Jyoti Ranjan Roy, Kolkata V. C.I.T Kolkata - XVII,kolkata, Kolkata

ITA 1251/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4587 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 27-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 14-05-2013
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUN
• Assessee Lawyers: T K CHAKRABORTY
• Keywords: Revenue expenditure
• Section: 143(3); 263; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SHRI M.BALAGANESH, AM & SRI S.S.V ISWANETHRA RAVI, JM ] I.T.A NO. 1251/KOL/20 13 ASSESSMENT YEAR : 2008-0 9 JYOTI RANJAN ROY -VS.- C.I.T., KOL-XVI I, KOLKATA KOLKATA [PAN : ADLPR 2179 P]] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI T.K.CHAKRABOR TY, A.R. FOR THE RESPONDENT : SHRI G.MALLIKARJUN, CIT , DR DATE OF HEARING : 27.06.2016. DATE OF PRONOUNCEMENT : 01.07.2016. ORDER PER M.BALAGANESH, AM THIS APPEAL OF THE ASSESSEE ARISES OUT OF T HE ORDER OF THE LEARNED CIT IN MEMO NO. CIT-XVII/U/S.263/20-12-13/763-765 DATED 08.03.2013 AGAINST THE ORDER OF ASSESSMENT FRAMED FOR THE ASST YEAR 2008-09 U/S 144 OF THE INC OME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LEARNED CIT IS JUSTIFIED IN INVOKING REVISIONARY JURISDICTION U/S 263 OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE ASSESSEE IS AN ARCHITECT ENGAGED IN CONSULTA NCY, SUPERVISION, PLANNING & DESIGNING, ESTIMATION AND VALUATION OF PROPERTIES. THE BRIEF FACTS OF THE CASE WAS THAT THE ASSESSMENT FOR A.Y. 2008-09 WAS ORIGINALLY PASS ED U/S. 144 OF THE ACT, BY THE ASSESSING OFFICER (A.O.) CIRCLE- 50 KOLKATA ON 31/ 12/2010 DETERMINING TOTAL INCOME AT 2 ITA NO.1251/KOL/2013 JYOTI RANJAN ROY A.YR.2008-09 2 RS. 27,42,717/- AGAINST RETURN INCOME OF RS. 20,04, 169/-. THE ASSESSEE FILED APPEAL BEFORE THE C.I.T. (A)- XXXII KOL AGAINST THE SAID O RDER OF THE A.O. ON 03/02/2011. 4. ON 06/11/2012 THE ADMINISTRATIVE C.IT.- XVII KO LKATA ISSUED A NOTICE U/S. 263 OF THE I.T. ACT PROPOSING TO ISSUE DIRECTION AS THE AS SESSMENT ORDER PASSED U/S.144 ON 31/12/2010 WAS CONSIDERED BY HER AS ERRONEOUS AND P REJUDICIAL TO THE INTEREST OF REVENUE. THE C.I.T.-XVII KOL FURTHER STATED IN THE NOTICE THAT CLOSING BALANCE OF ADVANCE AS PER BALANCE SHEET ENDED ON 31/03/2008 WA S RS. 2,88,21,596/- AND NO DETAILS OF SUCH ADVANCES WERE FILED DURING ASSESSMENT PROCE EDING. ACCORDING TO HER THE SAID ADVANCE WAS ACTUALLY NOT UTILIZED IN THE BUSINESS A CTIVITY, RATHER IT WAS UTILIZED FOR INVESTMENT AND THE A.O. HAD NOT EXAMINED THE ISSUE AT ALL. 5. IN REPLY TO THE SHOW CAUSE NOTICE, THE ASSESEE S TATED THAT THE SAID ADVANCE WAS ORIGINALLY RECEIVED IN ASST YEAR 1999-2000 AND WAS CARRIED FORWARD FROM EARLIER YEARS AND ACCORDINGLY THE SAME CANNOT BE TAXED AS INCOME OF ASST YEAR 2008-09. IT WAS SUBMITTED THAT THE SAID ADVANCE WAS RECEIVED BY THE ASSESSEE DURING ASST YEAR 1999- 2000 AND THE SAME WAS TAXED BY THE LD. AO U/S 41(1) OF THE ACT. ON FURTHER APPEAL TO TRIBUNAL, THE SAME WAS DISPOSED OFF VIDE ORDER IN I TA NO. 2177/KOL/2007 DATED 25.1.2008 BY DELETING THE ADDITION MADE TOWARDS ADV ANCE RECEIVED U/S 41(1) OF THE ACT, BUT WITH A DIRECTION TO TAX THE NET PROFIT DERIVED FROM THE CONSTRUCTION BUSINESS ACTIVITY FOR WHICH ADVANCES WERE RECEIVED IN EACH YEAR SO TH AT THE ADVANCES RECEIVED WOULD GET ADJUSTED / REDUCED ACCORDINGLY. THIS WAS ACCEPTED BY THE ASSESSEE AND THE SAME WAS DONE BY THE LD. AO COMMENCING FROM ASST YEARS 1999- 2000 ONWARDS TILL ASST YEAR 2005-06. HOWEVER, THE ASSESSEE STATED THAT HE HAD NOT PASSED NECESSARY ADJUSTMENT ENTRIES IN HIS BOOKS OF ACCOUNTS FOR GIVING EFFECT TO THE SAME BY REDUCING THE ADVANCE RECEIVED AND TRANSFERRING TO INCOME, EVEN THOUGH TH ERE IS NO VIOLATION OF PROVISIONS OF THE INCOME TAX ACT. 3 ITA NO.1251/KOL/2013 JYOTI RANJAN ROY A.YR.2008-09 3 6. THE LD. CIT IGNORING THE SUBMISSIONS OF THE ASSE SSEE RESORTED TO PASS AN ORDER U/S 263 REVISING THE ASSESSMENT FRAMED FOR THE ASST YEAR 20 08-09 U/S 143(3) DATED 31.12.2010 BY TREATING THE ORDER OF LD. AO AS ERRONEOUS AND PR EJUDICIAL TO THE INTERESTS OF THE REVENUE. ACCORDING TO LD. CIT , THE ISSUE WAS NOT PROPERLY EXAMINED BY THE LD. AO DURING ASSESSMENT PROCEEDINGS. HE SET ASIDE THE A SSESSMENT WITH THE DIRECTION TO EXAMINE THE ABOVE ISSUE AFRESH IN THE LIGHT OF THE DECISIONS TAKEN BY THE APPELLATE AUTHORITIES ON THE SAID ISSUE FOR ASST YEARS 1999-2 000 AND 2005-06. 7. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US O N THE FOLLOWING GROUNDS :- 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ASSUMPTION OF JURISDICTION U/S 263 OF THE I.T. ACT, 1961 BY THE LD. CI.T. IS W RONG AS THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER (A.O.) DATED 31.12.2010 U/S 1 44 IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. 2. THAT, THE ACTION OF THE LD. CI.T. U/S 263 OF THE I.T. ACT IN SETTING ASIDE THE ASSESSMENT FOR THE ASST. YEAR 2008 - 2009 IS TOTALLY UNJUSTIFI ED AS THE ISSUE RELATING TO CARRIED FORWARD ADVANCE AMOUNTING TO RS. 2,88,21,596/- WAS CONSIDER ED BY THE A.O. IN ASST. YEARS 1999 - 2000 AND 2005 - 2006 . 3. THAT THE LD. CI.T. WHILE ASSUMING JURISDICTION U /S 263 OF THE I.T. ACT APPEARS TO HAVE NOT EXAMINED THE RECORDS AVAILABLE TO THE DEPARTMEN T EVEN AFTER POINTING OUT THE ABOVE FACT OF CONSIDERATION OF ADVANCES BY THE APPELLANT THROUGH WRITTEN SUBMISSION . 4. THE APPELLANT ALSO CRAVES LEAVE TO ADDUCE ADDITI ONAL GROUNDS AND / OR TO AMEND OR ALTER OR WITHDRAW ANY OF THE FOREGOING GROUNDS BEFO RE OR AT THE TIME OF HEARING OF THE APPEAL. 