BHAROOMAL & CO, MUMBAI V. PR CIT 22, MUMBAI

ITA 3499/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3774 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 12-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H N SINGH
• Keywords: Opportunity of being heard; Corroborative evidences; Revenue expenditure
• Section: 143(3); 142(1); 263; 11

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE HONBLE SH. G. S. PANNU , VP & HONBLE SH. SANDEEP GOSAIN, JM ./ I.T.A. NO . 3499 /MUM/201 7 ( / ASSESSMENT YEAR: 2013 - 14 ) M/S BHAROOMAL& CO. 1 & 2, NURSING CO - OP. HSG. SOCIETY, 4 TH ROAD, KHAR (WEST), MUMBAI - 400052 / VS. PR.CIT 22 MUMBAI PIN - ./ ./ PAN NO. AADFB0780H ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI ANIL SATHE , A R / RESPONDENTBY : SHRI H. N. SINGH , DR / DATE OF HEARING : 16.11 .2018 / DATE OF PRONOUNCEMENT : 08.02.2019 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT APPE AL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF LD. PR. CIT (APPEAL) 22, MUMBAI DATED 02.03.17 F OR AY 20 13 - 14 ON THE GROUNDS MENTIONED HEREIN BELOW: - 2 I.T.A. NO. 3499 /MUM/201 7 M/S BHAROOMAL & CO. 1 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED PR. COMMISSIONER OF INCOME TAX HAS ERRED IN PASSING THE ORDER U/S 263 OF THE INCOME TAX ACT 1961 BY DISREGARDING APPELLANTS CONTENTIONS IN THIS REGARD. 2 . THE LEARNED PR. COMMISSIONER OF INCOME TAX ERRED IN INVOKING JURISDICTION OF SEC. 263 STATING THAT THE ASSESSING OFFICER HAS ACCEPTED THE RETURNED INCOME WITHOUT CARRYING OUT PROPER AND NECESSARY ENQUIRIES, WITHOUT CONDUCTING PROPER INVESTIGATION AND WITHOUT PROPER APPLICATION OF MIND WHEREAS THE OPERATING PARAGRAPH (PARAGRAPH NO. 3) OF THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE TO THE ASSESSING OFFICER DURING THE COURSE OF THE ASSESSMENT INDICATE OTHERWISE. 3 . THE LEARNED PR. COMMISSIONER OF INCOME TAX ERRED IN NOT APPRECIATING THE FA CT THAT THE ASSESSING OFFICER HAD ISSUED NOTICES UNDER SEC. 142(1) CALLING FOR VARIOUS DETAILS AND THE APPELLANT HAD COMPLIED WITH THE SAME BY FURNISHING REQUISITE INFORMATION / DOCUMENTS INCLUDING THE CONFIRMATION OF LOANS ACCEPTED BY THE APPELLANT. THERE FORE THE OBSERVATION OF THE LEARNED COMMISSIONER THAT THE ASSESSMENT WAS COMPLETED WITHOUT ENQUIRY WAS INCORRECT. 4 . THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY OF THE GROUNDS OF APPEAL AT ANY TIME BEFORE THE TIME OF HEARING. 3 I.T.A. NO. 3499 /MUM/201 7 M/S BHAROOMAL & CO. 2. THE B RIEF FACTS OF T HE CASE ARE THAT ASSESSMENT IN THE ABOVE CASE FOR AY 2013 - 14 WAS FINALIZED U/S. 143(3) OF THE I.T. ACT , 1961 ON 16.10.15 AT INCOME OF RS. 49,48,610 / - AC CEPTING THE RETURN INCOME OF THE ASSESSEE. LATER ON LD. CIT PASSED ORDER U/S 263 OF THE I.T ACT DATED 02 .03.17 THEREBY SETTING ASIDE THE ASSESSMENT MADE BY THE AO U/S 143(3) WITH DIRECTION TO MAKE THE SAME AFRESH. AGGRIE VED BY THE ORDER OF LD. CIT PASSED U/S 263 OF THE I.T. ACT, THE ASSESSEE PREFERRED THE PRESENT APPEAL BEFORE US BY RAISING THE ABOVE GROUNDS. GROUND NO. 1 TO 3 3. SINCE ALL THE GROUND S RAISED BY THE ASSESSEE ARE INTER CONNECTED AND INTER RELATED AND RELATES TO CHALLENGING THE ORDER OF LD. CIT IN PASSING ORDER U/S 263 OF I.T. ACT BY DISCARDING THE CONTENTION OF THE ASSESSEE, THEREFORE WE THOUGHT IT FIT TO DISPOSE OF THE SAME BY THIS COMMON ORDER. 4. WE HAVE HEARD COUNSELS FOR BOTH THE PARTIES AT LENGTH AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD, JUDGMENT 4 I.T.A. NO. 3499 /MUM/201 7 M/S BHAROOMAL & CO. CITED BY BOTH THE PARTIES AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASS ED BY LD. CIT WHILE PASSI NG ORDER U/S 263 OF I.T. ACT . THE OPERATIVE PO RTION OF THE ORDER OF LD. CIT IS CONTAINED IN PARA NO. 6 & 7 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 6. THE ASSESSEES SUBMISSION IS DULY CONSIDERED. THE CASE OF THE ASSESSEE IS BEING IN THE TERMS DISCUSSED HEREUNDER. FIRSTLY, AS REGARDS THE SUBMISSION OF THEASSESSEE THAT THE DETAILS REGARDING THE EX PENSES AIMED BY THE ASSESSEE IN THE RETURN OFINCOME WERE FILED BY THE ASSESSEE VIDE LETTER DATED 31.07.20 15 AND 22.09.2015 RESPECTIVELY AND SAME WERE SCRUTINIZED AND VERIFIED BY THE O WHILE FINALIZING THE ASSESSMENT CANNO T BE ACCEPTED AS THERE ARE NO SUCH DETAILS OF VERIFICATION /EXAMINATION OF THE NATURE AND GENUINENESS OF THE ABOVE EXPENSES CLAIMS MADE BY THE ASSESSEE PLACED ON RECORD. SECONDLY, ASSESSEE RECEIVED UNSECURED LOAN OF RS. 25,00,000/ - DURING THE YEAR FROM ONE SATISH CHANDER GUPTA, CHANDIGARH; HOWEVER, NO EVIDENCE WAS SUBMITTED REGARDING IDENTITY OF THE CREDITOR, HIS CREDITWORTHINESS AND GENUINENESS OF THE 5 I.T.A. NO. 3499 /MUM/201 7 M/S BHAROOMAL & CO. TRANSACTION. TOTAL OUTSTANDING UNSECURED LOANS ARE OF RS. 2,48,24,847/ - , HOWEVER, NO CONFIRMATIONS ARE PLAC ED ON RECORD, THERE IS NO MENTION OF ANY KIND OF ENQUIRY/INVESTIGATION/C ROSS VERIFICATION BY THE AO REGAR DING UNSECURED LOAN FROM PERSONS WHO HAVE NOT FILED RETURN OF INCOME (FORM 3CD) WHIC H WAS THE REASON WHY THE CASE WAS SELECTED FOR SCR UTINY UNDER CASS, THE ASSESSMENT ORDER DOES NOT SP EAK UP OF ANY CROSS VERIFICATION AS REGARDS IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE LOANS. AND THEREFORE, FINALLY IN THE ABSENCE OF ANY DETAILS REGARDING ENQUIRY/EXAMINATION AND CROSS VERIFICATION OF THE NATURE AND GENUINENESS OF EXPENSES ON RECORD AND SINCE THERE IS NO MENTION OF IT BEING CARRIED OUT IN THE OPENING PART OF ASSESSMENT ORDER, THE SUBMISSION OF THE ASSESSEE THAT THE SAID DETAILS WERE PLACEDON RECORD AND VERIFIED BY THE AO CANNOT A CCEPTED. 7. THE AO HAS NOT VERIFIED THE GENUINENESS OF LOAN CONFIRMATION WITH BANK STATEMENTSAND CREDITWORTHINESS OF THE LENDER IS NOT ESTABLISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HENCE THE ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD VS CIT REPORTED IN 243 ITR 83(SC) HAS CATEGORICALLY HELD THAT IF DUE TO AN ERRONEOUS ORDER,THE REVENUE IS LOSING TAX LAWFULLY 6 I.T.A. NO. 3499 /MUM/201 7 M/S BHAROOMAL & CO. PAYABLE BY A PERSON; IT WILL CERTAINL Y BE PREJUDICIAL TO THE INTEREST OF REVENUE. IT WAS FURTHER HELD THAT ONCE AO ACCEPTED THE CLAIM OF ASSESSEE WITHOUT MAKING AN ENQUIRY, THE ORDER OF THE AO IS ERRONEOUS AND THE EXERCISE OF JURISDICTION BY CIT U/S 263 IS JUSTIFIED. IN THE CASE OF GEE VEC EN TERPRISES VS ADDL. CIT REPORTED IN 99 ITR 375, THE HON'BLE DELHI HIGH COURT HAS HELD THAT THE ITO BEING NOT ONLY AN ADJUDICATOR BUT ALSO AN INVESTIGATOR, HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER EN QUIRY IN THE FACTS & CIRCUMSTANCES OF THE CASE AND THE WORD 'ERRONEOUS' IN SECTION 263 INCLUDES THE FAILURE TO MAKE SUCH AN ENQUIRY. IT WAS FURTHER HELD THAT THE CIT WAS ONLY JUSTIFIED IN EXERCISING HIS REVISIONAL JURISDICTION ON THE GROUND THAT THE AO HAD NOT MADE SUFFICIENT ENQUIRIES BEFORE ALLOWING THE LOAN AS GENUINE AND IT WAS NOT NECESSARY FOR THE CIT TO HAVE., HIMSELF MADE ENQUIRIES BEFORE CANCELLING AS SESSME NT SIMILARLY,IN THE CASE OF RAJAKSHMI MILLS VS ITO REPORTED IN 121 IT D 343,THE SPECIAL BENCH OF ITAT, CHENNAI HAS HELD THAT COMMISSIONER CAN REGARD ORDER AS ERRON EOUS FROM THE GROUND THAT IN CI RCUMSTANCES OF THE CASE THE AO SHOULD HAVE MADE FURTHER ENQUIRIES BEFORE ALLOWING THE CLAIM OF LOAN RS 25.00,003/ - AND OTHER EXPENSE S AS GENUINE. THEREFORE, THE LACK OF ENQUIRY OR LACK OF AP PLICATION OF MIND ON THE PART OF AO AND BY ACCEPTING THE SUBMISSION OF THE 7 I.T.A. NO. 3499 /MUM/201 7 M/S BHAROOMAL & CO. ASSESSEE ON ITS FACE VALUE WITHOUT ITS PROPER VERIFICATION, TO MY CONSIDERED OPINION MAKES THE ASSESSMENT ORDER ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDINGLY, THE ASSESSMENT MADE FOR AY 2013 - 14 IS HEREBY SET ASIDE TO BE MADE AFRESH. THE ASSESSING OFFICER IS DIRECTED TO PROCEED AND FINALIZE THE ASSESSMENT AFTER PROVIDING SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE A SSESSEE. 5. LD. AR APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED BEFORE US THAT THE ASSESSMENT ORDER U/S 143(3) OF THE ACT WAS PASSED BY THE AO AFTER DETAIL ENQUIRIES FROM THE ASSESSEE AND IN THIS RESPECT ALL THE REQUIRED DOCUMENTS WERE ALREADY SUBMITTED BY THE ASSESSEE. IN THIS REGARD, LD. AR DRAWN OUR ATTENTION TO PAPER BOOK CONTAINING PAGE NO. 1 TO 114 WHICH INCLUDED NOTICE U/S 263(1) OF I.T. ACT DATED 28.03.16 AT PAGE NO. 1 TO 2 OF THE PAPER BOOK. 6. AFTER CONSIDERING THE FACTS OF THE PRESENT CASE, WE FIND FROM THE RECORDS THAT LD. CIT HAD INV OLVED THE PROVISIONS OF SECTION 263 OF I.T. ACT BY HOLDING THAT THE RETURN INCOME OF THE 8 I.T.A. NO. 3499 /MUM/201 7 M/S BHAROOMAL & CO. ASSESSEE WAS ACCEPTED BY THE AO WITHOUT CARRYING OUT PROPER AND NE CESSAR Y ENQUIRIES REGARDING UNSECURED LOANS RECEIVED BY THE ASSESSEE DURING THE YEAR FROM ONE SATISH CHANDER GUPTA, CHANDIGARH AMOUNTING TO RS. 25 LAKHS. IT WAS MENTIONED BY LD. CIT, THAT AO HAD NOT CARRIED OUT ANY CROSS VERIFICATIONS IN RESPECT OF CLAIM OF SUB STANTIAL EXPENSES , PAYMENT OF COMMISSION AND RENTAL PAID TO RELATED PARTIES, ETC. 7. WHEREAS ON THE CONTRARY, LD. AR DRAWN OUR ATTENTION TO THE REQU IRED DOCUMENTARY EVIDENCE WHICH WAS PLACED ON RECORD BY THE ASSESSEE ON THE QUERIES RAISED BY THE AO DURING THE ORIGINAL ASSESSMENT . AS FAR AS THE UNSECURED LOAN IS CONCERNED, OUR ATTENTION WAS DRAWN BY THE AR TOWARDS BALANCE SHEET WHEREIN THE TOTA L UNSECURED LOANS WERE MENTIONED. APART FROM THAT, LD. AR ALSO DRAWN OUR ATTENTION TO THE DOCUMENTS CONTAINI NG THE PAR TICULARS OF THE PERSONS FROM WHOM UNSECURED LOANS WERE RECEIVED. LD. AR HAS ALSO PLACED ON RECORD THE LEDGER ACCOUNT OF SHRI SATISH CHANDER GUPTA, WHEREIN THE PAYMENT OF UNSECURED LOAN IS REFLECTED. 9 I.T.A. NO. 3499 /MUM/201 7 M/S BHAROOMAL & CO. 8. WE HAVE ALSO GONE THROUGH THE SUBMISSIO NS DATED 25.02.17 FILED BY THE ASSESSEE BEFORE LD. CIT(A) WHICH ARE AT PAGE NO. 3 & 4 OF THE PAPER BOOK AND SUBMISSION DATED 31.07.15 FILED BY THE ASSESSEE BEFORE THE AO IN PURSUANCE OF NOTICE U/S 142(1) DATED 07.07.15 WHICH ARE AT PAGE NO. 5 TO 91 OF THE PAPER BOOK AND SUBSEQUENT SUBMISSION DATED 22.09.15 FILED BY THE ASSESSEE BEFORE THE AO IN PURSUANCE OF NOTICE U/S 142(1) DATED 10.09.15 WHICH ARE AT PAGE NO. 92 TO 107 OF THE PAPER BOOK. APART FROM THIS, THE ASSESSMENT ORDER FOR AY 2012 - 13, 2013 - 14 AND 2 014 - 15 HAVE BEEN PLACED AT PAGE NO. 108 TO 114 OF THE PA PER BOOK. WE FIND THAT ALL THE DOCUMENTS IN THE PAPER BOOK CONTAINS ALL THE PARTICULARS OF UNSECURED LOANS , CONFIRMAT ION OF LOANS, DETAILS CALLED FROM THE ASSESSEE WHICH ARE AT PAGE NO. 92 OF THE PAPER BOOK AND THE DETAILS SUBMITTED BY THE ASSESSEE WHICH ARE AT PAGE NO. 96 - 106 OF THE PAPER BOOK. 9. WE HAVE ALSO CONSIDERED THE PREVIOUS AND SUBSEQUENT YEARS OF ASSESSMENT ORDERS IN THE CASE OF ASSESSEE WHERE IN AFTER CONSIDERING THE SIMILAR DO CUMENTS, NO ADDITIONS WERE MADE IN THE CASE OF ASSESSEE. 10 I.T.A. NO. 3499 /MUM/201 7 M/S BHAROOMAL & CO. 10. WE HAVE ALSO GONE THROUGH THE ORDERS PASSED BY THE COORDINATE BENCH OF HONBLE ITAT IN ITA NO. 2155/MUM/2017 IN THE CASE OF JOHN GALT INTERNATIONAL VRS. PR. CIT. THE OPERATIVE PORTION OF THE OR DER OF ITAT IS CONTAINED IN PARA NO. 21 TO 22, WHICH IS REPRODUCED BELOW: - 21. WE FURTHER FIND THAT EXCEPT STATING THAT THE ASSESSEE HAS NOT FURNISHED ANY DETAILS BEFORE THE ASSESSING OFFICER, THE ASSESSING OFFICER WITHOUT CONDUCTING PROPER INVESTIGATION AND WITHOUT PROPER APPLICATION OF MIND ACCEPTED THE CLAIMS OF THE ASSESSEE AND THEREFORE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, THE LD.PCIT COULD NOT DEMONSTRATE OR GIVE PROPER REASONS AS TO HOW THE ASSESSMENT ORDER PASSED BY TH E ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 22. IN VIEW OF THE ABOVE DISCUSSION WE ARE OF THE VIEW THAT THE LD.PCIT HAS FAILED TO SHOW THAT THE IMPUGNED ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WAS NOT ONLY ERRO NEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT IS AN ESTABLISHED PROPOSITION OF LAW THAT BOTH THE CONDITIONS I.E. ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ARE REQUIRED TO BE SATISFIED FOR INVOKING THE PROVISIONS OF SECTION 26 3 OF 11 I.T.A. NO. 3499 /MUM/201 7 M/S BHAROOMAL & CO. THE ACT. IN THE INSTANT CASE WE ARE OF THE VIEW THAT THE LD.PCIT HAS FAILED TO SHOW THAT BOTH THE CONDITIONS EXIST. IN THE CIRCUMSTANCES WE FIND MERIT IN THE CONTENTIONS OF THE ASSESSEE THAT THE REVISION ORDER PASSED BY THE LD.PCIT FOR THE YEAR UNDER CONSIDERATION IS BEYOND THE SCOPE OF SECTION 263 AND HENCE NOT VALID. IN THE CIRCUMSTANCES WE SET - ASIDE THE ORDER OF THE LD.PCIT AND ALLOW THE GROUNDS OF THE ASSESSEE. 11. WE HAVE ALSO GONE THROUGH THE JUDGMENTS IN THE CASE OF CIT VRS . SUNBEAM AUTO PVT. LTD. 332 ITR 167, WHEREIN IT WAS HELD THAT REVISION ERRONEOUS AND PREJUDICIAL ORDER LACK OF PROPER ENQUIRY THERE IS A DISTINCTION BETWEEN 'LACK OF ENQUIRY' AND 'INADEQUATE ENQUIRY' IF THERE IS AN ENQUIRY, EVEN INADEQUATE, THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE CIT TO PASS ORDER UNDER S. 263, MERELY BECAUSE HE HAS 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 ASSESSMENT DOES NOT GIVE ANY REASONS FOR ALLOWING THE ENTIRE EXPENDITURE AS REVENUE EXPENDITURE, THAT 12 I.T.A. NO. 3499 /MUM/201 7 M/S BHAROOMAL & CO. BY ITSELF WOULD NOT BE INDICATIVE OF THE FACT T HAT THE AO HAS NOT APPLIED HIS MIND TO THE ISSUE AO IS NOT REQUIRED TO GIVE DETAILED 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 ASSESSEE HAD FURNISHED ITS EXP LANATION THIS FACT HAS BEEN NOTICED BY THE CIT 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 EXPENDITURE IS TO BE TREATED AS CAPITAL OR REVENUE EXPENDITURE DY ES USED B Y THE ASSESSEE, A MANUFACTURE OF CAR PARTS, ARE THE COMPONENTS OF THE MACHINES AND NEED CONSTANT REPLACEMENT LIFE SPAN IS NOT MORE THAN A YEAR WITH THE REPLACEMENT OF SUCH TOOLS AND NEW ASSET COMES INTO EXISTENCE, NOR THERE IS BENEFIT OF ENDURING NATURE IT IT DOES NOT EN HANCE THE LIFE OF THE EXISTING MACHINE OR INCREASE ITS PRODUCTION CA PACITY - THEREFORE, THE VIEW TAKEN BY THE AO WAS ONE OF THE POSSIBLE VIEWS AND THE ASS ESSMENT ORDER PASSED BY THE AO COULD NOT BE HELD TO BE PREJUDICIAL TO THE REVE NUE AND CIT VRS. GABRIAL INDIA LTD. 203 ITR 108 , WHEREIN IT WAS HELD THAT REVISION - SCOPE ORDER SOUGHT TO BE REVISED MUST BE ERRONEOUS AND ALSO BY VIRTUE OF ITS BEING 13 I.T.A. NO. 3499 /MUM/201 7 M/S BHAROOMAL & CO. ERRONEOUS PREJUDICE MUST HAVE BEEN CAUSED TO INTERESTS OF THE REVENUE SECTION 263 DOES NOT VISUALISE SUBSTITUTION OF JUDGMENT OF COMMISSIONER FOR THAT OF ITO, UNLESS THE DECISION IS HELD TO BE ERRONEOUS ORDER IS ERRONEOUS WHEN IT IS NOT IN ACCORDANCE WITH LAW AND IS PREJUDICIAL WHEN IT HAS CAUSED LOSS OF REVENUE THERE MUST BE MATERIAL BEFO RE THE COMMISSIONER TO SATISFY HIM, PRIMA FACIE, THAT THE TWO REQUISITS ARE PRESENT POWER CANNOT BE EXERCISED AT THE WHIMS AND CAPRICE OF COMMISSIONER AND SMALL WONDER INDUSTRIES VRS. CIT IN ITA NO. 2464/MUM/2013. 12. WE HAVE ALSO GONE THROUGH THE ORDERS PASSED BY AO AND WE FIND THAT AO IN PARA NO 3 OF ITS ORDER HAS CATEGORICALLY MENTIONED THAT ASSESSEE MAINTAINS ALL RELEVANT BOOKS OF ACCOUNTS AND SUPPORTING EVIDENCES . IT HAS ALSO BE EN CATEGORICALLY MENTIONED BY THE AO THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUD ITED AS PER THE INCOME TAX ACT 1961 AND EVEN DURING THE COURSE OF HEARING, ALL THE RELEVANT DETAILS WERE CALLED FOR AND VERIFIED BY THE AO. 14 I.T.A. NO. 3499 /MUM/201 7 M/S BHAROOMAL & CO. 13. WE ALSO FIND THAT UNDER SIMILAR CIRCUMSTANCES, THE COORDINATE BENCH OF ITAT IN ITA NO. 2464/MUM/13 IN THE CASE OF SMALL WONDER INDUSTRIES VRS. CIT HAD SET ASIDE THE ORDER PASSED U/S 263 OF THE ACT BY HOLDING THAT WHEN THE ENTIRE MATERIAL WAS PLACED BY THE ASSESSEE BEFORE THE AO AT THE TIME OF ORIGINAL ASSESSMENT, THE AO APPLIED HIS MIND TO THE MATERIAL AND ACCEPTED THE VIEW CANVASSED BY THE ASSESSEE. THE MERE FACT THAT HE DID NOT EXPRESS THIS IN THE ASSESSMENT ORDER, CANNOT BE A GROUND TO CONCLUDE THAT INCOME HAS ESCAPED ASSESSMENT. THE HONBLE PUNJAB & HARYANA HIGH C OURT IN THE CASE OF HARI IRON TRADING CO. VRS. CIT (263 ITR 437) , HONBLE DELHI HIGH COURT IN THE CASE OF CIT VRS. EICHER (294 ITR 310) AND ALSO IN THE CASE OF CIT VRS. ASHISH RAJPAL (320 ITR 674) HAS TAKEN A SIMILAR VIEW. 14. AFTER CONSIDERING THE ENTIRE FACTS OF THE PRESENT CASE AS WELL AS ORDERS PASSED BY LD. CIT U/S 263 OF THE I.T. ACT , WE ARE OF THE VIEW THAT THERE MUST BE MATERIAL BEFORE THE COMMISSIONER TO SATISFY HIMSELF THAT TWO REQUISITE CONDITIONS WERE PRESENT BEFORE INVOKING THE PROVISIONS U/S 263 OF THE 15 I.T.A. NO. 3499 /MUM/201 7 M/S BHAROOMAL & CO. ACT, OTHERWISE THE POWERS U/S 263 OF THE ACT CANNOT BE EXERCISED AT THE WHIMS AND CAPRICE OF THE COMMISSIONER. WE HAVE ALSO SEEN THE PAPER BOOK FILED BY THE ASSESSEE AND THE DOCUMENTS/PAPERS CONTAINED /MENTIONED THEREIN, WERE DULY MADE AVAILABLE BEFORE THE AO BEFORE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT. ADMITTEDLY, AN INCORR ECT ASSUMPTION OF FACT OR AN INCORRECT APPLICATION OF LAW WOULD SATISFY THE REQUIREMENT OF ORDER BEING ERRONEOUS U/S. 263 OF THE ACT. THE PHRASE PREJUDICIAL TO THE INTEREST OF THE REVENUE U/S. 263 OF THE ACT, HAS TO BE READ IN CONJUNCTION WITH THE EXPRES SION ERRONEOUS ORDER BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF ASSESSMENT ORDER CANNOT BE TERMED AS PREJUDICIAL TO THE INTEREST OF REVENUE , MEANING THEREBY, PREJUDICE MUST BE PREJUDICE TO THE REVENUE ADMINISTRATION. AT THE S AME TIME, IF ANOTHER VIEW IS POSSIBLE REVISION IS NOT PERMISSIBLE. OUR VIEW IS FORTIFIED BY THE DECISION FROM HIMACHAL PRADESH FINANCIAL CORPN. (186 TAXMANN 105)(HP), BISMILLAH TRADING CO. (248 ITR 292)(KER.) AND CIT VS. GREEN WORLD CORPN. (314 ITR 81)(SC) . FOR INVOKING REVISIONAL JURISDICTION U/S. 263 THE ASSESSMENT ORDER MUST CONTAIN GRIEVOUS ERROR 16 I.T.A. NO. 3499 /MUM/201 7 M/S BHAROOMAL & CO. WHICH IS SUBVERSIVE OF THE ADMINISTRATION OF REVENUE. FURTHER, EXACT ERROR MUST BE DISCLOSED BY THE COMMISSIONER AS WAS HELD IN CIT VS. G.K. KABRA (211 ITR 336)(AP). TOTALITY OF FACTS, CLEARLY INDICATES THAT ASSESSMENT U/S. 143(3) OF THE ACT WAS FRAMED BY THE ASSESSING OFFICER AFTER OBTAINING NECESSARY DETAILS FROM THE ASSESSEE AND FURTHER THE SAME WERE EXAMINED BY HIM. THEREFORE, EVEN IF, THE SAME HAS NOT B EEN SPELT ELABORATELY IN THE ASSESSMENT ORDER IT CANNOT BE SAID THAT THERE IS A LACK OF ENQUIRY OR PREJUDICE HAS BEEN CAUSED TO THE REVENUE, AS WE HAVE DISCUSSED VARIOUS CASE LAWS IN EARLIER PART OF THIS ORDER WHICH ARE IDENTICAL TO THE FACTS BEFORE US . OUR VIEW IS FURTHER FORTIFIED BY THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF MEHTA TRADING COMPANY (ITA NO.2838/MUM/2013), ORDER DATED 31/10/2014, WHICH IS ALSO ON IDENTICAL FACTS/ISSUE. EVEN OTHERWISE IN THE CASE OF NARAYAN TATU RANE VRS . ITO (2016) 70 TAXMANN.COM 227 , IT WAS HELD THAT NEWLY INSERTED EXPLANATION - 2(A) TO SECTION 263 DOES NOT AUTHORIZE OR GIVE UNFETTERED POWERS TO THE COMMISSIONER TO REVISE EACH AND EVERY ORDER, IF IN HIS OPINION, THE SAME HAS BEEN PASSED WITHOUT MAKING ENQ UIRIES OR VERIFICATIONS WHICH SHOULD HAVE BEEN MADE. 17 I.T.A. NO. 3499 /MUM/201 7 M/S BHAROOMAL & CO. 15. EVEN FROM THE RECORDS, WE NOTICE THAT THE ASSESSEE BY WAY OF EXHAUSTIVE REPLY FILED WITH THE CIT IN RESPECT OF ALL THE AFORESAID ISSUES, ON THE BASIS OF WHICH THE ORDER PASSED BY THE AO WAS SOUGHT T O BE REVISED, HAD THUS FURNISHED CLARIFICATIONS AS REGARDS ALL THE SAID ISSUES AND DEMONSTRATED THAT THE ASSESSMENT ORDER WAS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE . HOWEVER, THE LD. CIT WITHOUT POINTING OUT ANY INFIRMITY IN THE REPLY /EXPLANATION OF THE ASSESSEE, AND AS TO WHY THE SAME COULD NOT ACCEPTED HAD RATHER HUSHED THROUGH THE MATTER AND CONCLUDED THAT THE ASSESSMENT ORDER PASSED BY THE AO WAS FOUND TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE . 16. SO FAR AS T HE RELIANCE UPON THE DECISION BY LD. DR IS CONCERNED, WE FIND THAT THE AO NEITHER MADE ANY QUERIES WITH RESPECT TO THE ISSUES NOT MADE ANY INQUIRIES IN THOSE CASE AS MENTIONED IN THE ORDER OF LD. CIT. HOWEVER IT IS NOT THE CASE BEFORE US, THEREFORE THOSE D ECISIONS ARE ON DIFFERENT FACTS. 18 I.T.A. NO. 3499 /MUM/201 7 M/S BHAROOMAL & CO. 17. IN VIEW OF THE ABOVE FACTS AND VARIOUS JUDICIAL PRONOUNCEMENTS, WE SET ASIDE THE ORDER OF LD. CIT AND DECIDE THE APPEAL IN FAVOUR OF THE ASSESSEE BECAUSE BY NO STRETCH OF IMAGINATION, THE ASSESSMENT ORDER CAN BE TERME D AS ERRONEOUS AND OR PREJUDICIAL TO THE INTEREST OF REVENUE AND ARE REQUIRED TO BE SATISFIED FOR INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT. RESULTANTLY, THESE GROUND S OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. GROUND NO. 4 18 . THIS GROUND IS GENERAL IN NATURE, THUS REQUIRES NO SPECIFIC ADJUDICATION. 19 . IN THE NET RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH FEB , 2019 SD/ - SD/ - ( G. S. PANNU ) (SANDEEP GOSAIN) VICE PRESIDENT JUDICIAL MEMBER MUMBAI ; DATED : 08 . 0 2 .201 9 SR.PS . DHANANJAY 19 I.T.A. NO. 3499 /MUM/201 7 M/S BHAROOMAL & CO. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI