Sh. Raman Lakha, Hoshiarpur V. The Income Tax Officer, Hoshiarpur

ITA 324/ASR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8744 (ITAT-AMRITSAR)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-01-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 01-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKAR
• Assessee Lawyers: SAMIR MAHAJA N CAS
• Keywords: Business income; Peak credit; Revenue expenditure
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR (CAMP AT JALANDH AR ) BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO.324(ASR)/2016 ASSESSMENT YEAR: 2011-12 PAN: AESPS-7404F SH. RAMAN LAKHA S/O SH. JAGAT RAM VILLAGE CHITTION, P.O. JALLOWAL KHANOOR, HOSHIARPUR. (PUNJAB) VS. INCOME TAX OFFICER, WARD-2, HOSHIARPUR. (APPELLANT) (RESPONDENT) CROSS OBJECTION NO. 22 (ASR)/2016 ARISING OUT OF ITA NO.324(ASR)/2016 ASSESSMENT YEA R: 2011-12 PR. CIT, JALANDHAR-1, JALANDHAR. VS. SH. RAMAN LAKHA S/O SH. JAGAT RAM VILLAGE CHITTION, P.O. JALLOWAL KHANOOR, HOSHIARPUR (PUNJAB (CROSS OBJECTORS) (RESPONDENT) APPELLANT BY: SH. SURINDER MAHAJAN & SH. SAMI R MAHAJAN (C.AS.) RESPONDENT BY: SH. BHAWANI SHANKAR (DR) DATE OF HEARING: 20.01.2017 DATE OF PRONOUNCEMENT: 27.02.201 7 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LEARNED PR. CIT, DATED 17.03.2016 FOR ASST. YEAR 2011-12. ITA NO. 324(ASR)/2016 C.O NO.22(ASR)/2016 ASSESSMENT YEAR: 2011-2012 2 2. THE ASSESSEE HAS TAKEN VARIOUS GROUNDS OF APPEAL , HOWEVER THE CRUX OF THE GROUNDS OF APPEAL IS THE ACTION OF LD. PR. CIT, BY WHICH HE HAS PASSED ORDER U/S 263 OF THE ACT. THE REVENUE HA S ALSO FILED CROSS OBJECTIONS TO THE APPEAL FILED BY ASSESSEE WHEREIN, IT HAS TAKEN VARIOUS CROSS OBJECTIONS AGAINST THE GROUNDS TAKEN BY ASSES SEE. 3. THE BRIEF FACTS AS NOTED IN THE ASSESSMENT ORDER ARE THAT ASSESSEE IS IN THE BUSINESS OF RUNNING AN IMMIGRANT CONSULTA NCY. THE RETURN DECLARING INCOME OF RS.1,82,800/- WAS FILED ON 28.0 8.2011. DURING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSER VED THAT ASSESSEE HAD DEPOSITED AN AMOUNT OF RS. 55,25,758 IN THE BAN K ACCOUNTS WITH HDFC BANK AND PNB. AFTER OBTAINING EXPLANATION FROM THE ASSESSEE, THE ASSESSING OFFICER HELD THE DEPOSITS IN THE BANK AS BUSINESS RECEIPTS AND CALCULATED INCOME ON THE TOTAL DEPOSITS AT THE RATE OF 10 PER CENT. 4. THE LD. PR. CIT WAS NOT SATISFIED WITH THE ASSES SMENT ORDER AND THEREFORE HE ISSUED SHOW CAUSE NOTICE TO ASSESSEE A ND REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY NOT THE ORDER OF ASSE SSMENT BE NOT SET ASIDE AS IN HIS OPINION, THE ASSESSING OFFICER SHOU LD HAVE MADE ADDITION OF THE WHOLE AMOUNT OF RS. 55,25,758 INSTEAD OF MAK ING ADDITION AT THE RATE OF 10 PER CENT. IN REPLY THE ASSESSEE SUBMITTE D THAT THE ORDER PASSED BY ASSESSING OFFICER WAS NOT ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF REVENUE AND THEREFORE, THE PROVISIONS OF SECTION 26 3 WERE NOT APPLICABLE. HOWEVER, THE LD. PR. CIT WAS NOT SATISFIED WITH THE REPLY AND HE SET ASIDE ITA NO. 324(ASR)/2016 C.O NO.22(ASR)/2016 ASSESSMENT YEAR: 2011-2012 3 THE ORDER PASSED BY ASSESSING OFFICER AND DIRECTED THE ASSESSING OFFICER TO PASS FRESH ORDER AFTER CONSIDERING ALL ASPECTS O F THE MATTER AND AFTER CARRYING OUT PROPER ENQUIRIES 5. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 6. AT THE OUTSET THE LD. AR SUBMITTED THAT THERE W AS A DELAY OF 12 DAYS IN FILING OF APPEAL WHICH HAD OCCURRED DUE TO THE FACT THAT ASSESSEE WAS SUFFERING FROM TYPHOID AND OUR ATTENTION WAS IN VITED TO THE DULY SWORN IN AFFIDAVIT OF THE ASSESSEE AND IT WAS PRAYE D THAT DELAY IN FILING OF THE APPEAL BE CONDONED. 7. THE LD. DR HAD NO OBJECTION TO CONDONE THE ISSUE OF DELAY AND THEREFORE DELAY WAS CONDONED AND LD. AR WAS DIRECTE D TO PROCEED WITH HIS ARGUMENTS. 8. THE LD. AR, AT THE OUTSET SUBMITTED THAT ASSESSE E WAS ENGAGED IN THE BUSINESS OF RUNNING IMMIGRATION CONSULTANCY AGE NCY AND WAS WORKING AS SUB-AGENT ON COMMISSION BASIS WITH CERTA IN AGENTS. IT WAS SUBMITTED THAT MONEY COLLECTED FROM STUDENTS USED T O BE DEPOSITED IN THE BANK ACCOUNT AND THE MONEY WAS SENT TO THE AGEN TS FOR WHOM THE ASSESSEE WAS WORKING AND IN CASE OF NON-GRANT OF VI SA TO STUDENTS, THE MONEY WAS REFUNDED TO STUDENTS. IT WAS SUBMITTED TH AT ASSESSEE WAS ASKED BY ASSESSING OFFICER TO EXPLAIN THE DEPOSITS IN THE BANK AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO PARA 2 OF THE ASSESSMENT ORDER. THE LD. AR, FURTHER TOOK US TO COPY OF ORDER SHEET OF A SSESSING OFFICER PLACED ITA NO. 324(ASR)/2016 C.O NO.22(ASR)/2016 ASSESSMENT YEAR: 2011-2012 4 AT PAGE 17 TO 20. OUR SPECIFIC ATTENTION WAS INVITE D TO ORDER SHEET ENTRY DATED 04.03.2014 WHEREIN THE ASSESSING OFFICER HAD REQUIRED THE ASSESSEE TO EXPLAIN THE DEPOSITS IN BANKS. WE WERE ALSO TAKEN TO ORDER SHEET DATED 07.03.2014, WHEREIN THE ASSESSING OFFIC ER HAD NOTED THE REPLY OF THE ASSESSEE STATING THAT THE DEPOSITS REP RESENTED THE BUSINESS RECEIPTS BUT SINCE NO DOCUMENTARY EVIDENCE WAS AVAI LABLE AND THEREFORE, THE ASSESSEE HAD OFFERED TO APPLY NET PROFIT AT THE RATE OF 10 PER CENT OF TOTAL RECEIPTS. THE LD. AR, FURTHER TOOK US TO THE ORDER SHEET OF ASSESSING OFFICER AT PAGE 19 AND 20 OF PAPER BOOK WHEREIN THE ASSESSING OFFICER HAS IMPOSED PENALTY FOR NON MAINTENANCE OF BOOKS OF ACCOUNT U/S 271(A) AND HAD ALSO IMPOSED PENALTY FOR CONCEALMENT OF INC OME U/S 271 (1) (C) OF THE ACT. THE LD. AR FURTHER TOOK US TO PAPER BOO K PAGE 21 TO 39 WHICH COPIES OF BANK ACCOUNTS OF THE ASSESSEE WERE PLACED . THE LD. AR SUBMITTED THAT FROM THE COPY OF BANK ACCOUNTS IT WA S APPARENT THAT ASSESSEE HAD MADE PAYMENTS TO VARIOUS AGENTS FOR WH OM HE WAS WORKING. IT WAS SUBMITTED THAT THE ASSESSING OFFICE R AFTER KEEPING IN VIEW THE FACTS AND CIRCUMSTANCE HAD ACCEPTED THE REQUEST OF ASSESSEE AND HAD APPLIED 10 PER CENT INCOME TO THE DEPOSITS HOLDING THAT THE DEPOSITS REPRESENTED BUSINESS RECEIPTS. IT WAS SUBMITTED THA T SINCE ASSESSING OFFICER HAD TAKEN A PLAUSIBLE VIEW THEREFORE, THE P ROVISIONS OF SECTION 263 WERE NOT APPLICABLE. OUR ATTENTION WAS ALSO INV ITED TO LETTER DATED 26.02.2014 PLACED AT (PB-46) WHEREIN THE ASSESSEE H AD SUBMITTED THAT THE DEPOSITS REPRESENTED BUSINESS RECEIPTS, IT WAS SUBMITTED THAT ITA NO. 324(ASR)/2016 C.O NO.22(ASR)/2016 ASSESSMENT YEAR: 2011-2012 5 INCOME-TAX OFFICER HAS EXERCISED THE QUASI JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH THE LAW ARRIVED AND AT CONCLUSIO N AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS, THOUGH IT MAY BE SUCH A CASE THAT THE ORDER IN QUESTION IS PREJUDICIAL TO T HE INTEREST OF REVENUE BUT THAT BY ITSELF NOT WOULD BE ENOUGH BECAUSE THE FIRST REQUIREMENT FOR INVOKING PROVISIONS OF SECTION 263 IS THAT THE ORDE R SHOULD BE ERRONEOUS. RELIANCE IN THIS RESPECT WAS PLACED ON THE FOLLOWIN G CASE LAWS: (A) MALABAR INDUSTRIES CO. LTD. (243 ITR 83 (SC) (B) CIT VS. GREEN WORLD CORP. (314 ITR 81 (SC)) (C ) CIT VS. DLF (350 ITR 555 (DEL)) (D) GRASIRN INDUSTRIAL LTD. VS. CIT (321 ITR 92 (BO MB.) (A)COMMISSIONER OF INCOME TAX VS. ARVIND JEWELLERS HIGH COURT ' OF GUJARAT (2002) 177 CTR (GUJ) 546 : (2003) 259 ITR 502 (GUJ) : (2002) 124 ' TAXMAN 615 (B) COMMISSIONER OF INCOME TAX VS. SUNBEAM AUTO LTD . HIGH COURT OF DELHI (2009) 227 CTR (DEL) 133 : (201 1) 332 ITR 167 : (2010) 189 TAXMAN 436 : (2009) 31 DTR 1 (C) COMMISSIONER OF INCOME TAX VS. VINOD KUMAR GUPT A HIGH COURT OF PUNJAB & HARYANA (2007) 165 TAXMAN 22 5 (P&H) (D) COMMISSIONER OF INCOME TAX VS. DESIGN & AUTOMAT ION ENGINEERS (BOMBAY) (P) LTD. HIGH COURT OF BOMBAY (2 008) 13 DTR (BOM) 145 : (2010) 323 ITR 632 : (2009) 177 TAXMAN (E) COMMISSIONER OF INCOME TAX VS. MUNJAL CASTINGS HIGH COURT OF PUNJAB & HARYANA (2008) 2 DTR (P&H) 20 : ( 2008) 303 ITR 23 : (2008) 168 TAXMAN 241) (F) COMMISSIONER OF INCOME TAX VS. MAHENDRA KUMAR BANSAL HIGH COURT OF ALLAHABAD (2008) 214 CTR (ALL) 349 : (2008) 297 ITR 99 (ALL) (G) COMMISSIONER OF INCOME TAX VS. DEEPAK MITTAL HI GH COURT OF PUNJAB AND HARYANA (2010) 37 DTR 0008, (20 10) 324 ITR 0411 ITA NO. 324(ASR)/2016 C.O NO.22(ASR)/2016 ASSESSMENT YEAR: 2011-2012 6 (H) COMMISSIONER OF INCOME TAX VS. LEISURE WEAR EXPORTS LTD. HIGH COURT OF DELHI (2010) 46 D TR 0097, (2012) 341 ITR 0166 (I) NARAIN SINGLA VS. PR. CIT, 62 TAXMAN.COM 225 (CHD. TRIB.) IN VIEW OF THE ABOVE JUDICIAL PRECEDENTS AND FACTS AND CIRCUMSTANCES, THE LD. AR ARGUED THE ORDER PASSED U /S 263 BE QUASHED. 9. THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORD ER OF LD. CIT AND SUBMITTED THAT THE ASSESSING OFFICER HAD ACCEPTED T HE REQUEST OF ASSESSEE TO COMPUTE INCOME A THE RATE OF 10 PER CEN T OF DEPOSITS WITHOUT KEEPING INTO AND MAKING FURTHER ENQUIRIES, THEREFOR E, THE ORDER PASSED BY ASSESSING OFFICER WAS PREJUDICIAL TO THE INTERES T OF REVENUE AND WAS ALSO ERRONEOUS. 10. AS REGARDS CROSS OBJECTIONS FILED BY REVENUE, THE LD. DR RELIED ON THE GROUNDS OF CROSS OBJECTIONS. 11. THE LD. AR, ON THE OTHER HAND, SUBMITTED THAT C ROSS OBJECTIONS FILED BY COMMISSIONER OF INCOME TAX ARE NOT MAINTAI NABLE. HE SUBMITTED THAT CROSS OBJECTIONS ARE GOVERNED BY SECTION 253(4 ) OF THE ACT AND OUR ATTENTION WAS INVITED TO SECTION 253(4) OF THE ACT AND IN VIEW OF THE SPECIFIC PROVISIONS OF THE ACT, THE LD. AR SUBMITTE D THAT THE CROSS OBJECTIONS ARE TO BE FILED ON RECEIPT OF NOTICE OF AN APPEAL FILED BY ASSESSEE OR REVENUE AGAINST THE ORDER OF LD. CIT(A) , THEREFORE THE CROSS OBJECTIONS FILED BY REVENUE ARE NOT MAINTAINABLE AS ASSESSEE HAD NOT FILED ITA NO. 324(ASR)/2016 C.O NO.22(ASR)/2016 ASSESSMENT YEAR: 2011-2012 7 AN APPEAL BEFORE COMMISSIONER (APPEALS), IN VIEW OF THE ABOVE, IT WAS SUBMITTED THAT THE CROSS OBJECTIONS FILED BY REVENU E BE DISMISSED. 12. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THOUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT UNDISPUTEDLY THE ASS ESSEE IS ENGAGED IN THE BUSINESS OF RUNNING IMMIGRATION CONSULTANCY AGE NCY AS HAS BEEN NOTED BY ASSESSING OFFICER IN HIS ORDER. THE ASSESS ING OFFICER DURING ASSESSMENT PROCEEDINGS REQUIRED THE ASSESSEE TO EXP LAIN THE DEPOSITS IN THE BANK ACCOUNTS WHICH IS APPARENT FROM THE COPY O F ORDER SHEET PAGE AT PAPER BOOK SHEET 17 TO 20. THE ASSESSING OFFICER ALSO EXAMINED THE BANK ACCOUNTS OF THE ASSESSEE AS IS APPARENT FROM P APER BOOK PAGE 21 TO 44. AFTER EXAMINING THE BANK ACCOUNTS AND AFTER EXA MINING THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICER HE LD THE DEPOSITS IN THE BANK ACCOUNT AS BUSINESS RECEIPTS AND TOOK A PLAUSI BLE VIEW. THE VIEW TAKEN BY ASSESSING OFFICER IS SUPPORTED BY THE NATU RE OF ENTRIES IN THE BANK ACCOUNT WHICH REFLECTS THE CASH DEPOSIT AND AL SO REFLECTS CASH PAID TO VARIOUS PERSONS. FURTHER THE DEBIT ENTRIES IN TH E HDFC ACCOUNT BANK REFLECT PAYMENTS TO VARIOUS PERSONS. FROM THE COPIE S OF BANKS STATEMENT, WE FURTHER FIND THAT THE PEAK CREDIT NEVER EXCEEDED RS. 4 OR RS. 5 LACKS AND FOR DEPOSITS IN THE BANKS THE THEORY OF PEAK CR EDIT AND THEORY OF TELESCOPING ARE APPLICABLE IN ASSESSMENT PROCEEDING S. WE FURTHER FIND THAT SINCE ASSESSEE WAS NOT MAINTAINING BOOKS OF AC COUNT AND SINCE HE WAS ENGAGED IN THE BUSINESS OF RUNNING AND IMMIGRAT ION CONSULTANCY THE DEPOSITS IN THE BANK ACCOUNT HAS RIGHTLY BEEN T REATED AS BUSINESS ITA NO. 324(ASR)/2016 C.O NO.22(ASR)/2016 ASSESSMENT YEAR: 2011-2012 8 DEPOSITS. THE ASSESSEE DURING ASSESSMENT PROCEEDING S HAD EXPLAINED BEFORE ASSESSING OFFICER THAT MONEY COLLECTED FROM VARIOUS STUDENTS WAS DEPOSITED IN BANK AND SOME WAS GIVEN TO AGENTS BY C HEQUES AND IF NO WORK WAS DONE FOR ANY PERSON MONEY WAS REFUNDED TO THAT PERSON. IN THIS RESPECT THE REPLY OF THE ASSESSEE DURING ASSES SMENT PROCEEDINGS TO ASSESSING OFFICERS PLACED ON PAPER BOOK PAGE AT 46 IS QUITE RELEVANT WHEREIN THE ASSESSEE VIDE LETTER DATED 26.02.2014 H AD SUBMITTED AS UNDER: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF IMMIGRA TION CONSULTANCY. THE ASSESSEE IS NOT ENGAGED DIRECTLY I N IMMIGRATION BUSINESS. HE IS HAVING CONTRACTS WITH VARIOUS PERSO NS WHO USED TO SEND PEOPLE ABROAD. PERSON INTERESTED TO GO ABROAD CONTRACT ASSESSEE AND ASSESSEE GOT THE WORK DONE THROUGH AGE NTS AFTER COLLECTING MONEY FROM THE PERSONS. MONEY COLLECTED FROM VARIOUS PERSONS IS DEPOSITED IN BANK ACCOUNTS MAINTAINED BY ASSESSEE. IF THE WORK IS DONE AMOUNT IS PAID TO AGENTS OTHERWISE IT IS RETURNED TO PERSON FROM WHOM IT WAS RECEIVED. THE ASSESSEE RECE IVE COMMISSION FROM AGENTS. THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNTS THUS HE CAN NOT PRODUCE DOCUMENTARY EVIDENCE . THE ASSESSEE FURTHER REITERATED THE SAME POSITION VIDE LETTER DATED 07.03.2014 PLACED IN PAPER BOOK PAGE 48. THE RELEVA NT SUBMISSIONS OF ASSESSEE ARE REPRODUCED AS UNDER. AS MENTIONED IN MY ORDER REPLY. THE ASSESSEE IS NO T DIRECTLY ENGAGED IN IMMIGRATION BUSINESS. HE WORKS THROUGH V ARIOUS AGENTS. HE COLLECTS MONEY FROM PERSONS DESIRING OF GOING A BROAD SAME IS DEPOSITED IN BANK. IF THERE WORK IS DONE MONEY IS P AID TO AGENT OR SAME IS RETURNED. THIS FACT COULD BE VERIFIED FROM THE BANK STATEMENTS ATTACHED FROM THE ABOVE REPLY FILED DURING ASSESSMENT PROCE EDINGS, WE FIND THAT ASSESSEE HAD SUBMITTED COPY OF BANK ACCOUNTS A ND HAD ALSO ITA NO. 324(ASR)/2016 C.O NO.22(ASR)/2016 ASSESSMENT YEAR: 2011-2012 9 REQUESTED ASSESSING OFFICER TO VERIFY FROM THE BANK S STATEMENTS THAT THE MONEY DEPOSITED IN BANKS WERE PAID TO AGENTS AND IF THE WORK WAS NOT DONE, THE SAME WAS RETURNED. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCE, WE FI ND THAT ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS HAD DULY VERI FIED THE ENTRIES IN THE BANKS STATEMENT AND THEREFORE HAD ARRIVED AT TH E CONCLUSION THAT THE DEPOSITS REPRESENTED BUSINESS TRANSACTIONS AND HAD TAKEN A PLAUSIBLE VIEW AND THEREFORE THE PROVISIONS OF SECTION 263 WE RE NOT APPLICABLE. THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR IN DUSTRIES CO. LTD. VS. CIT (243 ITR 83 (SC) HAS OBSERVED AS UNDER : 'A BARE READING OF S. 263 OF THE IT ACT, 1961, MAKE S IT CLEAR THAT THE PREREQUISITE FOR THE T EXERCISE OF JURISDICTION BY THE CIT SUO MOTU UNDER IT, IS THAT THE ORDER OF THE ITO IS ERRONEOUS INSOFAR A S IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE CIT HAS TO BE SATISFI ED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE AO SOUGHT TO BE REVISE D IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT-IF THE ORDER OF THE ITO IS ERRONEOUS BUT IS NOT PREJUDICIA L TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE-REC OURSE CANNOT BE HAD TO S. 263(1) OF THE ACT. THE PROVISION CANNOT BE INVOK ED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE AO, IT IS ONLY WHEN AN ORDER IS ERRONEOUS, THAT THE SECTION WILL BE ATTRAC TED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SA ME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL J USTICE 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 T HE ACT. UNDERSTOOD IN ITS ORDINARY MEANING IT IS OF WIDE IMPORT AND IS NOT CO NFINED TO LOSS OF TAX. THE SCHEME OF THE ACT IS TO LEVY AND COLLECT TEA IN ACC ORDANCE 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 IS LOSING T AX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INT ERESTS OF THE REVENUE. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE ' HAS TO BE READ IN ITA NO. 324(ASR)/2016 C.O NO.22(ASR)/2016 ASSESSMENT YEAR: 2011-2012 10 CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE A O. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER, OF THE AO, CA NNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EX AMPLE, WHEN AN ITO ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND I T HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE IT O HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TRE ATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE U NLESS THE VIEW TAKEN BY THE ITO IS UNSUSTAINABLE IN LAW. FROM THE ABOVE OBSERVATIONS MADE BY THE SU PREME 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 THE SECTION WILL BE ATTRACTED. THE SUPREME COURT HAS ALSO MADE IT CLEAR THAT THE PHRAS E PREJUDICIAL TO THE INTEREST OF THE REVENUE HAS TO BE READ IN CONJECTIO N WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER AND THAT EVER Y LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CA NNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF REVENUE. THE HON'BL E SUPREME COURT FURTHER HELD THAT WHEN AN ASSESSING OFFICER ADOPTS ONE OF THE COURSES PERMISSIBLE IN LAW AND IT RESULTED IN LOSS OF REVEN UE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ON E VIEW WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRO NEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAK EN BY ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. BEFORE INVOKING PROVISIONS OF SECTION 263 OF THE ACT ONE HAS TO KEEP IN MIND THE DISTINCTION BETWEEN LACK OF ENQUI RY AND INADEQUATE ENQUIRY. IF THERE WAS ANY ENQUIRY, EVEN THOUGHT IN ADEQUATE IT WOULD NOT ITA NO. 324(ASR)/2016 C.O NO.22(ASR)/2016 ASSESSMENT YEAR: 2011-2012 11 IN ITSELF EMPOWER CIT TO INVOKE PROVISIONS OF SECTI ON 263 OF THE ACT MERELY BECAUSE HE HAD DIFFERENT OPINION IN THE MATT ER. IT IS ONLY IN CASES OF LACK OF ENQUIRY THAT SUCH A COURSE OF ACTION WOU LD BE AVAILABLE TO CIT. THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. SUNBEAM AUTO LTD. 133 ITR 167 AS HELD AS UNDER : REVISION-ERRONEOUS AND PREJUDICIAL ORDER-LACK OF PR OPER ENQUIRY-THERE IS A DISTINCTION BETWEEN 'LACK OF ENQUIRY' AND 'INADEQUA TE ENQUIRY'-IF THERE IS AN ENQUIRY, EVEN INADEQUATE, THAT WOULD NOT BY ITSE LF GIVE OCCASION TO THE CIT TO PASS ORDER UNDER S. 263, MERELY BECAUSE HE H AS A DIFFERENT OPINION IN THE MATTER-SUCH A COURSE OF ACTION IS OPEN ONLY IN CASES OF 'LACK OF ENQUIRY'-CONTENTION OF THE REVENUE THAT THE AO DID NOT CONSIDER AS TO WHETHER THE EXPENDITURE IN QUESTION WAS CAPITAL OR REVENUE EXPENDITURE CANNOT BE ACCEPTED-ALTHOUGH APPARENTLY THE ASSESSME NT DOES NOT GIVE ANY REASONS FOR ALLOWING THE ENTIRE EXPENDITURE AS REVE NUE EXPENDITURE, THAT BY ITSELF WOULD NOT BE INDICATIVE OF THE FACT THAT THE AO HAS NOT APPLIED HIS MIND TO THE ISSUE-AO IS NOT REQUIRED TO GIVE DETAIL ED REASON IN RESPECT OF EACH AND EVERY ITEM OF DEDUCTION IN THE ASSESSMENT ORDER-AO HAD CALLED FOR EXPLANATION REGARDING THIS VERY ITEM AND THE AS SESSEE HAD FURNISHED ITS EXPLANATION-THIS FACT HAS BEEN NOTICED BY THE C IT HIMSELF IN HIS ORDER- THUS, IT CANNOT BE SAID THAT IT IS A CASE OF 'LACK OF ENQUIRY'-FURTHER, EVEN THE CIT WAS NOT CLEAR AS TO WHETHER THE SAID EXPEND ITURE IS TO BE TREATED AS CAPITAL OR REVENUE EXPENDITURE-DYES USED BY THE ASSESSEE, A MANUFACTURER OF CAR PARTS, ARE THE COMPONENTS OF TH E MACHINES AND NEED CONSTANT REPLACEMENT AS THEIR LIFE SPAN IS NOT MORE THAN A YEAR-WITH THE REPLACEMENT OF SUCH TOOLS AND DYES, NO NEW ASSET CO MES INTO EXISTENCE, NOR THERE IS BENEFIT OF ENDURING NATURE-IT DOES NOT ENHANCE THE LIFE OF THE EXISTING MACHINE OR INCREASE ITS PRODUCTION CAPACIT Y-THEREFORE, THE VIEW TAKEN BY THE AO WAS ONE OF THE POSSIBLE VIEWS AND T HE ASSESSMENT ORDER PASSED BY THE AO COULD NOT BE HELD TO BE PREJUDICIA L TO THE REVENUE. IN THE PRESENT CASE FROM THE ORDER SHEET AND OTHER MATERIAL PLACED ON RECORD, WE HAVE OBSERVED THAT ASSESSING OFFICER HAD MADE SUFFICIENT ENQUIRIES AND HAD ALSO EXAMINED THE BANK STATEMENTS AND IN VIEW OF THAT HAD TAKEN ONE OF THE POSSIBLE VIEWS THAT THE DEPOSI TS REPRESENTED ITA NO. 324(ASR)/2016 C.O NO.22(ASR)/2016 ASSESSMENT YEAR: 2011-2012 12 BUSINESS RECEIPT AND THEREFORE KEEPING IN VIEW THE JUDICIAL PRECEDENTS RELIED ON BY ASSESSEE, THE PROVISIONS OF SECTION 26 3 WERE NOT APPLICABLE. IN VIEW OF THE ABOVE, THE APPEAL FILED BY ASSESSEE IS ALLOWED. 13. NOW COMING TO THE CROSS OBJECTIONS FILED BY REVENUE, WE FIND THAT PROVISIONS RELATING TO FILING OF CROSS OBJECTIONS A RE CONTAINED IN SECTION 253(4) OF THE ACT WHICH READS AS UNDER: SECTION 253 (4) IN THE INCOME TAX ACT, 1961 (4) THE ASSESSING OFFICER OR THE ASSESSEE, AS THE C ASE MAY BE, ON RECEIPT OF NOTICE THAT AN APPEAL AGAINST THE ORDER OF THE DEPUTY COMMISSIONER(APPEALS)] OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)] HAS BEEN PREFERRED UNDER SUB-SECTION (1) OR SUB-SECTION (2) BY THE OTHER PARTY, MAY, NOTWITHSTANDING THAT HE MA Y NOT HAVE APPEALED AGAINST SUCH ORDER OR ANY PART THEREOF, WI THIN THIRTY DAYS OF THE RECEIPT OF THE NOTICE, FILE A MEMORANDUM OF CROSS-OBJECTIONS, VERIFIED IN THE PRESCRIBED MANNER, AGAINST ANY PART OF THE ORDER OF THE DEPUTY COMMISSIONER (APPEALS) OR, AS THE CASE M AY BE, THE COMMISSIONER (APPEALS), AND SUCH MEMORANDUM SHALL B E DISPOSED OF BY THE APPELLATE TRIBUNAL AS IF IT WERE AN APPEA L PRESENTED WITHIN THE TIME SPECIFIED IN SUB-SECTION (3). FROM THE ABOVE PROVISIONS RELATING TO FILING OF CR OSS OBJECTIONS, WE FIND THAT THE ASSESSING OFFICER OR ASSESSEE ON RECE IPT OF NOTICE THAT AN APPEAL AGAINST THE ORDER OF DEPUTY COMMISSIONER (AP PEAL) OR COMMISSIONER (APPEAL) HAS BEEN PREFERRED BY EITHER PARTY AND THEN THE OTHER PARTY CAN FILE THE CROSS OBJECTIONS. IN THE P RESENT CASE, THE ORDER PASSED BY THE CIT U/S 263 HAS NOT BEEN PASSED BY DE PUTY COMMISSIONER (APPEAL) OR THE COMMISSIONER (APPEAL) AND RATHER IT HAS BEEN PASSED BY PRINCIPAL COMMISSIONER AND THEREFORE THE PROVISIONS RELATING TO CROSS OBJECTIONS AS CONTAINED IN SECTIO N 253(4) ARE NOT ITA NO. 324(ASR)/2016 C.O NO.22(ASR)/2016 ASSESSMENT YEAR: 2011-2012 13 APPLICABLE AND HENCE, THE CROSS OBJECTIONS FILED BY REVENUE ARE NOT MAINTAINABLE. IN VIEW OF THE ABOVE, THE CROSS OBJEC TIONS FILED BY REVENUE ARE DISMISSED. 14. IN NUTSHELL, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED WHERE AS THE CROSS-OBJECTIONS FILED BY REVENUE ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 27.02.2017. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27.02.2017. /GP/SR. PS . COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER