J.R.D TATA TRUST , Mumbai V. CIT (E), MUMBAI

ITA 3739/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0780 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 29-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Rule of consistency; Set aside
• Section: 143(3); 2(A); 263; 63

Judgement Text

, , !'#,$%!'&! IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI PRAMOD KUMAR, VICE-PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER !. 3739 / /201 9 (%-. . 2009-10 ) ITA NO.3739/MUM/2019(A.Y.2009-10) J R D TATA TRUST, BOMBAY HOUSE, 24, HOMI MODY STREET, FORT, MUMBAI 400 001 PAN: AAATT-0165-F ...... #/ / APPELLANT - VS. THE COMMISSIONER OF INCOME TAX(EXEMPTIONS), 6 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI 400 012. ..... %0/ RESPONDENT APPELLANT BY : SHRI PERCY PARDIWALLA, SR.AD VOCATE WITH SHRI MADHUR AGGRAWAL, ADVOCATE RESPONDENT BY : SHRI PRABHAT KUMAR GUPTA(DR ) ! -1%0 #/ DATE OF HEARING : 18/06/2021 23 1%0 #/ DATE OF PRONOUNCEMENT : 01/07/2021 &/ ORDER PER VIKAS AWASTHY, JM: IN THIS APPEAL THE ASSESSEE HAS ASSAILED THE ORD ER OF COMMISSIONER OF INCOME TAX(EXEMPTIONS), MUMBAI [ IN SHORT THE CIT(E)] DA TED 31/03/2019 PASSED UNDER SECTION 263 OF THE OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) FOR ASSESSMENT YEAR 2009-10. 2. SHRI PERCY PARDIWALA APPEARING ON BEHALF OF TH E ASSESSEE SUBMITTED AT THE OUTSET THAT THE ASSESSEE IN APPEAL HAS RAISED LEGAL GROUNDS ASSAILING THE ACTION OF CIT 2 ITA NO.3739/MUM/2019(A.Y.2009-10) IN INVOKING REVISIONAL JURISDICTION UNDER SECTION 263 OF THE ACT, AS WELL AS, CHALLENGED THE VALIDITY OF IMPUGNED ORDER ON THE GR OUND OF LIMITATION. IN GROUNDS NO.1 AND 2 OF APPEAL, THE ASSESSEE HAS ASSAILE D VALIDITY OF ORDER PASSED UNDER SECTION 263 OF THE ACT ON THE GROUND THAT IT IS TI ME BARRED. THE LEGAL GROUND RAISED IN GROUNDS NO. 1 AND 2 ARE NOT PRESSED AT THIS STAG E, HOWEVER, THE ASSESSEE SEEKS LIBERTY TO REVIVE THESE GROUNDS IN CASE THE SITUATI ON ARISES AT LATER POINT OF TIME. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT TH E EFFECTIVE GROUNDS FOR ADJUDICATION IN THE PRESENT APPEAL ARE GROUNDS NO.3 AND 4 CHALLENGING THE ORDER OF CIT(E) HOLDING THAT THE ASSESSMENT ORDER PASSED UND ER SECTION 143(3) R.W.S. 147 OF THE ACT IS ERRONEOUS AS THE SAME HAS NOT BEEN PASSE D AFTER DUE VERIFICATION OF THE RECORDS. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT GROUNDS NO.3 AND 4 OF THE APPEAL ARE IDENTICAL TO THE GROUNDS RAISED IN THE C ASE OF SIR DORABJI TATA TRUST VS. DCIT IN ITA NO.3909/MUM/2019 FOR ASSESSMENT YEAR 20 14-15 DECIDED ON 28/12/2020 AND THE GROUNDS RAISED IN ASSESSEES OWN CASE IN ITA NO.3738/MUM/2019 FOR ASSESSMENT YEAR 2014-15 DECIDE D ON 28/12/2020. THE ORDER PASSED BY CIT(E) INVOKING REVISIONAL JURISDIC TION UNDER SECTION 263 OF THE ACT IS IDENTICAL TO THE ORDER PASSED IN THE CASE OF SIR DO RABJI TATA TRUST (SUPRA). THE CO- ORDINATE BENCH OF THE TRIBUNAL HAS QUASHED THE OR DER PASSED UNDER SECTION 263 OF THE ACT IN BOTH THE AFORESAID CASES. THE LD.COUNSE L FOR THE ASSESSEE PRAYED FOR QUASHING THE IMPUGNED ORDER IN PRESENT APPEAL FOR PARITY OF REASONS. 3. SHRI PRABHAT KUMAR GUPTA REPRESENTING THE DEPART MENT SUPPORTED THE IMPUGNED ORDER PASSED UNDER SECTION 263 OF THE ACT . HOWEVER, THE LD.DEPARTMENTAL REPRESENTATIVE FAIRLY ADMITTED THAT SIMILAR ORDERS PASSED U/S.263 OF THE ACT IN THE CASE OF SIR DORABJI TATA TRUST(SUPRA) AND IN ASSES SEES OWN CASE FOR THE ASSESSMENT YEAR 2014-15(SUPRA) HAS BEEN SET-ASIDE BY THE TRIBU NAL. 4. WE HAVE HEARD THE SUBMISSIONS MADE BY RIVAL SIDE S AND HAVE EXAMINED THE ORDERS OF AUTHORITIES BELOW. THE LD.COUNSEL FOR TH E ASSESSEE HAS STATED AT THE BAR 3 ITA NO.3739/MUM/2019(A.Y.2009-10) THAT HE IS NOT PRESSING GROUNDS NO. 1 AND 2 OF THE APPEAL AT THIS STAGE AND SEEKS LIBERTY TO REVIVE THE GROUNDS, IF NEED ARISES AT L ATER POINT OF TIME. NO OBJECTION HAS BEEN RAISED BY THE REVENUE ON THE LIBERTY SOUGHT BY LD.COUNSEL FOR THE ASSESSEE. IN VIEW OF THE STATEMENT MADE BY LD.COUNSEL FOR THE AS SESSEE, GROUNDS NO.1 AND 2 OF THE APPEAL ARE DISMISSED AS NOT PRESSED AT THIS ST AGE WITH LIBERTY TO REVIVE, AS PRAYED FOR. 5. NOW, THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDE R PASSED UNDER SECTION 263 OF THE ACT ON FOLLOWING GROUNDS: 3. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LEARNED CIT(E) ERRED IN HOLDING THAT THE REASSESSMENT ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME-TAX (EXEMPTIONS)- 2(1) ('THE LEARNED ASSESSI NG OFFICER') WAS ERRONEOUS AS DUE VERIFICATION WAS NOT UNDERTAKEN BY THE LEARNED ASSE SSING OFFICER. THE APPELLANT PRAYS THAT IT BE HELD THAT THE REASSE SSMENT ORDER PASSED WAS NOT ERRONEOUS SINCE ADEQUATE VERIFICATION HAD BEEN UNDE RTAKEN BY THE LEARNED ASSESSING OFFICER. 4. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF TH E CASE AND IN LAW, EVEN ASSUMING THE ASSESSMENT ORDER WAS ERRONEOUS, THE LEARNED CIT(E) ERRED IN EXERCISING JURISDICTION UNDER SECTION 263 OF THE ACT BY HOLDING THE ASSESSMENT OR DER WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHOUT APPRECIATING THAT THERE IS NO T AX EFFECT OF THE PROPOSED DIRECTIONS GIVEN BY THE CIT(E). THE APPELLANT PRAYS THAT IT BE HELD THAT THE ASSESS MENT ORDER WAS NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE SINCE THERE IS NO TAX EFFEC T OF THE PROPOSED DIRECTIONS / VERIFICATIONS. 6. BOTH SIDES ARE UNANIMOUS THAT GROUNDS RAISED I N PRESENT APPEAL CHALLENGING VALIDITY OF REVISIONAL ORDER PASSED UNDER SECTION 2 63 OF THE ACT ARE IDENTICAL TO THE GROUNDS RAISED IN THE CASE OF SIR DORABJI TATA TRU ST (SUPRA). WE HAVE OBSERVED THAT THE ORDER OF CIT(E) IN THE CASE OF SIR DORABJI TATA TRUST (SUPRA) AND IN THE PRESENT APPEAL IS ALMOST IDENTICAL. IN FACT, CONCLUSION OF THE ORDER PASSED BY CIT(E) IS VERBATIM. FOR THE SAKE OF COMPLETENESS THE CONCLUD ING PART OF THE IMPUGNED ORDER IS REPRODUCED HEREIN BELOW: 4 ITA NO.3739/MUM/2019(A.Y.2009-10) 11. CONCLUSION : THUS, IT CLEARLY COMES OUT FROM THE ABOVE JUDGEMENT S THAT NOT CONDUCTING DUE VERIFICATION AMOUNTS TO THE ORDER BEING ERRONEOUS AND PREJUDICIA L TO THE INTEREST OF REVENUE. NO ENQUIRY OR DUE VERIFICATION, EVEN IN CASES WHERE THE ISSUE WAS DEB ATABLE ALSO AMOUNTS TO THE ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. SIMILARLY, ADOPTING THE PERTINENT LINE OF ENQUIRY BUT NOT TAKING IT TO THE LOGICAL END ALSO R ENDERS THE ORDER ERRONEOUS AND PREJUDICIAL LO THE INTEREST OF REVENUE. 12. IN THE LIGHT OF THE DISCUSSION IN THE PRECEDING PARAGRAPHS, I AM OF THE OPINION THAT THE ORDER U/S 143(3) R.W.S. 147 DATED 30.11.2016 FOR THE ASSE SSMENT YEAR 2009-10 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THEREFORE, ORDER IS SET ASIDE TO THE FILE OF THE A. O. FOR MAKING A DE-NOVO ASSESSMENT AFTER PROPER EXAMIN ATION OF VARIOUS ISSUES INCLUDING THE AFORESAID ISSUES. NEEDLESS TO MENTION, THE ASSESSIN G OFFICER MUST DECIDE THE ISSUE AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE AND MUST PASS A SPEAKING AND WELL REASONED ORDER DEALING WITH ALL THE SUBMISSIONS OF THE ASSESSEE. 7. THE CO-ORDINATE BENCH OF TRIBUNAL IN THE CASE SIR JAMSHEDJI TATA TRUST (SUPRA) DECIDED BOTH THE GROUNDS ASSAILING INVOKIN G OF JURISDICTION UNDER SECTION 263 OF THE ACT ON THE PREMISE THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS THE ASSESSING OFFICER H AS FAILED TO CONDUCT VERIFICATION, IN FAVOUR OF ASSESSEE, BY OBSERVING AS UNDER: 17. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED T HE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 18. WE FIND THAT THE CASE OF THE COMMISSIONER HINGE S ON, WHAT HE PERCEIVES AS, LACK OF INQUIRY, THE INADEQUACY OF INQUIRY, OR TAKING UP TH E PERTINENT LINE OF INQUIRY BUT NOT FOLLOWING IT TO ITS LOGICAL CONCLUSION. LEARNED DEPARTMENTAL REPRESENTATIVE HAS ALSO BEEN VERY GRACIOUS TO SUBMIT THAT NONE DOUBTS THE PHILANTHROPIC WORK B EING DONE BY THE ASSESSEE TRUST BUT THE SHORT QUESTION BEFORE US REALLY IS WHETHER OR NOT T HE DUE VERIFICATIONS HAVE BEEN CARRIED OUT BY THE ASSESSING OFFICER. THE STAND OF THE LEARNED COMMISSIONER HAS SIMPLY BEEN REITERATED BY THE DEPARTMENTAL REPRESENTATIVE, AND A LOT OF EM PHASIS IS PLACED ON THE FACT IN THE LIGHT OF EXPLANATION 2 TO SECTION 263 ONCE COMMISSIONER I S OF THE VIEW, AS HE HAS BEEN ON THE FACTS OF THIS CASE, THAT THE ORDER IS PASSED WITHOUT MAK ING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE, THE ORDER IS REQUIRED TO BE TREATE D AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, WE MUST EXAMINE THE NATURE OF INQUIRIES CONDUCTED BY THE ASSESSING OFFICER AND WHETHER THESE INQUIRIES WERE SO DEFICIENT AS TO RENDER THE ORDER ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE, WITHIN MEANINGS OF THAT EXPRESSION ASSIGNED UNDER SECTION 263. 19. THE QUESTION THAT WE ALSO NEED TO ADDRESS IS AS TO WHAT IS THE NATURE OF SCOPE OF THE PROVISIONS OF EXPLANATION 2(A) TO SECTION 263 TO TH E EFFECT THAT AN ORDER IS DEEMED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE WHEN COMMISSIONER IS OF THE VIEW THAT THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE. 20. UNDOUBTEDLY, THE EXPRESSION USED IN EXPLANATION 2 TO SECTION 263 IS WHEN COMMISSIONER IS OF THE VIEW, BUT THAT DOES NOT MEAN THAT THE VI EW SO FORMED BY THE COMMISSIONER IS NOT 5 ITA NO.3739/MUM/2019(A.Y.2009-10) SUBJECT TO ANY JUDICIAL SCRUTINY OR THAT SUCH A VIE W BEING FORMED IS AT THE UNFETTERED DISCRETION OF THE COMMISSIONER. THE FORMATION OF HI S VIEW HAS TO BE IN A REASONABLE MANNER, IT MUST STAND THE TEST OF JUDICIAL SCRUTINY, AND IT MUST HAVE, AT ITS FOUNDATION, THE INQUIRIES, AND VERIFICATIONS EXPECTED, IN THE ORDINARY COURSE OF PERFORMANCE OF DUTIES, OF A PRUDENT, JUDICIOUS AND RESPONSIBLE PUBLIC SERVANT- THAT AN A SSESSING OFFICER IS EXPECTED TO BE. IF WE ARE TO PROCEED ON THE BASIS, AS IS BEING URGED BY THE L EARNED DEPARTMENTAL REPRESENTATIVE AND AS IS CANVASSED IN THE IMPUGNED ORDER, THAT ONCE CO MMISSIONER RECORDS HIS VIEW THAT THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFIC ATIONS WHICH SHOULD HAVE BEEN MADE, WE CANNOT QUESTION SUCH A VIEW AND WE MUST UPHOLD THE VALIDITY OF REVISION ORDER, FOR THE RECORDING OF THAT VIEW ALONE, IT WOULD RESULT IN A SITUATION THAT THE COMMISSIONER CAN DE FACTO EXERCISE UNFETTERED POWERS TO SUBJECT ANY ORD ER TO REVISION PROCEEDINGS. TO EXERCISE SUCH A REVISION POWER, IF THAT PROPOSITION IS TO BE UPHELD, WILL MEAN THAT VIRTUALLY ANY ORDER CAN BE SUBJECTED TO REVISION PROCEEDINGS; ALL THAT WILL BE NECESSARY IS THE RECORDING OF THE COMMISSIONERS VIEW THAT THE ORDER IS PASSED WITHO UT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE. SUCH AN APPROACH WILL BE CL EARLY INCONGRUOUS. THE LEGAL POSITION IS FAIRLY WELL SETTLED THAT WHEN A PUBLIC AUTHORITY HA S THE POWER TO DO SOMETHING IN AID OF ENFORCEMENT OF A RIGHT OF A CITIZEN, IT IS IMPERATI VE UPON HIM TO EXERCISE SUCH POWERS WHEN CIRCUMSTANCES SO JUSTIFY OR WARRANT. EVEN IF THE WO RDS USED IN THE STATUTE ARE PRIMA FACIE ENABLING, THE COURTS WILL READILY INFER A DUTY TO E XERCISE A POWER WHICH IS INVESTED IN AID OF ENFORCEMENT OF A RIGHTPUBLIC OR PRIVATEOF A CITIZ EN. [L HIRDAY NARAN VS INCOME TAX OFFICER [(1970) 78 ITR 26 (SC)]. AS A COROLLARY TO THIS LEG AL POSITION, WHEN A PUBLIC AUTHORITY HAS THE POWERS TO DO SOMETHING AGAINST ANY PERSON, SUCH AN AUTHORITY CANNOT EXERCISE THAT POWER UNLESS IT IS DEMONSTRATED THAT THE CIRCUMSTANCES SO JUSTIFY OR WARRANT. IN A DEMOCRATIC WELFARE STATE, ALL THE POWERS VESTED IN THE PUBLIC AUTHORITIES ARE FOR THE GOOD OF SOCIETY. A FORTIORARI, NEITHER CAN A PUBLIC AUTHORITY DECLINE TO EXERCISE THE POWERS, TO HELP ANYONE, WHEN CIRCUMSTANCES SO JUSTIFY OR WARRANT, NOR CAN A PUBL IC AUTHORITY EXERCISE THE POWERS, TO THE DETRIMENT OF ANYONE, UNLESS CIRCUMSTANCES SO JUSTIF Y OR WARRANT. WHAT ESSENTIALLY FOLLOWS IS THAT UNLESS THE ASSESSING OFFICER DOES NOT CONDUCT, AT THE STAGE OF PASSING THE ORDER WHICH IS SUBJECTED TO REVISION PROCEEDINGS, INQUIRIES AND VE RIFICATIONS EXPECTED, IN THE ORDINARY COURSE OF PERFORMANCE OF DUTIES, OF A PRUDENT, JUDICIOUS A ND RESPONSIBLE PUBLIC SERVANT- THAT AN ASSESSING OFFICER IS EXPECTED TO BE. COMMISSIONER CANNOT LEGITIMATELY FORM THE VIEW THAT THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VE RIFICATION WHICH SHOULD HAVE BEEN MADE. THE TRUE TEST FOR FINDING OUT WHETHER EXPLANATION 2 (A) HAS BEEN RIGHTLY INVOKED OR NOT IS, THEREFORE, NOT SIMPLY EXISTENCE OF THE VIEW, AS PRO FESSED BY THE COMMISSIONER, ABOUT THE LACK OF NECESSARY INQUIRIES AND VERIFICATIONS, BUT AN OB JECTIVE FINDING THAT THE ASSESSING OFFICER HAS NOT CONDUCTED, AT THE STAGE OF PASSING THE ORDE R WHICH IS SUBJECTED TO REVISION PROCEEDINGS, INQUIRIES AND VERIFICATIONS EXPECTED, IN THE ORDINARY COURSE OF PERFORMANCE OF DUTIES, OF A PRUDENT, JUDICIOUS AND RESPONSIBLE PUB LIC SERVANT THAT THE ASSESSING OFFICER IS EXPECTED TO BE. 21. THAT BRINGS US TO OUR NEXT QUESTION, AND THAT I S WHAT A PRUDENT, JUDICIOUS, AND RESPONSIBLE ASSESSING OFFICER IS TO DO IN THE COURS E OF HIS ASSESSMENT PROCEEDINGS. IS HE TO DOUBT OR TEST EVERY PROPOSITION PUT FORWARD BY THE ASSESSEE AND INVESTIGATE ALL THE CLAIMS MADE IN THE INCOME TAX RETURN AS DEEP AS HE CAN? TH E ANSWER HAS TO BE EMPHATICALLY IN NEGATIVE BECAUSE, IF HE IS TO DO SO, THE LINE OF DE MARCATION BETWEEN SCRUTINY AND INVESTIGATION WILL GET BLURRED, AND, ON A MORE PRAC TICAL NOTE, IT WILL BE PRACTICALLY IMPOSSIBLE TO COMPLETE ALL THE ASSESSMENTS ALLOTTED TO HIM WIT HIN NO MATTER HOW LIBERAL A TIME LIMIT IS FRAMED. IN SCRUTINY ASSESSMENT PROCEEDINGS, ALL THA T IS REQUIRED TO BE DONE IS TO EXAMINE THE INCOME TAX RETURN AND CLAIMS MADE THEREIN AS TO WHE THER THESE ARE PRIMA FACIE IN ACCORDANCE WITH THE LAW AND WHERE ONE HAS ANY REASO NS TO DOUBT THE CORRECTNESS OF A CLAIM MADE IN THE INCOME TAX RETURN, PROBE INTO THE MATTE R DEEPER IN DETAIL. HE NEED NOT LOOK AT 6 ITA NO.3739/MUM/2019(A.Y.2009-10) EVERYTHING WITH SUSPICION AND INVESTIGATE EACH AND EVERY CLAIM MADE IN THE INCOME TAX RETURN; A REASONABLE PRIMA FACIE SCRUTINY OF ALL TH E CLAIMS WILL BE IN ORDER, AND THEN TAKE A CALL, IN THE LIGHT OF HIS EXPERT KNOWLEDGE AND EXPE RIENCE, WHICH AREAS, IF AT ALL ANY, REQUIRED TO BE CRITICALLY EXAMINED BY A THOROUGH PROBE. WHILE I T IS TRUE THAT AN ASSESSING OFFICER IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVESTIGATOR AND HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR F URTHER INQUIRY BUT, AS OBSERVED BY HONBLE DELHI HIGH COURT IN THE CASE OF GEE VEE ENTERPRISES VS ACIT [(1195) 99 ITR 375 (DEL)], IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN THE RETURN WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE AN INQUIRY. (EMPHASIS, BY UNDERLINING, SUPPLIED BY US). IT IS, THEREFORE, OBVIOUS THAT WHEN THE CIRCUMSTANCES ARE NOT SUCH AS TO PROVOKE AN INQUIRY, HE NEED NOT PUT EVERY PROPOSITION TO THE TEST AND PROB E EVERYTHING STATED IN THE INCOME TAX RETURN. IN A WAY, HIS ROLE IN THE SCRUTINY ASSESSME NT PROCEEDINGS IS SOMEWHAT AKIN TO A CONVENTIONAL STATUTORY AUDITOR IN REAL-LIFE SITUATI ONS. WHAT JUSTICE LOPES SAID, IN THE CASE OF RE KINGSTON COTTON MILLS [(1896) 2 CH 279, 288)], I N RESPECT OF THE ROLE OF AN AUDITOR, WOULD EQUALLY APPLY IN RESPECT OF THE ROLE OF THE ASSESSI NG OFFICER AS WELL. HIS LORDSHIP HAD SAID THAT AN AUDITOR (READ ASSESSING OFFICER IN THE PRESENT C ONTEXT) IS NOT BOUND TO BE A DETECTIVE, OR, AS WAS SAID, TO APPROACH HIS WORK WITH SUSPICION OR WITH A FOREGONE CONCLUSION THAT THERE IS SOMETHING WRONG. HE IS A WATCH-DOG, BUT NOT A BLOOD HOUND.. OF COURSE, AN ASSESSING OFFICER CANNOT REMAIN PASSIVE ON THE FACTS WHICH, IN HIS FA IR OPINION, NEED TO BE PROBED FURTHER, BUT THEN AN ASSESSING OFFICER, UNLESS HE HAS SPECIFIC R EASONS TO DO SO AFTER A LOOK AT THE DETAILS, IS NOT REQUIRED TO PROVE TO THE HILT EVERYTHING COMING TO HIS NOTICE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. WHEN THE FACTS AS EMERGING OUT OF THE SCRUTINY ARE APPARENTLY IN ORDER, AND NO FURTHER INQUIRY IS WARRANTED IN HIS B ONAFIDE OPINION, HE NEED NOT CONDUCT FURTHER INQUIRIES JUST BECAUSE IT IS LAWFUL TO MAKE FURTHER INQUIRIES IN THE MATTER. A DEGREE OF REASONABLE FAITH IN THE ASSESSEE AND NOT DOUBTING E VERYTHING COMING TO THE ASSESSING OFFICERS NOTICE IN THE ASSESSMENT PROCEEDINGS CANN OT BE SAID TO BE LACKING BONAFIDE, AND AS LONG AS THE PATH ADOPTED BY THE ASSESSING OFFICER I S TAKEN BONAFIDE AND HE HAS ADOPTED A COURSE PERMISSIBLE IN LAW, HE CANNOT BE FAULTED- WH ICH IS A SINE QUA NON FOR INVOKING THE POWERS UNDER SECTION 263. IN THE CASE OF MALABAR INDUSTRIAL CO LTD VS CIT [(2000) 243 ITR 83 (SC)], HONBLE SUPREME COURT HAS HELD THAT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN ITO ADOPTED ONE OF TH E COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE ITO 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 U NLESS THE VIEW TAKEN BY THE ITO IS UNSUSTAINABLE IN LAW. THE TEST FOR WHAT IS THE LEAST EXPECTED OF A PRUDE NT, JUDICIOUS AND RESPONSIBLE ASSESSING OFFICER IN THE NORMAL COURSE OF HIS ASSESSMENT WORK, OR WHAT CONSTITUTES A PERMISSIBLE COURSE OF ACTION FOR THE ASSESSING OFFICER, IS NOT WHAT HE SHOULD HAVE DONE IN THE IDEAL CIRCUMSTANCES, BUT WHAT AN A SSESSING OFFICER, IN THE COURSE OF HIS PERFORMANCE OF HIS DUTIES AS AN ASSESSING OFFICER S HOULD, AS A PRUDENT, JUDICIOUS OR REASONABLE PUBLIC SERVANT, REASONABLY DO BONAFIDE I N A REAL-LIFE SITUATION. IT IS ALSO IMPORTANT TO BEAR IN MIND THE FACT THAT LACK OF BONAFIDES OR UNREASONABLENESS IN CONDUCT CANNOT BE INFERRED ON MERE SUSPICION; THERE HAVE TO BE SOME S TRONG INDICATORS IN DIRECTION, OR THERE HAS TO BE A SPECIFIC FAILURE IN DOING WHAT A PRUDENT, J UDICIOUS AND RESPONSIBLE OFFICER WOULD HAVE DONE IN THE NORMAL COURSE OF HIS WORK IN THE SIMILA R CIRCUMSTANCES. ON A SIMILAR NOTE, A COORDINATE BENCH OF THE TRIBUNAL, IN THE CASE OF NA RAYAN T RANE VS ITO [(2016) 70 TAXMANN.COM 227 (MUM)] HAS OBSERVED AS FOLLOWS: 20. CLAUSE (A) OF EXPLANATION STATES THAT AN ORDER SHALL BE DEEMED TO BE ERRONEOUS, IF IT HAS BEEN PASSED WITHOUT MAKING ENQUIRIES OR V ERIFICATION, WHICH SHOULD HAVE BEEN MADE. IN OUR CONSIDERED VIEW, THIS PROVISION S HALL APPLY, IF THE ORDER HAS BEEN 7 ITA NO.3739/MUM/2019(A.Y.2009-10) PASSED WITHOUT MAKING ENQUIRIES OR VERIFICATION WHI CH A REASONABLE AND PRUDENT OFFICER SHALL HAVE CARRIED OUT IN SUCH CASES, WHICH MEANS THAT THE OPINION FORMED BY LD PR. CLT CANNOT BE TAKEN AS FINAL ONE, WITHOUT SCRUTINISING THE NATURE OF ENQUIRY OR VERIFICATION CARRIED OUT BY THE AO VIS-A -VIS ITS REASONABLENESS IN THE FACTS AND CIRCUMSTANCES OF THE CASE. HENCE, IN OUR CONSIDERED VIEW, WHAT IS RELEVANT FOR CLAUSE (A) OF EXPLANATION 2 TO SEC. 26 3 IS WHETHER THE AO HAS PASSED THE ORDER AFTER CARRYING OUR ENQUIRIES OR VERIFICAT ION, WHICH A REASONABLE AND PRUDENT OFFICER WOULD HAVE CLAIMED OUT OR NOT. IT D OES NOT AUTHORISE OR GIVE UNFETTERED POWERS TO THE LD PR. CIT TO REVISE EACH AND EVERY ORDER, IF IN HIS OPINION, THE SAME HAS BEEN PASSED WITHOUT MAKING ENQUIRIES O R VERIFICATION WHICH SHOULD HAVE BEEN MADE. 22. HAVING SAID THAT, WE MAY ALSO ADD THAT WHILE IN A SITUATION IN WHICH THE NECESSARY INQUIRIES ARE NOT CONDUCTED OR NECESSARY VERIFICATI ONS ARE NOT DONE, COMMISSIONER MAY INDEED HAVE THE POWERS TO INVOKE HIS POWERS UNDER S ECTION 263 BUT THAT IT DOES NOT NECESSARILY FOLLOW THAT IN ALL SUCH CASES THE MATTE RS CAN BE REMITTED BACK TO THE ASSESSMENT STAGE FOR SUCH INQUIRIES AND VERIFICATIONS. THERE C AN BE THREE MUTUALLY EXCLUSIVE SITUATIONS WITH REGARD TO EXERCISE OF POWERS UNDER SECTION 263 , READ WITH EXPLANATION 2(A) THERETO, WITH RESPECT TO LACK OF PROPER INQUIRIES AND VERIFICATIO NS. THE FIRST SITUATION COULD BE THIS. EVEN IF NECESSARY INQUIRIES AND VERIFICATIONS ARE NOT MADE, THE COMMISSIONER CAN, BASED ON THE MATERIAL BEFORE HIM, IN CERTAIN CASES STRAIGHT AWAY COME TO A CONCLUSION THAT AN ADDITION TO INCOME, OR DISALLOWANCE FROM EXPENDITURE OR SOME OT HER ADVERSE INFERENCE, IS WARRANTED. IN SUCH A SITUATION, THERE WILL BE NO POINT IN SENDING THE MATTER BACK TO THE ASSESSING OFFICER FOR FRESH INQUIRIES OR VERIFICATION BECAUSE AN ADVERSE INFERENCE AGAINST THE ASSESSEE CAN BE LEGITIMATELY DRAWN, BASED ON MATERIAL ON RECORD, BY THE COMMISSIONER. IN EXERCISE OF HIS POWERS UNDER SECTION 263, THE COMMISSIONER MAY AS W ELL DIRECT THE ASSESSING OFFICER THAT RELATED ADDITION TO INCOME OR DISALLOWANCE FROM EXP ENDITURE BE MADE, OR REMEDIAL MEASURES ARE TAKEN. THE SECOND CATEGORY OF CASES COULD BE WH EN THE COMMISSIONER FINDS THAT NECESSARY INQUIRIES ARE NOT MADE OR VERIFICATIONS N OT DONE, BUT, BASED ON MATERIAL ON RECORD AND IN HIS CONSIDERED VIEW, EVEN IF THE NECESSARY I NQUIRIES WERE MADE OR NECESSARY VERIFICATIONS WERE DONE, NO ADDITION TO INCOME OR D ISALLOWANCE OF EXPENDITURE OR ANY OTHER ADVERSE ACTION WOULD HAVE BEEN WARRANTED. CLEARLY, IN SUCH CASES, NO PREJUDICE IS CAUSED TO THE LEGITIMATE INTERESTS OF THE REVENUE. NO INTERFE RENCE WILL BE, AS SUCH, JUSTIFIED IN SUCH A SITUATION. THAT LEAVES US WITH THE THIRD POSSIBILIT Y, AND THAT IS WHEN THE COMMISSIONER IS SATISFIED THAT THE NECESSARY INQUIRIES ARE NOT MADE AND NECESSARY VERIFICATIONS ARE NOT DONE, AND THAT, IN THE ABSENCE OF THIS EXERCISE BY THE AS SESSING OFFICER, A CONCLUSIVE FINDING IS NOT POSSIBLE ONE WAY OR THE OTHER. THAT IS PERHAPS THE SITUATION IN WHICH, IN OUR HUMBLE UNDERSTANDING, THE COMMISSIONER, IN THE EXERCISE OF HIS POWERS UNDER SECTION 263, CAN SET ASIDE AN ORDER, FOR LACK OF PROPER INQUIRY OR VERIF ICATION, AND ASK THE ASSESSING OFFICER TO CONDUCT SUCH INQUIRIES OR VERIFICATIONS AFRESH. 8. THE CO-ORDINATE BENCH OF TRIBUNAL IN ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 2014-15 IN ITA NO.3738/MUM/2019 (SUPRA) HAS QU ASHED THE ORDER PASSED UNDER SECTION 263 OF THE ACT FOR IDENTICAL REASONS. WE AR E LIVE TO THE FACT THAT RULE OF RESJUDICATA DOES NOT OPERATE UNDER INCOME TAX LAW, HOWEVER, WHEN FACTS ARE ADMITTEDLY IDENTICAL THE PRINCIPLE OF CONSISTENCY COMES INTO PLAY. SINCE, THE FACTS 8 ITA NO.3739/MUM/2019(A.Y.2009-10) GERMANE TO THE ISSUE ASSAILED IN GROUNDS NO.3 AND 4 OF THE APPEAL ARE IDENTICAL TO THE ONE ADJUDICATED BY THE TRIBUNAL IN THE CASE OF SIR DORABJI TATA TRUST (SUPRA) AND IN ASSESSEES OWN CASE (SUPRA) WE SEE NO REASON T O TAKE A DIFFERENT VIEW. CONSEQUENTLY, THE ASSESSEE SUCCEEDS ON GROUNDS NO.3 AND 4 OF THE APPEAL. THE IMPUGNED ORDER IS QUASHED AND GROUND NO.3 AND 4 OF APPEAL ARE ALLOWED.. 9. IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY THE 1 ST DAY OF JULY , 2021. SD/- SD/- (PRAMOD KUMAR) (VIKAS AWASTH Y) / VICE PRESIDENT $%!' / JUDICIAL MEMBER / MUMBAI, 5-/ DATED 01/07/2021 VM , SR. PS(O/S) COPY OF THE ORDER FORWARDED TO : 1. #/ / THE APPELLANT , 2. %0 / THE RESPONDENT. 3. 60 ( )/ THE CIT(A)- 4. 60 CIT 5. 78 %0%- , . . . , / DR, ITAT, MUMBAI 6. 89: ; / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI