M/s. Dharti Dredging & Infrastructure Ltd, Hyderabad V. Addl. CIT, Range-1, Hyderabad

ITA 145/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66444 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 01-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S C TIWARI
• Keywords: Business income; Depreciation; Principle of natural justice; Question of law; Competent authority; Right to appeal; Unabsorbed depreciation
• Section: 143(3); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A. NO. 145/HYD/2012 (ASSESSMENT YEAR : 2007-08) M/S. DHARTI DREDGING & INFRASTRUCTURE LTD., HYDERABAD PAN: AABCD6612M VS. ADDL. COMMISSIONER OF INCOME-TAX, RANGE-1 HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI S.C. TIWARI RESPONDENT BY: SRI NARAHARI BISWAL DATE OF HEARING: 11.10.2012 DATE OF PRONOUNCEMENT: 16.11.2012 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT-I, HYDERABAD DATED 26.12.2011 FOR A.Y. 2007 -08. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE AND IN LAW, LEARNED COMMISSIONER O F INCOME-TAX HAS ERRED IN OBSERVING THAT THE ASSESSME NT ORDER MADE BY THE LEARNED ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE IN RELATION TO SET OFF OF UNABSORBED DEPRECIATION ALLO WANCE BROUGHT FORWARD FROM ASSESSMENT YEAR 1998-99 AND THEREFORE REQUIRED REVISION U/S. 263 OF THE ACT. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE AND IN LAW, LEARNED COMMISSIONER O F INCOME-TAX HAS ERRED IN OBSERVING THAT THE ASSESSME NT ORDER MADE BY THE LEARNED ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE IN RELATION TO SET OFF OF UNABSORBED DEPRECIATION ALLO WANCE BROUGHT FORWARD FROM ASSESSMENT YEAR 1996-97 AND THEREFORE REQUIRED REVISION U/S. 263 OF THE ACT. I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 2 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE AND IN LAW, LEARNED COMMISSIONER O F INCOME-TAX HAS ERRED IN OBSERVING THAT THE ASSESSME NT ORDER MADE BY THE LEARNED ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE IN RELATION TO THE COMPROMISED SETTLEMENT OF DUES WITH STRESSED ASSETS STABILIZATION FUND IDBI. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE AND IN LAW, LEARNED COMMISSIONER O F INCOME-TAX HAS ERRED IN NOT FOLLOWING THE PRINCIPLE THAT CBDT CIRCULAR FAVOURABLE TO THE ASSESSEE IS BINDING ON THE LEARNED ASSESSING OFFICER. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE AND IN LAW, LEARNED COMMISSIONER O F INCOME-TAX HAS ERRED IN NOT APPRECIATING THAT EVEN IF ITAT TAKES, MORE SO SUBSEQUENTLY, A DIFFERENT VIEW; THE VIEW TAKEN BY THE LEARNED ASSESSING OFFICER DOES NO T CEASE TO BE A POSSIBLE VIEW AND CANNOT BE CALLED ERRONEOUS FOR THE PURPOSES OF SECTION 263. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANTS CASE AND IN LAW, LEARNED CIT HAS ERRED IN APPLYING PROVISIONS OF SECTION 263 ON THE POINT(S) FOR WHICH NO SHOW-CAUSE NOTICE WAS ISSUED TO THE APPELLANT. 7. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANTS CASE AND IN LAW, LEARNED CIT HAS ERRED IN OBSERVING THAT THE APPELLANT AGREED TO SETTING ASID E OF THE ASSESSMENT ORDER AS MADE BY THE LEARNED ASSESSING OFFICER. 8. THAT EACH OF THE GROUNDS OF APPEAL ABOVE ARE INDEPENDENT AND WITHOUT PREJUDICE TO ONE ANOTHER. 9. THAT THE IMPUGNED ORDER OF LEARNED CIT BEING CONTRA RY TO FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, LAW APPLICABLE AND MATERIAL ON RECORD MAY BE SET ASIDE OR SUCH ORDER MAY BE PASSED THEREUPON AS HONBLE TRIBUNAL MAY DEEM FIT. 10. THAT THE APPELLANT CRAVES LEAVE TO RESERVE TO ITSEL F TO ADD ON, CANCEL, ALTER OR MODIFY ANY OF THE GROUNDS OF APPEAL ABOVE BEFORE OR AT THE TIME OF HEARING OF TH IS APPEAL AND TO PRODUCE SUCH DOCUMENTS, EVIDENCE OR MATERIAL IN SUPPORT OF THIS APPEAL AS CONSIDERED I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 3 NECESSARY BY THE APPELLANT. 3. BRIEF FACTS OF THE ISSUE ARE THAT IN THIS CASE THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF INCOME-TAX ACT, 1961 V IDE ORDER DATED 29.12.2009. ON GOING THROUGH THE RECORDS IT WAS OBSERVED BY THE CIT THAT UNABSORBED DEPRECIATION RELATING TO A.Y. 1998-99 WAS WRONGLY SET OFF IN THE A.Y. 2007-08 AND ACCORDI NG TO THE CIT IT IS TO BE WITHDRAWN. IT WAS ALSO OBSERVED THAT UNAB SORBED DEPRECIATION RELATING TO A.Y. 1996-97 WAS ALSO WRON GLY SET OFF IN THE A.Y. 2007-08 ALSO AND IT HAS TO BE WITHDRAWN. ACCORDING TO THE CIT AS THE LAW APPLICABLE TO THE RELEVANT ASSES SMENT YEAR STIPULATED THAT SUCH CARRY FORWARD OF UNABSORBED DE PRECIATION IS TO BE LIMITED TO 8 YEARS ONLY. THE ASSESSEE WAS WR ONG IN SETTING OFF OF THE UNABSORBED DEPRECIATION RELATING TO A.Y. 199 6-97 AND 1998- 99 IN THE CURRENT YEAR UNDER CONSIDERATION I.E., 20 07-08. THE ASSESSEE OBJECTED TO THE PROPOSAL OF THE CIT PLACIN G RELIANCE ON THE CIRCULAR NO. 14 OF 2001 WHICH PERMITS CARRY FORWARD OF UNABSORBED DEPRECIATION INDEFINITELY. AT THE SAME TIME, THE ASSESSEE RELIED ON THE JUDGEMENT OF SUPREME COURT I N THE CASE OF UCO BANK VS. CIT (237 ITR 889) (SC) FOR THE PROPOSI TION THAT THE CIRCULAR IS BINDING IN NATURE. THE CIT RELIED ON T HE ORDER OF THE SPECIAL BENCH IN THE CASE OF DCIT VS. TIMES GUARANT EE LTD. (2010) 4 ITR 210 (TRIB) (SB) WHEREIN HELD THAT UNABSORBED DEPRECIATION RELATING TO A.YS. 1997-98 TO 1999-2000 IS TO BE DEA LT WITH IN ACCORDANCE WITH THE PROVISIONS OF SECTION 32(2) OF THE ACT AS APPLICABLE FOR A.YS. 1997-98 TO 1999-2000 AND, THER EFORE, ASSESSEE CANNOT CLAIM SET OFF OF UNABSORBED DEPRECIATION REL ATING TO A.YS. 1997-98 TO 1999-2000 AGAINST INCOME UNDER ANY HEAD OTHER THAN 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' IN A. Y. 2003-04. FURTHER, THE CIT HAS ALSO DEALT WITH THE ISSUE RELA TING TO COMPROMISE SETTLEMENT OF DUES WITH STRESSED ASSETS STABILISATION FUND IDBI. IT WAS THE CONTENTION OF THE ASSESSEE T HAT NO INCOME AROSE OUT OF THE SETTLEMENT EVEN UNDER THE PROVISIO NS OF SECTION 41 I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 4 OF THE ACT. HOWEVER, THE DETAILS OF INTEREST WAIVE D AS AGAINST WHAT WAS EARLIER ALLOWED AS DEDUCTION AND SUCH OTHER INF ORMATION GIVING THE PARTICULARS OF THE GROSS SUM OF RS. 10. 70 CRORES ARE NOT AVAILABLE. BEING SO, THE CIT REMITTED THE ISSUE BA CK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. AGA INST THIS ISSUE AND WITH REGARD TO ASSUMPTION OF JURISDICTION U/S. 263 OF THE ACT, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LEARNED AR SUBMITTED THAT THE IMPUGNED ORDER PA SSED BY THE LEARNED COMMISSIONER OF INCOME TAX IS AGAINS T THE BASIC TENETS OF PROVISIONS OF SECTION 263 OF INCOME TAX A CT, 1961 ON THE FOLLOWING ASPECTS OF LAW GOVERNING THE FACTS OF THE CASE. THE ASSESSMENT ORDER PASSED CANNOT BE TERMED AS 'ERRONE OUS' INASMUCH AS THE ASSESSING OFFICER HAS PASSED THE OR DER AFTER APPLICATION OF HIS MIND ON THE VERY SAME ISSUE, AFT ER CONSIDERING ALL THE INFORMATION, EXPLANATION FILED. THE COMMISS IONER OF INCOME TAX CANNOT SUBSTITUTE HIS OWN VIEWS ON THE ISSUE IN EXERCISE OF THE JURISDICTION UNDER SECTION 263 OF INCOME TAX ACT, 1 961. FOR THIS PURPOSE, HE RELIED ON THE FOLLOWING CASE-LAW: 1. MALABAR INDUSTRIES CO. LTD. VS. CIT (109 TAXMAN 66) (SC) 2. CIT V. GABRIEL INDIA LTD. (203 ITR 108) (BOM) 5. FURTHER AR SUBMITTED THAT THE IMPUGNED ORDER UNDER SECTION 263 OF INCOME TAX ACT, 1961 IS NOT MAINTAIN ABLE FOR THE REASON THAT THE SHOW CAUSE NOTICE WAS ISSUED FOR AL LEGED FAILURE OF FURTHER ENQUIRY INTO THE MATTER, EVEN IN THE BODY O F THE IMPUGNED ORDER IT GOES TO SHOW THAT THE ASSESSMENT ORDER WAS PROPOSED TO BE REVISED FOR FURTHER ENQUIRY INTO THE MATTER. IT WAS SUBMITTED THAT IF THE LEARNED COMMISSIONER WAS OF THE OPINION THAT NO ENQUIRY WAS MADE BY THE ASSESSING OFFICER, EVEN THE N HE SHOULD NOT HAVE DIRECTED THE ASSESSING OFFICER TO DISALLOW THE CLAIM OF THE ASSESSEE ITSELF. THUS, THE IMPUGNED ORDER HAD TRAV ELLED BEYOND THE SCOPE AND AMBIT OF SHOW CAUSE NOTICE AND THEREF ORE, THE ORDER UNDER SECTION 263 OF IT ACT, 1961 IS NULL AND VOID AND IS LIABLE TO I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 5 BE QUASHED. EVEN ASSUMING THAT THE ENQUIRIES MADE BY THE ASSESSING OFFICER ARE INADEQUATE, THE JURISDICTION UNDER SEC. 263 OF INCOME TAX ACT, 1961 CANNOT BE ASSUMED AS IT WAS ONLY IN THE CASES OF LACK OF ENQUIRIES THAT THE JURISDICTION UN DER SEC. 263 OF INCOME TAX ACT, 1961 CAN BE ASSUMED. 6. THE AR SUBMITTED THAT IN GABRIEL INDIA LTD., 203 IT R 108 (BORN), LAW ON THIS ASPECT WAS DISCUSSED IN THE FOL LOWING MANNER (PAGE 113) : 'FROM READING OF SUB-SECTION (1) OF SECTION 263, IT IS CLEAR THAT THE POWER OF SUO MOTO REVISION CAN BE EXERCISED BY THE COMMISSIONER ONLY IF, ON EXAMINATI ON OF THE RECORDS OF ANY PROCEEDINGS UNDER THIS ACT, H E CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE INCO ME- TAX OFFICER IS 'ERRONEOUS IN SO FAR AS IT IS PREJUD ICIAL TO THE INTERESTS OF THE REVENUE'. IT IS NOT AN ARBITRA RY OR UNCHARTERED POWER; IT CAN BE EXERCISED ONLY ON FULFILMENT OF THE REQUIREMENTS LAID DOWN BY SUB-SEC T ION (1). THE CONSIDERATION OF THE COMMISSIONER, AS TO WHETHER AN ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, MUST B E BASED ON MATERIALS ON THE RECORD OF THE PROCEEDINGS CALLED FOR BY HIM. IF THERE ARE NO MATERIALS ON REC ORD ON THE BASIS OF WHICH IT CA N BE SAID THAT THE COMMISSIONER ACTING IN A REASONABLE MANNER COULD HAVE COME TO SUCH A CONCLUSION, THE VERY INITIATION OF PROCEEDINGS BY HIM WILL BE ILLEGAL AND WITHOUT JURISDICTION. THE COMMISSIONER CANNOT INITIATE PROCEEDINGS WITH A VIEW TO STARTING FISHING AND ROV ING ENQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED. SUCH ACTION WILL BE AGAINST THE WELL- ACCEPTED POLICY OF LAW THAT THERE MUST BE A POINT O F FINALITY IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUE S SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND TH AT LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI-JUDICIAL CONTROVERSIES AS IT MUS T IN ETHER SPHERES OF HUMAN ACTIVITY. (SEE PARASHURAM POTTERY WORKS CO. LTD. V. ITO [1977) 106 ITR 1 (SC) AT PAGE 10) ....' FROM THE AFORESAID DEFINITIONS IT IS CLEAR THAT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN INCOME-TAX OFFICER ACTIN G IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT, THE I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 6 SAME CANNOT BE BRANDED AS 'ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. TH IS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION O F THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME -TAX OFFICER, WHO PASSED THE ORDER UNLESS THE DECISION I S HELD TO BE ERRONEOUS. CASES MAY BE VISUALISED WHERE THE INCOME-TAX OFFICER WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOU NTS OR BY MAKING SOME ESTIMATE HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCE RNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOULD HAVE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN THE ONE DETERMINED BY THE INCOME-TAX OFFICER. THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO RE- EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE. IT IS BECAUSE THE INCOM E-TAX OFFICER HAS EXERCISED THE QUASI-JUDICIAL POWER VEST ED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUS ION AND SUCH A CONCLUSION CANNOT BE FORMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUSION THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT TAX WHI CH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCOR RECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WA S JUST HAS BEEN IMPOSED. WE MAY NOW EXAMINE THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE POWERS OF THE COMMISSIONER SET OUT ABOVE. THE INCOME-TAX OFFICER IN THIS CASE HAD MADE ENQUIRIES IN REGARD TO THE NATURE OF THE EXPENDITUR E INCURRED BY THE ASSESSEE. THE ASSESSEE HAD GIVEN DETAILED EXPLANATION IN THAT REGARD BY A LETTER IN WRITING. ALL THESE ARE PART OF THE RECORD OF THE CA SE. EVIDENTLY, THE CLAIM WAS ALLOWED BY THE INCOME-TAX OFFICER ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, SUCH DECISION OF THE INCOME- TAX OFFICER CANNOT BE HELD TO BE 'ERRONEOUS' SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN TH AT REGARD.' 7. THE LEARNED AR SUBMITTED THAT IN THE INSTANT CASE, THE LEARNED ASSESSING OFFICER CALLED FOR EXPLANATION ON THE VERY SAME I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 7 ISSUE ON VARIOUS OCCASIONS FROM THE ASSESSEE AND TH E ASSESSEE HAD FURNISHED ITS EXPLANATION WHICH CLEARLY SHOWS T HAT THE ASSESSING OFFICER HAS UNDERTAKEN THE EXERCISE OF EX AMINING THE ISSUES IN DISPUTE AND ON BEING SATISFIED WITH THE E XPLANATION FURNISHED BY THE ASSESSEE, THE AO ACCEPTED THE SAM E. 8. THE AR SUBMITTED THAT THUS, EVEN THE LEARNED COMMIS SIONER OF INCOME TAX CONCEDED THE FACT THAT ASSESSING OFFI CER MADE ENQUIRIES. THE ONLY GRIEVANCE OF THE LEARNED COMMIS SIONER OF INCOME TAX WAS THAT THE ASSESSING OFFICER SHOULD HA VE MADE FURTHER ENQUIRIES RATHER THAN ACCEPTING THE CLAIM. THEREFORE, IT CANNOT BE SAID THAT IT IS A CASE OF 'LACK OF ENQUIR Y.' 9. THE AR FURTHER SUBMITTED THAT THE IMPUGNED ORDER IS ALSO LIABLE TO BE SET ASIDE FOR THE SIMPLE REASON THAT T HE LEARNED COMMISSIONER OF INCOME TAX HAD NOT FURNISHED THE MA TERIAL IN THE SHOW CAUSE NOTICE BASED ON WHICH HE JUMPED OVER TO THE CONCLUSION IMPETUOUSLY, WITHOUT PROPER APPLICATION OF MIND, THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL T O THE INTERESTS OF REVENUE. IT WAS ONLY IN THE IMPUGNED ORDER, A ME NTION WAS MADE TO THE SUBSEQUENT ORDER OF THE SPECIAL BENCH, BASED ON WHICH HE HAD COME TO SUCH CONCLUSION. IT IS WELL SE TTLED PRINCIPLE OF LAW THAT THE PRINCIPLE OF RES JUDICATA DOES NOT APPLY TO THE INCOME TAX PROCEEDINGS. 10. NO NEW MATERIAL HAS BEEN BROUGHT ON RECORD TO SUGGE ST THAT THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. THEREFORE, THE JURISDICTION U NDER SECTION 263 OF INCOME TAX ACT, 1961 CANNOT BE ASSUMED. 11. THE AR SUBMITTED THAT THAT THE LEARNED ASSESSING OF FICER AFTER DULY CONSIDERING THE EXPLANATION AND INFORMAT ION FILED IN RESPONSE TO THE QUESTIONNAIRE ON THE ISSUE, ON BEIN G SATISFIED WITH SUCH EXPLANATION CHOSE NOT TO MAKE ANY FURTHER ENQU IRY. ENDLESS I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 8 ENQUIRY IS NOT POSSIBLE AND IT IS FOR THE LEARNED A SSESSING OFFICER TO DECIDE WHEN TO END THE ENQUIRY. THE LEARNED CIT CAN NOT TRANSGRESS THE JURISDICTION UNDER SECTION 263 OF I. T. ACT, 1961 BY MENTIONING THAT NO PROPER ENQUIRY WAS MADE. 12. THE LEARNED AR ALSO SUBMITTED THAT THERE IS A CONTR ADICTION BETWEEN THE SHOW-CAUSE NOTICE AND THE ORDER OF THE CIT AND THE CIT HAS NOT GIVEN ANY FINDING AND ALSO GIVEN WRONG DIRECTION TO THE ASSESSING OFFICER TO REDO THE ENTIRE ASSESSMENT BY SETTING ASIDE THE ASSESSMENT ORDER. BEING SO, IT WAS SUBMITTED T HAT THE ORDER ON THIS ISSUE CANNOT BE SUSTAINED. 13. THE AR SUBMITTED THAT THE ASSESSING OFFICER RELIED ON CIRCULAR NO. 14 OF 2001 WHICH PERMITS CARRY FORWARD OF UNABSORBED DEPRECIATION INDEFINITELY. AS PER THE J UDGEMENT OF SUPREME COURT IN THE CASE OF UCO BANK LTD. (SUPRA) THE CIRCULAR OF THE CBDT IS BINDING ON THE DEPARTMENT. BEING SO, T HE ASSESSING OFFICER HAS NOT COMMITTED ANY ERROR WHILE PASSING T HE ASSESSMENT ORDER DATED 29.12.2009. FURTHER, HE SUBMITTED THAT AS PER THE INCOME-TAX ACT, THE LAW STANDS AMENDED ON THE FIRST DAY OF APRIL OF ANY FINANCIAL YEAR MUST APPLY TO THE ASSESSMENT OF THAT YEAR. ANY AMENDMENT IN THE ACT WHICH COMES INTO FORCE AFTER T HE FIRST DAY OF APRIL OF THE FINANCIAL YEAR WOULD NOT APPLY TO THE ASSESSMENT FOR THE YEAR, EVEN IF THE ASSESSMENT IS ACTUALLY MADE A FTER THE AMENDMENT COMES INTO FORCE. FOR THIS PURPOSE HE RE LIED ON THE JUDGEMENT OF SUPREME COURT IN THE CASE OF KARIMTHAR UVI TEA ESTATE LTD. VS. STATE OF KERALA (60 ITR 262) (SC) AND ON THE JUDGEMENT OF BOMBAY HIGH COURT IN THE CASE OF CIT V S. ORKAY SILK MILLS PVT. LTD. (230 ITR 108). FURTHER, HE ALSO SU BMITTED THAT THE ORDER OF THE TRIBUNAL SPECIAL BENCH MUMBAI IN THE C ASE OF DCIT VS. TIMES GUARANTEE LTD. (SUPRA) WAS DELIVERED ON 3 0.6.2010 WHEREIN IT WAS HELD THAT UNABSORBED DEPRECIATION RE LATING TO A.YS. 1997-98 TO 1999-2000 IS TO BE DEALT WITH IN ACCORDA NCE WITH THE I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 9 PROVISIONS OF SECTION 32(2) OF THE ACT AS APPLICABL E FOR A.YS. 1997- 98 TO 1999-2000 AND, THEREFORE, THE ASSESSEE CANNOT CLAIM SET OFF OF UNABSORBED DEPRECIATION RELATING TO A.YS. 1997- 98 TO 1999- 2000 AGAINST THE INCOME UNDER ANY HEAD OTHER THAN ' PROFIT AND GAINS OF BUSINESS OR PROFESSION' FOR THE A.YS. 2003 -04 AND 2004- 05. AS THE ASSESSMENT ORDER WAS PASSED ON 29.12.20 09, THIS SPECIAL BENCH ORDER DATED 30.6.2010 WAS NOT AVAILAB LE TO THE ASSESSING OFFICER. 14. FURTHER, HE DREW OUR ATTENTION TO THE PROVISIONS OF SECTION 32(2) AS THEY STOOD AS ON 1.4.2007 WHICH READS AS U NDER: '(2) WHERE, IN THE ASSESSMENT OF THE ASSESSEE, FULL EFFECT CANNOT BE GIVEN TO ANY ALLOWANCE UNDER SUB- SECTION (1) IN ANY PREVIOUS YEAR, OWING TO THERE BE ING NO PROFIT OR GAINS CHARGEABLE FOR THAT PREVIOUS YEAR O R OWING TO THE PROFITS OR GAINS CHARGEABLE BEING LESS THAN THE ALLOWANCE, THEN, SUBJECT TO THE PROVISIONS OF S UB- SECTION (2) OF SECTION 72 AND SUB-SECTION (3) OF SE CTION 73, THE ALLOWANCE OR THE PART OF THE ALLOWANCE TO W HICH EFFECT HAS NOT BEEN GIVEN, AS THE CASE MAY BE, SHAL L BE ADDED TO THE AMOUNT OF THE ALLOWANCE FOR DEPRECIATI ON FOR THE FOLLOWING PREVIOUS YEAR AND DEEMED TO BE PA RT OF THAT ALLOWANCE, OR IF THERE IS NO SUCH ALLOWANCE FOR THAT PREVIOUS YEAR, BE DEEMED TO BE THE ALLOWANCE F OR THAT PREVIOUS YEAR, AND SO ON FOR THE SUCCEEDING PREVIOUS YEAR. ' 15. HE SUBMITTED THAT FROM THE ABOVE IT IS CLEAR THAT T HERE IS NO TIME LIMIT U/S 32(2) FOR SET OFF OF ANY UNABSORBED DEPRECIATION BROUGHT FORWARD FROM EARLIER YEARS. IT MAY BE POINT ED OUT THAT THIS IS THE INTERPRETATION GIVEN BY CBDT IN CIRCULAR NO. 14 OF 2001 DATED 12.12.10 REPORTED IN 252 ITR (STATUTE) 65. 16. AS REGARDS THE OBJECTION OF AUDIT, BASED ON ITAT SP ECIAL BENCH DECISION IN THE CASE OF DCIT VS. M/S. TIMES G UARANTY LIMITED REPORTED IN 131 TTJ (MUM.) (SB) 257, IT IS SUBMITTED BY THE AR THAT NO COGNIZANCE OF THAT DECISION CAN BE TAKEN BY ANY ASSESSING OFFICER IN VIEW OF CBDT CIRCULAR NO. 14 ( SUPRA) IT IS A I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 10 SETTLED LEGAL POSITION THAT CBDT CIRCULAR CANNOT BE DISSENTED BY THE ASSESSING OFFICER, MORE SO IF THE CIRCULAR IS B ENEFICIAL TO TAXPAYER. FOR THIS, THERE IS A CLEAR AUTHORITY IN T HE HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF UCO BANK VS. CIT 237 ITR 889 (SC). IT, THEREFORE, FOLLOWS THAT EVEN AFTER IT AT (SB) DECISION IN THE CASE OF M/S. TIMES GUARANTEE (SUPRA) AN ASSESSI NG OFFICER IS LIABLE TO TAKE THE SAME ACTION AS HAS BEEN TAKEN BY THE ASSESSING OFFICER IN THE CASE UNDER CONSIDERATION. 17. HE SUBMITTED THAT IN THE INSTANT CASE THE ASSESSMEN T ORDER HAS BEEN MADE ON 29.12.09 WHEREAS THE SPECIAL BENCH OF THE TRIBUNAL HAS PRONOUNCED THEIR DECISION IN THE CASE OF M/S. TIMES GUARANTEE (SUPRA.) ON 30.06.10. THE VERY FACT THAT THE LARGER BENCH OF TRIBUNAL WAS CONSTITUTED SHOWS THAT THERE WERE TWO POSSIBLE VIEWS, WHICH HAVE BEEN SORTED OUT BY THE S PECIAL BENCH IN THE CASE OF M/S TIMES GUARANTEE (SUPRA). IT IS W ELL ESTABLISHED THAT IN A CASE WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER TAKES IN THE ASSESSMENT ORDER THE VIEW WHIC H IS FAVOURABLE TO THE ASSESSEE, NO FAULT CAN BE FOUND WITH THE ASS ESSING OFFICER AND THE ORDER PASSED BY HIM CANNOT BE SAID TO BE ER RONEOUS. AUTHORITY FOR THE SAME CAN BE FOUND IN THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GABRIEL IN DIA LTD. 203 ITR 108 (BOM) AND HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT 109 TAXMAN 66 (SC). 18. FURTHER, IT WAS POINTED OUT THAT DURING ASSESSMENT YEAR 2001-02, WHEN THE AMENDED PROVISION OF SEC. 32(2) B ECAME EFFECTIVE, THE UNABSORBED DEPRECIATION OF THE ASSES SEE FOR ASSESSMENT YEAR 1998-99 WAS LIVE AND CAPABLE OF BEI NG CARRIED FORWARD. 19. FURTHER HE RELIED ON THE JUDGEMENT OF GUJARAT HIGH COURT IN SPECIAL CIVIL APPLICATION NO. 1773 OF 2012 IN THE C ASE OF GENERAL I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 11 MOTORS INDIA PVT. LTD. VS. DCIT DATED 23.8.2012 WHE REIN HELD AS UNDER: '37. THE AR DREW OUR ATTENTION TO THE LAW OF INCOME -TAX BY SAMPATH IYENGAR WITH REGARD TO SCOPE AND EFFECT OF THE AMENDMENT AS EXPLAINED BY THE BOARD IN CIRCULAR NO. 14 OF 2001 THE CBDT CIRCULAR CLARIFIES THE INT ENT OF THE AMENDMENT THAT IT IS FOR ENABLING THE INDUSTRY TO CONSERVE SUFFICIENT FUNDS TO REPLACE PLANT AND MACHINERY AND ACCORDINGLY THE AMENDMENT DISPENSES WITH THE RESTRICTION OF 8 YEARS FOR CARRY FORWARD A ND SET OFF OF UNABSORBED DEPRECIATION. THE AMENDMENT IS APPLICABLE FROM ASSESSMENT YEAR 2002-03 AND SUBSEQUENT YEARS. THIS MEANS THAT ANY UNABSORBED DEPRECIATION AVAILABLE TO AN ASSESSEE ON 1 ST DAY OF APRIL, 2002 (A.Y. 2002-03) WILL BE DEALT WITH IN ACCORDANCE WITH THE PROVISIONS OF SECTION 32(2) AS AMENDED BY FINANCE ACT, 2001 AND NOT BY THE PROVISIONS OF SECTION 32(2) AS IT STOOD BEFORE THE SAID AMENDMENT. HAD THE INTENTION OF THE LEGISLATURE BEE N TO ALLOW THE UNABSORBED DEPRECIATION ALLOWANCE WORKED OUT IN A. Y. 1997-98 ONLY FOR EIGHT SUBSEQUE NT ASSESSMENT YEARS EVEN AFTER THE AMENDMENT OF SECTIO N 32(2) BY FINANCE ACT, 2001 IT WOULD HAVE INCORPORAT ED A PROVISION TO THAT EFFECT. HOWEVER, IT DOES NOT CO NTAIN ANY SUCH PROVISION. HENCE KEEPING IN VIEW THE PURPO SE OF AMENDMENT OF SECTION 32(2) OF THE ACT, A PURPOSI VE AND HARMONIOUS INTERPRETATION HAS TO BE TAKEN. WHIL E CONSTRUING TAXING STATUTES, RULE OF STRICT INTERPRE TATION HAS TO BE APPLIED, GIVING FAIR AND REASONABLE CONSTRUCTION TO THE LANGUAGE OF THE SECTION WITHOUT LEANING TO THE SIDE OF ASSESSEE OR THE REVENUE. BUT IF THE LEGISLATURE FAILS TO EXPRESS CLEARLY AND THE ASSESS EE BECOMES ENTITLED FOR A BENEFIT WITHIN THE AMBIT OF THE SECTION BY THE CLEAR WORDS USED IN THE SECTION, THE BENEFIT ACCRUING TO THE ASSESSEE CANNOT BE DENIED. HOWEVER, CIRCULAR NO. 14 OF 2001 HAD CLARIFIED THAT UNDER SECTION 32(2), IN COMPUTING THE PROFITS AND G AINS OF BUSINESS OR PROFESSION FOR ANY PREVIOUS YEAR, DEDUCTION OF DEPRECIATION UNDER SECTION 32 SHALL BE MANDATORY. THEREFORE, THE PROVISIONS OF SECTION 32 (2) AS AMENDED BY FINANCE ACT, 2001 WOULD ALLOW THE UNABSORBED DEPRECIATION ALLOWANCE AVAILABLE IN THE A.Y. 1997-98, 1999-2000, 2000-01 AND 2001-02 TO BE CARRIED FORWARD TO THE SUCCEEDING YEARS, AND IF ANY UNABSORBED DEPRECIATION OR PART THEREOF COULD NOT B E SET OFF TILL THE A.Y. 2002-03 THEN IT WOULD BE CARR IED I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 12 FORWARD TILL THE TIME IT IS SET OFF AGAINST THE PRO FITS AND GAINS OF SUBSEQUENT YEARS. 38. IT CAN BE SAID THAT, CURRENT DEPRECIATION IS DEDUCTIBLE IN THE FIRST PLACE FROM THE INCOME OF TH E BUSINESS TO WHICH IT RELATES. IF SUCH DEPRECIATION AMOUNT IS LARGER THAN THE AMOUNT OF THE PROFITS OF THAT BUSINESS, THEN SUCH EXCESS COMES FOR ABSORPTION FRO M THE PROFITS AND GAINS FROM ANY OTHER BUSINESS OR BUSINESS, IF ANY, CARRIED ON BY THE ASSESSEE. IF A BALANCE IS LEFT EVEN THEREAFTER, THAT BECOMES DEDUC TIBLE FROM OUT OF INCOME FROM ANY SOURCE UNDER ANY OF THE OTHER HEADS OF INCOME DURING THAT YEAR. IN CASE THE RE IS A STILL BALANCE LEFT OVER, IT IS TO BE TREATED AS UNABSORBED DEPRECIATION AND IT IS TAKEN TO THE NEXT SUCCEEDING YEAR. WHERE THERE IS CURRENT DEPRECIATIO N FOR SUCH SUCCEEDING YEAR THE UNABSORBED DEPRECIATION IS ADDED TO THE CURRENT DEPRECIATION FOR SUCH SUCCEEDI NG YEAR AND IS DEEMED AS PART THEREOF. IF, HOWEVER, TH ERE IS NO CURRENT DEPRECIATION FOR SUCH SUCCEEDING YEAR , THE UNABSORBED DEPRECIATION BECOMES THE DEPRECIATION ALLOWANCE FOR SUCH SUCCEEDING YEAR. WE ARE OF THE CONSIDERED OPINION THAT ANY UNABSORBED DEPRECIATION AVAILABLE TO AN ASSESSEE ON 1 SI DAY OF APRIL 2002 (A. Y. 2002-03) WILL BE DEALT WITH IN ACCORDANCE WITH THE PROVISIONS OF SECTION 32(2) AS AMENDED BY FINANCE A CT, 2001. AND ONCE THE CIRCULAR NO. 14 OF 2001 CLARIFIE D THAT THE RESTRICTION OF 8 YEARS FOR CARRY FORWARD A ND SET OFF OF UNABSORBED DEPRECIATION HAD BEEN DISPENSED WITH, THE UNABSORBED DEPRECIATION FROM A.Y. 1997-98 UP TO THE A.Y. 2001-02 GOT CARRIED FORWARD TO THE ASSESSMENT YEAR 2002-03 AND BECAME PART THEREOF, IT CAME TO BE GOVERNED BY THE PROVISIONS OF SECTION 32 (2) AS AMENDED BY FINANCE ACT, 2001 AND WERE AVAILABLE FOR CARRY FORWARD AND SET OFF AGAINST THE PROFITS A ND GAINS OF SUBSEQUENT YEARS, WITHOUT ANY LIMIT WHATSOEVER.' 