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TMI Blog2011 (6) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... Gujarat, and in respect of this power plant that the assesse claimed deduction under section 80IA of the Act, amounting to Rs. 45,55,08,392. While this claim was allowed in the course of the scrutiny assessment proceedings under section 143(3), as was the accepted past history of the case right since assessment year 2001-02, learned Commissioner, on 25th February 2010, required the assesse to show cause as to why the assessment order so allowing the claim not be subjected to revision under section 263. In the show cause notice, learned Commissioner observed as follows: On examination of the records for the A.Y. 2005-06, it is noticed that assessment order passed u/s.143(3) of the Income tax Act, 1961 on 20.12.2007 by the ACIT- 2(3), Mumbai in your case is erroneous and also prejudicial to interest of revenue in view of the fact that the Assessing Officer while passing order u/s.143(3) allowed a deduction of Rs. 45,55,08,392 u/s. 80IA in respect of notional profit earned on production of electricity and steam. The deduction allowed in respect of steam worked out to Rs. 22,10,31,452, which is not allowable since steam is a transient product does not have any shelf life. The wrong a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment under section 263 on technical grounds rather than on merits. However, on going through various decisions cited by the assessee, it is seen that the facts and circumstances of the case are distinguishable from the facts of the cases cited by the assessee. There are two Supreme Court decisions, namely Rampyari Devi Sarogi Vs CIT ( 67 ITR 84) and Tara Devi Agarwal Vs CIT ( 88 ITR 323), in which it has been categorically held that the Commissioner may consider the order as erroneous even if error of law may not be apparent on the face of the order. An order which simply accepts what the assessee has stated in his return and fails to make out enquiries which are called for in the circumstances of the case, is an erroneous order as per the Apex Court. In the present case, the Assessing Officer failed to make proper enquiries and accepted the claim of the assessee for deduction under section 80IA on notional profits on production of steam. This also resulted in the assessment order being prejudicial to the interest of the revenue. Since both these conditions are satisfied, I am of the opinion that this is a fit case for applying section 263..." 5. Learned Commissioner then procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m or whether it was a case for revision on the ground that the Assessing Officer did not make necessary verifications about the claim made by the assessee. The reason given in the show cause notice is former, while the reason for which revision powers are finally exercised in the impugned order are latter. Even with regard to the reasons of ineligibility of deduction under section 80 IA in respect of notional sale of steam, the reasons are different at the notice stage and at the time of the impugned order, but all that ceases to be relevant because the ground on which the assessment is finally set aside is that "the Assessing Officer f ailed to make proper enquiries". The reasons for which impugned assessment is set aside is thus entirely different from the reasons which were set out in the show cause notice. 8. As to whether such an exercise of revision powers, on the grounds other than the grounds of revision as set out in the show cause notice, could be held to be sustainable in law, we find guidance from the decisions of a coordinate bench in the case of Maxpack Investments Ltd Vs ACIT (13 SOT 67) which, inter al ia, observes as follows: In CIT v. G.K. Kabra [1995] 211 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT under section 263 and the powers of the Tribunal while dealing with an appeal against the order passed under that section were explained in that decision. The CIT had found the order of the Assessing Officer allowing continuation of registration to the assessee-firm to be erroneous on the ground that the actual distribution of the profits was different from the ratio mentioned in the deed of partnership. The Tribunal set aside the order of the CIT but while doing so observed that there was a change in the number of partners from 10 to 11 which fact had not been taken into account by the Assessing Officer when he granted registration for the firm for the assessment year 1966-67 and thus the grant of registration was erroneous. On the basis of this observation it was argued before the High Court on behalf of the Revenue that the Tribunal ought to have sustained the order of the CIT on that ground. Repelling the contention, it was held by the High Court as under (pages 502-3) : "The jurisdiction vested in the Commissioner under section 263(1) of the Act is of a special nature or, in other words, the Commissioner has the exclusive jurisdiction under the Act to revise the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as it is prejudicial to the interests of the Revenue. ...................... 9. In the case of Synergy Enterprises Solutions Pvt Ltd Vs DCIT (ITA No 2076/Mum/2010; order dated 31st March 2011), a coordinate bench had an occasion to deal with a materially identical situation. As held in this decision, following Maxpack Investments 13 SOT 67 (Del), G.K. Kabra 211 ITR 336 (AP) and Jagadhri Electric Supply 140 ITR 490 (P&H), if a ground of revision is not mentioned in the show-cause notice, it cannot be made the basis of the order for the reason that the assessee would have had no opportunity to meet the point. While learned Departmental Representative does not dispute this position and that decision of the coordinate bench squarely covers the issue, he urges us to at best remit the matter to the file of the CIT(A) so as the assessee can be given an opportunity to meet the point on which revision powers are exercised, even though, according to the learned Departmental Representative, strictly speaking even this partial relief is not due to the assesse because subject matter of the revision has remained the same as was set out in the notice, i.e. deduction under section 80 IA in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven by the Supreme Court to the concept of equality which is the subject-matter of that Article and that violation of principles of natural justice by a State action is a violation of Article 14. A quasi-judicial or administrative decision rendered or an order made in violation of the rule of audi alteram partem is null and void and the order made in such a case can be struck down as invalid on that score alone (Maneka Gandhi vs. Union of India AIR 1978 SC 597; Gangadharan Pillai vs. ACED (1978) 8 CTR (Ker) 352 : (1980) 126 ITR 356 (Ker) at pp. 365 to 367). In other words, the order which infringes the fundamental principle, passed in violation of audi alteram partem rule, is a nullity. When a competent Court or authority holds such an order as invalid or sets it aside, the impugned order becomes null and void. (Nb. Khan Abbas Khan vs. State of Gujarat AIR 1974 SC 1471 at 1479). 10. Once we come to the conclusion that the impugned order is null and void, it is not for us to advise the Commissioner as to what should he do. He is always at liberty to do whatever action he can take in accordance with the law, but we cannot give life to a null and void order by remitting it back to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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