Appeal details
Counselvise Citation
[2019] 116 COUNSELVISE.COM (IT) 7627 (ITAT-GUWAHATI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 2 month(s) 26 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
12-07-2019
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Assessment Year
2010-2011
Appeal Filed On
16-04-2018
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL GUWAHATI BEN CH, GUWAHATI . . , . . BEFORE SRI S.S. GODARA, JM AND DR. A.L. SAINI, AM ITA NO. 75/GAU/2018 (ASSESSMENT YEAR 2010-11) ITA NO. 105/GAU/2015 (ASSESSMENT YEAR 2010-11) ITA NO. 106/GAU/2015 (ASSESSMENT YEAR 2011-12) ARIHANT INTERNATIONAL LIMITED 216, SHREEMANTA MARKET, A.T. ROAD, GUWAHATI-781001 VS. THE COMMISSIONER OF INCOME TAX-II / THE ADDL. COMMISSIONER OF INCOME TAX, RANGE-4, AAYAKAR BHAWAN, SECOND FLOOR, G.S. ROAD, GUWAHATI-781005 (APPELLANT) .. ( RESPONDENT) ./ PAN NO. AAACK9113B / ASSESSEE BY : NARESH JAIN, ARATI DEBNATH, RAHUL JAIN, ARS ! / RESPONDENT BY : M HAOKIP, DR / DATE OF HEARING: 08.07.2019 / DATE OF PRONOUNCEMENT : 12.07.2019 / O R D E R PER BENCH, THESE THREE ASSESSEE(S) APPEALS FOR ASSESSMENT YEAR (S) 2010-11 & 2011-12 ARISING AGAINST THE COMMISSIONER OF INCOME TAX-II, GUWAHATI SEPARATE ORDERS 2 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 DATED 25.03.2015 AND 21.03.2013, INVOLVING PROCEEDI NGS U/S 263 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD, THE LEARNED COUNSEL SHRI NARESH JAIN, MS. AR ATI DEBNATH AND SHRI RAHUL JAIN APPEARING FOR ASSESSEES APPEAL AND SHRI M HAOKIP APPEARING FOR DEPARTMENT. 2. AT THE OUTSET, WE NOTICE THAT APPEAL FILED BY THE A SSESSEE IN ITA NO. 75/GAU/2018 FOR AY 2010-11 IS BARRED BY LIMITATION OF 1782 DAYS. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E COULD NOT FILE APPEAL ON TIME AND THERE WAS DELAY OF 1781 DAYS IN FILING THE APPE AL BY THE ASSESSEE. THE LEARNED COUNSEL STATED THAT THERE WAS A BONA FIDE R EASON FOR NOT FILING THE APPEAL WITHIN TIME AND HE STATED THAT THE DELAY WAS DUE TO BONA FIDE MISTAKE OF ASSESSEE(S) ADVOCATE SHRI ASHOM KUMAR JAIN, WHO FAI LED TO FILE THE APPEAL WITHIN THE PRESCRIBED TIME. THE LEARNED COUNSEL SUBMITTED THAT THE ASSESSEE IS A DIRECTOR OF THE ASSESSEE COMPANY AND HE IS A CANCER PATIENT AND ALSO SUFFERING FROM CRITICAL HEART DISEASE AND HE HAD UNDERGONE BYPASS SURGERY W ITHIN THE INSTALLATION OF PACE MAKER. THE DIRECTOR WAS ALSO FACING HEAVY DIABETICS DURING THE RELEVANT TIME. THEREFORE, THERE IS A COMMUNICATION GAP BETWEEN THE ASSESSEE AND HIS ADVOCATE AND THIS HAS RESULTED INTO DELAY FOR 1782 DAYS. THE LEARNED COUNSEL FURTHER SUBMITTED THAT THERE IS NO MALA FIDE INTENTION OR DELIBERATE ATTEMPT IN FILING THE PRESENT APPEAL LATE ON THE PART OF THE ASSESSEE COM PANY AND THE LEGITIMATE ASSESSEE COULD NOT BE DENIED FOR JUSTICE BECAUSE OF THESE TECHNICAL REASONS. THE LEARNED COUNSEL SUBMITTED BEFORE US AN AFFIDAVIT ST ATING THE REASONS FOR DELAY, WHICH IS BEING REPRODUCED BELOW: - I, SRI MAHABIR PRASAD SETHI, SON OF LATE NEMI CHAND SETHI. AGED ABOUT 68 YEARS RESIDING AT AT ROAD GUWAHATI 781001, DISTRICT KAMRU P (M), ASSAM, HAVING PAN NO AHVPS8770M DO HEREBY SOLEMNLY AFFIRM ON OATH AND DE CLARE AS FOLLOWS- 1. THAT I AM THE DIRECTOR OF ARIHANT INTERNATIONAL LIMITED, A COMPANY REGISTERED UNDER THE COMPANIES ACT 1956, HAVING ITS REGISTERED OFFICE AT 216 SREEMANTA MARKET A.T ROAD, GUWAHATI-781001, DISTRICT KAMRUP (M) ASSA M AND AS SUCH I AM FULLY ACQUAINTED WITH ALL THE FACTS AND CIRCUMSTANCES OF THE CASE. 3 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 2. THAT THE APPEAL FOR THE ASSESSMENT YEAR 2010-11 WILL BE FILED BEFORE THIS HON'BLE TRIBUNAL BY 16/04/2018 BY THE ASSESSEE COMP ANY I.E. M/S ARIHANT INTERNATIONAL LIMITED AGAINST THE ORDER OF THE LEAR NED CIT PASSED UNDER SECTION 263 OF THE INCOME TAX ACT 1961, GUWAHATI DATED 27/02/2013. 3. THAT THE ORDER PASSED U/S 263 BY THE CIT DATED 2 7/02/2013 WAS RECEIVED BY THE ASSESSEE COMPANY ON 01/04/2013. 4. THAT THE APPEAL U/S 253 OF THE ACT NEEDS TO THE FILED WITHIN 60 DAYS FROM THE DATE OF RECEIPT OF THE ORDER PASSED U/S 263 OF THE ACT, I.E. ON OR BEFORE 30.05.2013. 5. THAT THERE IS A DELAY OF APPROXIMATELY 1782 DAY S IN FILING THE APPEAL BY THE ASSESSEE COMPANY BEFORE YOUR HONOUR. 6. THAT I AM FULLY AWARE OF THE FACTS AND DISPUTE I N THE ABOVE CASE. 7. THAT THERE WAS A BONA FIDE REASON FOR NOT FILING THE APPEAL WITHIN TIME BEFORE YOUR HONOUR. 8. THAT THE DELAY WAS DUE TO BONAFIDE MISTAKE OF O UR ADVOCATE SRI ASHOK KUMAR JAIN WHO FAILED TO FILE THE APPEAL WITHIN THE PRESC RIBED TIME. 9. THAT I STATE THAT I AM A CANCER PATIENT AND ALS O SUFFERING FROM CRITICAL HEART DISEASES AND ALREADY I HAVE UNDERGONE BYE PASS SURG ERY WITH THE INSTALLATION OF PACEMAKER. I AM ALSO FACING HEAVY DIABETIC PROBLEMS AND DURING THE RELEVANT TIME I WAS MENTALLY DISTURBED AND AS A RESULT OF WHICH I COULD NOT GIVE PROPER CARE AND ATTENTION TO THE APPEAL MATTER AFORESAID AND AFTER HANDING OVER THE PAPERS TO MY ADVOCATE, I FAILED TO FOLLOW UP WITH THE ADVOCATE ABOUT THE STATUS OF THE APPEAL. 10. THAT THERE IS NO MALAFIDE INTENTION OR DELIBER ATE ATTEMPT IN DELAYING THE PRESENT APPEAL ON THE PART OF THE APPELLANT. 11. THAT I HAVE READ THE APPEAL MEMO & THE APPLICA TION FOR CONDONATION OF DELAY AND CONFIRM THE CONTENT AND FACTS STATED IN THE SAI D MEMO & APPLICATION AS TRUE. 12. THAT THE GROUNDS OF APPEAL TAKEN BY THE APPELL ANT CHALLENGING THE ORDER OF THE LD. CIT U/S 263 ARE REASONABLE, JUSTIFIED AND STRON G AND THAT THE APPLICANT HAS BONAFIDE BELIEF THAT THE SAME WILL BE DECIDED IN ITS FAVOUR BY THIS HON'BLE TRIBUNAL, BASED ON THE FACTS, EVIDENCES AND THE JUDICIAL PRONOUNCEMENTS. 13. THAT IN LIGHT OF THE ABOVE SITUATION, WE SEEK CONDONATION OF DELAY IN FILING THE ABOVE APPEAL. 3. WE HAVE HEARD BOTH THE PARTIES ON THIS PRELIMINARY ISSUE AND GOING THROUGH THE AFFIDAVIT AS WELL AS THE DELAY CONDONAT ION APPLICATION, WE NOTE THAT REASONS GIVEN IN THE AFFIDAVIT FOR CONDONATION OF D ELAY ARE CONVINCING AND THESE REASONS WOULD CONSTITUTE REASONABLE AND SUFFICIENT CAUSE FOR THE DELAY IN FILING THE APPEAL. THERE WAS NO DELIBERATION OR NEGLIGENCE OR MALA FIDES ON THE PART OF THE ASSESSEE. WE ALSO RELY ON THE DECISION OF THE COORD INATE BENCH OF THIS TRIBUNAL, IN 4 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 THE CASE OF SAHABUDDIN QUADIRI ITA NO. 1617/KOL/2016 FOR AY 2010-11, ORDER DATED 22.11.2018 WHEREIN UNDER SIMILAR SET OF FACTS AND R EASONS, THAT TRIBUNAL WAS PLEASED TO CONDONE THE DELAY OF 409 DAYS. FOR THE ENDS OF JUST ICE AND HAVING REGARD TO THE REASONS GIVEN IN THE PETITION, WE CONDONE THE DELAY AND ADM IT THE APPEAL FOR HEARING. 4. WE HAVE HEARD THIS PRELIMINARY ISSUES AND HAVING RE ASONS GIVEN IN THE AFFIDAVIT AND CONSIDERING VARIOUS MITIGATING FACTS AND CIRCUMSTANCES, WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR ADJUDICATION ON MERIT. 5. IT TRANSPIRES THAT DURING THE COURSE OF HEARING THA T THE INSTANT LIS INVOLVING ASSESSEES THREE APPEALS PERTAINS TO ASSESSMENT YEA R (S) 2010-11 AND 2011-12. FORMER ASSESSMENT YEAR CONTAINS THE ASSESSEES APPE ALS ITA NO. 75/GAU/2018 AND 105/GAU/2015. WE ARE TAKEN TO THE CORRESPONDING CASE RECORDS BY BOTH THE PARTIES. IT EMERGES THAT THE ASSESSING OFFICER HAD FRAMED HIS FIRST FOUND OF REGULAR ASSESSMENT ON 29.10.2012. THE CIT, GUWAHATI HEREIN REVISED THE SAME BY EXERCISING HIS JURISDICTION UNDER SECTION 263 OF TH E ACT VIDE ORDER UNDER CHALLENGE DATED 27.02.2013 / 21.03.2013. THE ASSESS ING OFFICER THEN FRAMED HIS CONSEQUENTIAL SECOND ROUND OF ASSESSMENT ON 30.03.2 014. THIS SECOND ASSESSMENT ALSO STANDS REVISED BY THE VERY CIT IS Y ET ANOTHER EXERCISE OF SECTION 263 JURISDICTION VIDE ORDER DATED 25.03.2015. THE A SSESSEE (S) LATTER APPEAL FOR THIS FOR AY 2010-11 BEARING ITA NO. 105/GAU/2015 IS DIRECTED AGAINST THE SECOND ROUND CITS REVISION ORDER. THE ASSESSEES A PPEAL ITA NO.106/GAU/2015 RELATING TO AY 2011-12 HAS EMANATED FROM THE VERY C ITS REVISION ORDER DATED 25.03.2015 SETTING ASIDE THE CORRESPONDING REGULAR ASSESSMENT FRAMED ON 29.03.2014. IN THESE BACKDROP OF FACTS, WE PROCEED TO DEAL WITH THE ASSESSEES APPEAL ITA NO. 75/GAU/2018 INVOLVING THE FIRST ROUND OF RE VISING PROCEEDINGS AS THE LEAD CASE. 6. WE NOW ADVERT TO THE BASIC RELEVANT FACTS. THE ASSE SSEE LIMITED COMPANY TRADES IN CEMENT, STEEL TO CARRIES OUT CONTRACTUAL WORKS AND INVESTMENTS IN SHARES. 5 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 IT FILED ITS RETURN ON 14.10.2010, STATING TOTAL IN COME OF RS. 182,98,680/-. THE ASSESSING OFFICER COMPLETED HIS SCRUTINY ASSESSMENT ON 2.10.2012 DISALLOWING/ ADDING DIRECT EXPENSES OF RS. 2 LACS ALONG WITH CAR RIAGE OUTWARD AND LABOUR CHARGES OF RS. 1.5 LACS, RESPECTIVELY. THE ASSESSEE DID NOT CHALLENGE THE SAID DISALLOWANCE(S) / ADDITION(S) ANYMORE. 7. THE CIT THEREAFTER PROPOSED TO REVISE THE ABOVE REG ULAR ASSESSMENT BY TERMING IT SAME AS ERRONEOUS CAUSING PREJUDICE TO I NTEREST OF THE REVENUE. HE ISSUED HIS SHOW CAUSE NOTICE DATED 07.02.2013 RAISI NG 9 ISSUES OF SECURITY PREMIUM OF RS. 14.27 CRORES, SECTION 14A DISALLOWAN CE REGARDING INVESTMENT IN SHARES, DEEMED DIVIDEND APPLICATION QUA LOANS AND A DVANCES OF RS. 98,137,880/-, CURRENT LIABILITIES OF RS. 910,778,336/-, GENUINENE SS OF COST OF OPERATIONS, LOANS FROM FUTURE TRADING IN SHARES/ COMMODITIES OF RS. 6 9,639,503/-, DIRECT EXPENSES OF RS. 597,64,671/-, CARRIAGE AND LABOUR CHARGES OF RS. 157,01,150/- AND DISALLOWANCE OF CASH PAYMENTS OF BUSINESS EXPENDITU RE UNDER SECTION 40(A)(3) OF THE ACT, RESPECTIVELY. 8. THE ASSESSEE FILED ITS DETAILED EXPLANATION DATED 2 7.02.2013 READ AS UNDER:- REF: PAN AAECA5555B/F. NO. Z-5/263/CIT-II/GHY/ARIHA NT INT. /2012-13/4132 SUB: SHOW CAUSE NOTICE U/S 263 FOR PROPOSED REVISIO N OF THE ORDER PASSED U/S 143(3) DATED : 29/10/2012 FOR THE ASSESSMENT YEAR 2010-11. DEAL SIR, IN REFERENCE TO THE ABOVE SHOW CAUSE NOTICE U/S 263 , WE WOULD LIKE TO AFFIRM & PUT FORWARD THE FOLLOWING POINT WISE REPLIES TO THE LET TER:- 1. THE ASSESSEE HAD SHOWN SECURITIES PREMIUM OF RS1 4.27 CRORES. THE NATURE AND SOURCE OF THE SAID PREMIUM HAD NOT BEEN EXAMINED. IN THIS REGARD WE WOULD LIKE TO BRING TO YOUR KNOWL EDGE, THAT TILE ASSESSEE HAS AN OPENING BALANCE OF SHARE PREMIUM OF RS.14.72 CRO RE SINCE AY 2004-2005. MOREOVER, WE HAVE PROVIDED DETAILS OF SHARE CAPITAL AT THE TIME OF HEARING EARED 17/10/2012 WHICH IS AGAIN SUBMITTED HEREWITH. THUS, THERE IS NO NEED TO RE-VERIFY THE NATURE & SOURCE OF THE SAME AS SAME B ALANCE IS CARRIED SINCE FY 2003-04 AND NO FRESH ADDITION IS THERE DURING THE P REVIOUS YEAR RELEVANT TO AY 2010-11. 6 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 2. THE ASSESSEE HAD ALSO SHOWN INVESTMENTS IN SNARE S ETC. THE APPLICABILITY OF THE PROVISION OF SECTION 14A HAD N OT BEEN LOOKED INTO. THE COMPANY HAS NOT INCURRED ANY EXPENSES AGAINST D IVIDEND INCOME OR ANY OTHER EXEMPT INCOME DURING THE RELEVANT PERIOD. THE REFORE, THE APPLICABILITY OF SECTION 14A IS NOT APPLICABLE TO THE COMPANY. THE M ATTER WAS DULY DISCUSSED DURING THE HEARING WITH THE ID. JOINT COMMISSIONER OF INCOME LAX ALSO. 3. THE ASSESSEE HAS SHOWN LOANS AND ADVANCES OF RS. 9,81,37,880/- THE APPLICABILITY OF THE PROVISION TO SECTION 2(22)(E) TO THE SAID LOANS AND ADVANCES HAD NOT BEEN LOOKED INTO. IN THIS REGARD, WE WOULD LIKE TO INFORM YOU THAT WE HAVE PROVIDED DETAILS OF LOANS AND ADVANCES BEFORE THE JOINT COMMISSIONER OF INCOME TAX ON 17/1/2012. THE PROVISION OF SECTION 2(22)(E) IS NOT APPLICABLE TO THE COMPANY AS NO LOANS & ADVANCES ARE GIVEN TO ANY OF SHAREHOLDERS. THE DE TAILS OF LOANS AND ADVANCES IS AGAIN ENCLOSED HEREWITH, WHICH CLEARLY REFLECTS THAT THEY MADE IN ORDINARY COURSE OF BUSINESS AND NOT AT ALL RELATED TO ANY SH AREHOLDERS OR DIRECTORS. 4. THE ASSESSEE HAD SHOWN CURRENT LIABILITIES OF RS . 9,10,78,336/. THE GENUINENESS AND CREDIBILITY OF THE LIABILITIES HAD NOT BEEN EXAMINED. THE DETAILS OF CURRENT LIABILITIES WERE PRESENTED B EFORE THE LD, ASSESSING OFFICER SPECIFYING THE POSTAL ADDRESS OF THE SAME, THE DETAILS IS AGAIN ENCLOSED HEREWITH WHICH CLEARLY REFLECTS THAT MOST OF THE LI ABILITY ARE FOR PURCHASE OF GODS FROM REPUTED COMPANIES, VAT AND OTHER GOVERNME NT LIABILITIES AND BANK (DUE TO OVER ISSUE OF CHEQUES). AGAINST A TURNOVER OF RS. 168 CRORES THE LIABILITY OF ABOUT RS. 9 CRORES WHICH IS ABOUT 20 YEARS CREDI T, WHICH IS VERY MUCH IN LINE WITH THE BUSINESS TRENDS IN THE INDUSTRY. 5. THE GENUINENESS O THE COST OF OPERATIONS HAD NOT BEEN EXAMINED. THE DETAILS OF COST OF OPERATIONS WERE DUTY VERIFIE D BY LD. ASSESSING OFFICER IN DETAILS DURING THE SCRUTINY PROCEEDINGS. ALL THE P URCHASE AND DIRECT EXPENSES VOUCHERS WERE VERIFIED IN DETAILS BY THE LD. JOINT COMMISSIONER OF INCOME TAX AND HE WAS SATISFIED WITH THE ACCOUNTS. 6. THE ASSESSEE HAD SHOWN LOSS FROM FUTURE TRADING IN SHARES/ COMMODITIES AMOUNTING TO RS. 6,96,39,503/-, WHICH WERE NOT VERI FIED. THE DETAILS ALONG WITH THE CONTRACT NOTE WERE DULY SUBMITTED TO THE LD. ASSESSING OFFICER AT THE TIME OF HEARING AND HE HAS VERIFIED THE SAME IN DETAILS. ALL THE TRANSACTIONS ARE DONE IN THE STOCK EXCHANGE AND HE WAS SATISFIED WITH ALL THE PAPERS. 7. THE NATURE AND GENUINENESS OF DIRECT EXPENSES OF RS,5,9764,671/-, WERE NOT PROPERTY VERIFIED. THE A.0. HAD MENTIONED THE S OME EXPENSES ARE SUPPORTED BY INTERNAL VOUCHERS WHICH CANNOT BE VERIFIED FOR L ACK OF IDENTITY OF THE PAYEES. AS ALREADY MENTIONED IN POINT NO. 5 ABOVE, THE DETA ILS OF DIRECT EXPENSES WERE PROVIDED BEFORE THE JOINT COMMISSIONER OF INCOME AL ONG WITH THE VOUCHERS AND HE HAS VERIFIED ALL OF THEM IN DETAILS. HE HAS MENT IONED THAT ''SOME. OF THE EXPENSES CLAIMED ARE SUPPORTED BY INTERNAL VOUCHERS WHICH CANNOT BE VERIFIED 7 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 FOR LACK OF IDENTITY OF THE PAYEES AND HAS DISALLOW ED A SUM OF RS. 2,00,000/- IN THIS REGARD. AS STATED BY THE LD. JOINT COMMISSIONE R OF INCOME TAX ONLY SOME OF EXPENSES ARE SUPPORTED BY INTERNAL VOUCHERS AND MOST OF THE VOUCHERS WERE VERIFIED BY THE LD. JOINT COMMISSIONER OF INCOME TA X AND HE WAS SATISFIED BY THE SAME. 8. THE ASSESSEE HAD SHOWN CARRIAGE AND LABOUR CHARG ES OF RS. 1,57,01,150/-, THE AO HAD MENTIONED THAT IN THE ABS ENCE OF DETAILS AND PAYMENTS MADE BY CASH, THE IDENTITY AS WELL AS GENU INENESS OF THE TRANSACTION COULD NOT BE ESTABLISHED AND MADE AD-HOC DISALLOWAN CE OF ITS. 10,000/-, THIS SHOWS THAT THE A 0. HAD NOT PROPERTY QUANTIFIED THE AMOUNT OF DISALLOWANCES INSPITE OF SUCH GROSS ANOMALIES. THE DETAILS OF DIRECT EXPENSES WERE PROVIDED BEFORE THE LD, ASSESSING OFFICER ALONG WITH ALL THE VOUCHERS. THE LD. ASSESSING OFFI CER HAS DISALLOWED A SUM OF ITS 150,000/- BY STATING THAT THE PAYMENTS ARE MADE IN CASH. IT IS RESPECTFULLY SUBMITTED THAT SUCH TYPE OF EXPENSE; ARE ALWAYS MAD E IN CASH, AS PETTY LABOURERS AND LABOUR CONTRACTORS CHARGE THE AMOUNTS AT RAILWAY SIDLINGS BASED ON LABOUR RATE. CONSIDERING THE VOLUME OF OUR TRANSACTIONS OF ABOUT 2,40,000 MT OR 48,00,000 BAS OF CEMENT, THE EXPENSE S OF RS. 1,57,01,150/- IS VERY MUCH REASONABLE AND JUSTIFIED AS IT COMES TO J UST ABOUT RS. 3,25 PER BAG. 9. THE APPLICATION OF THE PROVISIONS OF SECTION 40A (3) SHOULD HAVE BEEN LOOKED INTO WHEN THERE WARE CLEAR INDICATIONS OF CA SH PAYMENTS AS MENTIONED ABOVE. THE ASSESSEE HAS NOT PAID ANY AMOUNT WHICH IS MORE THAN RS. 20,000/- IN CASH WHICH WAS ALSO VERIFIED BY THE JOINT COMMISSIONER O F INCOME TAX. THUS, THE ASSESSEE HAS COMPLIED WITH THE PROVISIONS OF SECTIO N 40A(3). FURTHER, THE AUDITORS OF THE COMPANY IN THEIR TAX AUDIT REPORT U NDER SECTION 44AB HAS ALSO NOT QUALIFIED ANYTHING ADVERSE IN THE MATTER. HOPE YOU WILL FIND THE ABOVE REPLY SUFFICIENT IN CO MPLIANCE TO YOUR SHOW CAUSE. WE FIND THAT ALL THE POINTS RAISED BY YOUR HONOUR A RE REPLIED BY US AND WE FIND THAT THE ORDER UNDER SECTION 143(3) HAS BEEN DRAFTE D BY LD. JOINT COMMISSIONER OF INCOME TAX, AFTER CONSIDERING ALL THE ABOVE POIN T AND IS NOT ERRONEOUS AND NOT PREJUDICIAL TO THE INTEREST OF REVENUE. 9. THE CIT HAS DECLINED THE ASSESSEE ABOVE DETAILED EX PLANATION VIDE ORDER UNDER CHALLENGE DATED 27.02.2013 AS FOLLOWS:- 1. THE ASSESSEE HAD SHOWN SECURITIES PREMIUM OF RS. 14.27 CRORES. THE NATURE AND SOURCE OF THE SAID PREMIUM HAD NOT BEEN EXAMINE D. 1.1 IT WAS SUBMITTED THAT THE ASSESSEE HAD AN OPENI NG BALANCE OF SHARE PREMIUM OF RS. 14.72 CR. SINCE A.Y. 2004-05. THE DE TAILS OF SHARE CAPITAL WERE SUBMITTED AT THE TIME OF HEARING AND AS SUCH THE SA ME IS NOT REQUIRED TO BE RE- VERIFIED AS THE BALANCE HAS BEEN BROUGHT FORWARD SI NCE F.Y. 2003-04. 8 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 1.2 1 HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E FOR THE ASSESSEE AND CONSIDERING THE FACT THAT THE SUBMISSIONS MADE WOUL D REQUIRED EXAMINATION, THE ISSUE IS SET ASIDE TO THE FILE OF THE A.0. FOR FRES H VERIFICATION, 2. THE ASSESSEE HAD ALSO SHOWN INVESTMENTS IN SHARE S ETC. THE APPLICABILITY OF THE PROVISION OF SECTION 14A HAD NOT BEEN LOOKED IN TO. 2.1 ON THIS ISSUE IT WAS SUBMITTED THAT THE COMPANY HAD NOT INCURRED ANY EXPENSE AGAINST DIVIDEND INCOME OR ANY OTHER EXEMPT INCOME AND THEREFORE, THE PROVISION OF SECTION 14A IS NOT APPLICABLE. 2.2 1 HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E FOR THE ASSESSEE AND CONSIDERING THE FACT THAT THE SUBMISSIONS MADE WOUL D REQUIRED EXAMINATION, THE ISSUE IS SET ASIDE TO THE FILE OF THE A.O. FOR FRES H VERIFICATION. THE ASSESSEE HAD SHOWN LOANS AND ADVANCES OF RS.9,8 1,37,880/. THE APPLICABILITY OF THE PROVISION TO SECTION 2(22)(E) TO THE SAID LOANS AND ADVANCES HAD NOT BEEN LOOKED INTO. 3.1 ON THIS ISSUE, IT WAS SUBMITTED THAT THE DETAIL S OF LOANS AND ADVANCES WERE SUBMITTED BEFORE THE A,O,. THE PROVISION OF SECTION 2(22)(E) IS NOT APPLICABLE TO THE COMPANY AS NO LOANS AND ADVANCES WERE GIVEN TO THE SHAREHOLDERS. 3.2 1 HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E FOR THE ASSESSEE AND CONSIDERING THE FACT THAT THE SUBMISSIONS MADE WOUL D REQUIRED EXAMINATION, THE ISSUE IS SET ASIDE TO THE FILE OF THE A.O. FOR FRES H VERIFICATION. 4. THE ASSESSEE HAD SHOWN CURRENT LIABILITIES OF RS .9,10,78,336/-. THE GENUINENESS AND CREDIBILITY OF THE LIABILITIES HAD NOT BEEN EXAMINED. 4.1 ON THIS ISSUE, IT WAS SUBMITTED THAT THE DETAIL S OF CURRENT LIABILITIES WERE SUBMITTED BEFORE THE A.O.. MOREOVER, AGAINST A TURN OVER OF RS,168 CR., THE LIABILITY OF ABOUT RS. 9 CR. WHICH IS ABOUT TWENTY DAYS CREDIT IS VERY MUCH IN TINE WITH THE BUSINESS TRENDS. 4.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E FOR THE ASSESSEE AND CONSIDERING THE FACT THAT THE SUBMISSIONS MADE WOUL D REQUIRE EXAMINATION, THE ISSUE IS SET ASIDE TO THE FILE OF THE A.O. FOR FRES H VERIFICATION. 5. THE GENUINENESS OF THE COST OF OPERATIONS HAD NO T BEEN EXAMINED. 5.1 ON THIS ISSUE, IT WAS SUBMITTED THAT THE DETAIL S WERE FILE BEFORE THE A.O. AND ALL THE PURCHASES AND DIRECT EXPENSES VOUCHERS WERE VERIFIED AND THE A.O. WAS SATISFIED WITH THE ACCOUNTS. 5.2 1 HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E FOR THE ASSESSEE AND CONSIDERING THE FACT THAT THE SUBMISSIONS MADE WOUL D REQUIRE EXAMINATION, THE ISSUE IS SET ASIDE TO THE FILE OF THE A.O. FOR FRES H VERIFICATION. 6. THE ASSESSEE HAD SHOWN LOSS FROM FUTURE TRADING IN SHARES/COMMODITIES AMOUNTING TO RS.6,96,39,503/ WHICH WERE NOT VERIFIE D. 9 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 6.1 ON THIS ISSUE, IT WAS SUBMITTED THAT THE DETAIL S AND CONTRACT NOTES WERE DULY SUBMITTED BEFORE THE A.O. AND HE WAS SATISFIED WITH THE DOCUMENTS FILED. 6.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E FOR THE ASSESSEE AND CONSIDERING THE FACT THAT THE SUBMISSIONS MADE WOUL D REQUIRE EXAMINATION, THE ISSUE IS SET ASIDE TO THE FILE OF THE A.O. FOR FRES H VERIFICATION. 7. THE NATURE AND GENUINENESS OF DIRECT EXPENSES OF RS. 5,97,64,671/- WERE NOT PROPERTY VERIFIED. THE A.O. HAD MENTIONED THE SOME EXPENSES ARE SUPPORTED BY INTERNAL VOUCHER WHICH CANNOT BE VERIFIED FOR LACK OF IDENTITY OF THE PAYEES. 7.1 ON THIS ISSUE, IT WAS SUBMITTED THAT THE DETAIL S WERE FILED BEFORE THE A.O. AND IT WAS VERIFIED. ACCORDINGLY, THE A.O. HAD DISALLOW ED A SUM OF RS.2 LAKHS. 7.2 1 HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E FOR THE ASSESSEE. CONSIDERING THE FACT THAT THE SUBMISSIONS MADE WOUL D REQUIRE EXAMINATION, THE ISSUE IS SET ASIDE TO THE FILE OF THE A.O. FOR FRES H VERIFICATION AS BECAUSE THE A.0. HAD MADE DISALLOWANCE ON ESTIMATE WITHOUT QUANTIFYI NG THE DISCREPANCIES FOUNDS. 8. THE ASSESSEE HAD SHOWN CARRIAGE AND LABOUR CHARG ES OF RS.1,57,01,150/-. THE A.O. HAD MENTIONED THAT IN THE ABSENCE OF DETAI LS AND PAYMENTS MADE BY CASH, THE IDENTITY AS WELL IV/ GENUINENESS OF THE T RANSACTION COULD NOT BE ESTABLISHED AND MADE AD-HOC DISALLOWANCE OF RS.1,50 ,000/- . THIS SHOWS THAT THE AO HAD NOT PROPERLY QUANTIFIED THE AMOUNT OF DI SALLOWANCES INSPITE OF SUCH GROSS ANOMALIES. 8.1 ON THIS ISSUE, IT WAS SUBMITTED THAT THE DETAIL S OF DIRECT EXPENSES WERE FILED BEFORE THE A.O. AND THE A.O. HAD MADE A DISALLOWANC E OF RS. 50,000/- AS THE PAYMENTS MADE IN CASH. SUCH TYPE OF CASH EXPENSES A RE INEVITABLE IN THIS LINE UP BUSINESS. MOREOVER, THE EXPENSES SHOWN ARE VERY MUC H REASONABLE CONSIDERING THE VOLUME OF TRANSACTIONS. 8.2 1 HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E FOR THE ASSESSEE. CONSIDERING THE FACT THAT THE SUBMISSIONS MADE WOUL D REQUIRE EXAMINATION, THE ISSUE IS SET ASIDE TO THE FILE OF THE A.O. FOR FRES H VERIFICATION AS BECAUSE THE A.O. HAD MADE DISALLOWANCE ON ESTIMATE WITHOUT QUANTIFYI NG THE DISCREPANCIES FOUNDS. 9. THE APPLICATION OF THE PROVISION OF SECTION 40A( 3) SHOULD HAVE BEEN LOOKED IN /WHEN THERE ARE CLEAR INDICATIONS OF CASH PAYMENTS AS MENTIONED ABOVE. 9.1 ON THIS ISSUE, IT WAS SUBMITTED THAT THERE ARE NO CASH PAYMENTS IN EXCESS OF RS,20,000/. AND THE SAME WAS VERIFIED BY THE A.O.. MOREOVER, THE AUDITORS HAVE NOT MENTIONED ANYTHING ADVERSE ON THIS ISSUE. 9.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E FOR THE ASSESSEE AND CONSIDERING THE FACT THAT THE SUBMISSIONS MADE WOUL D REQUIRE EXAMINATION, THE ISSUE IS SET ASIDE TO THE FILE OF THE AO FOR FRESH VERIFICATION. THIS IS WHAT LEAVES THE ASSESSEE AGGRIEVED IN ITS F ORMER APPEAL ITA NO. 75/GAU/2018. 10 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 10. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL CONTENTIONS. AT THE OUTSET, THE ASSESSEE CONFINES HIS CHALLENGE TO CORR ECTNESS OF THE CITS ACTION ASSUMING REVISION JURISDICTION ONLY QUA THE 6 TH AND 7 TH ISSUES OF LOSSES FROM FUTURE TRADING IN SHARES / COMMODITIES AND DIRECT EXPENSES . IT REFERS TO THE ASSESSING OFFICER CONSEQUENTIAL ASSESSMENT ORDER (SUPRA) NOT DISALLOWING / ADDING ANY OF THE REMAINING SEVEN HEADS. WE THEREFORE, RESTRICT T O OUR INSTANT ADJUDICATION TO THE EXTENT OF THESE REMAINING TWO ISSUES ONLY. 11. WE CONTINUE TO EXAMINE CORRECTNESS OF THE CITS FOR ABOVE EXTRACTED REVISION ORDER UNDER CHALLENGED. IT HAS COME ON RE CORD THAT THERE IS NOT EVEN AN INDICATION IN THE IMPUGNED ORDER SETTING ASIDE THE REGULAR ASSESSMENT IN QUESTION AS TO WHY THE SAME WAS ERRONEOUS AND CAUSING PREJUD ICE TO THE INTEREST OF THE REVENUE. THE CIT APPEARS TO HAVE SIMPLY BURST ASIDE THE ASSESSEES FOREGOING DETAILED EXPLANATION SUFFICIENTLY PLEADING THAT THE ASSESSING OFFICER HAD CONDUCTED ALL DUE INQUIRIES DURING THE COURSE OF AS SESSMENT. THE ASSESSING OFFICER HAD ISSUED HIS SHOW CASE DATED 12.09.2012 ( P-49 IN PAPER BOOK ) ALONG WITH A DETAILED QUESTIONNAIRE FOR NECESSARY COMPLIA NCE RAISING VARIOUS ISSUES. THE ASSESSEE FILED ITS REPLY ALONG WITH DETAILS ON 17.1 0.2012 (AT PAGES 50 TO 55 OF PAPER BOOK). WE WISH TO MAKE IT CLEAR HERE THAT THE CITS ONLY REASON IN SHOW CAUSE IS THAT THE ASSESSING OFFICER HAD OVERLOOKED CERTAIN ISSUES. THE SAID MERE OVERLOOKING OF ISSUES IS NOWHERE EVIDENT FROM PERU SAL OF THE CASES FILE. HONBLE APEX COURTS LANDMARK DECISION IN MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 243 ITR 83 (SC) SETTLED THE LAW IN HOLDING THAT THE CITS EXERCISE OF REVISION JURISDICTION HAS TO SIMULTANEOUSLY SATISFY THE TWIN TEST OF THE CORRESPONDING ASSESSMENT TO BE BOTH ERRONEOUS AS WELL AS PREJUDIC IAL TO INTEREST OF THE REVENUE. THE LORDSHIPS FURTHER MADE IT CLEAR THAT IT IS NOT EACH AND EVERY ASSESSMENT WHICH AMOUNTS TO SUFFERING FROM ERROR(S) CAUSING SUCH A P REJUDICE TO THE INTEREST OF THE REVENUE IN CASE THE ASSESSING OFFICERS TAKES THE C ORRECT VIEW OF ONE OF TWO POSSIBLE VIEWS, WHEREIN THE CIT DOES NOT AGREE. COU PLED WITH THIS, HONBLE DELHI 11 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 HIGH COURT JUDGMENT OF ITO VS. DG HOUSING PROJECTS LIMITED, (2012) 343 ITR 329 (DELHI) HAS DEFINED THE CONTOURS OF CITS REVIS ION JURISDICTION AS FOLLOWS: - 8. THE TRIBUNAL HAS SET ASIDE THE ORDER OBSERVING THAT THE CIT HAD NOT HELD AND COME TO THE CONCLUSION OR GIVEN A FINDING THAT THE ACTUAL RECEIPT OF CONSIDERATION WAS MORE THAN WHAT WAS DECLARED IN THE RETURN. THE CIT HAD NOT RECORDED ANY FINDING THAT THE SALE CONSIDERATION OF THE PROPERTY WAS HIGHER. IT HAS BEEN HELD THAT THE CIT COULD NOT HAVE MADE ANY ADDITION UNDER SECTION 50C AS THE STAMP DUTY HAD NOT BEEN ENHANCED BY THE REGISTERING AUTHO RITY AND THE SALE DEED WAS REGISTERED. IT WAS NOT THE CASE OF THE CIT THAT ANY EXTRA STAMP DUTY OVER AND ABOVE THE TRANSACTION VALUE WAS PAYABLE BECAUSE OF THE CIRCLE RATES. THE ORDER UNDER SECTION 263 OF THE ACT WAS SET ASIDE/CANCELLE D. ACCORDINGLY, REVENUE IS IN APPEAL. 9. SECTION 263 OF THE ACT, READS AS UNDER:- 263. REVISION OF ORDERS PREJUDICIAL TO REVENUE.(1 ) THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDI NG UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN B Y 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 BE ING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEE MS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CAN CELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. EXPLAN ATION.FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT, FOR THE PURPOSES OF THIS SUB- SECTION, (A) AN ORDER PASSED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988 BY THE ASSESSING OFFICER SHALL INCLUDE (I) AN ORDER OF ASSESSMENT MADE BY THE ASSISTANT COMMISSIONER OR DEPUTY COMMIS SIONER OR THE INCOME TAX OFFICER ON THE BASIS OF THE DIRECTIONS I SSUED BY THE JOINT COMMISSIONER UNDER SECTION 144-A; (II) AN ORDER MAD E BY THE JOINT COMMISSIONER IN EXERCISE OF THE POWERS OR IN THE PE RFORMANCE OF THE FUNCTIONS OF AN ASSESSING OFFICER CONFERRED ON, OR ASSIGNED TO, HIM UNDER THE ORDERS OR DIRECTIONS ISSUED BY THE BOARD OR BY THE CHIEF COMMISSIONER OR DIRECTOR GENERAL OR COMMISSIONER AU THORISED BY THE BOARD IN THIS BEHALF UNDER SECTION 120; (B) RECORD SHALL INCLUDE AND SHALL BE DEEMED ALWAYS TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PROCEEDING UNDER THIS ACT AVAILABLE AT THE TIME OF EXAMINATION BY THE COMMISSIONER; (C) WHERE ANY ORDER REFERRED TO IN TH IS SUB-SECTION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJEC T-MATTER OF ANY APPEAL FILED ON OR BEFORE OR AFTER THE 1ST DAY OF J UNE, 1988, THE POWERS OF THE COMMISSIONER UNDER THIS SUBSECTION SHALL EXTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED TO SUCH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL. (2) NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) AFTER THE EXPIRY OF TWO YEARS FROM THE END OF THE F INANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE REVISED WAS PASSED. (3) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTI ON (2), AN ORDER IN REVISION UNDER THIS SECTION MAY BE PASSED AT ANY TI ME IN THE CASE OF AN 12 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 ORDER WHICH HAS BEEN PASSED IN CONSEQUENCE OF, OR T O GIVE EFFECT TO, ANY FINDING OR DIRECTION CONTAINED IN AN ORDER OF THE A PPELLATE TRIBUNAL, NATIONAL TAX TRIBUNAL, THE HIGH COURT OR THE SUPREM E COURT. EXPLANATION.IN COMPUTING THE PERIOD OF LIMITATION FOR THE PURPOSES OF SUB-SECTION (2), THE TIME TAKEN IN GIVING AN OPPORT UNITY TO THE ASSESSEE TO BE REHEARD UNDER THE PROVISO TO SECTION 129 AND ANY PERIOD DURING WHICH ANY PROCEEDING UNDER THIS SECTION IS STAYED BY AN O RDER OR INJUNCTION OF ANY COURT SHALL BE EXCLUDED. 10. REVENUE DOES NOT HAVE ANY RIGHT TO APPEAL TO TH E FIRST APPELLATE AUTHORITY AGAINST AN ORDER PASSED BY THE ASSESSING OFFICER. S ECTION 263 HAS BEEN ENACTED TO EMPOWER THE CIT TO EXERCISE POWER OF REVISION AN D REVISE ANY 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 EXP RESSION PREJUDICIAL TO THE INTEREST OF THE REVENUE IS OF WIDE IMPORT AND IS NOT CONFINED TO MERELY LO SS OF TAX. THE TERM ERRONEOUS MEANS A WRONG/INCORRECT DECISION DEVIATING FROM LAW. THIS EXPRESSION POSTULATES AN ERROR WHICH MAKE S AN ORDER UNSUSTAINABLE IN LAW. 11. THE ASSESSING OFFICER IS BOTH AN INVESTIGATOR A ND AN ADJUDICATOR. IF THE ASSESSING OFFICER AS AN ADJUDICATOR DECIDES A QUEST ION OR ASPECT AND MAKES A WRONG ASSESSMENT WHICH IS UNSUSTAINABLE IN LAW, IT CAN BE CORRECTED BY THE COMMISSIONER IN EXERCISE OF REVISIONARY POWER. AS A N INVESTIGATOR, IT IS INCUMBENT UPON THE ASSESSING OFFICER TO INVESTIGATE THE FACTS REQUIRED TO BE EXAMINED AND VERIFIED TO COMPUTE THE TAXABLE INCOME . IF THE ASSESSING OFFICER FAILS TO CONDUCT THE SAID INVESTIGATION, HE COMMITS AN ERROR AND THE WORD ERRONEOUS INCLUDES FAILURE TO MAKE THE ENQUIRY. IN SUCH CASE S, THE ORDER BECOMES ERRONEOUS BECAUSE ENQUIRY OR VERIFICATION H AS NOT BEEN MADE AND NOT BECAUSE A WRONG ORDER HAS BEEN PASSED ON MERITS. 12. DELHI HIGH COURT IN GEE VEE ENTERPRISES VS. ADD ITIONAL COMMISSION OF INCOME-TAX, DELHI-I & ORS.,(1975) 99 ITR 375, HAS O BSERVED AS UNDER: THE REASON IS OBVIOUS. THE POSITION AND FUNCTION O F THE INCOME-TAX OFFICER IS VERY DIFFERENT FROM THAT OF A CIVIL COUR T. THE STATEMENTS MADE IN A PLEADING PROVED BY THE MINIMUM AMOUNT OF EVIDENCE MAY BE ACCEPTED BY A CIVIL COURT IN THE ABSENCE OF ANY REBUTTAL. TH E CIVIL COURT IS NEUTRAL. IT SIMPLY GIVES DECISION ON THE BASIS OF THE PLEADI NG AND EVIDENCE WHICH COMES BEFORE IT. THE INCOME-TAX OFFICER IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN T HE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER INQUIRY. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN THE RETU RN WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE AN INQUIRY. THE MEANING TO BE GIVEN TO THE WORD 'ERRONEOUS' IN SECT ION 263 EMERGES OUT OF THIS CONTEXT. IT IS BECAUSE IT IS INCUMBENT ON T HE INCOME-TAX OFFICER TO FURTHER INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MAKE SUCH AN INQUIRY PRUDENT THAT THE WORD 'E RRONEOUS' IN SECTION 263 INCLUDES THE FAILURE TO MAKE SUCH AN INQUIRY. T HE ORDER BECOMES 13 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 ERRONEOUS BECAUSE SUCH AN INQUIRY HAS NOT BEEN MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WITH THE ORDER IF ALL THE F ACTS STATED THEREIN ARE ASSUMED TO BE CORRECT. 13. IN THE SAID JUDGMENT, DELHI HIGH COURT HAD REFE RRED TO EARLIER DECISIONS OF THE SUPREME COURT IN RAMPYARI DEVI SAROGI VS. CIT ( 1968) 67 ITR 84 (SC) AND TARA DEVI AGGARWAL VS. CIT (1973) 88 ITR 323 (SC), WHEREIN IT HAS BEEN HELD THAT WHERE ASSESSING OFFICER HAS ACCEPTED A PARTICU LAR CONTENTION/ISSUE WITHOUT ANY ENQUIRY OR EVIDENCE WHATSOEVER, THE ORDER IS ER RONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. AFTER REFERENCE TO THE SE TWO DECISIONS, THE DELHI HIGH COURT OBSERVED:- THESE TWO DECISIONS SHOW THAT IT IS NOT NECESSARY FOR THE COMMISSIONER TO MAKE FURTHER INQUIRIES BEFORE CANCELLING THE ASS ESSMENT ORDER OF THE INCOME-TAX OFFICER. THE COMMISSIONER CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES O F THE CASE THE INCOME-TAX OFFICER SHOULD HAVE MADE FURTHER INQUIRI ES BEFORE ACCEPTING THE STATEMENTS MADE BY THE ASSESSEE IN HIS RETURN. 14. THE AFORESAID OBSERVATIONS HAVE TO BE UNDERSTOO D IN THE FACTUAL BACKGROUND AND MATRIX INVOLVED IN THE SAID TWO CASES BEFORE TH E SUPREME COURT. IN THE SAID CASES, THE ASSESSING OFFICER HAD NOT CONDUCTED ANY ENQUIRY OR EXAMINED EVIDENCE WHATSOEVER. THERE WAS TOTAL ABSENCE OF ENQ UIRY OR VERIFICATION. THESE CASES HAVE TO BE DISTINGUISHED FROM OTHER CASES (I) WHERE THERE IS ENQUIRY BUT THE FINDINGS ARE INCORRECT/ERRONEOUS; AND (II) WHERE TH ERE IS FAILURE TO MAKE PROPER OR FULL VERIFICATION OR ENQUIRY. 15. IN THE CASE OF COMMISSIONER OF INCOME TAX VS. S UNBEAM AUTO LTD. (2011) 332 ITR 167 (DEL), DELHI HIGH COURT WAS CONSIDERING THE ASPECT, WHEN THERE IS NO PROPER OR FULL VERIFICATION, AND IT WAS HELD AS UNDER:- WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE CO UNSEL ON THE OTHER SIDE AND HAVE GONE THROUGH THE RECORDS. THE FIRST I SSUE THAT ARISES FOR OUR CONSIDERATION IS ABOUT THE EXERCISE OF POWER BY THE COMMISSIONER OF INCOME-TAX UNDER SECTION 263 OF THE INCOME-TAX ACT. AS NOTED ABOVE, THE SUBMISSION OF LEARNED COUNSEL FOR THE REVENUE WAS T HAT WHILE PASSING THE ASSESSMENT ORDER, THE ASSESSING OFFICER DID NOT CON SIDER THIS ASPECT SPECIFICALLY WHETHER THE EXPENDITURE IN QUESTION WA S REVENUE OR CAPITAL EXPENDITURE. THIS ARGUMENT PREDICATES ON THE ASSESS MENT ORDER, WHICH APPARENTLY DOES NOT GIVE ANY REASONS WHILE ALLOWING THE ENTIRE EXPENDITURE AS REVENUE EXPENDITURE. HOWEVER, THAT B Y 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 DOW N THE PRINCIPLE THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IS NO T REQUIRED TO GIVE DETAILED REASON IN RESPECT OF EACH AND EVERY ITEM O F 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. LEARNED COUNSEL FOR THE ASSESS EE IS RIGHT IN HIS SUBMISSION THAT ONE HAS TO KEEP IN MIND THE DISTINC TION BETWEEN LACK OF 14 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 INQUIRY AND INADEQUATE INQUIRY. IF THERE WAS ANY INQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCASION T O THE COMMISSIONER TO PASS ORDERS UNDER SECTION 263 OF THE ACT, MERELY BE CAUSE HE HAS A DIFFERENT OPINION IN THE MATTER. IT IS ONLY IN CASE S OF LACK OF INQUIRY THAT SUCH A COURSE OF ACTION WOULD BE OPEN. IN GABRIEL I NDIA LTD. [1993] 203 ITR 108 (BOM), LAW ON THIS ASPECT WAS DISCUSSED IN THE FOLLOWING MANNER (PAGE 113): . . . FROM A RENDING OF SUB-SECTION (1) OF SECTIO N 263, IT IS CLEAR THAT THE POWER OF SUO MOTU REVISION CAN BE EXERCISED BY THE COMMISSIONER ONLY IF, ON EXAMINATION OF THE RECORDS OF ANY PROCEEDINGS UN DER THIS ACT, HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE INCO ME-TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE . IT IS NOT AN ARBITRARY OR UNCHARTERED POWER, IT CAN BE EXERCISED ONLY ON FULFILLMENT OF THE REQUIREMENTS LAID DOWN IN SUB-SE CTION (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 REVENUE, MUST BE BASED ON MATERIALS ON THE RECORD OF THE PROCEEDINGS CALLE D FOR BY HIM. IF THERE ARE NO MATERIALS ON RECORD ON THE BASIS OF WHICH IT CAN BE SAID THAT THE COMMISSIONER ACTING IN A REASONABLE MANNER COULD HA VE COME TO SUCH A CONCLUSION, THE VERY INITIATION OF PROCEEDINGS BY H IM WILL BE ILLEGAL AND WITHOUT JURISDICTION. THE COMMISSIONER CANNOT INITI ATE PROCEEDINGS WITH A VIEW TO STARTING FISHING AND ROVING ENQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED. SUCH ACTION WILL BE AGAINST THE WELL ACCEPTED POLICY OF LAW THAT THERE MUST BE A POINT OF FINALIT Y IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUES SHOULD NOT BE REACTI VATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI-JUDICIAL CONTROVERSIES AS I T MUST IN OTHER SPHERES OF HUMAN ACTIVITY. (SEE PARASHURAM POTTERY WORKS CO . LTD. V. ITO [1977] 106 ITR 1 (SC) AT PAGE 10) . . . FROM THE AF ORESAID DEFINITIONS IT IS CLEAR THAT AN ORDER CANNOT BE TERMED AS ERRONEOU S 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, ACCOR DING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. TH IS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME-TAX OFFICER, WHO PASSED THE ORDE R UNLESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALISED WH ERE THE INCOME-TAX OFFICER WHILE MAKING AN ASSESSMENT EXAMINES THE ACC OUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUM STANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOU NTS OR BY MAKING SOME ESTIMATE HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFF ICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOUL D HAVE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN THE ONE DETERMINED B Y THE INCOME-TAX OFFICER. THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO RE-EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE. IT IS BECAUSE THE INCOME-TAX OFFICER HAS EXERCISED THE QU ASI-JUDICIAL POWER 15 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT BE FORMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCL USION . . . THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY T HE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTE RPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED . . . WE MAY NO W EXAMINE THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE POWERS OF T HE COMMISSIONER SET OUT ABOVE. THE INCOME-TAX OFFICER IN THIS CASE HAD MADE ENQUIRIES IN REGARD TO THE NATURE OF THE EXPENDITURE INCURRED BY THE AS SESSEE. THE ASSESSEE HAD GIVEN DETAILED EXPLANATION IN THAT REGARD BY A LETTER IN WRITING. ALL THESE ARE PART OF THE RECORD OF THE CASE. EVIDENTLY , THE CLAIM WAS ALLOWED BY THE INCOME-TAX OFFICER ON BEING SATISFIED WITH T HE EXPLANATION OF THE ASSESSEE. SUCH DECISION OF THE INCOME-TAX OFFICER C ANNOT BE HELD TO BE ERRONEOUS SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELA BORATE DISCUSSION IN THAT REGARD. 16. THUS, IN CASES OF WRONG OPINION OR FINDING ON M ERITS, THE CIT HAS TO COME TO THE CONCLUSION AND HIMSELF DECIDE THAT THE ORDER IS ERRONEOUS, BY CONDUCTING NECESSARY ENQUIRY, IF REQUIRED AND NECESSARY, BEFOR E THE ORDER UNDER SECTION 263 IS PASSED. IN SUCH CASES, THE ORDER OF THE ASSE SSING OFFICER WILL BE ERRONEOUS BECAUSE THE ORDER PASSED IS NOT SUSTAINAB LE IN LAW AND THE SAID FINDING MUST BE RECORDED. CIT CANNOT REMAND THE MAT TER TO THE ASSESSING OFFICER TO DECIDE WHETHER THE 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 MADE 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 OFFICER, MAKING THE ORDER UNSUSTAINABLE IN LAW. IN SOME CASES POSSI BLY THOUGH RARELY, THE CIT CAN ALSO SHOW AND ESTABLISH THAT THE FACTS ON RECOR D OR INFERENCES DRAWN FROM FACTS ON RECORD PER SE JUSTIFIED AND MANDATED FURTH ER ENQUIRY OR INVESTIGATION BUT THE ASSESSING OFFICER HAD ERRONEOUSLY NOT UNDER TAKEN THE SAME. HOWEVER, THE SAID FINDING MUST BE CLEAR, UNAMBIGUOUS AND NOT DEBATABLE. THE MATTER CANNOT BE REMITTED FOR A FRESH DECISION TO THE ASSE SSING OFFICER TO CONDUCT FURTHER ENQUIRIES WITHOUT A FINDING THAT THE ORDER IS ERRONEOUS. FINDING THAT THE ORDER IS ERRONEOUS IS A CONDITION OR REQUIREMEN T WHICH MUST BE SATISFIED FOR EXERCISE OF JURISDICTION UNDER SECTION 263 OF T HE ACT. IN SUCH MATTERS, TO REMAND THE MATTER/ISSUE TO THE ASSESSING OFFICER WO ULD IMPLY AND MEAN THE CIT HAS NOT EXAMINED AND DECIDED WHETHER OR NOT THE ORDER IS ERRONEOUS BUT HAS DIRECTED THE ASSESSING OFFICER TO DECIDE THE AS PECT/QUESTION. 17. THIS DISTINCTION MUST BE KEPT IN MIND BY THE CI T WHILE EXERCISING JURISDICTION UNDER SECTION 263 OF THE ACT AND IN TH E ABSENCE OF THE FINDING THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTER EST OF REVENUE, EXERCISE OF JURISDICTION UNDER THE SAID SECTION IS NOT SUSTAINA BLE. IN MOST CASES OF ALLEGED INADEQUATE INVESTIGATION, IT WILL BE DIFFICULT TO HOLD THAT THE ORDER OF THE ASSESSING OFFICER, WHO HAD CONDUCTED ENQUIRIES AND HAD ACTED AS AN INVESTIGATOR, IS ERRONEOUS, WITHOUT CIT CONDUCTING VERIFICATION/INQUIRY. THE 16 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 ORDER OF THE ASSESSING OFFICER MAY BE OR MAY NOT BE WRONG. CIT CANNOT DIRECT RECONSIDERATION ON THIS GROUND BUT ONLY WHEN THE OR DER IS ERRONEOUS. AN ORDER OF REMIT CANNOT BE PASSED BY THE CIT TO ASK THE ASS ESSING OFFICER TO DECIDE WHETHER THE ORDER WAS ERRONEOUS. THIS IS NOT PERMIS SIBLE. AN ORDER IS NOT ERRONEOUS, UNLESS THE CIT HOLD AND RECORDS REASONS 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 M UST AFTER RECORDING REASONS HOLD THAT THE ORDER IS ERRONEOUS. THE JURISDICTIONA L PRECONDITION STIPULATED IS THAT THE CIT MUST COME TO THE CONCLUSION THAT THE O RDER IS ERRONEOUS AND IS UNSUSTAINABLE IN LAW. WE MAY NOTICE THAT THE MATERI AL WHICH THE CIT CAN RELY INCLUDES NOT ONLY THE RECORD AS IT STANDS AT THE TI ME WHEN THE ORDER IN QUESTION WAS PASSED BY THE ASSESSING OFFICER BUT ALSO THE RE CORD AS IT STANDS AT THE TIME OF EXAMINATION BY THE CIT [SEE CIT VS. SHREE MANJUN ATHESWARE PACKING PRODUCTS, 231 ITR 53 (SC)]. NOTHING BARS/PROHIBITS THE CIT FROM COLLECTING AND RELYING UPON NEW/ADDITIONAL MATERIAL/EVIDENCE T O SHOW AND STATE THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS. 18. IT IS IN THIS CONTEXT THAT THE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD. VS. COMMISSIONER OF INCOME TAX, (2000) 243 ITR 83 ( SC), HAD OBSERVED THAT THE PHRASE PREJUDICIAL TO THE INTEREST OF 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 INTEREST OF REVENU E. THUS, WHEN THE ASSESSING OFFICER HAD ADOPTED ONE OF THE COURSES PERMISSIBLE AND AVAILABLE TO HIM, AND THIS HAS RESULTED IN LOSS TO REVENUE; OR TWO VIEWS WERE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE CIT MAY NOT AGREE; THE SAID ORDERS CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF REVENUE UNLESS THE VIEW TAKEN BY THE ASSESSING O FFICER IS UNSUSTAINABLE IN LAW. IN SUCH MATTERS, THE CIT MUST GIVE A FINDING T HAT THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW AND, THER EFORE, THE ORDER IS ERRONEOUS. HE MUST ALSO SHOW THAT PREJUDICE IS CAUS ED TO THE INTEREST OF THE REVENUE. 19. IN THE PRESENT CASE, THE FINDINGS RECORDED BY T HE TRIBUNAL ARE CORRECT AS THE CIT HAS NOT GONE INTO AND HAS NOT GIVEN ANY REASON FOR OBSERVING THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS . THE FINDING RECORDED BY THE CIT IS THAT ORDER PASSED BY THE ASSESSING OFFI CER MAY BE ERRONEOUS. THE CIT HAD DOUBTS ABOUT THE VALUATION AND SALE CONSIDE RATION RECEIVED BUT THE CIT SHOULD HAVE EXAMINED THE SAID ASPECT HIMSELF AN D GIVEN A FINDING THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS . HE CAME TO THE CONCLUSION AND FINDING THAT THE ASSESSING OFFICER H AD EXAMINED THE SAID ASPECT AND ACCEPTED THE RESPONDENTS COMPUTATION FIG URES BUT HE HAD RESERVATIONS. THE CIT IN THE ORDER HAS RECORDED THA T THE CONSIDERATION RECEIVABLE WAS EXAMINED BY THE ASSESSING OFFICER BU T WAS NOT PROPERLY EXAMINED AND THEREFORE THE ASSESSMENT ORDER IS ERR ONEOUS. THE SAID FINDING WILL BE CORRECT, IF THE CIT HAD EXAMINED AND VERIFI ED THE SAID TRANSACTION HIMSELF AND GIVEN A FINDING ON MERITS. AS HELD ABOV E, A DISTINCTION MUST BE DRAWN IN THE CASES WHERE THE ASSESSING OFFICER DOES NOT CONDUCT AN ENQUIRY; 17 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 AS LACK OF ENQUIRY BY ITSELF RENDERS THE ORDER BEIN G ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND CASES WHERE THE ASSESSING OFFICER CONDUCTS ENQUIRY BUT FINDING RECORDED IS ERRONEOUS AND WHICH IS ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN LATTER CASES, THE CIT H AS TO EXAMINE THE ORDER OF THE ASSESSING OFFICER ON MERITS OR THE DECISION TAKEN B Y THE ASSESSING OFFICER ON MERITS AND THEN HOLD AND FORM AN OPINION ON MERITS THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE SECOND SET OF CASES, CIT CANNOT DIR ECT THE ASSESSING OFFICER TO CONDUCT FURTHER ENQUIRY TO VERIFY AND FIND OUT WHET HER THE ORDER PASSED IS ERRONEOUS OR NOT. 12. WE ARE OF THE VIEW THAT IN THIS BACKDROP OF THE FOR EGOING LEGAL PROPOSITION THAT THE CIT HAS ERRED IN ASSUMING SECTION 263 REVI SION JURISDICTION. WE HAVE EXAMINED THE ASSESSMENT RECORD PERUSED ON WHICH DUL Y CONTAINS ALL THE RELEVANT MATERIALS OF ASSESSEES COMMODITY TRANSACTION(S) BY WAY OF A DETAILED CHART. WE WISH TO EMPHASIZE HERE THAT THE ASSESSEES REPLY TO THE ASSESSING AUTHORITY DURING SCRUTINY AND EXPLANATION IN DETAIL TO THE CIT (SUPR A) HAVE NOT EVEN DEALT WITH IN THIS CITS ORDER. LEARNED DEPARTMENTAL REPRESENTATI VE, AT THIS STAGE STRONGLY ARGUED THAT THE ASSESSING OFFICER; IN HIS ASSESSMEN T ORDER, IS TOTALLY SILENT ON THE TWIN ISSUES OF LOSS IN SHARES/ COMMODITIES AND DIRE CT EXPENSES. WE FIND NO SUBSTANCE IN THESE ARGUMENTS. HONBLE BOMBAY HIGH C OURTS DECISION CIT VS. GABRIEL INDIA LTD. (1993) 203 ITR 108 (BOM) HOLDS THAT THE MERE FACT OF ASSESSING OFFICER HAVING NOT INCORPORATED THE CORRE SPONDING EXPLANATION IN HIS ASSESSMENT ORDER DOES NOT PROVE THAT THE SAME IS ER RONEOUS CAUSING PREJUDICE TO THE INTEREST OF THE REVENUE. WE MAKE CLEAR THAT WE ARE DEALING WITH THE CITS EXERCISE OF AN REVISION JURISDICTION BEFORE THE COR RESPONDING AMENDMENT INSERTED IN THE ACT IN SECTION 263(1) EXPLANATION (2) VIDE F INANCE ACT, 2015 APPLICABLE WITH EFFECT FROM 01.06.2015. IT IS FURTHER SUFFICIE NTLY BORNE OUT FROM THE RECORDS THAT THE ASSESSING OFFICER HAD DISALLOWED THE ASSES SEES DIRECT EXPENSES (SUPRA) IN HIS FIRST ROUND OF ASSESSMENT. IT IS THEREFORE N OT A CASE OF NO INQUIRY AS IS PROJECTED AT THE CITS BEHEST. WE CONCLUDE IN THIS BACKGROUND OF FACTS AND CIRCUMSTANCES THAT THE CIT HAS ERRED IN INVOKING HI S REVISION JURISDICTION BY TERMING THE REGULAR ASSESSMENT IN ISSUE DATED 29.10 .2012 AS ERRONEOUS CAUSING PREJUDICE TO THE INTEREST OF THE REVENUE. HONBLE B OMBAY HIGH COURT DECISION IN 18 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 THE CASE OF CIT VS. HINDUSTAN LEVER LTD. (2012) 343 ITR 161 (BOM) HOLDS THAT THE CITS REVISION ORDER PASSED UNDER SECTION 263 O F THE ACT CAN BE REVERSED IN PART. WE THEREFORE ACCEPT THE ASSESSEES ARGUMENTS CHALLENGING CORRECTNESS OF CITS REVISION ORDER ON THE ABOVE TWIN ISSUES (SUPR A). ITS FORMER APPEAL NO. 75/GAU/2018 IS PARTLY ALLOWED IN ABOVE TERMS THEREF ORE. 13. COMING TO ASSESSEES LATTER APPEAL IN ITA NO. 105/G AU/2015 FOR THE VERY ASSESSMENT YEAR, IT IS CRYSTAL CLEAR THAT THE SAME INVOLVES SECOND ROUND OF ASSESSMENT FRAMED ON 30.03.2014 IN FURTHERANCE, THE CITS EARLIER REVISION ORDER DATED 21.3.2013 WHICH ALREADY STANDS IN PRECEDING P ARAGRAPHS. WE THEREFORE, CONCLUDE THAT THE INSTANT SECOND ROUND REVISION ORD ER FORMING SUBJECT MATTER OF CHALLENGE DOES HAVE NO LEGS TO STAND. THE SAME IS A CCORDINGLY HELD NOT SUSTAINABLE. THE ASSESSEE SUCCEEDS IN ITS INSTANT S ECOND APPEAL ITA NO. 105/GAU/2015 AS WELL. 14. THIS LEAVE US WITH THE LATTER ASSESSMENT YEAR 2011- 12 INVOLVING ITA NO. 106/GAU/2015. THE CIT HAS REVISED THE REGULAR ASSES SMENT DATED 29.03.2014 FORMING THE ASSESSEES LOSS OF RS.4,64,61,393/- FRO M FUTURE TRADING TO BE SPECULATIVE IN NATURE UNDER SECTION 73 OF THE ACT. THE ADDITIONAL COMMISSIONER OF INCOME TAX HAD FRAMED A REGULAR ASSESSMENT IN TH E INSTANT CASE. THE CIT REVISION ORDER HAS UNDER CHALLENGED DATED 25.03.201 5 HAS TREATED THE ABOVE LOSS TO BE A CASE OF TAX EVASION THROUGH CLIENT CODE MOD IFICATION LEADING TO AN INSTANCE OF THE ASSESSMENT AS ERRONEOUS CAUSING PREJUDICE TO INTEREST OF THE REVENUE. THE CIT HAS DIRECTED THE ASSESSING OFFICER TO FRAME AFR ESH ASSESSMENT AS UNDER: - 6.1 THE ASSESSMENT ORDER OF THE AO IS FOUND TO BE E RRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE ON ACCOU NT OF FOLLOWING:- (A) THE AO HAS RECORDED THE STATEMENT OF SHRI MAHAB IR PRASAD SETHI, DIRECTOR OF THE COMPANY ON OATH U/S 131 WHICH IS QUOTED BY THE AO A T PARA 8.9.1 PAGES 33 & 34 IN WHICH SHRI MAHABIR PRASAD SETHI, DIRECTOR OF THE CO MPANY STATED THAT HE DOES NOT KNOW WHAT IT MEANS BY FUTURE TRADING AND F&O SEGMEN T, HE SAID THAT NO ONE IN THE COMPANY KNOWS WHAT IS FUTURE TRADING AND F&O SEGMEN T, HE STATED THAT HE DOES NOT REMEMBER THE NAMES AND ADDRESSES OF BROKER AT KOLKA TA, HE DOES NOT REMEMBER WHETHER HE MADE ANY PROFIT IN F&O SEGMENT. THE STATEMENT OF SHRI MAHABIR PRASAD SETHI CLEARLY INDICATES THAT THE TRANSACTION OF THE ASSES SEE COMPANY WHICH RESULTED IN LOSS 19 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 CONSISTENTLY SHOWN AS BUSINESS LOSS WAS EXTREMELY D OUBTFUL AND THE REPORT OF THE PRINCIPAL CHIEF COMMISSIONER OF INCOME-TAX, GUWAHAT I ON 'TAX EVASION THROUGH CLIENT CODE MODIFICATION DURING F.Y. 2009-10' WHICH INCLUD ES STATEMENT OF THE BROKER INDICATES THAT THE TRANSACTION F&O LOSS SHOWN BY TH E ASSESSEE CANNOT BE TREATED TO BE GENUINE ON THE FACE ON THE FACT OF IT. (B) THOUGH THE AO MADE ADDITION OF RS.4,64,41 ,3931 - AS SPECULATIVE TRANSACTION AS AGAINST BUSINESS TRANSACTION DECLARED BY THE ASS ESSEE, THE AO'S ACTION OF NOT COMPLETING ENQUIRY TAKING THE ENQUIRY TO LOGICAL CO NCLUSION WHETHER OR NOT THE TRANSACTION IS GENUINE OR BOGUS IS PREJUDICIAL TO T HE INTEREST OF THE REVENUE AS ITS ALLOWS CARRY FORWARD OF LOSS OF RS.4.64,41,393/-. (C) THE INCOMPLETE ENQUIRY BY THE ASSESSING OFFICER AND HIS INACTION IN NOT TAKING THE ENQUIRY TO LOGICAL CONCLUSION WHETHER OR NOT TH E TRANSACTION IS GENUINE OR BOGUS IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AS IT AD VERSELY AFFECTS THE PENALTY PROCEEDINGS U/S 271(1)(C) FOR CONCEALMENT OF INCOME AND PROSECU TION PROCEEDINGS FOR WILLFUL ATTEMPT TO EVADE TAX U/S 2760 OF THE INCOME TAX ACT, 1961. 6.2 IT HAS BEEN HELD IN A CATENA OF JUDGMENTS THAT ASSESSMENT UNDER THE INCOME-TAX ACT, WITHOUT PROPER ENQUIRY, UNLIKE- HE CIVIL COURT , WHICH IS NEUTRAL TO GIVE A DECISION ON THE BASIS OF EVIDENCE PRODUCED BEFORE IT, IS NOT CORRECT AS AN ASSESSING OFFICER IS NOT ONLY AN ADJUDICATOR BUT IS ALSO AN INVESTIGATOR. TH E AO CANNOT REMAIN PASSIVE ON THE FACE OF A RETURN BUT HIS DUTY IS TO ASCERTAIN THE T RUTH OF THE FACTS STATED IN THE RETURN WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO P ROVOKE INQUIRY. IF THERE IS FAILURE TO MAKE ENQUIRY, ORDER IS ERRONEOUS AND PREJUDICIAL TO REVENUE AS HAS BEEN HELD IN THE CASES OF RAMPYARI DEVI SARAOGI VS CIT (SC) 67 ITR 8 4, MALABAR' INDUSTRIAL CO. LTD. VS CIT (SC) 243 ITR 83, SWARUP VEGETABLE PRODUCTS INDU STRIES LTD VS CIT (ALL) 187 ITR 412, GEE VEE ENTERPRISES VS ADDL. CIT & ORS. (DEL) 99 ITR 375, RAJALAKSHMI MILLS LTD, VS ITO (ITAT,SB-CHENNAI) 121 LTD 343 ; 313 ITR (AT) 182, SRM SYSTEMS & SOFTWARE PVT. LTD. VS ACIT 2010-TIOL-646-HC-MAD-IT. 6.3 AS THE AO HAS NOT COMPLETED THE ENQUIRES/INVEST IGATION IN RESPECT OF LOSS CLAIMED BY THE ASSESSEE ON TRANSACTIONS IN F&O SEGM ENT, THE ACTION OF THE AO IS FOUND TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO T HE INTEREST OF THE REVENUE. THE ORDER OF THE AO IS THEREFORE SET ASIDE AND THE AO IS DIRECTE D TO MAKE PROPER ENQUIRIES AND FRAME A FRESH ASSESSMENT ORDER AFTER GIVING OPPORTUNITY O F BEING HEARD TO THE ASSESSEE. 15. THE ASSESSEE VEHEMENTLY CONTENDS DURING THE COURSE OF HEARING THAT THE COMMISSIONER OF INCOME TAX HAD AUTHORIZED THE JCIT TO FRAMED ASSESSMENT AS ASSESSING OFFICER UNDER SECTION 120(4)(B) OF THE AC T. IT THEN INVITES OUR ATTENTION TO THE REGULAR ASSESSMENT FRAMED BY THE ADDITIONAL COMMISSIONER OF INCOME TAX THE THAN THE, JOINT COMMISSIONER OF INCOME TAX. ITS CONTENTION THEREFORE IS THAT IT CAN VERY WELL CHALLENGE CORRECTNESS OF IMPUGNED ASS ESSMENT IN THE NATURE OF COLLATERAL PROCEEDINGS. AND THAT ONCE THE ASSESSMEN T ITSELF LACKS TERRITORIAL JURISDICTION OF THE ASSESSING OFFICER THE SAME IS N OT SUSTAINABLE IN THE EYES OF LAW WHICH CANT BE VALIDATE JURISDICTION TO THE CIT FOR EXERCISING HIS JURISDICTION U/S 20 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 263 OF THE ACT. MR. HAOKIP STRONGLY SUPPORTS THE IM PUGNED ASSESSMENT. HE INVITES OUR ATTENTION TO SECTION 2(28C) OF THE ACT DEFINING THE JOINT COMMISSIONER OF INCOME TAX OR ADDITIONAL COMMISSIONER OF INCOME TAX U/S 2(28C) OF THE ACT THAT THE CRUCIAL TERM HEREIN OF THE JOINT COMMISSIO NER OF INCOME TAX AND THE ADDITIONAL COMMISSIONER OF INCOME TAX ARE VERY MUCH INTANGIBLE THEREFORE, THE ASSESSMENT IN QUESTION IS LIABLE TO UPHELD SINCE FR AMED BY THE COMPETENT AUTHORITY. 16. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE A BOVE RIVAL CONTENTIONS. THE FIRST QUESTION BEFORE US IS AS TO WHETHER THE A SSESSEE COULD CHALLENGE THE VALIDITY OF THE ASSESSED ITSELF ON ACCOUNT OF THE A SSESSING OFFICER NOT HAVING JURISDICTION IN SUBSEQUENT REVISION PROCEEDINGS IN THIS CASE. THIS TRIBUNAL DECISION IN ITA NO. 1214/KOL/2013 IN M/S D.D. DEPOSITS & ADVANCES PVT. LTD. VS. CIT HAS DECIDED ON 11.05.2018 ADJUDICATE THE VERY ISSU E IN ASSESSEES FAVOUR AS FOLLOW: - 7. WE SOUGHT TO KNOW WHAT IS TO WHETHER THE ASSESSE E COULD RAISE SUCH A PLEA IN THE INSTANT PROCEEDINGS INVOLVING QUESTION OF VALIDITY OF CITS ORDER PASSED U/S. 263 OF THE ACT. LEARNED COUNSEL TAKES AS TO A CO-ORDINATE BENC HS ORDER ITA NO.764-766/KOL/2014 IN M/S CLASSIC FLOUR & & FOOD PROCESSING PVT. LTD. KOLKATA VS. CIT-IV, KOLKATA DECIDED ON 05.04.2017. LEARNED CO-ORDINATE BENCH HE LD THAT AN ASSESSMENT IS IN THE NATURE OF PRIMARY PROCEEDINGS WHEREAS REVISION PROC ESS U/S. 263 OF THE ACT IS A COLLATERAL ONE WHEREIN VALIDITY OF THE FORMER CAN A LWAYS BE CHALLENGED. THIS TRIBUNALS DECISION IN M/S WESTLIFE DEVELOPMENT LTD. VS. PRINC IPAL CIT IN ITA NO. 686/MUM/2016 PLACES RELIANCE UPON HON'BLE APEX COURTS JUDGMENT IN KIRAN SINGH & ORS. VS. CHAMAN PASWAN & ORS.(1955) 1 SCR 117 (SC). THEIR LORDSHIPS ARE OF THE VIEW THAT A DECREE PASSED BY A COURT WITHOUT JURISDICTION IS A NULLITY WHICH COULD BE PUT TO CHALLENGE IN EXECUTION OR IN COLLATERAL PROCEEDINGS. THEIR LORDS HIPS CONCLUDE THAT ANY DEFECT OF JURISDICTION IN PECUNIARY OR TERRITORIAL OR IN RESP ECT OF SUBJECT-MATTER OF THE ACTION STRIKES AT THE VERY AUTHORITY OF THE COURT TO PASS ANY DECREE AND THE SAME WOULD NOT CURABLE EVEN BY CONSENT OF THE PARTIES. MR. SURANA TAKES PAINS TO ENLIGHTEN US THAT HON'BLE RAJASTHAN HIGH COURTS JUDGMENT IN DECP CHA ND KOTHARI VS. CIT (1988) 179 ITR 381 (RAJ) ADOPTS THE VERY REASONING IN CIVIL JURISP RUDENCE TO INCOME TAX PROCEEDINGS AS WELL. 8. LEARNED COUNSEL NEXT RELIES UPON THIS TRIBUNALS CO-ORDINATE BENCH DECISION IN DR. SB KALIDHAR VS. ITO WARD-4 IN ITA NO.1082/DEL/2016 DEC IDED ON 27.11.2017. LEARNED CO- ORDINATE BENCH THERE IS ANNULS SIMILAR ASSESSMENT / RE-ASSESSMENT ON THE GROUND THAT NON ISSUE OF NOTICE U/S 143(2) OF THE ACT AFTER FIL ING OF A RETURN RENDERS ENTIRE ASSESSMENT / RE-ASSESSMENT TO BE BAD IN THE EYES OF LAW. IT QU OTES HON'BLE APEX COURTS JUDGMENT IN ACIT VS. HOTEL BLUE MOON (2010) 321 ITR 362 (SC) WH ILST QUASHING THE ASSESSMENT IN QUESTION TO BE NON EST & VOID. 21 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 9. MR. SURANA LASTLY TAKES US TO THE CASE RECORDS A S WELL INCLUDING ASSESSMENT NOTINGS. HE STATES THAT THERE IS NO COPY OF THE RELEVANT NOT ICE IN ASSESSMENT RECORDS. HIS FURTHER CONTENTION IS THAT NEITHER ASSESSEE HAD AUTHORIZED ANYONE NOR ITS AUDITOR HAD EVER PUT IN APPEARANCE BEFORE THE ASSESSING OFFICER DURING THE RE-ASSESSMENT IN QUESTION. WE INVITED LEARNED COUNSELS ATTENTION TO THE FACT THA T THE SAME AUDITOR HAD REPRESENTED THE ASSESSEE EVEN IN SECTION 263 AS WELL AS CONSEQUENTI AL ASSESSMENT FRAMED ON 26.07.2014. MR. SURANA REITERATES THAT ONCE THE ORIGINAL ASSESS MENT / REASSESSMENT IS NON EST, THE ABOVE AUDITORS SUBSEQUENT ACT AND CONDUCT OR THAT OF THE ASSESSEE ITSELF CANNOT VALIDATE THE SAME AS HELD IN HON'BLE APEX COURTS DECISION ( SUPRA). HE THEREFORE PRAYS THAT THE IMPUGNED RE-ASSESSMENT FRAMED ON 28.12.2010 IS TO B E HELD NON EST, NULL AND VOID AT THE THRESHOLD ITSELF AND THEREFORE, THERE IS NO SCOPE F OR THE CIT TO EXERCISE HIS JURISDICTION VESTED U/S. 263 OF THE ACT. 10. MR. USMAN (CIT DR) REPRESENTS THE REVENUE. HE F IRST OF ALL INFORMS US THAT THE ASSESSMENT RECORD IN XEROX IS AVAILABLE WITH HIM. H E SUBMITS DURING THE COURSE OF HEARING THAT SINCE THE ASSESSING OFFICER HAD NOT MA DE PROPER ENQUIRIES DURING THE COURSE OF RE-ASSESSMENT, THE CIT HAS RIGHTLY INITIA TED THE IMPUGNED PROCEEDINGS AS UPHELD UPTO THE APEX COURT. THERE IS NO SCOPE LEFT THEREFORE IN THE INSTANT SECOND ROUND ONCE THE TRIBUNALS ORDER UPHOLDING THE SECTION 263 PROCEEDINGS OF THE ACT IS AFFIRMED UPTO HON'BLE APEX COURT. HE PLEADS THAT IT WOULD BE AN ANOMALOUS SITUATION IF THE INSTANT SECOND ROUND DISTURBS TRIBUNALS EARLIER FINDING (S UPRA) HAVING ALREADY CONCLUDED THAT CIT HAD RIGHTLY EXERCISED HIS REVISION JURISDICTION AS RE-ASSESSMENT ORDER DATED 28.12.2010 IS ERRONEOUS CAUSING PREJUDICE TO THE IN TEREST OF THE REVENUE. 11. LEARNED CIT-DR EMPHASIZES THAT RELEVANT ASSESSM ENT RECORDS DULY CORROBORATE THE FACT THAT THE ASSESSING OFFICER HAD ISSUED U/S 143( 2) NOTICE ON 16.11.2009 AS FOLLOWED BY SECTION 142(1) NOTICE. MR. USMAN STATES THAT THE ASSESSEE;S THIRD SUBSTANTIVE GROUND IN QUESTION TAKES ADVANTAGE OF THE CIT ABOVE CRUCIA L OBSERVATION (SUPRA) GOING AGAINST THE ASSESSMENT RECORDS. HE PLEADS THAT THE SAME ARE NOT BINDING ON THE REVENUE SINCE THEY ARE NEITHER APPEALABLE NOR RECTIFIABLE AT ITS BEHEST. HE FURTHER INVITES OUR ATTENTION TO THE CITS NOTICE(S) INITIATING SECTION 263 PROCE EDINGS DATED 21.12.2011 AND 15.01.2013, AS WELL AS ASSESSEES REPLY THERETO ON THE LATTER DATE TO THE EFFECT THAT IT HAD FILED ALL THE RELEVANT DETAILS AND DOCUMENTS AS CAL LED DURING THE ASSESSMENT FROM TIME TO TIME. THE ASSESSEE HAD ASSERTED AS PER ITS REPLY TH AT ALL OF ITS BOOKS OF ACCOUNT, BILLS, VOUCHERS AND OTHER SUPPORTING DOCUMENTS HAD ALSO BE EN CALLED BY THE ASSESSING OFFICER FOR EXAMINATION AS PRODUCED IN THE COURSE OF SCRUTI NY FOLLOWED BY INDEPENDENT VERIFICATION THROUGH NOTICE / SUMMONS ISSUED U/S 13 3(6) / 131 OF THE ACT. LEARNED DR FURTHER SUBMITS IN THE END THAT THE RE-ASSESSMENT I N QUESTION IS NEITHER NON EST NOR VOID SO AS NOT TO BE REVISED IN U/S 263 JURISDICTION VES TED WITH THE CIT. WE POSED A SPECIFIC QUERY TO THE REVENUE AS TO WHETHER THE ASSESSMENT R ECORDS COMPRISE OF THE RELEVANT NOTICES ISSUED U/S 143(2) OR U/S. 142 142(1) OR NOT . THE REPLY RECEIVED IS IN NEGATIVE. THE REVENUE EMPHASISES THAT THERE IS SUFFICIENT MAT ERIAL ON RECORD INDICATING THAT SAID NOTICE(S) HAD VERY MUCH BEEN ISSUED BUT NOT FORMING PART OF THE CASE RECORDS SINCE THE SAME HAS SEEN MULTIPLE ROUNDS OF PROCEEDINGS INVOLV ING MOVEMENT OF THE CASE FILE FROM ONE AUTHORITY TO ANOTHER. LEARNED DR QUOTES SECTION 292B OF THE ACT AS WELL THAT THE ASSESSEE CANNOT PLEAD NON ISSUANCE OF NOTICE AT THI S BELATED STAGE ONCE IT HAD DEFENDED THE RELEVANT ASSESSMENT IS REVISION PROCEEDINGS. 12. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO R IVAL SUBMISSIONS. SUFFICE TO SAY, WE HAVE ALREADY NARRATED THE BASIC FACTS THAT OUR INST ANT ADJUDICATION IS CONFINED TO ASSESSEES THIRD SUBSTANTIVE GROUND THAT THE CIT CO ULD NOT HAVE REVISED THE RE- ASSESSMENT IN QUESTION FRAMED ON 28.12.2010 SINCE T HE LATTER ONE IS A NON EST ORDER IN THE EYES OF LAW NOT EXIGIBLE TO REVISION. WE QUOTE ALL THE RELEVANT CASE LAW RELIED UPON AT 22 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 THE ASSESSEES BEHEST (SUPRA) TO OBSERVE FIRST OF A LL THAT IT IS VERY MUCH OPEN FOR THE ASSESSEE TO CHALLENGE VALIDITY OF THE RE-ASSESSMENT IN SECTION 263 PROCEEDINGS ON THE GROUND THAT SAME ARE NON EST IN THE EYES OF LAW. CO -ORDINATE BENCHS DECISION(S) (SUPRA) HAVE ALREADY CONCLUDED THAT ASSESSMENT PROCEEDINGS ARE PRIMARY PROCEEDINGS WHEREAS THOSE U/S 263 OF THE ACT ARE IN THE NATURE OF COLLA TERAL PROCEEDINGS. THE QUESTION BEFORE US IN THIS BACKDROP OF FACTS IS AS TO WHETHER THE A SSESSING OFFICER CAN BE HELD TO HAVE ISSUED NOTICES U/S 143(2) OR 142(1) OF THE ACT OR N OT. IN CASE THE REPLY IS IN NEGATIVE, IT WOULD RENDER THE ENTIRE RE-ASSESSMENT BAD IN THE EY ES OF LAW AS PER HON'BLE APEX COURTS DECISION IN HOTEL BLUE MOON (SUPRA) FOLLOWED IN THI S TRIBUNALS COORDINATE BENCHS ORDER. WE NOW REVERT BACK TO THE RELEVANT FACTS OF THE CASE. IT EMERGES FROM THE CASE RECORDS THAT THE ASSESSING OFFICER HAD INITIATED TH E IMPUGNED RE-OPENING VIDE SECTION 148 NOTICE ISSUED ON 03.11.2009. THESE ASSESSMENT F ILE NOTINGS DATED 16.11.2009 MAKE IT CLEAR THAT HE HAD ISSUED SECTION 143(2) AS WELL AS SECTION 142(1) NOTICE(S). LEARNED COUNSELS CASE IS THAT THERE IS NO SUCH NOTICE ON R ECORD. WE FIND NO MERIT IN THE INSTANT PLEA AS THE ABOVE NARRATED ASSESSMENT NOTINGS MAKE IT CLEAR THAT ASSESSING OFFICER HAD INDEED ISSUED THE SAID TWO NOTICES. WE QUOTE SECTIO N 114(E) OF THE INDIAN EVIDENCE ACT TO PRESUME AS A COURT THAT THE ASSESSING OFFICER HA D PERFORMED AN OFFICIAL ACT OF COMPLETING RE-ASSESSMENT IN ASSESSEES CASE AS PER THE PRESCRIBED PROCEDURE. WE REITERATE THAT ALTHOUGH ASSESSEE HAS PLEADED OF NEI THER IT ITSELF NOR ITS AUTHORIZED REPRESENTATIVE TO HAVE APPEARED DURING THE COURSE O F SCRUTINY IN FURTHERANCE TO THE SAID NOTICE(S), THE ABOVE NARRATED FACTS SPEAK OTHERWIS E WHEREIN IT HAD NOT EVEN FILED ITS AUTHORIZED REPRESENTATIVE AFFIDAVIT TO REBUT THE AB OVE ASSESSMENT NOTICE(S). THE VERY AUDITOR HAD BEEN CONTINUING TO REPRESENT THE ASSESS EES RIGHT FROM REASSESSMENT TO SECTION 263 PROCEEDINGS AS WELL AS THE CONSEQUENTIA L ASSESSMENT FRAMED ON 26.07.2014. WE TAKE NOTE OF THE ASSESSEES REPLY FILED BEFORE T HE CIT (SUPRA) AS WELL DEFENDING THE ABOVE ASSESSMENT TO HAVE BEEN COMPLETED AFTER CALLI NG NECESSARY BOOKS, BILLS, VOUCHERS AS WELL AS SUPPORTING DOCUMENTS FOR EXAMINATION AS PRODUCED AT ITS BEHEST FOLLOWED BY NOTICE / SUMMONS ISSUED U/S. 133(6) AND 131 OF THE ACT; RESPECTIVELY. WE ARE OF THE VIEW IN THESE FACTS THAT THE ASSESSEE COULD NOT HAVE PLA CED ON RECORD THE REQUIRED DOCUMENTS WITHIN ANY NOTICE AT ALL BEFORE SECTION 133(6)/131 PROCESS. THE ASSESSEES INSTANT SUBSTANTIVE GROUND THEREFORE APPEARS TO BE AS WELL WORDED ONE WHEREIN IT HAS SOUGHT TO REITERATE THE CITS OBSERVATION ONLY THAT THE ASSES SING OFFICER HAD NOT ISSUED THE SAID STATUTORY NOTICE(S) BEFORE COMPLETING THE ASSESSMEN T IN QUESTION. WE CONCLUDE IN VIEW OF THESE FACTS THAT THE CITS SAID OBSERVATION IS AGAI NST THE ASSESSMENT RECORDS. MERE ON NON PRODUCTION OF THE NOTICE(S) IN QUESTION; IN OUR CONSIDERED VIEW, IS NOT SUFFICIENT TO CONCLUDE THAT THE ASSESSING OFFICER HAD NOT ISSUED SEC. 143(2) AND SEC. 142(1) NOTICES WHICH IS VIEW OF THE ABOVE OVERWHELMING SUPPORTIVE EVIDENCE IN THE NATURE OF ASSESSMENT PROCEEDINGS BEFORE US. WE QUOTE SEC. 136 OF THE ACT TO CONCLUDE THAT THE LEGISLATURE HAS INDEED TREATED PROCEEDINGS BEFORE U S INCOME TAX AUTHORITIES TO BE JUDICIAL PROCEEDINGS AS WELL. 17. WE NOW COME TO YET ANOTHER CLINCHING ASPECT INVOLVE D IN THE INSTANT LIS AS TO WHETHER THE ADDITIONAL COMMISSIONER OF INCOME TA X CONCERN HAD RIGHTLY FRAMED THE REGULAR ASSESSMENT DATED 29.03.2014 THAN THE JCIT FORMING SUBJECT MATTER OF REVISION PROCEEDINGS. WE FIND THAT THE VE RY ISSUE AROSE BEFORE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. PAWAN KUMAR GARG (2011) 334 ITR 240 (DELHI). THERE LORDSHIP HAVE DECLINED VERY CONTENTI ON AS FOLLOWS: - 23 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 2. THE RECORD INDICATES THAT THE DIRECTOR INCOME TA X (INVESTIGATION) ISSUED A WARRANT OF AUTHORIZATION IN FORM 45 UNDER SECTION 132 OF TH E INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE SAID ACT') AND RULE 112 (2) (A) OF THE INCOME TAX R ULES, 1962 (HEREINAFTER REFERRED TO AS THE SAID RULES') TO, IN TER ALIA, THE ADDITIONAL DIRECTOR OF INCOME TAX (INVESTIGATION) (MR A. K. SINGH) AS ALSO TO ASSISTANT DIRECTORS OF INCOME TAX (INVESTIGATION) [MR L. K. AGGARWAL, MR AJAY, MR ANIL KUMAR, MR S. BOSE, MR K. C. BADHANG, MR P. K. MISHRA (DCIT) AND MR RAJIV KUMAR] . THIS WARRANT OF AUTHORIZATION WAS ISSUED ON 25.05.2000 AND WAS IN RESPECT OF THE PREMISES AT B-256, SURAJ MAL VIHAR, DELHI-92. A PANCHNAMA WAS DRAWN UPON ON 25.05.2000 ITSELF AND A RESTRAINT ORDER UNDER SECTION 132 (3) OF THE SAID ACT IN RESPECT OF LOCKER NO. 11-PNB, PREET VIHAR, DELHI UNDER THE NAMES OF SH. P. K. GARG AND SMT. SH ASHI GARG WAS ALSO SERVED ON MR P. K. GARG. 3. THEREAFTER, A SECOND WARRANT OF AUTHORIZATION IN FORM 45 UNDER SECTION 132 OF THE SAID ACT READ WITH RULE 112 (2)(A) OF THE SAID RULE S WAS ISSUED ON 25.05.2000 BY MR A. K. SINGH, ADDITIONAL DIRECTOR OF INCOME TAX (INVEST IGATION) AUTHORIZING SOME DEPUTY DIRECTORS OF INCOME TAX, ASSISTANT DIRECTORS OF INC OME TAX AND INCOME TAX OFFICERS TO CONDUCT A SEARCH IN RESPECT OF THE SAID LOCKER NO. 11 STANDING IN THE NAMES OF MR P. K. GARG AND SMT. SHASHI GARG IN PUNJAB NATIONAL BANK, PREET VIHAR, DELHI. THE PANCHNAMA DRAWN ON 26.05.2000 INDICATED THAT THE SE ARCH IN RESPECT OF THE SAID LOCKER COMMENCED ON 26.05.2000 AT 12.05 P.M AND THE SAME W AS CLOSED ON 26.05.2000 AT 1.15 P.M TEMPORARILY, TO BE COMMENCED SUBSEQUENTLY AND F OR WHICH PURPOSE SEALS WERE PLACED ON THE SAID LOCKER. 4. THEREAFTER, FURTHER SEARCH WAS CONDUCTED ON 02.0 6.2000 AS INDICATED BY THE PANCHNAMA OF THAT DATE. THE SAID PANCHNAMA INDICATE D THAT THE SEARCH COMMENCED ON 02.06.2000 AT 12.35 PM AND WAS CLOSED ON THAT VERY DATE AT 1.45 PM AS FINALLY CONCLUDED. THE RESTRAINT ORDER UNDER SECTION 132(3) WAS ALSO LIFTED. 5. ACCORDING TO THE REVENUE THIS PANCHNAMA IS THE L AST OF THE PANCHNAMAS RELATING TO THE SEARCH AND SEIZURE OPERATIONS CONDUCTED AT THE PREM ISES RELATING TO THE ASSESSEE. CONSEQUENTLY, THE PERIOD OF LIMITATION HAS TO BE RE CKONED FROM THE END OF THIS MONTH, THAT IS, FROM 30.06.2000. ON THE OTHER HAND, THE CO NTENTION OF THE ASSESSEE, WHICH WAS ACCEPTED BY THE TRIBUNAL, IS THAT THE LAST PANCHNAM A WAS THE ONE DRAWN ON 25.05.2000 PURSUANT TO THE WARRANT OF AUTHORIZATION ISSUED BY THE DIRECTOR OF INCOME TAX (INVESTIGATION) AND, THEREFORE, THE LIMITATION HAS TO BE RECKONED FROM 31.05.2000. THE TRIBUNAL TOOK THIS VIEW BECAUSE IN ITS OPINION THE WARRANT OF AUTHORIZATION ISSUED BY THE ADDITIONAL DIRECTOR OF INCOME TAX (INVESTIGATION) O N 25.05.2000 IN RESPECT OF THE SAID LOCKER WAS INVALID AS HE HAD NO POWER TO DO SO. 6. SECTION 132(1) OF THE SAID ACT INDICATES THE PER SONS WHO ARE AUTHORIZED TO ISSUE WARRANTS OF AUTHORIZATION FOR SEARCHES. THERE ARE T WO CLASSES OF PERSONS MENTIONED IN SECTION 132 (1). THE FIRST CLASS INCLUDES THE DIREC TOR GENERAL, DIRECTOR, THE CHIEF COMMISSIONER AND COMMISSIONER. THIS GROUP OF PERSON S CAN AUTHORIZE OTHER PERSONS SPECIFIED IN CLAUSE (A) OF SECTION 132 (1) TO CONDU CT THE SEARCH. THE SECOND GROUP OF PERSONS INCLUDES THE JOINT DIRECTOR AND JOINT COMMI SSIONER. HOWEVER, THE JOINT DIRECTOR AND JOINT COMMISSIONER WHO FALL IN THIS CA TEGORY ARE THOSE WHO ARE EMPOWERED IN THIS BEHALF BY THE CENTRAL BOARD OF DI RECT TAXES (IN SHORT THE BOARD') TO ISSUE WARRANTS OF AUTHORIZATION TO OTHER PERSONS IN DICATED IN CLAUSE (B) OF SECTION 132(1) OF THE SAID ACT. IN THE PRESENT CASE WHAT HA S HAPPENED IS THAT THE SECOND WARRANT OF AUTHORIZATION IN RESPECT OF THE SAID LOCKER WAS ISSUED BY THE ADDITIONAL DIRECTOR INCOME TAX (INVESTIGATION). THE ADDITIONAL DIRECTOR DOES NOT FIND MENTION IN THE PROVISIONS OF SECTION 132(1). HOWEVER, IT WAS CONTE NDED BY THE LEARNED COUNSEL FOR THE 24 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 REVENUE THAT THE ADDITIONAL DIRECTOR WOULD BE COVER ED IN THE EXPRESSION JOINT DIRECTOR IN VIEW OF THE PROVISIONS OF SECTION 2 (28D) OF TH E SAID ACT. EVEN ASSUMING THAT THE EXPRESSION JOINT DIRECTOR AS USED IN SECTION 132(1) INCLUDES AN ADDITIONAL DIRECTOR, SUCH ADDITIONAL DIRECTOR OR JOINT DIRECTO R WOULD HAVE TO HAVE INITIAL EMPOWERMENT BY THE BOARD TO ISSUE WARRANTS OF AUTHO RIZATION IN VIEW OF THE PROVISIONS OF SECTION 132(1)(B). THIS, OF COURSE, IS DE HORS T HE ARGUMENT THAT THE DEFINITION GIVEN IN SECTION 2(28D) HAS TO BE READ IN THE LIGHT OF THE O PENING WORDS OF SECTION 2 WHICH CLEARLY STIPULATES THAT THE DEFINITIONS GIVEN IN TH AT PROVISION ARE SUBJECT TO THE EXPRESSION -- UNLESS THE CONTEXT OTHERWISE REQUIRES. 7. THE LEARNED COUNSEL FOR THE REVENUE ALSO CONTEND ED THAT THERE WAS AUTHORITY GRANTED TO THE ADDITIONAL DIRECTOR OF INCOME-TAX BY THE BOA RD TO ISSUE WARRANTS OF AUTHORISATION OF SEARCH AND SEIZURE OPERATIONS UNDER SECTION 132( 1) OF THE SAID ACT. A REFERENCE WAS MADE, FIRST OF ALL, TO A NOTIFICATION DATED 06.11.1 979 ISSUED BY THE BOARD IN EXERCISE OF POWERS CONFERRED UNDER SECTION 132(1) OF THE SAID A CT. BY VIRTUE OF THE NOTIFICATION, THE BOARD EMPOWERED THE FOLLOWING DEPUTY DIRECTORS OF I NSPECTION AND INSPECTING ASSISTANT COMMISSIONERS TO AUTHORIZE ACTION UNDER S ECTION 132(1) OF THE SAID ACT:- 1. THE DEPUTY DIRECTORS OF INSPECTION POSTED IN THE DIRECTORATE OF INSPECTION (INVESTIGATION) AND WORKING UNDER THE DIRECTOR OF I NSPECTION (INVESTIGATION); 2. THE DEPUTY DIRECTORS OF INSPECTION POSTED IN THE INTELLIGENCE WINGS; AND 3. THE INSPECTING ASSISTANT COMMISSIONERS OF INCOME -TAX. 8. IT IS CLEAR FROM THE ABOVE NOTIFICATION THAT ONL Y DEPUTY DIRECTORS OF INSPECTION POSTED IN A PARTICULAR WING HAD BEEN AUTHORIZED BY THE BOA RD TO ISSUE WARRANTS OF AUTHORISATION IN RESPECT OF SEARCH AND SEIZURE OPER ATIONS UNDER SECTION 132(1) OF THE SAID ACT. SUCH AN AUTHORISATION BY THE BOARD WAS IM PERATIVE BEFORE ANY DEPUTY DIRECTOR OF INSPECTION OR ANY INSPECTING ASSISTANT COMMISSIONER COULD AUTHORISE AN ACTION UNDER SECTION 132(1) OF THE SAID ACT. IT IS ALSO CLEAR THAT ONLY THOSE DEPUTY DIRECTORS OF INSPECTION AND INSPECTING ASSISTANT CO MMISSIONERS WHO HAVE BEEN SPECIFICALLY AUTHORISED BY VIRTUE OF THE SAID NOTIF ICATION DATED 06.11.1979, HAD THE AUTHORITY TO ACT UNDER SECTION 132(1) OF THE SAID A CT. 9. THE LEARNED COUNSEL FOR THE REVENUE THEN REFERRE D TO THE NOTIFICATION DATED 11.10.1990 ISSUED BY THE BOARD EMPOWERING THE FOLLOWING DEPUTY DIRECTORS AND DEPUTY COMMISSIONERS TO AUTHORISE ACTION UNDER SECTION 132 (1) OF THE SAID ACT:- 1) ALL DEPUTY DIRECTORS OF INCOME-TAX (INVESTIGATIO N) POSTED UNDER THE DIRECTORS GENERAL OF INCOME-TAX (INVESTIGATION); 2) ALL DEPUTY DIRECTORS OF INCOME-TAX (INVESTI GATION) POSTED UNDER THE DIRECTORS OF INCOME-TAX (INVESTIGATION); AND 3) ALL DEPUTY COMMISSIONERS OF INCOME-TAX IN-CH ARGE OF INCOME-TAX RANGES, INCLUDING SPECIAL RANGES. 10. THIS NOTIFICATION OF 11.10.1990 WAS NECESSITATE D BECAUSE OF THE AMENDMENT BROUGHT ABOUT IN SECTION 132(1) OF THE SAID ACT IN 1988. AT THIS JUNCTURE, IT WOULD BE RELEVANT TO POINT OUT THE LEGISLATIVE HISTORY OF SECTION 132(1) . INITIALLY, UNDER SECTION 132(1), IT WAS ONLY THE COMMISSIONER WHO WAS EMPOWERED TO AUTHORIS E ANY ACTION UNDER SECTION 132 OF THE SAID ACT. THIS POSITION CONTINUED TILL 1965 WHEN, BY VIRTUE OF THE AMENDMENTS 25 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 BROUGHT ABOUT IN 1965, THE DIRECTOR OF INSPECTION, ALONGWITH THE COMMISSIONER, WAS EMPOWERED TO TAKE ACTION UNDER SECTION 132 OF THE S AID ACT. BY THE AMENDMENT INTRODUCED IN 1975, AN ADDITIONAL CLASS OR CATEGORY OF PERSONS WAS CREATED IN SECTION 132(1). THAT CLASS OR CATEGORY INCLUDED DEPUTY DIRE CTORS OF INSPECTION AND INSPECTING ASSISTANT COMMISSIONERS. WHILE THE PERSONS BELONGING TO THE ORIGINAL CATEGOR Y, I.E., OF DIRECTOR OF INSPECTION OR COMMISSIONER OF INCOME-TAX WERE EMPOWERED BY THE ST ATUTE ITSELF TO AUTHORISE ANY ACTION UNDER SECTION 132 OF THE SAID ACT, THE PERSO NS FALLING IN THE SECOND CATEGORY, I.E., DEPUTY DIRECTORS OF INSPECTION AND INSPECTING ASSIS TANT COMMISSIONERS HAD TO BE SPECIFICALLY EMPOWERED BY THE BOARD TO ISSUE WARRAN TS OF AUTHORISATION OF SEARCH AND SEIZURE OPERATIONS UNDER SECTION 132 OF THE SAID AC T. AFTER THE 1975 AMENDMENT, EVEN DEPUTY DIRECTORS OF INSPECTION AND INSPECTING ASSIS TANT COMMISSIONERS COULD INITIATE ACTION UNDER SECTION 132 PROVIDED THEY WERE SPECIFI CALLY EMPOWERED TO DO SO BY THE BOARD. IT IS PURSUANT TO THIS AMENDMENT IN 1975 THA T THE BOARD ISSUED THE NOTIFICATION DATED 06.11.1979 EMPOWERING SPECIFIC DEPUTY DIRECTO RS OF INSPECTION AND INSPECTING ASSISTANT COMMISSIONERS TO TAKE ACTION UNDER SECTIO N 132 OF THE SAID ACT. THIS POSITION CONTINUED TILL 1988 WHEN, BY VIRTUE OF AN AMENDMENT , THE FIRST CATEGORY OF PERSONS COMPRISED OF (1) THE DIRECTOR GENERAL; (2) DIRECTOR ; (3) CHIEF COMMISSIONER AND (4) COMMISSIONER. THESE PERSONS, WITHOUT REQUIRING ANY FURTHER AUTHORISATION FROM THE BOARD, COULD ISSUE WARRANTS OF AUTHORISATION OF SEA RCH AND SEIZURE OPERATIONS UNDER SECTION 132. THE SECOND CATEGORY OF PERSONS WAS ALS O AMENDED. IT COMPRISED OF THE DEPUTY DIRECTOR OF INCOME-TAX AND THE DEPUTY COMMIS SIONER OF INCOME-TAX. THESE PERSONS, HOWEVER, REQUIRED SPECIFIC EMPOWERMENT BY THE BOARD BEFORE THEY COULD AUTHORISE ACTION UNDER SECTION 132(1) OF THE SAID A CT. IT IS APPARENT THAT BECAUSE OF THIS AMENDMENT BROUGHT ABOUT IN 1988, THE BOARD ISSUED T HE SECOND NOTIFICATION DATED 11.10.1990 AUTHORISING THE SPECIFIED DEPUTY DIRECTO RS OF INCOME-TAX AND DEPUTY COMMISSIONERS WHO WERE EMPOWERED TO AUTHORISE ACTIO N UNDER SECTION 132(1) OF THE SAID ACT. IT IS APPARENT THAT NOT ALL THE DEPUTY DI RECTORS AND NOT ALL THE DEPUTY COMMISSIONERS WERE EMPOWERED TO AUTHORIZE ACTION UN DER SECTION 132(1) OF THE SAID ACT. ONLY THOSE OFFICERS WHO FOUND SPECIFIC MENTION UNDER THE NOTIFICATION DATED 11.10.1990 WERE EMPOWERED TO AUTHORIZE ACTION UNDER SECTION 132 (1) OF THE SAID ACT. 11. TO CONTINUE THE HISTORICAL DEVELOPMENT OF SECTI ON 132 OF THE SAID ACT, WE NOTE THAT THE POSITION AS OBTAINING AFTER THE 1988 AMENDMENT CONTINUED UPTO 1998 WHEN, W.E.F. 01.10.1998, THE SECOND CATEGORY OF PERSONS WAS AMEN DED. THE FIRST CATEGORY OF PERSONS REMAINED THE SAME. IT COMPRISED OF DIRECTOR GENERAL , DIRECTOR, CHIEF COMMISSIONER AND COMMISSIONER. AS POINTED OUT ABOVE, THESE PERSO NS WERE EMPOWERED BY THE STATUE ITSELF TO AUTHORIZE ACTION UNDER SECTION 132 (1) OF THE SAID ACT. THE SECOND CATEGORY OF PERSONS, HOWEVER, WAS ALTERED TO COMPRISE OF JOINT DIRECTOR AND JOINT COMMISSIONER IN PLACE OF THE ERSTWHILE CATEGORY WHICH COMPRISED OF DEPUTY DIRECTOR AND DEPUTY COMMISSIONER. HOWEVER, UNLIKE THE PAST, THE BOARD D ID NOT ISSUE ANY NOTIFICATION AFTER THE AMENDMENT OF 1998 SPECIFICALLY EMPOWERING ANY J OINT DIRECTOR OR JOINT COMMISSIONER TO AUTHORIZE ACTION UNDER SECTION 132( 1) OF THE SAID ACT. 12. THE LEARNED COUNSEL FOR THE REVENUE SOUGHT TO G ET OVER THIS HURDLE BY DRAWING OUR ATTENTION TO A NOTIFICATION DATED 23.10.1998 ISSUED BY THE CENTRAL GOVERNMENT UNDER SECTION 117(1) OF THE SAID ACT. THE SAID NOTIFICATI ON MERELY RE-DESIGNATED CERTAIN OFFICERS OF THE INDIAN REVENUE SERVICE W.E.F. 01.10 .1998. THE RE-DESIGNATION, INTER ALIA, ENTAILED THAT DEPUTY DIRECTORS OF INCOME-TAX AND DE PUTY COMMISSIONERS OF INCOME-TAX IN THE PAY SCALE OF RS 12,000-375- 16,500/- WOULD B E RE-DESIGNATED AS JOINT DIRECTOR OR INCOME-TAX AND JOINT COMMISSIONER OF INCOME-TAX IN THE PAY SCALE OF RS 12,000-375- 16,500/-. THE LEARNED COUNSEL FOR THE REVENUE CONTE NDED THAT THE EMPOWERMENT AS PER 26 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 NOTIFICATION DATED 11.10.1990, WOULD AUTOMATICALLY APPLY, IN VIEW OF THE ABOVE RE- DESIGNATION, TO JOINT DIRECTORS OF INCOME-TAX AS AL SO JOINT COMMISSIONERS OF INCOME- TAX. THIS ARGUMENT DOES NOT ADVANCE THE CASE OF THE REVENUE. FIRST OF ALL, THE OFFICER WHO ISSUED THE WARRANT OF AUTHORISATION ON 25.05.2000 W AS NOT A JOINT DIRECTOR OF INCOME- TAX, BUT WAS THE ADDITIONAL DIRECTOR OF INCOME-TAX (INVESTIGATION). SECONDLY, THE NOTIFICATION THAT WAS NECESSARY IN THE PRESENT CASE , WAS A NOTIFICATION BY THE BOARD IN EXERCISE OF POWERS UNDER SECTION 132(1) OF THE SAID ACT. THERE IS NO SUCH NOTIFICATION AUTHORIZING ANY JOINT DIRECTOR OR JOINT COMMISSIONE R. THE NOTIFICATION DATED 23.10.1998 ON WHICH THE REVENUE SEEKS TO PLACE RELI ANCE IS ONE WHICH HAS BEEN ISSUED NOT BY THE BOARD, BUT BY THE CENTRAL GOVERNMENT AND THAT TOO IN EXERCISE OF POWERS UNDER SECTION 117 (1) OF THE ACT. THERE IS NO SPECI FIC EMPOWERMENT IN FAVOUR OF ANY JOINT DIRECTOR OR JOINT COMMISSIONER UNDER SECTION 132(1) OF THE SAID ACT. MERE RE- DESIGNATION OF A CLASS OF OFFICERS DOES NOT TRANSLA TE TO THE SPECIFIC EMPOWERMENT WHICH IS REQUIRED UNDER SECTION 132(1) OF THE SAID ACT. 13. AT THIS JUNCTURE, WE MAY TAKE NOTE OF THE DECIS ION OF THIS COURT IN THE CASE OF DR NALINI MAHAJAN V. DIRECTOR OF INCOME-TAX (INVESTIGA TION): 257 ITR 123 WHICH HAD BEEN HEAVILY RELIED UPON BY THE RESPONDENT / ASSESSEE AN D ALSO BY THE TRIBUNAL IN PASSING THE IMPUGNED ORDER. AT THE OUTSET, WE WOULD ALSO LIKE T O MENTION THAT THE REVENUE HAD PREFERRED AN APPEAL BEFORE THE SUPREME COURT AGAINS T THE ORDER PASSED BY THIS COURT IN DR NALINI MAHAJAN (SUPRA). BY VIRTUE OF A JUDGMENT DATED 30.09.2008, THE SUPREME COURT IN CIVIL APPEAL NO.6410-6411/2003 (DIRECTOR O F INCOME-TAX V. DR NALINI MAHAJAN) OBSERVED THAT THE PRINCIPAL QUESTION WHICH AROSE FOR CONSIDERATION IN THE APPEALS BEFORE IT WAS WHETHER THE ADDITIONAL DIRECT OR (INVESTIGATION) HAD THE REQUISITE JURISDICTION TO AUTHORIZE ANY OFFICER TO EFFECT SEA RCH AND SEIZURE IN PURPORTED EXERCISE OF HIS POWER CONFERRED UPON HIM UNDER SECTION 132(1) O F THE SAID ACT AS IT STOOD AT THE RELEVANT TIME. THE SUPREME COURT OBSERVED THAT THE SAID QUESTION HAD BECOME ACADEMIC INASMUCH AS THE COMMISSIONER OF INCOME-TAX HAD ISSU ED ORDERS UNDER SECTION 132B FOR RELEASE OF CASH, FOR RELEASE OF JEWELLERY AND FOR R ELEASE OF BOOKS OF ACCOUNTS THAT WERE SEIZED DURING THE SEARCH AND SEIZURE CONDUCTED UNDE R SECTION 132(1) OF THE SAID ACT. THE SUPREME COURT OBSERVED THAT AS THE SAID QUESTIO N HAD BECOME ACADEMIC, IT WAS NOT REQUIRED TO EXAMINE THE ISSUE RAISED IN THE APPEALS BEFORE IT. THE SUPREME COURT, HOWEVER, MADE IT CLEAR THAT THE QUESTIONS OF LAW RA ISED IN THE SAID APPEALS WERE EXPRESSLY KEPT OPEN. NO OPINION WAS EXPRESSED BY TH E SUPREME COURT IN THAT REGARD. SUBJECT TO THIS, THE SAID CIVIL APPEALS WERE DISMIS SED AS INFRUCTUOUS. THE POSITION IN LAW, THEREFORE, IS THAT THE QUESTION OF LAW DECIDED BY A DIVISION BENCH OF THIS COURT IN THE CASE OF DR NALINI MAHAJAN (SUPRA), INSOFAR AS THIS COURT IS CONCERNED, STANDS CONCLUDED. THE ISSUE BEFORE THE SUPREME COURT, HOWEVER, IS OPE N. THE SUPREME COURT HAS NOT EXPRESSED ANY OPINION EITHER WAY IN ITS SAID JUDGME NT DATED 30.09.2008. 14. WITH THESE PREFATORY REMARKS IN RESPECT OF THE DIVISION BENCH DECISION OF THIS COURT IN DR NALINI MAHAJAN (SUPRA), IT WOULD BE APPROPRIA TE TO NOW EXAMINE WHAT WAS ACTUALLY HELD IN THAT DECISION. ONE OF THE ISSUES R AISED WAS WHETHER THE ADDITIONAL DIRECTOR (INVESTIGATION) HAD THE REQUISITE JURISDIC TION TO AUTHORIZE ANY OFFICER TO EFFECT SEARCH AND SEIZURE IN PURPORTED EXERCISE OF THE POW ER CONFERRED UPON HIM UNDER SECTION 132 OF THE SAID ACT. THE DIVISION BENCH CONCLUDED T HAT THE ADDITIONAL COMMISSIONER (INVESTIGATION) DID NOT HAVE THE POWER TO ISSUE ANY AUTHORISATION OR WARRANT TO THE JOINT DIRECTOR, NEW DELHI. WHILE DOING SO, THE DIVISION B ENCH CONSIDERED, INTER ALIA, THE PROVISIONS OF SECTION 2(21) WHICH DEFINED DIRECTOR GENERAL AND DIRECTOR; SECTION 2(28D) WHICH DEFINED JOINT DIRECTOR AND SECTION 132 (1) OF THE SAID ACT. THE DEFINITION OF DIRECTOR GENERAL OR DIRECTOR GIVEN IN SECTION 2( 21) AFTER THE AMENDMENT OF 01.10.1998 INDICATED THAT THE DIRECTOR GENERAL OR D IRECTOR MEANT A PERSON APPOINTED TO BE A DIRECTOR GENERAL OF INCOME-TAX OR, AS THE CASE MAY BE, A DIRECTOR OF INCOME-TAX, 27 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 UNDER SUB-SECTION (1) OF SECTION 117, AND INCLUDED A PERSON APPOINTED UNDER THAT SUB- SECTION TO BE AN ADDITIONAL DIRECTOR OF INCOME-TAX OR A JOINT DIRECTOR OF INCOME-TAX OR AN ASSISTANT DIRECTOR OR DEPUTY DIRECTOR OF INCOME- TAX. AN ARGUMENT WAS ADVANCED ON BEHALF OF THE REVENUE THAT SINCE THE DEFINITION OF DIRECTOR INCLUDES AN ADDITIONAL DIRECTOR OF INCOME-TAX, THE WARRANT OF AUTORISATION ISSUED BY THE ADDITIONAL DIRECTOR OF INCOME-TAX WOULD BE VALID. THIS ARGUMENT WAS REPELL ED BY THE DIVISION BENCH AFTER NOTING THAT THE INTERPRETATION CLAUSE AS CONTAINED IN SECTION 2 BEGINS WITH THE WORDS UNLESS THE CONTEXT OTHERWISE REQUIRES AND THAT TH E DEFINITIONS OF DIRECTOR GENERAL OR DIRECTOR ARE EXHAUSTIVE ONES. THE COURT OBSERVED TH AT IT WAS A WELL-SETTLED PRINCIPLE OF LAW THAT ALTHOUGH A DEFINITION WOULD GOVERN THE STA TUTE WHENEVER THE DEFINED WORD IS USED IN THE BODY THEREOF, WHERE THE CONTEXT MAKES T HE DEFINITION GIVEN IN AN INTERPRETATION CLAUSE INAPPLICABLE, A DEFINED WORD MAY HAVE TO BE GIVEN A MEANING DIFFERENT FROM THAT CONTAINED IN THE INTERPRETATION CLAUSE. THE COURT ALSO OBSERVED THAT HAD ADDITIONAL DIRECTOR BEEN COVERED WITHIN THE P URVIEW OF THE DEFINITION OF DIRECTOR GENERAL OR DIRECTOR, THERE WOULD HAVE BEEN NO NECES SITY OF DEFINING JOINT DIRECTOR AGAIN AS HAS BEEN DONE IN SECTION 2 (28D) OF THE SA ID ACT, IN TERMS WHEREOF ALSO A JOINT DIRECTOR WOULD BE AN ADDITIONAL DIRECTOR. THE DIVIS ION BENCH ALSO OBSERVED THAT AN INTERPRETATION CLAUSE IS NOT A POSITIVE ENACTMENT A ND THAT IT WAS WELL-SETTLED THAT AN INTERPRETATION CLAUSE, HAVING REGARD TO ITS LIMITED OPERATION, MUST BE GIVEN A LIMITED EFFECT. WHILE GIVING EFFECT THERETO, THE COURT MUST NOT FORGET THAT THE SCOPE AND OBJECT OF SUCH A PROVISION IS SUBJECT TO ITS APPLICABILITY AN D IT IS USED HAVING RELATION TO THE CONTEXT ONLY. THE DIVISION BENCH FURTHER OBSERVED T HAT A STATUTORY POWER HAS BEEN CONFERRED UNDER SECTION 132 UPON THE BOARD IN FAVOU R OF A PARTICULAR STATUTORY AUTHORITY. IN THIS REGARD, IT WAS SPECIFICALLY HELD :- THE SCOPE AND PURPORT OF THE SAID DEFINITION, THUS, CANNOT BE EXTENDED TO OTHER AUTHORITIES IN WHOSE FAVOUR THE POWER HAS NOT BEEN DELEGATED. 15. THE DIVISION BENCH ALSO REITERATED THE WELL-SET TLED PROPOSITION, AFTER NOTICING THE IMPORTANT CASES ON THIS ASPECT, NAMELY, NAZIR AHMAD V. THE KING-EMPEROR: AIR 1936 PC 253; VITERALLI V. SATON: 3 LAW ED. 1012 AND RAMA NA DAYARAM SHETTY V. INTERNATIONAL AIRPORT AUTHORITY OF INDIA: 1979 (3) SCC 489, THAT WHEN A POWER IS GIVEN TO DO A CERTAIN THING IN A CERTAIN MANNER, THE SAME MUST BE DONE IN THAT MANNER OR NOT AT ALL AND THAT ALL OTHER PROCEEDINGS ARE NECESSARI LY FORBIDDEN. IN THIS CONTEXT, THE DIVISION BENCH FOUND THAT THE ADDITIONAL DIRECTOR ( INVESTIGATION) HAD NO JURISDICTION TO ISSUE A WARRANT OF AUTHORISATION AND CONSEQUENTLY, THE SAME WAS LIABLE TO BE QUASHED. 16. WE MAY ALSO NOTE THAT IN CIT V. JAINSON: ITA 36 6/2007 DECIDED ON 17.07.2008, WE HAD ENDORSED AND RESPECTFULLY FOLLOWED THE VIEW TAK EN BY THIS COURT IN DR NALINI MAHAJAN (SUPRA). THE MAIN QUESTION SOUGHT TO BE RAI SED IN CIT V. JAINSON (SUPRA) WAS WITH REGARD TO THE POWER OF THE ADDITIONAL DIRECTOR OF INCOME-TAX (INVESTIGATION) TO ISSUE A WARRANT UNDER SECTION 132(1) OF THE SAID AC T. THE TRIBUNAL IN THAT CASE HAD FOUND THAT THE WARRANT OF AUTHORISATION BY THE ADDI TIONAL DIRECTOR OF INCOME-TAX (INVESTIGATION) WAS WITHOUT AUTHORITY AND, THEREFOR E, THE ENTIRE SEARCH AS WELL AS THE ASSESSMENT PROCEEDINGS SUBSEQUENT UPON SUCH WARRANT WERE INVALID AND BAD IN LAW. THE TRIBUNAL HAD, LIKE IN THE PRESENT CASE, FOLLOWE D THE DECISION OF THIS COURT IN DR NALINI MAHAJAN (SUPRA). WE HAD NOTED THAT IN DR NAL INI MAHAJAN (SUPRA) THIS COURT HAD ARRIVED AT A CONCLUSION THAT THE ADDITIONAL DIRECTO R OR INCOME-TAX (INVESTIGATION) DID NOT HAVE ANY POWER TO ISSUE ANY AUTHORISATION OR WA RRANT UNDER SECTION 132(1) OF THE SAID ACT. WE FOUND THAT THE ISSUE SOUGHT TO BE RAIS ED BY THE REVENUE WAS ENTIRELY COVERED BY THE DECISION OF THIS COURT IN THE CASE O F DR NALINI MAHAJAN (SUPRA) AND CONSEQUENTLY WE DISMISSED THE APPEAL AS THE ISSUE D ID NOT CALL FOR ANY FURTHER CONSIDERATION. 28 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 17. THE LEARNED COUNSEL FOR THE REVENUE HAD REFERRE D TO THE DECISION OF ANOTHER DIVISION BENCH OF THIS COURT RENDERED ON 30.01.2008 IN SUNIL DUA V. CIT (ITA 1429/2006). THAT DECISION WAS REFERRED TO IN THE CONTEXT OF THE ARGU MENT THAT THE EXPRESSION DEPUTY DIRECTOR INCLUDED AN ADDITIONAL DIRECTOR AND, THERE FORE, SINCE THE NOTIFICATION DATED 06.11.1979 HAD EMPOWERED THE DEPUTY DIRECTORS TO IS SUE WARRANTS OF AUTHORISATION, AN ADDITIONAL DIRECTOR WOULD, CONSEQUENTLY, ALSO HAVE SUCH AUTHORITY. IT MAY BE NOTED THAT IN SUNIL DUA (SUPRA), THE SEARCH HAD CONCLUDED ON 1 6.01.1998, I.E., PRIOR TO THE AMENDMENT OF 01.10.1998. THE DEFINITION OF DEPUTY D IRECTOR GIVEN IN SECTION 2 (19C) PRIOR TO 01.10.1998 INCLUDED NOT ONLY A DEPUTY DIRE CTOR, BUT ALSO AN ADDITIONAL DIRECTOR OF INCOME-TAX. SECTION 2(19C) HAD BEEN INT RODUCED IN 1994 W.E.F. 01.06.1994. THE SAID PROVISION SUFFERED AN AMENDMENT IN 1998 W. E.F. 01.10.1998, WHEREBY THE REFERENCE TO ADDITIONAL DIRECTOR OF INCOME-TAX WAS DELETED. PERHAPS, THE DEFINITION OF DEPUTY DIRECTOR AS IT STOOD PRIOR TO 01.10.1998, WA S WHAT PERSUADED THE COURT TO OBSERVE THAT THE EXPRE SSION DEPUTY DIRECTOR INCLUDES AN ADDITIONAL DIRE CTOR. THE POSITION HAS ALTERED AFTER THE 1998 AMENDMENT. THER EFORE, THE DECISION IN SUNIL DUA (SUPRA) WOULD HAVE NO APPLICATION TO THE PRESENT CA SE. IN ANY EVENT, THE SAID DECISION DID NOT NOTICE THE EARLIER DECISION OF THIS COURT I N THE CASE OF DR NALINI MAHAJAN (SUPRA). APART FROM THAT, IN SUNIL DUA (SUPRA), IT WAS CONTENDED THAT THE WARRANT OF AUTHORISATION DRAWN UP IN FAVOUR OF THE ADDITIONA L DIRECTOR OF INCOME -TAX WAS NOT VALID. HERE THE QUESTION IS ENTIRELY DIFFERENT. IT IS NOT A QUESTION OF IN WHOSE FAVOUR THE WARRANT OF AUTHORISATION IS DRAWN UP, BUT WHO HAS I SSUED THE WARRANT OF AUTHORISATION. ON THIS GROUND ALSO, THE DECISION IN SUNIL DUA (SUP RA) IS CLEARLY DISTINGUISHABLE. 18. IT HAD BEEN ARGUED BY THE LEARNED COUNSEL FOR T HE REVENUE THAT AS PER SECTION 2(28D), THE JOINT DIRECTOR MEANT A PERSON APPOINTED TO BE A JOINT DIRECTOR OF INCOME- TAX OR AN ADDITIONAL DIRECTOR OF INCOME-TAX UNDER S ECTION 117(1) OF THE SAID ACT. IT WAS, THEREFORE, CONTENDED THAT SINCE THE WARRANT OF AUTH ORISATION IN THE PRESENT CASE HAD BEEN ISSUED BY AN ADDITIONAL DIRECTOR OF INCOME-TAX , IT MEANT THAT IT WAS ISSUED BY A JOINT DIRECTOR OF INCOME-TAX AND, THEREFORE, THE WA RRANT OF AUTHORISATION WAS VALID. THIS ARGUMENT CANNOT BE ACCEPTED. AS HELD IN DR NAL INI MAHAJAN (SUPRA), THE DEFINITION OF JOINT DIRECTOR HAS TO BE READ CONTEXTUALLY. THE PROVISIONS OF SECTION 132(1) REFERS TO DIRECTOR GENERAL OR DIRECTOR AS WELL AS JOINT DIREC TOR OR JOINT COMMISSIONER. WHILE THE FIRST TWO AUTHORITIES FALL WITHIN THE FIRST CAT EGORY, WHICH WERE EMPOWERED BY THE STATUTE ITSELF TO AUTHORIZE ACTION UNDER SECTION 13 2(1), THE LATTER TWO AUTHORITIES, NAMELY, THE JOINT DIRECTOR OR JOINT COMMISSIONER, CAN ONLY AUTHORIZE ACTION IF THEY ARE SPECIFICALLY EMPOWERED BY THE BOARD IN THAT BEHALF. NOW, THE DEFINITION OF DIRECTOR GENERAL OR DIRECTOR AS GIVEN IN SECTION 2 (21), INC LUDES ADDITIONAL DIRECTOR OF INCOME- TAX AS WELL AS A JOINT DIRECTOR OF INCOME-TAX. IF T HE ARGUMENT OF THE LEARNED COUNSEL FOR THE REVENUE WERE TO BE ACCEPTED THAT THE EXPRESSION JOINT DIRECTOR AS USED IN SECTION 132(1) WOULD INCLUDE AN ADDITIONAL DIRECTOR OF INCO ME-TAX, THEN THERE WOULD HAVE BEEN NO OCCASION FOR THE LEGISLATURE TO HAVE SEPARATELY SPECIFIED JOINT DIRECTOR UNDER SECTION 132(1) WHEN IT HAD ALREADY MENTIONED THE DIRECTOR G ENERAL OR DIRECTOR. IT IS OBVIOUS THAT THE LEGISLATURE WAS MINDFUL OF THE DEFINITIONS GIVEN UNDER SECTION 2 (21) WHEN IT GAVE SEPARATE TREATMENT TO DIRECTOR GENERAL / DIREC TOR AND JOINT DIRECTOR / JOINT COMMISSIONER. THE DIRECTOR GENERAL OR DIRECTOR DID NOT REQUIRE ANY FURTHER EMPOWERMENT FROM THE BOARD, WHEREAS THE JOINT DIREC TOR OR THE JOINT COMMISSIONER REQUIRED SUCH SPECIFIC EMPOWERMENT. IT IS CLEAR THA T THE CONTEXT REQUIRES THAT THE WORDS DIRECTOR GENERAL OR DIRECTOR BE CONSTRUED IN TH E LIMITED SENSE AND NOT IN THE INCLUSIVE SENSE AS DEFINED IN SECTION 2(21) OF THE SAID ACT. BY SIMILAR LOGIC, WHEN THE LEGISLATURE HAS SPECIFIED THE AUTHORITIES WHO MAY B E EMPOWERED AS BEING THE JOINT DIRECTOR OR JOINT COMMISSIONER, WE CANNOT EXTEND TH E SAME BY EMPLOYING THE DEFINITION GIVEN IN SECTION 2 (28D) TO EXTEND IT TO ADDITIONAL DIRECTORS OF INVESTIGATION. WE MAY ALSO POINT OUT THAT ADDITIONAL DIRECTOR' HAS ALSO BEEN DEFINED UNDER SE CTION 2(1D) 29 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 WHICH WAS INTRODUCED WITH RETROSPECTIVE EFFECT FROM 01.06.1994 BY VIRTUE OF THE FINANCE ACT, 2007. UNDER THAT PROVISION, ADDITIONAL DIRECTO R MEANS A PERSON APPOINTED TO BE AN ADDITIONAL DIRECTOR OF INCOME-TAX UNDER SECTION 117 (1) OF THE SAID ACT. IT IS PERTINENT TO NOTE THAT WHILE THE DEFINITION OF ADDITIONAL DIRECT OR HAS BEEN INSERTED WITH RETROSPECTIVE EFFECT FROM 01.06.1994 BY VIRTUE OF THE FINANCE ACT , 2007, THE DEFINITION OF JOINT DIRECTOR WAS INTRODUCED AS SECTION 2 (28D) FOR THE FIRST TIME IN THE SAID ACT BY VIRTUE OF THE FINANCE NO. (2) ACT OF 1998 W.E.F. 01.10.1998. THUS, THERE WAS NO CONCEPT OF A JOINT DIRECTOR PRIOR TO 01.10.1998. SINCE THE DEFINITION OF ADDITIONAL DIRECTOR HAS BEEN INSERTED WITH RETROSPECTIVE EFFECT FROM 01.06.1994, THE LEGISLATURE CLEARLY MADE THE DISTINCTION BETWEEN A JOINT DIRECTOR AND AN ADDITIO NAL DIRECTOR. THE MANNER IN WHICH THE EXPRESSION JOINT DIRECTOR HAS BEEN USED IN SECTION 132(1) REQUIRES THE SAME TO BE INTERPRETED IN ITS LIMITED SENSE AS MEANING ONLY THE JOINT DIRECTOR AND NOT AN ADDITIONAL DIRECTOR OF INCOME-TAX. THIS IS SO BECAU SE HAD THE LEGISLATURE INTENDED TO INCLUDE AN ADDITIONAL DIRECTOR OF INCOME-TAX, IT WO ULD HAVE DONE SO SPECIFICALLY IN SECTION 132(1) ITSELF. 19. FOR ALL THESE REASONS, WE FEEL THAT THE TRIBUNA L HAS CORRECTLY APPLIED THE LAW IN FOLLOWING THE DECISION OF THIS COURT IN DR NALINI M AHAJAN (SUPRA). THE IMPUGNED DECISION OF THE TRIBUNAL DOES NOT CALL FOR ANY INTE RFERENCE AND THE ISSUE IS ENTIRELY COVERED BY THE DECISION OF THIS COURT IN THE CASE O F DR NALINI MAHAJAN (SUPRA). 18. WE MAKE IT CLEAR THAT THE FACTUAL POSITION HEREIN I S NO DIFFERENT, SINCE THE JURISDICTIONAL CIT HAD AUTHORIZED THE JOINT COMMISS IONER OF INCOME TAX TO FRAME THE REGULAR ASSESSMENT IN ASSESSEES CASE WHICH IN TURN WAS FINALIZED BY THE ADDITIONAL COMMISSIONER OF INCOME TAX. WE ADOPT THE ABOVE EXTRACTED REASONING TO CONCLUDE THAT THE IMPUGNED ASSESSMENT HAS BEEN FRAMED BY AN ASSESSING OFFICER NOT HAVING JURISDICTION AS PER TH E CITS ORDER PASSED U/S 120(4) OF THE ACT (SUPRA). THE SAME IS DECLARED TO BE NON EST IN THE EYES OF LAW. WE ACCORDINGLY CONCLUDE THAT THE CIT HAS ERRED IN REVI SING AN INVALID ASSESSMENT NOT FRAMED BY THE COMPETENT ASSESSING AUTHORITY. WE ACC EPT THE ASSESSEES ARGUMENTS CHALLENGING VALIDITY OF THE CITS REVISION JURISDIC TION IN IMPUGNED LATTER AY 2011-12 THEREFORE. 19. THESE THREE APPEALS ARE ALLOWED IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 12-07-2019. SD/- SD/- SD SD/- /- ( . . / DR. A.L. SAINI) ( . . / S.S. GODARA) ( / ACCOUNTANT MEMBER) ( / JUDICIAL MEMBER) 30 ARIHANT INTERNATIONAL LIMITED ITA NOS. 75/GAU/2018, 105 & 106/GAU/2015 , / GUWAHATI, DATED: 12-07-2019 , . / SUDIP SARKAR, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE ASSESSEE 2. ! / THE RESPONDENT. 3. + ( ) / THE CIT(A) 4. + / CIT 5. , , / DR, ITAT, GUWAHATI 6. , / GUARD FILE. / BY ORDER, ! //TRUE C/T . / SR. PRIVATE SECRETARY (ON TOUR) , / ITAT, GUWAHATI /TRUE COPY/
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