Sarlaben Bhansali Charities Trust, Kolkata v. CIT(EXEMPTIONS), KOLKATA, Kolkata

ITA 663/KOL/2016 | 2010-2011
Pronouncement Date: 30-11-2017 | Result: Allowed

Appeal Details

RSA Number 66323514 RSA 2016
Assessee PAN AADTS3168N
Bench Kolkata
Appeal Number ITA 663/KOL/2016
Duration Of Justice 1 year(s) 7 month(s) 16 day(s)
Appellant Sarlaben Bhansali Charities Trust, Kolkata
Respondent CIT(EXEMPTIONS), KOLKATA, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Allowed
Bench Allotted B
Tribunal Order Date 30-11-2017
Date Of Final Hearing 21-03-2017
Next Hearing Date 21-03-2017
First Hearing Date 21-03-2017
Assessment Year 2010-2011
Appeal Filed On 13-04-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA [BEFORE SHRI J. SUDHAKAR REDDY AM & SHRI S.S. VISWANETHRA RAVI JM] I.T.A. NO. 663 & 76/KOL/2016 ASSESSMENT YEAR: 2010-11 SARLABEN BHANSALI CHARITIES TRUST...............................APPELLANT C/O. V.N. PUROHIT & CO. CHARTERED ACCOUNTANTS DIAMOND CHAMBERS UNIT-III 4 TH FLOOR SUIT NO. 4G 4 CHOWRINGHEE LANE KOLKATA 700016 [PAN: AADTS3168N] CIT (EXEMPTIONS) RESPONDENT 10B MIDDLETON ROW 6 TH FLOOR KOLKATA - 700071 APPEARANCES BY: SHRI V.N. PUROHIT FCA APPEARING ON BEHALF OF THE ASSESSEE. MD. USMAN CIT DR APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : OCTOBER 31 2017 DATE OF PRONOUNCING THE ORDER NOVEMBER 30 2017 ORDER PER J. SUDHAKAR REDDY AM THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (EXEMPTIONS) KOLKATA DATED 11.02.2016 FOR THE ASSESSMENT YEAR 2010-11 UNDER SECTION 263 ON THE FOLLOWING GROUND. THAT THE COMMISSIONER OF INCOME TAX (EXEMPTION) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN HOLDING THAT ASSESSMENT ORDER PASSED ON 27.03.2014 U/S. 147/143(3) BY A.O. IS ERRONEOUS AND HENCE PREJUDICIAL TO THE INTEREST OF THE REVENUE AND DIRECTING A.O. DO FRESH ASSESSMENT. 2. THE ASSESSEE IS A CHARITABLE TRUST. IT FILED ITS RETURN FOR A.Y. 2009-10 ON 11.10.2010 DECLARING NIL INCOME. THE ASSESSING OFFICER ISSUED A NOTICE UNDER SECTION 148 AND THEREAFTER COMPLETED THE 2 I.T.A. NO. 663 & 76/KOL/2016 ASSESSMENT YEAR: 2010-11 SARLABEN BHANSALI CHARITIES TRUST ASSESSMENT UNDER SECTION 147 R.W.S. 143(3) & INCOME TAX ACT 1961 (ACT) DETERMINING THE TOTAL INCOME AT NIL. THE CIT (EXEMPTION) KOLKATA INVOKED HIS POWERS UNDER SECTION 263 OF THE ACT AND HELD THAT THE ASSESSEE IS NOT ENTITLED TO GET BENEFIT OF EXEMPTION UNDER SECTION 11 OF THE INCOME TAX ACT 1961 AS THE REGISTRATION GRANTED TO THE ASSESSEE UNDER SECTION 12AA WAS CANCELLED VIDE ORDER DATED 11.12.2015 WITH EFFECT FROM A.Y. 2009-10 AND HENCE THE IMPUGNED ASSESSMENT ORDER PASSED ON 27.03.2014 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE A.O. WAS DIRECTED TO MODIFY THIS ORDER AND DO A FRESH ASSESSMENT AFTER GIVING THE ASSESSEE ADEQUATE OPPORTUNITY. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER UNDER SECTION 263 WAS PASSED ON THE GROUND THAT THE REGISTRATION GRANTED TO THE ASSESSEE UNDER SECTION 12AA OF THE ACT WAS CANCELLED AND HENCE THE ASSESSEE WAS NOT ELIGIBLE TO CLAIM EXEMPTION UNDER SECTION 11AND CONSEQUENTLY THE ORDER PASSED UNDER SECTION 147 R.W.S. 143(3) WHEREIN EXEMPTION UNDER SECTION 11 WAS GRANTED TO THE ASSESSEE WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE SUBMITTED THAT THE LD. CIT WAS WRONG FOR THE REASON THAT REGISTRATION UNDER SECTION 12AA CANNOT BE CANCELLED RETROSPECTIVELY. IT WAS SUBMITTED THAT THE PLAIN READING OF THE SECTION AS WELL AS VARIOUS PROPOSITIONS OF LAW LAID DOWN IN THE CASE LAWS OF THE HIGH COURTS AND TRIBUNALS SUPPORT HIS CONTENTIONS. HE CONTENDED THAT THE ORDER UNDER SECTION 263 IS BASED ON AN ERRONEOUS INTERPRETATION OF LAW THAT REGISTRATION UNDER SECTION 12AA WAS NOT AVAILABLE TO THE 3 I.T.A. NO. 663 & 76/KOL/2016 ASSESSMENT YEAR: 2010-11 SARLABEN BHANSALI CHARITIES TRUST ASSESSEE DURING THE YEAR. HENCE HE SUBMITTED THAT THE ORDER IS BAD IN LAW AND HIS APPEAL IS TO BE ALLOWED. 4. THE DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND ARGUED THAT THERE IS LD. CIT(EXEMPTION) HAD SET ASIDE THE ORDER UNDER SECTION 263 ON TWO GROUNDS (A) THE FIRST BEING THAT THE REGISTRATION UNDER SECTION 12AA HAS BEEN CANCELLED AND THE SECOND BEING (B) IT HAS COME TO THE NOTICE OF THE REVENUE THAT ONE SHRI RAMCHANDRA D. JADAV DIRECTOR OF M/S. PRATIBHA CONSTRUCTION ENGINEERS AND CONSTRUCTIONS PVT. LTD. KOLHAPUR HAD MADE DONATION IN CASH OF RS. 15 LAKHS TO THE ORGANISATION IN THE MONTH OF SEPTEMBER 2009 AND SUCH DONATION WAS NOT FOUND RECORDED IN THE BOOKS OF ACCOUNT. THE ASSESSEE SUBMITTED THAT MERELY BECAUSE CANCELLATION OF REGISTRATION UNDER SECTION 12AA(3) CANNOT BE DONE RETROSPECTIVELY IT CANNOT BE CONCLUDED THAT INVOKING OF POWERS UNDER SECTION 263 OF THE LD. CIT (EXEMPTION) KOLKATA IS BAD IN LAW AS THE SECOND GROUND ON WHICH THE ASSESSMENT WAS CANCELLED HOLDS. 5. AFTER HEARING RIVAL CONTENTIONS WE FIND THAT REGISTRATION GRANTED TO THE ASSESSEE TRUST UNDER SECTION 12AA CANNOT BE INVOKED RETROSPECTIVELY UNDER SECTION 12AA(3) OF THE ACT. 6. IN THE CASE OF AGRA DEVELOPMENT AUTHORITY VS CIT 141 ITD 336 IT IS HELD AS FOLLOWS: 402. CANCELLATION UNDER SECTION 12AA(3) POWER OF CANCELLATION OF REGISTRATION UNDER SECTION 12A CAME TO BE INCORPORATED BY AMENDMENT IN SECTION 12AA(3) BY THE FINANCE ACT 2010 W.E.F. 1 ST JUNE 2010 HENCE 4 I.T.A. NO. 663 & 76/KOL/2016 ASSESSMENT YEAR: 2010-11 SARLABEN BHANSALI CHARITIES TRUST CANCELLATION OF REGISTRATION BY CIT FOR ASSESSMENT YEAR 2009-10 WAS NOT IN ACCORDANCE WITH LAW HELD THE COMBINED READING OF SS. 12A AND 12AA(3) MAKES IT CLEAR THAT BEFORE 1 ST JUNE 2010 REGISTRATION CAN BE CANCELLED ONLY OF THOSE CASES WHERE THE REGISTRATION HAS BEEN GRANTED UNDER SECTION 12AA(1)(B). BEFORE 1 ST JUNE 2010 THIS SECTION 12AA(3) NOWHERE EMPOWERS THE CIT TO CANCEL OR WITHDRAW REGISTRATION UNDER SECTION 12A. IN ABSENCE OF SUCH POWER THE REGISTRATION GRANTED UNDER S. 12A CANNOT BE WITHDRAWN OR CANCELLED BEFORE 1 ST JUNE 2010. THE POWER OF CANCELLATION OF REGISTRATION UNDER S. 12A CAME TO BE INCORPORATED BY WAY OF AMENDMENT INTRODUCED BY FINANCE ACT 2010 W.E.F. 1 ST JUNE 2010. THE CBDT CIRCULAR O. 1 OF 2011 DT. 6 TH APRIL 2011 EXPLAINS THAT THIS AMENDMENT WILL APPLY FOR ASSESSMENT YEAR 2011-12 AND SUBSEQUENT YEARS. WHEREAS IN THE CASE UNDER CONSIDERATION THE CIT CANCELLED REGISTRATION UNDER S. 12A FOR ASSESSMENT YEAR 2009-10 WHICH IS NOT IN ACCORDANCE WITH THE LAW N.H. KAPADIA VS DIRECTOR OF IT (EXEMPTIION) (ITA NO. 1420/AHD/2011 DT. 3 RD FEB 2010) AND DIRECTOR OF IT (EXEMPTION) VS MOOL CHAND KHAIRATI RAM TRUST (2011) 243 CTR (DEL) 245 : (2011) 58 DTR (DEL)254 RELIED ON. 7. THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF MUKESH BHANSALI CHARITIES TRUST VS CIT (EXEMPTION) ITA NO. 1250/KOL/2016 ORDER DATED 09.06.2017 APPLIED THE CIRCULAR NO. 1 OF 2011 DATED 06.04.2011 ISSUED BY THE CBDT AND HELD THAT SECTION 12AA(3) IS APPLICABLE ONLY FROM THE ASSESSMENT YEAR 2011-12. 8. RESPECTFULLY FOLLOWING THE PROPOSITION OF LAW LAID DOWN IN THESE CASE LAWS WE HOLD THAT THIS GROUND ON WHICH AN ORDER UNDER SECTION 263 OF THE ACT WAS PASSED BY THE LD. CIT IS BAD IN LAW. 9. COMING TO THE SECOND REASON FOR WHICH THE LD. CIT (EXEMPTION) INVOKING POWERS UNDER SECTION 263 WE FIND THAT THE LD. CIT (EXEMPTION) RECORDS THAT THE FACTS AS NARRATED BY HIM HAS BEEN 5 I.T.A. NO. 663 & 76/KOL/2016 ASSESSMENT YEAR: 2010-11 SARLABEN BHANSALI CHARITIES TRUST ESTABLISHED IN THE ASSESSMENT ORDER PASSED UNDER SECTION 147/143(3) OF THE ACT DATED 27.03.2014. WHEN THIS FACT HAS BEEN CONSIDERED IN THE ASSESSMENT BY THE ASSESSING OFFICER AND A CONSIDERED AND POSSIBLE VIEW TAKEN THERE IS NO GROUND FOR INVOCATION OF POWERS UNDER SECTION 263 OF THE ACT SPECIFICALLY WHEN THERE IS NO ALLEGATION OF NON APPLICATION OF MIND BY THE A.O. OR THAT ANY PREJUDICE OR ANY ERROR WAS COMMITTED BY THE ASSESSING OFFICER WHICH CAUSED PREJUDICED TO THE REVENUE. THE LD. CIT (EXEMPTION) MENTIONED THAT THESE FACTS WERE CONSIDERED BY THE ASSESSING OFFICER IN HIS ORDER THUS RULING OUT NON-APPLICATION OF MIND TO THIS ISSUE BY THE A.O. 10. THE HONEBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF SPECTRA SHARES AND SCRIPSPVT. LTD. V CIT (AP) 354 ITR 35 HAD CONSIDERED A NUMBER OF JUDGMENTS ON THIS ISSUE OF EXERCISE OF JURISDICTION U/S 263 OF THE ACT BY THE PRINCIPAL COMMISSIONER OF INCOME TAX AND CULLED THE PRINCIPLES LAID DOWN IN THE JUDGMENTS AS BELOW : 24. IN MALABAR INDUSTRIAL CO.LTD. ( 2 SUPRA) THE SUPREME COURT HELD THAT A BARE READING OF SEC.263 MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF JURISDICTION BY THE COMMISSIONER SUOMOTU UNDER IT IS THE ORDER OF THE INCOME TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS NAMELY (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT IF THE ORDER OF THE INCOME TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IT IS PREJUDICIAL TO THE REVENUE RECOURSE CANNOT BE HAD TO SEC.263 (1) OF THE ACT. IT ALSO HELD AT PG-88 AS FOLLOWS: 'THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE 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 OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. IT HAS BEEN HELD BY THIS COURT THAT WHERE A SUM NOT EARNED BY A PERSON IS ASSESSED AS INCOME IN HIS HANDS ON HIS SO OFFERING THE ORDER PASSED BY THE 6 I.T.A. NO. 663 & 76/KOL/2016 ASSESSMENT YEAR: 2010-11 SARLABEN BHANSALI CHARITIES TRUST ASSESSING OFFICER ACCEPTING THE SAME AS SUCH WILL BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. RAMPYARIDEVISARAOGI V. CIT (1968) 67 ITR 84 (SC) AND IN SMT. TARA DEVI AGGARWAL V. CIT (1973) 88 ITR 323 (SC)'. 25. IN MAX INDIA LTD. (3 SUPRA) REITERATED THE VIEW IN MALABAR INDUSTRIAL CO.LTD. (2 SUPRA) AND OBSERVED THAT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE WHEN AN INCOME TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME TAX OFFICER IS UNSUSTAINABLE IN LAW. ON THE FACTS OF THAT CASE SEC.80HHC(3) AS IT THEN STOOD WAS INTERPRETED BY THE ASSESSING OFFICER BUT THE REVENUE CONTENDED THAT IN VIEW OF THE 2005 AMENDMENT WHICH IS CLARIFICATORY AND RETROSPECTIVE IN NATURE THE VIEW OF THE ASSESSING OFFICER WAS UNSUSTAINABLE IN LAW AND THE COMMISSIONER WAS CORRECT IN INVOKING SEC.263. BUT THE SUPREME COURT REJECTED THE SAID CONTENTION AND HELD THAT WHEN THE COMMISSIONER PASSED HIS ORDER DISAGREEING WITH THE VIEW OF THE ASSESSING OFFICER THERE WERE TWO VIEWS ON THE WORD 'PROFITS' IN THAT SECTION; THAT THE SAID SECTION WAS AMENDED ELEVEN TIMES; THAT DIFFERENT VIEWS EXISTED ON THE DAY WHEN THE COMMISSIONER PASSED HIS ORDER; THAT THE MECHANICS OF THE SECTION HAD BECOME SO COMPLICATED OVER THE YEARS THAT TWO VIEWS WERE INHERENTLY POSSIBLE; AND THEREFORE THE SUBSEQUENT AMENDMENT IN 2005 EVEN THOUGH RETROSPECTIVE WILL NOT ATTRACT THE PROVISION OF SEC.263. 26. IN VIKAS POLYMERS (4 SUPRA) THE DELHI HIGH COURT HELD THAT THE POWER OF SUOMOTU REVISION EXERCISABLE BY THE COMMISSIONER UNDER THE PROVISIONS OF SEC.263 IS SUPERVISORY IN NATURE; THAT AN 'ERRONEOUS JUDGMENT' MEANS ONE WHICH IS NOT IN ACCORDANCE WITH LAW; THAT IF AN INCOME TAX OFFICER ACTING IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT THE SAME CANNOT BE BRANDED AS 'ERRONEOUS' BY THE COMMISSIONER SIMPLY BECAUSE ACCORDING TO HIM THE ORDER SHOULD HAVE BEEN WRITTEN DIFFERENTLY OR MORE ELABORATELY; THAT THE SECTION DOES NOT VISUALIZE THE SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME TAX OFFICER WHO PASSED THE ORDER UNLESS THE DECISION IS NOT IN ACCORDANCE WITH THE LAW; THAT TO INVOKE SUOMOTU REVISIONAL POWERS TO REOPEN A CONCLUDED ASSESSMENT UNDER SEC.263 THE COMMISSIONER MUST GIVE REASONS; THAT A BARE REITERATION BY HIM THAT THE ORDER OF THE INCOME TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE WILL NOT SUFFICE; THAT THE REASONS MUST BE SUCH AS TO SHOW THAT THE ENHANCEMENT OR MODIFICATION OF THE ASSESSMENT OR CANCELLATION OF THE ASSESSMENT OR DIRECTIONS ISSUED FOR A FRESH ASSESSMENT WERE CALLED FOR AND MUST IRRESISTIBLY LEAD TO THE CONCLUSION THAT THE ORDER OF THE INCOME TAX OFFICER WAS NOT ONLY ERRONEOUS BUT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THUS WHILE THE INCOME TAX OFFICER IS NOT CALLED UPON TO WRITE AN ELABORATE JUDGMENT GIVING DETAILED REASONS IN RESPECT OF EACH AND EVERY DISALLOWANCE DEDUCTION ETC. IT IS INCUMBENT UPON THE COMMISSIONER NOT TO EXERCISE HIS SUOMOTU REVISIONAL POWERS UNLESS SUPPORTED BY ADEQUATE REASONS FOR DOING SO; THAT IF A QUERY IS RAISED DURING THE COURSE OF THE SCRUTINY BY THE ASSESSING OFFICER WHICH WAS ANSWERED TO THE SATISFACTION OF THE ASSESSING OFFICER BUT NEITHER THE QUERY NOR THE ANSWER WERE REFLECTED IN THE ASSESSMENT ORDER THIS WOULD NOT BY ITSELF LEAD TO THE CONCLUSION THAT THE ORDER OF THE ASSESSING OFFICER CALLED FOR INTERFERENCE AND REVISION. 27. IN SUNBEAM AUTO LTD. ( 5 SUPRA) THE DELHI HIGH COURT HELD THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IS NOT REQUIRED TO GIVE A DETAILED REASON IN RESPECT OF EACH AND EVERY ITEM OF DEDUCTION ETC.; THAT WHETHER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE EXPENDITURE IN QUESTION HAS TO BE SEEN; THAT IF THERE WAS AN INQUIRY EVEN 7 I.T.A. NO. 663 & 76/KOL/2016 ASSESSMENT YEAR: 2010-11 SARLABEN BHANSALI CHARITIES TRUST INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE COMMISSIONER TO PASS ORDERS UNDER SEC.263 MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER; THAT IT IS ONLY IN CASES OF LACK OF INQUIRY THAT SUCH A COURSE OF ACTION WOULD BE OPEN; THAT AN ASSESSMENT ORDER MADE BY THE INCOME TAX OFFICER CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE ACCORDING TO HIM THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY; THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT THE TAX WHICH WAS LAWFULLY 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 WAS JUST HAS BEEN IMPOSED. IN THAT CASE THE DELHI HIGH COURT HELD THAT THE COMMISSIONER IN THE EXERCISE OF REVISIONAL POWER COULD NOT HAVE OBJECTED TO THE FINDING OF THE ASSESSING OFFICER THAT EXPENDITURE ON TOOLS AND DIES BY THE ASSESSEE A MANUFACTURER OF CAR PARTS IS REVENUE EXPENDITURE WHERE THE SAID CLAIM WAS ALLOWED BY THE LATTER ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND WHERE THE SAME ACCOUNTING PRACTICE FOLLOWED BY THE ASSESSEE FOR NUMBER OF YEARS WITH THE APPROVAL OF THE INCOME TAX AUTHORITIES. IT HELD THAT THE ASSESSING OFFICER HAD CALLED FOR EXPLANATION ON THE VERY ITEM FROM THE ASSESSEE AND THE ASSESSEE HAD FURNISHED ITS EXPLANATION. MERELY BECAUSE THE ASSESSING OFFICER IN HIS ORDER DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD HIS ORDER CANNOT BE TERMED AS ERRONEOUS. THE OPINION OF THE ASSESSING OFFICER IS ONE OF THE POSSIBLE VIEWS AND THERE WAS NO MATERIAL BEFORE THE COMMISSIONER TO VARY THAT OPINION AND ASK FOR FRESH INQUIRY. 28. IN GABRIEL INDIA LTD. (6 SUPRA) THE BOMBAY HIGH COURT HELD THAT A 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 CALLED 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 HAVE COME TO SUCH A CONCLUSION THE VERY INITIATION OF PROCEEDINGS BY HIM WILL BE ILLEGAL AND WITHOUT JURISDICTION. IT HELD THAT THE COMMISSIONER CANNOT INITIATE PROCEEDINGS WITH A VIEW TO START FISHING AND ROVING INQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED; THAT THE DEPARTMENT CANNOT BE PERMITTED TO BEGIN FRESH LITIGATION BECAUSE OF NEW VIEWS THEY ENTERTAIN ON FACTS OR NEW VERSIONS WHICH THEY PRESENT AS TO WHAT SHOULD BE THE INFERENCE OR PROPER INFERENCE EITHER OF THE FACTS DISCLOSED OR THE WEIGHT OF THE CIRCUMSTANCE; THAT IF THIS IS PERMITTED LITIGATION WOULD HAVE NO END EXCEPT WHEN LEGAL INGENUITY IS EXHAUSTED; THAT TO DO SO IS TO DIVIDE ONE ARGUMENT INTO TWO AND MULTIPLY THE LITIGATION. IT HELD THAT CASES MAY BE VISUALIZED WHERE THE INCOME TAX OFFICER WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS MAKES INQUIRIES APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNT OR BY MAKING SOME ESTIMATE HIMSELF; THAT THE COMMISSIONER ON PERUSAL OF THE RECORD MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOULD HAVE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN THE ONE DETERMINED BY THE INCOME TAX OFFICER; BUT THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO REEXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE; THERE MUST BE MATERIAL AVAILABLE ON THE RECORD CALLED FOR BY THE COMMISSIONER TO SATISFY HIM PRIMA FACIE THAT THE ORDER IS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. OTHERWISE IT WOULD AMOUNT TO GIVING UNBRIDLED AND ARBITRARY POWER TO THE REVISING AUTHORITY TO INITIATE PROCEEDINGS FOR REVISION IN EVERY CASE AND START RE-EXAMINATION AND FRESH INQUIRY IN MATTERS WHICH HAVE ALREADY BEEN CONCLUDED UNDER LAW. 29. IN M.S. RAJU (15 SUPRA) THIS COURT HAS HELD THAT THE POWER OF THE COMMISSIONER UNDER SEC.263 (1) IS NOT LIMITED ONLY TO THE MATERIAL WHICH WAS AVAILABLE BEFORE THE ASSESSING OFFICER AND IN ORDER TO PROTECT THE INTERESTS OF THE REVENUE THE COMMISSIONER IS ENTITLED TO EXAMINE ANY OTHER RECORDS WHICH ARE AVAILABLE AT THE TIME 8 I.T.A. NO. 663 & 76/KOL/2016 ASSESSMENT YEAR: 2010-11 SARLABEN BHANSALI CHARITIES TRUST OF EXAMINATION BY HIM AND TO TAKE INTO CONSIDERATION EVEN THOSE EVENTS WHICH AROSE SUBSEQUENT TO THE ORDER OF ASSESSMENT. 30. IN RAMPYARI DEVI SARAOGI (21 SUPRA) THE COMMISSIONER IN EXERCISE OF REVISIONAL POWERS CANCELLED ASSESSEES ASSESSMENT FOR THE YEARS 1952-1953 TO 1960-61 BECAUSE HE FOUND THAT THE INCOME TAX OFFICER WAS NOT JUSTIFIED IN ACCEPTING THE INITIAL CAPITAL THE GIFT RECEIVED AND SALE OF JEWELLERY THE INCOME FROM BUSINESS ETC. WITHOUT ANY ENQUIRY OR EVIDENCE WHATSOEVER . HE DIRECTED THE INCOME TAX OFFICER TO DO FRESH ASSESSMENT AFTER MAKING PROPER ENQUIRY AND INVESTIGATION IN REGARD TO THE JURISDICTION. THE ASSESSEE COMPLAINED BEFORE THE SUPREME COURT THAT NO FAIR OR REASONABLE OPPORTUNITY WAS GIVEN TO HER. THE SUPREME COURT HELD THAT THERE WAS AMPLE MATERIAL TO SHOW THAT THE INCOME TAX OFFICER MADE THE ASSESSMENTS IN UNDUE HURRY; THAT HE HAD PASSED A SHORT STEREO TYPED ASSESSMENT ORDER FOR EACH ASSESSMENT YEAR; THAT ON THE FACE OF THE RECORD THE ORDERS WERE PRE-JUDICIAL TO THE INTEREST OF THE REVENUE; AND NO PREJUDICE WAS CAUSED TO THE ASSESSEE ON ACCOUNT OF FAILURE OF THE COMMISSIONER TO INDICATE THE RESULTS OF THE ENQUIRY MADE BY HIM AS SHE WOULD HAVE A FULL OPPORTUNITY FOR SHOWING TO THE INCOME TAX OFFICER WHETHER HE HAD JURISDICTION OR NOT AND WHETHER THE INCOME TAX ASSESSED IN THE ASSESSMENT YEARS WHICH WERE ORIGINALLY PASSED WERE CORRECT OR NOT' 31. FROM THE ABOVE DECISIONS THE FOLLOWING PRINCIPLES AS TO EXERCISE OF JURISDICTION BY THE COMMISSIONER U/S.263 OF THE ACT CAN BE CULLED OUT: A) THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS NAMELY (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IT IS PREJUDICIAL TO THE REVENUE RECOURSE CANNOT BE HAD TO SEC.263 (1) OF THE ACT. B) EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE WHEN AN INCOME- TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE: OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. C) TO INVOKE SUOMOTU REVISIONAL POWERS TO REOPEN A CONCLUDED ASSESSMENT UNDER SEC.263 THE COMMISSIONER MUST GIVE REASONS; THAT A BARE REITERATION BY HIM THAT THE ORDER OF THE INCOME TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE WILL NOT SUFFICE; THAT THE REASONS MUST BE SUCH AS TO SHOW THAT THE AND MUST IRRESISTIBLY LEAD TO THE CONCLUSION THAT THE ORDER OF THE INCOME TAX OFFICER WAS NOT ONLY ERRONEOUS BUT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THUS WHILE THE INCOME TAX OFFICER IS NOT CALLED UPON TO WRITE AN ELABORATE JUDGMENT GIVING DETAILED REASONS IN RESPECT OF EACH AND EVERY DISALLOWANCE DEDUCTION ETC. IT IS INCUMBENT UPON THE COMMISSIONER NOT TO EXERCISE HIS SUOMOTU REVISIONAL POWERS UNLESS SUPPORTED BY ADEQUATE REASONS FOR DOING SO; THAT IF A QUERY IS RAISED DURING THE COURSE OF THE SCRUTINY BY THE ASSESSING OFFICER WHICH WAS ANSWERED TO THE SATISFACTION OF THE ASSESSING OFFICER BUT NEITHER THE QUERY NOR THE ANSWER WERE REFLECTED IN THE ASSESSMENT ORDER THIS WOULD NOT BY ITSELF LEAD TO THE CONCLUSION THAT THE ORDER OF THE ASSESSING OFFICER CALLED FOR INTERFERENCE AND REVISION. E) THE COMMISSIONER CANNOT INITIATE PROCEEDINGS WITH A VIEW TO START FISHING AND ROVING INQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED; THAT THE DEPARTMENT CANNOT BE PERMITTED TO BEGIN FRESH LITIGATION BECAUSE OF NEW VIEWS THEY ENTERTAIN ON FACTS OR 9 I.T.A. NO. 663 & 76/KOL/2016 ASSESSMENT YEAR: 2010-11 SARLABEN BHANSALI CHARITIES TRUST NEW CIRCUMSTANCE; THAT IF THIS IS PERMITTED LITIGATION WOULD HAVE NO END EXCEPT WHEN LEGAL INGENUITY IS EXHAUSTED F) WHETHER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE EXPENDITURE IN QUESTION HAS TO BE SEEN; THAT IF THERE WAS AN INQUIRY EVEN INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE COMMISSIONER TO PASS ORDERS UNDER SEC.263 MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER; THAT IT IS ONLY IN CASES OF LACK OF INQUIRY THAT SUCH A COURSE OF ACTION WOULD BE OPEN; THAT AN ASSESSMENT ORDER MADE BY THE INCOME TAX OFFICER CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE ACCORDING TO HIM THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY; THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT THE TAX WHICH WAS LAWFULLY 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 WAS JUST HAS BEEN IMPOSED. G) THE POWER OF THE COMMISSIONER UNDER SEC.263 (1) IS NOT COMMISSIONER IS ENTITLED TO EXAMINE ANY OTHER RECORDS WHICH ARE AVAILABLE AT THE TIME OF EXAMINATION BY HIM AND TO TAKE INTO CONSIDERATION EVEN THOSE EVENTS WHICH AROSE SUBSEQUENT TO THE ORDER OF ASSESSMENT. NOW WE EXAMINE THE FOLLOWING JUDGEMENTS. :- DIRECTOR OF INCOME TAX VS. JYOTI FOUNDATION 357 ITR 388 (DELHI HIGH COURT ) IT WAS HELD THAT REVISIONARY POWER U/S 263 IS CONFERRED ON THE COMMISSIONER/DIRECTOR OF INCOME TAX WHEN AN ORDER PASSED BY THE LOWER AUTHORITY IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. ORDERS WHICH ARE PASSED WITHOUT INQUIRY OR INVESTIGATION ARE TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE BUT ORDERS WHICH ARE PASSED AFTER INQUIRY/INVESTIGATION ON THE QUESTION/ISSUE ARE NOT PER SE OR NORMALLY TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE BECAUSE THE REVISIONARY AUTHORITY FEELS AND OPINES THAT FURTHER INQUIRY/INVESTIGATION WAS REQUIRED OR DEEPER OR FURTHER SCRUTINY SHOULD BE UNDERTAKEN. INCOME TAX OFFICER VS. DG HOUSING PROJECTS LTD343 ITR 329 (DELHI) REVENUE DOES NOT HAVE ANY RIGHT TO APPEAL TO THE FIRST APPELLATE AUTHORITY AGAINST AN ORDER PASSED BY THE ASSESSING OFFICER. S. 263 HAS BEEN ENACTED TO EMPOWER THE CIT TO EXERCISE POWER OF REVISION AND REVISE 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 EXPRESSION 'PREJUDICIAL TO THE INTEREST OF THE REVENUE' IS OF WIDE IMPORT AND IS NOT CONFINED TO MERELY LOSS OF TAX. THE TERM 'ERRONEOUS' MEANS A WRONG/INCORRECT DECISION DEVIATING FROM LAW. THIS EXPRESSION POSTULATES AN ERROR WHICH MAKES AN ORDER UNSUSTAINABLE IN LAW. THE ASSESSING OFFICER IS BOTH AN INVESTIGATOR AND AN ADJUDICATOR. IF THE ASSESSING OFFICER AS AN ADJUDICATOR DECIDES A QUESTION 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 AN 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 CASES THE ORDER BECOMES ERRONEOUS BECAUSE ENQUIRY OR VERIFICATION HAS NOT BEEN MADE AND NOT BECAUSE A WRONG ORDER HAS BEEN PASSED ON MERITS . 10 I.T.A. NO. 663 & 76/KOL/2016 ASSESSMENT YEAR: 2010-11 SARLABEN BHANSALI CHARITIES TRUST THUS IN CASES OF WRONG OPINION OR FINDING ON MERITS THE CIT HAS TO COME TO THE CONCLUSION AND HIMSELF DECIDE THAT THE ORDER IS ERRONEOUS BY CONDUCTING NECESSARY ENQUIRY IF REQUIRED AND NECESSARY BEFORE THE ORDER UNDER S. 263 IS PASSED. IN SUCH CASES THE ORDER OF THE ASSESSING OFFICER WILL BE ERRONEOUS BECAUSE THE ORDER PASSED IS NOT SUSTAINABLE IN LAW AND THE SAID FINDING MUST BE RECORDED. CIT CANNOT REMAND THE MATTER TO THE ASSESSING OFFICER TO DECIDE WHETHER 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 POSSIBLY THOUGH RARELY THE CIT CAN ALSO SHOW AND ESTABLISH THAT THE FACTS ON RECORD OR INFERENCES DRAWN FROM FACTS ON RECORD PER SE JUSTIFIED AND MANDATED FURTHER ENQUIRY OR INVESTIGATION BUT THE ASSESSING OFFICER HAD ERRONEOUSLY NOT UNDERTAKEN THE SAME. HOWEVER THE SAID FINDING MUST BE CLEAR UNAMBIGUOUS AND NOT DEBATABLE. THE MATTER CANNOT BE REMITTED FOR A FRESH DECISION TO THE ASSESSING OFFICER TO CONDUCT FURTHER ENQUIRIES WITHOUT A FINDING THAT THE ORDER IS ERRONEOUS. FINDING THAT THE ORDER IS ERRONEOUS IS A CONDITION OR REQUIREMENT WHICH MUST BE SATISFIED FOR EXERCISE OF JURISDICTION UNDER S. 263 OF THE ACT. IN SUCH MATTERS TO REMAND THE MATTER/ISSUE TO THE ASSESSING OFFICER WOULD IMPLY AND MEAN THE CIT HAS NOT EXAMINED AND DECIDED WHETHER OR NOT THE ORDER IS ERRONEOUS BUT HAS DIRECTED THE ASSESSING OFFICER TO DECIDE THE ASPECT/QUESTION. THIS DISTINCTION MUST BE KEPT IN MIND BY THE CIT WHILE EXERCISING JURISDICTION UNDER S. 263 OF THE ACT AND IN THE ABSENCE OF THE FINDING THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE EXERCISE OF JURISDICTION UNDER THE SAID SECTION IS NOT SUSTAINABLE. 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 ORDER OF THE ASSESSING OFFICER MAY BE OR MAY NOT BE WRONG. CIT CANNOT DIRECT RECONSIDERATION ON THIS GROUND BUT ONLY WHEN THE ORDER IS ERRONEOUS. AN ORDER OF REMIT CANNOT BE PASSED BY THE CIT TO ASK THE ASSESSING OFFICER TO DECIDE WHETHER THE ORDER WAS ERRONEOUS. THIS IS NOT PERMISSIBLE. AN ORDER IS NOT ERRONEOUS UNLESS THE CIT HOLD AND RECORDS REASONS WHY IT IS ERRONEOUS. AN ORDER WILL NOT BECOME ERRONEOUS BECAUSE ON REMIT THE ASSESSING OFFICER MAY DECIDE THAT THE ORDER IS ERRONEOUS. THEREFORE CIT MUST AFTER RECORDING REASONS HOLD THAT THE ORDER IS ERRONEOUS. THE JURISDICTIONAL PRECONDITION STIPULATED IS THAT THE CIT MUST COME TO THE CONCLUSION THAT THE ORDER IS ERRONEOUS AND IS UNSUSTAINABLE IN LAW. IT MAY BE NOTICED THAT THE MATERIAL WHICH THE CIT CAN RELY INCLUDES NOT ONLY THE RECORD AS IT STANDS AT THE TIME WHEN THE ORDER IN QUESTION WAS PASSED BY THE ASSESSING OFFICER BUT ALSO THE RECORD AS IT STANDS AT THE TIME OF EXAMINATION BY THE CIT. NOTHING BARS/PROHIBITS THE CIT FROM COLLECTING AND RELYING UPON NEW/ADDITIONAL MATERIAL/EVIDENCE TO SHOW AND STATE THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS. COMMISSIONER OF INCOME TAX VS. J. L. MORRISON (INDIA) LTD. 366 ITR AS REGARD THE SUBMISSION ON BEHALF OF THE REVENUE THAT POWER UNDER SECTION 263 OF THE ACT CAN BE EXERCISED EVEN IN A CASE WHERE THE ISSUE IS DEBATABLE IT WAS HELD THAT THE CASE OF CIT VS. M. M. KHAMBHATWALA WAS NOT APPLICABLE. THE OBSERVATION THAT THE COMMISSIONER CAN EXERCISE POWER UNDER SECTION 263 OF THE ACT EVEN IN A CASE WERE THE ISSUE IS DEBATABLE WAS A MERE PASSING REMARK WHICH IS AGAIN CONTRARY TO THE VIEW TAKEN BY THE APEX COURT IN THECASE OF MALABAR INDUSTRIAL COMPANY LTD. & MAX INDIA LTD. IF THE ASSESSING OFFICER HAS TAKEN A POSSIBLE VIEW IT CANNOT BE SAID THAT THE VIEW TAKEN BY HIM IS ERRONEOUS NOR THE ORDER OF THE ASSESSING OFFICER IN THAT CASE CAN BE SET ASIDE IN 11 I.T.A. NO. 663 & 76/KOL/2016 ASSESSMENT YEAR: 2010-11 SARLABEN BHANSALI CHARITIES TRUST REVISION. IT HAS TO BE SHOWN UNMISTAKABLY THAT THE ORDER OF THE ASSESSING OFFICER IS UNSUSTAINABLE. ANYTHING SHORT OF THAT WOULD NOT CLOTHE THE CIT WITH JURISDICTION TO EXERCISE POWER UNDER SECTION 263 OF THE ACT. CIT VS. M. M. KHAMBHATWALA REPORTED IN 198 ITR 144; CIT VS. RALSON INDUSTRIES LTD. REPORTED IN 288 ITR 322 (SC) NOT APPLICABLE; MALABAR INDUSTRIAL CO. LTD. V. CIT REPORTED IN 243 ITR 83 RELIED ON. (PARA 72) AS REGARD THE THIRD QUESTION AS TO WHETHER THE ASSESSMENT ORDER WAS PASSED BY THE ASSESSING OFFICER WITHOUT APPLICATION OF MIND IT WAS HELD THAT THE COURT HAS TO START WITH THE PRESUMPTION THAT THE ASSESSMENT ORDER WAS REGULARLY PASSED. THERE IS EVIDENCE TO SHOW THAT THE ASSESSING OFFICER HAD REQUIRED THE ASSESSEE TO ANSWER 17 QUESTIONS AND TO FILE DOCUMENTS IN REGARD THERETO. IT IS DIFFICULT TO PROCEED ON THE BASIS THAT THE 17 QUESTIONS RAISED BY HIM DID NOT REQUIRE APPLICATION OF MIND. WITHOUT APPLICATION OF MIND THE QUESTIONS RAISED BY HIM IN THE ANNEXURE TO NOTICE UNDER SECTION 142 (1) OF THE ACT COULD NOT HAVE BEEN FORMULATED. THE ASSESSING OFFICER WAS REQUIRED TO EXAMINE THE RETURN FILED BY THE ASSESSEE IN ORDER TO ASCERTAIN HIS INCOME AND TO LEVY APPROPRIATE TAX ON THAT BASIS. WHEN THE ASSESSING OFFICER WAS SATISFIED THAT THE RETURN FILED BY THE ASSESSEE WAS IN ACCORDANCE WITH LAW HE WAS UNDER NO OBLIGATION TO JUSTIFY AS TO WHY WAS HE SATISFIED. ON THE TOP OF THAT THE ASSESSING OFFICER BY HIS ORDER DATED 28 TH MARCH 2008 DID NOT ADVERSELY AFFECT ANY RIGHT OF THE ASSESSEE NOR WAS ANY CIVIL RIGHT OF THE ASSESSEE PREJUDICED. HE WAS AS SUCH UNDER NO OBLIGATION IN LAW TO GIVE REASONS. THE FACT THAT ALL REQUISITE PAPERS WERE SUMMONED AND THEREAFTER THE MATTER WAS HEARD FROM TIME TO TIME COUPLED WITH THE FACT THAT THE VIEW TAKEN BY HIM IS NOT SHOWN BY THE REVENUE TO BE ERRONEOUS AND WAS ALSO CONSIDERED BOTH BY THE TRIBUNAL AS ALSO BY US TO BE A POSSIBLE VIEW STRENGTHENS THE PRESUMPTION UNDER CLAUSE (E) OF SECTION 114 OF THE EVIDENCE ACT. A PRIMA FACIE EVIDENCE ON THE BASIS OF THE AFORESAID PRESUMPTION IS THUS CONVERTED INTO A CONCLUSIVE PROOF OF THE FACT THAT THE ORDER WAS PASSED BY THE ASSESSING OFFICER AFTER DUE APPLICATION OF MIND. MEERUT ROLLER FLOUR MILLS PVT. LTD. VS. C.I.T. ITA NO. 116 /COCH/ 2012; CIT VS. INFOSYS TECHNOLOGIES LTD. 341 ITR 293 (KARNATAKA); S.N. MUKHERJEE VS. UNION OF INDIA AIR 1990 SC 1984; A. A. DOSHI VS. JCIT 256 ITR 685; HINDUSTHAN TIN WORKS LTD. VS. CIT 275 ITR 43 (DEL) DISTINGUISHED. (PARAS 90-92 102) COMMISSIONER OF INCOME TAX VS. SOHANA WOOLLEN MILLS 296 ITR 238 (P&H HC) A REFERENCE TO THE PROVISIONS OF S. 263 SHOWS THAT JURISDICTION THEREUNDER CAN BE EXERCISED IF THE CIT FINDS THAT THE ORDER OF THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. MERE AUDIT OBJECTION AND MERELY BECAUSE A DIFFERENT VIEW COULD BE TAKEN WERE NOT ENOUGH TO SAY THAT THE ORDER OF THE AO WAS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE JURISDICTION COULD BE EXERCISED IF THE CIT WAS SATISFIED THAT THE BASIS FOR EXERCISE OF JURISDICTION EXISTED. NO RIGID RULE COULD BE LAID DOWN ABOUT THE SITUATION WHEN THE JURISDICTION CAN BE EXERCISED. WHETHER SATISFACTION OF THE CIT FOR EXERCISING JURISDICTION WAS CALLED FOR OR NOT HAS TO BE DECIDED HAVING REGARD TO A GIVEN FACT SITUATION. IN THE PRESENT CASE THE TRIBUNAL HAS HELD THAT THE ASSESSEE HAD DISCLOSED THAT OUT OF SALE CONSIDERATION A SUM OF RS. 1 LAKH WAS TO BE RECEIVED FOR SALE OF PERMIT. IF THAT IS SO THERE WAS NO ERROR IN THE VIEW TAKEN BY THE AO AND NO CASE WAS MADE OUT FOR INVOKING JURISDICTION UNDER S. 263. APPLYING THE PROPOSITIONS OF LAW LAID DOWN IN ALL THESE CASE LAWS TO THE FACTS OF THIS CASE WE UPHOLD THE CONTENTION OF THE ASSESSEE 12 I.T.A. NO. 663 & 76/KOL/2016 ASSESSMENT YEAR: 2010-11 SARLABEN BHANSALI CHARITIES TRUST THAT THE EXERCISE OF POWERS BY THE LD. CIT U/S 263 OF THE ACT IS BAD IN LAW. HENCE WE CANCEL THIS ORDER PASSED UNDER SECTION 263 OF THE ACT. 11. IN VIEW OF THE ABOVE DISCUSSION WE HAVE NO HESITATION IN HOLDING THAT THE ORDER PASSED UNDER SECTION 263 OF THE ACT IS BAD IN LAW. 12. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 76/KOL/2016 13. THIS IS APPEAL AGAINST THE CANCELLATION OF REGISTRATION GRANTED TO THE UNDER SECTION 12AA OF THE ACT BY THE LD. CIT (EXEMPTION) KOLKATA BY INVOKING HIS POWERS UNDER SECTION 12AA(3) OF THE ACT VIDE HIS ORDER DATED 11.12.2015. 14. THE ONLY SUBMISSION OF THE ASSESSEE IS THAT THE CANCELLATION OF REGISTRATION UNDER SECTION 12AA(3) OF THE ACT WHICH WAS DONE RETROSPECTIVELY IS WRONG AND THAT IT IS EFFECTIVE ONLY FROM 11.12.2015 I.E. THE DATE OF PASSING OF THE ORDER. 15. WE FIND THAT THIS LEGAL SUBMISSION OF THE ASSESSEE IS SUPPORTED BY THE FOLLOWING DECISION OF THE ITAT IN THE CASE OF AGRA DEVELOPMENT AUTHORITY VS CIT 141 ITD 336 WHICH IS EXTRACTED BY US IN PARA 6 OF THIS COMBINED ORDER. 16. RESPECTFULLY APPLYING THE PROPOSITIONS LAID DOWN IN THE ABOVE DECISIONS TO THE FACTS OF THIS CASE WE UPHOLD THE CONTENTION OF THE 13 I.T.A. NO. 663 & 76/KOL/2016 ASSESSMENT YEAR: 2010-11 SARLABEN BHANSALI CHARITIES TRUST ASSESSEE AND HOLD THAT THE RETROSPECTIVELY CANCELLATION OF THE REGISTRATION GRANTED TO THE ASSESSEE IS BAD IN LAW. 17. IN THE RESULT THIS APPEAL OF THE ASSESSEE IS ALLOWED IN PART. 18. THUS ITA NO. 663/KOL/2016 IS ALLOWED AND ITA NO. 76/KOL/2016 IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER 2017. SD/- SD/- (S.S. VISWANETHRA RAVI) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30/11/2017 BISWAJIT SR. PS COPY OF ORDER FORWARDED TO: 1. SARLABEN BHANSALI CHARITIES TRUST C/O. V.N. PUROHIT & CO. CHARTERED ACCOUNTANTS DIAMOND CHAMBERS UNIT-III 4 TH FLOOR SUIT NO. 4G 4 CHOWRINGHEE LANE KOLKATA 7 016. 2. CIT (EXEMPTION) 10B MIDDLETON ROW 6 TH FLOOR KOLKATA 700071. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY BY ORDER SR. P.S. / H.O.O. ITAT KOLKATA