABLE ON PAGE S 11 OF THE ASSESSES PAPER BOOK , AS UNDER: A NSWER NO. 4 : THE DETAILS OF SUNDRY CREDITORS ARE ENCLOSED. WE ARE TRYING TO GET THEIR CONFIRMATION. A NSWER NO. 6 : THE CONFIRMATION OF UNSECURED LOAN OF FOLLOWING WITH PAN ARE ENCLOSED: - 1. SANJAY BHARADWAJ 70,00,000 .00 2. YASH PAL SINGH 10,00,000 .00 (COPY OF HIS KISAN BAHI HAVING AGRICULTURE LAND 4.290 HECTARE AT VILLAGE RAJPURA IS ALSO ENCLOSED.). 4. KAMAL SINGH 50,00,00.00 (COPY OF HIS KISAN BAHI OF AGRICULTURE LAND 1.292 HECTARE AT VILLATE RAJPURA IS ENCLOSED.) 12 ITA NO. 2055/DEL/2013 AY: 2008 - 09 5. BRAJPAL SINGH 80 ,00,00.00 (COPY OF HIS KISHAN BAHI OF AGRICULTURE LAND 2.2560 HECTARE AT VILLAGE RAJPURA IS ENCLOSED.) A NSWER NO. 9 : THAT TDS WAS NOT DEDUCTIBLE ON ANY OF THE EXPENSES. 4.7 IN REPLY DATED 15/11/2010 , WHICH IS P LACED ON PAGE 18 OF THE ASSESSEE S PA PER BOOK, REPLY IN RESPECT OF CREDITORS WAS AS UNDER: ANSWER NO. 2: COPY OF A/C OF FOLLOWING CREDITORS IN OUR BOOKS OF A/C: (A) M/S. ABN ENTERPRISES HISSAR (B) M/S. APIN TEXTILES. 4.8 T HUS , IT IS EVIDENT FROM THE SUBMISSION OF THE ASSESSEE THAT NO CONFIRMATION WERE FILED IN RESPECT OF THE SUNDRY CREDITORS. SIMILARLY, IT IS CLEAR FROM THE QUERIES RAISED BY THE ASSESSING OFFICER THAT NO DETAILS IN RESPECT OF DEDUCTION OF TDS ON FREIGHT CHARGES WAS EXAMINED BY THE ASSESSING OFFICER. SIMILARLY , NEITHER DETAIL IN RESPECT OF FINANCIAL CHARGES WAS ALSO ASKED BY THE ASSESSING OFFICER NOR ANY INFORMATION WAS FILED BY THE ASSESSEE. IN VIEW OF THE ABOVE, THE LEARNED COMMISSIONER OF INCOME T AX IS CORRECT IN HOLDING THAT FURTHER ENQUIRY WAS NECESSARY TO EXAMINE THE SUNDRY CREDITORS, FINANCIAL CHARGES , LIABILITY OF TDS ON FREIGHT CHARGES . 4.9 THE HON BLE JURISDICTIONAL HIGH COUR T IN THE CASE OF MEERUT ROLLER F LOUR MILLS LTD (SUPRA) HELD THE ASSESSMENT ORDE R AS ERRONEOUS AND PREJ UDICIAL TO THE INTEREST OF THE R EVENUE WHEN THE ASSESSING OFFICER HAD NOT CONDUCTED A PROPER INQUIRY TO VERIFY CASH CREDITS AND TRADE CREDITORS AND THE MATTER REMANDED TO THE ASSESSING OFFICER UNDER SECTION 263 OF THE ACT. THE RELEVA NT FINDING OF THE HON BLE HIGH COURT IS REPRODUCED AS UNDER: 16. IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO HAVE EXAMINED THE CASH CREDIT ENTRIES APPEARING IN THE ACCOUNTS OF THE PETITIONER 13 ITA NO. 2055/DEL/2013 AY: 2008 - 09 ASSESSEE IN DETAIL KEEPING IN VIEW THE EXPLANATION FURNISHED BY THE PETITIONER. HAVING FAILED TO DO SO, IT IS BUT OBVIOUS THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. MERE FILING OF THE REPLY BY THE ASSESSEE TO WHICH THE ATTENTION OF THE COURT WAS INVITED IS NOT SUFFICIENT. WE FIND THAT WITH REGARD TO THE TRADE CREDITORS, COPIES OF THEIR ACCOUNT BOOKS WERE FILED VIDE LETTER DATED 9TH OF NOVEMBER, 2010, ; THAT IS ALL. THERE IS NO APPLICATION OF MIND BY THE ASSESSING AUTHORITY WITH REGARD TO THE GENUINENESS OF THE CREDIT ENTRIE S INCLUDING THAT OF TRADE CREDITORS. REFERENCE WAS MADE BY THE LEARNED COUNSEL FOR THE RESPONDENTS TO THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR WHICH IS ENCLOSED IN THE CONNECTED WRIT PETITION ( HAS BEEN DISMISSED ON 15TH OF MAY, 2013 ON THE GROUND OF A VAILABILITY OF STATUTORY REMEDY) WHEREIN ON EXAMINATION, IT WAS FOUND BY THE ASSESSING AUTHORITY THAT THE ASSESSEE WAS NOT ABLE TO PROVE THE GENUINENESS OF CERTAIN CASH CREDITS. BE THAT AS IT MAY, IN VIEW OF THE ORDER WHICH WE ARE PROPOSING TO PASS, IT IS NOT NECESSARY TO DWELL UPON THE MERITS OF THE CASE. PRIMA FACIE FINDINGS HAVE BEEN RECORDED BY US JUST TO MEET THE ARGUMENT OF THE PETITIONER. 4.10 THE HON BLE GUJARAT HIGH COURT IN THE CASE OF MUKUR CORPORATION (SUPRA) HAS UPHELD THE ACTION OF THE COMMISSIONER OF INCOME T AX IN ORDER UNDER SECTION 263 OF THE ACT, REMANDING THE MATTER TO THE ASSESSING OFFICER FOR FRESH EXAMINATION. THE RELEVANT FINDING OF THE HON BLE HIGH COURT IS REPRODUCED AS UNDER: 15. THE THIRD STEP IS AS REGARDS AN INQUIRY AS TH E CIT 'DEEMS NECESSARY'. IT IS WITH REGARD TO THIS STEP THAT SHRI PATEL VEHEMENTLY CONTENDED THAT THE CIT HAD COMMITTED AN ERROR IN NOT ALLOWING THE ASSESSEE TO CROSS - EXAMINE DR. VYAS, WHOSE AFFIDAVIT DT. 10TH MARCH, 14 ITA NO. 2055/DEL/2013 AY: 2008 - 09 1971, WAS VERY MATERIAL. NOW, AFTER REA DING THE RELEVANT PORTION OF SUB - S. (1) OF S. 263, WE DO NOT FIND ANY JUSTIFICATION FOR THE VIEW THAT IN EVERY CASE THE CIT IS EXPECTED TO MAKE AN INQUIRY BEFO RE PASSING THE FINAL ORDER. THE CONCLUDING PORTION OF THIS SUB - S. (1) OF S. 263 SHOWS THAT THE CI T CAN PASS VARIOUS ORDERS SUCH AS ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. IF THE CIT IN THIS CASE HAD ENHANCED OR MODIFIED THE ASSESSMENT, THEN LOOKING TO THE FACTS OF THE PRESENT CASE, SHRI PATE L WOULD HAVE BEEN JUSTIFIED IN CONTENDING THAT, BEFORE PASSING THE FINAL ORDER OF ENHANCEMENT OR MODIFICATION OF THE ASSESSMENT, THE ASSESSEE OUGHT TO HAVE BEEN GIVEN AN OPPORTUNITY TO CROSS - EXAMINE DR. VYAS. BUT HERE THE CIT HAS NOT HIMSELF PASSED ANY FIN AL ORDER AS REGARDS THE ASSESSMENT. WHAT HE HAS DONE IS TO CANCEL THE ORIGINAL ASSESSMENT AND TO DIRECT A FRESH ASSESSMENT BY THE ITO WITH A FURTHER DIRECTION TO THE ITO TO GIVE PROPER OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE ITS PLEAS AS WELL AS TO CRO SS - EXAMINE DR. VYAS. THEREFORE, THE QUESTION IS WHETHER IT IS OBLIGATORY ON THE CIT ACTING UNDER S. 263 TO ENTER INTO A REGULAR INQUIRY IN ALL CASES BEFORE THE ORIGINAL ASSESSMENT ORDER IS CANCELLED AND THE ITO IS DIRECTED TO MAKE A FRESH ASSESSMENT. THERE IS NOTHING IN THE SECTION ITSELF WHICH WOULD JUSTIFY SUCH A VIEW, BECAUSE, ON THE QUESTION OF INQUIRY, THE SECTION SPECIFICALLY SAYS THAT THAT INQUIRY SHOULD BE AS 'DEEMED NECESSARY' BY THE CIT. IN THIS CONNECTION, WE MAY PROFITABLY REFER TO SOME OF THE O BSERVATIONS OF THE SUPREME COURT IN RAMPYARI DEVI SARAOGI VS. CIT (1968) 67 ITR 84 (SC) : TC57R.202. IN THAT CASE, THE ORDER WHICH WAS PASSED BY THE CIT MENTIONED SOME FACTS WHICH WERE NOT INDICATED OR INTIMATED TO THE ASSESSEE AND WHICH THE ASSESSEE HAD N O OPPORTUNITY OF MEETING. THE ASSESSEE MADE A GRIEVANCE OF THIS BUT THE SUPREME COURT DISPOSED 15 ITA NO. 2055/DEL/2013 AY: 2008 - 09 OF THE CONTENTION RAISED BY THE ASSESSEE BY OBSERVING THAT ALL THE ADDITIONAL MATERIAL, ON WHICH THE CIT HAD RELIED UPON, WAS SUPPORTING MATERIAL AND DID NOT CON STITUTE THE BASIC GROUND ON WHICH THE ORDER UNDER S. 33B (OF THE ACT OF 1922) WAS PASSED. THE SUPREME COURT FURTHER OBSERVED THAT EVEN IF THE FACTS, WHICH THE CIT INTRODUCED REGARDING THE INQUIRIES MADE BY HIM, HAD BEEN INDICATED TO THE ASSESSEE, THE RESUL T WOULD HAVE BEEN THE SAME, BECAUSE THE ASSESSEE HAD NOT IN ANY WAY SUFFERED FROM THE FAILURE OF THE CIT TO INDICATE THE RESULTS OF THE INQUIRIES. THE SUPREME COURT ULTIMATELY HELD THAT IN SUCH A CASE THE ASSESSEE WOULD HAVE FULL OPPORTUNITY OF SHOWING TO THE ITO WHETHER THE INCOME ASSESSED IN THE ASSESSMENT ORDERS WHICH WERE ORIGINALLY PASSED WAS CORRECT OR NOT, AND, THEREFORE, THE ASSESSEE COULD NOT BE SAID TO HAVE BEEN DENIED AN OPPORTUNITY OF SHOWING CAUSE AGAINST THE GROUNDS AND MATERIALS AND THE RULES OF NATURAL JUSTICE WERE NOT VIOLATED. IN CIT VS. PANNA DEVI SARAOGI (1970) 78 ITR 728 (CAL) : TC57R.142, THE HIGH COURT OF CALCUTTA HELD THAT THERE WAS NO VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE ON THE QUESTION OF OPPORTUNITY BEING GIVEN TO THE ASS ESSEE. THAT OPPORTUNITY WAS REASONABLY GIVEN, BY STATING THE BASIC GROUNDS ON WHICH THE CIT THOUGHT THAT THE ITO'S ORDER WAS ERRONEOUS AND GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE EVEN TO PRODUCE EVIDENCE ALONG WITH FACTS OF THAT CASE, THE HIGH COUR T FURTHER OBSERVED THAT ALL THAT THE CIT DID WAS TO CANCEL THE ASSESSMENT AND ASK THE ITO TO MAKE A FRESH ASSESSMENT ACCORDING LAW AFTER MAKING PROPER ENQUIRIES AND INVESTIGATIONS WITH REGARD TO THE JURISDICTION, CARRYING ON THE BUSINESS, POSSESSION OF INI TIAL CAPITAL AND THE SOURCES OF MONEYS INVESTED IN THE NAME OF THE ASSESSEE AND, THEREFORE, THE ASSESSEE WOULD AGAIN GET FULL OPPORTUNITY TO PRODUCE EVIDENCE, IF ANY, IN SUPPORT OF HER CASE. 16 ITA NO. 2055/DEL/2013 AY: 2008 - 09 16. IN VIEW OF THIS, WE FIND THAT CONSIDERING THE FACTS OF THIS C ASE, THE CIT WAS NOT BOUND TO MAKE ANY INQUIRY BEFORE PASSING THE FINAL ORDER AND THAT IN SUBSTANCE NO PREJUDICE IS CAUSED TO THE ASSESSEE BY FAILURE OF THE CIT TO GIVE IT ANY OPPORTUNITY TO CROSS - EXAMINE DR. VYAS. 17. NEXT QUESTION IS WHETHER AT THE TIME OF PASSING THE FINAL ORDER, THE CIT WAS BOUND TO RECORD FINAL CONCLUSION. NOW, EVEN ON THIS QUESTION, WE FIND THAT THERE IS NOTHING IN S. 263(1) TO SHOW THAT BEFORE PASSING THE FINAL ORDER UNDER THAT SECTION, THE CIT MUST NECESSARILY AND IN ALL CASES RECOR D FINAL CONCLUSIONS ABOUT THE POINTS IN CONTROVERSY BEFORE HIM. AS ALREADY NOTED BY US ABOVE, WE WOULD HAVE EXPECTED HIM TO RECORD FINAL CONCLUSIONS, WHICH HE THOUGHT PROPER IF HE WAS TO SETTLE THE ASSESSMENT FINALLY BUT SINCE HE HAS NOT SETTLED THE ASSESS MENT FINALLY, AND HAS PREFERRED TO DIRECT THE ITO TO MAKE AN ORDER FOR FRESH ASSESSMENT, IT WAS PROPER THAT HE DID NOT EXPRESS ANY FINAL CONCLUSIONS AND RECORDED ONLY PRIMA FACIE CONCLUSIONS AT WHICH HE HAD ARRIVED WITH REFERENCE TO THE FACTS OF THE CASE. HERE IT SHOULD BE NOTED THAT, AS THE ASSESSMENT WAS TO BE FRESHLY MADE BY THE ITO, THE ONLY PROPER COURSE FOR THE CIT WAS NOT TO EXPRESS ANY FINAL OPINION AS REGARDS THE CONTROVERSIAL POINTS. 18. SHRI PATEL HEAVILY RELIED UPON THE ALLAHABAD HIGH COURT DECI SION IN J. P. SRIVASTAVA & SONS LTD. VS. CIT (1978) 111 ITR 326 (ALL) : TC57R.331 FOR THE PROPOSITION THAT IT WAS OBLIGATORY ON THE CIT TO EXAMINE THE MERITS OF THE OBJECTIONS RAISED BY THE ASSESSEE AND, THEREFORE, IT WAS NOT PROPER TO 'DELEGATE' THAT POWE R TO THE ITO BY SETTING ASIDE THE ASSESSMENT ORDER AND DIRECTING HIM TO MAKE FRESH ASSESSMENT. THE FACTS OF THAT CASE WERE THAT THE ONLY GROUND UPON WHICH ACTION WAS TAKEN BY THE CIT UNDER S. 33B (OF THE ACT OF 1922) 17 ITA NO. 2055/DEL/2013 AY: 2008 - 09 WAS THAT THE ITO DID NOT APPLY HIS MIND TO THE CLAIM OF THE ASSESSEE AS CONTAINED IN PART D OF THE RETURN. THE COURT FOUND THAT THE CIT HIMSELF DID NOT APPLY HIS MIND TO THE MERITS OF CLAIM AND, IN FACT, HE SPECIFICALLY REFRAINED FROM GOING INTO THE MERITS. IN VIEW OF THIS, THE COURT HELD THAT THE FINDING THAT THE ORDER OF THE ITO WAS ERRONEOUS, WAS BY ITSELF NOT ENOUGH TO GIVE JURISDICTION TO THE CIT, BECAUSE IT WAS NECESSARY TO BE SHOWN FURTHER THAT THE ORDER WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. SINCE, IN THE OPINION OF THE HIGH CO URT, THE CIT FAILED IN FINDING THAT THE ERRONEOUS ORDER PASSED BY THE ITO WAS AGAINST THE INTEREST OF THE REVENUE, THE HIGH COURT CONCLUDED THAT THE ORDER PASSED BY THE CIT IN SETTING ASIDE THE ORIGINAL ASSESSMENT WAS WRONG. THIS CASE IS EASILY DISTINGUISH ABLE ON FACTS BECAUSE, SO FAR AS THE CASE UNDER CONSIDERATION IS CONCERNED, IT IS EVIDENT THAT THE FAILURE OF THE ITO TO MAKE PROPER INQUIRY WITH REGARD TO BOTH THE DEDUCTIONS DURING THE COURSE OF HIS ORIGINAL ASSESSMENT WAS CLEARLY PREJUDICIAL TO THE REVE NUE, BECAUSE THE DEDUCTIONS IN QUESTION WERE QUITE SUBSTANTIAL IN NATURE. IN OUR OPINION, THEREFORE, THE DECISION RELIED UPON BY SHRI PATEL IS OF NO HELP TO THE RESPONDENT - ASSESSEE. 19. IN VIEW OF WHAT IS STATED ABOVE, WE ARE OF THE OPINION THAT THE TRIBUNAL WAS NOT JUSTIFIED IN LAW IN SETTING ASIDE THE ORDER OF THE ADDL. CIT UNDER S. 263 ON THE GROUND THAT THE ADDL. CIT HAD NOT COME TO A FIRM CONCLUSION THAT THE ORDER PASSED BY THE ITO WAS ERRONEOUS. IN OTHER WORDS, OUR ANSWER TO THE QUESTION REFERRED TO US IS IN THE NEGATIVE, I.E., IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. THE RESPONDENT - ASSESSEE SHALL BEAR THE COSTS OF THE REVENUE OF THIS REFERENCE. 18 ITA NO. 2055/DEL/2013 AY: 2008 - 09 5. IN THE LIGHT OF FOREGOI NG DISCUSSION AND RESPECTFULLY FOLLOWING THE FINDING S OF THE HON BLE ALLAHABAD HI GH COURT IN THE CASE OF MEERUT ROLLING M ILLS LTD . (SUPRA) AND HON BLE GUJARAT HIGH COURT IN THE CASE OF MUKUR CORPORATION (SUPRA), WE ARE SATISFIED THAT THE LEARNED COMMISSION ER OF INCOME T AX WAS JUSTIFIED IN CANCELLING THE ASSESSMENT OR DER BY HOLDING IT A S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE R EVENUE. THE I MPUGNED ORDER IS ACCORDINGLY UPHELD. 6. THE GROUND NO. 4 OF THE APPEAL WAS NOT PRESSED AND , THEREFORE , DISMI SSED AS INFRUCTUOUS. 7. THE GROUND NO. 5 OF THE APPEAL IS GENERAL IN NATURE , THEREFORE , NOT REQUIRED TO BE ADJUDICATED UPON BY US. 8. IN THE RESULT , THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 18 TH NOV. , 2016 . SD/ - SD/ - ( H.S. SIDHU ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 18 TH NOVEMBER , 2016 . LAPTOP / - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI