M/s. Sanspareils Greenlands Pvt. Ltd., Meerut V. ACIT, Meerut

ITA 695/DEL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5304 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 09-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Opportunity of being heard; Revenue expenditure; Capital expenditure
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI G.D.AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.3225/DEL/2013 ASSESSMENT YEAR: 2008-09 SANSPAREILS GREENLANDS PVT. LTD. 28/32, VICTORIA PARK MEERUT PAN : AACCS2788N VS. CIT, MEERUT ITA NO.695/DEL/2016 ASSESSMENT YEAR: 2008-09 SANSPAREILS GREENLANDS PVT. LTD. C/O. J.M. CHADHA & CHADHA, CAS, 299, P.L. SHARMA ROAD MEERUT PAN : AACCS2788N VS. ACIT, CIRCLE-2, AAYAKAR BHAWAN MEERUT APPELLANT RESPONDENT REVENUE BY : SHRI S.S.RANA, CIT, DR ASSESSEE BY : SHRI ROHIT JAIN, A DV., SH. DEEPESH JAIN, CA DATE OF HEARING : 18.07. 2018 DATE OF PRONOUNCEMENT : 11.10.2018 O R D E R PER BENCH : ITA NO. 3225/DEL/2013 IS THE APPEAL PREFERRED BY TH E ASSESSEE AGAINST ORDER DATED 21.03.2013 PASSED U/S 263 OF THE ITA NO. 3225/DEL/2013 ITA NO. 695/DEL/2016 (SANSPAREILS GREENLANDS PVT. LTD .) 2 INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT) BY THE LD. COMMISSIONER OF INCOME TAX, MEERUT FOR ASSESSME NT YEAR 2008-09. ITA NO. 695/DEL/2016 IS THE ASSESSEES APP EAL AGAINST ORDER DATED 11.01.2016 PASSED BY THE LD. CIT (APPEA LS), MEERUT FOR ASSESSMENT YEAR 2008-09 WHEREIN THE ASSESSEES APPEAL CHALLENGING THE ADDITIONS MADE IN THE ASSESSMENT U/ S 143(3) OF THE ACT CONSEQUENT TO THE ORDER PASSED U/S 263 OF T HE ACT WAS PARTLY ALLOWED. BOTH THE APPEALS WERE HEARD TOGETHE R AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE COMPANY IS ENGAGED IN THE MANUFACTURE, PURCHASE, SALE AND EXPO RT OF SPORTS GOODS. THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 14 3(3) OF THE ACT AT AN INCOME OF RS. 3,47,02,620/- VIDE ORDER DA TED 09.11.2010. SUBSEQUENTLY THE LD. CIT, MEERUT ISSUED A SHOW CAUSE NOTICE U/S 263 OF THE ACT ON THE GROUND THAT THE ASSESSEE HAD PAID AN AMOUNT OF RS. 25,87,500/- TO CRICKET PL AYERS DURING THE YEAR WHICH WAS NOT OF ANY VALUE TO THE BUSINESS OF THE ASSESSEE AND FURTHER THE AO HAD FAILED TO MAKE AN I NQUIRY IN THIS REGARD. THE LD. CIT PARTLY SET ASIDE THE ASSESSMENT ORDER WITH THE DIRECTION TO CONSIDER THE ADMISSIBILITY AND REA SONABLENESS OF ITA NO. 3225/DEL/2013 ITA NO. 695/DEL/2016 (SANSPAREILS GREENLANDS PVT. LTD .) 3 THESE EXPENSES. THE ASSESSEE IS IN APPEAL AGAINST THIS ORDER OF THE LD. CIT IN ITA NO. 3225/DEL/2013 AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN LAW AND ON FACTS IN INVOKING THE PROVISION S OF SECTION 263 OF THE INCOME TAX ACT, 1961 AND PASSING THE ORDER DATED 21.03.2013. THE ORDER PASSED AND THE VARIOUS DIRECTIONS GIVEN ARE BAD IN LAW, ARBITRARY, ERRONEOUS AND UNCALLED FOR IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE MATERIAL ON RECORD. THE ORDER THEREFORE, DESERVES T O BE QUASHED. 2. THAT IN VIEW OF THE WRITTEN REPLIES DATED 11 TH JANUARY, 2013 AND 7 TH FEBRUARY, 2013 TO THE NOTICE U/S 263 WITH ALL THE ENCLOSURES FILED AND THE ORAL ARGUMENTS ADVANCED BEFORE HER DURING THE HEARINGS, THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN LAW AND ON FACTS IN STILL HOLDING THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE WITHOUT CONTRADICTING TH E VARIOUS CLAIMS, THROUGH ANY COGENT MATERIAL OR ON ANY PROPER BASIS. THE ORDER U/S 263 THEREFORE, DESERVES TO BE QUASHED. 3. THAT WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN LAW AND ON FACTS IN HOLDING THAT THE EXPENDITURE OF ITA NO. 3225/DEL/2013 ITA NO. 695/DEL/2016 (SANSPAREILS GREENLANDS PVT. LTD .) 4 RS.25,87,500/- ON PAYMENTS MADE TO CRICKET PLAYERS, BOOKED BY THE APPELLANT UNDER THE HEAD ADVERTISEMENT AND PUBLICITY WAS DEFERRED CAPITAL EXPENDITURE AND THEREFORE, RESTRICTING THE CLAIM TO 1/5 OF RS.25,87,500/- I.E. RS.5.17,500/- TO BE ALLOWABLE, AND REMAINING AMOUNT OF RS.20,70,000/- TO BE ADDED TO THE INCOME OF THE ASSESSEE. THE LEARNED CIT WAS OBVIOUSLY CONFUSED WHILE DRAWING THE ABOVE CONCLUSION, BECAUSE IN THE END OF THE SAME PARA 3(I) OF THE ORDER SHE HAS HELD THAT T HE EXPENDITURE SHOULD HAVE BEEN TREATED AS DEFERRED REVENUE EXPENDITURE. THE ENTIRE EXPENDITURE CLAIMED BEING ALLOWABLE, RESTRICTION OF THE CLAIM TO 1/5 OF RS.25,87,500/- I.E. RS.5,17,500/- AND DISALLOWANCE OF RS.20.70,000/- BY HER ON VAGUE GROUNDS, WITHOUT ANY BASIS, IS BAD-IN-LAW, ARBITRARY, AND UNCALLED F OR IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE MATERIAL ON RECORD. J 4. THAT WITHOUT PREJUDICE TO GROUNDS NO. 1 AND 2 ABOVE, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF TH E CASE AND THE MATERIAL ON RECORD THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN PARTLY SETTING ASIDE THE ASSESSMENT ORDER WITH REGARD TO THE CLAIM OF EXPENSES UNDER THE HEADS LABOUR AND GARDENING. THE DIRECTIONS GIVEN ON THE BASIS OF ERRONEOUS CONCLUSIONS ARE BAD-IN-LAW, ARBITRARY AND UNCALLED FOR. ITA NO. 3225/DEL/2013 ITA NO. 695/DEL/2016 (SANSPAREILS GREENLANDS PVT. LTD .) 5 2.1 FURTHER, CONSEQUENT TO THE ORDER PASSED U/S 263 OF THE ACT, THE AO PASS THE ASSESSMENT ORDER ON 14.02.201 4 BY COMPLETING THE ASSESSMENT AT RS. 3,93,71,700/-. AFT ER MAKING A DISALLOWANCE OF RS. 20,70,000/-OUT OF THE AMOUNT PA ID TO CRICKETERS BY TREATING 4/5 TH OF THE SAME AS DEFERRED REVENUE EXPENDITURE, A FURTHER DISALLOWANCE OF LABOUR AND W AGES CHARGES AMOUNTING TO RS. 25,00,547/- AND ANOTHER DISALLOWAN CE OUT OF GARDENING EXPENSES AMOUNTING TO RS. 98,531/-. THE A SSESSEE PREFERRED AN APPEAL BEFORE LD. CIT (A) WHO PARTLY A LLOWED ASSESSEE'S APPEAL BY DIRECTING DELETION OF ADDITION OF RS. 25,00,547/-. HOWEVER, THE LD. CIT (A) UPHELD THE OT HER TWO ADDITIONS. AGAINST THIS ADJUDICATION BY THE LD. CIT (A), THE ASSESSEE IS IN APPEAL BEFORE THE ITAT IN ITA NO. 69 5/DEL/2016 AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN HOLDING THAT THE EXPENDITURE OF RS. 25,87,500/- ON PAYMENTS MADE TO CRICKET PLAYERS, BOOKED BY THE APPELLANT UNDER THE HEAD ADVERTISEMENT AND PUBLICITY WAS DEFERRED CAPITAL EXPENDITURE AND THEREFORE, RESTRICTING THE CLAIM TO 1/5 OF RS. 25,87,500/- I.E. RS. 5,17,500/- TO BE ALLOWABLE, AND REMAINING AMOUNT OF RS. ITA NO. 3225/DEL/2013 ITA NO. 695/DEL/2016 (SANSPAREILS GREENLANDS PVT. LTD .) 6 20,70,000/- TO BE ADDED TO THE INCOME OF THE ASSESSEE. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOM TAX (APPEALS) IS FURTHER NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS. 98,531/- ON ACCOUNT OF 10% OF EXPENSES CLAIMED UNDER THE HEAD CONSERVANCY & GARDENING EXPENSES. 3.0 WITH RESPECT TO THE ASSESSEES APPEAL AGAIN ST THE 263 ORDER, THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ALLEGATION OF THE LD. CIT THAT THE AO HAD NOT CARRI ED OUT ANY INQUIRY IN RESPECT OF PAYMENTS MADE TO SPORTS PERSO NS WAS INCORRECT BECAUSE THE AO HAD MADE INQUIRY ABOUT THE SAME AND THE ASSESSEE HAD DULY RESPONDED TO THE QUERIES RAIS ED BY THE ASSESSING OFFICER IN THIS REGARD. OUR ATTENTION WAS DRAWN TO PAGES 228 TO 231 OF THE PAPER BOOK WHEREIN COPY OF THE REPLY TO THE QUERY RAISED BY THE ASSESSING OFFICER WITH REFE RENCE TO THE PAYMENTS MADE TO THE CRICKET PLAYERS WAS PLACED. IT WAS ALSO SUBMITTED THAT TAX HAD DULY BEEN DEDUCTED AT SOURCE ON THE PAYMENTS MADE TO THE SIX CRICKET PLAYERS VIZ. SH. S UNIL GAVASKAR, SH. SURESH RAINA, SH. WASIM JAFFER, SH. CHETESWAR P UJARA, SH. DINESH KARTHICK AND SH. KIRAN MORE. IT WAS FURTHER SUBMITTED ITA NO. 3225/DEL/2013 ITA NO. 695/DEL/2016 (SANSPAREILS GREENLANDS PVT. LTD .) 7 THAT THE GENUINENESS OF THE PAYMENTS MADE WERE NOT DOUBTED BY THE LD. CIT ALSO AND IT WAS ONLY A CASE OF DIFFEREN CE OF OPINION INASMUCH AS THE LD. CIT FELT THAT THE PAYMENTS MADE TO THE VARIOUS CRICKETERS WAS TO BE TREATED AS DEFERRED RE VENUE EXPENDITURE WHEREAS THE AO HAD ALLOWED THE SAME AS REVENUE EXPENDITURE. IT WAS ALSO SUBMITTED THAT SIMILAR EXP ENSES WERE BEING ALLOWED WITHOUT ANY ADVERSE INFERENCE UNTIL T HE IMMEDIATELY PRECEDING YEAR. THE LD. AUTHORISED REPR ESENTATIVE ALSO PLACED ON RECORD COPY OF THE ITAT ORDER IN ASS ESSEES OWN CASE FOR A.Y. 1996-97 IN ITA NO. 2246/DEL/2000 WHER EIN AN ADDITION OF RS. 4,00,000/- MADE BY THE AO ON SIMILA R EXPENSES WAS MADE AND THE TRIBUNAL HAD DELETED THIS ADDITION BY NOTING THAT THIS EXPENDITURE HAD BEEN ALLOWED IN OTHER YEA RS ALSO. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT IT WAS NOT THE CASE OF THE LD. CIT THAT AO HAD NOT MADE ANY INQUIRY ON THE ISSUES WHICH WERE RAISED BY THE LD. CIT IN THE SHOW CAUSE NOTICE. THE LD. AUTHORISED REPRESENTATIVE PLACED RELIANCE ON NU MEROUS JUDICIAL PRECEDENTS AND VEHEMENTLY ARGUED THAT THE PROCEEDING U/S 263 OF THE ACT HAD BEEN WRONGLY INITIATED. 3.1 ON THE MERITS OF THE ADDITIONS SUSTAINED B Y THE LD. CIT (A), THE LD. AUTHORISED REPRESENTATIVE VEHEMENTLY A RGUED THAT ITA NO. 3225/DEL/2013 ITA NO. 695/DEL/2016 (SANSPAREILS GREENLANDS PVT. LTD .) 8 THE LD. CIT (A) HAD BRUSHED ASIDE THE VOLUMINOUS DO CUMENTS SUBMITTED BY THE ASSESSEE IN SUPPORT OF THE CLAIM O F THE EXPENDITURE AND HAD SUSTAINED THE DISALLOWANCE WITH OUT APPRECIATING THE FACT THAT THE CONCEPT OF DEFERRED REVENUE EXPENDITURE WAS ALIEN TO THE PROVISIONS OF THE INCO ME TAX ACT. WITH RESPECT TO THE SUSTENANCE OF DISALLOWANCE ON A CCOUNT OF GARDENING EXPENSES, IT WAS SUBMITTED THAT THIS WAS AN AD HOC DISALLOWANCE AND THE SAME COULD NOT BE SUSTAINED IN ABSENCE OF SPECIFIC FINDING POINTING OUT SPECIFIC DEFECT/S IN THE BOOKS OF ACCOUNTS. THE LD. AUTHORISED REPRESENTATIVE PRAYED THAT BOTH THE APPEALS OF THE ASSESSEE DESERVED TO BE ALLOWED. 4.0 IN RESPONSE, THE LD. CIT-DR SUBMITTED THAT TH E PAYMENTS TO CRICKET PLAYERS WERE MADE ON ACCOUNT OF FEE FOR DIS PLAYING OF THE ASSESSEES COMPANYS LOGO WHICH HELPED IN IMPROVING THE BRAND VALUE OF THE COMPANY AND, THEREFORE, THE AO HAD ERR ED IN ALLOWING THE ENTIRE EXPENDITURE RATHER THAN ALLOWIN G 1/5 TH OF THE EXPENDITURE. THE LD. CIT-DR SUBMITTED THAT THE LD. CIT HAD RIGHTLY INITIATED THE PROCEEDINGS U/S 263 OF THE AC T AS THE AO HAD NOT CARRIED OUT PROPER INQUIRY IN THIS REGARD. THE LD. CIT-DR ALSO PLACED RELIANCE ON NUMBER OF JUDICIAL PRECEDENTS TO SUPPORT HIS ITA NO. 3225/DEL/2013 ITA NO. 695/DEL/2016 (SANSPAREILS GREENLANDS PVT. LTD .) 9 CONTENTION THAT THE ASSUMPTION OF JURISDICTION U/S 263 OF THE ACT BY THE LD. CIT WAS VALID. 4.1 WITH RESPECT TO ASSESSEES APPEAL CHALLENGING THE QUANTUM ADDITION MADE SUBSEQUENT TO THE ORDER PASSED U/S 26 3 OF THE ACT, RELIANCE WAS PLACED ON THE ORDER OF THE LD. CI T (A) AS WELL AS THAT OF THE AO. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HA VE ALSO PERUSED THE MATERIAL ON RECORD. THE PROVISIONS OF SECTION 263 READ AS UNDER: '263. (1) THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD A ND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORD ER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLIN G THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. 5.1 IT WILL ALSO BE EXPEDIENT TO REITERATE THE GOVE RNING PRINCIPLES LAID DOWN BY THE HONBLE COURTS WITH REGARD TO THE EXERCISE OF POWER BY THE COMMISSIONER UNDER THE PROVISIONS OF S ECTION 263 OF THE ACT. THE POWER OF SUO MOTO REVISION EXERCISABLE BY THE ITA NO. 3225/DEL/2013 ITA NO. 695/DEL/2016 (SANSPAREILS GREENLANDS PVT. LTD .) 10 COMMISSIONER IS UNDOUBTEDLY SUPERVISORY IN NATURE. THE OPENING WORDS OF SECTION 263 EMPOWER THE COMMISSIONER TO CA LL FOR AND EXAMINE THE RECORD OF ANY PROCEEDINGS UNDER THE ACT . A BARE READING OF SECTION 263 ALSO MAKES IT CLEAR THAT 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 INTEREST OF THE REVENUE. IF ONE OF THEM IS ABSENT - IF THE ORDER OF THE ASSESSING OFFICER IS ERRONEOU S BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOU S BUT IT IS PREJUDICIAL TO THE REVENUE - RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT [SEE MALABAR INDUSTRIAL CO. LTD. VS. CI T, ( 2000) 243 ITR 83 (SC)]. 5.2 AS REGARDS THE SCOPE AND AMBIT OF THE EXPRESSIO N 'ERRONEOUS', A DIVISION BENCH OF THE HONBLE BOMBAY HIGH COURT IN CIT VS. GABRIEL INDIA LTD., (1993) 203 ITR 108 ( BOMBAY), HELD WITH REFERENCE TO BLACK'S LAW DICTIONARY THAT AN 'E RRONEOUS JUDGMENT' MEANS 'ONE RENDERED ACCORDING TO COURSE A ND PRACTICE OF COURT, BUT CONTRARY TO LAW, UPON MISTAKEN VIEW O F LAW; OR UPON ERRONEOUS APPLICATION OF LEGAL PRINCIPLES' AND THUS IT IS CLEAR THAT AN ORDER CANNOT BE TERMS AS 'ERRONEOUS' UNLESS IT I S NOT IN ACCORDANCE WITH LAW. IF ASSESSING OFFICER ACTING IN ACCORDANCE ITA NO. 3225/DEL/2013 ITA NO. 695/DEL/2016 (SANSPAREILS GREENLANDS PVT. LTD .) 11 WITH LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNO T BE BRANDED AS 'ERRONEOUS' BY THE COMMISSIONER SIMPLY B ECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTE N DIFFERENTLY OR MORE ELABORATELY. THE SECTION DOES NOT VISUALIZE THE SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FO R THAT OF THE ASSESSING OFFICER, WHO PASSED THE ORDER UNLESS THE DECISION IS NOT IN ACCORDANCE WITH LAW. THEN AGAIN, ANY AND EVE RY ERRONEOUS ORDER CANNOT BE THE SUBJECT MATTER OF REVISION BECA USE THE SECOND REQUIREMENT ALSO MUST BE FULFILLED. THERE MU ST BE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFU LLY EXIGIBLE HAS NOT BEEN IMPOSED [SEE GABRIEL INDIA LTD. (SUPRA )]. HOWEVER, THE EXPRESSION 'PREJUDICIAL TO THE INTEREST OF THE REVENUE', AS HELD BY THE HONBLE SUPREME COURT IN THE MALABAR INDUSTR IAL CO. LTD.'S CASE, IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT AND, THEREFORE, MUST BE UNDERSTOOD IN ITS ORDIN ARY MEANING. IT IS OF WIDE IMPORT AND IS NOT CONFINED TO THE LOS S OF TAX [SEE DAWJEE DADABHOY & CO. (SUPRA), CIT VS. T. NARAYANA PAI (1975) 98 ITR 422 (KAR), CIT VS. GABRIEL INDIA LTD. (SUPRA ) AND CIT VS. SMT. MINALBEN S. PARIKH, (1995) 215 ITR 81 (GUJ)]. 5.3 AT THE SAME TIME, THE WORDS 'PREJUDICIAL TO THE INTEREST OF THE REVENUE ', AS OBSERVED IN DAWJEE DADABHOY AND CO. VS. S.P. JAIN, ITA NO. 3225/DEL/2013 ITA NO. 695/DEL/2016 (SANSPAREILS GREENLANDS PVT. LTD .) 12 (1957) 311 ITR 872 (CALCUTTA), CAN ONLY MEAN THAT 'THE ORDERS OF ASSESSMENT CHALLENGED ARE SUCH AS ARE NOT IN ACCORD ANCE WITH LAW, IN CONSEQUENCE WHEREOF THE LAWFUL REVENUE DUE TO THE STATE HAS NOT BEEN REALIZED OR CANNOT BE REALIZED. ' THUS, THE COMMISSIONER'S EXERCISE OF REVISIONAL JURISDICTION UNDER THE PROVISIONS OF SECTION 263 CANNOT BE BASED ON WHIMS OR CAPRICE. IT IS TRITE LAW THAT IT IS A QUASI JUDICIAL POWER H EDGED IN WITH LIMITATION AND NOT AN UNBRIDLED AND UNCHARTERED ARB ITRARY POWER. THE EXERCISE OF THE POWER IS LIMITED TO CASE S WHERE THE COMMISSIONER ON EXAMINING THE RECORDS COMES TO THE CONCLUSION THAT THE EARLIER FINDING OF THE AO WAS ERRONEOUS AN D PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THAT A FRESH DET ERMINATION OF THE CASE IS WARRANTED. THERE MUST BE MATERIAL TO JU STIFY THE COMMISSIONER'S FINDING THAT THE ORDER OF THE ASSESS MENT WAS ERRONEOUS INSOFAR AS IT WAS PREJUDICIAL TO THE INTE REST OF THE REVENUE. 5.4 IT IS ALSO TRITE THAT THERE IS A FINE, THOUGH S UBTLE DISTINCTION, BETWEEN 'LACK OF INQUIRY' AND 'INADEQUATE INQUIRY' . IT IS ONLY IN CASES OF 'LACK OF INQUIRY' THAT THE COMMISSIONER IS EMPOWERED TO EXERCISE HIS REVISIONAL POWERS BY CALLING FOR AND E XAMINING THE ITA NO. 3225/DEL/2013 ITA NO. 695/DEL/2016 (SANSPAREILS GREENLANDS PVT. LTD .) 13 RECORDS OF ANY PROCEEDINGS UNDER THE ACT AND PASSIN G ORDERS THEREON. IN GABRIEL INDIA LTD. (SUPRA), IT WAS EXPR ESSLY OBSERVED:- 'THE COMMISSIONER CANNOT INITIATE PROCEEDINGS WITH A VIEW TO STARTING FISHING AND ROVING ENQUIRIES IN MA TTERS OR ORDERS WHICH ARE ALREADY CONCLUDED. SUCH ACTION WILL BE AGAINST THE WELL-ACCEPTED POLICY OF LAW THAT THE RE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDING S, THAT STALE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI-JUDICI AL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY [SEE PARASHURAM POTTERY WORKS CO. LTD. VS. ITO, (1977) 106 ITR 1 (SC)]. 5.5 IT WAS FURTHER OBSERVED AS UNDER:- 'FROM THE AFORESAID DEFINITIONS AS IT IS CLEAR THAT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NO T 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. TH IS SECTION DOES NOT VISUALIZE A CASE OF SUBSTITUTION O F THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME -TAX OFFICER, WHO PASSED THE ORDER UNLESS THE DECISION I S HELD TO BE ERRONEOUS. CASES MAY BE VISUALIZED WHERE THE INCOME-TAX OFFICER WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOU NTS OR BY MAKING SOME ESTIMATE HIMSELF. THE COMMISSIONE R, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION TH AT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOULD HA VE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN THE ON E DETERMINED BY THE INCOME-TAX OFFICER. THAT WOULD NO T VEST THE COMMISSIONER WITH POWER TO RE-EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGH ER FIGURE. IT IS BECAUSE THE INCOME-TAX OFFICER HAS EX ERCISED THE QUASI-JUDICIAL POWER VESTED IN HIM IN ACCORDANC E ITA NO. 3225/DEL/2013 ITA NO. 695/DEL/2016 (SANSPAREILS GREENLANDS PVT. LTD .) 14 WITH LAW AND ARRIVED AT CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WI TH THE CONCLUSION. X X X X THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD T O SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT B EEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATIO N A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED. 5.6 FROM THE ABOVE IT IS CLEAR THAT IN THE ULTIMATE ANA LYSIS IT IS A PRE-REQUISITE THAT THE COMMISSIONER MUST GIVE REASO NS TO JUSTIFY THE EXERCISE OF SUO MOTO REVISIONAL POWERS BY HIM TO RE-OPEN A CONCLUDED ASSESSMENT. A BARE REITERATION BY HIM THA T THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS INSOFAR AS IT I S PREJUDICIAL TO THE INTEREST OF THE REVENUE, WILL NOT SUFFICE. THE EXERCISE OF THE POWER BEING QUASI-JUDICIAL IN NATURE, THE REASONS M UST BE SUCH AS TO SHOW THAT THE ENHANCEMENT OR MODIFICATION OF THE ASSESSMENT OR CANCELLATION OF THE ASSESSMENT OR DIR ECTIONS ISSUED FOR A FRESH ASSESSMENT WERE CALLED FOR, AND MUST IR RESISTIBLY LEAD TO THE CONCLUSION THAT THE ORDER OF THE INCOME- TAX OFFICER WAS NOT ONLY ERRONEOUS BUT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THUS, WHILE THE AO IS NOT CALLED UPON TO WRITE AN E LABORATE JUDGMENT GIVING DETAILED REASONS IN RESPECT OF EACH AND EVERY DISALLOWANCE, DEDUCTION, ETC., IT IS INCUMBENT UPON THE ITA NO. 3225/DEL/2013 ITA NO. 695/DEL/2016 (SANSPAREILS GREENLANDS PVT. LTD .) 15 COMMISSIONER NOT TO EXERCISE HIS SUO MOTO REVISIONAL POWERS UNLESS SUPPORTED BY ADEQUATE REASONS FOR DOING SO. 5.7 THE HONBLE MADRAS HIGH COURT HELD IN THE CASE OF CIT V VALLIAMMAL (D.) (1998) 230 ITR 695 (MAD) THAT ASSES SMENT ORDER MADE AFTER CONSIDERING ALL FACT AND INFORMATION CAN NOT BE REVISED. WHERE THE ASSESSEE HAD FURNISHED THE REQUISITE INFO RMATION AND THE ASSESSING OFFICER HAD COMPLETED THE ASSESSMENT AFTER CONSIDERING AND THE FACTS BUT THE COMMISSIONER REVI SED THE ASSESSMENT ORDER ON THE GROUND THAT THE ASSESSING O FFICER HAD NOT MADE PROPER ENQUIRIES, THE TRIBUNAL WAS HELD JU STIFIED IN REVERSING THE ORDER OF THE COMMISSIONER AND RESTORI NG THAT OF THE ASSESSING OFFICER. COMMISSIONER CANNOT RE-EXAMINE A CCOUNTS AND SUBSTITUTE HIS JUDGMENT FOR THAT OF THE ASSESSING O FFICER. AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN A CCORDANCE WITH LAW. IF ASSESSING OFFICER MAKES ASSESSMENT IN ACCOR DANCE WITH LAW, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SECTION DO ES NOT VISUALIZE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE ASSESSING OFFICER UNLE SS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALIZED WH ERE THE ITA NO. 3225/DEL/2013 ITA NO. 695/DEL/2016 (SANSPAREILS GREENLANDS PVT. LTD .) 16 ASSESSING OFFICER EXAMINES THE ACCOUNTS, MAKES ENQU IRES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY MAKING THE ACCOUNTS OR BY MAKING SOME ESTIMATES HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMAT E MADE BY THE OFFICER WAS ON LOWER SIDE AND, LEFT TO THE COMMISSI ONER, HE WOULD HAVE ESTIMATED THE INCOME AT A HIGHER FIGURE THAT T HE ONE DETERMINED BY THE ASSESSING OFFICER. THAT WOULD NOT VEST THE COMMISSIONER WITH THE POWER TO RE-EXAMINE THE ACCOU NTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE. FU RTHER IN THE CASE OF INFOSYS TECHNOLOGIES V JCIT (ASST) (2006) 2 86 ITR (AT) 211, THE BANGALORE BENCH OF THE ITAT HELD THAT WHER E THE A.O AS EXAMINED AND CONSIDERED AND ISSUE, THOUGH NOT MENTI ONED IN THE ASSESSMENT ORDER, IT CANNOT BE SAID THAT THE ORDER PASSED WAS ERRONEOUS. IN CIT V GABRIEL INDIA LTD. (1993) 203 ITR 108 (BOM), THE HONBLE BOMBAY HIGH COURT HELD THAT ONCE THE AS SESSING OFFICER HAS EXERCISED THE QUASI-JUDICIAL POWER VEST ED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION, SU CH A CONCLUSION CANNOT BE CONSIDERED ERRONEOUS SIMPLY BE CAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCL USION. IT MAY BE THAT IN THE OPINION OF THE COMMISSIONER, THE ORD ER IN QUESTION ITA NO. 3225/DEL/2013 ITA NO. 695/DEL/2016 (SANSPAREILS GREENLANDS PVT. LTD .) 17 IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BUT THAT BY ITSELF WOULD NOT BE ENOUGH TO VEST THE COMMISSIONER WITH T HE POWERS OF SUO MOTU REVISION BECAUSE THE FIRST REQUIREMENT, NAMELY, TH AT THE ORDER IS ERRONEOUS, IS LACKING. 5.8 THE HONBLE DELHI HIGH COURT IN CIT VS. SUNBEA M AUTO LTD 332 ITR 167 (DEL) HAS OPINED IN PARA 17 OF ITS ORDE R AS UNDER:- 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF TH E COUNSEL ON THE OTHER SIDE AND HAVE GONE THROUGH THE RECORDS. THE FIRST ISSUE THAT ARISES FOR OUR CONSID ERATION IS ABOUT THE EXERCISE OF POWER BY THE COMMISSIONER OF INCOME-TAX UNDER SECTION 263 OF THE INCOME- TAX ACT . AS NOTED ABOVE, THE SUBMISSION OF LEARNED COUNSEL FOR THE REVENUE WAS THAT WHILE PASSING THE ASSESSMENT ORDER , THE ASSESSING OFFICER DID NOT CONSIDER THIS ASPECT SPECIFICALLY WHETHER THE EXPENDITURE IN QUESTION WA S REVENUE OR CAPITAL EXPENDITURE. THIS ARGUMENT PRED ICATES ON THE ASSESSMENT ORDER, WHICH APPARENTLY DOES NOT GIVE ANY REASONS WHILE ALLOWING THE ENTIRE EXPENDITURE A S REVENUE EXPENDITURE. HOWEVER, THAT BY ITSELF WOULD NOT BE INDICATIVE OF THE FACT THAT THE ASSESSING OFFICER H AD NOT APPLIED HIS MIND ON THE ISSUE. THERE ARE JUDGMENTS GALORE LAYING DOWN THE PRINCIPLE THAT THE ASSESSING OFFICE R IN THE ASSESSMENT ORDER IS NOT REQUIRED TO GIVE DETAILED R EASON IN RESPECT OF EACH AND EVERY ITEM OF DEDUCTION, ETC . THEREFORE, ONE HAS TO SEE FROM THE RECORD AS TO WHE THER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE EXPENDITURE IN QUESTION AS REVENUE EXPENDITURE. LEA RNED COUNSEL FOR THE ASSESSEE IS RIGHT IN HIS SUBMISSION THAT ONE HAS TO KEEP IN MIND THE DISTINCTION BETWEEN LA CK OF INQUIRY AND INADEQUATE INQUIRY. IF THERE WAS ANY INQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF G IVE ITA NO. 3225/DEL/2013 ITA NO. 695/DEL/2016 (SANSPAREILS GREENLANDS PVT. LTD .) 18 OCCASION TO THE COMMISSIONER TO PASS ORDERS UNDER SECTION 263 OF THE ACT, MERELY BECAUSE HE HAS A DIF FERENT OPINION IN THE MATTER. IT IS ONLY IN CASES OF LACK OF INQUIRY THAT SUCH A COURSE OF ACTION WOULD BE OPEN . 5.9 IN THE INSTANT APPEAL BEFORE US, IT IS NOT THE DEPARTMENTS CASE THAT NO INFORMATION REGARDING THE PAYMENTS MAD E TO THE CRICKETERS WAS CALLED FOR BY THE AO. THAT RELEVANT DETAILS AND DOCUMENTS WERE FURNISHED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AND FORMS PART OF THE RECORD . HENCE, NO INFERENCE CAN BE DRAWN THAT THE AO HAS NOT EXAMINED THE ISSUE ALTHOUGH HE HAS NOT EXPRESSED IT IN AS MANY TERMS A S MAY BE CONSIDERED APPROPRIATE BY HIS SUPERIOR AUTHORITY AN D EVEN IF THE SAME IS FOUND TO BE INADEQUATE THE SAME CANNOT BE A GROUND FOR REVISION. IT IS CLEAR THAT AN ORDER CANNOT BE TERME D AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. THIS SECTI ON DOES NOT VISUALIZE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE AO. THEREFORE, IT CANN OT BE HELD THAT IN THE INSTANT CASE THE AOS ORDER WAS ERRONEO US AND PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHIN T HE TERMS OF SECTION 263 OF THE ACT. ONCE THE IMPUGNED ISSUE WA S CONSIDERED AND EXAMINED BY THE ASSESSING OFFICER, LD. COMMISSI ONER CANNOT SET ASIDE THE ORDER WITHOUT RECORDING A CONTRARY FI NDING. THIS WILL BE CONTRARY TO SECTION 263 OF THE ACT. THEREFORE, IN VIEW OF THE ITA NO. 3225/DEL/2013 ITA NO. 695/DEL/2016 (SANSPAREILS GREENLANDS PVT. LTD .) 19 FACTUAL MATRIX OF THE CASE AND RESPECTFULLY FOLLOWI NG THE RATIO OF THE VARIOUS JUDICIAL PRONOUNCEMENTS AS DISCUSSED AB OVE, WE ARE OF THE CONSIDERED OPINION THAT THE IMPUGNED ACTION OF THE LD. CIT U/S 263 OF THE ACT WAS PATENTLY ILLEGAL AND IS LIAB LE TO BE QUASHED. THE PROCEEDINGS U/S 263 OF THE ACT ARE AC CORDINGLY QUASHED. 6.0 SINCE, WE HAVE ALREADY QUASHED THE PROCEE DINGS U/S 263 OF THE ACT AND HAVE ALLOWED THE ASSESSEE APPEAL CHA LLENGING U/S 263 PROCEEDINGS, THE ASSESSEES APPEAL CHALLENGING THE QUANTUM ADDITIONS SUSTAINED BY THE LD. CIT (A) BECOMES IN FRUCTUOUS AND THE SAME IS DISMISSED AS SUCH. 7.0 IN THE FINAL RESULT, ITA NO. 3225/DEL/2013 IS ALLOWED WHEREAS ITA NO. 695/DEL/2016 IS DISMISSED AS HAVING BECOME IN FRUCTUOUS . ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH OCTOBER, 2018. SD/- SD/- (G.D.AGRAWAL) (SUDHANSHU SRIVASTAV A) PRESIDENT JUDICIAL MEMBER *BR* DATED: OCTOBER, 2018 ITA NO. 3225/DEL/2013 ITA NO. 695/DEL/2016 (SANSPAREILS GREENLANDS PVT. LTD .) 20 COPY FORWARDED TO: - 1) APPELLANT 2) RESPONDENT 3) CIT(A) 4) CIT 5) DR TRUE COPY BY ORDER ASSTT. REGISTRAR DATE OF DICTATION 10.10.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 10.10.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 10.10.2018 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 10.10.2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 11.10.2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 22.10.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 22.10.2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER ITA NO. 3225/DEL/2013 ITA NO. 695/DEL/2016 (SANSPAREILS GREENLANDS PVT. LTD .) 21