8. THE LD. AR ALSO PLACED THE DETAILS OF ADVANCE P OSITION APPEARING IN THE BALANCE SHEETS AS BELOW:- 31.3.2005 (AY 2005-06) RS. 3,01,71,816 31.3.2006 (AY 2006-07) RS. 2,89,30,431 31.3.2007 (AY 2007-08) RS. 2,88,97,095 31.3.2008 (AY 2008-09) RS. 2,88,21,596 4 ITA NO.1251/KOL/2013 JYOTI RANJAN ROY A.YR.2008-09 4 IT WAS FURTHER STATED THAT THE FINAL LEFT OVER ADVA NCE RECEIVED FOR CONSTRUCTION ACTIVITY AMOUNTING TO RS. 50,75,641/- HAS BEEN DULY TAXED BY THE LD. AO IN ASST YEAR 2005-06 VIDE ORDER PASSED U/S 143(3) DATED 24.12.2007. HE ALSO PLACED THE COPIES OF VARIOUS BALANCE SHEETS COMMENCING FROM ASST YEARS 1999-2000 TO 2005-06 TO SHOW THAT THE ADVANCES HAVE BEEN GRADUALLY DECREASING OVER THE YE ARS. HE ALSO PLACED ON RECORD THE COPIES OF VARIOUS SCRUTINY ASSESSMENT ORDERS TO PRO VE HIS CONTENTIONS THAT THE ADVANCES RECEIVED HAS BEEN TAXED ON PIECEMEAL BASIS BASED ON ESTIMATION OF NET PROFITS IN EARLIER YEARS. IT WAS ARGUED THAT SINCE THE ENTIRE ADVAN CE RELATABLE TO CONSTRUCTION ACTIVITY HAD BEEN ALREADY TAXED IN THE EARLIER YEARS , THERE IS NOTHING LEFT OUT OF THE SAME TO BE TAXED IN ASST YEAR 2008-09 AND HENCE THE ORDER PASSED BY THE LD. AO CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. MORE OVER, THE LD.AO HAD DULY APPRECIATED ALL THE FACTS ON RECORD WHILE PASSING THE EXPARTE O RDER U/S 144 OF THE ACT AND HENCE THE SAME HAS TO BE CONSTRUED OF HAVING TAKEN ONE POSSIB LE VIEW BY THE LD. AO WHICH CANNOT BE THE SUBJECT MATTER OF REVISION U/S 263 OF THE AC T. HE ALSO ARGUED THAT THE LD. CIT HAD NEVER STATED IN HIS REVISION ORDER AS TO HOW THE OR DER PASSED BY THE LD. AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT. IT WAS ALSO ARGUED THAT IF IN TH E OPINION OF THE LD. CIT , THE LD.AO HAD NOT MADE ANY ENQUIRY ON THE IMPUGNED ISSUE , THEN I T IS FOR THE LD. CIT TO MAKE ADEQUATE ENQUIRIES TO ARRIVE AT A PRIMAFACIE CONCLUSION BY P OINTING OUT THE ERROR IN THE ORDER OF THE LD. AO AND THE PREJUDICE THAT IS CAUSED TO THE REVENUE DUE TO ENQUIRY. IN THE INSTANT CASE, THE LD. CIT HAD ABSOLUTELY NOT MADE ANY ENQUI RY AND HAD SIMPLY DIRECTED THE LD. AO TO MAKE FISHING OR ROVING ENQUIRY IN ORDER TO FI ND OUT WHETHER THE ORDER CONTAINS ANY ERROR AND WHETHER IT IS PREJUDICIAL TO THE INTE RESTS OF THE REVENUE. IN SUPPORT OF HIS ARGUMENTS, HE PLACED RELIANCE ON THE FOLLOWING DECI SIONS :- MALABAR INDUSTRIAL CO. LTD VS CIT REPORTED IN (2000 ) 243 ITR 83 (SC) CIT VS GABRIEL INDIA LTD REPORTED IN (1993) 203 ITR 108 (BOM) 5 ITA NO.1251/KOL/2013 JYOTI RANJAN ROY A.YR.2008-09 5 9. IN RESPONSE TO THIS, THE LD. DR ARGUED THAT THE ASSESSMENT WAS FRAMED U/S 144 OF THE ACT DUE TO NON-COOPERATION FROM THE SIDE OF THE ASS ESSEE DURING ASSESSMENT PROCEEDINGS AND HENCE THE LD. AO COULD NOT HAVE THE OCCASION TO GO INTO THE FACTS STATED BY THE LD. AR NOW THAT THE ADVANCE RECEIVED HAD ALREADY BEEN T AXED IN THE EARLIER YEARS BASED ON THE TRIBUNAL ORDERS FOR THE EARLIER YEARS. FROM T HE BARE PERUSAL OF THE ASSESSMENT ORDER, IT COULD BE SEEN THAT THE LD. AO HAD CONFINED HIMSE LF TO THE ADDITION TOWARDS UNDISCLOSED INVESTMENT IN MUTUAL FUND TO THE TUNE O F RS. 7,38,548/- BASED ON CERTAIN INFORMATION AVAILABLE ON RECORDS AND DID NOT LOOK I NTO OTHER ISSUES AS THERE WAS NO CO- OPERATION FROM THE ASSESSEE AND ASSESSMENT WAS FRAM ED U/S 144 OF THE ACT. THE LD. CIT HAD NOT DIRECTED THE LD. AO TO MAKE AN ADDITION TOWARDS ADVANCE RECEIVED. HE HAD SIMPLY STATED THAT THE ISSUE OF ADVANCE RECEIVED BE EXAMINED IN THE LIGHT OF THE FACTS STATED BY THE ASSESSEE AND IN THE LIGHT OF EARLIER TRIBUNAL DECISIONS IN ASSESSEES OWN CASE. HENCE NO PREJUDICE OR HARM IS CAUSED TO THE ASSESSEE BY THIS DIRECTION AND ACCORDINGLY ARGUED THAT THE LD. CIT HAD RIGHTLY INV OKED HIS REVISIONARY JURISDICTION U/S 263 OF THE ACT. 10. IN DEFENCE, THE LD. AR ARGUED THAT THE FRAMING OF ASSESSMENT U/S 144 OF THE ACT IS ALSO ONE OF THE RECOGNIZED MODES OF ASSESSMENT PRES CRIBED UNDER THE STATUTE AND NO SHELTER CAN BE TAKEN BY THE REVENUE THAT THE ISSUES WERE NOT PROPERLY EXAMINED IN THE SAID SECTION 144 ASSESSMENT. HE ARGUED THAT THER E IS ABSOLUTELY NO ELEMENT OF INCOME INVOLVED IN THE ENTIRE GAMUT OF TRANSACTIONS THAT C OULD GET TAXED IN ASST YEAR 2008-09 AS THE ADVANCE RECEIVED HAD ALREADY BEEN TAXED IN THE EARLIER YEARS UPTO ASST YEAR 2005- 06. HE ACCORDINGLY PRAYED FOR QUASHING OF THE SECT ION 263 ORDER. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. THE FACTS STATED HEREINABOVE ARE NOT REITERATED FOR THE SAKE OF BREVITY. WE FIND THAT IN THE INSTANT CASE, THE LD. CIT HAD NOT MADE ANY ENQU IRY TO ARRIVE AT A PRIMA FACIE CONCLUSION THAT THE ORDER PASSED BY THE LD. AO IS E RRONEOUS. HE SIMPLY PASSED ON THIS 6 ITA NO.1251/KOL/2013 JYOTI RANJAN ROY A.YR.2008-09 6 RESPONSIBILITY TO THE LD. AO. THIS ACTION, IN OUR OPINION, IS NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 263 (1) OF THE ACT. FOR THE SAKE OF CONVENIENCE, THE SAME IS REPRODUCED HEREINBELOW:- 263. (1) THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PRO0CEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE [ ASSESSING ] OFFICER IS ERRONEO8US IN SO FAR AS IT IS PREJUDICIA L TO THE INTERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING H EAD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING O R MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH AS SESSMENT. 11.1. WE FIND THAT THE ABOVE PROVISIONS ARE VERY C LEAR THAT THE LD. CIT HAD TO MAKE ENQUIRY IF HE DEEMS NECESSARY ON EXAMINATION OF THE RECORDS. BASED ON SUCH ENQUIRY ALONE, HE COULD ARRIVE AT A PRIMA FACIE CONCLUSION BY PINPOINTING THE ERROR IN THE ORDER OF THE LD. AO. HE NEED NOT FINALLY CONCLUDE THE ISSUE BASED ON HIS ENQUIRY. WE HOLD THAT THE LD. CIT CANNOT DELEGATE THE POWERS TO LD. AO TO VERIFY WHETHER THE ORDER IS ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF THE RE VENUE. IN THE INSTANT CASE, THE ASSESSEE HAD DULY REPLIED TO THE SHOW CAUSE NOTICE BY STATIN G THAT THE ADVANCES RECEIVED REMAINING IN THE BALANCE SHEET HAD ALREADY BEEN TAX ED IN THE EARLIER YEARS COMMENCING FROM ASST YEARS 1999-2000 TO 2005-06 AS PER THE DIR ECTIONS OF THE TRIBUNAL VIDE ORDER DATED 25.1.2008 (SUPRA). IF THE LD. CIT HAD ANY RESERVATION ON THE SAID SUBMISSIONS, HE SHOULD HAVE CONDUCTED FURTHER ENQUIRY ON THE MATTER TO FIND OUT THE ERROR, IF ANY, IN THE ORDER PASSED BY THE LD. AO. WE FIND THAT THE MAND ATE OF SECTION 263(1) OF THE ACT HAS BEEN MISSED OUT BY THE LD. CIT. 11.2. WE FIND THAT THE ASSESSEE HAD PLACED VARIOU S ORDERS ON RECORD TO PROVE THAT THE ADVANCES RECEIVED WERE ALREADY TAXED IN EARLIER YEA RS IN PIECEMEAL BASIS. WE FIND THAT OUT OF THE ADVANCES RECEIVED, RS. 21,50,825/- , RS. 48,86,847/-, RS. 11,11,817/- , RS. 5,06,066/- , RS. 5,66,952/- WERE TAXED IN ASST YEAR S 1999-2000 TO 2003-04 RESPECTIVELY AND RS. 50,75,641/- WAS TAXED IN ASST YEAR 2005-06 IN SCRUTINY PROCEEDINGS. WE FIND THAT MERELY BECAUSE NO ADJUSTMENT ENTRIES WERE PASS ED BY THE ASSESSEE IN HIS BOOKS BY 7 ITA NO.1251/KOL/2013 JYOTI RANJAN ROY A.YR.2008-09 7 TRANSFERRING THE ADVANCES RECEIVED TO ITS INCOME, IT COULD BE SEEN BEYOND DOUBT THAT NO CONCEALMENT OF INCOME TOWARDS ADVANCE RECEIVED HAS BEEN MADE THEREON. HENCE THE ACTION OF THE ASSESSEE AND CONSEQUENTIAL ORDER PASS ED BY THE LD. AO FOR ASST YEAR 2008- 09 CANNOT BE TREATED AS PREJUDICIAL TO THE INTERES TS OF THE REVENUE. WE HOLD THAT THE LD. CIT HAD ONLY TRIED TO INITIATE PROCEEDINGS WITH A V IEW TO START FISHING AND ROVING ENQUIRES IN MATTERS OR ORDERS WHICH ARE ALREADY CON CLUDED. 11.3. WE FIND THAT THE ENTIRE REVISION PROCEEDINGS HAD BEEN TRIGGERED MERELY ON THE BASIS THAT THE ADVANCES RECEIVED WERE REMAINING OUT STANDING IN THE BALANCE SHEET AS ON 31.3.2008. THIS MIGHT AT BEST COULD BE CONSTRUED ONLY AS AN ERROR COMMITTED BY THE ASSESSEE IN HIS BOOKS. BUT THAT DOES NOT MAKE THE ORDER OF THE LD. AO ERRONEOUS. IN THESE CIRCUMSTANCES, IT COULD ONLY BE INFERRED THAT THE LD. AO HAD TAKEN ONE OF THE POSSIBLE VIEWS BY DULY APPRECIATING THE CONTENTIONS OF THE ASSESSEE THAT THE ADVANCE RECEIVED HAD ALREADY BEEN TAXED IN THE EARLIER YEAR S AND HE HAD RIGHTLY NOT BROUGHT THE SAME TO TAX IN THE ASSESSMENT EVEN THOUGH THE SAME IS FRAMED U/S 144 OF THE ACT. 11.4. WE FIND THAT THE RELIANCE PLACED ON THE FOLL OWING DECISIONS BY THE LD. AR ARE WELL FOUNDED:- MALABAR INDUSTRIAL CO. LTD VS CIT REPORTED IN (2000 ) 243 ITR 83 (SC) A BARE READING OF SECTION 263 OF THE INCOME-TAX AC T, 1961, MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF JURISDICTION BY TH E COMMISSIONER SUO MOTU UNDER IT, IS THAT THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THE COMMISSIONER HAS TO B E SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT-IF THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDIC IAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE-RECOURS E CANNOT BE HAD TO SECTION 263(1) OF THE ACT. THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONL Y WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS, IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF N ATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF T HE REVENUE' IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT. UNDERSTOOD IN ITS OR DINARY MEANING IT IS OF WIDE IMPORT AND 8 ITA NO.1251/KOL/2013 JYOTI RANJAN ROY A.YR.2008-09 8 IS NOT CONFINED TO LOSS OF TAX. THE SCHEME OF THE A CT IS TO LEVY AND COLLECT TAX IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF DUE TO AN ERRONEOUS ORDER OF THE INCOME-TAX OFFICER, TH E REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICI AL TO THE INTERESTS OF THE REVENUE. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE ' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. E VERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING' OFFICER, CANNOT BE T REATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN INCOME-TAX OFFICE R ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF R EVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER P REJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFF ICER IS UNSUSTAINABLE IN LAW. CIT VS GABRIEL INDIA LTD REPORTED IN (1993) 203 ITR 108 (BOM) THE POWER OF SUO MOTU REVISION UNDER SUB-SECTION (1 ) OF. SECTION 263 OF THE INCOME-TAX ACT, 1961, IS IN THE NATURE OF SUPERVISORY JURISDIC TION AND CAN BE EXERCISED ONLY IF THE CIRCUMSTANCES SPECIFIED THEREIN EXIST. TWO CIRCUMS TANCES MUST EXIST TO ENABLE THE COMMISSIONER TO EXERCISE THE POWER OF REVISION UNDE R THIS SUB-SECTION. VIZ., I) THE ORDER SHOULD BE ERRONEOUS AND (II) BY VIRTUE OF THE ORDER BEING ERRONEOUS PREJUDICE MUST HAVE BEEN CAUSED TO THE. INTERESTS OF THE REVENUE. AN OR DER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN INCO ME-TAX OFFICER ACTING IN ACCORDANCE WITH LAW MAKES CERTAIN ASSESSMENT, THE SAME CANNOT BE B RANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM. THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME TAX OFFICER, WH O PASSED THE ORDER, UNLESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISU ALISED WHERE THE INCOME-TAX OFFICER WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS, M AKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMI NES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATES HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MA DE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOUL D HAVE ESTIMATED THE INCOME AT A HIGHER FIGURE THAN THE ONE DETERMINED BY THE INCOM E-TAX OFFICER. THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO RE-EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE. THIS IS BECAUSE THE INCOME-TAX OFFICER HAS EXERCISED THE QUASI-JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARR IVED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUSION. IT MAY BE SAID IN SUCH A CASE THAT IN THE OPINION OF THE COMMISSIONER THE ORDER IN QUESTION IS PREJUDICIAL T O THE INTERESTS OF THE REVENUE. BUT THAT BY ITSELF WOULD NOT BE ENOUGH TO VEST THE COMMISSIO NER WITH THE POWER OF SUO MOTU REVISION BECAUSE THE FIRST REQUIREMENT, NAMELY, THA T THE ORDER IS ERRONEOUS, IS ABSENT. SIMILARLY IF AN ORDER IS ERRONEOUS BUT NOT PREJUDIC IAL TO THE INTERESTS OF THE REVENUE, THEN THE POWER OF SUO MOTU REVISION CANNOT BE EXERCISED. ANY AND EVERY ERRONEOUS ORDER CANNOT BE THE SUBJECT MATTER OF REVISION BECAUSE TH E SECOND REQUIREMENT. MUST BE FULFILLED. THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY 9 ITA NO.1251/KOL/2013 JYOTI RANJAN ROY A.YR.2008-09 9 EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APP LICATION OF THE RELEVANT STATUTE, ON AN INCORRECT OR INCOMPLETE INTERPRETATION, A LESSER T AX THAN WHAT WAS JUST HAS BEEN IMPOSED. WHEN EXERCISE OF STATUTORY POWER IS DEPENDENT UPON THE EXISTENCE OF CERTAIN OBJECTIVE FACTS, THE AUTHORITY BEFORE EXERCISING SUCH POWER M UST HAVE MATERIALS ON RECORD TO SATISFY IT IN THAT REGARD. IF THE ACTION OF THE AUTHORITY I S CHALLENGED BEFORE THE COURT IT WOULD BE OPEN TO THE COURTS TO EXAMINE WHETHER THE RELEVANT OBJECTIVE FACTORS WERE AVAILABLE FROM THE RECORDS CALLED FOR AND EXAMINED BY SUCH AUTHO RITY (SEE PP, 1140, E, H, 115A-F', 116D,E) . HELD, THAT THE INCOME-TAX OFFICER IN THIS CAS E HAD MADE ENQUIRIES IN REGARD TO THE NATURE OF THE EXPENDITURE INCURRED BY THE ASSESSEE, THE ASSESSEE HAD GIVEN A DETAILED EXPLANATION IN THAT REGARD BY A LETTER IN WRITING. ALL THESE WERE PART OF THE RECORD OF THE CASE. EVIDENTLY, THE CLAIM WAS ALLOWED BY THE INCOM E-TAX OFFICER ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE THIS DECISION OF TH E INCOME-TAX OFFICER COULD NOT BE HELD TO BE 'ERRONEOUS' SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD, MOREOVER, IN THE INSTANT CASE. THE COMMISSIONER HIMSELF, EVEN AFTER INITIATING PROCEEDINGS FOR REVISION AND HEARING TH E ASSESSEE, COULD NOT SAY THAT THE ALLOWANCE OF THE CLAIM OF THE ASSESSEE WAS ERRONEOU S AND THAT THE EXPENDITURE WAS NOT REVENUE EXPENDITURE BUT AN EXPENDITURE OF CAPITAL N ATURE. HE SIMPLY ASKED THE INCOME-TAX OFFICER TO RE-EXAMINE THE MATTER. HE SIMPLY ASKED T HE INCOME-TAX OFFICER TO RE-EXAMINE THE MATTER. THAT WAS NOT PERMISSIBLE. THE TRIBUNAL WAS JUSTIFIED IN SETTING ASIDE THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX UNDER SECT ION 263. 11.5. IN VIEW OF THE AFORESAID FINDINGS AND THE RA TIO LAID DOWN IN THE AFORESAID JUDICIAL PRECEDENTS, WE HAVE NO HESITATION TO HOLD IN THE FA CTS AND CIRCUMSTANCES OF THE CASE THAT THE ORDER PASSED BY THE LD. AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ACCORDINGLY, THE ORDER PASSED BY THE LD. CIT U/S 263 OF THE ACT IS HEREBY QUASHED AND THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON 01.07.2016. SD/- SD/- [S.S.VISWANETHRA RAVI] [M.BALAGANESH] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 01.07.2016. [RG PS] 10 ITA NO.1251/KOL/2013 JYOTI RANJAN ROY A.YR.2008-09 10 COPY OF THE ORDER FORWARDED TO: 1.JYOT RANJAN ROY, AC-155, SECTOR-1, SALT LAKE CITY , KOLKATA-700064. 2. C.I.T., KOLKATA-XVII, KOLKATA. 3. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, KOLKATA BENCHES