M/s. Fortune Metals, Kolhapur V. Commissioner of Income-tax - II,

ITA 962/PUN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2540 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 09-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K RASTOGI
• Keywords: Prejudicial to interest
• Section: 143(3); 80HHC; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , A M . / ITA NO. 962 /PN/201 4 / ASSESSMENT YEAR : 20 1 1 - 1 2 M/S. FORTUNE METALS, UNIT NO.5, GANGA BHAGYODAY, 949/A - 3, PLOT NO.1, E WARD, KASBA BAWADA, KOLHAPUR 416006 . / APPELLANT PAN: SSSGG8763D VS. THE COMMISSION ER OF INCOME TAX - II , KOLHAPUR . / RESPONDENT / APPELLANT BY : SHRI C.H. NANIWADEKAR / RESPONDENT BY : SHRI S.K. RASTOGI, CIT / DATE OF HEARING : 1 9 . 0 1 .201 6 / DATE OF PRONOUNCEMENT: 21 . 0 3 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT - I I , KOLHAPUR , DATED 2 5 . 03 .20 1 4 RELATING TO ASSESSMENT YEAR 20 1 1 - 1 2 PASSED UNDER SECTION 263 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1 . THE LEARNED COMMISSIONER OF INCOME TAX ERRED ON FACTS AND IN LAW IN INVOKING JURISDICTION U/S 262 OF THE ACT, ESPECIALLY WHEN THE A.O. HAS TAKEN A POSSIBLE VIEW IN THE MATTER. ITA NO. 962 /PN/20 1 4 M/S. FORTUNE METALS 2 2. THE LEARNED COMMISSIONER OF INCOME TAX FAILED TO APPRECIATE THAT THE A.O. DURING THE ASSESSMENT PROCEEDINGS HAS CALLED FOR EXHAUSTIVE INFORMATION IN RESPECT OF PARTIES AND TRANSACTIONS MENTIONED IN HIS NOTICE U/S 263 AND IT IS ONLY AFTER AN IN - DEPTH EXAMINATION, THE A.O. HAS COMPLETED THE ASSESSMENT. THE ORDER OF THE A.O. IS THUS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, WHICH IS A PRIME REQUIREMENT FOR RESORTING TO SEC.263. THE CIT ALSO FAILED TO APPRECIATE TH E CONTENTIONS AND ARGUMENTS ADVANCED IN THIS BEHALF AS ALSO THE SETTLED LEGAL POSITION. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR SUBSTITUTE ALL OR ANY OF THE ABOVE GROUND S OF APPEAL. 3. THE PRESENT APPEAL IS FILED BY THE ASSESSEE AGAINST IN VOKING JURISDICTION BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT. 4. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE WAS PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF METAL SCRAP. THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS COMPLETED BY THE ADDL.CIT, RANGE - 2, KOLHAPUR UNDER SECTION 143(3) OF THE ACT ON ASSESSED INCOME OF RS. 63,89,110/ - AS AGAINST RETURNED INCOME OF RS.39,11,440/ - . THE COMMISSIONER ON SUBSEQUENT VERIFICATION OF RECORD AND INFORMATION AVAILABLE WITH THE OFFICE, NOTICED TH AT DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE FIRM WAS BENEFICIARY OF H AWALA TRAN SACTIONS TOTALING RS.37,79,207/ - . THE COMMISSIONER FURTHER NOTED THAT THE ASSESSING OFFICER HAD FAILED TO VERIFY THE TRANSACTIONS AND HAD ACCEPTED THE BOOKS OF ACCOUNT AND THE FINANCIAL RESULTS AT FACE VALUE. THE VERACITY OF INCOME WHICH WAS DISCLOSED BY THE ASSESSEE FIRM IN ITS PROFIT & LOSS ACCOUNT, WHICH AS PER THE COMMISSIONER, WAS PRIMA FACIE UNDERSTATED, REMAINED TO BE VERIFIE D DURING THE COURSE OF ASSESSMENT PROCEEDINGS. SINCE THIS LEAD TO ASSUMPTION OF INCORRECT COMPUTATION OF INCOME AND / OR UNDER ASSESSMENT OF INCOME, THE ORDER PASSED BY THE ASSESSING OFFICER, AS PER THE COMMISSIONER APPEARED TO BE ERRONEOUS AND PREJUDICIA L TO THE INTEREST OF REVENUE. A SHOW CAUSE NOTICE UNDER SECTION 263 OF THE ACT WAS ISSUED TO THE ASSESSEE. THE CONTENTION OF THE ASSESSEE ITA NO. 962 /PN/20 1 4 M/S. FORTUNE METALS 3 BEFORE THE COMMISSIONER WAS THAT THE ASSESSMENT WAS COMPLETED BY THE ASSESSING OFFICER AFTER EXTENSIVE ENQUIRIES AND VERIFICATION OF RECORDS SUBMITTED. IT WAS FURTHER POINTED OUT BY THE COMMISSIONER THAT THE ASSESSING OFFICER WAS WELL AWARE OF THE FACT THAT THE ASSESSMENTS OF EARLIER TWO YEARS WERE REOPENED ON THE SAME ISSUE AND THE ASSESSING OFFICER WAS ASKED TO VERIF Y THE QUESTIONS ABOUT PURCHASES . S INCE THE ASSESSMENT ORDER WAS MADE BY THE ASSESSING OFFICER AFTER ENQUIRIES , ACCORDINGLY, IT COULD NOT BE SAID THAT THERE WAS AN ERROR ON THE PART OF ASSESSING OFFICER WHICH WAS PREJUDICIAL TO THE INTEREST OF REVENUE. TH E COMMISSIONER WAS OF THE VIEW THAT WHERE THERE WAS NOTHING ON RECORD TO EVIDENCE THAT THE ASSESSING OFFICER HAD CARRIED OUT EXERCISE OF VERIFICATION OF TRANSACTIONS WITH THE FOUR PARTIES, THERE WAS SCOPE TO DRAW AN INFERENCE THAT THE ASSESSING OFFICER HAD FAILED TO VERIFY THE TRANSACTIONS AND COMPLETED THE ASSESSMENT BY ACCEPTING BOOKS OF ACCOUNT AND FINANCIAL RESULTS AT FACE VALUE. THE ORDER PASSED BY THE ASSESSING OFFICER WAS THUS, HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND THE MATTER WAS SET - ASIDE FOR RE - DETERMINATION OF INCOME AFTER FULL VERIFICATION OF MATERIAL AVAILABLE ON RECORD AND APPLICATION OF PROVISIONS OF LAW ACCORDINGLY. IT WAS FURTHER DIRECTED BY THE COMMISSIONER THAT THE ASSESSING OFFICER SHALL GIVE AN OPPORTUNITY OF HEARING TO THE ASSESSEE TO ADDUCE EVIDENCE IN SUPPORT OF CLAIM OF WORKING OF CAPITAL GAINS AND DEDUCTION THEREUNDER. 5. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF COMMISSIONER. 6. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE PERUSAL OF SHOW CAUSE NOTICE UNDER SECTION 263 OF THE ACT PLACED AT PAGE 1 OF THE PAPER BOOK REFLECTS THAT THE SAID SHOW CAUSE NOTICE WAS ISSUED WITH REGARD TO FOUR LISTED PARTIES AND WHETHER THE TRANSACTIONS WITH THEM HAVE BEEN ITA NO. 962 /PN/20 1 4 M/S. FORTUNE METALS 4 VERIFIED BY THE AS SESSING OFFICER OR NOT. OUR ATTENTION WAS DRAWN TO THE ASSESSMENT ORDER PLACED AT PAGES 3 TO 26 OF THE PAPER BOOK AND IT WAS POINTED OUT THAT MAINLY THE SAID ASSESSMENT ORDER TALKS OF CARR IAGE OF GOODS PURCHASED. THE ASSESSEE WAS A DEALER OF METAL SCRAP. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT A QUESTIONNAIRE WAS RAISED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHICH IS PLACED AT PAGE 30 OF THE PAPER BOOK, UNDER WHICH DETAILS OF MONTHLY PURCHASES AND SALES , DETAILS OF INVENTORY STOCK AS ON 31.03.2011 WERE ASKED FOR. FURTHER, THE ASSESSEE CLAIMS TO HAVE FILED THE SAID DETAILS DATE - WISE, WHICH ARE PLACED AT PAGES 33 TO 54 OF THE PAPER BOOK. FURTHER, THE LEARNED AUTHORIZED REPRESENTATIVE F OR THE ASSESSEE REFERRED TO THE REVERSE OF PAGE 35 OF PAPER BOOK AND POINTED OUT THAT THE PURCHASES FROM THE PARTIES, WHO WE RE PART OF SHOW CAUSE NOTICE ISSUED UNDER SECTION 263 OF THE ACT ARE ENLISTED. THEREAFTER, THE LEARNED AUTHORIZED REPRESENTATIVE FO R THE ASSESSEE POINTED OUT THAT CONFIRMATION WAS RECEIVED FROM THE SAID PARTIES WHICH ARE PLACED AT PAGE 55 OF PAPER BOOK IN RESPECT OF SAMPARK STEELS , P AGES 87 AND 88 OF PAPER BOOK I.E. PRAYAN TRADING CO. , PAGE 120 OF PAPER BOOK I.E. VITARAG TRADING CO. A ND PAGE 132 I.E SIDDHIVINAYAK STEEL. THE TOTAL PURCHASES FROM THE SAID PARTIES WERE RS.37,79,20 7 / - . IT WAS THE CASE OF LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE US THAT ALL THESE DETAILS WERE AVAILABLE WITH THE ASSESSING OFFICER AND THE P URCHASES WERE EXAMINED IN DETAIL BY THE ASSESSING OFFICER, HENCE, WHERE ENQUIRIES WERE MADE BY THE ASSESSING OFFICER, THERE IS NO QUESTION OF ACTION UNDER SECTION 263 OF THE ACT. RELIANCE IN THIS REGARD WAS PLACED ON THE RATIO S LAID DOWN BY THE HONBLE BO MBAY HIGH COURT IN CIT VS. GABRIEL INDIA LTD. (1993) 203 ITR 108 (BOM) AND CIT VS. DESIGN AND AUTOMATION ENGINEERS (BOMBAY) P. LTD. (2010) 323 ITR 632 (BOM) . IT WAS FURTHER POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ITA NO. 962 /PN/20 1 4 M/S. FORTUNE METALS 5 THAT LACK OF ENQUIRY IS ONE AND LACK OF PROPER ENQUIRY IS ANOTHER THING AND ALSO THE ASSESSING OFFICERS JUDGMENT CANNOT BE REPLACED BY THE COMMISSIONER. HE FURTHER POINTED OUT THAT THE COMMISSIONER SAYS THAT NO DIFFERENT VIEW AND SINCE THE ASSESSING OFFICER HAS FAIL ED TO VERIFY THE TRANSACTIONS, THE MATTER HAS BEEN SET - ASIDE FOR RE - DETERMINATION , WHICH IS NOT ALLOWED UNDER SECTION 263 OF THE ACT. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, POINTED OUT THAT THE ASSESSING OFFICER HAD ISSUED QUESTIONNAIRE, BUT HAD KEPT THE DETAILS WITH HIMSELF AND NOT VERIFIED THE TRANSACTIONS. IN VIEW OF THE INFORMATION AVAILABLE, HENCE, THE ORDER PASSED BY THE ASSESSING OFFICER WAS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 8. WE HA VE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. UNDER SECTION 263 OF THE ACT, THE COMMISSIONER CAN INVOKE HIS JURISDICTION WHERE THE SECTION 263 OF THE ACT, THE COMMISSIONER CAN INVOKE HIS JURISDICTION WHERE THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. AN ERRONEOUS ORDER WHICH HAS RESULTED IN THE ORDER BEING PREJUDICIAL TO THE INTEREST OF REVENUE CAN BE LOOKED INTO BY THE COMMISSIONER, WHILE EXERCISING THE JURISDICTIONAL POWER TO REVIEW THE ORDERS OF THE SUBORDINATE AUTHORITIES. THE HONBLE SUPREME COURT I N MALABAR INDUSTRIAL CO. LTD. VS. CIT, (2000) 243 ITR 83 (SC) HELD AS UNDER: - 'THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERR ONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUS TICE OR WITHOUT APPLICATION OF MIND. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE' IS NOT AN EXPRESSION OF ART 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. THE HIGH C OURT OF CALCUTTA IN DAWJEE DADABHOY AND CO. V. S. P. JAIN [1957] 31 ITR 872, THE HIGH COURT OF KARNATAKA IN CIT V. T. NARAYANA PAI [1975] 98 ITR 422, THE HIGH COURT OF BOMBAY IN CIT ITA NO. 962 /PN/20 1 4 M/S. FORTUNE METALS 6 V. GABRIEL INDIA LTD. [1993] 203 ITR 108 AND THE HIGH COURT OF GUJARAT IN CIT V. SMT. MINALBEN S. PARIKH [1995] 215 ITR 81 TREATED LOSS OF TAX AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. MR. ABRAHAM RELIED ON THE JUDGMENT OF THE DIVISION BENCH OF THE HIGH COURT OF MADRAS IN VENKATAKRISHNA RICE COMPANY V. CIT [1987] 163 ITR 129 INTERPRETING 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 'THE HIGH COURT HELD (PAGE 138) : 'IN THIS CONTEXT, IT MUST BE REGARDED AS INVOLVING A CONCEPTION OF ACTS OR ORDERS WHICH ARE SUBVERSIVE OF THE ADMINISTRATION OF REVENUE. THERE MUST BE SOME GRI EVOUS ERROR IN THE ORDER PASSED BY THE INCOME - TAX OFFICER, WHICH MIGHT SET A BAD TREND OR PATTERN FOR SIMILAR ASSESSMENTS, WHICH ON A BROAD RECKONING, THE COMMISSIONER MIGHT THINK TO BE PREJUDICIAL TO THE INTERESTS OF REVENUE ADMINISTRATION.' IN OUR VIEW, THIS INTERPRETATION IS TOO NARROW TO MERIT ACCEPTANCE. THE SCHEME OF THE ACT IS TO LEVY AND COLLECT TAX IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF DUE TO AN ERRONEOUS ORDER OF THE INCOME - TAX OFFICER, THE REVE NUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE'. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFIC ER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE, WHEN AN INCOME - TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN L OSS OF REVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME - TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE I NCOME - TAX OFFICER IS UNSUSTAINABLE IN LAW. ' 9. UNDER THE PROVISIONS OF SECTION 263 OF THE ACT, THE TERM ERRONEOUS MEANS A WRONG / INCORRECT DECISION DEVIATING FROM THE LAW. THIS EXPRESSION ALSO POSTULATES AN ERROR WHICH MAKES AN ORDER UN - SUSTAINABLE I N LAW. THE EXPRESSION PREJUDICIAL TO THE INTEREST OF REVENUE IS OF WIDE IMPORT AND IS NOT CONFINED MERELY LOSS OF TAX. THE ABOVE SAID PROPOSITIONS HAVE BEEN LAID DOWN BY THE HONBLE DELHI HIGH COURT IN ITO VS. DG HOUSING PROJECTS LTD. (2012) 343 ITR 329 (DELHI) . 1 0. THE HONBLE DELHI HIGH COURT IN GEE VEE ENTERPRISES VS. ADDL.CIT & OTHERS, (1975) 99 ITR 375 (DEL) HELD AS UNDER: - 'THE REASON IS OBVIOUS. THE POSITION AND FUNCTION OF THE INCOME - TAX OFFICER IS VERY DIFFERENT FROM THAT OF A CIVIL COURT. THE S TATEMENTS MADE IN A PLEADING PROVED BY THE MINIMUM AMOUNT OF EVIDENCE MAY BE ACCEPTED BY A CIVIL COURT IN THE ABSENCE OF ANY REBUTTAL. THE CIVIL COURT IS NEUTRAL. IT SIMPLY GIVES DECISION ON THE BASIS OF THE PLEADING AND EVIDENCE WHICH ITA NO. 962 /PN/20 1 4 M/S. FORTUNE METALS 7 COMES BEFORE IT. THE INCOME - TAX OFFICER IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVESTIGATOR. HE 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 W HEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE AN INQUIRY. THE MEANING TO BE GIVEN TO THE WORD 'ERRONEOUS' IN SECTION 263 EMERGES OUT OF THIS CONTEXT. IT IS BECAUSE IT IS INCUMBENT ON THE INCOME - TAX OFFICER TO FURTHER INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MAKE SUCH AN INQUIRY PRUDENT THAT THE WORD 'ERRONEOUS' IN SECTION 263 INCLUDES THE FAILURE TO MAKE SUCH AN INQUIRY. THE ORDER BECOMES ERRONEOUS BECAUSE SUCH AN INQUIRY HAS NOT BEEN MADE AND NOT BECAUSE THERE IS ANYTH ING WRONG WITH THE ORDER IF ALL THE FACTS STATED THEREIN ARE ASSUMED TO BE CORRECT.' 11 . THE HONBLE BOMBAY HIGH COURT IN CIT VS. GABRIEL INDIA LTD. (1993) 203 ITR 108 (BOM) HAD HELD AS UNDER: - ... FROM A RENDING OF SUB - SECTION (1) OF SECTION 263, IT IS CLEAR THAT THE POWER OF SUO MOTU REVISION CAN BE EXERCISED BY THE COMMISSIONER ONLY IF, ON EXAMINATION OF THE RECORDS OF ANY PROCEEDINGS UNDER THIS ACT, HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE INCOME - TAX OFFICER IS 'ERRONEOUS IN SO FAR AS IT IS P REJUDICIAL TO THE INTERESTS OF THE REVENUE' . IT IS NOT AN ARBITRARY OR UNCHARTERED POWER, IT CAN BE EXERCISED ONLY ON FULFILLMENT OF THE REQUIREMENTS LAID DOWN IN SUB - SECTION (1). THE CONSIDERATION OF THE COMMISSIONER AS TO WHETHER AN ORDER IS ERRONEOUS I N SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, MUST BE I N SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, MUST BE BASED ON MATERIALS ON THE RECORD OF THE PROCEEDINGS CALLED FOR BY HIM. IF THERE ARE NO MATERIALS ON RECORD ON THE BASIS OF WHICH IT CAN BE SAID THAT THE COMMISSIONER ACTING IN A REASONA BLE MANNER COULD HAVE COME TO SUCH A CONCLUSION, THE VERY INITIATION OF PROCEEDINGS BY HIM WILL BE ILLEGAL AND WITHOUT JURISDICTION. THE COMMISSIONER CANNOT INITIATE PROCEEDINGS WITH A VIEW TO STARTING FISHING AND ROVING ENQUIRIES IN MATTERS OR ORDERS WHIC H ARE ALREADY CONCLUDED. SUCH ACTION WILL BE AGAINST THE WELL - ACCEPTED POLICY OF LAW THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE R EPOSE IN AND SET AT REST JUDICIAL AND QUASI - JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. 12 . THE HONBLE DELHI HIGH COURT IN ITO VS. DG HOUSING PROJECTS LTD. (SUPRA) WHILE REFERRING TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT VS. GABRIEL INDIA LTD. (SUPRA) OBSERVED AS UNDER: - FROM THE AFORESAID DEFINITIONS IT IS CLEAR THAT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN INCOME - TAX OFFICER ACTING 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 ITA NO. 962 /PN/20 1 4 M/S. FORTUNE METALS 8 ELABORATELY. THIS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR TH AT OF THE INCOME - TAX OFFICER, WHO PASSED THE ORDER UNLESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALISED WHERE THE INCOME - TAX OFFICER WHILE 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 ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATE HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOULD HAVE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN THE ONE DETERMINED BY THE INCOME - TAX OFFICER. THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO RE - EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE . IT IS BECAUSE THE INCOME - TAX OFFICER HAS EXERCISED THE QUASI - JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT BE FORMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WI TH THE CONCLUSION . . . THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT TAX 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 WH AT WAS JUST HAS BEEN IMPOSED . . 13. IT HAS BEEN HELD BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. GABRIEL INDIA LTD. (SUPRA) THAT EXERCISE OF JURISDICTION UNDER SECTION 263 OF THE ACT CANNOT BE INVOKED FOR MAKING SHORT ENQUIRIES OR TO GO INTO THE PROCES S OF CANNOT BE INVOKED FOR MAKING SHORT ENQUIRIES OR TO GO INTO THE PROCES S OF ASSESSMENT AGAIN AND AGAIN MERELY ON THE BASIS THAT MORE ENQUIRIES OUGHT TO HAVE BEEN CONDUCTED TO FIND SOMETHING . IN CASES WHERE, TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAD TAKEN ONE VIEW, WITH WHICH THE COMMISSIONER MAY NOT AGREE, THE SAI D ORDER CANNOT BE TERMED AS ERRONEOUS AS HELD BY THE HONBLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD. VS. CIT (SUPRA). FURTHER, THE HONBLE SUPREME COURT HAD OBSERVED THAT THE PHRASE PREJUDICIAL TO INTEREST OF REVENUE HAS TO BE READ IN CONJUNCTION W ITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. HOWEVER, LOSS OF REVENUE AS A CONSEQUENCE TO ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF REVENUE. THE HONBLE APEX COURT (SUPRA) FURTHER HELD THAT WHERE THE AS SESSING OFFICER HAD ADOPTED ONE OF THE COURSES PERMISSIBLE AND AVAILABLE TO HIM, WHICH IN TURN, HAD RESULTED IN LOSS TO THE ITA NO. 962 /PN/20 1 4 M/S. FORTUNE METALS 9 REVENUE, CANNOT MAKE THE ORDER PREJUDICIAL TO THE INTEREST OF REVENUE. IN CASE, WHERE THE COMMISSIONER GIVES HIS FINDING THAT THE V IEW TAKEN BY THE ASSESSING OFFICER IS UN - SUSTAINABLE IN LAW AND THEREFORE, THE ORDER IS ERRONEOUS, WHICH IN TURN, WAS PREJUDICIAL TO THE INTEREST OF REVENUE, THEN THE EXERCISE OF POWER BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT IS TO BE UPHELD. 14. THE HONBLE BOMBAY HIGH COURT IN CIT VS. DESIGN AND AUTOMATION ENGINEERS (BOMBAY) P. LTD. (2010) 323 ITR 632 (BOM) HAS LAID DOWN THAT WHERE PROPORTIONATE DEDUCTION UNDER SECTION 80HHC OF THE ACT WAS ALLOWED TO THE ASSESSEE, IT CANNOT BE SAID THAT THE ASSES SING OFFICER HAD NOT APPLIED HIS MIND WHILE GRANTING THE SAID DEDUCTION AND THE HONBLE BOMBAY HIGH COURT UPHELD THE ORDER OF TRIBUNAL IN HOLDING THAT THE VIEW TAKEN BY THE ASSESSING OFFICER WAS A POSSIBLE VIEW AND THE CONDITIONS PRESCRIBED FOR INVOKING JU RISDICTION UNDER SECTION 263 OF THE ACT DID NOT EXIST. 15. IN THE FACTS OF THE PRESENT CASE, THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER ISSUED A QUESTIONNAIRE TO THE ASSESSEE TO FURNISH COMPLETE DETAILS IN RESPECT OF PURCHASES MADE BY THE ASSESSEE. IN REPLY, THE ASSESSEE NOT ONLY FILED DATE - WISE DETAILS OF PURCHASES, BUT ALSO FILED CONFIRMATIONS FROM THE PARTIES FROM WHOM THE SAID PURCHASES WERE MADE. THE SAID DETAILS INCLUDE PURCHASES MADE FROM SAMPARK STEELS, PRAYAN TRADING CO., VITARAG TRADING CO. AND SIDDHIVINAYAK STEEL . THE RELEVANT DETAILS AND INFORMATION IS FILED BY THE ASSESSEE IN THE PAPER BOOK. FURTHER, THE PERUSAL OF ASSESSMENT ORDER REFLECTS THAT THE ASSESSING OF FICER HAD MADE ELABORATE ENQUIRIES IN RESPECT OF TRANSPORTATION OF PURCHASES, WHERE THE ASSESSING OFFICER HAD CONSIDERED ALL THE PARTICULARS FILED BEFORE HIM AND HAD ALSO NOTED THE VARIOUS ASPECTS OF ITA NO. 962 /PN/20 1 4 M/S. FORTUNE METALS 10 TRANSACTIONS I.E. THE TRANSPORT OF THE GOODS PURCHASED B Y THE ASSESSEE AND HAD ALSO ENHANCED INCOME IN THE HANDS OF ASSESSEE . M ERELY BECAUSE ELABORATE DISCUSSION HAS NOT BEEN MADE BY THE ASSESSING OFFICER ON THIS ASPECT DOES NOT MA K E THE ORDER PASSED BY THE ASSESSING OFFICER AS BEING ACCEPTING TRANSACTIONS AT FACE VALUE. THE CASE OF THE COMMISSIONER WHILE INVOKING JURISDICTION UNDER SECTION 263 OF THE ACT IS THAT THE ASSESSING OFFICER HA D PRIMA FACIE MADE AN ASSUMPTION OF INCORRECT COMPUTATION OF INCOME AND / OR UNDER ASSESSMENT OF INCOME TO THAT EXTENT. AS P OINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AND AS NOTED BY US, THE ASSESSING OFFICER HAD MADE ENQUIRIES IN THE CASE AND HAD DISCUSSED THE ASPECT OF TRANSPORTATION OF GOODS IN THE ASSESSMENT ORDER ELABORATELY, BUT HAD NOT DISCUSSED THE INFORMATION AND DETAILS FILED BY THE ASSESSEE WITH REGARD TO PURCHASES , DOES NOT MAKE THE ORDER PASSED BY THE ASSESSING OFFICER TO BE A PRIMA FACIE CASE OF ASSUMPTION OF INCORRECT COMPUTATION OF INCOME OR UNDER ASSESSMENT OF INCOME. WE FIND SUPPORT F ROM THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. GABRIEL INDIA LTD. (SUPRA). THE ORDER PASSED BY THE ASSESSING OFFICER CANNOT BE SA ID TO BE ERRONEOUS OR PASSED ON ASSUMPTION OF INCORRECT COMPUTATION OF INCOME ON THE GROUND THAT THE ASSE SSING OFFICER HAD FAILED TO CARRY OUT THE EXERCISE OF VERIFICATION OF TRANSACTIONS WITH THE SAID FOUR PARTIES INVOLVING PURCHASES OF RS.37,79,207/ - . IN THE FIRST INSTANCE, THE ASSESSEE HIMSELF HAS FILED THE CONFIRMATIONS FROM THE SAID PARTIES, WHICH ARE A VAILABLE ON RECORD. FURTHER, EVIDENCE OF TRANSPORTATION OF THE GOODS ALSO HAVE BEEN FILED WHICH HAVE BEEN TAKEN NOTE BY THE ASSESSING OFFICER AND ELABORATELY RECORDED THE SAME IN THE ASSESSMENT ORDER. MAY BE, IT CAN BE THE CASE OF LACK OF PROPER ENQUIRY , BUT IT IS NOT THE CASE OF LACK OF ENQUIRY AND ONCE ENQUIRY HAS BEEN MADE BY THE ASSESSING OFFICER AND HE HAS TAKEN ONE VIEW, THE SAME CANNOT BE SET - ASIDE BY THE COMMISSIONER SINCE HE DOES NOT AGREE THAT THE VIEW TAKEN BY ITA NO. 962 /PN/20 1 4 M/S. FORTUNE METALS 11 THE ASSESSING OFFICER WAS A POSSIB LE VIEW. WE HOLD THAT THE CONDITIONS PRESCRIBED UNDER SECTION 263 OF THE ACT ARE NOT FULFILLED AND CONSEQUENTLY, WE HOLD THAT THE JURISDICTION EXERCISED BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT IS INVALID AND WITHOUT ANY BASIS. WE SET - ASIDE THE O RDER OF COMMISSIONER IN THIS REGARD AND ALLOW THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 21 ST DAY OF MARCH , 201 6 . SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 21 ST MARCH , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT - I I , KOLHAPUR ; 4 . , , / DR A , ITAT, PUNE; 5 . / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE