Shri Neerav S. Parekh, Ahmedabad V. The Income Tax Officer, Ward-5(2)(3), Ahmedabad

ITA 995/AHD/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9061 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 21-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANIL R SHAH
• Keywords: Salary income; Principle of natural justice; TDS
• Section: 143(3); 80G; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 995/AHD/2016 (ASSESSMENT YEAR: 2011-12) SHRI NEERAV S. PAREKH, PARITOSH KRISHNA SOCIETY, ELLISBRIDGE, AHMEDABAD- 380006 V/S INCOME TAX OFFICER, WARD- 5 (2)(3), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAVPV9727C APPELLANT BY: SHRI ANIL R. SHAH & KINJAL SHAH, A. R. RESPONDENT BY : SHRI SUBHASH BAINS, CIT/ D.R . ( )/ ORDER DATE OF HEARING : 28 -09-201 8 DATE OF PRONOUNCEMENT : 13 -12-2018 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. PR. CIT-5, AHMEDABAD DATED 18.3.2016 PERTAINING TO A.Y. 2011-1 2 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO . 995 /AHD/2016 . A.Y. 2011- 12 2 1. CIT HAS ERRED IN HOLDING THAT ORDER OF TH E AO PASSED U/S. 143(3) DATED 24- 1-2014 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT IS SUBMITTED THAT SINCE THE AO HAS APPLIED HIS M IND AND HAS VERIFIED ALL THE DATA, PARTICULARS EXPLANATIONS AND EVIDENCES, THE O RDER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE AND SINCE PR OVISIONS OF SEC. 263 ARE WRONGLY APPLIED, ORDER OF THE CIT U/S.263 BE CANCELLED AND ORDER OF THE AO PASSED U/S. 143(3) DT.24/1/2014 BE RESTORED. 2. ALTERNATIVELY AND WITHOUT PREJUDICE TO AB OVE, THE CIT HAS ERRED IN DIRECTING THE AO TO FRAME THE ASSESSMENT FRESH AFTER PROPER E XAMINATION, INQUIRY AND VERIFICATION OF THE FOLLOWING ISSUES DESPITE THE FA CT THAT APPELLANT HAS FURNISHED ALL THE DETAILS, EXPLANATIONS AND EVIDENCES BEFORE THE AO AS WELL AS BEFORE THE CIT AND THEREFORE, THE CIT OUGHT TO HAVE CONSIDERED THE MERITS OF EACH OF THE ISSUES INVOLVED AND DROP THE PROCEEDINGS INSTEAD OF DIRECT ING THE AO TO FRAME A FRESH ASSESSMENT ORDER. (I)TO VERIFY INTEREST PAID RS. 1 ,07,432/- ON UNSEC URED LOANS. (II) TO VERIFY DEDUCTION OF HRA RS. 2,05,489/- . (III TO VERIFY DEDUCTION OF DONATION OF RS.750/- U/ S.80G. (IV) TO VERIFY DIFFERENCE IN OPENING BALANCE OF RS . 3,61,573/- AND RS.38,075/-IN THE ACCOUNT OF AFLON ASSOCIATES. (V) TO VERIFY INTEREST RECEIVED RS. 1 8,337/- AND R S. 11 ,000/- FROM AFLON ASSOCIATES AND AFLON ALLPLAST RESPECTIVELY. (VI) TO VERIFY INTEREST RECEIVED OF RS.89,170/- O N I. TAX REFUND (WHICH IS ACTUALLY I. TAX PAID U/S. 1 40A) IT IS THEREFORE SUBMITTED THAT RELIEF CLAIMED ABOVE BE ALLOWED AND THE ORDER OF THE CIT BE MODIFIED ACCORDINGLY. 2. PROCEEDINGS U/S 263 OF THE ACT WERE INITIATED BY IS SUE OF SHOW CAUSE NOTICE (SCN) DATED 09/12/2015, WHEREIN THE ASSESSEE WAS AS KED TO SHOW CAUSE AS TO WHY PROCEEDINGS U/S.263 OF THE ACT SHOULD NOT BE IN ITIATED FOR MODIFYING OR ITA NO . 995 /AHD/2016 . A.Y. 2011- 12 3 EVEN CANCELLING THE ASSESSMENT, AND A FRESH ASSESSM ENT BE MADE FOR THE YEAR IN QUESTION. THE RELEVANT PORTION OF THE SCN IS REPROD UCED BELOW: '....ON VERIFICATION OF YOUR ASSESSMENT CASE RECORDS FOR THE A.Y.2011-12, IT IS SEEN THAT THE ASSESSMENT ORDER U/S. 143(3) OF THE INCOME TAX ACT, 1961 WAS PASSED ON 24/01/2014 BY THE ITO WARD-5(2)(3), AHMEDABAD, ACCE PTING THE RETURNED INCOME OF RS.14,64,030/-. THE CASE WAS SELECTED MANUALLY F OR SCRUTINY. ON EXAMINATION OF THE DETAILS AS MADE AVAILABLE BY YOU FOR THE PUR POSE OF MAKING ASSESSMENT ORDER, IT IS CONSTRUED THAT THE ASSESSMENT ORDER DA TED 24/01/2014 APPEARS TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF THE REVENUE FOR THE REASONS MENTIONED IN THE SUBSEQUENT PARAGRAPHS. 2.0 ON GOING THROUGH THE CASE-RECORDS AND THE DETAI LS FURNISHED BY YOU DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT HAS BEEN R EVEALED AS UNDER- YOU HAD FILED YOUR RETURN OF INCOME FOR A. Y. 2011- 12 ON 26/07/2011, DECLARING TOTAL INCOME OF RS. 14,64,030/-. DURING THE YEAR, Y OU HAD RECEIVED INTEREST INCOME OF RS. 1,97,478/- AND CLAIMED DEDUCTION U/S. 57 OF THE ACT OF RS. 1,28,753/-. NET INTEREST INCOME WAS SHOWN AS RS. 68 ,725/-, THE DETAILS OF EXPENSES CLAIMED WERE AS UNDER: SI. NO. NAME DEPOSIT INTEREST PAID 1. BHARTI RAMESHKUMAR KANTHARIA 35,000 4,200 2. HDFCBANK 3,321 3. KERUBEN R. KATHARIA 40,000 4,800 4. NEERAV S. PAREKH, HUF 55,622 5. RAMESHKUMAR K. KANTHARIA 35,000 4,200 6. SHAILESH M. PAREKH HUF 8,054 7. SHAILESH M. PAREKH INDL. 43,756 8. UMANG R. KANTHARIA 40,000 4,800 ITA NO . 995 /AHD/2016 . A.Y. 2011- 12 4 TOTAL 1,28,753 FURTHER, CONFIRMATIONS OF UNSECURED LOANS WERE FILE D FROM THE PERSONS MENTIONED AT SI. NO.1,3,5 & 8 ONLY, WITHOUT MENTIONING PAN. H OWEVER, NO CONFIRMATIONS WERE FILED FOR THE PERSONS SHOWN AT SI. NO.4,6, & 7 . HENCE, INTEREST EXPENSES CLAIMED IN THEIR NAMES WAS NOT ALLOWABLE. THEREFORE , A SUM OF RS. 1,07,432/- (RS.1,28,753/- MINUS RS. 21,321/- (RS.18,000/-+ INT EREST PAID TO HDFC BANK OF RS. 3321/-)) WAS TO BE DISALLOWED FROM THE CLAIM U/S.57 OF THE ACT AND WAS TO BE ADDED TO YOUR TOTAL INCOME. THE AO HAD NOT DISALLOW ED THE DEDUCTION CLAIMED U/S. 57 OF THE ACT. FURTHER, SUCH UNSECURED LOANS A ND INTEREST WERE DISALLOWED BY THE AO IN YOUR CASE FOR A. Y. 2008-09 ALSO. 3.0 IN THE RETURN OF INCOME FILED FOR A.Y. 2011-12, YOUR RESIDENTIAL ADDRESS IS SHOWN AS 'PARITOSH', KRISHNA SOCIETY, ELLISBRIDGE, AHMEDABAD, WHICH APPEARS TO BE OWNED BY THE HUF. IN THE COMPUTATION OF INCOME, YOU HAD CLAIMED EXEMPTION U/S.W(13A) OF THE ACT OF RS. 2,05,489/-, OUT OF SAL ARY RECEIVED FROM NET4NUTS LTD. HOWEVER, YOU HAD NOT FURNISHED ANY DETAILS WITH RES PECT TO BASIC, DA AND HRA. COPY OF FORM NO. 16 WAS ALSO NOT FILED BY YOU. IN V IEW OF THE ABOVE, THE CLAIM OF EXEMPTION OF HRA ON RENT PAID OFRS 2,05,489/- TO TH E HUF (OF WHICH YOU TOO ARE A MEMBER), CANNOT BE ALLOWED. FURTHER, THE SAME WAS DISALLOWED BY THE AO IN YOUR CASE FOR THE A.Y. 2008-09. WHILE FINALIZING TH E ASSESSMENT PROCEEDINGS, THE AO HAD FAILED TO NOTICE THIS FACT. 4.0 YOU HAD CLAIMED DONATION OF RS 1,500/- UNDER CH APTER VIA, BUT NO PROOF WAS FILED IN SUPPORT OF YOUR CLAIM. THE AO HAD ALLOWED CLAIM OF RS. 750/- (50% OF RS. 1,500/-), WITHOUT PROPER VERIFICATION. HOWEVER, SIN CE NO PROOF WAS FILED BY YOU, YOU WERE NOT ELIGIBLE FOR DEDUCTION. 5.0 DURING THE YEAR, YOU HAD SHOWN TO HAVE RECEIVED SALARIES FROM AFLON ALLPLAST PVT. LTD. OF RS. 6,60,000/- AND FROM NET4NUTS LTD. OF RS. 10,74,039/-, YOU HAD NOT FURNISHED FORM NO.16 ISSUED BY THE ABOVE EMPLOYERS. YOU HAD FURNISHED LEDGER ACCOUNT OF AFLON ASSOCIATES (WHICH IS A UNIT OF ALL PLAST PVT. LTD.), SHOWING REMUNERATION OF RS. 6,60,000/-. HOWEVER, ON VERIFIC ATION OF THE CONTRA ACCOUNT FILED BY AFLON ASSOCIATES, ENTRY RELATED TO REMUNER ATION OF RS. 6,60,000/- WAS NOT THERE. FURTHER, IN THE CONTRA ACCOUNT, CLOSING BALA NCE WAS SHOWN AT RS. 38,076/-, WHERE AS IN THE LEDGER ACCOUNT, BALANCE WAS SHOWN A T RS. 4,93,106/-. THE AO HAD NOT VERIFIED THIS FACT WHILE FINALIZING THE ASSESSM ENT PROCEEDINGS. YOU ARE REQUESTED TO PLEASE CLARIFY THE SAME. ITA NO . 995 /AHD/2016 . A.Y. 2011- 12 5 6.0 AS PER THE LEDGER ACCOUNTS FILED BY YOU, YOU HA D RECEIVED AN INTEREST OF RS 11,000/-FROM AFLON ENGINEERING CORPORATION, AND RS. 18,337/-FROM AFLON ASSOCIATES, BOTH BEING UNITS OF AFLON ALLPLAST PVT. LTD. HOWEVER, PAN OF AFLON ALLPLAST PVT. LTD. WAS NOT FURNISHED BY YOU. SINCE BOTH WERE UNITS OF AFLON ALLPLAST PVT. LTD., THERE WOULD BE ONLY ONE RECEIPT OF INTER EST. THE AO HAD FAILED TO VERIFY THE SAME. 7.0 DURING THE YEAR, YOU HAD RECEIVED REFUND OF RS 89,170/-, BUT NO INTEREST WAS OFFERED FOR TAXATION. THE AO HAD NOT CALLED FOR BIF URCATION OF PRINCIPAL AMOUNT OF REFUND AND INTEREST THEREON. ACCORDINGLY, THE INTER EST EARNED ON REFUND AMOUNT WAS NOT BROUGHT TO TAX. 8.0' IN VIEW OF THE ABOVE FACTS, THE ASSESSING OFFI CER WAS REQUIRED TO VERIFY THE ABOVE FACTS, BEFORE FINALIZING THE ASSESSMENT ORDER . INABILITY TO DO SO, RESULTED IN THE UNDERASSESSMENT, THUS RENDERING THE ASSESSMENT ORDER ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 9.0 FROM THE DISCUSSIONS ABOVE, IT MAY BE SEEN THAT THE ASSESSMENT ORDER PASSED U/S.!43(3) OF THE INCOME TAX ACT, 1961 ON 24 /01/2014 FOR THE A.Y. 2011- 12 APPEARS TO BE ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. YOU ARE THEREFORE REQUESTED TO SHOW CAUSE AS TO WHY ACTION U/S.263 OF THE INCOME TAX ACT, 1961 SHOULD NOT BE INITIATED FOR MO DIFYING OR EVEN CANCELLING THE SAID ASSESSMENT ORDER...' 3. IN RESPONSE TO THE NOTICE U/S.263 OF THE ACT, T HE ASSESSEE HAS FURNISHED A LETTER DATED 25/11/2015 ALONG WITH CERTAIN DETAILS/ DOCUMENTS, WHICH IS REPRODUCED BELOW : '.....I HAVE RECEIVED THE NOTICE UNDER REFERENCE. IN THIS CONNECTION, I STATE AS FOLLOWS: 1. ASSESSMENT ORDER PASSED U/S 143(3) EFT. 24/01/ 14 IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THER EFORE, PROVISIONS OF SEC. 263 ARE NOT APPLICABLE. 2. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE .AO HAS ASKED FOR THE DETAILS, EVIDENCES AND EXPLANATIONS WHICH ARE FURNISHED VIDE LETTER DT. 8/10/12, LETTER DATED 26/10/13 ALONGWITH 23 ENCLOSURES AND LETTER D ATED - ALONGWITH 37 ENCLOSURES (PAGES TO 7). THE AO HAS GONE THROUGH, . UNDERSTOOD AND EVALUATED ALL THE DOCUMENTS, EVIDENCES AND EXPLANATIONS IN DETAIL S, APPLIED HIS MIND AND HAS PASSED THE ASSESSMENT ORDER AFTER BEING FULLY SATIS FIED ABOUT THE TRUTH AND ITA NO . 995 /AHD/2016 . A.Y. 2011- 12 6 FAIRNESS OF THE ASSESSED INCOME BEING COMPUTED IN A CCORDANCE WITH THE PROVISIONS OF LAW. 3. YOUR HONOUR'S PROPOSAL OF MODIFYING OR EVEN CA NCELLING THIS ORDER IS THEREFORE UNJUSTIFIED AND IN VIOLATION OF THE PRINCIPLES OF E QUITY AND NATURAL JUSTICE AND HENCE, UNTENABLE IN LAW. I THEREFORE REQUEST YOUR HONOUR TO DROP THE PR OCEEDINGS AND OBLIGE. 4. WITHOUT PREJUDICE TO ABOVE, I OFFER MY EXPLANA TIONS TO THE QUERIES RAISED IN THE NOTICE UNDER REFERENCE IN THE PARAGRAPHS TO FOL LOW: A) INTEREST PAID TO NEERAV S. PAREKH (HUF) RS. 55,6 22; SHAILESH M. PAREKH (HUF) RS. 8,054 AND TO SHAILESH M. PAREKH (INDI) RS. 43,7 56 AGGREGATING TO RS. 1,07,432 ARE REFLECTED BY THE RECIPIENTS IN THEIR RESPECTIVE RETURNS AS MAY BE VERIFIED FROM THE COPIES OF ACKNOWLEDGEMENT, STATEMENT OF INCOME, CONFIRMATION AND COPY OF LEDGER ACCOUNT ENCLOSED (PAGES 8 TO 22). DEDUCTION OF RS. 1,07,432 IS THEREFORE CORRECTLY CLAIMED AND CORRECTLY ALLOWED AS SUCH IN THE ASSESSMENT ORDER. B) F.NO. 16 BEING SALARY CERTIFICATE ISSUED BY NET4 NUTS REFLECTING HRA OF RS. 2,05,489 FORMING PART OF MY SALARY IS ENCLOSED (PAG ES 23 TO 25). I HAVE PAID RENT OF RS. 2,64,000 TO SHAILESH M. PAREKH (HUF) WHICH I S SUPPORTED BY RENT RECEIPT ENCLOSED (PAGE 26). RENT RECEIVED BY SHAILESH M. PA REKH (HUF) IS REFLECTED AS 'INCOME FROM PROPERTY' IN HIS RETURN OF INCOME AS M AY BE VERIFIED FROM COPY THEREOF ENCLOSED (PAGES 14 TO 17). I THEREFORE SUBM IT THAT DEDUCTION OFRS. 2,05,489 IS CORRECTLY ALLOWED AND REQUIRES NO MODIF ICATION/CANCELLATION. C) RECEIPT FOR DONATION OF RS. 1,500 IS ENCLOSED (P AGE 27). THE DONEE TRUST HAS OBTAINED CERTIFICATE U/S 80G AS PER THE SPECIFICATI ONS MENTIONED THEREIN AND HENCE, THE DEDUCTION @ 50 % AT RS. 750 IS CORRECTLY GRANTED. D) SALARY CERTIFICATE FROM NET4NUTS IS ALREADY ENCL OSED AT PAGES 23 TO 25.1 ENCLOSE F. 16 FROM AFLON ALLPLAST (P) LTD (PAGES 28 TO 29). I ALSO ENCLOSE COPIES OF THE RELEVANT LEDGER ACCOUNTS FROM THE BOOKS OF AFLO N ALLPLAST (P) LTD (PAGES 30 TO 34) FROM WHICH, CLOSING BALANCE AS ON 31/3/2011AT R S. 38,076 BEING BROUGHT FORWARD AS OPENING BALANCE AS ON 1/4/11, GROSS SALA RY OF RS. 6,60,000, TDS OF RS. 2,04,970, NET SALARY OF RS. 4,55,030 AND BALANCE OF RS. 4,93,106 AS ON 30/4/11 ARE CLEARLY VERIFIABLE. E) I HAVE RECEIVED INTEREST OF RS. 11,000 FROM AFLO N ENGINEERING CORPORATION AND INTEREST OF RS. 18,337 FROM AFLON ASSOCIATE (WHICH IS UNIT OF AFLON ALLPLAST (P) LTD). BOTH THESE INTERESTS ARE REFLECTED AS INCOME FROM O THER SOURCES IN MY RETURN OF INCOME AND ASSESSED AS SUCH AND TDS OF RS. 1,100 AN D RS. 1,834 RESPECTIVELY IS GIVEN CREDIT FOR. PAN AND CONFIRMATIONS OF BOTH THE SE COMPANIES ARE ALSO ENCLOSED (PAGES 35 TO 36). ITA NO . 995 /AHD/2016 . A.Y. 2011- 12 7 F) I LASTLY STATE THAT RS. 89,170 IS I. TAX PAID U/ S 140A FOR A. Y. 2010/11 AS MAY BE VERIFIED FROM COPIES OF ACKNOWLEDGEMENT, STATEMENT AND CHALLAN ENCLOSED (PAGES 37 TO 41). SINCE RS. 89,170 IS NOT A REFUND DUE/REC EIVED BUT TAX PAID, THE QUESTION OF OFFERING INTEREST ON REFUND DOES NOT ARISE. G) I MAY MENTION IN PASSING THAT THE DISALLOWANCES MADE IN A. Y. 2008/09 MENTIONED IN THE NOTICES ARE ON DIFFERENT GROUNDS A ND THE APPEAL IS PENDING ADJUDICATION AS HON. CIT(A)-5 IS AWAITING REPORT OF THE AO ON CERTAIN ISSUES WHICH IS NOT YET SENT BY THE AO. 4. THEREAFTER ASSESSEE ALSO SUBMITTED DETAILS OF DEDUC TION OF RS. 205489/- AS WELL AS FORM NO. 16 ISSUED BY THE EMPLOYER, APART FROM T HAT RENT RECEIPT IN THE FORM OF A CERTIFICATE AND COPY OF STATEMENT OF INCO ME SHOWING LET OUT PROPERTY INCOME OF RS. 2,64,000/-. BUT LD. CIT WAS NOT AGREE WITH THE CONTENTION OF THE ASSESSEE AND DIRECTED A.O. TO MAKE FURTHER ENQUIRY. 5. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER. THE LD. A.O. ASSESSED THE INCOME OF THE ASSESSEE BY WAY OF ASSES SMENT ORDER DATED 24.01.2014 AND ALSO VERIFIED AND CHECKED DETAILS PE RTAINING TO ASSESSEES SALARY INCOME SHORT TERM CAPITAL GAIN ON SALE OF SHARES AN D INTEREST DIVIDEND ETC AND TOTAL INCOME AS PER INCOME WAS RS. 14,64,030/-. 6. LD. A.R. STATED THAT ASSESSEE HAS FURNISHED ALL DET AILS PERTAINING TO QUERIES RAISED BY THE LD. CIT AND SUBMITTED ALL THE DETAILS BEFORE THE LOWER AUTHORITIES. AS WE CAN SEE, AT PAGE NO. 11& 12 OF THE PAPER BOOK. ASSE SSEE SUBMITTED COMPUTATION OF INCOME, BALANCE SHEET AND PROFIT AND LOSS ACCOUNT AND DETAILS OF INVESTMENT AND DETAILS OF BANK ACCOUNT AND APART FROM THAT BEFORE PR. CIT, ASSESSEE ALSO FILED DETAILED REPLY ALONG WITH 41 EN CLOSURE IN SUPPORT OF ITS CONTENTION. ITA NO . 995 /AHD/2016 . A.Y. 2011- 12 8 7. LD. A.R. CITED AN ORDER OF JURISDICTIONAL HIGH COUR T IN THE MATTER OF ARYAN ARCADE LTD. [2017] 84 TAXMANN.COM 293 WHEREIN IT HA S BEEN HELD: SECTION 24, READ WITH SECTION 263. OF THE INCOME-T AX ACT, 1961 - INCOME FROM HOUSE PROPERTY-DEDUCTIONS (INTEREST) - ASSESSMENT Y EAR 2011-12 - ASSESSEE- COMPANY WAS ENGAGED IN RENTING OF PROPERTY - DURING RELEVANT PERIOD ASSESSEE RAISED FUNDS BY ISSUING DEBENTURES -FUNDS RAISED TH ROUGH SUCH DEBENTURES WERE UTILISED FOR REPAYMENT OF PAST LOANS TAKEN FOR PURP OSE OF CONSTRUCTION OF BUILDING - ASSESSEE POINTED OUT THIS ASPECT TO ASSE SSING OFFICER DURING ORIGINAL ASSESSMENT - THROUGH ACCOUNTS ASSESSEE COULD ESTABL ISH PRECISE CORRELATION BETWEEN DEBENTURES AND REPAYMENT OF PAST LOANS - AS SESSING OFFICER AFTER EXAMINING ISSUE ACCEPTED ASSESSEE'S CLAIM FOR DEDUC TION UNDER SECTION 24(B) EVEN WITH RESPECT TO INTEREST PAID ON DEBENTURES WH ICH WERE UTILISED FOR REPAYMENT OF PAST LOANS USED FOR PURPOSE OF CONSTRU CTION OF BUILDING - FURTHER, CBDT IN ITS CIRCULAR DATED 20-8-1969 HAD CLARIFIED POSITION THAT IF SECOND BORROWING HAD REALLY BEEN USED MERELY TO REPAY ORIG INAL LOAN AND THIS FACT WAS PROVED TO SATISFACTION OF INCOME-TAX OFFICER, INTER EST PAID ON SECOND LOAN WOULD ALSO BE ALLOWED AS A DEDUCTION - WHETHER VIEW OF AS SESSING OFFICER BEING PLAUSIBLE, IT WAS NOT OPEN FOR COMMISSIONER TO TAKE SUCH ORDER IN REVISION - HELD, YES [PARA 16][ IN FAVOUR OF ASSESSEE] 8. AND ALSO CITED THE CASE OF MALABAR INDUSTRIAL CO. L TD. VS. CIT [2000] 243 ITR 83 WHEREIN IT HAS BEEN HELD: 'A BARE READING OF THIS PROVISION MAKES IT CLEAR TH AT THE PREREQUISITE TO THE EXERCISE OF JURISDICTION BY THE COMMISSIONER SUO MO TU UNDER IT, IS THAT THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIE D OF TWIN CONDITIONS NAMELY (I) THE ORDER 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 INCOME TAX OFFICER 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) OF THE ACT. THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASS ESSING OFFICER, IT IS ONLY WHEN ITA NO . 995 /AHD/2016 . A.Y. 2011- 12 9 AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTR ACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SA TISFY THE REQUIREMENT OF ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS P ASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATIO N OF MIND. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REV ENUE' IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT. UNDERSTOOD IN ITS OR DINARY MEANING IT IS OF WIDE IMPORT AND IS NOT CONFINED TO LOSS OF TAX.' 9. AS WE CAN SEE, ASSESSEE HAS FURNISHED ALL THE DETAI LS BEFORE THE LOWER AUTHORITIES AND COPIES HAVE BEEN PLACED BEFORE US. WE THINK IN SUCH CIRCUMSTANCES, SECTION 263 CANNOT BE INVOKED IN THE CASE OF THE AS SESSEE. 10. AS WE CAN SEE, THAT ASSESSING OFFICER HAD MADE PROP ER ENQUIRY IN THIS CASE. THEREFORE, WE CANCEL THE ORDER OF PR. CIT U/S. 263. 11. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. 12. SO FAR MERIT OF THE CASE IS CONCERNED; WE DO NOT WA NT TO GO INTO THE DETAIL AS ALREADY DETAILS HAVE BEEN FURNISHED BEFORE THE LOWE R AUTHORITIES. ORDER PRONOUNCED IN OPEN COURT ON 13 - 12- 2018 SD/- SD/- (PRAMOD KUMAR) (MAHAVIR PRASAD) VICE PRESIDENT TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 13/12/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. ITA NO . 995 /AHD/2016 . A.Y. 2011- 12 10 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD