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Smart Summary

Structured Summary of the Tribunal's Opinion (as provided)

Factual and Procedural Background

This is an appeal by the assessee against an order of the learned Commissioner of Income Tax (CIT-III) passed under section 263 of the Income-tax Act in respect of assessment year 2007-08.

The assessee (an individual engaged in manufacturing and export of gems & jewellery) filed his return on 25-10-2007 declaring income of Rs. 2,64,140. Notices under section 143(2) were issued and several adjournments and hearings took place. The Assessing Officer (AO) recorded attendance and acceptance of books of account; an assessment under section 143(3) was framed on 5-1-2009. The CIT received a proposal (via the Additional CIT, Range-7) dated 17-7-2009 and issued a show-cause notice under section 263 on 23-7-2009 alleging that the AO's order was erroneous and prejudicial to the revenue because certain inquiries were not made or recorded.

The assessee submitted detailed written replies (and a chart comparing the CIT's queries, replies to the CIT and replies given to the AO). The CIT concluded that the AO had not properly examined the issues and set aside the AO's order, directing the AO to pass a fresh order after examining all details. The assessee appealed to the Tribunal, which heard rival submissions and disposed of the appeal by allowing the assessee's appeal and restoring the AO's original assessment order.

Legal Issues Presented

  1. Whether the learned CIT properly invoked and exercised the revisional power under section 263 — i.e., whether the AO's order was "erroneous" and "prejudicial to the interests of the revenue" as required for exercise of section 263.
  2. Whether the CIT conducted independent examination of the record (or merely acted on a proposal forwarded by the AO through the Additional CIT) and whether such practice is permissible under section 263.
  3. Whether the mere absence of a formal questionnaire on the AO's order sheet, or the fact that certain details were filed suo moto by the assessee, suffices to conclude that the AO's order was erroneous and prejudicial to revenue.
  4. Whether, in the circumstances of this case (including past assessments and allowance of deduction under section 10B), the CIT was justified in setting aside the AO's order and directing de novo assessment.

Arguments of the Parties

Appellant (Assessee) — Main Arguments

  • Assessment proceedings for AY 2006-07 and 2007-08 proceeded simultaneously. For AY 2006-07 the AO issued detailed queries; the assessee provided similar details for AY 2007-08 (vide letters dated 14-10-2008, 20-11-2008, 17-12-2008 and 5-1-2009).
  • The details filed before the AO were considered and the AO framed assessment on 5-1-2009 after making necessary enquiries; the AO recorded that details were test-checked and found correct and allowed deduction under section 10B consistent with past practice.
  • The CIT did not identify any specific instance of escaped income; rather, he merely asserted that the AO had not examined matters in the manner the CIT preferred. The CIT did not explain why the evidence and replies were unacceptable.
  • The assessee relied on a chart reproduced from its submissions showing, for each query raised by the CIT, the reply to the CIT and the reply given to the AO (with references to pages/annexures on record).
  • Counsel argued that the CIT's action amounted to ordering a de novo fishing or roving inquiry and relied on case law (including Shree Manjunathesware Packing Products & Camphor Works and others) to contend that the CIT cannot substitute his judgment for that of the AO absent an objectively demonstrable error prejudicial to revenue.

Respondent (Department / Learned CIT Representative) — Main Arguments

  • The CIT noted that there was no mention in the AO's order sheet of any formal queries and no query letter was on the record for the year under consideration; certain replies were filed suo moto by the assessee and, in the department's view, the AO did not properly consider those replies.
  • The assessment had been completed in a routine manner without adequate examination; such completion without proper enquiry rendered the AO's order erroneous and prejudicial to revenue.
  • The CIT was therefore justified in issuing the show-cause notice and setting aside the assessment for fresh adjudication. The Department relied on a number of precedents (including Malabar Industrial Co. Ltd. v. CIT and other High Court decisions) to support the proposition that where the AO fails to make necessary inquiries the CIT may exercise revisional jurisdiction under section 263.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court (as described in the opinion)
CIT v. Shree Manjunathesware Packing Products & Camphor Works [1998] 231 ITR 53 (SC) The opinion explains that this Supreme Court decision addresses the meaning of "record" under section 263 and confirms that "record" includes records available at the time of the CIT's examination; the CIT may make enquiries and take new material into account. The Tribunal relied on Manjunathesware to note that although the CIT can consider material available at the time of examination, in the present case the CIT did not comment on the assessee's explanations or evidence and therefore could not validly set aside the AO's order merely because the AO's order was brief.
CIT v. Gabriel India Ltd. [1993] 203 ITR 108 (Bom.) The opinion states Gabriel India establishes the twin conditions for exercise of section 263: (i) the order must be erroneous and (ii) the error must be prejudicial to revenue; the power is supervisory and cannot be used simply because the Commissioner prefers a different, more elaborate order. The Tribunal found Gabriel India squarely applicable and held that the AO had made enquiries, examined explanations and allowed the claim; the CIT could not simply ask for re-examination. On these grounds the Tribunal concluded the CIT's order was not sustainable.
Commissioner Of Income-Tax v. Trustees Anupam Charitable Trust [1987] 167 ITR 129 (Raj.) The opinion quotes Trustees Anupam for the principle that the "error" under section 263 must be an actual error of fact or law and not one based on possibility or guesswork. The Tribunal invoked this principle to hold that the CIT could not set aside the AO's order on mere conjecture; the CIT had not demonstrated any factual mistake or legal error in the AO's order.
Commissioner Of Income-Tax v. Sakthi Charities [2000] 244 ITR 226 (Mad.) The opinion cites Sakthi Charities for the proposition that if the Commissioner merely sets aside an order directing further investigation without recording a finding that the ITO's order was erroneous or prejudicial, such revision is not justified. The Tribunal applied this ratio to the present case, observing that the CIT had not recorded findings to show the AO's allowance was erroneous; consequently the CIT's direction to re-examine was improper.
CIT v. Goyal (P.) Family Specific Trust [1988] 171 ITR 698 (All.) The opinion cites Goyal to show that brevity or cryptic AO orders alone do not make an assessment erroneous; the Commissioner must point out specific errors. The Tribunal relied on this Authority to conclude that absence of detailed discussion by the AO does not automatically render the AO's order erroneous where there is evidence that the AO applied his mind and accepted explanations.
Rayon Silk Mills v. Commissioner Of Income-Tax [1996] 221 ITR 155 (Guj.) The opinion cites Rayon Silk Mills for the rule that the Commissioner's conclusion that an order is prejudicial must be founded on objective material; the Commissioner's view is not a matter of mere subjective satisfaction. The Tribunal used this principle to require that the CIT must have objective material to show prejudice to revenue; such material was not identified by the CIT in this case.
Commissioner Of Income-Tax v. Taj Printers [1989] 178 ITR 384 (All.) The opinion quotes Taj Printers to the effect that jurisdiction under section 263 is not properly assumed where the Commissioner does not set out points for enquiry or record reasons as to how the AO's order was erroneous or prejudicial. The Tribunal applied this principle, finding the CIT had not recorded specific reasons or pointed to material demonstrating error or prejudice and therefore his order could not be sustained.
Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 (SC) The opinion refers to Malabar for the statement that an incorrect assumption of fact or incorrect application of law will satisfy the requirement of "erroneous"; it reiterates the twin conditions (error and prejudice) for invoking section 263. The Tribunal considered Malabar but found that in the present case the CIT did not demonstrate any incorrect assumption of fact or incorrect application of law by the AO; moreover, the Tribunal held the second condition (prejudice to revenue) was not established, so Malabar did not justify the CIT's action.
K.A. Ramaswamy Chettiar v. CIT [1996] 220 ITR 657 (Mad.) This case is cited by the Department in support of the proposition that where the AO has not made any enquiry, revision under section 263 may be justified. The Tribunal distinguished this precedent on facts, noting that in the present matter the AO had conducted enquiries and the assessment was completed under section 143(3); therefore Ramaswamy Chettiar was not applicable.
Duggal & Co. v. CIT [1996] 220 ITR 456 / [1994] 77 Taxman 331 The opinion lists this precedent among those relied upon by the Department but does not set out the specific rule or principle from it. The opinion does not explain how this case was applied; this information was not available in the provided opinion.
Gee Vee Enterprise…Petitioner v. Additional Commissioner Of Income Tax… [1975] 99 ITR 375 (Delhi) The opinion mentions Gee Vee Enterprise as authority for the principle that the AO is both adjudicator and investigator and cannot remain passive where further enquiry is warranted. The Tribunal observed that Gee Vee is distinguishable because, in the present case, assessment was completed under section 143(3) with recorded test-checking of details and acceptance consistent with past practice; thus the Tribunal found Gee Vee not applicable on facts.
CIT v. R.D. Gupta Construction (P.) Ltd. [2003] 133 Taxman 81 (Raj.) The opinion cites R.D. Gupta Construction as relied upon by the Department; the present opinion does not elaborate the principle except to note it was placed before the Tribunal. The Tribunal stated this precedent was distinguishable on facts (example: different profit-rate issue) and therefore not applicable to the present facts where section 10B deductions applied.
Commissioner Of Income-Tax v. South India Shipping Corporation Ltd. [1998] 233 ITR 546 (Mad.) The opinion lists this precedent among those relied upon by the Department but does not record the specific principle drawn from it. This opinion does not explain how this decision was applied to the facts; this information was not available in the provided opinion.
Commissioner Of Income-Tax v. Mahavar Traders [1996] 220 ITR 167 (MP) The opinion lists Mahavar Traders among authorities cited by the Department but does not set out the principle from that case in the text supplied. The opinion does not describe the specific application of this case to the present matter; this information was not available in the provided opinion.
Other precedents (variously cited in submissions) This information was not available in the provided opinion. This information was not available in the provided opinion.

Court's Reasoning and Analysis

The Tribunal carefully weighed the material on record, the written submissions of both parties and the case law relied upon. The reasoning proceeded in the following steps (as described in the opinion):

  1. The Tribunal recorded the reasons stated by the CIT for issuing the section 263 notice: (a) absence of any mention of queries on the AO's order sheet and absence of a query letter on record; (b) certain details were filed suo moto by the assessee and, the CIT concluded, were not properly examined by the AO; and (c) the assessment order did not discuss the issues raised in the CIT's notice.
  2. The assessee's response (reproduced and summarized in a chart) showed that for each query raised by the CIT, corresponding replies and documentary evidence had been filed before the AO (with dates and references) and that the AO had examined these details and had test-checked and accepted them while completing assessment under section 143(3), including allowing deduction under section 10B.
  3. The Tribunal observed that the CIT's proceedings were initiated on a proposal forwarded by the Assessing Officer through the Additional CIT (i.e., the CIT had not himself examined the record independently but acted after a proposal was received).
  4. The Tribunal set out the statutory scheme in section 263 (CIT may call for and examine the record and, after giving an opportunity and after making or causing to be made enquiries, may pass an order if an AO's order is erroneous and prejudicial to the revenue).
  5. Applying the authorities the Tribunal emphasized the twin conditions for exercise of section 263: there must be an actual error and that error must be prejudicial to the interests of the revenue. The Tribunal relied on Gabriel India and related High Court and Supreme Court authorities to stress that the CIT cannot merely substitute his view because the AO's order is brief or because the CIT would have preferred a different mode of inquiry.
  6. The Tribunal noted that the CIT issued the show-cause notice, the assessee replied with detailed evidence (which the Tribunal finds was on record before the AO and was also placed before the CIT), yet the CIT did not record how those explanations or evidence were unacceptable. The CIT simply set aside the AO's order directing de novo assessment; the Tribunal found this approach legally unsound.
  7. The Tribunal found that the AO had applied his mind (test-checked details, examined bank accounts and books, and allowed section 10B deduction consistent with past practice and previous years' assessments). The Tribunal emphasized that where the AO has applied mind and reached a view permissible in law, the CIT cannot treat the order as erroneous for the sole reason that the AO did not write an elaborate order.
  8. On the issue of prejudice to revenue, the Tribunal concluded that prejudice was not demonstrated: given the acceptance of section 10B deduction in past years and the AO's acceptance of details (and no specific demonstration by the CIT that claimed items were incorrect), the second condition for exercise of section 263 was not satisfied.
  9. Consequently, the Tribunal held that the CIT's order setting aside the AO's assessment on a proposal forwarded by the AO through the Additional CIT and without recording specific defects was not justified; the CIT's direction amounted to ordering an inquiry in the manner he preferred, which is impermissible under section 263.

Holding and Implications

APPEAL ALLOWED; ORDER OF THE LEARNED CIT UNDER SECTION 263 SET ASIDE; ORIGINAL ASSESSMENT ORDER OF THE ASSESSING OFFICER RESTORED.

Implications:

  • The direct effect is that the Tribunal set aside the CIT's revision order under section 263 and restored the AO's original assessment framed under section 143(3) for AY 2007-08.
  • The Tribunal's reasoning underscores that invocation of section 263 requires both an identifiable error in law or fact and material to show prejudice to revenue; the CIT must independently examine records and record reasons demonstrating error and prejudice, not merely direct re-examination because the AO's order was brief or because the CIT prefers further inquiry.
  • The opinion distinguishes factually those precedents where the AO made no enquiries at all or where the AO's method demonstrably produced an untenable result; in the present case the AO had made enquiries and accepted the assessee's explanations and documentary material, including allowance of section 10B relief consistent with prior years.
  • No broader novel legal principle was laid down by this decision; the Tribunal applied established precedent to the facts and restored the AO's order. The immediate consequence is limited to the parties: the AO's order stands and the CIT's direction for de novo assessment is vacated.

Note: This summary is compiled exclusively from the text of the provided opinion. No additional facts, inferences or outside authorities have been added beyond what the opinion itself contains.

Show full summary ...

    Rajiv Arora v. Commissioner of Income-tax-III

    Per R.K. Gupta, Judicial Member. - This is an appeal by assessee against the order of ld. CIT-III passed under section 263 of the Act relating to assessment year 2007-08.

    2. The assessee is objecting initiation of proceedings under section 263 and thereafter direction of ld. CIT to pass a fresh order.

    3. The briefly stated facts discussed by ld. CIT (A) in first para of his order passed under section 263 are as under :-

    "This is a case of individual deriving income from manufacturing and export of Gems & Jewellery. Return declaring income of Rs. 2,64,140 was filed on 25-10-2007. Notice under section 143(2) was issued by ITO, Ward 7(2), Jaipur on 11-8-2008, the assessee sought and allowed adjournment on 20-8-2008 fixing the case for hearing on 14-10-2008. As per order sheet noting dated 20-8-2008 Shri P.C. Bafna, CA along with Shri J.P. Matolia, Manager of the assessee attended and filed details along with written submission and the case was adjourned to 20-11-2008. On 20-11-2008 both above mentioned persons attended the proceedings and furnished details. The case was adjourned to 17-12-2008. On 17-12-2008 both the above mentioned persons appeared before the Assessing Officer and filed details. Books of account produced and case was adjourned to 5-1-2009. On 5-1-2009 only Sh. P.C. Bafna, CA attended and filed details. Books of account produced and the case was discussed and assessed. Perusal of the above mentioned noting revealed that the Assessing Officer never issued any questionnaire and whatever details available on record have been suo moto filed by the assessee along with two letters dated 5-10-2009 and 17-12-2008. Filing of any details on 14-10-2008 and on 20-11-2008 is not born out from record as mentioned on order sheet."

    Thereafter proposal under section 263 of the Act was received from the Assessing Officer through Additional CIT Range-7, Jaipur vide letter No. 1380 dated 17-7-2009. According to the order under section 263, the record was examined and after examination of record it was considered a prima facie case of order deserving revision under section 263 of the Act. Accordingly notice under section 263(1) of the Act was issued on 23-7-2009 raising number of issues which according to him was not examined by the Assessing Officer while framing order under section 143(3). The issues raised by ld. CIT in show-cause notice under section 263(1) have been mentioned at pages 1 to 5 in paras 2 to 18. Thereafter detailed written submissions vide letter dated 14-9-2009 explaining his case was filed by the assessee before ld. CIT. Reply filed by assessee have been reproduced by ld. CIT at pages 5 to 10 of his order. Thereafter, the ld. CIT held that the replies filed by the assessee are not acceptable as the Assessing Officer has not examined the issue properly, therefore, the order of Assessing Officer is erroneous and prejudicial to the interest of revenue. Accordingly the order of Assessing Officer was set aside and matter was restored to the file of Assessing Officer to pass a fresh order after examining all the details. Now assessee is in appeal here before the Tribunal.

    4. It was explained by ld. A/R that in fact assessment proceedings for assessment years 2006-07 and 2007-08 were going on simultaneously. The Assessing Officer issued detailed query letter in respect of assessment proceedings for assessment year 2006-07 and assessee was asked to file similar details for assessment year 2007-08 also. The assessee in line with the query raised in assessment year 2006-07 filed various details vide letter dated 14-10-2008, 20-11-2008, 17-12-2008 and 5-1-2009. The Assessing Officer after considering these details and making necessary enquiries then only had framed assessment under section 143(3) on 5-1-2009. It was further submitted that the ld. CIT has not come to conclusion that any income has escaped for want of examination at the end of the Assessing Officer. Simply he wanted to make assessment proceedings in the manner he wanted. It was further explained that various queries were raised and they have already been answered before the Assessing Officer. However, detailed explanations along with evidences were filed before ld. CIT which he has not taken into consideration at all and by simply saying that Assessing Officer has not examined the case properly, he set aside the order. The attention of the Bench was drawn on reasons given by ld. CIT in his order and para-wise reply against query raised by ld. CIT and considered by Assessing Officer. Attention of the bench was drawn on copy of detailed reply filed before ld. CIT which is placed on record. Reliance is placed on various case laws mentioned in the written note filed by assessee. In reply, the ld. D/R has filed written note which is also placed on record.

    5. We have heard rival contentions and considered them carefully. The reasons on which basis the notice issued by ld. CIT are as under :

    (a)In the order sheet, there is no mention of any queries raised during assessment proceedings, nor any query letter is available on record.

    (b)The details suo moto made available by the assessee was not examined by the Assessing Officer and no investigation was made.

    (c)The assessment order was passed without discussing any of the issues raised in notice u/s 263 though these issues were replied by the assessee in revision proceedings.

    The explanation of the assessee indicating issue in brief raised in show cause notice issued by ld. CIT reply/comments in respect to each issue and reply/comments filed before Assessing Officer, which is in the shape of chart filed before Tribunal is as under :-

    Issues raised u/s 263 Reply to CIT Reply by the assessee before AO
    The AO has not examined the transaction relating to purchase of 70 Kgs. gold at Mumbai Port as well as manufacturing and trading account. The facts stated are incorrect. Assessee purchased 67 Kgs. of gold from Corporation Bank for which complete explanation filed (PB 7). Vide letter dated 5-1-2009, complete details of purchases filed (PB 69). Copy of bank account with Bank of Rajasthan and Corporation Bank was filed (PB 17). The quantitative details filed with the return (PB 47) shows total purchase of gold at 93.997 Kgs. The quantitative details was separately submitted to Assessing Officer vide letter dated 20-11-2008. Thus AO examined all the details.
    Assessee made unexplained investment in purchase of land at Amer. This is not examined by the AO. Capital gain in the hands of seller was also not examined. Copy of sale deed and source of payment furnished (PB 8). The purchase is made at the same value which is adopted for stamp value. Since the sale deed was executed on stamp paper of Rs. 1,000, therefore, stamp duty of Rs. 1,53,440 is separately deposited which is mentioned on the back of sale deed. Thus the CIT incorrectly appreciated the fact in assuming that there is unexplained investment in purchase of this land. In letter dated 17-12-2008 (PB 68), the fact of purchase of this land during the year was explained and the same was verified by the AO with reference to books of account.
    Assessee have shown value of agricultural land at Ajmer Road, Jaipur at Rs. 27,500. The AO has not examined this issue. This land was purchased on 2-9-1986 at Gram Dharampura, Machwa, Jaipur. Copy of sale deed filed as per letter dated 31-8-2009 (PB 8). In the detail of immovable properties as on 31-3-2007, this land is appearing (PB 68). In assessment proceedings for AY 2006-07, this land is also appearing in the list of immovable properties as on 31-3-2006. Thus this land is not purchased during the year.
    The purchase of flat at Status Enclave, Bani Park, Jaipur appears not fair and reasonable, AO has not examined this issue. This flat was purchased in March 1999. Copy of sale deed filed as per letter dated 31-8-2009 (PB 8). In the detail of immovable properties as on 31-3-2007, this flat is appearing (PB 68). In assessment proceedings for AY 2006-07, this flat is also appearing in the list of immovable properties as on 31-3-2006. Thus this flat is not purchased during the year.
    Club expenditure is claimed as business expenditure which is required to be disallowed after ascertaining commercial expediency, withdrawal for household expenditure at Rs. 2,98,844 is inadequate. These aspects were not examined by the AO. AO has not examined the bank account in which foreign exchange are realized and whether the Audit Report in respect of realization of foreign currency is correct or not. Payment to Club is not claimed as expenditure but debited to personal capital account which is evident from the personal capital account filed with the return. The house-hold expenses for four members at Rs. 2,78,179 was reasonable considering the fact that electricity expenses, telephone expenses and insurance are separately debited in the capital account (PB 8). The personal capital account was filed before the AO from which these facts are verifiable (PB 75).
    The payment in foreign currency vis-a-vis, applicability of section 195 on the basis of CA Certificate was not examined by AO. Copy of bank statement with Bank of Rajasthan, in which export realization are credited was filed and examined by the AO. Bank account with Bank of Rajasthan was filed to the AO in assessment proceedings (PB 70), the same was examined by the AO with reference to books of account produced.
    Allowability of exemption u/s 10B was not examined. Details of payment of wages and allowance has not been obtained. Allowability of exemption u/s 10B was examined by the AO. Details of wages and allowance was submitted to him. The AO on page 2 of the assessment order (PB 73) has examined and discussed the claim of deduction u/s 10B. Details of wages and salaries was submitted vide letter dated 5-1-2009 (PB 71).
    Quantitative detail furnished indicate excess /shortage which is not examined by AO There is no short/excess production as evident from quantitative details filed with Tax Audit Report (PB 9-10). Quantitative detail alongwith valuation of stock was submitted vide letter dated 20-11-2008 and examined by the AO.
    Taxability of certain receipts has not been examined by AO. The amount mentioned are in respect of margin money released/custom duty reversed which is duly accounted for in the books of account. It has no element of income (PB 10). These entries were verified by the AO with reference to books of account.
    Deposit and Withdrawal and realization of foreign currency in bank account is not examined. Nature of payment made to three parties was not examined. Complete bank account with reference to books of account were examined by AO. Nature of payment to three parties explained (PB 10). All bank accounts were filed to the AO (PB 70) and the same was examined with reference to books of account. The payment to the parties are for gold bullion purchased which is duly account for.
    Demat account for share transaction was not examined. No shares was purchased or sold during the year as is evident from Demat Account (PB 10 & 53-58). The fact that there is no purchase and sale of shares during the year is evident from the copy of the return and the details of investment in mutual funds, shares and capital account filed with the return for AY 2006-07 and 2007-08.
    No enquiry as regards the income and transactions with assessee's other concern M/s. Rajkrishna Developers Pvt. Ltd. was made. M/s. Rajkrishna Developers Pvt. Ltd. has not commenced any business during the year. Assessee has only made investment of Rs. 50,000 in the shares of this company (PB 10) which is also coming from the last year. Hence question of any income does not arise. Investment in shares of this company is verifiable from the details of investment filed with the return for AY 2006-07 and 2007-08.
    The income in relation to hired premises at Oberoi, Mumbai which is used by Amrapali Jewels is not examined. This premises is given on rent to Amrapali Jewels Pvt. Ltd. since inception. The rent paid by assessee is recovered from Amrapali Jewels Pvt. Ltd. (PB 11). The position remains the same as in earlier years.
    Purchase made from certain local suppliers are not verifiable as, as per the investigation carried out by the department. This aspect is not examined by AO. All parties are Income-tax assessee, having sales tax registration, payment is by account payee cheque and all purchases are genuine (PB 11). Details of purchases submitted (PB 69).
    AO has not examined the dividend income received from mutual fund from the angle of dividend stripping u/s 94(7). There is no loss suffered on redemption of units. Therefore section 94(7) is not applicable (PB 11). The details ol income from sale of mutual fund was filed alongwith the return which is examined by the AO.
    Source of investment in immovable properties was not examined nor applicability of wealth tax was considered. Complete details of investment in immovable properties filed in assessment proceedings (PB 11). Details of immovable properties filed vide letter dated 17-12-2008 (PB 68).

    6. It was further submitted that from the above chart it can be noted that Assessing Officer has considered all the issues raised in notice under section 263. Complete information was given to the Assessing Officer. Considering the same and after making necessary enquiries and also looking to the facts that income of the assessee is exempt under section 10B for last number of years, Assessing Officer has completed the assessment. The order passed by the Assessing Officer, therefore, cannot be held to be erroneous for want of enquiry or prejudicial to the interest of the revenue. Even before the CIT, complete details in support of the issues raised by him were furnished. The CIT has not pointed out in his order as to how, after the reply filed by the assessee. The order of Assessing Officer is erroneous and prejudicial to the interest of revenue. To what extent Assessing Officer should make investigation is a matter left to the wisdom of the Assessing Officer. If the Assessing Officer is satisfied then he can not be forced under the Act to make any fishing/roving enquiry. Hence the order passed by the Assessing Officer after considering the reply of the assessee and causing necessary enquiry cannot be held to be erroneous.

    7. It was further submitted that it appears that the CIT has passed the order under section 263 for making de novo assessment on the possibility or guesswork based on his subjective satisfaction without any objective material and without considering the material and evidence filed before him. Therefore the order passed by CIT under section 263 for starting fishing and roving enquiry is not valid in law. Reliance was placed on various case laws i.e., in case of CIT v. Shree Manjunathesware PackingProducts & Camphor Works [1998] 231 ITR 53 / 96 Taxman 1 (SC), CIT v. Gabriel India Ltd. [1993] 203 ITR 108 / 71 Taxman 585 , (Bom.). Commissioner Of Income-Tax v. Trustees Anupam Charitable Trust [1987] 167 ITR 129 / 31 Taxman 335 (Raj.), Commissioner Of Income-Tax v. Sakthi Charities [2000] 244 ITR 226 / 110 Taxman 451 (Mad.), CIT v. Goyal (P.) Family Specific Trust [1988] 171 ITR 698 /[1987] 35 Taxman 522 (All.), Rayon Silk Mills v. Commissioner Of Income-Tax. [1996] 221 ITR 155 Guj.) and Commissioner Of Income-Tax v. Taj Printers. [1989] 178 ITR 384 /[1990] 48 Taxman 331 (All.).

    8. The ld. D/R on the other hand has explained the facts of the case through written submission and has submitted that from the order of ld. CIT and from the impugned assessment order, it is clear that Assessing Officer has not raised any query. The ld. D/R though fairly has submitted that certain replies were filed by assessee. However, it is seen that they have been filed by assessee suo moto. Suo moto replies filed by assessee have not been considered by Assessing Officer in right perspective as the assessment has been completed in routine manner. The assessment completed in a routine manner without examining the details is an erroneous assessment and prejudicial to the interest of revenue. Therefore, ld. CIT was justified in setting aside the order of Assessing Officer. Reliance is placed on the decision of Apex Court in case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 / 109 Taxman 66 (SC) and in the cases of K.A. Ramaswamy Chettiar v. CIT [1996] 220 ITR 657 / 88 Taxman 526 (Mad.), Duggal & Co. v. CIT [1996] 220 ITR 456/[1994] 77 Taxman 331 (Gee Vee Enterprise…Petitioner v. Additional Commissioner Of Income Tax… [1975] 99 ITR 375 (Delhi), CIT v. R.D. Gupta Construction (P.) Ltd. [2003] 133 Taxman 81 (Raj.), Commissioner Of Income-Tax v. South India Shipping Corporation Ltd. [1998] 233 ITR 546 (Mad.), Commissioner Of Income-Tax v. Mahavar Traders. [1996] 220 ITR 167 (MP) and many others mentioned in the written note filed by ld. CIT DR. The ratio of these decisions was also explained by ld. D/R.

    9. In counter reply to the written submissions filed by ld. D/R, the ld. Counsel of the assessee explained the case in the following manner :-

    (1)Ld. D/R by referring to the finding of CIT that Assessing Officer never issued any questionnaire and the details were filed suo moto by the assessee and, therefore, the order of the Assessing Officer, by not examing and investigating the return filed by the assessee, is erroneous and prejudicial to the interest of the revenue and he also referred various case laws.

    (2)It may be noted that the assessment proceeding for assessment year 2006-07 and 2007-08 were simultaneously taken by the Assessing Officer. For assessment year 2006-07, the Assessing Officer raised two query letters which was replied by the assessee in detail. After considering the same, assessment order for assessment year 2006-07 was passed on 27-10-2008. Simultaneously the assessment proceeding for the year under consideration was taken up fixing the hearing on 20-8-2008. The Assessing Officer verbally required the assessee to file the details as called for in assessment year 2006-07. Accordingly the related details were filed vide letter dated 14-10-2008, 20-11-2008, 17-12-2008 and 5-1-2009. The Assessing Officer by considering the same and the fact that assessee's income is exempt assessment year 10B and further that since assessment year 2003-04, the case of the assessee has taken up for scrutiny and assessment passed after accepting the return income, passed the order accepting the return income. The Assessing Officer has also given a finding in the order that details filed were examined on test check and the requisite information and clarification has been obtained. In these circumstances, order of the Assessing Officer cannot be held to be erroneous or prejudicially to the interest of the revenue.

    (3)The CIT (A) in his show-cause notice has raised 17 queries. All these were replied by the assessee as reproduced on pages 5-10 of the order. After considering the said reply, the CIT has not made any discussion as to why the said details furnished by the assessee with necessary evidence are still required to be further examined by the Assessing Officer. Rather he accepted that issue raised in 263 notice has been replied by the assessee. The Supreme Court in the case of Shree Manjunathesware Packing Products & Comphor Works (supra), 63 has held that records shall include all records available at the time of examination by the CIT. After examining the records in making or causing to make an enquiry, if the CIT considers the order to be erroneous then only he can pass the order as the circumstances of the case justify. In present case after examining the details filed by the assessee, CIT has not given any finding that order of the Assessing Officer is erroneous.

    (4)Further attention of the Bench is invited on written submissions at pages 2-5 where it is explained that as to how issue raised in show cause notice under section 263 has already been replied to the Assessing Officer and considered by him. The learned D/R has not pointed out any discrepancy in the same. Simply because the Assessing Officer while framing the assessment has examined the return filed by the assessee in a particular manner but the ld. CIT wants that enquiry should be made in a particular manner which he cannot direct under section 263. Reliance in this regard is placed in case of Sakthi Charities (supra), Goyal (P.) Family Specific Trust's case (supra), Rayon Silk Mills's case (supra), Taj Printers's case ( supra). The various case laws relied by learned D/R are, therefore, not applicable on the fact of he assessee case.

    Accordingly it was submitted that neither the order of the Assessing Officer is erroneous nor prejudicial to the interest of the revenue.

    10. We have heard rival submissions and considered them carefully. After considering the relevant material along with written submissions filed on behalf of both the parties alongwith various case laws, we find that assessee deserves to succeed in his appeal. This is a matter of fact that assessment was completed under section 143(3). While completing assessment the Assessing Officer though has not discussed the issue in detail but has clearly mentioned that case was discussed and the various details filed by assessee were test checked and were found correct. The aspect that assessee is entitled for deduction under section 10-IB was also taken into consideration and taking into consideration the past history of the case deduction under section 10B was allowed. Thereafter it is seen that another Assessing Officer who may have come in place of the Assessing Officer who passed assessment originally referred the matter to the ld. CIT for invoking provisions of section 263. This is clear from para 2 at page 1 of the order of ld. CIT where he has observed:

    "Proposal under section 263 of the Act was received from the Assessing Officer through Addl. CIT, Range-7, Jaipur vide letter No. 1380 dated 17-7-2009". From these observations it is clear that ld. CIT has not examined the record himself but he has received proposal from Assessing Officer through Additional Commissioner, Range-7. The provisions of section 263 are very clear by which it is provided that "the CIT may call for and examine the record of any proceedings under this Act, and if considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of revenue, he may after giving the assessee an opportunity of being heard and after making or cause to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying assessment, or cancelling the assessment and directing afresh assessment".

    11. The provisions of section 263 itself provided that the CIT may examine the record. However, in the present case, the ld. CIT has not applied his mind but the matter was referred by the Assessing Officer through Additional Commissioner for initiating proceedings under section 263.

    12. However, if it is held that ld. CIT has examined the record and then found that no proper enquiry has been made by the Assessing Officer, he may issue show-cause notice. In the present case the ld. CIT issued show-cause notice assigning various reasons. It is seen that the assessee has explained each and every query before ld. CIT and all the relevant evidences filed before Assessing Officer were filed before ld. CIT. However, the ld. CIT has not commented upon those explanations or evidences filed before him as he precisely mentioned in his order that "I have examined the written submissions of the assessee vis-a-vis assessment order in the case of the assessee. In the order sheet there is no mention of any queries raised during the assessment proceedings nor is any query letter is available on record. The Assessing Officer has passed assessment order accepting returned income without discussing any of the issues mentioned above". Accordingly he set aside the order of the Assessing Officer to make a de novo assessment. In our considered view, the approach of the ld. CIT is not legally well founded. It is seen that ld. CIT wanted to complete the assessment in a manner he likes. On the other hand it is seen that assessment proceedings for assessment years 2006-07 and 2007-08 were simultaneously initiated by the Assessing Officer. A detailed query letter was issued by the Assessing Officer and as per statement of ld. Counsel at Bar it has been stated that Assessing Officer issued similar query for assessment year 2007-08 though verbally and, therefore, on various occasions, the Counsel of the assessee filed various details which admittedly are on record. The ld. CIT has also accepted this fact while initiating the proceedings under section 263. Such observations of ld. CIT are made in first para itself of his order.

    13. The Hon'ble Bombay High Court in the case of Gabriel India Ltd. (supra) has observed that:

    "the power of suo moto revision under sub-section (1) of section 263 of the Income-tax Act, 1961, is in the nature of supervisory jurisdiction and can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise the power of revision under this sub-section, viz., ( i) the order should be erroneous; and (ii ) by virtue of the order being erroneous prejudice must have been caused to the interests of the revenue. 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 certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him. the order should have been written more elaborately. This section does not visualise a case of substitution of the judgment of the Commissioner for that 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 circumstances of the case and determines the income either by accepting the accounts or by making some estimates 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 higher figure 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. This 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 termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the Commissioner the order in question is prejudicial to the interests of the revenue. But that by itself would not be enough to vest the Commissioner with the power of suo moto revision because the first requirement, namely, that the order is erroneous, is absent. Similarly if an order is erroneous but not prejudicial to the interests of the revenue, then the power of suo moto revision cannot be exercised. Any and every erroneous order cannot be the subject-matter of revision because the second requirement must be fulfilled. 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. When exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exercising such power must have materials on record to satisfy it in that regard. If the action of the authority is challenged before the court it would be open to the courts to examine whether the relevant objective factors were available from the records called for and examined by 1 such authority."

    13.1 Thereafter it has been 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 that regard by a letter in writing. All these were part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. This decision of the Income-tax Officer could not be held to be "erroneous" simply because in his order he did not make an elaborate discussion in that regard. Moreover, in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous and that the expenditure was not revenue expenditure but an expenditure of capital nature. He simply asked the Income-tax Officer to re-examine the matter. That was not permissible. The Tribunal was justified in setting aside the order passed by the Commissioner of Income-tax under section 263."

    14. The ratio of Hon'ble Bombay High Court is squarely applicable on the facts of present case as in this case also the assessment was completed under section 143(3) after making enquires from the assessee who filed detailed replies along with supporting evidence. It is not necessary that Assessing Officer should write a lengthy order discussing all the details filed on behalf of the assessee, but the necessity is that Assessing Officer should have applied his mind. It is further seen that the assessments of the assessee are completed under section 143(3) since assessment year 2003-04. The facts in the earlier years are similar to the facts in the year under consideration. Therefore, it has to be presumed that Assessing Officer based on the past history has accepted the explanation of the assessee. In past deduction under section 10B was allowed to the assessee. Accordingly, the Assessing Officer allowed deduction under section 10B for the year under consideration also. It is also a matter of fact that ld. CIT has initiated proceedings under section 263 for immediately preceding year i.e., 2006-07. The assessee preferred appeal against that order also before the Tribunal. The appeal for that year along with appeal of this year was heard together. We have already disposed off the appeal of the assessee for assessment year 2006-07 whereby the order of ld. CIT has been set aside and original order of Assessing Officer has been restored. This order was passed by the Tribunal on 11-6-2010.

    15. It is further seen that in response to show cause notice where various reasons were assigned by the ld. CIT, the assessee filed detailed reply. However, as stated above that reply has not taken into consideration by the ld. CIT at all as no comments have been given by ld. CIT. Neither ld. CIT could say that allowances of claim of the assessee was erroneous and that expenditure was not revenue expenditure. Likewise, ld. CIT could not say anything about other details filed before him as he similarly asked the Assessing Officer to re examine the matter, that was not permissible. The ld. CIT is supposed to consider the regard which was available before him before setting aside the order of Assessing Officer.

    16. The Hon'ble Supreme Court in the case of Shree Manjunathesware Packing Products & Camphores Works (supra) has observed and held as under :-

    "Section 263 of the Income-tax Act, 1961, enables the Commissioner to call for and examine the record of any proceeding under the Act and pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment, if he considers that any order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The section did not at first contain any Explanation. An Explanation was added to section 263(1) by the Taxation Laws (Amendment) Act, 1984. By the Finance Act, 1988. the said Explanation was substituted with effect from June 1, 1988. The Explanation was again amended by the Finance Act, 1989. By the amendments made by the Finance Acts of 1988 and 1989 a definition of the term "record" was provided. It has been provided that "record" shall include and shall be deemed always to have included all records relating to any proceeding under the Act available at the time of examination by the Commissioner. It cannot be said that the correct and settled legal position, with respect to the meaning of the word "record" till June 1, 1988, is that it meant the record which was available to the Income-tax Officer at the time of passing of the assessment order. Such a narrow interpretation of the word "record" is not justified in view of the object of the provision and the nature and scope of the power conferred upon the Commissioner. The revisional power conferred on the Commissioner under section 263 is of wide amplitude. It enables the Commissioner to call for and examine the record of any proceeding under the Act. It empowers the Commissioner to make or cause to be made such enquiry as he deems necessary in order to find out if any order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. After examining the record and after making or causing to be made an enquiry, if he considers the order to be erroneous, then he can pass the order thereon as the circumstances of the case justify. Obviously, as a result of the enquiry he may come into possession of new i material and he would be entitled to take that new material into account. If the material, which was not available to the Income-tax Officer when he made the assessment could thus be taken into consideration by the Commissioner after holding an enquiry, there is no reason why the material which had already come on record though subsequent to the making of the assessment, cannot be taken into consideration by him. Moreover, in view of the clear words used in clause (b) of the Explanation to section 263(1), it has to be held that while calling for and examining the record of any proceeding under section 263(1), it is and it was open to the Commissioner not only to consider the record of that proceeding but also the record relating to that proceeding available to him at the time of examination."

    In the present case all the details were filed before the Assessing Officer and they were filed before ld. CIT also. However, no comment has been given by ld. CIT that how the explanation and details filed by assessee are not acceptable. Mere observing that Assessing Officer has not asked for the details and assessee has filed all those details suo moto, the ld. CIT presumed that Assessing Officer may not have considered those details and set aside the order of Assessing Officer, in our considered view the approach of the ld. CIT is not acceptable. All details are on record, therefore, it should be presumed that all these details have been taken into consideration. If the ld. CIT has given any comment that these details are wrong or on the basis of these details deduction could not have been allowed, then only the action of the ld. CIT could have been said that the same is correct.

    17. In case of Trustees of Anupam Charitable Trust (supra), the Hon'ble Rajasthan High Court has held that the error envisaged by section 263 is not one which depends on possibility or guess work but it should be actually an error either of fact or of law. In the present case neither ld. CIT could point out any factual mistake or any legal error in the order.

    18. In case of Sakthi Charities (supra), the Hon'ble Madras High Court has observed that where the Commissioner of Income-tax has merely set aside the order of the ITO directing the officer to hold further investigation without recording any finding that the order passed by the ITO was in any way erroneous or prejudicial to the interests of the revenue, the Tribunal was quite justified in holding that the order did not call for any interference in the revision done by the Commissioner of income-tax.

    19. This ratio is also squarely applicable on the facts of the present case for the reason that ld. CIT has not given any instance how the order of Assessing Officer is erroneous or prejudicial to the interests of the revenue except mentioning that Assessing Officer has not examined the details filed before him. However, the ld., CIT could not point out how these details are not acceptable or how they are not correct.

    20. The Hon'ble Allahabad High Court in the case of Goyal (P.) Family Specific Trust (supra) has held that :

    "the orders of the Assessing Officer may be brief and cryptic, but that by itself is not sufficient reason to brand the assessment order as erroneous and prejudicial to the interest of revenue. It is for the Commissioner to point out as to what error was committed by the Assessing Officer in having reached the conclusion. The Commissioner having failed to point out any error, no error can be inferred from the orders of the Assessing Officer for the simple reason that they are bereft of details."

    21. Similarly, the Hon'ble Gujarat High Court in the case of Rayon Silk Mills (supra) has observed as under :-

    "It is an essential condition of exercise of power under section 263 that the Commissioner must find that the error which is found in the order of the Assessing Officer is prejudicial to the interest of revenue. The conclusion of Commissioner that order is prejudicial is not a matter of subjective satisfaction of the Commissioner. It is to be founded on the objective material after assessing the contentions raised by the assessee on opportunity of hearing being afforded to him before passing the order."

    22. In the case of Taj Printers (supra) the Hon'ble Allahabad High Court has observed as under :-

    "Where it is found that the basic requirements of assuming jurisdiction under section 263 is missing as the Commissioner did not either set out the points for enquiry nor did he record any reason or referred to any material as to how the order of officer was erroneous or prejudicial to the interest of revenue." (p. 385)

    23. After going through all these case laws and other material on record it is clearly established that order of ld. CIT cannot be sustained as neither any specific defect was pointed out that how the order of the Assessing Officer is erroneous and prejudicial to the interest of the revenue or the details filed before the Assessing Officer and again before the ld. CIT are not correct or how any addition can be sustained. As stated above, without pointing out any defect, mere setting aside the order of Assessing Officer just to make afresh investigation in a manner suggested by ld. CIT, in our considered view is not permissible under law.

    24. We have also seen various case laws relied upon by ld. D/R and found that they are distinguishable on facts. For example, the ld. D/R has placed reliance on the decision of Hon'ble Rajasthan High Court in the case of R.D. Gupta Construction (P.) Ltd. (supra).

    25. In this case the Assessing Officer completed the assessment by applying net profit at the rate of 5 per cent as declared by assessee. The ld. CIT directed the Assessing Officer to apply 10 per cent net profit rate. This order of ld. CIT was confirmed by Hon'ble Rajasthan High Court. It is seen that in this specific order a very low rate was applied and the order of the AO was held erroneous and prejudicial to the interest of revenue. But in the present case no such facts are involved. Rather fact of assessee's case are much stronger as assessee's entire profit are liable to deduction under section 10B.

    26. Reliance has also placed on the observation of the Hon'ble Apex Court in the case of Malabar Industrial Co. Ltd. (supra) that an incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous.

    27. In the present case nothing has been brought on record by ld. CIT that how the Assessing Officer has assumed incorrect facts or has applied the provisions of law incorrectly. Therefore, the observation of Hon'ble Apex Court in the present case does not apply. Rather the decision of Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. (supra) supports the case of the assessee. It has been held by the Hon'ble Apex Court that twin conditions should be satisfied, (1) that the order of the Assessing Officer sought to be revised is erroneous and (2) it is prejudicial to the interest of revenue. If one of them is absent i.e., if the order of ITO is erroneous but is not prejudicial to the interest of revenue or if it is not erroneous but it is prejudicial to the interest of revenue, recourse cannot be had to section 263(1) of the Act. In the present case it is not brought on record how the order of Assessing Officer is prejudicial. Technically, if we admit that no questionnaire was issued by the Assessing Officer, however, assessee had filed details and it may not have been considered by the Assessing Officer as observed by ld. CIT, therefore, it can be said that the order may be erroneous. But second condition i.e., that the order should be prejudicial to the interest of revenue is not satisfied. All the details were filed before ld. CIT. However, the ld. CIT could not say that the claim of the assessee is not allowable or the details which has been filed suggest that any addition is warranted. The ld. CIT simply asked the Assessing Officer to re-examine the case which is not permissible under the law.

    28. The scheme of the Act is to levy and collect tax in accordance with provisions of Act and this task is entrusted to the revenue. If due to erroneous order of the ITO, the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interest 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 Officer. 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 ITO adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views 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 the ITO is unsustainable in law.

    29. These observations have been made by the Hon'ble Apex Court.in case of Malabar Industrial Co. Ltd. (supra). These observations are clearly applicable on the facts of the present case as the Assessing Officer within the frame work of law has completed the assessment. Moreover, the assessee was entitled for deduction under section 10B. This is not a case of department that assessee is not entitled for deduction under section 10B, therefore, whatever the resulted income would have been there, those will qualify for deduction. In view of these facts, there was no loss of revenue even. Therefore, the order of Assessing Officer cannot be termed as erroneous or prejudicial to the interests of the revenue. Reliance has been placed on the decision of K.A. Ramaswamy Chettiar's case (supra).

    30. In this case the order of Assessing Officer was set aside as the Assessing Officer has not made any enquiry. The Hon'ble Madras High Court has examined the order passed under section 263 and it was found that Assessing Officer has not made any enquiry at all. But in the present case the assessment was completed under section 143(3) and ld. CIT himself admits that suo moto details were filed before Assessing Officer. If the details were filed suo moto and they were in consonance with the Balance Sheet and Profit & Loss account filed along with the return, then it cannot be said that these details were not considered by the Assessing Officer. Therefore, this ratio is not applicable in the present case.

    31. Further reliance has been placed on the decision of Hon'ble Delhi High Court in the case of Gee Vee Enterprises (supra). In this case accepted the statement of income made by the assessee in his return and thereafter on examination of record the order of the Assessing Officer was set aside by the ld. CIT. The Hon'ble Delhi High Court has observed that Assessing Officer is not only adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but called for further enquiry. These observations of Hon'ble Delhi High Court are not applicable on the facts of present cased as in the present case the assessment has been completed under section 143(3). The Assessing Officer has mentioned that various details were filed and were test checked. This fact is also mentioned in the order of Assessing Officer that assessment for claiming deduction under section 10B which is in line with deduction in the past and accordingly the same was allowed. Therefore, it cannot be said,that Assessing Officer has not applied his mind.

    31.1 Similarly, we have also seen various other case laws and found that they are also distinguishable on the facts.

    32. In view of the above facts and circumstances and in view of detailed reasoning and discussion of ours in preceding paras, we hold that ld. CIT was not justified in initiating proceedings under section 263 on a proposal sent by Assessing Officer through Additional Commissioner and thereafter set aside the order of Assessing Officer passed originally. Accordingly, we set aside the order of ld. CIT and restore the order of Assessing Officer passed originally.

    33. In the result, appeal of the assessee is allowed.

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