M/s Sujana Towers Limited, Hyderabad V. ACIT, Circle 3(1), Hyderabad

ITA 79/HYD/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2707 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-12-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 20-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J SIRI KUMAR
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Depreciation; Additional depreciation; Assessment record
• Section: 143(3); 263; 63; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 79/HYD/2014 ASSESSMENT YEAR: 2008-09 M/S SUJANA TOWERS LTD., HYDERABAD. PAN AAKCS 7820F VS. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 3(1) HYD. APPELLANT RESPONDENT ASSESSEE BY: SHRI P. MURALI MOHAN RAO REVENUE BY: SHRI J. SIRI KUMAR DATE OF HEARING: 19/12/2017 DATE OF PRONOUNCEMENT: 10/01/2018 O R D E R PER S. RIFAUR RAHMAN, AM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF CIT - III, HYDERABAD, DATED 25/03/2013 PASSED U/S 2 63 OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) RELATES T O THE AY 2008-09. 2. ON PERUSAL OF RECORD, WE FIND THAT THERE WAS A D ELAY OF 225 DAYS IN FILING THE APPEAL BEFORE US. IN THIS CO NNECTION, ASSESSEE FILED A PETITION REQUESTING FOR CONDONATIO N OF THE SAID DELAY EXPLAINING THE REASONS THAT SINCE THE 26 3 ORDER WAS MISPLACED BY OFFICE STAFF AND WHEN THE AO ISSUED NO TICE TO THE ASSESSEE FOR GIVING EFFECT TO THE DIRECTIONS OF THE CIT DATED 02/12/2013, THE ASSESSEE FILED THE APPEAL BELATEDLY AGAINST THE ORDER OF CIT U/S 263. CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE AND THE OBJECTION OF THE LD. DR, WE HEREBY CONDONE THE DELAY AS THE ASSESSEE WAS PREVENTED BY REASONAB LE CAUSE IN NOT FILING THE APPEAL WITHIN THE STIPULATED TIME . I.T.A. NO. 79/HYD/2014 M/S SUJANA TOWERS LTD. 2 3. BRIEFLY THE FACTS OF THE CASE ARE, THE ASSESSEE IS A COMPANY ENGAGED IN THE MANUFACTURE OF IRON AND STEE L PRODUCTS, TELECOM PRODUCTS AND POWER TRANSMISSION T OWERS. IT FILED ITS RETURN OF INCOME FOR AY 2008-09 ON 5.1 .2010 DECLARING TOTAL INCOME OF RS.1,60,09,484/-. THE ASS ESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) ON 28.1 2.2010 DETERMINING THE ASSESSED INCOME AT RS.1,67,58,560/- . 4. THE CIT NOTED THAT BY VIRTUE OF POWERS VESTED V IDE SECTION 263 OF THE I.T. ACT, HIS PREDECESSOR CALLE D FOR THE ASSESSMENT RECORDS OF THE ASSESSEE COMPANY AND EXAM INED THEM. ON EXAMINATION OF THE ASSESSMENT RECORDS, THE FOLLOWING DISCREPANCIES WERE NOTED: (I) THE ASSESSEE HAS CLAIMED DEPRECIATION ON PLANT & MACHINERY TO THE EXTENT OF RS.47,11,30,766 @ 80%. T HIS HIGHER RATE OF DEPREDATION I.E, 80% IS ALLOWABLE TO AN UNDERTAKING ENGAGED IN GENERATING POWER OR TO PLANT & MACHINERY WHICH IS AN ENERGY SAVING DEVISE, THE ASSESSEE COMPANY IS ENGAGED IN MANUFACTURE OF IRON AND STEEL PRODUCTS, TRANSMISSION TOWERS AND POWER TRANSMISSION TOWERS AND HENCE IS NOT ENTITLED TO DEPRECIATION ON PLANT & MACHINERY @ 80%. (II) IT WAS ALSO SEEN THAT THE UNAVAILED CENVAT CRE DIT AMOUNTED TO RS.4,97,61,782 WHILE THE OPENING BALANC E WAS RS.1,15,98,067. THE DIFFERENCE AMOUNTING TO RS. 3,81,68,715/- WAS UNAVAILED CENVAT PURCHASED AND IN THE NATURE OF FUTURE ENTITLEMENT AND SHOULD HAVE B EEN ADDED BACK TO THE TOTAL INCOME. 5. THE CIT OBSERVED THAT THE ASSESSING OFFICER HAVI NG FAILED TO TAKE THE ABOVE TWO ISSUES INTO ACCOUNT HA D ERRED. IN VIEW OF THE SAME, A SHOW CAUSE NOTICE DT. 20.12.201 2 WAS ISSUED BY HIS PREDECESSOR. SUBSEQUENTLY, THE CIT IS SUED A FRESH NOTICE ON 28.2.2013 FIXING THE HEARING ON 6.3 .2013. IN RESPONSE TO THE NOTICES ISSUED, THE ASSESSEE HAS MA DE A I.T.A. NO. 79/HYD/2014 M/S SUJANA TOWERS LTD. 3 WRITTEN SUBMISSION ON 23.1.2013. AS REGARDS THE FIR ST ISSUE, THE ASSESSEE HAS STATED AS UNDER: 'THE COMPANY IS ENGAGED IN THE MANUFACTURE OF IRON AND STEEL PRODUCTS MAINLY USEFUL FOR TOWERS AND TOWER P ARTS FOR TELECOM AND POWER INDUSTRIES. THE BASIC COMPONE NTS OF THESE TOWERS ARE MADE UP OF IRON AND STEEL WHICH IS MANUFACTURED IN-HOUSE IN A STEEL REROLLING MILL IN PLOT NO. 159 B&C, IDA BOLLARUM VILLAGE, JINNARAM MANDAL, MUTRAJPALLI PO, IN MEDAK DISTRICT OF AP. THE MILL I S DULY REGISTERED WITH THE OFFICE OF THE ASST. COMMISSIONE R OF CENTRAL EXCISE, B DIVISION, HYDERABAD WITH REGISTRA TION NO. AAKCS7820FXM004. THE MILL IS ALSO BEEN FAVOURED WITH A FACTORY LICENCE NO. 31560 BY THE DEPARTMENT OF INDUSTRIES, GOVT. OF AP. THE MILLS USE CHILLED ROLL S FOR ROLLING THE BILLETS WHICH ARE THE RAW MATERIAL FOR THE TOWER PARTS AFTER THEIR PREHEATING IN FURNACE. CHIL LED ROLLS ARE ROLLING MILL ROLLS AND ARE AN INTEGRAL PART OF THE ROLLING PROCESS OF IRON AND STEEL AND ARE USED TO TRIM AND RESIZE THE HEATED LARGE BILLETS AND BLOOMS TO COMMERCIAL S IZES. AS A PART OF THE PROCESS, THE HEATED BILLETS AND BL OOMS ARE PASSED THROUGH THE ROLLING MILL ROLLS WHICH ARE FIXED INTO MILL STANDS AND ROTATE AT HIGH SPEEDS AND THER EFORE ARE CLASSIFIED AS PLANT & MACHINERY. AS THE COMPANY IS ENGAGED IN THE REROLLING OF IRON AND STEEL PRODUCTS , THE COMPANY IS ELIGIBLE TO CLAIM 80% DEPRECIATION ON TH ESE ROLLING MILL ROLLS AS PER THE ITEM 8(VII) OF THE DE PRECIATION TABLE OF THE IT ACT. IT IS POINTED OUT IN THE NOTICE THAT THE COMPANY WA S NOT ENGAGED IN THE GENERATION OF POWER AND THE MACHINER Y WAS NOT AN ENERGY SAVING DEVISE THEREBY DISALLOWING THE DEPRECIATION. HOWEVER, WE WISH TO CLARIFY THAT IRON AND STEEL MILLS ARE ALSO ELIGIBLE FOR CLAIMING DEPRECIA TION ON ROLLING MILL ROLLS AT 80%. A COPY OF THE DEPRECIATI ON CHART HIGHLIGHTING THE RATE OF DEPRECIATION IS ENCLOSED F OR YOUR IMMEDIATE REFERENCE. THEREFORE, THE CLAIM OF THE COMPANY IS JUSTIFIED. IT IS FURTHER SUBMITTED THAT WHEN A SIMILAR ISSUE A ROSE IN RESPECT OF GROUP CONCERN M/S SUJANA METAL PRODUCTS, THE AO EXAMINED THE ELIGIBILITY OF THE DEPRECIATION CLAIM AT YOUR INSTRUCTIONS VIDE PROCEEDINGS NO. F.NO. CIT - III/REVISION/263(33)/2011-12 DT. 29/03/2012 AND THE OFFICER HAS CONFIRMED THE ELIGIBILITY OF DEPRECATIO N IN PARA 10 OF HIS ASSESSMENT ORDER. A COPY OF THE ORDE R DATED 17/01/2013 ISSUED IN THEIR RESPECT IS ENCLOSE D HEREWITH FOR YOUR KIND PERUSAL. I.T.A. NO. 79/HYD/2014 M/S SUJANA TOWERS LTD. 4 THE REVISED GUIDANCE NOTE ON ACCOUNTING TREATMENT O N EXCISE DUTY ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA (ICAI) EFFECTIVE FROM 01/04/19 99. THE RELEVANT PORTION IS REPRODUCED AS UNDER: ACCOUNTING TREATMENT OF INPUTS RECEIVED WHEN INPUTS ARE PURCHASED, PURCHASE PRICE (NET OF EXCISE) SHOULD BE DEBITED TO PURCHASE ACCOUNT AND EXCISE ON INPUTS SHOULD BE DEBITED TO CENTRAL CREDIT RECEIVABLE (INPUT) ACCOUNT. TOTAL INVOICE ACCOUNT (I.E. NET PURCHASE PRICE PLUS EXCISE) WILL BE CREDITED TO SUPPLIERS ACCOUNT (AS THE SUPPLIER HAS PAID EXCISE AND HIS INVOICE IS INCLUSIVE OF EXCISE PAID BY HIM ON MATERIALS SUPPLIED). WHEN DUTY IS DEBITED IN INPUT CENVAT CREDIT ACCOUNT TOWARDS PAYMENT OF DUTY ON FINAL PRODUCT, EXCISE DUTY PAID ON FINAL PRODUCTS ACCOUNT SHOULD BE DEBITED AND CENVAT CREDIT RECEIVABLE (INPUT) ACCOUNT SHOULD BE CREDITED. IF THERE IS DEBIT BALANCE AT THE END OF YEAR IN CENVAT ACCOUNT, IT MEANS THAT CREDIT IS NOT FULLY UTILIZED AND SHOULD BE SHOWN UNDER CURRENT ASSETS UNDER LOANS AND ADVANCES. CLOSING STOCK OF INPUTS SHOULD BE VALUED NET OF EXCISE DUTY. HOWEVER, SINCE CENVAT ON STOCK, WHICH HAS NOT BEEN USED, IS ALSO UTILIZED FOR PAYMENT OF DUTY, PURCHASES ARE UNDERSTATED TO THAT EXTENT. IF BALANCE IN CREDIT OF CENVAT CANNOT BE UTILIZED FOR ANY REASON, THE SAME MUST BE WRITTEN OFF. ACCORDINGLY, WE HAVE FOLLOWED THE ABOVE GUIDANCE NOTE ISSUED BY ICAI AND THE CLOSING VALUE OF UNVEILED CENVAT CREDIT IS SHOWN ON THE ASSET SIDE OF THE BALANCE SHEET. THE ASSESSEE HAD RELIED ON THE FOLLOWING DECISIONS : 1. CIT VS. INDO NIPPON CHEMICALS CO. LTD., [2003] 2 61 ITR 275. 2. INDIAN PETROCHEMICALS CORP OTD. VS. DEPARTMENT O F INCOME TAX VIDE ITA NO. 664 & 665/AHD/2008, ORDER DATED 29/06/2012. 6. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT OBSERVED AS UNDER: 6. AS REGARDS THE CLAIM FOR DEPRECIATION, THE ASSESSEE IS RELYING ON ITEM 8(VII) OF APPENDIX I, PART A , WHICH GIVES SCHEDULE 80% DEPRECIATION IN THE IRON AND STE EL INDUSTRY. AS PER THE BILLS/INVOICES SUBMITTED BY TH E I.T.A. NO. 79/HYD/2014 M/S SUJANA TOWERS LTD. 5 ASSESSEE AS WELL AS OTHER SUBMISSIONS MADE, THE ASSESSEE HAS PURCHASED MS CHILLED BARS. THE ASSESSE E IS CLAIMING THAT THESE MS CHILLED BARS AND ROLLING MILL ROLLS MENTIONED IN APPENDIX I ARE ONE AND THE SA ME ITEM AND ENTITLED TO 80% DEPRECIATION. SECONDLY, OU T OF PLANT & MACHINERY PURCHASED DURING THE YEAR ON WHIC H DEPRECIATION OF 80% HAS BEEN CLAIMED, THESE MS CHIL LED BARS/ROLLS ACCOUNT FOR RS. 24,25,84,899 ONLY, WHILE PLANT AND MACHINERY AMOUNTING TO RS. 28,25,35,757 PURCHASED DURING THE YEAR IS STATED TO BE AIR POLLU TION CONTROL EQUIPMENT AND WATER POLLUTION TREATMENT EQUIPMENT PURCHASED FROM M/S OMICRON BIO GENESIS LTD. AND M/S FUTURETECH