YES BANK LTD., MUMBAI V. ADDL.C.I.T. - 7(3), MUMBAI

ITA 23/MUM/2012

• Counselvise Citation: 2319914 RSA 2012
• Duration Of Justice: 2 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 18-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 02-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHA KALA CHANDA
• Assessee Lawyers: YOGESH A THAR
• Keywords: Revision of order; Question of law
• Section: 263; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI . . . . . . . . , , BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. : 23/MUM/2012 (ASSESSMENT YEAR: 2007-08) YES BANK LTD, 9 TH FLOOR, NEHRU CENTRE, DISCOVERY OF INDIA LTD., DR. ANNIE BESANT ROAD, WORLI, MUMBAI -400 018 .: PAN: AAACY 2068 D VS ACIT, CENTRAL CIRCLE - 44, ROOM NO. 656, 6 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI -400 020 (APPELLANT) ! (RESPONDENT) APPELLANT BY : SHRI YOGESH A THAR RESPONDENT BY : SMT. ABHAKALA CHANDA '#$ % &' /DATE OF HEARING : 18-11-2014 ()* % &' / DATE OF PRONOUNCEMENT : 05-12-2014 , , , , O R D E R , : :: : PER VIVEK VARMA, JM: INSTANT APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDE R UNDER SECTION 263, PASSED BY CIT-7, MUMBAI, DATED 14.11.20 11, WHEREIN, THE FOLLOWING GROUNDS HAVE BEEN RAISED: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX-7, MUMBAI [THE CIT] ERRED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE INCOME TAX ACT, 1961 (THE ACT) AND DIRECTING REVISION OF ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT BY THE DEPUTY COMMISSIONER OF INCOME TAX -7(3), MUMBAI (THE AO) ON THE ALLEGED GROUND THAT THE SAID ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF TH E REVENUE. 2. THE APPELLANT PRAYS THAT ORDER PASSED UNDER SEC TION 263 OF THE ACT TO BE STRUCK DOWN AS NULL AND VOID AB INITI O. WITHOUT PREJUDICE TO GROUND I GROUND II 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE CIT ERRED IN DIRECTING THE AO TO DISALLOW THE CLAIM FOR DEDUCTION UNDER SECTION 35D IN RESPECT OF AMORTIZAT ION OF EXPENDITURE INCURRED ON INITIAL PUBLIC OFFER OF EQU ITY SHARES AMOUNTING TO RS. 3.28 CRORES (BEING ONE FIFTH OF TH E TOTAL EXPENDITURE OF RS. 16.39 CRORES) ON THE GROUND THAT THE APPELLANT IS NOT AN INDUSTRIAL UNDERTAKING. 2. THE APPELLANT PRAYS THAT IT BE HELD THAT ON THE FAC TS AND CIRCUMSTANCES, INVOKING SECTION 263 FOR DIRECTING S UCH DISALLOWANCE IS NOT IN ACCORDANCE WITH LAW AND THAT DISALLOWANCE OF THE CLAIM FOR DEDUCTION UNDER SECTI ON 35D IS NOT CALLED FOR. YES BANK LTD ITA 23/M/2012 2 GROUND III THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER AND /OR DELETE ANY/ALL OF THE ABOVE GROUNDS OF APPEAL. 2. THE FACTS ARE THAT THE ASSESSEE IS A BANK AND IN TH E BANKING BUSINESS. IN ITS COMPUTATION OF INCOME, THE ASSESSE E BANK, AMONGST OTHER CLAIMS, CLAIMED AN ALLOWANCE OF RS. 3,27,82,000/-, BEING 1/5 TH OF THE EXPENSE CLAIMED AS DEDUCTION UNDER SECTION 35D, ON THE TOTAL EXPENSE INCURRED ON THE ISSUE ON IPO. THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) ON 31.10.2009. 3. AS PER THE ORDER OF THE CIT UNDER SECTION 263, THE ISSUE ON WHICH REVISION PROCEEDINGS WAS INITIATED, WAS THE DEDUCTION UNDER SECTION 35D, NOT AVAILABLE TO A FINANCE COMPANY, BECA USE, AS PER THE PROVISION, THE DEDUCTION IS AVAILABLE TO AN INDUSTRIAL UNDERTAKING. SINCE THE ASSESSEE IS A BANK, THE DEDUCTION, AS PER SPECIFIC WORDINGS IN THE SECTION IS NOT AVAILABLE TO AN UNDERTAKING WHICH IS NOT AN INDUSTRIAL UNDERTAKING. 4. IT WAS POINTED OUT THAT A DETAILED SUBMISSION WAS MAD E BEFORE THE CIT AND IT WAS ALSO PLACED ON RECORD THAT IN THE ROI, THE ASSESSEE HAD MADE A FOLLOWING NOTE DEDUCTION OF RS. 3,27,82,000/- CLAIMED UNDER SECTI ON 35D OF THE INCOME TAX ACT, 1961 (THE ACT) DURING THE FINANCIAL YEAR 2005-06, THE ASSESSEE HAD INCURRED AN AGGREGATE EXPENDITURE OF RS. 16,39,10,0 00/- ON INITIAL PUBLIC OFFICER (IPO) OF EQUITY SHARES MADE. THE ISSUE CLOSED ON JUNE 12, 2005. IT HAS CLAIMED A DEDUCTION UNDER SECTION 35D FOR RS. 3,27,82,000/- B EING ONE-FIFTH OF THE TOTAL EXPENSES INCURRED. THIS IS T HE SECOND YEAR OF CLAIM FOR DEDUCTION. THE ASSESSEE SUBMITS THAT SECTION 35D GRANTS A DEDUCTION/AMORTIZATION IN RESPECT OF EXPENSES INCUR RED BY A COMPANY IN CONNECTION WITH THE ISSUE, FOR PUBL IC SUBSCRIPTION, OF SHARES OR DEBENTURES OF A COMPANY OVER A PERIOD OF FIVE YEARS. SINCE THE FOREGOING EXPENSE S ON IPO ARE IN CONNECTION WITH THE ISSUE OF SHARES FOR PUBLIC SUBSCRIPTION, ONE-FIFTH OF THE TOTAL AMOUNT THEREOF IS ELIGIBLE FOR DEDUCTION UNDER SECTION 35D. THE ASSESSEE FURTHER SUBMITS THAT IT IS AN INDUSTR IAL UNDERTAKING FOR THE PURPOSE OF SECTION 35D BASED O N THE FOLLOWING CASES: YES BANK LTD ITA 23/M/2012 3 CIT VS EMIRATES COMMERCIAL BANK LTD. (262 ITR 55) WHERE THE BOMBAY HIGH COURT, WHICH IS ALSO THE JURISDICTIONAL HIGH COURT, HAS HELD THAT BANKS ARE INDUSTRIAL UNDERTAKINGS AND ELIGIBLE FOR DEDUCTION UNDER SECTION 32A OF THE ACT HSBC SECURITIES AND CAPITAL MARKETS (INDIA) PVT LTD (1384/M/2000) WHERE THE HONBLE MUMBAI ITAT HAS HELD THAT EVEN A SHARE BROKING ENTITY IS AN INDUSTRIAL UNDERTAKING FOR THE PURPOSE OF SECTION 35D. THEREFORE, THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 35D IS IN ACCORDANCE WITH LAW AND IS ALLOWA BLE. 5. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO SOU GHT TO CLARIFY FROM THE ASSESSEE THE CORRECTNESS OF ALLOWANCE OF 1/5 TH EXPENSE UNDER SECTION 35D VIDE HIS ORDER SHEET NOTING O N 12.10.2009 (COPY SUPPLIED BY THE ASSESSEE) . THE ASSESSEE VIDE LETTER DATED 26.10.2009, GAVE SPECIFIC SUBMISSIONS ON THE IS SUE RAISED BY THE AO. 6. WHILE PASSING THE ORDER, THE AO, HOWEVER, DID NOT MENTIO N ABOUT THE QUERY RAISED IN THE ASSESSMENT ORDER. 7. ON THIS LAPSE, THE CIT, INITIATED REVISION PROCEEDINGS UNDER SECTION 263. 8. BEFORE US, THE AR SUBMITTED THAT THE ISSUE IS VIABILITY O F PROCEEDINGS UNDER SECTION 263. IN THE PROCESS OF ARGUME NTS, THE AR VERY FAIRLY SUBMITTED THAT IN THE PRECEDING YEAR, THE ACTION OF THE CIT IN INITIATION OF PROCEEDINGS UNDER SECTION 263 WAS SUSTAINED AS THERE WAS NO ENQUIRY DONE BY THE AO. BUT HERE IN THE INSTANT CASE, IN THE INSTANT YEAR, THE AO HAD MADE ALL ENQUIRIES AND RELEVANT REPLIES HAD BEEN GIVEN. ON THE BASIS OF QUESTION RAISED AND THE ANSWER GIVEN BY THE ASSESSEE, T HE AO HAVING GOT SATISFIED, DID NOT MENTION THE ISSUE IN THE ASSES SMENT ORDER. 9. THE AR ALSO SUBMITTED THAT IN ANY CASE THE ISSUE OF ALLOWABILITY OF 1/5 TH EXPENSE UNDER SECTION 35D IN CASE OF THE YES BANK LTD ITA 23/M/2012 4 ASSESSEE IN THE PRECEDING YEAR HAS BEEN ADMITTED BY TH E HONBLE BOMBAY HIGH COURT UNDER SECTION 260A. 10. ON THIS BACKGROUND, THE AR REFERRED TO THE CASE OF THE CIT VS PEERLESS CONSULTANCY & SERVICES PVT LTD REPORTED IN 248 ITR 178 (SC), WHEREIN THE HONBLE SUPREME COURT HELD THAT, WHERE A COMPANY WAS ENGAGED IN PROCESSING THE DATA FURNISHED BY ITS CUSTOMERS BY USING IBM UNIT RECORD MACHINE COMPUTER, IT WAS HELD THAT THE ASSESSEE RECEIVED V OUCHERS AND STATEMENTS OF ACCOUNTS FROM ITS CUSTOMERS AND CONVE RTED THEM INTO BALANCE SHEET. SUCH ACTIVITIES AMOUNTED TO PR OCESSING OF GOODS AND THE ASSESSEE WAS HELD TO BE AN INDUSTRIAL COMPANY AND WAS ENTITLED TO THE CONCESSIONAL RATE OF TAXATI ON. FOLLOWING THE AFORESAID DECISION IN THE INSTANT CASE, THE TRI BUNAL WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE WAS AN INDUS TRIAL COMPANY ENTITLED TO INVESTMENT ALLOWANCE. 11. THE AR REFERRED TO THE CASE OF HSBC SECURITIES INDIA HOLDINGS LTD VS JCIT, ITA NO. 1394/MUM/2000 (COPY ENCLOSE D), WHEREIN THE COORDINATE BENCH AT MUMBAI WERE SEIZED WITH AN IDENTICAL ISSUE OF ALLOWANCE OF EXPENSE UNDER SECTION 35D ON INCREASE IN THE AUTHORIZED SHARE CAPITAL. THE COORDINATE B ENCH ACCEPTED THE CLAIM OF THE ASSESSEE FOLLOWING THE RATIO LAID D OWN IN THE CASE OF PEERLESS CONSULTANCY SERVICE ( SUPRA ) AND CIT VS EMIRATES COMMERCIAL BANK LTD, REPORTED IN 262 ITR 55 (BOM). 12. THE AR SUBMITTED THAT THE BASIS OF INVOCATION OF SEC TION 263 IS THE ENQUIRY DONE BY THE AO. HE, THEREFORE SUBMITTE D THAT IN SO FAR AS THE BASIS OF INITIATION ONLY IS SEEN, THE NOTING S IN THE ORDER-SHEET AS RECORDED BY THE AO AND THE REPLIES MAD E AND SUBMITTED IS ON RECORD, WHICH CLEARLY SHOWS THAT THE AO MADE PROPER ENQUIRY TO COME TO A CONCLUSION. MERELY PUTTING THE RESULT OF THE ENQUIRY MADE BY THE AO IS NOT OF CONSEQUEN CE, AS LAID DOWN BY THE COORDINATE BENCH AT MUMBAI, IN THE CASE OF RELIANCE COMMUNICATION LTD. VS DCIT, ITA NO. 2915/MUM/2012, WHEREIN IT HAS BEEN HELD (AT DIFFERENT PLACES), 15.1. WHILE FINALIZING ASSESSMENT, IT IS THE DUTY O F THE AO TO EXAMINE EACH AND EVERY ASPECT OF THE RETURN EXCEPT TINY OR INCONSEQUENTIAL ITEMS. HOWEVER, IT I S NOT YES BANK LTD ITA 23/M/2012 5 NECESSARY TO INCORPORATE ALL THE ASPECTS EXAMINED B Y HIM IN THE ASSESSMENT ORDER. AN ASSESSMENT ORDER ORDINARILY CONTAINS DISCUSSION ON THE ASPECTS WITH WHICH THE AO DOES NOT AGREE WITH THE ASSESSEE AND PROPOSE S TO MAKE ADDITIONS. IT IS SO BECAUSE HIS ACTION IS A GAIN SUBJECT TO SCRUTINY BY APPELLATE AUTHORITIES. AT TH E SAME TIME, THERE IS NO BAR ON THE AO TO ALSO INCLUDE ALL OR ANY OF THE RELEVANT ASPECTS OF ASSESSMENT IN HIS ORDER, WHERE HE EVEN AGREES WITH THE ASSESSEES CLAIM. BUT INCORPORATING SUCH RELEVANT ASPECTS IN THE ASSESSME NT ORDER IS DISCRETIONARY AND NOT MANDATORY. IF A VIE W IS TAKEN THAT AN ASSESSMENT ORDER MUST CONTAIN EACH AN D EVERY ASPECT EXAMINED BY HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS WITH THE REASONS AS TO WHY H E AGREES OR DISAGREES WITH THE ASSESSEE, THEN THE ASSESSMENT ORDER WOULD BECOME NEEDLESSLY LARGE. SO LONG AS THERE IS MATERIAL ON RECORD TO INDICATE THA T THE AO DID ENQUIRE INTO ALL THE RELEVANT ASPECTS OF THE ASSESSMENT, IT CANNOT BE CONSIDERED AS A CASE OF LA CK OF ENQUIRY EMPOWERING THE CIT TO EXERCISE JURISDICTION UNDER SECTION 263. IF WE SIMPLY GO BY NON-MENTIONIN G OF A PARTICULAR ISSUE IN THE ASSESSMENT ORDER AS A MAR K OF NON-APPLICATION OF MIND BY THE A.O., THEN PROBABLY EVERY ASSESSMENT ORDER WOULD FALL WITHIN THE DOMAIN OF AN ERRONEOUS ORDER. THE CRUX OF THE MATTER IS THAT W HERE THE ASSESSING OFFICER APPLIED HIS MIND, WHICH IS EV IDENT FROM THE ENQUIRY CONDUCTED BY HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSMENT ORDER CANNOT BE BRANDED AS ERRONEOUS DUE TO NON-APPLICATION OF M IND MERELY BECAUSE THERE IS NO MENTION OF CERTAIN ISSUE S IN THE ASSESSMENT ORDER ON WHICH THE ASSESSING OFFICER , AFTER DUE ENQUIRY, GOT SATISFIED. IN CASE THE CIT FAILS TO POINT OUT THE MISTAKE OF T HE AO IN SUCH CATEGORIES OF THE CASES, NO REVISION IS POSSIB LE. THE ASSESSEE ESCAPED REVISION IN GABRIAL INDIA LTD.(SUP RA) BECAUSE THE AO HAD CONDUCTED ENQUIRY ON THE ASPECT TAKEN NOTE OF IN THE REVISION BUT THE CIT COULD NOT POINT OUT AS TO HOW THE ASSESSMENT ORDER WAS ERRONEOUS ON THIS ISSUE. IT GOES WITHOUT SAYING THAT AN ASSESSME NT ORDER CAN BE CONSTRUED AS WRONG ONLY WHERE THE AO ADOPTS A VIEW WHICH IS NOT SUSTAINABLE IN LAW OR, I N OTHER WORDS, IS NOT A POSSIBLE VIEW. 16. ADVERTING TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE ASSESSING OFFICER MADE ENQUIRY ABOUT THE A BOVE REFERRED THREE ASPECTS WHICH HAVE BEEN NOTED BY THE CIT FOR EXERCISING JURISDICTION UNDER SECTION 263. UPON SUCH ENQUIRY, THE ASSESSEE MADE SUBMISSIONS BY PLACING A LL THE RELEVANT DOCUMENTS BEFORE THE AO. THUS IT CAN B E SEEN THAT THIS CASE DOES NOT FALL IN THE CATEGORY DISCUSSED IN PARA 15.1. ABOVE. THE MERE FACT THAT T HE ASSESSING OFFICER DID NOT MAKE ANY REFERENCE TO THE SE THREE ISSUES IN THE ASSESSMENT ORDER CANNOT MAKE TH E ASSESSMENT ORDER ERRONEOUS WHEN THESE ISSUES WERE PROPERLY LOOKED INTO BY THE ASSESSING OFFICER. NOW LET US SEE WHETHER IT CAN BE BROUGHT WITHIN THE AMBIT OF P ARA 15.2 ABOVE. FROM THE DETAILS FILED BY THE ASSESSEE IT CAN BE INFERRED THAT THE AO NOT ONLY ENQUIRED INTO THES E THREE ISSUES BUT ALSO GOT SATISFIED WITH THE ASSESSEES R EPLY YES BANK LTD ITA 23/M/2012 6 SUBMITTED FROM TIME TO TIME IN SUPPORT OF ITS STAND . RESORTING TO THE PROVISIONS OF SECTION 263 IN SUCH A SITUATION COULD HAVE BEEN POSSIBLE ONLY ON THE LD. CIT SHOWING THAT THE ASSESSMENT ORDER WAS ERRONEOUS ON SUCH THREE ASPECTS. 13. THE AR ALSO REFERRED TO THE CASE OF MALABAR INDUSTR IAL CO. LTD. VS CIT REPORTED IN 243 ITR 82 (SC), WHEREIN IT HAS BE EN HELD, THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE O R ERROR COMMITTED BY THE ASSESSING OFFICER; IT IS ONL Y WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTR ACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL OR DERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL J USTICE OR WITHOUT APPLICATION OF MIND. THE PHRASE PREJUDICIAL TO THE INTEREST OF THE REVE NUE IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT. UNDERSTOOD IN ITS ORDINARY MEANING, IT IS OF WIDE I MPORT AND IS NOT CONFINED TO LOSS OF TAX. THE SCHEME OF T HE ACT IS TO LEVY AND COLLECT TAX IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF DUE TO AN ERRONEOUS ORDER OF THE ITO, T HE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTERESTS OF THE RE VENUE. THE PHRASE PREJUDICIAL TO THE INTEREST OF THE REVE NUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER P ASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CA NNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE R EVENUE, FOR EXAMPLE, WHEN AN ITO ADOPTS ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF R EVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE ITO HAS TAK EN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE , IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF THE REVENUE UNLESS THE VIEW TAKEN B Y THE ITO IS UNSUSTAINABLE IN LAW. IT HAS BEEN HELD BY TH E SUPREME COURT THAT WHERE A SUM NOT EARNED BY A PERS ON IS ASSESSED AS INCOME IN HIS HANDS ON HIS SO OFFERI NG, THE ORDER PASSED BY THE ASSESSING OFFICER ACCEPTING THE SAME AS SUCH WILL BE ERRONEOUS AND PREJUDICIAL TO T HE INTERESTS OF THE REVENUE. 14. THE AR, BASING HIS ARGUMENTS ON THE ABOVE CASE LAWS , SUBMITTED THE ACTION OF THE CIT WAS UNJUSTIFIED FROM THE POINT OF VIEW OF THE FACT THAT THE ISSUE OF ALLOWANCE OF 1/5 TH EXPENSE UNDER SECTION 35D HAS BEEN ADMITTED BY THE HONBLE BOM BAY HIGH COURT AS SUBSTANTIAL QUESTION OF LAW UNDER SECTION 26 0A IN YES BANK LTD ITA 23/M/2012 7 ITA NO. 1010 OF 2012 (COPY ENCLOSED) AND THE QUESTIONS OF LAW ADMITTED ARE, PC: 1 HEARD BOTH SIDES. PERUSED SECTION 35B OF THE INC OME TAX ACT, 1961. IN VIEW THEREOF, THE APPEAL RAISES A SUBSTANT IAL QUESTION OF LAW AND DESERVES ADMISSION THE APPEAL IS ADMITTE D ON THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW (A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS RIGHT IN NOT FOLL OWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN TH E CASE OF COMMISSIONER OF INCOME TAX VS. EMIRATES COMMERCIAL BANK REPORTED IN 262 ITR 55? (B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND IN LAW, THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE APPELLANT IS NOT AN INDUSTRIAL UNDERTAKING SO A S TO BE ENTITLED TO DEDUCTION UNDER SECTION 35D OF THE INCO ME TAX ACT, 1961? (C) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE OMISSION OF THE WORD 'INDUSTRIAL' BY THE FINANC E ACT, 2008 IS PROSPECTIVE AND, THEREFORE, WOULD NOT APPLY FOR THE ASSESSMENT YEAR 2006-2007? 2. THE RESPON DENT/REVENUE WAIVES SERVICE. 15. THE AR, THEREFORE, SUBMITTED THAT FROM ALL ANGLES, THE INITIATION OF REVISION PROCEEDING WAS INFIRM AND THEREFORE, SHOU LD BE CANCELLED. 16. THE DR STRONGLY SUPPORTED THE ORDER OF THE CIT, IM PUGNED BEFORE US. 17. THE DR SUBMITTED THAT THE MAIN REASON FOR INCORPORA TING THE PROVISION IS TO SCRUTINIZE THE ORDERS OF THE LOWER REV ENUE AUTHORITIES. IN THE INSTANT CASE, THE DR SUBMITTED THAT, BECAUSE THE AO FAILED TO INCORPORATE THE ISSUE IN THE ORDER UNDER SECTION 143(3), IT GETS INTO THE ZONE OF INFIRMITY, WHICH THE CIT, RIGHT LY, SOUGHT TO REVISE, BY INITIATING THE ORDER PASSED BY THE AO UNDER THE PROVISIONS OF SECTION 263. 18. WE HAVE HEARD THE ARGUMENTS FROM EITHER SIDE, THE IS SUE BEFORE US IS LEGALITY OF INITIATION OF PROCEEDINGS UNDER SECTION 263 AND CONSEQUENT PASSING OF THE ORDER UNDER SECTION 263. YES BANK LTD ITA 23/M/2012 8 19. THE SECTION STARTS FROM THE WORDINGS, THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING U NDER THE ACT . HERE WE HAVE TO MAKE A DISTINCTION BETWEEN RECORD A ND ORDER, BECAUSE, BOTH THESE TERMS HAVE DISTINCT CONNOTATION S. AN ORDER IS THE MIND OF THE AO/OFFICER TO INCORPORATE OR NOT TO INC ORPORATE ANY POINT IN THE ORDER, WHEREAS THE RECORD FORMS THE BASIS FO R FORMATION AND CONSTRUCTION OF THE ORDER. IT IS THE RECORD OF THE CASE, FROM WHICH, ONE CAN ASCERTAIN, AS TO WHETHER THE AO HAD CONDUCTED A DEQUATE ENQUIRY TO FORM A LEGALLY CORRECT INFERENCE. IT IS, THEN UP TO THE AO/REVENUE AUTHORITIES TO INCORPORATE HIS INFERENCE DRAWN IN T HE ORDER. 20. WE ENTIRELY AGREE WITH THE DECISION OF THE COOR DINATE BENCH IN THE CASE OF RELIANCE COMMUNICATION LTD ( SUPRA ), WHEREIN, IT HAS BEEN OBSERVED, IF A VIEW IS TAKEN THAT AN ASSESSMENT ORDER MUST CONTAIN EACH AND EVERY ASPECT EXAMINED BY HIM DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS WITH THE REASO NS AS TO WHY HE AGREES OR DISAGREES WITH THE ASSESSEE, THEN THE ASSESSMENT ORDER WOULD BECOME NEEDLESSLY LARGE. SO LONG AS THERE IS MATERIAL ON RECORD TO IN DICATE THAT THE AO DID ENQUIRE INTO ALL THE RELEVANT ASPEC TS OF THE ASSESSMENT, IT CANNOT BE CONSIDERED AS A CASE O F LACK OF ENQUIRY EMPOWERING THE CIT TO EXERCISE JURISDICTION UNDER SECTION 263. IF WE SIMPLY GO BY NON- MENTIONING OF A PARTICULAR ISSUE IN THE ASSESSMENT ORDER AS A MARK OF NON-APPLICATION OF MIND BY THE A.O., T HEN PROBABLY EVERY ASSESSMENT ORDER WOULD FALL WITHIN T HE DOMAIN OF AN ERRONEOUS ORDER 21. IT HAS BEEN ACCEPTED BY THE HONBLE SUPREME COUR T IN THE CASE OF MALABAR INDUSTRIAL CO. LTD., WHEREIN IT WAS OBSERVED, AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. 22. IN THE DECISION OF MALABAR INDUSTRIAL CO. LTD. ( SUPRA ), WE OBSERVE, THAT THE HONBLE SUPREME COURT ALSO LOOKED INTO THE ISSUE FROM ANOTHER ANGLE, I.E. WHETHER TWO LEGALLY POSSIBLE VIE WS LEAD TO INITIATION OF REVISION OF ORDER AND ALSO WHERE THE ISS UE ITSELF IS DEBATABLE, IN SUCH A CASE, THE HONBLE SUPREME C OURT HELD THAT, IT IS NOT PERMISSIBLE FOR THE CIT TO INITIATE REVIS ION PROCEEDINGS UNDER SECTION 263. YES BANK LTD ITA 23/M/2012 9 23. THIS VIEW HAS BEEN TAKEN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS GABRIAL INDIA LTD., REPORTED IN 203 ITR 108 (BOM), WHEREIN IT HAS BEEN HELD THAT IN ORDER TO EXERCISE JURISDICTION UNDER SECTION 263, COMMISSIONER MUST HAV E MATERIAL TO PRIMA FACIE COME TO A CONCLUSION THAT THE ORDER OF ITO IS ERRONEOUS AS ALSO PREJUDICIAL TO THE INTEREST OF THE REV ENUE . 24. IN THE PROCEEDINGS BEFORE US, THE DR COULD NEITHER ELABORATE NOR ASSIST US TO CONVINCE US THAT THE INFERENC E DRAWN BY THE AO, AFTER CONDUCTING EXHAUSTIVE ENQUIRY WAS AN ERRONEOUS VIEW. 25. WE ALSO FIND THAT THE CIT DID NOT INITIATE THE PROCEED INGS HIMSELF BUT INITIATED THE PROCEEDINGS ON THE PROPOSAL RECEIV ED FROM THE AO. 26. THIS IN OUR OPINION, TOO IS AGAINST THE LEGISLATIVE SPIRIT, BECAUSE, THE PROVISION CONTEMPLATES INDEPENDENT APPLICATIO N OF MIND BY THE CIT, BECAUSE THE SECTION SAYS COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORDS OF ANY PROCEEDINGS U NDER THE ACT AND IF HE CONSIDERS , WHICH MEANS THAT THE PROPOSAL FOR INITIATION OF REVISION PROCEEDINGS MUST BE INITIATED BY THE CIT, BECAUSE, IT IS THE CIT WHO HAS TO CALL FOR EXAMINE THE R ECORD , AS HELD BY THE COORDINATE BENCH IN THE CASE OF ASHOK KUMA R SHIVPURI IN ITA NO. 631/MUM/2014 (WHERE ONE OF US WAS THE PARTY) . 27. LOOKING AT THE ISSUE FROM THIS ANGLE ALSO, THE INITIATION OF REVISION PROCEEDING BECOME INFIRM AND ILLEGAL. 28. IN THE LIGHT OF OUR OBSERVATION AS ABOVE, WE CANCEL T HE ORDER OF THE CIT AND CONSEQUENTIALLY RESTORE THE REGULA R ASSESSMENT DATED 31.10.2009. YES BANK LTD ITA 23/M/2012 10 29. IN THE RESULT, THE APPEAL AS FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 05.12.2014 SD/- SD/- ( . . . . . . . . ) ( ) $ $ $ $ (R C SHARMA) ( VIVEK VARMA ) ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 5 TH DECEMBER, 2014 &/ COPY TO:- 1) / THE APPELLANT. 2) ! / THE RESPONDENT. 3) THE CIT -7, MUMBAI 4) THE CIT-CONCERNED/ADD. CIT-RANGE 7(3), MUMBAI 5) /0
, 1* , '2$ / THE D.R. G BENCH, MUMBAI. 6) 03 4$ COPY TO GUARD FILE. ,#' / BY ORDER / / TRUE COPY / / 5 / 6 7 1* , '2$ DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *9:6# .#. * CHAVAN, SPS