Celebi Delhi Cargo Management India Pvt. Ltd., New Delhi V. Pr. CIT, New Delhi

ITA 3182/DEL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5122 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 01-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Revision of order; Search and seizure; Opportunity of being heard; Principle of natural justice; Question of law; Corroborative evidences; Non compliance; Assessment record; Revenue expenditure; Reassessment proceedings; Capital expenditure
• Section: 143(3); 142(1); 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI B BENCH, NEW DELHI BEFORE SHRI N.K. BILLAIYA ACCOUNTANT MEMBER , AND SHRI N.K. CHOUDH A RY , JUDICIAL MEMBER ITA NO. 3182 / DEL/201 6 [ASSESSMENT YEAR: 20 11 - 12 ] M/S CELEBI DELHI CARGO MANAGEMENT VS. THE PR .C.I.T INDIA PVT. LTD NEW DELHI R . NO. 23, IMPORT BUILDING - 3 INTERNATIONAL CARGO TERMINAL IGI AIRPORT, NEW DELHI PAN : AADCC 6885 B [APPELLANT] [RESPONDENT] DATE OF HEARING : 27 .0 9 .2018 DATE OF PRONOUNCEMENT : 2 3 . 10 .2018 ASSESSEE BY : SHRI RONAK DOSHI, CA REVENUE BY : MS. RACHNA SINGH, CIT - DR ORDER PER N.K. BILLAIYA , ACCOUNTANT MEMBER, WITH T HIS APPEAL , THE ASSESSEE HAS CHALLENGED THE CORRECTNESS OF THE ORDER OF THE LD. PR. CIT, NEW DELHI 2 DATED 31 .0 3 .201 6 PERTAINING TO ASSESSMENT YEAR 20 11 - 12 . 2 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE ASSESSEE IS THAT THE PCIT ERRED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] BY HOLDING THAT THE ASSESSEE FAILED TO PLACE ON RECORD , DURING THE ASSESSMENT PROCEEDINGS , ANY SUCH DOCUMENTARY EVIDENCE O F SUBSTANTIVE NATURE , TO JUSTIFY THE DEDUCTION U/S 80IA OF THE ACT. 3. THE REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LENGTH, THE CASE RECORDS CAREFULLY PERUSED AND WITH THE ASSISTANCE OF THE LD. COUNSEL, WE HAVE CONSIDERED THE DOCUMENTARY EVIDENCES BROUGHT ON RECORD IN THE FORM OF PAPER BOOK IN LIGHT OF RULE 18(6) OF ITAT RULES. JUDICIAL DECISIONS RELIED UPON WERE CAREFULLY PERUSED. 4. THE LD. REPRESENTATIVES, IN ADDITION TO THEIR ORAL ARGUMENTS, PLACED WRITTEN SYNOPSIS FOR OUR CONSIDERATION. 5. W E HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW AND GONE THROUGH THE WRITTEN SYNOPSIS PLACED ON RECORD BY BOTH THE SIDES. 3 6. FACTS ON RECORD SHOW THAT THE APPELLANT COMPANY HAS BEEN SET UP W ITH THE PRIMARY OBJECTIVE OF UNDERTAKING UPGRADATION, MODERNIZATION, FINANCING, OPERATION, MAINTENANCE AND MANAGEMENT OF CARGO TERMINAL. THE APPELLANT COMPANY ENTERED INTO CONCESSIONAIRE AGREEMENT WITH DELHI INTERNATIONAL AIRPORT PRIVATE LIMITED (DIAL) WHI CH GIVES RIGHT TO OPERATE, MAINTAIN, DEVELOP, MODERNIZE AND MANAGE THE C ARGO TERMINAL FOR THE PERIOD TILL MARCH 2034. 7 . THE RETURN WAS ELECTRONICALLY FILED ON 30 .11. 2011 AFTER AVAILING THE DEDUCTION U/S 80IA . HOWEVER, T AX WAS PAID ON BOOK PROFITS. SUBSEQUENTLY , THE RETURN WAS REVISED ON 30 .03. 2013 . THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY AND , ACCORDINGLY, STATUTORY NOTICE S WERE ISSUED AND SERVED UPON THE ASSESSEE. ASSESSMENT ORDER WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 14.03. 2014. 8 . SUBSEQUENTLY, THE ASSESSEE RECEIVED A NOTICE DATED 07 .03. 2016 FOR REVISION ARY PROCEEDINGS TO BE INITIATED U/S 263 OF THE ACT BY THE PRINCIPAL COMMISSIONER OF INCOME - TAX - 2 . THE SHOW CAUSE NOTICE READS AS UNDER: 4 I DRAW YOUR KIND ATTENTION TO THE ASSESSMENT PROCEEDING U/S 143(3) OF THE I.T. ACT, 1961 FOR THE A.Y. 2011 - 12. DATED 14,03.2014 IN THE CASE OF M/S CELEBI DELHI CARGO TERMINAL MANAGEMENT INDIA PVT. LTD. THE COMPANY IN THE RETURN OF INCOME/ ACKNOWLEDGE WAS FI LED DECLARING GROSS TOTAL INCOME OF RS. 85.44,38.071/ - AGAINST WHICH IT CLAIMED DEDUCTION UNDER CHAPTER VIA AT RS. 83,15.39.056/ - . T HE TOTAL INCOME DECLARED WAS RS. 2,28,99,015/ - ASSESSMENT PROCEEDINGS COMMENCED ON OR AFTER 19.07.20 13 . A QUESTIONNAIRE DATED 2.2.08.2011 WAS ISSUED AND DULY SERVED ON THE ASSESSE E. THE ASSESSING OFFICER IN THE BODY OF THE ASSESSMENT ORDER IN PARAGRAPH 2 HAD REPORTED AS UNDER: - 'THE COMPANY IS ENGAGED IN THE BUSINESS OF INFRASTRUCTURE FACILITIES PROVIDER. DETAILS WITH RE GARD TO THE SAME WERE CALLED FOR, EXAMINE PLACEDER DISCUS SION, RETURNED INCOME OF RS. 2, 28,99,015/ - IS ACCEPTED. THE ASSESSEE IN THIS CASE HAS CLAIMED DEDUCTION U/S 801A AS REFLECTED IN THE BODY OF THE ASSESSMENT ORDER. THE DC IT CIRCLE 5(1), NEW DELHI VIDE F. NO. DCIT/CIRCLE 5(2)/2015 - 16/714 DATED 03.03.2016 HAS MOVED A PROPOSAL FOR INVOKING PR OVISION OF SECTION 263 OF THE I. T. ACT, 1961 FOR THE CAPTIONED A.Y. AS THE COMPANY HAD FAILED TO PLACE ON ASSESSMENT RECORD ALL THE SUPPORTING AND RELEVANT DOCUME NTS RELATING TO THE NATURE OF BUSINESS ACTIVITIES HAVING BEEN ACTUALLY CONDUCTED DURING THE F.Y. 2010 - 11 RELEVANT TO A.Y. 2011 - 1 2. ON ACCOUNT OF NON COMPLIANCE 5 AND NON SUBMISSION OF THE DOCUMENTS ASKED FOR IN THIS CASE FROM TIME TO TI ME VIDE NOTICE U/S 142 (1) OF THE I.T. ACT DATED 22.08.2013 ISSUED IN THIS CASE BY THE ASSESSING OFFICER AND DULY SERVED UPON THE ASSESSEE. THE COMPANY FAILED TO ADDUCE THE SUPPORTING EVIDENCE AS RELEVANT TO THE DEDUCTION CLAIMED U/S 80IA. IN THE RETURN OF INCOME UNDER THE HEAD TAXES PAID IT HAS CLAIMED CREDIT FOR TDS OF RS. 8,78,93,767/ - AS TAX DEDUCTED AT SOURCE. THE RECEIPT OF INCOME UNDER THE CORRESPONDING PROVISION OF THE I .T. A C T, 1961 WHICH WERE A SUBJECT MATTER OF DEDUCTION OF THE TDS WERE NOT PLACED ON RECORD. KEEPING A LL THE ABOVE FACTS AND THE ASSESSMENT RECORD FOR THE A.Y. 2011 - 12, THE ASSESSMENT ORDER U/S 143(3) DATED 14.03.2014 A PPEARS TO BE PREJUDICIAL TO THE INTEREST OF REVENUE. IN ACCORDANCE WITH THE SECTION 263 OF THE INCOME TAX ACT, 1961. I HEREBY REQUIRE YOU TO APPEAR BEFORE THE UNDERSIGNED IN ROOM NO. 394, 3 LD FLOOR, C. R. BUILDING AT 11 A.M. ON 11.03. 2016 AND TO IT YOUR REPLY ON THE ISSUE ON OR BEFORE THE SAID DATE. 9 . IN REPLY TO THE AFORESAID NOTICE, THE ASSESSEE FILED A DETAILED REP LY DATED 18.03.2016. THE LD. PCIT WAS NOT CONVINCED WITH THE REPLY OF THE ASSESSEE AND HELD THAT THE ASSESSMENT ORDER DATED 14.03.2014 FRAMED U/S 143(3) OF THE ACT WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ACCORDINGL Y SET ASIDE THE ASSESSMENT WITH A DIRECTION TO PASS AN ORDER AFRESH AFTER TAKING INTO 6 ACCOUNT ALL RELEVANT FACTS AND AFTER MAKING NECESSARY ENQUIRIES AND VERIFICATION. 10. THE HON'BLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD., 243 ITR 83, HAS LAID DOWN THE FOLLOWING RATIO: 'A BARE READING OF SECTION 263 OF THE INCOME - TAX ACT, 1961, MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF JURISDICTION BY THE COMMISSIONER SUO MOTU UNDER IT, IS THAT THE ORDER OF THE INCOME - TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT -- IF THE ORDER OF THE INCOME - TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE -- REC OURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE 7 SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS '. 11 . ON 22.08.2013, THE ASSESSING OFFICER ISSUED NOTICE U/S 142(1) OF THE ACT WHICH WAS A QUESTIONNAIRE HAVING 21 QUESTIONS. THE RELEVANT Q UE RIES FOR OUR CONSIDERATION READ AS UNDER: 2. PLEASE FURNISH THE COPY OF INCOME TAX RETURN ACK FOR ASSESSMENT YEAR 2010 - 11 AND 2011 - 12 ALONGWITH ITS COMPUTATION OF INCOME. 19. DETAILS OF DEDUCTION CLAIMED FROM THE TAXABLE INCOME. 12 . THE ASSESSEE FIL ED A DETAILED REPLY AND SUBMITTED THE DOCUMENTS WITH REFERENCE TO THE AFORESAID QUESTIONNAIRE ON 05.09.2013. AT POINT NO. 19, DETAILS OF DEDUCTION CLAIMED FROM THE TAXABLE INCOME WERE FURNISHED ALONGWITH THE FOLLOWING N OTE ON THE B USINESS : THE AIRPORT AUTHORITY OF INDIA ('AAI'), AN ORGANIZATION WORKING UNDER THE MINISTRY OF CIVIL AVIATION THAT MANAGES MOST OF THE 8 AIRPORTS IN INDIA, AND DELHI INTERNATIONAL AIRPORT PVT. LTD (DIAL} ENTERED INTO AN OPERATION, MANAGEMENT AND DEVELOPMENT AGREEMENT DATED 4 APRIL 2006 (THE 'OMDA'} WHEREBY AAI HAS GRANTED TO DIAL THE EXCLUSIVE RIGHT AND AUTHORITY DURING THE TERM OF THE OMDA TO OPERATE, MAINTAIN, DEVELOP, DESIGN, CONSTRUCT, UPGRADE, MODERNIZE, FINANCE AND MANAGE THE INDIRA GANDHI INTERNATIONAL AIRPORT AT NEW DELHI, INDIA. PURSUANT TO THE CONCESSION AGREEMENT DATED 24 AUGUST 2009, DIAL GRANTED CELEBI HAVA SERVISI A.S ('CELEBI') THE RIGHTS FOR UP GRADATION, MODERNIZATION, FINANCING, OPERATION, MAINTENANCE AND MANAGEMENT OF THE CARGO TERMINAL AT THE AIRPORT FOR A TERM OF 25 YEARS. CELEBI WAS INCORPORATED M/S CELEBI DELHI CARGO TERMINAL MANAGEMENT INDIA PRIVATE LIMITED (THE CONCESSIONAIRE) AS A SPECIAL PURPOSE COMPANY FOR THE SOLE PURPOSE OF IMPLEMENTING THE CONCESSION AGREEMENT. PURSUANT TO THE CONC ESSION AGREEMENT, CELEBI IS RESPONSIBLE TO UPGRADE, MODERNIZE AND FINANCE THE CARGO TERMINAL AND OPERATE, MAINTAIN AND MANAGE THE CARGO TERMINAL (APPROXIMATELY 70,000 SQ.MT AREA COMPRISING OF WAREHOUSES FOR HANDLING EXPORT, IMPORT AND PERISHABLE JCAFGO) FO R A PERIOD OF 25 YEARS UNTIL 31 MARCH 2034. THE COMPANY EARNS ITS REVENUE FROM WAREHOUSE MANAGEMENT. 9 1 3 . AND THE DETAILS OF DEDUCTION CLAIMED READ AS UNDER: FY - 2009 - 10 FY - 2010 - 11 FY - 2011 - 12 ; ; AY - 2010 - 11 AY - 2011 - 12 AY - 2012 13 U/S 80 S ( 50% OF DONATION PAI D 250,000 U/S 80IA 831,539,055 154,863,614 TOTAL DEDUCTIONS 250,000 831,539,055 154,863,614 1 4 . FOR FURTHER VERIFICATION, THE ASSESSING OFFICER AGAIN ISSUED A NOTICE DATED 10.12.2013. QUE RY NO. 1 OF THE SAID NOTICE READS AS UNDER: A NOTE ON THE CLAIM OF DEDUCTION CLAIMED U/S 80IA OF THE ACT MENTIONING EXACT CLAUSE AND SUB - SECTION UNDER WHICH IT IS CLAIMED AND A COPY OF THE AGREEMENT WITH THE AUTHORITY FOR EXECUTION OF SERVICES RENDERED BY YOUR COMPANY. ALSO SUBMIT A COPY OF REPO RT OF YOUR CHARTERED ACCOUNTANT ON FORM NO. 10CCB. 1 5 . THIS SPECIFIC QUERY WAS REPLIED BY THE ASSESSEE VIDE SUBMISSION DATED 02.01.2014. ONCE AGAIN, A DETAILED NOTE OF THE CLAIM U/S 80IA OF THE ACT ALONGWITH RELEVANT EXTRACT OF THE OPERATION, MANAGEMEN T AND 10 DEVELOPMENT AGREEMENT [OMDA] SIGNED BETWEEN AIRPORT AUTHORITY OF INDIA AND DIAL ALONGWITH COPY OF FORM NO. 10CCB WAS SUBMITTED. 1 6 . FOR FURTHER VERIFICATION, THE ASSESSING OFFICER ONCE AGAIN ISSUED A NOTICE DATED 8.1.2014 IN WHICH QUESTION NO. 9 READ AS UNDER: DETAILED NOTE OF ON THE DEDUCTIONS U/S 80IA ALONGWITH COPY OF AGREEMENT FOR OPERATING AND MAINTENANCE OF INFRASTRUCTURE FACILITY, AND 1 7 . QUESTION NO. 13 READ AS UNDER: THE REVENUE FROM RENTAL CONTRACT QUALIFY FOR DEDUCTION U/S 80IA OF THE ACT. PLEASE EXPLAIN THE ACTIVITIES WISE REVENUE INCOME. 1 8 . ONCE AGAIN, THE SPECIFIC QUERIES WERE REPLIED IN DETAIL AND ONCE AGAIN A DETAILED NOTE OF THE CLAIM U/S 80IA OF THE ACT WAS SUBMITTED AND THE SAME IS EXHIBITED AT PAGES 110 & 120 OF THE PAPER BOOK AND EXHIBIT 133 OF THE PAPER BOOK CONTAINS DETAILS OF AL L THE UNBILLED REVENUE WERE FURNISHED. 11 1 9 . FROM THE ABOVE FACTS, IT CAN BE SEEN THAT NOT ONCE, BUT THREE NOTICES WERE ISSUED BY THE ASSESSING OFFICER AND IN ALL THE THREE REPLIES, THE ASSESSEE HAS FURNISHED COMPLETE DETAIL ON THE CLAIM OF DEDUCTION U/S 80IA OF THE ACT ALONGWITH DETAILED REPORT IN FORM NO. 10CCB. 20 . THE REVENUE ALLEGES THAT THE ASSESSMENT ORDER IS CRYPTIC AS THE ASSESSING OFFICER HAS NOT GIVEN ANY C LEAR FINDING ON THE CLAIM OF DEDUCTION U/S 80IA OF THE ACT AND, THEREFORE, ASSESSMENT ORDER IS ERRONEOUS AND IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 21 . THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GABRIEL INDIA LTD 203 ITR 108 HAS HELD AS UNDER: THE POWER OF SUO MOTU REVISION UNDER SUBSECTION (1) IS IN THE NATURE OF SUPERVISORY JURISDICTION AND THE SAME CAN BE EXERCISED ONLY IF THE CIRCUMSTANCES SPECIFIED THEREIN EXIST. TWO CIRCUMSTANCES MUST EXIST TO ENABLE THE COMMISSIONER T O EXERCISE POWER OF REVISION UNDER THIS SUB - SECTION, VIZ., (I) THE ORDER IS ERRONEOUS; (II) BY VIRTUE OF THE ORDER BEING ERRONEOUS PREJUDICE HAS BEEN CAUSED TO THE INTERESTS OF THE REVENUE. IT HAS, THEREFORE, TO BE CONSIDERED FIRSTLY AS TO WHEN AN ORDER 12 CA N BE SAID TO BE ERRONEOUS. WE FIND THAT THE EXPRESSIONS 'ERRONEOUS', 'ERRONEOUS ASSESSMENT' AND 'ERRONEOUS JUDGMENT' HAVE BEEN DEFINED IN BLACK'S LAW DICTIONARY. ACCORDING TO THE DEFINITION, 'ERRONEOUS' MEANS 'INVOLVING ERROR; DEVIATING FROM THE LAW'. 'ERR ONEOUS ASSESSMENT' REFERS TO AN ASSESSMENT THAT DEVIATES FROM THE LAW AND IS, THEREFORE, INVALID, AND IS A DEFECT THAT IS JURISDICTIONAL IN ITS NATURE, AND DOES NOT REFER TO THE JUDGMENT OF THE ASSESSING OFFICER IN FIXING THE AMOUNT OF VALUATION OF THE PRO PERTY. SIMILARLY, '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 PRINCIPLES'. 12. FROM THE AFORESAID DEFINITIONS 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 B Y THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY THIS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME - TAX OFFICER, WHO PASSED THE ORDER UNL ESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALISED WHERE THE INCOME - TAX OFFICER WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND 13 CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER B Y ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATE HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOULD HAVE ESTIMATED THE I NCOME AT A FIGURE HIGHER THAN THE ONE DETERMINED BY THE INCOME - TAX OFFICER. THAT WOULD NOT 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 T HE QUASI - JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUSION. IT MAY BE SAID IN SUCH A CASE THAT IN THE OPINION OF THE COMMISSIONER THE ORDER IN QUESTION IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BUT THAT BY ITSELF WILL NOT BE ENOUGH TO VEST THE COMMISSIONER WITH THE POWER OF SUO MOTU REVISION BECAUSE THE FIRST REQUIREMENT, VIZ., THAT THE ORDER IS ERRONEOUS, IS ABSENT. SIMILARLY, IF AN ORDER IS ERRONEOUS BUT NOT PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THEN ALSO THE POWER OF SUO MOTU REVISION CANNOT BE EXERCISED. ANY AND EVERY ERRONEOUS ORDER CANNOT BE THE SUBJECT - MATTER OF REVISION BECAUSE THE SECOND REQUIREMENT ALSO MUST BE FULFILLED. THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF 14 THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED. WE, THEREFORE, HOLD THAT IN ORDER TO EXERCISE POWER UNDER SUB - SECTION (1) OF SECTION 263 OF THE ACT THERE MUST BE MATERIAL BEFORE THE COMMISSIONER TO CON SIDER THAT THE ORDER PASSED BY THE INCOME - TAX OFFICER WAS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. WE HAVE ALREADY HELD WHAT IS ERRONEOUS. IT MUST BE AN ORDER WHICH IS NOT IN ACCORDANCE WITH THE LAW OR WHICH HAS BEEN PASSED BY THE INCOME - TAX OFFICER WITHOUT MAKING ANY ENQUIRY IN UNDUE HASTE. WE HAVE ALSO HELD AS TO WHAT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. AN ORDER CAN BE SAID TO BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE IF IT IS NOT IN ACCORDANCE WITH THE LA W IN CONSEQUENCE WHEREOF THE LAWFUL REVENUE DUE TO THE STATE HAS NOT BEEN REALISED OR CANNOT BE REALISED. THERE MUST BE MATERIAL AVAILABLE ON THE RECORD CALLED FOR BY THE COMMISSIONER TO SATISFY HIM PRIMA FACIE THAT THE AFORESAID TWO REQUISITES ARE PRESENT . IF NOT, HE HAS NO AUTHORITY TO INITIATE PROCEEDINGS FOR REVISION. EXERCISE OF POWER OF SUO MOTU REVISION UNDER SUCH CIRCUMSTANCES WILL AMOUNT TO ARBITRARY EXERCISE OF POWER. IT IS WELL - SETTLED THAT WHEN EXERCISE OF STATUTORY POWER IS DEPENDENT UPON THE EXISTENCE OF CERTAIN OBJECTIVE FACTS, THE AUTHORITY BEFORE EXERCISING SUCH POWER MUST HAVE MATERIALS ON RECORD TO SATISFY IT IN THAT REGARD. IF THE ACTION OF THE 15 AUTHORITY IS CHALLENGED BEFORE THE COURT IT WOULD BE OPEN TO THE COURTS TO EXAMINE WHETHER THE RELEVANT OBJECTIVE FACTORS WERE AVAILABLE FROM THE RECORDS CALLED FOR AND EXAMINED BY SUCH AUTHORITY. THE INCOME - TAX OFFICER IN THIS CASE HAD MADE ENQUIRIES IN REGARD TO THE NATURE OF THE EXPENDITURE INCURRED BY THE ASSESSEE. THE ASSESSEE HAD GIVEN DETAI LED EXPLANATION IN THAT REGARD BY A LETTER IN WRITING. ALL THESE ARE PART OF THE RECORD OF THE CASE. EVIDENTLY, THE CLAIM WAS ALLOWED BY THE INCOME - TAX OFFICER ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. SUCH DECISION OF THE INCOME - TAX OFFICER CANNOT BE HELD TO BE 'ERRONEOUS' SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. MOREOVER, IN THE INSTANT CASE, THE COMMISSIONER HIMSELF, EVEN AFTER INITIATING PROCEEDINGS FOR REVISION AND HEARING THE ASSESSEE, COULD NO T SAY THAT THE ALLOWANCE OF THE CLAIM OF THE ASSESSEE WAS ERRONEOUS AND THAT THE EXPENDITURE WAS NOT REVENUE EXPENDITURE BUT AN EXPENDITURE OF CAPITAL NATURE. HE SIMPLY ASKED THE INCOME - TAX OFFICER TO RE - EXAMINE THE MATTER . THAT, IN OUR OPINION, IS NOT PER MISSIBLE. HENCE THE PROVISIONS OF SECTION 263 OF THE ACT WERE NOT APPLICABLE TO THE INSTANT CASE AND, THEREFORE, THE COMMISSIONER WAS NOT JUSTIFIED IN SETTING ASIDE THE ASSESSMENT ORDER. 16 22. THE HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. NIRMA CHEMICAL WORKS LTD . 309 ITR 67 HAS OBSERVED AS UNDER: IF ASSESSMENT ORDER WERE TO INCORPORATE THE REASONS FOR UPHOLDING THE CLAIM MADE BY AN ASSESSEE, THE RESULT WOULD BE AN EPITOME AND NOT AN ASSESSMENT ORDER. IN THIS CASE, DURING THE ASSESSMENT PROCEEDINGS FOR BOTH THE ASSESSMENT YEARS, THE ASSESSING . A.Y. 2 009 - 10 OFFICER ISSUED A QUERY MEMO TO THE ASSESSEE, CALLING UPON HIM TO JUSTIFY THE GENUINENESS OF THE GIFTS. THE RESPONDENT - ASSESSEE RESPONDED TO THE SAME BY GIVING EVIDENCE OF THE COMMUNICATIONS RECEIVED FROM HIS FATHER AND HIS SISTER I.E. THE DONORS OF THE GIFTS ALONG WITH THE STATEMENT OF THEIR BANK ACCOUNTS. ON PERUSAL, THE ASSESSING OFFICER WAS SATISFIED ABOUT THE CREDITWORTHINESS/CAPACITY OF THE DONORS, THE SOURCE FROM WHERE THESE FUNDS HAVE COME AND ALSO THE CREDITWORTHINESS/CAPACITY OF THE DONOR. O NCE THE ASSESSING OFFICER WAS SATISFIED WITH REGARD TO THE SAME, THERE WAS NO FURTHER REQUIREMENT ON THE PART OF THE ASSESSING OFFICER TO DISCLOSE HIS SATISFACTION IN THE ASSESSMENT ORDER PASSED THEREON. THUS, THIS OBJECTION ON THE PART OF THE REVENUE CANN OT BE ACCEPTED . 2 3 . THE HON'BLE JURISDICTIONAL HIGH COURT HAD ALSO THE OCCASION TO CONSIDER A SIMILAR ISSUE IN THE CASE OF ASHISH RAJPAL 320 ITR 674 AND HELD AS UNDER: 17 T HE PARAMETERS AND PRINCIPLES LAID DOWN BY THE COURTS WHICH GOVERN THE EXERCISE POWER BY THE COMMISSIONER UNDER THE PROVISIONS OF SECTION 263 OF THE ACT ARE AS FOLLOWS: (I) THE POWER IS SUPERVISORY IN NATURE, WHEREBY THE COMMISSIONER CAN CALL FOR AND EXAMINE THE ASSESSMENT RECORDS. (II) T HE COMMISSIONER CAN REVISE THE ASSESSMENT ORDER IF THE TWIN CONDITIONS PROVIDED IN THE ACT ARE FULFILLED, THAT IS, THAT THE ASSESSMENT ORDER IS NOT ONLY ERRONEOUS BUT IS ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE FULFILMENT OF BOTH THE CONDITIONS IS AN ESSENTIAL PREREQUISITE. [ SEE MALABAR INDUSTRIAL CO. LTD VS CIT (2000) 243 ITR 83(SC)] (III) AN ORDER IS ERRONEOUS WHEN IT IS CONTRARY TO LAW OR PROCEEDS ON AN INCORRECT ASSUMPTION OF FACTS OR IS IN BREACH OF PRINCIPLES OF NATURAL JUSTICE OR IS PASSED WITHOUT APPLICATION OF MIND, THAT IS, IS STEREO - TYPED, IN AS MUCH AS, THE ASSESSING OFFICER, ACCEPTS WHAT IS STATED IN THE RETURN OF THE ASSESSEE WITHOUT MAKING ANY ENQUIRY CALLED FOR IN THE CIRCUMSTANC ES OF THE CASE, THAT IS, PROCEEDS WITH UNDUE HASTE . [SEE GEE VEE ENTERPRISES VS ACIT, DELHI - I & ORS. (1975) 99 ITR 375] (IV) THE EXPRESSION 'PREJUDICIAL TO THE INTEREST OF THE REVENUE' WHILE NOT TO BE CONFUSED WITH THE LOSS OF TAX WILL CERTAINLY INCLUDE AN ERRONEOUS ORDER WHICH RESULTS IN A PERSON NOT PAYING TAX WHICH IS 18 LAWFULLY PAYABLE TO THE REVENUE. [SEE MALABAR INDUSTRIAL CO. LTD. (SUPRA)]. (V) EVERY LOSS OF TAX TO THE REVENUE CANNOT BE TREATED AS BEING 'PREJUDICIAL TO THE INTEREST OF THE REVENUE'. F OR EXAMPLE, WHEN THE ASSESSING OFFICER TAKES RECOURSE TO ONE OF THE TWO COURSES POSSIBLE IN LAW OR WHERE THERE ARE TWO VIEWS POSSIBLE AND THE COMMISSIONER DOES NOT AGREE WITH THE VIEW TAKEN BY THE ASSESSING OFFICER WHICH HAS RESULTED IN A LOSS. [ SEE CIT VS MAX INDIA LTD . (2007) 295 ITR 282 (SC)] (VI) THERE IS NO REQUIREMENT OF ISSUANCE OF A NOTICE BEFORE COMMENCING PROCEEDINGS UNDER SECTION 263 OF THE ACT. WHAT IS REQUIRED IS ADHERENCE TO THE PRINCIPLES OF NATURAL JUSTICE BY GRANTING TO THE ASSESSEE AN OPPORTUNITY OF BEING HEARD BEFORE PASSING AN ORDER UNDER SECTION 263 . [SEE ELECTRO HOUSE (SUPRA)]. (VII) IF THE ASSESSING OFFICER ACTS IN ACCORDANCE WITH LAW HIS ORDER CANNOT BE TERMED AS ERRONEOUS BY THE COMMISSIONER, SIMPLY BECAUSE ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY . RECOURSE CANNOT BE TAKEN TO SECTION 263 TO SUBSTITUTE THE VIEW OF THE ASSESSING OFFICER WITH THAT OF THE COMMISSIONER. [ SEE CIT VS GABRIEL INDIA LTD (1993) 203 ITR 108(BOM)] (VIII) THE EXERCISE OF STATUTORY POWER UNDER SECTION 263 OF THE ACT IS DEPENDENT ON EXISTENCE OF OBJECTIVE FACTS ASCERTAINED FROM PRIMA FACIE MATERIAL ON RECORD. THE EVALUATION OF SUCH MATERIAL 19 SHOULD SHOW THAT TAX WHICH WAS LAWFULLY EXI GIBLE WAS NOT IMPOSED. [SEE GABRIEL INDIA LTD (SUPRA)] IN THE INSTANT CASE, IT WAS QUITE CLEAR THAT AFTER THE ASSESSEE HAD FILED HIS RETURN ON 31.10.2002, A NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUE D FOR THE PURPOSES OF CARRYING OUT A SCRUTINY IN RESPECT OF THE RETURN OF INCOME FILED BY THE ASSESSEE. IN THE COURSE OF SCRUTINY, AS INDICATED IN THE IMPUGNED JUDGMENT OF THE TRIBUNAL, SEVERAL COMMUNICATIONS WERE ADDRESSED BY THE ASSESSEE TO THE ASSESSING OFFICER WHEREBY, THE INFORMATION, DETAILS AND DOCUMENTS SOUGHT FOR, WERE ADVERTED TO AND FILED. THE TRIBUNAL IN ORDER TO SATISFY ITSELF, AS TO WHETHER THE ASSESSING OFFICER HAD SOUGHT FOR DETAILS AND CARRIED OUT AN ENQUIRY IN RESPECT OF TRANSACTIONS WHICH WERE ENTERED INTO BY THE ASSESSEE IN THE COURSE OF HIS BUSINESS, CALLED FOR THE ASSESSMENT RECORD AND SCRUTINIZED THE SAME. THE TRIBUNAL RETURNED A FINDING OF FACT THAT THE ASSESSEE HAD SUBMITTED COPIES OF DOCUMENTS AND DETAILS WITH REGARD TO VARIOUS MATT ERS, INCLUDING, IN PARTICULAR, WITH RESPECT TO THE PROPERTIES AT MALVIYA NAGAR AS WELL AS THOSE LOCATED AT GITANJALI ENCLAVE AND DEFENCE COLONY. THE ISSUE THAT HAS BEEN RAISED BEFORE US IS THAT, SINCE THE ASSESSMENT ORDER ADVERTED TO ONLY MALVIYA NAGAR PRO PERTY AND WAS SILENT WITH RESPECT TO THE PROPERTIES LOCATED AT GITANJALI ENCLAVE AND DEFENCE COLONY; ON THIS SHORT GROUND ALONE THE REVISIONAL ORDER OF COMMISSIONER OUGHT TO BE SUSTAINED. IT WOULD BE IMPORTANT TO REMIND OURSELVES THAT WHILE THE SUPERVISORY POWER OF COMMISSIONER IS WIDE, IT CANNOT BE INVOKED TO 20 SUBSTITUTE THE VIEW OF THE ASSESSING OFFICER. IF UPON A PERUSAL OF THE RECORD FILED WITH THE AUTHORITIES BELOW THE TRIBUNAL FORMED A VIEW THAT THERE HAD BEEN AN ENQUIRY WHICH HAD NOT BEEN CONDUCTED WI TH UNDUE HASTE SURELY WE WOULD BE SLOW TO HOLD OTHERWISE. MORE SO WHEN, THIS CONCLUSION, THE TRIBUNAL HAD ARRIVED AT AFTER EXAMINING THE RECORD WHICH THE ASSESSEE FILED WITH THE ASSESSING OFFICER DURING THE COURSE OF SCRUTINY. THE POINT TO BE NOTED IS TH AT ON A PERUSAL OF THE RECORD THE TRIBUNAL OBSERVED, BY REFERENCE TO A GENERAL PRACTICE IN VOGUE, THAT MERELY BECAUSE THE ASSESSMENT ORDER DID NOT REFER TO THE QUERIES RAISED DURING THE COURSE OF THE SCRUTINY AND THE RESPONSE OF THE ASSESSEE THERETO, IT CO ULD NOT BE SAID THAT THERE WAS NO ENQUIRY AND HENCE THE ASSESSMENT WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THIS OBSERVATION OF THE TRIBUNAL, ACCORDING TO US, DESERVES DUE WEIGHT, AS IN ITS VAST EXPERIENCE IT WOULD HAVE COME ACROSS SEV ERAL SUCH ORDERS. 16. THE FACT THAT A QUERY WAS RAISED DURING THE COURSE OF SCRUTINY WHICH WAS SATISFACTORILY ANSWERED BY THE ASSESSEE BUT DID NOT GET REFLECTED IN THE ASSESSMENT ORDER, WOULD NOT BY ITSELF LEAD TO A CONCLUSION THAT THERE WAS NO ENQUIRY W ITH RESPECT TO TRANSACTIONS CARRIED OUT BY THE ASSESSEE. THE FACT THAT THERE WAS AN ENQUIRY CAN ALSO BE DEMONSTRATED WITH THE HELP OF THE MATERIAL AVAILABLE ON RECORD WITH THE ASSESSING OFFICER. THE MATERIAL, TO WHICH A REFERENCE HAS BEEN MADE IN THE IMPUG NED JUDGMENT, WOULD SHOW 21 THAT THERE WAS NO UNDUE HASTE IN EXAMINING THE MATERIAL PRIOR TO THE PASSING OF THE ASSESSMENT ORDER DATED 24.03.2005. AT LEAST FOUR LETTERS DATED 27.04.2004, 22.02.2005, 28.02.2005 AND 18.03.2005 WERE ADDRESSED BY THE ASSESSEE TO THE ASSESSING OFFICER GIVING DETAILS, DOCUMENTS AND INFORMATION PERTAINING TO VARIOUS QUERIES RAISED BY THE ASSESSING OFFICER. THESE HAVE BEEN EXAMINED BY THE TRIBUNAL. WE HAVE NO REASON TO BELIE VE THAT EXAMINATION WAS LESS THAN EXACTING. THEREFORE, THE CONCLUSION OF THE COMMISSIONER THAT THERE WAS 'LACK OF PROPER' VERIFICATION IS UNSUSTAINABLE. 17. FURTHER, THE NOTICE DATED 11.05.2006 ISSUED BY THE COMMISSIONER BEFORE COMMENCING THE PROCEEDINGS U NDER SECTION 263 OF THE ACT REFERRED TO FOUR ISSUES, THE FINAL ORDER DATED 18/19.01.2007 PASSED REFERRED TO NINE ISSUES, SOME OF WHICH OBVIOUSLY DID NOT FIND MENTION IN THE EARLIER NOTICE AND HENCE RESULT ED IN THE PROCEEDINGS BEING VITIATED AS A RESULT OF THE BREACH OF THE PRINCIPLES OF NATURAL JUSTICE. T HERE IS NO REQUIREMENT UNDER SECTION 263 OF THE ACT TO ISSUE A NOTICE BEFORE EMBARKING UPON A REVISION ARY PROCEEDINGS. TO THAT EXTENT THE SUBMISSION OF THE LEARNED COUNSEL FOR THE REVENUE MR SANJEEV SABHARWAL HAS TO BE ACCEPTED. WHAT IS MANDATED UNDER SECTION 263 OF THE ACT IS THAT ONCE THE COMMISSIONER C ALLS FOR AND EXAMINES THE RECORD, PERTAINING TO THE ASSESSEE, AND FORMS A PRIMA FACIE VIEW THAT THE ORDER PASSED BY THE ASSESSING OFFICER 22 IS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE IS OBLIGED TO AFFORD AN OPPORTUNITY TO THE ASSESS EE BEFORE PASSING AN ORDER, TO THE PREJUDICE OF THE ASSESSEE. IN THE INSTANT CASE, THE COMMISSIONER SOUGHT TO ACCORD SUCH AN OPPORTUNITY TO THE ASSESSEE BY PUTTING HIM TO NOTICE AS REGARDS ASPECTS WHICH THE ASSESSING OFFICER HAD FAILED TO SCRUTINIZE. DURIN G THE COURSE OF THE REVISIONARY PROCEEDINGS THIS WAS CONVEYED TO THE ASSESSEE BY WAY OF A NOTICE DATED 11.05.2006. IT IS NOT DISPUTED THAT IN THE ORDER DATED 18/19.01.2007 THE COMMISSIONER HAS REFERRED TO CERTAIN OTHER ISSUES WHICH DID NOT FORM PART OF THE INITIAL NOTICE DATED 11.05.2006. TO OUR MINDS IT WAS ALWAYS OPEN TO THE COMMISSIONER TO PUT SUCH ISSUES/DISCREPANCIES, FOUND BY HIM BASED ON MATERIAL ON RECORD, TO THE ASSESSEE. IT IS TO BE NOTED, HOWEVER, THAT THE LEARNED COUNSEL FOR THE ASSESSEE VEHEMEN TLY DENIED THAT THE ASSESSEE HAD BEEN GIVEN ANY OPPORTUNITY TO MEET ISSUES OTHER THAN THOSE TO WHICH REFERENCE HAS BEEN MADE IN THE COMMISSIONER S NOTICE DATED 11.05.2006. FOR THIS PURPOSE, THE LEARNED COUNSEL FOR THE ASSESSEE SOUGHT TO PLACE RELIANCE ON T HE IMPUGNED JUDGMENT PASSED BY THE TRIBUNAL, WHEREIN THIS ASPECT OF THE MATTER HAS BEEN DISCUSSED ELABORATELY. IN ORDER TO SATISFY OURSELVES WE CALLED UPON LEARNED COUNSEL FOR THE REVENUE MR SANJEEV SABHARWAL TO PLACE ON RECORD ANY COMMUNICATION, ORDER OR ANY OTHER DOCUMENT WHICH WOULD SHOW THAT THE ASSESSEE HAD BEEN GIVEN AN OPPORTUNITY TO DEAL WITH THOSE ASPECTS WHICH DID NOT FORM PART OF THE INITIAL NOTICE DATED 11.05.2006, BUT WERE TAKEN INTO ACCOUNT BY THE COMMISSIONER WHILE PASSING HIS ORDER DATED 18/ 19.01.2007. IN THIS REGARD, THE LEARNED 23 COUNSEL FOR THE REVENUE PLACED ON RECORD ORDER SHEET ENTRIES OF THE PROCEEDINGS CONDUCTED BY THE COMMISSIONER. WE HAVE ALREADY EXTRACTED THE ORDER SHEET ENTRIES COMMENCING FROM 15.06.2005 TO 28.06.2006. A PERUSAL OF THOSE ENTRIES WOULD CLEARLY DEMONSTRATE THAT THERE IS NOTHING ON RECORD WHICH WOULD SHOW THAT THE ASSESSEE WAS GIVEN AN OPPORTUNITY TO RESPOND TO THESE DISCREPANCIES WHICH FORMED PART OF THE ORDER - IN - REVISION DATED 18/19.01.2007 BUT WERE NOT PART OF NOTICE DATED 11.05.2006. THIS WAS PUT TO THE LEARNED COUNSEL FOR THE REVENUE, WHO IN RESPONSE FAIRLY CONCEDED THAT THERE WAS NOTHING ON RECORD WHICH WOULD ESTABLISH THE CONTRARY. IT WAS, HOWEVER, URGED BY THE LEARNED COUNSEL FOR THE REVENUE MR SANJEEV SABHARWAL THAT THE ASSESSEE WOULD HAVE HIS OPPORTUNITY TO GIVE SATISFACTORY REPLIES TO THE DISCREPANCIES RAISED IN THE REVISIONAL ORDER BEFORE THE ASSESSING OFFICER AND THAT SUCH AN OPPORTUNITY WOULD MEET THE REQUIREMENTS OF THE PROVISION. WE ARE AFRAID THAT THAT IS NOT THE POSITION ENVISAGED IN LAW. IF ONE WERE TO PERMIT CORRECTION OF SUCH A GRIEVOUS ERROR IN THE MANNER SUGGESTED IT WOULD TANTAMOUNT TO, IN A MANNER OF SPEAKING, CLOSING THE STABLE DOORS AFTER THE HORSE HAS BOLTED. THE ASSESSMENTS, UNLESS REOPENED BY PAYING FAITHFUL OBEISANCE TO STATUTORY PROVISIONS AND CONDITIONALITIES PROVIDED THEREIN, ATTAIN FINALITY ON THEIR CONCLUSION. THE PROVISIONS OF SECTION 263 MANDATE THAT AN ORDER FOR ENHANCING, OR MODIFYIN G THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT CAN ONLY BE PASSED AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE 24 SUCH ENQUIRY AS IS DEEMED NECESSARY. THE THRESHOLD CONDITION F OR REOPENING THE ASSESSMENT IS THAT BEFORE PASSING AN ORDER AN OPPORTUNITY HAS TO BE GRANTED TO THE ASSESSEE AND, SUCH AN OPPORTUNITY GRANTED TO THE ASSESSEE IS A NECESSARY CONCOMITANT OF THE ENQUIRY THE COMMISSIONER IS REQUIRED TO CONDUCT TO COME TO A CON CLUSION THAT AN ORDER FOR EITHER AN ENHANCEMENT OR MODIFICATION OF THE ASSESSMENT OR, AS IN THE PRESENT CASE, AN ORDER FOR CANCELLATION OF THE ASSESSMENT IS CALLED FOR, WITH A DIRECTION TO ASSESSING OFFICER TO MAKE A FRESH ASSESSMENT. THIS DEFECT CANNOT BE CURED BY FIRST REOPENING THE ASSESSMENT AND THEN GRANTING AN OPPORTUNITY TO THE ASSESSEE TO RESPOND TO THE ISSUES RAISED BEFORE ASSESSING OFFICER DURING THE COURSE OF FRESH ASSESSMENT PROCEEDINGS. TO BUTTRESS HIS SUBMISSION THE LEARNED COUNSEL FOR THE REV ENUE HAS RELIED UPON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF RAMPYARI DEVI SARAOGI VS CIT, WEST BENGAL & ORS . (1968) 67 ITR 84. THIS IS A CASE IN WHICH, THE ORDER ISSUED BY THE COMMISSIONER, I TSELF REVEALED THAT THE ASSESSMENT WAS BEING REOPENED BASED ON AN ADDITIONAL SUPPORTING MATERIAL. THE SUPREME COURT IN SUCH FACT SITUATION THUS RULED THAT NON SUPPLY OF ADDITIONAL SUPPORTING MATERIAL WOULD NOT EFFECT THE BASIC ISSUE OF ASSESSMENT BEING CAR RIED OUT WITHOUT ADEQUATE INVESTIGATION. IN THE INSTANT CASE THE ORDER - IN - REVISION REFERS TO ISSUES AND DISCREPANCIES WHICH DID NOT FIND MENTION IN THE INITIAL NOTICE DATED 11.05.2006 AND NOT TO ADDITIONAL OR SUPPORTING MATERIAL AS IN THE CASE OF RAMPYARI DEVI (SUPRA). THEREFORE, TO SUGGEST THAT IT WOULD BE SUFFICIENT COMPLIANCE OF THE PROVISIONS OF SECTION 263 OF THE ACT, IF AN 25 OPPORTUNITY TO RESPOND TO THE DISCREPANCIES MENTIONED IN THE ORDER - IN - REVISION IS GIVEN TO THE ASSESSEE IN REASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER, IS ACCORDING TO US IS COMPLETELY UNTENABLE. IT IS THE REQUIREMENT OF SECTION 263 OF THE ACT THAT THE ASSESSEE MUST HAVE AN OPPORTUNITY OF BEING HEARD IN RESPECT OF THOSE ERRORS WHICH THE COMMISSIONER PROPOSES TO REVISE. TO ACCORD AN OPPORTUNITY AFTER SETTING ASIDE THE ASSESSMENT ORDER, WOULD IN OUR VIEW NOT MEET THE MANDATE THE SECTION 263 OF THE ACT. IF SUCH AN INTERPRETATION IS ACCEPTED IT WOULD MAKE LIGHT OF THE FINALITY ACCORDED TO AN ASSESSMENT ORDER WHICH CANNOT BE REOPENED UNLESS DUE ADHERENCE IS MADE TO THE CONDITIONALITIES INCORPORATED IN THE PROVISIONS OF THE ACT IN RESPECT OF SUCH POWERS VESTED IN THE REVENUE. 18. IN VIEW OF OUR DISCUSSION ABOVE, WE ARE OF THE OPINION THAT IMPUGNED JUDGMENT PASSED BY THE TRIBUNAL DESERVES TO BE SUSTAINED. THE FINDINGS RETURNED BY THE TRIBUNAL ARE PURE FINDINGS OF FACT. NO SUBSTANT IAL QUESTION OF LAW HAS ARISEN FOR OUR CONSIDERATION. RESULTANTLY, THE APPEAL IS DISMISSED. NO ORDER AS TO COST. 2 4 . IN HER WRITTEN SUBMISSION, THE LD. DR DREW OUR ATTENTION TO THE DECISION OF THE HON'BLE GAUHATI HIGH COURT IN THE CASE OF JAWAHAR 26 BHATTACHARJEE 341 ITR 434 WHEREIN THE HON'BLE HIGH COURT HAS HELD AS UNDER: NON APPLICATION OF MIND TO RELEVANT MATERIAL OR AN INCORRECT ASSUM PTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT ORDER BEING ERRONEOUS. 2 5 . IN O UR CONSIDERED VIEW, THIS JUDGMENT IS MISPLACED , IN AS MUCH AS , FACTS ON RECORD AS MENTIONED ELSEWHERE , CLEARLY SHOW THAT THE ASSESSING OFFICER HAS NOT ONLY APPLIED HIS MIND BUT HAS EXAMINED THE ISSUE OF CLAIM OF DEDUCTION U/S 80IA BY ISSUING THREE NOTICES ON THE SAME POINT. 2 6 . THE LD. DR HAS FURTHER RELIED UPON THE DECISION OF THE TRIBUNAL AT DELHI IN THE CASE OF NIIT 60 TAXMANN.COM 313 WHEREIN IT HAS BEEN HELD AS UNDER: AN ENQUIRY WHICH IS JUST A FARCE OR NEAR PRETENCE OF ENQUIRY CANNOT BE SAID TO BE AN ENQUIRY AT ALL , MUCH LESS AN ENQUIRY NEEDED TO REACH THE LEVEL OF SATISFACTION OF THE ASSESSING OFFICE R ON THE GIVEN ISSUE. THE LEVEL OF SATISFACTION WOULD OBVIOUSLY MEAN THAT HE HAS CONDUCTED THE ENQUIRY IN A MANNER WHEREBY HE PLACED ON RECORD THE MATERIAL ENOUGH TO REACH SATISFACTION, 27 WHICH A RATIONALE PERSON, BEING INFORMED OF NUANCES OF TAX LAWS WOULD READ AFTER DUE APPRECIATION OF SUCH MATERIAL. 2 7 . THE LD. DR HAS CONCLUDED BY STATING THAT IF THE ASSESSING OFFICER HAS MERELY ACCEPTED THE ASSESSEES EXPLANATION ON VARIOUS ISSUES WITHOUT PROPER ENQUIRY, THEN THE SAME WOULD COME WITHIN THE AMBIT OF LAC K OF ENQUIRY AND INADEQUATE ENQUIRY. 2 8 . IN OUR CONSIDERED OPINION, THE ANSWER TO THE OBJECTIONS RAISED BY THE LD. DR IS GIVEN BY THE HON'BLE J URISDICTIONAL HIGH COURT IN THE CASE O F SUNBEAM AUTO LTD 332 ITR 167 WHEREIN THE HON'BLE HIGH COURT W AS CONSIDER ING THE ASPECT , WHEN THERE IS NO PROPER OR FULL VERIFICATION AND IT HAS HELD AS UNDER: WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE COUNSEL ON THE OTHER SIDE AND HAVE GONE THROUGH THE RECORDS. THE FIRST ISSUE THAT ARISES FOR OUR CONSIDERATION IS ABOUT THE EXERCISE OF POWER BY THE COMMISSIONER OF INCOME - TAX UNDER SECTION 263 OF THE INCOME - TAX ACT. AS NOTED ABOVE, THE SUBMISSION OF LEARNED COUNSEL FOR THE REVENUE WAS THAT WHILE PASSING THE ASSESSMENT ORDER, THE ASSESSING OFFICER DID NOT CONSIDER THIS ASPE CT SPECIFICALLY WHETHER THE EXPENDITURE IN QUESTION WAS REVENUE OR CAPITAL EXPENDITURE. THIS ARGUMENT PREDICATES ON THE ASSESSMENT ORDER, WHICH APPARENTLY 28 DOES NOT GIVE ANY REASONS WHILE ALLOWING THE ENTIRE EXPENDITURE AS REVENUE EXPENDITURE. HOWEVER, THAT BY ITSELF WOULD NOT BE INDICATIVE OF THE FACT THAT THE ASSESSING OFFICER HAD NOT APPLIED HIS MIND ON THE ISSUE. THERE ARE JUDGMENTS GALORE LAYING DOWN THE PRINCIPLE THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IS NOT REQUIRED TO GIVE DETAILED REASON IN RESPECT OF EACH AND EVERY ITEM OF DEDUCTION, ETC. THEREFORE, ONE HAS TO SEE FROM THE RECORD AS TO WHETHER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE EXPENDITURE IN QUESTION AS REVENUE EXPENDITURE. LEARNED COUNSEL FOR THE ASSESSEE IS RIGHT IN HIS SUBMISSION THAT ONE HAS TO KEEP IN MIND THE DISTINCTION BETWEEN 'LACK OF INQUIRY' AND 'INADEQUATE INQUIRY'. IF THERE WAS ANY INQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE COMMISSIONER TO PASS ORDERS UNDER SECTION 263 OF THE ACT, M ERELY BECAUSE HP HAS A DIFFERENT OPINION IN THE MATTER. IT IS ONLY IN CASES OF 'LACK OF INQUIRY' THAT SUCH A COURSE OF ACTION WOULD BE OPEN. IN GABRIEL INDIA LTD. [1993] 203 ITR 108 (BOM), LAW ON THIS ASPECT WAS DISCUSSED IN THE FOLLOWING MANNER. 2 9 . CONSIDERING THE THREE NOTICES ISSUED BY THE ASSESSING OFFICER AND CONSIDERING TH E DETAILED SUBMISSIONS FILED BY THE ASSESSEE IN RESPONSE TO EACH NOTICE, IT CAN BE SAFELY CONCLUDED THAT THE ASSESSING OFFICER DID RAISE QUERIES WHICH WERE COMPLIED BY THE ASSE SSEE. 29 30 . CONSIDERING THESE FACTS IN TOTALITY, IT CAN BE SAFELY CONCLUDED THAT THE ASSESSING OFFICER DID RAISE QUERIES WHICH WERE COMPLIED BY THE ASSESSEE. IT IS A SETTLED POSITION OF LAW THAT POWERS U/S 263 OF THE ACT CAN BE EXERCISED BY THE COMMISSION ER ON SATISFACTION OF TWIN CONDITIONS, I.E., THE ASSESSMENT ORDER SHOULD BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. BY 'ERRONEOUS' IS MEANT CONTRARY TO LAW. THUS, THIS POWER CANNOT BE EXERCISED UNLESS THE COMMISSIONER IS ABLE TO ESTABLISH THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THUS, WHERE THERE ARE TWO POSSIBLE VIEWS AND THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEWS, NO ACTION TO EXERCISE POWERS OF REVISION CAN ARISE , NOR CAN REVISIONAL POWER BE EXERCISED FOR DIRECTING A FULLER ENQUIRY TO FIND OUT IF THE VIEW TAKEN IS ERRONEOUS. THIS POWER OF REVISION CAN BE EXERCISED ONLY WHERE NO ENQUIRY, AS REQUIRED UNDER THE LAW, IS DONE. IT IS NOT OPEN TO ENQUIRE IN CASE OF INADE QUATE INQUIRY. OUR VIEW IS FORTIFIED BY THE DECISION OF HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. NIRAV MODI, [2016] 71 T AXMANN.COM 272 (BOMBAY)'. 31 . IN VIEW OF THE ABOVE DISCUSSION ON THE FACTS VIS A VSI THE JUDICIAL PRONOUNCEMENTS ON THE SUBJECT, WE SET ASIDE THE ORDER OF THE LD. PCIT 30 AND RESTORE THAT OF THE ASSESSING OFFICER DATED 14.03.2104 FRAMED U/S 143(3) OF THE ACT. 32 . BEFORE PARTING, THE LD. DR HAS ALSO HEAVILY RELIED UPON EXPLANATION 2 TO SECTI ON 263 OF THE ACT. IN OUR CONSIDERED OPINION, THE SAID EXPLANATION IS APPLICABLE ONLY WHEN THERE IS NO ENQUIRY MADE BY THE ASSESSING OFFICER WHEREAS IN THE CASE IN HAND, AS DEMONSTRATED ELSEWHERE, THE ASSESSING OFFICER HAD MADE AMPLE ENQUIRIES BEFORE FRA MING THE ORDER U/S 143(3) OF THE ACT. 33 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO. 3182/ DEL/201 6 IS ALLOWED. THE ORDER IS PR ON O UNCED IN THE OPEN COURT ON 2 3 . 1 0.2018. SD/ - SD/ - [ N.K. CHOUDH A RY ] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 3 R D OCTOBER , 2018 VL/ 31 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 32