GUMPRO DRILLING FLUIDS PRIVATE LIMITED, MUMBAI V. PRINCIPAL COMMISSIONER OF INCOME TAX - 15, MUMBAI

ITA 2868/MUM/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5041 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Appeal Filed On: 07-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Gift; Revision of order; Business expenditure; Opportunity of being heard; Principle of natural justice; Period of limitation; Competent authority; Prejudicial to interest; Revised return; Revenue expenditure; Capital expenditure
• Section: 69C; 143(3); 142(1); 260A; 37(1); 147; 6; 263; 63; 28; 154

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.2868/MUM/2018 ASSESSMENT YEAR: 2013-14 GUMPRO DRILLING FLUIDS PRIVATE LIMITED, OPP. KARMA STAMBHA, HAZARAT COMPOUND, LBS MARG, VIKHROLI (WEST), MUMBAI-400083 VS PR. CIT-15, ROOM NO.517, 5 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 ( /ASSESSEE) ( / REVENUE) PAN. NO. AADCG2319N ' #$% / DATE OF HEARING : 10/10/2018 $% / DATE OF ORDER: 10/10/2018 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 19/03/2018 OF THE LD. COMMISSIONER OF INCOME TAX, / ASSESSEE BY SHRI ASHOK J. PATIL / REVENUE BY SHRI L.K.S. DAHIYA CIT- DR ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 2 MUMBAI, INVOKING REVISIONAL JURISDICTION U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSE E, SHRI ASHOK J. PATIL, CONTENDED THAT THE LD. COMMISS IONER WRONGLY INVOKED THE REVISIONAL JURISDICTION U/S 263 OF THE ACT AS THE ASSESSMENT ORDER WAS PASSED ON DUE APPLI CATION OF MIND AND CONSIDERING THE REPLY OF THE ASSESSEE. OUR ATTENTION WAS INVITED TO PAGE-10 TO 15 OF THE PAPER BOOK CONTAINING THE LETTER DATED 09/02/2016 FROM WHICH, IT WAS EXPLAINED THAT THE LD. ASSESSING OFFICER MADE ENQUI RIES AND THE SAME WERE REPLIED BY THE ASSESSEE. AT THIS STAG E, THE BENCH ASKED THE LD. ASSESSING OFFICER WHETHER ANY DISCUSSION HAS BEEN MADE BY THE LD. ASSESSING OFFIC ER WITH RESPECT TO CLAIMED DEDUCTION UNDER SECTION 35(2AB) OF THE ACT, IT WAS FAIRLY AGREED BY THE LD. COUNSEL FOR TH E ASSESSEE THAT NO DISCUSSION HAS BEEN MADE ON THE ISSUE IN HA ND IN THE ASSESSMENT ORDER. HOWEVER, IT WAS ADDED THAT ST ILL THE ASSESSMENT ORDER WAS PASSED AFTER MAKING DUE ENQUIR IES FOR WHICH THE ASSESSEE MAY NOT BE HELD LIABLE. IT WAS S UBMITTED THAT THE ASSESSEE IS DULY APPROVED BY THE COMPETENT ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 3 AUTHORITY FOR MAKING SUCH CLAIM FOR WHICH OUR ATTEN TION WAS INVITED TO PAGE-17 OF THE PAPER BOOK ALONG WITH PAG E-16 OF THE PAPER BOOK. RELIANCE WAS PLACED UPON THE FOLLO WING DECISIONS:- I. II. NARAYAN TATU RANE VS INCOME TAX OFFICER (2016) 70 TAXMAN.COM 227 (MUM. ITAT), III. M/S AMIRA ENTERPRISES LTD. VS PR. CIT (ITA NO.3206/DEL/2017) IV. M/S INDUS BEST HOSPITALITY VS PR. CIT (ITA NO.3125/MUM/2017) V. METACAPS ENGINEERING & MAHINDRA CONSTRUCTION COMPANY (J.V.) VS CIT (2017) 86 TAXMAN.COM 128 (MUM. TRIB.) 2.1. ON THE OTHER HAND, THE LD. CIT-DR, SHRI L.K.S . DAHIYA, STRONGLY DEFENDED THE REVISIONAL ORDER BY CONTENDING THAT THE ASSESSMENT ORDER IS NOT SPEAKIN G ONE BY INVITING OUT ATTENTION TO THE FACTUAL FINDING RE CORDED IN THE IMPUGNED ORDER BY THE LD. PR. COMMISSIONER. IT WAS PLEADED THAT THE LD. ASSESSING OFFICER HAS NOT APPL IED HIS MIND AND EVEN DID NOT MADE ANY WHISPER IN THE ASSES SMENT ORDER WITH RESPECT TO THE ISSUE IN HAND, CONSEQUENT LY, THE REVISIONAL JURISDICTION WAS INVOKED. ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 4 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE AD VERTING FURTHER, IT IS OUR BOUNDED DUTY TO EXAMINE SECTION 263 OF THE ACT, WHICH IS REPRODUCED HEREUNDER FOR READY REFERE NCE AND ANALYSIS:- 263. (1) THE PRINCIPAL COMMISSIONER OR COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING U NDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THER EIN BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS P REJUDICIAL TO THE INTERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR C AUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SU CH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, I NCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CAN CELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. 46 [ EXPLANATION 1 .]FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT, FOR THE PURPOSES OF THIS SUB-SECTION , ( A ) AN ORDER PASSED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988 BY THE ASSESSING OFFICER SHALL INCLUDE ( I ) AN ORDER OF ASSESSMENT MADE BY THE ASSISTANT COMM ISSIONER OR DEPUTY COMMISSIONER OR THE INCOME-TAX OFFICER ON THE BASIS OF THE DIRECTIONS ISSUED BY THE JOINT COMMISS IONER UNDERSECTION 144A ; ( II ) AN ORDER MADE BY THE JOINT COMMISSIONER IN EXERCI SE OF THE POWERS OR IN THE PERFORMANCE OF THE FUNCTIONS OF AN ASSESSING OFFICER CONFERRED ON, OR ASSIGNED TO, HIM UNDER THE ORDERS OR DIRECTIONS ISSUED BY THE BOARD OR BY THE PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL DIR ECTOR GENERAL OR DIRECTOR GENERAL OR PRINCIPAL COMMISSION ER OR COMMISSIONER AUTHORISED BY THE BOARD IN THIS BEHALF UNDER SECTION 120 ; ( B ) 'RECORD' SHALL INCLUDE AND SHALL BE DEEMED ALWAYS TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PROCEEDING UND ER THIS ACT ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 5 AVAILABLE AT THE TIME OF EXAMINATION BY THE PRINCIP AL COMMISSIONER OR COMMISSIONER; ( C ) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTION A ND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER O F ANY APPEAL FILED ON OR BEFORE OR AFTER THE 1ST DAY OF J UNE, 1988, THE POWERS OF THE PRINCIPAL COMMISSIONER OR COMMISSIONE R UNDER THIS SUB-SECTION SHALL EXTEND AND SHALL BE DEEMED A LWAYS TO HAVE EXTENDED TO SUCH MATTERS AS HAD NOT BEEN CONSI DERED AND DECIDED IN SUCH APPEAL. 47 [ EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION, IT IS HEREBY DECLARED THAT AN ORDER PASSED BY THE ASSESSING OFFI CER SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICI AL TO THE INTERESTS OF THE REVENUE, IF, IN THE OPINION OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER, ( A ) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR V ERIFICATION WHICH SHOULD HAVE BEEN MADE; ( B ) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT I NQUIRING INTO THE CLAIM; ( C ) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH AN Y ORDER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119 ; OR ( D ) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WITH ANY DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE, RENDERED BY T HE JURISDICTIONAL HIGH COURT OR SUPREME COURT IN THE C ASE OF THE ASSESSEE OR ANY OTHER PERSON.] (2) NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) AF TER THE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL Y EAR IN WHICH THE ORDER SOUGHT TO BE REVISED WAS PASSED. (3) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTI ON (2), AN ORDER IN REVISION UNDER THIS SECTION MAY BE PASSED AT ANY TIME IN THE CASE OF AN ORDER WHICH HAS BEEN PASSED IN CO NSEQUENCE OF, OR TO GIVE EFFECT TO, ANY FINDING OR DIRECTION CONTAINED IN AN ORDER OF THE APPELLATE TRIBUNAL, NATIONAL TAX TRIBU NAL, THE HIGH COURT OR THE SUPREME COURT. EXPLANATION .IN COMPUTING THE PERIOD OF LIMITATION FOR THE PURPOSES OF SUB-SECTION (2), THE TIME TAKEN IN GIVI NG AN OPPORTUNITY TO THE ASSESSEE TO BE REHEARD UNDER THE PROVISO TO SECTION 129 AND ANY PERIOD DURING WHICH ANY PROCEEDING ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 6 UNDER THIS SECTION IS STAYED BY AN ORDER OR INJUNCT ION OF ANY COURT SHALL BE EXCLUDED. 2.3. IF THE AFORESAID SECTION IS ANALYZED, IT SPEA KS ABOUT THE POWERS OF THE LD. PR. COMMISSIONER OR THE COMMISSIONER TO CONSIDER WHETHER THE ASSESSMENT ORD ER IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE AND AFTER GIVING OPPORTUNITY OF BEING HEARD AND HE MAKE SUCH ENQUIRY AS HE DEEMS NECESSARY AND PASS SUCH OR DER THEREON AS THE CIRCUMSTANCES OF THE CASE SO JUSTIFY INCLUDING, ENHANCE AND MODIFYING THE ASSESSMENT OR CANCELING THE ASSESSMENT AND DIRECTING A FRESH ASSE SSMENT. IT HAS BEEN FURTHER EXPLAINED WITH THE INSERTION OF EXPLANATION-2 INSERTED BY THE FINANCE ACT, 2015 W.E .F. 01/06/2015. UNDISPUTEDLY, THE LD. COMMISSIONER SER VED UPON THE ASSESSEE A SHOW CAUSE NOTICE DATED 20/06/2 017 ISSUED U/S 263 OF THE ACT AND SERVED UPON THE ASSES SEE AS TO WHY THE ASSESSMENT FRAMED UNDER SECTION 143(3) O F THE ACT SHOULD NOT BE REVISED, CANCELLED OR MODIFIED. T HE ASSESSEE VIDE LETTER DATED 21/08/2017, SUBMITTED TH E DETAILS. THE ASSESSEE ALSO RELIED UPON VARIOUS CASE LAWS. BEFORE THE LD. PR. COMMISSIONER, THE ASSESSEE SUBMI TTED ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 7 THAT THE LD. ASSESSING OFFICER DULY EXAMINED THE IS SUE INVOLVED, RAISED APPROPRIATE QUERIES, CALLED FOR RE LEVANT DETAILS AND ON EXAMINATION OF SUCH DETAILS ALLOWED RELIEF TO THE ASSESSEE. IDENTICAL PLEA WAS RAISED BEFORE THI S TRIBUNAL. 2.4. NOW, WE SHALL DEAL WITH THE CASES AND THE RAT IO LAID DOWN THEREIN AND ALSO SOME OTHER CASES WHICH A RE AVAILABLE ON THE ISSUE IN HAND, SO THAT WE CAN REAC H TO A JUSTIFIABLE CONCLUSION. THE FIRST DECISION IN ACIT VS M.P. WAREHOUSING AND LOGISTIC CORPORATION LTD. (2012) 21 TAXMAN.COM 322 (INDORE), WHEREIN WITH RESPECT TO RE PAIRS AND INSURANCE OF MACHINERY, PLANT AND FURNITURE, IT WAS HELD THAT THE EXPENDITURE MUST BE INCURRED BY THE A SSESSEE TO PRESERVE AND MAINTAIN EXISTING ASSET AND SUCH EXPENDITURE MUST NOT BRING INTO EXISTENCE A NEW ASS ET. THIS CASE ALSO MAY NOT HELP THE ASSESSEE BECAUSE THE ASS ESSEE ITSELF IN HIS SUBMISSIONS BEFORE THE LD. PR. COMMIS SIONER AGREED THAT REVENUE EXPENDITURE OF RS.39.97 LAKHS H AS BEEN MADE IN EXCESS UNDER SECTION 35(2AB) OF THE ACT. TH E LD. ASSESSING OFFICER HAS NEVER EXAMINED THE GENUINENES S OF SUCH CLAIM AND DID NOT MAKE ANY MENTION OF THE PROV ISION ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 8 OF SECTION 35(2AB) OF THE ACT IN THE ASSESSMENT ORD ER. IT IS A CLEAR CASE THAT THE ASSESSMENT ORDER WAS FRAMED IN A SLIP SHOT MANNER AND WITHOUT APPLICATION OF MIND, THEREF ORE, THE ASSESSMENT ORDER IS ERRONEOUS AS WELL AS PREJUDICIA L TO THE INTEREST OF REVENUE. 2.5 IN ANOTHER DECISION IN NARAYN TATU RANE VS INCOME TAX OFFICER (2016) 70 TAXMAN.COM 227 (MUM. T RIB.). IN THIS CASE, SINCE, THE COMMISSIONER HAD NOT BROUG HT ANY MATERIAL ON RECORD TO SUBSTANTIATE THE INFERENCE AN D MERELY PASSED THE REVISIONAL ORDER ONLY TO CARRY OUT FISHI NG AND ROVING ENQUIRIES WITH OBJECTIVE OF SUBSTITUTING HIS VIEW WITH THAT OF THE ASSESSING OFFICER, IN THAT SITUATION TH E REVISIONAL ORDER WAS HELD TO BE NOT JUSTIFIED, WHEREAS, IT IS NOT SO IN THE PRESENT APPEAL. 2.6. IN THE CASE OF M/A AMIRA ENTERPRISES LTD. VS PR. CIT (ITA NO.3206/DEL./2017), THE BUSINESS OF THE AS SESSEE WAS TRADING OF RICE. IT WAS FOUND BY THE TRIBUNAL T HAT THE PRINCIPLE CIT HIMSELF DID NOT TAKE ANY ENQUIRY TO R EACH TO A CONCLUSION THAT THE ASSESSMENT ORDER IS ERRONEOUS A ND ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 9 PREJUDICIAL TO THE INTEREST OF REVENUE. IN THAT SIT UATION, A PARTICULAR VIEW WAS TAKEN, THEREFORE, THIS DECISION MAY NOT HELP THE ASSESSEE. 2.7. LIKEWISE, IN THE CASE OF M/S INDUS BEST HOSPITALITY VS PR. CIT (ITA NO.3125/MUM/2017), THE BENCH RELIED UPON THE DECISION FROM HON'BLE JURISDICTIONA L HIGH COURT IN THE CASE OF CIT VS NIRAV MODI 390 ITR 292. THE ISSUE WAS WHETHER THE LD. ASSESSING OFFICER EXAMINE D THE GIFT RECEIVED BY THE ASSESSEE AND ACCEPTED THE SAM E AS GENUINE. NO ENQUIRY WAS CAUSED BY THE LD. CIT TO FI ND OUT WHETHER THE ASSESSING OFFICER WAS SATISFIED WITH RE SPECT TO CORRECTNESS OF THE CLAIM OF THE ASSESSEE WHETHER ER RONEOUS. IN THAT SITUATION, THE BANK TOOK A DECISION. 2.8. SO FAR AS, THE CASE OF METACPAS ENGINEERING A ND MAHENDRA CONSTRUCTION COMPANY (J.V.) (2017) 86 TAXMAN.COM 128 (MUM. ITAT) IS CONCERNED, THEREIN TH E ASSESSEE WAS AWARDED AS CIVIL CONSTRUCTION CONTRACT OF A PROJECT. AS THE ASSESSEE HAD INSUFFICIENT CAPITAL AND INFRASTRUCTURE, IT SUB-CONTRATCTED THE PROJECT TO SUB- ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 10 CONTRACTOR URJA ON BACK TO BACK BASIS. THE ENTIRE RESPONSIBILITY AND COMPLETION OF CONTRACT WAS TAKEN OVER BY THE SUB-CONTRACTOR. REVISIONAL JURISDICTION WAS IN VOKED MAINLY ON THE GROUND OF EXCESSIVE EXPENSES ON LABOU R PAYMENT, ETC. IN THAT SITUATION, A PARTICULAR VIEW WAS TAKEN. 2.9. THERE ARE CERTAIN DECISIONS, WHICH FAVOUR OF T HE CASE OF THE REVENUE AND ONE SUCH DECISION IS ARVEE INTERNAT IONAL VS ADDL. CIT (2006) 8 SOT 452 (MUM. TRIB.), WHEREIN, T HE ASSESSMENT WAS FRAMED WITHOUT APPLICATION OF MIND. IT WAS HELD THAT MERE ALLEGATION THAT ASSESSING OFFICER HA S TAKEN A VIEW IN THE MATTER WILL NOT PUT THE MATTER BEYOND T HE PURVIEW OF SECTION 263 UNLESS THE VIEW SO TAKEN BY THE ASSESSING OFFICER IS A JUDICIAL VIEW BASED ON PROPE R ENQUIRY AND LEGAL ASPECT. 2.10. IN THE CASE OF HORIZON INVESTMENT COMPANY LT D. VS CIT (ITA NO.1593/MUM/2013), WHEREIN, IT WAS CLEA R THAT THERE WAS A LACK/ABSENCE OF ENQUIRY BY THE ASSESSIN G OFFICER, THEREFORE, THE JURISDICTION IN RELATION TO DEDUCTION OF THE SAID EXPENDITURE WAS HELD TO BE VALIDLY ASSUMED . ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 11 2.11. IN THE CASE OF CIT VS I.C.I. INDIA PVT. LTD. 139 ITR 105 (CAL.), IT WAS HELD AS UNDER:- AN EXPENDITURE MAY NOT BE AN ALLOWABLE DEDUCTION U NDER SECTION 10(2)( V ) OF 1922 ACT ON THE GROUND THAT THE REPAIRS ARE NO T CURRENT REPAIRS AND YET, IT MAY BE ALLOWED UNDER SE CTION 10(2)( XV ) OF 1922 ACT PROVIDED ITS CONDITIONS ARE FULFILLED. IN THE INSTANT CASE, MERELY BECAUSE SOME COLUMNS AN D BEAMS WERE REPAIRED BY THE COMPANY IT DID NOT NECESSARILY FOLL OW THAT THE EXPENDITURE INCURRED ON IT WAS IN THE NATURE OF A C APITAL EXPENDITURE. THAT APART, IT WAS NOT THE FINDING OF THE TRIBUNAL IN THE INSTANT CASE THAT ANY STRUCTURAL ALTERATION WAS MADE. BY A MERE PATCH WORK, THE BUILDING WOULD HAVE LASTED ONLY FOR 5 TO 10 YEARS AND THE MONEY THAT WOULD HAVE BEEN SPENT IN IT WOULD HAVE B EEN A COMPLETE WASTE. THEREFORE, PLASTERING OF CERTAIN PO RTIONS OF THE CONCRETE WORKS WITH CEMENT AND SOME COLUMNS AND BEA MS BY THE PROCESS OF GUNITING BECAME ABSOLUTELY ESSENTIAL. NO DOUBT, THAT PROCESS HAD EXTENDED THE LIFE OF THE 'BUILDING' BY MANY MORE YEARS, BUT NOT EXCEEDING ITS ORIGINAL LIFE. FURTHER, THE R EPAIRS HAD NOT IMPROVED IN ORIGINAL CONDITION. IT WAS AN ADMITTED FACT THAT THE BUILDING NEEDED AN EXTENSIVE REPAIR. THE COMPANY HAD, NO DOUBT, MADE EXTENSIVE R EPAIRS BY INCURRING A HUGE EXPENDITURE. BUT THE MAGNITUDE OF REPAIR WENT WITH THE MAGNITUDE OF WEAR AND TEAR, AND NOT WITH T HE QUESTION AS TO WHETHER THE EXPENDITURE INCURRED IN IT WAS A CAP ITAL OR A REVENUE EXPENDITURE. THE QUANTUM OF EXPENDITURE BY ITSELF WAS ALSO NOT A DETERMINING FACTOR. WHERE A BUILDING NEEDS REPAIR, IT IS NOT FOR THE TA XING AUTHORITIES BUT FOR ITS OWNER TO DECIDE HOW AND IN WHICH MANNER , PROCESS OR APPLIANCES IT IS TO BE CARRIED OUT INCLUDING THE EX TENT OF ITS REPAIR AND THE EXPENDITURE TO BE INCURRED ON IT. EVEN WHER E STRUCTURAL REPAIRS ARE CARRIED OUT, THE EXPENDITURE INCURRED O N IT IS NOT NECESSARILY A CAPITAL EXPENDITURE, FOR EVERY REPAIR , IF PROPERLY DONE, MUST, AS A MATTER OF COURSE, IMPROVE THE CONDITION OF THE BUILDING. THE OBJECT AND THE PURPOSE OF EVERY REPAIR IS TO IM PROVE THE BAD CONDITION OF THE BUILDING, TO PREVENT ITS FURTHER D ETERIORATION AS FAR AS POSSIBLE AND TO KEEP IT WIND AND WATER-TIGHT. SO LONG THE REPAIR DOES NOT BRING INTO EXISTENCE AN ADDITIONAL ADVANTA GE OR BENEFIT OF ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 12 AN ENDURING NATURE OR CHANGE THE NATURE, CHARACTER OR THE IDENTITY OF THE BUILDING ITSELF, THE EXPENDITURE MUST BE REG ARDED AS A REVENUE EXPENDITURE. ON THE OTHER HAND, IF IT DOES, IT WILL BE IN THE NATURE OF A CAPITAL EXPENDITURE. GUNITING IS NOTHIN G BUT A MODERN PROCESS OF PLASTERING BY A MACHINE. THE COMPANY HAD USED THIS MODERN PROCESS. THE PROCESS OF GUNITING HAD NOT IMP ROVED THE ORIGINAL CONDITION OF BUILDING NOR HAD EXTENDED ITS ORIGINAL LIFE. THE FINDING OF THE TRIBUNAL WAS THAT THE OBJECT OF THE REPAIRS WAS TO MAINTAIN AND PRESERVE THE BUILDING. THE COURT AL SO AGREED WITH THE FINDING OF THE TRIBUNAL, NAMELY, THAT THE PROCE SS OF GUNITING HAD NOT BROUGHT INTO EXISTENCE ANY NEW BENEFIT OR A DVANTAGE OF ENDURING NATURE TO THE COMPANY. IN VIEW OF AFORESAI D, IT COULD BE CONCLUDED THAT THE ENTIRE REPAIR EXPENDITURE INCURR ED BY THE ASSESSEE ON ITS OFFICE PREMISES (BUILDING IN QUESTI ON) WAS REVENUE EXPENDITURE AND ALLOWABLE AS DEDUCTION. REFERENCE WAS ANSWERED IN FAVOUR OF THE ASSESSEE. 2.12. IN CIT V. OXFORD UNIVERSITY PRESS 108 ITR 166 (BOM.), WHEREIN, THE HON'BLE HIGH COURT HELD AS UND ER:- THIS COURT HELD IN THE CASE OF GULAMHUSSEIN EBRAHIM MATCHESWALLA V. CIT [1974] 97 ITR 24 (BOM.), THAT THE EXPRESSION REPAIR MUST BE UNDERSTOOD IN CONTRADISTINCTION TO RENEWAL OR RESTORATION AND THE TEST TO BE APPLIED IS TO SEE WH ETHER AS A RESULT OF THE EXPENDITURE WHAT IS BEING DONE IS TO PRESERV E AND MAINTAIN AN ALREADY EXISTING ASSET. IF THE AMOUNT IS SPENT F OR THE PURPOSE OF BRINGING INTO EXISTENCE A NEW ASSET OR OBTAINING A NEW ADVANTAGE THEN SUCH AN EXPENDITURE WOULD NOT BE REVENUE EXPEN DITURE. THE MERE QUANTUM OF EXPENDITURE IS NOT BY ITSELF DECISI VE OF THE QUESTION WHETHER IT IS OF THE NATURE OF REVENUE OR CAPITAL. A SUM CAN BE ALLOWED AS COST OF REPAIRS EVEN THOUGH THE E XPENDITURE IN A PARTICULAR YEAR IS HEAVY ON ACCOUNT OF THE FACT THA T IT IS UNDERTAKEN TO REMEDY THE EFFECT OF SEVERAL YEARS OF WEAR AND TEAR OR NEGLECT AND ALSO IN SPITE OF THE FACT THAT SUCH EXPENDITURE MAY NOT BE NECESSARY FOR SEVERAL YEARS TO COME AFTER RE PAIRS HAVE BEEN EFFECTED. IT IS THUS CLEAR THAT WHAT THE COURT IS R EQUIRED TO FIND OUT IS WHETHER AS A RESULT OF THE EXPENDITURE A NEW ASS ET OR A NEW ADVANTAGE IS BEING BROUGHT INTO EXISTENCE. THE COUR T WILL ALSO HAVE REGARD TO THE ASPECT AS TO WHETHER AS A RESULT OF THE EXPENDITURE WHAT IS BEING DONE IS TO PRESERVE AND M AINTAIN AN ALREADY EXISTING ASSET. ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 13 IN THE INSTANT CASE, IT WAS CLEAR AS TO WHY AND IN WHAT CIRCUMSTANCES THE GUNITING WORK WAS UNDERTAKEN BY T HE ASSESSEE IN RELATION TO THE BUILDING. IN THEIR LETTER, THE A RCHITECTS OF THE ASSESSEE STATED THAT DURING THE INSPECTION OF THE B UILDING, WHICH WAS UNDERTAKEN IN JANUARY, 1961, IT WAS OBSERVED TH AT THE REINFORCEMENT OF THE SLABS HAD DECAYED AND CRACKS W ERE VISIBLE UNDERSIDE OF THE SLAB AND ON THE FLOORS AND SOME OF THE STEEL REINFORCEMENT IN THE SLAB HAD LITTLE OR NO COVER. F URTHER, THAT THE ASSESSEE HAD BEEN SPENDING GOOD AMOUNTS ON THE REPA IRS OF SUCH CRACKS AND PLASTERINGS OF THE SLABS ON WHICH THE RE INFORCEMENTS HAD DISAPPEARED BUT THE AMOUNT SPENT FOR PLASTER PA TCH WORK THAT WAS UNDERTAKEN WAS A WASTE AND THAT, THEREFORE , SINCE THE PLASTERING BY MEANS OF AN ORDINARY METHOD WAS OF NO USE, PLASTERING BY THE PROCESS OF GUNITING WAS ADVISED. THE NATURE OF THE GUINTING PROCESS WAS EXPLAINED BY THE ASSESSEE. HAVING REGARD TO THE NATURE OF THE GUNITING PROCESS THAT W AS UNDERTAKEN FOR CARRYING OUT THE PLASTERING AND REPAIR WORK TO THE BUILDING AND THE REASONS AND CIRCUMSTANCES AS TO WHY THE GUN ITING PROCESS HAD BEEN EMPLOYED, IT BECAME VERY CLEAR THA T BY EMPLOYING THIS METHOD, WHICH WAS NOTHING BUT AN IMP ROVED METHOD OF PLASTERING AND REPAIRING WORK, ALL THAT T HE ASSESSEE HAD DONE WAS TO PRESERVE AND MAINTAIN THE ALREADY E XISTING ASSET. NO NEW ASSET OR NEW ADVANTAGE AS SUCH COULD BE SAID TO HAVE BEEN BROUGHT INTO EXISTENCE BY REASON OF EXPEN DITURE INCURRED FOR DOING THE GUINTING WORK. AS A RESULT O F GUNITING WORK DONE THE ASSESSEE HAD NOT CHANGED THE NATURE OF THE ASSET, VIZ., THE BUILDING AS A WHOLE, AND THE SAME IN NO WAY INCREASED THE ACCOMMODATION OR EARNING CAPACITY OF THE BUILDING; IN THAT SENSE NO NEW ADVANTAGE OF ENDURIN G BENEFIT HAD BEEN BROUGHT INTO EXISTENCE. THE REPAIRS ALSO COULD NOT BE REGARDED AS HEAVY STRUCTURAL REPAIRS, FOR, ACCORDIN G TO THE ASSESSEE'S ARCHITECTS, WHAT COULD NOT BE ACHIEVED B Y THE ORDINARY METHOD OF PLASTERING WAS ACHIEVED BY A SOPHISTICATE D METHOD OF PROCESS OF GUNITING. IN THIS VIEW OF THE MATTER, IT SEEMED VERY CLEAR THAT THE EXPENDITURE INCURRED FOR GUNITING WO RK DONE AS ALSO THE EXPENDITURE BEING THE ARCHITECTS' FEES PAI D IN CONNECTION THEREWITH WOULD HAVE TO BE REGARDED AS EXPENDITURE OF A REVENUE NATURE. ALL THAT THE ASSESSEE DID IN THE INSTANT CASE WAS T O UNDERTAKE THE PLASTER REPAIRING WORK OUT BY ADOPTING A NEW METHOD CALLED GUNITING PROCESS, AND BY INCURRING THE EXPENDITURE BY ADOPTING SUCH A PROCESS THE ASSESSEE WAS MERELY MAINTAINING AND PRESERVING AN ASSET WHICH IT ALREADY POSSESSED AND THUS THOUGH TO ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 14 SOME EXTENT THE LIFE OF THE ASSET HAD BEEN PROLONGE D AND THE ASSET WAS MADE TO GIVE BETTER SERVICE THEN IT WAS DOING I N THE PAST, THE EXPENDITURE WOULD HAVE TO BE REGARDED AS REVENUE EX PENDITURE. II. SECTION 37(1) OF THE INCOME-TAX ACT, 1961 - BUS INESS EXPENDITURE - ALLOWABILITY OF - ASSESSMENT YEAR 196 3-64 - DURING RELEVANT ASSESSMENT YEAR, ASSESSEE-COMPANY P AID CERTAIN AMOUNT TO ITS DECEASED EMPLOYEE AS GRATUITY , CALCULATING QUANTUM OF 2 YEARS' SALARY PAYABLE TO D ECEASED AT TIME OF HIS DEALTH - ITO DISALLOWED ASSESSEE'S C LAIM IN RESPECT OF AFORESAID EXPENDITURE - AAC FINDING THAT GRATUITY FIXED FOR NON-COVENANTED STAFF WAS ONLY 12 MONTHS' SALARY, HELD THAT GRATUITY PAYMENT IN EXCESS OF 12 MONTHS' SALARY WAS EX-GRATIA PAYMENT - HE THUS, ALLOWED DEDUCTION OF AMOUNT REPRESENTING 12 MONTHS' SALARY AS LEGITIMATE BUSINESS EXPENDITURE AND DISALLOWED REST AS BEING I N NATURE OF EX-GRATIA PAYMENT - TRIBUNAL CONFIRMED AA C'S ORDER - WHETHER, ON FACTS, TRIBUNAL RIGHTLY AFFIRME D AAC'S ORDER, AND THEREFORE, ORDER PASSED BY TRIBUNAL COUL D NOT BE INTERFERED WITH - HELD, YES FACTS-II DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE-C OMPANY PAID CERTAIN AMOUNT TO ITS DECEASED EMPLOYEE AS AND BY WAY OF GRATUITY, ROUGHLY CALCULATING THE QUANTUM OF 2 YEAR S' SALARY PAYABLE TO THE DECEASED AT THE TIME OF HIS DEATH. T HE ASSESSEE CLAIMED THE SAID PAYMENT AS AN ALLOWABLE EXPENDITUR E IN COMPUTING ITS ASSESSABLE INCOME. THE ITO DISALLOWED THE CLAIM ON THE GROUND THAT THERE WAS NO CONTRACTUAL OBLIGAT ION TO PAY ANY GRATUITY AND, THEREFORE, THE PAYMENT WAS AN EX- GRATIA PAYMENT AND NOT A LEGITIMATE BUSINESS EXPENDITURE. ON APPEAL, THE AAC HELD THAT THE GRATUITY PAID TO THE DECEASED'S HEIRS WAS EQUIVALENT TO APPROXIMATELY 2 YEARS' SALA RY WHILE THE GRATUITY FIXED FOR THE NON-COVENANTED STAFF WAS ONL Y 12 MONTHS' SALARY AND IN VIEW OF THIS HE HELD THAT THE GRATUIT Y PAYMENT IN EXCESS OF 12 MONTHS' SALARY WAS AN EX-GRATIA PAYMENT. IN OTHER WORDS, HE ALLOWED A DEDUCTION OF AMOUNT REPRESENTIN G 12 MONTHS' SALARY AS LEGITIMATE BUSINESS EXPENDITURE B UT DISALLOWED THE REST AS BEING IN THE NATURE OF EX-GRATIA PAYMENT. ON CROSS APPEALS, THE TRIBUNAL UPHELD THE ORDER OF THE AAC. ON REFERENCE : HELD-II IN THE INSTANT CASE THE AAC HELD THAT SINCE THE GRA TUITY FIXED FOR NON-COVENANTED STAFF WAS SUBJECT TO A MAXIMUM OF 12 MONTHS' ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 15 SALARY, IN RESPECT OF COVENANTED STAFF THE MEMBERS THEREOF COULD AT LEAST EXPECT THAT MUCH GRATUITY IF NOT MORE AND, HAVING REGARD TO THIS ASPECT OF THE MATTER, THE AAC HELD THAT PAR T OF THE GRATUITY PAID TO THE HEIRS OF DECEASED TO THE EXTENT OF RS. 24,000 BEING 12 MONTHS' SALARY COULD BE REGARDED AS PROPER AND LEGI TIMATE BUSINESS EXPENDITURE WHILE THAT PART WHICH WAS IN E XCESS OF 12 MONTHS' SALARY WAS TO BE REGARDED AS EX GRATIA PAYM ENT AND HE, THEREFORE, DISALLOWED THE EXCESS AMOUNT. THE MATTER WAS CARRIED IN FURTHER APPEAL TO THE TRIBUNAL, THE TRIBUNAL HAD CONFIRMED THIS FINDING OF THE AAC. IN THIS VIEW OF THE MATTER, IT WAS HELD THAT THE TRIBUNAL WAS RIGHT IN ALLOWING A DEDUCTION OF THE E XPENDITURE ONLY TO THE EXTENT OF RS. 24,000 BEING THE PART OF THE GRATUITY AMOUNT PAID BY THE ASSESSEE TO THE HEIRS OF DECEASE D. 2.13. THE HON'BLE CALCUTTA HIGH COURT IN CIT VS J. K. INDUSTRIES PVT. LTD. 125 ITR 218 (CAL.), HELD AS UN DER: IT HAD BEEN FOUND BY THE TRIBUNAL THAT WITH THE CAPITA L BORROWED THE ASSESSEE HAD ACQUIRED A BUSINESS ASSET FOR THE PURPOS ES OF ITS OWN BUSINESS. FURTHER FINDING WAS THAT IT WAS THE OBJECT OF THE ASSE SSEE TO HOUSE ITS OWN OFFICE AS ALSO THE OFFICES OF THE COMPANIES MANAGED BY IT. THE FINDINGS OF THE TRIBUNAL HAD NOT BEEN CHALLENGED NOR WAS IT CONTENDED AT ANY STAGE THAT THE HOUSING OF THE OFFICES OF THE MANAGED COMPANIES WAS NOT A PART OF THE BUSINESS OF THE ASSESSEE. HAD THIS POINT BEEN MOOTED AT THE PROPER STAGE THE AGREEMENTS BETWEEN THE ASSESSEE AND THE MANAGED COMP ANIES COULD HAVE BEEN CONSIDERED TO ASCERTAIN WHETHER THE ASSESSEE WAS IN ANY WAY LIABLE TO ARRANGE FOR OFFICE OF THE MANAGED COMPANIES. FOLLOW ING THE DECISION OF THE SUPREME COURT IN CIT V. KIRKEND COAL CO. [1969] 74 ITR 67 THE QUESTION WHICH WAS NEITHER RAISED NOR ARGUED BEFORE THE TRIBUNA L COULD NOT BE RAISED AT THIS STAGE. EVEN OTHERWISE, IT COULD NOT BE SAID THAT IT WOULD N OT BE CONDUCIVE TO THE BUSINESS OF THE ASSESSEE IF ALL THE COMPANIES MANAGE D BY IT WERE HOUSED IN THE SAME BUILDING. IT WOULD LEAD TO SOME ECONOMY AND GREATER EFFICIENCY IN MANAGEMENT. IN VIEW OF AFORESAID, IT COULD BE CONCLUDED THAT AMO UNTS PAID AS INTEREST AND THE MUNICIPAL TAXES WERE ALLOWABLE AS DEDUCTION. AS REGARDS RENOVATION EXPENSES FOR THE ASSESSMENT Y EAR 1961-62, THE EXPENSES IN PUTTING UP THE WOODEN PANELLING DID NOT RESULT IN ANY ENDURING BENEFIT TO THE ASSESSEE AND, THEREFORE, WAS DEDUCTIBL E AS A REVENUE EXPENDITURE. THE REVENUE DID NOT CHALLENGE THE OTHER EX PENSES. HENCE THE ENTIRE EXPENDITURE ON RENOVATION WAS DEDUCTIBLE. ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 16 2.14. NOW, WE SHALL DEAL WITH CERTAIN OTHER CASES, WHICH THROWS LIGHT ON THE ISSUE IN HAND SO THAT WE CAN RE ACH TO A FAIR AND JUSTIFIABLE CONCLUSION. THE HON'BLE CALCU TTA HIGH COURT IN RAJMANDIR ESTATE PVT. LTD. VS PR. CIT (201 6) 70 TAXMAN.COM 124 (CALC.) ORDER DATED 13/05/2016 AND T HE RATIO LAID DOWN THEREIN SUPPORTS THE CASE OF THE RE VENUE. IT IS NOTEWORTHY THAT WHILE COMING TO A PARTICULAR CON CLUSION, HON'BLE CALCUTTA HIGH COURT CONSIDERED FOLLOWING JU DICIAL PRONOUNCEMENTS:- I. CIT V. CALCUTTA DISCOUNT CO. LTD. [1973] 91 ITR 8 (SC) (PARA 3), II. SUMATI DAYAL V. CIT [1995] 214 ITR 801/80 TAXMAN 89 (SC) (PARA 4), III. CIT V. NOVA PROMOTERS & FINLEASE (P.) LTD. [2012] 342 ITR 169/206 TAXMAN 207/18 TAXMANN.COM 217 (DELHI) (PARA 4), IV. CIT V. DURGA PRASAD MORE [19711] 82 ITR 540 (SC) (PARA 6), V. CIT V. PRECISION FINANCE (P.) LTD. [1994] 208 ITR 465/[1995] 82 TAXMAN 31 (CAL.) (PARA 6), VI. ITO V. DG HOUSING PROJECTS LTD. [2012] 343 ITR 329/212 TAXMAN 132 (MAG.)/[2012] 20 TAXMANN.COM 587 (DELHI) (PARA 7), VII. DIT V. JYOTI FOUNDATION [2013] 35 ITR 388/219 TAXMAN 105/38 TAXMANN.COM 180 (DELHI) (PARA 7), VIII. CIT V. STELLER INVESTMENT LTD. [1991] 192 ITR 287/59 TAXMAN 568 (DELHI) (PARA 8), ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 17 IX. CIT V. SOPHIA FINANCE LTD. [1994] 205 ITR 98/70 TAXMAN 69 (DELHI) (FB) (PARA 8), X. CIT V. DIVINE LEASING & FINANCE LTD. [2008] 299 ITR 268/[2007] 158 TAXMAN 440 (DELHI)(PARA 8), XI. LOTUS CAPITAL FINANCIAL SERVICES LTD. V. ITO [IT APPEAL NO. 479 (KOL.) OF 2011] (PARA 8), XII. CIT V. LOTUS CAPITAL FINANCIAL SERVICES (P.) LTD. [ITAT NO. 125 OF 2012] (PARA 8), XIII. CIT V. DATAWARE (P.) LTD. [ITAT NO. 263 OF 2011] (PARA 8), XIV. CIT V. ROSEBERRY MERCANTILE (P.) LTD. [G.A. NO. 3296 OF 2010, DATED 10-1-2011] (PARA 8), XV. CIT V. SANCHATI PROJECTS (P.) LTD. [ITAT NO. 140 OF 2011] (PARA 8), XVI. CIT V. SAMIR BIO-TECH. (P.) LTD. [2010] 325 ITR 294 (DELHI) (PARA 8), XVII. CIT V. KAMDHENU STEEL & ALLOYS LTD. [2014] 361 ITR 220/[2012] 206 TAXMAN 254/19 TAXMANN.COM 26 (DELHI) (PARA 8), XVIII. CIT V. DWARKADHISH CAPITAL (P.) LTD. [2011] 330 ITR 298/[2010] 194 TAXMAN 43 (DELHI) (PARAS 9, 10), XIX. CIT V. KINETIC CAPITAL FINANCE LTD. [2013] 354 ITR 296/[2011] 202 TAXMAN 548/14 TAXMANN.COM 150 (DELHI) (PARAS 9, 10), XX. ZAFA AHMAD & CO. V. CIT [2013] 214 TAXMAN 440/30 TAXMANN.COM 267 (ALL.) (PARAS 9, 10), XXI. ANIL RICE MILLS V. CIT [2006] 282 ITR 236/[2005] 149 TAXMAN 313 (ALL.) (PARAS 9, 10), XXII. CIT V. FIVE VISION PROMOTERS (P.) LTD. [2016] 380 ITR 289/236 TAXMAN 502/65 TAXMANN.COM 71 (DELHI) (PARA 11), XXIII. CIT V. GABRIEL INDIA LTD. [1993] 203 ITR 108/71 TAXMAN 585 (BOM.) (PARA 12), ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 18 XXIV. HARI IRON TRADING CO. V. CIT [2003] 263 ITR 437/131 TAXMAN 535 (PUNJ. & HAR.) (PARA 12), XXV. CIT V. LEISURE WEAR EXPORTS (P.) LTD. [2012] 341 ITR 166/[2011] 202 TAXMAN 130/11 TAXMANN.COM 54 (DELHI) (PARA 13), XXVI. OMAR SALAY MOHAMED SAIT V. CIT [1959] 37 ITR 151 (SC) (PARA 14), XXVII. LALCHAND BHAGAT AMBICA RAM V. CIT [1959] 37 ITR 288 (SC) (PARA 14), XXVIII. RELIANCE JUTE & INDUSTRIES LTD. V. CIT [1979] 120 ITR 921/2 TAXMAN 417 (SC) (PARA 15), XXIX. KARIMTHARUVI TEA ESTATE LTD. V. STATE OF KERALA [1966] 60 ITR 262 (SC) (PARA 15), XXX. CIT V. SUNBEAM AUTO LTD. [2011] 332 ITR 167/[2010] 189 TAXMAN 436 (DELHI) (PARA 16), XXXI. GRINDLAYS BANK LTD. V. ITO [1978] 115 ITR 799 (CAL.) (PARA 17), XXXII. VIJAY MALLYA V. ASSTT. CIT [2003] 131 TAXMAN 477 (CAL.) (PARA 17), XXXIII. CIT V. J.L. MORRISON (INDIA) LTD. [2014] 366 ITR 593/225 TAXMAN 17 (MAG.)/46 TAXMANN.COM 215 (CAL.) (PARA 17 ), XXXIV. MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83/109 TAXMAN 66 (SC) (PARA 18), XXXV. CIT V. MAX INDIA LTD. [2007] 295 ITR 282/166 TAXMAN 188 (SC) (PARA 18), XXXVI. CIT V. MAITHAN INTERNATIONAL [2015] 375 ITR 123/231 TAXMAN 381/56 TAXMANN.COM 283 (CAL.) (PARA 20), XXXVII. CIT V. NAVODAYA CASTLES (P.) LTD. [2014] 367 ITR 306/226 TAXMAN 190/50 TAXMANN.COM 110 (DELHI) (PARA 20), XXXVIII. CIT V. N.R. PORTFOLIO (P.) LTD. [2013] 214 TAXMAN 408/29 TAXMANN.COM 291 (DELHI) (PARA 20), ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 19 XXXIX. CIT V. ACTIVE TRADERS (P.) LTD. [1995] 214 ITR 583/[1993] 69 TAXMAN 281 (CAL.) (PARA 20), XL. CIT V. JAWAHAR BHATTACHARJEE [2012] 341 ITR 434/209 TAXMAN 174/24 TAXMANN.COM 215 (GAU.) (FB) (PARA 20) AND XLI. SMT. TARA DEVI AGGARWAL V. CIT [1973] 88 ITR 323 (SC) (PARA 27). 2.15. IN CIT VS FINE JEWELLERY (INDIA) LTD. AND CI T VS NIRAV MODI ((SUPRA)), NO DOUBT THESE CASES THROW LI GHT ON THE ISSUE BUT WERE DECIDED BY HON'BLE JURISDICTIONAL HI GH COURT TO THE PECULIAR FACTS OF THE CASE AND ON THE BASIS OF FACTUAL FINDING RECORDED BY THE TRIBUNAL. 2.16. ADMITTEDLY, AN INCORRECT ASSUMPTION OF FACT OR AN INCORRECT APPLICATION OF LAW WOULD SATISFY THE REQU IREMENT OF ORDER BEING ERRONEOUS U/S. 263 OF THE ACT. THE PHRA SE PREJUDICIAL TO THE INTEREST OF THE REVENUE U/S. 2 63, HAS TO BE READ IN CONJUNCTION WITH THE EXPRESSION ERRONEO US ORDER BY THE ASSESSING OFFICER. EVERY LOSS OF REVEN UE AS A CONSEQUENCE OF ASSESSMENT ORDER CANNOT BE TERMED AS PREJUDICIAL TO THE INTEREST OF REVENUE, MEANING THE REBY, PREJUDICE MUST BE PREJUDICE TO THE REVENUE ADMINISTRATION. AT THE SAME TIME, IF ANOTHER VIEW I S POSSIBLE, ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 20 REVISION IS NOT PERMISSIBLE. OUR VIEW IS FORTIFIED BY THE DECISION FROM HIMACHAL PRADESH FINANCIAL CORP. (186 TAXMANN 105)(HP), BISMILLAH TRADING CO. (248 ITR 292)(KER.) AND CIT VS. GREEN WORLD CORPN. (314 ITR 81)(SC) . FOR INVOKING REVISIONAL JURISDICTION U/S. 263 OF THE AC T, THE ASSESSMENT ORDER MUST CONTAIN GRIEVOUS ERROR WHICH IS SUBVERSIVE OF THE ADMINISTRATION OF REVENUE. FURTHE R, EXACT ERROR MUST BE DISCLOSED BY THE COMMISSIONER AS WAS HELD IN CIT VS. G.K. KABRA (211 ITR 336)(AP). SECTION 263 OF THE ACT ENABLES THE COMMISSIONER TO HAVE A RE-LOOK AT THE O RDERS OR PROCEEDINGS OF THE LOWER AUTHORITY TO EFFECT CORREC TION, IF SO NEEDED, PARTICULARLY, IF THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE OBJ ECT OF THE PROVISION IS TO RAISE REVENUE FOR THE STATE AND SEC TION 263 IS ENABLING PROVISION CONFERRING JURISDICTION UPON THE COMMISSIONER TO REVISE THE ORDER. THE PROVISION IS INTENDED TO PLUG THE LEAKAGE OF THE REVENUE BY THE ERRONEOUS AND PREJUDICIAL ORDER . OUR VIEW FIND SUPPORT FROM THE RATIO LAID DOWN IN FOLLOWING DECISIONS:- I. CIT VS INFOSYS TECHNOLOGIES LTD. (2012) 341 ITR 293 (KARN.), ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 21 II. CIT VS JAWAHAR BHATTACHARYAJI (2012) 341 ITR 434 (GUWAHATI) (FB), III. CIT VS LEISURE WEAR EXPORTS LTD. (2012) 341 ITR 166 (DEL.), IV. CIT VS TRIVENI ENGINEERING WORKS LTD. (2011) 336 ITR 366 (DEL.), V. R.A. HIMMATSINGHKA & COMPANY VS CIT (2012) 340 ITR 253 (PAT.) VI. CIT VS RAJEEV AGNIHOTRI (2011) 332 ITR 608 (P & H), VII. CIT VS DLF LTD. (2013) 350 ITR 555 (DEL.), VIII. CIT VS GABREAL INDIA LTD. (1993) 203 ITR 108, 114 (BOM.), IX. MALABAR INDUSTRIAL COMPANY LTD. VS CIT (2000) 243 ITR 83 (SC), X. NABHA INVESTMENTS PVT. LTD. VS UOI (2000) 246 ITR 41 (DEL.), XI. BISMILLAH TRADING COMPANY LTD. VS IO (2001) 248 ITR 292, 308 (KERALA), XII. PAUL MATHEWS & SONS VS CIT (2003) 263 ITR 101, 113 (KERALA), XIII. CIT VS SESHASAYEE PAPER & BOARDS LTD. (2000) 242 ITR 490, 500 (MAD.), XIV. RAYON SILK MILLS VS CIT 221 ITR 155 (GUJ.) 2.17. IF THE AFORESAID JUDICIAL PRONOUNCEMENTS ARE KEPT IN JUXTAPOSITION WITH THE FACTS OF THE PRESENT APPEAL AND ANALYZED, THE LD. ASSESSING OFFICER WHILE FRAMI NG THE ASSESSMENT MADE NO DISCUSSION WITH THE CLAIM OF THE ASSESSEE AND SIMPLY FRAMED THE ASSESSMENT IN A SLIP SHOT MANNER. SUCH AN APPROACH OF THE LD. ASSESSING OFFIC ER CANNOT BE APPRECIATED. THUS, IT IS CLEAR THAT THE ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 22 ASSESSMENT ORDER WAS PASSED WITHOUT VERIFICATION, APPLICATION OF MIND, CONSEQUENTLY, IT IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE, CONS EQUENTLY, THE REVISIONAL JURISDICTION WAS RIGHTLY INVOKED. 2.18. OUR VIEW IS FORTIFIED BY THE DECISION IN IND IAN TEXTILE VS CIT (157 ITR 112) (MAD.), GEE VEE ENTERP RISES VS ADDL. CIT (99 ITR 375)(DEL.), THALIBAI F JAIN VS IT O 101 ITR 1 (KARN.) AND CIT VS HPFC 186 TAXMAN 105 (HP), CIT VS PUSHPA DEVI 164 ITR 639 (PATNA). WE ARE AWARE THAT BEFORE THE LD. COMMISSIONER INVOKES THE REVISIONAL JURISDICTION U/S 263 OF THE ACT, HE SHOULD GET SATI SFIED THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONE OUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HONBL E GUJARAT HIGH COURT IN CIT VS M. M.KHAMBATBALA 198 ITR 144 ( GUJ.) EVEN WENT TO THE EXTENT THAT REVISIONAL POWERS CAN BE EXERCISED EVEN IF THE ISSUE IS DEBATABLE. THE HONB LE JURISDICTIONAL HIGH COURT IN CIT VS GABRIEL INDIA L TD. (1993) 203 ITR 108 (BOM.) CONCLUDED THAT POWERS U/S 263 CA NNOT BE EXERCISED FOR STARTING FISHING AND ROVING ENQUIR IES. FOR MAKING A VALID ORDER U/S 263(1), IT IS ESSENTIAL TH AT THE ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 23 COMMISSIONER HAS TO RECORD AN EXPRESS FINDING THAT PREJUDICE HAS BEEN CAUSED TO THE INTEREST OF THE RE VENUE. OUR VIEW FIND SUPPORT FROM THE RATIO LAID DOWN IN B HARGWA ENGINEERING CORPORATION VS CIT (1996) 134 TAXATION 493, 494 (ALL.), CIT VS DIGVIJAY TRADERS (1997) 137 CTR (MP) 224, CIT VS REGIONAL AGRO INDUSTRIAL DEVELOPMENT COOPERATIVE SOCIETY LTD. (1998) 143 TAXATION 293 (K ERALA), CIT VS AGARWAL ENTERPRISES (1998) 100 TAXMAN 360 ( ALL.) AND CIT VS KAILASH APARTMENT PVT. LTD. (200) 243 IT R 795 (DEL.). TOTALITY OF FACTS, CLEARLY INDICATES THAT T HE ASSESSMENT ORDER HAS BEEN FRAMED WITHOUT FULL ENQUI RIES, THEREFORE, THE LD. COMMISSIONER JUSTIFIABLY INVOKED REVISIONAL JURISDICTION. 2.19. THE HON'BLE APEX COURT IN RAJMANDIR ESTATES PVT. LTD. (2017) 77 TAXMAN.COM 285 (SC), WHEREIN, THERE WAS LACK OF REQUISITE ENQUIRY INTO INCREASE OF SHARE CA PITAL AND NON-APPLICATION OF MIND, THE COMMISSIONER WAS HELD TO BE JUSTIFIED IN INVOKING THE REVISIONAL JURISDICTION, WHICH IS REPRODUCED HEREUNDER:- ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 24 SECTION 68, READ WITH SECTION 263 OF THE INCOME-TA X ACT, 1961 - CASH CREDIT (SHARE APPLICATION MONEY) - ASSESSMENT YEAR 2009- 10 - DURING RELEVANT YEAR, ASSESSEE-COMPANY HAD INC REASED ITS SHARE CAPITAL BY ISSUING 7.93 LAKHS SHARES OF RS.10 EACH AT A PREMIUM OF RS.390 - ASSESSING OFFICER COMPLETED ASS ESSMENT WITHOUT HOLDING REQUISITE INVESTIGATION EXCEPT FOR CALLING FOR RECORDS - COMMISSIONER PASSED ORDER UNDER SECTION 2 63 AND OPINED THAT THIS COULD BE A CASE OF MONEY LAUNDERIN G WHICH WENT UNDETECTED DUE TO LACK OF REQUISITE ENQUIRY IN TO INCREASE OF SHARE CAPITAL INCLUDING PREMIUM RECEIVED BY ASSESSE E AND NON- APPLICATION OF MIND - HIGH COURT BY IMPUGNED ORDER HELD THAT SINCE ASSESSEE WITH AN AUTHORISED SHARE CAPITAL OF RS.1.36 CRORES RAISED NEARLY A SUM OF RS.32 CRORES ON ACCOU NT OF PREMIUM AND CHOSE NOT TO GO IN FOR INCREASE OF AUTH ORISED SHARE CAPITAL MERELY TO AVOID PAYMENT OF STATUTORY FEES W AS AN IMPORTANT POINTER NECESSITATING INVESTIGATION AND T HUS, COMMISSIONER WAS JUSTIFIED IN TREATING ASSESSMENT O RDER ERRONEOUS AND PREJUDICIAL TO INTEREST OF REVENUE - WHETHER SPECIAL LEAVE PETITION FILED AGAINST IMPUGNED ORDER WAS TO BE DISMISSED - HELD, YES [PARA 2] [IN FAVOUR OF REVENU E] 2.20. THE HON'BLE APEX COURT IN CIT VS AMITABH BACCHAN (2016) 69 TAXMAN.COM 170 (SC) (ORDER DATED 11/05/2016) IS HELD AS UNDER:- 2. THE APPELLANT - REVENUE SEEKS TO CHALLENGE THE ORDE R OF THE HIGH COURT DATED 7TH AUGUST, 2008 DISMISSING THE APPEAL FILED BY IT UNDER SECTION 260A OF THE INCOME TAX ACT, 1961 (HEREINAFT ER REFERRED TO AS ''THE ACT') AND AFFIRMING THE ORDER OF THE INCOME T AX APPELLATE TRIBUNAL, MUMBAI BENCH ('TRIBUNAL' FOR SHORT) DATED 28TH AUGUST, 2007 WHEREBY THE ORDER DATED 20TH MARCH, 2006 PASSED BY THE COMMISSIONER OF INCOME TAX-1, MUMBAI ('C.I.T.' FOR SHORT) UNDER SECTION 263 OF THE ACT WAS REVERSED. THE ASSESSMENT YEAR IN QUESTION I S 2001-2002 AND THE ASSESSMENT ORDER IS DATED 30TH MARCH, 2004. 3. AFTER THE ASSESSMENT AS ABOVE WAS FINALIZED, A SHOW CAUSE NOTICE DATED 7TH NOVEMBER, 2005 UNDER SECTION 263 OF THE ACT WAS ISSUED BY THE LEARNED C.I.T. DETAILING AS MANY AS ELEVEN (11) ISS UES/GROUNDS ON WHICH THE ASSESSMENT ORDER WAS PROPOSED TO BE REVISED UND ER SECTION 263 OF THE ACT. THE RESPONDENT - ASSESSEE FILED HIS REPLY TO T HE SAID SHOW CAUSE NOTICE ON CONSIDERATION OF WHICH BY ORDER DATED 20T H MARCH, 2006 THE LEARNED C.I.T. SET ASIDE THE ORDER OF ASSESSMENT DA TED 30TH MARCH, 2004 ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 25 AND DIRECTED A FRESH ASSESSMENT TO BE MADE. AGGRIEV ED, THE RESPONDENT ASSESSEE CHALLENGED THE SAID ORDER BEFORE THE LEARN ED TRIBUNAL WHICH WAS ALLOWED BY THE ORDER DATED 28TH AUGUST, 2007. 4. AGGRIEVED BY THE ORDER DATED 28TH AUGUST, 2007 OF T HE LEARNED TRIBUNAL, THE REVENUE FILED AN APPEAL UNDER SECTION 260A OF THE ACT BEFORE THE HIGH COURT OF BOMBAY. THE AFORESAID APPE AL I.E. ITA NO. 293 OF 2008 WAS SUMMARILY DISMISSED BY THE HIGH COURT B Y THE IMPUGNED ORDER DATED 7TH AUGUST, 2008 HOLDING THAT AS THE C. I.T. HAD GONE BEYOND THE SCOPE OF THE SHOW CAUSE NOTICE DATED 7TH NOVEMB ER, 2005 AND HAD DEALT WITH THE ISSUES NOT COVERED/MENTIONED IN THE SAID NOTICE THE REVISIONAL ORDER DATED 20TH MARCH, 2006 WAS IN VIOL ATION OF THE PRINCIPLES OF NATURAL JUSTICE. SO FAR AS THE QUESTI ON AS TO WHETHER THE ASSESSING OFFICER HAD MADE SUFFICIENT ENQUIRIES ABO UT THE ASSESSEE'S CLAIM OF EXPENSES MADE IN THE RE-REVISED RETURN OF INCOME IS CONCERNED, WHICH QUESTION WAS FORMULATED AS QUESTION NO. 2 FOR THE HIGH COURT'S CONSIDERATION, THE HIGH COURT TOOK THE VIEW THAT TH E SAID QUESTION RAISED PURE QUESTIONS OF FACT AND, THEREFORE, OUGHT NOT TO BE EXAMINED UNDER SECTION 260A OF THE ACT. THE APPEAL OF THE REVENUE WAS CONSEQUENTLY DISMISSED. AGGRIEVED, THIS APPEAL HAS BEEN FILED UP ON GRANT OF LEAVE UNDER ARTICLE 136 OF THE CONSTITUTION OF INDIA. 5. WE HAVE HEARD SHRI RANJIT KUMAR, LEARNED SOLICITOR GENERAL APPEARING FOR THE APPELLANT REVENUE AND SHRI SHYAM DIVAN, LEA RNED SENIOR COUNSEL APPEARING FOR THE RESPONDENT ASSESSEE. 6. THE ASSESSMENT IN QUESTION WAS SET ASIDE BY THE LEA RNED C.I.T. BY THE ORDER DATED 20TH MARCH, 2006 ON THE PRINCIPAL GROUN D THAT REQUISITE AND DUE ENQUIRIES WERE NOT MADE BY THE ASSESSING OFFICE R PRIOR TO FINALIZATION OF THE ASSESSMENT BY ORDER DATED 30TH MARCH, 2004. IN THIS CONNECTION, THE LEARNED C.I.T. ON CONSIDERATION OF THE FACTS OF THE CASE AND THE RECORD OF THE PROCEEDINGS CAME TO THE CONCL USION THAT IN THE COURSE OF THE ASSESSMENT PROCEEDINGS DESPITE SEVERA L OPPORTUNITIES THE ASSESSEE DID NOT SUBMIT THE REQUISITE BOOKS OF ACCO UNT AND DOCUMENTS AND DELIBERATELY DRAGGED THE MATTER LEADING TO ONE ADJOURNMENT AFTER THE OTHER. EVENTUALLY, THE ASSESSING OFFICER, TO AVOID THE BAR OF LIMITATION, HAD NO OPTION BUT TO 'HURRIEDLY' FINALIZE THE ASSES SMENT PROCEEDINGS WHICH ON DUE AND PROPER SCRUTINY DISCLOSED THAT THE NECESSARY ENQUIRIES WERE NOT MADE. ON THE SAID BASIS THE LEARNED C.I.T. CAME TO THE CONCLUSION THAT THE ASSESSMENT ORDER IN QUESTION WA S ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE WARRANT ING EXERCISE OF POWER UNDER SECTION 263 OF THE ACT. CONSEQUENTLY, THE ASS ESSMENT FOR THE YEAR 2001-2002 WAS SET ASIDE AND A FRESH ASSESSMENT WAS ORDERED. AT THIS STAGE, IT MUST BE NOTICED THAT IN THE ORDER DATED 2 0TH MARCH, 2006 THE LEARNED C.I.T. ARRIVED AT FINDINGS AND CONCLUSIONS IN RESPECT OF ISSUES WHICH WERE NOT SPECIFICALLY MENTIONED IN THE SHOW C AUSE NOTICE DATED ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 26 7TH NOVEMBER, 2005. IN FACT, ON AS MANY AS SEVEN/EI GHT (07/08) ISSUES MENTIONED IN THE SAID SHOW CAUSE NOTICE THE LEARNED C.I.T. DID NOT RECORD ANY FINDING WHEREAS CONCLUSIONS ADVERSE TO THE ASSE SSEE WERE RECORDED ON ISSUES NOT SPECIFICALLY MENTIONED IN THE SAID NO TICE BEFORE PROCEEDING TO HOLD THAT THE ASSESSMENT NEEDS TO BE SET ASIDE. HOWEVER, THREE (03) OF THE ISSUES, DETAILS OF WHICH ARE NOTICED HEREIN BEL OW, ARE COMMON TO THE SHOW CAUSE NOTICE AS WELL AS THE REVISIONAL ORDER O F THE LEARNED C.I.T. 7. ON APPEAL, THE LEARNED TRIBUNAL TOOK THE VIEW THAT THE LEARNED C.I.T. EXERCISING POWERS UNDER SECTION 263 OF THE ACT COUL D NOT HAVE GONE BEYOND THE ISSUES MENTIONED IN THE SHOW CAUSE NOTIC E DATED 7TH NOVEMBER, 2005. THE LEARNED TRIBUNAL, THEREFORE, TH OUGHT IT PROPER TO TAKE THE VIEW THAT IN RESPECT OF THE ISSUES NOT MEN TIONED IN THE SHOW CAUSE NOTICE THE FINDINGS AS RECORDED IN THE REVISI ONAL ORDER DATED 20TH MARCH, 2006 HAVE TO BE UNDERSTOOD TO BE IN BREACH O F THE PRINCIPLES OF NATURAL JUSTICE. THE LEARNED TRIBUNAL ALSO SPECIFIC ALLY CONSIDERED THE THREE (03) COMMON ISSUES MENTIONED ABOVE AND ON SUC H CONSIDERATION ARRIVED AT THE CONCLUSION THAT THE REASONS DISCLOSE D BY THE LEARNED C.I.T. IN THE ORDER DATED 20TH MARCH, 2006 FOR HOLDING THE ASSESSMENT TO BE LIABLE FOR CANCELLATION ON THAT BASIS ARE NOT TENAB LE. ACCORDINGLY, THE LEARNED TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE AND REVERSED THE ORDER OF THE SUO MOTU REVISION DATED 20TH MARCH, 2006. 8. AT THIS STAGE, IT MAY BE APPROPRIATE TO REPRODUCE H EREUNDER THE PROVISIONS OF SECTION 263 OF THE ACT TO APPRECIATE THE ARGUMENTS ADVANCED AND TO UNDERSTAND THE CONTOURS OF THE SUO MOTU REVISIONAL POWER VESTED IN THE LEARNED C.I.T. BY THE AFORESAID PROVISION OF THE ACT. '263 - REVISION OF ORDERS PREJUDICIAL TO REVENUE.( 1) THE PRINCIPAL COMMISSIONER OR COMMISSIONER MAY CALL FOR AND EXAMI NE THE RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOUS INSOF AR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUS ING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THER EON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORD ER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSM ENT AND DIRECTING A FRESH ASSESSMENT. EXPLANATION ...' 9. UNDER THE ACT DIFFERENT SHADES OF POWER HAVE BEEN C ONFERRED ON DIFFERENT AUTHORITIES TO DEAL WITH ORDERS OF ASSESS MENT PASSED BY THE PRIMARY AUTHORITY. WHILE SECTION 147 CONFERS POWER ON THE ASSESSING AUTHORITY ITSELF TO PROCEED AGAINST INCOME ESCAPING ASSESSMENT, SECTION 154 OF THE ACT EMPOWERS SUCH AUTHORITY TO CORRECT A MISTAKE APPARENT ON THE FACE OF THE RECORD. THE POWER OF APPEAL AND REV ISION IS CONTAINED IN ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 27 CHAPTER XX OF THE ACT WHICH INCLUDES SECTION 263 TH AT CONFER SUO MOTU POWER OF REVISION IN THE LEARNED C.I.T. THE DIFFERE NT SHADES OF POWER CONFERRED ON DIFFERENT AUTHORITIES UNDER THE ACT HA S TO BE EXERCISED WITHIN THE AREAS SPECIFICALLY DELINEATED BY THE ACT AND THE EXERCISE OF POWER UNDER ONE PROVISION CANNOT TRENCH UPON THE PO WERS AVAILABLE UNDER ANOTHER PROVISION OF THE ACT. IN THIS REGARD, IT MUST BE SPECIFICALLY NOTICED THAT AGAINST AN ORDER OF ASSESSMENT, SO FAR AS THE REVENUE IS CONCERNED, THE POWER CONFERRED UNDER THE ACT IS TO REOPEN THE CONCLUDED ASSESSMENT UNDER SECTION 147 AND/OR TO REVISE THE A SSESSMENT ORDER UNDER SECTION 263 OF THE ACT. THE SCOPE OF THE POWE R/JURISDICTION UNDER THE DIFFERENT PROVISIONS OF THE ACT WOULD NATURALLY BE DIFFERENT. THE POWER AND JURISDICTION OF THE REVENUE TO DEAL WITH A CONCLUDED ASSESSMENT, THEREFORE, MUST BE UNDERSTOOD IN THE CO NTEXT OF THE PROVISIONS OF THE RELEVANT SECTIONS NOTICED ABOVE. WHILE DOING SO IT MUST ALSO BE BORNE IN MIND THAT THE LEGISLATURE HAD NOT VESTED IN THE REVENUE ANY SPECIFIC POWER TO QUESTION AN ORDER OF ASSESSME NT BY MEANS OF AN APPEAL. 10. REVERTING TO THE SPECIFIC PROVISIONS OF SECTION 26 3 OF THE ACT WHAT HAS TO BE SEEN IS THAT A SATISFACTION THAT AN ORDER PASSED BY THE AUTHORITY UNDER THE ACT IS ERRONEOUS AND PREJUDICIAL TO THE I NTEREST OF THE REVENUE IS THE BASIC PRE-CONDITION FOR EXERCISE OF JURISDIC TION UNDER SECTION 263 OF THE ACT. BOTH ARE TWIN CONDITIONS THAT HAVE TO B E CONJOINTLY PRESENT. ONCE SUCH SATISFACTION IS REACHED, JURISDICTION TO EXERCISE THE POWER WOULD BE AVAILABLE SUBJECT TO OBSERVANCE OF THE PRI NCIPLES OF NATURAL JUSTICE WHICH IS IMPLICIT IN THE REQUIREMENT CAST B Y THE SECTION TO GIVE THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. IT IS IN TH E CONTEXT OF THE ABOVE POSITION THAT THIS COURT HAS REPEATEDLY HELD THAT U NLIKE THE POWER OF REOPENING AN ASSESSMENT UNDER SECTION 147 OF THE AC T, THE POWER OF REVISION UNDER SECTION 263 IS NOT CONTINGENT ON THE GIVING OF A NOTICE TO SHOW CAUSE. IN FACT, SECTION 263 HAS BEEN UNDERSTOO D NOT TO REQUIRE ANY SPECIFIC SHOW CAUSE NOTICE TO BE SERVED ON THE ASSE SSEE. RATHER, WHAT IS REQUIRED UNDER THE SAID PROVISION IS AN OPPORTUNITY OF HEARING TO THE ASSESSEE. THE TWO REQUIREMENTS ARE DIFFERENT; THE F IRST WOULD COMPREHEND A PRIOR NOTICE DETAILING THE SPECIFIC GROUNDS ON WH ICH REVISION OF THE ASSESSMENT ORDER IS TENTATIVELY BEING PROPOSED. SUC H A NOTICE IS NOT REQUIRED. WHAT IS CONTEMPLATED BY SECTION 263, IS A N OPPORTUNITY OF HEARING TO BE AFFORDED TO THE ASSESSEE. FAILURE TO GIVE SUCH AN OPPORTUNITY WOULD RENDER THE REVISIONAL ORDER LEGAL LY FRAGILE NOT ON THE GROUND OF LACK OF JURISDICTION BUT ON THE GROUND OF VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. REFERENCE IN THIS REGARD MAY BE ILLUSTRATIVELY MADE TO THE DECISIONS OF THIS COURT IN GITA DEVI AGGARWAL V. CIT [1970] 76 ITR 496 AND IN CIT V. ELECTRO HOUSE [1971] 82 ITR 824 (SC) . PARAGRAPH 4 OF THE DECISION IN ELECTRO HOUSE ( SUPRA ) BEING ILLUMINATION OF THE ISSUE INDICATED ABOVE MAY BE USEFULLY REPRODUCED HEREUNDE R: ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 28 'THIS SECTION UNLIKE SECTION 34 DOES NOT PRESCRIBE ANY NOTICE TO BE GIVEN. IT ONLY REQUIRES THE COMMISSIONER TO GIVE AN OPPORT UNITY TO THE ASSESSEE OF BEING HEARD. THE SECTION DOES NOT SPEAK OF ANY N OTICE. IT IS UNFORTUNATE THAT THE HIGH COURT FAILED TO NOTICE THE DIFFERENCE IN LANGUAGE BETWEEN SECTIONS 33-B AND 34. FOR THE ASSUMPTION OF JURISDI CTION TO PROCEED UNDER SECTION 34, THE NOTICE AS PRESCRIBED IN THAT SECTION IS A CONDITION PRECEDENT. BUT NO SUCH NOTICE IS CONTEMPLATED BY SE CTION 33-B. THE JURISDICTION OF THE COMMISSIONER TO PROCEED UNDER S ECTION 33-B IS NOT DEPENDENT ON THE FULFILMENT OF ANY CONDITION PRECED ENT. ALL THAT HE IS REQUIRED TO DO BEFORE REACHING HIS DECISION AND NOT BEFORE COMMENCING THE ENQUIRY, HE MUST GIVE THE ASSESSEE AN OPPORTUNI TY OF BEING HEARD AND MAKE OR CAUSE TO MAKE SUCH ENQUIRY AS HE DEEMS NECE SSARY. THOSE REQUIREMENTS HAVE NOTHING TO DO WITH THE JURISDICTI ON OF THE COMMISSIONER. THEY PERTAIN TO THE REGION OF NATURAL JUSTICE. BREACH OF THE PRINCIPLES OF NATURAL JUSTICE MAY AFFECT THE LE GALITY OF THE ORDER MADE BUT THAT DOES NOT AFFECT THE JURISDICTION OF THE CO MMISSIONER. AT PRESENT WE ARE NOT CALLED UPON TO CONSIDER WHETHER THE ORDE R MADE BY THE COMMISSIONER IS VITIATED BECAUSE OF THE CONTRAVENTI ON OF ANY OF THE PRINCIPLES OF NATURAL JUSTICE. THE SCOPE OF THESE A PPEALS IS VERY NARROW. ALL THAT WE HAVE TO SEE IS WHETHER BEFORE ASSUMING JURISDICTION THE COMMISSIONER WAS REQUIRED TO ISSUE A NOTICE AND IF HE WAS SO REQUIRED WHAT THAT NOTICE SHOULD HAVE CONTAINED? OUR ANSWER TO THAT QUESTION HAS ALREADY BEEN MADE CLEAR. IN OUR JUDGMENT NO NOTICE WAS REQUIRED TO BE ISSUED BY THE COMMISSIONER BEFORE ASSUMING JURISDIC TION TO PROCEED UNDER SECTION 33-B. THEREFORE THE QUESTION WHAT THA T NOTICE SHOULD CONTAIN DOES NOT ARISE FOR CONSIDERATION. IT IS NOT NECESSARY NOR PROPER FOR US IN THIS CASE TO CONSIDER AS TO THE NATURE OF THE ENQUIRY TO BE HELD UNDER SECTION 33-B. THEREFORE, WE REFRAIN FROM SPELLING O UT WHAT PRINCIPLES OF NATURAL JUSTICE SHOULD BE OBSERVED IN AN ENQUIRY UN DER SECTION 33-B. THIS COURT IN GITA DEVI AGGARWAL V. CIT, WEST BENGAL RULED THAT SECTION 33- B DOES NOT IN EXPRESS TERMS REQUIRE A NOTICE TO BE SERVED ON THE ASSESSEE AS IN THE CASE OF SECTION 34. SECTION 33-B MERELY R EQUIRES THAT AN OPPORTUNITY OF BEING HEARD SHOULD BE GIVEN TO THE A SSESSEE AND THE STRINGENT REQUIREMENT OF SERVICE OF NOTICE UNDER SE CTION 34 CANNOT, THEREFORE, BE APPLIED TO A PROCEEDING UNDER SECTION 33-B.' (PAGE 827- 828). [NOTE: SECTION 33-B AND SECTION 34 OF THE INCOME TA X ACT, 1922 CORRESPONDS TO SECTION 263 AND SECTION 147 OF THE I NCOME TAX ACT, 1961] 11. IT MAY BE THAT IN A GIVEN CASE AND IN MOST CASES I T IS SO DONE A NOTICE PROPOSING THE REVISIONAL EXERCISE IS GIVEN TO THE A SSESSEE INDICATING THEREIN BROADLY OR EVEN SPECIFICALLY THE GROUNDS ON WHICH THE EXERCISE IS FELT NECESSARY. BUT THERE IS NOTHING IN THE SECTION (SECTION 263) TO RAISE ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 29 THE SAID NOTICE TO THE STATUS OF A MANDATORY SHOW C AUSE NOTICE AFFECTING THE INITIATION OF THE EXERCISE IN THE ABSENCE THERE OF OR TO REQUIRE THE C.I.T. TO CONFINE HIMSELF TO THE TERMS OF THE NOTICE AND F ORECLOSING CONSIDERATION OF ANY OTHER ISSUE OR QUESTION OF FAC T. THIS IS NOT THE PURPORT OF SECTION 263. OF COURSE, THERE CAN BE NO DISPUTE THAT WHILE THE C.I.T. IS FREE TO EXERCISE HIS JURISDICTION ON CONS IDERATION OF ALL RELEVANT FACTS, A FULL OPPORTUNITY TO CONTROVERT THE SAME AN D TO EXPLAIN THE CIRCUMSTANCES SURROUNDING SUCH FACTS, AS MAY BE CON SIDERED RELEVANT BY THE ASSESSEE, MUST BE AFFORDED TO HIM BY THE C.I.T. PRIOR TO THE FINALIZATION OF THE DECISION. 12. IN THE PRESENT CASE, THERE IS NO DISPUTE THAT IN T HE ORDER DATED 20TH MARCH, 2006 PASSED BY THE LEARNED C.I.T. UNDER SECT ION 263 OF THE ACT FINDINGS HAVE BEEN RECORDED ON ISSUES THAT ARE NOT SPECIFICALLY MENTIONED IN THE SHOW CAUSE NOTICE DATED 7TH NOVEMBER, 2005 T HOUGH THERE ARE THREE (03) ISSUES MENTIONED IN THE SHOW CAUSE NOTIC E DATED 7TH NOVEMBER, 2005 WHICH HAD SPECIFICALLY BEEN DEALT WI TH IN THE ORDER DATED 20TH MARCH, 2006. THE LEARNED TRIBUNAL IN ITS ORDER DATED 28TH AUGUST, 2007 PUT THE AFORESAID TWO FEATURES OF THE CASE INTO TWO DIFFERENT COMPARTMENTS. INSOFAR AS THE FIRST QUESTION I.E. FI NDINGS CONTAINED IN THE ORDER OF THE LEARNED C.I.T. DATED 20TH MARCH, 2006 BEYOND THE ISSUES MENTIONED IN THE SHOW CAUSE NOTICE IS CONCERNED THE LEARNED TRIBUNAL TAKING NOTE OF THE AFORESAID ADMITTED POSITION HELD AS FOLLOWS: 'IN THE CASE ON HAND, THE CIT HAS ASSUMED JURISDICT ION BY ISSUING SHOW CAUSE NOTICE U/S 263 BUT WHILE PASSING THE FINAL OR DER HE RELIED ON VARIOUS OTHER GROUNDS FOR COMING TO THE FINAL CONCLUSION. T HIS ITSELF MAKES THE REVISION ORDER BAD IN LAW AND ALSO VIOLATIVE OF PRI NCIPLES OF NATURAL JUSTICE AND THUS NOT MAINTAINABLE. IF, DURING THE C OURSE OF REVISION PROCEEDINGS THE CIT WAS OF THE OPINION THAT THE ORD ER OF THE AO WAS ERRONEOUS ON SOME OTHER GROUNDS ALSO OR ON ANY ADDI TIONAL GROUNDS NOT MENTIONED IN THE SHOW CAUSE NOTICE, HE OUGHT TO HAV E GIVEN ANOTHER SHOW CAUSE NOTICE TO THE ASSESSEE ON THOSE GROUNDS AND GIVEN HIM A REASONABLE OPPORTUNITY OF HEARING BEFORE COMING TO THE CONCLUSION AND PASSING THE FINAL REVISION ORDER. IN THE CASE ON HA ND, THE CIT HAS NOT DONE SO. THUS, THE ORDER U/S 263 IS VIOLATIVE OF PR INCIPLES OF NATURAL JUSTICE AS FAR AS THE REASONS, WHICH FORMED THE BAS IS FOR THE REVISION BUT WERE NOT PART OF THE SHOW CAUSE NOTICE ISSUED U/S 2 63 ARE CONCERNED. THE ORDER OF THE CIT PASSED U/S 263 IS THEREFORE LIABLE TO BE QUASHED INSOFAR AS THOSE GROUNDS ARE CONCERNED.' 13. THE ABOVE GROUND WHICH HAD LED THE LEARNED TRIBUNA L TO INTERFERE WITH THE ORDER OF THE LEARNED C.I.T. SEEMS TO BE CO NTRARY TO THE SETTLED POSITION IN LAW, AS INDICATED ABOVE AND THE TWO DEC ISIONS OF THIS COURT IN GITA DEVI AGGARWAL ( SUPRA ) AND ELECTRO HOUSE ( SUPRA ). THE LEARNED TRIBUNAL IN ITS ORDER DATED 28TH AUGUST, 2007 HAD N OT RECORDED ANY ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 30 FINDING THAT IN COURSE OF THE SUO MOTU REVISIONAL PROCEEDINGS, HEARING OF WHICH WAS SPREAD OVER MANY DAYS AND ATTENDED TO BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE, OPPORTUNITY OF HEAR ING WAS NOT AFFORDED TO THE ASSESSEE AND THAT THE ASSESSEE WAS DENIED AN OP PORTUNITY TO CONTEST THE FACTS ON THE BASIS OF WHICH THE LEARNED C.I.T. HAD COME TO HIS CONCLUSIONS AS RECORDED IN THE ORDER DATED 20TH MAR CH, 2006. DESPITE THE ABSENCE OF ANY SUCH FINDING IN THE ORDER OF THE LEA RNED TRIBUNAL, BEFORE HOLDING THE SAME TO BE LEGALLY UNSUSTAINABLE THE CO URT WILL HAVE TO BE SATISFIED THAT IN THE COURSE OF THE REVISIONAL PROC EEDING THE ASSESSEE, ACTUALLY AND REALLY, DID NOT HAVE THE OPPORTUNITY T O CONTEST THE FACTS ON THE BASIS OF WHICH THE LEARNED C.I.T. HAD CONCLUDED THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO T HE INTERESTS OF THE REVENUE. THE ABOVE IS THE QUESTION TO WHICH THE COU RT, THEREFORE, WILL HAVE TO TURN TO. 14. TO DETERMINE THE ABOVE QUESTION WE HAVE READ AND C ONSIDERED THE ORDER OF THE ASSESSING OFFICER DATED 30TH MARCH, 20 04; AS WELL AS THE ORDER OF THE LEARNED C.I.T. DATED 20TH MARCH, 2006. FROM THE ABOVE CONSIDERATION, IT APPEARS THAT THE LEARNED C.I.T. I N THE COURSE OF THE REVISIONAL PROCEEDINGS HAD SCRUTINIZED THE RECORD O F THE PROCEEDINGS BEFORE THE ASSESSING OFFICER AND NOTED THE VARIOUS DATES ON WHICH OPPORTUNITIES TO PRODUCE THE BOOKS OF ACCOUNT AND O THER RELEVANT DOCUMENTS WERE AFFORDED TO THE ASSESSEE WHICH REQUI REMENT WAS NOT COMPLIED WITH BY THE ASSESSEE. IN THESE CIRCUMSTANC ES, THE REVISIONAL AUTHORITY TOOK THE VIEW THAT THE ASSESSING OFFICER, AFTER BEING COMPELLED TO ADJOURN THE MATTER FROM TIME TO TIME, HAD TO HUR RIEDLY COMPLETE THE ASSESSMENT PROCEEDINGS TO AVOID THE SAME FROM BECOM ING TIME BARRED. IN THE COURSE OF THE REVISIONAL EXERCISE RELEVANT FACT S, DOCUMENTS, AND BOOKS OF ACCOUNT WHICH WERE OVERLOOKED IN THE ASSESSMENT PROCEEDINGS WERE CONSIDERED. ON SUCH RE-SCRUTINY IT WAS REVEALED THA T THE ORIGINAL ASSESSMENT ORDER ON SEVERAL HEADS WAS ERRONEOUS AND HAD THE POTENTIAL OF CAUSING LOSS OF REVENUE TO THE STATE. IT IS ON THE AFORESAID BASIS THAT THE NECESSARY SATISFACTION THAT THE ASSESSMENT ORDER DA TED 30TH MARCH, 2004 WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF T HE REVENUE WAS RECORDED BY THE LEARNED C.I.T. AT EACH STAGE OF THE REVISIONAL PROCEEDING THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAD A PPEARED AND HAD FULL OPPORTUNITY TO CONTEST THE BASIS ON WHICH THE REVIS IONAL AUTHORITY WAS PROCEEDING/HAD PROCEEDED IN THE MATTER. IF THE REVI SIONAL AUTHORITY HAD COME TO ITS CONCLUSIONS IN THE MATTER ON THE BASIS OF THE RECORD OF THE ASSESSMENT PROCEEDINGS WHICH WAS OPEN FOR SCRUTINY BY THE ASSESSEE AND AVAILABLE TO HIS AUTHORIZED REPRESENTATIVE AT ALL T IMES IT IS DIFFICULT TO SEE AS TO HOW THE REQUIREMENT OF GIVING OF A REASONABLE OPPORTUNITY OF BEING HEARD AS CONTEMPLATED BY SECTION 263 OF THE ACT HAD BEEN BREACHED IN THE PRESENT CASE. THE ORDER OF THE LEARNED TRIBUNAL INSOFAR AS THE FIRST ISSUE I.E. THE REVISIONAL ORDER GOING BEYOND THE SH OW CAUSE NOTICE IS ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 31 CONCERNED, THEREFORE, CANNOT HAVE OUR ACCEPTANCE. T HE HIGH COURT HAVING FAILED TO FULLY DEAL WITH THE MATTER IN ITS CRYPTIC ORDER DATED 7TH AUGUST, 2008 WE ARE OF THE VIEW THAT THE SAID ORDER S ARE NOT TENABLE AND ARE LIABLE TO BE INTERFERED WITH. 15. THIS WILL BRING US TO A CONSIDERATION OF THE SECON D LIMB OF THE CASE AS DEALT WITH BY THE LEARNED TRIBUNAL, NAMELY, THAT TE NABILITY OF THE ORDER OF THE LEARNED C.I.T. ON THE THREE (03) ISSUES MENTION ED IN THE SHOW CAUSE NOTICE AND ALSO DEALT WITH IN THE REVISIONAL ORDER DATED 20TH MARCH, 2006. THE AFORESAID THREE (03) ISSUES ARE: '( I ) ASSESSEE MAINTAINING 5 BANK ACCOUNTS AND AO NOT EXA MINING THE 5TH BANK ACCOUNT, BOOKS OF ACCOUNT AND ANY OTHER BA NK ACCOUNT WHERE RECEIPTS RELATED TO KBC WERE BANKED. ( II ) REGARDING CLAIM OF DEPOSITS OF RS. 52.06 LAKHS IN SPECIAL BENCH A/C NO.11155 UNDER THE HEAD RECEIPTS ON BEHALF OF MRS. JAYA BACHCHAN AND ( III ) REGARDING THE CLAIM OF ADDITIONAL EXPENSES IN THE R E-REVISED RETURN.' 16. ON THE ABOVE ISSUES THE LEARNED TRIBUNAL HAD GIVEN DETAILED REASONS FOR NOT ACCEPTING THE GROUNDS CITE D IN THE REVISIONAL ORDER FOR SETTING ASIDE THE ASSESSMENT U NDER SECTION 263 OF THE ACT. THE REASONS CITED BY THE LE ARNED TRIBUNAL INSOFAR AS THE FIRST TWO ISSUES ARE CONCER NED MAY NOT JUSTIFY A SERIOUS RELOOK AND HENCE NEED NOT BE GONE INTO. THE THIRD QUESTION WOULD, HOWEVER, REQUIRE SOME DETAILE D ATTENTION. THE SAID QUESTION IS WITH REGARD TO THE CLAIM OF ADDITIONAL EXPENSES MADE BY THE ASSESSEE IN ITS RE- REVISED RETURN WHICH WAS SUBSEQUENTLY WITHDRAWN. 17. THE ASSESSEE IN THE RE-REVISED RETURN DATED 31ST M ARCH, 2003 HAD MADE A CLAIM OF ADDITIONAL EXPENSES OF 30% OF THE GROSS PROFESSIONAL RECEIPTS (RS. 3.17 CRORES). IT A PPEARS THAT THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FILE REQUISITE DETAILS IN THIS REGARD. THE ASSESSEE RESPONDED BY L ETTER DATED 13TH FEBRUARY, 2004 STATING AS FOLLOWS: 'WITH REGARD TO THE 30% ESTIMATED EXPENSES CLAIMED, WE HAVE TO SUBMIT THAT THESE ARE THE EXPENSES WHICH ARE SPE NT FOR SECURITY PURPOSES BY EMPLOYING CERTAIN AGENCIES, GU ARDS ETC. FOR THE PERSONAL SAFETY OF SHRI BACHCHAN AS HE HAS TO PROTECT HIMSELF FROM VARIOUS THREATS TO HIS LIFE RECEIVED B Y HIM AND TO AVOID EXTORTION OF MONEY FROM GANGSTERS. THE NAMES OF SUCH AGENCIES CANNOT BE DISCLOSED/DIVULGED AS THERE IS A POSSIBILITY OF LEAKAGE OF INFORMATION OF AGENCIES' NAMES FROM T HE OFFICE STAFF, WHICH WILL OBVIOUSLY BE DETRIMENTAL TO THE I NTERESTS OF SHRI BACHCHAN. THE PAYMENTS HAVE BEEN MADE OUT OF C ASH ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 32 BALANCES AVAILABLE AND LOT OF OUTSTANDING EXPENSES ARE TO BE PAID WHICH COULD NOT BE PAID FOR WANT OF INCOME.' 18. THEREAFTER BY LETTER DATED 13TH MARCH, 2004 THE AS SESSEE INFORMED THE LEARNED C.I.T. THAT THE CLAIM WAS MADE ON A BELIEF THAT THE SAME IS ALLOWABLE BUT AS IT WILL NOT BE FE ASIBLE FOR THE ASSESSEE TO SUBSTANTIATE THE SAME, THE RE-REVISED R ETURN OF INCOME MAY BE TAKEN TO THE WITHDRAWN. IT APPEARS TH AT THEREAFTER THE ASSESSING OFFICER ISSUED A NOTICE TO SHOW CAUSE AS TO WHY THE PROVISIONS OF SECTION 69C SHOULD NOT BE INVOKED AND THE EXPENSES CLAIMED SHOULD NOT BE TREATED AS UNEXPLAINED EXPENDITURE. IN REPLY, THE ASSESSEE BY LETTER DATED 24TH MARCH, 2004 SUBMITTED THAT THE CLAIM WAS MADE AS A STANDARD DEDUCTION AND THAT THE ASSESSEE HAD BEEN W RONGLY ADVISED TO MAKE THE SAID CLAIM AND AS THE SAME HAS BEEN WITHDRAWN, SECTION 69-C WILL HAVE NO APPLICATION. T HE RECORD OF THE ASSESSMENT PROCEEDINGS DISCLOSE THAT THE SAI D STAND WAS ACCEPTED BY THE ASSESSING OFFICER AND THE MATTER WA S NOT PURSUED ANY FURTHER. 19. THE LEARNED C.I.T. TOOK THE VIEW THAT NOTWITHSTAND ING THE WITHDRAWAL OF THE CLAIM BY THE ASSESSEE, IN VIEW OF THE EARLIER STAND TAKEN THAT THE SAID EXPENSES WERE INCURRED FO R SECURITY PURPOSES OF THE ASSESSEE, THE ASSESSING OFFICER OUG HT TO HAVE PROCEEDED WITH THE MATTER AS THE ASSESSEE WAS FOLLO WING THE CASH SYSTEM OF ACCOUNTING AND THE FILING OF THE RE- REVISED RETURN, PRIMA FACIE, INDICATED THAT THE ADDITIONAL EXPENSES CLAIMED HAD BEEN INCURRED. IN THIS REGARD, THE FOLL OWING FINDINGS/REASONS RECORDED BY THE LEARNED C.I.T. IN THE ORDER DATED 20TH MARCH, 2006 WOULD BE OF PARTICULAR RELEV ANCE: 'WITHDRAWAL OF CLAIM BY ASSESSEE CAN BE FOR VARIETY OF REASONS AND THIS DOES NOT MEAN THAT ASSESSING OFFICER SHOUL D ABANDON ENQUIRIES REGARDING SOURCES FOR INCURRING EXPENSES. ASSESSEE FOLLOWS CASH SYSTEM OF ACCOUNTING AND THE CLAIM REG ARDING ADDITIONAL EXPENSES WAS MADE THROUGH DULY VERIFIED REVISED RETURN. THE CLAIM WAS PRESSED DURING ASSESSMENT PRO CEEDINGS CARRIED ON BY A.O. AFTER FILING REVISED RETURN AND IT WAS SPECIALLY STATED IN LETTER DATED 13.02.2004 THAT EX PENSES WERE FOR SECURITY PURPOSES AND THAT PAYMENTS HAVE BEEN M ADE OUT OF CASH BALANCES AVAILABLE ETC. UNDER THE CIRCUMSTA NCES, THE ASSESSING OFFICER WAS EXPECTED TO EXAMINE THE MATTE R FURTHER TO ARRIVE AT A DEFINITE FINDING WHETHER ASSESSEE IN CURRED EXPENSES OR NOT AND IN CASE, ACTUALLY INCURRED, THE N WHAT WERE SOURCES FOR INCURRING THESE EXPENSES. ASSESSING OFF ICER WAS ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 33 SATISFIED ON WITHDRAWAL OF THE CLAIM AND IN MY VIEW , HIS FAILURE TO DECIDE THE MATTER REGARDING ACTUAL INCURRING OF ADDITIONAL EXPENSES AND SOURCES THEREOF RESULTED INTO ERRONEOU S ORDER WHICH IS PREJUDICIAL TO THE INTEREST OF REVENUE.' 20. AN ARGUMENT HAS BEEN MADE ON BEHALF OF THE ASSESSE E THAT NOTICE UNDER SECTION 69-C WAS ISSUED BY THE ASSESSI NG OFFICER AND THEREAFTER ON WITHDRAWAL OF THE CLAIM BY THE AS SESSEE THE ASSESSING OFFICER THOUGHT THAT THE MATTER OUGHT NOT TO BE INVESTIGATED ANY FURTHER. THIS, ACCORDING TO THE LE ARNED COUNSEL FOR THE ASSESSEE, IS A POSSIBLE VIEW AND WH EN TWO VIEWS ARE POSSIBLE ON AN ISSUE, EXERCISE OF REVISIO NAL POWER UNDER SECTION 263 WOULD NOT BE JUSTIFIED. RELIANCE IN THIS REGARD HAS BEEN PLACED ON A JUDGMENT OF THIS COURT IN MALABAR INDUSTRIAL CO. LTD. V . CIT [2000] 243 ITR 83/109 TAXMAN 66 WHICH HAS BEEN APPROVED IN CIT V. MAX INDIA LTD. [2007] 295 ITR 282/[2008] 166 TAXMAN 188 (SC) 21. THERE CAN BE NO DOUBT THAT SO LONG AS THE VIEW TAK EN BY THE ASSESSING OFFICER IS A POSSIBLE VIEW THE SAME O UGHT NOT TO BE INTERFERED WITH BY THE COMMISSIONER UNDER SECTIO N 263 OF THE ACT MERELY ON THE GROUND THAT THERE IS ANOTHER POSSIBLE VIEW OF THE MATTER. PERMITTING EXERCISE OF REVISION AL POWER IN A SITUATION WHERE TWO VIEWS ARE POSSIBLE WOULD REAL LY AMOUNT TO CONFERRING SOME KIND OF AN APPELLATE POWER IN TH E REVISIONAL AUTHORITY. THIS IS A COURSE OF ACTION TH AT MUST BE DESISTED FROM. HOWEVER, THE ABOVE IS NOT THE SITUAT ION IN THE PRESENT CASE IN VIEW OF THE REASONS STATED BY THE L EARNED C.I.T. ON THE BASIS OF WHICH THE SAID AUTHORITY FELT THAT THE MATTER NEEDED FURTHER INVESTIGATION, A VIEW WITH WHICH WE WHOLLY AGREE. MAKING A CLAIM WHICH WOULD PRIMA FACIE DISCLOSE THAT THE EXPENSES IN RESPECT OF WHICH DEDUCTION HAS BEEN CLAIMED HAS BEEN INCURRED AND THEREAFTER ABANDONING/WITHDRA WING THE SAME GIVES RISE TO THE NECESSITY OF FURTHER ENQ UIRY IN THE INTEREST OF THE REVENUE. THE NOTICE ISSUED UNDER SE CTION 69-C OF THE ACT COULD NOT HAVE BEEN SIMPLY DROPPED ON TH E GROUND THAT THE CLAIM HAS BEEN WITHDRAWN. WE, THEREFORE, A RE OF THE OPINION THAT THE LEARNED C.I.T. WAS PERFECTLY JUSTI FIED IN COMING TO HIS CONCLUSIONS INSOFAR AS THE ISSUE NO. (III) I S CONCERNED AND IN PASSING THE IMPUGNED ORDER ON THAT BASIS. TH E LEARNED TRIBUNAL AS WELL AS THE HIGH COURT, THEREFORE, OUGH T NOT TO HAVE INTERFERED WITH THE SAID CONCLUSION. 22. IN THE LIGHT OF THE DISCUSSIONS THAT HAVE PRECEDED AND FOR THE REASONS ALLUDED WE ARE OF THE OPINION THAT THE PRESENT IS A ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 34 FIT CASE FOR EXERCISE OF THE SUO MOTU REVISIONAL POWERS OF THE LEARNED C.I.T. UNDER SECTION 263 OF THE ACT. THE OR DER OF THE LEARNED C.I.T., THEREFORE, IS RESTORED AND THOSE OF THE LEARNED TRIBUNAL DATED 28TH AUGUST, 2007 AND THE HIGH COURT DATED 7TH AUGUST, 2008 ARE SET ASIDE. THE APPEAL OF THE R EVENUE IS ALLOWED. SLP(C) NO.861 OF 2013 23. LEAVE GRANTED. 24. PURSUANT TO THE REVISIONAL ORDER DATED 20TH MARCH, 2006 UNDER SECTION 263 OF THE INCOME TAX ACT SETTING ASI DE THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2001-2002 AND DIRECTING FRESH ASSESSMENT, A FRESH ASSESSMENT HAD BEEN MADE BY THE ASSESSING OFFICER BY ORDER DATED 29TH DECEMB ER, 2006. AGAINST THE SAID ORDER THE RESPONDENT ASSESSEE FILE D AN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS). BY ORDER DATED 18TH OCTOBER, 2007 THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) HAD SET ASIDE THE ASSESSMENT O RDER DATED 29TH DECEMBER, 2006 AS IN THE MEANTIME, BY OR DER DATED 28TH AUGUST, 2007 OF THE LEARNED INCOME TAX A PPELLATE TRIBUNAL THE REVISIONAL ORDER DATED 20TH MARCH, 200 6 UNDER SECTION 263 OF THE ACT WAS SET ASIDE. THE REVENUE'S APPEAL BEFORE THE LEARNED TRIBUNAL AGAINST THE ORDER DATED 18TH OCTOBER, 2007 WAS DISMISSED ON 11TH JANUARY, 2000 A ND BY THE HIGH COURT ON 29TH FEBRUARY, 2012. AGAINST THE AFORESAID ORDER OF THE HIGH COURT THIS APPEAL HAS BEEN FILED BY THE REVENUE. AS BY THE ORDER PASSED TODAY IN THE CIVIL APPEAL ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO.11 621 OF 2009 WE HAVE RESTORED THE SUO MOTU REVISIONAL ORDER DATED 20TH MARCH, 2006 PASSED BY THE LEARNED C.I.T., WE ALLOW THIS APPEAL FILED BY THE REVENUE AND SET ASIDE THE ORDER DATED 11TH JANUARY, 2010 PASSED BY THE LEARNED TRIBUNAL AND TH E ORDER DATED 29TH FEBRUARY, 2012 PASSED BY THE HIGH COURT REFERRED TO ABOVE. HOWEVER, WE HAVE TO ADD THAT AS THE RE-AS SESSMENT ORDER DATED 29TH DECEMBER, 2006 HAD NOT BEEN TESTED ON MERITS THE ASSESSEE WOULD BE FREE TO DO SO, IF HE I S SO INCLINED AND SO ADVISED. 25. THE APPEALS ARE DISPOSED OF IN THE ABOVE TERMS. 2.21. HOWEVER, NOW, WE SHALL EXAMINE, WHETHER THE ASSESSMENT ORDER IS ERRONEOUS AS WELL AS PREJUDICIA L TO THE ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 35 INTEREST OF REVENUE. WE FIND THAT WHILE FRAMING THE ASSESSMENT, THE LD. ASSESSING OFFICER NO DOUBT ISSU ED NOTICE U/S 143(2) AND 142(1) ASKING THE ASSESSEE TO FILE DETAILS. IT IS FURTHER NOTED THAT BEFORE PASSING TH E REVISIONAL ORDER, A SHOW CAUSE NOTICE U/S 263 DATED 20/06/2017 WAS ISSUED TO THE ASSESSEE, HOWEVER, AS IS EVIDENT FROM PARA-5 OF THE IMPUGNED ORDER. THE LD. ASSESSING OFFICER MECHA NICALLY ACCEPTED THE CLAIM OF THE ASSESSEE AND EVEN DID NOT BOTHER TO EXAMINE THE GENUINENESS OF THE CLAIM. IF THE REV ISIONAL ORDER IS EXAMINED, THE LD. PR. CIT IN A JUSTIFIABLE MANNER CONSIDERED THE FACTUAL MATRIX AND NOTED THAT THE AS SESSEE ITSELF ADMITTED THAT EXCESS CLAIM TO THE TUNE OF RS .39.97 LAKHS HAS BEEN CLAIMED BY THE ASSESSEE UNDER SECTIO N 35(2AB) OF THE ACT. HOWEVER, THE LD. ASSESSING OFF ICER WITHOUT MAKING FULL ENQUIRY WITH RESPECT TO CLAIM U NDER SECTION 35(2AB) FRAMED THE ASSESSMENT. THE ASSESSEE CLAIMED DEDUCTION OF RS.11,26,994/- BEING 200% OF A CTUAL CAPITAL EXPENDITURE INCURRED OF RS.5,63,497/- AND G UMPRO HAS ALSO CLAIMED DEDUCTION OF RS.2,75,10,270/- BEIN G 200% ON ACTUAL REVENUE EXPENDITURE INCURRED OF RS.1,37,5 5,135/- ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 36 UNDER SECTION 35(2AB) OF THE ACT. IT IS FURTHER NOT ED THAT WHILE GIVING APPROVAL OF EXPENSES IN FORM 3CL, DSIR (COMPETENT AUTHORITY) VIDE ITS LETTER DATED 13/10/2 014 HAS SANCTIONED IN TOTO FOR CAPITAL EXPENDITURE ACTUALLY INCURRED AMOUNTING TO RS.5,63,497/- WHEREAS, DSIR SANCTIONED ONLY RS.97,58,000/-, THUS, DSIR HAS NOT SANCTIONED RS.39,97,135/- OUT OF REVENUE EXPENDITURE ACTUALLY INCURRED. SO FAR AS, THE CONTENTION OF THE ASSESSEE THAT FULL DETAILS WERE FILED BY THE ASSESSEE BEFORE THE LD. A SSESSING OFFICER, IS CONCERNED, WE ARE OF THE VIEW THAT IT I S THE DUTY OF THE LD. ASSESSING OFFICER TO EXAMINE THE DETAILS AN D THEN DECIDE THE ISSUE IN ACCORDANCE WITH LAW AND THE VER SION OF THE ASSESSEE CANNOT BE MECHANICALLY ACCEPTED. IT I S FURTHER NOTED THAT THE ASSESSEE CLAIMED DEDUCTION UNDER SEC TION 35(2AB) OF THE ACT @200% I.E. RS.2,86,37,260/- OF T HE AMOUNT OF RS.1,43,18,630/-(REVENUE EXPENDITURE RS.1,37,55,135 AND CAPITAL EXPENDITURE OF RS.5,63,4 97/-), HOWEVER, AS PER 3CL AN AMOUNT OF RS.1,03,21,000/- (REVENUE EXPENDITURE OF RS.97,58,000/- AND CAPITAL EXPENDITURE OF RS.5,63,497/-) ALLOWED BY THE DEPART MENT OF ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 37 SCIENTIFIC AND INDUSTRIAL RESEARCH. THE 200% OF RS.1,03,21,000/- I.E. RS.2,06,42,300/- ONLY WAS ELI GIBLE FOR DEDUCTION UNDER SECTION 35(2AB) OF THE ACT. THE DE CISION FROM HON'BLE RAJASTHAN HIGH COURT IN SHRI GYAN CHAN D JAIN VS CIT (2013) 354 ITR 622 (RAJ.) WAS CONSIDERED. IT IS NOT THE CASE THAT THE LD. PR. CIT THRUST UPON HIS VIEW TO D ISALLOW THE CLAIM OF THE ASSESSEE. EVEN OTHERWISE, AS PER M ANDATE OF ARTICLE 265 OF CONSTITUTION OF INDIA, ONLY DUE TAXE S HAVE TO BE LEVIED/COLLECTED. HOWEVER, WE DIRECT THE LD. A SSESSING OFFICER TO ADJUDICATE THE ISSUES AFRESH IN A DETAIL ED MANNER WITH REASONING. THE ASSESSEE IS DIRECTED TO FURNISH THE NECESSARY EVIDENCE IN SUPPORT OF ITS CLAIM. IN VIE W OF THIS FACTUAL MATRIX, IN PRINCIPLE, WE AFFIRM THE STAND O F THE LD. PR. COMMISSIONER, HOWEVER, WITH A DIRECTION TO MODIFY T HE DIRECTION CONTAINED AT LAST PAGE OF THE IMPUGNED OR DER WITH A FRESH DIRECTION THAT THE WHOLE CLAIM OF THE ASSES SEE MAY BE EXAMINED AFRESH, AFTER AFFORDING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. RESULTANTLY, THE APPEAL OF THE ASSESSEE IS, THEREFORE, HAVING NO MERIT, CONSEQUENT LY, DISMISSED. ITA NO.2868/MUM/2018 GUMPRO DRILLING FLUIDS PVT. LTD. 38 FINALLY, THE APPEAL OF THE ASSESSEE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF THE LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 10/10/2018. SD/- SD/- ( RA MI T KOCHAR ) (JOGINDER SINGH) ! ' / ACCOUNTANT MEMBER # ' /JUDICIAL MEMBER MUMBAI; ' DATED : 10/10/2018 F{X~{T? P.S/. .. $#%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. )*+, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. // 0 ( )* ) / THE CIT, MUMBAI. 4. // 0 / CIT(A)- , MUMBAI 5. 2 3- , /)*%)4 , / DR, ITAT, MUMBAI 6. 56 / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI