Abhishek Engineers Pvt.Ltd., Ahmedabad V. The CIT.,-1, Ahmedabad

ITA 754/AHD/2012

• Counselvise Citation: 75420514 RSA 2012
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 03-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R C SHAH
• Keywords: Depreciation; Revenue expenditure
• Section: 143(3); 263

Judgement Text

, , , , C, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH . .. . . .. . , , , , , , , , !' # $%&' !' # $%&' !' # $%&' !' # $%&', , , , ( ( ( ( ) ) ) ) BEFORE S/SHRI D.K.TYAGI, JUDICIAL MEMBER AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.754/AHD/2012 [ASSTT.YEAR : 2007-2008] ABHISHEK ENGINEERS PVT. LTD. ABHISHEK HOUSE 5, SHRIMALI SOIETY NR. NAVRANGPURA JAIR DERASAR NAVRANGPURA, AHMEDABAD. PAN AAACA 9827 E. # /VS. COMMISSIONER OF INCOME-TAX I, AHMEDABAD. ( (( (+, +, +, +, / APPELLANT) ( (( (-+, -+, -+, -+, / RESPONDENT) # .% / 0 / ASSESSEE BY : SHRI R.C. SHAH 2 / 0 / REVENUE BY : SHRI VINOD TANWANI  / %(/ DATE OF HEARING : 31 ST MAY, 2012 456 / %(/ DATE OF PRONOUNCEMENT : 22-6-2012 7 / O R D E R PER ANIL CHATURVEDI, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX-I, AHMEDABAD DATED 23.01.2012 FOR THE ASSTT.YEAR 2007-2008 PASSED UNDER SECTION 263 OF THE INCOME TA X ACT, 1961. ITA NO.754/AHD/2012 -2- THE ASSESSEE IS AGGRIEVED BY THE ACTION OF THE CIT- I, AHMEDABAD UNDER SECTION 263 IN SETTING ASIDE THE ORDER DATED 31-12-2009 PASSED BY THE AO PASSED UNDER SECTION 143(3) OF THE ACT. 2. ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF PROJECT CONSULTANT, CONSTRUCTION, CONTRACTOR AND SOFTWARE D EVELOPER. FOR A.Y 2007-08, THE ASSESSEE FILED RETURN OF INCOME ON 31. 10.2007 DECLARING TOTAL INCOME OF RS.4,227,427/-. THE CASE WAS TAKEN UP FOR SCRUTINY ASSESSMENT COMPLETED U/S. 143(3) VIDE ORDER DATED 3 1.12.2009 WHEREIN THE TAXABLE INCOME WAS DETERMINED AT RS.82, 63,407/-AFTER MAKING VARIOUS ADDITIONS/DISALLOWANCES INCLUDING TH E DISALLOWANCE OF RS.3,63,541 U/S 40A(IA). THE CIT ISSUED A SHOW CA USE NOTICE DATED 19.12.2011 TO ASSESSEE REQUIRING THE ASSESSEE TO SH OW CAUSE AS TO WHY THE ASSESSMENT ORDER U/S 143(3) SHOULD NOT BE TREAT ED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ACCORDINGLY THE ASSESSMENT ORDER PASSED U/S 143(3) BE MADE SUBJECT MATTER OF REVISION U/S.263 FOR TWO REASONS NAMELY THE DEDUCTION OF TDS WITHOUT SURCHARGE AND ON ALLOWABILITY OF DEPRECIATION ON WD V OF THE BLOCK OF BUILDING. THE CIT WAS OF THE VIEW THAT THE SCRUTINY OF THE DETAILS OF TDS DEDUCTED AND DEPOSITED REVEALED THAT THE TDS HA S BEEN DEDUCTED ON VARIOUS PAYMENTS WITHOUT SURCHARGE. ACCORDING TO CIT THE ASSESSEE HAS DEDUCTED TDS AT LESSER RATE (WITHOUT SURCHARGE) INSTEAD OF DEDUCTING IT WITH SURCHARGE OF 10% AND ACCORDINGLY THE AMOUNT OF RS.76,52,996/- WAS REQUIRED TO BE DISALLOWED U/S.40 A(IA) AND THEREFORE THE ORDER OF THE AO WAS ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF THE REVENUE. 3. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESS EE REPLIED AND INTERALIA SUBMITTED THAT THE AS PER THE PROVISIONS OF SECTIO N 2(6) OF THE ITA NO.754/AHD/2012 -3- FINANCE ACT 2007, THE TDS COMPUTED UNDER THE RESPEC TIVE SECTIONS IS TO BE INCREASED BY A SURCHARGE CALCULATED AT 10% WH ERE THE INCOME OR THE AGGREGATE OF SUCH INCOME PAID OR LIKELY TO BE P AID AND SUBJECT TO DEDUCTION EXCEEDS RS. 10 LACS IN CASE THE PAYEE IS AN INDIVIDUAL, HUF, AOP, BOI AND RS.1 CRORE WHERE THE PAYEE IS A DOMEST IC COMPANY. IN THE CASE OF THE ASSESSEE AS NONE OF THE PAYMENTS EX CEEDED THE LIMIT OF RS.10 LAC OR RS.1 CRORE AS THE CASE MAY BE, THE TDS WAS DEDUCTED AT THE APPROPRIATE RATE INCLUDING EDUCATION CESS BUT E XCLUDING SURCHARGE. THE ASSESSEE THUS REQUESTED THE CIT TO DROP THE PRO CEEDINGS U/S.263. THE SUBMISSIONS OF THE ASSESSEE WERE NOT FOUND CONV INCING AS ACCORDING TO THE CIT THE ASSESSEE SHOULD HAVE FILED THE DETAILS ALONGWITH THE RETURN OF INCOME OR ALONG WITH THE SU BMISSIONS MADE AT THE TIME OF ASSESSMENT BEFORE THE AO. HE THUS WENT AHEAD AND VIDE ORDER DATED 23.1.2012 PASSED U/S.263 HELD THE ORDER PASSED BY AO TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REV ENUE, AND ACCORDINGLY CANCELLED THE ORDER OF AO PASSED U/S.14 3(3). 4. AGGRIEVED BY THE AFORESAID ORDER OF CIT, THE ASS ESSEE IS IN APPEAL BEFORE US. 5. BEFORE US, THE LD A.R. SUBMITTED THAT THAT THE A SSESSEE HAD DEDUCTED THE TDS AT THE APPROPRIATE RATES AND THERE WAS NO QUESTION OF SHORT DEDUCTION. IT WAS SUBMITTED BY THE LD. A.R . THAT AS PER THE PROVISIONS OF SECTION 2(6) OF THE FINANCE ACT 2007, BEFORE MAKING THE PAYMENT, THE TDS COMPUTED UNDER THE RESPECTIVE SECT IONS IS TO BE INCREASED BY A SURCHARGE CALCULATED AT 10% WHERE TH E INCOME OR THE AGGREGATE OF SUCH INCOME PAID OR LIKELY TO BE PAID AND SUBJECT TO DEDUCTION EXCEEDS RS.10 LACS IN CASE THE PAYEE IS A N INDIVIDUAL, HUF, AOP, BOI AND RS.1 CRORE WHERE THE PAYEE IS A DOMEST IC COMPANY. IN ITA NO.754/AHD/2012 -4- THE PRESENT CASE, AS NONE OF THE PAYMENTS EXCEEDED THE THRESHOLD LIMIT OF RS.10 LAC OR RS. 1 CRORE, THE TDS WAS DEDUCTED A T THE APPROPRIATE RATE INCLUDING EDUCATION CESS BUT EXCLUDING SURCHAR GE AND THEREFORE THERE WAS NO QUESTION OF SHORT DEDUCTION OF TDS. IT WAS FURTHER SUBMITTED THAT THE QUESTION OF DISALLOWABILITY U/S. 40A(IA) WAS EXAMINED BY THE AO DURING THE ASSESSMENT PROCEEDING S AND THE AO HAD DISALLOWED A SUM OF RS.3,83,541/- U/S 40A(IA) A FTER EXAMINING THE ISSUE IN DETAIL AND THEREFORE IT CAN BE CONCLUDED T HAT THE DISALLOWANCE MADE BY AO WAS AFTER APPLICATION OF MIND. ON THE AL LOWABILITY OF DEDUCTION U/S.40A(IA), THE LD. A. R. ALSO PLACED BE FORE US THE COPY OF THE ORDER DATED 21.10.2011 OF KOLKATA TRIBUNAL IN T HE CASE OF DCIT VS S.K.TEKRIWAL (ITA NO 1136/KOL/2010) WHEREIN IT W AS HELD THAT THE CONDITIONS LAID DOWN U/S 40A(IA) OF THE ACT FOR MAKING ADDITION IS THAT TAX IS DEDUCTIBLE AT SOURCE AND SUCH TAX HAS N OT BEEN DEDUCTED. IF BOTH THE CONDITIONS ARE SATISFIED THEN SUCH PAYMENT CAN BE DISALLOWED U/S 40A(IA) OF THE ACT BUT WHERE TAX IS DEDUCTED BY THE ASSESSEE, EVEN UNDER BONA FIDE WRONG IMPRESSION, UNDER WRONG PROVISIONS OF TDS, THE PROVISIONS OF SECTION 40A(IA) OF THE ACT CANNOT BE INVOKED. 6. THE LD. A.R. FURTHER SUBMITTED THAT FOR THE PURP OSE OF INVOKING THE PROVISIONS OF SECTION 263 BOTH THE CONDITIONS I .E. THE ORDER IS PREJUDICIAL TO THE INTEREST OF REVENUE AND THE ORDE R IS ERRONEOUS HAS TO BE SIMULTANEOUSLY FULFILLED. IF ONLY ONE CONDITION IS FULFILLED, THEN ALSO PROVISIONS OF S. 263 CANNOT BE INVOKED. THE LD..A.R . FURTHER STATED THAT THE CIT HAS NOT STATED AND GIVEN A FINDING AS TO HOW THE ORDER PASSED BY THE AO IS ERRONEOUS AND IS ALSO PREJUDICI AL TO THE INTEREST OF REVENUE. HE THUS URGED THAT THE ORDER OF CIT PASSED U/S.263 BE QUASHED. ITA NO.754/AHD/2012 -5- 7. ON THE OTHER HAND THE LD. D.R. SUPPORTED THE ORD ER OF CIT. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. 9. IT IS AN UNDISPUTED FACT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE AO, THE ASSESSEE HAD FILED D ETAILS OF EXPENSES. THE AO HAD ALSO ISSUED SHOW CAUSE NOTICE TO ASSESSE E TO SHOW CAUSE AS TO WHY DISALLOWANCE U/S 40A(IA) BE NOT MADE. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE HAD FURNISHED REPLY . AFTER CONSIDERING THE REPLY, THE AO FOR THE REASONS THAT THE ASSESSEE HAS NOT DEDUCTED TDS INVOKED THE PROVISIONS OF S.40A(IA) AND DISALLO WED RS.383541/-. IT THUS APPEARS THAT THE AO HAD EXAMINED THE ASPECT OF DISALLOWANCE U/S 40A(IA). IT IS ALSO A FACT THAT IN RESPONSE T O THE SHOW CAUSE NOTICE ISSUED BY THE CIT W.R.T. REVISION PROCEEDINGS U/S 2 63, THE ASSESSEE HAD MADE WRITTEN SUBMISSIONS AND SUBMITTED THE DETA ILS WHEREBY IT WAS CONTENDED THAT THE ASSESSEE HAD RIGHTLY DEDUCTE D TDS WITHOUT CONSIDERING THE SURCHARGE AS NON OF THE PAYEE WERE BEYOND THE THRESHOLD LIMIT WHICH WOULD REQUIRE THE DEDUCTION O F TDS ALONGWITH THE SURCHARGE. WE FIND THAT EVEN THOUGH THESE FACTS WERE BROUGHT TO THE NOTICE OF THE COMMISSIONER AND IT WAS SUBMITTED THAT IT WAS BECAUSE OF THE ABOVE MENTIONED FACTS NO DISALLOWANC E U/S.40A(IA) WAS CALLED FOR, THE COMMISSIONER DID NOT ADEQUATELY DEA L WITH THESE CONTENTIONS, AND REJECTED THE CONTENTIONS OF THE AS SESSEE AND CANCELLED THE AOS ORDER DATED 31.12.2009 WITH A DIRECTION TO MAKE A FRESH ASSESSMENT AFTER CORRECTLY VERIFYING THE ISSUE. 10. THE EXPRESSION ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE HAVE BEEN CONSIDERED BY THE SUPREME COURT IN THE CASE OF ITA NO.754/AHD/2012 -6- MALABAR INDUSTRIAL CO. LTD (2000) 243 ITR 83 (SC) W HEREIN THEIR LORDSHIP HAVE HELD AS UNDER (RELEVANT PORTION FROM HEAD NOTES): THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDI TIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUG HT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT-IF THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDIC IAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIA L TO THE REVENUE-RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFI CER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WI LL BE ATTRACTED. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRO NEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVE NUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER, C ANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVE NUE. 11. THE BOMBAY HIGH COURT IN THE CASE OF CIT VS GAB RIEL INDIA LTD [1993] 203 ITR 108 [BOM] HAS DISCUSSED THE EXER CISE OF POWER OF CIT TO MAKE REVISION SUO MOTO. THE HONBLE HIGH COURT HAS HELD AS UNDER: THE POWER OF SUO MOTU REVISION UNDER SUB-SECTION (1) OF SECTION 263 OF THE INCOME-TAX ACT, 1961, IS IN THE NATURE OF SUPERVISORY JURISDICTION AND CAN BE EXERCISED ONLY IF THE CIRCUMSTANCES SPECIFIED THEREIN EXIST. TWO CIRCUMST ANCES MUST EXIST TO ENABLE THE COMMISSIONER TO EXERCISE THE PO WER OF REVISION UNDER THIS SUB-SECTION, VIZ., (I) THE ORDE R SHOULD BE ITA NO.754/AHD/2012 -7- ERRONEOUS; AND (II) BY VIRTUE OF THE ORDER BEING ER RONEOUS PREJUDICE MUST HAVE BEEN CAUSED TO THE INTERESTS OF THE REVENUE. AN ORDER CANNOT BE TERMED AS ERRONEOUS UNL ESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN INCOME-TAX OFFICE R ACTING IN ACCORDANCE WITH LAW MAKES CERTAIN ASSESSMENT, THE S AME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTE N MORE ELABORATELY. THIS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FO R THAT OF THE INCOME-TAX OFFICER, WHO PASSED THE ORDER, UNLESS TH E DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALISED WHERE THE INCOME-TAX OFFICER WHILE MAKING AN ASSESSMENT EXAMI NES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATES HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCE RNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOUL D HAVE ESTIMATED THE INCOME AT A HIGHER FIGURE THAN THE ON E DETERMINED BY THE INCOME-TAX OFFICER. THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO RE-EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE. TH IS IS BECAUSE THE INCOME-TAX OFFICER HAS EXERCISED THE QUASI-JUDI CIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED T O BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUSION. IT MAY BE SAID IN SU CH A CASE THAT IN THE OPINION OF THE COMMISSIONER THE ORDER IN QUE STION IS ITA NO.754/AHD/2012 -8- PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BUT TH AT BY ITSELF WOULD NOT BE ENOUGH TO VEST THE COMMISSIONER WITH T HE POWER OF SUO MOTU REVISION BECAUSE THE FIRST REQUIREMENT, NAMELY, THAT THE ORDER IS ERRONEOUS, IS ABSENT. SIMILARLY IF AN ORDER IS ERRONEOUS BUT NOT PREJUDICIAL TO THE INTERESTS OF T HE REVENUE, THEN THE POWER OF SUO MOTTO REVISION CANNOT BE EXER CISED. ANY AND EVERY ERRONEOUS ORDER CANNOT BE THE SUBJECT-MAT TER OF REVISION BECAUSE THE SECOND REQUIREMENT MUST BE FUL FILLED. 12. IT IS ALSO WELL-SETTLED THAT ORDER PASSED BY TH E ASSESSING OFFICER WOULD BE ERRONEOUS ONLY IF THE ASSESSING OFFICER HA S NOT CONSIDERED ALL MATERIALS OR HAD NOT DONE PROPER EXAMINATION OR ENQUIRY OR VERIFICATION OR IF THE ASSESSING OFFICER HAD COMPLE TELY OMITTED THE ISSUE, IN QUESTION, FROM CONSIDERATION AND MADE THE ASSESSMENT IN AN ARBITRARY MANNER. 13. IN THE CASE OF CIT VS. HERO AUTO LTD (2012) 343 ITR 342 (DEL), THE HONBLE DELHI HIGH COURT HAS HELD AS UND ER: (PAGE 344) THEREAFTER, HE HAS REFERRED TO THE SECO ND CLAIM OF THE RESPONDENT ASSESSEE AND HAS OBSERVED THAT THERE WAS LACK OF INQUIRY AND THIS VITIATED THE ASSESSMENT ORDER. REF ERENCE WAS MADE TO THE DECISION OF THIS COURT IN GEE VEE ENTER PRISE (1975) 99 ITR 375 (DEL). THERE IS NO DISCUSSION IN THE ORD ER OF THE COMMISSIONER AS TO HOW AND IN WHAT MANNER THE ENQUI RY WAS LACKING AND WHAT WAS THE FAULT AND DEFAULT COMMITTE D BY THE AO. THE AO HAD EXAMINED THE SAID ASPECT IN THE ORIG INAL ASSESSMENT PROCEEDINGS AND ACCEPTED THE STAND OF TH E ASSESSEE. THERE IS NO FINDING OF THE CIT THAT THE ORDER PASSE D BY THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF TH E REVENUE. 14. THE QUESTION OF LACK OF INQUIRY AND INADEQUA TE INQUIRY HAS BEEN EXPLAINED BY THIS COURT IN THE CASE OF CIT VS SUNBEAM AUTO LTD ITA NO.754/AHD/2012 -9- (2011) 332 ITR 167 (DEL) AND IT HAS BEEN OBSERVED A S UNDER (PAGE 179): THERE ARE JUDGEMENTS GALORE LAYING DOWN THE PRIN CIPLE THAT THE AO IN THE ASSESSMENT ORDER IS NOT REQUIRED TO G IVE DETAILED REASON IN RESPECT OF EACH AND EVERY ITEM OF DEDUCTI ON ETC. THEREFORE ONE HAS TO SEE FROM THE RECORD AS TO WHET HER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE EXPENDI TURE IN QUESTION AS REVENUE EXPENDITURE. IF THERE WAS ANY I NQUIRY, EVEN INADEQUATE, THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE CIT TO PASS ORDER U/S.263 OF THE ACT MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER. IT IS ONLY IN CASES OF LACK OF INQUIRY THAT SUCH A COURSE OF ACTION WOULD BE OPEN. AFTER REFERRING TO THE SAID DECISION IN THE CASE O F ITO VS DG HOUSING PROJECTS LTD DECIDED ON MARCH 1 2012 (2012) 343 ITR 329 (DEL) WE HAVE RECENTLY OBSERVED AND HELD AS UNDER ( PAGES 338-340): THUS IN CASES OF WRONG OPINION OR FINDING ON MERIT S, THE CIT HAS TO COME TO THE CONCLUSION AND HIMSELF DECIDE TH AT THE ORDER IS ERRONEOUS, BY CONDUCTING NECESSARY ENQUIRY, IF REQU IRED AND NECESSARY, BEFORE THE ORDER U/S 263 IS PASSED. IN S UCH CASES, THE ORDER OF THE AO WILL BE ERRONEOUS BECAUSE THE ORDER PASSE D IS NOT SUSTAINABLE IN LAW AND THE SAID FINDING MUST BE REC ORDED. THE CIT CANNOT REMAND THE MATTER TO THE AO TO DECIDE WHETHE R THE FINDINGS RECORDED ARE ERRONEOUS. IN CASES WHERE THERE IS INA DEQUATE ENQUIRY BUT NOT LACK OF INQUIRY, AGAIN THE CIT MUST GIVE AND RE CORD A FINDING THAT THE ORDER/INQUIRY MADE IS ERRONEOUS. THIS CAN HAPPE N IF AN ENQUIRY AND VERIFICATION IS CONDUCTED BY THE CIT AND HE IS ABLE TO ESTABLISH AND SHOW THE ERROR OR MISTAKE MADE BY THE AO, MAKIN G THE ORDER UNSUSTAINABLE IN LAW. IN SOME CASES, POSSIBLY THOUG H RARELY, THE CIT CAN ALSO SHOW AND ESTABLISH THAT THE FACTS OR RECOR DS OR INFERENCES DRAWN FROM THE FACTS ON RECORD PER SE JUSTIFIED AND MANDATED FURTHER ITA NO.754/AHD/2012 -10- ENQUIRY OR INVESTIGATION BUT THE AO HAD ERRONEOUSLY NOT UNDERTAKEN THE SAME. HOWEVER, THE SAID FINDING MUST BE CLEAR, UNAMBIGUOUS AND NOT DEBATABLE. THE MATTER CANNOT BE REMITTED FOR A FRESH DECISION TO THE AO TO CONDUCT FURTHER INQUIRIES WITHOUT A FINDI NG THAT THE ORDER IS ERRONEOUS. FINDING THAT THE ORDER IS ERRONEOUS IS A CONDITION OR REQUIREMENT WHICH MUST BE SATISFIED FOR EXERCISE OF JURISDICTION U/S 263 OF THE ACT. IN SUCH MATTERS, TO REMAND THE MATT ER /ISSUE TO THE AO WOULD IMPLY AND MEAN THE CIT HAS NOT EXAMINED AND D ECIDED WHETHER OR NOT THE ORDER IS ERRONEOUS BUT HAS DIREC TED THE AO TO DECIDE THE ASPECT/QUESTION. THIS DISTINCTION MUST BE KEPT IN MIND BY THE CIT W HILE EXERCISING JURISDICTION U/S.263 OF THE ACT AND IN T HE ABSENCE OF THE FINDING THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, EXERCISE OF JURISDICTION UNDER THE SAID SE CTION IS NOT SUSTAINABLE. IN MOST CASES OF ALLEGED INADEQUATE I NVESTIGATION, IT WILL BE DIFFICULT TO HOLD THAT THE ORDER OF THE AO, WHO HAD CONDUCTED ENQUIRIES AND HAD ACTED AS AN INVESTIGATOR, IS ERRO NEOUS, WITHOUT THE CIT CONDUCTING VERIFICATION /INQUIRY. THE ORDER OF THE AO MAY BE OR MAY NOT BE WRONG. THE CIT CANNOT DIRECT RECONSIDERA TION ON THIS GROUND BUT ONLY WHEN THE ORDER IS ERRONEOUS. AN ORD ER OF REMIT CANNOT BE PASSED BY THE CIT TO ASK THE AO TO DECIDE WHETHE R THE ORDER WAS ERRONEOUS. THIS IS NOT PERMISSIBLE. AN ORDER IS NOT ERRONEOUS UNLESS THE CIT HOLDS AND RECORDS REASONS WHY IT IS ERRONEO US. AN ORDER WILL NOT BECOME ERRONEOUS BECAUSE ON REMIT, THE AO MAY D ECIDE THAT THE ORDER IS ERRONEOUS. THEREFORE, THE CIT MUST AFTER R ECORDING REASONS HOLD THAT THE ORDER IS ERRONEOUS. THE JURISDICTIONA L PRECONDITION STIPULATED IS THAT THE CIT MUST COME TO THE CONCLUS ION THAT THE ORDER IS ERRONEOUS AND IS UNSUSTAINABLE IN LAW. WE MAY NOTIC E THAT THE MATERIAL ITA NO.754/AHD/2012 -11- WHICH THE CIT CAN RELY INCLUDES NOT ONLY THE RECORD AS IT STANDS AT THE TIME WHEN THE ORDER IN QUESTION WAS PASSED BY THE A O BUT ALSO THE RECORD AS IT STANDS AT THE TIME OF EXAMINATION BY T HE CIT (SEE CIT VS SHREE MANJUNATHESWARE PACKING PRODUCTS AND CAMPHOR WORKS (1998) 231 ITR 53 (SC). NOTHING BARS/ PROHIBITS THE CIT FROM COLLECTING AND RELYING UPON NEW / ADDITIONAL MATERI AL /EVIDENCE TO SHOW AND STATE THAT THE ORDER OF THE AO IS ERRONEOU S. IN THE CASE BEFORE US, WE FIND THAT NO FINDING HAS BEEN GIVEN BY CIT TO COME TO THE CONCLUSION THAT THE AS TO WHICH PAYMENTS THE ASSESSEE WAS REQUIRED TO DEDUCT TDS ALONG WITH SURC HARGE BUT HAS NOT DONE SO AND THEREFORE CANNOT BE ALLOWED AS DEDUCTIO N. CIT HAS NOT BEEN ABLE TO ESTABLISH AND SHOW THE ERROR OR THE MI STAKE MADE BY THE AO WHICH MAKES THE ORDER UNSUSTAINABLE IN LAW. AS H ELD BY THE HONBLE DELHI HIGH COURT, THE FINDING OF THE CIT MU ST BE CLEAR, UNAMBIGUOUS AND NOT DEBATABLE. FINDING THAT THE ORD ER IS ERRONEOUS IS A CONDITION OR REQUIREMENT WHICH MUST BE SATISFIED FOR EXERCISE OF JURISDICTION U/S 263 OF THE ACT. EVEN ON MERITS, IT IS SEEN THAT THE ASSESSEE HAS D EDUCTED TDS AT APPROPRIATE RATE INCLUDING EDUCATION CESS AND THE S URCHARGE WAS NOT REQUIRED TO BE ADDED AT ALL AS AGGREGATE OF THE PAY MENTS TO NONE OF THE PAYEES EXCEEDED THE LIMIT OF RS.10 LACS OR RS.1 CRO RE, AS THE CASE MAY BE. CIT HAS NOT POINTED OUT ANY SPECIFIC INSTANCE W HERE THE ASSESSEE WAS LIABLE TO DEDUCT TDS INCLUDING SURCHARGE BUT HA S NOT DEDUCTED. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS WE ARE OF THE FIRM VIEW THAT THE AO HAVING EXERCISED HIS MIND OVER THE ISSU E, THE ORDER OF THE AO PASSED UNDER SECTION 143(3) CANNOT BE TERMED AS ERRONEOUS AND ITA NO.754/AHD/2012 -12- PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFO RE THE ORDER OF CIT IS QUASHED AND THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 15. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( . .. . . .. . /D.K. TYAGI) ( /JUDICIAL MEMBER ( # $%&' # $%&' # $%&' # $%&' / ANIL CHATURVEDI) ( ( ( ( /ACCOUNTANT MEMBER C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD