Glade Steels Pvt.Ltd., Hyd, Hyderabad V. ITO, Ward-2(2), Hyd, Hyderabad

ITA 723/HYD/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6144 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-10-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 28-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P CHANDRA SEKHAR
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Depreciation; Tangible material; Difference of opinion; Assessment record; Change of opinion
• Section: 142(1); 263; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA.NO.723/HYD/2015 ASSESSMENT YEAR 2010-2011 M/S. GLADE STEEL PRIVATE LIMITED, HYDERABAD. PAN AACCG3684P VS. THE INCOME TAX OFFICER, WARD-2(2), HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. P. MURALIMOHAN RAO FOR REVENUE : MR. P. CHANDRASEKHAR DATE OF HEARING : 17.10.2016 DATE OF PRONOUNCEMENT : 21.10.2016 ORDER PER D. MANMOHAN, V.P. THIS APPEAL BY THE ASSESSEE-COMPANY IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX UNDER SECTION 263 OF THE I.T. ACT, 1961 AND IT PERTAINS TO THE A.Y. 2010-2011. 2. FACTS NECESSARY FOR THE DISPOSAL OF THE APPEAL ARE STATED IN BRIEF. AS PER 3CB REPORT OF THE COMPANY THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND TRADING OF MS BARS, MS ANGLES AND MS CHANNELS. FOR THE YEAR UNDER CONSID ERATION, IT DECLARED NIL INCOME WHICH WAS PROCESSED ACCORDINGLY ON 27.10.2011. THEREAFTER, THE CASE WAS TAKEN-UP FOR SCR UTINY AND A NOTICE WAS ISSUED UNDER SECTION 143(2) OF THE ACT. A QUESTIONNAIRE WAS ALSO ISSUED TO THE ASSESSEE CALLING FOR VARIOUS DETAILS. AS NOTICED FROM THE PAPER BOOK, A NOTICE UNDE R SECTION 2 ITA.NO.723/HYD/2015 M/S. GLADE STEEL PRIVATE LIMITED, HYDERABAD. 142(1) DATED 27.12.2012 WAS ISSUED CALLING-UPON THE A SSESSEE- COMPANY TO FURNISH COMPLETE DETAILS OF THE DIRECTORS ALONG WITH THEIR ASSESSMENT PARTICULARS, NAME, ADDRESS, SOURCE A ND ASSESSMENT PARTICULARS OF THE SHARE-HOLDERS, DETAILS OF SUNDRY DEBTORS, LOANS AND ADVANCES GIVEN AND SQUARED-UP DUR ING THE YEAR. THE DETAILS OF WORK-IN-PROGRESS, COPIES OF VAT RETURNS AND ALSO COPIES OF LEASE DEEDS IN RESPECT OF LEASE RENTAL S RECEIVED, WERE CALLED FOR APART FROM DIRECTING THE ASSESSEE TO PR ODUCE THE BOOKS OF ACCOUNT. AS NOTICED FROM ANNEXURE-A (PAGE-54 OF THE PAPER BOOK) THE ASSESSEE WAS CALLED-UPON TO FURNISH BRIEF NOTE ON THE NATURE OF THE BUSINESS CARRIED ON DURING THE PREVIO US YEAR AND ALL OTHER FINANCIAL STATEMENTS ALONG WITH ANNEXURE S. IN RESPONSE THERETO, THE ASSESSEE FURNISHED THE FOLLOWING DETAILS : 1. BOOKS OF ACCOUNTS OF THE COMPANY FOR THE A.Y. 2010 -2011 IN PRINTED FORMAT. 2. CONFIRMATION OF INVESTMENT INTO THE SHAREHOLDING OF THE COMPANY BY M/S. STARLINE HOLDINGS INC. AND M/S. SUJ ANA METAL PRODUCTS LIMITED. 3. LEDGER COPY OF SHARE PREMIUM ACCOUNT. 4. BANK RECONCILIATION STATEMENT ALONG WITH BANK STATE MENT. 5. LEDGER COPY OF INTEREST RECEIVED. 6. DETAILS OF LOANS AND ADVANCES GIVEN IN THE PRESCRIB ED FORMAT. 7. LEDGER ACCOUNT OF TDS PAYABLE. THE ASSESSEE ALSO FURNISHED CONFIRMATION OF INVESTMEN TS AND OTHER DETAILS. 3 ITA.NO.723/HYD/2015 M/S. GLADE STEEL PRIVATE LIMITED, HYDERABAD. 3. THE ASSESSING OFFICER EXAMINED THE BOOKS OF ACCO UNT AND DETAILS SUBMITTED BEFORE HIM AND NOTICED THAT DURING THE YEAR UNDER CONSIDERATION NO MANUFACTURING ACTIVITY W AS UNDERTAKEN BY THE ASSESSEE AND IT HAD MERELY CARRIED- OUT TRADING ACTIVITY. THE ASSESSING OFFICER FURTHER OBSERVED THAT TH E ASSESSEE LEASED-OUT ITS FACTORY PREMISES TO M/S. SUJANA METAL P RODUCTS. IT WAS FURTHER NOTICED THAT THE ASSESSEE AVAILED TERM LOAN FOR SETTING-UP OF FACTORY AND CLAIMED AN AMOUNT OF RS.49,5 0,000 TOWARDS INTEREST PAID TO APSFC. SINCE THE ASSESSEE RECEI VED A MEAGER AMOUNT OF RS.9 LAKHS IN THE FORM OF LEASE REN TAL, THE ASSESSING OFFICER OBSERVED THAT THE INTEREST PAID TO APS FC IS NOT COMMENSURATE WITH THE INVESTMENT AND THUS TREATED THE SAME AS NOT CONNECTED TO THE BUSINESS. IN OTHERWORDS, THE AMOUN T OF RS.49,50,000 WAS DEDUCTED FROM THE LOSS RETURNED AND ARRIVED AT THE TOTAL INCOME OF RS.46,90,635. THE ASSESSMENT WAS THU S COMPLETED ON 31.03.2013. 4. BY VIRTUE OF THE POWERS VESTED IN THE COMMISSION ER UNDER SECTION 263 OF THE ACT, THE ASSESSMENT RECORDS OF THE ASSESSEE-COMPANY WERE CALLED FOR AND ON PERUSAL OF THE SAME, THE LEARNED PRINCIPAL COMMISSIONER WAS OF THE OPINIO N THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE ERRORS POINTED-OUT IN THE NOTICE WERE REPRODUCED FOR IMMEDIATE REFERENCE : (I) NO ENQUIRIES WERE CONDUCTED INTO THE ALLEGED TRADI NG ACTIVITY, WHICH WOULD BE IN THE NATURE OF ROUND TRI PPING BECAUSE THE ENTITIES WITH WHOM THE ACTIVITIES ARE CONDUCTED ARE OF THE SAME GROUP COMPANIES; (II) THE INVESTMENT OF $ 32,49,877/- BY M/S. STARLINE HOLDINGS INC, 60 MARKET SQUARE, PO BOX NO.374, BELI ZE CITY, BELIZE @ RS.250/- PER SHARE (AT A PREMIUM OF 4 ITA.NO.723/HYD/2015 M/S. GLADE STEEL PRIVATE LIMITED, HYDERABAD. RS.250 PER SHARE) WAS NOT INVESTIGATED BY THE ASSESSING OFFICER AND THE DOCUMENTS WERE ACCEPTED A T FACE VALUE. 4.1. IN RESPONSE TO THE SAID NOTICE, THE REPRESENTATIVE WHO APPEARED ON BEHALF OF THE ASSESSEE-COMPANY SUBMITTED TH AT THE ORDER PASSED BY THE ASSESSING OFFICER IS NEITHER ERR ONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE REVENUE INASMUCH AS THE ASSESSING OFFICER HAD EXAMINED THE MATTER FROM ALL AN GLES AT THE TIME OF MAKING ASSESSMENT AND THUS THE ACTION OF THE PR. CIT AMOUNTS TO MERE CHANGE OF OPINION. TO SUBSTANTIATE THE CONTENTION OF THE ASSESSEE-COMPANY HE LEARNED REPRESEN TATIVE ADVERTED THE ATTENTION OF THE PRINCIPAL COMMISSIONER TO THE QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER WHEREIN THE ASSESSEE WAS CALLED-UPON TO FURNISH GROSS PROFIT/NET PROFIT MARGINS SHOWN WITH CORRESPONDING TURNOVER FOR THE CUR RENT AND PAST TWO YEARS AND THE ASSESSING OFFICER HAD ALSO DIR ECTED THE ASSESSEE TO FURNISH THE COPIES OF THE VAT RETURNS AND AFTER CONSIDERING ALL THE DETAILS FILED, THE ASSESSING OFFIC ER HAD COME TO THE CONCLUSION THAT THE ASSESSEE WAS MERELY ENGAGED IN TRADING ACTIVITY. SINCE THE ASSESSING OFFICER HAD TAKEN ONE OF THE POSSIBLE VIEWS ON THE MATTER, REVISION PROCEEDINGS BY THE PRINC IPAL COMMISSIONER - MERELY BECAUSE HE HOLDS A DIFFERENT V IEW ON THE MATTER - IS NOT PERMISSIBLE. 4.2. IT WAS FURTHER CONTENDED THAT THE LEARNED PRINCIPAL COMMISSIONER PROPOSES TO TAKE A DIFFERENT VIEW, MERELY ON PRESUMPTIONS/SURMISES; ACCORDING TO THE PR.CIT THE ASS ESSING OFFICER HAD NOT MADE ANY ENQUIRIES INTO THE ALLEGED TRA DING ACTIVITY AND IN PARTICULAR THE NATURE OF ROUND-TRIPPING , WHICH IS BASED ON THE ASSUMPTION THAT THE ENTITIES WITH WHOM THE 5 ITA.NO.723/HYD/2015 M/S. GLADE STEEL PRIVATE LIMITED, HYDERABAD. ACTIVITIES ARE CONDUCTED ARE OF THE SAME GROUP COMPANIE S. IN THE REPLY FURNISHED BEFORE THE PR.CIT IT WAS CONTENDED THAT EXCEPT THE ASSUMPTION OF THE PR.CIT HE HAD NOT SPECIFICALLY FO UND ANYTHING REGARDING NATURE OF ROUND-TRIPPING OF THE TRADING ACTI VITY; THEREFORE, THE REVISIONAL PROCEEDINGS ARE BAD IN LAW . AT BEST IT CAN BE SAID THAT THERE ARE TWO VIEWS POSSIBLE AND ME RELY BECAUSE THE COMMISSIONER DOES NOT AGREE WITH THE VIEW TAKEN BY THE ASSESSING OFFICER HIS VIEW CANNOT BE TREATED AS COMIN G WITHIN THE PURVIEW OF SECTION 263 OF THE ACT. 5. WITH REGARD TO THE POINT NO.2 I.E., VERIFICATION OF THE INVESTMENT INTO SHAREHOLDINGS, THE AUTHROISED REPRESEN TATIVE, APPEARING ON BEHALF OF THE ASSESSEE, SUBMITTED THAT THE ASSESSMENT WAS COMPLETED AFTER SATISFYING ABOUT THE INF ORMATION THAT THE INVESTMENTS WERE MADE AT RS.250 PER SHARE ETC. BE FORE TAKING ANOTHER VIEW ON THE MATTER THE COMMISSIONER SHO ULD POINT-OUT AS TO WHAT FURTHER INVESTIGATION WOULD HAVE BEE N MADE BY THE ASSESSING OFFICER. IT WAS THUS, STRONGLY SUBMITTED THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IS ONE OF THE POSS IBLE VIEWS ON THE MATTER AND THEREFORE, NOT AMENABLE TO THE JURISDICTIO N OF THE REVISIONAL AUTHORITY. 5.1. THE LD. PR. CIT AGREED IN PRINCIPLE THAT WHEN TH ERE ARE TWO VIEWS POSSIBLE AND IF ASSESSING OFFICER TAKE S ONE OF THE COURSES PERMISSIBLE IN LAW, THE CIT CANNOT EXERCISE H IS POWER UNDER SECTION 263 OF THE ACT MERELY BECAUSE HE HAS A D IFFERENT VIEW ON THE MATTER. AT THE SAME TIME, HE WAS OF THE OPINI ON THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABL E IN LAW AND THEREFORE, HE IS ENTITLED TO INVOKE JURISDICTION UND ER SECTION 263 OF THE ACT. IN HIS OPINION, THE ASSESSING OFFICER HAS TO 6 ITA.NO.723/HYD/2015 M/S. GLADE STEEL PRIVATE LIMITED, HYDERABAD. ASCERTAIN ALL THE FACTS BY MAKING FURTHER INVESTIGATION A ND FAILURE TO MAKE SUCH AN ENQUIRY WOULD MAKE THE ASSESSMENT ORDE R ERRONEOUS. PROCEEDING FURTHER, THE PR. CIT OBSERVED TH AT THE ASSESSING OFFICER FAILED TO CAUSE ENQUIRIES REGARDIN G THE ALLEGED TRADING ACTIVITY PERTAINING TO THE ENTITIES WITH WHOM THE A CTIVITIES ARE CONDUCTED. FURTHER, INVESTMENTS BY STERLING INC., BE LIZE CITY WAS NOT INVESTIGATED BY THE ASSESSING OFFICER AND DOC UMENTS WERE ACCEPTED AT FACE VALUE. HE THEREFORE, CONCLUDED THAT THE MATTER REQUIRES RE-EXAMINATION BY THE ASSESSING OFFIC ER PROPERLY AND ACCORDINGLY, SET ASIDE THE ASSESSMENT ORDER WITH A DIRECTION TO THE ASSESSING OFFICER TO MAKE FURTHER ENQUIRIES ON THE ISSUES MENTIONED IN THE SHOW CAUSE NOTICE. 5.2. AGGRIEVED BY THE ORDER PASSED BY THE PR. CIT, ASSESSEE-COMPANY IS IN APPEAL BEFORE US. LEARNED CO UNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS FOLLOW ED A PRUDENT APPROACH, OF CALLING-UPON THE ASSESSEE TO FUR NISH ALL DETAILS AND AFTER THOROUGH EXAMINATION OF THE FACTS IN DETAIL HE CONCLUDED THAT THE ASSESSEE IS NOT ENGAGED IN MANUFAC TURING ACTIVITY AND MERELY CARRIED-OUT TRADING ACTIVITY IN TH IS YEAR. SINCE HE HAS CALLED FOR ALL THE DETAILS WITH REGARD TO THE INVESTMENTS MADE BY THE ASSESSEE, MERELY BECAUSE THE COMMISSIONER HOLDS A DIFFERENT VIEW IT CANNOT BE ALLEGED THAT THE ACTIVITY WAS IN THE NATURE OF ROUND-TRIPPING. IN FACT, THE LD. COMMISSIONE R HAD NOT SPECIFICALLY MENTIONED AS TO HOW THE ACTIVITY CAN BE CO NSIDERED AS ROUND-TRIPPING ACTIVITY AND EVEN HE COULD NOT POINT-OU T AS TO HOW THE INVESTMENT INTO SHAREHOLDING OF STAR LINE HOLDINGS E TC., WAS NOT PROPERLY INVESTIGATED. IN FACT CONFIRMATIONS FROM S TAR LINE HOLDINGS INC., AND M/S. SUJANA METAL PRODUCTS LTD., WE RE ALREADY FURNISHED BEFORE THE ASSESSING OFFICER AND IT IS NOT K NOWN AS TO 7 ITA.NO.723/HYD/2015 M/S. GLADE STEEL PRIVATE LIMITED, HYDERABAD. WHAT FURTHER INVESTIGATION IS REQUIRED. IN OTHERWORDS, T HE ASSESSING OFFICER HAVING ARRIVED AT A FAIR VIEW ON T HE ISSUES RAISED BY THE COMMISSIONER, MERELY BECAUSE COMMISSIO NER HAD A DIFFERENT VIEW ON THE MATTERS, UNLESS THE ALLEGATIONS A RE SUPPORTED BY SOME OTHER MATERIAL, IT CANNOT BE SAID THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS UNSUSTAINABL E AND AS A NECESSARY CONSEQUENCE THE ASSESSMENT ORDER CANNOT BE CONSIDERED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTER ESTS OF THE REVENUE. IN THIS REGARD, THE LEARNED COUNSEL FOR THE A SSESSEE, STRONGLY RELIED UPON THE DECISION OF THE APEX COURT IN THE CASE OF MALABAR INDUSTRIAL CO., LTD, 243 ITR 83 WHEREIN THE CO URT OBSERVED THAT IN ORDER TO INVOKE THE PROVISIONS OF SECTI ON 263 OF THE ACT, THE CIT HAS TO BE SATISFIED WITH TWIN CONDITIONS NAMELY (A) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE R EVISED IS ERRONEOUS AND (B) IT IS PREJUDICIAL TO THE INTERESTS O F THE REVENUE. WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFIC ER HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE IT CANNOT BE TREATED AS ERRONEOUS ORDER. LEARNED COUNSEL FOR THE ASSESSE E ALSO RELIED UPON THE DECISION OF THE A.P. HIGH COURT IN THE CASE O F SPECTRA SHARES 36 TAXMANN.COM 348 WHEREIN THE COURT OBSERVED TH AT THE ASSESSING OFFICER, IN THE ASSESSMENT ORDER, IS NOT RE QUIRED TO GIVE DETAILED REASONS WHILE ACCEPTING THE PLEA OF THE ASSES SEE AND WHAT IS REQUIRED TO BE VERIFIED IS, WHETHER THERE WAS APPLICATION OF MIND BY AN ENQUIRY; ONCE THERE IS A PROPER ENQUIRY I T CANNOT BE CALLED AS ERRONEOUS MERELY BECAUSE THE COMMISSIONER ENTERTAINS A DIFFERENT OPINION ON THE MATTER. LEARNED COUNSEL FOR THE ASSESSEE THUS STRONGLY SUBMITTED THAT THE ORDER PASSED BY THE CIT IS BAD IN LAW INASMUCH AS THERE WAS NO MATERIAL ON RECORD TO SUGGEST THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENU E. 8 ITA.NO.723/HYD/2015 M/S. GLADE STEEL PRIVATE LIMITED, HYDERABAD. 6. ON THE OTHER HAND, THE LD. D.R. PLACED RELIANCE U PON THE FOLLOWING DECISIONS TO SUPPORT THE STAND TAKEN BY T HE COMMISSIONER THAT THE ORDER PASSED BY THE ASSESSING OF FICER CAN BE SAID TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 1. CIT VS. ALLOY STEELS (2013) 36 TAXMAN.COM 514 (KARNATAKA) (HC) (IN THE ABSENCE OF VOUCHERS IN RESPECT OF PAYMENTS IF THE ASSESSING OFFICER ACCEPTS LABOUR PAYMENTS WITHOUT APPLICATION OF MIND THE COMMISISONER CAN INVOKE REVISIONARY POWERS. 2. RAMPYARI DEVI SARAOGI VS. CIT (1968) 67 ITR 84 (SC ) (A SHORT STEREO-TYPED ASSESSMENT ORDER, DESPITE NOT PRODUCING EVIDENCE IN RESPECT OF MONEY LENDING BUSIN ESS DONE AND INTEREST INCOME SHOWN TO HAVE BEEN RECEIVED BY THE ASSESSEE WOULD BE SUFFICIENT TO COME TO THE CONCLUSION THAT THE ORDER PASSED BY THE ASSESSING OF FICER IS ERRONEOUS.) 3. CIT VS. INFOSYS TECHNOLOGIES LTD., 341 ITR 293 (KARNATAKA) (HC) (IF THE ASSESSING AUTHORITY FAILED TO VERIFY THE PARTICULARS/DETAILS, MORE SO IN EXTENDING A TAX RELIEF TO THE ASSESSEE, THE ORDER DEFINITELY CONSTITUTES AN ORDER N OT MERELY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTERESTS O F THE REVENUE.) 9 ITA.NO.723/HYD/2015 M/S. GLADE STEEL PRIVATE LIMITED, HYDERABAD. 7. JOINING THE ISSUE, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE INSTANT CASE, THE ASSESSING OFFICER HAD CONDUCTED DETAILED ENQUIRY BEFORE DETERMINATION OF INCOME AND IN FACT DISALLOWED A PORTION OF THE CLAIM I.E., AM OUNT CLAIMED AS DEDUCTION REFERABLE TO INTEREST PAID TO APSFC, AND TH US MERELY BECAUSE THE CIT HOLDS A DIFFERENT OPINION THE ORDER P ASSED BY THE ASSESSING OFFICER CANNOT BE SAID TO BE ERRONEOUS. HE ALSO RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE C ASE OF D.G. HOUSING PROJECT LTD., 20 TAXMAN 587 IN SUPPORT OF HIS CONTENTION THAT THE CIT CANNOT DIRECT THE ASSESSING OFFICER TO COND UCT FURTHER ENQUIRY TO VERIFY AS TO WHETHER FIRST ORDER PASS ED BY THE ASSESSING OFFICER IS ERRONEOUS OR NOT. IN THE SAID CA SE THE ASSESSEE SOLD IMMOVABLE PROPERTY AND CLAIMED CAPITAL LOSS AFTER INDEXATION. COMMISSIONER HAD CERTAIN DOUBTS ABOUT THE V ALUE AND SALE CONSIDERATION RECEIVED BUT HE HAD NOT EXAMINE D THE SAID ASPECT HIMSELF AND MERELY GAVE A FINDING THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS AND DIRECTED THE ASSESSING OFFICER TO PROPERLY EXAMINE THE MATTER. UNDER SUCH CIRCUMSTANCES, THE HONBLE DELHI HIGH COURT OBSERVED TH AT THE ASSESSING OFFICER IS BOTH AN INVESTIGATOR AND ADJUDICA TOR AND IN SUCH CAPACITY IF HE DECIDES A QUESTION OR ASPECT WHIC H IS PALPABLY WRONG/UNSUSTAINABLE IN LAW, IT CAN BE CORRECTED BY TH E COMMISSIONER IN EXERCISE OF REVISIONAL POWERS BUT IN ORDER TO HOLD THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IS W RONG THE COMMISSIONER HAS TO CONDUCT NECESSARY ENQUIRY BEFORE PASSING AN ORDER UNDER SECTION 263; THE COURT FURTHER REMARKED THAT IN CASES WHERE THERE IS INADEQUATE ENQUIRY BUT NOT LACK O F ENQUIRY, THE COMMISSIONER MUST GIVE A FINDING THAT THE ENQUIRY IS INSUFFICIENT AND IN ORDER TO COME TO SUCH A CONCLUSION THE COMMISSIONER HAS TO MAKE PROPER VERIFICATION OF FACTS AND SHOULD 10 ITA.NO.723/HYD/2015 M/S. GLADE STEEL PRIVATE LIMITED, HYDERABAD. ESTABLISH, BASED ON THE FACTS ON RECORD, THAT FURTHER ENQ UIRY IS MANDATORY. LEARNED COUNSEL FOR THE ASSESSEE STRONGLY RELIED UPON THE AFORECITED DECISION TO SUBMIT THAT EVEN IN TH E CASE OF GLADE STEELS THE LD. COMMISSIONER MERELY ACTED UPON CONJECTURES AND SURMISES WITHOUT MAKING ANY SPECIFIC ENQUIRY AS TO WHY A FURTHER INVESTIGATION IS REQUIRED/ABSOLUTELY M ANDATORY AND HOW THE TRADING ACTIVITY IS IN THE NATURE OF ROUND -TRIPPING ACTIVITY. THE REVISIONAL AUTHORITY JUMPED TO THE CONCLU SION MERELY BECAUSE THE ACTIVITY WAS WITHIN THE SAME GROUP OF COMPA NIES AND SUCH SURMISES SHOULD NOT BE THE BASIS FOR CONCLUDING THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS A ND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. HE ALSO RE LIED UPON THE DECISION OF THE HONBLE MUMBAI HIGH COURT IN THE C ASE OF CIT VS. CREDIT BANK 196 TAXMAN 329 WHEREIN THE COURT OBSERV ED THAT ASSESSING OFFICER HAVING MADE ENQUIRIES AND ARRIVED AT A CONCLUSION THAT ASSESSEE WAS ENTITLED TO DEPRECIATION ON THE VALUE OF SECURITIES HELD IN THE TRADING ACCOUNT, IN TH E ABSENCE OF ANY TANGIBLE MATERIAL TO THE CONTRARY THE COMMISSIONER COULD NOT HAVE TREATED THAT FINDING TO BE ERRONEOUS OR PREJUDICI AL TO THE INTERESTS OF THE REVENUE. 7.1. THE LEARNED COUNSEL FOR THE ASSESSEE, THUS, STRONGLY SUBMITTED THAT EVEN DURING THE COURSE OF 263 PROCEEDINGS THE ASSESSEE SPECIFICALLY MENTIONED THAT THE REVISIONAL AUT HORITY HAS NOT SPECIFICALLY FOUND ANYTHING BEFORE JUMPING TO TH E CONCLUSION, EXCEPT ON SURMISES, WITH REGARD TO NATURE OF ROUND-TRI PPING ACTIVITY, AND NO FURTHER INVESTIGATION WAS MADE BY THE COMMISSIONER BEFORE HOLDING THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO TH E INTERESTS OF THE REVENUE. 11 ITA.NO.723/HYD/2015 M/S. GLADE STEEL PRIVATE LIMITED, HYDERABAD. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE RECORD AND WE HAVE ALSO CAREFULLY GO NE THROUGH THE CASE LAW RELIED UPON BY BOTH THE PARTIES. THERE IS NO DISPUTE WITH REGARD TO THE PRINCIPLE AS TO WHAT IS THE FINE LIN E TO BE DRAWN BEYOND WHICH AN ORDER HAS TO BE TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND AT WHA T STAGE IT CAN BE HELD THAT THE ASSESSING OFFICER HAD TAKEN A REAS ONABLE VIEW ON THE MATTER WHICH CANNOT BE SET-ASIDE MERELY BE CAUSE THE COMMISSIONER HOLDS A DIFFERENT VIEW. IT IS ALSO NOT I N DISPUTE, BASED ON THE CASE LAW CITED (SUPRA), THAT WHEN AN ASSES SING OFFICER MAKES A REASONABLE ENQUIRY BEFORE REACHING APPROPRIATE CONCLUSIONS, IT IS FOR THE COMMISSIONER TO POINT-OUT A S TO HOW THE MATTER REQUIRES FURTHER ENQUIRY OR THE ORDER PASSED BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW; IN THE AB SENCE OF WHICH THE COMMISSIONER CANNOT INVOKE THE PROVISIONS OF SECTIO N 263 BASED ON THE GROUND THAT HE HOLDS A DIFFERENT VIEW ON TH E MATTER. 8.1. HAVING CAREFULLY GONE THROUGH THE ORDER OF THE COMMISSIONER, WE ARE OF THE OPINION THAT THE REVISIONAL AUTHORITY OUGHT TO HAVE MADE PROPER INVESTIGATION AND RECORDED APPROPRIATE CONCLUSION TO BUTTRESS HIS VIEW THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIA L TO THE INTERESTS OF THE REVENUE; HE OUGHT TO HAVE POINTED OUT WHA T MORE INVESTIGATION IS WARRANTED IN THE FACTS AND CIRCUMSTAN CES OF THE CASE. IT MAY NOT BE OUT OF PLACE TO MENTION THAT THE PR. C IT PASSED A LACKLUSTER ORDER WHILE HOLDING THAT THE ORDE R OF ASSESSING OFFICER IS UNSUSTAINABLE WITHOUT MAKING ANY EFFORT TO INVESTIGATE FURTHER. WE HAVE ALSO NOTICED THAT THE ASSESS ING OFFICER HAD CALLED FOR DETAILS WITH REGARD TO THE NATUR E OF INVESTMENTS, NATURE OF BUSINESS ACTIVITY ETC., AND AFTER APPLYING 12 ITA.NO.723/HYD/2015 M/S. GLADE STEEL PRIVATE LIMITED, HYDERABAD. HIS MIND THE ASSESSMENT WAS COMPLETED. SUCH BEING THE CASE, WITHOUT ANY FURTHER MATERIAL TO PROVE TO THE CONTRARY I.E ., TO HIGHLIGHT THAT IT IS IN THE NATURE OF ROUND-TRIPPING ACTI VITY OR THE INVESTMENTS INTO THE SHARES OF A SISTER CONCERN ARE C OLOURABLE THE LD. COMMISSIONER, IN OUR HUMBLE OPINION, IS NOT JUSTI FIED IN HOLDING THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENU E. 8.2. ON A CONSPECTUS OF THE MATTER, WE HOLD TH AT THE ORDER PASSED BY THE COMMISSIONER IS BAD IN LAW AND THEREFOR E, WE QUASH AND SET ASIDE THE ORDER PASSED BY THE COMMISSION ER AND ALLOW THE APPEAL FILED BY THE ASSESSEE COMPANY. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.10. 2016. SD/- SD/- (B. RAMAKOTAIAH) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT HYDERABAD, DATED 21 ST OCTOBER, 2016. VBP/- COPY TO 1. M/S. GLADE STEEL PRIVATE LIMITED, HYDERABAD. C/O. MR. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82. 2. THE INCOME TAX OFFICER, WARD-2(2), HYDERABAD. 3. PR. CIT-II, HYDERABAD. 4. ADDL. CIT, RANGE-2, HYDERABAD. 5. D.R. ITAT A BENCH, HYDERABAD. 6. GUARD FILE.