M/s Kusum Industrial Gases Ltd., Kolkata V. I.T.O.,Ward-4(4), Kolkata

ITA 362/KOL/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2446 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 11-06-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Principle of natural justice; Assessment record; Rule 8D
• Section: 263; 143(3); 142(1); 14A; 143(1); 22; 20

Judgement Text

1 ITA NO. 362/KOL/2020 M/S. KUSUM INDUSTRIAL GASES LTD., AY 2015-16 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI J. SUDHAKAR REDDY, AM AND SHRI A. T. VARKEY, JM] I.T.A. NO. 362/KOL/2020 ASSESSMENT YEAR: 2015-16 M/S KUSUM INDUSTRIAL GASES LTD. (PAN: AABCK 4407 B) VS. ITO, WARD-4(4), KOLKATA APPELLANT RESPONDENT DATE OF HEARING (VIRTUAL) 13.05.2021 DATE OF PRONOUNCEMENT 23.06.2021 FOR THE APPELLANT SHRI A.K. TULSIYAN, A.R FOR THE RESPONDENT SHRI TUSHAR DHWAL SINGH, CIT D.R ORDER PER SHRI A. T. VARKEY, JM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. PCIT-2, KOLKATA DATED 23.03.2020 PASSED U/S 263 OF INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2015-16. 2. THE LD. A.R. FOR THE ASSESSEE SHRI A.K. TULSIYA N DREW OUR ATTENTION TO THE LEGAL CHALLENGE MADE BY THE ASSESSEE AGAINST THE ACTION O F LD. PCIT TO INVOKE THE REVISIONAL JURISDICTION U/S 263 OF THE ACT WITHOUT SATISFYING THE CONDITION PRECEDENT AS PRESCRIBED U/S 263 OF THE ACT I.E. WITHOUT VALIDLY FINDING THAT TH E AOS ORDER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE REVENUE. 3. BRIEF FACTS OF THE CASE IS THAT THE LD. PCIT NOT ED THAT THE ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME ON 30.09.2015 DECLARING TOTAL RETURN INCOME OF RS. 44,61,840/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. HOWEVER , LATER IT WAS SELECTED FOR SCRUTINY THROUGH CASS AND THE ASSESSMENT ORDER U/S 143(3) OF THE ACT WAS PASSED ON 19.07.2017 WHEREIN THE AO ACCEPTED THE RETURN OF INCOME AS IT WAS RETURNED BY THE ASSESSEE. ACCORDING TO LD. PCIT, HE RECEIVED A PROPOSAL FOR REVIEW OF T HE ASSESSMENT ORDER DATED 09.07.2017 SINCE AN ERROR WAS DETECTED IN THE ASSESSMENT ORDER AND THEREUPON HE PERUSED THE SAID 2 ITA NO. 362/KOL/2020 M/S. KUSUM INDUSTRIAL GASES LTD., AY 2015-16 PROPOSAL AND FOUND THAT THE AO HAS FAILED TO TAKE L OGICAL ACTION ON THE INFORMATION AVAILABLE WITH HIM. ACCORDING TO LD. PCIT, HE ISSUED SHOW CAU SE NOTICE (SCN) TO THE ASSESSEE U/S. 263 OF THE ACT, THE RELEVANT PORTION OF THE SCN IS REPRODUCED AS UNDER: THE MAIN REASON FOR SCRUTINY WAS IN REGARD TO HUGE INVESTMENT MADE (RS. 8.35 CRORES) IN UNLISTED SECURITIES. THE OFFICER HAS NOT INQUIRED ABOUT THE SOURCE OF SUCH HUGE INVESTMENT, IT APPEARS FROM THE RECORD THAT THE ASSESSEE SOLD INVENTORY (MF UNITS) AND DIVERTED THE FUND INTO INVESTMENT IN UNLISTED EQUITY; BUT NO DETAIL WAS OBTAINED BY THE OFFICER. THE ASSESSEE EARNED DIVIDEND INCOME OF RS. 2.32 CRORES OUT OF MFS BUT DISALLOWANCE U/S 14A HAD NOT BEEN CONSIDERED BY THE OFFICER. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO HAD PASSED THE ORDER WITHOUT PROPER VERIFICATION/EXAMINATION OF THE ISSUES MENTIONED AB OVE AND ACCORDINGLY MAKING DISALLOWANCE / ADDITION IN THIS REGARD. 4. IN RESPONSE TO THE AFORESAID SHOW CAUSE NOTICE T HE LD. PCIT NOTES THAT NO ONE APPEARED NOR ANY ADJOURNMENT PETITION WAS FILED DES PITE THE MATTER WAS FIXED THRICE (12.03.2020, 18.03.2020 AND 20.03.2021). THEREAFTER THE LD. PCIT NOTES THAT FROM THE ASSESSMENT RECORDS IT IS SEEN THAT THE MAIN REASON FOR SCRUTINY WAS WITH REGARD TO HUGE INVESTMENT OF RS. 18.94 CRORES IN UNLISTED SECURITI ES. ACCORDING TO HIM, THE AO HAS NOT ENQUIRED THE SOURCE OF SUCH HUGE INVESTMENT. HOWEVE R, THE LD. PCIT NOTES THAT IT APPEARS FROM THE RECORD THAT THE ASSESSEE HAD SOLD INVENTOR Y MUTUAL FUND UNITS (MF UNITS) AND DIVERTED THE FUND INTO INVESTMENT IN UNLISTED EQUIT Y. ACCORDING TO LD. PCIT NO SUCH DETAILS WAS OBTAINED BY THE AO. THE OTHER FAULT FOUND BY TH E LD. PCIT WAS THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME OF RS. 2.32 CRORES OUT OF MU TUAL FUNDS BUT DISALLOWANCE U/S 14A HAS NOT BEEN CONSIDERED BY THE AO. THEREFORE, ACCOR DING TO LD. PCIT, THE AO HAS NOT DONE IN-DEPTH ENQUIRY IN RESPECT OF HUGE INVESTMENT MADE BY THE ASSESSEE AND SUBSEQUENT INCOME EARNED OUT OF SUCH INVESTMENT. THEREFORE, HE WAS PL EASED TO RESTORE THE ISSUES BACK TO THE FILE OF AO FOR DE NOVO ASSESSMENT AFTER GIVING OPPO RTUNITY TO THE ASSESSEE. 5. AGGRIEVED THE ASSESSEE IS BEFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. AT THE OUTSET, THE LD. A.R SUBMITTED THAT THE ASSESSEE PURSUANT TO THE SHOW CA USE NOTICE OF LD. PCIT DATED 06.03.2020 HAD FILED DETAILED WRITTEN SUBMISSION ON 20.03.2020 AND AS MARK OF PROOF THAT THE SAME WAS FILED BEFORE LD. PCIT, HE DREW OUR ATTENTION TO PAG E 5 OF PAPER BOOK, WHICH IS THE FIRST PAGE OF THE ASSESSEES WRITTEN SUBMISSION BEFORE THE LD. PCIT PURSUANT TO HIS SHOW CAUSE NOTICE DATED 06.03.2020. FROM A PERUSAL OF THE SAME IT IS SEEN THAT A SEAL OF THE DEPARTMENT IS 3 ITA NO. 362/KOL/2020 M/S. KUSUM INDUSTRIAL GASES LTD., AY 2015-16 AFFIXED DATED 20.03.2020 ( THOUGH NOT LEGIBLE ). THEREFORE HE SUBMITTED THAT THE LD. PCITS OBSERVATION THAT THE ASSESSEE DID NOT FILE ANY SUBM ISSION TO HIS SCN IS WRONG. ON THIS FACTUAL ASSERTION OF LD. AR, THE LD. D.R. REPRESENT ING THE REVENUE COULD NOT CONTROVERT THIS FACT OF THE ASSESSEE FILING THE WRITTEN SUBMISSION BEFORE THE LD. PCIT BEFORE HE PASSED IMPUGNED ORDER ON THE SAME DATE (20.03.2020). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. BEFORE WE ADVERT TO THE FACTS AND LAW INVOLVED IN THIS LIS BEFORE US, LET US REVI SE THE LAW GOVERNING THE ISSUE BEFORE US. THE ASSESSEE HAS CHALLENGED IN THE FIRST PLACE, THE VERY USURPATION OF JURISDICTION BY LD. PRINCIPAL CIT TO INVOKE HIS REVISIONAL POWERS ENJOY ED U/S 263 OF THE ACT. THEREFORE, FIRST WE HAVE TO SEE WHETHER THE REQUISITE JURISDICTION NECE SSARY TO ASSUME REVISIONAL JURISDICTION IS THERE EXISTING BEFORE THE PR. CIT TO EXERCISE HIS P OWER. FOR THAT, WE HAVE TO EXAMINE AS TO WHETHER IN THE FIRST PLACE THE ORDER OF THE ASSESSI NG OFFICER FOUND FAULT BY THE PRINCIPAL CIT IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. FOR THAT, LET US TAKE THE GUIDANCE OF JUDICIAL PRECEDENCE LAID DOWN BY THE HO NBLE APEX COURT IN MALABAR INDUSTRIES LTD. VS. CIT [2000] 243 ITR 83(SC) WHEREIN THEIR LO RDSHIP HAVE HELD THAT TWIN CONDITIONS NEEDS TO BE SATISFIED BEFORE EXERCISING REVISIONAL JURISDICTION U/S 263 OF THE ACT BY THE CIT. THE TWIN CONDITIONS ARE THAT THE ORDER OF THE ASSES SING OFFICER MUST BE ERRONEOUS AND SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN T HE FOLLOWING CIRCUMSTANCES, THE ORDER OF THE AO CAN BE HELD TO BE ERRONEOUS ORDER, THAT IS (I) I F THE ASSESSING OFFICERS ORDER WAS PASSED ON INCORRECT ASSUMPTION OF FACT; OR (II) INCORRECT APPLICATION OF LAW; OR (III)ASSESSING OFFICERS ORDER IS IN VIOLATION OF THE PRINCIPLE OF NATURAL JUSTICE; OR (IV) IF THE ORDER IS PASSED BY THE ASSESSING OFFICER WITHOUT APPLICATION OF MIN D; (V) IF THE AO HAS NOT INVESTIGATED THE ISSUE BEFORE HIM;[ BECAUSE AO HAS TO DISCHARGE DUAL ROLE OF AN INVEST IGATOR AS WELL AS THAT OF AN ADJUDICATOR ]THEN IN AFORESAID ANY EVENT THE ORDER PASSED BY TH E ASSESSING OFFICER CAN BE TERMED AS ERRONEOUS ORDER. COMING NEXT TO THE SE COND LIMB, WHICH IS REQUIRED TO BE EXAMINED AS TO WHETHER THE ACTIONS OF THE AO CAN BE TERMED AS PREJUDICIAL TO THE INTEREST OF REVENUE. WHEN THIS ASPECT IS EXAMINED ONE HAS TO UN DERSTAND WHAT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIES (SUPRA) HELD THAT THIS PHRASE I.E. PREJUDICIAL TO THE INTEREST OF THE REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. THEIR LORDSHIP HEL D 4 ITA NO. 362/KOL/2020 M/S. KUSUM INDUSTRIAL GASES LTD., AY 2015-16 THAT IT HAS TO BE REMEMBERED THAT EVERY LOSS OF REV ENUE AS A CONSEQUENCE OF AN ORDER OF ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. WHEN THE ASSESSING OFFICER ADOPTED ONE OF THE COURSES PERMIS SIBLE IN LAW AND IT HAS RESULTED IN LOSS TO THE REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND TH E ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TRE ATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF THE REVENUE UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. KEEPING THE AFORESAID LEGAL PRINCIPLE IN OUR MIND L ET US EXAMINE THE IMPUGNED ORDER OF THE LD. PCIT AS TO WHETHER THE CO NDITION PRECEDENT AS LAID DOWN BY THE HONBLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD . VS. CIT REPORTED IN [2000] 243 ITR 83 (SC) IS SATISFIED OR NOT. 8. KEEPING THE AFORESAID LEGAL PRINCIPLE IN OUR MIN D LET US EXAMINE THE IMPUGNED ORDER OF THE LD. PCIT AS TO WHETHER THE CONDITION PRECEDE NT AS LAID DOWN BY THE HONBLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD. VS. CIT REPORT ED IN [2000] 243 ITR 83 (SC) IS SATISFIED OR NOT. WE NOTE THAT THE ASSESSEE HAD RETURNED AN INCOME OF RS. 44,61,840/- WHICH HAS BEEN ACCEPTED BY THE AO AFTER SCRUTINY ASSESSMENT U /S 143(3) OF THE ACT. THE LD. PCIT HAS NOTED THAT THE REASON FOR SCRUTINY WAS IN REGARD TO THE HUGE INVESTMENT MADE OF RS.8.95 CRORES IN UNLISTED EQUITY AND THE MAIN FAULT ATTRIB UTED BY HIM WAS THAT THE SOURCE OF SUCH HUGE INVESTMENT HAS NOT BEEN ENQUIRED INTO BY THE A O. HOWEVER IT IS INTERESTING TO NOTE THAT IN THE SAME BREATH THE LD. PCIT NOTES THAT IT APPEARS FROM THE RECORD THAT THE ASSESSEE SOLD INVENTORY (MF UNIT) AND DIVERTED THE FUND INTO THE INVESTMENT IN UNLISTED EQUITY. FROM THE AFORESAID OBSERVATION/FINDING MADE BY THE LD. PCIT IN THE SHOW CAUSE NOTICE ISSUED ON 06.03.2020 WHICH HAS BEEN REPRODUCED (SUPRA) WE NOT E THAT THE LD. PCIT HIMSELF HAS RECORDED A FINDING THAT THE SOURCE OF HUGE INVESTME NT IN UNLISTED EQUITY WAS FROM THE SALE CONSIDERATION OF THE MUTUAL FUND UNITS /INVENTORY ( MFUNITS). THEREFORE, THE MAIN FAULT ALLEGED BY THE LD. PCIT THAT THE SOURCE OF HUGE INV ESTMENT MADE BY THE ASSESSEE TO THE TUNE OF RS. 8.95 CRORES IN UNLISTED EQUITY HAS NOT BEEN ENQUIRED INTO BY THE AO FALLS DOWN BY THE LD PCITS ADMISSION THAT FROM THE ASSESSMENT RECORD S IT APPEARS THAT THE SOURCE FROM THE INVESTMENT WAS FROM THE SALE CONSIDERATION OF THE M UTUAL FUND UNITS/INVENTORY. AND THE REMAINING FAULT IS THAT NO DETAILS OF THE INVESTMEN T MADE BY ASSESSEE IN UNLISTED EQUITIES WERE OBTAINED BY THE AO. FOR THAT THE LD. A.R. DREW OUR ATTENTION TO REPLY FILED BY THE 5 ITA NO. 362/KOL/2020 M/S. KUSUM INDUSTRIAL GASES LTD., AY 2015-16 ASSESSEE DURING THE ASSESSMENT PROCEEDINGS BEFORE T HE AO DATED 22.06.2017 AND 27.06.2016 WHICH ARE PLACED FROM PAGES 22 TO 24 AND 25 OF THE PAPER BOOK RESPECTIVELY. FROM A PERUSAL OF PAGE 23 OF PAPER BOOK IT IS NOTED THAT THE ASSESSEE HAS REPLIED TO THE AO PURSUANT TO THE NOTICE ISSUED U/S 142(1) OF THE ACT DATED 14.06.2017 WHEREIN THE ASSESSEE HAS GIVEN A REASON FOR INCREASE IN INVESTMENT IN UN LISTED EQUITIES (GROUP COMPANIES) AS UNDER: DURING THE YEAR, THE INCREASE IN INVESTMENT IN UNL ISTED EQUITIES IS AMOUNTING TO RS. 8,95,11,968/-. INVESTMENT IN UNLISTED EQUITIES AS ON 31.03.2014 W AS RS. 6,47,56,500/- WHICH HAD INCREASED TO RS. 15,42,68,468/- AS ON 31.03.2015. THIS IS EVIDENT FR OM NOTE-7 OF THE BALANCE SHEET. ALL SUCH INVESTMENT WERE MADE IN THE GROUP COMPANIES. THE DE TAILS OF COMPANIES IN WHICH SAID INVESTMENT WERE MADE IS AS UNDER: SL. NO. NAME OF COMPANY AMOUNT (RS.) OF INVESTMENT MADE DUR ING THE YEAR 1. HORIZON VINTRADE PVT. LTD. 2,30,00,000/- 2. MAJESTIC COMMOTRADE PVT. LTD. 70,00,000/- 3. PINNACLE COMMODEAL PVT. LTD. 2,15,00,000/- 4. TECHNO LEASING & FINANCE CO. PVT. LTD. 1,05,00,000/- 5. TECHNO INTERNATIONAL LTD. 1,40,00,000/- 6. VARANASI COMMERCIAL LTD. 1,35,11,968/- TOTAL 8,95,11,958/- THE ABOVE INVESTMENTS MADE IN THE SHARES OF GROUP C OMPANIES ARE STRATEGIC INVESTMENTS TO HOLD CONTROL OVER THE SAID COMPANY. 9. THEREAFTER THE LD. A.R DREW OUR ATTENTION TO PAG E 17 OF PB WHICH IS DETAILED REPLY FILED ASSESSEE BEFORE THE LD. PCIT WHEREIN THE ASSE SSEE HAS EXPLAINED THAT AO HAD IN FACT ENQUIRED ABOUT THE INVESTMENT IN UNLISTED EQUITIES AND PURSUANT TO WHICH THE ASSESSEE HAD REPLIED AND BROUGHT TO THE NOTICE OF THE AO THAT TH E INVESTMENT WERE MADE IN THE GROUP COMPANIES OF THE ASSESSEE (UNLISTED EQUITIES) TO A CQUIRE STRATEGIC CONTROL OVER THEM. AND THE SOURCE OF INVESTMENT WAS OUT OF THE FUNDS FROM REDEMPTION OF MUTUAL FUND . ACCORDING TO LD. A.R THIS FACT IS EVIDENT FROM THE PERUSAL OF THE BALANCE SHEET OF THE ASSESSEE (PAGE 26-40 PB) WHEREIN IT CAN BE NOTED THAT THE VALUE OF MUTUAL FUND AS ON 31.03.2015 HAS GOT REDUCED TO RS. 1,18,60,301/ DETAILS OF THE INVESTMENT MADE BY THE ASSESSEE CAN BE SEEN FROM THE CHART BELOW: 10. IN ORDER TO BUTTRESS THIS FACT THE ASSESSEE HAS FIL ED THE BANK STATEMENT AS WELL AS MUTUAL FUNDS STATEMENTS WHICH REFLECTS REDEMPTION OF MUTUAL FUNDS COPY OF STATEMENT SHOWING SOURCE OF INVESTMENT MADE RELEVANT BANK STATEMENT AND MUTUAL FUNDS STATEMENT ARE FOUND ENCLOSED. HE OUR A TTENTION TO PAGE 37 OF PB WHEREIN THE DETAILS OF OTHER INVESTMENT UNDER NON INVESTMENT IS GIVEN WHEREIN THE NAME OF INVESTMENT IN EQUITY INSTRU FROM A PERUSAL OF THE SAME, WE NOTE THAT THE DETAIL S OF GIVEN. WE NOTE FROM PAGE 37 OF PB ALONG WITH THE NUMBER OF SHARES HELD BY THE ASSESSEE AS ON 31.03.2 015. INVESTMENT MDE BY THE ASSESSEE IS SEEN TO HAVE BEEN SO, THEREFORE, THE LD. PCITS ALLEGATION THAT NO DETAIL S WAS ENQUIRY CONDUCTED IN RESPECT OF HUGE INVESTMENT MAD E TO THE TUNE OF RS. 8.95 CRORES IN UNLISTED EQUITY IS ON WRONG ASSUMPTION OF FACTS AND THEREFORE THE LD. PCI T ERRED ON THIS ISSUE. 11. COMING TO THE NEXT ISSUE I.E. THE A CRORES OUT OF MUTUAL FUNDS THE AO. IT IS NOTED THAT THE ASSESSEE HAD 14A READ WITH RULE 8D WHICH FACT IS EVIDENT FROM THE PERUSAL OF PAGE 23 PARA 4 THE COMPUTATION OF DISALLOWANCE U/S 14A READ WITH RULE 8D WAS ENCLOSED FOR THE PERUSAL OF AO PURSUANT TO THE NOTICE 6 M/S. KUSUM INDUSTRIAL GASES LTD., AY 2015 REDUCED TO RS. 1,18,60,301/ - FROM THE VALUE OF RS. 6,22,86,969/- AS ON 31.03.2014. AND THE DETAILS OF THE INVESTMENT MADE BY THE ASSESSEE CAN BE SEEN FROM THE CHART BELOW: IN ORDER TO BUTTRESS THIS FACT THE ASSESSEE HAS FIL ED THE BANK STATEMENT AS WELL AS MUTUAL FUNDS STATEMENTS WHICH REFLECTS THAT THE AMOUNT HAS BEEN REDEMPTION OF MUTUAL FUNDS , HE DREW OUR ATTENTION TO PAGE 41 AND 46 COPY OF STATEMENT SHOWING SOURCE OF INVESTMENT MADE IN UNLISTED EQUITIES ALONG WITH RELEVANT BANK STATEMENT AND MUTUAL FUNDS STATEMENT ARE FOUND ENCLOSED. HE TTENTION TO PAGE 37 OF PB WHEREIN THE DETAILS OF OTHER INVESTMENT UNDER NON INVESTMENT IS GIVEN WHEREIN THE NAME OF INVESTMENT IN EQUITY INSTRU FROM A PERUSAL OF THE SAME, WE NOTE THAT THE DETAIL S OF INVESTMENT IN QUOTED SHARES ARE PAGE 37 OF PB THE DETAILS VIZ. NAME OF UNQUOTED AND NUMBER OF SHARES HELD BY THE ASSESSEE AS ON 31.03.2 015. INVESTMENT MDE BY THE ASSESSEE IS SEEN TO HAVE BEEN FILED BY THE ASSESSEE BEFORE THE AO THEREFORE, THE LD. PCITS ALLEGATION THAT NO DETAIL S WAS CALLED FOR BY THE AO DURING THE ENQUIRY CONDUCTED IN RESPECT OF HUGE INVESTMENT MAD E TO THE TUNE OF RS. 8.95 CRORES IN WRONG ASSUMPTION OF FACTS AND THEREFORE THE LD. PCI T ERRED ON THIS COMING TO THE NEXT ISSUE I.E. THE A SSESSEE HAVING EARNED DIVIDEND INCOME OF RS. 2.32 CRORES OUT OF MUTUAL FUNDS AND NO DISALLOWANCE U/S 14A OF THE ACT HAD BEEN CONSIDE RED BY THE ASSESSEE HAD MADE SUO MOTO DISALLOWANCE OF RS. 8,65,105/ WHICH FACT IS EVIDENT FROM THE PERUSAL OF PAGE 23 PARA 4 THE COMPUTATION OF DISALLOWANCE U/S 14A READ WITH RULE 8D WAS ENCLOSED FOR THE PERUSAL OF AO PURSUANT TO THE NOTICE OF AO U/S 142(1) DATED 14.06.2016 ITA NO. 362/KOL/2020 M/S. KUSUM INDUSTRIAL GASES LTD., AY 2015 -16 AS ON 31.03.2014. AND THE DETAILS OF THE INVESTMENT MADE BY THE ASSESSEE CAN BE SEEN FROM THE CHART BELOW: IN ORDER TO BUTTRESS THIS FACT THE ASSESSEE HAS FIL ED THE BANK STATEMENT AS WELL AS HAS BEEN RECEIVED FROM THE HE DREW OUR ATTENTION TO PAGE 41 AND 46 OF PB WHEREIN THE UNLISTED EQUITIES ALONG WITH RELEVANT BANK STATEMENT AND MUTUAL FUNDS STATEMENT ARE FOUND ENCLOSED. HE THEREAFTER DREW TTENTION TO PAGE 37 OF PB WHEREIN THE DETAILS OF OTHER INVESTMENT UNDER NON -CURRENT INVESTMENT IS GIVEN WHEREIN THE NAME OF INVESTMENT IN EQUITY INSTRU MENTS ARE GIVEN AND INVESTMENT IN QUOTED SHARES ARE NAME OF UNQUOTED AND QUOTED SHARES NUMBER OF SHARES HELD BY THE ASSESSEE AS ON 31.03.2 015. THE ENTIRE DETAILS OF BY THE ASSESSEE BEFORE THE AO . CALLED FOR BY THE AO DURING THE ENQUIRY CONDUCTED IN RESPECT OF HUGE INVESTMENT MAD E TO THE TUNE OF RS. 8.95 CRORES IN WRONG ASSUMPTION OF FACTS AND THEREFORE THE LD. PCI T ERRED ON THIS SSESSEE HAVING EARNED DIVIDEND INCOME OF RS. 2.32 NO DISALLOWANCE U/S 14A OF THE ACT HAD BEEN CONSIDE RED BY SUO MOTO DISALLOWANCE OF RS. 8,65,105/ - U/S WHICH FACT IS EVIDENT FROM THE PERUSAL OF PAGE 23 OF THE PB WHEREIN PARA 4 THE COMPUTATION OF DISALLOWANCE U/S 14A READ WITH RULE 8D WAS ENCLOSED FOR THE U/S 142(1) DATED 14.06.2016 .THE COMPUTATION OF SUO MOTO DISALLOWANCE U/S 14A AS PER RULE 8D WHEREIN THE COMPUTATION AT 12. BASED ON THE AFORESAID COMPUTATION, THE ASSESSEE HA S SUO MOTO DISALLOWED THE AMOUNT OF RS.8,65,105/- WHICH FACT IS REVEALED F THIS ISSUE HAS BEEN ENQUIRED INTO BY THE AO AND AND SINCE THE DISALLOWANCE HAS BEEN MADE BY THE ASSESSE E SUO MOTO U/S 14A 8D THE FAULT ALLEGED BY THE LD. PCIT IS ACTION OF THE AO CANNOT BE TERMED AS ERRONEOUS AS W ELL AS PREJUDICIAL TO THE REVENUE ENQUIRY ON THE PART OF AO . THEREFORE, WITHOUT SATISFYING THE CONDITION PRECEDENT ORDER DATED 19.07.2017 AS ERRONEOUS AS WELL AS PREJ UDICIAL TO THE REVENUE THIS JURISDICTIONAL FACT AND LAW, OF THE ACT TO INTERFERE WITH JURISDICTIONAL CONDITION PRECEDENT HAS NOT BEEN SATISFIED IN THIS CASE PASSING THE IMPUGNED ORDER, 23.03.2020. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ORDER IS PRONOUNCED IN THE OPEN COURT ON SD/- (J.S. REDDY) ACCOUNTANT MEMBER SB, SR. PS 7 M/S. KUSUM INDUSTRIAL GASES LTD., AY 2015 U/S 14A AS PER RULE 8D IS SEEN PLACED AT PAGE 19 AND 20 OF PB THE COMPUTATION AT PAGE 19 MADE IN TABULAR FORMAT IS AS UNDER: BASED ON THE AFORESAID COMPUTATION, THE ASSESSEE HA S SUO MOTO DISALLOWED THE WHICH FACT IS REVEALED F ROM A PERUSAL OF PAGE 20 THIS ISSUE HAS BEEN ENQUIRED INTO BY THE AO AND THE ASSESSEE HAS REPLIED SINCE THE DISALLOWANCE HAS BEEN MADE BY THE ASSESSE E SUO MOTO U/S 14A 8D THE FAULT ALLEGED BY THE LD. PCIT IS AGAIN ON WRONG ASSUMPTION OF FACTS ACTION OF THE AO CANNOT BE TERMED AS ERRONEOUS AS W ELL AS PREJUDICIAL TO THE REVENUE . THEREFORE, WE NOTE THAT THE IMPUGNED OR WITHOUT SATISFYING THE CONDITION PRECEDENT AS STIPULATED U/S. 263 OF THE ACT ORDER DATED 19.07.2017 AS ERRONEOUS AS WELL AS PREJ UDICIAL TO THE REVENUE THIS JURISDICTIONAL FACT AND LAW, LD. PCIT OUGHT NOT TO HAVE U SURPED THE JURISDICTION U/S 263 THE ASSESSMENT ORDER PASSED BY THE AO ON 19.07.2017 . SINCE THE CONDITION PRECEDENT HAS NOT BEEN SATISFIED IN THIS CASE PASSING THE IMPUGNED ORDER, WE ARE INCLINED TO QUASH THE IMPUGNED ORDER OF LD PCIT DATED IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. IS PRONOUNCED IN THE OPEN COURT ON 23 RD JUNE, 2021 ( DATED: 23.06.2021 ITA NO. 362/KOL/2020 M/S. KUSUM INDUSTRIAL GASES LTD., AY 2015 -16 IS SEEN PLACED AT PAGE 19 AND 20 OF PB AS UNDER: BASED ON THE AFORESAID COMPUTATION, THE ASSESSEE HA S SUO MOTO DISALLOWED THE ROM A PERUSAL OF PAGE 20 PB. THEREFORE, HAS REPLIED TO IT AS AFORESTATED SINCE THE DISALLOWANCE HAS BEEN MADE BY THE ASSESSE E SUO MOTO U/S 14A READ WITH RULE WRONG ASSUMPTION OF FACTS . THEREFORE, THE ACTION OF THE AO CANNOT BE TERMED AS ERRONEOUS AS W ELL AS PREJUDICIAL TO THE REVENUE FOR NO THE IMPUGNED OR DER OF LD. PCIT WAS AS STIPULATED U/S. 263 OF THE ACT THAT THE AOS ORDER DATED 19.07.2017 AS ERRONEOUS AS WELL AS PREJ UDICIAL TO THE REVENUE . IN THE ABSENCE OF SURPED THE JURISDICTION U/S 263 THE ASSESSMENT ORDER PASSED BY THE AO ON 19.07.2017 . SINCE THE CONDITION PRECEDENT HAS NOT BEEN SATISFIED IN THIS CASE BY LD. PCIT BEFORE ARE INCLINED TO QUASH THE IMPUGNED ORDER OF LD PCIT DATED . SD/- ( A. T. VARKEY) JUDICIAL MEMBER 8 ITA NO. 362/KOL/2020 M/S. KUSUM INDUSTRIAL GASES LTD., AY 2015-16 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT- M/S KUSUM INDUSTRIAL GASES LTD., 32, RAD HA BAZAR LANE, ROOM NO. P- 46A, LAL BAZAR, KOLKATA, WEST BENGAL-700001 2. RESPONDENT ITO, WARD-4(4), KOLKATA 3. THE PCIT- 2, KOLKATA 4. CIT- , KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES, KOLKATA