Shri Deelip Hastimal Jain (Chopada), Jalgaon V. CIT-II, Nashik

ITA 897/PUN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85108 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 23-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Keywords: Principle of natural justice
• Section: 143(3); 6; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.897/PN/2013 (ASSESSMENT YEAR: 2008-09) SHRI DEELIP HASTIMAL JAIN (CHOPADA) CHOPDA BHAVAN, VISANJI NAGAR JALGAON PAN: AANPJ8359A . APPELLANT VS. THE COMMISSIONER OF INCOME TAX-II, NASHIK . RESPONDENT APPELLANT BY : SHRI PRAMOD SHINGTE RESPONDENT BY : SHRI A.K. MODI DATE OF HEARING : 14-10-2014 DATE OF PRONOUNCEMENT : 30-10-2014 ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT-II, NASHIK DATED 28.03.2013 RELATING TO ASSESSMENT YEAR 2008 -09 AGAINST ORDER PASSED UNDER SECTION 263 OF THE INCOME-TAX ACT. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (II) NASHIK HAS ERRED IN INITIATING THE PROCEEDING U/S 263, MERELY BASED ON A PROPOSAL OF REVISION OF ASSESSMENT RECEIVED BY HIS O FFICE. THE ACTION OF LEARNED CIT-II IS ILLEGAL AND THEREFORE THE O RDER PASSED U/S.263 IS BAD IN LAW.' 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (II) NASHIK HAS ERRED IN PASSING ORDER U/S 263 WITHOUT GIVING SUFFICIENT O PPORTUNITY OF HEARING TO THE APPELLANT. THEREFORE THE ORDER PASS ED IS ILLEGAL.' 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (II) NASHIK HAS ERRED IN PASSING ORDER U/S 263 FOR THE ALLEGED DEFAULTS BY PRESUMING INCORRECT FACTS AND WITHOUT CONSIDERING APPELLANTS CONTENTION IN THIS REGARD.' ITA NO.897/PN/2013 DEELIP HASTIMAL JAIN (CHOPADA) 2 4. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ASSESSMENT ORDER PASSED BY THE LEARNED AO IS NEITHE R, ERRONEOUS NOR PREJUDICIAL TO REVENUE, AND HENCE INVOKI NG PROVISIONS OF SECTION 263, IS BAD-IN-LAW. THE APPELLANT CRAVES FOR TO LEAVE, ADD, ALTER, MODIFY, DE LETE, ALTER ABOVE GROUND OF APPEAL BEFORE OR AT THE TIME HE ARING, IN THE INTEREST OF NATURAL JUSTICE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT IN THE CASE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 30.11.2010. THEREAFTER, THE ACIT SENT A PROPOSAL FOR REVIS ION OF THE ORDER UNDER SECTION 263 OF THE ACT TO THE CIT, NASHIK. THE CIT, THEREAFTER, ISSUED A SHOW CAUSE NOTICED UNDER SECTION 26 3 OF THE ACT ON ACCOUNT OF TWO REASONS I.E. FOR SHORT DECLARATION OF THE RENT AS AGAINST THE RENT REFLECTED IN THE TDS CERTIFICATE AND FURTH ER AGAINST THE TRANSPORTATION CHARGES PAID BY ONE CONCERN OF THE ASSE SSEE TO ITS ANOTHER PROPRIETARY CONCERN. THE MATTER WAS FIXED FOR HEARING ON 07.03.2013, HOWEVER, THE SAID NOTICE WAS RETURNED BACK BY THE POSTAL AUTHORITIES WITH THE REMARK LEFT AND RETURNED TO SENDE R. ANOTHER NOTICE WAS SERVED UPON THE ASSESSEE ON 11.03.2013 AND THE MATTER WAS FIXED FOR HEARING ON 13.03.2013. THE CIT NOTED THAT TILL THE DATE OF PASSING ORDER UNDER SECTION 263 OF THE ACT I.E. ON 28.03 .2013, THE ASSESSEE HAD NEITHER ATTENDED NOR FILED ANY WRITTEN REP LY IN THIS REGARD. THE CIT FURTHER PLACED RELIANCE ON THE VARIOUS JUDICIAL DECISIONS AS ENUMERATED UNDER PARA 3 AT PAGE 2 OF THE ORDER AND HELD AS UNDER: IN VIEW OF THE ABOVE, IT APPEARS THAT THE ASSESSEE IS NOT INTERESTED IN FINALIZATION OF THE REVISION PROCEEDI NGS. I AM THEREFORE OF THE VIEW THAT ORDER PASSED BY THE A.O. I S NOT ONLY ERRONEOUS BUT PREJUDICIAL TO THE INTEREST OF REVENUE. 4. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT. T HE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE SENT AN APPLICATION FOR ADJOURNMENT VIDE LETTER DATED 11.03.2013, WHICH IS PLACED AT PAGE 114 OF THE PAPER BOOK. THE ITA NO.897/PN/2013 DEELIP HASTIMAL JAIN (CHOPADA) 3 ASSESSEE FURTHER CLAIMS THAT IT HAD FURNISHED WRITTEN SUB MISSIONS BEFORE THE CIT, NASHIK DATED 28.03.2013 WHICH WAS SENT TH ROUGH POSTAL AUTHORITIES. THE COPY OF THE SAID LETTER IS PLACED A T PAGES 11 TO 18 OF THE PAPER BOOK. FURTHER, THE PLEA OF THE ASSESSEE WAS THAT NO SUFFICIENT OPPORTUNITY WAS GIVEN TO THE ASSESSEE BEFORE PA SSING THE ORDER UNDER SECTION 263 OF THE ACT AND IN THE ABSENCE OF THE SAME, THE ORDER PASSED BY THE CIT IS ILLEGAL. THE LEARNED AUTHORIZE D REPRESENTATIVE FOR THE ASSESSEE ALSO POINTED OUT THAT THE CIT HAD NOT APPLIED HIS MIND BEFORE ISSUING A NOTICE UNDER SECTION 263 O F THE ACT SINCE THE REVISION PROCEEDINGS WERE INITIATED ON THE PROPO SAL SUBMITTED BY THE ASSESSING OFFICER. WITH REGARD TO THE ME RITS OF THE CASE, IT WAS POINTED OUT BY THE LEARNED AUTHORIZED REPRE SENTATIVE FOR THE ASSESSEE THAT BOTH THE ISSUES WERE CONSIDERED BY THE ASSESSING OFFICER AND THE RELEVANT EXPLANATIONS AND DOCUMENTS WERE FILED DURING THE ASSESSMENT PROCEEDINGS WHICH HAVE NOT BEEN TAKEN NOTE OF OR CONSIDERED BY THE CIT BEFORE PASSING THE ORDER OF REVISIO N UNDER SECTION 263 OF THE ACT. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE POINTED OUT THAT THE ASSESSEE HAD FAILED TO APPEAR BEFOR E THE CIT THOUGH SUFFICIENT OPPORTUNITY WAS GRANTED TO THE ASSESSE E. IT WAS FURTHER POINTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE THAT BOTH THE ISSUES WERE NOT PROPERLY CONSID ERED BY THE ASSESSING OFFICER AND PRESENT REVISION PROCEEDINGS. IN ANY CASE, THE MATTER HAS BEEN SET ASIDE BY THE CIT TO THE ASSESSING OFFICER AND NO PREJUDICE WAS CAUSED TO THE ASSESSEE AS IT CAN APPEAR BEFORE THE AUTHORITIES BELOW AND PRESENT ITS CASE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE PRESENT APPEAL IS FILED BY THE ASSESSEE AGAINST INVOK ING OF ITA NO.897/PN/2013 DEELIP HASTIMAL JAIN (CHOPADA) 4 JURISDICTION BY THE CIT UNDER SECTION 263 OF THE ACT. TH E CIT, WHERE ON PERUSAL OF RECORD FINDS THE ASSESSMENT ORDER TO BE E RRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, IS EMPOWERED TO INVOKE THE JURISDICTION UNDER SECTION 263 OF THE ACT. IN THE FACTS O F THE PRESENT CASE BEFORE US, THE ORIGINAL ASSESSMENT WAS COMPLETED UND ER SECTION 143(3) OF THE ACT VIDE ORDER DATED 30.11.2010. THEREAFTER, THE ASSESSING OFFICER SENT A PROPOSAL TO THE CIT FOR REVISION O F ASSESSMENT UNDER SECTION 263 OF THE ACT. CONSEQUENT TO THAT, THE CIT ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE DATED 25.02.2013 FOR THE UNDER- MENTIONED REASONS. '02 AS PER TDS CERTIFICATE ISSUED BY JALGAON JILHA CO TTON FEDERATION, JALGAON, YOU ARE IN RESPECT OF RENT OF RS .10,50,000. HOWEVER, IN THE INCOME AND EXPENDITURE ACCOUNT, YOU HA VE CREDITED AN AMOUNT OF RS.3,92,000 ONLY AS GODOWN RENT RECEIVED. DURING THE SCRUTINY PROCEEDINGS NEITHER AO HAD RAISE D ANY QUESTION ON THIS ISSUE, NOR ANY EXPLANATION / RECONC ILIATION WAS FILED BY YOU. THUS ASSESSMENT IS ERRONEOUS AS WELL AS P REJUDICIAL TO THE INTEREST OF THE REVENUE ON THIS ISSUES. 03 ON VERIFICATION OF THE RECORD IT IS SEEN THAT YO U ARE A PROPRIETOR OF ARIHANT AGRO INPUT AND ARIHANT ROADWAYS. ARIHANT AGRO INPUT DEALS IN TRADING OF FERTILIZER ON WHOLE SALES BASIS AN D ARIHANT ROADWAYS IS ENGAGED IN TRANSPORTATION AND TRANSPORT COMMISSION. IN THE TRADING ACCOUNT OF ARIHANT AGRO I NPUT, YOU HAVE DEBITED PACKAGING AND HAMALI CHARGES OF RS.1,16,6 45 AND TRANSPORTATION CHARGES OF RS.24,39,904. THESE TWO EXPE NSES ARE PAID TO ARIHANT ROADWAYS, I.E. YOUR OTHER PROPRIETARY CONCERN. PROFIT OF ARIHANT ROADWAYS IS OFFERED FOR TAXATION U/S.44AE OF THE ACT AT RS.2,62,500. SINCE, EXPENSES OF RS.22,94,049 I.E. (2556549-262500) CLAIMED BY THE YOU, ARE NOT PAID TO THI RD PARTY BUT GIVEN TO YOUR OTHER PROPRIETARY CONCERN, SAME SH OULD BE DISALLOWED IN THE CASE OF ARIHANT AGRO INPUT' 7. THE ASSESSEE DID NOT APPEAR BEFORE THE CIT BUT, SOUG HT ADJOURNMENT VIDE LETTER DATED 11.03.2013, COPY OF WHICH IS PLACED AT PAGE 114 OF THE PAPER BOOK. THE SAID APPLICATION WAS SEN T BY REGISTERED POST TO THE CIT, NASHIK AND THE RECEIPT OF PO STAL AUTHORITIES IS PLACED AT PAGE 113 OF THE PAPER BOOK. HOWEVER, THE A SSESSEE THEREAFTER, DID NOT APPEAR BEFORE THE CIT NOR FILED ANY EX PLANATION BEFORE THE CIT, NASHIK AND THE ASSESSMENT ORDER PASSED BY THE ITA NO.897/PN/2013 DEELIP HASTIMAL JAIN (CHOPADA) 5 ASSESSING OFFICER WAS HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THE MATTER WAS SET ASIDE FO R PASSING A FRESH ORDER ON THE POINTS DISCUSSED IN THE NOTICE. THE LE ARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAD PLEADED THAT IT HAD SUBMITTED THE EXPLANATION BEFORE THE CIT VIDE LETTER DATE D 23.03.2013 WHICH IS PLACED AT PAGES 11 TO 17 OF THE PAPER BOOK. HO WEVER, THE PERUSAL OF THE RECEIPT OF DELIVERY OF THE SAID LETTER REFLECT S THAT THE SAME WAS DELIVERED ON 02.04.2013 IN THE OFFICE OF THE COMMISS IONER OF INCOME TAX, NASHIK. THE CIT HAD PASSED THE ORDER UNDE R SECTION 263 OF THE ACT ON 28.03.2013. 8. THE ASSESSEE IS AGGRIEVED BY INVOKING OF JURISDICTION UN DER SECTION 263 OF THE ACT AS THE SAME HAD BEEN INVOKED ON THE BASIS OF THE PROPOSAL OF REVISION OF ASSESSMENT SENT BY THE ASSE SSING OFFICER. FURTHER, THE ASSESSEE IS ALSO AGGRIEVED BY THE FACT THAT SUFFICIENT OPPORTUNITY OF HEARING WAS NOT AFFORDED BY THE CIT BEFOR E PASSING THE ORDER UNDER SECTION 263 OF THE ACT. IT WAS PUT TO THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE DURING THE C OURSE OF HEARING WHETHER THE ASSESSING OFFICER IS EMPOWERED TO SEND A PR OPOSAL OF REVISION OF ASSESSMENT TO THE CIT, IN VIEW OF THE PROVISIONS OF SECTION 263 OF THE ACT AND HE FAIRLY ADMITTED THAT THE ASSESSING OFFICER HAS TH E SAID INHERENT POWER. HOWEVER, IT WAS POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT BEFORE INVOKING THE JURISDICTION UNDER SECTION 263 OF THE ACT, THE CIT SHOULD BE SATISFIED THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. FROM PERUSAL OF TH E ORDER OF CIT, IT IS APPARENT THAT SHOW CAUSE NOTICE WAS ISSUED T O THE ASSESSEE BY THE CIT UNDER SECTION 263 OF THE ACT AFTER PERUSING THE RECORD AND IT CANNOT BE SAID THAT THE ACTION OF THE CIT IN THIS REGARD WAS ILLEGAL. ITA NO.897/PN/2013 DEELIP HASTIMAL JAIN (CHOPADA) 6 9. THE SECOND ASPECT OF THE ISSUE RAISED BY THE ASSESS EE IS THAT IT WAS NOT AFFORDED SUFFICIENT OPPORTUNITY OF HEARING BY THE CI T. THE FACTS POINT OUT THAT THE FIRST NOTICE ISSUED BY THE CIT W AS RETURNED BACK AS UNSERVED BY THE POSTAL AUTHORITIES AND THEREA FTER NOTICE WAS SERVED UPON THE ASSESSEE ON 11.03.2013. IN REPLY TO T HE SAID NOTICE, THE ASSESSEE HAD SUBMITTED AN ADJOURNMENT APPLICATION I N WHICH IT HAD SUBMITTED THAT IT WOULD FILE THE DETAILS WITHIN 15 DAYS T IME, HOWEVER, THE SAID DETAILS REACHED THE CITS OFFICE AFTER PA SSING THE ORDER UNDER SECTION 263 OF THE ACT. 10. NOW, COMING TO THE OBJECTIONS RAISED BY THE CIT IN T HE SHOW CAUSE NOTICE ISSUED TO THE ASSESSEE FOR INVOKING THE JU RISDICTION UNDER SECTION 263 OF THE ACT, WE FIND THE FIRST OBJECTION RAISED B Y THE CIT WAS THAT IN THE TDS CERTIFICATE ISSUED BY JALGAON JILHA COTTON FEDERATION, JALGAON, RENT OF RS.10,50,000/- HAS BEEN MENTIONED HOWEVE R, IN THE INCOME AND EXPENDITURE ACCOUNT, THE ASSESSEE HAS CRED ITED A SUM OF RS.3,92,000/- AS GODOWN RENT RECEIVED. THE CIT FURTHER OBSERVED THAT DURING THE SCRUTINY ASSESSMENT PROCEEDINGS, NEITHER THE ASSESSING OFFICER HAD RAISED ANY QUESTION NOR ANY EXPLANATION OR REC ONCILIATION WAS FILED BY THE ASSESSEE. IN REPLY, THE LEARNED AUTHOR IZED REPRESENTATIVE FOR THE ASSESSEE DREW OUR ATTENTION TO THE INCOME AND EXPENDITURE ACCOUNT PLACED AT PAGE 32 OF THE PAPER BO OK, THE ASSESSEE HAD REFLECTED THE STORAGE CHARGES RECEIVED FROM JALGAON JILHA COTTON FEDERATION, JALGAON AT RS.13,73,920/- AND FURTHER THE GODO WN RENT RECEIVED WAS RS.3,92,000/-. THE LEARNED AUTHORIZED REPRE SENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, THE COPY OF THE ACCOUNT OF M/S . JALGAON JILHA COTTON FEDERATION WAS FILED WHICH IS PLACED AT PAGES 55 AN D 56 OF THE PAPER BOOK, IN WHICH BIFURCATION OF THE TOTAL OF RS.13,73,92 0/- WAS EXPLAINED TO BE RENT OF RS.10,50,000/-, TDS OF RS.23,920/- AND OTHER ITA NO.897/PN/2013 DEELIP HASTIMAL JAIN (CHOPADA) 7 CHARGES OF RS.3,00,000/-. THE AMOUNT AS PER THE TDS CE RTIFICATE WAS RS.10,50,000/- WHICH HAD DULY BEEN DECLARED AS CHARGES RECEIVED FROM THE SAID CONCERN IN THE INCOME AND EXPENDITURE ACCO UNT ITSELF. IN ADDITION, THE ASSESSEE HAD RECEIVED GODOWN RENT OF RS .3,92,000/- FROM VARIOUS PARTIES AND THERE WAS NO MERIT IN THE SHOW CAUSE NOTICE ISSUED BY THE CIT IN THIS REGARD. 11. FROM THE PERUSAL OF THE RECORD AND THE DETAILS FURNIS HED BY THE ASSESSEE, WE FIND THAT THE ASSESSEE HAD DULY DECLARED THE RECEIP TS FROM THE JALGAON JILHA COTTON FEDERATION AS STORAGE CHARGES RECEIVED FROM IT AND IN ADDITION HAD DECLARED RECEIPTS FROM GODOWN RENT AT RS.3,92,000/-. IN THE TDS CERTIFICATE, THE RENT WAS DECLAR ED AT RS.10,50,000/- WHICH HAS DULY BEEN RECORDED BY THE ASS ESSEE IN ITS INCOME AND EXPENDITURE ACCOUNT . THE SAID ASPECT HAS B EEN CONSIDERED BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS AND THEREAFTER, THE ASSESSMENT WAS COMPLETE D UNDER SECTION 143(3) OF THE ACT IN THE HANDS OF THE ASSESSEE. I N THE ABOVE SAID FACTS AND CIRCUMSTANCES, WHERE THE ASSESSING OFFICER H AS ALREADY TAKEN A VIEW ON THE ISSUE, THERE IS NO MERIT IN INVOKING TH E JURISDICTION UNDER SECTION 263 OF THE ACT BY THE CIT ON IDENTICAL ISSUE. 12. THE SECOND ISSUE RAISED IN THE SHOW CAUSE NOTICE WAS IN RELATION TO THE TRANSPORTATION CHARGES. THE ASSESSEE IS PROPRIE TOR OF THREE CONCERNS I.E. ARIHANT AGRO INPUT, WHICH IS A TRADING CONCER N OF THE ASSESSEE, ARIHANT WAREHOUSING CORPORATION UNDER WHICH, INC OME FROM WAREHOUSING HAD BEEN DECLARED AND ARIHANT ROADWAYS UN DER WHICH, INCOME FROM TRANSPORTATION HAD BEEN DECLARED. DURING THE YEAR UNDER CONSIDERATION IN ARIHANT AGRO INPUT, THE ASSESSEE HAD DE BITED TRANSPORTATION CHARGES OF RS.24,39,904/- WHICH IN TURN WER E PAID TO ARIHANT ROADWAYS. FURTHER, PACKAGING EXPENSES OF RS.1,1 6,645/- ITA NO.897/PN/2013 DEELIP HASTIMAL JAIN (CHOPADA) 8 WERE ALSO DEBITED TO THE ACCOUNT OF ARIHANT ROADWAYS. M/S. ARIHANT ROADWAYS HAD OFFERED THE INCOME UNDER SECTION 44AE OF TH E ACT AT RS.2,62,500/-. THE CIT WAS OF THE VIEW THAT EXPENSES OF RS.22,94,049/- I.E. RS.25,56,549/- - RS.2,62,500/-, WERE NOT PAID TO THE THIRD PARTY BUT WERE PAID TO THE PROPRIETARY CONC ERN AND THE SAME SHOULD HAVE BEEN DISALLOWED IN THE HANDS OF ARIHANT AGRO INPUT. THE EXPLANATION OF THE ASSESSEE IN THIS REGARD WAS THAT M/S . ARIHANT ROADWAYS WAS TRANSPORTING THE GOODS SOLD BY M/S. ARIHAN T AGRO INPUT TO THIRD PARTIES. HOWEVER, THE TRANSPORTATION CHARGES W ERE RECEIVED BY M/S. ARIHANT AGRO INPUT AND WERE LATER REIMBURSED TO M/ S. ARIHANT ROADWAYS. THE REIMBURSEMENT OF THE EXPENSES ESTABLISH THAT THE SAID PROPRIETARY CONCERN WAS CARRYING ON ITS BUSINESS INDEPEN DENTLY, HOWEVER, THE CHARGES WERE RECEIVED THROUGH ARIHANT AGR O INPUT AS CONSOLIDATED AMOUNT WAS RAISED BY THE SAID CONCERN. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT ALL THIS INFORMATION WAS BEFORE THE ASSESSING OFFICER AND WAS ALSO C LEARLY REFLECTED IN THE BOOKS OF ACCOUNT BEFORE THE ASSESSMENT PROCEEDINGS AND THE ASSESSING OFFICER HAD ACCEPTED THE ACCOUNTS OF T HE ASSESSEE AND AS SUCH, THERE WAS NO MERIT IN THE JURISDICTION EXERC ISED BY THE CIT UNDER SECTION 263 OF THE ACT. WE HAVE PERUSED THE DETAILS AND DOCUMENTS FILED BY THE ASSESSEE INCLUDING THE SEPARATE AU DIT REPORTS IN FORM 3CB AND CD ALONG WITH AUDITED BALANCE SHEET, PROFIT & LOSS ACCOUNT OF THREE PROPRIETARY CONCERNS OF THE ASSESSEE. THE COMPLETE DETAILS WERE AVAILABLE WITH THE ASSESSING OFFICER AND THE CLA IM OF THE ASSESSEE HAS BEEN ALLOWED BY THE ASSESSING OFFICER BY ADO PTING A PARTICULAR VIEW ON THE ISSUE. THE EXERCISE OF JURISDICTION U NDER SECTION 263 OF THE ACT IN SUCH CASES WHERE A PARTICULAR VIEW HAS BEEN TAKEN BY THE ASSESSING OFFICER DOES NOT JUSTIFY THE INVOKING OF T HE JURISDICTION BY THE CIT UNDER SECTION 263 OF THE ACT. ITA NO.897/PN/2013 DEELIP HASTIMAL JAIN (CHOPADA) 9 13. THE HONBLE SUPREME COURT IN THE CASE OF MALABAR IND USTRIAL COMPANY LIMITED VS. CIT REPORTED IN (2000) 243 ITR 83 (SC ) HAD HELD AS UNDER: A BARE READING OF SECTION 263(1) MAKES IT CLEAR THAT THE PRE- REQUISITE TO EXERCISE OF JURISDICTION BY THE COMMISS IONER SUO MOTU UNDER IT, IS THAT THE ORDER OF THE ITO IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMM ISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORD ER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS ; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT IF THE ORDER OF THE ITO IS ERRONEOUS BUT IS NOT P REJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE RECOURSE CANNOT BE HAD TO SECTION 263(1). THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COM MITTED BY THE ASSESSING OFFICER; IT IS ONLY WHEN AN ORDER IS ERRON EOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIRE MENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDER S PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVEN UE' IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT. UND ERSTOOD IN ITS ORDINARY MEANING, IT IS OF WIDE IMPORT AND IS NOT CONF INED TO LOSS OF TAX. THE SCHEME OF THE ACT IS TO LEVY AND COLLECT T AX IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THIS T ASK IS ENTRUSTED TO THE REVENUE. IF DUE TO AN ERRONEOUS ORD ER OF THE ITO, THE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE.' 14. THE HON'BLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD. (SUPRA) NOTED THAT THE CASES WHICH FELL IN THE CATEGORY O F NON- APPLICATION OF PRINCIPLE OF NATURAL JUSTICE OR NON-APPLICATION OF MIND WOULD SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEO US AND THE COMMISSIONER OF INCOME TAX THUS WOULD BE ENTITLED TO INV OKE THE REVISIONAL JURISDICTION UNDER SECTION 263 OF THE ACT. THE HON'BLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD. (SUPRA) FURTHE R HELD THAT THE ORDER OF THE ASSESSING OFFICER PASSED WITHOUT APPLICATIO N OF MIND BY MERELY ACCEPTING THE ENTRIES IN THE STATEMENT OF ACC OUNT FILED BY THE ASSESSEE IN THE ABSENCE OF ANY SUPPORTING MATERIA L AND WITHOUT MAKING ANY ENQUIRIES WOULD BE AN ERRONEOUS ORDER AND WHERE THE SAID ORDER IS ERRONEOUS OR IMPLYING THEREBY THAT IN CASE THE SAID ORDER HAS RESULTED IN LOSS OF REVENUE, OR IS ALSO PREJUDICIAL TO T HE INTEREST OF ITA NO.897/PN/2013 DEELIP HASTIMAL JAIN (CHOPADA) 10 THE REVENUE JUSTIFIES THE INVOKING OF JURISDICTION BY THE COMMISSIONER OF INCOME TAX UNDER SECTION 263 OF THE ACT. 15. IN VIEW OF THE SETTLED POSITION OF LAW WHEREIN IT HAS BEE N REPEATEDLY HELD THAT IN ALL SUCH CASES WHERE THE ASSESS ING OFFICER HAS CONDUCTED THE ENQUIRIES AND PASSED THE ASSESSMENT OR DER CONSEQUENT TO THE ENQUIRIES CONDUCTED DURING THE ASSESSMENT PROCE EDINGS, THERE WAS NO OCCASION FOR THE CIT TO INVOKE THE JURISDICTION UN DER SECTION 263 OF THE ACT ON THE SURMISES THAT THERE WAS NO APPLIC ATION OF MIND BY THE ASSESSING OFFICER. IN THE TOTALITY OF THE ABOVE SA ID FACTS AND CIRCUMSTANCES, WHERE THE ASSESSING OFFICER HAD TAKEN A PA RTICULAR VIEW ON THE ISSUE, WE FIND NO MERIT IN THE ORDER OF CIT IN IN VOKING THE JURISDICTION UNDER SECTION 263 OF THE ACT WITHOUT GOING INT O THE DETAILS AND EXPLANATION AVAILABLE ON RECORD AND MERELY ON THE BA SIS OF ISSUES RAISED IN THE SHOW CAUSE NOTICE. ACCORDINGLY, WE SET AS IDE THE ORDER PASSED BY THE CIT UNDER SECTION 263 OF THE ACT. THUS, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF OCTOBER, 2014. SD/- SD/- (R.K. PANDA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 30 TH OCTOBER, 2014. GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT-II, NASHIK; 4) THE DR B BENCH, I.T.A.T., PUNE; 5) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE