Nallamilli Satyanarayana Reddy & Others, V. THE DY. CIT, Kakinada

ITA 33/VIZ/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8774 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 27-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEBAKUMAR SONOWAL
• Keywords: Depreciation; Principle of natural justice; Assessment record
• Section: 40A(3); 143(3); 263

Judgement Text

ITA NO.33/VIZAG/2016 NALLAMILLI SATYANARAYANA REDDY & OTHERS, TURANGI 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.33/VIZAG/2016 ( / ASSESSMENT YEAR: 2011-12) NALLAMILLI SATYANARAYANA REDDY & OTHERS TURANGI DCIT, CIRCLE - 1 KAKINADA [PAN NO. AACFN4562G ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI DEBA KUMAR SONOWAL, DR / DATE OF HEARING : 06.02.2018 / DATE OF PRONOUNCEMENT : 09.02.2018 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE AGAINST ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME TAX-2 (PCIT), VISAKHAPATNAM VIDE F.NO.PR.CIT- 2/VSP/263/10/2015-16 DATED 1.1.2016 FOR THE ASSESSM ENT YEAR 2011-12. ITA NO.33/VIZAG/2016 NALLAMILLI SATYANARAYANA REDDY & OTHERS, TURANGI 2 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE ORD ER PASSED BY THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX-2, (PCIT IN SHORT) VISAKHAPATNAM U/S 263 OF THE INCOME TAX ACT, 1961 ( HEREINAFTER CALLED AS 'THE ACT'). IN THIS CASE, THE ASSESSMENT ORDER WAS COMPLETED U/S 143(3) OF THE ACT BY AN ORDER DATED 31.12.2013 ON T OTAL INCOME OF ` 13,30,125/- AGAINST THE RETURNED INCOME OF ` 9,23,003/-. LATER ON, THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX HAS TAKEN UP THE CASE FOR REVISION AND FOUND THAT THE ORDER PASSED BY THE ASS ESSING OFFICER (A.O.) WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF TH E REVENUE DUE TO FOLLOWING REASONS: (I) THERE WERE CURRENT LIABILITIES TO THE EXTENT OF ` 6.06 CRORES AND RESERVES & SURPLUS OF ` 4.38 LAKHS WHICH WERE NOT EXAMINED BY THE A.O. (II) THE CLAIM OF THE ASSESSEE OF ` 1.01 CRORES INTEREST WAS NOT EXAMINED BY THE A.O. (III) THERE WAS NO PROOF OF EXAMINATION OF CLAIMS AND LIA BILITIES AND NO CROSS VERIFICATION WAS MADE BY THE A.O. WITH CORRESPONDING PARTIES. (IV) AS PER THE AUDIT REPORT, THE UNSECURED LOANS, VOUCH ERS FOR EXPENDITURE, ETC. WERE SUBJECT TO VERIFICATION. AN AMOUNT OF ` 15.66 LAKHS WAS SHOWN IN THE BALANCE SHEET AS UNSEC URED LOANS AND ` 5.6 CRORES OF EXPENSES WERE CLAIMED IN THE P&L ACC OUNT UNDER VARIOUS HEADS LEAVING MEAGER NET PROFIT OF ` 4.74 LAKHS. (V)THE A.O. HAS NOT VERIFIED THE ADDITION TO FIXED ASSETS FOR WHICH THE ASSESSEE HAS CLAIMED THE DEPRECIATION. (VI)THERE WAS A CURRENT ASSET IN THE NAME OF T. NEE LIMA AND THE A.O. HAS NOT OBTAINED ANY INFORMATION IN RESPECT OF THE ABOVE ASSET. ITA NO.33/VIZAG/2016 NALLAMILLI SATYANARAYANA REDDY & OTHERS, TURANGI 3 (VII) THERE WAS AN INTRODUCTION OF CAPITAL IN THE C APITAL ACCOUNTS. THE A.O. HAS NOT EXAMINED THE SOURCE FOR INCREASE I N CAPITAL. (VIII)THE A.O. HAS NOT VERIFIED THE PAYMENTS MADE I N VIOLATION OF SECTION 40A(3) OF THE ACT EVEN THOUGH AUDIT REPORT WAS GIVEN WITH A REMARK OF SUBJECT TO VERIFICATION. (IX) THE ASSESSEE HAD DEBITED VARIOUS EXPENSES TO T HE P&L ACCOUNT. THE GENUINENESS OF THE EXPENSES WAS NOT V ERIFIED BY THE A.O. AND NO EVIDENCE WAS PLACED ON RECORD. 3. DUE TO THE ABOVE DEFICIENCIES, THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX WAS OF THE VIEW THAT THE ORDER PASSED BY THE A.O. WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE AND ACCORDINGLY SET ASIDE THE ASSESSMENT ORDER DIRECTING THE A.O. T O REDO THE ASSESSMENT AFTER CONDUCTING ENQUIRIES AND TO TAKE D ECISION AS PER LAW. 4. AGGRIEVED BY THE ORDER OF THE LD. PCIT, THE ASSE SSEE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, T HE LD. COUNSEL OF THE ASSESSEE ARGUED THAT THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX HAS TAKEN UP THE CASE FOR REVISION AND SET ASIDE THE AS SESSMENT ORDER FOR INSUFFICIENCY OF ENQUIRY BUT NOT FOR LACK OF ENQUIR Y AND ARGUED THAT THE LD. PCIT IS NOT PERMITTED TO INVOKE THE JURISDICTIO N UNDER SECTION 263 FOR INADEQUATE ENQUIRY. IN THE ASSESSEES CASE, IT IS SUBMITTED BY THE LD. A.R. THAT THE A.O. HAS CALLED FOR THE BOOKS OF ACCO UNTS AND THE RELEVANT INFORMATION AND VERIFIED ALL THE ISSUES RAISED BY T HE LD. PRINCIPAL COMMISSIONER OF INCOME TAX IN THE SHOW CAUSE NOTICE AND THE REVISION ORDER. THE A.O. AFTER DUE VERIFICATION OF ALL THE ASPECTS PASSED THE ITA NO.33/VIZAG/2016 NALLAMILLI SATYANARAYANA REDDY & OTHERS, TURANGI 4 ASSESSMENT ORDER. THE A.R FURTHER SUBMITTED THAT WI TH REGARD TO THE VERIFICATION OF EXPENSES, LOW PROFIT, ADDITIONS TO ASSETS, VIOLATIONS U/S 40A(3), QUALIFIED REMARKS OF AUDIT REPORT, INCREASE IN CAPITAL AND THE CURRENT ASSETS AND LIABILITIES THE A.O. HAS VERIFI ED WITH THE BOOKS OF ACCOUNTS AND VOUCHERS DURING THE ASSESSMENT PROCEED INGS. THE SAME BOOKS OF ACCOUNTS WERE ALSO PRODUCED BEFORE THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX AT THE TIME OF REVISION PROCEEDINGS AND NO DEFECT WAS FOUND BY THE REVENUE. WITH REGARD TO TH E LORRIES, TANKER AND TRACTOR, IT WAS EXPLAINED BY THE LD. A.R. THAT THE LORRIES, TANKER AND TRACTOR WERE USED BY THE ASSESSEE FOR ITS BUSINESS PURPOSE, HENCE THERE WERE NO RECEIPTS AND THE SAME WAS EXPLAINED DURING THE ASSESSMENT PROCEEDINGS. WITH REGARD TO THE ADDITIONS TO CAPIT AL ASSETS, THE ASSESSEE HAS PRODUCED ALL THE RELEVANT VOUCHERS AT THE TIME OF ASSESSMENT AND SUPPORTED BY THE ENTRIES IN THE BOOK S OF ACCOUNTS, WHICH WERE DULY VERIFIED BY THE A.O. IN RESPECT OF SMT. NEELIMA, THE DEBTOR, WHICH WAS APPEARING AS AN ASSET, THE LD. A. R. SUBMITTED THAT SHE IS A PARTNER IN THE FIRM AND AT THE TIME OF ASS ESSMENT, THE ASSESSEE HAD PRODUCED THE BOOKS OF ACCOUNTS, WHICH WAS VERIF IED BY THE A.O. SHE HAS OVER DRAWN THE AMOUNTS, HENCE IT WAS SHOWN AS AN ASSET AND INTEREST WAS ALSO CHARGED. WITH REGARD TO THE INCRE ASE IN CAPITAL ACCOUNT, THERE WAS INTRODUCTION OF CAPITAL IN THE C ASE OF ONE OF THE ITA NO.33/VIZAG/2016 NALLAMILLI SATYANARAYANA REDDY & OTHERS, TURANGI 5 PARTNERS MR. T.VENKATA REDDY, WHOSE SOURCE WAS EXPL AINED TO THE A.O. AND ALSO FURNISHED THE PAN NUMBER OF THE PARTNER AN D STATED THAT MR. T.VENKATA REDDY WAS ALSO ASSESSED TO TAX. WITH REG ARD TO THE REMARKS IN THE AUDIT REPORT IN FORM NO.3CD, THE REMARKS MAD E BY THE ACCOUNTANT WERE OF ROUTINE NATURE AND THE SAME WERE VERIFIED F ROM THE BOOKS OF ACCOUNTS AT THE TIME OF ASSESSMENT. THE LD. A.R. RE FERRED OUR ATTENTION TO PAGE NO.25 OF THE PAPER BOOK, WHEREIN THE A.O. H AS ISSUED THE QUESTIONNAIRE ON VARIOUS ISSUES INCLUDING THE DETAI LS OF CURRENT ASSETS AND PROVISIONS, DETAILS OF RESERVES, DETAILS WITH R EGARD TO DEPOSITS EXCEEDING ` 20,000/-, VARIOUS EXPENSES, COPIES OF BANK ACCOUNT S, ETC. AND SUBMITTED THAT ALL THE DETAILS AS PER THE QUEST IONNAIRE WERE FURNISHED TO THE A.O. DURING THE COURSE OF ASSESSME NT. THE LD. A.R. ALSO INVITED OUR ATTENTION TO PAGE NOS.130 TO 139 O F THE PAPER BOOK REFERRING VARIOUS DETAILS FILED BY THE ASSESSEE BEF ORE THE A.O. THE LD. A.R. FURTHER SUBMITTED THAT THE A.O. HAS PASSED THE CONSEQUENTIAL ORDER U/S 143(3) R.W.S. 263 OF THE ACT GIVING EFFECT TO T HE ORDER OF THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX U/S 263 OF THE ACT, AND THE A.O. HAS NOT MADE ANY SPECIFIC ADDITION IN RESPECT OF TH E ISSUES RAISED BY THE LD. PCIT, EXCEPT ESTIMATED ADDITIONS OF ` 2,59,654/- FOR VEHICLE MAINTENANCE AND ` 2,99,157/- FOR SALARIES ON ESTIMATION BASIS. THE LD. A.R. ARGUED THAT THE LD. PCIT HAS INVOKED THE REVIS ION U/S 263 OF THE ITA NO.33/VIZAG/2016 NALLAMILLI SATYANARAYANA REDDY & OTHERS, TURANGI 6 ACT ON THE SURMISES AND CONJECTURES, WHICH IS NOT S USTAINABLE IN LAW. THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX HAS NO T BROUGHT ON RECORD ANY ISSUE RELATING TO THE UNDER ASSESSMENT O R SUPPRESSION OF INCOME AND IT IS NOT THE CASE OF THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX THAT THE A.O. HAS NOT CONDUCTED THE ENQU IRIES. IT IS A CASE OF THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX THA T THE A.O. HAS MADE INADEQUATE ENQUIRIES AND NOT PLACED THE NECESSARY C OPIES OF EVIDENCES FURNISHED DURING THE ASSESSMENT. THE LD. A.R. FURT HER ARGUED THAT THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX IS NOT PER MITTED TO MAKE REVISION U/S 263 OF THE ACT UNLESS THE ASSESSMENT M ADE BY THE A.O. IS FOUND TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF THE REVENUE. IN THIS CASE, THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX HAS NOT MADE OUT ANY CASE OF ERROR, WHICH IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, THE LD. A.R. OF THE ASSESSEE ARGUED THAT THE REVISION ORDER MADE BY THE LD. PRINCIPAL COMMISSIONER OF INCOME TA X REQUIRED TO BE QUASHED. PER CONTRA THE LD. D.R. SUPPORTED THE ORD ER OF THE LD. PCIT. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN P ADDY MILLING, PURCHASE AND SALE OF PADDY RICE AND ITS BY PRODUCT S. THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX HAS TAKEN UP THE CASE FO R REVISION U/S 263 ITA NO.33/VIZAG/2016 NALLAMILLI SATYANARAYANA REDDY & OTHERS, TURANGI 7 OF THE ACT FOR NOT CONDUCTING ENQUIRIES AND INVESTI GATIONS IN RESPECT OF THE EXPENSES AS PER PARA 3.1 OF THE SHOW CAUSE NOTI CE WITH REGARD TO RICE CUTTING, SALARIES, BANK INTEREST, FCI CUTTINGS , HPCL EXPENSES, LOW PROFIT, ADDITIONS TO ASSETS, INTRODUCTION OF FRESH CAPITAL, QUALIFIED REMARKS OF THE AUDIT REPORT, SALES TAX, CURRENT LIABILITIES AND CURRENT ASSETS ETC.. THE LD. PCIT ALSO OBSERVED THAT THE NO EVIDENCE HAS BEEN PLACED ON RECORD BY THE AO. THE LD A.R. SUBMITTED THAT THE D ETAILS CALLED FOR BY THE AO WERE FURNISHED AT THE TIME OF ASSESSMENT AND THE SAME WERE VERIFIED BY THE AO BEFORE COMPLETING THE ASSESSMENT . ON VERIFICATION OF THE ASSESSMENT ORDER, IT IS OB SERVED THAT THE ASSESSEE HAD PRODUCED THE BOOKS OF ACCOUNTS, WH ICH WAS VERIFIED BY THE ASSESSING OFFICER. WITH REGARD TO THE NET PROFI T, THE EXPENSES INCURRED, ADDITION TO FIXED ASSETS AND LOANS GIVEN TO THE PARTNER, NATURE OF CURRENT LIABILITIES, RESERVES AND SURPLUS, ALL T HESE ISSUES AND THE REMARKS MADE BY THE ACCOUNTANT REQUIRED TO BE VERIF IED FROM THE BOOKS OF ACCOUNTS AND THERE IS NO DISPUTE THAT THE ASSESS EE HAD PRODUCED THE BOOKS OF ACCOUNTS, BEFORE THE A.O. AND VERIFIED THE SAME. THIS FACT IS EVIDENCED BY THE ASSESSMENT ORDER. WHETHER THE A.O. HAS PLACED ANY EVIDENCES IN THE ASSESSMENT RECORD OR NOT IS DISCRE TION OF THE AO AND IS NOT THE CASE FOR REVISION U/S 263 OF THE ACT. WITH REGARD TO THE LORRIES, TANKER AND TRACTOR, THE ASSESSEE HAD EXPLAINED THAT THEY WERE USED IN ITA NO.33/VIZAG/2016 NALLAMILLI SATYANARAYANA REDDY & OTHERS, TURANGI 8 THE ASSESSEES OWN BUSINESS, HENCE, NO RECEIPTS WER E ADMITTED. THE LD. PCIT HAS NOT MADE OUT A CASE OF SUPPRESSION OF THE RECEIPTS OR INFLATION OF EXPENDITURE. WITH REGARD TO THE QUALIFIED AUDIT REPORT MADE BY THE ACCOUNTANT IN THE FORM 3CD, THE BOOKS OF ACCOUNTS W ERE EXAMINED BY THE AO NO DEFECT WAS FOUND BY THE AO AND THE LD. PC IT. WITH REGARD TO THE SALES TAX PENALTY, THE SAME WAS DISALLOWED BY T HE A.O., HENCE NO CASE FOR REVISION AND NO VIOLATION. THE LD. PRINCI PAL COMMISSIONER OF INCOME TAX IS EMPOWERED TO TAKE UP THE REVISION U/S 263 OF THE ACT, IF THE A.O. HAS NOT MADE ANY ENQUIRIES BUT NOT FOR INA DEQUATE ENQUIRIES. INADEQUATE ENQUIRY CANNOT BE A REASON FOR REVISION U/S 263 OF THE ACT. IN THE INSTANT CASE THE LD. PCIT IS OF THE VIEW THA T THE AO HAS NOT CONDUCTED THE ENQUIRIES AS PER HIS EXPECTATIONS. FO R REVISION OF THE ASSESSMENT ORDER, THE ASSESSMENT ORDER PASSED BY TH E A.O. SHOULD BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. ONCE THE ASSESSEE FURNISHES THE REQUIRED INFORMATION WHICH I S BEING VERIFIED BY THE A.O., THERE IS NO CASE FOR REVISION. ONCE A.O. HAS CONDUCTED ENQUIRY AND HE IS SATISFIED WITH THE REPLY GIVEN ON THE QUE RIES RAISED, THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX CANNOT INTERVE NE THROUGH REVISION TO COME TO A CONCLUSION THAT ASSESSMENT ORDER PASSE D BY THE A.O. WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE FOR LACK OF OR INADEQUATE ENQUIRY. THIS VIEW IS SUPPORTED BY THE DECISION OF ITAT, ITA NO.33/VIZAG/2016 NALLAMILLI SATYANARAYANA REDDY & OTHERS, TURANGI 9 KOLKATA B BENCH IN THE CASE OF VINOD AGGARWAL VS. PRINCIPAL CIT (CENTRAL) KOLKATA (2018) 80 TAXMANN.COM 171. FOR R EADY REFERENCE AND CLARITY WE EXTRACT THE RELEVANT PARTS OF THE HONBL E ITATS ORDER SUPRA WHICH READS AS UNDER: 27. AS POINTED OUT BY THE SUPREME COURT IN MALABAR INDUSTRIAL CO.'S CASE ( SUPRA ), THE PREREQUISITE TO THE EXERCISE OF JURISDICTION BY THE COMMISSIONER SUO MOTU UNDER IT, IS THAT THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEO US INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO B E SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUG HT 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 PREJ UDICIAL TO THE INTERESTS OF REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE IN TERESTS OF REVENUE-RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. THERE CAN BE NO D OUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE O R 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 APPLI CATION 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 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 MEAN ING IT IS OF WIDE IMPORT AND IS NOT CONFINED TO LOSS OF TAX. 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 ASSE SSING OFFICER CANNOT 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 IT HAS RESULTED IN L OSS OF REVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN O NE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED A S AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. 28. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GABRIEL INDIA LTD. ( SUPRA ) HAS HELD THAT THE POWER OF SUO MOTU REVISION UNDER SUB-S. (1 ) OF S. 263 IS IN THE NATURE OF SUPERVISORY JURISDICTION AND THE SAME CAN BE EXERCI SED ONLY IF THE CIRCUMSTANCES SPECIFIED THEREIN EXIST. TWO CIRCUMSTANCES MUST EXI ST TO ENABLE THE COMMISSIONER TO EXERCISE POWER OF REVISION UNDER THIS SUB-SECTION, VIZ., (I) THE ORDER IS ERRONEOUS; (II) BY VIRTUE OF THE ORDER BEING ERRONEOUS PREJUDICE HAS B EEN CAUSED TO THE INTEREST OF THE REVENUE. IT HAS, THEREFORE, TO BE CONSIDERED FIRSTL Y AS TO WHEN AN ORDER CAN BE SAID TO BE ERRONEOUS. AN ORDER CANNOT BE TERMED AS ERRONEOUS U NLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN ITO ACTING IN ACCORDANCE WITH LAW MAKES CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE ACCORDING TO HIM THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. TH IS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION OF JUDGMENT OF THE COMMISSIONER FOR THAT OF THE ITO, WHO PASSED THE ORDER, UNLESS THE DECISION IS HELD TO BE ERRONEOUS. ITA NO.33/VIZAG/2016 NALLAMILLI SATYANARAYANA REDDY & OTHERS, TURANGI 10 32. SINCE THE AO CONDUCTED ENQUIRY THE QUESTION IS WHE THER THERE CAN BE NO REVISION BECAUSE THE POWER U/S 263 CAN BE INVOKED ONLY IN CA SES OF LACK OF INQUIRY AND NOT CONDUCTING INADEQUATE INQUIRY. WE ARE OF THE VIEW T HAT WHERE AN ENQUIRY IS CONDUCTED BY THE AO AND HE IS SATISFIED WITH A REPLY GIVEN ON A QUERY RAISED, THEN THE CIT CANNOT INTERVENE THROUGH REVISION FOR COMING TO A CONCLUSI ON THAT THE ASSESSMENT ORDER PASSED BY THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTE RESTS OF THE REVENUE FOR LACK OF OR INADEQUATE ENQUIRY. IN THE INSTANT CASE, THE ASSESSEE HAS PROVIDE D THE ENTIRE INFORMATION TO A.O. AT THE TIME OF ASSESSMENT, WHICH WAS BEING VERIFIED BY THE A.O. BEFORE COMPLETING ASSESSMENT. THIS IS EVIDENCED BY THE QUESTIONNAIRE ISSUED BY THE A.O. AS WELL AS THE INFORMATION FURNI SHED BY THE ASSESSEE AT THE TIME OF ASSESSMENT. FURTHER, IN THE CONSEQU ENTIAL ORDER PASSED U/S 143(3) R.W.S 263 OF THE ACT, THE A.O. HAS NOT M ADE ANY SPECIFIC DISALLOWANCE IN RESPECT OF THE ISSUES RAISED BY THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX U/S 263 OF THE ACT EXCEP T THE ESTIMATED ADDITIONS. THE LD. PCIT HAS NOT MADE OUT A CASE OF NOT CONDUCTING THE ENQUIRY ON ANY OF THE ISSUES, HENCE, WE ARE UNAB LE TO SUSTAIN THE ORDER OF THE LD. PRINCIPAL COMMISSIONER OF INCOME T AX AND WE DO NOT FIND ANY REASON TO HOLD THE ASSESSMENT ORDER PASSED BY THE A.O. WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. PRINCIPAL COMMISSIONE R OF INCOME TAX AND ALLOW THE APPEAL OF THE ASSESSEE. ITA NO.33/VIZAG/2016 NALLAMILLI SATYANARAYANA REDDY & OTHERS, TURANGI 11 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 9 TH FEB18. SD/- SD/- ( . ) ( . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 09.02.2018 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT NALLAMILLI SATYANARAYANA REDDY & OTHERS, CONTS: SRI VENKATA PADMAVATHI RAW & BOILED RICE MILL, TURANGI. 2. / THE RESPONDENT THE DCIT, CIRCLE-1, KAKINADA. 3. + / THE PCIT-2, VISAKHAPATNAM, 4. + ( ) / THE CIT (A), VISAKHAPATNAM 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM