M. Diwakar, Hyderabad V. Income Tax Officer, Ward-4(1), Hyderabad

ITA 501/HYD/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1338 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 10-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained investment; Business income; Principle of natural justice; Peak credit; Assessment record
• Section: 143(3); 69; 263; 63; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 501/HYD/2012 ASSESSMENT YEAR 2007-08 SRI M. DIWAKAR HYDERABAD PAN: AFYPM9600F VS. THE INCOME TAX OFFICER WARD-4(1) HYDERABAD APPELLANT RESPONDENT ASSESSEE BY: SRI S. RAMA RAO REVENUE BY: SRI D. SUDHAKAR RAO DATE OF HEARING: 17.01.2013 DATE OF PRONOUNCEMENT: 22.02.2013 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT-IV, HYDERABAD DATED 21.3.2012 PASSED U/S. 2 63 OF INCOME-TAX ACT, 1961 FOR ASSESSMENT YEAR 2007-08. 2. BRIEF FACTS OF THE ISSUE ARE THAT IN THIS CASE, ORI GINAL ASSESSMENT WAS COMPLETED ON 9.7.2009 DETERMINING TH E INCOME AT RS. 4,00,000 AS AGAINST THE INCOME DECLARED BY T HE ASSESSEE AT RS. 2,83,110 U/S. 143(3) OF THE ACT CONSIDERING 25% OF PEAK CREDIT IN BANK ACCOUNT AT RS. 16 LAKHS. LATER THE C IT ON EXAMINATION OF ASSESSMENT RECORD FOUND THAT THERE W ERE CERTAIN ERRORS IN THE ORDER OF THE ASSESSING OFFICER WITH R EGARD TO TREATMENT OF DEPOSIT IN BANK ACCOUNT TO THE TUNE OF RS. 10,24,012 AS THE ASSESSING OFFICER NOT MADE ANY ENQ UIRY REGARDING THIS DEPOSIT. FURTHER, THE ASSESSING OFF ICER NOT EXAMINED WHETHER THE ASSESSEE ACTUALLY CARRIED ON B USINESS OF DIAGNOSTIC CENTRE AND FILM PRODUCTION DURING THE PR EVIOUS YEAR. BEING SO, THE CIT(A) SET ASIDE THE ASSESSMENT ORDER TO CAUSE IT A NO. 501/HYD/2012 SRI M. DIWAKAR ================= 2 NECESSARY ENQUIRY ON THE ABOVE TWO ISSUES. AGAINST THE ORDER OF THE CIT U/S. 263 OF THE ACT THE ASSESSEE IS IN APPE AL BEFORE US. 3. THE LEARNED AR SUBMITTED THAT THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT U/S. 143(3) OF THE ACT EX AMINED DEPOSITS IN HDFC BANK, ANDHRA BANK AND ICICI BANK W HICH IS RELATING TO THE RECEIPTS FROM DIAGNOSTIC CENTRE AS WELL AS FROM FILM PRODUCTION. THIS FACT IS EVIDENT FROM THE OBS ERVATIONS OF THE ASSESSING OFFICER IN ASSESSMENT ORDER AT PAGE N O. 2. THE ASSESSING OFFICER AFTER CAREFUL EXAMINATION OF THE ASSESSEES BOOKS OF ACCOUNT CAME TO KNOW THAT ALL THE DEPOSITS IN BANK ACCOUNTS WERE DULY EXPLAINED AND THUS, HE DID CONSI DER THE PEAK DEPOSIT IN BANK AT RS. 16 LAKHS AND DETERMINED THE INCOME AT 25% OF IT AT RS. 4 LAKHS. THE LEARNED AR SUBMITTED THAT THE DEPOSITS IN THE BANK ACCOUNT WERE FROM THE BUSINESS RECEIPTS OF DIAGNOSTIC CENTRE AS WELL AS FROM FILM PRODUCTION. THERE IS NO QUESTION OF INVOKING THE PROVISIONS OF SECTION 263 OR 69 OF THE ACT. HE RELIED ON THE ORDER OF THE ASSESSING OFFIC ER. 4. THE DR RELIED ON THE ORDER OF THE CIT. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED MATERIAL ON RECORD. WE HAVE CAREFULLY GONE THROUGH THE EARLIER ORDER OF THE ASSESSING OFFICER PASSED U/S. 143(3) DATED 9.7.2009 . THE ASSESSING OFFICER CONSIDERED THE PEAK DEPOSIT IN BA NK ACCOUNT AT RS. 16 LAKHS. HOWEVER, TOTAL DEPOSIT IN BANK AC COUNT IS OF RS. 37,91,312 ONLY. THE ORDER PASSED BY THE ASSESSING OFFICER IS VERY CRYPTIC AND IT CANNOT BE SAID THAT THE ASSESSI NG OFFICER APPLIED HIS MIND. THE ORDER SOUGHT TO BE REVISED C ONTAINS ERROR OF REASONING AND IT IS ON INCORRECT ASSUMPTION OF F ACTS AS WELL AS INCORRECT APPLICATION OF LAW. THERE IS NO APPLICAT ION OF MIND BY THE ASSESSING OFFICER. THE ORDER PASSED BY THE ASS ESSING OFFICER IS A STEREOTYPE ORDER AND HE HAS FAILED TO EXAMINE THE GENUINENESS OF THE CLAIM OF THE ASSESSEE. IT A NO. 501/HYD/2012 SRI M. DIWAKAR ================= 3 6. SECTION 263 OF THE INCOME-TAX ACT SEEKS TO REMOVE T HE PREJUDICE CAUSED TO THE REVENUE BY THE ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. IT EMPOWERS THE COMMISSIONER TO INITIATE SUO MOTO PROCEEDINGS EITHER WHERE THE ASSESSING OFFICER TAKE S A WRONG DECISION WITHOUT CONSIDERING THE MATERIALS AVAILABLE ON RECO RD OR HE TAKES A DECISION WITHOUT MAKING AN ENQUIRY INTO THE MATTERS , WHERE SUCH INQUIRY WAS PRIMA FACIE WARRANTED. THE COMMISSIONER WILL BE WELL WITHIN HIS POWERS TO REGARD AN ORDER AS ERRONEOUS O N THE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICE R SHOULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE CLAIM MADE B Y THE ASSESSEE IN HIS RETURN. THE REASON IS OBVIOUS. UNLIKE THE CIVIL COU RT WHICH IS NEUTRAL IN GIVING A DECISION ON THE BASIS OF EVIDENCE PRODUCED BEFORE IT, THE ROLE OF AN ASSESSING OFFICER UNDER THE INCOME-TAX ACT IS NO T ONLY THAT OF AN ADJUDICATOR BUT ALSO OF AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN, WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER ENQUIRY. HE MUST DISCHARGE BOTH THE ROLES EFFECTIVE LY. IN OTHER WORDS, HE MUST CARRY OUT INVESTIGATION WHERE THE FACTS OF THE CASE SO REQUIRE AND ALSO DECIDE THE MATTER JUDICIOUSLY ON THE BASIS OF MATERIALS COLLECTED BY HIM AS ALSO THOSE PRODUCED BY THE ASSE SSEE BEFORE HIM. THE SCHEME OF ASSESSMENT HAS UNDERGONE RADICAL CHANGES IN RECENT YEARS. IT DESERVES TO BE NOTED THAT THE PRESENT ASSESSMENT WA S MADE UNDER SECTION 143(3) OF THE INCOME-TAX ACT. IN OTHER WORD S, THE ASSESSING OFFICER WAS STATUTORILY REQUIRED TO MAKE THE ASSESS MENT UNDER SECTION 143(3) AFTER SCRUTINY AND NOT IN A SUMMARY MANNER A S CONTEMPLATED BY SUB-SECTION (1) OF SECTION 143. BULK OF THE RETURNS FILED BY THE ASSESSEES ACROSS THE COUNTRY IS ACCEPTED BY THE DEPARTMENT UN DER SECTION 143(1) WITHOUT ANY SCRUTINY. ONLY A FEW CASES ARE PICKED U P FOR SCRUTINY. THE ASSESSING OFFICER IS THEREFORE, REQUIRED TO ACT FAI RLY WHILE ACCEPTING OR REJECTING THE CLAIM OF THE ASSESSEE IN CASES OF SCR UTINY ASSESSMENTS. HE SHOULD BE FAIR NOT ONLY TO THE ASSESSEE BUT ALSO TO THE PUBLIC EXCHEQUER. THE ASSESSING OFFICER HAS GOT TO PROTECT, ON ONE HA ND, THE INTEREST OF THE ASSESSEE IN THE SENSE THAT HE IS NOT SUBJECTED TO ANY AMOUNT OF TAX IN EXCESS OF WHAT IS LEGITIMATELY DUE FROM HIM, AND ON THE OTHER HAND, HE HAS A DUTY TO PROTECT THE INTERESTS OF THE REVEN UE AND TO SEE THAT NO IT A NO. 501/HYD/2012 SRI M. DIWAKAR ================= 4 ONE DODGED THE REVENUE AND ESCAPED WITHOUT PAYING T HE LEGITIMATE TAX. THE ASSESSING OFFICER IS NOT EXPECTED TO PUT BLINKE RS ON HIS EYES AND MECHANICALLY ACCEPT WHAT THE ASSESSEE CLAIMS BEFORE HIM. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED AND THE GENUINENESS OF THE CLAIMS MADE IN THE RETURN WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE INQUIRY. ARBITRARINESS IN EITHER ACCE PTING OR REJECTING THE CLAIM HAS NO PLACE. THE ORDER PASSED BY THE ASSESSI NG OFFICER BECOMES ERRONEOUS BECAUSE AN ENQUIRY HAS NOT BEEN MADE OR G ENUINENESS OF THE CLAIM HAS NOT BEEN EXAMINED WHERE THE INQUIRIES OUG HT TO HAVE BEEN MADE AND THE GENUINENESS OF THE CLAIM OUGHT TO HAVE BEEN EXAMINED AND NOT BECAUSE THERE IS ANYTHING WRONG WITH HIS OR DER IF ALL THE FACTS STATED OR CLAIM MADE THEREIN ARE ASSUMED TO BE CORR ECT. THE COMMISSIONER MAY CONSIDER AN ORDER OF THE ASSESSING OFFICER TO BE ERRONEOUS NOT ONLY WHEN IT CONTAINS SOME APPARENT E RROR OF REASONING OR OF LAW OR OF FACT ON THE FACE OF IT BUT ALSO WHE N IT IS A STEREO-TYPED ORDER WHICH SIMPLY ACCEPTS WHAT THE ASSESSEE HAS ST ATED IN HIS RETURN AND FAILS TO MAKE ENQUIRIES OR EXAMINE THE GENUINEN ESS OF THE CLAIM WHICH ARE CALLED FOR IN THE CIRCUMSTANCES OF THE CA SE. IN TAKING THE AFORESAID VIEW, WE ARE SUPPORTED BY THE DECISIONS O F THE HON'BLE SUPREME COURT IN RAMPYARI DEVI SARAOGI V. CIT (67 ITR 84) (SC), SMT. TARA DEVI AGGARWAL V. CIT (88 ITR 323) (SC), A ND MALABAR INDUSTRIAL CO. LTD'S CASE ( 243 ITR 83) (SC). 7. IN MALABAR INDUSTRIAL CO. LTD. CASE THE HON'BLE CO URT HAS HELD AS UNDER: 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 ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPT ION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL THE ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NA TURAL JUSTICE OR WITHOUT APPLICATION OF MIND. IN OUR HUMBLE VIEW, ARBITRARINESS IN DECISION-MAKIN G WOULD ALWAYS NEED CORRECTION REGARDLESS OF WHETHER IT CAU SES PREJUDICE TO AN ASSESSEE OR TO THE STATE EXCHEQUER. THE LEGISLATURE HAS TAKEN AMPLE CARE TO PROVIDE FOR THE MECHANISM TO HAVE SUCH PREJUDICE REMOVED. WHILE AN ASSESSEE C AN HAVE IT IT A NO. 501/HYD/2012 SRI M. DIWAKAR ================= 5 CORRECTED THROUGH REVISIONAL JURISDICTION OF THE CO MMISSIONER UNDER SECTION 264 OR THROUGH APPEALS AND OTHER MEAN S OF JUDICIAL REVIEW, THE PREJUDICE CAUSED TO THE STATE EXCHEQUER CAN ALSO BE CORRECTED BY INVOKING REVISIONAL JURISD ICTION OF THE COMMISSIONER UNDER SECTION 263. ARBITRARINESS IN DE CISION- MAKING CAUSING PREJUDICE TO EITHER PARTY CANNOT THE REFORE BE ALLOWED TO STAND AND STARE AT THE LEGAL SYSTEM. IT IS DIFFICULT TO COUNTENANCE SUCH ARBITRARINESS IN THE ACTIONS OF TH E ASSESSING OFFICER. IT IS THE DUTY OF THE ASSESSING OFFICER TO ADEQUATELY PROTECT THE INTEREST OF BOTH THE PARTIES, NAMELY, T HE ASSESSEE AS WELL AS THE STATE. IF HE FAILS TO DISCHARGE HIS DUT IES FAIRLY, HIS ARBITRARY ACTIONS CULMINATING IN ERRONEOUS ORDERS C AN ALWAYS BE CORRECTED EITHER AT THE INSTANCE OF THE ASSESSEE , IF THE ASSESSEE IS PREJUDICED OR AT THE INSTANCE OF THE CO MMISSIONER, IF THE REVENUE IS PREJUDICED. WHILE MAKING AN ASSE SSMENT, THE ITO HAS A VARIED ROLE TO PLAY. HE IS THE INVESTIGAT OR, PROSECUTOR AS WELL AS ADJUDICATOR. AS AN ADJUDICATOR HE IS AN ARBITRATOR BETWEEN THE REVENUE AND THE TAXPAYER AND HE HAS TO BE FAIR TO BOTH. HIS DUTY TO ACT FAIRLY REQUIRES THAT WHEN HE ENQUIRES INTO A SUBSTANTIAL MATTER LIKE THE PRESENT ONE, HE MUST RECORD A FINDING ON THE RELEVANT ISSUE GIVING, HOWSOEVER BRI EFLY, HIS REASONS THEREFOR. IN S.N. MUKHERJEE V. UNION OF IND IA AIR 1990 SC 1984, IT HAS BEEN OBSERVED BY THE HON'BLE SUPREM E COURT AS FOLLOWS: REASONS, WHEN RECORDED BY AN ADMINISTRATIVE AUTHOR ITY IN AN ORDER PASSED BY IT WHILE EXERCISING QUASI-JUDICIAL FUNCTIONS, WOULD NO DOUBT FACILITATE THE EXERCISE OF ITS JURIS DICTION BY THE APPELLATE OR SUPERVISORY AUTHORITY. BUT THE OTHER CONSIDERATIONS, REFERRED TO ABOVE, WHICH HAVE ALSO WEIGHED WITH THIS COURT IN HOLDING THAT AN ADMINISTRATIVE A UTHORITY MUST RECORD REASONS FOR ITS DECISION ARE OF NO LESS SIGN IFICANCE. THESE CONSIDERATIONS SHOW THAT THE RECORDING OF REA SONS BY AN ADMINISTRATIVE AUTHORITY SERVES A SALUTARY PURPOSE, NAMELY, IT EXCLUDES CHANCES OR ARBITRARINESS AND ENSURES A DEG REE OF FAIRNESS IN THE PROCESS OF DECISION-MAKING. THE SAI D PURPOSE WOULD APPLY EQUALLY TO ALL DECISIONS AND ITS APPLIC ATION CANNOT BE CONFINED TO DECISIONS WHICH ARE SUBJECT TO APPEA L, REVISION OR JUDICIAL REVIEW. IN OUR OPINION, THEREFORE, THE REQUIREMENT THAT REASONS BE RECORDED SHOULD GOVERN THE DECISION S OF AN ADMINISTRATIVE AUTHORITY EXERCISING QUASI-JUDICIAL FUNCTIONS IRRESPECTIVE OF THE FACT MAY, HOWEVER, BE ADDED THA T IT IS NOT REQUIRED THAT THE REASONS SHOULD BE AS ELABORATE AS IN THE DECISION OF A COURT OF LAW. THE EXTENT AND NATURE O F THE REASONS WOULD DEPEND ON PARTICULAR FACTS AND CIRCUMSTANCES. WHAT IS NECESSARY IS THAT THE REASONS ARE CLEAR AND EXPLICI T SO AS TO INDICATE THAT THE AUTHORITY HAS GIVEN DUE CONSIDERA TION TO THE POINTS IN CONTROVERSY. THE NEED FOR RECORDING OF RE ASONS IS GREATER IN A CASE WHERE THE ORDER IS PASSED AT THE ORIGINAL STAGE. THE APPELLATE OR REVISIONAL AUTHORITY, IF IT AFFIRMS SUCH IT A NO. 501/HYD/2012 SRI M. DIWAKAR ================= 6 AN ORDER, NEED NOT GIVE SEPARATE REASONS IF THE APP ELLATE OR REVISIONAL AUTHORITY AGREES WITH THE REASONS CONTAI NED IN THE ORDER UNDER CHALLENGE. 8. SIMILAR VIEW WAS EARLIER TAKEN BY THE HON'BLE SUPRE ME COURT IN SIEMENS ENGG. & MFG. CO. LTD. V. UNION OF INDIA AIR 1976 SC 1785. IT IS SETTLED LAW THAT WHILE MAKING ASSESSMENT ON ASSESSE E, THE ITO ACTS IN A QUASI-JUDICIAL CAPACITY. AN ASSESSMENT ORDER IS AME NABLE TO APPEAL BY THE ASSESSEE AND TO REVISION BY THE COMMISSIONER UN DER SECTIONS 263 AND 264. THEREFORE, A REASONED ORDER ON A SUBSTANTI AL ISSUE IS LEGALLY NECESSARY. THE JUDGMENTS ON WHICH RELIANCE WAS PLAC ED BY THE LEARNED COUNSEL FOR THE ASSESSEE ALSO POINTS TO THE SAME DI RECTION. THEY HAVE HELD THAT ORDERS, WHICH ARE SUBVERSIVE OF THE ADMIN ISTRATION OF REVENUE, MUST BE REGARDED AS ERRONEOUS AND PREJUDICIAL TO TH E INTERESTS OF THE REVENUE. IF THE ASSESSING OFFICERS ARE ALLOWED TO M AKE ASSESSMENTS IN AN ARBITRARY MANNER, AS HAS BEEN DONE IN THE CASE B EFORE US, THE ADMINISTRATION OF REVENUE IS BOUND TO SUFFER. IF WI THOUT DISCUSSING THE NATURE OF THE TRANSACTION AND MATERIALS ON RECORD, THE ASSESSING OFFICER HAD MADE CERTAIN ADDITION TO THE INCOME OF THE ASSE SSEE, THE SAME WOULD HAVE BEEN CONSIDERED ERRONEOUS BY ANY APPELLA TE AUTHORITY AS BEING VIOLATIVE OF THE PRINCIPLES OF NATURAL JUSTIC E WHICH REQUIRE THAT THE AUTHORITY MUST INDICATE THE REASONS FOR AN ADVERSE ORDER. WE FIND NO REASON WHY THE SAME VIEW SHOULD NOT BE TAKEN WHEN A N ORDER IS AGAINST THE INTERESTS OF THE REVENUE. AS A MATTER OF FACT S UCH ORDERS ARE PREJUDICIAL TO THE INTERESTS OF BOTH THE PARTIES, B ECAUSE EVEN THE ASSESSEE IS DEPRIVED OF THE BENEFIT OF A POSITIVE F INDING IN HIS FAVOUR, THOUGH HE MAY HAVE SUFFICIENTLY ESTABLISHED HIS CAS E. 9. IN VIEW OF THE FOREGOING, IT CAN SAFELY BE SAID THA T AN ORDER PASSED BY THE ASSESSING OFFICER BECOMES ERRONEOUS A ND PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNDER SECTION 263 IN T HE FOLLOWING CASES: (I) THE ORDER SOUGHT TO BE REVISED CONTAINS ERROR OF REASONING OR OF LAW OR OF FACT ON THE FACE OF IT. (II) THE ORDER SOUGHT TO BE REVISED PROCEEDS ON IN CORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW . IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYI NG IT A NO. 501/HYD/2012 SRI M. DIWAKAR ================= 7 THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLIC ATION OF MIND. (III) THE ORDER PASSED BY THE ASSESSING OFFICER IS A STEREOTYPE ORDER WHICH SIMPLY ACCEPTS WHAT THE ASSESSEE HAS STATED IN HIS RETURN OR WHERE HE FAILS TO MAKE THE REQUISITE ENQUIRIES OR EXAMINE THE GENUINENESS OF THE CLAIM WHICH IS CALLED FOR IN THE CIRCUMSTANCES OF THE CASE. 10. WE SHALL NOW TURN TO THE FACTS OF THE CASE TO SEE W HETHER THE CASE BEFORE US IS COVERED BY THE AFORESAID PRINCIPLES. P ERUSAL OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER DO ES NOT SHOW ANY APPLICATION OF MIND ON HIS PART. HE SIMPLY ACCEPTED THE INCOME DECLARED BY THE ASSESSEE. THIS IS A CASE WHERE THE ASSESSING OFFICER MECHANICALLY ACCEPTED WHAT THE ASSESSEE WANTED HIM TO ACCEPT WITHOUT ANY APPLICATION OF MIND OR ENQUIRY. THE EVIDENCE A VAILABLE ON RECORD IS NOT ENOUGH TO HOLD THAT THE RETURN OF THE ASSESSEE WAS OBJECTIVELY EXAMINED OR CONSIDERED BY THE ASSESSING OFFICER. I T IS BECAUSE OF SUCH NON-CONSIDERATION OF THE ISSUES ON THE PART OF THE ASSESSING OFFICER THAT THE RETURN FILED BY THE ASSESSEE STOOD AUTOMATICALL Y ACCEPTED WITHOUT ANY PROPER SCRUTINY. THE ASSESSMENT ORDER PLACED BE FORE US IS CLEARLY ERRONEOUS AS IT WAS PASSED WITHOUT PROPER EXAMINATI ON OR ENQUIRY OR VERIFICATION OR OBJECTIVE CONSIDERATION OF THE CLAI M MADE BY THE ASSESSEE. THE ASSESSING OFFICER HAS COMPLETELY OMIT TED TO EXAMINE THE ISSUES IN QUESTION FROM CONSIDERATION AND MADE THE ASSESSMENT IN AN ARBITRARY MANNER. HIS ORDER IS A COMPLETELY NON-SPE AKING ORDER. IN OUR VIEW, IT WAS A FIT CASE FOR THE LEARNED COMMISSIONE R TO EXERCISE HIS REVISIONAL JURISDICTION UNDER SECTION 263 WHICH HE RIGHTLY EXERCISED BY CANCELLING THE ASSESSMENT ORDER AND DIRECTING THE A SSESSING OFFICER TO PASS A FRESH ORDER CONSIDERING THE ISSUES RAISED B Y THE CIT. IN OUR VIEW, THE ASSESSEE SHOULD HAVE NO GRIEVANCE IN THE ACTION OF LEARNED COMMISSIONER IN EXERCISING THE JURISDICTION U/S. 26 3 OF THE IT ACT. 11. IT WAS HOWEVER CONTENDED BY THE LEARNED COUNSEL THA T THE ASSESSING OFFICER HAD TAKEN A POSSIBLE VIEW IN DETE RMINING THE INCOME AND HENCE, THE COMMISSIONER WAS NOT JUSTIFIED IN AS SUMING THE REVISIONAL JURISDICTION UNDER SECTION 263. WE HAVE GIVEN OUR THOUGHTFUL IT A NO. 501/HYD/2012 SRI M. DIWAKAR ================= 8 CONSIDERATION TO THE AFORESAID SUBMISSIONS. AS ALRE ADY STATED EARLIER, AN ORDER BECOMES ERRONEOUS BECAUSE INQUIRIES, WHICH OU GHT TO HAVE BEEN MADE ON THE FACTS OF THE CASE, WERE NOT MADE AND NO T BECAUSE THERE IS ANYTHING WRONG WITH THE ORDER IF ALL THE FACTS STAT ED OR THE CLAIMS MADE IN THE RETURN ARE ASSUMED TO BE CORRECT. THUS, IT I S MERE FAILURE ON THE PART OF THE ASSESSING OFFICER TO MAKE THE NECESSARY INQUIRIES OR TO EXAMINE THE CLAIM MADE BY THE ASSESSEE IN ACCORDANC E WITH LAW, WHICH RENDERS THE RESULTANT ORDER ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF THE REVENUE. NOTHING MORE IS REQUIRED TO BE ESTABLI SHED IN SUCH A CASE. ONE WOULD NOT KNOW AS TO WHAT WOULD HAVE HAPPENED I F THE ASSESSING OFFICER HAD MADE THE REQUISITE INQUIRIES OR EXAMINE D THE CLAIM OF THE ASSESSEE IN ACCORDANCE WITH LAW. HE COULD HAVE ACCE PTED THE ASSESSEE'S CLAIM. EQUALLY, HE COULD HAVE ALSO REJECTED THE ASS ESSEE'S CLAIM DEPENDING UPON THE RESULTS OF HIS ENQUIRY OR EXAMIN ATION INTO THE CLAIM OF THE ASSESSEE. THUS, THE FORMATION OF ANY V IEW BY THE ASSESSING OFFICER WOULD NECESSARILY DEPEND UPON THE RESULTS O F HIS INQUIRY AND CONSCIOUS, AND NOT PASSIVE, EXAMINATION INTO THE CL AIM OF THE ASSESSEE. IF THE ASSESSING OFFICER PASSES AN ORDER MECHANICAL LY WITHOUT MAKING THE REQUISITE INQUIRIES OR EXAMINING THE CLAIM OF T HE ASSESSEE IN ACCORDANCE WITH LAW, SUCH AN ORDER WILL CLEARLY BE ERRONEOUS IN LAW AS IT WOULD NOT BE BASED ON OBJECTIVE CONSIDERATION OF TH E RELEVANT MATERIALS. IT IS THEREFORE, THE MERE FAILURE ON THE PART OF TH E ASSESSING OFFICER IN NOT MAKING THE INQUIRIES OR NOT EXAMINING THE CLAIM OF THE ASSESSEE IN ACCORDANCE WITH LAW THAT PER SE RENDERS THE RESULTANT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. NOT HING ELSE IS REQUIRED TO BE ESTABLISHED IN SUCH A CASE TO SHOW THAT THE O RDER SOUGHT TO BE REVISED IS ERRONEOUS AND PREJUDICIAL TO THE INTERES TS OF THE REVENUE. 12. WE ARE UNABLE TO ACCEPT THE SUBMISSION OF THE LEARN ED COUNSEL FOR TWO OTHER REASONS ALSO. FIRST REASON IS THAT TH E VIEW SO TAKEN BY THE ASSESSING OFFICER WITHOUT MAKING THE REQUISITE INQU IRIES OR EXAMINING THE CLAIM OF THE ASSESSEE WILL PER SE BE AN ERRONEOUS VIEW AND HENCE WILL BE AMENABLE TO REVISIONAL JURISDICTION UNDER S ECTION 263. SECOND REASON IS THAT IT IS NOT TAKING OF ANY VIEW THAT WI LL TAKE THE MATTER UNDER IT A NO. 501/HYD/2012 SRI M. DIWAKAR ================= 9 THE SCOPE OF SECTION 263. THE VIEW TAKEN BY THE ASS ESSING OFFICER SHOULD NOT BE A MERE VIEW IN VACUUM BUT A JUDICIAL VIEW. IT IS WELL ESTABLISHED THAT THE ASSESSING OFFICER BEING A QUAS I-JUDICIAL AUTHORITY CANNOT TAKE A VIEW, EITHER AGAINST OR IN FAVOUR OF THE ASSESSEE / REVENUE, WITHOUT MAKING PROPER INQUIRIES AND WITHOUT PROPER EXAMINATION OF THE CLAIM MADE BY THE ASSESSEE IN THE LIGHT OF THE APPLICABLE LAW. AS ALREADY STATED EARLIER, WE ARE NOT ABLE TO APPRECIA TE ON WHAT MATERIAL WAS PLACED BEFORE THE ASSESSING OFFICER AT THE ASSE SSMENT STAGE TO TAKE SUCH A VIEW. THE ASSESSEE HAS ALSO NOT BEEN ABLE TO LEAD ENOUGH EVIDENCE TO SHOW TO US THAT ANY INQUIRY WAS MADE BY THE ASSESSING OFFICER IN THIS REGARD. THEREFORE MERE ALLEGATION T HAT THE ASSESSING OFFICER HAS TAKEN A VIEW IN THE MATTER WILL NOT PUT THE MATTER BEYOND THE PURVIEW OF SECTION 263 UNLESS THE VIEW SO TAKEN BY THE ASSESSING OFFICER IS A JUDICIAL VIEW CONSCIOUSLY BASED UPON P ROPER INQUIRIES AND APPRECIATION OF ALL THE RELEVANT FACTUAL AND LEGAL ASPECTS OF THE CASE. THE JUDICIAL VIEW TAKEN BY THE ASSESSING OFFICER MAY PE RHAPS PLACE THE MATTER OUTSIDE THE PURVIEW OF SECTION 263 UNLESS IT IS SHOWN THAT THE VIEW SO TAKEN BY THE ASSESSING OFFICER CONTAINS SOM E APPARENT ERROR OF REASONING OR OF LAW OR OF FACT ON THE FACE OF IT. 13. HOWEVER, THE DIRECTION OF THE CIT TO MAKE ADDITION OF RS. 10,24,012 TOWARDS UNEXPLAINED INVESTMENT IS DELETED . THE CIT ORDER IS MODIFIED TO THAT EXTENT AND THE ASSESSING OFFICER I S DIRECTED TO CARRY OUT DETAILED ENQUIRY ON ALL THE ISSUES RAISED BY THE CI T IN HIS ORDER AND DECIDE THEREUPON. THE ORDER OF THE CIT IS SUSTAINE D TO THAT EXTENT AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND FEBRUARY, 2013. SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEM BER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 22 ND FEBRUARY, 2013 TPRAO IT A NO. 501/HYD/2012 SRI M. DIWAKAR ================= 10 COPY FORWARDED TO: 1. SRI M. DIWAKAR, C/O. SRI S. RAMA RAO, ADVOCATE, FLA T NO. 102, H. NO. 3-6-643, SHRIYA'S ELEGANCE, ST. NO. 9, HIMAYATHNAGAR, HYDERABAD-500 029. 2. THE INCOME TAX OFFICER, WARD - 4(1), HYDERABAD. 3. THE CIT - I V , HYDERABAD. 4. THE J CIT , RANGE - 4, HYDERABAD. 5. THE DR B BENCH, ITAT, HYDERABAD.