ASIAN HOMES P.LTD, MUMBAI V. PRINCIPAL COMMISSIONER OF INCOME TAX- 9, MUMBAI

ITA 2593/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9971 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 26-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANADI VARMA LD
• Assessee Lawyers: PARAS NATH; JITENDRA TRIVEDILD ARS
• Keywords: Business income; Prejudicial to interest; Tax effect; Liquidation
• Section: 143(3); 142(1); 115JB; 201; 13; 56; 263; 63; 10

Judgement Text

1 ITA NO.2593/MUM/2018 M/S. ASIAN HOMES PRIVATE LIMITED ASSESSMENT YEAR-2013-14 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.2593/MUM/2018 ( / ASSESSMENT YEAR:2013-14) M/S. ASIAN HOMES P RI VATE LIMITED GF, KIRABOO BUILDING CTS, E/291, 13 TH ROAD, KHAR (WEST) MUMBAI-400 052. / VS. PR. C IT - 9 2 ND FLOOR, ROOM NO.214 AAYKAR BHAVAN, M.K. ROAD MUMBAI-400 020. !' ./ ./PAN/GIR NO. AAGCA-6734-J ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) ASSESSEE BY : S/SHRI PARAS NATH & JITENDRA TRIVEDI-LD. ARS REVENUE BY : SHRI ANADI VARMA-LD.CIT-DR / DATE OF HEARING : 17/10/2019 / DATE OF PRONOUNCEMENT : 03/01/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. BY WAY OF THIS APPEAL FOR ASSESSMENT YEAR [IN SH ORT REFERRED TO AS AY] 2013-14, THE ASSESSEE CONTEST CORRECTNESS OF INVOCATION OF REVISIONAL JURISDICTION U/S 263 BY LD. PR. COMMISSIONER OF INC OME-TAX -9, MUMBAI [IN 2 ITA NO.2593/MUM/2018 M/S. ASIAN HOMES PRIVATE LIMITED ASSESSMENT YEAR-2013-14 SHORT REFERRED TO AS PR.CIT] VIDE ORDER DATED 27/ 02/2018.THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER: - 1. VALIDITY OF ORDER PASSED UNDER SECTION 263 O F THE INCOME TAX ACT, 1961 ('THE ACT') THAT ON FACTS AND UNDER THE CIRCUMSTANCES OF THE CA SE, LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX - 9, MUMBAI, ['ID. PR. CIT], ERRED IN HO LDING THAT THE ASSESSMENT ORDER DATED 27.02.2016 PASSED UNDER SECTION 143(3) OF THE ACT B Y LEARNED ASSESSING OFFICER ['ID. AO] IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E AND THEREBY SETTING ASIDE AND/OR CANCELLING THE ORDER PASSED BY ID. AO UNDER SECTION 263 OF THE ACT . 1.1. LD. PR. CIT HAS ERRED IN HOLDING THE ORDER PASSED BY ID. AO AS ERRONEOUS AND PREJUDICIAL TO REVENUE ON THE CONTENTION THAT ID. AO PASSED THE ORDER WITHOUT MAKING ENQUIRIES AND VERIFICATION AND THEREFORE, WITHOUT APPRECIATING TH E FACT THAT ID. AO HAD MADE DETAILED ENQUIRY ON THE ISSUE UNDER CONSIDERATION AND AFTER HAVING SATI SFIED HIMSELF WITH THE SAME, ORDER WAS PASSED BY ID. AO. 1.2. LD. PR. CIT HAS ERRED IN LAW IN HOLDING THE ORDER PASSED BY ID. AO AS ERRONEOUS AND PREJUDICIAL TO REVENUE WHILE TREATING INTEREST INCO ME AS 'INCOME FROM OTHER SOURCES' BY PLACING RELIANCE ON CASE LAWS WHICH ARE NOT APPLICABLE TO F ACTS OF THE APPELLANT AND HAS FURTHER ERRED IN NOT APPRECIATING THAT SAME ISSUE HAS BEEN CATEGORIC ALLY ANALYZED AND DECIDED IN FAVOUR OF APPELLANT BY ID. CIT (A) IN ITS OWN CASE FOR AY 201 1-12 AND AY 2012-13. 1.3. LD. PR. CIT HAS ERRED IN LAW IN HOLDING THE ORDER PASSED BY ID. AO AS ERRONEOUS AND PREJUDICIAL TO REVENUE BY APPLYING DECISION OF MALA BAR INDUSTRIAL CO. LTD. V. CIT [243 ITR 83] - [SC], WITHOUT PROVIDING ANY BASIS OR JUSTIFICATION THAT THE VIEW TAKEN BY ID. AO IS UNSUSTAINABLE IN LAW AND HAS FURTHER ERRED IN NOT APPRECIATING THAT THE VIEW OF ID. AO IS SUPPORTED BY JUDICIAL DECISIONS AND II) ALLOWED BY CIT (A) IN APPELLANT O WN'S CASE FOR AY 2011-12 AND AY 2012-13. 1.4. LD. PR. CIT ERRED IN LAW IN HOLDING THE ORD ER PASSED BY ID. AO AS ERRONEOUS AND PREJUDICIAL TO REVENUE BY NOT APPRECIATING THE FACT THAT ID. AO HAS PASSED THE ORDER AFTER MAKING DETAILED ENQUIRIES AND ALSO FOLLOWING THE CATEGORIC AL FINDINGS OF HIS SENIOR AUTHORITY I.E., ORDER OF ID. CIT [A) IN AY 2011-12 AND 2012-13 AND THEREFORE , LD. PR. CIT HAS ERRED IN HOLDING THAT ORDER PASSED BY ID. AO IS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF REVENUE. 1.5. LD. PR. CIT HAS ERRED IN HOLDING THAT ORDER PASSED BY ID. AO IS ERRONEOUS AND PREJUDICIAL TO INTEREST OF REVENUE, WITHOUT APPRECIATING THAT A N ORDER BASED ON AN INTERPRETATION OF LAW WHERE TWO DIFFERENT VIEWS ARE POSSIBLE, THE ORDER S HALL NOT BE CONSIDERED AS ERRONEOUS AND PREJUDICE TO THE REVENUE. HENCE, APPEAL. 2. WITHOUT PREJUDICE TO GROUND NO 1, ID. PR. C IT HAS ERRED IN LAW AS WELL AS ON FACTS IN CONSIDERING THE INTEREST INCOME AS 'INCOME FROM OTH ER SOURCES' UNDER SECTION 56 OF THE ACT, WITHOUT APPRECIATING THE SUBMISSIONS OF APPELLANT A ND FAVORABLE CIT (A) ORDER IN APPELLANT OWN CASE FOR AY 2011-12 AND AY 2012-13. HENCE, APPEAL. 2. WE HAVE HEARD RIVAL SUBMISSIONS, PERUSED RELEVAN T MATERIAL ON RECORD INCLUDING JUDICIAL PRONOUNCEMENTS AS CITED BEFORE U S DURING THE COURSE OF HEARING. OUR ADJUDICATION TO THE APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3 ITA NO.2593/MUM/2018 M/S. ASIAN HOMES PRIVATE LIMITED ASSESSMENT YEAR-2013-14 3.1 FACTS ON RECORD WOULD REVEAL THAT ASSESSEE BEIN G RESIDENT CORPORATE ASSESSEE, STATED TO BE ENGAGED AS BUILDERS & DEVELO PER, WAS ASSESSED FOR YEAR UNDER CONSIDERATION U/S. 143(3) ON 26/02/2016 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.1.08 LACS UNDER N ORMAL PROVISIONS AFTER CERTAIN ADDITIONS / ADJUSTMENTS AS AGAINST NIL RETURN FILED BY THE ASSESSEE ON 28/09/2013. THE BUSINESS INCOME WAS DE TERMINED AT RS.25.01 LACS, AGAINST WHICH BROUGHT FORWARD BUSINE SS LOSSES WERE SET-OFF. WHILE COMPUTING BUSINESS INCOME, AN ADDITION OF RS. 2.27 LACS REPRESENTING INTEREST INCOME RECEIVED FROM AN ENTIT Y WAS ADDED SINCE THE SAME WAS NOT CREDITED IN THE PROFIT & LOSS ACCOUNT. THE SAID ADDITION WAS MADE FOLLOWING THE APPELLATE ORDERS FOR AY 2011-12. THE INTEREST ON INCOME TAX REFUND AND EXCESS PROVISIONS WRITTEN BACK AGGRE GATING TO RS.1.08 LACS WERE BROUGHT TO TAX AS INCOME FROM OTHER SOURCES. THE BOOK PROFITS U/S 115JB WAS ACCEPTED TO BE AT RS.23.18 LACS AS OFFERE D BY THE ASSESSEE. THE ASSESSEE HAS BEEN FOUND LIABLE TO PAY TAX ON BOOK PROFIT AS PER THE PROVISIONS OF SEC.115JB SINCE THE TAX ON INCOME UND ER NORMAL PROVISIONS WAS LOWER THAN TAX ON BOOK PROFITS AS COMPUTED U/S 115JB. 3.2 SUBSEQUENTLY, UPON PERUSAL OF CASE RECORDS, LD. PR.CIT FORMED AN OPINION THAT THE QUANTUM ASSESSMENT ORDER WAS ERRON EOUS AND PREJUDICIAL TO REVENUE WHICH REQUIRE EXERCISE OF REVISIONAL JUR ISDICTION U/S 263. ACCORDINGLY, A SHOW-CAUSE NOTICE WAS ISSUED ON 30/1 1/2017, THE CONTENTS OF WHICH HAVE ALREADY BEEN EXTRACTED IN THE IMPUGNE D ORDER IN PARA-1. IT WAS POINTED OUT THAT INTEREST INCOME OF RS.27.13 LA CS AS CREDITED TO PROFIT & LOSS ACCOUNT AS OTHER INCOME WAS ACCEPTED AS BUSINESS INCOME AND 4 ITA NO.2593/MUM/2018 M/S. ASIAN HOMES PRIVATE LIMITED ASSESSMENT YEAR-2013-14 THE ASSESSEE HAS CLAIMED SET-OFF OF BROUGHT FORWARD BUSINESS LOSSES OF EARLIER AY AGAINST THE SAME. IT WAS ALSO STATED THA T INTEREST INCOME WAS EARNED OUT OF IDLE FUNDS BORROWED FOR THE BUSINESS WHICH HAD NEITHER COMMENCED NOR CARRIED OUT DURING THE YEAR UNDER CON SIDERATION AND THEREFORE, THE INTEREST WAS TO BE ASSESSED AS INCOME FROM OTHER SOURCES AND ACCORDINGLY, NOT AVAILABLE FOR SET-OFF AGAINST BROUGHT FORWARD BUSINESS LOSSES. SINCE LD. AO FAILED TO VERIFY THE SAME DURI NG REGULAR ASSESSMENT PROCEEDINGS, THEREFORE THE QUANTUM ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO REVENUE WITHIN THE MEANING OF SEC. 2 63. 3.3 THE ASSESSEE, IN DEFENSE OF QUANTUM ASSESSMENT ORDER, SUBMITTED THAT LD. AO VIDE POINT NO. 10 OF NOTICE U/S 142(1) DATED 14/09/2015 RAISED SPECIFIC QUERY AS TO WHY INTEREST ON LOANS SHOULD N OT BE CONSIDERED AS INCOME FROM OTHER SOURCES . THE QUERY WAS DULY RESPONDED TO BY THE ASSESSEE VIDE LETTER DATED 12/02/2016 WHEREIN THE A SSESSEE SUBMITTED DETAILED EXPLANATION ALONG-WITH SUPPORTING JUDICIAL DECISIONS IN RELATION TO SAID QUERY. AFTER VERIFYING THE SAME, LD. AO PASSED ASSESSMENT ORDER ACCEPTING THE INTEREST INCOME AS BUSINESS INCOME . THEREFORE, SINCE THE MATTER WAS SPECIFICALLY VERIFIED BY LD.AO DURING TH E COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS AND THEREFORE, THE SAID ORDE R COULD NO BE TERMED AS ERRONEOUS OR PREJUDICIAL TO THE REVENUE WHICH WO ULD REQUIRE REVISIONS U/S 263. 3.4 HOWEVER, NOT CONVINCED, LD. PR. CIT CHOSE TO RE LY UPON THE DECISION OF HONBLE SUPREME COURT RENDERED IN MALABAR INDUSTRIAL CO. V/S CIT [243 ITR 83 10/02/2000] AND MADE OBSERVATION THAT TAX TREATMENT OF INTEREST 5 ITA NO.2593/MUM/2018 M/S. ASIAN HOMES PRIVATE LIMITED ASSESSMENT YEAR-2013-14 INCOME WAS ACCEPTED AS BUSINESS INCOME FOLLOWING THE DECISION OF APPELLATE ORDER OF LD. CIT(A) FOR AY 2011-12 DATED 09/10/2015 ON THE WRONG ASSUMPTION / PREMISES THAT THE SAID DECISION WAS ACCEPTED BY THE DEPARTMENT ON MERITS. IN FACT, NO APPEAL WAS FILED BY THE DEPARTMENT AGAINST APPELLATE ORDER FOR AY 2011-12 SINCE THE TA X EFFECT INVOLVED IN THE APPEAL WAS BELOW PRESCRIBED MONETARY LIMIT FOR FILI NG OF APPEALS. THEREFORE, THE QUANTUM ASSESSMENT ORDER WAS ERRONEOUS AS IT WA S PASSED WITHOUT MAKING REQUISITE ENQUIRIES OR VERIFICATIONS WHICH S HOULD HAVE BEEN MADE BEFORE PASSING THE ORDER. THE ORDER WAS TERMED AS P REJUDICIAL TO REVENUE ALSO SINCE IT WOULD INVOLVE LOSS OF REVENUE AND THE ISSUE INVOLVED WOULD HAVE IMPLICATIONS FOR FUTURE YEARS. 3.5 REGARDING ASSESSEES SUBMISSIONS THAT LOANS WER E GRANTED ONLY ON TEMPORARY BASIS PENDING REVIVAL OF MARKET, IT WAS N OTED THAT THE ASSESSEE WAS INCORPORATED WITH AN OBJECT TO ENTER IN REAL ES TATE BUSINESS AND THE INTEREST INCOME WAS ACCEPTED AS BUSINESS INCOME ON THE WRONG PRESUMPTION THAT THE APPELLATE ORDER FOR AY 2011-12 WAS ACCEPTED BY THE DEPARTMENT, LOOSING SIGHT OF THE FACT THAT NO FURTH ER APPEAL WAS FILED DUE TO LOW TAX EFFECT AND IN PRINCIPAL, THE DECISION WAS N OT ACCEPTED BY THE DEPARTMENT. THEREFORE, FINDING THAT LD.AO FAILED TO EXAMINE THE CHARGEABILITY OF INTEREST INCOME, THE EXPLANATION-2 TO SEC. 263 WAS APPLICABLE TO THE FACTUAL MATRIX. CONSEQUENTLY, THE ASSESSMENT ORDER PASSED ON THIS ISSUE WAS SET-ASIDE / CANCELLED AND LD. AO WAS DIRECTED TO PASS FRESH ORDER AFTER PROVIDING REASONABLE OPPORTU NITY OF BEING HEARD TO 6 ITA NO.2593/MUM/2018 M/S. ASIAN HOMES PRIVATE LIMITED ASSESSMENT YEAR-2013-14 THE ASSESSEE. AGGRIEVED BY AFORESAID DIRECTIONS, TH E ASSESSEE IS UNDER FURTHER APPEAL BEFORE US. 4.1 UPON CAREFUL CONSIDERATION, WE FIND THAT THE PR IME ARGUMENT OF LD. AR WOULD REVOLVE AROUND THE FACT THAT SPECIFIC QUERIES WERE RAISED BY LD. AO DURING REGULAR ASSESSMENT PROCEEDINGS VIS--VIS CHA RGEABILITY OF INTEREST INCOME WHICH WAS DULY RESPONDED TO BY THE ASSESSEE ALONG WITH SUFFICIENT DETAILS AND EXPLANATIONS. THE LD. AO, AFTER CONSIDE RING THE SAME, CHOSE TO ACCEPT ASSESSEES CLAIM WITH DUE APPLICATION OF MIN D AND ADOPTED ONE OF THE TWO POSSIBLE VIEWS AND THEREFORE, THE ORDER COU LD NOT BE TERMED AS ERRONEOUS. AU CONTRAIRE, THE PRIME ARGUMENT OF LD. CIT-DR WOULD REVOLVE AROUND THE FACT THAT MERE RAISING OF SPECIFIC QUERI ES AND ASSESSEES REPLY THERETO WOULD NOT BE SUFFICIENT RATHER THERE SHOULD BE PROPER APPLICATION OF MIND ON THE PART OF LD. AO TO THE ISSUE IN HAND BEF ORE IT COULD BE SAID THAT A VIEW WAS TAKEN IN THE MATTER. IF LD. AO FAILED TO A PPLY HIS MIND TO THE SUBJECT MATTER, THE ORDER WOULD CERTAINLY BECOME ER RONEOUS WARRANTING REVISIONAL JURISDICTION U/S 263. 4.2 AFTER GOING THROUGH QUERIES RAISED BY LD. AO DU RING REGULAR ASSESSMENT PROCEEDINGS, WE FIND THAT VIDE NOTICE U/ S 142(1) DATED 14/09/2015, A SPECIFIC QUERY WAS RAISED BY LD. AO R EGARDING CHARGEABILITY OF INTEREST INCOME, IN THE FOLLOWING MANNER: - 10. PLEASE EXPLAIN AS TO WHY INTEREST INCOME EARNED SHOULD NOT BE TAXED UNDER HEAD INCOME FROM OTHER SOURCES AND ALSO THAT WHY EXPEN SES, WHICH WERE NOT INCURRED WHOLLY & EXCLUSIVELY FOR EARNING OF SUCH INTEREST INCOME SHOULD NOT BE DISALLOWED WHILE WORKING OUT YOU TAXABLE INCOME FOR THE YEAR UNDER C ONSIDERATION. 7 ITA NO.2593/MUM/2018 M/S. ASIAN HOMES PRIVATE LIMITED ASSESSMENT YEAR-2013-14 IN RESPONSE, THE ASSESSEE VIDE SUBMISSIONS DATED 12 /02/2016, INTER-ALIA, DREW ATTENTION TO THE FACT THAT BORROWINGS AND GRAN T OF LOANS BY ASSESSEE WERE WELL WITHIN THE PERMITTED OBJECTS AS PER MEMOR ANDUM OF ASSOCIATION OF THE ASSESSEE COMPANY. THE ATTENTION WAS ALSO DRA WN TO ORDER OF LD. CIT(A) FOR AY 2011-12 DATED 09/10/2015 WHEREIN INTE REST INCOME WAS HELD TO BE BUSINESS INCOME BY RELYING UPON VARIOUS JUDICIAL PRONOUNCEMENTS. THE COPY OF THE APPELLATE ORDER FOR AY 2011-12 WAS ALSO ENCLOSED WITH THE SAID REPLY. PROCEEDING FURTHER, THE ASSESSEE JUSTIF IED THE GRANT OF LOAN BY SUBMITTING THAT IN ORDER TO AVOID HUGE FINANCIAL LO SSES, THE IDLE MONEY WAS ADVANCED TO ASSOCIATED ENTITIES. IF THE ASSESSEE WO ULD NOT HAVE GRANTED LOANS THEN ACCUMULATION OF EXPENSES MAY HAVE EVEN L ED TO BANKRUPTCY OR LIQUIDATION OF THE ASSESSEE. THE MONEYS WERE ADVANC ED IN ORDER TO REDUCE FINANCIAL LOSSES AND THEREFORE, THE SAME WAS RIGHTL Y OFFERED AS BUSINESS INCOME . THE LOANS WERE STATED TO BE GRANTED OUT OF FUNDS BORROWED FOR BUSINESS PURPOSES FOR THE REASONS THAT PROJECTS HAD NOT STARTED. 4.3 AFTER DUE CONSIDERATION OF ASSESSEES SUBMISSIO NS, IT IS DIFFICULT TO ACCEPT THE FACT THAT SAID SUBMISSIONS WERE OMITTED TO BE CONSIDERED BY LD. AO WHILE PASSING THE QUANTUM ASSESSMENT ORDER. THIS IS EVIDENCED BY THE FACT THAT INTEREST ON TAX REFUND OFFERED AS BUSINESS INCOME BY THE ASSESSEE WAS SPECIFICALLY BROUGHT TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. SPECIFIC QUERIES WERE RAISED BY LD.AO AS TO TAXABIL ITY OF INTEREST INCOME UNDER APPROPRIATE HEADS WHICH WERE DULY RESPONDED T O BY THE ASSESSEE WITH REQUISITE DETAILS AND EXPLANATIONS. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THERE WAS DUE APPLICATION OF MIND TO T HE ISSUE BY LD. AO AND 8 ITA NO.2593/MUM/2018 M/S. ASIAN HOMES PRIVATE LIMITED ASSESSMENT YEAR-2013-14 THE CLAIM WAS ACCEPTED AFTER DUE CONSIDERATION OF F ACTUAL MATRIX RATHER THAN BY MERELY RELYING UPON THE APPELLATE ORDER FOR AY 2 011-12. THEREFORE, THE ALLEGATIONS OF LD. PR.CIT THAT THE INTEREST WAS ASS ESSED AS BUSINESS INCOME OVERLOOKING THE FACT THAT THE APPELLATE ORDER FOR A Y 2011-12 WAS NOT CONTESTED BY THE REVENUE DUE TO LOW TAX EFFECT, COU LD NOT BE ACCEPTED. 4.4 WE FIND THAT AS PER THE PROVISIONS OF SECTION 2 63 OF INCOME TAX ACT, 1961, SPECIFIED REVENUE AUTHORITIES MAY CALL FOR AN D EXAMINE THE RECORD OF ANY PROCEEDINGS UNDER THE ACT AND MAY PROCEED TO RE VISE THE SAME PROVIDED TWO CONDITIONS ARE SATISFIED-(I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS P REJUDICIAL TO THE INTEREST OF THE REVENUE. IF ONE OF THE CONDITION IS ABSENT I.E. IF THE ORDER OF THE INCOME- TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IT IS PREJUDICIAL TO THE REVENUE - RE COURSE CANNOT BE HAD TO SECTION 263 OF THE ACT AS HELD BY HONBLE SUPREME C OURT IN MALABAR INDUSTRIAL CO. LTD. V/S CIT [243 ITR 83 10/02/2000] & NOTED BY HONBLE DELHI HIGH COURT IN CIT V/S VIKAS POLYMERS [194 TAXMAN 57 16/08/2010]. THE HONBLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD. V/S CIT (SUPRA) HAS HELD THAT THE PHRASE 'PREJUDICIAL TO THE INTERE STS OF THE REVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORD ER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSE QUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDIC IAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE, WHEN AN INCOME-TAX OFFICER AD OPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN L OSS OF REVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER H AS TAKEN ONE VIEW WITH 9 ITA NO.2593/MUM/2018 M/S. ASIAN HOMES PRIVATE LIMITED ASSESSMENT YEAR-2013-14 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 BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. THE SAID PRINCIPAL HAS BEEN REITERATED BY HONBLE COURT IN ITS SUBSEQU ENT JUDGEMENT TITLED AS CIT V/S MAX INDIA LTD. (295 ITR 282). SIMILAR PRINCIPAL HAS BEEN FOLLOWED BY JURISDICTIONAL HIGH COURT IN GRASIM INDUSTRIES LTD. V/S CIT (321 ITR 92). 4.5 THE HONBLE DELHI HIGH COURT IN, CIT V/S VIKAS POLYMERS (SUPRA), FURTHER OBSERVED THAT AS REGARDS THE SCOPE AND AMBI T OF THE EXPRESSION 'ERRONEOUS', HONBLE BOMBAY HIGH COURT IN CIT VS. GABRIEL INDIA LTD. [1993 203 ITR 108 (BOMBAY)] , HELD WITH REFERENCE TO BLACK'S LAW DICTIONARY THAT AN 'ERRONEOUS JUDGMENT' MEANS 'ONE RENDERED ACCORDING TO COURSE AND PRACTICE OF COURT, BUT CONTRARY TO LAW, UPON MISTAKEN VIEW OF LAW; OR UPON ERRONEOUS APPLICATION OF LEGAL PRINCIP LES' AND THUS IT IS CLEAR THAT AN ORDER CANNOT BE TERMED AS 'ERRONEOUS' UNLES S IT IS NOT IN ACCORDANCE WITH LAW. IF AN INCOME-TAX OFFICER ACTIN G IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRAN DED AS 'ERRONEOUS' BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HI M, THE ORDER SHOULD HAVE BEEN WRITTEN DIFFERENTLY OR MORE ELABORATELY. THE SECTION DOES NOT VISUALIZE THE SUBSTITUTION OF THE JUDGMENT OF THE C OMMISSIONER FOR THAT OF THE INCOME-TAX OFFICER, WHO PASSED THE ORDER UNLESS THE DECISION IS NOT IN ACCORDANCE WITH LAW. IT WAS FURTHER OBSERVED THAT T HERE IS A FINE THOUGH SUBTLE DISTINCTION BETWEEN 'LACK OF INQUIRY' AND 'I NADEQUATE INQUIRY'. IT IS ONLY IN CASES OF 'LACK OF INQUIRY' THAT THE COMMISS IONER IS EMPOWERED TO 10 ITA NO.2593/MUM/2018 M/S. ASIAN HOMES PRIVATE LIMITED ASSESSMENT YEAR-2013-14 EXERCISE HIS REVISIONAL POWERS BY CALLING FOR AND E XAMINING THE RECORDS OF ANY PROCEEDINGS UNDER THE ACT AND PASSING ORDERS TH EREON. IN GABRIEL INDIA LTD. (SUPRA), IT WAS EXPRESSLY OBSERVED: - 'THE COMMISSIONER CANNOT INITIATE PROCEEDINGS WITH A VIEW TO STARTING FISHING AND ROVING ENQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CO NCLUDED. 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 REACTI VATED 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 [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 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 THE COMMISSIONER SIMPLY BECAUSE, ACCOR DING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SECTION DO ES NOT VISUALIZE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FO R 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 ASSESS MENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOU NTS OR BY MAKING SOME ESTIMATE HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORD S, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE L OWER 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 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-JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT CONCLUSIO N AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIO NER DOES NOT FEEL SATISFIED WITH THE CONCLUSION. X X X X THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD T O 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 INTERPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED. 4.6 THE HONBLE SUPREME COURT IN CIT V/S AMITABH BACHCHAN (69 TAXMANN.COM 170 11/05/2016) HELD THAT SO LONG AS THE VIEW TAKEN BY THE 11 ITA NO.2593/MUM/2018 M/S. ASIAN HOMES PRIVATE LIMITED ASSESSMENT YEAR-2013-14 ASSESSING OFFICER IS A POSSIBLE VIEW, THE SAME OUGH T NOT TO BE INTERFERED WITH BY THE COMMISSIONER UNDER SECTION 263 MERELY O N THE GROUND THAT THERE IS ANOTHER POSSIBLE VIEW OF THE MATTER. PERMI TTING EXERCISE OF REVISIONAL POWER IN A SITUATION WHERE TWO VIEWS ARE POSSIBLE WOULD REALLY AMOUNT TO CONFERRING SOME KIND OF AN APPELLATE POWE R IN THE REVISIONAL AUTHORITY. THIS IS A COURSE OF ACTION THAT MUST BE DESISTED FROM. 4.7 THE HONBLE BOMBAY HIGH COURT IN MOIL LTD. VS. CIT [81 TAXMANN.COM 420] OBSERVED THAT IF A QUERY IS RAISED DURING THE ASSESSMENT PROCEEDINGS WHICH WAS RESPONDED TO BY TH E ASSESSEE, THE MERE FACT THAT THE QUERY WAS NOT DEALT WITH IN THE ASSESSMENT ORDER THEN IT WOULD NOT LEAD TO A CONCLUSION THAT NO MIND HAS BEE N APPLIED TO IT AND THE ASSESSING OFFICER IS NOT EXPECTED TO RAISE MORE QUE RIES, IF HE WAS SATISFIED ABOUT THE ADMISSIBILITY OF CLAIM ON THE BASIS OF TH E MATERIAL AND THE DETAILS SUPPLIED. 4.8 AN EXPLANATION-2 HAS BEEN INSERTED BY FINANCE A CT 2015 IN SECTION 263 WITH EFFECT FROM 01/06/2015 TO DECLARE THAT OR DER SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, IF IN THE OPINION OF APPROPRIATE AUTHORITY-(1) THE ORDER WAS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATIONS WHICH SHOULD HAVE BEEN MADE; (II) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQUIRI NG INTO THE CLAIM; (III) THE ORDER IS NOT IN ACCORDANCE WITH ANY DIRECTION OR IN STRUCTIONS ETC. ISSUED BY THE BOARD U/S 119; OR (IV) THE ORDER WAS NOT IN ACC ORDANCE WITH BINDING JUDICIAL PRECEDENT. HOWEVER, THE SAID EXPLANATION W OULD COME INTO PLAY ONLY 12 ITA NO.2593/MUM/2018 M/S. ASIAN HOMES PRIVATE LIMITED ASSESSMENT YEAR-2013-14 IF THE PRIMARY CONDITIONS I.E. ORDER BEING ERRONEOU S AND PREJUDICIAL TO INTEREST OF REVENUE, WERE FULFILLED. 4.9 APPLYING THE ABOVE PRINCIPLES TO THE CASE IN HA ND, WE FIND THAT A VIEW WAS ALREADY TAKEN BY LD. AO IN THE ISSUES WHICH FRO M SUBJECT MATTER OF REVISION U/S 263 AND THE SAID VIEW COULD NOT BE HEL D TO BE ILLEGAL OR UNSUSTAINABLE IN LAW, IN ANY MANNER AND THEREFORE, THE EXERCISE OF JURISDICTION U/S 263 WOULD BE INVALID IN SUCH A CAS E. IF LD. AO ADOPTED ONE OF THE POSSIBLE VIEWS, THE LD. PR.CIT, IN OUR CONSI DERED OPINION, WOULD BE OUSTED TO EXERCISE JURISDICTION U/S 263. THEREFORE, BY QUASHING THE IMPUGNED ORDER, WE ALLOW ASSESSEES APPEAL. 5. THE APPEAL STANDS ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 03 RD JANUARY, 2020. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 03/01/2020 SR.PS:-JAISY VARGHESE / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 13 ITA NO.2593/MUM/2018 M/S. ASIAN HOMES PRIVATE LIMITED ASSESSMENT YEAR-2013-14 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , -% . , . , / DR, ITAT, MUMBAI 6. - /01 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.