Kaushal Kishore Bihani, Kolkata V. I.T.O.,Ward-45(1), Kolkata

ITA 690/KOL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4634 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-09-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 08-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM BILASH MEENA
• Assessee Lawyers: S M SURANA
• Keywords: Unexplained cash credit; Gift; Salary income; Principle of natural justice; Earning of tax free income; Assessment record; Right to appeal; Sham transactions; Penny stocks; Rule 8D; Set aside; Capital Gains
• Section: 143(3); 142(1); 80HHC; 14A; 133(6); 43; 13; 68; 263; 63

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH VIRTUAL COURT A KOLKATA BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S.GODARA, JUDICIAL MEMBER ITA NO.690/KOL/2019 ASSESSMENT YEAR: 2014-15 KAUSHAL KISHORE BIHANI 75, DHANDEVI KHANNA ROAD, PHOOL BAGAN, NR. INDIA GAS OFFICE,KOLKATA-700 054 [ PAN NO.ADHPB 6485 A ] / V/S . INCOME TAX OFFICER, WARD-45(1), 3, GOVT. PLACE (WEST), KOLKATA-001 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI S.M.SURANA, ADVOCATE /BY RESPONDENT SHRI RAM BILASH MEENA, CIT-DR /DATE OF HEARING 28-09-2020 /DATE OF PRONOUNCEMENT 19-10-2020 /O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2014-15 ARISES AGAINST THE PRINCIPAL COMMISSIONER OF INCOME TAX-15, KOLKATAS ORDER DATE D 05.03.2019 PASSED IN CASE M.NO.PCIT-15/KOL/U/S263/29/18-19/7978-80 INVOLVING PROCEEDINGS U/S 263 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. WE COME TO THE RELEVANT FACTUAL MATRIX QUA CORRECTNESS OF THE PCITS ACTION INVOKING U/S 263 REVISION JURISDICTION SO AS TO HOL D THAT THE ASSESSING OFFICERS REGULAR ASSESSMENT DATED 29.07.2016 WAS AN ERRONEOUS ONE CA USING PREJUDICE TO INTEREST OF THE ITA NO.609/KOL/2019 ASSESSMENT YEAR 2 014-15 KAUSHAL KISHORE BIHANI VS ITO WD-45(1), KOL. PAGE 2 REVENUE. THIS ASSESSEE IS AN INDIVIDUAL DERIVING IN COME FROM SALARY, BROKERAGE AND COMMISSION. HE FILED HIS RETURN DATED 12.08.2014 DI SCLOSING TAXABLE INCOME OF 6,06,560/-. THE ASSESSING OFFICER THEREAFTER ISSUED SCRUTINY NOTICE(ES) AND COMPLETED HIS REGULAR ASSESSMENT IN QUESTION. 3. COMING TO THE IMPUGNED REVISION PROCEEDINGS, THE PCIT ISSUED HIS SHOW-CAUSE NOTICE DATED 01.11.2018 ON THE GROUND THAT THE ASSE SSEE HAD CLAIMED SEC. 10(38) LTCG/LTCL OF 3,66,536/- CLAIMED AFTER TRANSFERRING SHARES HOLD I N M/S KAILASH AUTO FINANCE LTD. THE PCIT QUOTED THE DIT(INV.) KOL KATA DISCRETE INQUIRIES TO OBSERVE THAT THE SAID LTCG/LOSS HAD BEEN DERIVED FR OM SHARE TRANSACTIONS SALE-PRICE IN PENNY STOCK WHICH RENDERED THE ASSESSMENT ACCEPT ING THE SAME AS CORRECT TO BE TO ERRONEOUS CAUSING PREJUDICE TO THE INTEREST OF THE REVENUE. 4. THE ASSESSEE APPEARS TO HAVE FILED WRITTEN STATE MENT(S) DATED 16.11.2018 AND 13.02.2019 INTER ALIA PLEADING THEREIN THAT THE ASS ESSING OFFICERS ACTION ACCEPTING HIS LTCG/LOSS ON SALE OF SHARES HELD IN M/S KAILASH AUT O FINANCE LTD., AS GENUINENESS WAS VERY MUCH CORRECT SINCE HE HAD MADE ALL DETAILE D INQUIRIES AND AFTER GOING THROUGH THE CORRESPONDING DETAILS IN THE NATURE OF DEMAT ACCOUNT, SALE-PURCHASE TRANSACTIONS TO REGISTERED BROKERAGE OF STOCK EXCHA NGE IN THE CORRESPONDING LISTED SHARES, PAYMENTS RECEIVED THROUGH PROPER CHANNEL DU LY SUPPORTED BY THE RELEVANT CONTRACT NOTES. 5. WE NOTICE THAT THE PCIT HAS DECLINED THE SAME WH ILST HOLDING THE IMPUGNED REGULAR ASSESSMENT AS EXIGIBLE TO SEC.263 REVISION JURISDICTION AS FOLLOWS:- 4. I HAVE CAREFULLY CONSIDERED THE MATERIAL ON REC ORD AND THE SUBMISSION OF THE ASSESSEE. THE FACT OF THE CASE IS THAT THE ASSESSEE HAS IN HIS RETURN OF INCOME DECLARED INCOME FROM SALARY HOUSE PROPERTY, CAPITAL GAINS & INCOME FROM OTHER SOURCES. THE ASSESSEE HAS BEEN INVESTING IN SHARES FROM WHICH IT EARNS LONG TERM AND SHORT TERM CAPITAL GAIN. IN THE CURRENT YEAR, THE ASSESSEE HAS CLAIMED A DEDUCTION U/S 10(38) OF RS.3,66,536/- ON ACCOUNT OF LONG TERM CAPITAL GAIN/ LOSS ON LISTED SECURITIES. THIS CAPITAL GAIN INCLUDED A LONG TERM CAPITAL GAIN ON S ALE OF SHARES OF KAILASH AUTO FINANCE LTD. AMOUNTING TO RS. 10,18,950/-. IT IS TH IS CLAIM OF DEDUCTION U/S 10(38) OF RS.10,18,950/- WHICH IS THE ISSUE IN CONTENTION INV OLVED IN THE INSTANT CASE. IT HAD COME TO THE KNOWLEDGE OF THE DEPARTMENT THROUGH INV ESTIGATION MADE BY THE DIT(INV.), KOLKATA, THAT THERE WERE HUGE MANIPULATI ON BY CERTAIN BROKERS IN RESPECT OF THE SHARES OF KAILASH AUTO FINANCE LTD. HAVING TRAD E VALUE OF RS.1,877.83 CRORE ( SCRIPT CODE 511357 ) BSE LISTED PENNY STOCKS WHICH HAVE BEEN USED FOR GENERATING BOGUS LONG TERM CAPITAL GAIN. THE AO WHILE COMPLETI NG THE ASSESSMENT U/S 143(3) ITA NO.609/KOL/2019 ASSESSMENT YEAR 2 014-15 KAUSHAL KISHORE BIHANI VS ITO WD-45(1), KOL. PAGE 3 IGNORED THE INFORMATION RECEIVED FROM THE DIT(LNV.) , KOLKATA AND ALLOWED THE CLAIM FOR DEDUCTION U/S 10(38) WITH RESPECT TO BOGUS CAPI TAL GAIN ON SALE OF THE PENNY STOCK OF KAILASH AUTO FINANCE LTD. AMOUNTING TO RS.10,18, 950/-. THIS IGNORANCE AND FAILURE TO ENQUIRE INTO SUCH CLAIM U/S 10(38) HAS RENDERED THE ASSESSMENT MADE BY THE AO AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. 5. IN THE COURSE OF PROCEEDINGS U/S 263, THE ASSESS EE VIDE HIS LETTER DATED 16.11.2018 & 13.02.2019 HAS BASICALLY CONTENDED THAT THE TRANS ACTION IN KAILASH AUTO FINANCE LTD. WAS THROUGH DULY RECOGNIZED AND REGISTERED SHA RES BROKERS WITH FULLY VERIFIABLE TRANSACTIONS FROM BSE AND THROUGH ITS DE MAT ACCOUN T. THE ASSESSEE HAS REITERATED HIS STAND THAT HE HAS NO KNOWLEDGE OF PENNY STOCK AND THERE IS NO EVIDENCE THAT THE ASSESSEE HAD ENTERED INTO SHAM TRANSACTIONS. THE AS SESSEE HAS REITERATED HIS STAND THAT HE HAS NO KNOWLEDGE OF PENNY STOCK AND THERE IS NO EVIDENCE THAT THE ASSESSEE HAD ENTERED INTO SHAM TRANSACTIONS. THE ASSESSEE HAS AL SO STATED THAT HE HAD FILED ALL NECESSARY DETAILS LIKE CONTRACT NOTES BEFORE THE AO IN REPLY TO SPECIFIC QUERY RAISED BY HIM. THE ASSESSEE HAS RELIED UPON VARIOUS DECISI ONS OF THE HON'BLE GUJARAT HIGH COURTS AND HON'BLE KOLKATA TRIBUNAL. 6. I HAVE CONSIDERED THE SUBMISSION OF THE ASSESSEE . THE PERUSAL OF RECORD SHOWS THAT THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ON ACCOUNT OF ' SUSPICIOUS TRANSACTION RELATING TO LONG TERM CAPITAL GAIN ON S HARES (INPUTS FROM INVESTIGATION WING) '. THE RECORD SHOWS THAT THE AO HAD ONLY ISSUED A NOTICE U/S 142(1) DATED 07.06.2016 WHERE HE RAISED A GENERAL QUERY WITH REG ARD TO TRADING ACCOUNT SHARES FOR THE YEAR ENDED 31.03.2014, CASH FLOW STATEMENT, REC EIPT AND PAYMENT ACCOUNT. THIS QUERY WAS GENERAL INFORMATION SOUGHT FROM THE ASSES SEE AND THE ASSESSEE FURNISHED HIS BALANCE SHEET & P&L A/C AND HIS COMPUTATION OF INCO ME INCLUDING A STATEMENT OF EXEMPT LONG TERM CAPITAL GAIN INVOLVING 80 SCRIPTS. THIS STATEMENT INCLUDED THE DETAILS OF CAPITAL GAINS ON SALE OF THE SHARES OF KAILASH A UTO FINANCE LTD. THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE AO TOOK COGNIZA NCE OF THE INFORMATION RECEIVED FROM INVESTIGATION WING WITH REGARD TO TRANSACTION IN THE SHARES OF KAILASH AUTO FINANCE LTD. THERE IS NO SPECIFIC QUERY BY THE AO W ITH REGARD TO TRANSACTION IN THE SHARES OF KAILASH AUTO FINANCE LTD. THEREFORE, THE PLEA OF THE ASSESSEE THAT HE HAD GIVEN ALL NECESSARY DETAILS LIKE COPY OF CONTRACT N OTES, EVIDENCE OF PAYMENT & RECEIPT ETC. AS REPLY TO SPECIFIC QUERY RAISED BY THE AO IN INCORRECT. THOUGH THE CRITERIA FOR SELECTION OF THE CASE FOR SCRUTINY WAS INVESTIGATIO N INTO PENNY STOCK OF KAILASH AUTO FINANCE LTD., THE AO NEITHER RAISED ANY SPECIFIC QU ERY NOR EXAMINED THE VERACITY OF THE CLAIM OF DEDUCTION U/S 10(38) WITH RESPECT TO T HE SHARES OF KAILASH AUTO LTD. THE RELIANCE OF THE ASSESSEE ON THE HON'BLE GUJRAT HIGH COURT IN THE CASE OF MAHESH CHANDRA G.VAKIL & HIRNANI M VAKIL IS MISPLACED AS I N THE INSTANT CASE THERE WAS NO SPECIFIC QUERY RAISED BY THE AO ON THE TRANSACTION IN SHARES OF KAILASH AUTO FINANCE LTD. NOR THE ASSESSEE HAS FILED ANY DOCUMENTS TO ES TABLISH THE GENUINENESS OF THE TRANSACTION. THE RELIANCE ON THE HON'BLE KOLKATA TR IBUNAL IN THE CASE OF SUNITA KHERNA AND SANJIV GOYEL HUF ON THE SPECIFIC ISSUE OF SALE OF KAILASH AUTO FINAN CE LTD. IS ALSO MISPLACED. THE HON'BLE KOLKATA TRIBUNA L HAS HELD THAT AS THE ASSESSEE HAD PRODUCED ALL THE NECESSARY DOCUMENTS AND THE AO HAS NOT CONTROVERTED THE EVIDENCE FURNISHED BY THE ASSESSEE, NO ADDITION CAN BE MADE ON THE BASIS OF MERE SUSPICION OR SURMISE. IN THE INSTANT CASE NEITHER THE AO HAS RAI SED ANY SPECIFIC QUERY ON THE TRANSACTION OF KAILASH AUTO FINANCE LTD. NOR HAS TH E ASSESSEE FURNISHED THE NECESSARY DOCUMENTS TO PROVE THE GENUINENESS OF THE TRANSACTI ON RELATING TO THE PENNY STOCK OF KAILASH AUTO FINANCE LTD. THE AO HAS COMPLETELY IGN ORED THE SPECIFIC REASON FOR ITA NO.609/KOL/2019 ASSESSMENT YEAR 2 014-15 KAUSHAL KISHORE BIHANI VS ITO WD-45(1), KOL. PAGE 4 SCRUTINY WHICH WAS THE INFORMATION RECEIVED FROM IN VESTIGATION WING WITH RESPECT TO THE PENNY STOCK OF KAILASH AUTO FINANCE LTD. 7. THE ASSESSING OFFICER, THUS, FAILED TO MAKE ANY ENQUIRY WITH RESPECT TO TRANSACTIONS IN THE PENNY STOCK OF KAILASH AUTO FINANCE LTD. AND COMPLETELY IGNORED THE INFORMATION RECEIVED FROM THE INVESTIGATION WING IN THIS CASE. IN THIS REGARD IT IS MENTIONED THAT MERE NON-ENQUIRY WOULD ALSO RENDER A PARTICULAR ORDER PASSED BY LOWER AUTHORITY AS ERRONEOUS AND PREJUDICIAL TO THE INTER EST OF REVENUE. THIS POSITION HAS BEEN CLEARLY CONFIRMED BY HON'BLC SUPREME COURT IN THE CASE OF RAMPYARI DEVI SARAOGI V. CIT(1968) 67 ITR 84 & SMT. TARA DEVI AGG ARWAL V. CIT(1973) 88 ITR 3Z3(SC) . THE REASONING FOR THIS PROPOSITION HAS BEEN EXPLA INED BY HON'BLE DELHI HIGH COURT IN THE CASE OF GEE VEE ENTERPRISE VS. ADDL. CIT (1975) 99 ITR 375 IN THE FOLLOWING PARA: 'IT IS NOT NECESSARY FOR THE COMMISSIONER TO MAKE F URTHER INQUIRIES BEFORE CANCELLING THE ASSESSMENT ORDER OF THE INCOME TAX O FFICER. THE COMMISSIONER CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THA T IN THE CIRCUMSTANCES OF THE CASE THE INCOME TAX OFFICER SHOULD HOVE MADE FU RTHER INQUIRIES BEFORE ACCEPTING THE STATEMENTS MADE BY THE ASSESSEE IN HI S RETURN. THE REASON IS OBVIOUS. THE POSITION AND FUNCTION OF THE INCOME TA X OFFICER IS VERY DIFFERENT FROM THAT OF CIVIL COURT. THE STATEMENTS MADE ILL T HE PLEADING PROVED BY THE MINIMUM AMOUNT OF EVIDENCE MAY BE ADOPTED BY A CIVI L COURT IN THE ABSENCE OF ANY REBUTTAL. THE CIVIL COURT IS NEUTRAL. IT SIM PLY GIVES DECISION ON THE BASIS OF THE PLEADING AND EVIDENCES WHICH COME BEFORE IT. THE INCOME TAX OFFICER IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVESTIGATOR . HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORD4ER 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 PROVOKE AN INQUIRY. IT IS BECAUSE IT IS INCUMBENT ON THE INCOME TAX OFFICER TO FURTHER INVE STIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MAKE SUCH AN IN QUIRY PRUDENT THAT THE WORD ' ERRONEOUS ' IN SEC. 263 INCLUDES THE FAILURE TO MAKE SUCH AN ENQUIRY. THE ORDER BECOMES ERRONEOUS BECAUSE SUCH AN INQUIRY HAS NOT BE MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WITH THE ORDER IF ALL THE FACTS STATED THEREIN ARE ASSUMED TO BE CORRECT.' 7.1 FURTHER TO THIS IT IS NOTICED THAT THERE IS NO APPEAL RIGHT AVAILABLE TO THE REVENUE FROM THE ORDER OF ASSESSMENT PASSED BY ASSESSING OF FICER AND THAT IS WHY REVISIONARY POWERS HAVE BEEN GIVEN TO THE COMMISSIONER AND SUCH POWER WERE HELD TO BE OF WIDE AMPLITUDE BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. SHREE MANJUNATHESWARE PACKING PRODUCTS & CAMPHOR WORKS [1998] 231 ITR 53/96 TAXMAN 1. THEREFORE. NORMALLY WHEN ASSESSING OFFICE R HAS NOT MADE ANY ENQUIRY ON A PARTICULAR ISSUE, THEN SUCH ORDER IN VIEW OF THE ABOVE DETAILED DISCUSSION HAS TO BE CONSTRUED AS ERRONEOUS AND PREJUDICIAL TO THE INTER EST OF REVENUE AND THEREFORE, THE IMPUGNED ASSESSMENT ORDER IS ERRONEOUS AND PREJUDIC IAL TO-THE INTEREST OF REVENUE AS ASSESSING OFFICER HAS NOT FLIED TO MAKE ANY ENQUIRY . 7.2 IT MAY BE FURTHER NOTICED, THAT IN ORDER TO PRO VIDE CLARITY ON THE ISSUE OF ' ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF REVENUE ', A NEW EXPLANATION HAS BEEN INSERTED TO CLARIFY THAT AN OR DER PASSED BY THE ASSESSING OFFICER ITA NO.609/KOL/2019 ASSESSMENT YEAR 2 014-15 KAUSHAL KISHORE BIHANI VS ITO WD-45(1), KOL. PAGE 5 SHALL BE DEEMED TO BE ERRONEOUS IN PREJUDICIAL TO T HE INTEREST OF REVENUE, IF, IN THE OPINION OF THE PRINCIPAL COMMISSIONER. 1. THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH, SHOULD HAVE BEEN MADE; 2. THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOU T INQUIRING INTO THE CLAIM; 3. THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH A NY ORDER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD U/S. 119; OR 4. THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WITH ANY DECISION. PREJUDICIAL TO THE ASSESSEE, RENDERED BY THE JURISDICTIONAL HIG H COURT OR SUPREME COURT IN THE CASE OF THE ASSESSEE OR ANY OTHER PERSON. THIS AMENDMENT TAKES EFFECT FROM 1.6.2015 8. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LIGHT OF THE AFORESAID DECISIONS OF HOU'BLE SUPREME COURT AND IN ACCORDANCE WITH THE AMENDMENT MADE IN SEC. 263 OF THE ACT WITH EFFECT FROM 01.6.2 015, I HOLD THAT THE IMPUGNED ASSESSMENT ORDER DT. 29/07/2016 PASSED BY THE AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE AND IS LIABL E TO BE SET ASIDE. THE ASSESSMENT ORDER U/S.143(3) DATED 29/07/2016 MADE BY AO IS ACC ORDINGLY SET ASIDE WITH THE DIRECTION TO MADE FRESH ASSESSMENT AFTER CONSIDERIN G THE COMPLETE FACTS AS DISCUSSED ABOVE AND SUBMISSIONS MADE BY THE AR OF THE ASSESSE E IN RESPECT OF THE ABOVE SPECIFIC ISSUE RAISED AND AFTER GIVING OPPORTUNITY TO RHO ASSESSEE AND IN ACCORDANCE WITH LAW. THIS LEAVES THE ASSESSEE AGGRIEVED. 6. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL PLEADINGS AGAINST AND IN SUPPORT OF PCITS IMPUGNED SEC.263 JURISDICTION REV ISING THE REGULAR ASSESSMENT DATED 29.07.2016 ACCEPTING THE ASSESSEES LTCG/LOSS DERIV ED FROM TRANSFER OF SHARES HELD IN M/S KAILASH AUTO FINANCE (SUPRA). IT IS NOT IN D ISPUTE THAT THE ASSESSEE HAD FILED ALL THE SUPPORTIVE DETAILED EVIDENCE (SUPRA) FORMING PA RT OF THE ASSESSMENT RECORDS. LEARNED PCIT IS ALSO EQUALLY FAIR IN NOT TREATING T HE IMPUGNED ASSESSMENT AS A CASE OF THE FORMER LIMBS OF LACK OF INQUIRY BUT HE HOLDS TH AT IT IS AN ERRONEOUS DECISION ON ASSESSING OFFICERS PART TREATING THE GAINS / LOSS ASS GENUINENESS AS CAUSING PREJUDICE TO THE INTEREST OF THE REVENUE. WE NOTICE IN THESE CIRCUMSTANCES THAT THIS TRIBUNALS CO- ORDINATE BENCHS DECISION IN BATCH OF APPEALS M/S G ITASH TIKMANI, HUF VS. INCOME TAX OFFICER WARD-28(4) KOLKATA ITA NO. 01 TO 04/KOL/2019, ITA NO.05/KOL/2019 & ITA NO.609/KOL/2019 ASSESSMENT YEAR 2 014-15 KAUSHAL KISHORE BIHANI VS ITO WD-45(1), KOL. PAGE 6 ITA NO.13-15/KOL/2019 DECIDED ON 20.09.2019 HAS REVERSED THE PCITS SIMI LAR EXERCISES OF REVISIONAL JURISDICTION VIDE A FOLLOWI NG DETAILED DISCUSSION:- 5 .LEARNED AUTHORIZED REPRESENTATIVE VEHEMENTLY SUBMI TS DURING THE COURSE OF HEARING THAT THE PCIT HAS ERRED IN LAW AND ON FACTS IN EXERCISIN G HIS REVISION JURISDICTION VESTED U/S 263 OF THE ACT SINCE THE ASSESSING OFFICERS REGULAR ASSES SMENT IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. HE QUOTES HON'BLE APEX COURTS LAND MARK DECISION IN MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 243 ITR 83 (SC) THAT THESE TWIN CONDITIONS HAVE TO BE, SIMULTANEOUSLY SATISFIED BEFORE THE CITS OR THE PC ITS; AS THE CASE MAY BE PROPOSES TO INVOKE HIS JURISDICTION U/S 263 OF THE ACT. HE THEN INVITES OUR ATTENTION TO THE ASSESSEES FOREGOING DETAILED PAPER BOOK RUNNING INTO 98 PAGES CONTAINING ALL THE RELEVANT PARTICULARS OF THE LTCG IN ISSUE. LEARNED COUNSEL ACCORDINGLY SUBM ITS THAT ALTHOUGH THE PCIT HAS TERMED THE IMPUGNED REGULAR ASSESSMENT TO BE BOTH ERRONEOU S ONE AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE WHILST DIRECTING THE ASSESSING OFFICER TO ADD THE ASSESSEES LTCG AS BOGUS UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT, THERE I S NOT EVEN AN IOTA OF EVIDENCE THAT THE SAME ARE IN FACT NOT GENUINE. HE THEN QUOTES THIS TRIBUN ALS CO-ORDINATE BENCH DECISION IN TANISH DEALERS PVT. LTD. VS. PRINCIPAL COMMISSIONER OF INC OME-TAX CIRCLE-4, KOLKATA ITA NO.1153/KOL/2019 DECIDED ON 01.07.2019, M/S ARUN KUMAR GARG HUF VS. PR. CIT, DELHI- 13, NEW DELHI ITA NO.3391/DEL/2018 DECIDED ON 08.01.2019, OM FOREGOING & ENGINEERING (P) LTD. VS. PR. CIT-1, KOLKATA ITA NO.S 509-510/KOL/2017 DECIDED ON 13.12.2017, MINA MEHTA VS. INCOME-TAX OFFICER WARD-35(4), KOLKATA ITA NO.911/KOL/2011 DECIDED ON28.09.2018 IN BOTH REVISING SIMILAR EXERCISE OF U /S 263 REVISION JURISDICTION ON LEGALITY ASPECT AS WELL AS ON THE LATTER ISSUE OF GENUINENES S OF SIMILAR LTCG ON MERITS. 6 . LEARNED CIT-DR STRONGLY SUPPORTS THE PCITS EXERC ISE OF REVISION JURISDICTION IN FACTS OF THE INSTANT CASE. DR. SRIHARI VEHEMENTLY C ONTENDS THAT THE ASSESSING OFFICER HAS NOT CARRIED OUT THE REQUIRE DUE ENQUIRY WITH REGARD TO ASSESSEES ABOVE STATED LTCG WHICH PROMPTED THE PCIT TO INVOKE HIS REVISION JURISDICTI ON. HE REFER TO THE PCITS DETAILED DISCUSSION TO THIS EFFECT THAT SUCH KIND OF LTCG AR E OFFSHOOT OF COLLUSION AMOUNT OF ENTRY OPERATORS, PROMOTERS AND INVESTORS CONCERNED DERIVI NG BOGUS LTCG BY TAKING RECOURSE TO ARTIFICIAL PRICE OF THE SCRIPS. HE NEXT HIGHLIGHTS THE CBDTS STANDARD OPERATING PROCEDURAL (SOP) ISSUE RECENTLY TO THE FIELD AUTHORITIES FOR H ANDLING CASES OF BOGUS LTCG / LOSSES DERIVE MAINLY OF PENNY STOCK. 7 . DR. SRIHARIS NEXT RELIANCE IS ON VARIOUS DECISIO NS I.E. ITA NO.4057/DEL/2018 POOJA GUPTA VS. PR. CIT,NEW DELHI DECIDED ON 31.01.2019, ITA NO.5714/DEL/2018 POOJA AJMANI VS. ITO WARD-20(4), NEW DELHI DECIDED ON 25.04.2019 , ITA NO.1723/BANG/2018 SMT. M.K. RAJESHWARI VS. INCOME-TAX OFFICER, WARD-3, RAIPUR D ECIDED ON 12.10.2018 AND THOSE REFERRED IN THE PCITS ORDER UNDER CHALLENGE (SUPRA) TO PRAY FOR UPHOLDING THE IMPUGNED REVISION ORDER UNDER CHALLENGE. 8 .WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVA L CONTENTIONS. THE SOLE ISSUE THAT ARISES FOR OUR APT ADJUDICATION IN FACTS OF INSTANT CASE I S AS TO WHETHER THE PCIT HAS RIGHTLY EXERCISED HIS REVISION JURISDICTION VESTED U/S 263 OR NOT. TH ERE IS NO DISPUTE THAT THE ASSESSING OFFICER ACCEPTED THE ASSESSEES LTCG AS GENUINE AS PER HIS DISCUSSION IN THE ASSESSMENT ORDER THAT HE HAD VERIFIED ALL NECESSARY FACTS DURING THE COURSE OF SCRUTINY. SUFFICE TO SAY, THE SAME FACT VERY MUCH EMERGES NOT ONLY FROM ASSESSEES DETAILED PAPER BOOK RUNNING INTO 98 PAGES BUT ALSO FROM THE RELEVANT ASSESSMENT NOTINGS FORMING P ART OF RECORD (SUPRA). THIS TRIBUNALS CO- ORDINATE BENCHS DECISION IN CASE OF M/S SAREGAMA INDIA LTD. VS. CIT-1, KOLKATA ITA NO.1254/KOL/2014 DECIDED ON 20.09.2017 HAS REITERATED THE FOLLOWING SETTLED PRINCIPLES IN CASE OF SEC. 263 REVISION JURISDICTION:- ITA NO.609/KOL/2019 ASSESSMENT YEAR 2 014-15 KAUSHAL KISHORE BIHANI VS ITO WD-45(1), KOL. PAGE 7 11. NOW WE SHALL DISCUSS THE PROPOSITIONS OF LAW A S LAID DOWN BY VARIOUS COURTS ON THE ISSUE OF REVISIONARY JURISDICTION OF THE COMMIS SIONER OF INCOME TAX U/S 263 OF THE ACT. THE HONEBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF SPECTRA SHARES AND SCRIPS PVT. LTD. V CIT (AP) 354 ITR 35 HAD CONSIDERED A NUMBER OF JUDGMENT S ON THIS ISSUE OF EXERCISE OF JURISDICITON U/S 263 OF T HE ACT BY THE PRINCIPAL COMMISSIONER OF INCOME TAX AND CULLED OUT THE PRINCIPLES LAID DO WN IN THE JUDGMENTS AS BELOW: 24. IN MALABAR INDUSTRIAL CO.LTD. ( 2 SUPRA), THE S UPREME COURT HELD THAT A BARE READING OF SEC.263 MAKES IT CLEAR THAT THE PREREQUI SITE FOR THE EXERCISE OF JURISDICTION BY THE COMMISSIONER SUO MOTU UNDER IT, IS THE ORDER OF THE INCOME TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS , NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS ; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT IF THE ORDER OF THE INCOME TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IT IS PREJUDICIAL TO THE REVENUE RECOURSE CANNOT BE HAD TO SEC.263 (1) OF THE ACT. IT ALSO HELD AT PG-88 AS FOLLOWS: 'THE PHRASE ' PREJUDICIAL TO THE INTERESTS OF THE REVENUE ' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE A SSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. FOR EXAMPLE, WHEN AN INCOME-TAX OFFICER ADOPTED ONE OF THE COURSES PE RMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE: OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH TH E COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORD ER PREJUDICIAL TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. IT HAS BEEN HELD BY THIS COUR T THAT WHERE A SUM NOT EARNED BY A PERSON IS ASSESSED AS INCOME IN HIS HAN DS ON HIS SO OFFERING, THE ORDER PASSED BY THE ASSESSING OFFICER ACCEPTING THE SAME AS SUCH WILL BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. RAMPYARIDEVI SARAOGI V. CIT (1968) 67 ITR 84 (SC) AND IN SMT. TA RA DEVI AGGARWAL V. CIT (1973) 88 ITR 323 (SC)'. 25. IN MAX INDIA LTD. (3 SUPRA), REITERATED THE VIE W IN MALABAR INDUSTRIAL CO.LTD. (2 SUPRA) AND OBSERVED THAT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE, WHEN AN INCOME TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE; OR WHERE TW O VIEWS ARE POSSIBLE AND THE INCOME TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMI SSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME TAX OFFICER IS UNSUSTAINABLE IN LAW. ON THE FACTS OF THAT CASE, SEC.80HHC(3) AS IT THEN STOOD WAS INT ERPRETED BY THE ASSESSING OFFICER BUT THE REVENUE CONTENDED THAT IN VIEW OF THE 2005 AMENDMENT WHICH IS CLARIFICATORY AND RETROSPECTIVE IN NATURE, THE VIEW OF THE ASSESSING OFFICER WAS UNSUSTAINABLE IN LAW AND THE COMMISSIONER WAS CORRE CT IN INVOKING SEC.263. BUT THE SUPREME COURT REJECTED THE SAID CONTENTION AND HELD THAT WHEN THE COMMISSIONER PASSED HIS ORDER DISAGREEING WITH THE VIEW OF THE A SSESSING OFFICER, THERE WERE TWO VIEWS ON THE WORD ' PROFITS ' IN THAT SECTION; THAT THE SAID SECTION WAS AMENDE D ELEVEN TIMES; THAT DIFFERENT VIEWS EXISTED ON THE DAY WHEN THE COMMISSIONER PASSED HIS ORDER; THAT THE MECHANICS OF THE SECTION HAD BECOME SO COMPLICATED OVER THE YEARS THAT TWO VIEWS WERE INHERENTLY POSSIBLE; AND THEREF ORE, THE SUBSEQUENT AMENDMENT IN 2005 EVEN THOUGH RETROSPECTIVE WILL NOT ATTRACT THE PROVISION OF SEC.263. ITA NO.609/KOL/2019 ASSESSMENT YEAR 2 014-15 KAUSHAL KISHORE BIHANI VS ITO WD-45(1), KOL. PAGE 8 26. IN VIKAS POLYMERS (4 SUPRA), THE DELHI HIGH COU RT HELD THAT THE POWER OF SUO MOTU REVISION EXERCISABLE BY THE COMMISSIONER UNDER THE PROVISIONS OF SEC.263 IS SUPERVISORY IN NATURE; THAT AN ' ERRONEOUS JUDGMENT ' MEANS ONE WHICH IS NOT IN ACCORDANCE WITH LAW; THAT IF AN INCOME TAX OFFICER ACTING IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRAN DED AS ' ERRONEOUS ' BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN DIFFERENTLY OR MORE ELABORATELY; THAT THE SECTION D OES NOT VISUALIZE THE SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE IN COME TAX OFFICER, WHO PASSED THE ORDER UNLESS THE DECISION IS NOT IN ACCORDANCE WITH THE LAW; THAT TO INVOKE SUO MOTU REVISIONAL POWERS TO REOPEN A CONCLUDED ASSESSMENT UNDER SEC.263, THE COMMISSIONER MUST GIVE REASONS; THAT A BARE REITERA TION BY HIM THAT THE ORDER OF THE INCOME TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, WILL NOT SUFFICE; THAT THE REASONS MUST BE SUCH AS TO SHOW THAT THE ENHANCEMENT OR MODIFICATION OF THE ASSESSMENT OR CA NCELLATION OF THE ASSESSMENT OR DIRECTIONS ISSUED FOR A FRESH ASSESSMENT WERE CALLE D FOR, AND MUST IRRESISTIBLY LEAD TO THE CONCLUSION THAT THE ORDER OF THE INCOME TAX OFF ICER WAS NOT ONLY ERRONEOUS BUT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. TH US, WHILE THE INCOME TAX OFFICER IS NOT CALLED UPON TO WRITE AN ELABORATE JUDGMENT GIVI NG DETAILED REASONS IN RESPECT OF EACH AND EVERY DISALLOWANCE, DEDUCTION, ETC., IT IS INCUMBENT UPON THE COMMISSIONER NOT TO EXERCISE HIS SUO MOTU REVISIONAL POWERS UNLE SS SUPPORTED BY ADEQUATE REASONS FOR DOING SO; THAT IF A QUERY IS RAISED DURING THE COURSE OF THE SCRUTINY BY THE ASSESSING OFFICER, WHICH WAS ANSWERED TO THE SATISF ACTION OF THE ASSESSING OFFICER, BUT NEITHER THE QUERY NOR THE ANSWER WERE REFLECTED IN THE ASSESSMENT ORDER, THIS WOULD NOT BY ITSELF LEAD TO THE CONCLUSION THAT THE ORDER OF THE ASSESSING OFFICER CALLED FOR INTERFERENCE AND REVISION. 27. IN SUNBEAM AUTO LTD.( 5 SUPRA), THE DELHI HIGH COURT HELD THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IS NOT REQUIRED TO GIVE A DETAILED REASON IN RESPECT OF EACH AND EVERY ITEM OF DEDUCTION, ETC.; THAT WHETHE R THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE EXPENDITURE IN QUESTION HAS TO BE SEEN; THAT IF THERE WAS AN INQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF G IVE OCCASION TO THE COMMISSIONER TO PASS ORDERS UNDER SEC.263 MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER; THAT IT IS ONLY IN CASES OF LACK OF INQUIRY THAT SU CH A COURSE OF ACTION WOULD BE OPEN; THAT AN ASSESSMENT ORDER MADE BY THE INCOME TAX OFF ICER CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCOR DING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY; THERE MUST BE S OME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT THE TAX WHICH WAS LAWFULLY EXIG IBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN IN CORRECT OR INCOMPLETE INTERPRETATION, A LESSER TAX THAN WHAT WAS JUST, HAS BEEN IMPOSED. IN THAT CASE, THE DELHI HIGH COURT HELD THAT THE COMMISSIONER IN THE EXERCISE OF REVIS IONAL POWER COULD NOT HAVE OBJECTED TO THE FINDING OF THE ASSESSING OFFICER TH AT EXPENDITURE ON TOOLS AND DIES BY THE ASSESSEE, A MANUFACTURER OF CAR PARTS, IS REVEN UE EXPENDITURE WHERE THE SAID CLAIM WAS ALLOWED BY THE LATTER ON BEING SATISFIED WITH T HE EXPLANATION OF THE ASSESSEE AND WHERE THE SAME ACCOUNTING PRACTICE FOLLOWED BY THE ASSESSEE FOR NUMBER OF YEARS WITH THE APPROVAL OF THE INCOME TAX AUTHORITIES. IT HELD THAT THE ASSESSING OFFICER HAD CALLED FOR EXPLANATION ON THE VERY ITEM FROM TH E ASSESSEE AND THE ASSESSEE HAD FURNISHED ITS EXPLANATION. MERELY BECAUSE THE ASSES SING OFFICER IN HIS ORDER DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD, HIS OR DER CANNOT BE TERMED AS ERRONEOUS. THE OPINION OF THE ASSESSING OFFICER IS ONE OF THE POSSIBLE VIEWS AND THERE WAS NO MATERIAL BEFORE THE COMMISSIONER TO VARY THAT OPINI ON AND ASK FOR FRESH INQUIRY. 28. IN GABRIEL INDIA LTD. (6 SUPRA), THE BOMBAY HIG H COURT HELD THAT A CONSIDERATION OF THE COMMISSIONER AS TO WHETHER AN ORDER IS ERRON EOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, MUST BE BASED ON M ATERIALS ON THE RECORD OF THE PROCEEDINGS CALLED FOR BY HIM. IF THERE ARE NO MATE RIALS ON RECORD ON THE BASIS OF ITA NO.609/KOL/2019 ASSESSMENT YEAR 2 014-15 KAUSHAL KISHORE BIHANI VS ITO WD-45(1), KOL. PAGE 9 WHICH IT CAN BE SAID THAT THE COMMISSIONER ACTING I N A REASONABLE MANNER COULD HAVE COME TO SUCH A CONCLUSION, THE VERY INITIATION OF P ROCEEDINGS BY HIM WILL BE ILLEGAL AND WITHOUT JURISDICTION. IT HELD THAT THE COMMISSI ONER CANNOT INITIATE PROCEEDINGS WITH A VIEW TO START FISHING AND ROVING INQUIRIES I N MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED; THAT THE DEPARTMENT CANNOT BE PERMITTED TO BEGIN FRESH LITIGATION BECAUSE OF NEW VIEWS THEY ENTERTAIN ON FACTS OR NEW VERSION S WHICH THEY PRESENT AS TO WHAT SHOULD BE THE INFERENCE OR PROPER INFERENCE EITHER OF THE FACTS DISCLOSED OR THE WEIGHT OF THE CIRCUMSTANCE; THAT IF THIS IS PERMITTED, LIT IGATION WOULD HAVE NO END EXCEPT WHEN LEGAL INGENUITY IS EXHAUSTED; THAT TO DO SO IS TO DIVIDE ONE ARGUMENT INTO TWO AND MULTIPLY THE LITIGATION. IT HELD THAT CASES MAY BE VISUALIZED WHERE THE INCOME TAX OFFICER WHILE MAKING AN ASSESSMENT EXAMINES THE ACC OUNTS, MAKES INQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNT OR BY MAKING SOME ESTIMATE HIMSELF; THAT THE COMMISSIONER, ON PERUSAL OF THE RECORD, MAY BE OF T HE 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; BUT THAT WOULD NOT VEST THE COM MISSIONER WITH POWER TO REEXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIM SELF AT A HIGHER FIGURE; THERE MUST BE MATERIAL AVAILABLE ON THE RECORD CALLED FOR BY THE COMMISSIONER TO SATISFY HIM PRIMA FACIE THAT THE ORDER IS BOTH ERRONEOUS AN D PREJUDICIAL TO THE INTERESTS OF THE REVENUE. OTHERWISE, IT WOULD AMOUNT TO GIVING UNBRI DLED AND ARBITRARY POWER TO THE REVISING AUTHORITY TO INITIATE PROCEEDINGS FOR REVI SION IN EVERY CASE AND START RE- EXAMINATION AND FRESH INQUIRY IN MATTERS WHICH HAVE ALREADY BEEN CONCLUDED UNDER LAW. 29. IN M.S. RAJU ( 15 SUPRA ), THIS COURT HAS HELD THAT THE POWER OF THE COMMIS SIONER UNDER SEC.263(1) IS NOT LIMITED ONLY TO THE MATERIA L WHICH WAS AVAILABLE BEFORE THE ASSESSING OFFICER AND, IN ORDER TO PROTECT THE INTE RESTS OF THE REVENUE, THE COMMISSIONER IS ENTITLED TO EXAMINE ANY OTHER RECOR DS WHICH ARE AVAILABLE AT THE TIME OF EXAMINATION BY HIM AND TO TAKE INTO CONSIDERATIO N EVEN THOSE EVENTS WHICH AROSE SUBSEQUENT TO THE ORDER OF ASSESSMENT. 30. IN RAMPYARI DEVI SARAOGI (21 SUPRA), THE COMMIS SIONER IN EXERCISE OF REVISIONAL POWERS CANCELLED ASSESSEES ASSESSMENT FOR THE YEAR S 1952-1953 TO 1960-61 BECAUSE HE FOUND THAT THE INCOME TAX OFFICER WAS NOT JUSTIF IED IN ACCEPTING THE INITIAL CAPITAL, THE GIFT RECEIVED AND SALE OF JEWELLERY, THE INCOME FROM BUSINESS ETC., WITHOUT ANY ENQUIRY OR EVIDENCE WHATSOEVER . HE DIRECTED THE IN COME TAX OFFICER TO DO FRESH ASSESSMENT AFTER MAKING PROPER ENQUIRY AND INVESTIG ATION IN REGARD TO THE JURISDICTION. THE ASSESSEE COMPLAINED BEFORE THE SUPREME COURT TH AT NO FAIR OR REASONABLE OPPORTUNITY WAS GIVEN TO HER. SUPREME COURT HELD TH AT THERE WAS AMPLE MATERIAL TO SHOW THAT THE INCOME TAX OFFICER MADE THE ASSESSMEN TS IN UNDUE HURRY; THAT HE HAD PASSED A SHORT STEREO TYPED ASSESSMENT ORDER FOR EA CH ASSESSMENT YEAR; THAT ON THE FACE OF THE RECORD, THE ORDERS WERE PRE-JUDICIAL TO THE INTEREST OF THE REVENUE; AND NO PREJUDICE WAS CAUSED TO THE ASSESSEE ON ACCOUNT OF FAILURE OF THE COMMISSIONER TO INDICATE THE RESULTS OF THE ENQUIRY MADE BY HIM, AS SHE WOULD HAVE A FULL OPPORTUNITY FOR SHOWING TO THE INCOME TAX OFFICER WHETHER HE HA D JURISDICTION OR NOT AND WHETHER THE INCOME TAX ASSESSED IN THE ASSESSMENT YEARS WHI CH WERE ORIGINALLY PASSED WERE CORRECT OR NOT' 31. FROM THE ABOVE DECISIONS, THE FOLLOWING PRINCIP LES AS TO EXERCISE OF JURISDICTION BY THE COMMISSIONER U/S.263 OF THE ACT CAN BE CULLE D OUT: A) THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CON DITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ERR ONEOUS BUT IS NOT PREJUDICIAL ITA NO.609/KOL/2019 ASSESSMENT YEAR 2 014-15 KAUSHAL KISHORE BIHANI VS ITO WD-45(1), KOL. PAGE 10 TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IT IS PREJUDICIAL TO THE REVENUE RECOURSE CANNOT BE HAD TO SEC.263 (1) OF THE ACT. B) EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORD ER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE. FOR EXAMPLE, WHEN AN INCOME-TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE: OR W HERE TWO VIEWS ARE POSSIBLE AND THE INCOME TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOU S ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. C) TO INVOKE SUO MOTU REVISIONAL POWERS TO REOPEN A CONCLUDED ASSESSMENT UNDER SEC.263, THE COMMISSIONER MUST GIVE REASONS; THAT A BARE REITERATION BY HIM THAT THE ORDER OF THE INCOME TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, WILL N OT SUFFICE; THAT THE REASONS MUST BE SUCH AS TO SHOW THAT THE AND MUST IRRESISTI BLY LEAD TO THE CONCLUSION THAT THE ORDER OF THE INCOME TAX OFFICER WAS NOT ON LY ERRONEOUS BUT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THUS, WHILE THE INCOME TAX OFFICER IS NOT CALLED UPON TO WRITE AN ELABORATE JU DGMENT GIVING DETAILED REASONS IN RESPECT OF EACH AND EVERY DISALLOWANCE, DEDUCTION, ETC., IT IS INCUMBENT UPON THE COMMISSIONER NOT TO EXERCISE HIS SUO MOTU REVISIONAL POWERS UNLESS SUPPORTED BY ADEQUATE REASONS FOR DOI NG SO; THAT IF A QUERY IS RAISED DURING THE COURSE OF THE SCRUTINY BY THE ASS ESSING OFFICER, WHICH WAS ANSWERED TO THE SATISFACTION OF THE ASSESSING OFFIC ER, BUT NEITHER THE QUERY NOR THE ANSWER WERE REFLECTED IN THE ASSESSMENT ORD ER, THIS WOULD NOT BY ITSELF LEAD TO THE CONCLUSION THAT THE ORDER OF THE ASSESS ING OFFICER CALLED FOR INTERFERENCE AND REVISION. E) THE COMMISSIONER CANNOT INITIATE PROCEEDINGS WIT H A VIEW TO START FISHING AND ROVING INQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED; THAT THE DEPARTMENT CANNOT BE PERMITTED TO BEGIN FRESH L ITIGATION BECAUSE OF NEW VIEWS THEY ENTERTAIN ON FACTS OR NEW CIRCUMSTANCE; THAT IF THIS IS PERMITTED, LITIGATION WOULD HAVE NO END EXCEPT WHEN LEGAL INGE NUITY IS EXHAUSTED F) WHETHER THERE WAS APPLICATION OF MIND BEFORE ALL OWING THE EXPENDITURE IN QUESTION HAS TO BE SEEN; THAT IF THERE WAS AN INQUI RY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE COMMISSION ER TO PASS ORDERS UNDER SEC.263 MERELY BECAUSE HE HAS A DIFFERENT OPINION I N THE MATTER; THAT IT IS ONLY IN CASES OF LACK OF INQUIRY THAT SUCH A COURSE OF A CTION WOULD BE OPEN; THAT AN ASSESSMENT ORDER MADE BY THE INCOME TAX OFFICER CAN NOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCOR DING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY; THERE MU ST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT THE TAX WHICH WAS L AWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE RELE VANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION, A LESSER TAX THAN WHA T WAS JUST, HAS BEEN IMPOSED. G) THE POWER OF THE COMMISSIONER UNDER SEC.263 (1) IS NOT COMMISSIONER IS ENTITLED TO EXAMINE ANY OTHER RECORDS WHICH ARE AVA ILABLE AT THE TIME OF EXAMINATION BY HIM AND TO TAKE INTO CONSIDERATION E VEN THOSE EVENTS WHICH AROSE SUBSEQUENT TO THE ORDER OF ASSESSMENT. WE NOW EXAMINE THE FOLLOWING JUDGMENTS ON THIS ISS UE:- ITA NO.609/KOL/2019 ASSESSMENT YEAR 2 014-15 KAUSHAL KISHORE BIHANI VS ITO WD-45(1), KOL. PAGE 11 DIRECTOR OF INCOME TAX VS. JYOTI FOUNDATION 357 ITR 388 (DELHI HIGH COURT) IT WAS HELD THAT REVISIONARY POWER U/S 263 IS CONF ERRED ON THE COMMISSIONER/DIRECTOR OF INCOME TAX WHEN AN ORDER P ASSED BY THE LOWER AUTHORITY IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. ORDERS WHICH ARE PASSED WITHOUT INQUIRY OR INVESTIGATION ARE TREATED AS ERR ONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, BUT ORDERS WHICH ARE PASSED AFTER I NQUIRY/INVESTIGATION ON THE QUESTION/ISSUE ARE NOT PER SE OR NORMALLY TREATED A S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE BECAUSE THE REVISIONARY AUT HORITY FEELS AND OPINES THAT FURTHER INQUIRY/INVESTIGATION WAS REQUIRED OR DEEPER OR FUR THER SCRUTINY SHOULD BE UNDERTAKEN. INCOME TAX OFFICER VS. DG HOUSING PROJECTS LTD343 I TR 329 (DELHI) REVENUE DOES NOT HAVE ANY RIGHT TO APPEAL TO THE F IRST APPELLATE AUTHORITY AGAINST AN ORDER PASSED BY THE ASSESSING OFFICER. S . 263 HAS BEEN ENACTED TO EMPOWER THE CIT TO EXERCISE POWER OF REVISION AND REVISE AN Y ORDER PASSED BY THE ASSESSING OFFICER, IF TWO CUMULATIVE CONDITIONS ARE SATISFIED . FIRSTLY, THE ORDER SOUGHT TO BE REVISED SHOULD BE ERRONEOUS AND SECONDLY, IT SHOULD BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE EXPRESSION ' PREJUDICIAL TO THE INTEREST OF THE REVENUE ' IS OF WIDE IMPORT AND IS NOT CONFINED TO MERELY LOSS OF TAX. T HE TERM ' ERRONEOUS ' MEANS A WRONG/INCORRECT DECISION DEVIATING FROM LAW. THIS E XPRESSION POSTULATES AN ERROR WHICH MAKES AN ORDER UNSUSTAINABLE IN LAW. THE ASSE SSING OFFICER IS BOTH AN INVESTIGATOR AND AN ADJUDICATOR. IF THE ASSESSING O FFICER AS AN ADJUDICATOR DECIDES A QUESTION OR ASPECT AND MAKES A WRONG ASSESSMENT WHI CH IS UNSUSTAINABLE IN LAW, IT CAN BE CORRECTED BY THE COMMISSIONER IN EXERCISE OF REVISIONARY POWER. AS AN INVESTIGATOR, IT IS INCUMBENT UPON THE ASSESSING OF FICER 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 CAS ES, THE ORDER BECOMES ERRONEOUS BECAUSE ENQUIRY OR VERIFICATION HAS NOT B EEN MADE AND NOT BECAUSE A WRONG ORDER HAS BEEN PASSED ON MERITS. THUS, IN CASES OF WRONG OPINION OR FINDING ON MERIT S, THE CIT HAS TO COME TO THE CONCLUSION AND HIMSELF DECIDE THAT THE ORDER IS ERR ONEOUS, BY CONDUCTING NECESSARY ENQUIRY, IF REQUIRED AND NECESSARY, BEFORE THE ORDE R UNDER S. 263 IS PASSED. IN SUCH CASES, THE ORDER OF THE ASSESSING OFFICER WILL BE E RRONEOUS BECAUSE THE ORDER PASSED IS NOT SUSTAINABLE IN LAW AND THE SAID FINDING MUST BE RECORDED. CIT CANNOT REMAND THE MATTER TO THE ASSESSING OFFICER TO DECIDE WHETHER T HE FINDINGS RECORDED ARE ERRONEOUS. IN CASES WHERE THERE IS INADEQUATE ENQUIRY BUT NOT LACK OF ENQUIRY, AGAIN THE CIT MUST GIVE AND RECORD A FINDING THAT THE ORDER/INQUIRY MA DE IS ERRONEOUS. THIS CAN HAPPEN IF AN ENQUIRY AND VERIFICATION IS CONDUCTED BY THE CIT AND HE IS ABLE TO ESTABLISH AND SHOW THE ERROR OR MISTAKE MADE BY THE ASSESSING OFF ICER, MAKING THE ORDER UNSUSTAINABLE IN LAW. IN SOME CASES POSSIBLY THOUGH RARELY, THE CIT CAN ALSO SHOW AND ESTABLISH THAT THE FACTS ON RECORD OR INFERENCE S DRAWN FROM FACTS ON RECORD PER SE JUSTIFIED AND MANDATED FURTHER ENQUIRY OR INVESTIGA TION BUT THE ASSESSING OFFICER HAD ERRONEOUSLY NOT UNDERTAKEN THE SAME. HOWEVER, THE S AID FINDING MUST BE CLEAR, UNAMBIGUOUS AND NOT DEBATABLE. THE MATTER CANNOT BE REMITTED FOR A FRESH DECISION TO THE ASSESSING OFFICER TO CONDUCT 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 FOR EXERCISE OF JURISDICTION UNDE R S. 263 OF THE ACT. IN SUCH MATTERS, TO REMAND THE MATTER/ISSUE TO THE ASSESSING OFFICER WOULD IMPLY AND MEAN THE CIT HAS NOT EXAMINED AND DECIDED WHETHER OR NOT THE ORD ER IS ERRONEOUS BUT HAS DIRECTED THE ASSESSING OFFICER TO DECIDE THE ASPECT/QUESTION . THIS DISTINCTION MUST BE KEPT IN MIND BY THE CIT WH ILE EXERCISING JURISDICTION UNDER S. 263 OF THE ACT AND IN THE ABSENCE OF THE FINDING THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, EXERCISE OF JURISDICTION UNDER THE SAID SECTION IS ITA NO.609/KOL/2019 ASSESSMENT YEAR 2 014-15 KAUSHAL KISHORE BIHANI VS ITO WD-45(1), KOL. PAGE 12 NOT SUSTAINABLE. IN MOST CASES OF ALLEGED ' INADEQUATE INVESTIGATION ', IT WILL BE DIFFICULT TO HOLD THAT THE ORDER OF THE ASSESSING O FFICER, WHO HAD CONDUCTED ENQUIRIES AND HAD ACTED AS AN INVESTIGATOR, IS ERRONEOUS, WIT HOUT CIT CONDUCTING VERIFICATION/INQUIRY. THE ORDER OF THE ASSESSING OF FICER MAY BE OR MAY NOT BE WRONG. CIT CANNOT DIRECT RECONSIDERATION ON THIS GROUND BU T ONLY WHEN THE ORDER 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 R EASONS WHY IT IS ERRONEOUS. AN ORDER WILL NOT BECOME ERRONEOUS BECAUSE ON REMIT, T HE ASSESSING OFFICER MAY DECIDE THAT THE ORDER IS ERRONEOUS. THEREFORE CIT MUST AFT ER RECORDING REASONS HOLD THAT THE ORDER IS ERRONEOUS. THE JURISDICTIONAL PRECONDITION STIPULATED IS THAT THE CIT MUST COME TO THE CONCLUSION THAT THE ORDER IS ERRONEOUS AND IS UNSUSTAINABLE IN LAW. IT MAY BE NOTICED THAT THE MATERIAL 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 EXAMINA TION BY THE CIT. NOTHING BARS/PROHIBITS THE CIT FROM COLLECTING AND RELYING UPON NEW/ADDITIONAL MATERIAL/EVIDENCE TO SHOW AND STATE THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS. COMMISSIONER OF INCOME TAX VS. J. L. MORRISON (INDI A) LTD. 366 ITR AS REGARD THE SUBMISSION ON BEHALF OF THE REVENUE THAT POWER UNDER SECTION 263 OF THE ACT CAN BE EXERCISED EVEN IN A CASE WHERE TH E ISSUE IS DEBATABLE, IT WAS HELD THAT THE CASE OF CIT VS. M. M. KHAMBHATWALA WAS NOT APPLICABLE. THE OBSERVATION THAT THE COMMISSIONER CAN EXERCISE POWER UNDER SECT ION 263 OF THE ACT EVEN IN A CASE WERE THE ISSUE IS DEBATABLE WAS A MERE PASSING REMARK WHICH IS AGAIN CONTRARY TO THE VIEW TAKEN BY THE APEX COURT IN THE CASE OF MALABAR INDUSTRIAL COMPANY LTD. & MAX INDIA LTD . IF THE ASSESSING OFFICER HAS TAKEN A POSSIBLE VIE W, IT CANNOT BE SAID THAT THE VIEW TAKEN BY HIM IS ERRONEOUS NOR THE ORD ER OF THE ASSESSING OFFICER IN THAT CASE CAN BE SET ASIDE IN REVISION. IT HAS TO BE SHO WN UNMISTAKABLY THAT THE ORDER OF THE ASSESSING OFFICER IS UNSUSTAINABLE. ANYTHING SHORT OF THAT WOULD NOT CLOTHE THE CIT WITH JURISDICTION TO EXERCISE POWER UNDER SECTION 2 63 OF THE ACT. CIT VS. M. M. KHAMBHATWALA REPORTED IN 198 ITR 144; CIT VS. RAISO N INDUSTRIES LTD. REPORTED IN 288 ITR 322 (SC), NOT APPLICABLE; MALABAR INDUSTRIA L CO. LTD. V. CIT REPORTED IN 243 ITR 83, RELIED ON. (PARA 72) AS REGARD THE THIRD QU ESTION AS TO WHETHER THE ASSESSMENT ORDER WAS PASSED BY THE ASSESSING OFFICER WITHOUT A PPLICATION OF MIND, IT WAS HELD THAT THE COURT HAS TO START WITH THE PRESUMPTION TH AT THE ASSESSMENT ORDER WAS REGULARLY PASSED. THERE IS EVIDENCE TO SHOW THAT TH E ASSESSING OFFICER HAD REQUIRED THE ASSESSEE TO ANSWER 17 QUESTIONS AND TO FILE DOCUMEN TS IN REGARD THERETO. IT IS DIFFICULT TO PROCEED ON THE BASIS THAT THE 17 QUESTIONS RAISE D BY HIM DID NOT REQUIRE APPLICATION OF MIND. WITHOUT APPLICATION OF MIND THE QUESTIONS RAISED BY HIM IN THE ANNEXURE TO NOTICE UNDER SECTION 142(1) OF THE ACT COULD NOT HA VE BEEN FORMULATED. THE ASSESSING OFFICER WAS REQUIRED TO EXAMINE THE RETUR N FILED BY THE ASSESSEE IN ORDER TO ASCERTAIN HIS INCOME AND TO LEVY APPROPRIATE TAX ON THAT BASIS. WHEN THE ASSESSING OFFICER WAS SATISFIED THAT THE RETURN, FILED BY THE ASSESSEE, WAS IN ACCORDANCE WITH LAW, HE WAS UNDER NO OBLIGATION TO JUSTIFY AS TO WH Y WAS HE SATISFIED. ON THE TOP OF THAT THE ASSESSING OFFICER BY HIS ORDER DATED 28TH MARCH, 2008 DID NOT ADVERSELY AFFECT ANY RIGHT OF THE ASSESSEE NOR WAS ANY CIVIL RIGHT OF THE ASSESSEE PREJUDICED. HE WAS AS SUCH UNDER NO OBLIGATION IN LAW TO GIVE REAS ONS. THE FACT, THAT ALL REQUISITE PAPERS WERE SUMMONED AND THEREAFTER THE MATTER WAS HEARD FROM TIME TO TIME COUPLED WITH THE FACT THAT THE VIEW TAKEN BY HIM IS NOT SHO WN BY THE REVENUE TO BE ERRONEOUS AND WAS ALSO CONSIDERED BOTH BY THE TRIBUNAL AS ALS O BY US TO BE A POSSIBLE VIEW, STRENGTHENS THE PRESUMPTION UNDER CLAUSE (E) OF SEC TION 114 OF THE EVIDENCE ACT. A PRIMA FACIE EVIDENCE, ON THE BASIS OF THE AFORESAID PRESUMPTION, IS THUS CONVERTED INTO A CONCLUSIVE PROOF OF THE FACT THAT THE ORDER WAS P ASSED BY THE ASSESSING OFFICER AFTER DUE APPLICATION OF MIND. MEERUT ROLLER FLOUR MILLS PVT. LTD. VS. C.I.T., ITA NO. 116 ITA NO.609/KOL/2019 ASSESSMENT YEAR 2 014-15 KAUSHAL KISHORE BIHANI VS ITO WD-45(1), KOL. PAGE 13 /COCH/ 2012; CIT VS. INFOSYS TECHNOLOGIES LTD., 341 ITR 293 (KARNATAKA); S.N. MUKHERJEE VS. UNION OF INDIA, AIR 1990 SC 1984; A. A. DOSHI VS. JCIT, 256 ITR 685; HINDUSTHAN TIN WORKS LTD. VS. CIT, 275 ITR 43 (DEL), DISTINGUISHED. (PARAS 90- 92, 102) COMMISSIONER OF INCOME TAX VS. SOHANA WOOLLEN MILLS 296 ITR 238 (P&H HC) A REFERENCE TO THE PROVISIONS OF S. 263 SHOWS THAT JURISDICTION THEREUNDER CAN BE EXERCISED IF THE CIT FINDS THAT T HE ORDER OF THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. MERE AU DIT OBJECTION AND MERELY BECAUSE A DIFFERENT VIEW COULD BE TAKEN, WERE NOT ENOUGH TO S AY THAT THE ORDER OF THE AO WAS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REV ENUE. THE JURISDICTION COULD BE EXERCISED IF THE CIT WAS SATISFIED THAT THE BASIS F OR EXERCISE OF JURISDICTION EXISTED. NO RIGID RULE COULD BE LAID DOWN ABOUT THE SITUATION W HEN THE JURISDICTION CAN BE EXERCISED. WHETHER SATISFACTION OF THE CIT FOR EXER CISING JURISDICTION WAS CALLED FOR OR NOT, HAS TO BE DECIDED HAVING REGARD TO A GIVEN FAC T SITUATION. IN THE PRESENT CASE, THE TRIBUNAL HAS HELD THAT THE ASSESSEE HAD DISCLOSED T HAT OUT OF SALE CONSIDERATION, A SUM OF RS. 1 LAKH WAS TO BE RECEIVED FOR SALE OF PERMIT . IF THAT IS SO, THERE WAS NO ERROR IN THE VIEW TAKEN BY THE AO AND NO CASE WAS MADE OUT F OR INVOKING JURISDICTION UNDER S. 263. COMMISSIONER OF INCOME TAX VS. LEISURE WEAR EXPORTS LTD. 341 ITR 166 (DEL) THE PREREQUISITE TO THE EXERCISE OF SUO MOTU JURIS DICTION UNDER S. 263 BY THE CIT IS THAT THE ORDER OF THE AO IS ERRON EOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. TWO CONDITIONS ARE TO BE SATISFIED, NAMELY, (I) THE ORDER OF THE AO SOUGHT TO BE REVISED IS ERRONEOUS; AND (I I) THE ERROR COMMITTED BY THE AO IN THE ORDER IS PREJUDICIAL TO THE INTEREST OF THE REV ENUE. BOTH THESE CONDITIONS ARE TO BE SATISFIED SIMULTANEOUSLY. IT IS ALSO WELL-SETTLED P RINCIPLE THAT PROVISIONS OF S. 263 WOULD NOT BE INVOKED MERELY TO CORRECT A MISTAKE OR ERROR COMMITTED BY THE AO UNLESS IT HAS CAUSED PREJUDICE TO THE INTEREST OF T HE REVENUE. IF AN ORDER IS BASED ON INCORRECT ASSUMPTION OF FACTS OR ON INCORRECT APPLI CATION OF LAW OR WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE AND WITHOUT APPLI CATION OF MIND, IT WOULD BE TREATED AS ERRONEOUS. LIKEWISE, THE EXPRESSION ' PREJUDICIAL TO THE INTEREST OF THE REVENUE ' IS OF WIDE IMPORT AND IS NOT CONFINED TO LOSS OF TA X. IF DUE TO AN ERRONEOUS ORDER OF THE AO THE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WOULD BE CERTAINLY PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE POW ER OF REVISION IS NOT MEANT TO BE EXERCISED FOR THE PURPOSE OF DIRECTING THE AO TO HO LD ANOTHER INVESTIGATION WITHOUT DESCRIBING AS TO HOW THE ORDER OF THE AO IS ERRONEO US. FROM THIS IT ALSO FOLLOWS THAT WHERE THE ASSESSMENT ORDER HAS BEEN PASSED BY THE A O AFTER TAKING INTO ACCOUNT THE ASSESSEE'S SUBMISSIONS AND DOCUMENTS FURNISHED BY H IM AND NO MATERIAL WHATSOEVER HAS BEEN BROUGHT ON RECORD BY THE CIT WHICH SHOWED THAT THERE WAS ANY DISCREPANCY OR FALSITY IN EVIDENCES FURNISHED BY THE ASSESSEE, THE ORDER OF THE AO CANNOT BE SET ASIDE FOR MAKING DEEP INQUIRY ONLY ON THE PRESUMPTI ON AND ASSUMPTION THAT SOMETHING NEW MAY COME OUT. FOR MAKING A VALID ORDE R UNDER S. 263 IT IS ESSENTIAL THAT THE CIT HAS TO RECORD AN EXPRESS FINDING TO TH E EFFECT THAT ORDER PASSED BY THE AO IS ERRONEOUS WHICH HAS CAUSED LOSS TO THE REVENUE. FURTHERMORE, WHERE ACTING IN ACCORDANCE WITH LAW THE AO FRAMES CERTAIN ASSESSMEN T ORDER, SAME CANNOT BE BRANDED AS ERRONEOUS SIMPLY BECAUSE ACCORDING TO TH E CIT, THE ORDER SHOULD BE WRITTEN MORE ELABORATELY.MALABAR INDUSTRIAL CO. LT D. VS. CIT (2000) 159 CTR (SC) 1 : (2000) 243 ITR 83 (SC), GEE VEE ENTERPRISES VS. ADDL. CIT 1975 CTR (DEL) 61 : (1975) 99 ITR 375 (DEL), CIT VS. SESHASAYEE PAPER & BOARDS LTD. (2000) 242 ITR 490 (MAD), CWT VS. PRITHVI RAJ & CO. (1991) 98 CTR (DEL) 216 : (1993) 199 ITR 424 (DEL) AND J.P. SRIVASTAVA& SONS (KANPUR) LTD. V S. CIT (1978) 111 ITR 326 (ALL) RELIED ON. ITA NO.609/KOL/2019 ASSESSMENT YEAR 2 014-15 KAUSHAL KISHORE BIHANI VS ITO WD-45(1), KOL. PAGE 14 ( PARAS 6 & 7 ) IN THE ENTIRE ORDER EMPHASIS LAID BY THE CIT IS T HAT IN RESPECT OF FOUR ISSUES MENTIONED BY HIM, NO QUERIES WERE RAISED BY THE AO. ON THIS PREMISE, THOUGH IT IS OBSERVED THAT THERE WAS NO APPLICATION OF MIN D ON THE PART OF THE AO AND THE AO HAS NOT RECORDED ANY REASONS TO JUSTIFY THE OMISSIO N TO CONSIDER THE SAID FACTS, THE CIT DOES NOT TAKE THE SAID ORDER TO ITS LOGICAL CONCLUS ION WHICH WAS THE PRIME DUTY OF THE CIT IN ORDER TO JUSTIFY EXERCISE OF POWER UNDER S. 263. THERE IS NOT EVEN A WHISPER THAT THE ORDER IS ERRONEOUS. EVEN IF IT IS INFERRED THAT NON-CONSIDERATION OF THE ISSUES POINTED OUT BY THE CIT WOULD AMOUNT TO AN ERRONEOUS ORDER, IT IS NOT STATED AS TO HOW THIS ORDER IS PREJUDICIAL TO THE INTEREST OF THE RE VENUE. THE PENULTIMATE PARAS OF THE ORDER, AT BEST, CONTAIN THE OBSERVATIONS THAT THE A O WAS SATISFIED WITH MAKING FLIMSY ADDITIONS WHICH WERE DELETED BY THE CIT(A). THERE I S NOT A WHISPER AS TO HOW THIS ORDER WAS PREJUDICIAL TO THE INTEREST OF THE REVENU E. THAT APART, THE APPROACH OF THE TRIBUNAL IN DISCARDING THE OBSERVATION OF THE CIT A BOUT NOT MAKING PROPER INQUIRIES IN RESPECT OF THE SAID FOUR ISSUES IS ALSO JUSTIFIE D AND WITHOUT BLEMISH. ( PARAS 12 TO 14 ) FIRST COMMENT OF THE CIT WAS IN RESPECT OF FINISH ED GOODS IN THE CLOSING STOCK. THE CIT FOUND THAT THESE WERE TO THE TUNE OF RS. 5.28 CRORES. ACCORDING TO THE CIT, WHEN THE TOTAL TURNOVER OF TH E ASSESSEE WAS RS. 6.13 CRORES, THE AO SHOULD HAVE SATISFIED HIMSELF BY CALLING FOR MOR E DETAILS AS TO HOW THERE WAS CLOSING STOCK OF SUCH A MAGNITUDE OF RS. 5.28 CRORE S. THUS, THE CIT HAS NOT DOUBTED THE STATEMENT OF FINISHED GOODS IN THE CLOSING STOC K FURNISHED BY THE ASSESSEE. HE HAS ONLY REMARKED THAT THERE SHOULD HAVE BEEN A DEEPER PROBE BY CALLING FOR MORE DETAILS. THIS IS NEITHER HERE NOR THERE, WHEN ONE KEEPS IN V IEW THE INGREDIENTS OF S. 263. ( PARA 15 ) INSOFAR AS THE INSURANCE CLAIM IS CONCERNED, THE CIT OBSERVED THAT THE ASSESSEE HAD SHOWN RECEIVABLE ON THIS ACCOUNT TO TH E TUNE OF RS. 1.21 CRORES BUT NO DETAILS HAD BEEN FURNISHED. THE AO HAD ALSO NOT MAD E ANY INQUIRIES. IN THE DETAILED DISCUSSION ON THIS ASPECT, THE TRIBUNAL HAS OBSERVE D THAT INSURANCE CLAIM WAS LODGED FOR THE GOODS LOST IN TRANSIT. THE ASSESSEE AT THAT TIME HAD MERELY FILED A CLAIM WITH THE INSURANCE COMPANY. THIS CLAIM HAD NOT BEEN APPR OVED AS THE INSURANCE COMPANY HAD NEITHER ACCEPTED THE SAME NOR GIVEN ANY ASSURAN CE FOR MAKING PAYMENT. THEREFORE, NO INCOME HAD ' ACCRUED ' WHICH COULD BE TAXED. THE TRIBUNAL RIGHTLY HELD THAT ORDINARILY THE INCOME IS SAID TO HAVE ACCRUED TO A PERSON WHEN HE ACQUIRES THE RIGHT TO INCOME AND THIS SHOULD BE ENFORCEABLE RIGH T, THOUGH ACTUAL QUANTIFICATION OR RECEIPT MAY FOLLOW IN DUE COURSE. THE MERE CLAIM TO INCOME WITHOUT ANY ENFORCEABLE RIGHT CANNOT BE REGARDED AS AN ACCRUED INCOME FOR T HE PURPOSE OF IT ACT. ( PARA 16 ) COMING TO THE CLAIM UNDER S. 80HHC, IT WAS TOTALL Y UNCALLED FOR ON THE PART OF THE CIT TO SAY THAT THE AO DID NOT MAKE REQUISIT E INQUIRIES BECAUSE OF THE SIMPLE REASON THAT THE AO HAD, IN FACT, DECLINED AND REJEC TED THIS CLAIM OF THE ASSESSEE. IF THE AO HIMSELF DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE ON THIS ACCOUNT UNDER S. 80HHC, ONE FAILS TO UNDERSTAND WHAT FURTHER INQUIRI ES WERE NEEDED BY THE AO. ( PARA 17 ) LASTLY, THE OBSERVATIONS OF THE CIT ARE IN RESPEC T OF THE INCOME OF RS. 1.61 CRORES SHOWN BY THE ASSESSEE ON ACCOUNT OF VARIATIO N IN EXCHANGE RATE. THE CIT HAS ONLY OBSERVED THAT IN THE IMMEDIATE PREVIOUS YEAR N O SUCH GAIN WAS SHOWN AND THEREFORE, IT NEEDED EXAMINATION BY THE AO. HOWEVER , THE MOOT QUESTION WOULD BE EXAMINATION FOR WHAT PURPOSE? IT IS AN INCOME SHOWN BY THE ASSESSEE. WHETHER THE CIT WAS OF THE OPINION THAT THERE WAS NO SUCH INCOM E OR HE WAS NURTURING AN IMPRESSION THAT INCOME ON THIS ACCOUNT AS SHOWN WAS LESSER? THERE IS NO SUCH INDICATION IN THE ORDER. THE CIT ALSO DOES NOT AT A LL STATE AS TO WHAT WAS THE REASON FOR DOUBTING THE INCOME OFFERED BY THE ASSESSEE. EVEN I F IT IS FOUND THAT PART OF SUCH INCOME WAS CLAIMED AS DEDUCTION UNDER S. 80HHC, NO BENEFIT ENURED TO THE ASSESSEE ON THIS ACCOUNT AS CLAIM UNDER S. 80HHC WAS FULLY D ISALLOWED BY THE AO. IT IS NOT AT ALL OBSERVED AS TO HOW THE ORDER OF THE AO ON THIS ACCOUNT WAS ERRONEOUS AND FURTHER ITA NO.609/KOL/2019 ASSESSMENT YEAR 2 014-15 KAUSHAL KISHORE BIHANI VS ITO WD-45(1), KOL. PAGE 15 AS TO HOW IT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THUS, ORDER OF THE CIT WAS RIGHTLY SET ASIDE BY THE TRIBUNAL. IN THE CASE ON H AND THE LD. CIT FINDS FAULT WITH THE AO FOR NOT INVOKING RULE 8D WHILE MAKING DISALLOWAN CE U/S 14A. THE HONBLE DELHI HIGH COURT IN THE CASE OF MAXOP INVESTMENTS LTD. VS CIT (SUPRA) HELD THAT THE AO CANNOT PROCEED TO DETERMINE THE AMOUNT OF EXPENDITU RE INCURRED IN RELATION TO EXEMPT INCOME WITHOUT RECORDING A FINDING THAT HE IS NOT S ATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE. THIS IS A CONDITION PRECEDEN T WHILE REJECTING THE CLAIM OF THE ASSESSEE, WITH REGARD TO INCURRING OF EXPENDITURE O R NO EXPENDITURE IN RELATION TO EXEMPT INCOME. THE AO WILL HAVE TO INDICATE COGENT REASONS FOR THE SAME AND RULE 8D COMES INTO PLAY ONLY WHEN THE AO RECORDS A FINDI NG THAT HE IS NOT SATISFIED WITH THE ASSESSEES METHOD. IN THE CASE IN HAND THE AO H AS NOT MADE ANY SUCH RECORDING OF SATISFACTION AND HAS ACCEPTED THE DISALLOWANCE MADE U/S 14A BY THE ASSESSEE. IN SUCH CIRCUMSTANCES IT IS NOT OPEN FOR THE LD. CIT TO CO ME TO A CONCLUSION THAT THE AO SHOULD HAVE INVOKED RULE 8D, WITHOUT HIMSELF RECORD ING THE SATISFACTION THAT THE CALCULATION GIVEN BY THE ASSESSEE IN ITS DISALLOWAN CE MADE SUO MOTO U/S 14A IS NOT CORRECT. COMING TO THE OTHER EXPENSES CLAIMED, THE LD. CIT HAS SIMPLY COLLECTED INFORMATION AFTER RAISING QUERIES AND HAS NOT GIVEN ANY FINDING WHATSOEVER THAT THERE IS AN ERROR MADE BY THE AO OR THAT THE CIRCUMSTANCE S WAS SUCH THAT WOULD REQUIRE AND WARRANT FURTHER INQUIRY OR INVESTIGATION. NO ERROR IN THE ASSESSMENT ORDER HAS BEEN POINTED OUT AND IT IS NOT STATED AS TO HOW PREJUDIC E WAS CAUSED TO THE REVENUE. THE FINDING THAT THE AO HAD FAILED TO PROPERLY SCRUTINI SE THE ABOVE ASPECTS DOES NOT GIVE POWERS TO THE LD. CIT TO REVISE THE ASSESSMENT U/S 263 OF THE ACT. MAKING ROWING ENQUIRIES IS NOT A FINDING OF AN ERROR. ASSESSMENTS CANNOT BE SET ASIDE FOR FRESH ENQUIRIES UNLESS A SPECIFIC ERROR IS POINTED OUT AT NOT MAKING PROPER ENQUIRY CANNOT BE EQUATED WITH NO ENQUIRY. IN VIEW OF THE ABOVE WE QU ASH THE ORDER PASSED U/S 263 OF THE ACT AND ALLOW THE APPEAL OF THE ASSESSEE. 12. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED KEEPING IN MIND THE FOREGOING DETAILED DISCUSSION T HAT AN ASSESSMENT HAS TO BE BOTH ERRONEOUS AS WELL AS PREJUDICIAL IN INTEREST OF THE REVENUE SIMULTANEOUSLY BEFORE THE SAME IS SOUGHT TO BE REVISED AND IT IS NOT PERMISSIBLE FOR THE CIT OR THE PCIT TO EXERCISE HIS REVISION JURISDICTION IN CASE THE ASSESSING OFFICER HAS TAKE N ONE OF THE POSSIBLE VIEW, WE PROCEED TO DEAL WITH THE RELEVANT FACTS OF THE CASE. IT HAS CO ME ON RECORD THAT THE ASSESSING OFFICER HAD ISSUED SEC. 133(6) LETTER / NOTICE TO THE M/S SHCL DURING THE COURSE OF SCRUTINY WHICH STOOD ADEQUATELY REPLIED IN ASSESSEES FAVOUR. COUPLED WI TH THIS, ALL THE RELEVANT FACTUAL DETAILS IN SUPPORT OF THE ASSESSEES SHARE PURCHASE DOCUMENT, CONTRACT NOTES, BANK STATEMENT, (SUPRA) ALREADY IN THE CASE RECORDS. COUPLED WITH THIS, LEA RNED CIT-DR FAILS TO REBUT THE CLINCHING FACT THAT ALTHOUGH THE PCITS DETAILED DISCUSSION E XTRACTED IN THE PRECEDING PARAGRAPHS HAS SOUGHT TO MAKE OUT A CASE OF ARTIFICIAL PRICE RIGGI NG BETWEEN THE ASSESSEE, PROMOTERS ENTRY OPERATORS OF THE ENTITY IN LIGHT OF MINISTRY OF FIN ANCES LETTER DATED 24.07.2015 FIGURES, THERE IS NOT EVEN AN IOTA OF MATERIAL QUOTED AGAINST THE ASSESSEE TO HAVE BEEN ENGAGED IN ALL THE FOREGOING ARTIFICIAL PRICE RIGGING. WE ARE OBSERVIN G IN VIEW OF ALL THESE FACTS THAT THE ASSESSING OFFICER HAD RIGHTLY ACCEPTED THE ASSESSEE S LTCG KEEPING IN MAKING THE OVERWHELMING EVIDENCE FORMING PART OF RECORDS. THIS TRIBUNALS CO-ORDINATE BENCH DECISION (SUPRA) AS WELL AS HON'BLE JURISDICTIONAL HIGH COUR TS DECISIONS CIT VS. RATAN ITA NO.105/2016, M/S CLASSIC GROWERS LTD VS. CIT ITA 129/2012, CIT VS. LAKSHMARGARH ESTATE & TRADING CO. LTD. (2013) 40 TAXMAN 439 (CAL), CIT VS. SMT. SHREYASHI GANGULY ITA 196/2012, CIT VS. BHAGWATI PRASAD AGARWAL (2009/ TM I 34738/CAL IN 22/2009 29.04.2009 HAVE ACCEPTED GENUINENESS OF SIMILAR LTCG. SINCE TH E ISSUE IS COVERED BY ALL THE FOREGOING DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT, WE OBSERVE THAT THE ASSESSING OFFICER HAD RIGHTLY TREATED THE ASSESSEES FOREGOING LTCG DERIV ED FROM SALE OF SHARES TO BE GENUINE. THAT BEING THE CASE, WE HOLD THAT PCITS EXERCISE OF REV ISION JURISDICTION MERELY ON SUSPICIOUS CIRCUMSTANCES BY INVOKING IN SEC. 263 EXPLANATION ( SUPRA) WITH EFFECT FROM 01.06.2015 IS NOT ITA NO.609/KOL/2019 ASSESSMENT YEAR 2 014-15 KAUSHAL KISHORE BIHANI VS ITO WD-45(1), KOL. PAGE 16 SUSTAINING. WE THEREFORE REVERSE THE PCITS ORDER U NDER CHALLENGE AND RESTORE THE IMPUGNED ASSESSMENT FRAMED BY THE ASSESSING OFFICER ON 29.07 .2016. IT IS MADE CLEAR THAT WE HAVE DEALT WITH AN INSTANCE OF ASSESSING OFFICER HIMSELF HAVIN G ACCEPTED ASSESSEES LTCG AFTER EXAMINING ALL THE RELEVANT FACTS OF THE CASE. WE TH EREFORE DO NOT DEEM IT APPROPRIATE TO RESTORE THE VERY ISSUE BACK TO HIM FOR YET ANOTHER ROUND OF ASSESSMENT. THE ASSESSES SOLE SUBSTANTIVE GRIEVANCE AS WELL AS THIS LEAD APPEAL ITA NO.01/KOL/2019 IS ACCEPTED THEREFORE. WE ADOPT FOREGOING DETAILED DISCUSSION MUTATIS MUTA NDIS TO REVERSE THE PCITS IMPUGNED REVISION ORDER TREATING THE REGULAR ASSESS MENT DATED 29.07.2016 FRAMED IN THE INSTANT CASE AS AN ERRONEOUS AND CAUSING PREJUD ICE TO INTEREST OF THE REVENUE. THE SAID REGULAR ASSESSMENT STANDS RESTORED AS THE NECE SSARY COROLLARY. 6. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 19/10/2020 SD/- SD/- ( ') () ') (J.SUDHAKAR REDDY) (S.S.GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER *DKP-SR.PS * - 19/10/2020 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-KAUSHAL KISHORE BIHANI 75, DHANDEVI KHAN NA ROAD, PHOOL BAGAN, NR . INDIA GAS OFFICE, KOLKATA-54 2. /RESPONDENT-ITO WARD-45(1), 3, GOVT. PLACE (WEST), KOLKATA-700001 3. - . / CONCERNED CIT 4. . - / CIT (A) 5. / ))- , - /DR, ITAT, KOLKATA 6. 3 / GUARD FILE. BY ORD ER/ , /TRUE COPY/ -,