Sadguru Narendra Maharaj Sansthan, Ratnagiri V. ITO wd-II Kolhapur, Kolhapur

ITA 624/PUN/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9786 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 16-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH VERMA
• Assessee Lawyers: ARVIND SHONDE
• Keywords: Charitable institution; Opportunity of being heard; Assessment record; Revenue expenditure; Capital expenditure
• Section: 148; 6; 263; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER, AND SHRI R.S.PADVEKAR, JUDICIAL MEMBER. ITA.NO.624/PN/2011 (ASSTT. YEAR : 2006-07) SADGURU NARENDRA MAHARAJ SANSTHAN, AT POST NANIJ, TQ. RATNAGIRI, DIST. RATNAGIRI. .. APPELLANT VS. ITO, WARD-II, KOLHAPUR. .. RESPONDENT ASSESSEE BY : SHRI ARVIND SHONDE DEPARTMENT BY : SHRI MUKESH VERMA DATE OF HEARING : 12.10.2012 DATE OF PRONOUNCEMENT : 10.12.2012 ORDER PER R.S.PADVEKAR, JM : THIS APPEAL IS FILED BY THE ASSESSEE CHALLENGING T HE IMPUGNED ORDER OF THE LD. CIT-II, KOLHAPUR, PASSED U/S.263(1) OF THE I.T.ACT, 1961, DATED 29.03.2011 FOR THE A.Y. 2006-07. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS: 1. THE LEARNED CIT ERRED BOTH ON FACTS AND IN LAW IN I NVOKING THE PROVISIONS OF SECTION 263 WITHOUT SPECIFICALLY ESTABLISHING ANY ERROR IN THE ASSESSMENT ORDER OR A NY PREJUDICE TO THE INTEREST OF REVENUE. 2. THE LEARNED CIT ERRED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE INCOME TAX ACT IGNORING THE FACTS THAT O RDER SOUGHT TO BE REVISED WAS SUBJECT MATTER OF REASSESS MENT PROCEEDINGS U/S.148 OF THE ACT. 2. THE ASSESSEE IS A PUBLIC TRUST. FOR THE A.Y. 20 06-07, ASSESSEE TRUST FILED THE RETURN OF INCOME ON 18.09. 2006 DECLARING TOTAL DEFICIT OF RS.46,31,166/-. THE ASS ESSEES CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS CO MPLETED U/S.143(3) ACCEPTING THE DEFICIT DECLARED BY THE AS SESSEE IN THE 2 RETURN OF INCOME VIDE ORDER DATED 24.12.2008. SUBS EQUENTLY, LD. CIT-II, KOLHAPUR, BY EXERCISING HER POWERS U/S. 263 OF THE ACT, ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE PROPO SING TO REVISE ASSESSMENT ORDER PASSED BY THE ASSESSING OFF ICER U/S.143(3) BY GIVING THE REASON THAT THE SAID ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF THE REVENUE. THE REASONS GIVEN IN THE SHOW CAUSE NOTIC E BY LD. CIT-II, KOLHAPUR, ARE AS UNDER: A) IT IS NOTICED FROM THE RECORDS THAT, DURING THE YEA R, THE ASSESSEE-TRUST HAS RECEIVED DONATIONS OF .3,18,02,585/- WHICH WERE CLAIMED AS EXEMPT BEING DONATIONS TOWARD S CORPUS OF THE TRUST. HOWEVER, FROM THE RECORDS, IT IS SEEN THAT THERE ARE NO SUCH DIRECTIONS FROM THE DONORS. THE AO, IN THE ASSESSMENT ORDER U/S.143(3) DATED 24/12/2008 , HAS ALSO ACCEPTED THE SAME WITHOUT EXAMINING THE GENUINENESS OF THE DONATIONS, CREDITWORTHINESS OF T HE DONORS, AS WELL AS THE PURPOSE FOR WHICH THE DONATI ON WAS MADE. THIS ASPECT REQUIRED PROPER VERIFICATION DUR ING SCRUTINY, BEFORE ALLOWING THE CLAIM. B) FROM THE BALANCE SHEET IT IS SEEN THAT, AN AMOUNT O F .13,55,02,473/- IS REFLECTED AGAINST TRUST FUNDS O R IMMOVABLE PROPERTIES, I.E., CORPUS OF THE TRUST. F URTHER, FROM ANNEXURE-9 ENCLOSED ALONG WITH THE BALANCE SHE ET, IT IS SEEN THAT THIS AMOUNT CONSISTS ONLY OF SPECIFIC EARMARKED FUNDS WHICH CANNOT BE SAID TO BE CORPU S. IT IS ALSO SEEN THAT SUCH EARMARKED FUNDS ARE INCREASE D DURING THE YEAR BY .3,18,02,585/-. THIS AMOUNT HAS NEITHER BEEN OFFERED FOR TAXATION, NOR ADDED BY THE AO. THIS ASPECT WAS NOT EXAMINED BY THE AO DURING THE C OURSE OF ASSESSMENT PROCEEDINGS. C) OUT OF TOTAL SALARY DEBITED TO INCOME AND EXPENDITU RE ACCOUNT OF .10,26,708/-, SALARY OF .3,20,000/- IS PAID BY THE TRUST TO THE CHIEF TRUSTEE FOR HIS DISCOURSES/L ECTURES. THE TRUST HAS ALSO PAID .89,450/- TOWARDS MSEB BILLS OF THE CHIEF TRUSTEE. THE CHIEF TRUSTEE HAS ALSO BEEN GIVEN VARIOUS AMOUNTS OUT OF EXPENDITURE ON VARIOUS PROJE CTS. THIS ASPECT HAS REMAINED TO BE VERIFIED BY THE AO W ITH REFERENCE TO THE VIOLATION OF SECTION 13(1)(C) OF T HE ACT. 3. ASSESSEE RESISTED THE ACTION OF THE LD. CIT TO R EVISE ASSESSMENT ORDER FOR THE A.Y. 2006-07 BY INVOKING P ROVISIONS OF SECTION 263 OF THE ACT, BUT WITHOUT SUCCESS. TH E LD. CIT-II, KOLHAPUR, PASSED ORDER U/S.263(1) OF THE ACT SETTIN G ASIDE THE ASSESSMENT ORDER PASSED U/S.143(3) DATED 24.12.2008 WITH DIRECTION TO THE ASSESSING OFFICER TO MAKE THE ASSE SSMENT 3 AFRESH AFTER AFFORDING SUFFICIENT OPPORTUNITY TO TH E ASSESSEE. THE REASONS GIVEN BY THE LD. CIT FOR SETTING ASIDE THE ASSESSMENT ORDER ARE AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT AND TH E PRESENT PROCEEDINGS. THE ASSESSEE HAS MAINLY AVERR ED THAT THE FACTS WERE EXPLAINED TO THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AND CONSIDERING THESE SUBMISSION THE AO HAS FORMED OPINION THAT THESE DONATIONS ARE NOTHING BUT CORPUS OF THE TRUST, AND THAT HE HAS COME TO CONCLUSION THAT THE PAYMENTS TO CHI EF TRUSTEE WERE NOT VIOLATIVE OF SEC.13 OF THE ACT, AN D THE ASSESSMENT ORDER CANNOT BE BRANDED TO BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. 4.1. IN THIS ASPECT, EVEN A CURSORY EXAMINATION OF THE RELEVANT ASSESSMENT ORDER SUGGEST THAT THE AO HAS N OT AT ALL CONSIDERED ANY OF THE ISSUES MENTIONED IN PARA 2 ABOVE. IT IS FURTHER SEEN THAT THE AO HAS NOT AT A LL EXAMINED THE MATTER WITH REFERENCE TO VIOLATION OF PROVISIONS OF SEC.13 OF THE ACT. THUS, IT IS CLEAR THAT THE AO HAS NOT ARRIVED AT ONE OF THE POSSIBLE OPINION IN T HE MATTER, WHICH IS SUSTAINABLE IN LAW, AS IS CLAIMED BY THE ASSESSEE. WITHOUT PREJUDICE TO THE GENERALITY OF T HE DISCUSSION BROUGHT OUT ABOVE, THIS ASPECT HAS ALSO TO BE DULY TAKEN NOTE OF, THAT THERE IS NOTHING IN THE AC T WHICH FORBIDS THE COMMISSIONER FROM EXAMINING/RE-EXAMININ G THE ISSUES THAT HAVE BEEN WRONGLY/INADEQUATELY DEAL T WITH, BY THE AO. 4.2. FURTHER, THE ASSESSEE HAS SOUGHT TO RELY ON TH E DECISION OF THE HON. DELHI HIGH COURT IN THE CASE O F JAIPUR GOLDEN CHARITABLE CLINICAL LABORATORY TRUST (SUPRA) . IN THIS RESPECT IT IS PERTINENT TO NOTE THAT THE AFORE SAID DECISION OF THE HON. DELHI HIGH COURT HAS BEEN DELI VERED WITH REFERENCE TO A CASE WHERE A HOSPITAL RUN BY A TRUST WAS RECEIVING DONATIONS FROM THE CONSULTING DOCTORS AS PER THEIR OPTION EXERCISED UNDER AN AGREEMENT TO THE EF FECT THAT IN CASE OF THOSE DOCTORS GIVING DONATIONS, COLLECTI ON CHARGES OF THEIR CONSULTING FEE WILL BE 15%, AS AGA INST 20% IN CASE OF THOSE WHO WILL NOT GIVE DONATIONS. SUCH CLEARLY, ARE NOT THE FACTS OF THE INSTANT CASE. THEREFORE, FOR OBVIOUS REASONS, THE AFORESAID DECISION SERVES NO PURPOSE I N THE ASSESSEES CASE, SINCE BEING DIFFERENTIATED ON FACT S. 4.3. IN THIS RESPECT, I HAVE ALSO CONSIDERED THE ASSESSMENT ORDER DTD. 24-12-2008. ON VERIFICATION, IT IS NOTICED THAT, THE ABOVE ASSESSMENT ORDER SUFFERS WI TH THE FOLLOWING ERRORS: 4 I) THE ASSESSEE WAS IN RECEIPT OF DONATION TO THE TUNE OF .3.18 CRORES DURING THE YEAR. THIS AMOUNT IS NOT OFFERED BY THE ASSESSEE FOR TAXATION, AS THE ASSESS EE CLAIMED THIS AMOUNT EXEMPT AS DONATIONS TOWARDS CORPUS OF THE TRUST. HOWEVER, NO DIRECTIONS FROM T HE DONORS TO THIS EFFECT ARE ON RECORD. THIS ASPECT W AS NOT EXAMINED BY THE AO, AS SEEN FROM QUESTIONNAIRE AND SUBMISSION OF THE ASSESSEE. II) THE ASSESSEE HAS MAINTAINED VARIOUS EARMARKED FUNDS, SUCH AS BUILDING FUND, VEHICLE FUND, RENOVATION FUND, ETC. DURING A.Y. 2006-07 THE ASSESSEE HAS DIRECTLY CREDITED TOTAL AMOUNT OF .31802585/- TO THESE FUND. SAID AMOUNT IS CLAIMED EXEMPT BY THE ASSESSEE TREATING IT AS DONATION TOWARDS CORPUS. THE NAMES OF THE FUNDS ITSELF SHOWS THAT THESE ARE EARMARKED FUNDS AND NOT CORPUS OF THE TRUST. HOWEVER THE ASSESSEE CLAIMED THEM AS CORPUS. THUS, TOTAL AMOUNT OF RS.31802585/- IS NEITHER OFFERED FOR TAXATION BY TH E ASSESSEE NOR ADDED BY THE AO, AND THEREFORE, THE ORDER PASSED IS PREJUDICIAL TO THE INTEREST OF REVE NUE. III) OUT OF TOTAL SALARY DEBITED OF RS.1026708/- SALARY OF RS.320000/- IS PAID BY THE ASSESSEE TO THE CHIEF TRUSTEE, CLAIMED TO BE FOR HIS DISCOURSES/LECTURES. MSEB BILLS OF THE CHIEF TRUSTEE AMOUNTING TO RS.89450/- ARE PAID BY THE ASSESSEE. IT IS ALSO NOTICED THAT THE ASSESSEE HAS PAID VARIOUS AMOUNTS TO THE CHIEF TRUSTEE OUT OF EXPENDITURE ON VARIOUS PROJECT. THUS, THE PROVISIONS OF SECTION 13(1) ARE ATTRACTED IN THIS CASE. AS PER THE DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF CHAMPA CHARITABLE TRUST VS. CIT, THEIR LORDSHIPS HAVE CONFIRMED THAT SECTION 13 HAS OVERRIDING EFFECT ON SECTION 11 AND 12 (214 ITR 764). IV) THE ASSESSEE HAS NOT GIVEN ANY NOTICE IN FORM NO.10 UNDER RULE 17 IS THE AO IN WRITING BY THE ASSESSEE. THIS IS CONTRAVENTION OF THE PROVISION OF SECTION 1 1(2). 4.4. IN VIEW OF THE ABOVE THE ORDER U/S.143(3) DT. 24.12.2008 IS ERRONEOUS IN SO FAR AS IT IS PREJUDIC IAL TO THE INTEREST OF REVENUE. PRIMARILY IT IS A WELL SETTLED POSITION OF LAW THAT NON-VERIFICATION OF FACTS MATERIAL TO THE ASSESSMENT OF INCOME CAUSES PREJUDICE TO THE INTERE ST OF REVENUE. IN THE PRESENT CASE NO VERIFICATION, WHAT SOEVER, SEEMS TO HAVE BEEN DONE AS PER RECORDS. IN THE CAS E OF RAMPYARI DEVI SARAOGI VS. CIT (1969) 67 ITR 84 (SC) , THE HONBLE APEX COURT WAS PRESENTED WITH SIMILAR FACTS WHEREIN THE AO HAD DONE NO VERIFICATION BEFORE ACCE PTING THE CLAIM OF THE ASSESSEE. IN THIS CASE THE HONBL E SUPREME COURT HAS HELD THAT THE ORDER PASSED WAS CL EARLY ERRONEOUS. 5 4.5. HOWEVER, BEFORE ARRIVING AT A DEFINITE ADVERSE FINDING, THE ASSESSEE IS REQUIRED TO BE GIVEN AN OPPORTUNITY TO ADDUCE EVIDENCE FOR ITS CLAIM THAT T HE INCOME OFFERED IS PROPER AND THE EXPENSES CLAIMED A RE ALLOWABLE TO IT. HENCE TO ENSURE THAT THE ASSESSEE IS GIVEN PROPER OPPORTUNITY OF BEING HEARD AND FOR SUBSTANTI ATING ITS CLAIM IT WOULD BE JUST AND PROPER TO SET ASIDE THE CASE FOR DENOVO EXAMINATION OF THE FACTS. IN THIS REGAR D, RELIANCE IS PLACED ON THE CASE RAMPYARI DEVI SARAOG I VS. CIT (1969) 67 ITR 84(SC) REFERRED TO ABOVE. THE AP EX COURT HELD THAT SINCE THE ASSESSEE WAS GETTING AN OPPORTU NITY OF BEING HEARD, NO PREJUDICE IS CAUSED TO THE ASSESSEE IF THE ORDER IS SET ASIDE. THE AO IS HEREBY DIRECTED TO R EASSESS THE CASE AND EXAMINE THE EVIDENCE IN PROPER PERSPEC TIVE OF PROVISIONS OF ACT BEFORE COMING TO ANY CONCLUSION. 4.6. SINCE NO ADVERSE FINDING IS BEING GIVEN IN THI S CASE, THE ASSESSEE SHOULD NOT HAVE ANY GRIEVANCE WHATSOEV ER. THE ASSESSMENT FRAMED BY THE AO IS SET ASIDE FOR TH E PURPOSE OF PROPER VERIFICATION SO AS TO REACH TO A PROPER CONCLUSION AND THIS SHOULD NOT BE CONSIDERED AS ADV ERSE FINDING OR A DECISION PREJUDICIAL TO THE ASSESSEE A T THIS STAGE. LET THE AO VERIFY THE FACTS PROPERLY IN THE LIGHT OF THE SUBMISSIONS MADE BY THE ASSESSEE. 4. NOW THE ASSESSEE BEING AGGRIEVED BY THE ORDER OF THE LD. CIT IS IN APPEAL BEFORE US. LD. COUNSEL VEHEMENTLY ARGUED THAT THE POWER EXERCISED BY THE LD. CIT U/S.263 ITS ELF IS AN ERRONEOUS ONE. HE SUBMITS THAT IN THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER MADE ENQUIRIES ON ALL THE ASPECTS WHICH ARE MADE THE SUBJECT MATTER OF THE RE VISION BY THE LD. CIT U/S.263 OF THE ACT. HE SUBMITS THAT IF THE ASSESSING OFFICER HAS NOT DISCUSSED ANYTHING IN THE ORDER FOR THAT ASSESSEE CANNOT BE HELD RESPONSIBLE. LD. COUN SEL REFERRED TO PAGE NO.171 TO 177 OF THE PAPER BOOK WH ICH ARE THE COPIES OF THE ORDER SHEET IN THE ASSESSMENT PROCEED INGS OF THE ASSESSEE. HE SUBMITS THAT ON 21.10.2008 THE ASSESS ING OFFICER ASKED THE ASSESSEE TO FILE THE MAXIMUM DETA ILS INCLUDING THE PAYMENT MADE TO THE MANAGING TRUSTEE OF RS.3,20,000/-, DETAILS OF DONATIONS RECEIVED ABOVE RS.5,000/-, DETAILS OF AMOUNTS PAID ON FLOOD RELIEF, DETAILS OF THE DEVELOPMENT EXPENDITURE, ETC. HE ALSO TOOK US TO T HE LAST ITEM, I.E., ITEM NO.14, ON THE COPY OF THE ORDER SH EET DATED 6 21.10.2008 (PAGE NO.172) AND SUBMITS THAT ASSESSING OFFICER HAS ASKED FOR DETAILS OF THE ADDITIONS TO THE BUILD ING OF RS.42.99 LAKHS, JANJAGRUTI EDUCATION FUND, HOSPITAL FUND, EMERGENCY RELIEF FUND, ALL VOUCHERS, ETC. HE SUBMI TS THAT ON 3 RD DECEMBER, 2008, THE AUTHORISED REPRESENTATIVE OF T HE ASSESSEE TRUST AGAIN APPEARED AND DETAILED REPLY WA S ALSO FILED (PAGE NO.174 OF THE PAPER BOOK). ON 19.12.2008 THE ASSESSING OFFICER RECORDS THAT SHRI S.N.BHOSALE, CA, ATTENDED AND DISCUSSED THE SUBMISSIONS ALREADY FURNISHED AND THO UGH DISCUSSION WAS IN RESPECT OF THE QUERIES ON THE FIV E POINTS WHICH WERE COMMUNICATED TO THE ASSESSEE (PAGE NO.13 9 OF THE PAPER BOOK). HE FURTHER REFERRED TO THE COPY OF TH E ORDER SHEET AND SUBMITS THAT DURING THE COURSE OF THE ASSESSMEN T PROCEEDINGS THE ASSESSING OFFICER HIMSELF HAS EXAMI NED THE NATURE OF THE DONATIONS WHICH WERE CLAIMED AS EXEMP T, THE MEMBERS FUND AND THE IMMOVABLE PROPERTY, I.E., THE CORPUS OF THE TRUST AS WELL AS EACH AND EVERY EXPENDITURE INC LUDING THE EXPENDITURE TOWARDS SALARY OF RS.3,20,000/- PAID TO THE CHIEF TRUSTEE FOR HIS DISCOURSES/LECTURES. HE SUBMITS TH AT AFTER THE COMPLETION OF THE REGULAR ASSESSMENT U/S.143(3), TH E ASSESSING OFFICER INITIATED PROCEEDINGS U/S.147 FOR THE SAME ASSESSMENT YEAR AND ISSUED NOTICE U/S.148 DATED 05. 05.2009 (PAGE NO.148 OF THE PAPER BOOK). HE REFERRED TO PA GE NO.149 OF THE PAPER WHICH IS A COPY OF REPLY FILED BY THE ASS ESSEE. HE SUBMITS THAT THE REASONS FOR ISSUING THE NOTICE U/S .148 ARE IDENTICAL AS IN THE CASE OF PROCEEDINGS INITIATED B Y THE LD. CIT U/S. 263 OF THE ACT. THE LD. COUNSEL REFERRED TO P AGE NO.150 OF THE PAPER BOOK TO DEMONSTRATE THAT THE REASONS A RE IDENTICAL WHICH WERE COMMUNICATED TO THE ASSESSEE T RUST BY THE ASSESSING OFFICER FOR THE ISSUANCE OF THE NOTIC E U/S.148 OF THE ACT. HE SUBMITS THAT THOUGH THE PROCEEDINGS WE RE INITIATED, FINALLY ASSESSING OFFICER DROPPED THE RE ASSESSMENT PROCEEDINGS ACCEPTING THE REPLY FILED BY THE ASSESS EE. HE SUBMITS THAT IT IS CERTAINLY SHOCKING THAT AFTER DO ING THE EXERCISE U/S.147 BY THE ASSESSING OFFICER, WHICH WE RE FINALLY 7 DROPPED VIDE ORDER SHEET NOTING DATED 31.12.2010 (C OPY AT PAGE NO.179 OF THE PAPER BOOK), THE LD. CIT AGAIN I NITIATED THE PROCEEDINGS ON THE SAME REASONS U/S.263. LD. COUNS EL REFERRED TO THE IMPUGNED ORDER AND SUBMITS THAT THE RE IS NO SPECIFIC FINDING BY THE LD. CIT ON ANY OF THE POINT S BUT ONLY DOUBTS ARE RAISED. AS PER THE WELL SETTLED JUDICIA L PRINCIPLES, IF THE CIT IS NOT AGREEING TO THE ORDER OF THE ASSESSI NG OFFICER, THEN HE/SHE HAS TO RECORD THE SPECIFIC FINDINGS HOW THE ORDER IS ERRONEOUS. THE ENTIRE ORDER IS TOTALLY SILENT. AT ONE END THE LD. CIT OBSERVES THAT THE ASSESSING OFFICER HAS NOT MADE THE ENQUIRIES AT ALL AND AT ANOTHER END SHE OBSERVES TH AT NO PROPER ENQUIRIES ARE MADE. LD. CIT HERSELF IS NOT CLEAR WHETHER THE ASSESSMENT ORDER ALLEGEDLY SUFFERS FROM LACK OF ENQUIRY OR INADEQUATE ENQUIRY. THE LD. COUNSEL REL IED ON THE FOLLOWING PRECEDENTS: 1. MALABAR INDUSTRIAL CO. LTD. VS. CIT 243 ITR 83 (SC) . 2. CIT VS. GABRIEL INDIA LTD. 203 ITR 108 (BOM.) 3. CIT VS. SUNBEAM AUTO LTD. (2011) 332 ITR 167 (DEL.) 4. ITO VS. D.G.HOUSING PROJECTS LTD. (2012) 74 DTR 153 (DEL.) PER CONTRA, THE LD. DR SUPPORTED THE ORDER OF THE LD. CIT PASSED U/S.263 OF THE ACT. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORD BEFORE US. THE FACTS ARE ALREAD Y NARRATED HEREIN ABOVE. ADMITTEDLY IN THE ASSESSMENT ORDER T HERE IS NO DISCUSSION AT ALL IN RESPECT OF THE POINTS ON THE B ASIS OF WHICH THE LD. CIT EVOKED THE PROVISIONS OF SECTION 263 OF THE ACT. LAW IS WELL SETTLED SO FAR AS THE ASSUMPTION OF THE JURISDICTION U/S.263 OF THE ACT BY PLETHORA OF DECISIONS OF THE HONBLE SUPREME COURT AS WELL AS HIGH COURTS. AS PER THE E VIDENCE FILED BY THE ASSESSEE WE FIND THAT AT THE TIME OF A SSESSMENT ITSELF, THE ASSESSING OFFICER HAS RAISED NUMBER OF QUERIES AND IT IS CLEAR FROM THE COPY OF THE ORDER SHEET FILED BY THE ASSESSEE MAINTAINED BY THE ASSESSING OFFICER FOR THE A.Y. 20 06-07 (PAGE NO.171 TO 176 OF THE PAPER BOOK). IT IS SEEN THAT THE ASSESSING 8 OFFICER HAS RAISED THE DIFFERENT QUERIES IN RESPECT OF THE DONATIONS WHETHER THERE ARE SPECIFIC DIRECTIONS THA T THE SAME SHOULD BE AGAINST THE CORPUS OF THE TRUST, THE SALA RY PAID TO THE TRUSTEE OF RS.3,20,000/- FOR HIS DISCOURSES AND LECTURES, MSEB BILLS, ETC. (PAGE NO.139 OF THE PAPER BOOK). W E FIND THAT THE ASSESSEE FILED DETAILED REPLY ON ALL THE QUERIE S TO THE ASSESSING OFFICER (COPY PLACED AT PAGE NO.140 OF TH E PAPER BOOK) ON THE ISSUES WHICH ARE SUBJECT MATTER OF REV ISION. AS RIGHTLY ARGUED BY THE LD. COUNSEL, DRAFT OF THE ORD ER IS NOT IN THE HANDS OF THE ASSESSEE BUT ASSESSING OFFICER HAS TO WRITE THE ORDER. IF INSPITE OF FILING ALL THE DETAILS, T HERE IS NO REFERENCE IN THE ASSESSMENT ORDER, THEN THE ASSESSE E SHOULD NOT SUFFER. 6. THE CORE QUESTION IN THE PRESENT APPEAL IS WHETH ER THE ASSESSMENT ORDER SUFFERS FROM LACK OF ENQUIRY OR IN ADEQUATE ENQUIRY. ON THE PERUSAL OF THE ORDER U/S.263 OF TH E ACT PASSED BY THE LD. CIT, THOUGH IT IS OBSERVED THAT T HE ORDER SUFFERS FROM SOME OF THE ERRORS, BUT THERE IS NO CL EAR FINDING ON THOSE ERRORS. THE LD. CIT HAS OBSERVED THAT THERE IS NON- VERIFICATION OF MATERIAL FACTS TO THE ASSESSMENT. B UT AS PER THE EVIDENCE PLACED BEFORE US, WE FIND THAT ASSESSEE ME T ALL THE QUERIES OF THE ASSESSING OFFICER AND IT WAS THE DEC ISION OF THE ASSESSING OFFICER WHETHER TO DISCUSS THE SAID QUERI ES IN THE ORDER OR NOT. IN FACT IN PARA 4.6 THE LD. CIT OBSE RVES THAT SINCE NO ADVERSE FINDING IS BEING GIVEN IN THIS CA SE, THE ASSESSEE SHOULD NOT HAVE ANY GRIEVANCE WHATSOEVER. THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER IS SET A SIDE FOR THE PURPOSE OF PROPER VERIFICATION SO AS TO REACH PROPE R CONCLUSION AND THIS SHOULD NOT BE CONSIDERED AS ADVERSE FINDIN G OR DECISION PREJUDICIAL TO THE ASSESSEE AT THIS STAGE. LET THE ASSESSING OFFICER VERIFY THE FACTS PROPERLY IN THE LIGHT OF THE SUBMISSIONS MADE BY THE ASSESSEE. THE SAID OBSERV ATION OF THE LD. CIT CLEARLY SUGGESTS THAT THERE IS ONLY A S USPICION WHETHER ORDER IS ERRONEOUS OR NOT ERRONEOUS. OTHER WISE THE 9 LD. CIT WOULD HAVE GIVEN SOME SPECIFIC FINDING. BU T IT IS NOT REFLECTED SO IN THE IMPUGNED ORDER WHICH IS SUBJECT MATTER OF PRESENT APPEAL. 7. IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. (SUPR A), SAID DECISION IS ONE OF THE AUTHORITIES ON THE POWERS OF THE CIT TO EXERCISE JURISDICTION U/S.263 OF THE ACT, THE APEX COURT HAS HELD AS UNDER: THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE REV ENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER P ASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CA NNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVE NUE, FOR EXAMPLE, WHEN AN ITO ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF R EVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE ITO HAS TAK EN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE , IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY T HE ITO IS UNSUSTAINABLE IN LAW. IT HAS BEEN HELD BY THIS C OURT THAT WHERE A SUM NOT EARNED BY A PERSON IS ASSESSED AS INCOME IN HIS HANDS ON HIS SO OFFERING, THE ORDER P ASSED BY THE ASSESSING OFFICER ACCEPTING THE SAME AS SUCH WILL BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF TH E REVENUE - RAMPYARI DEVI SARAOGI V. CIT [1968] 67 ITR 84 (SC ) AND IN SMT. TARA DEVI AGGARWAL V. CIT [1973] 88 ITR 323 (SC). 8. IN THE CASE OF GABRIEL (SUPRA), THE HONBLE JURI SDICTIONAL HIGH COURT HAS HELD AS UNDER: FROM A READING OF SUB-SECTION (1) OF SECTION 263, I T IS CLEAR THAT THE POWER OF SUO MOTU REVISION CAN BE EXERCISE D BY THE COMMISSIONER ONLY IF, ON EXAMINATION OF THE REC ORDS OF ANY PROCEEDINGS UNDER THIS ACT, HE CONSIDERS THAT A NY ORDER PASSED THEREIN BY THE INCOME-TAX OFFICER IS 'ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE IN TERESTS OF THE REVENUE'. IT IS NOT AN ARBITRARY OR UNCHARTERED POWER. IT CAN BE EXERCISED ONLY ON FULFILLMENT OF THE REQU IREMENTS LAID DOWN IN SUB-SECTION (1). THE CONSIDERATION OF THE COMMISSIONER AS TO WHETHER AN ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE RE VENUE, MUST BE BASED ON MATERIALS ON THE RECORD OF THE PROCEEDI NGS CALLED FOR BY HIM. IF THERE ARE NO MATERIALS ON REC ORD 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 H IM WILL BE 10 ILLEGAL AND WITHOUT JURISDICTION. THE COMMISSIONER CANNOT INITIATE PROCEEDINGS WITH A VIEW TO STARTING FISHIN G AND ROVING ENQUIRIES IN MATTERS OR ORDERS WHICH ARE ALR EADY CONCLUDED. SUCH ACTION WILL BE AGAINST THE WELL-ACC EPTED POLICY OF LAW THAT THERE MUST BE A POINT OF FINALIT Y IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPS E OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI-JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SP HERES OF HUMAN ACTIVITY. (SEE PARASHURAM POTTERY WORKS CO. L TD. V. ITO [1977] 106 ITR 1 (SC), AT PAGE 10). AS OBSERVED IN SIRPUR PAPER MILLS LTD. V. ITO [1978 ] 114 ITR 404, 407 (AP) BY RAGHUVEER J. (AS HIS LORDSHIP THEN WAS), THE DEPARTMENT CANNOT BE PERMITTED TO BEGIN F RESH LITIGATION BECAUSE OF NEW VIEWS THEY ENTERTAIN ON F ACTS OR NEW VERSIONS WHICH THEY PRESENT AS TO WHAT SHOULD B E THE INFERENCE OR PROPER INFERENCE EITHER OF THE FACTS D ISCLOSED OR THE WEIGHT OF THE CIRCUMSTANCES. IF THIS IS PERMITT ED, LITIGATION WOULD HAVE NO END, 'EXCEPT WHEN LEGAL IN GENUITY IS EXHAUSTED'. TO DO SO, IS '. . . TO DIVIDE ONE AR GUMENT INTO TWO AND TO MULTIPLY THE LITIGATION'. THE POWER OF SUO MOTU REVISION UNDER SUBSECTION (1) IS IN THE NATURE OF SUPERVISORY JURISDICTION AND THE SAME CAN BE EXERCISED ONLY IF THE CIRCUMSTANCES SPECIFIED THERE IN EXIST. TWO CIRCUMSTANCES MUST EXIST TO ENABLE THE COMMISSI ONER TO EXERCISE POWER OF REVISION UNDER THIS SUB-SECTIO N, VIZ., (I) THE ORDER IS ERRONEOUS; (II) BY VIRTUE OF THE ORDER BEING ERRONEOUS PREJUDICE HAS BEEN CAUSED TO THE INTEREST S OF THE REVENUE. IT HAS, THEREFORE, TO BE CONSIDERED FIRSTL Y AS TO WHEN AN ORDER CAN BE SAID TO BE ERRONEOUS. WE FIND THAT THE EXPRESSIONS 'ERRONEOUS', 'ERRONEOUS ASSESSMENT' AND 'ERRONEOUS JUDGMENT' HAVE BEEN DEFINED IN BLACKS LA W DICTIONARY. ACCORDING TO THE DEFINITION, 'ERRONEOUS ' MEANS 'INVOLVING ERROR; DEVIATING FROM THE LAW'. 'ERRONEO US ASSESSMENT' REFERS TO AN ASSESSMENT THAT DEVIATES F ROM THE LAW AND IS, THEREFORE, INVALID, AND IS A DEFECT THAT IS JURISDICTIONAL IN ITS NATURE, AND DOES NOT REFER TO THE JUDGMENT OF THE ASSESSING OFFICER IN FIXING THE AMO UNT OF VALUATION OF THE PROPERTY. SIMILARLY, 'ERRONEOUS JU DGMENT' MEANS 'ONE RENDERED ACCORDING TO COURSE AND PRACTIC E OF COURT, BUT CONTRARY TO LAW, UPON MISTAKEN VIEW OF L AW; OR UPON ERRONEOUS APPLICATION OF LEGAL PRINCIPLES'. FROM THE AFORESAID DEFINITIONS IT IS CLEAR THAT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN INCOME-TAX OFFICER ACTIN G IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY THIS SECT ION 11 DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JU DGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME-TAX OFFICER , WHO 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 IN COME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATE HIMSELF. THE COMMISSIONER, ON PERUSAL OF T HE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MA DE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEF T 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 INCOM E-TAX OFFICER HAS EXERCISED THE QUASI-JUDICIAL POWER VEST ED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT CONCLUSIO N AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WI TH THE CONCLUSION. IT MAY BE SAID IN SUCH A CASE THAT IN T HE OPINION OF THE COMMISSIONER THE ORDER IN QUESTION I S PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BUT TH AT BY ITSELF WILL NOT BE ENOUGH TO VEST THE COMMISSIONER WITH THE POWER OF SUO MOTU REVISION BECAUSE THE FIRST REQUIR EMENT, VIZ., THAT THE ORDER IS ERRONEOUS, IS ABSENT. SIMIL ARLY, IF AN ORDER IS ERRONEOUS BUT NOT PREJUDICIAL TO THE INTER ESTS OF THE REVENUE, THEN ALSO THE POWER OF SUO MOTU REVISION C ANNOT BE EXERCISED. ANY AND EVERY ERRONEOUS ORDER CANNOT BE THE SUBJECT-MATTER OF REVISION BECAUSE THE SECOND REQUI REMENT ALSO MUST BE FULFILLED. THERE MUST BE SOME PRIMA FA CIE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFU LLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLIC ATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED. 9. IN THE CASE OF SUNBEAM AUTO LTD. (SUPRA), THE HO NBLE JURISDICTIONAL HIGH COURT HAS HELD AS UNDER: WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE COU NSEL ON THE OTHER SIDE AND HAVE GONE THROUGH THE RECORDS . THE FIRST ISSUE THAT ARISES FOR OUR CONSIDERATION IS AB OUT 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 W AS THAT WHILE PASSING THE ASSESSMENT ORDER, THE ASSESS ING OFFICER DID NOT CONSIDER THIS ASPECT SPECIFICALLY W HETHER THE EXPENDITURE IN QUESTION WAS REVENUE OR CAPITAL EXPENDITURE. THIS ARGUMENT PREDICATES ON THE ASSES SMENT ORDER, WHICH APPARENTLY DOES NOT GIVE ANY REASONS W HILE 12 ALLOWING THE ENTIRE EXPENDITURE AS REVENUE EXPENDIT URE. HOWEVER, THAT BY ITSELF WOULD NOT BE INDICATIVE OF THE FACT THAT THE ASSESSING OFFICER HAD NOT APPLIED HIS MIND ON THE ISSUE. THERE ARE JUDGMENTS GALORE LAYING DOWN THE PRINCIPLE THAT THE ASSESSING OFFICER IN THE ASSESSM ENT ORDER IS NOT REQUIRED TO GIVE DETAILED REASON IN RE SPECT OF EACH AND EVERY ITEM OF DEDUCTION, ETC. THEREFORE, ONE HAS TO SEE FROM THE RECORD AS TO WHETHER THERE WAS APPL ICATION OF MIND BEFORE ALLOWING THE EXPENDITURE IN QUESTION AS REVENUE EXPENDITURE. LEARNED COUNSEL FOR THE ASSES SEE IS RIGHT IN HIS SUBMISSION THAT ONE HAS TO KEEP IN MIN D THE DISTINCTION BETWEEN LACK OF INQUIRY AND INADEQUA TE INQUIRY. IF THERE WAS ANY INQUIRY, EVEN INADEQUAT E THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE COMMISSION ER TO PASS ORDERS UNDER SECTION 263 OF THE ACT, MERELY BE CAUSE HE HAS A DIFFERENT OPINION IN THE MATTER. IT IS ON LY IN CASES OF LACK OF INQUIRY THAT SUCH A COURSE OF ACTION WOULD BE OPEN. 10. THE DECISION IN THE CASE OF SUNBEAM AUTO LTD. ( SUPRA) WAS AGAIN REFERRED TO AND FOLLOWED BY THEIR LORDSHI PS OF HONBLE HIGH COURT OF DELHI IN THE CASE OF DG HOUSI NG PROJECTS (SUPRA). 16. THUS, IN CASES OF WRONG OPINION OR FINDING ON M ERITS, THE CIT HAS TO COME TO THE CONCLUSION AND HIMSELF D ECIDE THAT THE ORDER IS ERRONEOUS BY CONDUCTING NECESSARY ENQUIRY, IF REQUIRED AND NECESSARY, BEFORE THE ORDE R UNDER S.263 IS PASSED. IN SUCH CASES, THE ORDER OF THE A O WILL BE ERRONEOUS BECAUSE THE ORDER PASSED IS NOT SUSTAINAB LE IN LAW AND THE SAID FINDING MUST BE RECORDED. CIT CAN NOT REMAND THE MATTER TO THE AO TO DECIDE WHETHER THE FINDINGS RECORDED ARE ERRONEOUS. IN CASES WHERE TH ERE IS INADEQUATE ENQUIRY BUT NOT LACK OF ENQUIRY, AGAIN T HE CIT MUST GIVE AND RECORD A FINDING THAT THE ORDER/INQUI RY MADE IS ERRONEOUS. THIS CAN HAPPEN IF AN ENQUIRY A ND VERIFICATION IS CONDUCTED BY THE CIT AND HE IS ABLE TO ESTABLISH AND SHOW THE ERROR OR MISTAKE MADE BY THE AO MAKING THE ORDER UNSUSTAINABLE IN LAW. IN SOME CAS ES POSSIBLY THOUGH RARELY, THE CIT CAN ALSO SHOW AND ESTABLISH THAT THE FACTS ON RECORD OR INFERENCES DR AWN FROM FACTS ON RECORD PER SE JUSTIFIED AND MANDATED FURTH ER ENQUIRY OR INVESTIGATION BUT THE AO HAD ERRONEOUSLY NOT UNDERTAKEN THE SAME. HOWEVER, THE SAID FINDING MUS T BE CLEAR, UNAMBIGUOUS AND NOT DEBATABLE. THE MATTER C ANNOT BE REMITTED FOR A FRESH DECISION TO THE AO TO CONDU CT FURTHER ENQUIRIES WITHOUT A FINDING THAT THE ORDER IS ERRONEOUS. FINDING THAT THE ORDER IS ERRONEOUS IS A CONDITION OR REQUIREMENT WHICH MUST BE SATISFIED FO R EXERCISE OF JURISDICTION UNDER S.263 OF THE ACT. I N SUCH 13 MATTERS, TO REMAND THE MATTER/ISSUE TO THE AO WOULD IMPLY AND MEAN THE CIT HAS NOT EXAMINED AND DECIDED WHETHER OR NOT THE ORDER IS ERRONEOUS BUT HAS DIREC TED THE AO TO DECIDE THE ASPECT/QUESTION. 11. ANOTHER ASPECT TO BE CONSIDERED IN THIS CASE IS UNDISPUTEDLY THE PROCEEDINGS U/S.147 WERE INITIATED BY THE ASSESSING OFFICER BY ISSUANCE OF NOTICE U/S.148 DAT ED 05.05.2009. THE REASONS FURNISHED BY THE ASSESSING OFFICER TO THE ASSESSEE FOR ISSUANCE OF THE NOTICE U/S.148 ARE IDENTICAL (COPY AT PAGE 150 OF THE PAPER BOOK) WHICH ARE REPR ODUCED AS UNDER: 2. THE REASONS FOR ISSUE OF NOTICE UNDER SECTION 14 8 ARE AS UNDER: DONATIONS RECEIVED AGAINST VARIOUS FUNDS HAVE NOT B EEN CONSIDERED AS INCOME BY THE ASSESSEE BUT EXPENDITUR E IS CLAIMED OUT OF THESE FUNDS ONLY. THESE DONATIONS A RE NOT RECEIVED WITH A SPECIFIC DIRECTION THAT THE SAME AR E AGAINST CORPUS OF THE TRUST. DONATION RECEIPTS DO NOT CONT AIN ANY SUCH DIRECTION. ALSO THE FUNDS ARE NOT CORPUS OF TH E TRUST. TRUST HAS PAID SALARY 3,20,000/- TO THE CHIEF TRUST EE OUT OF TOTAL SALARY DEBIT OF RS.10,26,708/-. ALSO THE MSEB BILLS OF CHIEF TRUSTEE AMOUNTING TO RS.35620, RS.10 690, RS.4580, RS.18560 AND VARIOUS OTHER AMOUNTS OUT OF EXPENDITURE ON VARIOUS PROJECTS ARE PAID TO THE TRU STEE. THE PROVISIONS VIDE PARA 11 OF THE TRUST DEED ARE A GAINST THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE COULD NOT SUBMIT COMPLETE POSTAL ADDRESS IN RESPECT OF MOST OF THE DONORS EVEN ABOVE RS.5000/- FOR VERIFIC ATION BY THE DEPARTMENT. EVEN PAN COULD NOT BE GIVEN IN RESPECT OF DONATIONS ABOVE RS.50000/-. THESE DONAT IONS ARE THEREFORE ANONYMOUS DONATIONS. 12. THE ASSESSING OFFICER ALSO DROPPED THE PROCEEDI NGS INITIATED U/S.147 ON 31.12.2010 ACCEPTING THE SUBMI SSIONS OF THE ASSESSEE (ORDER SHEET COPY PLACED AT PAGE NO.17 9 OF THE PAPER BOOK). AS PER THE RECORD PLACED BEFORE US, W E ARE OF THE OPINION THAT THE ISSUES OR POINTS WHICH ARE THE BAS IS FOR INITIATING THE PROCEEDINGS U/S.263, THE ASSESSING O FFICER HAS ALREADY MADE THE ENQUIRY AT THE TIME OF ORIGINAL AS SESSMENT. 14 NOT ONLY THAT SUBSEQUENTLY ON THE SAME POINTS THE A SSESSING OFFICER INITIATES THE PROCEEDINGS U/S.147 AND ISSUE S NOTICE U/S.148 TO THE ASSESSEE. THE ASSESSEE FILES THE RE PLY RESISTING THE ACTION OF THE ASSESSING OFFICER TO INITIATE PRO CEEDINGS U/S.147. THE ASSESSING OFFICER WAS CONVINCED AND S ATISFIED WITH THE EXPLANATION OF THE ASSESSEE ON ALL THOSE P OINTS. HE ACCORDINGLY RECORDED THE SAME AND DROPPED THE PROCE EDINGS INITIATED U/S.147 AGAINST THE ASSESSEE. IN THIS BA CKGROUND CAN IT BE SAID THAT THE ASSESSING OFFICER HAS NOT A T ALL APPLIED HIS MIND ON THE POINTS WHICH ARE SUBJECT MATTER OF THE REVISION PROCEEDINGS. MOREOVER, THE LD. CIT HERSELF IS NOT SURE WHETHER THE POINTS OR THE ISSUES WHICH ALLEGEDLY NOT CONSID ERED BY THE ASSESSING OFFICER WERE NOT IN ACCORDANCE WITH LAW. LD. CIT ONLY ON THE FACE OF THE ORDER TRIED TO SET ASIDE TH E SAME AND IN OUR HUMBLE OPINION AS PER THE ORDER PASSED BY THE L D. CIT U/S.263 SUGGESTS THAT THE ENTIRE ASSESSMENT RECORD HAS NOT BEEN EXAMINED BY HER. ON PLAIN READING OF LANGUAGE USED IN SECTION 263 CLEARLY SUGGEST THAT CIT HAS TO EXAMINE RECORD AND NOT ONLY ORDER AS ON MANY OCCASIONS AO MAKES ENQUIRIES ON ALL ISSUES/POINTS BUT PREFERS TO REMAI N SILENT TO EXPLAIN HOW EXPLANATION OR EVIDENCES FILED BY THE A SSESSEE ARE ACCEPTABLE TO HIM. THIS CASE CANNOT BE SAID TO BE T HE CASE OF LACK OF ENQUIRY AND IF AT ALL THE LD. CIT WAS OF TH E OPINION THAT IT WAS THE CASE OF INADEQUATE ENQUIRY, THERE SHOULD HAVE BEEN SPECIFIC FINDING ON THE POINTS ON THE BASIS OF WHIC H ASSESSMENT ORDER IS SET ASIDE TO THE ASSESSING OFFICER. 13. WE ARE THEREFORE OF THE OPINION THAT THE ORDER PASSED BY THE ASSESSING OFFICER U/S.143(3) WHICH IS MADE SUBJ ECT MATTER OF THE REVISION IS NOT ERRONEOUS . LAW IS WELL SET TLED AS HELD BY THE APEX COURT IN THE CASE OF MALABAR INDUSTRIAL CO . LTD. (SUPRA) THAT TWO CONDITIONS MUST BE FULFILLED- I) T HE ORDER MUST BE ERRONEOUS AND II) AS WELL AS IT SHOULD BE PREJUD ICIAL TO THE INTEREST OF THE REVENUE. MERELY BECAUSE THERE IS A REVENUE LOSS, LD. CIT CANNOT ASSUME THE JURISDICTION U/S.26 3 OF THE 15 ACT AND TRY TO REVISE THE ASSESSMENT ORDER. SO FAR AS THE EXPRESSION ERRONEOUS IS CONCERNED WHICH MEANS THA T IS NOT IN CONFORMITY WITH LAW. IF ONE OF THE POSSIBLE VIE WS IS TAKEN BY THE ASSESSING OFFICER, LD. CIT CANNOT SUBSTITUTE H IS/HER OPINION ON THE VIEW TAKEN BY THE ASSESSING OFFICER. THE SAME PRINCIPLES HAVE BEEN REITERATED AGAIN BY THE JURISD ICTIONAL HIGH COURT IN THE CASE OF GABRIEL INDIA LTD. (SUPRA). W E THEREFORE ALLOW THE GROUNDS TAKEN BY THE ASSESSEE AND HOLD TH AT THERE WAS NO JUSTIFICATION BY THE LD. CIT-II, KOLHAPUR, T O PASS THE ORDER U/S.263 SETTING ASIDE THE ASSESSMENT ORDER. WE ACCORDINGLY CANCEL THE ORDER PASSED BY THE LD. CIT- II, KOLHAPUR U/S.63 DATED 29.03.2011. 14. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 10 TH DAY OF DECEMBER , 2012. SD/- SD/- ( G.S.PANNU ) ( R.S.PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER GSPS PUNE, DATED THE 10 TH DECEMBER, 2012. COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE ITO, WARD-II, KOLHAPUR. 3. THE CIT-II, KOLHAPUR. 4. THE DR A BENCH, PUNE. 5. GUARD FILE. BY ORDER SR.PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE BENCHES, PUNE.