Srinivasa Rao Turlapathi, Vijayawada V. THE CIT, Vijayawada

ITA 380/VIZ/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2170 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 02-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G GURUSWAMY
• Assessee Lawyers: SRIRAM MURTHY
• Keywords: Capital asset; Gift; Question of law; Cost of acquisition; Fair market value; Assessment record
• Section: 143(3); 68

Judgement Text

ITA NO.380/VIZAG/2015 SRINIVASA RAO TURLAPATI, VIJAYAWADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , ' BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.380/VIZAG/2015 ( / ASSESSMENT YEAR : 2007-08) SRINIVASA RAO TURLAPATI VIJAYAWADA VS. CIT VIJAYAWADA [ PAN: ACTPT 8630J] ( ) / APPELLANT) ( *+) / RESPONDENT ) / APPELLANT BY : SRI SRIRAM MURTHY, AR #$ / RESPONDENT BY : SHRI G. GURUSWAMY, DR ( / DATE OF HEARING : 08.01.2016 ( / DATE OF PRONOUNCEMENT : 22.01.2016 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF COMMISSIONER OF INCOMETAX, VIJAYAWADA DATED 29-02- 2012 FOR THE ASSESSMENT YEAR 2007-08. ITA NO.380/VIZAG/2015 SRINIVASA RAO TURLAPATI, VIJAYAWADA 2 2. WHEN THIS APPEAL IS TAKEN UP FOR HEARING, THE LE ARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE, SUBMITTED THAT THE APPEAL IS BARRED BY 3 YEARS AND 199 DAYS. THE A.R. SUBMITTED THAT THE ASS ESSEE HAS FILED A PETITION FOR CONDONATION OF DELAY, ALONG WITH AFFID AVIT GIVING REASONS FOR DELAY IN FILING THE APPEAL. THE A.R. FURTHER SUBMIT TED THAT THE DELAY IN FILING THE APPEAL IS BEYOND THE CONTROL OF ASSESSEE , AS THE ASSESSEE HAS FILED THE APPEAL ON THE ADVISE OF AN EXPERT, WHO AD VISED TO FILE THE APPEAL AGAINST THE ORDER UNDER SEC. 263, ONLY AFTER THE A.O. PASSED CONSEQUENTIAL ORDER U/S 143(3), R.W.S. 263 THE ACT. THE ASSESSEE HAS FILED THE APPEAL BEFORE THE ITAT, AGAINST THE CONSE QUENTIAL ORDER DATED 22-05-2012, PASSED UNDER SEC. 143(3), R.W.S. 263, A S ADVISED BY HIS COUNSEL. THE ITAT, BY ORDER DATED 2-12-2015 DISMISS ED THE APPEAL BY OBSERVING THAT THE ASSESSEE HAS FILED THE APPEAL AG AINST CONSEQUENTIAL ORDER, INSTEAD OF ORDER UNDER SEC. 263, THEREFORE, THE APPEAL FILED AGAINST ORDER UNDER SEC. 143(3), R.W.S. 263 IS NOT MAINTAINABLE. HOWEVER, THE ITAT LEFT OPEN AN OPTION TO THE ASSESS EE TO FILE APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX, U NDER SEC. 263 OF THE ACT IN ACCORDANCE WITH LAW. THE A.R. FURTHER SU BMITTED THAT THE ASSESSEE COULD NOT FILED THE APPEAL WITHIN THE SPEC IFIED PERIOD UNDER THE ACT, BECAUSE OF MISTAKEN OF FACTS AND ALSO ON WRONG ADVISE OF EXPERT, THEREFORE, THE DELAY OF 3 YEARS AND 199 DAYS IN FIL ING THE APPEAL MAY ITA NO.380/VIZAG/2015 SRINIVASA RAO TURLAPATI, VIJAYAWADA 3 PLEASED BE CONDONED AND ADMIT THE APPEAL ON MERITS. ON THE OTHER HAND, THE D.R. DID NOT OPPOSE THE CONDONATION PETIT ION. 3. WE HAVE HARD BOTH THE PARTIES. THE LD. D.R. NEVE R OBJECTED THE CONDONATION OF DELAY. HAVING CONSIDERED THE SUBMISS IONS AND ALSO EXERCISING POWERS VESTED WITH THE TRIBUNAL, UNDER S ECTION 253(5) OF THE INCOME TAX ACT, 1961 WE ARE OF THE OPINION THAT THE RE IS BONAFIED REASON FOR NOT PRESENTING THE PRESENT APPEAL WITHIN THE SPECIFIED DATE UNDER THE ACT. THEREFORE, WE CONDONE THE DELAY IN F ILING THE APPEAL, ADMIT THE APPEAL AND PROCEED TO DECIDE THE ISSUES A GITATED ON MERITS. 4. THE BRIEF FACTS OF THE CASE, IS THAT THE ASSESSE E IS A INDIVIDUAL FILED HIS RETURN OF INCOME FOR THE A.Y. 2007-08 ON 31/07/ 2007, DECLARING TOTAL INCOME OF RS. 7,05,985/-. DURING THE FINANCIAL YEAR , RELEVANT TO ASSESSMENT YEAR 2007-08, THE ASSESSEE HAS SOLD 1800 GRAM JEWELLERY FOR RS. 16,91,100/- AND COMPUTED LONG TERM CAPITAL GAIN OF RS. 1,30,986/-, AFTER REDUCING COST OF ACQUISITION OF R S.15,60,114/-. THE JEWELLERY WAS ACQUIRED BY THE ASSESSEE UNDER A GIFT FROM HIS MOTHER DURING THE FINANCIAL YEAR 1996-97, WHICH WAS IN TUR N ACQUIRED BY HIS MOTHER IN THE YEAR 1975 FROM HER PARENTS AND IN LAW S AT THE TIME OF HER MARRIAGE. THEREFORE, WHILE COMPUTING THE LTCG, THE ASSESSEE HAS ADOPTED COST OF ACQUISITION OF JEWELLERY BEING FMV AS ON 1 ST APRIL 1981 AND APPLIED THE INDEXATION FROM THE FINANCIAL YEAR 1981-82. THE CASE ITA NO.380/VIZAG/2015 SRINIVASA RAO TURLAPATI, VIJAYAWADA 4 WAS SELECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGL Y, NOTICE UNDER SEC. 143(2) OF THE ACT WAS ISSUED TO THE ASSESSEE. IN RE SPONSE TO NOTICE, THE ASSESSEE HIMSELF ALONG WITH HIS AUTHORIZED REPRESEN TATIVE APPEARED FROM TIME TO TIME AND FURNISHED THE DETAILS. THE A.O. CO MPLETED THE ASSESSMENT UNDER SEC. 143(3) OF THE ACT, AND DETERM INED TOTAL INCOME OF RS. 16,80,990/-, BESIDES AGRICULTURAL INCOME OF RS. 45,000/-. THE A.O. WHILE COMPLETING THE ASSESSMENT, HAS ACCEPTED THE L TCG ON SALE OF JEWELLERY DECLARED BY THE ASSESSEE. BUT, MADE ADDIT ION OF RS. 9,75,000/- TOWARDS UNSECURED LOANS FROM SIX PARTIERS, UNDER SE C. 68 OF THE ACT. 5. THE CIT, VIJAYAWADA ISSUED A SHOW CAUSE NOTICE U /S 263 OF THE ACT, DATED 15-06-2011 AND PROPOSED TO REVISE THE AS SESSMENT ORDER. THE CIT, PROPOSED TO REVISE THE ASSESSMENT ORDER FO R THE REASON THAT ON EXAMINATION OF ASSESSMENT RECORDS, CERTAIN OMISSION S AND COMMISSIONS WERE NOTICED, WHICH RENDERED THE ASSESSMENT ORDER E RRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, I N TERMS OF SECTION 263 OF THE ACT. THE CIT, IN THE SAID SHOW CAUSE NOTICE, O BSERVED THAT THE A.O. HAS ERRONEOUSLY ALLOWED INDEXED COST OF ACQUISITION FROM THE FINANCIAL YEAR 1981-82, AS AGAINST THE ADMISSIBLE FINANCIAL Y EAR 1996-97, WHICH RESULTED IN SHORT COMPUTATION OF CAPITAL GAIN, WHIC H WAS NOT EXAMINED BY THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT. THE CIT, FURTHER OBSERVED THAT THE ASSESSEE HAS ACCEPTED HUGE UNSECU RED LOANS ITA NO.380/VIZAG/2015 SRINIVASA RAO TURLAPATI, VIJAYAWADA 5 AMOUNTING TO RS. 1,09,75,000/-. THE A.O. DID NOT CO NDUCTED PROPER ENQUIRY WITH REGARD TO NATURE AND SOURCE OF UNSECUR ED LOANS AND ALSO SIMPLY ACCEPTED THE CONFIRMATION LETTER FILED BY TH E ASSESSEE, WITHOUT VERIFYING THE GENUINENESS OF THE TRANSACTION. THE C IT FURTHER OBSERVED THAT THE ASSESSEE HAS GIVEN ADVANCE TO VARIOUS PERS ONS TOWARDS PURCHASE OF SHARES. THE A.O. HAS FAILED TO VERIFY T HE GENUINENESS OF SAID ADVANCES, EXCEPT PLACING CONFIRMATION LETTERS. WITH THESE OBSERVATIONS, THE CIT WAS OF THE OPINION THAT THE ORDER UNDER SEC . 143(3) OF THE ACT, IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE IN TEREST OF THE REVENUE ON THESE COUNTS, THEREFORE ISSUED SHOW CAUSE NOTICE AN D ASKED AS TO WHY THE ORDER SHALL NOT BE REVISED UNDER SEC. 263 OF TH E INCOME TAX ACT 1961. 6. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE H AS FILED WRITTEN SUBMISSION ON 25. 7.2011 AND CONTENDED THAT THE ORD ER PASSED BY THE A.O. IS NOT ERRONEOUS, INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, AS THE A.O. HAS VERIFIED ALL THE ISSUES WH ICH WAS OBSERVED BY THE CIT IN HIS SHOW CAUSE NOTICE. THE ASSESSEE FURT HER SUBMITTED THAT DURING THE FINANCIAL YEAR 2006-07 RELEVANT TO ASSES SMENT YEAR 2007-08, HE HAS SOLD JEWELLERY MEASURING 1800 GMS FOR A CONS IDERATION OF RS.16,91,100/-. THE ASSESSEE FURTHER SUBMITTED THAT HE HAS ACQUIRED THE JEWELLERY UNDER A GIFT FROM HIS MOTHER, DURING THE FINANCIAL YEAR ITA NO.380/VIZAG/2015 SRINIVASA RAO TURLAPATI, VIJAYAWADA 6 1996-97, IN TURN HIS MOTHER ACQUIRED THE JEWELLERY IN THE YEAR 1975 FROM HER PARENTS AND IN LAWS AT THE TIME OF HER MARRIAGE AND FILED A AFFIDAVIT FROM HIS MOTHER IN SUPPORT OF HIS ARGUMENTS. THE AS SESSEE FURTHER CONTENDED THAT HE HAS RIGHTLY COMPUTED THE CAPITAL GAIN BY ADOPTING COST INFLATION INDEX FROM 1981-82, AS HE HAS GOT RI GHT OVER THE PROPERTY BY INHERITANCE FROM HIS MOTHER. THE ASSESSEE SUBMIT TED THAT SECTION 49(1)(II) OF THE ACT, PROVIDES THAT IN CASE, ANY A SSESSEE ACQUIRED THE CAPITAL ASSET UNDER A GIFT OR WILL, THE COST OF ACQ UISITION OF THE ASSET SHALL BE DEEMED TO BE THE COST FOR WHICH THE PREVIOUS OWN ER OF THE PROPERTY ACQUIRED IT, AS INCREASED BY THE COST OF ANY IMPROV EMENT OF THE ASSET INCURRED OR BORNE BY THE PREVIOUS OWNER OR THE ASSE SSEE, AS THE CASE MAY BE. THEREFORE, THERE IS NO ERROR IN THE COMPUTA TION OF COST OF ACQUISITION BY APPLYING THE COST INFLATION INDEX FR OM 1981-82. THE ASSESSEE FURTHER SUBMITTED THAT THE A.O. HAS VERIFI ED ALL THE DETAILS OF SALE OF JEWELLERY, COMPUTATION OF LTCG AND ALLOWED THE CLAIM. THEREFORE, FOR THE SAME REASONS, THE REVISION OF ASSESSMENT OR DER IS NOT CORRECT. THE ASSESSEE FURTHER SUBMITTED THAT AS FOR AS THE I SSUE OF UNSECURED LOAN AND ADVANCES IS CONCERNED, HE HAS FURNISHED AL L THE DETAILS ABOUT NATURE AND SOURCE OF LOANS AND ADVANCE. THE A.O. AF TER VERIFIED THE DETAILS HAS MADE ADDITION OF RS. 9,75,000/- TOWARDS UNSECURED LOANS WHICH IS EVIDENT FROM THE ASSESSMENT ORDER. HOWEVER , THE CIT, AFTER ITA NO.380/VIZAG/2015 SRINIVASA RAO TURLAPATI, VIJAYAWADA 7 CONSIDERING THE SUBMISSIONS OF ASSESSEE, REVISED TH E ASSESSMENT ORDER AND DIRECTED THE A.O. TO MAKE FRESH ASSESSMENT AFTE R DULY EXAMINING THE ABOVE ISSUES. 7. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE, S UBMITTED THAT THE ASSESSMENT ORDER IS NOT ERRONEOUS, INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, AS THE A.O. HAS MADE DETAI LED ENQUIRIES WITH REGARD TO THE ISSUES RAISED BY THE CIT, DURING THE ASSESSMENT PROCEEDINGS. THE A.R. FURTHER SUBMITTED THAT DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. ISSUED A DETAILED QUESTIONNAIRE, WHEREIN HE HAS EXAMINED SALE OF JEWELRY, COMPUTATIO N OF CAPITAL GAIN, UNSECURED LOAN, LOANS AND ADVANCES, WHICH IS EVIDEN T FROM THE ASSESSMENT ORDER. THE A.R. FURTHER SUBMITTED THAT T HE A.O. HAS PASSED CONSEQUENTIAL ORDER U/S 143(3) R.W.S. 263 OF THE AC T AND HAS ACCEPTED ALL THE ISSUES RAISED BY THE CIT, EXCEPT INDEXATION FROM 1981-82. THEREFORE, IT IS ABUNDANTLY CLEAR THAT THE CIT HAS REVISED THE ASSESSMENT ORDER PURELY ON SUSPICIOUS AND SURMISE, WITHOUT BEI NG ANY COGENT REASONS. THE A.R. FURTHER SUBMITTED THAT HE HAS ACQ UIRED THE JEWELLERY UNDER A GIFT FROM HIS MOTHER DURING THE FINANCIAL Y EAR 1996-97, IN TURN HIS MOTHER ACQUIRED THE JEWELLERY IN THE YEAR 1975 FROM HER PARENTS AND IN LAWS AT THE TIME OF HER MARRIAGE AND FILED A AFF IDAVIT FROM HIS MOTHER ITA NO.380/VIZAG/2015 SRINIVASA RAO TURLAPATI, VIJAYAWADA 8 IN SUPPORT OF HIS ARGUMENTS. THE ASSESSEE FURTHER C ONTENDED THAT HE HAS RIGHTLY COMPUTED THE CAPITAL GAIN BY ADOPTING COST INFLATION INDEX FROM 1981-82, AS HE HAS GOT RIGHT OVER THE PROPERTY BY I NHERITANCE FROM HIS MOTHER. THE ASSESSEE SUBMITTED THAT SECTION 49(1)(I I) OF THE ACT PROVIDES THAT IN THE CASE OF AN ASSESSEE ACQUIRED T HE CAPITAL ASSET UNDER A GIFT OR WILL, THE COST OF ACQUISITION OF THE ASSE T SHALL BE DEEMED TO BE THE COST FOR WHICH THE PREVIOUS OWNER OF THE PROPER TY ACQUIRED IT, AS INCREASED BY THE COST OF ANY IMPROVEMENT OF THE ASS ET INCURRED OR BORNE BY THE PREVIOUS OWNER OR THE ASSESSEE, AS THE CASE MAY BE. THEREFORE, THERE IS NO ERROR IN THE COMPUTATION OF COST OF ACQ UISITION BY APPLYING THE COST INFLATION INDEX FROM 1981-82 AS OBSERVED B Y THE CIT. THE ASSESSEE FURTHER SUBMITTED THAT THE A.O. HAS VERIFI ED ALL THE DETAILS OF SALE OF JEWELLERY, COMPUTATION OF LTCG AND ALLOWED THE CLAIM. THEREFORE, FOR THE SAME REASONS, THE REVISION OF ASSESSMENT OR DER IS NOT CORRECT AND REQUESTED TO QUASH THE CIT ORDER. IN SUPPORT OF HIS ARGUMENTS, THE A.R. RELIED UPON HONBLE BOMBAY HIGH COURT DECISION , IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MANJULA. J.SHAH 355 ITR 474 (2013). ON THE OTHER HAND, THE D.R. STRONGLY SUPPORTED CIT ORDER. 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE CIT ASSUMED THE JURISDICTION TO REVISE THE ASSESSME NT ORDER, FOR THE ITA NO.380/VIZAG/2015 SRINIVASA RAO TURLAPATI, VIJAYAWADA 9 REASON THAT THE A.O. HAS NOT CONDUCTED PROPER ENQUI RY AT THE TIME ASSESSMENT, THEREBY THE ASSESSMENT ORDER IS ERRONEO US IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE CI T HAS RAISED NUMBER OF ISSUES IN THE REVISION PROCEEDINGS, RIGHT FROM INDE XED COST OF ACQUISITION TO UNSECURED LOANS AND ADVANCES. ON PERUSAL OF THE SHOW CAUSE NOTICE ISSUED BY THE CIT, ASSESSMENT ORDER AND PAPER BOOK FILED BY THE ASSESSEE, WE FIND THAT ALL THE ISSUES QUESTIONED BY THE CIT IN THE REVISION PROCEEDINGS, WERE ALREADY EXAMINED BY THE A.O. AT THE TIME OF ASSESSMENT PROCEEDINGS. THEREFORE, THE CIT IS NOT C ORRECT IN OBSERVING THAT THE A.O. DID NOT CONDUCT PROPER VERIFICATION O F THE ISSUES BEFORE COMPLETION OF ASSESSMENT. 9. THE CIT ASSUMED THE JURISDICTION TO REVISE THE A SSESSMENT ORDER ON THE SOLE GROUND THAT THERE IS A LACK OF ENQUIRY ON THE PART OF A.O., IN EXAMINING THE ISSUES REFERRED IN THE SHOW CAUSE NOT ICE. THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE CIT WA S NOT CORRECT IN COMING TO THE CONCLUSION THAT THE A.O. DID NOT COND UCTED PROPER INQUIRY AT THE TIME OF ASSESSMENT, AS THE A.O. HAS EXAMINED ALL THE ISSUES WHICH ARE SUBJECT MATTER OF REVISION PROCEEDINGS. THE A.R . FURTHER SUBMITTED THAT THE A.O. HAS PASSED CONSEQUENTIAL ORDER UNDER SEC. 143(3) R.W.S. 263 TO GIVE EFFECT TO CIT DIRECTIONS, WHEREIN HE HA S ACCEPTED ALL THE ISSUES RAISED BY THE CIT, EXCEPT COST INFLATION IND EX FROM FINANCIAL YEAR ITA NO.380/VIZAG/2015 SRINIVASA RAO TURLAPATI, VIJAYAWADA 10 1981-82. WE HAVE EXAMINED THE CONSEQUENTIAL ORDER, WHICH IS AVAILABLE IN PAPER BOOK AND WE FIND THAT THE A.O. HAS ACCEPTE D ALL THE ISSUES RAISED BY THE CIT, EXCEPT COST INFLATION INDEX FROM FINANCIAL YEAR 1981- 82. THEREFORE, THE EFFECTIVE ISSUE WHICH LEADS TO R EVISION OF ASSESSMENT ORDER, IS WHETHER COST INFLATION INDEX FOR COMPUTAT ION OF COST OF ACQUISITION IS AVAILABLE FROM THE DATE THE ASSESSEE FIRST OWNED THE CAPITAL ASSET OR FROM THE DATE THE PREVIOUS OWNER ACQUIRED THE CAPITAL ASSET. 10. THE FACTS WITH REGARD TO DATES OF ACQUISITION OF CAPITAL ASSET AND THE MODE OF ACQUISITION ARE NOT DISPUTED BY THE REV ENUE AUTHORITIES. THE ONLY DISPUTE IS WITH REGARD TO APPLICABILITY OF DEE MED DATE OF HOLDING THE ASSET. THE ASSESSEE CONTENDS THAT HE IS ELIGIBLE FO R COST INFLATION INDEX FROM THE DATE THE PREVIOUS OWNER ACQUIRED THE CAPIT AL ASSET, AS HE GOT RIGHT OVER THE ASSET BY WAY OF INHERITANCE. IT IS T HE CONTENTION OF THE REVENUE THAT SINCE THE INDEXED COST OF ACQUISITION AS PER CL. (III) OF THE EXPLANATION TO S. 48 OF THE ACT HAS TO BE DETERMINE D WITH REFERENCE TO THE COST INFLATION INDEX FOR THE FIRST YEAR IN WHIC H THE ASSET WAS HELD BY THE ASSESSEE AND IN THE PRESENT CASE, AS THE ASSESS EE HELD THE ASSET W.E.F. 1996-97, THE FIRST YEAR OF HOLDING THE ASSET WOULD BE FINANCIAL YEAR 1996-97 AND ACCORDINGLY, THE COST INFLATION INDEX F OR 1996-97 WOULD BE APPLICABLE IN DETERMINING THE INDEXED COST OF ACQUI SITION. WE DO NOT SEE ANY MERITS IN THE ARGUMENTS OF THE REVENUE FOR THE REASON THAT THE ITA NO.380/VIZAG/2015 SRINIVASA RAO TURLAPATI, VIJAYAWADA 11 INDEXED COST OF ACQUISITION HAS TO BE DETERMINED WI TH REFERENCE TO THE COST INFLATION INDEX FOR THE YEAR IN WHICH THE CAPI TAL ASSET WAS FIRST HELD BY THE ASSESSEE. SECTION 49(1)(II) OF THE ACT PROVI DES THAT IN THE CASE OF AN ASSESSEE, ACQUIRED THE CAPITAL ASSET UNDER A GIF T OR WILL, THE COST OF ACQUISITION OF THE ASSET SHALL BE DEEMED TO BE THE COST FOR WHICH THE PREVIOUS OWNER OF THE PROPERTY ACQUIRED IT, AS INCR EASED BY THE COST OF ANY IMPROVEMENT OF THE ASSET INCURRED OR BORNE BY T HE PREVIOUS OWNER OR THE ASSESSEE, AS THE CASE MAY BE. ADMITTEDLY, IN THE PRESENT CASE ON HAND, THE ASSESSEE HAS ACQUIRED THE JEWELLERY UNDER A GIFT FROM HIS MOTHER DURING THE FINANCIAL YEAR 1996-97, IN TURN H IS MOTHER ACQUIRED THE JEWELLERY IN THE YEAR 1975 FROM HER PARENTS AND IN LAWS AT THE TIME OF HER MARRIAGE AND TO THIS EFFECT HAS FILED A AFFI DAVIT FROM HIS MOTHER IN SUPPORT OF HIS ARGUMENTS. THE REVENUE AUTHORITIES H AVE NOT DISPUTED THE FACTS WITH REGARD TO DATE OF ACQUISITION AND MODE O F ACQUISITION. THEREFORE, IN OUR OPINION, THE ASSESSEE HAS RIGHTLY COMPUTED THE CAPITAL BY APPLYING THE COST INFLATION INDEX FROM 1981-82, AS THE CAPITAL ASSET WAS FIRST ACQUIRED BY ASSESSEE MOTHER PRIOR TO 1 ST APRIL 1981 AND SUBSEQUENTLY HE GOT RIGHT OVER THE CAPITAL ASSET BY ONE OF THE MODES SPECIFIED IN SECTION 49(1) OF THE INCOME TAX ACT, 1 961 AS HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSION ER OF INCOME TAX VS. MANJULA.J SHAH (2013) 355 ITR 474 (BOM). HENCE, ON MERITS OF THE ITA NO.380/VIZAG/2015 SRINIVASA RAO TURLAPATI, VIJAYAWADA 12 ISSUE, THE CIT WAS NOT CORRECT IN COMING TO THE CON CLUSION THAT THE COST INFLATION INDEX BENEFIT WAS AVAILABLE FROM THE DATE THE ASSESSEE BECAME THE OWNER OF THE CAPITAL ASSET. 11. HAVING SAID THAT THE BENEFIT OF COST INFLATION INDEX IS AVAILABLE FROM THE DATE THE CAPITAL ASSET WAS FIRST HELD BY THE PR EVIOUS OWNER, WHEN RIGHT OVER THE CAPITAL ASSET WAS ACQUIRED BY ONE OF THE MODES SPECIFIED IN SECTION 49(1) OF THE INCOME TAX ACT 1961, LET US KNOW EXAMINE WHETHER, THE ASSESSMENT ORDER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE IN THE LIGHT OF THE FAC TS OF THE PRESENT CASE. THE ASSESSMENT ORDER IS NOT PREJUDICIAL TO THE INTE REST OF THE REVENUE, AS THERE IS NO LOSS OF REVENUE, BECAUSE, THE A.O. HAS ACCEPTED THE CLAIM OF THE ASSESSEE, WHICH IS IN ACCORDANCE WITH LAW. WE FU RTHER OBSERVED THAT THE A.O. HAS EXAMINED THE ISSUE AT THE TIME OF ASSE SSMENT AND CHOOSE TO ALLOW THE CLAIM OF ASSESSEE. ONCE, THE A.O. ALLO WED THE CLAIM AFTER BEING SATISFIED WITH THE EXPLANATION, THE CIT CANNO T REVISE THE ASSESSMENT ORDER FOR THE SAME REASONS WITH A DIFFER ENT OPINION. 12. THE CIT, UNDER SEC.263 HAS POWER TO REVISE THE ASSESSMENT ORDER. BUT, TO INVOKE THE PROVISIONS OF SECTION 263 OF THE ACT, THE TWIN CONDITIONS MUST BE SATISFIED I.E. THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND FURTHER IT MUST BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. UNLESS BOTH THE CONDITIONS ARE SATISFIED, THE CIT CANNOT ITA NO.380/VIZAG/2015 SRINIVASA RAO TURLAPATI, VIJAYAWADA 13 ASSUME JURISDICTION U/S 263 OF THE ACT. IT IS NOT NECESSARY THAT EVERY ORDER WHICH IS ERRONEOUS, MAY NOT PREJUDICIAL TO TH E INTEREST OF REVENUE OR VICE VERSA. UNLESS THE A.OS ORDER IS NOT ERRONE OUS, NO ACTION CAN BE TAKEN BY THE CIT U/S 263 OF THE ACT, THIS IS BECAUS E THE TWIN CONDITIONS I.E. (1) THE ORDER IS ERRONEOUS AND (2) THE SAME IS ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE ARE CO-EXISTS. IN THE PRES ENT CASE, THE A.O. HAS CONDUCTED DETAILED ENQUIRY AND ALSO EXAMINED THE PO INTS ON WHICH THE CIT WANTS FURTHER VERIFICATION. THE ASSESSING OFFIC ER AFTER VERIFICATION OF BOOKS OF ACCOUNTS AND RELEVANT DETAILS FURNISHED BY THE ASSESSEE, ALLOWED THE CLAIM OF ASSESSEE. THE CONTENTION OF T HE CIT WAS THAT THE A.O. HAS NOT CONDUCTED PROPER ENQUIRY AND ALSO NOT APPLIED HIS MIND BEFORE ALLOWING THE DEDUCTION. WE DO NOT SEE ANY ME RITS IN THE ARGUMENTS OF THE CIT FOR THE REASON THAT THERE IS A DISTINCTION BETWEEN LACK OF ENQUIRY AND INADEQUATE ENQUIRY. IF THERE I S AN INADEQUATE ENQUIRY, THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE CIT TO ASSUME JURISDICTION U/S 263 OF THE ACT, MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER. THE CIT CAN DO THIS, WHEN THERE IS A LACK OF ENQUIRY BY THE ASSESSING OFFICER. IN THE PRESENT CASE ON HAND , THERE IS NO REASON OF WHATSOEVER FOR THE COMMISSIONER TO REVISE THE ASSES SMENT ORDER, AS ON BOTH COUNTS, I.E. THE ORDER IS NOT ERRONEOUS AS THE A.O. HAS VERIFIED THE ISSUE AND ALLOWED THE CLAIM AND ALSO THE ORDER IS N OT PREJUDICIAL TO THE ITA NO.380/VIZAG/2015 SRINIVASA RAO TURLAPATI, VIJAYAWADA 14 INTEREST OF THE REVENUE, AS THE ISSUE OF COST INFLA TION INDEX WAS RIGHTLY CLAIMED BY THE ASSESSEE FROM THE FINANCIAL YEAR 198 1-82. THEREFORE, WE ARE OF THE OPINION THAT THE CIT WITHOUT ANY JUSTIFI CATION ASSUMED THE JURISDICTION TO REVISE THE ASSESSMENT ORDER, WHICH IS NOT PERMISSIBLE UNDER LAW. 13. NOW, WE SHALL GO TO THE CASE LAWS RELIED UPON B Y THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. THE A.R. RELIED UPON HONBLE BOMBAY HIGH COURT JUDGMENT, IN THE CASE OF COMMISSI ONER OF INCOME TAX VS. MANJULA.J.SHAH (2013) 355 ITR 474 (BOM). TH E HONBLE COURT, WHILE CONSIDERING THE ISSUE OF COST INFLATION INDEX , FOR COMPUTATION OF COST OF ACQUISITION WHEN THE CAPITAL ASSET WAS ACQU IRED BY WAY OF MODES SPECIFIED UNDER SEC. 49(1)(II) OF THE ACT, HELD THA T THE COST INFLATION INDEX HAS TO BE APPLIED FROM THE DATE THE CAPITAL ASSET W AS FIRST HELD BY PREVIOUS OWNER. THE RELEVANT PORTION IS REPRODUCED HEREINUNDER. THE INDEXED COST OF ACQUISITION HAS TO BE DETERMIN ED WITH REFERENCE TO THE COST INFLATION INDEX FOR THE FIRST YEAR IN WHICH THE CAPITAL ASSET WAS HELD BY THE ASSESSEE. SINCE THE EXPRESSION HELD BY THE ASSESSEE IS NOT DEFINED UN DER S. 48, THAT EXPRESSION HAS TO BE UNDERSTOOD AS DEFINED UNDER S. 2. EXPLANATION 1(I)( B) TO S. 2(42A) PROVIDES THAT IN DETERMINING THE PERIOD FOR WHICH AN ASSET IS HELD B Y AN ASSESSEE UNDER A GIFT, THE PERIOD FOR WHICH THE SAID ASSET WAS HELD BY THE PREVIOUS O WNER SHALL BE INCLUDED. AS THE PREVIOUS OWNER HELD THE CAPITAL ASSET FROM 29TH JAN ., 1993, AS PER EXPLN. 1(I)(B) TO S. 2(42A), THE ASSESSEE IS DEEMED TO HAVE HELD THE CAP ITAL ASSET FROM 29TH JAN., 1993. BY REASON OF THE DEEMED HOLDING OF THE ASSET FROM 29TH JAN., 1993, THE ASSESSEE IS DEEMED TO HAVE HELD THE ASSET AS A LONG-TERM CAPITAL ASSET . IF THE LONG-TERM CAPITAL GAINS LIABILITY HAS TO BE COMPUTED UNDER S. 48 BY TREATING THAT THE ASSESSEE HELD THE CAPITAL ASSET FROM 29TH JAN., 1993, THEN, NATURALLY IN DETERMINING THE INDEXED COST OF ACQUISITION UNDER S. 48, THE ASSESSEE MUST BE TREATED TO HAVE HELD THE A SSET FROM 29TH JAN., 1993 AND ACCORDINGLY THE COST INFLATION INDEX FOR 1992-93 WO ULD BE APPLICABLE IN DETERMINING THE INDEXED COST OF ACQUISITION. IF THE ARGUMENT OF THE REVENUE THAT THE DEEMING FICTION CONTAINED IN EXPLN. 1(I)(B) TO S. 2(42A) CANNOT BE APPLIED IN COMPUTING THE CAPITAL GAINS UNDER S. 48 IS ACCEPTED, THEN, THE ASSESSEE WOULD N OT BE LIABLE FOR LONG-TERM CAPITAL ITA NO.380/VIZAG/2015 SRINIVASA RAO TURLAPATI, VIJAYAWADA 15 GAINS TAX, BECAUSE, IT IS ONLY BY APPLYING THE DEEM ED FICTION CONTAINED IN EXPLN. 1(I)(B) TO S. 2(42A) AND S. 49(1)(II), THE ASSESSEE IS DEEM ED TO HAVE HELD THE ASSET FROM 29TH JAN., 1993 AND DEEMED TO HAVE INCURRED THE COST OF ACQUISITION AND ACCORDINGLY MADE LIABLE FOR THE LONG-TERM CAPITAL GAINS TAX. THEREFO RE, WHEN THE LEGISLATURE BY INTRODUCING THE DEEMING FICTION SEEKS TO TAX THE GAINS ARISING ON TRANSFER OF A CAPITAL ASSET ACQUIRED UNDER A GIFT OR WILL AND THE CAPITAL GAINS UNDER S. 48 HAS TO BE COMPUTED BY APPLYING THE DEEMED FICTION, IT IS NOT POSSIBLE TO ACCEPT THE CO NTENTION OF REVENUE THAT THE FICTION CONTAINED IN EXPLN. 1(I)(B) TO S. 2(42A) CANNOT BE APPLIED IN DETERMINING THE INDEXED COST OF ACQUISITION UNDER S. 48. (PARAS 17 & 18) IT IS TRUE THAT THE WORDS OF A STATUTE ARE TO BE UN DERSTOOD IN THEIR NATURAL AND ORDINARY SENSE UNLESS THE OBJECT OF THE STATUTE SUGGESTS TO THE CONTRARY. THUS, IN CONSTRUING THE WORDS ASSET WAS HELD BY THE ASSESSEE IN CL. (III) OF EXPLN. TO S. 48, ONE HAS TO SEE THE OBJECT WITH WHICH THE SAID WORDS ARE USED IN THE ST ATUTE. IF ONE READS EXPLN. 1(I)(B) TO S. 2(42A) TOGETHER WITH SS. 48 AND 49, IT BECOMES ABSO LUTELY CLEAR THAT THE OBJECT OF THE STATUTE IS NOT MERELY TO TAX THE CAPITAL GAINS ARIS ING ON TRANSFER OF A CAPITAL ASSET ACQUIRED BY AN ASSESSEE BY INCURRING THE COST OF AC QUISITION, BUT ALSO TO TAX THE GAINS ARISING ON TRANSFER OF A CAPITAL ASSET INTER ALIA A CQUIRED BY AN ASSESSEE UNDER A GIFT OR WILL AS PROVIDED UNDER S. 49 WHERE THE ASSESSEE IS DEEME D TO HAVE INCURRED THE COST OF ACQUISITION. THEREFORE, IF THE OBJECT OF THE LEGISL ATURE IS TO TAX THE GAINS ARISING ON TRANSFER OF A CAPITAL ASSET ACQUIRED UNDER A GIFT O R WILL BY INCLUDING THE PERIOD FOR WHICH THE SAID ASSET WAS HELD BY THE PREVIOUS OWNER IN DE TERMINING THE PERIOD FOR WHICH THE SAID ASSET WAS HELD BY THE ASSESSEE, THEN THAT OBJE CT CANNOT BE DEFEATED BY EXCLUDING THE PERIOD FOR WHICH THE SAID ASSET WAS HELD BY THE PREVIOUS OWNER WHILE DETERMINING THE INDEXED COST OF ACQUISITION OF THAT ASSET TO THE AS SESSEE. IN OTHER WORDS, IN THE ABSENCE OF ANY INDICATION IN CL. (III) OF THE EXPLANATION T O S. 48 THAT THE WORDS ASSET WAS HELD BY THE ASSESSEE HAS TO BE CONSTRUED DIFFERENTLY, THE SAID WORDS SHOULD BE CONSTRUED IN ACCORDANCE WITH THE OBJECT OF THE STATUTE, THAT IS, IN THE MANNER SET OUT IN EXPLN. 1(I)(B) TO S. 2(42A). IF THE MEANING GIVEN IN S. 2(42A) IS NOT ADOPTED IN CONSTRUING THE WORDS USED IN S. 48, THEN THE GAINS ARISING ON TRANSFER O F A CAPITAL ASSET ACQUIRED UNDER A GIFT OR WILL WILL BE OUTSIDE THE PURVIEW OF THE CAPITAL GAINS TAX WHICH IS NOT INTENDED BY THE LEGISLATURE. THEREFORE, THE ARGUMENT OF THE REVENUE WHICH RUNS COUNTER TO THE LEGISLATIVE INTENT CANNOT BE ACCEPTED. (PARAS 19 & 20) APART FROM THE ABOVE, S. 55(1)(B)(2)(II) PROVIDES T HAT WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE BY ANY OF THE MODES SP ECIFIED UNDER S. 49(1), NOT ONLY THE COST OF IMPROVEMENT INCURRED BY THE ASSESSEE BUT AL SO THE COST OF IMPROVEMENT INCURRED BY THE PREVIOUS OWNER SHALL BE DEDUCTED FROM THE TO TAL CONSIDERATION RECEIVED BY THE ASSESSEE WHILE COMPUTING THE CAPITAL GAINS UNDER S. 48. THE QUESTION OF DEDUCTING THE COST OF IMPROVEMENT INCURRED BY THE PREVIOUS OWNER IN THE CASE OF AN ASSESSEE COVERED UNDER S. 49(1) WOULD ARISE ONLY IF THE PERIOD FOR W HICH THE ASSET WAS HELD BY THE PREVIOUS OWNER IS INCLUDED IN DETERMINING THE PERIO D FOR WHICH THE ASSET WAS HELD BY THE ASSESSEE. THEREFORE, IT IS REASONABLE TO HOLD THAT IN THE CASE OF AN ASSESSEE COVERED UNDER S. 49(1), THE CAPITAL GAINS LIABILITY HAS TO BE COMPUTED BY CONSIDERING THAT THE ASSESSEE HELD THE SAID ASSET FROM THE DATE IT WAS H ELD BY THE PREVIOUS OWNER AND THE SAME ANALOGY HAS ALSO TO BE APPLIED IN DETERMINING THE INDEXED COST OF ACQUISITION. (PARA 21) THE OBJECT OF GIVING RELIEF TO AN ASSESSEE BY ALLOW ING INDEXATION IS WITH A VIEW TO OFFSET THE EFFECT OF INFLATION. AS PER THE CBDT CIRCULAR N O. 636 DT. 31ST AUG., 1992 A FAIR METHOD OF ALLOWING RELIEF BY WAY OF INDEXATION IS T O LINK IT TO THE PERIOD OF HOLDING THE ITA NO.380/VIZAG/2015 SRINIVASA RAO TURLAPATI, VIJAYAWADA 16 ASSET. THE SAID CIRCULAR FURTHER PROVIDES THAT THE COST OF ACQUISITION AND THE COST OF IMPROVEMENT HAVE TO BE INFLATED TO ARRIVE AT THE IN DEXED COST OF ACQUISITION AND THE INDEXED COST OF IMPROVEMENT AND THEN DEDUCT THE SAM E FROM THE SALE CONSIDERATION TO ARRIVE AT THE LONG-TERM CAPITAL GAINS. IF INDEXATIO N IS LINKED TO THE PERIOD OF HOLDING THE ASSET AND IN THE CASE OF AN ASSESSEE COVERED UNDER S. 49(1), THE PERIOD OF HOLDING THE ASSET HAS TO BE DETERMINED BY INCLUDING THE PERIOD FOR WHICH THE SAID ASSET WAS HELD BY THE PREVIOUS OWNER, THEN OBVIOUSLY IN ARRIVING AT T HE INDEXATION, THE FIRST YEAR IN WHICH THE SAID ASSET WAS HELD BY THE PREVIOUS OWNER WOULD BE THE FIRST YEAR FOR WHICH THE SAID ASSET WAS HELD BY THE ASSESSEE. (PARA 22) 14. THE HONBLE HIGH COURT OF KARNATAKA, IN THE CAS E OF COMMISSIONER OF INCOME TAX VS. SMT. KAVERI THIMMAIAH (2014) 369 ITR 81, WHILE DEALING WITH SIMILAR ISSUE, SET ASIDE THE ORDER PASSED BY C IT UNDER SEC. 263 OF THE ACT. THE RELEVANT PORTION IS REPRODUCED HEREINUNDER . DEFINITION OF INDEXED COST OF ACQUISITION, THE W ORD USED ARE, IN WHICH THE ASSET WAS HELD BY THE ASSESSEE, A HARMONIOUS READING OF SECT IONS 48 AND 49 MAKES IT CLEAR FOR THE PURPOSE OF INDEXED COST OF ACQUISITION, IT HA S TO BE UNDERSTOOD AS THE FIRST YEAR IN WHICH THE PREVIOUS OWNER HELD THE SAID PROPERTY. OT HERWISE, IF THE DATE OF INHERITANCE IS TAKEN INTO CONSIDERATION, THEN THE COST OF ACQUISIT ION OF THE ASSET ON THAT DATE CORRESPONDING TO THE MARKET VALUE IS TO BE TAKEN IN TO CONSIDERATION. OTHERWISE, TAKE THE COST OF ACQUISITION ON THE DAY THE PREVIOUS OWNER A CQUIRED IT AND APPLY THE INDEXED COST OF ACQUISITION AND THEN CALCULATE THE CAPITAL GAINS AND THE TAX PAYABLE. THAT IS PRECISELY WHAT HAS BEEN HELD BY THE BOMBAY HIGH COU RT IN THE AFORESAID JUDGMENT WHICH IN HIGH COURT VIEW IS THE CORRECT LEGAL DECISION. TRIBUNAL WAS JUSTIFIED IN FOLLOWING THE JUDGMENT OF THE BOMBAY HIGH COURT AND IN SETTING-ASIDE THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX. THEREFORE, THE SUBSTANTIAL QUESTION OF LAW FRAMED IS ANSWERED IN F AVOUR OF THE ASSESSES AND AGAINST THE REVENUE. 15. AN IDENTICAL ISSUE CAME UP FOR CONSIDERATION BE FORE COORDINATE BENCH OF THIS TRIBUNAL, IN THE CASE OF SRI SAI CONT RACTORS VS. ITO, WARD-1, IN ITA.NO. 109/VIZ/2012, WHEREIN THE TRIBUNAL AFTER CONSIDERING THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF ANDHRA PRADE SH, IN THE CASE OF SPECTRA SHARES AND SCRIPS PVT LTD VS. CIT, (2013) 3 54 ITR 35(AP) AND HONBLE DELHI HIGH COURT JUDGMENT IN THE CASE OF CI T VS. SUNBEAM AUTO ITA NO.380/VIZAG/2015 SRINIVASA RAO TURLAPATI, VIJAYAWADA 17 LTD (2011) 332 ITR 167 (DEL), HELD THAT ONCE THE A. O. EXAMINED THE ISSUES, THE CIT CANNOT ASSUME JURISDICTION ON THE S AME ISSUES WHICH WAS ALREADY CONSIDERED BY THE A.O., ON THE GUISE OF REVISION BY STATING THAT THE A.O. HAS CONDUCTED INADEQUATE ENQUIRY OR T HERE IS A LACK OF ENQUIRY. THE RELEVANT PORTION IS REPRODUCED HEREINU NDER: 10. TO INVOKE THE PROVISIONS OF SECTION 263 OF THE ACT, THE TWIN CONDITIONS MUST BE SATISFIED I.E. THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND FURTHER IT MUST BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. UNLESS BOTH CONDITIONS ARE SATISFIED, THE CIT CANNO T ASSUME JURISDICTION TO PASS ORDER U/S 263 OF THE ACT. IT IS NOT NECESSARY THAT EVERY ORDER WHICH IS PREJUDICIAL TO THE INTEREST OF REVENUE IS ALSO E RRONEOUS. UNLESS THE A.OS ORDER IS NOT ERRONEOUS, NO ACTION CAN BE TAKEN BY T HE CIT U/S 263 OF THE ACT, THIS IS BECAUSE THE TWIN CONDITIONS I.E. (1) T HE ORDER IS ERRONEOUS AND (2) THE SAME IS ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE ARE NOT CO- EXISTS. IN THE PRESENT CASE, THE A.O. HAS CONDUCTE D ENQUIRY BEFORE ALLOWING DEDUCTION TOWARDS WAGES AND CENTERING EXPE NSES AND ALSO EXAMINED THE POINTS ON WHICH THE CIT WANTS FURTHER VERIFICATION. THE ASSESSING OFFICER AFTER CAREFULLY EXAMINED THE BOOK S OF ACCOUNTS AND RELEVANT VOUCHERS FURNISHED BY THE ASSESSEE PASSED THE ASSESSMENT ORDER AS INDICATED IN HIS ORDER, WHICH IS CLEARLY EVIDENT FROM THE ASSESSMENT ORDER. THE CONTENTION OF THE CIT WAS THAT THE A.O. HAS NOT CONDUCTED PROPER ENQUIRY AND ALSO NOT APPLIED HIS MIND BEFORE ALLOWING THE DEDUCTION. BUT, WE DO NOT AGREE WITH THE CIT FOR T HE REASON THAT THERE IS A DISTINCTION BETWEEN LACK OF ENQUIRY AND INADEQUAT E ENQUIRY. IF THERE IS AN INADEQUATE ENQUIRY THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE CIT TO ASSUME JURISDICTION U/S 263 OF THE ACT, MERELY BECA USE HE HAS A DIFFERENT OPINION IN THE MATTER. THE CIT CAN DO THIS ONLY, W HEN THERE IS A LACK OF ENQUIRY BY THE ASSESSING OFFICER. IN THE PRESENT CA SE, THE ASSESSMENT ORDER IS DETAILED ONE AND ALSO, THE A.O. HAS PASSED A REMARKS IN THE ASSESSMENT ORDER ON TWO ISSUES, ON WHICH THE CIT AS SUMED JURISDICTION, I.E. DISALLOWANCE OF ROUND SOME EXPENDITURE OF RS. 1,00,000/- UNDER THE HEAD WAGES AND CENTERING CHARGES AND ALSO PARTNERS CAPITAL ACCOUNTS, WHERE THE ADDITION WAS RS. 66,825/-.THE A.O. HAD CA LLED FOR EXPLANATION AND THE ASSESSEE HAS FURNISHED ITS EXPLANATION. BU T, THE CIT WAS OF THE OPINION THAT THE ASSESSING OFFICER COULD HAVE DO WE LL TO EXPLORE THE POSSIBILITY OF REJECTING THE BOOKS OF ACCOUNTS AND ESTIMATE THE PROFIT. ACCORDING TO CIT, THE ASSESSING OFFICER HAS CONDUCT ED ENQUIRY BUT, IN ADEQUATE, THEREFORE HE WANTED FURTHER ENQUIRY ON TH E ISSUE ON WHICH HE ASSUMED JURISDICTION. THIS FACT HAD NOT BEEN DISPUT ED BY THE REVENUE. THE COMMISSIONER CANNOT INITIATE REVISION PROCEEDINGS, WITH A VIEW TO CONDUCT FISHING AND REVOLVING ENQUIRY IN THE MATTERS WHICH ARE ALREADY EXAMINED ITA NO.380/VIZAG/2015 SRINIVASA RAO TURLAPATI, VIJAYAWADA 18 BY THE A.O. THE DEPARTMENT CANNOT DO FRESH ASSESSME NT IN THE GUISE OF REVISION ON THE MATTERS WHICH ARE EXAMINED AND CONC LUDED BY THE A.O. THE A.O. BEING A QUASI JUDICIAL AUTHORITY, SHALL HA VE THE AUTHORITY TO EXERCISE RIGHT JUDGEMENT AND DISCRETION ON THE BASI S OF INFORMATION AVAILABLE BEFORE HIM. IN THE PRESENT CASE ON HAND, THE ASSESSING OFFICER AFTER CONSIDERING VOUCHERS, MADE AN ROUND SOME ADDI TION OF RS.1,00,000/- WHICH IS ONE OF THE POSSIBLE VIEW AVAILABLE FOR HIM , WHICH THE CIT SHALL NOT TERM IT AS LACK OF ENQUIRY OR NON APPLICATION OF MI ND. THUS, IT CANNOT BE SAID THAT IT IS A CASE OF LACK OF ENQUIRY OR NON AP PLICATION OF MIND. 16. IN THIS VIEW OF THE MATTER AND ALSO APPLYING TH E RATIOS OF THE JUDGMENTS DISCUSSED ABOVE, WE ARE OF THE OPINION TH AT THE ASSESSMENT ORDER UNDER SEC. 143(3) PASSED BY THE A.O. IS NOT E RRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. T HEREFORE, WE QUASHED THE ORDER PASSED BY THE CIT U/S 263 OF THE ACT AND RESTORE THE ASSESSMENT ORDER. 17. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 22 ND JAN16. SD/- SD/- (. ) ( . ) ( V. DURGA RAO ) ( G. MANJUNATHA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER , /VISAKHAPATNAM: 0 / DATED : 22.01.2016 VG/SPS ITA NO.380/VIZAG/2015 SRINIVASA RAO TURLAPATI, VIJAYAWADA 19 # 2, 3,/ COPY OF THE ORDER FORWARDED TO :- 1. / THE APPELLANT SRI SRINIVASA RAO TURLAPATI, FOF4, KODURU RESIDENCY , VISHNU VARDHAN RAO STREET, LABBIPETA, VIJAYAWADA-52 0 010. 2. #$ / THE RESPONDENT ACIT CIRCLE-1(1), VIJAYAWADA 3. 5 / THE CIT, VIJAYAWADA 4. 5 () / THE CIT (A), VIJAYAWADA 5. , # :, ( : , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // >? : ( SR.PRIVATE SECRETARY ) ( : , , / ITAT, VISAKHAPATNAM