Shukla Dairy Pvt. Ltd., Surat V. Pr. Commissioner of Income Tax-2, Surat

ITA 309/SRT/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7777 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 26-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S T BIDARE
• Keywords: Principle of natural justice; Assessment record; Prejudicial to interest; Reason to believe; Revenue expenditure; Reassessment proceedings; TDS
• Section: 40A(3); 143(3); 142(1); 133A; 40(a)(ia); 143(2); 13; 22; 131; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM ./ITA NO.309 & 310/SRT/2018 ( [ [ / ASSESSMENT YEAR: (2010-11 & 2013-14) (VIRTUAL COURT HEARING) SHUKLA DAIRY PVT. LTD. B-16/2, ROAD NO.12, HOJIWALA INDUSTRIAL ESTATE, PALSANA HIGWAY ROAD, SACHIN, SURAT 394230 VS. PRIN. CIT-2, SURAT ./ ./ PAN/GIR NO.: AAGCS8152E (ASSESSEE) (RESPONDENT) ASSESSEE BY : SHRI KAMLESH BHATT - CA RESPONDENT BY : SHRI S. T. BIDARE CIT. DR / DATE OF HEARING : 14/07/2021 /DATE OF PRONOUNCEMENT : 23/08/2021 / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: THESE CAPTIONED TWO APPEALS FILED BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEARS 2010-11 AND 2013-14, ARE DIRECTED AGAINST THE SEPARATE ORDERS PASSED BY THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX -2, SURAT [IN SHORT THE PCIT], DATED 26.03.2018 AND 23.03.2018 RESPECTIVELY, UNDER SECTION 263 OF THE INCOME TAX ACT 1961, [HEREINAFTER REFERRED TO AS THE ACT] 2. IN THESE TWO APPEALS, ASSESSEE HAS CHALLENGED THE CORRECTNESS OF THE ORDER PASSED BY THE LEARNED PCIT UNDER SECTION 263 OF THE ACT. SINCE, THE ISSUES INVOLVED IN ALL THESE TWO APPEALS ARE COMMON AND IDENTICAL; AND THESE TWO APPEALS RELATE TO SAME ASSESSEE, THEREFORE, THESE APPEALS HAVE BEEN HEARD TOGETHER AND ARE PAGE | 2 ITA 309 & 310/SRT/2018 A .YS.. 2010-11 & 2013-14 SHUKLA DAIRY PVT. LTD. BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. FOR THE SAKE OF CONVENIENCE, THE GROUNDS AS WELL AS THE FACTS NARRATED IN ITA NO. 310/SRT/2018 FOR AY 2013-14, HAVE BEEN TAKEN INTO CONSIDERATION FOR DECIDING THE ABOVE APPEALS EN MASSE . THE GRIEVANCES RAISED BY THE ASSESSEE IN ITA NO. 310/SRT/2018, FOR AY 2013-14, ARE AS FOLLOWS: 1. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT ERRED IN INVOKING THE PROVISIONS OF SECTION 263 AND THEREBY PASSING THE ORDER U/S 263 AND HENCE YOUR PETITIONER PRAYS THAT THE ORDER PASSED BY LD. PRIN CIT-2, SURAT ON 26 TH MARCH, 2018 BE DECLARED ILLEGAL, ULTRA-WIRES AND BE QUASHED. 2. SUCH OTHER RELIEF(S) TO WHICH THE APPELLANT MAY BE LAWFULLY ENTITLED TO. 3. THE FACTS OF THE CASE, WHICH CAN BE STATED QUITE SHORTLY ARE AS FOLLOWS: IN THIS CASE, THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013- 14 ON 30.09.2013, DECLARING TOTAL INCOME AT RS. 29,09,590/-. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF DAIRY PRODUCTS. THE TOTAL INCOME OF THE ASSESSEE HAS BEEN ASSESSED VIDE ORDER U/S 143(3) DATED 18.03.2016 AT RS.33,05,686/-. 4. LATER, LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX -2, SURAT ( LD.PCIT), HAS EXERCISED HIS JURISDICTION UNDER SECTION 263 OF THE INCOME TAX ACT 1961. ON EXAMINATION OF ASSESSMENT RECORDS, IT WAS NOTICED BY THE LD PCIT, FROM LEDGER ACCOUNT OF ASSESSEE COMPANY WITH RAMESHBHAI THAT ASSESSEE COMPANY HAD PAID RS.13,41,006/- TO RAMESHBHAI IN CASH IN F.Y. 2012-13 RELEVANT TO A.Y. 2013-14 AND ASSESSEE COMPANY REPLIED IN ITS SUBMISSION THAT SHRI RAMESHBHAI IS NOT A CONTRACTOR BUT EMPLOYEE OF ASSESSEE COMPANY AND MONEY WAS PAID TO HIM FOR PAYMENT OF LABOURS. HOWEVER, DURING THE SURVEY PROCEEDINGS, THE ASSESSEE COMPANY WAS ADMITTED THAT RAMESHBHAI IS A CONTRACTOR WHO PROVIDED LABOURS AND NO TDS WAS DEDUCTED ON PAYMENT TO RAMESHBHAI AND ALSO FROM THE FACT THAT ASSESSEE COMPANY HAS NOT DEDUCTED PF FROM RAMESHBHAI, AS EVIDENT FROM PF STATEMENT OF ASSESSEE COMPANY. THEREFORE, THE CLAIM OF ASSESSEE WAS NOT TENABLE. PAGE | 3 ITA 309 & 310/SRT/2018 A .YS.. 2010-11 & 2013-14 SHUKLA DAIRY PVT. LTD. HENCE, THE PAYMENT OF RS.13,41,006/- SHOULD TO BE DISALLOWED U/S 40(A)(IA) OF THE ACT. 5. IT WAS ALSO NOTICED FROM LEDGER ACCOUNT OF ASSESSEE-COMPANY WITH SHRI BECHARBHAI BHARWAR FOR F.Y. 2012-13 THAT ASSESSEE COMPANY HAS PAID ONLY RS.20,70,763/-, ON 15 OCCASION IN EXCESS OF RS.20,000/-. AS ONLY SHRI BECHARBHAI BHARWAD FALLS UNDER THE CATEGORY OF MILK PRODUCER, ONLY PAYMENT TO HIM IS IN CASH IN EXCESS OF RS.20,000/- IS PERMISSIBLE UNDER RULE 6DD OF INCOME TAX RULES. OTHER SELLERS OF MILK TO ASSESSEE COMPANY ARE TRADERS HENCE NOT ELIGIBLE FOR BENEFIT OF THIS RULE. IN VIEW OF THIS, FROM THE FINDINGS DURING SURVEY THAT IN F.Y. 2012-13 RS. 1,82,18,581/- WAS PAID BY ASSESSEE IN CASH IN EXCESS OF RS.20,000/- WHICH WAS NEITHER DISPUTED NOR THE STATEMENTS RETRACTED, LATER, ONLY RS. 20,70,763/- WAS ALLOWABLE EXPENDITURE U/S 40A(3) OF THE ACT READ WITH RULE 6DD OF THE RULES. FURTHER, DECLARATION OF RS.15,00,000/- MADE FOR F.Y; 2012-13 IS REGARDING IRREGULARITIES IN BOOKS OF ACCOUNTS AND HENCE, IT HAS NO BEARING ON DISALLOWANCE OF CASH PAYMENT IN EXCESS OF RS.20,000/-. HENCE, PAYMENT OF RS.1,61,47,818/- (RS.1,82,18,581 - RS.20,70,763/-) SHOULD BE DISALLOWED. 6. THEREFORE, LEARNED PCIT HAD ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE ON 29-01.2018, TO EXPLAIN THE ABOVE TRANSACTIONS. IN RESPONSE TO THE SAID SHOW CAUSE NOTICE, ASSESSEE HAS SUBMITTED WRITTEN SUBMISSION BEFORE THE LEARNED PCIT, WHICH IS REPRODUCED BELOW: 1. '--------WITH REFERENCE TO THE CAPTIONED NOTICE, YOUR GOOD SELF HAS ASKED US AS TO WHY PAYMENT OF RS.13,41,006/- MADE TO RAMESHBHAI - LABOUR CONTRACTOR SHOULD NOT BE DISALLOWED U/S 40(A)(IA). IN THIS REGARD, WE HAVE TO STATE THAT WE HAVE MADE PAYMENT TO RAMESHBHAI - LABOUR CONTRACTOR. THE ISSUE WAS ORIGINALLY CONSIDERED IN ASSESSMENT AND ACCORDINGLY THE DISALLOWANCE U/S 40 (A)(IA) WAS MADE AND THE ASSESSEE ACCEPTED THE DISALLOWANCE. IN VIEW OF THIS NO FURTHER FRESH, DISALLOWANCE IS REQUIRED TO BE MADE. 2. IN, PARA 2 OF YOUR NOTICE, YOUR GOOD SELF HAS ASKED US AS TO WHY PAYMENT OF RS.1,61,47,818/- (RS.1,82,18,581 - RS.20,70,763) MADE TO VARIOUS PERSON FROM 01-04-2012 TO 22-01-2013 SHOULD NOT BE DISALLOWED. PAGE | 4 ITA 309 & 310/SRT/2018 A .YS.. 2010-11 & 2013-14 SHUKLA DAIRY PVT. LTD. IN THIS REGARDS, WE PROVIDE HEREWITH SET OF PAPER BOOK CONTAINING 107 PAPERS WHICH CONTAIN THE COMPLETE DETAILS OF THE PAYMENTS REFERRED TO IN THE SHOW CAUSE NOTICE AND ALSO THE REASON WHY THE PAYMENT WAS MADE AND WHY THE SAME IS NOT REQUIRED TO BE DISALLOWED AS IT IS EITHER THE PAYMENT COVERED BY THE EXCEPTIONS PROVIDED IN RULE 6DD OR PAYMENT OF GOVERNMENT STAMP DUTIES AND FEES OR PURCHASE OF AGRICULTURE OR DAIRY PRODUCE OR THAT THE PAYMENT MIGHT NOT HAVE BEEN DEBITED TO PROFIT AND LOSS ACCOUNT BECAUSE THE SAME MAY NOT BE REVENUE EXPENDITURE OR MAY BE FORMING PART OF THE DISCLOSURE MADE FOR THE PERIOD. THE ISSUE WAS ORIGINALLY CONSIDERED IN ASSESSMENT AND ACCORDINGLY NO DISALLOWANCE U/S 40A(3) WAS MADE. IN VIEW OF THIS NO FURTHER FRESH DISALLOWANCE IS REQUIRED TO BE MADE ----------' 7. HOWEVER, LEARNED PCIT AFTER GOING THROUGH THE REPLY OF THE ASSESSEE OBSERVED THAT IN CASE OF PAYMENT TO RAMESHBHAI, THE ASSESSEE COMPANY HAS ACCEPTED THAT RAMESHBHAI IS A LABOUR CONTRACTOR AND ALSO STATED THAT THIS ISSUE WAS ORIGINALLY CONSIDERED IN ASSESSMENT AND ACCORDINGLY THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT WAS MADE AND THE ASSESSEE COMPANY ACCEPTED THE DISALLOWANCE. THE LEARNED PCIT NOTED THAT ASSESSING OFFICER DID NOT MAKE ANY DISALLOWANCE ON PAYMENT MADE TO RAMESHBHAI OF RS.13,41,006/-, THEREFORE, THE ORDER PASSED BY THE AO WAS WITHOUT PROPER VERIFICATION, HENCE, ORDER OF THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. LEARNED PCIT ALSO NOTED THAT IN THE MATTER OF PAYMENT OF RS.1,61,47,818/- MADE TO VARIOUS PERSON IN CASH IN EXCESS OF RS.20,000/-, WHEREIN THE ASSESSEE SUBMITTED PAPER BOOK BEFORE THE LEARNED PCIT WHICH SHOWS THAT COMPLETE DETAILS OF PAYMENTS AND STATED THAT THIS ISSUE WAS ORIGINALLY CONSIDERED IN ASSESSMENT AND ACCORDINGLY NO DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT WAS MADE. HOWEVER, THE LD PCIT, ON VERIFICATION OF SUBMISSION MADE BY THE ASSESSEE NOTED THAT IN SEVERAL TIME THE ASSESSEE HAD MADE THE PAYMENT IN CASH IN EXCESS OF RS.20,000/- IN A SINGLE DAY WHICH REQUIRES DETAILED VERIFICATION BY THE ASSESSING OFFICER. THEREFORE, ORDER PASSED BY THE ASSESSING OFFICER FOR AY 2013-14 UNDER SECTION 143(3) OF THE ACT, ON 22.03.2016 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. PAGE | 5 ITA 309 & 310/SRT/2018 A .YS.. 2010-11 & 2013-14 SHUKLA DAIRY PVT. LTD. THEREFORE, LEARNED PCIT SET-ASIDE THE ORDER OF THE AO WITH THE DIRECTION TO FRAME A FRESH ASSESSMENT. 8. AGGRIEVED BY THE ORDER OF THE LEARNED PCIT, THE ASSESSEE IS IN APPEAL BEFORE US. 9. SHRI KAMLESH BHATT, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE THE BENCH THAT VARIOUS ISSUES RAISED BY LEARNED PCIT IN HIS ORDER UNDER SECTION 263 OF THE ACT, HAVE BEEN EXAMINED BY THE ASSESSING OFFICER, THEREFORE, THOSE ISSUES WHICH WERE EXAMINED BY THE ASSESSING OFFICER SHOULD NOT BE SUBJECT TO REVISION PROCEEDINGS UNDER SECTION 263 OF THE ACT. ABOUT THE PAYMENT TO SHRI RAMESHBHAI OF RS.13,41,006/-, LEARNED COUNSEL SUBMITTED THAT THIS ISSUE HAS BEEN EXAMINED BY THE AO VIDE PARA 3 AND 4 OF THE ASSESSMENT ORDER. FURTHER, REGARDING THE ISSUE OF PAYMENT IN CASH IN EXCESS OF RS.20,000/-, THE ASSESSING OFFICER HAS TAKEN THE POSSIBLE VIEW, HENCE ORDER PASSED BY THE ASSESSING OFFICER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE, THEREFORE, ORDER OF THE LD PCIT UNDER SECTION 263 OF THE ACT MAY BE QUASHED. 10. ON THE OTHER HAND, SHRI S. T. BIDARE CIT- DR , RELIED ON THE ORDER OF THE LEARNED PCIT UNDER SECTION 263 OF THE ACT, ESPECIALLY ON PARA 4 OF THE ORDER OF THE LD PCIT WHICH IS REPRODUCED BELOW: 4. I HAVE CONSIDERED THE SUBMISSION MADE BY THE A.R. OF THE ASSESSEE BUT THE SAME IS FOUND NOT ACCEPTABLE AND TENABLE ON THE FOLLOWING GROUNDS :- (A) REGARDING THE MATTER OF PAYMENT TO RAMESHBHAI, THE AR OF THE ASSESSEE COMPANY HAS ACCEPTED THAT THE RAMESHBHAI IS A LABOUR CONTRACTOR AND ALSO STATED THIS ISSUE WAS ORIGINALLY CONSIDERED IN ASSESSMENT AND ACCORDINGLY THE DISALLOWANCE U/S 40(A)(IA) WAS MADE AND THE ASSESSEE COMPANY ACCEPTED THE DISALLOWANCE. HOWEVER, ON PERUSAL OF ASSESSMENT RECORDS IT IS FOUND THAT THE AO HAS MADE THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT OF RS.44,661/- IN THE MATTER OF NON DEDUCTION OF TDS ON INTEREST PAYMENT TO A NON BANKING FINANCE COMPANY(NBFC), NO DISALLOWANCE WAS MADE ON, PAYMENT MADE TO RAMESHBHAI OF RS. 13,41,006/-. THEREFORE, THE AO HAS PASSED ORDER WITHOUT PROPER VERIFICATION WHICH IS ERRONEOUS AND ALSO PREJUDICIAL TO INTEREST OF REVENUE. PAGE | 6 ITA 309 & 310/SRT/2018 A .YS.. 2010-11 & 2013-14 SHUKLA DAIRY PVT. LTD. (B) IN THE MATTER OF PAYMENT OF RS.1,61,47,818/- MADE TO VARIOUS PERSON IN CASH IN EXCESS OF RS.20,000/- THE AR OF THE ASSESSEE SUBMITTED PAPER BOOKS WHICH CONTAIN THE COMPLETE DETAILS OF THE PAYMENTS AND STATED THAT THIS ISSUE WAS ORIGINALLY CONSIDERED IN ASSESSMENT AND ACCORDINGLY NO DISALLOWANCE U/S 40A(3) WAS MADE. THE REPLY OF THE AR OF THE ASSESSEE COMPANY IS NOT SATISFACTORY BECAUSE ON VERIFICATION OF THE SUBMISSION MADE THE ASSESSEE IT IS REVEALED THAT IN SEVERAL TIMES THE ASSESSEE HAD MADE THE PAYMENT IN CASH IN EXCESS OF 20,000/- IN SINGLE DAY, WHICH REQUIRES THE DETAILED VERIFICATION. 11. THEREFORE, LEARNED CIT- DR ARGUED THAT LEARNED PCIT HAS FOUND OUT SPECIFIC ERRORS IN THE ASSESSMENT ORDER, AS NOTED ABOVE. LEARNED CIT- DR CONTENDED THAT NO DISALLOWANCE WAS MADE BY ASSESSING OFFICER, ON PAYMENT MADE TO RAMESHBHAI OF RS. 13,41,006/-.IN THE MATTER OF PAYMENT OF RS.1,61,47,818/- MADE TO VARIOUS PERSON IN CASH IN EXCESS OF RS.20,000/-, THE ASSESSING OFFICER HAS FAILED TO EXAMINE THE REQUIREMENT OF SECTION 40A(3) OF THE ACT. THEREFORE, ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, HENCE LD DR PRAYED THE BENCH THAT ORDER OF LD PCIT, UNDER SECTION 263 OF THE ACT MAY BE UPHELD. 12. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLUDING THE FINDINGS OF THE LD PCIT AND OTHER MATERIALS BROUGHT ON RECORD. IN ITA NO.309/SRT/2018, FOR ASSESSMENT YEAR 2010-11, ONLY ONE ISSUE WAS RAISED BY THE LD PCIT IN HIS ORDER UNDER SECTION 263 OF THE ACT, WHICH IS THAT OUT OF TOTAL CASH PAYMENT IN EXCESS OF RS.20,000/-, OF RS.93,56,628/- WHICH WAS FOUND DURING SURVEY, THE THEN ASSESSING OFFICER ALLOWED PAYMENT OF RS.49,45,811/- UNDER RULE 6DD OF THE INCOME TAX RULES, AS IT WAS PAID AGAINST PURCHASE OF MILK. IT WAS HOWEVER NOTICED BY LD PCIT, FROM CASH BOOK THAT IN THE FOLLOWING CASES, PAYMENTS OF RS.36,38,376/- WERE MADE TO EIGHT TRADERS, ( CASH PAYMENT IN EXCESS OF RS.20,000/- IN VIOLATION OF THE PROVISIONS OF SECTION 40A(3), AS DETAILED BELOW : SR NO NAME OF PAYEE AMOUNT IN RS. 1 SURBHI DAIRY PVT LTD 1877750 2 ASMITA AGRO VET AGENCY 1032750 PAGE | 7 ITA 309 & 310/SRT/2018 A .YS.. 2010-11 & 2013-14 SHUKLA DAIRY PVT. LTD. 3 BHAGWATIMATA MILK AND MILK PRODUCTS 410000 4 DUDH GANGA MILK PRODUCTS 63700 5 GANGOTRI DAIRY PRODUCTS PVT LTD 79464 6 JAGDISH TRADERS 62837 7 KARMBHOOMI DAIRY PRODUCTS 61875 8 LAXMI ICE FACTORY- DAIRY 50000 TOTAL 36,38,376 THE LD PCIT OBSERVED THAT PAYMENTS OF RS.36,38,376/- WERE MADE BY ASSESSEE TO TRADERS IN CASH IN EXCESS OF RS.20,000/-, WHICH IS A VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT. THE LD PCIT WAS OF THE VIEW THAT BENEFIT OF RULE 6DD IS AVAILABLE TO MILK PRODUCERS AND NOT TO TRADERS OF MILK, HENCE PAYMENT TO TRADERS IN CASH IN EXCESS OF RS.20,000/- IS REQUIRED TO BE DISALLOWED. THAT IS, ASSESSING OFFICER DID NOT DISALLOW RS.36,38,376/-, THEREFORE, LD PCIT HELD THAT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. WE NOTE THAT DURING THE ASSESSMENT STAGE, ASSESSEE HAS SUBMITTED ALL THE DOCUMENTS AND CONFIRMATIONS OF ALL THE PARTIES. EACH OF THE PARTY IS MILK PRODUCER, EACH OF THEM HAS THE CATTLE FARM HAVING LARGE NUMBER OF CATTLE. DURING THE ASSESSMENT STAGE, THE ASSESSEE HAS FURNISHED THE DOCUMENTS OF MILK PRODUCERS, SUCH AS THEIR DECLARATION, THEIR IDENTITY PROOF, THE ACCOUNT COPY ETC. IN DECLARATION IT IS MENTIONED THAT SUPPLIER ARE HAVING OWN LIVES STOCK AND OWN ARRANGEMENTS FOR SHED AND MILK STORAGE. THE LD COUNSEL SUBMITTED BEFORE US A CHART SHOWING THE TOTAL PURCHASES FROM EACH OF THE EIGHT PARTIES LISTED IN THE NOTICE AND HOW THEY WERE PAID. A CAREFUL LOOK AT THE CHART-DATA WILL SHOW THAT THOUGH EACH OF THEM WERE MILK PRODUCER, ASSESSEE TRIED TO PAY THEM MAINLY BY CHEQUE AND ONLY IN AN EXCEPTIONALLY SITUATION, ASSESSEE PAID THE SMALL PORTION IN CASH AND THE SAID PAYMENT TO EACH OF THEM IS COVERED, VIDE THE EXCEPTION PROVIDED IN SUB CLAUSE (II) OF CLAUSE (E) OF RULE 6DD OF THE INCOME TAX RULES. WE NOTE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS RIGHTLY ALLOWED THE IMPUGNED PAYMENT AS EXPENDITURE AS PAGE | 8 ITA 309 & 310/SRT/2018 A .YS.. 2010-11 & 2013-14 SHUKLA DAIRY PVT. LTD. IT WAS COVERED BY THE EXCEPTION PROVIDED IN SUB CLAUSE (II) OF CLAUSE (E) OF RULE 6DD OF THE INCOME TAX RULES, 1962. THUS, SO FAR, THIS ISSUE IS CONCERNED, THE ORDER PASSED BY THE ASSESSING OFFICER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. 13. LEARNED COUNSEL ALSO SUBMITTED BEFORE US THAT ABOUT THE ISSUE OF CASH PAYMENT IN EXCESS OF RS.20,000/-, ASSESSEE HAS SUBMITTED EACH AND EVERY DOCUMENTS DURING THE RE-ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) R.W.S. 147 OF THE ACT, WHICH IS EVIDENT FROM PARA 3 AND 4 OF THE ASSESSMENT ORDER, WHICH IS REPRODUCED BELOW: 3.DURING THE YEAR, THE ASSESSEE FIRM WAS ENGAGED IN THE BUSINESS OF MANUFACTURING OF DAIRY PRODUCTS. IN THIS CASE A SURVEY ACTION U/S 133A OF THE ACT WAS CARRIED OUT ON 22/01/2013 AT THE BUSINESS PREMISES OF THE ASSESSEE. DURING THE COURSE OF SURVEY PROCEEDINGS, STATEMENT ON OATH U/S 131 OF THE I.T.ACT, OF SHRI VIMAL KUMAR SHUKLA, DIRECTOR OF SHUKLA DIARY PVT. LTD. WAS RECORDED. IN ANSWER TO QUESTION Q NO. 12 OF HIS STATEMENT, HE HAS STATED THAT AN AMOUNT TO TUNE OF RS.93,56,628/- WAS PAID IN CASH DURING THE F.Y.2009-10. AFTER AFFORDING FULL AND ADEQUATE OPPORTUNITY TO THE ASSESSEE THROUGH ITS AUTHORIZED REPRESENTATIVE, THE ASSESSMENT PROCEEDINGS HAVE BEEN COMPLETED AND IN CONSEQUENCE, UPON THE CONCLUSION OF PROCEEDINGS AND HEARING OF EVIDENCES, ASSESSMENT IS MADE BY THIS ORDER. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON PERUSAL OF THE DETAILS SUBMITTED BY THE ASSESSEE, IT IS NOTICED THAT THE ASSESSEE HAS MADE CASH PAYMENTS OF RS.93,56,628/- TO VARIOUS PARTIES. OUT OF WHICH, SOME AMOUNTS EXCEEDING RS.20,000/- TO A SINGLE PARTY IN A DAY. THEREFORE, THE ASSESSEE WAS ASKED TO EXPLAIN VIDE SHOW CAUSE NOTICE DATED 14.03.2016, THE RELEVANT PORTION OF THE SAME ARE AS UNDER: '2. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, ON VERIFICATION OF THE DETAILS SUBMITTED, YOU HAVE MADE CASH PAYMENTS OF RS.93,56,628/- TO VARIOUS PARTIES EXCEEDS RS.20,000/- IN A DAY TO A SINGLE PARTY. OUT OF WHICH, THE PAYMENT MADE TO PURCHASE OF MILK OF RS.49,45,811/- IS EXEMPTED UNDER RULE-6DD OF INCOME-TAX RULES, 1962. THE OTHER CASH PAYMENTS EXCEEDING RS.20,000/- IN A DAY TO A SINGLE PARTY MADE BY YOU DURING THE F.Y.2009-10, THE BIFURCATION OF WHICH ARE AS UNDER: SR. NO. PARTICULARS AMOUNT RS. 1 OTHER EXPENSES 824672 PAGE | 9 ITA 309 & 310/SRT/2018 A .YS.. 2010-11 & 2013-14 SHUKLA DAIRY PVT. LTD. 2 TRANSPORTATION 1026223 3 SALARY 674981 4 DEPOSIT RETURN 1230000 4 PRINTED POLY FILM PAYMENT 390007 TOTAL 4145883 2.1 THE ABOVE PAYMENTS MADE IN CASH DURING THE YEAR UNDER CONSIDERATION VIOLATED THE PROVISIONS OF SECTION 40A(3) OF THE I.T.ACT. THEREFORE, YOU ARE ASKED TO EXPLAIN WHY THE ABOVE AMOUNT OF RS.41,45,883/- SHOULD NOT BE DISALLOWED AND ADDED TO THE TOTAL INCOME.' 4.1 IN RESPONSE TO WHICH, THE ASSESSEE SUBMITTED HIS REPLY VIDE LETTER DATED 18.03.2016 AND AGREED UPON THE PROPOSED DISALLOWANCES AS COMMUNICATED IN THE SHOW CAUSE NOTICE. ACCORDINGLY, THE TOTAL PAYMENTS MADE TO VARIOUS PARTIES OF RS.41,45,883/- IN CONTRAVENTION TO SECTION 40A(3) OF THE I.T.ACT IS DISALLOWED AND ADDED TO THE TOTAL INCOME. 14. IT IS ABUNDANTLY CLEAR FROM PARA NO.3 AND 4 OF ASSESSMENT ORDER THAT REGARDING EXCESS PAYMENT OF RS.20000/-, EACH AND EVERY DOCUMENT WERE THERE BEFORE THE ASSESSING OFFICER AND ASSESSING OFFICER EXAMINED THEM AND HAS TAKEN A POSSIBLE VIEW, THEREFORE, ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) R.W.S.147 OF THE ACT, DATED 18.03.2016, IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. 15. IN ITA NO.310/SRT/2018, FOR ASSESSMENT YEAR 2013-14, LD PCIT HAS RAISED THE SAME ISSUE OF PAYMENT IN CASH IN EXCESS OF RS.20,000/-: IN THE MATTER OF PAYMENT OF RS.1,61,47,818/- MADE TO VARIOUS PERSONS IN CASH IN EXCESS OF RS.20,000/-, THE LD PCIT, NOTED THAT IN SEVERAL TIME, THE ASSESSEE HAD MADE THE PAYMENT IN CASH IN EXCESS OF RS.20,000/- IN A SINGLE DAY WHICH, REQUIRES DETAILED VERIFICATION BY THE ASSESSING OFFICER. THEREFORE, ORDER PASSED BY THE ASSESSING OFFICER FOR A.Y. 2013-14 UNDER SECTION 143(3) OF THE ACT, ON 22.03.2016 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. LEARNED PCIT NOTICED THAT OTHER SELLERS OF ASSESSEE COMPANY ARE TRADERS, HENCE, NOT ELIGIBLE FOR BENEFIT OF THE RULE 6DD OF INCOME TAX RULES. IN VIEW OF THIS, FROM THE FINDINGS DURING SURVEY THAT IN F.Y. 2012-13, RS.1,82,18,581/- WAS PAID BY ASSESSEE IN CASH IN EXCESS OF RS.20,000/-, WHICH WAS NEITHER DISPUTED NOR THE STATEMENTS PAGE | 10 ITA 309 & 310/SRT/2018 A .YS.. 2010-11 & 2013-14 SHUKLA DAIRY PVT. LTD. RETRACTED LATER, AND OUT OF THE SAID AMOUNT RS.1,82,18,581/-, ONLY RS.20,70,763/- WAS ALLOWABLE EXPENDITURE UNDER SECTION 40A(3) OF THE ACT, READ WITH RULE 6DD OF THE INCOME TAX RULES. FURTHER, DECLARATION OF RS.15,00,000/- MADE FOR F.Y. 2012- 13, IS REGARDING IRREGULARITIES IN BOOKS OF ACCOUNTS AND HENCE, IT HAS NO BEARING ON DISALLOWANCE OF CASH PAYMENT IN EXCESS OF RS.20,000/-. THEREFORE, PAYMENT OF RS.1,61,47,818/- (RS.1,82,18,581 RS.20,70,763/-) SHOULD BE DISALLOWED BY THE ASSESSING OFFICER. SINCE, THE ASSESSING OFFICER HAS NOT DISALLOWED RS.1,61,47,818/- THEREFORE, LD PCIT HELD THAT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. WE NOTE THAT DURING THE ASSESSMENT PROCEEDINGS, ASSESSEE HAD SUBMITTED BEFORE ASSESSING OFFICER (AO), THE CASH PAYMENT REGISTER AND EXPLAINED EACH OF THE ITEM OF PROPOSED ADDITION AS PER SHOW CAUSE NOTICE OF ASSESSING OFFICER. THE CASH PAYMENT REGISTER, WHICH IS PLACED AT PAPER BOOK PAGE NOS. 22 TO 27, WHEREIN PAYMENT TO THE TUNE OF RS.1,82,18,581/- HAS BEEN EXPLAINED TO THE ASSESSING OFFICER. THE ASSESSING OFFICER, HAVING GONE THROUGH THE CASH PAYMENT REGISTER AND EXPLANATION OF EACH ITEM, DID NOT MAKE THE ADDITION. THEREFORE, WE NOTE THAT ASSESSING OFFICER HAS EXAMINED THIS ISSUE DURING THE ASSESSMENT STAGE AND HAS TAKEN A POSSIBLE VIEW AND THEREFORE, HE DID NOT MAKE THE ADDITION. HENCE, SO FAR THIS ISSUE IS CONCERNED, THE ORDER PASSED BY THE ASSESSING OFFICER, IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. 16. WE NOTE THAT IN ITA NO.310/SRT/2018, FOR ASSESSMENT YEAR 2013-14, LD PCIT HAS RAISED THE FOLLOWING ISSUE IN HIS ORDER UNDER SECTION 263 OF THE ACT: IN CASE OF PAYMENT TO RAMESHBHAI, THE ASSESSEE COMPANY HAS ACCEPTED THAT RAMESHBHAI IS A LABOUR CONTRACTOR AND ALSO STATED THAT THIS ISSUE WAS ORIGINALLY CONSIDERED IN ASSESSMENT AND ACCORDINGLY THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT WAS MADE AND THE ASSESSEE COMPANY ACCEPTED THE DISALLOWANCE. THE LEARNED PCIT NOTED THAT ASSESSING OFFICER DID NOT MAKE ANY DISALLOWANCE ON PAYMENT MADE TO RAMESHBHAI OF RS.13,41,006/-, THEREFORE, THE ORDER PASSED BY THE PAGE | 11 ITA 309 & 310/SRT/2018 A .YS.. 2010-11 & 2013-14 SHUKLA DAIRY PVT. LTD. AO WAS WITHOUT PROPER VERIFICATION, HENCE, ORDER OF THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. WE NOTE THAT ABOUT THE PAYMENT OF RS.13,41,006/- MADE TO RAMESHBHAI - LABOUR CONTRACTOR. THE ASSESSEE HAD MADE PAYMENT TO RAMESHBHAI - LABOUR CONTRACTOR AND THE SAID ISSUE WAS ORIGINALLY CONSIDERED IN ASSESSMENT PROCEEDINGS AND ACCORDINGLY THE DISALLOWANCE U/S 40 (A)(IA) OF THE ACT WAS MADE BY THE ASSESSING OFFICER AND THE ASSESSEE ACCEPTED THE DISALLOWANCE. THIS ISSUE HAS ALSO BEEN EXAMINED BY THE AO VIDE PARA 3 AND 4 OF THE ASSESSMENT ORDER. IN VIEW OF THIS ORDER PASSED BY THE ASSESSING OFFICER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. 17. WE NOTE THAT LD PCIT SHOULD HAVE REASON TO BELIEVE THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS PREJUDICIAL TO THE INTEREST OF REVENUE BUT ALSO ERRONEOUS IN LAW, FOR THAT WE RELY OF THE JUDGMENT OF THE HON`BLE HIGH COURT OF UTTARAKHAND IN THE CASE OF MC DERMOTT INTERNATIONAL INC, 172 TAXMAN 460 (UTTARANCHAL), WHEREIN THE HON`BLE COURT HELD AS FOLLOWS: 10. HOWEVER, THE OTHER GROUNDS MENTIONED IN THE IMPUGNED ORDER PASSED BY ITAT, ON WHICH THE APPEAL OF THE ASSESSEE WAS ALLOWED, SETTING ASIDE THE ORDER PASSED BY THE CIT UNDER SECTION 263 OF THE ACT, DOES NOT SUFFER FROM ANY ILLEGALITY. MR. ARVIND VASHISTHA, LEARNED STANDING COUNSEL FOR THE REVENUE/APPELLANT DREW ATTENTION OF THIS COURT TO THE PRINCIPLE OF LAW LAID DOWN IN KILLICK NIXON LTD. V. DEPUTY CIT [2002] 258 ITR 627 (SC), AND ARGUED THAT WHERE ANY INCOME IS FOUND CONCEALED AND NOT DISCLOSED IN KVSS, THE AUTHORITIES ARE NOT PREVENTED FROM ISSUING NOTICES AND TAKING STEPS UNDER THE INCOME-TAX ACT. AFTER GOING THROUGH THE OBJECTS OF THE KVSS, WE ARE SATISFIED IN VIEW OF THE PRINCIPLE OF LAW LAID DOWN IN THE AFORESAID CASE THAT WHERE THE DECLARATION IS FOUND FALSE, THE INCOME-TAX AUTHORITIES UNDER THE INCOME-TAX ACT, 1961, ARE NOT PREVENTED FROM TAKING THE STEPS UNDER THE ACT, AND WHAT GETS FINALIZED UNDER KVSS OF 1998 IS THE AMOUNT OF TAX PAYABLE ON THE DECLARED SUM UNDER THE SCHEME. BUT, LEARNED COUNSEL FOR THE REVENUE/APPELLANT COULD NOT SHOW US ANY MATERIAL OR GROUND ON THE BASIS OF WHICH IT CAN BE SAID THAT THE ORDER OF THE ASSESSING OFFICER, PASSED UNDER THE KVSS IS ERRONEOUS IN LAW, AS SUCH, MERELY ON THE GROUND THAT ORDER CAN BE PREJUDICIAL TO THE INTEREST OF REVENUE, POWER UNDER SECTION 263 OF THE ACT COULD NOT HAVE BEEN EXERCISED BY THE CIT. WHAT IS REQUIRED UNDER SECTION 263 OF THE ACT FOR CANCELLING AN ASSESSMENT UNDER SAID SECTION IS THAT NOT ONLY THE CIT SHOULD HAVE REASON TO BELIEVE THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS PREJUDICIAL TO THE INTEREST OF REVENUE BUT ALSO ERRONEOUS IN LAW. THE SAME VIEW HAS BEEN EXPRESSED BY THE APEX COURT IN MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83. SINCE, AS OBSERVED BY THE ITAT ALSO, THERE APPEARS TO BE NO MATERIAL ON RECORD TO ISSUE NOTICE IN THE PRESENT CASE TO CANCEL THE ASSESSMENT MADE BY ASSESSING OFFICER, TO PAGE | 12 ITA 309 & 310/SRT/2018 A .YS.. 2010-11 & 2013-14 SHUKLA DAIRY PVT. LTD. EXERCISE POWERS UNDER SECTION 263 OF THE ACT, AS SUCH, THE ORDER PASSED BY THE ITAT, SETTING ASIDE THE ORDER OF CIT, UNDER SAID SECTION NEEDS NO INTERFERENCE. 11. FOR THE REASONS AS DISCUSSED ABOVE, THIS APPEAL IS LIABLE TO BE DISMISSED WITH THE OBSERVATIONS MADE IN THIS JUDGMENT. ACCORDINGLY, THE APPEAL IS DISMISSED WITH THE OBSERVATIONS MADE ABOVE. 18. ON THE SIMILAR FACTS, OUR VIEW IS FORTIFIED BY THE JUDGMENT OF HON`BLE GUJARAT HIGH COURT IN THE CASE OF ARVIND JEWELLERS, 124 TAXMAN 615 (GUJ-HC), WHEREIN THE COURT HAS HELD AS FOLLOWS: 4. HEARD MRS. MONA BHATT, THE LEARNED COUNSEL APPEARING FOR THE APPLICANT-REVENUE AND MR. R.K. PATEL, THE LEARNED ADVOCATE APPEARING FOR THE RESPONDENT-ASSESSEE. THE REVENUE'S CASE WAS, AS CANVASSED BY MRS. BHATT, THAT SINCE THE MATERIAL WHICH WAS AVAILABLE WITH THE ITO WAS NOT CONSIDERED WHILE FINALIZING THE ASSESSMENT, THE ORDER PASSED ON THAT BASIS IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDING TO THE REVENUE, BEFORE PASSING THE ORDER, FULL ENQUIRY AND INVESTIGATION OUGHT TO HAVE BEEN MADE BY THE ITO AND SINCE THIS WAS NOT DONE, IT HAS CAUSED LOSS TO THE REVENUE AND IN THIS VIEW OF THE MATTER, THE ORDER SO PASSED WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THE COMMISSIONER WAS JUSTIFIED WHILE TAKING ACTION UNDER SECTION 263. IN SUPPORT OF HER CONTENTION, SHE HAD RELIED ON THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT V. MANJUNATHESWARE PACKING PRODUCTS & CAMPHOR WORKS [1998] 231 ITR 53 1 . 5. MR. R.K. PATEL, THE LEARNED ADVOCATE APPEARING FOR THE RESPONDENT-ASSESSEE HAS DRAWN OUR ATTENTION TO THE DECISION OF THE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83 2 WHEREIN THE SUPREME COURT HAS OBSERVED AS UNDER : 'A BARE READING OF SECTION 263 OF THE INCOME-TAX ACT, 1961, MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF THE JURISDICTION BY THE COMMISSIONER SUO MOTU UNDER IT, IS THAT THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT - IF THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE - RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS, THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE 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 LOSS OF TAX. THE SCHEME OF THE ACT IS TO LEVY AND COLLECT TAX IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF DUE TO AN ERRONEOUS ORDER OF THE INCOME-TAX OFFICER, THE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE PAGE | 13 ITA 309 & 310/SRT/2018 A .YS.. 2010-11 & 2013-14 SHUKLA DAIRY PVT. LTD. ASSESSING OFFICER, CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE,WHEN AN INCOME-TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW.' (P. 83) 6. FROM THE ABOVE OBSERVATIONS MADE BY THE SUPREME COURT, IT IS CLEAR THAT THE PROVISIONS OF SECTION 263 CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS, THAT SECTION WILL BE ATTRACTED AND INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. THE SUPREME COURT HAS ALSO MADE IT CLEAR THAT THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER AND THAT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IT WAS FURTHER EMPHATICALLY STATED THAT WHEN AN ITO ADOPTS ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ITO HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE ITO IS UNSUSTAINABLE IN LAW. 7. COMING TO THE FACTS OF THE PRESENT CASE, IT IS THE FINDING OF FACT GIVEN BY THE TRIBUNAL THAT THE ASSESSEE HAS PRODUCED RELEVANT MATERIAL AND OFFERED EXPLANATION IN PURSUANCE OF THE NOTICES ISSUED UNDER SECTION 142(1) AS WELL AS SECTION 143(2) AND AFTER CONSIDERING THOSE MATERIALS AND EXPLANATION, THE ITO HAS COME TO A DEFINITE CONCLUSION. THE COMMISSIONER DID NOT AGREE WITH THE CONCLUSION REACHED BY THE ITO. SECTION 263 DOES NOT EMPOWER HIM TO TAKE ACTION ON THESE FACTS TO ARRIVE AT THE CONCLUSION THAT THE ORDER PASSED BY THE ITO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. SINCE THE MATERIAL WAS THERE ON RECORD AND THE SAID MATERIAL WAS CONSIDERED BY THE ITO AND A PARTICULAR VIEW WAS TAKEN, THE MERE FACT THAT DIFFERENT VIEW CAN BE TAKEN, SHOULD NOT BE THE BASIS FOR AN ACTION UNDER SECTION 263 AND IT CANNOT BE HELD TO BE JUSTIFIED. 8. IN VIEW OF THIS AND FOLLOWING THE PRINCIPLES LAID DOWN BY THE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD.'S CASE (SUPRA), WE ARE OF THE VIEW THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN SETTING ASIDE THE ORDER PASSED BY THE COMMISSIONER UNDER SECTION 263. WE, THEREFORE, ANSWER BOTH THE QUESTIONS IN THE AFFIRMATIVE, I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 19. SINCE WE FIND THAT ASSESSING OFFICER HAS MADE ENQUIRIES INTO TRANSACTIONS OF CASH PAYMENT IN EXCESS OF RS.20,000/-, AND THE ACTION OF ASSESSING OFFICER IN ACCEPTING THE CLAIM OF ASSESSEE THAT TRANSACTIONS IN QUESTION WERE NOT IN VIOLATION OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT, AFTER DETAILED ENQUIRY, IS A PLAUSIBLE VIEW. THE ASSESSING OFFICER ALSO MADE DETAILED ENQUIRY ABOUT TDS TO BE DEDUCTED UNDER SECTION 40(A)(IA) OF THE ACT, THEREFORE, WE FIND THAT THE TWIN CONDITIONS REQUIRED FOR EXERCISING THE JURISDICTION UNDER SECTION 263 OF THE ACT IS MISSING, THAT IS, ORDER PASSED BY THE ASSESSING OFFICER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE PAGE | 14 ITA 309 & 310/SRT/2018 A .YS.. 2010-11 & 2013-14 SHUKLA DAIRY PVT. LTD. INTEREST OF REVENUE, THEREFORE, THE LD. CIT OUGHT NOT TO HAVE EXERCISED HIS REVISIONAL JURISDICTION UNDER SECTION 263 OF THE ACT AND, HENCE, WE CANCEL THE IMPUGNED REVISIONAL ORDERS FOR ASSESSMENT YEAR 2010-11 AND ASSESSMENT YEAR 2013-14. THEREFORE, WE ARE INCLINED TO ALLOW BOTH THE APPEALS OF THE ASSESSEE IN ITA NO.309/SRT/2018 FOR A.Y.2010-11 AND ITA NO.310/SRT/2018 FOR A.Y.2013- 14. 20. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE (IN ITA NOS.309 & 310/SRT/2018 FOR AYS. 2010-11 & 2013-14) ARE ALLOWED. ORDER IS PRONOUNCED ON 23/08/2021 BY PLACING RESULT ON NOTICE BOARD. SD/- SD/- (PAWAN SINGH) (DR. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER SURAT / / DATE:23/08/2021 / SKS COPY OF THE ORDER FORWARDED TO 1. THE ASSESSEE 2. THE RESPONDENT 3. THE CIT(A) 4. PR.CIT 5. DR/AR, ITAT, SURAT 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR/SR.PS/PS ITAT, SURAT