THE WEST BENGAL NATIONAL UNIVERSITY OF JURIDICIAL SCIENCE,KOLKATA vs. CIT(EXEMPTION) , KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘A’ BENCH, KOLKATA (Before Sri J. Sudhakar Reddy, Hon’ble Accountant Member & Sri S.S. Godara, Hon’ble Judicial Member) [VIRTUAL COURT HEARING] ITA No. 2643/Kol/2019 Assessment Year: 2016-17 The West Bengal National University of Juridical Science…………………….…………….....Appellant 12 LB Block, NUJS Bhawan Sector-3 Salt Lake City Kolkata – 700 098 [PAN : AAAJT 1531 H] Vs. Commissioner of Income Tax (Exemption), Kolkata.................….… ………….…....…..... Respondent Appearances by: Shri Soumitra Choudhury, Advocate & Shri Ratan Kr. Goel, A/R, appeared on behalf of the assessee. Shri Ram Bilash Meena, CIT, D/R, appearing on behalf of the Revenue. Date of concluding the hearing : September 8th, 2020 Date of pronouncing the order : September 30th, 2020 ORDER Per J. Sudhakar Reddy, AM :- This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Exemptions)- Kolkata, (hereinafter the ‘ld. CIT (E)’), dt. 13/09/2019, passed u/s 263 of the Income Tax Act, 1961 (the ‘Act’), relating to the Assessment Year 2016-17 (Financial Year 2015-16). 2. At the outset we find that there is a delay of 26 (Twenty Six) days in filing of this appeal by the assessee. After perusing the petition for condonation, we are convinced that the assessee was prevented by sufficient cause from filing the appeal in time. Hence the delay is condoned and the appeal is admitted. 3. The assessee, The West Bengal National University of Juridical Science (WBNUJS) is one of the premier national law schools of India. It was brought into existence by the Government of West Bengal, by way of the WBNUJS Act, 1999 (West Bengal Act IX of 1999) adopted by the West Bengal Legislature in July, 1999. The University was notified under Clause (f) of Section 2 of the UGC Act, 1956 in August, 2004 and was granted permanent affiliation by the Bar Council of India in July, 2005. The Chief Justice of India is the Chancellor of the WBNUJS and is also the Chairman of the General Council, the supreme policy making body of University. The assessee got registration u/s 12A of the Act on 09/12/2016 vide M. No.: CIT(E)/10E/666/2016-17/S-0307/3396-98. The ld. CIT(E), Kolkata, has also granted

2 ITA No. 2643/Kol/2019 Assessment Year: 2016-17 The West Bengal National University of Juridical Science The West Bengal National University of Juridical Science approval to the assessee u/s 10(23C)(vi) of the Act on 27/09/2016. The approval is approval to the assessee u/s 10(23C)(vi) of the Act on 27/09/2016. The approval is approval to the assessee u/s 10(23C)(vi) of the Act on 27/09/2016. The approval is applicable from the Assessment Year 2017 applicable from the Assessment Year 2017-18 onwards. 3.1. The assessee filed its original return of income for th The assessee filed its original return of income for the Assessment Year 2016 e Assessment Year 2016-17 on 20/10/2016. Notice u/s 143(2) of the Act was issued on 10/07/2017 and scrutiny Notice u/s 143(2) of the Act was issued on 10/07/2017 and scrutiny Notice u/s 143(2) of the Act was issued on 10/07/2017 and scrutiny proceedings initiated.. The assessee got registration u/s 12A of the Act on 09/12/2016. The assessee got registration u/s 12A of the Act on 09/12/2016. The assessee got registration u/s 12A of the Act on 09/12/2016. Thereafter, the assessee filed a petition for condonation of delay in filing of Form No. 10 Thereafter, the assessee filed a petition for condonation of delay in filing of Form No. 10 Thereafter, the assessee filed a petition for condonation of delay in filing of Form No. 10 before the ld. CIT(E), Kolkata on 23/ before the ld. CIT(E), Kolkata on 23/01/2017. The ld. CIT(E), Kolkata, passed an order 01/2017. The ld. CIT(E), Kolkata, passed an order 119 (2)(b) of the Act, dt. 20/11/2017 condoning the delay in filing of the requisite Form the Act, dt. 20/11/2017 condoning the delay in filing of the requisite Form the Act, dt. 20/11/2017 condoning the delay in filing of the requisite Form No. 10 for the Assessment Year 2014 No. 10 for the Assessment Year 2014-15, 2015-16 & 2016-17. The order reads as 17. The order reads as follows:- “The assessee filed petition for condonation of delay in filing of Form 10 for the “The assessee filed petition for condonation of delay in filing of Form 10 for the “The assessee filed petition for condonation of delay in filing of Form 10 for the assessment years 2014- -15, 2015-16 & 2016-17 on 23.01.2017. The assessee has contended that the requisite Form 10 for the said assessment The assessee has contended that the requisite Form 10 for the said assessment The assessee has contended that the requisite Form 10 for the said assessment years could not be filed in time since registration u/s. 12AA of the Income Tax Act, 1961 years could not be filed in time since registration u/s. 12AA of the Income Tax Act, 1961 years could not be filed in time since registration u/s. 12AA of the Income Tax Act, 1961 was granted on 09.12.2016. However, was granted on 09.12.2016. However, the assessee is an institute of eminence engaged in the assessee is an institute of eminence engaged in preparing future legal professionals wants to avail opportunities of setting apart of fund preparing future legal professionals wants to avail opportunities of setting apart of fund preparing future legal professionals wants to avail opportunities of setting apart of fund for future utilisation. The fund was, in fact, invested in accordance with the provisions of for future utilisation. The fund was, in fact, invested in accordance with the provisions of for future utilisation. The fund was, in fact, invested in accordance with the provisions of section 11 (5) of the Income Tax Act, 1961. In this regard, the assessee referred to the he Income Tax Act, 1961. In this regard, the assessee referred to the he Income Tax Act, 1961. In this regard, the assessee referred to the CBDT's Circular No. 273 dated 03.06.1980. CBDT's Circular No. 273 dated 03.06.1980. Considering the merits of the case and in accordance with CBDT's Circular, in Considering the merits of the case and in accordance with CBDT's Circular, in Considering the merits of the case and in accordance with CBDT's Circular, in exercise of powers conferred by sub exercise of powers conferred by sub-clause (b) of clause 2 of section 119 of the I. T. Act, tion 119 of the I. T. Act, 1961 and all other powers enabling in this behalf, the petitions for condonation of delay 1961 and all other powers enabling in this behalf, the petitions for condonation of delay 1961 and all other powers enabling in this behalf, the petitions for condonation of delay u/s. 119(2)(b) of the Income Tax Act, 1961 for the assessment years 2014 u/s. 119(2)(b) of the Income Tax Act, 1961 for the assessment years 2014 u/s. 119(2)(b) of the Income Tax Act, 1961 for the assessment years 2014-15, 2015-16 & 2016-17 are allowed. However, no interest is allowed 17 are allowed. However, no interest is allowed to be provided while processing to be provided while processing the belated return.” 3.1.1. Thereafter, the assessee filed a revised return of income on 29/11/2017 along the assessee filed a revised return of income on 29/11/2017 along the assessee filed a revised return of income on 29/11/2017 along with Form 10B. Thereafter, notice u/s 142(1) of the Act dt. 11/09/2018, was issued to with Form 10B. Thereafter, notice u/s 142(1) of the Act dt. 11/09/2018, was issued to with Form 10B. Thereafter, notice u/s 142(1) of the Act dt. 11/09/2018, was issued to the assessee. Another notice u/s 143(2) of the Act dt. 13/08/2018, was issued to the Another notice u/s 143(2) of the Act dt. 13/08/2018, was issued to the Another notice u/s 143(2) of the Act dt. 13/08/2018, was issued to the assessee proposing to scrutinize the return of income filed on 29/11/2017. proposing to scrutinize the return of income filed on 29/11/2017. proposing to scrutinize the return of income filed on 29/11/2017. Thereafter the Assessing Officer passed an order u/s 143(3) of the Act on 31/10/2018 determining the Assessing Officer passed an order u/s 143(3) of the Act on 31/10/2018 determining the Assessing Officer passed an order u/s 143(3) of the Act on 31/10/2018 determining the total income of the assessee at Nil. ome of the assessee at Nil. 3.2. The ld. CIT(E), invoked his powers u/s 263 of the Act and initiated proceedings The ld. CIT(E), invoked his powers u/s 263 of the Act and initiated proceedings The ld. CIT(E), invoked his powers u/s 263 of the Act and initiated proceedings vide notice dt. 27/05/2019. vide notice dt. 27/05/2019. The assessee filed detailed submissions. The ld. CIT(E) The assessee filed detailed submissions. The ld. CIT(E) considered the same and held as follows: held as follows:- “The undisputed facts of the case are that the return of income a well as “The undisputed facts of the case are that the return of income a well as “The undisputed facts of the case are that the return of income a well as Form-10 have been filed belatedly. As per Section 10 have been filed belatedly. As per Section-13(9) accumulation under section 13(9) accumulation under section 11(2) is to be allowed only if the return of income as well as Form 11(2) is to be allowed only if the return of income as well as Form-10 is filed before 10 is filed before the due date. In this case, delay in filing of form 10 only has been condoned in . In this case, delay in filing of form 10 only has been condoned in . In this case, delay in filing of form 10 only has been condoned in exercise of powers delegated to the undersigned. It however, does not mean that the exercise of powers delegated to the undersigned. It however, does not mean that the exercise of powers delegated to the undersigned. It however, does not mean that the delay in filing of return of income also stands condoned. delay in filing of return of income also stands condoned.

3 ITA No. 2643/Kol/2019 Assessment Year: 2016-17 The West Bengal National University of Juridical Science The West Bengal National University of Juridical Science In view of the requirements of Section 13(9) In view of the requirements of Section 13(9) the action of the A.O. in the action of the A.O. in allowing accumulation u/s 11 (2) in the case of a late return is clearly erroneous allowing accumulation u/s 11 (2) in the case of a late return is clearly erroneous allowing accumulation u/s 11 (2) in the case of a late return is clearly erroneous and prejudicial to the interest of revenue. The proper remedy, if at all, available to and prejudicial to the interest of revenue. The proper remedy, if at all, available to and prejudicial to the interest of revenue. The proper remedy, if at all, available to the assessee was to apply to C.B.D.T. for condonation of de the assessee was to apply to C.B.D.T. for condonation of delay in filing of return of lay in filing of return of income. In the absence of condonation of delay in filing of return of income. the In the absence of condonation of delay in filing of return of income. the In the absence of condonation of delay in filing of return of income. the claim of exemption u/s 11(2) cannot be allowed in the facts of the present case. The claim of exemption u/s 11(2) cannot be allowed in the facts of the present case. The claim of exemption u/s 11(2) cannot be allowed in the facts of the present case. The Assessment Order of the A.O. is therefore erroneous and preju Assessment Order of the A.O. is therefore erroneous and prejudicial to the revenue. dicial to the revenue. The A.O. is accordingly directed to compute the income without allowing The A.O. is accordingly directed to compute the income without allowing The A.O. is accordingly directed to compute the income without allowing accumulation u/s 11 (2).” accumulation u/s 11 (2).” 4. The ld. Counsel for the assessee submitted that the order passed u/s 263 of the The ld. Counsel for the assessee submitted that the order passed u/s 263 of the The ld. Counsel for the assessee submitted that the order passed u/s 263 of the Act is incorrect in law as well as on facts. He fil Act is incorrect in law as well as on facts. He filed a paper book running into 166 pages ed a paper book running into 166 pages and drew the attention of the Bench to Page 111 of the paper book, where the proposal and drew the attention of the Bench to Page 111 of the paper book, where the proposal and drew the attention of the Bench to Page 111 of the paper book, where the proposal for revision of the assessment order passed by the Assessing Officer u/s 143(3) of the the assessment order passed by the Assessing Officer u/s 143(3) of the the assessment order passed by the Assessing Officer u/s 143(3) of the Act, by the ld. CIT(E) invoking powers Act, by the ld. CIT(E) invoking powers u/s 263 of the Act was made by DCIT(E), Circle 63 of the Act was made by DCIT(E), Circle- 1(1), Kolkata. He submitted that the Assessing Officer cannot propose revision of an 1(1), Kolkata. He submitted that the Assessing Officer cannot propose revision of an 1(1), Kolkata. He submitted that the Assessing Officer cannot propose revision of an order u/s 263 of the Act and the jurisdiction has to originate from the Commissioner of order u/s 263 of the Act and the jurisdiction has to originate from the Commissioner of order u/s 263 of the Act and the jurisdiction has to originate from the Commissioner of Income Tax, after he examines the record Income Tax, after he examines the record and proceedings under the Act. He relied on and proceedings under the Act. He relied on the judgment of the Kolkata ‘C’ Bench of the Tribunal in the case of the judgment of the Kolkata ‘C’ Bench of the Tribunal in the case of M/s. Rupayan Udyog M/s. Rupayan Udyog vs. Pr. CIT in ITA No. 1073/Kol/2012; Assessment Year 2005 vs. Pr. CIT in ITA No. 1073/Kol/2012; Assessment Year 2005-06, order dt. 28/11/2018 06, order dt. 28/11/2018, for the proposition that invocation of revisionary jurisdiction on the proposition that invocation of revisionary jurisdiction on a proposal proposal to do so made by the Assessing Officer, is bad in law. the Assessing Officer, is bad in law. 4.1. On merits, he submitted that the CBDT vide its Circular No. 6/2006 dt. On merits, he submitted that the CBDT vide its Circular No. 6/2006 dt. On merits, he submitted that the CBDT vide its Circular No. 6/2006 dt. 19/02/2020, Notification No. F. No. 197/55/2018 19/02/2020, Notification No. F. No. 197/55/2018-ITA-1, authorizing the Commissioner 1, authorizing the Commissioner of Income Tax to admit belated applications for condonation of delay in filing of the of Income Tax to admit belated applications for condonation of delay in filing of the of Income Tax to admit belated applications for condonation of delay in filing of the return of income u/s 119(2)(b) of the Act and decide the same on merits. He pointed out return of income u/s 119(2)(b) of the Act and decide the same on merits. He pointed out return of income u/s 119(2)(b) of the Act and decide the same on merits. He pointed out that the ld. CIT(E) had condoned the delay in that the ld. CIT(E) had condoned the delay in filing of From No. 10 for the Assessment filing of From No. 10 for the Assessment Years 2014-15, 2015-16 & 2016 16 & 2016-17, u/s 119(2)(b) of the Act. He further pointed out that 17, u/s 119(2)(b) of the Act. He further pointed out that approval u/s 10(23C)(vi) of the Act was granted on 27/09/2016. He took this Bench approval u/s 10(23C)(vi) of the Act was granted on 27/09/2016. He took this Bench approval u/s 10(23C)(vi) of the Act was granted on 27/09/2016. He took this Bench through the order of the Assessing Officer through the order of the Assessing Officer passed u/s 143(3) of the Act, dt. 31/10/2018 passed u/s 143(3) of the Act, dt. 31/10/2018 and submitted that all aspects have been considered by the Assessing Officer and a and submitted that all aspects have been considered by the Assessing Officer and a and submitted that all aspects have been considered by the Assessing Officer and a reasoned order passed by taking a possible view by taking a possible view and under these circumstances, the ld. rcumstances, the ld. CIT(E) was wrong in exercising his jurisd CIT(E) was wrong in exercising his jurisdiction u/s 263 of the Act. He pointed out that iction u/s 263 of the Act. He pointed out that the Assessing Officer has taken a p the Assessing Officer has taken a possible view after detailed enquiry and on being view after detailed enquiry and on being satisfied with the replies and evidences submitted by and evidences submitted by the assessee, which are evident the assessee, which are evident from the copy of the order sheet entrie from the copy of the order sheet entries and case records. He relied on a number of case s and case records. He relied on a number of case-

4 ITA No. 2643/Kol/2019 Assessment Year: 2016-17 The West Bengal National University of Juridical Science The West Bengal National University of Juridical Science law for the propositions that that, under such circumstances, revision u/s 263 of the Act is revision u/s 263 of the Act is not permissible. We would refer to these as and when necessary. We would refer to these as and when necessary. He prayed for relie He prayed for relief.

5 ITA No. 2643/Kol/2019 Assessment Year: 2016-17 The West Bengal National University of Juridical Science The West Bengal National University of Juridical Science In this case the delay in filing Form In this case the delay in filing Form-10 was condoned by Ld. 10 was condoned by Ld. CIT(Exemption), Kolkata vide his order dated 20.11.2017. However, as per CIT(Exemption), Kolkata vide his order dated 20.11.2017. However, as per CIT(Exemption), Kolkata vide his order dated 20.11.2017. However, as per provisions of section 13(9) of the Act both the return of income and Form provisions of section 13(9) of the Act both the return of income and Form provisions of section 13(9) of the Act both the return of income and Form-10 are required to be submitted on or before the due date of filing return as prescribed u/s be submitted on or before the due date of filing return as prescribed u/s be submitted on or before the due date of filing return as prescribed u/s 139(1) of the Act. In the instant case, the delay in filing Form In the instant case, the delay in filing Form-10 though was condoned by the 10 though was condoned by the Ld. CIT, the delay in filing return of income stands late. Hence the assessee is not Ld. CIT, the delay in filing return of income stands late. Hence the assessee is not Ld. CIT, the delay in filing return of income stands late. Hence the assessee is not eligible for the benefit of exemption u/s. 11(2) of the Act. eligible for the benefit of exemption u/s. 11(2) of the Act. In view of the above, it is evident that the order passed u/s. 143(3) of the In view of the above, it is evident that the order passed u/s. 143(3) of the In view of the above, it is evident that the order passed u/s. 143(3) of the Act as above is erroneous in so far as it is prejudicial to the interest of revenue as Act as above is erroneous in so far as it is prejudicial to the interest of revenue as Act as above is erroneous in so far as it is prejudicial to the interest of revenue as per Section 13 (9) of the Act. per Section 13 (9) of the Act. Under the circumstances I request your honour to kindly initiate proceeding Under the circumstances I request your honour to kindly initiate proceeding Under the circumstances I request your honour to kindly initiate proceeding u/s. 263 of the Act, 1961 for revising the aforesaid order passed u/s. 143(3) of the u/s. 263 of the Act, 1961 for revising the aforesaid order passed u/s. 143(3) of the u/s. 263 of the Act, 1961 for revising the aforesaid order passed u/s. 143(3) of the Act.” 8.1. The ld. CIT(E) initiated proceedings u/s 263 of the Act based on this proposal. The ld. CIT(E) initiated proceedings u/s 263 of the Act based on this proposal. The ld. CIT(E) initiated proceedings u/s 263 of the Act based on this proposal. The issue is whether such initiation of proceedings is valid in law. The issue is whether such initiation of proceedings is valid in law. 8.2. The Kolkata ‘C’ Bench of the Tribunal in the case of The Kolkata ‘C’ Bench of the Tribunal in the case of M/s. Rupayan Udyog (supra) M/s. Rupayan Udyog (supra) has held as follows:- “So from a bare reading of sec. 263 of the Act reveals that the Commissioner may call for and So from a bare reading of sec. 263 of the Act reveals that the Commissioner may call for and So from a bare reading of sec. 263 of the Act reveals that the Commissioner may call for and examine the record of any proceeding under the Act and if he considers that any order passed examine the record of any proceeding under the Act and if he considers that any order passed examine the record of any proceeding under the Act and if he considers that any order passed therein by the AO is erroneous in so far as prejudicial to the interes therein by the AO is erroneous in so far as prejudicial to the interest of the revenue, he may t of the revenue, he may after giving opportunity of being heard to the assessee pass orders as prescribed under the after giving opportunity of being heard to the assessee pass orders as prescribed under the after giving opportunity of being heard to the assessee pass orders as prescribed under the Act. So, the power vested in the CIT is that of revisional jurisdiction to interfere with the order Act. So, the power vested in the CIT is that of revisional jurisdiction to interfere with the order Act. So, the power vested in the CIT is that of revisional jurisdiction to interfere with the order of AO, if it is erroneous in so far as of AO, if it is erroneous in so far as prejudicial to the revenue and, therefore, the power to prejudicial to the revenue and, therefore, the power to exercise the revisional jurisdiction is vested only with the Pr. Commissioner/Commissioner if exercise the revisional jurisdiction is vested only with the Pr. Commissioner/Commissioner if exercise the revisional jurisdiction is vested only with the Pr. Commissioner/Commissioner if he considers the order of the AO to be erroneous in so far as prejudicial to the interest of the he considers the order of the AO to be erroneous in so far as prejudicial to the interest of the he considers the order of the AO to be erroneous in so far as prejudicial to the interest of the revenue. Therefore, this power is vested with the Pr. CIT/CIT to exercise revisional jurisdiction Therefore, this power is vested with the Pr. CIT/CIT to exercise revisional jurisdiction Therefore, this power is vested with the Pr. CIT/CIT to exercise revisional jurisdiction is only when he considers that the order passed by the AO is erroneous in so far as prejudicial is only when he considers that the order passed by the AO is erroneous in so far as prejudicial is only when he considers that the order passed by the AO is erroneous in so far as prejudicial to the interest of the revenue and that power cannot be usurped by the to the interest of the revenue and that power cannot be usurped by the AO to trigger the AO to trigger the revisional jurisdiction vested with the CIT as per the scheme of the Act which gives various revisional jurisdiction vested with the CIT as per the scheme of the Act which gives various revisional jurisdiction vested with the CIT as per the scheme of the Act which gives various power to various authorities to exercise and they have to exercise powers in their respective power to various authorities to exercise and they have to exercise powers in their respective power to various authorities to exercise and they have to exercise powers in their respective given sphere which is clearly ear given sphere which is clearly ear-marked and spelled out by the statute. Here, we note that d out by the statute. Here, we note that the AO who is empowered by the Act to assess a subject within a prescribed time period has the AO who is empowered by the Act to assess a subject within a prescribed time period has the AO who is empowered by the Act to assess a subject within a prescribed time period has first assessed the assessee and later after passage of time has taken up a proposal with the first assessed the assessee and later after passage of time has taken up a proposal with the first assessed the assessee and later after passage of time has taken up a proposal with the CIT to exercise his revisional CIT to exercise his revisional jurisdiction cannot be countenanced for the simple reason that jurisdiction cannot be countenanced for the simple reason that when in the first place the AO noticing that he failed to properly enquire before assessing the when in the first place the AO noticing that he failed to properly enquire before assessing the when in the first place the AO noticing that he failed to properly enquire before assessing the assessee within the time limit prescribed by the statute cannot be allowed to get fresh innings assessee within the time limit prescribed by the statute cannot be allowed to get fresh innings assessee within the time limit prescribed by the statute cannot be allowed to get fresh innings to reassess because it was his duty to enquire properly within the time limit prescribed by the o reassess because it was his duty to enquire properly within the time limit prescribed by the o reassess because it was his duty to enquire properly within the time limit prescribed by the statute. Therefore, the very invocation of revisional jurisdiction on the proposal of the AO statute. Therefore, the very invocation of revisional jurisdiction on the proposal of the AO statute. Therefore, the very invocation of revisional jurisdiction on the proposal of the AO itself is bad in law and for coming to such a decision we rely on th itself is bad in law and for coming to such a decision we rely on the decision of the Tribunal in e decision of the Tribunal in the case of Shantai Exim Ltd. Vs. CIT (2017) 88 taxmann.com 361 (Ahd. Trib.) and the the case of Shantai Exim Ltd. Vs. CIT (2017) 88 taxmann.com 361 (Ahd. Trib.) and the the case of Shantai Exim Ltd. Vs. CIT (2017) 88 taxmann.com 361 (Ahd. Trib.) and the decision of ITAT, Mumbai Bench in the case of Ashok Kumar Shivpuri Vs. CIT for AY 2008 decision of ITAT, Mumbai Bench in the case of Ashok Kumar Shivpuri Vs. CIT for AY 2008 decision of ITAT, Mumbai Bench in the case of Ashok Kumar Shivpuri Vs. CIT for AY 2008-09 dated 07.11.2014. Therefore, we find merit in the c dated 07.11.2014. Therefore, we find merit in the contention of the Ld. AR and we quash the ontention of the Ld. AR and we quash the very usurpation of jurisdiction u/s. 263 of the Act by the CIT. Therefore, the appeal filed by the very usurpation of jurisdiction u/s. 263 of the Act by the CIT. Therefore, the appeal filed by the very usurpation of jurisdiction u/s. 263 of the Act by the CIT. Therefore, the appeal filed by the assessee is allowed.” Similar view was taken by th Similar view was taken by the Kolkata Bench of the Tribunal in the following cases: e Kolkata Bench of the Tribunal in the following cases:-  M/s. Luxmi Township & Holding Ltd. vs. CIT; ITA No. 468/Kol/2019; Luxmi Township & Holding Ltd. vs. CIT; ITA No. 468/Kol/2019; Luxmi Township & Holding Ltd. vs. CIT; ITA No. 468/Kol/2019; Assessment Year 2014 Assessment Year 2014-15, order dt. 2014-15.

6 ITA No. 2643/Kol/2019 Assessment Year: 2016-17 The West Bengal National University of Juridical Science The West Bengal National University of Juridical Science  Bangiya Gramin Vikash Bank vs. Pr. CIT in ITA No. 877/Kol/2015, Bangiya Gramin Vikash Bank vs. Pr. CIT in ITA No. 877/Kol/2015, Bangiya Gramin Vikash Bank vs. Pr. CIT in ITA No. 877/Kol/2015, Assessment Year 2010 Assessment Year 2010-11, order dt. 12/05/2017.  Ambo Agro Products Ltd. vs. Pr. CIT, Ambo Agro Products Ltd. vs. Pr. CIT, in ITA No. 676/Kol/2016, Assessment in ITA No. 676/Kol/2016, Assessment Year 2009-10, order dt. 19/05/2017. 10, order dt. 19/05/2017.

7 ITA No. 2643/Kol/2019 Assessment Year: 2016-17 The West Bengal National University of Juridical Science The West Bengal National University of Juridical Science section 10, shall not be treated as application of income for charitable or religious ot be treated as application of income for charitable or religious ot be treated as application of income for charitable or religious purposes, either during the period of accumulation or thereafter.] purposes, either during the period of accumulation or thereafter.]

Section 13(9) of the Act, reads as follows: Section 13(9) of the Act, reads as follows:- “[(9) Nothing contained in sub [(9) Nothing contained in sub-section (2) of section 11 shall operate so as to exclude any shall operate so as to exclude any income from the total income of the previous year of a person in receipt thereof, if income from the total income of the previous year of a person in receipt thereof, if income from the total income of the previous year of a person in receipt thereof, if— (i) the statement referred to in clause (a) of the said sub the statement referred to in clause (a) of the said sub-section in respect of such section in respect of such income is not furnished on or before the due date specified under sub income is not furnished on or before the due date specified under sub income is not furnished on or before the due date specified under sub-section (1) of section 139 section 139 for furnishing the return of income for the previous year; or for furnishing the return of income for the previous year; or (ii) the return of income for the previous year is not furnished by such person on or the return of income for the previous year is not furnished by such person on or the return of income for the previous year is not furnished by such person on or before the due date specified under sub before the due date specified under sub-section (1) of section 139 section 139 for furnishing the return of income for the said previous year.] return of income for the said previous year.] 16[Explanation 1.—For the purposes of For the purposes of sections 11, 12, 12A and this section, "trust" includes and this section, "trust" includes any other legal obligation and for the purposes of this section "relative", in relation to an any other legal obligation and for the purposes of this section "relative", in relation to an any other legal obligation and for the purposes of this section "relative", in relation to an individual, means— (i) spouse of the individual; spouse of the individual; (ii) brother or sister of the individual; brother or sister of the individual; (iii) brother or brother or sister of the spouse of the individual; (iv) any lineal ascendant or descendant of the individual; any lineal ascendant or descendant of the individual; (v) any lineal ascendant or descendant of the spouse of the individual; any lineal ascendant or descendant of the spouse of the individual; any lineal ascendant or descendant of the spouse of the individual; (vi) spouse of a person referred to in sub spouse of a person referred to in sub-clause (ii), sub-clause (iii), clause (iii), sub-clause (iv) or sub-clause (v); clause (v); (vii) any lineal descendant of a brother or sister of either the individual or of the spouse any lineal descendant of a brother or sister of either the individual or of the spouse any lineal descendant of a brother or sister of either the individual or of the spouse of the individual.] of the individual.] Explanation 2.—A trust or institution created or established for the benefit of Scheduled A trust or institution created or established for the benefit of Scheduled A trust or institution created or established for the benefit of Scheduled Castes, backward classes, Scheduled Tribes or women and children shall not be deemed to be rd classes, Scheduled Tribes or women and children shall not be deemed to be rd classes, Scheduled Tribes or women and children shall not be deemed to be a trust or institution created or established for the benefit of a religious community or caste a trust or institution created or established for the benefit of a religious community or caste a trust or institution created or established for the benefit of a religious community or caste within the meaning of clause (b) of sub within the meaning of clause (b) of sub-section (1). Explanation 3.—For the purpose For the purposes of this section, a person shall be deemed to have a s of this section, a person shall be deemed to have a substantial interest in a concern, substantial interest in a concern,— in a case where the concern is a company, if its shares (not being shares entitled to a in a case where the concern is a company, if its shares (not being shares entitled to a in a case where the concern is a company, if its shares (not being shares entitled to a (i) fixed rate of dividend whether with or without a further right to fixed rate of dividend whether with or without a further right to fixed rate of dividend whether with or without a further right to participate in profits) carrying not less than twenty per cent of the voting power are, at any time profits) carrying not less than twenty per cent of the voting power are, at any time profits) carrying not less than twenty per cent of the voting power are, at any time during the previous year, owned beneficially by such person or partly by such person during the previous year, owned beneficially by such person or partly by such person during the previous year, owned beneficially by such person or partly by such person and partly by one or more of the other persons referred to in sub and partly by one or more of the other persons referred to in sub and partly by one or more of the other persons referred to in sub-section (3); (ii) in the case of any other concern, if such person is entitled, or such person and one or in the case of any other concern, if such person is entitled, or such person and one or in the case of any other concern, if such person is entitled, or such person and one or more of the other persons referred to in sub more of the other persons referred to in sub-section (3) are entitled in the section (3) are entitled in the aggregate, at any time during the previous year, to not less than twenty pe aggregate, at any time during the previous year, to not less than twenty pe aggregate, at any time during the previous year, to not less than twenty per cent of the profits of such concern.] the profits of such concern.]

8 ITA No. 2643/Kol/2019 Assessment Year: 2016-17 The West Bengal National University of Juridical Science The West Bengal National University of Juridical Science

10.1. We find that the Assessing Officer in his order passed u/s 143(3) of the Act on We find that the Assessing Officer in his order passed u/s 143(3) of the Act on We find that the Assessing Officer in his order passed u/s 143(3) of the Act on 31/10/2018 had considered each and every aspect of this issue. In fact, the return of 31/10/2018 had considered each and every aspect of this issue. In fact, the return of 31/10/2018 had considered each and every aspect of this issue. In fact, the return of income was filed on 20/10/2016 declaring Nil income and this was in time. The income was filed on 20/10/2016 declaring Nil income and this was in time. The income was filed on 20/10/2016 declaring Nil income and this was in time. The assessee filed the revised return of income on 29/11/2017 and this was selected for led the revised return of income on 29/11/2017 and this was selected for led the revised return of income on 29/11/2017 and this was selected for scrutiny. The ld. CIT(E) while condoning the delay in filing of Form 10 vide his order dt. scrutiny. The ld. CIT(E) while condoning the delay in filing of Form 10 vide his order dt. scrutiny. The ld. CIT(E) while condoning the delay in filing of Form 10 vide his order dt. 20/11/2017, u/s 119(2)(b) of the Act, was aware of all these circumstances. As the 20/11/2017, u/s 119(2)(b) of the Act, was aware of all these circumstances. As the 20/11/2017, u/s 119(2)(b) of the Act, was aware of all these circumstances. As the original return was filed in time and delay in filing of Form 10 return was filed in time and delay in filing of Form 10 was condoned by the ld. was condoned by the ld. CIT(E), we are of the view that the twin conditions mentioned u/s 13(9) of the Act was that the twin conditions mentioned u/s 13(9) of the Act was that the twin conditions mentioned u/s 13(9) of the Act was satisfied. It is not the case of the revenue that the original return of income was not f It is not the case of the revenue that the original return of income was not f It is not the case of the revenue that the original return of income was not filed within the due date of filing as specified u/s 139(1) of the Act. The Assessing Officer has within the due date of filing as specified u/s 139(1) of the Act. The Assessing Officer has within the due date of filing as specified u/s 139(1) of the Act. The Assessing Officer has considered the legal position and has taken a possible view after application of mind considered the legal position and has taken a possible view after application of mind considered the legal position and has taken a possible view after application of mind. 11. This Mumbai Bench of the Tribunal in the case of Mumbai Bench of the Tribunal in the case of Swajan Pariwar Swajan Pariwar Trust vs. ADIT(E) (1997) 57 TTJ (Mum)(SMC) 77 (1997) 57 TTJ (Mum)(SMC) 77, while adjudicating an identical issue, while adjudicating an identical issue, has held as under:- “3. Aggrieved by the said order the assessee took up the matter in appeal 3. Aggrieved by the said order the assessee took up the matter in appeal 3. Aggrieved by the said order the assessee took up the matter in appeal before the Dy. CIT(A) and it was submitted that the AO was not justified in rejecting before the Dy. CIT(A) and it was submitted that the AO was not justified in rejecting before the Dy. CIT(A) and it was submitted that the AO was not justified in rejecting the application under s. 154 of the Act as the default in filing Form No. 10B along with the application under s. 154 of the Act as the default in filing Form No. 10B along with the application under s. 154 of the Act as the default in filing Form No. 10B along with return was merely a procedural formality. The learned Dy.CIT(A), however, held that as merely a procedural formality. The learned Dy.CIT(A), however, held that as merely a procedural formality. The learned Dy.CIT(A), however, held that the prima facie adjustment was rightly done in the light of the circular ofthe Board as the prima facie adjustment was rightly done in the light of the circular ofthe Board as the prima facie adjustment was rightly done in the light of the circular ofthe Board as the assessee failed to file Form No. 10B along with the return which was mandatory. the assessee failed to file Form No. 10B along with the return which was mandatory. the assessee failed to file Form No. 10B along with the return which was mandatory. The assessee also cited the decision of the Hon'ble Calcutta High Court in the case of ssee also cited the decision of the Hon'ble Calcutta High Court in the case of ssee also cited the decision of the Hon'ble Calcutta High Court in the case of CIT vs. Hardeodas Agarwalla Trust (1992) 198 ITR 511 (Cal) and the subsequent Hardeodas Agarwalla Trust (1992) 198 ITR 511 (Cal) and the subsequent Hardeodas Agarwalla Trust (1992) 198 ITR 511 (Cal) and the subsequent decision in the case of CIT vs. Rai Bahadur Bissesswarlal Motilal Malwasie Trust decision in the case of CIT vs. Rai Bahadur Bissesswarlal Motilal Malwasie Trust decision in the case of CIT vs. Rai Bahadur Bissesswarlal Motilal Malwasie Trust (1992) 195 ITR 825 (Cal) for the proposition that if the audit report was not filed (Cal) for the proposition that if the audit report was not filed (Cal) for the proposition that if the audit report was not filed along with the return of income, the return became defective and the AO was required along with the return of income, the return became defective and the AO was required along with the return of income, the return became defective and the AO was required to give an opportunity to the assessee to submit the audit report and rectify the defect to give an opportunity to the assessee to submit the audit report and rectify the defect to give an opportunity to the assessee to submit the audit report and rectify the defect before completing the assessment. Reliance was also placed on the decision of the g the assessment. Reliance was also placed on the decision of the g the assessment. Reliance was also placed on the decision of the Tribunal in the case of Calcutta Management Association vs. ITO (1992) 42 ITD 62 Tribunal in the case of Calcutta Management Association vs. ITO (1992) 42 ITD 62 Tribunal in the case of Calcutta Management Association vs. ITO (1992) 42 ITD 62 (Cal) wherein the Tribunal allowed time for filing Form No. 10B even upto the the Tribunal allowed time for filing Form No. 10B even upto the the Tribunal allowed time for filing Form No. 10B even upto the appellate stage. The learned Dy appellate stage. The learned Dy. CIT(A) did not accept the contentions on the . CIT(A) did not accept the contentions on the reasoning that the power of condonation of delay is the exclusive power of the DIT reasoning that the power of condonation of delay is the exclusive power of the DIT reasoning that the power of condonation of delay is the exclusive power of the DIT (Exemption) and this power has not been delegated to the appellate authorities. (Exemption) and this power has not been delegated to the appellate authorities. (Exemption) and this power has not been delegated to the appellate authorities. Therefore, the order of the AO cannot be said Therefore, the order of the AO cannot be said to be rectifiable. He accordingly rejected to be rectifiable. He accordingly rejected the appeal of the assessee. the appeal of the assessee. 4. The assessee is still aggrieved and has come up in appeal before the Tribunal. Shri 4. The assessee is still aggrieved and has come up in appeal before the Tribunal. Shri 4. The assessee is still aggrieved and has come up in appeal before the Tribunal. Shri Atul K. Jasani, the learned counsel appeared for the assessee and Shri V. S. Gore, the Atul K. Jasani, the learned counsel appeared for the assessee and Shri V. S. Gore, the Atul K. Jasani, the learned counsel appeared for the assessee and Shri V. S. Gore, the learned Departmental Representative, appeared for the Revenue. After hearing both partmental Representative, appeared for the Revenue. After hearing both partmental Representative, appeared for the Revenue. After hearing both the parties I am of the view that the AO as bound to rectify the order in the light of the the parties I am of the view that the AO as bound to rectify the order in the light of the the parties I am of the view that the AO as bound to rectify the order in the light of the decision of the Hon'ble Calcutta High Court cited above. Since the Hon'ble Calcutta decision of the Hon'ble Calcutta High Court cited above. Since the Hon'ble Calcutta decision of the Hon'ble Calcutta High Court cited above. Since the Hon'ble Calcutta

9 ITA No. 2643/Kol/2019 Assessment Year: 2016-17 The West Bengal National University of Juridical Science The West Bengal National University of Juridical Science High Court has held that the filing of the audit report in Form No. 10B was merely a t has held that the filing of the audit report in Form No. 10B was merely a t has held that the filing of the audit report in Form No. 10B was merely a procedural formality for the purpose of enabling the AO to allow the benefit of procedural formality for the purpose of enabling the AO to allow the benefit of procedural formality for the purpose of enabling the AO to allow the benefit of exemption to the trust and such procedural defect only makes the return become exemption to the trust and such procedural defect only makes the return become exemption to the trust and such procedural defect only makes the return become defective and rectifiable, the assessee is to be given the benefit as the defect has since able, the assessee is to be given the benefit as the defect has since able, the assessee is to be given the benefit as the defect has since been removed by filing of Form No. 10B. The AO is directed to rectify the order been removed by filing of Form No. 10B. The AO is directed to rectify the order been removed by filing of Form No. 10B. The AO is directed to rectify the order accordingly. 5. In the result, the appeal stands allowed.” 5. In the result, the appeal stands allowed.” 12. In the case also, the Assessing Officer In the case also, the Assessing Officer was bound to consider the original return of was bound to consider the original return of income which was filed in time as well as the Form 10 filed after condonation of delay by income which was filed in time as well as the Form 10 filed after condonation of delay by income which was filed in time as well as the Form 10 filed after condonation of delay by the ld. CIT(E) and grant exemption to the assessee. He did so in the assessment order the ld. CIT(E) and grant exemption to the assessee. He did so in the assessment order the ld. CIT(E) and grant exemption to the assessee. He did so in the assessment order passed u/s 143(3) of the Act on 31/ passed u/s 143(3) of the Act on 31/10/2018. He took a possible view. Such view cannot be 10/2018. He took a possible view. Such view cannot be considered as an order which causes prejudice to the revenue. The Courts have laid down considered as an order which causes prejudice to the revenue. The Courts have laid down considered as an order which causes prejudice to the revenue. The Courts have laid down the principles on the powers of the CIT u/s 263 of the the principles on the powers of the CIT u/s 263 of the Act. The Hon’ble Andhra Pradesh High Court in the case of ’ble Andhra Pradesh High Court in the case of Spectra Shares and Scrips Pvt. Spectra Shares and Scrips Pvt. Ltd. V CIT (AP) 354 ITR 35 had considered a number of judgments on this issue of exercise had considered a number of judgments on this issue of exercise had considered a number of judgments on this issue of exercise of jurisdiction u/s 263 of the Act by the Principal Commissioner of Income Tax and culled of jurisdiction u/s 263 of the Act by the Principal Commissioner of Income Tax and culled of jurisdiction u/s 263 of the Act by the Principal Commissioner of Income Tax and culled the principles laid down in the judgments as down in the judgments as below:

“24. In Malabar Industrial Co.Ltd. ( 2 Supra), Malabar Industrial Co.Ltd. ( 2 Supra), the Supreme Court held that a the Supreme Court held that a bare reading of Sec.263 makes it clear that the prerequisite for the exercise of bare reading of Sec.263 makes it clear that the prerequisite for the exercise of bare reading of Sec.263 makes it clear that the prerequisite for the exercise of jurisdiction by the Commissioner suomotu under it, is the order of the Income Tax jurisdiction by the Commissioner suomotu under it, is the order of the Income Tax jurisdiction by the Commissioner suomotu under it, is the order of the Income Tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The is erroneous in so far as it is prejudicial to the interests of the Revenue. The is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Commissioner has to be satisfied of twin conditions, namely, (i) the order of 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 Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent sts of the Revenue. If one of them is absent – if the order of the Income Tax if the order of the Income Tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but it is prejudicial to the Revenue but it is prejudicial to the Revenue – recourse cannot be had to Sec.263 (1) of the recourse cannot be had to Sec.263 (1) of the Act. It also held at pg lso held at pg-88 as follows: "The phrase "prejudicial to the interests of the Revenue" has to be read in "The phrase "prejudicial to the interests of the Revenue" has to be read in "The phrase "prejudicial to the interests of the Revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of conjunction with an erroneous order passed by the Assessing Officer. Every loss of conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as revenue as a consequence of an order of the Assessing Officer cannot be treated as revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when an Income the interests of the Revenue. For example, when an Income the interests of the Revenue. For example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of Officer adopted one of the courses permissible in law and it has resulted in loss of Officer adopted one of the courses permissible in law and it has resulted in loss of Revenue: or where two views are possible and the Income Revenue: or where two views are possible and the Income-tax Officer has taken tax Officer has taken one view with which the Commis one view with which the Commissioner does not agree, it cannot be treated as an sioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken erroneous order prejudicial to the interests of the Revenue, unless the view taken erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income-tax Officer is unsustainable in law. It has been held by this Court tax Officer is unsustainable in law. It has been held by this Court tax Officer is unsustainable in law. It has been held by this Court that where a sum not earned by a person i that where a sum not earned by a person is assessed as income in his hands on his s assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such so offering, the order passed by the Assessing Officer accepting the same as such so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the Revenue. will be erroneous and prejudicial to the interests of the Revenue. will be erroneous and prejudicial to the interests of the Revenue. RampyarideviSaraogi v. CIT (1968) 67 ITR 84 (SC) and in Smt. Tara RampyarideviSaraogi v. CIT (1968) 67 ITR 84 (SC) and in Smt. Tara RampyarideviSaraogi v. CIT (1968) 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwal V. CIT (1973) 88 ITR 323 (SC)". Aggarwal V. CIT (1973) 88 ITR 323 (SC)". 25. In Max India Ltd. Max India Ltd. (3 Supra), reiterated the view in Malabar Industrial Malabar Industrial Co.Ltd. (2 Supra) and observed that every loss of Revenue as a consequence of an (2 Supra) and observed that every loss of Revenue as a consequence of an (2 Supra) and observed that every loss of Revenue as a consequence of an

10 ITA No. 2643/Kol/2019 Assessment Year: 2016-17 The West Bengal National University of Juridical Science The West Bengal National University of Juridical Science order of the Assessing Officer cannot be treated as pr order of the Assessing Officer cannot be treated as prejudicial to the interests of ejudicial to the interests of the Revenue. For example, when an Income Tax Officer adopted one of the courses the Revenue. For example, when an Income Tax Officer adopted one of the courses the Revenue. For example, when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are permissible in law and it has resulted in loss of revenue; or where two views are permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income Tax Officer has taken one view with whic possible and the Income Tax Officer has taken one view with whic possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order Commissioner does not agree, it cannot be treated as an erroneous order Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income prejudicial to the interests of the Revenue, unless the view taken by the Income prejudicial to the interests of the Revenue, unless the view taken by the Income Tax Officer is unsustainable in law. On the facts of that case, Sec.80HHC(3) as it Tax Officer is unsustainable in law. On the facts of that case, Sec.80HHC(3) as it Tax Officer is unsustainable in law. On the facts of that case, Sec.80HHC(3) as it then stood was interpreted by the Assessing Officer but the Revenue contended interpreted by the Assessing Officer but the Revenue contended interpreted by the Assessing Officer but the Revenue contended that in view of the 2005 Amendment which is clarificatory and retrospective in that in view of the 2005 Amendment which is clarificatory and retrospective in that in view of the 2005 Amendment which is clarificatory and retrospective in nature, the view of the Assessing Officer was unsustainable in law and the nature, the view of the Assessing Officer was unsustainable in law and the nature, the view of the Assessing Officer was unsustainable in law and the Commissioner was correct in invoking S Commissioner was correct in invoking Sec.263. But the Supreme Court rejected ec.263. But the Supreme Court rejected the said contention and held that when the Commissioner passed his order the said contention and held that when the Commissioner passed his order the said contention and held that when the Commissioner passed his order disagreeing with the view of the Assessing Officer, there were two views on the disagreeing with the view of the Assessing Officer, there were two views on the disagreeing with the view of the Assessing Officer, there were two views on the word "profits" in that section; that the said section was amende word "profits" in that section; that the said section was amended eleven times; d eleven times; that different views existed on the day when the Commissioner passed his order; that different views existed on the day when the Commissioner passed his order; that different views existed on the day when the Commissioner passed his order; that the mechanics of the section had become so complicated over the years that that the mechanics of the section had become so complicated over the years that that the mechanics of the section had become so complicated over the years that two views were inherently possible; and therefore, the subsequent amendment in two views were inherently possible; and therefore, the subsequent amendment in two views were inherently possible; and therefore, the subsequent amendment in 2005 even though retrospective will not attract the provision of Sec.263. 005 even though retrospective will not attract the provision of Sec.263. 005 even though retrospective will not attract the provision of Sec.263. 26. In Vikas Polymers Vikas Polymers (4 Supra), the Delhi High Court held that the power of (4 Supra), the Delhi High Court held that the power of suomotu revision exercisable by the Commissioner under the provisions of Sec.263 suomotu revision exercisable by the Commissioner under the provisions of Sec.263 suomotu revision exercisable by the Commissioner under the provisions of Sec.263 is supervisory in nature; is supervisory in nature; that an "erroneous judgment" means one which is not in that an "erroneous judgment" means one which is not in accordance with law; that if an Income Tax Officer acting in accordance with law accordance with law; that if an Income Tax Officer acting in accordance with law accordance with law; that if an Income Tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as "erroneous" by the makes a certain assessment, the same cannot be branded as "erroneous" by the makes a certain assessment, the same cannot be branded as "erroneous" by the Commissioner simply because, according to Commissioner simply because, according to him, the order should have been him, the order should have been written differently or more elaborately; that the section does not visualize the written differently or more elaborately; that the section does not visualize the written differently or more elaborately; that the section does not visualize the substitution of the judgment of the Commissioner for that of the Income Tax substitution of the judgment of the Commissioner for that of the Income Tax substitution of the judgment of the Commissioner for that of the Income Tax Officer, who passed the order unless the decision is not in accorda Officer, who passed the order unless the decision is not in accorda Officer, who passed the order unless the decision is not in accordance with the law; that to invoke suomotu revisional powers to reopen a concluded assessment law; that to invoke suomotu revisional powers to reopen a concluded assessment law; that to invoke suomotu revisional powers to reopen a concluded assessment under Sec.263, the Commissioner must give reasons; that a bare reiteration by under Sec.263, the Commissioner must give reasons; that a bare reiteration by under Sec.263, the Commissioner must give reasons; that a bare reiteration by him that the order of the Income Tax Officer is erroneous in so far as it is him that the order of the Income Tax Officer is erroneous in so far as it is him that the order of the Income Tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, will not suffice; that the reasons must al to the interests of the Revenue, will not suffice; that the reasons must al to the interests of the Revenue, will not suffice; that the reasons must be such as to show that the enhancement or modification of the assessment or be such as to show that the enhancement or modification of the assessment or be such as to show that the enhancement or modification of the assessment or cancellation of the assessment or directions issued for a fresh assessment were cancellation of the assessment or directions issued for a fresh assessment were cancellation of the assessment or directions issued for a fresh assessment were called for, and must ir called for, and must irresistibly lead to the conclusion that the order of the resistibly lead to the conclusion that the order of the Income Tax Officer was not only erroneous but was prejudicial to the interests of Income Tax Officer was not only erroneous but was prejudicial to the interests of Income Tax Officer was not only erroneous but was prejudicial to the interests of the Revenue. Thus, while the Income Tax Officer is not called upon to write an the Revenue. Thus, while the Income Tax Officer is not called upon to write an the Revenue. Thus, while the Income Tax Officer is not called upon to write an elaborate judgment giving detailed reas elaborate judgment giving detailed reasons in respect of each and every ons in respect of each and every disallowance, deduction, etc., it is incumbent upon the Commissioner not to disallowance, deduction, etc., it is incumbent upon the Commissioner not to disallowance, deduction, etc., it is incumbent upon the Commissioner not to exercise his suomotu revisional powers unless supported by adequate reasons for exercise his suomotu revisional powers unless supported by adequate reasons for exercise his suomotu revisional powers unless supported by adequate reasons for doing so; that if a query is raised during the course of the scruti doing so; that if a query is raised during the course of the scruti doing so; that if a query is raised during the course of the scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, Assessing Officer, which was answered to the satisfaction of the Assessing Officer, Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer were reflected in the assessment order, this but neither the query nor the answer were reflected in the assessment order, this but neither the query nor the answer were reflected in the assessment order, this would not by itself lead to the conclusion that the order of the Assessing Offic would not by itself lead to the conclusion that the order of the Assessing Offic would not by itself lead to the conclusion that the order of the Assessing Officer called for interference and revision. called for interference and revision. 27. In Sunbeam Auto Ltd. Sunbeam Auto Ltd.( 5 Supra), the Delhi High Court held that the Assessing ( 5 Supra), the Delhi High Court held that the Assessing Officer in the assessment order is not required to give a detailed reason in respect Officer in the assessment order is not required to give a detailed reason in respect Officer in the assessment order is not required to give a detailed reason in respect of each and every item of deduction, etc.; that w of each and every item of deduction, etc.; that whether there was application of hether there was application of mind before allowing the expenditure in question has to be seen; that if there was mind before allowing the expenditure in question has to be seen; that if there was mind before allowing the expenditure in question has to be seen; that if there was an inquiry, even inadequate that would not by itself give occasion to the an inquiry, even inadequate that would not by itself give occasion to the an inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under Sec.263 merely because he has a d Commissioner to pass orders under Sec.263 merely because he has a d Commissioner to pass orders under Sec.263 merely because he has a different opinion in the matter; that it is only in cases of lack of inquiry that such a course opinion in the matter; that it is only in cases of lack of inquiry that such a course opinion in the matter; that it is only in cases of lack of inquiry that such a course of action would be open; that an assessment order made by the Income Tax of action would be open; that an assessment order made by the Income Tax of action would be open; that an assessment order made by the Income Tax Officer cannot be branded as erroneous by the Commissioner simply because, Officer cannot be branded as erroneous by the Commissioner simply because, Officer cannot be branded as erroneous by the Commissioner simply because,

11 ITA No. 2643/Kol/2019 Assessment Year: 2016-17 The West Bengal National University of Juridical Science The West Bengal National University of Juridical Science according to him, the order should have been written more elaborately; there him, the order should have been written more elaborately; there him, the order should have been written more elaborately; there must be some prima facie material on record to show that the tax which was must be some prima facie material on record to show that the tax which was must be some prima facie material on record to show that the tax which was lawfully exigible has not been imposed or that by the application of the relevant lawfully exigible has not been imposed or that by the application of the relevant lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomple statute on an incorrect or incomplete interpretation, a lesser tax than what was te interpretation, a lesser tax than what was just, has been imposed. In that case, the Delhi High Court held that the just, has been imposed. In that case, the Delhi High Court held that the just, has been imposed. In that case, the Delhi High Court held that the Commissioner in the exercise of revisional power could not have objected to the Commissioner in the exercise of revisional power could not have objected to the Commissioner in the exercise of revisional power could not have objected to the finding of the Assessing Officer that expenditure on tool finding of the Assessing Officer that expenditure on tools and dies by the assessee, s and dies by the assessee, a manufacturer of Car parts, is revenue expenditure where the said claim was a manufacturer of Car parts, is revenue expenditure where the said claim was a manufacturer of Car parts, is revenue expenditure where the said claim was allowed by the latter on being satisfied with the explanation of the assessee and allowed by the latter on being satisfied with the explanation of the assessee and allowed by the latter on being satisfied with the explanation of the assessee and where the same accounting practice followed by the assessee for numbe where the same accounting practice followed by the assessee for numbe where the same accounting practice followed by the assessee for number of years with the approval of the Income Tax Authorities. It held that the Assessing Officer with the approval of the Income Tax Authorities. It held that the Assessing Officer with the approval of the Income Tax Authorities. It held that the Assessing Officer had called for explanation on the very item from the assessee and the assessee had called for explanation on the very item from the assessee and the assessee had called for explanation on the very item from the assessee and the assessee had furnished its explanation. Merely because the Assessing Officer in his order had furnished its explanation. Merely because the Assessing Officer in his order had furnished its explanation. Merely because the Assessing Officer in his order did not make an elaborate discussion in that regard, his order cannot be termed id not make an elaborate discussion in that regard, his order cannot be termed id not make an elaborate discussion in that regard, his order cannot be termed as erroneous. The opinion of the Assessing Officer is one of the possible views and as erroneous. The opinion of the Assessing Officer is one of the possible views and as erroneous. The opinion of the Assessing Officer is one of the possible views and there was no material before the Commissioner to vary that opinion and ask for there was no material before the Commissioner to vary that opinion and ask for there was no material before the Commissioner to vary that opinion and ask for fresh inquiry. 28. In Gabriel India Ltd. Gabriel India Ltd. (6 Supra), the Bombay High Court held that a (6 Supra), the Bombay High Court held that a consideration of the Commissioner as to whether an order is erroneous in so far consideration of the Commissioner as to whether an order is erroneous in so far consideration of the Commissioner as 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 as it is prejudicial to the interests of the Revenue, must be based on materials on as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the pr the record of the proceedings called for by him. If there are no materials on oceedings 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 record on the basis of which it can be said that the Commissioner acting in a 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 reasonable manner could have come to such a conclusion, the very initiation of reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and wi proceedings by him will be illegal and without jurisdiction. It held that the thout jurisdiction. It held that the Commissioner cannot initiate proceedings with a view to start fishing and roving Commissioner cannot initiate proceedings with a view to start fishing and roving Commissioner cannot initiate proceedings with a view to start fishing and roving inquiries in matters or orders which are already concluded; that the department inquiries in matters or orders which are already concluded; that the department inquiries in matters or orders which are already concluded; that the department cannot be permitted to begin fresh litigation because of n cannot be permitted to begin fresh litigation because of new views they entertain ew views they entertain on facts or new versions which they present as to what should be the inference or on facts or new versions which they present as to what should be the inference or on facts or new versions which they present as to what should be the inference or proper inference either of the facts disclosed or the weight of the circumstance; proper inference either of the facts disclosed or the weight of the circumstance; proper inference either of the facts disclosed or the weight of the circumstance; that if this is permitted, litigation would have no end except when that if this is permitted, litigation would have no end except when legal ingenuity legal ingenuity is exhausted; that to do so is to divide one argument into two and multiply the is exhausted; that to do so is to divide one argument into two and multiply the is exhausted; that to do so is to divide one argument into two and multiply the litigation. It held that cases may be visualized where the Income Tax Officer while litigation. It held that cases may be visualized where the Income Tax Officer while litigation. It held that cases may be visualized where the Income Tax Officer while making an assessment examines the accounts, makes inquiries, applies his min making an assessment examines the accounts, makes inquiries, applies his min making an assessment examines the accounts, makes inquiries, applies his mind to the facts and circumstances of the case and determines the income either by to the facts and circumstances of the case and determines the income either by to the facts and circumstances of the case and determines the income either by accepting the account or by making some estimate himself; that the accepting the account or by making some estimate himself; that the accepting the account or by making some estimate himself; that the Commissioner, on perusal of the record, may be of the opinion that the estimate Commissioner, on perusal of the record, may be of the opinion that the estimate Commissioner, on perusal of the record, may be of the opinion that the estimate made by the Officer concerne made by the Officer concerned was on the lower side and left to the Commissioner d was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined he would have estimated the income at a figure higher than the one determined he would have estimated the income at a figure higher than the one determined by the Income Tax Officer; but that would not vest the Commissioner with power by the Income Tax Officer; but that would not vest the Commissioner with power by the Income Tax Officer; but that would not vest the Commissioner with power to reexamine the accounts and determine the in to reexamine the accounts and determine the income himself at a higher figure; come himself at a higher figure; there must be material available on the record called for by the Commissioner to there must be material available on the record called for by the Commissioner to there must be material available on the record called for by the Commissioner to satisfy him prima facie that the order is both erroneous and prejudicial to the satisfy him prima facie that the order is both erroneous and prejudicial to the satisfy him prima facie that the order is both erroneous and prejudicial to the interests of the Revenue. Otherwise, it would amount to giving interests of the Revenue. Otherwise, it would amount to giving unbridled and unbridled and arbitrary power to the revising authority to initiate proceedings for revision in arbitrary power to the revising authority to initiate proceedings for revision in arbitrary power to the revising authority to initiate proceedings for revision in every case and start re every case and start re-examination and fresh inquiry in matters which have examination and fresh inquiry in matters which have already been concluded under law. already been concluded under law. 29. In M.S. Raju(15 Supra), this Court has held (15 Supra), this Court has held that the power of the that the power of the Commissioner under Sec.263 (1) is not limited only to the material which was Commissioner under Sec.263 (1) is not limited only to the material which was Commissioner under Sec.263 (1) is not limited only to the material which was available before the Assessing Officer and, in order to protect the interests of the available before the Assessing Officer and, in order to protect the interests of the available before the Assessing Officer and, in order to protect the interests of the Revenue, the Commissioner is entitled to examine any other records which Revenue, the Commissioner is entitled to examine any other records which Revenue, the Commissioner is entitled to examine any other records which are available at the time of examination by him and to take into consideration even available at the time of examination by him and to take into consideration even available at the time of examination by him and to take into consideration even those events which arose subsequent to the order of assessment. those events which arose subsequent to the order of assessment.

12 ITA No. 2643/Kol/2019 Assessment Year: 2016-17 The West Bengal National University of Juridical Science The West Bengal National University of Juridical Science 30. In Rampyari Devi Saraogi Rampyari Devi Saraogi(21 Supra), the Commissioner in exercise of (21 Supra), the Commissioner in exercise of revisional powers cancelled assesse revisional powers cancelled assessee’s assessment for the years 1952 e’s assessment for the years 1952-1953 to 1960-61 because he found that the income tax officer was not justified in 61 because he found that the income tax officer was not justified in 61 because he found that the income tax officer was not justified in accepting the initial capital, the gift received and sale of jewellery, the income accepting the initial capital, the gift received and sale of jewellery, the income accepting the initial capital, the gift received and sale of jewellery, the income from business etc., without any enquiry or evidence whats from business etc., without any enquiry or evidence whatsoever . He directed the oever . He directed the income tax officer to do fresh assessment after making proper enquiry and income tax officer to do fresh assessment after making proper enquiry and income tax officer to do fresh assessment after making proper enquiry and investigation in regard to the jurisdiction. The assessee complained before the investigation in regard to the jurisdiction. The assessee complained before the investigation in regard to the jurisdiction. The assessee complained before the Supreme Court that no fair or reasonable opportunity was given to her. The Supreme Court that no fair or reasonable opportunity was given to her. The Supreme Court that no fair or reasonable opportunity was given to her. The Supreme Court held that there was ample material to show that the income tax reme Court held that there was ample material to show that the income tax reme Court held that there was ample material to show that the income tax officer made the assessments in undue hurry; that he had passed a short stereo officer made the assessments in undue hurry; that he had passed a short stereo officer made the assessments in undue hurry; that he had passed a short stereo typed assessment order for each assessment year; that on the face of the record, typed assessment order for each assessment year; that on the face of the record, typed assessment order for each assessment year; that on the face of the record, the orders were pre- -judicial to the interest of the Revenue; and no prejudice was dicial to the interest of the Revenue; and no prejudice was caused to the assessee on account of failure of the Commissioner to indicate the caused to the assessee on account of failure of the Commissioner to indicate the caused to the assessee on account of failure of the Commissioner to indicate the results of the enquiry made by him, as she would have a full opportunity for results of the enquiry made by him, as she would have a full opportunity for results of the enquiry made by him, as she would have a full opportunity for showing to the income tax officer whet showing to the income tax officer whether he had jurisdiction or not and whether her he had jurisdiction or not and whether the income tax assessed in the assessment years which were originally passed the income tax assessed in the assessment years which were originally passed the income tax assessed in the assessment years which were originally passed were correct or not" were correct or not" 31. From the above decisions, the following principles as to exercise of jurisdiction 31. From the above decisions, the following principles as to exercise of jurisdiction 31. From the above decisions, the following principles as to exercise of jurisdiction by the Commissioner u/s.263 o by the Commissioner u/s.263 of the Act can be culled out: a) The Commissioner has to be satisfied of twin conditions, namely, (i) the order a) The Commissioner has to be satisfied of twin conditions, namely, (i) the order a) 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 of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If erroneous but is not p to the interests of the Revenue. If erroneous but is not prejudicial to the Revenue rejudicial to the Revenue or if it is not erroneous but it is prejudicial to the Revenue or if it is not erroneous but it is prejudicial to the Revenue – recourse cannot be recourse cannot be had to Sec.263 (1) of the Act. had to Sec.263 (1) of the Act. b) Every loss of revenue as a consequence of an order of the Assessing Officer b) Every loss of revenue as a consequence of an order of the Assessing Officer b) Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to cannot be treated as prejudicial to the interests of the Revenue. For example, the interests of the Revenue. For example, when an Income-tax Officer adopted one of the courses permissible in law and it tax Officer adopted one of the courses permissible in law and it tax Officer adopted one of the courses permissible in law and it has resulted in loss of Revenue: or where two views are possible and the Income has resulted in loss of Revenue: or where two views are possible and the Income has resulted in loss of Revenue: or where two views are possible and the Income- tax Officer has taken one view with which the Commiss tax Officer has taken one view with which the Commissioner does not agree, it ioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the cannot be treated as an erroneous order prejudicial to the interests of the cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income Revenue, unless the view taken by the Income-tax Officer is unsustainable in law. tax Officer is unsustainable in law. c) To invoke suomotu revisional powers to reopen a concluded assessment u c) To invoke suomotu revisional powers to reopen a concluded assessment u c) To invoke suomotu revisional powers to reopen a concluded assessment under Sec.263, the Commissioner must give reasons; that a bare reiteration by him that Sec.263, the Commissioner must give reasons; that a bare reiteration by him that Sec.263, the Commissioner must give reasons; that a bare reiteration by him that the order of the Income Tax Officer is erroneous in so far as it is prejudicial to the the order of the Income Tax Officer is erroneous in so far as it is prejudicial to the the order of the Income Tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, will not suffice; that the reasons must be such as to sho interests of the Revenue, will not suffice; that the reasons must be such as to sho interests of the Revenue, will not suffice; that the reasons must be such as to show that the and must irresistibly lead to the conclusion that the order of the Income that the and must irresistibly lead to the conclusion that the order of the Income that the and must irresistibly lead to the conclusion that the order of the Income Tax Officer was not only erroneous but was prejudicial to the interests of the Tax Officer was not only erroneous but was prejudicial to the interests of the Tax Officer was not only erroneous but was prejudicial to the interests of the Revenue. Thus, while the Income Tax Officer is not called upon to write an Revenue. Thus, while the Income Tax Officer is not called upon to write an Revenue. Thus, while the Income Tax Officer is not called upon to write an elaborate judgment giving detailed reasons in respect of each and every t giving detailed reasons in respect of each and every t giving detailed reasons in respect of each and every disallowance, deduction, etc., it is incumbent upon the Commissioner not to disallowance, deduction, etc., it is incumbent upon the Commissioner not to disallowance, deduction, etc., it is incumbent upon the Commissioner not to exercise his suomotu revisional powers unless supported by adequate reasons for exercise his suomotu revisional powers unless supported by adequate reasons for exercise his suomotu revisional powers unless supported by adequate reasons for doing so; that if a query is raised during th doing so; that if a query is raised during the course of the scrutiny by the e course of the scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, Assessing Officer, which was answered to the satisfaction of the Assessing Officer, Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer were reflected in the assessment order, this but neither the query nor the answer were reflected in the assessment order, this but neither the query nor the answer were reflected in the assessment order, this would not by itself lead to the conclusion that the order would not by itself lead to the conclusion that the order of the Assessing Officer of the Assessing Officer called for interference and revision. called for interference and revision. e) The Commissioner cannot initiate proceedings with a view to start fishing and e) The Commissioner cannot initiate proceedings with a view to start fishing and e) The Commissioner cannot initiate proceedings with a view to start fishing and roving inquiries in matters or orders which are already concluded; that the roving inquiries in matters or orders which are already concluded; that the roving inquiries in matters or orders which are already concluded; that the department cannot be permitted to be department cannot be permitted to begin fresh litigation because of new views gin fresh litigation because of new views they entertain on facts or new circumstance; that if this is permitted, litigation they entertain on facts or new circumstance; that if this is permitted, litigation they entertain on facts or new circumstance; that if this is permitted, litigation would have no end except when legal ingenuity is exhausted would have no end except when legal ingenuity is exhausted f) Whether there was application of mind before allowing the expenditure f) Whether there was application of mind before allowing the expenditure f) Whether there was application of mind before allowing the expenditure in question has to be seen; that if there was an inquiry, even inadequate that would question has to be seen; that if there was an inquiry, even inadequate that would question has to be seen; that if there was an inquiry, even inadequate that would

13 ITA No. 2643/Kol/2019 Assessment Year: 2016-17 The West Bengal National University of Juridical Science The West Bengal National University of Juridical Science not by itself give occasion to the Commissioner to pass orders under Sec.263 not by itself give occasion to the Commissioner to pass orders under Sec.263 not by itself give occasion to the Commissioner to pass orders under Sec.263 merely because he has a different opinion in the matter; that it is only in cases of merely because he has a different opinion in the matter; that it is only in cases of merely because he has a different opinion in the matter; that it is only in cases of lack of inquiry that such a course of action would be open; that an assessment inquiry that such a course of action would be open; that an assessment inquiry that such a course of action would be open; that an assessment order made by the Income Tax Officer cannot be branded as erroneous by the order made by the Income Tax Officer cannot be branded as erroneous by the order made by the Income Tax Officer cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been Commissioner simply because, according to him, the order should have been Commissioner simply because, according to him, the order should have been written more elaborately; there must written more elaborately; there must be some prima facie material on record to be some prima facie material on record to show that the tax which was lawfully exigible has not been imposed or that by the show that the tax which was lawfully exigible has not been imposed or that by the show that the 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 application of the relevant statute on an incorrect or incomplete interpretation, a application of the relevant statute on an incorrect or incomplete interpretation, a lesser tax than what was just, has been imposed lesser tax than what was just, has been imposed. g) The power of the Commissioner under Sec.263 (1) is not Commissioner is g) The power of the Commissioner under Sec.263 (1) is not Commissioner is g) The power of the Commissioner under Sec.263 (1) is not Commissioner is entitled to examine any other records which are available at the time of entitled to examine any other records which are available at the time of entitled to examine any other records which are available at the time of examination by him and to take into consideration even those events which arose examination by him and to take into consideration even those events which arose examination by him and to take into consideration even those events which arose subsequent to the order of subsequent to the order of assessment.

Kolkata, the Kolkata, the 30th day of September, 2020.

Sd/- Sd/- [S.S. Godara] [J. Sudhakar Reddy] [J. Sudhakar Reddy] Judicial Member Accountant Member Accountant Member Dated : 30.09.2020 {SC SPS}

14 ITA No. 2643/Kol/2019 Assessment Year: 2016-17 The West Bengal National University of Juridical Science The West Bengal National University of Juridical Science Copy of the order forwarded to: 1. The West Bengal National University of Juridical Science The West Bengal National University of Juridical Science 12 LB Block, NUJS Bhawan Sector-3 Salt Lake City Kolkata – 700 098