M/s. Kandhari & Kandhari Pvt. Ltd., UDAIPUR V. CIT, JODHPUR

ITA 825/JODH/1997

• Counselvise Citation: 82523314 RSA 1997
• Duration Of Justice: 14 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-07-2011
• Assessment Year: 1992-1993
• Appeal Filed On: 27-05-1997
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K R MEENA
• Keywords: Principle of natural justice; Assessment record
• Section: 143(3); 263; 28; 2

Judgement Text

ITA NO.825/JU/1997 1 IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH : JODHPUR JODHPUR BENCH : JODHPUR JODHPUR BENCH : JODHPUR JODHPUR BENCH : JODHPUR BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND AND AND AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER SHRI K.D. RANJAN, ACCOUNTANT MEMBER SHRI K.D. RANJAN, ACCOUNTANT MEMBER SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NO.825/JU/1997 ASSESSMENT YEAR : 1992-93 KANDHARI & KANDHARI PVT. LTD., UDAIPUR. VS. THE COMMISSIONER OF INCOME TAX, JODHPUR. ASSESSEE BY : SHRI GOUTAM CHAND BAID REVENUE BY : SHRI K.R. MEENA, CIT,DR O R D E R O R D E R O R D E R O R D E R PER K.D. RANJAN, AM: PER K.D. RANJAN, AM: PER K.D. RANJAN, AM: PER K.D. RANJAN, AM: THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 1992-93 ARI SES OUT OF THE ORDER OF CIT, JODHPUR AGAINST THE ORDER U/S 263 O F THE INCOME-TAX ACT, 1961. THE RELEVANT GROUNDS OF APPEAL ARE REPRODUCED BELOW:- 1. THE LD. CIT, JODHPUR HAD ERRED IN ISSUING DIRE CTIONS U/S 263 OF THE ACT WITHOUT ANY LEGAL BASIS. THE DIRECTIONS ISSUED MAY KINDLY BE VACATED OR ORDER PASSED BE SET ASIDE. 2. THAT YOUR PETITIONER RESERVE THE RIGHT OF ADDITIONS AN ALTERATIONS IN THE GROUNDS OF APPEAL AT THE TIME OF HEARI NG. 2. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE ASSESSE E COMPANY DURING THE YEAR UNDER CONSIDERATION WAS ENGAGED IN TH E BUSINESS OF MANUFACTURING OF HDPE WOVEN SACKS AND ALSO DOING JOB W ORK OF CONVERTING HDPE GRANULES INTO HDPE TAPE WHICH WAS ULTIMATELY USED AS YARN IN WEAVING HDPE FABRIC. THE RETURN OF INCOME FOR THE YEAR UND ER CONSIDERATION WAS FILED ITA NO.825/JU/1997 2 ON 31 ST DECEMBER, 1992 AT AN INCOME OF ` 11,98,404/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 28 TH FEBRUARY, 1995 AT AN INCOME OF ` 23,62,540/-. 3. SUBSEQUENTLY, LD. CIT, JODHPUR, ON PERUSAL OF THE ASSESSM ENT RECORDS NOTED THAT THE ASSESSEE WAS DOING JOB WORK FOR ITS SISTER C ONCERN, NAMELY, M/S PLASTO PACKS INTERNATIONAL PVT. LTD. UNDER AN AGR EEMENT DATED 28 TH DECEMBER, 1984 ACCORDING TO WHICH EXCISE DUTY AND OT HER TAXES, IF ANY, LEVIED AT ANY TIME WERE TO BE REIMBURSED BY THE SISTER CONCERN. THE ASSESSMENT IN THE CASE OF SISTER CONCERN FOR ASSESSMENT YEAR 1 992-93 WAS COMPLETED BY THE AO ON 28 TH FEBRUARY, 1995. IN THE ASSESSMENT ORDER OF SISTER CONCERN, IT WAS OBSERVED BY THE AO THAT M/S PLASTO PACKS INTERNATIONAL PVT. LTD HAD CREDITED AN AMOUNT OF ` 8 LAC TOWARDS T HE ASSESSEE IN EXCISE DUTY ACCOUNT. IT WAS ALSO OBSERVED BY THE AO THAT THE ASSESSEE DID NOT RAISE ANY DEBIT NOTE ON M/S PLASTO PACKS INTERNATIONAL PVT. LTD WITH REGARD TO THE SUM OF ` 8 LAC. HOWEVER, THE AO DID NOT DEAL WITH T HE MATTER IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 1992-93. THE LD. CIT FUR THER NOTED THAT THE ASSESSEE IN FACT HAD DEMANDED ` 8 LAC FROM ITS SISTER CONCERN VIDE LETTER DATED 21 ST MARCH, 1992 WHICH POSITION WAS INDICATED IN THE ORDE R OF THE CIT (A), UDAIPUR DATED 10.2.97 IN APPEAL NO.20/96-97 FO R ASSESSMENT YEAR 1993- 94. LD. CIT, THEREFORE, WAS OF THE VIEW THAT AN AMO UNT OF ` 8 LAC WAS TAXABLE IN THE HANDS OF THE ASSESSEE FOR ASSESSMENT YEAR 1992-93, BU T THE SAME WAS NOT INCLUDED BY THE AO DUE TO FAILURE IN MAKING REQ UISITE INQUIRIES AS PER LAW WITH REGARD TO THE JOB WORK AND AGREEMENT DATED 28 TH DECEMBER, 1984. LD. CIT FURTHER NOTED THAT SIMILAR JOB WORK CHARGES RECEI VABLE FROM M/S PLASTO PACKS INTERNATIONAL PVT. LTD AMOUNTING TO ` 10 LAC FOR ASSESSMENT YEAR 1993-94 ADDED BY THE AO IN THE CASE OF ASSESSEE VIDE ORD ER DATED 18.3.96 AND THAT THE SAID ADDITION WAS CONFIRMED BY THE CIT ( A), UDAIPUR VIDE HIS ORDER DATED 10.2.97. IN VIEW OF THE ABOVE FACTS, LD . CIT (A) CAME TO THE CONCLUSION THAT NON-INCLUSION OF AN AMOUNT OF ` 8 LAC WITHOUT DUE INQUIRIES THE ASSESSMENT ORDER PASSED U/S 143 (3) WAS ERRONEOUS IN SO F AR AS IT WAS ITA NO.825/JU/1997 3 PREJUDICIAL TO THE INTEREST OF THE REVENUE. LD. CIT , THEREFORE, ISSUED NOTICE U/S 263. 4. IN RESPONSE TO THE NOTICE U/S 263, IT WAS SUBMITTED BY T HE ASSESSEE THAT THE ASSESSEE HAD NOT ISSUED ANY DEBIT NOTE FOR ` 8 LAC TO M/S PLASTO PACKS INTERNATIONAL PVT. LTD. HOWEVER, ACCORDING TO THE COUNSEL OF THE ASSESSEE, A REQUEST WAS MADE TO SISTER CONCERN FOR PAYMENT OF DISPUTED LIABILITY CALCULATED AT ` 8 LAC, BUT M/S PLASTO PACKS INTERNATIONAL PVT. LTD REFUSED TO MAKE PAYMENT. ACCORDING TO HIM, THIS WAS D ONE IN THE LIGHT OF THE UNDERTAKING DATED 24 TH AUGUST, 1991 AND ACCORDING TO THE PLAIN LANGUAGE OF THE UNDERTAKING THAT THE ASSESSEE COMPANY WAS NOT ENTITL ED TO RAISE ANY DEMAND OR ISSUE ANY DEBIT NOTE TO THE SISTER COMPANY. IT WAS ALSO ARGUED THAT THE LETTER ISSUED DEMANDING ` 8 LAC WAS ONLY AN INTIMATION FOR THE PROBABLE LIABILITY HAVING NO LEGAL FORCE AND, AS SUCH , NO PROCEEDINGS U/S 263 COULD BE TAKEN WITH REGARD TO THE SAME. IT WAS ALSO P OINTED OUT THAT THE AMOUNT OF ` 8 LAC RELATED TO THE LIABILITY FOR ASSESSME NT YEAR 1985-86 TO 1992-93 AND, AS SUCH, THE SAME COULD NOT BE CONSIDERED TO BE ASSESSEES INCOME FOR ASSESSMENT YEAR 1992-93. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAD NEITHER RECEIVED ANY PAYMENT NOR HAD IT B EEN HELD TO BE A LIABILITY BY THE HONBLE RAJASTHAN HIGH COURT ORDER WHICH MATTER WAS PENDING IN RESPECT OF EXCISE DUTY. IN VIEW OF THE ABOVE ARGU MENTS, THE ASSESSEE REQUESTED TO DROP THE PROCEEDINGS U/S 263 OF THE ACT. 5. LD. CIT, AFTER CONSIDERING THE ABOVE FACTS AND THE EX PLANATION OFFERED BY THE ASSESSEE, OBSERVED THAT IT WAS AN ADMITTED POSITION THAT THE SISTER CONCERN HAD ALSO CREDITED A SUM OF ` 8 LAC IN THE ACC OUNT OF THE ASSESSEE IN RESPECT OF EXCISE DUTY IN THE LIGHT OF ITS AGREEMENT F OR JOB WORK. THE AO, THEREFORE, WAS NOT JUSTIFIED IN NOT TAKING ANY ACTION FOR INCLUDING THE AMOUNT OF ` 8 LAC IN THE HANDS OF THE ASSESSEE IN THE YEAR UNDE R CONSIDERATION, PARTICULARLY WHEN THE ASSESSMENT OF SISTER CONCERN WAS COM PLETED ON THE ITA NO.825/JU/1997 4 SAME DATE. LD.CIT (A) HAD CONFIRMED THE ADDITION OF ` 10 LAC IN THE HANDS OF THE ASSESSEE FOR ASSESSMENT YEAR 1993-94 ON SIMILAR FACTS AND CIRCUMSTANCES AND ON THE BASIS OF SAME AGREEMENT NON-IN CLUSION OF ` 8 LAC AS INCOME FOR THE ASSESSMENT YEAR 1992-93 IN THE ASSESSMENT ORDER HAS TURNED THE ASSESSMENT ORDER ERRONEOUS IN SO FAR AS IT WAS P REJUDICIAL TO THE INTEREST OF THE REVENUE. LD. CIT, THEREFORE, SET ASID E THE ORDER OF AO TO BE MADE DENOVO WITH THE DIRECTIONS TO CARRY OUT NECESSARY VERIFICATI ON IN RESPECT OF THE EXCISE DUTY PAYABLE BY THE SISTER CONCER N. 6. BEFORE US, LD. AR OF THE ASSESSEE SUBMITTED THAT THE UNIT OF THE ASSESSEE WAS LIABLE FOR EXCISE DUTY ON THE GOODS MANUFACTU RED BY IT. THERE WAS DISPUTE BETWEEN THE ASSESSEE AND THE DEPARTMENT OF CE NTRAL EXCISE ON THE ISSUE OF CLASSIFICATION OF INTERMEDIATE AND FINAL P RODUCTS PRODUCED BY THE ASSESSEE. THE CLASSIFICATION OF PRODUCTS BY THE ASSESSEE WAS N OT ACCEPTED BY CENTRAL EXCISE DEPARTMENT AND THE MATTER WAS NOT SE TTLED BETWEEN THE ASSESSEE AND THE EXCISE AUTHORITIES. THE ASSESSEE BEING AGGR IEVED FROM THE STAND OF CENTRAL EXCISE AUTHORITY FILED A WRIT PETITI ON BEFORE THE HONBLE RAJASTHAN HIGH COURT. THE HONBLE RAJASTHAN HIGH COU RT IN AN INTERIM ORDER DATED 28 TH SEPTEMBER, 1989 DECIDED THE MATTER IN FAVOUR OF TH E ASSESSEE. THE EXCISE DEPARTMENT THEREAFTER PROVISIONALLY CLASSIFI ED THE GOODS MANUFACTURED BY THE ASSESSEE UNDER CHAPTER 39. THE AO WHILE PASSING THE ORDER UNDER SECTION 143(3) FOR ASSESSMENT YEAR 1991-92 ACCEPTED THE VIEW OF THE ASSESSEE AND NO ADDITION WAS MADE IN RESPECT OF EX CISE DUTY. THE AO WHILE PASSING THE ASSESSMENT ORDER U/S 143(3) FOR ASSESSMENT Y EAR 1992-93 MADE AN ADDITION FOR THE AMOUNT SHOWN IN THE LIABILI TY IN THE NAME OF EXCISE DEPARTMENT U/S 43-B, BUT NO ADDITION WAS MADE ON ACCO UNT OF ESTIMATED EXCISE DUTY RECOVERABLE ON THE JOB WORK DONE BY THE COMPANY ON BEHALF OF M/S PLASTO PACKS INTERNATIONAL PVT. LTD. IN ASSESSMENT YE AR 1993-94, THE AO MADE ADDITION IN RESPECT OF AMOUNT SHOWN IN THE LIABI LITY IN THE NAME OF EXCISE DEPARTMENT BY INVOKING THE PROVISIONS OF SECTIO N 43-B. THE AO DID ITA NO.825/JU/1997 5 NOT MAKE ANY ADDITION IN RESPECT OF ESTIMATED EXCISE D UTY RECOVERABLE ON JOB WORK DONE ON BEHALF OF M/S PLASTO PACKS INTERNATI ONAL PVT. LTD. LD. AR OF THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE HAD IN FACT DEMANDED ` 8 LAC FROM ITS SISTER CONCERN VIDE LETTER DATED 21 ST MARCH, 1992 AS IS EVIDENT IN THE ORDER OF CIT (A), UDAIPUR 10.2.1997 IN APPEAL F OR ASSESSMENT YEAR 1993- 94. IT IS PERTINENT TO MENTION THAT SIMILAR JOB CHAR GES RECEIVABLE FROM M/S PLASTO PACKS INTERNATIONAL PVT. LTD AMOUNTING TO ` 10 LAC FOR ASSESSMENT YEAR 1993-94 WERE ADDED BY THE AO IN THE CASE OF THE ASSESSEE AND THE SAID ADDITION HAS BEEN CONFIRMED BY THE CIT (A). IN VIEW OF THESE FACTS, IT WAS SUBMITTED BY THE ASSESSEE THAT LD. CIT IN PROCEEDINGS U/S 263 HAS TO JUDGE THE ACTION OF THE AO AS ON THE DATE WHEN THE ASSESSMENT WAS MADE. THE FACTUAL FINDING SUMMARIZED ON A POINT ARE FOR ASSESSMENT YEAR 1993-94 AND SUCH FACTS WERE NOT AVAILABLE ON RECORD WHILE PASSING O RIGINAL ASSESSMENT ORDER. THEREFORE, THERE EXISTED NO CIRCUMSTANCES WHIC H SUGGESTED THAT ANY KIND OF INQUIRY WAS TO BE MADE BY THE AO BEFORE PASSIN G THE ASSESSMENT ORDER. IT HAS ALSO BEEN SUBMITTED THAT IF THE INFORMA TION AVAILABLE ON THE ASSESSMENT RECORDS OF SISTER CONCERN M/S PLASTO PACKS INTERN ATIONAL PVT. LTD IS CONSIDERED AS THE INFORMATION FOR THE PURPOSE OF ASSESSM ENT IN ASSESSEES CASE, THEN, INQUIRY PRESUMED TO HAVE BEEN CONSIDERED I N THE ASSESSMENT OF THE ASSESSEE COMPANY AS THE FACT ON RECORD IS THAT THE ASSE SSEE COMPANY HAD NOT RAISED ANY DEBIT NOTE TO M/S PLASTO PACKS INTER NATIONAL PVT. LTD AND M/S PLASTO PACKS INTERNATIONAL PVT. LTD CREDITED ` 8 L AC ON ITS OWN TOWARDS THE ESTIMATED LIABILITY OF EXCISE DUTY ON JOB WORK OF THE ASSESSEE. IN VIEW OF THESE FACTS, IT HAS BEEN SUBMITTED THAT THE ORDER PASSED BY THE AO CANNOT BE SAID TO BE ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE IN TEREST OF THE REVENUE. 7. ON THE OTHER HAND, LD. CIT-DR RELYING ON THE DECISIO N OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF SMT. RENU GUPTA V S. COMMISSIONER OF INCOME-TAX, SUBMITTED THAT LACK OF PROPER INQUIRY RE NDERS THE ASSESSMENT ORDER ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTERE ST OF THE REVENUE. IT HAS ITA NO.825/JU/1997 6 FURTHER BEEN SUBMITTED THAT THE AO IN THE CASE OF M/ S PLASTO PACKS INTERNATIONAL PVT. LTD HAS NOTED THAT THE ASSESSEES ACCO UNT WAS CREDITED BY ` 8 LAC, BUT THE SAME AO HAD NOT MADE ADDITION IN TH E CASE OF THE ASSESSEE AND NO INQUIRY HAS BEEN MADE BY THE AO, THEREFORE, T HE ORDER PASSED BY THE AO IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. 8. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE THAT DURING THE RELEVANT PREVIOUS YEAR THE ASSESSEE WAS DOING JOB WORK ON WHICH EXCISE DUT Y WAS PAYABLE. SUCH EXCISE DUTY WAS TO BE RECEIVED BY THE ASSESSEE IN TE RMS OF AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND ITS SISTER CONCERN. THERE IS ALSO NO DISPUTE THAT M/S PLASTO PACKS INTERNATIONAL PVT. LTD HA S CREDITED THE ACCOUNT OF THE ASSESSEE ON ACCOUNT OF EXCISE DUTY PAYABLE BY THE M. WE ALSO FIND ON RECORD THE LETTER WRITTEN BY M/S KANDHARI & KANDHARI PVT. LTD., THE ASSESSEE, ON 21 ST MARCH, 1992 ADDRESSED TO M/S PLASTO PACKS INTERNATIONAL PVT. LTD. REQUESTING THEM TO MAKE IMMEDIATE PAYMENT OF ` 8 LAC . IN THIS LETTER, IT WAS CLARIFIED THAT IN CASE OF FAILURE, THE INTEREST/CHARG ES AND OTHER CONSEQUENCES SHALL BE AT THEIR ACCOUNT. LD. CIT (A) FOR ASSESSMENT Y EAR 1993-94 HAS REFERRED TO THE LETTER DATED 21 ST MARCH, 1992. THEREFORE, THE ASSESSEE CANNOT PLEAD IGNORANCE THAT HE HAD NOT ISSUED LETTER DATED 2 1 ST MARCH, 1992. M/S PLASTO PACKS INTERNATIONAL PVT. LTD. HAD CREDITED THE ACCOUNT OF THE ASSESSEE ON ACCOUNT OF EXCISE DUTY LIABILITY. SINCE THE ASSESSEE WAS MAKING PAYMENT TO EXCISE DEPARTMENT ON GOODS MANUFACTURED, THE REIMB URSEMENT OF THE EXCISE DUTY PAID WOULD BE INCOME IN THE HANDS OF THE ASSESSEE. THE CONTENTION OF THE ASSESSEE THAT THERE WAS DISPUTE BETWEEN EXCISE DEPARTMENT AND THE ASSESSEE ABOUT LEVY OF EXCISE DUTY ON INTERMEDIATE PRODUCTS HAS NOTHING TO DO WITH THE LIABILITY WHICH M /S PLASTO PACKS INTERNATIONAL PVT. LTD HAD INCURRED TOWARDS THE ASSESSEE . THE AO HAD PASSED ORDER IN THE CASE OF M/S PLASTO PACKS INTERNATIONA L PVT. LTD AND WAS AWARE OF THE FACT THAT ` 8 LAC HAS BEEN CREDITED IN THE ACCOUNTS OF THE ITA NO.825/JU/1997 7 ASSESSEE BY THEM. HAVING KNOWN THIS FACT, THE AO WAS DUT Y BOUND TO CONDUCT INQUIRY IN THE CASE OF THE ASSESSEE AS TO WHY THE ASSESSEE HAS FAILED TO CREDIT THE EXCISE DUTY REIMBURSABLE FROM M/S PLASTO PACKS INTERNATIONAL PVT. LTD. THEREFORE, BECAUSE OF THE FAILURE ON THE PART OF THE AO TO MAKE INQUIRIES, THE ORDER PASSED BY THE AO IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE HONBLE DELHI HIGH COURT IN THE CASE OF G.V. ENTERPRISES VS. ADDL. CIT 99 ITR 375 HAS HELD THAT THE INCOME-TAX OFFICER IS NOT ONLY AN ADJUDICATOR, BUT ALSO AN INVESTIGATOR. H E CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER , BUT CALLS FOR FURTHER INQUIRY. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN THE RETURN WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOK E AN INQUIRY. IT IS BECAUSE IT IS INCUMBENT ON THE INCOME-TAX OFFICER TO FURTHER INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MAK E SUCH AN INQUIRY PRUDENT THAT THE WORD ERRONEOUS IN SECTION 263 INCL UDES THE FAILURE TO MAKE SUCH AN INQUIRY. THE ORDER BECOMES ERRONEOUS BE CAUSE SUCH AN INQUIRY HAS NOT BEEN MADE AND NOT BECAUSE THERE IS ANY THING WRONG WITH THE ORDER IF ALL THE FACTS STATED THEREIN ARE ASSUMED TO BE CORRECT. 9. THE HONBLE SUPREME COURT IN THE CASE OF MALABAR IND USTRIAL COMPANY VS. CIT 243 ITR 83 HAS HELD THAT THE COMMISSIONER OF IN COME-TAX HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE AO SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IF ONE OF THEM IS ABSENT IF ORDER OF THE INCOME-TAX OF FICER IS ERRONEOUS, BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRON EOUS, BUT IS PREJUDICIAL TO THE REVENUE RECOURSE CANNOT BE HAD TO SECTION 263 (1) OF THE INCOME TAX ACT. THE PROVISIONS OF SECTION 263 CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE AO. IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THIS SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSE D WITHOUT APPLYING ITA NO.825/JU/1997 8 THE PRINCIPLE OF NATURAL JUSTICE OR WITHOUT APPLICAT ION OF MIND. THE PHRASE PREJUDICIAL TO THE INTEREST OF REVENUE IS NOT AN EX PRESSION OF WORD AND IS NOT DEFINED IN THE ACT. UNDERSTOOD IN ITS ORDINARY MEANING, IT IS OF WIDE IMPORT AND IS NOT CONFINED TO LOSS OF TAX. IF DUE TO AN ERRONEOUS ORDER OF INCOME-TAX OFFICER THE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTEREST OF REV ENUE. 10. IN THE CASE BEFORE US, THE SAME AO HAD PASSED ORDER ON T HE SAME DATE IN THE CASE OF M/S PLASTO PACKS INTERNATIONAL PVT. LTD AND WAS AWARE OF THE FACT THAT M/S PLASTO PACKS INTERNATIONAL PVT. LTD. HAD CREDITED THE ASSESSEES ACCOUNT BY EXCISE DUTY REIMBURSABLE TO THE ASSESSEE. THE AO WAS ALSO AWARE OF THE FACT THAT THERE WAS AN AGREEMENT BETWEE N THE ASSESSEE AND M/S PLASTO PACKS INTERNATIONAL PVT. LTD. FOR REIMBURSEM ENT OF SUCH LIABILITY. LD. AO WHILE MAKING ASSESSMENT IN THE CASE OF THE ASSESSEE H AD FAILED TO MAKE INQUIRY AS TO WHY THE AMOUNT OF EXCISE DUTY OF ` 8 LAC PAYABLE BY M/S PLASTO PACKS INTERNATIONAL PVT. LTD. WAS NOT CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THEREFORE, THE ORDER PASSED BY THE AO W ITHOUT MAKING INQUIRY IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE IN TEREST OF THE REVENUE. RESPECTFULLY FOLLOWING THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF G.V. ENTERPRISES LTD. (SUPRA) AND HONBLE SUPREME COUR T DECISION IN THE CASE OF MALABAR INDUSTRIAL COMPANY (SUPRA), IT IS HELD THA T THE ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE CONTENTION OF THE ASSESSEE THAT THE ISSUE OF LETTER DATE D 21 ST MARCH, 1992 HAS BEEN MENTIONED BY THE LD. CIT SUBSEQUENT TO PASSING OF SUCH LETTER IS OF NO CONSEQUENCE WHEN THERE IS NO DENIAL ON THE PART OF TH E ASSESSEE HAVING WRITTEN SUCH LETTER. THIS LETTER IS VERY MUCH AVAILAB LE ON FILE. THEREFORE, THE CONTENTION RAISED BY LD. AR OF THE ASSESSEE DESERVES TO BE REJECTED. 11. IN VIEW OF THE ABOVE FACTS, IT IS HELD THAT LD. C IT WAS JUSTIFIED IN CANCELLING THE ORDER AND DIRECTING THE AO TO VERIFY THE FACTS AND DECIDE THE ITA NO.825/JU/1997 9 MATTER DENOVO. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE CIT U/S 263 CANCELLING THE ORDER OF THE AO. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.07.2011. [RAJPAL YADAV] [K.D. RAN JAN] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 28 TH JULY, 2011 DK COPY FORWARDED TO:- 1. APPELLANT. 2. RESPONDENT 3. INCOME-TAX OFFICER, 4. CIT 5. DR 6. GUARD FILE ASSTT. REGISTRAR ITAT, JODHPUR