WINVEST HOLDINGS (I) PVT. LTD., CHENNAI V. ACIT CORPORATE CIRCLE 3(2), CHENNAI

ITA 1519/CHNY/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5028 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 14-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR P DANIEL
• Keywords: Opportunity of being heard; Principle of natural justice; Cost of acquisition; Reassessment proceedings; Set aside
• Section: 54F; 142(1); 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH : CHENNAI , . , [BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ] !' ./I.T.A. NO.1519/CHNY/2019. #$% &$ / ASSESSMENT YEAR : 2014-2015. M/S. WINVEST HOLDINGS (I) PVT. LTD, D-16, 2 ND FLOOR, NELSON CHAMBERS, NO.115 NELSON MANICKAM ROAD, AMINJIKARAI, CHENNAI 600 029. VS THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(2), CHENNAI. [PAN AAACW 7724Q] ( / APPELLANT) ( /RESPONDENT) !' '( ) * / APPELLANT BY : DR. P. DANIEL, ADVOCATE +,'( ) * /RESPONDENT BY : SHRI. SAILENDRA MAMIDI, PCIT. # - ) . /DATE OF HEARING : 17-07-2019 /0&% ) . /DATE OF PRONOUNCEMENT : 23-08-2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED A GAINST THE ORDER OF THE LD. PRINCIPAL COMMISSIONER OF INC OME TAX- 3, CHENNAI (PCIT FOR SHORT) DATED 27.03.2019 FOR THE ASSESSM ENT YEAR (AY) ITA NO.1519 /2019 :- 2 -: 2014-015 PASSED U/S.263 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE LEARNED PRINCIPAL COMMISSIONER OF INCOME T AX -3, CHENNAI ERRED IN LAW AND ON THE FACTS AND IN THE CI RCUMSTANCES OF THE CASE IN HOLDING THAT THE ORDER DATED: 07.11. 2016 PASSED BY THE ASSESSING OFFICER U!S.143 (3) OF THE INCOME TAX ACT, 1961 WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE WITHIN THE MEANING OF SECTION 263 OF THE INCOME TAX ACT, 1961. 2. THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX -3, CHENNAI ERRED IN LAW AND ON THE FACTS AND IN THE CI RCUMSTANCES OF THE CASE IN HOLDING THAT THE APPELLANT HAVE TO U LTIMATELY ESTABLISH THAT THE PAYMENTS OF RS.28,86,59,6681- HA VE BEEN INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE TRANSFER OF SHARES. 3. THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX -3, CHENNAI ERRED IN LAW AND ON THE FACTS AND IN THE CI RCUMSTANCES OF THE CASE IN DIRECTING THE ASSESSING OFFICER TO V ERIFY THE CLAIM OF THE APPELLANT THAT NO DEDUCTION OF FOREIGN EXCHA NGE FLUCTUATION EXPENSES AMOUNTING TO RS.6,31,12,289/- EVEN THOUGH THE APPELLANT DENIED HAVING CLAIMED ANY SUCH EXPENSES. 4. THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX -3, CHENNAI ERRED IN LAW AND ON THE FACTS AND IN THE CI RCUMSTANCES OF THE CASE IN DIRECTING THE ASSESSING OFFICER TO M AKE FISHING AND ROVING ENQUIRIES IN CONCLUDED MATTERS. 5. (I) THE ORDER OF PRINCIPAL COMMISSION OF INCOME TAX 3, CHENNAI BEING CONTRARY TO LAWS, EVIDENCE AND FACTS OF THE CASE MAY BE SET ASIDE/CANCELLED/AMENDED OR MODIFIED. (II) EACH GROUND OF APPEAL HEREINABOVE IS INDEPENDE NT AND WITHOUT PREJUDICE TO EACH OTHER. (III) THE APPELLANT CRAVES LEAVE TO RESERVE TO ITSE LF THE RIGHT TO ADD, AFTER, AMEND OR ANNUL ANY OF THE GROUNDS OF AP PEAL AT OR ITA NO.1519 /2019 :- 3 -: BEFORE THE TIME OF HEARING AND TO PRODUCE SUCH FURT HER EVIDENCES, DOCUMENTS AND PAPERS AS MAY BE NECESSARY . 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT NAMELY M/S. WINVEST HOLDINGS (I) PVT. LTD IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE CO MPANIES ACT, 1956. IT IS ENGAGED IN THE BUSINESS OF INVESTMENT . TRADING IN SHARES, STOCKS, DEBENTURES, BONDS ETC., THE RETURN OF INC OME FOR THE AY 2014-2015 WAS FILED ON 29.09.2014 DISCLOSING TOT AL INCOME OF RS. 722,84,21,180/-. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED BY THE ASSISTANT COMMISSIONER OF INCO ME TAX, CORPORATE CIRCLE-3(2), CHENNAI (HEREINAFTER CALLED AO) VIDE ORDER DATED 07.11.2016 PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ACCEPTING THE RETURNED INCOME. 4. THE RETURNED INCOME INCLUDES CAPITAL GAINS OF ` 722,11,72,932/- ARISING ON SALE OF SHARES OF PRIZM PAYMENT SERVICES PVT. LTD. IT IS A MATTER OF RECORD THAT THE APPEL LANT HAD SOLD THE SHARES OF PRIZM PAYMENT SERVICES PVT. LTD. HELD BY IT FOR A TOTAL SALE CONSIDERATION OF ` 779,37,71,993/- AFTER REDUCING THE INDEXED COST OF ACQUISITION OF ` 4,82,20,969/- LONG TERM CAPITAL GAINS WERE COMPUTED AT ` 774,55,51,024/-. FROM THIS SUM, A SUM OF ` 52,43,78,092/- WAS ITA NO.1519 /2019 :- 4 -: CLAIMED AS DEDUCTION IN CONNECTION WITH TRANSFER OF SUCH SHARES. WHICH INCLUDES PAYMENT OF EXGRATIA TO THE EMPLOYEE DIRECTORS ` 28,86,59,668/-. IT APPEARS THAT DURING THE COURS E OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAD CALLED FOR THE DETAILS OF THE CLAIM OF EXPENDITURE VIDE NOTICE DATED 24.05.2016 BY ISSUING NOTICE U/S.142(1) OF THE ACT. THE APPELLANT HAD FILED D ETAILED INFORMATION VIDE ITS LETTER DATED 03.11.2016 REGARDING CLAIM O F ALLOWANCE OF EXPENDITURE INCURRED IN CONNECTION WITH SALE OF SHA RES. THE ASSESSING OFFICER AFTER CONSIDERATION OF THE MATERIALS ON RE CORD AND SUBMISSIONS OF THE ASSESSEE ACCEPTED THE RETURNED INCOME. 5. SUBSEQUENTLY, THE LD. PCIT ON SUO-MOTU EXAMINATIO N OF THE RECORDS CAME TO CONCLUSION THAT ASSESSMENT ORDER P ASSED IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE R EVENUE SINCE ACCORDING TO HIM THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER WITHOUT ENQUIRING INTO THE ALLOWABILITY OF EXPEND ITURE OF EXGRATIA PAYMENT MADE TO THE EMPLOYEE DIRECTORS OF J28,86,59 ,668/- IN CONNECTION WITH THE SALE OF THE SHARES AND ALSO CLA IM TOWARDS EXCHANGE FLUCTUATION EXPENDITURE OF J6,31,12,289/- . ACCORDINGLY, THE LD. PCIT ISSUED SHOW CAUSE NOTICE DATED 07.02.2019 U/S.263 OF THE ACT CALLING UPON THE APPELLANT TO SHOW CAUSE WHY THE ASSESSMENT ORDER SHOULD NOT BE TREATED AS ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF THE REVENUE AND BE REVISED UNDER THE PO WERS OF VESTED ITA NO.1519 /2019 :- 5 -: WITH HIM UNDER THE PROVISIONS OF SECTION 263 OF T HE ACT. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE MADE DETAILE D SUBMISSIONS ON VARIOUS DATES I.E. 25.02.2019, 05.03.2019 AND 08.03 .2019 AND SUBMITTED THAT THE PAYMENT HAD BEEN MADE TO THE E MPLOYEE DIRECTORS FOR RENDERING THE FOLLOWING SERVICES. IDENTIFYING POSSIBLE DEVELOPMENT OPPORTUNITIES F OR SALE BY THE COMPANY OF ITS STAKE IN ITS SUBSIDIARY UNDERTAK ING THE ATM DEPLOYMENT AND ELECTRONIC FINANCIAL TRANSACTION S PROCESSING BUSINESS AND IN EVALUATE THE POSSIBLE STRATEGY FOR SUCH DIVESTMENT; EVALUATION OF AND ADVISING ON THE TRANSACTION STRUC TURE, SALE PRICE AND COMMERCIAL TERMS; IDENTIFICATION AND APPOINTMENT OF MERCHANT BANKER ( S) AND OTHER ADVISORS AND COORDINATING WITH THEM: PREPARE PLANNING DOCUMENT, BUDGETING FINANCIALS, CA SH REPORT AND CASH FLOW PROJECTIONS, DETAILED REPORT ON FINAN CIAL OPERATING AND BUSINESS PLANS; UNDERTAKE MARKET RESEARCH, MARKET STUDIES, LONGT ERM AND SHORT TERM STRATEGIC PLANS AND VALUATION ANALYSI S. PROVIDE A DETAILED REPORT ON THE PROCESS INVOLVED I N THE ATM DEPLOYMENT SERVICES, MULTI-VENDOR SERVICES AND FIEL D SERVICES AND LEAD THE TEAM FOR COORDINATING AND EXPLAINING A TM DEPLOYMENT OPERATIONS AND OPERATIONS OF THE BUSINE SS, SUPPORT OPERATIONAL AND FINANCIAL DUE DILIGENCE TE AM. ITA NO.1519 /2019 :- 6 -: IT IS FURTHER CONTENDED THAT SERVICES WERE RENDERE D WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE TRANSFER OF SHA RES AND THEREFORE THE SAME IS ALLOWABLE AS DEDUCTION WHILE COMPUTING CA PITAL GAINS ARISING ON SALE OF SHARES OF PRIZM PAYMENT SERVICES PVT. LT D. AS REGARDS TO THE CLAIM OF LOSS TOWARDS EXCHANGE FLUCTUATION ON DEFER RED RECEIVABLES, IT IS SUBMITTED THAT NO CLAIM FOR DEDUCTION WAS MADE , THEREFORE THE QUESTION OF DISALLOWANCE DOES NOT ARISE. FURTHER, IT WAS CONTENTED THAT THE ISSUE SOUGHT TO BE REVISED WERE EXAMINE D BY THE ASSESSING OFFICER DURING THE COURSE OF ORIGINAL ASSESSMENT PR OCEEDINGS AND THE ASSESSING OFFICER TOOK POSSIBLE VIEW THAT EXPENDI TURE IS ALLOWABLE AS DEDUCTION U/S.48 (I) OF THE ACT ON CONSIDERATION OF FULL MATERIAL AND INFORMATION ON RECORD. THE APPELLANT FURTHER CONTE NDED THAT THE POWERS OF REVISION CANNOT BE INVOKED FOR THE PURPOS E OF MAKING ROVING AND FISHING ENQUIRY. THUS, IT WAS CONTENDED THAT ASSESSMENT ORDER CANNOT BE SAID TO BE ERRONEOUS AND PREJUDICIA L TO THE INTEREST OF THE REVENUE, PLACING RELIANCE ON THE PLETHORA OF FOLLOWING DECISIONS. I) CIT VS. R. RAMANATHAN CHETTIAR (1985) 20 TAXMAN 2 32. II) CIT VS. VENKATA RAJENDRAN, (2015) 373 ITR 424. III) VAIPA PHARMACEUTICALS (P) LTD VS. ACIT, (2017) 46 ITR (T) 109. ITA NO.1519 /2019 :- 7 -: 6. THE LEARNED PCIT AFTER CONSIDERING THE MATERIAL ON RECORDS AND THE SUBMISSIONS MADE BY THE ASSESSEE CONCLUDED THAT THE ASSESSING OFFICER HAD ALLOWED EXPENDITURE OF J28,86 ,59,668/- WITHOUT EXAMINATION AND APPLICATION OF MIND AND ACCORDINGLY HELD THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND SET ASIDE THE ASSESSMENT, AND DIRECTED THE ASSESSING OFFICER TO REDO THE ASSESSMENT AFTER DUE ENQUIRY A ND EXAMINATION AND GIVING OPPORTUNITY OF HEARING TO THE APPELLANT VIDE ORDER DATED 27.03.2019 PASSED U/S.263 OF THE ACT. 7. BEING AGGRIEVED BY THE ORDER OF THE LD. PCIT, THE APPELLANT IS IN APPEAL BEFORE US IN THE PRESENT APPEAL. 8. THE LD. COUNSEL FOR THE APPELLANT CONTENDED THAT TH E ASSESSMENT ORDER WAS PASSED AFTER DUE EXAMINATION AND ENQUIRY OF THE ISSUES SOUGHT TO BE REVISED IN THE IMPUGNED ORD ER. THUS IT WAS SUBMITTED THAT IT IS NOT CASE OF LACK OF ENQUIRY, THEREFORE THE ASSESSMENT ORDER CANNOT BE SAID TO BE ERRONEOUS. I N THE ABSENCES OF SATISFYING THE TWIN CONDITIONS I.E. THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND PREJUDICIA L TO THE INTEREST OF REVENUE, THE LD. PCIT CANNOT EXERCISE POWER OF REVI SION U/S.263 OF THE ACT. IN THIS CONNECTION, HE PLACED RELIANCE ON THE JUDGMENT OF HON'BLE ITA NO.1519 /2019 :- 8 -: SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD VS. CIT, 243, ITR 83 AND ALSO THE FOLLOWING DECISIONS OF VARIOUS HONBLE HIGH COURTS. (I) DAVJEE DADABHOY AND CO. VS. S.P. JAIN, (1957) 31 ITR 872 (II) CIT VS. T. NARAYANA PAI, (1975) 98 ITR 422. (III) CIT VS. GABRIEL INDIA LTD, (1993) 203 ITR 108. (IV) CIT VS. SMT. MINALBEN S. PARIKH, (1995) 215 ITR 81. (V) CIT VS. G.R. THANGAMALIGAI, (2003) 259 ITR 129. IT IS FURTHER CONTENDED THAT ASSESSMENT ORDER WAS PASSED AFTER MAKING DUE ENQUIRY ON THE ISSUES SOUGHT TO BE REVI SED, IN CASE IF THE LD. PCIT WAS OF THE OPINION THAT THE ASSESSING OFFICER HAD NOT MADE ANY ENQUIRY ON THE ISSUES THEN IT WAS FOR THE LD. PCIT TO MAKE NECESSARY ENQUIRY AND GIVE FINDING THAT THE ASSES SMENT ORDER IS ERRONEOUS AND THE LD. PCIT CANNOT SET ASIDE THE ASS ESSMENT ORDER TO THE ASSESSING OFFICER FOR THE PURPOSE OF MAKING AN ENQUIRY AFTER PASSING THE ORDER OF REVISION U/S.263 OF THE ACT. R ELIANCE IN THIS REGARD WERE PLACED ON THE DECISIONS OF HONBLE DELHI HIGH COURT IN THE CASE OF ITO VS. D.G. HOUSING PROJECTS LTD (2012) 343 ITR 32 9 AND DIT VS. JYOTI FOUNDATION (2013) 357 ITR 38 8. IT IS FURTHER CONTENDED THAT MERE INADEQUATE ENQUIRY BY THE ASSESSING OFFICER D OES NOT CONFER JURISDICTION OF REVISION U/S.263 ON THE LD. PCIT. RELIANCE IN THIS REGARD WAS ALSO PLACED ON THE DECISION OF HONBLE DELHI H IGH COURT IN THE CASE OF CIT VS. SUNBEAM AUTO LTD (2011) 332 ITR 167 . FINALLY IT IS SUBMITTED THAT IN GARB OF EXERCISING POWERS U/S. 263 OF THE ACT, PCIT ITA NO.1519 /2019 :- 9 -: CANNOT INITIATE PROCEEDINGS WITH A VIEW TO START FISHING AND ROVING ENQUIRIES IN THE MATTERS OR ORDERS WHICH ARE ALRE ADY CONCLUDED. FURTHER, IT IS SUBMITTED THAT THERE WAS NO LOSS OF REVENUE AS THE PAYEES HAVE PAID THE TAXES THEREON. IN THE ABSENC E OF ANY FINDING BY THE LD. PCIT AS TO THE LOSS OF REVENUE, HE CAN NOT EXERCISE THE POWER OF REVISION VESTED WITH HIM U/S 263 OF THE AC T. RELIANCE IN THIS REGARD WAS PLACED ON THE JUDGMENT OF HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF CIT VS. G.R. THANGAMALIGAI (2 003) 259 ITR 129. THUS, THE LD. COUNSEL SUBMITTED THAT REVISION PROCE EDINGS U/S.263 OF THE ACT SHOULD BE SQUASHED. 9. ON THE OTHER HAND, THE LD. PCIT (DEPARTMENTAL REPRESENTATIVE) PLACED RELIANCE ON THE ORDER OF TH E LD. PCIT. 10. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. THE ONLY ISSUE INVOLVED IN THE PRESENT APPE AL RELATES TO THE VALIDITY OF THE REVISION PROCEEDINGS INITIATED B Y THE LD. PCIT UNDER THE PROVISIONS OF SECTION 263 OF THE ACT. NOW IT IS SETTLED POSITION OF LAW THAT IN ORDER TO INVOKE THE PROVISIONS OF SECT ION 263 OF THE ACT, IT IS INCUMBENT ON THE LD. PCIT TO SATISFY HIMSELF TH E FOLLOWING TWIN CONDITIONS NAMELY (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REV ISED IS ERRONEOUS; AND ITA NO.1519 /2019 :- 10 -: (II) IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. ARE SATISFIED CUMULATIVELY. REFERENCE IN THIS REG ARD CAN BE MADE TO THE DECISIONS OF HON'BLE SUPREME COURT IN THE CASES OF MALABAR INDUSTRIAL CO. LTD (SUPRA) AND CIT VS. MAX INDIA LTD, (2007) 295 ITR 282 . THEREFORE THE QUESTION THAT COMES UP FOR OUR CON SIDERATION WHETHER THE ASSESSMENT ORDER SOUGHT TO BE REVISED CAN BE CONSIDERED AS ERRONEOUS AND PREJUDICIAL TO THE INT ERESTS OF THE REVENUE. THE COURTS HAD LAID DOWN THE FOLLOWING P ARAMETERS TO DETERMINE WHETHER THE ASSESSMENT ORDER IS ERRONEO US OR NOT. (I) AN ORDER IS ERRONEOUS WHEN IT IS CONTRARY TO LAW OR PROCEEDS ON AN INCORRECT ASSUMPTION OF FACTS OR IS III BREACH OF PRINCIPLES OF NATURAL JUSTICE OR IS PASSE D WITHOUT APPLICATION OF MIND, THAT IS, IS STEREO-TYPED INASM UCH AS THE ASSESSING OFFICER ACCEPTS WHAT IS SLATED IN THE RETURN OF THE ASSESSEE WITHOUT MAKING ANY ENQUIRY CALLED F OR IN THE CIRCUMSTANCES OF THE CASE, I.E., PROCEEDS WITH UNDUE HASTE. (II) THE EXPRESSION PREJUDICIAL TO THE INTEREST OF THE REVENUE WHILE NOT TO BE CONFUSED WITH THE LOSS OF TAX WILL CERTAINLY INCLUDE AN ERRONEOUS ORDER WHICH RESULTS IN A PERSON NOT PAYING TAX WHICH IS LAWFULLY PAYABLE TO THE REVENUE. (III) EVERY LOSS OF TAX TO THE REVENUE CANNOT BE TR EATED AS BEING PREJUDICIAL TO THE INTEREST OF THE REVENUE. FOR EXAMPLE, WHEN THE ASSESSING OFFICER TAKES RECOURSE TO ONE OF THE TWO COURSES POSSIBLE, IN LAW, OR WHERE THERE ARE TWO VIEWS POSSIBLE AND THE COMMISSIONER DOES NOT AGREE WITH THE VIEW TAKEN BY THE ASSESSING OFFICER WHICH HAS R ESULTED IN A LOSS. (IV) THERE IS NO REQUIREMENT OF ISSUANCE OF A NOTIC E BEFORE COMMENCING PROCEEDINGS UNDER SECTION 263. WHAT IS ITA NO.1519 /2019 :- 11 -: REQUIRED IS ADHERENCE TO THE PRINCIPLES OF NATURAL JUSTICE BY GRANTING TO THE ASSESSEE AN OPPORTUNITY OF BEING HE ARD BEFORE PASSING AN ORDER UNDER SECTION 263. (V) IF THE ASSESSING OFFICER ACTS IN ACCORDANCE WIT H LAW, HIS ORDER CANNOT BE TERMED AS ERRONEOUS BY THE COMMISSIONER, SIMPLY BECAUSE ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. RECOU RSE CANNOT BE TAKEN TO SECTION 263 TO SUBSTITUTE THE VI EW OF THE ASSESSING OFFICER WITH THAT OF THE COMMISSIONER . THE EXPLANATION 2 TO SEC 263 OF THE ACT INSERTED W.E.F. 01.06.2015 BY FINANCE ACT, 2015 PROVIDES THAT AN ASSESSMENT ORDE R SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR IT IS PREJUDICE TO THE IN TEREST OF REVENUE IN THE FOLLOWING CIRCUMSTANCES. (A) THE ORDER IS PASSED WITHOUT MAKING INQUIRES OR VE RIFICATION WHICH SHOULD HAVE BEEN MADE; (B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQ UIRING INTO THE CLAIM; (C) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH ANY ORDER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119; OR (D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WITH AN Y DECISION, WHICH IS PREJUDICIAL TO THE ASSESSEE, REN DERED BY THE JURISDICTIONAL HIGH COURT OR SUPREME COURT IN THE C ASE OF THE ASSESSEE OR ANY OTHER PERSON. IN THE PRESENT CASE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER VIDE HIS NOTICE U/S.142(1) OF THE ACT DATED 24.05.2016 PLACED AT PAPER BOOK PAGE NO.88, SOUGHT DETAILS OF LONG TERM CAPITAL GAINS AND APPELLANT VIDE HIS LETTER DA TED 17.06.2016 ITA NO.1519 /2019 :- 12 -: FURNISHED THE DETAILS OF LONG TERM CAPITAL GAINS WH EREIN THE CLAIM FOR DEDUCTION OF EXPENDITURE INCURRED WHOLLY AND EXCLUS IVELY IN CONNECTION WITH THE SALE OF SHARES OF J52,43,78,092/- WHICH IN CLUDES EXGRATIA PAYMENT MADE TO THE EMPLOYEE DIRECTORS OF ` 28,86,59,668/- PLACED AT PAPER BOOK PAGES 99 & 100. THE ASSESSING OFFICER CONSIDERING THE DETAILS HAD ACCEPTED THE CLAIM FOR DEDUCTION OF EXP ENDITURE OF PAYMENT OF EXGRATIA TO EMPLOYEES DIRECTORS OF ` 28,86,59,668/-. HOWEVER, THE ASSESSMENT ORDER IS SILENT WITH RESPE CT TO THE ENQUIRES CONDUCTED BY THE ASSESSING OFFICER. THEREFORE THE ISSUE THAT MAY COME UP FOR CONSIDERATION IS WHETHER IN SUCH CIR CUMSTANCES, THE ASSESSMENT ORDER CAN BE TERMED AS ERRONEOUS AND PRE JUDICIAL TO THE INTERESTS OF THE REVENUE. HONBLE BOMBAY HIGH COUR T IN THE CASE OF CIT VS. GABRIEL INDIA LTD, (1993) 203 ITR 108 HAD H ELD THAT SIMPLY BECAUSE THE ASSESSING OFFICER DID NOT MAKE ELABORAT E DISCUSSION ON THE ISSUE IN THE ASSESSMENT ORDER IT CANNOT BE HELD THAT ASSESSMENT ORDER IS ERRONEOUS. THIS POSITION OF LAW WAS REITER ATED SUBSEQUENTLY BY VARIOUS HIGH COURTS. EVEN THE JURISDICTIONAL HIGH COURT IN THE CASE OF SM T . RENUKA PHILIP VS. ITO, 409 ITR 567 IN A CASE WHERE THE COMMISSIONER OF INCOME TAX, HAS SOUGHT TO REVISE TH E ASSESSMENT ORDER ON THE GROUND THAT THE ASSESSING OFFICER ALLO WED THE EXEMPTION CLAIMED U/S.54 OF THE ACT WITHOUT APPLICATION OF MI ND, THE HONBLE HIGH COURT HELD THAT IT CANNOT BE SAID THAT THERE IS NO APPLICATION OF MIND ITA NO.1519 /2019 :- 13 -: BY THE ASSESSING OFFICER ON ALLOWING THE EXEMPTION U/S.54F OF THE ACT MERELY BECAUSE THE ASSESSMENT ORDER IS SILENT ABOUT THE ENQUIRIES CONDUCTED BY THE ASSESSING OFFICER BY MAKING THE FO LLOWING OBSERVATIONS VIDE PARA 20 OF THE JUDGMENT. 20. ON A READING OF THE ABOVE, IT IS EVIDENTLY CL EAR THAT THE ASSESSEE HAD PRODUCED DOCUMENTS TO SHOW THAT THE PR OPERTY WAS UTILIZED FOR RESIDENTIAL PURPOSE. ON BEING SATI SFIED, THE ASSESSING OFFICER HAS EXTENDED THE BENEFIT OF DEDUC TION UNDER SECTION 54F OF THE ACT. THE ASSESSING OFFICER IS NOT EXPECTED TO WRITE A JUDGMENT AND HIS ORDER SHOULD R EVEAL APPLICATION OF MIND, WHICH IN OUR OPINION IS WRIT L ARGE ON THE FACE OF THE ORDER. THEREFORE, WE DO NOT APPROVE THE FINDING RENDERED BY THE COMMISSIONER IN HIS ORDER DATED MAR CH 14, 2012, THAT THE ASSESSING OFFICER DID NOT APPLY HIS MIND. UNFORTUNATELY, WHEN THE MATTER WAS TAKEN UP BEFORE THE TRIBUNAL, THE TRIBUNAL ALSO FAILED TO TAKE INTO CON SIDERATION, AS TO THE CLAIM MADE BY THE ASSESSEE AND THE EXERCI SE UNDERTAKEN BY THE ASSESSING OFFICER. THE FACT THAT THERE WAS AN ENQUIRY BY THE ASSESSIN G OFFICER CAN BE DEMONSTRATED WITH THE HELP OF MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, THE ASSESSING OFFICER ISSUED MANY NOT ICES U/S.143(2) AND 142(1) OF THE ACT ON VARIOUS DATES I.E. 31.08.2 015, 09.05.2016 AND 24.05.2016 AND THE ASSESSEE HAD ALSO VIDE LETT ERS DATED 14.09.2015, 18.05.2016, 17.06.2016, 03.11.2016 AND 04.11.2016 REPLIED TO THE ASSESSING OFFICER GIVING DETAILS, DO CUMENTS AND INFORMATION PERTAINING TO THE QUERIES RAISED BY THE ASSESSING OFFICER. THIS GOES TO PROVE THAT ASSESSMENT WAS NOT DONE IN UN DUE HASTE. ITA NO.1519 /2019 :- 14 -: THE FACT THAT THE ASSESSING OFFICER HAD CALLED FOR THE DETAILS OF THE EXPENDITURE INCURRED IN CONNECTION WITH THE TRANSF ER OF SHARES WOULD GO TO SHOW THAT THERE IS APPLICATION OF MIND ON T HE PART OF THE ASSESSING OFFICER. EVIDENTLY THE CLAIM FOR DEDUCTI ON OF EXPENDITURE IN CONNECTION OF TRANSFER OF SHARES WAS ALLOWED BY TH E ASSESSING OFFICER ON BEING SATISFIED WITH THE EXPLANATION AND THE E VIDENCE FILED BY THE ASSESSEE. THE FINDING OF THE LD. PCIT THAT THERE W AS NO ENQUIRY BY THE ASSESSING OFFICER IS FAR FROM TRUTH. THE LD. PCIT HAD NOT GIVEN FINDINGS WHAT ENQUIRY SHOULD HAVE BEEN CONDUCTED BY THE ASSESSING OFFICER ON THE ISSUE. IT IS FOR THE LD. PCIT TO CO NDUCT THE ENQUIRY FOR HIMSELF AND COME TO CONCLUSION THAT ASSESSMENT ORD ER IS ERRONEOUS AND THEN SET ASIDE THE ASSESSMENT ORDER TO THE ASSE SSING OFFICER TO REDO THE ASSESSMENT. IT IS SETTLED POSITION OF L AW THAT POWER OF REVISION CANNOT BE USED FOR THE PURPOSE OF MAKING R OVING AND FISHING ENQUIRES. THE HONBLE DELHI HIGH COURT IN THE CA SE OF CIT VS. ASHISH RAJPAL, (2010) 320 ITR 674, HAD HELD AS FOLLOWS:- 17.1 AS OBSERVED BY US ABOVE, THERE IS NO REQUIREMENT UNDER SECTION 263 OF THE ACT TO ISSUE A NOTICE BEFORE EMBARKING UPON A REVISIONARY PROCEEDINGS. TO THAT EXTENT THE SUBMISSION OF THE LEARNED COUNSEL FOR THE REVENUE MR.SANJEEV SABHARWA L HAS TO BE ACCEPTED. WHAT IS MANDATED UNDER SECTION 263 OF THE ACT IS THAT ONCE THE COMMISSIONER CALLS FOR AND EXAMINES THE RECORD, PERTAINING TO THE ASSESSEE , AND FORMS A PRIMA FACIE VIEW THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS BOTH ERRONEOUS AND PREJUDI CIAL TO THE INTEREST OF THE REVENUE, HE IS OBLIGED TO AF FORD AN OPPORTUNITY TO THE ASSESSEE BEFORE PASSING AN OR DER, ITA NO.1519 /2019 :- 15 -: TO THE PREJUDICE OF THE ASSESSEE. IN THE INSTANT CA SE, THE COMMISSIONER SOUGHT TO ACCORD SUCH AN OPPORTUNI TY TO THE ASSESSEE BY PUTTING HIM TO NOTICE AS REGARDS ASPECTS WHICH THE ASSESSING OFFICER HAD FAILED TO SCRUTINIZE. DURING THE COURSE OF THE REVISIONARY PROCEEDINGS THIS WAS CONVEYED TO THE ASSESSEE BY WA Y OF A NOTICE DATED MAY 11, 2006. IT IS NOT DISPUTED THAT IN THE ORDER DATED JANUARY 18/19, 2007, THE COMMISSIONER HAS REFERRED TO CERTAIN OTHER ISSUES WHICH DID NOT FORM PART OF THE INITIAL NOTICE DATED MAY 11, 2006. TO OUR MINDS IT WAS ALWAYS OPEN TO THE COMMISSIONER TO PUT SUCH ISSUES/DISCREPANCIES, FOUN D BY HIM BASED ON MATERIAL ON RECORD, TO THE ASSESSEE . IT IS TO BE NOTED, HOWEVER, THAT THE LEARNED COUNSEL F OR THE ASSESSEE VEHEMENTLY DENIED THAT THE ASSESSEE HA D BEEN GIVEN ANY OPPORTUNITY TO MEET ISSUES OTHER THA N THOSE TO WHICH REFERENCE HAS BEEN MADE IN THE COMMISSIONER' S NOTICE DATED MAY 11, 2006. FOR THIS PURPOSE, THE LEARNED COUNSEL FOR THE ASSESSEE SOUGH T TO PLACE RELIANCE ON THE IMPUGNED JUDGMENT PASSED BY T HE TRIBUNAL, WHEREIN THIS ASPECT OF THE MATTER HAS BEE N DISCUSSED ELABORATELY. IN ORDER TO SATISFY OURSELVE S WE CALLED UPON LEARNED COUNSEL FOR THE REVENUE MR. SANJEEV SABHARWAL TO PLACE ON RECORD ANY COMMUNICATION, ORDER OR ANY OTHER DOCUMENT WHICH WOULD SHOW THAT THE ASSESSEE HAD BEEN GIVEN AN OPPORTUNITY TO DEAL WITH THOSE ASPECTS WHICH DID NO T FORM PART OF THE INITIAL NOTICE DATED MAY 11, 2006, BUT WERE TAKEN INTO ACCOUNT BY THE COMMISSIONER WHILE PASSING HIS ORDER DATED JANUARY 18/19, 2007. IN THI S REGARD, THE LEARNED COUNSEL FOR THE REVENUE PLACED ON RECORD ORDER SHEET ENTRIES OF THE PROCEEDINGS CONDU CTED BY THE COMMISSIONER. WE HAVE ALREADY EXTRACTED THE ORDER SHEET ENTRIES COMMENCING FROM JUNE 15, 2005 T O JUNE 28, 2006. A PERUSAL OF THOSE ENTRIES WOULD CLE ARLY DEMONSTRATE THAT THERE IS NOTHING ON RECORD WHICH WOULD SHOW THAT THE ASSESSEE WAS GIVEN AN OPPORTUNI TY TO RESPOND TO THESE DISCREPANCIES WHICH FORMED PART OF THE ORDER IN REVISION DATED JANUARY 18/19, 2007, BU T WERE NOT PART OF NOTICE DATED MAY 11, 2006. THIS WA S PUT TO THE LEARNED COUNSEL FOR THE REVENUE, WHO IN RESPONSE FAIRLY CONCEDED THAT THERE WAS NOTHING ON RECORD WHICH WOULD ESTABLISH THE CONTRARY. IT WAS, HOWEVER, URGED BY THE LEARNED COUNSEL FOR THE REVEN UE MR.SANJEEV SABHARWAL THAT THE ASSESSEE WOULD HAVE H IS OPPORTUNITY TO GIVE SATISFACTORY REPLIES TO THE DISCREPANCIES RAISED IN THE REVISIONAL ORDER BEFORE THE ITA NO.1519 /2019 :- 16 -: ASSESSING OFFICER AND THAT SUCH AN OPPORTUNITY WOUL D MEET THE REQUIREMENTS OF THE PROVISION. WE ARE AFRA ID THAT THAT IS NOT THE POSITION ENVISAGED IN LAW. IF ONE WERE TO PERMIT CORRECTION OF SUCH A GRIEVOUS ERROR IN THE MANNER SUGGESTED IT WOULD TANTAMOUNT TO, IN A MANNER OF SPEAKING, CLOSING THE STABLE DOORS AFTER THE HORSE HAS BOLTED. THE ASSESSMENTS, UNLESS REOPENED BY PAYING FAITHFUL OBEISANCE TO STATUTORY PROVISIONS A ND CONDITIONALITIES PROVIDED THEREIN, ATTAIN FINALITY ON THEIR CONCLUSION. THE PROVISIONS OF SECTION 263 MANDATE T HAT AN ORDER FOR ENHANCING, OR MODIFYING THE ASSESSMENT , OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT CAN ONLY BE PASSED AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH ENQUIRY AS IS DEEMED NECESSARY. THE THRESHOLD CONDITION FOR REOPENING THE ASSESSMENT IS THAT BEFORE PASSING AN ORDER AN OPPORTUNITY HAS TO BE GRANTED TO THE ASSES SEE AND, SUCH AN OPPORTUNITY GRANTED TO THE ASSESSEE IS A NECESSARY CONCOMITANT OF THE ENQUIRY THE COMMISSIONER IS REQUIRED TO CONDUCT TO COME TO A CONCLUSION THAT AN ORDER FOR EITHER AN ENHANCEMENT OR MODIFICATION OF THE ASSESSMENT OR, AS IN THE PRESEN T CASE, AN ORDER FOR CANCELLATION OF THE ASSESSMENT I S CALLED FOR, WITH A DIRECTION TO THE ASSESSING OFFIC ER TO MAKE A FRESH ASSESSMENT. THIS DEFECT CANNOT BE CURE D BY FIRST REOPENING THE ASSESSMENT AND THEN GRANTING AN OPPORTUNITY TO THE ASSESSEE TO RESPOND TO THE ISSUE S RAISED BEFORE ASSESSING OFFICER DURING THE COURSE O F FRESH ASSESSMENT PROCEEDINGS. TO BUTTRESS HIS SUBMISSION THE LEARNED COUNSEL FOR THE REVENUE HAS RELIED UPON THE JUDGMENT OF THE SUPREME COURT IN TH E CASE OF RAMPYARI DEVI SARAOGI V. CIT [1968] 67 ITR 84 . THIS IS A CASE IN WHICH THE ORDER ISSUED BY THE COMMISSIONER, ITSELF REVEALED THAT THE ASSESSMENT W AS BEING REOPENED BASED ON AN ADDITIONAL SUPPORTING MATERIAL. THE SUPREME COURT IN SUCH FACT SITUATION THUS RULED THAT NON-SUPPLY OF ADDITIONAL SUPPORTING MATE RIAL WOULD NOT AFFECT THE BASIC ISSUE OF ASSESSMENT BEIN G CARRIED OUT WITHOUT ADEQUATE INVESTIGATION. IN THE INSTANT CASE THE ORDER IN REVISION REFERS TO ISSUES AND DISCREPANCIES WHICH DID NOT FIND MENTION IN THE INI TIAL NOTICE DATED MAY 11, 2006 AND NOT TO ADDITIONAL OR SUPPORTING MATERIAL AS IN THE CASE OF RAMPYARI DEVI SARAOGI V. CIT [1968] 67 ITR 84 . THEREFORE, TO SUGGEST THAT IT WOULD BE SUFFICIENT COMPLIANCE WITH THE PROVISIONS OF SECTION 263 OF THE ACT, IF AN OPPORTU NITY TO ITA NO.1519 /2019 :- 17 -: RESPOND TO THE DISCREPANCIES MENTIONED IN THE ORDER IN REVISION IS GIVEN TO THE ASSESSEE IN REASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER, IS ACCORD ING TO US IS COMPLETELY UNTENABLE. IT IS THE REQUIREMEN T OF SECTION 263 OF THE ACT THAT THE ASSESSEE MUST HAVE AN OPPORTUNITY OF BEING HEARD IN RESPECT OF THOSE ERRO RS WHICH THE COMMISSIONER PROPOSES TO REVISE. TO ACCOR D AN OPPORTUNITY AFTER SETTING ASIDE THE ASSESSMENT ORDER, WOULD, IN OUR VIEW, NOT MEET THE MANDATE THE SECTION 263 OF THE ACT. IF SUCH AN INTERPRETATION I S ACCEPTED IT WOULD MAKE LIGHT OF THE FINALITY ACCORD ED TO AN ASSESSMENT ORDER WHICH CANNOT BE REOPENED UNLESS DUE ADHERENCE IS MADE TO THE CONDITIONALITIES INCORPORATED IN THE PROVISIONS OF THE ACT IN RESPEC T OF SUCH POWERS VESTED IN THE REVENUE. THE HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS. DELHI AIRPORT METRO EXPRESS PVT. LTD, (2017) 398 ITR 8, HAD HELD AS FOLLOWS 12. MR. ASHEESH JAIN THEN VOLUNTEERED THAT THE PRIN CIPAL COMMISSIONER OF INCOME-TAX HAD EXERCISED THE SECOND OPTION AVAILABLE TO HIM UNDER SECTION 263(1) OF THE ACT BY SENDING THE ENTIRE MATTER BACK TO THE ASSESSING OFF ICER FOR A FRESH ASSESSMENT. THAT OPTION, IN THE CONSIDERED VI EW OF THE COURT, CAN BE EXERCISED ONLY AFTER THE PRINCIPAL CO MMISSIONER OF INCOME-TAX UNDERTAKES AN INQUIRY HIMSELF IN THE MANNER INDICATED HEREINBEFORE. THAT IS MISSING IN THE PRES ENT CASE. 13. THEREFORE, THE COURT IS OF THE VIEW THAT THE IN COME-TAX APPELLATE TRIBUNAL WAS NOT IN ERROR IN SETTING ASID E THE IMPUGNED ORDER OF THE PRINCIPAL COMMISSIONER OF INC OME-TAX UNDER SECTION 263 OF THE ACT. NO SUBSTANTIAL QUESTI ON OF LAW ARISES. THE HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS .JYOTI FOUNDATION, (2013) 357 ITR 388, AFTER REFERRING TO ITS EARLIER DECISIONS IN THE CASES ITA NO.1519 /2019 :- 18 -: OF CIT VS. SUNBEAM AUTO LTD, (2011) 332 ITR 167 AND CIT VS. DG HOUSING PROJECTS LTD, (2012) 343 ITR 329 HELD AS FOLLOWS. THUS, IN CASES OF WRONG OPINION OR FINDING ON THE MERITS, THE COMMISSIONER OF INCOME-TAX HAS TO COME TO THE CONCLUSION AND HIMSELF DECIDE THAT THE ORDER IS ERR ONEOUS, BY CONDUCTING NECESSARY ENQUIRY, IF REQUIRED AND NE CESSARY, BEFORE THE ORDER UNDER SECTION 263 IS PASSED. IN SU CH CASES, THE ORDER OF THE ASSESSING OFFICER WILL BE ERRONEOU S BECAUSE THE ORDER PASSED IS NOT SUSTAINABLE IN LAW AND THE SAID FINDING MUST BE RECORDED. THE COMMISSIONER OF INCOM E-TAX CANNOT REMAND THE MATTER TO THE ASSESSING OFFICER T O DECIDE WHETHER THE FINDINGS RECORDED ARE ERRONEOUS. IN CAS ES WHERE THERE IS INADEQUATE ENQUIRY BUT NOT LACK OF E NQUIRY, AGAIN THE COMMISSIONER OF INCOME- TAX MUST GIVE AND RECORD A FINDING THAT THE ORDER/INQUIRY MADE IS ERR ONEOUS. THIS CAN HAPPEN IF AN ENQUIRY AND VERIFICATION IS C ONDUCTED BY THE COMMISSIONER OF INCOME-TAX AND HE IS ABLE TO ESTABLISH AND SHOW THE ERROR OR MISTAKE MADE BY THE ASSESSING OFFICER, MAKING THE ORDER UNSUSTAINABLE I N LAW. IN SOME CASES POSSIBLY THOUGH RARELY, THE COMMISSIONER OF INCOME-TAX CAN ALSO SHOW AND ESTABLISH THAT THE FAC TS ON RECORD OR INFERENCES DRAWN FROM FACTS ON RECORD PER SE JUSTIFIED AND MANDATED FURTHER ENQUIRY OR INVESTIGA TION BUT THE ASSESSING OFFICER HAD ERRONEOUSLY NOT UNDERTAKE N THE SAME. HOWEVER, THE SAID FINDING MUST BE CLEAR, UNAMBIGUOUS AND NOT DEBATABLE. THE MATTER CANNOT BE REMITTED FOR A FRESH DECISION TO THE ASSESSING OFFI CER TO CONDUCT FURTHER ENQUIRIES WITHOUT A FINDING THAT TH E ORDER IS ERRONEOUS. FINDING THAT THE ORDER IS ERRONEOUS IS A CON DITION OR REQUIREMENT WHICH MUST BE SATISFIED FOR E XERCISE OF JURISDICTION UNDER SECTION 263 OF THE ACT. IN SUCH MATTERS, TO REMAND THE MATTER/ISSUE TO THE ASSESSING OFFICER WO ULD IMPLY AND MEAN THE COMMISSIONER OF INCOME-TAX HAS N OT EXAMINED AND DECIDED WHETHER OR NOT THE ORDER IS ERRONEOUS BUT HAS DIRECTED THE ASSESSING OFFICER TO DECIDE THE ASPECT/QUESTION. THIS DISTINCTION MUST BE KEPT IN MIND BY THE COMMIS SIONER OF INCOME-TAX WHILE EXERCISING JURISDICTION UNDER S ECTION 263 OF THE ACT AND IN THE ABSENCE OF THE FINDING TH AT THE ORDER IS ERRONEOUS AND PRE JUDICIAL TO THE INTEREST S OF THE REVENUE, EXERCISE OF JURISDICTION UNDER THE SAID SE CTION IS NOT SUSTAINABLE. IN MOST CASES OF ALLEGED 'INADEQUA TE INVESTIGATION, IT WILL BE DIFFICULT TO HOLD THAT TH E ORDER OF THE ITA NO.1519 /2019 :- 19 -: ASSESSING OFFICER, WHO HAD CONDUCTED ENQUIRIES AND HAD ACTED AS AN INVESTIGATOR, IS ERRONEOUS, WITHOUT THE COMMISSIONER OF INCOME-TAX CONDUCTING VERIFICATION/ INQUIRY. THE ORDER OF THE ASSESSING OFFICER MAY BE OR MAY NO T BE WRONG. THE COMMISSIONER OF INCOME-TAX CAN NOT DIREC T RECONSIDERATION ON THIS GROUND BUT ONLY WHEN THE OR DER IS ERRONEOUS. AN ORDER OF REMIT CANNOT BE PASSED BY TH E COMMISSIONER OF INCOME-TAX TO ASK THE ASSESSING OFF ICER TO DECIDE WHETHER THE ORDER WAS ERRONEOUS. THIS IS NOT PERMISSIBLE. AN ORDER IS NOT ERRONEOUS, UNLESS THE COMMISSIONER OF INCOME-TAX HOLD AND RECORDS REASONS WHY IT IS ERRONEOUS. AN ORDER WILL NOT BECOME ERRONEOUS BECAUSE ON REMIT, THE ASSESSING OFFICER MAY DECIDE THAT THE ORDER IS ERRONEOUS. THEREFORE, THE COMMISSIONER OF INCOME-TA X MUST AFTER RECORDING REASONS HOLD THAT THE ORDER IS ERRONEOUS. THE JURISDICTIONAL PRECONDITION STIPULAT ED IS THAT THE COMMISSIONER OF INCOME-TAX MUST COME TO THE CONCLUSION THAT THE ORDER IS ERRONEOUS AND IS UNSUS TAINABLE IN LAW. WE MAY NOTICE THAT THE MATERIAL WHICH THE COMMISSIONER OF INCOME-TAX CAN RELY INCLUDES NOT ON LY THE RECORD AS IT STANDS AT THE TIME WHEN THE ORDER IN Q UESTION WAS PASSED BY THE ASSESSING OFFICER BUT ALSO THE RE CORD AS IT STANDS AT THE TIME OF EXAMINATION BY THE COMMISSION ER OF INCOME-TAX (SEE CIT V. SHREE MANJUNATHESWARE PACKIN G PRODUCTS AND CAMPHOR WORKS [1998] 231 ITR 53 (SC)). NOTHING BARS/PROHIBITS THE COMMISSIONER OF INCOME-T AX FROM COLLECTING AND RELYING UPON NEW/ADDITIONAL MATERIAL/EVIDENCE TO SHOW AND STATE THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS.' 5. IN THE PRESENT CASE, INQUIRIES WERE CERTAINLY CO NDUCTED BY THE ASSESSING OFFICER. IT IS NOT A CASE OF NO IN QUIRY. THE ORDER UNDER SECTION 263 ITSELF RECORDS THAT THE DIR ECTOR FELT THAT THE INQUIRIES WERE NOT SUFFICIENT AND FURTHER INQUIRIES OR DETAILS SHOULD HAVE BEEN CALLED. HOWEVER, IN SUCH C ASES, AS OBSERVED IN THE CASE OF DG HOUSING PROJECTS LTD. (S UPRA), THE INQUIRY SHOULD HAVE BEEN CONDUCTED BY THE COMMISSIONER OR THE DIRECTOR HIMSELF TO RECORD THE FINDING THAT THE ASSESSMENT ORDER WAS ERRONEOUS. HE SHOULD NOT HAVE SET ASIDE THE ORDER AND DIRECTED THE ASSESSING OFFICER TO CONDUCT THE SAID INQUIRY. ITA NO.1519 /2019 :- 20 -: THE HONBLE DELHI HIGH COURT IN THE CASE OF ITO V S. DG HOUSING PROJECTS LTD, (2012) 343 ITR 329, HELD AS FOLLOWS. 17. THUS, IN CASES OF WRONG OPINION OR FINDING ON THE MERITS, THE COMMISSIONER OF INCOME-TAX HAS TO COME TO THE CONCL USION AND HIMSELF DECIDE THAT THE ORDER IS ERRONEOUS, BY COND UCTING NECESSARY ENQUIRY, IF REQUIRED AND NECESSARY, BEFORE THE ORD ER UNDER SECTION 263 IS PASSED. IN SUCH CASES, THE ORDER OF THE ASSE SSING OFFICER WILL BE ERRONEOUS BECAUSE THE ORDER PASSED IS NOT SUSTAINAB LE IN LAW AND THE SAID FINDING MUST BE RECORDED. THE COMMISSIONER OF INCOME-TAX CANNOT REMAND THE MATTER TO THE ASSESSING OFFICER T O DECIDE WHETHER THE FINDINGS RECORDED ARE ERRONEOUS. IN CASES WHERE THERE IS INADEQUATE ENQUIRY BUT NOT LACK OF ENQUIRY, AGAIN T HE COMMISSIONER OF INCOME-TAX MUST GIVE AND RECORD A FINDING THAT THE ORDER/INQUIRY MADE IS ERRONEOUS. THIS CAN HAPPEN IF AN ENQUIRY AN D VERIFICATION IS CONDUCTED BY THE COMMISSIONER OF INCOME-TAX AND HE IS ABLE TO ESTABLISH AND SHOW THE ERROR OR MISTAKE MADE BY THE ASSESSING OFFICER, MAKING THE ORDER UNSUSTAINABLE IN LAW. IN SOME CASES POSSIBLY THOUGH RARELY, THE COMMISSIONER OF INCOME-TAX CAN A LSO SHOW AND ESTABLISH THAT THE FACTS ON RECORD OR INFERENCES DR AWN FROM FACTS ON RECORD PER SE JUSTIFIED AND MANDATED FURTHER ENQUIR Y OR INVESTIGATION BUT THE ASSESSING OFFICER HAD ERRONEOUSLY NOT UNDER TAKEN THE SAME. HOWEVER, THE SAID FINDING MUST BE CLEAR, UNAMBIGUOU S AND NOT DEBATABLE. THE MATTER CANNOT BE REMITTED FOR A FRES H DECISION TO THE ASSESSING OFFICER TO CONDUCT FURTHER ENQUIRIES WITH OUT A FINDING THAT THE ORDER IS ERRONEOUS. FINDING THAT THE ORDER IS E RRONEOUS IS A CONDITION OR REQUIREMENT WHICH MUST BE SATISFIED FO R EXERCISE OF JURISDICTION UNDER SECTION 263 OF THE ACT. IN SUCH MATTERS, TO REMAND THE MATTER/ISSUE TO THE ASSESSING OFFICER WOULD IMP LY AND MEAN THE COMMISSIONER OF INCOME-TAX HAS NOT EXAMINED AND DEC IDED WHETHER OR NOT THE ORDER IS ERRONEOUS BUT HAS DIRECTED THE ASSESSING OFFICER TO DECIDE THE ASPECT/QUESTION. 18. THIS DISTINCTION MUST BE KEPT IN MIND BY THE CO MMISSIONER OF INCOME- TAX WHILE EXERCISING JURISDICTION UNDER SEC TION 263 OF THE ACT AND IN THE ABSENCE OF THE FINDING THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE, EXERCI SE OF JURISDICTION UNDER THE SAID SECTION IS NOT SUSTAINABLE. IN MOST CASES OF ALLEGED 'INADEQUATE INVESTIGATION', IT WILL BE DIFFICULT TO HOLD THAT THE ORDER OF THE ASSESSING OFFICER, WHO HAD CONDUCTED ENQUIRIES AND HAD ACTED AS AN INVESTIGATOR, IS ERRONEOUS, WITHOUT THE COMMISSI ONER OF INCOME-TAX CONDUCTING VERIFICATION/INQUIRY. THE ORDER OF THE A SSESSING OFFICER MAY BE OR MAY NOT BE WRONG. THE COMMISSIONER OF INCOME- TAX CANNOT DIRECT RECONSIDERATION ON THIS GROUND BUT ONLY WHEN THE ORDER IS ERRONEOUS. AN ORDER OF REMIT CANNOT BE PASSED BY TH E COMMISSIONER ITA NO.1519 /2019 :- 21 -: OF INCOME-TAX TO ASK THE ASSESSING OFFICER TO DECID E WHETHER THE ORDER WAS ERRONEOUS. THIS IS NOT PERMISSIBLE. AN OR DER IS NOT ERRONEOUS, UNLESS THE COMMISSIONER OF INCOME-TAX HO LD AND RECORDS REASONS WHY IT IS ERRONEOUS. AN ORDER WILL NOT BECO ME ERRONEOUS BECAUSE ON REMIT, THE ASSESSING OFFICER MAY DECIDE THAT THE ORDER IS ERRONEOUS. THEREFORE, THE COMMISSIONER OF INCOME-TA X MUST AFTER RECORDING REASONS HOLD THAT THE ORDER IS ERRONEOUS. THE JURISDICTIONAL PRECONDITION STIPULATED IS THAT THE COMMISSIONER OF INCOME-TAX MUST COME TO THE CONCLUSION THAT THE ORDER IS ERRONEOUS AND IS UNSUSTAINABLE IN LAW. WE MAY NOTICE THAT THE MATERI AL WHICH THE COMMISSIONER OF INCOME-TAX CAN RELY INCLUDES NOT ON LY THE RECORD AS IT STANDS AT THE TIME WHEN THE ORDER IN QUESTION WA S PASSED BY THE ASSESSING OFFICER BUT ALSO THE RECORD AS IT STANDS AT THE TIME OF EXAMINATION BY THE COMMISSIONER OF INCOME-TAX (SEE CIT V. SHREE MANJUNATHESWARE PACKING PRODUCTS AND CAMPHOR WORKS [1998] 231 ITR 53 (SC)). NOTHING BARS/PROHIBITS THE COMMISSION ER OF INCOME-TAX FROM COLLECTING AND RELYING UPON NEW/ADDITIONAL MAT ERIAL/EVIDENCE TO SHOW AND STATE THAT THE ORDER OF THE ASSESSING OFFI CER IS ERRONEOUS. 19. IT IS IN THIS CONTEXT THAT THE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83 (SC), HAD OBSERVE D THAT THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE' HAS T O BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE A SSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE. THUS, WHEN THE ASSESSING OFFICER HAD ADOPT ED ONE OF THE COURSES PERMISSIBLE AND AVAILABLE TO HIM, AND THIS HAS RESULTED IN LOSS TO THE REVENUE ; OR TWO VIEWS WERE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER OF I NCOME-TAX MAY NOT AGREE ; THE SAID ORDERS CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. IN S UCH MATTERS, THE COMMISSIONER OF INCOME-TAX MUST GIVE A FINDING THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW AN D, THEREFORE, THE ORDER IS ERRONEOUS. HE MUST ALSO SHOW THAT PREJUDIC E IS CAUSED TO THE INTERESTS OF THE REVENUE. THE PRINCIPLE ENUNCIATED IN THE ABOVE CASES IS THAT IN CASES WHERE THERE IS NO ENQUIRY OR INADEQUATE ENQUIRY BY THE AS SESSING OFFICER ON THE ISSUES SOUGHT TO BE REVISED BY THE CIT, THE CI T HIMSELF SHOULD CONDUCT THE ENQUIRES AND COME TO CONCLUSION THAT OR DER IS ERRONEOUS. ITA NO.1519 /2019 :- 22 -: THE MATTER CANNOT BE REMANDED TO THE ASSESSING OFFI CER TO ENQUIRE TO DECIDE WHETHER THE ORDER IS ERRONEOUS. IN THE PRES ENT CASE, WE ARE UNABLE TO DISCERN FROM THE IMPUGNED ORDER THAT THE LD. PCIT HAD CONDUCTED ANY ENQUIRIES AND RECORDED A FINDING THA T THE ASSESSMENT ORDER IS ERRONEOUS. THE FACT THAT THE LD. PCIT R EMANDED THE MATTER TO THE ASSESSING OFFICER FOR THE PURPOSE OF ENQUIRY BY ITSELF PROVE THAT THE LD. PCIT HAD NOT DECIDED WHETHER OR NOT THE ASS ESSMENT ORDER IS ERRONEOUS. MERE BALD FINDING BY THE LD. PCIT THAT THE ASSESSMENT ORDER IS ERRONEOUS CANNOT BE SUSTAINED IN THE EYES OF LAW UNLESS THE IMPUGNED ORDER REFERS TO ANY MATERIAL TO SHOW THAT THE ASSESSMENT ORDER IS ERRONEOUS. THE MERE NOMENCLATURE GIVEN TO AN ITEM OF EXPENDITURE CANNOT DECIDE THE ALLOWABILITY OTHERWIS E OF IT. REFERENCE CAN BE MADE TO THE DECISIONS OF HONBLE SUPREME COU RT IN THE CASES OF PADMASUNDARA RAO (DECD) VS. STATE OF TAMIL NADU (20 02) 255 ITR 147 AND NATIONAL STEEL WORKS LTD VS. CIT, (1962) 46 ITR 646 . THE TONE AND TONOR OF THE IMPUGNED ORDER INDICATES THAT THE LD.PCIT WAS DRIVEN BY THE NOMENCLATURE GIVEN TO THE ITEM OF EXP ENDITURE WITHOUT EXAMINING THE REAL NATURE OF EXPENDITURE. IT IS SET TLED POSITION OF LAW THAT THERE MUST BE SOME PRIMA FACIE MATERIAL ON REC ORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSE D OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED. IN ITA NO.1519 /2019 :- 23 -: THE PRESENT CASE, THE LD. PCIT HAD NOT REFERRED TO ANY MATERIAL WHICH INDICATES THAT THE EXGRATIA PAYMENT MADE TO EMPLOY EE DIRECTORS TOWARDS THE CONSIDERATION FOR SERVICE RENDERED IN CONNECTION WITH THE SALE OF SHARES OF PRIZM PAYMENT SERVICES PVT LTD HE LD BY IT IS NOT AN ALLOWABLE EXPENDITURE U/S.48(1) OF THE ACT. 11. . FURTHERMORE, WE FIND THAT THERE IS NO FINDING BY T HE LD. PCIT IN THE IMPUGNED ORDER AS TO HOW THE ASSESSMENT ORDE R IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN THE ABSENCE OF THIS FINDING, POWER OF REVISION CANNOT BE EXERCISED BY THE LD. PCIT U/S.263 OF THE ACT AS HELD BY HONBLE JURISDICTIONAL HIGH C OURT IN THE CASE OF G.R. THANGAMALIGAI (SUPRA ) HELD AS FOLLOWS. IN THE ABSENCE OF ANY FINDING THAT THERE IS LOSS OF REVENUE, INTERFERENCE U/S.263 OF THE ACT WAS NOT JUSTIFIED . FROM THE ABOVE DISCUSSIONS, IT IS APPARENT THAT THO UGH THE ASSESSMENT ORDER DOES NOT PATENTLY INDICATE THAT THE ISSUE IN QUESTION HAD BEEN CONSIDERED BY THE ASSESSING OFFICER, THE MATERIAL O N RECORD COULD SHOW THAT THE ASSESSING OFFICER HAD APPLIED HIS MIN D ON THE ISSUE. THE FACT THE LD. PCIT HAS SOUGHT TO REVISE THE ISSUE W HICH IS NOT SUBJECT MATTER OF DEDUCTION I.E. LOSS ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION ON RECEIVABLES WOULD SUGGEST THAT THERE WAS NO PROPER APPLICATION OF MIND ON THE PART OF LD. PCIT. THUS, WE ARE OF THE ITA NO.1519 /2019 :- 24 -: CONSIDERED OPINION THAT THE MATERIAL ON RECORD WOUL D ESTABLISH APPLICATION OF MIND ON THE PART OF THE ASSESSING OF FICER WHILE ALLOWING THE CLAIM DURING THE ASSESSMENT PROCEEDINGS. ONCE S UCH APPLICATION OF MIND IS DISCERNIBLE FROM THE RECORD, THE PROCEEDING S UNDER SECTION 263 OF THE ACT WOULD FALL INTO THE AREA OF THE LD. PCI T HAVING A DIFFERENT OPINION AND IT IS SETTLED PROPOSITION OF LAW THAT AN ASSESSMENT ORDER CANNOT BE TREATED AS ERRONEOUS AND PREJUDICIAL TO T HE INTERESTS OF THE REVENUE SIMPLY BECAUSE IN THE OPINION OF THE LD. P CIT SOME OTHER VIEWS ARE POSSIBLE AS HELD BY THE HONBLE SUPREME C OURT IN THE CASE OF CIT VS. MAX INDIA LTD, (2007) 295 ITR 282, WHEREIN IT WAS HELD AS FOLLOWS. 2. AT THIS STAGE WE MAY CLARIFY THAT UNDER PARAGR APH 10 OF THE JUDGMENT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83 THIS COURT HAS TAKEN THE VIEW THAT THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE ' UNDER SECTION 263 HAS TO BE READ IN CONJUNCTION WITH THE EXPRESSION 'ERRONEOUS' ORDER PASSED BY THE ASSESSIN G 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 EX AMPLE, WHEN AN INCOME-TAX OFFICER ADOPTED ONE OF THE COURS ES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF R EVENUE ; OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIO NER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOU S ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. ITA NO.1519 /2019 :- 25 -: 12. . THUS THE IMPUGNED ORDER PASSED BY THE LD. PCIT DOES NOT SATISFY THE PREREQUISITE CONDITION OF ASSESSMENT O RDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. TH EREFORE THE ORDER OF THE LD. PCIT CANNOT BE SUSTAINED IN THE EYES OF LAW . ACCORDINGLY, WE SET ASIDE THE ORDER PASSED U/S.263 BY THE LD. PCIT AND ALLOW THE APPEAL FILED BY THE ASSESSEE COMPANY. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE ST ANDS ALLOWED. ORDER PRONOUNCED ON 23RD DAY OF AUGUST, 2019, AT CHENNAI. SD/- SD/- ( . ! ) (DUVVURU RL REDDY) ' # ;[/JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER 1 #- / CHENNAI 2# / DATED:23RD AUGUST, 2019. KV 3 ) +.4 5' !6 5&. / COPY TO: 1 . !' '( / APPELLANT 3. 7. (!' ) / CIT(A) 5. 5 :; +.#< / DR 2. +,'( / RESPONDENT 4. 7. / CIT 6. ;$ =- / GF