Principal Commissioner Of Income Tax-1, Jaipur v. Shri Johari Lal Sodhani, D-105 Siwar Area, Bapu Nagar, Jaipur(A.y.2010-11

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 108 / 2015 Principal Commissioner of Income Tax-1, Jaipur. ----Appellant Versus Shri Johari Lal Sodhani, D-105 Siwar Area, Bapu Nagar, Jaipur(A.Y.2010-11) ----Respondent _____________________________________________________ For Appellant(s) : Mr. Anil MehtaFor Respondent(s) : Mr. Sanjay Jhanwar _____________________________________________________ HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE DINESH CHANDRA SOMANIJudgment 10/10/2017 1.By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal hasallowed the appeal of the assessee and setting aside the order ofCIT(A). 2.This Court while admitting the appeal on 23.11.2016 framedthe following substantial question of law:- “Q.1 Whether on the facts andcircumstances of the case, the ITAT has erredin law in setting aside the order of theCommissioner passed under Section 263 ofthe IT Act, 1961 by ignoring the decision ofthe Hon’ble Apex Court in the case of SurjitSingh Chabra Vs. UOI (1997(89) ELT 646(SC)relied upon by the CIT.” 3.Counsel for the appellant Mr.Anil Mehta has taken us to the order of A.O. wherein it has been observed as under:- “7. During the course of search, the Assessee inhis statement recorded on oath u/s 132(4) of the Acton 20-10-2009 admitted to an undisclosed incomewhich was advanced by him as loans through hisrelatives and acquaintances. In reply to Q. No. 18,the Assessee stated that he has no account of theamounts of loans advanced to persons whichaccording to him was done purely on the basis offaith and confidence of his close relatives as well asfriends. This fact was again admitted by theAssessee in reply to Q. 19 in which he additionallystated that he has discussed the matter of surrenderwith his wife. The assessee vide his letter dated 10-11-2009submitted to the Income Tax Department gavedetails of the surrender under various heads andreiterated the surrender made by him in his abovereferred statement. The Assessee surrendered anamount of Rs.34,60,400/- on account of loansadvanced to people as well as to cover updiscrepancies found during the course search. While examining the return of income for the yearunder consideration, it was noticed that theAssessee had disclosed only an amount of Rs.5,36,063/- out of Rs.34,60,400/-. On this under-disclosure of the surrendered amount,the Assessee was asked to explain as to why anamount of Rs.29,23,937/- being the under-disclosure should not be added to his income beingloans advanced to people out of his undisclosedincome? The Assessee vide his letter dated 27.12.2011furnished his submission whichis reproducedhereunder- "It is with reference to your order sheet querywhereby it is required to explain why the assesseehas not offered the amount of Rs.34,60,400/- in thereturn, which was surrendered by him in hisstatement recorded u/s132(4) as a part of the totalsurrender of Rs.2 crores. In this connection we areto submit as under:- 1. In letter dated 24.11.11 we have furnished achart explaining the income offered by the assessee/the company in which he is director vis-a-vis theamount surrendered at Rs. 2 crore in statement u/s132(4). 2. From that statement it can be noted that amountoffered in the return is Rs.1,10,40,000/- as againstRs. 2 crore stated in statement u/s 132(4). The difference is of Rs. 89,60,000/-. This differenceis on two counts. One is on account of cash whereinstead of Rs. 98,39,600/- surrendered u/s 132(4), 1. In letter dated 24.11.11 we have furnished achart explaining the income offered by the assessee/the company in which he is director vis-a-vis theamount surrendered at Rs. 2 crore in statement u/s132(4). 2. From that statement it can be noted that amountoffered in the return is Rs.1,10,40,000/- as againstRs. 2 crore stated in statement u/s 132(4). The difference is of Rs. 89,60,000/-. This differenceis on two counts. One is on account of cash whereinstead of Rs. 98,39,600/- surrendered u/s 132(4), the amount offered in the return is Rs.21,63,520/-.The difference is Rs.76,76,080/-. This difference ismainly on account of the not recording of sales offew days before the date of search in the books ofSodhani Sweets Pvt. Ltd. To this effect assessee hasalso clarified the position before the ADIT(Inv.) videletter dated 15.12.09. After including such salesmade in regular course of business, the difference inthe cash found and that as per the books ofaccounts has reduced to Rs.21,63,520/- which isoffered in the return by the assessee. Thus the cashreepresenting the sale is otherwise considered in theincome. 3. It may be noted that in statement u/s 132(4) tomake the total surrender at Rs.2 crores, assesseeoffered Rs.34,60,400/- as undisclosed advancesgiven through the relatives. Against this, assesseehas offered Rs.8.40 lacs as other income in SodhaniSweets Pvt. Ltd. Which was not surrendered instatements,Rs.8,00,417/-(40,00,417-32,00,000)extra amount offered towards investment inconstruction of workshop and shop at Ajmer Roadand Rs.5,36,063/- to cover any other discrepancies.Thus against Rs.34,60,400/- assessee has offered anamountofRs.21,76,480/(8,40,000+800,417+5,36,063) leaving a differenceof Rs.12,83,920/-(34,60,400-21,76,480). 4. In search no evidence is found that assessee hasadvanced any other amount other than thosespecifically mentioned in the statement through hisrelatives. The surrender was made to make theamount round about to Rs.2 crore. This fact wasspecified in letter filed before the Addl.DIT/DDIT on15.12.09.” 3.1. He contended that the reasoning adopted by the A.O. and confirmed by the CIT(A) in his order whereby while taking intoconsideration Section 263 of the Income Tax Act, the CIT(A) hasgiven reasons and send it only for reinvestigating of the mattersince the reasoning adopted by the A.O. was not reflecting thecorrect position and therefore, order of the Tribunal is requiredquashed and set aside. In support of his submissions he reliedupon judgments of the Supreme Court in Surjit Singh Chabra Vs.Union of India & Ors.(1997) 1 SCC 508 wherein it has been held as under:- “4. . It is contended that under the Rulesjewellery is exempted articles. Kara being asymbol of the religious wear by the Sikhcommunity, it is a jewellery exempted from theAct and it cannot be confiscated. In view of theadmission that he had purchased gold, convertedas Kara and brought as such, he necessarily usedit. Therefore, he is not "entitled to the benefit ofexemption. Under these circumstances, we donot find any illegality in the order passed by theauthority warranting interference”. 3.2. He also relied on another decision of Supreme Court inCommissioner of Income Tax, Mumbai Vs. Amitabh Bachchan(2016) 11 SCC 748 wherein it has been held as under :- as under:- “4. . It is contended that under the Rulesjewellery is exempted articles. Kara being asymbol of the religious wear by the Sikhcommunity, it is a jewellery exempted from theAct and it cannot be confiscated. In view of theadmission that he had purchased gold, convertedas Kara and brought as such, he necessarily usedit. Therefore, he is not "entitled to the benefit ofexemption. Under these circumstances, we donot find any illegality in the order passed by theauthority warranting interference”. 3.2. He also relied on another decision of Supreme Court inCommissioner of Income Tax, Mumbai Vs. Amitabh Bachchan(2016) 11 SCC 748 wherein it has been held as under :- “22. There can be no doubt that so long asthe view taken by the Assessing Officer is apossible view the same ought not to beinterfered with by the Commissioner UnderSection 263 of the Act merely on the groundthat there is another possible view of the matter.Permitting exercise of revisional power in asituation where two views are possible wouldreally amount to conferring some kind of anappellate power in the revisional authority. Thisis a course of action that must be desisted from.However, the above is not the situation in thepresent case in view of the reasons stated bythe learned C.I.T. on the basis of which the saidauthority felt that the matter needed furtherinvestigation, a view with which we whollyagree. Making a claim which would prima faciedisclose that the expenses in respect of whichdeduction has been claimed has been incurredand thereafter abandoning/withdrawing thesame gives rise to the necessity of furtherenquiry in the interest of the Revenue. Thenotice issued Under Section 69-C of the Actcould not have been simply dropped on theground that the claim has been withdrawn. We,therefore, are of the opinion that the learnedC.I.T. was perfectly justified in coming to hisconclusions insofar as the issue No. (iii) isconcerned and in passing the impugned order onthat basis. The learned Tribunal as well as theHigh Court, therefore, ought not to haveinterfered with the said conclusion”. 4.However, counsel for the respondent contended that in viewof observation made by the Tribunal which reads as under:- “6. We have heard the rival contentions of boththe parties and perused the material on record. TheAssessing Officer gave the reasonable opportunity ofbeing heard on short disclosure of income in thereturn on account of cash, which has been replied bythe assessee and considered by the AssessingOfficer with detailed evidences. It is true that he hasnot given detail findings in his order but does notmean, has not considered the assessee's reply onthis count. The appellant also explained thisdifference before the DDIT at the time of search,which has been again reiterated before theAssessing Officer at the time of assessment and alsoduring the course of 263 proceedings. The statementrecorded U/s 132(4) of the Act is an evidence underthe Income tax proceedings but is rebuttable. Theappellant had calculated the difference of cash onthe basis of cash sales bill book which had not beenconsidered during the search proceedings. Thelearned CIT DR had not found any defect in thecomputation made by the appellant regarding cashsales and receipts not posted up to 20.10.2009,payment remained/posted up to 20.10.2009. Mainlycash sales at Lalkothi branch, cash sales as permachine at Lalkohti shop, mainly cash sales at AjmerRoad branch, cash sales as machine at Ajmer RoadShop, sales worked out from seized material, cashsales as per bill book No. 3101 to 3200, recoveryfrom debtors, payment for expenses and paymentfor purchases, therefore, we do not find AssessingOfficer's order erroneous and prejudicial to theinterest of the revenue. Accordingly, the order of thelearned CIT passed U/s 263 of the Act is set aside.” 4.1. In view of decision of jurisdictional High Court inCommissioner of Income Tax Vs. Ganpat Ram Bishnoi observing asunder:- “11. Undoubtedly, the jurisdiction underSection 263 is wide and is meant to ensure thatdue revenue ought to reach the public treasuryand if it does not reach on account of somemistake of law or fact committed by the AO, theCIT can cancel that order and require theconcerned AO to pass a fresh order in accordance with law after holding a detailedenquiry. But when enquiry in fact has beenconducted and the AO has reached a particularconclusion, though reference to such enquirieshas not been made in the order of theassessment, but the same is apparent from therecord of the proceedings, in the present case,without anything to say how and why theenquiry conducted by the AO was not inaccordance with law, the invocation ofjurisdiction by the CIT was unsustainable. As theexercise of jurisdiction by the CIT is founded onno material, it was liable to be set aside.Jurisdiction under Section 263 cannot be invokedfor making short enquiries or to go into theprocess of assessment again and again merelyon the basis that more enquiry ought to havebeen conducted to find something”. 4.2. Further, decision of Bombay High Court in Commissioner of Income Tax Vs. Gabriel India Limited (1993) 203 ITR 108(Bombay) holding as under:- “13. We, therefore, hold that in order toexercise power under sub-section (1) of section263 of the Act there must be material before theCommissioner to consider that the order passedby the Income Tax Officer was erroneous in sofar as it is prejudicial to the interests of theRevenue. We have already held what iserroneous. It must be an order which is not inaccordance with the law or which has beenpassed by the Income Tax Officer withoutmaking any enquiry in undue haste. We havealso held as to what is prejudicial to theinterests of the Revenue. An order can be said tobe prejudicial to the interests of the Revenue if itis not in accordance with the law in consequencewhereof the lawful revenue due to the State hasnot been realised or cannot be realised. Theremust be material available on the record calledfor by the Commissioner to satisfy him primafacie that the aforesaid two requisites arepresent. If not, he has no authority to initiateproceedings for revision. Exercise of power ofsuo motu revision under such circumstances willamount to arbitrary exercise of power. It is well-settled that when exercise of statutory power isdependent upon the existence of certainobjective facts, the authority before exercising such power must have materials on record tosatisfy it in that regard. If the action of theauthority is challenged before the court it wouldbe open to the courts to examine whether therelevant objective factors were available fromthe records called for and examined by suchauthority. Our aforesaid conclusion gets fullsupport from a decision of Sabyasachi MukharjiJ. (as his Lordship then was) in RussellProperties Pvt. Ltd. v. A. Chowdhury, Addl. CIT[1977]109ITR229(Cal) . In our opinion, anyother view in the matter will amount to givingunbridled and arbitrary power to the revisingauthority to initiate proceedings for revision inevery case and start re-examination and freshenquiries in matters which have already beenconcluded under the law. As already stated it isa quasi judicial power hedged in with limitationand has to be exercised subject to the same andwithin its scope and ambit. So far as calling forthe records and examining the same isconcerned, undoubtedly, it is an administrativeact, but on examination "to consider" or in otherwords, to form an opinion that the particularorder is erroneous in so tar as it is prejudicial tothe interests of the Revenue, is a quasi-judicialact because on this consideration or opinion thewhole machinery of re-examination andreconsideration of an order of assessment, whichhas already been concluded and controversywhich has been set at rest, is set again inmotion. It is an important decision and the samecannot be based on the whims or caprice of therevising authority. There must be materialsavailable from the records called for by theCommissioner. 14. We may now examine the facts of thepresent case in the light of the powers of theCommissioner set out above. The Income TaxOfficer in this case had made enquiries in regardto the nature of the expenditure incurred by theassessee. The assessee had given detailedexplanation in that regard by a letter in writing.All these are part of the record of the case.Evidently, the claim was allowed by the IncomeTax Officer on being satisfied with theexplanation of the assessee. Such decision ofthe Income Tax Officer cannot be held to be"erroneous" simply because in his order he didnot make an elaborate discussion in that regard.Moreover, in the instant case, the Commissionerhimself, even after initiating proceedings forrevision and hearing the assessee, could not saythat the allowance of the claim of the assessee was erroneous and that the expenditure was notrevenue expenditure but an expenditure ofcapital nature. He simply asked the Income TaxOfficer to re-examine the matter. That, in ouropinion, is not permissible. Further inquiryand/or fresh determination can be directed bythe Commissioner only after coming to theconclusion that the earlier finding of the IncomeTax Officer was erroneous and prejudicial to theinterests of the Revenue. Without doing so, hedoes not get the power to set aside theassessment. In the instant case, theCommissioner did so and it is for that reasonthat the Tribunal did not approve his action andset aside his order. We do not find any infirmityin the above conclusion of the Tribunal”. 4.3. He further relied on judgment of Delhi High Court in Commissioner of Income Tax Vs. Sunbeam Auto Ltd. (2011) 332 ITR 167 (Delhi) wherein it has been held as under:- 4.3. He further relied on judgment of Delhi High Court in Commissioner of Income Tax Vs. Sunbeam Auto Ltd. (2011) 332 ITR 167 (Delhi) wherein it has been held as under:- 12. We have considered the rivalsubmissions of the counsel on the otherside and have gone through the records.The first issue that arises for ourconsideration is about the exercise ofpower by the Commissioner of Income Taxunder Section 263 of the Income Tax Act.As noted above, the submission of learnedCounsel for the Revenue was that whilepassing the assessment order, the AO didnot consider this aspect specificallywhether the expenditure in question wasrevenue or capital expenditure. Thisargument predicates on the assessmentorder, which apparently does not give anyreasons while allowing the entireexpenditure as Revenue expenditure.However, that by itself would not beindicative of the fact that the AO had notapplied his mind on the issue. There arejudgments galore laying down the principlethat the AO in the assessing order is notrequired to give detailed reason in respectof each and every item of deduction, etc.Therefore, one has to see from the recordas to whether there was application ofmind before allowing the expenditure inquestion as revenue expenditure. LearnedCounsel for the assessee is right in his submission that one has to keep in mindthe distinction between "lack of inquiry"and "inadequate inquiry". If there was anyinquiry, even inadequate that would not byitself give occasion to the Commissioner topass orders under Section 263 of the Act,merely because he has different opinion inthe matter. It is only in cases of "lack ofinquiry" that such a course of action wouldbe open. In Gabriel India Ltd. (Supra), lawon this aspect was discussed in thefollowing manner: xxx.... From a reading of Sub-section(1) of section, it is clear that the power ofsuo motu revision can be exercised by theCommissioner only if, on examination ofthe records of any proceedings under thisAct, he considers that any order passedtherein by the Income Tax Officer is"erroneous in so far as it is prejudicial tothe interests of the Revenue". It is not anarbitrary or unchartered power. It can beexercised only on fulfilment of therequirements laid down in Sub-section (1).The consideration of the Commissioner asto whether an order is erroneous in so faras it is prejudicial to the interests of theRevenue, must be based on materials onthe record of the proceedings called for byhim. If there are no materials on record onthe basis of which it can be said that theCommissioner acting in a reasonablemanner could have come to such aconclusion, the very initiation ofproceedings by him will be illegal andwithout jurisdiction. The Commissionercannot initiate proceedings with a view tostarting fishing and roving enquiries inmatters or orders which are alreadyconcluded. Such action will be against thewell-accepted policy of law that there mustbe a point of finality in all legalproceedings, that stale issues should notbe reactivated beyond a particular stageand that lapse of time must induce reposein and set at rest judicial and quasi-judicialcontroversies as it must in other spheres ofhuman activity. (See Parashuram PotteryWorks Co. Ltd. v. ITO [1977] 106 ITR 1(SC) at page 10). x x x From the aforesaid definitions it is clear x x x From the aforesaid definitions it is clear that an order cannot be termed aserroneous unless it is not in accordancewith law. If an Income Tax Officer acting inaccordance with law makes a certainassessment, the same cannot be brandedas erroneous by the Commissioner simplybecause, according to him, the ordershould have been written more elaboratelyThis section does not visualise a case ofsubstitution of the judgment of theCommissioner for that of the Income TaxOfficer, who passed the order unless thedecision is held to be erroneous. Casesmay be visualised where the Income TaxOfficer while making an assessmentexamines the accounts, makes enquiries,applies his mind to the facts andcircumstances of the case and determinesthe income either by accepting theaccounts or by making some estimatehimself. The Commissioner, on perusal ofthe records, may be of the opinion that theestimate made by the officer concernedwas on the lower side and left to theCommissioner he would have estimatedthe income at a figure higher than the onedetermined by the Income Tax Officer. Thatwould not vest the Commissioner withpower to re-examine the accounts anddetermine the income himself at a higherfigure. It is because the Income Tax Officerhas exercised the quasi-judicial powervested in him in accordance with law andarrived at conclusion and such a conclusioncannot be termed to be erroneous simplybecause the Commissioner does not feelsatisfied with the conclusion. There must be some prima faciematerial on record to show that tax whichwas lawfully eligible has not been imposedor that by the application of the relevantstatute on an incorrect or incompleteinterpretation a lesser tax than what wasjust has been imposed. We may now examine the facts of thepresent case in the light of the powers ofthe Commissioner set out above. TheIncome Tax Officer in this case had madeenquiries in regard to the nature of theexpenditure incurred by the assessee. Theassessee had given detailed explanation inthat regard by a letter in writing. All these are part of the record of the case.Evidently, the claim was allowed by theIncome Tax Officer on being satisfied withthe explanation of the assessee. Suchdecision of the Income Tax Officer cannotbe held to be "erroneous" simply becausein his order he did not make an elaboratediscussion in that regard.... 13. When we examine the matter in thelight of the aforesaid principle, we find thatthe AO had called for explanation on thisvery item, from the assessee and theassessee had furnished his explanationvide letter dated 26.09.2002. This fact iseven taken note of by the Commissionerhimself in Para 3 of his order dated03.11.2004. This order also reproduces thereply of the respondent in Para 3 of theorder in the following manner: The tools and dies have a very short lifeand can produce upto maximum 1 lakhpermissible shorts and have to be replacedthereafter to retain the accuracy. Most ofthe parts manufactured are for theautomobile industries which have to workon complete accuracy at high speed for alonger period. Since it is an ongoingprocedure, a company had produced10,75,000 sets whose selling rates isinclusive of the reimbursement of the diescost. The purchase orders indicating thecosting includes the reimbursement of diescost are being produced before yourhonour. Since the sale rate includes thereimbursement of die cost and to have thematching effect, the cost of the dies hasbeen claimed as a Revenue Expenditure. 14. This clearly shows that the AO hadundertaken the exercise of examining as towhether the expenditure incurred by theassessee in the replacement of dyes andtools is to be treated as revenueexpenditure or not. It appears that sincethe AO was satisfied with the aforesaidexplanation, he accepted the same. TheCIT in his impugned order even acceptsthis in the following word: 14. This clearly shows that the AO hadundertaken the exercise of examining as towhether the expenditure incurred by theassessee in the replacement of dyes andtools is to be treated as revenueexpenditure or not. It appears that sincethe AO was satisfied with the aforesaidexplanation, he accepted the same. TheCIT in his impugned order even acceptsthis in the following word: AO accepted the explanation withoutraising any further questions, and as statedearlier, completed the assessment at thereturned income. 15. Thus, even the Commissioner concededthe position that the AO made theinquiries, elicited replies and thereafterpassed the assessment order. Thegrievance of the Commissioner was thatthe AO should have made further inquiriesrather than accepting the explanation.Therefore, it cannot be said that it is a caseof 'lack of inquiry'. 16. Having put the records straight on thisaspect, let us proceed further. Is it a casewhere the Commissioner has concludedthat the opinion of the AO was clearlyerroneous and not warranted on the factsbefore him and, viz., the expenditureincurred was not the revenue expenditurebut should have been treated as capitalexpenditure? Obviously not. Even theCommissioner in his order, passed underSection 263 of the Act, is not clear as towhether the expenditure can be treated ascapital expenditure or it is revenue innature. No doubt, in certain cases, it maynot be possible to come to a definitefinding and therefore, it is not necessarythat in all cases the Commissioner is boundto express final view, as held by this Courtin Geevee Enterprise [supra]. But, theleast that was expected was to record afinding that order sought to be revised waserroneous and prejudicial to the interest ofthe revenue. [see Sashayee Paper(supra)].No basis for this is disclosed. In sum andsubstance, accounting practice of theassessee is questioned. However, thatbasis of the order vanishes in thin air whenwe find that this very accounting practice,followed for number of years, had theapproval of the income tax authorities.Interestingly, even for future assessmentyears, the same very accounting practice isaccepted. 17. It is in this context the question thatassumes importance is as to whetherpowers could be exercised under Section263 of the Act when two views are possibleand following observations of the Tribunal,in this backdrop, become relevant: “38. Still further, the Hon'ble SupremeCourt in Malabar Industrial Co. Ltd. (supra)has held that when two views are possibleand the AO has taken one of the possibleview, then the order cannot be held to be prejudicial to the interest of the Revenue.Since the CIT could not come to a definitefinding that the expenditure in questionwas a capital expenditure in theproceedings under Section 263, in ouropinion, the order of the AO could not beheld to be erroneous”. 17. It is in this context the question thatassumes importance is as to whetherpowers could be exercised under Section263 of the Act when two views are possibleand following observations of the Tribunal,in this backdrop, become relevant: “38. Still further, the Hon'ble SupremeCourt in Malabar Industrial Co. Ltd. (supra)has held that when two views are possibleand the AO has taken one of the possibleview, then the order cannot be held to be prejudicial to the interest of the Revenue.Since the CIT could not come to a definitefinding that the expenditure in questionwas a capital expenditure in theproceedings under Section 263, in ouropinion, the order of the AO could not beheld to be erroneous”. 18. Let us look into the matter fromanotherangel.Whatwasthematerial/information available with the AOon the basis of which he allowed theexpenditure as revenue? It was disclosedto him that the assessee is a manufacturerof car parts. In the manufacturing process,dyes are fitted in machines by which thecar parts are manufactured. These dyesare thus the components of the machines.These dyes need constant replacement, astheir life is not more than a year. Theassessee had also explained that sincethese parts are manufactured for theautomobile industry, which have to workon complete accuracy at high speed for alonger period, replacement of these partsat short intervals becomes imperative toretain accuracy. Because of these reasons,these tools and dyes have a very shortspan of life and it could produce maximumone lakh permissible shorts. Thereafter,they have to be replaced. With thereplacement of such tools and dyes, whichare the components of a machine, no newassets comes into existence, nor is theirbenefit of enduring nature. It does noteven enhance the life of existing machineof which these tools and dyes are onlyparts. No production capacity of theexisting machines is increased either. TheTribunal, in these circumstances, reliedupon the judgment of Mysore SpunConcrete Pipe Pvt. Ltd. (supra), whereinKarnataka High Court held that thereplacement of moulds was not in thenature of replacement of a capitalmachinery, but in the nature ofreplacement a part of the machinery whichin turn was in the nature of maintenance ofmachinery installed in the factory. Such anexpenditure was treated as revenueexpenditure. With this position in law, it isclear that view taken by the AO was one ofthe possible views and therefore, theassessment order passed by the AO couldnot be held to be prejudicial to the revenue. Such an order thus has rightlybeen set aside by the Tribunal. 19. When we consider the matter in theaforesaid perspective, it also becomes clearthat the judgments under which Mr.Sanjeev Sabharwal, learned Counsel forthe Revenue, had taken umbrage wouldnot be applicable in the instant case and,therefore, would not come to his rescue. InSaravana Spinning Mills Pvt. Ltd. (supra)where the Supreme Court expounded theprinciple of "current repairs", clear findingrecorded was that ring frames wouldconstitute independent and separatemachine capable of independent andspecific functions, as is clear from thefollowing observations: In our view, the A.O. was right inholding that each machine including theRing Frame was an independent andseparate machine capable of independentand specific function and, therefore, theexpenditure incurred for replacement ofthe new machine would not come withinthe meaning of the words "currentrepairs". In the present case, it is not thecase of the assessee that a part of themachine (out of 25 machines) neededrepairs. The entire machine had beenreplaced. Therefore, the expenditureincurred by the assessee did not fall withinthe meaning of "current repairs" in Section. In our view, the A.O. was right inholding that each machine including theRing Frame was an independent andseparate machine capable of independentand specific function and, therefore, theexpenditure incurred for replacement ofthe new machine would not come withinthe meaning of the words "currentrepairs". In the present case, it is not thecase of the assessee that a part of themachine (out of 25 machines) neededrepairs. The entire machine had beenreplaced. Therefore, the expenditureincurred by the assessee did not fall withinthe meaning of "current repairs" in Section. In the present case, finding is just theopposite, viz., dyes and tools are part ofthe machines. Replacing these dyes thepurpose is to maintain the existing assets,viz., machine and not to bring a new asset.Moreover, case at hand is not a case of"repairs of machinery" which was thesituation is Sarvana Prinning (supra). Thepresent case proceeded on the controversyright from the order of A.O. till ITAT as towhether this expenditure was revenue orcapital in nature. Even before us,arguments rested on this aspect. 20. Likewise, whether the Commissionershould have recorded definite finding ornot, may not be very relevant factor in thepresent case where on the facts of thiscase we have found that the opinion of theAO in treating the expenditure as revenueexpenditure was plausible and thus there was no material before the CIT to vary thatopinion and ask for fresh inquiry. 21. Thus, from whatever the matter is tobe looked into, the conclusion would bethat the order of the Tribunal does not callfor any interference as the question of lawhas rightly been decided. We, thus, answerthis question in favour of the assessee andagainst the Revenue, consequence whereofthis appeal is dismissed with cost. 4.4. Lastly relied on decision of Gujarat High Court inCommissioner of Income Tax-1 Vs. Amit Corporation (2012) 21Taxman.com 64 (GUJ) wherein it has been observed as under:- “4. Tribunal was of the opinion that whileframing the original assessment,l theAssessing Officer had carried out fullinquiries and thereafter framed theassessment. Tribunal, therefore, was of theopinion that the order of the AssessingOfficer could not have been categorized aserroneous on the grounds stated by theCommissioner of Income-tax. Tribunal heldand observed as under:- “6. We have carefully considered the rivalsubmissions and have also perused thematerial on record as also the paper bookfiled before us. We find from theassessment order itself that as stated inpara (4) thereof the A.O. has clearly statedthat during the year there were sales offlats of Rs. 5,20,000/- on which a certainprofit was declared. We find from the orderthat the assessee is a civil contractor andwhat is sold as flat is fixed assets of thefirm. From the submissions to the I.T.O.and to the CIT it is noted that no businessactivity was made during the year. We alsofind that the ITO has clearly stated in para(5) that subject to above remarks andbased upon the information producedbefore the undersigned, the total income ofthe assessee is computed as under. It isfurther noted that several replies were filedboth during assessment proceedings andduring the inquiry by the A.O. duringrevision proceedings. From the replies onissues referred to in the show cause notice, it is seen that in respect of the major itembeing cash credits, the required details insupport thereof were furnished and theA.O. is stated to have even issuedsummons u/s. 131 to the concernedparties for verification. In respect ofcurrent liabilitiews by way of sundrycreditors also, from the accounts filed it isseen that they are repayments of openingbalances and not fresh credits. Evenotherwise, considering the facts on record,we are not in agreement with the C.I.T.that no inquiries were conducted by theA.O. The decisions of jurisdictional HighCourt cited before us support the ground ofappeal. Hence, considering the same alongside the material on record and thelanguage of the assessment order, theassessment order cannot be said to beerroneous on grounds stated by the C.I.T.In view of above, we hold that only for thepurpose of making re-enquiries, more sowhen inquiry report was also obtained bythe CIT, the assessment cannot be setaside in the scheme of Section 263 of theAct.”5. We are of the opinion that the Tribunalcommitted no error. When, during thecourse of framing of the assessment, theAssessing Officer had access to all therecords of the assessee, after pursuingsuch record the Assessing Officer framedthe assessment, such assessment couldnot have been re-opened in exercise ofrevision power under Section 263 of theAct for making further inquiries. In thefacts of the case, in our opinion, Tribunalrightly interfered with such order. Noquestion of law arises. Tax Appeal is,therefore, dismissed.” 5.He contended that the view taken by the Tribunal is required to be accepted. 6. We have heard counsel for the parties. 7.Taking into consideration the order passed by the A.O. inparagraph 2 which reads as under:-paragraph 2 which reads as under:- “During the course of the above referred action(s),cash,jewellery,stock-in-trade,valuables,documents, books of account and/or loose paperswere found and/or seized from the premises of themembers of the Sodhani Sweet's Group of whichone such member happens to be the Assessee.” 7.1It has been specifically rebutted and the basis on which CIT(A) has gone that the submission made under Section 34 isbinding is not correct, the Tribunal has rightly considered andinterpreted the documents more particularly referred in paragraph6 which has been reproduced above. 8.Therefore, in our considered opinion, the view taken by theTribunal is required to be accepted. 9.The issue is answered in favour of the assessee and againstthe department. 10.The appeal stands dismissed. (DINESH CHANDRA SOMANI)J. (K.S.JHAVERI)J. BMG/ManishItemNo.s-137