P. J. GORADIA, A. M. : Various grounds are raised against order passed by CIT Rajkot assuming jurisdiction under s. 263 of IT Act, 1961. They are as follows: ld. CIT erred in passing order under s. 263. order of ITO was not erroneous. assumption of jurisdiction under s. 263 is not justified. difference is carry forward of unabsorbed deficiency of s.80J was mistake rectifiable under s. 164 of Act. ld. CIT erred in holding that for purpose of determining cost of building and machinery, subsidy of Rs. 4,29,584 was to be deducted from cost. ld. CIT erred in directing ITO to examine details of Bank Guarantee in order to determine whether it was capital or revenue expenditure. ld. CIT erred in directing ITO to verify correct amount of Guest House Expenses of No. 5808. ld. CIT erred in directing ITO to verify value of expenses namely Diwali expenses, legal expenses, office expenses, Commission and amount paid to N. L. Vaidya. ld. CIT erred in setting aside assessment. facts and decision leading to present appeal as found in order of CIT are as follows: On examining records of proceedings in this case for asst. yr. 1979- 80, it appeared that while passing assessment order for asst. yr. 1979-80, ITO had committed certain errors which were prejudicial to interest of revenue as stated in detail as under: (1) Out of unabsorbed deficiency of s. 80J of Rs. 5,61,246, ITO had set off Rs. 3,11,524 against profit and balance was directed to be carried forward. action of ITO was not correct as carry forward of s. 80J deficiency of earlier years had already been exhausted in asst. yr. 1977-78 and there was no balance which was to be set off in year under consideration. (2) assessee had received cash subsidy of Rs. 4,92,584. While working out depreciation, ITO had not deducted amount of cash subsidy from cost of machinery and building for determining depreciation. (3) ITO had allowed Bank Guarantee Commission amounting to Rs. 1, 76,591 with out verifying whether it was in nature of capital or revenue. (4) ITO had failed to disallow guest house expenses of Rs. 5,806 as per provisions of s. 37 (4). (5) ITO had failed to obtain details of Diwali expenses, details of repairs, legal expenses, office expenses commission payment and payment made to Shri N. L. Vaidya, Omission on part of ITO to obtain details and secrutinise them was erroneous. I have considered various submissions made b y assessee. As regards mistake of s. 80J deficiency set off, since assessee has stated that 80J deficiency was wrongly set off and it has no objection for its withdrawal, t h e ITO is directed to withdraw excess deficiency of 80J allowed while passing fresh order. As regards non-deduction of cash subsidy of Rs. 4,29,584 from cost for purpose of determining depreciation, assessee s contention that subsidy does not reduce cost for purpose of allowance of depreciation in view of Bombay, ITAT-A Bench decision is not acceptable. According to provisions of s. 43 (1), "actual cost means actual cost of assets assessee reduced by that portion of cost thereof if any, as has been met directly or indirectly by any other person or authority". amount of depreciation, therefore, requires to be determined. As regards bank guarantee commission, ITO had allowed Bank guarantee commission without obtaining details and purpose for which t h e commission was paid. It is clear that ITO erred in allowing this as t h e commission was paid. It is clear that ITO erred in allowing this as revenue expenditure without obtaining and examining detail Now assessee has furnished details of commission paid and purpose for which it was paid. In interest of justice, therefore, it would be proper that these details r e examined for deciding question whether expenditure was in nature of capita or revenue. As regards guest house expenses of Rs. 5,806, argument of assessee that guest house expenses have already been disallowed requires to be verified as figure of guest house expenses disallowed by ITO and amount of Rs. 5,806 does not tally. It would, therefore, be necessary for ITO to verify correct amount of disallowable under this head while passing fresh order. As regards various details of Diwali expenses, repairs. legal expenses, office expenses, commission and amount paid to Shri N. L. Vaidya, assessee has furnished details on 13the April, 1983. Since details have been brought on record after completion of assessment, in interest of justice, it would be necessary for ITO to verify nature of expenses form details furnished and to decide whether any of expenses are of disallowable nature on merits. For reasons stated above, it must be held that assessment order is erroneous and prejudicial to interest of revenue, I, therefore, set aside assessment made by ITO for asst. yr. 1979-80 with direction to reframe assessment on lines indicated above after giving opportunity of being heard to assessee." At time of hearing, ld. counsel appearing on behalf of assessee very kly raised grievance against assumption of jurisdiction under s. 263 by stating that regarding rectification in respect of relief under s. 80J assessee had already acted even before ITO and this was mistake apparent and could be rectified under s. 154. Regarding subsidy, reading relevant extracts from order passed by ITO it was submitted, that stand of assessee was accepted not only with regard to receipt of subsidy being of capital nature as discussed by ITO but same was not required to be deducted for purpose of depreciation and for this reliance placed by assessee on decisions of Madras Bench and Bombay Bench was accepted. Therefore, there was no question of any error. Regarding other revenue expenditure allowed in respect of remaining there points necessary details were already before ITO and considered by him. Therefore, here also there was no question of any error. On merits it was submitted that decisions taken by ITO did not require any modification or further consideration except in respect of relief under s. 80J for which there was obvious error rectifiable under s. 154 of Act. Regarding guest house expenses assessee itself had disallowed expenditure in computation of income submitted together with return of income and ITO had also disallowed same but by mistake had disallowed Rs. 5,886 in place of Rs. 5806, on this account order being prejudicial to assessee. It was wrong to state as mentioned in order passed by CIT that details in respect of Diwali Expenses, bank guarantee commission, repairs, commission payment etc. were not before ITO. In fact they were field together with return of income and only copies were submitted to CIT. Explaining nature of guarantee commission paid to bank it was submitted that same was in respect of revenue transactions such as discounting of bills in respect of export of coffee to USA and other countries . same also included charges made by bank on account of able./I. T. Charges, etc. amount of Rs, 65,551 was in respect of guarantee commission against furnishing guarantee in favour of I. D. B. I. for reference scheme in respect of various facilities of discounting of bills etc. amount of Rs. 6235 was in respect of guarantee in favour of Army Purchase. Organisation to whom assessee had supplied Vanasapati. No. amount was in relation to any capital expenditure. These details were already before ITO and same were again submitted to CIT. CIT instead of giving categorical finding went to extent of setting aside whole assessment against which assessee had very k grievance. Inspite of details filed CIT could not find anything disallowable, viewed from this angel it could not be said that order passed by ITO was erroneous. Reliance was placed on decision of Delhi High Court in case of Addl. CIT vs. J. K. D Costa (1981) 25 CTR (Del) 224: (1982) 133 ITR 7 (Del). Clarifying position it was submitted that it appeared that audit Department raised certain queries for which details were called for by ITO subsequent to assessment and copies of statements were given and on this basis proceedings were initiated under s. 263 of Act. ld. Departmental Representative vehemently opposed submissions i n respect of assumption of jurisdiction by lagging stress on aspect that assessee did admit mistake in granting relief under s. 80J forming major part of mistake. It was wrong to state that CIT could not invoke provisions of s. 263. No doubt s. 154 could be invoked but that did not necessarily debar CIT invoking provisions of s. 263 being revisional powers. It may be that both sections to some extent overlap land once assumption of jurisdiction is legal CIT could touch upon various points considered in assessment. Therefore, decision relied upon by assessee in case of J. K. D Costa (supra) was not relevant, Relying upon decision in case of Addl. CIT vs. Mukur Corporation (1978) 111 ITR 312 (Guj) it was not necessary for CIT to be decide all points. On aspects merits touching upon expenditure in merits touching upon expenditure respect of refinance scheme from I. D. B. I. It was stated that same was in respect of obtaining capital for purpose of business and, therefore, same could be capital expenditure because expenditure could neither fall for allowance under s. 36(1) (iii) or s. 37. One there was such prima facie case CIT could direct ITO to verify claim of assessee. Again as mentioned in order passed by CIT necessary details in respect of bank guarantee commission etc., were submitted for first time on 13th April, 1983 consequent to notice under s. 263 and, therefore, ITO could not have considered those details. In reply, ld. counsel reiterated that all detail were with ITO and what was submitted consequent to notice under s. 263 was only copy of statements. Again, assessment was made under s. 143 (3) and, therefore, all necessary details required to be furnished, if not furnished at time of filing return were furnished at time of hearing. We have gone through orders of authorities below and have also gone through cases relied upon by both sides. We decide issues as under. We find from order of ITO that assessment was completed under s. 1 4 3 (3) r/w s. 144-B Vide order dt. 10th May, 1982, Therefore, ratio of decision of special bench in case of East Coast Marine Products Pvt. Ltd. vs. ITO (1983) 4 ITR 72 (Hyd) (SB), gets directly applicable. In that case it was decided that where assessment was completed after incorporating directions under s. 144B CIT could not revise said order under s. 263. Neither side has brought to our notice decision of Special Bench of ITAT nor did anyone submit copies of objection by assessee or directions by IAC. However, on face of assessment order, it is quite clear that assessment was completed under s. 143 (3) r/w s. 144-B. Therefore, assumption of jurisdiction is held illegal. Apart from above, we find that order passed by ITO could not be said to be erroneous on any of points considered by CIT in respect fo relief under s. 80J. It is admittedly mistake apparent from record for which assessee had also agreed for necessary rectification. Therefore, ITO was within his powers to rectify mistake and in this respect even CIT could bring to notice of ITO mistake apparent so as to necessitate rectification. decision relied upon by assessee in case of J. K. D Costa (supra) would support stand taken by assessee. It was held by Their Lordships, while dealing with revisional powers of CIT as under:- "The mere fact that there is minor omission or mistake in assessment order cannot justify action of CIT in setting aside whole of assessment order. Such wholesale cancellation of assessment with direction to make fresh assessment is called for only in cases where there is something totally or basically wrong with assessment which is not capable of being remedied by amendments to assessment order itself," Therefore, issue that could be resolved by mere rectification involving of revisional powers involving their lenglty proceedings was improper. reliance planced by Department on decision of Mikur Corporation (supra), it should be clarified that in that case revisional powers were invoked o n basis of affidavit by person claiming to be benamidar of assessee. Clearly this could not be rectified under s. 154. Again in respect of subsidy sought to be deducted from cost of plant and machinery it is seen from order passed by ITO that he had relied upon order passed by two Benches of Tribunal. Besides Special Bench of Tribunal in case of Pioneer Match Works vs. ITO (1983) 15 TTJ (Mad) 88 (SB): (1983) 3 ITD 714 (Mad) (SB) also considered issue vide order dt. 12th Feb., 1981, holding that subsidy amount was not deductible in determining actual cost within meaning of s. 43(1) of he Act. Therefore, admittedly when assessment order was passed on 10th May, 1982, legal position was considered by ITO. Even CIT has failed to mention in order any decision contrary to position of law obtaining at time of assessment. assessment proceedings being quasi-judicial in nature ITO was bound to be guided by provisions of law, independent of any instructions or directions by superior bodies in hierarchy on basis of law established by Tribunals and opinion expressed by High Court or Supreme Court (S. R. Y. Sivaram Prasad Bahadur vs. CIT (1971) 82 ITR 527 (SC). Hence on that aspect also, we do not see any error in order passed by ITO coming to aspect of details in respect of bank guarantee and other expenditure, we do not find any substance in stand taken by Revenue that details were not on record while assessment was framed. perusal of Para 8 of assessment order where total income is determined shows that ITO has disallowed guest house expenses and even some portion out of sundry expenses in addition to other disallowances. Therefore, without seeing details in respect of sundry expenses which should also include Diwali expenses ITO could not have made disallowance. Again, assessment made under s. 143 (3) is based on proper evidence and enquiries. It would be futile to state or believe that ITO did not go through various items debited in P & L A/c. In fact, that is important part of assessment proceedings which no ITO missed. Therefore, while going through each any every debit expenditure claimed in P & L A/c necessary details are either taken on record or seen from books of accounts or discussed. This is not assessment made under s. 143 (1). With coming in force of instructions for acceptance of return for certain income under s. 143 (1) provisions contained in s. 143 (3) too get more weightage in sense that first provisions of s. 143 (1) are considered as to whether income is required to be accepted or necessary inquiries on certain points are requited to be made consequent to notice under s. 143 (2) It is not as if in case of each and every return notice under s. 143 (2) is issued without having look at return of income. Therefore, assessment completed under s. 143 (3) is on basis of all relevant material which ITO has gathered (Gundo Subbayya vs. CIT (1939) 7 ITR 21 (Mad). Again, ITO has very wide powers and is not fettered by technical rules of evidence and pleadings, only overriding feature being he must act honestly (Seth Gurumukh Singh vs. CIT (1944) 12 ITR 393 (Lah). It cannot be case of Revenue that ITO did not act honestly. While we are on this issue, we would also like authorities concerned to bear in mind following observations of Supreme Court in case of Parashuram Pottery Works Co. Ltd. ITO 1977 CTR (SC) 32: (1977) 106 ITR at 10, (SC): "It has been said that taxes are price that we pay for civilisation. If so, it is essential that those who are entrusted with task of calculating and realising that price should familiarise themselves with relevant provisions and become well- versed with law on subject. Any remissness on their part can only be at cost of national exchequer must necessarily result in loss of revenue. At same time, we have to bear in mind that policy of low in that there must be point of finality in all legal proceedings, that stale issues should not be reactivated beyond particular stage and that palse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity." For sake of clarification we would mention that, that case was in respect of reopening of assessment because of higher amount of depreciation allowed to assessee by failure of ITO to take into account initial depreciation required to be considered for purpose of reduction from original cost. ld. counsel was certainly right in voicing grievance and stating that inspite of details with CIT he could not state anything disallowable. We would also like to state here that return of income required to be filed by assessee does cost certain obligations in respect of filling of necessary details such as details in respect of payment of commission exceeding Rs. 1,000 details such as details in respect of payment of commission exceeding Rs. 1,000 etc. Besides, s. 139 contains sub-s. (9) inserted w. e. f. 1st Sept., 1980 on issue regarding defective returns field by assessee for which necessary remedial measures are required to be taken on instruction by ITO. Therefore, even if some of details are not field with return of income ITO shall call for same by considering return defective on wherever and whenever such occasion arises. All these aspects could lead to only one conclusion that necessary details, directed by CIT to be verified were considered by ITO while framing assessment under s. 143 (3). Moreover, this assessment was also subject to provisions contained in s. 144-B necessitating directions form IAC who too would be under bounder duty to bring to notice of ITO if certain details were not considered by him. Therefore, in our opinion, order passed by ITO could not be said to be erroneous for purpose of invoking provisions contained in s. 263. Coming to merits of case, regarding relief under s. 80J same is required to be rectified as conceded. In respect of subsidy amount not deductible from cost of building and machinery issue is decided in favour of assessee on basis of decision in case of Pioneer Match Works (supra) by Special Bench of ITAT referred to above. In respect of details regarding bank guarantee commission, we hold that same is allowable as revenue expenditure. contention by ld. Departmental Representative that part of expenditure is in respect of raising capital for purpose of business and, therefore, capital expenditure, holds no substance. If at all, it is only borrowing by assessee or expenditure in nature of discount for discounting usance bills rolling out finance earlier than date of maturity of bills. In respect of guest house expenses amount was already disallowed by assessee itself and same is also disallowed by ITO by committing mistake adverse to assessee and, therefore, does not require any verification. In respect of details of other expenses as held earlier nothing is found by CIT for purpose of disallowance while ITO has to some extent disallowed part of sundry expenses and, therefore, there is no necessity to examine same again. We, therefore, hold that assumption of jurisdiction of CIT under s. 263 was not justified and, therefore, illegal. On merits, issues are decided in favour of assessee except relief under s. 80J. We, therefore, set aside order of CIT on basis of illegality . In result, appeal is allowed. *** KOTHARI OIL PRODUCTS v. INCOME TAX OFFICER