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TMI Blog2018 (11) TMI 1322X X X X Extracts X X X X X X X X Extracts X X X X ..... ire in case of inadequate inquiry. Our view is fortified by the decision of Hon'ble High Court of Bombay in the case of CIT vs. Nirav Modi, [2016 (6) TMI 1004 - BOMBAY HIGH COURT] - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... e has claimed deduction u/s 801A as reflected in the body of the assessment order. The DC IT Circle 5(1), New Delhi vide F. No. DCIT/Circle 5(2)/2015-16/714 dated 03.03.2016 has moved a proposal for invoking provision of section 263 of the I.T. Act, 1961 for the captioned A.Y. as the company had failed to place on assessment record all the supporting and relevant documents relating to the nature of business activities having been actually conducted during the F.y. 2010-11 relevant to A.Y. 2011-12. On account of non compliance and non submission of the documents asked for in this case from time to time vide notice u/s 142(1) of the I.T. Act dated 22.08.2013 issued in this case by the assessing officer and duly served upon the assessee. The company failed to adduce the supporting evidence as relevant to the deduction claimed u/s 80IA. In the return of income under the head taxes paid it has claimed credit for TDS of ₹ 8,78,93,767/- as Tax deducted at Source. The receipt of income under the corresponding provision of the I.T. Act, 1961 which were a subject matter of deduction of the TDS were not placed on record. Keeping all the above facts and the assessment record for the A.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. The assessee filed a detailed reply and submitted the documents with reference to the aforesaid questionnaire on 05.09.2013. At point No. 19, details of deduction claimed from the taxable income were furnished alongwith the following Note on the Business: "The Airport Authority of India ("AAI"), an organization working under the Ministry of Civil Aviation that manages most of the airports in India, and Delhi International Airport Pvt. Ltd (DIAL} entered into an Operation, Management and Development Agreement dated 4 April 2006 (the "OMDA"} whereby AAI has granted to DIAL the exclusive right and authority during the term of the OMDA to operate, maintain, develop, design, construct, upgrade, modernize, finance and manage the Indira Gandhi International Airport at New Delhi, India. Pursuant to the Concession Agreement dated 24 August 2009, DIAL granted Celebi Hava Servisi A.S ("Celebi") the rights for up gradation, modernization, financing, operation, maintenance and management of the cargo terminal at the airport for a term of 25 years. Celebi was incorporated M/s Celebi Delhi Cargo Terminal Management India Private Limited (the Concessionair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has furnished complete detail on the claim of deduction u/s 80IA of the Act alongwith detailed report in Form No. 10CCB. 20. The Revenue alleges that the assessment order is cryptic as the Assessing Officer has not given any clear finding on the claim of deduction u/s 80IA of the Act and, therefore, assessment order is erroneous and in so far as it is prejudicial to the interest of the Revenue. 21. The Hon'ble Bombay High Court in the case of Gabriel India Ltd 203 ITR 108 has held as under: "The power of suo motu revision under subsection (1) is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of revision under this sub-section, viz., (i) the order is erroneous; (ii) by virtue of the order being erroneous prejudice has been caused to the interests of the Revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. We find that the expressions "erroneous", "erroneous assessment" and "erroneous judgment" have been defined in Black's Law Diction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 because the second requirement also must be fulfilled. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. We, therefore, hold that in order to exercise power under sub-section (1) of section 263 of the Act there must be material before the Commissioner to consider that the order passed by the Income-tax Officer was erroneous in so far as it is prejudicial to the interests of the Revenue. We have already held what is erroneous. It must be an order which is not in accordance with the law or which has been passed by the Income-tax Officer without making any enquiry in undue haste. We have also held as to what is prejudicial to the interests of the Revenue. An order can be said to be prejudicial to the interests of the Revenue if it is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A.Y. 2009-10 Officer issued a query memo to the assessee, calling upon him to justify the genuineness of the gifts. The Respondent-Assessee responded to the same by giving evidence of the communications received from his father and his sister i.e. the donors of the gifts along with the statement of their Bank accounts. On perusal, the Assessing Officer was satisfied about the creditworthiness/capacity of the donors, the source from where these funds have come and also the creditworthiness/capacity of the donor. Once the Assessing Officer was satisfied with regard to the same, there was no further requirement on the part of the Assessing Officer to disclose his satisfaction in the Assessment Order passed thereon. Thus, this objection on the part of the Revenue cannot be accepted." 23. The Hon'ble jurisdictional High Court had also the occasion to consider a similar issue in the case of Ashish Rajpal 320 ITR 674 and held as under: "The parameters and principles laid down by the Courts which govern the exercise power by the Commissioner under the provisions of Section 263 of the Act are as follows: (i) The power is supervisory in nature, whereby the Commissioner can call f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on existence of objective facts ascertained from prima facie material on record. The evaluation of such material should show that tax which was lawfully exigible was not imposed. [See Gabriel India Ltd (supra)] In the instant case, it was quite clear that after the assessee had filed his return on 31.10.2002, a notice under Section 143(2) of the Act was issued for the purposes of carrying out a scrutiny in respect of the return of income filed by the assessee. In the course of scrutiny, as indicated in the impugned judgment of the Tribunal, several communications were addressed by the assessee to the Assessing Officer whereby, the information, details and documents sought for, were adverted to and filed. The Tribunal in order to satisfy itself, as to whether the Assessing Officer had sought for details and carried out an enquiry in respect of transactions which were entered into by the assessee in the course of his business, called for the assessment record and scrutinized the same. The Tribunal returned a finding of fact that the assessee had submitted copies of documents and details with regard to various matters, including, in particular, with respect to the properties at Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been examined by the Tribunal. We have no reason to believe that examination was less than exacting. Therefore, the conclusion of the Commissioner that there was "lack of proper" verification is unsustainable. 17. Further, the notice dated 11.05.2006 issued by the Commissioner before commencing the proceedings under Section 263 of the Act referred to four issues, the final order dated 18/19.01.2007 passed referred to nine issues, some of which obviously did not find mention in the earlier notice and hence resulted in the proceedings being vitiated as a result of the breach of the principles of natural justice. There is no requirement under Section 263 of the Act to issue a notice before embarking upon a revisionary proceedings. To that extent the submission of the learned counsel for the Revenue Mr Sanjeev Sabharwal has to be accepted. What is mandated under Section 263 of the Act is that once the Commissioner calls for and examines the record, pertaining to the assessee, and forms a prima facie view that the order passed by the Assessing Officer is both erroneous and prejudicial to the interest of the Revenue, he is obliged to afford an opportunity to the assessee b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised in the Revisional Order before the Assessing Officer and that such an opportunity would meet the requirements of the provision. We are afraid that that is not the position envisaged in law. If one were to permit correction of such a grievous error in the manner suggested it would tantamount to, in a manner of speaking, closing the stable doors after the horse has bolted. The assessments, unless reopened by paying faithful obeisance to statutory provisions and conditionalities provided therein, attain finality on their conclusion. The provisions of Section 263 mandate that an order for enhancing, or modifying the assessment, or cancelling the assessment and directing a fresh assessment can only be passed after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry as is deemed necessary. The threshold condition for reopening the assessment is that before passing an order an opportunity has to be granted to the assessee and, such an opportunity granted to the assessee is a necessary concomitant of the enquiry the Commissioner is required to conduct to come to a conclusion that an order for either an enhancement or modification of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24. In her written submission, the ld. DR drew our attention to the decision of the Hon'ble Gauhati High Court in the case of Jawahar Bhattacharjee 341 ITR 434 wherein the Hon'ble High Court has held as under: "Non application of mind to relevant material or an incorrect assumption of facts or an incorrect application of law will satisfy the requirement order being erroneous." 25. In our considered view, this judgment is misplaced, in as much as, facts on record as mentioned elsewhere, clearly show that the Assessing Officer has not only applied his mind but has examined the issue of claim of deduction u/s 80IA by issuing three notices on the same point. 26. The ld. DR has further relied upon the decision of the Tribunal at Delhi in the case of NIIT 60 Taxmann.com 313 wherein it has been held as under: An enquiry which is just a farce or near pretence of enquiry cannot be said to be an enquiry at all, much less an enquiry needed to reach the level of satisfaction of the Assessing Officer on the given issue. The level of satisfaction would obviously mean that he has conducted the enquiry in a manner whereby he placed on record the material enough to reach satisfaction, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner." 29. Considering the three notices issued by the Assessing Officer and considering the detailed submissions filed by the assessee in response to each notice, it can be safely concluded that the Assessing Officer did raise queries which were complied by the assessee. 30. Considering these facts in totality, it can be safely concluded that the Assessing Officer did raise queries which were complied by the assessee. It is a settled position of law that powers u/s 263 of the Act can be exercised by the Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only ..... X X X X Extracts X X X X X X X X Extracts X X X X
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