C I T JAIPUR vs. MANOJ KUMAR JOHRI

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 47 / 2011 COMMISSIONER OF INCOME TAX, Jaipur-III, Jaipur ----Appellant Versus Shri Manoj Kumar Johari, Proprietor, M/S The Art Palace, Ramgarh Shekhawati, District Sikar. ----Respondent Connected With D.B. Income Tax Appeal No. 243 / 2011 Commissioner of Income Tax, Jaipur-III, Jaipur ----Appellant Versus Shri Manoj Kumar Johari Prop, The Art Palace, Ramgarh Shekhawati-Sikar ----Respondent D.B. Income Tax Appeal No. 275 / 2011 Commissioner of Income Tax, Jaipur-III, Jaipur ----Appellant Versus Shri Manoj Kumar Johari Prop, The Art Palace, Ramgarh Shekhawati-Sikar

----Respondent D.B. Income Tax Appeal No. 524 / 2011 Commissioner of Income Tax, Jaipur-III, Jaipur ----Appellant Versus Shri Manoj Kumar Johari Prop, The Art Palace, Ramgarh Shekhawati-Sikar

----Respondent _____________________________________________________ For Appellant(s) : Mr. Sameer Jain with Mr. Daksh Pareek For Respondent(s) : Mr. Sanjay Jhanwar with Ms. Archana _____________________________________________________

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HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH Judgment 29/08/2017 1. By way of these appeals, the department has challenged the judgment and order of the tribunal whereby the tribunal has dismissed the appeal of the department and confirmed the order of CIT(A) and in other appeals, proceedings under Section 263 are quashed by the Tribunal. 2. This court while admitting the appeals has framed following substantial questions of law:- D.B. Income Tax Appeal No.47/2011 admitted on 23.05.2013 “Whether on the facts and in the circumstances of the case, the Hon’ble ITAT is justified in law in upholding the decision of CIT(A) setting aside the fresh assessment order dated 27.07.2009 passed u/s 263/143(3), even when the appeal u/s 260A against ITAT’s order dated 25.02.2010 in ITA No.589/JP2009 is pending before the Hon’ble High Court? Whether the assessment order dated 27.07.2009 passed in compliance to order dated 16.2.2009 u/s 263 of the Act by the Commissioner can be treated as nullity and without locus standi inspite of the fact that the same was passed prior to passing of ITAT order dated 26.2.2010 and the fact of passing 27.7.2009 order was not at all considered by the ITAT?” D.B. Income Tax Appeal No.243/2011 admitted on 23.05.2013 “Whether the order of revision u/s 263 of Income Tax Act, 1961 can be declared as without jurisdiction, wrong and bad in law, when the basis of issuing the same are the evidences recovered during the course of survey u/s 133A

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and statements recorded u/s 131 of the Act, which categorically show that the order was erroneous and prejudicial to interest of revenue? Whether deduction of income u/s 80IB of the Act can be granted to the assessee when the new business as created by reconstruction splitting of business already in existence on the basis of evidences recorded during survey provisions Section 133A of the Act? D.B. Income Tax Appeal No.275/2011 and 524/2011 admitted on 23.05.2013 “Whether the learned Tribunal was right in law in setting aside the Assessment Order for the Assessment Year 2003-04 by placing reliance upon their order for the A.Y. 2005-06 in the assesses own case wherein facts, grounds were different and the Assessment order was passed u/s 263 of the I.T. Act, 1961? Whether the claim deduction u/s 80IB was right in law when the essential requirements u/s 80IB(2) were violated and the respondent assesses has renamed its business by restructuring splitting etc of the erstwhile running business?” 3. Since, it is a group of matters, Mr. Sameer Jain has mainly argued from record of Appeal No.524/2011. He has contended that while passing the order, the A.O. has considered as under:- “5. Brief History of Assessee’s Case:- For the initial year i.e. A.Y.2003-04 the assessee declared Income from his Proprietary business named M/s The Art Palace, for the first time. Prior to that, for the A.Y.2002-03 dassessee had Income of Rs.88,240/- i.e. Rs.7,241 as interest and Rs.36,000/- as salary from M/s Deepak Handicrafts and Rs.45,100/- as income from other sources. As per the Balance Sheet of assessee for the A.Y.2002-03, assessee had loan of Rs.14,20,000/- from M/s Indian Art Palace. M/s Indian Art Palace is a family partnership firm having assessee’s brothers, uncles and cousins

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as partners. M/s Indian Art Palace was in existence since long and was in the same business as is the assessee even today. For the assessment year 2003-04 the assessee started his business but he had no machinery of his own, no business premises of his own and no sufficient capital of his own. All these business in-puts were contributed by M/s Indian Art Palace, the old existing family concern of the assessee. He started his business in the same business premises where very old firm M/s Indian Art Palace was carrying the business. He used the same old machinery belonging to M/s Indian Art Palace, for which he paid rent to that concern. He also paid rent for the business premises separately to M/s Indian Art Palace. Assessee purchased own machinery towards the end of the initial year of his business which was after he had started his business by using machinery of M/s Indian Art Palace. Assessee claimed 10% deduction of his profit u/s 80-IB for the A.Y.2003- 04 as well as for the A.Y. 2004-05. As is evident from the sequence of events, the same business, at the same place and with same machinery had been going on for several years, in the name of M/s Indian Art Palace.” 4. The finding arrived at by the CIT(A) is as under:- “3.1 On perusal of the records, I find that the identical issues, as involved in this ground of appeal, were also involved in the appellant’s appeal for the A.Y.2003-04. The said appeal has been decided by me vide my order of even date, in ITA No.147/JPR/09-10, wherein as per detailed discussion in para 3.3 of that order, I have partly allowed the appellant’s ground taken against this disallowances of the claimed deduction u/s 80-IB of the I.T. Act. Therefore, following may said order, this ground of appeal is;, similarly allowed in this year also. Accordingly, a disallowance of 5% amounting to Rs.3,49,045/-, out of the claimed deduction u/s 80-IB is confimed and the balance disallowance is directed to be deleted. Consequently, this ground of appeal is treated as partly allowed.” 5. While considering the matter, the tribunal has observed as under:-

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and is a new unit having SSI registration No. 172307630 (P.B. Page 3). (2) It is a manufacturing unit not started by splitting up of existing unit. (3) New machinery has been installed. Copies of machinery purchases bills were submitted (P. B Page 18 24) (4) The unit is manufacturing wooden and other handcrafts items which are not covered by the list in the Eleventh Schedule. (5) Copy of Export License w.e.f. 2.09.2002 issued by Ministry of Commerce. Govt. of India bearing No.

ICE-1303006111

dated 2.9.2002. (P. B. Page1 ). (6) Copy of registration certificate granted by CTO. Sikar bearing TIN No. 08971353204 w.e.f. 26.8.2002. P. B. Page 4 ). (7) Copy of Muster roll register for payment to labours. Thereafter, the Tribunal has recorded that AO examined the above documents and evidences filed by the assessee as well as books of account and further raised the following queries:- "(i)That it is not practically possible for the assessee to carry out such huge manufacturing activities for affecting sales worth Rs. 14,73,58,247/- with

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the help of a small plant of Rs. 2 lacs as shown by the assessee in his balance sheet. (ii) That as per details of purchases the assessee had made purchases of ready built furniture of Rs. 16164420/- on Form H relates to purchases from out of state Rs. 7,03,050/- and on Form B-17, purchases within state worth Rs. 1,54,61,370/-. Thereafter, the AO passed a speaking order by which deduction claimed under section 80IB was allowed on 90% sales made by assessee. After examining all these evidences and documents and taking into consideration the order of AO as well as order of ld. CIT passed under section 263, the following findings were given by the Tribunal which are recorded at pages 15 & 16 of its order :- " Before us the ld. A/R has reiterated those explanation furnished by the assessee before the AO as discussed above. The ld. A/R has successfully been able to demonstrate before us that M/s Art Palace, a proprietary concern of the assessee was not set up in same business premises as that of M/s Indian Art Palace, the assessee was never a partner or employee in the firm and had no connection with the said firm M/s Indian Art Palace, the concerne M/s Art Palace is sole proprietary concern of the assessee, the assessee on this new

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premises set up his unit with effect from 28.8.2002 which place is having separate approach, the unit of Indian Art Palace was working at different location since 1984 as shown in the map placed at page 11 supported by an affidavit placed at page 12 of the paper book, the Indian Art Palace carried on business of manufacturing and sale till financial year 2002-03 i.e. even after assessee set up its unit and commenced business, more over manufacturing work of unit of assessee was got done on job basis, statements recorded in course of survey in financial year 2008- 09 from employee of factory cannot be relied upon as recorded behind the back of assessee. The assessee had also purchased machinery in financial year 2002-03 to 04-05 (purchase bills placed at pages 18 to 24), the manufacturing of wooden handicraft in which assessee deals required mostly manual handwork and no heavy machinery or plant is required, the assessee hired some hand tools and small machinery from M/s Indian Art Palace but the same cannot be termed transferred to a new business or plant previously used for any pourpose. We thus find that the allegations, on the basis of which the ld. CIT had held the assessment order in question on the issue as erroneous and prejudicial to the interest of revenue dislodged by the ld. A/R as discussed

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above, have not been specifically rebutted by the ld. D/R before us. Under these circumstances, we are of the view that the ld. CIT was not justified in treating the assessment order in question as erroneous and prejudicial to the interest of the revenue. We are also of the view that a revisional order passed under section 263 of the Act cannot also be justified, on the because, ld. CIT while setting aside the issue to the file AO for fresh consideration on the issue has given opportunity to the assessee to represent its case before the AO unless the above stated requirements of the provisions are fulfil. We thus while setting aside the revisional order in question, allow the grounds in favour of the assessee. 14. In the result appeal is allowed. 10. After going through the above finding of the Tribunal, it is clearly seen that the Tribunal has examined the issue on merit also. It has been clearly mentioned that ld. A/R has successfully been able to demonstrate before us that M/s Art Palace, proprietary concern of the assessee was not set up at the same business premises as that of M/s Indian Art Palace, the assessee was never a partner or employee in the firm and had not connection with the said firm M/s Indian Art Palace. The concern M/s Art Palace is sole proprietary concern of the assessee. The assessee on this new premises set up his unit w.e.f. 28.2.2002 which place is having separate approach. The unit of M/s Indian Art Palace

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was working at different location since 1984 as shown in the map place at page 11 supported by an affidavit placed at page 12 of the paper book, the Indian Art Palace carried on business of manufacturing and sale till financial year 2002-03 i.e. even after assessee set up its unit and

commenced

business,

moreover manufacturing work of the unit of assessee was got done on job basis, statements recorded in course survey in financial year 2008-09 from employees of factory cannot be relied upon as recorded behind the back of the assessee. It has been further observed by the Tribunal that assessee has also purchased machinery in financial year 2002-03 and 04- 05. These observation are finding of Tribunal clearly shows that Tribunal has examined the issue on merit also. Therefore, it has held that the AO has passed a speaking order after examining all the evidences for getting satisfied himself for allowing deduction under section 80-IB. Therefore, it cannot be said that the criminal has merely quashed the order under section 263 and has not given any finding on merit. The Tribunal has examined the fact that for financial year 2002-03 and 04- 05 relevant to assessment year 2003-04 to 05- 06 the assessee has purchased new machinery. Therefore, it can be easily held that even Tribunal has examined the details for A.Y. 2003-04 and 04-05 also. We further noted that even the ld. CIT (A) has taken into consideration the detailed submissions of the assessee in respect to deduction under section 80-IB. These have been reproduced in the

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order. Thereafter, the ld. CIT (A) has given a finding that the facts are identical in the year under consideration to the assessment year 2005-06 and the Tribunal has already given a finding for A.Y. 2005-06. Therefore, the claim of the assessee for these two years was allowed by ld. CIT (A). This is also not in dispute that the facts are identical for A.Y. 2003-04 to 05-06. Deduction under section 80- IB has already been granted by the order of the Tribunal for A.Y. 2005-06. Therefore, we are of the considered view that ld. CIT(A) was correct in allowing the appeal of the assessee for these two years in respect to deduction claimed under section 80-IB. Accordingly, the order of the ld. CIT (A) are confirmed. 6. In that view of the matter, learned counsel for the appellant contended that the Tribunal has seriously committed an error in dismissing the appeal. He has also taken us to the Appeal No.243/2011 where it has been pointed out that the AO has passed the order on 29.11.2006. The order passed under Section 263 was taken on 16.02.2009 and after the remand on 27.07.2009 and tribunal has passed an order subsequently, therefore the order of Tribunal will not be implemented since proceedings under Section 263 is exhausted in the order of CIT(A). 7. In that view of the matter, the order of the Tribunal has no legal validity in view of the order passed by the CIT(A). 8. He has also contended that:-

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“After receiving the proposal on 13.01.2009, a show cause notice u/s 263 of the IT Act was issued to the assessee for AY 2005-06 vide this office

letter

No.CIT.III/JPR/ITO(T&J)/2008- 09/2445 dated 14.01.2009. The assessee was asked to explain as to why the order passed for AY 2005-06 on 29.11.06 may not be revised and the deduction u/s 80IB of the IT Act allowed in excess to the extent of Rs.1,35,17,406 may not be ordered to be withdrawn. The hearing in this matter was fixed on 30th January, 2009. This condition is not fulfilled because the business of assessee is only an extension of a very old existing business in the name of M/s Indian Art Palace. M/s Indian Art Palace was an old partnership firm in which family members of assessee were partners. In nutshell, the same business continued in the name of M/s The Art Palace, as proprietary concern of the assessee. The features characteristic of the continuance of the old business is that: i. The business was started in the same business premises and is still continuing, primarily in the same premises. ii. The business was started with the same machinery and is still using the old machinery of the old concern M/s Indian Art Palace, with routine addition to the old machinery every year. iii. Many of the workers and employees who worked with M/s Indian Art Palace continued and are still working with the assessee concern, M/s. The Art Palace. iv. There was no change in the nature of business and its modus operandi except slight change in brand name from M/s Indian Art Palace to M/s Art Palace.” 9. He has also relied upon Para 11 and 12 of the Tribunal which reads as under:- "11. In the result, appeals of the department are dismissed.

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(2015) 56 taxmann.com 214 (Allahabad) wherein it has held as under:- “9. In Pullangode Rubber Produce Co. Ltd. v. State of Kerala, (1973) MANU/SC/0386/1971 : 91 ITR 18, the Supreme Court held that an admission is a piece of evidence though it is not conclusive. Consequently, a statement made voluntary under Section 133A of the Act cannot be retracted unless the asses-see files evidence to show that the admission made in the statement at the time of survey was wrong and against the material on record. The mere fact that the Commissioner of Income Tax in his report has held that the statement given by the petitioner was on oath and therefore, it cannot be retracted is immaterial in the context of what we have said aforesaid. 10. No doubt, Sections 132(4) and 133A of the Act are distinct and different. Under Section 133A of the Act, there is no provision to administer oath and to take a sworn statement whereas under Section 132(4) of the Act there is no provision to examine a person on oath. But it does not mean that a statement under Section 133A of the Act can be retracted at the whim

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and fancy of the assessee. In the light of the aforesaid, the assertions made by the learned counsel for the petitioner cannot be accepted. 11. On the question of charging Rs. 82/- per kg. on betel nuts we find from a perusal of the record that the price of betel nuts ranged from Rs. 25/- to Rs. 192/- per kg.. The Commission has taken an average of Rs. 82/- per kg., in which we do not find any error. Further, no evidence has been filed by the petitioner to indicate that he had purchased the betel nuts at the rate of Rs. 45/- per kg.. This being a pure finding of fact, no interference can be made by this Court in a writ jurisdiction.” 12. He has relied upon the decision rendered by the Bombay High Court in the case of Dr. Dinesh Jain Vs. Income Tax Officer reported in (2014) 363 ITR 210(Bom) wherein it has held as under:- 5. To consider the first contention, it will be apt to quote section 263(1) which is relevant for our purpose : "263. Revision of orders prejudicial to revenue - (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the assessing officer is erroneous insofar as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, 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. Explanation - * * *" A bare reading of this provision makes it clear that the prerequisite to exercise of jurisdiction by the Commissioner suo moto under it, is that the order of the Income Tax Officer is erroneous insofar as it is prejudicial to the interests of the revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the assessing officer sought to be revised is erroneous; and (ii) it is prejudicial to the

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interests of the revenue. If one of them is absent - if the order of the Income Tax Officer is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the revenue - recourse cannot be had to section 263(1) of the Act. There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the assessing officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase 'prejudicial to the interests of the revenue' is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not conferred to loss of tax. The High Court of Calcutta in Dawjee Dadabhoy & Co. v. S.P. Jain & Anr. MANU/WB/0263/1956 : [1957] 31 ITR 872 (Cal) , the High Court of Karnataka in CIT v. T. Narayana Pai MANU/KA/0017/1974 : [1975] 98 ITR 422 (KAR) , the High Court of Bombay in CIT v. Gabriel India Ltd. MANU/MH/0220/1993 : [1993] 203 ITR 108 (Bom) and the High Court of Gujarat in CIT v. Smt. Minalben S. Parikh MANU/GJ/0177/1994 : [1995] 215 ITR 81 (Guj) treated loss of tax as prejudicial to the interests of the revenue. 6. Mr. Abraham relied on the judgment of the Division Bench of the High Court of Madras in Venkatakrishna Rice Company v. CIT MANU/TN/0138/1981 : [1987] 163 ITR 129 (Mad) interpreting "prejudicial to the interests of the revenue". The High Court held, "In this context, it must be regarded as involving a conception of acts or orders which are subversive of the administration of revenue. There must be some grievous error in the order passed by the Income Tax Officer, which might set a bad trend or pattern for similar assessments, which on a broad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue Administration". In our view this interpretation is too narrow to merit acceptance. The scheme of the Act is to levy and collect tax in accordance with the provisions of

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the Act and this task is entrusted to the revenue. If due to an erroneous order of the Income Tax Officer, the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the revenue. 13. Counsel for the appellant has referred to Section 263 (1)(b) which reads as under:- 263 (1) (b)" record" shall include and shall be deemed always to have included] all records relating to any proceeding under this Act available at the time of examination by the Commissioner; 14. Counsel for the respondent has relied upon the decision rendered by the Supreme Court in the case of Commissioner of Income Tax Vs. Max India Ltd. Reported in (2000) 213 CTR 0266 wherein it has been held as under:- 4. “We find no merit in the said contentions. Firstly, it is not in dispute that when the order of the Commissioner was passed there were two views on the word "profits" in that section. The problem with Section 80HHC is that it has been amended eleven times. Different views existed on the day when the Commissioner passed the above order. Moreover, the mechanics of the section have become so complicated over the years that two views were inherently possible. Therefore, subsequent amendment in 2005 even though retrospective will not attract the provision of Section 263 particularly when as stated above we have to take into account the position of law as it stood on the date when the Commissioner passed the order dated March 5,1997, in purported exercise of his powers under Section 263 of the Income Tax Act.” 15. He has also relied upon the decision rendered by the Supreme Court in the case of Malabar Industrial Co. Ltd. Vs.

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Commissioner of Income Tax reported in (2000) 159 CTR 0001 wherein it has been held as under:- 5. To consider the first contention, it will be apt to quote section 263(1) which is relevant for our purpose : "263. Revision of orders prejudicial to revenue - (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the assessing officer is erroneous insofar as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, 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. Explanation - * * *" A bare reading of this provision makes it clear that the prerequisite to exercise of jurisdiction by the Commissioner suo moto under it, is that the order of the Income Tax Officer is erroneous insofar as it is prejudicial to the interests of the revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the assessing officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the revenue. If one of them is absent - if the order of the Income Tax Officer is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the revenue - recourse cannot be had to section 263(1)

the

Act. There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the assessing officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase 'prejudicial to the interests of the revenue' is not an expression of art and is not defined in the Act. Understood in its ordinary

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meaning it is of wide import and is not conferred to loss of tax. The High Court of Calcutta in Dawjee Dadabhoy & Co. v. S.P. Jain & Anr. MANU/WB/0263/1956 : [1957] 31 ITR 872 (Cal) , the High Court of Karnataka in CIT v. T. Narayana Pai MANU/KA/0017/1974 : [1975] 98 ITR 422 (KAR) , the High Court of Bombay in CIT v. Gabriel India Ltd. MANU/MH/0220/1993 : [1993] 203 ITR 108 (Bom) and the High Court of Gujarat in CIT v. Smt. Minalben S. Parikh MANU/GJ/0177/1994 : [1995] 215 ITR 81 (Guj) treated loss of tax as prejudicial to the interests of the revenue. 6. Mr. Abraham relied on the judgment of the Division Bench of the High Court of Madras in Venkatakrishna Rice Company v. CIT MANU/TN/0138/1981 : [1987] 163 ITR 129 (Mad) interpreting "prejudicial to the interests of the revenue". The High Court held, "In this context, it must be regarded as involving a conception of acts or orders which are subversive of the administration of revenue. There must be some grievous error in the order passed by the Income Tax Officer, which might set a bad trend or pattern for similar assessments, which on a broad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue Administration". In our view this interpretation is too narrow to merit acceptance. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the revenue. If due to an erroneous order of the Income Tax Officer, the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the revenue. 7. 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 assessing officer cannot be treated as prejudicial to the interests of the revenue, for example, when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of

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the revenue unless the view taken by the Income Tax Officer is unsustainable in law. It has been held by this court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the assessing officer accepting the same as such will be erroneous and prejudicial to the interests of the revenue. Rampyari Devi Saraogi v. CIT MANU/SC/0177/1967 : [1968] 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwal v. CIT MANU/SC/0339/1972 : [1973] 88 ITR 323 (SC) . 16. He has also relied on the decision of the Madras High Court in the case of Commissioner of Income Tax Vs. S. Khader Khan Son reported in (2008) 300 ITR 0157 which was confirmed by the Supreme Court (2013) 352 ITR 480 (SC). Para 4 and 5.3 reads as under:- “4. In the instant case, there was a survey operation conducted under Section 133A of the Act in the assessee's premises and a statement was recorded from one of the partner. Assuming there were discrepancies and irregularities in the books of accounts maintained by the assessee, an offer of additional income for the respective assessment years was made by the partner of the firm. But, such statement, in view of the scope and ambit of the materials collected during the course of survey action under Section 133A shall not have any evidentiary value, as rightly held by the Commissioner and the Tribunal, since such statement was not attached to the provisions of Section 133A of the Act. It could not be said solely on the basis of the statement given by one of the partner of the assessee-firm that the disclosed income was assessable as lawful income of the assessee. Since there was no material on record to prove the existence of such disclosed income or earning of such income in the hands of the assessee, it could not be said that the Revenue had lost lawful tax payable by the assessee.

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5.3. A power to examine a person on oath is specifically conferred on the authorities only under Section 132(4) of the Act in the course of any search or seizure. Thus, the Income Tax Act, whenever it thought fit and necessary to confer such power to examine a person on oath, has expressly provided for it, whereas Section 133A does not empower any Income Tax Officer to examine any person on oath. Thus, in contradistinction to the power under Section 133A, Section 132(4) of the Income Tax Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the Income Tax Act. On the other hand, whatever statement recorded under Section 133A of the Act is not given an evidentiary value, vide a decision of the Kerala High Court in Paul Mathews and Sons v.

Commissioner

Income

Tax MANU/KE/0184/2003 : [2003]263ITR101(Ker).” 17. We have heard counsel for the parties. 18. Before proceeding with the matter, whether the Tribunal was right in setting aside the order under Section 263 which has been passed by the CIT(A), that question has been considered by the Tribunal in Appeal No.243/2011 and the same was argued by Mr. Sameer Jain. The Tribunal while discussing the issue has relied upon different decisions of the High Court and after considering in detail has come to the conclusion that while invoking the provisions under Section 263 of the Act, the assessment order is prejudicial to the interest of revenue. The subsequent proceedings which took place on 24.09.2008 could not be relied upon. Taking support of Section 263 (1)(b), the concept of record is the record which was available with the A.O. at the time of assessment. If the contention which has been raised by Mr. Jain is taken into

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consideration, no assessee will be assessee. If the subsequent events to the assessment order is taken into consideration then the scope of Section 263 will be enlarged. In that view of the matter, we are of the opinion that the record which was available with the A.O. is required to be taken into consideration and the tribunal while considering the matter has taken into consideration the seven documents, more particularly D.L.C. Certificate which could be procured easily and the other documents like export licence which has been granted w.e.f. 02.09.2002 and registration certificate granted by C.T.O. w.e.f. 26.08.2002. He has also produced the muster roll register. 19. In that view of the matter, the tribunal has considered the complete facts in detail. It will not be appropriate to re-appreciate the facts, more particularly when the tribunal has observed that the discussion which has been done by the A.O. have not been specifically rebutted by the Department. 20. In that view of the matter, we are of the opinion that the view taken by the Tribunal is just and proper. The issue is required to be answered in favour of the assessee against the department. 21. The appeals stand dismissed. (INDERJEET SINGH)J.

(K.S.JHAVERI)J. Pdaiya/ Jyoti Item No.121-124