SHREE SAI CONSTRUCTION, MUMBAI V. DCIT 23(1), MUMBAI

ITA 4183/MUM/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56297 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 14-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 20-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O A MAO
• Assessee Lawyers: K GOPAL SHRI SATENDRA PANDEY
• Keywords: Business income; Loose papers

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI BEFORE SHRI N. V. VASUDEVAN, JM AND SHRI R.K. PANDA , AM ITA NO. : 4183/MUM/2011 ASSESSMENT YEAR : 2006-07 M/S. SHREE SAI CONSTRUCTION, 109, BHARAT INDUSTRIAL ESTATE, LBS MARG, BHANDUP (W), MUMBAI-400 078 PAN NO: AALFS 8731 P VS. DCIT - 23(1), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. GOPAL / SHRI SATENDRA PANDEY RESPONDENT BY : SHRI O. A. MAO DATE OF HEARING : 14 .1 2 .2011 DATE OF PRONOUNCEMENT : 30.12.2011 ORDER PER R. K. PANDA (AM) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 21.03.2011 PASSED U/S. 263 BY THE LD. CIT-23, MUMBA I RELATING TO ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE IN ITS ONLY EFFECTIVE GROUND HAS CH ALLENGED THE ORDER OF THE LD. CIT INVOKING THE JURISDICTION OF SECTION 263 OF THE I.T. ACT. 2.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SEE FIRM FILED ITS RETURN OF INCOME ON 31.10.2006, DECLARING TOTAL INCOME OF `. 43,63,175/-. THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF CONSTRU CTION AND HAS ITA NO : 4183/MUM/2011 M/S. SHRE E SAI CONSTRUCTION 2 CONSTRUCTED USHA COMPLEX AT BHANDUP (W). THE PROJ ECT CONSISTS OF TWO BUILDING WITH TOTAL 230 FLATS AND 10 SHOPS. THE SAL E OF THE FLATS AND SHOPS TOOK PLACE IN THE YEARS 2002, 2003 AND 2004. A SURVEY U/S.133A WAS CONDUCTED IN THE PREMISES ON 17.02.2006 AND THE ASSESSEE HAD DECLARED INCOME OF `. 52 LAKHS. 2.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE AS PER ITS SUBMISSION HAS DECLARED PRO FIT ON PROJECT COMPLETION METHOD. IT HAD NOT DECLARED ANY INCOME U PTO THE ASSESSMENT YEAR 2005-06. ON THE CONTRARY, IT WAS CLAIMING LOSS ES. DURING THE YEAR, THE ASSESSEE HAS DECLARED `. 20,97,228/- AS NET PROFIT. THE AO RECORDED THE STATEMENTS OF SHRI VINOD SHARMA AND SHRI DINESH SHARMA, PARTNERS OF THE ASSESSEES FIRMS. ON THE BASIS OF STATEMENT RECORDED FROM THE PARTNERS, THE AO NOTED THAT THE TOTAL SALE CONSIDER ATION WAS `. 27,77,77,889/- AND COST OF CONSTRUCTION PER SQ. FT. WAS `. 750/- TO `. 800/- PER SQ. FT. THE ASSESSEE HAD PAID `. 7,50,00,000/- AS LAND COST. THE AO FURTHER NOTED FROM THE LOOSE PAPERS SEIZED A T THE TIME OF SURVEY THAT APART FROM LAND COST AND COST OF CONSTRUCTION, CERTAIN OTHER EXPENDITURE ARE ALSO INCURRED WHICH ARE AS UNDER :- I) MUNICIPAL FEES AND CHARGES @ 100 P.S.F. II) LEGAL FEES AND ARCHITECTS FEES @ 100 P.S.F. III) ADMINISTRATION EXPENSES @ 50 P.S.F. IV) MISCELLANEOUS EXPENSES @ 50 P.S.F. 2.3 THE AO THEREAFTER OBSERVED THAT THE PROFIT DECL ARED BY THE ASSESSEE WAS MUCH LESS THAN WHAT SHOULD HAVE BEEN DISCLOSED AS PER THE FOLLOWING CALCULATIONS: ITA NO : 4183/MUM/2011 M/S. SHRE E SAI CONSTRUCTION 3 TOTAL SALES CONSIDERATION AS PER THE FINAL REPORT SUBMITTED `. 27,77,09,484 LESS: COST OF CONSTRUCTION @ `. 800 P.S.F. ON TOTAL CONSTRUCTED AREA 166462 `. 13,31,69,600 `. 14,45,39,884 LESS: LAND COST AS PER STATEMENT `. 7,50,00,000 `. 6,95,39,884 LESS: MISC. AND OTHER EXPENSES @ 300 P.S.F. ON AREA OF 1664623 SQ. FT. `. 4,99,38,600 `. 1,96,01,284 2.4 THE AO, THEREFORE, ASKED THE ASSESSEE TO EXPLAI N AS TO WHY THE PROFIT OF `. 1.96 CRORES SHOULD NOT BE ADOPTED AS AGAINST PROFIT OF `. 20.97 LAKHS AS PER THE PROFIT AND LOSS ACCOUNT. HE ALSO M ENTIONED THAT OTHER STATUTORY DISALLOWANCES WILL BE MADE SEPARATELY. TH E AO ALSO ASKED THE ASSESSEE TO EXPLAIN THE BASIS FOR DISCLOSURE OF `. 52 LAKHS DURING SURVEY AND ALSO TO CLARIFY WHY THE AMOUNT DISCLOSED AT THE TIME OF SURVEY WAS NOT DECLARED AS THE TOTAL INCOME IN THE RETURN FILE D. 2.5 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE MADE DETAILED SUBMISSION. IT WAS SUBMITTED THAT IT HAD G IVEN CONSENT FOR ESTIMATING THE PROFIT FOR THE PROJECT AT `. 52 LAKHS BECAUSE IN ADDITION TO RATES CONSIDERED FROM THE PAPER OF ESTIMATE THERE W AS ANOTHER COST FOR PENDING WORK OF COMPOUND WALL AND OTHER AMENITIES, WHICH WAS ESTIMATED AT `. 87 PER SQ. FT. WHICH REDUCED THE ESTIMATED PROFIT O F `. 1.97 CRORE, FURTHER BY `. 1,44,80,000/- AND ACCORDINGLY THEY HAD PAID `. 17.50 LAKHS AS TAX AMOUNT. THE ASSESSEE HOWEVER, SUBMITTE D THAT THEY STICK TO THEIR PROMISE AND ARE READY TO ACCEPT THE INCOME OF `. 52 LAKHS, WHICH ACCORDING TO THEM WAS TO BUY PEACE OF MIND AND WITH AN INTENTION TO COOPERATE WITH THE DEPARTMENT. 2.6 THE AO NOTED FROM THE REMARKS GIVEN BY THE AUDI TORS THAT THE ASSESSEE FIRM FOLLOWS PROJECT COMPLETION METHOD. TH E PROJECT IS STILL GOING ITA NO : 4183/MUM/2011 M/S. SHRE E SAI CONSTRUCTION 4 ON AND HAS NOT BEEN COMPLETED IN ALL RESPECTS TILL 31.03.2006. THE FIRM IN ITS ACCOUNTS HAS CONSIDERED THE PROJECT AS COMPL ETED AND HAS MADE PROVISIONS FOR VARIOUS EXPENSES WHICH ARE YET TO BE INCURRED. THESE ARE ACCORDING TO THE MUNICIPAL RULES OR CONTRACTUAL OBL IGATIONS UNDER THE AGREEMENTS FOR SALE. THE AO NOTED THAT ACCORDING TO THE AUDITOR, THE BALANCE OF PENDING WORK AS PER THE PROVISION MADE B Y THE ASSESSEE ARE AS UNDER :- I) PROVISION FOR N.A. TAX BILL DT. 09.11.05 `. 9,38,576 II) PROVISION FOR PROPERTY TAX BILL `. 1,43,369 III) LIFT TO BE INSTALLED IN WING A `. 3,25,000 IV) METER TO BE INSTALLED IN A,B, C & D `. 6,10,000 V) GARDENING WORK `. 3,00,000 VI) CHIPS TO BE FIXED IN WING A, B, C & D `. 3,25,000 VII) CONSTRUCTION OF COMPOUND WALL `. 8,75,000 VIII) MARBLE TUKDA TO BE FIXED IN STILT AREA `. 1,50,000 IX) BALANCE WORK OF MAIN GATE `. 1,00,000 X) M.C.G.M CLAIM/DEMAND FOR NALLA OF RAILWAY SITE `. 46,12,155 XI) ASST. TAX BILL FOR WING A TO F `. 19,03,015 XII) ASST. TAX BILLS FOR WING G TO L `. 43,53,731 `. `.`. `. 1,46,35,846 2.7 THE AO FINALLY CONCLUDED THAT IF THE PROVISION AS PER AUDITORS REPORT IS ALSO CONSIDERED, THE PROFIT APPROXIMATELY WILL BE `. 50 LAKHS. SINCE THE ASSESSEE HAS ALREADY DISCLOSED `. 52 LAKHS DURING SURVEY AND SINCE THERE IS A LOT OF FLUCTUATION IN THE RATES AT WHICH FLATS ARE SOLD TO DIFFERENT PARTIES, THE RATES VARY FROM `. 1300/- P.S.F TO `. 2222/- P.S.F. SINCE NO EXPLANATION HAS BEEN GIVEN IN RESPECT OF T HE DIFFERENCE IN RATES, THE AO ESTIMATED THE INCOME FROM THE PROJECT AT `. 60 LAKHS 3. THE LD. CIT CALLED FOR THE RECORDS AND NOTED THA T THE TOTAL INCOME WAS PROPOSED TO BE ESTIMATED AT `. 1,96,69,689/- BY THE AO. THE ASSESSEE HOWEVER DID NOT ACCEPT THE SAME ON THE GROUND THAT THERE ARE CERTAIN PENDING WORK WHICH ARE AS PER MUNICIPAL RULES OR AR E CONTRACTUAL ITA NO : 4183/MUM/2011 M/S. SHRE E SAI CONSTRUCTION 5 OBLIGATIONS. THE ASSESSEE HAD CLAIMED PROVISION FOR 13 ITEMS AMOUNTING TO `. 6,32,36,346/- WHICH INCLUDED PROVISION FOR REVISION OF RATE AT `. 4.86 CRORES PAYABLE TO ONE COMPANY. THE AO HAS ACCEPTED THE SUGGESTION FOR ADOPTING INCOME OF `. 52 LAKHS WITHOUT VERIFYING THE CLAIM OF THE PROVISI ON AND EXPENSES OF `. 6.23 CRORES THAT WERE TO BE INCURRED AS PROVISION W HILE FINALIZING THE ASSESSMENT. HE, THEREFORE, ISSUE A S HOW CAUSE NOTICE TO THE ASSESSEE TO EXPLAIN AS TO WHY THE ORDER PASSED BY T HE AO SHOULD NOT BE CONSIDERED TO BE ERRONEOUS AND PREJUDICIAL TO THE I NTEREST OF THE REVENUE. 3.1 THE ASSESSEE VIDE ITS LETTER DATED 23.12.2010 R EPLIED THAT DURING THE FINANCIAL YEAR ENDED 31.03.2006, THE PROJECT US HA COMPLEX AT BHANDUP WAS GOING ON AND WAS NOT COMPLETED IN ALL R ESPECTS. IT HAD TO FULFILL ITS CONTRACTUAL OBLIGATIONS AS PROMISED TO THE FLAT PURCHASERS SUCH AS INSTALLING LIFT, ELECTRIC METER, COMPOUND WALL, MAIN GATE, PROVIDING VARIOUS AGREED UPON AMENITIES SUCH AS GARDEN ETC. H OWEVER, DURING THE FINANCIAL YEAR 2005-06, SINCE A SUBSTANTIAL PORTION OF THE PROJECT WAS NEARING COMPLETION, THE FIRM HAD OFFERED TO TAX THE IR INCOME FROM THE SAID PROJECT DURING THE YEAR TO ABIDE BY THE LAW OF THE LAND. SINCE THE ASSESSEE HAD TO INCUR SOME EXPENSES IN FUTURE TOWAR DS THE PENDING PROJECT WORK CERTAIN PROVISIONS WERE MADE IN THE AC COUNTS AS ON 31.03.2006. 3.2 IT WAS FURTHER SUBMITTED THAT AN AMOUNT OF `. 4.86 CRORES WAS PAYABLE TO M/S. KHANDELWAL MANUFACTURING CORPORATIO N LTD. SINCE THE ASSESSEE WAS UNABLE TO PAY THEM PART OF THE AGREED CONSIDERATION IN TIME THEY HAVE ASKED THE ASSESSEE FIRM TO COMPENSATE THE M FOR THE DELAY IN THE PAYMENT BY DEMANDING ADDITIONAL COMPENSATION OF `. 4.86 CRORES VIDE THEIR LETTER DATED 01.02.2006. IT WAS ACCORDINGLY, SUBMITTED THAT THE CLAIM OF PROVISION MADE BY THE FIRM WAS FAIR AND JU ST. IT WAS ALSO SUBMITTED THAT SUBSEQUENT EVENTS HAVE PROVED THAT T HE AMOUNT OF ITA NO : 4183/MUM/2011 M/S. SHRE E SAI CONSTRUCTION 6 PROVISION WAS NOT OVERESTIMATED OR UNREALISTIC. IT WAS SUBMITTED THAT DETAILS REGARDING THE PROVISION OF `. 6,32,36,346/- WAS GIVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH WERE DULY VE RIFIED BY THE AO. AFTER CONSIDERING THE EXPLANATION AND EVIDENCE SUBM ITTED BY THE ASSESSEE THE AO SATISFIED HERSELF AND DID NOT MAKE ANY ADDITION ON ACCOUNT OF THE PROVISIONS. THEREFORE, THE ORDER PAS SED BY THE AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST O F REVENUE. 3.3 HOWEVER, THE LD. CIT WAS NOT CONVINCED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE NOTED THAT THE AO HAS NOT RAISE D EVEN A SINGLE QUERY IN THE ORDER SHEET, NOR ANY LETTER ISSUED TO THE AS SESSEE ON ACCOUNT OF `. 4.86 CRORES PAYABLE TO M/S. KHANDELWAL MANUFACTURIN G CORPORATION LTD. AS REGARDS THE ISSUE OF N.A., TAX LIABILITY HE OBSERVED THAT EVEN AFTER LAPSE OF MORE THAN 5 YEARS THE LIABILITY TO PAY NA TAX HAS NOT BEEN INCURRED TILL DATE. AS REGARDS THE PROVISION FOR PR OPERTY TAX OF OFFICE AND PROVISION FOR ASSESSMENT TAX OF WING A TO L, HE NOTED THAT SUCH TAX HAS NOT BEEN PAID TILL DATE EITHER ON THE PRETEXT OF PA UCITY OF FUNDS OR DISPUTE WITH THE LANDOWNER. HE OBSERVED THAT DISPUTED TAX L IABILITIES SHALL BE ALLOWED ONLY IN THE YEAR IN WHICH THESE ARE ACTUALL Y PAID. ACCORDING TO HIM, MERELY ON THE BASIS OF TAX BILLS/PROPERTY TAX NOTICES THESE AMOUNTS CANNOT BE ALLOWED AS THERE ARE LITIGATIONS GOING ON EITHER WITH THE LAND OWNER OR WITH THE RESIDENTS ASSOCIATION WHO HAVE GO NE TO THE CONSUMER COURT ON THE ISSUE OF PROPERTY TAX PAYMENTS. 3.4 AS REGARDS THE PROBABLE EXPENDITURE TO BE INCUR RED ON LIFT INSTALLMENTS, METER INSTALLMENTS, GARDENING WORK, C OMPOUND WALL ETC. HE OBSERVED THAT NO SIGNIFICANT WORK HAS BEEN DONE IN THESE HEADS IN THE SUBSEQUENT YEARS EXCEPT INSTALLATION OF LIFT IN THE SUBSEQUENT ASSESSMENT YEAR. ACCORDING TO THE LD. CIT THIS EXPENDITURE SHA LL BE ALLOWED ONLY IN THE YEAR IN WHICH THESE ARE ACTUALLY INCURRED. AS R EGARDS THE PROVISION OF ITA NO : 4183/MUM/2011 M/S. SHRE E SAI CONSTRUCTION 7 `. 46,12,155/- REGARDING THE PROJECT OF WIDENING AND T RAINING OF NALLAH AT ULHASNAGAR BHANDUP, HE OBSERVED THAT THIS HAS NOT B EEN PAID BY THE ASSESSEE TO THE MUNICIPAL CORPORATION OF GREATER MU MBAI (MCGM). FROM THE DOCUMENTS FURNISHED BY THE ASSESSEE HE OBSERVED THAT THE LETTER FROM MCGM DATED 24.05.2002 IS ADDRESSED TO ONE M/S. RAME SH DALVI & ASSOCIATES AND THERE IS NO MENTION OF THE ASSESSEE, SHREE SAI CONSTRUCTION. HE OBSERVED THAT THERE IS NO EVIDENCE THAT THIS LETTER PERTAINS TO THE PROJECT OF THE ASSESSEE AND SECONDL Y THERE ARE NO SUBSEQUENT CORRESPONDENCES FROM MCGM PURSUING THE R ECOVERY OF THIS AMOUNT EITHER FROM THE ASSESSEE OR FROM M/S. RAMESH DALVI & ASSOCIATES. IN VIEW OF THE ABOVE FACTUAL DISCREPANC IES, HE OBSERVED THAT NEITHER THE ASSESSEE HAS FURNISHED ALL THESE DOCUME NTS BEFORE THE AO NOR THE AO HAS APPLIED HIS MIND ABOUT THE ADMISSIBI LITY/LEGALITY OF THE PROVISIONS CREATED. HE ACCORDINGLY, HELD THE ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND DIRE CTED THE AO TO REDO AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSES SEE. 4. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT, THE AS SESSEE IS IN APPEAL BEFORE US. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ON THE BASIS OF VARIOUS DOCUMENTS FURNISHED BEFORE THE AO DURING TH E COURSE OF ASSESSMENT PROCEEDINGS THE AO COMPLETED THE ASSESSM ENT U/S.143(3) OF THE ACT AFTER DUE APPLICATION OF MIND. FURTHER, THE AO HAS ASSESSED HIGHER INCOME THAN THE INCOME DECLARED DURING THE C OURSE OF SURVEY. THEREFORE, NEITHER THE ORDER IS ERRONEOUS NOR IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE ACCORDINGLY, SUBMITTED THAT THE ORDER PASSED U/S.263 BY THE LD. CIT SHOULD BE SET ASIDE. 6. THE LD. DR ON THE OTHER HAND, WHILE SUPPORTING T HE ORDER OF THE LD. CIT SUBMITTED THAT THE AO HAS NEITHER GONE THRO UGH THE DETAILS ITA NO : 4183/MUM/2011 M/S. SHRE E SAI CONSTRUCTION 8 PROPERLY NOR APPLIED HIS MIND. REFERRING TO PAGE 9 OF THE PAPER BOOK, HE SUBMITTED THAT THE AUDITORS HAVE MADE PROVISIONS OF `. 6,32,36,346/- AND THEREAFTER, ARRIVED AT THE PROFIT OF `. 20,90,228/-. REFERRING TO PAGE NO. 38 OF THE PAPER BOOK, HE SUBMITTED THAT THE AO HIMSELF HAS CALCULATED THE PROFIT AT `. 1,96,01,284/- ON THE BASIS OF VARIOUS SUBMISSIONS M ADE BY THE ASSESSEE. REFERRING TO THE DETAILS OF PROVISION S, HE SUBMITTED THAT WHEN THE LIABILITY HAS NOT CRYSTALLIZED THE ASSESSE E CAN NOT DEBIT THE EXPENSES. THEREFORE, THE ORDER OF THE AO IS BOTH ER RONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE SUBM ITTED THAT THE ACTUAL PROFIT IS MUCH MORE THAN THE PROFIT DETERMINED BY T HE AO WHICH IS APPARENT FROM THE RECORDS. THEREFORE, MERELY BECAUS E THE SAME IS HIGHER THAN THE PROFIT DISCLOSED DURING THE COURSE OF SURV EY, IT CANNOT BE A GROUND TO SAY THAT THE ORDER IS NEITHER ERRONEOUS N OR PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE ACCORDINGLY SUBMITTED T HAT THE LD. CIT WAS FULLY JUSTIFIED IN INVOKING THE PROVISION OF SECTIO N 263 OF THE I.T. ACT. 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE LD. CIT AND TH E PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND FROM THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31.03.2006 (A COPY OF WHICH IS PLACED AT PAPER BOOK PG NO.9) THAT THE ASSESSEE WHILE ARRIVING AT THE PROFIT OF `. 20,90,288 HAS CLAIMED PROVISIONS OF `. 6,32,36,346/-. WE FIND THE AO IN THE BODY OF THE ASSESSMENT ORDER ALTHOUGH HAS MENTIONED THE PROVISI ON FOR EXPENDITURE TO THE TUNE OF `. 1.46 CRORES HAS NOT AT ALL DISCUSSED THE ALLOWABILI TY OR OTHERWISE OF THE AMOUNT OF `. 4.86 CRORES BEING PROVISION MADE FOR PAYMENT TO KMCL ON ACCOUNT OF ADDITIONAL DEMAND. SI MILARLY, THE AO HAS NOT APPLIED HIS MIND REGARDING THE CRYSTALLIZAT ION OF THE VARIOUS EXPENSES AND ALLOWABILITY OR OTHERWISE OF THE SAME DURING THE IMPUGNED ASSESSMENT YEAR. WE FURTHER FIND WHILE THE AO HAS D ETERMINED THE PROFIT AT 1.96 CRORES ON THE BASIS OF VARIOUS SUBMISSIONS MADE BY THE ASSESSEE, ITA NO : 4183/MUM/2011 M/S. SHRE E SAI CONSTRUCTION 9 HE HOWEVER, HAS ESTIMATED THE PROFIT AT `. 60 LAKHS. THE AO HAS NOT APPLIED HIS MIND TO GO THROUGH THE VARIOUS ITEMS AP PEARING IN THE PROFIT AND LOSS ACCOUNT ESPECIALLY THE PROVISION OF `. 6.32 CRORES CLAIMED IN THE PROFIT AND LOSS ACCOUNT AS PROVISION FOR VARIOUS EX PENSES TO BE INCURRED AND ADDITIONAL COMPENSATION FOR LAND TO BE PAID. 7.1 IT IS THE SETTLED PROPOSITION OF THE LAW THAT L ACK OF PROPER ENQUIRY OR IMPROPER ENQUIRY AND NON APPLICATION OF MIND WILL R ENDER THE ORDER ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THESE CIRCUMSTANCES, THE LD. CIT IS EMPOWERED TO INVOKE T HE PROVISION OF SECTION 263. SINCE IN THE INSTANT CASE AS OBSERVED EARLIER, THE AO HAS NEITHER MADE PROPER INQUIRY NOR APPLIED HIS MIND RE GARDING THE ALLOWABILITY OR OTHERWISE OF THE PROVISION OF `. 6,32,36,346/- BEFORE THE COMPLETION OF THE ASSESSMENT, THEREFORE, THE ORDER PASSED BY THE AO U/S.143(3), IN OUR OPINION, IS BOTH ERRONEOUS AND P REJUDICIAL TO THE INTEREST OF THE REVENUE. IN THIS VIEW OF THE MATTER , WE UPHOLD THE ORDER OF THE LD. CIT INVOKING THE REVISIONARY POWER U/S.263 OF THE I.T. ACT. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY DISMIS SED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS 30 TH DAY OF DECEMBER, 2011. SD/ - SD/ - ( N. V. VASUDEVAN ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTAT MEMBER MUMBAI, DT: 30/12/2011 ITA NO : 4183/MUM/2011 M/S. SHRE E SAI CONSTRUCTION 10 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, E- BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI