M/s. Kothi Steel Ltd., Godhra V. The CIT-III, Baroda

ITA 389/AHD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9583 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 02-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 07-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: UKTI SHAH; S N SOPARKAR
• Keywords: Related party transaction; Gift; Revision of order; Depreciation; Question of law
• Section: 143(3); 54F; 54; 263; 63; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 389/AHD/2014 (ASSESSMENT YEAR: 2009-10) M/S. KOTHI STEEL LTD., VEJALPUR ROAD, P.B. NO. 17, VILLAGE CHIKHODRA, TALUKA GODHRAS V/S CIT-III, AYKAR BHAWAN, BARODA (APPELLANT) (RESPONDENT) PAN: AAACK9952G APPELLANT BY: SHRI S. N. SOPARKAR & UKTI SHAH, AR RESPONDENT BY : SHRI SANJAY AGARWAL, CIT/ D. R. ( )/ ORDER DATE OF HEARING : 02 -01-201 7 DATE OF PRONOUNCEMENT : 10 -01-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. WITH THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE V ALIDITY OF THE ORDER OF THE LD. CIT-III, BARODA DATED 29.11.2013 MADE U/S. 263 OF THE ACT. THE APPELLANT CONTENDS THAT THE ASSESSMENT ORDER DATED 23.11.2011 MADE U/S. ITA NO. 389/ AHD/2014 . A.Y. 2009-10 2 143(3) OF THE ACT IS NEITHER ERRONEOUS NOR PREJUDIC IAL TO THE INTEREST OF THE REVENUE. THEREFORE, THE LD. COMMISSIONER ERRED IN I NVOKING THE POWERS VESTED UPON HIM BY THE PROVISIONS OF SECTION 263 OF THE ACT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AT LENGTH AND WIT H THE ASSISTANCE OF THE LD. SENIOR COUNSEL, WE HAVE CAREFULLY PERUSED THE R ELEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECORD IN THE FORM OF A PAPER BOOK IN THE LIGHT OF RULE 18(6) OF THE INCOME TAX APPELLATE TRIBUNAL RULES. T HE LD. COMMISSIONER VIDE NOTICE DATED 21.08.2013 INITIATED PROCEEDINGS U/S. 263 OF THE ACT, THE SAID NOTICE READS AS UNDER:- NO. BRD/CIT-III/HQ/263/KSL/2013-14 DATE: 21.08.2013 TO, THE PRINCIPAL OFFICER, KOTHI STEEL LTD., VILL: CHIKODRA, TAL: GODHRA SIR, SUB; PROCEEDINGS UNDER SECTION 263 OF THE INCOME TAX ACT , 1961- ASSESSMENT FOR A.Y, 2009-10- NOTICE UNDER SECTION 2 63 (1) OF I.T. ACT REGARDING. ASSESSMENT FOR A.Y, 2009-10 IN YOUR CASE HAD BEEN C OMPLETED U/S 143(3} ON 23.11.2011 BY THE ASSISTANT COMMISSIONER OF INCOME TAX, PANCHMAHAL CIRCLE, GODHRA. ON EXAMINATION OF RECORDS, IT IS FOUND THAT THE ASSESSMENT ORDER IN ITA NO. 389/ AHD/2014 . A.Y. 2009-10 3 QUESTION WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDIC IAL TO THE INTEREST OF REVENUE FOR THE REASONS MENTIONED BELOW: 1) THE BALANCE SHEET AS ON 31.3.2009 INDICATES ADDITIO N TO UNSECURED LOANS DURING THE YEAR OF RS. 42,16,500/- , DETAILS FILED IN THE COURSE OF-SCRUTINY INDICATE THE SAME TO BE DEPOSITS RECEIVED FROM DIRE CTORS, NAMELY SHRI SULERNAN A KOTHI OF RS. 19,64,000/- AND SHRI MOHAMMAD FIRDOS A KOTHI OF RS. 22,52,500/-. BOTH THESE PERSONS NOT ASSESSED TO TAX , AND THE ONLY SOURCE OF INCOME BY WAY OF AGRICULTURAL INCOME. FROM THE DOCU MENTS FILED IN SUPPORT OF AGRICULTURAL INCOME OF SHRI SULERNAN KOTHI, IT IS S EEN THAT THERE IS NO TRANSACTION OF ADVANCING SUM OF RS.19,64,000/- TO Y OU DURING THE YEAR IN HIS BANK STATEMENT. HOWEVER, NO FURTHER ENQUIRY / VERIF ICATION IN THIS REGARD AS WELL AS IN RESPECT OF GENUINENESS OF AGRICULTURAL I NCOME OF SUCH HUGE MAGNITUDE WAS CARRIED OUT BY THE A.O, DURING ASSESS MENT PROCEEDINGS. CREDIT WORTHINESS OF THE LENDERS / DEPOSITORS THEREFORE RE MAINED TO BE VERIFIED. 2) FROM THE RECORDS, IT IS SEEN THAT DURING THE YEAR U NDER CONSIDERATION, THERE WAS INCREASE IN SHARE CAPITAL BY RS. 60.5 LAKH, WHI LE ADDITION TO SHARE PREMIUM WAS OF RS. 5,445 CRORES (AT A PREMIUM OF RS .90 PER SHARE). FURTHER, IT IS OBSERVED THAT THE SAID SHARES WERE ALLOTTED TO C OMPANIES BASED IN CALCUTTA, MOST OF THESE COMPANIES DECLARED GROSS INCOME AS NI L. BANK STATEMENTS OF THESE INVESTOR COMPANIES INDICATE THAT THERE WERE I MMEDIATE CREDITS OF THE SAME AMOUNT IN THEIR BANK ACCOUNTS BEFORE CHEQUES W ERE ISSUED TO THE ASSESSEE COMPANY FOR INVESTMENT IN SHARES. FURTHER, WHEN THE ASSESSEE COMPANY WAS RUNNING INTO LOSS, COLLECTION OF HEFTY PREMIUM ON ISSUE OF SHARES WAS HIGHLY UNUSUAL, CREATING DOUBT ABOUT GENUINENES S OF THE TRANSACTIONS. JUSTIFICATION AND WORKING OF SHARE PREMIUM ON ISSUE OF THESE SHARES WAS THEREFORE REQUIRED TO BE ENQUIRED INTO DURING THE C OURSE OF SCRUTINY, WHICH WAS NOT DONE. CONSIDERING VARIOUS ASPECTS AS ABOVE, VERIFICATION REGARDING ITA NO. 389/ AHD/2014 . A.Y. 2009-10 4 FRESH SHARE CAPITAL / SHARE PREMIUM SHOULD HAVE BEE N DONE DURING SCRUTINY ASSESSMENT PROCEEDINGS, WHICH WAS NOT DONE. 3) ON PERUSAL OF SCHEDULE TO ACCOUNTS BEING ADVANCE TO SU PPLIERS, IT IS GATHERED THAT AN AMOUNT OF RS. 55.31 LACS, STOOD OUTSTANDING AS ON 31/03/2009, AGAINST A RELATED PARTY VIZ: KOTHI TRADERS. DURING ASSESSMENT PROCEEDINGS, NO ENQUIRY OR VERIFICATION REGARDING THE NATURE OF REL ATED PARTY TRANSACTION WAS CARRIED OUT. 4) MANY EXPENSES DEBITED VIZ INTEREST ON SERVICE TA X, INTEREST ON ELECTRICITY BILL ETC HA& NOT BEEN VERIFIED FROM THE ANGLE OF SAME BE ING PENAL IN NATURE, 5) THERE WAS GROSS LOSS INCURRED IN MANUFACTURING ACTI VITY BY THE COMPANY WHICH WAS EXPLAINED TO BE ON ACCOUNT OF RISE IN COST OF R AW MATERIAL IN THIRD QUARTER OF THE PREVIOUS YEAR. SUCH EXPLANATION REQUIRED FUR THER VERIFICATION ON A.O.'S PART OF PURCHASES AND SALES FROM PARTIES CONCERNED, WHICH WAS NOT DONE. 2. YOU ARE HEREBY GIVEN AN OPPORTUNITY OF BEING HE ARD AND TO SHOW CAUSE AS TO WHY THE AFORESAID ASSESSMENT MADE BY THE ASSESSING OFFICER FOR THE A.Y. 2009-10, BE NOT MODIFIED OR CANCELLED UNDER SECTION 263 OF T HE ACT WITH DIRECTIONS TO FRAME IT AFRESH. FOR THIS PURPOSE, YOU MAY APPEAR BEFORE THE UNDERSIGNED IN PERSON OR THROUGH AN AUTHORIZED REPRESENTATIVE ON 27 TH AUGUST,2013 AT 11.30 A.M. YOURS FAITHFULLY [RAJAT BANSAL] COMMISSIONER OF INCOME-TAX-III BARODA ITA NO. 389/ AHD/2014 . A.Y. 2009-10 5 3. WE WILL CONSIDER EACH ISSUE RAISED BY THE LD. COMMI SSIONER IN HIS AFOREMENTIONED NOTICE ONE BY ONE WITH THE QUERIES R AISED DURING THE ASSESSMENT PROCEEDINGS AND THE RELEVANT REPLY OF TH E ASSESSEE ALONG WITH THE RELATED DOCUMENTARY EVIDENCES. 4. (I) THE FIRST ISSUE RELATES TO THE UNSECURED LOANS OF RS. 42,16,500/-. THE LD. COMMISSIONER IS OF THE VIEW THAT THE A.O. HAS NOT D ONE ANY VERIFICATION REGARDING THE GENUINENESS OF AGRICULTURAL INCOME OF SUCH HUGE MAGNITUDE SHOWN BY THE CASH CREDITOR. 5. WE FIND THAT THE ASSESSEE HAS SHOWN DEPOSITS FROM S HRI SULEMAN A. KOTHI RS. 19,64,000/- AND FROM SHRI MOHAMMAD FIRDOS A KOT HI RS. 22,52,000/-. WE ALSO FIND THAT CONFIRMATION FROM THESE TWO PARTI ES WERE FILED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND THE SAME A RE EXHIBITED AT PAGES 93 AND 140 OF THE PAPER BOOK. WE ALSO FIND THAT FRO M PAGES 94 TO 135 OF THE PAPER BOOK. THE ASSESSEE HAS FILED ALL THE DOCU MENTARY EVIDENCES RELATING TO THE SALE OF AGRICULTURAL PRODUCE BY SHR I SULEMAN A KOTHI AND FROM PAGES 141 TO 171 SIMILAR EVIDENCES ARE FILED I N THE CASE OF SHRI MOHAMMAD FIRDOS A KOTHI. WE ALSO FIND FROM PAGES 13 6 TO 139 OF THE PAPER BOOK, BANK STATEMENTS OF SHRI SULEMAN A KOTHI AND FROM PAGES 172 AND 173 OF THE PAPER BOOK BANK STATEMENTS OF SHRI M OHAMMAD FIRDOS A KOTHI. 6. IT IS THE SAY OF THE LD. D.R. THAT SINCE THE A.O. H AS NOT MADE ANY MENTION ABOUT THE VERIFICATION OF THESE DOCUMENTS; THE ASSE SSMENT ORDER BECOMES ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. WE DO NOT FIND ITA NO. 389/ AHD/2014 . A.Y. 2009-10 6 ANY FORCE IN THIS CONTENTION OF THE LD. D.R. THE HO NBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GABRIEL INDIA LTD. 203 ITR 1 08 HAS HELD THAT THE DECISION OF THE ITO CANNOT BE HELD TO BE ERRONEOUS SIMPLY BECAUSE IN HIS ORDER HE DID NOT MADE AN ELABORATE DISCUSSION IN TH IS REGARD.. 7. THE ASSESSING OFFICER HAS TAKEN A VIEW WHICH MAY BE DIFFERENT FROM THE VIEW OF THE LD. COMMISSIONER AND ASSUMING THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IS A LOSS TO THE REVENUE, BUT THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. 243 ITR 83 HAS HELD THAT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSE SSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVE NUE. 8. (II) THE SECOND ISSUE RELATES TO THE INCREASE IN SH ARE CAPITAL BY RS. 60.5 LAKHS WHILE ADDITION TO SHARE PREMIUM WAS RS. 5.445 CRORE S. THE LD. COMMISSIONER IS OF THE VIEW THAT CONSIDERING VARIOU S ASPECTS, VERIFICATION REGARDING FRESH SHARER CAPITAL/SHARE PREMIUM SHOULD HAVE BEEN DONE DURING THE SCRUTINY ASSESSMENT PROCEEDINGS WHICH WA S NOT DONE. 9. WE FIND THAT DURING THE COURSE OF THE SCRUTINY ASSE SSMENT PROCEEDINGS VIDE A SUBMISSION DATED 04.11.2011 AT POINT NO. 16, THE ASSESSEE HAS EXPLAINED AS UNDER:- 16. ADDITION IN SHARE CAPITAL : THERE WAS AN ADDITION TO SHARE CAPITAL OF THE COMPANY DURING THE RELEVANT PREVIOUS YEAR. PLEASE R EFER ANNEXURE-XXXII PAGE NO.329 TO 528 FOR THE DETAILS OF ADDITION TO SHARE CAPITAL OF THE COMPANY. IT INCLUDES COMPLETE DETAILS OF SHARE HOLDERS, THERE A PPLICATIONS AND OTHER RELEVANT ITA NO. 389/ AHD/2014 . A.Y. 2009-10 7 DETAILS. THE SHARES WERE ISSUED ON PREMIUM TO THE S HARE HOLDERS. THE PREMIUM AMOUNT HAS BEEN CREDITED TO RESERVE ACCOUNT. 17. SHARE APPLICATION MONEY : THERE WAS AN OPENING BALANCE OF RS. 1,44,49,7057- IN SHARE APPLICATION ACCOUNT AT THE B EGINNING OF THE YEAR. DURING THE RELEVANT PREVIOUS YEAR SHARES INCLUDING PREMIUM AMOUNTING TO RS. 1,07,50000/- WERE ISSUED TO APPLICANTS. THE BALANCE IN SHARE APPLICATION ACCOUNT THUS REMAINED TO RS.36,99,705/-. NO ADDITION TO THI S ACCOUNT WAS THERE IN THE RELEVANT PREVIOUS YEAR. 10. WE FIND THAT FROM EXHIBIT 174 TO EXHIBIT 306, THE A SSESSEE HAS FILED RELATED DOCUMENTARY EVIDENCES/COPIES OF LEDGER ACCOUNT/COPI ES OF I.T. RETURNS OF THE APPLICANTS ALONG WITH THEIR RESPECTIVE COPIES O F BANK STATEMENTS. 11. THUS, IT CANNOT BE SAID THAT THE ASSESSEE DID NOT R ESPONDED TO THE SPECIFIC QUERY RAISED BY THE A.O. DURING THE COURSE OF THE S CRUTINY ASSESSMENT PROCEEDINGS. THE RATIOS LAID DOWN BY THE HONBLE BO MBAY HIGH COURT IN THE CASE OF GABRIEL INDIA LTD. (SUPRA) SQUARELY APPLY T O THE FACTS IN ISSUE. THE SUMMARY OF EXHIBIT 174 TO 306 CAN BE MORE APPRECIAT ED BY THE FOLLOWING CHART:- SR NO. PARTY PAN EVIDENCES SUBMITTED P/B PAGE 1 SLOW & SOUND ELECTRONICS PVT. LTD. AADCS 8092 A - BOARD RESOLUTION - PAN CARD COPY - CERTIFICATE OF INCORPORATION - CERTIFICATE OF REGISTRATION ACKNOWLEDGMENT OF RETURN - BANK STATEMENT 177 - 182 ITA NO. 389/ AHD/2014 . A.Y. 2009-10 8 2 ELEGANCE TRADE & HOLDINGS PVT. LTD. AAACE7011 L - BOARD RESOLUTION - PAN CARD COPY - CERTIFICATE OF INCORPORATION - CERTIFICATE OF REGISTRATION - ACKNOWLEDGMENT OF RETURN - BANK STATEMENT 183 - 188 O ELGIN SALES PROM OTION PVT. LTD. AAACE 5790 J - BOARD RESOLUTION - PAN CARD COPY - CERTIFICATE OF INCORPORATION - CERTIFICATE OF REGISTRATION - ACKNOWLEDGMENT OF RETURN - BANK STATEMENT 189 - 194 4 TRISTAR AGENCIES PVT. LTD. AAACT 9757 E - BOARD RESOLUTION - PAN CARD COPY - CERTIFICATE OF INCORPORATION - CERTIFICATE OF REGISTRATION - ACKNOWLEDGMENT OF RETURN - BANK STATEMENT 195 - 200 5 REDSTRIP MERCHANTS PVT. LTD. AABCR 3447 E - BOARD RESOLUTION - PAN CARD COPY - CERTIFICATE OF INCORPORATION - CERTIFICATE OF REGISTRATION - ACKNOWLEDGMENT OF RETURN - BANK STATEMENT 201 -206 6 CARELINK VYAPAAR PVT. LTD. AABCC 0963 G - BOARD RESOLUTION - PAN CARD COPY - CERTIFICATE OF INCORPORATION - CERTIFICATE OF REGISTRATION - ACKNOWLEDGMENT OF RETURN - BANK STATEMENT 207 - 212 7 KHUSHI VYAPAAR PVT. LTD. AADCK 0862 E - BOARD RESOLUTION - PAN CARD COPY - CERTIFICATE OF INCORPORATION - ACKNOWLEDGMENT OF RETURN - BANK STATEMENT 213 - 218 SRNO. PARTY PAN EVIDENCES SUBMITTED P/B PAGE ITA NO. 389/ AHD/2014 . A.Y. 2009-10 9 8 SIMPRO VANIJYA PVT. LTD. AAECS8186J - BOARD RESOLUTION - PAN CARD COPY - CERTIFICATE OF INCORPORATION - CERTIFICATE OF REGISTRATION - ACKNOWLEDGMENT OF RETURN FOR A.Y. 07-08 & 08-09 - BANK STATEMENT 219 - 225 9 WELON ADVISORY SERVICES PVT. LTD. AAACW 2230 R - BOARD RESOLUTION - PAN CARD COPY - CERTIFICATE OF INCORPORATION - CERTIFICATE OF REGISTRATION - ACKNOWLEDGMENT OF RETURN - BANK STATEMENT 226 - 231 10 ECHOLAC VINIMAY PVT. LTD. AAACE 5809 N - BOARD RESOLUTION - PAN CARD COPY - CERTIFICATE OF INCORPORATION - CERTIFICATE OF REGISTRATION - ACKNOWLEDGMENT OF RETURN - BANK STATEMENT 232 - 237 11 NILMANI BARTER PVT. LTD. AACCN 4445 R - BOARD RESOLUTION - PAN CARD COPY - CERTIFICATE OF INCORPORATION - ACKNOWLEDGMENT OF RETURN - BANK STATEMENT 238 - 243 12 BAKRA PRATISTHAN LTD. AABCB 3350 L - BOARD RESOLUTION - PAN CARD COPY - CERTIFICATE OF COMMENCEMENT OF BUSINESS - ACKNOWLEDGMENT OF RETURN - BANK STATEMENT 244 - 248 13 OLEANDER MANUFACTURERS & CREDIT PVT. LTD. AAACO 3452 D - B OARD RESOLUTION - PAN CARD COPY - CERTIFICATE OF INCORPORATION - CERTIFICATE OF REGISTRATION - ACKNOWLEDGMENT OF RETURN - BANK STATEMENT 249 - 255 ITA NO. 389/ AHD/2014 . A.Y. 2009-10 10 14 ACHI FINANCE & MANAGEMENT CONSULATANCY PVT. LTD. AACCA9158Q - BOARD RESOLUTION - PAN CARD COPY - CERTIFICATE OF INCORPORATION - CERTIFICATE OF REGISTRATION - ACKNOWLEDGMENT OF RETURN - BANK STATEMENT 256 - 261 15 S. K. STOCK DEALERS PVT. LTD. AADCS 7365 Q - BOARD RESOLUTION - PAN CARD COPY - CERTIFICATE OF INCORPORATION - CERTIFICATE OF REGISTRATION - ACKNOWLEDGMENT OF RETURN - BANK STATEMENT 262 - 269 16 RADIANT MERCHANDISE PVT. LTD. AABCR 3792 C - BOARD RESOLUTION - PAN CARD COPY - CERTIFICATE OF INCORPORATION - CERTIFICATE OF REGISTRATION - ACKNOWLEDGMENT OF RETURN - BANK STATEMENT 270 - 275 17 GALORE SUPPLIERS PVT. LTD. AAACG 9662 P - BOARD RESOLUTION - PAN CARD COPY - CERTIFICATE OF INCORPORATION - CERTIFICATE OF REGISTRATION - ACKNOWLEDGMENT OF RETURN - BANK STATEMENT 276 - 281 18 MSV FISCAL SERVICES PVT. LTD. AAC CM 1628B - BOARD RESOLUTION - PAN CARD COPY - CERTIFICATE OF INCORPORATION - CERTIFICATE OF REGISTRATION - ACKNOWLEDGMENT OF RETURN - BANK STATEMENT 282 - 287 19 SHUBH SUPPLIERS PVT. LTD. AAECS8192C - BOARD RESOLUTION - PAN CARD COPY - CERTIFICATE OF INCORPORATION - CERTIFICATE OF REGISTRATION - ACKNOWLEDGMENT OF RETURN - BANK STATEMENT 288 - 294 ITA NO. 389/ AHD/2014 . A.Y. 2009-10 11 20 NEWJET VYAPAAR PVT. LTD. AAACN 8446 Q - BOARD RESOLUTION - PAN CARD COPY - CERTIFICATE OF INCORPORATION - CERTIFICATE OF REGISTRATION - ACKNOWLEDGMENT OF RETURN - BANK STATEMENT 295 - 300 21 ROSEBERRY DISTRIBUTORS PVT. LTD. AACCR 7303 J - BOARD RESOLUTION - PAN CARD COPY - CERTIFICATE OF INCORPORATION - ACKNOWLEDGMENT OF RETURN - BANK STATEMENT 301 - 306 12. (III) THE THIRD ISSUE RELATES TO THE ADVANCE TO SUP PLIERS OF RS. 55,31,000/- AS ON 31.03.2009 AGAINST A RELATED PARTY M/S. KOTHI TR ADERS. THE LD. COMMISSIONER WAS OF THE OPINION THAT NO ENQUIRY OR VERIFICATION REGARDING THE NATURE OF RELATED PARTY TRANSACTION WAS CARRIED OUT. WE FIND FROM EXHIBIT 307 AND 308 OF THE PAPER BOOK, THE ASSESSEE HAD FILED THE COPY OF LEDGER ACCOUNT OF KOTHI TRADERS DURING THE COURSE O F THE ASSESSMENT PROCEEDINGS. 13. (IV)THE FOURTH ISSUE RELATES TO THE EXPENSES DEBITE D BY THE ASSESSEE RELATING TO INTEREST ON SERVICE TAX, INTEREST ON ELECTRICITY BILL ETC. THE LD. COMMISSIONER WAS OF THE VIEW THAT THE A.O. HAS NOT VERIFIED THE NATURE OF THESE EXPENSES. A PERUSAL OF THE ASSESSMENT ORDER S HOWS THAT THE A.O. HAS MADE ADDITION OF RS. 9,04,853/- BEING DISALLOWANCES OF CLAIM OF INTEREST ON SERVICE TAX AND ELECTRICITY DUTY. THIS SHOWS THE NO N APPLICATION OF MIND BY THE LD. COMMISSIONER IN ISSUING THE NOTICE U/S. 263 . SINCE THE A.O. HAS MADE THE DISALLOWANCES IN RESPECT OF THE IMPUGNED EXPENS ES, WE DO NOT FIND ANY MERIT IN THE OBSERVATIONS OF THE LD. COMMISSIONER. ITA NO. 389/ AHD/2014 . A.Y. 2009-10 12 14. (V) THE FIFTH ISSUE RELATES TO THE GROSS LOSS INCUR RED IN MANUFACTURING ACTIVITY BY THE COMPANY WHICH WAS EXPLAINED TO BE ON ACCOUNT OF RISE IN COST OF RAW MATERIAL IN THIRD QUARTER OF THE PREVIOUS YEAR. THE LD. COMMISSIONER IS OF THE VIEW THAT SUCH EXPLANATION REQUIRED FURTHER VER IFICATION ON A.OS PART OF PURCHASES AND SALES FROM PARTIES CONCERNED. 15. WE FIND THAT VIDE A SUBMISSION DATED 04.11.2011 DUR ING THE COURSE OF THE ASSESSMENT PROCEEDINGS ITSELF, THE ASSESSEE HAS MAD E THE FOLLOWING SUBMISSIONS BEFORE THE ASSESSING OFFICER:- (5) GP/NP RATIO : GROSS PROFIT AND NET PROFIT RATIO FOR LAST THREE YEARS IS AS UNDER:- YEAR SALE-AMT.RS. G.P.AMT.RS. % OF GP 2006-07- 60,64,05,079/- 1,08,54,937 /- 1.79 2007-08- 76,79,50,186/- 2,08,73,374/ - 2.72 2008-09- 1,03,80,18,802/- -4,11,55,664/- -- AS CAN BE SEEN FROM THE ABOVE FIGURES THE GP HAS DR ASTICALLY GONE DOWN IN NEGATIVE FORM. THE MAIN REASON FOR THE DRASTIC FALL WAS THE OVERALL INTERNATIONAL RECESSION IN STEEL INDUSTRY. THE PRICES OF THE STEE L WERE SHARPLY DECLINED FROM THE THIRD QUARTER OF THE RELEVANT PREVIOUS YEAR. THE ST OCK OF RAW MATERIAL WAS AT VERY HIGH RATE AND EVEN THE REDUCED PRICES OF FINISHED G OODS COULD NOT COVER THE COST OF RAW MATERIAL. THE AVERAGE RATE OF RAW MATERIAL PURCHASED IN THE M ONTH OF SEPTEMBER -2008 WAS RS.33,600/- AND STOCK AT THE END OF THE MONTH W AS 2395.105 MT. THE MANUFACTURING COST COMES NEAR ABOUT RS.7,000/- PER MT. IN THIS WAY THE COST OF PRODUCTION INCLUDING MATERIAL FOR THE SEPTEMBER MON TH WAS RS.40,500/-WHERE AS DRASTIC FALL IN THE SALE PRICE OF FINISHED GOODS MA DE IT COMPULSORY FOR THE UNIT TO SALE ITS FINISHED GOODS AT THE AVERAGE RATE OF RS.2 3,205/- PER MT WHICH RESULTED HUGE LOSS IN THAT QUARTER OF THE YEAR. PLEASE REFER ANNEXURE - XXVII PAGE NO. 152 TO 157 F OR THE PRODUCTION STATEMENT OF SEP.2008 AND OCTOBER-2008 WHICH SHOWS THE GROOM POS ITION OF TRADE OF THE COMPANY IN THAT PARTICULAR QUARTER. ITA NO. 389/ AHD/2014 . A.Y. 2009-10 13 THE COMPANY HAS MAINTAINED COMPLETE QUANTITATIVE DE TAILS OF ALL ITS PRODUCTS DURING THE RELEVANT PREVIOUS YEAR. 16. WE ALSO FIND THAT FROM EXHIBIT 87 TO 92 OF THE PAPE R BOOK, THE ASSESSEE HAD FILED THE QUANTITATIVE DETAILS ALONG WITH THE DETAI LS OF RAW MATERIALS, CONSUMABLE/GENERAL STORES DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. IT APPEARS THAT THE A.O. WANTED FURTHE R CLARIFICATION FROM THE ASSESSEE. THEREFORE VIDE A SUBMISSION DATED 17.11.2 011, THE ASSESSEE ONCE AGAIN CLARIFIED AS UNDER:- 4 ) LOSS : THE COMPANY HAS INCURRED HUGE LOSSES DURING THE REL EVANT PREVIOUS YEAR. THE MAIN REASON FOR THE UNEXPECTED LOSS WAS T HE OVERALL INTERNATIONAL RECESSION IN STEEL INDUSTRY. THE PRICES OF THE STEE L WERE SHARPLY DECLINED FROM THE THIRD QUARTER OF THE RELEVANT PREVIOUS YEAR. THE CO ST OF RAW MATERIAL IN STOCK WAS AT VERY HIGH RATE AND EVEN THE REDUCED PRICES OF FI NISHED GOODS COULD NOT COVER THE COST OF RAW MATERIAL. THE AVERAGE RATE OF RAW MATERIAL PURCHASED IN THE M ONTH OF SEPTEMBER -2008 WAS RS.33,600/- AND STOCK AT THE END OF THE MONTH WAS 3 337.620 MT. THE MANUFACTURING COST COMES NEAR ABOUT RS.7,000/- PER MT. IN THIS WAY THE COST OF PRODUCTION INCLUDING MATERIAL FOR THE SEPTEMBER MON TH WAS RS.40,6007- WHERE AS DRASTIC FALL IN THE SALE PRICE OF FINISHED GOODS MA DE IT COMPULSORY FOR THE UNIT TO SALE ITS FINISHED GOODS AT THE AVERAGE RATE OF RS.2 3,2057- PER MT WHICH RESULTED HUGE LOSS IN THAT QUARTER OF THE YEAR. THERE WAS AL SO A SOCK OF INGOT ( FINISHED GOODS ) TO THE TUNE OF 168.244 M.T. WHICH ALSO ADDE D TO THE TOTAL LOSS OF THE COMPANY. APART FROM ABOVE DURING THE RELEVANT PREVIOU S YEAR UNIT HAD EXPANDED ITS PRODUCTION CAPACITY BY INSTALLING NEW MACHINERY AND DUE TO THIS DEPRECIATION FOR THE RELEVANT PREVIOUS YEAR WAS MORE BY RS.30,10,431 7- IN COMPARE WITH EARLIER YEAR. IN THIS WAY THE INTEREST ON TERM LOAN FROM SB I WAS ALSO THERE WHICH AMOUNTED TO RS.38,17,831/- ADDED TO LOSS OF THE COMPANY. ITA NO. 389/ AHD/2014 . A.Y. 2009-10 14 PLEASE REFER ANNEXURE- III PAGE NO. 21 T O 75 FOR THE COPY OF PURCHASES ACCOUNT FOR THE MONTH OF SEPTEMBER-2008 ALONG WITH THE PURCHASES INVOICES