M/s. Fabindia Overseas Pvt Ltd., New Delhi v. DCIT, New Delhi

ITA 1980/DEL/2009 | 2004-2005
Pronouncement Date: 26-02-2010 | Result: Partly Allowed

Appeal Details

RSA Number 198020114 RSA 2009
Bench Delhi
Appeal Number ITA 1980/DEL/2009
Duration Of Justice 9 month(s) 14 day(s)
Appellant M/s. Fabindia Overseas Pvt Ltd., New Delhi
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 26-02-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 26-02-2010
Date Of Final Hearing 28-01-2010
Next Hearing Date 28-01-2010
Assessment Year 2004-2005
Appeal Filed On 12-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI R.C. SHARMA I.T.A. NO. 1980/DEL/2009 ASSESSMENT YEAR: 2004-05 M/S. FABINDIA OVERSEAS PVT. LTD. VS. DEPUTY CIT 14-N BLOCK MARKET CIRCLE 11(7) GRIEVANCE. KAILASH PART-I NEW DELHI. NEW DELHI-1100 48 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RAJAN BHATIA CA RESPONDENT BY: SHRI SANJIV SHAR MA DR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED COMMISSIONER OF INCOME-TAX DATED 09.03.2009 PASSED UNDER SECTION 263 OF THE INCOME-TAX ACT 1961. THE GROUNDS OF APPEAL TAK EN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH THE RULE 8 OF ITAT'S RULES THEY ARE DESCRIPTIVE AND ARGUMENTATIVE IN NATURE. IN BRIEF THE GRIEVANCE OF ASSESSEE IS THAT LEARNED CIT HAS ERRED IN TAKING COGNIZANCE UNDER SEC. 263 O F THE ACT AND THEREBY SETTING ASIDE THE ASSESSMENT ORDER WITHOUT PROPER E XAMINATION OF THE FACTS AND CIRCUMSTANCES. 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN EXPORT AND LOCAL TRADING OF VARIOUS LAND LOAN PRODU CTS INCLUDING READYMADE GARMENTS ETC. IT HAS FILED ITS RETURN OF INCOME ON IST NOVEMBER 2004 DECLARING AN INCOME OF RS.5 26 51 170. ASSESSING OF FICER HAD ISSUED NOTICE UNDER SEC.143(2) OF THE ACT ON 10.10.2005 WHICH WAS DULY SERVED UPON THE ASSESSEE. IN RESPONSE TO THIS NOTICE THE TAX CONSU LTANT OF THE ASSESSEE APPEARED BEFORE THE ASSESSING OFFICER AND SUBMITTED THE DETAILS ASKED FOR FROM TIME TO TIME. ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORDER ON 29.11.2006 UNDER SEC. 143(3) OF THE ACT. HE DETERMI NED THE TAXABLE INCOME AT RS.5 74 58 752. IN THE ASSESSMENT ASSESSING OFF ICER HAS ADDED THREE AMOUNTS I.E. DISALLOWANCE OUT OF REPAIR DISALLOWAN CE UNDER SEC.40(A) (I) AND DISALLOWANCE OUT OF FOREIGN TRAVEL EXPENSES. 3. LEARNED COMMISSIONER ON PERUSAL OF THE ASSESSMEN T RECORD FORMED AN OPINION THAT ASSESSING OFFICER FAILED TO CONDUCT PR OPER INQUIRY ON CERTAIN ISSUES AND THEREFORE HIS ORDER IS ERRONEOUS AND P REJUDICIAL TO THE INTEREST OF THE REVENUE IN SEVERAL ASPECTS. HE TOOK COGNIZANCE UNDER SEC. 263 OF THE ACT AND ISSUED A SHOW-CAUSE NOTICE TO THE ASSESSEE INVI TING ITS EXPLANATION AS TO WHY ASSESSMENT ORDER BE NOT SET ASIDE BEING ERRONEO US AND PREJUDICIAL TO THE 3 INTEREST OF THE REVENUE. IN BRIEF THE REASONS ASSI GNED IN THE SHOW-CAUSE NOTICE READ AS UNDER: FROM AN EXAMINATION OF THE INCOME-TAX ASSESSMENT R ECORDS FOR A.Y. 2004-05 OF M/S. FAB INDIA OVERSEAS P. LTD. 14- =N BLOCK MARKET GREATER KAILASH-I NEW DELHI IT TRANSPIRES THAT THE ASSESSEE COMPANY HAS MADE INTERNATIONAL TRANSACTIONS WITH IT S ASSOCIATES. IT HAS NOT BEEN VERIFIED AS TO WHETHER THE TRANSACTIONS HA VE BEEN MADE AT THE ARMS LENGTH PRICE. BROKERAGE OF RS.11 52 195 AS DEBITED IN THE PROFIT & LOSS A/C (SCHEDULE-15) HAS BEEN ALLOWED WITHOUT VERIFICATION . GENERAL CHARGES OF RS.11 20 500 HAVE BEEN CLAIMED I N THE RETURN AND ALLOWED WITHOUT ANY VERIFICATION. COMMISSION ON SALES CLAIMED AT RS.16 96 845 ( INCLU DED IN THE SELLING AND DISTRIBUTION EXPENSES DEBITED AT RS.2 1 6 24 173 ) HAS BEEN ALLOWED WITHOUT ANY VERIFICATION. 4. IN RESPONSE TO THE SHOW-CAUSE NOTICE ASSESSEE H AS FILED A WRITTEN SUBMISSIONS VIDE LETTER DATED 10.2.2009 COPY OF TH IS REPLY IS PLACED AT PAGES 108 TO 112 OF THE PAPER BOOK. LEARNED CIT HAS GONE THROUGH THE REPLY OF THE ASSESSEE AND ON THE STRENGTH OF HON'BLE DELHI HIGH COURTS DECISION IN THE CASE OF M/S. G.V. ENTERPRISES VS. ADDITIONAL CIT 99 ITR 373 HAS OBSERVED THAT ASSESSING OFFICER WAS SUPPOSED TO CONDUCT INQU IRIES ON THE VARIOUS ASPECTS WHILE FRAMING SCRUTINY ASSESSMENT BUT ASSES SING OFFICER REMAINED 4 PASSIVE ON THESE ISSUES. HE SET ASIDE THE ASSESSME NT ORDER AND DIRECTED THE ASSESSING OFFICER TO FRAME A DE NOVO ASSESSMENT. 5. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE IMPUG NING THE ORDER OF THE LEARNED COMMISSIONER SUBMITTED THAT FIRST REASON AS SIGNED BY THE LEARNED COMMISSIONER FOR TAKING COGNIZANCE UNDER SEC. 263 I S THAT ASSESSING OFFICER FAILED TO INVESTIGATE THE INTERNATIONAL TRANSACTION WITH ASSOCIATE CONCERNS. HE POINTED OUT THAT TOTAL VOLUME OF INTERNATIONAL TRAN SACTION WAS LESS THAN RS. 5 CRORES. THE ASSESSEE HAS BEEN MAINTAINING ITS ACCOU NTS PROPERLY IN FORM NO. 3CEB. THE DETAILS ARE MAINTAINED ON THE BASIS OF CO ST PLUS METHOD. SINCE THE TOTAL VALUE OF THE TRANSACTION IS LESS THAN RS. 5 C RORES. THERE WAS NO NECESSITY TO VERIFY THESE TRANSACTIONS UNDER SEC. 92-C OF THE ACT. HE MADE A REFERENCE TO A BOARDS CIRCULAR DATED 23 RD AUGUST 2001 ISSUED ON TRANSFER PRICING. THE NEXT REASON ASSIGNED BY THE LEARNED CIT IS BROKERAG E PAID BY THE ASSESSEE. HE POINTED OUT THAT THIS ISSUE HAS BEEN EXAMINED BY THE ASSESSING OFFICER AND IT TRAVELED BEFORE THE LEARNED CIT(APPEALS) ALS O. THE LEARNED COMMISSIONER CANNOT TAKE COGNIZANCE OF THIS ISSUE O NCE IT WAS DISPUTED BEFORE THE LEARNED FIRST APPELLATE AUTHORITY. THE L EARNED COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TOWARDS CLAUSE (C) OF E XPLANATION TO SEC. 263(1) OF THE ACT. THE NEXT ISSUE TAKEN BY THE LEARNED COM MISSIONER IS IN RESPECT 5 OF GENERAL EXPENSES. ASSESSING OFFICER HAS VERIFIED THESE EXPENSES AND ONLY THEREAFTER ACCEPTED. THE NEXT REASON ASSIGNED BY TH E LEARNED COMMISSIONER IS IN RESPECT OF COMMISSION ON SALES CLAIMED AT RS. 16 96 845. HE POINTED OUT THAT THE DETAILS OF THIS PAYMENT WERE SUBMITTED BEF ORE THE ASSESSING OFFICER VIDE LETTER DATED 25.8.2006. THE ASSESSEE WAS REQUI RED TO PAY COMMISSION @ 5% OF NET SALES REALIZATION AS PER AGREEMENT DATED 23 RD SEPTEMBER 2002. APART FROM THIS COMMISSION ASSESSEE WAS BEARING TH E COST OF MAINTENANCE ETC. BECAUSE IT IS REIMBURSING ELECTRICAL CHARGES WATER CHARGES INCURRED BY THE AGENT. ACCORDING TO THE LEARNED COMMISSIONER I F ALL THESE EXPENSES ARE ADDED TO THE AMOUNT OF COMMISSION PAID THE RATE OF COMMISSION WOULD WORK OUT TO BE VERY SUBSTANTIAL AND NOT 5% AS MENTI ONED IN THE AGREEMENT. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LEARNED COMMISSIONER FAILED TO CONSTRUE THE TRUE IMPORT OF THE TRANSACTI ON. THE PREMISES WHERE AGENT IS CARRYING ON THE BUSINESS RELATES TO THE AG ENTS. THIS FACTOR HAS TO BE BORNE IN MIND. LEARNED COMMISSIONER WITHOUT APPREC IATING THIS ASPECT ARRIVED AT A CONCLUSION THAT THE ASSESSING OFFICER HAS ACCEPTED THE VERSION OF THE ASSESSEE WITHOUT VERIFYING THE FACT. HE FURTHER CONTENDED THAT A SCRUTINY ASSESSMENT WAS MADE. EVERY DETAIL WAS BEFORE THE AS SESSING OFFICER. IT WAS THE DUTY OF THE ASSESSING OFFICER TO EXAMINE AND AP PRECIATE ALL THOSE DETAILS. 6 IF HE COMMITTED ANY FAULT THEN ASSESSEE CANNOT BE P UNISHED. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO CONTENDED THAT LEARNE D COMMISSIONER HAS NOWHERE ARRIVED ON FIRM CONCLUSION WHETHER PARTICUL AR ITEM HAS TO BE DISALLOWED TO THE ASSESSEE. HE SHOULD HAVE RECORDED A FIRM FINDING AND THEREAFTER SET ASIDE THE ISSUE. IN SUPPORT OF HIS C ONTENTION HE RELIED UPON THE FOLLOWING DECISION: 1. CIT VS. DAULT RAM RAWATMULL (S.C.) 87 ITR 349; 2. INDORE MALWA UNITED MILLS LTD. VS. STATE OF MP & OR S. (S.C) 60 ITR 41; 3. CIT VS. CHANDAN WOOD PRODUCTS (HON'BLE MADHYA PRADE SH HIGH COURT ) 217 ITR 834; 4. CIT VS. GABRIEL INDIA LTD. (BOMBAY HIGH COURT) 203 ITR 108; 5. CIT VS. EICHER LTD. (HON'BLE DELHI HIGH COURT) 294 ITR 310; 6. CIT VS. KELVINATOR OF INDIA LTD. (HON'BLE DELHI HIG H COURT) 256 ITR 1; AND 7. CIT VS. ASHISH RAJPAL (HON'BLE DELHI HIGH COURT) 18 0 TAXMAN 623. 6. LEARNED DR ON THE OTHER HAND SUBMITTED THAT THRE SHOLD LIMIT OF RS. 5 CRORES PROVIDED IN THE CIRCULAR FOR VERIFYING THE I NTERNATIONAL TRANSACTION WITH ASSOCIATE CONCERNS IS IN RESPECT OF MAKING A R EFERENCE TO THE TPO UNDER SEC. 92CA OF THE ACT. FOR THE ASSESSING OFFICER TH ERE IS NO SUCH LIMIT HE IS 7 BOUND TO EXAMINE PRIMA FACIE SUCH TRANSACTION UNDER SEC. 92C OF THE ACT. THERE IS NOT A SINGLE WHISPER EITHER IN THE ASSESSM ENT ORDER OR ANY OF THE QUERY PUT BY THE ASSESSING OFFICER TO THE ASSESSEE THEREFORE IT IS A FAILURE ON THE PART OF THE ASSESSING OFFICER TO PROPERLY IN VESTIGATE THE RETURN OF ASSESSEE AND THE CIT IS JUSTIFIED IN TAKING ACTION UNDER SEC. 263 OF THE ACT. HE RELIED UPON THE JUDGMENT OF THE HON'BLE DELHI HI GH COURT IN THE CASE OF M/S. V.G. ENTERPRISES (SUPRA). HE ALSO RELIED UPON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF DUGGAL & CO. VS. CI T 220 ITR 456. 7. WITH REGARD TO THE OTHER ISSUES TAKEN UP BY THE LEARNED COMMISSIONER IN THE SHOW-CAUSE NOTICE LEARNED DR POINTED OUT TH AT THERE IS NO WHISPER IN THE ASSESSMENT ORDER IN RESPECT OF COMMISSION PAID TO THE AGENT AND THE GENERAL EXPENSES. HE WAS UNABLE TO GIVE HIS COMMENT S ABOUT THE ISSUE OF BROKERAGE WHICH WAS AGITATED BEFORE THE LEARNED CIT (APPEALS). LEARNED DR FURTHER RELIED UPON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIES REPORTED IN 243 ITR 83. 8. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. THE ITAT IN THE CASE OF MRS. KH ATIZA S. OOMERBHOY VS. ITO MUMBAI 101 TTJ 1095 ANALYZED IN DETAIL VARI OUS AUTHORITATIVE PRONOUNCEMENTS INCLUDING THE DECISION OF HONBLE SU PREME COURT IN THE 8 CASE OF MALABAR INDUSTRIES 243 ITR 83 AS WELL AS H ONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF GABRIEL INDIA LTD. AN D HAS PROPOUNDED THE FOLLOWING BROADER PRINCIPLE TO JUDGE THE ACTION OF CIT TAKEN UNDER SECTION 263. THE FUNDAMENTAL PRINCIPLE WHICH EMERGE FROM THE A BOVE CASES MAY BE SUMMARIZED BELOW (I) THE CIT MUST RECORD SATISFACTION THAT THE ORDE R OF THE A.O IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. BO TH THE CONDITIONS MUST BE FULFILLED. (II) SEC. 263 CANNOT BE INVOKED TO CORRECT EACH AN D EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE A O AND IT WAS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. (III) AN INCORRECT ASSUMPTION OF FACTS OR AN INCOR RECT APPLICATION OF LAW WILL SUFFICE THE REQUIREMENT OF ORDER BEING ERRONEOUS. (IV) IF THE ORDER IS PASSED WITHOUT APPLICATION O F MIND SUCH ORDER WILL FALL UNDER THE CATEGORY OF ERRONEOUS ORDER. (V) EVERY LOSS OF REVENUE CANNOT BE TREATED AS PRE JUDICIAL TO THE INTERESTS OF THE REVENUE AND IF THE A.O HAS ADOPTED ONE OF TH E COURSES PERMISSIBLE UNDER LAW OR WHERE TWO VIEWS ARE POSSIBLE AND THE A.O HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE IT CANNOT B E TREATED AS AN ERRONEOUS ORDER UNLESS THE VIEW TAKEN BY THE A.O I S UNSUSTAINABLE UNDER LAW. (VI) IF WHILE MAKING THE ASSESSMENT THE A.O EXAMI NES THE ACCOUNTS MAKES ENQUIRIES APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINE THE INCOME THE CIT WHILE EXERC ISING HIS POWER UNDER S. 263 IS NOT PERMITTED TO SUBSTITUTE HIS ESTIMATE OF INCOME IN PLACE OF THE INCOME ESTIMATED BY THE A.O. (VII) THE A.O EXERCISES QUASI-JUDICIAL POWER VEST ED IN HIS AND IF HE EXERCISES SUCH POWER IN ACCORDANCE WITH LAW AND ARR IVES AT A CONCLUSION SUCH CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SI MPLY BECAUSE THE CIT DOES NOT FEEL SATISFIED WITH THE CONCLUSION. 9 (VIII) THE CIT BEFORE EXERCISING HIS JURISDICTION UNDER S. 263 MUST HAVE MATERIAL ON RECORD TO ARRIVE AT A SATISFACTION. (IX) IF THE A.O HAS MADE ENQUIRIES DURING THE COU RSE OF ASSESSMENT PROCEEDINGS ON THE RELEVANT ISSUES AND THE ASSESSEE HAS GIVEN DETAILED EXPLANATION BY A LETTER IN WRITING AND THE A.O ALLO WS THE CLAIM ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE THE DECISION OF THE A.O CANNOT BE HELD TO BE ERRONEOUS SIMPLY BECAUSE IN HI S ORDER HE DOES NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. 9. IN THE LIGHT OF ABOVE PROPOSITIONS LET US EXAMI NE THE FACTS OF THE PRESENT CASE. DURING THE COURSE OF HEARING WE HAVE CONFRONTED THE LEARNED COUNSEL FOR THE ASSESSEE TO SHOW US THE QUESTIONNAI RE ASKED BY THE ASSESSING OFFICER ON THE ISSUES TAKEN UP BY THE LEARNED COMMI SSIONER IN 263 PROCEEDINGS BUT LEARNED COUNSEL WAS UNABLE TO DREW OUR ATTENTIONS TOWARDS ANY SUCH QUESTIONNAIRE. HE EMPHASIZED THAT ASSESSEE HAS GIVEN REPLY ON ALL THESE ISSUES AND THEREFORE IT SHOULD BE CONSTRUED THAT IN A SCRUTINY ASSESSMENT PROCEEDING ASSESSING OFFICER MUST HAVE G ONE THROUGH THE RECORDS RELEVANT TO ALL THESE ISSUES. IN TEST NOS. 6 AND 7 EXTRACTED SUPRA IT HAS BEEN EXPOUNDED IF THE ASSESSING OFFICER EXAMINE S THE ACCOUNTS MAKES INQUIRY APPLIES HIS MIND THEN LEARNED COMMISSIONER WOULD NOT BE JUSTIFIED TO SUBSTITUTE HIS ESTIMATE OF INCOME IN PLACE THE I NCOME ESTIMATED BY THE ASSESSING OFFICER. THE APPLICATION OF MIND AT THE E ND OF THE ASSESSING OFFICER CAN BE ASCERTAINED EITHER FROM THE DISCUSSI ON AVAILABLE IN THE 10 ASSESSMENT ORDER OR FROM THE QUESTIONNAIRE ISSUED B Y HIM ON THE SPECIFIC ISSUES AND REPLIES SUBMITTED BY THE ASSESSEE. THE E XPLANATION SUBMITTED BY THE ASSESSEE SHOULD BE PLAUSIBLE ONE AND IN CONSONA NCE WITH THE QUERY OF THE ASSESSING OFFICER. NO SUCH THING ARE EVIDENT FROM T HE RECORD IN THE PRESENT CASE. THE FIRST ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT INQUIRY IN INTERNATIONAL TRANSACTION WITH ASSOCIATE CONCERN S FOR THE PURPOSE OF TRANSFER PRCISING THE VALUE OF INTERNATIONAL TRANS ACTION SHOULD BE MORE THAN RS. 5 CRORES IS CONCERNED LEARNED DR HAS RIGHTLY D EMONSTRATED THAT IT IS IN RESPECT OF A REFERENCE TO THE TPO OTHERWISE ASSESSI NG OFFICER CAN TAKE COGNIZANCE UNDER SEC. 92-C OF THE ACT. EXCEPT THE I SSUE IN RESPECT OF BROKERAGE ALL OTHER ISSUES HAVE NOT BEEN CONSIDERED BY THE ASSESSING OFFICER. THE OBSERVATIONS OF HON'BLE DELHI HIGH COU RT IN THE CASE OF VG ENTERPRISES NOTICED BY THE LEARNED COMMISSIONER ON PAGE 2 AND CONFRONTED TO THE ASSESSEE ARE WORTH TO NOTE HEREIN: IT IS NOT NECESSARY FOR THE COMMISSIONER TO MAKE FURTHER INQUIRIES BEFORE CANCELING THE ASSESSMENT ORDER OF THE INCOME-TAX OFFICER. THE COMMISSIONER CAN REGARD THE ORDER AS E RRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE THE IN COME-TAX OFFICER SHOULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE STATEMENTS MADE BY THE ASSESSEE IN HIS RETURN. THE REASON IS O BVIOUS. THE POSITION AND FUNCTION OF THE INCOME-TAX OFFICER IS VERY DIFFERENT FROM 11 THAT OF A CIVIL COURT. THE STATEMENT MADE IN A PLEA DING PROVED BY THE MINIMUM AMOUNT OF EVIDENCE MAY BE ADOPTED BY A CIVI L COURT IN THE ABSENCE OF ANY REBUTTAL. THE CIVIL COURT IS NEUTRAL . IT SIMPLY GIVES DECISION ON THE BASIS OF THE PLEADING AND EVIDENCE WHICH COMES BEFORE IT. THE INCOME-TAX OFFICER IS NOT ONLY AN AD JUDICATOR BUT ALSO AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FA CE OF THE RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER INQUIRY. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN THE R ETURN WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE AN INQUIRY. IT IS BECAUSE IT IS INCUMBENT ON THE ITO TO FURTHER INVES TIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MADE SUCH AN INQUIRY PRUDENT THAT THE WORD ERRONEOUS IN SECTION 263 IN CLUDES THE FAILURE TO MAKE SUCH AN ENQUIRY. THE ORDER BECOMES ERRONEOU S BECAUSE SUCH AN INQUIRY HAS NOT BEEN MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WITH THE ORDER IF ALL THE FACTS STATED THEREIN ARE ASSUMED TO BE CORRECT. 10. ONE OF THE CONTENTIONS RAISED BY THE LEARNED CO UNSEL FOR THE ASSESSEE IS THAT LEARNED COMMISSIONER OUGHT TO HAVE CONSIDER ED THE COMPLETE AGREEMENT BETWEEN THE ASSESSEE IN RESPECT OF COMMIS SION PAID AND THEN SHOULD HAVE ARRIVED AT A FIRM CONCLUSION. IN OUR OP INION LEARNED COMMISSIONER HAS NOT ADJUDICATED THE ISSUE CONCLUSI VELY IN THE PRESENT PROCEEDINGS. HE HAS TEST-CHECKED THE ASSESSMENT ORD ER PRIMA-FACIE WHETHER THE ASSESSING OFFICER HAS ACCEPTED THE ACCOUNTING E NTRY OF THE ASSESSEE 12 WITHOUT ANY INQUIRY OR NOT. HE HAS NOT MADE THE ADD ITION. HE SIMPLY SET ASIDE THE ISSUE TO THE ASSESSING OFFICER ON A PRIMA FACIE SATISFACTION THAT NO INQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER WHIL E FRAMING THE ASSESSMENT ORDER. THIS ACTION OF LEARNED CIT(A) IS DIRECTED IN THE LINE OF HONBLE HIGH COURTS DECISION IN THE CASE OF V.G. E NTERPRISES. THE CASE LAWS RELIED UPON BY THE ARE NOT APPLICABLE ON THE F ACTS OF THE CASE IN HANDS. THE FIRST DECISION RELIED UPON BY THE LEARNED COUNS EL FOR THE ASSESSEE IS IN THE CASE OF DAULAT RAM RAWATMAL. IN THAT CASE THE ISSUE BEFORE HON'BLE COURT WAS THAT IF A FACT FINDING AUTHORITY BASIS IT S DECISION PARTLY ON CONJECTURE SURMISES AND SUSPICION AND PARTLY ON EV IDENCE IN SUCH SITUATION IT WOULD NOT BE A FINDING OF FACT AND AN ISSUE OF L AW WOULD ARISE. THIS CASE LAW WAS CITED BY THE LEARNED COUNSEL FOR THE ASSESS EE FOR DEMONSTRATING THE ORDER OF THE LEARNED COMMISSIONER AS UNSUSTAINABLE ON THE GROUND THAT HE HAS NOT TAKEN INTO CONSIDERATION THE AGREEMENT BETW EEN THE ASSESSEE AND THE AGENT ON THE ISSUE OF COMMISSION PAYMENT. IN OUR OP INION PRECISELY I.E. NOT THE ISSUE. LEARNED COMMISSIONER HAS EXAMINED THE AS PECT WHETHER A PROPER INQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER OR N OT WHILE ACCEPTING THE CLAIM OF COMMISSION BY THE ASSESSING OFFICER. THE D ISPUTE IS NOT IN RESPECT OF GENUINENESS OF THE PAYMENT OF COMMISSION. THE DI SPUTE IS WHETHER SUCH A 13 CLAIM CAN BE ACCEPTED WITHOUT ANY PROPER INQUIRY. T HEREFORE LEARNED COMMISSIONER HAS NOT COMMITTED ANY ERROR IN APPRECI ATING THE CONTROVERSY FROM THAT ANGLE AND ON THE BASIS OF HON'BLE JURISDI CTIONAL HIGH COURTS DECISION. THE NEXT CASE LAW RELIED UPON BY THE ASSE SSEE IS IN THE CASE OF INDORE MALVA UNITED MILLS. THIS CASE RELATES TO IND ORE INDUSTRIAL TAX RULES 1927. THE ASSESSING AUTHORITY HELD THAT ASSESSEE HA D FAILED TO ACCOUNT FOR SHORTAGE OF YARN AND VALUING THE STOCK. SUCH A CONC LUSION WAS ARRIVED BY THE AUTHORITY ON PLACING ITS RELIANCE ON SELECTIVE MATE RIAL AND NOT CONSIDERING THE OTHER EVIDENCE. IN THAT BACKGROUND THE HON'BLE COU RT HAS HELD THAT ASSESSING AUTHORITY SHOULD HAVE NOT RECORDED A FINDING ON THE BASIS OF PICK AND CHOICE OF SOME REGISTERS. THERE IS NO SUCH ISSUE IN THE CA SE IN HANDS. LEARNED COMMISSIONER HAS ONLY SET ASIDE THE ISSUES AND AN O PPORTUNITY WOULD BE AVAILABLE TO THE ASSESSEE IN SUPPORT OF ITS CLAIM. THE NEXT CASE LAWS RELIED UPON BY THE ASSESSEE IS IN THE CASE OF CHANDAN WOOD . THIS DECISION IS OF HON'BLE MADHYA PRADESH HIGH COURT. IN THIS CASE TH E LEARNED COMMISSIONER SOUGHT TO REVISED THE ORDER OF THE ASS ESSING OFFICER ON THE GROUND THAT SIGNATURES OF THE PARTNER ON THE PARTNE RSHIP DEED WAS FORGED ONE. THIS OPINION WAS FORMED ON THE BASIS OF AN EXPERT R EPORT. THIS REPORT WAS NEVER SUPPLIED TO THE ASSESSEE INSPITE OF REQUESTS MADE BY THE ASSESSEE. IN 14 THAT BACKGROUND THE ITAT HAS SET ASIDE THE ORDER O F THE LEARNED COMMISSIONER AND THE ORDER OF THE ITAT HAS BEEN UPH ELD BY THE HON'BLE HIGH COURT. THERE ARE NO SUCH FACTS AVAILABLE IN TH E PRESENT CASE. THE NEXT JUDGMENT RELIED UPON BY THE ASSESSEE IS OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF GABRIAL INDIA. WE HAVE ALREADY CONSIDER ED THIS JUDGMENT WHILE CARVING OUT THE BROAD TEST FOR JUDGING AN ORDER PAS SED UNDER SEC. 263. THE ASSESSEE FURTHER RELIED UPON THE DECISION OF HON'BL E DELHI HIGH COURT IN THE CASE OF EICHAR LTD. AND KELVINATOR. BOTH THESE DECI SIONS ARE IN RESPECT OF REOPENING OF AN ASSESSMENT ON THE BASIS OF CHANGE O F OPINION. THEY ARE NOT RELEVANT FOR THE CONTROVERSY IN HAND. THE LAST DECI SION RELIED UPON BY THE ASSESSEE IS IN THE CASE OF AASHIS RAJPAL. LEARNED C OUNSEL FOR THE ASSESSEE SUBMITTED THAT LEARNED COMMISSIONER CANNOT BE PERMI TTED TO SUBSTITUTE HIS VIEWS. WE FIND THAT IN THIS DECISION LEARNED COMMIS SIONER HAS ISSUED SHOW- CAUSE NOTICE ON FOUR ISSUES AND THEN TAKEN UP NINE ISSUES. HON'BLE HIGH COURT FOUND A BREACH OF PRINCIPLES OF NATURAL JUSTI CE. THE FACTS OF THIS CASE ARE QUITE DISTINGUISHABLE FROM THE FACTS IN THE PRE SENT CASE. WE HAVE ALREADY MADE IT CLEAR THAT IF ASSESSING OFFICER HAD TAKEN A VIEW PERMISSIBLE UNDER THE LAW AND WHERE TWO VIEWS ARE POSSIBLE ON THAT IS SUE THEN THE VIEW OF ASSESSING OFFICER EVEN THOUGH NOT MATCHING WITH THE LEARNED 15 COMMISSIONERS VIEWS LEARNED COMMISSIONER WOULD NO T BE ABLE TO SUBSTITUTE HIS VIEW BY EXERCISING POWERS UNDER SEC. 263 OF THE ACT. IN THE PRESENT CASE THERE ARE NO VIEWS EXPRESSED BY THE A SSESSING OFFICER ON THE ISSUES. THE ONE OF THE ISSUES WHICH HAS BEEN CONSID ERED BY THE ASSESSING OFFICER IN RESPECT OF BROKERAGE WHICH HAS BEEN TRA VELED IN APPEAL BEFORE THE LEARNED COMMISSIONER THIS CANNOT BE TAKEN UP BY TH E LEARNED COMMISSIONER WHILE EXERCISING THE POWERS UNDER SEC. 263 OF THE ACT IN VIEW OF CLAUSE (C) EXPLANATION 1 APPENDED TO SEC. 263 OF THE ACT. WE MODIFY THE ORDER OF THE LEARNED COMMISSIONER TO THE EXTENT AND DIRECT THE ASSESSING OFFICER NOT TO INVESTIGATE THE ISSUE IN RESPECT OF BROKERAGE OF RS.11 52 195. 11. IN VIEW OF THE ABOVE DISCUSSION APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 26.02.201 0 ( R.C. SHARMA ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26/02/2010 MOHAN LAL COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR:ITAT ASSISTANT REGISTRAR