M/s SGC Builders Private Limited, Hyderabad V. ACIT, Circle-3(1), Hyderabad

ITA 536/HYD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6673 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 06-01-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 16-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MYTHLI RANI
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Proportionate interest; Non-deduction of tax; Assessment record
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P.MADHAVI DEVI, JUDICIAL MEMBER A ND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.536/HYD/2013 : ASSESSMENT YEAR 2008-09 M/S. SGC BUILDERS PVT. LTD., HYDERABAD (PAN - AAICS 3084 R) V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 3(1) HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.MURALI MOHAN RAO RESPONDENT BY : SMT. MYTHLI RANI CIT-DR DATE OF HEARING 06 . 01 .201 6 DATE OF PRONOUNCEMENT 13.04.2016 O R D E R PER P.MADHAVI DEVI, JUDICIAL MEMBER : THIS IS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2008-09. IT IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF IN COME-TAX PASSED UNDER S.263 OF THE INCOME TAX ACT, 1961. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY, WHICH IS ENGAGED IN THE BUSINESS OF CONSTRUCTION, FILED IT S RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 30.9.2008 DECL ARING A LOSS OF RS.45,66,434. DURING THE ASSESSMENT PROCEEDINGS U NDER S.143(3) OF THE ACT, VARIOUS DETAILS WERE CALLED FOR AN D AFTER VERIFICATION OF THE INFORMATION FILED BY THE ASSESSEE, T HE TOTAL LOSS WAS REDUCED AND THE INCOME OF THE ASSESSEE WAS DETERMINED AFT ER DISALLOWING EXPENDITURE OF RS.14,99,795 ON THE GROUND THAT THEY ARE SUPPORTED BY SELF MADE VOUCHERS AND IS NOT SUPPORTED BY P ROPER BILLS. THEREFORE, THE TOTAL LOSS WAS DETERMINED AT RS.30,66,63 9. ITA NO.536/HYD/2013 M/S. SGC BUILDERS PVT. LTD., HYDERABAD 2 3. THEREAFTER THE COMMISSIONER, UNDER S.263 OF THE ACT, PERUSED THE ASSESSMENT RECORD AND OBSERVED AS FOLLOWS- (I) A VERIFICATION OF THE CASH BOOK FOUND IN THE ASSESSMENT RECORD REVEAL THAT THE CASH BOOK RUN INTO NEGATIVE BALANCES. THE PEAK NEGATIVE CASH BALANCE WAS FOUND AT RS.2,14,12,595/-. (II) IN THE PROFIT & LOSS ACCOUNT, EXPENDITURE IN THE NATURE OF EQUIPMENT HIRE CHARGES AND FINANCE CHARGES WERE DEBITED TO THE TUNE OF RS.43,10,154/- AND RS.5,15,459/- RESPECTIVELY. THE ASSESSING OFFICER FAILED TO VERIFY WHETHER THE ASSESSEE COMPANY HAS COMPLIED WITH THE TDS PROVISIONS UNDER CHAPTER XVII, KEEPING IN VIEW THE PROVISIONS OF SECTION 40(A)(IA) OF THE I.T. ACT . (III) IT WAS NOTICED FROM THE CASH BOOK THAT THE ASSESSEE COMPANY HAS INCURRED CERTAIN EXPENDITURE IN CASH IN RESPECT OF THE PAYMENTS EXCEEDING RS.20,000. THE ASSESSING OFFICER FAILED TO EXAMINE THE DISCREPANCY KEEPING IN VIEW THE PROVISIONS OF SECTION 40(A)(3) OF THE I.T. ACT. (IV) VERIFICATION OF THE CASH BOOK REVEAL THAT THE ASSESSEE COMPANY HAS ACCEPTED LOANS FROM THE FOLLOWING PARTIES IN CASH AND FAILED TO INITIATE PENALTY PROCEEDINGS U/S. 271D. ITA NO.536/HYD/2013 M/S. SGC BUILDERS PVT. LTD., HYDERABAD 3 SL. NO. NAME OF THE PERSONS AMOUNT OF LOAN & DATE (1) SRI SRIPATHI RS.1,05,00 0/- ON 01.04.2007 (2) SRI SRIPATHI RS.1,88,000 /- ON 21.07.2007 (3) SRI SANJAY KENY RS.5,00,00 0/- ON 21.07.2007 (4) SRI KISHORE PUTTA RS.3,45,0 00/- ON 18.09.2007 (5) SRI KISHORE PUTTA RS.3,00,000/- O N 28.12.2007 (6) SRI KISHORE PUTTA RS.10,0 0,000/-ON 29.12.2007 (V) AS SEEN FROM THE BANK A/C STATEMENT WITH ORIENTAL BANK OF COMMERCE, THE ASSESSEE COMPANY DIVERTED THE INTEREST BEARING FUNDS TO A SISTER CONCERN BY NAME, M/S. SGC INFOTECH PVT. LTD., IN WHICH THE DIRECTORS ARE THE SAME. THE ASSESSEE COMPANY DID NOT DISALLOW THE PROPORTIONATE INTEREST IN RESPECT OF THE FUNDS DIVERT ED TO SISTER CONCERN SINCE THE ASSESSEE COMPANY DID NOT CHARGE INTEREST ON THE DIVERTED FUNDS. THE COMMISSIONER, FURTHER OBSERVED THAT THE ASSESSING OFF ICER, WHILE COMPLETING THE ASSESSMENT UNDER S.143(3), FAILED TO EXA MINE THE ABOVE DISCREPANCIES AND ITS TAX IMPLICATIONS AND THEREFORE , THE ASSESSMENT ORDER WAS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE COMMISSIONER THEREFORE, I SSUED SHOW CAUSE NOTICE UNDER S.263 OF THE ACT, CALLING UPON THE ASSE SSEE TO EXPLAIN AS TO WHY THE ASSESSMENT MADE UNDER S.143(3) SHOU LD NOT BE REVISED. THE ASSESSEE, VIDE LETTER DATED NIL, REPLIED T O THE COMMISSIONER OF INCOME-TAX EXPLAINING THE TRANSACTIONS F OUND FAULT WITH BY THE COMMISSIONER. THE COMMISSIONER HOWEVER, OBS ERVED THAT THE ASSESSEE HAS NOT SUBSTANTIATED ITS CLAIM WITH ANY EVIDEN CE IN SUPPORT THEREOF, AND THEREFORE, THE ASSESSEES CONTENTIONS ARE NOT ACCEPTABLE. HE THEREFORE, HELD THE ASSESSMENT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND A CCORDINGLY DIRECTED ITA NO.536/HYD/2013 M/S. SGC BUILDERS PVT. LTD., HYDERABAD 4 THE ASSESSING OFFICER TO RE-DO THE ASSESSMENT IN THE LIGHT O F HIS DIRECTIONS. 4. AGGRIEVED BY THE ORDER OF THE COMMISSIONER, ASSESSEE IS IN APPEAL BEFORE US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS CALLED FOR BY THE ASSE SSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS UNDER S.143(3) OF THE ACT, AND THAT THE ASSESSING OFFICER, AFTER DUE AP PLICATION OF MIND TO THE SAID DETAILS, HAS COMPLETED THE ASSESSMENT AFTE R MAKING DISALLOWANCE OF CERTAIN EXPENDITURE. THUS, ACCORDING TO HIM, THE ASSESSMENT ORDER IS PASSED AFTER DUE APPLICATION OF MIND, A ND THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEWS IN COMP LETING THE ASSESSMENT AND HENCE, SUCH AN ASSESSMENT ORDER CANNOT BE HELD AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVE NUE THEREFORE CANNOT BE REVISED AS SUCH. IN SUPPORT OF HIS CONTENTIONS, L EARNED COUNSEL PLACED RELIANCE UPON THE FOLLOWING DECISIONS- (I) SPECTRA SHARES & SCRIPS (P) LTD. 36.TAXMANN.COM.348 (AP HC) (II) MALABAR INDUSTRIAL CO. LTD. VS. CIT(109 TAXMAN.66)-S C (III) DG HOUSING PROJECTS LIMITED (20 TAXMAN587)-DEL. HC (IV) DEVELOPMENT CREDIT BANK LTD. (196 TAXMAN 329)-BOM. HC (V) CH.GOVARDAHAN NAIDU (ITA NO.593/HYD./2015 DATED 5.8.2015) (VI) VISU INTERNATIONAL LIMITED (ITA NO.488/HYD/2013 DATED 12.11.2014) ITA NO.536/HYD/2013 M/S. SGC BUILDERS PVT. LTD., HYDERABAD 5 6. HE ALSO ARGUED ON MERITS OF EACH OF THE ISSUES POINT ED OUT BY THE COMMISSIONER AND ALSO AS TO HOW THE DECISION OF TH E ASSESSING OFFICER IS NOT ERRONEOUS AS WELL AS PREJUDICIAL TO THE I NTEREST OF THE REVENUE. HE SUBMITTED THAT AS LONG AS THE ASSESSMENT ORDE R DOES NOT SATISFY BOTH THE ABOVE CONDITIONS, I.E OF BEING ERRONE OUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE, THE REVI SION ORDER IS NOT SUSTAINABLE. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, SUPPORTED THE ORDER OF THE COMMISSIONER AND ALSO FURNISHED A COPY OF THE CASH BOOK EXTRACT FROM THE ASSESSMENT RECORD TO DEMONSTRATE THAT THE CONTENTIONS OF THE ASSESSEE ARE NOT CO RRECT. HE THEREFORE, PRAYED THAT THE ORDER OF THE COMMISSIONER BE CONFIRMED. 8. IN REBUTTAL, THE LEARNED COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE CASH BOOK EXTRACT PRODUCED BY THE LEARNED DEPA RTMENTAL REPRESENTATIVE IS NOT THE COMPLETE CASH BOOK WHICH ONLY DEMONSTRATES THAT THE COMMISSIONER HAS CONSIDERED ONLY PART OF THE CA SH BOOK TO ERRONEOUSLY COME TO THE CONCLUSION THAT THE ASSESSEES CASH BO OK DOES NOT REFLECT THE CORRECT POSITION. 9. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MA TERIAL ON RECORD, WE FIND THAT THE COMMISSIONER HAS SOUGHT TO REVI SE THE ASSESSMENT ORDER ON THE GROUND THAT THE ASSESSING OFFICER HAS NOT CONSIDERED FIVE ISSUES, WHICH ARE NOTED IN THE PARAGRAPH ABOVE. THE ASSESSEE HAS ALSO FILED COPIES OF THE SHOW CAUSE NOTICES ISSUED BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS UNDER S.1 43(3) OF THE ACT. FROM A PERUSAL OF THE SAID SHOW-CAUSE NOTICES, WE DO NOT FIND ANY QUESTION RAISED BY THE ASSESSING OFFICER ON ANY O F THE FIVE ISSUES ON WHICH THE COMMISSIONER HAS SOUGHT TO REVISE THE ASSESSMENT ORDER. THEREFORE, IT IS CLEAR THAT THE ASSESSING O FFICER HAS ITA NO.536/HYD/2013 M/S. SGC BUILDERS PVT. LTD., HYDERABAD 6 NOT VERIFIED THE DETAILS OF THE ISSUES, ON WHICH THE COM MISSIONER IS SEEKING TO REVISE THE ASSESSMENT ORDER. THEREFORE, IT CAN NOT BE SAID THAT THE ASSESSING OFFICER HAS CONSIDERED THESE ISSUES AND HAS TAKEN ONE OF THE POSSIBLE VIEWS. 10. LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED UPON TH E JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF SPECTRA SHARES & SCRIPS (P) LTD. (SUPRA) WHEREIN IT WAS HELD THAT THE ASSESSING OFFICER IS NOT REQUIRED TO GIVE DETAILED REASONS IN THE ASSESSMEN T ORDER AND IT IS ENOUGH IF APPLICATION OF MIND IS MADE OUT THEREFROM . THERE IS NO QUARREL WITH THIS RATIO LAID DOWN BY THE JURISDICTIO NAL HIGH COURT IN THE ABOVE CASE AS LONG AS THE ASSESSING OFFICER HAS CALLED FOR TH E DETAILS AND HAS APPLIED HIS MIND TO THE SAME BEFORE TAKING A DECISION. BUT IN THE PRESENT CASE, WE FIND THAT THE ASSESSING OFFICER HAD NO T CALLED FOR THE DETAILS RELATING TO THE FIVE ISSUES AND THEREFORE, IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAS APPLIED HIS MIND TO ANY OF THESE ISSUES. THIS JUDGMENT THEREFORE, DOES NOT COME TO THE HELP OF THE ASSESSEE. 11. THE NEXT DECISION RELIED UPON BY THE ASSESSEE IS OF T HE APEX COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. (SUPRA ), WHEREIN THE HON'BLE SUPREME COURT HAS HELD THAT WHERE TWO VIEWS AR E POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE SUCH VIEW, THE ASSESSMENT CANNOT BE SAID TO BE ERRONEOUS. WE HAVE ALREADY HELD THAT TH E ASSESSING OFFICER HAD NOT CONSIDERED THESE ISSUES AT ALL DURING THE ASSESSMENT PROCEEDINGS, AND THEREFORE, IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEWS. THIS JUDGMENT IS ALS O, THEREFORE, NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US. THE H ON'BLE DELHI HIGH COURT IN THE CASE OF GEE VEE ENTERPRISES V/S. ADDL. CIT REPORTED IN (1975) 99 ITR 375 HAS HELD THAT THE WORD ERRONEO US IN SECTION 263 INCLUDES CASES WHERE THERE HAS BEEN A FAILURE TO MAKE THE NECESSARY ENQUIRIES. IN THE CASE BEFORE US, THOUGH THE ABOVE DISCR EPANCIES ITA NO.536/HYD/2013 M/S. SGC BUILDERS PVT. LTD., HYDERABAD 7 POINTED OUT BY THE COMMISSIONER ARE PART OF THE RECORD , THE ASSESSING OFFICER HAS FAILED TO MAKE ANY ENQUIRIES ABOUT THE SAME . 12. HOWEVER, IN ORDER TO REVISE AN ASSESSMENT ORDER, OT HER CONDITION TO BE SATISFIED IS THAT THE ASSESSMENT ORDER SHOU LD ALSO BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE FI RST GROUND ON WHICH REVISION IS MADE IS THAT THERE ARE NEGATIVE BALANCES IN THE CASH BOOK. IN SUPPORT OF THIS CONTENTION, EXTRACT OF THE CASH BOOK FROM THE ASSESSMENT RECORD IS FILED BEFORE US BY THE LEARNED DEPAR TMENTAL REPRESENTATIVE. WE FIND THAT BEFORE THE COMMISSIONE R, THE ASSESSEE HAS STATED THAT THE NEGATIVE CASH BALANCES SO APPEARED AS MONTHLY BALANCES HAVE BEEN EXTRACTED FROM THE CASH BOOK DUE TO T ECHNICAL ERROR AND WAS LEAVING NEGATIVE BALANCES, AND IT WAS F URTHER STATED THAT IF THE COMPLETE CASH BOOK IS DRAWN ON DAILY BASIS, IT WOULD NOT RESULT IN ANY NEGATIVE BALANCE. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THIS SUBMISSION BEFORE US AS WELL, BUT THE CO MMISSIONER HAS POINTED OUT THAT THE ASSESSEE HAS NOT FILED ANY CASH BOOK ON DAILY BASIS TO DEMONSTRATE THAT THE CASH BOOK RUNNING INTO NEGATIVE BALANCE IS NOT CORRECT. ALSO, WE FIND FROM THE COPY OF THE CASH BOOK FILED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT IT REFL ECTS ONLY THE PAYMENTS WITHOUT ANY RECEIPTS. THEREFORE, IT CANNOT BE ACCEPTED AS A PROPER AND COMPLETE CASH BOOK. IF THE COMMISSIONER UNDE R S.263 HAS RELIED UPON THIS DOCUMENT THEN, HE HAS COMMITTED AN E RROR IN COMING TO THE CONCLUSION THAT THERE ARE NEGATIVE BALANCES. B EFORE COMING TO THE CONCLUSION THAT THE ASSESSMENT ORDER IS PREJUDICIAL TO THE INTEREST OF REVENUE, THE COMMISSIONER HAS TO VERIFY THE PROPER RECORDS WHICH APPEARS TO NOT HAVE BEEN DONE IN THIS CASE. 13. FURTHER, THE SECOND ISSUE ON WHICH REVISION IS MADE BY THE COMMISSIONER IS RELATING TO NON-DEDUCTION OF TAX AT SOU RCE ON EQUIPMENT HIRE CHARGES AND FINANCE CHARGES DEBITED TO PR OFIT & LOSS ITA NO.536/HYD/2013 M/S. SGC BUILDERS PVT. LTD., HYDERABAD 8 ACCOUNT. IN RESPONSE TO THE NOTICE UNDER S.263 OF THE A CT, THE ASSESSEE HAD STATED THAT SUCH EXPENSES HAVE BEEN WRONGLY BOOKED UNDER THE EQUIPMENT CHARGES, THOUGH THEY RELATE TO PU RCHASE OF MATERIAL. THE COMMISSIONER OBSERVED THAT THERE IS NO MA TERIAL IN SUPPORT OF THIS CONTENTION AND THAT EVEN THOUGH THE O PPORTUNITY WAS GIVEN TO THE ASSESSEE, THE ASSESSEE HAS FAILED TO FURNISH ANY MATERIAL IN SUPPORT OF THIS CONTENTION. THE ASSESSEE HAS FURNISHED B EFORE US A PAPER-BOOK CONTAINING COPIES OF THE DOCUMENTS IN SUPPORT OF PURCHASE OF FIXED ASSETS AND ALSO LEDGER ACCOUNT IN SUPPORT OF PUR CHASE OF VARIOUS MATERIALS. THE ASSESSEE CONTENDED THAT ALL THESE D OCUMENTS WERE FILED BEFORE THE COMMISSIONER. HOWEVER, SINCE THERE IS NO RECORDING OF THE SAME IN THE ORDER OF THE COMMISSIONER, WHO RATHER NOTED THAT THE ASSESSEE HAS NOT FURNISHED ANY MATERIAL I N SUPPORT OF THIS CLAIM, WE ARE OF THE OPINION THAT MATERIAL FILED BY THE ASSESSEE NEED VERIFICATION BY THE COMMISSIONER BEFORE HOLDING THE ASSESSMENT ORDER TO BE PREJUDICIAL TO THE INTEREST OF REVENUE. FURTHER IN THE CASE OF VISU INTERNATIONAL LIMITED (ITA NO.488/HYD/2013 DA TED 12.11.2014) COORDINATE BENCH OF THIS TRIBUNAL HAS HELD THAT DISALLO WANCE UNDER S.40A(IA) CANNOT BE MADE, IF NO PROCEEDINGS UNDER S.2 01(1) OF THE ACT ARE INITIATED. 14. FURTHER, WITH REGARD TO THE EXPENDITURE OF A BOVE RS.20,000 IN CASH, THE CONTENTION OF THE ASSESSEE BEFORE THE COMMISSIO NER WAS THAT THESE KINDS OF PAYMENTS WERE VERY FEW AND WERE M ADE ONLY ON THE INSISTENCE OF THE PARTIES, AS THEY DID NOT HAVE ANY BANK ACCOUNT. THE COMMISSIONER HAS REJECTED THIS CONTENTION ON THE GROU ND THAT THERE WAS NO DISCUSSION IN THE ASSESSMENT ORDER AND THE ASSE SSEE HAS NOT GIVEN ANY EXPLANATION IN THIS REGARD. THIS FINDIN G, IN OUR OPINION, OF THE COMMISSIONER IS NOT SUSTAINABLE, AS THE COMMISSIONER DID NOT VERIFY THE CONTENTION OF THE ASSESSEE, NOR DID HE ASK THE ASSESSEE TO PRODUCE THE PARTIES OR THE CONFIRMATIONS FROM SUCH PARTIE S. WITHOUT ITA NO.536/HYD/2013 M/S. SGC BUILDERS PVT. LTD., HYDERABAD 9 GOING INTO THE RELEVANT MATERIAL, THE COMMISSIONER HA S COME TO THE CONCLUSION THAT THESE EXPENSES IN CASH EXCEEDING RS.20,000 W ERE IN VIOLATION OF THE PROVISIONS OF S.40A(3) OF THE ACT. TH E COMMISSIONER HAS NOT RECORDED THAT THE ASSESSMENT ORDER IS PREJUDICIAL T O THE INTERESTS OF THE REVENUE ON THIS GROUND. 15. AS REGARDS THE LOANS ACCEPTED IN CASH OF RS.20,000 A ND ABOVE, THE COMMISSIONER HAS DIRECTED THE ASSESSING OFFICER TO INFORM DETAILS OF SUCH LOANS ACCEPTED BY THE ASSESSEE TO THE ADDL. COMMISSIONER OF INCOME-TAX FOR INITIATION OF PENALTY P ROCEEDINGS UNDER S.271D, WHICH IS CLEARLY NOT IN ACCORDANCE WITH LAW. UN DER SECTION 263 OF THE ACT, THE COMMISSIONER CAN ONLY HOLD THE ASSESS MENT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF R EVENUE, BUT HE CANNOT DIRECT THE ASSESSING OFFICER TO INITIATE PENALTY PR OCEEDINGS, AS HELD BY THE COORDINATE BENCH OF THIS TRIBUNAL IN ITA NO.593/HYD/2015 AND OTHERS DATED 5.8.2015 IN THE CASE OF SHRI CH.GOVER DHAN NAIDU, CITED SUPRA. 16. AS FOR THE DIVERSION OF INTEREST BEARING FUNDS T O SISTER CONCERN, VIZ. SGC INFO-TECH PVT. LTD., THE COMMISSIONE R HAS OBSERVED THAT THE ASSESSEE HAS NOT OFFERED ANY EXPLANATION OR RAI SED OBJECTIONS TO THE SHOW CAUSE NOTICE ON THIS ISSUE, AND THEREFORE, HE HELD THAT THE ASSESSEE DID NOT HAVE ANY VALID EXPLANATION TO OFFER. HE ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO QUANTIFY PROPORTIONATE INTEREST AND DISALLOW THE SAME. BUT WE FIND THAT THE ASSESSEE HAD IN F ACT REPLIED THAT DIVERSION OF FUNDS WAS ONLY IN THE BUSINESS EXPEDIEN CY, AS THE ASSESSEE COMPANY HAD INVESTED IN ITS SUBSIDIARY AND FURTHER EVEN THE PROVISIONS OF S.271D CANNOT BE APPLIED TO THE SUBSIDIAR Y COMPANY. THE COMMISSIONER HAS NOT DISCUSSED ANY OF THE CONTENTIONS RAIS ED BY THE ASSESSEE, BUT HAS SUMMARILY COME TO THE CONCLUSION THAT THE ITA NO.536/HYD/2013 M/S. SGC BUILDERS PVT. LTD., HYDERABAD 10 ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF THE REVENUE. 17. SINCE WE HAVE HELD THAT THE ASSESSMENT ORDER IS ERR ONEOUS AND ALSO THAT THE COMMISSIONER HAS CONSIDERED INCOMPLETE M ATERIAL TO SET ASIDE THE ASSESSMENT, WE DEEM IT FIT AND ORDER TO SET ASIDE THE REVISION ORDER AND REMIT THE MATTER TO THE FILE OF T HE COMMISSIONER WITH A DIRECTION TO CONSIDER THE MATERIAL FILED BY THE ASSESSEE BEFORE CONCLUSION OF THE 263 PROCEEDINGS. NEEDLESS TO MENTION T HAT THE ASSESSEE SHALL BE GIVEN A REASONABLE OPPORTUNITY OF HEARI NG. 18. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 13 TH APRIL, 2016 SD/-/- SD/-/- (S.RIFAUR RAHMAN) (P.MADHAVI DEVI) ACCOUNTANT MEMBER. JUDICIAL MEMBER DT/- 13 TH APRIL, 2016 COPY FORWARDED TO: 1. M/S. SGC BUILDERS PVT. LTD., C/O. M/S.P.MURALI & CO ., CHARTERED ACCOUNTANTS, 6-3-655/2/3, 1ST FLOOR, SOMAJIGUDA, HYDERAB AD-82 2. ASST. COMMISSIONER OF INCOME TAX, CIRCLE 3(1), HYDERA BAD 3. COMMISSIONER OF INCOME-TAX III, HYDERABAD 4. DEPARTMENTAL REPRESENTATIVE ITAT, HYDERABAD B.V.S.