DEVANG GANDHI, NAVI MUMBAI v. PR CIT CEN 4, MUMBAI

ITA 3745/MUM/2016 | 2007-2008
Pronouncement Date: 27-11-2017 | Result: Allowed

Appeal Details

RSA Number 374519914 RSA 2016
Assessee PAN ABHPG0909N
Bench Mumbai
Appeal Number ITA 3745/MUM/2016
Duration Of Justice 1 year(s) 5 month(s) 27 day(s)
Appellant DEVANG GANDHI, NAVI MUMBAI
Respondent PR CIT CEN 4, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 27-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Allowed
Bench Allotted D
Tribunal Order Date 27-11-2017
Assessment Year 2007-2008
Appeal Filed On 31-05-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI BEFORE SHRI P K BANSAL VICE PRESIDENT & SHRI RAM LAL NEGI JUDICIAL MEMBER ITA NO.3745 & 3746/MUM/2016 ASSESSMENT YEARS :2007-08 & 2009-10 SHRI DEVANG GANDHI A/303 BALAJI GARDENS SECTOR 11 KOPARKHAIRNE NAVI MUMBAI 400 709 PAN ABHPG0909N VS. PRINCIPAL CIT CENTRAL 4 MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAKESH JOSHI RESPONDENT BY : MS SUNITA BILLA DATE OF HEARING : 1 2 . 10. 2017 DATE OF PRONOUNCEMENT : 27 . 11 .2017 O R D E R PER P K BANSAL VICE-PRESIDENT: THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAIN ST TWO SEPARATE ORDERS OF THE PRINCIPAL CIT BOTH DATED 28.03.2016 PASSED U/S 263 OF THE INCOME ACT 1961 FOR ASSESSMENT YEARS 2007-08 AND 2009-10 BY TAKING THE FOLLOWING COMMON GROUNDS OF APPEAL: 1) ON THE FACT AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW THE V LEARNED PRINCIPAL CIT HAS ERRED IN PASSING REVISIO N ORDER U/S.263 OF THE INCOME TAX ACT 1961 FOR THE ASSESSMENT ORDE R U/S. 143(3) R.W.S 153A OF THE ACT PASSED BY THE LEARNED ASSESSI NG OFFICER AFTER MAKING ADEQUATE ENQUIRIES AND APPLICATION OF MIND WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE . 2) ON THE FACT AND CIRCUMSTANCES OF THE CASE AS WEL L AS IN LAW THE LEARNED PRINCIPAL CIT HAS ERRED IN CONSIDERING THE ORDER PASSED U/S. ITA NO.3745 & 3746/MUM/2016 DEVANG GANDHI 2 143(3) R.W.S 153A OF THE INCOME TAX ACT 1961 BY TH E LEARNED ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF THE REVENUE WITHOUT APPRECIATING THE FACTS AND CIRCUMS TANCES OF THE CASE. 3) ON THE FACT AND CIRCUMSTANCES OF THE CASE AS WEL L AS IN LAW THE LEARNED PRINCIPAL CIT HAS ERRED IN SETTING ASIDE AS SESSMENT ORDER PASSED BY THE LEARNED ASSESSING OFFICER AND DIRECTI NG HIM TO MAKE FRESH ASSESSMENT WITHOUT APPRECIATING THE FACTS AN D CIRCUMSTANCES OF THE CASE. 4) ON THE FACT AND CIRCUMSTANCES OF THE CASE AS WEL L AS IN LAW THE LEARNED PRINCIPAL CIT HAS ERRED IN GIVING DIRECTION TO THE LEARNED ASSESSING OFFICER TO VERIFY THE FACTS ON THE ISSUE WHICH WAS ALREADY VERIFIED BY THE LEARNED ASSESSING OFFICER DURING TH E COURSE OF ASSESSMENT PROCEEDINGS WITHOUT APPRECIATING THE FA CTS AND CIRCUMSTANCES OF THE CASE. 5) ON THE FACT AND CIRCUMSTANCES OF THE CASE AS WEL L AS IN LAW THE LEARNED PRINCIPAL CIT HAS ERRED IN CONSIDERING THE EXPLANATION 2 TO SECTION 263 AS RETROSPECTIVE BEING IN THE NATURE OF CLARIFICATION WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. 6) THE APPELLANT CRAVES LEAVE TO ADD AMEND ALTER OR DELETE THE SAID GROUND OF APPEAL. 2. BOTH THE PARTIES AGREED THAT THE APPEALS BE DISP OSED OF ON THE BASIS OF THE FACTS INVOLVED IN A.Y. 2007-08 AND WHATEVER VIE W THIS TRIBUNAL MAY TAKE THE SAME MAY BE TAKEN FOR A.Y. 2009-10 ALSO. 3. BRIEF FACTS OF THE CASE IN A.Y. 2007-08 ARE THAT IN THIS CASE ASSESSMENT WAS COMPLETED BY THE ASSESSING OFFICER VIDE ORDER U /S. 153A R.W.S. 143(3) DATED 28.02.2014 DETERMINING TOTAL INCOME AT ` 47 87 600/- AS AGAINST THE RETURNED INCOME OF ` 1 37 603/-. THE CIT(A) AFTER GOING THROUGH THE RE CORD ITA NO.3745 & 3746/MUM/2016 DEVANG GANDHI 3 WAS OF THE VIEW THAT THE ASSESSING OFFICER PASSED T HE ASSESSMENT ORDER WITHOUT MAKING REQUIRED INQUIRIES AND INVESTIGATION WHICH RESULTED INTO THE ORDER BEING ERRONEOUS IN SO FAR AS PREJUDICIAL TO T HE INTERESTS OF THE REVENUE. ACCORDINGLY HE ISSUED SHOW CAUSE NOTICE TO THE ASS ESSEE DATED 15.03.2016 WHICH READ AS UNDER: 1.1] ON AN EXAMINATION OF THE RECORDS FOR A.Y. 2007 -08 IT IS NOTICED THAT THE ASSESSMENT PROCEEDINGS WERE COMPLE TED U/S. 153A R.W.S. 143(3) OF THE I.T. ACT VIDE ORDER DATED 28.0 2.2014 DETERMINING TOTAL INCOME OF RS 47 87 600/-. ON PERU SAL OF RECORDS IT IS SEEN THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD INTRODUCED CAPITAL AMOUNTING TO RS 20 00 000/- IN T HE FIRM M/'S. DEV STEELS. 1.2] A PERUSAL OF THE RECORDS AND THE ASSESSMENT OR DER SHOWS THAT THE AO HAS NOT OBTAINED ANY DETAILS ABOUT THE SOURC E OF FUNDS WHICH HAS BEEN INTRODUCED AS CAPITAL IN THE FIRM. T HE AO DID NOT CARRY OUT ANY SUCH BASIC REQUISITE ENQUIRIES IN ORD ER TO FIND OUT THE SOURCE OF FUNDS AND IT IS CLEAR THAT THERE IS A FAI LURE ON THE PART OF THE AO TO EXAMINE THE ISSUE OF THE UNEXPLAINED CASH CREDIT WITH RESPECT TO THE CAPITAL OF RS.20 00 000/- INTRODUCED IN THE FIRM BY THE ASSESSEE THIS HAS RENDERED THE IMPUGNED ASSESS MENT ORDER PASSED U/S 153A R.W. SECTION 143(3) OF THE I.T. ACT ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE IN TERMS OF EXPLANATION 2 TO SECTION 263 OF THE ! T ACT. I.3] IN VIEW OF THE ABOVE YOU ARE REQUESTED TO S HOW CAUSE AS TO WHY THE SAID ASSESSMENT ORDER SHOULD NOT BE REVISE D U/S 263 OF THE I.T. ACT 1961. THE DATE-OF HEARING IS FIXED FOR THIS PURPOSE ON 23.03.2016. YOU ARE REQUESTED TO /APPEAR PERSONA LLY OR THROUGH AUTHORIZED REPRESENTATIVE ON THE SAID DATE AT II.30 AM IN MY OFFICE CHAMBER [ROOM NO 663 AAYAKAR BHAWAN]. ITA NO.3745 & 3746/MUM/2016 DEVANG GANDHI 4 SIMILAR SHOW CAUSE NOTICE WAS ISSUED IN A.Y. 2009-1 0 EXCEPT THE CHANGE IN FIGURE OF ` 25 LACS FOR THE INTRODUCTION OF CAPITAL IN PLACE O F ` 20 LACS IN ADDITION TO THE DETERMINATION OF THE TOTAL INCOME A T ` 56 46 390/- IN PLACE OF ` 47 87 600/-. 4. THE ASSESSEE CONTENDED BEFORE THE CIT THAT THE ASSESSING OFFICER HAD MADE REQUIRED INQUIRY AND SUBMITTED BEFORE THE CIT(A) THE COPY OF THE LETTER ADDRESSED TO THE ASSESSING OFFICER SUBMITTIN G EVIDENCE DURING THE COURSE OF HEARING. HE FURTHER RELIED ON THE DECISI ON OF HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS . CIT 243 ITR 83 (SC); THAT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. GABRIEL INDIA LTD. 203 ITR 108 (BOM); THE GUJARAT HIGH COURT DECISION IN T HE CASE OF CIT VS. R K CONSTRUCTION CO. 313 ITR 65 (GUJ) AND VARIOUS OTHER DECISIONS. HOWEVER THE CIT DID NOT AGREE WITH THE SUBMISSIONS OF THE ASS ESSE AND TOOK THE VIEW THAT THE ASSESSING OFFICER WHILE MAKING THE ASSESSM ENT ORDER HAS NOT EXAMINED THE ISSUE OF UNEXPLAINED CASH CREDIT IN RE SPECT OF CAPITAL INTRODUCED BY THE FIRM M/S. DEV STEEL AND TREATED THE ASSESSME NT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE BY MOVING THE ASSESSMENT TO SECTION 263. ULTIMATELY THE CIT SET ASIDE THE A SSESSMENT ORDER AND DIRECTED THE ASSESSING OFFICER TO MAKE THE DE NOVO ASSESSMENT AFTER MAKING NECESSARY INQUIRIES/INVESTIGATING AND ASCERTAINING THE FACTS. ITA NO.3745 & 3746/MUM/2016 DEVANG GANDHI 5 5. WE HAVE HEARD BOTH THE PARTIES AND CONSIDERED TH EIR SUBMISSIONS ALONG WITH THE ORDERS OF THE AUTHORITIES BELOW. WE NOTED FROM THE PROVISIONS OF SECTION 263 THAT THIS SECTION EMPOWERED THE CIT TO CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDINGS UNDER THE ACT. IT ALSO M AKES IT VERY CLEAR THAT THE COMMISSIONER HAS TO BE SATISFIED BEFORE INVOKING TH E PROVISIONS OF SECTION 263 THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND EVE N IF ONE OF THE CONDITIONS IS ABSENT THE CIT CANNOT INVOKE THE PROVISIONS OF SEC TION 263. WE NOTED THAT IN THIS CASE THE ASSESSEE VIDE ITS LETTER DATED 28 .01.2014 HAS GIVEN COMPLETE DETAILS OF THE CAPITAL INTRODUCED DURING THE IMPUGN ED ASSESSMENT YEAR. NOT ONLY THIS IT IS APPARENT FROM PAGE 17 OF THE PAPER -BOOK WHEREIN THE ASSESSEE HAS GIVEN DETAILS OF ` 76 LACS TOWARDS CAPITAL INTRODUCED. OUT OF ` 76 LACS ` 20 LACS WAS GIVEN TO THE FIRM M/S. DEV STEEL VIDE C HEQUE DATED 30.03.2007. THE ASSESSEE HAS ALSO FILED COPY OF BALANCE SHEET O F M/S. DEV STEEL IN WHICH THE ASSESSEE CAPITAL ACCOUNTS AND CURRENT ACCOUNT I S DULY REFLECTED. CAPITAL ACCOUNT SHOWS ` 20 LACS COPY OF WHICH IS PLACED AT PAGES 22 AND 2 3 OF THE PAPER-BOOK. THUS WE FIND THAT THE ASSESSEE HAS FI LED ALL THESE BEFORE THE ASSESSING OFFICER. IT IS APPARENT THAT IT IS NOT A CASE WHERE THE ASSESSING OFFICER HAS NOT MADE DUE INQUIRY IN RESPECT OF CAPI TAL INTRODUCED BY THE ASSESSEE IN THE FIRM. RATHER THE ASSESSING OFFICER HAS MADE INQUIRY AND IN REPLY THERETO THE ASSESSEE HAS SUBMITTED COPIES OF THE DETAILS. IT IS NOT A ITA NO.3745 & 3746/MUM/2016 DEVANG GANDHI 6 CASE OF LACK OF INQUIRY. IT MAY BE A CASE OF INADE QUATE INQUIRY. THUS IT CANNOT BE SAID THAT THERE IS AN ERROR IN THE ORDER OF THE ASSESSING OFFICER. IN OUR OPINION THE ASSESSEE CANNOT DIRECT THE ASSESSI NG OFFICER AS TO WHAT SHOULD TO INCLUDED BY HIM IN THE ASSESSMENT ORDER. WE NOTED THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. GABRIEL INDIA LTD. 203 ITR 108 IN THIS REGARD HELD AS UNDER: - 'HELD THAT THE INCOME-TAX OFFICER IN THIS CASE HAD MADE ENQUIRIES IN REGARD TO THE NATURE OF THE EXPENDITURE INCURRED BY THE ASSESSEE. THE ASSESSEE HAD GIVEN A DETAILED EXPLANATION IN TH AT REGARD BY A LETTER IN WRITING. ALL THESE WERE PART OF THE RECOR D OF THE CASE. EVIDENTLY THE CLAIM WAS ALLOWED BY THE INCOME-TAX OFFICER ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. THI S DECISION OF THE INCOME-TAX OFFICER COULD NOT BE HELD TO BE 'ERRONEO US' SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE D ISCUSSION IN THAT REGARD. MOREOVER IN THE INSTANT CASE THE COM MISSIONER HIMSELF EVEN AFTER INITIATING PROCEEDINGS FOR REVI SION AND HEARING THE ASSESSEE COULD NOT SAY THAT THE ALLOWANCE OF T HE CLAIM OF THE ASSESSEE WAS ERRONEOUS AND THAT THE EXPENDITURE WAS NOT REVENUE EXPENDITURE BUT AN EXPENDITURE OF CAPITAL NATURE. H E SIMPLY ASKED THE INCOME-TAX OFFICER TO RE-EXAMINE THE MATTER. TH AT WAS NOT PERMISSIBLE. THE TRIBUNAL WAS JUSTIFIED IN SETTING ASIDE THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX UNDER SECT ION 263.' SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE ALL AHABAD HIGH COURT IN THE CASE OF CIT VS. MAHENDER KUMAR BANSAL 297 ITR 0099 IN WHICH RESPECTFULLY FOLLOWING THE DECISION IN THE CASE OF CIT VS. GOYAL PRIVATE FAMILY SPECIFIC TRUST 171 ITR 698 (ALLD.) HAS HELD UNDER PARA NO.12 AS UNDER :- ITA NO.3745 & 3746/MUM/2016 DEVANG GANDHI 7 AS HELD BY THIS COURT IN THE CASE OF GOYAL PRIVATE FAMILY SPECIFIC TRUST (SUPRA ) WE ARE OF THE CONSIDERED OPINION THA T MERELY BECAUSE THE ITO HAD NOT WRITTEN LENGTHY ORDER IT W OULD NOT ESTABLISH THAT THE ASSESSMENT ORDER PASSED UNDER SE CTION 143(3)/148 OF THE ACT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHOUT BRINGING ON RECORD SPECIFIC INS TANCES WHICH IN THE PRESENT CASE THE CIT HAS FAILED TO DO. A PERUSAL OF THE ORDER PASSED BY THE CIT INDICATED THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WAS CANCELLED ON TH E GROUND THAT THE ASSESSING OFFICER HAS NOT MADE PROPER ENQUIRY AND V ERIFICATION IN RESPECT OF THE ISSUE AS DISCUSSED ABOVE. THIS IN OUR CONSIDER ED OPINION CANNOT BE SUFFICIENT GROUND FOR CANCELLING THE ASSESSMENT. WH ILE MAKING THE ASSESSMENT ORDER IT IS THE SATISFACTION OF THE ASSESSING OFFI CER WHO MADE THE ENQUIRY AND IT SHOULD BE TOUCHSTONE OF ASSESSMENT ORDER PASSED BY HIM. NO COGENT MATERIAL OR EVIDENCE WAS BROUGHT TO OUR KNOWLEDGE B Y THE LD. DR WHICH MAY PROVE THAT VIEW TAKEN BY THE ASSESSING OFFICER IN T HE CASE OF THE ASSESSEE WAS UNSUSTAINABLE IN LAW. THEREFORE WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE CIT IS ILLEGAL AND WITHOUT JURISDICTI ON. IF THE ORDER PASSED BY THE CIT IS SUSTAINED THEN THIS WILL PERMIT THE ILLE GALITY TO CONTINUE AND THE SUBSEQUENT ACTION IS CARRIED OUT ON THE ILLEGAL ORD ER IS ALSO ILLEGAL PER SE. ITA NO.3745 & 3746/MUM/2016 DEVANG GANDHI 8 6. IN THE CASE OF CIT VS. R.K. CONSTRUCTION CO. (S UPRA) HONBLE GUJARAT HIGH COURT CONFIRMING THE ORDER OF THE ITAT FOR WH ICH THE UNDERSIGNED WAS THE AUTHOR HAS HELD AS UNDER:- THE DETAILS OF SUB-CONTRACTORS EXAMINED BY THE AO AS PER THE DIRECTIONS OF CIT IN REVISION PROCEEDINGS INTER AL IA INCLUDE THE NAMES OF THESE SUB-CONTRACTORS THEIR PERMANENT ACC OUNT NUMBERS THEIR PERMANENT ADDRESSES AMOUNT GIVEN TO THEM NA ME OF WORK ENTRUSTED TO THEM NATURE OF SUCH WORK AND STATEMEN TS RECORDED BY THE AO ETC. THESE DETAILS REVEAL THAT DURING THE COURSE OF EXAMINATION UNDER S. 131 NO QUESTION WAS PUT TO MA NY OF THESE SUB-CONTRACTORS AS TO THE VARIATION IN THEIR SIGNAT URES. SIMILARLY NO QUESTION WAS PUT TO THEM FOR THE REASONS OF DISCOUN TING WITH THE SHROFF. IT IS THE STAND OF THE ASSESSEE RIGHT FROM THE BEGINNING THAT ALL THESE SUB-CONTRACTORS WERE MAINLY WORKING FOR T HE ASSESSEE AND THEY DID NOT HAVE ANY OFFICE SET UP AND SINCE THEY WERE WORKING FOR THE ASSESSEE THEY HAVE USED ASSESSEES ADDRESS FOR CORRESPONDENCE ESPECIALLY WITH THE GOVERNMENT FOR TIMELY COMMUNICATION. THESE PERSONS ARE ELIGIBLE UNDER S. 44AD TO FILE THEIR RETURNS UNDER PRESUMPTIVE SCHEME OF TAXATION. ALL THESE PERSONS WERE PRODUCED BEFORE THE AO IN REVISION PRO CEEDINGS AND NO QUESTION WAS PUT TO THEM THOUGH THEIR STATEMENTS ON OATH WERE RECORDED. ALL THESE PERSONS HAVE CONFIRMED IN REVI SION PROCEEDINGS THAT THE MONEY WAS NOT RETURNED BY THEM TO ANY PERS ON AND WAS USED FOR THEIR PERSONAL BENEFIT. THE PAYMENTS WERE MADE TO THESE PERSONS BY BANKING CHANNELS AND TAX WAS DEDUCTED AT SOURCE IN ACCORDANCE WITH LAW. THE ASSESSEE HAS ALSO GIVEN C OMPLETE DETAILS WITH RESPECT TO LABOUR EXPENSES CALLED FOR IN ASSES SMENT PROCEEDINGS. THESE DETAILS WERE DULY VERIFIED BY T HE AO WITH THE BOOKS AND RECORDS. NO ADVERSE OBSERVATION WAS MADE BY THE AO AND HENCE NO ADDITION WAS MADE IN THE REGULAR ASSE SSMENT. THE AO HAS ALSO RANDOMLY SELECTED TWO LABOURERS AND EXA MINED THEM AND THEIR STATEMENTS WERE RECORDED UNDER S. 131. S INCE ALL NECESSARY DETAILS WERE FURNISHED BY THE ASSESSEE T HERE WAS NO REASON FOR THE CIT TO INVOKE THE REVISIONAL JURISDI CTION UNDER S. 263. THE CIT HAS NOT STOPPED MERELY BY ISSUANCE OF NOTIC E UNDER S. 263. ONCE COMPLIANCE IS MADE HE WENT ON ISSUING NOTICE AFTER NOTICE AND CERTAIN ADVERSE INFERENCE WERE DRAWN BY HIM FRO M THE DETAILS COLLECTED BY HIM DURING THE REVISIONAL PROCEEDINGS. THOSE DETAILS ITA NO.3745 & 3746/MUM/2016 DEVANG GANDHI 9 WERE THOROUGHLY CHECKED AND EXAMINED BY THE TRIBUNA L AND IT ARRIVED AT A FACTUAL FINDING THAT THERE WAS NO ILLE GALITY COMMITTED BY THE ASSESSEE IN ENTRUSTING THE WORK TO SUB-CONTRACT ORS NOR THERE WAS ANY ILLEGALITY IN MAKING ALL DUE PAYMENTS TO TH EM. THE TRIBUNAL HAS ALSO GIVEN SPECIFIC FINDING TO THE EFF ECT THAT THERE WAS NO EVIDENCE ON RECORD THAT THESE CONTRACTORS WERE R ELATED TO THE ASSESSEE OR WERE ASSOCIATES OR SISTER CONCERNS OF T HE ASSESSEE. THE TRIBUNAL HAS ALSO GIVEN FINDING THAT THE REVENU E HAS NOT DISCHARGED THE ONUS THAT THE PAYMENTS TO SUB-CONTRA CTORS WERE NOT GENUINE. THUS THE TRIBUNAL HAS COME TO THE CONCLUS ION THAT NO DISALLOWANCES CAN BE MADE MERELY ON THE BASIS OF SU SPICION HOWSOEVER STRONG MAY IT BE AND THE SUSPICION CANNO T TAKE THE PLACE OF ACTUALITY. AO HAS TAKEN A PARTICULAR VIEW ON THE BASIS OF EVIDENCE PRODUCED BEFORE HIM. ON THE BASIS OF THE SAID MATERIAL AND MATERIALS WHICH WERE COLLECTED BY THE CIT IN RE VISIONAL PROCEEDINGS THE CIT HAS TAKEN A DIFFERENT VIEW. H OWEVER IN THE REVISIONAL PROCEEDINGS UNDER S. 263 IT IS NOT OPEN FOR THE CIT TO TAKE SUCH A DIFFERENT VIEW. NO SUBSTANTIAL QUESTIO NS OF LAW ARISE OUT OF THE ORDER OF THE TRIBUNAL AND HENCE THE APP EAL FILED BY THE REVENUE DESERVES TO BE DISMISSED. CIT VS. ARVIND JEWELLERS (2002) 177 CTR (GUJ) 546 : (2003) 259 ITR 502 (GUJ) AND MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 159 CTR (SC) 1 : (2000) 243 ITR 83 (SC) RELIED ON). IN OUR OPINION THE IMPUGNED CASE IS DULY COVERED B Y THIS DECISION ALSO. 7. FURTHER HONBLE SUPREME COURT IN THE CASE OF CI T VS. MAX INDIA LIMITED 295 ITR 282 (SC) HAS HELD AS UNDER :- THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE RE VENUE IN SECTION 263 OF THE INCOME-TAX ACT 1961 HAS TO BE READ IN CONJUNCTION WITH THE EXPRESSION ERRONEOUS ORDER P ASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONS EQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE WHEN TH E ASSESSING OFFICER ADOPTS ONE OF TWO COURSES PERMISSIBLE IN LA W AND IT HAS RESULTED IN LOSS OF REVENUE OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE IT CANNOT BE TREATED AS AN ERRONEOU S ORDER ITA NO.3745 & 3746/MUM/2016 DEVANG GANDHI 10 PREJUDICIAL TO THE REVENUE UNLESS THE VIEW TAKEN B Y THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. 8. IN THE CASE OF CIT VS SUNBEAM AUTO LTD 332 ITR 167 HONBLE DELHI HIGH COURT HAS HELD THAT INADEQUACY OF ENQUIRY WILL NOT GIVE THE JURISDICTION TO CIT U/S 263. IN THIS HONBLE HIGH COURT HAS HELD AS UNDER :- THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IS N OT REQUIRED TO GIVE A DETAILED REASON IN RESPECT OF EA CH AND EVERY ITEM OF DEDUCTION ETC. WHETHER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE EXPENDITURE IN QUESTION HAS TO BE SEEN . IF THERE WAS ANY INQUIRY EVEN INADEQUATE THAT WOULD NOT BY ITSE LF GIVE OCCASION TO THE COMMISSIONER TO PASS ORDERS UNDER SECTION 26 3 OF THE INCOME-TAX ACT 1961 MERELY BECAUSE HE HAS A DIFFE RENT OPINION IN THE MATTER. IT IS ONLY IN CASES OF LACK OF INQUIRY THAT SUCH A COURSE OF ACTION WOULD BE OPEN. AN ORDER CANNOT BE TERMED ERRONEOUS UNLESS IT IS NO T IN ACCORDANCE WITH LAW. IF AN INCOME-TAX OFFICER ACTIN G IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT IT CANNOT BE B RANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE ACCOR DING TO HIM THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY . SECTION 263 DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JU DGEMENT OF THE COMMISSIONER FOR THAT OF THE INCOME-TAX OFFICER WHO PASSED THE ORDER UNLESS THE DECISION IS HELD TO BE ERRONEOUS. WHERE THE INCOME-TAX OFFICER HAS EXERCISED THE QUASI-JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUS ION SUCH A CONCLUSION CANNOT BE FOUND TO BE ERRONEOUS SIMPLY B ECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCL USION. 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 WHAT WAS JUST HAS BEEN IMPOSED. THE ASSESSEE WAS A MANUFACTURER OF CAR PARTS. ITS R ETURN FOR THE ASSESSMENT YEAR 2001-02 WAS TAKEN UP FOR SC RUTINY AND ASSESSMENT WAS COMPLETED. IN REVISIONAL PROCEEDINGS THE SOLITARY OBJECTION OF THE COMMISSIONER WAS THAT THE EXPENDIT URE ON TOOLS AND DYES AGGREGATING TO RS. 10 56 69 367/- WAS ALLO WED AS ITA NO.3745 & 3746/MUM/2016 DEVANG GANDHI 11 REVENUE EXPENDITURE WITHOUT A DETAILED INVESTIGATIO N. AFTER CONSIDERING ALL THE MATERIALS FURNISHED BY THE ASSE SSEE THE COMMISSIONER TOOK THE VIEW THAT THE ACCOUNTING PRAC TICE FOLLOWED BY THE ASSESSEE TO DEBIT THE ENTIRE COST OF TOOLS A ND DYES IN THE YEAR OF INSTALLATION WAS NOT CORRECT AND HE REMITTE D THE CASE TO THE ASSESSING OFFICER FOR RE-EXAMINATION. THE TRIBUNAL ALLOWED THE CLAIM OF THE ASSESSEE. ON APPEAL: HELD DISMISSING THE APPEAL (I) THAT THE ASSESSING OFFICER ALLOWED THE CLAIM ON BEING SATISFIED WITH THE EXPLANATION O F THE ASSESSEE. SUCH DECISION OF THE ASSESSING OFFICER COULD NOT BE HELD TO BE ERRONEOUS SIMPLY BECAUSE IN HIS ORDER HE DID NOT MA KE AN ELABORATE DISCUSSION IN THAT REGARD. THE ASSESSING OFFICER HA D CALLED FOR EXPLANATION ON THE VERY ITEM FROM THE ASSESSEE AND THE ASSESSEE HAD FURNISHED ITS EXPLANATION. THIS FACT WAS CONCED ED BY THE COMMISSIONER HIMSELF IN HIS ORDER. THIS SHOWED THAT THE ASSESSING OFFICER HAD UNDERTAKEN THE EXERCISE OF EXAMINING AS TO WHETHER THE EXPENDITURE INCURRED BY THE ASSESSEE IN THE REPLACE MENT OF DYES AND TOOLS WAS TO BE TREATED AS REVENUE EXPENDITURE OR NOT. THEREFORE IT COULD NOT BE SAID THAT IT WAS A CASE OF LACK OF INQUIRY. THE ACCOUNTING PRACTICE FOLLOWED FOR A NUMBER OF YE ARS HAD THE APPROVAL OF THE INCOME-TAX AUTHORITIES. EVEN FOR FU TURE ASSESSMENT YEARS THE VERY SAME ACCOUNTING PRACTICE WAS ACCEPT ED. (II) THAT THE DYES WERE COMPONENTS OF THE MACHINES. THEY NEEDED CONSTANT REPLACEMENT AS THEIR LIFE WAS NOT MORE TH AN A YEAR. THE ASSESSEE ALSO EXPLAINED THAT SINCE THE PARTS WERE M ANUFACTURES FOR THE AUTOMOBILE INDUSTRY WHICH HAD TO WORK ON COMPL ETE ACCURACY AT HIGH SPEED FOR A LONGER PERIOD REPLACEMENT OF T HE PARTS AT SHORT INTERVALS BECOME IMPERATIVE TO RETAIN THE ACCURACY. NEITHER WITH THE REPLACEMENT OF TOOLS AND DYES TO NEW ASSET COMES IN TO EXISTENCE NOR WAS THEIR BENEFIT OF ENDURING NATURE. THEY DID NOT EVEN ENHANCE THE LIFE OF THE EXISTING MACHINE OF WHICH T HE TOOLS AND DYES WERE ONLY PARTS. THEREFORE THE VIEW TAKEN BY THE A SSESSING OFFICER WAS ONE OF THE POSSIBLE VIEWS AND THE ASSESSMENT OR DER PASSED BY HIM COULD NOT BE HELD TO BE PREJUDICIAL TO THE INTE RESTS OF THE REVENUE. THE OPINION OF THE ASSESSING OFFICER IN TR EATING THE EXPENDITURE AS REVENUE EXPENDITURE WAS PLAUSIBLE AN D THUS THERE WAS NO MATERIAL BEFORE THE COMMISSIONER TO VARY THA T OPINION AND ASK FOR FRESH INQUIRY. ITA NO.3745 & 3746/MUM/2016 DEVANG GANDHI 12 9. IN VIEW OF VARIOUS DECISIONS AS DISCUSSED BY US IN THE PRECEDING PARAGRAPHS WE ARE OF THE VIEW THAT THE CIT WAS NOT CORRECT IN LAW IN EXERCISING THE JURISDICTION U/S 263 THEREBY CANCELL ING THE ASSESSMENT. WE ACCORDINGLY QUASH THE ORDERS PASSED U/S 263 FOR BO TH THE ASSESSMENT YEARS UNDER CONSIDERATION. 10. IN THE RESULT THE APPEALS FILED BY THE ASSESSE E STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH DAY OF NOVEMBER 2017. SD/- SD/- (RAM LAL NEGI) (P K BANSAL) JUDICIAL MEMBER VICE-PRESIDENT MUMBAI; DATED: 27 TH NOVEMBER 2017 SA COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A) MUMBAI 4. THE CIT 5. DR D BENCH ITAT MUMBAI BY ORDER #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI