M/s. Vishnu Chemicals Ltd., Hyd, Hyderabad V. ACIT, Central Circle-3, Hyderabad

ITA 813/HYD/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1317 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 23-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIDISHA KALRA
• Assessee Lawyers: A V RAGHURAM
• Keywords: Depreciation; Principle of natural justice; Assessment record
• Section: 143(3); 153A; 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 813/HYD/2012 ASSESSMENT YEAR 2005-06 M/S. VISHNU CHEMICALS LTD., HYDERABAD PAN: AACCV1903A VS. THE ACIT CENTRAL CIRCLE-3 HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI A.V. RAGHURAM RESPONDENT BY: S MT. VIDISHA KALRA DATE OF HEARING: 2 0.12.2012 DATE OF PRONOUNCEMENT: 22.02.2013 O R D E R PER CHANDRA POOJARI, AM: THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT (CENTRAL), HYDERABAD PASSED U/S. 2 63 OF THE INCOME-TAX ACT, 1961 26.3.2012. 2. THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS WIT H REGARD TO INVOKING THE JURISDICTION OF SECTION 263 SO AS TO CAUSE FURTHER ENQUIRY ON THE ISSUE RELATING TO ALLO WABILITY OF EXPENDITURE ON PRODUCT DEVELOPMENT AT RS. 1,29,79,0 50. 3. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE-COMP ANY, ENGAGED IN MANUFACTURING OF CHROME AND ALLIED CHEMI CALS, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-06 AD MITTING NIL INCOME AFTER SET OFF OF LOSSES. CONSEQUENT TO SEARC H PROCEEDINGS, AN ORDER U/S 143(3) READ WITH SECTION 153A WAS PASS ED IN THIS CASE FOR THE SUBJECT ASSESSMENT YEAR ON 30.12.2009 BY THE ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-3, HYDER ABAD DETERMINING THE NORMAL INCOME AT NIL AND BOOK PROFI TS AT RS. 3,52,82,943/-. ITA NO. 813/HYD/2012 M/S. VISHNU CHEMICALS LTD. ===================== 2 4. ON VERIFICATION OF THE ASSESSMENT RECORDS FOR THE A SSESSMENT YEAR 2005-06, IT IS SEEN FROM THE COMPUTATION OF IN COME THAT THE ASSESSEE HAS REDUCED THE INCOME BY AN AMOUNT OF RS. 1,29,79,050/- STATING THAT THE SAID EXPENDITURE WAS INCURRED TOWARDS PRODUCT-DEVELOPMENT. IT IS PERTINENT TO MEN TION HERE THAT THIS EXPENDITURE WAS NOT DEBITED TO PROFIT & LOSS A CCOUNT AND WAS CAPITALIZED IN THE BALANCE SHEET WHILE PREPARING TH E FINANCIAL STATEMENTS. SINCE THIS EXPENDITURE WAS CAPITALIZED FOR BALANCE SHEET PURPOSES THE SAME SHOULD HAVE BEEN ALLOCATED TO THE ASSETS PROPORTIONATELY AND DEPRECIATION SHOULD HAVE BEEN C LAIMED. INSTEAD OF DOING SO, THE ASSESSEE CLAIMED THE ENTIR E EXPENDITURE DURING THE YEAR UNDER CONSIDERATION. FURTHER, IT I S ALSO OBSERVED FROM THE RECORDS THAT THE INCOME ARRIVED FOR THE YE AR WAS SET OFF AGAINST BROUGHT FORWARD LOSSES. WHILE DOING SO, TH E DEPRECATION LOSS PERTAINING TO THE ASSESSMENT YEAR 1997-98 OF R S. 15,24,945/- WAS WRONGLY TAKEN AS RS. 24,65,463/-, THEREBY ALLOW ING EXCESS DEPRECATION LOSS OF RS. 9,40, 518-. AS THESE ISSUE S WERE NOT CONSIDERED BY THE ASSESSING WHILE FRAMING THE ASSES SMENT ORDER 143(3), READ WITH SECTION 153A ON 30.12.2009, THE O RDER PASSED BY THE ACIT, CENTRAL CIRCLE-3, HYDERABAD IS ERRONEOUS INASMUCH AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. ACCORDIN GLY, A SHOW CAUSE NOTICE PROPOSING TO REVISE THE ORDER DATED 30.12.20 09 U/S 263 OF THE INCOME -TAX ACT, 1961 WAS ISSUED TO THE ASSESSE E CALLING FOR OBJECTIONS. 5. THE CIT ON FURTHER VERIFICATION OF ASSESSMENT RECOR DS FOUND THAT THE ASSESSEE HAD CAPITALISED THE PRODUCT DEVELOPMENT EXPENDITURE IN ITS BOOKS OF ACCOUNT. H OWEVER, THE ASSESSEE CLAIMED THE SAME AS EXPENDITURE IN ITS RETURN OF INCOME. ACCORDING TO THE CIT IT CAN BE TREATED AS PRIOR PERIOD EXPENDITURE AND HAD TO BE ALLOTTED TO THE AS SETS PROPORTIONATELY SO AS TO CLAIM DEPRECIATION. HENCE THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS INSOFAR AS IT IS ITA NO. 813/HYD/2012 M/S. VISHNU CHEMICALS LTD. ===================== 3 PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORD INGLY, HE SET ASIDE THE ORDER OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE CLAIM OF PRODUCT DEVELOPMENT EXPENDI TURE AND TO RESTRICT THE BROUGHT FORWARD DEPRECIATION CL AIM TO THE EXTENT POSSIBLE AFTER GIVING OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE FOLLOWING GROUNDS ARE RAISED BY THE ASSESSEE: (A) THE ISSUE ON WHICH THE COMMISSIONER HAS SET ASIDE HAS ALREADY BEEN CONSIDERED IN THE ORIGINAL ASSESSMENT (SCRUTINY ASSESSMENT) AND LATER IN ASSESSMENT MADE U/S. 153A OF THE ACT. (B) THE ASSESSMENT ORDER (143 R.W.S. 153A) WHICH IS SOUGHT TO BE REVISED IS INVALID ORDER AS IT IS NOT BASED ON ANY MATERIAL (MUMBAI SPECIAL BENCH IN ALL CARGO LOGISTICS LIMITED - 137 ITD 287 ). (C) THE ISSUE OF ALLOWING EXPENDITURE ON PRODUCT DEVELOPMENT AS REVENUE WAS CONSIDERED IN DETAIL IN ORIGINAL ASSESSMENT ITSELF. THE COMMISSIONER HAD WRONGLY CONSIDERED THE ORDER OF ASSESSMENT PASSED UNDER SECTION 143(3) R.W.S 153A FOR REVISION WHEN SUCH ISSUE WAS CONSIDERED IN ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT. IF ASSESSMENT ORDER PASSED U/S. 143(3) IS CONSIDERED, THEN IT WOULD BE BEYOND THE TIME LIMITS. THE COMMISSIONER THEREFORE HAS CHOSEN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 153A ONLY TO OVERCOME THE ISSUE OF LIMITATION THAT IS PRESCRIBED IN SECTION 263 OF THE ACT. THIS GROUND IS SQUARELY COVERED BY THE JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF ALAGENDRAM FINANCE REPORTED AS 293 ITR 1. (D) THE AO HAS CONSIDERED THE NATURE OF EXPENDITURE IN THE SCRUTINY ASSESSMENT AND HAS TAKEN ONE OF THE POSSIBLE VIEW (DELHI HC IN SUNBEAM AUTO LTD. 332 ITR 167 ). 7. THE AR SUBMITTED THAT THE LETTER WAS FILED DURING THE COURSE OF HEARING REGARDING THE ISSUE AND, THER EFORE, THERE IS NO ACKNOWLEDGEMENT FROM THE OFFICER. THE A R ITA NO. 813/HYD/2012 M/S. VISHNU CHEMICALS LTD. ===================== 4 SUBMITTED THAT THE TRIBUNAL MAY KINDLY CALL FOR THE RECORDS FOR CONFIRMATION OF THE ABOVE FACT. THE ASS ESSEE IS WILLING TO FACE ANY PROCEEDINGS IF THE FACT OF SUBM ITTING THE ABOVE LETTER ALONG WITH DOCUMENTS IS PROVED INCORRECT. ACCORDINGLY, THE AR SUBMITTED THAT THE O RDER OF THE COMMISSIONER IS UNSUSTAINABLE BOTH ON FACTS AND IN LAW AND IS LIABLE TO BE QUASHED. ACCORDING TO THE AR, THERE IS PROPER ENQUIRY BY THE ASSESSING OFFICER WH ILE COMPLETING THE ASSESSMENT AND THE ORDER OF CIT IS NOTHING BUT CAUSING ROVING ENQUIRY. 8. THE LEARNED DR RELIED ON THE ORDER OF THE CIT. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE HAVE CAREFULLY GONE THROUGH THE EARLIER ORDER OF THE ASSESSING OFFICER PASSED U/S. 143(3) R.W.S. 153A OF THE ACT DATED 30.12.2009. THERE IS NO WHISPER REGARDING THE IMPUGNED ISSUE IN THE ASSESSM ENT ORDER. THE ORDER PASSED BY THE ASSESSING OFFICER I S VERY CRYPTIC AND IT CANNOT BE SAID THAT THE ASSESSING OF FICER APPLIED HIS MIND. THE ORDER SOUGHT TO BE REVISED C ONTAINS ERROR OF REASONING AND IT IS ON INCORRECT ASSUMPTIO N OF FACTS AS WELL AS INCORRECT APPLICATION OF LAW. THERE IS NO APPLICATION OF MIND BY THE ASSESSING OFFICER. THE ORDER PASSED BY THE ASSESSING OFFICER IS A STEREOTYPE ORD ER WHICH SIMPLY ACCEPTED WHAT THE ASSESSEE HAS STATED IN ITS RETURN OF INCOME AND HE IS FAILED TO EXAMINE THE GENUINENE SS OF THE CLAIM OF THE ASSESSEE. 10. SECTION 263 OF THE INCOME-TAX ACT SEEKS TO REMOVE T HE PREJUDICE CAUSED TO THE REVENUE BY THE ERRONEOUS OR DER PASSED BY THE ASSESSING OFFICER. IT EMPOWERS THE COMMISSIONER TO INITIATE SUO MOTO PROCEEDINGS EITHER WHERE THE ASSESSING OFFICER TAK ES A WRONG DECISION WITHOUT CONSIDERING THE MATERIALS AV AILABLE ON ITA NO. 813/HYD/2012 M/S. VISHNU CHEMICALS LTD. ===================== 5 RECORD OR HE TAKES A DECISION WITHOUT MAKING AN ENQ UIRY INTO THE MATTERS, WHERE SUCH INQUIRY WAS PRIMA FACIE WARRANT ED. THE COMMISSIONER WILL BE WELL WITHIN HIS POWERS TO REGA RD AN ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES O F THE CASE, THE ASSESSING OFFICER SHOULD HAVE MADE FURTHER INQUIRIE S BEFORE ACCEPTING THE CLAIM MADE BY THE ASSESSEE IN HIS RET URN. THE REASON IS OBVIOUS. UNLIKE THE CIVIL COURT WHICH IS NEUTRAL IN GIVING A DECISION ON THE BASIS OF EVIDENCE PRODUCED BEFORE IT, THE ROLE OF AN ASSESSING OFFICER UNDER THE INCOME-TAX ACT IS NO T ONLY THAT OF AN ADJUDICATOR BUT ALSO OF AN INVESTIGATOR. HE CANN OT REMAIN PASSIVE IN THE FACE OF A RETURN, WHICH IS APPARENTL Y IN ORDER BUT CALLS FOR FURTHER ENQUIRY. HE MUST DISCHARGE BOTH T HE ROLES EFFECTIVELY. IN OTHER WORDS, HE MUST CARRY OUT INVE STIGATION WHERE THE FACTS OF THE CASE SO REQUIRE AND ALSO DECIDE TH E MATTER JUDICIOUSLY ON THE BASIS OF MATERIALS COLLECTED BY HIM AS ALSO THOSE PRODUCED BY THE ASSESSEE BEFORE HIM. THE SCHEME OF ASSESSMENT HAS UNDERGONE RADICAL CHANGES IN RECENT YEARS. IT D ESERVES TO BE NOTED THAT THE PRESENT ASSESSMENT WAS MADE UNDER SE CTION 143(3) OF THE INCOME-TAX ACT. IN OTHER WORDS, THE ASSESSIN G OFFICER WAS STATUTORILY REQUIRED TO MAKE THE ASSESSMENT UNDER S ECTION 143(3) AFTER SCRUTINY AND NOT IN A SUMMARY MANNER AS CONTE MPLATED BY SUB-SECTION (1) OF SECTION 143. BULK OF THE RETURNS FILED BY THE ASSESSEES ACROSS THE COUNTRY IS ACCEPTED BY THE DEP ARTMENT UNDER SECTION 143(1) WITHOUT ANY SCRUTINY. ONLY A FEW CAS ES ARE PICKED UP FOR SCRUTINY. THE ASSESSING OFFICER IS THEREFORE , REQUIRED TO ACT FAIRLY WHILE ACCEPTING OR REJECTING THE CLAIM OF TH E ASSESSEE IN CASES OF SCRUTINY ASSESSMENTS. HE SHOULD BE FAIR NO T ONLY TO THE ASSESSEE BUT ALSO TO THE PUBLIC EXCHEQUER. THE ASSE SSING OFFICER HAS GOT TO PROTECT, ON ONE HAND, THE INTEREST OF TH E ASSESSEE IN THE SENSE THAT HE IS NOT SUBJECTED TO ANY AMOUNT OF TAX IN EXCESS OF WHAT IS LEGITIMATELY DUE FROM HIM, AND ON THE OTHER HAND, HE HAS A DUTY TO PROTECT THE INTERESTS OF THE REVENUE AND TO SEE THAT NO ITA NO. 813/HYD/2012 M/S. VISHNU CHEMICALS LTD. ===================== 6 ONE DODGED THE REVENUE AND ESCAPED WITHOUT PAYING T HE LEGITIMATE TAX. THE ASSESSING OFFICER IS NOT EXPECTED TO PUT B LINKERS ON HIS EYES AND MECHANICALLY ACCEPT WHAT THE ASSESSEE CLAI MS BEFORE HIM. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE F ACTS STATED AND THE GENUINENESS OF THE CLAIMS MADE IN THE RETURN WHEN T HE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE IN QUIRY. ARBITRARINESS IN EITHER ACCEPTING OR REJECTING THE CLAIM HAS NO PLACE. THE ORDER PASSED BY THE ASSESSING OFFICER BE COMES ERRONEOUS BECAUSE AN ENQUIRY HAS NOT BEEN MADE OR G ENUINENESS OF THE CLAIM HAS NOT BEEN EXAMINED WHERE THE INQUIR IES OUGHT TO HAVE BEEN MADE AND THE GENUINENESS OF THE CLAIM OUG HT TO HAVE BEEN EXAMINED AND NOT BECAUSE THERE IS ANYTHING WRO NG WITH HIS ORDER IF ALL THE FACTS STATED OR CLAIM MADE THEREIN ARE ASSUMED TO BE CORRECT. THE COMMISSIONER MAY CONSIDER AN ORDER OF THE ASSESSING OFFICER TO BE ERRONEOUS NOT ONLY WHEN IT CONTAINS SOME APPARENT ERROR OF REASONING OR OF LAW OR OF FACT ON THE FACE OF IT BUT ALSO WHEN IT IS A STEREO-TYPED ORDER WHICH SIMPLY A CCEPTS WHAT THE ASSESSEE HAS STATED IN HIS RETURN AND FAILS TO MAKE ENQUIRIES OR EXAMINE THE GENUINENESS OF THE CLAIM WHICH ARE CALL ED FOR IN THE CIRCUMSTANCES OF THE CASE. IN TAKING THE AFORESAID VIEW, WE ARE SUPPORTED BY THE DECISIONS OF THE HON'BLE SUPREME C OURT IN RAMPYARI DEVI SARAOGI V. CIT (67 ITR 84) (SC), SM T. TARA DEVI AGGARWAL V. CIT (88 ITR 323) (SC), AND MALABAR INDU STRIAL CO. LTD'S CASE ( 243 ITR 83) (SC). 11. IN MALABAR INDUSTRIAL CO. LTD. (243 ITR 83) (SC) CA SE THE HON'BLE COURT HAS HELD AS UNDER: THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE O R ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONL Y WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUI REMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ITA NO. 813/HYD/2012 M/S. VISHNU CHEMICALS LTD. ===================== 7 THE ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES O F NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. IN OUR HUMBLE VIEW, ARBITRARINESS IN DECISION-MAKIN G WOULD ALWAYS NEED CORRECTION REGARDLESS OF WHETHER IT CAUSES PREJUDICE TO AN ASSESSEE OR TO THE STATE EXCHEQUER. THE LEGISLATURE HAS TAKEN AMPLE CARE TO PROVIDE FOR THE MECHANISM TO HAVE SUCH PREJUDICE REMOVED. WHILE AN ASSESSEE CAN HAVE IT CORRECTED THROUGH REVISIONAL JURISDICTION OF THE COMMISSIONER UNDER SECTION 264 OR THROUGH APPEALS AND OTHER MEAN S OF JUDICIAL REVIEW, THE PREJUDICE CAUSED TO THE STA TE EXCHEQUER CAN ALSO BE CORRECTED BY INVOKING REVISIO NAL JURISDICTION OF THE COMMISSIONER UNDER SECTION 263. ARBITRARINESS IN DECISION-MAKING CAUSING PREJUDICE TO EITHER PARTY CANNOT THEREFORE BE ALLOWED TO STAND A ND STARE AT THE LEGAL SYSTEM. IT IS DIFFICULT TO COUNT ENANCE SUCH ARBITRARINESS IN THE ACTIONS OF THE ASSESSING OFFICER. IT IS THE DUTY OF THE ASSESSING OFFICER TO ADEQUATELY PROTECT THE INTEREST OF BOTH THE PARTIES , NAMELY, THE ASSESSEE AS WELL AS THE STATE. IF HE FA ILS TO DISCHARGE HIS DUTIES FAIRLY, HIS ARBITRARY ACTIONS CULMINATING IN ERRONEOUS ORDERS CAN ALWAYS BE CORRECTED EITHER AT THE INSTANCE OF THE ASSESSEE, I F THE ASSESSEE IS PREJUDICED OR AT THE INSTANCE OF THE COMMISSIONER, IF THE REVENUE IS PREJUDICED. WHILE MAKING AN ASSESSMENT, THE ITO HAS A VARIED ROLE TO PLAY. HE IS THE INVESTIGATOR, PROSECUTOR AS WELL AS ADJUDICATOR. AS AN ADJUDICATOR HE IS AN ARBITRATOR BETWEEN THE REVENUE AND THE TAXPAYER AND HE HAS TO BE FAIR TO BOTH. HIS DUTY TO ACT FAIRLY REQUIRES TH AT WHEN HE ENQUIRES INTO A SUBSTANTIAL MATTER LIKE THE PRES ENT ONE, HE MUST RECORD A FINDING ON THE RELEVANT ISSUE GIVING, HOWSOEVER BRIEFLY, HIS REASONS THEREFOR. IN S.N. MUKHERJEE V. UNION OF INDIA AIR 1990 SC 1984, IT HA S BEEN OBSERVED BY THE HON'BLE SUPREME COURT AS FOLLOWS: REASONS, WHEN RECORDED BY AN ADMINISTRATIVE AUTHORITY IN AN ORDER PASSED BY IT WHILE EXERCISING QUASI-JUDICIAL FUNCTIONS, WOULD NO DOUBT FACILITATE THE EXERCISE OF ITS JURISDICTION BY THE APPELLATE OR SUPERVISORY AUTHORITY. BUT THE OTHER CONSIDERATIONS , REFERRED TO ABOVE, WHICH HAVE ALSO WEIGHED WITH THI S COURT IN HOLDING THAT AN ADMINISTRATIVE AUTHORITY M UST RECORD REASONS FOR ITS DECISION ARE OF NO LESS SIGNIFICANCE. THESE CONSIDERATIONS SHOW THAT THE RECORDING OF REASONS BY AN ADMINISTRATIVE AUTHORITY ITA NO. 813/HYD/2012 M/S. VISHNU CHEMICALS LTD. ===================== 8 SERVES A SALUTARY PURPOSE, NAMELY, IT EXCLUDES CHAN CES OR ARBITRARINESS AND ENSURES A DEGREE OF FAIRNESS I N THE PROCESS OF DECISION-MAKING. THE SAID PURPOSE WOULD APPLY EQUALLY TO ALL DECISIONS AND ITS APPLICATION CANNOT BE CONFINED TO DECISIONS WHICH ARE SUBJECT TO APPEA L, REVISION OR JUDICIAL REVIEW. IN OUR OPINION, THEREF ORE, THE REQUIREMENT THAT REASONS BE RECORDED SHOULD GOVERN THE DECISIONS OF AN ADMINISTRATIVE AUTHORITY EXERCISING QUASI-JUDICIAL FUNCTIONS IRRESPECTIVE OF THE FACT M AY, HOWEVER, BE ADDED THAT IT IS NOT REQUIRED THAT THE REASONS SHOULD BE AS ELABORATE AS IN THE DECISION O F A COURT OF LAW. THE EXTENT AND NATURE OF THE REASONS WOULD DEPEND ON PARTICULAR FACTS AND CIRCUMSTANCES. WHAT IS NECESSARY IS THAT THE REASONS ARE CLEAR AND EXPLICIT SO AS TO INDICATE THAT THE AUTHORITY HAS G IVEN DUE CONSIDERATION TO THE POINTS IN CONTROVERSY. THE NEED FOR RECORDING OF REASONS IS GREATER IN A CASE WHERE THE ORDER IS PASSED AT THE ORIGINAL STAGE. THE APPELLAT E OR REVISIONAL AUTHORITY, IF IT AFFIRMS SUCH AN ORDER, NEED NOT GIVE SEPARATE REASONS IF THE APPELLATE OR REVISIONA L AUTHORITY AGREES WITH THE REASONS CONTAINED IN THE ORDER UNDER CHALLENGE. 12. SIMILAR VIEW WAS EARLIER TAKEN BY THE HON'BLE SUPRE ME COURT IN SIEMENS ENGG. & MFG. CO. LTD. V. UNION OF INDIA AIR 1976 SC 1785. IT IS SETTLED LAW THAT WHILE MAKING ASSESS MENT ON ASSESSEE, THE ITO ACTS IN A QUASI-JUDICIAL CAPACITY . AN ASSESSMENT ORDER IS AMENABLE TO APPEAL BY THE ASSESSEE AND TO REVISION BY THE COMMISSIONER UNDER SECTIONS 263 AND 264. THEREFORE, A REASONED ORDER ON A SUBSTANTIAL ISSUE IS LEGALLY NECESSARY. THE JUDGMENTS ON WHICH RELIANCE WAS PLACED BY THE LEARNED COUNSEL FOR THE ASSESSEE ALSO POINTS TO THE SAME DIRECTION. THEY HA VE HELD THAT ORDERS, WHICH ARE SUBVERSIVE OF THE ADMINISTRATION OF REVENUE, MUST BE REGARDED AS ERRONEOUS AND PREJUDICIAL TO TH E INTERESTS OF THE REVENUE. IF THE ASSESSING OFFICERS ARE ALLOWED TO MAKE ASSESSMENTS IN AN ARBITRARY MANNER, AS HAS BEEN DON E IN THE CASE BEFORE US, THE ADMINISTRATION OF REVENUE IS BOUND T O SUFFER. IF WITHOUT DISCUSSING THE NATURE OF THE TRANSACTION AN D MATERIALS ON RECORD, THE ASSESSING OFFICER HAD MADE CERTAIN ADDI TION TO THE INCOME OF THE ASSESSEE, THE SAME WOULD HAVE BEEN CO NSIDERED ITA NO. 813/HYD/2012 M/S. VISHNU CHEMICALS LTD. ===================== 9 ERRONEOUS BY ANY APPELLATE AUTHORITY AS BEING VIOLA TIVE OF THE PRINCIPLES OF NATURAL JUSTICE WHICH REQUIRE THAT TH E AUTHORITY MUST INDICATE THE REASONS FOR AN ADVERSE ORDER. WE FIND NO REASON WHY THE SAME VIEW SHOULD NOT BE TAKEN WHEN AN ORDER IS AGAINST THE INTERESTS OF THE REVENUE. AS A MATTER OF FACT SUCH ORDERS ARE PREJUDICIAL TO THE INTERESTS OF BOTH THE PARTIES, B ECAUSE EVEN THE ASSESSEE IS DEPRIVED OF THE BENEFIT OF A POSITIVE F INDING IN HIS FAVOUR, THOUGH HE MAY HAVE SUFFICIENTLY ESTABLISHED HIS CASE. 13. IN VIEW OF THE FOREGOING, IT CAN SAFELY BE SAID THA T AN ORDER PASSED BY THE ASSESSING OFFICER BECOMES ERRONEOUS A ND PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNDER SECTION 263 I N THE FOLLOWING CASES: (I) THE ORDER SOUGHT TO BE REVISED CONTAINS ERROR OF REASONING OR OF LAW OR OF FACT ON THE FACE OF IT. (II) THE ORDER SOUGHT TO BE REVISED PROCEEDS ON INCORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. (III) THE ORDER PASSED BY THE ASSESSING OFFICER IS A STEREOTYPE ORDER WHICH SIMPLY ACCEPTS WHAT THE ASSESSEE HAS STATED IN HIS RETURN OR WHERE HE FAILS TO MAKE THE REQUISITE ENQUIRIES OR EXAMINE THE GENUINENESS OF THE CLAIM WHICH IS CALLED FOR IN THE CIRCUMSTANCES OF THE CASE. 14. WE SHALL NOW TURN TO THE FACTS OF THE CASE TO SEE W HETHER THE CASE BEFORE US IS COVERED BY THE AFORESAID PRINCIPL ES. PERUSAL OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER DO ES NOT SHOW ANY APPLICATION OF MIND ON HIS PART. HE SIMPLY ACCE PTED THE INCOME DECLARED BY THE ASSESSEE. THIS IS A CASE WH ERE THE ASSESSING OFFICER MECHANICALLY ACCEPTED WHAT THE AS SESSEE WANTED HIM TO ACCEPT WITHOUT ANY APPLICATION OF MIND OR EN QUIRY. THE EVIDENCE AVAILABLE ON RECORD IS NOT ENOUGH TO HOLD THAT THE RETURN OF THE ASSESSEE WAS OBJECTIVELY EXAMINED OR CONSIDE RED BY THE ASSESSING OFFICER. IT IS BECAUSE OF SUCH NON-CONSI DERATION OF THE ITA NO. 813/HYD/2012 M/S. VISHNU CHEMICALS LTD. ===================== 10 ISSUES ON THE PART OF THE ASSESSING OFFICER THAT TH E RETURN FILED BY THE ASSESSEE STOOD AUTOMATICALLY ACCEPTED WITHOUT A NY PROPER SCRUTINY. THE ASSESSMENT ORDER PLACED BEFORE US IS CLEARLY ERRONEOUS AS IT WAS PASSED WITHOUT PROPER EXAMINATI ON OR ENQUIRY OR VERIFICATION OR OBJECTIVE CONSIDERATION OF THE C LAIM MADE BY THE ASSESSEE. THE ASSESSING OFFICER HAS COMPLETELY OMIT TED TO EXAMINE THE ISSUES IN QUESTION FROM CONSIDERATION AND MADE THE ASSESSMENT IN AN ARBITRARY MANNER. HIS ORDER IS A C OMPLETELY NON- SPEAKING ORDER. IN OUR VIEW, IT WAS A FIT CASE FOR THE LEARNED COMMISSIONER TO EXERCISE HIS REVISIONAL JURISDICTIO N UNDER SECTION 263 WHICH HE RIGHTLY EXERCISED BY CANCELLING THE AS SESSMENT ORDER AND DIRECTING THE ASSESSING OFFICER TO PASS A FRESH ORDER CONSIDERING THE ISSUES RAISED BY THE CIT. IN OUR VI EW, THE ASSESSEE SHOULD HAVE NO GRIEVANCE IN THE ACTION OF LEARNED C OMMISSIONER IN EXERCISING THE JURISDICTION U/S. 263 OF THE IT ACT. 15. IT WAS HOWEVER CONTENDED BY THE LEARNED COUNSEL THA T THE ASSESSING OFFICER HAD TAKEN A POSSIBLE VIEW IN ACCE PTING THE RETURN OF THE ASSESSEE WITH REFERENCE TO EXPENDITURE AND HENCE, THE COMMISSIONER WAS NOT JUSTIFIED IN ASSUMING THE REVI SIONAL JURISDICTION UNDER SECTION 263. WE HAVE GIVEN OUR T HOUGHTFUL CONSIDERATION TO THE AFORESAID SUBMISSIONS. AS ALRE ADY STATED EARLIER, AN ORDER BECOMES ERRONEOUS BECAUSE INQUIRI ES, WHICH OUGHT TO HAVE BEEN MADE ON THE FACTS OF THE CASE, W ERE NOT MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WITH THE OR DER IF ALL THE FACTS STATED OR THE CLAIMS MADE IN THE RETURN ARE A SSUMED TO BE CORRECT. THUS, IT IS MERE FAILURE ON THE PART OF TH E ASSESSING OFFICER TO MAKE THE NECESSARY INQUIRIES OR TO EXAMINE THE C LAIM MADE BY THE ASSESSEE IN ACCORDANCE WITH LAW, WHICH RENDERS THE RESULTANT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. NOTHING MORE IS REQUIRED TO BE ESTABLISHED IN SUCH A CASE. ONE WOULD NOT KNOW AS TO WHAT WOULD HAVE HAPPENED IF TH E ASSESSING OFFICER HAD MADE THE REQUISITE INQUIRIES OR EXAMINE D THE CLAIM OF ITA NO. 813/HYD/2012 M/S. VISHNU CHEMICALS LTD. ===================== 11 THE ASSESSEE IN ACCORDANCE WITH LAW. HE COULD HAVE ACCEPTED THE ASSESSEE'S CLAIM. EQUALLY, HE COULD HAVE ALSO REJEC TED THE ASSESSEE'S CLAIM DEPENDING UPON THE RESULTS OF HIS ENQUIRY OR EXAMINATION INTO THE CLAIM OF THE ASSESSEE. THUS, T HE FORMATION OF ANY VIEW BY THE ASSESSING OFFICER WOULD NECESSARILY DEPEND UPON THE RESULTS OF HIS INQUIRY AND CONSCIOUS, AND NOT P ASSIVE, EXAMINATION INTO THE CLAIM OF THE ASSESSEE. IF THE ASSESSING OFFICER PASSES AN ORDER MECHANICALLY WITHOUT MAKING THE REQ UISITE INQUIRIES OR EXAMINING THE CLAIM OF THE ASSESSEE IN ACCORDANCE WITH LAW, SUCH AN ORDER WILL CLEARLY BE ERRONEOUS I N LAW AS IT WOULD NOT BE BASED ON OBJECTIVE CONSIDERATION OF THE RELE VANT MATERIALS. IT IS THEREFORE, THE MERE FAILURE ON THE PART OF TH E ASSESSING OFFICER IN NOT MAKING THE INQUIRIES OR NOT EXAMINING THE CL AIM OF THE ASSESSEE IN ACCORDANCE WITH LAW THAT PER SE RENDERS THE RESULTANT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. NOTHING ELSE IS REQUIRED TO BE ESTABLISHED IN SUCH A CASE TO SHOW THAT THE ORDER SOUGHT TO BE REVISED IS ERRONEOUS AN D PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 16. WE ARE UNABLE TO ACCEPT THE SUBMISSION OF THE LEARN ED COUNSEL FOR TWO OTHER REASONS ALSO. FIRST REASON IS THAT THE VIEW SO TAKEN BY THE ASSESSING OFFICER WITHOUT MAKING THE R EQUISITE INQUIRIES OR EXAMINING THE CLAIM OF THE ASSESSEE WI LL PER SE BE AN ERRONEOUS VIEW AND HENCE WILL BE AMENABLE TO REVISI ONAL JURISDICTION UNDER SECTION 263. SECOND REASON IS TH AT IT IS NOT TAKING OF ANY VIEW THAT WILL TAKE THE MATTER UNDER THE SCOPE OF SECTION 263. THE VIEW TAKEN BY THE ASSESSING OFFICE R SHOULD NOT BE A MERE VIEW IN VACUUM BUT A JUDICIAL VIEW. IT IS WE LL ESTABLISHED THAT THE ASSESSING OFFICER BEING A QUASI-JUDICIAL A UTHORITY CANNOT TAKE A VIEW, EITHER AGAINST OR IN FAVOUR OF THE ASS ESSEE / REVENUE, WITHOUT MAKING PROPER INQUIRIES AND WITHOUT PROPER EXAMINATION OF THE CLAIM MADE BY THE ASSESSEE IN THE LIGHT OF T HE APPLICABLE LAW. AS ALREADY STATED EARLIER, WE ARE NOT ABLE T O APPRECIATE ON ITA NO. 813/HYD/2012 M/S. VISHNU CHEMICALS LTD. ===================== 12 WHAT MATERIAL WAS PLACED BEFORE THE ASSESSING OFFIC ER AT THE ASSESSMENT STAGE TO TAKE SUCH A VIEW. THE ASSESSEE HAS ALSO NOT BEEN ABLE TO LEAD ENOUGH EVIDENCE TO SHOW TO US THA T ANY INQUIRY WAS MADE BY THE ASSESSING OFFICER IN THIS REGARD. T HEREFORE MERE ALLEGATION THAT THE ASSESSING OFFICER HAS TAKEN A V IEW IN THE MATTER WILL NOT PUT THE MATTER BEYOND THE PURVIEW OF SECTI ON 263 UNLESS THE VIEW SO TAKEN BY THE ASSESSING OFFICER IS A JUD ICIAL VIEW CONSCIOUSLY BASED UPON PROPER INQUIRIES AND APPRECI ATION OF ALL THE RELEVANT FACTUAL AND LEGAL ASPECTS OF THE CASE. THE JUDICIAL VIEW TAKEN BY THE ASSESSING OFFICER MAY PERHAPS PLACE TH E MATTER OUTSIDE THE PURVIEW OF SECTION 263 UNLESS IT IS SHO WN THAT THE VIEW SO TAKEN BY THE ASSESSING OFFICER CONTAINS SOME APP ARENT ERROR OF REASONING OR OF LAW OR OF FACT ON THE FACE OF IT. 17. BEING SO, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT GIVING DIRECTION TO THE ASSESSING OFFICER T O CAUSE FURTHER ENQUIRY AND DECIDE THEREUPON. THE ORDER OF THE CIT IS SUSTAINED AND THE APPEAL OF THE ASSESSEE IS DISM ISSED. 18. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND FEBRUARY, 2013. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 22 ND FEBRUARY, 2013 TPRAO COPY FORWARDED TO: 1. M/S. VISHNU CHEMICALS LTD., C/O. M/S. A.V. RAGHURAM & K. VASANTKUMAR, ADVOCATES, 610, 6 TH FLOOR, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD-4. 2. THE ACIT, CENTRAL CIRCLE - 3, HYDERABAD. 3. THE CIT (CENTRAL) , HYDERABAD. 4. THE ADDL. CIT, CENTRAL RANGE - 2 , HYDERABAD. 5. THE DR B BENCH, ITAT, HYDERABAD.