Green World Corporation, V. ITO, New Delhi

ITA 408/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 7014 (ITAT-DELHI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 09-07-2009
• Assessment Year: 1998-1999
• Appeal Filed On: 03-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANSHU KHURANA
• Assessee Lawyers: S B GARG
• Keywords: Principle of natural justice; Retrospective amendment; Reason to believe
• Section: 143(3); 80HHC; 234B; 260A; 80IA; 150(1); 143(2); 142(2A); 147; 148; 263; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE SHRI I.P.BANSAL, JM AND SHRI R.C.SHARMA, AM ITA NO.408/DEL/2009 ASSESSMENT YEAR : 1998-99 M/S GREEN WORLD CORPORATION, C/O M/S PANKAJ JINDAL & CO., CA'S, 2 ND FLOOR, 11/10, SHAKTI NAGAR, DELHI 110 007. PAN NO.AAAFG6719Q. VS. INCOME TAX OFFICER, WARD-19(3), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ACHIN GARG, ADVOCATE AND SHRI S.B.GARG, CA. RESPONDENT BY : SMT.ANSHU KHURANA, DR. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DIR ECTED AGAINST THE ORDER OF CIT(A) DATED 31.3.2008, IN THE MATTER OF ORDER PASS ED U/S 143(3) READ WITH SECTION 147/142(2A) OF THE IT ACT. GROUNDS OF APPE AL READ AS UNDER:- 1. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AS WELL AS LAW, THE INITIATION OF THE PROCEEDINGS UND ER SECTION 147 OF THE INCOME TAX ACT, 1961 (HEREAFTER THE ACT), AN D ASSUMPTION OF JURISDICTION ARE INVALID, UNTENABLE, BAD IN LAW, NULL AND VOID AB INITIO AND THEREFORE THE RESULTING ASSESSMENT, IS W ITHOUT JURISDICTION AND DESERVES TO BE ANNULLED. 1.1 THERE IS NO SATISFACTION OF THE COMPETENT A UTHORITY AS REQUIRED BY SECTION 151 OF THE ACT. 1.2 THE NOTICE UNDER SECTION 148 OF THE ACT HAS NEITHER BEEN ISSUED NOR SERVED AS REQUIRED BY LAW. 1.3 THE LD. INCOME TAX OFFICER, PARWANOO, DISTRI CT SOLAN, HIMACHAL PRADESH (HEREAFTER THE ITO) INITIATED THE PROCEEDINGS UNDER SECTION 147 OF THE ACT ON THE CHANGE OF OPINI ON, ON THE DICTATES, DIRECTIONS, AND INSTRUCTIONS OF HIGHER AU THORITIES, WITHOUT APPLICATION OF INDEPENDENT MIND AND ON THE BASIS OF FINDINGS UNDER SECTION 263 OF THE ACT FOR THE ASSES SMENT YEAR 2000-01. ITA-408/DEL/2009 2 1.4 THE LD. ITO HAD NO REASON TO BELIEVE, MATER IAL OR BASIS TO INITIATE THE PROCEEDINGS UNDER SECTION 147 OF THE A CT, THE PROCEEDINGS WERE INITIATED ON HIGHLY MISCONCEIVED G ROUNDS, IN THE NATURE OF PRETENCE AND WITHOUT ANY JUSTIFICATIO N, WHICH IS SINE QUA NON FOR ASSUMPTION OF VALID JURISDICTION U NDER THAT SECTION. 2. THE NOTICE UNDER SECTION 143(2) OF THE ACT HAS N EITHER BEEN ISSUED NOR SERVED AS REQUIRED BY LAW AND THEREFORE THE ASSESSMENT, HAVING BEEN COMPLETED WITHOUT ASSUMING PROPER JURISDICTION, IS BAD IN LAW, NULL AND VOID AB-INITI O AND DESERVES TO BE ANNULLED. 3. THE PROPOSAL FOR AUDIT UNDER SECTION 142(2A) OF THE ACT WAS INITIATED BY THE LD. ITO WITHOUT EVEN HAVING EXAMIN ED THE BOOKS OF ACCOUNTS OF THE ASSESSEE FIRM AND THE DIRECTION U/S. 142(2A) OF THE ACT FOR AUDIT WAS ISSUED WITHOUT THERE BEING ANY COMPLEXITY OF THE ACCOUNTS OF THE ASSESSEE AND THER EFORE THE SAME IS TOTALLY AGAINST LAW AND INVALID AND THEREFO RE THE ASSESSMENT IS TIME BARRED. 4. THE LD. ITO ERRED IN RESORTING TO ROVING AND FIS HING ENQUIRIES TO MAKE THE DISALLOWANCES AND ADDITIONS, WITHOUT TH ERE BEING ANY EVIDENCE OF ESCAPEMENT OF SUCH DISALLOWANCES AN D ADDITIONS. 5. INCOME ALLEGED TO HAVE ESCAPED ASSESSMENT IN REA SONS RECORDED TO INITIATE THE PROCEEDINGS UNDER SECTION 147 OF THE ACT, HAS NOT BEEN ACTUALLY FOUND TO HAVE ESCAPED AS SESSMENT IN THE COURSE OF ASSESSMENT PROCEEDINGS AND THEREFO RE THE ASSESSMENT IS BAD IN LAW. 6. THE LD. ITO ERRED IN FRAMING THE ASSESSMENT, WIT HOUT THERE BEING A VALID RETURN OF INCOME. 7. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) X XII, NEW DELHI [HEREAFTER THE LD. CIT(A)] ERRED IN NOT ALLOW ING PAYMENT OF BONUS OF RS.17,545 PERTAINING TO EARLIER YEAR, WHIC H WAS PAID DURING THE YEAR UNDER CONSIDERATION. 8. THE LD. CIT (A) ERRED IN UPHOLDING DISALLOWANCE OF (A) RS.3,821/- OUT OF REPAIRS, (B) RS.6,551/- OUT OF TR AVELING AND CONVEYANCE, AND (C) RS.3,528 OUT OF BUSINESS PROMOT ION. 9. THE LD. CIT (A) ERRED IN UPHOLDING ADDITION OF R S.7,677 BEING DIFFERENCE IN CLOSING STOCK OF FINISHED GOODS , PARTICULARLY WITHOUT APPRECIATING THE FACT THAT THE AMOUNT OF TH E CLOSING STOCK ITA-408/DEL/2009 3 DISCLOSED IN THE FINANCIAL STATEMENTS IS HIGHER THA N THE AMOUNT CALCULATED BY THE LD. ITO. 10. THE LD. CIT (A) ERRED IN UPHOLDING THE FOLLOWIN G ADDITION MADE BY THE ITO ON PRESUMPTIONS AND WITHOUT ANY MAT ERIAL ON RECORD. A. RS. 18,000 BEING TRAVELING OF PARTNERS OF THE FI RM FROM DELHI TO PARWANOO AND BACK, B. RS. 25,000 BEING ADVERTISEMENT AND PUBLICITY, C. RS. 15,000 BEING STAFF WELFARE, D. RS. 8,000 BEING REPAIR AND MAINTENANCE, E. RS. 56,750 BEING OVERTIME SALARY AND WAGES, F. RS. 1,20,000 BEING GENERATOR EXPENSES. G. RS.69,000 BEING FREIGHT OUTWARD H. RS.27,000 BEING SALES PROMOTION I. RS.5,000 BEING DIFFERENCE IN CASH. 11. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) ERRED IN RESTRICTING THE DEDUCTION U/S. 80IA OF THE ACT TO T HE AMOUNT OF PROFIT DECLARED BY THE APPELLANT, INSTEAD OF THE AM OUNT OF PROFIT DETERMINED BY THE LD. ITO. 12. THE INTEREST HAS BEEN CHARGED WRONGLY PARTICULA RLY BY IGNORING THE PROVISIONS OF SUB-SECTION 3 OF SECTION 234B OF THE ACT. 2. AT THE OUTSET, IT MAY BE MENTIONED THAT BOTH THE PARTIES ARGUED BEFORE US ONLY THE ISSUE REGARDING VALIDITY OR OTHERWISE OF R E-ASSESSMENT PROCEEDINGS. 3. THE VALIDITY OF RE-ASSESSMENT PROCEEDINGS HAS BE EN CHALLENGED BY THE ASSESSEE MAINLY ON THE GROUND THAT RECENTLY HON'BLE SUPREME COURT IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2000-01 VIDE OR DER DATED 6 TH MAY, 2009 (SINCE REPORTED 224 CTR 113) HAS HELD THAT RE-ASSES SMENT PROCEEDINGS INITIATED PURSUANT TO DIRECTION OF LD. CIT (A) VIDE HIS ORDER PASSED U/S 263 DATED 12 TH JULY, 2004 IS INVALID AND A NULLITY. LD. AR OF THE ASSES SEE REFERRED TO THE VARIOUS PARAS OF ORDER OF HON'BLE SUPREME COURT AND IT WAS CONTEN DED THAT IN VIEW OF THESE OBSERVATIONS OF HON'BLE SUPREME COURT THE REASSESSM ENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER SHOULD BE HELD INVALID. H E ALSO SUBMITTED THAT UNDER SIMILAR FACTS AND CIRCUMSTANCES FOR ASSESSMENT YEAR 2002-03 THE COORDINATE BENCH OF THE DELHI ITAT IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2002- 03 IN ITA NO.950/DEL/2009 VIDE ORDER DATED 19 TH JUNE, 2009 HAS HELD THAT ITA-408/DEL/2009 4 INITIATION OF RE-ASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2002-03 WAS INVALID AND CONSEQUENTL Y ASSESSMENT WAS QUASHED. HE WAS REQUESTED TO FURNISH THE COPY OF S AID ORDER OF THE TRIBUNAL ON OUR RECORD, WHICH WAS SUBMITTED SUBSEQUENTLY. 4. ON THE OTHER HAND, LD. DR RELYING ON THE ORDER O F THE ASSESSING OFFICER AND LD. CIT (A) PLEADED THAT RE-ASSESSMENT PROCEEDI NGS WERE VALIDLY INITIATED, THEREFORE, THE ORDER OF THE LD. CIT (A) SHOULD BE U PHELD. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. IT IS OBSERVED THAT THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2002-03 VIDE AFOREMENTIONED ORDER DATED 19 TH JUNE, 2009 HAS HELD THAT RE-ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2002-03 WERE INVALI D FOR HOLDING SO, THE COORDINATE BENCH HAS REFERRED TO THE OBSERVATIONS H ON'BLE SUPREME COURT IN SEVERAL PARAS AND AFTER CONSIDERING THE SAME A CONC LUSION HAS BEEN ARRIVED AT THAT RE-ASSESSMENT PROCEEDINGS WERE NOT VALID. THE RELEVANT PORTION FROM THE ORDER OF THE TRIBUNAL IS REPRODUCED BELOW:- 26. BEFORE THE HONBLE SUPREME COURT, TWO CIVIL AP PEALS WERE FILED ONE BY THE DEPARTMENT AND THE OTHER BY THE ASSESSEE, RESPECTIVELY AGAINST THE HIGH COURT ORDER DATED 02. 03.2006 IN ITA NO. 50 OF 2005 AND CWP NO. 800 OF 2005, AS ALSO THE HIGH COURT ORDER DATED 03.04.2007 IN CIVIL REVIEW NO. 15 AND 1 6 OF 2006 IN ITA NO. 50 OF 2005 AND CWP NO. 800 OF 2005. 27. ON BEHALF OF THE ASSESSEE, IT WAS SUBMITTED THA T: I HAVING REGARD TO THE ORDER OF TRANSFER PASSED BY CBDT TRANSFERRING THE CASE FROM CIT (SHIMLA) TO CIT (DEL HI), CIT (SHIMLA) HAD NO LOCUS STANDI TO MAINTAIN THE APPEAL PREFERRE D BEFORE THE HIGH COURT UNDER SECTION 260A OF THE ACT. II. DESPITE ORDER BY THE HIGH COURT, CIT (DELHI) HA VING NOT BEEN IMPLEADED AS A PARTY, IT MUST BE HELD THAT THE CIT (SHIMLA) HAS NO LOCUS STANDI TO MAINTAIN THE APPEAL. III. NOTICE UNDER SECTION 263 HAVING BEEN ISSUED IN RESPECT OF ASSESSEMENT YEAR 2000-2001 ONLY, DIRECTIONS IN RESP ECT OF THE PAST AND THE FUTURE YEARS OF ASSESSMENTS COULD NOT HAVE BEEN ISSUED; SOME OF THEM BEING BARRED BY LIMITATION. ITA-408/DEL/2009 5 IV. THE ORDER OF THE CIT (SHIMLA) BEING BIASED, THE TRIBUNAL HAS RIGHTLY INTERFERED THEREWITH AS THE NOTICES UNDER S ECTION 148 OF THE ACT HAD BEEN ISSUED PURSUANT TO THE DIRECTIONS OF T HE CIT (SHIMLA), THE SAME ARE NOT MAINTAINABLE. V. MERE ERROR OF LAW AND/OR A DIFFERENT VIEW FROM T HAT OF THE ASSESSING OFFICER BY ITSELF COULD NOT HAVE BEEN A G ROUND FOR EXERCISING THE JURISDICTION UNDER SECTION 263 OF TH E ACT. VI. SECTION 150(1) OF THE ACT WHEREUPON RELIANCE HA S BEEN PLACED BY THE REVENUE IS NOT APPLICABLE. VII. SPECIAL LEAVE PETITION FILED BY CIT (SHIMLA) O N SELF SAME REASONS IS NOT MAINTAINABLE. VIII. CIT (SHIMLA) HAS NOT RAISED ANY QUESTION THAT THE ORDER OF ASSESSMENT WAS PASSED AT THE BEHEST OF THE CIT, THE HIGH COURT COMMITTED A SERIOUS ERROR IN PASSING THE IMPUGNED J UDGMENT RELYING ON OR ON THE BASIS OF THE SAID FOOTNOTE. T HE SAID FOOTNOTE WAS ISSUED HAVING REGARD TO THE CIRCULAR LETTER ISS UED BY THE CBDT ITSELF DATED 03.07.2001. IX. IN ANY EVENT, THE TRIBUNAL HAVING NOT ENTERED I NTO THE MERIT OF THE MATTER, THE ONLY OPTION AVAILABLE TO THE HIGH C OURT WAS TO REMAND THE MATTER BACK TO THE TRIBUNAL AND NOT TO E NTER INTO THE MERIT ITSELF. X. CITS DIRECTION TO THE ASSESSING OFFICER TO INIT IATE ACTION UNDER SECTION 148 OF THE ACT FOR THE EARLIER AND SUBSEQUE NT YEARS WAS ILLEGAL AND BAD IN LAW, AND, THUS, THE PROCEEDINGS SO INITIATED WERE ALSO ILLEGAL, BAD IN LAW AND WERE LIABLE TO BE QUAS HED. 28. ON BEHALF OF THE DEPARTMENT, IT WAS CONTENDED T HAT: I. CIT (SHIMLA) HAD THE LOCUS STANDI TO PREFER AN APPEAL BEFORE THE HIGH COURT AS HE HAD PASSED THE ORDER PRIOR TO THE ORDER OF TRANSFER. II. THE ASSESSEE HAVING PLAYED FRAUD ON THE DEPARTM ENT AS IT HAD SHOWN A HUGE AMOUNT OF PROFIT WITHOUT THERE BEING S UFFICIENT NUMBER OF WORKMEN ENGAGED AND WITHOUT CONSUMING REQ UISITE UNITS OF ELECTRICAL ENERGY ONLY WITH A VIEW TO ENJOY THE TAX HOLIDAYS, CIT (SHIMLA) HAD RIGHTLY INTERFERED THEREWITH. III. THE AMOUNT OF PROFIT SHOWN FROM THE PARWANOO H AVING BEEN HOLDING DISPROPORTIONATE TO THE INVESTMENT MADE, TH E HIGH COURT WAS CORRECT IN PASSING THE IMPUGNED JUDGMENT. ITA-408/DEL/2009 6 IV. IN ANY EVENT, THE ASSESSEE CANNOT BE SAID TO HA VE BEEN PREJUDICED IN ANY MANNER WHATSOEVER BY THE ORDER OF THE HIGH COURT, AS THE APPEAL ALTHOUGH WAS IMPROPERLY FILED MAY BE HELD TO BE MAINTAINABLE. 29. THE HONBLE SUPREME COURT, VIDE ITS AFORESAID O RDER DATED 06.05.2009 OBSERVED, INTER ALIA AND WE QUOTE HERE E XTRACTS OF THE SAID ORDER, AS FOLLOWS: 19. THE PRINCIPAL QUESTION WHICH ARISES FOR CONSID ERATION IS AS TO WHETHER THE ORDER OF ASSESSMENT WAS PASSED AT THE I NSTANCE OF THE HIGHER AUTHORITY. XXX XXX XXX XXX XXX XXX XXX XXX XXX 23. BEFORE, HOWEVER, ADVERTING TO THE JURISDICTIONA L ISSUE RAISED BY THE ASSESSEE HEREIN, WE MAY CONSIDER THE JURISDICTI ON OF THE COMMISSIONER OF INCOME-TAX TO ISSUE NOTICE IN TERMS OF SECTION 263 OF THE ACT. IT PROVIDES FOR A REVISIONAL POWER . IT HAS ITS OWN LIMITATIONS. AN ORDER CAN BE INTERFERED SUO MOTU B Y THE SAID AUTHORITY NOT ONLY WHEN AN ORDER PASSED BY THE ASSE SSING OFFICER IS ERRONEOUS BUT ALSO WHEN IT IS PREJUDICIAL TO THE IN TERESTS OF THE REVENUE. BOTH THE CONDITIONS PRECEDENT FOR EXERCIS ING THE JURISDICTION UNDER SECTION 263 OF THE ACT ARE CONJU NCTIVE AND NOT DISJUNCTIVE. XXX XXX XXX 25. INDISPUTABLY, THE ASSESSEE CARRIED THE MATTER I N APPEAL. BEFORE THE APPELLATE AUTHORITY, A LARGE NUMBER OF G ROUNDS WERE RAISED. WE MAY, HOWEVER, NOTICE THAT THAT A QUESTI ON WITH REGARD TO THE PROPRIETY ON THE PART OF THE COMMISSIONER OF INCOME TAX TO INTERFERE WITH THE FUNCTIONS OF THE ASSESSING OFFIC ER WAS RAISED, STATING THAT THE SAID ORDER WAS PASSED AT THE DICTA TE OF THE HIGHER AUTHORITIES. XXX XXX XXX XXX XXX XXX 28. THE HIGH COURT FURTHERMORE NOTICED THE OBJECTIO N OF THE ASSESSEE THAT CIT (SHIMLA) COULD NOT MAINTAIN APPEA L BEFORE IT. IT FURTHERMORE NOTICED THE QUESTION RAISED BEFORE IT F OR THE FIRST TIME THAT THE ASSESSMENT ORDER HAS BEEN PASSED BY THE AS SESSING OFFICER AT THE DICTATES OF THE HIGHER AUTHORITIES. ITA-408/DEL/2009 7 BEFORE THE HIGH COURT AS MANY AS 12 QUESTIONS WERE RAISED. THE HIGH COURT HELD: 37. THE AFORESAID DISCUSSION PERTAINING TO THE INT ERPRETATION OF SECTIONS 150(1) AND 153(3)(II) INCLUDING THE OPERAT ION OF SECTION 149, PRESCRIBING LIMITATION FOR ISSUE OF NOTICE, UN DER SECTION 148 AND SECTION 153(2) PROVIDING LIMITATION FOR PASSING AN ORDER, UNDER SECTION 147, HOWEVER, DOES NOT MEAN THAT THE COMMIS SIONER OF INCOME TAX, IN EXERCISE OF HIS POWER, UNDER SECTION 263 OF THE INCOME TAX ACT, CANNOT RECORD A FINDING OR GIVE A D IRECTION FOR RE- OPENING THE ASSESSMENT PERTAINING TO ASSESSMENT YEA RS OTHER THAN THE ASSESSMENT YEAR(S) COVERED BY THE REVISIONAL PR OCEEDINGS. THE ONLY EFFECT OF THE ABOVE DISCUSSION AND INTERPR ETATION IS THAT THE BAR OF LIMITATION CONTAINED IN SECTIONS 149 AND 153 (2) WILL NOT BE LIFTED, IF THE ORDER OR THE FINDING OR THE DIRECTIO N OF THE APPELLATE OR THE REVISIONAL AUTHORITY, PERTAIN TO AN ASSESSMENT YEAR OTHER THAN THE ASSESSMENT YEAR, WHICH WAS THE SUBJECT MATTER O F THE APPELLATE OR REVISIONAL PROCEEDINGS, UNLESS THE CASE IS COVER ED BY EXPLANATION 2 AND 3 TO SECTION 153. IN OTHER WORDS , THE REVENUE CANNOT SUCCESSFULLY PRESS INTO SERVICE THE PROVISIO NS OF SECTIONS 150(1) AND 153(2) LIFTING THE BAR OF LIMITATION IN CASES WHERE THE ORDER OF REVISONAL OR APPELLATE AUTHORITY RELATES T O ASSESSMENT YEAR(S) OTHER THAN ASSESSMENT YEAR(S) TO WHICH THE APPEAL OR REVISION PERTAINED. IN REGARD TO THE VALIDITY OF THE NOTICES UNDER SECT ION 148 OF THE ACT, IT WAS OPINED THAT THEY WERE NOT SAVED FROM THE LIM ITATION UNDER THE EXCLUSIONARY PROVISIONS OF SECTIONS 150(1) AND 153( 3)(II) OF THE ACT. IT WAS DIRECTED: 41. BEFORE PARTING WITH THE JUDGMENT, WE FEEL THAT IS DESIRABLE AND IN THE PUBLIC INTERESTS THAT THE CHIEF VIGILANCE CO MMISSIONER IS APPROACHED BY THE APPOINTING AUTHORITY OF THE COMMI SSIONER OF INCOME TAX, WHO INTERFERED IN THE STATUTORY FUNCTIO NING OF THE ASSESSING OFFICER AND PRESSURIZED HER TO PASS THE O RDER ACCEPTING THE RETURN OF THE ASSESSEE TO INQUIRE INTO THE MATT ER AND IF NO INQUIRY THE CHIEF VIGILANCE COMMISSIONER FINDS AND REPORTS THAT THE SAID COMMISSIONER OF INCOME TAX WAS GUILTY OF MISCONDUCT , ACTION IS TAKEN AGAINST HIM BY HIS SUCH AUTHORITY, AS PER LAW . WE DIRECT THE APPOINTING AUTHORITY OF THE SAID COMMISSIONER ACCOR DINGLY. TWO SETS OF REVIEW APPLICATIONS WERE FILED, ONE BY SHRI DHIRENDRA KHARE, AND ANOTHER BY THE ASSESSEE. THE HIGH COURT WHILE ALLOWING KHARES REVIEW APPLICATION EXPUNGING ALL OBSERVATIONS MADE IN ITS ORDER DATED 02.03.2006 REJECTED THE REV IEW APPLICATION FILED BY THE ASSESSEE. ITA-408/DEL/2009 8 JURISDICTION UNDER SECTION 263 29. THE SCOPE OF PROVISIONS OF SECTION 263 OF THE A CT IS NO LONGER RES INTEGRA. THE POWER TO EXERCISE OF SUO MOTU OF REVISION IN TERMS OF SECTION 263(1) IS IN THE NATURE OF SUPERVISORY J URISDICTION AND SAME CAN BE EXERCISED ONLY IF THE CIRCUMSTANCES SPE CIFIED THEREIN, VIZ., (1) THE ORDER IS ERRONEOUS; (2) BY VIRTUE OF THE ORDER BEING ERRONEOUS PREJUDICE HAS BEEN CAUSED TO THE INTEREST OF THE REVENUE, EXIST. IN MALABAR INDUSTRIAL CO. LTD. VS. CIT [243 ITR 83 (SC) : [(2000) 2 SCC 718), THIS COURT HELD: 7. THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COM MITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRO NEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUI REMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHO UT APPLICATION OF MIND. XXX XXX XXX 10. THE PHRASE PREJUDICIAL TO THE INTEREST OF THE REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASS ED BY THE ASSESSING OFFICER. EVERY LOSS OF REVUE AS A CONSEQ UENCE OF AN ORDER OF ASSESSING OFFICER CANNOT BE TREATED AS PRE JUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN INCOME TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW IT HA S RESULTED IN LOSS OF REVENUE; OR WHERE TWO VIEW ARE POSSIBLE AND THE INCOME TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIO NER DOES NOT AGREE, IT CANNOT BE TREATED AS ERRONEOUS ORDER PREJ UDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY T HE INCOME TAX OFFICER IS UNSUSTAINABLE IN LAW. IT HAS BEEN HELD BY THIS COURT THAT WHERE A SUM NOT EARNED BY PERSON IS ASSESSED AS INC OME IN HIS HANDS ON HIS SO OFFERING, THE ORDER PASSED BY THE A SSESSING OFFICER ACCEPTING THE SAME AS SUCH WILL BE ERRONEOUS AND PR EJUDICIAL TO THE INTERESTS OF THE REVENUE. (EMPHASIS SUPPLIED) THE PRINCIPLE LAID DOWN THEREIN WAS FOLLOWED IN COM MISSIONER OF INCOME TAX VS. MAX INDIA LTD. [(2007) 295 ITR 282 (SC)], STATING: IN OUR VIEW AT THE RELEVANT TIME TOW VIEWS WERE PO SSIBLE ON THE WORK PROFITS IN THE PROVISO TO SECTION 80HHC (3). IT IS TRUE THAT VIDE THE 2005 AMENDMENT THE LAW HAS BEEN CLARIFIED WITH RETROSPECTIVE EFFECT BY INSERTION OF THE WORD LOSS IN THE NEW ITA-408/DEL/2009 9 PROVISO. WE EXPRESS NO OPINION ON THE SCOPE OF THE SAID AMENDMENT OF 2005. SUFFICE IT TO STATE THAT IN THI S PARTICULAR CASE WHEN THE ORDER OF THE COMMISSIONER WAS PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961, TOW VIEWS ON THE S AID PROFITS EXISTED. REFERRING TO MALABAR INDUSTRIAL CO. LTD. (SUPRA), I T WAS OBSERVED: EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. FOR EXAMPLE, WHEN AN INCOME TAX OFFIC ER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RE SULTED IN LOSS OF REVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE IN COME TAX OFFICER TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER P REJUDICIAL TO THE INTEREST OF THE REVENUE, UNLESS THE VIEW TAKEN BY T HE INCOME TAX OFFICER IS UNSUSTAINABLE IN LAW. IT IS BEYOND ANY DOUBT OR DISPUTE THAT ONLY IN TERM S OF THE DIRECTIONS ISSUED BY THE COMMISSIONER DATED 12.07.2004 UNDER S ECTION 263 OF THE ACT, NOTICES UNDER SECTION 148 OF THE ACT WERE ISSUED. 30. INDISPUTABLY, CIT (SHIMLA) HAD NO JURISDICTION TO ISSUE DIRECTIONS. NOTICES ISSUED PURSUANT THERETO WOULD BE BAD IN LAW. XXX XXX XXX 32. WHEN A STATUTE PROVIDES FOR DIFFERENT HIERARCHI ES PROVIDING FOR FORUMS IN RELATION TO PASSING OF AN ORDER AS ALSO A PPELLATE OR ORIGINAL ORDER; BY NO STRETCH OF IMAGINATION A HIGH ER AUTHORITY CAN INTERFERE WITH THE INDEPENDENCE WHICH IS THE BASIC FEATURE OF ANY STATUTORY SCHEME INVOLVING ADJUDICATORY PROCESS. XXX XXX XXX 35. THIS CASE POSES BEFORE US SOME PECULIAR QUESTIO NS. WHEREAS THE ORDER UNDER SECTION 263 OF THE ACT AND CONSEQUE NTLY THE NOTICES UNDER SECTION 148 OF THE ACT HAVE BEEN HELD TO BE NOT MAINTAINABLE, WE ARE CONSTRAINED TO THINK THAT THE ASSESSING OFFICER HAD PASSED AN ORDER AT THE INSTANCE OF THE HIGHER A UTHORITY WHICH IS ILLEGAL. 30. IT IS THUS SEEN THAT THE NOTICES ISSUED U/S. 14 8 OF THE ACT FOR A.Y. 1996-97 TO 1999-2000, 2001-02 AND 2002-03(THE LAST A.Y. BEING THE YEAR OF CONSIDERATION HEREIN) PURSUANT TO THE ORDER DATED 12.07.2004 BY THE CIT U/S. 263 OF THE ACT HAVE BEEN HELD BY THE HONBLE SUPREME COURT TO BE BAD IN LAW. ITA-408/DEL/2009 10 31. THE LD. CIT (A), VIDE THE IMPUGNED ORDER, HELD THE INITIATION OF PROCEEDINGS U/S. 147 OF THE ACT FOR THE YEAR UNDER CONSIDERATION TO BE VALID FOR THE REASON THAT THE HONBLE HIMACHAL P RADESH HIGH COURT UPHELD THE NOTICES ISSUED UNDER SECTION 147/1 48 OF THE ACT EXCEPT THOSE FALLING IN LIMITATION AND THE YEAR UND ER CONSIDERATION WAS NOT COVERED UNDER LIMITATION. 32. THAT ORDER OF THE HONBLE HIMACHAL PRADESH HIGH COURT HAS BEEN CONSIDERED BY THE HONBLE SUPREME COURT IN ITS ABOVE DISCUSSED ORDER DATED 06.05.2009 AND THE NOTICE ISS UED U/S. 148 OF THE ACT FOR THE YEAR UNDER CONSIDERATION HAS BEEN H ELD TO BE BAD IN LAW. THE IMPUGNED IS DATED 31.03.2008. THE ORDER OF THE HONBLE SUPREME COURT WAS PASSED ON 06.05.2009. AT THE TIM E OF THE PASSING OF THE IMPUGNED ORDER, IT WAS THE HIGH COUR T ORDER WHICH WAS IN OPERATION. NOW, HOWEVER, THE SUPREME COURT ORDER STANDS PASSED. IT IS THEREFORE, THAT THE IMPUGNED ORDER N O LONGER SURVIVES. THE SAME IS THUS QUASHED, IN CONFORMITY WITH THE SU PREME COURT ORDER DATED 06.05.2009. 33. AT THIS JUNCTURE, IT IS PERTINENT TO MENTION TH AT THE ASSESSMENT HAS BEEN DIRECTED TO BE REOPENED BY THE CIT, DELHI- VII. 34. IN VIEW OF THE ABOVE DISCUSSION, SINCE THE NOTI CE UNDER SECTION 148 OF THE ACT ITSELF, STANDS QUASHED, NOTH ING ELSE SURVIVES AND ACCORDINGLY, THE REMAINING GROUNDS RAISED IN TH IS APPEAL BY THE ASSESSEE DO NOT REQUIRE GOING INTO AND WE HOLD SO 35. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. 36. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH OF JUNE, 2009. 6. IN THIS VIEW OF THE SITUATION, WE FOUND THAT THE ISSUE RAISED BEFORE US IS SQUARELY COVERED BY AFOREMENTIONED ORDER DATED 19.6 .2009 OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2002-03. I N PARA 34 QUOTED AS ABOVE, IT CAN BE NOTED THAT CO-ORDINATE BENCH HAS Q UASHED NOTICE U/S 148. ADOPTING THE SIMILAR VIEW WE HOLD THAT NOTICE U/S 1 48 IS QUASHED FOR THE PRESENT YEAR ALSO AND AS NOTICE IS QUASHED NOTHING ELSE SUR VIVES AND ACCORDINGLY, THE REMAINING GROUNDS RAISED IN THE PRESENT APPEAL DO N OT REQUIRE GOING INTO. WE HOLD ACCORDINGLY. ITA-408/DEL/2009 11 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED IN AFOREMENTIONED MANNER. DECISION PRONOUNCED IN THE OPEN COURT ON 4 TH SEPTEMBER, 2009. SD/- SD/- (I.P.BANSAL) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 04.09.2009. DK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR