Vaddiraju Ganesh (HUF), Warangal, Warangal V. ITO Ward -1, Warangal

ITA 1028/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66187 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 26-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALKA R JAIN
• Assessee Lawyers: G MANIKYA PRASAD
• Keywords: Unexplained investment; Principle of natural justice; Right to appeal
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A. NO. 1028/HYD/2011 ASSESSMENT YEAR 2006-07 M/S. VADDIRAJU GANESH (HUF), WARANGAL PAN: AADHV8154M VS. INCOME TAX OFFICER WARD-1 WARANGAL APPELLANT RESPONDENT APPELLANT BY: SRI G. MANIKYA PRASAD RESPONDENT BY: SMT. ALKA R. JAIN DATE OF HEARING: 19.07.2012 DATE OF PRONOUNCEMENT: 31.08.2012 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT-VI, HYDERABAD DATED 30.3.2011 FOR A.Y. 2 006-07 U/S. 263 OF INCOME-TAX ACT, 1961. 2. BRIEF FACTS OF THE ISSUE AS NARRATED IN THE 263 ORD ER ARE THAT IN ASSESSMENT YEAR 2006-07 THE ASSESSEE DECLAR ED INCOME OF RS. 83,000 AND AGRICULTURAL INCOME OF RS. 85,000 . HOWEVER, THE CORRECT INCOME RETURNED BY THE ASSESSEE HUF IS AT RS. 1,80,875 AND THE ASSESSING OFFICER DETERMINED THE I NCOME AT RS. 14,91,856. THE CIT WHILE EXAMINING THE RECORD OBSE RVED THAT REGARDING RENTS JOINTLY RECEIVED FROM ICICI BANK AN D MADE CASH DEPOSITS OF RS. 58,00,000 IN ASSESSEE'S SAVINGS BAN K ACCOUNT WITH HDFC BANK, HANAMKONDA, WARANGAL BUT THE SAME R ENTAL INCOME OF RS. 58 LAKHS WAS SHOWN IN BANK ACCOUNT IN HUF CAPACITY. WHEN THE CLARIFICATION WAS CALLED FOR NO EXPLANATION WAS OFFERED BUT THE SAME LETTER COPY ENCLOSED WHICH WAS FILED BEFORE THE ASSESSING OFFICER ON 31.12.2008. WITHOU T ANY FURTHER I.T.A. NO. 1028/HYD/2011 M/S. VADDIRAJU GANESH (HUF) ======================= 2 EVIDENCE HOW THE ASSESSING OFFICER ACCEPTED THE CLA IM IS NOT KNOWN. 3. REGARDING CASH DEPOSIT OF RS. 5.00 LAKH ON 09.06.20 05, THE ASSESSEE STATED THAT THE AMOUNT WAS RECEIVED FROM M R. ASHIRWADAM TOWARDS PURCHASE OF FLAT FROM .IAGANMATH A BUILDERS, HYDERABAD AND THE SAID AMOUNT WAS TRANSFE RRED TO IT. CONFIRMATION LETTER STATED TO BE FILED. BUT NEITHER CONFIRMATION LETTER ALLEGED TO BE FILED BEFORE THE ASSESSING OFF ICER NOR ACCOUNT COPY OF THE SAID FIRM WAS AVAILABLE. EVEN BEFORE THE CIT THE ASSESSEE REITERATED THE SAME THING BUT NOT PROD UCED ANY EVIDENCE. IN THE ABSENCE OF ABOVE NOTHING CAN BE IN FERRED REGARDING THE GENUINENESS OF THE TRANSACTION. IT W AS SUBMITTED THAT RS. 2.00 LAKH CASH DEPOSIT ON 28.06.2005 OUT O F SALE PROCEEDS OF AGRICULTURAL LANDS. IT WAS FURTHER STAT ED THAT IT WAS NORMAL PRACTICE THAT IN CASE OF SALE OF LAND THE AM OUNTS WERE RECEIVED INSTALMENTS AND ONLY A SMALL PORTION IS RE CEIVED AT THE TIME OF REGISTRATION. IT WAS FURTHER CLAIMED THAT T HE ASSESSEE HAVING SUFFICIENT CASH BALANCE FOR DEPOSIT OF RS. 2 .00 LAKHS IN THE BANK. THE MOOT POINT HERE IS AFTER 11.05.2005 N EXT SALE OF LAND WAS ON 05.10.2005. THE DEPOSIT DATE WAS 28.06. 2005. NO, EVIDENCE WHATSOEVER WAS PRODUCED TO BELIEVE THE CLA IM OF THE ASSESSEE AND THE LINK BETWEEN THE SALE PROCEEDS OF AGRICULTURAL LANDS COULD NOT BE ESTABLISHED CLEARLY. HENCE CONCL USION CANNOT BE DRAWN. FURTHER EVIDENCE TO CEMENT THE ASSESSEE'S CLAIM IS NECESSARY AND THE ASSESSEE NOT PRODUCED ANYTHING TO PROVE HIS POINT. HAVING FAILED TO SHOW ANY EVIDENCE, THE ASSE SSEE HAS NOT DISCHARGED HIS DUTY COMPLETELY. 4. THE CIT OBSERVED THAT IN THE CASE OF CASH DEPOSIT O F RS. 1.00 LAKH AND RS. 5.50 LAKH ALSO THE ASSESSEE STATE D THAT THE DEPOSITS WERE OUT OF SALE PROCEEDS AND PART PAYMENT S RECEIVED AS ADVANCE AGAINST THE SALE OF AGRICULTURAL LAND. I T WAS SEEN FROM I.T.A. NO. 1028/HYD/2011 M/S. VADDIRAJU GANESH (HUF) ======================= 3 THE LETTER DT: 31.12.2008 THAT THE TOTAL SALE ON IM MEDIATELY PRECEDING DATE TO 25.10.2005, I.E. 05.10.2005 WAS O NLY RS. 1,67,010. THUS, THERE APPEARS A WIDE GAP BETWEEN TH E AMOUNTS DEPOSITED AND AVAILABLE AMOUNT ON THE DATES. ACCORD ING TO CIT, WITHOUT ANY FURTHER EVIDENCE THE ASSESSEE'S CLAIM C ANNOT BE ACCEPTED. THE A.O. WITHOUT VERIFYING IT ACCEPTED TH E CLAIM OF THE ASSESSEE WHICH IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE AS PER CIT. 5. REGARDING THE DEPOSIT OF RS. 4.5 LAKH ON 17.8.2005, IT WAS STATED BEFORE THE CIT THAT RS. 2.5 LAKH RECEIVED FR OM SURENDER RAO TOWARDS PURCHASE OF PROPERTY FROM JAGANMATHA BU ILDERS, HYDERABAD AND THE BALANCE OF RS. 2.00 LAKH WAS OUT OF SALE PROCEEDS OF AGRICULTURAL LANDS. THE CIT OBSERVED TH AT HERE ALSO NO FURTHER EVIDENCE WAS PRODUCED. HE OPINED THAT AN Y STATEMENT SHOULD BE FOLLOWED BY EVIDENCE TO ACCEPT THE SAME. MERE STATEMENT WITHOUT EVIDENCE CANNOT BE ACCEPTED, IF A CCEPTED IT WOULD BE NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL. A S THE ASSESSING OFFICER HAS NOT CONSIDERED THE ABOVE, THE ORDER PASSED U/S. 143(3), DATED 29.12.2008 BY THE INCOME- TAX OFFICER, WARD-I, WARANGAL IS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY, THE CIT SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE ASSESSING OFFICER TO REDO THE ASSESSMENT AFTER VERIFYING THE COPIES OF THE SALE D EEDS, BANK ACCOUNT COPIES ETC. AND REDO THE ASSESSMENT SO THAT UNTAXED AMOUNTS CAN BE BROUGHT TO TAX. AGAINST THIS, THE A SSESSEE IS IN APPEAL BEFORE US. 6. THE LEARNED AR SUBMITTED THAT THE ASSESSEE INCOME U NDER THE HEAD 'HOUSE PROPERTY' COMPRISED OF INCOME FROM HOUSE PROPERTY BEARING H. NO. 13-4-22; 1-8-526 AND ALSO S HARE OF RENT S INCOME FROM THE CO-OWNERS PROPERTY BEARING H. NO. 5 -9-116 IN THE COMPLEX KNOWN AS 'GREEN SQUARE PLAZA'. THE ASSE SSING I.T.A. NO. 1028/HYD/2011 M/S. VADDIRAJU GANESH (HUF) ======================= 4 OFFICER WHILE COMPUTING THE INCOME FROM THE PROPERT Y KNOWN AS GREEN SQUARE PLAZA HAS MADE CERTAIN DISALLOWANCES O F RS. 1,58,861 WERE DISPUTED BEFORE THE CIT(A) AND THE CI T(A) VIDE ORDER DT. 31-3-2011 DELETED ADDITION OF RS. 1,50,63 5 AND RESTRICTED THE ADDITION OF RS. 15,226/- ONLY. 7. THE AR SUBMITTED THAT THE ASSESSEE IS A PARTNER IN VARIOUS FIRMS AND HE IS ALSO MAINTAINING THE BANK ACCOUNT W ITH ICICI BANK AND HDFC BANK. ICICI A/C NO. IS 020101501080, HDFC A/C NO. 03751000005364. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS GIVEN TO UNDERSTAND TH AT THE CASE WAS SELECTED FOR SCRUTINY REGARDING THE DEPOSITS IN THE BANK ACCOUNT BY WAY OF CASH AS THE SAID DEPOSIT EXCEEDED RS. 10,00,000 DURING THE YEAR. 8. THE AR ALSO SUBMITTED THAT THE ASSESSEE'S CASE WAS SELECTED FOR SCRUTINY IN NOVEMBER 2007 BUT DUE TO C HANGE OF THE ASSESSING OFFICER THE ASSESSMENT PROCEEDINGS OF THE ASSESSEE HUF AND ALSO ALL THE ASSESSMENT IN HIS INDIVIDUAL S TATUS WERE SIMULTANEOUSLY TAKEN UP IN DECEMBER 2008. INITIALLY THE ASSESSING OFFICER HAD NOT INFORMED THE ASSESSEE THE REASON FOR TAKING UP THE CASE FOR SCRUTINY IN RESPONSE TO THE INITIAL NOTICE U/S. 142(1) AND 143(2) THE ASSESSEE FURNISHED THE DETAILS BY TH EIR LETTER DATED 10-12-2008 GIVING THE COPIES OF THE PA RTNERSHIP DEEDS, CAPITAL ACCOUNTS OF THE ASSESSEE IN THE FIR M AND BANK ACCOUNTS. THEREAFTER THE ASSESSEE WAS ASKED CERTAIN CLARIFICATIONS ON CERTAIN SPECIFIC POINTS, THE ASSE SSEE FILED THE INFORMATION BY HIS LETTER DATED 26-12-2008. THE INF ORMATION REQUIRED WAS REGARDING THE AGRICULTURAL LANDS, CONT RIBUTIONS TO MUTUAL FUNDS, RENTAL INCOME FROM GREEN SQUARE PLACE AND COPIES OF THE LEASE DEEDS. THE ASSESSING OFFICER HAD NOT Q UESTIONED OR ENQUIRED ABOUT THE INVESTMENT BY THE APPELLANT IN T HE FIRMS AT THAT TIME, HOWEVER THE APPELLANT WAS ASKED TO GIVE DETAILED I.T.A. NO. 1028/HYD/2011 M/S. VADDIRAJU GANESH (HUF) ======================= 5 EXPLANATION FOR THE CREDITS APPEARING IN THE BANK W ITH HDFC ON 26-12-2008. 9. THE AR SUBMITTED THAT THE ASSESSEE VIDE THEIR LETTE R DT. 31-12-2008 I.E., LAST DATE OF THE TIME BARRING .STA GE APPEARED BEFORE THE ASSESSING OFFICER AND FILED DETAILED EXP LANATION ALONG WITH EVIDENCES FOR THE CREDITS IN THE BANK ACCOUNT OF HDFC. AT THAT TIME THE APPELLANT ALSO SUBMITTED THAT THERE W AS SALE OF AGRICULTURAL LANDS OF THE MAJOR JOINT FAMILY OF RS. 24,42,069 AND GAVE THE PARTICULARS ALONG WITH DOCUMENT NO. DATE O F SALE CONSIDERATION RECEIVED ETC., AND EXPLAINED THAT CAS H DEPOSIT IN HDFC ONLY TO THE EXTENT OF RS. 10,50,000 ARE FROM T HESE JOINT FAMILY FUNDS WHICH WAS ACCEPTED BY THE ASSESSING OF FICER. SIMILARLY IT WAS EXPLAINED DURING THE LAST DAY'S PR OCEEDINGS THAT THE CASH INVESTMENTS IN THE FIRMS WERE ALSO FROM TH E JOINT FAMILY FUNDS WHICH WAS ACCEPTED BY THE ASSESSING OF FICER AS NO QUERY WAS RAISED AT THAT TIME. HOWEVER WHILE COMPLE TING THE ASSESSMENT AT A MUCH LATER DATE THE ASSESSING OFFIC ER ADDED RS. 11,40,000 AS UNEXPLAINED INVESTMENT IN THE FIRM WITHOUT EVEN EXPRESSING ANY KIND OF DOUBT DURING THE COURSE OF . ASSESSMENT. THE ASSESSEE DISPUTES THE SAID ADDITION OF RS. 11,4 0,000 AS UNEXPLAINED INVESTMENT BEFORE THE CIT (APPEALS). T HE ADDITION OF RS. 11,40,000 WAS DELETED BY THE CIT(A) ON THE B ASIS OF REMAND REPORT GIVEN BY THE ASSESSING OFFICER. 10. THE LEARNED AR SUBMITTED THAT FURTHER TO THE APPEAL FILED BY THE ASSESSEE BEFORE THE CIT(A) AGAINST THE ORDER PASSED BY THE ITO, THE ASSESSEE RECEIVED SHOW CAUSE NOTICE U/ S. 263 DT/ 7- 2-2011 ON 8-2-2011. INITIALLY IN THE SAID NOTICE TH E INCOME PARTICULARS WERE MENTIONED OF INDIVIDUAL INSTEAD OF HUF, REPLYING TO SAID NOTICE THE ASSESSEE VIDE THEIR LET TER DT. 16-2- 2011 FILED ON 01-03-2011 BROUGHT TO THE NOTICE OF T HE LEARNED CIT THE SAID MISTAKE IN THE NOTICE ISSUED BY CIT. THE ASSESSEE I.T.A. NO. 1028/HYD/2011 M/S. VADDIRAJU GANESH (HUF) ======================= 6 ALSO EXPLAINED BEFORE THE CIT THAT THE ISSUES RAISE D BY CIT IN THE SHOW CAUSE NOTICE WERE ALREADY EXAMINED AND CONSIDE RED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSME NT PROCEEDINGS & REMAND PROCEEDINGS FURTHER TO THE FIL ING OF THE APPEAL BY THE ASSESSEE THE LEARNED CIT(A) ALSO REMA NDED THE MATTER TO THE ASSESSING OFFICER FOR EXAMINATION. TH E ASSESSING OFFICER AFTER THOROUGHLY EXAMINING THE EVIDENCES FI LED SUBMITTED HIS REPORT TO THE LEARNED CIT(A). HOWEVER , ON THE DATE OF FILING OF THE LETTER ON 1-3-2011, THE COPY OF TH E SAID REMAND REPORT WAS NOT MADE AVAILABLE TO THE APPELLANT BY T HE CIT(A). THE APPELLANT HOWEVER SUBMITTED THAT THESE ISSUES W ERE EXAMINED BY THE ASSESSING OFFICER DURING THE COURSE OF REMAND PROCEEDINGS AND REQUESTED THE CIT TO EXAMINE THE RE CORDS IN THIS MATTER. IN THE FURTHER HEARING ON 18-3-2011 T HE ASSESSEE ALSO FILED THE COPY OF THE REMAND REPORT HIGHLIGHTI NG THAT THE ISSUES RAISED BY THE CIT ARE ALREADY EXAMINED BY TH E ASSESSING OFFICER AND DEALT BY HIM IN HIS REMAND REPORT AND H ENCE THE ORDER IS NEITHER ERRONEOUS NOR JUDICIAL TO THE INTE REST OF THE REVENUE AND REQUESTED THE CIT TO DROP THE PROCEEDIN GS INITIATED U/S 263 OF THE IT ACT. HOWEVER, THE CIT BRUSHING ASIDE THE VARIOUS SUBMISSIONS MADE BY THE ASSESSEE AND REITER ATED THE MATTERS ISSUED IN THE SHOW-CAUSE NOTICE PASSED ORDE R U/S. 263 OF THE ACT. 11. THE LEARNED DR RELIED ON THE ORDER OF THE CIT. 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. AS SEEN FROM THE ASSESSMENT ORDER THERE IS NO DISCUSSION ON THE ISSUE RAISED BY THE CIT. THE ORD ER PASSED BY THE ASSESSING OFFICER IS CRYPTIC AND MECHANICAL. W E CANNOT SEE ON WHAT BASIS THE ASSESSING OFFICER BASED HIS CONCL USION. THERE IS NO DISCUSSION WHATSOEVER ON THE IMPUGNED ISSUE. THERE IS LACK OF APPLICATION OF MIND AND ENQUIRY. BEING SO, THE ORDER I.T.A. NO. 1028/HYD/2011 M/S. VADDIRAJU GANESH (HUF) ======================= 7 PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PR EJUDICIAL TO THE INTEREST OF REVENUE. MORE SO, ADOPTING ONE OF THE COURSES PERMISSIBLE IN LAW NECESSARILY REQUIRES THE ASSESSI NG OFFICER TO CONSCIOUSLY ANALYSE AND EVALUATE THE FACTS IN THE L IGHT OF RELEVANT LAW AND BRING THEM ON RECORD. IT IS ONLY T HEN THAT HE CAN BE SAID TO HAVE 'ADOPTED' OR CHOSEN ONE OF THE COURSES PERMISSIBLE IN LAW. THE ASSESSING OFFICER CANNOT BE PRESUMED OR ATTRIBUTED TO HAVE 'ADOPTED' OR CHOSEN A COURSE PER MISSIBLE IN LAW WHEN HIS ORDER DOES NOT SPEAK IN THAT BEHALF. S IMILARLY, 'TAKING' ONE VIEW WHERE TWO OR MORE VIEWS ARE POSSI BLE ALSO NECESSARILY IMPORTS THE REQUIREMENT OF ANALYSING TH E FACTS IN THE LIGHT OF APPLICABLE LAW. THEREFORE, PROPER EXAMINAT ION OF FACTS IN THE LIGHT OF RELEVANT LAW IS A NECESSARY CONCOMITAN T IN ORDER TO SAY THAT THE ASSESSING OFFICER HAS ADOPTED A PERMIS SIBLE COURSE OF LAW OR TAKEN A VIEW WHERE TWO OR MORE VIEWS ARE POSSIBLE. IT IS ONLY AFTER SUCH PROPER EXAMINATION AND EVALUATIO N HAS BEEN DONE BY THE ASSESSING OFFICER THAT HE CAN COME TO A CONCLUSION AS TO WHAT ARE THE PERMISSIBLE COURSES AVAILABLE IN LAW OR WHAT ARE THE POSSIBLE VIEWS ON THE ISSUE BEFORE HIM. IN CASE HE COMES TO THE CONCLUSION THAT MORE THAN ONE VIEW IS POSSIB LE THEN HE HAS NECESSARILY TO CHOOSE A VIEW, WHICH IS MOST APP ROPRIATE ON THE FACTS OF THE CASE. IN ORDER TO APPLY THE AFORES AID OBSERVATIONS TO A GIVEN CASE, IT MUST THEREFORE FIR ST BE SHOWN THAT THE ASSESSING OFFICER HAS 'ADOPTED' A PERMISSI BLE COURSE OF LAW OR, WHERE TWO VIEWS ARE POSSIBLE, THE ASSESSING OFFICER HAS 'TAKEN' ONE SUCH POSSIBLE VIEW IN THE ORDER SOUGHT TO BE REVISED UNDER SECTION 263. THIS REQUIRES THE ASSESSING OFFI CER TO TAKE A CONSCIOUS DECISION; ELSE HE WOULD NEITHER BE ABLE T O 'ADOPT' A COURSE PERMISSIBLE IN LAW NOR 'TAKE' A VIEW WHERE T WO OR MORE VIEWS ARE POSSIBLE. IN OTHER WORDS, IT IS THE ASSES SING OFFICER WHO HAS TO ADOPT A PERMISSIBLE COURSE OF LAW OR TAK E A VIEW WHERE TWO OR MORE VIEWS ARE POSSIBLE. IT IS DIFFICU LT TO I.T.A. NO. 1028/HYD/2011 M/S. VADDIRAJU GANESH (HUF) ======================= 8 COMPREHEND AS TO HOW THE ASSESSING OFFICER CAN BE A TTRIBUTED TO HAVE 'ADOPTED' A PERMISSIBLE COURSE OF LAW OR 'T AKEN' A VIEW WHERE TWO OR MORE VIEWS ARE POSSIBLE WHEN THE ORDER PASSED BY HIM DOES NOT SPEAK IN THAT BEHALF. WE CANNOT ASSUME , IN ORDER TO PROVIDE LEGITIMACY TO THE ASSESSMENT ORDER, THAT THE ASSESSING OFFICER HAS ADOPTED A PERMISSIBLE COURSE OF LAW OR TAKEN A POSSIBLE VIEW WHERE HIS ORDER DOES NOT SAY SO. THE SUBMISSIONS MADE BY THE LEARNED COUNSEL, IF ACCEPTE D, WOULD REQUIRE US TO FORM, SUBSTITUTE AND READ OUR VIEW IN THE ORDER OF THE ASSESSING OFFICER WHEN THE ASSESSING OFFICER HI MSELF HAS NOT TAKEN A VIEW. IT COULD HAVE BEEN A DIFFERENT PO SITION IF THE ASSESSING OFFICER HAD 'ADOPTED' OR 'TAKEN' A VIEW A FTER ANALYSING THE FACTS AND DECIDING THE MATTER IN THE LIGHT OF THE APPLICABLE LAW. HOWEVER, IN THE CASE BEFORE US, THE ASSESSING OFFICER HAS NOT AT ALL EXAMINED AS TO WHETHER ONLY ONE VIEW WAS POSSIBLE OR TWO OR MORE VIEWS WERE POSSIBLE AND HEN CE, THE QUESTION OF HIS ADOPTING OR CHOOSING ONE VIEW IN PR EFERENCE TO THE OTHER DOES NOT ARISE. 13. IN THE CASE OF PADMASUNDARA RAO V. STATE OF TAMIL N ADU (255 ITR 147), THE HON'BLE SUPREME COURT HAS HELD T HAT '... THERE IS ALWAYS PERIL IN TREATING THE WORDS OF A SPEECH OR JUDGMENT AS THOUGH THEY ARE WORDS IN A LEGISLATIVE ENACTMENT, AND IT IS TO BE REMEMBERED THAT JUDICIAL UTTERANCES ARE MADE IN THE SETTING OF THE FACTS OF A PARTICULAR CASE, SAID LORD MORRIN IN HARRINGTON V. BRITISH RAILWAYS BOARD [1972] 2 WLR 537 (HL). CIRCUMSTANTIAL FLEXIBILITY, ONE ADDITIONA L OR DIFFERENT FACT MAY MAKE A WORLD OF DIFFERENCE BETWEEN CONCLUSIONS IN TWO CASES....' THEREFORE, TH E OBSERVATIONS OF THE HON'BLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD'S CASE (SUPRA) ON WHICH RELIANCE HAS BEEN PLACED BY THE LEARNED COUNSEL CANNOT BE READ IN ISOLATION. THE JUDGMENT DESERVES TO BE READ IN ITS ENTIRETY TO CULL OUT THE LAW LAID DOWN BY THE HON'BLE SUPREME COURT. IF SO READ, IT IS QUI TE EVIDENT THAT THE ORDERS PASSED ON AN INCORRECT I.T.A. NO. 1028/HYD/2011 M/S. VADDIRAJU GANESH (HUF) ======================= 9 ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW OR WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IF THE ORDER SOUGHT TO BE REVISED UNDER SECTION 263 SUFFERS FROM ANY OF THE AFORESAID VICES, IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAS 'ADOPTED', IN SUCH AN ORDER, A COURSE PERMISSIBLE IN LAW OR 'TAKEN' A VIEW WHERE TWO OR MORE VIEWS ARE POSSIBLE. 14. IT WAS NEXT CONTENDED BY THE LEARNED AUTHORISED REPRESENTATIVE THAT THE ASSESSING OFFICER HAD CONSI DERED ALL THE RELEVANT ASPECTS OF THE CASE CAREFULLY WHILE PASSIN G THE ORDER. ACCORDING TO HIM, THE MERE FACT THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WAS SHORT WOULD NEI THER MEAN FAILURE ON HIS PART IN NOT EXAMINING THE MATTER CAR EFULLY NOR WOULD RENDER HIS ORDER ERRONEOUS SO LONG AS THE VIE W TAKEN BY HIM WAS A POSSIBLE VIEW. IN OUR VIEW, THE AFORESAID SUBMISSION OF THE ASSESSEE MUST FAIL FOR THE REASONS ALREADY E XPLAINED IN THE FOREGOING PARAS OF THIS ORDER AS THE ORDER, WHICH I S SOUGHT TO BE REVISED UNDER SECTION 263 REFLECTS NO PROPER APPLIC ATION OF MIND BY THE ASSESSING OFFICER AND THUS BE AMENABLE TO RE VISION UNDER SECTION 263. IN THIS CASE BEFORE US, THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER LACKS JUDICIAL STRENGTH TO STAND. IT IS NOT A CASE WHERE THE ORDER IS SHORT BUT IS NOT SUPPORTE D BY JUDICIAL STRENGTH. IT IS IN THIS VIEW OF THE MATTER THAT WE FEEL THAT THE LEARNED COMMISSIONER HAS CORRECTLY EXERCISED HIS RE VISIONAL JURISDICTION UNDER SECTION 263. 15. IN OUR OPINION, THE ASSESSING OFFICER HAS BEEN ENTR USTED THE ROLE OF AN INVESTIGATOR, PROSECUTOR AS WELL AS ADJUDICATOR UNDER THE SCHEME OF THE INCOME-TAX ACT. IF HE COMMI TS AN ERROR WHILE DISCHARGING THE AFORESAID ROLES AND CONSEQUEN TLY PASSES AN ERRONEOUS ORDER CAUSING PREJUDICE EITHER TO THE ASSESSEE OR TO THE STATE EXCHEQUER OR TO BOTH, THE ORDER SO PAS SED BY HIM IS I.T.A. NO. 1028/HYD/2011 M/S. VADDIRAJU GANESH (HUF) ======================= 10 LIABLE TO BE CORRECTED. AS MENTIONED EARLIER, THE A SSESSEE CAN HAVE THE PREJUDICE CAUSED TO HIM CORRECTED BY FILIN G AN APPEAL; AS ALSO BY FILING A REVISION APPLICATION UNDER SECT ION 264. BUT THE STATE EXCHEQUER HAS NO RIGHT OF APPEAL AGAINST THE ORDERS OF THE ASSESSING OFFICER. SECTION 263 HAS THEREFORE BEEN E NACTED TO EMPOWER THE COMMISSIONER TO CORRECT AN ERRONEOUS OR DER PASSED BY THE ASSESSING OFFICER WHICH HE CONSIDERS TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE COM MISSIONER HAS ALSO BEEN EMPOWERED TO INVOKE HIS REVISIONAL JURISD ICTION UNDER SECTION 264 AT THE INSTANCE OF THE ASSESSEE ALSO. T HE LINE OF DIFFERENCE BETWEEN SECTIONS 263 AND 264 IS THAT WHI LE THE FORMER CAN BE INVOKED TO REMOVE THE PREJUDICE CAUSE D TO THE STATE THE LATER CAN BE INVOKED TO REMOVE THE PREJUD ICE CAUSED TO THE ASSESSEE. THE PROVISIONS OF SECTION 263 WOULD L OSE SIGNIFICANCE IF THEY WERE TO BE INTERPRETED IN A MA NNER THAT PREVENTED THE COMMISSIONER FROM REVISING THE ERRONE OUS ORDER PASSED BY THE ASSESSING OFFICER, WHICH WAS PREJUDIC IAL TO THE INTEREST OF THE REVENUE. IN FACT, SUCH A COURSE WOU LD BE COUNTER PRODUCTIVE AS IT WOULD HAVE THE EFFECT OF PROMOTING ARBITRARINESS IN THE DECISIONS OF THE ASSESSING OFFICERS AND THUS DESTROY THE VERY FABRIC OF SOUND TAX DISCIPLINE. IF ERRONEOUS O RDERS, WHICH ARE PREJUDICIAL TO THE INTEREST OF THE REVENUE, ARE ALLOWED TO STAND, THE CONSEQUENCES WOULD BE DISASTROUS IN THAT THE HONEST TAX PAYERS WOULD BE REQUIRED TO PAY MORE THAN OTHER S TO COMPENSATE FOR THE LOSS CAUSED BY SUCH ERRONEOUS OR DERS. FOR THIS REASON ALSO, WE ARE OF THE VIEW THAT THE ORDER S PASSED ON AN INCORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICAT ION OF LAW OR WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND OR WITHOUT MAKING REQUISITE INQ UIRIES WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOU S AND PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHIN T HE MEANING OF SECTION 263. I.T.A. NO. 1028/HYD/2011 M/S. VADDIRAJU GANESH (HUF) ======================= 11 16. FURTHER AS SEEN FROM THE ORDER OF THE CIT, HE HAS D IRECTED THE ASSESSING OFFICER TO CONSIDER THE CASH DEPOSIT OF RS. 5 LAKHS ON 9.6.20805, RS. 2 LAKHS ON 28.6.2005 AND RS. 1 LA KH AND RS. 5,50,000 WHICH ARE SAID TO BE DEPOSITED OUT OF SALE PROCEEDS OF AGRICULTURAL LAND AND ALSO HE HAS DIRECTED THE ASSE SSING OFFICER TO EXAMINE DEPOSIT OF RS. 4.5 LAKHS ON 17.8.2005. THERE IS NO DISCUSSION IN THE ORDER OF THE ASSESSING OFFICER ON THESE ISSUES. BEING SO THERE IS LACK OF ENQUIRY ON THE PART OF TH E ASSESSING OFFICER WHILE COMPLETING ORIGINAL ASSESSMENT U/S. 1 43(3) AND THIS ITSELF PRONE TO REVISION BY CIT. FURTHER, THE ASSESSEE SUBMITTED THAT THERE IS AN APPEAL AGAINST THE ORIGI NAL ORDER BEFORE THE CIT(A) AND ACCORDING TO THE AR WHEN THE ORDER IS SUBJECT MATTER OF APPEAL BEFORE THE CIT(A), THE CIT CANNOT EXERCISE JURISDICTION U/S. 263 OF THE ACT. THIS AR GUMENT OF THE ASSESSEE IS DEVOID OF MERIT. THE ISSUES RAISED BY THE CIT IN HIS ORDER U/S. 263 OF THE ACT ARE NOT AT ALL DISPUTED B EFORE THE CIT(A) AND THESE ARE SEPARATE ISSUES RAISED BY THE CIT. BEING SO THEE IS NO QUESTION OF REPEATED EXAMINATION OF THE SAME ISSUES. MORE SO, THE CIT DIRECTED THE ASSESSING OFFICER TO CARRY OUT NECESSARY ENQUIRY AND REDO THE ASSESSMENT. WE DO N OT FIND ANY INFIRMITY IN THE DIRECTION OF THE CIT AND THE ORDER OF THE CIT IS CONFIRMED. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST, 2012. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 31 ST AUGUST, 2012 TPRAO I.T.A. NO. 1028/HYD/2011 M/S. VADDIRAJU GANESH (HUF) ======================= 12 COPY FORWARDED TO: 1. M/S. VADDIRAJU GANESH (HUF), C/O. M/S. G.S. MADH AVA RAO & CO., H. NO. 11-26-54, MG ROAD, WARANGAL. 2. THE INCOME TAX OFFICER, WARD-1, WARANGAL. 3. THE CIT-VI, HYDERABAD. 4. THE DR B BENCH, ITAT, HYDERABAD