TMI Blog1993 (4) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... of two existing plants for the manufacturing of shock absorbers, which were located side by side at its factory at Mulund. The case of the assessee was that as the lay-out of the two plants was not conducive, the management decided to merge those two plants and re-lay-out the same according to the flow of operations conducive to more production. This exercise of merging the two plants necessarily called for relocation of the facilities as well as adopting the existing structure and other services necessary for the plant as a whole. The above expenditure had been incurred by the assessee for that purpose. Under the circumstances, according to the assessee, it was a business expenditure allowable as deduction in computation of his income. The Income-tax Officer accepted the explanation of the assessee and allowed the deduction as claimed by it. After the completion of the assessment, the Commissioner of Income-tax ("the Commissioner") issued notice to the assessee under section 263 of the Act stating that the order of the Income-tax Officer was erroneous and prejudicial to the Revenue in so far as it related to the allowance of deduction of the above amount of Rs. 99,326 as the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... himself come to a finding that the order in question is erroneous and only after arriving at such finding, he can set aside the order. As, according to the Tribunal, the Commissioner had not done so, the order passed by him under section 263 of the Act was held to be not tenable in law. Aggrieved by the order of the Tribunal, the Commissioner has come to this court by way of reference of the questions set out above under section 256(1) of the Act. We have heard learned counsel for the parties and carefully perused the orders of the Income-tax Officer, the Commissioner and the Tribunal. On perusal of the admitted facts, it appears that the Income-tax Officer in the instant case had examined the allowability of the claim of the assessee for deduction of the above amount of Rs. 99,326. While doing so, he asked for an explanation from the assessee in regard to the nature thereof. The assessee furnished a detailed explanation, vide his letter dated September 19, 1975. It was on a consideration of the said explanation and on being satisfied that it was a revenue expenditure that the Income-tax Officer allowed the claim for deduction. It is, however, correct that in his order, he did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. 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. ( Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1 (SC), at page 10). As observed in Sirpur Paper Mills Ltd. v. ITO [1978] 114 ITR 404, 407 (AP) by Raghuveer J. (as his Lordship then was), the Department cannot be permitted to begin fresh litigation because of new views ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner, on perusal of the records, 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. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the Commissioner the order in question is prejudicial to the interests of the Revenue. But that by itself will not be enough to vest the Commissioner with the power of suo motu revision because the first requirement, viz., that the order is erroneous, is absent. Similarly, if an order is erroneous but not prejudicial to the interests of the Revenue, then also the power of suo motu revision cannot be exercised. Any and every erroneous order cannot be the subject-matter of revision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the court it would be open to the courts to examine whether the relevant objective factors were available from the records called for and examined by such authority. Our aforesaid conclusion gets full support from a decision of Sabyasachi Mukharji J.(as his Lordship then was) in Russell Properties Pvt. Ltd. v. A. Chowdhury, Add CIT [1977] 109 ITR 229 (Cal). In our opinion, any other view in the matter will 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 enquiries in matters which have already been concluded under the law. As already stated it is a quasi-judicial power hedged in with limitation and hat to be exercised subject to the same and within its scope and ambit. So far as calling for the records and examining the same is concerned, undoubtedly, it is an administrative act, but on examination "to consider" or in other words, to form an opinion that the particular order is erroneous in so far as it is prejudicial to the interests of the Revenue, is a quasi-judicial act because on this consideration or opinion the whole machinery of re-examination and reconsideration ..... X X X X Extracts X X X X X X X X Extracts X X X X
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