INDUSTRIES LTD. AS PER THE SCHEDULE FOR DEPRECIATION, AIR POLLUTION CONTROL EQUIPMENT ARE ENTITLED TO 100% DEPRECIATION WHEREAS THE ASSESSEE HAS CLAIMED ONLY 80% DEPRECIATION. THE AO HAS NOT CARRIED OUT ANY ENQUIRY SO AS TO CONFIRM WHETHER THE EQUIPMENT MENTIONED IN THE STATEMENT OF ACCOUNT IS THE SAME EQUIPMENT WHICH IS ENTITLED TO 100% DEPRECIATION. MOREOVER, IT IS NOT CLEAR WHY THE ASS ESSEE HAS CLAIMED ONLY 80% DEPRECIATION, IF IT IS ENTITLE D TO 100% DEPRECIATION. MOREOVER, THE AO HAS NOT VERIFIE D WHETHER MS CHILLED BARS AND ROLLING MILL ROLLS ARE ONE AND THE SAME AND ARE ENTITLED FOR 80% DEPRECIATION. IN THE ABSENCE OF ANY ENQUIRY, THE ASSESSMENT ORDER PASSED ON 28/12/2000 IS ERRONEOUS AND PREJUDICIAL T O THE INTERESTS OF REVENUE. THE ASSESSMENT ORDER IS S ET ASIDE WITH DIRECTION TO THE AO TO VERIFY WHETHER MS CHILLED BARS AND ROLLING MILL ROLLS ARE THE SAME TH ING AND ALSO WHETHER THE AIR POLLUTION CONTROL EQUIPMENT AN D WATER POLLUTION TREATMENT EQUIPMENT PURCHASED BY TH E ASSESSEE IS ONE WHICH IS ENTITLED TO HIGHER RATE OF DEPRECIATION AND THAT SUCH AIR POLLUTION AND WATER POLLUTION EQUIPMENT WAS INSTALLED WITHIN TIME AT TH E FACTORY PREMISES OF THE ASSESSEE. 6.1 AS REGARDS THE ISSUE OF CENVAT CREDIT, THE CIT OBSERVED THAT THE ASSESSEES AR HAS STATED THAT THE COMPANY HAS FOLLOWED GUIDANCE NOTE ISSUED BY ICAI AND INPUT S HAVE BEEN DEBITED AT PURCHASE PRICE NET OF EXCISE AND TH E UNUTILIZED CENVAT CREDIT HAS ALSO NOT BEEN TAKEN AS EXPENDITURE, HENCE, THIS APPEARS TO BE IN LINE WITH THE JUDICIAL PRONOUNCEMENTS AS WELL AS THE CIRCULAR MENTIONED AB OVE. HOWEVER, HE DIRECTED THE AO TO VERIFY WHETHER PURCH ASE ARE NET OF EXCISE AND ALSO WHETHER UNUTILIZED CENVAT CR EDIT HAS I.T.A. NO. 79/HYD/2014 M/S SUJANA TOWERS LTD. 6 BEEN DEBITED BEFORE ALLOWING THE SAME. ACCORDINGLY, HE SET ASIDE THE ORDER OF THE AO. 7. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US R AISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LD. CIT IS ERRONEOUS BOTH ON FA CTS AND IN LAW. 2. THE LD. CIT ERRED IN PASSING THE ORDER U/S 263 BECAUSE THE ASSESSMENT ORDER PASSED BY THE AO WAS AFTER APPLICATION OF MIND WITH RESPECT TO THE PROVI SIONS STATED IN THE ACT, THUS THE ORDER PASSED CANNOT BE TREATED AS ERRONEOUS. 3. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE ORDER U/S 263 IS MERELY 'CHANGE IN OPINION'. TH E ORDER U/S 143(3) PASSED BY THE LD. AO DOES NOT IN A NY WAY REPRESENT ERRONEOUS ORDER. THE ACTION OF THE LD . CIT WAS WHOLLY UNREASONABLE, UNCALLED FOR AND BAD I N LAW. 4. THE LD. CIT INITIATED THE PROCEEDINGS U/S 263 WI TH A VIEW TO STARTING FISHING AND ROVING ENQUIRIES IN TH E ORDERS WHICH ARE ALREADY CONCLUDED WITHOUT APPRECIA TING THE FACT THAT THE ORDER PASSED WAS NOT ERRONEOUS. 5. THE LD. CIT HAS INVOKED JURISDICTION U/S 263 WIT HOUT THE BASIC CONDITIONS BEING SATISFIED I.E. ORDER PAS SED IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE. 6. THE LD. CIT ERRED IN PASSING THE ORDER U/S.263 W ITH A DIRECTION TO SET ASIDE THE ASSESSMENT ORDER PASSED DATED 28.12.2010 FOR ENQUIRIES REGARDING DEPRECIATI ON ON PLANT AND MACHINERY AND UNUTILIZED CENVAT CREDIT . 7. THE LD. CIT ERRED IN DISALLOWING THE CLAIM OF ADDITIONAL DEPRECIATION BY STATING THAT HIGHER ALLO WABLE TO THE ASSESSEE COMPANY. 8. THE LD. CIT ERRED IN PASSING THE ORDER U/S.263 W ITH A DIRECTION TO SET ASIDE THE ASSESSMENT ORDER PASSED DATED 28.12.2010 FOR ENQUIRIES REGARDING DEPRECIATI ON ON PLANT AND MACHINERY AND UNUTILIZED CENVAT CREDIT . 9. THE LD. CIT ERRED IN DISALLOWING THE CLAIM OF ADDITIONAL DEPRECIATION BY STATING THAT HIGHER RATE OF DEPRECIATION IS NOT ALLOWABLE TO THE ASSESSEE COMPA NY. I.T.A. NO. 79/HYD/2014 M/S SUJANA TOWERS LTD. 7 10. THE LD. CIT ERRED IN UPHOLDING THE CLAIM OF DEPRECIATION WITHOUT CONSIDERING THE FACT THAT HIGH ER RATE OF DEPRECIATION IS ALLOWABLE TO THE ASSETS UNDER CONSIDERATION AS PER THE ITEM 8(VII) OF THE DEPRECI ATION TABLE OF THE INCOME TAX ACT, 1961. 11.THE LD. CIT OUGHT TO HAVE APPRECIATED THE FACT T HAT THE ASSESSEE IS INTO THE BUSINESS OF MANUFACTURING OF TRANSMISSION TOWERS AND THE ADDITIONAL DEPRECIATION CLAIM ON PLANT AND MACHINERY IS AS PER THE PROVISIO NS OF THE INCOME TAX ACT,1961.. 12. THE LD. CIT ERRED IN NOT CONSIDERING THE FACT T HAT WHEN A SIMILAR ISSUE AROSE IN RESPECT OF ASSESSEE'S GROUP CONCERN, THE AO EXAMINED THE ELIGIBILITY OF T HE DEPRECIATION CLAIM AND PASSED AN ORDER ALLOWING THE SAME. 13.THE LD. CIT HAS ERRED IN OBSERVING THAT UNAVAILE D CENVAT CREDIT OF RSA,97,61,782/- SHOULD FORM PART O F COST OF PURCHASES. 14. THE LD. CIT OUGHT TO HAVE APPRECIATED THE FACT THAT THE TREATMENT GIVEN BY THE ASSESSEE WAS AS PER THE GUIDANCE NOTE ISSUE BY ICAL AND WAS CORRECT AS PER LAW, 15. THE LD. CIT ERRED IN PASSING ORDER U/S 263 WITH OUT CONSIDERING THE FACT THAT THE AO HAS EXERCISED QUAS I- JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT CONCLUSION THAT THE TREATMENT ADOPTED BY THE ASSESSEE IN RESPECT OF UNAVAILED CENVAT CREDIT WAS CORRECT AND AS PER LAW. 16. THE LD. CIT HAS ERRED IN EXERCISING POWERS BEYO ND THE NOTICE ISSUED WITH A VIEW TO STARTING FISHING A ND ROVING ENQUIRIES IN THE ORDER PASSED. 17. THE ASSESSEE MAY ADD, ALTER OR MODIFY ANY OTHER POINT TO THE GROUNDS OF APPEAL AT ANY TIME BEFORE O R AT THE TIME OF HEARING OF THE APPEAL. 8. LD. AR SUBMITTED THAT LD. CIT ERRED IN PASSING T HE ORDER U/S 263 BECAUSE THE AO HAS PASSED ASSESSMENT ORDER AFTER DULY APPLICATION OF HIS MIND. HE FURTHER SUBMITTED THAT CIT HAS NOT BROUGHT ON RECORD ANY FINDING TO SUBSTANTIATE T HAT THE ASSESSMENT ORDER PASSED IS ERRONEOUS OR PREJUDICIAL TO THE I.T.A. NO. 79/HYD/2014 M/S SUJANA TOWERS LTD. 8 INTERESTS OF REVENUE. IT IS MERELY DIRECTION TO AO TO VERIFY THE CLAIM OF THE ASSESSEE. HE RELIED ON THE FOLLOWING CASE LAWS: 1. BHAVANI JEWELLERS VS. ITO, ITA NO. 1004/HYD/2013 . 2. SPECTRA SHARES & SCRIPS PVT. LTD. VS. CIT, 36 TAXMANN 348 (AP) 3. ITO VS. DG HOUSING PROJECTS, 20 TAXMAN 587 (DEL HI) 4. NEW CYBERABAD CITY PROJECTS VS. ITO, 33 TAXMAN 280 (ITAT HYD.) 9. LD. DR, ON THE OTHER HAND, RELIED ON THE ORDER O F CIT. 10. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL FACTS ON RECORD. IT IS OBSERVED THAT THE A SSESSEE BROUGHT TO THE NOTICE OF THE CIT THAT IN RESPECT O F GROUP CONCERN M/S SUJANA METAL PRODUCTS, SIMILAR DEPRECIA TION CLAIM WAS ALLOWED BY THE AO WHEN THE CIT SET ASIDE THE IS SUE TO HIM FOR EXAMINATION, BUT, IN THE GIVEN CASE, THE C IT IGNORED THE SUBMISSIONS OF THE ASSESSEE. WE FIND THAT SIMIL AR ISSUE CAME UP FOR CONSIDERATION BEFORE THE COORDINATE BEN CH OF THIS TRIBUNAL IN THE CASE OF NEW CYBERABAD CITY PROJECTS VS. ITO (SUPRA) WHEREIN THE BENCH HAS QUASHED THE ORDER PAS SED BY THE CIT U/S 263 BY OBSERVING AS UNDER: 13. FROM READING OF SUB-SECTION (1) OF SECTION 263 , IT IS CLEAR THAT THE POWER OF SUO MOTO REVISION CAN BE EXERCISE D BY THE COMMISSIONER ONLY IF, ON EXAMINATION OF THE RECORDS OF ANY PROCEEDINGS UNDER THIS ACT, HE CONSIDERS THAT ANY O RDER PASSED THEREIN BY THE INCOME-TAX OFFICER IS 'ERRONE OUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE RE VENUE'. IT IS NOT AN ARBITRARY OR UNCHARTERED POWER; IT CAN BE EXERCI SED ONLY ON FULFILMENT OF THE REQUIREMENTS LAID DOWN BY SUB- SECT ION (1). THE CONSIDERATION OF THE COMMISSIONER, AS TO W HETHER AN ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, MUST BE BASED ON MATERIAL S ON THE RECORD OF THE PROCEEDINGS CALLED FOR BY HIM. IF THE RE ARE NO MATERIALS ON RECORD ON THE BASIS OF WHICH IT CAN BE SAID THAT THE COMMISSIONER ACTING IN A REASONABLE MANNER COUL D HAVE COME TO SUCH A CONCLUSION, THE VERY INITIATION OF P ROCEEDINGS BY HIM WILL BE ILLEGAL AND WITHOUT JURISDICTION. TH E COMMISSIONER CANNOT INITIATE PROCEEDINGS WITH A VIE W TO STARTING FISHING AND ROVING ENQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED. SUCH ACTION WILL BE AG AINST THE I.T.A. NO. 79/HYD/2014 M/S SUJANA TOWERS LTD. 9 WELL ACCEPTED POLICY OF LAW THAT THERE MUST BE A PO INT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUE S SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT L APSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI- JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. ( PARASHURAM POTTERY WORKS CO. LTD. V. ITO [1977) 106 ITR 1 (SC) AT PAGE 10). 14. FROM THE PROVISIONS OF SECTION 263(1) IT IS CLEAR THAT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NO T IN ACCORDANCE WITH LAW. IF AN INCOME-TAX OFFICER ACTIN G IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS 'ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SECTION DOES NO T VISUALISE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME-TAX OFFICER, WH O PASSED THE ORDER UNLESS THE DECISION IS HELD TO BE ERRONEO US. CASES MAY BE VISUALISED WHERE THE INCOME-TAX OFFICER WHIL E MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUM STANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPT ING THE ACCOUNTS OR BY MAKING SOME ESTIMATE HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ASSESSMENT MADE BY THE OFFICER CON CERNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOULD HAVE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN T HE ONE DETERMINED BY THE INCOME-TAX OFFICER. THAT WOULD NO T VEST THE COMMISSIONER WITH POWER TO RE-EXAMINE THE ACCOU NTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE . IT IS BECAUSE THE INCOME-TAX OFFICER HAS EXERCISED THE QU ASI- JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A CONCLUSION CANNO T BE FORMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIO NER DOES NOT FEEL SATISFIED WITH THE CONCLUSION THERE M UST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT TA X WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WA S JUST HAS BEEN IMPOSED. 15. IN OUR OPINION, IN THE PRESENT CASE, THE LEARNE D ASSESSING OFFICER AFTER DULY CONSIDERING THE EXPLANATION AND INFORMATION FILED IN RESPONSE TO THE NOTICE ISSUED U/S. 143(2) OF THE ACT, ON BEING SATISFIED WITH SUCH EXPLANATIO N CHOSE NOT TO MAKE ANY FURTHER ENQUIRY. ENDLESS ENQUIRY IS NOT POSSIBLE AND IT IS FOR THE LEARNED ASSESSING OFFICER TO DECI DE WHEN TO END THE ENQUIRY. THE LEARNED CIT CANNOT TRANSGRESS THE I.T.A. NO. 79/HYD/2014 M/S SUJANA TOWERS LTD. 10 JURISDICTION UNDER SECTION 263 OF I.T. ACT, 1961 BY MENTIONING THAT NO PROPER ENQUIRY WAS MADE. RELIANCE IN THIS R EGARD IS PLACED ON THE DECISION OF HON'BLE AGRA BENCH OF ITA T IN THE CASE OF RISHI KUMAR GUPTA V. CIT , 90 TTJ 645 WHEREIN HELD THAT THE ASSESSING OFFICER HAVING MADE THE ASSESSME NT AFTER ENQUIRY, AS ADMITTED BY THE CIT IN HIS NOTICE AS WE LL AS IN HIS ORDER U/S. 263, HE WAS NOT JUSTIFIED IN SETTING ASI DE THE ASSESSMENT ON THE GROUND THAT THE ASSESSING OFFICER HAD FAILED TO MAKE 'PROPER ENQUIRY'. FOLLOWING THE ABOVE DECISION, WE QUASH THE ORDER PA SSED BY THE CIT U/S 263 OF THE ACT, CONSIDERING THE FACT TH AT CIT HAS NOT BROUGHT ON RECORD THE FINDINGS TO SUBSTANTIATE THAT THE ORDER PASSED BY AO IS ERRONEOUS AND ALSO IT IS PREJ UDICIAL TO THE INTERESTS OF REVENUE. MERE SET-ASIDE WITHOUT PR OPER FINDINGS BY HIM WILL BE ILLEGAL AND WITHOUT PROPER JURISDICTION. THEREFORE, WE RESTORE THE ORDER OF AO PASSED U/S 14 3(3) OF THE ACT. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN THE OPEN COURT ON 10 TH JANUARY, 2018. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER SD/- (S. RIFAUR RAHMAN) ACCOUNTANT MEMBER HYDERABAD, DATED 10 TH JANUARY, 2018 KV COPY FORWARDED TO: 1. M/S SUJANA TOWERS LTD., C/O P. MURALI & CO., CAS , 6-3- 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82 2. ACIT, CIRCLE 3(1), HYDERABAD 3. CIT - III, HYDERABAD 4 ADDL. CIT - RANGE 3, HYDERABAD 5 THE DR, ITAT, HYDERABAD 6 GUARD FILE I.T.A. NO. 79/HYD/2014 M/S SUJANA TOWERS LTD. 11 S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./ P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER