P.Karunakar, V. THE DCIT, CIRCLE - 1, Kakinada

ITA 264/VIZ/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0198 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 20-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G GURUSWAMY
• Keywords: Unexplained cash credit; Cost of acquisition; Assessment record; Right to appeal; Reassessment proceedings; Capital expenditure
• Section: 40A(3); 143(3); 142(1); 37(1); 263

Judgement Text

ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 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.264/VIZAG/2014 ( / ASSESSMENT YEAR : 2009-10 ) P. KARUNAKAR YELWSWARAM, E.G. DIST. VS. DCIT, CIRCLE - 1 KAKINADA [ PAN: AEFPP4224G] (, , , , / APPELLANT) (-., -., -., -., / RESPONDENT ) , / / APPELLANT BY : SHRI G.V.N. HARI, AR -., / / RESPONDENT BY : SHRI G. GURUSWAMY, DR / 3 / DATE OF HEARING : 04.11.2015 / 3 / DATE OF PRONOUNCEMENT : 20.11.2015 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF COMMISSIONER OF INCOME TAX, RAJAHMUNDRY, DATED 26- 03-2014 PASSED U/S 263 OF THE INCOME TAX ACT, 1961 FOR THE A.Y. 20 09-10. ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 2 2. THE BRIEF FACTS OF THE CASE , IS THAT THE ASSESS EE IS AN INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE A.Y. 2009-10 ON 28-09-2009, DECLARING TOTAL INCOME OF RS. 3,15,69,330/-. THE RETURN WAS P ROCESSED U/S 143(1) AND THEN, SELECTED FOR SCRUTINY ASSESSMENT THROUGH CASS. DURING REASSESSMENT PROCEEDINGS, THE A.O. ISSUED NOTICES U /S 143(2) AND 142(1) ALONG WITH DETAILED QUESTIONNAIRE. IN RESPON SE TO NOTICE, THE ASSESSEE AUTHORISED REPRESENTATIVE SRI.M.V.V. SATYA NARAYANA MURTHY, CHARTERED ACCOUNTANT APPEARED FROM TIME TO TIME AND SUBMITTED BOOKS OF ACCOUNTS, BILLS & VOUCHERS AND OTHER DETAILS AS PER THE QUESTIONNAIRE. THE ASSESSING OFFICER, AFTER VERIFICATION OF BOOKS OF ACCOUNTS AND OTHER DETAILS COMPLETED THE ASSESSMENT AND MADE ADDITIONS BEING DISALLOWANCE OF CASH PAYMENTS U/S 40A(3) OF RS. 5,0 2,164/-, ADDITION TO UNEXPLAINED CASH CREDITS OF RS. 45,00,000/-, DISALL OWANCES U/S 40A(IA) OF RS. 7,15,000/-, ADDITION TOWARDS EXCESS CLAIM OF IN TEREST EXPENDITURE UNDER THE HEAD INCOME FROM HOUSE PROPERTY OF RS.2,68,649/- , ADDITIONS TO CAPITAL EXPENDITURE DEBITED TO PROFIT & LOSS ACCOUNT OF RS. 1,67,663/- AND ADDITION TOWARDS EXPENDITURE CLAIMED UNDER CRUSHER MAINTENANCE FOR RS. 4,53,903/-. THUS, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT AND DETERMINED TOTAL INCOME OF RS. 3 ,82,76,712/-, AS AGAINST THE INCOME RETURNED OF RS. 3,16,69,333/-. ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 3 3. THE COMMISSIONER OF INCOME TAX, RAJAHMUNDRY, ISS UED SHOW- CAUSE NOTICE U/S 263 DATED 22-11-2012 AND PROPOSED TO REVISE THE ASSESSMENT ORDER. THE CIT, PROPOSED TO REVISE THE A SSESSMENT ORDER ON THE REASON THAT ON EXAMINATION OF ASSESSMENT RECORD S, CERTAIN ERRONEOUS COMMISSIONS AND OMISSIONS WERE NOTICED, W HICH RENDERED THE SAID ASSESSMENT ORDER ERRONEOUS INSOFAR AS IT IS PR EJUDICIAL TO THE INTEREST OF THE REVENUE IN TERMS OF SECTION 263 OF THE INCOME TAX ACT, 1961. THE CIT, IN THE SHOW CAUSE NOTICE, OBSERVED T HAT THE ASSESSEE HAS CLAIMED HUGE INTEREST EXPENDITURE AGAINST INCOM E FROM HOUSE PROPERTY WHICH INCLUDES PRE CLOSURE CHARGES BUT, TH E ASSESSING OFFICER DID NOT EXAMINED THE GENUINENESS OF THE INTEREST CL AIM AGAINST THE RENTAL INCOME. THE CIT FURTHER OBSERVED THAT AS SEE N FROM THE PROFIT & LOSS ACCOUNT, THE ASSESSEE CLAIMED HUGE EXPENDITURE UNDER VARIOUS HEADS BUT, THE A.O. DID NOT EXAMINED THE ABOVE EXPE NDITURES. THE CIT, FURTHER OBSERVED THAT THE ASSESSEE HAS INCURRED HUG E EXPENDITURE OF RS. 6.29 CRORES UNDER THE HEAD QUARRY EXCAVATION, BUT T HE ASSESSMENT RECORDS REVELS THAT THE ASSESSEE HAS FURNISHED DETA ILS FOR RS. 5.41 CRORES ONLY, THUS, THERE IS DIFFERENCE OF RS. 87 LA CS, IT WAS NOT KNOWN WHETHER THE A.O. HAS EXAMINED THE CORRECTNESS OF TH E CLAIM. THE CIT FURTHER OBSERVED THAT ON VERIFICATION OF LEDGER EXT RACTS RELATING TO VARIOUS EXPENDITURES CLAIMED IN THE PROFIT & LOSS A CCOUNT, THE ASSESSEE ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 4 HAS MADE PAYMENTS IN EXCESS OF RS. 20,000/- AGGREGA TING TO RS. 5,48,764/- AS AGAINST THIS THE A.O. HAS MADE DISALL OWANCES OF RS. 5,02,164/-, THUS, THERE IS DIFFERENCE OF RS. 46,600 /-, IT WAS NOT KNOWN WHETHER A.O. HAS EXAMINED THIS ISSUE OR NOT. THE CI T, OBSERVED THAT ON VERIFICATION OF STATEMENT OF TOTAL INCOME, THE ASSE SSEE HAS DECLARED SHORT TERM CAPITAL GAIN, BUT, THE DETAILS OF CLAIM OF COST OF ACQUISITION AND OTHER RECORDS WERE NOT AVAILABLE IN THE FILE, T HEREFORE, OPINED THAT THE A.O. DID NOT CALL FOR THE EVIDENCE FOR COST OF ACQUISITION OF PROPERTY OF RS. 78,81,040/-. SIMILARLY, THE CIT HAS OBSERVED VARIOUS OTHER ISSUES SUCH AS SUNDRY CREDITORS, CLOSING STOCK AND LOANS A ND ADVANCES IN THE BALANCE SHEET AND DOUBTED GENUINENESS OF SUNDRY CRE DITORS, STOCK IN TRADE AND LOANS AND ADVANCES. WITH THESE OBSERVATION S, THE CIT WAS OF THE VIEW THAT THE A.O. COMPLETED THE ASSESSMENT WIT HOUT EXAMINING THE ABOVE ISSUES, THUS, THE ASSESSMENT ORDER PASSED U/S 143(3) IS ERRONEOUS INSOFAR IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE IN TERMS OF SECTION 263 OF THE ACT. 4. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE T HROUGH HIS AUTHORISED REPRESENTATIVE FILED A LETTER DATED 28-0 1-2014 AND SUBMITTED ALL THE DETAILS ADDRESSED BY THE CIT IN HIS SHOW CA USE NOTICE. THE ASSESSEE SUBMITTED THAT THE A.O. AFTER VERIFICATION OF BOOKS OF ACCOUNT, BILLS AND VOUCHERS AND OTHER DETAILS, PASSED THE AS SESSMENT ORDER, ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 5 THEREFORE, HIS ORDER IS NOT ERRONEOUS AND ALSO NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE ASSESSEE FURTHER SUBMI TTED THAT THE A.O. HAS ISSUED DETAILED QUESTIONNAIRE DATED 22-08-2011, WHEREIN HE HAD CALLED FOR EACH AND EVERY ITEM OF EXPENDITURE DEBIT ED TO PROFIT & LOSS ACCOUNT AND ALSO CALLED DETAILS ABOUT CLOSING STOCK , UNSECURED LOANS, SUNDRY DEBTORS AND CREDITORS, DETAILS OF CAPITAL GA INS ETC. THE ASSESSEE HAS SUBMITTED ALL THE DETAILS SOUGHT BY THE A.O. VI DE HIS LETTER DATED 13- 09-2011, WHICH IS AVAILABLE IN PAPER BOOK PAGE NO. 47 TO 51. THE CIT HOWEVER, AFTER CONSIDERING THE SUBMISSION OF THE AS SESSEE HELD THAT THE A.O. DID NOT PROPERLY VERIFIED THE ISSUES AT THE TI ME OF COMPLETING THE ASSESSMENT, THEREFORE, THE ASSESSMENT ORDER DATED 3 0-11-2011 IS ERRONEOUS, INSOFAR IT IS PREJUDICIAL TO THE INTERES T OF REVENUE, IN TERMS OF SECTION 263 OF THE ACT. HENCE, SET ASIDE THE ASSESS MENT ORDER DATED 30- 11-2011 AND DIRECTED THE A.O. TO PASS CONSEQUENTIAL ORDER WITHIN THE TIME ALLOWED, AFTER GIVING OPPORTUNITY OF BEING HEA RD TO THE ASSESSEE. AGGRIEVED BY THE CIT ORDER, THE ASSESSEE IS IN APPE AL BEFORE US AND RAISED THE FOLLOWING GROUNDS. 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX IS CONTRARY TO THE FACTS AND ALSO THE LAW APPLICABLE TO THE FACTS. 2. THE LEARNED COMMISSIONER OF INCOME TAX. IS NOT JUSTI FIED IN INVOKING THE PROVISIONS OF S.263 OF THE ACT IN AS MUCH AS THE OR DER DT. 30-11-2011 U/S 143(3) OF THE ASSESSING OFFICER IS NEITHER ERRONEOU S NOR PREJUDICIAL TO THE INTERESTS OF REVENUE. ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 6 3. THE LEARNED COMMISSIONER OF INCOME TAX IS NOT JUSTI FIED IN DIRECTING THE ASSESSING OFFICER TO REEXAMINE THE FOLLOWING: A) PRE-CLOSURE CHARGES CLAIMED U/S 24(B) OF THE ACT. B) RENTAL INCOME AND DEDUCTION CLAIMED THERE FROM. C) ADMISSIBILITY OF INTEREST PAID TO SUNDARAM FINANCE. D) VERIFICATION OF CLOSING STOCK VALUED AT RS.82,35,00 0. E) CORRECTNESS OF SHORT-TERM CAPITAL GAINS ADMITTED AT RS.1,61,18,952/- F) DISALLOWANCE U/S 40(A) (2) (B) VIS--VIS THE LORRY HIRE CHARGES PAID TO WIFE AND BROTHER- IN-LAW OF THE APPELLANT. G) DISALLOWANCE IF ANY TO BE MADE U/S 36(I) (III) IN R ESPECT OF INTEREST FREE ADVANCES ATTRIBUTABLE TO BORROWED FUNDS. H) GENUINENESS OF SUNDRY CREDITORS. I) DAILY LABOUR EXPENSES OF RS.86,83,664/-. J) EXPENDITURE CLAIMED UNDER THE FOLLOWING HEADS: (I) BANK INTEREST ` 2,46,46,264/- (II) BANK CHARGES ` 25,38,787/- (III) SALARIES AND WAGES ` 2,37,41,584/- (IV) CAR MAINTENANCE ` 21,78,829/- (V) TYRES AND RETRACTING ` 27,93,691/- (VI) QUARRY MAINTENANCE ` 15,13,559/- (VII) MESS MAINTENANCE ` 28,32,971/- 4. THE LEARNED COMMISSIONER OF INCOME TAX OUGHT TO HAVE APPRECIATED THAT THE ASSESSING OFFICER HAD ALREADY ENQUIRED INTO ALL THE ABOVE ISSUES AND MERELY BECAUSE THE LEARNED COMMISSIONER OF INCOME TAX IS OF THE VIEW THAT FURTHER ENQUIRES OUGHT TO HAVE BEEN CONDUCTED THE ASSESSMEN T ORDER CANNOT BE TERMED AS ERRONEOUS. 5. THE LEARNED COMMISSIONER OF INCOME TAX DID NOT POIN T OUT ANY SPECIFIC DEFECTS IN THE DETAILS SUBMITTED BY THE APPELLANT AND DID NOT MAKE OUT EVEN A PRIME FACIE CASE OF ANY PREJUDICE CAUSED TO THE INTERESTS OF RE VENUE. 6. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF A PPEAL HEARING. 5. THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE, S UBMITTED THAT THE ASSESSMENT ORDER IS NOT ERRONEOUS, INSOFAR IT IS NO T PREJUDICIAL TO THE ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 7 INTEREST OF THE REVENUE, AS THE A.O. MADE DETAILED ENQUIRIES DURING THE ASSESSMENT PROCEEDINGS. THE A.R. FURTHER SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. ISSUED A DETAILED QUESTIONNAIRE DATED 22-11-2011 WHEREIN, ALL THE DET AILS ABOUT THE ISSUES RAISED BY THE CIT IS CALLED FOR AND EXAMINED. THE L EARNED AUTHORISED REPRESENTATIVE FURTHER, SUBMITTED THAT THE A.O. EXA MINED THE NUKE AND CORNER OF THE BOOKS OF ACCOUNTS ALONG WITH BILLS AN D VOUCHERS, WHICH IS EVIDENT FROM THE ADDITION MADE TOWARDS CAPITAL EXPE NDITURE DEBITED TO PROFIT & LOSS ACCOUNT FOR RS. 1,67,663/-, THOUGH TH ERE IS NO SPECIFIC REFERENCE TO THIS PARTICULAR ISSUE IN THE NOTICE DA TED 22-08-2011. THE A.R. FURTHER SUBMITTED THAT VIDE LETTER DATED 19-10 -2011 THE A.O. DULY APPRAISED THE NET PROFIT, THEREFORE, THE CIT IS NOT CORRECT IN COMING TO THE CONCLUSION THAT THE A.O. DID NOT CONDUCT PROPER ENQUIRY BEFORE COMPLETING THE ASSESSMENT. THE A.R. FURTHER SUBMITT ED THAT ALL THE ISSUES RAISED BY THE CIT IN THE REVISION PROCEEDING S WERE ONCE AGAIN DULY EXAMINED BY THE A.O. DURING THE REVISION PROCE EDINGS BUT, DID NOT POINTED OUT ANY LAPSE IN THE ISSUES IN QUESTION. TH E CIT, WITHOUT POINTING OUT ANY ERRORS IN THE ASSESSMENT ORDER, DI RECTED THE A.O. TO RE- EXAMINE THE ISSUES IN ORDER TO MAKE FURTHER ENQUIRY WHICH IS NOTHING BUT REDOING THE ASSESSMENT ALREADY CONCLUDED BY THE A.O . ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 8 6. THE LEARNED AUTHORISED REPRESENTATIVE, FURTHER S UBMITTED THAT THE LEARNED CIT OUGHT TO HAVE APPRECIATED THE FACT THAT THE ASSESSING OFFICER HAD ALREADY EXAMINED INTO ALL THE ISSUES AND MERELY BECAUSE HE HAD A VIEW THAT FURTHER ENQUIRIES OUGHT TO HAVE BEEN COND UCTED, THE ASSESSMENT ORDER CANNOT BE TERMED AS ERRONEOUS. THE A.R. FURTHER SUBMITTED THAT THE ASSESSEE HAS FURNISHED DETAILED EXPLANATIONS ON EACH AND EVERY ISSUES RAISED BY THE CIT IN THE REVIEW PR OCEEDINGS, WHICH IS EXTRACTED IN THE PARAGRAPH 15 TO 18 OF THE CIT ORDE R. THE A.R. FURTHER SUBMITTED THAT OUT OF THE ISSUES RAISED BY THE CIT, THE A.O. DROPPED MOST OF THE ISSUES IN THE CONSEQUENTIAL PROCEEDINGS , FROM THIS WHICH IS CLEAR THAT THE CIT IS NOT CORRECT IN ASSESSING JURI SDICTION TO REVISE THE ASSESSMENT ORDER. THE A.R. FURTHER SUBMITTED THAT W ITH REGARD TO THOSE OF THE ISSUES THAT HAVE RESULTED IN AN ADDITION IN THE CONSEQUENTIAL ASSESSMENT PROCEEDINGS, I.E. INTEREST FREE LOANS GI VEN TO RELATED PARTY, THE A.O. IN THE ORIGINAL ASSESSMENT PROCEEDINGS CAL LED FOR THE DETAILS OF LOANS AND ADVANCES AND AFTER VERIFICATION, THE CLAI M OF THE ASSESSEE WAS ACCEPTED. AS FOR AS THE ISSUE OF PRE CLOSURE CHARGE S OF LOAN IS CONCERNED, THE A.O. HAS BEEN ALREADY EXAMINED THE I SSUE AND DISALLOWED INTEREST WHEREVER NECESSARY. THEREFORE, FOR THE VERY SAME REASON REVISION IS NOT CALLED FOR. SIMILARLY, MESS MAINTENANCE CHARGES, BANK CHARGES AND QUERY EXCAVATION CHARGES WERE TWIC E EXAMINED BY THE ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 9 A.O., THEREFORE, THE CIT IS NOT CORRECT IN DIRECTIN G THE A.O. TO MAKE FURTHER ENQUIRIES. 7. ON THE OTHER HAND, THE DEPARTMENTAL REPRESENTATI VE STRONGLY SUPPORTED THE ORDER OF THE CIT. THE D.R. FURTHER, S UBMITTED THAT THE CIT RIGHTLY ASSUMED THE JURISDICTION TO REVISE THE ASSE SSMENT ORDER, AS THERE WERE COMMISSIONS AND OMISSIONS IN THE ASSESSMENT OR DER, WHICH RESULTS INTO PREJUDICE TO THE INTEREST OF REVENUE. THE D.R. , FURTHER SUBMITTED THAT THE ASSESSMENT ORDER IS ERRONEOUS, IN SO FAR A S IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, AS THE ASSESSING OFFICER P ASSED THE ORDER WITHOUT CONDUCTING PROPER ENQUIRY IN RELATION CLAIM OF EXPENDITURES DEBITED TO PROFIT & LOSS ACCOUNT, INTEREST EXPENDIT URE CLAIMED AGAINST INCOME FROM HOUSE PROPERTY, MESS MAINTENANCE, BANK CHARGES, CASH PAYMENTS REFERRED TO IN SECTION 40A(3) AND QUERY EX CAVATION CHARGES, AS THESE ISSUES RESULTING INTO ADDITIONS IN THE CONSEQ UENTIAL ASSESSMENT PROCEEDINGS. THE D.R. FURTHER ARGUED THAT IT IS CLE AR CASE OF NON- APPLICATION OF MIND AND LACK OF ENQUIRY BY THE A.O. , AS THERE WAS NO IOTA OF EVIDENCE IN THE ASSESSMENT RECORDS FOR HAVING DO NE ANY KIND OF VERIFICATION BEFORE COMPLETION OF ASSESSMENT. THERE FORE, THE ASSESSMENT ORDER IS ERRONEOUS, IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. THEREFORE, THE CIT RIGHTLY ASSUMED THE JURISDICTION BY INVOKING PROVISIONS OF SECTION 263 AND HIS ORDER SHOULD BE U PHELD. ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 10 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 THE REVISION POWERS ON THE REASONS THAT THE A.O. HAS NOT CONDUCTED PROPER ENQUIRY BEFORE PASSING ASSESSMENT ORDER, THEREBY HIS ORDER IS ERRONEOUS, IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE CIT HAS RAISED NUMBER OF ISSUES IN THE REVISION PROCEEDINGS. ON PERUSAL OF SHOW CAUSE NOTICE ISSUED BY THE CIT, ASSESSMENT ORDER AND PAPER BOOK FILED BY THE ASSESS EE, IT WAS NOTICED THAT ALL THE ISSUES QUESTIONED BY THE CIT IN THE PR OCEEDINGS WERE ALREADY EXAMINED BY THE ASSESSING OFFICER IN THE AS SESSMENT PROCEEDINGS. THE A.R. FILED A PAPER BOOK CONTAINING DETAILS FILED BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT PRO CEEDINGS. ON PERUSAL OF THE PAPER BOOK, IT WAS NOTICED THAT THE A.O. ISS UED A QUESTIONNAIRE, WHEREIN HE HAS RAISED QUESTIONS ABOUT ALL THE ISSUE S RAISED BY THE CIT IN REVISION PROCEEDINGS. ON VERIFICATION ASSESSMENT OR DER, WE FIND THAT THE A.O. HAS MADE MANY ADDITIONS TOWARDS EXPENDITURES R IGHT FROM DISALLOWANCES OF EXPENDITURE TO INVOKING PROVISIONS OF SECTION 40A(3), S.68 AND S.40A(IA). ON FURTHER VERIFICATION OF ASSE SSMENT ORDER, IT WAS NOTICED THAT THE A.O. EXAMINED THE INTEREST EXPENDI TURE CLAIM UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND MADE DISALLOWAN CE. FROM THIS, IT IS CLEAR THAT THE A.O. HAS TOUCHED NUKE AND CORNER OF FINANCIAL ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 11 STATEMENTS AND BOOKS OF ACCOUNTS BEFORE COMPLETING THE ASSESSMENTS. THEREFORE, THE CIT IS NOT CORRECT IN OBSERVING THAT THE A.O. DID NOT CONDUCT PROPER VERIFICATION OF THESE ISSUES BEFORE COMPLETION OF ASSESSMENTS. 9. THE CIT, ASSUMED THE JURISDICTION TO REVISE THE ASSESSMENT ON THE SOLE GROUND THAT THERE IS LACK OF ENQUIRY ON THE PA RT OF A.O. IN EXAMINING THE ISSUES REFERRED IN HIS SHOW CAUSE NOTICE. THE C IT QUESTIONED THE DEDUCTION ALLOWED TOWARDS INTEREST PAID ON HOUSING LOAN ON THE REASON THAT PRE CLOSURE CHARGES PAID TO BANK IS NOT ALLOWA BLE U/S 24(B) OF THE ACT. THE ASSESSEE CONTENDED THAT INTEREST INCLUDES ALL CHARGES LEVIED BY THE BANK IN CONNECTION WITH LOAN, AS SUCH PRE CLOSU RE CHARGES IS ALSO QUALIFIES FOR DEDUCTION UNDER SECTION 24(B). THE A. O. EXAMINED THE ISSUE OF INTEREST ON HOUSING LOAN AND MADE DISALLOWANCE O F RS. 2,69,649/- WHILE COMPLETING THE ASSESSMENT, WHICH IS EVIDENT F ROM THE ASSESSMENT ORDER. THE A.O. EXAMINED THE ISSUE AND COME TO THE CONCLUSION THAT THE CLAIM OF THE ASSESSEE IS CORRECT. ONCE, THE ISSUE I S EXAMINED AND CONSIDERED BY THE A.O. THE CIT HAS NO JURISDICTION TO ENTERTAIN FRESH INQUIRY ON THE SAME ISSUE, BECAUSE HE HAS A DIFFERE NT OPINION ON THE ISSUE. IN OUR OPINION, THE ISSUE OF DEDUCTION OF PR E CLOSURE CHARGES IS HIGHLY DEBATABLE ISSUE AND ALWAYS TWO VIEWS ARE POS SIBLE. THE A.O. HAS VERIFIED THE ISSUE AND ALLOWED THE DEDUCTION TOWARD S PRE CLOSURE CHARGES ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 12 AND TAKEN ONE OF THE POSSIBLE VIEWS WHICH CANNOT BE TERMED AS ERRONEOUS. THERE MAY BE LOSS OF REVENUE BECAUSE OF THE DECISION TAKEN BY THE A.O., BUT, EVERY LOSS OF REVENUE AS A RESULT OF AN ASSESSMENT ORDER CANNOT BE TREATED AS PREJUDICIAL TO THE INTER EST OF REVENUE. THE LEARNED A.R. ARGUED THAT PRE CLOSURE CHARGE OF A L OAN IS ALWAYS PART OF INTEREST, THEREFORE ALLOWABLE UNDER SECTION 24(B) O F THE ACT. IN SUPPORT OF HIS CONTENTION, HE DREW OUR ATTENTION TO THE JUD GMENT OF HONBLE ITAT CHENNAI BENCH DECISION IN THE CASE OF OVERSEAS SANMAR FINANCIAL LTD. VS. JOINT COMMISSIONER OF INCOME TAX (2003) 86 ITD 145. WE HAVE EXAMINED THE FACTS OF THE PRESENT CASE, WITH THE JU DGMENT RELIED UPON BY THE LEARNED A.R. AND WE FIND THAT THE PRE CLOSUR E CHARGES HELD TO BE ALLOWED IN THE YEAR OF PAYMENT. THEREFORE, WE ARE O F THE OPINION THAT THE CIT, WRONGLY ASSUMED THE JURISDICTION TO REVISE THE ASSESSMENT ORDER ON THE ISSUES WHICH WAS ALREADY EXAMINED AND ALLOWED BY THE A.O. WHILE COMPLETING THE ASSESSMENT. 10. COMING TO THE OTHER ISSUES WHICH LEAD TO REVISI ON OF ASSESSMENT ORDER. THE CIT WITHOUT POINTING OUT ANY SPECIFIC LA PSES, MADE GENERAL OBSERVATION AND HELD THAT THE A.O. DID NOT CONDUCT PROPER ENQUIRY WHILE COMPLETING THE ASSESSMENT AND DIRECTED THE A.O. RE DO THE ASSESSMENT. THE A.O. WHILE GIVING EFFECT TO CIT ORDER, MADE ADH OC DISALLOWANCES TOWARDS CERTAIN EXPENDITURE WITHOUT POINTING OUT AN Y SPECIFIC MISTAKES ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 13 IN THE BOOKS OF ACCOUNTS. ON PERUSAL OF THE ASSESSM ENT ORDER, WE NOTICED THAT THE A.O. MADE ADHOC DISALLOWANCES FROM QUARRY MAINTENANCE AND MESS MAINTENANCE CHARGES. AS FOR AS BANK CHARGES IS CONCERNED, THE A.O DISALLOWED THE PROCESSING CHARGE S PAID TO BANK TOWARDS CHANGE OF OCC ACCOUNT FROM ONE BANK TO ANOT HER BANK. THE A.O. SIMPLY DISALLOWED THE SAID AMOUNT FOR THE REAS ON THAT IT IS IN THE NATURE OF CAPITAL EXPENDITURE AND ALSO ONE TIME EXP ENDITURE AND HENCE CANNOT BE ALLOWABLE. BUT, THE FACT IS THAT PROCESS ING CHARGES PAID FOR GETTING OCC LOAN FROM BANK IS VERY MUCH REVENUE EXP ENDITURE DEDUCTIBLE U/S 37(1) OF THE ACT. THE A.O. EXAMINED THE ISSUE AND ALLOWED THE DEDUCTION WHICH IS IN OUR OPINION IN AC CORDANCE WITH LAW. FURTHER, THE DEDUCTIBILITY OF PROCESSING CHARGES IS HIGHLY DEBATABLE ISSUE AND ALSO THERE IS ALWAYS A POSSIBILITY OF HAVING TW O VIEWS. THE A.O. HAS TAKEN ONE OF THE COURSES PERMISSIBLE IN LAW WHICH M AY RESULTED IN LOSS OF REVENUE WHICH CANNOT BE TERMED AS ERRONEOUS ORDER P REJUDICIAL TO THE INTEREST OF REVENUE. THEREFORE, IN OUR OPINION, THE CIT WITHOUT POINTING OUT ANY MISTAKES IN THE ASSESSMENT ORDER, DIRECTED THE A.O. TO RECONSIDER THE ISSUE TO REPLACE HIS VIEW WHICH HE C ANNOT DO SO IN THE REVIEW PROCEEDINGS. IN OUR CONSIDERED VIEW, THE CIT HAS EXCEEDED HIS AUTHORITY BY STEPPING INTO THE SHOES OF A.O. TO DO THE ASSESSMENT. ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 14 11. THE CIT HAS POWER TO REVISE ASSESSMENT ORDER. B UT, TO INVOKE THE PROVISIONS OF SECTION 263 OF THE ACT, THE TWIN COND ITIONS MUST BE SATISFIED I.E. THE ORDER OF THE ASSESSING OFFICER I S ERRONEOUS AND FURTHER IT MUST BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. UNLESS BOTH CONDITIONS ARE SATISFIED, THE CIT CANNOT ASSUME JUR ISDICTION U/S 263 OF THE ACT. IT IS NOT NECESSARY THAT EVERY ORDER WHIC H IS ERRONEOUS MAY NOT PREJUDICIAL TO THE INTEREST OF REVENUE OR VICE VERS A. UNLESS THE A.OS ORDER IS NOT ERRONEOUS, NO ACTION CAN BE TAKEN BY T HE CIT U/S 263 OF THE ACT, THIS IS BECAUSE THE TWIN CONDITIONS I.E. (1) T HE ORDER IS ERRONEOUS AND (2) THE SAME IS ALSO PREJUDICIAL TO THE INTERES T OF THE REVENUE ARE NOT CO-EXISTS. IN THE PRESENT CASE, THE A.O. HAS C ONDUCTED DETAILED ENQUIRY AND ALSO EXAMINED THE POINTS ON WHICH THE C IT WANTS FURTHER VERIFICATION. THE ASSESSING OFFICER AFTER VERIFICAT ION OF BOOKS OF ACCOUNTS AND RELEVANT DETAILS FURNISHED BY THE ASSESSEE, ALL OWED THE DEDUCTION TOWARDS SUCH EXPENDITURES WHICH ARE FINDS PLACE IN THE SHOW CAUSE NOTICE ISSUED BY THE CIT IN 263 PROCEEDINGS. THE C ONTENTION OF THE CIT WAS THAT THE A.O. HAS NOT CONDUCTED PROPER ENQUIRY AND ALSO NOT APPLIED HIS MIND BEFORE ALLOWING THE DEDUCTION. WE DO NOT AGREE WITH THE CIT FOR THE REASON THAT THERE IS A DISTINCTION BETWEEN LACK OF ENQUIRY AND INADEQUATE ENQUIRY. IF THERE IS AN INADEQUATE ENQU IRY, THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE CIT TO ASSUME JURISD ICTION U/S 263 OF THE ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 15 ACT, MERELY BECAUSE HE HAS A DIFFERENT OPINION IN T HE MATTER. THE CIT CAN DO THIS, WHEN THERE IS A LACK OF ENQUIRY BY THE ASSESSING OFFICER. IN THE PRESENT CASE, THE ASSESSMENT ORDER IS DETAILED ONE AND ALSO, THE A.O. HAS PASSED A REMARK IN THE ASSESSMENT ORDER ON ALL THE ISSUES ON WHICH THE CIT WANTS FURTHER VERIFICATION. ACCORDING TO CIT, THE ASSESSING OFFICER HAS CONDUCTED ENQUIRY BUT, IT IS IN ADEQUAT E, THEREFORE HE WANTED FURTHER ENQUIRY AND THIS FACT WAS NOT DISPUTED BY T HE REVENUE. THE COMMISSIONER CANNOT INITIATE REVISION PROCEEDINGS W ITH A VIEW TO CONDUCT FISHING AND REVOLVING ENQUIRY IN THE MATTER S WHICH ARE ALREADY EXAMINED BY THE A.O. THE DEPARTMENT CANNOT DO FRESH ASSESSMENT IN THE GUISE OF REVISION ON THE MATTERS WHICH ARE EXAM INED AND CONCLUDED BY THE A.O. THUS, IT CANNOT BE SAID THAT IT IS A CA SE OF LACK OF ENQUIRY. 12. THE LEARNED A.R. ARGUED THAT THE A.O. EXAMINED ALL THE ISSUES WHICH LEAD TO REVISION OF ASSESSMENT ORDER U/S 263. WE HAVE OBSERVED THAT THE ASSESSING OFFICER VIDE HIS QUESTIONNAIRE D ATED 22-08-2011 MADE ELABORATE INQUIRY INTO ALL THE MATTER. THE A.O. IN THE SAID LETTER RAISED AS MANY AS 23 QUESTIONS WHEREIN HE HAD CALLED FOR EXPL ANATIONS FROM ALL THE ISSUES WHICH ARE SUBJECT MATTER OF PROCEEDINGS U/S 263. THE COPIES OF QUESTIONNAIRE AND REPLY FURNISHED BY THE A.O. AR E PLACED BEFORE US. ON PERUSAL OF THE DETAILS PLACED BEFORE US, WE ARE OF THE OPINION THAT THE A.O. HAS MADE DETAILED ENQUIRY ABOUT ALL THE IS SUES AND PASSED ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 16 DETAILED ASSESSMENT ORDER. IN OUR OPINION, THE LD. COMMISSIONER HAS WRONGLY PRESUMED THAT THE ASSESSING OFFICER HAD NOT PROPERLY EXAMINED THE ISSUE. THE ORDER OF THE ASSESSING OFFICER MAY B E BRIEF AND CRYPTIC BUT THAT BY ITSELF DOES NOT SUFFICIENT REASON TO BRAND THE ASSESSMENT ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REV ENUE. IT IS WELL SETTLED LAW THAT WRITING AN ORDER IN DETAILS MAY BE A LEGAL REQUIREMENT BUT THE ORDER NOT FULFILLING THIS REQUIREMENTS CANNOT BE SA ID TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IT IS APPAR ENT FROM THE RECORDS THAT THE ASSESSEE SUBMITTED ITS REPLY AND ALSO FURN ISHED THE REQUISITE INFORMATION OR DETAILS TO SUBSTANTIATE ITS CLAIM DU RING THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAVING CONSIDERE D ALL THESE ISSUES, ON WHICH THE ASSESSMENT ORDER IS REVISED U/S 263, THE EXERCISE OF POWERS U/S 263 IS BAD IN LAW. IT IS ALSO TRUE THAT IF AN E NQUIRY IS MADE BY THE ASSESSING OFFICER AND THEN OBJECTION OF THE CIT IS THAT SUCH INQUIRY IS NOT ADEQUATE, THE CIT WOULD HAVE NO JURISDICTION U/S 26 3 OF THE ACT TO REVISE THE ORDER OF THE ASSESSING OFFICER. IN OUR CONSIDER ED VIEW, THE ASSESSING OFFICER HAS MADE PROPER AND DESIRED ENQUIRES BEFORE PASSING THE ASSESSMENT ORDER. THEREFORE, THE VIEW TAKEN BY THE LD. CIT CANNOT BE HELD JUSTIFIABLE. WHILE TAKING SUCH A VIEW, WE ARE INFLUENCED BY THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. GABRIAL INDIA LTD (1992) 203 ITR 108 (BOMBAY) WHEREIN IT HA S BEEN HELD THAT ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 17 A.O HAD MADE ENQUIRES IN REGARD TO THE NATURE OF TH E EXPENDITURE INCURRED BY THE ASSESSEE. THE ASSESSEE HAD GIVEN DE TAILED EXPLANATION IN THAT REGARD BY A LETTER IN WRITING. ALL THESE AR E PART OF THE RECORD OF THE CASE. THE HON'BLE HIGH COURT FURTHER OBSERVED T HAT THE CLAIM WAS ALLOWED BY THE ASSESSING OFFICER ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. THE HON'BLE HIGH COURT OPINED THAT SUCH DECISION OF THE A.O CANNOT BE HELD TO BE ERRONEOUS SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE ANY ELABORATE DISCUSSION IN THAT REGARD. 13. NOW IT IS RELEVANT TO CONSIDER THE JUDGMENTS RE FERRED BY THE LD. AUTHORISED REPRESENTATIVE. THE A.R. RELIED UPON CO- ORDINATE BENCH DECISION OF THIS TRIBUNAL IN THE CASE OF SMT. SUSHE ELA DEVI BOTHRA JAIN VS. ITO, WARD -1, RAJHAMUNDRY, ITA. NO. 279/VIZ/201 4, WHEREIN THE TRIBUNAL AFTER CONSIDERING THE DELHI HIGH COURT DEC ISION IN THE CASE OF DIRECTOR OF INCOME TAX VS. JYOTI FOUNDATION (SUPRA) , CIT, SUNBEAM AUTO LTD (2011) 332 ITR 167 (DEL) AND HONBLE ANDHRA PRA DESH HIGH COURT DECISION IN THE CASE OF SPECTRA SHARES AND SCRIPS P VT LTD VS. CIT, (2013) 354 ITR 35(AP), QUASHED THE ORDER PASSED BY CIT U/S 263 OF THE ACT. 14. IN THE CASE OF SPECTRA SHARES AND SCRIPS PVT. L TD., (2013) 354 ITR 35, THE HONBLE A.P. HIGH COURT HAS CULLED OUT PRIN CIPLES LAID DOWN BY THE HONBLE SUPREME COURT AND ALSO VARIOUS HIGH COU RTS ON THE ISSUE OF ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 18 EXERCISE OF JURISDICTION BY THE CIT U/S 263 OF THE ACT. IT READS AS FOLLOWS: '(A) THE COMMISSIONER HAS TO BE SATISFIED OF TWIN C ONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. IF ONE OF THEM IS ABSENTIF THE ORDER OF THE INCOME-TAX OFFICER IS ERR ONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOU S BUT IT IS PREJUDICIAL TO THE REVENUERECOURSE CANNOT BE HAD TO SECT/ON 263(1) OF THE ACT. (B) EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE. FOR EXAMPLE, WHEN AN INCOME-TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE OR WH ERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VI EW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED A S AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. (C) TO INVOKE THE SUOMOTU REVISIONAL POWERS TO REOPEN A CONCLUDED ASSESSMENT UNDER SECTION 263, THE COMMISSIONER MUST GIVE REASONS; THAT A BARE REITERATION BY HIM THAT THE ORDER OF THE INCOME -TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE, WILL NOT SUFFICE; THAT THE REASONS MUST BE SUCH AS TO SH OW THAT THE ENHANCEMENT OR MODIFICATION OF THE ASSESSMENT OR CA NCELLATION OF THE ASSESSMENT OR DIRECTIONS ISSUED FOR A FRESH ASSESSM ENT WERE CALLED FOR, AND MUST IRRESISTIBLY LEAD TO THE CONCLUSION THAT THE O RDER OF THE INCOME-TAX OFFICER WAS NOT ONLY ERRONEOUS BUT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THUS, WHILE THE INCOME-TAX OFFICER IS NOT C ALLED UPON TO WRITE AN ELABORATE JUDGMENT GIVING DETAILED REASONS IN RESPE CT OF EACH AND EVERY DISALLOWANCE, DEDUCTION, ETC., IT IS INCUMBENT UPON THE COMMISSIONER NOT TO EXERCISE HIS SUOMOTU REVISIONAL POWERS UNLESS SUPPO RTED BY ADEQUATE REASONS FOR DOING SO; THAT IF A QUERY IS RAISED DURING THE COURSE OF THE SCRUTINY BY THE ASSESSING OFFICER, WHICH WAS ANSWERED TO THE SA TISFACTION OF THE ASSESSING OFFICER, BUT NEITHER THE QUERY NOR THE AN SWER WERE REFLECTED IN THE ASSESSMENT ORDER, THIS WOULD NOT BY ITSELF LEAD TO THE CONCLUSION THAT THE ORDER OF THE ASSESSING OFFICER CALLED FOR INTER FERENCE AND REVISION. (E) THE COMMISSIONER CANNOT INITIATE PROCEEDINGS WI TH A VIEW TO START FISHING AND ROVING INQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED , THAT THE DEPARTMENT CANNOT BE PERMITTED TO BEGIN FR ESH LITIGATION BECAUSE OF NEW VIEWS THEY ENTERTAIN ON FACTS OR NEW VERSIONS W HICH THEY PRESENT AS TO WHAT SHOULD BE THE INFERENCE OR PROPER INFERENCE EI THER OF THE FACTS DISCLOSED OR THE WEIGHT OF THE CIRCUMSTANCE; THAT I F THIS IS PERMITTED, LITIGATION WOULD HAVE NO END EXCEPT WHEN LEGAL INGE NUITY IS EXHAUSTED. (F) WHETHER THERE WAS APPLICATION OF MIND BEFORE AL LOWING THE EXPENDITURE ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 19 IN QUESTION HAS TO BE SEEN; THAT IF THERE WAS AN IN QUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE COMMI SSIONER TO PASS ORDERS UNDER SECTION 263 MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER; THAT IT IS ONLY IN CASES OF LACK OF INQUIRY THAT SUCH A COURSE OF ACTION WOULD BE OPEN; THAT AN ASSESSMENT ORDER MADE BY THE INCOME-TAX OFFICER CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTE N MORE ELABORATELY, THERE MUST BE SOME PRIMA FADE MATERIAL ON RECORD TO SHOW THAT THE TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLE TE INTERPRETATION, A LESSER TAX THAN WHAT WAS JUST, HAS BEEN IMPOSED. (G) THE POWER OF THE COMMISSIONER UNDER SECTION 263 (1) IS NOT LIMITED ONLY TO THE MATER/AL WHICH WAS AVAILABLE BEFORE THE AO AND, IN ORDER TO PROTECT THE INTERESTS OF THE REVENUE, THE COMMISSIONER IS ENTIT LED TO EXAMINE ANY OTHER RECORD WHICH ARE AVAILABLE AT THE TIME OF EXAMINATI ON BY HIM AND TO TAKE INTO CONSIDERATION EVEN THOSE EVENTS WHICH AROSE SUBSEQU ENT TO THE ORDER OF ASSESSMENT.' 15. AN IDENTICAL ISSUE CAME UP FOR CONSIDERATION BE FORE COORDINATE BENCH OF THIS TRIBUNAL, IN THE CASE OF SRI SAI CONT RACTORS VS. ITO, WARD - 1, IN ITA.NO. 109/VIZ/2012, WHEREIN THE TRIBUNAL AF TER CONSIDERING THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF SPECTRA SHARES AND SCRIPS PVT LTD VS. CIT, (2013 ) 354 ITR 35(AP) AND HONBLE DELHI HIGH COURT JUDGMENT IN THE CASE OF CI T, SUNBEAM AUTO LTD (2011) 332 ITR 167 (DEL), HELD THAT ONCE THE A. O. EXAMINED THE ISSUES, THE CIT CANNOT ASSUME JURISDICTION ON THE S AME ISSUES WHICH IS ALREADY CONSIDERED BY THE A.O., ON THE GUISE OF REV ISION BY STATING THAT THE A.O. HAS CONDUCTED INADEQUATE ENQUIRY OR THERE IS A LACK OF ENQUIRY. THE RELEVANT PORTION REPRODUCED AS HEREUNDER: ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 20 10. TO INVOKE THE PROVISIONS OF SECTION 263 OF THE ACT, THE TWIN CONDITIONS MUST BE SATISFIED I.E. THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND FURTHER IT MUST BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. UNLESS BOTH CONDITIONS ARE SATISFIED, THE CIT CANNO T ASSUME JURISDICTION TO PASS ORDER U/S 263 OF THE ACT. IT IS NOT NECESSARY THAT EVERY ORDER WHICH IS PREJUDICIAL TO THE INTEREST OF REVENUE IS ALSO E RRONEOUS. UNLESS THE A.OS ORDER IS NOT ERRONEOUS, NO ACTION CAN BE TAKEN BY T HE CIT U/S 263 OF THE ACT, THIS IS BECAUSE THE TWIN CONDITIONS I.E. (1) T HE ORDER IS ERRONEOUS AND (2) THE SAME IS ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE ARE NOT CO- EXISTS. IN THE PRESENT CASE, THE A.O. HAS CONDUCTE D ENQUIRY BEFORE ALLOWING DEDUCTION TOWARDS WAGES AND CENTERING EXPE NSES AND ALSO EXAMINED THE POINTS ON WHICH THE CIT WANTS FURTHER VERIFICATION. THE ASSESSING OFFICER AFTER CAREFULLY EXAMINED THE BOOK S OF ACCOUNTS AND RELEVANT VOUCHERS FURNISHED BY THE ASSESSEE PASSED THE ASSESSMENT ORDER AS INDICATED IN HIS ORDER, WHICH IS CLEARLY EVIDENT FROM THE ASSESSMENT ORDER. THE CONTENTION OF THE CIT WAS THAT THE A.O. HAS NOT CONDUCTED PROPER ENQUIRY AND ALSO NOT APPLIED HIS MIND BEFORE ALLOWING THE DEDUCTION. BUT, WE DO NOT AGREE WITH THE CIT FOR T HE REASON THAT THERE IS A DISTINCTION BETWEEN LACK OF ENQUIRY AND INADEQUAT E ENQUIRY. IF THERE IS AN INADEQUATE ENQUIRY THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE CIT TO ASSUME JURISDICTION U/S 263 OF THE ACT, MERELY BECA USE HE HAS A DIFFERENT OPINION IN THE MATTER. THE CIT CAN DO THIS ONLY, W HEN THERE IS A LACK OF ENQUIRY BY THE ASSESSING OFFICER. IN THE PRESENT CA SE, THE ASSESSMENT ORDER IS DETAILED ONE AND ALSO, THE A.O. HAS PASSED A REMARKS IN THE ASSESSMENT ORDER ON TWO ISSUES, ON WHICH THE CIT AS SUMED JURISDICTION, I.E. DISALLOWANCE OF ROUND SOME EXPENDITURE OF RS. 1,00,000/- UNDER THE HEAD WAGES AND CENTERING CHARGES AND ALSO PARTNERS CAPITAL ACCOUNTS, WHERE THE ADDITION WAS RS. 66,825/-.THE A.O. HAD CA LLED FOR EXPLANATION AND THE ASSESSEE HAS FURNISHED ITS EXPLANATION. BU T, THE CIT WAS OF THE OPINION THAT THE ASSESSING OFFICER COULD HAVE DO WE LL TO EXPLORE THE POSSIBILITY OF REJECTING THE BOOKS OF ACCOUNTS AND ESTIMATE THE PROFIT. ACCORDING TO CIT, THE ASSESSING OFFICER HAS CONDUCT ED ENQUIRY BUT, IN ADEQUATE, THEREFORE HE WANTED FURTHER ENQUIRY ON TH E ISSUE ON WHICH HE ASSUMED JURISDICTION. THIS FACT HAD NOT BEEN DISPUT ED BY THE REVENUE. THE COMMISSIONER CANNOT INITIATE REVISION PROCEEDINGS, WITH A VIEW TO CONDUCT FISHING AND REVOLVING ENQUIRY IN THE MATTERS WHICH ARE ALREADY EXAMINED BY THE A.O. THE DEPARTMENT CANNOT DO FRESH ASSESSME NT IN THE GUISE OF REVISION ON THE MATTERS WHICH ARE EXAMINED AND CONC LUDED BY THE A.O. THE A.O. BEING A QUASI JUDICIAL AUTHORITY, SHALL HA VE THE AUTHORITY TO EXERCISE RIGHT JUDGEMENT AND DISCRETION ON THE BASI S OF INFORMATION AVAILABLE BEFORE HIM. IN THE PRESENT CASE ON HAND, THE ASSESSING OFFICER AFTER CONSIDERING VOUCHERS, MADE AN ROUND SOME ADDI TION OF RS.1,00,000/- WHICH IS ONE OF THE POSSIBLE VIEW AVAILABLE FOR HIM , WHICH THE CIT SHALL NOT TERM IT AS LACK OF ENQUIRY OR NON APPLICATION OF MI ND. THUS, IT CANNOT BE SAID THAT IT IS A CASE OF LACK OF ENQUIRY OR NON AP PLICATION OF MIND. ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 21 16. IN THE INSTANT CASE, THE ASSESSEE HAD FURNISHED DETAILED EXPLANATION WITH REGARD TO THE INTEREST EXPENDITURE CLAIMED UNDER THE HEAD INCOME FROM HOUSE PROPERTY, DETAILS OF SHORT T ERM CAPITAL GAINS, DETAILS OF EXPENDITURE DEBITED TO PROFIT & LOSS ACC OUNT BEING MESS MAINTENANCE, BANK CHARGES QUARRY MAINTENANCE, DETAI LS OF LOANS AND ADVANCES AND DETAILS OF SUNDRY DEBTORS AND CREDITOR S VIDE HIS LETTER DATED 13-09-2011 AND 10-10-2011. FROM THE RECORDS, IT IS CLEAR THAT THE ASSESSING OFFICER HAS MADE THE REQUISITE ENQUIRIES BEFORE FRAMING THE ASSESSMENT ORDER FOR THE YEAR UNDER CONSIDERATION. IN OUR CONSIDERED OPINION THE ASSESSING OFFICER WAS SATISFIED WITH TH E RECORD PRODUCED BEFORE HIM AND EXPLANATION GIVEN TO HIM BY THE ASSE SSEE WITH REGARD TO THE AFORESAID POINTS / QUERIES. THE LD. COMMISSIONE R INITIATED THE PROCEEDINGS BY POINTING OUT WHAT HE SAW AS GLARING ILLEGALITIES IN THE ASSESSMENT ORDER WHICH WAS SUBJECTED TO REVISION PR OCEEDINGS, BUT WHAT HE CONCLUDED WAS THAT THE SUCH ASSESSMENT ORDER WAS PASSED WITHOUT MAKING PROPER INQUIRES. THE COMMISSIONER FINALLY RE VISED THE ORDER FOR WANT OF PROPER AND DESIRED INQUIRES THEN SHIFTED TH E STAND, WHICH IS NOT PERMISSIBLE UNDER THE PROVISIONS OF LAW. AS WE HAVE ALREADY OBSERVED HEREINABOVE THAT THE ORDER OF THE ASSESSING OFFICER MAY BRIEF AND CRYPTIC, BUT THAT BY ITSELF IS NOT A SUFFICIENT REA SON TO BRAND THE ASSESSMENT ORDER AS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 22 REVENUE. THE CIT DIRECTED THE A.O. TO GIVE EFFECT T O THE ISSUES DISCUSSED IN HIS ORDER AND PASS ASSESSMENT ORDER WI THIN THE TIME ALLOWED AFTER AFFORDING AN OPPORTUNITY OF HEARING T O THE ASSESSEE. FROM THE ABOVE, IT IS ABUNDANTLY CLEAR THAT THE CIT HAS EXCEEDED HIS AUTHORITY PROVIDED UNDER SECTION 263 IN DIRECTING THE A.O. TO REDO THE ASSESSMENT. THEREFORE, THE DIRECTIONS GIVEN TO THE ASSESSING OF FICER TO FRAME FRESH ASSESSMENT ORDER IS BAD IN LAW AS THIS IS CLEARLY A CASE OF REASSESSING THE CASE BY STEPPING IN TO THE SHOES OF ASSESSING O FFICER. THE CIT, BEING HIGHLY PLACED AUTHORITY OF THE REVENUE, EXERCISES H IS POWER UNDER SECTION 263 TO DO FRESH ASSESSMENT, THEN THE RIGHT OF APPEALS, REVISIONS ETC. ARE TOTALLY MEANINGLESS AND THAT COULD NOT BE THE INTENTION OF THE LEGISLATURE. 17. IN VIEW OF THE ABOVE AND ALSO APPLYING THE RATI OS OF THE JUDGMENTS DISCUSSED ABOVE AND RESPECTFULLY FOLLOWING THE CO-O RDINATE BENCH DECISION, WE ARE OF THE OPINION THAT THE ASSESSMENT ORDER PASSED BY THE A.O. IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF THE REVENUE, THEREFORE, THE CIT ORDER PASSED U/S 263 OF THE ACT IS NOT MAINTAINABLE. ACCORDINGLY, WE QUASHED THE CIT ORDER U/S 263 AND R ESTORE THE ASSESSMENT ORDER. ITA NO.264/VIZAG/2014 P. KARUNAKAR, YELWSWARAM, E.G. DIST. 23 18. IN THE RESULT, THE ASSESSEE APPEAL IS ALLOWED . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 20 TH NOV15. SD/- SD/- ( (( ( . .. . ) ) ) ) ( (( ( . . . . ) ) ) ) ( (( ( V. DURGA RAO ) )) ) ( (( ( G. MANJUNATHA) / // / JUDICIAL MEMBER / // / ACCOUNTANT MEMBER /VISAKHAPATNAM: 6 / DATED : 20.11.2015 VG/SPS / - 7 / COPY OF THE ORDER FORWARDED TO :8 1. , / THE APPELLANT P. KARUNAKAR, D.NO.15-19A, NARSIPATNAM ROAD, YELWSWARAM (E.W.D.) 2. -., / THE RESPONDENT THE DCIT, CIRCLED-1, KAKINADA 3. : / THE CIT, RAJAHMUNDRY 4. : () / THE CIT (A), RAJAHMUNDRY 5. THE PRINCIPAL CIT-2, VISAKHAPATNAM 6. -, , / // / DR, ITAT, VISAKHAPATNAM 7 . . . . / GUARD FILE / BY ORDER // TRUE COPY // @A ( SR.PRIVATE SECRETARY ) , / // / ITAT, VISAKHAPATNAM SL. NO. DESCRIPTION DATE INITIALS 1. DATE OF DICTATION BY THE AUTHOR SR.PS 2. DRAFT PLACED BEFORE THE DICTATING MEMBER SR.PS 3. DRAFT PLACED BEFORE THE SECOND MEMBER SR. PS 4. DRAFT APPROVED BY THE SECOND MEMBER SR. PS 5. DATE OF APPROVED ORDER COMES TO THE SR. PS SR. PS 6. DATE OF PRONOUNCEMENT OF ORDER SR. PS 7. DATE OF FILE SENT TO THE BENCH CLERK SR. PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK HD. C LK 9. DATE OF DISPATCH OF ORDER SR. PS