Ontime Transport Company Ltd., CHENNAI V. ACIT, Madurai

ITA 1729/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8030 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 13-01-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 29-07-2015
• Court: TRIBUNAL
• Department Lawyers: DEVENDRACIT
• Assessee Lawyers: V JAGADISANC A
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 143(3); 194C; 263; 63

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , ! . ' #$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.1729 /MDS./2015 ( / ASSESSMENT YEAR :2010-11) & S.P. NO.390/MDS./2015 M/S.ONTIME TRANSPORT COMPANY LTD , [NOW KNOWN AS M/S.ONTIME INDUSTRIAL SERVICES LD.,] PSK NAGAR, RAJAPALAYAM 626 108 . VS. ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-2, MADURAI. PAN AAACO 8508 Q ( %& / APPELLANT ) ( '(%& / RESPONDENT ) / APPELLANT BY : MR.V.JAGADISAN,C.A / RESPONDENT BY : MR.DEVENDRA,CIT, D.R ! / DATE OF HEARING : 13.01.2016 '# ! /DATE OF PRONOUNCEMENT : 10.02.2016 ) / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX-I, MADURAI DATED ITA NO.1729/MDS/2015 SP NO.390/MDS./15 2 30.03.2015 PERTAINING TO THE ASSESSMENT YEAR 2010-1 1. THE ASSESSEE ALSO FILED A STAY PETITION (S.P) SEEKING STAY OF OPERATION OF THE ORDER OF THE COMMISSIONER OF INCOME TAX, MADURA I PASSED U/S.263 OF THE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY IS ENGAGED IN THE BUSINESS OF TRANSPORTATION AND FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2010-11 ON 18.12.2010. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS AND THE ASSESSMENT U/S.143(3) WAS COMPLETED ON 30.12.2012 ACCEPTING THE RETURNED INCOME. THEREAFTER THE LD.CIT AFTER PERUS ING THE ORIGINAL ASSESSMENT ORDER DATED 30.12.12 OPINED THAT THE A SSESSEE FAILED TO PROVIDE REQUISITE INFORMATION RELATING TO TDS ON PA YMENT OF LORRY FREIGHT CHARGES AGGREGATING TO RS.70,76,83,553/-, T HEREBY TREATING THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF REVENUE BY INVOKING THE PROVISIONS OF THE SECTION 2 63 OF THE ACT. THE CIT OBSERVED THAT AS THE ASSESSEE HAS NOT COMPLIED WITH THE PROVISIONS OF THE SECTION 194C, THEN SEC.40(A)(IA) WILL BE ATTRACTED AND HE DIRECTED THE AO TO INVOKING THE PROVISIONS O F THE SECTION 194C ITA NO.1729/MDS/2015 SP NO.390/MDS./15 3 OF THE ACT. FURTHER, HE OBSERVED THAT THE AO HAD N OT MADE ANY VERIFICATION OR INVESTIGATION RELATING TO TDS ON P AYMENT OF LORRY FREIGHT CHARGES AGGREGATING TO RS.70,76,83,553/-. AS THESE ASPECTS WERE NOT VERIFIED WHILE COMPLETING THE ASSESSMENT , THE CIT CAME TO A CONCLUSION THAT THE ASSESSMENT MADE WAS ERRONEOU S AND PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREFOR E THE ASSESSMENT IN THIS CASE IS SET ASIDE TO BE DONE AFRESH BY THE AO. FURTHER, HE DIRECTED HE AO TO ENQUIRE INTO THIS ASPECT AS WELL AS ANY OTHER ASPECT WHICH WOULD OTHERWISE BE REQUIRED TO BE ENQUIRED IN TO WHILE COMPLETING THE ASSESSMENT IN THIS CASE AND REDO THE ASSESSMENT AS PER LAW AND CONSIDERING ALL THE FACTS OF THE CASE. AGAINST THIS ASSESSEE IS IN APPEAL BEFORE US. 3. THE A.R SUBMITTED THAT THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143 (3) DATED 30/12/2012 ACCEPTING TH E TOTAL INCOME RETURNED AND THE CIT ASSUMED JURISDICTION UNDER SEC TION 263 AND ISSUED SHOW CAUSE NOTICE DATED 1.3.2015 THAT NO TDS WAS MADE ON RS.70,76,83,553/ TOWARDS LORRY FREIGHT CHARGES AND NO DISALLOWANCE WAS MADE UNDER SECTION 40 (A) (IA) IN THE ASSESSMEN T MADE UNDER ITA NO.1729/MDS/2015 SP NO.390/MDS./15 4 SECTION 143 (3). THE AUTHORISED REPRESENTATIVE OF ASSESSEE SUBMITTED THAT TDS WAS DEDUCTED ON A SUM OF RS.33,9 0,74,390/- (1ST & 2ND QUARTER) AMOUNTING TO RS.36.65,836/- - THE A. R STATED THAT UNDER SECTION 194 C (6) WITH EFFECT FROM 1.10.2010 , NO TDS IS TO BE DEDUCTED IF PAN IS FURNISHED TO THE ASSESSEE BY T HE TRANSPORTER AND HENCE NO TDS WAS DEDUCTED BY ASSESSEE ON TRANSP ORT CHARGES PAID IN III & IV QUARTER. ACCORDING TO A.R, THESE D ETAILS WERE MADE AVAILABLE TO THE ASSESSING OFFICER (AT THE TIME OF HEARING ON 17.3.2015) AND ALSO BEFORE THE CIT IN PROCEEDINGS U NDER SECTION 263. ACCORDING TO THE A.R., NO PARTICULARS WERE PRESCRIB ED UNDER SECTION 194C (7) AND HENCE CIT IS NOT CORRECT IN ASSUMING J URISDICTION ON A STATED DEFAULT WHICH IS NOT THERE AND THE CIT DID N OT REFER TO DEFAULT UNDER SECTION 194 C (7) IN THE SHOW CAUSE NOTICE AN D CANNOT THEREFORE PASS ANY ORDER THEREON IN PROCEEDINGS UND ER SECTION 263. ACCORDING TO HIM, THE CIT HAS ALSO NOT IDENTIFIED WHAT ARE PRESCRIBED UNDER SECTION 194 C (7) AND HOW ASSESS EE IS IN DEFAULT. ACCORDING TO A.R., IT IS ON RECORD THAT, THE ASSESS EE FILED FORM NO.26Q ACKNOWLEDGEMENT FOR QL, Q2, Q3 AND Q4 FOR FI NANCIAL YEAR 2009-10. (ASSESSMENT YEAR 2010-11) . HE SUBMITTED T HAT THE ITA NO.1729/MDS/2015 SP NO.390/MDS./15 5 ASSESSEE FILED FORM NO 26Q FOR III & IV QUARTER IN RESPECT OF OTHER ITEMS ON WHICH TDS WAS EFFECTED (OTHER THAN TRANSPO RT CHARGES) AND THE REQUIREMENT TO DISCLOSE ITEMS IN FORM NO.26Q ON WHICH NO TDS WAS EFFECTED CAME INTO FORCE MUCH LATER. HENCE THE ASSESSEE CANNOT BE FAULTED IN THIS REGARD. THE DEPARTMENTAL REPRES ENTATIVE RELIED ON THE ORDER OF THE CIT. 4. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS IN THE LIGHT OF MATERIAL PLACED BEFORE US AND ALSO GONE THROUGH ALL THE JUDGEMENTS CITED BY THE PARTIES BEFORE US. FIRST WE TAKE UP THE LEGAL ISSUE WITH REFERENCE TO THE JURISDICTION OF INVOKIN G THE PROVISIONS OF SECTION 263 OF THE ACT BY THE LEARNED CIT. THE SCHE ME OF THE IT ACT IS TO LEVY AND COLLECT TAX IN ACCORDANCE WITH THE PROV ISIONS OF THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF DUE T O ERRONEOUS ORDER OF THE ASSESSING OFFICER, THE REVENUE IS LOSING TAX LA WFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INT EREST OF THE REVENUE. AS HELD IN THE CASE OF MALABAR INDUSTRIESCO. LTD., (243 ITR 83)(SC), THE COMMISSIONER CAN EXERCISE REVISION JURISDICTIONAL U /S 263 IF HE IS SATISFIED THAT THE ORDER OF THE ASSESSING OFFICER S OUGHT TO BE REVISED IS ITA NO.1729/MDS/2015 SP NO.390/MDS./15 6 (I) ERRONEOUS; AND ALSO (II) PREJUDICIAL TO THE INT ERESTS OF THE REVENUE. THE WORD 'ERRONEOUS' HAS NOT BEEN DEFINED IN THE IN COME TAX ACT. IT HAS BEEN HOWEVER DEFINED AT PAGE 562 IN BLACK'S LAW DICTIONARY (SEVENTH EDITION) THUS'; 'ERRONEOUS, ADJ. INVOLVING ERROR, DEVIATING FROM TH E LAW'. THE WORD 'ERROR' HAS BEEN DEFINED AT THE SAME PAGE IN THE SAME DICTIONARY THUS: 'ERROR NO. 1 : A PSYCHOLOGICAL STATE THAT DOES NOT CONFORM TO OBJECTIVE REALITY; A BRIEF THAT WHAT IS FALSE IS TRUE OR THAT WHAT IS TRUE IS FALSE'. AT PAGE 649/650 IN P. RAMANATHA AIYER'S 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 'ERR OR' IS A FAULT IN JUDGEMENT, OR IN THE PROCESS OR PROCEEDING TO JUDGE MENT OR IN THE EXECUTION UPON THE SAME, IN A COURT OF RECORD; WHIC H IN THE CIVIL LAW IS CALLED A NULLITYIE' (TERMES DE LA LEY). SOMETHING INCORRECTLY DONE THROUGH IGNORANCE OR INA DVERTENCE S.99 CPC AND S.215 CR.PC. ITA NO.1729/MDS/2015 SP NO.390/MDS./15 7 'ERROR, FAULT, ERROR RESPECTS THE ACT; FAULT RESPEC T 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 EXPLAI NED THUS: 'AN ERROR IS ANY DEVIATION FROM THE STANDARD OR COU RSE OF RIGHT, TRUTH, JUSTICE OR ACCURACY, WHICH IS NOT INTENTIONAL. A MI STAKE IS AN ERROR COMMITTED UNDER A MISAPPREHENSION OF MISCONCEPTION OF THE NATURE OF A CASE. AN ERROR MAY BE FROM THE ABSENCE OF KNOW LEDGE, A MISTAKE IS FROM INSUFFICIENT OR FALSE OBSERVATION. BLUNDER IS A PRACTICAL ERROR OF A PECULIARLY GROSS OR AWKWARD KIND, COMMITTED THROU GH GLARING IGNORANCE, HEEDLESSNESS, OR AWKWARDNESS. AN ERROR M AY BE OVERLOOKED OR ATONED FOR, A MISTAKE MAY BE RECTIFIE D, BUT THE SHAME OR RIDICULE WHICH IS OCCASIONED BY A BLUNDER, WHO C AN COUNTERACT. STRICTLY SPEAKING, HALLUCINATION IS AN ILLUSION OF THE PERCEPTION, A PHANTASM OF THE IMAGINATION. THE ONE COMES OF DISOR DERED VISION, THE OTHER OF DISCARDED IMAGINATION. IT IS EXTENDED IN MEDICAL SCIENCE TO MATTERS OF SENSATION, WHETHER THERE IS NO CORRES PONDING CAUSE TO PRODUCE IT. IN ITS ORDINARY USE IT DENOTES AN UNACC OUNTABLE ERROR IN ITA NO.1729/MDS/2015 SP NO.390/MDS./15 8 JUDGEMENT OR FACT, ESPECIALLY IN ONE REMARKABLE OTH ERWISE FOR ACCURATE INFORMATION AND RIGHT DECISION. IT IS EXCE PTIONAL ERROR OR MISTAKE IN THOSE OTHERWISE NOT LIKELY TO BE DECEIVE D.' 5. IN ORDER TO ASCERTAIN WHETHER AN ORDER SOUGHT TO BE REVISED UNDER SECTION 263 IS ERRONEOUS, IT SHOULD BE SEEN WHETHER IT SUFFERS FROM ANY OF THE AFORESAID FORMS OF ERROR. IN OUR VIEW, A N ORDER SOUGHT TO BE REVISED UNDER SECTION 263 WOULD BE ERRONEOUS AND FA LL IN THE AFORESAID CATEGORY OF 'ERRORS' IF IT IS, INTER ALIA , BASED ON AN INCORRECT 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 PRE JUDICE TO THE INTEREST OF THE REVENUE. 6. SECTION 263 OF THE INCOME-TAX ACT SEEKS TO REMOV E THE PREJUDICE CAUSED TO THE REVENUE BY THE ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. IT EMPOWERS THE COMMISSIONER TO INITIATE SUO MOTO PROCEEDINGS EITHER WHERE THE ASSESSING OFFICER TAKE S A WRONG ITA NO.1729/MDS/2015 SP NO.390/MDS./15 9 DECISION WITHOUT CONSIDERING THE MATERIALS AVAILABL E ON RECORD OR HE TAKES A 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 AS ERRONE OUS ON THE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSIN G OFFICER SHOULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE CL AIM MADE BY THE ASSESSEE IN HIS RETURN. THE REASON IS OBVIOUS. UNLI KE THE CIVIL COURT WHICH IS NEUTRAL IN GIVING A DECISION ON THE BASIS OF EVIDENCE PRODUCED BEFORE IT, THE ROLE OF AN ASSESSING OFFICE R UNDER THE INCOME-TAX ACT IS NOT ONLY THAT OF AN ADJUDICATOR B UT ALSO OF AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN, WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER ENQUIR Y. HE MUST DISCHARGE BOTH THE ROLES EFFECTIVELY. IN OTHER WORDS, HE MUST CARRY OUT INVESTIGATION WHERE THE FACTS OF THE CASE SO REQUIR E AND ALSO DECIDE THE MATTER JUDICIOUSLY ON THE BASIS OF MATERIALS CO LLECTED 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 PRESENT ASSESSMENT WA S MADE UNDER SECTION 143(3) OF THE INCOME-TAX ACT. IN OTHER WORD S, THE ASSESSING ITA NO.1729/MDS/2015 SP NO.390/MDS./15 10 OFFICER WAS STATUTORILY REQUIRED TO MAKE THE ASSESS MENT UNDER SECTION 143(3) AFTER SCRUTINY AND NOT IN A SUMMARY MANNER AS CONTEMPLATED BY SUB-SECTION (1) OF SECTION 143. BUL K OF THE RETURNS FILED BY THE ASSESSEES ACROSS THE COUNTRY IS ACCEPT ED BY THE DEPARTMENT UNDER SECTION 143(1) WITHOUT ANY SCRUTIN Y. ONLY A FEW CASES ARE PICKED UP FOR SCRUTINY. THE ASSESSING OFF ICER IS THEREFORE, REQUIRED TO ACT FAIRLY WHILE ACCEPTING OR REJECTING THE CLAIM OF THE ASSESSEE IN CASES OF SCRUTINY ASSESSMENTS. HE SHOUL D BE FAIR NOT ONLY TO THE ASSESSEE BUT ALSO TO THE PUBLIC EXCHEQU ER. THE ASSESSING OFFICER HAS GOT TO PROTECT, ON ONE HAND, THE INTERE ST OF THE ASSESSEE IN THE SENSE THAT HE IS NOT SUBJECTED TO ANY AMOUNT OF TAX IN EXCESS OF WHAT IS LEGITIMATELY DUE FROM HIM, AND ON THE OTHER HAND, HE HAS A DUTY TO PROTECT THE INTERESTS OF THE REVENUE AND TO SEE THAT NO ONE DODGED THE REVENUE AND ESCAPED WITHOUT PAYING THE L EGITIMATE TAX. THE ASSESSING OFFICER IS NOT EXPECTED TO PUT BLINKE RS ON HIS EYES AND MECHANICALLY ACCEPT WHAT THE ASSESSEE CLAIMS BEFORE HIM. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED AND THE GENUINENESS OF THE CLAIMS MADE IN THE RETURN WHEN THE CIRCUMSTANCE S OF THE CASE ARE SUCH AS TO PROVOKE INQUIRY. ARBITRARINESS IN EITHER ACCEPTING OR ITA NO.1729/MDS/2015 SP NO.390/MDS./15 11 REJECTING THE CLAIM HAS NO PLACE. THE ORDER PASSED BY THE ASSESSING OFFICER BECOMES ERRONEOUS BECAUSE AN ENQUIRY HAS NO T BEEN MADE OR GENUINENESS OF THE CLAIM HAS NOT BEEN EXAMINED W HERE THE INQUIRIES OUGHT TO HAVE BEEN MADE AND THE GENUINENE SS OF THE CLAIM OUGHT TO HAVE BEEN EXAMINED AND NOT BECAUSE THERE I S ANYTHING WRONG WITH HIS ORDER IF ALL THE FACTS STATED OR CLA IM 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 A CCEPTS WHAT THE ASSESSEE HAS STATED IN HIS RETURN AND FAILS TO MAKE ENQUIRIES OR EXAMINE THE GENUINENESS OF THE CLAIM WHICH ARE CALL ED FOR IN THE CIRCUMSTANCES OF THE CASE. IN TAKING THE AFORESAID VIEW, WE ARE SUPPORTED BY THE DECISIONS OF THE HON'BLE SUPREME C OURT IN RAMPYARI DEVI SARAOGI (SUPRA), SMT. TARA DEVI AGGAR WAL V. CIT [1973] 88 ITR 323 (SC), AND MALABAR INDUSTRIAL CO. LTD'S (SUPRA). 7. IN MALABAR INDUSTRIAL CO. LTD. CASE (SUPRA) THE HON'BLE COURT HAS HELD AS UNDER: ITA NO.1729/MDS/2015 SP NO.390/MDS./15 12 'THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN IN CORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOU S. IN THE SAME CATEGORY FALL THE ORDERS PASSED WITHOUT APPLYI NG THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATIO N OF MIND. IN OUR HUMBLE VIEW, ARBITRARINESS IN DECISION-MAKING W OULD ALWAYS NEED CORRECTION REGARDLESS OF WHETHER IT CAU SES 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 J URISDICTION OF THE COMMISSIONER UNDER SECTION 264 OR THROUGH AP PEALS AND OTHER MEANS OF JUDICIAL REVIEW, THE PREJUDICE C AUSED TO THE STATE EXCHEQUER CAN ALSO BE CORRECTED BY INVOKI NG REVISIONAL JURISDICTION OF THE COMMISSIONER UNDER S ECTION 263. ARBITRARINESS IN DECISION-MAKING CAUSING PREJU DICE TO EITHER PARTY CANNOT THEREFORE BE ALLOWED TO STAND A ND STARE AT THE LEGAL SYSTEM. IT IS DIFFICULT TO COUNTENANCE SUCH ARBITRARINESS IN THE ACTIONS OF THE ASSESSING OFFIC ER. 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 FAILS TO DISCHARGE HIS DUTIES FAIR LY, HIS ARBITRARY ITA NO.1729/MDS/2015 SP NO.390/MDS./15 13 ACTIONS CULMINATING IN ERRONEOUS ORDERS CAN ALWAYS BE CORRECTED EITHER AT THE INSTANCE OF THE ASSESSEE, I F THE ASSESSEE IS PREJUDICED OR AT THE INSTANCE OF THE COMMISSIONER, IF THE REVENUE IS PREJUDICED. WHILE M AKING AN ASSESSMENT, THE ITO HAS A VARIED ROLE TO PLAY. HE I S 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 THAT WHEN HE ENQUIRES INTO A SUBSTANTIAL M ATTER LIKE THE PRESENT ONE, HE MUST RECORD A FINDING ON THE RE LEVANT ISSUE GIVING, HOWSOEVER BRIEFLY, HIS REASONS THEREF OR. IN S.N. MUKHERJEE V. UNION OF INDIA AIR 1990 SC 1984, IT HA S BEEN OBSERVED BY THE HON'BLE SUPREME COURT THAT 'REASON S, WHEN RECORDED BY AN ADMINISTRATIVE AUTHORITY IN AN ORDER PASSED BY IT WHILE EXERCISING QUASI-JUDICIAL FUNCTI ONS, WOULD NO DOUBT FACILITATE THE EXERCISE OF ITS JURISDICTIO N 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 A UTHORITY MUST RECORD REASONS FOR ITS DECISION ARE OF NO LESS SIGNIFICANCE. THESE CONSIDERATIONS SHOW THAT THE RE CORDING OF REASONS BY AN ADMINISTRATIVE AUTHORITY SERVES A SALUTARY PURPOSE, NAMELY, IT EXCLUDES CHANCES OR ARBITRARINE SS AND ENSURES A DEGREE OF FAIRNESS IN THE PROCESS OF DECI SION- MAKING. THE SAID PURPOSE WOULD APPLY EQUALLY TO ALL ITA NO.1729/MDS/2015 SP NO.390/MDS./15 14 DECISIONS AND ITS APPLICATION CANNOT BE CONFINED TO DECISIONS WHICH ARE SUBJECT TO APPEAL, REVISION OR JUDICIAL R EVIEW. IN OUR OPINION, THEREFORE, THE REQUIREMENT THAT REASONS BE RECORDED SHOULD GOVERN THE DECISIONS OF AN ADMINISTRATIVE AU THORITY EXERCISING QUASI-JUDICIAL FUNCTIONS IRRESPECTIVE OF THE FACT MAY, HOWEVER, BE ADDED THAT IT IS NOT REQUIRED THAT THE REASONS SHOULD BE AS ELABORATE AS IN THE DECISION O F A COURT OF LAW. THE EXTENT AND NATURE OF THE REASONS WOULD DEPEND ON PARTICULAR FACTS AND CIRCUMSTANCES. WHAT IS NECE SSARY IS THAT THE REASONS ARE CLEAR AND EXPLICIT SO AS TO IN DICATE THAT THE AUTHORITY HAS GIVEN DUE CONSIDERATION TO THE PO INTS IN CONTROVERSY. THE NEED FOR RECORDING OF REASONS IS G REATER IN A CASE WHERE THE ORDER IS PASSED AT THE ORIGINAL ST AGE. THE APPELLATE OR REVISIONAL AUTHORITY, IF IT AFFIRMS SU CH 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 SU PREME COURT IN SIEMENS ENGG. & MFG. CO. OF INDIA LTD. V. UNION OF INDIA AIR 1976 SC 1785. IT IS SETTLED LAW THAT WHILE MAKING ASSESS MENT ON ASSESSEE, THE ITO ACTS IN A QUASI-JUDICIAL CAPACITY. AN ASSES SMENT ORDER IS AMENABLE TO APPEAL BY THE ASSESSEE AND TO REVISION BY THE ITA NO.1729/MDS/2015 SP NO.390/MDS./15 15 COMMISSIONER UNDER SECTIONS 263 AND 264. THEREFORE, A REASONED ORDER ON A SUBSTANTIAL ISSUE IS LEGALLY NECESSARY. THE JUDGMENTS ON WHICH RELIANCE WAS PLACED BY THE LEARNED COUNSEL FO R THE ASSESSEE ALSO POINTS TO THE SAME DIRECTION. THEY HAVE HELD T HAT ORDERS, WHICH ARE SUBVERSIVE OF THE ADMINISTRATION OF REVENUE, MU ST BE REGARDED AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. IF THE ASSESSING OFFICERS ARE ALLOWED TO MAKE ASSESSMENTS IN AN ARBITRARY MANNER, AS HAS BEEN DONE IN THE CASE BEFORE US, THE ADMINISTRATION OF REVENUE IS BOUND TO SUFFER. IF WITHOUT DISCUSSIN G THE NATURE OF THE TRANSACTION AND MATERIALS ON RECORD, THE ASSESSING OFFICER HAD MADE CERTAIN ADDITION TO THE INCOME OF THE ASSESSEE, THE SAME WOULD HAVE BEEN CONSIDERED ERRONEOUS BY ANY APPELLATE AUTHORIT Y AS BEING VIOLATIVE OF THE PRINCIPLES OF NATURAL JUSTICE WHIC H REQUIRE THAT THE AUTHORITY MUST INDICATE THE REASONS FOR AN ADVERSE ORDER. WE FIND NO REASON WHY THE SAME VIEW SHOULD NOT BE TAKEN WHEN A N ORDER IS AGAINST THE INTERESTS OF THE REVENUE. AS A MATTER O F FACT SUCH ORDERS ARE PREJUDICIAL TO THE INTERESTS OF BOTH THE PARTIE S, BECAUSE EVEN THE ASSESSEE IS DEPRIVED OF THE BENEFIT OF A POSITIVE F INDING IN HIS FAVOUR, THOUGH HE MAY HAVE SUFFICIENTLY ESTABLISHED HIS CAS E. ITA NO.1729/MDS/2015 SP NO.390/MDS./15 16 9. IN VIEW OF THE FOREGOING, IT CAN SAFELY BE SAID THAT AN ORDER PASSED BY THE ASSESSING OFFICER BECOMES ERRONEOUS A ND PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNDER SECTION 263 I N THE FOLLOWING CASES: (I) THE ORDER SOUGHT TO BE REVISED CONTAINS ERROR O F REASONING OR OF LAW OR OF FACT ON THE FACE OF IT. (II) THE ORDER SOUGHT TO BE REVISED PROCEEDS ON INC ORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW. IN THE SA ME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NA TURAL 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 I N HIS RETURN OR WHERE HE FAILS TO MAKE THE REQUISITE ENQUIRIES OR E XAMINE THE GENUINENESS OF THE CLAIM WHICH IS CALLED FOR IN THE CIRCUMSTANCES OF THE CASE 10. COMING TO THE FACTS OF THE PRESENT CASE, THE ORDER OF THE AO IS VERY CRYPTIC. THERE IS NO DISCUSSION OF WHATSOEVER IN HIS ASSESSMENT ORDER. HE ACCEPTED THE RETURN OF INCOME OF ` 9,49,940/- AS INCOME DETERMINED BY THE ASSESSEE. WE CANNOT SAY WHAT ENQ UIRY THE AO ITA NO.1729/MDS/2015 SP NO.390/MDS./15 17 HAS MADE TO ACCEPT THE RETURN OF INCOME AS TRUE AND CORRECT. THERE ARE NO DETAILS WHAT KIND OF ENQUIRY AO HAS MADE, HO W HE HAS FORMED THE OPINION TO ACCEPT THE RETURN OF INCOME AS FILED BY THE ASSESSEE. THEN, THE CIT EMPOWERED TO INITIATE THE SUO MOTO PR OCEEDINGS U/S.263 OF THE ACT EITHER WHERE AO TAKES WRONG DECI SION WITHOUT CONSIDERING MATERIAL AVAILABLE ON RECORD OR HE TAKE S A DECISION WITHOUT MAKING AN ENQUIRY INTO MATTERS, WHERE SUCH ENQUIRY WAS PRIMA FACIE WARRANTED. IN THE PRESENT CASE, THE CI T HAS INVOKED THE PROVISIONS OF THE SECTION 263 OF THE ACT ON THE RE ASON THAT THERE WAS UTTER FAILURE ON THE PART OF THE AO TO CARRY OUT N ECESSARY ENQUIRY WHILE COMPLETING HE ASSESSMENT ON 30.12.2012 BECAU SE OF NON- ENQUIRY AND NON-APPLICATION OF MIND BY THE AO. TH E LD. CIT IS JUSTIFIED IN INVOKING THE JURISDICTION U/S.263 OF T HE ACT. FURTHER, THE CIT HAS NOT FORMED ANY OPINION AND HE HAS CANCELLED THE ORDER OF AO BY DIRECTING TO REDO THE ASSESSMENT AFRESH AFTER GIVING ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. BEING SO, WE ARE OF THE OPINION THAT THE LD. CIT IS JUSTIFIED IN INVOKING T HE JURISDICTION U/S.263 OF THE ACT. SINCE WE HAVE CONFIRMED THE INVOKING O F JURISDICTION U/S.263 OF THE ACT, THERE IS NO FINDING BY CIT ON M ERIT; WHATEVER ITA NO.1729/MDS/2015 SP NO.390/MDS./15 18 GRIEVANCE OF ASSESSEE ON MERIT OF ISSUE RAISED BY T HE CIT, TO BE CONSIDERED BY AO WHILE FRAMING ASSESSMENT AND AO SH ALL NOT INFLUENCE BY ANYWAY BY THE OBSERVATION OF CIT IN HI S ORDER. ACCORDINGLY, THE ASSESSEES APPEAL IS DISMISSED. 11. SINCE WE HAVE DISMISSED THE APPEAL OF ASSESSEE , THE STAY PETITION FILED BY THE ASSESSEE BECOMES INFRUCTUOUS AS THE SAME STAND DISMISSED. 12. IN THE RESULT, THE APPEAL OF ASSESSEE AND THE S TAY PETITION FILED BY THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 10 TH OF FEBRUARY,2016 AT CHENNAI. SD/- SD/- ( . ) (G.PAVAN KUMAR) ( ( $% & ) ) ' CHANDRA POOJARI () JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 10 TH FEBRUARY,2016 . K S SUNDARAM. *+)),-).- /COPY TO: ) 1. /APPELLANT 2. /RESPONDENT 3. ) /)'( /CIT(A) 4. ) / /CIT 5. -01 )2 /DR 6. 13)4 /GF