M/s Sarawati Glass Industries, Firozabad V. CIT, Agra

ITA 89/AGR/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0474 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-07-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 06-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SEEMA RAJ
• Assessee Lawyers: NAVIN GARGH
• Keywords: Depreciation; Opportunity of being heard; Period of limitation; Reason to believe; Set aside
• Section: 43B; 143(3); 6; 263; 63; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI P.K. BANSAL, ACCOUNTANT MEMBER ITA NO.89/AGR/2009 ASST. YEAR: 2005-06 M/S SARASWATI GLASS INDUSTRIES, VS. THE COMMISSI ONER OF INCOME-TAX-II, SHEETAL KHAN ROAD, AGRA. FIROZABAD. (PAN : AASFS 8844 G). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVIN GARGH, ADVOCATE RESPONDENT BY : SMT. SEEMA RAJ, CIT (D.R.) ORDER PER P.K. BANSAL, A.M.: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT DATED 20.01.2009 PASSED UNDER SECTION 263 OF THE INCOME-TAX ACT, 196 1 (THE ACT HEREINAFTER). 2. THE BRIEF FACTS OF THE CASE ARE THAT THE CIT ISS UED NOTICE UNDER SECTION 263 OF THE ACT TO THE ASSESSEE SATING THAT THERE IS A CHANGE IN CONST ITUTION OF THE FIRM IN VIEW OF AUDIT REPORT PARA 7(B) ANNEXURE-1. IT WAS NOTICED THAT THE PARTNER S MT. VIMLA DEVI IS OUTGOING PARTNER AND IN HER PLACE, NEW PARTNER NAMELY SHRI CHANDRA KUMAR JAIN H AS BEEN INTRODUCED IN THE YEAR UNDER ASSESSMENT. A PERUSAL OF THE RETURN FILED BY THE A SSESSEE REVEALS THAT NEITHER THE ASSESSEE HAS FURNISHED ANY CERTIFIED COPY OF THE REVISED PARTNER SHIP DEED NOR THE A.O. HAS ISSUED ANY QUERY ON THIS ISSUE. THUS, THE ASSESSEE FAILED TO COMPLY WI TH THE PROVISIONS OF SECTION 184(2)(B) READ WITH SECTION 184(4) AND, THEREFORE, THE FIRM SHOULD HAVE ASSESSED AS AN AOP. IT WAS ALSO STATED THAT 2 ACCORDINGLY THE SALARY TO THE PARTNER AMOUNTING TO RS.1,02,000/- AND INTEREST TO PARTNERS AMOUNTING TO RS.4,51,597/- SHOULD HAVE BEEN ADDED. IT WAS ALSO MENTIONED IN THE NOTICE THAT THE SCHEDULE D OF AUDIT REPORT PART OF BALANCE SHEET ANNEXED WITH RETURN REVEALS THAT THE ASSESSEE HAD SHOWN A LIABILITY OF RS.1,05,000/- ON ACCOUNT O F BONUS PAYABLE IN THE BALANCE SHEET WHICH HAD BEEN DEBITED IN THE PROFIT & LOSS ACCOUNT. THE EVIDENCE FOR THE PAYMENT OF BONUS SHOULD HAVE BEEN ENCLOSED ALONG WITH THE RETURN AND, THERE FORE, THE SAID AMOUNT WAS TO BE ADDED UNDER SECTION 43B. THE PROFIT & LOSS ACCOUNT AND HANDWRI TTEN COPY OF COMPARATIVE CHART SHOWING THE EXPENSES FOR FINANCIAL YEAR 2003-04 & 2004-05 REVEA LS THAT THE ASSESSEE HAS NOT MADE ANY EXPENSES ON DIESEL DURING THE YEAR. THIS PROVES TH AT THE EXPENSES OF RS.29,600/- PLUS RS.43,348/- DEBITED TO THE P&L ACCOUNT RELATES TO T HE GENERATOR SHOULD NOT BE ALLOWED AS THE GENERATOR WAS NOT PUT TO USE IN THIS YEAR. THUS, T HE CIT WAS OF THE OPINION THAT THE ORDER PASSED BY THE A.O. WAS ERRONEOUS AND PREJUDICIAL TO THE IN TEREST OF THE REVENUE. IN REPLY THERETO, THE ASSESSEE SUBMITTED BEFORE THE CIT THAT SHRI CHANDRA KUMAR JAIN (HUSBAND OF LATE SMT. VIMLA DEVI) WAS INTRODUCED AS NEW PARTNER IN PLACE OF SMT . VIMLA DEVI WHO EXPIRED ON 23.02.2004 VIDE PARTNERSHIP DEED DATED 24.02.2004. THE CERTIF IED COPY OF THE SAME WAS FILED BY THE ASSESSEE VIDE LETTER DATED 26.02.2004 BEFORE THE A.O. ALONG WITH DEATH CERTIFICATE. THERE WAS NO REQUIREMENT OF SUBMITTING THE SAME AGAIN. IN RESPE CT OF QUERY REGARDING GENERATOR REPAIR EXPENSES AND DEPRECIATION DEBITED TO THE P&L ACCOUN T, THE ASSESSEE DID NOT SUBMIT ANY REPLY. IN RESPECT OF BONUS PAYABLE SHOWN AS LIABILITY IN THE BALANCE SHEET, THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD PAID THE BONUS ON 31.10.2005 WITHIN TH E DUE DATE OF FURNISHING OF RETURN UNDER SECTION 139(1). HE ALSO ENCLOSED THE PROOF FOR THE PAYMENT OF BONUS IN THE SHAPE OF COPY OF CASH BOOK AND COPY OF LEDGER. IT WAS ALSO POINTED OUT T HAT ALL THESE EVIDENCES WERE SUBMITTED BEFORE THE A.O. WHICH WERE DULY EXAMINED BY HIM. SINCE TH E PAYMENT WAS MADE WITHIN THE DUE DATE OF 3 FILING THE RETURN, THEREFORE, THE AUDITOR IN FORM 3 CD IN CLAUSE 21 HAD ALSO NOT REPORTED THE SAME. THE AUDITOR HAS CLEARLY STATED THAT THE PAYM ENT WAS MADE BY THE ASSESSEE ON 31.10.2005. THE CIT WAS NOT SATISFIED WITH THE REPLY OF THE ASS ESSEE AND ACCORDINGLY HE SET ASIDE THE ASSESSMENT AND DIRECTED THE A.O. TO MAKE THE ASSESS MENT AFRESH AFTER GIVING OPPORTUNITY TO THE ASSESSEE. 3. THE LD. A.R. BEFORE US VEHEMENTLY CONTENDED THAT THERE WAS A CHANGE IN THE CONSTITUTION OF THE FIRM. THE ASSESSEE HAS SUBMITTED PARTNERSHI P DEED VIDE HIS LETTER WRITTEN TO THE A.O. ON 26.02.2004, COPY OF WHICH IS AVAILABLE AT PAGE 13. COPY OF PARTNERSHIP DEED IS AVAILABLE AT PAGE NOS.7 TO 12. IT WAS POINTED OUT THAT THIS CHANGE W AS ALSO DULY RECORDED BY THE ASST. COMMISSIONER TRADE TAX, COPY OF WHICH IS AVAILABLE AT PAGE NOS.14 OF THE PAPER BOOK. BY REFERRING TO SECTION 184 IT WAS POINTED OUT THAT TH ERE WAS NO REQUIREMENT FOR SUBMITTING THE PARTNERSHIP DEED FOR THE CHANGE IN THE CONSTITUTION AGAIN. THE ASSESSEE HAD DULY INTIMATED AND THIS FACT WAS ON RECORD OF THE A.O. ACCORDINGLY TH E A.O. HAS ACCEPTED THE CHANGE IN THE CONSTITUTION. IN RESPECT OF THE BONUS PAYABLE, IT WAS SUBMITTED THAT THE BONUS WAS PAID BY THE ASSESSEE ON 31.10.2005 I.E. WITHIN THE DUE DATE OF FURNISHING OF RETURN. OUR ATTENTION WAS ALSO DRAWN TO THE COPY OF ASSESSMENT ORDER WHICH IS AVAI LABLE AT PAGE NOS.26 TO 27, POINTING OUT THAT ALTHOUGH THIS HAS DULY BEEN EXAMINED BY THE A.O., A BOUT THE GENERATOR IT WAS CONTENDED THAT THE ASSESSEE HAS SUBMITTED ALL THE DETAILS IN RESPECT O F ALL EXPENSES AND THE SAME HAS DULY BEEN VERIFIED BY THE A.O. NOT ONLY THIS, THE NEW GENERA TOR WAS DULY SHOWN BY THE ASSESSEE IN THE BALANCE SHEET. REFERRING TO THE ORDER PASSED UNDER SECTION 143 READ WITH SECTION 263 OF THE ACT, IT WAS CONTENDED THAT THE A.O. HAS FRAMED THE ASSES SMENT BUT HAS NOT DISALLOWED NEITHER THE BONUS PAYABLE NOR THE GENERATOR EXPENSES ALTHOUGH H E TREATED THE FIRM TO BE AN AOP ON THE BASIS 4 THAT THE ASSESSEE HAS SUBMITTED COPY OF THE PARTNER SHIP DEED EXECUTED ON 24.02.2004 VIDE LETTER DATED 26.02.2004 AND THE SAID LETTER WAS FILED DURI NG THE A.Y. 2004-05 AND IS NOT APPLICABLE TO THE A.Y. 2005-06. IT WAS VEHEMENTLY CONTENDED THAT THE PARTNERSHIP DEED WAS ON RECORD. THE CIT HAS ALSO COME TO KNOW FROM THE RECORD. OTHERWI SE ALSO IT MAY BE A TECHNICAL DEFAULT WHICH DO NOT MAKE THE ASSESSMENT TO BE ERRONEOUS. 4. LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDER OF THE CIT AND VEHEMENTLY CONTENDED THAT THE ASSESSEE SHOULD HAVE SUBMITTED THE PARTNERSHIP DEED DURING THE A.Y. 2005-06 NOT DURING THE A.Y. 2004-05. CHANGE OF PARTNERSHIP IN THE CONSTIT UTION OF PARTNERS EFFECTED W.E.F. 01.04.2006 AND WAS NOT APPLICABLE TO THE A.Y. 2004-05. THUS T HERE WAS AN ERROR IN THE ORDER OF THE A.O. THE CIT HAS RIGHTLY SET ASIDE THE ORDER AND RESTORE D THE ISSUE TO THE FILE OF THE A.O. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS, GONE THROUGH THE ORDERS OF THE TAX AUTHORITIES AS WELL AS THE ORDER OF THE C.I.T. PASS ED U/S 263 ALONG WITH THE CASE LAWS CITED BEFORE US. BEFORE DECIDING THE ISSUE, IT IS NECESSARY TO R EFER TO THE PROVISIONS OF SECTION 263 WHICH IS BEING REPRODUCED HEREUNDER :- 263. (1) THE COMMISSIONER MAY CALL FOR AND EXA MINE 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 IN TERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD A ND AFTER MAKING 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 O R MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASS ESSMENT. EXPLANATION.-FOR THE REMOVAL OF DOUBTS, IT IS HEREB Y DECLARED THAT, FOR THE PURPOSES OF THIS SUB-SECTION, - (A) AN ORDER PASSED ON OR BEFORE OR AFTER THE 1ST D AY OF JUNE, 1988 BY THE ASSESSING OFFICER SHALL INCLUDE - 5 (I) AN ORDER OF ASSESSMENT MADE BY THE ASSISTANT CO MMISSIONER OR DEPUTY DIRECTOR OR THE INCOME-TAX OFFICER ON THE BA SIS OF THE DIRECTIONS ISSUED BY THE JOINT COMMISSIONER UNDER S ECTION 144A; (II) AN ORDER MADE BY THE JOINT COMMISSIONER IN EXE RCISE 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 COMM ISSIONER OR DIRECTOR GENERAL OR COMMISSIONER AUTHORISED BY THE BOARD IN THIS BEHALF UNDER SECTION 120; (B) 'RECORD' SHALL INCLUDE AND SHALL BE DEEMED ALWA YS TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PROCEEDING UNDER THIS ACT A VAILABLE 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 AN Y APPEAL FILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988, THE POWE RS OF THE COMMISSIONER UNDER THIS SUB-SECTION SHALL EXTEND AND SHALL BE DE EMED 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) AF TER 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-SECTI ON (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 C OURT. EXPLANATION.-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 PROCEED ING UNDER THIS SECTION IS STAYED BY AN ORDER OR INJUNCTION OF ANY COURT SHALL BE EXCLUD ED. 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 COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORDS O F ANY PROCEEDINGS UNDER THE ACT AND FOR THIS PURPOSE HE NEED NOT TO SHOW ANY REASON OR RECO RD ANY REASON TO BELIEVE. IT IS A PART OF HIS ADMINISTRATIVE POWER TO CALL FOR THE RECORD AND EXA MINE THEM RELATING TO ANY ASSESSEE. SECONDLY 6 HE MAY CONSIDER ANY ORDER PASSED BY THE ASSESSING O FFICER AS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THIS CONSIDERATION HAV ING REGARD TO THE LANGUAGE OF SECTION 263 APPARENTLY IS A CONSIDERATION WHICH HE EXERCISES BY CALLING FOR AND EXAMINING THE RECORD AVAILABLE AT THIS STAGE. THERE IS NO QUESTION OF TH E ASSESSEE TO APPEAR AND MAKE SUBMISSION. THIRDLY, IF AFTER CALLING FOR AND EXAMINING THE REC ORDS THE COMMISSIONER CONSIDERS THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE I S BOUND TO GIVE AN OPPORTUNITY TO THE ASSESSEE OF BEI NG HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH ENQUIRY AS HE MAY DEEM FIT, PASS SUCH ORD ER THEREON AS THE CIRCUMSTANCES OF THE CASE MAY JUSTIFY INCLUDING AN ORDER ENHANCING OR MODIFYI NG 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 263 CAN ENHANCE OR MODIFY THE ASSESSMENT. 7. IT IS A SETTLED LAW THAT FOR INVOKING THE PROVIS IONS OF SECTION 263 THE CIT MUST SATISFY BOTH THE CONDITIONS THAT THE ORDER PASSED BY THE ASSESSI NG OFFICER IS ERRONEOUS AND ALSO THAT IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IF ONE OF THE CONDITIONS IS ABSENT, THE ORDER PASSED BY THE CIT BY INVOKING THE PROVISIONS OF SECTION 263 W ILL NOT BE LEGAL. THE TERM ERRONEOUS HAS NOT BEEN DEFINED UNDER THE INCOME-TAX ACT BUT IT IS WE LL 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 ASSES SING OFFICER AFTER MAKING THE ENQUIRIES AND EXAMINING THE RECORDS, TAKEN ONE OF THE POSSIBLE VI EWS, IT CANNOT BE SAID THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS. 7 8. IT IS ALSO APPARENTLY CLEAR THAT THE POWER OF TH E CIT ARE THREE FOLD. ONE, PRIOR TO THE INITIATION OF THE PROCEEDINGS U/S 263. SECOND, AT T HE TIME OF INITIATION OF THE PROCEEDINGS. THIRD, THE FINAL OUTCOME AFTER THE INITIATION OF THE PROCE EDING. POWER OF THE CIT PRIOR TO THE INITIATION INCLUDES CALL FOR AND EXAMINE THE RECORDS OF ANY PROCEEDINGS UNDER THIS ACT. THE WORD RECORD IS VERY IMPORTANT, BECAUSE ON THE BASIS OF THE RECO RD 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 OP PORTUNITY 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 FORMS AN OPINION ON THE BASIS OF RECOR D THAT THE ORDER PASSED IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE WORD R ECORD HAS BEEN DEFINED UNDER EXPLANATION (B) OF SECTION 263 TO MEAN THAT THE RECORD SHALL INCL UDE AND SHALL BE DEEMED ALWAYS TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PROCEEDING UND ER THIS ACT AVAILABLE AT THE TIME OF EXAMINATION BY THE COMMISSIONER. THE EXAMINATION OF THE RECORD IS TO BE CARRIED BY THE COMMISSIONER PRIOR TO THE FORMING AN OPINION THAT T HE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. ONCE THE RECORD IS EXAMIN ED AND THE CIT ON THE BASIS OF EXAMINATION OF THE RECORD FORMS AN OPINION THAT THE ORDER IS ERRON EOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE IS EMPOWERED AFTER GIVING THE OPPORTUNI TY 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 B Y THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AFTER EX AMINING 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 TH AT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 8 9. NOW, THEREFORE, IN THIS CASE, THE QUESTION ARISE S WHAT WAS THE MATERIAL BEFORE CIT ON THE BASIS OF WHICH CIT FORMED AN OPINION THAT THE ORDER PASSED BY THE A.O. WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. WHAT W AS THE RECORD AVAILABLE WITH THE CIT. IN THE NOTICE THE CIT HAS CLEARLY MENTIONED THAT THERE IS A CHANGE IN THE CONSTITUTION OF THE FIRM IN VIEW OF THE AUDIT REPORT PARA 7(B) ANNEXURE-1 WHICH REVE ALS THAT SMT. VIMLA DEVI IS OUTGOING PARTNER WHO WAS SHARING THE FIRM AT 12% AND IN HER PLACE SH RI CHANDRA KUMAR JAIN WAS INTRODUCED IN THE SAME CAPACITY. SECTION 184(4) NO DOUBT REQUIR ES THAT WHERE ANY SUCH CHANGE HAD TAKEN PLACE IN THE PREVIOUS YEAR, THE FIRM SHALL FURNISH A CERTIFIED COPY OF THE REVISED INSTRUMENT OF PARTNERSHIP ALONG WITH THE RETURN OF INCOME FOR THE ASSESSMENT YEAR RELEVANT TO SUCH PREVIOUS YEAR AND ALL THE PROVISIONS OF THIS SECTION SHALL A PPLY ACCORDINGLY. IN THE CASE OF THE ASSESSEE FIRM, SMT. VIMLA DEVI EXPIRED ON 24.02.2004 AND IN HER PLACE NEW PARTNER SHRI CHANDRA KUMAR JAIN ENTERED INTO THE PARTNERSHIP VIDE PARTNERSHIP DEED EXECUTED ON 24.02.2004. CERTIFIED COPY OF THE DEED WAS FILED BY THE ASSESSEE VIDE LETTER D ATED 26.02.2004 ALTHOUGH THE PARTNERSHIP DEED WAS EFFECTIVE W.E.F. 01.04.2004. THIS FACT HAS ALS O BEEN MENTIONED BY THE AUDITOR IN HIS REPORT IN FORM 3CD THAT THERE HAD BEEN A CHANGE IN THE CON STITUTION OF THE FIRM. IN OUR OPINION, ONCE THE ASSESSEE HAS SUBMITTED COPY OF THE PARTNERSHIP DEED BEFORE THE A.O., EVEN IF IT MAY NOT BE ALONG WITH RETURN OF INCOME, IT CAN NOT BE SAID THA T THE ASSESSEE HAS NOT SUBMITTED COPY OF THE PARTNERSHIP DEED. THE PROVISION OF SECTION 184(4), IN OUR OPINION, IS A PROCEDURAL PROVISION. THE ONLY PURPOSE OF THIS PROVISION IS THAT THE A.O. MUS T NOTE, WHILE FRAMING THE ASSESSMENT, THAT THERE HAD BEEN CHANGE IN THE CONSTITUTION OF THE FI RM. MERELY THE ASSESSEE HAS SUBMITTED COPY OF THE PARTNERSHIP DEED PRIOR TO THE FILING OF THE RET URN, IN OUR OPINION, IT CANNOT BE SAID THAT THE ASSESSEE HAS NOT COMPLIED WITH THE PROVISION OF SEC TION 184(4). TAKING OF THIS VIEW, IN OUR OPINION, WILL BE VERY TECHNICAL. IT IS A SETTLED L AW THAT WHEN THE TECHNICAL CONSIDERATION AND 9 SUBSTANCE OF JUSTICE ARE PITTED AGAINST EACH OTHER, SUBSTANCE OF JUSTICE HAS TO BE PREFERRED. THE A.O. WHILE FRAMING THE ASSESSMENT WAS FULLY AWARE O F THE COPY OF THE AUDIT REPORT IN FORM 3CD AS WELL AS PARTNERSHIP DEED WHICH WAS IN THE RECORD OF THE DEPARTMENT THAT THERE HAD BEEN CHANGE IN THE CONSTITUTION OF THE FIRM. THE LEGISL ATURE HAS NOT RELATED THE MEANING OF THE WORD RECORD TO A PARTICULAR ASSESSMENT YEAR. HAD THAT BEEN THE INTENTION OF THE LEGISLATURE, THEY WOULD HAVE USED THE WORD ALL RECORDS RELATING TO A NY PROCEEDINGS OF THE ASSESSMENT YEAR .. THEREFORE, IN OUR OPINION, THE CIT WAS NOT CORRECT IN HOLDING THAT THERE WAS AN ERROR IN THE ORDER OF THE A.O. AS THE ASSESSEE HAS NOT FI LED COPY OF THE NEW PARTNERSHIP DEED ALONG WITH THE RETURN. THE ORDER PASSED BY THE A.O. CANNOT BE HELD TO BE ERRONEOUS ON THIS BASIS. . NO ORDER OF THE TRIBUNAL OR HIGH COURT WAS BROUGHT TO OUR KN OWLEDGE BY THE LD. D.R. WHICH MAY CLEARLY HOLD THAT SUBMISSION OF THE PARTNERSHIP DEED BY THE ASSESSEE BEFORE FILING OF THE RETURN FOR THE CHANGE OF CONSTITUTION IS NOT VALID. 10. NOW COMING TO THE OTHER POINT, THERE IS PLENTY OF EVIDENCE INCLUDING AUDITORS CERTIFICATE WHICH PROVES THAT THE ASSESSEE PAID THE BONUS ON 31 .10.2005 I.E. WITHIN THE DUE DATE OF FILING OF RETURN UNDER SECTION 139(1). PROVISO TO SECTION 43 B REQUIRES THE ASSESSEE TO MAKE THE PAYMENT BEFORE THE DUE DATE, APPLICABLE IN EACH CASE, OF FU RNISHING RETURN UNDER SECTION 139. MERELY THE ASSESSEE HAS FILED THE RETURN ON 28.10.2005 WILL NO T DEBAR THE ASSESSEE FROM CLAIMING THE DEDUCTION UNDER SECTION 43B IN RESPECT OF BONUS ACT UALLY PAID BY HIM. ON THIS BASIS ALSO, IN OUR OPINION, THE ORDER PASSED BY THE A.O. CANNOT BE REG ARDED TO BE ERRONEOUS. 11. REGARDING GENERATOR EXPENSES AND DEPRECIATION W HICH HAS BEEN DEBITED TO P&L ACCOUNT, IN OUR OPINION, IT CANNOT BE SAID THAT THE ORDER PA SSED BY THE A.O. IS ERRONEOUS. THE A.O. HAS 10 DULY EXAMINED THE DETAILS SUBMITTED Y THE ASSESSEE AND EVEN IN THE SUBSEQUENT ASSESSMENT WHICH WAS PASSED UNDER SECTION 143(3) READ WITH SECTION 2 63 THE A.O. HAS NOT DISALLOWED THIS EXPENDITURE. THIS IS SETTLED LAW THAT IN VIEW OF T HE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO., 243 ITR 83 THAT IF THERE ARE TWO VIEWS POSSIBLE AND THE A.O. HAS TAKEN ONE VIEW FOR WHICH THE CIT DOS NOT AGREE, THE ORDER PASSED BY THE A.O. CANNOT BE TREATED TO BE ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF T HE REVENUE UNLESS AND UNTIL THE VIEW TAKEN BY THE A .O. IS UNSUSTAINABLE IN LAW. THE A.O. AFTER A PPRECIATING THE SUBMISSIONS MADE BY THE ASSESSEE FROM TIME TO TIME DID NOT MAKE ANY ADDITIO N AND ASSESSED THE FIRM AS A FIRM AND ACCORDINGLY ALLOWED DEDUCTION IN THE CASE OF SALARY AND INTEREST PAID TO THE PARTNERS. MERELY THAT THE A.O. HAS NOT DISCUSSED ABOUT THE ENQUIRY CARRIE D OUT AND ITS OUTCOME DOES NOT MEAN THAT THE ORDER IS ERRONEOUS. THERE IS NO PROVISION UNDER TH E INCOME-TAX ACT WHICH REQUIRES THAT THE ASSESSEE SHOULD DIRECT THE A.O. IN WHAT MANNER THE A.O. SHOULD WRITE IN THE ASSESSMENT ORDER. IF THE A.O. HAS MADE ENQUIRY AND RAISED QUERY AND A SSESSEE SUBMITTED REPLY THEREOF AND A.O. IS SATISFIED THEREWITH, HE NEED NOT TO MAKE ALL THESE THINGS IN THE ASSESSMENT ORDER. IT IS ONLY WHERE THE A.O. DID NOT AGREE WITH THE SUBMISSIONS O F THE ASSESSEE AND HE WANT TO MAKE CERTAIN DISALLOWANCE AND ADDITION HE SHOULD MENTION IN THE ASSESSMENT ORDER BECAUSE THE DISALLOWANCE AND ADDITIONS MADE BY HIM WILL IN THAT CASE TO BE S UBSTANTIATED BY HIS REASONING. WE ALSO NOTED FROM THE ORDER OF CIT THAT THE CIT HAS MERELY SET A SIDE THE ASSESSMENT ORDER AND DIRECTED THE A.O. TO MAKE A FRESH ASSESSMENT. HE HAS NOT GIVEN ANY SPECIFIC DIRECTION TO THE A.O. WHICH MAY POINT OUT THAT THE FINDING GIVEN BY THE A.O. WAS NO T CORRECT OR NOT IN ACCORDANCE WITH THE LAW. THIS DIRECTION ALSO DO NOT PROVE THAT THERE IS ERRO R IN THE ASSESSMENT. WE, THEREFORE, ARE OF THE VIEW THAT THE ORDER PASSED BY THE A.O. IS NOT ERRON EOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ACCORDINGLY WE QUASH THE ORDER PASSED U NDER SECTION 263. 11 12. SINCE WE HAVE ALREADY QUASHED THE ORDER PASSED UNDER SECTION 263, IN OUR OPINION, THERE IS NO NEED TO ADJUDICATE THE GROUNDS TAKEN BY THE A SSESSEE ON MERIT. 13. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 27.08.2010) . SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 27 TH AUGUST, 2010. PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY