Sh Abdul Waheed Malik, V. The Principal Commissioner Of Income Tax,

ITA 377/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8813 (ITAT-AMRITSAR)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 09-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SHARDA
• Keywords: Opportunity of being heard; Audit objection; Principle of natural justice; Difference of opinion; Corroborative evidences; Change of opinion
• Section: 40A(3); 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.377(ASR)/2015 ASSESSMENT YEAR:2010-11 PAN:ALTPM7339L SH. ABDUL WAHEED MALIK VS. PRINCIPAL COMMISSION ER OF INCOME TAX, GOVT. CONTRACTOR, JAMMU. RAMBAN, JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.ANIL VERMA, CA RESPONDENT BY: SH.R.K. SHARDA, DR DATE OF HEARING: 03/02/2016 DATE OF PRONOUNCEMENT: 10/03/2016 ORDER PER A.D. JAIN, JM THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2010-11 AGAINST THE ORDER DATED 31.03.2015, PASSED BY THE LD. PRI. CIT, JAMMU. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. BASED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE APPELLANT RESPECTFULLY SUBMITS THAT THE LD. PRI. CI T ERRED IN VIOLATING THE PRINCIPLES OF NATURAL JUSTICE BY FAIL ING TO JUSTIFY THAT THE ORDER OF THE ITO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE OR DER U/S 263 IS MERELY CHANGE OF OPINION. THE ORDER U/S 14 3(3) PASSED BY THE AO DOES NOT IN ANY WAY REPRESENT ERRO NEOUS ORDER. THE ACTION OF THE LD. PR. CIT WAS WHOLLY UNR EASONABLE, UNCALLED FOR AND BAD IN LAW. 2. BASED ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE APPELLANT RESPECTFULLY SUBMITS THAT THE LD. PRI. C IT ERRED IN ITA NO.377(ASR)/2015 ASSESSMENT YEAR: 2010-11 2 LAW AND VIOLATED PRINCIPLES OF NATURAL JUSTICE BY P ASSING THE ORDER U/S 263 OF THE INCOME TAX ACT, 1961 WITHOUT A FFORDING ANY OPPORTUNITY OF BEING HEARD DUE TO FOLLOWING REA SONS. A) SHOW CAUSE NOTICE DATED 26.03.2015 FIXING DATE OF HEARING ON 30.03.2015 GIVING LESS THAN EVEN WEEKS TIME TO APPEAR. B) APPELLANT RECEIVED THE SHOW CAUSE NOTICE ON 25.04.,2015 LONG AFTER DATE OF PASSING ORDER ON 31. 03.2015. 2. AS PER THE REGISTRY, THERE IS DELAY OF 27 DAYS I N FILING THE APPEAL. ACCORDING TO THE APPLICATION FOR CONDONATION OF DEL AY, WHICH IS ACCOMPANIED BY AN AFFIDAVIT OF THE ASSESSEE, THE AS SESSEE IS A CIVIL CONTRACTOR AND RESIDES IN RAMBAN ( J & K). THE SAID PLACE IS A HILLY AREA AND WORKS CONTRACTS ARE BEING EXECUTED IN FAR FLUNG AREAS OF RAMBAN DISTRICT FOR WHICH THE ASSESSEE GENERALLY REMAINS A T THOSE PLACED. THE ASSESSEE HANDED OVER THE ORDER TO BE APPEALED AGAIN ST ALONGWITH SOME OTHER PAPERS TO HIS EMPLOYEE FOR SUBMITTING THE SAM E TO THE CHARTERED ACCOUNTANTS AT UDHAMPUR, WHICH IS 80 KMS AWAY FROM RAMBAN. THE TRAVELING TIME FROM RAMBAN TO UDHAMPUR IS 4-5 HOUR S DEPENDING UPON THE TRAFFIC CONDITIONS. THE NATIONAL HIGHWAY FROM R AMBAN TO UDHAMPUR IS IN A PATHETIC CONDITION RESULTING IN TRAFFIC JAM S FREQUENTLY. HE GOT STUCK IN A TRAFFIC JAM FOR NEARLY 7-8 HOURS WHILE T RAVELING A PUBLIC TRANSPORT VEHICLE AND WAS FORCED TO SPEND THE NIGHT IN SOME UNKNOWN PLACE ON THE HIGHWAY. HE MISPLACED THE PAPERS IN T HE SAID UNREST AND WAS ABLE TO LOCATE THE PAPERS ONLY ON 30.06.2015. THEREAFTER, IMMEDIATELY, THE PAPERS WERE HANDED OVER TO THE CHA RTERED ACCOUNTANT TO FILE THE APPEAL WITHOUT FURTHER DELAY. ITA NO.377(ASR)/2015 ASSESSMENT YEAR: 2010-11 3 3. CONSIDERING THE ABOVE CONTENTS OF THE APPLICATIO N FOR CONDONATION OF DELAY, WE ARE OF THE VIEW THAT THE ASSESSEE WAS VISITED WITH SUFFICIENT CAUSE PREVENTING HIM FROM FILING THE APPEAL IN TIM E. ACCORDINGLY, THE DELAY IN FILING THE APPEAL IS CONDONED. 4. ON MERITS, THE FACTS ARE THAT THE ASSESSEE, A GO VT. CONTRACTOR, DECLARED NET TAXABLE INCOME OF RS.4,47,354/- ON GRO SS CONTRACT RECEIPTS OF RS.81,04,233/-. THE AO OBSERVED THAT THE GROSS C ONTRACT RECEIPTS WERE EVIDENCED BY FORM NO.16A/CONFIRMATORY LETTERS FROM THE RESPECTIVE DEPARTMENTS AND WERE REFLECTED IN THE BANK STATEME NTS PLACED ON RECORD; THAT IN THE AUDITED ACCOUNTS, I.E., IN THE PROFIT & LOSS ACCOUNT AS ON 31.03.2010, THE ASSESSEE HAD DEBITED VARIOUS EXP ENSES AGAINST THE GROSS RECEIPTS, I.E., CONSTRUCTION MATERIAL OF RS.4 2,94,058/-, LABOUR AND WAGES OF RS.22,26,058/-, TRAVELLING EXPENSES OF RS .54,160/-, STAFF WELFARE OF RS.30,470/- AND SALARY OF RS.1,44,600/- , AND HAD SHOWN A NET PROFIT OF RS.4,47,354/- @ 5.54%; THAT THE DEPAR TMENTAL RECOVERIES ON ACCOUNT OF SALES TAX AND CESS AND STORES WERE AT RS .7,16,948/- AND RS.2,10,570/-, RESPECTIVELY; THAT DESPITE HAVING BE EN GIVEN AMPLE OPPORTUNITY, NO PROPER AND COMPLETE BOOKS AND BILLS AND VOUCHERS/OTHER SUPPORTING EVIDENCE HAD BEEN PRODUCED BY THE ASSESS EE, TO PROVE AND SUBSTANTIATE THE GENUINENESS OF THESE EXPENSES, THO UGH SOME COMPUTERIZED LEDGER ACCOUNTS HAD BEEN FILED; THAT THE ASSESSEE HAD ADMITTED THAT COMPLETE VOUCHERS AND BILLS WERE NOT AVAILABLE WITH HIM; AND THAT A LETTER DATED 20.12.2012 WAS ISSUED, PROV IDING A FINAL ITA NO.377(ASR)/2015 ASSESSMENT YEAR: 2010-11 4 OPPORTUNITY TO THE ASSESSEE REGARDING THE TIME BARR ING NATURE OF THE PROCEEDINGS AND THE PROPOSED COMPUTING AND ASSESSI NG OF HIS INCOME BY APPLYING A HIGHER NET PROFIT RATE OF 10% ON THE GR OSS CONTRACT RECEIPTS, IN THE ABSENCE OF BOOKS OF ACCOUNT, VOUCHERS AND OTHER SUPPORTING EVIDENCE, TO PROVE THE CORRECTNESS OF THE RETURN OF INCOME FILED. ON CONSIDERING THE ASSESSEES REPLY, THE AO, VIDE TH E ASSESSMENT ORDER DATED 28.12.2012, REJECTED THE ASSESSEES TRADING/B OOK RESULTS AND COMPUTED THE ASSESSEES INCOME/PROFITS FROM THE CON TRACT BUSINESS BY APPLYING A NET PROFIT RATE OF 10%, AT RS.7,27,796/ -, MAKING AN ADDITION OF RS.2,80,442/-. 5. AS PER THE IMPUGNED ORDER DATED 31.03.2015, PASS ED BY THE LD. PRI. CIT U/S 263 OF THE INCOME TAX ACT, 1961, A PROPOSAL DATED 19.03.2015, U/S 263 OF THE ACT, WAS RECEIVED FROM THE ITO, UDHA MPUR. THIS PROPOSAL STATED THAT DURING THE INTERNAL AUDIT OF THE CASE, IT HAD BEEN OBSERVED THAT THE ASSESSEE HAD MADE CASH PAYMENTS EXCEEDING RS.20,000/-, TOTAL AMOUNTING TO RS.5,45,164/- TO M/S. HARGUM STEEL WOR KS, RAIPUR SATWARI ON DIFFERENT DATES IN VIOLATION OF THE PRO VISIONS OF SECTION 40A(3) OF THE I.T. ACT; THAT THE AUDIT HAD POINTED OUT THA T THE AO SHOULD HAVE MADE DISALLOWANCE OF RS.5,45,164/- U/S 40A(3) OF TH E I.T. ACT, INSTEAD OF REJECTING THE BOOKS OF ACCOUNT AND APPLYING NET PRO FIT RATE; THAT THE AO HAD NOT ACCEPTED THE AUDIT OBJECTION, STATING THAT THE ASSESSMENT WAS MADE BY APPLYING A NET PROFIT RATE OF 10% AFTER REJ ECTING THE BOOKS OF ACCOUNT AND THEREFORE, NO FURTHER ADDITION BASED ON BOOK VERSION/BOOKS ITA NO.377(ASR)/2015 ASSESSMENT YEAR: 2010-11 5 OF ACCOUNT WAS MADE; THAT HOWEVER, THE AUDIT HAD N OT ACCEPTED THE AOS REPLY AND HAD OBSERVED THAT THE AO WAS SUPPOSED TO FRAME ASSESSMENT IN THE INTEREST OF THE REVENUE AND THAT IF ALL THE MATERIAL WAS AVAILABLE WITH HIM ON FILE WITH REGARD TO THE CASH PAYMENTS M ADE, HE WOULD HAVE MADE A DISALLOWANCE OF RS.5,45,164/- U/S 40A(3) OF THE I.T. ACT, INSTEAD OF REJECTING THE BOOKS OF ACCOUNT AND APPLYING NET PROFIT RATE, WHICH WOULD HAVE BEEN MORE BENEFICIAL TO THE REVENUE; THA T THE OBSERVATION OF THE AUDIT WAS ACCEPTABLE, BECAUSE THE APPLICATION O F NET PROFIT RATE OF 10% HAD RESULTED IN A TOTAL ADDITION OF RS.2,80,442 /-, WHEREAS IF THE AUDIT OBJECTION WERE TO BE ACCEPTED, ADDITION OF RS .5,45,164/- ON ACCOUNT OF DISALLOWANCE U/S 40A(3) OF THE I.T. ACT COULD BE MADE; AND THAT AS SUCH, A SHORT DEMAND OF RS.96,191/- HAD ARI SEN, WHICH COULD BE MADE GOOD BY REMEDIAL ACTION U/S 263 OF THE ACT, IN THE INTEREST OF THE REVENUE, SINCE IN THE SAID FACTS AND CIRCUMSTANCES, THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE REVENUE. THE I TO, UDHAMPUR THUS RECOMMENDED A REVISION U/S 263 OF THE ACT. 6. THE PRI. CIT ISSUED A SHOW CAUSE U/S 263 OF THE ACT TO THE ASSESSEE ON THE BASIS OF THE AFORESAID REPORT OF TH E ITO, UDHAMPUR. AS NONE ATTENDED, NOR ANY REPLY WAS FILED, THE PRI. CI T CANCELLED THE ASSESSMENT FRAMED ON THE SPECIFIC ISSUES AS POINTED OUT BY THE ITO, UDHAMPUR IN THE PROPOSAL U/S 263 AND DIRECTED THE A O TO EXAMINE THESE ISSUES AFRESH WITH REFERENCE TO THE RELEVANT MATERI AL ON RECORD AND THE ITA NO.377(ASR)/2015 ASSESSMENT YEAR: 2010-11 6 BOOKS OF ACCOUNT/DOCUMENTS OF THE ASSESSEE, ON AFFO RDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. CHALLENGING THE IMPUGNED ORDER, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE PRI. CIT HAS ERRED IN PASSIN G THE IMPUGNED ORDER BY OBSERVING THAT THE ASSESSMENT ORDER WAS ERRONEOU S AS FAR AS IT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE; THAT T HE ORDER UNDER SECTION 263 IS MERELY A CHANGE OF OPINION FROM THAT HELD BY THE AO IN THE ORDER PASSED U/S 143(3) OF THE ACT,; THAT THE ORDER PASSE D BY THE AO DID NOT, IN ANY WAY, AMOUNT TO AN ERRONEOUS ORDER; THAT THE PRI N. CIT DID NOT AFFORD ANY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, IN AS MUCH AS THE SHOW CAUSE NOTICE ISSUED U/S 263 OF THE ACT WAS ISSUED ON 26.03.2015, FIXING THE DATE OF HEARING 30.03.2015, NOT GIVING ANY TIME WHATSOEVER TO THE ASSESSEE; THAT THE SHOW CAUSE NOTICE DATED 26.03.20 15 WAS RECEIVED BY THE ASSESSEE ONLY ON 25.04.2015, LONG AFTER THE ORD ER U/S 263 OF THE ACT, WHICH ORDER WAS PASSED ON 31.03.2015. 8. ON THE OTHER HAND, THE LD. DR HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. 9. A BARE PERUSAL OF THE ORDER UNDER CHALLENGE MAKE S IT EVIDENT THAT THE PROCEEDINGS U/S 263 OF THE ACT WERE INITIATED O NLY ON THE BASIS OF THE INTERNAL AUDIT CONDUCTED IN THE CASE OF THE ASSESSE E. THIS INTERNAL AUDIT, IT IS SEEN, WAS CONDUCTED MUCH AFTER THE PASSING O F THE ASSESSMENT ORDER U/S 143(3) OF THE ACT. IN THE ASSESSMENT ORDE R SO PASSED, THE AO, FOR WANT OF COMPLETE BOOKS AND BILLS AND VOUCHERS/O THER SUPPORTING ITA NO.377(ASR)/2015 ASSESSMENT YEAR: 2010-11 7 EVIDENCE TO PROVE AND SUBSTANTIATE THE GENUINENESS OF THE EXPENSES CLAIMED, I.E., CONSTRUCTION MATERIAL OF RS.42,94,05 8/-, LABOUR AND WAGES OF RS.22,26,058, TRAVELING EXPENSES OF RS.54,160/-, STAFF WELFARE OF RS.30,470/- AND SALARY OF RS.1,44,600/-, REJECTED T HE BOOK RESULTS OF THE ASSESSEE AND APPLIED A NET PROFIT RATE OF 10% ON TH E GROSS CONTRACT RECEIPTS OF THE ASSESSEE AMOUNTING TO RS.81,04,233/ -. THE NET PROFIT RATE OF 10% AMOUNTED TO RS.7,27,796/-. THEREBY, THE AO M ADE AN ADDITION OF RS.2,80,442/-. 10. IN THE INTERNAL AUDIT CONDUCTED ON THE ASSESSEE , IT WAS OBSERVED THAT THE ASSESSEE HAD MADE CASH PAYMENTS EXCEEDING RS.20,000/- EACH, TOTAL AMOUNTING TO RS.5,45,164/-, TO M/S. HARGUM ST EEL WORKS, RAIPUR SATWARI, ON DIFFERENT DATES, IN VIOLATION OF THE PR OVISIONS OF SECTION 40A(3) OF THE ACT. AS PER THE AUDIT, THE AO OUGHT TO HAVE MADE DISALLOWANCE OF RS.5,45,164/-, INSTEAD OF REJECTING THE BOOKS OF AC COUNT AND APPLYING A NET PROFIT RATE. 11. THE AO DID NOT ACCEPT THE AUDIT OBJECTION AND I T WAS OBSERVED THAT THE ASSESSMENT HAD BEEN MADE BY APPLYING NET PROFIT RATE AFTER REJECTING THE BOOKS OF ACCOUNT AND AS SUCH, NO FURTHER ADDITI ON BASED ON BOOK VERSION/BOOKS OF ACCOUNT HAD BEEN MADE. 12. THE AUDIT, PER-CONTRA, OBSERVED THAT THE AO WAS SUPPOSED TO FRAME ASSESSMENT IN THE INTEREST OF REVENUE AND THAT IF A LL THE MATERIAL WAS AVAILABLE WITH HIM WITH REGARD TO THE CASH PAYMENTS MADE, THE AO WOULD HAVE MADE A DISALLOWANCE OF RS.5,45,164/- U/S 40A(3 ) OF THE ACT, WHICH ITA NO.377(ASR)/2015 ASSESSMENT YEAR: 2010-11 8 WOULD HAVE BEEN MORE BENEFICIAL TO THE REVENUE, WHE REAS AS A RESULT OF THE ASSESSMENT ORDER PASSED, A SHORT DEMAND OF RS.9 6,191/- HAD ARISEN. 13. THE PROPOSAL UNDER SECTION 263 OF THE ACT, AS F ILED BY THE ITO, UDHAMPUR BEFORE THE PRI. CIT, WAS ON THESE VERY LIN ES AND THE PRI. CIT ACCEPTED THE SAME. 13. THE QUESTION IS AS TO WHETHER THE AFORESAID ACT ION OF THE PRIN. CIT IS IN ACCORDANCE WITH LAW. 14. THE FACT REMAINS THAT THE ASSESSMENT ORDER WAS PASSED U/S 143(3) OF THE ACT. IT PRECEDED THE AUDIT OBJECTION. IN THE ASSESSMENT ORDER, THE BOOK RESULTS OF THE ASSESSEE HAD BEEN REJECTED AND A NET PROFIT RATE OF 10% HAD BEEN APPLIED. NOW, IN SUCH A SCENARIO, AS I N THE PRESENT CASE, POST THE PASSING OF THE ASSESSMENT ORDER, THE AUDIT CONDUCTED REVEALED SHORT DEMAND ARISEN, CAN THAT AMOUNT TO THE ASSESSM ENT ORDER BEING TERMED AS ERRONEOUS IN AS MUCH AS IT IS BENEFICIAL TO THE INTERESTS OF THE REVENUE, SO AS TO JUSTIFY THE REVISION OF THE ASSES SMENT ORDER U/S 263 OF THE ACT. 15. SECTION 263(1) OF THE ACT READS AS FOLLOWS: 263. (1) THE PRINCIPAL COMMISSIONER OR COMMISSIONE R MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSE SSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTA NCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. ITA NO.377(ASR)/2015 ASSESSMENT YEAR: 2010-11 9 16. NOW, A READING OF SECTION 263(1) SHOWS THAT IT IS ONLY IF ON CALLING FOR AND EXAMINING THE RECORD OF ANY PROCEEDING UND ER THE ACT, THE PRI. CIT CONSIDERS ANY ORDER PASSED BY THE AO TO BE ERR ONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE MAY REVISE THE SAID ASSESSMENT ORDER. 17. THUS, THE PREREQUISITE IS THAT IT IS THE CONSID ERATION OF THE PRI. CIT, ON EXAMINING THE RECORD, THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL, WHICH MAY LEAD TO REVISION OF THE ASSE SSMENT ORDER. IN THE PRESENT CASE, AS SEEN, IT IS NOT SO. HERE, THE PRI. CIT HAS ACTED MERELY ON THE AUDIT OBJECTION, WHICH FORMS THE BASIS OF THE P ROPOSAL FOR REVISION. HENCE, THE ORDER UNDER APPEAL LACKS IN THE APPLICAT ION OF MIND BY THE PRI. CIT AND THIS IS ALSO EVIDENT FROM THE FACT THA T THE PRI. CIT HAS FAILED TO APPRECIATE THAT AT THE TIME OF THE PASSING OF TH E ASSESSMENT ORDER, THE ONLY RELEVANT CONSIDERATION FOR THE AO WAS THE ABSE NCE OF THE BOOKS OF ACCOUNT, VOUCHERS AND OTHER SUPPORTING EVIDENCE TO PROVE THE CORRECTNESS OF THE RETURN OF INCOME FILED. IT WAS O NLY FOR SUCH ABSENCE THAT THE TRADING RESULTS OF THE ASSESSEE WERE REJEC TED AND NET PROFIT RATE WAS APPLIED. 18. NOW, ONCE THIS WAS SO, OBVIOUSLY, NO FURTHER AD DITION BASED ON BOOK VERSION/BOOKS OF ACCOUNT COULD HAVE BEEN MADE. THE LATER DISCOVERY OF SHORT DEMAND OF RS.96,191/- ON ACCOUNT OF NON- DISALLOWANCE UNDER SECTION 40(A)(IA) WOULD NOT REND ER THE ASSESSMENT ORDER ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTERESTS OF THE ITA NO.377(ASR)/2015 ASSESSMENT YEAR: 2010-11 10 REVENUE. IT IS ONLY BECAUSE OF THE AUDIT OBJECTION THAT THE ASSESSMENT ORDER WAS SOUGHT TO BE DEEMED TO BE ERRONEOUS. IT G OES WITHOUT SAYING THAT BOTH THE REQUIREMENTS OF THE ASSESSMENT ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE MUST CO -EXISTS SO AS TO JUSTIFY THE INVOCATION OF SECTION 263 OF THE ACT AND REVIS ION OF THE ASSESSMENT ORDER THEREUNDER. IN THE CASE AT HAND, ON THE CONTR ARY, IT IS THE SHORT DEMAND OF RS.96,191/-, STATEDLY PREJUDICIAL TO THE INTERESTS OF THE REVENUE, WHICH HAS BEEN SOUGHT TO BE RELIED ON TO DUB THE ASSESSMENT ORDER AS ERRONEOUS ALSO. 19. THE ABOVE IS NOT EITHER THE INTENTION, OR THE P URPORT OF THE LAW. THE ASSESSMENT ORDER, WHICH WAS NOT AT ALL ERRONEOUS A B-INITIO, CANNOT BE PAINTED AS ONE MERELY BECAUSE OF THE SHORT DEMAND A RISEN DUE TO THE AUDIT ACTION ON THE ASSESSEE POST THE PASSING OF TH E ASSESSMENT ORDER. IT IS IRREFUTABLE THAT THE COURSE ADOPTED BY THE AO W AS ONE PERMISSIBLE TO HIM UNDER THE LAW, I.E., REJECTION OF BOOK RESULTS AND APPLICATION OF NET PROFIT RATE IN THE ABSENCE OF BOOKS OF ACCOUNT, VOU CHERS AND OTHER SUPPORTING EVIDENCE TO BUTTRESS THE CLAIM IN THE RE TURN OF INCOME FILED. 20. IN CIT VS. DLF LTD., 350 ITR 0555 (DEL), IT HAS BEEN HELD THAT WHEN THE AO ADOPTS ONE OF TWO COURSES PERMISSIBLE U NDER LAW AND IT HAS RESULTED IN LOSS OF REVENUE, IT CANNOT BE TREATED A S AN ERRONEOUS ORDER PREJUDICIAL TO THE REVENUE, UNLESS THE VIEW TAKEN BY THE AO IS UNSUSTAINABLE IN LAW. ITA NO.377(ASR)/2015 ASSESSMENT YEAR: 2010-11 11 21. IN CIT VS. GABRIAL INDIA LTD., 203 ITR 108 (B OM), IT HAS BEEN HELD THAT THE SCOPE OF REVISION U/S 263 OF THE ACT IS TH AT THE ORDER SOUGHT TO BE REVISED MUST BE ERRONEOUS AND ALSO BY VIRTUE OF ITS BEING ERRONEOUS PREJUDICE MUST HAVE BEEN CAUSED TO THE INTERESTS OF THE REVENUE; THAT SECTION 263 OF THE ACT DOES NOT VISUALIZE SUBSTITUT ION OF JUDGMENT OF COMMISSIONER FOR THAT OF THE AO, UNLESS THE DECIS ION IS HELD TO BE ERRONEOUS; AND THAT THE ASSESSMENT ORDER IS ERRONEO US WHEN IT IS NOT IN ACCORDANCE WITH LAW AND IS PREJUDICIAL WHEN IT HAS CAUSED LOSS OF REVENUE. 22. IN MALABAR INDUSTRIAL CO. LTD. VS. CIT, 243 I TR 83 (SC), IT HAS BEEN HELD THAT THE LD. CIT CAN INVOKE SECTION 263 OF THE ACT, IF THE ORDER OF THE AO IS ERRONEOUS AND IS ALSO PREJUDICIAL TO T HE INTERESTS OF THE REVENUE; THAT BOTH THE CONDITIONS MUST CO-EXIST; TH AT THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE REVENUE IS OF WIDE IMPORT AND IS NOT CONFINED TO LOSS OF TAX; THAT IF DUE TO AN ERRONEO US ORDER OF THE AO, THE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE; AND TH AT HOWEVER, EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE AO C ANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 23. ALL THE ABOVE CASE LAWS ARE DIRECTLY APPLICABLE TO THE CASE AT HAND. NO DECISION TO THE CONTRARY HAS BEEN CITED BEFORE U S. ITA NO.377(ASR)/2015 ASSESSMENT YEAR: 2010-11 12 24. FOR THE ABOVE, WE HOLD THAT THE INVOCATION OF S ECTION 263 OF THE ACT AND THE PASSING OF THE IMPUGNED ORDER THEREUNDER IS UNSUSTAINABLE IN THE EYE OF LAW. 25. BESIDES THE ABOVE, THE ASSESSEE IS ALSO CORRECT IN CONTENDING THAT THE ORDER UNDER CHALLENGE HAS BEEN PASSED WITHOUT A FFORDING DUE AND ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE IN AS MUCH AS THE SHOW CAUSE U/S 263 OF THE ACT WAS ISSUED ON 26.03.2015. THE DATE OF HEARING FOR COMPLIANCE (COMPLETION OF ASSESSMENT) WAS FIXE D FOR 30.03.2015 AND THE ORDER UNDER APPEAL WAS PASSED ON 31.03.2015. 26. WHILE DEALING WITH THE MERITS OF THE CASE, WE H AVE HELD INVOCATION OF THE PROVISIONS OF SECTION 263 OF THE ACT AT THE HANDS OF THE PRI. CIT, TO BE UNSUSTAINABLE IN LAW. ACCORDINGLY, NOTHING ELSE SURVIVES FOR ADJUDICATION. 27. HENCE, THE GRIEVANCE OF THE ASSESSEE IS JUSTIFI ED AND IS ACCEPTED. THE ORDER UNDER APPEAL IS REVERSED. 28. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/03/ 2016. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10/03/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. ABDUL WAHEED MALIK, RAMBAN, JAMMU . 2. THE PRI. CIT, JAMMU. 3. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER