PEOPLE INFOCOM PVT. LTD.,MUMBAI vs. C.I.T. CIR.7, MUMBAI

आदेश / O R D E R Per Joginder Singh (Judicial Member) The assessee is aggrieved by the impugned order

dated 10/07/2012, of the Ld. Commissioner of Income Tax

invoking revisional jurisdiction u/s 263 of the Income Tax

Act, 1961 (hereinafter the Act).

appeal before this Tribunal against the impugned order.

The assessee has filed application for condonation of delay

along with an affidavit in support of the application. The

crux of argument advanced on behalf of the assessee is that

pursuant to the decision from Hon’ble Madras High Court,

in identical matter in the own case of the assessee on the

issue of Employee Stock Option Plan (hereinafter ESOP)

confirming the order of the Tribunal in SSI Ltd. vs DCIT

(2004) 85 TTJ (Chennai) 1049 holding that the assessee

has to follow SEBI directions and by following such

directions, the assessee claimed the ascertained amount as

liability for deduction. In view of the aforesaid decision, the

assessee decided to file an appeal. It was contended that

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the decision from Hon’ble Madras High Court came in June

2012 in favour of the assessee and the assessee filed the

appeal on 07/01/2013. It was contended that keeping in

view, the substantial cause of justice, the delay may be

condoned.

2.1. On the other hand, Shri M. Dayasagar, ld. CIT-

DR, contended that delay may not be condoned for which

reliance was placed upon the decision of the Tribunal in

Vikas Bhalchandra (ITA No.3245/Mum/2012) order dated

20/08/2014 and Shri Vijay V. Meghani vs DCIT (ITA

No.5418 & 5419/Mum/2011) order dated 20/08/2014. ld.

CIT-DR brought to our notice to amendment made by the

Finance Act, 2015 w.e.f. 01/06/2015.

2.2. We have considered the rival submissions and

perused the material available on record. Under the facts

narrated before us, considering the situation, no doubt

filing of an appeal is a right granted under the statute to

the assessee and is not an automatic privilege, therefore,

the assessee is expected to be vigilant in adhering to the

manner and mode in which the appeals are to be filed in

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terms of the relevant provisions of the Act. Nevertheless, a

liberal approach has to be adopted by the appellate

authorities, where delay has occurred for “bona fide

reasons” on the part of the assessee or the Revenue in filing

the appeals. In matters concerning the filing of appeals, in

exercise of the statutory right, a refusal to condoned the

delay can result in a meritorious matter being thrown out

at the threshold, which may lead to miscarriage of justice.

The judiciary is respected not on account of its power to

legalize injustice on technical grounds but because it is

capable of removing injustice and is expected to do so.

2.3. The Hon’ble Apex Court in a celebrated decision in

Collector, Land Acquisition vs Mst. Katiji & Ors. 167 ITR

471 opined that when technical consideration and

substantial justice are pitted against each other, the courts

are expected to further the cause of substantial justice.

This is for the reason that an opposing party, in a dispute,

cannot have a vested right in injustice being done because

of a non- deliberate delay. Therefore, it follows that while

considering matters relating to the condonation of delay,

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judicious and liberal approach is to be adopted. If

“sufficient cause” is found to exist, which is bona-fide one,

and not due to negligence of the assessee, the delay needs

to condoned in such cases. The expression ‘sufficient

cause’ is adequately elastic to enable the courts to apply

law in a meaningful manner, which sub-serves the end of

justice- that being the life purpose of the existence of the

institution of the courts. When substantial justice and

technical consideration are pitted against each other, the

cause of substantial justice deserves to be preferred. This

means that there should be no malafide or dilatory tactics.

Sufficient cause should receive liberal construction to

advance substantial justice. The Hon’ble Apex Court in

Collector, Land Acquisition vs Mst. Katiji & Ors. (167 ITR

471) observed as under:-

“3. The legislature has conferred the power to condone delay by enacting section 51 of the Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on de merits. The expression “sufficient cause” employed by the legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice that being the life-purpose of the existence of the institution of courts. It is common

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knowledge that this court has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the others courts in the hierarchy.”

2.4. Furthermore, the Hon'ble Supreme Court in the

case of Vedabai Alia Vaijayanatabai Baburao Patil vs.

Shantaram Baburao Patil 253 ITR 798 held that the court

has to exercise the discretion on the facts of each case

keeping in mind that in construing the expression

‘sufficient cause’, the principle of advancing substantial

justice is of prime importance. The court held that the

expression “sufficient cause” should receive liberal

construction.

2.5. So far as, the decisions cited by the ld. CIT-DR is

concerned, we find that in the case of Shri Vikash

Bhalchandra vs ACIT, there was delay of 2009 days and in

the case of Shri Vijay Meghani, there was delay of 2984

days, whereas, in the appeal of the assessee, there is delay

of 252 days, therefore, considering the huge delay in the

cases relied upon by the ld. CIT-DR and comparatively,

lesser delay in the present appeal, the reasons of delay,

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explanation of the assessee and having made the aforesaid

observation and considering the material facts available on

record, as mentioned earlier, by taking a lenient view, the

delay is condoned.

ld. counsel for the assessee invited our attention to page-4

of the paper book, pages-40 & 42 of the paper book

explained that the revisional jurisdiction was wrongly

invoked. The ld. counsel also filed an order u/s 7(1) of the

R.T.I. Act, 2005 duly signed by the Central Public

Information Officer/DCIT, Circle-7(3)(2), Mumbai. Our

attention was also invited to the order sheet (page-3,

annexure-A and page-4) along with the factual matrix

recorded in the assessment order. The crux of the

argument is that necessary details were filed by the

assessee and the same were duly examined by the

Assessing Officer, therefore, the assessment order is neither

erroneous nor prejudicial to the interest of the Revenue.

3.1. On the other hand, the ld. CIT-DR, defended the

order of the ld. CIT by contending that the necessary details

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were not filed by the assessee and further the Assessing

Officer has not put into writing the claim of the assessee

and also the order is short one, therefore, in the absence of

detailed assessment order, prejudice has been caused to

the Revenue.

3.2. We have considered the rival submissions and

perused the material available on record. We find that in

the assessment order (page-40 & 41 of the paper book), the

facts have been mentioned that the assessee company is

engaged in the business of mobile value, added services

under the brand name Mauj, declared loss of

Rs.8,37,31,010/- in its return filed on 31/10/2007, which

was processed u/s 143(3) on 27/02/2009. The case of the

assessee was selected for scrutiny under CASS, therefore,

notice u/s 143(2) of the Act was served upon the assessee.

Thereafter notice u/s 142(1) along with questionnaire was

issued to the assessee to which the assessee furnished the

requisite details along with physical copy of e-filed return

and the case of discussed, as is evident from page-1 of the

assessment order. In para -3, the assessee has made

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discussion with respect to disallowance out of staff welfare

expenses and at page-2(page-41 of the paper book), there is

mention “on examination of details filed by the assessee”

meaning thereby, the facts were duly examined by the

Assessing Officer. Likewise, in para-4, discussion has been

made with respect to business development expenses and

in para-5, further discussion has been made on

disallowance of miscellaneous expenses and thereafter in

para-6, the income was computed. In the concluding para,

direction has been issued for giving credit for pre-paid taxes

and charging of interest u/s 234A, 234B and 234C as

applicable. We also note that vide letter dated 14/12/2009

addressed to the ACIT (pages 42 to 45 of the paper book)

explanation with respect to ESOP and the details of

expenses was furnished. It is not the case that the ld.

Assessing Officer passed the order blindly. Possibly, the

order may not be detailed one but that does not mean the

assessment was framed without examining the facts,

therefore, the assessment order cannot be said to be

erroneous or prejudicial to the interest of the Revenue.

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3.3. So far as, the scope of revision u/s 263 of the Act

is concerned, the Hon’ble Bombay High Court has

enlightened us in its order dated 15/04/1993 in CIT vs

Gabrial India Ltd. (1993) 203 ITR 108 (pages 9 to 15 of the

paper book), wherein discussion was made at length and

finally decided in favour of the assessee. The relevant

portion of the order is reproduced hereunder:-

“7. We have heard learned counsel for the parties and carefully perused the orders of the Income-tax Officer, the Commissioner and the Tribunal. On perusal of the admitted facts, it appears that the Income-tax Officer in the instant case had examined the allowability of the claim of the assessee for deduction of the above amount of Rs. 99,326. While doing so, he asked for an explanation from the assessee in regard to the nature thereof. The assessee furnished a detailed explanation, vide his letter dated September 19, 1975. It was on a consideration of the said explanation and on being satisfied that it was a revenue expenditure that the Income-tax Officer allowed the claim for deduction. It is, however, correct that in his order, he did not make any discussion in regard to the query made by him and the explanation submitted by the assessee thereto.

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The Tribunal did not approve such action of the Commissioner. Therefore, the question that arises for consideration is whether the Commissioner without arriving at a finding that the order in question was erroneous can set aside the assessment in exercise of power under section 263 of the Act. It may be expedient at this stage to set out section 263 of the Act. Section 263, so far as relevant, runs as follows :

"263. Revision of orders prejudicial to Revenue. - (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.

(2) No order shall be made under sub-section (1) -

(a) to revise an order of reassessment made under section 147, or

(b) after the expiry of two years from the date of the order sought to be revised. . . .

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far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. (See Parashuram Pottery Works Co. Ltd. v. ITO ).

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means "involving error; deviating from the law". "Erroneous assessment" refers to an assessment that deviates from the law and is, therefore, invalid, and is a defect that is jurisdictional in its nature, and does not refer to the judgment of the Assessing Officer in fixing the amount of valuation of the property. Similarly, "erroneous judgment" means "one rendered according to course and practice of court, but contrary to law, upon mistaken view of law; or upon erroneous application of legal principles".

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not be enough to vest the Commissioner with the power of suo motu revision because the first requirement, viz., that the order is erroneous, is absent. Similarly, if an order is erroneous but not prejudicial to the interests of the Revenue, then also the power of suo motu revision cannot be exercised. Any and every erroneous order cannot be the subject-matter of revision 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.

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been realised or cannot be realised. There must be material available on the record called for by the Commissioner to satisfy him prima facie that the aforesaid two requisites are present. If not, he has no authority to initiate proceedings for revision. Exercise of power of suo motu revision under such circumstances will amount to arbitrary exercise of power. It is well-settled that when exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exercising such power must have materials on record to satisfy it in that regard. If the action of the authority is challenged before the court it would be open to the courts to examine whether the relevant objective factors were available from the records called for and examined by such authority. Our aforesaid conclusion gets full support from a decision of Sabyasachi Mukharji J. (as his Lordship then was) in Russell Properties Pvt. Ltd. v. A. Chowdhury, Addl. CIT . In our opinion, any other view in the matter will amount to giving unbridled and arbitrary power to the revising authority to initiate proceedings for revision in every case and start re-examination and fresh enquiries in matters which have already been concluded under the law. As already stated it is a quasi judicial power hedged in with limitation and has to be exercised subject to the same and within its scope and ambit. So far as calling for the records and examining the same is concerned, undoubtedly, it is an administrative act, but on examination "to consider" or in other words, to form an opinion that the particular order is erroneous in so tar as it is prejudicial to the interests of the Revenue, is a quasi-judicial act because on this consideration or opinion the whole machinery of re-examination and reconsideration of an order of assessment, which has already been concluded and controversy which has been set at rest, is set again in motion. It is an important decision and the same cannot be based on the whims or caprice of the revising authority. There must be materials available from the records called for by the Commissioner.

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3.4. In the celebrated case of Malabar Industrial

Company Ltd. vs CIT (243 ITR 83)(SC), it was held that for

invoking jurisdiction u/s 263 by the ld. Commissioner, the

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order should be either erroneous and prejudicial to the

interest of Revenue. In that case, the assessment was

framed without making an enquiry by the Assessing Officer,

in that situation, exercise of revisional jurisdiction by the

CIT was held to be justified. However, in the present case,

due enquiries was made by the Assessing Officer and the

necessary details, filed by the assessee were examined,

therefore, this judicial pronouncements supports the case

of the assessee. Identical ratio was laid down in CIT vs Max

India Ltd. (2007) 295 ITR 282, wherein, the decision of

Malabar Industrial Company Ltd. was also considered and

the appeal of the Department was dismissed. It is

elementary, as was held by Hon’ble Supreme Court in the

case of Malabar Industrial Co Ltd Vs CIT [(2000) 243 ITR 83

(SC)], “Every loss of revenue as a consequence of an order

of AO cannot be treated as prejudicial to the interests of the

Revenue, for example, when an ITO adopted one of the

courses permissible in law and it has resulted in loss of

revenue; or where two views are possible and the ITO has

taken one view with which the CIT does not agree, it cannot

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be treated as an erroneous order prejudicial to the interests

of the Revenue unless the view taken by the ITO is

unsustainable in law”. Learned Commissioner was thus in

error in holding that the ld. Assessing Officer did not made

enquiries while framing the assessment and rendered the

assessment order erroneous and prejudicial to the interest

of the revenue, we find no such error, which can lead to the

assessment order being subjected to the revision

proceedings under section 263.

3.5. The case of the assessee is further fortified by

the decision in Siddhi Real Estate Developers vs CIT (ITA

No.2630 to 2635/Mum/2012) order dated 13/05/2014,

wherein, various decisions like Mudhit Madanlal Gupta vs

ACIT (51 DTR 217), DCIT vs Magapatta Township

Development and Construction Company (141 ITD

682)(Pune), Rahul Construction Company vs ITO (ITA

No.1250/Pn/2009), CIT vs Vandana Properties (2012) 353

ITR 36 (Bom.) and various decisions were considered and

finally decided in favour of the assessee.

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3.6. Hon’ble Delhi High Court in CIT vs Sunbeam

Auto Ltd. (2011) 332 ITR 167 order dated 11/09/2009,

after considering various decisions, made an elaborate

discussion and decided in favour of the assessee by holding

that there is distinction between “lack of enquiry” and

“inadequate enquiry” and hold that if there is an enquiry,

even inadequate, that would not by itself give occasion to

the CIT to pass order us/ 263, merely because he has a

different opinion in the matter. This judicial

pronouncement squarely defends the case of the assessee.

While coming to this conclusion, the Hon’ble Court duly

considered the following decision

a. Asstt. CIT vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 210 CTR (SC) 30 (2007) 291 ITR 500 (SC) b. CIT vs. Mysore Spun Concrete Pipe (P) Ltd. (1991) 97 CTR (Kar) 117 (1992) 194 ITR 159 (Kar) c. CIT vs. Seshasayee Paper & Boards Ltd. (2000) 242 ITR 490 (Mad) d. Gee Vee Enterprises vs. Add!. CIT 1975 CTR (Del) 61 : (1975) 99 ITR 375 (Del) e. Madras Industrial Investment Corporation Ltd. vs. CIT (1997) 139 CTR (SC) 555 (1997) 225 ITR 802 (SC) f. Malabar Industrial Co. Ltd. vs. CIT (2000) 159 CTR (SC) 1 : (2000) 243 ITR 83 (SC)

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3.7. Now, we shall deal with the contention of the ld.

CIT-DR with respect to amendment made by the Finance

Act, 2015 w.e.f. 01/06/2015. The provision of the Act is

reproduced hereunder for ready reference:-

“ 263. (1) The [Principal Commissioner or] Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. [Explanation 1.]—For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,— (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include— (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the [Principal Chief Commissioner or] Chief Commissioner or [Principal Director General or] Director General or [Principal Commissioner or] Commissioner authorised by the Board in this behalf under section 120; (b) "record" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the [Principal Commissioner or] Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the [Principal Commissioner or] Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal.

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[Explanation 2.—For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,— (a) the order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.] (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, [National Tax Tribunal,] the High Court or the Supreme Court. Explanation.—In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded.”

If the aforesaid insertion of Explanation -2 is analyzed the revisional jurisdiction can be invoked only when

(a) The order is passed without making enquiries or verification which should have been made

(b) The order is passed allowing any relief without enquiring into the claim

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(c) The order has not been made in accordance with any order, direction or instruction issued by the Board u/s 119 or

(d) The order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional high court or Supreme Court in a case of the assessee or any other person.

3.8. If the aforesaid insertion, w.e.f. 01/06/2015, if

kept in juxtaposition with the facts of the present appeal, it

can be said that there is no violation of the insertion by the

Assessing Officer because the assessment order was passed

after considering the details and on

examination/verification of the same and the relief was

granted to the assessee after making due enquiry,

therefore, so far as, explanation-2(a) and (b) is concerned,

consequently, on this count also, we find no merit in the

assertion made on behalf of the Revenue.

3.9. The Mumbai Bench of the Tribunal in M/s.

Simandhar Association vs Principal CIT (I.T.A. No.

789/Mum/2016) Order dated 21/03/2016 has discussed

the scope of revisional jurisdiction u/s 263 of the Act. The

relevant portion from the order is reproduced hereunder:-

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“The scope of revision proceedings initiated under section 263 of the Act was considered by Hon'ble Bombay High Court, in the case of Grasim Industries Ltd. V CIT (321 ITR 92) by taking into account the law laid down by the Hon'ble Supreme Court. The relevant observations are extracted below: “Section 263 of the Income-tax Act, 1961 empowers the Commissioner to call for and examine the record of any proceedings under the Act and, if he considers that any order passed therein, by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, to pass an order upon hearing the assessee and after an enquiry as is necessary, enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment. The key words that are used by section 263 are that the order must be considered by the Commissioner to be “erroneous in so far as it is prejudicial to the interests of the Revenue”. This provision has been interpreted by the Supreme Court in several judgments to which it is now necessary to turn. In Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83, the Supreme Court held that the provision “cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer” and “it is only when an order is erroneous that the section will be attracted”. The Supreme Court held that an incorrect assumption of fact or an incorrect application of law, will satisfy the requirement of the order being erroneous. An order passed in violation of the principles of natural justice or without application of mind, would be an order falling in that category. The expression “prejudicial to the interests of the Revenue”, the Supreme Court held, it is of wide import and is not confined to a loss of tax. What is prejudicial to the interest of the Revenue is explained in the judgment of the Supreme Court (headnote) :

“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 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-tax Officer adopted one of the courses permissible in law and it has

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resulted in loss of revenue, or where two views are 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 prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law.” The principle which has been laid down in Malabar Industrial Co. Ltd. [2000] 243 ITR 83 (SC) has been followed and explained in a subsequent judgment of the Supreme Court in CIT v. Max India Ltd. [2007] 295 ITR 282.” The principles laid down by the courts are that the Learned CIT cannot invoke his powers of revision under section 263 if the Assessing Officer has conducted enquiries and applied his mind to the issues. If the assessment order has been passed by causing enquiries, then it would not give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has a different opinion in the matter. The consideration of the Commissioner as to whether an order is erroneous in so far it is prejudicial to the interests of Revenue must be based on materials on record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to start fishing and roving enquiries in matters or orders which are already concluded.” 3.10. The ratio laid down by the Ahmadabad Bench of the

Tribunal in the case of Aditya medisales vs addl. CIT (ITA

No.1334/Ahd/2015) order dated 16/02/2016 further

supports the case of the assessee, wherein, the revisional

jurisdiction invoked u/s 263 of the Act was quashed. The

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relevant portion from the aforesaid order is reproduced

hereunder for ready reference:-

“ 7. We have noted that as on the time of passing the impugned revision order, the matter regarding disallowance under section 14 A was pending for I . T.A . No. 1334/Ahd/15 Assessment Year : 2010 -1 1 consideration before the CIT(A). The assessee had filed the appeal before the CIT(A) on 22nd March 2013 and even the written submissions were filed on 14th October 2013. Learned CIT(A) was thus in seisin of the question as to whether the disallowance under section 14A was correctly made, and let us not forget that the CIT(A) had all the powers, co terminus with the powers of the Assessing Officer, including the powers of enhancement. As to whether the learned Commissioner could have exercised his revision powers under section 263 at this point of time, we find guidance from Hon'ble Madras High Court's judgment, in the case of CWT Vs Sampathmal Chordia [(2002) 256 ITR 440 (Mad)], which observes, inter alia, as follows: 2. The revisional jurisdiction cannot be exercised in a manner which would result in depriving the appellate authority of the power to examine the correctness of the order under appeal, when an appeal, has, in fact, been filed in respect of those matters and was pending before the appellate authority. The Explanation to s. 25(2) in cl. (c) thereof, after its amendment by the Finance Act of 1989 makes this abundantly clear. That provision sets out that where the order sought to be revised is one passed by the AO and had been made the subject-matter of an appeal, the power of the CWT will extend to such matters as had not been considered and decided in such appeal.

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(c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. [Explanation c to Section 25(2)] (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Principal Commissioner or Commissioner under this sub-section shall extend and shall be deemed always to have extended] to such matters as had not been considered and decided in such appeal. xxxxxxxxxxxxxxxxxxxxx

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3.11. To sum up the issue, admittedly, an incorrect

assumption of fact or an incorrect application of law would

satisfy the requirement of order being erroneous u/s. 263

of the Act. The phrase “prejudicial to the interest of the

Revenue” u/s. 263 of the Act, has to be read in conjunction

with the expression “erroneous” order by the Assessing

Officer. Every loss of Revenue as a consequence of

assessment order cannot be termed as prejudicial to the

interest of Revenue, meaning thereby, “prejudice” must be

prejudice to the Revenue administration. At the same time,

if another view is possible revision is not permissible. Our

view is fortified by the decision from Himachal Pradesh

Financial Corpn. (186 Taxmann 105)(HP), Bismillah Trading

Co. (248 ITR 292)(Ker.) and CIT vs. Green World Corpn. (314

ITR 81)(SC). For invoking revisional jurisdiction u/s. 263

the assessment order must contain grievous error which is

subversive of the administration of Revenue. Further, exact

error must be disclosed by the Commissioner as was held

in CIT vs. G.K. Kabra (211 ITR 336)(AP). Totality of facts,

clearly indicates that assessment u/s. 143(3) of the Act was

ITA No.210/Mum/2013 28 People Inf ocom Pvt. Ltd.

framed by the Assessing Officer after obtaining necessary

details from the assessee and further the same were

examined by him. Therefore, even if, the same has not been

spelt elaborately in the assessment order it cannot be said

that there is a “lack of enquiry” or prejudice has been

caused to the Revenue, as we have discussed various case

laws in earlier part of this order which are identical to the

facts before us. It is also noted that while invoking the

revisional jurisdiction, the ld. Commissioner has not

pointed out exact error in the assessment order specifying

as to how the assessment order is erroneous/prejudicial to

the interest of the Revenue. In view of these facts and the

judicial pronouncements from Hon'ble Apex Court, various

Hon'ble High Courts and various Benches of the Tribunal,

we set aside the order of the ld. Commissioner invoking

revisional jurisdiction u/s 263 of the Act, being not within

the parameters of the law, as the assessment was framed

by the Assessing Officer after considering necessary details

filed by the assessee and on examination of the same. It is

not the case that the assessment was framed in a hasty

ITA No.210/Mum/2013 29 People Inf ocom Pvt. Ltd.

manner or without considering the factual

matrix/necessary details. The jurisdiction u/s 263 of the

Act could not be assumed merely stating that adequate

enquiry was not made by the Assessing Officer. The

decision from Delhi High Court in CIT vs Sunbeam Auto Ltd

(supra) and the decision of the Tribunal in Vegesina Kamala

vs ITO (2016) 66 taxman.com 280 (Vishakhapatnam)

supports the case of the assessee. therefore, considering

the totality of facts and the judicial pronouncement, the

revisional order is quashed. The appeal of the assessee is

allowed.

Finally, the appeal of the assessee is allowed.

This order was pronounced in the open in the

presence of ld. representatives from both sides at the

conclusion of the hearing on 19/05/2016.

Sd/- Sd/- (Rajendra) (Joginder Singh) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER मुंबई Mumbai; �दनांक Dated : 19/05/2016

f{x~{tÜ? P.S/.�न.स.

ITA No.210/Mum/2013 30 People Inf ocom Pvt. Ltd.

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to :

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील�य अ�धकरण, मुंबई / ITAT, Mumbai