Shri Balaji Industries Complex, Badaun V. CIT, Moradabad

ITA 2775/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0246 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 08-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEETA SINGH
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Difference of opinion; Change of opinion; Revenue expenditure; Capital expenditure
• Section: 143(3); 50C; 147; 263; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.2775/DEL/2015 ASSESSMENT YEAR: 2009-10 BALAJI INDUSTRIES COMPLEX, ISMAILPUR, BADAUN. (PAN: ABEFS3007Q) VS CIT, MORADABAD-244001 APPELLANT RESPONDENT ASSESSEE BY: MR. ABHINAV M EHROTRA, ADV. DEPARTMENT BY: SMT. MEETA SING H C.I.T. DR DATE OF HEARING: 19.06 .2018 DATE OF PRONOUNCEMENT: 17.09.2018 O R D E R PER SUDHANSHU SRIVASTAVA, JM THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER DATED 26.02.2015 PASSED BY THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX, MORADABAD PERTAINING TO ASSESSMENT YEAR 2010-11 WHEREIN VIDE THE IMPUGNED O RDER PASSED U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINA FTER CALLED 'THE ACT'), THE LD. PR. COMMISSIONER OF INCOME TAX HAS CANCELLED AND SET ASIDE THE ASSESSMENT ORDER DATED 17.02.2014 AND HAS DIRECTED THE ASSESSING OFFICER TO FRAME THE ASSESSM ENT DE NOVO. ITA NO. 2775/DEL/2015 ASSESSMENT YEAR 2009-10 2 2.0 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT FOR THE YEAR WAS COMPLETED U/S 143(3) R/W 147 WHEREIN THE SHORT TERM CAPITAL GAIN WAS COMPUTED AT RS. 22,86,227/-. THE ASSESSE E HAD SOLD AN ENTIRE COLD STORAGE PLANT CONSISTING OF LAND, BU ILDING AND PLANT AND MACHINERY FOR A SUM OF RS. 99,30,000/-. THE AS SESSING OFFICER, WHILE MAKING THE ASSESSMENT, CALCULATED TH E SHORT TERM CAPITAL GAIN BY CALCULATING THE DIFFERENCE BETWEEN SALE PRICE OF COMPOSITE PROPERTY AND THE VALUE SHOWN BY THE ASSES SEE IN ITS BALANCE SHEET AS ON 31.03.2009. SUBSEQUENT TO THE ASSESSMENT ORDER, THE REVISIONARY JURISDICTION WAS INVOKED BY THE LD. COMMISSIONER OF INCOME TAX U/S 263 OF THE ACT ON TH E GROUND THAT THE ASSESSING OFFICER HAD IGNORED THAT OUT OF THE THREE ITEMS I.E. LAND, BUILDING AND PLANT AND MACHINERY, CAPITA L GAIN ON LAND COULD EITHER BE SHORT TERM OR LONG TERM, DEPENDING ON THE PERIOD OF HOLDING, AS IT WAS NOT A DEPRECIABLE ASSET, WHER EAS BUILDING AND PLANT AND MACHINERY BEING DEPRECIABLE ITEMS HAD TO BE TAXED UNDER SHORT TERM CAPITAL GAINS. THE LD. PR. C.I. T. WAS ALSO OF THE VIEW THAT THE STAMP DUTY VALUE OF THE PROPERTY WAS TO BE DEEMED AS FULL VALUE OF THE CONSIDERATION FOR THE PURPOSE OF SECTION 48 R/W SECTION 50C OF THE ACT. THE LD. PR. C.I.T. DIR ECTED THE ASSESSING OFFICER TO EXAMINE THE ISSUE AFRESH AND F RAME THE ITA NO. 2775/DEL/2015 ASSESSMENT YEAR 2009-10 3 ASSESSMENT ORDER DE NOVO. THE OBSERVATIONS OF THE LD. PR. CIT, WHILE CANCELLING THE ASSESSMENT ORDER, WERE AS UNDE R:- (A) THE SALE DEED OF THE PROPERTY SHOWS THAT THE TOTAL AREA OF THE LAND IS 4922 SQ. MTR. AND AS PER THE SA LE DEED THE CIRCLE RATE OF THE VACANT LAND IS RS. 500/SQ. MTR. ACCORDING TO THIS CALCULATION, THE STAMP DUTY VALUATION OF VACAN T LAND OF 4922 SQ METER COMES TO RS. 24,61,000/-.THE AO IS DI RECTED TO GATHER DATE AND PURCHASE OF LAND AND WILL CALCULATE LONG TERM CAPITAL GAIN OR SHORT TERM CAPITAL GAIN ON THE BASIS OF PERIOD OF HOLDING TAKING THE VALUE OF FULL CONSIDER ATION OF THE LAND AT RS. 24,61,000/-. (B) THE SALE VALUE OF PLANT & MACHINERY HAS NOT BEEN GIVEN AS THE ENTIRE COMPOSITE SALE IS APPEARING IN THE DOCUMENTS PROVIDED BY THE ASSESSEE. AS PER THE SALE DEED THE VALUATION OF PLANTING MACHINERY HAS BEEN SHOWN AT RS. 24,96,000/-. THE AO IS DIRECTED TO CALCULATE THE SH ORT TERM CAPITAL GAIN AFTER TAKING SALE PRICE OF PLANT & MAC HINERY AT RS. 24,96,000/-. (C) . THE SALE DEED OF THE PROPERTY SHOWS STAMP DUTY VALUATION OF THE ENTIRE PROPERTY AT RS. 2,89,93,000 /- AND AS THE STAMP DUTY VALUE OF LAND IS RS. 24,61,000/- AND THE VALUATION OF PLANTING &MACHINERY IS AT RS. 24,96,00 0/-, THE REMAINING IS BEING CONSIDERED AS STAMP DUTY VALUE O F BUILDING AND IT COMES TO RS. 2,40,39,000/-. THE AO IS DIRECTED TO CALCULATE SHORT TERM CAPITAL GAIN AFTER TAKING THE VALUE OF FULL CONSIDERATION OF THE BUILDING U/S 50C OF IT ACT AT RS. 2,40,39,000/-. 2.1 AGGRIEVED BY THE ORDER OF THE LD. PR. COMMISSIO NER OF INCOME TAX), THE ASSESSEE HAS NOW APPROACHED THE IT AT CHALLENGING THE REVISIONARY PROCEEDINGS AND HAS RAI SED THE FOLLOWING GROUNDS OF APPEAL:- ITA NO. 2775/DEL/2015 ASSESSMENT YEAR 2009-10 4 1. BECAUSE THE IMPUGNED ORDER PASSED BY LD. PRINC IPAL COMMISSIONER OF INCOME TAX, MORADABAD, U/S 263, IS WITHOUT JURISDICTION AS THE SAME DO NOT ADDRESS ON THE REQUIREMENTS OF LAW, DEMONSTRATING AS TO HOW THE OR DER OF ASSESSMENT IS ERRONEOUS AS WELL AS PREJUDICIAL TO T HE INTEREST OF REVENUE AND THAT THE TWIN CONDITIONS U/ S 263, STAND CUMULATIVELY SATISFIED IN THE CASE OF THE ASS ESSEE, WHENCE THE MATTER OF SALE OF ASSETS WAS UNDER DETAI LED DISCUSSION BY THE ASSESSING OFFICER. 2. BECAUSE, THE NOTICE U/S 263, ISSUED BY LD. PRIN CIPAL COMMISSIONER OF INCOME TAX, MORADABAD, IS BASED ON THE RECOMMENDATION/PROPOSAL OF THE ASSESSING OFFICER, A ND HENCE THE SAME HAS BEEN ISSUED WITHOUT EXAMINING TH E CASE RECORDS AND FURTHER THERE IS NO INDEPENDENT APPLICATION OF MIND BY THE CIT BEFORE ISSUANCE OF S UCH NOTICE AND AS SUCH THE ACTION OF THE CIT BECOMES VO ID. 3. BECAUSE, WITHOUT PREJUDICE, THE LEARNED PR. CIT MORADABAD, FURTHER FAILED TO APPRECIATE THAT THE SA LE OF CONSOLIDATED ASSETS IN QUESTION, HAVE BEEN INCURRED AS SLUMP SALE ATTRIBUTABLE TO DISTRESS CONDITIONS AN D DETERMINATION OF CAPITAL GAIN/LOSS, THEREOF IS REQU IRED TO BE MADE CONSEQUENT TO PROVISIONS OF SECTION 50B AND NOT AS PER SECTION 50C. HENCE THE DIRECTION TO THE AO BY THE CIT IS ABSOLUTELY ILLEGAL, BAD IN LAW AND DESER VES TO BE QUASHED. 4. BECAUSE THE LEARNED PR. CIT MORADABAD, FURTHER FAILED TO APPRECIATE THAT THE ASSESSING OFFICER HAS DULY EXAMINED THE TRANSACTION AND HAS CHOSEN TO TREAT TH E SAME AS SLUMP SALE, HENCE THE SUBSTITUTION OF HIS OPINION BY THE CIT IS IMPERMISSIBLE IN LAW BEING A PURE CHANGE OF OPINION. 5. BECAUSE WITHOUT PREJUDICE THE LEARNED PR.CIT MORADABAD, FURTHER FAILED TO APPRECIATE THAT THE AS SET IN QUESTION IS AN AGRICULTURAL LAND WHICH IS OUTSIDE T HE DEFINITION OF CAPITAL ASSETS AND HENCE CHARGEABILIT Y OF CAPITAL GAINS DO NOT ARISE, PER-SE. FURTHER, THE LD . CIT ITA NO. 2775/DEL/2015 ASSESSMENT YEAR 2009-10 5 FAILED TO ASSIGN INCORRECT VALUATIONS OF LAND/BUILDING/PLANT AND MACHINERY BY MIS-READING TH E COVENANTS OF THE INSTRUMENT OF SALE. 6. BECAUSE WITHOUT PREJUDICE, THE LEARN ED PR.CIT MORADABAD, GROSSLY ERRED IN LAW, WHILE DIRECTI NG THE ASSESSING OFFICER TO COMPUTE THE CAPITAL GAINS AS PER SECTION 50C, WITHOUT HAVING A REFERENCE THEREOF BEI NG MADE TO THE DVO WITHOUT GIVING PROPER OPPORTUNITY O F HEARING TO THE ASSESSEE AND WITHOUT CONSIDERING THE REPORT OF THE REGISTERED VALUER/SDM OR THE FACT THA T ASSET IN QUESTION WAS SOLD BY UPFC FOR RS. 9.75L SOME TIM E BACK. 6.1 BECAUSE WITHOUT PREJUDICE THE LEARNED PR. CIT MORADABAD, GROSSLY ERRED IN LAW, WHILE DIRECTING TH E ASSESSING OFFICER TO COMPUTE THE CAPITAL GAINS ON S ALE OF BUILDING AS PER PROVISIONS OF SECTION 50C, WHEN THE SAME CONSTITUTES DEPRICIABLE ASSETS AND FORMS PART OF BLOCK OF ASSETS, HENCE PROVISION OF SECTION 50C HAS NO APPLICATION, THERETO. 6.2 BECAUSE WITHOUT PREJUDICE THE LEARNED PR. CIT MORADABAD, GROSSLY ERRED IN LAW IN DIRECTING THE AO TO CALCULATE CAPITAL GAINS IN RELATION TO SALE OF BUIL DING ON A STAND-ALONE BASIS, WHEREAS IT IS IMPERMISSIBLE UNDE R LAW TO, EXCLUSIVELY VALUE, BUILDING FOR THE PURPOSE OF SECTION 50C. 7. BECAUSE ON THE FACTS AND IN CIRCUMSTANCES OF TH E CASE THE LEARNED PRINCIPAL CIT, MORADABAD, FAILED TO TAK E COGNIZANCE OF THE CARDINAL ERROR OF JURISDICTION CO MMITTED BY THE AO WHILE FRAMING THE ASSESSMENT, TO THE EXTE NT THAT NO ADDITIONS HAVE BEEN MADE BY THE ASSESSING OFFICER THAT ARE REFERABLE TO THE REASONS RECORDED FOR REOPENING THE ASSESSMENT, HENCE THE ENTIRE ORDER IS LIABLE TO BE QUASHED IN VIEW OF DECISION IN THE CASE OF M/ S JET AIRWAYS - MUMBAI HC, M/S RANBAXY - DEL HC. 8. BECAUSE ON THE FACTS AND IN CIRCUMSTANCES OF TH E CASE THE LEARNED CIT DID NOT PROVIDE SUFFICIENT AND REAS ONABLE ITA NO. 2775/DEL/2015 ASSESSMENT YEAR 2009-10 6 OPPORTUNITY TO THE ASSESSEE TO PLEAD HIS CASE PROPE RLY AND THAT NO NOTICE OF HEARING WAS RECEIVED BY THE ASSESSEE, FROM THE OFFICE OF THE CIT, FIXING THE DA TE OF HEARING. 9 . BECAUSE THE ORDER PASSED IS BAD IN LAW AND DESERVES TO BE QUASHED. 3.0 THE LD. AR SUBMITTED THAT THE IMPUGNED PROPERTY WAS PURCHASED FROM UTTAR PRADESH FINANCE CORPORATION (U PFC) IN THE YEAR 2004 FOR A TOTAL CONSIDERATION OF RS. 9,75 ,000/- VIDE SALE DEED DATED 28.09.2004, A COPY OF WHICH WAS PLA CED AT PAGES 29 TO 347 OF THE PAPER BOOK FILED BY THE ASSESSEE. THE LD. AR ALSO DREW OUR ATTENTION TO PAGE NO. 46 OF THE PAPER BOOK WHICH CONTAINED DESCRIPTION/SCHEDULE OF THE PROPERTY WHIC H WAS PURCHASED. THE LD. AR ALSO DREW OUR ATTENTION TO T HE ORIGINAL ASSESSMENT ORDER DATED 17.02.2014 AND SUBMITTED THA T THE ISSUE OF CAPITAL GAINS WAS DULY CONSIDERED BY THE A SSESSING OFFICER AT THE TIME OF THE ORIGINAL ASSESSMENT PROC EEDINGS AND, THEREAFTER, THE SHORT TERM CAPITAL GAIN WAS COMPUTE D AT RS. 22,86,227/- AND IT WAS SUBMITTED THAT, THEREFORE, I T IS NOT THE CASE OF THE DEPARTMENT THAT THE ASSESSING OFFICER H AD NOT CONDUCTED ANY INQUIRY ON THE ISSUE. THE LD. AR FUR THER DREW OUR ATTENTION TO THE FACT THAT FINDING NO RELIEF AT THE LEVEL OF THE ITA NO. 2775/DEL/2015 ASSESSMENT YEAR 2009-10 7 LD. CIT (A) AGAINST THE ADDITION MADE ON ACCOUNT OF CAPITAL GAINS IN THE ORIGINAL ASSESSMENT, THE ASSESSEE HAD APPROA CHED THE ITAT AND THE ITAT DELHI BENCH, VIDE ORDER DATED 9.4 .2018 IN ITA NO. 3551/DEL/2015, HAD RESTORED THE ISSUE TO THE F ILE OF THE LD. C.I.T. (A) WITH A DIRECTION TO DECIDE THE APPEAL ON MERITS AS THE LD. C.I.T. (A) HAD PASSED THE ORDER EX PARTE QUA THE ASSESSEE. THE LD. AR FURTHER SUBMITTED THAT IN THE CASE OF TH E ASSESSEE THIS WAS A CASE OF COMPOSITE SALE WHICH WOULD ATTRA CT THE PROVISIONS OF SECTION 50B OF THE ACT AND NOT SECTIO N 50C OF THE ACT AND, THEREFORE, THE LD. PR. C.I.T. WAS PATENTLY WRONG IN DIRECTING THE ASSESSING OFFICER TO RE-COMPUTE THE V ALUE OF CAPITAL GAINS IN TERMS OF SECTION 50C OF THE ACT. THE LD. AR FURTHER SUBMITTED THAT WHETHER THE PROVISIONS OF SECTION 50 C WERE APPLICABLE IN THE CASE OF THE ASSESSEE OR NOT WAS A DEBATABLE ISSUE AND, THEREFORE, THE LD. PR. C.I.T. HAD NO POW ER TO ASSUME JURISDICTION U/S 263 AS THE ASSESSING OFFICER HAD T AKEN RECOURSE TO ONE OF THE POSSIBLE COURSES BEFORE HIM. THE LD . AR ALSO SUBMITTED THAT SECTION 50B WAS INTRODUCED BY FINANC E ACT, 1999 TO FACILITATE THE COMPUTATION OF CAPITAL GAIN IN TH E CASE OF TRANSFER OF UNDERTAKING AS A WHOLE AND THE SAME WAS DEFINED IN SECTION 2(42C) OF THE ACT AS SLUMP SALE WHICH WOULD MAKE ITA NO. 2775/DEL/2015 ASSESSMENT YEAR 2009-10 8 TRANSFER OF ONE OR MORE UNDERTAKINGS AS A RESULT OF THE SALE FOR A LUMP SUM CONSIDERATION WITHOUT VALUES BEING ASSIGNE D TO THE INDIVIDUAL ASSETS AND LIABILITIES IN SUCH SALES AS A SLUMP SALE. IT WAS SUBMITTED THAT SINCE THE ASSESSEE HAD SOLD THE ENTIRE BUSINESS AT ONE GO, IT WAS THE CASE OF SLUMP SALE A ND, ACCORDINGLY, THE PROVISIONS OF SECTION 50B WOULD AP PLY AND NOT THE PROVISIONS OF SECTION 50C. LD. AR ALSO PLACED RELIANCE ON A PLETHORA OF JUDICIAL PRECEDENTS TO SUPPORT HIS CONT ENTION THAT THE ORDER PASSED U/S 263 DESERVES TO BE QUASHED. 4. IN RESPONSE, THE LD. C.I.T. DR SUPPORTED THE FIN DINGS AND OBSERVATIONS OF THE LD. PR. C.I.T. AS MADE IN THE I MPUGNED ORDER AND SUBMITTED THAT IN VIEW OF EXPLANATION 2 TO SECT ION 263 WHICH HAS BEEN INSERTED W.E.F. 1.6.2015, THE LD. PR . C.I.T. WAS WELL WITHIN HIS POWER TO HAVE INVOKED JURISDICTION U/S 263 OF THE ACT. LD. C.I.T. DR ALSO SUBMITTED THAT THE DEPARTME NT DOES NOT ACCEPT THE CONTENTION OF THE ASSESSEE THAT IT WAS A CASE OF SLUMP SALE AS THE SAME WAS NOT EVIDENCED FROM RECORDS. T HE LD. CIT DR VEHEMENTLY ARGUED THAT THE PROVISIONS OF SECTION 263 HAVE BEEN RIGHTLY INVOKED BY THE LD. PR. C.I.T. AND IT W AS SUBMITTED THAT THE IMPUGNED ORDER SHOULD BE UPHELD. ITA NO. 2775/DEL/2015 ASSESSMENT YEAR 2009-10 9 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE AL SO PERUSED THE MATERIAL ON RECORD. THE LD. CIT DR HAS SUBMITTED THAT EXPLANATION 2 TO SECTION 263 WILL BE APPLICABL E IN THE CASE OF THE ASSESSEE. HOWEVER, WE NOTE THAT THIS EXPLANA TION HAS BEEN INSERTED IN SECTION 263 W.E.F. 1.6.2015 ONLY WHEREA S THE IMPUGNED ORDER HAS BEEN PASSED ON 26.02.2015. IT I S UNDISPUTED THAT THIS AMENDMENT IS NOT RETROSPECTIVE BUT PROSPECTIVE AND, THEREFORE, WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE LD. CIT DR ON THE ISSUE THAT THE ASSESSEES CASE WILL BE COVERED BY EXPLANATION 2 TO SECTION 26 3. 5.1 FURTHER, A PERUSAL OF THE ORIGINAL ASSESSMENT O RDER SHOWS THAT THE ISSUE OF CAPITAL GAINS WAS DULY CONSIDERED BY THE ASSESSING OFFICER AND HE PROCEEDED TO COMPUTE THE S HORT TERM CAPITAL GAIN AT RS. 22,86,227/- WHEREAS IT WAS THE ASSESSEES CLAIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS T HAT NO CAPITAL GAINS HAD BEEN EARNED. THUS, IT IS NOT THE CASE OF THE DEPARTMENT THAT NO INFORMATION REGARDING THE IMPUGN ED TRANSACTION WAS CALLED FOR BY THE ASSESSING OFFICER OR THAT THE TRANSACTION WAS NOT ENQUIRED INTO BY THE ASSESSING OFFICER. IT IS VERY MUCH EVIDENT THAT RELEVANT DETAILS IN THIS REG ARD WERE SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSE SSMENT ITA NO. 2775/DEL/2015 ASSESSMENT YEAR 2009-10 10 PROCEEDINGS AND THE SAME FORM PART OF THE RECORD. THEREFORE, NO INFERENCE CAN BE DRAWN THAT THE ASSESSING OFFICER H AS NOT EXAMINED THE ISSUE ALTHOUGH HE MAY NOT HAVE EXPRESS ED IT IN AS MANY TERMS AS MAY BE CONSIDERED APPROPRIATE BY HIS SUPERIOR AUTHORITY AND EVEN IF THE INQUIRY WAS INADEQUATE, T HE SAME CANNOT BE A GROUND FOR REVISION. IT IS SETTLED LAW THAT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN A CCORDANCE WITH LAW. SECTION 263 DOES NOT VISUALISE THE SUBST ITUTION OF JUDGMENT OF THE LD. C.I.T. FOR THAT OF THE ASSESSIN G OFFICER. 5.2 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 COMMISSION ER TO CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDINGS UNDER THE ACT. A BARE READING OF SECTION 263 ALSO MAKES IT CLEAR THA T THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS , NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REV ISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERE ST OF THE REVENUE. IF ONE OF THEM IS ABSENT - IF THE ORDER OF THE ASSE SSING OFFICER IS ITA NO. 2775/DEL/2015 ASSESSMENT YEAR 2009-10 11 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(1) OF THE ACT [SEE MALABAR IN DUSTRIAL CO. LTD. VS. CIT, ( 2000) 243 ITR 83 (SC)]. 5.3 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 REVISIONARY POWERS BY CALLING FOR AND EXAMINING THE 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 MA TTERS OR ORDERS WHICH ARE ALREADY CONCLUDED. SUCH ACTION WILL BE AGAINST THE WELL-ACCEPTED POLICY OF LAW THAT THE RE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDING S, 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-JUDICI AL CONTROVERSIES AS IT MUST IN OTHER 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 ITA NO. 2775/DEL/2015 ASSESSMENT YEAR 2009-10 12 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 DECISION I S 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 ACCOU NTS OR BY MAKING SOME ESTIMATE HIMSELF. THE COMMISSIONE R, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION TH AT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOULD HA VE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN THE ON E 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 HIGH ER FIGURE. IT IS BECAUSE THE INCOME-TAX OFFICER HAS EX ERCISED THE QUASI-JUDICIAL POWER VESTED IN HIM IN ACCORDANC E WITH LAW AND ARRIVED AT CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WI TH 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 B EEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATIO N A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED. 5.4 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 REVISIONARY 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 ITA NO. 2775/DEL/2015 ASSESSMENT YEAR 2009-10 13 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 COMMISSIONER NOT TO EXERCISE HIS SUO MOTO REVISIONARY POWERS UNLESS SUPPORTED BY ADEQUATE REASONS FOR DOING SO. 5.5 THE HONBLE MADRAS HIGH COURT HELD IN THE CASE OF CIT V VALLIAMMAL (D.) (1998) 230 ITR 695 (MAD) THAT ASSES SMENT ORDER MADE AFTER CONSIDERING ALL FACT AND INFORMATION CAN NOT BE REVISED. WHERE THE ASSESSEE HAD FURNISHED THE REQUISITE INFO RMATION AND THE ASSESSING OFFICER HAD COMPLETED THE ASSESSMENT AFTER CONSIDERING AND THE FACTS BUT THE COMMISSIONER REVI SED THE ASSESSMENT ORDER ON THE GROUND THAT THE ASSESSING O FFICER HAD NOT MADE PROPER ENQUIRIES, THE TRIBUNAL WAS HELD JU STIFIED IN REVERSING THE ORDER OF THE COMMISSIONER AND RESTORI NG THAT OF THE ITA NO. 2775/DEL/2015 ASSESSMENT YEAR 2009-10 14 ASSESSING OFFICER. COMMISSIONER CANNOT RE-EXAMINE A CCOUNTS AND SUBSTITUTE HIS JUDGMENT FOR THAT OF THE ASSESSING O FFICER. AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN A CCORDANCE WITH LAW. IF ASSESSING OFFICER MAKES ASSESSMENT IN ACCOR DANCE WITH LAW, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING 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 FOR THAT OF THE ASSESSING OFFICER UNLE SS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALIZED WH ERE THE ASSESSING OFFICER EXAMINES THE ACCOUNTS, MAKES ENQU IRES, 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 VS. JCIT (ASST) (2006) 286 ITR (AT) ITA NO. 2775/DEL/2015 ASSESSMENT YEAR 2009-10 15 211, 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 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. 5.6 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 CONSID ERATION 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 , ITA NO. 2775/DEL/2015 ASSESSMENT YEAR 2009-10 16 THE ASSESSING OFFICER DID NOT CONSIDER THIS ASPECT SPECIFICALLY WHETHER THE EXPENDITURE IN QUESTION WA S REVENUE OR CAPITAL EXPENDITURE. THIS ARGUMENT PRED ICATES ON THE ASSESSMENT ORDER, WHICH APPARENTLY DOES NOT GIVE ANY REASONS WHILE ALLOWING THE ENTIRE EXPENDITURE A S REVENUE EXPENDITURE. HOWEVER, THAT BY ITSELF WOULD NOT BE INDICATIVE OF THE FACT THAT THE ASSESSING OFFICER H AD NOT APPLIED HIS MIND ON THE ISSUE. THERE ARE JUDGMENTS GALORE LAYING DOWN THE PRINCIPLE THAT THE ASSESSING OFFICE R IN THE ASSESSMENT ORDER IS NOT REQUIRED TO GIVE DETAILED R EASON IN RESPECT OF EACH AND EVERY ITEM OF DEDUCTION, ETC . THEREFORE, ONE HAS TO SEE FROM THE RECORD AS TO WHE THER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE EXPENDITURE IN QUESTION AS REVENUE EXPENDITURE. LEA RNED COUNSEL FOR THE ASSESSEE IS RIGHT IN HIS SUBMISSION THAT ONE HAS TO KEEP IN MIND THE DISTINCTION BETWEEN LA CK OF INQUIRY AND INADEQUATE INQUIRY. IF THERE WAS ANY INQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF G IVE OCCASION TO THE COMMISSIONER TO PASS ORDERS UNDER SECTION 263 OF THE ACT, MERELY BECAUSE HE HAS A DIF FERENT OPINION IN THE MATTER. IT IS ONLY IN CASES OF LACK OF INQUIRY THAT SUCH A COURSE OF ACTION WOULD BE OPEN . 5.6 IN THE INSTANT APPEAL BEFORE US, IT IS NOT THE DEPARTMENTS CASE THAT NO INFORMATION REGARDING THE SALE OF ASSE TS WAS CALLED FOR BY THE AO. THAT RELEVANT DETAILS AND DOCUMENTS WERE FURNISHED BY THE ASSESSEE DURING THE ASSESSMENT PRO CEEDINGS AND FORMS PART OF THE RECORD. HENCE, NO INFERENCE C AN BE DRAWN THAT THE AO HAS NOT EXAMINED THE ISSUE ALTHOUGH HE HAS NOT EXPRESSED IT IN AS MANY TERMS AS MAY BE CONSIDERED APPROPRIATE BY HIS SUPERIOR AUTHORITY AND EVEN IF THE SAME IS F OUND TO BE ITA NO. 2775/DEL/2015 ASSESSMENT YEAR 2009-10 17 INADEQUATE THE SAME CANNOT BE A GROUND FOR REVISION . IT IS CLEAR THAT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. THIS SECTION DOES NOT VISUALIZ E A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FO R THAT OF THE AO. THEREFORE, IT CANNOT BE HELD THAT IN THE INSTAN T CASE THE AOS ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHIN THE TERMS OF SECTION 263 OF THE ACT. ONCE T HE ISSUE OF SALE OF ASSETS WAS CONSIDERED AND EXAMINED BY THE ASSESS ING OFFICER, THE LD. PR. COMMISSIONER CANNOT SET ASIDE THE ORDER WITHOUT RECORDING A CONTRARY FINDING. THIS WILL BE CONTRARY TO SECTION 263 OF THE ACT. 5.7 WE ALSO NOTE THAT THE HONBLE APEX COURT IN THE CASE OF C.I.T. VS. EQUINOX SOLUTIONS (P) LTD. REPORTED IN 3 93 ITR 566 (SC) HAS HELD THAT THAT WHEN THE ENTIRE BUSINESS WI TH ASSETS AND LIABILITIES IS SOLD BY THE ASSESSEE IN ONE GO, SUCH SALE CANNOT BE CONSIDERED AS SALE OF SHORT TERM CAPITAL ASSETS AND WHERE THE ENTIRE BUSINESS IS SOLD IN ONE GO, IT WILL BE A CAS E OF SLUMP SALE OF A LONG TERM CAPITAL ASSET WHICH WOULD BE COVERED BY THE PROVISIONS OF SECTION 50B OF THE ACT. ALTHOUGH, THE ISSUE OF SLUMP SALE HAS NOT BEEN EXAMINED BY ANY OF THE LOWE R AUTHORITIES, FROM FACTS ON RECORD, IT IS VERY MUCH EVIDENT THAT THE ITA NO. 2775/DEL/2015 ASSESSMENT YEAR 2009-10 18 IMPUGNED TRANSACTION WOULD FALL UNDER THE DEFINITIO N OF SLUMP SALE. WE FIND THAT AN IDENTICAL ISSUE WAS EXAMINED BY THE LUCKNOW BENCH OF THE ITAT IN THE CASE OF LAXMI ICE & COLD STORAGE VS. ITO IN ITA NO. 260/LKW/2016 FOR ASSESSM ENT YEAR 2009-10 WHEREIN, VIDE ORDER DATED 21.02.2018, THE L UCKNOW BENCH HELD THAT SECTION 50C SPEAKS ABOUT TRANSFER O F LAND OR BUILDING OR BOTH AND THE ADOPTION OF DEEMED VALUATI ON BEING VALUATION OF STAMP PURPOSES AS THE FULL VALUE OF CO NSIDERATION BUT THIS DOES NOT INCLUDE PLANT. THE ITAT LUCKNOW BENCH OBSERVED THAT THE TERM PLANT HAS BEEN INTERPRETED A S COLD STORAGE BUILDING ALSO AND, ACCORDINGLY, THE BENCH W AS OF THE VIEW THAT PROVISIONS OF SECTION 50C WOULD NOT BE AP PLICABLE TO THE COLD STORAGE BUILDING SO AS TO SUBSTITUTE ACTUA L SALES CONSIDERATION BY DEEMED SALES CONSIDERATION AND, AC CORDINGLY, THE ORDER OF THE ASSESSING OFFICER PASSED U/S 147/1 43(3) OF THE ACT COULD NOT BE A SUBJECT MATTER OF REVISIONARY PR OCEEDINGS U/S 263 OF THE ACT. THE CASE OF THE ASSESSEE IS IDENTI CAL AND FOR THIS REASON ALSO, WE ARE UNABLE TO AGREE WITH THE DIRECT IONS OF THE LD. PR. C.I.T. IN SETTING ASIDE THE ASSESSMENT ORDER AN D REQUIRING IT TO BE FRAMED DE NOVO. THEREFORE, ON FACTS, IT IS OUR CONSIDERED OPINION THAT IN THE INSTANT CASE, THE ASSESSING OFF ICERS ORDER ITA NO. 2775/DEL/2015 ASSESSMENT YEAR 2009-10 19 CANNOT BE HELD TO BE ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF THE REVENUE WITHIN THE MEANING OF SECTION 263. THE REFORE, IN VIEW OF THE FACTUAL MATRIX OF THE CASE AND RESPECTF ULLY FOLLOWING THE RATIO OF THE VARIOUS JUDICIAL PRONOUNCEMENTS AS DISCUSSED ABOVE, WE HOLD THAT THE IMPUGNED ACTION OF THE LD. PR. C.I.T. U/S 263 OF THE ACT WAS PATENTLY ILLEGAL AND IS LIABLE T O BE QUASHED. THE PROCEEDINGS U/S 263 OF THE ACT ARE ACCORDINGLY QUASHED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH SEPTEMBER, 2018. SD/- SD/- (N.K.BILLAIYA) (SUDHANSHU SRIVASTA VA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17 TH SEPTEMBER, 2018 GS COPY FORWARDED TO: - 1) APPELLANT 2) RESPONDENT 3) CIT(A) 4) CIT 5) DR TRUE COPY BY ORDER ASSTT. REGISTRAR