ON RANDOM SELECTION BASIS AS POINTED OUT BY YOUR GOOD SELVES. PLEASE REFER ANNEXURE- IV PAGE NO. 75 TO 154 FOR THE COPY OF INGOT SALE ACCOUNT FOR THE MONTH OF OCTOBER-2008 ALONG WITH TH E SALES INVOICES ON RANDOM SELECTION BASIS AS POINTED OUT BY YOUR GOOD SELVES. THE PURCHASES BILLS OF SEPTEMBER-2008 AND SALES BIL LS OF OCTOBER-2008 CLEARLY SHOW THE REASONS OF HUGE LOSS INCURRED BY THE COMPA NY. THE DRASTIC FALL IN THE PRICES OF INGOTS PUT COMPANY IN THE POSITION OF HUG E LOSSES. PLEASE ALSO REFER ANNEXURE - V PAGE NO. 155 TO 266 FOR THE COMPLETE RAW MATERIAL PURCHASES ACCOUNT FOR THE RELEVANT PREVIOU S YEAR. HOPE ABOVE DETAILS WOULD BE SUFFICIENT FOR FINALIZA TION OF MY ASSESSMENT. PLEASE DO THE NEEDFUL. 17. HAVING DISCUSSED THE FACTUAL MATRIX QUA THE ASSESSM ENT PROCEEDINGS, LET US NOW SEE THE JUDICIAL DECISIONS ON THE POINT UNDER C ONSIDERATION. 18. IT IS A SETTLED POSITION OF LAW THAT POWERS U/S 26 3 OF THE ACT CAN BE EXERCISED BY THE COMMISSIONER ON SATISFACTION OF TW IN CONDITIONS, I.E., THE ASSESSMENT ORDER SHOULD BE ERRONEOUS AND PREJUDICIA L TO THE INTEREST OF THE REVENUE. BY 'ERRONEOUS' IS MEANT CONTRARY TO LAW. T HUS, THIS POWER CANNOT BE EXERCISED UNLESS THE COMMISSIONER IS ABLE TO EST ABLISH THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THUS, WHERE THERE ARE TWO POSSIBLE VIEWS A ND THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEWS, NO ACT ION TO EXERCISE POWERS OF REVISION CAN ARISE, NOR CAN REVISIONAL POWER BE EXE RCISED FOR DIRECTING A FULLER ENQUIRY TO FIND OUT IF THE VIEW TAKEN IS ERR ONEOUS, WHEN A VIEW HAS ITA NO. 389/ AHD/2014 . A.Y. 2009-10 15 ALREADY BEEN TAKEN AFTER ENQUIRY. THIS POWER OF REV ISION CAN BE EXERCISED ONLY WHERE NO ENQUIRY, AS REQUIRED UNDER THE LAW, I S DONE. IT IS NOT OPEN TO ENQUIRE IN CASE OF INADEQUATE INQUIRY. OUR VIEW IS FORTIFIED BY THE DECISION OF HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. NIRAV MODI, [2016] 71 TAXMANN.COM 272 (BOMBAY). THIS VIEW IS FURTHER S UPPORTED BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF SHRI PRAKASH BHAGCHAND KHATRI IN TAX APPEAL NO. 177 WITH TAX APP EAL NO.178 OF 2016, WHEREIN THE HON'BLE JURISDICTIONAL HIGH COURT WAS S EIZED WITH THE FOLLOWING SUBSTANTIAL QUESTION OF LAW:- 'WHETHER THE TRIBUNAL IS RIGHT IN LAW AND ON FACTS I N UPHOLDING THE ORDER PASSED BY THE CIT UNDER SECTION 263 OF THE ACT ON MERITS A ND STILL STORING THE ISSUE OF ALLOWABILITY OF DEDUCTION UNDER SECTION 54 OF THE A CT TO THE FILE OF ASSESSING OFFICER EVEN THOUGH THE WORKING OF ALLOWABILITY OF DEDUCTION UNDER SECTION 54F IS AVAILABLE IN THE ORDER UNDER SECTION 263 WHICH IS N OT DISPUTED BY THE ASSESSEE BEFORE ITAT.' 19. AND THE HON'BLE HIGH COURT, AFTER CONSIDERING THE F ACTS, HELD AS UNDER:- '6. IT CAN THUS BE SEEN THAT THOUGH FINAL ORDER OF A SSESSMENT WAS SILENT ON THIS ASPECT, THE ASSESSING OFFICER HAD CARRIED OUT INQUI RIES ABOUT THE NATURE OF SALE OF LAND AND ABOUT THE VALIDITY OF THE ASSESSEE'S CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT. LEARNED COUNSEL FOR THE REVENUE HOWEVER SUBMITTED THAT THESE INQUIRIES WERE CONFINED TO THE CLAIM OF DEDUCTION U NDER SECTION 54F OF THE ACT IN THE CONTEXT OF FULFILLING CONDITIONS CONTAINED THER EIN AND MAY POSSIBLY HAVE NO RELEVANCE TO THE QUESTION WHETHER THE SALE OF LAND GAVE RISE TO A LONG TERM CAPITAL GAIN. LOOKING TO THE TENOR OF QUERIES BY TH E ASSESSING OFFICE AND DETAILS ITA NO. 389/ AHD/2014 . A.Y. 2009-10 16 SUPPLIED BY THE ASSESSEE, WE ARE UNABLE TO ACCEPT S UCH A CONDITION. IN THAT VIEW OF THE MATTER, THE OBSERVATION OF THE TRIBUNAL THAT THE ASSESSING OFFICER HAVING MADE INQUIRIES AND WHEN TWO VIEWS ARE POSSIBLE, REV ISIONAL POWERS COULD NOT BE EXERCISED, CALLED FOR NO INTERFERENCE. SINCE WITH R ESPECT TO COMPUTATION AND ASSERTIONS OF OTHER ASPECTS OF DEDUCTION UNDER SECT ION 54FOFTHE ACT, THE TRIBUNAL HAS REMANDED THE PROCEEDINGS, NOTHING STATED IN THI S ORDER WOULD AFFECT EITHER SIDE IN CONSIDERATIONS OF SUCH CLAIM. 7. NO QUESTION OF LAW ARISES. TAX APPEALS ARE DISMI SSED.' 20. THE HONBLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD., 243 ITR 83, HAS LAID DOWN THE FOLLOWING RATIO:- 'A BARE READING OF SECTION 263 OF THE INCOME-TAX AC T, 1961, MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF JURISDICTION B Y THE COMMISSIONER SUO MOTU UNDER IT, IS THAT THE ORDER OF THE INCOME-TAX OFFIC ER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE CO MMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE AS SESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENTIF THE ORDER OF THE INCOME-TA X OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRO NEOUS BUT IS PREJUDICIAL TO THE REVENUE RECOURSE CANNOT BE HAD TO SECTION 263(1) O F THE ACT. THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR A N INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERR ONEOUS '. 21. THE LD. D.R. IN HIS WRITTEN SUBMISSION HAS RELIED U PON VARIOUS JUDICIAL DECISIONS. WE HAVE CAREFULLY PERUSED THE WRITTEN SU BMISSION OF THE LD. D.R. QUA THE DECISIONS RELIED UPON HIM. IN OUR CONSIDERE D OPINION, ALL THE ITA NO. 389/ AHD/2014 . A.Y. 2009-10 17 DECISIONS RELIED UPON BY THE LD. D.R. RELATES TO TH E CASES WHERE NO ENQUIRY WAS MADE BY THE A.O. DURING THE COURSE OF THE ASSE SSMENT PROCEEDINGS BUT THAT IS NOT THE FACTS OF THE CASE IN HAND. IN THE C ASE IN HAND, AS MENTIONED ELSEWHERE, THE A.O. RAISED SPECIFIC QUERIES TO WHIC H THE ASSESSEE HAD NOT ONLY MADE SPECIFIC REPLIES BUT HAS ALSO FILED ALL T HESE RELATED DOCUMENTARY EVIDENCES. 22. AT THE COST OF REPETITION, WE WOULD ONCE AGAIN LIKE TO REITERATE WHAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GABRIEL IN DIA LTD. 203 ITR 108 HAS HELD THE DECISION OF THE ITO CANNOT BE HELD TO BE ERRON EOUS SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSIO N IN THAT REGARD. 23. THE TWO DECISIONS OF THE CO-ORDINATE BENCH RELIED U PON BY THE LD. D.R. I.E. M/S. KUSHARA REAL ESTATE IN ITA NO. 4247/DEL/2009 A ND M/S ZARS TRADING PRIVATE LTD. IN ITA NO. 3284/DEL/2009. WE FIND THAT BOTH THE DECISIONS RELATE TO THE REGULAR ASSESSMENT ORDER MADE U/S. 14 3(3) OF THE ACT WHEREAS THE CASE IN HAND RELATES TO THE ASSUMPTION OF JURIS DICTION BY THE LD. COMMISSIONER U/S. 263 OF THE ACT. THEREFORE, THESE TWO DECISIONS ARE NOT RELEVANT FOR THE CASE IN HAND. 24. THE HONBLE HIGH COURT OF GUJARAT IN CIT VS. NIRMA CHEMICAL WORKS LTD. 309 ITR 67 HAS OBSERVED THAT IF ASSESSMENT ORDER WERE T O INCORPORATE THE REASONS FOR UPHOLDING THE CLAIM MADE BY AN ASSESSEE , THE RESULT WOULD BE AN EPITOME AND NOT AN ASSESSMENT ORDER. IN THIS CAS E, DURING THE ASSESSMENT PROCEEDINGS FOR BOTH THE ASSESSMENT YEAR S, THE ASSESSING ITA NO. 389/ AHD/2014 . A.Y. 2009-10 18 OFFICER ISSUED A QUERY MEMO TO THE ASSESSEE, CALLIN G UPON HIM TO JUSTIFY THE GENUINENESS OF THE GIFTS. THE RESPONDENT-ASSESSEE R ESPONDED TO THE SAME BY GIVING EVIDENCE OF THE COMMUNICATIONS RECEIVED F ROM HIS FATHER AND HIS SISTER I.E. THE DONORS OF THE GIFTS ALONG WITH THE STATEMENT OF THEIR BANK ACCOUNTS. ON PERUSAL, THE ASSESSING OFFICER WAS SAT ISFIED ABOUT THE CREDITWORTHINESS/CAPACITY OF THE DONORS, THE SOURCE FROM WHERE THESE FUNDS HAVE COME AND ALSO THE CREDITWORTHINESS/CAPAC ITY OF THE DONOR. ONCE THE ASSESSING OFFICER WAS SATISFIED WITH REGARD TO THE SAME, THERE WAS NO FURTHER REQUIREMENT ON THE PART OF THE ASSESSING OF FICER TO DISCLOSE HIS SATISFACTION IN THE ASSESSMENT ORDER PASSED THEREON . THUS, THIS OBJECTION ON THE PART OF THE REVENUE CANNOT BE ACCEPTED. 25. CONSIDERING THE FACTS IN TOTALITY, IN THE LIGHT OF THE JUDICIAL DECISIONS DISCUSSED HEREINABOVE, IN OUR UNDERSTANDING OF THE LAW, THE ASSESSMENT ORDER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE I NTEREST OF THE REVENUE. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. COMMISSIONER U/S. 263 AND RESTORE THAT OF THE ASSES SING OFFICER PASSED U/S. 143(3) OF THE ACT. 26. BEFORE PARTING, THE LD. D.R. VIDE A LETTER DATED 0 2.01.2017 BROUGHT TO THE NOTICE OF THE BENCH THAT HE HAS MADE AN APPLICATION FOR REFERENCE TO SPECIAL BENCH IN ITA NO. 1517/AHD/2015 VIDE AN APPL ICATION DATED 09.09.2016 AND IN ITA NO. 3419/AHD/2014 VIDE AN APP LICATION DATED 04.11.2016 STATING THAT THERE ARE CONTRASTING VIEWS OF THE CO-ORDINATE ITA NO. 389/ AHD/2014 . A.Y. 2009-10 19 BENCHES OF THE TRIBUNAL INSOFAR AS THE APPLICABILIT Y OF THE EXPLANATION ADDED TO SECTION 263 BY FINANCE ACT OF 2015. 27. THE EXPLANATION 2 WAS INSERTED BY FINANCE ACT, 2015 WITH EFFECT FROM 01.06.2015. THIS ISSUE HAS BEEN EARLIER CONSIDERED BY THE TRIBUNAL AHMEDABAD BENCH IN THE CASE OF JAYANT MURTHY IN ITA N0. 870 & 1234/AHD/2014 AND THE RELEVANT PART READS AS UNDER: - SUFFICE TO SAY THAT THESE FINDINGS, WHATEVER BE THE IR WORTH AND LEGAL SUSTAINABILITY, CANNOT BE REASON ENOUGH TO HOLD THA T THE ASSESSMENT FOR OTHER ASSESSMENT YEARS, IN WHICH THESE DETAILED INVESTIGA TIONS- WHICH ARE SURELY MORE OF AN EXCEPTION RATHER THAN RULE, WERE NOT CARRIED OUT, ARE REQUIRED TO BE TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THERE IS, HOWEVER, NOTHING MORE THAN THESE FINDINGS FOR THE ASSESSMENT YEARS 2011-12 WHICH ARE FOUNDATIONAL FOR THE IMPUGNED REVISION ORDER. IN AN Y CASE, AS HELD BY HON'BLE JURISDICTIONAL HIGH COURT, IN THE CASE OF CIT VS AM IT CORP [(2012) 21 TAXMANN.64 (GUJ)], 'WHEN, DURING THE COURSE OF FRAMING OF THE ASSESSMENT, THE ASSESSING OFFICER HAD ACCESS TO ALL THE RECORDS OF THE ASSESS EE, AFTER PURSUING SUCH RECORD THE ASSESSING OFFICER FRAMED THE ASSESSMENT, SUCH A SSESSMENT COULD NOT HAVE BEEN REOPENED IN EXERCISE OF REVISION POWER UNDER S ECTION 263 OF THE ACT FOR MAKING FURTHER INQUIRIES'. THAT PRECISELY IS THE SI TUATION BEFORE US. AS REGARDS THE DECISION OF THE COORDINATE BENCH RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, I.E. IN THE CASE OF CROMPTON GREAVE S LTD VS CIT [ITA NOS. 1994/MUM/13 AND 2836/MUM/14; ORDER DATED 1ST FEBRUA RY 2016], WHEREIN IT IS HELD THAT THE AMENDMENTS TO SECTION 263, BY INSERTI ON OF EXPLANATION 2, BY THE FINANCE ACT 2015 ARE RETROSPECTIVE IN EFFECT, WE MA Y POINT OUT THAT THE EXPLANATION 2 TO SECTION 263, WHICH PROVIDES THAT E VEN WHEN AN ORDER IS PASSED WITHOUT MAKING INQUIRIES AND VERIFICATIONS WHICH SH OULD HAVE BEEN, IN THE OPINION OF REVISIONAL AUTHORITY, WILL BE 'DEEMED TO BE ERRON EOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE', IS SPECIFICALLY STATE D TO BE EFFECTIVE FROM 1ST JUNE 2015. IT IS CLEARLY A PROVISION ADVERSE TO THE INTE RESTS OF THE ASSESSEE AND IS SPECIFICALLY STATED TO BE PROSPECTIVE IN EFFECT. .. ITA NO. 389/ AHD/2014 . A.Y. 2009-10 20 A JUDICIAL PRECEDENT CEASES TO BE A BINDING PRECEDE NT WHEN IT IS PASSED PER INCURIUM I.E. 'IN IGNORANCE OF A PREVIOUS DECISION O F ITS OWN OR OF A CO-ORDINATE JURISDICTION' WHICH COVERED THE ISSUE. THE AMENDMENT S MADE TO SECTION 263 BY THE FINANCE ACT 2015 WILL, THEREFORE, HOLD GOOD ONL Y IN RESPECT OF THE REVISION ORDERS ON OR AFTER 1ST JUNE 2015, WHEREAS THE IMPUG NED REVISION ORDER WAS PASSED ON 11 TH MARCH 2014. AS FOR THE LAW IN FORCE AT THE RELEVA NT POINT OF TIME, FOR THE DETAILED REASONS SET OUT EARLIER, THE CASES OF INADEQUATE INQUIRY, EVEN IF THAT BE SO, WILL CONTINUE TO BE OUTSIDE THE AMBIT O F SCOPE OF SECTION 263. 28. THERE IS NO SUCH PRAYER FOR THE CASE IN HAND AND S UCH AN ATTEMPT AT THIS STAGE IS NOT PERMISSIBLE. IN ANY CASE, IN THE CASE OF JUDGMENT OF HONBLE BOMBAY HIGH COURT IN CASE OF NIRAV MODI (SUPRA) WHI CH WAS PASSED ON 16.06.2016 I.E. POST INSERTION OF EXPLANATIONS TO S ECTION 263 BY FINANCE ACT, 2015 AND HONBLE HIGH COURT APPLIED THE LAW BEFORE THE AMENDMENT BY FINANCE ACT, 2015 IN THE LIGHT OF THE DECISION OF T HE HONBLE BOMBAY HIGH COURT (SUPRA). THIS ARGUMENT OF THE LD. D.R FAILS. 29. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 10 - 01- 20 17 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 10 /01/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD.