AFCONS INFRASTRUCTURE LTD, MUMBAI V. PR.CIT 9, MUMBAI

ITA 3159/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2764 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 13-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANADI VARMA LD
• Assessee Lawyers: J D MISTRY; NITESH JOSHI LD A R S ABC
• Keywords: Opportunity of being heard; Principle of natural justice; Rule of consistency; Difference of opinion; Revised return; Change of opinion; Set aside
• Section: 142(1); 195; 13; 147; 263; 63; 10

Judgement Text

1 ITA NO.3159/MUM/2019 AFCONS INFRASTRUCTURE LTD. ASSESSMENT YEAR-2014-15 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.3159/MUM/2019 ( / ASSESSMENT YEAR:2014-15) AFCONS INFRASTRUCTURE LIMITED 16, AFCONS HOUSE SHAH INDUSTRIAL ESTATE VEERA DESAI ROAD, ANDHERI WEST MUMBAI. / VS. PR. CIT - 9 ROOM NO.214, AAYKAR BHAVAN 2 ND FLOOR, M.K. ROAD MUMBAI. => ./ ./PAN/GIR NO. AAACA-9067-G ( >@ /APPELLANT ) : ( AB>@ / RESPONDENT ) >@ / APPELLANT BY : S/ SHRI J.D. MISTRY & NITESH JOSHI - LD . A R S AB>@C / RESPONDENT BY : SHRI ANADI VAR MA - LD. CIT - DR / DATE OF HEARING : 05/09/2019 & 19/12/2019 / DATE OF PRONOUNCEMENT : 17/03/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1.1 AS PER THE PROVISIONS OF SECTION 263 OF INCOME TAX ACT, 1961, THE REVENUE AUTHORITIES NAMELY PR. COMMISSIONER OF INCO ME TAX / COMMISSIONER OF INCOME TAX IS VESTED WITH THE SUPER VISORY POWERS OF SUO- 2 ITA NO.3159/MUM/2019 AFCONS INFRASTRUCTURE LTD. ASSESSMENT YEAR-2014-15 MOTO REVISION OF ANY ORDER PASSED BY THE ASSESSING OFFICER [AO]. FOR THE SAID PURPOSE, THE APPROPRIATE AUTHORITY MAY CALL FO R AND EXAMINE THE RECORD OF ANY PROCEEDINGS UNDER THE ACT AND MAY PROCEED TO REVISE THE SAME PROVIDED TWO CONDITIONS ARE SATISFIED-(I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS P REJUDICIAL TO THE INTEREST OF THE REVENUE. IF ONE OF THE CONDITION IS ABSENT I.E. IF THE ORDER OF THE INCOME- TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IT IS PREJUDICIAL TO THE REVENUE - RE COURSE CANNOT BE HAD TO SECTION 263 OF THE ACT AS HELD BY HONBLE SUPREME C OURT IN MALABAR INDUSTRIAL CO. LTD. V/S CIT [243 ITR 83 10/02/2000] & NOTED BY HONBLE DELHI HIGH COURT IN CIT V/S VIKAS POLYMERS [194 TAXMAN 57 16/08/2010]. THE HONBLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD. V/S CIT (SUPRA) HAS HELD THAT THE PHRASE 'PREJUDICIAL TO THE INTERE STS OF THE REVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORD ER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSE QUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDIC IAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE, WHEN AN INCOME-TAX OFFICER AD OPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN L OSS OF REVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER H AS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. THE SAID PRINCIPAL HAS BEEN REITERATED BY HONBLE COURT IN ITS SUBSEQU ENT JUDGEMENT TITLED AS CIT V/S MAX INDIA LTD. (295 ITR 282). SIMILAR PRINCIPAL HAS BEEN FOLLOWED 3 ITA NO.3159/MUM/2019 AFCONS INFRASTRUCTURE LTD. ASSESSMENT YEAR-2014-15 BY JURISDICTIONAL HIGH COURT IN GRASIM INDUSTRIES LTD. V/S CIT (321 ITR 92). 1.2 THE HONBLE DELHI HIGH COURT IN CIT V/S VIKAS POLYMERS (SUPRA), FURTHER OBSERVED THAT AS REGARDS THE SCOPE AND AMBI T OF THE EXPRESSION 'ERRONEOUS', HONBLE BOMBAY HIGH COURT IN CIT VS. GABRIEL INDIA LTD. [1993 203 ITR 108 (BOMBAY)] , HELD WITH REFERENCE TO BLACK'S LAW DICTIONARY THAT AN 'ERRONEOUS JUDGMENT' MEANS 'ONE RENDERED ACCORDING TO COURSE AND PRACTICE OF COURT, BUT CONTRARY TO LAW, UPON MISTAKEN VIEW OF LAW; OR UPON ERRONEOUS APPLICATION OF LEGAL PRINCIP LES' AND THUS IT IS CLEAR THAT AN ORDER CANNOT BE TERMED AS 'ERRONEOUS' UNLES S IT IS NOT IN ACCORDANCE WITH LAW. IF AN INCOME-TAX OFFICER ACTIN G IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRAN DED AS 'ERRONEOUS' BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HI M, THE ORDER SHOULD HAVE BEEN WRITTEN DIFFERENTLY OR MORE ELABORATELY. THE SECTION DOES NOT VISUALIZE THE SUBSTITUTION OF THE JUDGMENT OF THE C OMMISSIONER FOR THAT OF THE INCOME-TAX OFFICER, WHO PASSED THE ORDER UNLESS THE DECISION IS NOT IN ACCORDANCE WITH LAW. 1.3 FURTHER, ANY AND EVERY ERRONEOUS ORDER CANNOT B E THE SUBJECT MATTER OF REVISION BECAUSE THE SECOND REQUIREMENT ALSO MUS T BE FULFILLED. THERE MUST BE MATERIAL ON RECORD TO SHOW THAT TAX WHICH W AS LAWFULLY LEVIABLE HAS NOT BEEN IMPOSED AS HELD IN GABRIEL INDIA LTD. HOWEVER, THE EXPRESSION 'PREJUDICIAL TO THE INTEREST OF THE REVENUE', AS HE LD BY THE SUPREME COURT IN THE MALABAR INDUSTRIAL CO. LTD.'S CASE, IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT AND, THEREFORE, MUST BE UNDE RSTOOD IN ITS ORDINARY 4 ITA NO.3159/MUM/2019 AFCONS INFRASTRUCTURE LTD. ASSESSMENT YEAR-2014-15 MEANING. IT IS OF WIDE IMPORT AND IS NOT CONFINED T O THE LOSS OF TAX AS HELD IN VARIOUS JUDICIAL PRONOUNCEMENTS. AT THE SAME TIME, THE WORDS 'PREJUDICIAL TO THE INTEREST OF THE REVENUE', AS OBSERVED IN DAWJEE DADABHOY AND CO. VS. S.P. JAIN, (1957) 311 ITR 872 (CALCUTTA), CAN ONLY MEAN THAT 'THE ORDERS OF ASSESSMENT CHALLENGED ARE SUCH AS ARE NOT IN ACCORD ANCE WITH LAW, IN CONSEQUENCE WHEREOF THE LAWFUL REVENUE DUE TO THE S TATE HAS NOT BEEN REALIZED OR CANNOT BE REALIZED.' THUS, THE COMMISSI ONER'S EXERCISE OF REVISIONAL JURISDICTION UNDER THE PROVISIONS OF SEC TION 263 CANNOT BE BASED ON WHIMS OR CAPRICE. IT IS TRITE LAW THAT IT IS A Q UASI-JUDICIAL POWER HEDGED IN WITH LIMITATION AND NOT AN UNBRIDLED AND UNCHARTERE D ARBITRARY POWER. THE EXERCISE OF THE POWER IS LIMITED TO CASES WHERE THE COMMISSIONER ON EXAMINING THE RECORDS COMES TO THE CONCLUSION THAT THE EARLIER FINDING OF THE INCOME-TAX OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THAT FRESH DETERMINATION OF THE CASE IS WARRANTED. THERE MUST BE MATERIAL TO JUSTIFY THE COMMISSIONER'S FINDING T HAT THE ORDER OF THE ASSESSMENT WAS ERRONEOUS INSOFAR AS IT WAS PREJUDIC IAL TO THE INTEREST OF THE REVENUE. 1.4 THE HONBLE DELHI COURT, IN THE CITED DECISION, FURTHER OBSERVED THAT THERE IS A FINE THOUGH SUBTLE DISTINCTION BETWEEN ' LACK OF INQUIRY' AND 'INADEQUATE INQUIRY'. IT IS ONLY IN CASES OF 'LACK OF INQUIRY' THAT THE COMMISSIONER IS EMPOWERED TO EXERCISE HIS REVISIONA L POWERS BY CALLING FOR AND EXAMINING THE RECORDS OF ANY PROCEEDINGS UNDER THE ACT AND PASSING ORDERS THEREON. IN GABRIEL INDIA LTD. (SUPRA), IT W AS EXPRESSLY OBSERVED: - 5 ITA NO.3159/MUM/2019 AFCONS INFRASTRUCTURE LTD. ASSESSMENT YEAR-2014-15 'THE COMMISSIONER CANNOT INITIATE PROCEEDINGS WITH A VIEW TO STARTING FISHING AND ROVING ENQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CO NCLUDED. SUCH ACTION WILL BE AGAINST THE WELL-ACCEPTED POLICY OF LAW THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUES SHOULD NOT BE REACTI VATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI-JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY [PARASHURAM POTTERY WORKS CO. LTD. VS. ITO , (1977) 106 ITR 1 (SC)]. IT WAS FURTHER OBSERVED AS UNDER: - 'FROM THE AFORESAID DEFINITIONS AS IT IS CLEAR THAT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN INCOME-TAX OFFICER ACTING IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCOR DING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SECTION DO ES NOT VISUALIZE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FO R THAT OF THE INCOME-TAX OFFICER, WHO PASSED THE ORDER UNLESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALIZED WHERE THE INCOME-TAX OFFICER WHILE MAKING AN ASSESS MENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOU NTS OR BY MAKING SOME ESTIMATE HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORD S, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE L OWER SIDE AND LEFT TO THE COMMISSIONER HE WOULD HAVE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN THE ONE DETERMINED BY THE INCOME-TAX OFFICER. THAT WOULD NO T VEST THE COMMISSIONER WITH POWER TO RE-EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE. IT IS BECAUSE THE INCOME-TAX OFFICER HAS EXERCISED THE QUASI-JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT CONCLUSIO N AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIO NER DOES NOT FEEL SATISFIED WITH THE CONCLUSION. X X X X THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD T O SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLIC ATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED. 1.5 THE HONBLE SUPREME COURT IN CIT V/S AMITABH BACHCHAN (69 TAXMANN.COM 170 11/05/2016) HELD THAT THE POWER OF APPEAL AND REVISION IS CONTAINED IN CHAPTER XX OF THE ACT WHICH INCLUDE S SECTION 263 THAT CONFERS SUO-MOTU POWER OF REVISION IN THE COMMISSIONER. THE DIFFEREN T SHADES OF POWER CONFERRED ON DIFFERENT AUTHORITIES UNDER THE ACT HAS TO BE 6 ITA NO.3159/MUM/2019 AFCONS INFRASTRUCTURE LTD. ASSESSMENT YEAR-2014-15 EXERCISED WITHIN THE AREAS SPECIFICALLY DELINEATED BY THE ACT AND THE EXERCISE OF POWER UNDER ONE PROVISION CANNOT TRENCH UPON THE POWERS AVAILABLE UNDER ANOTHER PROVISION OF THE ACT. IN TH IS REGARD, IT MUST BE SPECIFICALLY NOTICED THAT AGAINST AN ORDER OF ASSES SMENT, 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 RE VISE THE ASSESSMENT ORDER UNDER SECTION 263. THE SCOPE OF THE POWER/JUR ISDICTION UNDER THE DIFFERENT PROVISIONS OF THE ACT WOULD NATURALLY BE DIFFERENT. THE POWER AND JURISDICTION OF THE REVENUE TO DEAL WITH A CONCLUDE D ASSESSMENT, THEREFORE, MUST BE UNDERSTOOD IN THE CONTEXT OF THE PROVISIONS OF THE RELEVANT SECTIONS. WHILE DOING SO, IT MUST ALSO BE BORNE IN MIND THAT THE LEGISLATURE HAD NOT VESTED IN THE REVENUE ANY SPECIFIC POWER TO QUESTIO N AN ORDER OF ASSESSMENT BY MEANS OF AN APPEAL. REGARDING APPLICA BILITY OF SECTION 263, WHAT HAS TO BE SEEN IS THAT A SATISFACTION THAT AN ORDER PASSED BY THE AUTHORITY UNDER THE ACT IS ERRONEOUS AND PREJUDICIA L TO THE INTEREST OF THE REVENUE IS THE BASIC PRE-CONDITION FOR EXERCISE OF JURISDICTION UNDER SECTION 263. BOTH ARE TWIN CONDITIONS THAT HAVE TO BE CONJO INTLY PRESENT. ONCE SUCH SATISFACTION IS REACHED, JURISDICTION TO EXERCISE T HE POWER WOULD BE AVAILABLE SUBJECT TO OBSERVANCE OF THE PRINCIPLES OF NATURAL JUSTICE WHICH IS IMPLICIT IN THE REQUIREMENT CAST BY THE SECTION TO GIVE THE ASS ESSEE AN OPPORTUNITY OF BEING HEARD. FURTHER, THERE COULD BE NO DOUBT THAT SO LONG AS THE VIEW TAKEN BY THE ASSESSING OFFICER IS A POSSIBLE VIEW, THE SA ME OUGHT NOT TO BE INTERFERED WITH BY THE COMMISSIONER UNDER SECTION 2 63 MERELY ON THE GROUND THAT THERE IS ANOTHER POSSIBLE VIEW OF THE M ATTER. PERMITTING EXERCISE 7 ITA NO.3159/MUM/2019 AFCONS INFRASTRUCTURE LTD. ASSESSMENT YEAR-2014-15 OF REVISIONAL POWER IN A SITUATION WHERE TWO VIEWS ARE POSSIBLE WOULD REALLY AMOUNT TO CONFERRING SOME KIND OF AN APPELLATE POWE R IN THE REVISIONAL AUTHORITY. THIS IS A COURSE OF ACTION THAT MUST BE DESISTED FROM. 1.6 THE HONBLE BOMBAY HIGH COURT IN MOIL LTD. VS. CIT [81 TAXMANN.COM 420] OBSERVED THAT IF A QUERY IS RAISED DURING THE ASSESSMENT PROCEEDINGS WHICH WAS RESPONDED TO BY TH E ASSESSEE, THE MERE FACT THAT THE QUERY WAS NOT DEALT WITH IN THE ASSESSMENT ORDER THEN IT WOULD NOT LEAD TO A CONCLUSION THAT NO MIND HAS BEE N APPLIED TO IT AND THE ASSESSING OFFICER IS NOT EXPECTED TO RAISE MORE QUE RIES, IF HE WAS SATISFIED ABOUT THE ADMISSIBILITY OF CLAIM ON THE BASIS OF TH E MATERIAL AND THE DETAILS SUPPLIED. 1.7 AN EXPLANATION-2 HAS BEEN INSERTED BY FINANCE A CT 2015 IN SECTION 263 WITH EFFECT FROM 01/06/2015 TO DECLARE THAT OR DER SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, IF IN THE OPINION OF APPROPRIATE AUTHORITY-(1) THE ORDER WAS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATIONS WHICH SHOULD HAVE BEEN MADE; (II) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQUIRI NG INTO THE CLAIM; (III) THE ORDER IS NOT IN ACCORDANCE WITH ANY DIRECTION OR IN STRUCTIONS ETC. ISSUED BY THE BOARD U/S 119; OR (IV) THE ORDER WAS NOT IN ACC ORDANCE WITH BINDING JUDICIAL PRECEDENT. 2.1 KEEPING IN MIND AFORESAID PRINCIPLE, WE FIND TH AT THE ASSESSEE BEFORE US, IS UNDER APPEAL CHALLENGING THE VALIDITY OF REV ISIONAL JURISDICTION AS EXERCISED BY LD. PR. COMMISSIONER OF INCOME TAX-9, MUMBAI FOR 8 ITA NO.3159/MUM/2019 AFCONS INFRASTRUCTURE LTD. ASSESSMENT YEAR-2014-15 ASSESSMENT YEAR 2014-15 VIDE ORDER DATED 29/03/2019 . THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER: - 1. RE: VALIDITY OF ORDER UNDER SECTION 263: 1.1. THE LEARNED CIT HAS ERRED IN PASSING AN ORD ER UNDER SECTION 263 OF THE INCOME-TAX ACT, 1961 BASED ON SURMISES AND CONJECTURES WITHOUT APPRECIATING THE FACTS AND JUDICIAL PRECEDENTS IN THE MATTER. HENCE, SUCH ORDER IS BAD IN LAW AND OUGHT TO BE QUASHED. 1.2. THE LEARNED CIT HAS ERRED IN HOLDING THAT TH E ASSESSMENT ORDER DATED 30 DECEMBER 2016 PASSED BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FA R AS THE SAME IS PREJUDICIAL TO THE INTERESTS OF REVENUE. 1.3. THE LEARNED CIT FAILED TO APPRECIATE THAT THE CONDITIONS SPECIFIED UNDER EXPLANATION 2 TO SECTION 263 ARE NOT SATISFIED IN THE APPELLANT'S CASE . ACCORDINGLY, THE APPELLANT PRAYS THAT THE IMPUGNED ORDER PASSED BY THE LEARNED CIT IS ULTRA VIRE S, INVALID AND OUGHT TO BE STRUCK DOWN. 1.4. THE LEARNED CIT HAS ERRED IN HOLDING THAT TH E ASSESSING OFFICER FAILED TO CONDUCT ADEQUATE ENQUIRIES DURING THE COURSE OF ASSESSMENT PROCEEDING S IN SPITE OF THE FACT THE ASSESSING OFFICER HAD RECORDED THE DEDUCTION CLAIMED BY THE APPELLANT IN TH E ASSESSMENT ORDER AND HAS SPECIFICALLY DISALLOWED THE PROFESSIONAL FEES PAID IN CONNECTION WITH ARBITRATION AWARDS. 1.5. THE LEARNED CIT FAILED TO APPRECIATE THAT T HERE IS DUE APPLICATION OF MIND BY THE LEARNED AO DURING ASSESSMENT PROCEEDINGS AND SETTING ASIDE OF TH E IMPUGNED ORDER IS ERRONEOUS, IN EXCESS OF JURISDICTION AND BAD IN LAW. 1.6. THE LEARNED CIT OUGHT TO HAVE FOLLOWED THE DECISION OF THE JURISDICTIONAL BOMBAY HIGH COURT IN DESIGN & AUTOMATION ENGINEERS (BOMBAY) (P) LTD (323 IT R 632) WHICH HAS BEEN RENDERED IN THE CONTEXT OF SECTION 263 OF THE ACT. 1.7. THE LEARNED CIT ERRED IN HOLDING THAT THE VI EW TAKEN BY THE APPELLANT IS UNSUSTAINABLE IN LAW AND HENCE CHANGE OF OPINION IS PERMISSIBLE TO INVOKE RE VISION PROCEEDINGS UNDER SECTION 263 OF THE ACT. 1.8. THE LEARNED CIT OUGHT TO HAVE APPRECIATED THAT WHERE THE LEARNED ASSESSING OFFICER ADOPTED ONE VIEW OUT OF THE TWO POSSIBLE VIEWS, THE PROVISIONS OF SECTION 263 OF THE ACT CANNOT BE INVOKED MERELY BECAUSE THE COMMISSIONER/ PRINCIPAL COMMISSION ER PROPOSES TO TAKE ANOTHER VIEW. WITHOUT PREJUDICE TO THE AFORESAID: 2. RE: ADDITION IN RESPECT OF INTEREST ON ARBITRATION AWARDS GRANTED TO THE APPELLANT 2.1. THE LEARNED CIT ERRED IN NOT FOLLOWING THE PRINCIPLE OF CONSISTENCY APPLIED BY THE SUPREME CO URT IN THE CASE OF RADHASOAMI SATSANG V. CIT (193 ITR 321) IN RESPECT OF THE POSITION ADOPTED BY THE HON'BLE DISPUTE RESOLUTION PANEL AND THE LEARNED ASSESSING OFFICERS IN THE PREVIOUS ASSESSMENT YEARS. 2.2. THE LEARNED CIT ERRED IN HOLDING THAT THE AMOUNT OF RS.36,22,59,000 OUGHT TO BE TAXED IN THE YEAR UNDER CONSIDERATION EVEN THOUGH THE MATTER HAS NOT REACHED FINALITY AND NO RIGHT HAS ACCRUED TO THE APPELLANT TO RECEIVE SUCH INTEREST ON ARBITRATION A WARD. 2.3. THE LEARNED CIT ERRED IN HOLDING THAT RECO RDING OF ENTRIES IN THE BOOKS OF ACCOUNT UNDER MERC ANTILE SYSTEM OF ACCOUNTING ARE DETERMINATIVE FOR TAXABILI TY OF INCOME UNDER THE PROVISIONS OF THE ACT. 2.4. THE LEARNED CIT ERRED IN RELYING ON THE AR BITRATION AND CONCILIATION (AMENDMENT) ACT, 2015 AND THE JUDICIAL PRONOUNCEMENT ON ENFORCEABILITY OF AWARD UNDER NEW STATUTE TO CONCLUDE THAT ENFORCEABILITY AND FINALITY OF AWARD ARE SYNONYMOUS . 2.5. THE LEARNED CIT ERRED IN RELYING ON THE DE CISION OF THE SUPREME COURT IN THE CASE OF BCCI VS. KOCHI CRICKET PVT. LTD & ORS WHICH HAS BEEN REN DERED UNDER THE ARBITRATION AND CONCILIATION ACT, 1996 AND ARBITRATION AND CONCILIATION (AMENDME NT) ACT, 2015 WHICH DEALS WITH THE ISSUE OF ENFORCEABILITY OF THE ARBITRATION AWARD. THUS, THE SAME CANNOT BE FOLLOWED FOR PROPOSING TAXATION OF INCOME OF RS.36,22,59,000 IN THE CURRENT ASSESSM ENT YEAR. 9 ITA NO.3159/MUM/2019 AFCONS INFRASTRUCTURE LTD. ASSESSMENT YEAR-2014-15 2.6. THE LEARNED CIT ERRED IN DISREGARDING THE JUDICIAL PRECEDENTS RELIED UPON BY THE APPELLANT UNDER THE INCOME-TAX ACT, 1961 TO CONTEND THAT ARBI TRATION AWARDS AND INTEREST THEREON SHOULD BE TAXABLE ONLY ONCE THE MATTER HAS REACHED FINALITY. 2.7. THE LEARNED CIT ERRED IN RELYING ON JUDICI AL PRECEDENTS RENDERED UNDER THE INCOME-TAX ACT, 1961 WHICH ARE DISTINGUISHABLE ON FACTS AS COMPARED TO FACTS IN THE APPELLANT'S CASE. 2.8. THE LEARNED CIT OUGHT TO HAVE APPRECIATED THE APPELLANT'S SUBMISSION THAT THERE IS NO PERMANENT EXCLUSION OF THE INTEREST ON ARBITRATION AWARDS FROM BEING TAXED IN THE HANDS OF APPELLANT. THE APPELLANT OFFERS THE SAID INCOME TO TAX IN THE YEAR IN WHICH THE ARBITRATION AWARDS REACHES FINALITY. AS EVIDENT, THE ASSESSEE HAS CONTESTED THE VALIDITY OF ORDER PASSED U/S 263 BESIDES CONTESTING THE PROPOSED ADDITION ON MERITS IN RESPECT OF INTEREST ON ARBITRATION AWARDS GRANTED IN FAVOR OF THE ASSESSEE . 2.2 THE REGULAR ASSESSMENT FOR YEAR UNDER CONSIDERA TION WAS FRAMED BY LD. AO ON 30/12/2016 WHEREIN THE INCOME, UNDER NORM AL PROVISIONS, WAS DETERMINED AT RS.37.44 CRORES AFTER SOLE DISALLOWAN CE OF PROFESSIONAL FEES FOR ARBITRATION AWARD FOR RS.4.57 CRORES. HOWEVER, BOOK PROFITS OF RS.103.62 CRORES, AS COMPUTED BY THE ASSESSEE U/S 1 15JB IN ITS THIRD REVISED RETURN FILED ON 28/03/2016, WERE ACCEPTED W ITHOUT MAKING ANY FURTHER ADJUSTMENT. THE ASSESSEE BEING RESIDENT COR PORATE ASSESSEE WAS STATED TO BE ENGAGED IN THE BUSINESS OF CIVIL CONST RUCTION LIKE ROADS, BRIDGES, PILE FOUNDATION AND MARINE WORKS. THE PROF ESSIONAL FEES OF RS.4.57 CRORES STATED TO BE PAID BY THE ASSESSEE FOR ARBITR ATION WAS DISALLOWED WHILE COMPUTING INCOME UNDER NORMAL PROVISIONS SINC E THE ASSESSEE HAD NOT OFFERED CORRESPONDING ARBITRATION AWARD INCOME FOR TAXATION. SIMILAR DISALLOWANCE MADE IN EARLIER YEARS WAS DELETED BY L D. FIRST APPELLATE AUTHORITY, AGAINST WHICH REVENUES APPEAL WAS STATE D TO BE PENDING BEFORE TRIBUNAL. KEEPING IN LINE WITH THE STAND TAKEN IN E ARLIER YEARS, SIMILAR DISALLOWANCE WAS MADE IN YEAR UNDER CONSIDERATION. SO FAR AS THE 10 ITA NO.3159/MUM/2019 AFCONS INFRASTRUCTURE LTD. ASSESSMENT YEAR-2014-15 ASSESSMENT ORDER IS CONCERNED, THERE IS NO OTHER MA TERIAL DISCUSSION EXCEPT FOR THIS DISALLOWANCE. 2.3 SUBSEQUENTLY, LD. PR.CIT, AFTER PERUSAL OF CASE RECORDS, NOTED THAT LD. AO FAILED TO ASSESS INCOME OF RS.36.22 CRORES ON AC COUNT OF INTEREST ON ARBITRATION AWARD, WHICH LED TO ISSUANCE OF SHOW-CAUSE NOTICE U/S 263 DATED 18/03/2019, THE SUBSTANTIVE PORTION OF WHICH HAS AL READY BEEN EXTRACTED IN THE IMPUGNED ORDER. IT WAS NOTED THAT ALTHOUGH THE ASSESSEE, AS PER COMPUTATION OF INCOME SUBMITTED DURING THE COURSE O F ASSESSMENT PROCEEDINGS, OFFERED INCOME OF RS.36.22 CRORES AS P ER COMPANIES ACT ON ACCOUNT OF INTEREST ON ARBITRATION AWARD WHILE ARRIVING AT THE BOOK PROFITS U/S 115JB. HOWEVER, THE SAID AMOUNT WAS REDUCED FROM TH E COMPUTATION OF INCOME. IT WAS STATED THAT LD. AO ALLOWED THE SAID EXPENDITURE WITHOUT CONSIDERING THE SAID FACT AND ERRED IN TREATING THE AMOUNT OF RS.36.22 CRORE AS ALLOWABLE EXPENDITURE WHICH MADE THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHIN T HE MEANING OF SEC. 263. THE ASSESSEE ASSAILED THE PROPOSED REVISIONAL JURIS DICTION VIDE SUBMISSIONS DATED 25/03/2019, A COPY OF WHICH HAS B EEN PLACED ON RECORD. THE ATTENTION WAS DRAWN TO THE FACT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, LD. AO HAD SPECIFICALLY SHOW-CAUSED TH E ASSESSEE AS TO WHY INTEREST ON ARBITRATION AWARDS OF RS.36.22 CRORES W AS REDUCED IN THE COMPUTATIONS, AGAINST WHICH DETAILED SUBMISSIONS WE RE FURNISHED BY THE ASSESSEE TO LD. AO. THE COPIES OF AWARDS RECEIVED D URING THE YEAR, STAY PETITION FILED BY THE CLIENTS BEFORE THE HIGH COURT S AND JOURNAL ENTRIES PASSED IN THE BOOKS OF ACCOUNTS WERE ALSO FURNISHED . IT WAS SUBMITTED THAT 11 ITA NO.3159/MUM/2019 AFCONS INFRASTRUCTURE LTD. ASSESSMENT YEAR-2014-15 SINCE LD. AO HAD CALLED FOR THE REQUISITE DETAILS O F ARBITRATION AWARDS AND EVEN MADE DISALLOWANCE FOR PROFESSIONAL FEES DEBITE D IN THE PROFIT & LOSS ACCOUNT IN RELATION TO ARBITRATION AWARDS, HE HAD A PPLIED HIS MIND TO THE ISSUE AND CONCLUDED THAT INTEREST ON ARBITRATION AW ARDS WAS NOT TO BE TAXED DURING THE YEAR UNDER CONSIDERATION. 2.4 ON MERITS ALSO, IT WAS SUBMITTED THAT THE ASSES SEE, FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING WAS MAINTAINING BOO KS AS PRESCRIBED UNDER THE COMPANIES ACT, 2013. ACCORDINGLY, THE ASS ESSEE CREDITED THE INTEREST ON ARBITRATION AWARDS RECEIVED DURING THE CURRENT YEAR AS WELL AS RECEIVED IN EARLIER YEARS TO THE PROFIT & LOSS ACCO UNT BUT THE SAID INTEREST WAS NOT ACTUALLY RECEIVED AND THE AWARDS WERE CHALL ENGED BY THE CLIENTS BEFORE THE HIGH COURTS. THE MATTER HAD NOT ATTAINED FINALITY AND THERE WAS NO ACTUAL RECEIPT OF FUNDS AND THE INTEREST WAS MER ELY A BOOK ENTRY. THE DETAILS OF INTEREST COMPONENT WOULD REVEAL THAT AMO UNT OF RS.32.17 CRORES PERTAINED TO AWARDS RECEIVED DURING THE YEAR WHEREA S THE BALANCE INTEREST OF RS.4.05 CRORES PERTAINED TO INTEREST ON AWARDS R ECEIVED IN EARLIER YEARS. IT WAS SUBMITTED THAT THE AWARDS GIVEN IN EARLIER Y EARS WERE CHALLENGED BY THE CLIENTS BEFORE HIGH COURTS AND THE MATTERS HAD NOT REACHED FINALITY. THE ASSESSEE ACCOUNTED FOR SUCH INTEREST INCOME IN THE BOOKS TO KEEP THE CLAIMS ALIVE. SUCH INTEREST INCOME SHALL ACCRUE TO THE ASSESSEE ONLY WHEN THE MATTER REACHED FINALITY IN ASSESSEES FAVOR. TH US, THE SAID INTEREST COULD NOT BE SAID TO HAVE ACCRUED IN TERMS OF SEC.5 OF TH E ACT. THE ASSESSEE WAS OFFERING SUCH AWARDS FOR TAX IN THE YEARS IN WHICH THE MATTER REACHES FINALITY. THE ARBITRATION AWARDS WERE STATED TO BE COVERED UNDER THE 12 ITA NO.3159/MUM/2019 AFCONS INFRASTRUCTURE LTD. ASSESSMENT YEAR-2014-15 ARBITRATION AND CONCILIATION ACT, 1996 WHEREIN FURT HER APPEAL WOULD PUT AN AUTOMATIC STAY ON THE EXECUTION OF THE AWARD. SINCE THE AWARDS WERE FURTHER APPEALED BY THE CLIENTS, THE ASSESSEE HAD N O ABSOLUTE OWNERSHIP OF THE AWARDS AND HENCE THE SAME WOULD NOT BE TAXABLE UNLESS ACTUALLY RECEIVED. 2.5 THE ATTENTION WAS ALSO DRAWN TO THE FACT THAT L OK SABHA PASSED A BILL WHICH CLARIFIED THAT THE AMENDED ARBITRATION AND CO NCILIATION ACT, 2015 SHALL APPLY RETROSPECTIVELY I.E. FROM 23/10/2015 ONWARDS. THE AMENDMENT BILL, 2018 CLARIFIES THAT AWARDS PASSED UNDER THE EARLIER ARBITRATION ACT AND APPEALS FILED PURSUANT TO SUCH ORDERS SHALL CONTINU E TO BE GOVERNED BY THE ERSTWHILE ARBITRATION AND CONCILIATION ACT, 1996.TH E ASSESSEE PLACED RELIANCE ON THE DECISION OF HONBLE APEX COURT REND ERED IN SHOORJI BALLABHDAS & CO. (46 ITR 144) AND ALSO ON THE DECISION OF EXCEL INDUSTRIES LTD. (358 ITR 295) FOR THE SUBMISSIONS THAT TAX WAS TO BE LEVIED ONLY ON REAL INCOME. THE INTEREST ON AWARDS WAS HYP OTHETICAL INCOME AND ASSESSEE DID NOT HAVE ANY RIGHT OVER SUCH INCOME AN D THEREFORE, NO REAL INCOME ACCRUED TO THE ASSESSEE ON GRANT OF ARBITRAT ION AWARD IN FAVOR OF THE ASSESSEE. THE INCOME WOULD BE OFFERED TO TAX ONLY W HEN THE MATTER REACHES FINALITY. 2.6 IT WAS FURTHER SUBMITTED THAT THE ASSESSEE OFFE RED THE ARBITRATION AWARDS TO TAX IN THE YEAR OF ACTUAL RECEIPT ONCE TH E MATTER REACHED FINALITY WHICH WAS EVIDENT FROM THE FACT THAT THE ASSESSEE O FFERED TO TAX ARBITRATION AWARD OF RS.18.82 CRORES RECEIVED DURING THE YEAR. THUS, THERE WOULD ONLY 13 ITA NO.3159/MUM/2019 AFCONS INFRASTRUCTURE LTD. ASSESSMENT YEAR-2014-15 BE TIMING DIFFERENCE IN OFFERING THE SAID INCOME TO TAX DEPENDING ON WHEN MATTER REACHES FINALITY. 2.7 THE ASSESSEE ALSO RAISED A PLEA OF RULE OF CONS ISTENCY BY SUBMITTING THAT SIMILAR SUBMISSIONS WERE MADE BEFORE LD. DRP F OR AY 2009-10 WHEREIN LD. DRP, AFTER CONSIDERING THE SAME, DID NO T ISSUE ANY DIRECTIONS FOR ENHANCEMENT OF THE PROPOSED INCOME OF THE ASSES SEE. THEREFORE, FOLLOWING THE RULE OF CONSISTENCY IN TERMS OF DECIS ION OF HONBLE APEX COURT IN RADHASOAMI SATSANG V/S CIT (193 ITR 321) , NO ADDITION WAS TO BE MADE ON ACCOUNT OF INTEREST ON ARBITRATION AWARD S. 2.8 IN THE ABOVE BACKGROUND, THE ASSESSEE, RELYING UPON VARIOUS JUDICIAL PRONOUNCEMENTS, ASSAILED THE EXERCISE OF REVISIONAL JURISDICTION U/S 263 AND SUBMITTED THAT THE ORDER WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE WHICH WOULD REQUIRE ANY INTERFERENCE U/S 263. 2.9 HOWEVER, THE SAID SUBMISSIONS COULD NOT FIND FA VOR WITH LD. PR. CIT, WHO OPINED THAT THE INTEREST INCOME WOULD ACCRUE TO THE ASSESSEE IN THE YEAR IN WHICH THE AWARD WAS ISSUED. ONCE AWARD WAS GRANTED, IT IS REALIZABLE WITH REASONABLE CERTAINTY EVEN THOUGH TH E FINAL AWARD MAY VARY AFTER THE HIGH COURT ORDERS. THEREFORE, INTEREST IN COME WAS TO BE OFFERED IN THE YEAR IN WHICH THE AWARD WAS GRANTED. THE PLEA T HAT A STAND WAS ALREADY TAKEN BY LD. AO DURING REGULAR ASSESSMENT PROCEEDIN GS WAS ALSO REJECTED BY OBSERVING THAT LD. AO HAD FAILED TO CONDUCT ADEQ UATE INQUIRIES. A MERE COLLECTION OF DOCUMENTS COULD NOT BE HELD AS CONDUC TING INQUIRY AND IT WOULD BE EQUIVALENT TO NO INQUIRY BY THE OFFICER. T HIS WAS CLEAR CASE OF NON- APPLICATION OF MIND BY LD.AO AND THEREFORE, NO OPIN ION COULD BE SAID TO 14 ITA NO.3159/MUM/2019 AFCONS INFRASTRUCTURE LTD. ASSESSMENT YEAR-2014-15 HAVE BEEN FORMED BY LD. AO. FINALLY, RELYING UPON V ARIOUS JUDICIAL PRONOUNCEMENTS, THE ORDER WAS TERMED AS ERRONEOUS A S WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, THE ORDE R WAS SET ASIDE TO BE PASSED AFRESH AS PER LAW AFTER CONDUCTING NECESSARY ENQUIRIES AND INVESTIGATIONS. AGGRIEVED, THE ASSESSEE IS UNDER FURTHER APPEAL BEF ORE US. 3. THE LD. SR. COUNSEL, ADVANCED ARGUMENTS, ASSAILI NG THE REVISIONAL JURISDICTION ON LEGAL GROUNDS AS WELL AS ON MERITS. THE LD. SR. COUNSEL FORTIFIED THE SUBMISSIONS WITH VARIOUS CASE LAWS ON THE SUBJECTS, THE COPIES OF WHICH HAVE BEEN PLACED ON RECORD. SUBSEQUENTLY, WRITTEN SUBMISSIONS HAVE ALSO BEEN FILED SUMMARIZING THE ARGUMENTS PUT FORWARD BY LD. SR. COUNSEL. 4. AU CONTRAIRE , LD. CIT-DR VEHEMENTLY OPPOSED ANY INTERFERENCE IN THE DIRECTIONS OF LD. PR.CIT BY SUBMITTING THAT THE ASS ESSMENT WAS FRAMED WITHOUT CONSIDERING THE ISSUES RAISED BY LD. PR.CIT AND MERE COLLECTION OF INFORMATION WITHOUT APPLICATION OF MIND WOULD MAKE THE ORDER LIABLE FOR REVISION U/S 263. THE LD. CIT-DR ALSO RELIED UPON V ARIOUS CASE LAWS TO FORTIFY ITS SUBMISSIONS. THE WRITTEN SUBMISSIONS HA VE ALSO BEEN FILED IN DUE COURSE WHICH WE HAVE DULY CONSIDERED. SUBSEQUENT TO CONCLUSION OF HEARING, THE MATTER WAS PUT UP FOR CLARIFICATION IN VIEW OF THE SUBSEQUENT DECISION RENDERED BY HON BLE APEX COURT IN THE CASE OF HINDUSTAN CONSTRUCTION CO. LTD. & ANR. V/S UNION OF INDIA [WP(C) NOS. 1074 OF 2019 AND ORS. 27/11/2019] WHICH WAS IN THE CONTEXT 15 ITA NO.3159/MUM/2019 AFCONS INFRASTRUCTURE LTD. ASSESSMENT YEAR-2014-15 OF THE ARBITRATION AND CONCILIATION ACT, 1996. THE ASSESSEE FILED WRITTEN SUBMISSIONS AGAINST THE SAME ALSO, WHICH HAS DULY B EEN CONSIDERED. 5.1 WE HAVE CAREFULLY CONSIDERED THE FACTUAL MATRIX AS WELL AS ARGUMENTS ADVANCES BY BOTH THE REPRESENTATIVES. OUR ADJUDICAT ION TO THE ISSUE, IN THE LIGHT OF SETTLED LEGAL POSITION AS ENUMERATED IN OP ENING PARAGRAPHS, WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 5.2 FROM THE PERUSAL OF DOCUMENTS ON RECORD, WE FIN D THAT DURING REGULAR PROCEEDINGS, NOTICE U/S 142(1) WAS ISSUED TO THE AS SESSEE ON 31/05/2016 WHEREIN THE ASSESSEE WAS DIRECTED TO FILE THE COPY OF RETURN OF INCOME, FINANCIAL STATEMENTS AND COPY OF ASSESSMENT ORDERS FOR LAST 3 YEARS. THE NOTICE WAS DULY COMPLIED WITH BY THE ASSESSEE VIDE SUBMISSIONS DATED 08/06/2016 WHEREIN THE ASSESSEE, INTER-ALIA, FILED ITS ANNUAL REPORT, STATEMENT OF TOTAL INCOME AND ASSESSMENT ORDERS FOR AYS 2011-12 & 2012- 13. IN THE COMPUTATION OF INCOME, THE ASSESSEE HAS OFFERED TO TAX MONEY RECEIVED ON ARBITRATION AWARD FOR RS.18.82 CRORES A ND AT THE SAME TIME, CLAIMED DEDUCTION OF INTEREST ON ARBITRATION AWARD FOR RS.36.22 CRORES. THEREAFTER, THE ASSESSEE HAS FILED ANOTHER SUBMISSI ON VIDE LETTER NO. PG/26138 WHICH IS STATED TO BE AS PER ORAL INQUIRY RAISED BY LD. AO DURING THE COURSE OF HEARING. IN THIS SUBMISSION, THE ASSE SSEE HAS ELABORATELY DEALT WITH THE ISSUE AS TO WHY THE ARBITRATION AWAR D AND INTEREST ON ARBITRATION AWARDS WERE REDUCED FROM COMPUTATION OF INCOME. THE ASSESSEE FILED PROJECT-WISE DETAILS OF DEDUCTION SO CLAIMED AND SUBMITTED THAT INTEREST WOULD NOT BE LIABLE TO TAX SINCE THE SAME WAS DISPUTED BY THE CLIENTS AND THE MATTER HAD NOT REACHED FINALITY. NO RIGHT WAS STATED TO HAVE 16 ITA NO.3159/MUM/2019 AFCONS INFRASTRUCTURE LTD. ASSESSMENT YEAR-2014-15 ACCRUED TO THE ASSESSEE TO RECEIVE ANY AMOUNT TOWAR DS ARBITRATION AWARDS INCLUDING INTEREST ON ARBITRATION AWARD AS THESE AW ARDS WERE DISPUTED BY THE CLIENTS BEFORE HONBLE HIGH COURTS. FOR THE SAI D SUBMISSIONS, RELIANCE WAS PLACED , INTER-ALIA, ON THE DECISION OF HONBLE APEX COURT IN HINDUSTAN HOUSING AND LAND DEVELOPMENT TRUST LTD. (1986 161 I TR 524), GODHRA ELECTRICITY CO. LTD. (1997 225 ITR 746), DECISION OF HONBLE BOMBAY HIGH COURT IN CIT V/S SEKSARIA BISWAN SUGAR FACTORY PVT. LTD. (19 92 195 ITR 778), CIT V/S VIMLA D. SONWANE (1994 212 ITR 489), CIT V/S SHARDA SUGAR INDUSTRIES LTD. (1999 239 ITR 393) AND CIT V/S ABDUL MANNAN SHAH MOHAMMED (2001 248 ITR 614) BESIDES VARIOUS OTHER DECISION OF HONBLE HIGH COURTS. IN THE STATED BACKGROUND, IT W AS SUBMITTED THAT RIGHT TO RECEIVE THE INTEREST WAS CONDITIONAL AND WOULD ENTI RELY DEPEND UPON THE FINAL OUTCOME OF THE DECISION OF HONBLE COURTS. TH E ASSESSEE WOULD RECEIVE RIGHT ON SUCH INTEREST ONLY IN THE YEAR IN WHICH THE DISPUTE WAS FINALLY SETTLED. THE COPIES OF THE RELEVANT ARBITRA TION AWARD ALONG WITH DETAILS OF PETITIONS FILED BY THE CLIENTS BEFORE HONBLE HI GH COURT CONTESTING THE TERMS OF THE AWARD WAS ALSO PLACED ON RECORD ALONG WITH THE SUBMISSIONS. 5.3 ANOTHER SUBMISSION WAS THAT ACCOUNTING ENTRIES WOULD NOT BE DETERMINATIVE OF TAXABILITY OF INCOME. THE ATTENTIO N WAS DRAWN TO THE FACT, THAT ARBITRATION AWARDS INCLUDING INTEREST, AS ACTU ALLY RECEIVED DURING THE YEAR, WAS ALREADY OFFERED TO TAX. THE COPIES OF ARB ITRATION AWARDS AND THE PETITION FILED AGAINST THE SAME BEFORE HONBLE HIGH COURTS WAS ALSO PLACED ON RECORD. THE AFORESAID FACTS WERE REITERATED BY T HE ASSESSEE IN PARA-5 OF 17 ITA NO.3159/MUM/2019 AFCONS INFRASTRUCTURE LTD. ASSESSMENT YEAR-2014-15 ITS SUBMISSIONS DATED 25/03/2019 TO LD. PR.CIT WHIL E OPPOSING THE REVISION PROCEEDINGS U/S 263. 5.4 THEREAFTER, AN ASSESSMENT HAS BEEN FRAMED U/S 1 43(3) ON 30/12/2016 WHEREIN, LD. AO HAS CHOSEN TO MAKE DISALLOWANCE OF RS.4.57 CRORES, BEING PROFESSIONAL FEES FOR ARBITRATION SINCE CORRESPONDI NG ARBITRATION AWARD INCOME WAS NOT OFFERED FOR TAXATION. IT WAS NOTED T HAT SIMILAR DISALLOWANCE WAS MADE IN EARLIER YEARS AND THE SAME WAS DELETED BY LD. FIRST APPELLATE AUTHORITY AND CONSEQUENTLY, THE DEPARTMENT WAS IN A PPEAL BEFORE TRIBUNAL ON THE STATED ISSUE. HOWEVER, TO KEEP THE ISSUE ALI VE, THE SAID DISALLOWANCE WAS MADE FOR THE YEAR UNDER CONSIDERATION. 5.5 FIRST OF ALL, WE DEAL WITH THE ARGUMENTS ADVANC ED BY LD.CIT-DR THAT THE SUBMISSIONS MADE BY THE ASSESSEE DURING THE COU RSE OF REGULAR PROCEEDINGS WITH RESPECT TO TAXABILITY OF INTEREST ON ARBITRATION AWARDS WERE NOT CALLED FOR BY LD. AO IN NOTICE U/S 142(1) AND T HE SUBMISSIONS WERE PURELY SUO-MOTO VOLUNTARY SUBMISSIONS WHICH WOULD C LEARLY DEMONSTRATE THAT LD. AO DID NOT APPLY HIS MIND TO THIS ASPECT W HILE FRAMING THE ASSESSMENT. WE FIND THAT ASSESSEE HAS DULY CERTIFIE D THE PAPER-BOOK CONTAINING THE SAID SUBMISSION THAT THE AFORESAID S UBMISSIONS VIDE LETTER NO. PG/26138 AS WELL AS SUPPORTING DOCUMENTS WERE D ULY SUBMITTED TO LD.AO DURING THE COURSE OF REGULAR HEARING. THE FAC TUM OF MAKING SAID SUBMISSION DURING THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS WAS REITERATED BY THE ASSESSEE IN PARA-5 OF ITS SUBMISS IONS DATED 25/03/2019 TO LD. PR.CIT WHILE OPPOSING THE REVISION PROCEEDINGS U/S 263. EVEN LD. CIT- DR HAS NOT DISPUTED THE FACT THAT THE SAID DOCUMENT S WERE NOT, AT ALL, 18 ITA NO.3159/MUM/2019 AFCONS INFRASTRUCTURE LTD. ASSESSMENT YEAR-2014-15 AVAILABLE BEFORE LD.AO DURING THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS. THE ARGUMENT ADVANCED IS THAT THE SAID DOCUMENTS WERE NOT CALLED FOR BY LD. AO AND THE SAME WERE NOT CONSIDER ED BY LD.AO WHILE FRAMING THE ASSESSMENT. 5.6 HOWEVER, IN THE BACKGROUND OF FACTUAL MATRIX AS ENUMERATED BY US, IT IS DIFFICULT TO ACCEPT THE FACT THAT THE SAID DOCUM ENTS WERE NOT APPRECIATED / CONSIDERED BY LD. AO SINCE A SPECIFIC DISALLOWANCE HAS BEEN MADE, BEING CONSCIOUS OF THE FACT THAT CERTAIN ARBITRATION INCO ME WAS NOT OFFERED TO TAXATION BY THE ASSESSEE. THE ASSESSMENT ORDERS FOR EARLIER YEARS WERE SPECIFICALLY CALLED FOR VIDE NOTICE U/S 142(1) AND THE SAME WERE ALSO FURNISHED BY THE ASSESSEE. UPON PERUSAL OF THE SAME , LD.AO SPECIFICALLY TOOK NOTE OF THE FACT THAT SIMILAR DISALLOWANCE WAS MADE IN EARLIER YEARS AND THEREFORE, HE CHOSE TO MAKE SIMILAR DISALLOWANCE DU RING THE YEAR UNDER CONSIDERATION. THE COMPUTATION OF INCOME FILED BY T HE ASSESSEE CLEARLY DEMONSTRATED THAT ARBITRATION AWARDS RECEIVED DURIN G THE YEAR WERE OFFERED TO TAX WHEREAS INTEREST ON ARBITRATION AWARD WAS RE DUCED WHILE COMPUTING THE TAXABLE INCOME. THE REVENUE RECOGNITION POLICY BEING FOLLOWED BY THE ASSESSEE TO RECOGNIZE THE INTEREST INCOME WAS FULLY DISCLOSED IN NOTES TO THE ACCOUNT. IN THE LIGHT OF ALL THESE FACTS, IT COULD SAFELY B E CONCLUDED THAT THE POSITION TAKEN BY ASSESSEE TO RECOGNIZE THE INT EREST INCOME WAS ACCEPTED BY LD.AO WHO WAS WELL CONSCIOUS OF THE FAC T THAT CERTAIN ARBITRATION INCOME WAS NOT OFFERED TO TAX. HENCE, I T COULD NOT BE SAID THAT THERE WAS NON-APPLICATION OF MIND BY LD. AO ON THE SATED ISSUE. THIS BEING THE CASE, A LOGICAL ASSUMPTION WOULD ARISE THAT LD. AO HAS DULY APPLIED HIS 19 ITA NO.3159/MUM/2019 AFCONS INFRASTRUCTURE LTD. ASSESSMENT YEAR-2014-15 MIND TO THE ISSUE OF INTEREST ON ARBITRATION AWARD AND CHOSE NOT TO MAKE ANY ADDITION THEREOF. THEREFORE, IT COULD NOT BE SA ID THAT THERE WAS NON- APPLICATION OF MIND AND NO VIEW WAS TAKEN BY LD. AO ON THE STATED MATTER. 5.7 ANOTHER LOGICAL DEDUCTION WOULD BE THAT THE ACC OUNTING METHODOLOGY BEING FOLLOWED BY THE ASSESSEE TO RECOGNIZE THE INT EREST INCOME AS REVENUE, WAS ACCEPTED BY THE REVENUE IS EARLIER YEA RS AND SIMILAR DEDUCTION CLAIMED IN EARLIER YEARS WAS NOT DISTURBE D. THE NOTES TO THE ACCOUNTS WOULD, PRIMA-FACIE, ESTABLISH THAT THE ASSESSEE WAS FOLLOWING CONSISTENT METHOD OF ACCOUNTING FOR RECOGNITION OF INTEREST INCOME AND THERE WAS NO CHANGE IN ACCOUNTING POLICY IN THIS RE GARD. THIS IS IN CONSONANCE WITH PLEA OF RULE OF CONSISTENCY AS RAIS ED BY LD. SR. COUNSEL, WHO HAS SUBMITTED THAT THERE WAS NO CHANGE IN THE A CCOUNTING METHODOLOGY BEING FOLLOWED BY THE ASSESSEE FOR RECO GNIZING THE INTEREST INCOME ON ARBITRATION AWARDS. THIS IS FURTHER EVIDE NCED BY THE SUBMISSIONS MADE BY THE ASSESSEE DURING THE COURSE OF ASSESSMEN T PROCEEDINGS WITH RESPECT TO TAXABILITY OF INTEREST INCOME ON ARBITRA TION AWARDS DURING ASSESSMENT PROCEEDINGS FOR AYS 2009-10 TO 2013-14 W HEREIN SIMILAR PLEAS HAS BEEN RAISED. THE PERUSAL OF THESE SUBMISSIONS W OULD REVEAL THAT THE ASSESSEE HAS OFFERED INTEREST INCOME ON ARBITRATION AWARDS TO TAX ONLY IN THE YEAR OF ACTUAL RECEIPT THEREOF. THEREFORE, THE PRINCIPLE OF RULE OF CONSISTENCY FAVOR THE ASSESSEE, ON THE ISSUE RAISED BY LD. PR.CIT. 5.8 THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTANCES , WE FIND THAT THE SUBJECT MATTER OF PROPOSED REVISION WAS ALREADY DEL IBERATED UPON BY LD. AO AND A POSSIBLE WAS TAKEN IN THE MATTER. THAT VIE W COULD NOT BE SAID TO 20 ITA NO.3159/MUM/2019 AFCONS INFRASTRUCTURE LTD. ASSESSMENT YEAR-2014-15 BE CONTRARY TO LAW, PERVERSE OR UNSUSTAINABLE IN LA W, IN ANY MANNER AND THE SAME WOULD BE A POSSIBLE VIEW KEEPING IN MIND THE R ULE OF CONSISTENCY. THIS BEING THE CASE, THE ASSESSMENT ORDER COULD NOT BE TERMED AS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REV ENUE U/S 263 AS HELD BY LD. PR. CIT. THE ACTION OF LD. AO, IN OUR OPINION, WAS IN CONSONANCE WITH THE POSITION ACCEPTED BY THE REVENUE IN EARLIER YEARS A ND THEREFORE, IT COULD NOT BE SAID THAT THE ORDER WAS NOT IN ACCORDANCE WITH L AW. IN SUCH A CASE, THE ACTION OF LD. PR.CIT IN INVOKING JURISDICTION U/S 2 63 COULD NOT BE SUSTAINED IN THE EYES OF LAW. THEREFORE, WE QUASH THE SAME IN TE RMS OF SETTLED LEGAL POSITION AS ENUMERATED BY US IN OPENING PARAGRAPHS. 5.9 HAVING SAID SO, KEEPING IN VIEW THE FACT THAT IN THE PRESENT APPEAL WE ARE MERELY CONCERNED WITH DETERMINING THE VALIDITY OF REVISIONAL JURISDICTION U/S 263, THE ARGUMENT THAT WHETHER THE ACTION OF TH E ASSESSEE IN RECOGNIZING THE INTEREST INCOME, IN SUCH A MANNER, WAS IN CONSONANCE WITH THE PROVISIONS OF THE ARBITRATION AND CONCILIATION ACT, 1996 OR NOT, IS LEFT OPEN. THE OTHER ARGUMENTS ALSO, ON MERITS, NOT DELV ED INTO AND LEFT OPEN. 6. THE APPEAL STANDS ALLOWED TO THE EXTENT INDICATE D IN THE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH MARCH, 2020. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 17/03/2020 SR.PS:-JAISY VARGHESE 21 ITA NO.3159/MUM/2019 AFCONS INFRASTRUCTURE LTD. ASSESSMENT YEAR-2014-15 78 98 / COPY OF THE ORDER FORWARDED TO : 1. >@ / THE APPELLANT 2. AB>@ / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. V W A X , X , / DR, ITAT, MUMBAI 6. W YZ[ / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.