M/s. Bhushan Energy Ltd., New Delhi V. ACIT, New Delhi

ITA 1644/DEL/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8796 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 20-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A MISRA
• Assessee Lawyers: ASHWA NI KUMAR CA ADITYA KUMAR
• Keywords: Gift; Wrong claim; Right to appeal; Revenue expenditure; Capital expenditure; Speculative transactions
• Section: 143(3); 153A; 263

Judgement Text

ITA NO. 1641 TO 1646/DEL/2014 AY: 2006-07 TO 2010-11 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `A NEW DELHI BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.1641/DEL/2014 ASSESSMENT YEAR : 2006-07 I.T.A.NO.1642/DEL/2014 ASSESSMENT YEAR : 2007-08 I.T.A.NO.1643/DEL/2014 ASSESSMENT YEAR : 2008-09 I.T.A.NO.1644/DEL/2014 ASSESSMENT YEAR : 2008-09 I.T.A.NO.1645/DEL/2014 ASSESSMENT YEAR : 2009-10 I.T.A.NO.1646/DEL/2014 ASSESSMENT YEAR : 2010-11 BHUSHAN STEEL LTD., VS ASSTT.COMMISSION ER OF INCOME TAX, 1 ST FLOOR, F-BLOCK, CENTRAL CIRCLE-13, INTERNATIONAL TRADE TOWER, NEW DELHI. NEHRU PLACE, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: S/SHRI ASHWA NI KUMAR, CA, ADITYA KUMAR, CA RESPONDENT BY : SMT. A. MISRA, CIT D R DATE OF HEARING: 22.1.2015 DATE OF PRONOUNCEMENT: ITA NO. 1641 TO 1646/DEL/2014 AY: 2006-07 TO 2010-11 2 O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THE ABOVE CAPTIONED APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), CENTRAL-I, NEW DELHI DATED 20 .02.2014 PERTAINING TO AY 2006-07, 2007-08, AND 2008-09, AND ORDER DATED 18.2 .2014 FOR AY 2008-09, 2009-10 AND 2010-11 PASSED U/S 263 OF THE INCOME TA X ACT, 1961. THE ASSESSEE HAS RAISED SIMILAR GROUNDS IN ALL THESE AP PEALS EXCEPT CALCULATION OF ALLEGED BOGUS EXPENSES. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO.1641/DEL/2014 READ AS UNDER:- 1. THAT THE ORDER DATED 20-02-2014 PASSED U/S 263 OF THE INCOME-TAX ACT, 1961 PASSED BY THE LD COMMISSIO NER OF INCOME-TAX, CENTRAL-I, NEW DELHI IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS SHE WAS NOT JUSTIFIED:- A) TO SET ASIDE THE ORDER DATED 29-12-2011 PASSED U /S 153A R.W.S. 143(3) OF THE INCOME-TAX ACT, 1961 PASS ED BY THE LD. ASSTT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCL E -13, NEW DELHI ON THE GROUND THAT THE SAME IS ALLEGEDLY ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE; B) TO SET ASIDE THE ASSESSMENT ORDER DATED 29-12-20 11 IN AS MUCH AS THE TWIN CONDITIONS AS LAID OUT IN SECTI ON 263 OF THE INCOME-TAX ACT, 1961 WERE NOT FULFILLED; C) TO DIRECT THE ASSESSING OFFICER TO EXAMINE THE TAXABILITY OF THE AMOUNT OF RS. 20,19,7341- ON ACCO UNT OF ALLEGED BOGUS EXPENSES BOOKED WITHOUT APPRECIATING THE FACTUAL POSITION AND THE DETAILED SUBMISSIONS MADE ON BEHALF OF THE APPELLANT COMPANY. ITA NO. 1641 TO 1646/DEL/2014 AY: 2006-07 TO 2010-11 3 2. WE MAY ALSO POINT OUT THAT THE GROUNDS IN OTHER FIVE APPEALS ARE ALSO SIMILARLY WORDED EXCEPT DATE OF ASSESSMENT ORDER AN D QUANTUM OF ALLEGED BOGUS EXPENSES. 3. BRIEFLY STATED THE GROUNDS GIVING RISE TO THESE APPEALS ARE THAT A SEARCH OPERATION U/S 1342(1) OF THE ACT WAS CONDUCTED ON 3 .3.2010 ON BHUSHAN STEEL GROUP OF CASES. THE PREMISES OF M/S BHUSHAN STEEL LTD. WERE COVERED ALONG WITH OTHER COMPANIES OF THIS GROUP. SUBSEQUENTLY, THE ASSESSMENT ORDERS WERE PASSED U/S 143(3) R/W SECTION 153A OF THE ACT ON 29 .12.2011 FOR AY 2004-05 TO AY 2008-09 FOR AY 2009-10 AND AY 2010-11 ON 1.5.201 3 IN THE CASE OF M/S BHUSHAN STEEL LTD. WHEREAS ASSESSMENT ORDER IN THE CASE OF M/S BHUSHAN ENERGY LTD. WAS PASSED U/S 143(3) R/W SECTION 153A OF THE ACT ON 27.12.2011 FOR AY 2004-05 TO AY 2010-11. DURING THE COURSE OF SEARCH ACTION, IT HAS BEEN NOTICED THAT THE ASSESSEE COMPANY WAS INVOLVED IN I NFLATING SOME OF THE EXPENSES USING VARIOUS PARTIES WHICH WERE NOT GENUI NE AND THEREBY REDUCING THE TAX LIABILITY OF THE ASSESSEE COMPANY. THESE COMPA NIES WERE M/S ELEGANT SECURITY SERVICES PVT. LTD., M/S DEPENDABLE TRANSPO RT PVT. LTD., M/S TERRIFIC STEEL PVT. LTD. AND MS/ STYLISH CONSTRUCTION PVT. L TD. WHICH HAD PROVIDED SUCH ENTRIES TO THE ASSESSEE COMPANY FOR AY 2006-07 TO 2 010-11. A SURVEY ACTION WAS ALSO CONDUCTED ON THE PREMISES OF THESE COMPANI ES ALONG WITH OTHER BHUSHAN STEEL GROUP OF CASES AND IT HAD BEEN ESTABL ISHED BY INVESTIGATION WING THAT THESE PARTIES WERE NOT DOING ANY GENUINE BUSIN ESS ACTIVITIES AND HAVE BEEN ITA NO. 1641 TO 1646/DEL/2014 AY: 2006-07 TO 2010-11 4 USED BY THE ASSESSEE COMPANY FOR INFLATING ITS EXPE NSES FOR REDUCING ITS TAX LIABILITY. THE DDIT(INV) HAD ALSO HIGHLIGHTED THESE FACTS AND FINDINGS IN THE APPRAISAL REPORT PREPARED IN PURSUANCE TO THE SEARC H OPERATION. 4. SUBSEQUENTLY, THE CIT ISSUED NOTICE U/S 263 OF T HE ACT TO M/S BHUSHAN STEEL LTD. ON 24.1.2011 FOR AY 2006-07 TO 2008-09 A ND TO M/S BHUSHAN ENERGY LTD. ON 20.1.2014 FOR AY 2008-09 TO 2010-11. AFTER ALLOWING DUE OPPORTUNITY OF HEARING, THE CIT PASSED IMPUGNED ORDERS AND HELD THAT THE ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND HE SET ASIDE THE SAME DIRECTING THE AO TO EXAMINE THE TAXABILITY OF ALLEGED BOGUS EXPENSES AMOUNTING TO RS.20,19,734 FOR AY 2006-07, RS.1,65,4 5,383 FOR AY 2007-08, RS. 3,06,37,162 FOR AY 2008-09 IN THE CASES OF M/S BHUSHAN STEEL LTD. AND ALLEGED BOGUS EXPENSES OF RS.62,33,456 FOR AY 2008- 09, RS.1,08,49,113 FOR AY 2009-10 AND RS.2,56,60,607 FOR AY 2010-11 IN THE CASES OF BHUSHAN ENERGY LTD. 5. BEING AGGRIEVED BY THE ABOVE ORDERS OF THE CIT(A ) PASSED U/S 263 OF THE ACT QUASHING THE EARLIER ASSESSMENT ORDER PASSED U/ S 143(3) R/W SECTION 153A OF THE ACT IN THE RESPECTIVE ASSESSMENT YEARS, THE ASSESSEE HAS PREFERRED THESE APPEALS WITH SIMILARLY WORDED GROUNDS REPRODUCED HE REINABOVE. 6. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT A SEARCH WAS CONDUCTED ON 3.3.2010 ON BHUSHAN STEEL G ROUP COMPANY. IN ITA NO. 1641 TO 1646/DEL/2014 AY: 2006-07 TO 2010-11 5 PURSUANCE TO SEARCH OPERATION, THE ASSESSMENT PROCE EDINGS WERE CONCLUDED BY FRAMING ASSESSMENT U/S 143(3) R/W 153A OF THE ACT. LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT NO SPECIFIC QUESTIO N WAS RAISED BY THE AO ABOUT THE EXPENSES CLAIMED BY THE ASSESSEE IN THE P&L ACC OUNT AND STATEMENT OF ACCOUNTS FILED ALONG WITH RETURN OF INCOME. LD. AR FURTHER POINTED OUT THAT UNDER SCHEME OF REASSESSMENT U/S 153A OF THE ACT, N O ADDITION COULD HAVE BEEN MADE BEYOND INCRIMINATING MATERIAL WHERE THE ASSESS MENT WAS COMPLETED BEFORE SEARCH OPERATION. LD. COUNSEL FAIRLY ACCEPT ED THAT THIS PLEA WAS NOT RAISED BEFORE THE CIT(A) DURING THE COURSE OF PROCE EDINGS U/S 263 OF THE ACT. LD. COUNSEL OF THE ASSESSEE VEHEMENTLY CONTENDED TH AT ALL THE ACCOUNTS AND DETAILS WERE FILED BEFORE THE AO AND THE SAME WERE ALSO FILED BEFORE THE CIT(A) DURING THE PROCEEDINGS U/S 263 OF THE ACT. LD. COU NSEL ALSO CONTENDED THAT BOTH THE CONDITIONS VIZ. ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE HAVE TO BE FULFILLED AND IN THIS CASE THE ORDER OF THE A O MAY BE ERRONEOUS BUT THE SAME CANNOT BE SAID TO BE PREJUDICIAL TO THE INTERE ST OF REVENUE AS THE PARTIES WHO HAVE RECEIVED AMOUNT OF CLAIMED EXPENSES ARE AL SO TAX PAYEES AND THEY HAVE PAID DUE TAX TO THE DEPARTMENT ON THESE RECEIP TS AND THEREFORE THE EXPENSES CLAIMED BY THE ASSESSEE COMPANY AND OFFERED TO TAX BY THE RECIPIENT COMPANY BECOME REVENUE NEUTRAL AND, THEREFORE, IT CANNOT BE SAID THAT THE ORDER OF THE AO WAS PREJUDICIAL TO THE INTEREST OF REVENUE. ITA NO. 1641 TO 1646/DEL/2014 AY: 2006-07 TO 2010-11 6 7. PLACING RELIANCE ON THE DECISION OF HONB LE SUPREME COURT IN THE CASE OF GEE VEE ENTERPRISES VS ACIT(1975) 99 ITR 375 (S C) , LD. COUNSEL SUBMITTED THAT THE COMMISSIONER CAN REGARD THE ORDE R AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE, THE I TO SHOULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE STATEMENT MADE BY TH E ASSESSEE IN HIS RETURN BUT MERELY ON THE BASIS THAT SOME MORE INQUIRY WAS TO B E CONDUCTED, THE ASSESSMENT ORDER CANNOT BE HELD AS ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF REVENUE. LD. COUNSEL FURTHER PLACING RELIANCE ON THE DECISIONS O F HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF CIT VS ANIL KUMA R SINHA (2011) 335 ITR 83 (DEL) SUBMITTED THERE IS A DISTINCTION BETWEEN LACK OF INQUIRY AND INADEQUATE INQUIRY, IF THERE WAS ANY INQUIRY EVEN INADEQUATE, THAT WOULD NOT ITSELF GIVE RIGHT OR OCCASION TO THE COMMISSIONER T O PASS ORDER U/S 263 OF THE ACT MERELY BECAUSE HE HAS DIFFERENT OPINION IN THE MATTER. LD. COUNSEL FURTHER PLACING RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF CIT VS HINDUSTAN MARKETING & ADVERTISING CO. LTD. [2012] 341 ITR 180(DEL) SUBMITTED THAT THE REVISIONAL POWERS OF THE COMMISSIONER U/S 263 OF THE ACT ARE LIMITED AND WHE N ASSESSMENT HAS BEEN FRAMED AFTER INQUIRY AND THERE IS NO ERROR IN THE O RDER, THEN THE ORDER CANNOT BE REVISED ON THE GROUND THAT INQUIRY SHOULD HAVE BEEN MORE DETAILED OR ELABORATE. FINALLY, LD. COUNSEL OF THE ASSESSEE PRAYED THAT TH E IMPUGNED ORDER OF THE CIT AND ALL SUBSEQUENT PROCEEDINGS IN PURSUANCE THERETO MAY KINDLY BE QUASHED. ITA NO. 1641 TO 1646/DEL/2014 AY: 2006-07 TO 2010-11 7 8. REPLYING TO THE ABOVE, LD. DR PLACING RELIANCE O N THE RECENT DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE C ASE OF CIT VS V. NAGESH KNITWERS P. LTD AND OTHERS (2012) 345 ITR 135 (DEL) SUBMITTED THAT WHEN THE AO HAS ALLOWED CLAIM OF THE ASSESSEE IN A SLIPSHOD MANNER WITHOUT CONDUCTING ANY INQUIRY, THEN IN THE CASE OF NO INQUIRY, THE ASSESSMENT ORDER IS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. LD. DR FURTHER POINTED OUT THAT THE ORDER OF ASSESSMENT HAS TO BE A SPEAKING ORDER AND WHEN THE FACT OF OTHERS VIEW HAS NOT BEEN MENT IONED AND THE CLAIM OF EXPENSES PRESSED BY THE ASSESSEE HAS BEEN ALLOWED W ITHOUT MAKING ANY INQUIRY, THEN THE ORDER MUST BE HELD AS ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF REVENUE. LD. DR FURTHER SUBMITTED THAT HONBLE JUR ISDICTIONAL HIGH COURT HAS ALSO CONSIDERED RATIO OF EARLIER DECISIONS VIZ. DEC ISIONS OF HONBLE APEX COURT IN THE CASE OF RAMPYARI DEVI SAROGI VS CIT (1968) 67 ITR 84(SC), T ARA DEVI AGGARWAL VS CIT (1973) 88 ITR 323 (SC) AND THE DECISION IN THE CASE OF MALABAR INDUSTRIAL COMPANY LTD VS .CIT, 243 ITR 83 (SC) AND DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT OF D ELHI IN THE CASE OF GEE VEE ENTERPRISES VS ACIT (SUPRA) WHILE PASSING THE ORDER IN FAVOUR OF THE REVENUE IN THE CASE OF CIT VS NAGESH KNITWEARS PVT. LTD. (SU PRA). 9. LD. COUNSEL OF THE ASSESSEE ALSO SUBMITTED REJOI NDER TO THE ABOVE SUBMISSIONS AND CONTENTIONS OF THE LD. DR AND SUBMI TTED THAT IN THE CASE OF REALEST BUILDERS AND SERVICES LTD. (2008) 307 ITR 2 02 (SC) SUBMITTED THAT IF ITA NO. 1641 TO 1646/DEL/2014 AY: 2006-07 TO 2010-11 8 THE AO COMES TO THE CONCLUSION THAT THERE IS UNDER ESTIMATION OF PROFITS, THEN HE MUST GIVE FACTS AND FIGURES IN THAT REGARD AND D EMONSTRATE THAT THE IMPUGNED METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE RESULT S IN UNDER-ESTIMATION OF PROFITS. OTHERWISE THE PRESUMPTION WOULD BE THAT T HE ENTIRE EXERCISE IS REVENUE NEUTRAL. LD. COUNSEL REITERATING ITS EARLIER ARGUM ENT SUBMITTED THAT WHEN THE PAYMENTS HAVE BEEN MADE BY THE ASSESSEE TO THE RESP ECTIVE SERVICE PROVIDER COMPANIES AND THE SAME RECEIPTS WERE ALSO TAXED IN THE HANDS OF RECIPIENT/PAYEE COMPANIES, THEN THE WHOLE EXERCISE IS REVENUE NEUTR AL AND IN THIS SITUATION, THE ASSESSMENT ORDERS PASSED U/S 153 R/W SECTION 143 CA NNOT BE CONSIDERED TO BE ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE , THEREFORE, THE SAME DESERVES TO BE QUASHED. 10. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISS IONS AND VIGILANT PERUSAL AND CONSIDERATION OF RATIO OF THE DECISIONS AND LEG AL PROPOSITIONS RELIED BY BOTH THE PARTIES, AT THE VERY OUTSET, WE NOTE THAT ON PE RUSAL OF THE RELEVANT ASSESSMENT ORDERS PASSED ON 29.12.2011 FOR AY 2006-07 TO 2008 -09 IN THE CASE OF M/S BHUSHAN STEEL LTD. AND ASSESSMENT ORDERS PASSED ON 27.12.2011 FOR AY 2007- 08 TO 2010-11 IN THE CASE OF BHUSHAN ENERGY LTD., W E CLEARLY OBSERVE THAT THE AO HAS NOT POINTED OUT ANY QUERY OR DOUBT ABOUT THE CLAIM OF EXPENSES SUBMITTED BY THE ASSESSEE PERTAINING TO THE EXPENSE S BOOKED AGAINST THE AFOREMENTIONED FOUR COMPANIES DURING ASSESSMENT PRO CEEDINGS FOR AY 2006-07 TO 2008-09 AND ABOUT THE EXPENSES BOOKED AGAINST M/ S STYLISH CONSTRUCTION PVT. ITA NO. 1641 TO 1646/DEL/2014 AY: 2006-07 TO 2010-11 9 LTD. FOR AY 2008-09 TO AY 2010-11 IN THE ASSESSMENT ORDERS OF BHUSHAN ENERGY PVT. LTD. ON SPECIFIC QUERY FROM THE BENCH, LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THERE WERE PROCEEDINGS OF REASSESSME NT U/S 143(3) R/W SECTION 153 OF THE ACT, THEREFORE, THE AO COULD NOT HAVE MA DE ANY ADDITION OUT OF AMBIT OF INCRIMINATING MATERIAL FOUND DURING THE COURSE O F SEARCH, HOWEVER, THE LD. COUNSEL FAIRLY ACCEPTED THAT THE AO HAD NOT RAISED ANY QUERY AND HAS NOT MADE ANY INQUIRY IN REGARD TO ALLEGED EXPENSES BOOKED BY THE ASSESSEE IN THE RESPECTIVE ASSESSMENT YEARS AGAINST ALLEGED COMPANI ES. 11. UNDER THESE FACTS AND CIRCUMSTANCES, WE RESPECT FULLY HOLD THAT THE BENEFIT OF THE DECISIONS OF HONBLE JURISDICTIONAL HIGH COU RT OF DELHI IN THE CASE OF CIT VS HINDUSTAN MARKETING & ADVERTISING CO. (SUPRA ) AND DECISION OF CIT VS ANIL KUMAR SHARMA (SUPRA) IS NOT AVAILABLE FOR THE ASSESSEE BECAUSE THESE WERE THE CASES OF INADEQUATE INQUIRY WHEREAS THE PRES ENT CASE IS CLEARLY OF LACK OF INQUIRY. PER CONTRA, WE RESPECTFULLY NOTE THAT THE CASE OF THE REVENUE IS SQUARELY COVERED BY THE DECISION OF HONBLE JURISDICTIONAL H IGH COURT OF DELHI IN THE CASE OF CIT VS NAGESH KNITWEARS PVT. LTD. & OTHERS (SUPRA) AND BY THE LANDMARK DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF GEE VEE ENTERPRISES (SUPRA). 12. IN THE CASE OF GEE VEE ENTERPRISES SPEAKING FOR HIGH COURT OF DELHI THEIR LORDSHIPS MADE A CLEAR DISTINCTION BETWEEN THE CASE S OF INADEQUATE INQUIRY AND LACK OF INQUIRY' BY ALSO CONSIDERING THE RAT IO OF THE DECISION OF HONBLE ITA NO. 1641 TO 1646/DEL/2014 AY: 2006-07 TO 2010-11 10 APEX COURT IN THE CASE OF RAMPYARI DEVI SAROGI VS CIT (SUPRA) AND TARA DEVI AGGARWAL VS CIT (SUPRA) AND HELD THAT IT IS INCUMBE NT UPON THE ITO TO FURTHER INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIR CUMSTANCES WOULD MAKE SUCH AN INQUIRY PRUDENT WITH THE WORD ERRONEOUS IN SE CTION 263 INCLUDES FAILURE TO MAKE SUCH AN INQUIRY. IT WAS FURTHER HELD THAT THE ORDER BECOMES ERRONEOUS BECAUSE SUCH AN INQUIRY HAS NOT BEEN MADE AND NOT B ECAUSE THERE IS ANYTHING WRONG WITH THE ORDER IF ALL THE FACTS STATED THEREI N ARE ASUMMED TO BE CORRECT. THE RELEVANT OPERATIVE PART OF THIS DECISION READS AS UNDER:- IN RAMPYARI DJVI SARAOGI V. COMMISSIONER OF INCOME -TAX, THE INCOME-TAX OFFICER ACCEPTED THE RETURN OF THE ASSESSEE IN RESPECT OF THE INITIAL CAPITAL, THE GIFT RECEIVE D AND THE SALE OF JEWELLERY, THE INCOME FROM BUSINESS, ETC., WITHOUT ANY INQUIRY OR EVIDENCE WHATSOEVER. FOR THIS REASON THE COMMISS IONER HELD THE ORDER TO BE ERRONEOUS. IN REVISION, HE CAN CELLED THE ORDER AND ORDERED THE INCOME- TAX OFFICER TO MAKE A FRESH ASSESSMENT. IN HIS ORDER THE COMMISSIONER HAD USED CERTAIN NEW GROUNDS WHICH HAD NOT BEEN DISCLOSED TO THE ASS ESSEE IN THE NOTICE GIVEN TO HIM TO SHOW CAUSE WHY THE ORDER OF THE INCOME-TAX OFFICER SHOULD NOT BE REVISED. BUT, APAR T FROM THESE NEW GROUNDS, THE SUPREME COURT OBSERVED AT PA GE 88 OF THE REPORT THAT: THERE WAS AMPLE MATERIAL TO SHOW THAT THE INCOME-T AX OFFICER MADE THE ASSESSMENTS IN UNDUE HURRY ... TH E ASSESSEE MADE A DECLARATION GIVING THE FACTS REGARDING INITI AL CAPITAL, THE ORNAMENTS AND PRESENTS RECEIVED AT THE TIME OF MARRIAGE, OTHER GIFTS RECEIVED FROM HER FATHER-IN-LAW, ETC., WHICH SHOULD HAVE PUT ANY INCOME-TAX OFFICER ON HIS GUARD. BUT T HE INCOME TAX OFFICER WITHOUT MAKING ANY INQUIRIES TO SATISFY HIMSELF PASSED THE ASSESSMENT ORDER.... A SHORT STEREO-TYPE D ASSESSMENT ORDER WAS MADE FOR EACH ASSESSMENT YEAR ... NO EVIDENCE WHATSOEVER WAS PRODUCED IN RESPECT OF THE MONEY- LENDING BUSINESS DONE ... NO NAMES WERE GIVEN AS TO THE PARTIES TO WHOM THE LOANS WERE ADVANCED .... ITA NO. 1641 TO 1646/DEL/2014 AY: 2006-07 TO 2010-11 11 IN TARA DEVI AGGARWAL V. COMMISSIONER OF INCOME-TA X ALSO THE INCOME-TAX OFFICER, HOWRAH, WHILE REMARKIN G THAT THE SOURCE OF INCOME OF THE ASSESSEE WAS INCOME FROM SP ECULATION AND INTEREST ON INVESTMENTS STATED THAT NEITHER TH E ASSESSEE WAS ABLE TO PRODUCE THE DETAILS AND VOUCHERS OF THE SPECULATIVE TRANSACTIONS MADE DURING THE ACCOUNTIN G YEAR NOR WAS THERE EVIDENCE REGARDING THE INTEREST RECEIVED BY THE ASSESSEE FROM DIFFERENT PARTIES ON HER INVESTMENTS. NOTWITHSTANDING THESE DEFECTS THE INCOME TAX OFFICE R DID NOT INVESTIGATE INTO THE VARIOUS SOURCES BUT ASSESSED T HE ASSESSEE ON A TOTAL INCOME OF RS. 9,037. THE INQUIRIES MADE BY THE COMMISSIONER REVEALED THAT THE ASSESSEE DID NOT RES IDE OR CARRY ON BUSINESS AT THE ADDRESS GIVEN IN THE RETUR N. THE COMMISSIONER WAS ALSO OF THE VIEW THAT THE INCOME-T AX OFFICER WAS NOT JUSTIFIED IN ACCEPTING THE INITIAL CAPITAL, THE SALE OF ORNAMENTS, THE INCOME FROM BUSINESS, THE INVESTMENT S ETC., WITHOUT ANY INQUIRY OR EVIDENCE WHATSOEVER AND THAT THE ORDER OF ASSESSMENT WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE HIGH COURT HELD THAT THERE WERE MATERI ALS TO JUSTIFY THE COMMISSIONER'S FINDING THAT THE ORDER O F ASSESSMENT WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO TH E INTERESTS OF THE REVENUE. SHRI SHARMA TRIED TO DISTINGUISH THIS DECISION ON THE GROUND THAT THE ADDRESS OF THE ASSESSEE IN THAT CASE WAS GIVEN INCORRECTLY. THE DECISION OF THE HIGH COURT A ND THAT OF THE SUPREME COURT WERE NOT, HOWEVER, BASED ON THAT GROUND AT ALL. ON THE CONTRARY, THE SUPREME COURT FOLLOWED T HEIR PREVIOUS DECISION IN RAMPYARI DEVI'S CASE AND UPHE LD THE DECISION OF THE HIGH COURT PRECISELY ON THE SAME GR OUNDS. THESE TWO DECISIONS SHOW THAT IT IS NOT NECESSARY F OR THE COMMISSIONER TO MAKE FURTHER INQUIRIES BEFORE CANCE LLING THE ASSESSMENT ORDER OF THE INCOME-TAX OFFICER. THE COM MISSIONER CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THA T IN THE CIRCUMSTANCES OF THE CASE THE INCOME-TAX OFFICER SH OULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE STATEME NTS MADE BY THE ASSESSEE IN HIS RETURN. THE REASON IS OBVIOUS. THE POSITION AND FUNCTION OF THE INCOME TAX OFFICER IS VERY DIFFERENT FROM THAT OF A CIVIL COURT. THE STATEMENTS MADE IN A PLEADING PROVED BY THE MIN IMUM AMOUNT OF EVIDENCE MAY BE ACCEPTED BY A CIVIL COURT IN THE ABSENCE OF ANY REBUTTAL. THE CIVIL COURT IS NEUTRAL . IT SIMPLY ITA NO. 1641 TO 1646/DEL/2014 AY: 2006-07 TO 2010-11 12 GIVES DECISION ON THE BASIS OF THE PLEADING AND EVI DENCE WHICH COMES BEFORE IT. THE INCOME-TAX OFFICER IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVESTIGATOR. HE CANNOT RE MAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER INQUIRY. IT IS HIS DUTY TO ASCERT AIN THE TRUTH OF THE FACTS STATED IN THE RETURN WHEN THE CIRCUMSTANC ES OF THE CASE ARE SUCH AS TO PROVOKE AN INQUIRY. THE MEANING TO BE GIVEN TO THE WORD' ERRONEOUS' IN SECTION 263 EMERGE S OUT OF THIS CONTEXT. IT IS BECAUSE IT IS INCUMBENT ON THE. INCOME-TAX OFFICER TO FURTHER INVESTIGATE THE FACTS STATED IN' THE RETURN WHEN CIRCUMSTANCES WOULD MAKE SUCH AN INQUIRY PRUD ENT THAT THE WORD' ERRONEOUS' IN SECTION 263 INCLUDES THE FA ILURE TO MAKE SUCH AN INQUIRY. THE ORDER BECOMES ERRONEOUS B ECAUSE SUCH AN INQUIRY HAS NOT BEEN MADE AND NOT BECAUSE T HERE IS ANYTHING WRONG WITH THE ORDER IF ALL THE FACTS STAT ED THEREIN ARE ASSUMED TO BE CORRECT. 13. IN THE CASE OF CIT VS NAGESH KNITWEARS HONBLE DELHI HIGH COURT AFTER CONSIDERING THE RATIO OF ITS EARLIER DECISIONS INCL UDING ITS DECISION IN THE CASE OF ITO VS DG HOUSING PROJECTS LTD. 345 ITR 153 HELD AS UNDER:- 36. AS FAR AS SECTION 263 IS CONCERNED, WE HAVE EXAMINED THE SAID SECTION IN DEPTH AND DETAIL IN IT O VS. D G HOUSING PROJECTS LTD. DECIDED ON 1 ST MARCH, 2012, IN ITA NO. 179/2011 AND OBSERVED AS UNDER:-ITA NO. 591/2008 AN D CONNECTED MATTERS 28 10. REVENUE DOES NOT HAVE ANY RIGHT TO APPEAL TO THE FIRST APPELLATE AUTHORITY AGAINST AN ORDER PASSED BY THE ASSESSING OFFICER. SECTION 263 HAS BEEN ENAC TED TO EMPOWER THE CIT TO EXERCISE POWER OF REVISION AND R EVISE ANY ORDER PASSED BY THE ASSESSING OFFICER, IF TWO CUMUL ATIVE CONDITIONS ARE SATISFIED. FIRSTLY, THE ORDER SOUGHT TO BE REVISED SHOULD BE ERRONEOUS AND SECONDLY, IT SHOULD BE PREJ UDICIAL TO THE INTEREST OF THE REVENUE. THE EXPRESSION PREJUD ICIAL TO THE INTEREST OF THE REVENUE IS OF WIDE IMPORT AND IS NOT CONFINED TO MERELY LOSS OF TAX. THE TERM ERRONEOUS MEANS A WRONG/INCORRECT DECISION DEVIATING FROM LAW. THIS E XPRESSION POSTULATES AN ERROR WHICH MAKES AN ORDER UNSUSTAINA BLE IN LAW. 11. THE ASSESSING OFFICER IS BOTH AN INVESTIGA TOR AND AN ADJUDICATOR. IF THE ASSESSING OFFICER AS AN ADJUDIC ATOR DECIDES A QUESTION OR ASPECT AND MAKES A WRONG ASSESSMENT W HICH IS ITA NO. 1641 TO 1646/DEL/2014 AY: 2006-07 TO 2010-11 13 UNSUSTAINABLE IN LAW, IT CAN BE CORRECTED BY THE CO MMISSIONER IN EXERCISE OF REVISIONARY POWER. AS AN INVESTIGATO R, IT IS INCUMBENT UPON THE ASSESSING OFFICER TO INVESTIGATE THE FACTS REQUIRED TO BE EXAMINED AND VERIFIED TO COMPUTE THE TAXABLE INCOME. IF THE ASSESSING OFFICER FAILS TO CONDUCT T HE SAID INVESTIGATION, HE COMMITS AN ERROR AND THE WORD ER RONEOUS INCLUDES FAILURE TO MAKE THE ENQUIRY. IN SUCH CASES , THE ORDER BECOMES ERRONEOUS BECAUSE ENQUIRY OR VERIFICATION H AS NOT BEEN MADE AND NOT BECAUSE A WRONG ORDER HAS BEEN PA SSED ON MERITS. 12. DELHI HIGH COURT IN GEE VEE ENTERPRISES V. ADDITIONAL COMMISSION OF INCOME-TAX, DELHI-I, (1975 ) 99 ITR 375, HAS OBSERVED AS UNDER:- THE REASON IS OBVIOUS . THE POSITION AND FUNCTION OF THE INCOME-TAX OFFICER IS VERY DIFFERENT FROM THAT OF A CIVIL COURT. THE STATEMENT S MADE IN A PLEADING PROVED BY THE MINIMUM AMOUNT OF EVIDENCE M AY BE ACCEPTED BY A CIVIL COURT IN THE ABSENCE OF ANY REB UTTAL. THE CIVIL COURT IS NEUTRAL. IT SIMPLY GIVES DECISION ON THE BASIS OF THE PLEADING AND EVIDENCE WHICH COMES BEFORE IT. TH E INCOME- TAX OFFICER IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF ITA NO. 591 /2008 AND CONNECTED MATTERS 29 A RETURN WHICH IS APPARENTLY I N ORDER BUT CALLS FOR FURTHER INQUIRY. IT IS HIS DUTY TO ASCERT AIN THE TRUTH OF THE FACTS STATED IN THE RETURN WHEN THE CIRCUMSTANC ES OF THE CASE ARE SUCH AS TO PROVOKE AN INQUIRY. THE MEANING TO BE GIVEN TO THE WORD ERRONEOUS IN SECTION 263 EMERGE S OUT OF THIS CONTEXT. IT IS BECAUSE IT IS INCUMBENT ON THE INCOME-TAX OFFICER TO FURTHER INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MAKE SUCH AN INQUIRY PRUDE NT THAT THE WORD ERRONEOUS IN SECTION 263 INCLUDES THE FA ILURE TO MAKE SUCH AN INQUIRY. THE ORDER BECOMES ERRONEOUS B ECAUSE SUCH AN INQUIRY HAS NOT BEEN MADE AND NOT BECAUSE T HERE IS ANYTHING WRONG WITH THE ORDER IF ALL THE FACTS STAT ED THEREIN ARE ASSUMED TO BE CORRECT. 13. IN THE SAID JUDGMENT, D ELHI HIGH COURT HAD REFERRED TO EARLIER DECISIONS OF THE SUPR EME COURT IN RAMPYARI DEVI SAROGIV. CIT (1968) 67 ITR 84 (SC) AND TARA DEVI AGGARWAL V. CIT (1973) 88 ITR 323 (SC), W HEREIN IT HAS BEEN HELD THAT WHERE ASSESSING OFFICER HAS ACCE PTED A PARTICULAR CONTENTION/ISSUE WITHOUT ANY ENQUIRY OR EVIDENCE WHATSOEVER, THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. AFTER REFERENCE TO THESE T WO DECISIONS, THE DELHI HIGH COURT OBSERVED:- THESE TWO DECISION S SHOW THAT IT IS NOT NECESSARY FOR THE COMMISSIONER TO MA KE FURTHER INQUIRIES BEFORE CANCELLING THE ASSESSMENT ORDER OF THE ITA NO. 1641 TO 1646/DEL/2014 AY: 2006-07 TO 2010-11 14 INCOME-TAX OFFICER. THE COMMISSIONER CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCE S OF THE CASE THE INCOME-TAX OFFICER SHOULD HAVE MADE FURTHE R INQUIRIES BEFORE ACCEPTING THE STATEMENTS MADE BY T HE ASSESSEE IN HIS RETURN. 14. THE AFORESAID OBSERVATIONS HAVE TO BE UNDERSTOOD IN THE FACTUAL BACKGROUND AND MATRIX INV OLVED IN THE SAID TWO CASES BEFORE THE SUPREME COURT. IN THE SAID CASES, THE ASSESSING OFFICER HAD NOT CONDUCTED ANY ENQUIRY OR EXAMINED EVIDENCE WHATSOEVER. THERE WAS TOTAL ABSEN CE OF ENQUIRY OR VERIFICATION. THESE CASES HAVE TO BE DIS TINGUISHED FROM OTHER CASES (I) WHERE THERE IS ENQUIRY BUT THE FINDINGS ITA NO. 591/2008 AND CONNECTED MATTERS 30 ARE INCORRECT/ERRONEOUS; AND (II) WHERE THERE IS FAILUR E TO MAKE PROPER OR FULL VERIFICATION OR ENQUIRY. 15. IN THE CASE OF COMMISSIONER OF INCOME TAX V. SUNBEAM AUTO LTD. (20 11) 332 ITR 167 (DEL), DELHI HIGH COURT WAS CONSIDERING THE ASPECT, WHEN THERE IS NO PROPER OR FULL VERIFICATION, AND I T WAS HELD AS UNDER:- WE HAVE CONSIDERED THE RIVAL SUBMISSIONS O F THE COUNSEL ON THE OTHER SIDE AND HAVE GONE THROUGH THE RECORDS. THE FIRST ISSUE THAT ARISES FOR OUR CONSIDERATION I S ABOUT THE EXERCISE OF POWER BY THE COMMISSIONER OF INCOME-TAX UNDER SECTION 263 OF THE INCOME-TAX ACT. AS NOTED ABOVE, THE SUBMISSION OF LEARNED COUNSEL FOR THE REVENUE WAS T HAT WHILE PASSING THE ASSESSMENT ORDER, THE ASSESSING OFFICER DID NOT CONSIDER THIS ASPECT SPECIFICALLY WHETHER THE EXPEN DITURE IN QUESTION WAS REVENUE OR CAPITAL EXPENDITURE. THIS A RGUMENT PREDICATES ON THE ASSESSMENT ORDER, WHICH APPARENTL Y DOES NOT GIVE ANY REASONS WHILE ALLOWING THE ENTIRE EXPENDIT URE AS REVENUE EXPENDITURE. HOWEVER, THAT BY ITSELF WOULD NOT BE INDICATIVE OF THE FACT THAT THE ASSESSING OFFICER H AD NOT APPLIED HIS MIND ON THE ISSUE. THERE ARE JUDGMENTS GALORE L AYING DOWN THE PRINCIPLE THAT THE ASSESSING OFFICER IN THE ASS ESSMENT ORDER IS NOT REQUIRED TO GIVE DETAILED REASON IN RESPECT OF EACH AND EVERY ITEM OF DEDUCTION, ETC. THEREFORE, ONE HAS TO SEE FROM THE RECORD AS TO WHETHER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE EXPENDITURE IN QUESTION AS REVENUE EXP ENDITURE. LEARNED COUNSEL FOR THE ASSESSEE IS RIGHT IN HIS SU BMISSION THAT ONE HAS TO KEEP IN MIND THE DISTINCTION BETWEEN LA CK OF INQUIRY AND INADEQUATE INQUIRY. IF THERE WAS ANY INQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCAS ION TO THE COMMISSIONER TO PASS ORDERS UNDER SECTION 263 OF TH E ACT, MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MA TTER. IT IS ONLY IN CASES OF LACK OF INQUIRY THAT SUCH A COUR SE OF ACTION ITA NO. 1641 TO 1646/DEL/2014 AY: 2006-07 TO 2010-11 15 WOULD BE OPEN. IN GABRIEL INDIA LTD. [1993] 203 ITR 108 (BOM), LAW ON THIS ASPECT WAS DISCUSSED IN THE FOLL OWING MANNER (PAGE 113):ITA NO. 591/2008 AND CONNECTED MA TTERS 31 FROM A RENDING OF SUB-SECTION (1) OF SECTION 263, IT IS CLEAR THAT THE POWER OF SUO MOTU REVISION CAN BE EX ERCISED BY THE COMMISSIONER ONLY IF, ON EXAMINATION OF THE REC ORDS OF ANY PROCEEDINGS UNDER THIS ACT, HE CONSIDERS THAT ANY O RDER PASSED THEREIN BY THE INCOME-TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE . IT IS NOT AN ARBITRARY OR UNCHARTERED POWER, IT CAN BE EXERCISED ONLY ON FULFILMENT OF THE REQUIREMENTS LAID DOWN IN SUBSECT ION (1). THE CONSIDERATION OF THE COMMISSIONER AS TO WHETHER AN ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE, MUST BE BASED ON MATERIALS ON THE RECORD O F THE PROCEEDINGS CALLED FOR BY HIM. IF THERE ARE NO MATE RIALS ON RECORD ON THE BASIS OF WHICH IT CAN BE SAID THAT TH E COMMISSIONER ACTING IN A REASONABLE MANNER COULD HA VE COME TO SUCH A CONCLUSION, THE VERY INITIATION OF PROCEE DINGS BY HIM WILL BE ILLEGAL AND WITHOUT JURISDICTION. THE COMMI SSIONER CANNOT INITIATE PROCEEDINGS WITH A VIEW TO STARTING FISHING AND ROVING ENQUIRIES IN MATTERS OR ORDERS WHICH ARE ALR EADY CONCLUDED. SUCH ACTION WILL BE AGAINST THE WELL-ACC EPTED POLICY OF LAW THAT THERE MUST BE A POINT OF FINALIT Y IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUES SHOULD NOT BE REACTI VATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDU CE REPOSE IN AND SET AT REST JUDICIAL AND QUASI-JUDICIAL CONTROV ERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. (SEE PARAS HURAM POTTERY WORKS CO. LTD. V. ITO [1977] 106 ITR 1 (SC) AT PAGE 10) FROM THE AFORESAID DEFINITIONS IT IS CLEAR TH AT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN A CCORDANCE WITH LAW. IF AN INCOME-TAX OFFICER ACTING IN ACCORD ANCE WITH LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, AC CORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELA BORATELY. THIS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUT ION OF 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 ACC OUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE ITA NO . 591/2008 AND CONNECTED MATTERS 32 INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATE H IMSELF. ITA NO. 1641 TO 1646/DEL/2014 AY: 2006-07 TO 2010-11 16 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 W OULD HAVE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN THE ON E DETERMINED BY THE INCOME-TAX OFFICER. THAT WOULD NO T VEST THE COMMISSIONER WITH POWER TO RE-EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE. IT IS BECAUSE THE INCOME-TAX OFFICER HAS EXERCISED THE QUASI-JUDI CIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT BE FORMED T O 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 WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLIC ATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTE RPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED WE MAY NOW EXAMINE THE FACTS OF THE PRESENT CASE IN THE LI GHT OF THE POWERS OF THE COMMISSIONER SET OUT ABOVE. THE INCOM E-TAX OFFICER IN THIS CASE HAD MADE ENQUIRIES IN REGARD T O THE NATURE OF THE EXPENDITURE INCURRED BY THE ASSESSEE. THE AS SESSEE HAD GIVEN DETAILED EXPLANATION IN THAT REGARD BY A LETT ER IN WRITING. ALL THESE ARE PART OF THE RECORD OF THE CASE. EVIDE NTLY, THE CLAIM WAS ALLOWED BY THE INCOME-TAX OFFICER ON BEIN G 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 D ISCUSSION IN THAT REGARD. 16. THUS, IN CASES OF WRONG OPINION OR FINDING ON MERITS, THE CIT HAS TO COME TO THE CONCL USION AND HIMSELF DECIDE THAT THE ORDER IS ERRONEOUS, BY COND UCTING NECESSARY ENQUIRY, IF REQUIRED AND NECESSARY, BEFOR E THE ORDER UNDER SECTION 263 IS PASSED. IN SUCH CASES, THE ORD ER OF THE ASSESSING OFFICER WILL BE ERRONEOUS BECAUSE THE ORD ER PASSED IS NOT SUSTAINABLE IN LAW AND THE SAID FINDING MUST BE RECORDED. CIT CANNOT REMAND THE MATTER TO THE ASSES SING OFFICER TO DECIDE WHETHER THE FINDINGS ITA NO. 591/ 2008 AND CONNECTED MATTERS 33 RECORDED ARE ERRONEOUS. IN CAS ES WHERE THERE IS INADEQUATE ENQUIRY BUT NOT LACK OF ENQUIRY , AGAIN THE CIT MUST GIVE AND RECORD A FINDING THAT THE ORDER/I NQUIRY MADE IS ERRONEOUS. THIS CAN HAPPEN IF AN ENQUIRY AN D VERIFICATION IS CONDUCTED BY THE CIT 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 CASE S POSSIBLY THOUGH RARELY, THE CIT CAN ALSO SHOW AND ESTABLISH THAT THE ITA NO. 1641 TO 1646/DEL/2014 AY: 2006-07 TO 2010-11 17 FACTS ON RECORD OR INFERENCES DRAWN FROM FACTS ON R ECORD PER SE JUSTIFIED AND MANDATED FURTHER ENQUIRY OR INVEST IGATION BUT THE ASSESSING OFFICER HAD ERRONEOUSLY NOT UNDERTAKE N THE SAME. HOWEVER, THE SAID FINDING MUST BE CLEAR, UNAM BIGUOUS AND NOT DEBATABLE. THE MATTER CANNOT BE REMITTED FO R A FRESH DECISION TO THE ASSESSING OFFICER TO CONDUCT FURTHE R ENQUIRIES WITHOUT A FINDING THAT THE ORDER IS ERRONEOUS. FIND ING THAT THE ORDER IS ERRONEOUS IS A CONDITION OR REQUIREMENT WH ICH MUST BE SATISFIED FOR EXERCISE OF JURISDICTION UNDER SEC TION 263 OF THE ACT. IN SUCH MATTERS, TO REMAND THE MATTER/ISSU E TO THE ASSESSING OFFICER WOULD IMPLY AND MEAN THE CIT HAS NOT EXAMINED AND DECIDED WHETHER OR NOT THE ORDER IS ER RONEOUS BUT HAS DIRECTED THE ASSESSING OFFICER TO DECIDE TH E ASPECT/QUESTION. 17. THIS DISTINCTION MUST BE KEPT IN MIND BY THE CIT WHILE EXERCISING JURISDICTION UNDER SECTION 263 OF THE ACT AND IN THE ABSENCE OF THE FINDING THAT THE ORDE R IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E, EXERCISE OF JURISDICTION UNDER THE SAID SECTION IS NOT SUSTA INABLE. IN MOST CASES OF ALLEGED INADEQUATE INVESTIGATION, I T WILL BE DIFFICULT TO HOLD THAT THE ORDER OF THE ASSESSING O FFICER, WHO HAD CONDUCTED ENQUIRIES AND HAD ACTED AS AN INVESTI GATOR, IS ERRONEOUS, WITHOUT CIT CONDUCTING VERIFICATION/INQU IRY. THE ORDER OF THE ASSESSING OFFICER MAY BE OR MAY NOT BE WRONG. CIT CANNOT DIRECT RECONSIDERATION ON THIS GROUND BU T ONLY WHEN THE ORDER IS ERRONEOUS. AN ORDER OF REMIT CANN OT BE PASSED BY THE CIT TO ASK THE ASSESSING OFFICER TO D ECIDE WHETHER THE ORDER WAS ERRONEOUS. THIS IS NOT PERMIS SIBLE. AN ORDER IS NOT ERRONEOUS, UNLESS THE CIT HOLD AND REC ORDS REASONS WHY IT IS ERRONEOUS. AN ORDER WILL NOT BECO ME ERRONEOUS BECAUSE ON REMIT, THE ITA NO. 591/2008 AN D CONNECTED MATTERS 34 ASSESSING OFFICER MAY DECIDE T HAT THE ORDER IS ERRONEOUS. THEREFORE CIT MUST AFTER RECORD ING REASONS HOLD THAT THE ORDER IS ERRONEOUS. THE JURIS DICTIONAL PRECONDITION STIPULATED IS THAT THE CIT MUST COME T O THE CONCLUSION THAT THE ORDER IS ERRONEOUS AND IS UNSUS TAINABLE IN LAW. WE MAY NOTICE THAT THE MATERIAL WHICH THE CIT CAN RELY INCLUDES NOT ONLY THE RECORD AS IT STANDS AT THE TI ME WHEN THE ORDER IN QUESTION WAS PASSED BY THE ASSESSING OFFIC ER BUT ALSO THE RECORD AS IT STANDS AT THE TIME OF EXAMINATION BY THE CIT [SEE CIT V. SHREE MANJUNATHESWARE PACKING PRODUCTS, 231 ITR 53 (SC)]. NOTHING BARS/PROHIBITS THE CIT FROM C OLLECTING AND RELYING UPON NEW/ADDITIONAL MATERIAL/EVIDENCE T O SHOW AND STATE THAT THE ORDER OF THE ASSESSING OFFICER I S ERRONEOUS. ITA NO. 1641 TO 1646/DEL/2014 AY: 2006-07 TO 2010-11 18 18. IT IS IN THIS CONTEXT THAT THE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD. V. COMMISSIONER OF INCOME TAX, (2000) 243 ITR 83 (SC), HAD OBSERVED THAT THE PHRASE PREJUDIC IAL TO THE INTEREST OF REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EV ERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSI NG OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF REVENUE. THUS, WHEN THE ASSESSING OFFICER HAD ADOPTED ONE OF THE COURSES PERMISSIBLE AND AVAILABLE TO HIM, AND THIS HAS RESULTED IN LOSS TO REVENUE; OR TWO VIEWS WERE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE CIT MAY NOT AGREE; THE SAID ORDERS CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF REVENUE UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. IN SUCH MATTERS, THE CIT MUST GIVE A FINDING THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW AND, THER EFORE, THE ORDER IS ERRONEOUS. HE MUST ALSO SHOW THAT PREJUDIC E IS CAUSED TO THE INTEREST OF THE REVENUE. 14. IN VIEW OF FOREGOING DISCUSSIONS, WE ARE INCLIN ED TO HOLD THAT THE PRESENT CASE IS SQUARELY COVERED IN FAVOUR OF THE REVENUE B Y THE DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF G EE VEE ENTERPRISES VS ACIT (SUPRA) AND CIT VS NAGESH KNITWEARS P. LTD. (SUPRA) AS IN THE PRESENT CASE, THE AO DID NOT RAISE ANY QUERY OR MAKE ANY INQUIRY PERT AINING TO THE CLAIM OF EXPENSES SUBMITTED BY THE ASSESSEE IN ITS BOOKS AND STATEMENTS OF ACCOUNTS SUBMITTED ALONG WITH RETURN AND THIS IS A CLEAR CAS E OF LACK OF INQUIRY. WE MAY ALSO POINT OUT THAT IF THE AO FAILS TO CONDUCT THE SAID INVESTIGATION, HE COMMITS THE ERROR AND THE WORD ERRONEOUS INCLUDES FAILURE TO MAKE INQUIRY. IN SUCH CASES, THE ORDER BECOMES ERRONEOUS BECAUSE NEC ESSARY INQUIRY OR VERIFICATION HAS NOT BEEN MADE AND NOT BECAUSE A WR ONG ORDER HAS BEEN PASSED ON MERITS. WE FURTHER HOLD THAT IF FROM THE DETAIL ED INVESTIGATION CONDUCTED BY ITA NO. 1641 TO 1646/DEL/2014 AY: 2006-07 TO 2010-11 19 THE INVESTIGATION WING OF THE DEPARTMENT, IT IS REV EALED THAT THE BOGUS EXPENSES HAVE BEEN CLAIMED BY THE ASSESSEE WITH THE INTENTIO N TO REDUCE ITS TAX LIABILITY, THEN THE ORDER IS ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. THE ARGUMENT OF THE LD. COUNSEL OF THE ASSESSEE ABOUT REVENUE NEUTRALIT Y IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 15. IN THE CASE OF ITO VS CH. ATCHAIAH (1996) 218 ITR 239(SC) , SPEAKING FOR HONBLE APEX COURT THEIR LORDSHIPS HELD AS FOLL OWS:- IN OUR OPINION, THE CONTENTION URGED BY DR. GAURI SHANKAR MERITS ACCEPTANCE. WE ARE OF THE OPINION T HAT UNDER THE PRESENT ACT, THE INCOME TAX OFFICER HAS NO OPTI ON LIKE THE ONE HE HAD UNDER THE 1922 ACT. HE CAN, AND HE MUST , TAX THE RIGHT PERSON AND THE RIGHT PERSON ALONE. BY RIGHT PERSON, WE MEAN THE PERSON WHO IS LIABLE TO BE TAXED, ACCOR DING TO LAW, WITH RESPECT TO A PARTICULAR INCOME. THE EXPR ESSION WRONG PERSON IS OBVIOUSLY USED AS THE OPPOSITE OF THE EXPRESSION RIGHT PERSON. MERELY BECAUSE A WRONG PERSON IS TAXED WITH RESPECT TO A PARTICULAR INCOME, THE ASSE SSING OFFICER IS NOT PRECLUDED FROM TAXING THE RIGHT PERS ON WITH RESPECT TO THAT INCOME. THIS IS SO IRRESPECTIVE OF THE FACT WHICH COURSE IS MORE BENEFICIAL TO THE REVENUE. IN OUR O PINION, THE LANGUAGE OF THE RELEVANT PROVISIONS OF THE PRESENT ACT IS QUITE CLEAR AND UNAMBIGUOUS. SECTION 183 SHOWS THAT WHER E PARLIAMENT INTENDED TO PROVIDE AN OPTION, IT PROVID ED SO EXPRESSLY. WHERE A PERSON IS TAXED WRONGFULLY, HE IS NO DOUBT ENTITLED TO BE RELIEVED OF IT IN ACCORDANCE WITH LA W, BUT THAT IS A DIFFERENT MATTER ALTOGETHER. THE PERSON LAWFULLY LIABLE TO BE TAXED CAN CLAIM NO IMMUNITY BECAUSE THE ASSESSING O FFICER (INCOME TAX OFFICER) HAS TAXED THE SAID INCOME IN T HE HANDS OF ANOTHER PERSON CONTRARY TO LAW. ITA NO. 1641 TO 1646/DEL/2014 AY: 2006-07 TO 2010-11 20 16. THEREFORE, IT IS WELL-SETTLED PRINCIPLE THAT TH E REVENUE AUTHORITIES ARE DUTY BOUND TO TAX RIGHT PERSON AND RIGHT PERSON ALONE. BY RIGHT PERSON IS MEANT THE PERSON WHO IS LIABLE TO BE TAXED, ACCORDING TO LAW, WITH RESPECT TO A PARTICULAR INCOME. THE MEANING OF WRONG PERSON IS OBVIOUSLY USED AS THE OPPOSITE OF THE EXPRESSION RIGHT PERSON. IN OUR HUMBLE UNDER STANDING, THE RATIO OF THIS DECISION CLARIFIES THAT MERELY BECAUSE OF A WRONG P ERSON IS TAXED WITH RESPECT TO A PARTICULAR INCOME, THE AO IS NOT PRECLUDED FROM T AXING THE RIGHT PERSON WITH RESPECT TO THAT INCOME. SAME IS THE CASE HERE WHEN ASSESSEE COMPANY MADE A BOGUS CLAIM OF EXPENDITURE THEN THE ASSESSEE CANNOT AVAIL IMMUNITY FROM TAX LIABILITY BY STATING THAT THE IMPUGNED AMOUNT OF EX PENDITURE CLAIM HAS BEEN TAXED IN THE HANDS OF RESPECTIVE PAYEE COMPANIES. 17. THUS, WE REACH TO A LOGICAL CONCLUSION THAT THE CIT(A) WAS QUITE JUSTIFIED AND WITHIN THE AMBIT OF THE JURISDICTION AVAILABLE TO HIM U/S 263 OF THE ACT AND, THEREFORE, WE ARE OF THE VIEW THAT THE CIT(A) INVOK ED PROVISIONS OF SECTION 263 OF THE ACT IN A JUDICIOUS AND PROPER MANNER AND WE ARE UNABLE TO SEE ANY AMBIGUITY, PERVERSITY OR ANY OTHER VALID REASON TO INTERFERE WITH THE SAME. HENCE, SOLE GROUND OF THE ASSESSEE IN ALL SIX APPEA LS BEING DEVOID OF MERITS IS DISMISSED. ITA NO. 1641 TO 1646/DEL/2014 AY: 2006-07 TO 2010-11 21 18. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.3.2015. SD/- SD/- (PRAMOD KUMAR) (CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 30TH MARCH, 2015 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER AS STT. REGISTRAR