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TMI Blog2009 (2) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... fundamental principle to Judge the action of CIT taken u/s. 263. In the light of above proposition, if we examine the facts of the present case, the assessee has submitted the details as called for by AO. The ld CIT has not pointed out any specific defect in those details. The assessee has submitted the construction account in the paper book and has produced from where funds have been procured. The ld CIT without pointing out any discrepancy in these facts and circumstances put the assessee in the second round of litigation. Similar are the facts with regard to the other issues. The CIT was of the opinion that instead of disallowing sum from telephone expenses etc. it should have been something more. These are not the issues which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance under s. 263 of the Act and issued a show-cause notice on 14th March, 2006. In his opinion, assessee had constructed a house and AO has not examined the issue regarding the construction of the house. He further found from the record that a sum of Rs. 1 lac has been deposited in the capital account of the assessee. AO has accepted this amount without verification. Similarly, the CIT disapproved the disallowance out of car expenses, telephone expenses, travelling and conveyance expenses and credit card expenses. In his opinion, the AO has not made disallowance appropriately under these heads. He set aside the assessment order and directed the AO to make a fresh assessment order. 3. The learned counsel for the assessee while impugning t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT was of the opinion that the issue should have been referred to the Valuation Officer for determining the cost of construction. He pointed out that this is not the requirement of the law. The learned CIT in the impugned order has not highlighted the circumstances which could have persuaded the AO to refer the matter for valuation. If there is no defect in the books of the assessee and the details of expenses, then there was no necessity to make a reference for the valuation of the construction. The learned CIT before doubting the appreciation of evidence at the end of the AO should have referred the documentary evidence for such basis. Similarly, with regard to the other issues, he pointed out that AO has specifically called for the info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 71 (All). 5. We have duly considered the rival contentions and gone through the record carefully. The Tribunal in the case of Mrs. Khatiza S. Oomerbhoy vs. ITO (2006) 101 TTJ (Mumbai) 1095 analyzed in detail various authoritative pronouncements including the decision of Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 159 CTR (SC) 1 : (2000) 243 ITR 83 (SC) as well as Hon'ble Bombay High Court rendered in the case of Gabriel India Ltd. and has propounded the following broader principle to Judge the action of CIT taken under s. 263. The fundamental principle which emerge from the above case may be summarized below: (i) The CIT must record satisfaction that the order of the AO is erroneous and prejudicia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under s. 263 must have material on record to arrive at a satisfaction. (ix) If the AO has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the AO allows the claim on being satisfied with the explanation of the assessee, the decision of the AO cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard. 6. In the light of above proposition, if we examine the facts of the present case, then it would reveal that AO has called for the information on every issue from the assessee as discernible from the show-cause notice issued by the AO. The assessee has submitted the details and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. The assessee has debited sum of Rs. 27,340 towards mobile phone expenses and Rs. 6,497 towards telephone expenses. Out of these expenses, AO has disallowed Rs. 5,000. Because there is no straitjacket formula to measure the personal user of such facility. The element of guesswork in quantifying the disallowance would always be there. The AO has taken one of the possible views, it is not completely illegal. The learned CIT did not record a finding as to how the order of the AO is erroneous on facts in the above circumstances. Thus, taking into consideration all the facts and circumstances, we allow the appeal of the assessee and quash the order passed under s. 263 of the Act. 7. In the result, the appeal filed by the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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