Sri Ch. Krishna Murthy, Hyderabad V. ACIT, Central Circle-3, Hyderabad

ITA 766/HYD/2012

• Counselvise Citation: 76622514 RSA 2012
• Duration Of Justice: 2 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-12-2014
• Assessment Year: 2002-2003
• Appeal Filed On: 21-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: M CHANDRAMOULESWAR RAO
• Keywords: Search and seizure; Opportunity of being heard; Deemed dividend; Assessment record; Block assessment
• Section: 143(3); 153A; 263; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 766/HYD/2012 ASSESSMENT YEAR: 2002-03 SHRI CH KRISHNA MURTHY, HYDERABAD PAN ABJPC 6521 ASST. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE 3, HYDERABAD. (ASSESSEE) (RESPONDENT) ASSESSEE BY SHRI M. CHANDRAMOULESWAR RAO REVENUE BY SHRI D. SUDHAKAR RAO DATE OF HEARING 15-12-2014 DATE OF PRONOUNCEMENT 13-02-2015 O R D E R PER SAKTIJIT DEY, J.M.: THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST ORDER DATED 21/03/2013 OF CIT(CENTRAL) PASSED U/S 263 OF THE AC T, FOR THE ASSESSMENT YEAR 2002-03. 2. ASSESSEE HAS RAISED FIVE GROUNDS. GROUND NOS. 1 & 5 ARE GENERAL IN NATURE, HENCE, NEED NOT BE ADJUDICATED. GROUND NO. 2 IS WITH REGARD TO THE ISSUE OF LIMITATION. HOWEVER, LD . AR DID NOT PRESS THIS GROUND AT THE TIME OF HEARING BEFORE US, HENCE , THE SAME IS DISMISSED AS NOT PRESSED. 3. THE GROUNDS THAT ARE TO BE ADJUDICATED ARE GROU ND NOS. 3 & 4, WHICH ARE AS FOLLOWS: 2 ITA NO. 766/HYD/2012 CH. KRISHNA MURTHY 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. COMMISSIONER HAS ERRED IN TREATING THE ASSESSMENT O RDER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE ON AN ISSUE WHICH HAS BEEN CONSIDERED, EXAMINED AND INVES TIGATED UPON DURING THE ASSESSMENT BOTH BY THE ASSESSING OF FICER AND ALSO BY THE ADDL.CIT WHILE GIVING THE APPROVAL TO T HE DRAFT ASSESSMENT ORDER. THE LD. COMMISSIONER OUGHT TO HAV E CONSIDERED THAT THE LIABILITY CREATED IN THE BOOKS OF ONE OF THE DIVISIONS IS AN ARTIFICIAL ONE WHICH CANNOT BE EQUA TED AS ANY LOAN OR ADVANCE TO COVER U/S.2(22)(E) OF THE ACT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER HAS ERRED IN INVOKING IN THE PROVISION S OF SEC.2(22)(E) OF THE ACT, IN THE CASE OF JOURNAL ENT RY TRANSFERRING THE ARTIFICIAL LIABILITY IN THE DIVISIONS BOOKS OF ACCOUNTS AS A LIABILITY IN THE HANDS OF THE ASSESSEE. 3.1 ASSESSEE HAS ALSO RAISED THE FOLLOWING ADDITION AL GROUND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX HAS ERRED I N EXERCISING HIS REVISIONARY POWERS U /S.263 IN RELAT ION TO AN INVALID ASSESSMENT ORDER MADE U/S.153A. THE LD. COMMISSIONER OF INCOME TAX OUGHT TO HAVE CONSIDERED THAT NO ADDITION COULD BE ORDERED U /S.2(22) (E) IN THE ASSESSMENT U /S.153A WITHOUT THERE BEING ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH AND HE IS NOT JUSTIFIED TO DIRECT THE ASSESSING OFFICER TO MA DE RE- ASSESSMENT OF CONCLUDED ASSESSMENTS. 4. THE LD. AR SUBMITTED, THAT SINCE ADDITIONAL GRO UND IS PURELY LEGAL IN NATURE AND GOES TO THE ROOT OF THE MATTER, THE SAME MAY BE ADMITTED. HE FURTHER SUBMIT TED THAT THIS GROUND OF APPEAL IS RAISED TO OBJECT TO THE JURISDI CTION OF THE LD. CIT IN ORDERING THE ASSESSING OFFICER TO BRING TO TAX A N AMOUNT AS 'DEEMED DIVIDEND' IN AN ASSESSMENT U /S, 153A R.W.S. 143(3) WITHOUT ANY INCRIMINATING MATERIAL WHERE THE ASSESSMENT WAS NOT ABATED AS THE SAME HAS ATTAINED FINALITY AS ON THE DATE OF SE ARCH U /S.132 OR REQUISITION U /S.132A. IN THIS REGARD, LD. AR RELI ED ON THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF NTPC VS CIT- 229 ITR 383 (SC). 3 ITA NO. 766/HYD/2012 CH. KRISHNA MURTHY 5. BEFORE VENTURING INTO DECIDING THE ISSUES RAISED BY ASSESSEE, IT IS NECESSARY TO EXAMINE THE RELEVANT FACTS. 6. BRIEFLY STATED, ASSESSEE IS A DIRECTOR OF A COM PANY IN THE NAME AND STYLE OF M/S VISHNU CHEMICALS PVT. LTD. WHEREIN PUBLIC ARE NOT SUBSTANTIALLY INTERESTED. ASSESSEE ALSO HAS SUBSTAN TIAL SHAREHOLDING IN THE SAID COMPANY. ASSESSEE FILED HIS IT RETURN FOR AY 2002-03 ORIGINALLY ON 31/10/2002. SUBSEQUENTLY, SEARCH AND SEIZURE OPERATIONS WERE CONDUCTED IN CASE OF THE COMPANY AS WELL AS ASSESSEE ON 19/02/2008. IN PURSUANCE TO NOTICE ISSU ED U /S.153A, ASSESSEE FILED RETURNS FOR SIX ASSESSMENT YEARS INC LUDING THE PRESENT ASSESSMENT YEAR ASSESSMENT U/S.153A R.W.S. 143(3) W AS COMPLETED ON 31/12/2009 AFTER OBTAINING APPROVAL OF ADDL. CIT AS PER SECTION 153D. 7. THE LD. CIT, IN EXERCISE OF POWER U/S 263 OF THE ACT, CALLED FOR ASSESSMENT RECORDS OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR AND AFTER EXAMINING THE SAME WAS OF THE VIEW T HAT THE ASSESSMENT ORDER PASSED IS ERRONEOUS AND PREJUDICIA L TO THE INTERESTS OF REVENUE AS THE AO HAS FAILED TO BRING TO TAX AN AMOUNT OF RS. 4,27,36,648, BEING LOAN GRANTED TO ASSESSEE BY M/S VISHNU CHEMICALS PVT. LTD., AS DEEMED DIVIDEND U/S 2(22)(E ) OF THE ACT. ACCORDINGLY, LD. CIT ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE TO EXPLAIN WHY THE ASSESSMENT ORDER SHOULD NOT BE REVI SED FOR NON- CONSIDERATION OF THE SAID ISSUE. 8. IN RESPONSE TO THE SHOW-CAUSE NOTICE AS WELL AS IN COURSE OF THE REVISION PROCEEDING ASSESSEE SUBMITTED THAT M/S VISHNU CHEMICALS PVT. LTD., WHICH IS ENGAGED IN MANUFACTUR ING INORGANIC CHEMICALS HAD TWO DIVISIONS, VIZ., I) CHROME DIVISI ON AND (II) BARIUM DIVISION. AS BARIUM DIVISION WAS SUSTAINING LOSS, I T WAS DECIDED TO SEPARATE IT FROM THE EXISTING COMPANY AND CONVERT I T TO A NEW COMPANY IN THE NAME AND STYLE OF M/S VISHNU BARIUM CHEMICALS PVT. LTD. ACCORDINGLY, ALL ASSETS AND LIABILITIES OF BA RIUM DIVISION WERE 4 ITA NO. 766/HYD/2012 CH. KRISHNA MURTHY TRANSFERRED TO THE NEW COMPANY AS PER THE SCHEME OF DEMERGER APPROVED BY HONBLE AP HIGH COURT. IT WAS SUBMITTED , WHEN BARIUM DIVISION WAS UNDER THE OLD COMPANY, IT HAS TAKEN FU NDS FROM THE CHROME DIVISION WHICH IS APPEARING AS A LIABILITY I N THE BOOKS OF BARIUM DIVISION IN THE NAME OF CHROME DIVISION. COR RESPONDINGLY, IT WAS SHOWN IN THE BOOKS OF CHROME DIVISION AS ADVANC E TO BARIUM DIVISION. AFTER BARIUM DIVISION WAS FORMED INTO A S EPARATE COMPANY, IT REQUIRED FUNDS FOR ITS EXISTENCE, HENCE, IT OFFERED SHARE CAPITAL SO THAT FUNDS CAN BE INFUSED TO MEET THE FINANCIAL REQUIREM ENTS. A FOREIGN INVESTOR ALSO AGREED TO PARTICIPATE IN THE SHARE CA PITAL OF THE NEW COMPANY, PROVIDED THE MD WOULD ALSO HAVE SOME SHARE S IN THE NEW COMPANY. TO FACILITATE INVESTMENT BY FOREIGN INVEST OR, THE LIABILITY IN THE NAME OF CHROME DIVISION IN THE BOOKS OF NEWLY F ORMED COMPANY WAS CONVERTED AS SHARE CAPITAL IN THE NAME OF ASSES SEE AND ASSOCIATES. AN MOU WAS ALSO REACHED BETWEEN THE PAR TIES TO THIS EFFECT. ACCORDINGLY, ASSESSEE AND HIS FAMILY MEMBER S WERE ALLOTTED FORTY LAKH SHARES OF M/S VISHNU BARIUM CHEMICALS PV T. LTD. WORTH RS. 4 CRORES. SINCE THE LIABILITY IN M/S VBCPL WAS ENTR USTED TO ASSESSEE WHO IS THE MD, THE ADVANCE GIVEN TO BARIUM DIVISION WAS ALSO CONVERTED AS AN ADVANCE TO THE ASSESSEE IN THE BOOK S OF M/S VCPL. IT WAS SUBMITTED, AS NO PHYSICAL ADVANCE HAS BEEN G IVEN BY M/S VCPL TO ASSESSEE FOR HIS PERSONAL BENEFIT AND ADVAN CE TO BARIUM DIVISION WAS CONVERTED AS ADVANCE TO ASSESSEE THRO UGH MERE JOURNAL ENTRIES, IT CANNOT BE TREATED AS DEEMED DIVIDEND U/ S 2(22)(E). 9. LD. CIT AFTER CONSIDERING THE SUBMISSIONS OF ASS ESSEE AND ON VERIFICATION OF RECORD FOUND THAT ASSESSING OFFICER IN THE DRAFT ASSESSMENT ORDER SENT FOR APPROVAL TO ADDL. CIT DID TREAT THE ADVANCE IN THE NAME OF ASSESSEE AS DEEMED DIVIDEND U/S 2(22 )(E). HOWEVER, ADDL. CIT WHILE GRANTING APPROVAL DIRECTED THE ASSE SSING OFFICER NOT TO MAKE THE ADDITION OF DEEMED DIVIDEND BECAUSE ENT RY MADE IN THE BOOKS OF NEWLY FORMED COMPANY SHOWING THE ASSESSEE AS SHAREHOLDER IS ONLY A BOOK ENTRY AND ACTUAL PAYMENT WAS NOT MADE TO 5 ITA NO. 766/HYD/2012 CH. KRISHNA MURTHY ASSESSEE AND SECONDLY THE COMPANY DID NOT HAVE ANY ACCUMULATED PROFITS AT THE TIME OF MAKING PAYMENT, WHICH IS A P RE-CONDITION FOR INVOKING SECTION 2(22)(E). IN ACCORDANCE WITH THE D IRECTION OF ADDL. CIT, ASSESSING OFFICER FINALLY PASSED THE ASSESSMEN T ORDER WITHOUT MAKING ADDITION OF DEEMED DIVIDEND. LD. CIT, THOUGH , AGREED THAT NO AMOUNT WAS PHYSICALLY GIVEN TO ASSESSEE BY THE COMP ANY, BUT, ASSESSEE AND HIS ASSOCIATES BECAME ABSOLUTE OWNER O F 40,00,000 SHARES WORTH RS. 4.00 CRORES WITHOUT PAYING ANY AMO UNT. ACCORDING TO LD. CIT, WHAT IT ULTIMATELY MEANS IS ADVANCE GIVEN BY CHROME DIVISION HAS BEEN CONVERTED AS SHARE CAPITAL OF NEWLY FORMED COMPANY WHICH WERE ALLOTTED IN THE NAME OF ASSESSEE AND ASSOCIATE S AND NOT IN THE NAME OF THE COMPANY M/S VCPL. AS A RESULT ASSESSEE AND ASSOCIATES ARE NOT ONLY ENTITLED TO DIVIDEND, IF ANY, BUT ALL OTHER BENEFITS AS A SHAREHOLDER. LD. CIT HELD THAT NON CONSIDERATION OF ADVANCE IN THE NAME OF ASSESSEE AS DEEMED DIVIDEND U/S 2(22)(E) HA S MADE THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE I NTERESTS OF REVENUE. ACCORDINGLY, HE SET ASIDE THE ASSESSMENT O RDER AND DIRECTED THE ASSESSING OFFICER TO RECOMPUTE THE INCOME BY BR INGING TO TAX THE AMOUNT OF RS. 4,27,36,648 AS DEEMED DIVIDEND U/S 2( 22)(E). BEING AGGRIEVED ASSESSEE IS BEFORE US. 10. LD. AR ORALLY AS WELL AS IN WRITING SUBMITTED T HAT THE ISSUE OF INVOKING THE PROVISIONS OF SECTION 2(22)(E) WAS THO ROUGHLY EXAMINED BY ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDI NGS UNDER SECTION 153A. THE ADDITIONAL COMMISSIONER OF INCOME TAX AT THE STAGE OF GRANTING HIS APPROVAL TO THE ASSESSMENT OR DER AS PER THE PROVISIONS OF SECTION 153D OF THE IT ACT, 1961 ALSO HAD AN OCCASION TO EXAMINE THE ISSUE. THE ADDL. CIT ALSO RECORDED THE REASONS WHY THE ADVANCE SHOWN IN THE BOOKS OF ACCOUNTS OF THE PRIVA TE LIMITED COMPANY CAN NOT BE BROUGHT TO TAX AS 'DEEMED DIVIDE ND' IN TERMS OF SEC.2(22)(E) OF THE IT ACT. IT WAS SUBMITTED, AS PE R SETTLED PRINCIPLES OF LAW, THE COMMISSIONER OF INCOME TAX IS NOT EMPOW ERED TO SUBSTITUTE HIS VIEWS IN PLACE OF VIEWS OF THE ASSE SSING OFFICER, AND 6 ITA NO. 766/HYD/2012 CH. KRISHNA MURTHY CIT IS PRECLUDED FROM TERMING THE ASSESSMENT ORDER AS 'ERRONEOUS' WITHOUT POINTING OUT THE SPECIFIC ERROR, AND WITHOU T BRINGING ON RECORD THE PREJUDICE CAUSED BY SUCH ERROR. 11. LD. AR SUBMITTED THAT, THE ASSESSMENT ORDER MAD E UNDER SECTION 153A AFTER DULY FOLLOWING THE DIRECTIONS OF THE ADDL. CIT AND APPROVED UNDER THE PROVISIONS OF SECTION 153D OF TH E IT ACT, 1961 CAN NOT BE TREATED AS AN 'ERRONEOUS ORDER'. 12. LD. AR SUBMITTED, THE ASSESSMENT ORDER IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE IN VIEW OF THE FACT THAT THE ASSESSING OFFICER HAS EXAMINED THE ISSUE OF APPLICA BILITY OF DEEMED DIVIDEND IN DETAIL WITH PARTICULAR REFERENCE TO THE COMMENTS IN THE APPRAISAL REPORT AND HAS EXAMINED THE EXPLANATION S UBMITTED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AND ALSO FOLLOWED THE DIRECTIONS OF THE ADDL. COMMISSIONER OF INCOME TAX (CENTRAL), HYDERABAD ISSUED U/S.153D AND 144A OF THE IT ACT AND COMPLETED THE ASSESSMENT. IT WAS SUBMITTED, DETAILED SUBMISS IONS WERE MADE ON THE ISSUE OF DEEMED DIVIDEND DURING THE ASSESSME NT PROCEEDINGS BY BRINGING ON RECORD ALL FACTS AND MATERIALS RELAT ING TO DEMERGER, FORMATION OF NEW COMPANY, CONVERSION OF ADVANCE IN THE NAME OF ASSESSEE, ALLOTMENT OF SHARES OF NEW COMPANY. IN TH IS CONTEXT, LEARNED AR INVITED OUR ATTENTION TO PAGES 30 TO 41 OF PAPER BOOK. THUS, IT WAS SUBMITTED, THE ASSESSING OFFICER HAS C ONSIDERED ALL THE MANDATORY CONDITIONS FOR TREATING AN AMOUNT AS DEEM ED DIVIDEND AND HAS EXAMINED IN DEPTH ALONG WITH ALL THE RECORDS AN D HAS FOLLOWED THE LAW IN THIS REGARD AND HAS NOT COMMITTED ANY ERROR. FURTHER, HE HAS ALSO FOLLOWED THE DIRECTIONS OF THE ADDL. COMMISSIO NER OF INCOME TAX AS REQUIRED BY THE PROVISIONS OF SEC.153D OF THE AC T AND SEC.144A OF THE ACT. 13. LD. AR SUBMITTED, IT IS SETTLED LAW THAT, WHERE THE AO EXAMINES THE ACCOUNTS, MAKES ENQUIRES, APPLIES HIS MIND TO T HE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME , THE 7 ITA NO. 766/HYD/2012 CH. KRISHNA MURTHY COMMISSIONER, WHILE EXERCISING HIS POWER U /S.263 I S NOT PERMITTED TO SUBSTITUTE HIS VIEW WITH THAT OF AO WITHOUT BRINGING ANY MATERIAL ON RECORD TO PROVE THAT THE CONCLUSIONS DRAWN BY THE AO ARE ERRONEOUS. LD. AR SUBMITTED, THE COMMISSIONER IN HIS ORDER HAS NOT BROUGHT ANY FACT TO ESTABLISH THAT THE ASSESSEE OR THE NEWLY FO RMED COMPANY IN WHICH HE IS A SHARE HOLDER HAS TAKEN ANY LOAN OR AD VANCE OR THERE ARE ANY TRANSFER OF FUNDS FOR HIS BENEFITS NOR HAS HE S TATED ANYWHERE IN HIS ORDER THAT, THERE ARE ACCUMULATED PROFITS AVAIL ABLE IN THE HANDS OF THE COMPANY IN WHOSE BOOKS OF ACCOUNTS THE DEBITS I N THE NAME OF THE ASSESSEE WERE FOUND. THE ADDL. CIT HAS CATEGORI CALLY RECORDED THAT, THE DEBITS IN THE ACCOUNT OF THE ASSESSEE ARE DUE TO PASSING OF JOURNAL ENTRIES MADE IN THE SCHEME OF DE-MERGER OF THE COMPANY AND FURTHER RECORDED THE FACT THAT THERE ARE NO ACCUMUL ATED PROFITS AVAILABLE IN THE BALANCE SHEET OF THE PRIVATE LIMIT ED COMPANY ON THE DATED OF DEBITS. THE AVAILABILITY OF THE ACCUMULATE D PROFITS IS A MANDATORY CONDITION TO INVOKE THE PROVISIONS OF SEC . 2(22)(E) AND THIS MANDATORY REQUIREMENT HAS NOT BEEN EXAMINED BY THE LD. CIT AND GIVEN A GO BYE. THEREFORE, THE REVISION ORDER OF T HE COMMISSIONER IS ERRONEOUS AND INVALID EVEN ON THE MERITS OF THE ISS UES IN THE PRESENT CASE. 14. LD. AR SUBMITTED, ASSESSMENT IN CASE OF ASSESSE E WAS COMPLETED U/S 143(1) PRIOR TO THE DATE OF SEARCH. A S ON THE DATE OF SEARCH, NO ASSESSMENT PROCEEDING FOR THE IMPUGNED A SSESSMENT YEAR WAS PENDING WHICH COULD HAVE ABATED. IN PURSUANCE T O NOTICE U/S 153A, ASSESSEE FILED RETURN OF INCOME ON 20/01/2009 DECLARING INCOME AT RS.3,34,53,850/- AND AGRICULTURAL INCOME AT RS.85,000/- AS WAS DECLARED IN THE ORIGINAL INCOME TAX RETURN FILE D FOR AY 2002-03 BEFORE THE DATE OF SEARCH OPERATIONS. THEREAFTER, T HE ASSESSING OFFICER PASSED ORDER ON 31/12/2009 U/S.153A R.W.S. 143(3) OF THE IT ACT. DETERMINING INCOME AT RS.4,81,35,852/- AND THE ONLY ADDITION MADE WAS ON ACCOUNT OF SHORT TERM CAPITAL GAIN ON T HE TRANSFER OF SHARES. 8 ITA NO. 766/HYD/2012 CH. KRISHNA MURTHY 15. THE LEARNED AR SUBMITTED, FOR THE AY 2002-03 NE ITHER THE INVESTIGATION WING OF THE IT DEPARTMENT NOR THE ASS ESSING OFFICER HAS FOUND ANY INCRIMINATING MATERIAL. THE ASSESSEE HAS DECLARED THE SAME AMOUNT OF INCOME IN BOTH THE INCOME TAX RETURN S FILED BEFORE THE DATE OF SEARCH AND ALSO FILED CONSEQUENT TO SEARCH U /S.153A. THE ASSESSING OFFICER, NOWHERE IN THE ASSESSMENT ORDER HAS REFERRED TO ANY INCRIMINATING MATERIAL WHICH WAS FOUND IN THE S EARCH FOR MAKING FRESH ADDITIONS IN THE ASSESSMENT U/S.153A R.W.S 14 3(3). HE HAS PREFERRED NOT TO BRING TO TAX THE DEBIT AMOUNTS IN THE ACCOUNT OF THE ASSESSEE INTO THE SWEEP OF THE PROVISIONS OF SEC.2( 22)( E) MAINLY DUE TO THE REASONS THAT -(I) THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE SEARCH PARTICULARLY PERTAINING TO THE PRESENT I SSUE IN DISPUTE FOR THE AY 2002-03, AND (II) THE ADDL. COMMISSIONER OF INCOME TAX, WHILE ACCORDING HIS STATUTORY APPROVAL U/S.153D HAS THORO UGHLY VERIFIED, EXAMINED AND ANALYZED THE PRESENT ISSUE AND ITS TAX ABILITY OR OTHERWISE UNDER THE PROVISIONS OF SEC.2(22)(E) AND APPROVED FOR NOT TAXING THE AMOUNT AS D EEMED DIVIDEND. 16. IT WAS SUBMITTED, SEC.153A CONTEMPLATES THAT, N OTWITHSTANDING THE REGULAR PROVISIONS FOR THE ASSESSMENT/RE-ASSESS MENT CONTAINED IN THE IT ACT, WHERE SEARCH IS CONDUCTED U/S.132 OR RE QUISITION IS MADE U/S.132A ON OR AFTER 31/05/2003 IN CASE OF ANY PERS ON, THE ASSESSING OFFICER SHALL ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH RETURN OF INCOME WITHIN THE TIME STIPULATED THEREIN , IN RESPECT OF SIX ASSESSMENT YEARS IMMEDIATELY PROCEEDINGS THE ASSESS MENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH I S CONDUCTED OR REQUISITION IS MADE AND THEREAFTER ASSESS OR RE-ASS ESS THE TOTAL INCOME FOR THOSE ASSESSMENT YEARS. THE SECOND PROVI SO TO SEC.153A PROVIDES FOR ABATEMENT OF ASSESSMENTS/RE-ASSESSMENT S PROCEEDINGS WHICH ARE PENDING ON THE DATE OF SEARCH/REQUISITION S. LEARNED AR SUBMITTED, A PLAIN READING OF SEC.153A OF THE IT AC T, IT IS CLEAR THAT ON INITIATION OF PROCEEDINGS U /S.153A, IT IS ONLY THE ASSESSMENTS/RE- ASSESSMENTS PROCEEDING THAT ARE PENDING ON THE DATE OF CONDUCTING 9 ITA NO. 766/HYD/2012 CH. KRISHNA MURTHY SEARCH U/S.132 OR REQUISITION U/S.132A WILL STAND A BATED. IT WAS SUBMITTED, BY A CIRCULAR NO. 8 OF 2003 DATED 18/09/ 2003 263 ITR (SC) 61 AT 107 THE CBDT HAS CLARIFIED THAT ON INITIATION OF PROCEEDINGS U /S.153A, THE PROCEEDINGS PENDING IN APPEAL, REVISIO N OR RECTIFICATION PROCEEDINGS AGAINST FINALIZED ASSESSMENT/RE-ASSESSM ENT SHALL NOT ABATE. IT IS ONLY BECAUSE, THE FINALIZED ASSESSMENT S/RE-ASSESSMENTS DO NOT ABATE AND THE ASSESSEE SUBMIT THAT, THE COMP LETED ASSESSMENTS BEFORE THE DATE OF SEARCH WILL HOLD THE GROUND AND ARE VALID AND ANY ADDI8TIONS TO THE INCOME HAVE TO BE I NVARIABLY BASE ON INCRIMINATING MATERIAL UNEARTHED DURING THE SEARCH. 17. THE LEARNED AR SUBMITTED, FOR THE IMPUGNED ASSE SSMENT YEAR, THERE ARE NO INCRIMINATING MATERIAL OR DOCUMENTS F OUND IN THE SEARCH. LD. COMMISSIONER OF INCOME TAX HAS NOT REFERRED TO ANY FRESH INCRIMINATING MATERIAL IN HIS REVISIONARY ORDER UND ER SEC. 263 FOR DIRECTING THE ASSESSING OFFICER TO BRING TO TAX THE AMOUNT OF DEBITS AS 'DEEMED DIVIDENDS'. LD. CIT WAS ONLY PROVOKED BY TH E OBSERVATIONS OF THE AUDIT PARTY AND HAS NOT EXAMINED THE ISSUE INDE PENDENTLY. 18. LD. AR SUBMITTED, AS NO INCRIMINATING MATERIAL WAS BROUGHT ON RECORD BY THE LD. COMMISSIONER OF INCOME TAX WHICH WAS UNEARTHED DURING THE SEARCH, THE ASSESSING OFFICER WAS CORREC T AS PER LAW IN NOT MAKING ANY ADDITION IN ASSESSMENT ORDER U/S.153A TO WARDS 'DEEMED DIVIDEND' IN THE ABSENCE OF ANY INCRIMINATING MATER IAL FOUND DURING THE SEARCH AND FURTHER, THE ADDL. COMMISSIONER OF I NCOME TAX HAS CORRECTLY GRANTED APPROVAL FOR SUCH ASSESSMENT ORDE R U/S.153D AND THEREFORE, SUCH ASSESSMENT ORDER WHICH WAS MADE ACC ORDING TO LAW, CAN NOT BE TERMED AS 'ERRONEOUS'. CONVERSELY, THE REVISIONARY ORDER DIRECTING THE ASSESSING OFFICER U/S. 263 TO MAKE AD DITION WITHOUT INCRIMINATING MATERIAL HAS NO SANCTION FROM THE LAW . 19. LEARNED AR SUBMITTED, THE 'DEEMED DIVIDEND' COU LD NOT BE BROUGHT TO TAX BY THE ASSESSING OFFICER IN THE ASSE SSMENT UNDER SECTION 153A R.W.S 143(3) SINCE THERE WAS NO INCRIMINATING MATERIAL 10 ITA NO. 766/HYD/2012 CH. KRISHNA MURTHY FOUND AS A RESULT OF SEARCH, WHICH COULD HAVE GIVEN JURISDICTION TO THE ASSESSING OFFICER. 20. THE LD. AR SUBMITTED, WHEN A PARTICULAR ISSUE C OULD NOT HAVE BEEN RAISED IN THE ASSESSMENT UNDER SECTIO N 153A OF THE ACT, POWER UNDER SECTION 263 WITH REGARD THERETO CA N NOT OBVIOUSLY BE EXERCISED BY THE LD. COMMISSIONER OF INCOME TAX. TH E ORDER OF THE LD. CIT DIRECTING THE ASSESSING OFFICER TO DO AN AC T NOT PERMITTED UNDER THE LAW, IS IN ITSELF IS 'ERRONEOUS' AND INVA LID. IN SUPPORT OF PROPOSITIONS/ARGUMENTS ADVANCED, LEARNED AR RELIED UPON A NUMBER OF DECISIONS AS REFERRED TO IN THE WRITTEN SUBMISSI ON. 21. THE LEARNED DEPARTMENTAL REPRESENTATIVE COUNTER ING THE SUBMISSIONS OF ASSESSEES COUNSEL SUBMITTED THAT, A SSESSING OFFICER WHILE COMPLETING THE ASSESSMENT HAVING COMPLETELY I GNORED THE ISSUE OF ASSESSING DEEMED DIVIDEND AT THE HANDS OF ASSESS EE, ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. HE SUBMITTED THAT THERE IS NO DISPUTE TO THE FACT THAT ASSESSEE WAS A SHAREHOLDER OF VISHNU CHEMICALS PVT. LTD. (VCPL). I T IS ALSO NOT DISPUTED THAT LIABILITY OF THE NEW COMPANY I.E. VBP CL WAS TREATED AS ADVANCE TO SHRI CH. KRISHNAMURTHY, PRESENT ASSESSEE , ON THE BASIS OF WHICH SHARES TO THE TUNE OF RS. 4 CRORES WERE AL LOTTED TO ASSESSEE AND HIS FAMILY MEMBERS. IN THESE CIRCUMSTANCES, WHE N THE CONDITIONS OF SECTION 2(22)(E) ARE SATISFIED, ASSESSING OFFICE R SHOULD HAVE INVOKED PROVISIONS OF SECTION 2(22)(E) AND TREATED THE TRANSFER LIABILITY AS ADVANCE TO ASSESSEE IN THE BOOKS OF VCPL AS DEEM ED DIVIDEND. LD. DR SUBMITTED THAT ASSESSING OFFICER IN THE DRAF T ASSESSMENT ORDER HAVING PROPOSED THE ADDITION ON ACCOUNT OF DEEMED D IVIDEND SHOULD NOT HAVE IGNORED IT WHILE COMPLETING ASSESSMENT. LE ARNED DR SUBMITTED THAT EVEN IF THERE IS NO INCRIMINATING MA TERIAL WITH REFERENCE TO THE ADDITION MADE, BUT, ASSESSING OFFICER U/S 15 3A RETAINS THE POWER TO ALSO LOOK INTO OTHER ASPECTS AS THE ENTIR E ASSESSMENT IS OPEN BEFORE HIM. 11 ITA NO. 766/HYD/2012 CH. KRISHNA MURTHY 22. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDER S OF REVENUE AUTHORITIES AS WELL AS OTHER MATERIAL ON RECORD. WE HAVE ALSO APPLIED OUR MIND TO THE DECISIONS RELIED UPON BY THE PARTIE S BEFORE US. IT IS EVIDENT FROM THE ORDER OF LD. CIT THAT HE CONSIDERS THE ASSESSMENT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERE STS OF REVENUE AS ASSESSING OFFICER HAS FAILED TO TREAT THE ADVANCE O F RS. 4,27,36,648 SHOWN IN THE BOOKS OF VCPL IN THE NAME OF CH. KRISH NAMURTHY TO BE DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT. HOWEVER, I T IS TO BE NOTED THAT ACTUALLY NO LOAN WAS ADVANCED TO ASSESSEE BY V CPL, AS SUCH. IT IS A FACT THAT DUE TO DEMERGER APPROVED BY HONBLE HIGH COURT OF AP ONE OF THE DIVISION OF VCPL, NAMELY, BARIUM DIVISIO N WAS CONVERTED INTO A NEW COMPANY IN THE NAME AND STYLE OF M/S VIS HNU BARIUM CHEMICALS PVT. LTD. AND ASSETS & LIABILITIES OF BAR IUM DIVISION WERE TRANSFERRED TO THE NEWLY FORMED COMPANY. IT IS ALSO A FACT THAT BARIUM DIVISION HAD TAKEN SOME FUNDS FROM CHROME DIVISION OF VCPL, WHICH WAS SHOWN AS ADVANCE IN THE BOOKS OF CHROME DIVISIO N AND CORRESPONDINGLY SHOWN AS LIABILITIES IN THE BOOKS O F BARIUM DIVISION. AT THE TIME OF DEMERGER, LIABILITY APPEARING IN THE BOOKS OF BARIUM DIVISION WAS CONVERTED AS SHARE CAPITAL IN THE NAME OF CH. KRISHNAMURTHY, PRESENT ASSESSEE AND OTHER FAMILY ME MBERS AND TO REGULARISE THE FINANCIAL TRANSACTIONS ADVANCE GIVEN TO BARIUM DIVISION WAS CONVERTED AS ADVANCE GIVEN TO ASSESSEE IN THE B OOKS OF M/S VCPL BY PASSING JOURNAL ENTRIES. THESE FACTS HAVE N OT BEEN CONTROVERTED BY LD. CIT. THUS, AS IT APPEARS, THE C ONVERSION OF OUTSTANDING LIABILITY OF BARIUM DIVISION AS ADVANCE GIVEN TO PRESENT ASSESSEE FOR THE PURPOSE OF FACILITATING ACQUISITIO N OF SHARES OF THE NEWLY FORMED COMPANY IS AN ARRANGEMENT BETWEEN THE PARTIES WITHOUT MONEY CHANGING HANDS. 23. AT THIS STAGE, ONE HAS TO REMEMBER, THE SETTLED POSITION OF LAW IS, FOR INVOKING JURISDICTION U/S 263 OF THE ACT, T WO CONDITIONS HAVE TO BE SATISFIED CUMULATIVELY. FIRSTLY, ORDER MUST BE E RRONEOUS AND SECONDLY IT MUST BE PREJUDICIAL TO THE INTERESTS OF REVENUE. IN ABSENCE 12 ITA NO. 766/HYD/2012 CH. KRISHNA MURTHY OF ANY ONE OF THE TWO CONDITIONS, THE POWER CONFER RED U/S 263 CANNOT BE EXERCISED. ON A PERUSAL OF THE ASSESSMENT ORDER AS A WHOLE, SPECIFICALLY, PARA 17, IT IS VERY MUCH EVIDENT THAT ASSESSING OFFICER WAS CONSCIOUS ABOUT THE FACT THAT BARIUM DIVISION W AS HAVING OUTSTANDING LIABILITY OF THE ADVANCE GIVEN BY CHROM E DIVISION AT THE TIME OF DEMERGER. HE WAS ALSO AWARE OF THE FACT THA T OUTSTANDING LIABILITY WAS CONVERTED AS ADVANCE GIVEN TO ASSESS EE AGAINST WHICH SHARES OF NEWLY FORMED COMPANY I.E. VBCPL WERE ALLO TTED TO ASSESSEE AND HIS ASSOCIATES. THEREFORE, IT IS CLEAR FROM THE ASSESSMENT ORDER THAT ASSESSING OFFICER HAS EXAMINE D THE ISSUE OF CONVERSION OF THE OUTSTANDING LIABILITY OF BARIUM D IVISION TO ADVANCE IN THE NAME OF ASSESSEE THROUGH JOURNAL ENTRIES AS WELL AS ALLOTMENT OF SHARES AGAINST SUCH ADVANCE TO ASSESSEE AND HIS FAMILY MEMBERS. FURTHERMORE, FROM PARA 2.3 OF IMPUGNED ORDER OF LEA RNED CIT, IT BECOMES CLEAR THAT ASSESSING OFFICER WHILE FORWARDI NG THE DRAFT ASSESSMENT ORDER FOR APPROVAL, AFTER CONSIDERING AP PRAISAL REPORT HAS PROPOSED TO TREAT THE CONVERSION OF OUTSTANDING LIA BILITY OF BARIUM DIVISION AS ADVANCE TO ASSESSEE IN THE BOOKS OF VCP L AS DEEMED DIVIDEND U/S 2(22)(E). HOWEVER, WHILE ACCORDING HIS APPROVAL IN TERMS WITH SECTION 153D, ADDL. CIT, WHO IS RANGE HEAD DIR ECTED ASSESSING OFFICER NOT TO MAKE ADDITION U/S 2(22)(E). THE REAS ONING OF THE ADDL. CIT IS, ADVANCE CREATED IN THE NAME OF ASSESSEE WAS ONLY THROUGH BOOK ENTRY AND NO PAYMENT WAS MADE AND SECONDLY, TH ERE WAS NO ACCUMULATED PROFITS OF THE COMPANY, WHICH IS A PRER EQUISITE FOR INVOKING PROVISIONS OF SECTION 2(22)(E). THEREFORE, FROM THE AFORESAID DISCUSSION, IT BECOMES CLEAR THAT NOT ONLY ASSESSIN G OFFICER HAS EXAMINED THE ISSUE, BUT, HE HAS ALSO PASSED THE ORD ER IN CONSEQUENCE TO THE DIRECTIONS OF HIS HIGHER AUTHORI TY IN TERMS WITH SECTION 153D OF THE ACT. ITAT, PUNE BENCH IN CASE O F AKIL GULAMALI SOMJI VS. ITO IN ITA NOS. 455 TO 458/PN/2010 DT. 30 /03/2012 WHILE HOLDING THE CONDITIONS IMPOSED U/S 153D TO BE OF MA NDATORY NATURE, REFERRED TO CLAUSE 9 OF MANUAL OF OFFICE PROCEDURE, VOLUME II (TECHNICAL) FEBRUARY 2003 ISSUED BY DIRECTORATE OF INCOME-TAX ON 13 ITA NO. 766/HYD/2012 CH. KRISHNA MURTHY BEHALF OF CBDT, WHICH READS AS UNDER: 9. APPROVAL FOR ASSESSMENT : AN ASSESSMENT ORDER U NDER CHAPTER XIV-B CAN BE PASSED ONLY WITH THE PREVIOUS APPROVAL OF THE RANGE JCIT/ADDL.CIT. (FOR THE PERIOD FROM 30-6- 1995 TO 31-1 2-1996 THE APPROVING AUTHORITY WAS THE CIT.) T HE ASSESSING OFFICER SHOULD SUBMIT THE DRAFT ASSESSMEN T ORDER FOR SUCH APPROVAL WELL IN TIME. THE SUBMISSION OF THE D RAFT ORDER MUST BE DOCKETED IN THE ORDER-SHEET AND A COPY OF T HE DRAFT ORDER AND COVERING LETTER FILED IN THE RELEVANT MIS CELLANEOUS RECORDS FOLDER. DUE OPPORTUNITY OF BEING HEARD SHOU LD BE GIVEN TO THE ASSESSEE BY THE SUPERVISORY OFFICER GIVING A PPROVAL TO THE PROPOSED BLOCK ASSESSMENT, AT LEAST ONE MONTH BEFOR E THE TIME BARRING DATE. FINALLY ONCE SUCH APPROVAL IS GRANTED , IT MUST BE IN WRITING AND FILED IN THE RELEVANT FOLDER INDICAT ED ABOVE AFTER MAKING A DUE ENTRY IN THE ORDER-SHEET. THE ASSESSME NT ORDER CAN BE PASSED ONLY AFTER THE RECEIPT OF SUCH APPROV AL. THE FACT THAT SUCH APPROVAL HAS BEEN OBTAINED SHOULD ALSO BE MENTIONED IN THE BODY OF THE ASSESSMENT ORDER ITSELF. THUS, FROM THE AFORESAID FACTS IT BECOMES CLEAR, TH E ASSESSING OFFICER WHILE EXERCISING POWER U/S 153A HAS TO PASS THE ASS ESSMENT ORDER AS PER THE APPROVAL GRANTED BY ADDL. CIT U/S 153D. IN THESE CIRCUMSTANCES, ASSESSING OFFICER HAVING EXAMINED TH E ISSUE AND APPLIED HIS MIND TO THE FACTS AND HAVING PASSED THE ORDER IN TERMS WITH THE DIRECTIONS OF THE RANGE HEAD AS PER THE ST ATUTORY PROVISIONS CONTAINED U/S 153D, THE ASSESSMENT ORDER CANNOT BE HELD TO BE ERRONEOUS. IN FACT LD. CIT HAS BLAMED THE RANGE HEA D FOR THE DIRECTIONS GIVEN BY HIM WHILE APPROVING THE DRAFT A SSESSMENT ORDER. THEREFORE, IF AT ALL, THERE IS ANY ERROR, IT IS IN THE ORDER OF THE RANGE HEAD AND NOT IN THE ASSESSMENT ORDER. WITHOUT REVIS ING THE DIRECTIONS OF ADDL. CIT, ASSESSMENT ORDER COULD NOT BE REVISED . 24. FURTHERMORE, IT IS CLEAR FROM THE DISCUSSIONS M ADE BY LD. CIT, THE REASONS ON WHICH RANGE HEAD I.E. ADDL. CIT DISA PPROVED TREATING THE ADVANCE AS DEEMED DIVIDEND U/S 2(22)(E) IS BECA USE IT IS CONVERTED AS ADVANCE IN THE NAME OF ASSESSEE MERELY THROUGH BOOK ENTRIES AND ACTUALLY NO MONEY WAS ADVANCED TO ASSES SEE AND SECONDLY THE COMPANY I.E. VCPL WAS NOT HAVING ACCUM ULATED PROFITS 14 ITA NO. 766/HYD/2012 CH. KRISHNA MURTHY AT THE TIME OF SUCH PAYMENT. THOUGH, LEARNED CIT H AS ACCEPTED THE FACT THAT IN REALITY NO MONEY WAS ADVANCED BY THE C OMPANY TO ASSESSEE, BUT, ACCORDING TO HIM, BY VIRTUE OF SUCH A TRANSACTION ASSESSEE AND HIS FAMILY MEMBERS HAVE BECOME OWNER OF SHARES WORTH RS. 4 CRORES IN THE NEWLY FORMED COMPANY. ACC ORDING TO HIM, IN THESE CIRCUMSTANCES, JOURNAL ENTRIES PASSED IN THE BOOKS OF ACCOUNT BY CONVERTING THE OUTSTANDING LIABILITY OF THE NEWL Y FORMED COMPANY AS ADVANCE GIVEN TO ASSESSEE WILL ATTRACT PROVISION S OF SECTION 2(22)(E). IN THIS CONTEXT, HE HAS RELIED UPON A DEC ISION OF THE ITAT CHENNAI BENCH AND ANOTHER DECISION OF HONBLE MADRA S HIGH COURT IN CASE OF T. SUNDARAM CHETTIAR AND ANOTHER VS. CIT, 4 9 ITR 287. FROM THE AFORESAID DISCUSSIONS OF LEARNED CIT, IT IS APP ARENT AND OBVIOUS THAT THE ISSUE WHETHER THE ADVANCE CAN BE TREATED A S DEEMED DIVIDEND U/S 2(22)(E) AT THE HANDS OF ASSESSEE IS A DEBATABLE ISSUE ON WHICH MORE THAN ONE VIEW ARE POSSIBLE. THEREFORE , WHEN THE VIEW TAKEN BY ADDL. CIT AND ASSESSING OFFICER CAN BE CON SIDERED AS ONE OF THE POSSIBLE VIEWS, ASSESSMENT ORDER CANNOT BE TREA TED AS ERRONEOUS, EVEN THOUGH THERE MAY BE SOME PREJUDICE CAUSED TO R EVENUE. ONE MORE ASPECT, WHICH NEEDS TO BE TAKEN NOTE OF IS LEA RNED CIT WHILE REVISING ASSESSMENT ORDER AND DIRECTING ASSESSING O FFICER TO TREAT THE AMOUNT OF RS. 4,27,36,648 AS DEEMED DIVIDEND AT THE HANDS OF ASSESSEE HAS TOTALLY FAILED TO EXAMINE WHETHER M/S VCPL AT THE TIME OF ALLEGED PAYMENT WAS HAVING ACCUMULATED PROFITS O R NOT. WHEN LEARNED CIT IS AWARE OF THE FACT THAT ADDL. CIT WHI LE DISAPPROVING THE ADDITION PROPOSED TO BE MADE U/S 2(22)(E) HAS OBSER VED THAT M/S VCPL DID NOT HAVE ACCUMULATED PROFITS, WHICH IS ONE OF THE CONDITIONS FOR INVOKING SECTION 2(22)(E), IT WAS INCUMBENT UPO N HIM TO EXAMINE THAT ASPECT BEFORE DIRECTING FOR ADDITION OF RS. 4, 27,36,648 U/S 2(22)(E). ITAT LUCKNOW BENCH IN CASE OF MEHTAB ALAM VS. ACIT, ITA NO. 288 TO 294/LKW/14 DATED 18/11/2014 WHILE SETTIN G ASIDE THE ORDER PASSED U/S 263 OF THE ACT, AMONGST OTHER DECI SIONS ALSO TOOK NOTE OF A DECISION OF THE HONBLE ALLABAHAD HIGH CO URT IN CASE OF CIT VS. DR. ASHOK KUMAR WHEREIN IT WAS HELD THAT WHEN A SSESSING OFFICER 15 ITA NO. 766/HYD/2012 CH. KRISHNA MURTHY WAS FULLY ALIVE ABOUT THE FACTS OF THE CASE AND THE ORDER PASSED BY HIM WAS APPROVED BY ADDL. CIT, THEN, LD. CIT CANNOT BE JUSTIFIED IN INTERFERING IN THE APPROVAL GIVEN BY ADDL. CIT FOR FRAMING ASSESSMENT ORDER AND THERE WILL BE NO CASE FOR SETTING ASIDE T HE ASSESSMENT ORDER. THEREFORE, CONSIDERED IN THE AFORESAID PERSP ECTIVE WHEN IT IS A FACT ON RECORD THAT BOTH THE ADDL. CIT WHILE GRANTI NG APPROVAL U/S 153D AS WELL AS ASSESSING OFFICER IN COURSE OF ASSE SSMENT PROCEEDING HAVE EXAMINED THE ISSUE OF DEEMED DIVIDE ND U/S 2(22)(E) OF THE ACT AT THE HANDS OF ASSESSEE IN RELATION TO THE ADVANCE SHOWN IN HIS NAME IN THE BOOKS OF M/S VCPL AND THE VIEW T AKEN BY ASSESSING OFFICER AS WELL AS ADDL. CIT CAN BE CONSI DERED AS ONE OF THE POSSIBLE VIEWS, ASSESSMENT ORDER CANNOT BE TREA TED AS ERRONEOUS. MORE SO, WHEN ASSESSMENT ORDER HAS BEEN PASSED IN T ERMS WITH SECTION 153D OF THE ACT AND LD. CIT HAS NOT REVISED THE DIRECTIONS OF ADDL. CIT. IN THESE CIRCUMSTANCES, AS ONE OF THE C ONDITIONS OF SECTION 263 IS NOT SATISFIED, THE IMPUGNED ORDER PASSED U/S 263 IS NOT VALID. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER OF LEA RNED CIT AND RESTORED THE ASSESSMENT ORDER PASSED. 25. AS WE HAVE HELD THE REVISION ORDER TO BE INVALI D FOR THE REASONS STATED ABOVE, THE OTHER ISSUES RAISED BY ASSESSEE I N THE GROUNDS OF APPEAL RELATING TO THE ABSENCE OF INCRIMINATING MAT ERIAL, ETC. ARE NOT REQUIRED TO BE GONE INTO. FOR THE VERY SAME REASON, ADDITIONAL GROUND IS ALSO NOT REQUIRED TO BE ADJUDICATED. 26. IN THE RESULT, ASSESSEES APPEAL IS CONSIDERED TO BE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 13/02/2015. SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICI AL MEMBER HYDERABAD, DATED: 13 TH FEBRUARY, 2015 16 ITA NO. 766/HYD/2012 CH. KRISHNA MURTHY KV COPY TO:- 1) SHRI CH. KRISHNA MURTHY, C/O SHRI M. CHANDRAMOU LESWARA RAO, CA, C-3, SKYLARK APARTMENTS, BASHEERBAGH, HYDE RABAD 29. 2) ACIT, CENTRAL CIRCLE 3, HYDERABAD 3) CIT, HYDERABAD 4) ADDL. CIT, CENTRAL RANGE 2, HYD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.