M/S SHREE SAIBABA CONSTRUCTION, Nagpur V. CIT-IV, Nagpur

ITA 292/NAG/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9668 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 02-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Keywords: Revision of order; Rectification of order; Opportunity of being heard; Principle of natural justice; Question of law; Assessment record; Reassessment proceedings
• Section: 143(3); 142(1); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI P.K. BANSAL, VICE PRESIDENT AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO. 292/NAG./2014 ( ASSESSMENT YEAR : 200910 ) M/S. SHREE SAIBABA CONSTRUCTION BEHIND GOYAL TALKIES KAMPTEE, NAGPUR 441 002 PAN ABNFS6079D APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE8, NAGPUR .... RESPONDENT ASSESSEE BY : SHRI K.P. DEWANI REVENUE BY : SHRI A.R. NINAWE DATE OF HEARING 22.06.2017 DATE OF ORDER 27.06 .2017 O R D E R PER AMARJIT SINGH, J.M. THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE IMPUGNED ORDER DATED 20 TH MARCH 2014, PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) BY THE LEARNED COMMISSIONER OF INCOME TAXVI, NAGPUR, RELEVANT TO THE ASSESSMENT Y EAR 200910. 2. THE EFFECTIVE GROUNDS RAISED BY THE ASSESSEE IS REP RODUCED BELOW: 1. THE ORDER PASSED BY THE CIT U/S 263 OF THE ACT IS ILLEGAL, WITHOUT JURISDICTION AND VOID AB INITIO; 2 M/S. SHREE SAIBABA CONSTRUCTION 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, PROV ISIONS OF SECTION 263 IS NOT APPLICABLE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENG AGED IN THE BUSINESS OF UNDERTAKING CIVIL CONSTRUCTION CONTRACT S. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED ITS RETURN OF INC OME ON 30 TH SEPTEMBER 2009, DECLARING TOTAL INCOME TO THE TUNE OF RS ` 25,25,540. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSME NT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT, DETERMINING TOTAL INCOME OF ` 1,47,98,682. THE ASSESSING OFFICER OBSERVED THAT TH E ASSESSEE HAS DEBITED EXPENSES OF RS. 5,10,46,326 UNDER THE HEAD URD PURCHASE . OUT OF THESE PURCHASES, THE ASSESSING OFFICER HAD E XAMINED PURCHASES OF ` 1,01,57,105 IN DETAIL AND FOUND THAT 60% OF THESE WERE BOGUS AND NONGENUINE PURCHASES. THE ASSESSING OFFICER, THERE FORE, MADE AN ADDITION OF ` 61,00,242 ON ACCOUNT OF BOGUS AND NONGENUINE PURCHASES. 3. MEANWHILE, THE LEARNED COMMISSIONER OF INCOME TAX INVOKED HIS POWERS UNDER SECTION 263 OF THE ACT, CALLED FOR THE ASSESSMENT RECORDS OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR AND AFTER SCRUTINIZING THE SAME, WAS OF THE VIEW THAT THE ASS ESSMENT ORDER 3 M/S. SHREE SAIBABA CONSTRUCTION PASSED BY THE ASSESSING OFFICER IS ERRONEOUS INASMU CH AS IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE FOR THE REA SONS THAT THE ASSESSING OFFICER WAS REQUIRED TO DISALLOW 60% OF T HE TOTAL URD PURCHASE OF RS. ` 5,10,46,326 INSTEAD OF RESTRICTING TO THE EXTENT O F 60% OF THE PURCHASES ACTUALLY VERIFIED (I.E., ` 1,01,57,105). THE LEARNED COMMISSIONER CONSIDERED THE ASSESSMENT ORDE R PRIMAFACIE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE, THEREFORE NOTICE UNDER SECTION 263(1) WAS ISSUED TO THE ASSESSEE ON 5 TH APRIL 2013, TO SHOW CAUSE AS TO WHY THE ASSESSMENT ORDER PASSED UN DER SECTION 143(3) ON 30 TH DECEMBER 2011 SHOULD NOT BE SET ASIDE. IN RESPONS E TO THE SAID NOTICE OF THE LEARNED COMMISSIONER, THE ASSESSEE FILED A DETAILED REPLY OBJECTING TO THE INITIATION OF PROCE EDINGS UNDER SECTION 263 OF THE ACT. THE CONTENTIONS OF THE ASSESSEE SUB MITTED BEFORE THE LEARNED COMMISSIONER ARE REPRODUCED BELOW: 3. IN RESPONSE TO THE NOTICE, SHRI VIVEK TIWARI, C .A., AND AUTHORIZED REPRESENTATIVE OF THE ASSESSEE, ATTENDED AND FILED A WRITTEN SUBMISSION ON 18/03/2014, WHICH IS REPRODUC ED AS UNDER:- 'WITH REFERENCE TO NOTICE U/S 263 THE ASSESSEE MAKE S THE FOLLOWING SUBMISSION. DURING THE COURSE OF ASSESSMENT PROCEED ING THE ASSESSING OFFICER EXAMINES THE TOTAL UNREGISTERED P URCHASES 'URD' OF AN AMOUNT OF RS. 51,046,326.00/-. FROM THESE PUR CHASES THE ASSESSING OFFICER ASKED FOR DETAILS OF FOLLOWING PU RCHASES:- NAME TOTAL URD PURCHASES ( ` ) TOTAL PAYMENT ( ` ) SHRI MESHRAM 7,25,000 / - 7,25,000 / - VAISHNAVI CONSTRUCTION 66,08,370 / - 48,24,507 / - 4 M/S. SHREE SAIBABA CONSTRUCTION SHRI LAXMIKANT JIBHKATE 28,38,982 / - 28,38,982 / - ANIL BHUTANI 65,053 / - 65,053 / - BAPU MOHAD 3,37,700 / - 3,37,700 / - SHYAM BORIKAR 7,00,000 / - 7,00,000 / - K. SIVESH 58,000 / - 58,000 / - DEEPAK AGRAWAL 24,000 / - 24,000 / - TOTAL 10 , 14 , 57 , 1 05 / - 83,73,242 / - AFTER EXAMINING THEM SHE DISALLOWED THE FOLLOWING P URCHASES TOTALING TO RS. 61,00,242.00/-. THE NOTICE U/S 263 STATES AS UNDER, THAT YOU HAVE D EBITED EXPENSES OF RS. 5,10,46,326/- UNDER THE HEAD- URD P URCHASES. OUT OF THESE, A.O. HAD EXAMINED URD PURCHASES OF RS . 1,01,57,105/- IN DETAIL AND FOUND THAT ABOUT 60% OF THESE WERE BOGUS AND NON - GENUINE PURCHASES. THE AO, THEREFOR E, MADE AN ADDITION OF RS. 61,00,242/- ON ACCOUNT OF BOGUS AND NO-GENUINE PURCHASES. HOWEVER, THE A.O. HAS NOT VERIFIED THE G ENUINENESS OF THE BALANCE URD PURCHASES OF RS. 4,08,89,2277-AS 60 % OF THE PURCHASES WERE FOUND TO BE BOGUS AND NON- GENUINE, THE POSSIBILITY OF BOGUS AND NON-GENUINE PURCHASES IN THE BALANCE U RD PURCHASES OF RS. 4,08,89,22,100/- CANNOT BE RULED OUT. IT IS WRONG TO STATE THAT THE INCOME TAX OFFICER EX AMINED ONLY RS. 101,57,105.00/- AND SHE HAS NOT EXAMINED THE BALANC E PURCHASES URD. THEREFORE THE ORDER IS PREJUDICIAL TO THE INTE REST OF REVENUE. IN FACT THE ASSESSING OFFICER EXAMINED URD PURCHASE S AT RS. 5,10,46,326.00/- AND REQUIRED THE ASSESSEE TO FURNI SH THE DETAILS OF THE EIGHT CREDITORS AGAINST URD PURCHASES DETAIL ED ABOVE. OUT OF THESE PURCHASES THE ASSESSING OFFICER EVENTUALLY DI SALLOWED RS. 61,00,242.00/- AS DISCUSSED IN PAGE 32 OF THE ORDER . SO THE POSITION IS WHERE THE ASSESSING OFFICER EXAMINED TH E ENTIRE URD PURCHASE OF RS. 5,70,46,32,600/- OUT OF WHICH SHE H AD ONLY FOUND ITEMS OF PURCHASE TO THE EXTENT OF RS.101,57,10,500 /- AS VERIFIABLE AND ULTIMATELY OUT OF THAT ASSESSING OFFICER DISALL OWED ONLY RS. 67,00,242.007-. SO THERE IS NO QUESTION OF 60% ANYW HERE IN THE ORDER. THAT THE ASSESSING OFFICER EXAMINED THE ENTI RE PURCHASES AND INITIALLY FOUND OUT, THAT FOLLOWING PURCHASE MA TERIAL ABOVE TO THE EXTENT OF RS. 101,57,10,500/- WAS DOUBTFUL AND AFTER FURTHER EXAMINATION DISALLOWED ONLY A PART OF IT. IT IS A T WO STAGE SCREENING OF THE PURCHASES. THAT IS TO SAY OUT OF THE RS. 5,7 0,46,32,600/- SHE FOUND ONLY RS. 707,57,70,500/- AS WORTHY OF DETAILE D EXAMINATION AND AFTER THAT THE ADDITION WAS MADE OF RS. 67,00,2 4,200/-. IT IS THEREFORE VERY INCORRECT TO SAY THAT THE ASSESSING OFFICER EXAMINED 5 M/S. SHREE SAIBABA CONSTRUCTION ONLY 20% OF PURCHASES. THIS IS ONLY A PRESUMPTION T HAT ONLY PARTLY URD PURCHASES WERE EXAMINED. ALTERNATIVELY, EVEN OTHERWISE THERE IS A PRESUMPTIO N THAT WHEN AN ORDER IS U/S 143 (3) IS MADE THE ITO HAS EXAMINED A LL ASPECTS AND THE ORDER HAS BEEN PASSED CONSIDERING ALL THE ASPEC TS OF THE MATTER VIDE CIT V/S KELVINATOR OF INDIA LTD 256 ITRPAGE 19 (DELHI) (FB) VIDE LAST PARA. THIS DECISION WAS APPROVED BY SUPREME COURT IN THE SAME CASE REPORTED IN 320ITR PAGE 561 FURTHER SAME PRINCIPAL HAS BEEN ADOPTED IN THE CASE OF BY THE BOMBAY HIGH COURT 308 ITR 190 & 195. 1) ASTEROIDS TRADING & INVESTMENT PVT LTD VS DEPUT Y COMMISSIONER OF INCOME TAX. 2) ASIAN PAINTS LTD. VS DEPUTY COMMISSIONER OF INCO ME TAX AND ANOTHER.' 5.1. THE ASSESSEE'S SUBMISSION HAS BEEN DULY CONSID ERED. IN ITS SUBMISSION, THE ASSESSEE HAS STATED THAT THE AO HAS EXAMINED THE ENTIRE URD PURCHASES OF RS. 5.10 CRORES AND AFTER F INDING THAT THE PURCHASES TO THE TUNE OF RS. 1.01 CRORES ARE DOUBTF UL AND WORTHY OF DETAILED EXAMINATION, SHE HAS REQUIRED THE ASSESSEE TO FURNISH THE DETAILS OF 8 CREDITORS OF THE SAID URD PURCHASES RE LATING TO WHICH A DISALLOWANCE OF RS.61 LACS HAS BEEN MADE. THE ASSES SEE SUBMITTED THAT IT IS INCORRECT TO SAY THAT THE AO HAS EXAMINE D ONLY 20% OF PURCHASES. THE ASSESSEE'S CONTENTION IS NOT ACCEPTA BLE AS THE FACTS POINT OTHERWISE. IT IS USEFUL TO MENTION HERE THAT IN ITS 'CONTRACT ACCOUNT' THE ASSESSEE HAS SHOWN CONTRACT RECEIPTS O F RS. 11.63 CRORES AND DEBITED AN AMOUNT OF RS. 5.10 CRORES ON ACCOUNT OF 'URD PURCHASE'. DURING THE COURSE OF SCRUTINY PRO CEEDINGS, THE AO RESORTED TO VERIFICATION BY TEST CHECK BASIS. THE C OUNSEL OF THE ASSESSEE WAS ASKED TO PRODUCE SUPPORTING BILLS AND VOUCHERS IN RESPECT OF 8 PARTIES RELATING TO SUCH PURCHASES. HO WEVER, AS MENTIONED IN PARAGRAPH 4.1 OF THE ASSESSMENT ORDER, THE COUNSEL COULD NOT PRODUCE A SINGLE DOCUMENT STATING THAT TH E BILLS AND VOUCHERS HAVE BEEN DISPLACED. SUBSEQUENTLY, THE AO ISSUED SUMMONS TO THESE 8 PARTIES. IT IS INTERESTING TO NO TE THAT OUT OF THESE 8 PARTIES, 5 PARTIES DENIED HAVING SUPPLIED A NY MATERIAL TO THE ASSESSEE AND ONE PERSON DID NOT ATTEND THE PROC EEDINGS. OF THE REMAINING TWO PARTIES, ONE VAISHNAVI CONSTRUCTION I NFORMED THE AO THAT NO BOOKS OF ACCOUNTS WERE MAINTAINED BY IT. DU RING HIS STATEMENT SHRI SANDIP NARAD (KARTA OF M/S SANDIP NA RAD HUF WHICH IS PROPRIETOR OF VAISHNAVI CONSTRUCTION) STAT ED THAT NO BILLS HAVE BEEN ISSUED TO THE ASSESSEE FIRM IN RESPECT OF THE MATERIAL SOLD TO THE ASSESSEE. HE ALSO INFORMED THE AO THAT NO SALES WERE 6 M/S. SHREE SAIBABA CONSTRUCTION MADE TO ANY OTHER PARTY OTHER THAN THE ASSESSEE. T HE REMAINING PERSON FROM WHOM THE ASSESSEE HAS CLAIMED TO HAVE M ADE URD PURCHASES IS SHRI LAXMAN JIBHKATE. IN HIS STATEMENT SHRI LAXMAN JIBHKATE STATED THAT NO SALES HAVE BEEN MADE BY HIM TO THE ASSESSEE. HE FURTHER STATED THAT PAYMENTS WERE RECE IVED BY WAY OF CHEQUES IN HIS BANK ACCOUNTS AND THAT HE HAD WITHDR AWN THE SAME IN CASH AND RETURNED THE CASH TO THE ASSESSEE AFTER RETAINING 5% OF THE AMOUNT AS COMMISSION. HE ALSO STATED THAT NO BI LLS WERE ISSUED BY HIM TO THE ASSESSEE. AFTER EXAMINING THESE 8 PAR TIES, THE AO CAME TO CONCLUSION THAT THE EXPENSES TOWARDS PURCHA SES SHOWN TO HAVE BEEN MADE FROM THESE 8 PARTIES AMOUNTING TO RS . 61 LACS ARE REQUIRED TO BE DISALLOWED. THE AO ACCORDINGLY MADE AN ADDITION OF RS. 61 LACS ON THIS GROUND. 5.2. IN VIEW OF THE ABOVE POSITION, THE ASSESSEE IS NOT RIGHT IN STATING THAT THE AO HAS EXAMINED THE ENTIRE URD PUR CHASES OF RS. 5.10 CRORES. IN FACT, THE AO HAS EXAMINED THE PURCH ASES WHICH ARE STATED TO HAVE BEEN MADE BY THE ASSESSEE FROM 8 PAR TIES ON PURELY TEST CHECK BASIS. THERE IS NOTHING ON RECORD TO IND ICATE THAT THE ENTIRE URD PURCHASES HAVE ENDURED THE RIGOURS OF AO 'S SCRUTINY. AS THE AO HAS EXAMINED ON TEST CHECK BASIS THE URD PUR CHASES TOTALING RS. 1.01 CRORES OF WHICH SHE FOUND PURCHAS ES TO THE TUNE OF RS. 61 LACS AS BOGUS AND NON-GENUINE, THE AO WAS REQUIRED TO DISALLOW 60% OF THE TOTAL URD PURCHASES OF RS. 5.10 CRORE INSTEAD OF LIMITING THE DISALLOWANCE TO THE PURCHASES IN RE SPECT OF THE AFORESAID 8 PARTIES EXAMINED BY HER. IN THIS VIEW O F THE MATTER, THE ORDER DATED 30.12.2011 PASSED BY THE AO IS ERRONEOU S. FURTHER, AS THE SAME HAS RESULTED IN LOSS OF TAX THE ORDER IS A LSO PREJUDICIAL TO THE INTEREST OF REVENUE. 5.3. IN ITS WRITTEN SUBMISSION, THE ASSESSEE HAS QU OTED THE CASE OF CIT V/S KELVINATOR OF INDIA LTD (256 ITR 1) AND TWO OTHER CASES. THE SAME ARE NOT RELEVANT HERE. THE SAID CASES RELA TE TO REASSESSMENT PROCEEDINGS TO THE EFFECT THAT A MERE CHANGE IN THE OPINION WOULD NOT CONFER JURISDICTION UPON THE ASSE SSING OFFICER TO INITIATE A PROCEEDING UNDER SECTION 147. IT HAS BEE N HELD IN THE SAID CASE THAT IT IS A WELL-SETTLED PRINCIPLE OF LAW TH AT WHAT CANNOT BE DONE DIRECTLY CANNOT BE DONE INDIRECTLY. IF THE ITO DOES NOT POSSESS THE POWER OF REVIEW, HE CANNOT BE PERMITTED TO ACHI EVE THE SAID OBJECT BY TAKING RECOURSE TO INITIATING A PROCEEDIN G OF REASSESSMENT OR BY WAY OF RECTIFICATION OF MISTAKE. IN A CASE OF THIS NATURE THE REVENUE IS NOT WITHOUT REMEDY. SECTION 263 OF THE A CT EMPOWERS THE COMMISSIONER TO REVIEW AN ORDER WHICH IS PREJUD ICIAL TO THE REVENUE'. IN THE PRESENT CASE, TAKING RECOURSE TO T HE REVISIONAL JURISDICTION, THE ORDER PASSED BY THE A.O. HAS BEEN ESTABLISHED TO BE BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST O F REVENUE AND, THEREFORE, THE CASES CITED BY THE ASSESSEE DOES NOT COME TO ITS RESCUE. IT IS PERTINENT TO MENTION HERE THAT IN THE CASE OF MALABAR 7 M/S. SHREE SAIBABA CONSTRUCTION INDUSTRIAL CO. LTD. V. COMMISSIONER OF INCOME-TAX, WHILE DELIBERATING UPON THE PROVISIONS OF SECTION 263, TH E HON'BLE SUPREME COURT HAS HELD AS UNDER: 'THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COM MITTED BY THE ASSESSING OFFICER; IT IS ONLY WHEN AN ORDER IS ERRO NEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUI REMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS P ASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHO UT APPLICATION OF MIND. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REV ENUE' IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT. UN DERSTOOD IN ITS ORDINARY MEANING, IT IS OF WIDE IMPORT AND IS NOT C ONFINED TO LOSS OF TAX. THE HIGH COURT OF CALCUTTA IN DAWJEE DADABHOV & CO. V. S.P. JAIN [1957] 31ITR 872, THE HIGH COURT OF KARNATAKA IN CIT V. T. NARAYANA PAI [1975] 98 ITR 422 , THE HIGH COURT OF BOMBAY IN CIT V. GABRIEL INDIA LTD. [1993] 203 ITR 208 AND THE HI GH COURT OF GUJARAT IN CIT V. SMT. MINALBEN S. PARIKH [1995] 21 5 ITR 81/ 79 TAXMAN 184 TREATED LOSS OF TAX AS PREJUDICIAL TO TH E INTERESTS OF THE REVENUE'. 6. IN VIEW OF THE ABOVE DISCUSSION, I AM OF THE OPI NION THAT THE ORDER PASSED BY THE ACIT, CIRCLE-8, NAGPUR, ON 30.1 2.2011 IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTER EST OF REVENUE. BY VIRTUE OF POWERS VESTED IN ME U/S. 263 OF THE I. T. ACT. I HEREBY SET ASIDE THE SAID ASSESSMENT ORDER DATED 30/12/2011 WI TH A DIRECTION TO THE A.O. TO PASS A FRESH ORDER AFTER EXAMINING T HE ISSUE AND GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE A SSESSEE. 4. CONSIDERING THE SUBMISSION, THE LEARNED COMMISSIONE R OF INCOMETAX SET ASIDE THE ASSESSMENT ORDER DATED 30 TH DECEMBER 2011, PASSED BY THE ASSESSING OFFICER AND DIRECTED HIM TO PASS THE ORDER AFTER EXAMINING THE ISSUE AFRESH. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 5. BEFORE US, THE LEARNED COUNSEL FOR ASSESSEE, AT THE VERY OUTSET, SUBMITTED THAT THE ISSUE IN DISPUTED IS COVERED BY DECISION OF HONBLE 8 M/S. SHREE SAIBABA CONSTRUCTION JURISDICTIONAL HIGH COURT IN THE CASE OF MOIL LTD. IN ITA NO.67/2016 VIDE ORDER DATED 26 TH APRIL 2017. HE SUBMITTED THAT THE LEARNED COMMISSIONER HAS CONCLUDED THAT THE ASSESSING OFFIC ER HAS NOT EXAMINED COMPLETE URD PURCHASES, THEREFORE, THE ORD ER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO T HE INTERESTS OF REVENUE. THE LEARNED COUNSEL SUBMITTED THAT THE ASS ESSMENT WAS FRAMED AFTER IN-DEPTH ENQUIRY AND EXAMINING ALL THE ISSUES. THE ASSESSMENT SO FRAMED IS RUNNING IN TO 35 PAGES AFTE R MAKING ADDITION OF ` 122.73 LAKH. THE ASSESSING OFFICER HAS DISCUSSED T HE ADDITION AT PAGES24 TO 32 OF THE ASSESSMENT ORDER AND OBSERVED THAT THE TOTAL URD PURCHASES CLAIMED ARE ` 5,10,46,326. THE ASSESSING OFFICER AFTER EXAMINING DETAILS MADE DISALLOWANCE OF ` 61,00,242. THE LEARNED COUNSEL FURTHER SUBMITTED THAT THE ASSESSING OFFICE R IN THE COURSE OF ASSESSMENT PROCEEDING HAD EXAMINED THE URD PURCHASES . THE ASSESSING OFFICER VIDE NOTICE UNDER SECTION 142(1) DATED 2 ND AUGUST 2011 CALLED THE ASSESSEE TO GIVE DETAILS OF MATERIA L PURCHASES. THE LEARNED COUNSEL SUBMITTED THAT THE ASSESSING OFFICE R IN THE COURSE OF ASSESSMENT PROCEEDING HAD EXAMINED THE URD PURCHASES AND PROCEEDED TO MAKE THE DISALLOWANCE AT ` 61,00,242 AT THE TIME OF FRAMING OF ASSESSMENT OUT OF CLAIM OF DEDUCTION AT ` 5,10,46,326. THE 9 M/S. SHREE SAIBABA CONSTRUCTION DISALLOWANCE MADE BY THE ASSESSING OFFICER IS DISCU SSED AT PARA4 OF THE ASSESSMENT ORDER. HE SUBMITTED THAT IN VIEW OF ABOVE CONCLUSION DRAWN BY THE LEARNED COMMISSIONER THAT SUCH EXPENDI TURE IS NOT EXAMINED BY ASSESSING OFFICER IS FACTUALLY INCORREC T AND THE ORDER PASSED BY THE ASSESSING OFFICER ALLOWING PART DEDUC TION ON ACCOUNT OF URD PURCHASES EXPENSES CANNOT BE TERMED AS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE. THEREFORE, THE IMPUGNE D ORDER PASSED BY THE LEARNED COMMISSIONER UNDER SECTION 26 3 OF ACT IS NOT JUSTIFIED. THE LEARNED COUNSEL SUBMITTED THAT THE A SSESSING OFFICER HAS MADE DUE ENQUIRIES IN THE MATTER AND ASSESSEE HAS S UBMITTED DETAILS IN RESPONSE TO SAME AND IT IS NOT THE CASE OF NO EN QUIRY. IT IS SUBMITTED BY THE LEARNED COUNSEL THAT ON THE ABOVE UNDISPUTED FACTUAL POSITION ORDER PASSED BY ASSESSING OFFICER CANNOT B E CONSIDERED TO BE PASSED WITHOUT PROPER EXAMINING URD PURCHASES EXPEN SES AND THUS IS BEYOND THE SCOPE OF THE PROVISIONS OF SECTION 263 O F ACT. THE LEARNED COUNSEL FOR ASSESSEE IN SUPPORT OF THE CONTENTION, RELIED UPON THE FOLLOWING CASE LAWS: I) HON'BLE BOMBAY HIGH COURT, NAGPUR BENCH, ORDER I N ITA NO.67/ 2016 IN THE CASE OF MOIL LIMITED VIDE ORDER DATED 2 6/04/2017. II) 96 CCH 0199 (BOM.) CIT VS. NIRAV MODI III) PETITION(S) FOR SPECIAL LEAVE TO APPEAL CC NO. (S) 22149/2016 IN THE CASE OF NIRAV MODI VIDE JUDGMENT DATED 28/01/20 16. IV) CIT V/S FINE JEWELLERY (INDIA) LTD. (2015) 372 ITR 0303 (BOM.) 10 M/S. SHREE SAIBABA CONSTRUCTION V) VODAFONE ESSAR SOUTH LTD. VS. CIT (2011)141 TTJ 0084 (DEL.) VI) GUPTA INTERNATIONAL VS. ITO (2010)2 ITR 0428 (DEL.) ; VII) MR. RAJESH KUMAR, ITAT ORDER IN ITA NO.462/HYD ./2015 IN THE CASE OF VIDE ORDER DATED 05/02/2016. 6. LEARNED DEPARTMENTAL REPRESENTATIVE DUTIFULLY SUPPO RTED THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX AND SUBMITTED THAT THE INCOME TAX OFFICER EXAMINED ONLY ` 101,57,105.00 AND SHE HAS NOT EXAMINED THE BALANCE PURCHASES URD, THEREFORE, THE ORDER IS PREJUDICIAL TO THE INTEREST OF REVENUE. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LEARNED COMMISSIONER, WHIL E PASSING ORDER UNDER SECTION 263 OF THE ACT, HAS CONCLUDED THAT TH E ASSESSING OFFICER HAS NOT EXAMINED COMPLETE URD PURCHASES AND THEREFOR E, ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3 ) OF THE ACT IS ERRONEOUS INASMUCH AS IT IS PREJUDICIAL TO THE INTE RESTS OF REVENUE. THE LEARNED COMMISSIONER, AFTER CONSIDERING THE SUBMISS ION OF ASSESSEE, HAS SET ASIDE THE ISSUE TO THE FILE OF ASSESSING OF FICER TO MAKE ASSESSMENT AFRESH AFTER VERIFYING URD PURCHASES. IN THE FACTS OF PRESENT CASE, THE URD PURCHASES CLAIMED WERE ` 5,10,46,326. THE ASSESSING OFFICER HAS EXAMINED THE ENTIRE URD PURCHA SED AND AFTER IDENTIFYING ` 1,01,57,105, HAS MADE ADDITION OF ` 61,00,242 AT 60% IN 11 M/S. SHREE SAIBABA CONSTRUCTION THE ASSESSMENT FRAMED. IT IS ALSO SEEN FROM RECORD THAT NOTICE UNDER SECTION 142(1) HAS BEEN ISSUED BY THE ASSESSING OFF ICER ON 02 ND AUGUST 2011 CALLING FOR DETAILS AS REGARD TO MATERI AL PURCHASE. IN THE REPLY TO SAID NOTICE, THE ASSESSEE HAS DULY SUBMITT ED THE COMPLETE DETAILS INCLUDING DETAILS AS TO URD PURCHASES MADE. THE ASSESSING OFFICER AFTER EXAMINING THE DETAILS SUBMITTED BY AS SESSEE HAS MADE DISALLOWANCE AT ` 61 LAKH OUT OF CLAIM OF DEDUCTION IN RESPECT TO URD PURCHASES IN THE ASSESSMENT FRAMED. THE ASSESSING O FFICER DISCUSSED THE DISALLOWANCE OUT OF URD PURCHASES MADE AT PARA4 OF THE ASSESSMENT ORDER. THE ORDER SHEET ENTRY ON 5 TH DECEMBER 2011, NOTES THAT LEDGER ACCOUNT OF URD PURCHASES WAS SEEN. THE EVIDENCE ON RECORD CLEARLY DEPICTS THAT URD PURCHASES WERE COMPL ETELY EXAMINED. THE ENQUIRY MADE BY ASSESSING OFFICER AND SUBMISSIO NS OF ASSESSEE MAKE IT CLEAR THAT THE CONCLUSION OF LEARNED COMMIS SIONER THAT THE ASSESSING OFFICER HAS NOT EXAMINED COMPLETE URD PUR CHASES IS FACTUALLY INCORRECT. THE ORDER PASSED BY ASSESSING OFFICER CANNOT BE TERMED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVEN UE AS THE ORDER PASSED BY THE ASSESSING OFFICER WAS AFTER DUE ENQUIRIES AND VERIFICATION AS REGARD TO CLAIM OF URD PURCHASES. TH E HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF MOIL LTD. IN ITA NO.67/2016 DATED 26 TH APRIL 2017 HAS CONSIDERED SIMILAR CIRCUMSTANCES A ND 12 M/S. SHREE SAIBABA CONSTRUCTION CONCLUDED THAT ORDER PASSED UNDER SECTION 263 WAS N OT IN ACCORDANCE WITH LAW IT HAS BEEN HELD AT PARA5 OF JUDGMENT AS UNDER: 5. ON A PERUSAL OF THE ORDERS PASSED BY THE AUTHOR ITIES, IT APPEARS THAT BEFORE THE ASSESSMENT ORDER WAS PASSED , A NOTICE WAS SERVED ON THE ASSESSEE UNDER SECTION 142 (1) OF THE ACT AND 20 QUERIES RETAINING TO DIFFERENT HEADS WERE MADE T HEREIN. THE NINTH QUERY IN THE NOTICE UNDER SECTION 142 (1) OF THE ACT PERTAINS TO THE EXPENDITURE FOR THE CORPORATE SOCIAL RESPONS IBILITY. BY THE SAID QUERY, THE ASSESSEE WAS DIRECTED TO GIVE A DET AILED NOTE OF EXPENDITURE FOR THE CORPORATE SOCIAL RESPONSIBILITY ALONG WITH BIFURCATION OF THE EXPENSES UNDER DIFFERENT HEADS. AN EXHAUSTIVE REPLY WAS SUBMITTED BY THE ASSESSEE TO THE NOTICE U NDER SECTION 142(1) OF THE ACT. IN PARAGRAPH 8 OF THE REPLY, THE ASSESSEE GAVE THE DETAILED NOTE PERTAINING TO THE EXPENDITURE FOR THE CORPORATE SOCIAL RESPONSIBILITY UNDER DIFFERENT HEADS THAT RU NS INTO SEVERAL PAGES. THE HEADS UNDER WHICH THE EXPENSES WERE MAD E TOWARDS THE CORPORATE SOCIAL RESPONSIBILITY WERE SPECIFICAL LY MENTIONED AS HEALTH, ENVIRONMENT, SPORTS, EDUCATION ETC. AND FOR EACH OF THE DIFFERENT HEADS, PARTICULARS WERE GIVEN IN RESPECT OF EVERY MINOR OR MAJOR EXPENSES. A DETAILED NOTE ON THE EXPENDITU RE ON THE CORPORATE SOCIAL RESPONSIBILITY CLAIM WAS GIVEN IN PARAGRAPH 8 WHICH RUNS INTO MORE THAN FIVE PAGES. IT IS NOT DIS PUTED THAT THE APPELLANT ASSESSEE IS A GOVERNMENT OF INDIA UNDERTA KING AND THE GOVERNMENT HAS A CONTROL OVER THE EXPENSES OF THE U NDERTAKING. IT IS PERTINENT TO NOTE THAT DURING THE PREVIOUS AS SESSMENT YEARS, SIMILAR CLAIMS WERE MADE BY THE ASSESSEE COMPANY AN D THE ASSESSMENT ORDERS ALLOWING THE CLAIMS HAVE ATTAINED FINALITY. WE HAVE MINUTELY PERUSED THE ASSESSMENT ORDER. THE CLA IMS FOR DEDUCTIONS WERE MADE BY THE ASSESSEE AT LEAST UNDER 20 HEADS AND QUERIES WERE MADE IN THE NOTICE UNDER SECTION 1 42 (1) OF THE ACT TO THE ASSESSEE IN RESPECT OF NEARLY ALL OF THE M. WE, HOWEVER, FIND FROM THE ASSESSMENT ORDER THAT THE ASSESSING O FFICER HAS DEALT WITH NEARLY NINE CLAIMS OF DEDUCTIONS. THESE CLAIMS HAVE BEEN SPECIFICALLY MENTIONED IN THE ASSESSMENT ORDER AND THEY HAVE BEEN DISCUSSED THEREIN BECAUSE THE ASSESSING O FFICER APPEARS TO HAVE DISALLOWED THOSE CLAIMS EITHER PART IALLY OR TOTALLY. IN RESPECT OF THE CLAIM FOR THE CORPORATE SOCIAL RE SPONSIBILITY AND SOME OTHER CLAIMS THAT WERE ALLOWED BY THE ASSESSIN G OFFICER, THE ASSESSING OFFICER HAS NOT MADE A SPECIFIC REFERENCE IN THE ASSESSMENT ORDER. IT IS APPARENT FROM THE ASSESSMEN T ORDER THAT THE ASSESSING OFFICER HAS EXPRESSED IN DETAIL ABOUT THE CLAIMS THAT WERE DISALLOWABLE. WHERE THE CLAIMS WERE ALLOWABLE, AS WE FIND FROM THE READING OF THE ASSESSMENT ORDER, THE ASSES SING OFFICER HAS NOT REFERRED TO THOSE CLAIMS. THE CORPORATE SOC IAL RESPONSIBILITY CLAIM IS ONE OF THEM. IT IS APPARENT FROM THE NOTICE 13 M/S. SHREE SAIBABA CONSTRUCTION UNDER SECTION 142 (1) OF THE ACT THAT A SPECIFIC QU ERY IN REGARD TO THE CLAIM PERTAINING TO THE CORPORATE SOCIAL RESPON SIBILITY WAS MADE AND A DETAILED NOTE AFTER GIVING BIFURCATION O F THE EXPENSES UNDER DIFFERENT HEADS WAS SOUGHT. WE HAVE PERUSED T HE RESPONSE IN RESPECT OF THIS QUERY WHICH IS EXHAUSTIVE. WE FI ND THAT THE ASSESSEE HAS GIVEN THE DETAILS, AS ARE SOUGHT UNDER QUERY NO.9 IN THE NOTICE UNDER SECTION 142 (1) OF THE ACT. IF THA T IS SO, THE JUDGMENTS, REPORTED IN (2015) 372 ITR 303 (BOM.) AN D (2016) 138 DTR 81 (BOM.) AND ON WHICH THE LEARNED COUNSEL FOR THE ASSESSEE HAS PLACED GREAT RELIANCE WOULD COME INTO PLAY. IT IS HELD IN THE JUDGMENTS REFERRED TO HEREIN ABOVE BY R ELYING ON THE JUDGMENT IN THE CASE OF IDEA CELLULAR LTD. (SUPRA) THAT IF A QUERY IS RAISED DURING THE ASSESSMENT PROCEEDINGS AND THE QUERY IS RESPONDED TO BY THE ASSESSEE, THE MERE FACT THAT TH E QUERY IS NOT DEALT WITH IN THE ASSESSMENT ORDER WOULD NOT LEAD T O A CONCLUSION THAT NO MIND HAS BEEN APPLIED TO IT. IN THE CASE OF FINE JEWELLERY (INDIA) LTD. (SUPRA) THIS COURT FOUND THAT FROM THE NATURE OF THE EXPENDITURE AS EXPLAINED BY THE ASSESSEE IN THAT CA SE THE ASSESSING OFFICER TOOK A POSSIBLE VIEW AND THEREFOR E, IT WAS NOT A CASE WHERE THE PROVISIONS OF SECTION 263 OF THE ACT COULD HAVE BEEN RESORTED TO. CONSIDERING THE EXPLANATION OF TH E ASSESSEE IN THIS CASE, WE ARE ALSO OF THE VIEW THAT THE ASSESSI NG OFFICER HAD TAKEN A POSSIBLE VIEW. IN THE CASE OF NIRAVMODI (SU PRA) THIS COURT HELD THAT THE TRIBUNAL WAS JUSTIFIED IN THAT CASE I N CANCELLING THE ORDER UNDER SECTION 263 OF THE ACT AS THE ASSESSEE HAD RESPONDED TO THE QUERY MADE TO IT DURING THE ASSESSMENT PROCE EDINGS AND MERELY BECAUSE THE ASSESSMENT ORDER DID NOT MENTION THE SAME, IT WOULD NOT LEAD TO A CONCLUSION THAT THE ASSESSIN G OFFICER HAD NOT APPLIED HIS MIND TO THE CASE. IN THE INSTANT CA SE WE FIND THAT THE ASSESSING OFFICER HAS APPLIED HIS MIND TO THE C LAIMS MADE BY THE ASSESSEE AND WHEREVER THE CLAIMS WERE DISALLOWA BLE THEY HAVE BEEN DISCUSSED IN THAT ASSESSMENT ORDER AND TH ERE IS NO DISCUSSION OR REFERENCE IN RESPECT OF THE CLAIMS TH AT WERE ALLOWED. IN VIEW OF THE LAW LAID DOWN IN THE JUDGMENTS IN TH E CASE OF FINE JEWELLERY (INDIA) LTD. (SUPRA) AND NIRAVMODI (SUPRA ) IT WOULD BE NECESSARY TO HOLD THAT IN THECIRCUMSTANCES OF THE C ASE, IT CANNOT BE SAID THAT MERELY BECAUSE THE ASSESSING OFFICER H AD NOT SPECIFICALLY MENTIONED ABOUT THE CLAIM IN RESPECT O F THE CORPORATE SOCIAL RESPONSIBILITY, THE ASSESSING OFFICER HAD PA SSED THE ASSESSMENT ORDER WITHOUT MAKING ANY ENQUIRY IN RESP ECT OF THE ALLOWABILITY OF THE CLAIM OF CORPORATE SOCIAL RESPO NSIBILITY. IN OUR VIEW, THE PROVISIONS OF SECTION 263 OF THE ACT COUL D NOT HAVE BEEN INVOKED BY THE COMMISSIONER OF INCOME TAX IN THE CI RCUMSTANCES OF THIS CASE. THE TRIBUNAL WAS NOT JUSTIFIED IN HOL DING THAT THE QUERY UNDER SECTION 142 (1) OF THE ACT WAS VERY GEN ERAL IN NATURE AND THE REPLY OF THE ASSESSEE WAS ALSO VERY GENERAL IN NATURE. IN OUR CONSIDERED VIEW, THE QUERY PERTAINING TO CORPOR ATE SOCIAL RESPONSIBILITY WAS EXHAUSTIVELY ANSWERED AND THE AP PELLANT 14 M/S. SHREE SAIBABA CONSTRUCTION ASSESSEE HAD PROVIDED THE DATA PERTAINING TO THE EX PENDITURE UNDER EACH HEAD OF THE CLAIM IN RESPECT OF CORPORAT E SOCIAL RESPONSIBILITY, IN DETAIL. THE TRIBUNAL WAS NOT JUS TIFIED IN HOLDING THAT THE REPLY/EXPLANATION OF THE ASSESSEE WAS NOT ELABORATE ENOUGH TO DECIDE WHETHER THE EXPENDITURE CLAIM WAS ADMISSIBLE UNDER THE PROVISIONS OF THE INCOME TAX ACT. THE ASS ESSING OFFICER IS NOT EXPECTED TO RAISE MORE QUERIES, IF THE ASSES SING OFFICER IS SATISFIED ABOUT THE ADMISSIBILITY OF CLAIM ON THE B ASIS OF THE MATERIAL AND THE DETAILS SUPPLIED. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ANSWER THE QUESTION OF LAW IN THE N EGATIVE AND AGAINST THE REVENUE. 8. THE RATIO LAID BY THE HONBLE JURISDICTIONAL HIGH C OURT SQUARELY APPLIES TO THE FACTS IN CASE OF ASSESSEE. IN THE PR ESENT CASE, COMPLETE URD PURCHASES WERE EXAMINED AND PART DISALLOWANCE WA S MADE BY THE ASSESSING OFFICER. THE VIEW TAKEN BY THE ASSESSING OFFICER BY MAKING PART DISALLOWANCE IS POSSIBLE VIEW ON THE MATTER AN D THE ORDER PASSED BY THE ASSESSING OFFICER CANNOT BE TERMED AS ERRONE OUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. CONSIDERING THE TOTALIT Y OF FACTS AND CIRCUMSTANCES IN THE CASE OF ASSESSEE AND RESPECTFU LLY FOLLOWING THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT, WE H OLD THAT LEARNED COMMISSIONER (APPEALS) IS NOT CORRECT IN HOLDING TH AT ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF THE REVENUE. IN VIEW OF ABOVE, WE HOLD THAT THE ORDER PASSED BY LEARNED COMMISSIONER (APPEALS) UNDER SECTION 263 OF THE ACT IS UNSUSTAINABLE AND IS HEREBY ORDERED TO BE SET ASIDE. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. 5. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. 15 M/S. SHREE SAIBABA CONSTRUCTION ORDER PRONOUNCED IN THE OPEN COURT ON SD/ - P.K. BANSAL VICE PRESIDENT SD/ - AMARJIT SINGH JUDICIAL MEMBER NAGPUR, DATED: COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, NAGPUR DATE INITIAL 1. DRAFT DICTATED ON 23.06.2017 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 24.06.2017 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 27.06.2017 SR.PS 6. DATE OF PRONOUNCEMENT 27.06.2017 SR.PS 7. FILE SENT TO THE BENCH 27.06.2017 SR.PS