Santosh Sasmal, Jagatsinghpur V. CIT, Cuttack

ITA 76/CTK/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77539 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-04-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 06-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K AJAY KUMAR
• Assessee Lawyers: S K JENA
• Keywords: Revision of order; Depreciation; Opportunity of being heard; Principle of natural justice; Period of limitation; Difference of opinion; Reason to believe; Change of opinion; Revenue expenditure
• Section: 40A(3); 143(3); 37(1); 263; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 76/ CTK /2013 : (ASST. YEAR : 2008 - 09) SHRI SANTOSH SASMAL, PROP. M/S. SASMAL DISTRIBUTOR, AT BIJAYCHANDRAPUR, PARADEEP, DIST JAGATSINGHPUR, ODISHA PAN : ALUPS0782L (APPELLANT) VS. COMMISSIONER OF INCOME TAX, CUTTACK, ODISHA. (RESPONDENT) ASSESSEE BY : S.K. JENA, AR REVENUE BY : K. AJAY KUMAR, DR DATE OF HEARING : 29/04/2014 DATE OF PRONOUNCEMENT : 23 /05/2014 O R D E R PER BENCH : 1. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT PASSED U/S 263 BY TAKING THE GROUND THAT THE ORDER PASSED BY AO IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT U/S 143(3) WAS MADE VIDE ORDER DT. 30.12.2010 DETERMINING THE TOTAL INCOME AT RS.25,86,050/ - AGAINST RETURNED INCO ME OF RS.4,50,386/ - BY MAKING THE FOLLOWING ADDITIONS : (A) MATERIAL CONSUMED RS.1,00,000.00 (B) EQUIPMENT CHARGES RS.2,00,000.00 (C) LABOUR AND WAGE CHARGES RS. 50,000.00 (D) TRANSPORTATION CHARGES RS.1,00,000.00 (E) REPAIR & MAINTENANCE OF VEHICLES & EQUIPMENTS RS. 50,000.00 (F) DISALLOWANCE U/S. 40(A)(IA) RS.9,28,644.00 (G) DISALLOWANCE U/S. 40A(3) RS.1,06,586.00 2 ITA NO. 76/CTK/2013 (ASST. YEAR : 2008 - 09) (H) SUPPRESSION OF RECEIPTS & INTERESTS RS. 50,593.00 (I) EXCESS CLAIM OF DEPRECIATION RS.5,49,839.00 SUBSEQUENTLY, CIT ISSUED SHOW CAU SE NOTICE U/S 263 GIVING THE FOLLOWING REASONS : THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT HAS DEBITED RS 1,14,87,355/, RS.72,62,036/ - AND RS.25,25,371/ - TOWARDS EQUIPMENT CHARGES, TRANSPORTATION CHARGES AND REPAIR & MAINTENANCE CHARGES RESPECTIVELY. DURING THE COURSE OF ASSESSMENT PROCEEDING, THE ASSESSEE HAS FURNISHED LEDGER ACCOUNT COPIES OF SUCH CLAIMS WITHOUT ANY SUPPORTING BILLS AND VOUCHERS. AS PER THE PROVISIONS OF SECTION 37(1) OF THE I.T. ACT, 1961 THE ONUS OF PROVIDING NECESSARY FACTS IN OR DER TO AVAIL THE CLAIM OF EXPENSES IS ENTIRELY ON THE ASSESSEE. IF THE ASSESSEE FAILS TO ESTABLISH THE FACTS NECESSARY TO SUPPORT HIS CLAIM FOR DEDUCTION, THE CLAIM FOR DEDUCTION OF EXPENDITURE IS NOT ADMISSIBLE. IN THE INSTANT CASE AS ALREADY STATED ABO VE NO DOCUMENTARY EVIDENCE SUCH AS BILLS AND VOUCHERS WERE PRODUCED BY THE ASSESSEE IN SUPPORT OF THE CLAIM OF EXPENSES UNDER THE HEADS EQUIPMENT CHARGES, TRANSPORTATION CHARGES AND REPAIR & MAINTENANCE CHARGES DURING SCRUTINY ASSESSMENT PROCEEDING. ACCOR DINGLY THE CLAIM OF EXPENSES UNDER THE AFORESAID HEADS HAS NOT BEEN SUBSTANTIATED. FOR SUCH ACTIONS OF THE A.O. IN NOT PROPERLY EXAMINING THE APPLICABILITY OF THE PROVISIONS OF SECTION 37(1) OF THE I.T. ACT, 1961 TO THE FACTS AND CIRCUMSTANCES OF THE A SSESSEES CASE THE ASSESSMENT ORDER DATED 30 - 12 - 2010 HAS BECOME ERRONEOUS UNDER LAW AND FACTS AND IT HAS CAUSED PRIMA - FACIE PREJUDICE IN THE FORM OF UNDER CHARGE OF TAX PAYABLE DUE TO UNDER ASSESSMENT OF TOTAL INCOME. THE ASSESSEE IN COMPLIANCE THEREOF SUBMITTED THAT HE HAS DULY SUBMITTED THE BILLS, VOUCHERS AND BOOKS OF ACCOUNTS BEFORE THE AO AND AO AFTER EXAMINING ALL THE RECORDS MADE THE DISALLOWANCE UNDER THE HEAD EQUIPMENT CHARGES, TRANSPORTATION CHARGES AND REPAIR AND MAINTENANCE CHARGES AND THEREF ORE IT IS NOT A CASE WHERE THE AO HAS NOT EXAMINED THE CLAIM S OF THE ASSESSEE RELATING TO THESE EXPENSES . CIT DID NOT AGREE BUT SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE AO TO CALL FOR ALL THE BILLS AND VOUCHERS IN SUPPORT OF THE EXPENSES CLAIMED BY THE ASSESSEE UNDER THE HEAD EQUIPMENT CHARGES, TRANSPORTATION CHARGES AND REPAIR AND MAINTENANCE CHARGE S AND THEREAFTER EXAMINE AND CROSS - EXAMINE THE SAME WITH REFERENCE TO THE ENTRIES MADE IN THE BOOKS OF ACCOUNTS. 3 ITA NO. 76/CTK/2013 (ASST. YEAR : 2008 - 09) JCIT, RANGE - 1 HAS ALSO BEEN DIRECTED TO SUPERVISE THE PRESENT AO IN RE - EXAMINING THE ISSUES RELATING TO THE APPLICABILITY OF THE LAW AND FACTS IN THE SET ASIDE ASSESSMENT PROCEEDINGS. 3. THE LD. AR BEFORE US CONTENDED THAT THE ORDER PASSED U/S 263 IS ILLEGAL AND LIABLE TO BE CANCELLED. THERE IS NO ERROR IN THE ORDER OF THE AO. THE AO HAS DULY APPLIED HIS MIND ON ALL THE THREE POINTS. THE AS SESSING OFFICER ISSUED THE NOTICE U/S 143(2) AND THE ASSESSEE COMPLIED WITH THE SAID NOTICES. THE ASSESSEE PRODUCED THE BOOKS OF ACCOUNTS AS APPARENT FROM ASSESSMENT ORDER WHERE THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NOT MAINTAINED PROPER BOO KS OF ACCOUNTS. AS MANY AS TEN ADHOC ADDITIONS WERE MADE. THE ASSESSEE HAS CHALLENGED THE ADDITIONS BEFORE CIT(A) AND THE APPEAL IS PENDING FOR ADJUDICATION. THESE ADDITION INCLUDE DISALLOWANCES MADE OUT OF EQUIPMENT CHARGES, TRANSPORTATION AND REPAIR AND MAINTAINENCE CHARGES CLAIMED BY THE ASSESSEE. THE CIT WAS OF THE OPINION THAT THE A.O HAS NOT PROPERLY EXAMINED THE APPLICABILITY OF THE PROVISIONS OF SECTION 37(1). THE BILLS AND VOUCHERS WERE DULY PRODUCED BEFORE THE ASSESSING OFFICER. HE HAS ASKED THE A .O TO RE - EXAMINE THE ISSUE AND FRAME THE ASSESSMENT THEREAFTER. THE ASSESSED INCOME AS PER THE ASSESSMENT ORDER IS ALMOST FIVE TIMES THE RETURNED INCOME AND IN NO WAY THE ASSESSMENT ORDER IS PREJUDICIAL TO THE INTEREST OF REVENUE. THE ORDER IS ALSO NOT E RRONEOUS AS OPINED BY THE LD.CIT AS BECAUSE WHILE MAKING THE ASSESSMENT, THE LD. A.O HAS EXAMINED AND MADE ADDITIONS ON THOSE ISSUES. THEREFORE IT IS NOT PROPER FOR THE COMMISSIONER TO DIRECT THE A.O TO MAKE FURTHER EXAMINATION / INVESTIGATION. IT IS ALSO SETTLED THAT MERELY BECAUSE THE COMMISSIONER HAS A DIFFERENT OPINION IN THE MATTER, IT IS ONLY IN THE CASE OF LACK OF ENQUIRY AN ASSESSMENT ORDER CANNOT BE TURNED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF A.O ACTING IN ACCORDANCE WITH LAW MA KES A CERTAIN ASSESSMENT, IT CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER, SIMPLY BECAUSE ACCORDING TO HIM THOROUGH INVESTIGATION SHOULD HAVE BEEN DONE AND THE OTHER SHOULD HAVE 4 ITA NO. 76/CTK/2013 (ASST. YEAR : 2008 - 09) BEEN WRITTEN MORE ELABORATELY. THE APPELLANT PLACES ITS RELIANCE ON THE FOLLOWING CASE LAWS : (I) C.I.T. - VS. - SUNBEAM AUTO LTD, 332 ITR, 167 (DEL.) (II) C.I.T. - VS. - VIKASH POLYMERS, 341 ITR, 537 (DEL.) (III) C.I.T. - VS. - INTERNATIONAL TRAVEL HOUSE LTD., 344 ITR, 554 (DEL.) (IV) JAYANTA KU. JENA VS. I.T.O., 19 IT R (TRIB.) 514 (CTK). 4. THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORDER OF THE CIT. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE HAVE ALSO GONE THROUGH THE ORDER OF THE TAX AUTHORITIES BELOW AS WELL AS THE ORDER OF THE CIT PASSED U/S 263 ALONGWITH THE CASE LAWS CITED BEFORE US. BEFORE DECIDING THE ISSUE IT IS NECESSARY TO REFER TO THE PROVISIONS OF SEC. 263 WHICH IS BEING REPRODUCED HEREUNDER : 263. (1) THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKIN G OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. EXPLANAT ION. - FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT, FOR THE PURPOSES OF THIS SUB - SECTION, - (A) AN ORDER PASSED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988 BY THE ASSESSING OFFICER SHALL INCLUDE - (I) AN ORDER OF ASSESSMENT MADE BY THE ASSIST ANT COMMISSIONER OR DEPUTY DIRECTOR OR THE INCOME - TAX OFFICER ON THE BASIS OF THE DIRECTIONS ISSUED BY THE JOINT COMMISSIONER UNDER SECTION 144A; (II) AN ORDER MADE BY THE JOINT COMMISSIONER IN EXERCISE OF THE POWER 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 COMMISSIONER OR DIRECTOR GENERAL OR COMMISSIONER AUTHORISED BY THE BOARD IN THIS BEHALF UNDER SECTION 120; 5 ITA NO. 76/CTK/2013 (ASST. YEAR : 2008 - 09) (B) 'RECORD' SHALL INCLU DE AND SHALL BE DEEMED ALWAYS TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PROCEEDING UNDER THIS ACT AVAILABLE AT THE TIME OF EXAMINATION BY THE COMMISSIONER; (C) WHERE ANY ORDER REFERRED TO IN THIS SUB - SECTION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER OF ANY APPEAL FILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988, THE POWERS OF THE COMMISSIONER 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. (2) NO ORDER SHALL BE MADE UNDER SUB - SECTION (1) AFTER THE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE REVISED WAS PASSED. (3) NOTWITHSTANDING ANYTHING CONTAINED IN SUB - SECTION (2), AN ORDER IN REVISION UNDER THIS SECTION MAY BE PASSED AT ANY TIME IN THE CASE OF AN ORDER WHICH HAS BEEN PASSED IN CONSEQUENCE OF OR TO GIVE EFFECT TO, ANY FINDING OR DIRECTION CONTAINED IN AN ORDER OF THE APPELLATE TRIBUNAL, THE HIGH COURT OR THE SUPREME COURT. EXPLA NATION. - IN COMPUTING THE PERIOD OF LIMITATION FOR THE PURPOSES OF SUB - SECTION (2), THE TIME TAKEN IN GIVING AN OPPORTUNITY TO THE ASSESSEE TO BE REHEARD UNDER THE PROVISO TO SECTION 129 AND ANY PERIOD DURING WHICH ANY PROCEEDING UNDER THIS SECTION IS STAYE D BY AN ORDER OR INJUNCTION OF ANY COURT SHALL BE EXCLUDED. 6. FROM THE PERUSAL OF THE AFORESAID SECTION, IT IS APPARENT THAT THERE ARE FOUR MAIN FEATURES OF THE POWER OF REVISION TO BE EXERCISED U/S 263 BY THE COMMISSIONER OF INCOME - TAX. FIRSTLY, THE COM MISSIONER MAY CALL FOR AND EXAMINE THE RECORDS OF ANY PROCEEDINGS UNDER THE ACT AND FOR THIS PURPOSE HE NEED NOT TO SHOW ANY REASON OR RECORD ANY REASON TO BELIEVE. IT IS A PART OF HIS ADMINISTRATIVE POWER TO CALL FOR THE RECORD AND EXAMINE THEM RELATING TO ANY ASSESSEE. SECONDLY HE MAY CONSIDER ANY ORDER PASSED BY THE ASSESSING OFFICER AS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THIS CONSIDERATION HAVING REGARD TO THE LANGUAGE OF SECTION 263 APPARENTLY IS A CONSIDERATION WHICH HE E XERCISES BY CALLING FOR AND EXAMINING THE RECORD AVAILABLE AT THIS STAGE. THERE IS NO QUESTION OF THE ASSESSEE TO APPEAR AND MAKE SUBMISSION. THIRDLY, IF AFTER CALLING FOR AND EXAMINING THE RECORDS THE COMMISSIONER CONSIDERS THAT THE ORDER OF THE ASSESSIN G OFFICER IS ERRONEOUS IN SO FAR IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE IS BOUND TO GIVE AN OPPORTUNITY TO THE ASSESSEE OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE 6 ITA NO. 76/CTK/2013 (ASST. YEAR : 2008 - 09) MADE SUCH ENQUIRY AS HE MAY DEEM FIT, PASS SUCH ORDER THEREON AS THE CIRC UMSTANCES OF THE CASE MAY JUSTIFY INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELING ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. THIS EMPOWERS THE C.I.T. TO CAUSE OR MAKE SUCH ENQUIRIES AS HE DEEMS NECESSARY. FOURTHLY THE C.I.T. U/S 26 3 CAN ENHANCE OR MODIFY THE ASSESSMENT. 7. IT IS A SETTLED LAW THAT FOR INVOKING THE PROVISIONS OF SECTION 263 THE CIT MUST SATISFY BOTH THE CONDITIONS THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND ALSO THAT IT IS PREJUDICIAL TO THE INTER EST OF THE REVENUE. IF ONE OF THE CONDITIONS IS ABSENT, THE ORDER PASSED BY THE CIT BY INVOKING THE PROVISIONS OF SECTION 263 WILL NOT BE LEGAL. THE TERM ERRONEOUS HAS NOT BEEN DEFINED UNDER THE INCOME - TAX ACT BUT IT IS WELL SETTLED THAT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER CANNOT BE SAID TO BE AN ERROR. AN ORDER CAN BE SAID TO BE ERRONEOUS IF THERE IS AN INCORRECT ASSUMPTION OF FACT OR INCORRECT APPLICATION OF LAW IN THE ORDER PASSED BY THE ASSESSING OFFICER. IF THE ASSESSING OFFICER AFTER MAKING THE ENQUIRIES AND EXAMINING THE RECORDS, TAKEN ONE OF THE POSSIBLE VIEWS, IT CANNOT BE SAID THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS. 8. IT IS ALSO APPARENTLY CLEAR THAT THE POWER OF THE CIT ARE THREE FOL D. ONE, PRIOR TO THE INITIATION OF THE PROCEEDINGS U/S 263. SECOND, AT THE TIME OF INITIATION OF THE PROCEEDINGS. THIRD, THE FINAL OUTCOME AFTER THE INITIATION OF THE PROCEEDING. POWER OF THE CIT PRIOR TO THE INITIATION INCLUDES CALL FOR AND EXAMINE THE R ECORDS OF ANY PROCEEDINGS UNDER THIS ACT. THE WORD RECORD IS VERY IMPORTANT, BECAUSE ON THE BASIS OF THE RECORD OF THE PROCEEDINGS THE CIT WILL FORM AN OPINION THAT THE ORDER PASSED IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ONCE HE FORMS AN OPINION, HE HAS TO GIVE AN OPPORTUNITY TO THE ASSESSEE OF BEING HEARD AND AFTER MAKING OR CAUSING THE ENQUIRY HE CAN PASS AN ORDER. MOREOVER THE INQUIRY IS CONDUCTED ONCE THE CIT 7 ITA NO. 76/CTK/2013 (ASST. YEAR : 2008 - 09) FORMS AN OPINION ON THE BASIS OF RECORD THAT THE ORDER PA SSED IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE WORD RECORD HAS BEEN DEFINED UNDER EXPLANATION (B) OF SECTION 263 TO MEAN THAT THE RECORD SHALL INCLUDE AND SHALL BE DEEMED ALWAYS TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PROCEEDING UNDER THIS ACT AVAILABLE AT THE TIME OF EXAMINATION BY THE COMMISSIONER. T HE EXAMINATION OF THE RECORD IS TO BE CARRIED BY THE COMMISSIONER PRIOR TO THE FORMING AN OPINION THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF THE REVENUE. ONCE THE RECORD IS EXAMINED AND THE CIT ON THE BASIS OF EXAMINATION OF THE RECORD FORMS AN OPINION THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE IS EMPOWERED AFTER GIVING THE OPPORTUNITY TO THE ASSESSEE, TO MAKE SUCH ENQUIRY AS HE MAY DEEM NECESSARY. THEREFORE, THE ENQUIRY TO BE CONDUCTED BY THE CIT IS AN ACT ONCE THE CIT ARRIVES AT A CONCLUSION THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AFTER EXAMINING THE RECORD. THUS ENQUIRY PRECEDES THE RECORD AND THE MATERIAL COLLECTED DURING THE COURSE OF THE ENQUIRY CANNOT BE THE PART OF THE RECORD OF THE PROCEEDINGS WHEN THE CIT FORMS AN OPINION THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE IN TEREST OF THE REVENUE. 9. NOW, THEREFORE, IN THIS CASE, THE QUESTION ARISES WHAT WAS THE MATERIAL BEFORE THE CIT ON THE BASIS OF WHICH THE CIT FORMED AN OPINION THAT THE ORDER PASSED BY THE AO WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE RE VENUE ? WHAT WAS THE RECORD AVAILABLE WITH THE CIT ? IN THE NOTICE, THE CIT HAS CLEARLY MENTIONED ABOUT THE SUPPORTING BILLS AND VOUCHERS OF EXPENSES UNDER THE HEAD EQUIPMENT CHARGES, TRANSPORT CHARGES AND REPAIR AND MAINTENANCE CHARGES. ON THIS BASIS IT SELF HE TOOK THE VIEW THAT THE AO HAS NOT PASSED THE ORDER CORRECTLY AND THE ORDER PASSED IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 8 ITA NO. 76/CTK/2013 (ASST. YEAR : 2008 - 09) 10. WE NOTED THAT IT IS NOT A CASE WHERE THE AO HAS NOT EXAMINED THE ISSUES. THE AO DURING THE COURSE OF THE ASSESSMENT HAS DULY ASKED FOR THE DETAILS OF THE EXPENSES. THE ASSESSEE HAS PRODUCED COMPUTER GENERATED LEDGER. THE A.O OBSERVED THAT BILLS AND VOUCHERS WERE NOT PRODUCED FOR VERIFICATION IN ALL CASES AND TOOK THE VIEW THAT ASSESSEE DOES NOT MAINTAI N PROPER BOOKS OF ACCOUNTS. THIS CLEARLY SHOWS THAT THE ASSESSEE HAS PRODUCED BILLS AND VOUCHERS TO THE EXTENT AVAILABLE WITH HIM. THE A.O DISALLOWED A SUM OF RS.2,00,000/ - OUT OF EQUIPMENT CHARGES AS THESE EXPENSES WERE NOT PR OPERLY VERIFIABLE. A SUM OF R S. 1,00,000/ - WAS DISALLOWED OUT OF THE TRANSPORTATION CHARGES IN ABSENCE OF PROPER BILLS AND VOUCHERS . THUS, WE NOTED THAT IT IS NOT A CASE WHERE INQUIRIES WERE NOT MADE BY THE AO. AO HAS DULY MADE THE INQUIRY AND TAKEN A VIEW AFTER APPLYING HIS MIND. T HUS, THERE IS NO ERROR IN THE ORDER PASSED BY THE AO. IT IS A SETTLED LAW THAT IF THE AO HAS TAKEN ONE OF THE POSSIBLE VIEWS, IT CANNOT BE SAID THAT THERE IS AN ERROR IN THE ORDER PASSED UNLESS AND UNTIL THE VIEW TAKEN BY THE AO IS UNSUSTAINABLE IN LAW. THE SAID VIEW HAS BEEN TAKEN BY THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT, 243 ITR 83 (SC) WHEREIN THEIR LORDSHIPS HAS HELD AS UNDER : - THE PRE - REQUISITE TO THE EXERCISE OF JURISDICTION BY THE COMMISSIONER UNDER SECTION 263 IS THAT THE ORDER OF THE AO IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) I S PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT - IF THE ORDER OF THE ASSESSING OFFICE IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE - RECOURSE CANNOT BE HAD TO SECTION 263(1). THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE RE QUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. THE PHRASE 'PREJUDICIAL TO THE INTEREST OF THE REVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF THE ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE, IF THE ASSESSING OFFICER HAS ADOPTED ONE OF THE CO URSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS 9 ITA NO. 76/CTK/2013 (ASST. YEAR : 2008 - 09) OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST S OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. WHERE A SUM NOT EARNED BY A PERSON IS ASSESSED AS INCOME IN HIS HANDS ON HIS SO OFFERING THE ORDER PASSED BY THE ASSESSING OFFICER ACCEPTING THE SAME WITHOUT APPLICAT ION OF MIND AS SUCH WILL BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE.' 11. WE HAVE ALSO GONE THROUGH THE DECISIONS AS HAS BEEN RELIED BY THE LD. AR IN THE CASE OF CIT VS INTERNATIONAL TRAVEL HOUSE LTD ( SUPRA ). WE NOTED THAT IN THIS CASE T HE HON'BLE HIGH COURT HAS CLEARLY HELD AS UNDER : HELD, DISMISSING THE APPEAL, THAT AS WAS EVIDENT FROM THE ORDER OF THE TRIBUNAL, NO ADDITION TO THE INCOME OF THE ASSESSEE COULD BE MADE MERELY BECAUSE OF THE DIFFERENCE IN THE ACCOUNTING TREATMENT OF THE COMMISSION IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AS BOTH ACCOUNTING SYSTEMS WERE ACCEPTABLE. THE ASSESSING OFFICER HAD DULY APPLIED HIS MIND AND WAS SATISFIED WITH THE EXPLANATION OFFERED BY THE ASSESSEE AND DID NOT MAKE ANY ADDITION IN THAT REGARD. THE ASSESSING OFFICER HAD NOT INCORPORATED THE FACTS IN DETAIL IN THE ORDER BUT THAT WOULD NOT MEAN THAT THERE HAD BEEN NO APPLICATION OF MIND. THE TRIBUNAL NOTED THE FACT THAT THE DETAILS OF TAX DEDUCTED AT SOURCE DURING THE FINANCIAL YEAR HAD BEEN SHOWN AND THE INCOME THAT WAS SHOWN AS COMMISSION INCOME WAS REFLECTED IN DETAIL IN THE SHOW CAUSE AND IN THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER HAD ALREADY EXAMINED THIS ASPECT BUT THE COMMISSIONER HAD DIRECTED A RE - INQUIRY FOR MERELY A CHANGE OF OPINION WHICH WAS IMPERMISSIBLE UNDER SECTION 263 OF THE ACT. H E WAS REQUIRED TO ARRIVE AT A DEFINITE CONCLUSION BUT HE HAD NOT DONE SO. THERE WAS NO REASON TO INTERFERE WITH THE ORDER OF THE TRIBUNAL . 12. IN THE CASE OF DIT VS. JYOTI FOUNDATION, 357 ITR 388 (DEL) ( SUPRA ), THE HON'BLE DELHI HIGH COURT HAS HELD AS UN DER : REVISIONARY POWER UNDER SECTION 263 IS CONFERRED BY THE ACT ON THE COMMISSIONER/DIRECTOR OF INCOME - TAX WHEN AN ORDER PASSED BY THE LOWER AUTHORITY IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. ORDERS WHICH ARE PASSED WITHOUT INQUIRY OR INVESTIGATION ARE TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, BUT ORDERS WHICH ARE PASSED AFTER INQUIRY/INVESTIGATION ON THE QUESTION/ISSUE ARE NOT PER SE OR NORMALLY TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE R EVENUE BECAUSE THE REVISIONARY AUTHORITY FEELS AND OPINES THAT FURTHER INQUIRY/INVESTIGATION WAS REQUIRED OR DEEPER OR FURTHER SCRUTINY SHOULD BE UNDERTAKEN. 13. WE NOTED IN THE CASE OF CIT VS SUNBEAM AUTO LTD, 332 ITR 167 (DEL.) HONBLE DELHI COURT HAS T AKEN THE VIEW THAT THE VIEW TAKEN BY THE ASSESSING 10 ITA NO. 76/CTK/2013 (ASST. YEAR : 2008 - 09) OFFICER WAS ONE OF THE POSSIBLE VIEWS AND THE ASSESSMENT ORDER PASSED BY HIM COULD NOT BE HELD TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE OPINION OF THE ASSESSING OFFICER IN TREATING THE EXPENDI TURE AS REVENUE EXPENDITURE WAS PLAUSIBLE AND THUS THERE WAS NO MATERIAL BEFORE CIT TO VARY THAT OPINION AND ASK FOR FRESH INQUIRY. WE HAVE ALSO GONE THROUGH THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS VIKAS POLYMERS, 341 ITR 537 (DEL.) IN THIS CASE THE HONBLE HIGH COURT HAS HELD AS UNDER: - HELD, THAT THE COMMISSIONER HAD MENTIONED THAT THE INCOME - TAX OFFICER HAD NOT EXAMINED THE CASH CREDITS OF THE PARTNERS OR DEPOSITS OF CHIT FUND. ASSUMING THIS TO BE SO, THIS MIGHT MAKE THE ORDER ERRONEOUS, BUT HOW IT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE HAD NOT BEEN STATED BY THE COMMISSIONER AS HE DID NOT DEAL WITH THE EXPLANATION GIVEN BY THE ASSESSEE IN THE COURSE OF THE S ECTION 263 PROCEEDINGS. THE COMMISSIONER OBSERVED IN HIS ORDER THAT THE ASSESSEE HAD NOT FILED CERTAIN DOCUMENTS ON THE RECORD AT THE TIME OF ASSESSMENT. ASSUMING THIS WAS SO IT DID NOT JUSTIFY THE CONCLUSION ARRIVED AT BY THE COMMISSIONER THAT THE ASSESSING OFFICER HAD SHIRKED HIS RESPONSIBILITY OF EXAMINING AND INVESTIGATIO N THE CASE. MORE SO, IN VIEW OF THE FACT THAT THE ASSESSEE EXPLAINED THAT THE CAPITAL INVESTMENT MADE BY THE PARTNERS, WHICH HAD BEEN CALLED INTO QUESTION BY THE COMMISSIONER, AND THIS WAS DULY REFLECTED IN THE RESPECTIVE ASSESSMENTS OF THE PARTNERS WHO WE RE INCOME - TAX ASSESSEES AND THE UNSECURED LOAN TAKEN FROM THE CHIT FUND WAS DULY REFLECTED IN THE ASSESSMENT ORDER OF THE CHIT FUND WHICH WAS ALSO AN ASSESSEE. THE ORDER OF REVISION WAS NOT VALID. 14. THE ASSESSING OFFICER HAS DULY EXAMINED ALL THE ISSU ES AND FORMED AN OPINION. THE OPINION FORMED BY THE ASSESSING OFFICER IS NOT ILLEGAL OR UNSUSTAINABLE IN LAW. THEREFORE, WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. WE, THEREFORE, QUASH THE ORDER PASSED U/S 263. 15 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 16 . ORDER PRONOUNCED IN PURSUANCE OF RULE 34(4) OF ITAT RULES, 1963 BY PUTTING ON NOTICE BOARD OF THE BENCH AT CUTTACK ON 23 / 05 /201 4 . SD/ - ( D.T.GARASIA) JUDICIAL MEMBER SD/ - (P.K. BANSAL) ACCOUNTANT MEMBER 11 ITA NO. 76/CTK/2013 (ASST. YEAR : 2008 - 09) PLACE : PANAJI DATED : 23 / 05/2014 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT(A) CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER