M/s.Regent Plaza, Calicut V. ITO, Calicut

ITA 321/COCH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69059 (ITAT-COCHIN)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 05-09-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 20-05-2013
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: T N SEETHARAMAN
• Keywords: Principle of natural justice; Rule of consistency
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 321/COCH/2013 ASSESSMENT YEAR : 2008-09 M/S. REGENT PLAZA, RAMANATTUKARA, KOZHIKODE. [PAN: AAHFR 5637F] VS. THE INCOME TAX OFFICER, WARD-2(3), KOZHIKODE. (ASSESSEE -APPELLANT) (REVENUE-R ESPONDENT) ASSESSEE BY SHRI T.N. SEETHARAMAN, ADV. REVENUE BY SHRI K.K. JOHN SR. DR DATE OF HEARING 05/09/2013 DATE OF PRONOUNCEMENT 13/11/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE VALIDITY OF REVISION ORDER DATED 25-03-2013 PASSED BY LD CIT, KOZHIKODE AND IT RELAT ES TO THE ASSESSMENT YEAR 2008- 09. 2. THE FACTS RELATING TO THE CASE ARE STATED IN BRI EF. THE ASSESSEE IS A PARTNERSHIP FIRM ORIGINALLY CONSTITUTED ON 25.10.2003. THEREAF TER, IT WAS RECONSTITUTED ON 27.01.2005 AND 12.06.2008. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING ROOMS AND COMMERCIAL COMPLEXES ON RENT. FOR THE YE AR UNDER CONSIDERATION, THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING NIL I NCOME. THE AO ACCEPTED THE RETURN OF INCOME IN THE SCRUTINY ASSESSMENT. ON EXAMINATI ON OF RECORD, THE LD CIT NOTICED THAT THE ASSESSEE FIRM HAS RECEIVED RENTAL INCOME O F RS.30,45,466/- DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2008-09 BY LET TING OUT THE COMMERCIAL BUILDING. HOWEVER, THE ASSESSEE FIRM DID NOT DECLARE THE RENT AL INCOME IN ITS HANDS, BUT IT WAS I.T.A. NO.321/COCH/2013 2 DECLARED THE SAME IN THE HANDS OF THE PARTNERS IN P ROPORTION TO THEIR PROFIT SHARING RATIO. IT WAS NOTICED THAT THE ASSESSEE HAS FILED COPIES OF MINUTES DATED 23.03.2005 PASSED BY THE PARTNERS BEFORE THE AO, AS PER WHICH THEY HAVE DECIDED TO OFFER THE RENTAL INCOME UNDER THE STATUS OF CO-OWNERSHIP AS P ER SEC. 22 TO 26. ACCORDINGLY, THE ASSESSEE EXPLAINED THAT IT DID NOT OFFER ANY INCOME , SINCE THE RENTAL INCOME HAD BEEN OFFERED BY THE PARTNERS. THE AO HAS ACCEPTED THE S AID EXPLANATIONS AND ACCORDINGLY COMPLETED THE ASSESSMENT BY ACCEPTING NIL RETURN FI LED BY THE ASSESSEE. 3. THE LD CIT NOTICED THAT, THE CLAUSES OF PARTN ERSHIP DEED ARE VERY SPECIFIC AND IT HAS BEEN MENTIONED THAT THE LAND AND BUILDING WILL BE CONSIDERED AS ASSETS OF THE PARTNERSHIP FIRM. ACCORDINGLY, THE LD CIT NOTICED THAT THE PARTNERSHIP FIRM, BEING A SEPARATE ASSESSABLE ENTITY, SHOULD HAVE OFFERED THE RENTAL INCOME IN ITS HANDS, SINCE THE FIRM ONLY HAS DERIVED THE INCOME. SINCE THE RENTAL INCOME HAS BEEN ASSESSED IN THE HANDS OF THE PARTNERS AT A LOWER RATE, THE LD CIT F ELT THAT IT HAS RESULTED IN UNDER ASSESSMENT. HE FURTHER FELT THAT THE ASSESSING OFF ICER HAS OVERLOOKED THE ABOVE MENTIONED FACTS AND HAS COMPLETED THE ASSESSMENT WI THOUT APPLYING HIS MIND AND HENCE THE ORDER IS RENDERED ERRONEOUS AND PREJUDICI AL ONE. ACCORDINGLY, HE INITIATED REVISION PROCEEDINGS U/S 263 OF THE ACT. 4. BEFORE LD CIT, THE ASSESSEE CONTENDED THAT T HE RENTAL INCOME WAS OFFERED FOR TAXATION IN THE HANDS OF THE PARTNERS IN TERMS OF T HE PROVISIONS OF SEC. 22 TO 26 OF THE ACT. IT WAS FURTHER SUBMITTED THAT THE PARTNERSHIP FIRM DID NOT CARRY ON ANY BUSINESS ACTIVITY AND IT WAS ENGAGED IN THE ACTIVITY OF LETT ING OUT THE COMMERCIAL COMPLEX. THE ASSESSEE PLACED EMPHASIS ON THE PROVISIONS OF SEC. 26 WHICH READS AS UNDER:- 26. WHERE PROPERTY CONSISTING OF BUILDINGS OR BUI LDINGS AND LANDS APPURTENANT THERETO IS OWNED BY TWO OR MORE PERSONS AND THEIR R ESPECTIVE SHARES ARE DEFINITE AND ASCERTAINABLE, SUCH PERSONS SHALL NOT IN RESPEC T OF SUCH PROPERTY BE ASSESSED AS AN ASSOCIATION OF PERSONS, BUT THE SHARE OF EACH SUCH PERSON IN THE INCOME FROM THE PROPERTY AS COMPUTED IN ACCORDANCE WITH SE CTIONS 22 TO 25 SHALL BE INCLUDED IN HIS TOTAL INCOME. ACCORDINGLY, THE ASSESSEE CONTENDED THAT THE FACT T HAT THE PROPERTY WAS BROUGHT INTO THE BOOKS OF PARTNERSHIP FIRM DOES NOT MAKE ANY CHA NGE IN THE STATUS OF CO-OWNERSHIP OF THE INDIVIDUAL PARTIES. ACCORDINGLY, IT WAS CON TENDED THAT THE ASSESSING OFFICER WAS I.T.A. NO.321/COCH/2013 3 RIGHT IN ASSESSING THE RENTAL INCOME IN THE HANDS O F CO-OWNERS. THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING CASE LAW BEFORE LD CIT. (A) GORA CHAND SEN VS. CIT (154 ITR 435)(CAL) (B) CIT VS. SMT. SUNITHA RANI AGARWAL (334 ITR 252 )(ALL) (C) ACIT VS. C.K. MALIK (89 ITD 249)(ALL) 5. THE LD CIT WAS NOT CONVINCED WITH THE CON TENTIONS URGED BEFORE HIM. THE LD CIT PLACED EMPHASIS ON THE RECITALS MADE IN THE PAR TNERSHIP DEED, WHEREIN IT HAS BEEN CLEARLY STATED THAT THE IMPUGNED PROPERTIES ARE ASS ETS OF THE PARTNERSHIP FIRM. THE LD CIT ALSO FOUND THAT THE CASE LAW RELIED UPON BY THE ASSESSEE WAS NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE. THE LD CIT, ON THE OTHE R HAND, PLACED RELIANCE ON THE FOLLOWING CASE LAW:- (A) ADDANKI NARAYANAPPA VS. BHASKARA KRISHNAPPA A IR 1966 SC 1300, PG. 1304 (B) SUNIL SIDHDHARTHBHAI VS. CIT (1985)(156 ITR 50 9)(SC) (C) SRI SYED MOHAMMED SAHEB AND BROTHERS VS. CIT ( 68 ITR 791)(KER) IN THE FIRST CASE, THE HONBLE SUPREME COURT HAS OB SERVED THAT THE PROPERTY, AFTER HAVING BROUGHT INTO THE PARTNERSHIP FIRM, WOULD CEA SE TO BE THE EXCLUSIVE PROPERTY OF THE PERSON WHO BROUGHT IT IN. IN THE SECOND CASE, THE HONBLE SUPREME COURT HAS HELD THAT, DURING THE SUBSISTENCE OF THE PARTNERSHIP, TH E VALUE OF INTEREST OF EACH PARTNER QUA THAT ASSET CANNOT BE ISOLATED OR CARVED OUT FRO M THE VALUE OF PARTNERS INTEREST IN THE TOTALITY OF THE PARTNERSHIP ASSETS. IN THE THI RD CASE, THE HONBLE JURISDICTIONAL KERALA HIGH COURT HAS HELD THAT IN A CASE WHERE THE CONTRO VERSY IS WHETHER THE INCOME OF THE HOUSE PROPERTY SHOULD BE INCLUDED IN THE TOTAL INCO ME OF A FIRM, A COMPANY OR JOINT HINDU FAMILY OR SHOULD BE ASSESSED IN THE HANDS OF THE MEMBERS OF THE RESPECTIVE ENTITY, SECTION 26 DOES NOT COME INTO OPERATION. I T WAS FURTHER HELD THAT IN ALL THESE CASES, SECTION 22 ALONE APPLIES AND THAT THE INCOME FROM THE HOUSE PROPERTY WAS PROPERLY ASSESSABLE IN THE HANDS OF THE FIRM U/S 22 OF THE INCOME TAX ACT. 6. ACCORDINGLY, THE LD CIT HELD THAT THE RENTAL INCOME SHOULD HAVE BEEN ASSESSED AS INCOME OF THE ASSESSEE FIRM ONLY. ACCORDINGLY HE H ELD THAT THE AO HAS NOT APPLIED HER MIND NOR CONDUCTED ANY ENQUIRY/VERIFICATION WHILE C OMPLETING THE ASSESSMENT U/S 143(3) OF THE ACT. SINCE THERE WAS LACK OF ENQUIRY , THE LD CIT HELD THAT THE ASSESSMENT I.T.A. NO.321/COCH/2013 4 ORDER IS RENDERED ERRONEOUS IN SO FAR AS IT IS PREJ UDICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY, HE SET ASIDE THE ASSESSMENT ORDER WITH A DIRECTION TO ISSUE FRESH DEMAND NOTICE AND CHALLAN AFTER ASSESSING THE RENTAL INCOM E AS THE INCOME OF THE FIRM AS INCOME FROM HOUSE PROPERTY. AGGRIEVED, THE ASSESSE E HAS FILED THIS APPEAL BEFORE US. 7. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED TH AT THE RENTAL INCOME WAS OFFERED IN THE HANDS OF PARTNERS, AS THEY ARE THE CO-OWNERS. HE SUBMITTED THAT THE INCOME WAS OFFERED IN IDENTICAL MANNER IN THE HANDS OF THE PAR TNERS IN THE EARLIER YEARS ALSO. HE FURTHER SUBMITTED THAT THE EARLIER YEARS ASSESSMEN TS WERE COMPLETED BY ACCEPTING THE CLAIM OF THE ASSESSEE, THAT TOO, AFTER OBTAINING AP PROVAL FROM THE JCIT. ACCORDINGLY, HE SUBMITTED THAT THERE HAS BEEN APPLICATION OF MIND B Y MORE THAN ONE ASSESSING OFFICER IN MORE THAN ONE YEAR. ACCORDINGLY HE SUBMITTED THAT THE LD CIT WAS NOT CORRECT IN HOLDING THAT THE AO HAS NOT APPLIED HIS MIND. HEN CE, THE LD CIT WAS NOT JUSTIFIED IN REVISING THE IMPUGNED ASSESSMENT ORDER, WHICH WAS P ASSED BY FOLLOWING THE CONSISTENT METHOD FOLLOWED IN THE EARLIER YEARS. HE SUBMITTED THAT IT IS ESSENTIAL TO FOLLOW THE RULE OF CONSISTENCY IN THE ASSESSMENT PROCEEDINGS. IN T HIS CONNECTION, HE PLACED RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ESCORTS LTD (2011)(338 ITR 435)(DEL), WHEREIN THE HONBLE HIGH COURT HAS HELD THAT, IF THE DECISION REGARDING FUNDAMENTAL NATURE OF TRANSACTIONS CONTIN UING FOR A NUMBER OF YEARS, THEN TAKING A DIFFERENT VIEW FOR A PARTICULAR YEAR WITHO UT ADEQUATE REASON WAS NOT JUSTIFIED. HE FURTHER SUBMITTED THAT THE ALL THE PARTNERS, BEI NG THE CO-OWNERS, ARE ALSO PAYING TAX AT THE HIGHER RATE OF 30% AND HENCE NO PREJUDICE IS CAUSED TO THE REVENUE IN ASSESSING THE RENTAL INCOME IN THE HANDS OF THE PARTNERS. AC CORDINGLY HE SUBMITTED THAT THE IMPUGNED ASSESSMENT ORDER CANNOT BE CONSIDERED TO B E ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. 8. HE FURTHER SUBMITTED THAT THOUGH THE PARTNER SHIP FIRM WAS CONSTITUTED AND THE ASSETS HAVE ALSO BEEN BROUGHT INTO THE BOOKS OF THE FIRM, YET THE PARTNERSHIP FIRM HAS NOT STARTED ANY BUSINESS SO FAR. HE SUBMITTED THAT A PARTNERSHIP FIRM SHALL NOT BE RECOGNISED AS A PARTNERSHIP FIRM UNLESS IT CARRIES ON BUSINESS. ACCORDINGLY HE SUBMITTED THAT CARRYING ON BUSINESS IS SINE QUA NON OF A PART NERSHIP FIRM AND IF THERE IS NO I.T.A. NO.321/COCH/2013 5 BUSINESS, IT CANNOT BE SAID THAT THERE IS A PARTNER SHIP FIRM. IN THIS REGARD, THE LD A.R PLACED RELIANCE ON THE FOLLOWING CASE LAW:- (A) THAYYIL ENTERPRISES VS. ITO (2006)(287 ITR 414 )(KER) (B) RAMNIKLAL SUNDERLAL VS. CIT (1959)(36 ITR 464) (BOM) (C) CIT VS. BABA ESTATES (2000)(244 ITR 413)(MAD) (D) IBRAHIM SHAH MOHAMAD VS. NOOR AHMED NOOR MOHAM ED (AIR 1984 GUJ 126). ACCORDINGLY HE SUBMITTED THAT EVEN ON MERITS, THE V IEW ENTERTAINED BY LD CIT IS NOT IN ACCORDANCE WITH LAW. 9. ON THE CONTRARY, THE LD D.R SUBMITTED THAT T HE PARTNERS OF THE ASSESSEE FIRM HAVE BEEN GIVEN LICENCE TO CONSTRUCT A BUS STAND IN THE 54 CENTS OF LAND ALLOTTED BY RAMANATTUKARA GRAMA PANCHAYAT. THE LD D.R INVITED OUR ATTENTION TO THE COPY OF LICENCE AGREEMENT ENTERED BETWEEN THE PARTNERS OF T HE FIRM AND THE RAMANUTTUKARA GRAMA PANCHAYAT, WHICH IS PLACED AT PAGES 52 TO 55 OF THE PAPER BOOK FILED BY THE ASSESSEE. THE LD D.R SUBMITTED THAT THE TENURE OF THE AGREEMENT IS 50 YEARS AND FURTHER, AS PER CLAUSE 5 OF THE LICENCE AGREEMENT, THE FIRST PARTY (PARTNERS OF THE FIRM) SHALL HAND OVER THE PROPERTY TO THE GRAMA PANCHAYAT . AS PER CLAUSE 8, THE FIRST PARTY SHALL BE ENTITLED TO 30% OF THE TOTAL COLLECTION (G ROSS INCOME WITHOUT ANY DEDUCTION) FROM THE BUS STAND. FURTHER, THE FIRST PARTY IS LI ABLE TO DO REPAIR WORKS AS PER CLAUSE 3 OF THE LICENCE AGREEMENT. ACCORDINGLY, THE LD D.R SUBMITTED THAT IT IS NOT A CASE OF MERE COLLECTION OF RENTAL INCOME FROM THE PROPERTY OWNED BY THE PARTNERS. ON THE CONTRARY, THE OWNERSHIP OF THE PROPERTY LIES WITH T HE GRAMA PANCHAYAT AND FURTHER THE GRAMA PANCHAYAT ITSELF COLLECTS THE REVENUE AND HAN DS OVER 30% OF THE SAME TO THE FIRST PARTY. ACCORDINGLY, THE LD D.R SUBMITTED THA T IT IS AN ORGANISED BUSINESS ACTIVITY CARRIED ON BY THE PARTNERSHIP FIRM, WHICH HAS BEEN FORMED ONLY TO EXECUTE THE WORK AS PER THE LICENCE AGREEMENT. HENCE THE LD CIT HAS HE LD THAT THE INCOME FROM THIS ACTIVITY IS LIABLE TO BE ASSESSED IN THE HANDS OF T HE PARTNERSHIP FIRM. HENCE, RELIANCE PLACED BY THE ASSESSEE IN SEC. 26 OF THE ACT IS MIS PLACED, AS HELD BY THE HONBLE KERALA HIGH COURT IN THE CASE OF SRI SYED MOHAMMED SAHEB A ND BROTHERS VS. CIT (SUPRA). THE LD D.R FURTHER SUBMITTED THAT THE ASSESSING OFF ICER DID NOT MAKE ANY ENQUIRY IN ORDER TO ASCERTAIN ABOUT THE NATURE OF RECEIPT AS W ELL AS THE REASON FOR NOT OFFERING THE I.T.A. NO.321/COCH/2013 6 SAME IN THE HANDS OF THE FIRM. IN EFFECT, THE ASSE SSING OFFICER DID NOT APPLY HER MIND AT ALL ON THIS ISSUE. HE FURTHER SUBMITTED THAT EVEN IF THE AO IS PRESUMED TO HAVE APPLIED HER MIND, HER DECISION SHOULD BE REFLECTED IN THE A SSESSMENT ORDER. SINCE THE AO DID NOT DISCUSS ABOUT THE ISSUES, THE ASSESSMENT ORDER IS RENDERED ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. IN THIS C ONNECTION, THE LD D.R PLACED RELIANCE ON THE ORDER DATED 02-08-2013 PASSED BY THIS BENCH OF TRIBUNAL IN THE CASE OF PERINTHALMANNA SERVICE CO-OP BANK LTD IN ITA NO.199 /COCH/2013, WHEREIN THE TRIBUNAL HAS UPHELD THE REVISION ORDER PASSED BY LD CIT U/S 263 OF THE ACT ON THE REASONING THAT THE ASSESSMENT ORDER DID NOT CONTAIN ANY DISCUSSION ON THE MATTERS POINTED OUT BY LD CIT. ACCORDINGLY, THE LD D.R STRONGLY DEFENDED THE IMPUGNED REVISION ORDER PASSED BY LD CIT. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PER USED THE RECORD. ADMITTEDLY, THE ASSESSMENT ORDER IS CRYPTIC AND IT DID NOT CONTAIN ANY DISCUSSION ABOUT THE CORRECTNESS OF THE CLAIM MADE BY THE PARTNERSHIP FIRM. IT IS WE LL SETTLED PROPOSITION OF LAW THAT THE ASSESSMENT ORDER WOULD BE RENDERED ERRONEOUS AND PR EJUDICIAL TO THE INTERESTS OF THE REVENUE, IF THERE IS LACK OF ENQUIRY ON THE PART OF THE ASSESSING OFFICER ON ANY OF THE ISSUES HAVING TAX IMPACT. FOR THIS PROPOSITION, A GAINFUL REFERENCE MAY BE MADE TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MA LABAR INDUSTRIAL CO. VS. CIT (243 ITR 83). WE FEEL IT PERTINENT TO REFER TO THE DECI SION RENDERED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GRASIM INDUSTRIES LTD. V CIT (321 ITR 92), WHEREIN THE COURT HAS DISCUSSED ABOUT THE SCOPE OF PROVISIONS OF SECT ION 263 AS UNDER: SECTION 263 OF THE INCOME-TAX ACT, 1961 EMPOWERS TH E COMMISSIONER TO CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDINGS UNDER THE ACT AND, IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN, BY THE ASS ESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE, TO PASS AN ORDER UPON HEARING THE ASSESSEE AND AFTER A N ENQUIRY AS IS NECESSARY, ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. THE KE Y WORDS THAT ARE USED BY SECTION 263 ARE THAT THE ORDER MUST BE CONSIDERE D BY THE COMMISSIONER TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THIS PROVISION HAS BEEN INTERPRETED BY THE SUPREME COURT IN SEVERAL JUDGMENTS TO WHICH IT IS NOW NECESSARY TO TURN. IN MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83, THE SUPREME COURT HELD THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR I.T.A. NO.321/COCH/2013 7 COMMITTED BY THE ASSESSING OFFICER AND IT IS ON LY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. THE SUPREME COURT HELD THAT AN INCORRECT ASSUMPTION OF FACT OR AN INCORRECT APP LICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. AN ORDER PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE OR W ITHOUT APPLICATION OF MIND, WOULD BE AN ORDER FALLING IN THAT CATEGORY . THE EXPRESSION PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THE SUPREME COURT HELD, IT IS OF WIDE IMPORT AND IS NOT CONFINED TO A LOSS OF TAX. W HAT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE IS EXPLAINED IN THE JUDGMEN T OF THE SUPREME COURT (HEAD NOTE) : THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE RE VENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE A SSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER, CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS O F THE REVENUE, FOR EXAMPLE, WHEN AN INCOME-TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. THE PRINCIPLE WHICH HAS BEEN LAID DOWN IN MALABAR I NDUSTRIAL CO. LTD. [2000] 243 ITR 83 (SC) HAS BEEN FOLLOWED AND EXPLAI NED IN A SUBSEQUENT JUDGMENT OF THE SUPREME COURT IN CIT V. MAX INDIA L TD. [2007] 295 ITR 282. THERE MAY NOT BE ANY DISPUTE THAT THE REVISION PROC EEDING SHALL NOT LIE ON THE ISSUES ON WHICH THE ASSESSING OFFICER HAS TAKEN A PLAUSIBLE V IEW AFTER EXAMINING AND APPLYING HIS MIND ON IT. IF THE AO DID NOT MAKE ANY ENQUIRY ON ANY OF THE PERTINENT ISSUE, IT WILL RESULT IN LACK OF APPLICATION OF MIND. 11. IN THE INSTANT CASE, THE ASSESSEE HAS FILE D COPIES OF ASSESSMENT ORDERS PASSED IN ITS HAND FOR EARLIER YEARS. WE FIND THAT THERE WAS NO DISCUSSION ABOUT THE CORRECTNESS OF THE CLAIM MADE BY THE ASSESSEE IN ANY OF THE ASS ESSMENT ORDERS. 12. IN ANY CASE, AS HELD BY THE HONBLE DELHI HIGH COURT IN THE CASE OF TOYOTO MOTOR CORPORATION (306 ITR 49), THE PROCEEDINGS BEFORE TH E AO ARE QUASI JUDICIAL PROCEEDINGS AND A DECISION TAKEN BY THE AO IN THIS REGARD MUST BE SUPPORTED BY REASONS. IN THE I.T.A. NO.321/COCH/2013 8 CASE BEFORE THE DELHI HIGH COURT, THE ASSESSING OFF ICER PASSED A CRYPTIC ORDER DROPPING THE PENALTY PROCEEDINGS WITHOUT GIVING ANY REASON A ND HENCE THE SAID ORDER WAS REVISED BY THE LD CIT U/S 263 OF THE ACT. THE ASSE SSEE CHALLENGED THE REVISION ORDER BEFORE THE TRIBUNAL AND COULD SUCCEED. THE DEPARTM ENT CARRIED THE MATTER IN APPEAL BEFORE THE HONBLE DELHI HIGH COURT, WHICH UPHELD T HE REVISION ORDER PASSED BY LD CIT U/S 263 OF THE ACT FOR THE REASONS STATED ABOVE. T HE SAID ORDER OF THE DELHI HIGH COURT HAS BEEN APPROVED BY THE HONBLE SUPREME COURT IN T HE CASE OF TOYOTO MOTOR CORPORATION (306 ITR 52) WITH THE OBSERVATION THAT THE ASSESSING OFFICER SHOULD PASS A REASONED ORDER. THESE DECISIONS CLEARLY BRING OUT THAT THE ASSESSMENT ORDER SHOULD BE PASSED WITH OR CONTAIN PROPER REASONS ON VARIOUS IS SUES. 13. THE ISSUE POINTED OUT BY LD CIT WOULD HAVE IM PLICATION ON THE TAX COMPUTATION IF IT IS DECIDED AGAINST THE ASSESSEE, IN WHICH CASE T HE IMPUGNED ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WOULD BECOME PREJUD ICIAL TO THE INTERESTS OF THE REVENUE. 14. IN VIEW OF THE FOREGOING DISCUSSIONS, IN OU R VIEW, THE REVISION ORDER PASSED BY LD CIT IS SUSTAINABLE AS THE SAME IS IN ACCORDANCE WIT H THE LAW. 15. THOUGH THE LD A.R ARGUED THAT THE VIEW ENTE RTAINED BY LD CIT IS NOT SUSTAINABLE ON THE REASONING THAT THE PARTNERSHIP FIRM HAS NOT COMMENCED ANY BUSINESS ACTIVITY, YET WE DO NOT FIND IT TO BE APPROPRIATE TO ADDRESS THE SAME AT THIS STAGE, AS THE LD D.R HAS DISPUTED THE SAID CONTENTIONS BY MAKING SPECIFI C REFERENCE TO THE LICENCE AGREEMENT. HENCE, IN OUR VIEW, THE SAME SHOULD BE LEFT TO THE WISDOM OF THE ASSESSING OFFICER. HOWEVER, WE NOTICE THAT THE LD CIT HAS D IRECTED THE ASSESSING OFFICER TO ASSESS THE INCOME IN THE HANDS OF THE ASSESSEE HEREIN. W E DO NOT FIND IT TO BE JUSTIFIED AS, IN OUR CONSIDERED VIEW, IT IS IMPERATIVE THAT THE ASSE SSING OFFICER SHOULD APPLY HIS MIND AND SHALL TAKE HIS OWN DECISION WITHOUT BEING UNTRA MMELLED BY THE OBSERVATIONS MADE BY LD CIT. ACCORDINGLY, WE MODIFY THE REVISION ORD ER PASSED BY LD CIT AND DIRECT THE ASSESSING OFFICER TO EXAMINE THE ISSUE INDEPENDENTL Y WITHOUT BEING INFLUENCED BY ANY OF THE OBSERVATIONS MADE BY THE LD CIT IN THE REVISION ORDER. I.T.A. NO.321/COCH/2013 9 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED ACCORDINGLY ON 13-11-20 13. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 13TH NOVEMBER, 2013 GJ COPY TO: 1. M/S. REGENT PLAZA, RAMANATTUKARA, KOZHIKODE. 2.THE INCOME TAX OFFICER, WARD-2(3), KOZHIKODE. 3.THE COMMISSIONER OF INCOME-TAX, KOZHIKODE. 4. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 5. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN