KARTHIK FINANCIAL SERVICES LTD, MUMBAI V. CIT 5, MUMBAI

ITA 4132/MUM/2013

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3637 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2008-2009
• Appeal Filed On: 22-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUHAS KULKARNI LD
• Assessee Lawyers: ANUJ KISNADWALA LD ARS
• Keywords: Capital asset; Business income; Search and seizure; Opportunity of being heard; Rule of consistency
• Section: 143(3); 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE HONBLE SHRI MANOJ KUMAR AGGARWAL, AM AND HONBLE SHRI RAVISH SOOD, JM ./I.T.A. NO.4132/MUM/2013 ( / ASSESSMENT YEAR: 2008-09) KARTHIK FINANC IAL SERVICES LTD. ESSAR HOUSE, 11 KESHAVRAO KHADYE MARG MAHALAXMI, MUMBAI 400 034 / VS. COMMISSIONER OF INCOME TAX - 5 AAYKAR BHAWAN MUMBAI 400 020 ./PAN : AABCK-0657-P ( ! /APPELLANT ) : ( '# ! / RESPONDENT ) ASSESSEE BY : SHRI VIJAY MEHTA & ANUJ KISNADWALA, LD. ARS REVENUE BY : SHRI SUHAS KULKARNI, LD. DR / DATE OF HEARING : 28/12/2018 / DATE OF PRONOUNCEMENT : 26 /02/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2008- 09 CONTEST THE INVOCATION OF REVISIONAL JURISDICTIO N U/S 263 BY LD. COMMISSIONER OF INCOME-TAX-5 [CIT], MUMBAI ON 26/03/2013. ALTHOUGH THE ASSESSEE HAS RAISED AS MANY AS 10 GROU NDS OF APPEAL, THE EFFECTIVE MAIN GROUND OF APPEAL IS GROUND NUMBER-3 WHEREAS THE OTHER GROUNDS ARE IN SUPPORT OF THE MAIN GROUND. GROUND NUMBER-3 READS AS UNDER: - 2 THE ASSUMPTION OF JURISDICTION UNDER SECTION 263 OF THE ACT BY CIT IS BEYOND THE SCOPE OF PROVISIONS CONTAINED IN SECTION 263 OF THE ACT. THEREFORE, THE ORDER IS NOT SUSTAINABLE IN LAW AND LIABLE TO BE QUASHED. 2.1 FACTS GERMANE TO THE ISSUE ARE THAT THE ASSESSE E BEING RESIDENT CORPORATE ENTITY STATED TO BE AN INVESTMENT COMPANY ENGAGED IN INVESTMENT IN SHARES AND DEBENTURES OF UNLISTED COM PANIES WAS ASSESSED FOR IMPUGNED AY IN SCRUTINY ASSESSMENT U/S 143(3) ON 24/12/2010 ACCEPTING RETURNED LOSS OF RS.552.34 LAC S REFLECTED BY THE ASSESSEE IN ITS RETURN OF INCOME E-FILED ON 20/09/2008. THE SAID LOSS COMPRISED-OFF OF BUSINESS LOSS OF RS.0.15 LACS AND LONG-TERM CAPITAL LOSS [LTCL] OF RS.552.18 LACS. 2.2 SUBSEQUENTLY, UPON PERUSAL OF CASE RECORDS, THE AFORESAID ORDER WAS SUBJECTED TO REVISIONAL JURISDICTION U/S 263 BY LD. CIT VIDE SHOW- CAUSE NOTICE DATED 12/02/2013 WHEREIN THE STATED ORDER W AS HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ON FOLLOWING GROUNDS: - (I) DURING THE YEAR, IT WAS NOTICED THAT THE PURCHA SE COST OF SHARES IN RESPECT OF M/S SHIPPING DOT COM INDIA PVT. LTD. IS AT RS.5, 71,00,000/- AND M/S ESSAR SPACTEL PVT. LTD. IS AT RS.22,97,48,750/-. HO WEVER, IN THE BALANCE SHEET, THE AMOUNT IS REFLECTED AT RS.28,69,48,650/- . THUS, THERE IS A DIFFERENCE OF RS,1,00,100/- IN THE PURCHASE VALUE O F SHARES. THEREFORE, THE AO HAS FAILED TO EXAMINE THIS ISSUE CORRECTLY. (II) ON PERUSAL OF THE DETAILS OF THE SUNDRY DEBTOR S SUBMITTED BY THE ASSESSEE, IT IS SEEN THAT THERE IS A MISTAKE IN COMPUTATION O F CLOSING BALANCE OF SUNDRY DEBTORS. THE OPENING BALANCE DURING THE YEAR WAS AT (-) RS.4,87,51,050/-, THE ADDITION WAS RS.16,19,42,600/ - AND DELETION / REDUCTION DURING THE YEAR WAS AT RS.20,58,21,700/-. HENCE, THE VALUE OF CLOSING DEBTORS SHOULD BE AT (-) RS.9,26,30,150/- I NSTEAD OF RS.48,71,950/. THE ASSESSING OFFICER HAS FAILED TO VERIFY THIS ISS UE. (III) THE BUSINESS OF THE ASSESSEE COMPANY HAS BEEN DESCRIBED AS INVESTMENT IN SHARES AND DEBENTURES OF UNLISTED COM PANIES. THEREFORE, THE SALE AMOUNT IS TO BE TREATED AS TURNOVER AND NA TURE OF INCOME SHOULD 3 BE SHOWN AS BUSINESS INCOME INSTEAD OF CAPITAL GAIN AS CLAIMED BY THE ASSESSEE COMPANY. (IV) FURTHER, IT IS SEEN THAT STATUTORY AUDIT U/S 4 4AB OF THE ACT WAS NOT DONE. THE AO HAS FAILED TO INITIATE PENALTY PROCEEDINGS O N THIS ACCOUNT. 2.3 ALTHOUGH THE ASSESSEE DEFENDED THE SAME VIDE RE PLIES DATED 01/03/2013 & 08/03/2013, HOWEVER, THE SAME COULD NO T FIND FAVOR WITH LD. CIT. RESULTANTLY, FINDING NO MERITS IN ASSESSEE S SUBMISSIONS, THE ASSESSMENT ORDER WAS CANCELLED U/S 263 AND LD. AO W AS DIRECTED TO PASS THE ASSESSMENT ORDER DE NOVO AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASS ESSEE, IN ITS REPLIES, REBUTTED THE OBSERVATION OF REVISIONAL AUT HORITY BY POINTING OUT THAT THERE WAS NO DIFFERENCE IN COST OF SHARES REFL ECTED IN THE BALANCE SHEET . REGARDING SUNDRY DEBTORS BALANCES , IT WAS SUBMITTED THAT THERE WAS ONLY A TYPOGRAPHICAL ERROR IN MENTIONING THE AMOUNT OF OPENING BALANCE WHICH WAS SHOWN AS NEGATIVE INSTEAD OF A POSITIVE AMOUNT. THE ASSESSEE FURTHER SUBMITTED THAT INVESTMENTS WER E HELD AS CAPITAL INVESTMENTS AND NOT AS STOCK-IN-TRADE AND THEREFORE, RESULTANT PROFITS / GAINS WERE RIGHTLY ASSESSABLE UNDER THE HEAD CAPITAL GAINS AS DONE BY LD. AO AND CONSEQUENTIALLY, THE PROVISIONS OF SE CTION 44AB WERE NOT APPLICABLE TO THE FACTS OF THE CASE. HOWEVER, R EJECTING THE SAME, LD. CIT UPHELD THE REVISIONAL JURISDICTION AND DIRE CTED THE LD. AO TO REFRAME THE ASSESSMENT AS UNDER: - 5. IN THE LIGHT OF THE ABOVE FACTS, THE ASSESSMENT ORDER PASSED IS HEREBY CANCELLED U/S 263 OF THE ACT. THE A.O. IS DIRECTED TO PASS THE ASSESSMENT ORDER DE NOVO AFTER ACCORDING ADEQUATE OPPORTUNITY OF HEA RING TO THE ASSESSEE. 4 AGGRIEVED BY AFORESAID DIRECTIONS, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3.1 THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [AR], SHRI VIJAY MEHTA , DRAWING OUR ATTENTION TO THE FINANCIAL STATEMENTS AS WELL AS OTHER DOCUMENTS AS PLACED IN THE PAPER-BOOK, VEHEMENTLY CONTESTED THE ABOVE STATED OBSERVATIONS MADE BY LD. CIT ON WH ICH THE ASSESSMENT FRAMED BY LD. AO WAS HELD TO BE ERRONEOU S AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT WAS SUBMITTED THAT REVISION WAS BEING INVOKED ON ERRONEOUS ASSUMPTION OF FACTS. RELIANCE WAS PLACED ON CATENA OF JUDICIAL PRONOUNCEMENTS, FEW OF WHICH COULD BE TABULATED IN THE FOLLOWING MANNER: - NO. CASE LAWS AUTHORITY CITATION 1. ACIT VS. J.K.DCOSTA HONBLE DELHI HIGH COURT 133 ITR 7 SLP DISMISSED (147 ITR 1] 2. SMITHKLINE BEECHAM CONSUMER HEALTHCARE LTD. VS DCIT ITAT, CHANDIGARH 68 ITD 163 3. CENTURY PLYBOARDS (I) LTD. VS CIT ITAT, KOLKATA ITA NO. 643/KOL/2014 20/01/2016 4. STERLING BIOTECH LTD. VS CIT ITAT, MUMBAI ITA 27 50-56/MUM/2016 29/06/2016 5. SURYA ALLOY INDUSTRIES LTD. VS CIT ITAT, KOLKATA ITA NO. 769/KOL/2013 04/03/2015 6. RASHTRIYA CHEMICALS & FERTILIZERS LTD. VS CIT ITAT, MUMBAI ITA NO. 3265/MUM/2017 14/02/2018 CIT M U ST EXAMINE THE EXPLANATION GIVEN BY ASSESSEE BEFORE SETTING ASIDE THE MATTER 7. METACAPS ENGINEERING & MAHENDRA CONSTRUCTION CO.JV ITAT, MUMBAI 86 TAXMANN.COM 128 8 CIT VS VIKAS POLYMERS HONBLE DELHI HIGH COURT 341 ITR 537 9. CIT VS DG HOUSING PROJECTS LTD. HONBLE DELHI HI GH COURT 343 ITR 329 10. CIT VS SUPERMAN KNITTERS P LTD HONBLE P & H HI GH COURT 387 ITR 494 11. AV INDUSTRIES VS ACIT ITAT, MUMBAI ITA NO. 3469 /MUM/2010 26/11/2015 12. GAURAV MATHRAWALA VS CIT ITAT, MUMBAI ITA NO. 2 378/MUM/2015 06/01/2016 5 3.2 PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE [DR] SUBMITTED THAT NON-CONSIDERATION OF CERTAIN VITAL ASPECTS, AS NOTED BY LD. CIT, WHILE FRAMING THE ASSESSMENT MADE THE ORDER ERRONEO US AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THER EFORE, THE JURISDICTION WAS RIGHTLY INVOKED WHICH WAS THE ONLY RECOURSE AVA ILABLE TO REVENUE UNDER THE CIRCUMSTANCES. 4.1 WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS A ND PERUSED RELEVANT MATERIAL ON RECORD INCLUDING IMPUGNED ORDE R, ASSESSMENT FRAMED BY LD. AO, DOCUMENTS PLACED IN THE PAPER BOOK, FINANCIAL STATEMENT, MEMORANDUM & ARTICLES OF ASSOCIATION OF THE ASSESSEE COMPANY AND JUDICIAL PRONOUNCEMENTS AS RELIED UPON BY RESPE CTIVE REPRESENTATIVES BEFORE US. 4.2 UPON PERUSAL OF IMPUGNED ORDER, IT IS NOTED THA T THE ASSESSMENT ORDER HAS BEEN HELD TO BE ERRONEOUS & PREJUDICIAL T O THE INTEREST OF THE REVENUE MAINLY ON FOUR GROUNDS, EACH OF WHICH HAS B EEN DEALT WITH BY US IN THE SUCCEEDING PARAGRAPHS. 4.3 THE FIRST GROUND WHICH HAS LED THE LD. CIT TO F ORM THE AFORESAID BELIEF IS THE FACT THAT THERE WAS A DIFFERENCE OF R S.1,00,100/- IN THE PURCHASE VALUE OF CERTAIN SHARES REFLECTED BY THE A SSESSEE IN THE BALANCE SHEET. THE COST OF SHARES, AS PER LD. CIT, SHOULD HAVE BEEN RS.28,68,48,750/- AS AGAINST RS.28,69,48,650/- REFL ECTED BY THE ASSESSEE IN THE BALANCE SHEET. HOWEVER, UPON PERUSA L OF BALANCE SHEET AS KEPT ON PAGE NO. 6 OF THE PAPER-BOOK, IT IS OBSERVED THAT AS ON 31/03/2007 THE VALUE OF SHARES OF SHIPPINGSTOP DOT COM (I) P. LTD. & ESSAR SPACETEL P. LTD. HAS BEEN REFLECTED AS RS.5,71,00,000/- & 6 RS.22,97,48,750/- RESPECTIVELY. THE AGGREGATE OF TH E TWO COMES TO RS.28,68,48,750/- WHICH MATCHES WITH THE CORRECT AM OUNT AS NOTED BY LD. CIT. THE STATEMENT OF LONG-TERM CAPITAL LOSS AS PER ASSESSEES COMPUTATION OF INCOME HAS BEEN PLACED ON PAGE-24 OF THE PAPER BOOK. THE FIGURES STATED IN THIS STATEMENT ARE IN T OTAL AGREEMENT WITH COMPUTATION OF INCOME, PROFIT & LOSS ACCOUNT AND PU RCHASE COST AS REFLECTED IN THE BALANCE SHEET . THE FIGURES AS ON 31/03/2008 ARE REFLECTED AS NIL. APPARENTLY, THE FIGURES OF RS.28,69,48,650/- AS NOT ED BY LD. CIT HAS BEEN PICKED UP FROM CASH FLOW STATEMENT AS PLACED ON PAGE NO. 10 OF THE PAPER BOOK. HOWEVER, THE FIGURES REFLECTED IN THE CASH FLOW STATEMENT ALSO COMPLETELY MATCHES WITH THE BALANCE SHEET OF THE ASSESSEE. HENCE, WE FIND THE STATED OBSERVAT ION TO BE FACTUALLY INCORRECT AND THEREFORE, THERE COULD NOT NO OCCASIO N TO CONSIDER THE ASSESSMENT ORDER ERRONEOUS ON THIS POINT. 4.4 THE AFORESAID CONCLUSION IS FURTHER FORTIFIED B Y THE FACT THAT DURING QUANTUM ASSESSMENT PROCEEDINGS, THE ASSESSEE, VIDE REPLIES DATED 03/08/2010, 15/12/2010 & 20/12/2010 [ PAGE NOS. 12 TO 24] HAD SUBMITTED THE COMPUTATION OF DETAILED HEAD-WISE WOR KING OF INCOME, PARTY-WISE DETAILS OF PURCHASES & SALES ABOVE RS.10 LACS, LONG TERM CAPITAL GAINS / LOSS WORKINGS AS PER INCOME TAX ACT AND PROFIT / LOSS AS PER BOOKS OF ACCOUNTS ON SALE OF INVESTMENTS WHI CH INDICATE THAT THERE WAS NO DISCREPANCY IN THE FIGURES OF COST OF SHARES AS REFLECTED IN THE BALANCE SHEET AND AS REFLECTED IN THE COMPUT ATION OF INCOME. ALL THESE DETAILS WERE MADE AVAILABLE WITH LD. AO, WHO WITH DUE APPLICATION OF MIND AS WELL AS AFTER DUE EXAMINATIO N, ACCEPTED THE 7 ASSESSEES WORKING. CONSEQUENTLY, THE OBSERVATIONS MADE BY LD. CIT ON THIS ACCOUNT ARE FACTUALLY INCORRECT AND THEREFO RE THE SAME COULD NOT FORM THE BASIS OF INVOKING REVISIONAL JURISDICT ION U/S 263. 4.5 THE SECOND OBSERVATION MADE BY LD. CIT STEM FRO M THE FACT THAT CLOSING VALUE OF A SUNDRY DEBTOR NAMELY ESSAR INVESTMENTS LTD. , AS PER LD. CIT SHOULD HAVE BEEN RS. (-)9,26,30,150/- A S AGAINST RS.48,71,950/- REFLECTED BY THE ASSESSEE IN THE BOO KS OF ACCOUNTS, AS COMPUTED IN THE FOLLOWING MANNER: - THIS DISCREPANCY ARISES IN VIEW OF THE FACT THAT TH E OPENING VALUE OF SUNDRY DEBTORS , IN FACT, WAS A POSITIVE VALUE INSTEAD OF A NEGATIVE VALUE AND THE SAME WAS MERELY A TYPOGRAPHICAL ERROR WHICH CREPT IN ASSESSEES SUBMISSIONS FILED DURING ASSESSMENT PROC EEDINGS TO LD. AO. THE DETAIL OF THE SAME HAS BEEN PLACED ON PAGE NO. 21 OF THE PAPER-BOOK. NEVERTHELESS, THE RELEVANT DETAILS INCL UDING THE CORRECT BALANCES OF SUNDRY DEBTORS WERE DULY FILED BY THE A SSESSEE TO LD.AO DURING ASSESSMENT PROCEEDINGS VIDE ITS REPLIES DATE D 15/12/2010 & 20/12/2010, THE COPIES OF WHICH HAVE BEEN PLACED ON RECORD. THE DISCREPANCY WAS ALSO DULY EXPLAINED BY THE ASSESSEE VIDE ITS REPLY DATED 01/03/2013 IN RESPONSE TO SHOW-CAUSE NOTICE ISSUED BY LD. CIT WHEREIN IT WAS SUBMITTED THAT THERE WAS TYPOGRAPHICAL ERROR IN MENTIONING THE AMOUNT OF OPENING BALANCE WHICH WAS WRONGLY SHOWN NO. PART ICULARS AMT . (RS.) 1. OPENING DEBTORS -4,87,51,050/- 2. ADDITIONS DURING THE YEAR 16,19,42,600/- 3. DELETION / REDUCTION DURING THE YEAR -20,58,21,7 00/- 4. CLOSING DEBTORS -9,26,30,150/- 8 AS NEGATIVE INSTEAD OF A POSITIVE . HOWEVER, THE SAID TYPOGRAPHICAL ERROR, AS PER ASSESSEES SUBMISSIONS, HAD NO IMPACT ON THE BALANCE SHEET OR THE ASSESSMENT ORDER SINCE CLOSING SUNDRY DEBTORS BALANCES WERE TALLYING WITH AMOUNT REFLECTED IN THE BALANCE SHEET. THE ACCOUNT CONFIRMATION OF THE SAID DEBTORS WAS ALSO PLACED ON RECORD TO FORTIFY THE SAID FACT. HOWEVER, LD. CIT WITHOUT CONSIDERING THE EXPLANATION / DETAILS SUBMITTED BY THE ASSESSEE SIMPLY SET ASIDE THE MATTER. THE SAME, IN OUR OPINION, IS NOT LINE WITH SETTLED LEGA L POSITION SINCE IT WAS OBLIGATORY ON THE PART OF LD. CIT TO DELIBERATE UPO N THE REPLIES SUBMITTED BY THE ASSESSEE AND WEIGH THE SAME TO ARR IVE AT A CONCLUSION THAT WHETHER THE ORDER UNDER QUESTION, I N TERMS OF ASSESSEES REPLY, COULD BE TERMED AS ERRONEOUS AS W ELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE OR NOT. THE CO-ORDIN ATE BENCH OF THIS TRIBUNAL, IN ITS DECISION TITLED AS METCAPAS ENGINEERING & MAHENDRA CONSTRUCTION CO. (JV) VS. CIT [86 TAXMANN.COM 128 1 1/09/2017], WHICH HAS BEEN AUTHORED BY ONE OF US, AFTER CONSIDE RING CATENA OF JUDICIAL PRONOUNCEMENTS, HAS SUCCINCTLY PUT FORWARD THE LEGAL POSITION, IN THIS REGARD, IN THE FOLLOWING MANNER: - 4. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ER PASSED BY THE CIT AND ARE UNABLE TO PERSUADE OURSELVES TO UPHOLD THE SAME. WE FIND THAT AS PER THE MANDATE OF SEC. 263, A STATUTORY OBLIGATION IS CAST UPON TH E CIT TO AFFORD AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, BEFORE AN ORDER PASSED BY THE A.O IS REVISED IN EXERCISE OF THE REVISIONAL JURISDICTION VESTED WITH HIM UNDER THE SAID STATUTORY PROVISION. THE UNDERLYING PURPOSE OF AFFORDING OF S UCH AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IS TO GIVE AN OPPORTUNITY TO HIM TO EXPLAIN AS TO HOW THE ORDER PASSED BY THE A.O ON THE ISSUES ON WHICH THE SAME I S SOUGHT TO BE REVISED BY THE CIT, IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF THE REVENUE. WE ARE OF THE CONSIDERED VIEW THAT THE VERY PURPOSE OF AFFORDING OF AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, ON THE ISSUES ON WHICH THE ORDER P ASSED BY THE A.O IS SOUGHT TO BE REVISED BY THE CIT WOULD BE LOST AND RENDERED OT IOSE, IN CASE THE REPLY OF THE ASSESSEE EXPLAINING AS TO WHY THE ORDER SOUGHT TO B E REVISED IS NOT ERRONEOUS AND 9 PREJUDICIAL TO THE INTEREST OF THE REVENUE IS NOT J UDICIALLY DELIBERATED UPON BY THE CIT. WE ARE OF THE CONSIDERED VIEW THAT IT IS OBLIG ATORY ON THE PART OF THE CIT TO CONSIDER THE REPLY OF THE ASSESSEE IN RESPECT OF TH E ISSUES ON WHICH THE ORDER OF THE A.O IS SOUGHT TO BE REVISED BY HIM. IT IS ONLY IF T HE CONVICTION OF THE CIT THAT THE ORDER OF THE A.O IS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF THE REVENUE OUTWEIGHS THE REPLY/EXPLANATION FURNISHED BY THE AS SESSEE, THAT THE CIT REMAINS VESTED WITH THE JURISDICTION TO PROCEED WITH AND RE VISE THE ORDER OF THE A.O. WE THOUGH ARE NOT OBLIVIOUS OF THE FACT THAT THE VIEW THAT AN ORDER PASSED BY THE A.O IS FOUND TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF THE REVENUE REMAINS WITHIN THE EXCLUSIVE REALM OF THE WISDOM OF THE CIT, BUT T HEN THE LEGISLATURE BY CONTEMPLATING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, CAN THUS SAFELY BE HELD TO HAVE PRESUPPOSED DUE APPLICATION OF MIND BY THE REVISIONAL AUTHORITY BEFORE REVISING THE ORDER PASSED BY THE A.O. WE ARE OF THE CONSIDERED VIEW THAT THE CIT AFTER RECEIVING THE REPLY/OBJECTIONS OF THE ASSESSE E IN RESPECT OF THE ISSUES ON WHICH THE ORDER OF THE A.O IS SOUGHT TO BE REVISED, IN ALL FAIRNESS, IS REQUIRED TO DELIBERATE ON THE SAME, AND THEREAFTER ON THE BASIS OF LOGICAL REASONING CONCLUDE AS TO WHETHER IN THE BACKDROP OF THE REPLY/EXPLANAT ION OF THE ASSESSEE CAN THE ORDER OF THE A.O BE CHARACTERIZED AS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. WE ARE OF THE CONSIDERED VIEW THAT MERE PLACING ON RECORD THE REPLY/EXPLANATION OF THE ASSESSEE ON THE ISSUES ON WHICH THE ORDER OF THE A.O IS SOUGHT TO BE REVISED AS A MERE FORMALITY, WOULD THE REIN RENDER THE VERY AFFORDING OF OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS NOTHI NG BETTER THAN BEING A FARCE AND AN EYE WASH, DEFEATING THE VERY LEGISLATIVE INTENT. WE ARE AFRAID THAT IN THE CASE OF THE PRESENT ASSESSEE, THOUGH THE CIT HAD PLACED ON RECORD THE REPLY OF THE ASSESSEE IN RESPECT OF THE ISSUES ON WHICH THE ORDE R PASSED BY THE A.O WAS SOUGHT TO BE REVISED AND HAD ALSO REFERRED ABOUT THE SAME IN THE BODY OF HIS ORDER PASSED UNDER SEC. 263, HOWEVER, NEITHER ANY REASON HAD BEE N GIVEN BY THE CIT, NOR IT CAN BE GATHERED FROM THE IMPUGNED ORDER, AS TO WHY THE EXPLANATION OF THE ASSESSEE THAT THE ORDER PASSED BY THE A.O WAS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ON THE ISSUES ON WHICH IT WAS SOUGHT TO BE REVISED, WAS NOT FOUND TO BE ACCEPTABLE. WE MAY CLARIFY THAT THOUGH THERE IS NO DOUBT THAT THE JURISDICTION TO REVISE THE ORDER PASSED BY THE A.O REMAINS WITHIN T HE EXCLUSIVE DOMAIN OF THE JURISDICTION OF THE CIT, BUT HOWEVER, THE INTERNAL SAFEGUARD PROVIDED BY THE LEGISLATURE BY AFFORDING AN OPPORTUNITY OF BEING HE ARD TO THE ASSESSEE WOULD FAIL IF THE EXPLANATION/OBJECTIONS RAISED BY THE ASSESSEE D URING THE COURSE OF SUCH PROCEEDINGS, THEREIN DEMONSTRATING THAT THE ORDER O F THE A.O IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ARE NOT JUDICIALLY CONSIDERED AND BROUGHT TO A LOGICAL END BY THE CIT. WE WOULD NOT HESITATE TO OBSERVE THAT DESPITE THE FACT THE ASSESSEE HAD DURING THE COURSE OF THE REVISIONAL PR OCEEDINGS PLACED ON RECORD IRREBUTABLE MATERIAL WHICH INESCAPABLY ESTABLISHED THAT THE ORDER OF THE A.O WAS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE IN RESPECT OF CERTAIN ISSUES ON WHICH THE SAME WAS SOUGHT TO BE REVISED, HOWEVER , THE SAME DID NEVER SEE THE LIGHT OF THE DAY AND EXCEPT FOR FORMING PART OF THE RECORD AND FINDING A MENTION IN THE ORDER PASSED BY THE CIT U/S 263, WERE HOWEVER A S A MATTER OF FACT NEVER DELIBERATED UPON AND BROUGHT TO A LOGICAL END BY TH E CIT. WE ARE OF THE CONSIDERED VIEW THAT IN THE BACKDROP OF THE EXPLANATION/OBJECT IONS FILED BY THE ASSESSEE DURING 10 THE COURSE OF REVISIONAL PROCEEDINGS IN RESPECT OF CERTAIN ISSUES ON WHICH THE CIT HAD SOUGHT TO REVISE THE ORDER PASSED BY THE A.O UN DER SEC. 143(3), THE CIT HAD FAILED TO POINT OUT AS TO HOW THE ORDER OF THE A.O WAS FOUND TO BE 'ERRONEOUS'. WE ARE OF THE CONSIDERED VIEW THAT IN THE ABSENCE OF C LEAR OBSERVATIONS OF THE CIT AS TO HOW THE ORDER OF THE A.O AFTER CONSIDERING THE EXPL ANATION/OBJECTIONS FILED BY THE ASSESSEE WAS FOUND TO BE ERRONEOUS IN RESPECT OF TH E SAID RESPECTIVE ISSUES, THUS, CAN SAFELY BE HELD TO HAVE FAILED THE FUNDAMENTAL R EQUIREMENT FOR VALID ASSUMPTION OF JURISDICTION AS PER THE MANDATE OF LAW. WE FIND OUR AFORESAID VIEW TO BE SUPPORTED BY THE JUDGMENT OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF VIKAS POLYMERS (SUPRA), WHEREIN IT WAS OBSERVED, AS UNDER : - '18. WE ARE THUS OF THE OPINION THAT THE PROVISIONS OF S. 263 OF THE ACT, WHEN READ AS A COMPOSITE WHOLE MAKE IT INCUMBENT UPON TH E CIT BEFORE EXERCISING REVISIONAL POWERS TO : (I) CALL FOR AND EXAMINE THE RECORD, AND (II) GIVE THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND THEREAFT ER TO MAKE OR CAUSE TO BE MADE SUCH ENQUIRY AS HE DEEMS NECESSARY. IT IS ONLY ON FULFILMENT OF THESE TWIN CONDITIONS THAT THE CIT MAY PASS AN ORDER EXERCISIN G HIS POWER OF REVISION. MINUTELY EXAMINED, THE PROVISIONS OF THE SECTION EN VISAGE THAT THE CIT MAY CALL FOR THE RECORDS AND IF HE PRIMA FACIE CONSIDERS THA T ANY ORDER PASSED THEREIN BY THE AO IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE MAY AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEI NG HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH ENQUIRY AS HE DEEMS NECE SSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY. T HE TWIN REQUIREMENTS OF THE SECTION ARE MANIFESTLY FOR A PURPOSE. MERELY BECAUS E THE CIT CONSIDERS ON EXAMINATION OF THE RECORD THAT THE ORDER HAS BEEN E RRONEOUSLY PASSED SO AS TO PREJUDICE THE INTEREST OF THE REVENUE WILL NOT SUFF ICE. THE ASSESSEE MUST BE CALLED, HIS EXPLANATION SOUGHT FOR AND EXAMINED BY THE CIT AND THEREAFTER IF THE CIT STILL FEELS THAT THE ORDER IS ERRONEOUS AND PRE JUDICIAL TO THE INTEREST OF THE REVENUE, THE CIT MAY PASS REVISIONAL ORDERS. IF, ON THE OTHER HAND, THE CIT IS SATISFIED, AFTER HEARING THE ASSESSEE, THAT THE ORD ERS ARE NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE MAY CHOOSE NOT TO EXERCISE HIS POWER OF REVISION. THIS IS FOR THE REASON THAT IF A QUERY IS RAISED DURING THE COURSE OF SCRUTINY BY THE AO, WHICH WAS ANSWERED TO THE SATISFACTION OF THE AO, BUT NEITHER THE QUERY NOR THE ANSWER WERE REFLECTED IN THE ASSESSMENT ORDER, THIS WOULD NOT BY ITSELF LEAD TO THE CONCLUSION THA T THE ORDER OF THE AO CALLED FOR INTERFERENCE AND REVISION. IN THE INSTANT CASE, FOR EXAMPLE, THE CIT HAS OBSERVED IN THE ORDER PASSED BY HIM THAT THE ASSESS EE HAS NOT FILED CERTAIN DOCUMENTS ON THE RECORD AT THE TIME OF ASSESSMENT. ASSUMING IT TO BE SO, IN OUR OPINION, THIS DOES NOT JUSTIFY THE CONCLUSION A RRIVED AT BY THE CIT THAT THE AO HAD SHIRKED HIS RESPONSIBILITY OF EXAMINING AND INVESTIGATING THE CASE. MORE SO, IN VIEW OF THE FACT THAT THE ASSESSEE EXPLAINED THAT THE CAPITAL INVESTMENT MADE BY THE PARTNERS, WHICH HAD BEEN CALLED INTO QU ESTION BY THE CIT WAS DULY REFLECTED IN THE RESPECTIVE ASSESSMENTS OF THE PART NERS WHO WERE INCOME-TAX ASSESSEES AND THE UNSECURED LOAN TAKEN FROM M/S STU TEE CHIT & FINANCE (P) LTD. WAS DULY REFLECTED IN THE ASSESSMENT ORDER OF THE SAID CHIT FUND WHICH WAS ALSO AN ASSESSEE.' 11 WE FIND THAT A SIMILAR VIEW WAS ALSO ARRIVED AT BY THE HON'BLE HIGH COURT OF PUNJAB & HARYANAIN THE CASE OF CIT V. R.K. METAL WORKS [19 78] 112 ITR 445, WHEREIN STRESSING ON THE STATUTORY OBLIGATION ON THE PART O F THE CIT TO DEAL WITH THE POINTS RAISED BY THE ASSESSEE IN ITS EXPLANATION/OBJECTION FILED WITH HIM DURING THE COURSE OF THE REVISIONAL PROCEEDINGS TO SHOW THAT THE ORDE R PASSED BY THE A.O WAS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE, IN CONTEXT OF THE ISSUES ON WHICH IT WAS SOUGHT TO BE REVISED, THE HON'BLE HIGH COURT HELD AS UNDER:- 'THERE IS NO INDICATION IN THE ORDER OF THE CIT AS TO THE BASIS ON WHICH HE CAME TO THE PRIMA FACIE CONCLUSION THAT THE CAPITAL BORR OWED BY THE FIRM WAS UTILISED FOR PURPOSES OTHER THAN THAT OF THE FIRM'S BUSINESS . WHEN THE ASSESSEE FILED A DETAILED WRITTEN STATEMENT BEFORE HIM, THE CIT DID NOT DEAL WITH ANY OF THE POINTS RAISED IN THE STATEMENT. HE THOUGHT THAT THE BEST COURSE IN THE CIRCUMSTANCES WAS TO REMAND THE MATTER TO THE ITO F OR CONSIDERATION OF THE POINTS RAISED IN THE ASSESSEE'S WRITTEN STATEMENT. THAT CERTAINLY WAS NOT THE PROPER COURSE TO BE ADOPTED BY HIM. IT WAS NECESSAR Y FOR THE CIT TO STATE IN WHAT MANNER HE CONSIDERED THAT THE ORDER OF THE ITO WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND WHA T THE BASIS WAS FOR SUCH A CONCLUSION. AFTER INDICATING HIS REASONS FOR SUCH A CONCLUSION, IT WOULD CERTAINLY HAVE BEEN OPEN TO HIM TO REMAND THE MATTER TO THE I TO FOR SUCH OTHER INVESTIGATION OR ENQUIRY AS MIGHT BE NECESSARY.' SIMILAR PROPOSITION HAS BEEN LAID OUT IN OTHER CASE LAWS TABULATED IN PARA 3.1 AT SERIAL NUMBERS 8 TO 12 ABOVE. UPON DUE CONSIDERA TION OF FACTUAL MATRIX, WE FIND THAT THE ABOVE DISCREPANCY AS OBSERVED BY REVISIONAL AUTHORITY STOOD EXPLAINED BY THE ASSESSE E DURING ASSESSMENT PROCEEDINGS AS WELL AS DURING REVISIONAL PROCEEDINGS WHICH IS FURTHER EVIDENT FROM THE FACT THAT SUNDRY DEBTORS BALANCES AS REFLECTED IN THE BALANCE SHEET MATCHES WITH THE DET AILS FILED BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS AS SUPPORTED BY CONFIRMATION OF ACCOUNTS FILED BY THE ASSESSEE IN R ESPECT OF CONCERNED SUNDRY DEBTOR. LAST BUT NOT THE LEAST, THE ALLEGED DISCREPANCY, VIEWED FROM ANY ANGLE, WOULD HAVE NO BEARING ON ASSESSEE INCOME DURING IMPUGNED AY AND THEREFORE, THERE COULD BE NO OCCASI ON TO TERM THE ASSESSMENT ORDER AS PREJUDICIAL TO THE INTEREST OF THE REVENUE ON THIS 12 ACCOUNT . THIS BEING THE CASE, THE TWIN CONDITIONS AS ENVISA GED BY SECTION 263 VIZ. THE ORDERS SHOULD BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE, REMAINED UNFULFILLE D ON THIS ISSUE. WE HOLD SO. CONSEQUENTLY, THE REVISIONAL JURISDICTION, AS INVOKED BY LD. CIT, ON THIS ISSUE, COULD NOT BE SUSTAINED IN THE E YES OF LAW. 4.6 THE THIRD GROUND ON WHICH THE REVISION HAS BEEN SOUGHT IS THE FACT THAT SALE OF INVESTMENT, IN THE OPINION OF LD. CIT, WAS TO BE TREATED AS ASSESSEES TURNOVER AND THE RESULTANT IN COME SHOULD HAVE BEEN ASSESSED UNDER THE HEAD BUSINESS INCOME INSTEAD OF CAPITAL GAINS AS ACCEPTED BY LD. AO. THE LD. AR HAS SUBMITTED THA T THE ASSESSEE HAD ALL ALONG BEEN MAKING INVESTMENTS IN S HARES AND INCOME DERIVED THEREFROM HAS REGULARLY BEEN ASSESSE D UNDER THE HEAD CAPITAL GAINS AS EVIDENT FROM ASSESSMENT ORDERS OF VARIOUS OTHER ASSESSMENT YEARS AS PLACED ON RECORD AND THEREFORE, FOLLOWING RULE OF CONSISTENCY, THE REVENUE WAS DEBARRED FROM CHANGING HIS STAND ON THIS POINT PARTICULARLY WHEN THERE WAS NO CHANGE IN MATERIAL FACTS. IT HAS FURTHER BEEN SUBMITTED THAT THE ASSESSEE HAS CO NSISTENTLY SHOWN ITS INTENTIONS TO HOLD THE SHARES AS INVESTMENTS ONLY AND NOT AS STOCK- IN-TRADE WHICH IS EVIDENT FROM THE FINANCIAL STATEMENTS AND BORNE OUT OF THE FACT THAT THE ASSESSEE CARRIED OUT ONLY TWO SALES TRANSACTION S OF SHARES DURING THE IMPUGNED AY. FURTHER, THE ASSESSE ES CLAIM, ON MERITS, WAS DULY EXAMINED AS WELL AS VERIFIED BY LD . AO DURING ASSESSMENT PROCEEDINGS AND THE RESULTANT GAINS / LO SSES WERE ACCEPTED UNDER THE HEAD CAPITAL GAINS WITH DUE APPLICATION OF MIND. 13 SINCE, THE ACTION OF LD. AO WAS ONE OF THE POSSIBLE VIEWS, THE ORDER UNDER QUESTION COULD NOT BE SAID TO BE ERRONEOUS, I N ANY MANNER. 4.7 WE HAVE DULY CONSIDERED THE SUBMISSIONS ON THIS POINT. UPON CAREFUL CONSIDERATION OF FINANCIAL STATEMENTS, IT I S UNDISPUTED FACT THAT THE SHARES HELD BY THE ASSESSEE, HAS ALL ALONG, BEE N REFLECTED UNDER THE HEAD INVESTMENTS RATHER THAN AS STOCK-IN-TRADE WHICH IS FURTHER FORTIFIED BY THE FACT THAT THE INVESTMENTS ARE VALUED AT COST AS AGAINST STOCK-IN-TRADE WHICH IS GENERALLY VALUED AT LOWER OF COST OR MARK ET PRICE. IT IS SETTLED LEGAL POSITION THAT IT IS POSS IBLE FOR THE ASSESSEE TO MAINTAIN TWO PORTFOLIOS I.E. AN INVESTMENT PORTFOLI O HELD AS CAPITAL ASSET GIVING RISE TO INCOME / LOSS UNDER THE HEAD CAPITAL GAINS AND TRADING PORTFOLIO HELD AS STOCK-IN-TRADE GIVING RIS E TO INCOME / LOSS UNDER THE HEAD BUSINESS INCOME WHICH HAS ALSO BEEN ACCEPTED BY CBDT IN CIRCULAR NO. 4 OF 2007. FURTHER HONBLE APEX COU RT IN CIT V. ASSOCIATED INDUSTRIAL DEVELOPMENT CO. (P.) LTD. [19 71] 82 ITR 586 (SC) HAS OBSERVED THAT: - WHETHER A PARTICULAR HOLDING OF SHARES IS BY WAY O F INVESTMENT OR FORMS PART OF THE STOCK-IN-TRADE IS A MATTER WHICH IS WITHIN THE KNOW LEDGE OF THE ASSESSEE WHO HOLDS THE SHARES AND IT SHOULD, IN NORMAL CIRCUMSTANCES, BE I N A POSITION TO PRODUCE EVIDENCE FROM ITS RECORDS AS TO WHETHER IT HAS MAINTAINED AN Y DISTINCTION BETWEEN THOSE SHARES WHICH ARE ITS STOCK-IN-TRADE AND THOSE WHICH ARE HE LD BY WAY OF INVESTMENT. IT IS ALSO UNDISPUTED FACT THAT THE INVESTMENTS SOL D BY THE ASSESSEE DURING IMPUGNED AY WERE LONG TERM INVESTMENTS MADE BETWEEN AY 2004-05 TO 2006-07 AND THE SAME WERE HELD AS INVESTMENT VALUED AT COST IN THE BALANCE SHEET WHICH LEND CREDENCE TO THE ARG UMENTS OF LD. AR, IN THIS REGARD. 14 4.8 PROCEEDING FURTHER, WE FIND THAT THE AFORESAID POSITION HAS ALSO BEEN ACCEPTED BY THE REVENUE BY WAY OF ACCEPTANCE O F RETURNED INCOME FOR AYS 2006-07 AS WELL AS FOR AY 2009-10 IN SCRUTINY ASSESSMENT U/S 143(3), THE COPIES OF WHICH HAVE BEE N PLACED ON RECORD. THIS IS FURTHER FORTIFIED BY UNDISPUTED FAC T THAT EVEN DURING SET- ASIDE PROCEEDINGS CONSEQUENT TO IMPUGNED ORDER U/S 263, THE RESULTANT INCOME FROM SHARES HAS AGAIN BEEN ASSESSE D UNDER THE HEAD CAPITAL GAINS ONLY BY LD. AO DESPITE THE OBSERVATION OF LD. CIT THAT THE INCOME SHOULD HAVE BEEN ASSESSED UNDER THE HEAD BUSINESS INCOME . 4.9 ANOTHER IMPORTANT ASPECT OF THE MATTER IS THAT THE ASSESSEE, DURING ASSESSMENT PROCEEDINGS U/S 143(3) OF IMPUGNE D AY, HAD FILED COMPLETE DETAILS OF GAINS / LOSSES UNDER THE HEAD CAPITAL GAINS WHICH WAS DULY EXAMINED AND VERIFIED BY LD. AO. HENCE, TH E ASSESSEE CLAIM WAS ACCEPTED WITH DUE APPLICATION OF MIND AND THE ACTION OF LD. AO IN ACCEPTING THE INCOME UNDER THE HEAD CAPITAL GAINS WAS CERTAINLY ONE OF THE POSSIBLE VIEWS WHICH COULD NOT BE SAID T O BE PERVERSE OR CONTRARY TO LAW, IN ANY MANNER. SIMPLY BECAUSE THE RESULTANT INCOME, IN THE OPINION OF LD. CIT, SHOULD HAVE BEEN ASSESSE D AS BUSINESS INCOME, WOULD NOT MAKE THE ASSESSMENT ORDER ERRONEOUS UNLES S THE SAME IS NOT IN ACCORDANCE WITH LAW. WE FIND SUBSTAN TIAL FORCE IN THE ARGUMENTS RAISED BY LD. AR, IN THIS REGARD AND CONC UR WITH THE SUBMISSIONS MADE BEFORE US. FOR THE SAME, WE DRAW S TRENGTH FROM THE FOLLOWING OBSERVATIONS OF HONBLE APEX COURT RE NDERED IN THE CASE OF CIT VS. AMITABH BACHCHAN [384 ITR 200]: - 15 21. THERE CAN BE NO DOUBT THAT SO LONG AS THE VIEW TAK EN BY THE ASSESSING OFFICER IS A POSSIBLE VIEW THE SAME OUGHT NOT TO BE INTERFERED WITH BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT MERELY ON THE GROUND THAT THERE IS ANOTHER POSSIBLE VIEW OF THE MATTER. PERMITTING EXE RCISE OF REVISIONAL POWER IN A SITUATION WHERE TWO VIEWS ARE POSSIBLE WOULD REALLY AMOUNT TO CONFERRING SOME KIND OF AN APPELLATE POWER IN THE REVISIONAL AUTHOR ITY. THIS IS A COURSE OF ACTION THAT MUST BE DESISTED FROM... 4.10 THE ROOT OF LAST GROUND ON WHICH THE JURISDICT ION HAS BEEN INVOKED LIES IN THE FACT THAT STATUTORY AUDIT U/S 4 4AB, AS PER LD. CIT, WAS NOT DONE AND LD. AO FAILED TO INITIATE PENALTY PROCEEDINGS ON THIS ACCOUNT. WE FIND THAT WHEN THE INCOME WAS ASSESSED UNDER THE HEAD CAPITAL GAINS, WHICH WAS ONE OF THE POSSIBLE VIEWS, THE SAME DID NOT CONSTITUTE ASSESSEES TURNOVER FOR THE PURPOSE OF S ECTION 44AB AND THERE COULD BE NO OCCASION FOR LD. AO TO INITIATE P ENALTY PROCEEDINGS AGAINST THE ASSESSEE FOR NON-COMPLIANCE OF THE PROV ISIONS OF SECTION 44AB. FURTHER, IT IS UNDISPUTED FACT THAT OTHER INC OME REFLECTED BY THE ASSESSEE DID NOT EXCEED THE PRESCRIBED THRESHOLD LI MIT U/S 44AB AND THEREFORE, THE PROVISIONS OF SECTION 44AB WERE NOT APPLICABLE TO THE ASSESSEE. THIS BEING THE CASE, WE DO NOT FIND ANY E RROR IN THE QUANTUM ASSESSMENT ORDER WHICH NECESSITATE REVISION S BY LD. CIT. 5.1 PROCEEDING FURTHER, LD. AR HAS ALSO AGITATED TH E BLANKET SET ASIDE OF ASSESSMENT ORDER AND SUBMITTED THAT AS PER SETTLED LEGAL POSITION, ONLY THOSE ISSUES COULD BE SUBJECTED TO R EVISIONAL JURISDICTION U/S 263 WHICH MADE THE ORDER ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF THE REVENUE AND CANCELLATION OF COMPLETE ORDER W OULD DISTURB THE ALREADY CONCLUDED ISSUES AND RESULT IN SERIOUS DETR IMENT TO THE ASSESSEE WHICH WAS NOT THE INTENTION OF THE LEGISLA TURE. IT HAS BEEN 16 SUBMITTED THAT THE CANCELLATION OF COMPLETE ORDER W OULD GIVE ANOTHER INNING TO LD. AO TO REVIEW THE ALREADY CONCLUDED IS SUES IN THE GUISE OF REVISIONAL PROCEEDINGS WHICH WAS NOT PERMITTED UNDE R THE LAW. FOR THIS PROPOSITION, OUR ATTENTION HAS BEEN DRAWN TO THE FO LLOWING JUDICIAL PRONOUNCEMENTS: - NO. CASE LAWS AUTHORITY CITATION 1. ACIT VS. J.K.DCOSTA HONBLE DELHI HIGH COURT 133 ITR 7 SLP DISMISSED (147 ITR 1] 2. SMITHKLINE BEECHAM CONSUMER HEALTHCARE LTD. VS DCIT ITAT, CHANDIGARH 68 ITD 163 3. CENTURY PLYBOARDS (I) LTD. VS CIT ITAT, KOLKATA ITA NO. 643/KOL/2014 20/01/2016 4. STERLING BIOTECH LTD. VS CIT ITAT, MUMBAI ITA 27 50-56/MUM/2016 29/06/2016 5. SURYA ALLOY INDUSTRIES LTD. VS CIT ITAT, KOLKATA ITA NO. 769/KOL/2013 04/03/2015 6. RASHTRIYA CHEMICALS & FERTILIZERS LTD. VS CIT ITAT, MUMBAI ITA NO. 3265/MUM/2017 14/02/2018 THE LD. DR HAS CONTROVERTED THE SAME BY SUBMITTING THAT COMPUTATION OF CAPITAL GAINS FORMED ENTIRE GAMUT OF THE ASSESSMENT AND THEREFORE , THE DIRECTIONS WERE PERFECTLY VALID. 5.2 AFTER WEIGHING THE RIVAL SUBMISSIONS INCLUDING ASSESSMENT ORDER, WE FIND CERTAIN FORCE IN THE ARGUMENT RAISED BY LD. AR IN VIEW OF THE FACT THAT UNDER LAW, LD. AO IS NOT PERMITTED TO REV IEW THE ORDERS. THE CANCELLATION OF ENTIRE ASSESSMENT ORDER AND DIRECTI ON FOR REFRAMING OF ASSESSMENT DE NOVO WOULD EMPOWER LD. AO TO REVIEW THE ALREADY CONCLUDED ISSUES WHICH IS NOT THE INTENTION OF THE LEGISLATURES. FOR THIS, WE DRAW STRENGTH FROM THE FOLLOWING OBSERVATIONS MA DE BY HONBLE DELHI HIGH COURT IN THE CASE OF ACIT VS. J.K.DCOSTA [133 ITR 7] AS CONFIRMED BY HONBLE APEX COURT : - 17 7. THE SECOND QUESTION, IN OUR OPINION, IS ALSO CAP ABLE OF THE SAME SIMPLE ANSWER. THOUGH THE LANGUAGE OF S. 263 IS QUITE WIDE , IT ONLY EMPOWERS THE COMMISSIONER TO PASS AN ORDER WHICH THE CIRCUMSTANC ES OF THE CASE WILL JUSTIFY. AS THE TRIBUNAL HAS RIGHTLY POINTED OUT, T HE MERE FACT THAT THERE IS SOME MINOR OMISSION OR MISTAKE IN THE ASSESSMENT ORDER C ANNOT JUSTIFY THE ACTION OF THE COMMISSIONER IN SETTING ASIDE THE WHOLE OF THE ASSESSMENT ORDER. SUCH A WHOLESALE CANCELLATION OF THE ASSESSMENT WITH A DIR ECTION TO MAKE A FRESH ASSESSMENT IS CALLED FOR ONLY IN CASES WHERE THERE IS SOMETHING TOTALLY OR BASICALLY WRONG WITH THE ASSESSMENT WHICH IS NOT CA PABLE OF BEING REMEDIED BY AMENDMENTS TO THE ASSESSMENT ORDER ITSELF. IN TH E PRESENT CASE, HAVING COME TO THE CONCLUSION THAT THERE WAS A DEFECT IN T HE ASSESSMENT ORDER IN SO FAR AS THE QUESTION OF LEVY OF INTEREST WAS NOT CON SIDERED BY THE ITO, ALL THAT THE COMMISSIONER HAD TO DO WAS TO DIRECT THE ITO TO CONSIDER THE QUESTION ON MERITS AND IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSED AN OPPORTUNITY OF BEING HEARD. IT WAS NOT FURTHER NECESSARY FOR HIM, NOR DID THE CIRCUMSTANCES OF THE CASE JUSTIFY, THAT THE WHOLE ASSESSMENT SHOULD BE SET ASIDE. WE NEED HARDLY POINT OUT THAT SETTING ASIDE OF ASSESSMENT W HOLESALE WILL HAVE FAR- REACHING CONSEQUENCES UNDER THE ACT AND THAT THE JU RISDICTION UNDER S. 263 SHOULD NOT BE EXTENDED SO AS TO RESULT IN SUCH FAR- REACHING CONSEQUENCES EXCEPT WHERE THE CIRCUMSTANCES CALL FOR SUCH A REME DIAL ACTION. WE, THEREFORE, ALSO ANSWER THE SECOND QUESTION IN THE A FFIRMATIVE AND IN FAVOR OF THE ASSESSEE. SIMILAR ANALOGY HAS BEEN DRAWN IN OTHER DECISIONS O F THE TRIBUNAL AS CITED BEFORE US & TABULATED ABOVE. DRAWING STRENGTH FROM CATENA OF JUDICIAL PRONOUNCEMENTS, WE CONCLUDE THAT LD. CIT W AS NOT JUSTIFIED IN BLANKET SET ASIDE OF THE ASSESSMENT ORDER AND DIRECT LD. AO TO REFRAME THE SAME DE-NOVO. 6. KEEPING IN VIEW THE OVERALL FACTS AND CIRCUMSTAN CES, JUDICIAL PRONOUNCEMENTS, OUR OBSERVATIONS AND CONCLUSIONS, W E ARE UNABLE TO UPHOLD THE EXERCISE OF REVISIONAL JURISDICTION U/S 263 BY LD. CIT. THEREFORE, BY SETTING ASIDE THE SAME, WE ALLOW THE ASSESSEES APPEAL. 7. RESULTANTLY, THE APPEAL STANDS ALLOWED IN TERMS OF OUR ABOVE ORDER. 18 ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH FEBRUARY, 2019. SD/- SD/- (RAVISH SOOD) (MANOJ KUMAR AGGARWAL) / // / JUDICIAL MEMBER MEMBER MEMBER MEMBER / / / / ACCO ACCO ACCO ACCOUNTANT UNTANT UNTANT UNTANT MEMBER , MUMBAI; , DATED : 26/02/2019 SR.PS. THIRUMALESH/SR.PS:- JAISY VARGHESE / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI