Kapil Mehta, Delhi V. PCIT(Central)-3, New Delhi

ITA 533/DEL/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3833 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2017-2018
• Appeal Filed On: 19-05-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PARMOD JAIN CA SH MUKUL GUPTA
• Keywords: Gift; Revision of order; Search and seizure; Opportunity of being heard; Earning of tax free income; Period of limitation; Question of law; Right to appeal; Retraction; Revenue expenditure; Capital expenditure; Set aside
• Section: 143(3); 153A; 192; 43; 48; 13; 153; 22; 153C; 131; 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE, SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.533/DEL/2021 (ASSESSMENT YEAR 2017-18) KAPIL MEHTA C-10, PHASE-IV, ASHOK VIHAR, DELHI-110 052 PAN AEYPM 8313A VS. PR.CIT(CENTRAL), DELHI-3. (APPELLANT) (RESPONDENT) APPELLANT BY SH. PARMOD JAIN, CA SH. MUKUL GUPTA, ADV. RESPONDENT BY MS. SUNITA SINGH, CIT-DR DATE OF HEARING 15.07.2021 DATE OF PRONOUNCEMENT 11.10.2021 ORDER PER SUDHANSHU SRIVASTAVA, JM: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST ORDER DATED 19.03.2021 PASSED BY THE LEARNED PRINCIPAL CO MMISSIONER OF INCOME TAX (CENTRAL), DELHI-3 (PCIT) AND CHALLENGES THE ORDER PASSED U/S 263 OF THE INCOME TAX ACT, 1961, (HEREIN AFTER CALLED THE ACT) FOR ASSESSMENT YEAR 2017-18. 2 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE RETU RN OF INCOME WAS FILED IN RESPONSE TO NOTICE ISSUED U/S 153A READ WITH SECTION 143(3) OF THE ACT DECLARING INCOME OF RS.31,67,190/ -. THE ASSESSMENT WAS COMPLETED AT THE RETURNED INCOME. 2.1 THE LD. PR. CIT HAD CALLED FOR ASSESSME NT RECORDS IN THE CASE OF ASSESSEE AND NOTED THAT THERE WAS AN INFORMA TION OF SEIZURE OF CASH AMOUNTING TO RS.2 CRORES BY THE POLICE AND, THEREFORE, A SEARCH & SEIZURE ACTION U/S 132 & 132A OF THE ACT WA S CARRIED OUT IN THE CASE OF THE ASSESSEE. THE LD. PR. CIT FURTHE R NOTED THAT THE ASSESSEE HAD CLAIMED DURING THE ASSESSMENT PROCEEDI NGS THAT THIS CASH OF RS.2 CRORES BELONGED TO HIS DECEASED FATHER , LATE SH. SATISH MEHTA AND THAT THE SOURCE OF THIS CASH WAS AGRICULTU RAL INCOME OF HIS FATHER WHICH HAD BEEN DULY DECLARED IN THE FATHE RS RETURN OF INCOME FOR ASSESSMENT YEAR 2017-18. THE LD. PR. C IT ALSO NOTED THAT IT WAS THE ASSESSEES SUBMISSIONS BEFORE THE AS SESSING OFFICER THAT THE ASSESSEE HAD RECEIVED 2 CRORES IN CASH AFT ER THE DEMISE OF HIS FATHER AND IT WAS THE SAME CASH WHICH HAD BEEN DE POSITED IN ASSESSEES BANK ACCOUNTS AND HAD BEEN SEIZED BY THE DEPARTMENT. 3 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T THE LD. PR.CIT FURTHER NOTED THAT THE ASSESSING OFF ICER HAD ACCEPTED THE ASSESSEES CLAIM THAT THE SOURCE OF CA SH FOUND IN HIS POSSESSION HAD BEEN GENERATED THROUGH THE AGRICULTU RAL ACTIVITIES CARRIED OUT BY THE FATHER OF THE ASSESSEE BY THE AS SESSING OFFICER WITHOUT ANY ENQUIRY. THE LD. PR. CIT ALSO NOTED THAT THE ORIGINAL RETURN OF INCOME OF ASSESSEES FATHER, WHICH WAS FILE D ON 08.03.2018, DID NOT DISCLOSE ANY AGRICULTURAL INCOM E AND THE RETURN WAS REVISED ON 30.03.2018 WHEREIN AN AMOUNT OF RS.2.0 5 CRORES WAS MENTIONED AS EXEMPT INCOME. THE LD. PR. CIT NOTE D THAT NO PROPER ENQUIRY, EVIDENCE HAS BEEN FOUND ON RECORD T HAT THE FATHER OF THE ASSESSEE WAS HAVING AGRICULTURAL LAND AND WAS CARRYING ON AGRICULTURAL ACTIVITIES IN THE EARLIER ASSESSMENT Y EARS ALSO. THE LD. PR. CIT ALSO NOTED THAT THE ASSESSING OFFICER HAD N OT MADE ANY PROPER OR INDEPENDENT INQUIRY TO ASCERTAIN THE GENU INENESS OF THE AGRICULTURAL ACTIVITIES CARRIED OUT AND AGRICULTURA L INCOME EARNED THERE FROM. THEREFORE, THE LD. PR. CIT WAS OF THE VI EW THAT THE ASSESSMENT ORDER WAS NOT ONLY ERRONEOUS BUT ALSO PRE JUDICIAL TO THE INTEREST OF THE REVENUE. 4 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T 2.2 THE LD. PR. CIT PROCEEDED TO ISSUE SHOW CA USE NOTICE U/S 263(1) OF THE ACT REQUIRING THE ASSESSEE TO EXPLAIN WHY THE ASSESSMENT ORDER SHOULD NOT BE REVISED AS THE SAME WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 2.3 IT WAS THE ASSESSEES CONTENTION BEF ORE THE LD. PR. CIT THAT THE ASSESSING OFFICER (AO) HAD MADE PROPER VER IFICATION IN RESPECT OF ALL THE ISSUES AS PER LAW. IT WAS ALSO TH E ASSESSEES SUBMISSION THAT ALL THE NECESSARY CONFIRMATIONS AND EXPLANATIONS WERE TAKEN BY THE ASSESSING OFFICER AND THAT HE HAD COLLECTED EXHAUSTIVE EVIDENCE FOR FRAMING OF THE ASSESSMENT . IT WAS ALSO SUBMITTED THAT THE ASSESSING OFFICER HAD MADE A DET AILED ENQUIRY FROM THE OWNER OF THE LAND TAKEN ON LEASE BY THE FAT HER OF THE ASSESSEE AND HAD ALSO RECORDED HIS STATEMENT U/S 13 1 OF THE ACT. 2.4 HOWEVER, THE LD. PR. CIT DID NOT FIND THE EXPLANATIONS AND SUBMISSIONS OF THE ASSESSEE SATISFACTORY AND HE REACHED THE CONCLUSION THAT THE ASSESSMENT ORDER FOR THE CAPTIO NED YEAR WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INT EREST OF THE REVENUE. IT WAS SET ASIDE FOR FRESH ADJUDICATION BY THE ASSESSING 5 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T OFFICER WITH A DIRECTION TO CARRY OUT THOROUGH AND D ETAILED ENQUIRIES TO ASCERTAIN THE GENUINENESS OF ACCUMULATION OF CAS H RECEIPTS OF RS.2.05 CRORES SHOWN AS EXEMPT INCOME. 2.5 AGAINST THIS ORDER OF THE LD. PR. CIT S ETTING ASIDE THE ASSESSMENT ORDER, THE ASSESSEE HAS NOW APPROACHED TH IS TRIBUNAL CHALLENGING THE REVISIONARY ORDER BY RAISING THE FO LLOWING GROUNDS OF APPEAL:- 1. THE ORDER OF CIT IS BAD IN LAW AND ON FACTS. 2. ON THE FACTS AND UNDER THE CIRCUMSTANCES T HE CIT HAS ERRED IN INVOKING THE PROVISIONS OF SECTION 263, AL LEGING THAT THE ORDER OF AO IS ERRONEOUS AND PREJUDICIAL TO THE INT EREST OF REVENUE. 3. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE, THE ORDER OF THE AO WAS VOID-AB-INITIO AS THE SAME HAS BEEN PASSED IN PURSUANCE TO A MECHANICAL APPROVAL OF ADD CIT U/S 153D AND HENCE THE CONSEQUENTIAL PROCEEDINGS WOULD ALSO BE A NULLITY. 4. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AND HAVING REGARD TO THE FACT THE DRAFT APPROVALS W ERE SENT ON THE SAME DAY WHEN THE APPROVAL WAS ACCORDED, WOULD PROVE BEYOND DOUBT THAT THE APPROVAL WAS MECHANICAL APPRO VAL. 5. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE & HAVING REGARD TO THE FACT THAT THE APPROVING AUTHOR ITY HAS GRANTED A CONSOLIDATED APPROVAL, IGNORING THE MANDA TORY LANGUAGE AND CORRECT PAN NUMBER WOULD ALSO PROVE BE YOND DOUBT THAT THE APPROVAL WAS A MECHANICAL APPROVAL A ND HENCE ALL PROCEEDINGS ARE VOID AB INITIO. 6 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T 6. WITHOUT PREJUDICE TO THE ABOVE, ON THE FA CTS AND UNDER THE CIRCUMSTANCES OF THE CASE THE CIT HAS FAILED TO APPRECIATE THAT THE ORDER OF THE AO HAS BEEN PASSED WITH THE A PPROVAL OF THE ADDITIONAL CIT, WHICH ORDERS ARE NOT COVERED IN THE PROVISIONS OF SECTION 263 OF THE ACT. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CAS E THE CIT HAS FAILED TO APPRECIATE THAT ACTION OF SEARCH IS A FUL L FLEDGE ENQUIRY OF THE FACTS & HENCE THE ORDER OF THE AO CANNOT BE TERMED AS ERRONEOUS & PR-JUDICIAL TO THE INTEREST OF REVENUE MORE SO WHEN THE SAME HAS BEEN PASSED, AFTER TAKING APPROVAL FRO M ADD CIT U/S 153D OF THE ACT. 8. THE LD.CIT WHILE REVISING THE ORDER OF T HE AO HAS FAILED TO APPRECIATE THAT NOTHING INCRIMINATING WAS UNEART HED DURING SEARCH WHICH WOULD SHOW THAT THE IMPUGNED SUM WAS N OT AGRICULTURE INCOME OF ASSESSEE. 9. THE LD CIT HAS FAILED TO APPRECIATE THAT THE AO WHILE ACTING AS AN INVESTIGATOR HAS INVESTIGATED THE FACT S PROPERLY AND WHILE ACTING AS AN ADJUDICATOR HAS TAKEN A PLAU SIBLE VIEW AND HENCE THE ORDER OF THE AO WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. 10. THE LD CIT HAS FURTHER IGNORED THAT IN VIE W OF THE PROVISIONS OF EXPLANATION 2 OF SECTION 263, IT IS I NCUMBENT TO POINT OUT WHAT MORE ENQUIRIES WOULD THE AO OUGHT TO HAVE CONDUCTED. 11. THE CIT HAS FAILED TO APPRECIATE THAT P OWERS OF REVISION U/S 263 CANNOT BE EXERCISED FOR REDOING THE INVESTI GATION, RATHER THE CIT OUGHT TO HAVE DONE THE INVESTIGATION HIMSELF BEFORE RESTORING THE MATTER TO THE AO. 12. THAT THE APPELLANT CRAVES LEAVE TO AMEND ALTERS, ADD OR FOREGO ANY OF THE ABOVE GROUNDS. 7 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T 3.0 THE LD. AR SUBMITTED THAT THE REVISIONARY ORD ER PASSED BY THE LD. PR. CIT WAS BAD IN LAW. IT WAS ARGUED THAT THE LD. PR. CIT HAD ERRED IN INVOKING THE PROVISIONS OF SECTION 263 BECAUSE THE LD. PR. CIT HAD FAILED TO APPRECIATE THAT THE ASSESSING OFFICER HAD CARRIED OUT DETAILED ENQUIRIES DURING THE COURSE OF ASSESSMENT AND HAD ALSO RAISED VARIOUS QUERIES BEFORE REACHING THE CONCLUSION THAT THE IMPUGNED AMOUNT WAS INDEED AGRICULTURAL INCOME. IT WAS ALSO ARGUED THAT DURING THE COURSE OF SEARCH, NO INCRIMI NATING MATERIAL WAS FOUND IN POSSESSION OF THE ASSESSEE WHICH COULD P OINT OUT THAT THE IMPUGNED AMOUNT WAS UNEXPLAINED INCOME OF THE AS SESSEE. IT WAS ALSO ARGUED THAT THE ASSESSING OFFICER HAD TAKEN A PLAUSIBLE VIEW ON THE FACTS OF THE CASE AND IT WAS NOT OPEN TO THE LD. PR. CIT TO DIRECT THE ASSESSING OFFICER TO TAKE A VIEW WHICH WAS IN ACCORDANCE WITH THE VIEW OF THE LD. PR. CIT. IT WAS A LSO ARGUED THAT IT WAS A CASE WHERE BEFORE PASSING THE ASSESSMENT ORD ER, THE ASSESSING OFFICER HAD OBTAINED APPROVAL OF THE ADDL . CIT U/S 153D OF THE ACT AND, THEREFORE, IN SUCH A CIRCUMSTANCE O RDERS PASSED AFTER OBTAINING APPROVAL U/S 153D OF THE ACT CANNOT BE REVISED U/S 8 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T 263 OF THE ACT. THE LD. AR ALSO ARGUED THAT IT WAS N OT A CASE OF LACK OF ENQUIRY AS WAS BEING STATED BY THE LD. PR. CIT. I T WAS ARGUED THAT THE ASSESSING OFFICER HAD CONDUCTED DUE ENQUIRY ALT HOUGH, THE SAME MIGHT NOT HAVE BEEN IN THE WAY THE LD. PR. CIT WOULD HAVE WANTED BUT THIS CANNOT BE A REASON FOR PASSING A REV ISIONARY ORDER. THE LD. AR PRAYED THAT THE IMPUGNED ORDER U/S 263 O F THE ACT DESERVED TO BE QUASHED. 4.0 PER CONTRA, THE LD. CIT-DR PLACED EXTENSIVE RE LIANCE ON THE ORDER OF THE LD. PR. CIT AND WHILE READING OUT T HE RELEVANT PARAGRAPHS FROM THE IMPUGNED ORDER, IT WAS EMPHASIZE D THAT THE LD. PR. CIT HAD RIGHTLY PASSED THE REVISIONARY ORDE R AS THE ASSESSING OFFICER HAD COMPLETELY FAILED TO ENQUIRE INTO THE SOURCE AND NATURE OF THE CASH DEPOSIT AMOUNTING TO RS.2 CR ORES AND BEING CLAIMED BY THE ASSESSEE AS BEING AGRICULTURAL INCOM E OF HIS FATHER. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAV E ALSO PERUSED THE MATERIAL ON RECORD. THE FACTS IN THE CA SE ARE NOT IN DISPUTE. THERE WAS A SEIZURE OF CASH BY THE POLICE IN THE CASE OF THE ASSESSEE AND SUBSEQUENTLY, THE INCOME TAX DEPARTMEN T WAS 9 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T INFORMED. A SEARCH OPERATION WAS CARRIED OUT BY THE DEPARTMENT AND THIS CASH HAD BY THE THEN BEEN DEPOSITED INTO T HREE BANK ACCOUNTS OF THE ASSESSEE. THE RETURN FILED BY THE A SSESSEE DECLARED AN INCOME OF RS.31,67,190/- AND THE SAME WAS ACCEPTE D BY THE ASSESSING OFFICER VIDE ORDER DATED 17.08.2019 PASSE D U/S 153A OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDING S U/S 153A, IT WAS THE ASSESSES SUBMISSION BEFORE THE ASSESSING OF FICER THAT THE CASH SEIZED BELONGED TO HIS FATHER LATE SH. SATISH MEHTA, WHO WAS AN AGRICULTURIST. IT WAS ALSO SUBMITTED BY THE ASSE SSEE THAT SH. SATISH MEHTA WAS CARRYING OUT AGRICULTURAL ACTIVITIE S IN GUJRAT AND HAD TAKEN LAND ON LEASE FROM ONE SH. VIJAY KUMAR, WH O WAS RESIDENT OF 24, BHUJ MUNDRA ROAD, MUNDRA, GUJRAT. T HE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PRODUCE SH. VIJAY KUMAR AND SH. VIJAY KUMAR HAD ATTENDED THE OFFICE AND HIS STATEME NTS U/S 131 OF THE ACT WAS RECORDED. THE ASSESSING OFFICER ALSO NOT ED THAT THE DOCUMENTS IN RESPECT OF LEASE AGREEMENT OF LAND AND AGRICULTURAL DETAILS WERE PRODUCED AND THE CLAIM OF THE ASSESSEE REGARDING AGRICULTURAL PRODUCE WERE VERIFIED AND WERE FOUND G ENUINE AND, THEREFORE, THE RETURNED INCOME WAS BEING ACCEPTED. 10 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T 5.1 DURING THE COURSE OF HEARING BEFORE US, TH E LD. AUTHORIZED REPRESENTATIVE (AR) HAS HARPED UPON THIS OBSERVATIO N OF THE ASSESSING OFFICER THAT HE HAD CALLED FOR THE DETAIL S WHICH WERE VERIFIED AND WERE FOUND TO BE CORRECT. THE LD. AR HA S FURTHER HARPED UPON THE FACT THAT SH. VIJAY KUMAR HAD BEEN PRODUCED BEFORE THE ASSESSING OFFICER WHOSE STATEMENT U/S 131 OF THE ACT HAD BEEN RECORDED. IT IS THE CONTENTION OF THE LD. AR THAT THE ASSESSING OFFICER HAD CARRIED OUT ALL THE NECESSARY ENQUIRIES BEFORE REACHING THE CONCLUSION THAT THE IMPUGNED AMOUNT OF RS.2 CRORES BELONGED TO THE ASSESSEES FATHER AS AGRICULTURAL I NCOME. 5.2 HOWEVER, DURING THE COURSE OF PROCEEDINGS, THE LD. AR HAD BEEN EXPRESSLY ASKED BY THE BENCH WHETHER THE ASSESS EE HAD ANY PAPER BOOK TO BE FILED BEFORE THIS TRIBUNAL FOR THE PURPOSE OF DEMONSTRATING THAT THE ASSESSEE HAD FILED REQUIRED DOCUMENTS/DETAILS BEFORE THE ASSESSING OFFICER DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS WHICH COULD SUITABLY ESTABLIS H THAT THE ASSESSING OFFICER HAD RAISED PERTINENT QUERIES WHIC H WERE DULY RESPONDED TO BY THE ASSESSEE. HOWEVER, THE LD. AR EX PRESSED HIS 11 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T INABILITY TO FILE SUCH DOCUMENTS. THE BENCH ALSO RE QUIRED THE ASSESSEE TO SHOW US A COPY OF QUESTIONNAIRE ISSUED B Y THE ASSESSING OFFICER WHILE EXAMINING THE ISSUE OF RS.2 CRORES BEING CLAIMED BY THE ASSESSEE AS AGRICULTURAL INCOME OF H IS FATHER. HOWEVER, THE LD. AR AGAIN EXPRESSED HIS INABILITY T O PROVIDE A COPY OF SUCH QUESTIONNAIRE. THUS, ALTHOUGH IT IS THE CLA IM OF THE ASSESSEE THAT THE ASSESSING OFFICER HAD CARRIED OUT PROPER E NQUIRIES REGARDING THE IMPUGNED ISSUE, THERE IS NOTHING ON R ECORD TO DEMONSTRATE AND ESTABLISH THAT PROPER ENQUIRY HAD B EEN CONDUCTED BY THE ASSESSING OFFICER. A PERUSAL OF THE ASSESSME NT ORDER ALSO SHOWS THAT THE ASSESSING OFFICER HAS DISCUSSED THE I SSUE IN A VERY CRYPTIC MANNER BY JUST STATING THAT HE HAS EXAMINED THE DOCUMENTS AND THE LEASE DEED OF LAND AND HAS FOUND IT IN ORDE R AND THAT THE STATEMENT OF SH. VIJAY KUMAR HAS BEEN RECORDED U/S 131 OF THE ACT. THUS, APPARENTLY AND ADMITTEDLY FROM THE RECORD BEF ORE US, THE ASSESSEE HAS FAILED TO DEMONSTRATE THAT PROPER ENQU IRY WAS MADE BY THE ASSESSING OFFICER DURING THE COURSE OF ASSES SMENT PROCEEDINGS AND THAT SUCH ENQUIRY HAD BEEN DULY RES PONDED TO BY THE ASSESSEE IN A PROPER MANNER IN FORM OF DOCUMENT S AND 12 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T EVIDENCES WHICH WOULD ESTABLISH THAT THE IMPUGNED AMO UNT OF RS.2 CRORES BELONGED TO THE FATHER OF THE ASSESSEE AS HI S AGRICULTURAL INCOME. 5.3 WE ALSO NOTE THAT WHEN THE LD. PR. CIT IS SUED A SHOW CAUSE NOTICE TO THE ASSESSEE REQUIRING HIM TO EXPLA IN AS TO WHY THE IMPUGNED ASSESSMENT ORDER WAS NOT ONLY BEEN ERRONEOU S BUT ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE, THE AS SESSEE HAD ONLY SUBMITTED THAT THE ASSESSING OFFICER HAD UNDERTAKEN PROPER VERIFICATION IN THE MATTER AND THAT ALL NECESSARY E XPLANATIONS WERE TAKEN BY THE ASSESSING OFFICER AND THAT HE HAD COLL ECTED EXHAUSTIVE EVIDENCES FOR THE PURPOSE OF FRAMING OF THE ASSESSM ENT. HOWEVER, THE LD. PR. CIT HAS ALSO MENTIONED NON-SUBMISSION O F ANY DOCUMENTS OR EVIDENCES BEFORE HIM WHICH COULD ESTABL ISH THE FACT THAT THE IMPUGNED AMOUNT BELONGED TO THE FATHER OF THE ASSESSEE AS AGRICULTURAL INCOME. 5.4 DURING THE COURSE OF PROCEEDINGS, THE BEN CH AGAIN SPECIFICALLY QUERIED THE LD. AR IF HE COULD FILE CO PY OF DOCUMENTS WHICH THE ASSESSEE HAD FILED BEFORE THE LD. PR. CIT DURING THE 13 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T PROCEEDINGS U/S 263 OF THE ACT WHICH COULD ENABLE U S TO REACH A CONCLUSION AS TO THE CORRECTNESS AND RELIABILITY OF THE ASSESSEES CLAIM OF THE IMPUGNED AMOUNT BELONGING TO HIS FATHE R AS AGRICULTURAL INCOME. HOWEVER, AGAIN THE LD. AR HAS EXPRESSED HIS INABILITY TO PRODUCE SUCH DOCUMENTS. THEREFORE, THE CONTINUED INABILITY OF THE LD. AR TO PRODUCE ANY DOCUMENT WHIC H COULD SUBSTANTIATE THE CLAIM OF THE ASSESSEE EVEN AFTER R EPLATED QUERIES BY THE BENCH LEAVES NO DOUBTS WHATSOEVER THAT THE ASSES SEE HAD NOT FILED ANY SUCH DOCUMENTS OR EVIDENCES EITHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR BEFORE THE LD. PR. CIT DU RING THE COURSE OF 263 PROCEEDINGS. THEREFORE, IT IS VERY MUCH EVID ENT THAT THE ASSESSING OFFICER REACHED THE CONCLUSION THAT THE I NCOME RETURNED BY THE ASSESSEE WAS TO BE ACCEPTED WITHOUT EXAMINING AND CONSIDERING THE RELEVANT DOCUMENTS. IT IS ALSO TO B E NOTED THAT THE ORIGINAL RETURN OF INCOME OF THE ASSESSES FATHER D ID NOT REFLECT ANY AGRICULTURAL INCOME AND IT WAS SUBSEQUENTLY REVISED TO SHOW THAT THE ASSESSEES FATHER WAS ALSO IN RECEIPT OF EXEMPT AGRICULTURAL INCOME. THE LD. AR WAS ASKED A SPECIFIC QUERY BY THE BENCH WHETHER HE COULD SUBSTANTIATE THAT THE ASSESSEES FA THER WAS 14 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T EARNING AGRICULTURAL INCOME OF THIS MAGNITUDE IN EA RLIER YEARS ALSO BUT THE LD. AR AGAIN EXPRESSED HIS INABILITY TO ENL IGHTEN THE BENCH ON THE SAME. EVEN THE LEASE DEED OF THE LAND, WHICH THE ASSESSEE IS CLAIMING TO HAVE BEEN TAKEN ON LEASE FROM SH. VIJAY KUMAR OF MUNDRA, GUJRAT HAS NOT BEEN PLACED BEFORE US AND, T HEREFORE, WE CANNOT BUT COME TO A CONCLUSION THAT THE ENTIRE CLA IM OF THE ASSESSEE REGARDING THE IMPUGNED AMOUNT BELONGING TO THE FATHER OF THE ASSESSEE AS AGRICULTURAL INCOME HAS NO EDIFICE TO STAND ON AND IS RATHER MORE OF AN AFTER THOUGHT WHEN THE SEIZURE OF CASH BY THE POLICE AUTHORITIES DURING THE DEMONETIZATION CAME T O THE LIGHT OF THE INCOME TAX DEPARTMENT. 5.5 THE LD. PR. CIT, IN PARAGRAPH -8 OF TH E IMPUGNED ORDER HAS RAISED 10 POINTS WHICH HAVE NOT BEEN EXAMINED BY THE ASSESSING OFFICER BEFORE REACHING THE CONCLUSION TH AT IMPUGNED AMOUNT OF RS.2 CORES BELONGED TO THE FATHER OF THE ASSESSEE AS HIS AGRICULTURAL INCOME. THE ISSUES POINTED OUT BY THE LD. PR. CIT IN PARA 8 OF THE IMPUGNED ORDER ARE BEING REPRODUCED H EREIN UNDER FOR A READY REFERENCE:- 15 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T 1. THE ASSESSING OFFICER HAS FAILED TO CALL REPORT FRO M THE STATE AUTHORITIES TO ASCERTAIN THE GENUINENESS OF T HE AGRICULTURAL ACTIVITIES UNDERTAKEN DURING THE YEAR UNDER CONSIDE RATION OR PRIOR/SUBSEQUENT TO IT ON THE SAID LAND. 2. NOR DETAILS OF PERSONS FROM WHOM SUCH IN COME WAS RECEIVED HAS NOT BEEN CALLED FOR BY THE AO NEITHER ANY VERIFICATION OR ENQUIRY HAS BEEN MADE IN THIS REGAR D. 3. SIMILARLY, THE DETAILS OF EXPENSES INCURR ED ON SO CALLED AGRICULTURAL ACTIVITIES AND EVIDENCES OF INCURRING SUCH EXPENSES HAVE NOT BEEN GATHERED. 4. DETAILS OF THE MANDI OR MARKET WHERE SUCH PRODUCE WAS SOLD NOT GATHERED 5. THE STAMP PAPER ON WHICH THE LEASE DEED HA S BEEN STATED TO BE RECORDED WAS PURCHASED IN DELHI DURING SEPTEMBER 2012, WHERE AS THE DEED ON IT WAS RECORDED ON 10.09 .2015. THIS LEASE DEED WAS NEITHER REGISTERED NOR NOTARIZE D BY ANY NOTARY. 6. IT HAS BEEN STATED ON THE LEASE DEED THAT IT WAS RECORDED AT MUNDRA, GUJRAT BUT BOTH THE WITNESSES AS WELL AS THE LESSEE WERE RESIDENT OF DELHI. HOWEVER, NO EVIDENCES WERE FOUND ON RECORD TO SUGGEST HOW THEY KNOW OR MET WITH THE LES SOR. HOW THE DEAL WAS FINALIZED WHETHER ANY BROKER WAS INVOL VED. NO ENQUIRY OR INVESTIGATION HAS BEEN DONE TO ASCERTAIN THESE FACTS. SIMILARLY, NO ENQUIRY HAS BEEN MADE FROM THE WITNES SES EITHER TO ASCERTAIN THESE FACTS. 7. NO EVIDENCE FOUND ON RECORD TO SHOW THAT T HE LESSOR OF THE LAND WAS INDEED THE OWNER OF THE LAND FOR WHICH THE STATED LEASE DEED HAS BEEN RECORDED. 16 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T 8. HENCE, IT IS APPARENTLY CLEAR THAT THE CL AIM OF SEIZED CASH GENERATED THROUGH AGRICULTURAL ACTIVITIES WAS ACCEP TED BY THE ASSESSING OFFICER WITHOUT DESIRABLE EXAMINATION & I NQUIRIES AS ELABORATED ABOVE AND WITHOUT PROPER SCRUTINY WHICH IS TOTALLY IN CONTRAVENTION TO THE RELEVANT PROVISIONS OF THE I.T . ACT, 1961. 9. NO ENQUIRY OR INVESTIGATION MADE TO ASCERT AIN WHAT HAPPENED TO ANY CROP UNDER PROCESS AT THE TIME OF D EMISE OF THE FATHER OF THE ASSESSEE AND HOW ITS CLAIM HAS BEEN S ETTLED. 10. SIMILARLY, NO EVIDENCES WERE GATHERED ABOUT TRANSFER OF ANY MONEY OR THE RENTALS PAID BY THE LESSEE TO THE LESSOR IN LIEU OF THE LEASE DEED. 5.6 DURING THE COURSE OF HEARING BEFORE US , WHEN THE LD. AR WAS ASKED TO REFUTE THESE OBSERVATIONS OF THE LD. PR . CIT, HE HAD AGAIN NOTHING STATE IN FORM OF CONCRETE EVIDENCE TO DEMONSTRATE THAT THE OBSERVATIONS AND FINDINGS BY THE LD. PR. C IT WERE EITHER PERVERSE OR WERE NOT IN ACCORDANCE WITH SETTLED LAW. THEREFORE, ON THE FACTUAL MATRIX OF THE CASE, IT IS VERY MUCH EVI DENT THAT THE ASSESSING OFFICER HAD FAILED TO MAKE ANY SOUGHT OF ENQUIRY FROM THE ASSESSEE REGARDING THE IMPUGNED AMOUNT. THE OBSERVA TIONS OF THE LD. PR. CIT THAT NOTHING WAS FOUND IN THE CASE RECOR D ALSO SUPPORTS THIS VIEW. FURTHER THE FAILURE OF THE ASSESSEE TO SU BMIT ANY KIND OF DOCUMENTARY EVIDENCES BEFORE US AGAIN STRENGTHEN TH IS VIEW. 17 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T THEREFORE, IN OUR CONSIDERED OPINION, THIS IS A CAS E WHERE THE ASSESSING OFFICER DID NOT MAKE ANY ENQUIRY WHATSOEVE R AND SIMPLY ACCEPTED THE RETURN OF INCOME FILED BY THE ASSESSEE . .HEREIN MENTIONING BY THE ASSESSEE THAT HE HAS CARRIED OUT THE NECESSARY ENQUIRIES AND CALLED FOR THE REQUIRED DOCUMENTS AND HAS EXAMINED THEM WOULD NOT ABSOLVE THE ASSESSING OFFICER FROM T HE DUTY CAST UPON HIM AS THERE IS NOTHING IN THE CASE RECORDS WHI CH COULD SUITABLY LEND CREDENCE TO THE STATEMENT OF THE ASSE SSING OFFICER AS WELL AS THE CLAIM OF THE ASSESSEE THAT THE ASSESSING OFFICER HAD MADE ADEQUATE ENQUIRIES AND THAT THE ASSESSEE DULY RESPONDED TO SUCH QUERIES. EVEN THE STATEMENT RECORDED U/S 131 O F THE ACT OF SH. VIJAY KUMAR AS MENTIONED IN THE ASSESSMENT ORDER, WA S NOT PRODUCED BEFORE US TO SUBSTANTIATE THE VERACITY OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AS WELL AS THE CLAIM OF THE ASSESSEE OF THAT HAVING BEEN DONE. THEREFORE, IT IS OUR CONS IDERED VIEW THAT THIS IS NOT A CASE OF INADEQUATE ENQUIRY AS THE LD. AR WOULD WANT US TO ACCEPT, BUT IS RATHER A CASE OF COMPLETE LAC K OF ENQUIRY BY THE ASSESSING OFFICER AND, THEREFORE, WE HOLD THAT THE LD. PR. CIT 18 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T WAS ABSOLUTELY CORRECT IN INVOKING HIS REVISIONARY P OWERS U/S 263 OF THE ACT. 5.7. IN THE CASE OF GEE VEE ENTERPRISES SP EAKING FOR HIGH COURT OF DELHI THEIR LORDSHIPS MADE A CLEAR DISTINC TION BETWEEN THE CASES OF INADEQUATE INQUIRY AND LACK OF INQUIRY BY ALSO CONSIDERING THE RATIO OF THE DECISION OF HONBLE AP EX COURT IN THE CASE OF RAMPYARI DEVI SAROGI VS CIT (SUPRA) AND TAR A DEVI AGGARWAL VS CIT (SUPRA) AND HELD THAT IT IS INCUMBENT UPON T HE ITO TO FURTHER INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRC UMSTANCES WOULD MAKE SUCH AN INQUIRY PRUDENT WITH THE WORD ERRONEOU S IN SECTION 263 INCLUDES FAILURE TO MAKE SUCH AN INQUIRY. IT WAS FURTHER HELD THAT THE ORDER BECOMES ERRONEOUS BECAUSE SUCH AN IN QUIRY HAS NOT BEEN MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WIT H THE ORDER IF ALL THE FACTS STATED THEREIN ARE ASUMMED TO BE C ORRECT. THE RELEVANT OPERATIVE PART OF THIS DECISION READS AS U NDER:- IN RAMPYARI DEVI SARAOGI V. COMMISSIONER OF INCOME -TAX, THE INCOME-TAX OFFICER ACCEPTED THE RETURN OF THE ASSES SEE IN RESPECT OF THE INITIAL CAPITAL, THE GIFT RECEIVED AND THE S ALE OF JEWELLERY, THE INCOME FROM BUSINESS, ETC., WITHOUT ANY INQUIRY OR EVIDENCE WHATSOEVER. FOR THIS REASON THE COMMISSIONER HELD T HE ORDER TO BE ERRONEOUS. IN REVISION, HE CANCELLED THE ORDER A ND ORDERED 19 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T THE INCOME- TAX OFFICER TO MAKE A FRESH ASSESSMENT. IN HIS ORDER THE COMMISSIONER HAD USED CERTAIN NEW GROUNDS WHICH HAD NOT BEEN DISCLOSED TO THE ASSESSEE IN THE NOTICE GIVEN TO HIM TO SHOW CAUSE WHY THE ORDER OF THE INCOME-TAX OFFICER SHOULD NOT BE REVISED. BUT, APART FROM THESE NEW GROUNDS, THE SUPREME COURT OBSERVED AT PAGE 88 OF THE REPORT THAT: THERE WAS AMPLE MATERIAL TO SHOW THAT THE INCOME-T AX OFFICER MADE THE ASSESSMENTS IN UNDUE HURRY ... THE ASSESSEE MADE A DECLARATION GIVING THE FACTS REGARDING INITI AL CAPITAL, THE ORNAMENTS AND PRESENTS RECEIVED AT THE TIME OF MARR IAGE, OTHER GIFTS RECEIVED FROM HER FATHER-IN-LAW, ETC., WHICH SHOULD HAVE PUT ANY INCOME-TAX OFFICER ON HIS GUARD. BUT THE IN COME TAX OFFICER WITHOUT MAKING ANY INQUIRIES TO SATISFY HIM SELF PASSED THE ASSESSMENT ORDER.... A SHORT STEREO-TYPED ASSES SMENT ORDER WAS MADE FOR EACH ASSESSMENT YEAR ... NO EVIDENCE W HATSOEVER WAS PRODUCED IN RESPECT OF THE MONEY- LENDING BUSIN ESS DONE ... NO NAMES WERE GIVEN AS TO THE PARTIES TO WHOM THE L OANS WERE ADVANCED IN TARA DEVI AGGARWAL V. COMMISSIONER OF INCOME-TAX ALSO THE INCOME-TAX OFFICER, HOWRAH , WHILE REMARKING THAT THE SOURCE OF INCOME OF THE ASSESSEE WAS INCOME FROM SPECULATI ON AND INTEREST ON INVESTMENTS STATED THAT NEITHER THE ASS ESSEE WAS ABLE TO PRODUCE THE DETAILS AND VOUCHERS OF THE SPE CULATIVE TRANSACTIONS MADE DURING THE ACCOUNTING YEAR NOR WA S THERE EVIDENCE REGARDING THE INTEREST RECEIVED BY THE ASS ESSEE FROM DIFFERENT PARTIES ON HER INVESTMENTS. NOTWITHSTANDI NG THESE DEFECTS THE INCOME TAX OFFICER DID NOT INVESTIGATE INTO THE VARIOUS SOURCES BUT ASSESSED THE ASSESSEE ON A TOTA L INCOME OF RS.9,037. THE INQUIRIES MADE BY THE COMMISSIONER RE VEALED THAT THE ASSESSEE DID NOT RESIDE OR CARRY ON BUSINE SS AT THE ADDRESS GIVEN IN THE RETURN. THE COMMISSIONER WAS A LSO OF THE VIEW THAT THE INCOME-TAX OFFICER WAS NOT JUSTIFIED IN ACCEPTING 20 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T THE INITIAL CAPITAL, THE SALE OF ORNAMENTS, THE INC OME FROM BUSINESS, THE INVESTMENTS ETC., WITHOUT ANY INQUIRY OR EVIDENCE WHATSOEVER AND THAT THE ORDER OF ASSESSMENT WAS ERR ONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE HIGH COURT HELD THAT THERE WERE MATERIALS TO JUSTIFY THE COMMI SSIONER'S FINDING THAT THE ORDER OF ASSESSMENT WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. SHRI SHARMA TRIED TO DISTINGUISH THIS DECISION ON THE GROUND TH AT THE ADDRESS OF THE ASSESSEE IN THAT CASE WAS GIVEN INCORRECTLY. THE DECISION OF THE HIGH COURT AND THAT OF THE SUPREME COURT WER E NOT, HOWEVER, BASED ON THAT GROUND AT ALL. ON THE CONTRA RY, THE SUPREME COURT FOLLOWED THEIR PREVIOUS DECISION IN R AMPYARI DEVI'S CASE AND UPHELD THE DECISION OF THE HIGH COU RT PRECISELY ON THE SAME GROUNDS. THESE TWO DECISIONS SHOW THAT IT IS NOT NECESSARY FOR THE COMMISSIONER TO MAKE FURTHER INQU IRIES BEFORE CANCELLING THE ASSESSMEN T ORDER OF THE INCOME-TAX OFFICER. THE COMMISSIONER CAN REGARD THE ORDER AS ERRONEOUS ON T HE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE THE INCOME-TA X OFFICER SHOULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE STATEMENTS MADE BY THE ASSESSEE IN HIS RETURN. THE REASON IS OBVIOUS. THE POSITION AND FUNCTION OF THE INCOME TAX OFFICER IS VERY DIFFERENT FROM THAT OF A CIVIL COURT. THE STATEMENTS MADE IN A PLEADING PROVED BY THE MINIMUM AMOUNT OF EVIDENCE MAY BE ACCEPTED BY A CIVIL COURT IN THE ABSENCE OF ANY REBUTTAL. THE CIVIL COURT IS NEUTRAL. IT SIMPLY GIVES DECISION ON THE BASIS OF THE PLEADING AND EVIDENCE WHICH COM ES BEFORE IT. THE INCOME-TAX OFFICER IS NOT ONLY AN ADJUDICAT OR BUT ALSO AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER INQUIRY. 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 PROVOK E AN INQUIRY. THE MEANING TO BE GIVEN TO THE WORD' ERRONEOUS' IN SECTION 263 21 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T EMERGES OUT OF THIS CONTEXT. IT IS BECAUSE IT IS IN CUMBENT ON THE. INCOME-TAX OFFICER TO FURTHER INVESTIGATE THE FACTS STATED IN' THE RETURN WHEN CIRCUMSTANCES WOULD MAKE SUCH AN INQUIR Y PRUDENT THAT THE WORD' ERRONEOUS' IN SECTION 263 IN CLUDES THE FAILURE TO MAKE SUCH AN INQUIRY. THE ORDER BECOMES ERRONEOUS BECAUSE SUCH AN INQUIRY HAS NOT BEEN MADE AND NOT B ECAUSE THERE IS ANYTHING WRONG WITH THE ORDER IF ALL THE F ACTS STATED THEREIN ARE ASSUMED TO BE CORRECT. 5.8 IN THE CASE OF CIT VS. NAGESH KNITWEARS H ONBLE DELHI HIGH COURT AFTER CONSIDERING THE RATIO OF ITS EARLIER DE CISIONS INCLUDING ITS DECISION IN THE CASE OF ITO VS DG HOUSING PROJECTS LTD. 345 ITR 153 HELD AS UNDER: 36. AS FAR AS SECTION 263 IS CONCERNED, WE HAV E EXAMINED THE SAID SECTION IN DEPTH AND DETAIL IN ITO VS. D G HOUSING PROJECTS LTD. DECIDED ON 1 ST MARCH, 2012, IN ITA NO. 179/2011 AND OBSERVED AS UNDER:- 10. REVENUE DOES NOT HAVE ANY RIGHT TO APPEAL TO THE FIRST APPELLATE AUTHORITY AGAINST AN ORDER PASSED B Y THE ASSESSING OFFICER. SECTION 263 HAS BEEN ENACTED TO EMPOWER THE CIT TO EXERCISE POWER OF REVISION AND R EVISE ANY ORDER PASSED BY THE ASSESSING OFFICER, IF TWO CUMULATIVE CONDITIONS ARE SATISFIED. FIRSTLY, THE O RDER SOUGHT TO BE REVISED SHOULD BE ERRONEOUS AND SECOND LY, IT SHOULD BE PREJUDICIAL TO THE INTEREST OF THE REVENU E. THE EXPRESSIONO..PREJUDICIAL TO THE INTEREST OF THE RE VENUE' IS OF WIDE IMPORT AND IS NOT CONFINED TO MERELY LOSS O F TAX. THE TERM ERRONEOUS MEANS A WRONG/INCORRECT DECISI ON DEVIATING FROM LAW. THIS EXPRESSION POSTULATES AN E RROR WHICH MAKES AN ORDER UNSUSTAINABLE IN LAW. 22 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T 11. THE ASSESSING OFFICER IS BOTH AN INVESTIGAT OR AND AN ADJUDICATOR. IF THE ASSESSING OFFICER AS AN ADJUDIC ATOR DECIDES A QUESTION OR ASPECT AND MAKES A WRONG ASSESSMENT WHICH IS UNSUSTAINABLE IN LAW, IT CAN BE CORRECTED BY THE COMMISSIONER IN EXERCISE OF REVISI ONARY POWER. AS AN INVESTIGATOR, IT IS INCUMBENT UPON THE ASSESSING OFFICER TO INVESTIGATE THE FACTS REQUIRED TO BE EXAMINED AND VERIFIED TO COMPUTE THE TAXABLE INCOME . IF THE ASSESSING OFFICER FAILS TO CONDUCT THE SAID INVESTIGATION, HE COMMITS AN ERROR AND THE WORD ERRONEOUS INCLUDES FAILURE TO MAKE THE ENQUIRY. IN SUCH CASES, THE ORDER BECOMES ERRONEOUS BECAUSE ENQUIRY OR VERIFICATION HAS NOT BEEN MADE AND NOT BECAUSE A WR ONG ORDER HAS BEEN PASSED ON MERITS. 12. DELHI HIGH COURT IN GEE VEE ENTERPRISES V. ADDITIONAL COMMISSION OF INCOME-TAX, DELHI-1, (1975 ) 99 ITR 375, HAS OBSERVED AS UNDER:- THE REASON IS OBVIOUS. THE POSITION AND FUNCTION O F THE INCOME-TAX OFFICER IS VERY DIFFERENT FROM THAT OF A CIVIL COURT. THE STATEMENTS MADE IN A PLEADING PROV ED BY THE MINIMUM AMOUNT OF EVIDENCE MAY BE ACCEPTED BY A CIVIL COURT IN THE ABSENCE OF ANY REBUTTAL. 'T HE CIVIL COURT IS NEUTRAL. IT SIMPLY GIVES DECISION ON THE BASIS OF THE PLEADING AND EVIDENCE WHICH COMES BEFORE IT. THE INCOME- TAX OFFICER IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF ITA NO. 591/2008 AND CONNECTED MATTERS 29 A RETURN WHICH IS APPARENTLY I N ORDER BUT CALLS FOR FURTHER INQUIRY. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN THE RETU RN WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE AN INQUIRY. THE MEANING TO BE GIVEN TO THE WORD ERRONEOUS IN SECTION 263 EMERGES OUT OF THI S CONTEXT. IT IS BECAUSE IT IS INCUMBENT ON THE INCOM E- TAX OFFICER TO FURTHER INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MAKE SUCH AN 23 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T INQUIRY PRUDENT THAT THE WORD ERRONEOUS IN SECTIO N 263 INCLUDES THE FAILURE TO MAKE SUCH AN INQUIRY. T HE ORDER BECOMES ERRONEOUS BECAUSE SUCH AN INQUIRY HAS NOT BEEN MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WITH THE ORDER IF ALL THE FACTS STAT ED THEREIN ARE ASSUMED TO BE CORRECT. 13. IN THE SAID JUDGMENT, DELHI HIGH COURT HAD REFERRED TO EARLIER DECISIONS OF THE SUPREME COURT IN RAMPYA RI DEVI SAROGIV. CIT (1968) 67 ITR 84 (SC) AND TARA DEVI AGGARWAL V. CIT (1973) 88 ITR 323 (SC), WHEREIN IT HAS BEEN HELD THAT WHERE ASSESSING OFFICER HAS ACCEPTED A PARTICULAR CONTENTION/ISSUE WITHOUT ANY ENQUIRY OR EVIDENCE WHATSOEVER, THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. AFTER R EFERENCE TO THESE TWO DECISIONS, THE DELHI HIGH COURT OBSERVED: - THESE TWO DECISIONS SHOW THAT IT IS NOT NECESSARY FOR THE COMMISSIONER TO MAKE FURTHER INQUIRIES BEFO RE CANCELLING THE ASSESSMENT ORDER OF THE INCOME-TAX OFFICER. THE COMMISSIONER CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES O F THE CASE THE INCOME-TAX OFFICER SHOULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE STATEMENTS MADE BY THE ASSESSEE IN HIS RETURN. 14. THE AFORESAID OBSERVATIONS HAVE TO BE UNDER STOOD IN THE FACTUAL BACKGROUND AND MATRIX INVOLVED IN THE S AID TWO CASES BEFORE THE SUPREME COURT. IN THE SAID CAS ES, THE ASSESSING OFFICER HAD NOT CONDUCTED ANY ENQUIRY OR EXAMINED EVIDENCE WHATSOEVER. THERE WAS TOTAL ABSEN CE OF ENQUIRY OR VERIFICATION. THESE CASES HAVE TO BE DISTINGUISHED FROM OTHER CASES (I) WHERE THERE IS E NQUIRY BUT THE FINDINGS ARE INCORRECT/ERRONEOUS; AND (II) WHERE THERE IS FAILURE TO MAKE PROPER OR FULL VERIFICATIO N OR ENQUIRY. 24 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T 15. IN THE CASE OF COMMISSIONER OF INCOME TAX V. SUNBEAM AUTO LTD. (2011) 332 ITR 167 (DEL), DELHI H IGH COURT WAS CONSIDERING THE ASPECT, WHEN THERE IS NO PROPER OR FULL VERIFICATION, AND IT WAS HELD AS UNDER:- WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE COUNSEL ON THE OTHER SIDE AND HAVE GONE THROUGH THE RECORDS. THE FIRST ISSUE THAT ARISES FOR OUR CONSIDERATION IS ABOUT THE EXERCISE OF POWER BY THE COMMISSIONER OF INCOME-TAX UNDER SECTION 263 OF THE INCOME-TAX ACT. AS NOTED ABOVE, THE SUBMISSION OF LEARNED COUNSEL FOR THE REVENUE WAS THAT WHILE PASSING THE ASSESSMENT ORDER, THE ASSESSING OFFICER DID NOT CONSIDER THIS ASPECT SPECIFICALLY WHETHER T HE EXPENDITURE IN QUESTION WAS REVENUE OR CAPITAL EXPENDITURE. THIS ARGUMENT PREDICATES ON THE ASSESSMENT ORDER, WHICH APPARENTLY DOES NOT GIVE ANY REASONS WHILE ALLOWING THE ENTIRE EXPENDITURE A S REVENUE EXPENDITURE. HOWEVER, THAT BY ITSELF WOULD NOT BE INDICATIVE OF THE FACT THAT THE ASSESSING OF FICER HAD NOT APPLIED HIS MIND ON THE ISSUE. THERE ARE JUDGMENTS GALORE LAYING DOWN THE PRINCIPLE THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IS NOT REQUIRED TO GIVE DETAILED REASON IN RESPECT OF EACH AND EVERY ITEM OF DEDUCTION, ETC. THEREFORE, ONE HA S TO SEE FROM THE RECORD AS TO WHETHER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE EXPENDITURE IN QUESTION AS REVENUE EXPENDITURE. LEARNED COUNSEL FOR THE ASSESSEE IS RIGHT IN HIS SUBMISSION THAT ON E HAS TO KEEP IN MIND THE DISTINCTION BETWEEN LACK OF INQUIRY AND INADEQUATE INQUIRY. IF THERE WAS ANY INQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF G IVE OCCASION TO THE COMMISSIONER TO PASS ORDERS UNDER SECTION 263 OF THE ACT, MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER. IT IS ONLY IN CASE S OF LACK OF INQUIRY THAT SUCH A COURSE OF ACTION WOULD BE OPEN. IN GABRIEL INDIA LTD. [1993] 203 ITR 108 25 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T (BOM), LAW ON THIS ASPECT WAS DISCUSSED IN THE FOLLOWING MANNER:- ... FROM A RENDING OF SUB-SECTION (1) OF SECTION 2 63, IT IS CLEAR THAT THE POWER OF SUO MOTU REVISION CAN BE EXERCISED BY THE COMMISSIONER ONLY IF, ON EXAMINATION OF THE RECORDS OF ANY PROCEEDINGS UNDER THIS ACT, HE CONSIDERS THAT ANY ORDER PASSED THEREI N BY THE INCOME-TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE'. IT IS NOT AN ARBITRARY OR UNCHARTERED POWER, IT CAN BE EXERCISED ONLY ON FULFILMENT OF THE REQUIREMENTS LA ID DOWN IN SUBSECTION (I).THE CONSIDERATION OF THE COMMISSIONER AS TO WHETHER AN ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, MUST BE BASED ON MATERIALS ON THE RECORD OF THE PROCEEDINGS CALLED FOR BY HIM. IF THERE ARE NO MATERIALS ON RECORD ON THE BASIS OF WHICH IT CAN BE SAID THAT THE COMMISSIONER ACTING IN A REASONABLE MANNER COULD HAVE COME TO SUCH A CONCLUSION, THE VERY INITIATION OF PROCEEDINGS BY HIM WILL BE ILLEG AL AND WITHOUT JURISDICTION. THE COMMISSIONER CANNOT INITIATE PROCEEDINGS WITH A VIEW TO STARTING FISHIN G AND ROVING ENQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED. SUCH ACTION WILL BE AGAINST THE WELL-ACCEPTED POLICY OF LAW THAT THERE MUST BE A PO INT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT STALE IS SUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOSE IN AND SE T AT REST JUDICIAL AND QUASI-JUDICIAL CONTROVERSIES A S IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. (SEE PARASHURAM POTTERY WORKS CO. LTD. V. 1TO [1977] 106 ITR I (SC) AT PAGE 10) ... FROM THE AFORESAID DEFINITIONS IT IS CLEAR THAT AN ORDER CANNOT BE TER MED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LA W. IF AN INCOME-TAX OFFICER ACTING IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE 26 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SECTION DOES NO T VISUALISE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME-TAX OFFICER, WH O PASSED THE ORDER UNLESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALISED WHERE THE INCOME TAX OFFICER WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATE HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY HE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOULD HAVE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN THE ONE DETERMINED BY THE INCOME-TAX OFFICER. THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO RE-EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE . IT IS BECAUSE THE INCOME-TAX OFFICER HAS EXERCISED THE QUASI-JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT BE FORMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUSION ... THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY T HE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WA S JUST HAS BEEN IMPOSED ... WE MAY NOW EXAMINE THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE POWER S OF THE COMMISSIONER SET OUT ABOVE. THE INCOME-TAX OFFICER IN THIS CASE HAD MADE ENQUIRIES IN REGARD T O THE NATURE OF THE EXPENDITURE INCURRED BY THE ASSESSEE. THE ASSESSEE HAD GIVEN DETAILED EXPLANATION IN THAT REGARD BY A LETTER IN WRITING. ALL 27 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T THESE ARE PART OF THE RECORD OF THE CASE. EVIDENTLY , THE CLAIM WAS ALLOWED BY THE INCOME-TAX OFFICER ON BEIN G SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. SUC H DECISION OF THE INCOME-TAX OFFICER CANNOT BE HELD T O BE ..ERRONEOUS' SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. 16. THUS, IN CASES OF WRONG OPINION OR FINDING O N MERITS, THE CIT HAS TO COME TO THE CONCLUSION AND HIMSELF D ECIDE THAT THE ORDER IS ERRONEOUS, BY CONDUCTING NECESSAR Y ENQUIRY, IF REQUIRED AND NECESSARY, BEFORE THE ORDE R UNDER SECTION 263 IS PASSED. IN SUCH CASES, THE ORDER OF THE ASSESSING OFFICER WILL BE ERRONEOUS BECAUSE THE ORD ER PASSED IS NOT SUSTAINABLE IN LAW AND THE SAID FINDI NG MUST BE RECORDED. CIT CANNOT REMAND THE MATTER TO THE ASSESSING OFFICER TO DECIDE WHETHER THE FINDINGS IT A NO. 591/200S AND CONNECTED MATTERS 33 RECORDED ARE ERRONEOUS. IN CASES WHERE THERE IS INADEQUATE ENQUI RY BUT NOT LACK OF ENQUIRY, AGAIN THE CIT MUST GIVE AND RE CORD A FINDING THAT THE ORDER/INQUIRY MADE IS ERRONEOUS. T HIS CAN HAPPEN IF AN ENQUIRY AND VERIFICATION IS CONDUCTED BY THE CL'T AND HE IS ABLE TO ESTABLISH AND SHOW THE ERROR OR MISTAKE MADE BY THE ASSESSING OFFICER, MAKING THE O RDER UNSUSTAINABLE IN LAW. IN SOME CASES POSSIBLY THOITG H RARELY, THE CIT CAN ALSO SHOW AND ESTABLISH THAT TH E FACTS ON RECORD OR INFERENCES DRAWN FROM FACTS ON RECORD PER SE JUSTIFIED AND MANDATED FURTHER ENQUIRY OR INVESTIGA TION BUT THE ASSESSING OFFICER HAD ERRONEOUSLY NOT UNDERTAKE N THE SAME. HOWEVER, THE SAID FINDING MUST BE CLEAR, UNAMBIGUOUS AND NOT DEBATABLE. THE MATTER CANNOT BE REMITTED FOR AFRESH DECISION TO THE ASSESSING OFFIC ER TO CONDUCT FURTHER ENQUIRIES WITHOUT A FINDING THAT TH E ORDER IS ERRONEOUS. FINDING THAT THE ORDER IS ERRONEOUS I S A CONDITION OR REQUIREMENT WHICH MUST BE SATISFIED FO R EXERCISE OF JURISDICTION UNDER SECTION 263 OF THE A CT. IN SUCH MATTERS, TO REMAND THE MATTER/ISSUE TO THE ASS ESSING OFFICER WOULD IMPLY AND MEAN THE CIT HAS NOT EXAMIN ED 28 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T AND DECIDED WHETHER OR NOT THE ORDER IS ERRONEOUS B UT HAS DIRECTED THE ASSESSING OFFICER TO DECIDE THE ASPECT/QUESTION. 17. THIS DISTINCTION MUST BE KEPT IN MIND BY T HE CIT WHILE EXERCISING JURISDICTION UNDER SECTION 263 OF THE ACT AND IN THE ABSENCE OF THE FINDING THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E, EXERCISE OF JURISDICTION UNDER THE SAID SECTION IS NOT SUSTAINABLE. IN MOST CASES OF ALLEGED INADEQUATE INVESTIGATION, IT WILL BE DIFFICULT TO HOLD THAT T HE ORDER OF THE ASSESSING OFFICER, WHO HAD CONDUCTED ENQUIRIES AND HAD ACTED AS AN INVESTIGATOR, IS ERRONEOUS, WITHOUT CIT CONDUCTING VERIFICATION/INQUIRY. THE ORDER OF THE A SSESSING OFFICER MAY BE OR MAY NOT BE WRONG. CIT CANNOT DIRE CT RECONSIDERATION ON THIS GROUND BUT ONLY WHEN THE OR DER IS ERRONEOUS. AN ORDER OF REMIT CANNOT BE PASSED BY TH E CIT TO ASK THE ASSESSING OFFICER TO DECIDE WHETHER THE ORDER WAS ERRONEOUS. THIS IS NOT PERMISSIBLE. AN ORDER IS NOT ERRONEOUS, UNLESS THE CIT HOLD AND RECORDS REASONS WHY IT IS ERRONEOUS. AN ORDER WILL NOT BECOME ERRONEOUS BE CAUSE ON REMIT, THE ASSESSING OFFICER MAY DECIDE THAT THE ORDER IS ERRONEOUS. THEREFORE CIT MUST AFTER RECORDING RE ASONS HOLD THAT THE ORDER IS ERRONEOUS. THE JURISDICTIONA L PRECONDITION STIPULATED IS THAT THE CIT MUST COME T O THE CONCLUSION THAT THE ORDER IS ERRONEOUS AND IS UNSUSTAINABLE IN LAW. WE MAY NOTICE THAT THE MATERI AL WHICH THE CIT CAN RELY INCLUDES NOT ONLY THE RECORD AS IT STANDS AT THE TIME WHEN THE ORDER IN QUESTION WAS P ASSED BY THE ASSESSING OFFICER BUT ALSO THE RECORD AS IT STANDS AT THE TIME OF EXAMINATION BY THE CIT [SEE CIT V. SHREE MANJUNATHESWARE PACKING PRODUCTS, 231 ITR 53 (SC)]. NOTHING BARS/PROHIBITS THE CIT FROM COLLECTING AND RELYING 29 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T UPON NEW/ADDITIONAL MATERIAL/EVIDENCE TO SHOW AND S TATE THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOU S. 18. IT IS IN THIS CONTEXT THAT THE SUPREME C OURT IN MALABAR INDUSTRIAL CO. LTD. V. COMMISSIONER OF INCOME TAX, (2000) 243 ITR 83 (SC), HAD OBSERVED THAT THE PHRAS E PREJUDICIAL TO THE INTEREST OF REVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSE QUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREA TED AS PREJUDICIAL TO THE INTEREST OF REVENUE. THUS, WHEN THE ASSESSING OFFICER HAD ADOPTED ONE OF THE COURSES PERMISSIBLE AND AVAILABLE TO HIM, AND THIS HAS RESU LTED IN LOSS TO REVENUE; OR TWO VIEWS WERE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE CIT MAY NOT AGREE; THE SAID ORDERS CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF REVE NUE UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. IN SUCH MATTERS, THE CIT MUST GIVE A FINDING THAT THE VIEW TAKEN BY THE ASSESSING OFFICE R IS UNSUSTAINABLE IN LAW AND, THEREFORE, THE ORDER IS ERRONEOUS. HE MUST ALSO SHOW THAT PREJUDICE IS CAUS ED TO THE INTEREST OF THE REVENUE. 5.9 IN VIEW OF FOREGOING DISCUSSIONS, WE AR E INCLINED TO HOLD THAT THE PRESENT CASE IS SQUARELY COVERED IN FAVOUR OF THE REVENUE BY THE DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF GEE VEE ENTERPRISES VS. ACIT (SUPRA) AND CI T VS. NAGESH KNITWEARS P. LTD. (SUPRA) AS IN THE PRESENT CASE, TH E AO DID NOT RAISE ANY QUERY OF MAKE ANY INQUIRY PERTAINING TO T HE CLAIM OF 30 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T EXPENSES SUBMITTED BY THE ASSESSEE IN ITS BOOKS AND STATEMENTS OF ACCOUNTS SUBMITTED ALONG WITH RETURN AND THIS IS A C LEAR CASE OF LACK OF INQUIRY. WE MAY ALSO POINT OUT THAT IF TH E AO FAILS TO CONDUCT THE SAID INVESTIGATION, HE COMMITS THE ERRO R AND THE WORD ERRONEOUS INCLUDES FAILURE TO MAKE INQUIRY. IN SU CH CASES, THE ORDER BECOMES ERRONEOUS BECAUSE NECESSARY INQUIRY O R VERIFICATION HAS NOT BEEN MADE AND NOT BECAUSE A WRONG ORDER HAS BEEN PASSED ON MERITS. THEREFORE, ON THIS GROUND THE APPEAL OF THE ASSESSEE FAILS. 6.0 WE FURTHER NOTE THAT THE ASSESSEE HA S RAISED ANOTHER ISSUE THAT SINCE THE APPROVAL OF THE ADDL. CIT HAD BEEN RECEIVED U/S 153 D OF THE ACT, THE ASSESSMENT ORDER PASSED U/S 1 53A OF THE ACT WOULD NOT BE SUBJECTED TO REVISION U/S 263 OF THE AC T. IN THIS REGARD, THE LD. AR HAS PLACED RELIANCE ON A PRINCIP LE OF JUDICIAL PRECEDENTS AND HAS PRAYED THAT THE 263 ORDER DESERV ES TO BE QUASHED FOR THIS REASON ALONE. WE NOTE THAT THIS GR OUND HAS BEEN TAKEN BY THE ASSESSEE IN GROUND NO.7 IN GROUNDS OF APPEAL. HOWEVER, THE ASSESSEE HAS ALSO TAKEN GROUND NO.3 WHI CH IS 31 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T CONTRADICTORY TO GROUND NO.7. BOTH THESE GROUNDS AR E BEING REPRODUCED HEREIN UNDER FOR A READY REFERENCE:- 7. ON THE FACTS AND CIRCUMSTANCES OF THE CAS E THE CIT HAS FAILED TO APPRECIATE THAT ACTION OF SEARCH IS A FUL L FLEDGE ENQUIRY OF THE FACTS & HENCE THE ORDER OF THE AO CANNOT BE TERMED AS ERRONEOUS & PR-JUDICIAL TO THE INTEREST OF REVENUE MORE SO WHEN THE SAME HAS BEEN PASSED, AFTER TAKING APPROVAL FRO M ADD CIT U/S 153D OF THE ACT. 3. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE, THE ORDER OF THE AO WAS VOID-AB-INITIO AS THE SAME HAS BEEN PASSED IN PURSUANCE TO A MECHANICAL APPROVAL OF ADD CIT U/S 153D AND HENCE THE CONSEQUENTIAL PROCEEDINGS WOULD ALSO BE A NULLITY. 6.1 HOWEVER, EVEN IF WE IGNORE THE GROUND N O.3 RAISED BY THE ASSESSEE AND CONSIDER THE PLEADINGS WITH REFERENCE T O GROUND NO.7, IT IS THE ASSESSEES PLEA THAT ONCE APPROVAL HAS BE EN OBTAINED U/S 153D OF THE ACT, THE LD. PR. CIT CANNOT EXERCISE JU RISDICTION U/S 263 OF THE ACT. THE ASSESSEE HAS TAKEN PLACE RELIA NCE ON THE FOLLOWING JUDICIAL PRECEDENTS. (I) HONBLE DELHI ITAT IN ABHA BANSAL VS. PR. CIT, ITA NO. 383/DEL/2021, DATED 31/05.2021 (II) HONBLE ALLAHABAD HIGH COURT IN CIT VS. DR. ASHOK KUMAR IN ITA NO. 192/2000 DATED 06.08.2012 32 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T (III) HONBLE LUCKNOW ITAT IN MEHTAB ALAM VS. ACIT ITA NOS.288 TO 294/LKW/2014 ORDER DATED 18-11-2014 (IV) HONBLE PUNE ITAT IN M/S BU BHANDARI SCHEMES CS. PCIT, ITA NO. 634-641 / PUNE/ 2018, DATED 14.11.201 8 (V) HONBLE PUNE ITAT IN VISHWA INFRAWAYS (P) LTD., VS., CIT (CENTRAL), ITA NO. 596/PUNE/2015 6.2 WE HAVE CAREFULLY CONSIDERED THE ABOVE PLEA OF THE ASSESSEE. THE ASSESSEE HAS RELIED HEAVILY MAINLY O N THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. DR. ASHOK KUMAR[ INCOME TAX APPEAL NO. - 192 OF 2000 DATED 06 .08.2012. WE HAVE CAREFULLY CONSIDERED THE ABOVE DECISION. T HE HONBLE HIGH COURT IN THAT DECISION UPHELD THE ORDER OF THE CO-O RDINATE BENCH QUASHING THE 263 ORDER PASSED BY THE LD. CIT AS PER PARA NO. 8 WHEREIN IT HAS BEEN HELD THAT THE TRIBUNAL HAS FOUND THAT THE ASSESSEE HAD SUFFICIENTLY EXPLAINED THE RETRACTION OF HIS STATEMENT GIVEN ON 12.12.1994 AND THE LD. CIT COULD NOT POINT OUT AS TO WHETHER THE ASSESSING OFFICER HAD FAILED TO WORK OUT THE AMOUNT OF CONCEALED INCOME CORRECTLY. HONBLE HIGH COURT FUR THER HELD THAT THE ASSESSING OFFICER HAD MADE THE ADDITION ON ESTI MATE BASIS FOR ALL THE ASSESSMENT YEARS AND THERE WAS NO MATERIAL INDICATING 33 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T SUPPRESSION OF RECEIPTS. THEREFORE, THE HONBLE HI GH COURT ON THIS ISSUE UPHELD THE ORDER OF THE ITAT QUASHING THE ORD ER OF THE LD. CIT PASSED UNDER SECTION 263 OF THE ACT. THE HONBLE H IGH COURT THOUGH HAS REPRODUCED PARA NO.5.2 OF THE ORDER OF T HE CO-ORDINATE BENCH, BUT IT HAS MAINLY AGREED WITH THE ORDER OF TH E CO-ORDINATE BENCH AS IN PARA NO. 1 OF THE ORDER OF THE CO-ORDIN ATE BENCH. THE COMPLETE ORDER OF THE HONBLE HIGH COURT IS AS UNDE R:- 1. WE HAVE HEARD SRI R.K. UPADHYAY, LEARNED COUNSEL FOR THE APPELLANTS AND SRI R.R. AGRAWAL, LEARNED COUNSEL APPEARS FOR THE RESPONDENT- ASSESSEE. 2. THE REVENUE IS AGGRIEVED BY THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 12.1.2000, WHICH WAS SET-ASIDE THE ORDER OF COMMISSIONER INCOME TAX (A), REMANDING THE MATTER TO THE ASSESSING OFFICER UNDER SECTION 263 OF INCOME TAX ACT, 1961 AFTER SETTING ASIDE THE ASSESSMENT ORDER DATED 27.12.1995 FOR ASSESSMENT YEAR 1991-92 TO 1994-95 AND THE ORDER DATED 31.7.1996 FOR THE ASSESSMENT YEAR 1995-96. 3. THESE APPEALS WERE ADMITTED ON THE QUESTION OF LAW, WHICH WE HAVE CORRECTED AS FOLLOWS:- 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN INTERFERING WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX, UNDER SECTION 263 OF THE 34 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T INCOME TAX ACT 1961 FOR THE ASSESSMENT YEARS 1991-92 TO ASSESSMENT YEARS 1995-96?' 4. WE HAVE GONE THROUGH THE ORDER OF ASSESSING OFFICER, COMMISSIONER INCOME TAX (A) AND INCOME TAX APPELLATE TRIBUNAL AND FIND THAT THE ITAT HAS CONSIDERED THE REASONS GIVEN BY THE CIT(A), AND HAS FOUND THAT THE ASSESSEE HAD SUFFICIENTLY EXPLAINED THE SURRENDER OF THE INCOME WHICH HE HAS SUBSEQUENTLY RETRACTED. 5. AFTER ASSESSMENTS WERE COMPLETED, A RAID WA S CARRIED OUT, AT THE NURSING HOME OF THE RESPONDENT- ASSESSEE ON 7.12.2004. SOME INCRIMINATING DOCUMENTS OF CONCEALMENT OF INCOME, WERE DISCOVERED. THE ASSESSEE WAS NOT PRESENT AT THE TIM E OF INSPECTION. HE APPEARED BEFORE THE AO ON 12.12.1994 AND SURRENDERED THE PROPOSED ADDITIONS IN THE INCOME FOR THE RELEVANT YEARS. THE RESPONDEN T- ASSESSEE THEREAFTER RETRACTED HIS STATEMENT, BY GIVING AN EXPLANATION THAT HE DID NOT HAVE ACCESS T O HIS ACCOUNTS BOOKS, WHEN HE HAD APPEARED ON HIS OWN BEFORE THE AO ON 12.12.1994. ON CHECKING UP THE ACCOUNT BOOKS, HE HAD FOUND THAT THE RETURNS WERE ACCEPTED, ON THE ACCOUNTS BOOKS PREPARED BY HIM. 6. THE TRIBUNAL THEREAFTER HAS OBSERVED AS UNDER:- '5.1 THE OTHER RELEVANT POINT TO BE NOTED IS THAT C IT SET ASIDE THE ASSESSMENT ORDER ON THE BASIS OF INCORRECT REASONS. AS POINTED OUT BY THE LEARNED COUNSEL, THERE WAS NO MATERIAL FOUND DURING SEARCH ABOUT SUPPRESSION OF RECEIPTS FOR A.Y. 1991-92 TO 1994-95 NOR THE LEARNED D.R. WAS ABLE TO POINT OUT ANY SUCH MATERIAL WHICH MIGHT HAVE BEEN IGNORED BY THE AO WHILE FRAMING THE ASSESSMENT AND THUS THE 35 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T VARY BASIS FOR PASSING THE IMPUGNED ORDER GOES AWAY. THE CIT ALSO FAILED TO POINT OUT AS TO WHY TH E AO FAILED TO WORK OUT THE AMOUNT OF CONCEALED INCOME CORRECTLY, RATHER THE AO HAD MADE THE ADDITIONS ON ESTIMATE BASIS FOR ALL THE ASSESSMENT YEARS THOUGH THERE WAS NO SEIZED MATERIAL INDICATIN G SUPPRESSION OF RECEIPTS FOR THESE ASSESSMENT YEARS AND FOR A.Y. 1995-96 THE MATERIAL FOUND AT THE TIME OF SEARCH HAD BEEN ANALYSED AFTER NECESSARY ENQUIRIES AND ASSESSMENT HAD BEEN FRAMED ACCORDINGLY. 5.2 IN THE LAST IT IS ALSO RELEVANT FACT THAT THE A O WAS FULLY ALIVE ABOUT THE FACTS OF THE CASE AND THAT IS WHY HE GOT NECESSARY APPROVAL OF ADDL. COMMISSIONER BEFORE COMPLETING THE ASSESSMENT ORDERS FOR ALL THE ASSESSMENT YEARS AND ONCE THAT IS NOT DISPUTED BY THE REVENUE THAN THE CIT WOULD NOT BE JUSTIFIED IN INTERFERING IN THE APPROVAL ACCORDED BY THE ADDL. C IT FOR FRAMING THE ASSESSMENT ORDER AND THUS THERE WAS NO CASE FOR SETTING ASIDE THE ASSESSMENT ORDERS FOR THE ASSESSMENT YEARS IN QUESTION. ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE I AM OF THE OPINION THAT THE IMPUGNED ORDER IS LIABLE TO BE QUASHED ACCORDINGLY. 6. IN THE RESULT, APPEALS ARE ALLOWED.' 7. SRI R.K. UPADHYAY HAD RELIED UPON MALABA R INDUSTRIAL CO. LTD. VS. COMMISSIONER OF INCOME TAX, (2000) 243 ITR 83 AND COMMISSIONER OF INCOME TAX VS. KWALI TY TWXTILE ASSOCIATE PVT. LTD., (2005) 272 ITR 371. IN THESE CASES THE SUPREME COURT AND THE MADRAS HIGH COURT H AVE DISCUSSED THE POWERS OF CIT UNDER SECTION 263 OF TH E ACT, TO REMAND THE MATTER. IF THE TWIN CONDITIONS NAMELY THAT THE ORDER OF AO SOUGHT TO BE REVISED IS ERRONEOUS, AND IT ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE ARE SATISFIED THE CIT CAN REMAND THE MATTER TO THE FILE OF A.O. 36 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T 8. WE FIND THAT THE TRIBUNAL HAS CONSIDERED T HE RELEVANT PRINCIPLES OF LAW IN INTERFERING WITH THE ORDER OF CIT. THE TRIBUNAL FOUND THAT THE ASSESSEE-RESPONDEN T HAD SUFFICIENTLY EXPLAINED THE RETRACTION OF HIS STATEM ENT GIVEN ON 12.12.1994. IT ALSO FOUND THAT THE CIT COULD NOT POINT OUT AS TO WHETHER THE AO HAD FAILED TO WORK OUT THE AMOUNT OF CONCEALED INCOME CORRECTLY. THE AO HAD MA DE ADDITIONS ON ESTIMATE BASIS FOR ALL THE ASSESSMENT YEARS. THERE WAS NO MATERIAL INDICATING SUPPRESSION OF REC EIPTS. 9. WE FIND THAT THE TRIBUNAL HAS NOT COMMITT ED ANY ERROR OF LAW IN SETTING ASIDE THE ORDER OF CIT PASS ED UNDER SECTION 263 OF INCOME TAX ACT FOR THE ASSESSMENT YE AR 1991-92 TO 1995-96. 10. THE QUESTION OF LAW IS DECIDED AGAINST THE REVENUE AND IN FAVOUR OF ASSESSEE. THE INCOME TAX APPEALS ARE ACCORDINGLY DISMISSED. 6.3 THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE O F ABHA BANSAL HAS DEALT WITH THIS ISSUE IN PARA NO. 7 OF TH E ORDER. THERE ALSO THE ASSESSEE HAD RELIED UPON THE DECISION OF T HE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. DR. ASH OK KUMAR (SUPRA). THE CO-ORDINATE BENCH HAS REPRODUCED THER EIN LIST OF DECISIONS OF THE CO-ORDINATE BENCH, WHICH HAVE FOLLO WED THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT AND HE LD THAT AN ASSESSMENT ORDER, WHICH HAS BEEN APPROVED BY THE JOI NT COMMISSIONER OF INCOME TAX UNDER SECTION 153D OF TH E ACT CANNOT BE REVISED BY THE LD. PR. CIT UNDER SECTION 263 OF THE ACT. 37 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T 6.4 WE FIND THAT THE HONBLE PUNJAB & HA RYANA HIGH COURT HAD AN OCCASION TO CONSIDER THE ISSUE IN OSHO FORGI NG LTD. VS. CIT , 410 ITA 198 (PUNJAB & HARYANA). THE FOLLOWING ISSUE WERE THEREFORE THE HONBLE COURTS CONSIDERATION:- ''( I ) WHETHER THE LD. TRIBUNAL COMMITTED GROSS ILLEGALITY IN REMANDING THE MATTER BACK TO THE CIT TO DECIDE I T ON MERIT THOUGH NO MANDATORY PRIOR APPROVAL/PERMISSION WAS OBTAINED BY THE ASSESSING OFFICER UNDER SECTION 153D? ( II ) WHETHER IN THE ABSENCE OF PRIOR APPROVAL/PERMISSION THE ASSESSMENT ORDER PASSED BY ASSESSING OFFICER IS NULL AND VOID? ( III ) WHETHER IN FACT AND CIRCUMSTANCES OF THE CASE, THE ACTION OF THE LD. TRIBUNAL PASSING THE IMPUGNED ORDER DATED 02.01.2017 ANNEXURE-A7 IS LEGALLY SUSTAINABLE IN THE EYES OF LAW?'' 6. 5 IN THAT CASE THE LD. CIT PASSED AN ORDER UNDER SECTION 263 OF THE ACT IN THE CASE OF SEARCH ASSESSMENT PAS SED UNDER SECTION 153A OF THE INCOME TAX ACT (IT IS MANDATORY TO PASS ANY ORDER UNDER SECTION 153A/153C WITH THE APPROVAL OF T HE JOINT COMMISSIONER OF INCOME TAX AS PROVIDED U/S 153D OF THE ACT ). IN PARA NOS. 8 -11 THE HONBLE HIGH COURT HELD AS UNDE R:- 8. ALTHOUGH THE ASSESSEE CLAIMS THAT THREE SUBSTANTIAL QUESTIONS OF LAW ARISE, IN FACT THE ISS UE INVOLVED IN THE PRESENT APPEAL IS: ''WHETHER UNDER SECTION 153D OF THE ACT THERE IS A REQUIREMENT OF FRESH APPROVAL FOR COMPLYING WITH TH E 38 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T REMAND DIRECTIONS UNDER SECTION 263, IN A CASE WHERE THE ASSESSMENT UNDER SECTION 153A OF THE ACT WAS ORIGINALLY FRAMED AFTER COMPLIANCE OF SECTION 153D OF THE ACT?'' 9. WE ANSWER THE QUESTION AGAINST THE ASSESSEE. SECTION 153D IS AS UNDER: ''153D. NO ORDER OF ASSESSMENT OR REASSESSMENT SHAL L BE PASSED BY AN ASSESSING OFFICER BELOW THE RANK OF JOINT COMMISSIONER IN RESPECT OF EACH ASSESSMENT YEAR REFERRED TO IN CLAUSE (B) OF (SUB- SECTION (1) OF) SECTION 153A OR THE ASSESSMENT YEAR REFERRED TO IN CLAUSE (B) OF SUB-SECTION (1) OF SECTION 153B, EXCE PT WITH THE PRIOR APPROVAL OF THE JOINT COMMISSIONER:) '' 10. AS PER SECTION 153-D, NO ORDER OF ASSESSMENT UNDER SECTIONS 153A AND 153B CAN BE PASSED BY THE A.O. WITHOUT PRIOR APPROVAL OF THE JOINT COMMISSIONER. 1 1. THE ASSESSMENT ORDER DATED 24.12.2010 WAS PASSED UNDER SECTION 153A READ WITH SECTION 143(3) OF THE ACT AFTER OBTAINING APPROVAL UNDER SECTION 153D OF THE ACT. THE APPROVAL WAS VIDE LETTER DATED 24.12.2010. THEREAFTER THE SAID ORDER WAS TAKEN UP IN REVISION. THE ORDER WAS SET ASIDE AND THE MATTER WAS REMITTED TO THE A.O. TO PASS A FRESH ASSESSMENT ORDER. THE APPROVAL UNDER SECTION 153D WAS NOT SET ASIDE. THERE WAS NO QUESTION THEREUPON OF THE A.O. SEEKING FRESH APPROVAL UNDER SECTION 153D. THE ORDER DATED 18.03.2014 PASSED BY THE A.O. WAS IN COMPLIANCE WITH THE REMAND DIRECTIONS. IT WAS NOT A CASE OF THE A.O. ASSUMING JURISDICTION UNDER SECTIO N 153A OF THE ACT. THAT STAGE WAS OVER WHEN ORDER DATED 24.12.2010 WAS PASSED. THE A.O. WAS COMPLYING WITH THE DIRECTIONS OF THE REVISIONAL AUTHORITY. SECTION 153D OF THE ACT IS ONLY APPLICAB LE FOR PASSING AN ASSESSMENT ORDER OR RE-ASSESSMENT 39 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T ORDER. THERE IS NO REQUIREMENT UNDER SECTION 153D FOR PRIOR APPROVAL FOR COMPLYING THE REMAND DIRECTIONS. THE APPROVAL DATED 24.12.2010 IN FACT WAS TO THE EFFECT THAT ASSESSMENT OF ASSESSEE CAN B E PASSED UNDER SECTION 153A. REMAND DIRECTION WAS THAT THE ASSESSMENT UNDER SECTION 153A SHOULD BE FRAMED AGAIN. THERE WAS NO OCCASION OF FRESH ASSUMPTION OF JURISDICTION TO FRAME ASSESSMENT. RATHER IT WAS IN CONTINUATION OF EARLIER PROCEEDING WHICH WAS DULY APPROVED. EVEN OTHERWISE THERE IS NO QUESTION OF SEEKING AN APPROVAL FROM THE JOINT COMMISSIONER OR THE ADDITIONAL COMMISSIONER OFFICER LOWER IN RANK THAN COMMISSIONER FOR COMPLYING WITH THE DIRECTIONS GIVEN BY THE COMMISSIONER. 6.6 THUS IT EMERGES THAT :- I. ASSESSMENT ORDER DATED 24 TH DECEMBER, 2010 WAS PASSED UNDER SECTION 153A READ WITH SECTION 143(3) OF THE ACT AFTER OBTAINING APPROVAL UNDER SECTION 153D OF THE ACT. THE APPROVAL WAS VIDE LETTER DATED DECEMBER 24, 2010. THEREAFTER THE SAID ORDER WAS TAKEN UP IN REVISION; II. THE APPROVAL UNDER SECTION 153D WAS NOT SET ASIDE; 40 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T III. SECTION 153D OF THE ACT IS ONLY APPLICABLE FOR PASSING AN ASSESSMENT ORDER OR RE-ASSESSMENT ORDER; IV. EVEN OTHERWISE THERE IS NO QUESTION OF SEEKING AN APPROVAL FROM THE JOINT COMMISSIONER OR THE ADDL. COMMISSIONER, AN OFFICER LOWER IN RANK THAN THE COMMISSIONER FOR COMPLYING WITH THE DIRECTION GIVEN BY THE COMMISSIONER. 6.7 THEREAFTER, IN PARA NO. 14 IT UPHELD THE ASSESSMENT ORDER PASSED UNDER SECTION 263 OF THE ACT FRAMED UNDER SE CTION 143(3) OF THE ACT PURSUANT TO THE DIRECTION OF THE COMMISSION ER WITHOUT OBTAINING THE APPROVAL OF THE JOINT COMMISSIONER ON CE AGAIN UNDER SECTION 153D OF THE ACT. 6.8 SO THE PRINCIPAL THAT EMERGES IS THAT WH EN A HIGHER AUTHORITY IS EXERCISING JURISDICTION I.E. COMMISSIO NER UNDER SECTION 263 OF THE ACT, THE APPROVAL GRANTED BY THE LOWER A UTHORITY UNDER SECTION 153D DOES NOT INFRINGE UPON POWERS OF THE HIGHER AUTHORITY. 41 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T 6.9 IT WAS FURTHER HELD THAT THE APPROVAL OF SECTION 153 D IS ONLY FOR PASSING OF THE ORDER. 6.10 PROVISIONS OF SECTION 263 OF TEH ACT ARE AS UNDER :- REVISION OF ORDERS PREJUDICIAL TO REVENUE. 28A 263. (1) THE 28 [ 28B [PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COMMISSIONER] OR] COMMISS IONER MAY CALL FOR AND EXAMINE 29 THE RECORD 29 OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER 30 PASSED THEREIN BY THE 31 [ASSESSING] OFFICER IS ERRONEOUS 30 IN SO FAR AS 30 IT IS 30 PREJUDICIAL TO THE INTERESTS OF THE REVENUE 30 , HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH I NQUIRY AS HE DEEMS NECESSARY, 30 PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIF YING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT 30 AND DIRECTING A FRESH ASSESSMENT. 32 [ 33 [EXPLANATION 1.]FOR THE REMOVAL OF DOUBTS 34 , IT IS HEREBY DECLARED THAT, FOR THE PURPOSES OF THIS SUB-SECTION , (A) AN ORDER PASSED 35 [ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988] B Y THE ASSESSING OFFICER SHALL INCLUDE (I) AN ORDER OF ASSESSMENT MADE BY THE ASSISTANT CO MMISSIONER 36 [OR DEPUTY COMMISSIONER] OR THE INCOME-TAX OFFICER ON THE BASIS OF THE DIRECTIONS ISSUED BY THE 37 [JOINT] COMMISSIONER UNDER SECTION 144A; (II) AN ORDER MADE BY THE 37 [JOINT] COMMISSIONER IN EXERCISE OF THE POWERS OR IN THE PERFORMANCE OF THE FUNCTIONS OF AN ASSESSING OFFICER CONFERRED ON, OR ASSIGNED TO, HIM UNDER THE ORDERS OR DIRECTIONS ISSUED BY THE BOARD OR BY THE 38 [PRINCIPAL CHIEF COMMISSIONER OR] CHIEF COMMISSIONER OR 38 [PRINCIPAL DIRECTOR GENERAL OR] DIRECTOR GENERAL OR 38 [PRINCIPAL COMMISSIONER OR] COMMISSIONER AUTHORISED BY THE BOARD IN THIS BEHALF UNDER SECTION 120; 42 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T (B) 39 'RECORD' 40 [SHALL INCLUDE AND SHALL BE DEEMED ALWAYS TO HAVE I NCLUDED] ALL RECORDS RELATING TO ANY PROCEEDING UNDER THIS A CT AVAILABLE AT THE TIME OF EXAMINATION BY THE 38 [PRINCIPAL 40A [CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL] COMMISSIONER OR] COMMISS IONER; (C) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER 41 OF ANY APPEAL 42 [FILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988 41 ], THE POWERS OF THE * 43 [PRINCIPAL COMMISSIONER OR] COMMISSIONER UNDER THIS SUB-SECTION SHALL EXTEND 42 [AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED] TO SU CH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN S UCH APPEAL.] 44 [EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, I T IS HEREBY DECLARED THAT AN ORDER PASSED BY THE ASSESSING OFFI CER SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICI AL TO THE INTERESTS OF THE REVENUE, IF, IN THE OPINION OF THE PRINCIPAL 45 [CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL] CO MMISSIONER OR COMMISSIONER, (A) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE; (B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQUIRING INTO THE CLAIM; (C) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH ANY ORDER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119; OR (D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WIT H ANY DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE, RENDERED BY THE JURISD ICTIONAL HIGH COURT OR SUPREME COURT IN THE CASE OF THE ASSESSEE OR ANY OT HER PERSON.] 46 [(2) NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) A FTER THE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHI CH THE ORDER SOUGHT TO BE REVISED WAS PASSED.] (3) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTI ON (2), AN ORDER IN REVISION UNDER THIS SECTION MAY BE PASSED AT ANY TI ME IN THE CASE OF AN ORDER WHICH HAS BEEN PASSED IN CONSEQUENCE OF, OR T O GIVE EFFECT TO, ANY FINDING OR DIRECTION CONTAINED IN AN ORDER OF T HE APPELLATE TRIBUNAL, 47 [NATIONAL TAX TRIBUNAL,] THE HIGH COURT OR THE SUPR EME COURT. EXPLANATION.IN COMPUTING THE PERIOD OF LIMITATION FOR THE PURPOSES OF SUB-SECTION (2), THE TIME TAKEN IN GIVING AN OPPORT UNITY TO THE ASSESSEE TO BE REHEARD UNDER THE PROVISO TO SECTION 129 AND ANY PERIOD DURING WHICH ANY PROCEEDING UNDER THIS SECTION IS STAYED B Y AN ORDER OR INJUNCTION OF ANY COURT SHALL BE EXCLUDED. 43 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T 6.11 ON A PLAIN READING OF THE SECTION, WE DO N OT FIND THAT THERE IS ANY FETTERS ON THE POWERS OF PCIT OR CIT FOR R EVISING ANY ORDER PASSED BY THE AO EXCEPT AS PROVIDED IN EXPLANATIO N 1(C) OF THE SECTION. 6.12 HOWEVER, HERE THE ARGUMENT OF THE ASSESSE E IS THAT POWERS GRANTED TO THE PCIT AND CIT U/S 263 BECOMES OTIOSE IF THE AUTHORITY BELOW THE RANK OF PCIT/ CIT I.E JOINT COMM ISSIONER OF INCOME TAX, HAS APPROVED THE ORDER U/S 153D OF THE ACT. THE NATURAL COROLLARY OF THE ARGUMENT IS THAT IF THE LOWER AUTHORITY, U/S 153D, HAS APPROVED THE ORDER, THE HIGHER AUTHOR ITY I.E., PCIT AND CIT LOSE THEIR POWER TO REVISE SUCH ORDERS. . IT IS OBVIOUS AND AS GLARING AS THE DAY LIGHT THAT PR. COMMISSIONER O F INCOME TAX IS WAY HIGH ABOVE THE JOINT COMMISSIONER OF INCOME TAX. REFERENCE TO SECTION 116 OF THE INCOME TAX ACT, WHERE THE INCOME TAX AUTHORITIES IN THEIR HIERARCHIAL ORDER ARE LISTED, CLEARS ANY DOUBT ABOUT IT. 44 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T 6.13 THE HONBLE DELHI HIGH COURT IN NIIT LTD. VS. UNION OF INDIA IN WPC NO. 172179/2009 DATED 11 TH DECEMBER, 2009 IN PARA NO. 20 HAS CATEGORICALLY HELD THAT:- 20. THE LEGAL POSITION WHICH CANNOT BE DISPUTED IS THAT WHEN A PARTICULAR AUTHORITY IS VESTED WITH THE POWE R TO DISCHARGE STATUTORY FUNCTION, LIKE THE COMMISSIONER WHO IS EMPOWERED TO PASS ORDERS UNDER SECTION 263 OF THE A CT, IT IS THAT AUTHORITY WHICH IS TO APPLY ITS INDEPENDENT MIND AND ARRIVE AT ITS OWN CONCLUSION WITHOUT BEING INFL UENCED BY ANY OTHER AUTHORITY, MUCH LESS THE HIGHER AUTHOR ITY. UNFETTERED DISCRETION LIES IN THE COMMISSIONER OF I NCOME TAX TO PASS ORDERS UNDER SECTION 263 OF THE ACT. HE IS SUPPOSED TO EXAMINE THE RECORDS PRODUCED BEFORE HIM TO ARRIVE AT A CONCLUSION WHETHER THE ASSESSMENT ORDER PASSED BY THE AO SUFFERS FROM INFIRMITIES AND NEEDS TO BE REVISED UNDER SECTION 263 OF THE ACT. THE PARAMETER S WHICH ARE LAID DOWN IN SECTION 263 OF THE ACT NEED TO BE FULFILLED IN EXERCISING SUCH A DISCRETION. IT IS TH E COMMISSIONER WHO HAS TO SATISFY HIMSELF, ON THE BAS IS OF AVAILABLE RECORDS, THAT IN A GIVEN CASE THE CONDITI ONS STIPULATED UNDER SECTION 263 OF THE ACT ARE SATISFI ED. IN ARRIVING AT THIS CONCLUSION, HE IS NOT TO BE CONTRO LLED EVEN BY A HIGHER AUTHORITY. LIKEWISE, THE HIGHER AUTHORI TY IS NOT TO INTERFERE WITH THE INDEPENDENCE OF HIS UNFETTERE D DISCRETION WHICH IS STATUTORILY CONFERRED UPON THE COMMISSIONER. 6.14 THUS, EVEN THE AUTHORITY ABOVE PCIT AND CIT CANNO T DEPRIVE THE POWERS OF THE REVISION AND THUS THERE I S NO REASON THAT LOWER AUTHORITY EXERCISING POWERS GRANTED TO IT CAN PREVENT 45 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T THE PCIT OR THE CIT TO EXERCISE REVISIONARY POWERS. THEREFORE, IT IS APPARENT THAT NONE OF THE LOWER AUTHORITIES OR E VEN A SUPERIOR AUTHORITY CANNOT PUT SPOKES IN EXERCISING THE POWER OF THE PR. COMMISSIONER OF INCOME TAX. SUCH IS THE MANDATE OF THE HONBLE DELHI HIGH COURT. 6.15 NOW WE COME TO THE DECISION OF THE HON BLE SUPREME COURT IN T.N. CIVIL SUPPLIES CORPN. LTD VS COMMISSIONER OF INCOME-TAX [2003] 260 ITR 82 (SC) WHEREIN THE ASSESSING OFFICER PASSED AN ORDER ON THE DIRECTION OF THE INSPECTING ASSISTANT COMMISSIONER UNDER SECTION 144B OF THE ACT, WHICH WAS SUBJECT TO REVISION UNDER SECTION 263 OF THE ACT. THE HONB LE SUPREME COURT IN THAT PARTICULAR CASE HAS CATEGORICALLY HEL D THAT THE ORDERS ARE TO BE REVISED ARE ORDERS PASSED BY THE I NCOME TAX OFFICER. HONBLE SUPREME COURT FURTHER HELD THAT P ROVISIONS OF SECTION 263 DID NOT EXCLUDE ORDERS PASSED BY THE A SSESSING OFFICER ON THE DIRECTION OF A SUPERIOR AUTHORITY EI THER UNDER SECTION 144A OR SECTION 144B OF THE ACT. THE HON BLE SUPREME COURT HELD THAT :- 46 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T 2. THE POWER TO REVISE ORDERS OF THE INCOME-TAX OF FICER UNDER SECTION 263 OF THE INCOME-TAX ACT, 1961 WAS SOUGHT TO BE LIMITED BY THE APPELLANT-ASSESSEE BY CONTENDING THAT THE PHRASE 'ORDER PASSED BY THE INCOME-TAX OFFICER' IN SECTION 263 EXCLUDED THOSE ORDERS PASSED BY THE INCOME-TAX OFFICER PURSUANT TO THE DIRECTIONS OF THE INSPECTING ASSISTANT COMMISSI ONER UNDER SECTION 144B WHICH WAS THEN INCLUDED IN THE ACT. 3. THE HIGH COURT IN ITS DECISION HAS FOLLOWED ITS EARLIER DECISION IN WHICH IT HAD REFERRED TO AND RELIED UPO N THE REASONING OF SEVERAL OTHER HIGH COURTS ON THE SAME ISSUE TO NEGATIVE THE CONTENTIONS OF THE ASSESSEE. GIVEN THE UNIFORMITY OF INTERPRETATION BY THE SEVER AL HIGH COURTS, IT WOULD NOT BE APPROPRIATE TO INTERFE RE WITH THE DECISION OF THE HIGH COURT. 4. IN ANY EVENT WE ARE OF THE VIEW THAT HAVING REGA RD TO THE SUBSEQUENT AMENDMENTS TO THE ACT ISSUED FROM TIME TO TIME THERE WAS NO SCOPE FOR LIMITING THE PH RASE 'ORDER PASSED BY THE INCOME-TAX OFFICER' IN SECTION 263 TO EXCLUDE ORDERS PASSED BY THE INCOME-TAX OFFICER ON THE DIRECTIONS OF A SUPERIOR AUTHORITY EITHER UNDER SECTION 144A OR 144B. 6.16 CATEGORICALLY HERE THE ORDERS ARE NOT P ASSED EVEN UNDER THE INSTRUCTIONS OF THE SUPERIOR AUTHORITY OR UNDER THE DIRECTION OF THE SUPERIOR AUTHORITY, BUT MERELY AN APPROVAL WAS GRANTED BY THE JOINT COMMISSIONER OF INCOME TAX UND ER SECTION 153D OF THE ACT TO PASS THE ORDERS. PROVISIONS OF SECTION 153D SPEAK ABOUT PRIOR APPROVAL FOR ASSESSMENT IN THE CASE OF 47 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T SEARCH. THEY ALSO PROVIDE FOR OBTAINING THE PRIOR APPROVAL OF THE JOINT COMMISSIONER FOR MERELY PASSING AN ORDER. TH EREFORE, THE DECISION OF THE HONBLE SUPREME COURT CLEARLY LAYS DOWN THAT ANY ORDER PASSED BY THE ASSESSING OFFICER CAN BE REVISED UNDER SECTION 263 OF THE ACT IRRESPECTIVE OF THE FACT THA T ANY AUTHORITY HAS GRANTED ANY DIRECTION TO THE ASSESSING OFFICER. 6.17 THEREFORE, NATURAL COROLLARY WOULD BE SHOW THAT ALL ORDERS OF SEARCH AND SEIZURE PASSED UNDER SECTION 1 53A OR UNDER SECTION 153C OF THE ACT ARE REQUIRED TO BE PA SSED AFTER PRIOR APPROVAL OF THE JOINT COMMISSIONER EXCEPT AS PROVIDED UNDER SECTION 154BA(12). THEREFORE, IF THE ARGUMEN T OF THE LD. AR IS TO BE ACCEPTED THEN IN SUCH CASES WHERE THE AS SESSMENT HAS BEEN FRAMED UNDER SECTION 153A OR SECTION 153C, THE SAME WILL GO OUT OF THE AMBIT OF THE PROVISIONS OF SECTIO N 263 OF THE ACT AND SUCH A VIEW IS DIRECTLY CONTRARY TO THE DECISION OF THE HONBLE SUPREME COURT IN T .N .CIVIL CORPORATION VS. CIT 26 0 ITR 82, HONBLE PUNJAB & HARYANA HIGH COURT OSHO FORGING LT D. VS. CIT 48 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T (SUPRA) AND HONBLE DELHI HIGH COURT IN NIIT LTD. V S. UNION OF INDIA (SUPRA). 6.18 THE POWER OF THE COMMISSIONER UNDER SECT ION 263 OF THE ACT IS IN THE NATURE OF SUPERVISORY JURISDICTI ON. THIS POWER IS GRANTED TO CORRECT AN ERROR, WHICH IS PREJUDICIAL TO THE INTEREST OF THE REVENUE IN THE ORDER OF THE ASSESSING OFFICE R, EVEN IF IT IS APPROVED BY THE JOINT COMMISSIONER, WHO IS ALSO FALL ING BELOW THE RANK OF THE PR. COMMISSIONER. IF THE ARGUMENT OF THE LD. AR IS ACCEPTED THEN THE SUPERVISORY AUTHORITY OF TH E PR. COMMISSIONER GRANTED UNDER THE ACT IS HAMPERED. 6.19 THEREFORE, ON PROVISIONS OF SECTION 263 OF THE ACT GIVE UN-FETTERED RIGHT TO THE COMMISSIONER OF INCOM E TAX TO REVISE ANY ORDER PASSED BY THE ASSESSING OFFICER. WHATEVER WAS TO BE EXCLUDED BY THE LAW HAS ALREADY BEEN PROVIDED UNDER THAT SECTION AND THE ONLY EXCEPTION ARE THE ISSUES DECI DED AND CONSIDERED IN THE APPELLATE ORDERS. THEREFORE, TH E REASONING OF THE ARGUMENTS ADVANCED BY THE LD. AR ON THIS LINE A LSO FAILS AND WE DISMISS THE SAME. 49 ITA NO.533/DEL/2021 KAPIL MEHTA VS. PCI T 6.20 THEREFORE, IN VIEW OF THE ABOVE DISCUSS ION, WE HOLD THAT THE IMPUGNED ORDER PASSED U/S 263 OF THE ACT I S ILLEGALLY SUSTAINABLE AND NO INTERFERENCE IS CALLED FOR. 7.0 IN THE FINAL RESULT, THE APPEAL OF TH E ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED ON 11 TH OCTOBER, 2021. SD/- SD/- (PRASHANT MAHARISHI) (SUDHANSHU SRIVASTAVA ) ACCOUNTANT MEMBER JUDICIAL MEMB ER DATED: 11/10/2021 PK/PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI