1. This appeal arises out of order of ld. CIT, Allahabad dated 28-7- 2005. 2. Though there are ten grounds of appeal but main and effective ground relates to alleged error of ld. CIT in holding that regular assessment order dated 28-3-2005 is erroneous in so far as it is prejudicial in interests of revenue and in setting aside assessment as whole with direction that while framing reassessment, Assessing Officer shall be at liberty to examine other issues also which may come to his notice during course of reassessment proceedings. Briefly stated facts of case are that assessee-company had set u p industrial undertaking at Plot No. B-71, Satharia Industrial Estate, Satharia, District Jaunpur. For assessment year 2003-04, it had filed return wherein current years income was claimed as exempt under section 80-IB. return so filed by assessee was selected for scrutiny with approval of ld. Chief CIT, Allahabad and thereafter regular assessment proceedings were initiated by issue of notice under section 143(2). During course of regular assessment proceedings, assessee produced books of account and other relevant records as also details as were called for from time to time. assessees claim for relief under section 80-IB was also examined and consequent upon such examination it was reduced by sum of Rs. 3,33,250. After such examination, Assessing Officer completed regular assessment vide order dated 28-3-2005. 3. notice under section 263 of Act dated 7-6-2005 was issued on various grounds summarised as below: (i)relief under section 80-IB had been allowed without there being on record, requisite report of "Accountant" as defined in section 288 of Act; (ii)claim of brokerage amounting to Rs. 10,14,335, which is much higher from immediately preceding year has not been properly examined; (iii)premium received on allotment of 7 lakhs equity shares has not been transferred to "Securities Payment Premium Account", for being applied in consonance with provisions of section 78 of Companies Act. (iv)stock of crude soya bean oil was shown in transit at figure of 127900 Kgs. (127.900 MT), whereas consignment of imported soya bean oil was for 2,50,000 kgs. (250 MT); (v)the stock register, as per qualification appearing in Auditors report, was under seizure by Excise Authorities and because of non- availability of said stock register, trading and manufacturing results as shown by assessee were not open to verification. 4. assessee made extensive submissions on all issues vide submissions dated 21-7-2005 which as whole have been quoted by ld. CIT in his order under appeal. After examining assessees reply, he dropped some of issues and held assessment order dated 28-3-2005 to be erroneous inasmuch as same was prejudicial to interests of revenue on following ground: (i)the claim for exemption under section 80-IB had wrongly been allowed s inspection of records revealed that Audit report was required to be submitted in Form No. 10CCB (hereinafter to as "Audit report"), is not available in file and even if such Audit report is accepted to have been filed after filing return, exemption under section 80-IB was still not available as provisions of section 80-IA(7) have not been complied with; (ii)the assessee neither produced stock register before its own auditors, as could be seen from their qualification appended to their report of Statutory audit, nor such stock register had been produced before Assessing Officer during course of assessment proceedings and, thus, very important register had not been examined by Assessing Officer; (iii)premium received by assessee on allotment of 700,000 equity shares had not been transferred to "Securities payment premium account" as per provisions contained in section 78 of Companies Act and there was failure at part of Assessing Officer to examine case from this angle. However, while setting aside assessment order, ld. CIT gave following directions: "11. On going through facts and circumstances of case, and position of law as discussed above in foregoing paragraphs, I hold that assessment order passed under section 143(3) dated 28-3-2005 by TRO, R- II(1), Allahabad is erroneous insofar as it is prejudicial to interest of revenue. ITO has illegally allowed deduction under section 80-IB of Income-tax Act, even though mandatory audit report was not filed alongwith return. Assessing Officer did not examine case properly as discussed above. Therefore, assessment order is set aside with direction to Assessing Officer to pass fresh order in accordance with law in light o f observations made in foregoing paragraphs and after affording assessee reasonable opportunity of being heard. While framing re-assessment, Assessing Officer shall be at liberty to examine other issues also which may come to his notice during course of reassessment proceedings." Being aggrieved order of ld. CIT, assessee is in appeal before Tribunal. 5. Sri S.K. Garg, ld. A.R. of assessee has argued that report under section 80-IB, although filed separately and on date subsequent to date of filing return, formed part of Return itself. In any case, same was available on records of Assessing Officer, who had even examined same before completion of assessment and even computing relief under section 80-IB as was available to assessee. ld. A.R. further argued that stock register was not available with assessee at time of statutory audit/tax audit (for this reason same could not be produced before them), quantitative tally had been prepared and submitted also as forming part of "Annual Statement of account". On examination of such quantitative tally no discrepancy was found by Auditors as there is no qualification attached to audit report in this respect. In any case, during course of assessment proceedings, there was specific requisition from Assessing Officer for all relevant details in support of quantitative tally, valuation of closing stock, and stock in transit etc., as was amply borne out from assessment record and same were duly submitted. It was only after necessary verification that Assessing Officer had accepted assessees version with regard to same. ld. A.R. of assessee argued that misclassification of share premium account had no bearing on computation of taxable income of assessee, as computed as per provisions contained in Companies Act and, therefore, no prejudice can be said to have been caused to revenue, even if it is found and held that Assessing Officer has failed to discuss said matter elaborately in regular assessment order dated 28-3-2005. ld. A.R. of assessee further argued that in any case, said order stands wholly vitiated as in terms of his direction contained in para 11 of impugned order, ld. CIT had widened scope of set aside proceedings, beyond limits as had been laid down in notice under section 263 dated 7-6-2005. In support of various contentions, Paper Books in three volumes were filed. References were made to same as also to order sheet entries which already formed part of Memo of appeal itself, as Annexure-1 thereto. 6. As far as first issue is concerned, he invited my attention to letter dated 28-11-2003, copy of which appears at page 40 of Paper Book, which bears acknowledgement of same date from office of concerned Income-tax Officer and also to copy of Audit Report in Form No. 10CCB as prescribed in Income-tax Rules for purposes of making claim under section 80-IB also and other relevant documents copies of which appear at pages 41 to 49 of vol. 1 of Paper Book. It was very candidly admitted fry Sri Garg, as had been admitted by him before ld. CIT also during course of proceedings under section 263, that audit report could not be filed alongwith return and it was filed on following day. However, he hastened to add that date of filing audit report was still within time limit as prescribed under section 139(1) and it related back to return itself as per narration given in audit report. He further submitted that date of Audit report was 11-8-2003, which was also date of statutory audit report. It was just because of inadvertence that audit report under section 80-IB could not be attached alongwith return itself and no motive could have been attached for such inadvertence. audit report so filed by assessee on subsequent date was available before Assessing Officer, when proposal was sent to ld. Chief CIT for selecting case for scrutiny, much before completion of assessment. This is evident from this fact alone that in proposal sent to Chief CIT for his approval there was no mention of audit report having not been filed alongwith return. On other hand, case was recommended for scrutiny only for proper examination of accounts and for no other purposes. ld. A.R. drew my attention specifically to para 4 of impugned order wherein said proposal has been reproduced. 7. It was further submitted by ld. A.R. of assessee that on face of such official document, ld. CIT could not have held that audit report had not been filed even on 28-1-2003, without bringing on record any material to show that acknowledgement, as appearing on said letter itself, was not genuine. It was for Income-tax authorities to keep record in tact, and in case said letter dated 28-11-2003 alongwith audit report were not available in records of Assessing Officer at time of inspection by CIT, blame lies at door of Income-tax department itself for which assessee cannot be penalised. 8. In impugned order, ld. CIT has mentioned that even if audit report is held to have been filed on 28-11-2003, provisions of section 80- IA(7) as amended with effect from assessment year 2003-04 which provide that assessee must furnish audit report alongwith return, has not been complied with. ld. A.R. of assessee has submitted that filing of audit report, just day after date of filing return itself and that too within time prescribed for filing return under section 139(1) was liable to be treated as part of return itself. In any case, from sequence of events given earlier, it is evident that audit report was available before Assessing Officer , right from stage at least at time when proposal to select case for scrutiny was sent to Chief CIT. availability of report before Assessing Officer before completion of assessment is also proved from manner in which Assessing Officer made his own re-computation of relief under section 80-IB. availability of report before completion of assessment is sufficient compliance of provisions of section 80-IA(7) and in support of this contention, he referred to large number of case laws, gist of which appears at pages F to R of Vol. III of Paper Book and full text of case laws also appear in R of Vol. III of Paper Book and full text of case laws also appear in said Vol. of Paper Book. In nutshell, contention of Sri Garg was that assessee had duly filed audit report in manner laid down in Act and well within time limit prescribed for filing return and even it is taken to have been filed belatedly still there is sufficient compliance of provisions of section 80-IA(7). said provisions are directory in nature and not mandatory. If audit report is available before Assessing Officer, before completion of assessment as is case here, claim for relief under section 80-IA(7) cannot be negated on technical ground that said audit report remained to be tagged with return itself. Reliance was placed on principle laid down by Honble Supreme Court in judicial pronouncement in matter of CIT v. Nagpur Hotel Owners Association [2001] 247 ITR 201 which is in context o f furnishing Form No. 10 under Rule 17 of Income-tax Rules for purposes of claiming benefit of section 11 of Act. 9. As far as second issue is concerned, ld. A.R. relied upon submissions made before C.I.T. to effect that non-compliance with provisions contained in section 78 of Companies Act, which merely prescribes manner in which premium collected on issue of shares to be utilised. assessees failure to transfer premium amount to separate Share Premium Account, had no bearing on computation of taxable income of assessee under Income-tax Act and merely because accounting entry was not in accordance with provisions of section 78 of Act, no adverse inference could have been drawn. In support of this contention, he referred to written submissions placed before ld. CIT which are reproduced in impugned order itself. It was emphatically stated that even ld. CIT has not refuted in any manner, said contention. In any case, CIT has wrongly held that issue relating to share premium account, had not been examined by Assessing Officer. entry with regard to receipt of premium on issue of shares appeared at face of Balance Sheet itself and said Balance Sheet and other statements accompanying return were got verified from books of account and as have been repeatedly produced before Assessing Officer. As share premium account did not have any bearing on computation of taxable income under Income-tax Act, there was no necessity for Assessing Officer to deal with accounting treatment of same, as was referred to be given according to provisions of Companies Act. 10. As regards third issue of non-availability of stock register at time of statutory/tax audit it was pleaded that no doubt same could not be produced before auditors as it was in possession of Excise department at that time for purposes of finding out tariff item as mentioned in Excise laws. But in view of fact that on requisition being made by Assessing Officer during course of assessment proceedings as b y that time said register had been returned by Excise Authorities, same was duly produced before him during course of assessment proceedings. Thereafter, Assessing Officer made detailed enquiries about inventory or stock-in-hand, stock in transit and method of valuation thereof and in compliance with such enquiries all relevant details were submitted before Assessing Officer. In support of this contention, ld. A.R. referred to order sheet entries, copy of which appears at pages 84 to 93 of Vol. III of Paper Book and other relevant documents. 11. ld. A.R. of assessee further submitted that assessment order dated 28-3-2005 accorded fully with provisions of law and same, therefore, could not have been termed as erroneous and prejudicial to interests of revenue. said term received extensive examination by Honble Bombay High Court in case of CIT v. Gabriel India Ltd. [1993] 203 ITR 108 wherein it has been held that only such order can be subject-matter of revision under section 263 which is not in accordance with provisions of law. principle now represents law of land as that has received approval of Apex Court also in case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83. As there was no legal infirmity in regular assessment order passed by Assessing Officer, or any of specific issues on which order has been finally found to be erroneous and prejudicial to interests revenue by ld. CIT. In support of this contention too large number of case laws were cited, gists of which appear at pages to E of Vol. III of assessees compilation. 12. ld. A.R. of assessee further submitted that impugned order stands wholly vitiated as it had exceeded limit as had been laid down by CIT himself in his notice under section 263. As per overall scheme of Act, CIT has been given authority to revise only such order which is both erroneous as well as prejudicial to interest of revenue. Before exercising such jurisdiction, he has to give notice to assessee spelling out therein grounds on which revisionary jurisdiction is proposed to be exercised. In present case, such jurisdiction was sought to be assumed on five grounds only mentioned in paragraph 3 of order. After hearing assessee, ld. CIT himself has dropped two of said grounds and expressed his opinion only in relation to three issues mentioned in para 4 above. It meant that in final analysis, order was found to be erroneous and prejudicial to interests of revenue only on three issues, viz.(i) non-availability of audit report in support of claim under section 80-IB, (ii) non-verification of stock register and (iii) non- examination of share premium account. After having recorded his finding on these three issues, he could not have cancelled assessment order as whole with further direction to Assessing Officer to examine other issues also which may come to his notice during course of reassessment proceedings. ld. CIT could not have given such directions, as has been done here, so as to widen scope of fresh assessment, beyond scope of notice under section 263 of Act. Reliance in this regard was placed, besides other case laws, on decision of Apex Court in case of Sirpur Paper Mill Ltd. v. CWT [1970] . 13. Sri Subedar Ram, Joint CIT (DR) appeared on behalf of revenue and argued that assessee should not have any grievance against order dated 28-7-2005 passed by ld. CIT in his revisionary jurisdiction under section 263, as he himself has held in para 11 of his order that assessee shall be afforded reasonable opportunity of being heard. ld. CIT has merely set aside assessment in his supervisory jurisdiction and assessee is at liberty to make all his objections before Assessing Officer himself. 14. Proceeding further, ld. D.R. submitted that it was mandatory for assessee to file audit report in prescribed form alongwith return itself. It is evident from very language of section 80-IA(7) which is applicable to relief admissible under section 80-IB also. It nowhere says that such compliance can be made later on. In present case, admittedly, audit compliance can be made later on. In present case, admittedly, audit report had not been filed alongwith return itself. Even if, section 80-IB is beneficial provision, assessee has to make strict compliance, in order to avail benefit as is provided in said section. ld. CIT has, therefore, rightly held assessment order to be erroneous and prejudicial to interests of revenue on this count. 15. As regards non-availability of stock register, it was pleaded by ld. D.R. that same was not available for scrutiny and examination by Auditors at time of audit and they had even qualified their report by saying that stock register was not produced. Although, such stock register had been produced during course of assessment proceedings, it is not understood as to why assessee chose not to make compliance at stage of audit itself. Further, ld. CIT has not expressed any opinion either way on verifiability or otherwise of stock register. He has merely set aside assessment for purposes of necessary verification. If on such verification, no discrepancy is found, assessee will get fair deal at reassessment stage. 16. As regards share premium account, there is glaring violation of provisions of section 78 of Companies Act. assessee is company and it has to necessarily draw its accounts on basis of provisions as contained in Companies Act. Failure to observe rules of Company Law, make accounts themselves unreliable which called for suitable action from ld. CIT in his supervisory jurisdiction. At this stage, specific query was made from ld. D.R. as to whether there is any dispute about source of share application money and/or premium received on same. After consulting assessment records, he fairly conceded that allotment of shares had taken place against credit balance in account of allottee who is also assessed to tax with same Assessing Officer. source of such receipts is, therefore, not in dispute. He, however, submitted that non-compliance with provisions of Companies Act in drawing Annual statement of account and failure of Assessing Officer to take note of same, itself makes assessment order as erroneous and prejudicial to interests of revenue. 17. Finally, ld. D.R. tried to counter appellants submissions to effect that order of CIT got vitiated as same was far in excess of term of notice under section 263, by saying that section itself lays down that CIT in his revisionary jurisdiction can pass such order as is justified on circumstances of case, which includes order exercising or modifying assessment or cancelling assessment. In present case also, ld. CIT has held that owing to various errors of omission and commission at part of Assessing Officer, assessment order as whole deserved to be made afresh. In any case, assessee will get due opportunity of being heard at reassessment stage, as per specific directions given by ld. CIT and no prejudice can be said to have been caused to assessee, by directions as are contained in paragraph 11j of ld. CITs order. 18.1 In rejoinder, Sri Garg submitted that law itself has laid down built in safeguard against arbitrary action of ld. CIT. He cannot interfere with finality of assessment unless requisite conditions are satisfied. As per other scheme of Act, Commissioner is precluded to pass any order under section 263 without confronting assessee with material on which order passed by Assessing Officer has been found to be erroneous and prejudicial to interests of revenue. This is essence of principles of natural justice which have to be observed and followed in all walks of life. In present case, assessee was confronted with some specific grounds, but assessment as whole has been cancelled, which being undisputedly in excess of scope of notice under section 263 of Act, is wholly illegal. 18.2 Further, very jurisdiction of ld. CIT to pass order under section 263 in this case has been challenged and on such challenge being made, grounds are to be examined by Tribunal before whom such order is appealable. Therefore, if on such examination, order under section is not found to be tenable on grounds on which notice had been issued, order has to be quashed by Tribunal. Reliance in this regard has been placed on decision of Honble Punjab and Haryana High Court in case of CIT v. Jagadhri Electric Supply & Industrial Co. [1983] 140 ITR 490 on ground not specified. Therefore, if on examination of three specific issues on which ld. CIT has held order to be erroneous and prejudicial to interests of revenue, order of CIT is not found to be maintainable, same has to be quashed and assessees fate cannot be put into wilderness on such issues quashed and assessees fate cannot be put into wilderness on such issues and grounds which never formed part of proceedings under section 263. 18.3 Further, misclassification of share allotment account has nothing to do with reliability or otherwise of books of account as such. During course of assessment proceedings, detailed enquiries were made on various issues which have bearing on computation of taxable income of assessee. Undisputedly, receipts under head share premium account is part of capital of company. So long as such capital contribution is fully verifiable, as is case here, Share Premium Account did not have any bearing on computation of taxable income of assessee. Simply on ground that such receipts have not been classified as per provisions of section 78 of Companies Act, no adverse inference can be drawn against assessee. 18.4 Similarly, Assessing Officer on face of qualification in Auditors report about non-availability of stock register at time of audit, had made extensive queries on all aspects of closing stock which included quantitative tally as well as valuation thereof. If stock register was available during course of assessment proceedings and same had duly been placed also before Assessing Officer, no adverse inference could be drawn against assessee, on ground that same was not available at t h e time of audit and/or was not produced before auditors. Thus, assessment order cannot be said to be erroneous and prejudicial to interests of revenue within meaning of section 263 of Act or any of counts and order passed by ld. CIT deserves to be quashed. 19. I have carefully considered rival submissions and material on record as also assessment records as had been produced by Assessing Officer at earlier date of hearing as per requisition. It is seen that case has been picked up for scrutiny on following grounds: "The assessee has declared income of Rs. 1,12,54,279. deduction under section 80-IB Chapter VIA has been claimed in full. Gross profit declared is 6.58 per cent. Expenditure has been claimed at Rs. 25,46,34,152 as against claimed during previous year at Rs. 15,67,65,062. For proper examination of accounts case is being recommended for scrutiny." Which has been noted by ld. CIT also in para 4 of his order under section 263. bare perusal of said proposal goes to show that case was picked up for scrutiny, for proper examination of accounts. In said proposal itself, Assessing Officer has clearly noted assessees claim for exemption under section 80-IB. Had audit report in prescribed for being not there on records at that time, it would have been natural for him to make mention of same in his proposal, as non-filing of such report would have attracted disqualification of said claim. In said proposal, Assessing Officer has not even mentioned that assessees claim for exemption under section 80-IB needed verification. Then, said proposal was sent to Chief CIT for his approval and as per usual practice proposal is accompanied by assessment record. Non-availability of such vital document on which admissibility of claim under section 80-IB was dependent could not have escaped attention of Authority concerned. Nothing has been brought on record to show that Chief CIT even noted such deficiency. Such factual position itself clinches issue of availability of report on records of Assessing Officer, at least at time when proposal of selecting case for scrutiny was sent to Chief CIT and Chief CIT accorded his approval. 20. Moreover, assessee has placed before ld. CIT as well as before m e in Vol. 1 of Paper Book copy of letter dated 28-11-2003 alongwith which audit report had been filed. It has been noted by ld. CIT himself that said letter bears acknowledgement also from office of ITO. N o material whatsoever has been brought on record, either by ld. CIT himself or even by ld. Sr. D.R. during course of hearing before me, which could go to show that acknowledgement was not genuine, nor any other material has been placed on record to refute assessees claim that said report had duly been filed before Assessing Officer on 28-11-2003, day subsequent to date of filing return. On other and, assessee had placed on record k evidences both direct as well as circumstantial which go to prove that audit report had duly been filed and same was well within purview and knowledge not only of Authorities starting from stage of Assessing Officer, but upto stage of Chief CIT at least ever since Assessing Officer, but upto stage of Chief CIT at least ever since proposal was sent for selecting case for scrutiny. Not only this, tenor of assessment order in question goes to show that said audit report received due attention of Assessing Officer before completion of assessment. 21. Further, no adverse inference can be drawn from this fact also that letter dated 28-11-2003 did not bear acknowledgement No. etc. from office of Income-tax department. During course of present proceedings, it was explained before me that acknowledgement No. is given only at time when documents are presented at dak counter. No such acknowledgement bearing distinctive number is given when documents are filed before Assessing Officer and any other authority. This procedure followed in Income-tax department, has not been disputed even by ld. D.R. In fact, he could not have done so, for reason that pages 70-71 of First Vol. of Paper Book, which are photo copies of letters filed in office of CIT himself also do not bear any acknowledgement number. Still authenticity of said documents is not in dispute. By same token, authenticity of letter dated 28-11-.2003 alongwith which audit report had been filed, cannot be disputed. 22. It is also seen from assessment order dated 28-3-2005 itself that Assessing Officer himself had extensively examined claim under section 80-IB which includes quantification parts of same. After such examination, assessees claim for exemption was allowed, though at reduced figure. There is force in assessees contention that such examination was not possible in absence of audit report being there before Assessing Officer. Therefore, on due consideration of totality of facts and circumstances of case, assessees claim that report had been duly filed alongwith letter dated 28-11-2003 on that very date, has to be accepted and I hold so. 23. It is also not without significance that letter dated 28-11-2003 reads as under: "This has reference to return of income filed by applicant assessee on 27-11-2003 acknowledgement No. 0203015276 for assessment year 2003-04. On going through records, we found that negligently audit report prescribed in Form No. 10 CCB required to be filed under provision of section 80-IB was not filed with said return of income. copy of audit report in prescribed Form 10CCB alongwith certificate issued by Mukhya Karyapalika Adhikari, Satharia Industrial Development Authority for running edible business in specified industrial area under provision of section 80-IB of Income-tax Act, 1961 is enclosed, which may please be attached with return of income filed earlier by us i.e., on 27-11-2003 and same should be treated as part of return of income earlier filed. Audited financial statement, TDS certificate are filed with return of income. Kindly acknowledge receipt." audit report was filed as part of return itself. Since such report has been filed within time limit prescribed under section 139(1), it is liable to be treated as having been filed alongwith return itself, provisions of section 80-IA(7) stood fully complied with. Thus, no error of law has been committed by Assessing Officer while allowing claim for exemption on basis of such report. 24. After having held that audit report in prescribed form had been duly filed on 28-11-2003 as part of return and assessees claim had been allowed by Assessing Officer, after full examination, it is not necessary to go into part of objection of CIT which says that "even if I accept contention of Sri Garg that he had filed audit report subsequently, deduction cannot be allowed in view of amendment made to section 80-IA(7) effective from assessment year 2003-04." However, for sake of completeness of discussion, I proceed to examine as to whether there is any effect of such delay so to say in filing audit report on maintainability of assessees claim for exemption under section 80-IB and whether Assessing Officer has committed any error of law by accepting assessees claim for exemption under section 80-IB, although at reduced level. ld. A.R. of assessee has referred to catena of case laws as mentioned in gist of case laws as appearing at pages F to R of III Vol. of Paper Book, which are as under: (1)CIT v. Gupta Fabs [2005] (Punj. & Har.), (2)CIT v. Shivanand Electronics [1994] 209 ITR 63 (Bom.), (3)CIT v. Shiva Rice & Dal Mills [2005] 273 ITR 265 (Punj. & Har.), (4)CIT v. Panama Chemical Works [2000] 245 ITR 684 (MP), (5)CIT v. Gujarat Oil & Allied Industries [1993] (Guj.), (6)CIT v. Punjab Financial Corpn. [2002] 254 ITR 6 (Punj. & Har.), (7)CIT v. Jayant Patel [2001] 248 ITR 199 (Mad.), (8)CIT v. B.L. Murarka [2001] 250 ITR 714 (Raj.), (9)CIT v. Hemsons Industries [2001] 251 ITR 693 (AP), (10)CIT v. A.N. Arunachalam [1994] 208 ITR 481 (Mad.), (11)CIT v. Shahzadanand Charity Trust [1997] 228 ITR 292 (Punj. & Har.), (12)Zenith Processing Mills v. CIT [1996] (Guj.), (13)CIT v. Magnum Export (P.) Ltd. [2003] 262 ITR 10 (Cal.), (14)Addl. CIT v. Murlidhar Mathura Prasad [1979] (All.). Finally, ld. A.R. of assessee referred to and relied upon principle laid down by Apex Court in case of CIT v. Nagpur Hotel Owners Association [2001] 247 ITR 201. 25. Although said case laws are not on issue of exemption under section 80-IB, underlying principle as culled out from them is that filing of audit report wherever it is so required to be filed in support of claim for exemption/deduction, alongwith return itself, is not mandatory. It is sufficient compliance of law if such report becomes available to Assessing Officer before completion of assessment. In earlier part of this order, it has already been held by me, as matter of fact, that such report was available on records of Assessing Officer and claim under section 80-IB was allowed only after proper verification and examination of same. As availability of audit report on assessment records of Assessing Officer has been accepted by me, I hold that there is no infirmity in Assessing Officers approach in allowing assessees claim for exemption under section 80-IB, even if such report is held to be filed belatedly and not alongwith return itself. Therefore, order of Assessing Officer cannot be said to be erroneous and prejudicial to interest of revenue on this count and order of ld. CIT in this respect is reversed. 26. Now, I come to second ground on which assessment order has been held to be erroneous and prejudicial to interests of revenue, which is referable to non-consideration by Assessing Officer of issue of classification of share premium Account, which was not in accordance with provisions of Companies Act. ld. A.R. of assessee has submitted that such non-compliance has no bearing on computation of income as such collection was merely part of share capital. So long as source of such collection is not in dispute, it does not affect computation of taxable income. submissions made by assessee during course of revisionary proceedings are, therefore, held to be having sufficient force. Under Income- tax Act, income has to be computed as per provisions contained in Act itself. In support, reliance was placed on decision of Honble Supreme Court in matter of Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT 227 ITR 172, wherein it was held as under: "In case before us, company had surplus funds in its hands. In order to earn income out of surplus funds, it invested amount for purpose of earning interest. interest thus earned is clearly of revenue nature and will have to be taxed accordingly. accountants may have taken some other view but accountancy practice is not necessarily good law. In B.S.C. Footwears case, 83 ITR 269, House of Lords had no hesitation in holding that accounting practice for calculating its profit followed by assessee and accepted by revenue for 30 years could not be treated as sanctioned by law and was not acceptable for purpose of computation of taxable income. It is true that this court has very often referred to accounting practice for ascertainment of profit made by company or value of assets of company. But when question is whether receipt of money is taxable or not or whether certain deductions from that receipt are permissible in law or not, question has to be decided according to he principles of law and not in accordance with accountancy practice. Accounting practice cannot override section 56 or any other provision of Act. As was pointed out by Lord Russell in case of B.S.C. Footwear Ltd. [1970] 77 ITR 8857,860 (CA), income-tax law does not march step by step in footprints of accountancy profession." As such classification or wrong classification has not caused any prejudice to interest of revenue, assessment order could not be subjected to revision by ld. CIT in exercise of his jurisdiction under section 263 of Act on this score too. 27. Another ground on which revisionary jurisdiction has been specifically exercised by ld. CIT refers to non-production of stock register before auditors and again before Assessing Officer. finding of ld. CIT is as under: "9. next most important reason for taking action under section 263 is absence of stock register. assessee did not produce stock register before its own auditors and auditors announced in meeting of shareholders that stock register was not produced by assessee. assessee did not produce stock register during course of assessment proceedings also. Thus very important register was not examined by Assessing Officer. Mr. Garg only stated that stock register could not be produced before Company Auditors because it had been taken away by Excise Authorities but date on which stock register was taken away and date on which same was returned to assessee have not been disclosed before me. It is not case of assessee that stock register was with Excise Authorities throughout audit proceedings and assessment proceedings. submissions being vague cannot be accepted. There is no supporting evidence for stock shown by assessee. From this angle also, action under section 263 is absolutely called for." However, from perusal of assessment records, I find that aforesaid finding insofar as same relates to non-production of stock register before Assessing Officer during course of assessment proceedings, is mistaken one. On other hand, it is seen from said records that not only stock register was produced before Assessing Officer, he, in turn made detailed queries on all aspects of quantitative tally of stock as well as valuation thereof as also stock in transit. For sake of ready reference, extract from order sheet entries are given below: "17-1-2005 Sri Navneet Agarwal, CA attended with Sri Amit Agarwal. Filed reply dated 17-1-2005 and produced cash book, ledger, journal book and purchase vouchers which have been test-checked. They are further required to furnish- (1)Details of stock in transit, quantity of price-wise. (2)Details of closing stock. (3)Produce vouchers and expenses (4)Produce books of A/c and vouchers for purchase and sales. Date fixed; for compliance 28-1-2005. 23-2-2005Sri Navneet Agarwal, CA attended with Sri Amit Kumar, Director. Produced cash book, ledger, stock register and vouchers, which have been test checked. Case partly examined. They are further required to furnish/produce (i)Bank statement with reconciliation (ii)Why income from tankers has not been disclosed, furnish details of tankers. (iii) P & L and Balance sheet of Financial Officer 2001-02. (iv)Proof regarding commencement of business & period from which deduction under section 80-IB is being claimed. (v)Why income under head other income be not taxed as income from other sources and claimed under section 80-IB on such income be not taxed as income from other sources and claim under section 80-IB on such income be not disallowed. (vi)Produce books of account and vouchers for further examination of A/cs. Date fixed for compliance 9-3-2005. 23-3-2005Sri Navneet Agrawal attended with Sri Amit Agarwal. Filed reply and produced cash book, ledger, stock register and vouchers which have been test checked and examined." 28. It is also seen from Vol.-1 of Paper Book (pages 52 to 69) that voluminous details had been placed on record alongwith letter dated 14-2-2005, which reads as under: "From Amit Vegetable Oil Ltd., 27/95, Dharbhanga Colony, Lowther Road, Allahabad. 14-2-2005 To Assessing Officer, Range II(1), Income-tax Department, Allahabad. Sir, Sub:Notice under section 143(2) of Income-tax Act, 1961. Ref.:M/s. Amit Vegetable Oils Limited, assessment year 2003-04. This has reference to assessment proceedings of Amit Vegetable Oils Limited for assessment year 2003-04, whereby certain queries were raised by you, point-wise reply is as under: 1.Books of account, stock register, vouchers for sales, purchase and expenses: Books of accounts, stock register and vouchers, bills in support of sales, purchase and expenses are produced herewith for your kind perusal. 2.Details of stock in transit: Details of stock in transit at balance sheet date is placed at Annexure A. 3.Details of closing stock: Details showing closing stock and its value is produced herewith for your kind perusal. Hope, above shall meet your requirements in completing assessment proceedings of captioned assessee-company, in case of any other details assessee may kindly be given opportunity to furnish same. Thanking you, Yours faithfully, For Amit Vegetable Oils Limited. Sd/Amit Agrawal Encl. As stated. Director" Even stock register was produced before Assessing Officer. Thus, i t is proved from assessment records themselves that not only stock register was produced before Assessing Officer, all relevant information was placed before him. Not only this, Assessing Officer had examined also, all such details and records. Thus, action has been taken by ld. CIT on non-existent ground, which cannot be supported. Further, there being no failure at part of Assessing Officer to examine quantitative tally of finished products, as obtained from purchases of raw material, stock-in-transit, valuation of stocks etc. and no error much less error of law has crept in assessment order. Therefore, CITs order in this respect also is not tenable. 29. On due consideration of facts and circumstances of case in their entirety, only conclusion that emerges is that regular assessment order dated 29-3-2005 accorded fully with provisions of law on all issues on which revision under section 263 was considered necessary by ld. CIT. Therefore, following principle laid down by Honble Bombay High Court in case of Gabriel India Ltd. (supra) and other case laws which have been approved by Apex Court in case of Malabar Industrial Co. Ltd. (supra) as may be seen from following extract from judgment: "The phrase "prejudicial to interests of revenue" has to be read in conjunction with erroneous order passed by Assessing Officer. Every loss of revenue as consequence of order of Assessing Officer, cannot be treated as prejudicial to interest of revenue, for examine, when Income-tax Officer adopted one of courses permissible in law and it has resulted in loss of revenue, or where two views are possible and Income-tax Officer has taken one view with which Commissioner does not agree, it cannot be treated as erroneous order prejudicial to interests of revenue unless view taken by Income-tax Officer is unsustainable in law. It has been held by this court that where sum not earned by person is assessed as income in his hands on his so offering, order passed by Assessing Officer accepting same as such will be erroneous and prejudicial to interests of revenue, Rampyari Devi Saraogi v. CIT [1968] (SC) (p. 88). ** ** ** phrase "prejudicial to interests of revenue" is not expression of art and is not defined in Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. High Court of Calcutta in Dawjee Dadbhoy and Co. v. S.P. Jain [1957] , High Court of Karnataka in CIT v. T. Narayana Pai [1975] 93 ITR 422, High Court of Bombay in CIT v. Gabriel India Ltd. [1993] 203 ITR 108 and High Court of Gujarat in CIT v. Smt. Minalben S. Parikh [1995] 215 ITR 81 treated loss of tax as prejudicial to interest of revenue." I, therefore, hold that assumption of revisionary jurisdiction under section 263 by ld. CIT was not proper either on facts or in law in relation to regular assessment order dated 28-3-2005. said order is, therefore, quashed. 30. Before parting with matter, I deem it necessary to deal with assessees objection to effect that CITs order stands vitiated as para 11 of same, which has been reproduced above, contains directions which are in excess of scope of proceedings as stood laid down in notice under section 263. cardinal principle of assumption of jurisdiction under section 263 is that these are quasi-jurisdictional proceedings and Commissioner cannot allow himself to pass order in relation to issues, which have not been disclosed to assessee. In decision in case of Sirpur Paper Mill Ltd. (supra), Honble Apex Court held as under: "The power conferred by section 25 is not administrative, it is quasi-judicial. expression "may make such inquiry and pass such order thereon" does not confer any absolute discretion on Commissioner. In exercise of power Commissioner must bring to bear unbiased mind, consider impartially objections raised by aggrieved party, and decide dispute according to procedure consistent with principles of natural justice, he cannot permit his judgment to be influenced by matters not disclosed to assessee, nor by dictation of another authority. Section 13 of Wealth-tax Act provides that all officers and other persons employed in execution of this Act shall observe and follow orders, instructions and directions of Board. These instructions may control exercise of power of officers of department in matters administrative, but not quasi-judicial. proviso to section 13 is somewhat obscure in its import. It enacts that no orders, instructions or directions shall be given by Board so as to interfere with discretion of Appellate Assistant Commissioner of Wealth-tax in exercise of his appellate functions. It does not, however, imply that Board may give any directions or instructions to Wealth-tax Officer or to Commissioner in exercise of his quasi-judicial function. Such interpretation would be plainly contrary to scheme of Act and nature of power conferred upon authorities invested with quasi-judicial power. power conferred by section 25 is not administrative: it i s quasi-judicial. expression "may make such inquiry and pass such order thereon" does not confer any absolute discretion on Commissioner. In exercise of power, Commissioner must bring to bear unbiased mind, consider impartially objections raised by aggrieved party, and decide dispute according to procedure consistent with principles of natural justice, he cannot permit his judgment to be influenced by matters not disclosed to assessee, nor by dictation of another authority." above decision lends full support to said principle. Undisputedly, ld. CIT had issued notice under section 263 on five grounds as has been listed in beginning. After hearing assessee, he has not recorded any adverse finding on two, out of five issues. Therefore, he could not have proceeded to give blanket direction to Assessing Officer to reframe assessment in manner laid down by him in para 11 of his order as same are not covered by his notice under section 263. Such transgression has effect of rendering order itself as invalid and I hold so. 31. This controversy has got another aspect also. proceedings under section 263 are peculiar in nature and different from other kind of appeals which come up for consideration before Tribunal, as in relation to order under section 263, revenue has no right to appeal. Therefore, Tribunal has power to examine only such issues on which assessee has been given opportunity of being heard at stage of CIT and on which order of Assessing Officer has been found by him to be erroneous and prejudicial to interests of revenue. same cannot be supplemented by Tribunal. In case grounds specifically referred to and relied upon by CIT are not found to be tenable, as has been held in this case, Tribunal has no option but to quash order under section 263. decision of Honble Punjab and Haryana High Court in case of Jagadhari Electric Supply & Industrial Co. (supra), goes to fortify said view. relevant portion of judgment is reproduced below: "The jurisdiction vested in Commissioner under section 263(1) of Act is of special nature or in other words, Commissioner has exclusive jurisdiction under Act to revise order of ITO if he considers that any order passed by him was erroneous insofar as it was prejudicial to interests of revenue. Before doing so, he is also required to give opportunity of being heard to assessee. If after hearing assessee in pursuance of notice issued by him under section 263(1) of Act, he is not satisfied, he may pass necessary orders. Of course, order thus passed will contain grounds for holding order of ITO to be erroneous, as contemplated under section 263(1) of Act. Feeling aggrieved, therefore, assessee may file appeal against same, as provided under section 253(1)(c) of Act. In memorandum of appeal, assessee is supposed to attach order of Commissioner and to challenge grounds for decision given by him in his order. At time of hearing, if assessee can satisfy Tribunal that grounds for decision given in order by Commissioner are wrong on facts or are not tenable in law, Tribunal has no option, but to accept appeal and to set aside order of Commissioner. Tribunal cannot uphold order of Commissioner on any other ground which, in its opinion, was available to Commissioner as well. If Tribunal is allowed to find out grounds available to Commissioner to pass order under section 263(1) of Act, then it will amount to sharing of exclusive jurisdiction vested in Commissioner, which is not warranted under Act. It is all more so because revenue has not been given any right of appeal under Act against order of Commissioner under section 263(1) of Act." From this view point also, CITs order in present case, which has t h e effect of re-opening entire assessment cannot be allowed to be sustained. 32. Thus, as order under section 263 has not been found to be maintainable on any of three grounds which ld. CIT has finally picked up for decision against assessee, only consequence that follows is that order under appeal is liable to be declared as wholly without jurisdiction and I hold so. 33. In result, appeal is allowed. *** AMIT VEGETABLE OILS LTD. v. COMMISSIONER OF INCOME TAX