20. THE AR FURTHER RELIED ON THE ORDER OF THE TRIBUNAL THIRD MEMBER IN THE CASE OF SINGHVI & DOSHI ENTERPRISES V S. ITO 131 ITD 161 (TM) WHEREIN HELD THAT DECISION OF NON-JURI SDICTIONAL HIGH COURT IS BINDING SO LONG AS THERE IS NO DECISION OF JURISDICTIONAL HIGH COURT, THE TRIBUNAL IS BOUND BY THE JUDGEMENT OF ANY OTHER HIGH COURT WHICH IS AVAILABLE DIRECTLY ON THE SUBJE CT. I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 13 21. ACCORDING TO AR, IN VIEW OF THE THIRD MEMBER DECISI ON OF CHENNAI BENCH CITED SUPRA GUJARAT HIGH COURT DECISI ON IS TO BE FOLLOWED INSTEAD OF SPECIAL BENCH DECISION. 22. THE AR DREW OUR ATTENTION TO THE LAW OF INCOME-TAX BY SAMPATH IYENGAR WITH REGARD TO SCOPE AND EFFECT OF THE AMENDMENT AS EXPLAINED BY THE BOARD IN CIRCULAR NO. 14 OF 2001. 23. THE AR SUBMITTED THAT, THEREFORE, IT CAN BE SAID TH AT, CURRENT DEPRECIATION IS DEDUCTIBLE IN THE FIRST PLA CE FROM THE INCOME OF THE BUSINESS TO WHICH IT RELATES. IF SUCH DEPRECIATION AMOUNT IS LARGER THAN THE AMOUNT OF THE PROFITS OF THAT BUSINESS, THEN SUCH EXCESS COMES FOR ABSORPTION FROM THE PROF ITS AND GAINS FROM ANY OTHER BUSINESS OR BUSINESS, IF ANY, CARRIE D ON BY THE ASSESSEE. IF A BALANCE IS LEFT EVEN THEREAFTER, THA T BECOMES DEDUCTIBLE FROM OUT OF INCOME FROM ANY SOURCE UNDER ANY OF THE OTHER HEADS OF INCOME DURING THAT YEAR. IN CASE THE RE IS A STILL BALANCE LEFT OVER, IT IS TO BE TREATED AS UNABSORBE D DEPRECIATION AND IT IS TAKEN TO THE NEXT SUCCEEDING YEAR. WHERE THERE IS CURRENT DEPRECIATION FOR SUCH SUCCEEDING YEAR THE UNABSORBE D DEPRECIATION IS ADDED TO THE CURRENT DEPRECIATION F OR SUCH SUCCEEDING YEAR AND IS DEEMED AS PART THEREOF. IF, HOWEVER, THERE IS NO CURRENT DEPRECIATION FOR SUCH SUCCEEDING YEAR , THE UNABSORBED DEPRECIATION BECOMES THE DEPRECIATION AL LOWANCE FOR SUCH SUCCEEDING YEAR. WE ARE OF THE CONSIDERED OPIN ION THAT ANY UNABSORBED DEPRECIATION AVAILABLE TO AN ASSESSEE ON 1 ST DAY OF APRIL 2002 (A. Y. 2002-03) WILL BE DEALT WITH IN AC CORDANCE WITH THE PROVISIONS OF SECTION 32(2) AS AMENDED BY FINAN CE ACT, 2001. AND ONCE THE CIRCULAR NO. 14 OF 2001 CLARIFIED THAT THE RESTRICTION OF 8 YEARS FOR CARRY FORWARD AND SET OFF OF UNABSOR BED DEPRECIATION HAD BEEN DISPENSED WITH, THE UNABSORBED DEPRECIATIO N FROM A.Y. 1997-98 UP TO THE A.Y. 2001-02 GOT CARRIED FORWARD TO THE I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 14 ASSESSMENT YEAR 2002-03 AND BECAME PART THEREOF, IT CAME TO BE GOVERNED BY THE PROVISIONS OF SECTION 32(2) AS AMEN DED BY FINANCE ACT, 2001 AND WERE AVAILABLE FOR CARRY FORWARD AND SET OFF AGAINST THE PROFITS AND GAINS OF SUBSEQUENT YEARS, WITHOUT ANY LIMIT WHATSOEVER. 24. THE LEARNED DR SUBMITTED THAT THERE IS NO ENQUIRY O N THE PART OF THE ASSESSING OFFICER WHILE COMPLETING ASSE SSMENT. HE SIMPLY ACCEPTED THE CLAIM OF THE ASSESSEE WITH REGA RD TO SET OFF OF UNABSORBED DEPRECIATION WHILE COMPLETING ASSESSMENT . BEING SO, NOTHING PROHIBITS THE CIT IN ASSUMING JURISDICTION U/S. 263 OF THE ACT. EVEN ON MERIT, THERE IS NO CASE TO ASSESSEE A S THE ISSUE WAS ALREADY DECIDED BY THE SPECIAL BENCH (MUMBAI) (CITE D SUPRA) IN FAVOUR OF THE DEPARTMENT. 25. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUB MISSIONS IN THE LIGHT OF MATERIAL PLACED BEFORE US AND ALSO GONE TH ROUGH ALL THE JUDGEMENTS CITED BY THE PARTIES BEFORE US. FIRST W E TAKE UP THE LEGAL ISSUE WITH REFERENCE TO THE JURISDICTION OF I NVOKING THE PROVISIONS OF SECTION 263 OF THE ACT BY THE LEARNED CIT. THE SCHEME OF THE IT ACT IS TO LEVY AND COLLECT TAX IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THIS TASK IS ENTRUSTE D TO THE REVENUE. IF DUE TO ERRONEOUS ORDER OF THE ASSESSING OFFICER, THE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CE RTAINLY BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. AS HEL D IN THE CASE OF MALABAR INDUSTRIES CO. LTD., VS. CIT ( 243 ITR 83 (SC), THE COMMISSIONER CAN EXERCISE REVISION JURISDICTIONAL U/S 263 IF HE IS SATISFIED THAT THE ORDER OF THE ASSESSING OFFICER S OUGHT TO BE REVISED IS (I)ERRONEOUS; AND ALSO (II) PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE WORD ERRONEOUS HAS NOT BEEN DEF INED IN THE INCOME TAX ACT. IT HAS BEEN HOWEVER DEFINED AT PAG E 562 IN BLACKS LAW DICTIONARY (SEVENTH EDITION) THUS; I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 15 ERRONEOUS, ADJ. INVOLVING ERROR, DEVIATING FROM TH E LAW. THE WORD ERROR HAS BEEN DEFINED AT THE SAME PAGE IN THE SAME DICTIONARY THUS: ERROR NO. 1 : A PSYCHOLOGICAL STATE THAT DOES NOT CONFORM TO OBJECTIVE REALITY; A BRIEF THAT WHAT IS FALSE IS TRUE OR THAT WHAT IS TRUE IS FALSE. AT PAGE 649/650 IN P. RAMANATHA AIYERS LAW LEXICON REPRINT 2002, THE WORD ERROR HAS BEEN DEFINED TO MEAN- ERROR: A MISTAKEN JUDGEMENT OR DEVIATION FROM THE TRUTH IN MATTERS OF FACT, AND FROM THE LAW IN MATTERS OF JUDGEMENT ERROR IS A FAULT IN JUDGEMENT, OR IN THE PROCESS OR PROCEEDING TO JUDGEMENT OR IN THE EXECUTION UPON THE SAME, IN A COURT OF RECORD; WHICH IN THE CIVIL LAW IS CALLED A NULLITYIE (TERMES DE LA LEY). SOMETHING INCORRECTLY DONE THROUGH IGNORANCE OR INADVERTENCE S.99 CPC AND S.215 CR.PC. ERROR, FAULT, ERROR RESPECTS THE ACT; FAULT RESPE CT THE AGENT, AN ERROR MAY LAY IN THE JUDGEMENT, OR IN THE CONDUCT, BUT A FAULT LIES IN THE WILL OR INTENTION. 26. AT PAGE 650 OF THE AFORESAID LAW LEXICON, THE SCOP E OF ERROR, MISTAKE, BLUNDER, AND HALLUCINATION HAS BEEN EXPLAINED THUS: AN ERROR IS ANY DEVIATION FROM THE STANDARD OR COU RSE OF RIGHT, TRUTH, JUSTICE OR ACCURACY, WHICH IS NOT INTENTIONAL. A MISTAKE IS AN ERROR COMMITTED UNDER A MISAPPREHENSION OF MISCONCEPTION OF THE NATURE OF A CASE. AN ERROR MAY BE FROM THE ABSENCE OF KNOWLEDG E, A MISTAKE IS FROM INSUFFICIENT OR FALSE OBSERVATION . BLUNDER IS A PRACTICAL ERROR OF A PECULIARLY GROSS OR AWKWARD KIND, COMMITTED THROUGH GLARING IGNORANCE, HEEDLESSNESS, OR AWKWARDNESS. AN ERROR MAY BE OVERLOOKED OR ATONED FOR, A MISTAKE MAY BE RECTIFIE D, BUT THE SHAME OR RIDICULE WHICH IS OCCASIONED BY A BLUNDER, WHO CAN COUNTERACT. STRICTLY SPEAKING, HALLUCINATION IS AN ILLUSION OF THE PERCEPTION, A PHANTASM OF THE IMAGINATION. THE ONE COMES OF I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 16 DISORDERED VISION, THE OTHER OF DISCARDED IMAGINATI ON. IT IS EXTENDED IN MEDICAL SCIENCE TO MATTERS OF SENSATION, WHETHER THERE IS NO CORRESPONDING CAUSE TO PRODUCE IT. IN ITS ORDINARY USE IT DENOTES AN UNACCOUNTABLE ERROR IN JUDGEMENT OR FACT, ESPECIALL Y IN ONE REMARKABLE OTHERWISE FOR ACCURATE INFORMATION A ND RIGHT DECISION. IT IS EXCEPTIONAL ERROR OR MISTAKE IN THOSE OTHERWISE NOT LIKELY TO BE DECEIVED. 27. IN ORDER TO ASCERTAIN WHETHER AN ORDER SOUGHT TO BE REVISED UNDER SECTION 263 IS ERRONEOUS, IT SHOULD BE SEEN W HETHER IT SUFFERS FROM ANY OF THE AFORESAID FORMS OF ERROR. I N OUR VIEW, AN ORDER SOUGHT TO BE REVISED UNDER SECTION 263 WOULD BE ERRONEOUS AND FALL IN THE AFORESAID CATEGORY OF 'ERRORS' IF I T IS, INTER ALIA, BASED ON AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW OR NON-APPLICATION OF MIND TO SOMETHING WHICH W AS OBVIOUS AND REQUIRED APPLICATION OF MIND OR BASED ON NO OR INSUFFICIENT MATERIALS SO AS TO AFFECT THE MERITS OF THE CASE AN D THEREBY CAUSE PREJUDICE TO THE INTEREST OF THE REVENUE. 28. SECTION 263 OF THE INCOME-TAX ACT SEEKS TO REMOVE T HE PREJUDICE CAUSED TO THE REVENUE BY THE ERRONEOUS OR DER PASSED BY THE ASSESSING OFFICER. IT EMPOWERS THE COMMISSIONER TO INITIATE SUO MOTO PROCEEDINGS EITHER WHERE THE ASSESSING OFFICER TAK ES A WRONG DECISION WITHOUT CONSIDERING THE MATERIALS AV AILABLE ON RECORD OR HE TAKES A DECISION WITHOUT MAKING AN ENQ UIRY INTO THE MATTERS, WHERE SUCH INQUIRY WAS PRIMA FACIE WARRANT ED. THE COMMISSIONER WILL BE WELL WITHIN HIS POWERS TO REGA RD AN ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES O F THE CASE, THE ASSESSING OFFICER SHOULD HAVE MADE FURTHER INQUIRIE S BEFORE ACCEPTING THE CLAIM MADE BY THE ASSESSEE IN HIS RET URN. THE REASON IS OBVIOUS. UNLIKE THE CIVIL COURT WHICH IS NEUTRAL IN GIVING A DECISION ON THE BASIS OF EVIDENCE PRODUCED BEFORE IT, THE ROLE OF AN ASSESSING OFFICER UNDER THE INCOME-TAX ACT IS NO T ONLY THAT OF AN ADJUDICATOR BUT ALSO OF AN INVESTIGATOR. HE CANN OT REMAIN PASSIVE IN THE FACE OF A RETURN, WHICH IS APPARENTL Y IN ORDER BUT I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 17 CALLS FOR FURTHER ENQUIRY. HE MUST DISCHARGE BOTH T HE ROLES EFFECTIVELY. IN OTHER WORDS, HE MUST CARRY OUT INVE STIGATION WHERE THE FACTS OF THE CASE SO REQUIRE AND ALSO DECIDE TH E MATTER JUDICIOUSLY ON THE BASIS OF MATERIALS COLLECTED BY HIM AS ALSO THOSE PRODUCED BY THE ASSESSEE BEFORE HIM. THE SCHEME OF ASSESSMENT HAS UNDERGONE RADICAL CHANGES IN RECENT YEARS. IT D ESERVES TO BE NOTED THAT THE PRESENT ASSESSMENT WAS MADE UNDER SE CTION 143(3) OF THE INCOME-TAX ACT. IN OTHER WORDS, THE ASSESSIN G OFFICER WAS STATUTORILY REQUIRED TO MAKE THE ASSESSMENT UNDER S ECTION 143(3) AFTER SCRUTINY AND NOT IN A SUMMARY MANNER AS CONTE MPLATED BY SUB-SECTION (1) OF SECTION 143. BULK OF THE RETURNS FILED BY THE ASSESSEES ACROSS THE COUNTRY IS ACCEPTED BY THE DEP ARTMENT UNDER SECTION 143(1) WITHOUT ANY SCRUTINY. ONLY A FEW CAS ES ARE PICKED UP FOR SCRUTINY. THE ASSESSING OFFICER IS THEREFORE , REQUIRED TO ACT FAIRLY WHILE ACCEPTING OR REJECTING THE CLAIM OF TH E ASSESSEE IN CASES OF SCRUTINY ASSESSMENTS. HE SHOULD BE FAIR NO T ONLY TO THE ASSESSEE BUT ALSO TO THE PUBLIC EXCHEQUER. THE ASSE SSING OFFICER HAS GOT TO PROTECT, ON ONE HAND, THE INTEREST OF TH E ASSESSEE IN THE SENSE THAT HE IS NOT SUBJECTED TO ANY AMOUNT OF TAX IN EXCESS OF WHAT IS LEGITIMATELY DUE FROM HIM, AND ON THE OTHER HAND, HE HAS A DUTY TO PROTECT THE INTERESTS OF THE REVENUE AND TO SEE THAT NO ONE DODGED THE REVENUE AND ESCAPED WITHOUT PAYING T HE LEGITIMATE TAX. THE ASSESSING OFFICER IS NOT EXPECTED TO PUT B LINKERS ON HIS EYES AND MECHANICALLY ACCEPT WHAT THE ASSESSEE CLAI MS BEFORE HIM. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE F ACTS STATED AND THE GENUINENESS OF THE CLAIMS MADE IN THE RETURN WHEN T HE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE IN QUIRY. ARBITRARINESS IN EITHER ACCEPTING OR REJECTING THE CLAIM HAS NO PLACE. THE ORDER PASSED BY THE ASSESSING OFFICER BE COMES ERRONEOUS BECAUSE AN ENQUIRY HAS NOT BEEN MADE OR G ENUINENESS OF THE CLAIM HAS NOT BEEN EXAMINED WHERE THE INQUIR IES OUGHT TO HAVE BEEN MADE AND THE GENUINENESS OF THE CLAIM OUG HT TO HAVE I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 18 BEEN EXAMINED AND NOT BECAUSE THERE IS ANYTHING WRO NG WITH HIS ORDER IF ALL THE FACTS STATED OR CLAIM MADE THEREIN ARE ASSUMED TO BE CORRECT. THE COMMISSIONER MAY CONSIDER AN ORDER OF THE ASSESSING OFFICER TO BE ERRONEOUS NOT ONLY WHEN IT CONTAINS SOME APPARENT ERROR OF REASONING OR OF LAW OR OF FACT ON THE FACE OF IT BUT ALSO WHEN IT IS A STEREO-TYPED ORDER WHICH SIMPLY A CCEPTS WHAT THE ASSESSEE HAS STATED IN HIS RETURN AND FAILS TO MAKE ENQUIRIES OR EXAMINE THE GENUINENESS OF THE CLAIM WHICH ARE CALL ED FOR IN THE CIRCUMSTANCES OF THE CASE. IN TAKING THE AFORESAID VIEW, WE ARE SUPPORTED BY THE DECISIONS OF THE HON'BLE SUPREME C OURT IN RAMPYARI DEVI SARAOGI V. CIT (67 ITR 84) (SC), SM T. TARA DEVI AGGARWAL V. CIT (88 ITR 323) (SC), AND MALABAR INDU STRIAL CO. LTD.'S CASE ( 243 ITR 83) (SC). 29. IN MALABAR INDUSTRIAL CO. LTD. CASE THE HON'BLE CO URT HAS HELD AS UNDER: THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE O R 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 REQUI REMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL THE ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES O F NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. IN OUR HUMBLE VIEW, ARBITRARINESS IN DECISION-MAKIN G WOULD ALWAYS NEED CORRECTION REGARDLESS OF WHETHER IT CAUSES PREJUDICE TO AN ASSESSEE OR TO THE STATE EXCHEQUER. THE LEGISLATURE HAS TAKEN AMPLE CARE TO PROVIDE FOR THE MECHANISM TO HAVE SUCH PREJUDICE REMOVED. WHILE AN ASSESSEE CAN HAVE IT CORRECTED THROUGH REVISIONAL JURISDICTION OF THE COMMISSIONER UNDER SECTION 264 OR THROUGH APPEALS AND OTHER MEAN S OF JUDICIAL REVIEW, THE PREJUDICE CAUSED TO THE STA TE EXCHEQUER CAN ALSO BE CORRECTED BY INVOKING REVISIO NAL JURISDICTION OF THE COMMISSIONER UNDER SECTION 263. ARBITRARINESS IN DECISION-MAKING CAUSING PREJUDICE TO EITHER PARTY CANNOT THEREFORE BE ALLOWED TO STAND A ND STARE AT THE LEGAL SYSTEM. IT IS DIFFICULT TO COUNT ENANCE I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 19 SUCH ARBITRARINESS IN THE ACTIONS OF THE ASSESSING OFFICER. IT IS THE DUTY OF THE ASSESSING OFFICER TO ADEQUATELY PROTECT THE INTEREST OF BOTH THE PARTIES , NAMELY, THE ASSESSEE AS WELL AS THE STATE. IF HE FA ILS TO DISCHARGE HIS DUTIES FAIRLY, HIS ARBITRARY ACTIONS CULMINATING IN ERRONEOUS ORDERS CAN ALWAYS BE CORRECTED EITHER AT THE INSTANCE OF THE ASSESSEE, I F THE ASSESSEE IS PREJUDICED OR AT THE INSTANCE OF THE COMMISSIONER, IF THE REVENUE IS PREJUDICED. WHILE MAKING AN ASSESSMENT, THE ITO HAS A VARIED ROLE TO PLAY. HE IS THE INVESTIGATOR, PROSECUTOR AS WELL AS ADJUDICATOR. AS AN ADJUDICATOR HE IS AN ARBITRATOR BETWEEN THE REVENUE AND THE TAXPAYER AND HE HAS TO BE FAIR TO BOTH. HIS DUTY TO ACT FAIRLY REQUIRES TH AT WHEN HE ENQUIRES INTO A SUBSTANTIAL MATTER LIKE THE PRES ENT ONE, HE MUST RECORD A FINDING ON THE RELEVANT ISSUE GIVING, HOWSOEVER BRIEFLY, HIS REASONS THEREFOR. IN S.N. MUKHERJEE V. UNION OF INDIA AIR 1990 SC 1984, IT HA S BEEN OBSERVED BY THE HON'BLE SUPREME COURT AS FOLLOWS: REASONS, WHEN RECORDED BY AN ADMINISTRATIVE AUTHORITY IN AN ORDER PASSED BY IT WHILE EXERCISING QUASI-JUDICIAL FUNCTIONS, WOULD NO DOUBT FACILITATE THE EXERCISE OF ITS JURISDICTION BY THE APPELLATE OR SUPERVISORY AUTHORITY. BUT THE OTHER CONSIDERATIONS , REFERRED TO ABOVE, WHICH HAVE ALSO WEIGHED WITH THI S COURT IN HOLDING THAT AN ADMINISTRATIVE AUTHORITY M UST RECORD REASONS FOR ITS DECISION ARE OF NO LESS SIGNIFICANCE. THESE CONSIDERATIONS SHOW THAT THE RECORDING OF REASONS BY AN ADMINISTRATIVE AUTHORITY SERVES A SALUTARY PURPOSE, NAMELY, IT EXCLUDES CHAN CES OR ARBITRARINESS AND ENSURES A DEGREE OF FAIRNESS I N THE PROCESS OF DECISION-MAKING. THE SAID PURPOSE WOULD APPLY EQUALLY TO ALL DECISIONS AND ITS APPLICATION CANNOT BE CONFINED TO DECISIONS WHICH ARE SUBJECT TO APPEA L, REVISION OR JUDICIAL REVIEW. IN OUR OPINION, THEREF ORE, THE REQUIREMENT THAT REASONS BE RECORDED SHOULD GOVERN THE DECISIONS OF AN ADMINISTRATIVE AUTHORITY EXERCISING QUASI-JUDICIAL FUNCTIONS IRRESPECTIVE OF THE FACT M AY, HOWEVER, BE ADDED THAT IT IS NOT REQUIRED THAT THE REASONS SHOULD BE AS ELABORATE AS IN THE DECISION O F A COURT OF LAW. THE EXTENT AND NATURE OF THE REASONS WOULD DEPEND ON PARTICULAR FACTS AND CIRCUMSTANCES. WHAT IS NECESSARY IS THAT THE REASONS ARE CLEAR AND EXPLICIT SO AS TO INDICATE THAT THE AUTHORITY HAS G IVEN DUE CONSIDERATION TO THE POINTS IN CONTROVERSY. THE NEED FOR RECORDING OF REASONS IS GREATER IN A CASE WHERE THE I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 20 ORDER IS PASSED AT THE ORIGINAL STAGE. THE APPELLAT E OR REVISIONAL AUTHORITY, IF IT AFFIRMS SUCH AN ORDER, NEED NOT GIVE SEPARATE REASONS IF THE APPELLATE OR REVISIONA L AUTHORITY AGREES WITH THE REASONS CONTAINED IN THE ORDER UNDER CHALLENGE. 30. SIMILAR VIEW WAS EARLIER TAKEN BY THE HON'BLE SUPRE ME COURT IN SIEMENS ENGG. & MFG. CO. LTD. V. UNION OF INDIA AIR 1976 SC 1785. IT IS SETTLED LAW THAT WHILE MAKING ASSESS MENT ON ASSESSEE, THE ITO ACTS IN A QUASI-JUDICIAL CAPACITY . AN ASSESSMENT ORDER IS AMENABLE TO APPEAL BY THE ASSESSEE AND TO REVISION BY THE COMMISSIONER UNDER SECTIONS 263 AND 264. THEREFORE, A REASONED ORDER ON A SUBSTANTIAL ISSUE IS LEGALLY NECESSARY. THE JUDGMENTS ON WHICH RELIANCE WAS PLACED BY THE LEARNED COUNSEL FOR THE ASSESSEE ALSO POINTS TO THE SAME DIRECTION. THEY HA VE HELD THAT ORDERS, WHICH ARE SUBVERSIVE OF THE ADMINISTRATION OF REVENUE, MUST BE REGARDED AS ERRONEOUS AND PREJUDICIAL TO TH E INTERESTS OF THE REVENUE. IF THE ASSESSING OFFICERS ARE ALLOWED TO MAKE ASSESSMENTS IN AN ARBITRARY MANNER, AS HAS BEEN DON E IN THE CASE BEFORE US, THE ADMINISTRATION OF REVENUE IS BOUND T O SUFFER. IF WITHOUT DISCUSSING THE NATURE OF THE TRANSACTION AN D MATERIALS ON RECORD, THE ASSESSING OFFICER HAD MADE CERTAIN ADDI TION TO THE INCOME OF THE ASSESSEE, THE SAME WOULD HAVE BEEN CO NSIDERED ERRONEOUS BY ANY APPELLATE AUTHORITY AS BEING VIOLA TIVE OF THE PRINCIPLES OF NATURAL JUSTICE WHICH REQUIRE THAT TH E AUTHORITY MUST INDICATE THE REASONS FOR AN ADVERSE ORDER. WE FIND NO REASON WHY THE SAME VIEW SHOULD NOT BE TAKEN WHEN AN ORDER IS AGAINST THE INTERESTS OF THE REVENUE. AS A MATTER OF FACT SUCH ORDERS ARE PREJUDICIAL TO THE INTERESTS OF BOTH THE PARTIES, B ECAUSE EVEN THE ASSESSEE IS DEPRIVED OF THE BENEFIT OF A POSITIVE F INDING IN HIS FAVOUR, THOUGH HE MAY HAVE SUFFICIENTLY ESTABLISHED HIS CASE. 31. IN VIEW OF THE FOREGOING, IT CAN SAFELY BE SAID THA T AN ORDER PASSED BY THE ASSESSING OFFICER BECOMES ERRONEOUS A ND PREJUDICIAL I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 21 TO THE INTERESTS OF THE REVENUE UNDER SECTION 263 I N THE FOLLOWING CASES: (I) THE ORDER SOUGHT TO BE REVISED CONTAINS ERROR OF REASONING OR OF LAW OR OF FACT ON THE FACE OF IT. (II) THE ORDER SOUGHT TO BE REVISED PROCEEDS ON INCORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. (III) THE ORDER PASSED BY THE ASSESSING OFFICER IS A STEREOTYPE ORDER WHICH SIMPLY ACCEPTS WHAT THE ASSESSEE HAS STATED IN HIS RETURN OR WHERE HE FAILS TO MAKE THE REQUISITE ENQUIRIES OR EXAMINE THE GENUINENESS OF THE CLAIM WHICH IS CALLED FOR IN THE CIRCUMSTANCES OF THE CASE. 32. WE SHALL NOW TURN TO THE FACTS OF THE CASE TO SEE W HETHER THE CASE BEFORE US IS COVERED BY THE AFORESAID PRINCIPL ES. PERUSAL OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER DO ES NOT SHOW ANY APPLICATION OF MIND ON HIS PART. HE SIMPLY ACCE PTED THE CLAIM OF THE ASSESSEE. THIS IS A CASE WHERE THE ASSESSIN G OFFICER MECHANICALLY ACCEPTED WHAT THE ASSESSEE WANTED HIM TO ACCEPT WITHOUT ANY APPLICATION OF MIND OR ENQUIRY. THE EV IDENCE AVAILABLE ON RECORD IS NOT ENOUGH TO HOLD THAT THE RETURN OF THE ASSESSEE WAS OBJECTIVELY EXAMINED OR CONSIDERED BY THE ASSESSING OFFICER. IT IS BECAUSE OF SUCH NON-CONSIDERATION O F THE ISSUES ON THE PART OF THE ASSESSING OFFICER THAT THE RETURN F ILED BY THE ASSESSEE STOOD AUTOMATICALLY ACCEPTED WITHOUT ANY P ROPER SCRUTINY. THE ASSESSMENT ORDER PLACED BEFORE US IS CLEARLY ERRONEOUS AS IT WAS PASSED WITHOUT PROPER EXAMINATI ON OR ENQUIRY OR VERIFICATION OR OBJECTIVE CONSIDERATION OF THE C LAIM MADE BY THE ASSESSEE. THE ASSESSING OFFICER HAS COMPLETELY OMIT TED TO EXAMINE THE ISSUES IN QUESTION FROM CONSIDERATION AND MADE THE ASSESSMENT IN AN ARBITRARY MANNER. HIS ORDER IS A C OMPLETELY NON- SPEAKING ORDER. IN OUR VIEW, IT WAS A FIT CASE FOR THE LEARNED COMMISSIONER TO EXERCISE HIS REVISIONAL JURISDICTIO N UNDER SECTION I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 22 263 WHICH HE RIGHTLY EXERCISED BY CANCELLING THE AS SESSMENT ORDER AND DIRECTING THE ASSESSING OFFICER TO PASS A FRESH ORDER CONSIDERING THE ISSUES RAISED BY THE CIT. IN OUR VI EW, THE ASSESSEE SHOULD HAVE NO GRIEVANCE IN THE ACTION OF LEARNED C OMMISSIONER IN EXERCISING THE JURISDICTION U/S. 263 OF THE IT ACT. 33. IT WAS HOWEVER CONTENDED BY THE LEARNED COUNSEL THA T THE ASSESSING OFFICER HAD TAKEN A POSSIBLE VIEW IN ACCE PTING THE RETURN OF THE ASSESSEE WITH REFERENCE TO EXPENDITURE AND HENCE, THE COMMISSIONER WAS NOT JUSTIFIED IN ASSUMING THE REVI SIONAL JURISDICTION UNDER SECTION 263. WE HAVE GIVEN OUR T HOUGHTFUL CONSIDERATION TO THE AFORESAID SUBMISSIONS. AS ALRE ADY STATED EARLIER, AN ORDER BECOMES ERRONEOUS BECAUSE INQUIRI ES, WHICH OUGHT TO HAVE BEEN MADE ON THE FACTS OF THE CASE, W ERE NOT MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WITH THE OR DER IF ALL THE FACTS STATED OR THE CLAIMS MADE IN THE RETURN ARE A SSUMED TO BE CORRECT. THUS, IT IS MERE FAILURE ON THE PART OF TH E ASSESSING OFFICER TO MAKE THE NECESSARY INQUIRIES OR TO EXAMINE THE C LAIM MADE BY THE ASSESSEE IN ACCORDANCE WITH LAW, WHICH RENDERS THE RESULTANT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. NOTHING MORE IS REQUIRED TO BE ESTABLISHED IN SUCH A CASE. ONE WOULD NOT KNOW AS TO WHAT WOULD HAVE HAPPENED IF TH E ASSESSING OFFICER HAD MADE THE REQUISITE INQUIRIES OR EXAMINE D THE CLAIM OF THE ASSESSEE IN ACCORDANCE WITH LAW. HE COULD HAVE ACCEPTED THE ASSESSEE'S CLAIM. EQUALLY, HE COULD HAVE ALSO REJEC TED THE ASSESSEE'S CLAIM DEPENDING UPON THE RESULTS OF HIS ENQUIRY OR EXAMINATION INTO THE CLAIM OF THE ASSESSEE. THUS, T HE FORMATION OF ANY VIEW BY THE ASSESSING OFFICER WOULD NECESSARILY DEPEND UPON THE RESULTS OF HIS INQUIRY AND CONSCIOUS, AND NOT P ASSIVE, EXAMINATION INTO THE CLAIM OF THE ASSESSEE. IF THE ASSESSING OFFICER PASSES AN ORDER MECHANICALLY WITHOUT MAKING THE REQ UISITE INQUIRIES OR EXAMINING THE CLAIM OF THE ASSESSEE IN ACCORDANCE WITH LAW, SUCH AN ORDER WILL CLEARLY BE ERRONEOUS I N LAW AS IT WOULD I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 23 NOT BE BASED ON OBJECTIVE CONSIDERATION OF THE RELE VANT MATERIALS. IT IS THEREFORE, THE MERE FAILURE ON THE PART OF TH E ASSESSING OFFICER IN NOT MAKING THE INQUIRIES OR NOT EXAMINING THE CL AIM OF THE ASSESSEE IN ACCORDANCE WITH LAW THAT PER SE RENDERS THE RESULTANT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. NOTHING ELSE IS REQUIRED TO BE ESTABLISHED IN SUCH A CASE TO SHOW THAT THE ORDER SOUGHT TO BE REVISED IS ERRONEOUS AN D PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 34. WE ARE UNABLE TO ACCEPT THE SUBMISSION OF THE LEARN ED COUNSEL FOR TWO OTHER REASONS ALSO. FIRST REASON IS THAT THE VIEW SO TAKEN BY THE ASSESSING OFFICER WITHOUT MAKING THE R EQUISITE INQUIRIES OR EXAMINING THE CLAIM OF THE ASSESSEE WI LL PER SE BE AN ERRONEOUS VIEW AND HENCE WILL BE AMENABLE TO REVISI ONAL JURISDICTION UNDER SECTION 263. SECOND REASON IS TH AT IT IS NOT TAKING OF ANY VIEW THAT WILL TAKE THE MATTER UNDER THE SCOPE OF SECTION 263. THE VIEW TAKEN BY THE ASSESSING OFFICE R SHOULD NOT BE A MERE VIEW IN VACUUM BUT A JUDICIAL VIEW. IT IS WE LL ESTABLISHED THAT THE ASSESSING OFFICER BEING A QUASI-JUDICIAL A UTHORITY CANNOT TAKE A VIEW, EITHER AGAINST OR IN FAVOUR OF THE ASS ESSEE / REVENUE, WITHOUT MAKING PROPER INQUIRIES AND WITHOUT PROPER EXAMINATION OF THE CLAIM MADE BY THE ASSESSEE IN THE LIGHT OF T HE APPLICABLE LAW. AS ALREADY STATED EARLIER, WE ARE NOT ABLE T O APPRECIATE ON WHAT MATERIAL WAS PLACED BEFORE THE ASSESSING OFFIC ER AT THE ASSESSMENT STAGE TO TAKE SUCH A VIEW. THE ASSESSEE HAS ALSO NOT BEEN ABLE TO LEAD ENOUGH EVIDENCE TO SHOW TO US THA T ANY INQUIRY WAS MADE BY THE ASSESSING OFFICER IN THIS REGARD. T HEREFORE MERE ALLEGATION THAT THE ASSESSING OFFICER HAS TAKEN A V IEW IN THE MATTER WILL NOT PUT THE MATTER BEYOND THE PURVIEW OF SECTI ON 263 UNLESS THE VIEW SO TAKEN BY THE ASSESSING OFFICER IS A JUD ICIAL VIEW CONSCIOUSLY BASED UPON PROPER INQUIRIES AND APPRECI ATION OF ALL THE RELEVANT FACTUAL AND LEGAL ASPECTS OF THE CASE. THE JUDICIAL VIEW TAKEN BY THE ASSESSING OFFICER MAY PERHAPS PLACE TH E MATTER I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 24 OUTSIDE THE PURVIEW OF SECTION 263 UNLESS IT IS SHO WN THAT THE VIEW SO TAKEN BY THE ASSESSING OFFICER CONTAINS SOME APP ARENT ERROR OF REASONING OR OF LAW OR OF FACT ON THE FACE OF IT. 35. THE LEARNED COUNSEL HAS STRONGLY RELIED UPON THE FO LLOWING OBSERVATIONS MADE IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. (SUPRA) AND SUBMITTED THAT THE LEARNED COMMISSIONER WAS NOT JUSTIFIED IN SUBSTITUTING HIS VIEW FOR THAT OF THE ASSESSING OFFICER: ... EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN O RDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJU DICIAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE, WHEN AN INCOME-TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH TH E COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED A S AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. 36. WE HAVE CAREFULLY GONE THROUGH THE AFORESAID OBSERV ATIONS. 'ADOPTING' ONE OF THE COURSES PERMISSIBLE IN LAW NE CESSARILY REQUIRES THE ASSESSING OFFICER TO CONSCIOUSLY ANALY SE AND EVALUATE THE FACTS IN THE LIGHT OF RELEVANT LAW AND BRING TH EM ON RECORD. IT IS ONLY THEN THAT HE CAN BE SAID TO HAVE 'ADOPTED' OR CHOSEN ONE OF THE COURSES PERMISSIBLE IN LAW. THE ASSESSING OFFIC ER CANNOT BE PRESUMED OR ATTRIBUTED TO HAVE 'ADOPTED' OR CHOSEN A COURSE PERMISSIBLE IN LAW WHEN HIS ORDER DOES NOT SPEAK IN THAT BEHALF. SIMILARLY, 'TAKING' ONE VIEW WHERE TWO OR MORE VIEW S ARE POSSIBLE ALSO NECESSARILY IMPORTS THE REQUIREMENT OF ANALYSI NG THE FACTS IN THE LIGHT OF APPLICABLE LAW. THEREFORE, PROPER EXAM INATION OF FACTS IN THE LIGHT OF RELEVANT LAW IS A NECESSARY CONCOMI TANT 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 POS SIBLE. IT IS ONLY AFTER SUCH PROPER EXAMINATION AND EVALUATION HAS BE EN DONE BY THE ASSESSING OFFICER THAT HE CAN COME TO A CONCLUS ION AS TO WHAT I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 25 ARE THE PERMISSIBLE COURSES AVAILABLE IN LAW OR WHA T ARE THE POSSIBLE VIEWS ON THE ISSUE BEFORE HIM. IN CASE HE COMES TO THE CONCLUSION THAT MORE THAN ONE VIEW IS POSSIBLE THEN HE HAS NECESSARILY TO CHOOSE A VIEW, WHICH IS MOST APPROPR IATE ON THE FACTS OF THE CASE. IN ORDER TO APPLY THE AFORESAID OBSERVATIONS TO A GIVEN CASE, IT MUST THEREFORE FIRST BE SHOWN THAT T HE ASSESSING OFFICER HAS 'ADOPTED' A PERMISSIBLE COURSE OF LAW O R, WHERE TWO VIEWS ARE POSSIBLE, THE ASSESSING OFFICER HAS 'TAKE N' ONE SUCH POSSIBLE VIEW IN THE ORDER SOUGHT TO BE REVISED UND ER SECTION 263. THIS REQUIRES THE ASSESSING OFFICER TO TAKE A CONSC IOUS DECISION; ELSE HE WOULD NEITHER BE ABLE TO 'ADOPT' A COURSE P ERMISSIBLE IN LAW NOR 'TAKE' A VIEW WHERE TWO OR MORE VIEWS ARE P OSSIBLE. IN OTHER WORDS, IT IS THE ASSESSING OFFICER WHO HAS TO ADOPT A PERMISSIBLE COURSE OF LAW OR TAKE A VIEW WHERE TWO OR MORE VIEWS ARE POSSIBLE. IT IS DIFFICULT TO COMPREHEND AS TO H OW THE ASSESSING OFFICER CAN BE ATTRIBUTED TO HAVE 'ADOPTED' A PERMI SSIBLE COURSE OF LAW OR 'TAKEN' A VIEW WHERE TWO OR MORE VIEWS ARE P OSSIBLE WHEN THE ORDER PASSED BY HIM DOES NOT SPEAK IN THAT BEHA LF. WE CANNOT ASSUME, IN ORDER TO PROVIDE LEGITIMACY TO THE ASSES SMENT ORDER, THAT THE ASSESSING OFFICER HAS ADOPTED A PERMISSIBL E COURSE OF LAW OR TAKEN A POSSIBLE VIEW WHERE HIS ORDER DOES NOT S AY 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 HIMSEL F HAS NOT TAKEN A VIEW. IT COULD HAVE BEEN A DIFFERENT POSITION IF THE ASSESSING OFFICER HAD 'ADOPTED' OR 'TAKEN' A VIEW AFTER ANALY SING THE FACTS AND DECIDING THE MATTER IN THE LIGHT OF THE APPLICA BLE LAW. HOWEVER, IN THE CASE BEFORE US, THE ASSESSING OFFICER HAS NO T AT ALL EXAMINED AS TO WHETHER ONLY ONE VIEW WAS POSSIBLE OR TWO OR MORE VIEWS WERE POSSIBLE AND HENCE, THE QUESTION OF HIS ADOPTI NG OR CHOOSING ONE VIEW IN PREFERENCE TO THE OTHER DOES NOT ARISE. THE AFORESAID I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 26 OBSERVATIONS OF THE HON'BLE SUPREME COURT DO NOT, I N OUR VIEW, HELP THE ASSESSEE; AND RATHER THEY ARE AGAINST THE ASSESSEE. 37. 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 T HAT JUDICIAL UTTERANCES ARE MADE IN THE SETTING OF THE FACTS OF A PARTICULAR CASE, SAID LORD MORRIN IN HARRINGTO N V. BRITISH RAILWAYS BOARD [1972] 2 WLR 537 (HL). CIRCUMSTANTIAL FLEXIBILITY, ONE ADDITIONAL OR DIFFE RENT FACT MAY MAKE A WORLD OF DIFFERENCE BETWEEN CONCLUSIONS IN TWO CASES....' THEREFORE, THE OBSERVATIONS OF THE H ON'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 CUL L OUT THE LAW LAID DOWN BY THE HON'BLE SUPREME COURT. IF SO READ, IT IS QUITE EVIDENT THAT THE ORDERS PASSED ON AN INCORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICAT ION OF LAW OR WITHOUT APPLYING THE PRINCIPLES OF NATURAL J USTICE 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 T WO OR MORE VIEWS ARE POSSIBLE. 38. 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 NEITHER ME AN FAILURE ON HIS PART IN NOT EXAMINING THE MATTER CAREFULLY NOR WOULD RENDER HIS ORDER ERRONEOUS SO LONG AS THE VIEW TAKEN BY HI M WAS A POSSIBLE VIEW. IN OUR VIEW, THE AFORESAID SUBMISSIO N OF THE ASSESSEE MUST FAIL FOR THE REASONS ALREADY EXPLAINE D IN THE FOREGOING PARAS OF THIS ORDER AS THE ORDER, WHICH IS SOUGHT TO BE I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 27 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 ASSESSMEN T ORDER PASSED BY THE ASSESSING OFFICER LACKS JUDICIAL STRENGTH TO STAND. IT IS NOT A CASE WHERE THE ORDER IS SHORT BUT IS NOT SUPPORTED 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. 39. IN OUR OPINION, THE ASSESSING OFFICER HAS BEEN ENTR USTED THE ROLE OF AN INVESTIGATOR, PROSECUTOR AS WELL AS ADJU DICATOR UNDER THE SCHEME OF THE INCOME-TAX ACT. IF HE COMMITS AN ERRO R WHILE DISCHARGING THE AFORESAID ROLES AND CONSEQUENTLY PA SSES AN ERRONEOUS ORDER CAUSING PREJUDICE EITHER TO THE ASS ESSEE OR TO THE STATE EXCHEQUER OR TO BOTH, THE ORDER SO PASSED BY HIM IS LIABLE TO BE CORRECTED. AS MENTIONED EARLIER, THE ASSESSEE CA N HAVE THE PREJUDICE CAUSED TO HIM CORRECTED BY FILING AN APPE AL; AS ALSO BY FILING A REVISION APPLICATION UNDER SECTION 264. BU T 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 P REJUDICIAL TO THE INTEREST OF THE REVENUE. THE COMMISSIONER HAS ALSO BEEN EMPOWERED TO INVOKE HIS REVISIONAL JURISDICTION UND ER SECTION 264 AT THE INSTANCE OF THE ASSESSEE ALSO. THE LINE OF D IFFERENCE BETWEEN SECTIONS 263 AND 264 IS THAT WHILE THE FORMER CAN B E INVOKED TO REMOVE THE PREJUDICE CAUSED TO THE STATE THE LATER CAN BE INVOKED TO REMOVE THE PREJUDICE CAUSED TO THE ASSESSEE. THE PROVISIONS OF SECTION 263 WOULD LOSE SIGNIFICANCE IF THEY WERE TO BE INTERPRETED IN A MANNER THAT PREVENTED THE COMMISSIONER FROM RE VISING THE ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER, WH ICH WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN FACT , SUCH A COURSE WOULD BE COUNTER PRODUCTIVE AS IT WOULD HAVE THE EF FECT OF I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 28 PROMOTING ARBITRARINESS IN THE DECISIONS OF THE ASS ESSING OFFICERS AND THUS DESTROY THE VERY FABRIC OF SOUND TAX DISCI PLINE. IF ERRONEOUS ORDERS, WHICH ARE PREJUDICIAL TO THE INTE REST OF THE REVENUE, ARE ALLOWED TO STAND, THE CONSEQUENCES WOU LD BE DISASTROUS IN THAT THE HONEST TAX PAYERS WOULD BE R EQUIRED TO PAY MORE THAN OTHERS TO COMPENSATE FOR THE LOSS CAUSED BY SUCH ERRONEOUS ORDERS. FOR THIS REASON ALSO, WE ARE OF T HE VIEW THAT THE ORDERS PASSED ON AN INCORRECT ASSUMPTION OF FACTS O R INCORRECT APPLICATION OF LAW OR WITHOUT APPLYING THE PRINCIPL ES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND OR WITHOUT M AKING REQUISITE INQUIRIES WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE WITH IN THE MEANING OF SECTION 263. 40. ADVERTING TO THE FACTS OF THE PRESENT CASE, THERE I S NO ENQUIRY BY THE ASSESSING OFFICER WHATSOEVER ON THE ISSUE IN DISPUTE. HE JUST ACCEPTED THE CLAIM OF SET OFF OF EARLIER YEAR UNABSORBED DEPRECIATION IN THE ASSESSMENT YEAR UNDE R CONSIDERATION. BEING SO, THE CIT ASSUMED JURISDICT ION U/S. 263 OF THE ACT. THE ARGUMENT OF THE ASSESSEE'S COUNSEL I S THAT THERE ARE DECISIONS IN FAVOUR OF THE ASSESSEE. THEREFORE, TH E VIEW ADOPTED BY THE ASSESSING OFFICER IS ONE OF THE POSSIBLE VIEWS. THE GENERAL LAW ON THE QUESTION OF REVISIONAL JURISDICTION IS THAT AN ORDER PASSED BY THE ASSESSING OFFICER CANNOT BE HELD TO BE ERRON EOUS, IF THE ASSESSING OFFICER HAS FOLLOWED ONE OF THE POSSIBLE VIEWS ON THE SUBJECT. BUT THIS PRINCIPLE BY AND LARGE APPLIES T O QUESTIONS OF FACT. WHEN IT COMES TO QUESTION OF LAW, THE LAW LA ID DOWN BY THE COMPETENT AUTHORITY HAS TO BE INVARIABLY FOLLOWED. IT IS A SETTLED LAW THAT WHEN A COURT DECLARES THE LAW ON A SUBJEC T, THE DECLARATION GOES BACK TO THE DATE OF ENACTMENT OF T HAT PARTICULAR LAW AS TO STATE THAT THE LAW FROM THE DATE OF ITS E NACTMENT ITSELF WAS IN THE MANNER DECIDED BY THE COURT SUBSEQUENTLY . THEREFORE, THE PRONOUNCED ORDER OF THE SPECIAL BENCH DATES BAC K TO THE DATE I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 29 OF ENACTMENT AND, THEREFORE, THE SUPERIMPOSITION MA DE BY THE JUDICIAL PRONOUNCEMENT THE ASSESSMENT ORDER HAS BEC OME ERRONEOUS. IT IS NOT ONLY ERRONEOUS, BUT ALSO PREJ UDICIAL TO THE INTEREST OF REVENUE INASMUCH AS THE ERROR HAS CONTR IBUTED IN GRANTING EXCESSIVE RELIEF TO THE ASSESSEE. THE AR GUMENTS OF THE CIT DR THAT THE QUESTION OF ALLOWABILITY OF CLAIM W AS SUB-JUDICE BEFORE THE TRIBUNAL SPECIAL BENCH (MUMBAI) AT THE T IME OF PASSING THE REVISION ORDER IS ACCEPTED AND THE ARGUMENT OF THE ASSESSEE'S COUNSEL THAT IT IS A DEBATABLE ISSUE IS REJECTED AS THERE WAS NO DISCUSSION OF WHATSOEVER BY THE ASSESSING OFFICER I N THE IMPUGNED ASSESSMENT ORDER. IN OUR HUMBLE OPINION SUBJECT MA TTER OF THE REVISION IS PENDING BEFORE THE SPECIAL BENCH FOR AD JUDICATION AND THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER W ITHOUT AN IOTA OF DISCUSSION ON THE ISSUE OF WHATSOEVER AS SUCH TH E CIT EXERCISED HIS POWERS U/S. 263 OF THE ACT TO REVISE THE ORDER OF THE ASSESSING OFFICER WHICH WAS IN CONFORMITY WITH THE ORDER OF T HE SPECIAL BENCH AND INVOKING THE PROVISIONS OF SECTION 263 IS JUSTIFIED. 41. COMING TO THE MERIT OF THE ISSUE RAISED BY THE ASSE SSEE RELATING TO SET OFF OF UNABSORBED DEPRECIATION ALLO WANCES CARRIED FORWARD FROM ASSESSMENT YEAR 1996-97 AND 1998-99 AG AINST INCOME RELATING TO ASSESSMENT YEAR 2007-08, THIS I SSUE IS COVERED AGAINST THE ASSESSEE BY THE ORDER OF THE SPECIAL BE NCH CITED SUPRA WHEREIN HELD THAT UNABSORBED DEPRECIATION RELATING TO ASSESSMENT YEARS 1997-98 TO 1999-2000 IS TO BE DEALT WITH IN A CCORDANCE WITH THE PROVISIONS OF SECTION 32(2) OF THE IT ACT AS AP PLICABLE TO ASSESSMENT YEAR 1997-98 TO 1999-2000 AND, THEREFORE , ASSESSEE CANNOT CLAIM SET OFF OF UNABSORBED DEPRECIATION REL ATING TO ASSESSMENT YEAR 1997-98 TO 1999-2000 UNDER ANY HEAD OF INCOME OTHER THAN INCOME FROM BUSINESS OR PROFESSION IN ASSESSMENT YEARS 2003-04 AND 2004-05. IN VIEW OF THE ABOVE DE CISION, WE ARE INCLINED TO HOLD THAT THE ASSESSEE CASE IS SQUARELY COVERED BY THE I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 30 ABOVE DECISION AND AS SUCH ASSESSEE CANNOT CLAIM SE T OFF OF UNABSORBED CARRIED FORWARD DEPRECIATION RELATING TO ASSESSMENT YEARS 1996-97 AND 1998-99 AGAINST THE INCOME RELATI NG TO ASSESSMENT YEAR 2007-08. ON MERIT ALSO, THIS ISSUE IS DECIDED AGAINST THE ASSESSEE. 42. THE LEARNED AR RELIED ON THE JUDGEMENT OF GUJARAT H IGH COURT IN SPECIAL CIVIL APPLICATION NO. 1773 OF 2012 DATED 23.8.2012 IN THE CASE OF GENERAL MOTORS INDIA PVT. LTD. (CITED SUPRA) FOR THE PROPOSITION OF SET OFF OF UNABSORBED DEPRECIATION ALLOWANCE DISPUTED BEFORE US AGAINST THE PROFIT AND GAINS OF SUBSEQUENT YEAR WITHOUT ANY LIMIT OF PERIOD WHATSOE VER. IN OUR OPINION THIS JUDGEMENT CANNOT BE CONSIDERED AS BIND ING PRECEDENT AS THIS IS NOT A JURISDICTIONAL HIGH COURT JUDGEMEN T. FURTHER, ON THE SAME SUBJECT HONBLE MADRAS HIGH COURT IN THE C ASE OF CIT VS. PIONEER ASIA PACKING PVT. LTD., (310 ITR 198) HAS H ELD THAT UNABSORBED DEPRECIATION BROUGHT FORWARD AS ON 1 ST APRIL 1997 COULD BE SET OFF AGAINST THE BUSINESS INCOME OR INC OME UNDER ANY OTHER HEAD FOR A.Y. 1997098 AND 7 SUBSEQUENT YEARS ON THE BASIS OF CLARIFICATION ISSUED BY THE FINANCE MINISTER. A GAIN THE HONBLE MADRAS HIGH COURT IN THE CASE OF S & S POWER SWITCH GEAR LTD. (318 ITR 187) (MAD) REITERATED THE SAME VIEW BY LAY ING DOWN THAT THE UNABSORBED DEPRECIATION BROUGHT FORWARD AS ON 1 ST APRIL, 1997 COULD BE SET OFF AGAINST BUSINESS INCOME OR INCOME UNDER ANY OTHER HEAD FOR A.Y. 1997-98 AND 7 SUBSEQUENT ASSESS MENT YEARS BY RELYING ON THE CLARIFICATION OF FINANCE MINISTER AS WELL AS CBDT CIRCULAR NO. 762 DATED 18.2.1997 (145 ITR ST. 5). BEING SO, UN ADJUSTED DEPRECIATION BROUGHT FORWARD UP TO 1 ST APRIL, 1997 BECAME ELIGIBLE FOR SET OFF NOT ONLY AGAINST THE BU SINESS INCOME BUT ALSO AGAINST INCOME UNDER THE OTHER HEADS IN 8 ASSESSMENT YEARS ONLY ON THE STRENGTH OF THE CLARIFICATION GIV EN BY THE FINANCE MINISTER. BEING SO, IN OUR OPINION, JUDGEMENT OF H IGH COURT, THOUGH NOT OF THE JURISDICTIONAL HIGH COURT, PREVAI LS OVER AN ORDER I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 31 OF THE SPECIAL BENCH. HOWEVER, WHEN THERE ARE SEVE RAL DECISIONS OF NON-JURISDICTIONAL HIGH COURTS EXPRESSING CONTRARY VIEWS, THE TRIBUNAL IS FREE TO CHOOSE TO ADOPT THAT VIEW WHICH APPEALS TO IT. FOR THIS PURPOSE, WE PLACE RELIANCE ON THE ORDER OF THE SPECIAL BENCH IN THE CASE OF KANEL OIL & EXPORT INDUSTRIES LTD. VS. JCIT, (121 ITD 596) (SB) (AHD). 43. REGARDING THE ISSUE RELATING TO SETTLEMENT OF DUES WITH STRESSED ASSTS STABILISATION FUND IDBI, THE AR SUBM ITTED THE ISSUE IS TO BE DECIDED IN FAVOUR OF THE ASSESSEE IN VIEW OF THE JUDGEMENT OF SUPREME COURT IN THE CASE OF CIT VS. T .V. SUNDARAM IYENGAR & SONS LTD., 222 ITR 344 (SC). HE SUBMITT ED THAT AS SEEN FROM THE RECORDS THAT THE ASSESSEE ENTERED INT O ONE TIME COMPROMISE SETTLEMENT OF DUES WITH STRESSED ASSETS STABILIZATION FUND (IDBI) FOR AN AGGREGATE SUM OF RS. 17,67,00,00 0 IN FULL AND FINAL SETTLEMENT OF DUES. IT IS SUBMITTED THAT THE ENTIRE AMOUNT OF RS. 17,67,00,000/- DOES NOT CONTAIN ANY AMOUNT FOR WHICH THE ALLOWANCE/DEDUCTION HAS BEEN MADE IN EARLIER ASSESS MENT FOR ANY ASSESSMENT YEAR, INCLUDING THE ASSESSMENT YEAR UNDE R CONSIDERATION. HE SUBMITTED THAT THE PROVISIONS OF SEC. 41(1) ARE NOT APPLICABLE. THE AR ALSO RELIED ON MORLEY (INSPE CTOR OF TAXES) VS. TETTERSALL (7 ITR 316) (CA) WHEREIN HELD THAT T HE QUALITY AND THE NATURE OF A RECEIPT FOR INCOME-TAX PURPOSES IS FITTED ONCE AND FOR ALL WHEN IT IS RECEIVED, AND SUBSEQUENT OPERATI ONS CANNOT TURN A RECEIPT WHICH IS NOT A TRADING RECEIPT INTO ONE. 44. THE DR RELIED ON THE ORDER OF THE CIT ON THIS ISSU E AND SUBMITTED THAT THERE WAS NO ENQUIRY BY THE ASSESSIN G OFFICER AS THE DETAILS OF INTEREST WAIVED AS AGAINST WHAT WAS EARLIER ALLOWED AS DEDUCTION AND SUCH OTHER INFORMATION GIVING PART ICULARS OF THE COMPONENT OF THIS SETTLEMENT DUES IS NOT BROUGHT ON RECORD BY THE ASSESSING OFFICER. I.T.A. NO. 145/HYD/2012 M/S. DHARTI DREDGING & INFRASTRUCTURE LTD. =============================== 32 45. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. WE HAVE GONE THROUGH THE IMPUGNED ASSESSME NT ORDER. IN THIS CASE ALSO THERE IS NO DISCUSSION IN THE ASS ESSMENT ORDER ON THE IMPUGNED ISSUE. THERE IS NO ENQUIRY ON THIS IS SUE. THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REV ENUE AS DISCUSSED IN EARLIER PARAS OF THIS ORDER. ACCORDIN GLY, WE CONFIRM THE ORDER OF THE CIT. THIS ISSUE WAS ALSO NOT EXA MINED BY THE ASSESSING OFFICER AND IT REQUIRES EXAMINATION BY TH E ASSESSING OFFICER. BEING SO, THE CIT IS JUSTIFIED IN DIRECTI NG THE ASSESSING OFFICER TO CONDUCT NECESSARY ENQUIRY. 46. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH NOVEMBER, 2012. SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 16 TH NOVEMBER, 2012 COPY FORWARDED TO: 1. M/S. DHARTI DREDGING & INFRASTRUCTURE LTD., 1 ST FLOOR, POINT OF VIEW, B.S. MAKTHA, BEGUMPET, HYDERABAD-500 016 2. THE ADDL. COMMISSIONER OF INCOME - TAX, RANGE - 1, HYDERABAD. 3. THE CIT - I, HYDERABAD 4. THE ACIT, CIRCLE - 1(2), HYDERABAD. 5. THE DR A BENCH, ITAT, HYDERABAD. TPRAO