M/s Chava Srinivasa Rao, Warangal V. Income Tax Officer, Ward-1, Kothagudem

ITA 997/HYD/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1856 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 14-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 22-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: G MANIKYA PRASAD
• Keywords: Opportunity of being heard; Assessment record
• Section: 143(3); 133A; 131; 263

Judgement Text

ITA NO.997 OF 2014 CHAVA SRINIVASA RAO, PALONCHA, W ARANGAL PAGE 1 OF 13 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER & SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.997/HYD/2014 (ASSESSMENT YEAR: 2010-11) SRI CHAVA SRINIVASA RAO KOTHAGUDEM, KHAMMAM PAN-AFCPC 0716 L VS. INCOME TAX OFFICER WARD 2 KOTHAGUDEM (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI G. MANIKYA PRASAD FOR REVENUE : SHRI P. SOMASEKHAR REDDY, DR DATE OF HEARING : 14.07.2015 DATE OF PRONOUNCEMENT : 05 .0 8 . 2015 O R D E R PER SAKTIJIT DEY, J.M. INSTANT APPEAL OF THE ASSESSEE IS AGAINST THE ORDE R DATED 26.03.2014 OF THE LD CIT, VIJAYAWADA PASSED U/S 263 OF THE ACT FOR THE A.Y 2010-11. 2. BRIEFLY, THE FACTS ARE, ASSESSEE AN INDIVIDUAL I S THE PROPRIETOR OF M/S SWAPANA RESTAURANT & BAR. FOR THE A.Y UNDER CONSIDERATION, ASSESSEE FILED HIS RETURN OF INCOME ON 15.10.2010 DECLARING TOTAL INCOME OF RS.97,72,119, BESIDES AGR ICULTURAL INCOME OF RS.25.00 LAKHS. IT MAY BE STATED, A SURVE Y OPERATION U/S 133A OF THE ACT WAS CONDUCTED IN THE BUSINESS P REMISES OF THE ASSESSEE ON 19.03.2010. IN COURSE OF THE ASSESS MENT PROCEEDINGS, AO CALLED FOR RELEVANT DETAILS TO SUBS TANTIATE THE EARNING OF AGRICULTURAL INCOME AT RS.25.00 LAKHS. A FTER ITA NO.997 OF 2014 CHAVA SRINIVASA RAO, PALONCHA, W ARANGAL PAGE 2 OF 13 EXAMINING THE EVIDENCES SUBMITTED BY ASSESSEE, AO A CCEPTED THE AGRICULTURAL INCOME TO THE EXTENT OF RS.21,90,000 W HILE TREATING THE AMOUNT OF RS.3,10,000 AS INCOME FROM OTHER SOUR CES. AO ALSO MADE SOME OTHER DISALLOWANCES OUT OF THE EXPEN DITURE CLAIMED BY THE ASSESSEE AS A RESULT OF WHICH THE TO TAL INCOME WAS DETERMINED AT RS.1,02,13,350 AS PER THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT ON 11.5.2011. 3. LD CIT IN EXERCISE OF POWERS U/S 263 OF THE ACT, CALLED FOR ASSESSMENT RECORDS OF THE ASSESSEE FOR THE YEAR UND ER CONSIDERATION AND AFTER EXAMINING THE SAME WAS OF T HE VIEW THAT THE AO HAS FAILED TO EXAMINE/CONSIDER VARIOUS ISSUE S, WHICH ACCORDING TO THE LD CIT HAS MADE THE ASSESSMENT ORD ER ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. ACCORDINGLY, HE ISSUED A SHOW CAUSE NOTICE TO THE A SSESSEE ON 24.01.2014. SUBSEQUENTLY, AFTER CHANGE IN INCUMBENC Y, ANOTHER SHOW CAUSE NOTICE U/S 263 OF THE ACT WAS ISSUED ON 11.03.2013 BY THE SUCCESSOR CIT RAISING SOME OTHER NEW ISSUES. THOUGH, ASSESSEE IN ITS REPLY SUBMITTED IN RESPONSE TO THE SHOW CAUSE NOTICE, OBJECTED TO THE INITIATION OF PROCEEDINGS U /S 263 OF THE ACT, BUT LD CIT DID NOT FIND MERIT IN THE OBJECTIO NS OF THE ASSESSEE. AS FAR AS THE DECLARATION OF AGRICULTURAL INCOME OF RS.16.00 LAKHS FROM SALE OF BAMBOO STICKS IS CONCER NED, LD CIT WAS OF THE OPINION THAT ASSESSEES CLAIM IS NOT AC CEPTABLE BECAUSE ASSESSEE DID NOT HAVE ADQUATE AGRICULTURAL LAND TO GROW BAMBOO TREES WHICH COULD GENERATE INCOME OF RS.16.0 0 LAKHS. HE OBSERVED THAT BAMBOO TREES TAKES ABOUT 5 YEARS TO G ROW. THEREFORE, CONSIDERING THE FACT THAT ASSESSEE HAS A CQUIRED 24.22 ACRES OF LAND ON 08.06.2004, IT COULD NOT HAVE BEEN POSSIBLE TO GROW BAMBOO TREES WITHIN SUCH A SHORT PERIOD TO DER IVE INCOME ITA NO.997 OF 2014 CHAVA SRINIVASA RAO, PALONCHA, W ARANGAL PAGE 3 OF 13 FROM SALE OF SUCH CROP. HE ALSO OBSERVED THAT EVEN BAMBOO TREES COULD NOT HAVE BEEN GROWN IN THE LAND AS IT IS WET LAND. HE ALSO NOTED THAT THE AMOUNTS CLAIMED TO HAVE BEEN CREDITE D TO THE BANK A/C TOWARDS SALE OF BAMBOO STICKS CANNOT BE AC CEPTED WITHOUT EXAMINING THE SOURCE OF SUCH PAYMENT AS WEL L AS THE IDENTITY AND CREDITWORTHINESS OF THE PERSON WHO PAI D THE AMOUNT. LD CIT OBSERVED THAT AS THE AO HAS NOT MADE PROPER INQUIRY OR EXAMINED ALL THESE ASPECTS, ASSESSMENT O RDER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. ACCORDINGLY, HE DIRECTED THE AO TO EXAMINE THE ISSU E AFRESH. 4. HE FURTHER NOTICED THAT ASSESSEE IS CONTRIBUTING TO THREE CHITS OF MARGADARSHI CHITS AND OUT OF WHICH TWO CHI TS WERE BIDDED FOR AN AMOUNT OF RS.31,52,110 WHICH WAS INVE STED IN PURCHASE OF ASSETS. ACCRUED CHIT CONTRIBUTIONS TO M ARGADARSI WERE TO THE TUNE OF RS.17,86,015, THE SOURCE OF WHI CH HAVE NOT BEEN EXPLAINED. THOUGH ASSESSEE SUBMITTED THAT CONT RIBUTION TO THE CHITS WERE BY HUF AND THE ISSUE HAS BEEN EXAMIN ED BY THE AO. LD CIT NOT BEING CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE HELD THAT AS THE AO HAS NOT EXAMINED THE S OURCE FOR CONTRIBUTION TO THE CHITS, ASSESSMENT ORDER IS ERRO NEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ACCORD INGLY HE DIRECTED THE AO TO EXAMINE THE ISSUE AFRESH AFTER G IVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. THE NEXT ISSUE ON WHICH LD CIT CONSIDERED ASSESS MENT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERE STS OF THE REVENUE IS DURING THE SURVEY PROCEEDING, ASSESSEE O FFERED TO DECLARE ADDITIONAL INCOME OF RS.1.00 CRORE FOR THE A.Y 2010-11 AND PROMISED TO PAY ADVANCE TAX OF RS.30.00 LAKHS, WHEREAS IN ITA NO.997 OF 2014 CHAVA SRINIVASA RAO, PALONCHA, W ARANGAL PAGE 4 OF 13 THE RETURN OF INCOME FILED FOR THE SAID A.Y, ASSESS EE OFFERED INCOME OF RS.80.00 LAKHS. HE, THEREFORE, WAS OF THE VIEW THAT AS THE ASSESSEE DID NOT DECLARE THE BALANCE AMOUNT OF RS.20.00 LAKHS, AO SHOULD HAVE ADDED THE AMOUNT TO THE INCOM E RETURNED. ACCORDINGLY, HE DIRECTED AO TO EXAMINE TH E ISSUE AFRESH. LD CIT ALSO CONSIDERED THE ASSESSMENT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE ON VARIOUS OTHER ISSUES. ON THE BASIS OF THE REASONS S ATED IN THE ORDER PASSED U/S 263, LD CIT ULTIMATELY SET ASIDE T HE ASSESSMENT ORDER AND DIRECTED AO TO RE DO THE ASSESSMENT DE NO VO. BEING AGGRIEVED OF THE ORDER PASSED BY LD CIT, ASSESSEE P REFERRED THE PRESENT APPEAL. 6. AS COULD BE SEEN FROM THE GROUNDS RAISED BEFORE US, ASSESSEE IS BASICALLY CHALLENGING THE JURISDICTION OF THE LD CIT IN EXERCISING POWER U/S 263 OF THE ACT. LD AR SUBMITTE D BEFORE US, AO HAVING EXAMINED ALL THE ISSUES ON WHICH LD CIT P ROPOSED TO REVISE THE ASSESSMENT ORDER AND COMPLETED ASSESSMEN T AFTER NECESSARY INQUIRY ON THOSE ISSUES, THE ASSESSMENT O RDER CANNOT BE HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTE RESTS OF THE REVENUE. LD AR REFERRING TO THE DISCUSSIONS MADE IN THE ASSESSMENT ORDER AS WELL AS THE REPLIES SUBMITTED B Y THE ASSESSEE FROM TIME TO TIME IN COURSE OF THE ASSESSM ENT PROCEEDINGS SUBMITTED BEFORE US, NOT ONLY THE AO HA S MADE ADEQUATE INQUIRY, BUT ASSESSEE HAS ALSO SUBMITTED A LL THE INFORMATIONS AND NECESSARY DETAILS ON THE QUERY RAI SED BY THE AO. THUS, IT WAS SUBMITTED BY THE LD AR SINCE THE A O HAS COMPLETED THE ASSESSMENT AFTER CONDUCTING NECESSARY INQUIRY AND APPLICATION OF MIND, LD CIT CANNOT REVISE THE O RDER BY INVOKING HIS POWER U/S 263 ONLY BECAUSE IN HIS OPIN ION AO ITA NO.997 OF 2014 CHAVA SRINIVASA RAO, PALONCHA, W ARANGAL PAGE 5 OF 13 SHOULD HAVE CONDUCTD SOME MORE INQUIRIES OR THE INQ UIRY CONDUCTED BY THE AO IS INADEQUATE. THUS IT WAS SUBM ITTED BY THE LD AR THAT EXERCISE OF POWER U/S 263 OF THE ACT IS NOT VALID. 7. LD DR SUBMITTED BEFORE US THAT THOUGH THE AO IN COURSE OF THE ASSESSMENT PROCEEDING HAS RAISED CERTAIN ISSUES WITH REGARD TO THE AGRICULTURAL INCOME AND THE CONTRIBUTION OF CHITS, BUT AFTER SUBMISSION OF INFORMATION BY THE ASSESSEE AO HAS SI MPLY ACCEPTED ASSESSEES CLAIM WITHOUT VERIFYING INFORMA TION SUBMITTED BY THE ASSESSEE OR TAKING THE INQUIRY TO ITS LOGICAL END. LD DR SUBMITTED THAT AS FAR AS AGRICULTURAL INCOME IS CONCERNED, THOUGH THE ASSESSEE SUBMITED CONFIRMATION FROM THE PURCHASER OF BAMBOO STICKS, BUT AO HAS FAILED TO VERIFY WHETH ER THE PURCHASER WAS GENUINE AND THE AMOUNT PAID TOWARDS S ALE OF BAMBOO STICK IS REASONABLE. WITHOUT ANY INQUIRY HE ACCEPTED ASSESSEES CLAIM. HE SUBMITED THAT IT IS RATHER UNU SUAL THAT THE ASSESSEE HAS EARNED INCOME OF RS.16.00 LAKHS FROM S ALE OF BAMBOO STICKS WITHOUT INCURRING ANY EXPENDITURE. AS FAR AS CONTRIBUTION TO CHITS ARE CONCERNED, LD DR SUBMITTE D SOURCE FROM WHICH INVESTMENT WAS MADE WAS NEVER INQUIRED BY THE AO. LD DR SUBMITTED, AO ALSO FAILED TO EXAMINE WHY ASSESSE E DID NOT OFFER THE AMOUNT OF RS.20.00 LAKHS IN THE RETURN OF INCOME OUT OF THE ADDITIONAL INCOME DECLARED AT THE TIME OF SURVE Y OPERATIONS. THUS, THE LD DR SUBMITTED THAT THE AO HAVING NOT CO NDUCTED PROPER INQUIRY ON THE ISSUES ON WHICH LD CIT INVOKE D HIS JURISDICTION U/S 263, THE ORDER PASSED BY HIM IS VA LID. 8. IN THE REJOINDER, LD AR RELYING UPON THE DECISIO N OF THE HON'BLE DELHI HIGH COURT IN CASE OF DIRECTOR OF INC OME TAX VS. JYOTHI FOUNDATION (357 ITR 388) SUBMITTED BEFORE US , THAT THE ITA NO.997 OF 2014 CHAVA SRINIVASA RAO, PALONCHA, W ARANGAL PAGE 6 OF 13 REVISIONAL AUTHORITY WHILE INVOKING POWER U/S 263, MUST MAKE INQUIRY AND ENSURE THAT THE ASSESSMENT ORDER IS ERR ONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND HE HAS NO POWER TO REMAND AND DIRECT THE AO TO CONDUCT INQUIRY. THE LD AR SUBMITTED, AS FAR AS SALE OF BAMBOO STICKS ARE CONC ERNED, THERE CANNOT BE ANY DISPUTE WITH REGARD TO THE SAME AS TH E ASSESSEE CANNOT SELL THEM ON HIS OWN WITHOUT TAKING PERMISSI ON OF THE FOREST AUTHORITIES. IT WAS SUBMITTED THAT FROM THE TIME OF CUTTING OF BAMBOO TREES TO ITS DESPATCH TO THE FINAL DESTIN ATION, EVERYTHING HAS TO BE MONITORED BY THE FOREST AUTHOR ITIES, HENCE THERE CANNOT BE ANY DISPUTE WITH REGARD TO THE SALE OF THE BAMBOO STICKS AS IT IS REGULATED COMMODITY. AS FAR AS INVESTMENT IN CHITS ARE CONCERNED, LD AR SUBMITTED THAT THE EN TIRE INVESTMENT HAS BEEN REFLECTED IN THE BOOKS OF ACCOU NTS HENCE, THERE CANNOT BE ANY DISPUTE WITH REGARD TO THE SOUR CE OF THE DEPOSITS. THUS, IT WAS SUBMITTED THAT THE LD CIT HA S INVOKED HIS JURISDICTION INVALIDLY. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIALS ON THE RECORD. AS COULD BE SE EN THERE ARE THREE MAJOR ISSUES ON WHICH LD CIT HAS HELD THE ASS ESSMENT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERE STS OF THE REVENUE. THEY ARE AS UNDER: INCOME FROM SALE OF BAMBOO STICKS CONTRIBUTIONS MADE TO THE CHITS ADDITIONAL INCOME OFFERED AT THE TIME OF SURVEY AT RS.1.00 CRORE WAS REDUCED TO RS.80.00 LAKHS IN THE RETURN F ILED. 10. AS FAR AS THE FIRST ISSUE RELATING TO EARNING O F AGRICULTURAL INCOME FROM SALE OF BAMBOO STICKS IS CONSIDERED, AS COULD BE ITA NO.997 OF 2014 CHAVA SRINIVASA RAO, PALONCHA, W ARANGAL PAGE 7 OF 13 SEEN FROM THE MATERIAL ON RECORD, ASSESSEE IN THE A GRICULTURAL INCOME SHOWN IN THE RETURN HAS INCLUDED AN AMOUNT O F RS.16.00 LAKHS TOWARDS SALE OF BAMBOO TREES. IN COURSE OF TH E ASSESSMENT PROCEEDINGS IN PURSUANCE TO THE INQUIRY CONDUCTED B Y THE AO ASSESSEE HAS SUBMITTED CONFIRMATION LETTER FROM THE PURCHASER OF BAMBOO STICKS AND HAS ALSO STATED THAT THE ENTIRE A MOUNT WAS RECEIVED IN CHEQUES. IN FACT, THE ASSESSMENT ORDER AS WELL AS THE REPLIES SUBMITTED BY THE ASSESSEE IN PURSUANCE TO T HE QUERY MADE BY THE AO REVEAL THAT NOT ONLY AO HAS CONDUCTE D INQUIRY ON THE ISSUE OF AGRICULTURAL INCOME AND MORE SPECIF ICALLY WITH REGARD TO THE AMOUNT RECEIVED ON SALE OF BAMBOO STI CKS, BUT ASSESSEE HAS ALSO SUBMITTED EVIDENCE IN SUPPORT OF ITS CLAIM OF SALE OF BAMBOO STICKS. THEREFORE, UPON CONSIDERATIO N OF FACTS AND FACTERIALS ON RECORD, IT IS CLEARLY ESTABLISHED THA T NOT ONLY THE AO HAS MADE INQUIRIES WITH REGARD TO THE AGRICULTURAL INCOME, BUT HAS ALSO APPLIED HIS MIND TO THE FACTS AND MATERIAL S ON RECORD. THE SAME IS THE CASE WITH REGARD TO THE CONTRIBUTIO N TO THE CHITS. THOUGH, IT MAY BE A FACT THAT THE AO HAS NOT MADE A NY REFERENCE TO THE CONTRIBUTION TO MARGADARSI CHITS IN THE ASSE SSMENT ORDER, HOWEVER, PERUSAL OF ASSESSEES REPLIES SUBMITTED BE FORE THE AO IN COURSE OF THE ASSESSMENT PROCEEDINGS, COPIES OF WHI CH HAVE BEEN SUBMITTED IN THE PAPER BOOK CLEARLY DEMONSTRATE THA T THE AO HAS MADE INQUIRY AS FAR AS CONTRIBUTION TO CHITS ARE CO NCERNED. THEREFORE, AS FAR AS THE ISSUE OF EARNING OF AGRICU LTURAL INCOME AND INVESTMENT IN CHITS ARE CONCERNED, AO HAVING EX AMINED THE ISSUE AND APPLIED HIS MIND TO THE FACTS AND MATERIA LS ON RECORD WHILE COMPLETING THE ASSESSMENT, THE ASSESSMENT ORD ER CANNOT BE HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTE RESTS OF THE REVENUE ON THESE TWO ISSUES. THE HON'BLE SUPREME CO URT IN THE ITA NO.997 OF 2014 CHAVA SRINIVASA RAO, PALONCHA, W ARANGAL PAGE 8 OF 13 CASE OF MALABAR INDUSTRIAL CO. LTD VS. CIT (243 ITR 83) HELD AS UNDER: 9. THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDIC IAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN ITO ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW A ND IT HAS RESULTED IN LOSS OF REVENUE; OR WHERE TWO VI EWS ARE POSSIBLE AND THE ITO 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 T HE ITO IS UNSUSTAINABLE IN LAW. IT HAS BEEN HELD BY TH IS COURT THAT WHERE A SUM NOT EARNED BY A PERSON IS ASSESSED AS INCOME IN HIS HANDS ON HIS SO OFFERING, THE ORDER PASSED BY THE ASSESSING OFFICER ACCEPTING THE SAME AS SUCH WILL BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE - RAMPYARI DEVI SARAOGI V. CIT [1968] 67 ITR 84 (SC) AND IN SMT. TARA DEVI AGGARWAL V. CIT [1973] 88 ITR 323 (SC). 11. THE JURISDICTIONAL HIGH COURT IN CASE OF SPECTR A SHARES AND SCRIPS PVT. LTD VS. CIT (354 ITR 35) WHILE EXAMININ G THE CITS POWER U/S 263 OF THE ACT ANALYSED NUMBER OF DECISIO NS OF THE HON'BLE SUPREME COURT AS WELL AS DIFFERENT HIGH COU RT AND CULLED OUT THE PRINCIPLES FOR EXERCISE OF JURISDICT ION U/S 263 OF THE ACT AS UNDER: 31. FROM THE ABOVE DECISIONS, THE FOLLOWING PRINCIPLES AS TO EXERCISE OF JURISDICTION BY THE COMMISSIONER U/S.263 OF THE ACT CAN BE CULLED OUT: ( A ) THE COMMISSIONER HAS TO BE SATISFIED 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 PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IT IS PREJUDI CIAL TO THE REVENUE - RECOURSE CANNOT BE HAD TO SECTION 263 (1) OF THE AC T. ITA NO.997 OF 2014 CHAVA SRINIVASA RAO, PALONCHA, W ARANGAL PAGE 9 OF 13 ( B ) EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREAT ED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE, WHEN AN INCOME TAX OFFICER ADOPTED ONE OF THE COURS ES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE: OR WHERE TW O VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW W ITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOU S ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME TAX OFFICER IS UNSUSTAINABLE IN LAW. ( C ) TO INVOKE SUO MOTU REVISIONAL POWERS TO REOPE N A CONCLUDED ASSESSMENT UNDER SEC.263, THE COMMISSIONER MUST GIVE REASONS; THAT A BARE REITERATION BY HIM THAT THE ORDER OF THE INCOME TAX OFFICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, WILL N OT SUFFICE; THAT THE REASON S MUST BE SUCH AS TO SHOW THAT THE ENHANCEMENT OR MOD IFICATION OF THE ASSESSMENT OR CANCELLATION OF THE ASSESSMENT OR DIR ECTIONS ISSUED FOR A FRESH ASSESSMENT WERE CALLED FOR, AND MUST IRRESISTIBLY L EAD TO THE CONCLUSION THAT THE ORDER OF THE INCOME TAX OF FICER WAS NOT ONLY ERRONEOUS BUT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THUS, WHILE THE INCOME TAX OFFICER IS NOT CALLED UPON TO WRITE AN ELABORATE JU DGMENT GIVING DETAILED REASONS IN RESPECT OF EACH AND EVERY DISALLOWANCE, DEDUCTION, ETC., IT IS INCUMBENT UPON THE COMMISSIONER NOT TO EXERCISE HIS SUO MOTU REVISIONAL POWERS UNLESS SUPPORTED BY ADEQUATE REASONS FOR DOI NG SO; THAT IF A QUERY IS RAISED DURING THE COURSE OF THE SCRUTINY BY THE ASS ESSING OFFICER, WHICH WAS ANSWERED TO THE SATISFACTION OF THE ASSESSING OFFICER, BUT NEITHER THE QUERY NOR THE ANSWER WERE REFLECTED IN THE ASSESSMENT ORD ER, THIS WOULD NOT BY ITSELF LEAD TO THE CONCLUSION THAT THE ORDER OF THE ASSESSING OFFICER CALLED FOR INTERFERENCE AND REVISION. ( E ) THE COMMISSIONER CAN NOT INITIATE PROCEEDINGS WITH A VIEW TO START FISHI NG AND ROVING INQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED; THAT THE DEPARTMENT CANNOT BE PERMITTED TO BEGIN FRESH L ITIGATION BECAUSE OF NEW VIEWS THEY ENTERTAIN ON FACTS OR NEW VERSIONS WHIC H THEY PRESENT AS TO WHAT SHOULD BE THE INFERENCE OR PROPER INFERENCE EITHER OF THE FACTS DISCLOSED OR THE WEIGHT OF THE CIRCUMSTANCE; THAT IF THIS IS PERMITT ED, LITIGATION WOULD HAVE NO END EXCEPT WHEN LEGAL INGENUITY IS EXHAUSTED ( F ) WHETHER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE EXPENDITURE IN QUESTION HAS TO BE SEEN; THAT IF THERE WAS AN INQUI RY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE COMMISSION ER TO PASS ORDERS UNDER SEC.263 MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER; THAT IT IS ONLY IN CASES OF LACK OF INQUIRY THAT SUCH A COURSE OF ACTION WOULD BE OPEN; THAT AN ASSESSMENT ORDER MADE BY THE INCOME TAX OFF ICER CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, AC CORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY; TH ERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT THE TAX WHICH WAS L AWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATIO N, A LESSER TAX THAN WHAT WAS JUST, HAS BEEN IMPOSED. ITA NO.997 OF 2014 CHAVA SRINIVASA RAO, PALONCHA, W ARANGAL PAGE 10 OF 13 ( G ) THE POWER OF THE COMMISSIONER UNDER SEC.263 (1) IS NOT LIMITED ONLY TO THE MATERIAL WHICH WAS AVAILABLE BEFORE THE ASSESSING O FFICER AND, IN ORDER TO PROTECT THE INTERESTS OF THE REVENUE, THE COM MISSIONER IS ENTITLED TO EXAMINE ANY OTHER RECORDS WHICH ARE AVAILABLE AT THE TIME O F EXAMINATION BY HIM AND TO TAKE INTO CONSIDERATION EVEN THOSE EVENTS WHICH AROSE SUBSEQUENT TO THE ORDER OF ASSESSMENT. 12. THUS, IF WE APPLY THE AFORESAID PRINCIPLES TO T HE FACTS OF THE PRESENT CASE, IT IS VERY MUCH PERTINENT THAT THE AO HAS NOT ONLY CONDUCTED INQUIRY ON THE AGRICULTURAL INCOME AS WEL L AS CONTRIBUTION TO CHITS, BUT HAS ALSO APPLIED HIS MIN D TO THE INFORMATION SUBMITTED BY ASSESSEE. IN THESE CIRCUMS TANCES, ASSESSMENT ORDER CANNOT HELD TO BE ERRONEOUS AND PR EJUDICIAL TO THE INTERESTS OF THE REVENUE, ONLY BECAUSE THE CIT WAS OF THE OPINION THAT SOME MORE INQUIRIES SHOULD HAVE BEEN M ADE BY THE AO. AS HELD BY THE JUDICIAL AUTHORITIES, THE POWER U/S 263 CANNOT BE EXTENDED TO HOLD AN ORDER PASSED BY THE A O AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE DUE TO INADEQUACY OF INQUIRY. IN VIEW OF THE AFORESAID, WE DO NOT SEE ANY REASON TO UPHOLD THE EXERCISE OF POWER U/S 263 OF T HE ACT AS FAR AS THE ISSUE RELATING TO AGRICULTURAL INCOME AND CO NTRIBUTION TO CHITS ARE CONCERNED. 13. AS FAR AS THE ISSUE RELATING TO NOT SHOWING AN AMOUNT OF RS.20.00 LAKHS OUT OF THE INCOME OFFERED OF RS.1.00 CRORES AT THE TIME OF SURVEY IS CONCERNED, WE ARE OF THE VIEW THA T EXERCISE OF POWER U/S 263 ON THIS ISSUE IS VALID. THERE IS NO D ISPUTE THAT IN THE STATEMENT RECORDED AT THE TIME OF SURVEY ON 19. 03.2010, ASSESSEE HAD OFFERED TO PAY AN AMOUNT OF RS.30.00 L AKHS AS ADVANCE TAX FOR A.Y UNDER CONSIDERATION. FURTHER IN THE STATEMENT RECORDED U/S 131 OF THE ACT ON 23.03.2010 , ASSESSEE ITA NO.997 OF 2014 CHAVA SRINIVASA RAO, PALONCHA, W ARANGAL PAGE 11 OF 13 AGAIN STATED THAT HE WILL OFFER ADDITIONAL INCOME O F RS.1.00CRORE AND PAY ADVANCE TAX OF RS.30.00 LAKHS FOR A.Y UNDER CONSIDERATION. THUS, FROM THE AFORESAID STATEMENTS, IT IS CLEAR THAT THE ASSESSEE CONSISTENTLY TOOK THE STAND THAT HE WILL OFFER AN AMOUNT OF RS.1.00 CRORE AS HIS INCOME FOR THE A.Y U NDER CONSIDERATION FOR WHICH THE TAX LIABILITY WOULD BE RS.30.00 LAKHS. HOWEVER, IN THE RETURN FILED FOR THE IMPUGNED A.Y, ASSESSEE DECLARED INCOME OF RS.80.00 LAKHS. THEREFORE, NOT S HOWING THE ADDITIONAL INCOME OFFERED AT THE TIME OF SURVEY IN THE RETURN OF INCOME FILED ULTIMATELY SHOULD HAVE TRIGGERED AN IN QUIRY BY THE AO. HE SHOULD HAVE MADE AN EFFORT TO FIND OUT WHAT ARE THE REASONS BEHIND NOT DECLARING AN AMOUNT OF RS.20.00 LAKHS OUT OF THE TOTAL AMOUNT OF RS.1.00 CRORE DECLARED AT THE T IME OF SURVEY. THE AO COULD HAVE ACCEPTED THE INCOME DECLARED IN T HE RETURN AFTER SATISFYING HIMSELF WITH THE REASONABLENESS OF ASSESSEES EXPLANATION. THERE IS NOTHING IN RECORD TO SHOW THA T THE AO MADE ANY INQUIRY TO FIND OUT WHY THE ASSESSEE DID N OT OFFER THE AMOUNT DECLARED AT THE TIME OF SURVEY AS INCOME IN THE RETURN FILED. THAT BEING THE CASE, WE DO NOT FIND ANY INFI RMITY IN THE ORDER OF THE LD CIT IN HOLDING THE ASSESSMENT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE ON THIS ISSUE. 14. AS FAR AS THE OTHER ISSUES CONSIDERED BY THE LD CIT FOR SETTING ASIDE THE ASSESSMENT ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE ARE CONCERNED, AFTE R PERUSING THE REASONING OF THE CIT IN THE CONTEXT OF FACTS AND MA TERIALS ON RECORD, WE ARE OF THE FIRM VIEW THAT THE DIRECTION OF THE LD CIT ON THESE ISSUES ARE IN THE NATURE OF STARTING A ROVING AND FISHING ITA NO.997 OF 2014 CHAVA SRINIVASA RAO, PALONCHA, W ARANGAL PAGE 12 OF 13 INQUIRY WHICH IS NOT PERMISSIBLE AS HELD BY HON'BLE BOMBAY HIGH COURT IN CIT VS.GABRIEL INDIA LTD (203 ITR 108 AT P AGE 114). IN OUR VIEW, LD CIT HAS NO MATERIAL BEFORE HIM TO CONS IDER THE ASSESSMENT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE ON THESE ISSUES. ON PERUSAL OF THE D ISCUSSIONS MADE BY THE LD CIT, IT APPEARS THAT HIS ACTIONS ARE MORE LIKE AN AO IN SESSION OF AN ASSESSMENT PROCEEDING RATHER TH AN A REVISIONAL AUTHORITY EXERCISING POWERS U/S 263. POW ER U/S 263 IS TO BE EXERCISED SPARINGLY AND IN GENUINE CASES W HERE DUE TO ERROR COMMITTED BY AO, THERE IS LOSS TO THE REVENUE . IF THERE ARE NO CONCLUSIVE EVIDENCE WHICH COULD PRIMA FACIE DEMO NSTRATE THAT ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO TH E INTERESTS OF REVENUE, ON MERE DOUBT AND SUSPICION LD CIT CANNOT REVISE THE ASSESSMENT ORDER ON TRIVIAL OR NON-EXISTENT ISSUES. MOREOVER, IT APPEARS FROM RECORD, THE AO DURING THE ASSESSMENT P ROCEEDINGS HAS MADE ENQUIRIES ON ALL THESE ISSUES, THOUGH, IT MAY NOT HAVE BEEN REFERRED TO IN THE ASSESSMENT ORDER. AS IT APP EARS, IN THE GARB OF PROCEEDINGS U/S 263 OF THE ACT, THE LD CIT IN FACT IS UNDERTAKING AN ASSESSMENT PROCEEDING HIMSELF. 15. IN VIEW OF OUR REASONING HEREIN ABOVE, WE HOLD THAT THE EXERCISE OF POWER U/S 263 BY THE LD CIT IS NOT VALI D IN RESPECT OF ALL OTHER ISSUES, EXCEPT THE ISSUE RELATING TO NON DISCLOSURE OF AN AMOUNT OF RS.20.00 LAKHS OUT OF ADDITIONAL INCOME O F RS.1.00 CRORES OFFERED AT THE TIME OF SURVEY. ACCORDINGLY, WE UPHOLD THE ORDER OF LD CIT TO THE EXTENT OF ISSUE RELATING TO NOT SHOWING OF ADDITIONAL INCOME OF RS.20.00 LAKHS BY THE ASSESSEE IN THE RETURN OF INCOME. WE DIRECT THE AO TO EXAMINE THIS ISSUE INDEPENDENTLY, WITHOUT BEING INFLUENCED BY ANY OF T HE OBSERVATIONS OF THE LD CIT, AND DECIDE THE ISSUE ON ITS OWN MERIT ITA NO.997 OF 2014 CHAVA SRINIVASA RAO, PALONCHA, W ARANGAL PAGE 13 OF 13 AND IN ACCORDANCE TO LAW AFTER REASONABLE OPPORTUNI TY OF BEING HEARD TO THE ASSESSEE. IF THE ASSESSEE OFFERS REASO NABLE EXPLANATION REGARDING NOT OFFERING THE AMOUNT OF RS .20.00 LAKHS KEEPING WITH THE DECLARATION MADE AT THE TIME OF SU RVEY, AO MAY ACCEPT THE INCOME SHOWN AFTER VERIFYING THE EXPLANA TION OF THE ASSESSEE. 16. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH AUGUST, 2015. S D/ - S D/ - (P.M. JAGTAP) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 5 TH AUGUST, 2015. VNODAN/SPS COPY TO: 1. G.S., MADHAVA RAO & CO. CAS, SUDHARMA BUILDINGS, MG ROAD, WARANGAL 2. INCOME TAX OFFICER WARD 2 KOTHAGUDEM, WARANGAL 3. CIT VIJAYAWADA 4. ADD. CIT, KHAMMAM RANGE, KHAMMAM 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER