TaxTMI 
TaxTMI 
TaxTMI 
2014 (7) TMI 50
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....nditure far in excess of the income received were the subject matter of all the notices issued. The Commissioner's jurisdiction under Section 263 or rather the palpable lack of it in the subject years is the grievance highlighted. 3. The learned counsel Sri.N.J.Mathews in his inimitable style, forcefully but with elegant restrain urges before Court that the power exercised by the Commissioner under Section 263 in the instant cases cannot at all be sustained and the show cause notices are to be struck down by this Court. To invoke the jurisdiction under Article 226 of the Constitution, the learned counsel places reliance on the decision in Siemens Ltd. v. State of Maharashtra [2007 (1) KLT 88 (SC)], to contend that if the issuance of a show cause notice is totally without jurisdiction, then necessarily this Court is competent to invoke its powers under Article 226, despite the opportunity available for the assessee to convince the Commissioner about the illegality of exercise of such revisory jurisdiction, as such; as also on facts. The learned counsel would term the power available under Section 263 to be a composite power, clothing the Commissioner with the power to issue not....
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.... by the Department, is the argument. 6. Learned Senior Counsel for Government of India (Taxes) Sri.P.K.R.Menon would contend that the plea of harassment made by the petitioners cannot be looked into by this Court, especially since that cannot be a reason to strike down a show cause notice. The legislature in its wisdom having provided measures to plug evasion and ensure payment of revenue due; the action of the Commissioner neither can be assailed on the ground of harassment nor can it be termed 'legal ingenuity'. The impugned orders being only a show cause notice, it is the argument of the learned Senior Counsel that there is no reason why this Court should interfere at this stage and all contentions could be raised before the Commissioner. The learned Senior Counsel would rely on the decisions in Appollo Tyres Ltd. Deputy CIT [(2014) 360 ITR 36 (Ker) and CIT v. English Indian Clays Ltd. [(2011) 331 ITR 219 (Ker, to contend that even when there was no application of mind by the Assessing Officer or when the procedure adopted is patently wrong, the Commissioner could invoke the powers under Section 263. 7. In Malabar Industrial Co. Ltd. (supra), the Hon'ble Supreme Co....
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....ssessment rendered contrary to law or on a mistaken view of law or upon erroneous application of legal principles and does not at all refer to the efficacy of the judgment of an Assessing Officer. The Bombay High Court, in the said decision, was concerned with an expenditure claimed by the assessee as 'revenue expenditure', the same having been incurred in merging two industrial plants of the assessee. The Assessing Officer had called for an explanation from the assessee and had considered the detailed explanation placed on record by the assessee before allowing the claim for deduction. However, there was no discussion in so far as the allowance of the deduction and, hence, the Commissioner revised the order under Section 263 for non-application of mind, since the Commissioner was of the opinion that the expenditure would be a 'capital expenditure'. It was only in such circumstance that the High Court of Bombay held that the opinion of the Commissioner alone cannot form the basis of the revision under Section 263. The Commissioner's view that there was no elaborate discussion was held to be insufficient to invoke the powers under Section 263. With respect to the....
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.... of the former; Section 263 could be invoked. Anil Kumar Sharma (supra) followed this decision and the revision attempted was found to be bad again for the reason of the records having revealed an enquiry having been properly undertaken, and the apparent lack of reasons in the order for allowing a claim being not sufficient ground to invoke Section 263. 14. Jindal Photo Films Ltd. (supra) was concerned with a reopening of assessment under Section 147, made for reason only of a deduction having been granted wrongly. It was held that the Assessing Officer was not seized of any new material or information and the mere change of opinion could not lead to reopening on the ground of escaped assessment. Touching upon the jurisdictional infirmity, it was held so in para 20: "It is also equally well settled that if a notice under section 148 has been issued without the jurisdictional foundation under Section 147 being available to the Assessing Officer, the notice and the subsequent proceedings will be without jurisdiction, liable to be struck down in exercise of writ jurisdiction of this court. If 'reason to believe' be available, the writ court will not exercise its power of jud....
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....dian Clays Ltd. (supra) was a case in which two claims of depreciation were allowed, one in part and the other in whole. The assessee was found to have claimed a similar depreciation in the earlier year, which was found to be bogus and it was conceded by the assessee by settling the tax liability under the Kar Vivad Samdahan Scheme. The Commissioner found that the claim was allowed by the Assessing Officer without reference to the original assessment and without examining the eligibility of the assessee. The assessment having been made in a cursory manner granting huge amount as depreciation, was found to be erroneous in so far as causing prejudice to the interests of the revenue. The records were found to have revealed that the depreciation claimed was totally unsubstantiated. The Division Bench of this Court reversed the order of the Tribunal which set aside the order of the Commissioner under Section 263. 17. Appollo Tyres Ltd. (supra). was a case in which the Commissioner invoked Section 263 to consider specifically the nine points on which the Assessing Officer had failed to apply his mind. The contention that the Assessing Officer did consider the said nine points and ....
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....The Commissioner has found that the order is erroneous for reason of the Assessing Officer having not applied his mind to a number of factual aspects available in the records. These inter alia relate to the expenditure incurred by the assessees in developing landed property, construction of buildings, renovation and alteration of residential apartments and those incurred in travelling to various countries abroad. It also takes note of expenditure allowed far in excess of that permissible; and even beyond the income declared. The same would, hence, definitely be an erroneous procedure adopted by the Assessing Officer, wherein the entire materials available to the Department had not been taken into account, resulting in prejudice to the interests of the revenue. The Commissioner, by the impugned orders has not attempted a substitution of his opinion to that of the Assessing Officer; but has taken cognizance of the 'lack of enquiry' with respect to certain transactions as distinguished from 'insufficient enquiry'. This reveals clear non-application of mind by the Assessing Officer; as has been noticed by the two separate Division Benches of this Court in Appollo ....