Ms. Beena Jain, Meerut V. CIT, Meerut

ITA 2080/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97536 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 10-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Keywords: Rejection of books of accounts; Depreciation; Opportunity of being heard; Principle of natural justice; Assessment record
• Section: 143(3); 80HHC; 133(6); 6; 263; 68

Judgement Text

1 ITA NO. 20 80/DEL/2013 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH:A NEW DELHI BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER & SMT. BEENA PILLAI, JUDICIAL MEMBER I.T.A .NO. 2080/DE L/2013 (ASSESSMENT YEAR-2008- 09) BEENA JAIN, 24-26, KALINDI COLONY, TRANSPORT NAGAR, MEERUT. ACXPJ6992K VS CIT, MEERUT. APPELLANT BY SH. DEEPAK KAPOOR, ADV. RESPONDENT BY SH. RAVI JAIN, CIT DR ORDER PER BEENA PILLAI, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX, MEERUT U/S 263 OF THE I NCOME TAX ACT, 1961 DATED 25.03.2013 FOR A.Y. 2008-09 ON THE FOLLOWING REVISED GROUNDS OF APPEAL, FILED ON 28/05/2015, WHI CH ARE AS BELOW: 1. BECAUSE ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE IMPUGNED ORDER DATED 25.03.2013 PASS ED BY THE LD. CIT, MEERUT U/S 263 OF THE INCOME TAX AC T, 1961 (THE ACT) IS WRONG AND BAD IN LAW INASMUCH AS THE ASSESSMENT ORDER DATED 10.12.2010 PASSED BY THE LD. AO U/S 143(3) OF THE ACT WAS NOT ERRONEOUS AND PREJUDI CIAL TO THE INTEREST OF THE REVENUE. DATE OF HEARING 23.09.2015 DATE OF PRONOUNCEMENT 30.09.2015 2 ITA NO. 20 80/DEL/2013 2. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE IMPUGNED ORDER DATED 25.03.2013 PASSED BY THE LD. CIT, MEERUT U/S 263 OF THE ACT IS WRONG AND BAD IN LAW AS MUCH AS THE LD. CIT DID NOT GIVE REASONABLE OPPORTUNITY TO THE ASSESSEE TO REPRESENT THE CASE AND COMPLETED THE PROCEEDINGS BY PASSING IMPUG NED ORDER. 3. BECAUSE IT IS A SETTLED LEGAL POSITION THAT IF THE GROUND ON WHICH ORDER IS PASSED BY THE CIT IS NOT SPECIFIED I N THE NOTICE U/S 263, SUCH AN ORDER CANNOT BE SUSTAINED. THE IMPUGNED ORDER IS PASSED MAINLY FOR; (I) NON MAINT ENANCE OF STOCK REGISTER (II) LOW NET PROFIT (III) REJECTI ON OF BOOKS OF ACCOUNT U/S 145(3) (IV) FAILURE TO PROVE SUNDRY CRE DITORS AND UNSECURED LOANS ETC. THESE GROUNDS WERE NOT EVEN MENTIONED IN THE SHOW CAUSE NOTICE DATED 12.2.2013. THE SHOW CAUSE NOTICE DATED 12.02.2013 ISSUED BY TH E LD. CIT DID NOT RAISE THE ISSUE OF ADDITIONS ON ACCOUNT OF ENTIRE SUNDRY CREDITORS AND UNSECURED LOANS NOR WAS THE ASSESSEE CONFRONTED WITH THIS ASPECT OF THE MATTER. IF THE ASSESSEE HAD BEEN CONFRONTED WITH THIS ISSUE, IT CO ULD HAVE EXPLAINED THE POSITION BEFORE THE LD. CIT THAT ALL THE SUNDRY CREDITORS AND UNSECURED LOANS ARE FULLY EXPLAINABLE . THE LD. CIT CANNOT TRAVEL BEYOND THE SHOW CAUSE NOTICE. 4. BECAUSE THE IMPUGNED ORDER CONTAINS CONTRADICTORY AND INCORRECT FACTS WHICH CLEARLY SHOWS THAT THE IMPUGN ED ORDER IS PASSED MECHANICALLY WITHOUT ANY APPLICATION OF M IND AND THE SAME DESERVES TO BE QUASHED. 5. BECAUSE ON FACTS AND IN LAW AND ON GROUNDS TAKEN AND BASIS ADOPTED, THE ADDITION OF RS. 48,23,008/- U/S 68 ON ACCOUNT OF ENTIRE UNSECURED LOAN AS PER THE PERSONA L SET OF THE ASSESSEE (INCLUDING OPENING BALANCE OF RS. 37,0 2,605/-) IS UNJUSTIFIED AND ILLEGAL. THE ASSESSEE FILED THE DOCUMENTS/PROOF (CONFIRMATIO N CERTIFICATES, ITR, BANK A/C ETC.) FOR THE LOAN OF R S. 10,00,000/- RAISED DURING THE YEAR IN THE PERSONAL SET. THESE DOCUMENTS WERE FILED DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) AND ALSO DURING REVISION PROCEEDINGS U/S 263. THE ASSESSEE HAD DULY EXPLAIN ED THE IDENTITY/GENUINENESS/CREDITWORTHINESS OF ALL THE UN SECURED 3 ITA NO. 20 80/DEL/2013 LOANS RECEIVED DURING THE YEAR AND HAD FULLY DISCHA RGED THE ONUS AS REQUIRED U/S 68 OF THE ACT. THE LD. CIT HAS MADE ADDITION U/S 68 FOR TOTAL LOAN S OUTSTANDING AS ON 31.03.2008 WHICH INCLUDES LOAN OF RS. 37,02,605/- TAKEN BY THE ASSESSEE IN EARLIER YEARS. THE ADDITION OF RS. 48,23,008/- IS THEREFORE, ILLEG AL, UNJUSTIFIED AND DESERVES TO BE DELETED IN FULL. 6. BECAUSE ON THE FACTS AND IN LAW AND ON GROUNDS TAKEN AND BASIS ADOPTED, THE ADDITION OF RS. 35,93,265/- U/S 68 ON ACCOUNT OF ENTIRE UNSECURED LOAN AS PER THE BUSI NESS SET OF THE ASSESSEE (INCLUDING OPENING BALANCE OF RS. 21,91,271/-) IS UNJUSTIFIED AND ILLEGAL. THE ASSESSEE FILED THE DOCUMENTS/PROOF (CONFIRMATIO N CERTIFICATES, ITR, BANK A/C ETC.) FOR THE LOAN OF R S. 18,74,000/- RAISED DURING THE YEAR IN THE BUSINESS SET. THESE DOCUMENTS WERE FILED DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) AND ALSO DURING REVISION PROCEEDINGS U/S 263. THE ASSESSEE HAD DULY EXPLAIN ED THE IDENTITY/GENUINENESS/CREDITWORTHINESS OF ALL THE UN SECURED LOANS RECEIVED DURING THE YEAR AND HAD FULLY DISCHA RGED THE ONUS AS REQUIRED U/S 68 OF THE ACT. THE LD. CIT HAS MADE ADDITION U/S 68 FOR TOTAL LOAN S OUTSTANDING AS ON 31.03.2008 WHICH INCLUDES LOAN OF RS. 21,91,271/- TAKEN BY THE ASSESSEE IN EARLIER YEARS. THE ADDITION OF RS. 35,93,265/- IS THEREFORE ILLEGA L, UNJUSTIFIED AND DESERVES TO BE DELETED IN FULL. 7. BECAUSE ON THE FACTS AND IN LAW AND ON GROUNDS TAKEN AND BASIS ADOPTED, THE ADDITION OF RS. 5,90,39,946/ - ON ACCOUNT OF SUNDRY CREDITORS IS TOTALLY WRONG, UNJUS TIFIED AND ILLEGAL. DURING THE ASSESSMENT PROCEEDINGS, THE AS SESSEE DULY FILED THE CONFIRMED COPY OF ACCOUNTS OF CREDIT ORS AS REQUIRED BY THE LD. AO AND ALSO PRODUCED BOOKS OF A CCOUNTS ALONG WITH PURCHASE INVOICES AND VOUCHERS. THE LD. AO DULY ACCEPTED THE CREDITORS AFTER EXAMINING THE REC ORDS. THE LD. CIT DID NOT CONDUCT ANY ENQUIRY, DID NOT EV EN EXAMINE THE PURCHASE BILLS, ACCOUNTS OF THE CREDITO RS (WITH OPENING BALANCES). THEREFORE, ON FACTS AND IN LAW AND ON GROUND TAKEN AND BASIS ADOPTED, THE ADDITION OF RS. 5,90,39,946/- IS TOTALLY WRONG, UNJUSTIFIED AND ILL EGAL. 4 ITA NO. 20 80/DEL/2013 THE SAME DESERVES TO BE DELETED IN TOO. 8. THAT THE ASSESSEE CRAVES LEAVE TO ADD, AMEND, ALTER OR WITHDRAW ANY OF THE GROUND OF APPEAL ON OR BEFORE T HE DATE OF HEARING. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS THE PROPRIETOR OF M/S ARIHANT PRAKASHAN. THE BUSINESS OF THE ASSESSE E IS PUBLICATION OF BOOKS FOR COMPETITIVE EXAMINATIONS. THE ASSESSE E HAS BEEN FILING INCOME TAX RETURN REGULARLY FOR LAST MANY YEARS. FOR THE ASSESSMENT YEAR 2008-09, THE ASSESSEE FILED ORIGINAL RETURN U/S 139(1) DECLARING TOTAL INCOME AT RS. 31,47,931/ -. THE CASE OF THE ASSESSEE WAS MARKED FOR SCRUTINY AND THE ASSESS MENT WAS COMPLETED BY THE LD. ACIT, CIRCLE (1) MEERUT(THE A. O), AT TOTAL INCOME OF RS. 32,62,590/- U/S 143(3) OF THE INCOME TAX ACT , 1961 (THE ACT) VIDE ORDER DATED 10.12.2010. 3. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE PRODUCED THE BOOKS OF ACCOUNTS AND VOUCHERS WHICH WERE EXAMINED BY THE LD. AO. FURTHER DURING THE ASSESSMENT PROCEEDINGS, THE ASSE SSEE DULY FILED THE CONFIRMATION COPY OF ACCOUNT OF SUNDRY CREDITOR S AND ALSO FILED ALL THE NECESSARY DOCUMENTS IN SUPPORT OF UNSECURED LOAN RAISED BY THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR. TH E LD. AO RAISED QUERIES IN RESPECT OF SUNDRY CREDITORS, UNSECURED L OAN AND INCREASE IN THE CAPITAL BY THE ASSESSEE. THE ASSESSMENT ORDE R WAS PASSED U/S 143(3) AND THE LD. AO OBSERVED AS UNDER: THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PRINTING AND PUBLICATION OF BOOKS FOR COMPETITIVE EXAMINATIONS. THE RESULTS DECLARED BY THE ASSESSEE HAVE BEEN EXAMINED AND VERIFIED ON TEST CHECK BASIS FROM THE BOOKS OF ACCOUNTS AND BANK STATEMENTS AND 5 ITA NO. 20 80/DEL/2013 VARIOUS OTHER DETAILS AND DOCUMENTS SUBMITTED BY TH E ASSESSEE FROM TIME TO TIME. 4. THE LD. AO MADE ADDITION, IN RESPECT OF VEHICLE RUNNING AND MAINTENANCE EXPENSES WHICH WAS CLAIMED AS BUSIN ESS EXPENSES BY THE ASSESSEE AS WELL AS ADDITION U/S.43 B WAS MADE IN RESPECT OF THE UNPAID SERVICE TAX LIABILITY . 5. SUBSEQUENTLY THE LD. CIT, MEERUT INITIATED PROCE EDINGS U/S 263 OF THE INCOME TAX ACT VIDE NOTICE DATED 12/02/2013. B Y THE SAID NOTICE, THE LD. CIT RAISED CERTAIN QUERIES. THE LD . CIT ON EXAMINATION OF ASSESSMENT RECORDS HAD OPINED THAT T HE ASSESSMENT ORDER HAS BEEN PASSED WITHOUT PROPER ENQUIRY IN VIE W OF THE FOLLOWING POINTS: A) FROM THE PERUSAL OF BALANCE SHEET AND ITS ANNEXURE, IT APPEARS THAT DURING THE YEAR THE ASSESSEE HAS INTRO DUCED NEW CAPITAL OF RS. 20,99,000/- BUT SOURCE OF CAPITA L (HAS NOT BEEN VERIFIED) BY THE AO. B) THE ASSESSEE HAS FILED PERSONAL BALANCE SHEET FOR T HE ENDING YEAR 31.03.2008 IN WHICH CAPITAL SHOWN RS. 1,03,64,190/-. THE ASSESSEE HAS ALSO FILED BALANCE SHEET FOR THE YEAR ENDING ON 31.03.2007 IN WHICH CAPITAL WAS RS. 76,56,659/-. THUS, CAPITAL HAS BEEN INCREASED TO R S. 27,07,531/-. THE SOURCE HAS NOT BEEN VERIFIED BY T HE AO. C) DURING THE YEAR, THE ASSESSEE HAS PAID CARTAGE TO M /S EASTERN CARRIER AND M/S GATI LTD. RS. 53,696/- & RS . 2,62,424/- RESPECTIVELY ON DIFFERENT DATES, BUT TDS HAS NOT BEEN DEDUCTED THEREON. THEREFORE, THE SAME AMOUNT SHOULD BE DISALLOWED U/S 40(A)(IA). D) DURING THE YEAR, THE ASSESSEE HAS PAID FREIGHT TO M /S DELHI M.P. ROAD CARRIER TO RS. 55,971/- BUT TDS HAS NOT B EEN DEDUCTED ON THE SAME AMOUNT. THEREFORE, THE SAME S HALL BE DISALLOWED U/S 40(A)(IA). 6 ITA NO. 20 80/DEL/2013 6. THE LD. CIT ULTIMATELY CONCLUDED THE GROUNDS OF ADDITION IN THE FOLLOWING MANNER: S.NO . POINT/GROUND AS PER NOTICE U/S 263 DATED 12.02.2012 TREATMENT/CONCLUSION IN ORDER U/S 263 DATED 25.03.2013 A. FROM THE PERUSAL OF BALANCE SHEET AND ITS ANNEXURE, IT APPEARS THAT DURING THE YEAR THE ASSESSEE HAS INTRODUCED NE W CAPITAL OF RS. 20,99,000/- BUT SOURCE OF CAPITAL (HAS NOT BEEN VERIFIED) BY THE AO VIDE PARA 5 OF THE IMPUGNED ORDER THE LD. CIT ADDED ENTIRE SUM OF LOAN LIABILITY OF RS. 48.23 LACS (INCLUDING OPENING BALANCES OF RS. 37.02 LAC) APPEARING IN THE PERSONAL SET WITHOUT AFFORDING ANY OPPORTUNITY TO THE ASSESSEE WHATSOEVER B. THE ASSESSEE HAS FILED PERSONAL BALANCE SHEET FOR THE YEAR ENDING 31.03.2008 IN WHICH CAPITAL SHOWN RS. 1,03,64,190/- . THE ASSESSEE HAS ALSO FILED BALANCE SHEET FOR THE YEAR ENDING ON 31 .03.2007 IN WHICH CAPITAL WAS RS. 76,56,659/- . THUS, CAPITAL HAS BEEN INCREASED TO RS. 27,07,531/- THE SOURCE HAS NOT BEEN VERIFIED BY THE AO. VIDE PARA 6 OF THE IMPUGNED ORDER THE LD. CIT DIRECTED AO TO VERIFY. AFTER VERIFICATION, THE LD. AO MADE NO ADD ITION VIDE ORDER U/S 143(3)/263 DATED 24.02.2014. C. DURING THE YEAR, THE ASSESSEE HAS PAID CARTAGE TO M/S EASTERN CARRIER AND M/S GATI LTD. RS. 53,696/- & RS. 2,62,424/- RESPECTIVELY ON DIFFERENT DATED, BUT TDS HAS NOT BEEN DEDUCTED ON THE SAME. THEREFO RE, THE SAME AMOUNT SHOULD BE DISALLOWED U/S 40(A)(IA). VIDE PARA 7 OF THE IMPUGNED ORDER THE LD. CIT DIRECTED THE AO TO VERIFY. AFTER VERIFICATION, THE LD. AO MADE NO ADDITION VIDE ORDER U/S 143(3)/263 DATED 24.02.2014. D. DURING THE YEAR, THE ASSESSEE HAS PAID FREIGHT TO M/S DELHI M.P. ROAD CARRIER TO RS. 55,971/- BUT TDS HAS NOT BEEN DEDUCTED ON THE SAME AMOUNT. THEREFORE, THE SAME SHALL BE DISALLOWED U/S 40(A)(IA). VIDE PARA 7 OF THE IMPUGNED ORDER THE LD. CIT DIRECTED THE AO TO VERIFY. AFTER VERIFI CATION, THE LD. AO MADE NO ADDITION VIDE ORDER U/S 143(3)/263 DATED 24.02.2014. E. SUNDRY CREDITORS AND UNSECURED LOANS HAVE NOT BEEN CONFIRMED BY THE AO BY ISSUE OF NOTICE U/S 133(6). AO SIMPLY ACCEPTED THE CONFIRMATION FILED BY THE ASSESSEE. VIDE PARA 8 OF THE IMPUGNED ORDER THE LD. CIT HERSELF ADDED ENTIRE UNSECURED LOAN IN BUSINESS SET RS. 35.93 LACS (INCLUDING OPENING BALANCES OF RS. 21.91 LAC) & SUNDRY 7 ITA NO. 20 80/DEL/2013 CREDITOR RS. 5.90 CRORE (INCLUDING OPENING BALANCES) WITHOUT CONDUCTING ANY ENQUIRY U/S 133(6) AND WITHOUT AFFORDING ANY OPPORTUNITY TO THE ASSESSEE WHATSOEVER. 7. THE LD.CIT PASSED THE ORDER U/S.263 BY HOLDING T HAT THE ORDER PASSED BY THE LD.AO IS ERRONEOUS AS WELL AS PREJUDI CIAL TO THE INTEREST OF THE REVENUE FOR THE PURPOSE OF SEC.263. 8. ACCORDINGLY, THE LD. AO PASSED AN ORDER ON 21/02 /2014 U/S 263 R.W.S. 143(3) OF THE ACT GIVING EFFECT TO THE O RDER OF THE LD. CIT. AS PER THE DIRECTIONS OF THE LD. CIT, THE AO VERIFI ED THE PERSONAL BALANCE SHEET FOR THE YEAR ENDING 31/03/2008 OF THE APPELLANT IN WHICH CAPITAL WAS SHOWN AMOUNTING TO RS. 1,03,64,19 0/-. HE ALSO VERIFIED THE BALANCE SHEET FOR THE YEAR ENDING 31/0 3/2007 IN WHICH A CAPITAL AMOUNTING TO RS. 76,56,659/- WAS SHOWN. THE AO ON VERIFICATION IN RESPECT OF ISSUES AT POINTS B, C, AND D IN PARA 5 ABOVE, ACCEPTED THE EXPLANATION AND THE EVIDENCES F URNISHED BY THE ASSESSEE, AND HELD THAT NO ADDITION IS WARRANTED ON THESE POINTS. THE LD. ASSESSING OFFICER AFTER GIVING EFFECT TO TH E ORDER OF THE LD. CIT PASSED U/S 263 COMPUTED THE TOTAL INCOME OF THE APP ELLANT AS UNDER: INCOME ASSESSED AS PER ASSESSMENT U/S 143(3) DATED 10.12.2010 RS. 3262590/- ADD: I) ADDITION ON ACCOUNT OF UNSECURED LOANS IN SET OF PERSONAL BALANCE SHEET RS. 48230 08/- II) ADDITION ON ACCOUNT OF UNSECURED LOANS RS. 359326 5/- III) ADDITION ON ACCOUNT OF SUNDRY CREDITORS RS. 5903994 6/- 8 ITA NO. 20 80/DEL/2013 TOTAL INCOME RS. 70718809/- OR RS. 70718810/- 9. THE LD.AO HOWEVER MADE ADDITION IN RESPECT OF TH E LOAN LIABILITY AMOUNTING TO RS.48.23 LACS, UNSECURED LOA N AMOUNTING TO RS.38.23 LACS AND SUNDRY CREDITORS AMOUNTING TO RS. 5.9CRS, AS PER THE ORDER PASSED BY THE LD. CIT U/S.263 OF THE ACT. 10. AGGRIEVED BY THE ORDER OF THE LD. CIT PASSED U/ S 263, VIDE ORDER DATED 12/02/2012 THE ASSESSEE IS IN APPEAL BEFORE U S. THE LIMITED ISSUE REQUIRED TO BE ADJUDICATED IN THIS APPEAL IS WHETHER OR NOT THE LD.CIT WAS JUSTIFIED IN EXERCISING REVISION POWERS U/S.263 OF THE ACT, ON THE FACTS AND CIRCUMSTANCES OF THIS CASE. THE AS SESSMENT YEAR INVOLVED 2008-09. 11. SUBSEQUENT TO THE FINALIZATION OF THE ASSESSMEN T U/S.143(3), THE LD.CIT SOUGHT TO REVISE THE SUBJECT ASSESSMENT. IN THE ASSESSMENT HAS BEEN SOUGHT TO BE REVISED ON THE GRO UND THAT THE ASSESSMENT ORDER HAS BEEN PASSED WITHOUT PROPER ENQ UIRY ON THE POINTS RAISED IN PARAGRAPH 6 ABOVE. 12. THE LD. AR SUBMITTED THAT IN RESPECT OF ADDITIO N OF LOAN LIABILITY AMOUNTING TO RS.48.23 LACS, UNSECURED LOA N AMOUNTING TO RS.38.23 LACS AND SUNDRY CREDITORS AMOUNTING TO RS.5.9CRS, AS PER THE ORDER PASSED BY THE LD. CIT U/S.263 OF THE ACT IS BAD IN LAW IN AS MUCH AS THE ASSESSMENT ORDER PASSED U/S.1 43(3), DATED 10.12.2010 WAS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD. AR SUBMITTED THAT THE DETAILS 9 ITA NO. 20 80/DEL/2013 REGARDING THE LOAN AND THE CONFIRMATIONS WERE FILED BEFORE THE LD.AO AND IT WAS VERIFIED BY THE LD.AO. 13. THE LD.AR POINTED OUT THAT IN THE ASSESSMENT OR DER PASSED ON 21.02.2014, PASSED IN PURSUANCE TO THE ORDER U/S .263 OF THE ACT, THE LD.AO HAS NOT MADE ANY ADDITIONS ON ANY OF THE POINTS AT B, C AND D MENTIONED IN PARA 6 ABOVE. THE LD. AR FURTHER POINTED OUT THAT THE LD. AO WHILE PASSING THE ASSES SMENT ORDER IN PURSUANCE TO ORDER U/S.263 OF THE ACT, HAS MADE ONLY THOSE ADDITIONS WHICH HAS BEEN MADE BY THE LD.CIT VIDE OR DER DATED 25.03.2013. 14. THE LD. AR STRENUOUSLY CONTENDED THAT THE LD.CI T REJECTED THE BOOKS OF ACCOUNTS AT THE ASSESSEE U/S 145(3) OF THE ACT WITHOUT AFFORDING DUE OPPORTUNITY OF HEARING FOR THE ASSESS EE. IT IS CONTENDED BY THE LD.AR THAT NO SHOW CAUSE WAS ISSUE D TO THE ASSESSEE IN THIS RESPECT. THE LD.AR SUBMITTED THAT LD.AO HAD ACCEPTED THE BOOKS OF ACCOUNTS. 15. THE LD. DR SUPPORTS THE ORDERS OF THE AUTHORITI ES BELOW. 16. WE HAVE PERUSED THE ASSESSMENT RECORDS AND THE ORDERS PASSED BY THE AUTHORITIES BELOW. ON CAREFUL CONSIDE RATION OF THE SUBMISSIONS, WE NOTE THAT THE LD.CIT POINTED OUT FI VE ISSUES IN THE NOTICE DATED 12.02.2013 ISSUED U/S.263 OF THE ACT(A S REPRODUCED IN PARA 4 HEREINABOVE). WE SHALL DEAL WITH THE ADDITIO NS MADE BY THE LD. CIT AS UNDER; A) FROM THE PERUSAL OF BALANCE SHEET AND ITS ANNEXURE, IT APPEARS THAT DURING THE YEAR THE ASSESSEE HAS INTRO DUCED 10 ITA NO. 2 080/DEL/2013 NEW CAPITAL OF RS. 20,99,000/- BUT SOURCE OF CAPITA L (HAS NOT BEEN VERIFIED) BY THE AO. B) SUNDRY CREDITORS AND UNSECURED LOANS HAVE NOT BEEN CONFIRMED BY THE AO BY ISSUE OF NOTICE U/S 133(6). AO SIMPLY ACCEPTED THE CONFIRMATION FILED BY THE ASSES SEE. 16. DURING THE YEAR UNDER CONSIDERATION, THE CAPITA L OF THE ASSESSEE IN THE BOOKS OF M/S. ARIHANT PRAKASHAN INC REASED FROM RS.64,65,601.07/- TO RS.98,00584.05/-. THE SAM E IS VERIFIABLE FROM THE AUDITED BALANCE SHEET. IT IS VE RY MUCH EVIDENT THAT THE ASSESSEE HAS INTRODUCED CAPITAL AM OUNTING TO RS.20,99,000/- DURING THE YEAR UNDER CONSIDERATION. THE LD.DR CONFIRMS FROM THE ASSESSMENT RECORDS THAT THE ASSESSEE HAD FILED ALL THE DETAILS AND CONFIRMATIONS OF THE UNSECURED LOANS RAISED BY THE ASSESSEE IN THE PERSONAL BALANC E SHEET. FURTHER IT HAS BEEN PROVED FROM THE BOOKS OF ACCOUN TS THAT THE ASSESSEE ISSUED CHEQUES TO THE ACCOUNT OF M/S. ARIH ANT PRAKASHAN. HOWEVER THE LD.CIT IN THE ORDER PASSED U /S.263 RECORDS AT PARA 5 THAT THE DETAILS OF THE ACCOUNTS WERE NOT FILED AT THE TIME OF ASSESSMENT. IT IS FURTHER NOTICED T HAT THE LD. CIT HAS EXCERPTED WRONG FIGURES FROM THE SUBMISSIONS MA DE BY THE ASSESSEE. 18. IT IS OBSERVED BY US THAT THE LD.CIT DID NOT PR OVIDED OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, WHICH I S PARAMOUNT AND MANDATORY REQUIREMENT OF THE ACT, PRIOR TO INVOKING THE PROVISION OF SEC. 145(3). THE CIT REJECTED BOOKS OF ACCOUNTS BY POINTING OUT THAT THE BUSINESS RESULTS COULD NOT BE ASCERTAINED OR VE RIFIED IN THE ABSENCE STOCK REGISTER AND OTHER RELEVANT RECORDS T O SUPPORT THE 11 ITA NO. 2 080/DEL/2013 SAME. THE DEFICIENCIES AS NOTED BY THE CIT CANNOT B E HELD INCLUSIVE UNTIL AND UNLESS THE ASSESSEE IS PROVIDED DUE OPPOR TUNITY OF BEING HEARD TO EXPLAIN HER STAND. FURTHER IT IS NOTICED T HAT THE SHOW CAUSE NOTICE ISSUED U/S.263 OF THE ACT DOES NOT CON TAIN THESE GROUND RELATING TO REJECTION OF BOOKS OF ACCOUNTS A ND LOWER NET PROFIT. THE LD.CIT HAS TRAVELLED BEYOND THE ISSUES RAISED IN THE NOTICE ISSUED U/S.263 OF THE ACT. HENCE, ON THE BAS IS OF FOREGOING DISCUSSIONS WE ARE INCLINED TO HOLD THAT THE LD.CIT REJECTED BOOKS OF ACCOUNTS OF THE ASSESSEE IN A UNJUSTIFIED MANNER IS NOT ONLY AGAINST THE SCHEME OF THE ACT BUT ALSO VIOLATIVE TO THE PRI NCIPLES OF NATURAL JUSTICE. ON CAREFUL CONSIDERATION, WE NOTE THAT THE CIT INVOKED SECTION 145(3) WITH FOLLOWING OBSERVATION AND CONCL USION , THE REGULAR BOOKS OF ACCOUNT, AS SUCH ARE NOT PRO PERLY MAINTAINED, PROVISIONS OF SECTION 145(3) OF THE I.T.ACT, 1961 A RE THUS INVOKED REJECTING THE SAME SINCE ACCOUNTS ARE NOT PROPERLY MAINTAINED AND ARE NOT VERIFIABLE. 19. IT IS ALSO PERTINENT TO NOTE THAT WHILE PASSING ORDER U/S 263 READ WITH SECTION 143(3) OF THE ACT ON 21.02.20 14, THE LD.AO HAS NOT MADE ANY ADDITION IN REGARD TO ANY OF THE POINTS RAISED BY THE CIT IN THE NOTICE U/S 263 OF THE ACT. PER CONTRA THE ASSESSING OFFICER MADE TWO ADDITIONS VIZ. FIRST ADDITION ON ACCOUNT OF UNSECURED LOANS AND SUNDRY CREDITORS. WE ARE OF THE CONSIDERED VIEW OF THAT THE IMPUGNED REVISION ORDER IS CONTRARY TO THE SCHEME OF LAW AS STIPULATED U/S 263 OF THE ACT BECAUSE THE CIT PROCEEDED TO ISSUE NOTICE BY POINTI NG OUT FIVE 12 ITA NO. 2 080/DEL/2013 ISSUES AS REPRODUCED HEREINABOVE. HOWEVER WE NOTICE IN THE IMPUGNED ORDER PASSED U/S 263 OF THE ACT, THE CIT D IRECTED THE LD.AO TO MAKE INQUIRY NOT ONLY ON FOUR POINTS BUT A LSO ENHANCED THE SCOPE OF INQUIRY FOR ESTIMATION OF NET PROFIT A T THE OF THE ASSESSEE WHICH WERE NOT MENTIONED IN THE NOTICE U/S 263 OF THE ACT. ON PERUSAL OF THE ORDER PASSED U/S.263, WE FUR THER OBSERVED A LOT OF FACTUAL MISTAKES, CONTRADICTIONS AND INFIRMI TIES IN THE ORDER WHICH ARE AS UNDER; S.NO. FACTS BY CIT CONTRADICTION/CORRECT FACTS 1. PARA 5 PAGE 5 OF ORDER WHILE ASKED, IT WAS ADMITTED THAT NO BALANCE SHEET OF PERSONAL SET WAS EVER FILED BY THE ASSESSEE EITHER ALONG WITH THE RETURN OF INCOME OR THEREAFTER I ) VIDE PARA 2(B) OF NOTICE U/S 263 THE ASSESSEE HAS FILED PERSONAL BALANCE SHEET FOR THE ENDING YEAR 31.03.08 IN WHICH CAP SHOWN RS. 1,03,64,190/- THE ASSESSEE ALSO FILED B/S FOR THE YEAR ENDING ON 31.03.07 IN WHICH CAP WAS 76,56,659/- II) PERSONAL SET BALANCE SHEETS ON PAGE 58 -59 WHICH WERE FILED BOTH DURING ASSESSMENT PROCEEDINGS AND PROCEEDINGS U/S 263 2. PARA 5 PAGE 6 OF ORDER DETAILS OF UNSECURED LOAN YEAR 2007-08. THIS TABLE IS WRONG MOST OF THE OBSERVATIONS RELATE TO DOCUMENTARY SUPPORT CORRECT TABLE ON PAGE 58 IN EACH OF THE ACCOUNT STARTING FROM AKASH JAIN WRONG FACTS HAVE BEEN OBSERVED BY THE LD. CIT . THERE IS NO VIPIN KR. JAIN THE CIT IS WRONG IN RECORDING THE FACTS RELATING TO LENDERS. 13 ITA NO. 2 080/DEL/2013 ETC. FOR OPENING BALANCE IN ACCOUNTS OF LENDERS. 3. PARA 8 PAGE 9 OF THE ORDER; IN CASE OF PARUL JAIN, THE LOAN OF RS. 4,66,275/- HAS BEEN SHOWN WHOSE TOTAL INCOME BELOW TAXABLE LIMIT SHOWING TAX PAYABLE AS NIL PAGE 81 GTI OF PARUL IS 2.63 LAC. TOTAL INCOME 1.64 LAC TAX PAID 3498 SOURCE OF LOAN OF RS. 5 LAC IS CLEARLY BANK OVERDRAFT 4. PARA 8 PAGE 9 OF ORDER: IN CASE OF PAYAL JAIN THE TOTAL SUM ADVANCED TO THE ASSESSEE IS 947660/-. FACTS ARE TOTALLY WRONG. SEE PARA 83-86 : LOAN OF RS. 4 LAC RECEIVED FROM PAYAL. RS. 3 LAC WAS TAKEN AND REPAID. 5. PARA 8 PAGE 10 OF ORDER: DESPITE REPEATED REQUESTS BEING GIVEN TO FURNISH AND PRODUCE THE BOOKS OF ACCOUNTS, NO BOOKS OF ACCOUNTS WERE PRODUCED AT PAGE 11 PARA 3 OF THE IMPUGNED ORDER: THE LD. CIT OBSERVES THE BOOKS OF THE ASSESSEE HAD BEEN THOROUGHLY VERIFIED DURING THE COURSE OF THE PROCEEDINGS U/S 263 6. PARA 8 PAGE 10 OF IMPUGNED ORDER: NEITHER DURING THE COURSE OF THE PROCEEDINGS BEFORE THE AO NOR IN THE PROCEEDINGS U/S 263 THE ASSESSEE HAS FURNISHED ANY CONFIRMATION FROM SUNDRY CREDITORS. SEE PARA 14 AND 27 OF WRITTEN SUBMISSIONS DURING ASSESSMENT PROCEEDINGS. THE LIST AS WELL AS CONFIRMED COPY OF ACCOUNT WERE FILED. SEE PARA 2.8 PAGE 55 OF PAPER BOOK FILED IN APPEAL REPLY OF NOTICE U/S 263. BOTH LIST AND CONFIRMATIONS WERE FILED IN 263 PROCEEDINGS ALSO. [PARA 2(E) OF NOTICE U/S 263] 7. PARA 8 PAGE 11 OF ORDER: PAG E 454 OF PB FILED IN APPEAL: 14 ITA NO. 2 080/DEL/2013 THE ASSESSEE HAS SHOWN TURNOVER OF RS. 20,39,25,524 ON WHICH IT HAS DECLARED NP OF RS. 33,40,720/- THE TURNOVER IS RS. 17.05 CORES LAST YEAR NET PROFIT RS. 21.72 LAC CURRENT YEAR NET PROFIT RS. 33.40 LAC 8. PARA 8 PAGE 11 OF ORDER OBSERVATIONS REGARDING STOCK REGISTER, LOWER NP ETC. REJECTION OF BOOKS U/S 145(3) NO SUCH QUERY REGARDING STOCK, LOWER NP IN NOTICE U/S 263 NO SHOW CAUSE FOR REJECTION OF BOOKS THE AO ACCEPTED BOOKS OF ACCOUNTS 9. PARA 2(E) OF NOTICE U/S 263 SUNDRY CREDITORS AND UNSECURED LOANS HAVE NOT BEEN CONFIRMED BY THE AO BY ISSUE OF NOTICE U/S 133(6). AO HAS SIMPLY ACCEPTED THE CONFIRMATION FILED BY THE ASSESSEE AT PARA 8 PAGE 10 OF ORDER THE LD. CIT OBSERVES THAT NO CONFIRMATION FROM ANY CREDITORS FILED. LD. CIT DOESNT HERESELF ISSUE NOTICE U/S 133(6) AND DIRECTLY ADDS ENTIRE SUNDRY CREDITORS INCLUDING OPENING BALANCE. 20. WE HAD CALLED FOR THE ASSESSMENT RECORDS AND TH E LD.DR CONFIRMS THAT ALL THE DETAILS IN RESPECT OF THE LOA NS ALONG WITH CONFIRMATIONS NECESSARY FOR THE PURPOSES OF VERIFIC ATION, DETAILS REGARDING THE SUNDRY CREDITORS ETC., WERE AVAILABLE BEFORE THE LD.AO AT THE TIME OF ASSESSMENT. FROM THE QUESTIONN AIRE RAISED BY THE LD.AO IT FURTHER APPEARS THAT SPECIFIC QUERI ES HAVE BEEN RAISED BY THE LD.AO IN RESPECT OF LOAN LIABILITY, U NSECURED LOANS AND SUNDRY CREDITORS AND THE ASSESSEE HAS FILED ALL THE DETAILS AS 15 ITA NO. 2 080/DEL/2013 SOUGHT FOR BY THE LD.AO. THE LD.AO HAS VERIFIED THE SAME AT THE TIME OF ASSESSMENT. 21. IN THE PRESENT CASE, THE FOLLOWING LEGAL PRECED ENTS ARE RELEVANT: (A) MALABAR INDUSTRIAL CO. LTD. VS. CIT [2000] 243 ITR 83 (SC). IT WAS, INTER ALIA , LAID DOWN IN THIS CASE THAT THE PREREQUISITE FOR THE EXERCISE OF JURISDICTION BY THE CIT UNDER S ECTION 263 IS THAT THE ORDER OF THE ITO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE. THE CIT H AS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY : (A) THE ORDER OF THE AO SOUGHT TO BE REVISED IS E RRONEOUS, AND (B) IT IS PREJUDICIAL TO THE INTERESTS OF THE RE VENUE. IF ONE OF THEM IS ABSENT IF THE ORDER OF THE ITO IS ERRONEOUS, BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS N OT ERRONEOUS, BUT IS PREJUDICIAL TO THE REVENUE RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. IT WAS FURTHER HELD THAT THE PROVISIONS OF SECTION 263 CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAK E OR ERROR COMMITTED BY THE AO. (B) CIT VS MAX INDIA LTD [2007] 295 ITR 282 (SC) : 213 CTR 266 (SC) 16 ITA NO. 2 080/DEL/2013 IT WAS HELD IN THIS CASE THAT WHERE TWO VIEWS A RE POSSIBLE AND THE ITO HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER, PREJUDICIAL TO THE INTERESTS OF THE REVENUE. (C) GUPTA INTERNATIONAL VS ITO [2010] 2 ITR (TRIB) 428 (DEL) IT WAS, INTER ALIA , HELD IN THIS CASE THAT WHEN AN ISSUE HAD BEEN RAISED AND A PROPER REPLY TO IT WAS GIVEN, THE N IT COULD NOT BE PRESUMED THAT THE ISSUE HAD BEEN DEALT WITH IN HASTE OR WITHOUT MAKING ANY ENQUIRY. (D) CIT VS. DEVELOPMENT CREDIT BANK LTD. [2010] 323 IT R 206 (BOM.) IN THIS CASE, THE CIT PASSED AN ORDER UNDER S ECTION 263(1) OF THE ACT, SETTING ASIDE THE ASSESSMENT ORDER PASS ED BY THE AO AND DIRECTING DE NOVO ENQUIRY ON TWO ISSUES. THE TRIBUNAL NOTED THAT ALL THE DETAILS HAD BEEN CONSID ERED BY THE AO WHILE PASSING THE ASSESSMENT ORDER UNDER SEC TION 143(3) OF THE ACT. THE TRIBUNAL HELD THAT THE CIT WAS NOT JUSTIFIED IN EXERCISING THE SUO MOTU POWER OF REVISION UNDER SECTION 263. ON FURTHER APPEAL, THE HIGH COURT, DISMISSING THE APPEAL, HELD THAT THERE WAS NO BASIS OR JUSTIFICATION FOR T HE CIT TO INVOKE THE PROVISIONS OF SECTION 263. THE AO AFTER MAKING AN ENQUIRY AND ELICITING A RESPONSE FROM THE ASSESS EE, CAME TO THE CONCLUSION THAT THE ASSESSEE WAS ENTITL ED TO 17 ITA NO. 2 080/DEL/2013 DEPRECIATION ON THE VALUE OF SECURITIES HELD ON THE TRADE ACCOUNT. THE CIT SHOULD NOT HAVE TREATED THIS FIND ING TO BE ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE OBSERVATION OF THE CIT THAT THE AO HAD ARRIVED AT A FINDING WITHOUT CONDUCTING AN ENQUIRY WAS ERRONEOUS , SINCE AN ENQUIRY WAS SPECIFICALLY HELD WITH REFEREN CE TO WHICH A DISCLOSURE OF DETAILS WAS CALLED FOR BY THE AO AND FURNISHED BY THE ASSESEEE. THE TRIBUNAL WAS, THERE FORE, JUSTIFIED IN HOLDING THAT RECOURSE TO THE POWERS UN DER SECTION 263 WAS NOT WARRANTED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. (E) CIT VS. DESIGN AND AUTOMATION ENGINEERS (BOMBAY) P. LTD. [2010] 323 ITR 632 (BOM.). PURSUANT TO FILING THE RETURN, THE ASSESSEE, ENGAGED IN THE BUSINESS OF EXPORTING GARMENTS AS WELL AS SALES IN THE DOMESTIC MARKET, WAS ASKED TO FILE THE DETAILS AND TO EXPLAIN THE REASONS FOR INCREASE IN THE EXPENSES. AN EXPLANATION WAS FILED BY THE ASSESSEE WHICH WAS ACC EPTED BY THE ASSESSING OFFICER AND DEDUCTION WAS ALLOWED U/S. 80HHC OF THE ACT. THEREAFTER, A NOTICE UNDER SECTIO N 263 WAS ISSUED BY THE COMMISSIONER ON THE GROUND THAT T HE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT WA S ERRONEOUS AS THE ASSESSEE WAS ENTITLED TO ONLY PROPORTIONATE DEDUCTION UNDER SECTION 80HHC(3) OF T HE ACT. THE COMMISSIONER HELD THAT WHILE ALLOWING DED UCTION 18 ITA NO. 2 080/DEL/2013 UNDER SECTION 80HHC OF THE ACT, THE ASSESSING OFFIC ER HAD NOT FOLLOWED THE PROVISION OF SECTION 80HHC(3) OF T HE ACT, THE DEDUCTION ALLOWED WAS HIGHER THAN WHAT WAS ALLO WABLE AND RECALCULATED THE DEDUCTION UNDER SECTION 80HHC OF THE ACT. ON APPEAL, THE TRIBUNAL SET ASIDE THE ORDER PASSED BY THE COMMISSIONER HOLDING THAT THE VIEW TAKEN BY THE ASSESSING OFFICER WAS A POSSIBLE VIEW AND THEREFORE , IT COULD NOT BE CONCLUDED THAT THE ORDER OF THE ASSESS ING OFFICER WAS ERRONEOUS AND WAS PREJUDICIAL TO THE IN TEREST OF THE REVENUE AND THAT THE CONDITION PRECEDENT FOR IN VOKING JURISDICTION UNDER SECTION 263 OF THE ACT DID NOT E XIST. ON FURTHER APPEAL TO THE HIGH COURT, DISMISS ING THE APPEAL, HELD THAT IT COULD NOT BE SAID THAT THE ASS ESSING OFFICER HAD NOT APPLIED HIS MIND WHILE GRANTING DED UCTION UNDER SECTION 80HHC OF THE ACT AS REGARDS THE NET P ROFIT EARNED BY THE ASSESSEE PERTAINING TO ITS EXPORT BUS INESS. THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE VIEW TAK EN BY THE ASSESSING OFFICER WAS A POSSIBLE VIEW AND THAT THE CONDITION PRECEDENT FOR INVOKING JURISDICTION UNDER SECTION 263 BY THE COMMISSIONER DID NOT EXIST. THE TRIBUNA L WAS JUSTIFIED IN UPSETTING THE ORDER PASSED BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT. 19 ITA NO. 2 080/DEL/2013 (F) CIT VS. SMT.MINALBEN S. PARIKH [1995] 215 ITR 81 (G UJ.) IT WAS HELD IN THIS CASE THAT TWO CONDITI ONS ARE REQUIRED TO BE SATISFIED BEFORE THE CIT CAN EXERCISE POWERS UND ER SECTION 263 OF THE ACT, VIZ : (A) THE ORDER OF THE AO MUST BE FOUND TO BE ERRONEO US, AND (B) THE ORDER OF THE AO MUST ALSO BE FOUND TO BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. UNLESS BOTH THE CONDITIONS ARE SATISFI ED, THE CIT DOES NOT GET JURISDICTION TO PASS AN ORDER UNDER SECTION 263 , REVISING THE ASSESSMENT ORDER. IT IS NOT NECESSARY THAT EVERY ORDER WHICH IS FOUND TO BE ERRONEOUS IS ALSO PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IT WAS ALSO HELD THAT THE CIT HAD NOT CONSIDERED WHETHER THE ORDER OF THE AO WAS PREJUDICIAL TO THE INTEREST S OF THE REVENUE. THE TRIBUNAL WAS RIGHT IN COMING TO THE CONCLUSION THAT IF THE ORDER OF THE CIT WAS ALLOWED TO STAND, IT WOULD RESULT IN DOUBLE TAXATION WHICH WAS CONTRARY TO THE SCHEME OF THE ACT AND WAS NOT THE P URPOSE OF EXERCISE OF POWERS UNDER SECTION 263 OF THE ACT. 20 ITA NO. 2 080/DEL/2013 THEREFORE, THE TRIBUNAL WAS RIGHT IN LAW IN SETTING ASIDE THE ORDER OF THE CIT, UNDER SECTION 263 OF THE ACT. (G) CIT VS. ARVIND JEWELLERS [2003] 259 ITR 502 (GUJ) : [2002] 124 TAXMAN 615 (GUJ.) IT WAS HELD IN THIS CASE THAT THE PROVISI ONS OF SECTION 263 CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE AO. IN THE INSTANT CASE, IT WAS THE FINDING O F FACT GIVEN BY THE TRIBUNAL THAT THE ASSESSEE HAD PRODUCED RELEVANT MA TERIAL AND OFFERED EXPLANATION IN PURSUANCE OF THE NOTICES UNDER SECTION 142(1), AS WELL AS SECTION 143(2) AND AFTER CONSIDERING THOSE MATERIALS AND EXPLANATION, THE IT O HAD COME TO A DEFINITE CONCLUSION. THE CIT DID NOT AGR EE WITH THE CONCLUSION REACHED BY THE ITO. SECTION 263 DID NOT EMPOWER HIM TO TAKE ACTION ON THESE FACTS TO ARRIVE AT THE CONCLUSION THAT THE ORDER PASSED BY THE ITO WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. SINCE THE MATERIAL WAS THERE ON RECORD AND SAID MAT ERIAL WAS CONSIDERED BY THE ITO AND A PARTICULAR VIEW WAS TAKEN, THE MERE FACT THAT DIFFERENT VIEW COULD BE T AKEN, SHOULD NOT BE THE BASIS FOR AN ACTION UNDER SECTION 263 AND IT COULD NOT BE HELD TO BE JUSTIFIED. IN THIS CASE, THE HON. HIGH COURT RELIED UPON THE JUDGMENT OF THE SUPREME COURT, IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT [2000] 243 ITR 83 (SC). 21 ITA NO. 2 080/DEL/2013 (H) RAMAKANT SINGH VS CIT [2011] 8 ITR (TRIB) 403 (PATN A) IT WAS HELD IN THIS CASE THAT THE QUESTIONNAIRE ISS UED BY THE AO COVERED ALL THE POINTS RAISED BY THE CIT IN HIS SHOW- CAUSE NOTICE AND IN THE ORDER PASSED UNDER SECTION 263, AND ON ALL THESE POINTS REPLY ALONG WITH NECESSARY DETAILS AND EVIDENCE WAS FURNISHED BY THE ASSESSEE BEFORE T HE AO, DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND HENCE IT HAD TO BE ACCEPTED THAT THE AO HAD APPLIED HIS M IND ON ALL THESE ISSUES. IT WAS FURTHER HELD THAT EVEN IF SUCH ENQUIRY WAS INADEQUATE IN THE OPINION OF THE CIT, THIS DID NOT GIVE POWER TO THE CIT TO PASS ORDER UNDER SECTION 263, MERELY BECAUSE HE HAD A DIFFERENT OPINION ON THE MATTER. IT WAS, ACCORDINGLY, HELD THAT ORDER OF THE CIT UND ER SECTION 263 WAS NOT SUSTAINABLE. (I) JAMNADAS T. MEHTA VS. ITO [2002] 257 ITR (AT) 90 (P UNE) (TM). IT WAS HELD IN THIS CASE THAT THE AMBIT OF INTERFER ENCE UNDER SECTION 263 IS NOT TO SET ASIDE MERELY UNFAVORABLE ORDERS AND BRING TO TAX SOME MORE MONEY TO THE TREASURY. THE SECTION IS NOT ENACTED TO GET A SHEER ESCAPEMENT OF REVENUE WH ICH IS TAKEN CARE OF IN OTHER PROVISIONS OF THE ACT. PREJ UDICE THAT IS CONTEMPLATED UNDER SECTION 263 IS THE PREJUDICE TO THE INCOME- 22 ITA NO. 2 080/DEL/2013 TAX ADMINISTRATION AS A WHOLE. SECTION 263 IS TO B E INVOKED NOT AS A JURISDICTIONAL CORRECTIVE OR AS A REVIEW OF A SUBORDINATES ORDER IN EXERCISE OF THE SUPERVISORY POWER, BUT IT IS TO BE INVOKED AND EMPLOYED ONLY FOR SETTING RIGHT DISTORT IONS AND PREJUDICES TO THE REVENUE, WHICH IS A UNIQUE CONCEP TION, WHICH IS TO BE UNDERSTOOD IN THE CONTEXT OF AND IN THE IN TERESTS OF THE REVENUE ADMINISTRATION. IT WAS ALSO HELD THAT WHERE TWO VIEWS ARE POSSIBLE AND THE AO HAS TAKEN ONE VIEW, WITH WHICH THE CIT DOES NOT AGR EE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER, PREJUDICIA L TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE AO IS UNSUSTAINABLE IN LAW. 22. IT IS EVIDENT FROM THE ORDER OF THE ASSESSING O FFICER THAT HE HAS CONSIDERED ALL DETAILED PARTICULARS FILED BEFORE HI M. THE SAME IS VERIFIABLE FROM THE QUESTIONNAIRE ISSUED BY THE LD. AO AT THE TIME OF ASSESSMENT. THE LD.AO HAS DEALT WITH AND VERIFIED A LL THE DETAILS IN RESPECT OF THE ISSUES RAISED IN THE NOTICE ISSUED B Y THE LD.CIT U/S.263 OF THE ACT. WE THEREFORE REJECT THE SUBMISS ION OF THE REVENUE THAT THE ORDER OF THE LD.AO IS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REVENUE OR HAVE BEEN PASSED WIT HOUT APPLICATION OF MIND ONLY BECAUSE IN THE ASSESSMENT ORDER THE LD .AO HAS NOT MADE ELABORATE DISCUSSION IN THAT REGARD. IT IS EVI DENT THAT THE LD.CIT HAS SET ASIDE THE ORDER OF THE LD.AO ONLY ON THE GROUND THAT THE VIEW TAKEN BY THE LD.AO WAS NOT AGREEABLE TO HI M. IN OUR CONSIDERED OPINION, IT CANNOT BE SAID THAT THE LD.A O HAS NOT APPLIED 23 ITA NO. 2 080/DEL/2013 HIS MIND AT THE TIME OF ASSESSMENT. THE VIEW TAKEN BY THE LD.AO WAS A POSSIBLE VIEW AND THAT THE CONDITION PRECEDEN T FOR INVOKING JURISDICTION UNDER SECTION 263 BY THE COMMISSIONER OF INCOME-TAX DID NOT EXIST IN THE FACTS OF THE PRESENT CASE. 22.1 HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GABRIEL INDIA LTD.,(1993) 203 ITR 108 HAS HELD AS UNDER; THE POWER OF SUO MOTU REVISION UNDER SUB-SECTION (1) OF SECTION 263 OF THE INCOME-TAX ACT, 1961, IS IN THE NATURE OF SUPERVISORY JURISDICTION AND CAN BE EXERCISED ONLY IF THE CIRCUMSTANCES SPECIFIED THEREIN EXIST. TWO CIRCUMST ANCES MUST EXIST TO ENABLE THE COMMISSIONER TO EXERCISE T HE POWER OF REVISION UNDER THIS SUB-SECTION, VIZ., (I) THE ORDER SHOULD BE ERRONEOUS; AND (II) BY VIRTUE OF THE ORDE R BEING ERRONEOUS PREJUDICE MUST HAVE BEEN CAUSED TO THE INTERESTS OF THE REVENUE. AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN INCOME-TAX OFFICER ACTING IN ACCORDANCE WITH LAW MA KES CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCOR DING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FO R THAT OF THE INCOME-TAX OFFICER, WHO PASSED THE ORDER, UN LESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISU ALISED WHERE THE INCOME-TAX OFFICER WHILE MAKING AN ASSESS MENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETE RMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY M AKING SOME ESTIMATES HIMSELF. THE COMMISSIONER, ON PERUSA L OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMAT E MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOULD HAVE ESTIMATED THE INCOME AT A HIGHER FIGURE THAN THE ONE DETERMINED BY THE INCO ME-TAX OFFICER. THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO RE-EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME 24 ITA NO. 2 080/DEL/2013 HIMSELF AT A HIGHER FIGURE. THIS IS BECAUSE THE INC OME-TAX OFFICER HAS EXERCISED THE QUASI-JUDICIAL POWER VEST ED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUS ION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONE OUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATIS FIED WITH THE CONCLUSION. IT MAY BE SAID IN SUCH A CASE THAT IN THE OPINION OF THE COMMISSIONER THE ORDER IN QUESTI ON IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BUT TH AT BY ITSELF WOULD NOT BE ENOUGH TO VEST THE COMMISSIONER WITH THE POWER OF SUO MOTU REVISION BECAUSE THE FIRST REQUIREMENT, NAMELY, THAT THE ORDER IS ERRONEOUS, I S ABSENT. SIMILARLY IF AN ORDER IS ERRONEOUS BUT NOT PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THEN T HE POWER OF SUO MOTU REVISION CANNOT BE EXERCISED. ANY AND E VERY ERRONEOUS ORDER CANNOT BE THE SUBJECT-MATTER OF REV ISION BECAUSE THE SECOND REQUIREMENT MUST BE FULFILLED. T HERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSE D OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE, ON AN INCORRECT OR INCOMPLETE INTERPRETATION, A LESSER TA X THAN WHAT WAS JUST HAS BEEN IMPOSED. WHEN EXERCISE OF STATUTORY POWER IS DEPENDENT UPON THE EXISTENCE OF CERTAIN OBJECTIVE FACTS, THE AUTHORITY BEFORE EXERCISING SU CH POWER MUST HAVE MATERIALS ON RECORD TO SATISFY IT IN THAT REGARD. IF THE ACTION OF THE AUTHORITY IS CHALLENGED BEFORE THE COURT IT WOULD BE OPEN TO THE COURTS TO EXAMINE WHETHER T HE RELEVANT OBJECTIVE FACTORS WERE AVAILABLE FROM THE RECORDS CALLED FOR AND EXAMINED BY SUCH AUTHORITY. 23. IN VIEW OF THE ABOVE REASONING AND FINDINGS, WE ARE INCLINED TO FOLLOW THE DECISION OF CIT V. GABRIEL INDIA LTD. [1 993] 203 ITR 108, WE ARE OF THE CONSIDERED OPINION THAT THE PROVISION S OF SECTION 263 OF THE ACT, COULD NOT BE INVOKED IN RESPECT OF THE AFORESAID ISSUE, BECAUSE THE SAME HAD BEEN CONSIDERED BY THE AO IN T HE ASSESSMENT ORDER FOR THE AY 2008-09. 25 ITA NO. 2 080/DEL/2013 24. WE THEREFORE QUASH AND SET-ASIDE THE ORDER /S.2 63 OF THE ACT, DATED 25.03.2013 PASSED BY THE LD.CIT, MERRUT AS TH E SAME IS NOT VALID AND SUSTAINABLE. 25. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS THEREBY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30/09/ 2015 SD/- SD/- (INTURI RAMA RAO) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30.09.2015 *KAVITA, P.S. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 26 ITA NO. 2 080/DEL/2013 DATE 1. DRAFT DICTATED ON 24.09.2015 2. DRAFT PLACED BEFORE AUTHOR 28.09.2015 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 29.09.2015 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 30.09.2015 5. APPROVED DRAFT COMES TO THE SR.PS/PS 30.09.2015 6. KEPT FOR PRONOUNCEMENT ON 30.09.2015 7. FILE SENT TO THE BENCH CLERK 30.09.2015 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.