M/S GAD FASHION, Jaipur V. PRINCIPAL COMMISSIONER OF INCOME TAX-3, Jaipur

ITA 670/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6286 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 16-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI; ROLI AGARWAL
• Keywords: Bogus purchase; Depreciation; Opportunity of being heard; Principle of natural justice; Retrospective amendment
• Section: 143(3); 148; 263; 63

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 670/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2009-10 M/S GAD FASHION G- 152, RIICO INDUSTRIAL AREA, MANSAROVER, JAIPUR. CUKE VS. THE PR. CIT-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABFG 0977 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P. C. PARWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SMT. ROLI AGARWAL (CIT) & SHRI PANISHWAR (DCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 13/07/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 17/07/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 31.03.2018 OF LD. PR. CIT, JAIPUR PASSED U/S 263 OF THE IT ACT FOR THE ASSESSMENT YEAR 2009-10. THE ASSESSEE HAS RAISED TH E FOLLOWING GROUNDS UNDER AS UNDER:- 1. UNDER THE FACTS & CIRCUMSTANCES OF THE CASE, TH E ORDER PASSED BY LD. CIT U/S 236 IS ILLEGAL & BAD IN LAW AND BE Q UASHED. ITA NO. 670/JP/2018 M/S GAD FASHION VS. PCIT 2 1.1 THE LD. CIT HAS ERRED ON FACTS AND IN LAW IN HO LDING THAT AO HAS NOT MADE NECESSARY ENQUIRIES/ VERIFICATION WITH REFERENCE TO THE PURCHASES MADE FROM M/S MOHIT INTERNATIONAL AND M/S NAKSHATRA BUSINESS PVT. LTD. AS TO THE CORRECTNESS OF THE RATES AND AT THE SAME TIME ADMITTING THAT ON ACCOUNT OF T HESE PURCHASES, AO HAS REJECTED THE BOOKS OF ASSESSEE AN D DISALLOWED 25% OF SUCH PURCHASE IN THE ASSESSMENT FRAMED U/S 1 47/143(3) DATED 24.06.2016 AND THEREFORE, ORDER OF AO CANNOT BE HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REV ENUE. 2. THE ASSESSEE CRAVES TO AMEND, ALTER AND MODIFY A NY OF THE GROUNDS OF APPEAL. 3. THE APPROPRIATE COST BE AWARDED TO THE ASSESSEE. 2. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ELECTRONICALLY ON 28.09.2009, D ECLARING TOTAL INCOME OF RS. 3,53,79,360/-. THE SCRUTINY ASSESSMENT U/S 1 43(3) WAS COMPLETED ON 13.12.2011 AT INCOME OF RS. 3,56,72,42 1/-. SUBSEQUENTLY THE ASSESSMENT WAS REOPENED BASED ON THE REPORT OF THE INVESTIGATION WING, MUMBAI THAT THE ASSESSEE HAS TAKEN ACCOMMODAT ION ENTRIES IN RESPECT OF PURCHASES FROM THE ENTITIES MANAGED BY SHRI PRAVEEN KUMAR JAIN. THE AO ISSUED NOTICE U/S 148 OF THE ACT ON 17 .03.2015 AND THEREAFTER COMPLETED REASSESSMENT U/S 143(3) R.W.S. 148 OF THE ACT WHEREBY THE PURCHASES FROM TWO PARTIES NAMELY M/S M OHIT INTERNATIONAL & M/S NAKASHATRA BUSINESS PVT. LTD. TOTAL AMOUNTIN G TO RS. 41,55,399/- WERE DISALLOWED BY THE AO @ 25% OF THE SAID PURCHAS ES. HENCE, THE AO MADE TRADING ADDITION OF RS. 10,38,850/- BEING 2 5% OF THE ITA NO. 670/JP/2018 M/S GAD FASHION VS. PCIT 3 UNVERIFIABLE PURCHASES MADE FROM THESE TWO PARTIES. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT( A) IN THE MEANTIME THE PR. CIT PROPOSE TO REVISE THE ORDER OF THE ASSE SSING OFFICER PASSED U/S 143(3) R.W.S. 147 DATED 24.02.2016 BY ISSUING S HOW CAUSE NOTICE DATED 29.03.2018. THE LD. PR. CIT WAS OF THE VIEW T HAT THE ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE BECAUSE THE AO HAS DISALLOWED ONLY 25% OF THE UNVERIFIABLE/ BOGUS PURCHASES INSTEAD OF 100% OF THE PURCHASE OUGHT TO HAVE BEEN DISALLOWED. IN RESPONSE TO THE SHOW CAUSE NOTICE THE ASSESSEE FILE D ITS REPLY DATED 31.03.2009. IT APPEARS THAT SHOW CAUSE NOTICE U/S 2 63 WAS ISSUED BY THE LD. PR. CIT AT THE FAG END OF THE LIMITATION P ERIOD ON 29.03.2018 AS THE TIME PERIOD FOR PASSING THE ORDER WAS TO EXPIRE ON 31.03.2018. ACCORDINGLY, THE IMPUGNED ORDER WAS PASSED BY THE L D. PR. CIT ON 31.03.2018. 3. WE HAVE HEARD THE LD. AR AS WELL AS THE LD. DR A ND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD. AR HAS POI NTED OUT THAT IN THE REPLY TO THE SHOW CAUSE NOTICE THE ASSESSEE HAS CLE ARLY STATED THAT THE ASSESSEE ALREADY FILED AN APPEAL BEFORE THE LD. CIT (A) AGAINST DISALLOWANCE OF 25% OF THE PURCHASE MADE BY THE AO AND THE ISSUE WHICH IS RAISED IN THE REVISION PROCEEDINGS IS THE SUBJECT MATTER OF THE ITA NO. 670/JP/2018 M/S GAD FASHION VS. PCIT 4 APPEAL BEFORE THE LD. CIT(A) AND THEREFORE, COMMISS IONER HAS NO JURISDICTION TO INVOKE THE PROVISIONS OF SECTION 26 3 OF THE ACT AGAINST THE ORDER OF THE ASSESSING OFFICER WHICH IS SUBJECT MAT TER OF APPEAL. THE LD. AR HAS FURTHER SUBMITTED THAT THE LD. CIT(A) HAS FI NALLY PASSED THE ORDER DATED 03.07.2018 AND CONFIRMED THE ADDITION M ADE BY THE AO ON ACCOUNT OF UNVERIFIABLE PURCHASE. HE HAS RELIED UPO N THE DECISION OF HONBLE M.P. HIGH COURT IN CASE OF CIT VS. NAROTTAM MISHRA 395 ITR 138. 4. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT ONCE THE PURCHASES ARE CONSIDERED AS BOGUS DUE TO THE ACCOMM ODATION ENTRIES AVAILED BY THE ASSESSEE THEN, THE ENTIRE PURCHASES OUGHT TO HAVE BEEN DISALLOWED INSTEAD OF 25%. HENCE, THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF THE REVENUE. SHE HAS RELIED UPON THE IMPUGNED ORDER OF THE PR. CIT. 5. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. WE NOTE THAT THE ORIGINAL ASSES SMENT WAS COMPLETED U/S 143(3) VIDE ORDER DATED 13.12.2011. T HE ASSESSMENT WAS REOPENED BY THE AO BY ISSUING NOTICE U/S 148 ON 17.03.2015 TO ASSESS THE INCOME ON ACCOUNT OF BOGUS PURCHASES MAD E BY THE ASSESSEE FROM TWO PARTIES NAMELY M/S MOHIT INTERNAT IONAL & M/S ITA NO. 670/JP/2018 M/S GAD FASHION VS. PCIT 5 NAKASHATRA BUSINESS PVT. LTD. ( HEMA TRADING CO. PV T. LTD.). THUS THE AO PROPOSED TO REASSESS THE INCOME ON ACCOUNT OF PU RCHASES OF RS. 41,55,399/- MADE BY THE ASSESSEE FROM THESE TWO ABO VE SAID PARTIES DUE TO THE REASONS THAT IN THE SEARCH AND SURVEY AC TION CARRIED OUT BY INVESTIGATION WING, MUMBAI AND SURAT IT WAS FOUND T HAT THESE CONCERNS ARE CONTROLLED AND MANAGED BY ONE SHRI PRAVEEN KUMA R JAIN WHO IS ENGAGED IN PROVIDING ACCOMMODATION ENTRY OF BOGUS S ALES. THUS, WHEN THE VERY REOPENING OF THE ASSESSMENT WAS TO ASSESS THE BOGUS PURCHASES AND THE AO HAS FINALLY COMPLETED THE REAS SESSMENT BY MAKING DISALLOWANCE @ 25% OF SUCH PURCHASES THEN IT IS A CLEAR CASE OF A VIEW TAKEN BY THE ASSESSING OFFICER ON THIS ISSUE WHICH WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFO RE THE LD. CIT(A). ON OUR DIRECTION THE ASSESSING OFFICER HAS APPEARED IN THE PROCEEDINGS AND HAS CONFIRMED THAT ON THE DATE OF SHOW CAUSE NOTICE DATED 29.03.2018 THE APPEAL FILED BY THE ASSESSEE WAS PENDING BEFORE THE LD. CIT(A) WHEREIN ONE OF THE GROUND RAISED BY THE ASSESSEE IS AGAINST THE ADDITION MADE BY THE AO TO THE EXTENT @ 25% OF THE PURCHASES FROM TWO ENTITIES. HENCE, THE DEPARTMENT HAS NOT DISPUTE D THE FACT THAT THE SUBJECT MATTER ON WHICH THE PR. COMMISSIONER HAS IN VOKED THE PROVISIONS OF SECTION 263 OF THE ACT WAS PENDING IN THE APPEAL BEFORE ITA NO. 670/JP/2018 M/S GAD FASHION VS. PCIT 6 THE LD. CIT(A). EVEN OTHERWISE WE NOTE THAT AS PER THE ORDER PASSED BY THE LD. CIT(A) DATED 03.07.2018 THE DATE OF INSTITU TION OF THE APPEAL IS GIVEN AS ON 16.03.2016 AND THEREAFTER E-FILING ON 0 9.06.2016. THE GROUNDS RAISED BY THE ASSESSEE HAVE BEEN REPRODUCED BY THE LD. CIT(A) IN THE SAID ORDER DATED 03.07.2018 IN PARA 3 AS UND ER:- 3. THE APPELLANT HAS TAKEN FOLLOWING GROUNDS OF AP PEAL AS UNDER:- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE ORDER PASSED U/S 147 IS ILLEGAL AND BAD IN LAW. 2. THE LD. ASSESSING OFFICER HAS ERRED IN FACT AND IN LAW IN HOLDING THAT PURCHASES OF RS. 41,55,399/- MADE FROM M/S MOHIT INTERNATIONAL AND M/S NAKSHATRA BUSINESS PVT. LTD. (HEMA TRADING CO. PVT. LTD.) ARE NOT GENUINE AND THEREBY MAKING ADDITION OF RS. 10,38,850/- BEING 25% OF THESE PURC HASES, TO THE TOTAL INCOME OF THE ASSESSEE, AFTER REJECTING THE B OOKS OF ACCOUNTS U/S 145. HE HAS FURTHER ERRED IN MAKING TH E ADDITION WITHOUT CONSIDERING THE VARIOUS EVIDENCES FILED BY ASSESSEE TO PROVE THE GENUINENESS OF THESE PURCHASES. 3. THE ASSESSEE CRAVES RIGHT TO ADD, ALTER OR AMEND ANY OF THE GROUNDS OF APPEAL. THUS, IT IS CLEAR THAT GROUND NO. 2 IN THE SAID APP EAL BEFORE THE LD. CIT(A) WAS REGARDING THE ADDITION MADE BY THE AO OF 25% OF THE PURCHASE MADE FROM THESE TWO COMPANIES WHICH IS ALS O THE SUBJECT MATTER OF SHOW CAUSE NOTICE BY THE PR. CIT U/S 26 3 OF THE ACT. SECTION 263 CONFERS THE POWER TO THE PR. COMMISSIONER/COMMI SSIONER FOR CALLING THE RECORD AND EXAMINATION OF THE SAME AND THEN MAY REVISE THE ITA NO. 670/JP/2018 M/S GAD FASHION VS. PCIT 7 ORDER PASSED BY THE ASSESSING OFFICER IF IT IS FOUN D ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. AS PER CLAUSE-C OF EXPLANATION-1 TO SECTION 263 THE POWERS OF THE PR. COMMISSIONER/ COMMISSIONER U/S 263(1) INCLUDES AND EXTENDED TO SU BJECT MATTER HAS NOT BEEN CONSIDERED AND DECIDED IN THE APPEAL IF TH E SAID ORDER IS THE SUBJECT MATTER OF THE APPEAL. THEREFORE, IN CASE TH E ORDER PASSED BY THE ASSESSING OFFICER HAS BEEN SUBJECT MATTER OF THE AP PEAL THEN THE POWER OF THE PR. COMMISSIONER/COMMISSIONER U/S 263 IS EXT ENDED ONLY TO THE MATTER WHICH HAS NOT BEEN CONSIDERED AND DECIDED IN THE APPEAL. FOR READY REFERENCE WE QUOTE EXPLANATION-1 TO SECTION 2 63(1) AS UNDER:- SECTION 263(1) THE PRINCIPAL COMMISSIONER OR COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDI NG UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THER EIN 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 OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUS ING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, I NCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CAN CELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. [EXPLANATION.1 FOR THE REMOVAL OF DOUBTS, IT IS HE REBY DECLARED THAT, FOR THE PURPOSES OF THIS SUB-SECTION, (A) AN ORDER PASSED [ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1 988] BY THE ASSESSING OFFICER SHALL INCLUDE (I) AN ORDER OF ASSESSMENT MADE BY THE ASSISTANT CO MMISSIONER [OR DEPUTY COMMISSIONER] OR THE INCOME-TAX OFFICER ON THE BASIS ITA NO. 670/JP/2018 M/S GAD FASHION VS. PCIT 8 OF THE DIRECTIONS ISSUED BY THE [JOINT] COMMISSIONE R UNDER SECTION 144A ; (II) AN ORDER MADE BY THE [JOINT] COMMISSIONER IN E XERCISE OF THE POWERS OR IN THE PERFORMANCE OF THE FUNCTIONS OF AN ASSESSING OFFICER CONFERRED ON, OR ASSIGNED TO, HIM UNDER THE ORDERS OR DIRECTIONS ISSUED BY THE BOARD OR BY THE CHIEF COMM ISSIONER OR DIRECTOR GENERAL OR COMMISSIONER AUTHORISED BY THE BOARD IN THIS BEHALF UNDER SECTION 120; (B) RECORD [SHALL INCLUDE AND SHALL BE DEEMED ALW AYS TO HAVE INCLUDED] ALL RECORDS RELATING TO ANY PROCEEDING UN DER THIS ACT AVAILABLE AT THE TIME OF EXAMINATION BY THE COMMISS IONER; (C) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER O F ANY APPEAL [FILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1 988], THE POWERS OF THE COMMISSIONER UNDER THIS SUB-SECTION SHALL EX TEND [AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED] TO SUCH MA TTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL. ] THE HONBLE M.P. HIGH COURT IN CASE OF CIT VS. NARO TTAM MISHRA (SUPRA) HAS CONSIDERED AND DECIDED AN IDENTICAL ISSUE IN PA RA 8 TO 12 AS UNDER:- 8. IT IS CLEAR FROM THE AFORESAID THAT IF TWO VIEW S ARE POSSIBLE AND IF THE ASSESSING OFFICER HAS TAKEN A VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED A S ERRONEOUS ORDER, PREJUDICIAL TO THE INTEREST OF REVENUE. IN T HIS CASE ALSO THE ASSESSING OFFICER APPRECIATED THE ENTIRE ASPECT AND CAME TO ONE CONCLUSION AND MERELY BECAUSE A DIFFERENT VIEW WAS POSSIBLE THE EXERCISE OF POWER UNDER SECTION 263 COULD NOT BE MA DE. THE APPELLATE TRIBUNAL HAS CONSIDERED ALL THESE ASPECTS OF THE MATTER AND IT IS ONLY AFTER APPLYING THE LAW IN THE CASE O F MALABAR (SUPRA) THAT THE APPEAL HAS BEEN ALLOWED. THIS JUDGMENT OF THE SUPREME ITA NO. 670/JP/2018 M/S GAD FASHION VS. PCIT 9 COURT IN THE CASE OF MALABAR INDUSTRIAL (SUPRA) HAS BEEN FOLLOWED IN THE CASE OF COMMISSIONER OF INCOME TAX (CENTRAL) LUDHIANA VS MAX INDIA LTD. (2008) 166 TAXMAN 188 (SC) AND IN PA RA 2 THE FOLLOWING PRINCIPLES HAVE BEEN CRYSTALIZED : AT THIS STAGE WE MAY CLARIFY THAT UNDER PARA 10 OF THE JUDGMENT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. (SUPRA) THIS COURT HAS TAKEN THE VIEW THAT THE PHRASE PREJUDICIAL TO THE INTEREST OF THE REVENUE UNDER SECTION 263 HAS TO BE READ IN CONJUN CTION WITH THE EXPRESSION ERRONEOUS ORDER PASSED BY THE ASSESSIN G OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. FOR EXAMPLE, WHEN THE INCOME-TAX OF FICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND I T HAS RESULTED IN LOSS OF REVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH TH E COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED A S AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME TAX OFFICER IS UNSUSTA INABLE IN LAW. (EMPHASIS SUPPLIED) 9. A DIVISION BENCH OF THIS COURT HAS FOLLOWED THE PRINCIPLE LAID DOWN IN THE CASE OF MALABAR INDUSTRIAL (SUPRA) AND FOLLOWED THIS PRINCIPLE IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SHALIMAR HOUSING AND FINANCE LTD. (2010) 320 ITR 157 (M.P.) AND THE TRIBUNAL AFTER TAKING NOTE OF ALL THESE FACTORS HAS FOUND THAT EXERCISE OF POWER UNDER SECTION 263 WAS NOT WARRANT ED IN THE PRESENT CASE AND, THEREFORE, THE CITS REVISION ORD ER WAS QUASHED, WE FIND NO ERROR IN THE SAME WARRANTING RE CONSIDERATION AS WE ARE ALSO OF THE CONSIDERED VIEW THAT THE EXER CISE OF POWER BY THE COMMISSIONER UNDER SECTION 263 WAS NOT PROPE R. 10. IN THIS CASE, IF WE GO THROUGH A DETAILED ORDER PASSED BY THE COMMISSIONER APPEAL EXERCISING ITS POWER OF REVISIO N ON ITA NO. 670/JP/2018 M/S GAD FASHION VS. PCIT 10 31.12.2012 WE FIND THAT THE ONLY REASON GIVEN TO HO LD THE ORDER OF THE ASSESSING OFFICER TO BE ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF REVENUE IS THAT ONCE THE AMOUNT OF PROC EED RECEIVED FROM M/S. NAGARJUNA CONSTRUCTION COMPANY LTD. AND M /S. SIMPLEX INFRASTRUCTURE LTD. IS FOUND TO BE 16.02 CR ORES AND 10.50 CRORES, THEN MAKING AN ADDITION TO THE TUNE OF ONLY RS.14,24,60,600/- AND 1,53,41,000/- IS NOT PROPER. THIS IS THE ONLY REASON FOR HOLDING THE ORDER OF THE ASSESSING OFFICER TO BE ERRONEOUS. HOWEVER WHILE DOING SO, THE AUTHORITY NA MELY THE COMMISSIONER OF INCOME TAX EXERCISING JURISDICTION UNDER SECTION 263 LOST SIGHT OF THE FACT THAT THE LEARNED ASSESSI NG OFFICER IN DETAIL HAD GONE INTO THIS ASPECT OF THE MATTER AND HAS RECORDED A SPECIFIC FINDING TO SAY THAT APPRECIATING THE PRIMA RY EVIDENCE FROM NO.1 TO 9 ALONG WITH CORROBORATIVE EVIDENCE 1 TO 6 AN ADDITION OF ONLY RS.14,24,60,600/- CAN BE MADE AND SIMILARLY BY CONSIDERING PRIMARY EVIDENCE 1 TO 5 ALONG WITH CORR OBORATED EVIDENCE NO. 7 AN ADDITION OF RS.1,53,41,000/- ONLY PERMISSIBLE, THUS ON A DUE ANALYSES OF THE EVIDENCE, ASSESSING O FFICER ARRIVED AT A PARTICULAR CONCLUSION AND IF THIS IS ONE OF TH E VIEWS POSSIBLE BASED ON EVIDENCE THAT WERE APPRECIATED BY THE ASSE SSING OFFICER, MERELY BECAUSE A DIFFERENT VIEW WAS POSSIB LE INTERFERENCE UNDER SECTION 263 ON THIS COUNT COULD NOT BE MADE. THEREAFTER THIS ADDITION IS ALSO ANALYZED BY THE APPELLATE AUT HORITY IN DETAIL WHILE PASSING THE ORDER ORIGINALLY ON 12.12.2012 AN D THIS ADDITION IS ALSO FOUND TO BE UNSUSTAINABLE FOR REASONS AS HA VE BEEN INDICATED IN THE SAID ORDER AND WHICH IS CONSIDERED BY US IN THE PRECEDING PARAGRAPH. 11. MERELY BECAUSE IN A GIVEN SET OF CIRCUMSTANCES TWO DIFFERENT OPINIONS CAN BE FORMED, IT IS NOT APPROPRIATE TO IN TERFERE WITH ONE OF THE OPINION EXPRESSED UNTIL AND UNLESS THE OPINI ON IS FOUND TO BE PERVERSE OR BASED ON NO EVIDENCE OR MATERIAL. IF THIS PRINCIPLE IS APPLIED TO THE PRESENT CASE, WE FIND THAT THE TR IBUNAL HAS NOT COMMITTED ANY ERROR, IT WAS A CASE WHERE THE EXERCI SE OF JURISDICTION UNDER SECTION 263 BY THE COMMISSIONER BEING ITA NO. 670/JP/2018 M/S GAD FASHION VS. PCIT 11 UNSUSTAINABLE, THE TRIBUNAL HAS RIGHTLY INTERFERED INTO THE MATTER, IN VIEW OF THE INTERPRETATION TO SECTION 263 MADE B Y THE SUPREME COURT, AS DETAILED HEREINABOVE, INTERFERENCE MADE B Y THE COMMISSIONER APPEAL BEING UNSUSTAINABLE, WE ANSWER QUESTION NO.1 AND 3 BY HOLDING THAT THE EXERCISE OF POWER UN DER SECTION 263 BY THE APPELLATE AUTHORITY NAMELY THE COMMISSIO NER APPEAL WHILE PASSING THE APPELLATE ORDER ON 31.12.2012 WAS NOT PROPER AND BY INTERFERING IN A PROCEEDING UNDER SECTION 26 3 AN ERROR HAS BEEN COMMITTED AND IF THE TRIBUNAL HAS INTERFERED O N SAME, NO ILLEGALITY IS COMMITTED BY THE TRIBUNAL. ONCE WE HO LD THAT THE EXERCISE OF POWER UNDER SECTION 263 BY THE COMMISSI ONER WHILE PASSING ORDER ON 31.12.2012 WAS NOT WARRANTED WE HA VE TO DISMISS THIS APPEAL AND THE OTHER QUESTIONS, I.E. Q UESTION NO.2 FORMULATED NEED NOT TO BE GONE INTO. 12. WE ACCORDINGLY HOLD THAT THE POWER EXERCISED BY THE COMMISSIONER UNDER SECTION 263 OF THE INCOME TAX AC T BEING UNSUSTAINABLE, THE APPEAL IS LIABLE TO BE AND IS AC CORDINGLY DISMISSED. THE HONBLE SUPREME COURT IN CASE OF CIT VS. ARBUDA MILLS LTD. 231 ITR 50 HAS ALSO EXAMINED THE EXPLANATION-1(C) TO SECTI ON 263 AND HELD IN PARA 2 TO 8 AS UNDER:- 2. THE ASSESSEE IS A COMPANY. THE RELEVANT ASSESSMENT YEAR IS 1975-76 ENDING ON 31ST DEC., 1974. THE ASSESSMENT W AS COMPLETED UNDER S. 143(3) R/W S. 144B, ON 31ST MARC H, 1978, IN WHICH THE NET BUSINESS LOSS WAS COMPUTED AT RS. 3,6 1,086 AND THE INCOME UNDER THE HEAD 'CAPITAL GAINS' AT RS. 38 ,874. THE ITO HAD MADE CERTAIN ADDITIONS AND DISALLOWANCE WHILE C OMPUTING THE LOSS AND INCOME AS ABOVE AND HAD ALSO ACCEPTED, INT ER ALIA, THE FOLLOWING THREE CLAIMS: ITA NO. 670/JP/2018 M/S GAD FASHION VS. PCIT 12 (I) DEDUCTION OF A SUM OF RS. 23,82,621 BY WAY OF P ROVISION FOR GRATUITY; (II) DEPRECIATION ON RS. 4,21,000 WHICH WAS PAID BY THE ASSESSEE TO UNITED TEXTILE INDUSTRIES AS CONSIDERATION FOR T RANSFER OF INSTALLED PROPERTY OF 17,480 SPINDLES AND 400 LOOMS OF OLD MANEK CHOWK MILLS; (III) LOSS ON ACCOUNT OF DIFFERENCE IN EXCHANGE RAT E WHICH WAS REFERABLE TO THE PURCHASE OF MACHINERY, ETC., AS RE VENUE EXPENDITURE. 3. FOR THE PURPOSES OF THE PRESENT MATTER, IT IS ONLY THESE THREE ITEMS OF CLAIM WHICH ARE RELEVANT. 4. IN THE APPEALS FILED BY THE ASSESSEE, THE ITEMS IN RESPECT OF WHICH THE DECISION WAS IN ITS FAVOUR WERE NOT THE S UBJECT-MATTER OF THE APPEALS. IN RESPECT OF THESE THREE ITEMS, THE CIT EXERCISED HIS POWER UNDER S. 263 OF THE IT ACT. THE ABOVE QUESTION ARIS ES IN THIS CONTEXT. 5. THE MAIN CONTENTION OF THE ASSESSEE WHICH WAS CONS IDERED BY THE TRIBUNAL WAS WHETHER OR NOT THE ORDER OF THE IT O REGARDING THE SAID THREE ITEMS IN RESPECT OF WHICH THE ASSESS EE HAD NO OCCASION TO PREFER AN APPEAL HAD MERGED IN THAT OF THE CIT(A) SO AS TO EXCLUDE THE JURISDICTION OF THE CIT UNDER S. 263 OF THE ACT. 6. WE MAY REFER TO THE AMENDMENT MADE IN S. 263 OF TH E IT ACT BY THE FINANCE ACT, 1989, WITH RETROSPECTIVE EFFECT FROM 1ST JUNE, 1988. THE RELEVANT PART THEREOF FOR THE PRESENT CAS E IS AS UNDER: 'EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT, FOR THE PURPOSES OF THIS SUB-SECTION,. ITA NO. 670/JP/2018 M/S GAD FASHION VS. PCIT 13 (C) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTION AND PASSED BY THE AO HAD BEEN THE SUBJECT-MATTER OF ANY APPEAL FI LED ON OR BEFORE OR AFTER 1ST JUNE, 1988, THE POWERS OF THE C IT UNDER THIS SUB-SECTION SHALL EXTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED TO SUCH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL'. 7. THE CONSEQUENCE OF THE SAID AMENDMENT MADE WITH RETROSPECTIVE EFFECT IS THAT THE POWERS UNDER S. 26 3 OF THE CIT SHALL EXTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXT ENDED TO SUCH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN AN APPEAL. ACCORDINGLY, EVEN IN RESPECT OF THE AFORESA ID THREE ITEMS, THE POWERS OF THE CIT UNDER S. 263 SHALL EXTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED TO THEM BECAUSE THE SAME HAD NOT BEEN CONSIDERED AND DECIDED IN THE APPEAL FILED BY THE ASSESSEE. THIS IS SUFFICIENT TO ANSWER THE QUESTION WHICH HAS BEEN REFERRED. 8. THE QUESTION REFERRED IS, THEREFORE, ANSWERED IN T HE NEGATIVE, IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. ACCORDINGLY, WHEN THE ADDITION MADE BY THE AO WAS T HE SUBJECT MATTER OF APPEAL BEFORE THE LD. CIT(A) AND THIS ISSUE WAS PENDING BEFORE THE LD. CIT(A) THEN, THE PR. CIT HAS NOT POWERED TO INV OKE THE JURISDICTION OF U/S 263 OF THE ACT ON THE SAME ISSUE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE THE ISSUE WHICH WAS THE S UBJECT MATTER OF APPEAL BEFORE THE LD. CIT(A) AT THE TIME OF ISSUING THE SHOW CAUSE NOTICE THEN, THE INITIATION OF PROCEEDINGS U/S 263 ITSELF IS NOT VALID. FURTHER, IT IS APPARENT AND MANIFEST FROM THE RECOR D THAT THE LD PR. CIT ITA NO. 670/JP/2018 M/S GAD FASHION VS. PCIT 14 ISSUED THE SHOW CAUSE NOTICE ON 29.03.2018 AND PASS ED THE IMPUGNED ORDER ON 31.03.2018 AS FAILING WHICH THE TIME LIMIT AVAILABLE WOULD HAVE EXPIRED. THUS PASSING THE REVISION ORDER IN SUCH A HASTE WITHOUT CONSIDERING THE RELEVANT MATERIAL AS WELL AS REPLY FILED BY THE ASSESSEE IS OTHERWISE NOT SUSTAINABLE IN LAW. WE FIND THAT T HE PR. CIT WHILE PASSING THE IMPUGNED ORDER HAS NOT EVEN MADE ANY RE FERENCE TO THE REPLY FILED BY THE ASSESSEE THUS SUCH AN ORDER PASS ED IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE IS NOT SUSTAINABLE AND LIABLE TO QUASH. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER PASSED U/S 263 OF THE ACT. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/07/2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 17/07/2018. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S GAD FASHION, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- PR. CIT-3, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. ITA NO. 670/JP/2018 M/S GAD FASHION VS. PCIT 15 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 670/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR