M/s. Aksah Hotels P. Ltd, Hyderabad V. The CIT - I, Hyderabad

ITA 1488/HYD/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53509 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 29-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M SRINIVAS RAO
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Principle of natural justice; Right to appeal
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.1488/HYD/2010 ASSESSMENT YEAR 2006-07 M/S AKASH HOTELS (P) LTD., HYDERABAD (PAN AABCA 9101 G) VS THE CIT, HYDERABAD APPELLANT RESPONDENT APPELLANT BY : SHRI P. MURALI MOHAN RAO RESPONDENT BY : SHRI M. SRINIVAS RAO ORDER PER CHANDRA POOJARI, A.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRE CTED AGAINST THE ORDER PASSED U/S 263 OF THE IT ACT, 196 1 BY THE CIT, HYDERABAD DATED 2.11.2010 AND PERTAINS TO THE ASSESSMENT YEAR 2006-07. 2. THE MAIN GRIEVANCE OF THE ASSESSEE IN HIS APPEA L IS WITH REGARD TO INVOKING THE PROVISIONS U/S 263 OF T HE INCOME TAX ACT, 1961 BY THE CIT. THE ASSESSEE HAS ALSO HAVING GRIEVANCE AGAINST THE DIRECTION OF THE CIT R EGARDING RE-EXAMINATION OF THE PRIOR PERIOD ADJUSTMENT ACCOU NT AT RS.2,65,17,247/- AND INSTITUTIONAL INTEREST PAID AT RS.1,57,33,000/-. 3. BRIEF FACTS OF THE ISSUE ARE THAT THE CIT, ON GOING THROUGH THE RECORDS OF THE ASSESSMENT RELATING TO T HE ASSESSMENT YEAR 2006-07 FOUND THAT THERE IS A NEED FOR RE- EXAMINATION THE PRIOR PERIOD INCOME ACCOUNT AND ALS O INSTITUTIONAL INTEREST PAID ACCOUNT FOR WHICH THE A SSESSEES ITA NO.1488/H/2010 M/S AKASH HOTELS P LTD., HYDERABAD 2 COUNSEL AGREED TO SET ASIDE THE ASSESSMENT ORDER FO R RE- EXAMINATION. ACCORDINGLY, THE CIT HAS GIVEN A DIRE CTION FOR RE-EXAMINATION ON TWO COUNTS TO THE FILE OF ASSESSI NG OFFICER AND ALSO TO BRING THE ADDITIONAL INCOME TO TAX IF A NY. HE ALSO GIVEN DIRECTION TO THE ASSESSING OFFICER THAT HE SHOULD COMPUTE THE TOTAL INCOME ACCORDING TO THE PROVISION S OF SECTION 115JB. AGAINST THIS, THE ASSESSEE IS IN AP PEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE HAVE CAREFULLY C ONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF MATERIAL PLAC ED BEFORE US AND ALSO GONE THROUGH ALL THE JUDGEMENTS CITED B Y THE PARTIES BEFORE US. FIRST WE TAKE UP THE LEGAL ISSU E WITH REFERENCE TO THE JURISDICTION OF INVOKING THE PROVI SIONS OF SECTION 263 OF THE ACT BY THE LEARNED CIT. THE S CHEME OF THE IT ACT 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 ERRONEOUS ORDER OF THE ASSESSIN G OFFICER, THE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PER SON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTEREST OF TH E REVENUE. AS HELD IN THE CASE OF MALABAR INDUSTRIES CO. LTD., VS. CIT ( 243 ITR 83 (SC), THE COMMISSIONER CAN EXERCISE RE VISION JURISDICTIONAL U/S 263 IF HE IS SATISFIED THAT THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS (I)ERRON EOUS; AND ALSO (II) PREJUDICIAL TO THE INTERESTS OF THE REVEN UE. THE WORD ERRONEOUS HAS NOT BEEN DEFINED IN THE INCOME TAX ACT. IT HAS BEEN HOWEVER DEFINED AT PAGE 562 IN BLACKS LAW DICTIONARY (SEVENTH EDITION) THUS; ERRONEOUS, ADJ. INVOLVING ERROR, DEVIATING FROM THE LAW. ITA NO.1488/H/2010 M/S AKASH HOTELS P LTD., HYDERABAD 3 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 TH AT 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 RESPECT THE AGENT, AN ERROR MAY LAY IN THE JUDGEMENT, OR IN THE CONDUCT, BUT A FAULT LIES IN THE WILL OR INTENTION. AT PAGE 650 OF THE AFORESAID LAW LEXICON, THE SCOPE 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 ITA NO.1488/H/2010 M/S AKASH HOTELS P LTD., HYDERABAD 4 KNOWLEDGE, 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 RECTIFIED, 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 DISORDERED VISION, T HE OTHER OF DISCARDED IMAGINATION. 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, ESPECIALLY IN ONE REMARKABLE OTHERWISE FOR ACCURATE INFORMATION AND RIGHT DECISI ON. IT IS EXCEPTIONAL ERROR OR MISTAKE IN THOSE OTHERWI SE NOT LIKELY TO BE DECEIVED. 5. IN ORDER TO ASCERTAIN WHETHER AN ORDER SOUGHT T O BE REVISED UNDER SECTION 263 IS ERRONEOUS, IT SHOULD B E SEEN WHETHER IT SUFFERS FROM ANY OF THE AFORESAID FORMS OF ERROR. IN OUR VIEW, AN ORDER SOUGHT TO BE REVISED UNDER SE CTION 263 WOULD BE ERRONEOUS AND FALL IN THE AFORESAID CA TEGORY OF 'ERRORS' IF IT IS, INTER ALIA, BASED ON AN INCORREC T ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW OR NON- APPLICATION OF MIND TO SOMETHING WHICH WAS OBVIOUS AND REQUIRED APPLICATION OF MIND OR BASED ON NO OR INSUFFICIENT MATERIALS SO AS TO AFFECT THE MERITS OF THE CASE AND THEREBY CAUSE PREJUDICE TO THE INTEREST OF THE REVENUE. 6. SECTION 263 OF THE INCOME-TAX ACT SEEKS TO REMO VE THE 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 TAKES A WRONG DECISION WITHOU T CONSIDERING THE MATERIALS AVAILABLE ON RECORD OR HE TAKES A ITA NO.1488/H/2010 M/S AKASH HOTELS P LTD., HYDERABAD 5 DECISION WITHOUT MAKING AN ENQUIRY INTO THE MATTERS , WHERE SUCH INQUIRY WAS PRIMA FACIE WARRANTED. THE COMMISS IONER WILL BE WELL WITHIN HIS POWERS TO REGARD AN ORDER A S ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES O F THE CASE, THE ASSESSING OFFICER SHOULD HAVE MADE FURTHE R INQUIRIES BEFORE ACCEPTING THE CLAIM MADE BY THE AS SESSEE IN HIS RETURN. THE REASON IS OBVIOUS. UNLIKE THE CI VIL COURT WHICH IS NEUTRAL IN GIVING A DECISION ON THE BASIS OF EVIDENCE PRODUCED BEFORE IT, THE ROLE OF AN ASSESSI NG OFFICER UNDER THE INCOME-TAX ACT IS NOT ONLY THAT OF AN ADJ UDICATOR BUT ALSO OF AN INVESTIGATOR. HE CANNOT REMAIN PASSI VE IN THE FACE OF A RETURN, WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER ENQUIRY. HE MUST DISCHARGE BOTH THE ROLES EFFECTIVELY. IN OTHER WORDS, HE MUST CARRY OUT INVE STIGATION WHERE THE FACTS OF THE CASE SO REQUIRE AND ALSO DEC IDE THE MATTER JUDICIOUSLY ON THE BASIS OF MATERIALS COLLEC TED BY HIM AS ALSO THOSE PRODUCED BY THE ASSESSEE BEFORE HIM. THE SCHEME OF ASSESSMENT HAS UNDERGONE RADICAL CHANGES IN RECENT YEARS. IT DESERVES TO BE NOTED THAT THE PRES ENT ASSESSMENT WAS MADE UNDER SECTION 143(3) OF THE INC OME- TAX ACT. IN OTHER WORDS, THE ASSESSING OFFICER WAS STATUTORILY REQUIRED TO MAKE THE ASSESSMENT UNDER S ECTION 143(3) AFTER SCRUTINY AND NOT IN A SUMMARY MANNER A S CONTEMPLATED BY SUB-SECTION (1) OF SECTION 143. BUL K OF THE RETURNS FILED BY THE ASSESSEES ACROSS THE COUNTRY I S ACCEPTED BY THE DEPARTMENT UNDER SECTION 143(1) WIT HOUT ANY SCRUTINY. ONLY A FEW CASES ARE PICKED UP FOR SC RUTINY. THE ASSESSING OFFICER IS THEREFORE, REQUIRED TO ACT FAIRLY WHILE ACCEPTING OR REJECTING THE CLAIM OF THE ASSES SEE IN CASES OF SCRUTINY ASSESSMENTS. HE SHOULD BE FAIR NO T ONLY TO THE ASSESSEE BUT ALSO TO THE PUBLIC EXCHEQUER. THE ASSESSING OFFICER HAS GOT TO PROTECT, ON ONE HAND, THE ITA NO.1488/H/2010 M/S AKASH HOTELS P LTD., HYDERABAD 6 INTEREST OF THE ASSESSEE IN THE SENSE THAT HE IS NO T SUBJECTED TO ANY AMOUNT OF TAX IN EXCESS OF WHAT IS LEGITIMAT ELY DUE FROM HIM, AND ON THE OTHER HAND, HE HAS A DUTY TO P ROTECT THE INTERESTS OF THE REVENUE AND TO SEE THAT NO ONE DODGED THE REVENUE AND ESCAPED WITHOUT PAYING THE LEGITIMA TE TAX. THE ASSESSING OFFICER IS NOT EXPECTED TO PUT BLINKE RS ON HIS EYES AND MECHANICALLY ACCEPT WHAT THE ASSESSEE CLAI MS BEFORE HIM. IT IS HIS DUTY TO ASCERTAIN THE TRUTH O F THE FACTS STATED AND THE GENUINENESS OF THE CLAIMS MADE IN TH E RETURN WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE INQUIRY. ARBITRARINESS IN EITHER ACCEPTING OR REJECTING THE CLAIM HAS NO PLACE. THE ORDER PASSED BY THE ASSESSING OFFICER BECOMES ERRONEOUS BECAUSE AN ENQU IRY HAS NOT BEEN MADE OR GENUINENESS OF THE CLAIM HAS N OT BEEN EXAMINED WHERE THE INQUIRIES OUGHT TO HAVE BEE N MADE AND THE GENUINENESS OF THE CLAIM OUGHT TO HAVE BEEN EXAMINED AND NOT BECAUSE THERE IS ANYTHING WRONG WI TH HIS ORDER IF ALL THE FACTS STATED OR CLAIM MADE THEREIN ARE ASSUMED TO BE CORRECT. THE COMMISSIONER MAY CONSIDE R 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 ACCEPTS WHAT THE ASSESSEE HAS STATED I N HIS RETURN AND FAILS TO MAKE ENQUIRIES OR EXAMINE THE GENUINENESS OF THE CLAIM WHICH ARE CALLED FOR IN TH E CIRCUMSTANCES OF THE CASE. IN TAKING THE AFORESAID VIEW, WE ARE SUPPORTED BY THE DECISIONS OF THE HON'BLE SUPRE ME COURT IN RAMPYARI DEVI SARAOGI V. CIT (67 ITR 84) ( SC), SMT. TARA DEVI AGGARWAL V. CIT (88 ITR 323) (SC)AND MALABAR INDUSTRIAL CO. LTD'S CASE (243 ITR 83) (SC) . ITA NO.1488/H/2010 M/S AKASH HOTELS P LTD., HYDERABAD 7 7. IN MALABAR INDUSTRIAL CO. LTD. CASE (SUPRA) THE HON'BLE COURT 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 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 ITA NO.1488/H/2010 M/S AKASH HOTELS P LTD., HYDERABAD 8 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 THIS COURT IN HOLDING THAT AN ADMINISTRATIVE AUTHORITY MUST 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 CHANCES OR ARBITRARINESS AND ENSURES A DEGREE OF FAIRNESS IN 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 APPEAL, REVISION OR JUDICIAL REVIEW. IN OUR OPINION, THEREFORE, THE REQUIREMENT THAT REASONS BE RECORDED SHOULD GOVERN THE DECISIONS OF AN ADMINISTRATIVE AUTHORITY EXERCISING QUASI-JUDICIAL FUNCTIONS IRRESPECTIVE OF THE FACT MAY, HOWEVER, BE ADDED THAT IT IS NOT REQUIRED THAT THE REASONS SHOULD BE AS ITA NO.1488/H/2010 M/S AKASH HOTELS P LTD., HYDERABAD 9 ELABORATE AS IN THE DECISION OF 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 GIVEN DUE CONSIDERATION TO THE POINTS IN CONTROVERSY. THE NEED FOR RECORDING OF REASONS IS GREATER IN A CASE WHERE THE ORDER IS PASSED AT THE ORIGINAL STAGE. THE APPELLATE OR REVISIONAL AUTHORITY, IF IT AFFIRMS SUCH AN ORDER, NEED NOT GIVE SEPARATE REASONS IF THE APPELLATE OR REVISIONAL AUTHORITY AGREES WITH THE REASONS CONTAINED IN THE ORDER UNDER CHALLENGE. 8. SIMILAR VIEW WAS EARLIER TAKEN BY THE HON'BLE SUPREME COURT IN SIEMENS ENGG. & MFG. CO. LTD. V. U NION OF INDIA AIR 1976 SC 1785. IT IS SETTLED LAW THAT WHILE MAKING ASSESSMENT ON ASSESSEE, THE ITO ACTS IN A QU ASI- JUDICIAL CAPACITY. AN ASSESSMENT ORDER IS AMENABLE TO APPEAL BY THE ASSESSEE AND TO REVISION BY THE COMMI SSIONER UNDER SECTIONS 263 AND 264. THEREFORE, A REASONED O RDER ON A SUBSTANTIAL ISSUE IS LEGALLY NECESSARY. THE JU DGMENTS 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 ADMINISTRA TION OF REVENUE, MUST BE REGARDED AS ERRONEOUS AND PREJUDIC IAL TO THE INTERESTS OF THE REVENUE. IF THE ASSESSING OFFI CERS ARE ALLOWED TO MAKE ASSESSMENTS IN AN ARBITRARY MANNER, AS HAS BEEN DONE IN THE CASE BEFORE US, THE ADMINISTRA TION OF REVENUE IS BOUND TO SUFFER. IF WITHOUT DISCUSSING T HE NATURE OF THE TRANSACTION AND MATERIALS ON RECORD, THE ASS ESSING OFFICER HAD MADE CERTAIN ADDITION TO THE INCOME OF THE ASSESSEE, THE SAME WOULD HAVE BEEN CONSIDERED ERRON EOUS BY ANY APPELLATE AUTHORITY AS BEING VIOLATIVE OF TH E PRINCIPLES OF NATURAL JUSTICE WHICH REQUIRE THAT TH E AUTHORITY MUST INDICATE THE REASONS FOR AN ADVERSE ORDER. 9. ITA NO.1488/H/2010 M/S AKASH HOTELS P LTD., HYDERABAD 10 9. 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, BECAUSE EVEN THE ASS ESSEE IS DEPRIVED OF THE BENEFIT OF A POSITIVE FINDING IN HI S FAVOUR, THOUGH HE MAY HAVE SUFFICIENTLY ESTABLISHED HIS CAS E. 10. IN VIEW OF THE FOREGOING, IT CAN SAFELY BE SAI D THAT AN ORDER PASSED BY THE ASSESSING OFFICER BECOMES ERRON EOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE UND ER SECTION 263 IN 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. 11. WE SHALL NOW TURN TO THE FACTS OF THE CASE TO SEE WHETHER THE CASE BEFORE US IS COVERED BY THE AFORES AID PRINCIPLES. PERUSAL OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER DOES NOT SHOW ANY APPLICATION OF MIND ON HIS PART. HE SIMPLY ACCEPTED THE INCOME DECLARED BY THE ASSESSEE AS IT IS, THOUGH THE ASSESSING OFFICER IS EXPECTED TO EXAMINE THE SAME. THE ASSESSING OFFICER NOT BOTHER ED TO EXAMINE THE ISSUE INVOLVED HEREIN. THIS IS A CASE WHERE THE ASSESSING OFFICER MECHANICALLY ACCEPTED WHAT TH E ITA NO.1488/H/2010 M/S AKASH HOTELS P LTD., HYDERABAD 11 ASSESSEE WANTED HIM TO ACCEPT WITHOUT ANY APPLICATI ON OF MIND OR ENQUIRY. NO EVIDENCE HAS BEEN PLACED BEFOR E US WITH REGARD TO THE ISSUE INVOLVED HEREIN WAS OBJECT IVELY EXAMINED OR CONSIDERED BY THE ASSESSING OFFICER EIT HER ON RECORD OR IN THE ASSESSMENT ORDER. IT IS BECAUSE OF SUCH NON-CONSIDERATION OF THE ISSUES ON THE PART OF THE ASSESSING OFFICER THAT THE CLAIM BY THE ASSESSEE STOOD AUTOMA TICALLY ACCEPTED WITHOUT ANY SCRUTINY. THE ASSESSMENT ORDER PLACED BEFORE US IS CLEARLY ERRONEOUS AS IT WAS PAS SED WITHOUT PROPER EXAMINATION OR ENQUIRY OR VERIFICATI ON OR OBJECTIVE CONSIDERATION OF THE CLAIM MADE BY THE AS SESSEE. THE ASSESSING OFFICER HAS COMPLETELY OMITTED THE IS SUE IN QUESTION FROM CONSIDERATION AND MADE THE ASSESSMENT IN AN ARBITRARY MANNER. HIS ORDER IS A COMPLETELY NON- SPEAKING ORDER. IN OUR VIEW, IT WAS A FIT CASE FOR THE LEARNED COMMISSIONER TO EXERCISE HIS REVISIONAL JURISDICTIO N UNDER SECTION 263 WHICH HE RIGHTLY EXERCISED BY CANCELLIN G THE ASSESSMENT ORDER AND DIRECTING THE ASSESSING OFFICE R TO PASS A FRESH ORDER CONSIDERING THE ISSUE INVOLVED HEREIN. IN OUR VIEW, THE ASSESSEE SHOULD HAVE NO GRIEVANCE IN THE ACTION OF LEARNED COMMISSIONER. 12. IT WAS HOWEVER CONTENDED BY THE LEARNED COUNSE L THAT THE ASSESSING OFFICER HAD TAKEN A POSSIBLE VIE W IN ACCEPTING THE RETURN OF THE ASSESSEE WITH REFERENCE TO HEAD OF INCOME AND HENCE, THE COMMISSIONER WAS NOT JUSTI FIED IN ASSUMING THE REVISIONAL JURISDICTION UNDER SECTION 263. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE AFOR ESAID SUBMISSIONS. AS ALREADY STATED EARLIER, AN ORDER BE COMES ERRONEOUS BECAUSE INQUIRIES, WHICH OUGHT TO HAVE BE EN MADE ON THE FACTS OF THE CASE, WERE NOT MADE AND NO T BECAUSE THERE IS ANYTHING WRONG WITH THE ORDER IF A LL THE ITA NO.1488/H/2010 M/S AKASH HOTELS P LTD., HYDERABAD 12 FACTS STATED OR THE CLAIMS MADE IN THE RETURN ARE A SSUMED TO BE CORRECT. THUS, IT IS MERE FAILURE ON THE PART OF THE ASSESSING OFFICER TO MAKE THE NECESSARY INQUIRIES O R TO EXAMINE THE CLAIM MADE BY THE ASSESSEE IN ACCORDANC E WITH LAW, WHICH RENDERS THE RESULTANT ORDER ERRONEOUS AN D PREJUDICIAL TO THE INTEREST OF THE REVENUE. NOTHING MORE IS REQUIRED TO BE ESTABLISHED IN SUCH A CASE. ONE WOUL D NOT KNOW AS TO WHAT WOULD HAVE HAPPENED IF THE ASSESSIN G OFFICER HAD MADE THE REQUISITE INQUIRIES OR EXAMINE D THE CLAIM OF THE ASSESSEE IN ACCORDANCE WITH LAW. HE CO ULD HAVE ACCEPTED THE ASSESSEE'S CLAIM. EQUALLY, HE COULD HA VE ALSO REJECTED THE ASSESSEE'S CLAIM DEPENDING UPON THE RE SULTS OF HIS ENQUIRY OR EXAMINATION INTO THE CLAIM OF THE AS SESSEE. THUS, THE FORMATION OF ANY VIEW BY THE ASSESSING OF FICER WOULD NECESSARILY DEPEND UPON THE RESULTS OF HIS IN QUIRY AND CONSCIOUS, AND NOT PASSIVE, EXAMINATION INTO TH E CLAIM OF THE ASSESSEE. IF THE ASSESSING OFFICER PASSES AN ORDER MECHANICALLY WITHOUT MAKING THE REQUISITE INQUIRIES OR EXAMINING THE CLAIM OF THE ASSESSEE IN ACCORDANCE W ITH LAW, SUCH AN ORDER WILL CLEARLY BE ERRONEOUS IN LAW AS I T WOULD NOT BE BASED ON OBJECTIVE CONSIDERATION OF THE RELE VANT MATERIALS. IT IS THEREFORE, THE MERE FAILURE ON THE PART OF THE ASSESSING OFFICER IN NOT MAKING THE INQUIRIES OR NO T EXAMINING THE CLAIM OF THE ASSESSEE IN ACCORDANCE W ITH 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 T HAT THE ORDER SOUGHT TO BE REVISED IS ERRONEOUS AND PREJUDI CIAL TO THE INTERESTS OF THE REVENUE. 13. WE ARE UNABLE TO ACCEPT THE SUBMISSION OF THE LEARNED COUNSEL FOR TWO OTHER REASONS ALSO. FIRST R EASON IS ITA NO.1488/H/2010 M/S AKASH HOTELS P LTD., HYDERABAD 13 THAT THE VIEW SO TAKEN BY THE ASSESSING OFFICER WIT HOUT MAKING THE REQUISITE INQUIRIES OR EXAMINING THE CLA IM OF THE ASSESSEE WILL PER SE BE AN ERRONEOUS VIEW AND HENCE WILL BE AMENABLE TO REVISIONAL JURISDICTION UNDER SECTION 2 63. SECOND REASON IS THAT IT IS NOT THE TAKING OF ANY V IEW THAT WILL TAKE THE MATTER UNDER THE SCOPE OF SECTION 26 3. THE VIEW TAKEN BY THE ASSESSING OFFICER SHOULD NOT BE A MERE VIEW IN VACUUM BUT A JUDICIAL VIEW. IT IS WELL ESTA BLISHED THAT THE ASSESSING OFFICER BEING A QUASI-JUDICIAL A UTHORITY CANNOT TAKE A VIEW, EITHER AGAINST OR IN FAVOUR OF THE ASSESSEE / REVENUE, WITHOUT MAKING PROPER INQUIRIES AND WITHOUT PROPER EXAMINATION OF THE CLAIM MADE BY THE ASSESSEE IN THE LIGHT OF THE APPLICABLE LAW. AS A LREADY STATED EARLIER, WE ARE NOT ABLE TO APPRECIATE ON WH AT MATERIAL WAS PLACED BEFORE THE ASSESSING OFFICER AT THE ASSESSMENT STAGE TO TAKE SUCH A VIEW. THE ASSESSEE HAS ALSO NOT BEEN ABLE TO SHOW TO US THAT ANY INQUIRY W AS MADE BY THE ASSESSING OFFICER IN THIS REGARD. THEREFORE MERE ALLEGATION THAT THE ASSESSING OFFICER HAS TAKEN A V IEW IN THE MATTER WILL NOT PUT THE MATTER BEYOND THE PURVIEW O F SECTION 263 UNLESS THE VIEW SO TAKEN BY THE ASSESSI NG OFFICER IS A JUDICIAL VIEW CONSCIOUSLY BASED UPON P ROPER INQUIRIES AND APPRECIATION OF ALL THE RELEVANT FACT UAL AND LEGAL ASPECTS OF THE CASE. THE JUDICIAL VIEW TAKEN BY THE ASSESSING OFFICER MAY PERHAPS PLACE THE MATTER OUTS IDE THE PURVIEW OF SECTION 263 UNLESS IT IS SHOWN THAT THE VIEW SO TAKEN BY THE ASSESSING OFFICER CONTAINS SOME APPARE NT ERROR OF REASONING OR OF LAW OR OF FACT ON THE FACE OF IT. 14. THE LEARNED COUNSEL HAS STRONGLY RELIED UPON T HE FOLLOWING OBSERVATIONS MADE IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. (SUPRA) AND SUBMITTED THAT THE LEARNED ITA NO.1488/H/2010 M/S AKASH HOTELS P LTD., HYDERABAD 14 COMMISSIONER WAS NOT JUSTIFIED IN SUBSTITUTING HIS VIEW FOR THAT OF THE ASSESSING OFFICER: ... EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL 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 THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. 15. WE HAVE CAREFULLY GONE THROUGH THE AFORESAID OBSERVATIONS. 'ADOPTING' ONE OF THE COURSES PERMISS IBLE IN LAW NECESSARILY REQUIRES THE ASSESSING OFFICER TO C ONSCIOUSLY ANALYSE AND EVALUATE THE FACTS IN THE LIGHT OF RELE VANT LAW AND BRING THEM ON RECORD. IT IS ONLY THEN THAT HE C AN 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 PERMISSIBLE IN LAW WHEN HIS ORDER DOES NOT S PEAK IN THAT BEHALF. SIMILARLY, 'TAKING' ONE VIEW WHERE TWO OR MORE VIEWS ARE POSSIBLE ALSO NECESSARILY IMPORTS THE REQ UIREMENT OF ANALYSING THE FACTS IN THE LIGHT OF APPLICABLE L AW. THEREFORE, PROPER EXAMINATION OF FACTS IN THE LIGHT OF RELEVANT LAW IS A NECESSARY CONCOMITANT IN ORDER TO SAY THAT THE ASSESSING OFFICER HAS ADOPTED A PERMISSIBLE COU RSE OF LAW OR TAKEN A VIEW WHERE TWO OR MORE VIEWS ARE POS SIBLE. 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 A VAILABLE ITA NO.1488/H/2010 M/S AKASH HOTELS P LTD., HYDERABAD 15 IN LAW OR WHAT ARE THE POSSIBLE VIEWS ON THE ISSUE BEFORE HIM. IN CASE HE COMES TO THE CONCLUSION THAT MORE T HAN ONE VIEW IS POSSIBLE THEN HE HAS NECESSARILY TO CHOOSE A VIEW, WHICH IS MOST APPROPRIATE ON THE FACTS OF THE CASE. IN ORDER TO APPLY THE AFORESAID OBSERVATIONS TO A GIVEN CASE , IT MUST THEREFORE FIRST BE SHOWN THAT THE ASSESSING OFFICER HAS 'ADOPTED' A PERMISSIBLE 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 UND ER SECTION 263. THIS REQUIRES THE ASSESSING OFFICER TO TAKE A CONSCIOUS DECISION; ELSE HE WOULD NEITHER BE ABLE T O 'ADOPT' A COURSE PERMISSIBLE IN LAW NOR 'TAKE' A VIEW WHERE TWO OR MORE VIEWS ARE POSSIBLE. IN OTHER WORDS, IT IS THE ASSESSING OFFICER WHO HAS TO ADOPT A PERMISSIBLE COURSE OF LA W OR TAKE A VIEW WHERE TWO OR MORE VIEWS ARE POSSIBLE. IT IS DIFFICULT TO COMPREHEND AS TO HOW THE ASSESSING OFFICER CAN BE ATTRIBUTED TO HAVE 'ADOPTED' A PERMISSIBLE COURSE O F LAW OR 'TAKEN' A VIEW WHERE TWO OR MORE VIEWS ARE POSSIBLE WHEN THE ORDER PASSED BY HIM DOES NOT SPEAK IN THAT BEHA LF. WE CANNOT ASSUME, IN ORDER TO PROVIDE LEGITIMACY TO TH E ASSESSMENT ORDER, THAT THE ASSESSING OFFICER HAS AD OPTED 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 ACCEPTED, WOULD REQUIRE US TO F ORM, SUBSTITUTE AND READ OUR VIEW IN THE ORDER OF THE AS SESSING OFFICER WHEN THE ASSESSING OFFICER HIMSELF HAS NOT TAKEN A VIEW. IT COULD HAVE BEEN A DIFFERENT POSITION IF TH E ASSESSING OFFICER HAD 'ADOPTED' OR 'TAKEN' A VIEW AFTER ANALY SING THE FACTS AND DECIDING THE MATTER IN THE LIGHT OF THE A PPLICABLE 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 ITA NO.1488/H/2010 M/S AKASH HOTELS P LTD., HYDERABAD 16 QUESTION OF HIS ADOPTING OR CHOOSING ONE VIEW IN PR EFERENCE TO THE OTHER DOES NOT ARISE. THE AFORESAID OBSERVAT IONS OF THE HON'BLE SUPREME COURT DO NOT, IN OUR VIEW, HELP THE ASSESSEE; AND RATHER THEY ARE AGAINST THE ASSESSEE. 16. IN THE CASE OF PADMASUNDARA RAO V. STATE OF TA MIL NADU (255 ITR 147), THE HON'BLE SUPREME COURT HAS H ELD THAT '... 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 ADDITIONAL OR DIFFERENT FACT MAY MAKE A WORLD OF DIFFERENCE BETWEEN CONCLUSIONS IN TWO CASES....' THEREFORE, THE 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 QUITE EVIDENT THAT THE ORDERS PASSED ON AN INCORRECT 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. ITA NO.1488/H/2010 M/S AKASH HOTELS P LTD., HYDERABAD 17 17. IT WAS NEXT CONTENDED BY THE LEARNED AUTHORISE D REPRESENTATIVE THAT THE ASSESSING OFFICER HAD CONSI DERED ALL THE RELEVANT ASPECTS OF THE CASE CAREFULLY WHILE PA SSING THE ORDER. ACCORDING TO HIM, THE MERE FACT THAT THE ASS ESSMENT ORDER PASSED BY THE ASSESSING OFFICER WAS SHORT WOU LD NEITHER MEAN FAILURE ON HIS PART IN NOT EXAMINING T HE MATTER CAREFULLY NOR WOULD RENDER HIS ORDER ERRONEO US SO LONG AS THE VIEW TAKEN BY HIM WAS A POSSIBLE VIEW. IN OUR VIEW, THE AFORESAID SUBMISSION OF THE ASSESSEE MUST FAIL FOR THE REASONS ALREADY EXPLAINED IN THE FOREGOING PARA S OF THIS ORDER AS THE ORDER, WHICH IS SOUGHT TO BE REVISED UNDER SECTION 263 REFLECTS NO PROPER APPLICATION OF MIND BY THE ASSESSING OFFICER AND THUS BE AMENABLE TO REVISION UNDER SECTION 263. IN THIS CASE BEFORE US, THE ASSESSMEN T ORDER PASSED BY THE ASSESSING OFFICER LACKS JUDICIAL STRE NGTH TO STAND. IT IS NOT A CASE WHERE THE ORDER IS SHORT BU T IS NOT SUPPORTED BY JUDICIAL STRENGTH. IT IS IN THIS VIEW OF THE MATTER THAT WE FEEL THAT THE LEARNED COMMISSIONER H AS CORRECTLY EXERCISED HIS REVISIONAL JURISDICTION UND ER SECTION 263. 18. IN OUR OPINION, THE ASSESSING OFFICER HAS BEEN ENTRUSTED THE ROLE OF AN INVESTIGATOR, PROSECUTOR A S WELL AS ADJUDICATOR UNDER THE SCHEME OF THE INCOME-TAX ACT. IF HE COMMITS AN ERROR WHILE DISCHARGING THE AFORESAID RO LES AND CONSEQUENTLY PASSES AN ERRONEOUS ORDER CAUSING PREJ UDICE EITHER TO THE ASSESSEE OR TO THE STATE EXCHEQUER OR TO BOTH, THE ORDER SO PASSED BY HIM IS LIABLE TO BE CORRECTE D. AS MENTIONED EARLIER, THE ASSESSEE CAN HAVE THE PREJUD ICE CAUSED TO HIM CORRECTED BY FILING AN APPEAL; AS AL SO BY FILING A REVISION APPLICATION UNDER SECTION 264. BU T THE STATE EXCHEQUER HAS NO RIGHT OF APPEAL AGAINST THE ORDERS OF ITA NO.1488/H/2010 M/S AKASH HOTELS P LTD., HYDERABAD 18 THE ASSESSING OFFICER. SECTION 263 HAS THEREFORE BE EN ENACTED TO EMPOWER THE COMMISSIONER TO CORRECT AN ERRONEOUS ORDER-PASSED BY THE ASSESSING OFFICER WHI CH HE CONSIDERS TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE COMMISSIONER HAS ALSO BEEN EMPOWERED TO INVOKE HIS REVISIONAL JURISDICTION UNDER SECTION 264 AT THE IN STANCE OF THE ASSESSEE ALSO. THE LINE OF DIFFERENCE BETWEEN S ECTIONS 263 AND 264 IS THAT WHILE THE FORMER CAN BE INVOKED TO REMOVE THE PREJUDICE CAUSED TO THE STATE THE LATER CAN BE INVOKED TO REMOVE THE PREJUDICE CAUSED TO THE ASSES SEE. THE PROVISIONS OF SECTION 263 WOULD LOSE SIGNIFICANCE I F THEY WERE TO BE INTERPRETED IN A MANNER THAT PREVENTED T HE COMMISSIONER FROM REVISING THE ERRONEOUS ORDER PASS ED BY THE ASSESSING OFFICER, WHICH WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN FACT, SUCH A COURSE WOULD BE COU NTER PRODUCTIVE AS IT WOULD HAVE THE EFFECT OF PROMOTING ARBITRARINESS IN THE DECISIONS OF THE ASSESSING OFF ICERS AND THUS DESTROY THE VERY FABRIC OF SOUND TAX DISCIPLIN E. 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 THE VIEW THAT THE ORDERS PASSED ON AN INCORRECT ASS UMPTION OF FACTS OR INCORRECT APPLICATION OF LAW OR WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLIC ATION OF MIND OR WITHOUT MAKING REQUISITE INQUIRIES WILL SAT ISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF THE REVENUE WITHIN THE MEANING OF S ECTION 263. ITA NO.1488/H/2010 M/S AKASH HOTELS P LTD., HYDERABAD 19 19. NOW WE WILL TAKE UP THE MERIT OF THE ISSUE RAI SED BY THE ASSESSEE BEFORE US. IN OUR OPINION, THERE WAS A CONSENT GIVEN BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON POINTING OUT THE DEFICIENCY IN THE ASSE SSMENT ORDER BY THE CIT AND HE HAS AGREED WITH THE CIT TO SET ASIDE THE ASSESSMENT ORDER FOR FRESH CONSIDERATION ON THE ISSUE RAISED IN THE NOTICE ISSUED U/S 263. ACCORDINGLY, THE CIT HAS GIVEN A DIRECTION TO THE ASSESSING OFFICER TO R E-EXAMINE THE ISSUES RELATING TO PRIOR PERIOD INCOME AND INST ITUTIONAL INTEREST PAID ACCOUNT AND COMPUTATION OF BOOK PROFI T U/S 115JB. BEING SO, THE ASSESSEE CANNOT HAVE ANY GRIE VANCE IN THE DIRECTION OF THE CIT TO ASSESSING OFFICER TO RE-EXAMINE THE ISSUE. THE CONSENT GIVEN BY THE ASSESSEE TO CI T AT THE TIME OF PASSING THE REVISIONAL ORDER IS VERY SIGNIF ICANT AND ON THAT BASIS THE CIT HAS GIVEN DIRECTION TO ASSESS ING OFFICER FOR RE-EXAMINATION OF ISSUE RAISED IN THE S HOW CAUSE NOTICE. WE CANNOT FIND ANY MERIT IN THE ARGUMENTS OF THE ASSESSEES COUNSEL THAT REVISIONAL ORDER WILL RESUL T IN ROVING ENQUIRY BY THE ASSESSING OFFICER. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO RE-EXAMINE ONLY TH OSE ISSUES DEALT BY CIT IN HIS ORDER PASSED U/S 263 AND DECIDE THE SAME IN ACCORDANCE WITH THE LAW. 20. AT THIS STAGE WE REFRAIN FROM GOING INTO THE M ERITS OF THE ISSUE RAISED BY THE ASSESSEES COUNSEL THOUGH T HE ASSESSEES COUNSEL RELIED ON SOME UNREPORTED ORDERS OF THE DELHI HIGH COURT DATED 18.2.2011 IN THE CASE OF LOG ISTICS P LTD. IN ITA NO.1623/H/2010 AND IN ITA NO.503/H/ 201 0. ITA NO.1488/H/2010 M/S AKASH HOTELS P LTD., HYDERABAD 20 21. IN THE RESULT, THE ASSESSEES APPEAL STANDS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 11. 8.2011 SD/- SD/- (G.C. GUPTA) (CHANDRA POOJARI) VICE PRESIDENT ACCOUNTANT M EMBER DATED THE 11 TH AUGUST, 2011 COPY FORWARDED TO: 1. SHRI P. MURALI & CO., C AS, 6-3-655/2/3/1 ST FLOOR, SOMAJIGUDA, HYDERABAD-82. C/O M/S AKASH HOTELS P LTD., 11-4-649/ AC GUARDS, LAKDIKAPUL, HYDERABAD 2. THE CIT, HYDERABAD-I 3. THE CIT, HYDERABAD 4. THE DR, ITAT, HYDERABAD NP/