Commr.Of I. T-I.Mumbai Vs. Amitabh Bachchan, on 11th May 2016, Supreme Court of India – Read Judgement

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.5009 OF 2016
[Arising out of S.L.P.(C) No.11621 of 2009]

COMMISSIONER OF INCOME TAX, MUMBAI      …APPELLANT(S)

VERSUS

AMITABH BACHCHAN                          …RESPONDENT(S)

WITH

CIVIL APPEAL NO.5010 OF 2016
[Arising out of S.L.P.(C) No.861 of 2013]

J U D G M E N T

RANJAN GOGOI, J.

SLP(C) NO. 11621 OF 2009

1.          Leave granted.

2.          The appellant – Revenue seeks to  challenge  the  order  of  the
High Court dated 7th August, 2008 dismissing the appeal filed  by  it  under
Section 260A of the Income Tax Act, 1961 (hereinafter referred to  as  ‘”the
Act”) and affirming the order of the Income Tax Appellate  Tribunal,  Mumbai
Bench (“Tribunal” for short) dated  28th  August,  2007  whereby  the  order
dated 20th March, 2006 passed by the Commissioner of  Income  Tax-1,  Mumbai
(“C.I.T.” for short) under  Section  263  of  the  Act  was  reversed.   The
assessment year in question is 2001-2002 and the assessment order  is  dated
30th March, 2004.

3.          After the assessment  as  above  was  finalized,  a  show  cause
notice dated 7th November, 2005 under Section 263 of the Act was  issued  by
the learned C.I.T. detailing as many as eleven (11) issues/grounds on  which
the assessment order was proposed to be revised under  Section  263  of  the
Act.  The respondent – assessee filed his  reply  to  the  said  show  cause
notice on consideration of  which  by  order  dated  20th  March,  2006  the
learned C.I.T. set aside the order of assessment dated 30th March, 2004  and
directed a fresh  assessment  to  be  made.   Aggrieved,  the  respondent  –
assessee challenged the said order before the  learned  Tribunal  which  was
allowed by the order dated 28th August, 2007.

4.          Aggrieved by the order dated 28th August, 2007  of  the  learned
Tribunal, the Revenue filed an appeal under Section 260A of the  Act  before
the High Court of Bombay.  The aforesaid appeal i.e. ITA No.293 of 2008  was
summarily dismissed by the High  Court  by  the  impugned  order  dated  7th
August, 2008 holding that as the C.I.T. had gone beyond  the  scope  of  the
show cause notice dated 7th November, 2005 and had  dealt  with  the  issues
not covered/mentioned in the said notice the  revisional  order  dated  20th
March, 2006 was in violation of the principles of natural justice.   So  far
as the question as to whether the  Assessing  Officer  had  made  sufficient
enquiries about the assessee’s claim of  expenses  made  in  the  re-revised
return of income is concerned, which question  was  formulated  as  question
No.2 for the High Court’s consideration, the High Court took the  view  that
the said question raised pure questions of fact and,  therefore,  ought  not
to be examined under Section 260A of the Act.  The  appeal  of  the  Revenue
was consequently dismissed.  Aggrieved, this  appeal  has  been  filed  upon
grant of leave under Article 136 of
the Constitution of India.

5.          We have heard  Shri  Ranjit  Kumar,  learned  Solicitor  General
appearing for the appellant Revenue and Shri  Shyam  Divan,  learned  Senior
Counsel appearing for the respondent – assessee.

6.          The assessment in question was set aside by the  learned  C.I.T.
by the order dated 20th March, 2006 on the principal ground  that  requisite
and  due  enquiries  were  not  made  by  the  Assessing  Officer  prior  to
finalization of the assessment by order dated 30th  March,  2004.   In  this
connection, the learned C.I.T. on consideration of the  facts  of  the  case
and the record of the proceedings came to the conclusion that in the  course
of the assessment proceedings despite  several  opportunities  the  assessee
did  not  submit  the  requisite  books  of  account   and   documents   and
deliberately dragged the matter leading to one adjournment after the  other.
Eventually, the Assessing Officer, to avoid the bar of limitation,  had  no
option but to “hurriedly” finalize the assessment proceedings which  on  due
and proper scrutiny disclosed that the necessary enquiries  were  not  made.
On the said basis the  learned  C.I.T.  came  to  the  conclusion  that  the
assessment order in question was erroneous and prejudicial to the  interests
of the Revenue warranting exercise of power under Section 263  of  the  Act.
Consequently, the assessment for the year 2001-2002  was  set  aside  and  a
fresh assessment was ordered.  At this stage, it must  be  noticed  that  in
the order dated 20th March, 2006 the learned C.I.T. arrived at findings  and
conclusions in respect of issues which were not  specifically  mentioned  in
the show cause notice dated 7th November, 2005.  In  fact,  on  as  many  as
seven/eight (07/08) issues mentioned in  the  said  show  cause  notice  the
learned C.I.T. did not record any finding  whereas  conclusions  adverse  to
the assessee were recorded on issues not specifically mentioned in the  said
notice before proceeding to hold that the assessment needs to be set  aside.
However, three (03) of the issues, details of  which  are  noticed  herein
below, are common to the show cause notice as well as the  revisional  order
of the learned C.I.T.

7.          On appeal, the learned Tribunal took the view that  the  learned
C.I.T. exercising powers under Section 263 of the Act could  not  have  gone
beyond the issues mentioned in the show cause  notice  dated  7th  November,
2005. The learned Tribunal, therefore, thought it proper to  take  the  view
that in respect of the issues not mentioned in the  show  cause  notice  the
findings as recorded in the revisional order dated 20th March, 2006 have  to
be understood to be in breach of the  principles  of  natural  justice.  The
learned Tribunal also specifically considered the three (03)  common  issues
mentioned above and on such consideration arrived  at  the  conclusion  that
the reasons disclosed by the learned C.I.T. in the order dated  20th  March,
2006 for holding the assessment to be liable for cancellation on that  basis
are not tenable. Accordingly, the learned Tribunal  allowed  the  appeal  of
the assessee and reversed the order of the  suo  motu  revision  dated  20th
March, 2006.

8.          At this stage, it may be appropriate to reproduce hereunder  the
provisions of Section 263 of the Act to appreciate  the  arguments  advanced
and to understand the contours of the suo motu revisional  power  vested  in
the learned C.I.T. by the aforesaid provision of the Act.
“263  –  Revision  of  orders  prejudicial  to  revenue.-(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…………………………………………”

9.          Under the Act different shades of power have been  conferred  on
different authorities to deal  with  orders  of  assessment  passed  by  the
primary authority.   While  Section  147  confers  power  on  the  Assessing
Authority itself to proceed against income escaping assessment, Section  154
of the Act empowers such authority to correct  a  mistake  apparent  on  the
face of the record. The  power  of  appeal  and  revision  is  contained  in
Chapter XX of the Act which includes Section 263 that confer suo motu  power
of revision in the learned C.I.T.  The different shades of  power  conferred
on different authorities under the Act has to be exercised within the  areas
specifically delineated by the Act and  the  exercise  of  power  under  one
provision cannot trench upon the powers available  under  another  provision
of the Act.  In this regard, it must be specifically  noticed  that  against
an order of assessment, so far  as  the  Revenue  is  concerned,  the  power
conferred under the Act is to reopen the concluded assessment under  Section
147 and/or to revise the assessment order under  Section  263  of  the  Act.
The scope of the power/jurisdiction under the different  provisions  of  the
Act would naturally be different. The power and jurisdiction of the  Revenue
to deal with a concluded assessment, therefore, must be  understood  in  the
context of the provisions of the  relevant  Sections  noticed  above.  While
doing so it must also be borne in mind that the legislature had  not  vested
in the Revenue any specific power to question  an  order  of  assessment  by
means of an appeal.

10.    Reverting to the specific provisions of Section 263 of the  Act  what
has to be seen is that a satisfaction that an order passed by the  Authority
under the Act is erroneous and prejudicial to the interest  of  the  Revenue
is the basic pre-condition for exercise of jurisdiction  under  Section  263
of the Act.  Both are twin conditions that have to  be  conjointly  present.
Once such satisfaction is reached, jurisdiction to exercise the power  would
be available subject to observance of  the  principles  of  natural  justice
which is implicit in the  requirement  cast  by  the  Section  to  give  the
assessee an opportunity of being heard.  It is in the context of  the  above
position that this Court has  repeatedly  held  that  unlike  the  power  of
reopening an assessment under Section 147 of the Act, the power of  revision
under Section 263 is not contingent on  the  giving  of  a  notice  to  show
cause.  In fact,  Section  263  has  been  understood  not  to  require  any
specific show cause notice to be served on the  assessee.  Rather,  what  is
required under the said provision  is  an  opportunity  of  hearing  to  the
assessee.  The two requirements are different; the first would comprehend  a
prior notice detailing  the  specific  grounds  on  which  revision  of  the
assessment order is  tentatively  being  proposed.  Such  a  notice  is  not
required. What is contemplated by Section 263, is an opportunity of  hearing
to be afforded to the assessee. Failure to give such  an  opportunity  would
render the revisional order legally fragile not on the  ground  of  lack  of
jurisdiction but on  the  ground  of  violation  of  principles  of  natural
justice.  Reference in  this  regard  may  be  illustratively  made  to  the
decisions of this Court in Gita Devi Aggarwal  vs.  Commissioner  of  Income
Tax, West Bengal and others[1] and in The C.I.T., West Bengal, II,  Calcutta
vs. M/s Electro House[2]. Paragraph 4 of the decision in  The  C.I.T.,  West
Bengal, II, Calcutta vs. M/s Electro House  (supra)  being  illumination  of
the issue indicated above may be usefully reproduced hereunder:

“This section unlike Section 34 does not prescribe any notice to  be  given.
It only requires the Commissioner to give an opportunity to the assessee  of
being heard. The section does not speak of any  notice.  It  is  unfortunate
that the High Court failed to notice  the  difference  in  language  between
Sections 33-B and 34. For the assumption of jurisdiction  to  proceed  under
Section 34, the  notice  as  prescribed  in  that  section  is  a  condition
precedent.  But  no  such  notice  is  contemplated  by  Section  33-B.  The
jurisdiction of the Commissioner  to  proceed  under  Section  33-B  is  not
dependent on the fulfilment of any  condition  precedent.  All  that  he  is
required to do before reaching his decision and not  before  commencing  the
enquiry, he must give the assessee an opportunity of being  heard  and  make
or cause to make such enquiry as  he  deems  necessary.  Those  requirements
have nothing to do with the jurisdiction of the Commissioner.  They  pertain
to the region of natural  justice.  Breach  of  the  principles  of  natural
justice may affect the legality of the order made but that does  not  affect
the jurisdiction of the Commissioner. At present we are not called  upon  to
consider whether the order made by the Commissioner is vitiated  because  of
the contravention of any of the principles of natural justice. The scope  of
these appeals is very narrow. All that we have  to  see  is  whether  before
assuming jurisdiction the Commissioner was required to issue  a  notice  and
if he was so required what that notice should have contained? Our answer  to
that question has already been made clear. In our  judgment  no  notice  was
required to be issued by the Commissioner before  assuming  jurisdiction  to
proceed under Section 33-B. Therefore the question what that  notice  should
contain does not arise for consideration. It is  not  necessary  nor  proper
for us in this case to consider as to the nature of the enquiry to  be  held
under Section 33-B. Therefore, we refrain from spelling out what  principles
of natural justice should be observed in  an  enquiry  under  Section  33-B.
This Court in Gita Devi Aggarwal v. CIT, West Bengal ruled that Section  33-
B does not in express terms require a notice to be served  on  the  assessee
as in the  case  of  Section  34.  Section  33-B  merely  requires  that  an
opportunity of  being  heard  should  be  given  to  the  assessee  and  the
stringent  requirement  of  service  of  notice  under  Section  34  cannot,
therefore, be applied to a proceeding under Section 33-B.”  (Page 827-828).

[Note: Section 33-B and Section 34 of the Income Tax Act,  1922  corresponds
to Section 263 and Section 147 of the Income Tax Act, 1961]
11.         It may be that in a given case and in most cases it is  so  done
a notice  proposing  the  revisional  exercise  is  given  to  the  assessee
indicating therein broadly or even specifically the  grounds  on  which  the
exercise is felt necessary. But there is nothing  in  the  section  (Section
263) to raise the said notice to  the  status  of  a  mandatory  show  cause
notice affecting the initiation of the exercise in the  absence  thereof  or
to require the C.I.T. to confine himself to the  terms  of  the  notice  and
foreclosing consideration of any other issue or question of  fact.  This  is
not the purport of Section 263. Of course, there  can  be  no  dispute  that
while the C.I.T. is free to exercise his jurisdiction  on  consideration  of
all relevant facts, a  full  opportunity  to  controvert  the  same  and  to
explain the circumstances surrounding  such  facts,  as  may  be  considered
relevant by the assessee, must be afforded to him by  the  C.I.T.  prior  to
the finalization of the decision.

12.         In the present case, there is  no  dispute  that  in  the  order
dated 20th March, 2006 passed by the learned C.I.T.  under  Section  263  of
the Act findings have been recorded on  issues  that  are  not  specifically
mentioned in the show cause notice dated 7th  November,  2005  though  there
are three  (03)  issues  mentioned  in  the  show  cause  notice  dated  7th
November, 2005 which had specifically been dealt with  in  the  order  dated
20th March, 2006.  The learned Tribunal in  its  order  dated  28th  August,
2007 put  the  aforesaid  two  features  of  the  case  into  two  different
compartments.  Insofar as the first question i.e. findings contained in  the
order of the learned  C.I.T.  dated  20th  March,  2006  beyond  the  issues
mentioned in the show cause notice is concerned the learned Tribunal  taking
note of the aforesaid admitted position held as follows:
“In the case on hand, the CIT  has  assumed  jurisdiction  by  issuing  show
cause notice u/s 263 but while passing the final order he relied on  various
other grounds for coming to the final conclusion.   This  itself  makes  the
revision order bad in law  and  also  violative  of  principles  of  natural
justice and thus not  maintainable.   If,  during  the  course  of  revision
proceedings the CIT was of  the  opinion  that  the  order  of  the  AO  was
erroneous on some other grounds  also  or  on  any  additional  grounds  not
mentioned in the show cause notice, he ought  to  have  given  another  show
cause notice to the assessee on those grounds and  given  him  a  reasonable
opportunity of hearing before coming  to  the  conclusion  and  passing  the
final revision order.  In the case on hand, the CIT has not done so.   Thus,
the order u/s 263 is violative of principles of natural justice  as  far  as
the reasons, which formed the basis for the revision but were  not  part  of
the show cause notice issued u/s 263 are concerned.  The order  of  the  CIT
passed u/s 263 is therefore liable to be quashed in so far as those  grounds
are concerned.”

13.   The above ground which had led the learned Tribunal to interfere  with
the order of the  learned  C.I.T.  seems  to  be  contrary  to  the  settled
position in law, as indicated above and the two decisions of this  Court  in
Gita Devi Aggarwal (supra) and  M/s  Electro  House  (supra).   The  learned
Tribunal in its order dated 28th August, 2007 had not recorded  any  finding
that in course of the suo motu revisional proceedings, hearing of which  was
spread over many days and attended to by the  authorized  representative  of
the assessee, opportunity of hearing was not afforded to  the  assessee  and
that the assessee was denied an opportunity to  contest  the  facts  on  the
basis of which the learned C.I.T. had come to his  conclusions  as  recorded
in the order dated 20th March,  2006.  Despite  the   absence  of  any  such
finding in the order of the learned Tribunal, before holding the same to  be
legally unsustainable the Court will  have  to  be  satisfied  that  in  the
course of the revisional proceeding the assessee, actually and  really,  did
not have the opportunity to contest the facts on  the  basis  of  which  the
learned C.I.T. had concluded that the order  of  the  Assessing  Officer  is
erroneous and prejudicial to the interests of the  Revenue.   The  above  is
the question to which the Court, therefore, will have to turn to.

14.         To determine the above question we have read and considered  the
order of the Assessing Officer dated 30th March, 2004; as well as the  order
of  the  learned  C.I.T.  dated  20th  March,   2006.     From   the   above
consideration, it appears that the learned  C.I.T.  in  the  course  of  the
revisional proceedings had scrutinized the record of the proceedings  before
the Assessing Officer and noted the various dates on which opportunities  to
produce the books of account and other relevant documents were  afforded  to
the assessee which requirement was not complied with by  the  assessee.   In
these circumstances,  the  revisional  authority  took  the  view  that  the
Assessing Officer, after being compelled to adjourn the matter from time  to
time, had to hurriedly complete the  assessment  proceedings  to  avoid  the
same from becoming time barred.  In the course of  the  revisional  exercise
relevant facts, documents, and books of account  which  were  overlooked  in
the assessment proceedings were  considered.  On  such  re-scrutiny  it  was
revealed that the original assessment order on several heads  was  erroneous
and had the potential of causing loss of revenue to the  State.   It  is  on
the aforesaid basis that the  necessary  satisfaction  that  the  assessment
order dated 30th March, 2004 was erroneous and prejudicial to the  interests
of the revenue was recorded by the learned  C.I.T.  At  each  stage  of  the
revisional proceeding the authorized  representative  of  the  assessee  had
appeared and had  full  opportunity  to  contest  the  basis  on  which  the
revisional authority was proceeding/had proceeded in  the  matter.   If  the
revisional authority had come to its conclusions in the matter on the  basis
of the record of the assessment proceedings which was open for  scrutiny  by
the assessee and available to his authorized representative at all times  it
is difficult to see as to how the requirement  of  giving  of  a  reasonable
opportunity of being heard as contemplated by Section 263  of  the  Act  had
been breached in the present  case.   The  order  of  the  learned  Tribunal
insofar as the first issue i.e. the revisional order going beyond  the  show
cause notice is concerned, therefore, cannot have our acceptance.  The  High
Court having failed to fully deal with  the  matter  in  its  cryptic  order
dated 7th August, 2008 we are of the view  that  the  said  orders  are  not
tenable and are liable to be interfered with.

15.         This will bring us to a consideration of the second limb of  the
case as dealt with by the learned Tribunal, namely, that tenability  of  the
order of the learned C.I.T. on the three (03) issues mentioned in  the  show
cause notice and also dealt with in the revisional order dated  20th  March,
2006.  The aforesaid three (03) issues are:

“i)   Assessee maintaining 5 bank accounts and  AO  not  examining  the  5th
bank account, books of account and any other  bank  account  where  receipts
related to KBC were banked.

ii)   Regarding claim of deposits of Rs.52.06 lakhs in   Special  Bench  A/c
No.11155 under the head “Receipts on behalf of Mrs. Jaya Bachchan and

iii)  Regarding the claim of additional expenses in the re-revised return.”

16.         On the above issues the  learned  Tribunal  had  given  detailed
reasons for not accepting the grounds cited  in  the  revisional  order  for
setting aside the assessment under Section 263  of  the  Act.   The  reasons
cited by the learned Tribunal insofar as the first two issues are  concerned
may not justify a serious relook and hence need not be gone into. The  third
question  would,  however,  require  some  detailed  attention.   The   said
question is with regard to the claim of  additional  expenses  made  by  the
assessee in its re-revised return which was subsequently withdrawn.

17.         The assessee in the re-revised return  dated  31st  March,  2003
had made a claim of additional expenses of 30%  of  the  gross  professional
receipts (Rs.3.17 crores).  It appears that the Assessing  Officer  required
the assessee to  file  requisite  details  in  this  regard.   The  assessee
responded by letter dated 13th February, 2004 stating as follows:
“With regard to the 30% estimated expenses claimed, we have to  submit  that
these are the expenses which are spent for security  purposes  by  employing
certain Agencies, guards etc. for the personal safety of  Shri  Bachchan  as
he has to protect himself from various threats to his life received  by  him
and to avoid extortion of money from gangsters. The names of  such  Agencies
cannot be disclosed/divulged  as  there  is  a  possibility  of  leakage  of
information of Agencies’ names from the office staff, which  will  obviously
be detrimental to the interests of Shri Bachchan.  The  payments  have  been
made out of cash balances available and lot of outstanding expenses  are  to
be paid which could not be paid for want of income.”

18.   Thereafter by letter dated 13th March, 2004 the assessee informed  the
learned C.I.T. that the claim  was  made  on  a  belief  that  the  same  is
allowable but as it will not be feasible for the  assessee  to  substantiate
the same, the re-revised return of income may be  taken  to  the  withdrawn.
It appears that thereafter the Assessing Officer issued  a  notice  to  show
cause as to why the provisions of Section 69-C should  not  be  invoked  and
the expenses claimed should not be treated as  unexplained  expenditure.  In
reply, the assessee by letter dated 24th  March,  2004  submitted  that  the
claim was made as a standard  deduction  and  that  the  assessee  had  been
wrongly advised to make the said claim and as the same has  been  withdrawn,
Section 69-C  will  have  no  application.  The  record  of  the  assessment
proceedings disclose that the said  stand  was  accepted  by  the  Assessing
Officer and the matter was not pursued any further.

19.         The learned  C.I.T.  took  the  view  that  notwithstanding  the
withdrawal of the claim by the assessee, in view of the earlier stand  taken
that the said expenses were incurred for security purposes of the  assessee,
the Assessing Officer ought  to  have  proceeded  with  the  matter  as  the
assessee was following the cash system of accounting and the filing  of  the
re-revised return, prima  facie,  indicated  that  the  additional  expenses
claimed had been incurred. In this regard,  the  following  findings/reasons
recorded by the learned C.I.T. in the order dated 20th March, 2006 would  be
of particular relevance:

“Withdrawal of claim by assessee can be for  variety  of  reasons  and  this
does not mean that Assessing  Officer  should  abandon  enquiries  regarding
sources for incurring expenses.  Assessee follows cash system of  accounting
and the claim regarding additional expenses was made through  duly  verified
revised  return.   The  claim  was  pressed  during  assessment  proceedings
carried on by A.O.  after filing revised return and it was specially  stated
in letter dated 13.02.2004 that expenses  were  for  security  purposes  and
that payments have been made out of cash balances available etc.  Under  the
circumstances, the Assessing Officer was  expected  to  examine  the  matter
further to arrive at a definite finding whether assessee  incurred  expenses
or not and in case, actually incurred, then what were sources for  incurring
these expenses.  Assessing Officer was satisfied on withdrawal of the  claim
and in my view, his failure to decide the matter regarding actual  incurring
of additional expenses and sources thereof  resulted  into  erroneous  order
which is prejudicial to the interest of revenue.”

20.         An argument has been made on behalf of the assessee that  notice
under Section 69-C was issued by the Assessing  Officer  and  thereafter  on
withdrawal of the claim by the assessee the Assessing Officer  thought  that
the matter ought not to be investigated any  further.   This,  according  to
the learned counsel for the assessee, is a possible view and when two  views
are possible on an issue, exercise of revisional  power  under  Section  263
would not be justified. Reliance  in  this  regard  has  been  placed  on  a
judgment of this Court in Malabar Industrial Co. Ltd. vs. CIT[3]  which  has
been  approved in Commissioner of Income-tax  vs.  Max  India
Ltd. [4]

21.         There can be no doubt that so long as  the  view  taken  by  the
Assessing Officer is a possible view the same ought  not  to  be  interfered
with by the Commissioner under Section 263 of the Act merely on  the  ground
that there is another possible view of the matter.  Permitting  exercise  of
revisional power in a situation where two views are  possible  would  really
amount to conferring some kind of  an  appellate  power  in  the  revisional
authority. This is a course of action that must be desisted from.   However,
the above is not the situation in the present case in view  of  the  reasons
stated by the learned C.I.T. on the basis of which the said  authority  felt
that the matter needed further investigation, a view with  which  we  wholly
agree.  Making a claim which would prima facie disclose  that  the  expenses
in respect of which  deduction  has  been  claimed  has  been  incurred  and
thereafter abandoning/withdrawing the same gives rise to  the  necessity  of
further enquiry in the interest of the  Revenue.  The  notice  issued  under
Section 69-C of the Act could not have been simply  dropped  on  the  ground
that the claim has been withdrawn.  We, therefore, are of the  opinion  that
the learned C.I.T. was perfectly justified  in  coming  to  his  conclusions
insofar as the issue No.(iii) is  concerned  and  in  passing  the  impugned
order on that basis.  The learned  Tribunal  as  well  as  the  High  Court,
therefore, ought not to have interfered with the said conclusion.

22.         In the light of the discussions that have preceded and  for  the
reasons alluded we are of the opinion that the present is  a  fit  case  for
exercise of the suo motu revisional  powers  of  the  learned  C.I.T.  under
Section 263 of the Act.  The order of  the  learned  C.I.T.,  therefore,  is
restored and those of the learned Tribunal dated 28th August, 2007  and  the
High Court dated 7th August, 2008 are set aside.  The appeal of the  Revenue
is allowed.

SLP(C) No.861 of 2013
23.         Leave granted.

24.         Pursuant to the revisional order dated 20th  March,  2006  under
Section 263 of the Income Tax Act setting aside  the  assessment  order  for
the assessment year  2001-2002  and  directing  fresh  assessment,  a  fresh
assessment had been made by  the  Assessing  Officer  by  order  dated  29th
December, 2006.   Against the said order the respondent  assessee  filed  an
appeal before the learned Commissioner of Income Tax  (Appeals).   By  order
dated 18th October, 2007 the learned Commissioner of  Income  Tax  (Appeals)
had set aside the assessment order dated  29th  December,  2006  as  in  the
meantime, by order dated  28th  August,  2007  of  the  learned  Income  Tax
Appellate Tribunal  the  revisional  order  dated  20th  March,  2006  under
Section 263 of the Act was set  aside.   The  Revenue’s  appeal  before  the
learned Tribunal against the order dated 18th October,  2007  was  dismissed
on 11th January, 2000  and  by  the  High  Court  on  29th  February,  2012.
Against the aforesaid order of the High Court this appeal has been filed  by
the Revenue.   As by the order passed today in the Civil Appeal arising  out
of Special Leave Petition (Civil) No.11621 of 2009 we have restored the  suo
motu revisional order dated 20th March, 2006 passed by the  learned  C.I.T.,
we allow this appeal filed by the Revenue and  set  aside  the  order  dated
11th January, 2010 passed by the learned Tribunal and the order  dated  29th
February, 2012 passed by the High Court  referred  to  above.   However,  we
have to add that as the re-assessment order dated 29th  December,  2006  had
not been tested on merits the assessee would be free to do so, if he  is  so
inclined and so advised.

25.         The appeals are disposed of in the above terms.

….……………………….,J.[RANJAN GOGOI]

……………………….,J.[PRAFULLA C. PANT]

 

NEW DELHI
MAY 11, 2016

———————–
[1]    (1970) 76 ITR 496
[2]    (1971) 82 ITR 824
[3]    (2000) 243 ITR 83 (SC)
[4]    (2007) 295 ITR 282 (SC)

Read Also: Commr.Of I. T-I.Mumbai Vs. Amitabh Bachchan