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TMI Blog2012 (6) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... al to interests of the revenue and therefore, the proceedings are bad in law. (3) That on the fact and in the circumstances of the case, the ld. CIT was not justified rather grossly erred in not adjudicating the issues involved in the proceedings u/s. 263 on merit when all the material facts and evidences where on record at the time of hearing. 2. By way of a petition seeking admission of additional ground of appeal, the assessee has also raised the following grievance : - "That on the facts and in the circumstances of the case, the impugned revision order u/s. 263 dated 29.01.2010 is barred by the period of limitation in terms of sub-section (2) of section 263". 3. To adjudicate on this appeal, only a few material facts need to be taken note of. The assessee is engaged in the business of manufacturing and trading in refractories. The order sought to be revised by way of impugned revision proceedings was passed by the Assessing Officer under section 147 read with section 143(3) on 7th December, 2007. Subsequent to finalisation of the said re-assessment proceedings, a show-cause notice was served upon the assessee by the ld. Commissioner, requiring the assessee to show cause as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The assessee is aggrieved and is in appeal before us. 5. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case as also the applicable legal position. 6. We find that the impugned revision order is indeed not sustainable in law for the very elementary reason that the grounds on which order was subjected to revision are different, vis-à-vis the grounds on which revision proceedings were actually initiated. A plain reading of the impugned revision order clearly shows that the conclusions drawn in the revision proceedings, which are extracted earlier in this order, are materially different than the reasons for which revision proceedings were initiated. While in the show-cause notice, learned Commissioner states that "the order passed by the Assessing Officer was erroneous and prejudicial to the interest of revenue because the Assessing Officer did not assess the amount of Rs.55 lakhs received by Vesuvius India Ltd. (the assessee) as repairs of machinery charges and he did not assess a sum of Rs.2,41,81,436/- being contract receipts for A.Y. 2002- 03", in the revision order, learned Commissioner abundance this stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income-tax lacks initial jurisdiction, particularly when the conclusion made by the Commissioner of Income-tax in the order under section 263 was on the basis of the information furnished in response to the initial notice ?" While declining to refer the above question, the High Court held as under (pages 339-340) : "The necessary implication in the expression "after giving opportunity of being heard" relates to the point on which the Commissioner considers the order to be erroneous and prejudicial to the interests of the revenue. In other words, it is necessary for the commission to point out the exact error in the order which he proposes to revise so that the assessee would have an adequate opportunity of meeting the error before the final order is made." [Emphasis supplied] In the case before the High Court, the show-cause notice referred to two issues to which the assessee had given satisfactory replies. No action was taken under sect ion 263 in respect of these two issues. However, in the said order the CIT mentioned the hire charges as the ground for revising the assessment. This point had not been mentioned as a ground in the show-cause notice. The High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice issued by him under section 263(1) of the Act, he is not satisfied, he may pas s the necessary orders. Of course, the order thus passed will contain the grounds for holding the order of the ITO to be erroneous, as contemplated under sect ion 263(1) of the Act.... The Tribunal cannot uphold the order of the Commissioner on any other ground which, in its opinion, was available to the Commissioner as well. If the Tribunal is al lowed to find out the ground available to the Commissioner to pass an order under section 263(1) of the Act, then it will amount to a sharing of the exclusive jurisdiction vested in the Commissioner, which is not warranted under the Act. It is all the more so, because the revenue has not been given any right of appeal under the Act against an order of the Commissioner under section 263(1) of the Act.... Under section 263 of the Act it is only the Commissioner who has been authorized to proceed in the matter and, therefore, it is his satisfaction according to which he may pass necessary orders thereunder in accordance with law. If the grounds which were available to him at the time of the passing of the order do not find a mention in his order appealed ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed of these analysis, unless learned Commissioner points out errors in the order of Assessing Officer, which has not been pointed out before us, he cannot invoke his powers under section 263. 9. Having said so, we may also make it clear that in view of the judgement of the Hon'ble Delhi High Court in the case of CIT vs Vee Gee Enterprises [99 ITR 375], an assessment order is rendered erroneous and prejudicial to the interest of revenue in a situation in which Assessing Officer remains passive in the face of a return which is apparently in order but calls for further enquiry. However, the facts of the present case are distinct from this judicial precedence on two material counts. Firstly, in the present case, proceedings were not initiated on the grounds that adequate enquiries were not carried out. The Commissioner has not alleged in the show cause notice that adequate enquiries were not carried out, and again, it is elementary that no person can be condemned unheard, and therefore, the assessee not having been heard on the quest ion whether or not adequate enquiries were carried out, learned Commissioner could not have subjected the re-assessment order to revision proceedings on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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