Ashok Handloom Factory Pvt. Ltd., Meerut V. CIT, Meerut

ITA 2495/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96980 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 29-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Assessee Lawyers: SSH K SAMPATH; RAJA KUMAR S
• Keywords: Revision of order; Difference of opinion; Revenue expenditure
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO . 2495 /DEL/201 3 ASSESSMENT YEAR: 2008 - 09 ASHOK HANDLOOM FACTORY P. LTD., VS. COMMISSIONER OF INCOME TAX, 99, SUBHASH BAZAR, MEERUT MEERUT (PAN: AABCA1945N ) (APPELLANT) (RESPONDENT) APPELLANT BY : S /SH . K. SAMPATH & RAJA KUMAR, ADVOCATES RESPONDENT BY : SH. RAVI JAIN, CIT - DR DATE OF HEARING: 07.07.2015 DATE OF PRONOUNCEMENT: 21.08.2015 ORDER PER INTURI RAMA RAO, A.M. : THIS IS AN APPEAL FILED BY THE ASSESSEE COMPANY FOR THE ASSESSMENT YEAR 2008 - 09 AGAINST THE ORDER DATED 25.03.2013 PASSED BY THE LEARNED CIT, MEERUT, UNDER SECTION 263 OF THE INCOME - TAX ACT, 1961 , RAISING THE FOLLOWING GROUND OF APPEAL: I. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE ORD ER OF THE LD. CIT REVISING THE ASSESSMENT ORDER DATED 27.12.2010 PASSED U/S 143(3) OF THE INCOME - TAX ACT 1961 IS DEVOID MISCONCEIVED AND IS ERRONEOUS AND MUST BE QUASHED; II. THAT THE ORDER OF REVISION OF THE LD. CIT BASED SOLELY ON A DIFFERENCE OF OPINION AN D SEEKING ONLY A FURTHER ENQUIRY FOR ASSESSMENT AND PASSED WITHOUT INDICATING ANY ERROR OR PREJUDICE IN THE ASSESSMENT ORDER DATED 27.12.2010 IS AB INITIO ILLEGAL AND VOID AND SO MUST BE QUASHED; III. THAT FURTHER, WITHOUT PREJUDICE TO THE FOREGOING, THE FINDI NG OF THE LD. CIT THAT THE BOOK RESULTS FOR THE TRADING ACTIVITY WERE UNRELIABLE AND WERE 2 NO AMENABLE TO VERIFICATION AND THAT THE REST OF THE ASSESSMENT HAD TO BE SET ASIDE IS FALLACIOUS, CAPRICIOUS AND UNTENABLE AND MUST BE QUASHED WITH DIRECTION FOR ABI DING BY THE BOOK VERSION AND AS PER THE ASSESSMENT ORDER ALREADY PASSED BY THE ASSESSING OFFICER ON ALL POINTS; IV. THAT THE ORDER OF THE LD. CIT SETTING ASIDE THE ASSESSMENT ORDER IN EXERCISE OF HIS POWERS U/S 263 OF THE I.T. ACT, 1961 BEING PERVERSE AND PRE POSTEROUS MUST BE QUASHED; V. THAT THE ASSESSMENT ORDER DATED 27.12.2010 BEING WITHOUT BLEMISH OR SHORT - COMING AND BEING CORRECT ON FACTS AND LAW MUST BE RESTORED AS BEFORE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BU SINESS OF PRINTING, PROCESSING AND SALE OF HANDLOOM. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008 - 09 WAS FILED ON 23.09.2008, DECLARING INCOME OF RS. 3,19,970/ - . AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF T HE INCOME - TAX ACT, 1961 (FOR SHORT THE ACT ) VIDE ORDER DATED 27.12.2010 AT A TOTAL INCOME OF RS. 3,61,080/ - . SUBSEQUENTLY, A NOTICE UNDER SECTION 263 OF THE ACT WAS ISSUED BY THE CIT(A), MEERUT, DATED 15.02.2013 PROPOSING THE REVISION OF THE ASSESSMENT O RDER ON THE GR OUND THAT NO PROPER INQUIRIES ARE CONDUCTED WITH REFERE NCE TO THE FOLLOWING ITEMS: A) UNSECURED LOAN OF RS. 4,38,58,522/ - HAVE NOT BEEN ENQUIRED INTO & THE A.O. HAS SIMPLY ACCEPTED THE CONFIRMATION FILED BY THE ASSESSEE. B) SUNDRY CREDITORS OF RS. 1,20,42,621/ - HAVE NOT BEEN ENQUIRED INTO AND THE A.O. HAS SIMPLY ACCEPTED THE CONFIRMATION FILED BY THE ASSESSEE. C) DURING THE YEAR, ASSESSEE HAD MADE AN ADDITION IN FIXED ASSETS OF RS. 68,31,743/ - , BUT SOURCE OF INVESTMENT HAVE NOT BEEN VERIFIED BY THE A.O. AND HE HAS NOT OBTAINED THE BILLS/VOUCHERS OF THE SAME. D) A.O. HAS NOT OBTAINED THE COPY OF BANK STATEMENTS AND NOT VERIFIED THE GENUINENESS OF SHARE HOLDERS. E) THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PRINTING, PROCESSING AND SA LE OF HAND LOOMS IN WHICH TURNOVER OF RS. L6,39,30,613/ - IS SHOWN. HOWEVER, THE N.P. IS SHOWN AT MERELY RS.8,73,333/ - WHICH IS NEGLIGIBLE. AS PER TAX AUDIT REPORT, THE ASSESSEE HAS NOT MAINTAINED STOCK REGISTER FOR TRADING ACTUAL RAW MATERIAL AS WELL AS FI NISHED GOODS. MOREOVER, THE AUDIT 3 REPORT CLEARLY REPORTS THAT IN ABSENCE OF STOCK REGISTER, REQUIRED DETAILS REGARDING MATERIALS CONSUMED AND FINISHED GOODS COULD NOT BE REPORTED AND THUS BUSINESS RESULTS REMAINED TOTALLY UNVERIFIABLE FROM INCOMPLETE BOOKS OF ACCOUNTS, DESPITE WHICH THE A.O. HAS ACCEPTED NEGLIGIBLE PROFITS AS ABOVE. 3. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE APPELLANT HAD FILED DETAILED REPLY VIDE LETTER DATED 5 TH MARCH, 2013 WHEREIN IT WAS SUBMITTED THAT IN RESPECT OF THOSE ITEMS, THE ASSESSING OFFICER HAD CAUSED THE NECESSARY INQUIRIES AND DRAWN ATTENTION TOWARDS THE QUESTIONNAIRE DATED 29 TH JULY, 2010 ISSUED BY THE ASSESSING OFFICER ON THOSE ITEMS. HOWEVER, THE CIT NOT APPRECIATED THE EXPLANATION AND SET ASIDE THE ASSESSMENT VIDE HIS ORDER DATED 25 TH MARCH, 2013 , EXERCISING THE POWERS VESTED WITH HIM UNDER THE PROVISIONS OF SECTION 263 OF THE ACT O N THE GROUND THAT PRIOR NO PROPER INQUIRY WAS CONDUCTED. IN SUPPORT OF THIS, HE RELIED UPON THE FOLLOWING DECISIONS: I. CIT VS. V.N.M.A. RATHI NASABAPATHY NADAR, (1995) 215 ITR 309, 315 (MAD.) II. SWARUP VEGETABLE PRODUCTS INDUSTRIES LTD. VS. CIT, (1991) 187 ITR 412, 415 - 416 (ALL.) III. UMASHANKAR RICE MILLS VS. CIT, (1991) 187 ITR 638 - 39 (ORI.) IV. GEE VEE ENTERPRISES VS. ADDL. CIT, 99 ITR 375 (DEL.) BEING AGGRIEVED WITH THE ORDER CIT, THE ASSESSEE COMPANY IS BEFORE US WITH THE PRESENT APPEAL. 4. IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE COMPANY THAT NO ASSESSMENT CAN BE SET ASIDE IN EXERCISE OF THE POWER UNDER SECTION 263 OF THE ACT ON THE GROUND THAT NO PROPER INQUIRY WAS MADE. HE HAS DRAWN OUR ATTENTION TO THE QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER PLACED AT PAGE NO. 1 OF THE 4 PAPER BOOK AND ALSO FILED REPLIES OF T HE ASSESSEE BEFORE THE ASSESSING OFFICER IN RESPONSE TO THE QUEST IONNAIRE ISSUED BY HIM A T PAGE 4 TO 259 OF THE PAPER BOOK. HE FURTHER SUBMITTED THAT IT WAS NOT A CASE OF NON - INQUIRY WHEN A VALID JURISDICTION UN DER SECTION 263 CAN BE EXERCISED AND IN SUPPORT OF THIS PROPOSITION HE RELIED ON THE FOLLOWING DECISIONS OF TH E HON BLE JURISDICTIONAL HIGH COURT: I. DIRECTOR OF INCOME TAX VS. JYOTI FOUNDATION, (2013) 357 ITR 388 (DEL.) II. ITO VS. D.J. HOUSING PROJECTS LTD., 343 ITR 329 III. CIT VS. SUNBEAM AUTO LTD., 332 ITR 167 IV. CIT VS. NEW DELHI TELEVISION LTD, (2014) 360 ITR 44 (DEL.) V. CI T VS. INTERNATIONAL TRAVEL HOUSE LTD., (2012) 344 ITR 554 (DEL.) 5. ON THE OTHER HAND, LEARNED CIT - DR RELIED ON THE ORDER OF CIT PASSED UNDER SECTION 263 OF THE ACT. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THIS APPEAL , WE ARE REQUIRED TO ADJUDICATE WHETHER THE CIT IS JUSTIFIED IN EXERCISING THE JURISDICTION UNDER SECTION 263 OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE LD. CIT ISSUED SHOW CAUSE NOTICE ON THE GROUND THAT THE ASSESSING OFFICER AT THE TIME O F FRAMING THE ASSESSMENT UNDER SECTION 143 (3) HAD NOT MADE PROPER INQUIRIES ON THE FOLLOWING ITEMS: A) UNSECURED LOAN OF RS. 4,38,58,522/ - HAVE NOT BEEN ENQUIRED INTO & THE A.O. HAS SIMPLY ACCEPTED THE CONFIRMATION FILED BY THE ASSESSEE. B) SUNDRY CREDITORS OF RS. 1,20,42,621/ - HAVE NOT BEEN ENQUIRED INTO AND THE A.O. HAS SIMPLY ACCEPTED THE CONFIRMATION FILED BY THE ASSESSEE. C) DURING THE YEAR, ASSESSEE HAD MADE AN ADDITION IN FIXED ASSETS OF RS. 68,31,743/ - , BUT SOURCE OF INVESTMENT HAVE NOT BEEN VERIFIED BY THE A.O. AND HE HAS NOT OBTAINED THE BILLS/VOUCHERS OF THE SAME. D) A.O. HAS NOT OBTAINED THE COPY OF BANK STATEMENTS AND NOT VERIFIED THE GENUINENESS OF SHARE HOLDERS. 5 E) THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PRINTING, PROCESSING AND SALE OF HAND LOOMS IN WHICH TURNOVER OF RS. L6,39,30,613/ - IS SHOWN. HOWEVER, THE N.P. IS SHOWN AT MERELY RS.8,73,333/ - WHICH IS NEGLIGIBLE. AS PER TAX AUDIT REPORT, THE ASSESSEE HAS NOT MAINTAINED STOCK REGISTER FOR TRADING ACTUAL RAW MATER IAL AS WELL AS FINISHED GOODS. MOREOVER, THE AUDIT REPORT CLEARLY REPORTS THAT IN ABSENCE OF STOCK REGISTER, REQUIRED DETAILS REGARDING MATERIALS CONSUMED AND FINISHED GOODS COULD NOT BE REPORTED AND THUS BUSINESS RESULTS REMAINED TOTALLY UNVERIFIABLE FROM INCOMPLETE BOOKS OF ACCOUNTS, DESPITE WHICH THE A.O. HAS ACCEPTED NEGLIGIBLE PROFITS AS ABOVE. 7. THE APPELLANT REPLIED SAYING THAT ALL THOSE ITEMS H AD BEEN EXAMINED BY THE ASSESSING OFFICER, ONLY AFTER BEING SATISFIED WITH THE EXPLANATION FILED BY THE APPELLANT D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER. THIS FACTS HAVE NOT BEEN DISPUTED BY THE LEARNED CIT - DR BUT ONLY GROUND ON WHICH THE ASSESSMENT HAD BEEN SET ASIDE BY THE CIT UNDER SECTION 263 IS THAT NO PROPER INQUIRY HAS BEEN MADE BY THE ASSESSING OFFICER ON THOSE ITEMS. THE COMMISSIONER OF INCOME TAX AGREED TO THE EXTENT THAT THE ASSESSING OFFICER MADE SOME INQUIRIES BUT NOT PROPER INQUIRY. NOW , THE LAW IS FAIRLY SETTLED TO THE EXTENT THAT THE COMMISSIONER OF INCOME TAX CAN EXERCISE HIS JURISDICTION UNDER SECTION 263 OF THE ACT ONLY IN CASES WHERE NO INQUIRY HAS BEEN MADE BY THE ASSESSING OFFICER AN D RELIANCE IN THIS REGARD CAN BE PLACED ON THE MOTHER DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GABRIEL INDIA LTD., (1993) 203 ITR 108 (BOM.) . THIS DECISION WAS FOLLOWED SUBSEQUENTLY BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. SUNBEAM AUTO LTD., 332 ITR 167 WHERE IT HAS BEEN HELD AS UNDER : ..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 6 OF EACH AND EVERY ITEM OF D EDUCTION, 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 ASSESSEE IS RIGHT IN HIS SUBMISSION THAT ONE HAS TO KEEP IN MIN D THE DISTINCTION BETWEEN LACK OF INQUIRY AND INADEQUATE INQUIRY . IF THERE WAS ANY INQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE COMMISSIONER TO PASS ORDERS UNDER SECTION 263 OF THE ACT, MERELY BECAUSE HE HAS A DIFFERENT OPINI ON IN THE MATTER. IT IS ONLY IN CASES OF LACK OF INQUIRY THAT SUCH A COURSE OF ACTION WOULD BE OPEN. IN GABRIEL INDIA LTD. [1993] 203 ITR 108 (BOM), LAW ON THIS ASPECT WAS DISCUSSED IN THE FOLLOWING MANNER (PAGE 113) : FROM A RENDING OF SUB - SECTION (1) OF SECTION 263, IT IS CLEAR THAT THE POWER OF SUO MOTU REVISION CAN BE EXERCISED BY THE COMMISSIONER ONLY IF, ON EXAMINATION OF THE RECORDS OF ANY PROCEEDINGS UNDER THIS ACT, HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE INCOME - TAX OFFICER IS ERRONEOU S 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 FULFILLMENT ON THE REQUIREMENTS LAID DOWN IN SUB - SECTION (1). THE CONSIDERATION OF THE COMMISSIONER AS TO WHETHER AN ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, MUST BE BASED ON MATERIALS ON THE RECORD OF THE PROCEEDINGS CALLED FOR BY HIM. IF THERE ARE NO MATERIALS ON RECORD ON THE BASIS OF WHICH IT CAN BE SAID THAT THE COMMISSION ER ACTING IN A REASONABLE MANNER COULD HAVE COME TO SUCH A CONCLUSION, THE VERY INITIATION OF PROCEEDINGS BY HIM WILL BE ILLEGAL AND WITHOUT JURISDICTION. 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 LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI - JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. (SEE PARASHURAM POTTERY WORKS CO. LTD. VS. ITO [1977] 106 ITR 1 (SC) AT PAGE 10) FROM THE AFORESAID DEFINITIONS IT IS CLEAR THAT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN INCOME - TAX OFFICER ACTING IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY TH E COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SECTION DOES NOT VISUALIZE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME - TAX OFFICER, WHO PASSED THE ORDER UNLESS THE DECISION 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 7 FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY A CCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATE HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE POWER SIDE AND LEFT TO THE COMMISSIONER HE WOULD HAVE ESTIMATED THE INCO ME 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 WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT BE FORMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUSION .. THERE MUST BE SOME PRIMA FACIE MATER IAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BE 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. 8. IT IS VERY CLEAR THAT IF T HERE IS AN INQUIRY EVEN INADEQUATE THAT WOULD NOT BY ITSELF GIVES POWER TO THE COMMISSIONER TO PASS ORDER UNDER SECTION 263 OF THE ACT MERELY BECAUSE HE HAD A DIFFERENT OPINION IN THE MATTER. IT IS ONLY IN THE CASES OF T O T A L LACK OF INQUIRY THAT THE REVISI ON UNDER SECTION 263 WOULD BE JUSTIFIED. FURTHER, THE JURISDICTIONAL HIGH COURT IN THE CASE OF ITO VS. D.J. HOUSING PROJECTS LTD., 343 ITR 329 HELD AS UNDER: THUS, IN CASES OF WRONG OPINION OR FINDING ON THE MERITS, THE COMMISSIONER OF INCOME - TAX HAS TO C OME TO THE CONCLUSION AND HIMSELF DECIDE THAT THE ORDER IS ERRONEOUS, BY CONDUCTING NECESSARY ENQUIRY, IF REQUIRED AND NECESSARY, BEFORE THE ORDER UNDER SECTION 263 IS PASSED. IN SUCH CASES, THE ORDER OF THE ASSESSING OFFICER WILL BE ERRONEOUS BECAUSE THE ORDER PASSED IS NOT SUSTAINABLE IN LAW AND THE SAID FINDING MUST BE RECORDED. THE COMMISSIONER OF INCOME - TAX CANNOT REMAND THE MATTER TO THE ASSESSING OFFICER TO DECIDE WHETHER THE FINDINGS RECORDED ARE ERRONEOUS. IN CASES WHERE THERE IS INADEQUATE ENQUIR Y BUT NOT LACK OF ENQUIRY, AGAIN THE COMMISSIONER OF INCOME - TAX MUST GIVE AND RECORD A FINDING THAT THE ORDER/INQUIRY MADE IS ERRONEOUS. THIS CAN HAPPEN IF AN ENQUIRY AND VERIFICATION IS CONDUCTED BY THE COMMISSIONER OF INCOME - TAX AND HE IS ABLE TO ESTABLI SH AND SHOW THE ERROR OR MISTAKE MADE BY THE ASSESSING OFFICER, MAKING THE ORDER UNSUSTAINABLE IN LAW. IN SOME CASES POSSIBLY THOUGH RARELY, THE COMMISSIONER OF INCOME - TAX CAN ALSO SHOW AND ESTABLISH THAT THE FACTS ON RECORD OR INFERENCE DRAWN FROM FACTS ON RECORD PER SE JUSTIFIED AND MANDATED FURTHER ENQUIRY OR INVESTIGATION BUT THE ASSESSING OFFICER HAD ERRONEOUSLY NOT 8 UNDERTAKEN THE SAME. HOWEVER, THE SAID FINDING MUST BE CLEAR, UNAMBIGUOUS AND NOT DEBATABLE. THE MATTER CANNOT BE REMITTED FOR A FRESH DECISION TO THE ASSESSING OFFICER TO CONDUCT FURTHER ENQUIRIES WITHOUT A FINDING THAT THE ORDER IS ERRONEOUS. FINDING THAT THE ORDER IS ERRONEOUS IS A CONDITION OR REQU IREMENT WHICH MUST BE SATISFIED FOR EXERCISE OF JURISDICTION UNDER SECTION 263 OF THE A CT. IN SUCH MATTERS, TO REMAND THE MATTER/ISSUE TO THE ASSESSING OFFICER WOULD IMPLY AND MEAN THE COMMISSIONER OF INCOME - TAX HAS NOT EXAMINED AND DECIDED WHETHER OR NOT THE ORDER IS ERRONEOUS BUT HAS DIRECTED THE ASSESSING OFFICER TO DECIDE THE ASPECT/QUES TION. 9. THE PRINCIPLE THAT CAN BE CULLED OUT FROM THE ABOVE DECISION IS THAT THE ASSESSMENT CAN T BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR THE PURPOSES OF FURTHER INQUIRY/INVESTIGATION AND TO COME TO THE CONCLUSION THAT THE ASSESSMENT ORDER IS ERRONEOUS. THE CIT HIMSELF HAS TO CONDUCT THE INQUIRY BEFORE THE ORDER UNDER SECTION 263 IS PASS ED. 10. THE DECISION HELD IN THE CASE OF GEE VEE ENTERPRISES VS. ADDL. CIT, 99 ITR 375 (DEL.) WAS DISTINGUISHED BY THE HON BLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX VS. JYOTI FOUNDATION, (2013) 357 ITR 388 (DEL.) AS FOLLOWS: THE DELHI HIGH COURT IN GEE VEE ENTERPRISES V. ADDL. CIT [1975] 99 ITR 375 (DELHI), HAS OBSERVED AS UNDER (PAGE 386) 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 MINIMUM AMOUNT OF EVIDENCE MAY BE ACCEPTED BY A CIVIL COURT IN THE ABSENCE OF ANY REBUTTAL. THE CIVIL COURT IS NEUTRAL. IT SIMPLY GIVES DECISION ON THE BASIS OF THE PLEADING AND EVIDENCE WHICH COMES BEFORE IT. THE INCOME - TAX OFFICER IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER INQUIRY. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN THE RETURN WHEN THE CIRCUMSTANCE S OF THE CASE ARE SUCH AS TO PROVOKE AN INQUIRY. THE MEANING TO BE GIVEN TO THE WORD ERRONEOUS IN SECTION 263 EMERGES 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 9 AN INQUIRY PRUDENT THAT THE WORD ERRONEOUS IN SECTION 263 INCLUDES THE FAILURE TO MAKE SUCH AN INQUIRY HAS NOT BEEN MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WITH THE ORDER IF ALL THE FACTS STATED THEREIN ARE ASSUMED TO B E CORRECT IN THE SAID JUDGMENT, THE DELHI HIGH COURT HAD REFERRED TO EARLIER DECISIONS OF THE SUPREME COURT IN RAMPYARI DEVI SARAOGI VS. CIT [1968] 67 ITR 84 (SC) AND SMT. TARA DEVI AGGARWAL VS. CIT [1973] 88 ITR 323 (SC), WHEREIN IT HAS BEEN HELD THAT WHERE THE ASSESSING OFFICER HAS ACCEPTED A PARTICULAR CONTENTION/ ISSUE WITHOUT ANY ENQUIRY OR EVIDENCE WHATSOEVER, THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. AFTER REFERENCE TO THESE TWO DECISIONS, THE DELHI HIGH COURT OBSERVED (PAGE 386): THESE TWO DECISIONS SHOW THAT IT IS NOT NECESSARY FOR THE COMMISSIONER TO MAKE FURTHER INQUIRIES BEFORE CANCELLING THE ASSESSMENT ORDER OF THE INCOME - TAX OFFICER. THE COMMISSIONER CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES OF THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE THE INCOME - TAX OFFICER SHOULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE STATEMENTS MADE BY THE ASSESSEE IN HIS RETURN. THE AFORESAID OBSERVATIONS HAVE TO B E UNDERSTOOD IN THE FACTUAL BACKGROUND AND MATRIX INVOLVED 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 ABSENCE OF ENQUIRY OR VERIFIC ATION. THESE CASES HAVE TO BE DISTINGUISHED FROM OTHER CASES (I) WHERE THERE IS ENQUIRY BUT THE FINDINGS ARE INCORRECT/ERRONEOUS; AND (II) WHERE THERE IS FAILURE TO MAKE PROPER OR FULL VERIFICATION OR ENQUIRY. 11. THUS, THE DECISIONS RELIED UPON BY THE CIT ON THE ISSUE OF JURISDICTION UNDER SECTION 263 ARE NOT APPLICABLE TO THE FACTS OF THE CASE. FURTHER WE OBSERVE THAT THE ASSESSING OFFICER AS AN INVESTIGATOR OF THE CASE, I T IS OPEN TO HIM WHERE TO START OR STOP IN QUIRY. THE CIT(A) CANNOT DIRECT THE ASSESSING OFFICER TO CONDUCT INQUIRY IN A PARTICULAR MANNER SINCE IT IS A WELL SETTLED PRINCIPLE OF LAW THAT THE COMMISSIONER HAD NO VALID POWER TO DIRECT THE ASSESSING OFFICER TO FRAME THE ASSESSMENT ORDER IN A PARTICUL AR MANNER. IN THESE CIRCUMSTANCES, WE 10 HAVE NO HESITATION TO QUASH THE ORDER PASSED UNDER SECTION 263 OF THE ACT BY THE CIT AND ACCORDINGLY WE ALLOW THE APPEAL FILED BY THE ASSESSEE COMPANY. 12. IN THE RESULT, THE APPEAL IS ALLOWED. THE DECISION IS PRONO UNCED IN THE OPEN COURT ON 2 1 S T A U G U S T , 2015. S D / - S D / - ( I.C. SUDHIR ) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 1 S T A U G U S T , 2015. RK/ - COPY FORWARDED TO: 1. AP PELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI