BHARATI SAPRU,J. - (1.) Heard Shri Gaurav Mahajan, learned counsel for the appellant and Shri R.R. Kapoor, learned counsel for the respondent-assessee.
(2.) This appeal under Section 260-A of the Income Tax, 1961(hereinafter referred to as the 'Act') has been filed by the department against the order of the Income Tax Appellate Tribunal dated 16.10.2009 for the assessment year 2004-05. The questions of law sought to be answered are as hereunder: "(1) Whether the CIT rightly invoked the statutory provisions of Section 263 of the Act as the assessment so made by the A.O. was not only erroneous but also pre-judicial to the interest of the Revenue within the meaning of the provisions of Section 263 of the Act? (2) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in setting aside the order passed under section 263 of the Act by the CIT and restoring the assessment order by completely overlooking the reasons recorded in the order passed under section 263 of the Act?"
(3.) Shri Gaurav Mahajan, learned counsel for the department has sought to argue that the Tribunal has wrongly set aside the order passed by the CIT under Section 263 of the Act because four grounds were raised by the CIT, which have been explained by the department by the A.O.'s order and by the Tribunal. The grounds reads as hereunder": "(i) From the records, it is seen that the assesse had disclosed export incentive in the form of duty draw back amounting to Rs. 1,31,15,713/- on total export turnover of Rs. 52,93,21,557/-, which in terms of percentage works out to 2.47%. In the preceding year total export incentive in the from of draw back was shown at Rs. 2,76,41,554/- on total export turnover of Rs. 47,47,16,835/- i.e. 5.82 per cent. The decreases in percentage of export incentive in comparison to preceding year has been inquired into by the A.O. (ii) As the quantitative details of stock enclosed with the 3CD report filed along with the return of income it is seen that total number of pairs manufactured were shown at 793975 as against total number of pairs of sole/insole consumed at 961984. Thus, there remains a difference of 168009 pairs manufactured from the sole/insole consumed and the consumption of sole/insole has been claimed at much higher figure than the pairs manufactured. This has been inquired into the Asseessing Officer. (iii) An expenditure of Rs. 2,11,896/- was claimed on 27.3.2004 for purcahse of foreign currency in respect of travelling of one of the partner of the firm Mr. Ajit N. Kaisi. The AO has made any inquiry about the consumption of foreign exchange in the year under consideration particularly when the foreign currency was purcahsed at the fag end of the financial year. (iv) From the details of the expenses in respect of Germany office, it is seen that the assessee firm has claimed expenditure in respect of health insurance of one of the partner, namely, Mr. Ajit N. Kaisi. This being a personal expenditure of the partner is allowable in the hands of the firm?";