Shree Kaila Devi Real Estate Ltd., Uttar Pradesh V. CIT, New Delhi

ITA 2469/DEL/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7522 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 03-03-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 22-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Keywords: Revision of order; Opportunity of being heard; Accommodation entries; Assessment record; Revenue expenditure; Capital expenditure
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 2469/DEL/2012 AY: 20 03-04 SHREE KAILA DEVI REAL ESTATE LTD., VS CIT (CENTRAL)-I, 1918, DAMPLER NAGAR, NEW DELHI. MTHURA, U.P. (PAN: AAGCS7321D) (APPELLANT) (R ESPONDENT) APPELLANT BY : SHRI SUDESH GARG, ADV. RESPONDENT BY : SHRI PANKAJ VIDHARTHI, CIT DR DATE OF HEARING: 03.03.2016 DATE OF PRONOUNCEMENT: 30.05.2016 ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER DATED 26/3/2012 PASSED U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) BY THE LD. CIT- CENTRAL-1, NEW DELHI FOR ASSESSMENT YEAR 2003-04. 2. THE SHOW-CAUSE NOTICE DATED 10/8/2011 ISSUED U /S 263 OF THE INCOME TAX ACT, 1961 IS REPRODUCED BELOW:- I.T.A. NO. 2469/D/2012 ASSESSMENT YEAR 2003-04 2 F.NO. CIT( CENTRAL)-L/2011-12/ DATED: 10.08.2011 TO, THE PRINCIPAL OFFICER, M/S SHREE KAILA DEVI REAL ESTATE LTD., 1918, DAMPIER NAGAR, MATHURA (U.P.) SUB.:-REVISION OF ORDER U/S 263 OF THE INCOME TAX ACT IN THE CASE OF M/S SHREE KAILA DEVI REAL ESTATE LTD. - ASSESSMENT YEAR 2003-04 - REGARDING IT HAS BEEN NOTICED DURING THE COURSE OF EXAMINATION OF ASSESSMENT RECORDS OF YOUR CASE FOR THE ASSESSMENT YEAR 2003-04 THAT IN YOUR CASE, THE ASSESSMENT WAS COMPLETED U/S 153C /143(3) OF THE INCOME TAX ACT, 1961 AT AN INCOME OF RS.49,500/- ON 30.12.2010. 2. IT IS SEEN FROM THE ASSESSMENT RECORD OF A.Y. 2003 - 04, THAT AN AMOUNT OF RS. 1,79,00,000/- HAS BEEN RECEIVED AS SHARE CAPITAL FROM THE VARIOUS PARTIES, IN THIS REGARD, YOU HAVE FILED THE DETAILS OF FRESH CA PITAL RECEIVED DURING THE YEAR. IN YOUR REPLY DATED 26.11.2010, COPIES' OF FORM NO. 2 AS PER COMPANY ACT, 1956 FO R ALLOTMENT OF SHARES, COPIES OF APPLICATION FOR ALLOTMENT OF SHARES MADE BY THE APPLICANTS HAVE ALSO BEEN ENCLOSED. AFTER GOING THROUGH, THE DETAIL S AND DOCUMENTS SUBMITTED BY YOU BEFORE THE AO, 1 FIN D THAT GENUINENESS OF THE TRANSACTIONS FOR SHARE CAPI TAL INTRODUCED DURING THE YEAR AND CREDITWORTHINESS OF THE APPLICANT ARE NOT PROVED BY THESE DOCUMENTS. NEITHE R THE AO HAS MADE ANY FURTHER EFFORT TO INVESTIGATE T HE GENUINENESS OR CREDITWORTHINESS OF THE APPLICANT, T HE AO HAS ACCEPTED THE INVESTMENT TO SHARE CAPITAL PAI D DURING THE YEAR WITHOUT PROPER EVIDENCE. THEREFORE, HIS ORDER DATED-- 13.12.2010 PASSED U/S 153C R.W.S. 143(3) IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE TO THE EXTENT OF FRESH CAPITAL AMOUNTIN G TO RS. 1,79,00,000/- INTRODUCED DURING THE YEAR. HENCE , YOU ARE REQUIRED TO EXPLAIN WHY ACTION U/S 263 OF T HE INCOME TAX ACT, 1961 MAY NOT BE TAKEN IN YOUR CASE FOR A.Y. 2003-04. I.T.A. NO. 2469/D/2012 ASSESSMENT YEAR 2003-04 3 3. YOU ARE HEREBY GIVEN AN OPPORTUNITY TO STATE YOUR OBJECTIONS, IF ANY, TO THE PROPOSED ACTION EIT HER PERSONALLY OR THROUGH AN AUTHORIZED REPRESENTATIVE ON 18.08.2011 AT 2.30 P.M. IN MY OFFICE ROOM NO. 338, 3 RD FLOOR, A.R.A. CENTRE, JHNDEWALAN EXTENSION, NEW DELHI FAILING WHICH THE CASE WILL BE DECIDED ON MERITS. SD/- 3. THE OBSERVATIONS AND FINDINGS OF THE LD. CIT IN THE IMPUGNED ORDER ARE IN PARAS 1 TO 7 AND THE RELEVANT PORTIONS THEREOF ARE BEING REPRODUCED FOR A READY REFERENCE AS UNDER:- ON VERIFICATION OF THE ASSESSMENT RECORDS FOR THE YEAR UNDER CONSIDERATION IT WAS OBSERVED THAT THE ASSESSEE COMPANY HAD RECEIVED SUM OF RS.1,79,00,000/- BY WAY OF SHARE APPLICATION MONEY. IN THIS REGARD THE ASSESSEE HAD PRODUCED DETAILS VIZ. FORM NO. 2 FILED WITH THE REGISTRAR OF COMPANY AND SHARE APPLICATION MONEY FORMS RECEIVED FROM THE PARTIES CONCERNED. HOWEVER IT IS ALSO SEEN FROM THE RECORD THAT THE AO HAS NOT CARRIED OUT ANY FURTHER INVESTIGATIO N AS TO THE GENUINENESS OF SUCH TRANSACTIONS AS WELL AS CRE DIT WORTHINESS OF THE PARTIES INVESTING IN SUCH SHARES. SINCE THE AO HAS NOT CARRIED PROPER INQUIRES IN THE MATTE R HIS ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL T O THE INTEREST OF THE REVENUE AND CONSEQUENTLY NOTICE U/S 263 WAS SENT TO THE PARTY TO SHOW CAUSE AS TO WHY THE A CTION U/S 263 SHOULD NOT BE TAKEN, IN VIEW OF THE ABOVE. 2. IT IS PERTINENT TO NOTE THAT AT THE TIME OF VERI FICATION OF RECORD IT WAS ALSO FOUND THAT A CD WAS RECEIVED FROM THE INVESTIGATING WING DELHI CONTAINING THE LIST OF SEVERAL BENEFICIARIES WHO HAD TAKEN ACCOMMODATION ENTRIES F ROM DIFFERENT ENTRY OPERATORS. ON PERUSAL OF THE SAID L IST IT WAS ALSO FOUND THAT THE ASSESSEE WAS ALSO ONE OF TH E I.T.A. NO. 2469/D/2012 ASSESSMENT YEAR 2003-04 4 BENEFICIARY OF SUCH ENTRY OPERATION AND THAT THE ASSESSEE COMPANY HAD OBTAINED SUM TOTAL OF RS.85,00,000/- FROM SUCH ENTRY PROVIDERS. THIS FACT COULD HAVE BEEN FUND OUT BY THE AO HAD HE CARRIED O UT THE PROPER INVESTIGATION DURING THE COURSE OF ASSES SMENT. SINCE THE SAME IS NOT DONE HIS ORDER IS ERRONEOUS I N SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REV ENUE. ACCORDINGLY THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE PROVISIONS OF SECTION 263 SHOULD NOT BE INVOKED. XXXXX 3. I HAVE GONE THROUGH THE CONTENTION OF THE ASSESSEE AS ALSO PERUSED THE JUDGEMENTS RELIED UPON AND DO NOT FIND ANY MERIT IN THE ASSESSEES CASE. IT IS NOT IN DISP UTE THAT THE AO HAS MERELY TAKEN THE DOCUMENTS ON RECORDS AS WER E SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS AND HAS MECHANICALLY ACCEPTED THEM AS TRUE AND CORRECT WITHOUT THERE BEING ANY FURTHER INQUIRIES CAUSED AS TO THE GENUINENESS OF THE CREDITORS. FROM THE FACT AS HAS BEEN STATED EARLIER THAT DURING THE COURSE OF SOME SEARC H IT WAS ALSO FOUND THAT THE ASSESSEE COMPANY WAS A BENEFICI ARY 'OF VARIOUS ENTRY PROVIDERS WHO HAD ACKNOWLEDGED THE SA ID FACT THAT THEY WERE THE ENTRY PROVIDERS ONLY AND HA D NOT ACTUALLY SUBSCRIBED TO ANY SUCH SHARES. IT WAS IN T HESE CIRCUMSTANCES THAT HAD THE AO INVESTIGATED THE ISSU E AT WITH REGARDS TO GENUINENESS OF THE TRANSACTIONS THE POSITION WOULD HAVE BEEN DIFFERENCE AND THEREFORE BY NOT MAK ING THE PROPER INQUIRIES THE ORDER OF THE AO IS ERRONEOUS A ND SINCE THE AMOUNT WHICH SHOULD HAVE BEEN BROUGHT TO TAX TH E SAME IS ALSO PREJUDICIAL TO THE INTEREST OF THE REV ENUE. XXXXXXX 5.THUS FROM THE FACTS OF THE CASE AS HAS BEEN APPRE CIATED IT IS CLEAR THAT THE ASSESSING OFFICER HAS COMPLETED T HE ASSESSMENT WITHOUT APPLICATION OF MIND AS ALSO WITH OUT CARRYING OUT PROPER INQUIRIES IN THE MATTER OF SHAR E APPLICATION RECEIVED THE SAME IS NOT ONLY ERRONEOUS BUT IS ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. XXXX I.T.A. NO. 2469/D/2012 ASSESSMENT YEAR 2003-04 5 6. THUS IT IS CLEAR THAT ORDER WHICH HAS BEEN PASSE D ACCEPTING THE MATERIAL REQUIRES FURTHER SCRUTINY AN D AO HAVING NOT DONE SO THE ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. FURT HER IT IS ALSO A FACT THAT IN THE INSTANT CASE THE INFORMATION IS RECEIVED THAT THE ASSESSEE COMPANY WAS ALSO A BENEFICIARY O F HAWALA ENTRY RACKET WHERE THE PARTIES FROM WHOM THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED SHARE APPLICA TION MONEY HAD ADMITTED HAVING MERELY GIVEN ENTRIES AND NOT THE ACTUAL AMOUNT AS HAS BEEN CLAIMED THERE IS ALL THE MORE REASON TO INVOKE THE PROVISIONS OF SECTION 263 OF T HE ACT. XXXXX 7.THUS CONSIDERING THE FACTS OF THE CASE, I AM SATI SFIED THAT THE ORDER PASSED BY 'THE AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND HENC E THE SAME IS SET ASIDE AND THE AO IS DIRECTED TO VERIFY IN DETAILS OF THE CASH CREDIT RECEIVED BY THE ASSESSEE COMPANY IN TERMS OF SHARE APPLICATION MONEY SHOULD BE PROPERLY SCRUTINIZED AFTER GIVING PROPER AND DUE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. 4. IN THE REVISED GROUNDS OF APPEAL, THE ASSESSE E HAS TAKEN AS MANY AS FIVE GROUNDS OF APPEAL BUT THE MAIN EFFECTI VE GROUND IS GROUND NO. 4 WHICH READS AS UNDER: THE LD. CIT HAS ERRED IN IGNORING THAT THE ORDER O F THE ASSESSING OFFICER PASSED UNDER SECTION 153C R.W.S. 143(3) OF THE INCOME TAX ACT, 1961 WAS UNSUSTAINABLE IN THE EYES OF LAW FOR NOT MEETING TH E REQUIREMENTS OF SECTION 153C OF THE INCOME TAX ACT AND HAS FURTHER ERRED IN GIVING THE DIRECTIONS TO T HE ASSESSING OFFICER TO CARRY OUT ENQUIRIES/ ASSESSMEN T OF INCOME BEYOND THE SCOPE OF ASSESSMENTS U/S 153C/153A OF THE INCOME TAX ACT, 1961. I.T.A. NO. 2469/D/2012 ASSESSMENT YEAR 2003-04 6 5. THE LD. AR SUBMITTED THAT THE LD. CIT HAS NOT MADE ANY MENTION OF CD IN THE SHOW CAUSE NOTICE ISSUED ON 08 /10/2011. IT WAS SUBMITTED THAT ALL THE ALLEGATIONS MADE BY T HE LD. CIT ARE VAGUE AND WHOLLY BASED ON ASSUMPTIONS AND PRESUMPTI ONS. HE SUBMITTED THAT THE ASSESSEE HAD SUBMITTED ALL THE R ELEVANT DOCUMENTS DURING THE COURSE OF ASSESSMENT PROCEEDIN GS EVIDENCING THE GENUINENESS OF TRANSACTION AND THE L D. CIT HAS NOT BEEN ABLE TO FIND ANY FAULT WITH THE SAME. HE A LSO SUBMITTED THAT THE REFERENCE TO CD IS ABSOLUTELY VAGUE. THE L D. CIT NEVER CONFRONTED THE ASSESSEE WITH THE SO CALLED EVIDENCE AND NOR WAS THE ASSESSEEE EVEN MADE AWARE AS TO WHO THE SUPPOSE D ENTRY OPERATORS WERE AND WHAT EVIDENCE AGAINST THE ASSESS EE WAS PROVIDED BY THEM. HE SUBMITTED THAT IT IS JUDICIALL Y SETTLED THAT THE CIT CANNOT ACT ON ASSUMPTIONS AND PRESUMPTIONS WHILE ASSUMING JURISDICTION U/S 263. HE IS BOUND TO ESTAB LISH THAT THE ASSESSMENT IS ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF REVENUE. THE LD. AR SUBMITTED THAT THE DEPARTMENT H AS NOT BEEN ABLE TO GIVE THE COPY OF EVIDENCE AGAINST THE ASSES SEE, IF ANY, CONTAINED IN THE SO CALLED CD IN SPITE OF SPECIFIC REQUEST HAVING BEEN MADE. IT WAS ALSO SUBMITTED THAT THE ATTENTION OF LD. CIT WAS DRAWN TO VARIOUS RULINGS FOR VARIOUS PROPOSITIO NS OF LAW IN REPLY TO THE SHOW CAUSE NOTICE BUT H E HAS NOT CONSIDERED ANY OF I.T.A. NO. 2469/D/2012 ASSESSMENT YEAR 2003-04 7 THE RULINGS CITED BEFORE HIM. IN LIGHT OF THE FACTS AND THE SETTLED LAW, IT WAS SUBMITTED THAT THE APPEAL OF THE ASSESS EE BE ALLOWED. 6. THE LD. DR, IN RESPONSE, SUBMITTED THAT THE I MPUGNED ORDER HAD BEEN PASSED AFTER DUE CONSIDERATION OF THE FACT S OF THE CASE AND THAT THE DEPARTMENT HAD A SPECIFIC INFORMATION ABOUT ACCOMMODATION ENTRIES HAVING BEEN RECEIVED BY THE A SSESSEE. THEREFORE, IF THE AO HAD NOT EXAMINED THE ISSUE WIT H THE CONSIDERATION AND ENQUIRY THAT WAS CALLED FOR, THE ORDER WOULD BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. IT WAS SUBMITTED THAT THE IMPUGNED ORDER BE UPHELD. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE RECORDS. THE PROVISIONS OF SECTION 263 ARE AS UNDER : '263. (1) THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. I.T.A. NO. 2469/D/2012 ASSESSMENT YEAR 2003-04 8 8. IT WILL BE EXPEDIENT TO REITERATE THE GOVERNING PRINCIPLES LAID DOWN BY THE HONBLE COURTS WITH REGARD TO THE EXERC ISE OF POWER BY THE COMMISSIONER UNDER THE PROVISIONS OF SECTION 263 OF THE ACT. THE POWER OF SUO MOTO REVISION EXERCISABLE BY THE COMMISSIONER IS UNDOUBTEDLY SUPERVISORY IN NATURE. THE OPENING WORDS OF SECTION 263 EMPOWER THE COMMISSIONER TO CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDINGS UNDER THE ACT . A BARE READING OF SECTION 263 ALSO MAKES IT CLEAR THAT THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS ; AND (II) IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IF ONE OF THEM IS ABSENT - IF THE ORDER OF THE ASSESSING OFFICER IS ERRONEOU S BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOU S BUT IT IS PREJUDICIAL TO THE REVENUE - RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT [SEE MALABAR INDUSTRIAL CO. LTD. VS. CIT , ( 2000) 243 ITR 83 (SC)]. 9. AS REGARDS THE SCOPE AND AMBIT OF THE EXPRESSI ON 'ERRONEOUS', A DIVISION BENCH OF THE HONBLE BOMBAY HIGH COURT I N CIT VS. GABRIEL INDIA LTD., (1993) 203 ITR 108 (BOMBAY), HE LD WITH REFERENCE TO BLACK'S LAW DICTIONARY THAT AN 'ERRONE OUS JUDGMENT' MEANS 'ONE RENDERED ACCORDING TO COURSE AND PRACTIC E OF COURT, BUT CONTRARY TO LAW, UPON MISTAKEN VIEW OF LAW; OR UPON I.T.A. NO. 2469/D/2012 ASSESSMENT YEAR 2003-04 9 ERRONEOUS APPLICATION OF LEGAL PRINCIPLES' AND THUS IT IS CLEAR THAT AN ORDER CANNOT BE TERMS AS 'ERRONEOUS' UNLESS IT I S NOT IN ACCORDANCE WITH LAW. IF ASSESSING OFFICER ACTING IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNO T BE BRANDED AS 'ERRONEOUS' BY THE COMMISSIONER SIMPLY B ECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTE N DIFFERENTLY OR MORE ELABORATELY. THE SECTION DOES NOT VISUALIZE THE SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FO R THAT OF THE ASSESSING OFFICER, WHO PASSED THE ORDER UNLESS THE DECISION IS NOT IN ACCORDANCE WITH LAW. THEN AGAIN, ANY AND EVERY E RRONEOUS ORDER CANNOT BE THE SUBJECT MATTER OF REVISION BECA USE THE SECOND REQUIREMENT ALSO MUST BE FULFILLED. THERE MUST BE M ATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED [SEE GABRIEL INDIA LTD. (SUPRA)]. HOWEVER, THE EXPRESSION 'PREJUDICIAL TO THE INTEREST OF THE REVENUE', AS HE LD BY THE HONBLE SUPREME COURT IN THE MALABAR INDUSTRIAL CO. LTD.'S CASE, IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT AND, THEREFORE, MUST BE UNDERSTOOD IN ITS ORDINARY MEANING. IT IS O F WIDE IMPORT AND IS NOT CONFINED TO THE LOSS OF TAX [SEE DAWJEE DADABHOY & CO. (SUPRA), CIT VS. T. NARAYANA PAI (1975) 98 ITR 422 (KAR), CIT VS. GABRIEL INDIA LTD. (SUPRA) AND CIT VS. SMT. MINALBEN S. PARIKH , (1995) 215 ITR 81 (GUJ)]. I.T.A. NO. 2469/D/2012 ASSESSMENT YEAR 2003-04 10 10. AT THE SAME TIME, THE WORDS 'PREJUDICIAL TO THE INTEREST OF THE REVENUE ', AS OBSERVED IN DAWJEE DADABHOY AND CO. VS. S.P. JAIN , (1957) 311 ITR 872 (CALCUTTA), CAN ONLY MEAN THAT 'THE ORDERS OF ASSESSMENT CHALLENGED ARE SUCH AS ARE NOT IN ACCORD ANCE WITH LAW, IN CONSEQUENCE WHEREOF THE LAWFUL REVENUE DUE TO THE STATE HAS NOT BEEN REALIZED OR CANNOT BE REALIZED. ' THUS, THE COMMISSIONER'S EXERCISE OF REVISIONAL JURISDICTION UNDER THE PROVISIONS OF SECTION 263 CANNOT BE BASED ON WHIMS OR CAPRICE. IT IS TRITE LAW THAT IT IS A QUASI JUDICIAL POWER HEDG ED IN WITH LIMITATION AND NOT AN UNBRIDLED AND UNCHARTERED ARB ITRARY POWER. THE EXERCISE OF THE POWER IS LIMITED TO CASES WHERE THE COMMISSIONER ON EXAMINING THE RECORDS COMES TO THE CONCLUSION THAT THE EARLIER FINDING OF THE AO WAS ERRONEOUS AN D PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THAT A FRESH DETERM INATION OF THE CASE IS WARRANTED. THERE MUST BE MATERIAL TO JUSTIF Y THE COMMISSIONER'S FINDING THAT THE ORDER OF THE ASSESS MENT WAS ERRONEOUS INSOFAR AS IT WAS PREJUDICIAL TO THE INTE REST OF THE REVENUE. 11. IT IS ALSO TRITE THAT THERE IS A FINE, THOUGH S UBTLE DISTINCTION, BETWEEN 'LACK OF INQUIRY' AND 'INADEQUATE INQUIRY' . IT IS ONLY IN CASES OF 'LACK OF INQUIRY' THAT THE COMMISSIONER IS EMPOWERED TO EXERCISE HIS REVISIONAL POWERS BY CALLING FOR AND E XAMINING THE I.T.A. NO. 2469/D/2012 ASSESSMENT YEAR 2003-04 11 RECORDS OF ANY PROCEEDINGS UNDER THE ACT AND PASSIN G ORDERS THEREON. IN GABRIEL INDIA LTD. (SUPRA), IT WAS EXPR ESSLY OBSERVED:- 'THE COMMISSIONER CANNOT INITIATE PROCEEDINGS WITH A VIEW TO STARTING FISHING AND ROVING ENQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED. SUCH ACTION WILL BE AGAINST THE WELL-ACCEPTED POLICY OF LAW THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPS E OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDIC IAL AND QUASI-JUDICIAL CONTROVERSIES AS IT MUST IN OTHE R SPHERES OF HUMAN ACTIVITY [SEE PARASHURAM POTTERY WORKS CO. LTD. VS. ITO , (1977) 106 ITR 1 (SC)]. IT WAS FURTHER OBSERVED AS UNDER:- 'FROM THE AFORESAID DEFINITIONS AS IT IS CLEAR THAT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NO T IN ACCORDANCE WITH LAW. IF AN INCOME-TAX OFFICER ACTIN G IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. TH IS SECTION DOES NOT VISUALIZE A CASE OF SUBSTITUTION O F THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME - TAX OFFICER, WHO PASSED THE ORDER UNLESS THE DECISI ON IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALIZED WHERE THE INCOME-TAX OFFICER WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATE HIMSELF. TH E COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOULD HAVE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN THE ONE DETERMINED BY THE INCOME-TAX OFFICER. THAT WOULD NOT 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-JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WI TH I.T.A. NO. 2469/D/2012 ASSESSMENT YEAR 2003-04 12 LAW AND ARRIVED AT CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUSION. X X X X 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 APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED. 12. FROM THE ABOVE IT IS CLEAR THAT IN THE ULTIMATE ANA LYSIS IT IS A PRE-REQUISITE THAT THE COMMISSIONER MUST GIVE REASO NS TO JUSTIFY THE EXERCISE OF SUO MOTO REVISIONAL POWERS BY HIM TO RE-OPEN A CONCLUDED ASSESSMENT. A BARE REITERATION BY HIM THA T THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS INSOFAR AS IT I S PREJUDICIAL TO THE INTEREST OF THE REVENUE, WILL NOT SUFFICE. THE EXERCISE OF THE POWER BEING QUASI-JUDICIAL IN NATURE, THE REASONS M UST BE SUCH AS TO SHOW THAT THE ENHANCEMENT OR MODIFICATION OF THE ASSESSMENT OR CANCELLATION OF THE ASSESSMENT OR DIR ECTIONS ISSUED FOR A FRESH ASSESSMENT WERE CALLED FOR, AND MUST IR RESISTIBLY LEAD TO THE CONCLUSION THAT THE ORDER OF THE INCOME- TAX OFFICER WAS NOT ONLY ERRONEOUS BUT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THUS, WHILE THE AO IS NOT CALLED UPON TO WRITE AN E LABORATE JUDGMENT GIVING DETAILED REASONS IN RESPECT OF EACH AND EVERY DISALLOWANCE, DEDUCTION, ETC., IT IS INCUMBENT UPON THE I.T.A. NO. 2469/D/2012 ASSESSMENT YEAR 2003-04 13 COMMISSIONER NOT TO EXERCISE HIS SUO MOTO REVISIONAL POWERS UNLESS SUPPORTED BY ADEQUATE REASONS FOR DOING SO. 13. IN THE INSTANT APPEAL BEFORE US, IT IS NOT TH E DEPARTMENTS CASE THAT NO INFORMATION REGARDING THE SHARE APPLIC ATION MONEY WAS CALLED FOR BY THE AO. THAT RELEVANT DETAILS AND DOCUMENTS WERE FURNISHED BY THE ASSESSEE DURING THE ASSESSMEN T PROCEEDINGS HAS BEEN ACKNOWLEDGED BY THE LD. CIT IN THE IMPUGNED ORDER ALSO. HENCE, NO INFERENCE CAN BE DRA WN THAT THE AO HAS NOT EXAMINED THE ISSUE ALTHOUGH HE HAS NOT E XPRESSED IT IT IN AS MANY TERMS AS MAY BE CONSIDERED APPROPRIAT E BY HIS SUPERIOR AUTHORITY AND EVEN IF THE SAME IS FOUND TO BE INADEQUATE THE SAME CANNOT BE A GROUND FOR REVISION. THE HONB LE MADRAS HIGH COURT HELD IN THE CASE OF CIT V VALLIAMMAL (D. ) (1998) 230 ITR 695 (MAD) THAT ASSESSMENT ORDER MADE AFTER CONS IDERING ALL FACT AND INFORMATION CANNOT BE REVISED. WHERE THE A SSESSEE HAD FURNISHED THE REQUISITE INFORMATION AND THE ASSESSI NG OFFICER HAD COMPLETED THE ASSESSMENT AFTER CONSIDERING AND THE FACTS BUT THE COMMISSIONER REVISED THE ASSESSMENT ORDER ON THE GR OUND THAT THE ASSESSING OFFICER HAD NOT MADE PROPER ENQUIRIES , THE TRIBUNAL WAS HELD JUSTIFIED IN REVERSING THE ORDER OF THE CO MMISSIONER AND RESTORING THAT OF THE ASSESSING OFFICER. COMMISSION ER CANNOT RE- I.T.A. NO. 2469/D/2012 ASSESSMENT YEAR 2003-04 14 EXAMINE ACCOUNTS AND SUBSTITUTE HIS JUDGMENT FOR TH AT OF THE ASSESSING OFFICER. AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF ASSESSING OFFI CER MAKES ASSESSMENT IN ACCORDANCE WITH LAW, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, AC CORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABOR ATELY. THIS SECTION DOES NOT VISUALIZE A CASE OF SUBSTITUTION O F THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE ASSESSING OFFIC ER UNLESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISU ALIZED WHERE THE ASSESSING OFFICER EXAMINES THE ACCOUNTS, MAKES ENQUIRES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY MAKING THE ACCOUNTS OR BY MAKING SOME ESTIMATES HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMAT E MADE BY THE OFFICER WAS ON LOWER SIDE AND, LEFT TO THE COMMISSI ONER, HE WOULD HAVE ESTIMATED THE INCOME AT A HIGHER FIGURE THAT T HE ONE DETERMINED BY THE ASSESSING OFFICER. THAT WOULD NOT VEST THE COMMISSIONER WITH THE POWER TO RE-EXAMINE THE ACCOU NTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE. FU RTHER IN THE CASE OF INFOSYS TECHNOLOGIES V JCIT (ASST) (2006) 2 86 ITR (AT) 211, THE BANGALORE BENCH OF THE ITAT HELD THAT WHER E THE A.O AS EXAMINED AND CONSIDERED AND ISSUE, THOUGH NOT MENTI ONED IN THE I.T.A. NO. 2469/D/2012 ASSESSMENT YEAR 2003-04 15 ASSESSMENT ORDER, IT CANNOT BE SAID THAT THE ORDER PASSED WAS ERRONEOUS. IN CIT V GABRIEL INDIA LTD. (1993) 203 ITR 108 (BOM), THE HONBLE BOMBAY HIGH COURT HELD THAT ONCE THE AS SESSING OFFICER HAS EXERCISED THE QUASI-JUDICIAL POWER VEST ED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION, SU CH A CONCLUSION CANNOT BE CONSIDERED ERRONEOUS SIMPLY BE CAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCL USION. IT MAY BE THAT IN THE OPINION OF THE COMMISSIONER, THE ORD ER IN QUESTION IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BUT THAT BY ITSELF WOULD NOT BE ENOUGH TO VEST THE COMMISSIONER WITH T HE POWERS OF SUO MOTU REVISION BECAUSE THE FIRST REQUIREMENT, NAMELY, TH AT THE ORDER IS ERRONEOUS, IS LACKING. 14. THE HONBLE DELHI HIGH COURT IN CIT VS. SUNBEA M AUTO LTD 332 ITR 167 (DEL) HAS OPINED IN PARA 17 OF ITS ORDE R AS UNDER:- 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF TH E COUNSEL ON THE OTHER SIDE AND HAVE GONE THROUGH THE RECORDS. THE FIRST ISSUE THAT ARISES FOR OUR CONSIDERATION IS 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 THAT WHILE PASSING THE ASSESSMENT ORDER, THE ASSESSING OFFICER DID NOT CONSIDER THIS ASPECT SPECIFICALLY WHETHER T HE EXPENDITURE IN QUESTION WAS REVENUE OR CAPITAL EXPENDITURE. THIS ARGUMENT PREDICATES ON THE ASSESSMENT ORDER, WHICH APPARENTLY DOES NOT GIVE AN Y I.T.A. NO. 2469/D/2012 ASSESSMENT YEAR 2003-04 16 REASONS WHILE ALLOWING THE ENTIRE EXPENDITURE AS REVENUE EXPENDITURE. HOWEVER, THAT BY ITSELF WOULD NOT BE INDICATIVE OF THE FACT THAT THE ASSESSING OFFICE R HAD NOT APPLIED HIS MIND ON THE ISSUE. THERE ARE JUDGMENTS GALORE LAYING DOWN THE PRINCIPLE THAT THE ASSESSING OFFICER IN THE ASSESSMENT 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 EXPENDITURE. LEARNED COUNSEL FOR THE ASSESS EE IS RIGHT IN HIS SUBMISSION THAT ONE HAS TO KEEP IN MIND THE DISTINCTION BETWEEN LACK OF INQUIRY AND INADEQUATE INQUIRY. IF THERE WAS ANY INQUIRY, EVE N INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCASION T O THE COMMISSIONER TO PASS ORDERS UNDER SECTION 263 O F THE ACT, MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER. IT IS ONLY IN CASES OF LACK OF INQUIRY THAT SUCH A COURSE OF ACTION WOULD BE OPEN. 15. IN THE INSTANT APPEAL BEFORE US, THE AO HAS C ONDUCTED AN ENQUIRY. HOWEVER, HE HAS NOT LAUNCHED A LENGTHY DIS CUSSION ON THE ISSUE OF SHARE CAPITAL BUT THAT DOES NOT LEAD T O AN INFERENCE THAT THERE HAS BEEN A LACK OF ENQUIRY ON HIS PART O N THE ISSUE. IT IS CLEAR THAT AN ORDER CANNOT BE TERMED AS ERRONEOU S UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN AO, ACTING IN ACC ORDANCE WITH LAW, MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCOR DING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABOR ATELY. THIS I.T.A. NO. 2469/D/2012 ASSESSMENT YEAR 2003-04 17 SECTION DOES NOT VISUALIZE A CASE OF SUBSTITUTION O F THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE AO. THEREFORE, IT CANNOT BE HELD THAT IN THE INSTANT CASE THE AOS ORDER WAS ER RONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHIN T HE TERMS OF SECTION 263 OF THE ACT. ONCE THE ISSUE OF SHARE CA PITAL WAS CONSIDERED AND EXAMINED BY THE ASSESSING OFFICER, L D. COMMISSIONER CANNOT SET ASIDE THE ORDER WITHOUT REC ORDING CONTRARY FINDING. THIS WILL BE CONTRARY TO SECTION 263 OF THE ACT. THEREFORE, IN VIEW OF THE FACTUAL MATRIX OF THE CAS E AND RESPECTFULLY FOLLOWING THE RATIO OF THE VARIOUS JUD ICIAL PRONOUNCEMENTS AS DISCUSSED ABOVE, WE ARE OF THE CO NSIDERED OPINION THAT THE IMPUGNED ACTION OF THE LD. CIT U/S 263 OF THE ACT WAS PATENTLY ILLEGAL AND LIABLE TO BE QUASHED. THE PROCEEDINGS U/S 263 OF THE ACT ARE ACCORDINGLY QUAS HED. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MAY, 2016. SD/- SD/- (G.D. AGRAWAL) (SU DHANSHU SRIVASTAVA) VICE PRESIDENT JUDICI AL MEMBER DATED: THE 30TH MAY, 2016 GS I.T.A. NO. 2469/D/2012 ASSESSMENT YEAR 2003-04 18 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 4. DR, ITAT BY ORDER ASSTT. REGISTRAR