Pr. Commissioner Of Income Tax v. M/S Mahavir Ashok Enterprises Pvt. Ltd., Halwai Line, Sadar Bazar,Raipur, District Raipur, Chhattisgarh

(Tax Case No.40/2022) Digitally signedby SISTASOMAYAJULUDate: 2024.10.03 2024:CGHC:38422-DB SISTASOMAYAJULU AFR 17:54:45 +0530 HIGH COURT OF CHHATTISGARH AT BILASPUR TAXC No. 40 of 2022 Pr. Commissioner of Income Tax-1, Raipur, District Raipur, Chhattisgarh... Appellant versus M/s Mahavir Ashok Enterprises Pvt. Ltd., Halwai Line, Sadar Bazar,Raipur, District Raipur, Chhattisgarh ... Respondent For Appellant: Mr. Amit Chaudhari and Mr. Vijay Chawla, Advocates.For Respondent : Mr. Ashish Goyal, Advocate through VideoConferencing and Mr. Priyanshu Gupta, Advocate. -Division Bench: Hon'ble Shri Sanjay K. Agrawal and Hon'ble Shri Amitendra Kishore Prasad, JJ. Order on Board(27/09/2024) Sanjay K. Agrawal, J. 1. The sole substantial question of law involved and formulated on 2- 2-2023 for decision of this tax appeal preferred under Section 260A of the Income Tax, 1961 (for short, ‘the IT Act’), states as under: - “Whether the learned Tribunal was correct in holding in theattending facts and circumstances of the case that there wasno tangible material before the revisional authority fordirecting the Assessing Officer to make inquiries with (Tax Case No.40/2022) regard to applicability of Sections 69 and 115BBE of theIncome Tax Act, 1961 in connection with unexplainedinvestment of Rs.2,25,75,951/-?” [For the sake of convenience, the appellant will be referredhereinafter as ‘Revenue’ and the respondent will be referredhereinafter as ‘assessee’.] 2. The assessee Company is engaged in the business of trading ofGold Ornaments, Gold Bullion, Diamond Ornaments & preciousmetals and derives income from them. The assessee’s case wasselected for compulsory scrutiny consequent upon the survey actioncarried out at the business premises of the assessee under Section133A of the IT Act on 6-3-2017. During the course of surveyproceedings, excess stock of 2,25,75,951/- was found which the₹assessee surrendered as his income for the assessment year 2017-18and thereafter, the assessee filed income tax return for the saidassessment year in response to the notice under Section 142(1) ofthe IT Act declaring total income of 2,36,89,620/- as profit and₹gains from business or profession which includes the impugnedexcess stock of 2,25,75,951/-. ₹ 3. The assessee filed return of income electronically on 30-11-2018declaring total income of 2,36,89,620/- vide acknowledgment₹No.369948171200118. On 21-12-2017, a notice under Section142(1) of the IT Act was issued by the Assessing Officer, CentralCircle to file return of income by 20-1-2018 which the assesseedeclaring total income of 2,36,89,620/- vide acknowledgment₹No.369948171200118. On 21-12-2017, a notice under Section142(1) of the IT Act was issued by the Assessing Officer, CentralCircle to file return of income by 20-1-2018 which the assessee (Tax Case No.40/2022) filed and on 18-9-2018, return of income was selected undercompulsory scrutiny after due approval of the competent authorityand notice under Section 143(2) of the IT Act was issued andultimately, the Assessing Officer issued show cause notice to theassessee under Section 263 of the IT Act that the assessee Companyhas shown very small net profit ratio in comparison to the net profitshown in the previous two years, which the assessee replied,however, the Assessing Officer did not find the explanationsatisfactory and added only 1,42,715/- and the entire income was₹taxed at the rate of 30% along with surcharge and cess by orderdated 21-12-2019. (Tax Case No.40/2022) filed and on 18-9-2018, return of income was selected undercompulsory scrutiny after due approval of the competent authorityand notice under Section 143(2) of the IT Act was issued andultimately, the Assessing Officer issued show cause notice to theassessee under Section 263 of the IT Act that the assessee Companyhas shown very small net profit ratio in comparison to the net profitshown in the previous two years, which the assessee replied,however, the Assessing Officer did not find the explanationsatisfactory and added only 1,42,715/- and the entire income was₹taxed at the rate of 30% along with surcharge and cess by orderdated 21-12-2019. 4. The revisional authority i.e. the Principal Commissioner of IncomeTax (PCIT) finding that the Assessing Officer (AO) has failed toverify the claim of the assessee of excess purchase and furtherfinding that there is no application of mind on the part of the AO toverify the claim of the assessee in the return of income and alsofinding that the assessment order passed under Section 144 of the ITAct is erroneous as well as it is prejudicial to the interest of theRevenue, proceeded to issue notice under Section 263 of the IT Acton the ground that the assessee had disclosed additional income of ₹2,25,75,951/- after finding the excess stock of jewellery of samevalue during the survey proceedings on 6-3-2017 and the sameshould have been declared as unexplained investment by the (Tax Case No.40/2022) assessee under Section 69 of the IT Act which should have beentaxed under Section 115BBE of the IT Act and it should have beentaxed at the rate of 60% + surcharge and cess. The assessee repliedthe notice under Section 263 of the IT Act stating that the assesseeis a Company engaged in trading of Gold Ornaments, Gold Bullion,Diamond Ornaments and precious metals and that the assesseeCompany follows mercantile system of accounting over the yearsconsistently and there is no deviation from the method ofaccounting followed by the assessee Company during the yearunder consideration, and prayer was made to drop the proceedinginitiated under Section 263 of the IT Act. Finally, after consideringthe reply filed by the assessee, the PCIT by its order dated 27-3-2021 came to the conclusion that the assessing authority did notmake proper inquiry and having satisfied that the assessment orderis erroneous and it is prejudicial to the interest of the Revenue inview of Explanation 2 to Section 263 of the IT Act, set aside theassessment order and remanded back the matter to the AO for freshadjudication of the issues by conducting necessary inquiries andpassing fresh assessment order after giving adequate opportunity tothe assessee. 5. Feeling dissatisfied and aggrieved by the order of the PCIT,invoking the revisional jurisdiction under Section 263(1) of the ITAct, the assessee preferred appeal under Section 253 of the IT Actinvoking the revisional jurisdiction under Section 263(1) of the ITAct, the assessee preferred appeal under Section 253 of the IT Act (Tax Case No.40/2022) before the ITAT branding the same as unsustainable and stating thatSection 263 of the IT Act is not attracted and thus, the learned PCITcould not have invoked Section 263. The ITAT by its impugnedorder dated 29-9-2021 passed in ITA No.46/RPR/2021, allowed theappeal and set aside the order of the PCIT holding that there is noreason and justification for exercising the revisional power underSection 263 of the IT Act and restored the order passed by the AO. 6. Being aggrieved against the order of the ITAT setting aside theorder of the PCIT and restoring the order of the AO, the Revenuehas preferred this appeal in which substantial question of law hasbeen formulated and set-out in the opening paragraph of this order.order of the PCIT and restoring the order of the AO, the Revenuehas preferred this appeal in which substantial question of law hasbeen formulated and set-out in the opening paragraph of this order. 6. Being aggrieved against the order of the ITAT setting aside theorder of the PCIT and restoring the order of the AO, the Revenuehas preferred this appeal in which substantial question of law hasbeen formulated and set-out in the opening paragraph of this order.order of the PCIT and restoring the order of the AO, the Revenuehas preferred this appeal in which substantial question of law hasbeen formulated and set-out in the opening paragraph of this order. 7. Mr. Amit Chaudhari, learned counsel appearing for the appellantherein / Revenue, would submit that the ITAT has committed gravelegal error in granting the appeal, as the assessee has failed tosatisfactorily explain the nature and source of cash transactionsadding 2,25,75,951/- as additional income as excess stock of₹jewellery of same value was found during the survey proceedingsand as such, the impugned order of the ITAT deserves to be setaside. herein / Revenue, would submit that the ITAT has committed gravelegal error in granting the appeal, as the assessee has failed tosatisfactorily explain the nature and source of cash transactionsadding 2,25,75,951/- as additional income as excess stock of₹jewellery of same value was found during the survey proceedingsand as such, the impugned order of the ITAT deserves to be setaside. 8. Mr. Ashish Goyal, learned counsel appearing for the respondent /assessee Company, would support the order of the ITAT and submitthat the ITAT has clearly recorded a finding holding that both theassessee Company, would support the order of the ITAT and submitthat the ITAT has clearly recorded a finding holding that both the (Tax Case No.40/2022) conditions to invoke Section 263(1) of the IT Act namely, the orderwas erroneous as well as it was prejudicial to the interest of theRevenue, are not attracted and in that view of the matter, the appealdeserves to be dismissed. 9. We have heard learned counsel for the parties and considered theirrival submissions made herein-above and also went through therecord with utmost circumspection.rival submissions made herein-above and also went through therecord with utmost circumspection. 10. In order to consider the plea raised at the Bar, it would be appropriate to notice Section 263(1) of the IT Act, which states asunder: -under: - “263. Revision of orders prejudicial to revenue.—(1) ThePrincipal Chief Commissioner or Chief Commissioner orPrincipal Commissioner or Commissioner may call for andexamine the record of any proceeding under this Act, and ifhe considers that any order passed therein by the AssessingOfficer or the Transfer Pricing Officer, as the case may be,is erroneous in so far as it is prejudicial to the interests ofthe revenue, he may, after giving the assessee anopportunity of being heard and after making or causing tobe made such inquiry as he deems necessary, pass suchorder thereon as the circumstances of the case justify,including,— (i) an order enhancing or modifying the assessmentor cancelling the assessment and directing a freshassessment; or (ii) an order modifying the order under section 92CA;or (iii) an order cancelling the order under section 92CAand directing a fresh order under the said section. (Tax Case No.40/2022) Explanation 1.—For the removal of doubts, it is herebydeclared that, for the purposes of this sub-section,— (a) an order passed on or before or after the 1[st] day ofJune, 1988, by the Assessing Officer or the TransferPricing Officer, as the case may be, shall include— (i) an order of assessment made by theAssistantCommissionerorDeputyCommissioner or the Income-tax Officer on thebasis of the directions issued by the JointCommissioner under section 144A; (i) an order enhancing or modifying the assessmentor cancelling the assessment and directing a freshassessment; or (ii) an order modifying the order under section 92CA;or (iii) an order cancelling the order under section 92CAand directing a fresh order under the said section. (Tax Case No.40/2022) Explanation 1.—For the removal of doubts, it is herebydeclared that, for the purposes of this sub-section,— (a) an order passed on or before or after the 1[st] day ofJune, 1988, by the Assessing Officer or the TransferPricing Officer, as the case may be, shall include— (i) an order of assessment made by theAssistantCommissionerorDeputyCommissioner or the Income-tax Officer on thebasis of the directions issued by the JointCommissioner under section 144A; (ii) an order made by the Joint Commissionerin exercise of the powers or in the performanceof the functions of an Assessing Officer or theTransfer Pricing Officer, as the case may be,conferred on, or assigned to, him under theorders or directions issued by the Board or bythe Principal Chief Commissioner or ChiefCommissioner or Principal Director General orDirector General or Principal Commissioner orCommissioner authorised by the Board in thisbehalf under section 120; (iii) an order under section 92CA by theTransfer Pricing Officer; (b) "record" shall include and shall be deemed alwaysto have included all records relating to anyproceeding under this Act available at the time ofexamination by the Principal Chief Commissioner orChief Commissioner or Principal Commissioner orCommissioner; (c) where any order referred to in this sub-section andpassed by the Assessing Officer or the TransferPricing Officer, as the case may be, had been thesubject-matter of any appeal filed on or before orafter the 1[st] day of June, 1988, the powers of PrincipalCommissioner or Commissioner under this sub-section shall extend and shall be deemed always to (Tax Case No.40/2022) have extended to such matters as had not beenconsidered and decided in such appeal. Explanation 2.—For the purposes of this section, it ishereby declared that an order passed by the AssessingOfficer or the Transfer Pricing Officer, as the case may be,shall be deemed to be erroneous in so far as it is prejudicialto the interests of the revenue, if, in the opinion of thePrincipal Chief Commissioner or Chief Commissioner orPrincipal Commissioner or Commissioner,— (a) the order is passed without making inquiries orverification which should have been made; (b) the order is passed allowing any relief withoutinquiring into the claim; (c) the order has not been made in accordance withany order, direction or instruction issued by the Boardunder section 119; or (d) the order has not been passed in accordance withany decision which is prejudicial to the assessee,rendered by the jurisdictional High Court or SupremeCourt in the case of the assessee or any other person. Explanation 3.—For the purposes of this section, “TransferPricing Officer” shall have the same meaning as assigned toit in the Explanation to section 92CA.” 11. A careful perusal of Section 263(1) of the IT Act would show that it is the essential condition to invoke Section 263 that theCommissioner must find that the order of assessment is erroneousfirstly and secondly, that the order of the assessing authority isprejudicial to the interests of the revenue. The Commissioner ofIncome Tax has power to take into consideration all recordsavailable at the time of examination by him. ‘Record’ would mean (Tax Case No.40/2022) all records relating to proceeding available at the time ofexamination with the Commissioner. (See Commissioner ofIncome Tax, Bangalore v. Shree Manjunatheaware PackingProducts & Camphore Works1.) 12. The Supreme Court in the matter of Malabar Industrial Co. Ltd. 11. A careful perusal of Section 263(1) of the IT Act would show that it is the essential condition to invoke Section 263 that theCommissioner must find that the order of assessment is erroneousfirstly and secondly, that the order of the assessing authority isprejudicial to the interests of the revenue. The Commissioner ofIncome Tax has power to take into consideration all recordsavailable at the time of examination by him. ‘Record’ would mean (Tax Case No.40/2022) all records relating to proceeding available at the time ofexamination with the Commissioner. (See Commissioner ofIncome Tax, Bangalore v. Shree Manjunatheaware PackingProducts & Camphore Works1.) 12. The Supreme Court in the matter of Malabar Industrial Co. Ltd. v. Commissioner of Income Tax, Kerala State2 has held that twoconditions precedent for exercise of the revisional power underSection 263(1) of the IT Act namely, (i) the order of the AssessingOfficer sought to be revised is erroneous; and (ii) it is prejudicial tothe interests of the Revenue, have to be satisfied. It is further heldthat if one of them is absent, recourse cannot be had to Section263(1), and observed as under: - “6.A bare reading of this provision makes it clear thatthe prerequisite to exercise of jurisdiction by theCommissioner suo motu under it, is that the order of theIncome Tax Officer is erroneous insofar as it is prejudicialto the interests of the Revenue. The Commissioner has to besatisfied of twin conditions, namely, (i) the order of theAssessing Officer sought to be revised is erroneous; and (ii)it is prejudicial to the interests of the Revenue. If one ofthem is absent — if the order of the Income Tax Officer iserroneous but is not prejudicial to the Revenue or if it is noterroneous but is prejudicial to the Revenue — recoursecannot be had to Section 263(1) of the Act. 7.There can be no doubt that the provision cannot beinvoked to correct each and every type of mistake or errorcommitted by the Assessing Officer; it is only when anorder is erroneous that the section will be attracted. An 1AIR 1998 SC 1478 : (1998) 1 SCC 5982(2000) 2 SCC 7182(2000) 2 SCC 718 (Tax Case No.40/2022) incorrect assumption of facts or an incorrect application oflaw will satisfy the requirement of the order beingerroneous. In the same category fall orders passed withoutapplying the principles of natural justice or withoutapplication of mind. 8.The phrase “prejudicial to the interests of theRevenue” is not an expression of art and is not defined inthe Act. Understood in its ordinary meaning it is of wideimport and is not confined to loss of tax. The High Court ofCalcutta in Dawjee Dadabhoy & Co. v. S.P. Jain[3], the HighCourt of Karnataka in CIT v. T. Narayana Pai[4], the HighCourt of Bombay in CIT v. Gabriel India Ltd.[5] and the HighCourt of Gujarat in CIT v. Minalben S. Parikh[6] treated lossof tax as prejudicial to the interests of the Revenue. 10.The phrase “prejudicial to the interests of theRevenue” has to be read in conjunction with an erroneousorder passed by the Assessing Officer. Every loss ofrevenue as a consequence of an order of the AssessingOfficer cannot be treated as prejudicial to the interests ofthe Revenue, for example, when an Income Tax Officeradopted one of the courses permissible in law and it hasresulted in loss of revenue; or where two views are possibleand the Income Tax Officer has taken one view with whichthe Commissioner does not agree, it cannot be treated as anerroneous order prejudicial to the interests of the Revenueunless the view taken by the Income Tax Officer isunsustainable in law. It has been held by this Court thatwhere a sum not earned by a person is assessed as incomein his hands on his so offering, the order passed by theAssessing Officer accepting the same as such will beerroneous and prejudicial to the interests of the Revenue.(See Rampyari Devi Saraogi v. CIT[7] and in Tara DeviAggarwal v. CIT[8].)” 3(1957) 31 ITR 872 (Cal) 3(1957) 31 ITR 872 (Cal) 4(1975) 98 ITR 422 (Kant) 5(1993) 203 ITR 108 (Bom) 6(1995) 215 ITR 81 (Guj) 7(1968) 67 ITR 84 (SC) 8(1973) 3 SCC 482 : 1973 SCC (Tax) 318 : (1973) 88 ITR 323 (Tax Case No.40/2022) 13. The principle of law laid down in Malabar Industrial Co. Ltd.(supra) has recently been followed by their Lordships of theSupreme Court with approval in the matter of Commissioner of-9(supra) has recently been followed by their Lordships of theSupreme Court with approval in the matter of Commissioner of-9Incometax v. Paville Projects Pvt. Ltd.. 14. Reverting to the facts of the present case in light of the decisions ofthe Supreme Court in Malabar Industrial Co. Ltd.(supra) and’sPaville Projects Pvt. Ltd.case (supra), it has to be seen whetherthe order of the assessing authority sought to be revised waserroneous and whether it was prejudicial to the interests of theRevenue. In the present case, the Principal Commissioner ofIncome Tax i.e. the revisional authority though recorded a findingthat the order is erroneous and prejudicial to the interests of theRevenue, but only on the basis that no inquiry has been conductedon the issue and it smacks non-application of mind by the AssessingOfficer, reached to the conclusion that the order sought to berevised is erroneous and prejudicial to the interests of the Revenueand proceeded to invoke jurisdiction under Section 263(1) of the ITAct and proceeded to quash the order of the assessing authority.However, in appeal preferred by the assessee before the ITAT, theITAT in paragraph 7 of the order impugned, has proposed twoissues which state as under: - (Tax Case No.40/2022) “7.In exercise of powers conferred under section 263 ofthe Act, the PCIT has proposed revision of the assessmentorder on two counts: i) The excess stock surrendered by the assesseeduring the survey, returned as business income, isliable to be considered as unexplained investmentunder section 69 of the Act and consequently tax wasrequired to be enforced in terms of section 115BBEof the Act. ii) The figures of purchase in the in the auditedaccounts drawn as on 31.03.2017 were not reconciledwith the figures in the Trial Balance as on the date ofsurvey i.e. 06.03.2017.” 15. The above stated two issues have been considered by the ITATagainst the Revenue. With regard to the first issue, the learnedITAT relying upon the decisions of two High Courts namely, theRajasthan High Court in the matter of Principal Commissioner of –Income Tax Central, Jaipur v. Aacharan Enterprises (P.)Ltd.10 and the Calcutta High Court in the matter of PrincipalCommissioner of Income Tax Officer, Burdwan v. Subarna RiceMill11, has reached to the conclusion that surrender of undisclosedbusiness income would not attract the penal provisions contained inSection 115BBE of the IT Act, and proceeded to hold that such anundisclosed business income has been considered as businessincome of the assessee. Similarly, with regard to the second issue,the ITAT in its order has held in favour of the assessee and against the Revenue. However, in this regard, it would be appropriate to10 (2020) 273 Taxman 85 (Raj)11 (2018) 257 Taxman 509 (Cal) (Tax Case No.40/2022) –Income Tax Central, Jaipur v. Aacharan Enterprises (P.)Ltd.10 and the Calcutta High Court in the matter of PrincipalCommissioner of Income Tax Officer, Burdwan v. Subarna RiceMill11, has reached to the conclusion that surrender of undisclosedbusiness income would not attract the penal provisions contained inSection 115BBE of the IT Act, and proceeded to hold that such anundisclosed business income has been considered as businessincome of the assessee. Similarly, with regard to the second issue,the ITAT in its order has held in favour of the assessee and against the Revenue. However, in this regard, it would be appropriate to10 (2020) 273 Taxman 85 (Raj)11 (2018) 257 Taxman 509 (Cal) (Tax Case No.40/2022) notice that the Assessing Officer has issued specific show causenotice dated 18-12-2019 wherein identical question was raised andthe assessee was required by the AO to show cause as to why theamount of 2,25,75,951/- be not treated as unexplained investment₹under Section 69 of the IT Act and the tax rate prescribed underSection 115BBE of the IT Act be not imposed against which theassessee on 19-12-2019 filed reply stating that excess businessstock of ₹ 2,25,75,951/- found during the course of surveyproceedings in the business premises of the assessee Company inthe year under consideration is duly entered and disclosed in thebooks of accounts as business income which is included in the netprofit. The assessee has further stated in the reply that the assesseeCompany is engaged in retail trading of Gold and Silver Ornamentssince so many years and the object for which the Company isincorporated is also trading of Gold and Silver Ornaments. It hasalso been stated in the reply that the business activity of theassessee company is also accepted and assessed as such in earlieryear assessments and as the excess business stock found duringsurvey proceedings under the IT Act during the year underconsideration in the business premises of the assessee Company andduly recorded in the books of accounts of the concerned year,Section 69 of the IT Act would not be attracted to the assesseeCompany. The assessee has also stated in the reply that as far as (Tax Case No.40/2022) nature and source of investments is concerned, the investments arein the form business stock of Gold and Silver Ornaments found inthe business premises and explanation of the business source ofinvestments given on the basis of documents available in thebusiness premises during the course of survey proceedings by theDirector of the assessee Company was very well verified by thesurvey team and accepted, and hence, the excess stock of ₹2,25,75,951/- declared during the course of survey proceedings inthe business premises cannot be treated as unexplained investmentunder Section 69 of the IT Act and as Section 69 does not attract inthis situation, question of applicability of tax rate of 60% underSection 115BBE of the IT Act does not arise. The AO consideredthe reply and found substance in the submission raised on behalf ofthe assessee and only added 1,42,715/- to the business income of₹the assessee for the year under consideration. 16. In this regard, decision of the Supreme Court in the matter ofCommissioner of Income Tax, (Central) Ludhiana v. Max IndiaLimited12 may be noticed herein profitably in which their Lordshipshave held that every loss of revenue as a consequence of an order ofthe Assessing Officer cannot be treated as prejudicial to the interestof the Revenue. When the Income Tax Officer adopted one of thecourses permissible in law and it has resulted in loos of revenue; or 12 (2007) 15 SCC 401 (Tax Case No.40/2022) where two views are possible and the Income Tax Officer has takenone view with which the Commissioner does not agree, it cannot betreated as an erroneous order prejudicial to the interest of theRevenue, unless the view taken by the Income Tax Officer isunsustainable in law. 16. In this regard, decision of the Supreme Court in the matter ofCommissioner of Income Tax, (Central) Ludhiana v. Max IndiaLimited12 may be noticed herein profitably in which their Lordshipshave held that every loss of revenue as a consequence of an order ofthe Assessing Officer cannot be treated as prejudicial to the interestof the Revenue. When the Income Tax Officer adopted one of thecourses permissible in law and it has resulted in loos of revenue; or 12 (2007) 15 SCC 401 (Tax Case No.40/2022) where two views are possible and the Income Tax Officer has takenone view with which the Commissioner does not agree, it cannot betreated as an erroneous order prejudicial to the interest of theRevenue, unless the view taken by the Income Tax Officer isunsustainable in law. 17. In this case also, the Assessing Officer has issued specific showcause notice to the assessee as to why the excess stock of ₹2,25,75,951/- be treated as unexplained investment under Section69 of the IT Act which the assessee replied stating that the saidexcess business stock was found during survey proceedings underthe IT Act during the year under consideration in the businesspremises of the assessee Company and duly recorded in the booksof accounts of the concerned year and thus, Section 69 of the IT Actwould not be attracted to the assessee Company, as excess stockwould not be treated as undisclosed income within the meaning ofSection 69, which the AO has accepted and taken it as one of thepossible views and which the ITAT has accepted holding to be thecorrect view. cause notice to the assessee as to why the excess stock of ₹2,25,75,951/- be treated as unexplained investment under Section69 of the IT Act which the assessee replied stating that the saidexcess business stock was found during survey proceedings underthe IT Act during the year under consideration in the businesspremises of the assessee Company and duly recorded in the booksof accounts of the concerned year and thus, Section 69 of the IT Actwould not be attracted to the assessee Company, as excess stockwould not be treated as undisclosed income within the meaning ofSection 69, which the AO has accepted and taken it as one of thepossible views and which the ITAT has accepted holding to be thecorrect view. 18. In that view of the matter, we are of the considered opinion thatboth the twin conditions, namely, the order of the Assessing Officersought to be revised is erroneous and it is prejudicial to the interestsof the Revenue, are not satisfied at all to invoke the jurisdictionboth the twin conditions, namely, the order of the Assessing Officersought to be revised is erroneous and it is prejudicial to the interestsof the Revenue, are not satisfied at all to invoke the jurisdiction Soma (Tax Case No.40/2022) under Section 263 of the IT Act, as the Assessing Officer has passedthe order of assessment after conducting inquiry. As such, thelearned PCIT is absolutely unjustified in invoking the jurisdictionunder Section 263 of the IT Act which has rightly been set-aside bythe ITAT. 19. In that view of the matter, we answer the substantial question of law in favour of the assessee and against the Revenue. 20. Consequently, the tax appeal deserves to be and is accordinglydismissed leaving the parties to bear their own cost(s). dismissed leaving the parties to bear their own cost(s). Sd/- Sd/-(Sanjay K. Agrawal) (Amitendra Kishore Prasad)JudgeJudge