MOTISONS JEWELLERS, Jaipur V. CIT, Jaipur

ITA 280/JPR/2014

• Counselvise Citation: 28023114 RSA 2014
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 10-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROLEE AGARWAL DHK
• Keywords: Sale consideration of property below Jantri Value; Audit objection; Bad and doubtful debts; Corroborative evidences; Prejudicial to interest; Benefit of exemption
• Section: 143(3); 142(1); 10AA; 10B; 147; 263

Judgement Text

ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 1 VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 280/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 M/S. MOTISONS JEWELERS 272, JOHARI BAZAR, JAIPUR CUKE VS. THE CIT CENTRAL, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AACFM 0520 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VIJAY GOYAL JKTLO DH VKSJ LS@ REVENUE BY :SMT. ROLEE AGARWAL (CIT-DR) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 11/12/2014 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 19/02/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT-(CENTRAL), JAIPUR DATED 18-03-2014 FOR THE ASS ESSMENT YEAR 2009-10 U/S 263 OF THE ACT WHERE IN THE ASSESSEE HAS RAISED FOL LOWING GROUNDS. (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE ORDER UNDER S. 263 OF THE ACT PASSED BY THE CIT IS ILLEGAL, VOID AB INITIO AND NO T JUSTIFIABLE, THEREFORE DESERVE TO BE ANNULLED. 2) THAT LEARNED CIT ERRED IN HOLDING THAT THE ORDER UNDER S. 143(3) PASSED BY THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF RE VENUE. 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT IS NOT JUSTIFIED IN INVOKING THE PROCEEDINGS OF SECTION 263 OF INCOME TAX ACT, 1 961 AND SETTING ASIDE THE ORDER PASSED BY THE AO U/S 143(3) OF INCOME TAX ACT AND D IRECTING THE AO TO VERIFY THE DEDUCTION CLAIMED U/S 10AA OF INCOME TAX ACT, 1961. ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 2 4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT IS NOT JUSTIFIED IN NOT CONSIDERING THE VARIOUS CASE LAW RELIED BEFORE HER AND HOLDING THAT THE CASE LAWS CITED ARE DISTINGUISHABLE FROM THE FACTS OF THIS CA SE. 2.1 BRIEF FACTS ARE THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING & TRADING OF GOLD, GOLD ORNAMENTS AND SETTED JEWELLERY. DURING THE YEAR THE ASSESSEE STARTED A MANUFACTURIN G UNIT IN SEZ-II, SITAPURA, JAIPUR FOR MANUFACTURING AND EXPORT OF GO LD JEWELLERY. THE ASSESSEES BOOKS OF ACCOUNT WERE AUDITED U/S 44AB O F INCOME TAX ACT; SEPARATE BOOKS OF ACCOUNT, SEPARATE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET ARE MAINTAINED FOR SEZ UNIT WHICH ARE PLACED ON RECORD . RETURN OF INCOME WAS E-FILED IN ITR-5 ON 29.09.2009 DECLARING TOTAL INCOME OF RS.59,61,290/- AFTER CLAIMING EXEMPTION U/S 10AA OF THE I T ACT OF RS. 70,55,269/-. THE CASE WAS SELECTED FOR SCRUTINY UND ER CASS AND NOTICES U/S 143(2) AND 142(1) OF THE I T ACT ALONG WITH A SERIE S OF OTHER NOTICES AND QUERIES WERE ISSUED BY AO WHICH ARE CLAIMED TO BE D ULY COMPLIED WITH. ACCORDING TO ASSESSEE LD. AO AFTER DUE CONSIDERATIO N OF BOOKS OF ACCOUNTS INCLUDING THE SEPARATE BOOKS FROM TIME TO TIME AND VERIFICATION OF CA CERTIFICATES FOR ELIGIBILITY U/S 10AA OF SEZ UNIT, STOCK REGISTERS, BILLS, VOUCHERS, BANK STATEMENTS, SUPPORTING EVIDENCES VAR IOUS ENQUIRIES, COMPLIANCES AND DISCUSSIONS FRAMED THE ASSESSMENT O F INCOME U/S 143(3) VIDE ORDER DTD.28.12.2011 ALLOWING THE CLAIM U/S 1 0AA. 2.2 ACCORDING TO 263 ORDER BASED ON THE AUDIT OBJEC TIONS, THE LD CIT- CENTRAL JAIPUR ISSUED SHOW CAUSE NOTICE U/S 263 DAT ED 22/02/2013, ALLEGING FOLLOWING ERRORS WHICH ARE PREJUDICIAL TO THE INTER EST OF REVENUE AS EXEMPTION U/S 10AA WAS GRANTED WITHOUT VERIFICATION AND KEEPING BASIC DOCUMENTS ON RECORD: ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 3 (I) CERTIFICATE ISSUED BY THE DEVELOPMENT COMMISSIO N (SEZ) NOT PLACED ON FILE. (II) THREE CONDITIONS FOR EXEMPTION U/S 10AA HAVE A LSO NOT BEEN EXAMINED BY AO (III) NET PROFIT FROM EXEMPT UNIT IS HIGH THAN THE PROFIT FROM REGULAR BUSINESS. THE AO OUGHT TO HAVE EXAMINED THE POSSIBILITY OF DIVERSION OF EXPENDITURE FROM SEZ UN IT TO THE REGULAR UNIT. (IV) CERTAIN EXPENDITURES IN CONSOLIDATES TRADING A ND PROFIT AND LOSS ACCOUNT REQUIRED PROPER VERIFICATION. THE ASSESSEE FILED DETAILED REPLY TO THIS SHOW CAUS E NOTICE VIDE LETTER DATED 11/03/2013 OBJECTING TO THE PROCEEDINGS U/S 263 CON TENDING THAT THE ASSESSMENT WAS FRAMED AND EXEMPTION GRANTED AFTER V ARIOUS HEARINGS AND DUE VERIFICATION OF RECORD. FOLLOWING DOCUMENTS WER E ON RECORD OR CALLED FOR BY AO DURING ASSESSMENT PROCEEDINGS: I). COPY OF CERTIFICATE ISSUED BY THE DEVELOPMENT COMMISSIONER (SEZ). (II) COPY OF ALLOTMENT OF PLOT BY RIICO FOR ESTABLISHING OF INDUSTRY IN SPECIAL ECONOMIC ZONE. III). COPY OF REPORT U/S 10AA(8) OF INCOME TAX ACT IN PRESCRIBED FORM NO 56F WITH ANNEXURE A (UNDER PARAGRAPH 2 OF FORM 56F) ISSUED BY CHARTERED ACCOUNTANT. IT WAS FURTHER SUBMITTED THAT ALL OTHER NECESSARY I NFORMATION WAS FURNISHED ALONG WITH BOOKS OF ACCOUNTS, VOUCHERS AND SUPPORTI NG EVIDENCES INCLUDING ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 4 THE SEPARATE RECORD OF SEZ UNIT WERE PRODUCED BEFOR E THE LD AO WHICH WERE DULY EXAMINED BY THE LD. AO DURING THE COURSE OF AS SESSMENT PROCEEDINGS AND EXEMPTION WAS GRANTED AFTER DUE VERIFICATION OF CLAIM. THEREAFTER, LD CIT FURTHER ISSUED A SHOW CAUSE NOTICE DATED 29-01- 2014 MENTIONING WHILE CLAIMING EXEMPTION RELEVANT SUB CLAUSE OF SECTION 1 0AA WAS NOT MENTIONED IN RETURN AND EVIDENCE OF DATE OF REGISTRATION AND COMMENCEMENT OF MANUFACTURE BY THE SEZ UNIT WAS NOT FURNISHED BY TH E ASSESSEE. BESIDES NO PROOF OF PURCHASING NEW PLANT AND MACHINERY FOR SEZ UNIT WAS PLACED ON RECORD. THE ASSESSEE FILED DETAILED REPLY TO THIS SHOW CAUSE NOTICE ALSO VIDE LETTER DATED 05/02/2014 ALONG WITH THE SUPPORTING E NCLOSURE CLAIMING THAT AS LONG AS A VALID CLAIM QUOTING SEC. 10AA WAS MADE, M ERE NON MENTIONING OF A SUB CLAUSE CANNOT BE A DETRIMENT FOR GRANTING THE EXEMPTION. IT WAS FIRST YEAR OF MANUFACTURING FOR WHICH SUB CLAUSE (I) TO S ECTION 10AA ONLY WAS APPLICABLE. THE DATE OF REGISTRATION OF UNIT WAS ME NTIONED IN THE REGISTRATION CERTIFICATE FURNISHED WITH AO AND THE EVIDENCE OF C OMMENCEMENT OF MANUFACTURE BY SEZ UNIT AND EXPORT OF GOODS WAS DEM ONSTRATED FROM THE BOOKS OF ACCOUNTS. THESE DATES ALONG WITH NATURE OF MANUFACTURING ACTIVITIES AND EXPORT WERE EXAMINED BY AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THESE ASPECTS WERE ALSO EVIDENT FROM T HE REPORT IN FORM NO. 56F FROM ASSESSES AUDITORS WHICH ALSO IS ON RECORD AND WAS EXAMINED BY THE ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 5 LD.AO. ORIGINAL BILLS/VOUCHERS OF PLANT & MACHINERY PURCHASED ALONG WITH PHOTOCOPIES WERE PRODUCED BEFORE THE AO ALONG WITH BOOKS OF ACCOUNTS. WHATEVER COPIES IN THIS BEHALF WERE DESIRED BY AO F OR KEEPING ON RECORD, WERE DULY SUPPLIED. THUS THERE WAS NO JUSTIFICATION FOR HOLD AN ADVERSE INFERENCE THAT EXEMPTION WAS GRANTED WITHOUT VERIFI CATION AND ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. LD. AO DULY EXAMINED THIS RECORD AND DOCUMENTS AND THEREAFTER A LLOWED THE CLAIM OF EXEMPTION U/S 10AA AFTER VERIFYING THE RELEVANT PAR AMETERS. 2.3 LD CIT CENTRAL, JAIPUR FURTHER ISSUED SHOW CAUS E NOTICE DATED 03/03/2014 ASKING TO FILE CERTIFIED EVIDENCE OF BEG INNING OF MANUFACTURE AND EXPORT OF GOODS AND PROOF OF NEW PLANT AND MACHINER Y BROUGHT FOR THE UNIT. 2.4 IT WAS EXPLAINED TO LD CIT THAT VIDE ORDER SHEE T ENTRY DATED 26.12.2011 THE LD AO EXAMINED THIS EVIDENCE AND KEP T ON RECORD THE COPIES HE DEEMED FIT. REGARDING THE DATE OF START OF MANUF ACTURE THE ASSESSEE SUBMITTED COPY OF THE CERTIFICATE ISSUED BY THE GOV ERNMENT OF RAJASTHAN, DISTRICT INDUSTRIES CENTRE, JAIPUR MENTIONING THAT THESE ACTIVITIES COMMENCED IN THE FACTORY ON 15.07.2008. IT WAS SUBMITTED THAT AFTER TESTING OF MACHINERY IT WAS STARTED ON 30.07.2008 AND FINALLY THE FIRST OUTPUT OF FINISHED GOODS IN THE SHAPE OF BANGLES CAME ON 22.09.08 WHICH IS EVID ENT FROM THE STOCK REGISTER OF SITAPURA SEZ UNIT. APROPOS THE NEW PURC HASE OF PLANT ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 6 &MACHINERY, THE TOTAL ADDITION IN FIXED ASSETS WAS OF RS. 1,85,58,417/-, WHICH ALSO INCLUDED ADDITION ON ACCOUNT OF PLANT & MACHINERY WAS OF RS. 16,43,466/-. COPY OF LEDGER A/C OF PLANT & MACHINER Y ALONG WITH SUPPORTING INVOICES TO DEMONSTRATE THAT THE PLANT & MACHINERY SO PURCHASED WAS NEW. ALL THESE FACTS WERE REFLECTED BY AUDITED STATEMENT S, SCHEDULE OF FIXED ASSETS AND ACCOUNTS. ASSESSEEES REPLY DID NOT FIND FAVOR WITH LD CIT AND HELD THAT THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND PASSED ORDER U/S 263 OF INCOME TAX ACT, SETTING ASIDE THE ASSESSMENT ORDER BY FOLLOWING OBSERVATIONS:- PARA 8 IT IS SEEN THAT ALL THE CASE LAWS CITED ARE DISTIN GUISHABLE FROM THE FACTS OF THIS CASE AS THERE IS NO MATERIAL ON R ECORD TO SHOW THAT THE ASSESSING OFFICER HAS APPLIED HIS MIND ON DEDUCTION CLAIMED U/S 10AA, AS THE ASSESSEE HAD NOT EVEN MENTIONED THE RELEVANT CLAUSE OF SECTION 10AA FOR CLAIMING DEDUCTION AND HAD NEITHER SUBMITT ED ALL PROOFS. THE AO HAD NEITHER PLACED ANY MATERIAL ON RECORD WH ICH CONFIRMED THAT INFLATED PROFIT WAS NOT CLAIMED ON EXEMPT UNIT OR ALL THE EXPENDITURE CLAIMED (ON EXEMPT UNIT AND WITH RESPEC T TO REGULAR BUSINESS) WAS GENUINE, THEREFORE, THE ASSESSMENT OR DER DATED 28.12.2011IS ERRONEOUS IN SO FAR AS IT IS PREJUDICI AL TO THE INTEREST OF THE REVENUE, AND IS SET ASIDE BACK TO THE FILE OF THE AO- FOR NECESSARY VERIFICATION. 2.5 AGGRIEVED, ASSESSEE IS BEFORE US. 2.6 LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT LD A O HAS PASSED THE ASSESSMENT ORDER AFTER PROPER EXAMINATION OF BOOKS OF ACCOUNT, SUPPORTING ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 7 EVIDENCE, HEARINGS ON THE CONCERNED ISSUES, PROPER INQUIRIES AND AFTER DUE APPLICATION OF MIND. THE PREMISES OF SEZ UNIT ARE S EPARATE FROM REGULAR UNIT; THE MAINTENANCE OF STOCK AND MANUFACTURING AC TIVITIES ARE ALSO SEPARATE. IT IS NOT DISPUTED THAT ASSESSEE MAINTAINS SEPARATE BOOKS OF ACCOUNT AND BANK ACCOUNT FOR ITS REGULAR BUSINESS AND SEZ UNIT; SEPA RATE MANUFACTURING AND P & L A/C, BALANCE SHEET AND OTHER RECORD ARE MAINTAI NED. THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE AUDITED BY CHARTERED A CCOUNTANT U/S 44AB OF INCOME TAX ACT. THE ACCOUNTS OF SEZ UNIT AUDITED U/ S 10AA(8) AS PROVIDED BY THE INCOME TAX ACT. THE COPIES OF AUDIT REPORTS U/S 44AB IN FORM NO 3CD REPORT U/S 10AA(8) . THE AUDITORS HAVE CERTIFIED THEM TO BE TRUE AND FAIR PROFITS WITHOUT ANY QUALIFICATION. THESE REPOR TS ARE NEITHER DISPUTED BY LD. AO NOR LD. CIT. THE AUDITORS HAVE CERTIFIED THE ELIGIBILITY OF EXEMPTION U/S 10AA TO THE ASSESSEE. IT IS NOT CORRECT ON THE PART OF LD. CIT THAT AO DID NOT CONDUCT PROPER VERIFICATION AND INQUIRIES. DURI NG THE COURSE OF ASSESSMENT LD AO IN ORDER TO VERIFY THE CORRECTNESS OF THE CLAIM OF EXEMPTION RAISED QUERIES FROM TIME TO TIME; IN REPL Y THERETO ASSESSEE FILED REPLIES VIDE LETTER DATED 24/10/2011, 01/11/2011 AN D 15/12/2011.VIDE ORDER SHEET ENTRY DATED 26.12.2011 THE LD. AO EXAMINED TH E BOOKS OF ACCOUNTS AND SUPPORTING RECORDS SUCH AS BILLS & VOUCHERS, DOCUME NTS AS REGARD ESTABLISHMENT OF UNIT IN SEZ AND MACHINERY BEING NE W. FOR VERIFICATION OF ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 8 THE EXPORTS LD. AO EXAMINED THE SALES, EXPORT-SALES , SHIPPING BILLS, REALIZATION OF EXPORT BILLS, PURCHASES, PRODUCTION AND EXPENSES OF THE ASSESSEE. AFTER EXAMINING THE BOOKS OF ACCOUNTS THE LD. AO KEPT ON THE RECORD THOSE COPIES WHICH WERE DEEMED NECESSARY BY HIM FOR RECORD. IT IS EMPHASIZED THAT ASSESSEE HAS NO AUTHORITY TO DIRECT THE LD. AO AS TO WHICH COPIES SHOULD BE KEPT ON THE RECORD. THE RELEVANT F INDINGS OF LD AO IN ASSESSMENT ORDER IN THIS REGARD ARE REFERRED TO AS UNDER:- IN COMPLIANCE TO SAID NOTICES, SHRI GULSHANAGARWAL CA & AR OF THE ASSESSEE ATTENDED HEARINGS DURING THE COURSE OF ASSESSMENT PROCEEDINGS PRODUCED BOOKS OF ACCOUNT AND FILED DET AILS/INFORMATION. THE INFORMATION/DETAIL(S) SO FILED WAS EXAMINED ON A TEST-CHECK BASIS AND OTHER POINTS/ISSUES THAT CROPPED UP DURING THE COURSE OF HEARING(S) WERE DISCUSSED WITH THE AUTHORIZED REPRE SENTATIVE OF THE ASSESSEE AND HE WAS HEARD. IT IS CONTENDED BY LD. COUNSEL THAT THESE CATEGORIC AL FINDINGS OF THE LD AO, MAKE IT IS CLEAR THAT BOOKS OF ACCOUNT AND VARIOUS OTHER DETAILS FILED BEFORE LD. AO VIZ. AUDITED TRADING ACCOUNT, PROFIT AND LOS S ACCOUNT BALANCE SHEET AND CLAIM OF DEDUCTION U/S 10AA WAS EXAMINED BY THE AO AND AFTER PROPER APPLICATION OF MIND, THE DEDUCTION U/S 10AA WAS ALLOWED. 2.7 APROPOS THE CIT OBSERVATION THAT RELEVANT CLAUS E OF SECTION 10AA HAS NOT BEEN MENTIONED FOR CLAIMING DEDUCTION . IT IS PLEADED THAT FOR CLAIMING THE DEDUCTION U/S 10AA, LAW HAS PRESCRIBED FORM NO 56F UNDER RULE 16D ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 9 OF INCOME TAX RULES. THIS FORM DOES NOT REQUIRE ANY CONDITION TO MENTION THE SUB CLAUSE OF SECTION 10AA OF INCOME TAX ACT FO R CLAIMING THE EXEMPTION. THERE ARE TWO SUB CLAUSES OF SECTION 10A A (1). THE SUB CLAUSE (I) IS APPLICABLE FOR THE FIRST FIVE YEARS WHEREIN 100% DEDUCTION OF PROFIT IS ALLOWED AND FOR NEXT FIVE YEARS WHEREIN 50% DEDUCTI ON OF PROFIT IS ALLOWED. THE SUB CLAUSE (II) IS APPLICABLE FOR FIVE CONSECU TIVE YEAR. IN THE CASE OF THE ASSESSEE, THIS YEAR IS FIRST YEAR AND THIS FACT IS CLEAR FROM THE AUDIT REPORT IN FORM NO 56F WHEREIN THE DATE OF INITIAL REGISTRATIO N IS MENTIONED AS 03.07.2006 AND DATE OF COMMENCEMENT OF PRODUCTION I S MENTIONED AS 30/07/2008. THEREFORE, ONLY AND ONLY SUB CLAUSE (I) OF SECTION 10AA(1) IS APPLICABLE IN THE CASE OF THE ASSESSEE; LD. CIT IN AN ATTEMPT TO WILLY NILLY RECOURSE TO REVISION U/S 263 HAS CREATED UNNECESSAR Y CONFUSION IN THIS REGARD. THE EXEMPTION U/S 10AA IS APPLICABLE FOR T HE UNITS WHICH COMMENCE THE PRODUCTION ON OR AFTER 01-04-2006. THE FULFILLMENT OF THIS CONDITION IS APPARENT FROM THE BOOKS OF ACCOUNTS AN D RECORD PRODUCED BEFORE THE AO AS WELL AS LD. CIT. IT IS HELD BY HONBLE RA JASTHAN HIGH COURT IN THE CASE OF CIT VS RAJASTHAN FASTENERS (P) LTD (2014) 3 63 ITR 271 THAT NON- MENTIONING OF SECTION OR WRONG MENTIONING OF SECTIO N CANNOT COME IN WAY BY DISALLOWING THE OTHERWISE ALLOWABLE/ELIGIBLE FOR DEDUCTION. THE OBSERVATIONS OF LD. CIT ARE VEHEMENTLY DENIED BY AS SESSEE THAT AO HAS NOT ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 10 PLACED PROPER COPIES OF MATERIAL ON RECORD WHICH CO NFIRMED THAT PROFITS OF ELIGIBLE UNIT WERE INFLATED OR ALL THE EXPENDITURE WAS NOT CLAIMED. IT IS CONTENDED THAT IT IS NOT IN THE HANDS OF ASSESSEE T O INTERFERE IN PROCEEDINGS AS TO WHICH COPIES SHOULD BE KEPT BY AO ON RECORD. AO IS A QUASI JUDICIAL AUTHORITY AND LAW ALSO DOES NOT PROVIDE THE NATURE OF COPIES TO BE KEPT BY AO ON RECORD. THE ASSESSEES OBLIGATION IS OVER AFT ER COMPLYING WITH THE AOS QUERIES AND REQUIREMENTS. THE RECORD SUPPORTS T HE ASSESSEES STAND AS THERE IS NO ALLEGATION OF ANY NON-COOPERATION. ASSE SSEE HAVING PRODUCED RELEVANT ACCOUNT BOOKS, RECORD AND DOCUMENTS,; THE FACTS BEING SO DEMONSTRATIVELY OBVIOUS; THE LOGICAL INFERENCE LEAD TO A CONCLUSION THAT THEY WERE PROPERLY EXAMINED. DURING THE COURSE OF PROCEE DINGS U/S 263, THE DOCUMENTS PRODUCED BEFORE AO WERE AGAIN FILED. THE LD CIT HAS FOUND NO DEFECT IN THE DOCUMENTS PRODUCED BEFORE HER, IN THI S EVENTUALITY LD. CIT SHOULD NOT HAVE SET ASIDE THE ASSESSMENT FOR DOING THE SAME EXERCISE. THE TWIN CONDITIONS OF ERROR IN THE ORDER AND PREJUD ICE TO REVENUE MUST CO- EXIST IN MATERIAL TERMS AS HELD IN S. MURUGAN V. ITO (2012) 135 ITD 527 (CHENNAI) (TRIB.) .THE ASSESSMENT ORDER CANNOT BE HELD AS ERRONEOUS A ND PREJUDICIAL TO THE INTEREST OF REVENUE U/S 263 MERE LY ON ASSUMPTION, PRESUMPTION, PROBABILITIES, POSSIBILITIES OR ON GUE SS WORK AS HAS BEEN DONE IN THIS CASE. THE REQUIREMENT OF SECTION 263 IS TH AT THE COMMISSIONER SHOULD ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 11 RECORD A FINDING ABOUT LACK OF INQUIRY, A VAGUE ASS ERTION THAT INQUIRIES WERE NOT MADE IN A PROPER MANNER IS INSIGNIFICANT. IT HA S NO PROPENSITY TO HOLD THE ASSESSMENT ORDER AS ERRONEOUS. A VALID ASSESSMENT O RDER PASSED BY THE A.O CANNOT BE SAID TO BE ERRONEOUS OR PREJUDICIAL TO TH E INTEREST OF THE REVENUE MERELY BECAUSE SATISFY AUDIT OBJECTIONS LD. COMMISS IONER ATTEMPTED TO SUBSTITUTE HIS PERCEPTION OF INQUIRES OVER WHAT HAS BEEN PROPERLY DONE BY AO. THUS THE ASSESSMENT ORDER PASSED BY THE A.O CAN NOT BE SAID TO BE ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REV ENUE ON SUCH PRESUMPTIVE FINDINGS AS ARRIVED AT BY LD. CIT. THE SCOPE OF INT ERFERENCE UNDER SECTION 263 IS NOT MEANT TO HAVE SECOND INNINGS BY ADMINISTRATI VE MEASURES QUA THE ORDERS WHICH ARE VIEWED AS UNFAVORABLE BY DEPARTMEN T. ALTERNATIVE METHODS LIKE SECTION 147 EXIST FOR THE SAME. RELIANCE FOR T HESE PROPOSITIONS IS PLACED ON FOLLOWING DECISIONS:- (I) CIT VS JAIN CONSTRUCTION CO (2013) 257 CTR (RAJ)/ 8 4 DTR (RAJ) 369 REVISION U/S 263ORDER ERRONEOUS AND PREJUDICIAL TO INTEREST OF REVENUECIT ISSUED A NOTICE U/S 263 TO ASSESSEE ON GROUND THAT ASSESSMENT ORDER OF AO PASSED U/S 143 (3) WAS AN OR DER ERRONEOUS AND PREJUDICIAL TO INTEREST OF REVENUETRIBUNAL ALL OWED APPEAL OF ASSESSEEHELD, SAFEGUARD PROVIDED TO ASSESSEE IN SE CTION 263 IS THAT MERE ERRONEOUS ORDERS ARE NOT REVISABLE BUT REVISIO NAL AUTHORITY HAS TO FURTHER ESTABLISH WITH MATERIAL ON RECORD THAT SUCH ERRONEOUS ORDER IS ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 12 ALSO PREJUDICIAL TO INTEREST OF REVENUETWIN CONDIT IONS OF ASSESSMENT ORDER BEING ERRONEOUS AND IT ALSO BEING PREJUDICIAL TO INTEREST OF REVENUE, KEEPS INITIAL BURDEN ON COMMISSIONER, WHO INVOKES SUCH JURISDICTIONPREMISE FOR INVOKING REVISIONAL JURISD ICTION ON THE GROUND THAT THE ASSESSING AUTHORITY MADE INSUFFICIE NT ENQUIRY OR IMPROPER ENQUIRY AND FAILED TO VERIFY CLOSING STOCK S IN RECORD OF ASSESSEE, BEFORE PASSING ASSESSMENT ORDER, FALLS FL AT BY A BARE PERUSAL OF ASSESSMENT ORDER ITSELFTHUS, TRIBUNAL WAS JUSTI FIED IN HOLDING THAT COMMISSIONER WAS IN ERROR IN INVOKING REVISION AL JURISDICTION U/S 263MERE ALLEGED INSUFFICIENCY OF ENQUIRY IN OPINIO N OF COMMISSIONER BY ASSESSING AUTHORITY, COULD NOT PERM IT HIM TO INVOKE REVISIONAL JURISDICTION U/S 263THEREFORE, E SSENTIAL TWIN CONDITIONS FOR INVOKING REVISIONAL JURISDICTION, WE RE NOT SATISFIED ORDER OF TRIBUNAL UPHELDREVENUES APPEAL DISMISSED . (II) CIT VSGANPAT RAM VISHNOI (2008) 296 ITR 292 ( RAJ) HELD :- UNDOUBTEDLY, THE JURISDICTION UNDER S. 263 IS WIDE AND IS MEANT TO ENSURE THAT DUE REVENUE OUGHT TO REACH THE PUBLIC TREASURY AND IF IT DOES NOT REACH ON ACCOUNT OF SOME MISTAKE OF LAW OR FACT COMMITTED BY THE AO, THE CIT CAN CANCEL THAT ORDER AND REQUIRE THE CONCERNED AO TO PASS A FRESH ORDER IN ACCORDANCE WI TH LAW AFTER HOLDING A DETAILED ENQUIRY. BUT WHEN ENQUIRY IN FAC T HAS BEEN CONDUCTED AND THE AO HAS REACHED A PARTICULAR CONCL USION, THOUGH REFERENCE TO SUCH ENQUIRIES HAS NOT BEEN MADE IN TH E ORDER OF THE ASSESSMENT, BUT THE SAME IS APPARENT FROM THE RECOR D OF THE PROCEEDINGS, IN THE PRESENT CASE, WITHOUT ANYTHING TO SAY HOW AND WHY THE ENQUIRY CONDUCTED BY THE AO WAS NOT IN ACCORDAN CE WITH LAW, THE INVOCATION OF JURISDICTION BY THE CIT WAS UNSUSTAIN ABLE. AS THE EXERCISE OF JURISDICTION BY THE CIT IS FOUNDED ON N O MATERIAL, IT WAS LIABLE TO BE SET ASIDE. JURISDICTION UNDER S. 263 C ANNOT BE INVOKED FOR MAKING SHORT ENQUIRIES OR TO GO INTO THE PROCESS OF ASSESSMENT AGAIN AND AGAIN MERELY ON THE BASIS THAT MORE ENQUIRY OUG HT TO HAVE BEEN CONDUCTED TO FIND SOMETHING. ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 13 IN CIT VS. SHRI GANESH PRINT FAB.(P) LTD, (ITAT, J ODHPUR), ITA NO. 357/ JU/2010. DATED 13.01.2012, THE ITAT, JODHPUR:T HE RATIO OF THIS JUDGMENT IS SQUARELY APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE AS ALL MATERIAL PERTAINING TO ELIGIBILITY OF ASSESS EE FOR EXEMPTION U/S 10AA OF THE ACT WAS AVAILABLE WITH THE AO BEFORE CO NCLUDING THE ASSESSMENT PROCEEDINGS. (III) CIT VS DEEPAK REAL ESTATE DEVELOPERS (I) (P) LTD (2014) 107 DTR (RAJ) 259 REVISIONREVISION BY COMMISSIONER OF ORDERS PREJUD ICIAL TO REVENUEAO OBSERVED THAT RETURN SUBMITTED BY ASSESS EE WAS DULY SUPPORTED BY NECESSARY EVIDENCE AND ACCEPTED ASSESS EES RETURN CIT IN EXERCISE OF HIS POWER U/S 263, ISSUED NOTICE TO ASSESSEE BEING OF OPINION THAT ASSESSMENT OF AO WAS ERRONEOUS AND PREJUDICIAL TO INTEREST OF REVENUEITAT VIEWED THAT CIT COULD NOT HAVE FORMED ANY OPINION THAT ASSESSMENT ORDER WAS ERRONEOUS AND NO REASONS HAD BEEN RECORDED TO DEMONSTRATE THAT ASSESSMENT ORDER WAS PREJUDICIAL TO INTEREST OF REVENUEHELD, PERUSAL OF ORDER OF ITAT WOULD TESTIFY THAT AO HAD CONSCIOUSLY EXAMINED ALL RELEVANT RECORDS IN ACCEPTING RETURN SUBMITTED BY ASSESSEECIT DID NOT FIND FAULT WITH A NY FINDINGS OF AO, CULMINATING IN ULTIMATE CONCLUSION THAT RETURN OF ASSESSEE WAS ACCEPTABLEDECISION OF CIT AUTHENTICATES THAT ASSES SEE FURNISHED ALL RELEVANT RECORDS AND DOCUMENTS IN SUPPORT OF ITS RE TURN ACCEPTED BY AOCIT DID NOT REJECT DOCUMENTS TO BE IRRELEVANTCI T ONLY REMANDED MATTER TO AO OBSERVING THAT DOCUMENTS OUGH T TO HAVE BEEN LAID BEFORE HIM AND EXAMINED AT TIME OF ASSESSMENT REVISIONAL JURISDICTION AVAILABLE TO COMMISSIONER U/S 263 SUBJ ECT TO CONDITION THAT ORDER OF AO WAS ERRONEOUS AND PREJUDICIAL TO I NTEREST OF REVENUEANY EXERCISE OF REVISIONAL JURISDICTION, BE REFT OF SUCH SATISFACTION WAS IMPERMISSIBLE RENDERING RESULTANT ORDER VOIDNO INTERFERENCE WITH IMPUGNED ORDER OF ITAT WAS WARRAN TEDAPPEAL DISMISSED ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 14 (IV) BONGAIGAON REFINERY & PETROCHEMICALS LTD. VS. UNION OF INDIA & ORS. (2006) 287 ITR 120 (GAU) REVISIONERRONEOUS AND PREJUDICIAL ORDERDIRECTION TO RECOMPUTE DEDUCTION UNDER SS. 80HH AND 80-IPOWER OF COMPUTAT ION OF PROFITS AND GAINS FOR THE PURPOSE OF DETERMINING THE DEDUCT ION ALLOWABLE TO ASSESSEE UNDER SS. 80HH AND 80-I IS LOCATED IN THE AO AND IS EXERCISABLE BY HIMIF ON THE BASIS OF THE FACTS AND DATA AVAILABLE TO THE AO, COMPUTATION OF THE PROFIT AND LOSS IN TERMS OF THE PROCEDURE SANCTIONED BY S. 80HH(6) AND S. 80-I(8) IS POSSIBLE AND THE AO IS NOT CONFRONTED WITH ANY EXCEPTIONAL DIFFICULTY, COMPUTA TION OF THE PROFIT AND LOSS ON REASONABLE BASIS WOULD NOT BE WARRANTED INTERVENTION OF CIT IN PURPORTED EXERCISE OF POWERS UNDER S. 263 TO SUGGEST ANY MODE OF COMPUTATION DIFFERENT FROM THE ONE ADOPTED BY TH E AO IS NOT PERMISSIBLECIT HAS ISSUED DIRECTION TO THE AO TO B IFURCATE THE PROFITS OF THREE UNITS OF THE ASSESSEE IN PROPORTIO N OF THEIR TURNOVER AND RECOMPUTE THE DEDUCTIONS UNDER SS. 80HH AND 80-ISU CH DIRECTION IS BEYOND THE LIMITS OF HIS JURISDICTION UNDER S. 263 ORDER PASSED BY CIT IS SET ASIDE (V) CIT V. SMTTASNEEM Z MADRASWALA REPORTED IN 324 ITR 67 (MAD.), HONBLE MADRAS HIGH COURT HELD AS UNDER : WHILE CANCELLING THE ORDER OF ASSESSMENT, THERE WA S NO POWER VESTED WITH THE COMMISSIONER TO DIRECT THE ASSESSIN G OFFICER TO COMPLETE THE ASSESSMENT IN A PARTICULAR MANNER. THE REFORE, THE TRIBUNAL HAD CORRECTLY SET ASIDE THAT PORTION OF TH E ORDER PASSED BY THE COMMISSIONER, DIRECTING THE ASSESSING OFFICER TO CO MPLETE THE ASSESSMENT BY RECOURSE TO THE PROVISIONS CONTAINED U/S.50C(2)(B) OF THE ACT. (VI) CIT VS. DLF LTD. [2013] 350 ITR 555 (DELHI) HONBLE DELHI HIGH COURT HAS ACCEPTED THE ARGUMENTS OF THE ASSESSEE THAT THE TRIBUNALS ORDER SHOULD NOT BE INTERFERED WITH BECAUSE IF ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 15 ENQUIRIES ARE CONDUCTED BY COMMISSIONER, HE CANNOT GO INTO OR SCRUTINIZE THE QUESTION OF APPROPRIATENESS OF THE P REVIOUS PROCEEDINGS BEFORE THE ASSESSING OFFICER. CIT V. SUNBEAM AUTO LTD.[2011] 332 ITR 167 (DELHI) HOLDING THAT THERE CAN BE NO ROVING AND FISHING ENQUIRY BY THE C OMMISSIONER AND HE HAS TO MERELY CONFINE HIMSELF TO THE MATERIALS O N RECORD OF THE PROCEEDINGS CALLED FOR BY HIM. IN OTHER WORDS, IF T HE ASSESSING OFFICER MAKES AN ASSESSMENT ACTING IN ACCORDANCE WITH LAW T HAT CANNOT BE BRANDED AS ERRONEOUS. CIT V. ANIL KUMAR SHARMA [2011] 335 ITR 83 (DELHI). CWT V. PRITHVI RAJ AND CO. [1993] 199 ITR 424 (DELH I) FOR THE PROPOSITION THAT ANY ORDER OF REVISION WHICH DOES N OT SPECIFY CLEAR PRIMA FACIE ERROR IN THE ORDER OR APPROACH OF THE A SSESSING OFFICER, IT WOULD BE BEYOND THE JURISDICTION OF SEC 263. MALABAR INDUSTRIAL CO LTD VS CIT (2000) 243 ITR 83 (SC) REVISIONERRONEOUS AND PREJUDICIAL ORDERCONDITIONS PRECEDENT CIT CAN INVOKE S. 263 IF THE ORDER OF AO IS ERRONEO US AND IT IS ALSO PREJUDICIAL TO INTERESTS OF THE REVENUEBOTH CONDIT IONS MUST CO- EXISTPHRASE PREJUDICIAL TO THE INTERESTS OF THE R EVENUE IS OF WIDE IMPORT AND IS NOT CONFINED TO LOSS OF TAXIF DUE TO AN ERRONEOUS ORDER OF THE AO, THE REVENUE IS LOSING TAX LAWFULLY PAYAB LE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTERESTS OF T HE REVENUEHOWEVER, EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF AO CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF REVENUE. (VII) CIT V. ARVINDJEWELLER, 259 ITR 502 (GUJ.), HONBLE COURT HELD THAT THE ASSESSEE HAD PRODUCED R ELEVANT MATERIAL AND OFFERED EXPLANATIONS IN PURSUANCE OF T HE NOTICES ISSUED U/S.142(1) AS WELL AS U/S.143(2) OF THE ACT AND AFT ER CONSIDERING THE MATERIALS AND EXPLANATIONS, THE INCOME-TAX OFFICER HAD COME TO A DEFINITE CONCLUSION. MERELY BECAUSE THE INCOME-TAX OFFICER HAD TAKEN ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 16 A PARTICULAR VIEW WITH WHICH THE COMMISSIONER DID N OT AGREE CANNOT FORM THE BASIS FOR AN ACTION U/S.263 OF THE ACT AND AS SUCH ORDER OF REVISION WAS NOT JUSTIFIED. THE GUJARAT HIGH COURT APPLIED THE PRINCIPLES LAID DOWN BY THE SUPREME COURT IN THE CA SE OF MALABAR INDUSTRIAL CO. LTD, CASE MENTIONED ABOVE AND DECIDE D THE CASE IN FAVOUR OF THE ASSESSEE (VIII) CIT V. HONDA SEIL POWER PRODUCTS LTD. (2011) 333 ITR 547 (DEL): HONBLE DELHI HIGH COURT UPHELD THE DECISION OF THE TRIBUNA L AND HELD AS UNDER: (I) IN CASES WHERE THE ASSESSING OFFICER ADOPTS ON E OF THE COURSES PERMISSIBLE, IN LAW, OR WHERE TWO VIEWS ARE POSSIBL E AND THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIE WS, THE COMMISSIONER CANNOT EXERCISE HIS POWERS U/S.263 TO DIFFER WITH THE VIEW OF THE ASSESSING OFFICER, EVEN IF THERE HAS BE EN A LOSS OF REVENUE. (II) IT IS ALSO CLEAR THAT WHILE PASSING AN ORDER U /S.263, THE COMMISSIONER HAS TO EXAMINE NOT ONLY THE ASSESSMENT ORDER, BUT ALSO THE ENTIRE RECORD. SINCE THE ASSESSEE HAS NO CONTRO L OVER THE WAY AN ASSESSMENT ORDER IS DRAFTED AND SINCE GENERALLY THE ISSUES WHICH ARE ACCEPTED BY THE ASSESSING OFFICER, DO NOT FIND MENT ION IN THE ASSESSMENT ORDER AND ONLY THOSE POINTS ARE TAKEN NO TE OF ON WHICH THE ASSESSEES EXPLANATIONS ARE REJECTED AND ADDITIONS/ DISALLOWANCES ARE MADE, IN THE INSTANT CASE, THE MERE ABSENCE OF THE DISCUSSION OF THE PROVISIONS OF S. 80-IB(13), R/W. S. 80-IA(9), WOULD NOT MEAN THAT THE ASSESSING OFFICER HAD NOT APPLIED HIS MIND TO THE S AID PROVISIONS. (III). WHEN A REGULAR ASSESSMENT IS MADE U/S. 143(3 ), A PRESUMPTION CAN BE RAISED THAT THE ORDER HAS BEEN PASSED UPON A N APPLICATION OF MIND. NO DOUBT, THIS PRESUMPTION IS REBUTTABLE, WHI CH SHOULD BE STRONG ENOUGH TO INDICATE THAT THE ASSESSING OFFICE R HAD NOT APPLIED HIS MIND. (IX) CIT VSSOHANAWOLLEN MILLS (2008) 296 ITR 238 (P &H) ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 17 REVISIONERRONEOUS AND PREJUDICIAL ORDERAO TAKING POSSIBLE VIEWMERE AUDIT OBJECTION, AND MERELY BECAUSE A DIF FERENT VIEW CAN BE TAKEN ARE NOT ENOUGH TO HOLD THAT THE ORDER OF T HE AO IS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REVENUEAO AC CEPTED THE CASE OF THE ASSESSEE THAT OUT OF SALE CONSIDERATION OF THE MACHINERY SOLD BY IT, SUM OF RS. 1 LAKH WAS RECEIVED FOR THE SALE OF PERM IT IN RESPECT OF 1,200 SPINDLESTHERE WAS NO ERROR IN THE VIEW TAKEN BY THE AO CIT NOT JUSTIFIED IN INVOKING JURISDICTION UNDER S. 263 ON THE STRENGTH OF AN AUDIT NOTE. (X) CIT VS SMT. D VALLIAMMAL (1998) 230 ITR 695 (MA D). IT HAS BEEN HELD THAT SETTING ASIDE THE ITOS ORDER ON THE GROU ND THAT VERIFICATION OF ACCOUNT WAS NEEDED AFTER OBTAINING CLARIFICATION FROM THE ASSESSEE IS NOT A VALID GROUND FOR INVOKING THE JURISDICTION UNDER SECTION 263. (XI) CIT VS HASTINGS PROPERTIES (2002) 253 ITR 124 (CAL). IT HAS BEEN HELD THAT THE ASSESSMENT ORDER HAVING BEEN MADE AFT ER DUE VERIFICATION AND ALL RELEVANT MATERIAL WAS COLLECTED BY THE AO, THE ASSESSMENT ORDERS CANNOT BE SAID TO BE ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF REVENUE. (XII) CIT VS DENSO HARYAN (P) LTD (2010) 42 DTR (DE L) 187 HELD THAT CIT WAS NOT JUSTIFIED IN INVOKING PROVIS IONS OF S.263 TO ADD BACK SALES COMMISSION PAID BY THE ASSESSEE WHICH WA S DEBITED IN THE P & L ACCOUNT AND THE P & L ACCOUNT WAS AUDITED AND DULY CERTIFIED BY THE STATUTORY AUDITORS. (XIII) CIT VS MAX INDIA LTD (2007) 295 ITR 282 (SC) , WHEREIN HONBLE APEX COURT HELD THAT WHEN TWO VIEWS ARE POS SIBLE 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 INTEREST OF THE REVENUE UNLESS THE VIEW TAKEN BY THE ITO IS SHOWN T O BE UNSUSTAINABLE IN LAW. ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 18 2.8 IT IS CONTENDED THAT THE FACTS EXPLAINED BY THE ASSESSEE HAVE NOT BEEN CONTROVERTED BY LD. CIT; BESIDES ASSESSEE RELIED ON A CATENA OF JUDGMENTS NONE OF WHICH IS OBJECTIVELY DISTINGUISHED. LD CIT WITHOUT DISTINGUISHING THE FACTS OR ANY OF THE CASE LAW, SUMMARILY UNDER T HE INFLUENCE OF AUDIT OBJECTIONS HELD THE ASSESSMENT ORDER TO BE ERRONEOU S AND PREJUDICIAL TO THE REVENUE. THE LAW ORDAINS THAT THE LD. CIT MUST JUDG E THE ISSUE INDEPENDENTLY AND JUDICIALLY AND SHOULD NEITHER ALLOW IT TO BE IN FLUENCED BY OPINION OF AUDIT PARTY NOR BY INSTRUCTIONS OF OTHER AUTHORITY. RELIANCE IS PLACED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF SI RPUR PAPER MILL LTD VS CWT (1970) 77 ITR 6 (SC). IT IS PLEADED THAT THE ASSESSMENT ORDER HAS BEEN PASSED AFTER DUE INQUIRIES, VERIFICATION AND COMPLI ANCE, IT CANNOT BE HELD ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE , THEREFORE, THE IMPUGNED ORDER PASSED U/S 263 BY LD. CIT MAY BE QUASHED . 2.9 LD. CIT(DR) ON THE OTHER HAND CONTENDS THAT TH E SCOPE OF POWERS OF CIT FOR REVISION U/S 263 IS FAIRLY WIDE AND CAN BE EXERCISED NOT ONLY WHEN ORDER CONTAINS SOME APPARENT ERROR OR REASONING OF LAW OR OF FACT BUT ALSO WHEN AO PASSES A STEREO TYPED ORDER WHICH SIMPLY AC CEPTS WHAT HAS BEEN STATED IN RETURN OF INCOME WITHOUT MAKING PROPER IN QUIRIES. RELIANCE IS PLACED ON CIT V NIHAL CHAND REKHYAN 242 ITR 45 (DEL ). IN THIS CASE THE ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 19 RETURNED INCOME OF THE ASSESSEE HAS BEEN ACCEPTED B Y AO IN STEREOTYPE MANNER WITHOUT REFERRING EVEN TO EXEMPTION U/S 10AA . BEING FIRST YEAR OF CLAIM U/S 10AA IT WAS OBLIGATORY ON AO TO MAKE PROP ER INQUIRIES AND ARRIVE AT A FINDING OF ALLOW ABILITY OF 10AA AFTER CONSID ERING THE MATERIAL AVAILABLE ON RECORD. THUS THE AO HAS FAILED TO DISCHARGE HIS FUNCTIONS AS A QUASI JUDICIAL OFFICER WHICH MAKES THE IMPUGNED ORDER ERR ONEOUS. SINCE THE ERROR HAS LEAD TO UNVERIFIED CLAIM OF EXEMPTION U/S 10AA, APART FROM BEING ERRONEOUS THE ORDER BECOMES PREJUDICIAL TO THE INTE REST OF REVENUE; CONSEQUENTLY TWIN CONDITIONS PRESCRIBED BY SEC. 263 EXIST IN THIS CASE. RELIANCE FOR THE PROPOSITION THAT TERMS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE TO BE WIDELY CONSTRUED IS PLACED ON: I. TARA DEVI AGARWAL V CIT 88 ITR 323(SC) II. HINDU BANK KARUR LTD. 103 ITR 553 (MAD) III. EXPORTOS INDIA V CIT 246 ITR 1 (DEL) 2.10 LD. AO SHOULD HAVE VERIFIED THAT IN RESPECT OF SAME MANUFACTURING ACTIVITY ASSESSEE HAS SHOWN MORE PROFITS FROM EXEMP T UNIT. THIS WAS POSSIBLE EITHER BECAUSE OF INFLATION OF SUCH PROFIT S OR DEFLATION OF RELEVANT EXPENSES TO YIELD MORE TAX FREE INCOME; THUS THE IS SUES WHICH REQUIRED PROPER VERIFICATION AND FINDINGS BY AO TO FRAME A P ROPER ASSESSMENT HAVE NOT BEEN CONSIDERED. HAVING NOT DISCHARGED HIS DUTI ES IN RESPECT OF ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 20 INVESTIGATION OF THESE ISSUES AS AN ASSESSING OFFIC ER, THE ORDER PASSED BY LD. OFFICER BECOMES ERRONEOUS AND PREJUDICIAL TO THE IN TEREST OF REVENUE. 2.11 APROPOS THE AUDIT INFORMATION, LD CIT DR CONTE NDS THAT THE POWER TO REVISE THE ORDER U/S 263 IS DERIVED BY CIT AFTER CA LLING AND VERIFICATION OF THE RECORD. THE RECORD MAY BE CALLED ON THE BASIS OF IN FORMATION FROM AUDIT OR EVEN BY THE AO. RELIANCE FOR THIS PROPOSITION IS PL ACED ON RENUSAGAR POWER CO. LTD. 234 ITR 782 (AP). IT IS PLEADED THAT THE IMPUGNED ORDER PASSED BY LD. CIT IS VALID, TENABLE AND SATISFIES THE TWIN CONDITIONS PRESCRIBED BY SEC 263 AND DESERVES TO BE UPHELD. 2.12 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. IT WILL BE DESIRABLE TO CONSID ER THE NATURE OF ERROR IN THE AOS ORDER WHICH IS AGITATED BY THE LD. CIT(A). A PE RUSAL REVEALS THAT IT IS MAINLY TO THE EFFECT THAT BASIC AND CRUCIAL DOCUMEN TS REQUIRED FOR VERIFICATION OF CLAIM U/S 10AA HAVE NEITHER BEEN CA LLED FOR, NOR VERIFIED AND PLACED ON RECORD BY THE AO INCLUDING THE CERTIFICAT E ISSUED BY THE DEVELOPMENT COMMISSIONER (SEZ). BESIDES CONDITIONS OF SECTION 10AA(4) HAVE NOT BEEN EXAMINED AND COMPLIANCE PLACED ON REC ORD. THE NET PROFIT FROM EXEMPT UNIT IS CLAIMED AT RS. 70.55 LACS FOR T HE TURNOVER OF RS. 317.10 LACS, WHICH IS 22.24%. WHILE FOR THE BALANCE TURNOV ER OF BUSINESS, THE PROFIT ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 21 IS MERELY RS. 54.96 LACS FOR A TURNOVER OF RS. 109 8.34 LACS, WHICH IS JUST 5%. THUS NET PROFIT EXEMPT UNIT IS ABNORMALLY HIGH AT 4.5 TIMES OF PROFIT FROM REGULAR BUSINESS. THIS IS DESPITE THE FACT THA T THE BUSINESS OF UNIT IN SEZ WAS THE NEW BUSINESS, IN THIS EVENTUALITY THE A O OUGHT TO HAVE EXAMINED THE POSSIBILITY OF DIVERSION OF EXPENDITUR E FROM THE SEZ UNIT TO THE REGULAR UNIT, OR THE PROFITS WERE INFLATED IN T HE SEZ UNIT TO AVAIL THE HIGHER BENEFIT OF EXEMPTION U/S 10AA. BESIDES THERE WERE CERTAIN EXPENDITURES IN THE CONSOLIDATED TRADING AND PROFIT AND LOSS ACCOUNT WHICH REQUIRED PROPER VERIFICATION VIZ. INTEREST EXPENSES (WHETHER THERE WAS ANY DIVERSION OF INTEREST BEARING FUNDS), BAD DEBTS, RE PAIR AND MAINTENANCE, SALARY AND ALLOWANCES ETC. THE NOTICE U/S 263 OF TH E ACT WAS ISSUED BY CONSIDERING THESE ASPECTS AS PREJUDICIAL TO THE INT EREST OF THE REVENUE. IN RESPONSE TO THE NOTICE, THE ASSESSEE APPEARED BEFOR E THE LD. CIT AND EXPLAINED THE FACTS CLAIMING THAT ALL THE RELEVANT INFORMATION WAS CALLED BY THE AO AND VERIFIED AND RELEVANT COPIES DESIRED BY THE AO WERE PROVIDED AND THE CLAIM OF THE ASSESSEE WAS ALLOWED AFTER DUE ENQUIRY AND VERIFICATION. THE CATENA OF JUDGMENTS WERE FILED BY THE ASSESSEE. THE LD. CIT HELD THE IMPUGNED ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND CAME TO FOLLOWING CONCLUSION. ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 22 8. IT IS SEEN THAT ALL THE CASE LAWS CITED ARE DISTINGUISHABLE FROM THE FACTS OF THIS CASE AS THER E IS NO MATERIAL ON RECORD TO SHOW THAT THE AO HAD APPLIED HIS MIND ON DEDUCTION CLAIMED U/S 10AA, THE ASSESSEE HAD NOT EV EN MENTIONED THE RELEVANT CLAUSE OF SECTION 10AA FOR C LAIMING DEDUCTION AND HAD NEITHER SUBMITTED ALL PROOFS. THE AO HAD NEITHER PLACED ANY MATERIAL ON RECORD WHICH CONFIRM ED THAT INFLATED PROFIT WAS NOT CLAIMED ON EXEMPT UNIT OR A L THE EXPENDITURE CLAIMED (ON EXEMPT UNIT AND WITH RESPEC T TO REGULAR BUSINESS) WAS GENUINE, THEREFORE, THE ASSES SMENT ORDER DATED 28-12-201 IS ERRONEOUS IN SO FAR AS IT IS PRE JUDICIAL TO THE INTEREST OF THE REVENUE AND IS SET ASIDE BACK TO TH E FILE OF THE AO FOR NECESSARY VERIFICATIONS. 2.13 THE ERRORS PREJUDICIAL TO THE INTEREST OF THE REVENUE AS PER OBSERVATION OF THE LD. CIT IS AS UNDER:- (I) THERE IS NO MATERIAL ON RECORD TO SHOW THAT THE AO HAS APPLIED HIS MIND ON CLAIM OF DEDUCTION U/S 10AA OF THE ACT AS RELEVANT CLAUSE OF 10AA HAS NOT BEEN SUBMITTED WITH ALL THE PROOF. (II) THE AO HAD NEITHER PLACED ANY MATERIAL ON RECO RD WHICH VERIFIES THAT INFLATED PROFIT WAS NOT CLAIMED BY EX EMPTED UNIT OR THE EXPENDITURE CLAIMED IN EXEMPTED UNIT WAS GENUINE. 2.14 APROPOS FIRST MISTAKE THE LD. COUNSEL HAS DRAW OUR ATTENTION TO THE ASSESSMENT PROCEEDINGS. (I) THE ASSESSMENT ORDER IN QUESTION WAS PASSED O N 28-12- 2011. THE ASSESSEE VIDE LETTER DATED 24-10-2011 GAV E AN EXPLANATION REGARDING CLAIM OF DEDUCTION U/S 10AA W HICH WAS BY CLAIMED BY IT U/S 10B BY FOLLOWING SUBMISSIONS. 1. EXPLANATION REGARDING PROFIT CLAIMED EXEMPTED U/S 10B OF THE I.T. ACT, 1961. ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 23 IN F.Y. 2008-09, THE ASSESSEE STATED A MANUFACTURING UNIT IN SEZ-II, SITAPURA, JAIPUR WHIC H WAS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF GOLD JEWELLERY. THE PROFIT EARNED FROM THIS UNIT IS EXEMPT U/S 10AA OF I.T. ACT , 1961. THE COPY OF REP ORT OF CHARTERED ACCOUNTANTS IN SUPPORT OF EXEMPTION OF PROFIT OF THIS UNIT U/S 10AA IS ENCLOSED HEREWITH. IN COMPUTATION OF TOTAL INCOME DUE TO TYPING ERROR THE DEDUCTION OF INCOME EARNED FROM THIS UNIT WRONGLY CLAIMED U/S 10B OF I.T. ACT, 1961 IN PLACE OF SECTI ON 10AA OF I.T. ACT, 1961. YOU ARE THEREFORE, REQUESTE D TO KINDLY RECTIFY THIS TYPING MISTAKE AND ALLOW THE EXEMPTION U/S 10AA OF I.T. ACT , 1961 WHICH IS DULY ALLOWABLE TO ASSESSEE AND REPORT IN SUPPORT OF WHIC H IS ENCLOSED HEREWITH. THE REVISED COMPUTATION OF TOTAL INCOME AND RETURN FORM DULY SIGNED BY PARTNER OF ASSESSEE IS ALSO ENCLOSED HEREWITH. (II) AGAIN VIDE LETTER DATED DURING ASSESSMENT PROC EEDINGS QUA THE CLAIM U/S 10AA OF THE ACT, THE ASSESSEE SUB MITTED AS UNDER:- 4AUDIT REPORT IN PRESCRIBED FORM FOR DEDUCTION ALLOWABLE U/S 10AA. THE DETAIL SUBMISSION ALONG WITH NECESSARY REPORTS AND ENCLOSURES HAS BEEN SUBMITTED ALONG WITH OUR LETTER DATED 24-10-2011. 2.15 THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE ALLEGATION THAT PRIMARY DOCUMENTS FOR ELIGIBILITY OF CLAIM U/S 10AA WERE NEITHER ASKED BY THE NOR GIVEN BY THE ASSESSEE AND CONSEQUENTLY THEY ARE NOT VERIFIED IS NOT CORRECT. RELEVANT STATEMENTS, ELIGIBILITY CERTIFICA TES AND AUDIT REPORTS WERE FILED ALONG WITH RETURN OF INCOME WITH QUESTIONNAIR E. OUR ATTENTION IS DRAWN TO PAPER BOOK PAGES 69 TO 71 WHICH ARE AUDIT REPORT S FILED ALONG WITH RETURN ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 24 OF INCOME WHICH CONTAINS RELEVANT INFORMATION ABOUT THE ESTABLISHMENT OF SEZ ZONE AS TO ALLOWABLE CLAIM. ANNEXURE A ENCLOSE D THERETO CONTENDS THE DATE OF REGISTRATION, AMOUNT OF EXPORT AND OTHER RE LEVANT INFORMATION. THUS THERE IS NO MERIT IN THE ALLEGATION OF THE LD. CIT IN THIS BEHALF. WITH THESE DOCUMENTS ON RECORD, WE ARE UNABLE TO SUBSCRIBE THE VIEW OF THE LD. CIT. THE CRUCIAL DOCUMENTS WERE NOT ASKED BY THE AO NOT PRODUCED BY THE ASSESSEE. 2.16 THE NEXT QUESTION WHICH IS RAISED BY THE LD. C IT IS THAT RELEVANT SUB- CLAUSE 10AA HAS NOT BEEN MENTIONED. TO THIS ALLEGAT ION, THE ASSESSEE HAS CONTENDED THAT FORM NO. 56F AND ANNEXURE A THERETO DOES NOT PRESCRIBE ANY MENTIONING OF SUB-CLAUSE. BESIDES, THE HON'BLE RAJA STHAN HIGH COURT IN THE CASE OF CIT VS. RAJASTHAN FASTENERS (P) LTD. (2014) 363 ITR 271 HELD THAT NON-MENTIONING OF SECTION AND WRONG MENTIONING OF S ECTION CANNOT COME IN THE WAY OF ALLOWING CLAIM WHICH IS OTHERWISE ELIGIB LE TO THE ASSESSEE. SINCE THE REQUISITE FORM DOES NOT REQUIRE MENTIONING OF S UB-CLAUSE BESIDES THE HON'BLE JURISDICTIONAL HIGH COURT DOES NOT CONSIDER IT TO BE A REQUIREMENT WHICH CAN DISENTITLE THE ASSESSEE. RESPECTFULLY FOL LOWING HONBLE JURISDICTIONAL HIGH COURT JUDGMENT WE HAVE TO OVERR ULE THIS ALLEGATION. ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 25 2.17 APROPOS THE INFLATED PROFITS AND EXPENDITURE, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT SEPARATE BOOKS OF ACCOU NT FOR SEZ UNIT ARE MAINTAINED ALONG WITH PROFIT AND LOSS ACCOUNT , EXP ENSES VOUCHERS ETC. THE BOOKS OF ACCOUNT OF THE ASSESSEE HAVE BEEN UPHELD B Y THE AO, LD. CIT HAS NOT CONSIDERED UPHOLDING OF THE ACCOUNTS BY AO TO B E AN ERROR. THIS LEADS TO A VERY VAGUE SITUATION WHEN THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE UPHELD AND NOT CHALLENGED AT THE SAME TIME ALLEGATIONS ARE RAISED ABOUT CONTENTS THEREOF. THE LD. CIT WHILE PASSING THE ORDER U/S 26 3 OF THE ACT HAS NOT REFERRED TO ANY OTHER MISTAKE. IN CONSIDERATION OF THE FOREGOING FACTS, WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE AO IS NEIT HER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. WE MAY ADD THAT HON'BLE DELHI HIGH COURT IN THE CASES OF CIT VS. SUNBEAM AUTO AND CIT VS. DLF (SUPRA) HAS HELD THAT REVISION PROCEEDINGS CANNOT BE INITIATED TO MAKE ROVING ENQUIRIES. THERE IS NO PRESCRIBED PROFORMA OF AN ASSESSMENT OR DER IN IT ACT WHICH PRESCRIBED HOW THE ASSESSMENT ORDER SHOULD BE PASSE D. THUS THE CONTENTS OF THE BODY OF THE ASSESSMENT ORDER DEPEND ON THE DIS CRETION OF QUASI JUDICIAL AUTHORITY I.E. AO. THE ORDER DOES NOT BECOME ERRONE OUS AS LONG AS RECORD REFLECTS THAT RELEVANT ENQUIRIES WERE MADE. THEREFO RE, NO ADVERSE INFERENCE CAN BE DRAWN IN THIS BEHALF AS THE ASSESSEE HAS BEE N ABLE TO DEMONSTRATE CONDUCTING OF RELEVANT ENQUIRIES AND COMPLIANCE DUR ING THE COURSE OF ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 26 ASSESSMENT PROCEEDINGS. THE HON'BLE DELHI HIGH COUR T IN THE CASE OF CIT VS. VIKAS POLYMERS (2010) 236 CTR 476 HELD THAT IF THE CIT IS OF THE VIEW THAT THE SOME DOCUMENTS OUGHT TO HAVE BEEN PLACED O N RECORD BY THE AO. WHICH ARE PRODUCED BY THE ASSESSEE BEFORE CIT, IN T HAT CASE THE LD. CIT HIMSELF SHOULD DECIDE THE MATTER ON THE MATERIAL MA DE AVAILABLE. IN THIS CASE IF IN THE PERCEPTION OF LD CIT SOME DOCUMENTS WERE NOT PLACED ON RECORD THEY WERE FORTHWITH SUPPLIED BY THE ASSESSEE. CONS EQUENTLY, NO CASE IS MADE OUT FOR SETTING THE ASSESSMENT TO FRAME THE SA ME DENOVO. WE FIND MERIT IN THE CONTENTIONS OF ASSESSEE THAT IT HAS NO CONTROL OVER AO AS TO WHAT COPIES SHOULD BE PLACED ON RECORD OR IN WHICH MANNE R ASSESSMENT ORDER SHOULD BE PASSED. OUR VIEWS ARE FORTIFIED BY DECISI ONS OF HON'BLE APEX COURT IN THE CASES OF CIT VS. MAX INDIA LTD. (2007) 295 ITR 282 AND M/S. MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 243 ITR 83 (SC) AND OTHER HON'BLE HIGH COURT JUDGEMENTS. THUS IN VIEW OF THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT IMPUGNED ASSESSMENT ORDER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE I NTEREST OF REVENUE WHICH IS UPHELD. HENCE, ORDER PASSED U/S 263 OF THE ACT BY L D. CIT IS QUASHED. ITA NO. 289/JP/2014 MOTIONS JEWELLERS VS. CIT, CENTRAL JAIPUR 27 3. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/02/201 5. SD/- SD/- VH-VKJ-EHUK VKJ-IH-RKSYKUH (T.R. MEENA) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 19 TH FEB. 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. MOTISONS JEWELLERS, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE CIT-CENTRAL, JAIPUR 3. VK;DJ VK;QDR@ CIT, 4. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 5. XKMZ QKBZY@ GUARD FILE (ITA NO.280/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR