Galileo India Pvt. Ltd., Gurgaon v. CIT- IV, New Delhi

ITA 5655/DEL/2011 | 2006-2007
Pronouncement Date: 29-02-2012 | Result: Allowed

Appeal Details

RSA Number 565520114 RSA 2011
Assessee PAN AAACG3351K
Bench Delhi
Appeal Number ITA 5655/DEL/2011
Duration Of Justice 2 month(s) 13 day(s)
Appellant Galileo India Pvt. Ltd., Gurgaon
Respondent CIT- IV, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 29-02-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 29-02-2012
Date Of Final Hearing 16-02-2012
Next Hearing Date 16-02-2012
Assessment Year 2006-2007
Appeal Filed On 16-12-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI C BENC H BEFORE SHRI R.P. TOLANI JM & SHRI A.N. PAHUJA AM ITA NO.5655/D/2011 ASSESSMENT YEAR: 2006-07 M/S GALILEO INDIA (P) LTD. BLOCK 2B DLF CORPORATE PARK DLF CITY PHASE-II NEW DELHI V/S . COMMISSIONER OF INCOME- TA DELHI-IV ROOM NO.397 C.R. BUILDING I.P. ESTATE NEW DELHI [PAN:AAACG 3351 K] (APPELLANT) (RESPONDENT) ASSESSEE BY S/SHRI TAPAS RAM MISHRA & K.K. SAMANTORAY ARS REVENUE BY SHRI R.I.S. GILL DR DATE OF HEARING 17-02-2012 DATE OF PRONOUNCEMENT 29-02-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 16 TH DECEMBER 2011 BY THE ASSESSEE AGAINST AN ORDER DATED 03.11.2011 OF THE LD. CIT DELHI-IV RAISES THE FOLLOWING GROUNDS:- 1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT HAS ERRED IN ASSUMING THE JURISDICT ION U/S 263 INCOME-TAX ACT 1961 1961 (ACT) WITHOUT APPRE CIATING THE FACT THAT THE ORDER PASSED BY LEARNED ASSESSING OFFICER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERES T OF THE REVENUE. 2 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT HAS ERRED IN REFERRING THE CASE BAC K TO ASSESSING OFFICER FOR FRESH EXAMINATION OF DISALLOW ANCE U/S 14A OF THE ACT WITHOUT APPRECIATING THE FACT THAT S AME HAS ALREADY BEEN EXAMINED BY ASSESSING OFFICER DURING T HE COURSE OF ASSESSMENT PROCEEDINGS. 2.1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT HAS ERRED IN OBSERVING THAT THE ASS ESSING OFFICER FAILED TO MAKE ANY INQUIRY TO ASCERTAIN THE GENUINENESS OF THE DISALLOWANCE U/S 14A OF THE ACT AS OFFERED BY THE APPELLANT DESPITE THE RECORDS CLEAR LY I.T.A.NNO.5655/DEL./2011 2 INDICATING SPECIFIC QUERIES BEING RAISED BY THE ASS ESSING OFFICER AND THE SAME BEING RAISED BY THE ASSESSING OFFICER AND THE SAME BEING ANSWERED BY THE APPELLANT. 2.2 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT HAS ERRED IN EXERCISING JURISDICTIO N U/S 263 OF THE ACT IN RESPECT OF DISALLOWANCE U/S 14A OF THE A CT WITHOUT APPRECIATING THAT THERE WAS CLEAVAGE OF JUDICIAL OP INION ON AFORESAID ISSUE THEREFORE COULD AT BEST BE SAID T O BE DEBATABLE OUSTING JURISDICTION U/S 263. 3 WITHOUT PREJUDICE THE CIT ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT EVEN IF THE ASSESSMENT ORDER COUL D BE SAID TO BE ERRONEOUS IN RELATION TO AFORESAID DISALLOWA NCE U/S 14A THERE WAS NO PREJUDICE CAUSED TO THE REVENUE IN VIEW OF APPELLANTS INCOME BEING EXEMPT U/S 10A OF THE A CT. THE APPELLANT CRAVES LEAVE TO ADD AMEND OR VARY FR OM THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HE ARING. 2. FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THA T ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) OF THE INCOME-TAX ACT 1961[HEREINAFTER REFERRED TO AS THE ACT] VIDE ORDER DATED 17.11.2009 ACCEPT ING THE RETURNED INCOME OF ` `4 18 62 106/- IN TERMS OF RETURN FILED ON 18.10.20 06 BY THE ASSESSEE A COMPANY PROVIDING CONNECTIVITY TO TRAVEL AGENTS IN INDIA THROUGH THE CENTRAL RESERVATION SYSTEMS (CRS) PROVIDED BY GALILEO INTER NATIONAL NETHERLANDS BV FROM THEIR DATA CENTRE IN COLARADO NEW JERSEY USA . DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER (A.O. IN SHORT) INTER ALIA RAISED A QUERY RELATING TO DIVIDEND INCOME AND EXPENSES I NCURRED IN EARNING THE SAID INCOME. IN RESPONSE THE ASSESSEE REPLIED VIDE LETT ER DATED 27.03.2009/17 TH JULY 2009 THAT THEY HAD SUBMITTED THE DETAILS IN T HEIR LETTER 5.8.2008 AND THAT AN AMOUNT OF ` 94 47 712/- HAD BEEN OFFERED FOR DISALLOWANCE U/S 1 4A OF THE ACT. ACCORDINGLY NO FURTHER DISALLOWANCE WAS MADE IN T HE ASSESSMENT ORDER. THEREAFTER THE LEARNED CIT CALLED FOR THE ASSESSME NT RECORDS AND NOTED AS UNDER:- I) THE ASSESSEE/DEPARTMENT HAD COMPUTED THE EXPORT TURNOVER AT ` `135 77 42 730/- WITHOUT DEDUCTING THE TELECOMMUNIC ATION EXPENSES OF ` ` 501 99 000/- AND INSURANCE EXPENSES OF ` `4 06 000/- AND CONSEQUENTLY HAD ALLOWED DEDUCTION OF ` `83 65 14 094/- U/S I.T.A.NNO.5655/DEL./2011 3 10B INSTEAD OF CORRECT AMOUNT OF ` ` 80 53 36 025/-. THE MISTAKE RESULTED IN EXCESS DEDUCTION OF ` `311 78 068/- U/S 10B INVOLVING SHORT LEVY OF TAX OF ` ` 151 12 134/-. II) NO PROPORTIONATE EXPENSES WERE DISALLOWED AS PE R SECTION 14A READ WITH RULE 8D. THE OMISSION RESULTED IN UNDER ASSESSMENT OF INCOME BY ` `99 39 492/- AND SHORT LEVY OF TAX BY ` `4 81 711/-. 2.1 ACCORDINGLY A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE ON 4 TH FEBRUARY 2011. IN RESPONSE THE ASSESSEE FILED D ETAILED SUBMISSIONS RELYING INTER ALIA ON THE DECISION OF HONBLE SUPREME COUR T IN MALABAR INDUSTRIAL CO. LTD. VS. CIT (243 ITR 83) (SC) AND CIT VS. MAX INDIA LTD . (2007) 295 ITR 282 (SC) HOWEVER THE LD. CIT DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND DIRECTED THE AO TO CAUSE FURTHER INQUIRIES TO ARRIV E AT CORRECT DISALLOWANCE U/S 14A OF THE ACT READ WITH RULE 8D OF THE I.T. RULES 1962BY TAKING DUE COGNIZANCE THE MATERIAL FACTS AVAILABLE ON RECORD IN THE FOLL OWING TERMS:- 3. I HAVE CONSIDERED THE ABOVE SUBMISSIONS OF THE AR OF THE ASSESSEE COMPANY. IT IS OBSERVED THAT THE ASSESSIN G OFFICER IN HIS ORDER U/S 143(3) OF THE INCOME-TAX ACT 1961 HAS A LLOWED DEDUCTION U/S 10B OF ` 83 65 14 094/- BY ACCEPTING THE CLAIM OF EXPORT TURNOVER OF ` `135 77 42 730/- DECLARED BY THE ASSESSEE COMPANY. THE TOTAL TURNOVER HAS ALSO BEEN ACCEPTED AS DECLARED BY THE ASSESSEE AT THE SAME FIGURE. IT HAS BEEN NO TED THAT THE ASSESSEE COMPANY HAS INCURRED TELECOM EXPENSES OF ` 5 01 99 000/- WHICH INCLUDE SUCH EXPENSES INCURRED IN FOREIGN EXCHANGE TO THE TUNE OF ` `1928.67. THERE HAS BEEN NO INCIDENCE OF INSURANCE EXPENSES PAID IN FOREIGN EXCHANGE ATTR IBUTABLE TO THE DELIVERY OF ARTICLES OR THINGS OR COMPUTER SOFTWARE OUTSIDE INDIA. AS PER THE DEFINITION OF EXPORT TURNOVER AS PROVIDED I N CLAUSE (IV) OF EXPLANATION 2 TO SECTION 10A EXPORT TURNOVER MEA NS THE CONSIDERATION IN RESPECT OF EXPORT BY THE UNDERTAKI NG OF ARTICLES OR THINGS OR COMPUTER SOFTWARE RECEIVED IN OR BROUGHT INTO INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE IN ACCORDA NCE WITH SUB- SECTION (III) BUT DOES NOT INCLUDE FREIGHT TELECOM MUNICATION CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY OF THE AR TICLES OR THINGS OR COMPUTER SOFTWARE OUTSIDE INDIA OR EXPENSES IF ANY INCURRED IN FOREIGN EXCHANGE IN PROVIDING THE TECHNICAL SERVICE S OUTSIDE INDIA. 4. FROM THE ABOVE DEFINITION OF EXPORT TURNOVER IT IS EVIDENT THAT SUCH VALUE DOES NOT INCLUDE THE COMPONENT OF FREIGH T TELECOM CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY O F ARTICLES OR THINGS OR COMPUTER SOFTWARE OUTSIDE INDIA. IN THE CASE OF THE ASSESSEE I.T.A.NNO.5655/DEL./2011 4 COMPANY THE ONLY COMPONENT OF SUCH TELECOMMUNICATI ON CHARGES IS BY WAY OF INTERNET ACCESS CHARGES WHICH AGGREGAT E TO ` ` 1928.67. SIMILARLY AS FAR AS INSURANCE EXPENSES ARE CONCERN ED THE SAME PERTAIN TO GENERAL INSURANCE FOR VARIOUS ACTIVITIES OF THE ASSESSEE COMPANY IN INDIA INCLUDING SUCH INSURANCE PAYMENT F OR RUNNING OF MOTOR CARS. EVEN IF SUCH EXPENSES ARE DEDUCTED FRO M EXPORT TURNOVER THERE IS NO CHANGE AS FAR AS DEDUCTION U/S 10B IS CONCERNED BECAUSE THE TOTAL TURNOVER IS REQUIRED TO BE REDUCED BY THE SAME AMOUNT. AS A RESULT I DO NOT FIND ANY RE ASON TO CAUSE ANY INTERFERENCE IN RESPECT OF THE ALLOWANCE MADE U /S 10B OF I.T. ACT IN THE ORIGINAL ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF INCOME-TAX ACT 1961. 5. AS REGARDS THE EXEMPT INCOME BY WAY OF DIVIDEND OF ` `24 12 482/- FROM MUTUAL FUNDS NO DISALLOWANCE WAS MADE U/S 14A READ WITH RULE 8D OF I.T. RULES 1962. IN THIS RESPECT THE AR OF THE ASSESSEE COMPANY HAS SUBMITTED BEFORE ME THA T COMPANY HAS AVAILED AN OVER DRAFT OF ` `38 CRORES FROM SBI @7.30% (INTEREST PAID ` `67 41 502/-). THIS AMOUNT WAS INVESTED IN FDRS WI TH UBI @5.35%. THEN COMPANY AVAILED A TERM LOAN OF ` `35 CRORES FROM UBI @5.85% (INTEREST PAID ` `94 47 712/-). THE PROCEEDS OF THE TERM LOANS WERE INVESTED IN SHARE CAPITAL OF ONE OF THE GROUP COMPANY. IN THE COMPUTATION OF INCOME WE HAVE NET TED OFF THE INTEREST PAYABLE TO SBI I.E. ` `67 41 502/- FROM INTEREST EARNED OF ` ` 3 19 55 223/- (WHICH INCLUDES INTEREST EARNED ON FD RS FROM UBI) AS THERE IS A DIRECT NEXUS BETWEEN THEM AND ` `94 47 712/- BEING INTEREST PAID ON TERM LOAN FROM UBI BANK HAS BEEN D ISALLOWED U/S 14A OF INCOME-TAX ACT 1961. FROM THIS EXPLANATI ON IT IS NOT CLEAR AS TO HOW THE ASSESSEE COMPANY HAS OFFERED ONLY ` `94 47 712/- AS DISALLOWANCE U/S 14A OF I.T. ACT BECAUSE THE RELEVA NT INTEREST PAYMENT ON ACCOUNT OF BORROWED FUND NAMELY TERM L OAN FROM UBI DOES NOT FULLY COVER THE INVESTMENT BY MEANS OF WHI CH EXEMPT INCOME HAS BEEN EARNED. 6. IT APPEARS THAT THE ASSESSING OFFICER HAS NOT CA USED ANY INQUIRY IN THIS RESPECT TO ASCERTAIN THE GENUINENES S OF DISALLOWANCE U/S 14A OF I.T. ACT OFFERED BY THE ASSESSEE COMPANY . NO FINDING HAS ALSO BEEN RECORDED TO ACCEPT THE SAME ON THE BA SIS OF ANY PLAUSIBLE REASON. UNDER THESE FACTS AND CIRCUMSTAN CES I AM UNABLE TO ACCEPT THE EXPLANATION OF THE LEARNED AR OF THE ASSESSEE REGARDING SUCH DISALLOWANCE VOLUNTARILY MADE BY THE ASSESSEE. AS A RESULT THE ASSESSMENT ORDER PASSED BY THE ASSESS ING OFFICER U/S 143(3) OF INCOME-TAX ACT IS SET ASIDE ON THIS POIN T BY INVOKING PROVISION OF SECTION 263 OF I.T. ACT WITH A DIRECTI ON TO THE ASSESSING OFFICER TO CAUSE FURTHER ENQUIRIES TO ARRIVE AT THE CORRECT DISALLOWANCE U/S 14A OF I.T. ACT READ WITH RULE 8D OF I.T. RULE I.T.A.NNO.5655/DEL./2011 5 1962 BY TAKING DUE COGNIZANCE OF THE MATERIAL FACTS AVAILABLE ON RECORD AND AFTER PROVIDING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE TO MEET THE ENDS OF JUSTICE. 3. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINS T THE AFORESAID FINDINGS OF THE LD. CIT. AT THE OUTSET THE LD. AR ON BEHALF OF THE ASSESSEE POINTED OUT THAT IN A SIMILAR SITUATION THE ITAT VIDE THEI R ORDER DATED 16 TH DECEMBER 2010 IN THEIR OWN CASE FOR ASSESSMENT YEAR 2005-06 IN ITA NO. 2331/DEL./2010 CANCELLED THE ORDER OF CIT U/S 263 OF THE ACT. ON T HE OTHER HAND LEARNED DR SUPPORTED THE FINDINGS OF THE LD. CIT. 4. WE HAVE HEARD BOTH THE PARTIES AND GONE THR OUGH THE FACTS OF THE CASE. INDISPUTABLY BUSINESS INCOME OF THE ASSESSE E IS EXEMPT U/S 10A OF THE ACT .THE AO DURING THE COURSE OF ASSESSMENT PROCEED INGS RAISED A SPECIFIC QUERY RELATING TO DETAILS OF DIVIDEND INCOME OF ` `24 12 482/-AND EXPENSES ATTRIBUTABLE FOR EARNING THIS INCOME. IN RESPONSE THE ASSESSEE VIDE LETTER DATED 17 TH JULY 2009 FURNISHED THE RELEVANT DETAILS POINTIN G OUT INTER ALIA THAT THE EXPENSES ATTRIBUTABLE TO EARNING THIS INCOME AMOUNT ING TO ` ` 94 47 712/- WERE SUO MOTO OFFERED FOR DISALLOWANCE IN THE COMPUTATIO N OF INCOME FILED BY THE ASSESSEE. ACCORDINGLY THE ASSESSMENT WAS COMPLETED WITHOUT ANY FURTHER DISALLOWANCE U/S 14A OF THE ACT. THE LD. CI T INVOKED THE PROVISIONS OF SEC. 263 OF THE ACT ON TWO ISSUES VI Z. DEDUCTION U/S 10B OF THE ACT AND DISALLOWANCE IN TERMS OF PROVIS IONS OF SEC. 14A OF THE ACT READ WITH RULE 8D OF THE IT RULES 1962. THOUGH THE LD. CIT ACCEPTED THE SUBMISSIONS OF THE ASSESSEE IN RELATIO N TO DEDUCTION U/S 10B OF THE ACT THE ASSESSMENT ORDER DATED 17. 11.2009 WAS FOUND TO BE ERRONEOUS IN SO FAR AS PREJUDICIAL TO T HE INTEREST OF REVENUE IN RELATION TO DISALLOWANCE U/S 14A OF THE ACT. ACCORDINGLY THE MATTER HAS BEEN SET ASIDE TO THE AO. SINCE THE ISSUE RELATES TO ASSUMPTION OF JURISDICTION BY THE CIT U/S 263 OF TH E ACT WE MAY AT THE OUTSET HAVE A LOOK AT THE RELEVANT PROVISIONS WHICH READ AS UNDER:- I.T.A.NNO.5655/DEL./2011 6 263. (1) THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE HE MAY AFTER GIVIN G THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUS ING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY PASS SUCH ORDER THER EON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY INCLUDING AN ORD ER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELLING THE ASSESSM ENT AND DIRECTING A FRESH ASSESSMENT. EXPLANATION.- FOR THE REMOVAL OF DOUBTS IT IS HERE BY DECLARED THAT FOR THE PURPOSES OF THIS SUB-SECTION - (A) AN ORDER PASSED ON OR BEFORE OR AFTER THE 1 ST DAY OF JUNE 1988 BY THE ASSESSING OFFICER SHALL INCLUDE - (I) AN ORDER OF A SSESSMENT MADE BY THE ASSISTANT COMMISSIONER OR DEPUTY COMMISSIONER OR TH E INCOME-TAX OFFICER ON THE BASIS OF THE DIRECTIONS ISSUED BY TH E JOINT COMMISSIONER UNDER SECTION 144A; (II) AN ORDER MADE BY THE JOINT COMMISSIONER IN EXERCISE OF THE POWERS OR IN THE PERFORMANCE 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 COMM ISSIONER OR DIRECTOR GENERAL OR COMMISSIONER AUTHORIZED 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 A VAILABLE AT THE TIME OF EXAMINATION BY THE COMMISSIONER; (C) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER OF AN Y APPEAL FILED ON OR BEFORE OR AFTER THE 1 ST DAY OF JUNE 1988 THE POWERS OF THE COMMISSIONER UNDER THIS SUB-SECTION SHALL EXTEND AND SHALL BE DE EMED 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) A FTER THE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH T HE ORDER SOUGHT TO BE REVISED WAS PASSED. .. 4.1. THE LD. AR ON BEHALF OF THE ASSESSEE POINT ED OUT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO HAD ENQUIRED IN T O THE ISSUE OF DISALLOWANCE U/S 14A OF THE ACT AND AFTER CONSIDERING THEIR DET AILED SUBMISSIONS DATED 17.07.2009 DID NOT MAKE ANY FURTHER DISALLOWANCE. S INCE THE AO HAD AFTER PROPER I.T.A.NNO.5655/DEL./2011 7 ENQUIRIES ACCEPTED THEIR CLAIM PROVISIONS OF SEC. 263 OF THE ACT COULD NOT BE INVOKED THE LD. AR ARGUED. AS IS APPARENT FROM THE AFORESAID PROVISIONS OF SEC. 263 OF THE ACT THE POWER OF SUO MOTO REVISION EXERCISABLE BY THE CIT IS UNDOUBTEDLY SUPERVISORY IN NATURE. THE OPENING WORD S OF SECTION 263 EMPOWER THE CIT TO CALL FOR AND EXAMINE THE RECORD OF ANY P ROCEEDINGS UNDER THE ACT. A BARE READING OF SECTION 263 ALSO MAKES IT CLEAR THA T THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS NAMELY (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDIC IAL TO THE INTEREST OF THE REVENUE. IF ONE OF THEM IS ABSENT I.E. IF THE ORDER OF THE AO I S ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IT IS PREJUDICIAL TO THE REVENUE RECOURSE CANNOT BE HAD TO PROVISIONS OF THE 263(1) OF THE ACT AS HELD IN MALABAR INDUSTRIAL CO. LTD. VS. CIT 243 ITR 83 (SC). 4.2. AS REGARDS THE SCOPE AND AMBIT OF TH E EXPRESSION ERRONEOUS HONBLE BOMBAY HIGH COURT IN CIT VS. GABRIEL INDIA LTD. (1993) 203 ITR 108 (BOMBAY) WHILE REFERRING TO BLACKS LAW DICTIONARY THAT AN ERRONEOUS JUDGMENT MEANS ONE RENDERED ACCORDING TO COURSE A ND PRACTICE OF COURT BUT CONTRARY TO LAW UPON MISTAKEN VIEW OF LAW; OR UPON ERRONEOUS APPLICATION OF LEGAL PRINCIPLES OBSERVED THAT AN ORDER CANNOT B E TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN AO ACTING I N ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE CIT MERELY BECAUSE ACCORDING TO HIM THE ORDER SHOULD HAVE BEEN WRITTEN DIFFERENTLY OR MORE ELABORATELY. THE PROVISIONS OF SEC. 263 OF THE ACT DO NOT VISUALIZE THE SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FO R THAT OF THE AO UNLESS HIS ORDER IS NOT IN ACCORDANCE WITH LAW. THERE AGAIN E VERY ERRONEOUS ORDER CANNOT BE THE SUBJECT MATTER OF REVISION BECAUSE THE SECON D REQUIREMENT HAS ALSO TO BE FULFILLED. THERE MUST BE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED AS HELD IN GABRIEL I NDIA LTD. (SUPRA). HOWEVER THE EXPRESSION PREJUDICIAL TO THE INTEREST OF THE REVENUE AS HELD BY THE HONBLE SUPREME COURT IN THE MALABAR INDUSTRIAL CO. LTD. 24 3 ITR 83(SC) IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT AND THEREFORE MUST BE UNDERSTOOD I.T.A.NNO.5655/DEL./2011 8 IN ITS ORDINARY MEANING. IT IS OF WIDE IMPORT AND I S NOT CONFINED TO ONLY THE LOSS OF REVENUE. THE WORDS PREJUDICIAL TO THE INTEREST OF THE REVENUE AS OBSERVED IN DAWJEE DADABHOY AND CO. VS. S.P. JAIN 31 ITR 872 ( CALCUTTA ) CAN ONLY MEAN THAT THE ORDERS OF ASSESSMENT CHALLENGED ARE SUCH AS ARE NOT IN ACCORDANCE WITH LAW IN CONSEQUENCE WHEREOF THE LAWFUL REVENUE DUE TO THE STATE HAS NOT BEEN REALIZED OR CANNOT BE REALIZED. THUS THE EX ERCISE OF REVISIONAL JURISDICTION UNDER THE PROVISIONS OF SECTION 263 OF THE ACT IS LIMITED TO CASES WHERE THE COMMISSIONER ON EXAMINING THE RECORDS COMES TO THE CONCLUSION THAT THE EARLIER FINDING OF THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THAT FRESH DETERMINATION OF THE ASSESSMENT WAS NE CESSARY. THERE MUST BE MATERIAL TO JUSTIFY THE COMMISSIONERS FINDING THAT THE ORDER OF THE ASSESSMENT WAS ERRONEOUS INSOFAR AS IT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 4.3. THOUGH THERE IS A FINE THOUGH SUBTLE DIST INCTION BETWEEN LACK OF INQUIRY AND INADEQUATE INQUIRY IT IS ONLY IN CASES OF L ACK OF INQUIRY THAT THE CIT CAN EXERCISE HIS REVISIONAL JURISDICTION. AS HELD IN GA BRIEL INDIA LTD. (SUPRA) THE CIT CANNOT INITIATE PROCEEDINGS WITH A VIEW TO START FI SHING AND ROVING ENQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED. HON BLE BOMBAY HIGH COURT FURTHER OBSERVED IN THEIR SAID DECISION AS UNDER: - FROM THE AFORESAID DEFINITIONS AS IT IS CLEAR THAT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN INCOME-TAX OFFICER ACTING IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BEC AUSE ACCORDING TO HIM THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY . THIS SECTION DOES NOT VISUALIZE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME-TAX OFFICER WHO PASSED THE ORDER UNLESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALIZED WHERE THE INCOME -TAX OFFICER WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS MAKES ENQUIRIE S APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATE H IMSELF. THE COMMISSIONER ON PERUSAL OF THE RECORDS MAY BE OF THE OPINION TH AT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOULD HAVE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN T HE ONE DETERMINED BY THE INCOME-TAX OFFICER. THAT WOULD NOT VEST THE COMMISS IONER WITH POWER TO RE- EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSE LF AT A HIGHER FIGURE. ITIS BECAUSE THE INCOME-TAX OFFICER HAS EXERCISED THE QU ASI-JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT CONCLUSIO N AND SUCH A CONCLUSION I.T.A.NNO.5655/DEL./2011 9 CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUSION. X X X X THERE M UST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFU LLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WA S JUST HAS BEEN IMPOSED. X X X X WE MAY NOW EXAMINE THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE POWERS OF THE COMMISSIONER SET OUT ABOVE. THE INCOME-TAX OFFI CER IN THIS CASE HAD MADE ENQUIRIES IN REGARD TO THE NATURE OF THE EXPENDITUR E INCURRED BY THE ASSESSEE. THE ASSESSEE HAD GIVEN DETAILED EXPLANATION IN THAT REGARD BY A LETTER IN WRITING. ALL THESE ARE PART OF THE RECORD OF THE CASE. EVIDE NTLY THE CLAIM WAS ALLOWED BY THE INCOME-TAX OFFICER ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. SUCH DECISION OF THE INCOME-TAX OFFICER CANNOT BE H ELD TO BE ERRONEOUS SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE D ISCUSSION IN THAT REGARD.. 4.4 WHILE ADJUDICATING A SIMILAR ISSUE HONBLE SUPREME COURT IN THE CASE OF CIT VS MAX INDIA LTD. (SUPRA) RELYING UPON ITS EARL IER DECISION IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. (SUPRA) HELD AS UNDER: THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE RE VENUE IN SECTION 263 OF THE INCOME-TAX ACT 1961 HAS TO BE READ IN CONJUNCTION WITH THE EXPRESSION ERRONEOUS ORDER PASSED BY THE ASSESSIN G OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSI NG OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVE NUE. FOR EXAMPLE WHEN THE ASSESSING OFFICER ADOPTS ONE OF TWO COURSES PERMISS IBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIO NER DOES NOT AGREE IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE REVENUE UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABL E IN LAW. 4.5 SIMILARLY HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS R. K. CONSTRUCTION CO. 313 ITR 65 HELD AS UNDER: AS FAR AS LAW IS CONCERNED THE ASSESSING OFFICER H AS TAKEN A PARTICULAR VIEW ON THE BASIS OF EVIDENCE PRODUCED BEFORE HIM. ON THE BASIS OF THE SAID MATERIAL AND MATERIALS WHICH WERE COLLECTED BY THE CIT IN REVISIONAL PROCEEDINGS THE COMMISSIONER HAS TAKEN A DIFFERENT VIEW. HOWEVER IN THE REVISIONAL PROCEEDINGS UNDER SECTION 263 IT IS NOT OPEN FOR THE COMMISSIONER TO TAKE SUCH A DIFFERENT VIEW IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUST RIAL CO. LTD. THERE IS NOTHING ON RECORD TO SUGGEST THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE AT LAW. THIS COURT HAS ALSO TAKEN THE SAME VIEW IN CASE OF ARVIND JEWELLERS WHEREBY THE ORDER PASSED BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT WAS QUASHED AND SET ASIDE. . I.T.A.NNO.5655/DEL./2011 10 4.6 IN THE CASE OF CIT V. ARVIND JEWELLERS [2003] 259 ITR 502 (GUJ) IT WAS OBSERVED THAT THE FINDING OF FACT GIVEN BY THE TRIB UNAL WAS THAT THE ASSESSEE HAD PRODUCED RELEVANT MATERIAL AND OFFERED EXPLANATIONS IN PURSUANCE OF THE NOTICES ISSUED UNDER SECTION 142(1) AS WELL AS SECTION 143( 2) OF THE ACT AND AFTER CONSIDERING THE MATERIAL AND EXPLANATIONS THE INCO ME-TAX OFFICER HAD COME TO A DEFINITE CONCLUSION. SINCE THE MATERIAL WAS THERE O N RECORD AND THE SAID MATERIAL WAS CONSIDERED BY THE INCOME-TAX OFFICER AND A PART ICULAR VIEW WAS TAKEN THE MERE FACT THAT A DIFFERENT VIEW CAN BE TAKEN SHOULD NOT BE THE BASIS FOR AN ACTION UNDER SECTION 263. THE HONBLE JURISDICTIONAL HIGH COURT THEREFORE TOOK THE VIEW THAT THE ORDER OF REVISION WAS NOT JUSTIFIED. IN TH E WORDS OF THE HONBLE HIGH COURT IT WAS HELD AS UNDER: COMING TO THE FACTS OF THE PRESENT CASE IT IS THE FINDING OF FACT GIVEN BY THE TRIBUNAL THAT THE ASSESSEE HAS PRODUCED RELEVANT MA TERIAL AND OFFERED EXPLANATIONS IN PURSUANCE OF THE NOTICES ISSUED UND ER SECTION 142(1) AS WELL AS SECTION 143(2) OF THE ACT AND AFTER CONSIDERING THE MATERIALS AND EXPLANATION THE INCOME-TAX OFFICER HAS COME TO A DEFINITE CONCLUSIO N. THE COMMISSIONER OF INCOME-TAX DID NOT AGREE WITH THE CONCLUSION REACHE D BY THE INCOME-TAX OFFICER. SECTION 263 OF THE ACT DOES NOT EMPOWER HIM TO TAKE ACTION ON THESE FACTS TO ARRIVE AT THE CONCLUSION THAT THE ORDER PASSED BY T HE INCOME-TAX OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. SINCE THE MATERIAL WAS THERE ON RECORD AND THE SAID MATERIAL WAS CONSIDERE D BY THE INCOME-TAX OFFICER AND A PARTICULAR VIEW WAS TAKEN THE MERE FACT THAT A DIFFERENT VIEW CAN BE TAKEN SHOULD NOT BE THE BASIS FOR AN ACTION UNDER SECTION 263 OF THE ACT AND IT CANNOT BE HELD TO BE JUSTIFIED. 4.7 IN CIT V. MEHROTRA BROTHERS 270 ITR 157 (MP) THE HONBLE HIGH COURT GAVE THE STAMP OF APPROVAL TO THE ORDER OF TH E TRIBUNAL WHICH AFTER RELYING ON CIT V. RATLAM COAL ASH CO. [1988] 171 ITR 141 HAD HELD THAT WHEN THE AO CONSIDERED THE RECORDS BEFORE HIM AND COMPLETED THE ASSESSMENT AFTER CONSIDERING THE EVIDENCE FILED AND AFTER HIS SATISF ACTION ABOUT THE GENUINENESS OF CASH CREDITS THE ORDER OF REVISION UNDER SECTION 2 63 ON THE VAGUE GROUND THAT THE AO DID NOT MAKE PROPER ENQUIRY WAS NOT VALID. 4.8 HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS DEEPAK MITTAL 324 ITR 411 HELD THAT CHANGE OF OPINION BY REAPPRAISING THE EVIDENCE IS NOT I.T.A.NNO.5655/DEL./2011 11 WITHIN THE PARAMETERS OF REVISIONAL JURISDICTION OF THE COMMISSIONER UNDER SECTION 263 OF THE ACT. 4.9 IN CIT VS. INTERNATIONAL TRAVEL HOUSE 194 TAX MAN 324(DEL) HONBLE DELHI HIGH COURT WHILE RELYING IN TER ALIA ON THE DECISION OF HONBLE GUJRAT HIGH COURT IN ARVIND JEW ELLERS(SUPRA) OBSERVED THAT THE COMMISSIONER HAD REALLY MADE AN EFFORT TO CAUSE A ROUTINE INQUIRY WITH REGARD TO THE MATTER THAT HAD ALREADY BEEN CONCLUDED AND HE THOUGHT THAT HE HAD THE AUTHORITY TO BEGIN A FRESH LITIGATION BECAUSE OF THE VIEW ENTERTAINED BY HIM. HONBLE HIGH COURT HELD THAT A MERE CHANGE OF OPINION OR VIEW WOULD NOT ENABLE THE COMMISSIONER TO EXERCISE JURISDICTION UNDER SECTION 263 OF THE ACT MORE SO WHEN THE ASSESSING OFFICER HAD CONSIDERED THE DETAILS AND THE EXPLANATION OFFERED BY THE ASSESSEE. 4.10 IN CIT VS. SUNBEAM AUTO LTD. [2010] 189 TAXM AN 436 (DEL) HONBE HIGH COURT WHILE ADJUDICATING A SIMILAR ISSU E DREW DISTINCTION BETWEEN LACK OF ENQUIRY AND INADEQUATE ENQUIRY AND ACCORDINGLY OBSERVED AS UNDER: 'AS NOTED ABOVE THE SUBMISSION OF LEARNED COUNSEL FOR THE REVENUE WAS THAT WHILE PASSING THE ASSESSMENT ORDER THE ASSES SING OFFICER DID NOT CONSIDER THIS ASPECT SPECIFICALLY WHETHER THE EXPENDITURE IN QUESTION WAS REVENUE OR CAPITAL EXPENDITURE. THIS ARGUMENT PREDICATES ON TH E ASSESSMENT ORDER WHICH APPARENTLY DOES NOT GIVE ANY REASONS WHILE ALLOWING THE ENTIRE EXPENDITURE AS REVENUE EXPENDITURE. HOWEVER THAT BY ITSELF WOU LD NOT BE INDICATIVE OF THE FACT THAT THE ASSESSING OFFICER HAD NOT APPLIED HIS MIND ON THE ISSUE. THERE ARE JUDGMENTS GALORE LAYING DOWN THE PRINCIPLE THAT THE ASSESSING OFFICER IN THE ASSESSING ORDER IS NOT REQUIRED TO GIVE DETAILED RE ASON IN RESPECT OF EACH AND EVERY ITEM OF DEDUCTION ETC. THEREFORE ONE HAS TO SEE FROM THE RECORD AS TO WHETHER THERE WAS APPLICATION OF MIND BEFORE ALLOWI NG THE EXPENDITURE IN QUESTION AS REVENUE EXPENDITURE. LEARNED COUNSEL FO R THE ASSESSEE IS RIGHT IN HIS SUBMISSION THAT ONE HAS TO KEEP IN MIND THE DISTINC TION BETWEEN 'LACK OF INQUIRY' AND INADEQUATE INQUIRY'. IF THERE WAS ANY INQU IRY EVEN INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE COMMISSIONER TO PASS ORDERS UNDER SECTION 263 OF THE ACT MERELY BECAUSE HE HAS DIFFERENT OPI NION IN THE MATTER.' 4.101 THE HONBLE HIGH COURT IN THE SAID DECISION FURTHE R WENT ON TO OBSERVE THAT : I.T.A.NNO.5655/DEL./2011 12 'THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTE RPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED.' 4.11 IN CIT VS. ANIL KUMAR SHARMA [2010] 194 T AXMAN 504 (DEL) WHILE FOLLOWING THEIR OWN DECISION IN SUNBEAM AUTO LTD. (SUPRA) HONBLE DELHI HIGH COURT OBSERVED: 7. IN VIEW OF THE ABOVE DISCUSSION IT IS APPARENT THA T THE TRIBUNAL ARRIVED AT A CONCLUSIVE FINDING THAT THOUGH THE ASSESSMENT ORDE R DOES NOT PATENTLY INDICATE THAT THE ISSUE IN QUESTION HAD BEEN CONSIDERED BY T HE ASSESSING OFFICER THE RECORD SHOWED THAT THE ASSESSING OFFICER HAD APPLIE D HIS MIND. ONCE SUCH APPLICATION OF MIND IS DISCERNIBLE FROM THE RECORD THE PROCEEDINGS UNDER SECTION 263 WOULD FELL INTO THE AREA OF THE COMMISSIONER HA VING A DIFFERENT OPINION. WE ARE OF THE VIEW THAT THE FINDINGS OF FACTS ARRIVED AT BY THE TRIBUNAL DO NOT WARRANT INTERFERENCE OF THIS COURT. THAT BEING THE POSITION THE PRESENT CASE WOULD NOT BE ONE OF LACK OF INQUIRY AND EVEN IF THE INQUIRY WAS TERMED AS INADEQUATE FOLLOWING THE DECISION IN SUNBEAM AUTO LTD.S CASE (SUPRA) 'THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE COMMISSION ER TO PASS ORDERS UNDER SECTION 263 OF THE SAID ACT MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER'. NO SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDERATION. CONSQUENTLY THE APPEAL IS DISMISSED. 4.12 IN CIT VS. LEISURE WEAR EXPORTS LTD. [2010 ] 46 DTR (DEL) 97 HONBLE DELHI HIGH COURT HELD THAT POWER OF REVISI ON U/S 263 OF THE ACT IS NOT MEANT TO BE EXERCISED FOR THE PURPOSE O F DIRECTING THE AO TO HOLD ANOTHER INVESTIGATION WITHOUT DESCRIBING A S TO HOW THE ORDER OF THE AO IS ERRONEOUS. WHERE THE ASSESSMENT ORDER HAS BEEN PASSED BY THE AO AFTER TAKING INTO ACCOUNT ASSESSEE 'S SUBMISSIONS AND DOCUMENTS FURNISHED BY HIM AND NO MATERIAL IS BROUGHT ON RECORD BY THE CIT WHICH SHOWS THAT THERE WAS ANY DI SCREPANCY OR FALSITY IN THE EVIDENCE FURNISHED BY THE ASSESSEE THE ORDER OF THE AO CANNOT BE SET ASIDE FOR MAKING DEEP ENQUIRY ONLY ON THE PRESUMPTION THAT SOMETHING NEW MAY COME OUT. SINCE THERE WAS NOT EVEN A WHISPER THAT THE ORDER WAS ERRONEOUS NOR AS TO HOW THE SAID ORDER WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE WHILE THE ONLY OBSERVATIONS OF THE CIT WERE THAT A DEEPER PR OBE BY CALLING FOR I.T.A.NNO.5655/DEL./2011 13 MORE DETAILS WAS REQUIRED OR THAT THE MATTER NEEDE D EXAMINATION BY THE AO HONBLE HIGH COURT HELD THAT THIS DID NOT S ATISFY THE INGREDIENTS OF S. 263 OF THE ACT. ACCORDINGLY HON BLE HIGH COURT UPHELD THE FINDINGS OF THE TRIBUNAL SETTING ASIDE THE ORDER OF THE CIT. 4.13 AS REGARDS ABSENCE OF DISCUSSION IN THE AS SESSMENT ORDER IN CIT VS. NIRMA CHEMICALS WORKS P. LTD. [2009] 309 ITR 67 (GUJ) ALSO A SIMILAR CONTENTION WAS RAISED WHEN THE HONB LE HIGH COURT FOLLOWING THEIR EARLIER DECISION IN RAYON SILK MI LLS V. CIT [1996] 221 ITR 155 CONCLUDED IN THE FOLLOWING TERMS: THE CONTENTION ON BEHALF OF THE REVENUE THAT T HE ASSESSMENT ORDER DOES NOT REFLECT ANY APPLICATION OF MIND AS TO THE ELIGIBILI TY OR OTHERWISE UNDER SECTION 80-I OF THE ACT REQUIRES TO BE REJECTED. AN ASSESSMENT O RDER CANNOT INCORPORATE REASONS FOR MAKING/GRANTING A CLAIM OF DEDUCTION. I F IT DOES SO AN ASSESSMENT ORDER WOULD CEASE TO BE AN ORDER AND BECOME AN EPIC TOME. THE REASONS ARE NOT FAR TO SEEK. FIRSTLY IT WOULD CAST AN ALMOST IMPOS SIBLE BURDEN ON THE ASSESSING OFFICER CONSIDERING THE WORKLOAD THAT HE CARRIES A ND THE PERIOD OF LIMITATION WITHIN WHICH AN ORDER IS REQUIRED TO BE MADE; AND SECONDLY THE ORDER IS AN APPEALABLE ORDER. AN APPEAL LIES WOULD BE FILED O NLY AGAINST DISALLOWANCES WHICH AN ASSESSEE FEELS AGGRIEVED WITH. AS FAR AS ABSENCE OF DISCUSSION IN THE ASSESSMENT O RDER IS CONCERNED THIS IS WHAT HAS BEEN LAID DOWN BY THIS COURT IN THE CASE O F RAYON SILK MILLS V. CIT [1996] 221 ITR 155 : 'IN THE FIRST INSTANCE IT WAS CONTENDED BY LEARNED COUNSEL FOR THE ASSESSEE THAT THE VERY PREMISE ON WHICH ORDER UNDER SECTION 263 WAS MADE AGAINST THE ASSESSEE NAMELY THAT THE INCOME-TAX O FFICER HAS NOT AT ALL EXAMINED THE GOODWILL ACCOUNT IS NOT EXISTE NT. ACCORDING TO HIM IT IS APPARENT FROM THE RECORD THAT THE GOODWILL ACCOUNT WAS THOROUGHLY EXAMINED BY THE INCOME-TAX OFFICER BEFORE MAKING THE ASSESSMENT AND AFTER EXAMINING WHEN HE ACCEPTED THE CONTE NTION OF THE ASSESSEE ITS DISCUSSION DID NOT FIND PLACE IN THE ASSESSMEN T ORDER AS NO ADDITIONS WERE GOING TO BE MADE OR NO MODIFICATI ONS IN THE RETURN FILED BY THE ASSESSEE WERE REQUIRED TO BE MADE I N THAT REGARD. THIS CONTENTION OF THE ASSESSEE APPEARS TO BE WELL-FOUNDED . IT IS TRUE THAT THE ASSESSMENT ORDER DOES NOT SPEAK ABOUT THE EXAMI NATION OF I.T.A.NNO.5655/DEL./2011 14 GOODWILL ACCOUNT AS SUCH. HOWEVER AS WE HAVE NOTICED ABOVE THE ASSESSEE IN HIS REPLY TO THE SHOW-CAUSE NOTICE UNDER SECTION 2 63 HAD SPECIFICALLY MENTIONED THAT THE ENTIRE MATTER WAS SCRUTI NISED AND ACCEPTED WHILE PASSING THE ASSESSMENT ORDER. OUR ATTENTION WAS ALSO DRAWN TO ANNEXURE 'D'. A SUBMISSION MADE BY THE ASSESSEE TO THE INCOME-TAX OFFICER SURAT DATED OCTOBER 18 1976 REG ARDING THE ASSESSMENT YEAR 1974-75 GIVING DETAILED CHRONOLOGICAL DAT A OF THE CONSTITUTION OF THE FIRM ON NOVEMBER 11 1968 INDUCTI ON OF FOUR MORE PARTNERS ON NOVEMBER 7 1972 THE CREATION OF GOODWIL L IN THE BOOKS OF ACCOUNT OF THE FIRM BY DEBITING THE GOODWILL ACCOUNT AN D CREDITING THE OLD PARTNERS' CAPITAL ACCOUNTS IN THEIR PROFIT SHARING RA TIO ON THAT DATE FORMATION OF A PRIVATE LIMITED COMPANY IN THE NAME O F RAYON SILK MILLS PRIVATE LIMITED AND ITS INDUCTION INTO THE FIRM AS PA RTNER BY THE DEED OF PARTNERSHIP DATED OCTOBER 27 1973 AND THE DISSOLUT ION OF THE PARTNERSHIP FIRM ON FEBRUARY 23 1974 LEAVING THE P RIVATE LIMITED COMPANY AS A SOLE PROPRIETOR THEREOF AND THE VALUATION OF THE BUSINESS AT THE BOOK VALUE AS ON THAT DATE. AFTER GIVING THE CHRONOLOGICAL SEQUENCE OF EVENTS THE ASSESSEE ALSO CONTENDED IN HIS SUBMI SSION BEFORE THE INCOME-TAX OFFICER THAT THERE WAS NO ACTUAL TRANSFER OF ANY ASSET INASMUCH AS WHEN A PARTNER IS ADMITTED INTO THE FI RM NO TRANSFER TAKES PLACE. IT WAS ALSO CONTENDED THAT NO CASH TRANSFER TOOK PLACE FROM PERSON TO PERSON AND THE TRANSFER AND THE DISSOLUTI ON OF THE FIRM ALSO DID NOT RESULT IN ACCRUAL OF CAPITAL GAINS. IN THE F ACE OF THIS MATERIAL ON RECORD IT IS DIFFICULT TO EXPLAIN THAT T HE ASSESSMENT ORDER WAS MADE WITHOUT MAKING ANY ENQUIRY INTO THE GOODWIL L ACCOUNT OF RS. 10 75 000.' THERE IS ANOTHER ASPECT OF THE MATTER. THE ASSESSEE HAD CHALLENGED JURISDICTION OF THE COMMISSIONER OF INCOME-TAX TO EXERCISE POWERS UNDER SECTION 263 OF THE ACT. FOR AN ORDER OF THE ASSESSIN G OFFICER TO BE INTERFERED WITH IN EXERCISE OF REVISIONAL POWERS THE COMMISSIONER OF INCOME-TAX HAS TO FIND IN THE FIRST INSTANCE THAT THE O RDER IS ERRONEOUS AND SECONDLY THE ORDER IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE CONDITIONS ARE TWIN CONDITIONS AS HELD BY THE APEX CO URT AND BOTH OF THEM HAVE TO BE FULFILLED BEFORE THE COMMISSIONER OF INCOME-TAX CAN EXERCISE JURISDICTION UNDER SECTION 263 OF THE ACT. IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83 (SC) THE APEX COURT HAS HELD: 'THE PHRASE 'PREJUDICIAL TO THE INTEREST S OF THE REVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEO US ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUE NCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUD ICIAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE WHEN AN INCOME- TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX I.T.A.NNO.5655/DEL./2011 15 OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER D OES NOT AGREE IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJ UDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW.' APPLYING THE AFORESAID TESTS TO THE FACTS O F THE CASE IT IS NOT POSSIBLE TO UPHOLD THE ORDER OF THE TRIBUNAL AS REGARDS JURISDI CTION AFTER CONSIDERING THE LAW ENUNCIATED BY THE APEX COURT. THE ASSESSING OFFICER AFTER MAKING DUE INQUIRIES AS NOTED HEREINBEFORE ADOPTED ONE VIEW AND GRANTED PARTIAL RELIEF UNDER SECTION 80-I OF THE ACT. THE COMMISSIONER OF INCOME-TAX TAK ES A DIFFERENT VIEW OF THE MATTER. HOWEVER THAT WOULD NOT BE SUFFICIENT TO PE RMIT THE COMMISSIONER OF INCOME-TAX TO EXERCISE POWERS UNDER SECTION 263 OF THE ACT BECAUSE WHEN TWO VIEWS ARE POSSIBLE AND THE COMMISSIONER OF INCOME-T AX DOES NOT AGREE WITH THE VIEW TAKEN BY THE ASSESSING OFFICER THE ASSESSMENT ORDER CANNOT BE TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. T HAT IS NOT THE POSITION IN THE PRESENT CASE. IN FACT EVEN THE PARTIAL DENIAL OF RE LIEF UNDER SECTION 80-I OF THE ACT HAS BEEN FOUND TO BE INCORRECT BY THE APPELLATE AUT HORITY. THEREFORE EXISTENCE OF TWO VIEWS STANDS ESTABLISHED. IN THE AFORESAID CIRC UMSTANCES THE COMMISSIONER OF INCOME-TAX COULD NOT HAVE EXERCISED JURISDICTION UNDER SECTION 263 OF THE ACT AS PER SETTLED LEGAL POSITION. 5. IN THE LIGHT OF VIEW TAKEN IN THE AFORESAID DECISIONS BY THE HONBLE HIGH COURT & APEX COURT IT IS APPARENT THAT THE CIT HAS TO GIVE REASONS TO JUSTIFY THE EXERCISE OF SUO MOTO REVISIONAL POWERS BY HIM TO RE -OPEN A CONCLUDED ASSESSMENT. IN THE INSTANT CASE A QUESTIONNAIRE WA S ISSUED BY THE AO AND THE ASSESSEE SUBMITTED A DETAILED REPLY AND ANSWERED THE QUERY TO THE SATISFACTION OF THE AO BUT NEITHER THE QUERY NOR THE ANSWER WER E REFLECTED IN THE ASSESSMENT ORDER. HOWEVER THIS WOULD NOT BY ITSELF LEAD TO TH E CONCLUSION THAT THE ORDER OF THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF REVENUE . THE AO HAD NOT SHIRKED HIS RESPONSIBILITY OF EXAMINING AND INV ESTIGATING THE CASE.. APPARENTLY THE AO WAS SATISFIED WITH THE EXPLANATI ON OF THE ASSESSEE REGARDING DISALLOWANCE U/S 14A OF THE ACT. IT MAY BE POINTED OUT THAT RULE 8D IS NOT APPLICABLE IN THE YEAR UNDER CONSIDERATION AS HELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN THEIR DECISION DATED 18.11.2011 IN M AXOPP INVESTMENT LTD. VS. CIT [2011] 15 TAXMANN.COM 390 (DELHI) WHILE FOLLOWI NG THE VIEW TAKEN BY HONBLE BOMBAY HIGH COURT IN GODREJ & BOYCE CO. LTD.VS. DCI T 234 CTR 1(BOM.). EVEN OTHERWISE INCOME OF THE ASSESSEE UNDER THE HEAD PR OFITS AND GAINS OF BUSINESS I.T.A.NNO.5655/DEL./2011 16 OR PROFESSION IS EXEMPT U/S 10A OF THE ACT. MOREOV ER IN A SOMEWHAT SIMILAR SITUATION A CO-ORDINATE BENCH QUASHED THE ORDER OF THE CIT U/S 263 OF THE ACT IN THE ASSESSEES OWN CASE IN ITA NO.2331/DEL./2010 FO R THE AY 2005-06. 6.. A CHANGE OF OPINION OR VIEW WOULD NOT ENAB LE THE CIT TO EXERCISE JURISDICTION U/S 263 OF THE ACT MORE SO WHEN THE A O HAD CONSIDERED THE DETAILS AND THE EXPLANATION OFFERED BY THE ASSESSEE . C HANGE OF OPINION BY REAPPRAISING THE EVIDENCE IS NOT WITHIN THE PARAMET ERS OF REVISIONAL JURISDICTION OF THE COMMISSIONER UNDER SECTION 263 OF THE ACT. IN VIEW THEREOF WE SET ASIDE THE IMPUGNED ORDER U/S 263 OF THE ACT AND QUASH THE SAM E. THEREFORE GROUND NOS. 1 TO 3 IN THE APPEAL ARE ALLOWED. 7. NO OTHER SUBMISSION OR ARGUMENT WAS M ADE BEFORE US. 8. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND IN THE APPEAL OF THE ASSESSEE ACC ORDINGLY THIS GROUND IS DISMISSED. 9. IN RESULT APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT SD/- SD/- (R.P. TOLANI ) (A.N. P AHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER NS COPY OF THE ORDER FORWARDED TO :- 1. M/S GALILEO INDIA (P) LTD. BLOCK 2B DLF CORP ORATE PARK DLF CITY PHASE-II NEW DELHI 2.C.I.T.-IV ROOM NO.397 C.R. BUILDING I.P. ESTAT E NEW DELHI. 3. DCIT CIRCLE-12(1) NEW DELHII 4. THE DR ITAT B BENCH NEW DELHI 5. GUARD FILE. TRUE COPY BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT DELHI