PRIYANKA REGENCY BUILDERS & DEVELOPERS P. LTD, NAVI MUMBAI V. CIT 10, MUMBAI

ITA 2944/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8596 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 29-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRATAP SINGH
• Keywords: Question of law; Difference of opinion; Assessment record; Prejudicial to interest; Right to appeal; Change of opinion; Revenue expenditure
• Section: 143(3); 142(1); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR, ( AM ) ./ I.T.A. NO . 2944 / MUM/20 1 4 ( / ASSESSMENT YEAR - 2009 - 10 ) PRIYANKA REGENCY BUILDERS & DEVELOPERS PVT.LTD., PRIYANKA COMPLEX , SHOP NO.12 - A, PLOT NO.4 , SECTOR - 10, SANPADA, NAVI MUMBAI - 400705 / VS. COMMISSIONER OF INCOME TAX - 10, ROOM NO.574, 5 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAECP5519J / APPELLANT BY: SHRI PRAKASH PANDIT / RESPONDENT BY SHRI PRATAP SINGH / DATE OF HEARING : 2 8.11 .201 6 / DATE OF PRONOUNCEMENT : 08. 02 . 2017 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRECTED AGAINST THE ORDER OF THE LD. C OMMISSIONER OF INCOME TAX - 10, MUMBAI D ATED 7.3.2014 PERTAINING TO A.Y .200 9 - 10 . 2. THE ISSUE RAISED IN ALL THE GROUNDS OF APPEAL IS AGAINST THE SETTING ASIDE THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TA X ACT, 1961 DATED 9.12.2011 BY INVOKING REVISIONARY JURISDICTION U/S 263 OF THE ACT BY THE CIT . ITA NO.2944/M/14 2 3 . BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 25.9.2009 DECLARING A TOTAL INCOME OF RS.29,66,020/ - AND ASSESSMENT WAS FRAMED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 9.12.2011 ACCEPTING THE RETURNED INCOME. THEREAFTER THE SAID ASSESSMENT WAS SET ASIDE BY THE COMMISSIONER BY EXERCISING THE REVISIONARY POWERS U/S 263 OF THE ACT BY ISSUING SH OW CAUSE NOTICE DATED 9.10.2013 WHEREIN THE LD.CIT(A) HAS CITED FOLLOWING REASONS : A) THE AO DID NOT VERIFY THE BASIS OF ESTIMATING THE VALUATION OF WORK IN PROGRESS; B) THE AO DID NOT VERITY THE DIRECT EXPENSES AS THE PROJECT GOT COMPLETION CERTIFICATE ON 21. 09.2010 ; C) THE INTEREST COST OF RS.12.84 LACS SHOULD HAVE BEEN TREATED AS DIRECT EXPENSES; D) THE SOURCE AND GENUINENESS OF CLAIM OF ADVANCE RECEIVED FROM CUSTOMERS WERE NOT EXAMINED BY THE AO THE SAID NOTICE WAS RESPONDED BY THE ASSESSEE VIDE LE TTER DATED 22.10.2013 THE RELEVANT EXTRACTS OF WHICH ARE REPRODUCED BELOW: WE ARE IN THE RECEIPT OF THE SHOW CAUSE NOTICE FOR A. Y. 2009 - 10 U /S 263 OF THE ACT BY WHICH YOU HAVE ASKED WHY THE ORDER PASSED BY THE A. O U/S.143(3) OF THE ACT DATED 09.12.2011 IS NOT ERRONEOUS SO FAR AS IT IS PREJUDICE TO THE INTEREST OF THE REVENUE ON THE, POINTS RAISED IN THE SHO W CAUSE NOTICE. WE HEREBY SAY THAT THE SAID ORDER IS NOT ERRONEOUS AN D PREJUDICE TO THE INTEREST OF THE REVENUE ON THE FOLLOWING FACTS AN D SUBMISSIONS: (1) AT THE OUTSET, WE SAY THAT THE COMPANY FOLLOWS THE PERCENTAGE OF COMPLETION METHOD OF ACCOUNTING AS PRESCRIBED BY INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA, 'ACCOUNTING FOR CONSTRUC TION CONTRACTS' ACCOUNTING STANDARD - 7. AS PER THE ACCOUNTING STANDAR D, PROFIT IS RECOGNIZED ON ESTIMATE BASIS FOR THE YEAR END BASED ON FV' INCOME & EXPENDITURE INCURRED DURING THE YEAR. THE EXPENDITU RE I NCURRED ON THE PROJECT IS CARRIED OVER TO SUBSEQUENT YEAR AS WORK IN PROGRESS ITA NO.2944/M/14 3 INCLUDING THE ESSENTIAL PROFIT ELEMENT, TILL THE PROJECT GETS COMPLETED. ON COMPLETION OF PROJECT, THE PROFIT IS DETERMINED ON SALE VALUE OF THE PROJECT AFTER CONSIDERING THE WORK IN PROGRESS AND EXPENDITURE INCURRED TILL THE DATE OF COMPLETION. (2) DURING ASSESSMENT PROCEEDINGS IN RESPONSE TO 142 NOTICE, OUR AUTHORISED REPRESENTATIVE HAVE FILED DETAILS IN RESPECT OF PROFIT & LOSS ACCOUNT AND BALANCE SHEET AS WELL AS IN RESPECT OF WORK IN PROGRESS CALCULATION AND THE ASSESSING OFFICER, AFTER VER IFYING THE DETAILS FILED AND AFTER EXAMINING THE VOUCHERS AND DOCUMENTS, HAVE PASSED AN ORDER U/S.143(3), ACCEPTING THE RETURNED INCOME AS DISCLOSED BY US. IT IS ALSO SUBMITTED THAT WE ARE FOLLOWING PERCENTAGE COMPLETION METHOD AND THE SAME HAS BEEN ACCEPT ED BY THE ASSESSING OFFICER WHILE PASSING THE ORDER U/S.143(3) FOR SUBSEQUENT ASSESSMENT YEAR. (3) NOW WE SAY AND SUBMIT ON THE DISCREPANCIES AS POINTED IN YOUR SHOW CAUSE NOTICE AS UNDER: - (A) ASSESSING OFFICER DID NOT VERIFY THE BASIS OF ESTIMATING T HE VALUATION OF WORK IN PROGRESS: THE COMPANY ACQUIRED THE LAND FOR ITS PROJECT 'PRIYANAKA TULIP' LOCATED AT PLOT NOS.19 & 19A, SECTOR - 14, KALAMBOLI, TAL. PANVEL, DIST. RAIGAD, IN THE FINANCIAL YEAR 2007 - 08. AFTER PREPARING THE PLANS AND COMPLETION OF O THER FORMALITIES, IT APPLIED FOR COMMENCEMENT CERTIFICATE TO THE LOCAL AUTHORITY, M/S. CIDCO LTD., ON 17/03/2008. THE COMPANY GOT THE PERMISSION TO START THE WORK FROM M/S. CIDCO LTD., ON 25/06/2008, COPY OF SAID COMMENCEMENT CERTIFICATE (KNOWN AS CC CERTI FICATE) IS ENCLOSED HEREWITH FOR YOUR READY REFERENCE. (ANNEXURE - 1) DURING THE YEAR, THE COMPANY HAS INCURRED FOLLOWING EXPENSES TOWARDS ITS PROJECT: SR. SR. PARTICULARS AMOUNT AMOUNT 1 OPENING WIP 92,154 2 PROPORTIONATE LAND COST 1,05,48,358 1,05,48,358 3 PURCHASES 1,57,17,157 4 CONTRACT PAYMENTS 46,71,253 5 OTHER DIRECT EXPENSES 25,01,751 6 INTEREST ON BORROWED CAPITAL 12,83,780 7 DISCOUNT (49,669) TOTAL DIRECT EXPENSES INCURRED ON THE PROJECT TILL 31.03.2009 3,47,64,784 ITA NO.2944/M/14 4 ON THE SAID EXPENSES, THE ASSESSEE HAS DISCLOSED A PROFIT AT 21 % OF THE COST AS PER THE WORKING WHICH WAS GIVEN TO THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT PROCEEDINGS. THE SAME IS ALSO ENCLOSED FOR YOUR PERUSAL WITH THIS LETTER. (ANNEXURE - 2) THE A.O. APPLIED HIS MIND TO THE SAME AT THE TIME OF COMPLETING THE ASSESSMENT. (B) THE ASSESSEE DID NOT VERIFY DIRECT EXPENSES AS THE PROJECT GOT OCCUPATION CERTIFICATE ON 21.09.2010: DURING ASSESSMENT PROCEEDINGS, WE GAVE ALL THE DETAILS OF CONSTRUCTION PROJECT EXPENSES AND THE ASSESSING OFFICER, AFTER VERIFYING THE SAME, COMPLETED TH E ASSESSMENT. COPIES OF DETAILS SUBMITTED ALONGWITH COVERING LETTERS IS ENCLOSED WITH THIS LETTER. (ANNEXURE - 3) (C) THE INTEREST COST OF RS.12.84 LACS SHOULD HAVE BEEN TREATED AS DIRECT EXPENSES WE HAD BORROWED FUNDS FOR THE PROJECT. DURING THE YEAR, T HE ASSESSEE PAID AN INTEREST OF RS.12,83, 780 ON SUCH BORROWED CAPITAL AS MENTIONED IN EARLIER PARA 2 OF THIS LETTER, WHILE CALCULATING T HE GROSS PROFIT FROM THE PROJECT, WE HAVE INCLUDED THE INTEREST UNDER T HE DIRECT EXPENSES. THE FACT CAN BE VER IFIED FROM THE DETAILED WORKI NG OF WORK IN PROGRESS, SUBMITTED DURING THE COURSE OF ASSESSME NT PROCEEDINGS, VIDE LETTER DATED 18/08/2011 IN PARA 2. (D) THE SOURCE AND GENUINENESS OF THE CLAIM OF THE ADVANCES RECEIVED FROM THE CUSTOMERS WERE NOT EXAMINED 'BY THE A.O. AS ON 31 SI MARCH, 2009, WE HAD RECEIVED BOOKING ADVANCES OF RS.5,61,84,9201 - FROM OUR CUSTOMERS. THE DETAILS OF THE S AID ADVANCES RECEIVED FROM THE CUSTOMERS WITH THEIR NAMES, ADDRESS , DATE OF BOOKING, AMOUNT RECEIVED TILL 31 SI MARCH, 2009 WAS GIV EN TO THE A.O. DURING THE COURSE OF SCRUTINY ASSESSMENTS. COPY OF DETAILS SUBMITTED FOR BOOKING ADVANCES IS ENCLOSED WITH THIS LETTER. (ANNEXURE 4) THUS, IT WILL BE SEEN THAT THE A.O. HAS PASSED AN ASSESSMENT ORDER AFTER NECESSARY EXAMINATION OF' ALL THE ISSUES AND AF TER CONSIDERING THE ITA NO.2944/M/14 5 NECESSARY DETAILS AND EXPLANATION GIVEN BY US. THE SE ISSUES INCLUDE ISSUES WHICH YOUR GOODSELF HAVE RAISED IN THE PRESE NT SHOW CAUSE NOTICE. IN VIEW OF THE FACT IT IS SUBMITT ED THAT THE ORDER PASSED BY T HE .0. IS NEITHER ERRONEOUS NOR PREJUDICE TO THE INTEREST OF REVE NUE. AS THE AO AFTER DUE EXAMINATION OF THE RECORD AND EXPLANATION HAS PASSED AN ASSESSMENT ORDER AND THERE IS NO ERROR IN SAID ORDER. IT IS SUBMITTED THAT THE PROVISIONS OF SECTION 263 CANNOT BE INVOKED ON MERE SUSPICION. IT IS FURTHER SUBMITTED THAT SECTION 263 CONTEMPLATES TWO CONDITIONS NAMELY, (L) THE ORDER OF THE A.O. IS ERRONEOUS, AND (2) THE SAME IS PREJUDICE TO THE INTEREST OF REVENUE. IT IS SUBMITTED THAT APPLYING THE SAID TWO CONDITIONS TO THE FACTS OF OUR CASE, WE HAVE AMPLY DEMONSTRATED BEFORE YOUR GOODSELF THAT THE ISSUE ON WHICH YOUR GOODSELF WANTS TO INVOKE THE PROVISIONS OF SECTION 263, HAVE BEEN DULY CONSIDERED BY T HE ASSESSING OFFICER ON THE DETAILS SUBMITTED DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAS ACCEPTED THE PERCENTAGE COMPLETION METHOD FOR A.Y. 2009 - 10 AS WELL AS FOR 2010 - 11. WE, THEREFORE, SUBMIT THAT THERE IS NO NECESSITY TO MAKE ANY CHANG ES IN THE PROFIT ARRIVED BY THE ASSESSING OFFICER IN THE PERCENTAGE COMPLETION METHOD AS THE WHOLE EXERCISE WILL BE TAX NEUTRAL. (SUPREME COURT IN CIT VS. REALEST BUILDERS AND SERVICES, 307 ITR 208.) IT IS, THEREFORE, THAT THE ASSESSMENT ORDER PASSED BY THE A.O. IS A VALID ASSESSMENT ORDER PASSED AND THE SAME CANNOT BE REVISED U/S.263 MORE SO, AS A VIEW TAKEN BY THE A.O. IS ONE OF THE POSSIBLE VIEW AND DO REQUIRE FURTHER CONSIDERATION. (DELHI HIGH COURT CIT VS. SUNBEAM AUTO LTD., 227 CTR PAGE 133) IT IS FURTHER SUBMITTED THAT AS HELD BY THE SUPREME COURT IN PARSHURAM POTTERY VS. I TO 106 I TR PAGE 1 THE PROVISIONS OF SECTION 263 CANNOT BE INITIATED WITH A VIEW TO STARTING FISHING AND ROVING ENQUIRIES IN THE MATTERS AND ORDERS WHICH ARE ALREADY CONCLUD ED. SUCH ACTIONS WOULD BE AGAINST A WELL ACCEPTED POLICY OF LAW AS THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS. IT IS FURTHER SUBMITTED THAT BOMBAY HIGH COURT IN THE CASE OF GABRIEL INDIA LTD., 203 ITR PAGE 108 HAVE HELD THAT IF THE INCOME TAX OFFICER ITA NO.2944/M/14 6 IS ACTING IN ACCORDANCE WITH LAW AND MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY COMMISSIONER SIMPLY BECAUSE ACCORDING TO HIM THE ORDER SHOULD HAVE BEEN MORE ELABORATE. THE SECTION 263 DOES NOT VISUALIZE THE CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME TAX OFFICER WHO HAS PASSED THE ORDER. IN OUR CASE ALSO, THE IDENTICAL FACTS AND PARAMETERS EXIST, DETAI L ENQUIRY WAS MADE BY THE A.O. ON THE ISSUES RAISED BY YOUR GOODSELF, PERCENTAG E COMPLETION METHOD HAS BEEN ACCEPTED BY THE A.O. AFTER DUE EXAMINATION OF THE FACTS FOR A.Y. 2009 - 10 AND 2010 - 11 AND AS THE ASSE S SEE HAS DISCLOSED THE ENTIRE PROFIT IN A. Y. 2011 - 12 ANY CHANGES IN THE TAXABLE INCOME WILL BE EXERCISE OF REVENUE NEUTRAL. THEREFORE, IT IS SUBMITTED THAT THE ORDER PASSED BY THE A.O. IS NOT ERRONEOUS AS WELL AS PREJUDICE TO THE INTEREST OF THE REVENUE. IN VIEW OF THE ABOVE LEGAL AND FACTUAL SUBMISSION WE SUBMIT THAT THE NOTICE U/S.263 REQUIRES TO BE DROPPED. 4. ALL THE DETAILS / EXPLANATIONS ON THE VARIOUS POINTS AS RAISED BY THE COMMISSIONER IN THE SHOW CAUSE NOTICE WERE FURNISHED IN SIMILAR MANNER AS SUBMITTED BEFORE THE AO DURING THE COURSE OF ASSESS MENT PROCEEDINGS AND THEREFORE, SUBMITTING THAT THE PROCEEDINGS UNDER SECTION 263 SHOULD NOT BE INVOKED AS AO HAS EXAMINED ALL THE ISSUES RAKED UP BY THE COMMISSIONER IN THE SHOW CAUSE NOTICE AFTER CALLING FOR AND RAISING SPECIFIC QUERY ON EACH POINT . HOWEVER, THE LD. COMMISSIONER DID NOT ACCEPT THE CONTENTION OF T HE ASSESSEE AND SET ASIDE THE ORDER OF THE AO BY OBSERVING AND HOLDING AS UNDER: 4.1II I HAVE CONSIDERED SUBMISSION OF THE ASSESSEE. THE ARGUMENT OF THE ASSESSEE THAT THE CONDITIONS LAID DOWN IN THE PROVISIONS OF SECTION 263 ARE , NOT SATISFIED CANNOT BE ACCEPTED ON THE FACTS AND MERITS OF THE CASE WHICH IS DISCUSSED IN THE FOLLOWING PARAGRAPHS. ON THE LEGAL FRONT, THE HON' BLE SUPREME COURT IN THE CASE OF M/S MALABAR INDUSTRIAL CO.LTD 243 ITR 83 (SC) HAS LAID DOWN THE CONDITIONS PRECEDENT BY ITA NO.2944/M/14 7 WHICH THE CIT CAN INVOKE THE PROVISIONS OF SECTION 263. THE HON'BLE SUPREME COURT HAS HELD THAT 'IF THE ORDER OF THE A.O. IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE.' IT I S FURT HER HELD THAT 'AN INCORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS.' FURTHER, IT I S HELD THAT 'THE PHRASE PREJUDICIAL TO THE INTEREST OF REVENUE' IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT. UNDERSTOOD IN ITS ORDINARY MEANING IT IS OF WIDE IMPORT AND IS NOT CONFINED TO THE LOSS OF TAX. THE SCHEME OF THE ACT IS TO LEVY AND COLLECT TAX I N ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF DUE TO AN ERRONEOUS ORDER OF THE ITO, THE REVENUE I S LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTEREST OF, THE REVENUE. MOREOVER THE HON'BLE KERALA HIGH COURT IN THE CASE OF ENGLISH INDIAN CLAYS LTD. 331 ITR 219 (KER .) HAS HELD THAT A LACK OF PROPER ENQUIRY BY THE ASSESSING OFFICER WILL RENDER THE ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. RELIANCE IS ALSO PLACED ON HON'BLE DELHI HIGH COURT DECISION IN THE CASE OF CIT VS. GOETZE (INDIA) LTD. IN IT A NO. 1179/2010, ORDER DATED 09.12.2013, WHEREIN HC OBSERVED THAT CIT HAD GIVEN SPECIFIC REASONS BEHIND TREATING ASSESSING OFFICER'S ORDER AS PREJUDICIAL AND ERRONEOUS. HC REJECTED ASSESSEE'S CONTENTION THAT POWER U/S 263 COULD NOT BE INVOKED SINCE THE ASS ESSING OFFICER HAD TAKEN A PROBABLE VIEW, WHICH MAY BE DEBATABLE AND NOT ACCEPTABLE TO THE REVENUE. HC REMARKED THAT THE ORDER OF CIT COULD NOT BE SET ASIDE ONLY ON THE GROUND THAT TWO VIEWS WERE POSSIBLE OR PROBABLE, BUT CRR HAD RECORDED HOW THE ORDER OF ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO INTERESTS OF REVENUE. ORDER OF THE CIT COULD BE SET - ASIDE ONLY IF FINDINGS ACCORDED BY CIT WERE INCORRECT OR I F ORDER OF ASSESSING OFFICER WAS NOT PREJUDICIAL TO INTEREST OF REVENUE. HC OBSERVED THAT CIT C OULD EXAMINE THE ISSUE ON MERITS EVEN WHEN THE SAME WAS EXAMINED BY ASSESSING OFFICER AND THAT PRINCIPLES OF 'CHANGE OF OPINION' DID NOT APPLY. HC NOTED THAT REVENUE DID NOT HAVE ANY RIGHT TO APPEAL AGAINST THE ORDER OF ASSESSING OFFICER AND THEREFORE THE POWER OF REVISION U/S 263 WAS CONFERRED ON THE CIT TO CORRECT ERRONEOUS ORDER WHICH WERE ALSO PREJUDICIAL TO REVENUE'S INTERESTS. HE REMARKED THAT ' ..... IT WOULD B E INCORRECT TO STATE AS A BOARD PROPOSITION THAT AN ORDER OF ASSESSING OFFICE R CANNOT BE E RRONEOUS, IF THE ASSESSING OFFICER HAS TAKEN ONE OF THE TWO VIEW POSSIBLE. IN SUCH CASES THE ORDER OF THE ASSESSING OFFICER IS ERRONEOU S PROVIDED THE COMMISSIONER HOLDS AND IS ABLE TO DEMONSTRATE THAT THE V I E W TAKEN BY THE ASSESSING OFFICER WAS NOT PLAUSIB LE, BEING LEGALLY UNSUSTA I NAB LE AND INCORRECT'. 4.1.III.THE CONTENTION OF THE ASSESSEE THAT THE STAND TAKEN IN THE NOTICE U /S 263 IS A MERE CHANGE OF OPINION IS ALSO NOT TENABLE. RELIANCE IN THIS REGA RD ITA NO.2944/M/14 8 IS PLACED ON THE CHENNAI ITAT DECISION IN THE CASE OF M/S COIMBATORE CABLE NET PRIVATE LIMITED VS ACIT, COIMBATORE 2012 TIOL 60 WHEREIN IT WAS HEL D THAT WHEN THE AO BELIEVED THE NOMENCLATURE GIVEN IN THE BALANCE - SHEET AN D SIMPLY ACCEPTED THE CLAIM OF THE ASSESSEE WITHOUT APPLICATION OF MIND AN D WITHOUT E XAMINING THE EVIDENCE OF THE EXPENDITURE INCURRED, CIT HAS RIGHTLY INITIATED THE PROCEEDINGS U/S 263. SIMILARLY, THE CHANDLGARH ITAT IN T HE CASE OF MI5 IND SPHINX PRECISION LTD BY AN ORDER DATED NOVEMBER 10, 2006 HAS HELD THAT THE ASSESSING OFFICER HAS PASSED THE ORDER WITHOUT GIVING AN Y REASONS FOR ACCEPTING THE CONTENTIONS OF THE ASSESSEE, THE COMMISSIONER WAS WELL WITHIN HIS JURISDICTION T O INVOKE SECTION 263 AS THE ORDER OF TH E ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE THOUGH THE ASSESSING OFFICER HAS PASSED THE ORDER AFTER TAKING A POSSIBLE VIEW. RELIANCE IN THIS REGARD IS ALSO PLACED IN THE KERALA HIGH COUR T J U DGEMENT IN THE CASE OF BHATSONS ACQUATIC PRODUCTS 329 ITR 67 (KER). 4.1.IV.IT HAS BEEN HELD BY THE CALCUTTA HIGH COURT IN THE CASE REPORTED IN 31 ITR 872 THAT IF THE DECISION OF THE ASSESSING OFFICER IS NOT IN ACCORDANCE WI TH THE LAW, THE SAME C AN BE REVISED BY THE COMMISSIONER OF INCOME - TAX U/ S 263. IT HAS BEEN HELD BY HONOURABLE ITAT, MUMBAL BENCH 'A', MUMBAL IN TH E CASE OF STERLING CONSTRUCTION & INVESTMENT VS. ASSTT. COMMISSIONER OF INCOME TAX 79 ITO 299(MUM) THAT WHEN ASSESSMENT ORDER WAS BA SED O N COMMISSIONER WAS COMPETENT TO REVISE IT. RELIANCE IS ALSO PLACED ON THE INCORRECT ASSUMPTION OF FACTS AND INCORRECT APPLICATION OF LAW THE ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREFORE COMMISSIONER WAS COMPETENT TO REVISE IT. RELIANCE IS ALSO PLACED ON THE DECISION OF HONOURABLE ITAT, INDORE BENCH IN THE CASE OF FRLGOSCANDLA WINNER FOOD PROCESS SYSTEM (79 ITD 357). 4.1.V.HENCE, THE CONTENTIONS RAISED BY THE ASSESSEE AGAINST THE INVOCATION OF SECTION 263 ARE NOT TEN ABLE AND THE SAME ARE REJECTED. 4.2. THE ASSESSEE HAS SUBMITTED DETAIL OF WIP, DIRECT EXPENSES, INTEREST COST OF RS. 12.84 LACS AND DETAIL OF ADVANCES RECEIVED FROM THE CUSTOMERS, VIDE THEIR LETTER DATED 22.10.2013. FURTHER, DETAIL HAS. BEEN FILED VIDE LE TTER DATED 28.10.2013. 4.2.1 I HAVE CONSIDERED THE SUBMISSION OF THE ASSESSEE. THE FACTS AND MERITS OF THE CASE ARE DISCUSSED I N FOLLOWING PARAGRAPHS: - 4.2.1.I THE ASSESSEE VIDE ITS LETTER DATED 22.10.2013 FILED THE WORKING OF WIP OF KALAMBOLL PROJECT (PLOT NO. 19 - 19A) AS PER 'ANNEXURE - 2 ' CLAIMING THAT THE SAME WAS SUBMITTED BEFORE THE ASSESSING OFFICER. AS ITA NO.2944/M/14 9 PER THIS ANNEXURE TOTAL DIRECT EXPENSES INCURRED ON THE PROJECT TILL 31.03.2009 IS SHOWN AT RS. 3,47,64,784/ - . OUT OF THIS PROPORTIONATE LAND COST IS SHOWN AT RS. 98,72,832/ - . HOWEVER, IN THE DETAIL FILED VIDE DATED 22.10.2013 IT IS CLAIMED THAT PROPORTIONATE LAND COST WAS 1,05,48,358/ - OUT OF TOTAL DIRECT EXPANSES OF ~ 3,47,64,784/ - . FURTHER, IT IS SEEN THAT GROSS PROFIT HAS BEEN ESTIMATED @ 21 % WITHOUT GIVING AN Y BASE AND SUPPORT FOR THE SAME. THE ASSESSING OFFICER HAS NOT EXAMINED PROPERLY THE WORKING OF WIP, AS THERE I S A DIFFERENCE IN PROPORTIONATE LAND COST AS MENTIONED HEREINABOVE , AND ESTIMATION OF PROFIT IS WITHOUT ANY BASE AND SUPPORT. THUS, THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND AND HAS NOT VERIFIED THE FACTS I N PROPER PROSPECTIVE. THEREFORE, THE ASSESSMENT ORDER DATED 09.12.2011 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. COMMISSIONER WAS COMPETENT TO REVISE IT. RELIANCE IS ALSO PLAC ED ON THE DECISION OF HONOURABLE ITAT, INDORE BENCH IN THE CASE OF FRLGOSCANDLA WINNER FOOD PROCESS SYSTEM (79 ITD 357). 4.1.V.HENCE, THE CONTENTIONS RAISED BY THE ASSESSEE AGAINST THE INVOCATION OF SECTION 263 ARE NOT TENABLE AND THE SAME ARE REJECTED. 4.2. THE ASSESSEE HAS SUBMITTED DETAIL OF WIP, DIRECT EXPENSES, INTEREST COST OF RS. 12.84 LACS AND DETAIL OF ADVANCES RECEIVED FROM THE CUSTOMERS, VIDE THEIR LETTER DATED 22.10.2013. FURTHER, DETAIL HAS. BEEN FILED VIDE LETTER DATED 28.10.2013. 4.2.1 I HAVE CONSIDERED THE SUBMISSION OF THE ASSESSEE. THE FACTS AND MERITS OF THE CASE ARE DISCUSSED IN FOLLOWING PARAGRAPHS: - 4.2. 1. I THE ASSESSEE VIDE ITS LETTER DATED 22.10.2013 FILED THE WORKING OF WIP OF KALAMBOLL PROJECT(PLOT NO. 19 - 19A) AS PER 'ANNEX URE - 2' CLAIMING THAT THE SAME WAS SUBMITTED BEFORE THE ASSESSING OFFICER. AS PER THIS ANNEXURE TOTAL DIRECT EXPENSES INCURRED ON THE PROJECT TILL 31.03.2009 IS SHOWN AT RS. 3,47,64,784/ - . OUT OF THIS PROPORTIONATE LAND COST IS SHOWN AT RS. 98,72,832/ - . HOWE VER, IN THE DETAIL FILED VIDE DATED 22.10.2013 IT I S CLAIMED THAT PROPORTIONATE LAND COST WAS 1,05,48,358/ - OUT OF TOTAL DIRECT EXPANSES OF ~ 3,47,64,784/ - . FURTHER, IT IS SEEN THAT GROSS PROFIT HAS BEEN ESTIMATED @ 21 % WITHOUT GIVING ANY BASE AND SUPPORT FOR THE SAME. THE ASSESSING OFFICER HAS NOT EXAMINED PROPERLY THE WORKING OF WIP, AS THERE I S A DIFFERENCE IN PROPORTIONATE LAND COST AS MENTIONED HERE IN ABOVE, AND ESTIMATION OF PROFIT IS WITHOUT ANY BASE AND SUPPORT. THUS, THE ASSESSING OFFICER HAS NOT A PPLIED HIS MIND AND HAS NOT VERIFIED THE FACTS IN PROPER PROSPECTIVE. THEREFORE, THE ASSESSMENT ORDER DATED 09.12.2011 I S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. ITA NO.2944/M/14 10 5. THUS, AN ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3)DATED 09.12.2011 I S HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 4.2.1.II WITH REGARDS TO INTEREST COST OF RS. 12.84 LACS. IT IS SEEN THAT THE SA ME DEBITED TO DIRECT EXPENSES, HOWEVER, THE SAME HAS NOT BEEN VERIFIED BY T HE ASSESSING OFFICER. 4.2.L.III WITH REGARDS TO ADVANCES RECEIVED FROM THE CUSTOMERS T HE ASSESSEE HAS FILED DETAIL OF ADVANCES AS PER 'ANNEXURE - 4' VIDE THEIR LET TER DATED 22.10.2013 CLAIMING THAT THE SAME WAS FILED BEFORE THE ASSESSI NG OFFICER. AS PER THIS ANNEXURE FLATS HAVE B EEN SOLD ON THE SAME DATE AND THE SAME FLOOR BUT THERE IS A VAST DIFFERENCE IN RATE PER SQ FT. FOR EXAMPLE: - SR.NO. NAME OF THE FLAT OWNER FLAT NO. DATE OF BOOKING DATE OF REGISTRATION RATE PER SQ.FT 1. D EEPAK G. TRIPATHI 201 15.03.2008 17.07.2008 4490.9 9 2 D EEPAK G. TRIPATHI 202 15.03.2008 17.07.2008 3262.43 3 D EEPAK G. TRIPATHI 203 15.03.2008 17.07.2008 3231.63 4 NATRAJAN SRIRAM 302 15.03.2008 25.07.2008 4429.22 5 NATRAJAN SRIRAM 303 15.03.2008 25.07.2008 4365.38 6 NATRAJAN SRIRAM 304 15.03.2008 25.07.2008 4490.9 9 SIMILARLY, THERE A IS RATE DIFFERENCE IN THE FLATS SOLD ON THE SAME FLO OR AND ON THE SAME DATE IN CASE OF REKHA VINAYAK NAIK [FLAT NO. 501 TO 504]. THE ASSESSING OFFICER HAS NOT ENQUIRED ABOUT THE REASONS FOR THE RA TE VARIATION AS THERE IS NOTHING ON THE RECORD. THUS THE ASSESSING OFFICER H AS NOT APPLIED HIS MIND AND HAS NOT DONE ANY INVESTIGATION AND REQUI RED VERIFICATION. DURING THE REVISION PROCEEDINGS THE ASSESSEE WAS ASKED TO GIVE DET AIL IN THIS REGARD. THE SAME WAS FURNISHED VIDE LETTER DATED 28.10.2013 AS P ER 'ANNEXURE - Z'. FROM THIS IT IS SEEN THAT THE RATE PER SQ. FT HAS BEEN SHOWN AS UNDER: - SR.NO. NAME OF THE FLAT OWNER FLAT NO. DATE OF BOOKING DATE OF REGISTRATION RATE PER SQ.FT 1. D EEPAK G. TRIPATHI 201 15.03.2008 17.07.2008 4491 2 D EEPAK G. TRIPATHI 202 15.03.2008 17.07.2008 4439 3 D EEPAK G. TRIPATHI 203 15.03.2008 17.07.2008 4381 ITA NO.2944/M/14 11 4 D EEPAK G. TRIPATHI 204 15.03.2008 17.07.2008 4491 THUS, THERE IS RATE DIFFERENCE AS FURNISHED BY THE ASSESSEE ITSELF BEFORE THE ASSESSING OFFICER AND DURING THE REVISION PROCEEDINGS. THIS REQUIRES FURTHER VERIFICATION AND INVESTIGATION AS WELL AS GENUINENESS AND CAPABILITY OF DEPOSITS RECEIVED ON ACCOUNT OF ADVANCES FROM SAID CUSTOMERS WHICH WAS NOT DONE BY THE ASSESSING OFFICER. 5. THUS, AN ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3)DATED 09.12.2011 IS HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 6. IN VIEW OF THE ABOVE, I T IS APPROPRIATE TO SET ASIDE THE ASSESSMENT TO BE MADE AFRESH BY THE ASSESSING OFFICER ON THE ABOVE POINTS FOLLOWING THE DIRECTIONS GIVEN HEREINABOVE PARAGRAPHS. 5. THE LD. AR DURING THE COURSE OF HEARING BEFORE US DREW OUR ATTENTION THE QUESTIONNAIRE ATTACHED WITH NOTICE U/S 142(1) DATED 17.6.2011 AND POINTED OUT THAT THE AO SPECIFICALLY RAISED QU E RRIES ON EACH AND EVERY POINT SEEKING DETAILS AND EXPLANATION FROM THE ASSESSEE VIDE PARA S 12 , 13,14 AND 23 OF THE DETAILED QUESTIONNAIRE DATED 17.6.2011 WHICH WERE REPLIED VIDE WRITTEN SUBMISSIONS DATED 20.6.2011 . ON THE QUERY NO. 23 BY THE AO QUA WIP OF KALAMBOLI PROJECT , THE ASSESSEE FILED THE DETAILS OF WIP OF KALAMBOLI PROJECT COMPRISING DETAILS OF ALL THE EXPENSES AND CALCULATION OF CLOSING WIP AS A NNEXURE - 1 TO THE SUBMISSION DATED 20.06.2011 A COPY OF WHICH IS FILED AT PAGE NO 24 O F THE PB WHICH RELATE TO POINT A & B OF THE SHOW CAUSE NOTICE. THE LD. COUNSEL POINTED OUT THAT IN REPLY ON SPECIFIC QUER IES FROM THE AO IN THE NOTICE, THE ASSESSEE VIDE LETTER DATED 20 .6.2011 FILED DETAILS OF ALL EXPENSES COPIES OF WHICH ARE AT PAGES 25 TO 28 OF THE PAPER BOOK . O N POINT NO. (C) OF THE SHOW CAUSE NOTICE U/S 263 OF THE ACT , THE LD. COUNSEL , ITA NO.2944/M/14 12 WHILE REFERRI NG TO P AGE 24 OF THE PAPER BOOK WHICH CONTAIN ED THE DETAILS OF WIP OF KALAMBOLI PROJECT , POINTED OUT THAT RS.12,83,780 / - INTEREST ON LOAN WAS SPECIFICALLY SHOWN IN THE DETAILS WIP AT SR. NO 6 OF ANNEXURE 1 SUPRA . ON THE POINT NO. (D) OF THE SHOW CAUSE NOTICE, WHICH IS REGARDING THE GENUINENESS OF THE ADVANCES RECEIVED FROM CUSTOMERS , T HE LD. AR SUBMITTED THAT VIDE PARA S 12 &13 OF THE QUESTIONNAIRE DATED 17.6.2011, THE AO ASKED THE ASSESSEE TO FURNISH DETAILS OF B OOKING ADVANCES AS ON 31.3.2007 IN THE SPECIFIED FORMAT CALLING FOR VARIOUS DETAILS SUCH AS . NAME OF FLAT OWNER , DATE OF BOOKING, TOTAL AREA, RATE, AGREEMENT VALUE, AMOUNT RECEIVED AT THE BEGINNING AND RECEIVED DURING THE YEAR, TOTAL AMOUNT RECEIVED AN D BALANCE RECEIVABLE WHICH WERE R EPLIED BY THE ASSESSEE BY FILING THE NECESSARY DETAILS FILED VIDE PARA 12 OF THE WRITTEN SUBMISSIONS DATED 20.6.2011 COPIES OF WHICH ARE PLACED IN THE PAPER BOOK AT PAGE 29 - 30. THE LD. AR SUBMITTED BEFORE US THAT THE CI T HAS WRONGLY EXERCISED THE JURISDICTION UNDER SECTION 263 OF THE ACT AS THE CONDITIONS AS PROVIDED IN SECTION 263 FOR INVOKING THE PROVISIONS OF SECTION 263 WERE NOT SATISFIED AS THE ASSESSMENT FRAMED BY THE AO WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. VARIOUS ALLEGATIONS MADE BY THE CIT IN THE SHOW CAUSE NOTICE FOR WHICH THE CIT RESORTED TO THE PROVISIONS OF SECTION 263 TO SET AS IDE HE ASSESSMENT ORDER WERE TOTALLY MISPLACED AND WRONG AND THUS THE CONCLUSION DRAWN BY THE CIT IS DEVOID OF ANY BASIS AND WITHOUT APPLICATION OF MIND TO THE FACTS ON RECORDS AS THE AO HAS PASSED ASSESSMENT ORDER BY TAKING AND EXAMINING EVERY ASPECT S WH ICH WAS RAISED BY THE CIT IN THE SHOW CAUSE NOTICE . THE LD. ITA NO.2944/M/14 13 AR FINALLY IN DEFEN S E OF HIS ARGUMENT RELIED UPON THE DECISION IN THE CASE OF CIT V/S FINE JEWELLERY (INDIA) LTD. [2015] 372 ITR 303 (BOMBAY) AND CIT V. GERA DEVELOPMENTS (P.) LTD. [2016] 387 ITR 691 (BOMBAY) AND PRAYED THAT IN VIEW OF THE RATIO LAID DOWN IN THE DECISION (SUPRA) THE PROCEEDINGS UNDER SECTION 263 INITIATED BY THE CIT BE QUASHED AND ASSESSMENT ORDER PASSED BY THE AO SHOULD BE UPHELD. 6 . ON THE CONTRARY, THE LD. DR RELIED HEAVILY ON THE ORDER OF THE CIT BY SUBMITTING THAT THE AO HAS COMPLETELY FAILED TO GO INTO THE VARIOUS ISSUES AS RAISED IN THE SHOW CAUSE NOTICE ISSUED U/S 263 OF THE ACT BY THE CIT AND THEREFORE THE ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE TO THAT EXTENT. THE LD. DR FURTHER ARGUED THAT ONCE IT IS PROVED THAT THE ISSUES WERE NOT RAISED OR EXAMIN ED OR ASKED FOR DETAILS ON CERTAIN POINTS WHICH WERE PARAMO UNT IMPORTANCE TO THE ASSESSMENT OF REVENUE THEN ONLY REMEDY AVAILABLE IS TO INVOKE THE REVISIONARY POWERS UNDER SECTION 263 OF THE ACT WHICH WAS RIGHTLY EXERCISED BY THE COMMISSIONER. THE LD. DR FINALLY PRAYED THAT THE ORDER OF CIT BE CONFIRMED BY DISM ISSING THE SUBMISSIONS OF THE ASSESSEE. 7 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE IMPUGNED ORDERS AND CASE LAW S RELIED UPON BY THE ASSESSEE. WE FIND THAT THE CIT HAS EXERCISED THE REVISIONARY POWERS BY ISSUING SHOW CAUSE NOTICE DATED 17.06.2011 UNDER SECTION 263 OF THE ACT SETTING OUT VARIOUS REASONS BECAUSE OF WHICH THE ORDER OF THE ASSESSING ITA NO.2944/M/14 14 OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REV ENUE AS THE AO FAILED TO EXAMINE ALL THE FOUR ISSUES RAISED IN THE SAID NOTICE . WE FIND FROM THE RECORD THAT ALL THESE FOUR POINTS AS MENTIONED IN THE SHOW CAUSE NOTICE WERE SPECIFICALLY RAISED BY THE AO IN THE QUESTIONNAIRE DATED 17.6.2011 AND REPLIED BY THE ASSESSEE BY FILING NECESSARY DETAILS BY WAY OF WRITTEN SUBMISSIONS DATED 20.06.2011 . THE AO IN THE QUESTIONNAIRE DATED 17.6.2011 VIDE PARA 23 SPECIFICALLY ASKED THE ASSESSEE FOR THE DETAILS OF WIP QUA KALAMBOLI WHICH WERE FILED BY THE ASSESSEE VIDE LETTER DATED 20.9.2011 ANNEXURE - 2 SUBMITTING THE DETAILS AS CALLED FOR BY THE AO COPY OF WHICH IS FILED AT PAGE 24 OF THE PAPER BOOK BEFORE US . ON SECOND ISSUE RAISED BY THE CIT QUA NON VERIFICATION OF DIRECT EXPEN SES AS THE PROJECT GOT OCCUPANCY CERTIFICATE ON 21.9.2010 , T HE ASSESSEE IN RESPONSE TO SPECIFIC QUERY FILED NECESSARY DETAILS OF DIRECT EXPENSES VIDE ANNEXURE - III FILED COPIES OF WHICH ARE AT PAGES 25 TO 28 OF THE PAPER BOOK. ON ISSUE NO.3 IN THE SHOW CAUSE NOTICE WHICH IS IN RESPECT OF INTEREST AMOUNT OF RS.12.84 LAKHS AS DIRECT EXPENSES, WE FIND FROM THE PAGE 24 OF THE PAPER BOOK THAT THIRD LAST ITEM OF EXPENSES IS INTEREST ON LOAN OF RS .12,83,780/ - WHICH WAS ALSO VERY MUCH BEFORE THE AO IN THE DETAILS OF WIP OF KALAMBOLI PROJECT AS ANNEXURE - 2 . ON THE LAST POINT I.E 4 WHICH IS REGARDING NON VERIFICATION OF GENUINENESS OF ADVANCES RECEIVED FROM THE CUSTOMERS , THE AO CALLED UPON THE AS SESSEE V IDE PARA 12 OF THE QUESTIONNAIRE DATED 17.6.2011 TO FURNISH THE DETAILS OF BOOKING ADVANCES IN SPECIFIED FORMAT WHICH WAS REPLIED VIDE LETTER DATED 20.9.2011 VIDE PARA 12 FORMING PART OF THE ASSESSEES PAPER BOOK AT PAGES ITA NO.2944/M/14 15 29 AND 30. FROM THE ABO VE FACT S ON RECORD IT IS ABUNDANTLY CLEAR THAT THE REVISIONARY POWERS WERE EXERCISED BY THE CIT WITHOUT EXAMINING THE ASSESSMENT RECORD WAS NOT JUSTIFIED AS EVERY ISSUE RAISED IN THE SHOW CAUSE NOTICE WAS EXAMINED BY THE AO . THE AO RAISED SPECIFIC QUERY A ND ASSESSEE HAS FILED SPECIFIC REPLY TO EACH AND EVERY POINT WITH DETAILED ANNEXURE WHICH ARE ON ASSESSMENT FILE . UNDER THIS CIRCUMSTANCE , WE ARE NOT IN AGREEMENT WITH CONCLUSIONS DRAWN BY THE COMMISSIONER THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE CIT CANNOT BE ALLOWED TO EXERCISE THE REVISIONARY POWERS WHERE ALL THE ISSUES AS RAISED IN THE SHOW CAUSE NOTICE U/S 263 OF THE ACT WERE RAISED BY THE AO A ND REPLIED BY THE ASSESSEE AS STATED HEREINABOVE. WE FIND THAT THERE ARE TWO POSSIBLE VIEWS AND THE AO HAS TAKEN ONE OF THE POSSIBLE VIEW S WHICH IS IN FAVOUR OF THE ASSESSEE AND WITH WHICH THE COMMISSIONER DO ES NOT AGREE , THE ORDER PASSED BY THE AO SHOU LD NOT BE TREATED AS PREJUDICIAL TO THE REVENUE UNLESS THE VIEW TAKEN BY THE AO WAS UNSUSTAINABLE IN LAW. IN THE CASE OF FINE JEWELLERY (INDIA) LTD. (SUPRA) IT HAS BEEN OBSERVED AND HELD AS UNDER: 8. WE FIND THAT THE IMPUGNED ORDER OF THE TRIBUNAL DOES RECORD THE FACT THAT SPECIFIC QUERIES WERE MADE DURING THE ASSESSMENT PROCEEDINGS WITH REGARD TO DETAILS OF EXPENDITURE CLAIMED UNDER THE HEAD 'MISCELLANEOUS EXPENSES' AGGREGATING TO RS. 2.94 CRORES. THE RESPONDENT - ASSESSEE HAD RESPONDED TO THE SAME AND ON CONSIDERATION OF RESPONSE OF THE RESPONDENT - ASSESSEE, THE ASSESSING OFFICER HELD THAT OF AN AMOUNT OF RS. 17.98 LAKHS INCURRED ON ACCOUNT OF REPAIRS AND MAINTENANCE OUT OF RS. 2.94 CORES IS CAPITAL EXPE NDITURE. THIS ITSELF WOULD BE INDICATION OF APPLICATION OF MIND BY THE ASSESSING OFFICER WHILE PASSING THE IMPUGNED ORDER. THE FACT THAT THE ASSESSMENT ORDER ITSELF DOES NOT CONTAIN ANY DISCUSSION WITH REGARD TO THE BALANCE ITA NO.2944/M/14 16 AMOUNT OF EXPENDITURE OF RS. 1.7 6 CRORES I.E. RS. 2.94 CRORES LESS RS. 17.98 LAKHS CLAIMED AS REVENUE EXPENDITURE WOULD NOT BY ITSELF INDICATE NON APPLICATION OF MIND TO THIS ISSUE BY THE ASSESSING OFFICER IN VIEW OF SPECIFIC QUERIES MADE DURING THE ASSESSMENT PROCEEDINGS AND THE RESPOND ENT - ASSESSEE'S RESPONSE TO IT. IN FACT THIS COURT IN THE CASE OF 'IDEA CELLULAR LTD. V. DY. CIT [2008] 301 ITR 407 ' HAS HELD THAT IF A QUERY IS RAISED DURING ASSESSMENT P ROCEEDINGS AND RESPONDED TO BY THE ASSESSEE, THE MERE FACT THAT IT IS NOT DEALT WITH IN THE ASSESSMENT ORDER WOULD NOT LEAD TO A CONCLUSION THAT NO MIND HAD BEEN APPLIED TO IT. 9. MOREOVER, FROM THE NATURE OF EXPENDITURE AS EXPLAINED BY THE PETITIONER TO T HE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS ITSELF INDICATES THAT THE VIEW THAT THE SAME WERE IN THE REALM OF REVENUE EXPENDITURE, IS A POSSIBLE VIEW. THEREFORE, WE FIND NO FAULT IN THE IMPUGNED ORDER HAVING FOLLOWED THE BINDING DECISION OF THE SUPREME COURT IN THE CASE OF MAX INDIA LTD. (SUPRA), WHILE ALLOWING THE APPEAL BEFORE IT. IN THE CASE OF GERA DEVELOPMENTS (P.) LTD. (SUPRA), IT HAS BEEN OBSERVED AND HELD AS UNDER : 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WITH REGARD TO ISSUE (A) I.E. TAXABILITY OF THE TRANSFER OF DEVELOPMENT RIGHT, WE FIND THAT THE IMPUGNED ORDER OF THE ITAT RECORDS FINDINGS OF ASSESSING OFFICER IN DETAIL FROM WHICH IT IS EVIDENT THAT THE ASSESSING OFFICER APPLIED HIS MIND TO THE ABOVE CLAIM AND ON THE BASIS OF TH E FACTS BEFORE HIM, CAME TO THE CONCLUSION THAT AN AMOUNT OF RS.5.86 CRORES OUT OF RS. 41 CRORES RECEIVED COULD ALONE BE SUBJECTED TO THE TAX AS INCOME DURING THE SUBJECT ASSESSMENT YEAR. THE BALANCE AMOUNT RS.35.14 CRORES HAS TO BE TREATED AS DEPOSIT AS T HE SAME IS SUBJECT TO BEING REFUNDED IN THE ABSENCE OF THE ENVIRONMENTAL CLEARANCE. THUS, WE FIND THAT THE ASSESSING OFFICER HAS TAKEN A VIEW/FORMED AN OPINION ON THE FACTS BEFORE HIM AND SUCH A OPINION CANNOT BE SAID TO BE AN ERRONEOUS AS IT DOES NOT PROC EED ON THE INCORRECT ASSUMPTION OF FACTS OR LAW AND THE VIEW TAKEN IS A POSSIBLE VIEW. THEREFORE, AS HELD BY THE APEX COURT IN MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83/109 TAXMAN 66 WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME TAX OFFICER HAS TA KEN ONE VIEW WITH WHICH THE COMMISSIONER OF THE INCOME TAX DOES NOT AGREE, CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME TAX OFFICER IS ITSELF UNSUSTAINABLE IN LAW. SO FAR AS ISSUE (B) I.E. WARRANTY EXPENSES CLAIMED BY THE RESPONDENT - ASSESSEE IS CONCERNED, WE FIND THAT THE ITAT HAS RECORDED THE FACT THAT A SPECIFIC QUERY WITH REGARD TO THE SAME WAS MADE BY THE ASSESSING ITA NO.2944/M/14 17 OFFICER DURING THE ASSESSMENT PROCEEDINGS. THIS QUERY WAS RESP ONDED TO BY THE RESPONDENT - ASSESSEE JUSTIFYING THE WARRANTY EXPENSES. THE ASSESSING OFFICER BEING SATISFIED WITH REGARD TO THE JUSTIFICATION OFFERED, ALLOWED THE CLAIM OF WARRANTY EXPENSES AS MADE BY THE RESPONDENT - ASSESSEE. IT IS THUS CLEAR THAT THE A SSESSING OFFICER HAD CONSIDERED THE ISSUE BY RAISING QUESTIONS DURING THE ASSESSMENT PROCEEDINGS. THE MERE FACT THAT IT DOES NOT FALL FOR DISCUSSION IN THE ASSESSMENT ORDER WOULD NOT IPSO FACTO LEAD TO THE CONCLUSION THAT THE ASSESSING OFFICER DID NOT APPL Y HIS MIND. IT IS CLEAR THAT IF THE ASSESSING OFFICER IS SATISFIED WITH THE RESPONSE OF THE ASSESSEE ON THE ISSUE AND DROPS THE LIKELY ADDITION, IT CANNOT BE SAID TO BE NON APPLICATION OF MIND TO THE ISSUE ARISING BEFORE THE ASSESSING OFFICER. IN FACT THIS ISSUE WAS A SUBJECT MATTER OF THE CONSIDERATION BY THIS COURT IN THE CIT V. FINE JEWELLERY (INDIA) LTD. [2015] 55 TAXMANN.COM 514/230 TAXMAN 641/372 ITR 303. IN THE ABOVE CASE, AN IDENTICAL SUBMISSION MADE ON BEHALF OF THE REVENUE WAS NEGATIVED IN THE CON TEXT OF EXERCISING OF POWER UNDER SECTION 263 OF THE ACT TO HOLD THAT IF A QUERY IS RAISED DURING THE ASSESSMENT PROCEEDINGS AND RESPONDED TO BY THE ASSESSEE, THE MERE FACT THAT IT HAS NOT BEEN DEALT WITH IN THE ASSESSMENT ORDER WOULD NOT LEAD TO A CONCLUS ION THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND TO THE ISSUES. 8. WE THUS FIND THAT ON THE ISSUES (A) AND (B) VIZ. CONSIDERATION RECEIVED ON TRANSFER OF DEVELOPMENT RIGHT AND WARRANTY EXPENSES ARE CONCERNED, THE IMPUGNED ORDER OF THE ITAT HAS APPLI ED THE PRINCIPLE OF LAW LAID DOWN IN MALABAR INDUSTRIAL CO. LTD.'S CASE (SUPRA) AND FINE JEWELLERY (INDIA) LTD. (SUPRA). THUS, THE QUESTION AS PROPOSED DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS, THE QUESTION AS FRAMED ARE NOT ENTERTAINED. 9. ACCORDINGLY, APPEAL IS DISMISSED. NO ORDER AS TO COSTS. 8 . CONSIDERING THE FACTS OF THE CASE I N THE LIGHT OF AFORESAID JUDGMENTS , WE FIND THAT THE CASE OF THE ASSESSEE IS SQUARELY COVER ED IN FAVOUR OF THE ASSESSEE. IN OUR OPINION ALL THE POINTS AS R AISED BY THE CIT U/S 263 IN THE SHOW CAUSE NOTICE ISSUED UNDER SECTION 263 OF THE ACT WERE DULY RAISED BY THE AO DURING THE ASSESSMENT PROCEEDINGS AND ALSO REPLIED BY THE ASSESSEE BY FILING THE NECESSARY DETAILS AND THEREFORE, THE ORDER OF THE AO CANN OT BE TERMED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY, ITA NO.2944/M/14 18 WE QUASH THE PROCEEDINGS U/S 263 AND THE CONSEQUENT ORDER OF THE COMMISSIONER . 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 8TH FEB, 2017 . 8TH FEB, 2017 SD SD (JOGINDER SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 8TH FEB, 2017 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI