NILKANT TECH PARK P LTD, MUMBAI V. CIT 8, MUMBAI

ITA 3511/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0782 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 16-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N P SINGH
• Keywords: Capital asset converted into stock in trade; Capital asset; Business income; Revision of order; Opportunity of being heard; Principle of natural justice; Period of limitation; Speculation loss; Difference of opinion; Right to appeal; Change of opinion
• Section: 45(2); 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B, MU MBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.3511/MUM/2014 (ASSESSMENT YEAR- 2009-10) M/S NILKANTH TECH PARK PVT. LTD. CITIMALL, NEW LINK ROAD, ANDHERI (W), MUMBAI-400053 PAN: AACCN0341G VS. C.I.T.-8, MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PRAKASH JOTWANI - ADVOCATE REVENUE BY : SHRI N.P. SINGH (CIT-DR) DATE OF HEARING : 20.04.2017 DATE OF PRONOUNCEMENT : 19.05.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF THE IN COME-TAX ACT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF I NCOME TAX-8(CIT), MUMBAI PASSED UNDER SECTION 263 OF THE ACT DATED 24.03.201 4 FOR THE ASSESSMENT YEAR 2009-10. 2. THE BACKGROUND FACTS ARE THAT THE ASSESSEE FILED RE TURN OF INCOME FOR RELEVANT AY ON 29.09.2009 DECLARING TOTAL INCOME AT LOSS OF RS. -4,88,18,926/-. THE ASSESSMENT WAS COMPLETED ON 17.11.2011 U/S 143(3) OF THE ACT. SUBSEQUENTLY, THE LD CIT ISSUED NOTICE U/S 263 DATED 04.03.2014. IN THE NOTI CE U/S 263 THE LD CIT MENTIONED THAT ON GOING THROUGH THE ASSESSMENT PROCEEDING, IT WAS SEEN THAT ASSESSEE HAD CONVERTED ITS INVESTMENT OF 3,00,000 SHARE OF SPS L TD. AMOUNTING TO RS. 5,75,70,135/- INTO STOCK-IN-TRADE, WHICH WERE SOLD ON 30.03.2009 FOR A CONSIDERATION OF RS. 96,55,125/-. ON SALE OF THOSE SHARE, THE ASSESSEE CLAIMED LOSS OF RS. 4,49,03,946/- UNDER THE HEAD BUSINESS INCO ME. THE ASSESSING OFFICER (AO) ASSESSED THE SAID LOSS AT RS. 4,49,03,946/- AN D ALLOWED IT TO BE CARRIED ITA NO.4511/M/2014- M/S NILKANTH TECH PARK PVT. LTD. 2 FORWARD AS BUSINESS LOSS. THE LD CIT FURTHER MENTIO NED THAT THE ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPME NT AND THERE HAS BEEN NO CHANGE IN THE NATURE OF BUSINESS DURING THE YEAR. T HUS, THE PROVISION OF EXPLANATION TO SECTION 73 OF THE ACT IS APPLICABLE TO THE SHARE TRADING TRANSACTION DURING THE YEAR. THE AO HAS TREATED THE SHARE TRADI NG LOSS AS A BUSINESS LOSS WHILE COMPLETING THE ASSESSMENT ORDER PASSED U/S 143(3) O N 17.11.2011. THE ORDER PASSED BY AO IS ERRONEOUS AND PREJUDICIAL TO THE IN TEREST OF REVENUE. THE LD CIT ISSUED A SHOW-CAUSED TO THE ASSESSEE AS TO WHY THE ASSESSMENT ORDER BE NOT CANCELLED/SET-ASIDE. THE ASSESSEE CONTESTED THE NOT ICE BY FILING DETAILED REPLY. THE ASSESSEE IN ITS REPLY CONTENDED THAT THE AO DURING THE ASSESSMENT PROCEEDING RAISED QUERY RELATING TO THE APPLICABILITY OF SECTI ON 73 OF THE ACT, IF THE SHARE TRADING LOSS AS A SPECULATION LOSS. THE QUERY OF TH E AO WAS REPLIED BY ASSESSEE VIDE ITS LETTER/REPLY DATED 05.11.2011. THE ASSESSE E HAD EXPLAINED TO THE AO THAT EXPLANATION TO SECTION 73 IS NOT APPLICABLE TO THE ASSESSEE AND THE LOSS SUSTAINED BY ASSESSEE IS NOT SPECULATION LOSS. THE CONTENTION OF ASSESSEE WAS DULY CONSIDERED BY AO AND AFTER CONSIDERING THE CONTENTION OF THE ASSE SSEE, THE LOSS WAS ALLOWED TO BE CARRIED FORWARD. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY CIT HOLDING THAT THE AO HAS NOT TOUCHED (DISCUSSED) THE POSSIBI LITY OF LOSS INCURRED TO BE SPECULATION LOSS BY AO. THE AO NOT CONSIDERED THE B INDING PROVISION RELATING TO THE TRANSACTION IN SHARE AND INCOME/LOSS. THE LD CI T CONCLUDED THAT THE ASSESSMENT IS NOT ONLY PREJUDICIAL TO THE REVENUE BUT ERRONEOU S AS WELL. THEREFORE, THE LD. CIT SET-ASIDE THE ASSESSMENT ORDER DATED 17.11.2011 AND DIRECTED THE AO TO PASS THE ASSESSMENT ORDER AFRESH BY APPLYING THE PROVISIONS OF SECTION 45(2) OF THE ACT TO THE CONVERSION OF SHARE FROM INVESTMENT OR CAPITAL ASSET TO STOCK-IN-TRADE. THE LOSS WAS DIRECTED TO BE TREATED AS SPECULATION LOSS. AGG RIEVED BY THE ORDER OF LD. CIT, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW: 1. THE LEARNED CIT ERRED IN PASSING AN ORDER U/S 26 3 ON THE FACTS WHICH WERE CONSIDERED BY THE AO WHEN HE PASSED THE ORIGINAL AS SESSMENT ORDER. ITA NO.4511/M/2014- M/S NILKANTH TECH PARK PVT. LTD. 3 2. THE LEARNED CIT ERRED IN PASSING AN ORDER U/S 26 3 ON THE ISSUE OF SEC. 45 (2) AND TREATING LOSS AS CAPITAL LOSS WITHOUT RAISING T HE ISSUE BY WAY OF A SHOW CAUSE NOTICE THUS VIOLATING PRINCIPLES OF NATURAL JUSTICE . 3. THE LEARNED CIT ERRED IN APPLYING PROVISIONS OF EXPLANATION TO SEC. 73 OF THE IT. ACT, 1961 AND THEREBY TREATING THE LOSS AS SPECULATIVE. 4. THE LEARNED CIT ERRED IN NOT ACCEPTING THAT IN A CASE WHERE OTHER INCOME EXCEEDS BUSINESS INCOME THEN A PROVISION OF EXPLANA TION TO SEC.73 DOES NOT APPLY. 3. WE HAVE HEARD THE SUBMISSIONS OF SHRI PRAKASH JOTWA NI THE LEARNED AR OF THE ASSESSEE AND SHRI N.P. SINGH THE LD. DR FOR THE REV ENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASSESSEE ARG UED THAT DURING THE ASSESSMENT PROCEEDING, THE AO MADE THE PROPER SCRUTINY OF THE VARIOUS CLAIM MADE BY ASSESSEE. THE AO APPLIED HIS MIND TO THE MATERIAL P LACED BEFORE HIM AND ACCEPTED THE VIEW CONVEYED BY ASSESSEE, MERE FACT THAT THE A O EXPRESSLY NOT DISCUSSED THE FACT IN THE ASSESSMENT ORDER CANNOT BE A GROUND TO CONCLUDE THAT THE INCOME HAS ESCAPED ASSESSMENT. THE AO MADE ADEQUATE ENQUIRY BE FORE PASSING THE ORDER OF ASSESSMENT U/S 143(3) OF THE ACT ON 17.11.2011. THE AO ISSUED A QUESTIONNAIRE DURING THE ASSESSMENT AND THE ASSESSEE VIDE ITS REP LY DATED 02.11.2011 AND 05.11.2011 FURNISHED THE INFORMATION AND EXPLANATIO N WITH REGARD TO INVESTMENT IN SHARE OF SPS LTD. OF 3,00,000 SHARE OF RS. 5,75,70 ,135/- WHICH HAVE BEEN CONVERTED INTO STOCK-IN-TRADE. THE ASSESSEE REPORTE D ALL THE INFORMATION IN TAX AUDIT REPORT. THE AO ALSO EXAMINED THE APPLICABILIT Y OF SECTION 73 OF THE ACT. THE ASSESSEE VIDE ITS REPLY DATED 05.11.2011 BEFORE AO CONTENDED THAT SECTION 73 IS NOT APPLICABLE TO THE ASSESSEE-COMPANY AS THE ON LY INCOME OF THE COMPANY DURING THE YEAR UNDER CONSIDERATION IS INCOME CHARG EABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. AFTER CONSIDERING THE SUBMISSI ON AND EXPLANATION OF ASSESSEE, THE AO ACCEPTED THE LOSS AND ALLOWED THE SAME TO BE CARRIED FORWARD. THE AO PASSED THE DETAILED ORDER ON MERIT. THE LD. CIT NOWHERE IN THE SHOW- CAUSE REFERRED THAT THE AO PASSED THE ORDER WITHOUT MAKING ANY ENQUIRY. THE LD. AR FOR ASSESSEE FURTHER SUBMITTED THAT THE LOSS CAR RIED FORWARD FOR THE YEAR UNDER CONSIDERATION HAS NOT BEEN UTILIZED TILL NOW. THE L D. AR OF THE ASSESSEE ARGUED THAT THE ORDER OF LD. CIT IS A MERE CHANGE OF OPINION. T HE ORDER IS NOT ERRONEOUS. PER CONTRA THE LD. DR FOR THE REVENUE MADE THE SUBMISSI ON THAT THE ASSESSEE IS IN THE ITA NO.4511/M/2014- M/S NILKANTH TECH PARK PVT. LTD. 4 BUSINESS OF REAL ESTATE DEVELOPMENT SINCE INCEPTION AND THERE IS NO CHANGE IN ITS NATURE OF BUSINESS. THE MAJOR SOURCE OF INCOME DURI NG THE YEAR UNDER CONSIDERATION IS DIVIDEND INCOME WHICH WAS CLAIMED AS EXEMPTED. THE REVENUE HAS NO RIGHT TO APPEAL TO THE LD. CIT AGAINST THE O RDER PASSED BY AO, THAT IS WHY, THE LD. CIT IS CONFERRED THE POWER U/S 263 BY STATU TE TO REVISE THE ORDER PASSED BY AO, WHERE THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IT WAS FURTHER SUBMITTED THAT THE PHRASE ERRONEOUS AND PREJUDICIAL ARE NOT DEFINED IN THE INCOME-TAX ACT. THE BLACK LAW DICTIONARY DEFINE S ERRONEOUS AS INVOLVING ERROR, DEVIATING FROM THE LAW. THUS, ERRONEOUS ASSE SSMENT REFERS TO AN ASSESSMENT THAT DEVIATES FROM THE LAW AND IS THEREFORE, INVALI D AND IS DEFECTIVE BEING JURISDICTIONAL IN NATURE. SIMILARLY, THE ERRONEOUS JUDGMENT MEANS ONE RENDER NOT ACCORDING TO COURSE AND PRACTICE OF COURT, BUT CONT RARY TO LAW UPON MISTAKEN VIEW OF LAW. THE PHRASE PREJUDICIAL TO THE INTEREST OF REVENUE HAS TO BE READ IN CONJUNCTION OF THE ERRONEOUS ORDER PASSED BY AO. EV ERY LOSS OF REVENUE AS A CONSEQUENCE OF ORDER OF AO, THOUGH CANNOT BE TREATE D AS PREJUDICIAL TO THE INTEREST OF REVENUE UNLESS THE VIEWS TAKEN BY AO ARE INCONSI STENT BY LAW. IN SUPPORT OF HIS SUBMISSION, LD. DR FOR REVENUE RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN CASE OF MALABAR INDUSTRIES COMPANY LTD. VS . CIT (234 ITR 83) AND SMT. TARADEVI AGGARWAL VS. CIT (1973) 88 ITR 323. THE LD . DR FURTHER ARGUED THAT INCORRECT ASSUMPTION OF FACT BY AO RENDERS THE ASSE SSMENT ORDER AS ERRONEOUS AS HELD IN CIT VS. AMALGAMATION (238 ITR 963). THE AO COMPLETELY OMITTED THE ISSUE IN QUESTION FROM CONSIDERATION AND PASS THE A SSESSMENT ORDER ARBITRARILY IN ARBITRARY MANNER, WHICH RENDERS SUCH ASSESSMENT AS ERRONEOUS. THE AO HAS NOT EXAMINED THE ISSUE ON SALE OF SHARE WHICH RESULTED INTO HEAVY LOSS. THERE IS NO DISCUSSION IN THE ASSESSMENT ORDER WITH RESPECT TO THE ISSUE OF CONVERSION OF SHARE INTO STOCK-IN-TRADE IN VIEW OF THE FACT THAT THE NA TURE OF BUSINESS OF ASSESSEE IS REAL ESTATE DEVELOPMENT, WHETHER PROVISION OF SECTION 45 (2) WERE APPLICABLE AND THE SAID LOSS BE TREATED AS SPECULATION LOSS AS PER PRO VISIONS OF SECTION 73. THE LD. DR FOR THE REVENUE FINALLY SUBMITTED THAT THE ORDER PA SSED U/S 263 IS PROPER AND MAY BE SUSTAINED BY DISMISSING THE APPEAL OF THE ASSESS EE. THE LD. DR FOR THE REVENUE ITA NO.4511/M/2014- M/S NILKANTH TECH PARK PVT. LTD. 5 ALSO RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN CIT VS. ASHOK LOGANI IN ITA NO. 553/2010 DATED 11.05.2011. IN REJ OINDER SUBMISSION, THE LD. AR OF THE ASSESSEE WOULD SUBMIT THAT THE CASE LAW R ELIED BY LD. DR FOR THE REVENUE IS DIFFER ON FACT OF THE PRESENT CASE. THE LD. CIT HAS NOT GIVEN ANY SHOW- CAUSE FOR SECTION 45(3) OF THE ACT. IN SUPPORT OF H IS SUBMISSION, THE LD. AR FOR THE ASSESSEE ALSO RELIED UPON THE DECISION OF MALABAR I NDUSTRIES CO. LTD. (SUPRA). THE DECISION OF MUMBAI TRIBUNAL IN SMALL WONDER INDUSTR IES VS. CIT IN ITA NO. 2464/M/2013 DATED 24.02.2017 AND DECISION IN CASE O F HONBLE MADRAS HIGH COURT IN FIRST LEASING CO. INDIA LTD. VS. CIT [134 ITR 641 (MAD.)]. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PAR TIES AND HAVE GONE THROUGH THE RECORD OF VARIOUS DECISION RELIED BY THE PARTIES. B EFORE CONSIDERING THE FACT OF THE PRESENT CASE WE MAY REFER THE PROVISIONS OF SECTIO N 263 OF INCOME TAX ACT, WHICH MAY BE READS AS UNDER; REVISION OF ORDERS PREJUDICIAL TO REVENUE. 263. (1). THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD3 OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE3, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD A ND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORD ER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECT ING A FRESH ASSESSMENT. EXPLANATION .FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT, FOR THE PURPOSES OF THIS SUB- SECTION,- ( A ) AN ORDER PASSED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988 BY THE ASSESSING OFFICER SHALL INCLUDE- ( I ) AN ORDER OF ASSESSMENT MADE BY THE ASSISTANT C OMMISSIONER OR DEPUTY COMMISSIONER OR THE INCOME-TAX OFFICER ON THE BASIS OF THE DIREC TIONS ISSUED BY THE JOINT COMMISSIONER UNDER SECTION 144A; ( II ) AN ORDER MADE BY THE JOINT COMMISSIONER IN EXER CISE OF THE POWERS OR IN THE PERFORMANCE OF THE FUNCTIONS OF AN ASSESSING OFFIC ER CONFERRED ON, OR ASSIGNED TO, HIM UNDER THE ORDERS OR DIRECTIONS ISSUED BY THE BO ARD OR BY THE CHIEF COMMISSIONER OR DIRECTOR GENERAL OR COMMISSIONER AUTHORIZED BY T HE BOARD IN THIS BEHALF UNDER SECTION 120; ( B ) RECORD SHALL INCLUDE AND SHALL BE DEEMED ALW AYS TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PROCEEDING UNDER THIS ACT AVAILABLE AT THE TIME OF EXAMINATION BY THE COMMISSIONER; ( C ) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECT ION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER OF ANY APPEAL FILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988, THE POWERS OF THE COMMISSIONER UNDER TH IS SUB-SECTION SHALL EXTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED TO SUCH MAT TERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL. (2) NO ORDER SHALL BE MADE UNDER SUB-SECTION ( 1) AFTER THE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE REVISED WAS PASSED. ITA NO.4511/M/2014- M/S NILKANTH TECH PARK PVT. LTD. 6 (3) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-S ECTION (2), AN ORDER IN REVISION UNDER THIS SECTION MAY BE PASSED AT ANY TIME IN THE CASE OF AN ORDER WHICH HAS BEEN PASSED IN CONSEQUENCE OF, OR TO GIVE EFFECT TO, ANY FINDING O R DIRECTION CONTAINED IN AN ORDER OF THE APPELLATE TRIBUNAL, NATIONAL TAX TRIBUNAL, THE HIGH COURT OR THE SUPREME COURT. EXPLANATION .IN COMPUTING THE PERIOD OF LIMITATION FOR THE PUR POSES OF SUBSECTION (2), THE TIME TAKEN IN GIVING AN OPPORTUNITY TO THE ASSESSEE TO BE REHEARD UNDER THE PROVISO TO SECTION 129 AND ANY PERIOD DURING WHICH ANY PROCEED ING UNDER THIS SECTION IS STAYED BY AN ORDER OR INJUNCTION OF ANY COURT SHALL BE EXC LUDED. THE CAREFUL PERUSAL OF SECTION 263 MAKE IT CLEAR TH AT, THE COMMISSIONER CAN PASS AN ORDER, HOWEVER HE IS REQUIRED TO GIVE THE ASSESS EE AN OPPORTUNITY OF BEING HEARD. THE COMMISSIONER IS REQUIRED TO RECORD THAT THE ORDER MADE BY ASSESSING OFFICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL T O THE INTEREST OF THE REVENUE. IF IN THE FRESH ASSESSMENT, THE ASSESSING OFFICER IS ENTI TLED TO EXAMINE ITEM WHICH DOES NOT FORM PART OF SECTION 263 PROCEEDINGS, THE STATU TORY REQUIREMENT OF FRAMING AN ORDER UNDER SECTION 263 AFTER GIVING THE ASSESSEE A N OPPORTUNITY OF BEING HEARD, STAND OBLITERATED OR IS MADE REDUNDANT. FURTHER, PL AN READING OF SECTION 263(1), IT IS APPARENT THAT COMMISSIONER COULD HAVE TREATED A NY FURTHER ITEM OR PART OF THE ASSESSMENT ORDER AS BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 5. FROM THE RECORD WE HAVE SEEN THAT THE LEARNED AR OF ASSESSEE HAS PLACED ON RECORD THE COPY OF REPLY FILED, AGAINST THE QUARRIES RAISE D BY ASSESSING OFFICER DURING THE ASSESSMENT ORDER. THE ASSESSEE IN ITS REPLY /LETTER DATED 2 ND NOVEMBER 2011, HAS SPECIFICALLY REFERRED THAT DURING THE RELEVANT FINA NCIAL YEAR UNDER CONSIDERATION INVESTMENTS IN THE SHARE OF SPS LTD 300000 AMOUNTIN G TO RS. 5,75,70135/- WAS CONVERTED INTO STOCK-IN-TRADE AT COST. THE SAME WAS REPORTED IN THE TAX AUDIT REPORT. THE DETAILS THEREOF WERE MENTIONED IN THE B ALANCE-SHEET. FURTHER, IN REPLY DATED 5 NOVEMBER 2011 THE ASSESSEE FURTHER IN THE Q UARRIES RAISED BY THE ASSESSING OFFICER CONTENDED THAT DURING THE YEAR UNDER CONSID ERATION, THE ASSESSEE WAS DOING BUSINESS ACTIVITY FOR DEALING IN SHARES AND STOCKS. THE ONLY INCOME AND DURING THE YEAR UNDER CONSIDERATION WAS DIVIDEND ON SHARES AND MUTUAL FUND WHICH IT CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. IN REPLY TO THE APPLICABILITY OF EXPLANATION TO SECTION 73 OF THE A CT THE ASSESSEE CONTENDED THAT SECTION 73 IS NOT APPLICABLE TO THE ASSESSEE COMPAN Y. THE COPIES OF REPLY OF ASSESSEE DATED 2 NOVEMBER 2011 AND 5 TH NOVEMBER 2011(PAGE NO.6 TO9 OF PB) ITA NO.4511/M/2014- M/S NILKANTH TECH PARK PVT. LTD. 7 AND THE VARIOUS DETAILS MAKES IT CLEAR THAT THE ASS ESSING OFFICER CONSIDERED THE FACTUAL MATRIX OF THE ISSUE BEFORE PASSING THE ASSE SSMENT ORDER. THUS, FROM THE RECORD PLACED BEFORE US IT CANNOT BE SAID THAT THE ASSESSMENT WAS PASSED WITHOUT APPLICATION OF MIND AND/OR NO QUESTION WAS RAISED B Y ASSESSING OFFICER REGARDING THE LOSS SHOWN BY ASSESSEE. WE MAY ALSO NOT THAT TH E ASSESSING OFFICER HAS NOT REFERRED HIS FINDING REGARDING THE CLAIM OF LOSS, T HE MANNER IN WHICH IT WAS SUBSTANTIATED BY ASSESSEE IN THE ASSESSMENT ORDER. THE REVENUE HAS NOT DISPUTED THE COPIES OF REPLIES PLACED BEFORE THE ASSESSING OFFIC ER. THUS, FROM THE CONTENTS OF ORDER OF ASSESSMENT WE MAY CONCLUDE THAT ORDER MAYB E ERRONEOUS AS THE SAME IS NOT SPEAKING ORDER ON A PARTICULAR ISSUE, HOWEVER T HE ORDER IS NOT PREJUDICIAL TO THE INTEREST OF REVENUE. THE ASSESSING OFFICER PASSED T HE ORDER WHICH IS BASED ON ONE OF THE POSSIBLE VIEW. WE MAY FURTHER CONCLUDE THAT THE ORDER PASSED BY LEARNED COMMISSIONER DOES NOT FULFILL THE TWIN CONDITION AS CONTEMPLATED UNDER SECTION 263 OF THE ACT. THE ORDER OF LEARNED COMMISSIONER I S BASED ON CHANGE OF OPINION. 6. WE MAY ALSO REFER HERE THAT THE ASSESSING OFFICER W HILE PASSING/ FRAMING ASSESSMENT ORDER PERFORMS A QUASI-JUDICIAL FUNCTION . THE JURISDICTION UNDER SECTION 263 CAN BE EXERCISED ONLY WHEN BOTH THE TWIN CONDI TION I.E. THE ORDER OF ASSESSING OFFICER IS ERRONEOUS AND SO FAR AS PREJUDICIAL TO T HE INTEREST OF REVENUE. THESE CONDITIONS ARE CONJUNCTIVE AS HAS BEEN HELD BY HON BLE SUPREME COURTS IN A MALABAR INDUSTRIAL COMPANY LTD (SUPRA). FURTHER, TH E ORDER OF ASSESSING OFFICER CANNOT BE TERMED ERRONEOUS UNLESS IT IS NOT IN ACCO RDANCE WITH LAW. IF ASSESSING OFFICER IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSE SSMENT, IT CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCOR DING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE DELIBERATELY. SECTION 263 DOES NOT VISUALIZE A CASE OF SUBSTITUTION OF JUDGMENT BY THE COMMISSIONER FOR THAT OF THE ASSESSING OFFICER WHO PASSED THE ORDER UNLESS THE DECISION IS HELD TO BE ERRONEOUS. WHERE THE ASSESSING OFFICER HAS EXERCISED THE QUASI-JUDICIAL POWER VESTED IN HIM ACCORDING TO LAW AND ARRIVED AT THE CONCLUSION SUCH CONCLUSION C ANNOT BE FOUND TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATIS FIED WITH THE CONCLUSION AS ITA NO.4511/M/2014- M/S NILKANTH TECH PARK PVT. LTD. 8 HELD BY HONBLE DELHI HIGH COURT IN CIT VERSUS SUNB EAM AUTO LTD 332 ITR 167(DELHI) AND IN CIT VERSUS ANIL KUMAR SHARMA 335 ITR 83(DELHI). 7. WE HAVE SEEN THAT THE FACTS OF THE CASE RELIED BY L EARNED DR FOR THE REVENUE IN CIT VERSUS ASHOK LOGONI (SUPRA) IS AT VARIANCE. IN THE SAID CASE THE ASSESSEE HAD OFFERED ADDITIONAL INCOME DURING THE SEARCH FOR TAX ATION, BUT THE SAME WAS NOT OFFERED IN THE RETURN OF INCOME AND THE ASSESSING O FFICER HAD NOT EXAMINED THE SUCH ASPECT DURING THE ASSESSMENT PROCEEDING. THUS, IT WAS A CASE WHERE THE ASSESSING OFFICER HAS NOT EXAMINED THE ISSUE WHICH WAS REVISED BY LEARNED COMMISSIONER BY EXERCISING POWER UNDER SECTION 263 OF INCOME TAX ACT. IN VIEW OF THE ABOVE FACTS AND VARIOUS JUDICIAL PRONOUNCEME NTS OF HONBLE APEX COURT AND THE DELHI HIGH COURT, HENCE, WE SET ASIDE THE O RDER OF LEARNED COMMISSIONER BY ACCEPTING THE GROUNDS OF APPEAL RAISED BY ASSESS EE. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DAY OF MAY 2017. SD/- SD/- (G.S.PANNU) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 19/05/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/