KISHORE MADNANI, Kota V. CIT, Kota

ITA 508/JPR/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74809 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 06-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K KHANDELWAL
• Assessee Lawyers: SARVAN KUMAR GUPTA
• Keywords: Rejection of books of accounts; Unexplained investment; Sale consideration of property below Jantri Value; Gift; Business income; Charitable institution; Opportunity of being heard; Prejudicial to interest; Revenue expenditure
• Section: 147; 148; 263; 63; 12; 143(3); 50C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI HARI OM MARATHA AND SHRI N.K. SAI NI) ITA NO. 508/JP/2013 ASSESSMENT YEAR : 2005-06 PAN: ACFPN 8855 Q SHRI KISHORE MADNANI VS. THE CIT S/O N.D. MADNANI KOTA 128, CIVIL LINES, KOTA (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SARVAN KUMAR GUPTA DEPARTMENT BY: SHRI A.K. KHANDELWAL DATE OF HEARING: 17-01-2014 DATE OF PRONOUNCEMENT: 31 -01-2014 ORDER PER HARI OM MARATHA, JM:- THIS APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEA R 2005-06 IS DIRECTED AGAINST THE ORDER OF THE LD. CIT DATED 07- 03-2013 PASSED U/S 263 OF THE I.T. ACT, 1961 (THE ACT FOR SHORT). 2.1 BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSMENT FOR ASSESSMENT YEAR 2005-06 WAS COMPLETED U/S 143(3) RE AD WITH SECTION 147 OF THE ACT ON 27-09-2010 AT A TOTAL INCOME OF RS. 3,4, 820/- AGAINST RETURNED INCOME OF RS. 1,48,700/-.` 2 2.2 THE LD. CIT ON THE BASIS OF A LETTER DATED 12-1 0-2011 RECEIVED FROM ITO, WARD- 2,(1), KOTA , PROPOSING THE ACTION U/S 2 63 OF THE ACT ON TWO POINTS BY THE LD. CIT THAT THE ASSESSMENT ORDER IS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. THESE P OINTS ARE AS UNDER:- 1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE AO DID NOT DULY VERIFY ALL THE CREDIT AND DEBIT ENT RIES APPEARING IN THE SAVING BANK ACCOUNT OF THE ASSESSE E. 2. THE AO DID NOT EXAMINE PROPERLY, COST OF IMPROVEMENT FOR RS. 4,59,000/- SHOWN BY THE ASSESSE E AND ACCEPTED THE SAME AS IT WAS. AS PER SALE DEED O F THE PROPERTY, THERE IS WORD MENTIONED IN PLOT HAS BEE N SOLD WHICH IS MENTIONED SPECIFICALLY IN THE SALE DEED WH ILE THE AO ACCEPTED THIS PROPERTY AS HOUSE AS STATED BY THE ASSESSEE. THE PARA 3 OF THIS APPELLATE ORDER OF THE LD CIT I S EXTRACTED AS UNDER: ON RECEIPT OF PROPOSAL U/S 263 OF THE I.T. ACT, 1 961 FROM THE INCOME TAX OFFICER, WARD- 2(1),KOTA A SHOW CAUSE NOTICE U/S 263 VIDE THIS OFFICE LETTER NO. CIT/KTA/ITO(TECH.)/2012-13/2535 DATED 02-01-2013 WA S ISSUED THROUGH REGISTERED A.D. POST FIXING THE CASE FOR HEARING ON 16-01-2013 FROM THE ABOVE NARRATION OF THE LD. CIT ORDER, IT B ECOMES VERITABLY CLEAR THAT THE LD. CIT SIMPLY SHOW CAUSED THE ASSESSEE VIDE LE TTER DATED 02-01-2013 AFTER RECEIPT OF THE PROPOSAL FROM THE ITO WARD- 2( 1), KOTA. HE DID NOT APPLY HIS MIND TO SEE WHATEVER PROPOSAL HAD BEEN PR OPOSED TO HIM, HE HIMSELF SHOULD HAVE BEEN SATISFIED THAT THE PROPOSE D ACTION IS REALLY FALSE U/S 263 OF THE ACT OR NOT. THE FACTS OF THE CASE IS THA T ASSESSEE IS A SMALL AND 3 PETTY CIVIL CONTRACTOR AND CARRYING CONTRACTOR SHIP BUSINESS AS WAS DONE IN EARLIER YEARS. (CIT PAGE 4). ACTUALLY ON THE BASIS OF AN INFORMATION RECEIVED IN THE OFFICE OF THE ITO THAT THE ASSESSEE HAS SOLD A PLOT TO SHRI VIMAL KUMAR JAIN S/O SHRI CHITTAR MAL JAIN, 1-213, TALWANDI KOT A AND SHRI GHANSHYAM PRASAD GARG S/O SHRI MOTI LAL GARG, VILLAGE LAKHERI , TEHSIL, INDRAGARH, DISTT. BUNDI ON 6-09-2004 FOR A CONSIDERATION OF RS . 13,41,000/-. BUT THE SUB-REGISTRAR HAS TAKEN THE VALUE OF THIS PROPERTY FOR THE PURPOSE OF STAMP DUTY U/S 50C OF THE ACT AT RS. 16,38,872/-.AS PER T HE, ITO, THE ASSESSEE DID NOT OFFER INCOME FOR TAXATION AND THEREFORE, ACTION U/S 148 OF THE ACT READ WITH SECTION 147 WAS INITIATED. 2.3 AGAINST THIS SHOW CAUSE, THE ASSESSEE MADE DETA ILED SUBMISSION WHICH ARE INCORPORATED IN THE ORDER ITSELF. SIMILAR OBJEC TIONS HAVE BEEN RAISED BEFORE US ALSO. THEREFORE, FOR READY REFERENCE, WE INCORPORATE ENTIRE WRITTEN SUBMISSION FILED BY THE ASSESSEE BEFORE US AS UNDER :- 1. ACTION U/S 263 ON THE PROPOSAL OF THE ASSESSING OFFICER ITSELF TO THE LD. CIT IS INVALID: AT THE VERY OUTSET IT IS SUBMITTED THAT THE PROCEED ING OR ACTION U/S 263 IN THE PRESENT CASE ITSELF INVALID. BECAUSE AS PER THE ORD ER OF LD. CIT. IT IS VERY CLEAR THAT THE ACTION U/S 263 IN THE PRESENT CASE HAS BEEN TAKEN O N THE PROPOSAL OF THE AO OF THE SAME WARD ON THE VERY ISSUES IN THE PROPOSAL LETTER . HE HAS NOT MADE ANY AMENDMENTS ON THE ISSUES. THUS, THE ACTION U/S 263 HAS NOT BEEN TAKEN BY THE LD. CIT SUO MOTO. THE ACTION U/S 263 CAN ONLY BE TAKEN BY T HE CIT WHEN HE HAS FOUND ANY ERROR IN THE ASSESSMENT ORDER. THE AO ITSELF CAN NO T PROPOSE TO TAKE ANY ACTION U/S 263 FOR THE ASSESSMENT MADE BY THE HIS PREDECESSOR. AT THE WORST HE CAN TAKE ACTION U/S 147/148 ONLY AFTER RECORDING SATISFACTION OR RE ASONS. AND IN LAW NO WHERE IT HAS BEEN PROVIDED THAT IF THE AO HAS FOUND ANY ERRONEOU S AND PREJUDICIAL IN THE ASSESSMENT ORDER HE MAY PROPOSE THE CIT TO TAKE ACT ION U/S 263. HENCE THE ACTION TAKEN BY THE LD. CIT ON THE PROPOSAL OF AO ITSELF I S INVALID AND LIABLE TO BE QUASHED. HOW AN ASSESSING OFFICER ITSELF CAN SAYS ITS OWN OR DER ERRONEOUS AND PREJUDICIAL TO 4 THE INTEREST OF THE REVENUE. KINDLY REFER JHEENDU R AM V/S CIT 130 TTJ 82(LUCK.) AND RAJEEV ARORA V/S CIT 135 TTJ 01(JP). 2. ACTION OF THE CIT IS INVALID AND WITHOUT JURISD ICTION: FURTHER IT IS SUBMITTED THE ACTION AND DIRECTION OF THE LD. CIT I S WITHOUT JURISDICTION AND INVALID ON THE FACTS AND LEGAL POSITION BECAUSE THE LD. CIT HAS RIGHT OR JURISDICTION OF REVISION U/S 263 ONLY WHEN THE ORDER OF THE AO(I) I S ERRONEOUS IN SO FAR AS (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. S. 26 3 PROVIDES AS UNDER 263. (1) THE COMMISSIONER MAY CALL FOR AND EXAMIN E THE RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE [ASSESSING] OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPOR TUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEE MS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUST IFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLIN G THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. AND ON PERUSAL OF THE ORDER OF THE LD. AO AS WELL A S THE ORDER OF THE LD. CIT ITSELF IT IS VERY CLEARLY PROVED THAT THE ORDER OF THE AO HAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BECAUS E THE LD. AO DURING THE COURSE OF ASSESSMENT PROCEEDING HAS ASKED OR MADE INQUIRY REG ARDING THE VARIOUS ISSUES INCLUDING THESE ISSUES VIDE REASONS RECODED (PB8) A ND ITS QUERY REPLIED BY THE ASSESSEE THROUGH LETTERS AND DETAILS(PB9-38) AS REQ UIRED BY THE AO) WITH VARIOUS DETAILS AND INFORMATION AS PER THOSE LETTERS. AND THE AO DID EXAMINE ALL THESE DETAILS, RECORD AND DISCUSSION WITH THE A/R AND ASS ESSEE, AFTER THAT THE AO HAD TAKEN A POSSIBLE VIEW BEING A QUASI JUDICIAL AUTHORITY. HE COMPLETED THE ASSESSMENT AT RS. 3,44,812/-. WHIL E MAKING THE ASSESSMENT HE HAD MADE ADDITION OF CAPITAL OF RS.1, 79,872/- AND TRADING ADDITION OF RS. 16,240/- VIDE ASSESSMENT ORDER DT. 27.09.2010(P B 5-7). THUS IN THE LIGHT OF THE SETTLED LEGAL POSITION THE CIT CANNOT BE SAID TO BE JUSTIFIED IN HOLDING THAT IF THE NECESSARY INQUIRY WERE NOT DONE BY THE AO THE ORDER BECOMES ERRONEOUS AND AUTOMATICALLY, IT SHALL ALSO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD. CIT HAS NOT GONE IN TO THE MER IT OF THE ASSESSEES CASE OR ARGUMENT OR CONTENTIONS, IF SO THAN HOW IT CAN BE S AID OR FOUND OUT WHETHER ANY PREJUDICE IN FACT HAS BEEN CAUSED TO REVENUE OR NOT BY LACK OF INQUIRY ON THE PART OF THE AO. IF NO LOSS OF REVENUE IS CAUSED AND THE RES ULT REMAINS THE SAME EVEN AFTER CONDUCT THE INQUIRY. IT IS VERY SETTLED PRINCIPAL A ND LEGAL POSITION BY VARIOUS COURTS OR JUDGMENTS THAT IT WILL BE WRONG TO SAY THAT MERELY BECAUSE PROPER ENQUIRY WAS NOT CONDUCT, THE ASSESSMENT WOULD BECOME PREJUDICIAL AL SO. IT WAS INCUMBENT UPON THE CIT TO HAVE SHOWN AS TO HOW THE ORDER WAS PREJUDICI AL TO THE INTEREST OF THE REVENUE. IN THE PRESENT CASE THE APPELLANT HAS FUR NISHED A DETAILED REPLY (PB 39- 43) TO THE SHOW CAUSE NOTICE BY MAKING THE REFERENC E TO THE FACTS OF THE CASE. DESPITE THAT THE CIT DID NOT PROVED OR BRING ANY MATERIAL O R CIRCUMSTANTIAL EVIDENCE ON RECORD THAT THE CLAIMS OF THE ASSESSEE ON THESE ISS UES ARE NOT GENUINE, BOGUS, NOT VERIFIABLE, NOT CORRECT. HE HAS NOT DECIDED MERIT O F THE CASE WHETHER ANY ADDITION OR DISALLOWANCES WAS CALLED FOR OR NOT. HE WAS ONLY OF THE VIEW THAT THE AO HAS NOT 5 MADE DEEP OR PROPER INQUIRY ON THE ISSUE. HE HAS O NLY STATED THAT THE ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HENCE THE CONCLUSION OF THE CIT THAT THE ORDER IS PREJUDICIAL TO THE INTEREST OF THE REVENUE IS NOT A MATTER OF SUBJECTIVE SATISFACTION OF THE CIT. HE, THEREFORE OUGHT TO HAVE FOUND OUT THIS ON THE BASIS OF OBJECTIVE MATERIAL AFTER A SSESSING THE CONTENTION RAISED BY THE ASSESSEE IN ITS REPLY TO THE SHOW CAUSE NOTICE. HE, HOWEVER FAILED TO DO SO AND REACHED A CONCLUSION THAT THE ORDER WAS PREJUDICIAL WITH A VIEW THAT THE PRESENT AO SHALL UNDERTAKE THAT EXERCISE AFTER THE ASSESSMENT HAS BEEN SETASIDE FOR HIS CONSIDERATION. SUCH A VIEW OR ACTION IS NOT WELL FO UNDED IN THE LAW OR BY VARIOUS HONBLE COURTS. KINDLY REFER DIRECT DECISIONS IN CA SE OF SMT. LEELA CHOUDHARY V/S CIT 289 ITR 226(GAU.) ALSO REFER, SAW PIPES LTD V/ S ADD. CIT 94 TTJ 1036(DEL) ALSO REFER MALABAR INDUSTRIAL CO. LTD. V/S CIT 159 CTR(1)(SC), CIT V/S RAYN SILK MILLS 221 ITR 155(GUJ.) SAME VIEW HAS BEEN EXPRESSED IN THE CASE OF KAMAL K UMAR GUPTA V/S CIT 142 TTJ 9(JP) WHEREIN IT HAS BEEN HELD THAT ASSESSEE WAS ASKED BY THE AO TO FILE THE DETAILS OF TRADE CREDITORS WHICH ARE SHOWN IN T HE NAME OF AGRICULTURALIST. IN THE REPLY, ASSESSEE FILED WRITTEN SUBMISSION ENCLOSING THE LIST OF CREDITORS. THUS, THE AO MADE THE INQUIRY AND IT IS NOT A CASE OF LACK OF IN QUIRY BUT CAN BE CASE OF INSUFFICIENT ENQUIRY. CIT WAS NOT JUSTIFIED IN PASSING THE ORDER U/S 263. IN THE PRESENT CASE ALSO IS THE SAME POSITION. AND ALSO FOLLOWED IN THE CASE OF SH. GYAN CHAND JAIN V/S CIT 50 TW 109(JP). 3. NO FIX FORMULA OR LIMIT OR EXTENT OF INQUIRY: T HUS, HERE IT IS NOT THE CASE OF THE CIT THAT NO INQUIRY OR EXAMINE HAS BEEN MADE BY THE AO ON THESE ISSUES. THE AO HAS MADE THE INQUIRY AS ABOVE, WHEN THE REOPENIN G WAS ITSELF ON THE VERY SAME ISSUE. NO ONE (AO) CAN READ THE MIND OF OTHER PERS ON(CIT) WHILE DOING THE WORK ON ITS SPRITE AND CANNOT GUESS THE EXPECTATION OR MANN ER OF HIS SUPERIOR AUTHORITY. HERE THE MEANING IS THAT NON MAKING OF AN ENQUIRY MAY RE NDER THE SUBJECT ASSESSMENT ERRONEOUS, HOWEVER THE PROCESS OF MAKING ENQUIRIES MAY BE ENDLESS. FOR SOMEONE, SOME ENQUIRIES MAY BE SUFFICIENT (HERE AO), HOWEVER , THE SAME MAY BE INSUFFICIENT FOR THE OTHER(CIT). THERE IS NO STRAIGHT JACKET FOR MULA TO MAKE INQUIRY IN THE ASSESSMENT PROCEEDINGS. WHAT IS REQUIRED IS THAT TH E AO SHOULD FRAME THE ASSESSMENT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT, AS INTERPRETED AND IN THE LIGHT OF THE RELEVANT JUDICIAL PRONOUNCEMENTS, AS A VAILABLE ON THE DATE OF FRAMING THE ASSESSMENT OR MATERIAL AVAILABLE BEFORE HIM. THE A O BEING A QUASI-JUDICIAL AUTHORITY CAN ALSO TAKE SUPPORT FROM ONE SET OF THE DECISIONS, IF THERE, IN CASE IS A DIVERSIONS OF OPINION. HE CANT BE DIRECTED TO MAKE AN ASSESSMENT IN A PARTICULAR MANNER, AS SPECIFICALLY PROHIBITED BY S. 119. IN CASE OF CHORMA BUSINESS LTD V/S DCIT 82 TTJ 54 0(CAL) IT HAS BEEN HELD THAT AO BEFORE MAKING THE ASSESSMENT, HAVING CALLE D FOR DETAILS AND HAVING DISCUSSED THE MATTER WITH THE A/R OF THE ASSESSEE, SUCH AN ORDER CANNOT BE CALLED ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE ONLY BECAUSE THE AO MADE A BRIEF ASSESSMENT ORDER WITHOUT DISCUSSING SUCH DETA ILS THEREIN. FURTHER, THE CIT ALSO DID NOT GIVE ANY FINDING AS TO WHETHER THE SHARE TR ANSACTION LOSS CLAIMED BY THE ASSESSEE WAS BOGUS OR NOT GENUINE BUT MERELY STATED THAT THE TRANSACTION COULD HAVE BEEN VERIFIED BY THE CONTRACT NOTES FROM THE BROKER S, CHALLAN ETC. REVISION ORDER OF THE CIT SET ASIDE. ALSO REFER SUBRATA KUMAR NAG V/ S CIT 127 TTJ 238(KOL), RAJIV ARORA V/S CIT (SUPRA). 6 4. NO REQUIREMENT OF DEEP INVESTIGATION: THUS, ON THE PERUSAL OF THE ORDER OF THE CIT IT IS VERY CLEAR THAT HE WAS OF THE VIEW TH AT THE AO MUST HAVE MADE DEEP INVESTIGATION AND IN THE CASE OF ARVIND BHARTIYA VI DHYALAYA SAMITI V/S ITO 94 TTJ 614(JP). WHERE IN HELD THAT DEEP INVESTIGATION IS OUTSIDE OF THE PREVIEW OF ASSESSMENT PROCEDURE . AND ALSO HELD THERE IS NO CASE LAWS WHICH SAY FO R DEEP INVESTIGATIONS BECAUSE THERE IS NO LIMIT OF DEEP IN VESTIGATION. ALSO REFER GABERIAL INDIA LTD. 203 ITR 108 (BOM). THAT IS WHY HONBLE S C HELD IN MALABAR FISHERIES INDUSTRIES LTD. 243 ITR 82 (SC) THAT IN EACH AND EV ERY TYPE OF MISTAKE/ ERROR CANNOT BE MADE A BASIS TO INVOKE SEC.263. THE CASE LAWS AV AILABLE ON THE SUBJECT ON THIS ASPECT, ARE DISTINGUISHABLE IN AS MUCH AS THOSE WER E THE CASES WHERE NO INQUIRIES AT ALL (OR VERY MINOR REFLECTING FROM A SHORT ASSESSME NT ORDER), WHICH IS NOT AT ALL A CASE HERE. ALSO REFER GYAN CHAND GUPTA V/S CIT 135 TTJ 0 1(JP) IN CIT V/S JAIN CONSTRUCTION 257 CTR 336(RAJ. ) IT HAS BEEN HELD THAT REVISION U/S 263ORDER ERRONEOUS AND PREJUDICIAL TO INTEREST OF REVENUECIT ISSUED A NOTICE U/S 263 TO ASSESSEE ON GROUND THAT ASSESSMENT ORDER OF AO PASSED U/S 143 (3) WAS AN ORDER ERRONEOUS AND PREJUDICIAL TO INTEREST OF REVENUE TRIBUNAL ALLOWED APPEAL OF ASSESSEEHELD, SAFEGUARD PROVIDED TO ASSESSEE IN SECTION 263 IS THAT MERE ERRONEOUS ORDERS ARE NOT R EVISABLE BUT REVISIONAL AUTHORITY HAS TO FURTHER ESTABLISH WITH MATERIAL ON RECORD TH AT SUCH ERRONEOUS ORDER IS ALSO PREJUDICIAL TO INTEREST OF REVENUETWIN CONDITIONS OF ASSESSMENT ORDER BEING ERRONEOUS AND IT ALSO BEING PREJUDICIAL TO INTEREST OF REVENUE, KEEPS INITIAL BURDEN ON COMMISSIONER, WHO INVOKES SUCH JURISDICTIONPREM ISE FOR INVOKING REVISIONAL JURISDICTION ON THE GROUND THAT THE ASSE SSING AUTHORITY MADE INSUFFICIENT ENQUIRY OR IMPROPER ENQUIRY AND FAILED TO VERIFY CLOSING STOCKS IN RECORD OF ASSESSEE, BEFORE PASSING ASSESSMENT ORDER , FALLS FLAT BY A BARE PERUSAL OF ASSESSMENT ORDER ITSELFTHUS, TRIBUNAL WAS JUSTIFIE D IN HOLDING THAT COMMISSIONER WAS IN ERROR IN INVOKING REVISIONAL JU RISDICTION U/S 263MERE ALLEGED INSUFFICIENCY OF ENQUIRY IN OPINION OF COMM ISSIONER BY ASSESSING AUTHORITY, COULD NOT PERMIT HIM TO INVOKE REVISIONA L JURISDICTION U/S 263 THEREFORE, ESSENTIAL TWIN CONDITIONS FOR INVOKING R EVISIONAL JURISDICTION, WERE NOT SATISFIED 5. ON PERUSAL OF THE ORDER IN THE PRESENT CASE THE LD. CIT HAS TAKEN ACTION U/S 263 ONLY ON THE ASSUMPTION AND PRESUMPTION THAT THE NO VERIFICATIONS HAS BEEN MADE BY THE AO ON THE ISSUES AND NOT VERIFIED. KINDLY R EFER CIT V/S PARAS COTTON CO. 288 ITR 211(RAJ.) WHERE HELD THAT CIT COULD NOT HAVE A CTED ON MERE ASSUMPTION. MERE SUSPICION CANNOT TAKE PLACE OF PROOF AND THE ORDER OF CIT U/S 263 CANNOT BE SUSTAINED. IN CIT VS ANUPAM CHARITABLE TRUST 164 I TR 129 (RAJ) ALSO IT IS HELD THAT TO PROCEED U/S 263 ON MERE SUSPICION IS NOT PERMISS IBLE. 6.1 RELIANCE IS ALSO PLACE UPON THE DECISION OF ON RISHI KUMAR GUPTA V/S CIT (2004) 90 TTJ (AGRA-TRIB) 645, WHEREIN IT HAS BEEN HELD THAT, IN THE INSTANT CASE WE HAVE SEEN THAT IT IS NOT A CASE OF NO ENQUIRY, BUT A CASE OF PROPER ENQUIRY, WHICH IS A MATTER OF SUBJEC TIVITY. IT IS NOT THE COMMISSIONER TO DECIDE THAT UP TO WHAT EXTENT ENQUI RY IS TO BE MADE, BUT IN FACT, IT IS THE ASSESSING OFFICER TO DECIDE THE MATTER AND T O DRAW INFERENCES. ONCE THE, 7 ASSESSING OFFICER HAS DRAWN INFERENCE AFTER MAKING ENQUIRY, THE COMMISSIONER DOES NOT HAVE ANY JURISDICTION U/S 263 TO CANCEL TH E ASSESSMENT ORDER. ENDLESS ENQUIRY IS NOT POSSIBLE AND THE ENQUIRY IS TO BE CL OSED AT SOME STAGE. IT IS FOR THE ASSESSING OFFICER TO DECIDE TO END THE ENQUIRY THE COMMISSIONER CANNOT TRANSGRESS THE JURISDICTION UNDER SECTION 263 BY MENTIONING TH AT NO PROPER ENQUIRY WAS MADE. HENCE, WE CANCEL THE ORDER PASSED BY COMMISSI ONER U/S 263 OF IT ACT. 6.2 IN C IT V/S GIRDHARI LAL 258 ITR 331(RAJ.) IT HAS BEEN HELD, WHEN THE ASSESSING OFFICER AFTER GOING THROUGH THE MATERIAL ON RECORD AND AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, MADE SOME ADDITIONS AND REJECTED THE BOOKS OF ACCOUNTS, IT COULD NOT BE SAID THAT HE HAD NOT APPLIED HIS MIND. IT IS NOT ALWAYS NECESSARY THAT EVERY ASSESSEE IN THE LIN E OF BUSINESS SHOULD HAVE THE SAME RATE OF PROFIT. THE TRIBUNAL WAS CORRECT IN CA NCELING THE ORDER UNDER SEC 263 OF INCOME TAX ACT. ALSO REFER CIT V/S GANPAT RAM B ISHNOI 296 ITR 292(RAJ.) 6.3 IN HARYANA STATE CO-OP SUPPLIER & MARKETING FED ERATION LTD. V/S DY. CIT (2004) 90 ITD 551 (CHD-TRIB). IN HYCRON INDIA V /S ASSTT. CIT (2004) 82 TTJ (JOD-TRIB) 450, THE ORDER PASSED U/S 263 WAS NO T VALID AS, ON THE FACTS OF THE CASE, THE ASSESSING OFFICER HAS MADE DUE ENQUIRIES, FOR ALLOWING INTEREST INCOME AS BUSINESS INCOME AND AFTER APPLICATION OF MIND THE A SSESSMENT ORDER WAS PASSED. SAME CANNOT BE TERMED AS ERRONEOUS AND PREJUDICIAL ORDER. SINCE AFTER OBTAINING REQUISITE INFORMATION & DETAILED EVIDENCE, THE ASSE SSING OFFICER HAD ACCEPTED THAT THERE WERE NO UNEXPLAINED INVESTMENTS & GIFTS RECEI VED BY ASSESSEE WERE GENUINE, THEREFORE, ASSESSMENT ORDER CANNOT BE SAID TO BE ER RONEOUS & PREJUDICIAL TO THE INTEREST OF REVENUE.- VIDE SHRI MUKESH KUMAR JAIN V /S ITO (2000) 13 DTC 793 (JAB-TRIB), NATIONAL PLASTIC & ALLIED PLASTIC & ALL IED INDUSTRIES V/S DEPUTY CIT (2000) 18 DTC 315 (MUM-TRIB) (2000) 67 TTJ (MUM-TRI B) 824, CIT V/S SMT. NIRMALA ANAND (2000) 16 DTC 538, (DEL-HC) (2000) 24 5 ITR 836 (DEL.). 6.4 IN BALJEES V/S ASSTT. CIT (2005) 3 (II) ITCL, 3 8 (CHD. B-TRIB) (2004) 85 TTJ (CHD-TRIB) 543, ASSESSMENT OF THE ASS ESSEE RESTAURANT WAS MADE BY ASSESSING OFFICER AFTER ISSUING DETAILED QUESTIONNA IRE, EXAMINATION OF THE BOOKS OF ACCOUNTS, VOUCHERS, DETAIL OF OPENING & CLOSING STO CK AND COMPARISON OF GROSS PROFIT RATE WITH EARLIER YEARS. HOWEVER, THE COMMIS SIONER INVOKED ON THE GROUND THAT THE ASSESSMENT WAS COMPLETED IN UNDUE HASTE & WITHOUT CONDUCTING PROPER ENQUIRIES WITH REGARD TO THE COST OF RAW MATERIALS & SALES AS PER MENU AND OTHER RELEVANT FACTORS FOR PROPER ASSESSMENT. THE ASSESSE E ARGUED THAT IT WAS NECESSARY FOR ASSUMING JURISDICTION THAT THERE SHOULD BE A PR OPER AND VALID REASON AND THE CONCLUSION OF THE COMMISSIONER SHOULD BE BASED ON T HE FACTS. IT WAS SUBMITTED THAT IN THE INSTANT CASE THE COMMISSIONER HAD NOT COME T O A DEFINITE CONCLUSION AS TO HOW THE ORDER PASSED BY THE ASSESSING OFFICER WERE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT WAS VEHEMENTLY ARGU ED THAT THE ENTIRE APPROACH OF THE COMMISSIONER WAS FACULTY & CRYPTIC AND ON THAT BASIS, NO ORDER U/S SEC 263 COULD HAVE BEEN PASSED. IT WAS HELD THAT THE POWER OF COMMISSIONER U/S 263 IS QUASI-JUDICIAL IN THE CHARACTER & THE COMMISSIONER, HAS NOT TO RECORD HIS SUBJECTIVE SATISFACTION BUT TO COME TO A CONCLUSION THAT THE O RDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS & PREJUDICIAL TO THE INTEREST OF THE REVENUE. THUS AS THE ASSESSMENT HAS BEEN MADE AFTER RELEVANT ENQUIRIES S AME COULD NOT BE CANCELLED U/S 263. THE REVISIONAL ORDER, THEREFORE, WAS SET ASIDE . 8 6.5 IN THE SHIVAM LEASING & FINANCE LTD. V/S ITO ( 1993) 117 TAXATION 49 (DEL-TRIB), THE COMMISSIONER INITIATED PROCEEDIN G ON THE ALLEGATION THAT THE ASSESSING OFFICER FINALIZED ASSESSMENT WITH UNDUE H ASTE AND WITHOUT ENQUIRING INTO THE ASSESSEES SHAREHOLDING. THE DECISION OF THE CO MMISSIONER WAS BASED ON SUSPICION BECAUSE PAPERS APPEARED NEW TO HIM. IT WA S HELD THAT THE PAPER APPEARED FRESH TO THE COMMISSIONER OF THE FACTS THAT THE PAP ER DID NOT BEAR THE TICK MARKS OF THE ASSESSING OFFICER DID NOT LOOK INTO THE PAPERS AND HE DID NOT APPLY HIS MIND BUT IGNORED THE ENTIRE EVIDENCE AND ACCEPTED THE ASSESS EE PLEA. OTHER THAN THE SUSPICION OF THE COMMISSIONER THAT THE ASSESSING OF FICER DID NOT MAKE PROPER ENQUIRY, THERE WAS NO EVIDENCE BROUGHT ON RECORDS T O SHOW THAT ANY OF THE SHAREHOLDERS, ASSUMING THAT THE AMOUNT COULD BE ADD ED AS INCOME OF THE ASSESSEE, WERE BOGUS IN NATURE OR THE BENAMIDARS OF SOME OTHE R PERSONS. SUSPICION CANNOT BE THE BASIS TO INVOKE THE POWERS VESTED IN THE COM MISSIONER UNDER SECTION 263. 6.6 IN THE CASE OF COMMISSIONER OF INCOME TAX V/S A NIL KUMAR SHARMA 335 ITR 83, REVISION- ERRONEOUS AND PREJUDICIAL O RDER- LACK OF PROPER ENQUIRY- CIT CAME TO THE CONCLUSION THAT THE ISSUE RELATING TO TAXABILITY OF COMPENSATION RECEIVED BY THE ASSESSEE WAS NOT EXAMINED BY THE AO AND HELD THAT THE ORDER OF AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE- TRIBUNAL HAS ARRIVED AT A CONCLUSIVE FINDING THAT THROUGH THE AS SESSMENT ORDER DOES NOT PATENTLY INDICATE THAT ISSUE OF THE TAXABILITY OF THE COMPEN SATION HAS BEEN CONSIDERED BY THE AO, THE RECORD SHOWS THAT THE AO HAS APPLIED HI S MIND-THUS, IT IS NOT A CASE OF LACK OF ENQUIRY EVEN IF THE ENQUIRY WAS INADEQUA TE AND THE CIT WAS NOT JUSTIFIED IN PASSING THE ORDER UNDER SECTION 263- F INDINGS OF THE TRIBUNAL QUASHING THE ORDER OF THE CIT PASSED UNDER SECTION 263 DO NO T WARRANT ANY INFERENCE- CIT V/S SUNBEAM AUTO LTD. (2009) 227 CTR (DEL) 133: (20 09) 31 DTR (DEL) 1 FOLLOWED. 7. THE FUNDAMENTAL PRINCIPLES WHICH EMERGE FR OM THE CATENA OF JUDICIAL PRONOUNCEMENTS MAY BE SUMMARIZED AS UNDER : (I) THE CIT MUST RECORD SATISFACTION THAT THE O RDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE I NTEREST OF THE REVENUE. BOTH THE CONDITIONS MUST BE FULFILLED: (II) SECTION 263 CANNOT BE INVOKED TO CORR ECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSIN G OFFICER AND IT IS ONLY WHEN AN ORDER IS ERRONEOUS, THAT THE SECTION WILL BE ATTRACTED. (III) AN INCORRECT ASSUMPTION OF FACTS OR A N INCORRECT APPLICATION OF LAW WILL SUFFICE FOR THE REQUIREMENT OR ORDER BEING ERRONEOUS. (IV) IF THE ORDER IS PASSED WITHOUT APPLICAT ION OF MIND, SUCH ORDER WILL FALL UNDER THE CATEGORY OF ERRONEOUS ORDER. (V) EVERY LOSS OF REVENUE CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND IF THE ASSESSING OFFICER HAS ADOPTED ONE OF THE COURSES PERMISSIBLE UNDER LAW OR WHERE TWO V IEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW UNDER WI TH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER, UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE UNDER THE LAW. 9 (VI) IF WHILE MAKING THE ASSESSMENT, THE AS SESSING OFFICER EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIN D TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME, THE CIT, WHILE EXERCISING HIS POWER UNDER SECTION 263, IS NO T PERMITTED TO SUBSTITUTE HIS ESTIMATE OF INCOME IN PLACE OF THE INCOME ES TIMATED BY THE ASSESSING OFFICER. (VII) THE ASSESSING OFFICER EXERCISE QUASI-JU DICIAL POWER VESTED IN HIM AND IF HE EXERCISE SUCH POWER IN ACCORDANC E WITH LAW AND ARRIVES AS A CONCLUSION, SUCH CONCLUSION CANNOT BE TERMED T O BE ERRONEOUS SIMPLY BECAUSE THE CIT DOES NOT FEEL SATISFIED WITH THE CONCLUSION. (VIII) THE CIT, BEFORE EXERCISING HIS JURISD ICTION UNDER SECTION 263 , MUST HAVE MATERIAL ON RECORD TO ARRIVE AT A SAT ISFACTION. (IX) IF THE ASSESSING OFFICER HAS MADE ENQU IRIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON THE RELEVANT ISS UES AND THE ASSESSEE HAS GIVEN DETAILED EXPLANATION BE A LETTER IN WRITING A ND ASSESSING OFFICER ALLOWED THE CLAIM ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, THE DECISION OF THE ASSESSING OFFICER CANNOT BE HELD TO BE E RRONEOUS SIMPLY BECAUSE IN HIS ORDER HE DOES NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. KINDLY REFER THE LAKE PALACE HOTELS & MOTELS PVT L TD V/S THE CIT UDAIPUR 48 TW 181(JD). 8. ON MERIT OUR SUBMISSIONS ARE AS UNDER WHICH HAS ALSO BEEN FILED BEFORE THE LD. CIT: REGARDING FIRST ISSUE ON ACCOUNT OF VE RIFICATION OF DEBIT CREDIT ENTRIES IN SAVING BANK ACCOUNT: IT IS SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDING THE ASSESSEE HAS SUBMITTED THAT THE COPY OF BANK ACCOUNT(PB 10-11) AND THE ENTRIES IN THIS ACCOUNT HAS BEEN EXPLAINED TO THE AO. AND ON PERUSAL OF THE BANK ACCOUNT IT IS VERY CLEAR THAT THERE IS NO MUCH ENTRIES IN THIS BANK ACCOUNT AND NOR ANY ENTRIES IN THIS BANK ACCOUNT FROM WHICH IT IS REVEALED OR ARISES ANY UNDISCLOSED INCOME. FOR EXAMPLE IN THE CREDIT SIDE ON IST APRIL THERE IS OPENING BALANCE OF RS. 1,82,259/- OUT OF THESE BALANCE THE ASSESSEE HAS MADE WITHDRAWALS IN SMALL AMOUNTS ON VARIOUS DATES TILL 25.06.2004. ON 28/06 THERE IS DEPOSIT/CREDIT OF RS. 18,000/- THROUGH CHEQUE, ON 02/08 THERE IS C REDIT OF HALF YEARLY INTEREST OF RS. 2076/- ON 07/08 DEPOSIT/CREDIT OF RS. 18,000/- THROUGH CHEQUE AND RS. 1,00,000/- DEPOSIT/CREDIT OF RS. 18,000/- THROUGH C HEQUE WHICH WAS RECEIVED ON ACCOUNT OF SALE OF PLOT. ON 27/08 THERE IS DEPOSIT/ CREDIT OF RS. 12,950/-THROUGH CHEQUE. ON 09/09 THERE IS DEPOSIT/CREDIT OF RS. 12 ,41,000/- THROUGH PAY ORDER NO. 897661 WHICH WAS RECEIVED ON ACCOUNT OF SALE OF PLOT AND THESE TWO BIG ENTRIES ARE CROSS VERIFIED FROM THE SALE DEED ITSEL F(PB20) . AND THERE AFTER ALSO SOME SMALL ENTRIES BY CHEQUE AND THERE IS ONLY ONE ENTRIES OF RS. 45,000/- IN CASH DEPOSIT IN FULL BANK ACCOUNT AND OTHER ENTRIES BY C HEQUE WERE ON ACCOUNT OF BUSINESS TRANSACTION. THUS ON PERUSAL OF BANK ACCOU NT THE DEBIT AND CREDIT ENTRIES ARE ITSELF VERIFIABLE AND EXPLANATORY AND THERE IS NO ABNORMAL ENTRIES. HENCE HOW IT CAN BE SAID THAT THE AO HAS NOT VERIFIED THE BAN K ENTRIES. THE LD. CIT HAS NOT PROVIDED A SINGLE INSTANCE THAT WHICH ENTRIES ARE N OT VERIFIED AND THERE BORN OUT ANY UNDISCLOSED INCOME. IF SO THAN HOW IT CAN BE S AID THAT ORDER OF THE LD. AO WAS BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. REGARDING COST OF IMPROVEMENT FOR RS. 4,95,000/- SH OWN BY THE ASSESSEE AND STATUS OF LAND AS PLOT OR HOUSE: IN THIS REGARD IT IS SUBMITTED THAT AS IN THIS MATTER THE CASE WAS REOPENED DUE TO THE DIFFERENCE IN COST BETWEEN THE SALE CONSIDERATION AND VALUE DETERMINED BY THE STAMP DUT Y OFFICER. IN THE COMPUTATION 10 OF TOTAL INCOME FILED WITH THE RETURN THE ASSESSEE HAS DECLARED THE SHORT TERM CAPITAL LOSS AT RS. 1,18,000/- BY GIVING THE CALCUL ATION(PB 1-3). IN THE COURSE OF ASSESSMENT PROCEEDING THE POINT REGARDING COST OF I MPROVEMENT HAS BEEN DULY EXAMINED BY THE AO WHICH IS CLEARLY PROVED FROM THE RECORD ITSELF BECAUSE THE AO HAS DEMANDED THE PROOF OF COST OF IMPROVEMENT OF RS. 4,95,000/- IN RESPONSE THERETO THE ASSESSEE HAD FILED THE BILLS A ND VOUCHER OF THE EXPENSES(PB 35-38) CONTAINING THE FILL DETAILS TO THE AO AND A FTER EXAMINING THESE DETAILS THE AO HAS ACCEPTED THE SAME. REGARDING THE NATURE OF PROPERTY AS PLOT OR HOUSE I T IS SUBMITTED THAT THE LD. AO (WHO HAS PROPOSED THE ACTION U/S 263) AS WEL L THE LD. CIT BOTH PROCEEDED ON MISCONCEPTION OF FACTS AND WITHOUT GOING THROUGH THE FACTS AND RECORDS. BECAUSE IN THE ASSESSMENT ORDER THE AO HAS NEITHER STATED PLOT NOR STATED HOUSE HE STATED ONLY PROPERTY EXCEPT IN THE REASONS RECORDED . FURTHER IT IS SUBMITTED THAT ORIGINALLY THE ASSESSEE HAD PURCHASED A HOUSE FROM THE RAJ. HOUSING BOARD KOTA AND THEREAFTER HE MADE IMPROVEMENT IN THIS HOUSE. T HE PURCHASER HAS BROKEN THIS HOUSE FOR NEW CONSTRUCTION AND NOW IT WAS IN THE SH APE OF PLOT. THIS HAS BEEN CLEARLY MENTIONED IN THE SALE DEED. ON PERUSAL OF T HE ALL PAGES OF SALE DEED ITSELF(PB18). IT IS CLEARLY MENTIONED ALMOST ON EVE RY PAGES THAT HOUSE SOLD(AT PRESENT IT IS IN THE SHAPE OF PLOT). THUS, THE ASSE SSEE HAS SOLD THE HOUSE NOT PLOT AND IT IS ALSO CLEAR FORM THE PURCHASE DEED ITSELF (PB32-34) AND THE REGISTRAR OF STAMP DUTY HAS ALSO VALUED THE PROPERTY AS HOUSE. AND THE LD. AO (WHO HAS PROPOSED THE ACTION U/S 263) AS WELL THE LD. CIT B OTH HAVE MISGUIDED THEIR SELF DESPITE THE RECORD AVAILABLE. IF SO THAN HOW IT CAN BE SAID THAT ORDER OF THE LD. AO WAS BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. DURING THE ASSTT. PROCEEDING THE SAME HAS BEEN EXPL AINED TO AO ALSO AND HE HIMSELF WAS SATISFIED. THEREBY NO INFERENCE HAS BEEN MADE BY AO. IT IS SUBMITTED THAT WHEN ALL THE DETAILS SUBMITTED BY ASSESSEE AND AO FRAMED THE ASSTT ORDER THEREON, RELIANCE IS PLACED ON A CASE OF HIGH COURT OF GUJARAT 21 TAXMAN. COMM. 64 (GUJ) COMMISSIONER OF I . TAX V/S AMIT CORPORATION IT HAS BEEN HELD WHEN DURING COURSE O F FRAMING OF ASSESSMENT, ASSESSING OFFICER HAD ACCESS TO ALL RECORDS OF ASSE SSEE AND AFTER PERUSING SAID RECORDS, HE FRAMED ASSESSMENT, SAID ASSESSMENT COUL D NOT BE RE -OPENED IN EXERCISE OF REVISION POWER UNDER SECTION 263 FOR MA KING FURTHER INQUIRES . REFERENCE HAS BEEN MADE TO THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF ANIL BULK CARRIERS (P) LTD. V S. CIT (2005) 194 CTR (ALL.) 226 : (2005) 276 ITR 625 (ALL.). IT IS FURTHER SUBMITTED THAT ON THE PERUSAL OF ASSE SSMENT ORDER YOUR GOOD SELF WOULD FIND THAT THERE IS AN ADDITION OF RS. 1, 79,872/- HAS BEEN MADE IN THE INCOME OF ASSESSEE ON ACCOUNT OF CAPITAL GAIN AND A SSESSEE HAS NOT PREFERRED ANY APPEAL FOR THAT ADDITION. THUS IT CANNOT BE SAID HE HAD NOT APPLIED HIS MIND IN MAKING ASSESSMENT OF INCOME OF ASSESSEE. THE RELIANCE IS PLACED ON DECISION OF RAJASTHAN HIG H COURT ,IN THE CASE OF COMMISSIONER OF WEALTH TAX VS. GIRDHARI LAL 258 ITR 331 IT IS HELD : 11 WHEN THE ASSESSING OFFICER AFTER GOING THROUGH THE MATERIAL ON RECORD AND AFTER CONSIDERING THE EXPLANATION OF THE ASSESS EE, MADE SOME ADDITIONS AND REJECTED THE BOOKS OF ACCOUNTS, IT COULD NOT BE SAI D THAT HE HAD NOT APPLIED HIS MIND. IT IS NOT NECESSARY THAT THE EVERY ASSESSEE I N THE LINE OF BUSINESS SHOULD BE THE SAME RATE OF PROFIT. WHEN THE ASSESSING OFFICER HAD CONSIDERED ALL THE R ELEVANT MATERIAL ON RECORD, IT WAS BASICALLY A QUESTION OF FACTS AND IT COULD NOT BE INTERFERED WITH UNLESS THE FINDING OF THE TRIBUNAL WAS FOUND PERVER SE. CONSIDERING THE MATERIAL ON RECORD, IT COULD BE SAID THAT FINDING OF THE TRI BUNAL WAS PERVERSE. THEREFORE, THE TRIBUNAL WAS CORRECT IN CANCELLING T HE ORDER UNDER SECTION 263. IT IS SUBMITTED THAT DEPARTMENT CAN ASSUME JURISDIC TION UNDER SECTION 263 OF INCOME TAX ACT IF TWIN CONDITIONS OF THE ORDER BEIN G ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ARE SATISFIED.IF THE VI EW TAKEN BY THE A.O. IS ONE OF THE POSSIBLE VIEWS THEN LEARNED CIT CANNOT ASSUME JURIS DICTION. FOR THIS PURPOSE RELIANCE HAS BEEN PLACED ON THE FOLLOWINGS DECISION S: 1. MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 I TR 83 (SC) 2. CIT VS MAX INDIA LTD.(2007)213 CTR 266(SC ) IT IS FURTHER SUBMITTED THAT PROCEEDINGS UNDER S. 2 63 CANNOT BE TAKEN ON THE GROUND THAT THE AO HAS NOT MADE SUFFICIENT ENQUIRY. THE LEARNED CIT CAN ASSUME JURISDICTION IF THERE HAS BEEN LACK OF ENQUIRY. IN THE INSTANT CASE, THE ENQUIRY HAS BEEN MADE, THOUGH THE ENQUIRY MAY NOT BE SUFFICIENT IN THE OPINION OF THE LEARNED CIT. THE RELIANCE IS PLACED UPON THE DECISION OF HO NBLE DELHI HIGH COURT IN THE CASE OF CIT V. HINDUSTAN MARKETING & ADVERTISING CO . LTD. [2010] 46 DTR (DEL.) 109. THE ATTENTION IS DRAWN TOWARDS THE DECI SION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. TRUSTEES ANUPAM CH ARITABLE TRUST [1987] 65 CTR (RAJ.) 30 : [1987] 167 ITR 129 (RAJ.) THUS IT IS CLEAR THAT ASSESSING OFFICER HAS MADE EN QUIRY BUT SUFFICIENCY OF ENQUIRY CAN BE DEPEND UPON FROM PERSON TO PERSON. T HE AO CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER ENQUIRY. IT IS THE DUTY OF THE AO TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN THE RETURN WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE AN ENQUIRY. THE WORD ERRONEOUS INCLUDES THE FAILURE TO MAKE ENQUI RY. IT IS SUBMITTED THAT THE AO MADE THE ENQUIRY AND IT IS NOT A CASE OF LACK OF EN QUIRY. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. VIKAS POLYMERS [2010] 2 36 CTR (DEL.) 476 : [2010] 47 DTR (DEL.) 348 HAD AN OCCASION TO CONSIDER THE P ASSING OF ORDER UNDER S. 263 OF THE ACT BY THE LEARNED CIT WHEN THE AO MADE AN E NQUIRY AND THE ASSESSEE FILED THE REPLY. THE HONBLE DELHI HIGH COURT HELD THAT ASSUMPTION OF JURISDICTION UNDER S. 263 OF THE ACT BY LEARNED CIT IS NOT WARRA NTED. IT WILL BE USEFUL TO REPRODUCE THE HEAD NOTE FROM THIS DECISION: 12 'PROVISIONS OF S. 263 WHEN READ AS A COMPOSITE WHOL E MAKE IT INCUMBENT UPON THE CIT BEFORE EXERCISING REVISIONAL POWERS TO : (I) CALL FOR AND EXAMINE THE RECORD, AND (II) GIVE THE ASSESSEE AND OPPORTUNITY OF BEING HEARD AND THEREAFTER TO MAKE OR CAUSE TO BE MADE SUCH ENQUIRY AS HE DEEMS N ECESSARY. IT IS ONLY ON FULFILLMENT OF THESE TWIN CONDITIONS THAT THE CIT M AY PASS AN ORDER EXERCISING HIS POWER OF REVISION. MINUTELY EXAMINED, THE PROVISION S OF THE SECTION ENVISAGE THAT THE CIT MAY CALL FOR THE RECORDS AND IF HE PRIMA FA CIE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE AO IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE MAY AFTER GIVING THE ASSESSEE AN OP PORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH ENQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY. THE TWIN REQUIREMENTS OF THE SECTION ARE MANIFESTLY FOR A PURPOSE. MERELY BECAUSE THE CIT CONSIDERS ON EXAMINATION OF THE RECORD THAT THE ORDER HAS BEEN E RRONEOUSLY PASSED SO AS TO PREJUDICE THE INTEREST OF THE REVENUE WILL NOT SUFF ICE. THE ASSESSEE MUST BE CALLED, HIS EXPLANATION SOUGHT FOR AND EXAMINED BY THE CIT AND THEREAFTER IF THE CIT STILL FEELS THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF THE REVENUE, THE CIT MAY PASS REVISIONAL ORDERS. IF, ON THE OTHER HA ND, THE CIT IS SATISFIED, AFTER HEARING THE ASSESSEE, THAT THE ORDERS ARE NOT ERRON EOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE MAY CHOOSE NOT TO EXERC ISE HIS POWER OF REVISION. THIS IS FOR THE REASON THAT IF A QUERY IS RAISED DURING THE COURSE OF SCRUTINY BY THE AO, WHICH WAS ANSWERED TO THE SATISFACTION OF THE AO, B UT NEITHER THE QUERY NOR THE ANSWER WAS REFLECTED IN THE ASSESSMENT ORDER, THIS WOULD NOT BY ITSELF LEAD TO THE CONCLUSION THAT THE ORDER OF THE AO CALLED FOR INTE RFERENCE AND REVISION. IN THE INSTANT CASE, FOR EXAMPLE, THE CIT HAS OBSERVED IN THE ORDER PASSED BY HIM THAT THE ASSESSEE HAS NOT FILED CERTAIN DOCUMENTS ON THE RECORD AT THE TIME OF ASSESSMENT, ASSUMING IT TO BE SO, THIS DOES NOT JUS TIFY THE CONCLUSION ARRIVED AT BY THE CIT THAT THE AO HAD SHIRKED HIS RESPONSIBILITY OF EXAMINING AND INVESTIGATING THE CASE. MORE SO, IN VIEW OF THE FACT THAT THE ASS ESSEE EXPLAINED THAT THE CAPITAL INVESTMENT MADE BY THE PARTNERS, WHICH HAD BEEN CAL LED INTO QUESTION BY THE CIT WAS DULY REFLECTED IN THE RESPECTIVE ASSESSMENTS OF THE PARTNERS WHO WERE INCOME- TAX ASSESSEE AND THE UNSECURED LOAN TAKEN FROM SC ( P) LTD. WAS DULY REFLECTED IN THE ASSESSMENT ORDER OF THE SAID CHIT FUND WHICH WA S ALSO AN ASSESSEE. MERELY ON THE BASIS THAT THE AO HAS NOT EXAMINED THE CASH CRE DITS OF THE PARTNERS OR DEPOSITS FROM SC (P) LTD., CIT WAS NOT JUSTIFIED IN INVOKING HIS SUOMOTU POWERS, ESPECIALLY WHERE THE ASSESSEE HAD EXPLAINED THAT TH E CAPITAL INVESTMENT MADE BY THE PARTNERS, WHICH HAD BEEN CALLED INTO QUESTION B Y THE CIT WAS DULY REFLECTED IN THE RESPECTIVE ASSESSMENTS OF THE PARTNERS AND THE UNSECURED LOAN TAKEN FROM THE SC (P) LTD. WAS DULY REFLECTED IN THE ASSESSMENT OR DER OF THE SAID PERSON.' THE RELIANCE IS PLACED IN THE ORDER OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. ANIL KUMAR SHARMA [2010] 38 DTR (DEL HI) 305 : [2011] 335 ITR 83 (DELHI) HAS HELD THAT JURISDICTION UNDER S. 263 CANNOT BE ASSUMED IF ENQUIRY IS INADEQUATE AS PER OPINION OF THE LEARNED CIT. IT WI LL BE USEFUL TO REPRODUCE THE HELD PORTION: 'HELD, DISMISSING THE APPEAL THAT PRESENTS CASE WOU LD NOT BE ONE OF LACK OF ENQUIRY EVEN IF THE ENQUIRY WAS TERMED INADEQUA TE. THE TRIBUNAL FOUND THAT COMPLETE DETAILS WERE FILED BEFORE THE AO AND THAT HE APPLIED HIS MIND TO THE RELEVANT MATERIAL AND FACTS, ALTHOUGH SUCH APPLICAT ION OF MIND WAS NOT DISCERNIBLE FROM THE ASSESSMENT ORDER. THE TRIBUNAL HELD THAT T HE CIT IN PROCEEDINGS UNDER S. 13 263 ALSO HAD ALL THESE DETAILS AND MATERIAL AVAILAB LE BEFORE HIM, BUT HAD NOT BEEN ABLE TO POINT OUT DEFECTS CONCLUSIVELY IN THE MATER IAL, FOR ARRIVING AT A CONCLUSION THAT PARTICULAR INCOME HAD ESCAPED ASSESSMENT ON AC COUNT OF NON-APPLICATION OF MIND BY THE AO. THE TRIBUNAL WAS RIGHT AND THE ORDE R OF REVISION WAS NOT VALID.' THE RELIANCE IS ALSO PLACED IN THE ORDER OF THE HON BLE ITAT AGRA BENCH IN THE CASE OF RISHI KUMAR GUPTA V. CIT [2004] 90 T TJ (AGRA) 645 HAS HELD THAT CIT WAS NOT JUSTIFIED IN SETTING ASIDE THE ASSESSME NT ON THE GROUND THAT AO HAD FAILED TO MAKE PROPER ENQUIRY. IT IS FOR THE AO A ND NOT FOR THE CIT TO DECIDE UPTO WHAT EXTENT ENQUIRY IS TO BE MADE. IT WILL BE USEFUL TO REPRODUCE THE HELD PORTION OF THE CASE: HELD THAT WHEN THE AO PROCEEDED TO MAKE THE ASSESS MENT ORDER, HE WAS FULLY AWARE OF THOSE DOCUMENTS, WHICH WERE FOUND DU RING THE COURSE OF SURVEY AND FOR HIS SATISFACTION HE REQUIRED THE ASSESSEE T O PRODUCE BOOKS OF ACCOUNT, BILLS, VOUCHERS, DETAILS OF THE STUDENTS AND OTHER EXPLANA TIONS. IT IS NOT A CASE OF NO ENQUIRY, BUT A CASE OF NO PROPER ENQUIRY. ACCORDING TO CITS NOTICE AS WELL AS ORDER UNDER S. 263, THE AO HAS CONDUCTED ENQUIRIES, BUT HE FAILED TO CONDUCT PROPER ENQUIRIES. THE USE OF WORD PROPER ENQUIRIES IS A MATTER OF SUBJECTIVITY. IT IS FOR THE AO TO DECIDE WHAT ENQUIRY AND UPTO WHAT EXTENT HE WOULD LIKE TO CONDUCT THE ENQUIRY AND NOT THE CIT. IT IS NOT THE CIT TO DECIDE THAT UPTO WHAT EXTENT, ENQUIRY IS TO BE MADE, BUT IN FACT, IT IS T HE AO TO DECIDE THE MATTER AND TO DRAW INFERENCES. ONCE THE AO HAS DRAWN INFERENCE AF TER MAKING ENQUIRY, THE CIT DOES NOT HAVE ANY JURISDICTION UNDER S. 263 TO CANC EL THE ASSESSMENT ORDER. ENDLESS ENQUIRY IS NOT POSSIBLE AND THE ENQUIRY HAS TO BE CLOSED AT SOME STAGE. IT IS FOR THE AO TO DECIDE TO END THE ENQUIRY. THE CIT CANNOT TRANSGRESS THE JURISDICTION UNDER S. 263 IS CANCELLED. RELIED ON H INDUSTAN MARKETING & ADVERTISING CO. LTD. VS. ITO (1989) 28 ITD 231 (DEL ), ASHOK KUMAR PARASRAMKA VS. ASSTT. CIT (1998) 61 TTJ (CAL) 156: (1998) 65 I TD 1 (CAL) AND PROGRESSIVE SERVICES LTD. VS. ITO (1991) 40 TTJ (CAL) 595. THE RELIANCE IS ALSO PLACED IN THE ORDER OF THE HON BLE HIGH COURT OF BOMBAY IN THE CASE OF CIT V. GABRIAL INDIA LTD. [19 93] 71 TAXMAN 585 (BOM.). IT WILL BE USEFUL TO REPRODUCE THE HELD POR TION OF THE CASE: SECTION 263 OF THE INCOME-TAX ACT, 1961 - REVISION - OF ORDERS PREJUDICIAL TO INTERESTS OF REVENUE - ASSESSMENT YEAR 1973-74 - ASSESSEE CLAIMED A SUM OF RS. 99,326 DESCRIBED 'AS PLANT RELAY OUT EXPENSES' AS REVENUE EXPENDITURE AND ITO, AFTER MAKING ENQUIRIES IN REGARD TO NATURE OF SAID EXPENDITURE AND CONSIDERING EXPLANATION FURNISHED BY ASSESSEE IN TH AT REGARD, ALLOWED ASSESSEE'S CLAIM - SUBSEQUENTLY, COMMISSIONER, EXERCISING POWE RS UNDER SECTION 263, CANCELLED ORDER OF THE ITO OBSERVING THAT ORDER OF ITO DID NOT CONTAIN DISCUSSION IN REGARD TO ALLOW ABILITY OF CLAIM FOR DEDUCTION W HICH INDICATED NON-APPLICATION OF MIND AND THAT CLAIM OF ASSESSEE REQUIRED EXAMINA TION AS TO WHETHER EXPENDITURE IN QUESTION WAS A REVENUE OR CAPITAL EX PENDITURE AND DIRECTED ITO TO MAKE A FRESH ASSESSMENT ON LINES INDICATED BY HIM - WHETHER UNDER SECTION 263 SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FO R THAT OF THE ITO IS PERMISSIBLE - HELD, NO - WHETHER ITO'S CONCLUSION C AN BE TERMED AS ERRONEOUS SIMPLY BECAUSE COMMISSIONER DOES NOT AGREE WITH HIS CONCLUSION - HELD, NO - WHETHER ITO'S ORDER COULD BE HELD TO BE 'ERRONEOUS' SIMPLY BECAUSE IN HIS ORDER 14 HE DID NOT MAKE AN ELABORATE DISCUSSION - HELD, NO - WHETHER PROVISIONS OF SECTION 263 WERE APPLICABLE TO INSTANT CASE AND COM MISSIONER WAS JUSTIFIED IN SETTING ASIDE ASSESSMENT ORDER - HELD, NO HOWEVER THE LD. CIT HAS NOT APPLIED HIS MIND ON THE SE SUBMISSIONS AND PASSED THE ORDER WHICH IS ILLEGAL AND BAD IN LAW AS PER VERY SETTLED LEGAL POSITIONS AS ABOVE. 9. HENCE IN VIEW OF THE ABOVE SUBMISSION THE ORDER OF THE CIT MAY KINDLY BE SET-ASIDE OR DIRECTION OF THE CIT U/S 263 MAY K INDLY BE QUASHED. 2.4 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ER OF THE LD. CIT . 2.5 AFTER CONSIDERING THE RIVAL SUBMISSIONS OF BOTH THE PARTIES, WE HAVE FOUND THAT THIS ORDER DESERVES TO BE SET ASIDE NOT ONLY FACTS BUT ALSO ON LEGAL PROVISIONS. BEFORE, WE GIVE OUR REASONS IN SUPPORT OF THE ABOVE FINDINGS, WE WOULD LIKE TO DISCUSS THE SCHEME OF REVISIONARY JUR ISDICTION VESTED TO THE LD. CIT U/S 263 OF THE ACT AS UNDER:- 2. THE SUBJECT OF REVISION UNDER SECTION 263 HAS BEE N VASTLY EXAMINED AND ANALYZED BY VARIOUS COURTS INCLUDING T HAT OF HONBLE APEX COURT. THE REVISIONAL POWER CONFERRED ON THE CIT V IDE SECTION 263 IS OF VIDE AMPLITUDE. IT ENABLES THE CIT TO CALL FOR AND EXAMINE THE RECORDS OF ANY PROCEEDING UNDER THE ACT. IT EMPOWERS THE CIT TO MAKE OR CAUSE TO BE MADE SUCH AN ENQUIRY AS HE DEEMS NECESSARY IN OR DER TO FIND OUT IF ANY ORDER PASSED BY ASSESSING OFFICER IS ERRONEOUS IN S O FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE ONLY LIMITATI ON ON HIS POWERS IS THAT HE MUST HAVE SOME MATERIAL(S) WHICH WOULD ENABLE HI M TO FORM A PRIMA FACIE OPINION THAT THE ORDER PASSED BY THE ASSESSIN G OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF T HE REVENUE. ONCE HE COMES TO THE ABOVE CONCLUSION ON THE BASIS OF THE MATER IAL THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND ALSO PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THE CIT IS EMPOWERED TO PASS AN ORDER AS T HE CIRCUMSTANCES OF THE CASE MAY WARRANT. HE MAY PASS AN ORDER ENHANCI NG THE ASSESSMENT OR HE MAY MODIFY THE ASSESSMENT. HE IS ALSO EMPOWERED TO CANCEL THE ASSESSMENT AND DIRECT TO FRAME A FRESH ASSESSMENT. HE IS EMPOWERED TO TAKE RECOURSE TO ANY OF THE THREE COURSES INDICATED IN SECTION 263. SO, IT IS CLEAR THAT THE CIT DOES NOT HAVE UNFETTERED AND UNC HEQURED DISCRETION TO REVISE AN ORDER. THE CIT IS REQUIRED TO EXERCISE R EVISIONAL POWER WITHIN THE BOUNDS OF THE LAW AND HAS TO SATISFY THE NEED O F FAIRNESS IN ADMINISTRATIVE ACTION AND FAIR PLAY WITH DUE RESPEC T TO THE PRINCIPLE OF AUDI ALTERAM PARTEM AS ENVISAGED IN THE CONSTITUTIO N OF INDIA AS WELL AS IN SECTION 263. AN ORDER CAN BE TREATED AS ERRONE OUS IF IT WAS PASSED IN UTTER IGNORANCE OR IN VIOLATION OF ANY LAW; OR PASS ED WITHOUT TAKING INTO 15 CONSIDERATION ALL THE RELEVANT FACTS OR BY TAKING I NTO CONSIDERATION IRRELEVANT FACTS. THE PREJUDICE THAT IS CONTEMPL ATED UNDER SECTION 263 IS THE PREJUDICE TO THE INCOME TAX ADMINISTRATION AS A WHOLE. THE REVISION HAS TO BE DONE FOR THE PURPOSE OF SETTING RIGHT DIS TORTIONS AND PREJUDICES CAUSED TO THE REVENUE IN THE ABOVE CONTEXT. THE FU NDAMENTAL PRINCIPLES WHICH EMERGE FROM THE SEVERAL CASES REGARDING THE P OWERS OF THE CIT UNDER SECTION 263 MAY BE SUMMARIZED BELOW: (I) THE CIT MUST RECORD SATISFACTION THAT THE ORDE R OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO T HE INTERESTS OF THE REVENUE. BOTH THE CONDITIONS MUS T BE FULFILLED. (II) SECTION 263 CANNOT BE INVOKED TO CORRECT EAC H AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER AND IT IS ONLY WHEN AN ORDER IS ERRONEOUS, THAT THE SECTION WILL BE ATTRACTED. (III) AN INCORRECT ASSUMPTION OF FACTS OR AN INCORR ECT APPLICATION OF LAW WILL SUFFICE FOR THE REQUIREMENT OR ORDER BEING ERRONEOUS. (IV) IF THE ORDER IS PASSED WITHOUT APPLICATION OF MIND, SUCH ORDER WILL FALL UNDER THE CATEGORY OF ERRONEOUS ORD ER. (V) EVERY LOSS OF REVENUE CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND IF THE ASSESSING OFFICE R HAS ADOPTED ONE OF THE COURSES PERMISSIBLE UNDER LAW OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFI CER HAS TAKEN ONE VIEW UNDER WITH WHICH THE CIT DOES NO T AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER, UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAI NABLE UNDER THE LAW. (VI) IF WHILE MAKING THE ASSESSMENT, THE ASSE SSING OFFICER EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME, THE CIT, WHILE EXERCISING HI S POWER UNDER SECTION 263, IS NOT PERMITTED TO SUBSTI TUTE HIS ESTIMATE OF INCOME IN PLACE OF THE INCOME ESTIM ATED BY THE ASSESSING OFFICER. (VII) THE ASSESSING OFFICER EXERCISE QUASI-JUDICIA L POWER VESTED IN HIM AND IF HE EXERCISE SUCH POWER IN ACCORDANCE WITH LAW AND ARRIVES AS A CONCLUSION, SUCH CONCLUSION CA NNOT 16 BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE CIT DO ES NOT FEEL SATISFIED WITH THE CONCLUSION. (VIII) THE CIT, BEFORE EXERCISING HIS JURISDICTION UNDER SECTION 263, MUST HAVE MATERIAL ON RECORD TO ARRIVE AT A SATISFACTION. (IX) IF THE ASSESSING OFFICER HAS MADE ENQUIRIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON THE RELEVANT IS SUES AND THE ASSESSEE HAS GIVEN DETAILED EXPLANATION BE A LETTER IN WRITING AND THE ASSESSING OFFICER ALLOWED THE CLAIM ON BEING SATISFIED WITH THE EXPLANATION OF TH E ASSESSEE, THE DECISION OF THE ASSESSING OFFICER CAN NOT BE HELD TO BE ERRONEOUS SIMPLY BECAUSE IN HIS ORDER HE DOES NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. 2.6 ADVERTING TO THE FACTS OF THE CASE, WE ARE AFRA ID THAT THE AO HIMSELF CAN FIND HIS ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND CAN MAKE SUCH PROPOSAL TO THE LD. CIT U/S THE A CT. THE POWER OF REVISION AS DISCUSSED ABOVE WIDELY VESTS IN COMMISSIONER WHO MAY CALL AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THE ACT AND IF H E CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE AO IS ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF THE REVENUE. HE MAY AFTER GIVING THE ASSESSEE AN PARTI CULAR OPPORTUNITY OF BEING HEARD OR AFTER MAKING ANY SUCH ENQUIRY REVISE THAT ORDER. THEREFORE, IT IS VERY CLEAR FROM THE PROVISION OF SECTION 263 OF THE ACT THAT THE AO HAS TO EXAMINE THE RECORD HIMSELF TO COME TO A CONCLUSION THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. THERE IS NO SUCH PROCEDURE LAID UNDER THIS SECTION WHEREIN THE AO HI MSELF CAN PROPOSE THE ORDER TO FILE U/S 263 OF THE ACT. THIS ACTION OF TH E AO IS UNWARRANTED AND NOT LEGAL. ON THE BASIS OF SUCH PROPOSAL, THE LD. CIT C ANNOT TAKE ACTION AS HE HAS 17 TAKEN IN THIS REGARD. THE DECISION OF ITAT LUCKNOW BENCH IN THE CASE OF JHEENU RAM VS. CIT, 130 TTJ (LUCK) AND ITAT JAIPUR BENCH IN THE CASE OF RAJEEV ARORA VS. CIT 135 TTJ 01 (JP.) ARE RELEVANT. THE RATIO DECIDENDIE OF THE ABOVE TWO ORDERS IS THAT THE AO CANNOT PROPOSE HIS OWN ORDER BY TREATING IT AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE FOR GETTING IT REVISED BY THE LD. COMMISSIONER U/S 263 OF THE ACT. THIS PROCEDURE IS UNKNOWN TO THE INCOME TAX. ACCORDINGLY, ON THIS VER Y BASIS, THE APPELLATE ORDER IS STRUCK DOWN AND QUASHED. 2.7 ON MERITS ALSO, THIS IS A CASE OF REOPENING AND DURING REOPENING BOTH THE ISSUES RAISED BY THE AO HIMSELF HAVE BEEN DULY VERIFIED BY HIM. THE ASSESSEE HAS CLEARLY EXPLAINED THE DEBIT AND CREDIT ENTRIES AS DISCUSSED IN THE WRITTEN SUBMISSION AND ALSO EXPLAINED THE COST OF I MPROVEMENT SHOWN BY THE ASSESSEE AND THE STATUS OF THE LAND ETC. THEREFORE, THIS IS NOT A CASE OF NO VERIFICATION OR NO PROPER VERIFICATION. THE VERIFI CATION DONE BY THE AO IS ALSO TO BE TREATED AS PROPER UNLESS SOME SPECIFIC I NSTRUCTION OR PRESCRIPTION OF A PARTICULAR SECTION OF THE ACT HAS NOT BEEN CAR RIED OUT BY THE AO OR ELSE THE AO HAS NOT CONDUCTED ENQUIRY AS DEMANDED BY LAW . IN OUR CONSIDERED OPINION, THIS IS NOT SUCH A CASE. THE TWIN CONDITIO NS OF SECTION 263 AS DISCUSSED ABOVE IN DETAIL ARE NOT FOUND TO CO-EXIST . THEREFORE, WE SET ASIDE THE APPELLATE ORDER DATED 07-03-2013 PASSED BY THE LD. CIT AND ALLOW THE APPEAL OF THE ASSESSEE . 18 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31-01-20 14. SD/- SD/- (.N.K. SAINI) (HARI OM MARATHA) ACCOUNTANT MEMBER JUDICIAL MEMEBR JAIPUR DATED: 31 ST JAN 2014 *MISHRA COPY FORWARDED TO:- BY ORDER 1. SHRI KISHORE MADNANI, KOTA 2. THE LD. CIT, KOTA 3. THE LD. CIT 4. THE DR 5. THE GUARD FILE (IT NO.508/JP/13) A.R. ITAT: JAIPUR 19 20