TATA CHEMICALS LTD, MUMBAI V. DCIT 2(2), MUMBAI

ITA 3127/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49250 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 12-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 22-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A P SINGH
• Keywords: Opportunity of being heard; Principle of natural justice; Right to appeal
• Section: 143(3); 263

Judgement Text

ITA NO. 3127/MUM/10 ASSESSMENT YEAR: 2005-06 PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI E BENCH, MUMBAI BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI V DURGA RAO, JUDICIAL MEMBER ITA NO. 3127/MUM/10 ASSESSMENT YEAR: 2005-06 TATA CHEMICALS LIMITED .. APPELLANT BOMBAY HOUSE, FORT, MUMBAI 400 001 PAN : AAACT4059M VS. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 2(2), MUMBAI RESPONDENT APPEARANCES: DINESH VYAS, SENIOR ADVOCATE, ALONG WITH S M IYER AND AT SURAIYA, FOR THE APPELLANT A P SINGH, FOR THE RESPONDENT O R D E R PER PRAMOD KUMAR : 1. THE SHORT ISSUE THAT WE ARE REQUIRED TO ADJUDICA TE IN THIS APPEAL IS WHETHER OR NOT, ON THE FACTS AND IN THE CIRCUMSTANC ES OF THIS CASE, THE LEARNED COMMISSIONER WAS JUSTIFIED IN EXERCISING RE VISION POWERS UNDER SECTION 263 OF THE INCOME TAX ACT, 1961. THE ASSESS MENT YEAR INVOLVED IS 2005-06, THE IMPUGNED REVISION ORDER WAS PASSED BY THE LEARNED COMMISSIONER ON 18 TH MARCH 2010, AND THE ASSESSMENT ORDER, SO SUBJECTED TO REVISION PROCEEDINGS, WAS PASSED BY TH E ASSESSING OFFICER UNDER SECTION 143(3) OF THE ACT. ITA NO. 3127/MUM/10 ASSESSMENT YEAR: 2005-06 PAGE 2 OF 11 2. THE ISSUE IN APPEAL LIES IN A RATHER NARROW COMP ASS OF MATERIAL FACTS. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND DEALING IN VARIOUS TYPES OF ORGANIC, INORGANIC AND HEAVY CHEMICALS. THE ASSESSE ALSO HAS A POWER PLANT AT MITHAPUR, GUJARAT , AND IN RESPECT OF THIS POWER PLANT THAT THE ASSESSE CLAIMED DEDUCTION UNDE R SECTION 80IA OF THE ACT, AMOUNTING TO RS 45,55,08,392. WHILE THIS CLAIM WAS ALLOWED IN THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS UNDER SECTION 143(3), AS WAS THE ACCEPTED PAST HISTORY OF THE CASE RIGHT SIN CE ASSESSMENT YEAR 2001-02, LEARNED COMMISSIONER, ON 25 TH FEBRUARY 2010, REQUIRED THE ASSESSE TO SHOW CAUSE AS TO WHY THE ASSESSMENT ORDE R SO ALLOWING THE CLAIM NOT BE SUBJECTED TO REVISION UNDER SECTION 26 3. IN THE SHOW CAUSE NOTICE, LEARNED COMMISSIONER OBSERVED AS FOLLOWS: ON EXAMINATION OF THE RECORDS FOR THE A.Y. 2005-06, IT IS NOTICED THAT ASSESSMENT ORDER PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961 ON 20.12.2007 BY THE ACIT- 2(3), MUMBAI IN YOUR CASE IS ERRONEOUS AND ALSO PREJ UDICIAL TO INTEREST OF REVENUE IN VIEW OF THE FACT THAT THE ASSESSING OFFI CER WHILE PASSING ORDER U/S.143(3) ALLOWED A DEDUCTION OF RS 45,55,08,392 U /S. 80IA IN RESPECT OF NOTIONAL PROFIT EARNED ON PRODUCTION OF ELECTRICIT Y AND STEAM. THE DEDUCTION ALLOWED IN RESPECT OF STEAM WORKED OUT TO RS 22,10, 31,452, WHICH IS NOT ALLOWABLE SINCE STEAM IS A TRANSIENT PRODUCT DOES NO T HAVE ANY SHELF LIFE. THE WRONG ALLOWANCE OF DEDUCTION RESULTED IN THE UNDER ASSESSMENT OF RS 22,10,31,452 AND SHORT LEVY OF TAX OF RS 8,08,80,93 3. IN VIEW OF THE ABOVE ERROR IN THE ASSESSMENT ORDER, YOU ARE REQUESTED TO SHOW CAUSE AS TO WHY THE SAID ORDER SHOULD NOT BE REVISE D U/S.263 OF THE INCOME TAX ACT. YOUR OBJECTIONS, IF ANY TO THE PROPOSED REVIS ION OF ASSESSMENT MAY BE FILED BEFORE THE UNDERSIGNED ON OR BEFORE 7.10.2009 ON WHIC H DATE THE MATTER STANDS POSTED FOR HEARING IN MY OFFICE AT THE ABOVE ADDRESS AT 4.00 PM. YOU MAY APPEAR PERSONALLY OR THROUGH YOUR AUTHORIZED REPRES ENTATIVE IN THIS REGARD. 3. IN RESPONSE TO THE SHOW CAUSE NOTICE, IT WAS SUB MITTED BY THE ASSESSE THAT, ON MERITS, THIS CLAIM OF DEDUCTION WA S RIGHTLY ALLOWED BY THE ASSESSE. A REFERENCE WAS MADE TO THE WRITTEN SUBMIS SIONS IN WHICH ELABORATE SUBMISSIONS WERE MADE BY THE ASSESSE IN S UPPORT OF THIS CLAIM, ON MERITS, TO THE EFFECT (A) THAT THE CLAIM MADE BY THE ASSESSE IS IN ITA NO. 3127/MUM/10 ASSESSMENT YEAR: 2005-06 PAGE 3 OF 11 CONSONANCE WITH THE LAW LAID DOWN BY THE INCOME TAX APPELLATE TRIBUNAL IN THE CASE OF WEST COAST PAPER MILLS LTD VS ACIT ( 103 ITD 19); (B) THAT THE CLAIM OF THE ASSESSE IS BASED ON SATISFACTION O F ALL THE CONDITIONS LAID DOWN IN SECTION 80IA IN THE FIRST YEAR OF CLAIM, AN D THAT SUCH A SATISFACTION CANNOT BE DISTURBED IN THE SUBSEQUENT YEARS PARTI CULARLY BY WAY OF REVISION UNDER SECTION 263; (C) THAT A SIMILAR SHO W CAUSE NOTICE UNDER SECTION 263 WAS ISSUED IN THE ASSESSMENT YEAR 2001- 02 AS WELL, BUT, HAVING REGARD TO THE SUBMISSIONS MADE BY THE ASSESS E IN RESPONSE THEREOF, THE SAME WAS DROPPED; (D) THAT THIS IS FIF TH YEAR OF CLAIM AND THE SAME HAS BEEN ALLOWED IN EARLIER YEARS BY WAY OF SP EAKING ORDERS UNDER SECTION 143(3) PARTICULARLY IN THE ASSESSMENT YEA R 2001-02; AND (E) THAT THE REVISION OF ASSESSMENT ORDER, ON THESE FACTS, W ILL SIMPLY AMOUNT TO SUBSTITUTION OF OPINION OF THE ASSESSING OFFICER BY THE OPINION OF THE LEARNED COMMISSIONER. 4. NONE OF THESE SUBMISSIONS, HOWEVER, IMPRESSED TH E LEARNED COMMISSIONER. WHILE LEARNED COMMISSIONER DID NOT R EALLY REJECT THE SUBMISSIONS SO MADE BY THE ASSESSEE ON MERITS, HE E XERCISED HIS REVISION POWERS ON THE GROUND THAT ALL THESE ISSUES WERE NOT EXAMINED BY THE ASSESSING OFFICER IN THE COURSE OF THE ASSESSMENT. HE REJECTED THESE ARGUMENTS AND OBSERVED AS FOLLOWS: ..ON GOING THROUGH THE WRITTEN SUBMISSIONS, IT IS SEEN THAT THE ASSESSEE HAS MAINLY OBJECTED TO THE SETTING ASIDE O F THE ASSESSMENT UNDER SECTION 263 ON TECHNICAL GROUNDS RATHER THAN ON MERITS. HOWEVER, ON GOING THROUGH VARIOUS DECISIONS CITED B Y THE ASSESSEE, IT IS SEEN THAT THE FACTS AND CIRCUMSTANCES OF THE CAS E ARE DISTINGUISHABLE FROM THE FACTS OF THE CASES CITED B Y THE ASSESSEE. THERE ARE TWO SUPREME COURT DECISIONS, NAMELY RAMPY ARI DEVI SAROGI VS CIT ( 67 ITR 84) AND TARA DEVI AGARWAL VS CIT ( 88 ITR 323), IN WHICH IT HAS BEEN CATEGORICALLY HELD THAT THE COMMI SSIONER MAY CONSIDER THE ORDER AS ERRONEOUS EVEN IF ERROR OF LA W MAY NOT BE APPARENT ON THE FACE OF THE ORDER. AN ORDER WHICH S IMPLY ACCEPTS WHAT ITA NO. 3127/MUM/10 ASSESSMENT YEAR: 2005-06 PAGE 4 OF 11 THE ASSESSEE HAS STATED IN HIS RETURN AND FAILS TO MAKE OUT ENQUIRIES WHICH ARE CALLED FOR IN THE CIRCUMSTANCES OF THE CA SE, IS AN ERRONEOUS ORDER AS PER THE APEX COURT. IN THE PRESENT CASE, T HE ASSESSING OFFICER FAILED TO MAKE PROPER ENQUIRIES AND ACCEPTED THE CL AIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IA ON NOTION AL PROFITS ON PRODUCTION OF STEAM. THIS ALSO RESULTED IN THE ASSE SSMENT ORDER BEING PREJUDICIAL TO THE INTEREST OF THE REVENUE. SINCE B OTH THESE CONDITIONS ARE SATISFIED, I AM OF THE OPINION THAT THIS IS A F IT CASE FOR APPLYING SECTION 263 5. LEARNED COMMISSIONER THEN PROCEEDED TO CONCLUDE THAT, IN VIEW OF THE REASONS MENTIONED ABOVE AND OVERRULING THE OBJE CTION OF THE ASSESSEE, I SET ASIDE THE ASSESSMENT ORDER FOR ASSE SSMENT YEAR 2005-06 UNDER SECTION 263 OF THE INCOME TAX ACT, 1961, WITH A DIRECTION TO THE ASSESSING OFFICER TO RE DO THE ASSESSMENT AS PER LA W AND AFTER GIVING SUFFICIENT OPPORTUNITY (OF HEARING) TO THE ASSESSEE. THE ASSESSEE IS AGGRIEVED OF THE ACTION OF THE COMMISSIONER, AND IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE FACTUAL MATRIX OF TH E CASE AS ALSO THE APPLICABLE LEGAL POSITION. 7. WE FIND THAT THE IMPUGNED REVISION ORDER IS IND EED NOT SUSTAINABLE IN LAW. A PLAIN READING OF THE IMPUGNED REVISION OR DER CLEARLY SHOWS THAT THE CONCLUSION DRAWN IN THE REVISION PROCEEDINGS AR E DIFFERENT FROM THE REASONS FOR REVISION PROCEEDINGS SET OUT IN THE SHO W CAUSE NOTICE- EXTRACTS FROM WHICH ARE SET OUT IN THE REVISION ORD ER ITSELF. IT IS IMPORTANT TO NOTE THE SHIFTING STAND OF THE COMMISSIONER SO F AR AS REASONS FOR SUBJECTING THE ASSESSMENT ORDER TO REVISION PROCEED INGS. IN THE SHOW CAUSE NOTICE, THE LEARNED COMMISSIONER WAS OF THE V IEW THAT DEDUCTION UNDER SECTION 80IA WAS NOT ALLOWABLE SINCE STEAM IS A TRANSIENT PRODUCT DOES NOT HAVE ANY SHELF LIFE . THIS PLEA ABOUT LACK OF SHELF LIFE OF STEAM DID ITA NO. 3127/MUM/10 ASSESSMENT YEAR: 2005-06 PAGE 5 OF 11 NOT FIND MENTION IN THE REVISION ORDER, BUT AT PAGE 1 OF THE IMPUGNED REVISION ORDER, LEARNED COMMISSIONER NOTES THAT THA T AS THE COST OF PRODUCTION OF STEAM EQUALS THE SALES VALUE, NO PROF IT CAN BE ATTRIBUTED TO THE TRANSACTION AND THAT THUS THE DEDUCTION UNDER SECTION 80IA RESULTED IN THE ASSESSMENT BEING ERRONEOUS AND PREJ UDICIAL TO THE INTEREST OF THE REVENUE. HOWEVER, BY THE TIME, LEARNED COMMISSIONER REACHED THE OPERATIVE PORTION OF THE REVISION ORDER , HE ENTIRELY ABANDONED THESE GROUNDS ABOUT INADMISSIBILITY OF CLAIM OF DED UCTION UNDER SECTION 80 IA ON MERITS, AND SET ASIDE THE ASSESSMENT ORDER ON THE GROUND THAT IN THE PRESENT CASE, THE ASSESSING OFFICER FAILED TO M AKE PROPER ENQUIRIES AND ACCEPTED THE CLAIM OF THE ASSESSEE FO R DEDUCTION UNDER SECTION 80IA ON NOTIONAL PROFITS ON PRODUCTION OF S TEAM . IT IS THUS CLEAR THAT THERE HAS BEEN A SHIFT IN THE STAND OF T HE COMMISSIONER ON WHETHER IT WAS A FIT CASE FOR REVISION ON THE GROUN D THAT THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA IN RE SPECT OF NOTIONAL SALE OF STEAM OR WHETHER IT WAS A CASE FOR REVISION ON THE GROUND THAT THE ASSESSING OFFICER DID NOT MAKE NECESSARY VERIFICATI ONS ABOUT THE CLAIM MADE BY THE ASSESSEE. THE REASON GIVEN IN THE SHOW CAUSE NOTICE IS FORMER, WHILE THE REASON FOR WHICH REVISION POWERS ARE FINALLY EXERCISED IN THE IMPUGNED ORDER ARE LATTER. EVEN WITH REGARD TO THE REASONS OF INELIGIBILITY OF DEDUCTION UNDER SECTION 80 IA IN R ESPECT OF NOTIONAL SALE OF STEAM, THE REASONS ARE DIFFERENT AT THE NOTICE STAG E AND AT THE TIME OF THE IMPUGNED ORDER, BUT ALL THAT CEASES TO BE RELEVANT BECAUSE THE GROUND ON WHICH THE ASSESSMENT IS FINALLY SET ASIDE IS THAT THE ASSESSING OFFICER FAILED TO MAKE PROPER ENQUIRIES . THE REASONS FOR WHICH IMPUGNED ASSESSMENT IS SET ASIDE IS THUS ENTIRELY DIFFERENT FROM THE REASONS WHICH WERE SET OUT IN THE SHOW CAUSE NOTICE. 8. AS TO WHETHER SUCH AN EXERCISE OF REVISION POWER S, ON THE GROUNDS OTHER THAN THE GROUNDS OF REVISION AS SET OUT IN TH E SHOW CAUSE NOTICE, ITA NO. 3127/MUM/10 ASSESSMENT YEAR: 2005-06 PAGE 6 OF 11 COULD BE HELD TO BE SUSTAINABLE IN LAW, WE FIND GUI DANCE FROM THE DECISIONS OF A COORDINATE BENCH IN THE CASE OF MAXPACK INVES TMENTS LTD VS ACIT (13 SOT 67) WHICH, INTER ALIA , OBSERVES AS FOLLOWS: .IN CIT V. G.K. KABRA [1995] 211 ITR 336 THE ANDHRA PRADESH HIGH COURT WAS DEALING WITH AN APPLICATION SEEKING REFERENCE UNDER SECTION 256(2), INTER ALIA, OF THE FOLLOWING QUESTI ON : WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE INCOME-TAX APPELLATE TRIBUNAL WAS CORRECT IN HOLDIN G THAT THE COMMISSIONER OF INCOME-TAX LACKS INITIAL JURISDICTI ON, PARTICULARLY WHEN THE CONCLUSION MADE BY THE COMMISSIONER OF INC OME-TAX IN THE ORDER UNDER SECTION 263 WAS ON THE BASIS OF THE INF ORMATION FURNISHED IN RESPONSE TO THE INITIAL NOTICE ? WHILE DECLINING TO REFER THE ABOVE QUESTION, THE HI GH COURT HELD AS UNDER (PAGES 339-340) : THE NECESSARY IMPLICATION IN THE EXPRESSION AFTER GIVING OPPORTUNITY OF BEING HEARD RELATES TO THE POINT ON WHICH THE COMMISSIONER CONSIDERS THE ORDER TO BE ERRONEOUS AN D PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN OTHER WORDS, IT IS NECESSARY FOR THE COMMISSION TO POINT OUT THE EXACT ERROR IN THE ORDE R WHICH HE PROPOSES TO REVISE SO THAT THE ASSESSEE WOULD HAVE AN ADEQUATE OPPORTUNITY OF MEETING THE ERROR BEFORE THE FINAL O RDER IS MADE. [EMPHASIS SUPPLIED] IN THE CASE BEFORE THE HIGH COURT, THE SHOW-CAUSE N OTICE REFERRED TO TWO ISSUES TO WHICH THE ASSESSEE HAD GIVEN SATISFACTORY REPLIES. NO ACTION WAS TAKEN UNDER SECTION 263 IN RESPECT OF TH ESE TWO ISSUES. HOWEVER, IN THE SAID ORDER THE CIT MENTIONED THE HI RE CHARGES AS THE GROUND FOR REVISING THE ASSESSMENT. THIS POINT HAD NOT BEEN MENTIONED AS A GROUND IN THE SHOW-CAUSE NOTICE. THE HIGH COUR T HELD THAT INASMUCH AS THE COMMISSIONER HAD NOT CHOSEN TO SHO W THESE TWO POINTS AS THE ERRORS IN MAKING THE FINAL ORDER AND THE FIN AL ORDER UNDER SECTION 263 REFERS ONLY TO THE INFERENCE OF HIRE CHARGES BE ING EXIGIBLE TO TAX WHICH WAS NOT MENTIONED AT ALL IN THE SHOW CAUSE, O BVIOUSLY THE ASSESSEE HAD NO OPPORTUNITY TO MEET THAT POINT. [EMPHASIS S UPPLIED] ITA NO. 3127/MUM/10 ASSESSMENT YEAR: 2005-06 PAGE 7 OF 11 10. THE RATIO OF THE DECISION, CLEAR FROM THE ABOVE OBSERVATIONS, IS THAT IF A GROUND OF REVISION IS NOT MENTIONED IN THE SHO W-CAUSE NOTICE ISSUED UNDER SECTION 263, THAT GROUND CANNOT BE MADE THE B ASIS OF THE ORDER PASSED UNDER THE SECTION, FOR THE SIMPLE REASON THA T THE ASSESSEE WOULD HAVE HAD NO OPPORTUNITY TO MEET THE POINT. . 11. THE OTHER JUDGMENT WHICH SUPPORTS THE CASE OF T HE ASSESSEE IS THAT OF THE PUNJAB AND HARYANA HIGH COURT IN CIT V. JAGADHR I ELECTRIC SUPPLY AND INDUSTRIAL CO. LTD. [1983] 140 ITR 490 THE NATURE OF THE JURISDICTION OF THE CIT UNDER SECTION 263 AND THE POWERS OF THE TRIBUNAL WHILE DEALING WITH AN APPEAL AGAINST THE ORDER PASSED UND ER THAT SECTION WERE EXPLAINED IN THAT DECISION. THE CIT HAD FOUND THE O RDER OF THE ASSESSING OFFICER ALLOWING CONTINUATION OF REGISTRATION TO TH E ASSESSEE-FIRM TO BE ERRONEOUS ON THE GROUND THAT THE ACTUAL DISTRIBUTIO N OF THE PROFITS WAS DIFFERENT FROM THE RATIO MENTIONED IN THE DEED OF P ARTNERSHIP. THE TRIBUNAL SET ASIDE THE ORDER OF THE CIT BUT WHILE D OING SO OBSERVED THAT THERE WAS A CHANGE IN THE NUMBER OF PARTNERS FROM 1 0 TO 11 WHICH FACT HAD NOT BEEN TAKEN INTO ACCOUNT BY THE ASSESSING OF FICER WHEN HE GRANTED REGISTRATION FOR THE FIRM FOR THE ASSESSMEN T YEAR 1966-67 AND THUS THE GRANT OF REGISTRATION WAS ERRONEOUS. ON TH E BASIS OF THIS OBSERVATION IT WAS ARGUED BEFORE THE HIGH COURT ON BEHALF OF THE REVENUE THAT THE TRIBUNAL OUGHT TO HAVE SUSTAINED T HE ORDER OF THE CIT ON THAT GROUND. REPELLING THE CONTENTION, IT WAS HE LD BY THE HIGH COURT AS UNDER (PAGES 502-3) : THE JURISDICTION VESTED IN THE COMMISSIONER UNDER SECTION 263(1) OF THE ACT IS OF A SPECIAL NATURE OR, IN OTH ER WORDS, THE COMMISSIONER HAS THE EXCLUSIVE JURISDICTION UNDER T HE ACT TO REVISE THE ORDER OF THE ITO IF HE CONSIDERS THAT AN Y ORDER PASSED BY HIM WAS ERRONEOUS INSOFAR AS IT WAS PREJU DICIAL TO THE INTERESTS OF THE REVENUE. BEFORE GOING SO, HE I S ALSO REQUIRED TO GIVE AN OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE. IF AFTER HEARING THE ASSESSEE IN PURSUANCE OF THE N OTICE ISSUED BY HIM UNDER SECTION 263(1) OF THE ACT, HE IS NOT S ATISFIED, HE MAY PASS THE NECESSARY ORDERS. OF COURSE, THE ORDER THUS PASSED WILL CONTAIN THE GROUNDS FOR HOLDING THE ORD ER OF THE ITO TO BE ERRONEOUS, AS CONTEMPLATED UNDER SECTION 263(1) OF THE ACT. . . . THE TRIBUNAL CANNOT UPHOLD THE ORDER OF THE COMMISSIONER ON ANY OTHER GROUND WHICH, IN ITS OPIN ION, WAS AVAILABLE TO THE COMMISSIONER AS WELL. IF THE TRIBU NAL IS ALLOWED TO FIND OUT THE GROUND AVAILABLE TO THE COM MISSIONER TO PASS AN ORDER UNDER SECTION 263(1) OF THE ACT, T HEN IT WILL AMOUNT TO A SHARING OF THE EXCLUSIVE JURISDICTION V ESTED IN THE COMMISSIONER, WHICH IS NOT WARRANTED UNDER THE ACT. IT IS ALL ITA NO. 3127/MUM/10 ASSESSMENT YEAR: 2005-06 PAGE 8 OF 11 THE MORE SO, BECAUSE THE REVENUE HAS NOT BEEN GIVEN ANY RIGHT OF APPEAL UNDER THE ACT AGAINST AN ORDER OF THE COM MISSIONER UNDER SECTION 263(1) OF THE ACT. . . . UNDER SECTIO N 263 OF THE ACT IT IS ONLY THE COMMISSIONER WHO HAS BEEN AUTHOR IZED TO PROCEED IN THE MATTER AND, THEREFORE, IT IS HIS SAT ISFACTION ACCORDING TO WHICH HE MAY PASS NECESSARY ORDERS THE REUNDER IN ACCORDANCE WITH LAW. IF THE GROUNDS WHICH WERE A VAILABLE TO HIM AT THE TIME OF THE PASSING OF THE ORDER DO NOT FIND A MENTION IN HIS ORDER APPEALED AGAINST, THEN IT WILL BE DEEMED THAT HE REJECTED THOSE GROUNDS FOR THE PURPOSE OF A NY ACTION UNDER SECTION 263(1) OF THE ACT. IN THIS SITUATION, THE TRIBUNAL, WHILE HEARING AN APPEAL FILED BY THE ASSESSEE, CANN OT SUBSTITUTE THE GROUNDS WHICH THE COMMISSIONER HIMSE LF DID NOT THINK PROPER TO FORM THE BASIS OF HIS ORDER. WE RESPECTFULLY UNDERSTAND THIS JUDGMENT AS HOLDING , BY NECESSARY IMPLICATION, THAT IF THE CIT HAS NOT MENTIONED THE GROUND ON WHICH ACTION IS PROPOSED TO BE TAKEN UNDER SECTION 263 IN THE SHOW-CAUSE NOTICE, IT IS DEEMED THAT HE WAS NOT SATISFIED THAT IT WAS A FIT GROUND FOR TAKING ACTION UNDER THE SECTION, WITH THE RESUL T THAT THE FINAL ORDER, IF BASED ON THE GROUND WHICH HE HAD EARLIER CONSIDERED NOT FIT FOR TAKING ACTION UNDER THE SECTION, WILL HAVE TO B E SET ASIDE AS NOT BASED ON ANY GROUND WHICH MAY JUSTIFY HIS BELIEF TH AT THE ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS INSOF AR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. . 9. IN THE CASE OF SYNERGY ENTERPRISES SOLUTIONS PVT LTD VS DCIT (ITA NO 2076/MUM/2010; ORDER DATED 31 ST MARCH 2011), A COORDINATE BENCH HAD AN OCCASION TO DEAL WITH A MATERIALLY IDENTICAL SITUATION. AS HELD IN THIS DECISION, FOLLOWING MAXPACK INVESTMENTS 13 SOT 67 (DEL), G.K. KABRA 211 ITR 336 (AP) AND JAGADHRI ELECTRIC SUPPLY 140 I TR 490 (P&H ), IF A GROUND OF REVISION IS NOT MENTIONED IN THE SHOW-CAU SE NOTICE, IT CANNOT BE MADE THE BASIS OF THE ORDER FOR THE REASON THAT THE ASSESSEE WOULD HAVE HAD NO OPPORTUNITY TO MEET THE POINT . WHILE LEARNED DEPARTMENTAL REPRESENTATIVE DOES NOT DISPUTE THIS POSITION AND T HAT DECISION OF THE COORDINATE BENCH SQUARELY COVERS THE ISSUE, HE URGE S US TO AT BEST REMIT THE MATTER TO THE FILE OF THE CIT(A) SO AS THE ASSE SSEE CAN BE GIVEN AN OPPORTUNITY TO MEET THE POINT ON WHICH REVISION POW ERS ARE EXERCISED, EVEN THOUGH, ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIVE, ITA NO. 3127/MUM/10 ASSESSMENT YEAR: 2005-06 PAGE 9 OF 11 STRICTLY SPEAKING EVEN THIS PARTIAL RELIEF IS NOT DUE TO THE ASSESSE BECAUSE SUBJECT MATTER OF THE REVISION HAS REMAINED THE SAM E AS WAS SET OUT IN THE NOTICE, I.E. DEDUCTION UNDER SECTION 80 IA IN R ESPECT OF NOTIONAL SALE OF STEAM. WE ARE UNABLE TO SEE ANY LEGALLY SUSTAINABLE MERITS IN THE STAND OF THE LEARNED DEPARTMENTAL REPRESENTATIVE. WHILE SUBJ ECT MATTER OF REVISION MAY HAVE BEEN THE SAME AS IN THE SHOW CAUS E NOTICE, THE GROUND ON WHICH REVISION WAS SOUGHT TO BE DONE IN THE SHOW CAUSE NOTICE IS MATERIALLY DIFFERENT THAN THE GROUND ON WHICH REVIS ION POWERS ARE ACTUALLY EXERCISED. AS SUCH, ASSESSEE HAD NO OPPORT UNITY TO DEFEND ON THE GROUND WHICH IS ULTIMATELY DECIDED AGAINST HIM. IT IS WELL SETTLED LEGAL POSITION, AS WE HAVE SEEN IN THE ERUDITE DISCUSSION S IN MAXPACK DECISION (SUPRA) , THAT REVISION POWERS CAN NOT BE EXERCISED ON A GR OUND WHICH HAS NOT BEEN PUT TO THE ASSESSEE. IN ANY CASE, IT IS ON E OF THE FUNDAMENTAL PRINCIPLES OF NATURAL JUSTICE THAT NO PERSON CAN BE CONDEMNED UNHEARD I.E AUDI ALTERAM PARTEM , AND THE IMPUGNED REVISION ORDER WAS THUS PASSED I N VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. AS FOR THE PLEA THAT THE MATTER SHOULD BE REMITTED TO THE FILE OF THE LEARNE D COMMISSIONER FOR AFFORDING THE ASSESSEE AN OPPORTUNITY OF HEARING, W E FIND WHAT IS IN CHALLENGE BEFORE US IS THE REVISION ORDER PASSED BY THE LEARNED COMMISSIONER, AND, AS WE HAVE NOTED ABOVE, THE SAID ORDER IS LEGALLY UNSUSTAINABLE IN LAW, AND QUASHED ACCORDINGLY. AS OBSERVED BY A SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF COLONIZERS VS . ACIT (41 ITD SB 57), THE VIOLATION OF PRINCIPLES OF JUSTICE, AS HAS HAPP ENED IN THIS CASE, RESULTS IN AN ORDER BEING RENDERED NULL AND VOID. THE SPECI AL BENCH HAS, INTER ALIA, OBSERVED AS FOLLOWS: AS IT HAS BEEN DISCUSSED IN THE EARLIER PARAGRAPH TH ERE ARE PLETHORA OF CASES HOLDING THAT VIOLATION OF PRINCIPLES OF NATURAL JUS TICE MAKES THE DECISION VOID AS IN EVERY OTHER CASE ULTRA VIRES. THE RULES OF NATUR AL JUSTICE OPERATE AS IMPLIED MANDATORY REQUIREMENT, NON-OBSERVANCE OF WHICH AMOU NTS TO ARBITRARINESS AND DISCRIMINATION. THE PRINCIPLES OF NATURAL JUSTI CE HAVE BEEN ELEVATED TO THE STATUS OF FUNDAMENTAL RIGHTS GUARANTEED IN THE CONS TITUTION OF INDIA AS IS ITA NO. 3127/MUM/10 ASSESSMENT YEAR: 2005-06 PAGE 10 OF 11 EVIDENT FROM THE DECISION OF THE FULL BENCH OF THE HON'BLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. TULSIRAM PATEL & ORS. RE PORTED IN AIR 1985 SC 1416 AT 1469, HOLDING THAT THE PRINCIPLE OF NATURAL JUSTICE HAVE THUS COME TO BE RECOGNISED AS BEING A PART OF THE GUARANTEE CONTAINE D IN ARTICLE 14 OF THE CONSTITUTION OF INDIA BECAUSE OF THE NEW AND DYNAMIC INTERPRETATION GIVEN BY THE SUPREME COURT TO THE CONCEPT OF EQUALITY WHICH IS THE SUBJECT-MATTER OF THAT ARTICLE AND THAT VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BY A STATE ACTION IS A VIOLATION OF ARTICLE 14. A QUASI-JUDICIAL OR ADMINI STRATIVE DECISION RENDERED OR AN ORDER MADE IN VIOLATION OF THE RULE OF AUDI ALTE RAM PARTEM IS NULL AND VOID AND THE ORDER MADE IN SUCH A CASE CAN BE STRUCK DOWN AS INVALID ON THAT SCORE ALONE (MANEKA GANDHI VS. UNION OF INDIA AIR 1978 SC 597; GANGADHARAN PILLAI VS. ACED (1978) 8 CTR (KER) 352 : (1980) 126 ITR 35 6 (KER) AT PP. 365 TO 367). IN OTHER WORDS, THE ORDER WHICH INFRINGES THE FUNDA MENTAL PRINCIPLE, PASSED IN VIOLATION OF AUDI ALTERAM PARTEM RULE, IS A NULLITY . WHEN A COMPETENT COURT OR AUTHORITY HOLDS SUCH AN ORDER AS INVALID OR SETS IT ASIDE, THE IMPUGNED ORDER BECOMES NULL AND VOID. (NB. KHAN ABBAS KHAN VS. STATE O F GUJARAT AIR 1974 SC 1471 AT 1479). 10. ONCE WE COME TO THE CONCLUSION THAT THE IMPUGNE D ORDER IS NULL AND VOID, IT IS NOT FOR US TO ADVISE THE COMMISSIONER A S TO WHAT SHOULD HE DO. HE IS ALWAYS AT LIBERTY TO DO WHATEVER ACTION HE CA N TAKE IN ACCORDANCE WITH THE LAW, BUT WE CANNOT GIVE LIFE TO A NULL AND VOID ORDER BY REMITTING IT BACK TO THE LEARNED COMMISSIONER FOR GIVING AN O PPORTUNITY OF PASSING THE FRESH ORDER AFTER GIVING THE ASSESSEE AN OPPORT UNITY OF HEARING. IN CASE, IT IS POSSIBLE FOR THE COMMISSIONER TO PASS A FRESH ORDER AT THIS STAGE, IN ACCORDANCE WITH THE SCHEME OF THE ACT, HE CAN VE RY WELL DO SO, BUT IN CASE THE TIME LIMIT FOR PASSING SUCH ORDER HAS ALRE ADY EXPIRED, WE CANNOT EXTEND THE SAME BY DIRECTING HIM TO PASS THE ORDER AFRESH AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE. AS FOR LEAR NED DEPARTMENTAL REPRESENTATIVES SUGGESTION THAT NO REAL PREJUDICE IS CAUSED TO THE LEGITIMATE INTERESTS OF THE ASSESSEE SINCE BY WAY O F IMPUGNED ORDER LEARNED COMMISSIONER HAS ONLY DIRECTED FRESH DECISI ON OF THE ASSESSING OFFICER ON MERITS AND IN ACCORDANCE WITH THE LAW, A LL WE CAN SAY IS THAT IF WE ARE TO UPHOLD SUCH A CONTENTION, WE WILL HAVE BU RY THE CONCEPT OF FINALITY OF ASSESSMENT DEEP AND IGNORE THE STATUTO RY LIMITATIONS ON THE POWERS OF THE REVENUE AUTHORITIES TO TINKER WITH TH E ASSESSMENTS ITA NO. 3127/MUM/10 ASSESSMENT YEAR: 2005-06 PAGE 11 OF 11 ALTOGETHER. LEARNED DEPARTMENTAL REPRESENTATIVES A RGUMENT IS THUS CLEARLY CONTRARY TO THE SCHEME OF THE ACT. FOR ALL THESE REASONS, WE REJECT THE SUBMISSIONS OF THE DEPARTMENTAL REPRESENTATIVES , AND QUASH THE IMPUGNED REVISION ORDER ON THE GROUND THAT THE REVI SION IS DONE ON A GROUND OTHER THAN THE GROUND SET OUT IN THE SHOW CA USE NOTICE. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. HOWEVER, AS W E HAVE QUASHED THE IMPUGNED REVISION ORDER ON THE TECHNICAL GROUND SE T OUT ABOVE, WE SEE NO NEED TO DEAL WITH THE MERITS OF OTHER ARGUMENTS RAI SED BY THE ASSESSEE. 11. IN THE RESULT, THE APPEAL IS ALLOWED IN THE TER MS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON 30 TH DAY OF JUNE, 2011. SD/- SD/- ( V D RAO ) (PRAMOD KUMAR) JUDICIAL MEMBER ACCO UNTANT MEMBER MUMBAI; 30 TH _ DAY OF JUNE , 2011 . COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER MUMBAI CITY , MUMBAI 4. COMMISSIONER (APPEALS) , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, E BENCH, MUMBAI 6. GUARD FILE TRUE COPY BY ORDER ETC. ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, MUMBAI