TMI Blog2020 (11) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 10B of the IT Act. The decision of the AO to allow such deduction to the Assessee without making any inquiries whatsoever or rather without addressing the issue in his order, rendered his order quite erroneous and prejudicial to the interests of the Revenue. At this stage, therefore, it will not be appropriate for us to examine the issue as to whether the Assessee indeed fulfilled the requirements of Section 10B of the IT Act during the relevant assessment year. It is for the Appellate Authority to go into the issue of eligibility of the Assessee for deduction under Section 10B of the IT Act during the relevant assessment year. Therefore, it will not be appropriate for us, at this stage and in these proceedings to go into such issues, now that we have held that there was no error in exercise of revision jurisdiction by the CIT for the relevant assessment year. - Decided against assessee. - TAX APPEALS NO.27/2015 AND 28/2015 - - - Dated:- 2-11-2020 - M.S. Sonak Dama Seshadri Naidu, JJ. Mr. P. Pardiwalla, Senior Advocate with Mr. Pranav Kakodkar, Advocate for the Appellant. Ms. Susan Linhares, Standing Counsel for the Respondents. JUDGMENT : - (Per M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Assessee's claim for deduction under Section 10B of the IT Act in respect of the Assessee's plant at Codli mines. 8. On 14/2/2012, the Commissioner of Income Tax (CIT) issued notice to the Assessee invoking the provisions of Section 263 of the IT Act and requiring the Assessee to show cause as to why the AO's order dated 23/12/2009 be not revised on the grounds referred to in the notice. 9. The Assessee filed a response dated 1/3/2012, pointing out that there were errors in the assessment order date 23/12/2009. This was followed by yet another response dated 15/3/2012, in the context of various issues raised in the CIT's notice dated 14/2/2012, purporting to invoke revision powers under Section 263 of the IT Act. 10. CIT, on 23/3/2012, issued yet another notice under Section 263 of the IT Act, mainly relating to the issue of additional depreciation. The Assessee responded to this notice on 29/3/2012. 11. The CIT, vide order dated 29/3/2012 exercising revision powers under Section 263 of the IT Act, set aside the AO's order dated 23/12/2009 and directed the AO to undertake a fresh assessment for the Assessment Year 2006-07. 12. The Assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication of mind, concluded that the Assessee was entitled to deduction under Section 10B of the IT Act. He submits that this was a correct view or, in any case, a plausible view taken by the AO. The CIT, in such a situation, lacked jurisdiction to style the AO's order dated 23/12/2009 as erroneous and interfere with the same by exercising revision jurisdiction. He submits that the settled law is that a plausible view of the AO is not interfered with by the CIT in exercise of powers under Section 263 merely because the Commissioner may entertain a different view in the matter. He relies on the following decisions in support of his contention: (a) Commissioner of Income Tax vs. Max India Ltd. 295 ITR 282 (SC); (b) CIV vs. Design Automation Engineers (Bom.) (P) Ltd 323 ITR 623 (Bom).. 16. Mr. Pardiwalla contends that even assuming that this is a case of inadequate consideration on the issue of claim under Section 10B of the IT Act, the Commissioner still has no jurisdiction under Section 263 of the IT Act to interfere with such order. He relies on the following decisions in support of this contention: (i) CIT vs. Vodafone Essar South Ltd.2012 Taxman 184 (De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the issue of deduction under Section 10B of the IT Act in respect of this very Assessee for the Assessment Year 2005-06. She points out that the claim for deduction has to be considered in respect of each assessment year, depending upon whether the Assessee fulfills the prerequisites for the relevant assessment year or not. 21. Ms. Linhares also relies on the decision of the Hon'ble Supreme Court in Malabar Industrial Co. Ltd. (supra) to submit that where the AO accepts any entry in the statement of account of the Assessee without any supporting materials and without making any inquiry, such exercise of jurisdiction by the Commissioner under Section 263(1) is justified. 22. Ms. Linhares also relied upon Rampyari Devi Saraogi vs. CIT 67 ITR 84 (SC) to submit that the CIT in this case had merely directed the AO to consider the issue of deduction under Section 10B of the IT Act afresh and, therefore, the Assessee was not prejudiced in any manner. She points out that in similar circumstances, the High Court, as well as the Supreme Court, had refused to interfere with the exercise of revision jurisdiction by the Commissioner. 23. For all the aforesaid reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/12/2009. However, according to us, this by itself can never be regarded as sufficient. What is further necessary is that the AO actually applies his mind to the information that may be supplied by the Assessee and considers such information and thereafter forms an opinion whether the Assessee is actually entitled to deduction under Section 10B of the IT Act for the relevant assessment year. There is a distinction between merely calling for information on a particular issue and considering such information with due application of mind if and when such information is actually provided by the Assessee. 32. Now, if the order dated 23/12/2009 made by the AO is perused, we find merit in the contention of Ms. Linhares that there was no consideration whatsoever of the information provided by the Assessee in the context of its claim for deduction under Section 10B of the IT Act. The assessment order dated 23/12/2009 indicates that the AO has not even considered, much less, applied his mind to such information before allowing the deduction under Section 10B of the IT Act. On perusal of the assessment order dated 23/12/2009, an impression is created that the AO proceeded on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter. This decision is also an authority for the proposition that revision jurisdiction is not to be exercised merely because the Commissioner is of the opinion that the inquiries made by the AO were inadequate. 35. In the present case, however, whatever status of the queries, it is apparent that the AO did not even bother to look into or consider the information provided by the Assessee in the context of the claim for deduction under Section 10 of the IT Act. Therefore, this is not a case of some inadequate inquiries. This is a case of no inquiries. This is a case of non-consideration and consequently, non-application of mind to the material on record 36. In Malabar Industrial Co. Ltd. (supra), the Hon'ble Supreme Court has held that the revision jurisdiction under Section 263 of the IT Act cannot be invoked to correct each and every type of mistake or error committed by the AO. It is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court noted that the AO had not only made detailed inquiries, but recorded a finding that the Assessee had duly proved the identity, source and creditworthiness of donors. In these circumstances, the Court held that if two views are possible and the AO has taken one of the possible views, no occasion to exercise powers of revision can arise. In this case, this Court has also observed that power of revision can be exercised only where there was no inquiry as required under law and not where inquiry was held and the same was inadequate. 41. In NTPC Ltd. vs. CIT. (2014) 45 Taxman.com 527 (Delhi) it was held that where the view taken by the AO is endorsed by law, there was no question of exercise of revision jurisdiction by the Commissioner. The Court reiterated the legal position that as long as the AO's opinion is a plausible one, the exercise of revision powers would be unwarranted. 42. The principles in Max India Ltd. (supra) and Design Automation Engineers (Supra) are of no assistance to the Assessee because this is not a case of interference with a plausible view of the AO based on some different opinion held by the Commissioner. 43. In K.A. Ramaswamy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or not, and whether the income assessed in the assessment orders which were originally passed was correct or not. 47. The circumstance that for certain subsequent assessment years the claim of the Assessee for deduction under Section 10B of the IT Act was allowed by the ITAT is not strictly speaking relevant to determining whether revision jurisdiction was correctly invoked. Firstly, the view taken by the ITAT has till date, not attained the finality. Secondly, the view was in the context of the subsequent assessment years. It is possible that for a given assessment year the Assessee does not fulfill the prerequisites for claiming the deduction under Section 10B of the IT Act, but for the subsequent years such prerequisites are duly fulfilled. For the assessment year with which we are concerned, the AO, without considering the material on record and without application of mind to the responses furnished by the Assessee, proceeded on the basis that the Assessee was entitled to the deduction under Section 10B of the IT Act. In these circumstances, it cannot be said that the CIT exceeded the jurisdiction in exercising powers under Section 263 of the IT Act. 48. From the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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