TMI Blog2018 (11) TMI 1421X X X X Extracts X X X X X X X X Extracts X X X X ..... erest of the revenue within the terms of section 263 of the Act. Once the impugned issue was considered and examined by the AO Commissioner cannot set aside the order without recording a contrary finding. - Decided in favour of assessee. - ITA No.3225/Del/2013 And ITA No.695/Del/2016 - - - Dated:- 11-10-2018 - SHRI G.D.AGRAWAL, HON BLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For The Revenue : Shri S.S.Rana, CIT, DR For The Assessee : Shri Rohit Jain, adv., Sh. Deepesh Jain, CA ORDER PER BENCH : ITA No. 3225/Del/2013 is the appeal preferred by the assessee against order dated 21.03.2013 passed u/s 263 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) by the Ld. Commissioner of Income Tax, Meerut for assessment year 2008-09. ITA No. 695/Del/2016 is the assessee s appeal against order dated 11.01.2016 passed by the Ld. CIT (Appeals), Meerut for assessment year 2008-09 wherein the assessee s appeal challenging the additions made in the assessment u/s 143(3) of the Act consequent to the order passed u/s 263 of the Act was partly allowed. Both the appeals were heard together and are being disposed of by this common or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above conclusion, because in the end of the same para 3(i) of the order she has held that the expenditure should have been treated as deferred revenue expenditure. The entire expenditure claimed being allowable, restriction of the claim to 1/5 of ₹ 25,87,500/- i.e. ₹ 5,17,500/- and disallowance of ₹ 20.70,000/- by her on vague grounds, without any basis, is bad-in-law, arbitrary, and uncalled for in view of the facts and circumstances of the case and the material on record. 4. That without prejudice to grounds No. 1 and 2 above, in view of the facts and circumstances of the Case and the material on record the learned Commissioner of Income Tax erred in partly setting aside the assessment order with regard to the claim of expenses under the heads Labour and Gardening. The directions given on the basis of erroneous conclusions are bad-in-law, arbitrary and uncalled for. 2.1 Further, consequent to the order passed u/s 263 of the Act, the AO pass the assessment order on 14.02.2014 by completing the assessment at ₹ 3,93,71,700/-. After making a disallowance of ₹ 20,70,000/-out of the amount paid to cricketers by treating 4/5of the same as def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cricketers was to be treated as deferred revenue expenditure whereas the AO had allowed the same as revenue expenditure. It was also submitted that similar expenses were being allowed without any adverse inference until the immediately preceding year. The Ld. Authorised Representative also placed on record copy of the ITAT order in assessee s own case for A.Y. 1996-97 in ITA No. 2246/Del/2000 wherein an addition of ₹ 4,00,000/- made by the AO on similar expenses was made and the Tribunal had deleted this addition by noting that this expenditure had been allowed in other years also. The Ld. Authorised Representative submitted that it was not the case of the Ld. CIT that AO had not made any inquiry on the issues which were raised by the Ld. CIT in the show cause notice. The Ld. Authorised Representative placed reliance on numerous judicial precedents and vehemently argued that the proceeding u/s 263 of the Act had been wrongly initiated. 3.1 On the merits of the additions sustained by the Ld. CIT (A), the Ld. Authorised Representative vehemently argued that the Ld. CIT (A) had brushed aside the voluminous documents submitted by the assessee in support of the claim of the exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is undoubtedly supervisory in nature. The opening words of Section 263 empower the Commissioner to call for and examine the record of any proceedings under the Act. A bare reading of Section 263 also makes it clear that 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 interest of the revenue. If one of them is absent - if the order of the Assessing 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 Section 263(1) of the Act [See Malabar Industrial Co. Ltd. vs. CIT, (2000) 243 ITR 83 (SC)]. 5.2 As regards the scope and ambit of the expression erroneous , a Division Bench of the Hon ble Bombay High Court in CIT vs. Gabriel India Ltd., (1993) 203 ITR 108 (Bombay), held with reference to Black's Law Dictionary that an erroneous judgment means one rendered according to course and practice of Court, but contrary to law, upon mistaken view of law; or upon erroneous application of legal principles and thus it is clear that an order cannot be terms as erroneo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough subtle distinction, between lack of inquiry and inadequate inquiry . It is only in cases of lack of inquiry that the Commissioner is empowered to exercise his revisional powers by calling for and examining the records of any proceedings under the Act and passing orders thereon. In Gabriel India Ltd. (supra), it was expressly observed:- The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity [see Parashuram Pottery Works Co. Ltd. vs. ITO, (1977) 106 ITR 1 (SC)]. 5.5 It was further observed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elaborate judgment giving detailed reasons in respect of each and every disallowance, deduction, etc., it is incumbent upon the Commissioner not to exercise his suo moto revisional powers unless supported by adequate reasons for doing so. 5.7 The Hon ble Madras High Court held in the case of CIT v Valliammal (D.) (1998) 230 ITR 695 (Mad) that assessment order made after considering all fact and information cannot be revised. Where the assessee had furnished the requisite information and the Assessing Officer had completed the assessment after considering and the facts but the commissioner revised the assessment order on the ground that the Assessing Officer had not made proper enquiries, the Tribunal was held justified in reversing the order of the commissioner and restoring that of the assessing officer. Commissioner cannot re-examine accounts and substitute his judgment for that of the Assessing Officer. An order cannot be termed as erroneous unless it is not in accordance with law. If assessing officer makes assessment in accordance with law, the same cannot be branded as erroneous by the commissioner simply because, according to him, the order should have been written mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture. This argument predicates on the assessment order, which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would 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 assessment order is not required to give detailed reason 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 allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between lack of inquiry and inadequate inquiry . If there was any inquiry, 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 a different opinion in the matter. It is only in cases of lack of inquiry that such a course of action would be open. 5.9 In the instant appeal before us, it is not the Department s case that no information regarding the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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